B-170909, MAR 17, 1971

B-170909, MAR 17, 1971

BID PROTEST - BIDDER RESPONSIBILITY DECISION DENYING PROTEST BY SECOND LOW BIDDER AGAINST CONTRACT AWARD TO NATIONAL SERVICE CORPORATION, THIRD LOW BIDDER, FOR OPERATION AND MAINTENANCE OF AN AIR FORCE PUMPING STATION UNDER IFB ISSUED BY THE DEFENSE FUEL SUPPLY CENTER, CAMERON STATION, ALEXANDRIA, VA. SINCE LOW BIDDER WITHDREW ITS BID, A PREAWARD SURVEY TEAM EVALUATED PROTESTANT, SECOND LOW BIDDER, AND RECOMMENDED NO AWARD BECAUSE: UNSATISFACTORY LABOR RESOURCES; UNSATISFACTORY PERFORMANCE RECORD; INABILITY TO MEET REQUIRED SCHEDULE. ASPR 1-903.4 PROVIDES THAT ACCEPTABLE EVIDENCE OF A PROSPECTIVE CONTRACTOR'S ABILITY TO OBTAIN PERSONNEL SHALL NORMALLY BE A COMMITMENT OR EXPLICIT ARRANGEMENT WHICH WILL BE IN EXISTENCE AT THE TIME OF AWARD. BECAUSE THE RECORD IS DEVOID OF ANY EVIDENCE, OTHER THAN ORAL MANIFESTATIONS OF SUCH INTENT AND PROTESTANT'S OFFER OF 17 EMPLOYEES WAS SOME 15 PEOPLE SHORT OF THE GOVERNMENT'S ESTIMATE OF THE NUMBER OF PEOPLE REQUIRED TO SUCCESSFULLY PERFORM THE CONTRACT AND SINCE DETERMINATION OF A CONTRACTOR'S QUALIFICATIONS ARE PRIMARILY THE FUNCTION OF THE CONTRACTING AGENCY, THE COMP. GEN. FINDS NO ADEQUATE LEGAL BASIS FOR OBJECTING TO THE REJECTION OF THE BID AND THE PROTEST IS DENIED.

TO METTEN, HEALY & COLLINS:

FURTHER REFERENCE IS MADE TO A TELEGRAM DATED SEPTEMBER 29, 1970, FROM YOUR CLIENT, CONTINENTAL SERVICE COMPANY (CONTINENTAL), AND TO YOUR LETTERS OF OCTOBER 9 AND DECEMBER 8, 1970, PROTESTING AGAINST THE AWARD OF A CONTRACT TO NATIONAL SERVICE CORPORATION (NATIONAL) UNDER IFB NO. DSA600 -71-B-0031, ISSUED ON JULY 31, 1970, BY THE DEFENSE FUEL SUPPLY CENTER, CAMERON STATION, ALEXANDRIA, VIRGINIA.

THE INSTANT INVITATION SOLICITED BIDS FOR THE OPERATION AND MAINTENANCE OF THE SEARSPORT AND LIMESTONE AIR FORCE PETROLEUM OIL LUBRICANT RETAIL DISTRIBUTION STATIONS FOR THE PERIOD OCTOBER 3, 1970, TO OCTOBER 3, 1971. ORIGINALLY, THE SOLICITATION REQUIRED A 24 HOUR, 5 DAY (MONDAY THROUGH FRIDAY) PUMPING OPERATION. HOWEVER, BY AMENDMENT 0001, ISSUED ON AUGUST 19, 1970, 8 HOUR PUMPING WAS ADDED FOR BOTH SATURDAYS AND SUNDAYS AND THE FIRE PROTECTION AND INTERNAL SECURITY REQUIREMENTS WERE REVISED AT LIMESTONE, FROM 2 MEN 8 HOURS PER DAY, 7 DAYS PER WEEK, TO 2 MEN 24 HOURS A DAY, 7 DAYS PER WEEK.

