B-162098, OCT. 9, 1967

B-162098, OCT. 9, 1967

BIDDERS - RESPONSIBILITY - PREAWARD SURVEY DECISION TO MASKO MANUFACTURING CO. PROTESTING AWARD TO ARGUS, INC. OF CONTRACT FOR PANORAMIC TELESCOPES FOR SELF PROPELLED HOWITZER FIRE CONTROL SYSTEM BY FRANKFORD ARSENAL, PHILADELPHIA. LOW BIDDER WHO WAS GIVEN A NEGATIVE RESPONSIBILITY REPORT AS RESULT OF RECENT PRE AWARD SURVEY FOR SIMILAR EQUIPMENT AND SUBSEQUENT EVALUATION REPORT REVIEWING ALLEGED CORRECTIVE ACTIONS ON DEFICIENCIES MUST HAVE DETERMINATION OF NON-RESPONSIBILITY REGARDED AS BASED ON SUBSTANTIAL GROUNDS. DETERMINATION OF URGENCY REQUIRED WHEN BIDDERS NEGATIVE PREAWARD SURVEY IS NOT REFERRED TO SMALL BUSINESS ADMIN. IS ALSO PROPERLY SUPPORTED. WHILE LOW BIDDER CLAIMS AWARD WAS MADE AT UNREASONABLE PRICE, RECORD INDICATES THAT UNIT PRICE OF SUCCESSFUL BIDDER WAS LESS THAN AVERAGE UNIT PRICE OF ALL BIDS AND THAT PRICE OF $1,821.11 PER UNIT IS NOT OUT OF LINE WITH GOVT. ESTIMATE OF $1,700, THEREFORE, PRICE UNREASONABLENESS DETERMINATION WOULD NOT BE JUSTIFIED.

TO MASKO MANUFACTURING COMPANY:

FURTHER REFERENCE IS MADE TO YOUR LETTER OF JULY 17, 1967, WITH ENCLOSURES, PROTESTING AGAINST THE AWARD OF A CONTRACT TO ANOTHER BIDDER UNDER INVITATION FOR BIDS NO. DAAA25-67-B-0728, ISSUED BY THE FRANKFORD ARSENAL, PHILADELPHIA, PENNSYLVANIA.

THE INVITATION ISSUED ON APRIL 19, 1967, REQUESTED BIDS FOR A MAXIMUM QUANTITY OF 700 PANORAMIC TELESCOPES, M117. SIX BIDS WERE RECEIVED AND OPENED ON MAY 19, 1967, AS FOLLOWS:

TOTAL

BIDDER UNIT MAXIMUM QUANTITY

MASKO $1,438.00 $1,006,600

AMERICAN CYSTOSCOPE 1,599.85 1,119,895

ARGUS, INC. 1,821.11 1,274,777

PALON INDUSTRIES, INC. 1,834.60 1,284,220

ALTON IRON WORKS 2,290.00 1,603,000

OPTIC-ELECTRONIC 2,850.00 1,995,000

ON MAY 19, 1967, THE CONTRACTING OFFICER REQUESTED THAT DEFENSE CONTRACT ADMINISTRATION SERVICES DISTRICT (DCASD) VAN NUYS, CALIFORNIA, PERFORM A PREAWARD SURVEY OF YOUR FACILITIES IN CONNECTION WITH REQUEST FOR PROPOSALS NO. DAAA25-67-R0747 FOR PANORAMIC TELESCOPES M113, A SIMILAR ITEM OF FIRE CONTROL EQUIPMENT. THE COMPLETED SURVEY DATED JUNE 7, 1967, RECOMMENDED NO AWARD TO YOUR COMPANY--A SMALL BUSINESS CONCERN--FOR VARIOUS REASONS, INCLUDING THE FOLLOWING:

