B-157549, DEC. 21, 1965

B-157549, DEC. 21, 1965

TO ALTON IRON WORKS, INC.:

YOUR LETTER OF AUGUST 23, 1965, REFERENCE F-20, PROTESTS AGAINST THE REJECTION BY THE DEPARTMENT OF THE AIR FORCE OF YOUR BID UNDER INVITATION FOR BIDS (IFB) NO. 04-607-65-174, ISSUED BY THE SAN BERNARDINO AIR MATERIEL AREA, NORTON AIR FORCE BASE, CALIFORNIA, AND AWARD TO ANOTHER BIDDER AT A HIGHER PRICE. SPECIFICALLY, YOU PROTEST THE FAILURE OF THE DEPARTMENT TO REFER THE MATTER OF YOUR PRODUCTIVE CAPABILITY TO THE SMALL BUSINESS ADMINISTRATION (SBA) UNDER THE CERTIFICATE OF COMPETENCY PROCEDURE FOLLOWING THE ISSUANCE OF A NEGATIVE FACILITY CAPABILITY REPORT (FCR) ON YOUR FIRM. YOU STATE THAT COMMITMENTS WHICH YOUR SUPPLIES HAD FILED TO FULFILL WHEN THE SURVEY OF YOUR FACILITIES WAS MADE HAVE SINCE BEEN MET. THEREFORE, YOU REQUEST THAT THE AWARD BE HELD IN ABEYANCE PENDING A DECISION BY OUR OFFICE IN THE MATTER.

THE IFB, DATED JUNE 18, 1965, SOLICITED BIDS TO FURNISH 25 ROLL CONTROL DUCTS TO BE MANUFACTURED IN ACCORDANCE WITH CERTAIN DRAWINGS AND SPECIFICATIONS, AND STIPULATED THAT BIDS WOULD BE OPENED ON JULY 20. SINCE THE PROCUREMENT ITEMS WERE TO BE USED IN THE OVERHAUL BY AEROJET GENERAL CORPORATION (AEROJET) OF THE TITAN II WEAPONS SYSTEM, TO INSURE ITS OPERATIONAL READINESS, PROMPT DELIVERY WAS AN IMPORTANT FACTOR. ACCORDINGLY, BIDDES WERE ADVISED THAT DELIVERY WAS DESIRED BY SEPTEMBER 1 BUT REQUIRED BY OCTOBER 15, THE LATTER DATE BEING BASED ON AN EXPECTED AWARD WITHIN 10 DAYS AFTER BID OPENING.

BIDS WERE OPENED ON JULY 21 AS SCHEDULED. YOUR BID, WITH A UNIT PRICE OF $1,000, TOTAL PRICE $25,000, WAS LOW. THE BID OF WESTERN WAY, INCORPORATED, QUOTING A UNIT PRICE OF $1,073, TOTAL PRICE $26,825, WAS SECOND LOW.

