B-178135, AUG 28, 1973

B-178135, AUG 28, 1973

DENIAL OF PROTEST AGAINST THE REJECTION OF ITS BIDS IN RESPONSE TO TWO ADVERTISED SOLICITATIONS ONE FOR GAS RANGES AND THE OTHER FOR ELECTRIC RANGES. NONRESPONSIBILITY FOR RESOLUTION BY THE CONTRACTING OFFICER.

TO COBURN, CROFT, SHEPHERD & HERZOG:

BY LETTER DATED MARCH 2, 1973, AND SUBSEQUENT CORRESPONDENCE, YOUR CLIENT, EAGLE RANGE & MANUFACTURING COMPANY (EAGLE), PROTESTED THE REJECTION OF ITS BIDS SUBMITTED IN RESPONSE TO TWO ADVERTISED SOLICITATIONS - ONE FOR GAS RANGES AND THE OTHER FOR ELECTRIC RANGES. EAGLE'S BIDS WERE REJECTED ON THE GROUND THAT IT WAS A NONRESPONSIBLE BIDDER. THEREAFTER, PURSUANT TO A DETERMINATION OF URGENCY, A NEGOTIATED CONTRACT FOR ELECTRIC RANGES WAS AWARDED TO SUNRAY STOVE COMPANY (SUNRAY) ON APRIL 25, 1973. FOR THE REASONS DISCUSSED BELOW, WE FIND NO BASIS FOR SUSTAINING THE PROTESTS.

THE SUBJECT SOLICITATIONS WERE ISSUED BY THE FEDERAL SUPPLY SERVICE (FSS) OF THE GENERAL SERVICES ADMINISTRATION (GSA) FOR GAS AND ELECTRIC RANGES ON DECEMBER 14 AND DECEMBER 18, 1972, RESPECTIVELY. BIDS WERE OPENED FOR BOTH SOLICITATIONS ON JANUARY 22, 1973. THE CONTRACTING OFFICER DETERMINED THAT ALL BIDS EXCEPT EAGLE'S WERE NONRESPONSIVE. SINCE EAGLE WAS THE ONLY RESPONSIVE BIDDER, THE CONTRACTING OFFICER ON JANUARY 26, 1973, REQUESTED THE QUALITY CONTROL DIVISION OF FSS TO CONDUCT A PLANT FACILITY SURVEY OF EAGLE TO DETERMINE WHETHER EAGLE COULD COMPLY WITH THE TECHNICAL REQUIREMENTS OF THE SPECIFICATIONS AND COULD MEET THE SHORT DELIVERY PERIODS REQUIRED BY THE SOLICITATIONS.

A TEAM OF THREE QUALITY ASSURANCE SPECIALISTS FROM THE GSA REGIONAL OFFICE IN CHICAGO CONDUCTED A SURVEY OF EAGLE'S PLANT AND SUBMITTED NEGATIVE REPORTS WITH RESPECT TO EAGLE'S CAPABILITY TO PERFORM EITHER CONTRACT. BASED ON THESE REPORTS, THE CONTRACTING OFFICER DETERMINED ON MARCH 7, 1973, THAT FOR THE PURPOSES OF THESE TWO PROCUREMENTS EAGLE WAS A NONRESPONSIBLE PROSPECTIVE CONTRACTOR BECAUSE OF THE INADEQUACY OF ITS QUALITY CONTROL SYSTEM AND ITS POOR PERFORMANCE RECORD ON PRIOR CONTRACTS FOR BOTH GAS AND ELECTRIC RANGES.

IN REGARD TO EAGLE'S QUALITY CONTROL SYSTEM THE SURVEY REPORTS STATE IN PART THAT:

"THE EFFECTIVENESS OF (EAGLE'S) QUALITY CONTROL SYSTEM HAS BEEN INCONSISTENT.

"THE BIDDER DOES NOT CONSISTENTLY PERFORM SATISFACTORY INSPECTIONS AND TESTS OF MATERIALS AND COMPONENTS PRIOR TO INCORPORATION INTO END ARTICLES AND SUCH END ARTICLES PRIOR TO OFFERING THEM FOR GOVERNMENT INSPECTION.

"GSA QUALITY ASSURANCE SPECIALISTS HAVE CONTINUOUSLY PROVIDED GUIDANCE AND ASSISTANCE TO THE COMPANY MANAGEMENT PERSONNEL TO MODIFY THEIR PROCEDURES IN ORDER TO IMPROVE THE EFFECTIVENESS OF THEIR QUALITY CONTROL SYSTEM ON PREVIOUS CONTRACTS. THE BIDDER LACKS THE INITIATIVE TO CONSISTENTLY MAINTAIN A SMOOTH FUNCTIONING QUALITY CONTROL SYSTEM. AT THE SPECIFIC TIME OF THIS WRITING THE EFFECTIVENESS OF THE BIDDERS SYSTEM DOES NOT SATISFY THE CONTRACTOR INSPECTION RESPONSIBILITY CLAUSE IN ITS ENTIRETY."

