[Protest of Navy Contract Award]

B-169609, SEP. 1, 1970

BID PROTEST - SBA - BIDDER CAPABILITY - REQUIREMENTS DECISION DENYING PROTEST OF C & M INDUSTRIAL ASSOCIATES, INC., AGAINST AWARD OF CONTRACT TO READING TECHMATIC CORP., LOW BIDDER, FOR DEICING/DECONTAMINATION SPRAY UNITS, FOR THE SAN ANTONIO AIR MATERIEL AREA, KELLY AIR FORCE BASE, TEXAS. BIDDER WHO PROTESTED AWARD OF CONTRACT TO THE READING TECHMATIC CORP. ON THE BASIS THAT IT WAS NONRESPONSIBLE FINANCIALLY AND INADEQUATELY EQUIPPED TO PERFORM THE CONTRACT AND MEET SCHEDULE DEMANDED FOR THE PROCUREMENT IS DENIED PROTEST ON THE GROUNDS THAT PREAWARD SURVEY, AND INFORMATION FROM SBA THAT BIDDER HAD FINANCES NECESSARY TO PERFORM THE CONTRACT SUPPORTED THE ADMINISTRATIVE DETERMINATION.

TO C & M INDUSTRIAL ASSOCIATES, INC.:

REFERENCE IS MADE TO YOUR LETTERS OF APRIL 15 AND JUNE 3, 1970, PROTESTING AGAINST THE AWARD OF A CONTRACT TO ANYONE OTHER THAN YOUR FIRM UNDER INVITATION FOR BIDS (IFB) NO. F41608-70-B-0991, ISSUED BY THE SAN ANTONIO AIR MATERIEL AREA (SAAMA), KELLY AIR FORCE BASE, TEXAS.

THIS SOLICITATION WAS ISSUED MARCH 6, 1970, AND CALLED FOR THE FURNISHING OF A QUANTITY OF DEICING/DECONTAMINATION SPRAY UNITS IN ACCORDANCE WITH MIL-S-26110C. THE SOLICITATION INVITED BIDS FROM SMALL BUSINESS FIRMS ONLY, ON A THREE YEAR MULTI-YEAR BASIS INCLUDING A PROVISION FOR SUBMISSION OF SEPARATE BIDS FOR THE FIRST PROGRAM YEAR. THE BEST ESTIMATED QUANTITY FOR THE FIRST YEAR AND THE ANTICIPATED INITIAL ORDER QUANTITY WAS 110 UNITS. AWARD WAS TO BE MADE ON THE ONE YEAR OR ON THE MULTI-YEAR REQUIREMENTS AS DETERMINED TO BE THE MOST ADVANTAGEOUS TO THE GOVERNMENT.

BIDS WERE OPENED ON MARCH 30, 1970, AND EIGHT BIDS WERE RECEIVED IN RESPONSE TO THE INVITATION. READING TECHMATIC CORPORATION (READING) SUBMITTED THE LOW ONE YEAR BID, AND ALSO THE LOW MULTI-YEAR BID AT A UNIT PRICE $200 LESS THAN ITS ONE YEAR UNIT PRICE. THE ONE YEAR UNIT PRICE BIDS WERE AS FOLLOWS:

READING TECHMATIC CORP. $35,000.00

READING, PA.

LUBBOCK MFG. CO.37,915.00

LUBBOCK, TEXAS

SUPERIOR WELDING, INC. 39,143.00

BARTLESVILLE, OKLA.

CALAVAR CORP. $39,815.00

SANTA FE SPRINGS, CALIF.

INTERCONTINENTAL ENGR. MFG. CORP. 42,637.50

KANSAS CITY, MO.

GARSITE PRODUCTS 42,775.00

DEER PARK, N. Y.

SUPPLIERS, INC. 51,368.00

GEORGETOWN, TEXAS

C & M INDUSTRIAL ASSOC. 60,300.00

BETHESDA, MARYLAND

IN YOUR LETTER OF APRIL 15, YOU ALLEGE THAT NO FIRM OTHER THAN YOUR FIRM WOULD BE ABLE TO DELIVER A FIRST ARTICLE UNIT IN ACCORDANCE WITH THE SPECIFICATIONS, REQUIREMENT FOR DELIVERY WITHIN 150 DAYS AFTER RECEIPT OF ORDER, DUE TO THE TIME REQUIRED TO PREPARE THE NECESSARY ENGINEERING DATA AND THE TIME REQUIRED TO TEST THE UNIT. FURTHER, YOU ALLEGE THAT SIX OF THE EIGHT BIDDERS WERE NOT BIDDING ON A RESPONSIBLE BASIS SINCE THEIR BIDS ARE LESS THAN THEIR ENGINEERING COSTS, FACTORY LABOR, MATERIAL AND SHOP OVERHEAD. YOU ALSO FURNISHED A COPY OF A CREDIT REPORT, DATED MARCH 20, 1970, WHICH YOU STATE SHOWS THAT READING IS NOT RESPONSIBLE.

