B-163860, FEB. 6, 1969

B-163860, FEB. 6, 1969

TO MR. SECRETARY:

REFERENCE IS MADE TO A LETTER DATED NOVEMBER 14, 1968, FROM THE GENERAL COUNSEL, UNITED STATES ARMY MATERIEL COMMAND, FURNISHING US A SUPPLEMENTAL REPORT AND LEGAL OPINION IN RESPONSE TO OUR LETTER OF OCTOBER 10, 1968, CONCERNING THE PROTEST OF SPACE SYSTEMS LABORATORY, INC. (SPACE SYSTEMS), AGAINST THE AWARD OF A CONTRACT TO ANOTHER FIRM UNDER SOLICITATION NO. DAAA25-68-R-0294, ISSUED BY FRANKFORD ARSENAL, PHILADELPHIA, PENNSYLVANIA.

OUR LETTER OF OCTOBER 10, 1968, EXPRESSED THE BELIEF THAT THE CONTRACTING OFFICER'S DETERMINATION THAT SPACE SYSTEMS LACKED NECESSARY TENACITY AND PERSEVERANCE TO PERFORM THE WORK COVERED BY SOLICITATION NO. -0294 COULD ONLY BE CONSIDERED PROPER IF IT COULD BE SHOWN THAT SPACE SYSTEMS' DELINQUENT DELIVERIES UNDER CONTRACT NO. AMC-3957 (W) WERE IN FACT ATTRIBUTABLE TO DELAYS IN DELIVERIES OF COMPONENTS BY GERMAN SUPPLIERS.

WITH OUR LETTER OF OCTOBER 10, 1968, WE SUBMITTED CERTAIN DOCUMENTATION INDICATING THAT SPACE SYSTEMS' DELINQUENCIES UNDER CONTRACT NO. AMC- 3957/W) WERE ATTRIBUTABLE TO DESIGN DEFICIENCIES, AND WE THEREFORE REQUESTED THAT WE BE FURNISHED WITH ANY ADDITIONAL DOCUMENTATION OR EXPLANATION SUPPORTING THE CONTRACTING OFFICER'S DETERMINATION THAT SUCH DELINQUENCIES WERE ATTRIBUTABLE TO DELINQUENT DELIVERIES BY GERMAN SUPPLIERS, RATHER THAN TO DEFECTIVE SPECIFICATIONS. NEITHER THE ABOVE MENTIONED SUPPLEMENTAL REPORT NOR THE LEGAL OPINION SUPPLIED THE REQUESTED DOCUMENTATION OR EXPLANATION. CONVERSELY, IN PARAGRAPH 4 OF THE SUPPLEMENTAL REPORT THE CONTRACTING OFFICER TATED:

"ALTHOUGH REQUESTED BY GAO, WE ARE UNABLE TO IDENTIFY THE SPECIFIC GERMAN SUPPLIERS AND THE EXTENT AND DATES OF THEIR DELINQUENCIES AS IT PERTAINS TO CONTRACT AMC-3957.'

AS A RESULT OF ORAL DISCUSSION WITH REPRESENTATIVES OF THIS OFFICE, BY LETTER OF DECEMBER 2, 1968, THE OFFICE OF COUNSEL, FRANKFORD ARSENAL, FORWARDED COPIES OF FIVE TELEGRAMS DATED MARCH 10, MAY 2, 3, 4, AND 30, 1967, WHICH WERE REPRESENTED AS THE ONLY ADDITIONAL DOCUMENTATION WHICH WOULD SUPPORT THE CONTRACTING OFFICER'S CONCLUSION THAT THE DELINQUENCIES UNDER AMC-3957 (W) WERE ATTRIBUTABLE TO LATE DELIVERIES BY GERMAN SUPPLIERS. THE MARCH 10 TELEGRAM, FROM DCASD ORLANDO TO ARMY PROCUREMENT CENTER, FRANKFORT, GERMANY, IS IN THE NATURE OF A REQUEST FOR A PROPOSED DELIVERY SCHEDULE AND STATES:

