B-163293, MAY 9, 1968

B-163293, MAY 9, 1968

TO AJAX HARDWARE MANUFACTURING CORPORATION:

REFERENCE IS MADE TO YOUR LETTER DATED APRIL 10, 1968, AND TO PREVIOUS CORRESPONDENCE, CONCERNING YOUR PROTEST AGAINST THE POSSIBLE AWARD OF A CONTRACT TO ADVENTURE LINE MANUFACTURING COMPANY, INCORPORATED, PARSONS, KANSAS, PURSUANT TO INVITATION FOR BIDS NO. F33657-68-B-0145, ISSUED SEPTEMBER 5, 1967, BY THE AERONAUTICAL SYSTEMS DIVISION, WRIGHT-PATTERSON AIR FORCE BASE, OHIO, FOR THE PROCUREMENT OF METAL PARTS KITS FOR THE BLU- 26B FRAGMENTATION BOMB.

THE INVITATION CONSISTED OF TWO PARTS: PART I WAS APPLICABLE TO SMALL BUSINESS CONCERNS ONLY AND PART II TO BOTH SMALL AND LARGE BUSINESS CONCERNS. FOR THE SMALL BUSINESS SET-ASIDE PORTION OF THE PROPOSED PROCUREMENT, BIDDERS WERE REQUESTED UNDER THE PART I SCHEDULE TO BID ON QUANTITY INCREMENTS RANGING UP TO A TOTAL OF 12 MILLION UNITS. UNDER THE PART II SCHEDULE BIDS WERE REQUESTED ON QUANTITY INCREMENTS RANGING UP TO A TOTAL OF 36 MILLION UNITS. BIDDING ON OPTIONAL QUANTITIES WAS ALSO PERMITTED BUT THAT FEATURE OF THE INVITATION IS NOT INVOLVED IN YOUR PROTEST. FOR THE BASIC QUANTITY INCREMENTS OF BOTH BIDDING SCHEDULES A BIDDER COULD SUBMIT EITHER AN "A" BID OR A "B" BID. IF THE BIDDER HAD PREVIOUSLY FURNISHED AN ACCEPTED METAL PARTS BOMB KIT, HE DID NOT HAVE TO OBTAIN "FIRST ARTICLE APPROVAL" , AND COULD SUBMIT A "B" BID. AN "A" BID REQUIRED FIRST ARTICLE APPROVAL.

THE DELIVERY SCHEDULE OF THE INVITATION PROVIDED FOR DELIVERY OVER AN EIGHT-MONTH PERIOD IN EQUAL MONTHLY INSTALLMENTS COMMENCING IN APRIL, 1968. HOWEVER, THE INVITATION STATED THAT THE DELIVERY SCHEDULE WAS TO BE EXTENDED IF THE CONTRACT AWARD WAS NOT MADE ON OR BEFORE NOVEMBER 30, 1967,"BY THE NUMBER OF CALENDAR DAYS AFTER THE ABOVE DATE THAT THE CONTRACT IS IN FACT AWARDED" .