IN ORDER TO DETERMINE YOUR RESPONSIBILITY, THE PROCURING ACTIVITY REQUESTED THE NEW YORK CONTRACT MANAGEMENT DIVISION OF THE AIR FORCE SYSTEMS COMMAND TO PERFORM A SURVEY OF YOUR FACILITIES. THE RESULTING FCR DISCLOSED, AMONG OTHER THINGS, THAT WHILE YOU HAD MICROFILM COPIES OF ALL PERTINENT DRAWINGS, YOU HAD DECIDED NOT TO PURCHASE ONE MAJOR COMPONENT, AN "ELBOW," FROM THE QUALIFIED SOURCE CITED ON THE AEROJET DRAWING; ALSO, THAT IN ACCORDANCE WITH YOUR PLANS, A PERIOD OF 10 WEEKS, OR 70 DAYS, WOULD BE REQUIRED FOR THE COMPLETION OF ONE SUBASSEMBLY ALONE AND THAT SOPHISTICATED CLEANING, TESTING AND SPECIAL PACKAGING OPERATIONS WERE TOTALLY UNPROVIDED FOR, THUS AFFORDING NO ASSURANCE OF A REASONABLE EXPECTATION TO PERFORM WITHIN THE REQUIRED PERIOD. THE FCR FURTHER DISCLOSED SERIOUS DELINQUENCIES UNDER FOUR SEPARATE AIR FORCE CONTRACTS HELD BY YOU AS OF JULY 22, 1965, EVIDENCING A LACK OF RESPONSIBLE BIDDING PRACTICES COUPLED WITH A DISREGARD FOR CONTRACTUAL COMMITMENTS, RESULTING IN DISRUPTIVE DELIVERY ON CRITICAL ELEMENTS OF SUPPLY AND INORDINATE ADMINISTRATIVE EFFORT AND EXPENSE. MOREOVER, A SUBSEQUENT CHECK BY HEADQUARTERS, UNITED STATES AIR FORCE, WITH THE NEW YORK CONTRACT MANAGEMENT DIVISION REVEALS THAT AS OF SEPTEMBER 16, 1965, THE SAME FOUR CONTRACTS WERE STILL IN A DELINQUENT STATUS. THE FCR ALSO STATES THAT YOU HAVE FAILED TO PROVIDE SATISFACTORY PROGRESS REPORTS ON THE GOVERNMENT CONTRACTS HELD BY YOU AND THAT SUCH FAILURE IS ATTRIBUTABLE TO INEFFECTIVE CONTROLS BOTH IN-HOUSE AND ON SUPPLIES. FURTHER, PERFORMANCE OF A DEPARTMENT OF THE NAVY CONTRACT REPORTEDLY AVERAGED 131 DAYS LATE DURING THE LAST HALF OF THE CALENDAR YEAR 1964 AND 31 DAYS LATE DURING THE FIRST HALF OF THE CALENDAR YEAR 1965. ACCORDINGLY, THE NEW YORK CONTRACT MANAGEMENT DIVISION RECOMMENDED THAT YOU BE DENIED AWARD UNDER IFB NO. 04- 607-65-174.

IN ADDITION TO THE NEGATIVE FCR, THERE ARE ON FILE WITH THE PROCURING ACTIVITY RECORDS SHOWING THAT YOUR NAME WAS INCLUDED BY THE NEW YORK CONTRACT MANAGEMENT DISTRICT ON A LIST, ISSUED MAY 10, 1965, OF CONTRACTORS WITH UNSATISFACTORY PERFORMANCE RECORDS, WHOSE, RESPONSIBILITY WARRANTS CAREFUL CONSIDERATION. SUCH RECORDS SHOW THAT YOU WERE DELINQUENT IN DELIVERIES ON 62 OF 73 AIR FORCE CONTRACTS HELD BY YOU SINCE JANUARY 1963; THAT OF 30 PRE-AWARD SURVEYS OF YOUR FIRM CONDUCTED SINCE JANUARY 1963, 28 RESULTED IN DENIALS OF AWARDS BASED ON YOUR REPEATED FAILURE TO MEET CONTRACT DELIVERY SCHEDULES, MAINLY BECAUSE OF LACK OF PLANNING, INADEQUATE FACILITIES, POOR SELECTION OF VENDORS, LACK OF FOLLOW -UP ON VENDORS, INADEQUATE IN-HOUSE CONTROLS OVER MATERIALS AND PROCESSING OPERATIONS AND A LACK OF RESPONSIBILITY RELATIVE TO CONTRACTUAL COMMITMENTS; AND WHILE TWO AFFIRMATIVE FCR'S WERE ISSUED IN DECEMBER 1963 ONLY AFTER YOU HAD PROMISED TO RECTIFY SUCH DEFICIENCIES, YOU FAILED TO KEEP SUCH PROMISES. IT IS ALSO INDICATED THAT IN MARCH 1964, HEADQUARTERS, AIR FORCE LOGISTICS COMMAND, RECOMMENDED TO HEADQUARTERS, UNITED STATES AIR FORCE, THAT YOUR FIRM BE PLACED ON THE JOINT CONSOLIDATED LIST OF DEBARRED, INELIGIBLE AND SUSPENDED CONTRACTORS FOR A ONE-YEAR PERIOD.

