B-170248, AUG. 6, 1970

B-170248, AUG. 6, 1970

BIDDERS -- SMALL BUSINESS -- RESPONSIBILITY DETERMINATION A LOW SMALL BUSINESS BIDDER WHO WAS DETERMINED TO BE NONRESPONSIBLE FOR PRINTING U.S. CIRCUIT COURT OPINIONS BECAUSE IT LACKED THE PRINTING OR TECHNICAL EXPERIENCE REQUIRED MUST HAVE THE MATTER OF ITS CAPACITY TO PERFORM REFERRED TO SBA SINCE THAT AGENCY ALONE HAS THE "FINAL WORD" AS TO THE ELEMENTS OF A BIDDER'S CAPACITY AND CREDIT AND THE SBA STATUTE IS APPLICABLE TO THE ADMINISTRATIVE OFFICE OF THE COURTS. THE PROPOSED AWARD TO SCOFIELD'S QUALITY PRINTERS, SECOND LOW BIDDER, MAY NOT BE MADE UNTIL SBA DETERMINATION OF HAUSER'S RESPONSIBILITY.

TO MR. SWEENEY:

REFERENCE IS MADE TO YOUR LETTER DATED JULY 6, 1970, WITH ENCLOSURES, REQUESTING OUR OPINION AS TO WHETHER THE LOW BIDDER UNDER AN INVITATION FOR BIDS FOR THE PRINTING BY THE HOT LEAD PROCESS OF THE OPINIONS OF THE UNITED STATES COURT OF APPEALS, FIFTH CIRCUIT, DURING THE PERIOD JULY 1, 1970, THROUGH JUNE 30, 1971, MAY BE REJECTED AS NONRESPONSIBLE AND AWARD MADE TO THE SECOND LOW BIDDER, SCOFIELD'S QUALITY PRINTERS, INC.

THE THREE RECEIVED BIDS IN RESPONSE TO THE INVITATION WERE OPENED ON MAY 20, 1970. THE LOWEST RESPONSIVE BID WAS SUBMITTED BY J. G. HAUSER, INC., A SELF-CERTIFIED SMALL BUSINESS CONCERN. YOU STATE THAT PURSUANT TO THE REQUEST OF THE CHIEF JUDGE AND THE JUDICIAL COUNCIL OF THE FIFTH CIRCUIT, THE CLERK OF THE UNITED STATES COURT OF APPEALS, FIFTH CIRCUIT, CONDUCTED AN INVESTIGATION CONCERNING THE OVERALL ACCEPTABILITY OF HAUSER AS A RESPONSIBLE PROSPECTIVE CONTRACTOR AND THAT AS A RESULT OF THE INVESTIGATION, THE CLERK OF THE COURT RECOMMENDED TO THE CHIEF JUDGE OF THE COURT THAT NO AWARD BE MADE TO HAUSER AS THAT FIRM "IS NOT THAT KIND OF 'RESPONSIBLE' PRINTER, INSOFAR AS THIS COURT'S SPECIAL NEEDS ARE CONCERNED, WHICH WOULD ENTITLE HIM TO BE AWARDED THE CONTRACT." IN HIS REPORT TO THE CHIEF JUDGE, THE CLERK STATED THAT HIS INVESTIGATION DISCLOSED THAT THE FIRM OF J. G. HAUSER, INC., HAD BEEN IN EXISTENCE FOR ONLY 1 YEAR AND HAD "EMERGED FROM A BANKRUPT CORPORATION WITH ITS SAME LOCATION AND APPARENTLY THE SAME FACILITIES." THE CLERK ALSO STATES THAT HAUSER HAS NO PROVEN RECORD OF PAST PERFORMANCE IN HOT LEAD PRINTING WHICH IS REQUIRED FOR THE PRINTING OF THE CIRCUIT'S OPINIONS AND THAT IF AWARDED THE CONTRACT, HAUSER WOULD EXPERIENCE AN ABRUPT 50 PERCENT OR MORE INCREASE IN ITS GROSS ANNUAL SALES, EQUIPMENT, AND PRODUCTION REQUIREMENTS.

IT APPEARS THAT THE DETERMINATION BY THE CLERK OF THE COURT THAT HAUSER IS A NONRESPONSIBLE BIDDER IS PRIMARILY BASED ON THE FIRM'S LACK OF CAPACITY TO PERFORM THE PRINTING WORK IN ACCORDANCE WITH THE SPECIFICATIONS.

IT IS WELL SETTLED THAT THE DETERMINATION OF A BIDDER'S RESPONSIBILITY INVOLVES THE EXERCISE OF A CONSIDERABLE RANGE OF DISCRETION, AND OUR OFFICE HAS CONSISTENTLY ADHERED TO THE RULE THAT THE ADMINISTRATIVE DETERMINATION WILL NOT BE QUESTIONED UNLESS ARBITRARY, CAPRICIOUS, OR NOT BASED ON SUBSTANTIAL EVIDENCE. 38 COMP. GEN. 131 (1958); 37 ID. 430, 435 (1957). HOWEVER, WHERE, AS HERE, THE LOW BIDDER IS A SMALL BUSINESS CONCERN, THE CONTRACTING OFFICER'S DETERMINATION OF RESPONSIBILITY IS SUBJECT, SO FAR AS CONCERNS THE BIDDER'S CAPACITY AND CREDIT, TO THE CERTIFICATE OF COMPETENCY AUTHORITY OF THE SMALL BUSINESS ADMINISTRATION (SBA) UNDER SECTION 8(B)(7) OF THE SMALL BUSINESS ACT, PUBLIC LAW 85-536, 15 U.S.C. 637(B)(7). THAT PROVISION OF LAW READS AS FOLLOWS:

