TITLE:  Downtown Legal Copies, B-289432, January 7, 2002
BNUMBER:  B-289432
DATE:  January 7, 2002
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Decision

Matter of: Downtown Legal Copies

File: B-289432

Date: January 7, 2002

William E. Slade, Esq., Patton Boggs, for the protester.

Roy E. Potter, Esq., Government Printing Office, for the agency.

Ralph O. White, Esq., and Christine S. Melody, Esq., Office of the General
Counsel, GAO, participated in the preparation of the decision.

DIGEST

Contention that agency wrongly rejected protester's low bid for copying
services after determining that it was not responsible is denied where the
record as a whole shows that the agency's nonresponsibility determination
was not unreasonable.

DECISION

Downtown Legal Copies (DLC) protests the determination that it is not a
responsible bidder, and the resulting rejection of its low bid, by the
Government Printing Office (GPO) under invitation for bids (IFB) No. 2085S,
issued to procure color and black-and-white copying services for the
Department of Agriculture, the Forest Service, and various other federal
agencies with offices in the Juneau, Alaska area. DLC argues that the
agency's nonresponsibility determination lacks a reasonable basis.

We deny the protest.

BACKGROUND

The IFB here contemplated the award of a fixed-price, indefinite-delivery,
indefinite-quantity requirements contract for a period of 1 year, followed
by four 1-year options. The successful bidder is to produce, at a facility
within a 35-mile radius of Juneau, flat forms and books requiring black and
color copying, an assortment of binding styles, packing, labeling, and
delivery.

The IFB estimated an annual average of 64 form orders and 157 book orders,
with most orders copied or printed on standard-sized (8ï¿½ by 11 inches or
smaller) paper. In addition, the IFB identified 14 different types of stock
to be used in the printing orders covered by the contract. The IFB also
provided a detailed breakdown of its estimates for form and book orders. For
example, the IFB estimated that 39 of the 64 form orders would involve
black-and-white copies, and 14 of those orders would be for 500 to 5,000
copies; similarly, the IFB advised that the average book order would be for
144 copies, with an average page count of 284 pages. [1] In addition, the
IFB anticipated that most orders would be completed within 3 workdays, but
required that bidders be prepared to provide same-day service on
approximately 2 percent of the anticipated orders, limited to orders not
requiring more than 10,000 impressions.

By the September 18, 2001, bid opening date, DLC submitted the low bid
($217,618.95), with the next-low bid ($253,316.50) submitted by the
incumbent, Copy Express. After conducting a responsibility review that
included a site visit to DLC's Juneau facility, GPO concluded that DLC was
not a responsible bidder, and that award should be made to Copy Express.
Specifically, GPO concluded that DLC had not shown the ability to produce
the work required, adequate staffing, or evidence of "quality and/or
production control." Determination and Findings (D&F), Sept. 28, 2001. By
letter dated October 1, the contracting officer advised DLC of this
determination, and this protest followed.

During the course of this protest, DLC challenged many of the factual
assertions made and conclusions reached by GPO during this responsibility
review. Many of these challenges took the form of direct rebuttal, by sworn
declarations, of GPO's allegedly factual assertions about the review, which
had been set forth in narrative form in the agency's report. In response to
these challenges raised by the protester in its comments filing, GPO
answered with sworn declarations from the contracting officer (CO), who
found DLC to be nonresponsible, and from the contracting officer's
representative (COR), who conducted the review and made the site visit upon
which the CO relied. The content of these agency declarations was again
contested by the protester with more declarations in its final filing.

To assist in reconciling these disparate accounts of the facts, our Office
convened a hearing in this matter, and took testimony from the COR and two
DLC witnesses. While not every dispute has been reconciled, several have
been. As a result, we set forth below additional facts, ultimately not in
dispute, which are needed to explain and resolve this protest.

DLC's bid listed its address as 175 South Franklin Street, Juneau, Alaska.
DLC had been operating since 1995 in Anchorage, and prior to submitting its
bid here, DLC had no presence in Juneau. To participate in this procurement,
DLC "made substantial investments at substantial cost to ensure its
performance capability . . . ." Protest at 7. Among other things, the record
shows that DLC's administrative office in downtown Juneau, and its
production facility, located 4 to 5 miles outside of downtown, were both
leased after September 1, 2001. Tr. at 100-02. In addition, the record shows
that the Juneau facility performed its very first copying job approximately
4 days prior to GPO's site visit. Tr. at 127. In the words of DLC's Juneau
branch manager, "we hadn't been open too long . . . ." Tr. at 116.