A. INADEQUATE PRODUCTION CONTROL SYSTEM.

B. EXISTING PLANT FACILITIES AND EQUIPMENT ARE UNSATISFACTORY.

C. BUILDING LACKS PROPER AREA PARTITIONING FOR TYPES OF OPERATIONS THAT REQUIRE SEGREGATION FOR PRODUCTION.

D. INABILITY TO MEET REQUIRED DELIVERY SCHEDULE.

E. LACK OF EFFECTIVE INSPECTION PLAN.

F. LACK OF INSPECTION OR TEST EQUIPMENT.

G. INADEQUATE VENDOR CONTROL PROCEDURE.

H. INADEQUATE MEASURES PROVIDED FOR PRESERVATION, PACKAGING AND SHIPMENT OF MATERIAL.

I. PLANT SAFETY WAS RATED UNSATISFACTORY.

J. INADEQUATE ACCOUNTING SYSTEM FOR ALLOCATION OF COSTS TO GOVERNMENT CONTRACTS.

ON MAY 29, 1967, THE CONTRACTING OFFICER REQUESTED THAT DCASD PERFORM A PREAWARD SURVEY WITH RESPECT TO YOUR RESPONSIBILITY IN CONNECTION WITH INVITATION FOR BIDS -0728 FOR THE M117 TELESCOPE. THE COMPLETED SURVEY DATED JUNE 7, 1967, RECOMMENDED NO AWARD FOR THE SAME REASONS SET FORTH ABOVE. BY LETTER OF JUNE 23, 1967, YOU WROTE THE CONTRACTING OFFICER ALLEGING THAT DEFICIENCIES MENTIONED IN CONNECTION WITH THE PREAWARD SURVEY FOR THE M113 TELESCOPE HAVE BEEN CORRECTED. THE LETTER WAS REVIEWED AND EVALUATED BUT THE FACTS STATED THEREIN WERE NOT DEEMED SUFFICIENT TO REQUIRE A REVERSAL OF THE PREAWARD RECOMMENDATION. THEREFORE, THE CONTRACTING OFFICER EXECUTED A DETERMINATION OF YOUR NONRESPONSIBILITY UNDER INVITATION -0728, PURSUANT TO ARMED SERVICES PROCUREMENT REGULATION (ASPR) 1-902. ON JUNE 30, 1967, AWARD OF CONTRACT DAAA-25-67-D-1058 WAS MADE TO ARGUS, INC., AS THE LOWEST RESPONSIVE, RESPONSIBLE BIDDER. PRIOR TO THIS AWARD, THE CONTRACTING OFFICER EXECUTED THE REQUIRED DETERMINATION OF RESPONSIBILITY FOR ARGUS UNDER ASPR 1-902.

YOUR PROTEST CONCERNING INVITATION -0728 IS MADE ON SEVERAL GROUNDS WHICH RELATE TO THE GOVERNMENT'S ACTIONS IN EVALUATING YOUR FIRM'S RESPONSIBILITY; ITS FAILURE TO AWARD A CONTRACT TO YOU AS LOW BIDDER; AND ITS FAILURE TO SUBMIT THE QUESTION OF YOUR COMPETENCY TO THE SMALL BUSINESS ADMINISTRATION (SBA) FOR REVIEW.

THE DETERMINATION BY THE CONTRACTING OFFICER THAT YOU WERE NOT A RESPONSIBLE BIDDER FOR THE PROCUREMENT UNDER -0728 WAS BASED UPON A THOROUGH TECHNICAL PREAWARD SURVEY CONDUCTED BY QUALIFIED REPRESENTATIVES OF DCASD AND ON AN EVALUATION REPORT THAT REVIEWED YOUR LETTER OF JUNE 23, 1967, WHICH CLAIMED YOU HAD CORRECTED THE DEFICIENCIES NOTED IN THE PREAWARD SURVEY.

ASPR 1-902 PROVIDES THAT PURCHASES SHALL BE MADE FROM, AND CONTRACTS SHALL BE AWARDED TO, RESPONSIBLE PROSPECTIVE CONTRACTORS ONLY. RESPONSIBLE PROSPECTIVE CONTRACTOR IS ONE WHICH MEETS THE STANDARDS SET FORTH IN ASPR 1-903.1 AND 1-903.2 AND APPLICABLE SPECIAL STANDARDS. THAT SECTION FURTHER PROVIDES THAT THE AWARD OF A CONTRACT TO A SUPPLIER BASED ON LOWEST EVALUATED PRICE ALONE CAN BE FALSE ECONOMY IF THERE IS SUBSEQUENT DEFAULT, LATE DELIVERIES, OR OTHER UNSATISFACTORY PERFORMANCE RESULTING IN ADDITIONAL PROCUREMENT OR ADMINISTRATIVE COSTS. UNDER THE REGULATION, DOUBT AS TO PRODUCTIVE CAPACITY WHICH CANNOT BE RESOLVED AFFIRMATIVELY REQUIRES A DETERMINATION OF NONRESPONSIBILITY.

