B-170218, SEP. 10, 1970

BID PROTEST - BIDDER RESPONSIBILITY DENIAL OF PROTEST OF QUADRATEC, INC., AGAINST AWARD OF CONTRACT TO METAL CRAFT CO., LOW BIDDER, FOR FIN ASSEMBLIES USED FOR THE FOUR POUND MAGNESIUM BOMBLET USED IN A.F. INCENDIARY CLUSTER PROGRAM. PROTESTANT WHO ALLEGES THAT THE LOW BIDDER WAS NOT RESPONSIVE, AND DID NOT HAVE THE ABILITY AND FINANCES TO DESIGN AND FABRICATE THE NECESSARY TOOLING WITHIN THE TIME NECESSARY TO MEET DELIVERY SCHEDULE OF CONTRACT IS DENIED PROTEST ON BASIS THAT PREAWARD SURVEY PROVED THE COMPANY TECHNICALLY CAPABLE AND FINANCIALLY ABLE TO PURCHASE ANY AND ALL TOOLING NECESSARY TO PERFORM IN A TIMELY MANNER, EVEN THOUGH ITS PROFIT WOULD BE MARGINAL.

TO QUADRATEC, INC.:

REFERENCE IS MADE TO YOUR TELEGRAM DATED JULY 2, 1970, AND YOUR LETTER DATED JULY 8, 1970, IN WHICH YOU PROTEST AN AWARD MADE TO METAL CRAFT CO., UNDER INVITATION FOR BIDS NO. DAAA15-70-B-0476, ISSUED BY EDGEWOOD ARSENAL.

THE IFB WAS ISSUED ON APRIL 17, 1970. IT REQUESTED BIDS ON 800,000 M15 FIN ASSEMBLIES FOR THE 4 POUND MAGNESIUM BOMBLET USED IN THE M36E1 CLUSTER. SEVENTY-TWO SOURCES WERE SOLICITED AND TWELVE BIDS WERE RECEIVED. METAL CRAFT COMPANY WAS DETERMINED TO BE THE LOWEST RESPONSIVE BIDDER. A PRE-AWARD SURVEY WAS THEN COMMENCED IN ORDER TO DETERMINE WHETHER THE LOW BIDDER WAS FINANCIALLY AND TECHNICALLY ABLE TO PERFORM THE CONTRACT. THIS ISSUE WAS RESOLVED IN THE AFFIRMATIVE, AND AN AWARD WAS MADE TO THAT COMPANY ON JUNE 10, 1970.

WHILE YOU ALLEGE THAT METAL CRAFT CO., DOES NOT HAVE THE ABILITY TO DESIGN AND FABRICATE NECESSARY TOOLING WITHIN THE TIME NECESSARY IN ORDER TO MEET THE DELIVERY SCHEDULE, THE DEFENSE CONTRACT ADMINISTRATION SERVICES REGION - DETROIT, MICHIGAN (DCAS) PERFORMED A COMPLETE PRE-AWARD SURVEY AND ITS INVESTIGATION CONCLUDED THAT METAL CRAFT CO. IS ABLE TO MAKE OR PURCHASE ANY AND ALL TOOLING NECESSARY TO PERFORM IN A TIMELY MANNER.

WITH REGARD TO YOUR ALLEGATION THAT METAL CRAFT CO., BY VIRTUE OF ITS LOW UNIT PRICE, WILL SUFFER FINANCIAL HARDSHIP WHICH IT "COULD NOT POSSIBLY OVERCOME, AND THEREBY CAUSE FURTHER DELIVERY DELINQUENCY AND/OR ULTIMATE FAILURE TO COMPLETE THE CONTRACT," THE RECORD INDICATES THAT THE SURVEY TEAM INVESTIGATED ALL ASPECTS OF METAL CRAFT'S FINANCIAL POSITION, INCLUDING METAL CRAFT'S PRESENT FINANCIAL POSITION, ITS PERFORMANCE ON OTHER GOVERNMENT CONTRACTS, ANY FINANCIAL PROBLEMS ENCOUNTERED, AND ULTIMATELY DETERMINED THAT METAL CRAFT CO., WAS WELL QUALIFIED FINANCIALLY TO PERFORM THIS CONTRACT.

