B-171121, B-171123, MAR 26, 1971

B-171121, B-171123, MAR 26, 1971

BID PROTEST - BIDDER RESPONSIBILITY - AFFILIATES DENIAL OF PROTEST BY MARTIN ELECTRONICS, LOW OFFEROR, AGAINST THE AWARD OF A NEGOTIATED CONTRACT ISSUED BY THE EDGEWOOD ARSENAL FOR RED AND VIOLET SMOKE GRENADES TO TALLEY INDUSTRIES, INC., NEXT LOW OFFEROR. THE CONTRACTING OFFICER WAS JUSTIFIED IN CONSIDERING THE DELINQUENT PERFORMANCE RECORD OF ORDNANCE PRODUCTS, INC., (OPI) IN DETERMINING THE RESPONSIBILITY OF ITS WHOLLY OWNED SUBSIDIARY, MARTIN; EVEN THOUGH ONLY THREE MANAGERIAL POSITIONS OF MARTIN AND OPI WERE HELD BY THE SAME INDIVIDUALS AND THERE WAS LITTLE EVIDENCE OF A CLOSE WORKING RELATIONSHIP BETWEEN THE FIRMS, THE COMBINATION OF MINOR DELIQUENCIES OF MARTIN COMBINED WITH THE POOR PERFORMANCE RECORD OF OPI JUSTIFY THE CONCLUSION NOT TO AWARD THE CONTRACT TO THE LOW OFFEROR.

TO MARTIN ELECTRONICS:

REFERENCE IS MADE TO YOUR TELEGRAMS OF OCTOBER 26, 1970, AND SUBSEQUENT CORRESPONDENCE, PROTESTING THE AWARD OF CONTRACTS TO ANY OTHER FIRMS UNDER REQUEST FOR PROPOSALS (RFP) NOS. DAA15-71-R-0071 (HEREAFTER 0071) AND DAAA15-71-R-0075 (HEREAFTER 0075) ISSUED BY THE EDGEWOOD ARSENAL, EDGEWOOD, MARYLAND.

RFP 0071, ISSUED ON AUGUST 26, 1970, SOLICITED PRICE QUOTATIONS ON A QUANTITY OF 146,016 RED SMOKE M18 HAND GRENADES AND CALLED FOR DELIVERY OF THE FIRST INCREMENT OF 53,568 ON OR BEFORE FEBRUARY 1, 1971. RFP 0075, ISSUED ON AUGUST 27, 1970, SOLICITED PRICE QUOTATIONS ON A QUANTITY OF 339,552 VIOLET SMOKE M18 HAND GRENADES AND CALLED FOR DELIVERY OF THE FIRST INCREMENT OF 69,984 ON OR BEFORE MARCH 1, 1971. BOTH PROCUREMENTS WERE FOR THE PURPOSE OF SATISFYING URGENT REQUIREMENTS DESIGNATED AS PRIORITY 02. YOUR FIRM WAS THE LOW OFFEROR UNDER BOTH PROCUREMENTS. HOWEVER, YOUR FIRM DID NOT RECEIVE AN AWARD ON EITHER SOLICITATION BECAUSE THE CONTRACTING OFFICER DETERMINED THAT YOUR FIRM WAS NOT A RESPONSIBLE OFFEROR. BOTH AWARDS WERE MADE TO TALLEY INDUSTRIES, INC., THE NEXT LOW OFFEROR.

PRIOR TO THE CONTRACTING OFFICER'S DETERMINATION OF NONRESPONSIBILITY, THE DEFENSE CONTRACT ADMINISTRATION SERVICES DISTRICT (DCASD), BALTIMORE, WAS REQUESTED TO CONDUCT A PREAWARD SURVEY OF YOUR FIRM, AS WELL AS ORDNANCE PRODUCTS, INC. (OPI), SINCE YOUR FIRM IS A WHOLLY OWNED SUBSIDIARY OF OPI. THE BALTIMORE DCASD IN CONJUNCTION WITH THE ORLANDO (FLORIDA) DCASD RENDERED A FAVORABLE PREAWARD SURVEY REPORT, RECOMMENDING AWARD TO YOUR FIRM. HOWEVER, THE CONTRACTING OFFICER DISAGREED WITH THE PREAWARD SURVEY RECOMMENDATION, AND ON THE BASIS OF INFORMATION AVAILABLE TO HIM, INCLUDING A REPORT BY EDGEWOOD ARSENAL REPRESENTATIVES AFTER A VISIT TO YOUR FACILITIES, CONCLUDED THAT HE COULD NOT MAKE THE REQUIRED AFFIRMATIVE DETERMINATION THAT YOUR FIRM WAS A RESPONSIBLE OFFEROR FOR EITHER AWARD.

