BNUMBER: B-271788
DATE: July 30, 1996
TITLE: Cromartie Construction Company
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Matter of:Cromartie Construction Company
File: B-271788
Date:July 30, 1996
Charles Cromartie for the protester.
Cynthia S. Guill, Esq., and Garret L. Ressing, Esq., Department of the
Navy, for the agency.
Glenn G. Wolcott, Esq., and Paul Lieberman, Esq., Office of the
General Counsel, GAO, participated in the preparation of the decision.
DIGEST
1. Where RFQ sought fixed-price quotations and identified only price
as an evaluation factor, procuring agency improperly rejected
responsive, low quotation in favor of a higher quotation.
2. In procurement set aside for small emerging businesses, record
does not reasonably support agency's determination to issue purchase
order to a large business at a substantial price premium on the basis
of purported urgent need for contract performance.
3. Agency's concern that small business' quotation was unreasonably
low involves the quoter's responsibility, the negative determination
of which must be referred to the Small Business Administration.
DECISION
Cromartie Construction Company (CCC) protests the Department of the
Navy's rejection of its low quotation under request for quotations
(RFQ) No. N68925-96-Q-A303 to provide and install new locks and keys
for a particular building at the Washington Navy Yard. CCC asserts
that the Navy acted unreasonably in issuing a purchase order to
another company at a price substantially higher than CCC's quotation.
We sustain the protest.
BACKGROUND
On March 22, 1996, the Navy Public Works Center issued the subject RFQ
under the simplified acquisition procedures set forth in part 13 of
the Federal Acquisition Regulation (FAR). The solicitation was set
aside for "emerging small businesses" and sought fixed-price
quotations to provide new locks and keys for Building
No. 183 at the Washington Navy Yard in Washington, D.C.[1] The
solicitation did not require the submission of technical proposals and
did not identify any evaluation factors other than price.[2] The RFQ
required "work to be completed within
14 calendar days."
After issuing the solicitation, the Navy's purchasing agent contacted
various firms and posted the RFQ on the Navy Public Works Center
bulletin board. CCC submitted a quotation of $3,795 prior to the
March 25 deadline; the government's estimate for this procurement was
$7,500. CCC's quotation stated that the company was located in
Washington, D.C., but listed a Pennsylvania telephone number.[3]
On March 26, Cromartie telephoned the Navy Public Works Center to
inquire about the procurement, asking to speak with the purchasing
agent identified in the RFQ. The purchasing agent declined to speak
with Cromartie and directed another Navy employee to advise Cromartie
that the Navy was considering cancellation of the solicitation.[4]
The Navy asserts that, beginning on March 29, Navy personnel attempted
to contact Cromartie by telephone, but were unable to get an answer at
the number provided until April 4.[5] On April 4, Cromartie's mother
answered a call placed by the Navy and told the Navy representative
that Cromartie would call back. On April 5, the Navy awarded a
purchase order to Best Locking Systems of Maryland, a large business,
in the amount of $6,894.[6] Cromartie returned the Navy's call on
Monday, April 8. At that time, the agency advised him that, due to
the agency's pressing need to have the new locks installed, a purchase
order had been issued. This protest followed.
DISCUSSION
The Navy first argues that CCC has no basis to challenge the Navy's
issuance of a purchase order because the procurement was conducted
under simplified acquisition procedures, pursuant to an RFQ, under
which CCC has no entitlement to award. See L C Jones Elec., B-249491,
Nov. 23, 1992, 92-2 CPD para. 367. In this regard, the purchasing agent
asserts that, because the Navy issued an RFQ rather than an invitation
for bids (IFB), the Navy "had no obligation to utilize the quote [CCC]
provided."
Where an agency proceeds with a small business set-aside using
simplified acquisition procedures and receives a quotation from only
one responsible small business concern at a reasonable price, FAR sec.
13.105(c)(3) requires that the contracting officer make an award to
that concern. Further, we do not agree with the proposition that a
responsible vendor submitting a low quotation in response to an RFQ is
not entitled to any recourse in the event the agency issues a purchase
order based on a higher quotation. Where, as here, an RFQ seeks
fixed-price quotations and identifies only price as an evaluation
factor, a procuring agency may not ignore a responsive, low quotation
from a responsible vendor in favor of a higher quotation submitted by
another firm. See Imaging Technology Corp.,
B-270124, Feb. 12, 1996, 96-1 CPD para. 68; The Mart Corp. B-254967.3,
Mar. 28, 1994, 94-1 CPD para. 215; Garrett-Callahan Co., B-246895, Apr. 8,
1992, 92-1 CPD para. 352.
The Navy next maintains that it reasonably rejected CCC's quotation
due to its inability to contact Cromartie and in light of the agency's
urgent need to obtain contract performance.[7] During a telephone
conference conducted by our Office, Navy representatives noted that
the solicitation required that performance be completed in 14 days and
asserted that because this was a "priority one" procurement, the Navy
had been unable to delay issuance of a purchase order beyond April 5.
