B-174912, MAY 16, 1972

B-174912, MAY 16, 1972

BID PROTEST - SMALL BUSINESS SET-ASIDE - NOTIFICATION OF AWARD - ALLEGED "BAD FAITH" SELF-CERTIFICATION DECISION DENYING THE PROTEST OF SOUTHERN ASSOCIATED ENGINEERS, INC., AGAINST AWARD OF A TOTAL SMALL BUSINESS SET-ASIDE TO ASTRO SPACE LABORATORIES, INC. (ASL), UNDER AN RFQ ISSUED BY THE ARMY FOR THE OPERATION OF ENVIRONMENTAL FACILITIES AT REDSTONE ARSENAL, ALA. SOUTHERN PROTESTS THAT THE CONTRACTING OFFICER FAILED TO NOTIFY OTHER OFFERORS OF THE IMPENDING AWARD TO ASL, AS REQUIRED BY ASPR 3 508.2(B). IN VIEW OF THE FACT THAT THE AGENCY WAS UNABLE TO DETERMINE THE APPARENT SUCCESSFUL BIDDER UNTIL JUST TWO DAYS BEFORE THE EXPIRATION OF THE EXISTING CONTRACT, THE COMP. GEN. MUST CONCLUDE THAT THE FAILURE TO NOTIFY WAS JUSTIFIED. THE CONTRACTING OFFICER HAS STATED THAT HIS DETERMINATION OF URGENCY WAS MADE PRIOR TO AWARD AND HE DENIES HAVING EVER ADMITTED TO BEING UNAWARE OF THE AFOREMENTIONED REGULATION. EVEN IF IT COULD BE SHOWN THAT ASL CERTIFIED ITS SMALL BUSINESS STATUS IN BAD FAITH, THE CONTRACT WOULD ONLY BE RENDERED VOIDABLE AT THE GOVERNMENT'S OPTION. 49 COMP. GEN. 369, 375 (1969). IN THE INSTANT CASE IT IS APPARENT THAT CANCELLATION WOULD NOT SERVE THE GOVERNMENT'S BEST INTERESTS. ACCORDINGLY, THE PROTEST MUST BE DENIED.

TO SOUTHERN ASSOCIATED ENGINEERS, INC.:

FURTHER REFERENCE IS MADE TO YOUR LETTER OF JANUARY 5, 1972, AND SUBSEQUENT CORRESPONDENCE, CONCERNING YOUR PROTEST UNDER REQUEST FOR QUOTATIONS (RFQ) DAAH03-72-Q-0472, ISSUED AS A TOTAL SMALL BUSINESS SET ASIDE ON OCTOBER 29, 1971, BY THE DEPARTMENT OF THE ARMY, REDSTONE ARSENAL, ALABAMA, FOR THE OPERATION AND MAINTENANCE OF GOVERNMENT-OWNED ENVIRONMENTAL FACILITIES AND EQUIPMENT AT THE INSTALLATION FOR A ONE YEAR PERIOD WITH AN OPTION TO EXTEND FOR TWO ADDITIONAL YEARS.

ON NOVEMBER 22, 1971, QUOTATIONS WERE RECEIVED FROM SIX, SELF CERTIFIED, SMALL BUSINESS OFFERORS, INCLUDING YOUR CONCERN AND ASTRO SPACE LABORATORIES, INC. (ASL). THE RECORD INDICATES THAT THESE PROPOSALS WERE SUBSEQUENTLY REVIEWED AND EVALUATED BY THE RELIABILITY TEST DIVISION AT THE INSTALLATION WHICH DETERMINED THAT THE QUOTATIONS OF YOUR CONCERN, ASL AND TMC, INC. WERE ACCEPTABLE.

