Protest Alleging Lack of Integrity and Business Ethics on Part of Successful Bidder

B-177199(2), JAN 30, 1973

BID PROTEST - RESPONSIBILITY - BIDDER INTEGRITY - TIMELINESS OF PROTEST DECISION CONCERNING THE DENIAL OF PROTEST ON BEHALF OF THE INTERLOG CORPORATION AGAINST THE AWARD OF A CONTRACT TO MOORE EQUIPMENT CO., INC. UNDER AN IFB ISSUED BY THE GENERAL SERVICES ADMINISTRATION, SAN FRANCISCO, CAL. SINCE ANY QUESTION AS TO A BIDDER'S INTEGRITY AS AN ASPECT OF RESPONSIBILITY, FPR 1-1.1203-1(D), MUST BE RAISED PRIOR TO AWARD OF THE CONTRACT, THE COMP. GEN. AGREES WITH THE CONTRACTING OFFICER'S DETERMINATION THAT POST AWARD CONTENTIONS AS TO A BIDDER'S INTEGRITY WERE UNTIMELY RAISED AS WELL AS WITHOUT MERIT. THEREFORE, SINCE THERE IS NO SHOWING OF ABUSE OF ADMINISTRATIVE DISCRETION, THE PROTEST IS DENIED. COMP. GEN. 4 (1965).

TO LITTLER, MENDELSON & FASTIFF:

REFERENCE IS MADE TO YOUR LETTER OF OCTOBER 24, 1972, WITH ENCLOSURES, PROTESTING ON BEHALF OF THE INTERLOG CORPORATION (INTERLOG), THE AWARD OF A CONTRACT TO MOORE EQUIPMENT COMPANY (MOORE), UNDER INVITATION FOR BIDS (IFB) NO. GS-09-DP-(P)-210, ISSUED BY THE GENERAL SERVICES ADMINISTRATION (GSA), SAN FRANCISCO, CALIFORNIA.

THE ABOVE IFB COVERING INDEFINITE QUANTITY REQUIREMENTS FOR REPAIR OF HEAVY CONSTRUCTION, INDUSTRIAL AND VEHICULAR EQUIPMENT AND RELATED ITEMS WAS ISSUED ON JULY 12, 1972, WITH A BID OPENING DATE OF AUGUST 2, 1972. THE WORK WAS DIVIDED INTO VARIOUS SERVICE AREAS AND EQUIPMENT WAS CLASSIFIED ACCORDING TO TYPES IN THE GROUPS I, II AND III OF THE BID SCHEDULE. SEPARATE AWARDS WERE TO BE MADE FOR EACH SERVICE AREA, AND IN THE AGGREGATE WITHIN EACH GROUP FOR ITEMS 1 AND 2 AND FOR ITEMS 3 AND 4. ITEM 1 REPRESENTED THE LABOR RATE PER HOUR FOR SERVICES PERFORMED AT THE CONTRACTOR'S PLANT, AND ITEM 2 REPRESENTED THE DISCOUNT FROM THE MANUFACTURER'S LIST PRICE OFFERED FOR THE REPAIR PARTS REQUIRED IN PERFORMING SUCH WORK. ITEM 3 REPRESENTED THE LABOR RATE PER HOUR FOR SERVICES PERFORMED AT THE USING AGENCY'S SITE, AND ITEM 4 CONCERNED THE DISCOUNT FROM MANUFACTURER'S LIST PRICE OFFERED FOR THE NECESSARY REPAIR PARTS. FOR SERVICE AREA NO. 1, NORTHERN CALIFORNIA, INTERLOG WAS THE LOW BIDDER FOR ITEMS 1 AND 2 IN GROUPS I, II AND III, WHILE MOORE WAS THE LOW BIDDER FOR ITEMS 3 AND 4 IN GROUPS I, II AND III, AND WAS AWARDED THE CONTRACT FOR THOSE ITEMS ON SEPTEMBER 7, 1972.

AN INSPECTION OF INTERLOG'S PLANT WAS CONDUCTED BY GSA ON AUGUST 9, 1972. THE PLANT INSPECTION DISCLOSED THE FOLLOWING:

A) PRODUCTION EQUIPMENT AT PLANT WAS RUSTED AND HAD NOT BEEN USED FOR SOME TIME.