SIX BIDS WERE RECEIVED BY SEPTEMBER 2, 1970, THE DATE SET FOR OPENING, WHICH WHEN FULLY EVALUATED, WERE AS FOLLOWS:

A. MONTGOMERY MAINTENANCE SERVICE $170,052.00

B. CONTINENTAL SERVICE COMPANY $174,833.00

C. NATIONAL SERVICE CORP. 208,699.40

D. PLANT ENGINEERING INC. 225,160.97

E. PROCESS OPERATORS INC. 227,616.00

F. MAINE METAL PROCESSORS INC. 248,202.27

IT IS REPORTED THAT THE GOVERNMENT ESTIMATED THE COST OF THIS PROCUREMENT AT SLIGHTLY ABOVE $200,000. SUSPECTING THAT THE LOW BIDDER, MONTGOMERY MAINTENANCE SERVICE (MONTGOMERY), MAY HAVE MADE A MISTAKE IN ITS BID, THE COMPANY WAS REQUESTED ON SEPTEMBER 3, 1970, TO EITHER VERIFY ITS BID PRICE OR SUBMIT EVIDENCE OF ERROR. BY LETTER OF SEPTEMBER 10, 1970, MONTGOMERY ALLEGED MISTAKE AND REQUESTED PERMISSION TO WITHDRAW ITS BID, WHICH REQUEST WAS GRANTED ON SEPTEMBER 18, 1970, BY THE PROCURING ACTIVITY.

SINCE CONTINENTAL'S BID WAS ALSO BELOW THE ESTIMATED COST TO RUN THE TERMINAL FACILITY, IT WAS REQUESTED ON SEPTEMBER 10, 1970, TO VERIFY ITS BID OR SUBMIT EVIDENCE OF ERROR. BY TELEGRAM OF SEPTEMBER 14, 1970, CONTINENTAL CONFIRMED ITS PRICE. THE RECORD ESTABLISHES THAT ON SEPTEMBER 15, 1970, THE PROCURING ACTIVITY REQUESTED THE DEFENSE CONTRACT ADMINISTRATIVE SERVICES REGION (DCASR), BALTIMORE, TO CONDUCT A PREAWARD SURVEY OF CONTINENTAL. ON THE BASIS OF THE REPLIES TO QUESTIONS ASKED AT A CONFERENCE OF MR. HENRY S. MAUK, PRESIDENT OF CONTINENTAL, BY THE REPRESENTATIVES OF DCASR, THE SURVEY TEAM CONCLUDED IN ITS REPORT OF SEPTEMBER 23, 1970, TO THE CONTRACTING OFFICER THAT NO AWARD COULD BE RECOMMENDED BECAUSE OF THE FOLLOWING REASONS:

(1) UNSATISFACTORY LABOR RESOURCES

(2) UNSATISFACTORY PERFORMANCE RECORD

(3) INABILITY TO MEET REQUIRED SCHEDULE CONCLUSIONS NUMBERED (1) AND (3) ARE SUPPORTED BY A MEMORANDUM OF THE INTERVIEW WHICH IS QUOTED BELOW IN PERTINENT PART:

"DURING THE SURVEY, THE INDUSTRIAL SPECIALIST ASKED MR. MAUK OF CONTINENTAL SERVICE COMPANY, IF HE HAD AN ORGANIZATION PLAN FOR THE MANNING OF THE INSTALLATION. MR. MAUK REPLIED THAT HE INTENDED TO MAN THE SITE ADEQUATELY TO MEET HIS OBLIGATIONS AND SINCE A PERFORMANCE BOND WAS REQUIRED, THE GOVERNMENT WAS TAKING NO RISK. THE INDUSTRIAL SPECIALIST PURSUED THE SUBJECT FURTHER BY STATING THAT IT WAS NECESSARY FOR THE CONTRACTOR TO SUPPLY HIS MANNING INTENTIONS SO AS TO SATISFY THE REQUIREMENTS OF THE SURVEY AND A VERBAL MANNING INTENT WOULD BE ACCEPTABLE IF NO WRITTEN PLAN WAS AVAILABLE. THE CONTRACTOR THEN PROCEEDED TO VERBALLY NAME 9 PERSONNEL STATIONS FOR ITEM 1 OF IFB AND 8 STATIONS THAT HE PLANNED TO MAN FOR ITEM 2. THE INDUSTRIAL SPECIALIST ASKED MR. MAUK IF HE REALIZED THAT THE IFB HAD BEEN AMENDED TO INCREASE THE OPERATING HOURS OF THE SITE BEYOND THE PRESENT CONTRACT REQUIREMENTS AND HE STATED THAT HE DID BUT HE INTENDED TO MAN THE INSTALLATION ONE SHIFT FOR 40 HOURS A WEEK AND THAT HE DID NOT INTEND TO MAN 24 HOURS A DAY (PER PARAGRAPH 3 OF MOD 0001). INSTEAD, IF PUMPING WAS REQUIRED DURING HOURS OTHER THAN THE NORMAL 40 HOUR SHIFT, HE WOULD CALL IN THE NECESSARY OPERATORS.