IN TWO SEPARATE AND LENGTHY DETERMINATIONS, BOTH DATED OCTOBER 9, 1970, THE CONTRACTING OFFICER LISTED SEVERAL REASONS JUSTIFYING HIS DETERMINATION OF NONRESPONSIBILITY. BASICALLY, HE DETERMINED THAT THE MANAGEMENT OF YOUR FIRM AND OPI WERE ONE AND THE SAME, AND OPI'S LONG HISTORY OF UNSATISFACTORY PERFORMANCE IN REGARD TO TIMELINESS OF DELIVERY WOULD THEREFORE HAVE TO BE IMPUTED TO YOUR FIRM. AS AN EXAMPLE OF THIS ALLEGED LACK OF TENACITY AND PERSEVERANCE, THE CONTRACTING OFFICER CITES OPI'S INEXCUSABLE DELINQUENCIES IN THE DELIVERY SCHEDULE UNDER CONTRACT NOS. DAAA15-70-C-0110 (HEREAFTER 0110) AND DAAA15-70-C-0053. ADDITIONALLY, IT IS POINTED OUT THAT UNDER CONTRACT DAAA15-70-C-0182 FOR 2000 CRYPTOGRAPHIC EQUIPMENT DESTROYERS, M2A1, OPI FAILED TO MEET ORIGINAL FIRST ARTICLE SUBMISSION DATES. ALSO, THE CONTRACTING OFFICER STATES THAT ON MAY 13, 1970, A LETTER WAS RECEIVED FROM DCASR, PHILADELPHIA, REQUESTING, IN VIEW OF OPI'S DELINQUENCIES ON A NUMBER OF DOD CONTRACTS, THAT OPI BE DISQUALIFIED AS A PLANNED PRODUCER. THERE IS ALSO EVIDENCE THAT OPI WAS DELINQUENT IN ITS DELIVERY SCHEDULE FOR CONTRACTS DAAA15-68-C -0742 AND DAAA15-67-C 0185. ADDITIONALLY, ON SEVERAL OTHER CONTRACTS (DA11-173-AMC-835A, DA10-175-AMC-809, DAAA15-67-C-0185, DAAA09-69-C-0063, DAAA09-69-C-0354 AND DAAA09-69-C-0353) THERE WERE REVISIONS IN THE DELIVERY SCHEDULES, AND THERE IS EVIDENCE THAT THE CONTRACT REQUIREMENTS WERE RELAXED IN SEVERAL INSTANCES TO FACILITATE PERFORMANCE BY OPI.

THE CONTRACTING OFFICER ALSO POINTS OUT THAT CONTRACT DAAA15-70-C 0471 (HEREAFTER 0471) AWARDED TO YOUR FIRM ON JUNE 12, 1970, REQUIRED SUBMISSION OF GENERAL & DETAILED INSPECTION PROCEDURES WITHIN 30 DAYS AFTER AWARD, BUT THAT THEY WERE NOT SUBMITTED UNTIL SEPTEMBER 18, 1970. ALSO, BY MODIFICATION P00008 TO OPI'S CONTRACT 0110 A QUANTITY OF 100,000 VIOLET SMOKE GRENADES WAS AUTHORIZED TO BE PRODUCED BY YOUR FIRM AND THAT THE FIRST ARTICLE QUANTITY FOR THESE GRENADES WAS DUE IN EDGEWOOD ARSENAL FROM YOUR FACILITY FOR GOVERNMENT TESTING ON OCTOBER 2, 1970. AS OF OCTOBER 9, 1970 (THE DATE OF THE NONRESPONSIBILITY DETERMINATION), THE PRE -PRODUCTION QUANTITY HAD NOT BEEN SUBMITTED.

IN YOUR LETTER OF FEBRUARY 9, 1971, FROM MR. F. H. BEACH COMMENTING ON THE ADMINISTRATIVE REPORT, YOU STATE THAT THE DAY-TO-DAY MANAGEMENT OPERATIONS OF YOUR FIRM ARE COMPLETELY AUTONOMOUS FROM OPI. YOU LIST SEVERAL MANAGERIAL FUNCTIONS AND THE INDIVIDUALS RESPONSIBLE FOR THE PERFORMANCE OF THESE FUNCTIONS. PRESUMABLY THESE INDIVIDUALS HAVE NO CONNECTION WITH YOUR AFFILIATE OPI. YOU POINT OUT THAT WHILE THE PRESIDENT AND THE SECRETARY-TREASURER ARE THE SAME INDIVIDUALS FOR BOTH CORPORATIONS (ALSO THE POSITION OF ADMINISTRATIVE ASSISTANT FOR THE TWO CORPORATIONS IS HELD BY THE SAME INDIVIDUAL), THESE INDIVIDUALS ARE NOT DIRECTLY INVOLVED IN THE DAY-TO-DAY MANAGEMENT OF YOUR FIRM.