FURTHERMORE, WITH REGARD TO THE GAS RANGES, THE SURVEY REPORT STATES THAT EAGLE CANNOT COMPLY WITH THE REQUIREMENT FOR END-ITEM TESTING FOR OPERATIONAL PURPOSES. THE APPLICABLE GAS RANGE SPECIFICATION REQUIRES THAT EACH RANGE BE FULLY TESTED IN ACCORDANCE WITH SPECIFIED PROCEDURES AND THAT FAILURE TO PASS THESE TESTS IS CAUSE FOR REJECTION OF THE ITEM. IN CONNECTION WITH THIS REQUIREMENT, THE DIRECTOR OF THE QUALITY CONTROL DIVISION ELABORATED ON THE PLANT FACILITY REPORT AS FOLLOWS:

"*** EAGLE DOES NOT HAVE THE FACILITIES TO PERFORM THE FULL OPERATIONAL TESTING AS REQUIRED BY PARAGRAPH 4.4.1 *** AT THE TIME THAT THE PREAWARD SURVEY WAS PERFORMED AT THE EAGLE RANGE AND MANUFACTURING COMPANY PLANT, THE QAS (QUALITY ASSURANCE SPECIALISTS) FROM REGION 5 DETERMINED THAT EAGLE WOULD NOT BE ABLE TO PERFORM THE TEST ON THE SURFACE BURNERS BECAUSE THESE BURNERS UNDER THE NEW ASSEMBLY PROCEDURES WERE SHRINK PACKED PRIOR TO THE END-ITEM INSPECTION. THE EAGLE REPRESENTATIVES INDICATED AT THE TIME OF THE PLANT FACILITY SURVEY THAT THEY COULD NOT CHANGE THEIR CURRENT PRODUCTION LINE PROCEDURES FOR THE CONTRACT COVERED BY THE SOLICITATION.

IN RESPONSE TO THE POSITION OF GSA, YOU CLAIM THAT THE ONLY SPECIFIC OBJECTION RAISED BY GSA IS EAGLE'S INABILITY TO PERFORM END-ITEM TESTING ON GAS RANGES AND THAT SUCH TESTING IS NOT, IN FACT, REQUIRED. YOU CONTEND THAT WHILE THE SPECIFICATIONS REQUIRE FULL END-ITEM TESTING OF EACH RANGE, THE SHORT DELIVERY SCHEDULE PROHIBITS EAGLE OR ANY OTHER COMPANY FROM COMPLYING. YOU ALSO STATE THAT DURING AND AFTER THE SURVEY CERTAIN GSA PERSONNEL ACKNOWLEDGED THE UNREASONABLENESS OF THE REQUIREMENT FOR TESTING EACH RANGE AND AGREED THAT TESTING SHOULD BE LIMITED TO A REPRESENTATIVE SAMPLE. IN ADDITION, YOU CONTEND THAT BECAUSE OF THE UNREASONABLENESS OF THIS REQUIREMENT THE DELIVERY SCHEDULE IN THE NEGOTIATED CONTRACT FOR THIS ITEM WAS RELAXED. FINALLY, YOU SAY THAT IN THE PAST GSA HAS NOT GENERALLY INSISTED UPON FULL END-ITEM TESTING. THEREFORE, YOU ARGUE THAT GSA'S CRITICISM IN THIS REGARD WAS A "MAKE- WEIGHT" ARGUMENT FOR FINDING EAGLE NONRESPONSIBLE.

ALTHOUGH YOU HAVE GONE TO CONSIDERABLE LENGTH TO QUESTION THE VALIDITY AND NEED FOR THIS REQUIREMENT, WE BELIEVE THAT SUCH OBJECTIONS SHOULD HAVE PROPERLY BEEN RAISED PRIOR TO BID OPENING. IN THE ABSENCE OF ANY SUCH OBJECTIONS, WE BELIEVE THE SURVEY TEAM AND CONTRACTING OFFICER PROPERLY CONSIDERED EAGLE'S CAPABILITY TO COMPLY WITH THE REQUIREMENT. WITH REGARD TO GSA'S PAST ENFORCEMENT OF THIS REQUIREMENT, WE NOTE THAT THE ONLY "CONCRETE" EVIDENCE IN THE RECORD IS A GSA LETTER OF NOVEMBER 21, 1972, IN CONNECTION WITH A PRIOR DEFAULTED EAGLE CONTRACT IN WHICH GSA INSISTED UPON COMPLIANCE WITH THE SURFACE BURNER TESTING AND AGREED TO ALLOW AN EXCEPTION TO THE LOW OVEN TEMPERATURE TEST REQUIREMENT. MOREOVER, AS NOTED PREVIOUSLY, THIS MATTER WAS ONLY PART OF THE SURVEY TEAM'S BASIS FOR A NEGATIVE CONCLUSION WITH RESPECT TO QUALITY CONTROL. FURTHERMORE, QUALITY CONTROL WAS ONLY ONE OF THE FACTORS RELIED UPON BY BOTH THE SURVEY TEAM AND THE CONTRACTING OFFICER IN DETERMINING THAT EAGLE WAS NOT CAPABLE OF PERFORMING EITHER CONTRACT.