"MR. MAUK WAS THEN ASKED IF HE HAD ANY VERIFICATION OF QUALIFICATIONS OF SUPERVISORY PERSONNEL. HE REPLIED THAT HE INTENDED TO HIRE INCUMBENT'S SUPERVISORS, MR. AMES AND MR. KNIGHT, BUT HE COULD NOT VERIFY AVAILABILITY OF EITHER.

"SINCE THE MANNING INTENT OF CONTINENTAL SERVICE COMPANY INDICATED 40% REDUCTION OF THE PERSONNEL PRESENTLY MANNING THIS SITE AND THE IFB MOD 0001 SPECIFIED AN INCREASE OF OPERATING HOURS WOULD BE REQUIRED, THE CONTRACTOR'S PLAN FOR MANNING THIS SITE WAS INADEQUATE.

"THE INDUSTRIAL SPECIALIST THEN ASKED MR. MAUK IF HE HAD ANY ADDITIONAL INFORMATION WHICH HE COULD PROVIDE TO VERIFY HIS ABILITY AND HIS INTENT OF MEETING THE PERFORMANCE REQUIREMENTS, AND HE STATED NEGATIVE."

BASED UPON THE NEGATIVE PREAWARD SURVEY RESULTS AND THE FACT THAT THE PROTESTED INVITATION REQUIRED 64 MORE HOURS PER WEEK THAN THE CONTRACT WHICH WAS TO EXPIRE ON OCTOBER 3, 1970, UNDER WHICH THE INCUMBENT CONTRACTOR WAS UTILIZING 28 FULL TIME AND 5 PART TIME EMPLOYEES, THE BUYER CONCLUDED THAT IT WOULD BE VIRTUALLY IMPOSSIBLE FOR CONTINENTAL, OFFERING 17 MEN, TO PROVIDE THE MANPOWER NECESSARY TO PERFORM ALL OF THE REQUIRED SERVICES. CONSEQUENTLY, ON SEPTEMBER 24, 1970, CONTINENTAL WAS DETERMINED TO BE NONRESPONSIBLE AND ON SEPTEMBER 28, 1970, AWARD WAS MADE TO NATIONAL.

PRIOR TO THE DETERMINATION OF NONRESPONSIBILITY, IT IS REPORTED THAT THE SMALL BUSINESS REPRESENTATIVE FOR THE PROCURING ACTIVITY INQUIRED OF THE REGIONAL OFFICE OF THE SMALL BUSINESS ADMINISTRATION (SBA) AS TO THE TIME REQUIRED FOR THAT OFFICE TO RULE UPON THE COMPETENCY OF CONTINENTAL. THE REGIONAL OFFICE OF SBA REPLIED THAT A CERTIFICATE OF COMPETENCY COULD NOT POSSIBLY BE ISSUED PRIOR TO OCTOBER 15, 1970. SINCE AWARD HAD TO BE MADE PRIOR TO THE EXPIRATION OF THE INCUMBENT CONTRACT (OCTOBER 3, 1970), IF OPERATION OF THE FUEL SUPPLY SYSTEM WAS TO CONTINUE UNINTERRUPTED, IT WAS DETERMINED ON SEPTEMBER 25, 1970, PURSUANT TO SECTION 1-705.4(C)(IV) OF THE ARMED SERVICES PROCUREMENT REGULATION (ASPR), THAT REFERRAL WOULD NOT BE MADE TO SBA BECAUSE OF THE URGENCY INVOLVED.