SEVENTEEN BIDS WERE RECEIVED AND OPENED, AS SCHEDULED, ON OCTOBER 25, 1967. ADVENTURE LINE MANUFACTURING COMPANY, INCORPORATED, A "B" BIDDER, QUOTED ON ALL OF THE QUANTITY INCREMENTS OF THE TWO PARTS OF THE INVITATION AND ITS QUOTED PRICES WERE CONSIDERABLY LOWER THAN THOSE QUOTED BY ANY OF THE OTHER BIDDERS. THERE EXISTED A DOUBT WHETHER THE COMPANY COULD MAKE TIMELY DELIVERIES IF IT RECEIVED A CONTRACT AWARD FOR A TOTAL OF 48 MILLION UNITS AND, WHEN THE CONTRACTING OFFICER WAS PLACED ON NOTICE OF THE PROTEST WHICH HAD BEEN FILED IN OUR OFFICE, HE HAD ALREADY DETERMINED THAT AN AWARD TO ADVENTURE LINE SHOULD NOT COVER MORE THAN 16 MILLION UNITS. AWARD ACTION WAS TAKEN ON OR ABOUT JANUARY 9, 1968, WITH RESPECT TO APPROXIMATELY 32 MILLION UNITS OF THE PART II SCHEDULE OF THE INVITATION AND CONSIDERATION WAS THEN BEING GIVEN TO THE QUESTION WHETHER AN ADDITIONAL AWARD FOR 16 MILLION UNITS SHOULD BE MADE TO ADVENTURE LINE, WHICH WOULD COVER 4 MILLION UNITS OF THE PART II SCHEDULE AND THE 12 MILLION UNITS OF THE PART I SCHEDULE. ADVENTURE LINE HAD AGREED TO A PRICE OF $0.34 PER KIT ON A TOTAL OF 16 MILLION UNITS, ALTHOUGH IT HAD QUOTED A PRICE OF $0.35 PER KIT ON THE FINAL QUANTITY INCREMENT OF THE PART I SCHEDULE. IN THAT CONNECTION, THE CONTRACTING OFFICER WAS OF THE OPINION THAT A PRICE OF $0.34 SHOULD BE APPLIED TO ALL 16 MILLION UNITS SINCE ADVENTURE LINE HAD QUOTED THAT PRICE ON THE FOURTH QUANTITY INCREMENT OF THE PART II SCHEDULE WHICH COVERED A QUANTITY RANGE OF FROM 15,000,001 UNITS TO 18 MILLION UNITS.

WE UNDERSTAND THAT, IF NO AWARD WAS TO BE MADE TO ADVENTURE LINE, YOUR COMPANY'S "B" BID ON CERTAIN OF THE QUANTITY INCREMENTS LISTED IN THE TWO SCHEDULES OF THE INVITATION MIGHT HAVE BEEN ELIGIBLE FOR FURTHER CONSIDERATION IN THE MAKING OF CONTRACT AWARDS PURSUANT TO THE INVITATION.

YOUR PROTEST CONCERNING THE BID OF ADVENTURE LINE WAS MADE BY TELEGRAM DATED JANUARY 11, 1968, AND SUPPLEMENTED BY LETTER DATED JANUARY 19, 1968. WE ALSO RECEIVED A LETTER DATED JANUARY 18, 1968, FROM YOUR ATTORNEY, MR. JACK PAUL, IN WHICH A QUESTION WAS RAISED AS TO THE RESPONSIVENESS OF THE ADVENTURE LINE BID AND REFERENCE WAS MADE TO THE FACT THAT, UNDER APPLICABLE PROVISIONS OF THE ARMED SERVICES PROCUREMENT REGULATION, AN AWARD TO ADVENTURE LINE NORMALLY WOULD NOT HAVE BEEN PROPER UNLESS THE CONTRACTING OFFICER HAD MADE AN AFFIRMATIVE DETERMINATION PRIOR TO AWARD THAT THE COMPANY MET THE STANDARDS FOR DETERMINING A PROSPECTIVE CONTRACTOR'S RESPONSIBILITY WHICH ARE SET FORTH IN ASPR 1-903.1 AND 1- 903.2. YOUR ATTORNEY REQUESTED AN OPPORTUNITY TO DISCUSS THE MERITS OF YOUR PROTEST WITH OUR REPRESENTATIVES WHEN WE HAD RECEIVED AN ADMINISTRATIVE REPORT FROM THE DEPARTMENT OF THE AIR FORCE, AND BEFORE ANY DECISION ON THE PROTEST WAS RENDERED BY OUR OFFICE. A REPORT WAS FURNISHED BY LETTER DATED MARCH 25, 1968, AND COPIES OF THE LETTER WERE FURNISHED TO YOU AND TO YOUR ATTORNEY WITH THE ADVICE THAT A CONFERENCE ON THE CASE COULD BE ARRANGED IF SO DESIRED.