ON MARCH 31, THE DEFENSE CONTRACT ADMINISTRATION SERVICES DIVISION (DCASD) WAS REQUESTED TO CONDUCT A PREAWARD SURVEY OF READING. ALTHOUGH THE DCASD PREAWARD SURVEY REPORT ORIGINALLY RECOMMENDED NO AWARD TO READING, ON THE BASIS THAT ITS FINANCIAL POSITION WAS UNSATISFACTORY, THE REPORT INCLUDES FINDINGS THAT READING HAD THE NECESSARY ENGINEERING AND TECHNICAL "KNOW HOW" TO DESIGN AND FABRICATE THE IFB ITEM; ADEQUATE SKILLED PERSONNEL TO PERFORM THE CONTRACT; ADEQUATE PLANT CAPACITY; AND SUFFICIENT QUANTITIES OF EQUIPMENT TO MEET THE REQUIRED DELIVERY SCHEDULE. THE PROCURING ACTIVITY ALSO CONTENDS THAT ENGINEERING DATA WHICH COULD BE USED IN PERFORMING THIS CONTRACT IS AVAILABLE TO AT LEAST TWO LARGE BUSINESS FIRMS (PITMAN MANUFACTURING COMPANY (PITMAN) AND TIFFIN ART METAL COMPANY (TIFFIN) WHICH COULD HAVE MADE ARRANGEMENTS TO MAKE SUCH DATA AVAILABLE TO PROSPECTIVE BIDDERS.

YOU STATE THAT WHILE YOU HAVE AN ARRANGEMENT WITH PITMAN RELATIVE TO THE PURCHASE OF ENGINEERING DATA AND MANUFACTURE OF THE AERIAL PLATFORM, PITMAN DOES NOT HAVE SUCH AN ARRANGEMENT WITH ANY OTHER FIRM. YOU ALSO STATED THAT TIFFIN HAS NO ENGINEERING DATA OR SUBCONTRACTING ARRANGEMENTS WITH ANYONE, NOR DOES IT INTEND TO ENTER INTO ANY SUCH ARRANGEMENTS. DO NOT BELIEVE THAT SUCH FACTORS MAY BE CONSIDERED TO BE DETERMINATIVE OF THE PRINCIPAL ISSUES, SINCE THE EVIDENCE OF RECORD DOES NOT ESTABLISH THAT USE OF SUCH DATA IS ESSENTIAL TO TIMELY PERFORMANCE OF THE CONTRACT, AND IT WAS ADMINISTRATIVELY DETERMINED THAT READING HAS THE TECHNICAL "KNOW HOW," PERSONNEL AND FACILITIES TO DESIGN, FABRICATE AND DELIVER THE ITEM AS REQUIRED BY THE IFB. ALSO, THE AIR FORCE STATES THAT ITS TECHNICAL PERSONNEL ANALYZED THE TIME REQUIRED FOR PREPARING THE ENGINEERING DATA AND FOR TESTING THE UNIT, AND HAVE CONCLUDED THAT IT IS CONSIDERABLY LESS THAN YOU ALLEGE. WHILE YOU TAKE STRONG ISSUE WITH THESE CONCLUSIONS, WE DO NOT HAVE THE NECESSARY EXPERTISE FOR RESOLVING SUCH TECHNICAL DISPUTES AND MUST RELY UPON THE JUDGEMENT OF THE GOVERNMENT'S ENGINEERING PERSONNEL, ABSENT A CLEAR SHOWING OF ARBITRARY OR CAPRICIOUS ACTION WHICH IS NOT ESTABLISHED HERE. SEE B-169007, JULY 27, 1970, AND CASES CITED THEREIN.

