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THE FINAL DETERMINATION OF A BIDDER'S CAPABILITY TO PERFORM IS WITH THE CONTRACTING OFFICER. THE CONTRACTING OFFICER'S DETERMINATION OF REPONSIBILITY IS NOT SUBJECT TO QUESTION. RACON CORP.: REFERENCE IS MADE TO YOUR TELEGRAM OF APRIL 20 AND LETTERS OF APRIL 19 AND MAY 9. ACCOMPANY AN ACTIVITY IN A TRANSFER OF FUNCTION EVEN THOUGH NO ELEMENT OF DISCIPLINE IS PRESENT. "IF THE AGENCY IS INVOLVED IN A TRANSFER OF FUNCTION SITUATION IT MUST EFFECT ITS ACTION IN ACCORDANCE WITH SECTION 12 OF THE VETERANS' PREFERENCE ACT AND OUR REGULATIONS. SECTION 12 OF THE ACT LAYS DOWN THE GENERAL PRINCIPLES BUT LEAVES TO COMMISSION REGULATIONS THE DETAILS OF THESE PRINCIPLES SO THE RESULT WILL BE ADMINISTRATIVELY WORKABLE.

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B-160562, JUL. 26, 1967

BIDDERS - RESPONSIBILITY - PREAWARD SURVEY RECONSIDERATION OF DECISION OF APRIL 19, 1967, CONCERNING REJECTION OF BID OF RACON CORP. FOR AWARD BY DEFENSE ELECTRONICS SUPPLY CENTER ON BASIS OF LACK OF RESPONSIBILITY. ALTHOUGH BIDDER CONTESTS DETERMINATION OF PREAWARD SURVEY TEAM, THE FINAL DETERMINATION OF A BIDDER'S CAPABILITY TO PERFORM IS WITH THE CONTRACTING OFFICER, WHO EVALUATES THE SURVEY REPORT AND OTHER INFORMATION. ON THE BASIS OF THE RECORD, THE CONTRACTING OFFICER'S DETERMINATION OF REPONSIBILITY IS NOT SUBJECT TO QUESTION.

TO MR. ALAN ABRAHAMS, PRESIDENT, RACON CORP.:

REFERENCE IS MADE TO YOUR TELEGRAM OF APRIL 20 AND LETTERS OF APRIL 19 AND MAY 9, 1967, REQUESTING RECONSIDERATION OF OUR DECISION B 160562, DATED APRIL 19, 1967, WHICH DENIED YOUR PROTEST AGAINST AWARD OF CONTRACT TO ANY OTHER FIRM UNDER INVITATIONS FOR BIDS NOS. ACCOMPANY AN ACTIVITY IN A TRANSFER OF FUNCTION EVEN THOUGH NO ELEMENT OF DISCIPLINE IS PRESENT.

"IF THE AGENCY IS INVOLVED IN A TRANSFER OF FUNCTION SITUATION IT MUST EFFECT ITS ACTION IN ACCORDANCE WITH SECTION 12 OF THE VETERANS' PREFERENCE ACT AND OUR REGULATIONS. THE VETERANS' PREFERENCE ACT AUTHORIZES THE COMMISSION TO ISSUE AND ENFORCE REGULATIONS TO CARRY OUT THE PROVISIONS, PURPOSE, AND INTENT OF THE ACT. SECTION 12 OF THE ACT LAYS DOWN THE GENERAL PRINCIPLES BUT LEAVES TO COMMISSION REGULATIONS THE DETAILS OF THESE PRINCIPLES SO THE RESULT WILL BE ADMINISTRATIVELY WORKABLE. IN VIEW OF THIS, THE COMMISSION REQUIRES THAT IN A TRANSFER-OF- FUNCTION SITUATION THE EMPLOYEE MUST BE GIVEN DSA-900-67-B-0351 AND -0913, ISSUED BY THE DEFENSE ELECTRONICS SUPPLY CENTER, DAYTON, OHIO.