"REQUEST BEST FIRM DELIVERY SCHEDULE ON PO 5282, CONTRACT DA-36-038 AMC- 3957 (W), SPACE SYSTEMS LAB, MELBOURNE, FLA WITH DR. F. A. WOHLER, OPTISCHE FABRIKEN, 35 KASSEL 2, WOLFGANGERSTRASSE 12 WEST GERMANY FOR M109 ELBOW TELESCOPE PN8588780. FORECAST SHOULD TAKE INTO CONSIDERATION THE NECESSARY REWORK FOR DIMENSIONAL PROBLEM ON DIAMETER OF THE OBJECTIVE CELLS FOR APPROX 3000 UNITS PARTIALLY ASSEMBLED. PARTS FURNISHED WOHLER BY SPACE SYSTEMS. SHOULD BE NO PROBLEM. PARTS FOR 1000 ASSEMBLIES FURNISHED (FINISHED). 90 PERCENT OF PARTS REQUIRED FOR ORDER WILL BE SHIPPED WITHIN A WEEK. PRIME CONTRACT IS DELINQUENT - YOUR REPLY IS URGENTLY REQUESTED.'

THE "NECESSARY REWORK FOR DIMENSIONAL PROBLEM ON DIAMETER OF THE OBJECTIVE CELLS" REFERRED TO IN THE ABOVE TELEGRAM IS THE SAME DIMENSIONAL OR TOLERANCE PROBLEM FOR WHICH SPACE SYSTEMS SOUGHT CHANGE BY REQUEST FOR TECHNICAL ACTION, FORM 1020-1, DATED MARCH 6, 1967. CONCERNING THIS PROBLEM SPACE SYSTEMS STATES THAT ITS GERMAN VENDORS SUPPLIED IT WITH A SUFFICIENT NUMBER OF OBJECTIVE CELL ASSEMBLIES, WHICH WERE WITHIN THE PERMISSIBLE DIMENSIONAL TO LERANCE AND THUS CONFORMED TO THE SPECIFICATIONS, AND IN ADEQUATE TIME TO MEET THE SCHEDULE REQUIREMENTS. HOWEVER, SINCE ONLY THOSE ASSEMBLIES WHICH WERE WITHIN THE LOWER RANGE OF THE PERMISSIBLE DIMENSIONAL TOLERANCE WOULD PRODUCE THE REQUIRED COLLIMATION ACCURACY, MANY OF THE ASSEMBLIES HAD TO BE DISASSEMBLED, AND SOME OF THOSE OBJECTIVE CELLS WHICH WERE IN THE ALLOWABLE TOLERANCE RANGE HAD TO BE REWORKED TO A CLOSER TOLERANCE, WHILE THE REMAINING CELLS WERE REJECTED. SPACE SYSTEMS CONTENDS THAT WERE IT NOT FOR THE DEFECTIVE SPECIFICATIONS THIS WOULD NOT HAVE BEEN NECESSARY.

THE STATEMENTS MADE IN THE MARCH 10 TELEGRAM ARE NOT ONLY CONSISTENT WITH SPACE SYSTEMS' CONTENTION, BUT FURTHER SUPPORT THE STATEMENT ON PAGE 2 OF OUR LETTER OF OCTOBER 10 THAT THE CONTRACTING OFFICER WAS AWARE OF SPACE SYSTEMS' CONTENTION THAT THE SPECIFICATIONS WERE DEFECTIVE, AND WERE PREVENTING TIMELY DELIVERIES, AS EARLY AS MARCH 1967.