THE ADMINISTRATIVE ACTIONS TAKEN AFTER THAT DETERMINATION HAVE BEEN REPORTED TO THIS OFFICE BY THE NEGOTIATOR FOR THE PROCUREMENT AS FOLLOWS:

" 6. TECHNICAL EVALUATION RECEIVED - 6 DECEMBER

" 7. REQUEST FOR PRICING - 6 DECEMBER

"8. PRICING REPORT RECEIVED - 17 DECEMBER

" 9. OPENED NEGOTIATIONS - 17 DECEMBER

"10. CLOSED NEGOTIATIONS - 21 DECEMBER

"11. AWARD BOARD REVIEW - 28 DECEMBER

"12. LEGAL REVIEW - 29 DECEMBER"

ON DECEMBER 29, 1971, THE CONTRACTING OFFICER, RECOGNIZING THAT THE EXISTING CONTRACT FOR THESE SERVICES WOULD EXPIRE ON DECEMBER 30, 1971, DETERMINED THAT AN AWARD FOR THE PROCUREMENT HAD TO BE MADE TO ASL, WHOSE OFFER WAS HIGHEST IN TECHNICAL MERIT AND LOWEST IN PRICE, WITHOUT DELAY TO ENSURE THAT THE SUPPORT SERVICES WOULD BE MAINTAINED ON A CONTINUOUS BASIS. HE FURTHER DETERMINED THAT HE WAS NOT REQUIRED TO GIVE A PREAWARD NOTICE OF THE IDENTITY OF THE APPARENTLY SUCCESSFUL OFFEROR TO ALL OTHER OFFERORS IN ACCORDANCE WITH THE "URGENCY" EXCEPTION TO THE NOTICE REQUIREMENT WHICH IS SET FORTH IN ARMED SERVICES PROCUREMENT REGULATION (ASPR) 3-508.2(B) AS FOLLOWS:

"3-508.2 PRE-AWARD NOTICE OF UNACCEPTABLE OFFERS.

(B) IN ANY PROCUREMENT INVOLVING A SMALL BUSINESS SET-ASIDE TO BE PLACED THROUGH CONVENTIONAL NEGOTIATION, UPON FINAL COMPLETION OF NEGOTIATIONS AND DETERMINATIONS OF RESPONSIBILITY BUT PRIOR TO AWARD, THE CONTRACTING OFFICER SHALL INFORM EACH UNSUCCESSFUL OFFEROR BY WRITTEN NOTICE OF THE NAME AND LOCATION OF THE APPARENTLY SUCCESSFUL OFFERORS). EACH APPARENTLY UNSUCCESSFUL OFFEROR SHOULD BE ADVISED THAT ANY SUBSEQUENT REVISIONS OF HIS PROPOSAL WILL NOT BE CONSIDERED, SINCE NO FURTHER NEGOTIATIONS ARE CONTEMPLATED, AND NO FURTHER CONTACT WITH THE CONTRACTING OFFICER NEED BE MADE REGARDING THE INSTANT PROCUREMENT UNLESS THE UNSUCCESSFUL OFFEROR HAS GROUNDS TO CHALLENGE THE SMALL BUSINESS SIZE STATUS OF THE APPARENTLY SUCCESSFUL OFFERORS). THIS NOTIFICATION PROCEDURE SHALL NOT APPLY TO PROCUREMENTS EXEMPT BY 3 508.1 ABOVE OR TO ANY URGENT PROCUREMENT ACTION WHICH THE CONTRACTING OFFICER DETERMINES IN WRITING MUST BE AWARDED WITHOUT DELAY TO PROTECT THE PUBLIC INTEREST. THE CONTRACTING OFFICER'S DETERMINATION SHALL BE PLACED IN THE CONTRACT FILE."

ACCORDINGLY, THE CONTRACTING OFFICER MADE AN AWARD TO ASL ON DECEMBER 29.

ON JANUARY 4, 1972, YOU PROTESTED THE SMALL BUSINESS SIZE STATUS OF ASL TO THE PROCURING ACTIVITY AND CONTENDED THAT YOU WERE IMPROPERLY DENIED PREAWARD NOTICE OF THE GOVERNMENT'S PROPOSED INTENT TO AWARD TO THAT CONCERN. BY LETTER OF JANUARY 5, 1972, YOU TRANSMITTED YOUR PROTEST TO THIS OFFICE AND REQUESTED THAT THE AWARD BE CANCELLED.

