B-179033, FEB 22, 1974

B-179033, FEB 22, 1974

1. SBA REQUIREMENT THAT BIDDERS SEEKING ISSUANCE OF CERTIFICATE OF COMPETENCY (COC) MUST FILE DATA NOT MORE THAN 5 WORKING DAYS AFTER RECEIPT OF NECESSARY COC FORMS FROM SBA IS NOT UNREASONABLE SINCE AWARD DETERMINATION IS SUSPENDED PENDING SBA'S CONSIDERATION OF COC APPLICATION. 2. ALTHOUGH CONTRACTING OFFICER ONLY QUESTIONED BIDDER'S TECHNICAL CAPACITY, SBA IS JUSTIFIED IN REQUESTING SUBMISSION OF FINANCIAL DATA FROM BIDDER SINCE COC COVERS BOTH CAPACITY AND CREDIT AND SBA CAN REFUSE TO ISSUE COC TO BIDDER FOR REASON DIFFERENT FROM CONTRACTING OFFICER'S DETERMINATION OF NONRESPONSIBILITY. 3. GAO WILL NOT REVIEW A CONTRACTING OFFICER'S DETERMINATION OF NONRESPONSIBILITY AS TO CAPACITY OR CREDIT WHERE BIDDER DOES NOT AVAIL ITSELF OF OPPORTUNITY TO FILE FOR COC.

TO ALS ELECTRONICS CORP. (ALS):

ALS HAS PROTESTED THE REJECTION OF ITS LOW BID UNDER INVITATION FOR BIDS (IFB) NO. N00156-73-B-0089, ISSUED BY THE NAVAL AIR ENGINEERING CENTER, PHILADELPHIA, PENNSYLVANIA FOR A QUANTITY OF 20 KILOWATT SOLID STATE FREQUENCY CHANGERS FOR CONVERTING 120/208 VOLT, 3 PHASE (50 TO 60 HERTZ) TO 115/200 VOLT, 3 PHASE (400 HERTZ POWER). THE BID WAS REJECTED BECAUSE ALS, A SMALL BUSINESS CONCERN, WAS DETERMINED TO BE A NONRESPONSIBLE BIDDER FOR THIS PROCUREMENT.

A PREAWARD SURVEY OF ALS WAS REQUESTED BY THE CONTRACTING OFFICER PURSUANT TO ARMED SERVICES PROCUREMENT REGULATION (ASPR) 1-905.4. THE SURVEY WAS CONDUCTED BY THE DEFENSE CONTRACT ADMINISTRATION SERVICE DISTRICT (DCASD), PASADENA, CALIFORNIA, WHICH SUBMITTED ITS REPORT ON JUNE 21, 1973, RECOMMENDING NO AWARD. THE NEGATIVE RECOMMENDATION WAS BASED UPON THE SURVEY TEAM'S CONCLUSION THAT ALS LACKED THE NECESSARY TECHNICAL AND PRODUCTION CAPABILITY, PURCHASING AND SUBCONTRACTING CAPABILITY, PERFORMANCE RECORD, AND ABILITY TO MEET THE REQUIRED SCHEDULE. A FOLLOW- UP SURVEY FOR THE PURPOSE OF REEVALUATION AND CLARIFICATION IN CERTAIN AREAS COVERED BY THE PREAWARD SURVEY, WAS ALSO REQUESTED BY THE CONTRACTING OFFICER. THE DCASD REEVALUATION SURVEY WAS SUBMITTED ON JULY 6, 1973, WHICH CONFIRMED ITS PRIOR NO-AWARD RECOMMENDATION.

AS REQUIRED BY ASPR 1-705.4(C)(II), THE MATTER WAS REFERRED TO THE SMALL BUSINESS ADMINISTRATION (SBA) FOR POSSIBLE ISSUANCE OF A CERTIFICATE OF COMPETENCY (COC). A COC IS A WRITTEN INSTRUMENT ISSUED BY SBA CERTIFYING THAT THE SMALL COMPANY INVOLVED POSSESSES THE CAPACITY AND CREDIT TO PERFORM A SPECIFIC GOVERNMENT PROCUREMENT AND SUCH DETERMINATIONS BY SBA ARE BINDING. ON JULY 30, 1973, THE CONTRACTING OFFICER WAS ADVISED BY SBA THAT SINCE ALS HAD FAILED TO FILE A COC APPLICATION, THE CASE WAS BEING CLOSED. THEREAFTER, THE CONTRACTING OFFICER MADE THE DETERMINATION THAT ALS WAS NONRESPONSIBLE AND REJECTED ITS BID, PRIMARILY ON THE BASIS OF THE SURVEY TEAM'S CONCLUSION THAT ALS LACKED THE NECESSARY CAPABILITIES TO PERFORM THE CONTRACT.