BOTH THE SURVEY TEAM AND THE CONTRACTING OFFICER POINT TO THE DEFAULT TERMINATION IN 1972 OF EAGLE'S CONTRACTS FOR THE SAME GAS AND ELECTRIC RANGES WHICH ARE THE SUBJECT OF THE PROCUREMENTS HERE INVOLVED IN SUPPORT OF THEIR RESPECTIVE DETERMINATIONS. IT IS POINTED OUT THAT THESE CONTRACTS WERE DEFAULTED AFTER EAGLE WAS UNABLE TO DELIVER ACCEPTABLE PREPRODUCTION SAMPLES. IN THIS CONNECTION, THE RECORD INCLUDES REPORTS DETAILING THE BASES FOR REJECTING THE GAS AND ELECTRIC RANGE PREPRODUCTION SAMPLES. IN A SUPPLEMENT TO THE SURVEY REPORT DATED MARCH 7, 1973, IT IS POINTED OUT THAT EAGLE'S FIRST OFFERS OF PREPRODUCTION SAMPLES WERE ALSO REJECTED UNDER OTHER CONTRACTS IN 1966 THROUGH 1971, INCLUSIVE. FURTHERMORE, THE SURVEY REPORTS ALSO STATE THAT ON EAGLE'S MOST RECENT GAS AND ELECTRIC RANGE CONTRACTS PRIOR TO THOSE TERMINATED IN 1972, EAGLE HAD AN 84 PERCENT AND 66.5 PERCENT ON TIME DELIVERY PERFORMANCE, RESPECTIVELY.

YOU PROTEST THE CONSIDERATION BY GSA OF THE DEFAULTED CONTRACTS AS GROUNDS FOR A DETERMINATION OF NONRESPONSIBILITY. YOU POINT OUT THAT THESE TERMINATIONS HAVE BEEN APPEALED TO THE GSA BOARD OF CONTRACTS APPEALS, AND ARGUE THAT THEIR CONSIDERATION IN CONNECTION WITH THE RESPONSIBILITY DETERMINATIONS WHILE THE APPEALS ARE PENDING WAS IMPROPER AND EFFECTIVELY DENIES EAGLE'S RIGHT TO MEANINGFUL APPEALS.

WE HAVE HELD THAT A TERMINATION FOR DEFAULT IS A PROPER MATTER FOR CONSIDERATION IN DETERMINING BIDDER RESPONSIBILITY, NOTWITHSTANDING A PENDING APPEAL FROM SUCH DETERMINATION. SEE 43 COMP. GEN. 323 (1963); B- 168034, MARCH 20, 1970. THEREFORE, WE CONCUR WITH GSA'S CONSIDERATION OF THE DEFAULT TERMINATIONS OF EAGLE'S CONTRACTS EVEN THOUGH APPEALS ARE PENDING.

WE HAVE HELD THAT QUESTIONS CONCERNING THE RESPONSIBILITY OF A PROSPECTIVE CONTRACTOR ARE PRIMARILY FOR RESOLUTION BY THE CONTRACTING OFFICER BECAUSE IT IS HE "*** WHO SHOULD BE IN THE BEST POSITION TO ASSESS RESPONSIBILITY, WHO MUST BEAR THE MAJOR BRUNT OF ANY DIFFICULTIES EXPERIENCED IN OBTAINING PERFORMANCE, AND WHO MUST MAINTAIN DAY TO DAY RELATIONS WITH THE CONTRACTOR ON THE GOVERNMENT'S BEHALF." 43 COMP. GEN. 228, 230 (1963); 45 COMP. GEN. 4 (1965). UPON REVIEW OF THE RECORD IN THE INSTANT CASE, INCLUDING YOUR REBUTTAL TO GSA'S POSITION, IT IS OUR VIEW THAT THE NEGATIVE PLANT FACILITIES REPORTS AND THE DEFAULT TERMINATIONS REASONABLY SUPPORT AND JUSTIFY THE CONTRACTING OFFICER'S NONRESPONSIBILITY DETERMINATIONS FOR THESE PROCUREMENTS.

WE SHOULD ALSO NOTE THAT THE DETERMINATIONS OF RESPONSIBILITY APPLY ONLY TO THE PROCUREMENTS IN QUESTION. SUBSEQUENT DETERMINATIONS IN REGARD TO FUTURE PROCUREMENTS MUST BE MADE ON THE BASIS OF THE BEST, CURRENT INFORMATION AVAILABLE AT THAT TIME.

ACCORDINGLY, FOR THE REASONS SET FORTH ABOVE, YOUR PROTEST IS DENIED.