B-158543, APR. 28, 1966

B-158543, APR. 28, 1966

TO BARENBAUM AND BARENBAUM:

FURTHER REFERENCE IS MADE TO YOUR LETTER OF FEBRUARY 16, 1966, WITH ENCLOSURES, AND SUBSEQUENT CORRESPONDENCE, PROTESTING ON OF TRIP CONSTRUCTION COMPANY AGAINST THE PROPOSED AWARD OF A CONTRACT TO THERMAL CONSTRUCTION COMPANY BY THE AIR FORCE UNDER INVITATION FOR BIDS (IFB) NO. 19-682-66-154.

THE SUBJECT INVITATION CALLED FOR BIDS FOR REHABILITATION OF THE STEAM HEAT DISTRIBUTION SYSTEM AT HANSCOM FIELD, BEDFORD, MASSACHUSETTS. THE FOLLOWING THREE BIDS WERE RECEIVED AND OPENED IN THE DESIGNATED BID OPENING ROOM AT 3 P.M., FEBRUARY 8, 1966:

THERMAL CONSTRUCTION, INC. $633,681

ARDEN ENGINEERING COMPANY, INC. 684,532

TRIP CONSTRUCTION COMPANY, INC. 802,000

A TELEGRAPHIC MODIFICATION REDUCING THE TRIP BID TO $642,200 WAS RECEIVED IN THE HANSCOM FIELD MESSAGE CENTER AT 2:48 P.M., FEBRUARY 8, 1966, BUT WAS NOT DELIVERED TO THE BASE PROCUREMENT DIVISION PRIOR TO BID OPENING. PURSUANT TO ARMED SERVICES PROCUREMENT REGULATION (ASPR) 2-407.9/B//3) OUR OFFICE WAS ADVISED ON APRIL 5, 1966, THAT SINCE THE WAGE RATE DETERMINATION INCLUDED IN THE SPECIFICATIONS WOULD EXPIRE ON APRIL 8, 1966, AWARD WAS BEING MADE TO THERMAL AS THE LOW RESPONSIVE AND RESPONSIBLE BIDDER.

THE BASIS OF YOUR PROTEST, AS STATED IN THE CORRESPONDENCE TO OUR OFFICE AS WELL AS IN EARLIER CORRESPONDENCE TO THE CONTRACTING OFFICER, IS THAT THERMAL IS NOT A RESPONSIBLE COMPANY. IN SUPPORT OF THIS CONTENTION YOU POINT OUT THAT THE CORPORATION CAME INTO EXISTENCE ON JANUARY 31, 1966, AND THEREFORE HAS NO RECORD OF EXPERIENCE; THAT LIABILITY FOR FAILURE TO PERFORM WOULD BE LIMITED TO THE CORPORATE ENTITY; THAT, ACCORDING TO A DUN AND BRADSTREET REPORT, THE ONLY ASSET OF THE COMPANY IS A BANK DEPOSIT OF $1,000, ALTHOUGH IT IS INDICATED THAT $19,000 MORE IS TO BE DEPOSITED IN THE NEAR FUTURE; THAT MR. NAMI, ONE OF THE PRINCIPALS OF THERMAL HAS HAD NO EXPERIENCE IN THE TYPE OF WORK CALLED FOR UNDER THE IFB, ALTHOUGH HE HAS HAD EXPERIENCE IN HEAVY EXCAVATION WORK; THAT ONE OF THE OTHER PRINCIPALS, W. VIBBERT, HAS WORKED WITH TRIP BOTH AS AN EMPLOYEE AND SUBCONTRACTOR AND HIS PERFORMANCE WAS UNSATISFACTORY; THAT MR. VIBBERT SIGNED THE THERMAL BID AS VICE PRESIDENT ALTHOUGH HE IS NOT LISTED AS AN OFFICER OF THE FIRM ON THE DUN AND BRADSTREET REPORT; AND THAT THE FURNISHING OF A BID BOND BY THERMAL IS NOT SUFFICIENT TO SUPPORT A FINDING OF RESPONSIBILITY. IN ADDITION TO THE FOREGOING, YOU ALSO CONTEND THAT THERMAL DOES NOT OTHERWISE MEET THE REQUIREMENTS OF SEVERAL CITED PROVISIONS OF THE ARMED SERVICES PROCUREMENT REGULATION PERTAINING TO THE STANDARDS OF A PROSPECTIVE CONTRACTOR. YOU HAVE ALSO PRESENTED ARGUMENTS IN SUPPORT OF YOUR CONTENTION THAT THE TELEGRAPHIC MODIFICATION OF TRIP'S BID WAS RECEIVED IN TIME TO BE GIVEN EFFECT, IN WHICH CASE TRIP WOULD BE THE SECOND LOW BIDDER AND WOULD BE ENTITLED TO CONSIDERATION FOR THE AWARD ONLY IF WE CONCLUDE THAT THE CONTRACT AWARDED TO THERMAL IS INVALID.