IT WAS INDICATED IN YOUR LETTER OF JANUARY 19, 1968, THAT ADVENTURE LINE WAS THEN PERFORMING A CONTRACT FOR THE PRODUCTION OF 5 MILLION UNITS OF THE METAL PARTS BOMB KIT, THAT THE COMPANY HAD MADE DELIVERY OF ONLY 400,000 UNITS ALTHOUGH THE DELIVERY SCHEDULE OF THE CONTRACT PROVIDED FOR THE SHIPMENT OF 1 MILLION KITS PER MONTH BEGINNING IN NOVEMBER, 1967, AND THAT, IN YOUR OPINION, THE COMPANY DID NOT APPEAR TO BE CAPABLE OF MAKING DELIVERIES OF AN ADDITIONAL 16 MILLION KITS WITH A DELIVERY SCHEDULE OF 2 MILLION KITS PER MONTH BEGINNING IN APRIL, 1968. YOU STATED THAT YOU HAD INFORMATION THAT ADVENTURE LINE HAD BEEN GRANTED WAIVERS ON THE 400,000 UNITS, AND THAT ADVENTURE LINE WAS EMPLOYING A WORK FORCE OF 300 EMPLOYEES IN PRODUCTION UNDER ITS CURRENT CONTRACT. YOU SUGGESTED THAT IT WAS NOT POSSIBLE TO MAINTAIN A WORK FORCE OF THAT SIZE AND STILL PRODUCE THE ITEM INVOLVED WITHOUT SUFFERING A MAJOR FINANCIAL LOSS IN THE PERFORMANCE OF ADVENTURE LINE'S CURRENT CONTRACT.

PRIOR TO AWARD THE CONTRACTING OFFICER APPARENTLY DID NOT HAVE SUFFICIENT INFORMATION TO DETERMINE ADVENTURE LINE'S RESPONSIBILITY AND, THEREFORE, REQUESTED A PRE-AWARD SURVEY. THE SURVEY REPORT RECOMMENDED THAT AN AWARD BE MADE TO ADVENTURE LINE FOR 23 MILLION UNITS. HOWEVER, IN VIEW OF DIFFICULTIES WHICH WERE BEING EXPERIENCED BY THE COMPANY IN THE PERFORMANCE OF A CURRENT CONTRACT, THE PRE-AWARD SURVEY REVIEW BOARD DECIDED TO REDUCE THE RECOMMENDED TOTAL TO 16 MILLION UNITS. THE REPORT OF SURVEY INCLUDED INFORMATION FOR THE PURPOSE OF ENABLING THE CONTRACTING OFFICER TO DETERMINE, IN ACCORDANCE WITH THE STANDARDS OF ASPR 1-903.1 AND 1-903.2, WHETHER THE BIDDER HAD THE NECESSARY FINANCIAL RESOURCES OR THE ABILITY TO OBTAIN SUCH RESOURCES, WHETHER THE BIDDER WAS ABLE TO COMPLY WITH THE PROPOSED DELIVERY SCHEDULE IF AN AWARD WAS MADE FOR 23 MILLION UNITS OR ANY SMALLER QUANTITY, WHETHER THE BIDDER HAD A SATISFACTORY RECORD OF PERFORMANCE AND WHETHER IT HAD THE NECESSARY ORGANIZATION, EXPERIENCE, OPERATIONAL SKILLS, OR THE ABILITY TO OBTAIN THEM. SO FAR AS PRODUCTION CAPACITY IS CONCERNED, THE REPORT INDICATED THAT THE BIDDER PROPOSED TO PURCHASE AND INSTALL ADDITIONAL MACHINERY AND TO IMPROVE ITS QUALITY CONTROL AND INSPECTION SYSTEMS.

INVESTIGATION IMMEDIATELY SUBSEQUENT TO THE TIME THAT THE CONTRACTING OFFICER WAS PLACED ON NOTICE OF THE PROTEST WHICH HAD BEEN FILED IN OUR OFFICE DISCLOSED THAT ADVENTURE LINE HAD SHIPPED 881,100 UNITS UNDER ITS CURRENT CONTRACT AS OF JANUARY 25, 1968, AND THAT IT WAS EXPECTED THAT PRODUCTION WOULD CONTINUE AT THE RATE OF 1-1/2 MILLION UNITS PER MONTH WITH THE RESULT THAT DELIVERIES UNDER THE CONTRACT WOULD BE COMPLETED DURING THE MONTH OF APRIL, 1968. WAIVERS WERE GRANTED FOR A FAILURE TO MEET THE EXACT SPECIFICATIONS WERE CONSIDERED TO BE MINOR BUT ADVENTURE LINE REWORKED SOME OF THE ITEMS AT NO COST TO THE GOVERNMENT FOLLOWING A DETERMINATION THAT CORRECTIONS SHOULD BE MADE ON A PORTION ON WHICH WAIVERS PREVIOUSLY HAD BEEN GRANTED. AS OF JANUARY 25, 1968, ADVENTURE LINE HAD A WORK FORCE OF 366 EMPLOYEES BUT IT PLANNED TO REDUCE THE WORK FORCE DURING FEBRUARY, 1968. THE AIR FORCE PERSONNEL CONSIDERED THAT ADVENTURE LINE COULD IN FACT INCREASE ITS STAFF BY ANOTHER 10 PERCENT AND STILL BE IN A SIGNIFICANT PROFIT POSITION.