ON AUGUST 12, 1965, THE CONTRACTING OFFICER ISSUED A WRITTEN DETERMINATION THAT YOU WERE NONRESPONSIBLE INSOFAR AS AWARD UNDER IFB 04- 607-65-174 WAS CONCERNED. THE DETERMINATION CITED YOUR DELINQUENT PERFORMANCE RECORD, THE HEADQUARTERS AIR FORCE LOGISTICS COMMAND RECOMMENDATION REGARDING YOUR PLACEMENT ON THE JOINT CONSOLIDATED LIST OF DEBARRED, INELIGIBLE AND SUSPENDED CONTRACTORS AND THE NEGATIVE FOR. THERE WAS ALSO INCLUDED IN THE DETERMINATION A STATEMENT THAT SINCE THE TITAN II PROPULSION SYSTEMS, FOR WHICH THE PROCUREMENT ITEMS WERE INTENDED, MUST BE MAINTAINED AS A FIRST LINE OF DEFENSE WEAPON, ANY SLIPPAGE IN MAINTAINING OVERHAUL SCHEDULES COULD JEOPARDIZE OUR (THE NATION-S) DEFENSE POSTURE. ACCORDINGLY, AWARD WAS MADE ON AUGUST 19 TO THE NEXT LOW BIDDER, WESTERN WAY, INCORPORATED, A SMALL BUSINESS CONCERN, WHICH RECEIVED AN AFFIRMATIVE FCR. IT IS OUR UNDERSTANDING THAT DELIVERY HAS BEEN COMPLETED BY THE CONTRACTOR.

IT IS THE POSITION OF THE DEPARTMENT OF THE AIR FORCE THAT NOTIFICATION TO SBA OF THE PROPOSED REJECTION OF YOUR BID WAS NOT REQUIRED BECAUSE THE DETERMINATION OF NONRESPONSIBILITY, INVOLVING YOUR "BUSINESS PRACTICES," WAS NOT SOLELY RELATED TO YOUR CAPACITY OR CREDIT, AND BECAUSE OF THE URGENT NEED FOR THE ITEMS IN THE TITAN II PROPULSION SYSTEM OVERHAUL PROGRAM.

THE APPLICABLE PROCUREMENT STATUTE PROVIDES FOR AWARD OF ADVERTISED PROCUREMENTS TO THE RESPONSIBLE BIDDER WHOSE BID IS RESPONSIVE TO THE INVITATION AND WILL BE THE MOST ADVANTAGEOUS TO THE UNITED STATES. U.S.C. 2305/C). ARMED SERVICES PROCUREMENT REGULATION (ASPR) 1-902, ISSUED IN IMPLEMENTATION OF THE STATUTE, PROVIDES THAT CONTRACT AWARDS WILL BE MADE ONLY TO RESPONSIBLE PROSPECTIVE CONTRACTORS.

THE DETERMINATION OF A BIDDER'S RESPONSIBILITY NECESSARILY INVOLVES THE EXERCISE OF CONSIDERABLE DISCRETION. HOWEVER, WHERE, AS HERE, THE BIDDER IS A SMALL BUSINESS CONCERN, THE CONTRACTING OFFICER'S DETERMINATION OF RESPONSIBILITY IS SUBJECT, INSOFAR AS CAPACITY AND CREDIT ARE CONCERNED, TO THE PROVISIONS OF SECTION 8 (B) (7) OF THE SMALL BUSINESS ACT, 15 U.S.C. 637 (B) (7), AUTHORIZING SBA TO CERTIFY TO GOVERNMENT PROCUREMENT OFFICERS AS TO THE CAPACITY AND CREDIT OF A SMALL BUSINESS CONCERN TO PERFORM A SPECIFIC PROCUREMENT AND REQUIRING THAT SUCH CERTIFICATION BE ACCEPTED BY THE PROCUREMENT OFFICERS AS CONCLUSIVE.