AS REQUIRED BY ASPR 1-904.1, THE CONTRACTING OFFICER MADE THE FOLLOWING DETERMINATION CONCERNING THE RESPONSIBILITY OF THERMAL:

"A PRE-AWARD SURVEY INITIATED AND CONDUCTED BY THE UNDERSIGNED CONTRACTING OFFICER HAS DISCLOSED THE FOLLOWING INFORMATION: THE THERMAL CONSTRUCTION CO. WAS IN FACT INCORPORATED IN JAN 1966 (SEE TAB K). THE PRESIDENT OF THE FIRM, MR. RICHARD A. FREY, IS ENGAGED IN THE INSURANCE BUSINESS IN TRENTON, N.J., A FINANCIAL STATEMENT AS OF 24 FEB 1966 INDICATES NET WORTH OF $258,940.00 (SEE TAB L). THE VICE PRESIDENT OF THE FIRM, MR. ROBERT N. NAMI, IS A HEAVY CONSTRUCTION CONTRACTOR AND OPERATES A LARGE FLEET OF EARTH-MOVING EQUIPMENT AND ACCORDING TO THE DUN AND BRADSTREET REPORT, THE LATEST FINANCIAL STATEMENT DATED 15 DEC 1964 SHOWED A NET WORTH OF $145,667.00. MR. WILLIAM VIBBERT, THE INDIVIDUAL THAT SIGNED THE BID AS VICE PRESIDENT ON BEHALF OF THE THERMAL CONSTRUCTION CO. WAS AUTHORIZED BY A RESOLUTION OF THE BOARD OF DIRECTORS OF THE THERMAL CONSTRUCTION CO. TO EXECUTE ANY AND ALL CONTRACTUAL INSTRUMENTS FOR THE COMPANY (SEE TAB M). MR. VIBBERT WILL BE THE PRINCIPAL OPERATING INDIVIDUAL OF THE THERMAL CONSTRUCTION CO. ON THE PROPOSED WORK. THIS INDIVIDUAL IS KNOWN TO THIS OFFICE HAVING PERFORMED A SUBCONTRACT ON THE RECENTLY COMPLETED FAMILY HOUSING PROJECT CONSTRUCTED AT L. G. HANSCOM FIELD. MR. STANLEY SIDNEY THE PROJECT MANAGER FOR THE BEACON CONSTRUCTION COMPANY, PRIME CONTRACTOR FOR THE FAMILY HOUSING PROJECT, CONSIDERED THE WORK PERFORMED BY MR. VIBBERT AS MOST SATISFACTORY. WHEREAS THE SUBCONTRACT ON THE FAMILY HOUSING PROJECT WAS OF A MUCH LESS MONETARY VALUE THAN THE PROPOSED CONTRACT HEREUNDER, MR. VIBBERT ALSO PERFORMED A SUB-CONTRACT FOR THE BEACON CONSTRUCTION CO. IN 1961 AMOUNTING TO APPROXIMATELY $485,000.00 THIS WORK WAS PERFORMED AT FORT DEVENS, AYER, MASS. AND CONSISTED OF INSTALLATION OF WATER AND GAS DISTRIBUTION SYSTEMS ON A FAMILY HOUSING PROJECT. THIS SUBCONTRACT WAS ALSO PERFORMED IN A SATISFACTORY MANNER ACCORDING TO MR. SIDNEY AND HE HAS STATED THAT HIS FIRM WOULD CONSIDER MR. VIBBERT FOR A CONTRACT ON ANY FUTURE WORK INVOLVING UNDERGROUND PIPING BECAUSE OF THEIR FAVORABLE EXPERIENCE WITH HIM. (SEE TAB N)

