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TO RACON CORP.: FURTHER REFERENCE IS MADE TO YOUR TELEGRAM OF DECEMBER 14 AND LETTERS DATED DECEMBER 15 AND 28. THE NEXT LOWEST BID WAS SUBMITTED BY UNIVERSITY SOUND DIVISION OF LTV LING ALTEC. AN EVALUATION BY THE CONTRACTOR EVALUATION BOARD OF THE ELECTRONICS COMMAND THAT YOUR FIRM WAS NOT A RESPONSIBLE BIDDER UNDER THE CRITERIA SET OUT IN ASPR 1-903. THE CONTRACTING OFFICER CONCLUDED THAT YOUR FIRM WAS UNABLE TO MEET THE REQUIRED DELIVERY SCHEDULE. IN ARRIVING AT THIS DETERMINATION OF NONRESPONSIBILITY PARTICULAR CONSIDERATION WAS GIVEN TO YOUR FIRM'S LACK OF FINANCIAL RESOURCES AND THE FACT THAT YOUR PURCHASING AND SUBCONTRACTING PLANS WERE DEEMED UNSATISFACTORY. AS REQUIRED BY ASPR 1-705.4 THE MATTER WAS REFERRED TO THE SMALL BUSINESS ADMINISTRATION (SBA) SO THAT IT COULD CONSIDER WHETHER TO ISSUE A CERTIFICATE OF COMPETENCY (COC) TO YOUR FIRM.

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B-160562, APR. 19, 1967

TO RACON CORP.:

FURTHER REFERENCE IS MADE TO YOUR TELEGRAM OF DECEMBER 14 AND LETTERS DATED DECEMBER 15 AND 28, 1966, PROTESTING AGAINST THE MAKING OF ANY AWARDS OTHER THAN TO YOUR FIRM UNDER INVITATIONS FOR BIDS DAABO5-67-B-0015 -0001, DSA-900-67-B-0351 AND DSA-900-67-B-0913.

THE UNITED STATES ARMY ELECTRONICS COMMAND, PHILADELPHIA, PENNSYLVANIA, BY DEPARTMENT OF THE ARMY INVITATION FOR BIDS NO. DAABO5 67-B-0015-0001, HEREINAFTER REFERRED TO AS INVITATION -0001, REQUESTED BIDS FOR FURNISHING VARIOUS INCREMENTAL QUANTITIES OF TYPE LS-166) ( (U LOUDSPEAKERS. YOUR FIRM SUBMITTED THE LOWEST BID. THE NEXT LOWEST BID WAS SUBMITTED BY UNIVERSITY SOUND DIVISION OF LTV LING ALTEC, INC. WHILE YOUR FIRM SUBMITTED THE LOWEST BID, THE CONTRACTING OFFICER DETERMINED ON THE BASIS OF A PREAWARD SURVEY MADE BY THE DEFENSE CONTRACT ADMINISTRATION SERVICES REGION (DCASR), NEW YORK, AND AN EVALUATION BY THE CONTRACTOR EVALUATION BOARD OF THE ELECTRONICS COMMAND THAT YOUR FIRM WAS NOT A RESPONSIBLE BIDDER UNDER THE CRITERIA SET OUT IN ASPR 1-903. THE CONTRACTING OFFICER CONCLUDED THAT YOUR FIRM WAS UNABLE TO MEET THE REQUIRED DELIVERY SCHEDULE, AND IN ARRIVING AT THIS DETERMINATION OF NONRESPONSIBILITY PARTICULAR CONSIDERATION WAS GIVEN TO YOUR FIRM'S LACK OF FINANCIAL RESOURCES AND THE FACT THAT YOUR PURCHASING AND SUBCONTRACTING PLANS WERE DEEMED UNSATISFACTORY. AS REQUIRED BY ASPR 1-705.4 THE MATTER WAS REFERRED TO THE SMALL BUSINESS ADMINISTRATION (SBA) SO THAT IT COULD CONSIDER WHETHER TO ISSUE A CERTIFICATE OF COMPETENCY (COC) TO YOUR FIRM. ON DECEMBER 13, 1966, THE CONTRACTING OFFICER WAS ADVISED BY SBA THAT SINCE YOUR FIRM HAD FAILED TO FILE AN ACCEPTABLE COC APPLICATION WITHIN THE TIME LIMITS FOR SBA TO PROCESS THE APPLICATION THE CASE WAS BEING CLOSED. IT IS REPORTED THAT THE CONTRACTING OFFICER HAVING RECEIVED NO NEW EVIDENCE TO CAUSE A CHANGE IN HIS ORIGINAL DETERMINATION AWARDED THE CONTRACT ON DECEMBER 30, 1966, TO UNIVERSITY SOUND DIVISION OF LTV LING ALTEC, INC. THE CONTRACT PROVIDED FOR FIRST DELIVERIES IN SEPTEMBER 1967 AND COMPLETION BY DECEMBER 1967.

