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.