"WITH RESPECT TO WORKING CAPITAL TO PERFORM THE CONTRACT, THE UNDERSIGNED HAS RECEIVED NOTIFICATION FROM THE TRENTON TRUST COMPANY THAT THE THERMAL CONSTRUCTION CO. HAS ON DEPOSIT A PRESENT BALANCE OF $70,00.00 AND THE COMPANY AND THE BANK ARE IN THE PROCESS OF ENTERING INTO AN ESCROW AGREEMENT TO SEGREGATE IN THE BANK'S TRUST DEPARTMENT THE ENTIRE AMOUNT OF $70,000.00 FOR OPERATING EXPENSES TO BE INCURRED IN CONNECTION WITH THE CONTRACT. (SEE TAB 0)

"THE CONTRACTING OFFICER HAS ALSO BEEN FURNISHED A LETTER BY THE ATTORNEY IN FACT FOR THE PLANET INSURANCE CO. ASSURING THAT THE PLANET INSURANCE COMPANY STANDS READY TO EXECUTE PERFORMANCE AND PAYMENT BONDS TO SUPPORT THE PROPOSED CONTRACT IF AWARDED TO THERMAL CONSTRUCTION CO. (SEE TAB P)

"SINCE MATERIALS (STEAM DISTRIBUTION PIPE) REPRESENT APPROXIMATELY FORTY- FIVE (45) PERCENT OF THE TOTAL CONTRACT AMOUNT THE PROPOSED SUPPLIER'S REPRESENTATIVE WAS CONTACTED AND THEY HAVE ADVISED THAT THEY ARE READY TO EXTEND CREDIT FOR PURCHASED MATERIALS, AND DO NOT ANTICIPATE ANY PROBLEMS IN THE MEETING OF OBLIGATIONS BY THE THERMAL CONSTRUCTION CO. (SEE TAB Q)