THE DEFENSE ELECTRONICS SUPPLY CENTER, DAYTON, OHIO, BY DEFENSE SUPPLY AGENCY INVITATIONS FOR BIDS DSA-900-67-B-0351 AND DSA-900-67-B 0913, HEREINAFTER REFERRED TO AS INVITATIONS -0351 AND -0913, REQUESTED BIDS FOR FURNISHING VARIOUS INCREMENTAL QUANTITIES OF TYPE LS-166/U AND TYPE LS203/U LOUDSPEAKERS. SINCE YOUR FIRM SUBMITTED THE LOWEST RESPONSIVE BIDS IN RESPONSE TO BOTH INVITATIONS, THE CONTRACTING OFFICER REQUESTED THE DEFENSE CONTRACT ADMINISTRATION SERVICES REGION, NEW YORK, TO CONDUCT A PREAWARD SURVEY OF YOUR FIRM. ON NOVEMBER 17, 1966, DCASR RETURNED TO THE CONTRACTING OFFICER ITS "NO AWARD" RECOMMENDATION REGARDING YOUR FIRM'S ELIGIBILITY TO RECEIVE AN AWARD ON BOTH INVITATIONS -0351 AND - 0913. THE RECOMMENDATION AS TO INVITATION -0351 WAS BASED ON UNSATISFACTORY FINDINGS AS TO FINANCIAL CAPABILITY, PURCHASING AND SUBCONTRACTING, AND ABILITY TO MEET THE REQUIRED DELIVERY SCHEDULE. INVITATION -0913 THE FINDINGS WERE UNSATISFACTORY ON THE SAME POINTS AND, IN ADDITION, IT WAS FOUND THAT YOUR FIRM'S TESTING FACILITIES WERE NOT ADEQUATE. SINCE YOUR FIRM'S FINANCIAL CAPABILITY WAS QUESTIONED IN THE DCASR REPORTS, THE CONTRACTING OFFICER BY LETTERS DATED NOVEMBER 28 AND 29, 1966, REQUESTED THE SBA TO DETERMINE WHETHER YOUR FIRM WAS ELIGIBLE TO RECEIVE A CERTIFICATE OF COMPETENCY. BY LETTER DATED DECEMBER 13, 1966, THE CONTRACTING OFFICER WAS ADVISED BY SBA THAT SINCE YOUR FIRM HAD FAILED TO FILE AN ACCEPTABLE CERTIFICATE OF COMPETENCY APPLICATION WITHIN THE ESTABLISHED TIME LIMITS IN ORDER FOR THAT AGENCY TO PROCESS THE APPLICATION THE CASES INVOLVING INVITATIONS -0351 AND -0913 WERE CONSIDERED CLOSED. IN VIEW OF THE LAPSE OF TIME SINCE THE INITIAL SURVEYS IN NOVEMBER 1966 AND THE INDICATION IN YOUR PROTEST LETTER THAT THERE MIGHT HAVE BEEN A SIGNIFICANT CHANGE IN SOME OF THE QUESTIONABLE AREAS, DCASR WAS REQUESTED BY THE CONTRACTING OFFICER TO UP-DATE THE PREAWARD SURVEYS MADE BY THAT ORGANIZATION ON YOUR FIRM. THE UP-DATED SURVEYS DATED MARCH 13, 1967, SHOW THAT FINANCING IS NO LONGER A PROBLEM WITH YOUR FIRM. HOWEVER, THE SURVEYS INDICATE THAT OTHER AREAS DETERMINED TO BE UNSATISFACTORY ON THE INITIAL SURVEY, SUCH AS PURCHASING, SUBCONTRACTING AND THE ABILITY TO MEET THE REQUIRED DELIVERY SCHEDULE, ARE STILL UNSATISFACTORY. THE CONTRACTING OFFICER STATES THAT HE IS STILL UNABLE TO MAKE AN AFFIRMATIVE FINDING OF RESPONSIBILITY AS REQUIRED BY ASPR 1-904.1 ON THE BASIS OF THE INFORMATION IN THE UP-DATED SURVEYS ON YOUR FIRM. IS REPORTED THAT AWARDS UNDER INVITATIONS -0351 AND -0913 ARE BEING WITHHELD PENDING A DECISION BY OUR OFFICE IN THE MATTER.