YOUR PROTEST PRESENTS ESSENTIALLY TWO CONTENTIONS: FIRST, THAT THE CONTRACTING OFFICER'S DETERMINATION OF CONTINENTAL'S NONRESPONSIBILITY WAS ARBITRARY AND CAPRICIOUS SINCE EVERY FAVORABLE ASPECT OF ITS ABILITY AND RESPONSIBILITY WAS IGNORED BY A NON-QUALIFIED SURVEY TEAM WHICH FAILED TO REQUEST INFORMATION CONCERNING CONTINENTAL'S ABILITY TO OBTAIN NECESSARY PERSONNEL; AND SECOND, THE CONTRACTING OFFICER IGNORED THE PROVISIONS OF ASPR 1-705.4(C)(IV) BY HAVING THE TWO LOW BIDDERS SURVEYED SERIALLY RATHER THAN SIMULTANEOUSLY.

IN SUPPORT OF THE FIRST CONTENTION, YOU ARGUE THAT CONTINENTAL COMPLIED WITH THE GENERAL REQUIREMENTS OF MINIMUM STANDARDS OF RESPONSIBILITY AS IS REQUIRED BY ASPR 1-902, AND THE CONTRACTING OFFICER EXACTED AN UNREASONABLE, UNATTAINABLE STANDARD. WE AGREE WITH YOUR OBSERVATION THAT MINIMUM STANDARDS OF RESPONSIBILITY DO NOT REQUIRE THAT PERSONNEL BE HIRED WHEN THE BID IS SUBMITTED OR ON THE DATE OF AWARD. HOWEVER, ASPR 1-903.4 PROVIDES THAT ACCEPTABLE EVIDENCE OF A PROSPECTIVE CONTRACTOR'S ABILITY TO OBTAIN PERSONNEL SHALL NORMALLY BE A COMMITMENT OR EXPLICIT ARRANGEMENT WHICH WILL BE IN EXISTENCE AT THE TIME THE CONTRACT IS TO BE AWARDED. THE RECORD IS DEVOID OF ANY EVIDENCE, OTHER THAN HIS ORAL MANIFESTATIONS OF SUCH INTENT, THAT YOUR CLIENT HAD A COMMITMENT OR EXPLICIT ARRANGEMENT TO HIRE THE INCUMBENT CONTRACTOR'S SUPERVISORS. IN ANY EVENT, CONTINENTAL'S OFFER OF 17 EMPLOYEES WAS SOME 15 PEOPLE SHORT OF THE GOVERNMENT'S ESTIMATE OF THE NUMBER OF PEOPLE REQUIRED TO SUCCESSFULLY PERFORM THE CONTRACT.

WHILE THE APPLICABLE PROCUREMENT REGULATIONS LIST VARIOUS SOURCES FROM WHICH A CONTRACTING OFFICER MAY OBTAIN INFORMATION ON WHICH TO DETERMINE THE RESPONSIBILITY OF A BIDDER, THE REGULATIONS DO NOT IMPOSE ANY DUTY OR RESPONSIBILITY UPON HIM TO INDEPENDENTLY GATHER SUCH INFORMATION AS MAY BE NECESSARY TO RESOLVE ANY DOUBT RELATIVE TO A BIDDER'S RESPONSIBILITY, WHICH MAY BE RAISED BY THE INFORMATION OR LACK THEREOF SUBMITTED BY THE BIDDER. INSTEAD, THE BURDEN IS UPON THE BIDDER, AND AS INDICATED BY ASPR 1-902, SUCH DOUBT IS TO BE RESOLVED AGAINST THE BIDDER. THE MERE FACT THAT CONTINENTAL HAD SUCCESSFULLY PERFORMED SIMILAR SERVICES UNDER AN EARLIER CONTRACT REQUIRING FEWER HOURS OF OPERATION, AND PERHAPS GENERALLY ENJOYED A GOOD REPUTATION AS A RESPONSIBLE CONTRACTOR IN NO WAY WOULD DEFEAT THE RIGHT OF THE AGENCY TO REQUEST A CURRENT PREAWARD SURVEY. THIS AREA, OUR OFFICE CAN IMPOSE NO GREATER REQUIREMENTS ON THE CONTRACTING AGENCY. IN VIEW THEREOF, AND SINCE DETERMINATIONS OF A CONTRACTOR'S QUALIFICATIONS ARE PRIMARILY THE FUNCTION OF THE CONTRACTING AGENCY, WE CONCLUDE THAT THE ENTIRE RECORD IS SUCH AS TO JUSTIFY THE DOUBT OF THE PROCURING ACTIVITY THAT CONTINENTAL WAS CAPABLE OF PERFORMING THE CONTRACT SATISFACTORILY AT ITS BID PRICE AND PROPOSED MANNING LEVEL, AND THAT THE ADMINISTRATIVE ACTION IN REJECTING ITS BID THEREFORE WAS NOT UNREASONABLE OR IMPROPER.