IT IS THE POSITION OF OUR OFFICE THAT THE DETERMINATION OF A PROSPECTIVE CONTRACTOR'S QUALIFICATIONS IS PRIMARILY THE FUNCTION OF THE CONTRACTING AGENCY, INVOLVING THE EXERCISE OF A CONSIDERABLE RANGE OF DISCRETION, AND, IN THE ABSENCE OF BAD FAITH OR LACK OF SUBSTANTIAL GROUNDS FOR THE ADMINISTRATIVE DETERMINATION, AS HERE, THERE IS NO BASIS FOR LEGAL OBJECTION. 37 COMP. GEN. 430, 435.

ASPR 1-705.4 (C) PROVIDES THAT WHEN THE BID OF A SMALL BUSINESS CONCERN IS TO BE REJECTED SOLELY BECAUSE THE CONTRACTING OFFICER HAS DETERMINED THAT THE CONCERN IS NONRESPONSIBLE AS TO CAPACITY OR CREDIT, THE MATTER SHALL BE REFERRED TO SBA AND AWARD SHALL NOT BE MADE UNTIL SBA RENDERS ITS DECISION OR UNTIL 15 WORKING DAYS HAVE ELAPSED, WHICHEVER IS EARLIER. HOWEVER, ASPR 1-705.4 (C) (IV) PROVIDES THAT A REFERRAL NEED NOT BE MADE TO SBA IF THE CONTRACTING OFFICER CERTIFIES IN WRITING THAT THE AWARD MUST BE MADE WITHOUT DELAY, INCLUDES SUCH CERTIFICATE AND SUPPORTING DOCUMENTATION IN THE CONTRACT FILE, AND PROMPTLY FURNISHES A COPY TO THE SBA REPRESENTATIVE.

WE ARE ADVISED THAT THIS TELESCOPE IS A COMPONENT OF THE M109 SELF PROPELLED HOWITZER FIRE CONTROL SYSTEM WHICH IS IN A SUPER-CRITICAL STOCK STATUS. AS SUCH, IT IS URGENTLY REQUIRED TO SUPPORT THIS WEAPONS SYSTEM. WE ARE FURTHER ADVISED THAT SUCH A CRITICAL SITUATION COULD STAND ABSOLUTELY NO FURTHER DELAY AND IMMEDIATE AWARD WAS AN ABSOLUTE NECESSITY. BASED ON THE DEMONSTRATED URGENCY OF THESE REQUIREMENTS, THE EXTENDED LEAD TIME TO MANUFACTURE THE ITEM AND THE STRINGENT CONTRACT SCHEDULE REQUIRED, IT WAS DETERMINED THAT AN IMMEDIATE AWARD MUST BE MADE. IN VIEW THEREOF, AND PURSUANT TO THE AUTHORITY IN ASPR 1-705.4 (C) (IV), THE CONTRACTING OFFICER DETERMINED NOT TO REFER THE NEGATIVE PREAWARD SURVEY OF YOUR COMPANY TO THE SBA FOR POSSIBLE ISSUANCE OF A CERTIFICATE OF COMPETENCY. THE REQUIRED CERTIFICATE OF URGENCY WAS ISSUED AND A COPY THEREOF WAS FURNISHED TO SBA, LOS ANGELES, CALIFORNIA, BY LETTER. WE FIND NO BASIS TO QUESTION THIS DETERMINATION OF URGENCY. CF. 46 COMP. GEN. 53.

REGARDING YOUR ALLEGATION OF AWARD AT UNREASONABLE COST, THE BID BY ARGUS AT A UNIT PRICE OF $1,821.11 WAS LESS THAN THE AVERAGE UNIT PRICE OF ALL BIDS. UNDER ASPR 2-407.1 AND 10 U.S.C. 2305 (C), AWARD IS REQUIRED TO BE MADE TO THAT RESPONSIBLE BIDDER WHOSE BID WILL BE MOST ADVANTAGEOUS TO THE GOVERNMENT, PRICE AND OTHER FACTORS CONSIDERED. FURTHER, THE BID OF ARGUS OTHERWISE FOR ACCEPTANCE WAS NOT OUT OF LINE WITH THE GOVERNMENT UNIT COST ESTIMATE OF $1,700, ALL FACTORS CONSIDERED. THEREFORE, A DETERMINATION OF PRICE UNREASONABLENESS WOULD NOT HAVE BEEN JUSTIFIED.

IN THE CIRCUMSTANCES, WE MAY NOT QUESTION THE ACTIONS TAKEN BY THE CONTRACTING OFFICER IN REJECTING YOUR LOW BID AND IN MAKING THE AWARD TO ARGUS. 38 COMP. GEN. 248.