IN A LETTER DATED DECEMBER 15, 1966, TO OUR OFFICE, YOU CONTEND THAT THE SBA DID NOT ALLOW YOUR FIRM SUFFICIENT TIME TO FILL OUT THE FORMS WHICH ACCOMPANY AN APPLICATION FOR ISSUANCE OF A CERTIFICATE OF COMPETENCY. VIEW THEREOF WE REQUESTED THE SBA TO FURNISH US WITH A REPORT OF THE ACTION TAKEN BY THAT AGENCY WITH RESPECT TO YOUR APPLICATION FOR ISSUANCE OF A CERTIFICATE OF COMPETENCY. BY LETTER DATED JANUARY 20, 1967, THE SBA ADVISED US THAT REFERRALS FOR COC ACTION WERE RECEIVED BY THE SBA ON NOVEMBER 22 (INVITATION -0351), NOVEMBER 30 (INVITATION -0913), AND DECEMBER 1, 1966 (INVITATION 0015); THAT DUE TO THE CLOSE PROXIMITY OF DATES OF REFERRAL, THE NEW YORK REGIONAL OFFICE ELECTED TO TREAT THE REFERRALS AS ONE AND CONDUCT ONLY ONE TECHNICAL SURVEY OF YOUR FIRM; AND THAT BECAUSE OF THE COMBINING OF THE REFERRALS, THE ORIGINAL DATE FOR RECEIPT OF PLANT DATA FROM YOUR FIRM WAS EXTENDED FROM DECEMBER 1 TO DECEMBER 8, 1966. SINCE YOUR FIRM DID NOT SUBMIT TO SBA THE REQUIRED FINANCIAL DATA AND TECHNICAL INFORMATION, THAT AGENCY DECIDED TO CONCLUDE FURTHER COC ACTION. ON DECEMBER 12, 1966, THE CASES WERE OFFICIALLY TERMINATED BY REASON OF YOUR FAILURE TO FILE AN ACCEPTABLE COC APPLICATION WITHIN THE ESTABLISHED TIME LIMITS FOR SBA TO PROCESS THE APPLICATION. THE SBA STATES IT IS OF THE OPINION THAT YOUR FIRM WAS GIVEN EVERY CONSIDERATION AND OPPORTUNITY TO FILE ITS APPLICATION AND ESTABLISH ITSELF AS A RESPONSIBLE PROSPECTIVE CONTRACTOR. THE RECORD INDICATES THAT YOUR FIRM WAS GIVEN A TOTAL OF 12 WORKING DAYS AND 2 WEEKENDS TO SUBMIT THE REQUESTED DATA TO THE SBA. ASPR 1-705.4 (C) PROVIDES THAT THE SBA SHALL HAVE 15 WORKING DAYS TO PROCESS A COC APPLICATION, EXCEPT THAT THE SBA MUST ADVISE THE CONTRACTING OFFICER WHETHER IT IS PROCESSING A COC WITHIN 5 WORKING DAYS FROM THE DATE OF RECEIPT OF THE REFERRAL. OUR OFFICE HAS HELD THAT THE AMOUNT OF TIME TO BE ALLOWED A PROSPECTIVE CONTRACTOR FOR THE SUBMISSION OF EVIDENCE IN SUPPORT OF A CERTIFICATE OF COMPETENCY IS FOR DETERMINATION BY THE SBA. B-152198, NOVEMBER 6, 1963. ALSO, OUR OFFICE HAS REFUSED TO QUESTION THE CONTRACTING OFFICER'S DETERMINATION OF NONRESPONSIBILITY WHERE THE CONTRACTOR FAILED TO FURNISH SBA THE DOCUMENTATION WHICH IS REQUESTED AS A BASIS FOR AN INDEPENDENT INVESTIGATION OF THE MATTER. SEE 37 COMP. GEN. 703, 705; B-156069, JUNE 15, 1965; B-154865, SEPTEMBER 14, 1964; B-160451, JANUARY 13, 1967.

