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CONTRACTING OFFICER'S DETERMINATION OF NONRESPONSIBILITY AS TO CAPACITY OR CREDIT WHERE SMALL BUSINESS BIDDER DOES NOT AVAIL ITSELF OF OPPORTUNITY TO FILE FOR SBA CERTIFICATE OF COMPETENCY WILL NOT BE REVIEWED. PROTEST THAT COVERAGE OF ECONOMIC PRICE ADJUSTMENT CLAUSE HAS BEEN ADVERSELY AFFECTED BY MORE THAN 4 MONTH DELAY IN MAKING AWARD BECAUSE BIDDERS WERE NOT ALLOWED TO INCLUDE CONTINGENCIES FOR INCREASED COSTS OF PERFORMANCE COVERED BY CLAUSE AND WOULD BE LEFT WITHOUT PROTECTION FOR INFLATION FOR PERIOD THAT WILL BE ADDED TO END OF DELIVERY SCHEDULE TO ACCOMODATE DELAY IN AWARD IS DENIED. THAT SPECIFICATIONS IN IFB ARE DEFECTIVE. IS UNTIMELY UNDER GAO INTERIM BID PROTEST PROCEDURES AND STANDARDS (4 C.F.R.

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B-181522, NOV 19, 1974

1. CONTRACTING OFFICER'S DETERMINATION OF NONRESPONSIBILITY AS TO CAPACITY OR CREDIT WHERE SMALL BUSINESS BIDDER DOES NOT AVAIL ITSELF OF OPPORTUNITY TO FILE FOR SBA CERTIFICATE OF COMPETENCY WILL NOT BE REVIEWED, SINCE THAT WOULD AMOUNT OT SUBSTITUTION OF AGENCY SPECIFICALLY AUTHORIZED BY STATUTE TO REVIEW DETERMINATION. 2. PROTEST THAT COVERAGE OF ECONOMIC PRICE ADJUSTMENT CLAUSE HAS BEEN ADVERSELY AFFECTED BY MORE THAN 4 MONTH DELAY IN MAKING AWARD BECAUSE BIDDERS WERE NOT ALLOWED TO INCLUDE CONTINGENCIES FOR INCREASED COSTS OF PERFORMANCE COVERED BY CLAUSE AND WOULD BE LEFT WITHOUT PROTECTION FOR INFLATION FOR PERIOD THAT WILL BE ADDED TO END OF DELIVERY SCHEDULE TO ACCOMODATE DELAY IN AWARD IS DENIED, SINCE ANY BIDDER COULD AVOID RISK BY REFUSING TO EXTEND ACCEPTANCE TIME AND SUCCESSFUL BIDDER HAS NOT COMPLAINED ABOUT AWARD ON ADVERTISED BASIS. 3. PROTEST FILED ON NOVEMBER 13, 1974, THAT SPECIFICATIONS IN IFB ARE DEFECTIVE, SUCH DEFECTS HAVING BEEN REVEALED DURING PERFORMANCE OF PRIOR CONTRACT BY PROTESTER, IS UNTIMELY UNDER GAO INTERIM BID PROTEST PROCEDURES AND STANDARDS (4 C.F.R. PART 20 (1974)) WHICH REQUIRES PROTESTS BE FILED WITHIN 5 DAYS AFTER BASIS OF PROTEST IS KNOWN OR SHOULD HAVE BEEN KNOWN AND PROTESTER KNEW OF DEFECTS IN AUGUST 1974.

INFLATED PRODUCTS CO., INC; AMERICAN AIR FILTER COMPANY, INC; AND

INVITATION FOR BIDS (IFB) NO. DAAA15-74-B-0178 FOR M51 SHELTER SYSTEMS, INCLUDING SPARE PARTS AND DATA WAS ISSUED ON MARCH 11, 1974, BY THE ARMY EDGEWOOD ARSENAL, ABERDEEN, MARYLAND. THE QUANTITY OF SYSTEMS PROCURED COULD RANGE COULD RANGE FROM 151 TO 522 DEPENDING ON THE EXERCISE OF OPTION RIGHTS AND WHETHER A SINGLE OR MULTI-YEAR CONTRACT IS AWARDED.

