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INC.: FURTHER REFERENCE IS MADE TO YOUR TELEGRAM OF JANUARY 9. REFERENCE WILL BE MADE TO THE ARMED SERVICES PROCUREMENT REGULATION(ASPR). INASMUCH AS THE PREAWARD SURVEY OF YOUR FIRM WAS MADE UNDER ASPR GUIDANCE. THE FOLLOWING BIDS WERE RECEIVED: CHART NAME AMOUNT J. IS PRIMARILY A CONSTRUCTION FIRM AND HAS HAD NO EXPERIENCE IN MANUFACTURING EQUIPMENT OF THE NATURE REQUIRED BY THIS PROCUREMENT. THE PROSPECTIVE CONTRACTOR IS NOT AND DOES NOT CONTEMPLATE BEING THE MANUFACTURER OF THE SUPPLIES ON WHICH HE IS BIDDING. IS ALSO LISTED AS THE GENERAL MANAGER/SENIOR VICE PRESIDENT OF CRYO-SONICS. WAS ACQUIRED BY J. THERE HAVE BEEN NO CHANGES IN PRODUCTION PERSONNEL SINCE THAT TIME. 029. "/2) THESE FOUR CONTRACTS WERE FOR LIQUID NITROGEN EQUIPMENT OF A CLOSELY RELATED NATURE TO THAT ON THE PRESENT PROCUREMENT. "/3) EACH OF THESE FOUR CONTRACTS HAD DELIVERY DELINQUENCIES RANGING FROM 15 DAYS TO 232 DAYS.

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B-160649, MAR. 27, 1967

TO J. CARNER CO., INC.:

FURTHER REFERENCE IS MADE TO YOUR TELEGRAM OF JANUARY 9, 1967, AND COPY OF A LETTER DATED JANUARY 11, 1967, TO THE PROCUREMENT AGENCY, PROTESTING AGAINST THE AWARD OF A CONTRACT TO HOFMAN-PAUL CRYOGENIC DIVISION, AIR REDUCTION COMPANY, INC. (HOFMAN-PAUL), A LARGE BUSINESS CONCERN, UNDER INVITATION FOR BIDS NO. MSC-WS-67-7-AD, ISSUED BY THE NATIONAL AERONAUTICS AND SPACE ADMINISTRATION (NASA) MANNED SPACECRAFT CENTER, WHITE SANDS TEST FACILITY, LAS CRUCES, NEW MEXICO. IN THE FOLLOWING CONSIDERATION OF YOUR PROTEST, REFERENCE WILL BE MADE TO THE ARMED SERVICES PROCUREMENT REGULATION(ASPR), AS WELL AS THE RELATED NASA PROCUREMENT REGULATION (NASA PR), INASMUCH AS THE PREAWARD SURVEY OF YOUR FIRM WAS MADE UNDER ASPR GUIDANCE.

THE SUBJECT INVITATION, ISSUED SEPTEMBER 14, 1966, SOLICITED BIDS FOR A LIQUID NITROGEN RECHARGER FOR STORING, PUMPING AND VAPORIZING LIQUID NITROGEN AND DISCHARGING THE RESULTANT GASEOUS NITROGEN INTO A HIGH PRESSURE DISTRIBUTION SYSTEM. AT THE BID OPENING ON OCTOBER 13, 1966, THE FOLLOWING BIDS WERE RECEIVED:

CHART

NAME AMOUNT

J. CARNER CO., INC. $31,529

HOFMAN-PAUL CRYOGENIC DIVISION,

AIR REDUCTION COMPANY, INC. 34,950

PICO CRYOGENIC PRODUCTS CORPORATION 43,623

SAGE ENGINEERING AND VALVE COMPANY 49,450

THE COSMODYNE CORPORATION 51,784

AFTER BID OPENING, HOFMAN-PAUL PROTESTED TO THE CONTRACTING OFFICER AGAINST ANY POSSIBLE AWARD TO YOUR FIRM--- A SMALL BUSINESS CONCERN--- ON THE BASIS OF PAST POOR PERFORMANCE BY CRYO-SONICS, INC. (AN AFFILIATE OF J. CARNER CO., INC.). AS A RESULT OF THE PROTEST MADE BY HOFMAN-PAUL, AND IN ACCORDANCE WITH NORMAL ADMINISTRATIVE PROCEDURES (ASPR 1-905.4 AND NASA PR 1.905-4), THE CONTRACTING OFFICER REQUESTED THAT A PREAWARD SURVEY BE CONDUCTED OF YOUR FIRM BY THE DEFENSE CONTRACT ADMINISTRATION SERVICES REGION (DCASR/-LOS ANGELES.