YOU ALSO QUESTION THE CONTRACTING OFFICER'S DETERMINATION OF NONRESPONSIBILITY IN VIEW OF THE FACT THAT THE ORLANDO DCASD RENDERED A FAVORABLE PREAWARD SURVEY OF YOUR FIRM.

YOU STATE THAT YOU WERE NOT DELINQUENT ON CONTRACT 0471, NOR HAVE YOU BEEN DELINQUENT ON ANY PRIME GOVERNMENT CONTRACT. HOWEVER, YOU ADMIT THAT UNDER CONTRACT 0471 YOU WERE REQUIRED TO DELIVER 158,016 YELLOW SMOKE GRENADES BY DECEMBER 19, 1970, WHICH YOU DID NOT DELIVER UNTIL DECEMBER 23, AND YOU ATTRIBUTE THIS DELAY TO THE FAILURE OF THE GOVERNMENT TO FURNISH YOU THE NECESSARY SHIPPING DOCUMENTS. IN ANY EVENT, THE CONTRACTING OFFICER MAKES NO MENTION OF ANY DELINQUENCIES IN THE DELIVERY SCHEDULE OF CONTRACT 0471. HE MERELY MENTIONED THAT YOUR FIRM WAS DELINQUENT IN THE DELIVERY OF CERTAIN INSPECTION PROCEDURES, WHICH YOU DID NOT MENTION IN YOUR FEBRUARY 9 LETTER.

REGARDING THE DELINQUENCY IN THE DELIVERY TO THE EDGEWOOD ARSENAL OF THE FIRST ARTICLE QUANTITY OR PRE-PRODUCTION SAMPLE UNDER CONTRACT 0110, YOU STATE THAT DELIVERY WAS REQUIRED BY OCTOBER 2, 1970, AND THAT YOU MADE DELIVERY ON OCTOBER 12, 1970. YOU STATE THAT THE SHIPPING TIME FROM PERRY, FLORIDA, TO EDGEWOOD ARSENAL ACCOUNTED FOR FIVE OF THE TEN-DAY DELAY.

THE FIRST QUESTION WHICH MUST BE ANSWERED IS WHETHER THE CONTRACTING OFFICER WAS JUSTIFIED IN TAKING OPI'S PERFORMANCE RECORD INTO CONSIDERATION IN HIS DETERMINATION THAT YOUR FIRM WAS NOT RESPONSIBLE.

IN REGARD TO THE MANAGEMENT OF YOUR FIRM AND OPI, ACCORDING TO SECTION 1- 904.2(A) OF THE ARMED SERVICES PROCUREMENT REGULATIONS (ASPR) AFFILIATED CONCERNS SHALL BE CONSIDERED AS SEPARATE ENTITIES IN DETERMINING WHETHER THE ONE OF THEM WHICH IS TO PERFORM THE CONTRACT MEETS THE APPLICABLE STANDARDS FOR A RESPONSIBLE PROSPECTIVE CONTRACTOR. HOWEVER, ASPR 1- 904.2(B) AUTHORIZES THE CONTRACTING OFFICER TO CONSIDER THE PERFORMANCE RECORD OF AFFILIATED CONCERNS WHICH MAY ADVERSELY AFFECT THE RESPONSIBILITY OF A PROSPECTIVE CONTRACTOR. ADMITTEDLY, ASIDE FROM THE FACT THAT THREE MANAGERIAL POSITIONS OF YOUR FIRM AND OPI WERE HELD BY THE SAME INDIVIDUALS, THE ONLY EVIDENCE OF A CLOSE WORKING RELATIONSHIP BETWEEN YOUR FIRM AND OPI WAS YOUR PERFORMANCE OF A PORTION OF OPI'S CONTRACT 0110.

WHILE WE MAY DISAGREE WITH THE CONTRACTING OFFICER IN REGARD TO THE WEIGHT GIVEN OPI'S DELINQUENCIES IN CONNECTION WITH HIS DETERMINATION, WE ARE UNABLE TO CONCLUDE THAT HE SHOULD NOT HAVE CONSIDERED OPI'S PERFORMANCE RECORD IN HIS DETERMINATION OF YOUR RESPONSIBILITY. WE ARE THEREFORE OF THE VIEW THAT THE CIRCUMSTANCES OF THE PRESENT CASE JUSTIFIED CONSIDERATION OF OPI'S RESPONSIBILITY. B-160649, MARCH 27, 1967. SEE 49 COMP. GEN. 600, 605 (1970).