B) THE MAJORITY OF THE EQUIPMENT HAD NOT BEEN INSTALLED.

C) PERSONNEL WAS INADEQUATE.

D) NO CALIBRATION EQUIPMENT WAS AVAILABLE.

E) PLANT SECURITY WAS INADEQUATE.

A FINANCIAL CHECK OF INTERLOG WAS ALSO MADE WHICH RESULTED IN A DETERMINATION THAT INTERLOG'S FINANCIAL STATUS WAS SATISFACTORY. HOWEVER, AS A RESULT OF THE PLANT INSPECTION, THE CONTRACTING OFFICER DETERMINED THAT INTERLOG WAS NOT A RESPONSIBLE PROSPECTIVE CONTRACTOR DUE TO LACK OF CAPACITY. SINCE INTERLOG WAS A SMALL BUSINESS FIRM, THE QUESTION OF ITS CAPACITY WAS REFERRED TO THE SMALL BUSINESS ADMINISTRATION (SBA), SAN FRANCISCO, ON SEPTEMBER 8, 1972, IN ACCORDANCE WITH SECTION 1-1.708-2(A) OF THE FEDERAL PROCUREMENT REGULATIONS (FPR). THIS REGULATION PROVIDES, WITH CERTAIN EXCEPTIONS, THAT WHEN THE OTHERWISE ACCEPTABLE BID OF A SMALL BUSINESS CONCERN IS TO BE REJECTED FOR THE REASON THAT THE FIRM WAS FOUND BY THE CONTRACTING OFFICER TO BE NOT RESPONSIBLE AS TO CAPACITY OR CREDIT, SBA SHALL BE NOTIFIED SO AS TO PERMIT IT TO ISSUE A CERTIFICATE OF COMPETENCY (COC) REGARDING THE FIRM'S RESPONSIBILITY IN SUCH AREAS.

BY LETTER OF SEPTEMBER 11, 1972, SBA ADVISED GSA THAT INTERLOG WOULD FILE FOR A CERTIFICATE OF COMPETENCY. ON OCTOBER 6, 1972, SBA ADVISED INTERLOG THAT IT HAD BEEN ISSUED A COC AND, BY LETTER OF THE SAME DATE, SBA ADVISED GSA THAT INTERLOG HAD BEEN FOUND COMPETENT AS TO BOTH CAPACITY AND CREDIT TO PERFORM THE PROPOSED CONTRACT.

BY TELEFAX OF OCTOBER 5, 1972, MOORE PROTESTED AGAINST ANY AWARD TO INTERLOG UNDER THE IFB ON THE BASIS THAT INTERLOG LACKED CAPACITY AND CREDIT TO PERFORM THE CONTRACT. IT IS YOUR CONTENTION THAT THIS PROTEST IS A SHAM DESIGNED TO DELAY AWARD OF THE PLANT WORK CONTRACT TO INTERLOG SO THAT THE "ORDERING OFFICES," UNDER THE TERMS OF THE SOLICITATION, WILL BE REQUIRED TO HAVE REPAIR AND MAINTENANCE WORK, ORDINARILY PERFORMED AT A PLANT, DIVERTED TO MOORE'S ON-SITE CONTRACT. YOU FURTHER CONTEND THAT MOORE'S TELEFAX MESSAGE OF OCTOBER 5, WHEREIN MOORE PROTESTED AGAINST AWARD TO INTERLOG, DEMONSTRATED MOORE'S LACK OF INTEGRITY AND BUSINESS ETHICS. YOU POINT OUT THAT MOORE, IN ITS SUPPLEMENTAL LETTER OF OCTOBER 12, MADE NO MENTION OF INTERLOG'S FINANCES, BUT DEALT EXCLUSIVELY WITH INTERLOG'S PLANT CAPACITY. YOU ALSO QUESTION THE PROPRIETY OF MOORE REQUESTING LOCAL COUNTY HEALTH OFFICIALS TO CONDUCT AN INVESTIGATION OF INTERLOG'S PLANT. YOU SAY THAT MOORE ATTEMPTED TO SECURE AN OPTION TO PURCHASE THE BUILDING, IN WHICH INTERLOG'S PLANT IS LOCATED, IN ORDER TO CAUSE CONFUSION IN CONNECTION WITH INTERLOG'S PLANT AND TO CREATE DOUBT AS TO INTERLOG'S RESPONSIBILITY. YOU STATE THAT MOORE, FAILING IN ITS ATTEMPT TO PURCHASE THE BUILDING, NOW ALLEGES THAT THE BUILDING, WHICH IT WANTED TO PURCHASE AT A PREMIUM PRICE, IS UNSAFE TO WORK IN. YOU ALSO CONTEND THAT THE STATEMENT BY MOORE, THAT THE HEAD OF THE INTERNATIONAL ASSOCIATION OF MACHINISTS LOCAL 428 AGREES THAT THE BUILDING SHOULD BE CONDEMNED, IS NOT TRUE. IN CONCLUSION, YOU STATE THAT THE DEFECTS POINTED OUT IN MOORE'S LETTER OF OCTOBER 12, 1972, DO NOT EXIST OR CAN BE EASILY CORRECTED. YOU ALLEGE THAT MOORE, BY ITS CONDUCT, HAS DEMONSTRATED THAT IT DOES NOT HAVE A "SATISFACTORY RECORD OF INTEGRITY AND BUSINESS ETHICS," PURSUANT TO FPR 1-1.1203-1(D).