THE PREAWARD SURVEY CONDUCTED BY DCASR, AND FURNISHED TO THE CONTRACTING OFFICER, DISCLOSED THE FOLLOWING:

"A. THE J. CARNER CO., INC., IS PRIMARILY A CONSTRUCTION FIRM AND HAS HAD NO EXPERIENCE IN MANUFACTURING EQUIPMENT OF THE NATURE REQUIRED BY THIS PROCUREMENT; HAS HAD NO RELATIONSHIP WITH SUCH MANUFACTURING ACTIVITY EXCEPT THROUGH ITS RELATIVELY SHORT TERM ASSOCIATION (LATE 1965, TO PRESENT) IN THE ADMINISTRATIVE MANAGEMENT OF CRYO-SONICS, INC. (CALIFORNIA/NEVADA); AND THE PROSPECTIVE CONTRACTOR IS NOT AND DOES NOT CONTEMPLATE BEING THE MANUFACTURER OF THE SUPPLIES ON WHICH HE IS BIDDING, EXCEPT IN A PARENT COMPANY RELATIONSHIP. MR. GEORGE R. OWENS, WHO SIGNED THIS BID AS VICE PRESIDENT OF THE J. CARNER CO., INC., IS ALSO LISTED AS THE GENERAL MANAGER/SENIOR VICE PRESIDENT OF CRYO-SONICS, INC. (CALIFORNIA/NEVADA).

"B. THE KEY PERSONNEL AND EQUIPMENT OF CRYO-SONICS, INC., TORRANCE, CALIFORNIA, WAS ACQUIRED BY J. CARNER CO., INC., AND MOVED INTO THE 17210 SOUTH MAIN STREET, GARDENA, CALIFORNIA, LOCATION DURING JUNE 1966, AND THERE HAVE BEEN NO CHANGES IN PRODUCTION PERSONNEL SINCE THAT TIME. INDICATED IN HIS BID, THE BIDDER INTENDED TO PERFORM THE CONTRACT AT THIS GARDENA, CALIFORNIA, LOCATION.

"C. THE DCASR-LOS ANGELES INDUSTRIAL SPECIALIST'S REVIEW DISCLOSED THAT ALL OF THE WORK INVOLVED IN THIS PROCUREMENT WOULD BE ACCOMPLISHED BY CRYO -SONICS, INC. * * *

"D. DCASR-LOS ANGELES EVALUATED THE RECORD OF CRYO-SONICS, INC. (CALIFORNIA/NEVADA) WITH THE FOLLOWING RESULTS:

"/1) CRYO-SONICS HAD FOUR CONTRACTS IN THE LAST 12 MONTHS WITH A TOTAL FACE VALUE OF $2,416,029.

"/2) THESE FOUR CONTRACTS WERE FOR LIQUID NITROGEN EQUIPMENT OF A CLOSELY RELATED NATURE TO THAT ON THE PRESENT PROCUREMENT.

"/3) EACH OF THESE FOUR CONTRACTS HAD DELIVERY DELINQUENCIES RANGING FROM 15 DAYS TO 232 DAYS. THE DELINQUENCIES WERE REPORTED TO BE DUE TO INADEQUATE PLANNING AND SCHEDULE CONTROL AND THE TENDENCY OF MANAGEMENT TO ACCEPT DELIVERY SCHEDULES THAT COULD NOT BE MET.

"/4) EQUIPMENT ON AT LEAST ONE OF THE FOUR CONTRACTS WAS SERIOUSLY DEFICIENT AFTER SHORT OPERATING PERIODS. THIS IS CONSISTENT WITH THE EXPERIENCE AT WSTF. THE CRYO-SONICS, INC., LIQUID NITROGEN VAPORIZERS AT WSTF REQUIRED AN EXCESSIVE AMOUNT OF MAINTENANCE TO KEEP THEM OPERATIONAL, AND THE DESIGN OF THE UNITS REQUIRED REPLACEMENT OF THE ENTIRE VAPORIZER WHEN A HEATING COIL BURNED OUT.'

CONTRARY TO YOUR BELIEF, THE PREAWARD SURVEY PERFORMED BY DCASR-LOS ANGELES DID NOT RESULT IN AN AFFIRMATIVE RECOMMENDATION THAT YOUR FIRM BE AWARDED THE CONTRACT. IN FACT, THE RECORD SHOWS THAT THE PREAWARD SURVEY BOARD VOTED UNANIMOUSLY TO RECOMMEND "NO AWARD" TO YOUR FIRM BASED ON THE UNSATISFACTORY PRIOR PERFORMANCE RECORD OF CRYO-SONICS, INC., WHICH WOULD HAVE PERFORMED THE ACTUAL WORK WITH ITS FACILITIES AND PERSONNEL. THE PREAWARD SURVEY OF THE FACILITIES AND CAPABILITIES OF HOFMAN-PAUL BY DCASR -LOS ANGELES RESULTED IN A RECOMMENDATION THAT SUCH BIDDER BE AWARDED THE CONTRACT, AND IN VIEW OF THE REPORTED URGENCY OF THE REQUIREMENT, AWARD WAS MADE TO THAT BIDDER ON JANUARY 6, 1967, AS THE LOWEST RESPONSIBLE BIDDER UNDER THE INVITATION.