CONCERNING THE FAVORABLE PREAWARD SURVEY OF YOUR FIRM BY DCASD, THIS OFFICE HAS CONSISTENTLY TAKEN THE POSITION THAT THE DETERMINATION OF A PROSPECTIVE CONTRACTOR'S RESPONSIBILITY INVOLVES THE EXERCISE OF CAREFUL JUDGEMENT ON THE PART OF THE CONTRACTING OFFICER, SINCE THE DETERMINATION IS ESSENTIALLY A FORECAST OF THE BIDDER'S ABILITY TO PERFORM THE CONTRACT. SEE 43 COMP. GEN. 228 (1963). IN REACHING HIS DECISION THE CONTRACTING OFFICER IS NOT REQUIRED TO MAKE AWARD TO A BIDDER BECAUSE OF A FAVORABLE PREAWARD SURVEY, NOR IS HE PRECLUDED FROM CONSIDERING OTHER FACTORS. B-166275(1), OCTOBER 17, 1969.

IN THE PRESENT CASE THE OTHER FACTORS WHICH THE CONTRACTING OFFICER CONSIDERED WERE PRIOR PERFORMANCE BY YOUR FIRM AND THE PERFORMANCE RECORD OF OPI. EVEN IF THE DELINQUENCIES OF YOUR FIRM UNDER CONTRACTS 0471 AND 0110 WERE MINOR WHEN CONSIDERED INDIVIDUALLY, THESE DELINQUENCIES COUPLED WITH THE MUCH POORER PERFORMANCE RECORD OF OPI LED THE CONTRACTING OFFICER TO THE CONCLUSION THAT YOUR FIRM WOULD BE UNABLE TO MAKE TIMELY DELIVERY SHOULD IT BE AWARDED THE CONTRACTS UNDER RFP 0071 AND RFP 0075. TIMELY DELIVERY WAS ESPECIALLY IMPORTANT ON THESE TWO PROCUREMENTS BECAUSE OF THE "02" PRIORITY ON BOTH PROCUREMENTS.

YOU ALSO STATE THAT SUBSEQUENT TO THE CONTRACTING OFFICER'S DETERMINATION IN CONNECTION WITH RFP 0071 AND 0075, OPI HAS RECEIVED TWO CONTRACTS (DAAA15-71-C-0157 AND DAAA15-71-C-0184). THIS OFFICE HAS HELD THAT:

"SINCE THE PARTICULAR CONTRACTING OFFICER IS RESPONSIBLE FOR THE CONDUCT OF THE PROCUREMENT, HIS REASONABLE DETERMINATION IS ACCEPTED EVEN THOUGH A DIFFERENT CONTRACTING OFFICER, OR THE SAME ONE FOR A DIFFERENT PROCUREMENT, MAY REACH A DIFFERENT CONCLUSION." B-167782, JANUARY 21, 1970. THE ABOVE IS SUPPORTED BY OUR HOLDING IN B-169119, MAY 14, 1970, WHEREIN WE STATED:

" *** A DETERMINATION OF RESPONSIBILITY APPLIES ONLY TO THE PARTICULAR PROCUREMENT FOR WHICH IT IS MADE AND IS NO WAY INTENDED TO REPRESENT THE GOVERNMENT'S APPROVAL OR DISAPPROVAL OF A PARTICULAR BUSINESS CONCERN. ADDITIONALLY, AS A GENERAL RULE, A PRIOR ADMINISTRATIVE DETERMINATION OF RESPONSIBILITY IS NOT DETERMINATIVE OF A SUBSEQUENT QUESTION OF RESPONSIBILITY."

IN YOUR FEBRUARY 9 LETTER YOU ALLEGE THAT THE RECORD OF THIS CASE CLEARLY INDICATES THAT THERE IS NO SUBSTANTIAL EVIDENCE JUSTIFYING THE ACTIONS OF THE CONTRACTING OFFICER. A DETERMINATION OF A BIDDER'S RESPONSIBILITY INVOLVES THE EXERCISE OF A CONSIDERABLE RANGE OF DISCRETION AND WE HAVE CONSISTENTLY ADHERED TO THE RULE THAT DETERMINATIONS OF RESPONSIBILITY OR NONRESPONSIBILITY WILL NOT BE QUESTIONED UNLESS THE DETERMINATIONS ARE EITHER ARBITRARY, CAPRICIOUS OR NOT BASED ON SUBSTANTIAL EVIDENCE. IN THE PRESENT CASE, WE ARE OF THE VIEW THAT THE EVIDENCE OUTLINED ABOVE MUST BE CONSIDERED ADEQUATE TO SUPPORT THE CONTRACTING OFFICER'S DETERMINATION THAT HE COULD NOT MAKE AN AFFIRMATIVE DETERMINATION OF RESPONSIBILITY, AS REQUIRED UNDER ASPR 1-904.1 AND 1-904.2 FOR THE PURPOSE OF MAKING AN AWARD TO YOUR FIRM.

ACCORDINGLY, WE FIND NO BASIS TO QUESTION THE ADMINISTRATIVE ACTION TAKEN, AND YOUR PROTEST MUST THEREFORE BE DENIED.