B-164069, JUN. 20, 1968

B-164069, JUN. 20, 1968

TO SYSTEMS DESIGN CORPORATION:

REFERENCE IS MADE TO YOUR TELEGRAMS OF APRIL 17 AND 26, 1968, AND YOUR LETTER DATED APRIL 27, 1968, WITH ENCLOSURES, PROTESTING AGAINST THE MAKING OF ANY AWARDS OTHER THAN TO YOUR FIRM UNDER REQUEST FOR PROPOSALS (RFP) NO. F34601-68-R-0352 UNTIL ADVANCE PAYMENT FINANCING HAS BEEN ARRANGED UNDER APPENDIX "E" OF THE ARMED SERVICES PROCUREMENT REGULATION (ASPR).

THE RFP, DATED AUGUST 25, 1967, SOLICITED PROPOSALS FOR THE ENGINEERING, FURNISHING AND INSTALLING OF ONE CLOSED-CIRCUIT TELEVISION SYSTEM THAT WAS URGENTLY REQUIRED. AT THE DATE OF OPENING, SEPTEMBER 25, 1967, EIGHT OFFERS WERE RECEIVED.

ALTHOUGH YOUR COMPANY, A SMALL BUSINESS CONCERN, SUBMITTED THE LOWEST OFFER AS TO PRICE, THE CONTRACTING OFFICER WAS UNABLE TO MAKE AN AFFIRMATIVE DETERMINATION AS TO YOUR RESPONSIBILITY AS REQUIRED BY ASPR 1- 904.1. THIS DETERMINATION WAS BASED ON A PREAWARD SURVEY CONDUCTED BY THE DEFENSE CONTRACT ADMINISTRATION SERVICES DIRECTORATE (DCASD), PASADENA, CALIFORNIA. THE PREAWARD SURVEY FOUND THAT YOUR FIRM WAS DEFICIENT IN THE FOLLOWING AREAS: PRODUCTION CAPABILITY, FINANCIAL CAPABILITY, PURCHASING AND SUBCONTRACTING, ACCOUNTING SYSTEM, QUALITY ASSURANCE CAPABILITY, PERFORMANCE RECORD AND ABILITY TO MEET THE REQUIRED DELIVERY SCHEDULE. SPECIFICALLY CONCERNING YOUR NAVY CONTRACT NO. N00019-67-C-0391 FOR A WEATHER TELEVISION SYSTEM, WE HAVE BEEN ADVISED THAT:

"THIS CONTRACT IS CURRENTLY DELINQUENT FOR DELIVERY OF ITEM 1, THE CONSOLES, ITEM 3, VIDEO MONITOR AND ITEM 4, VIDEO AMPLIFIERS. THE DELINQUENCY IS SHARED PRIMARILY BY BOTH THE GOVERNMENT AND THE CONTRACTOR. THE GOVERNMENT HAS FAILED TO SUPPLY ON H6.1 HANDBOOK WHICH INSTRUCTS THE CONTRACTOR ON PROPER METHOD AND FORMAT TO REQUEST EQUIPMENT NOMENCLATURE. HOWEVER, IF THE CONTRACTOR RECEIVED THE NOMENCLATURE TODAY, A PERIOD OF 90 TO 120 DAYS WOULD BE REQUIRED TO DELIVER THE EQUIPMENT. THE PACING ITEM, ITEM 3, VIDEO MONITORS, WERE DESIGNED AND A PURCHASE ORDER PLACED WITH THE VENDOR. THE UNITS, 45 EA, WERE READY FOR DELIVERY TO THE CONTRACT PRIOR TO AUG/67. HOWEVER, DUE TO LACK OF FUNDS, THE CONTRACTOR WAS UNABLE TO PAY FOR AND ACCEPT DELIVERY. THE CONTRACTOR WAS AUTHORIZED AND AGREED, BY LETTER, TO PURCHASE THE UNITS FOR PAYMENT PURPOSE AND STORE AT NO COST TO THE GOVERNMENT AT HIS FACILITY IN LAS VEGAS. THE CONTRACTOR STATED, AFTER HAVING SECOND THOUGHTS, HE ELECTED NOT TO HONOR THIS AGREEMENT DUE TO THE HIGH STORAGE COSTS WHICH MAY OCCUR IF THE NOMENCLATURE WAS NOT RECEIVED IN A TIMELY MANNER. IN THE INTERIM PERIOD THE VENDOR WOULD NOT CONTINUE TO STORE THE UNITS WITHOUT PAYMENT, RESULTING IN THE SALES OF ALL 45 MONITORS TO ANOTHER COMPANY. THEREFORE, EVEN THOUGH THE NOMENCLATURE HAS NOT BEEN SUPPLIED, IF IT WERE AVAILABLE TODAY, THE CONTRACTOR WOULD BE DELINQUENT DUE TO NOT PURCHASING THE EQUIPMENT FROM THE VENDOR.'