"IN CONCLUSION IT IS THE OPINION OF THE UNDERSIGNED THAT THE THERMAL CONSTRUCTION COMPANY, UTILIZING THE SERVICES OF MR. WILLIAM VIBBERT AS THE PRINCIPAL OPERATING INDIVIDUAL, HAS THE NECESSARY CAPABILITIES TO PERFORM THE PROPOSED CONTRACT. THIS INDIVIDUAL HAS HAD CONSIDERABLE EXPERIENCE IN SIMILAR OR RELATED WORK AND HAS HAD PAST EXPERIENCE IN ORGANIZING AND DIRECTING WORK FORCES ON LARGE MONETARY SIZE CONTRACTS. THE FINANCIAL CONDITION OF THE FIRM, BASED ON THE STATEMENT OF THE VICE PRESIDENT OF THE TRENTON TRUST CO., IS CONSIDERED TO BE SATISFACTORY TO MEET OBLIGATIONS TO BE INCURRED IN THE EARLY STAGES OF CONSTRUCTION. (AS WORK PROGRESSES AND MATERIALS ARE DELIVERED TO THE WORK SITE, THE CONTRACTOR WILL BE ENTITLED TO PARTIAL PAYMENTS.) IN VIEW OF THE FACT THAT ONE OF THE OFFICERS OF THE FIRM OWNS AND OPERATES CONSTRUCTION EQUIPMENT, IT CAN BE EXPECTED THAT EITHER THE NECESSARY MACHINES SUCH AS BACKHOE, GRADALL, ETC. WILL BE FURNISHED BY THE FIRM HEADED BY MR. NAMI. IT SHOULD BE NOTED HOWEVER THAT EXPERIENCE HAS SHOWN FROM IDENTICAL WORK ON INCREMENT I OF THIS PROJECT, RECENTLY COMPLETED, THAT ONLY A SMALL AMOUNT OF HEAVY EQUIPMENT; NAMELY, A BACKHOE, GRADALL AND PROBABLY TWO TRUCKS WILL BE NECESSARY TO PERFORM THE WORK. EQUIPMENT IN THIS AMOUNT WOULD BE READILY AVAILABLE TO THE CONTRACTOR ON A SUBCONTRACT BASIS FROM LOCAL SOURCES THAT ARE AVAILABLE B- 15843 P. 4 FOR THE TYPE WORK TO BE PERFORMED. IT IS TO BE NOTED THAT THE LOW BIDDER PROPOSES TO SUBCONTRACT FIFTY (50) PERCENT OF THE CONTRACT, WHICH WILL CONSIST MAINLY OF EXCAVATION AND BACKFILLING OPERATIONS.'

IN SUPPORT OF THIS DETERMINATION, THE CONTRACTING OFFICER HAS FURNISHED OUR OFFICE THE DOCUMENTS REFERRED TO THEREIN AND WE HAVE GIVEN THEM DUE CONSIDERATION.

THE DETERMINATION OF A PROSPECTIVE CONTRACTOR'S RESPONSIBILITY IS THE FUNCTION OF THE CONTRACTING OFFICER, AND IS NECESSARILY A MATTER OF JUDGMENT. OUR OFFICE HAS CONSISTENTLY HELD THAT WHERE SUCH A DETERMINATION IS BASED UPON SUBSTANTIAL EVIDENCE AND IS NEITHER ARBITRARY NOR CAPRICIOUS, THERE IS NO BASIS TO SUBSTITUTE OUR JUDGMENT FOR THAT OF THE CONTRACTING OFFICER. 37 COMP. GEN. 430, 435. WE HAVE ALSO HELD THAT IN EVALUATING THE EXPERIENCE AND FINANCIAL RESPONSIBILITY OF A NEWLY FORMED COMPANY, INCLUDING A CORPORATION, THERE MAY BE CONSIDERED THE EXPERIENCE, RESOURCES, AND RESPONSIBILITY OF THE PRINCIPAL OFFICERS OF THE COMPANY. SEE 36 COMP. GEN. 673; 38 ID. 572. ON THE BASIS OF THE RECORD BEFORE US, AND IN THE ABSENCE OF A CLEAR INDICATION THAT THE CONTRACTING OFFICER'S DETERMINATION WAS ARBITRARY OR CAPRICIOUS, WE MUST CONCLUDE THAT THE AFFIRMATIVE DETERMINATION OF THERMAL'S RESPONSIBILITY WAS REASONABLE AND IN ACCORDANCE WITH APPLICABLE REGULATIONS.

SINCE WE MUST THEREFORE CONCLUDE THAT THE AWARD WAS PROPERLY MADE TO THERMAL, YOUR ARGUMENTS CONCERNING THE TELEGRAPHIC MODIFICATION TO TRIP'S BID ARE ACADEMIC AND WILL NOT BE CONSIDERED.

IN VIEW THEREOF, WE SEE NO LEGAL BASIS TO OBJECT TO THE CONTRACT AWARDED TO THERMAL, AND YOUR PROTEST MUST THEREFORE BE DENIED.