One day after bids were opened, on September 19, the COR requested that DLC
provide an equipment list, financial information, references, and samples of
products copied and bound by the company, in order to assist the agency with
its responsibility determination. COR's Affidavit at 1. DLC responded to the
COR's request for additional information, including samples, but apparently
omitted an equipment list. In addition to the information requested, DLC
provided a list of its key personnel, which identified a branch manager for
the Juneau location, and claimed that the manager's skills "have made the
Juneau office a successful operation." Agency Report (AR), Tab G. When the
COR noticed that DLC had omitted its equipment list, the agency made a
second request for the list. DLC responded immediately, apologizing for its
oversight, in a letter sent by facsimile and dated September 24, that
identified the equipment on hand at its Juneau location. AR, Tab I.

Upon receipt of the equipment list, the COR noticed that several of the
samples provided could not have been produced on the equipment identified by
DLC in its September 24 letter, and the COR telephoned DLC's representative
[2] to ask about this matter. During that call, the COR learned that all but
one of the samples provided by DLC were not prepared at its Juneau facility,
but in Anchorage. (Tr. at 15, 80-81.) For the binding operations for which
DLC did not have equipment in Juneau--identified during this protest as
perfect binding, hot tape binding, and saddle-stitching--DLC advised that it
had an arrangement with a local Juneau printing company to perform these
services. This exchange led to a request from GPO for more information. On
September 25, DLC provided GPO with a letter of the same date from its
source for these services, Alaska Litho Printers, which acknowledged that
company's "commitment to [DLC] to offer any prepress, press, and/or bindery
services as a trade service." AR, Tab J.

On September 27, the COR traveled to Juneau to perform an on-site inspection
of DLC's facility. Since the only address the COR had been given was the
address on DLC's bid--at this point, the COR did not know that DLC had a
separate production facility--the COR traveled to 175 South Franklin Street,
in downtown Juneau. Upon his arrival, he was met by DLC's member manager at
a small office, with few, if any, furnishings. [3] From there, the two men
traveled together to DLC's production facility, located in an office park
approximately four or five miles from downtown Juneau.

Upon arrival at the production facility, the COR found a suitable site,
outfitted with the claimed equipment in apparent good order, but noted that
the facility was quiet, with no work in progress, and only one employee,
DLC's branch manager. Tr. at 20-22, 86-88, 116. This led to a discussion,
confirmed by all three witnesses, about the fact that DLC would both hire
locally and transfer employees from its Anchorage operation in the event it
received the contract. Tr. at 22-23, 29, 93-94, 121. After a short visit,
which included a viewing by the COR of DLC's stock of paper and supplies but
no discussion of its adequacy, Tr. at 40-41, 99, 123-125, the COR departed.
The next day, September 28, using information provided by the COR, the CO
determined, and a review panel concurred, that DLC was not a responsible
bidder, because, in essence, DLC lacked the capacity to perform. As
indicated above, this finding was communicated to DLC by letter dated
October 1.

DISCUSSION

DLC argues that GPO's determination of nonresponsibility lacked a reasonable
basis because it is not supported by the facts and applicable law, and
because it violates GPO's own regulations. With respect to the facts, DLC
argues that GPO never advised that it wanted samples produced at the
company's Juneau facility, and any adverse inference arising from its
forwarding of samples produced in Anchorage is unfair. DLC also disputes the
COR's conclusions about its capacity, and the facts upon which those
conclusions are based. Specifically, DLC argues that the COR was
unreasonable in concluding that it would not have sufficient employees by
the contract start date, that it had no prior work, that the company lacked
the ability to comply with the contract's requirement to perform pick-up and
delivery of work, and that the company lacked adequate paper stock and
supplies.

In considering the applicable standard here, we note first that despite
DLC's status as a small business concern, this nonresponsibility
determination was not required to be referred to the Small Business
Administration (SBA) for review under that agency's certificate of
competency procedures, as GPO is not subject to the referral requirements of
the Small Business Act, 15 U.S.C. sect. 637(b)(7) (1994). Fry Communications,
Inc., B-207605, Feb. 1, 1983, 83-1 CPD para. 109 at 2-5. When an agency's
nonresponsibility determination is reviewed by our Office, and when there is
no allegation of bad faith--and there is none here--we will not disturb the
determination unless a protester can show that the agency had no reasonable
basis for its determination; put simply, this is a matter where the CO is
vested with broad discretion in exercising his or her business judgment.
Document Printing Serv., Inc., B-256654, B-257051, July 8, 1994, 94-2 CPD para.
13 at 3. Our review of such a determination is limited to whether the
determination was reasonable when it was made, given the information the
agency had before it at the time. See Mail Boxes Etc., B-281487, Feb. 16,
1999, 99-1 CPD para. 37 at 3.