YOUR REQUEST FOR REVIEW IS DIRECTED TO THE VALIDITY OF THE PREAWARD SURVEY MADE OF YOUR FIRM BY THE DEFENSE CONTRACT ADMINISTRATION SERVICES REGION (DCASR) UPON WHICH THE DETERMINATION WAS BASED THAT YOUR FIRM WAS NOT A RESPONSIBLE BIDDER UNDER THE CRITERIA SET OUT IN ASPR 1-903. SPECIFICALLY, YOU CONTEND THE FOLLOWING:

"YOU HAVE INFORMED ME THAT THE SECOND DCASR SURVEY INDICATED THAT WE DID NOT HAVE COMMITMENTS FROM RAW MATERIAL SUPPLIERS; HOWEVER, WE DO HAVE ALL OF THESE COMMITMENTS...AND IN WRITING** I PERSONALLY SHOWED EACH COMMITMENT FOR EVERY PART TO THE SURVEY TEAM AND I CHALLENGE THEM TO INDICATE EVEN ONE PART THAT WE DID NOT EITHER HAVE IN STOCK OR WERE PROMISED EARLY DELIVERY.'

WE HAVE BEEN ADVISED BY THE DEFENSE SUPPLY AGENCY THAT DCASR PREAWARD SURVEYS ARE GENERALLY ACCOMPLISHED ON A TEAM BASIS COMPRISED OF TECHNICAL REPRESENTATIVES FROM QUALITY ASSURANCE AND PRODUCTION AND FINANCIAL SPECIALISTS. THE RESULTS OF THEIR INDIVIDUAL INVESTIGATIONS ARE COMPILED AND FORWARDED TO A PREAWARD MONITOR WITH RECOMMENDATIONS IN THEIR RESPECTIVE AREAS OF ANALYSIS. THE PREAWARD FINDINGS AND RECOMMENDATIONS ARE THEN SUBJECTED TO SUPERVISORY REVIEW AND ULTIMATELY ARE EXAMINED BY A PREAWARD SURVEY BOARD COMPOSED OF KEY PERSONNEL APPOINTED BY THE REGION DIRECTOR. THE FINAL REPORT SUBMITTED TO THE CONTRACTING OFFICER REPRESENTS THE COLLECTIVE JUDGMENTS AND RECOMMENDATIONS OF THE REGION. HOWEVER, THE ULTIMATE AUTHORITY AS TO WHETHER TO GRANT OR DENY AN AWARD STILL RESTS WITH THE CONTRACTING OFFICER WHO EVALUATES THE RECOMMENDATIONS CONTAINED IN THE PREAWARD SURVEY REPORT, TOGETHER WITH OTHER INFORMATION AVAILABLE TO HIM, IN RENDERING A FINAL DETERMINATION REGARDING THE PROPOSED CONTRACTOR'S RESPONSIBILITY.

THE FINDINGS OF A PREAWARD SURVEY REFLECT THE BIDDER'S CAPABILITY AS OF THE TIME OF THE SURVEY (NOT SOME TIME IN THE FUTURE). THE BIDDER MUST DEMONSTRATE THROUGH OBJECTIVE EVIDENCE THAT HE HAS THE NECESSARY ORGANIZATION, EXPERIENCE, OPERATIONAL CONTROLS AND TECHNICAL SKILLS OR THE ABILITY TO OBTAIN THEM WITHIN THE TIME LIMITATIONS OF THE PROPOSED AWARD.

WITH REGARD TO YOUR CONTENTIONS RESPECTING THE PREAWARD SURVEY, WE HAVE BEEN ADVISED BY THE DEFENSE SUPPLY AGENCY, AS FOLLOWS:

"3. THE SUBJECT BIDDER'S LETTERS ESSENTIALLY CONCERN TWO SURVEYS PERFORMED IN MID NOVEMBER 1966 AND SUBSEQUENT RE-SURVEYS PERFORMED IN MID MARCH 1967. THESE LETTERS CONTAIN THE FOLLOWING BASIC ALLEGATIONS, EACH OF WHICH ARE DISCUSSED SEPARATELY BELOW.