THE REMAINING FOUR TELEGRAMS, WHICH ARE DATED IN MAY 1967 AND REFER TO LENS RETICLE ASSEMBLIES, LEND SOME SUPPORT TO A CONCLUSION THAT SHORTAGES OF RETICLES AND LENS DURING THE FEBRUARY-JUNE 1967 PERIOD COULD BE ATTRIBUTED TO GERMAN SUPPLIERS. HOWEVER, THEY REFER TO DELINQUENCIES WHICH OCCURRED SEVERAL MONTHS PRIOR TO THE DELINQUENCIES WHICH THE CONTRACTING OFFICER STATES WERE CAUSED BY GERMAN SUPPLIERS. WHILE SPACE SYSTEMS DOES NOT DENY THAT THERE WAS A SHORTAGE OF LENS RETICLE ASSEMBLIES DURING THE FEBRUARY-JUNE 1967 PERIOD (THE PERIOD IN WHICH THE DELINQUENCIES REFERRED TO BY THE TELEGRAMS OCCURRED), IT DENIES THAT DELINQUENCIES BY SPACE SYSTEMS IN THE DELIVERY OF COMPLETED ELBOW TELESCOPES DURING THIS PERIOD -- DURING WHICH NO DISPOSITION HAD BEEN MADE OF THE CONTRACTOR'S COMPLAINTS -- WERE CAUSED BY THIS SHORTAGE. CONVERSELY, SPACE SYSTEMS MAINTAINS THAT THE DELINQUENCIES IN THE DELIVERY OF ELBOW TELESCOPES AFTER JULY 1967 WERE DUE ENTIRELY TO DIFFICULTIES WITH THE OBJECTIVE CELL ASSEMBLY WHICH WERE CAUSED BY DEFECTIVE SPECIFICATIONS, AND THE DOCUMENTS TRANSMITTED WITH OUR LETTER OF OCTOBER 10, 1968, SUBSTANTIATE THIS CONCLUSION. FURTHER, SPACE SYSTEMS STATES THAT FROM JULY 1967, WHEN THE WAIVERS OF THE OBJECTIONABLE SPECIFICATIONS WERE ACCOMPLISHED, UNTIL COMPLETION OF THE CONTRACT, THERE WERE SUFFICIENT LENS RETICLE ASSEMBLIES ON HAND TO MEET THE SCHEDULE REQUIREMENTS. OUR EXAMINATION OF SPACE SYSTEMS' RECORDS OF ITS RECEIPT OF LENS RETICLE ASSEMBLIES, AS COMPARED TO THE REQUIRED AMENDED SCHEDULES OF DELIVERIES OF END ITEMS BY SPACE SYSTEMS UNDER AMC-3957/W), INDICATE THAT ITS RECORDS SUPPORT THIS CONTENTION.

IN VIEW OF THE FOREGOING, THE ONLY EVIDENCE OF RECORD WHICH WOULD APPEAR TO SUPPORT THE CONTRACTING OFFICER'S CONCLUSION THAT SPACE SYSTEMS' DELINQUENCIES UNDER AMC-3957/W) WERE ATTRIBUTABLE TO DELINQUENT DELIVERIES FROM GERMAN SUPPLIERS IS THE RECORD DATED DECEMBER 1, 1967, OF A TELEPHONE CONVERSATION BETWEEN MR. SHANKER OF FRANKFORD ARSENAL AND MR. BRADFORD OF SPACE SYSTEMS, WHICH WAS REFERRED TO AT PAGE 9 OF OUR DECISION OF AUGUST 14, 1968, AND IN WHICH THE LATTER ALLEGEDLY ATTRIBUTED THE DELINQUENCIES UNDER AMC-3957/W) TO LATE DELIVERIES OF LENS RETICLE ASSEMBLIES BY GERMAN SUPPLIERS. HOWEVER, SINCE MR. BRADFORD CATEGORICALLY DENIES MAKING THIS STATEMENT, AND THE STATEMENT WOULD APPEAR TO BE IN DIRECT CONFLICT WITH THE FACT THAT SPACE SYSTEMS' RECORDS OF DELIVERIES OF LENS RETICLE ASSEMBLIES INDICATES ITS INVENTORY WAS MORE THAN ADEQUATE TO MEET REQUIRED DELIVERIES OF END ITEMS FROM NOVEMBER 1967 THROUGH FEBRUARY 1968, WE MUST CONCLUDE THAT THE RECORD OF THE DECEMBER 1, 1967, PHONE CONVERSATION IS INADEQUATE TO JUSTIFY THE CONTRACTING OFFICER'S CONCLUSION.