ESSENTIALLY ALS QUESTIONS THE VALIDITY OF THE SURVEY'S CONCLUSIONS AND IT HAS ALLEGED THAT THE FAVORABLE FINDINGS OF THE DCAS INDUSTRIAL SPECIALIST WHO CONDUCTED THE SURVEY WERE ALTERED BY HIS REVIEWING SUPERIORS. ALS CONTENDS THAT IT WAS UNFAIR FOR DCAS TO SUBMIT A NEGATIVE PREAWARD SURVEY SINCE THE CONTRACTING OFFICER SHOULD HAVE BEEN FULLY INFORMED AS TO THE FINDINGS OF THE REPORTING SPECIALIST IN ADDITION TO THE CONTRARY POSITION OF THE REVIEWING SUPERIORS. WITH REGARD TO SBA'S INVOLVEMENT IN THIS CASE ALS CONTENDS THAT THE TIME ALLOWED BY SBA FOR SUBMITTING THE REQUIRED APPLICATION FOR A COC WAS INSUFFICIENT AND THAT SBA COULD HAVE PROVIDED ADDITIONAL TIME IF IT HAD ACTED UPON RECEIPT OF NAVY'S TELEPHONIC ADVICE. ALS ALSO CONTENDS THAT SBA ACTED IN BAD FAITH IN REQUIRING THE SUBMISSION OF FINANCIAL DATA INASMUCH AS THE CONTRACTING OFFICER AND DCAS HAD QUESTIONED ONLY THE FIRM'S CAPACITY TO PERFORM THE CONTRACT. MOREOVER, ALS CONTENDS THAT IT WAS MISLED BY THE ERRONEOUS TELEPHONIC ADVICE RECEIVED FROM SBA THAT ITS INVESTIGATION WOULD NOT INCLUDE A REVIEW OF THE FIRM'S FINANCIAL CONDITION.

WITH REGARD TO THE ARRANGEMENTS FOR COMPLETION AND SUBMISSION OF THE REQUISITE FORMS, GAO HAS CONSISTENTLY HELD THAT THIS IS A MATTER FOR DETERMINATION BY SBA. B-174970, FEBRUARY 29, 1972. IN THIS CONNECTION, WE HAVE RECOGNIZED THAT SINCE AN AWARD DETERMINATION IS SUSPENDED PENDING SBA'S CONSIDERATION OF A COC APPLICATION, SBA MUST ACT EXPEDITIOUSLY IN PROCESSING THESE APPLICATIONS. B-173499, OCTOBER 18, 1971. SBA'S COC STANDARD OPERATING PROCEDURE (SOP) 60 04 PROVIDES AT PARAGRAPH 12 THAT "EXCEPT IN UNUSUAL CIRCUMSTANCES, A DEADLINE OF NOT MORE THAN 5 WORKING DAYS SHOULD BE ESTABLISHED FOR SUBMISSION OF ACCEPTABLE APPLICATIONS." ADDITION, PARAGRAPH 2C STATES THAT THE RESPONSIBILITY FOR SUBMITTING DATA TO ESTABLISH COMPETENCY WITHIN APPLICABLE TIME LIMITS RESTS WITH THE APPLICANT.

THE RECORD INDICATES THAT ALS RECEIVED THE NECESSARY FORMS AND ACCOMPANYING LETTER FROM SBA AT 10:28 A.M. ON FRIDAY, JULY 20, 1973. THE SBA APPLICATION WAS REQUIRED TO BE SUBMITTED BY THE CLOSE OF BUSINESS ON JULY 26, 1973. THIS PERMITTED SLIGHTLY LESS THAN FIVE FULL WORKING DAYS TO SUBMIT THE FORMS. IN VIEW OF THE ABOVE-CITED SOP PROVISIONS, WE FIND NO BASIS FOR QUESTIONING THE TIME LIMITS ESTABLISHED BY SBA IN THIS CASE. THEREFORE, WE DO NOT BELIEVE THAT ALS WAS PREJUDICED EVEN ASSUMING FOR PURPOSES OF THIS DISCUSSION THAT IT WAS TELEPHONICALLY ADVISED PRIOR TO JULY 20 THAT FINANCIAL INFORMATION WOULD NOT BE REQUIRED FOR THE COC APPLICATION.

IN CONNECTION WITH THE OBJECTIONS RAISED REGARDING THE NECESSITY FOR SUBMISSION OF FINANCIAL DATA, THE COC PROCEDURE IS NOT LIMITED TO A CONSIDERATION OF THE DEFICIENCIES FOUND BY THE CONTRACTING OFFICER. WHILE SBA MAY EVALUATE INFORMATION SUPPLIED BY THE PROCURING AGENCY, SBA REQUIRES ITS OWN INDEPENDENT EVALUATION. SEE, FOR EXAMPLE, PARAGRAPH 26BG) OF SOP 60 04. IT IS ENTIRELY CONCEIVABLE THAT SBA MAY REFUSE TO ISSUE A COC FOR A REASON DIFFERENT FROM THE CONTRACTING OFFICER'S DETERMINATION OF NONRESPONSIBILITY. SEE, FOR EXAMPLE, B 159933, NOVEMBER 18, 1966, AND B-156885, SEPTEMBER 3, 1965.

IT HAS BEEN THE POSITION OF GAO THAT A SMALL BUSINESS WHICH FAILS TO FILE AN ACCEPTABLE COC APPLICATION WITH SBA, DOES NOT AVAIL ITSELF OF THE POSSIBLE RELIEF PROVIDED BY STATUTE AND REGULATION TO AFFORD SMALL BUSINESS CONCERNS A DEGREE OF PROTECTION AGAINST UNREASONABLE DETERMINATIONS AS TO THEIR CAPACITY OR CREDIT BY CONTRACTING OFFICERS. SUCH CIRCUMSTANCES, GAO SHOULD NOT UNDERTAKE A REVIEW OF A CONTRACTING OFFICER'S DETERMINATION OF NONRESPONSIBILITY FOR REASONS PERTAINING TO CAPACITY OR CREDIT, SINCE SUCH ACTION WOULD, IN EFFECT, AMOUNT TO A SUBSTITUTION OF GAO FOR THE AGENCY SPECIFICALLY AUTHORIZED BY STATUTE TO REVIEW SUCH DECISIONS BY CONTRACTING OFFICERS. B-173499, SUPRA.

ACCORDINGLY, THE PROTEST IS DENIED.