ON FEBRUARY 24, 1972, THE BIRMINGHAM, ALABAMA, OFFICE OF THE SMALL BUSINESS ADMINISTRATION (SBA) FOUND THAT ASL WAS NOT A SMALL BUSINESS FOR THIS PROCUREMENT. IT IS OUR INFORMAL UNDERSTANDING THAT SUCH FINDING HAS NOT BEEN APPEALED BY ASL.

WITH RESPECT TO YOUR CONTENTION THAT YOU WERE IMPROPERLY DENIED NOTICE OF THE PENDING AWARD TO ASL, YOU FURTHER STATE THAT YOU RECEIVED A TELEPHONE CALL FROM THE CONTRACTING OFFICER ON DECEMBER 30, 1971; THAT THE CONTRACTING OFFICER APOLOGIZED FOR "IRREGULARITIES" IN THE AWARDING OF THIS CONTRACT; AND THAT HE STATED HE WAS UNAWARE OF THE REQUIREMENT FOR GIVING PREAWARD NOTICE OF THE IDENTITY OF THE APPARENTLY SUCCESSFUL OFFEROR IN NEGOTIATED SMALL BUSINESS SET-ASIDES.

YOU ALSO MAINTAIN THAT THE CONTRACTING OFFICER AWARDED THE CONTRACT BEFORE HE FORMULATED THE URGENCY DETERMINATION, NOTED ABOVE. IN THIS REGARD, YOU QUESTION THE DETERMINATION THAT THERE WAS AN URGENT NEED TO MAKE AN AWARD FOR THESE SERVICES ON DECEMBER 29, 1971, SINCE YOU WERE FURNISHING THESE SERVICES AT THAT TIME UNDER AN EXTENSION OF YOUR PRIOR CONTRACT AND YOU HAD OFFERED ANOTHER EXTENSION TO THE CONTRACTING OFFICER PENDING RESOLUTION OF THE PROTEST.

IT IS THE POSITION OF THE PROCURING ACTIVITY THAT IT WAS NOT POSSIBLE TO DETERMINE THE IDENTITY OF THE "APPARENTLY SUCCESSFUL" OFFEROR FOR THE RFQ UNTIL THE DATE OF THE FINAL AWARD BOARD REVIEW ON DECEMBER 28, 1971, TWO DAYS BEFORE THE EXPIRATION OF YOUR CONTRACT; THAT THE CONTRACTING OFFICER PROPERLY DETERMINED THERE WAS AN URGENT NEED TO MAKE AN AWARD BEFORE YOUR CONTRACT EXPIRED; THAT HE MADE THE AWARD TO ASL AFTER MAKING THE URGENCY DETERMINATION, NOTED ABOVE; AND THAT HE DID NOT INFORM YOU ON DECEMBER 30, 1971, THAT HE WAS UNAWARE OF THE REQUIREMENT FOR NOTIFYING UNSUCCESSFUL OFFERORS OF THE IDENTITY OF THE APPARENTLY SUCCESSFUL OFFEROR.

FROM OUR REVIEW OF THE RECORD WE CANNOT DISPUTE THE DEPARTMENT'S POSITION THAT THE IDENTITY OF THE APPARENTLY SUCCESSFUL OFFEROR WAS NOT KNOWN UNTIL THE FINAL REVIEW WAS COMPLETED ON DECEMBER 28, 1970, OR THAT THERE WAS AN URGENT NEED TO MAKE AN AWARD FOR THESE SERVICES BEFORE YOUR CONTRACT EXPIRED. ALTHOUGH YOU MAINTAIN THAT THE CONTRACTING OFFICER COULD HAVE EXTENDED YOUR CONTRACT PENDING RESOLUTION OF THE PROTEST, WE NOTE THAT YOU HAD NOT SUBMITTED A PROTEST AT THE TIME THE CONTRACTING OFFICER DETERMINED THE URGENCY OF THE SITUATION REQUIRED AN IMMEDIATE AWARD.