PURSUANT TO ASPR 1-705.4 (C), THE MATTER OF YOUR NONRESPONSIBILITY WAS REFERRED TO THE SMALL BUSINESS ADMINISTRATION (SBA) FOR CONSIDERATION AS TO WHETHER A CERTIFICATE OF COMPETENCY (COC) SHOULD BE ISSUED TO YOUR COMPANY UNDER ITS PROCEDURES CODIFIED AT 13 CFR 124.8-16. ON APRIL 16, 1968, THE SBA REGIONAL OFFICE IN SAN FRANCISCO, CALIFORNIA, ADVISED THE CONTRACTING OFFICER THAT IT HAD DECLINED TO ISSUE A COC IN YOUR BEHALF.

ON THE BASIS OF THE NEGATIVE PREAWARD SURVEY AND THE REFUSAL OF SBA TO ISSUE A COC, THE CONTRACTING OFFICER WAS PRECLUDED FROM MAKING ANY AWARD TO YOUR FIRM UNDER ASPR 1-902 AND 10 U.S.C. 2305 (C) REQUIRING AWARDS TO "RESPONSIBLE BIDDERS.' AWARD WAS THEREFORE MADE TO THE LOWEST RESPONSIBLE OFFEROR. IN THESE CIRCUMSTANCES, WE HAVE HELD THAT THE REFUSAL OF SBA TO ISSUE A COC TO A SMALL BUSINESS BIDDER MUST BE REGARDED AS PERSUASIVE WITH RESPECT TO COMPETENCY OR CREDIT OF THE BIDDER CONCERNED. 39 COMP. GEN. 705. WHEN THE ISSUANCE OF A COC IS DENIED BY SBA, THE CONTRACTING OFFICER'S DETERMINATION OF NONRESPONSIBILITY MUST BE REGARDED AS HAVING BEEN AFFIRMED, AND SUCH DENIAL IS NOT ORDINARILY SUBJECT TO QUESTION BY OUR OFFICE. NEITHER DO WE HAVE ANY AUTHORITY TO REQUIRE SBA TO ISSUE A COC IN A PARTICULAR CASE.

RESPECTING YOUR REQUEST FOR ADVANCE PAYMENTS AND THAT AWARD BE DELAYED UNTIL YOUR REQUEST FOR SUCH PAYMENTS IS APPROVED, IT APPEARS THAT UNDER ASPR, APPENDIX "E," SECTION 409, AN AFFIRMATIVE RECOMMENDATION FOR GRANTING ADVANCE PAYMENTS MAY BE MADE WHEN THE PROSPECTIVE CONTRACTOR IS OTHERWISE QUALIFIED AS A RESPONSIBLE CONTRACTOR. SINCE THE MATTER OF YOUR NONRESPONSIBILITY INVOLVED FACTORS IN ADDITION TO FINANCIAL CAPABILITY, FAVORABLE CONSIDERATION OF YOUR REQUEST FOR ADVANCE PAYMENTS WAS NOT POSSIBLE UNDER THE REGULATIONS.

IN OUR VIEW, THE DENIAL OF SBA TO ISSUE A COC RENDERED CONCLUSIVE THE ADMINISTRATIVE DETERMINATION OF NONRESPONSIBILITY. A DETERMINATION OF RESPONSIBILITY IS PRIMARILY THE FUNCTION OF THE CONTRACTING OFFICER AND IS NECESSARILY A MATTER OF JUDGMENT INVOLVING A CONSIDERABLE RANGE OF DISCRETION. WHERE SUCH DETERMINATION IS BASED UPON SUBSTANTIAL EVIDENCE, AS IN THIS INSTANCE, THERE IS NO VALID BASIS UPON WHICH WE MAY SUBSTITUTE OUR JUDGMENT FOR THAT OF THE CONTRACTING OFFICER. 39 COMP. GEN. 705; ZEPHYR AIRCRAFT CORPORATION V. UNITED STATES, 122 CT. CL. 523. UNDER THESE CIRCUMSTANCES, NO LEGAL BASIS EXISTS FOR DISTURBING THE ADMINISTRATIVE ACTIONS TAKEN UNDER THE RFP.