The FAR requirements for simplified acquisition procedures contemplate
significant flexibility to permit agencies to make such acquisitions
efficiently and economically, and without incurring unnecessary
burdens. Consistent with this flexibility, we do not believe that a
contracting activity is required to substantially delay the issuance
of a purchase order in a situation where there is a bona fide
immediate need to satisfy the solicited requirement. However, here
the record contradicts the agency's representations that its urgent
needs justified issuance of a purchase order to Best Locking Systems 1
day after being advised that Cromartie would return the Navy's call.
Specifically, the quotation submitted by Best Locking Systems
contained an express exception to the RFQ's requirements regarding the
14-day period for contract performance. In particular, Best's
quotation stated that contract performance would not be completed for
"4-6 weeks after receipt of an order."[8] Consistent with Best's
express exception to the RFQ's performance requirements, the Navy's
April 5 purchase order provided for a delivery date of May 28--some 7
weeks after the order was issued. On this record, we are unpersuaded
that the Navy reasonably awarded a purchase order to a large business,
at a price nearly double CCC's quotation, just 1 day after the Navy
had been advised that Cromartie would contact them regarding his
company's quotation.
Finally, the Navy asserts that it properly rejected CCC's quotation on
the basis that it was unreasonably low. Specifically, the contracting
officer states:
"I made a determination to cancel the emerging small business
[ESB] set-aside and proceed with an unrestricted procurement in
accordance with FAR sec. 19.1006(c)(1) and (2) [which states] that
if only one quote is received on an ESB set-aside that is not a
reasonable price, the contracting officer may cancel the ESB
set-aside."
A determination that an offered price for a fixed-price contract is
too low generally concerns the offeror's responsibility, that is, the
offeror's ability and capacity to successfully perform the contract at
its offered price. See Envirosol, Inc., B-254223, Dec. 2, 1993, 93-2
CPD para. 295; Monopole S.A., Inc., B-254137, Nov. 4, 1993, 93-2 CPD para.
268; Ball Tech. Prods. Group, B-224394, Oct . 17, 1986, 86-2 CPD para.
465. Where the solicitation for a negotiated procurement includes
evaluation criteria which pertain to an offeror's understanding of the
work required, an offeror's unrealistically low price may be evaluated
as indicating a lack of technical understanding. However, here, the
RFQ did not identify any technical evaluation criteria. Accordingly,
the agency's concern regarding the reasonableness of CCC's price could
only be considered as a matter of responsibility. See Envirosol,
Inc., supra; Ball Tech. Prods. Group, supra. Since CCC is a small
business, any agency concern regarding CCC's responsibility was
required to be referred to the Small Business Administration (SBA) for
consideration under the certificate of competency (COC) procedures.
15 U.S.C. sec. 637(b)(7) (1994); FAR 19.602-1(a); PHE/Maser, Inc., 70
Comp. Gen. 689 (1991), 91-2 CPD para. 210.
The protest is sustained.
Performance has been stayed and we recommend that the purchase order
issued to Best Locking Systems be canceled and a purchase order be
issued to CCC unless the Navy has concerns regarding CCC's
responsibility. If this is the case, the Navy should refer the matter
to the SBA for a conclusive COC determination. CCC is also entitled
to recover the costs of filing and pursuing its protest.
Comptroller General
of the United States
1."Emerging small business" means a small business concern whose size
is no greater than 50 percent of the normal size standard applicable
to the standard industrial classification code assigned to a
contracting opportunity. FAR sec. 19.1002.
2. Under the heading "Evaluation for Award" the solicitation stated:
"Discounts offered may be taken, but will not be evaluated for award."
No further evaluation criteria were identified.
3. Charles Cromartie, the company's owner, explains that the
Pennsylvania telephone number is the residence of his retired mother.
4. There is some dispute regarding what Cromartie was told during this
conversation. The Navy's purchasing agent submitted a declaration
stating: "Cromartie was informed that the [Navy] was considering
using in house forces and that [the purchasing agent] would contact
[Cromartie] when a decision was reached." During a telephone
conference conducted by our Office, the Navy employee with whom
Cromartie spoke stated that she only advised Cromartie that the
contract was scheduled to be canceled and did not provide any
additional information. The parties agree that no information
regarding CCC's quotation was requested during this conversation.
5. Cromartie disputes the agency's assertions regarding its efforts to
contact him, maintaining that the telephone identified in the
quotation is equipped with a continuously operating answering machine.
6. Best's quotation specifically states that it is other than a small
business.
7. The agency explains that the building at issue in this procurement
was recently renovated, during which keys were provided to various
contractors. The installation of new locks and keys in this
procurement is intended to ensure that the building is secure.
8. CCC's quotation took no exception to the RFQ requirement that
performance be completed within 14 days.