MOREOVER, WE DO NOT BELIEVE THE CONTRACTING OFFICER WAS REQUIRED TO GRANT A THIRD EXTENSION OF YOUR CONTRACT MERELY BECAUSE OF THE POSSIBILITY THAT A PROTEST CONCERNING ASL'S STATUS AS A SMALL BUSINESS PROTEST MIGHT BE FILED. IN THIS CONNECTION, THE RECORD INDICATES THAT THE PROCURING ACTIVITY HAD PREVIOUSLY AWARDED CONTRACTS TO ASL AS A SMALL BUSINESS CONCERN, AND THAT IT DID NOT HAVE ANY INFORMATION BEFORE THE SUBJECT AWARD WAS MADE THAT ASL WAS NOT THEN A SMALL BUSINESS.

WITH RESPECT TO YOUR ALLEGATIONS THAT THE CONTRACTING OFFICER MADE THE AWARD BEFORE EXECUTING THE URGENCY DETERMINATION AND INFORMED YOU THAT HE WAS UNAWARE OF THE REQUIREMENT FOR GIVING PREAWARD NOTICE OF THE IDENTITY OF THE APPARENTLY SUCCESSFUL OFFEROR, THE CONTRACTING OFFICER SPECIFICALLY DENIES SUCH CONTENTIONS. IN OUR VIEW, THE RECORD DOES NOT PROVIDE AN ADEQUATE BASIS TO JUSTIFY A REJECTION BY THIS OFFICE OF THE ADMINISTRATIVELY REPORTED CIRCUMSTANCES CONCERNING THE ISSUANCE OF THE CONTRACTING OFFICER'S DETERMINATION THAT THE AWARD SHOULD BE MADE WITHOUT DELAY TO PROTECT THE PUBLIC INTEREST.

YOU ALSO ALLEGE THAT ASL CERTIFIED ITS SMALL BUSINESS STATUS IN BAD FAITH AND, THEREFORE, THE AWARD MUST BE CANCELLED. ON THE BASIS OF THE PRESENT RECORD WE CANNOT MAKE A DETERMINATION WHETHER ASL DID, OR DID NOT, CERTIFY ITS STATUS IN BAD FAITH. HOWEVER, WE DO NOT CONSIDER SUCH A DETERMINATION ESSENTIAL TO DISPOSITION OF THE MATTER AT HAND. EVEN THOUGH A BAD FAITH CERTIFICATION BY ASL WOULD HAVE AFFECTED THAT FIRM'S ELIGIBILITY FOR THE AWARD (ASPR 1-703(B); 51 COMP. GEN. (B-174807, MARCH 23, 1972)), WE HAVE EXPRESSED THE VIEW THAT SMALL BUSINESS SET ASIDE CONTRACTS WHICH HAVE BEEN AWARDED TO INELIGIBLE LARGE BUSINESS CONCERNS ARE MERELY VOIDABLE AT THE GOVERNMENT'S OPTION. SEE 49 COMP. GEN. 369, 375 (1969).

IN DECIDING WHETHER IT WOULD BE IN THE BEST INTEREST OF THE GOVERNMENT TO EXERCISE SUCH AN OPTION, CONSIDERATION MUST BE GIVEN TO THE ADVERSE EFFECTS TO THE GOVERNMENT OF A CANCELLATION. ALTHOUGH THE DEPARTMENT STATES IT WILL NOT EXERCISE THE OPTIONS IN ASL'S CONTRACT, IT MAINTAINS THAT IT IS NOT IN THE GOVERNMENT'S BEST INTEREST TO CANCEL ASL'S CONTRACT, CONSIDERING THE DISRUPTIVE EFFECT SUCH ACTION WOULD HAVE ON THESE CRITICAL SERVICES AND THE RESULTING FINANCIAL LOSS TO THE GOVERNMENT. THESE EFFECTS ARE DETAILED BY THE CONTRACTING OFFICER AS FOLLOWS:

"THE OPERATION AND SERVICING OF THE T&E DIRECTORATE ENVIRONMENTAL FACILITIES REQUIRE CONTINUOUS 24 HOUR PER DAY SEVEN DAY PER WEEK COVERAGE. MANY TESTS ARE OF CRITICAL NATURE AND HIGH PRIORITY. ONE OF THE PROGRAMS OF THIS TYPE INVOLVES THE LONG TERM TEMPERATURE CONDITIONING OF FIVE SAM-D BOOSTER MOTORS. TEMPERATURE TOLERANCES ON THESE MOTORS ARE SUCH THAT VERY FEW DEGREES ABOVE OR BELOW THE TEST TEMPERATURES WILL RENDER THE MOTORS TOTALLY USELESS.