We begin our analysis with GPO's request to DLC for additional information,
including samples, and the impressions that were reasonably created by the
events that followed. First, while we recognize that DLC disputes GPO's
claim that the agency's oral request to DLC for samples specified that the
samples must have been produced at the Juneau facility, we need not resolve
this dispute. Simply put, whether GPO did, or did not, specify that the
samples provided had to have been produced in Juneau, in the context of a
responsibility determination about DLC's Juneau facility, it was not
reasonable to provide printing samples produced elsewhere. In our view, DLC
should have understood that providing samples produced on machines in
Anchorage would provide GPO little information about the capabilities of
DLC's Juneau facility. [4]

Second, we think the way in which the origin of these samples came to light
reasonably contributed to GPO's concern that DLC might be overstating its
readiness. When DLC responded to the agency's request for additional
information, it omitted its equipment list. While we have no reason to
believe that this omission was anything other than inadvertent, it was only
after GPO made a second request for the list, and received it, that GPO was
able to discern that certain of the samples provided could not be produced
on the equipment identified. [5]

Third, we add to this mix the information regarding DLC's branch manager in
Juneau that was provided to GPO with the other information requested.
Specifically, the description stated that the branch manager's skills "have
made the Juneau office a successful operation." AR, Tab G. This claim was
made to the CO on or around September 21. See Initial Protest, Tab D (e-mail
from DLC's member manager promising the COR the requested materials, which
included this claim, by September 21). During the hearing, however, DLC's
Juneau branch manager testified that the first job performed at the Juneau
site was not performed until on or about September 23, only 4 days prior to
the September 27 site visit. See Tr. at 127. In our view, this inflated
claim, while perhaps mere puffery, again reasonably caught the CO's
attention (CO's Declaration at 4), and reasonably reinforced his increasing
concern that DLC might be overstating its readiness to begin performance.

Finally, in the string of events that, while not dispositive, contributed to
the conclusion here, the COR arrived for his site visit at the address DLC
included on its bid, and found an empty, or nearly-empty, room. While, as
DLC argues, there is no requirement in the solicitation for a downtown
office, we think the condition of DLC's office reasonably contributed to
GPO's concerns about DLC's readiness to perform this contract.

With respect to the events at the site visit, as noted above, there is no
dispute that the COR found DLC's production facility to be a suitable site
and outfitted with the claimed equipment in apparent good order. There is
also no dispute that the COR found a quiet facility, with no work in
progress, and only one employee present, DLC's branch manager. This
situation apparently led to a discussion, confirmed by all three witnesses
during the hearing, about the fact that DLC would hire locally, and would
transfer employees from its Anchorage operation, in the event it received
the contract. Tr. at 22-23, 29, 93-94, 121. Beyond these matters there is
little agreement.

Our pre-hearing conference call, and hearing letter, outlined the four areas
of disagreement between the agency and DLC about what was asked and what was
seen during the COR's visit to DLC's production facility. At the conclusion
of our hearing, three of these areas were still in dispute. These were:
(1) the information exchanged between the COR and representatives of DLC
about other work performed by the company at the Juneau facility;
(2) whether the COR inquired about, and if so, what information was
exchanged about, the ability of DLC to pick up and deliver work; and (3) the
information exchanged about DLC's employees. On the other hand, the fourth
area of disagreement explored at the hearing--i.e., the availability of
supplies (including paper) during the COR's site visit--can be resolved by
our Office based on a review of the declarations, as amplified by the
declarants at the hearing.

In responding to the agency report, DLC's member manager submitted a
declaration disputing GPO's conclusion that the Juneau facility lacked
adequate supplies to perform this contract. Specifically, he stated that "we
had all the supplies necessary on-hand at our Juneau production site to
perform the GPO contract, including plenty of ink, toner, and 120 cases of
paper (600,000) sheets." Declaration of DLC's Member Manager, Nov. 16, 2001,
at 3. In response, the COR submitted a declaration describing what he saw
during his September 27 site visit. On this point he states as follows:

Without reservation, I deny [DLC's Member Manager's] claim that DLC had 120
cases of paper at the production location when I visited with him, including
the storage area I specifically asked to see. I made a subsequent visit for
an on-site inspection in connection with another contract which was later
awarded to DLC. At that visit, I saw more supplies, including a large
quantity of paper. In fact, there could have been 120 cases of paper there
then, but not on September 27, 2001. This second visit occurred
approximately 6 weeks later.