"A. FINANCIAL CONDITION - THE ORIGINAL SURVEYS REVEALED THAT THE FINANCIAL DATA SUBMITTED TO THIS DCASR REGARDING THE BIDDER'S CAPITAL RESOURCES CONFLICTED WITH THAT SUBMITTED TO DUN AND BRADSTREET. (IT SHOULD BE NOTED THAT REPORTS FROM THE AFOREMENTIONED COMMERCIAL CREDIT ORGANIZATION ARE SPECIFICALLY APPROVED FOR USE IN A PRE-AWARD SURVEY.) AGAIN, IT SHOULD BE EMPHASIZED THAT AT THE TIME OF THE ORIGINAL SURVEY THE BIDDER DID NOT DEMONSTRATE HIS FINANCIAL CAPABILITY AS PERTINENT TO THE PROPOSED PROCUREMENTS AND HIS PROJECTED COMMITMENTS. HOWEVER, NOTWITHSTANDING THE BIDDER'S ORIGINAL FAILURE TO FURNISH SATISFACTORY FINANCIAL EVIDENCE, DURING THE RE-SURVEYS HE SUBMITTED ADDITIONAL DATA WHICH WAS CONSIDERED SATISFACTORY AND SO REPORTED BY THE FINANCIAL ANALYST. IT MUST BE NOTED THAT THE CHANGE FROM UNSATISFACTORY FINANCIAL TO SATISFACTORY FINANCIAL RESULTED SOLELY FROM INFORMATION SUBMITTED AT THE TIME OF THE RE-SURVEYS.

"B. COMMITMENTS FROM RAW MATERIALS SUPPLIERS - THE ORIGINAL SURVEYS REFLECTED THE BIDDER'S FAILURE TO FURNISH SATISFACTORY EVIDENCE REGARDING THE TIMELY AVAILABILITY OF MATERIALS AND PARTS. DURING THE RE-SURVEYS THE BIDDER DID PRODUCE QUOTATIONS FROM VARIOUS SUPPLIERS; HOWEVER, THESE QUOTATIONS WERE FOR HIS CURRENT CONTRACT (WHICH INCIDENTALLY IS DELINQUENT) AND DID NOT CONTAIN ANY COMMITMENT FOR THE QUANTITIES FOR THE TWO PROPOSED PROCUREMENTS. AS SUCH, THIS PRECLUDED ANY ASSURANCE THAT MATERIALS AND PARTS COULD BE OBTAINED IN SUFFICIENT TIME FOR HIM TO PERFORM THE VARIOUS IN-HOUSE PROCESSING OPERATIONS AND STILL EFFECT DELIVERIES IN ACCORDANCE WITH THE PRESCRIBED SCHEDULES OF THE TWO PROPOSED PROCUREMENTS.

"C. POOR HOUSEKEEPING IN PLANT - WHILE THE ORIGINAL SURVEYS DID NOT RESULT IN UNSATISFACTORY RECOMMENDATIONS WITH REGARD TO QUALITY, THE REPORTS MADE SPECIFIC COMMENT REGARDING THE INADEQUACY OF HOUSEKEEPING, THE LACK OF PROGRESS IN INSTALLING AN ACCEPTABLE INSPECTION SYSTEM, AND DETAILED THE LACK OF ACCEPTABLE INSPECTION AND TEST EQUIPMENT REQUIRED FOR THE TWO PROCUREMENTS. THE BIDDER'S STATEMENTS THAT THE AFORE CITED DEFICIENT AREAS WOULD BE CORRECTED WERE ACCEPTED ON THE BASIS THAT, IN THE QUALITY SURVEYOR'S JUDGMENT, THE BIDDER APPEARED TO BE ACTING ON PREVIOUS SUGGESTIONS AND CRITICISMS AND HAD THE ABILITY TO EFFECT THE NECESSARY CORRECTIONS IN A MINIMAL TIME PERIOD. THE RE-SURVEYS CONDUCTED FOUR MONTHS LATER CITED THE BIDDER'S LACK OF PROGRESS IN EFFECTING THE PROMISED NECESSARY CORRECTIONS AND HIS FAILURE TO PROPERLY IMPLEMENT THE MIL-I- 45208A INSPECTION REQUIREMENTS. ACCORDINGLY, UNSATISFACTORY QUALITY REPORTS WERE ISSUED.