REGARDING YOUR ALLEGATION THAT READING IS NOT A RESPONSIBLE BIDDER, SINCE THE ORIGINAL DCASD REPORT WAS NEGATIVE AS TO READING'S FINANCES, THAT FIRM WAS DETERMINED TO BE NONRESPONSIBLE AND THE MATTER WAS SUBMITTED TO THE SMALL BUSINESS ADMINISTRATION (SBA) AREA OFFICE IN PHILADELPHIA FOR CONSIDERATION AS TO WHETHER A CERTIFICATE OF COMPETENCY SHOULD BE ISSUED TO READING. DURING THE COURSE OF ITS INVESTIGATION SBA RECEIVED ADDITIONAL INFORMATION ON READING INDICATING ADDITIONAL BANK FINANCING AND A MORATORIUM ON CERTAIN OF ITS OUTSTANDING DEBTS. AFTER THIS INFORMATION WAS FURNISHED TO DCASD THE NEGATIVE PREAWARD SURVEY WAS REVERSED, AS PROVIDED BY ASPR 1-705.4(F) (I), AND AN AWARD TO READING WAS RECOMMENDED BASED ON THE SBA INVESTIGATION WHICH SHOWED THE CONTRACTOR AS THEN HAVING ADEQUATE FINANCES TO PERFORM THE CONTRACT. A MULTI-YEAR CONTRACT WAS AWARDED TO READING ON JUNE 8, 1970, PURSUANT TO THE CONTRACTING OFFICER'S DETERMINATION UNDER ASPR 2-407.8(B)(3) THAT DELIVERY OF PERFORMANCE WOULD BE UNDULY DELAYED BY FAILURE TO MAKE AWARD PROMPTLY.

OUR OFFICE HAS CONSISTENTLY HELD THAT THE DETERMINATION OF A BIDDER'S OVERALL RESPONSIBILITY IS PRIMARILY THE FUNCTION OF THE ADMINISTRATIVE AGENCY AND NOT OF THE GENERAL ACCOUNTING OFFICE. 38 COMP. GEN. 131 (1958); 33 ID. 549 (1954). WHETHER A BIDDER IS CAPABLE OF PRODUCING IN ACCORDANCE WITH CONTRACT REQUIREMENTS IS A QUESTION OF FACT, AND ABSENT EVIDENCE CLEARLY SHOWING THAT THE DETERMINATION OF A PROSPECTIVE CONTRACTOR'S CAPABILITIES WAS BASED ON ERROR, BAD FAITH OR LACK OF REASONABLE BASIS THEREFOR, OUR OFFICE WILL ACCEPT THE FINDINGS OF THE CONTRACTING AGENCY. 40 COMP. GEN. 294 (1960). WE HAVE ALSO STATED THAT THE PROJECTION OF A BIDDER'S ABILITY TO PERFORM IF AWARDED A CONTRACT IS A MATTER OF JUDGMENT. WHILE IT SHOULD BE BASED ON FACT AND ARRIVED AT IN GOOD FAITH, IT MUST BE LEFT LARGELY TO THE SOUND ADMINISTRATIVE DISCRETION OF THE CONTRACTING OFFICERS INVOLVED SINCE THEY ARE IN THE BEST POSITION TO ASSESS RESPONSIBILITY; THEY MUST BEAR THE BRUNT OF ANY DIFFICULTIES EXPERIENCED BY REASON OF THE CONTRACTOR'S LACK OF ABILITY; AND THEY MUST MAINTAIN THE DAY TO DAY RELATIONS WITH THE CONTRACTOR ON BEHALF OF THE GOVERNMENT. 39 COMP. GEN. 705, 711 (1960); 43 COMP. GEN. 228, 230 (1963).

THE RECORD INDICATES THAT, IN DETERMINING READING WAS A RESPONSIBLE BIDDER, THE CONTRACTING OFFICER USED THE LATEST INFORMATION AVAILABLE AT THE PROCURING ACTIVITY, INCLUDING A PREAWARD SURVEY REPORT OBTAINED IN ACCORDANCE WITH ASPR 1-905.4, WHICH CONCLUDED THAT READING WAS CAPABLE OF PERFORMING IN ACCORDANCE WITH THE CONTRACT REQUIREMENTS. IN THE CIRCUMSTANCES, WE ARE UNABLE TO CONCLUDE THAT THE CONTRACTING OFFICER'S DETERMINATION WAS ARBITRARY OR WITHOUT A SUBSTANTIAL BASIS.

CONCERNING YOUR ALLEGATION THAT READING AND OTHER BIDDERS DID NOT BID ON A RESPONSIBLE BASIS AS THEIR BIDS ARE LESS THAN ENGINEERING COSTS, FACTORY LABOR, MATERIAL AND SHOP OVERHEAD, WE ARE AWARE OF NO LEGAL PRINCIPLE ON WHICH AN AWARD TO THE LOW BIDDER MAY BE PRECLUDED OR DISTURBED MERELY BECAUSE IT SUBMITTED AN UNPROFITABLE PRICE. B-169465, JUNE 19, 1970; B- 149551, AUGUST 16, 1962; B-150318, MARCH 25, 1963.

FOR THE ABOVE REASONS, WE FIND NO BASIS ON WHICH TO QUESTION THE LEGALITY OF THE AWARD TO READING AND YOUR PROTEST IS THEREFORE DENIED.