UNDER NASA PR 1.903-1 (III) (ASPR 1-903.1 (III) ( , A PROSPECTIVE CONTRACTOR MUST:

"/III) HAVE A SATISFACTORY RECORD OF PERFORMANCE (CONTRACTORS WHO ARE SERIOUSLY DELINQUENT IN CURRENT CONTRACT PERFORMANCE, WHEN THE NUMBER OF CONTRACTS AND THE EXTENT OF DELINQUENCIES OF EACH ARE CONSIDERED, SHALL, IN THE ABSENCE OF EVIDENCE TO THE CONTRARY OR CIRCUMSTANCES PROPERLY BEYOND THE CONTROL OF THE CONTRACTOR, BE PRESUMED TO BE UNABLE TO FULFILL THIS REQUIREMENT). 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 THE SMALL BUSINESS ADMINISTRATION; SEE 1.705-4 (B) (IV) AND 1.905-2; "

NASA PR 1.903-1 (VII) (ASPR 1-903.2 (A) (II) ( PROVIDES THAT PROSPECTIVE CONTRACTORS MUST ALSO:

"/VIII) HAVE THE NECESSARY PRODUCTION, CONSTRUCTION, AND TECHNICAL EQUIPMENT AND FACILITIES, OR THE ABILITY TO OBTAIN THEM. WHERE A PROSPECTIVE CONTRACTOR PROPOSES TO USE THE FACILITIES OR EQUIPMENT OF ANOTHER CONCERN, NOT A SUBCONTRACTOR, OR OF HIS AFFILIATE (SEE 1.904 (D) ( , ALL EXISTING BUSINESS ARRANGEMENTS, FIRM OR CONTINGENT, FOR THE USE OF SUCH FACILITIES OR EQUIPMENT SHALL BE CONSIDERED IN DETERMINING THE ABILITY OF THE PROSPECTIVE CONTRACTOR TO PERFORM THE CONTRACT; "

THE DETERMINATION OF THE RESPONSIBILITY OF CRYO-SONICS, INC., UNDER THE CIRCUMSTANCES, NOT ONLY WAS PROPER BUT WAS REQUIRED. BOTH ASPR AND NASA PR AUTHORIZE THE CONSIDERATION OF THE PERFORMANCE RECORD OF AN AFFILIATED CONCERN WHICH MAY ADVERSELY AFFECT THE RESPONSIBILITY OF THE BIDDER. SUCH CONSIDERATION CLEARLY WAS DICTATED BY THE CIRCUMSTANCES OF THE CASE. SEE B-159575, AUGUST 31, 1966; ASPR 1 904.3; NASA PR 1.904 (D).

AS TO YOUR SMALL BUSINESS STATUS, IT IS TO BE NOTED THAT THIS PROCUREMENT WAS NOT RESTRICTED TO SMALL BUSINESS CONCERNS. WHILE ORDINARILY THE RESPONSIBILITY OF A SMALL BUSINESS BIDDER, INSOFAR AS IT RELATES TO THE BIDDER'S CAPACITY AND CREDIT, IS REQUIRED TO BE REFERRED TO THE SMALL BUSINESS ADMINISTRATION (SBA) FOR DETERMINATION AS TO WHETHER A CERTIFICATE OF COMPETENCY SHOULD BE ISSUED, SUCH PROCEDURE IS NOT REQUIRED, AS HERE, WHERE THE FINDING OF NONRESPONSIBILITY WAS BASED UPON UNSATISFACTORY PRIOR PERFORMANCE UNRELATED TO CAPACITY AND CREDIT. SEE 43 COMP. GEN. 298. THE RECORD BEFORE US CONTAINS INFORMATION WHICH REASONABLY ESTABLISHES THAT CRYO SONICS, C., WAS SERIOUSLY DELINQUENT ON PREVIOUS PROCUREMENTS BECAUSE OF LACK OF PERSEVERANCE OR PRODUCTION MANAGEMENT.

THE PROJECTION OF A BIDDER'S ABILITY TO PERFORM IF AWARDED A CONTRACT IS OF NECESSITY A MATTER OF JUDGMENT. FRIEND V. LEE, 221 F.2D 96. WHILE SUCH JUDGMENT SHOULD BE BASED ON FACT AND SHOULD BE ARRIVED AT IN GOOD FAITH, IT MUST PROPERLY BE LEFT LARGELY TO THE SOUND ADMINISTRATIVE DISCRETION OF THE CONTRACTING OFFICES INVOLVED SINCE THEY ARE IN THE BEST POSITION TO ASSESS RESPONSIBILITY, THEY MUST BEAR THE BRUNT OF ANY DIFFICULTY 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. FOR THESE REASONS, IT WOULD BE UNREASONABLE TO SUPERIMPOSE THE JUDGMENT OF OUR OFFICE ON THAT OF THE CONTRACTING AGENCY IN THIS CASE WHERE THERE APPEARS TO BE VALID AND SUBSTANTIAL BASES FOR THE ACTIONS TAKEN. 37 COMP. GEN. 430; 36 ID. 42.

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