THE FOLLOWING THREE BIDS FOR A MULTI-YEAR QUANTITY OF 261 END ITEMS, INCLUDING PROMPT PAYMENT DISCOUNTS, BUT EXCLUDING TRANSPORTATION COSTS, WERE OPENED ON MAY 2, 1974:

INDUSTRIAL DESIGN LABORATORIES, INC. (IDL) - $6,739,563

INFLATED PRODUCTS COMPANY, INC. (IPC) - 6,967,905

AMERICAN AIR FILTER COMPANY, INC. (AAF) - 7,338,055

BIDS WERE REQUESTED ON AN F.O.B. ORIGIN BASIS. THE IFB ADVISED BIDDERS THAT A TRANSPORTATION COST EVALUATION WOULD BE CONDUCTED AFTER BID OPENING TO ARRIVE AT THE OVERALL LOWEST BID PRICE. ONLY THE BIDS OF IDL AND IPC WERE SUBJECTED TO THE TRANSPORTATION EVALUATION. TRANSPORTATION WAS NOT EVALUATED FOR AAF, SINCE ITS COST WOULD REMAIN HIGHER THAN IDL AND IPC WITHOUT THAT EVALUATION. THE STANDING AS LOW BIDDER VARIES BETWEEN IDL AND IPC DEPENDING UPON THE TRANSPORTATION RATE USED, THE NUMBER OF ITEMS THAT COULD BE LOADED ON A TRAILER AND THE WEIGHT USED FOR GOVERNMENT FURNISHED PROPERTY. HOWEVER, THE CONTENTIONS IN THAT REGARD ARE ACADEMIC, SINCE IDL HAS BEEN DETERMINED TO BE NONRESPONSIBLE AND THUS NOT ELIGIBLE FOR AN AWARD. IN THAT CONNECTION, IDL HAS PROTESTED THE DETERMINATION THAT IT IS NONRESPONSIBLE. A PREAWARD SURVEY WAS CONDUCTED ON IDL BY DCAS AND RESULTED IN A RECOMMENDATION OF "NO AWARD" BECAUSE OF INADEQUATE FINANCIAL CAPACITY. BASED ON THIS INFORMATION, THE CONTRACTING OFFICER ON MAY 22, 1974, FOUND IDL TO BE NONRESPONSIBLE AND REFERRED THE MATTER TO THE SMALL BUSINESS ADMINISTRATION (SBA) IN ACCORDANCE WITH SECTION 1 705.4 OF THE ARMED SERVICES PROCUREMENT REGULATION (1973 ED.) FOR CONSIDERATION OF THE ISSUANCE OF A CERTIFICATE OF COMPETENCY (COC). IDL FAILED TO SUBMIT THE REQUIRED INFORMATION TO SBA. ON JUNE 10, 1974, SBA NOTIFIED THE CONTRACTING OFFICER THAT IT WAS CLOSING ITS FILE ON THE MATTER AS IDL HAD NOT FILED FOR THE COC.

WHILE IDL HAS MADE NUMEROUS ARGUMENTS THAT IT POSSESSES ADEQUATE FINANCIAL CAPACITY, THAT MATTER WILL NOT BE CONSIDERED BY OUR OFFICE. 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. IN SUCH CIRCUMSTANCES, OUR OFFICE WILL 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 OUR OFFICE FOR THE AGENCY SPECIFICALLY AUTHORIZED BY STATUTE TO REVIEW SUCH DECISIONS. MATTER OF ALS ELECTRONICS CORPORATION, B-180649, JUNE 24, 1974. FURTHER, IT IS OUR UNDERSTANDING THAT AFTER IDL FAILED TO FURNISHED THE REQUIRED INFORMATION TO SBA. DCAS CONTINUED TO EXPLORE THE MATTER OF RESPONSIBILITY WITH IDL, BUT THE DCAS FILE IS NOW CLOSED AND THE NEGATIVE PREAWARD REPORT BASED UPON IDL FINANCIAL NONRESPONSIBILITY STANDS.

THUS, IPC ORDINARILY WOULD BE ENTITLED TO AWARD, BUT FOR THE PROTEST OF AAF THAT THE COVERAGE OF THE ECONOMIC PRICE ADJUSTMENT (EPA) CLAUSE IN THE IFB HAS BEEN ADVERSELY AFFECTED BY THE DELAY IN MAKING THE AWARD. THE IFB CONTEMPLATED AWARD BY JUNE 28, 1974. THE EPA CLAUSE PERMITS PRICES TO BE ADJUSTED UPWARD OR DOWNWARD BASED ON CHANGES IN THE WHOLESALE PRICE INDEX FOR TEXTILE PRODUCTS AND APPAREL AND FOR METALS AND METAL PRODUCTS PUBLISHED BY THE BUREAU OF LABOR STATISTICS, DEPARTMENT OF LABOR. THE BASE FOR PRICE REVISION IS THE AVERAGE OF THE COMBINED THREE MONTH ARITHMETICAL AVERAGE OF EACH INDEX FOR THE MONTHS OF MAY, JUNE AND JULY, 1974. PRICES FOR THE FIRST YEAR PROGRAM ARE ADJUSTED ACCORDING TO THE PERCENTAGE DIFFERENCE BETWEEN THE BASE AND THE AVERAGE OF THE COMBINED 3 MONTH ARITHMETICAL AVERAGE OF EACH INDEX FOR THE MONTHS OF MAY, JUNE AND JULY, 1975. THE PRICES FOR THE SECOND YEAR OF THE PROGRAM ARE ADJUSTED AS ABOVE, EXCEPT THAT THE BASE IS COMPARED TO MAY, JUNE AND JULY, 1976. THE CLAUSE CONTAINS A LIMIT OF 20 PERCENT OF THE BASE AS THE MAXIMUM UPWARD ADJUSTMENT. THERE IS NO LIMIT ON THE AMOUNT OF DOWNWARD ADJUSTMENT. THE CLAUSE ALSO PROVIDES THAT BIDDERS WARRANT THAT PRICES CONTAIN NO CONTINGENCIES FOR INCREASED COSTS COVERED BY THE CLAUSE.