ACCORDING TO ARMED SERVICES PROCUREMENT REGULATION (ASPR) 1-705.4 (C) (VI), SHOULD A CONTRACTING OFFICER MAKE A DETERMINATION THAT A SMALL BUSINESS BIDDER IS NONRESPONSIBLE BECAUSE OF LACK OF TENACITY OR PERSEVERANCE, THE DETERMINATION MUST BE SUPPORTED BY SUBSTANTIAL EVIDENCE DOCUMENTED IN THE CONTRACT FILE. WHETHER EVIDENCE ON WHICH A CONTRACTING OFFICER BASES A PROCUREMENT ACTION IS "SUBSTANTIAL" MUST BE DECIDED UPON THE BASIS OF ALL EVIDENCE OF RECORD. SEE 46 COMP. GEN. 441, 462. FOLLOWS THAT WHERE A CONTRACTING OFFICER'S DECISION IS BASED UPON INFORMATION OR RECORDS WHICH, WHEN REVIEWED IN THE LIGHT OF OTHER INFORMATION OR RECORDS, MUST BE CONSIDERED INCORRECT OR OTHERWISE ERRONEOUS, THE DECISION CANNOT BE CONSIDERED AS HAVING BEEN BASED UPON SUBSTANTIAL EVIDENCE. WHILE, AS INDICATED AT PAGE 9 OF OUR DECISION OF AUGUST 14, 1968, THE RECORD BEFORE THE CONTRACTING OFFICER CONTAINED INFORMATION INDICATING THAT DELINQUENT DELIVERIES BY GERMAN SUPPLIERS OF LENSES AND RETICLES WERE THE REASONS FOR DELINQUENT DELIVERIES OF ELBOW TELESCOPES BY SPACE SYSTEMS, SUCH INFORMATION NOW APPEARS CLEARLY TO HAVE BEEN INACCURATE OR OTHERWISE ERRONEOUS.

IN VIEW THEREOF, AND SINCE THE RECORD CLEARLY ESTABLISHES THAT THE CONTRACTING OFFICER WAS MADE AWARE AT VARIOUS TIMES FROM DECEMBER 1966 THROUGH MAY 1967 OF SPACE SYSTEMS' CONTENTION THAT ITS DELINQUENCIES WERE ATTRIBUTABLE TO FAULTY SPECIFICATIONS; THAT THE SPECIFICATIONS WERE AMENDED SO AS TO RELAX CERTAIN REQUIREMENTS IN RESPONSE TO SPACE SYSTEMS' CONTENTIONS; THAT SUCH AMENDED SPECIFICATIONS WERE THEREAFTER USED IN SOLICITING BIDS FROM OTHER SUPPLIERS; AND THAT THE VALIDITY OF SPACE SYSTEMS' CONTENTIONS HAVE SINCE BEEN BORNE OUT BY YOUR DEPARTMENT'S ALLOWANCE OF ITS CLAIM FOR REIMBURSEMENT OF COSTS EXPENDED IN PERFORMING UNDER THE FAULTY SPECIFICATIONS IN QUESTION, WE MUST CONCLUDE THAT THE CONTRACTING OFFICER'S DETERMINATION THAT SPACE SYSTEMS' DELINQUENCIES UNDER CONTRACT NO. AMC-3957/W) WERE ATTRIBUTABLE TO DELINQUENT DELIVERIES OF PARTS FROM GERMAN SUPPLIERS WAS NOT SUPPORTED BY THE FACTS AS ESTABLISHED BY THE ENTIRE RECORD.