THE CONTRACTING OFFICER MADE AN AFFIRMATIVE DETERMINATION IN FEBRUARY, 1968, THAT ADVENTURE LINE QUALIFIED AS A RESPONSIBLE PROSPECTIVE CONTRACTOR FOR THE PRODUCTION AND DELIVERY OF 16 MILLION UNITS OF THE KITS AS DESCRIBED IN THE INVITATION FOR BIDS AND THE AMENDMENTS THERETO. HOWEVER, THE AIR FORCE MADE ADDITIONAL INQUIRIES AND, AS OF MARCH 18, 1968, IT WAS DETERMINED (1) THAT ADVENTURE LINE'S CURRENT CONTRACT WOULD BE COMPLETED NOT LATER THAN ABOUT MAY 15, 1968; AND (2) THAT EXISTING CAPABILITY AND PLANNED INCREASES IN CAPACITY OF THAT COMPANY WOULD PERMIT ADVENTURE LINE TO COMPLETE DELIVERIES OF AN ADDITIONAL QUANTITY OF 16 MILLION UNITS WELL IN ADVANCE OF THE 12 MONTHS REQUIRED BY THE DELIVERY SCHEDULE OF THE INVITATION FOR BIDS.

YOU WERE FURNISHED A COPY OF A LETTER DATED MARCH 25, 1968, FROM HEADQUARTERS, UNITED STATES AIR FORCE, STATING THAT ALL OF THE ADMINISTRATIVE REQUIREMENTS FOR THE DETERMINATION OF THE RESPONSIBILITY OF ADVENTURE LINE HAD BEEN MET, AND CONCURRING WITH THE CONTRACTING OFFICER'S AFFIRMATIVE DETERMINATION WITH RESPECT TO ADVENTURE LINE'S RESPONSIBILITY. IT WAS REPORTED THAT, ALTHOUGH ADVENTURE LINE HAD BEEN DELINQUENT IN MAKING DELIVERIES UNDER ITS CURRENT CONTRACT, ALL NEW FISCAL YEAR 1967 BLU-26B CONTRACTORS, INCLUDING YOUR COMPANY, FAILED TO MEET THE DELIVERY REQUIREMENTS OF THEIR CONTRACTS, AND THE DEPARTMENT BELIEVED THAT A DELINQUENCY IN DELIVERY ON A PRIOR OR CURRENT CONTRACT DOES NOT, IN ITSELF, CONSTITUTE NONRESPONSIBILITY. IT WAS FURTHER REPORTED THAT ADVENTURE LINE HAD PRODUCED AN ACCEPTABLE PRODUCT, THAT THERE DID NOT APPEAR TO BE ANY BASIS TO QUESTION THE RESPONSIVENESS OF ITS BID AND THAT ON MARCH 19, 1968, THE CONTRACTING OFFICER WAS AUTHORIZED TO PROCEED WITH THE AWARD TO ADVENTURE LINE IN VIEW OF THE URGENT NEED FOR THE SUPPLIES IN SUPPORT OF SOUTHEAST ASIA REQUIREMENTS. THAT AUTHORIZATION FOR AWARD PRIOR TO THE CONSIDERATION BY OUR OFFICE OF YOUR PROTEST WAS BASED ON ASPR 2-407.9 (B) (3), WHICH IS TO THE EFFECT THAT, WHERE A WRITTEN PROTEST AGAINST THE MAKING OF A CONTRACT AWARD IS RECEIVED, AWARD MAY BE MADE BEFORE FINAL ACTION IS TAKEN ON THE PROTEST IF THE ITEMS TO BE PROCURED ARE URGENTLY REQUIRED.