IN VIEW OF THE FOREGOING, AND IN THE ABSENCE OF INFORMATION THAT METAL CRAFT HAS ACTUALLY FAILED TO MAKE TIMELY DELIVERIES, WE MUST ACCEPT THE PRE-AWARD CONCLUSIONS AS CORRECT. WITH REGARD TO YOUR ALLEGATIONS THAT IT IS A KNOWN FACT THAT THE PRICE BID BY METAL CRAFT CO. ALLOWS FOR NO PROFIT AMOUNT, AND THAT THERE IS A RISK FACTOR PRESENT TO METAL CRAFT CO., IN TERMS OF MONETARY LOSS, IT IS SUFFICIENT FOR OUR PURPOSES THAT THE BIDDER IS TECHNICALLY AND FINANCIALLY ABLE TO PERFORM ADEQUATELY. WITH SPECIFIC REGARD TO METAL CRAFT'S ABILITY TO MAKE OR NOT TO MAKE A PROFIT, IN B- 157505, NOVEMBER 3, 1965, THIS OFFICE STATED AS FOLLOWS IN CONNECTION WITH SIMILAR ALLEGATIONS:

"PRIOR TO AWARD THE BID PRICES OF *** , WERE VERIFIED WITH THAT FIRM. ITS MARGIN OF PROFIT ON THE CONTRACT IS IRRELEVANT TO AN AWARD FOR, WHILE ITS BID IS THE LOWEST, IT HAS NOT BEEN FOUND TO BE SO LOW AS TO PRECLUDE SUCCESSFUL PERFORMANCE." ALSO SEE B-157815, JANUARY 21, 1966. RECENTLY AS DECEMBER 8, 1969, IN B-167928, THAT POSITION WAS SUSTAINED. IN THAT CASE, THIS OFFICE HELD IN PART AS FOLLOWS:

"SINCE IT HAS BEEN HELD BY OUR OFFICE THAT THE CONTRACTING AGENCY HAS THE PRIMARY RESPONSIBILITY OF DETERMINING WHETHER A BID PRICE IS REASONABLE, WE FIND NO BASIS FOR LEGAL OBJECTION TO THE DETERMINATION OF PRICE REASONABLENESS IN THIS INSTANCE. B-166012, APRIL 3, 1969; 44 COMP. GEN. 27,32. EVEN ASSUMING THAT COYNE'S BID PRICES FOR SOME AREAS WERE BELOW COST, WE ARE AWARE OF NO LEGAL PRINCIPLE ON THE BASIS OF WHICH AN AWARD MAY BE PRECLUDED OR DISTURBED MERELY BECAUSE THE LOW BIDDER SUBMITTED AN UNPROFITABLE PRICE. B-158143, MARCH 4, 1966; B 154750, NOVEMBER 17, 1964."

WITH REGARD TO THAT PORTION OF YOUR LETTER WHICH STATES THAT THE GOVERNMENT'S AND THE CONTRACTOR'S BEST INTERESTS ARE SERVED ONLY WHEN THERE IS A SIGNIFICANT DEGREE OF ASSURANCE THAT THE CONTRACTOR CAN PERFORM WITHIN THE PRICE QUOTED AND DELIVER WITHIN THE REQUIREMENTS ESTABLISHED, WE ARE ADVISED THAT THE CONTRACTING OFFICER, RECOGNIZING THAT THIS PROCUREMENT FOR M15 FIN ASSEMBLIES IS A KEY CONTRACT SUPPORTING THE AIR FORCE M36E1 INCENDIARY CLUSTER PROGRAM, ASSIGNED A TEAM OF FUNCTIONAL SPECIALISTS FROM EDGEWOOD ARSENAL TO ASSIST DCAS IN PERFORMING THE PRE- AWARD SURVEY. THIS TEAM TOGETHER WITH DCAS CONDUCTED AN IN-DEPTH AND CRITICAL ASSESSMENT OF METAL CRAFT'S PLAN AND THOROUGHLY REVIEWED ALL THE AVAILABLE EVIDENCE TO DETERMINE WHETHER METAL CRAFT POSSESSED OR COULD ACQUIRE THE NECESSARY TOOLING, FACILITIES AND PERSONNEL TO PERFORM THIS CONTRACT SUCCESSFULLY. THE CONCLUSION OF THE EDGEWOOD ARSENAL TECHNICAL SPECIALISTS, WHO ARE COMPLETELY FAMILIAR WITH THE ITEM, ITS PRIOR PRODUCERS AND ITS PAST PRODUCTION PROBLEMS, IS THAT METAL CRAFT IS EMINENTLY QUALIFIED TECHNICALLY TO PERFORM THIS CONTRACT.

IN VIEW THEREOF, AND SINCE WE HAVE BEEN INFORMALLY ADVISED THAT METAL CRAFT'S PRE-PRODUCTION SAMPLE WAS APPROVED ON AUGUST 24, 1970, YOUR PROTEST MUST BE DENIED.