CONCERNING YOUR CONTENTION THAT THE SURVEY TEAM WAS NOT QUALIFIED TO DISCUSS THE TECHNICAL PUMPING PROCESS HERE INVOLVED, WE MUST DECLINE TO EXPRESS AN OPINION THEREON. WITH REFERENCE TO THE TIME CONSUMED BY THE SURVEY TEAM, THE RECORD INDICATES THAT THE PRINCIPAL FACTORS TO BE INVESTIGATED WERE CONTINENTAL'S LABOR RESOURCES AND ABILITY TO MEET THE REQUIRED PERFORMANCE SCHEDULE. WHETHER THOSE QUESTIONS COULD BE RESOLVED IN AN HOUR, WHICH THE CONTRACTING AGENCY CLAIMS THE SURVEY TEAM SPENT WITH YOUR CLIENT, OR IN 15 MINUTES, WHICH YOU CLAIM THE TEAM SPENT WITH YOUR CLIENT, MAY WELL BE SUBJECT TO DIFFERING OPINIONS. HOWEVER, WE DO NOT BELIEVE THE AMOUNT OF TIME, STANDING ALONE, CONSUMED BY A SURVEY TEAM IS SUCH A CRITICAL FACTOR AS WOULD NECESSARILY AFFECT THE VALIDITY OF ITS FINDINGS. WE THEREFORE ARE UNABLE TO CONCLUDE THAT THE PREAWARD SURVEY PROCEDURES OF APPENDIX K OF ASPR WERE NOT FOLLOWED.

WITH RESPECT TO THE ALLEGED UNSATISFACTORY PERFORMANCE BY CONTINENTAL UNDER A CONTRACT FOR SIMILAR SERVICES AT CINCINNATI, OHIO, OUR OWN INDEPENDENT INVESTIGATION LEADS US TO THE CONCLUSION THAT THE NOTED DEFICIENCIES THERE WERE RELATIVELY MINOR AND THEY HAD BEEN CORRECTED PRIOR TO THE SURVEY IN QUESTION. IT IS OUR OPINION SUCH DEFICIENCIES WERE NOT OF A NATURE WHICH SHOULD DISQUALIFY CONTINENTAL FOR CONSIDERATION OF THE INSTANT AWARD, AND THE SURVEY TEAM'S FINDINGS IN THIS REGARD (WHICH WERE ALSO RELIED ON IN PART BY THE CONTRACTING OFFICER) HAVE NOT ENTERED INTO OUR CONSIDERATION OF THE MERITS OF YOUR PROTEST.

IN ANSWER TO YOUR INQUIRY AS TO WHETHER NATIONAL WAS SUBJECTED TO A PREAWARD SURVEY, WE HAVE BEEN INFORMALLY ADVISED THAT SUCH A SURVEY WAS CONDUCTED, WITH A RESULTING RECOMMENDATION OF COMPLETE AWARD.

IN SUPPORT OF YOUR SECOND CONTENTION YOU SPECIFICALLY ASSERT THAT THE CONTRACTING OFFICER IGNORED AND GAVE NO EFFECT TO THE LAST SENTENCE OF ASPR 1-705.4(C)(IV), WHICH STATES:

"REFERRAL OF A CASE TO SBA OR EXECUTION OF A CERTIFICATE OF URGENCY SHALL NOT BE DEFERRED PENDING INVESTIGATION AND DETERMINATION OF THE RESPONSIBILITY OF OTHER OFFERORS."

