B-170069, APR 23, 1971

B-170069, APR 23, 1971

BID PROTEST - BIDDER RESPONSIBILITY - NEWLY ORGANIZED FIRM DENIAL OF PROTEST OF SOUTHERN AIRWAYS COMPANY, THIRD LOW BIDDER, PROTESTING AWARD OF CONTRACT TO NATIONAL METAL MANUFACTURING CO., INC., UNDER AN RFP ISSUED BY AMMUNITION PROCUREMENT AND SUPPLY AGENCY FOR A QUANTITY OF PROJECTILE CASSINGS. PROTESTANT CONTENDS NATIONAL LACKS FINANCIAL CAPABILITIES AND EXPERIENCE TO COMPLETE AS IT WAS NEWLY ORGANIZED FOR EXPRESS PURPOSE OR OBTAINING CONTRACT IN QUESTION; HOWEVER, THIS FACT ALONE DOES NOT REQUIRE REJECTION. PREAWARD FINANCIAL SURVEY AND TECHNICAL EVALUATION BOTH FOUND NATIONAL COMPETENT TO PERFORM AND ABSENT EVIDENCE OF LACK OF FAITH ON PART OF AGENCY INTERVENTION BY COMP. GEN. IS NOT WARRANTED.

TO MR. W. W. STOREY:

REFERENCE IS MADE TO YOUR LETTER OF OCTOBER 16, 1970, AND PRIOR CORRESPONDENCE, ON BEHALF OF SOUTHERN AIRWAYS COMPANY (SOUTHERN), PROTESTING AGAINST THE AWARD OF A CONTRACT TO NATIONAL METAL MANUFACTURING CO., INC. (NATIONAL), UNDER REQUEST FOR PROPOSALS (RFP) NO. DAAA09-70-R- 0160.

THE AMMUNITION PROCUREMENT & SUPPLY AGENCY ISSUED THE RFP ON FEBRUARY 5, 1970, TO PROCURE A QUANTITY OF 155MM PROJECTILE CASINGS. ON JUNE 16, 1970, AWARD WAS MADE TO NATIONAL. SOUTHERN, WHICH WAS THE THIRD LOWEST OFFEROR, PROTESTED. AFTER CONSIDERING THE ARGUMENTS WHICH YOU HAVE ASSERTED NOT ONLY IN YOUR CORRESPONDENCE BUT AT VARIOUS CONFERENCES WITH OUR STAFF, THE LATEST BEING MARCH 25, 1971, WE CONCLUDE THAT YOUR PROTEST PRESENTS NO LEGAL BASIS FOR CANCELING THE CONTRACT AWARDED TO NATIONAL.

SOUTHERN CONTENDS THAT NATIONAL, AS A COMPANY, LACKS THE EXPERIENCE AND FINANCIAL CAPABILITY TO SUCCESSFULLY COMPLETE THE CONTRACT AND IS, THEREFORE, NONRESPONSIBLE. HOWEVER, THE FACT THAT A FIRM IS NEWLY ORGANIZED OR ORGANIZED FOR THE EXPRESS PURPOSE OF OBTAINING A PARTICULAR CONTRACT, AS WAS THE CASE WITH NATIONAL, DOES NOT IN ITSELF REQUIRE THE REJECTION OF SUCH FIRM. 6 COMP. GEN. 557 (1927). MOREOVER, THE EXPERIENCE OF THE PRINCIPAL OFFICERS OF A FIRM MAY BE CONSIDERED WHEN EVALUATING THE RESPONSIBILITY OF A NEW FIRM. 36 COMP. GEN. 673 (1957); B- 160758, MAY 15, 1967.

IT IS ADMITTED BY SOUTHERN THAT SEVERAL OFFICERS OF NATIONAL WERE, AT ONE TIME, EMPLOYEES OF SOUTHERN RESPONSIBLE FOR THE OPERATION OF THE SAME FACILITY WHERE THE CONTRACT AWARDED TO NATIONAL IS PRESENTLY BEING PERFORMED. IN ADDITION, THE ADMINISTRATIVE REPORT INDICATES THAT THE CONTRACTING OFFICER BASED HIS DETERMINATION AS TO NATIONAL'S RESPONSIBILITY ON THE REPORT OF AN EIGHT-MAN TECHNICAL EVALUATION TEAM AND A FINANCIAL PREAWARD SURVEY BOTH OF WHICH RECOMMENDED COMPLETE AWARD TO NATIONAL. IN VIEW OF THESE CIRCUMSTANCES, WE CANNOT SAY THAT THE DETERMINATION OF RESPONSIBILITY WAS ARRIVED AT CAPRICIOUSLY, ARBITRARILY, OR IN BAD FAITH. IN THE ABSENCE OF SUCH A SHOWING, INTERVENTION BY OUR OFFICE IS NOT WARRANTED.

SOUTHERN ALSO CONTENDS THAT THE SOLE PURPOSE OF THE PERFORMANCE BOND REQUIREMENT OF AMENDMENT 7 WAS TO BOLSTER AN AWARD TO NATIONAL; THAT THE NUMEROUS AMENDMENTS TO THE RFP (EIGHT IN ALL) MAY HAVE ALLOWED "LEAKS" CONCERNING PRICING AND TECHNICAL INFORMATION; AND, FINALLY, THAT SINCE CERTAIN ENGINEERING ORDERS, INCORPORATED BY AMENDMENT, HAD NO IMPACT ON PRICE, THEIR INCLUSION IN THE RFP WAS OF QUESTIONABLE PROPRIETY.