"D. DELINQUENCY ON A PRESENT CONTRACT FOR A SIMILAR ITEM

"/1) DURING THE PERIOD OF THE RE-SURVEYS, THE SURVEYOR REVIEWED THE BIDDER'S PERFORMANCE ON A THEN GOING CONTRACT FOR A SIMILAR TYPE OF LOUD SPEAKER SYSTEM. THE REVIEW REVEALED THAT THE CONTRACT WAS DELINQUENT DUE TO THE BIDDER'S FAILURE TO SUBMIT FIRST ARTICLE TEST REPORTS THAT WERE DUE IN DECEMBER 1966. THE FIRST ARTICLE TEST REPORTS WERE SUBMITTED LATE ON 30 MARCH 1967 AND WERE FOUND TO BE INCOMPLETE AND, THEREFORE, REJECTED. INCIDENTALLY, NUMEROUS REJECTIONS TRANSPIRED SUBSEQUENT TO THE INITIAL REJECTION. CONTINUED LACK OF SATISFACTORY PROGRESS AFTER THE RESURVEY PRECLUDED ANY ASSURANCE THAT THE BIDDER WOULD CORRECT HIS DELINQUENCY IN A TIMELY MANNER. SUBSEQUENTLY, A LETTER WAS FORWARDED TO THE COGNIZANT PCO RECOMMENDING THAT THE CONTRACT BE TERMINATED AND THE MATERIAL RE-PROCURED FROM A NEW SOURCE.

"/2) IN THE SUBJECT LETTERS THE BIDDER STATED THAT HE NOW HAS GOOD HOUSEKEEPING, THAT HIS DELIVERIES ON THE AFOREMENTIONED CONTRACT ARE NOW AHEAD OF SCHEDULE AND THAT HE NOW HAS COMPLETE AND CALIBRATED TEST EQUIPMENT. HOWEVER, THE DEFICIENT CONDITIONS DID EXIST AT THE TIME OF THE PRE-AWARD SURVEYS. MOREOVER, NOTWITHSTANDING THE BIDDER'S CLAIM TO NOW BE AHEAD OF SCHEDULE; AS OF 12 MAY 1967 THE AFOREMENTIONED MATERIAL WAS STILL UNDELIVERED IN THAT THE FIRST ARTICLE HAD NOT BEEN APPROVED.

"E. THE -FIX- REMARK - WE CAN ONLY ENTER A CATEGORICAL DENIAL OF ANY SUCH STATEMENTS AND DEPLORE THE NEED TO REFUTE SUCH OBVIOUS ATTEMPTS TO DISCREDIT OUR PERSONNEL AND INVALIDATE THEIR RECOMMENDATIONS.

"4. IN SUMMARY, THIS REGION FEELS THAT THE CONTRACTOR FAILED TO DEMONSTRATE AFFIRMATIVELY HIS ABILITY TO MEET THE REQUIREMENTS OF THE PROPOSED AWARD BOTH IN THE INITIAL AND RE-SURVEYS CONDUCTED BY OUR FUNCTIONAL SPECIALISTS.'

IN VIEW OF THE FOREGOING, WE MUST CONCLUDE THAT THE DETERMINATION MADE BY THE CONTRACTING OFFICER OF YOUR FIRM'S NONRESPONSIBILITY IS NOT SUBJECT TO QUESTION BY OUR OFFICE. IN THIS REGARD, WE DIRECT YOUR ATTENTION TO THE STATEMENTS AND AUTHORITIES CITED IN THE LAST PARAGRAPH ON PAGES 3 AND 4 OF OUR DECISION OF APRIL 19 TO YOU.

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