"THE OPERATION AND SERVICING OF THESE CHAMBERS IS ACCOMPLISHED BY CONTRACTOR PERSONNEL. IT IS IMPERATIVE THAT COMPLETE CONTINUITY AND UNINTERRUPTED SERVICE ON THE CONTRACT BE HAD AT ALL TIMES. FOR INSTANCE, IF ONE CONTRACT EXPIRED AT 2400 HOURS ON A SET DATE AND THE FOLLOW-UP CONTRACT WAS NOT EFFECTIVE IMMEDIATELY, IRREPARABLE DAMAGE TO TEST HARDWARE CAN RESULT DUE TO REASONS STATED ABOVE.

"TERMINATION OF THIS CONTRACT AND AWARD OF A NEW CONTRACT WILL HAVE THE IMPACT OF DISRUPTING OPERATIONS AS DESCRIBED ABOVE WITH THE RESULTING FINANCIAL LOSS TO THE GOVERNMENT.

"THE EFFECTS UPON PART II OF CANCELING THE SUBJECT CONTRACT AND AWARDING TO ANOTHER CONTRACTOR WOULD HAVE A TREMENDOUSLY ADVERSE IMPACT ON THE WORK PLANNED, SCHEDULED AND IN PROGRESS. SINCE THE EFFECTIVE DATE OF THE PRESENT CONTRACT (31 DEC 71) SIX TASK ORDERS TOTALING $173,000.00 HAVE BEEN ISSUED (SEE INCLOSURES). THESE TASK ORDERS ARE IN VARIOUS STATES OF COMPLETENESS, WITH THE LONGEST ESTIMATED COMPLETION DATE BEING 31 NOV 72. PARTS AND MATERIALS HAVE BEEN ORDERED ON SOME TASKS, ENGINEERING DRAWINGS ARE IN PROGRESS ON SOME TASKS, AND FABRICATION IS IN PROGRESS ON OTHER TASKS. TO CANCEL THIS CONTRACT IN MIDST OF THIS WORK WOULD COST THE GOVERNMENT CONSIDERABLE MONEY AND WOULD HAVE INTOLERABLE EFFECTS ON THE TEST SCHEDULES OF VARIOUS ARMY PROJECTS SUCH AS SAM-D, LANCE, TOW, DRAGON & MET ROCKET.

"CONSIDERABLE TIME IS SPENT (STARTING SEVERAL MONTHS BEFORE CONTRACT TERMINATION) ON THE PREPARATION OF THE CONTRACT PACKAGE. THEN CONSIDERABLE TIME IS SPENT IN THE CAREFUL TECHNICAL EVALUATION OF PROPOSALS AND AWARDING OF THE CONTRACT. AFTER THE CONTRACT IS AWARDED USUALLY A PERIOD OF TWO MONTHS OR SO IS REQUIRED FOR THE NEW CONTRACTOR TO BECOME SUFFICIENTLY ORIENTED IN METHODS OF OPERATION FOR THE CONTRACT TO PROCEED IN AN EFFICIENT AND SMOOTH MANNER. THE PRESENT CONTRACT IS JUST NOW REACHING THIS STATE OF EFFICIENT AND SMOOTH OPERATION. TO CANCEL THIS CONTRACT AND AWARD IT TO ANOTHER CONTRACTOR WOULD RESULT IN ANOTHER TWO MONTH INDOCTRINATION PERIOD."

IN VIEW OF THE ABOVE, WE DO NOT BELIEVE THAT WE WOULD BE JUSTIFIED IN NOT ACCEPTING THE DEPARTMENT'S POSITION THAT CANCELLATION WOULD NOT SERVE THE GOVERNMENT'S BEST INTEREST.

ACCORDINGLY, FOR THE REASONS SET FORTH ABOVE, YOUR PROTEST, INSOFAR AS IT REQUESTS CANCELLATION OF THE SUBJECT CONTRACT, MUST BE DENIED.