NO RESPONSE WAS MADE BY EITHER YOUR COMPANY OR YOUR ATTORNEY TO THE QUESTION WHETHER A CONFERENCE ON THE CASE WAS STILL DESIRED BEFORE A DECISION WAS RENDERED ON YOUR PROTEST. HOWEVER, IN YOUR LETTER OF APRIL 10, 1968, YOU STATE THAT YOU ARE SURPRISED TO HEAR THAT THE AIR FORCE AUTHORIZED THE CONTRACTING OFFICER TO PROCEED WITH AN AWARD TO ADVENTURE LINE ON THE BASIS THAT THERE IS AN URGENT NEED FOR THE 16 MILLION NETAL PARTS BOMB KITS. YOU ALLEGE THAT IN DECEMBER, 1967, AND AGAIN IN JANUARY, 1968, YOU OFFERED TO ASSIST IN MAKING UP FOR ANY SHORTAGE IN THE SUPPLY OF THE ITEMS; THAT YOU WERE "ONLY FRACTIONALLY BEHIND" IN YOUR REVISED DELIVERY SCHEDULE UNTIL DECEMBER, 1967, AND, STARTING IN DECEMBER, YOU WERE WELL AHEAD OF SCHEDULE; AND THAT YOU HAD BEEN INFORMED THAT ADVENTURE LINE WOULD BE ABLE TO COMPLETE ITS CURRENT CONTRACT IN ADVANCE OF THE FIRST REQUIRED DELIVERY UNDER THE PROPOSED NEW CONTRACT BECAUSE THAT DELIVERY SCHEDULE HAD BEEN ,MOVED BACK SOME FOUR MONTHS" . YOU SUGGEST THAT, IF THE DELIVERY REQUIREMENTS OF THE NEW CONTRACT WERE "MOVED BACK" , ANY SUCH REVISION IN DELIVERY REQUIREMENTS WOULD BE INCONSISTENT WITH THE AWARD AUTHORIZATION BASED UPON "URGENT NEED" .

IT DOES NOT APPEAR THAT ANY REJECTION OF YOUR OFFERS IN DECEMBER, 1967, AND JANUARY, 1968, TO MAKE UP FOR ANY SHORTAGE IN THE SUPPLY OF METAL PARTS BOMB KITS WOULD BE INCONSISTENT WITH A FINDING AS OF ABOUT MARCH 19, 1968, THAT THERE EXISTED AN URGENT NEED TO COMPLETE THE AWARDS COVERING APPROXIMATELY 48 MILLION KITS TO BE DELIVERED FOR THE MOST PART DURING THE BALANCE OF THIS YEAR.

WE HAVE NO INFORMATION AS TO THE EXTENT TO WHICH YOUR DELIVERY SCHEDULE WAS REVISED, OR AS TO THE REASONS FOR REVISING THE DELIVERY SCHEDULE OF YOUR CONTRACT. HOWEVER, IT IS APPARENT THAT THE AIR FORCE CORRECTLY CONSIDERED THAT A FAILURE TO MEET THE DELIVERY SCHEDULE UNDER A CURRENT CONTRACT WOULD NOT NECESSARILY REQUIRE A DETERMINATION OF NONRESPONSIBILITY ON THE PART OF ANY OF THE FISCAL YEAR 1967 CONTRACTORS.