"IT SHALL ALSO BE THE DUTY OF THE ADMINISTRATION AND IT IS EMPOWERED, WHENEVER IT DETERMINES SUCH ACTION IS NECESSARY--

"(7) TO CERTIFY TO GOVERNMENT PROCUREMENT OFFICERS, AND OFFICERS ENGAGED IN THE SALE AND DISPOSAL OF FEDERAL PROPERTY, WITH RESPECT TO THE COMPETENCY, AS TO CAPACITY AND CREDIT, OF ANY SMALL-BUSINESS CONCERN OR GROUP OF SUCH CONCERNS TO PERFORM A SPECIFIC GOVERNMENT CONTRACT. IN ANY CASE IN WHICH A SMALL-BUSINESS CONCERN OR GROUP OF SUCH CONCERNS HAS BEEN CERTIFIED BY OR UNDER THE AUTHORITY OF THE ADMINISTRATION TO BE A COMPETENT GOVERNMENT CONTRACTOR WITH RESPECT TO CAPACITY AND CREDIT AS TO A SPECIFIC GOVERNMENT CONTRACT, THE OFFICERS OF THE GOVERNMENT HAVING PROCUREMENT OR PROPERTY DISPOSAL POWERS ARE DIRECTED TO ACCEPT SUCH CERTIFICATION AS CONCLUSIVE, AND ARE AUTHORIZED TO LET SUCH GOVERNMENT CONTRACT TO SUCH CONCERN OR GROUP OF CONCERNS WITHOUT REQUIRING IT TO MEET ANY OTHER REQUIREMENT WITH RESPECT TO CAPACITY AND CREDIT;"

THE TERM "CAPACITY AND CREDIT," AS USED IN THE ABOVE-QUOTED PROVISION, HAS BEEN DEFINED AS THE OVERALL ABILITY OF THE BIDDER TO MEET QUALITY, QUANTITY, AND TIME REQUIREMENTS OF THE PROCUREMENT, INCLUDING ABILITY TO PERFORM, ORGANIZATION, TECHNICAL EXPERIENCE, KNOWLEDGE, SKILLS, "KNOW- HOW," TECHNICAL EQUIPMENT, AND FACILITIES. 38 COMP. GEN. 864 (1959). SHORT, THE CERTIFICATE IS CONCLUSIVE AS TO WHETHER THE BIDDER "CAN" PERFORM. WE HAVE HELD THAT THE LANGUAGE OF THE SMALL BUSINESS ACT IS EXTREMELY BROAD IN THAT IT ENCOMPASSES ALL GOVERNMENT PROCUREMENT, INCLUDING "PRINTING." 43 COMP. GEN. 497 (1963).

THE QUESTION BEFORE US IS NOT WHETHER THE ADVERSE DETERMINATION OF THE CLERK OF THE COURT AS TO THE RESPONSIBILITY OF HAUSER WAS JUSTIFIED. THE CONGRESS HAS SPECIFICALLY LIMITED THE RIGHTS OF PROCURING AGENCIES TO DETERMINE THE RESPONSIBILITY OF SMALL BUSINESS BIDDERS BY GIVING SBA THE FINAL WORD AS TO THOSE ELEMENTS OF RESPONSIBILITY INCLUDED IN THE TERM "CAPACITY AND CREDIT." IT IS CLEAR FROM THE RECORD BEFORE US THAT HAUSER WAS DETERMINED TO BE NONRESPONSIBLE BECAUSE IT LACKED THE PRINTING OR TECHNICAL EXPERIENCE THAT THE SPECIFICATIONS DEMANDED. THE FINAL DETERMINATION WHETHER HAUSER HAS THE TECHNICAL EXPERIENCE OR "CAPACITY" TO PERFORM THE ADVERTISED CONTRACT MUST BE MADE BY SBA UNDER ITS STATUTORY RESPONSIBILITY, QUOTED ABOVE. 43 COMP. GEN. 298 (1963). WE HAVE NOT FOUND ANY BASIS FOR CONCLUDING THAT THE ADMINISTRATIVE OFFICE OF THE UNITED STATES COURTS IS EXCEPTED FROM THE STATUTE ABOVE QUOTED. IN FACT, INFORMAL ADVICE FROM YOUR OFFICE IS TO THE EFFECT THAT THE SBA STATUTE IS BY ITS PLAIN TERMS APPLICABLE TO PROCUREMENTS BY YOUR OFFICE. WE AGREE THAT THE STATUTE IS APPLICABLE. IN VIEW THEREOF, AND SINCE THE MATTER OF HAUSER'S NONRESPONSIBILITY MUST BE REFERRED TO SBA FOR ITS CONSIDERATION UNDER 15 U.S.C. 637(B)(7), YOU ARE ADVISED THAT NO PRESENT AUTHORITY EXISTS FOR AWARD OF A CONTRACT TO SCOFIELD'S QUALITY PRINTERS, INC., UNTIL SBA DETERMINES WHETHER A CERTIFICATE OF COMPETENCY MAY BE ISSUED TO HAUSER. GUIDE TO THE PROCEDURES INVOLVED MAY BE FOUND IN SECTION 1-1.708 OF THE FEDERAL PROCUREMENT REGULATIONS. SEE 40 COMP. GEN. 106 (1960).

THE ORIGINAL BIDS OF J. G. HAUSER, INC., SCOFIELD'S QUALITY PRINTERS, INC., AND SOUTHERN PRINTING ..END :