IN REGARD TO THE DETERMINATION OF THE RESPONSIBILITY OF A PROSPECTIVE CONTRACTOR, THE AUTHORITIES ARE IN AGREEMENT THAT THE OFFICERS IN WHOM THE POWER IS VESTED TO DETERMINE ,RESPONSIBILITY" MUST DETERMINE THE FACT AND SUCH DETERMINATION CANNOT BE SET ASIDE UNLESS THE ACTION WAS ARBITRARY, CAPRICIOUS OR FRAUDULENT. DETERMINATION OF THE LOWEST RESPONSIBLE BIDDER IS TO BE MADE BY THE AUTHORIZED OFFICIAL OF THE CONTRACTING AGENCY, WHO IS REQUIRED TO ACT FAIRLY UPON REASONABLE INFORMATION WHICH SUPPORTS THE DETERMINATION MADE. WHEN SUCH OFFICIAL DETERMINES THE RESPONSIBILITY OF A BIDDER, SUCH DETERMINATION CANNOT BE OVERTHROWN BY THE COURTS OR OUR OFFICE UNLESS IT CAN BE HELD THAT THE DETERMINATION WAS ARBITRARY, CAPRICIOUS OR FRAUDULENT. SEE MCQUILLIN, MUNICIPAL CORPORATIONS, 3D ED., VOL. 10, SEC. 29.73, AND THE CASES THERE CITED; 38 COMP. GEN. 131; 33 ID. 549; BROWN V. CITY OF PHOENIX, 272 P.2D 358; MCNICHOLS V. CITY AND COUNTY OF DENVER, 274 P.2D 317. THUS, THE ONLY QUESTION FOR CONSIDERATION IS WHETHER THE DETERMINATION ADMINISTRATIVELY MADE OF YOUR NONRESPONSIBILITY MEETS THE CRITERIA DISCUSSED. PARAGRAPH 1-902 OF ASPR PROVIDES PURCHASES SHALL BE AWARDED ONLY TO RESPONSIBLE PROSPECTIVE CONTRACTORS. ASPR 1- 904.1 REQUIRES THE CONTRACTING OFFICER TO MAKE A DECISION REGARDING THE RESPONSIBILITY OF THE PROSPECTIVE CONTRACTOR. THIS REGULATION FURTHER PROVIDES THAT THIS DETERMINATION OF RESPONSIBILITY IS TO BE MADE WITHIN THE FRAMEWORK OF ASPR 1-902 AND ASPR 1-903. ASPR 1-903 PROVIDES FOR MINIMUM STANDARDS FOR RESPONSIBLE PROSPECTIVE CONTRACTORS. ASPR 1 903.1 (II) PROVIDES THAT PROSPECTIVE CONTRACTORS MUST BE ABLE TO COMPLY WITH THE REQUIRED OR PROPOSED DELIVERY OR PERFORMANCE SCHEDULE, TAKING INTO CONSIDERATION ALL EXISTING BUSINESS COMMITMENTS, COMMERCIAL AS WELL AS GOVERNMENTAL.

THEREFORE, IN VIEW OF THE UP-DATED SURVEYS DATED MARCH 13, 1967, SHOWING THAT YOUR FIRM WAS STILL UNABLE TO MEET THE REQUIRED DELIVERY SCHEDULE AND AS YOUR FIRM DID NOT AVAIL ITSELF OF THE OPPORTUNITY AFFORDED BY LAW AND REGULATION TO HAVE SBA CONSIDER THE MATTER OF ITS COMPETENCY TO PERFORM THE PROCUREMENTS, WE FIND NO LEGAL BASIS TO QUESTION THE REJECTION OF YOUR BID UNDER DEPARTMENT OF THE ARMY INVITATION -0001 AND THE PROPOSED REJECTION OF YOUR BIDS UNDER DEFENSE SUPPLY AGENCY INVITATIONS -0351 AND - 0913.

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