SINCE BIDDERS WERE NOT ALLOWED TO INCLUDE CONTINGENCIES FOR INCREASED COSTS OF PERFORMANCE COVERED BY THE EPA CLAUSE, AAF CONTENDS THAT ANY BIDDER THAT RECEIVES THE AWARD UNDER THE IFB HAS BEEN LEFT WITHOUT PROTECTION FOR INFLATION FOR THE PERIOD THAT, IN ACCORDANCE WITH THE IFB TERMS, WILL BE ADDED TO THE END OF THE DELIVERY SCHEDULE TO ACCOMODATE THE MORE THAN 4 MONTHS DELAY IN AWARD. AAF, THEREFORE, CONTENDS THAT THE PROCUREMENT SHOULD BE CANCELED AND RESOLICITED WITH AN UPDATED EPA CLAUSE.

IT IS CORRECT THAT NO PROVISION WAS MADE FOR CHANGING THE BASE IN THE EPA CLAUSE IN THE EVENT THE AWARD DATE WAS POSTPONED BEYOND JUNE 28, 1974. HOWEVER, THE IFB PROVIDED FOR AN ADJUSTMENT IN THE DELIVERY SCHEDULE IN THAT EVENT. THUS, THE IFB CONTEMPLATED THE POSSIBILITY OF A DELAYED AWARD WITH ADJUSTMENT BEING MADE IN THE LATTER RESPECT WHILE NONE WAS BEING MADE IN THE FORMER. BIDDERS MUST BE CONSIDERED TO HAVE BID IN COMTEMPLATION OF THOSE PROVISIONS AND TO HAVE ASSUMED THE RISK OF INFLATION IF THE AWARD WAS MADE LATE.

ALTHOUGH THE DELAY IN MAKING AN AWARD BEYOND THE ORIGINALLY CONTEMPLATED AWARD DATE MAY HAVE IMPOSED A RISK UPON BIDDERS BEYOND THAT CONTEMPLATED WHEN BIDS WERE SUBMITTED, ANY BIDDER COULD HAVE AVOIDED THE RISK BY REFUSING TO EXTEND THE ACCEPTANCE TIME UPON ITS EXPIRATION. IN THE CIRCUMSTANCES, IT APPEARS THAT THE ONLY BIDDER THAT MIGHT BE PREJUDICED BY AN AWARD WOULD BE IPC. HOWEVER, IPC HAS NOT BEEN HEARD TO COMPLAIN ABOUT AN AWARD TO IT ON THE BASIS ADVERTISED.

ON NOVEMBER 13, 1974, AAF FILED AN ADDITIONAL PROTEST THAT THE SPECIFICATIONS IN THE IFB WERE DEFECTIVE AND THE IFB SHOULD BE CANCELED. THE BASIS FOR THE PROTEST IS THAT AAF, THE CONTRACTOR UNDER THE PRIOR YEAR CONTRACT FOR THE SAME ITEM, HAS FOUND, DURING PRODUCTION, THAT THESE SAME SPECIFICATIONS ARE DEFICIENT AND HAS SUBMITTED VARIOUS PROPOSALS TO THE ARMY TO HAVE THE DEFICIENCIES CORRECTED UNDER THE PRIOR YEAR CONTRACT.

A REVIEW OF THE RECORD SHOWS THAT AAF KNEW OF THE PROBLEMS WITH THE SPECIFICATION AT LEAST BY LATE AUGUST 1974, WHEN IT SUBMITTED THE FIRST OF ITS PROPOSALS TO THE ARMY. THEREFORE, UNDER THE INTERIM BID PROTEST PROCEDURES AND STANDARDS (4 C.F.R. PART 20 (1974)) OF OUR OFFICE, THE PROTEST IS UNTIMELY. UNDER 4 C.F.R. SEC. 20.2(A) (1974), PROTESTS MUST BE FILED WITH OUR OFFICE WITHIN 5 DAYS AFTER THE BASIS OF THE PROTEST IS KNOWN OR SHOULD HAVE BEEN KNOWN. WE THEREFORE HAVE NOT CONSIDERED THIS BASIS OF THE PROTEST BECAUSE OF ITS UNTIMELINESS.

ACCORDINGLY, AN AWARD TO IPC WOULD APPEAR TO BE PROPER IN THE CIRCUMSTANCES AND THE PROTEST OF AAF IS THEREFORE DENIED.

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