AS WE POINTED OUT IN OUR LETTER OF OCTOBER 10, 1968, THE ONLY DELINQUENCY, OTHER THAN THOSE UNDER AMC-3957/W), ON THE PART OF SPACE SYSTEMS FOR APPROXIMATELY A YEAR PRECEDING THE CONTRACTING OFFICER'S DETERMINATION OF NONRESPONSIBILITY WAS A DELAY OF 11 DAYS IN DELIVERING 54 UNITS UNDER CONTRACT AMC-4114. SINCE THE CONTRACTOR'S PERFORMANCE HAD OTHERWISE BEEN CONSISTENTLY ON SCHEDULE FROM MARCH 1967 TO FEBRUARY 1968, IT IS OUR OPINION THAT THE LATE DELIVERY OF 54 UNITS IN NOVEMBER 1967 WILL NOT, BY ITSELF, SUPPORT THE CONTRACTING OFFICER'S CONCLUSION IN FEBRUARY 1968 THAT SPACE SYSTEMS HAD NOT CORRECTED THE LACK OF CONTROL OVER GERMAN SUPPLIERS WHICH RESULTED IN DELINQUENCIES A YEAR EARLIER UNDER CONTRACT AMC-2299/W), OR THAT SPACE SYSTEMS WAS NOT RESPONSIBLE BECAUSE OF LACK OF TENACITY AND PERSEVERANCE.

IN VIEW OF THE FOREGOING, THE QUESTION OF WHETHER SPACE SYSTEMS SHOULD HAVE BEEN AWARDED THE CONTRACT, AND THE FURTHER QUESTION OF THE VALIDITY OF THE CONTRACT AWARDED TO BAUSCH AND LOMB, WOULD BE DEPENDENT UPON WHETHER CONSIDERATION OF FACTORS OTHER THAN TENACITY AND PERSEVERANCE WOULD HAVE JUSTIFIED THE CONCLUSION THAT SPACE SYSTEMS WAS NOT A RESPONSIBLE BIDDER. SINCE IT WOULD APPEAR THAT THE ANSWER TO THIS QUESTION WOULD DEPEND UPON WHETHER SPACE SYSTEMS, AS OF THE TIME OF AWARD, HAD THE NECESSARY CAPACITY AND CREDIT TO PERFORM THE CONTRACT, AND IT DOES NOT APPEAR THAT THIS QUESTION WAS PREVIOUSLY DECIDED, STEPS SHOULD BE TAKEN TO NOW MAKE SUCH A DETERMINATION. IF SUCH DETERMINATION IS NEGATIVE, THE MATTER SHOULD BE SUBMITTED TO THE SMALL BUSINESS ADMINISTRATION FOR ACTION PURSUANT TO ASPR 1-705.4. SEE B-137471, OCTOBER 24, 1958. IF IT HAS ALREADY BEEN DETERMINED, OR IF A "NUNC PRO TUNC" DETERMINATION IS MADE BY YOUR DEPARTMENT OR BY SMALL BUSINESS ADMINISTRATION THAT SPACE SYSTEMS HAD THE NECESSARY CAPACITY AND CREDIT TO PERFORM THE CONTRACT, IT IS REQUESTED THAT YOU NOTIFY THIS OFFICE IN ORDER THAT FURTHER ACTION MAY BE TAKEN.

IN VIEW OF THE CONSIDERABLE CONGRESSIONAL INTEREST, AND THE TIME WHICH HAS ALREADY ELAPSED SINCE THE PROTEST WAS INITIALLY SUBMITTED, IT IS REQUESTED THAT THIS MATTER BE GIVEN IMMEDIATE CONSIDERATION AND YOUR REPLY EXPEDITED.