FPR 1-1203-1(D) REQUIRES CIVILIAN AGENCIES OF THE GOVERNMENT TO CONSIDER A BIDDER'S INTEGRITY IN ARRIVING AT A DETERMINATION CONCERNING THE BIDDER'S RESPONSIBILITY. SINCE IT IS A FACTOR TO BE CONSIDERED IN DETERMINING A BIDDER'S RESPONSIBILITY, EVIDENCE TENDING TO QUESTION A BIDDER'S INTEGRITY SHOULD BE SUBMITTED PRIOR TO AWARD. THE REASON FOR THIS IS THAT A DETERMINATION OF RESPONSIBILITY MUST BE MADE PRIOR TO AWARD AND BE BASED ON EVIDENCE AVAILABLE TO THE AGENCY AT THAT TIME. SINCE THE ACTIONS BY MOORE TO WHICH YOU OBJECT APPEAR TO HAVE OCCURRED MAINLY AFTER THE AWARD OF THE CONTRACT TO THAT FIRM, IT IS CLEAR THAT SUCH ACTIONS COULD NOT HAVE BEEN CONSIDERED BY THE CONTRACTING OFFICER AT THE TIME HE DETERMINED THAT MOORE WAS A RESPONSIBLE PROSPECTIVE CONTRACTOR FOR THE AWARD.

IT HAS BEEN THE CONSISTENT POSITION OF THIS OFFICE THAT THE CONTRACTING OFFICER HAS THE DUTY AND AUTHORITY TO DETERMINE THE RESPONSIBILITY OF A PROSPECTIVE CONTRACTOR, AND HE IS VESTED WITH A LARGE DEGREE OF DISCRETION IN MAKING THIS DETERMINATION. ALSO, WE WILL NOT QUESTION THE CONTRACTING OFFICER'S DECISION UNLESS IT IS CLEARLY SHOWN TO BE ARBITRARY, CAPRICIOUS OR NOT BASED ON SUBSTANTIAL EVIDENCE. 45 COMP. GEN. 4 (1965). WE DO NOT REGARD YOUR CONTENTIONS CONCERNING MOORE'S POST AWARD ACTIONS AS PROVIDING A BASIS UPON WHICH THIS OFFICE WOULD BE JUSTIFIED IN CONCLUDING THAT THERE WAS AN ABUSE OF ADMINISTRATIVE DISCRETION IN THE PRIOR DETERMINATION THAT MOORE WAS A RESPONSIBLE PROSPECTIVE CONTRACTOR FOR THE AWARD OF ITEMS NOS. 3 AND 4.

ACCORDINGLY, ON THE BASIS OF THE RECORD BEFORE US, WE ARE UNABLE TO CONCLUDE THAT THE CONTRACT WAS IMPROPERLY AWARDED TO MOORE, AND YOUR PROTEST MUST THEREFORE BE DENIED.

ENCLOSED IS A COPY OF OUR DECISION OF TODAY TO MOORE DENYING ITS PROTEST AGAINST AN AWARD OF A CONTRACT TO INTERLOG UNDER THE SAME IFB.