IN REGARD TO THE QUESTION WHETHER THE DELIVERY SCHEDULE OF THE INVITATION FOR BIDS HAS BEEN OR WOULD BE "MOVED BACK SOME FOUR MONTHS" , UNDER A CONTRACT AWARD TO ADVENTURE LINE, THE DELIVERY REQUIREMENTS OF SUCH PROPOSED CONTRACT WOULD APPEAR TO SUBSTANTIALLY MEET THE DELIVERY REQUIREMENTS OF THE INVITATION. IF IT SHOULD BE ASSUMED THAT A NEW CONTRACT WAS AWARDED TO ADVENTURE LINE ON OR ABOUT MARCH 20, 1968, WHICH WOULD BE APPROXIMATELY FOUR MONTHS AFTER NOVEMBER 30, 1967, IT WOULD HAVE BEEN CONSISTENT WITH THE TERMS AND CONDITIONS OF THE INVITATION TO PROVIDE THAT DELIVERIES UNDER THE NEW CONTRACT SHOULD BEGIN DURING THE MONTH OF JULY, 1968, AND CONTINUE AT THE RATE OF 2 MILLION UNITS PER MONTH FOR AN EIGHT-MONTH PERIOD EXTENDING THROUGH THE MONTH OF JANUARY, 1969, AND A PART OF THE MONTH OF FEBRUARY, 1969. THE RECORD BEFORE US REASONABLY INDICATES THAT ADVENTURE LINE COULD COMMENCE DELIVERIES BEFORE JULY, 1968, AND COMPLETE DELIVERIES OF THE 16 MILLION UNITS WELL IN ADVANCE OF SUCH DELIVERY REQUIREMENTS. ANY SO-CALLED MOVING BACK OF THE DELIVERY SCHEDULE AS SET FORTH IN THE INVITATION WOULD BE ATTRIBUTABLE SOLELY TO DELAY ON THE PART OF THE GOVERNMENT IN MAKING THE CONTRACT AWARD AND NOT TO ANY ADVANTAGE PURPOSELY GIVEN TO ADVENTURE LINE IN THE CONSIDERATION OF ITS BID. WE BELIEVE THAT THE AIR FORCE MADE AN ADEQUATE INVESTIGATION IN THE MATTER AND THAT WE WOULD NOT BE WARRANTED IN TAKING THE POSITION THAT AN AWARD TO ADVENTURE LINE FOR THE PRODUCTION AND DELIVERY OF 16 MILLION METAL PARTS BOMB KITS WOULD NOT HAVE BEEN PROPER IN THE PARTICULAR CIRCUMSTANCES. A DETERMINATION OF RESPONSIBILITY FAVORABLE TO ADVENTURE LINE WAS MADE IN ACCORDANCE WITH APPLICABLE PROVISIONS OF THE ARMED SERVICES PROCUREMENT REGULATION AND SUCH DETERMINATION HAS NOT BEEN FOUND TO BE SUBJECT TO QUESTION ON THE GROUND THAT IT WAS EITHER ARBITRARY OR CAPRICIOUS OR NOT MADE IN GOOD FAITH. DECIDING A PROSPECTIVE CONTRACTOR'S PROBABLE ABILITY TO PERFORM A CONTRACT TO BE AWARDED INVOLVES A FORECAST WHICH MUST OF NECESSITY BE A MATTER OF JUDGMENT AND THE ADMINISTRATIVE DETERMINATION SHOULD BE ACCORDED FINALITY ABSENT A SHOWING OF BAD FAITH OR LACK OF A REASONABLE BASIS THEREFOR. SEE 43 COMP. GEN. 228, 230.

FURTHERMORE, ADVENTURE LINE IS A SMALL BUSINESS CONCERN AND THERE IS HERE INVOLVED A SERIOUS QUESTION WHETHER THE SMALL BUSINESS ADMINISTRATION WOULD HAVE REFUSED TO ISSUE A CERTIFICATE OF COMPETENCY IN FAVOR OF THAT COMPANY IF THE CONTRACTING OFFICER HAD ORIGINALLY PROPOSED TO REJECT ADVENTURE LINE'S BID ON THE GROUND THAT IT LACKED THE NECESSARY CAPACITY OR CREDIT FOR PERFORMANCE IN ACCORDANCE WITH THE REQUIREMENTS OF THE INVITATION FOR BIDS. WITH REFERENCE TO THE AUTHORITY OF THE SMALL BUSINESS ADMINISTRATION IN SUCH MATTERS, SEE ASPR 1-705.4.

ACCORDINGLY, ON THE BASIS OF ALL OF THE PRESENTLY AVAILABLE INFORMATION CONCERNING AN AWARD TO ADVENTURE LINE, YOUR PROTEST IS DENIED.