THE CONTRACTING OFFICER DENIES THAT ANY "LEAK" OCCURRED. FURTHER, THE FACT THAT THERE WERE A NUMBER OF AMENDMENTS TO THE SOLICITATION IS NOT AN INDICATION THAT THERE WAS A "LEAK." THEREFORE, AND IN THE ABSENCE OF EVIDENCE TO THE CONTRARY, SOUTHERN'S CONTENTION IN THIS REGARD IS WITHOUT FACTUAL BASIS.

WITH RESPECT TO SOUTHERN'S CONTENTION REGARDING THE PERFORMANCE BOND REQUIREMENT, WE NOTE THAT THE REQUIREMENT FOR A PERFORMANCE BOND IS A MATTER WITHIN THE DISCRETION OF THE CONTRACTING OFFICER. SEE PARAGRAPH 10 -104.2 OF THE ARMED SERVICES PROCUREMENT REGULATION. FURTHER, THE REQUIREMENT APPLIED TO ALL OFFERORS AND NOT TO SOUTHERN ALONE. THEREFORE, WE PERCEIVE OF NO GROUNDS FOR OBJECTING TO THE ACTION OF THE CONTRACTING OFFICER IN IMPOSING THE BONDING REQUIREMENT.

AS A FINAL MATTER, WE FIND NO BASIS TO SUSTAIN SOUTHERN'S CONTENTION WITH RESPECT TO THE INCORPORATION OF THE ENGINEERING ORDERS. THE DRAFTING OF SPECIFICATIONS REFLECTING THE NEEDS OF THE GOVERNMENT IS PRIMARILY THE FUNCTION OF THE PURCHASING ACTIVITY AND UNLESS THE SPECIFICATIONS RESTRICT COMPETITION NO BASIS EXISTS FOR OUR INTERVENTION IN THE MATTER. SEE B- 169196, MAY 22, 1970. FURTHERMORE, THE FACT THAT A SPECIFICATION CHANGE MAY NOT HAVE AN IMPACT ON PRICE DOES NOT, IN OUR VIEW, NECESSARILY REQUIRE THE CONCLUSION THAT THE CHANGE WAS NONESSENTIAL OR ITS INCLUSION IN A SOLICITATION IMPROPER.

ACCORDINGLY, THE PROTEST IS DENIED.

TO MR. SECRETARY:

ENCLOSED IS A COPY OF OUR DECISION OF TODAY TO MR. W. W. STOREY, ATTORNEY FOR SOUTHERN AIRWAYS COMPANY (SOUTHERN), WHICH DENIES SOUTHERN'S PROTEST AGAINST THE AWARD OF A CONTRACT TO NATIONAL METAL MANUFACTURING CO., INC., UNDER REQUEST FOR PROPOSALS NO. DAAA09-70-R 0160. THIS MATTER WAS THE SUBJECT OF REPORT AMCGC-P DATED JULY 31, 1970, FROM THE ASSISTANT GENERAL COUNSEL, UNITED STATES ARMY MATERIEL COMMAND.

PARAGRAPH 10-104.2 OF THE ARMED SERVICES PROCUREMENT REGULATION STATES THAT THE JUSTIFICATION FOR REQUIRING A PERFORMANCE BOND MUST BE FULLY DOCUMENTED. ALTHOUGH A PERFORMANCE BOND WAS REQUIRED IN THIS PROCUREMENT AND SOUTHERN PROTESTED ITS USE, NO DOCUMENTATION JUSTIFYING THE BOND REQUIREMENT WAS PROVIDED TO OUR OFFICE. IN FUTURE SITUATIONS OF THIS NATURE, BOTH THE JUSTIFICATION AND SUPPORTING DOCUMENTATION SHOULD BE SUBMITTED AS PART OF THE PURCHASING ACTIVITY'S REPORT TO OUR OFFICE.

AS A SECOND MATTER, IT HAS COME TO OUR ATTENTION THAT THE LOUISIANA ARMY AMMUNITION PLANT IS OPERATED BY A CONTRACTOR WHO NOT ONLY OPERATES A PRODUCTION LINE FOR 155MM SHELL CASINGS BUT ALSO INSPECTS, AS PART OF ITS LOADING CONTRACT, CASINGS SUPPLIED BY ITS COMPETITORS. WHILE WE HAVE NO KNOWLEDGE OF ANY IRREGULARITIES WITH REGARD TO THIS SITUATION, THE POSSIBILITY DOES EXIST THAT THE INSPECTING CONTRACTOR COULD BENEFIT THROUGH THE ARBITRARY REJECTION OF CASINGS OF A COMPETITOR. WE BRING THIS MATTER TO YOUR ATTENTION FOR SUCH ACTION AS MAY BE APPROPRIATE TO PROVIDE SAFEGUARDS AGAINST IMPROPER REJECTION ACTIONS.