FROM OUR REVIEW OF THE RECORD IT SEEMS CLEAR THAT AFTER THE OPENING OF BIDS THERE WAS NO IMMEDIATE INVESTIGATION AND DETERMINATION OF THE RESPONSIBILITY OF ANY BIDDER; RATHER, THE CONTRACTING OFFICER, IN KEEPING WITH THE MANDATE OF ASPR 2-406.1, WAS REQUESTING NATIONAL AND CONTINENTAL TO VERIFY THEIR BIDS BECAUSE OF SUSPECTED MISTAKES. WE CANNOT SAY THAT THE LAPSE OF ONE WEEK (SEPTEMBER 3 - SEPTEMBER 10) BETWEEN THE DATES WHEN THE FIRST AND SECOND LOW BIDDERS WERE REQUESTED TO VERIFY THEIR BIDS WAS UNREASONABLE. IN FACT, FROM THE REPORTED FACTS CONCERNING THE DATES IN QUESTION, IT WOULD APPEAR THAT THE CONTRACTING OFFICER ACTED WITH DUE DILIGENCE IN CONDUCTING THE NECESSARY INQUIRIES PREREQUISITE TO AWARD. VIEW THEREOF, AND OF THE ADVICE OF SBA ON SEPTEMBER 22, 1970, THAT IT COULD NOT POSSIBLY RULE ON THE QUESTION OF CONTINENTAL'S COMPETENCY BY THE TIME REQUIRED FOR AWARD, WE MUST CONCLUDE THAT THE APPLICABLE REGULATIONS WERE PROPERLY FOLLOWED IN THIS INSTANCE.

LASTLY, YOU INFORMALLY ADVISED THAT THE SOLICITATION REFERENCED AN INCORRECT WAGE DETERMINATION BY THE DEPARTMENT OF LABOR UNDER THE SERVICE CONTRACT ACT (41 U.S.C. 35 ET. SEQ.) IN THAT UNDER DATE OF JULY 14, 1970, THE WAGE DETERMINATIONS FOR GUARDS AND WATCHMAN FOR THE CONTRACT LOCALITY WAS RAISED FROM $2.02 TO $2.15 PER HOUR AND THAT YOUR CLIENT KNEW OF THIS CHANGE AND WAS THEREFORE PLACED AT A COMPETITIVE DISADVANTAGE. WHILE WE HAVE ASCERTAINED THAT THE HIGHER RATE SHOULD HAVE BEEN REFERENCED IN THE SOLICITATION, WE FAIL TO SEE HOW CONTINENTAL'S KNOWLEDGE OF THIS CHANGE SOME TWO WEEKS BEFORE THE ISSUANCE OF THE INVITATION WORKED TO ITS DETRIMENT. IN THIS CONNECTION IT SHOULD BE NOTED THAT BIDDERS ARE ENTITLED TO RELY UPON THE WAGE DETERMINATION INCLUDED IN THE INVITATION FOR BIDS, AND SHOULD BASE THEIR BIDS ON THE RATES SET OUT THEREIN, RATHER THAN UPON RATES WHICH THEY MAY OTHERWISE BELIEVE TO BE PROPER. ADDITIONALLY, THE RECORD CONTAINS NO EVIDENCE THAT ALL OTHER BIDDERS DID NOT POSSESS THE SAME INFORMATION RELATIVE TO THE CORRECT WAGE RATE THAT YOU POSSESSED. CONSEQUENTLY, WE CANNOT CONCLUDE THAT CONTINENTAL WAS PLACED AT A COMPETITIVE DISADVANTAGE BY ITS KNOWLEDGE IN THIS AREA. THE CIRCUMSTANCES, WE FIND NO ADEQUATE LEGAL BASIS FOR OBJECTING TO THE ACTION TAKEN BY THE CONTRACTING OFFICER, AND YOUR PROTEST ON BEHALF OF CONTINENTAL MUST THEREFORE BE DENIED.