UNDER ASPR 1-903.1 (III), A SATISFACTORY PERFORMANCE RECORD IS REQUISITE TO A DETERMINATION THAT A BIDDER IS RESPONSIBLE, AND WHERE A BIDDER'S PERFORMANCE HAS BEEN UNSATISFACTORY, IT MUST BE SHOWN THAT THE DELINQUENCY WAS FOR REASONS BEYOND THE CONTRACTOR'S CONTROL IN ORDER TO MEET SUCH REQUIREMENT. ADDITIONALLY, THE CURRENT PROVISIONS OF ASPR 1-903 (III), EFFECTIVE AUGUST 31, 1965, STATE THAT PAST UNSATISFACTORY PERFORMANCE, DUE TO FAILURE TO APPLY NECESSARY TENACITY OR PERSEVERANCE TO DO AN ACCEPTABLE JOB, SHALL BE SUFFICIENT TO JUSTIFY A FINDING OF NONRESPONSIBILITY AND IN THE CASE OF SMALL BUSINESS CONCERNS SHALL NOT REQUIRE SUBMISSION OF THE CASE TO SBA.

UNDER ASPR 1-705, A CONTRACTING OFFICER WHO FINDS A SMALL BUSINESS BIDDER NONRESPONSIBLE FOR REASONS RELATING SOLELY TO CAPACITY OR CREDIT IS REQUIRED TO REFER THE MATTER TO SBA FOR DETERMINATION WHETHER A CERTIFICATE OF COMPETENCY SHOULD BE ISSUED UNLESS THE AWARD MUST BE MADE WITHOUT DELAY. HOWEVER, WHERE THE FINDING OF NONRESPONSIBILITY IS BASED ON A RECORD OF UNSATISFACTORY PERFORMANCE, REFERRAL TO SBA IS REQUIRED ONLY IF THE DELINQUENT PERFORMANCE WAS DUE SOLELY TO INADEQUATE CAPACITY OR CREDIT. PURSUANT TO SUCH PROVISIONS, WHEN A CONTRACTING OFFICER DETERMINES THAT A LOW SMALL BUSINESS BIDDER IS NONRESPONSIBLE FOR REASONS NOT INCLUDED IN SBA CERTIFICATIONS, THAT IS, FACTORS CONCERNING WHETHER A BIDDER WILL, RATHER THAN CAN, PERFORM, THE MATTER OF THE BIDDER'S RESPONSIBILITY NEED NOT BE SUBMITTED TO SBA. 43 COMP. GEN. 298, 300.

FROM THE FACTS SET FORTH, IT IS EVIDENT THAT YOUR UNSATISFACTORY PERFORMANCE ON PRIOR GOVERNMENT CONTRACTS WAS DUE TO REASONS OTHER THAN THOSE SOLELY RELATED TO YOUR FINANCIAL STATUS AND PHYSICAL CAPABILITY TO PERFORM, SUCH AS LACK OF PERSEVERANCE, TENACITY, AND PROPER PLANNING, FACTORS WHICH WE HAVE HELD ARE FOR DETERMINATION BY THE CONTRACTING AGENCY WITHOUT REFERENCE TO SBA. 43 COMP. GEN. 257 AND CASES CITED THEREIN. FURTHER, THE DETERMINATION OF YOUR NONRESPONSIBILITY, BASED UPON SUCH FACTORS, WAS PROPERLY DOCUMENTED AS REQUIRED BY ASPR 1-705.4.

IN THE CIRCUMSTANCES, WE MUST CONCUR WITH THE CONCLUSION OF THE CONTRACTING OFFICER THAT REFERRAL TO SBA OF THE MATTER OF YOUR RESPONSIBILITY WAS NOT REQUIRED BY THE REGULATIONS. WHILE IT IS CONCEDED THAT YOUR BID PRICE WAS $1,825 LOWER THAN THE BID OF THE SUCCESSFUL BIDDER, NEVERTHELESS, IT HAS LONG BEEN HELD THAT IT IS INFINITELY MORE IN THE PUBLIC INTEREST TO ABIDE BY THE RULES OF COMPETITIVE BIDDING THAN TO OBTAIN A PECUNIARY ADVANTAGE IN A PARTICULAR CASE BY THE VIOLATION OF SUCH RULES. 17 COMP. GEN. 554.

FOR THE REASONS STATED, WE FIND NO LEGAL BASIS FOR OBJECTION TO THE ACTION OF THE CONTRACTING OFFICER IN REJECTING YOUR BID AND MAKING AWARD TO THE NEXT LOW RESPONSIVE BIDDER, WHO WAS DETERMINED TO BE RESPONSIBLE. THEREFORE, YOUR PROTEST AGAINST SUCH ACTION IS DENIED.