Declaration of COR at 5. The protester's final filing included a declaration
from DLC's branch manager in Juneau that was consistent with the COR's view
of the amount of stock on hand. Specifically, the branch manager stated, "My
recollection is that we had 25 cases of paper there when [the COR] visited.
Each case contains 5000 pages. We received an additional 120 cases of paper
the following week." Declaration of DLC's Branch Manager at 1.

During the hearing, each of the witnesses was asked about the supplies on
hand, and again, the testimony provided by the COR and DLC's branch manager
was largely consistent. Compare Tr. at 57-61 (COR describes his "ballpark"
estimate that there were 20 cases of paper) with Tr. at 123-24 (branch
manager estimates there were 25 cases of paper). In addition, these two
witnesses also gave consistent testimony about the kinds of paper on
hand--that DLC had on hand mostly regular white bond paper, with a much
smaller assortment of other papers that might be used to perform this
contract. Accordingly, we find that there were between 20 and 25 cases of
paper on hand at DLC's Juneau facility on September 27.

We explored during the hearing whether the COR thought 25 cases of paper
would be adequate to perform this contract, and he testified that it would
not. Tr. at 41-42. In reaching this conclusion, the COR admitted that DLC
might have had enough paper to perform the contract for a week, given the
agency's past experience that this contract requires 5.1 million impressions
per year, or almost 100,000 impressions weekly, provided all of the copying
requests were for white paper. Id. at 40-42. On the other hand, he pointed
out that the contract here requires the use of 15 different types of stock
(IFB at 7) and that DLC did not have range of stock it would need to
successfully perform. Tr. at 41-42. [6] In addition, the COR acknowledged
that there were other retail sources for white paper in the Juneau area, but
expressed concern about the availability of some of the other types of
paper, especially in the winter months when access to Juneau might be
reduced due to ice and/or fog. Tr. at 58-61.

We recognize that the record here indicates that DLC generally has adequate
facilties and equipment and that GPO in fact awarded a different (albeit
smaller) contract to DLC 6 weeks after the nonresponsibility determination
here. Our role, however, is not to make a de novo responsibility
determination or to "second guess" GPO's determination in light of
subsequent events, but to determine whether GPO reasonably found DLC
nonresponsible based on the information provided by DLC in response to GPO's
inquiries and at the site visit. We think the record here shows that the
nonresponsibility determination was not unreasonable. Specifically, it is
clear that DLC did not at that time have an established operation in Juneau,
but instead was "ramping up" its capabilities, and that a site visit even 3
days earlier might have shown that DLC did not even have adequate equipment
installed. We also note that this site visit occurred on Thursday, September
27, with performance to begin 4 days later on Monday, October 1, and that
the COR found a quiet facility, with only one employee, and with supplies
the COR reasonably viewed as inadequate. In addition, we note that at the
time of this visit, several events had already created a reasonable concern
at GPO that DLC was overstating the readiness of its new facility in Juneau.
Thus, given the record here, including the pleadings, declarations, and
testimony

during the hearing, we cannot conclude that the agency acted unreasonably in
finding that DLC was not prepared to perform this contract on October 1.

The protest is denied.

Anthony H. Gamboa

General Counsel

Notes

1. Put differently, during the course of a hearing held on this protest an
agency representative testified that in past years this contract has
involved approximately 5.1 million impressions annually. Hearing Transcript
(Tr.) at 40.

2. DLC's representative contacted for this information is the same
individual who signed its bid; he is identified there, and on other company
materials, as DLC's "member manager." For ease of reference, we will refer
to this individual as DLC's member manager, as distinguished from DLC's
branch manager for the Juneau facility. Both provided affidavits during the
course of this protest, and both participated in the hearing.

3. On this point there is a slight, but ultimately immaterial, dispute. The
COR says the small room was empty but for a telephone and DLC's member
manager. Tr. at 18. DLC's member manager testified that there was also a
small table and one chair. Tr. at 85.

4. We have no reason to believe that DLC was trying to mislead GPO by
providing samples from Anchorage, and we found credible the testimony of
DLC's member manager explaining why he did so. During the hearing, DLC's
member manager testified that he received the telephone call requesting
samples in his Anchorage office, and that he was trying to quickly address a
request from a significant potential customer. Thus, he pulled sample
materials off the rack in Anchorage. Tr. at 80-81. On the other hand, we
note that a significant portion of DLC's copying machines were not yet
installed at the time of GPO's request for samples; in fact, several
machines were still on a barge en route from Anchorage to Juneau at this
time. See Letter of Ikon Solutions to DLC, Sept. 21, 2001 (Initial Protest,
Tab E); Declaration of CO at 2. Thus, it appears that DLC might have been
unable to provide samples produced in Juneau at the time of the agency's
request.

5. In addition, as noted above, additional machines were being installed
between the time that GPO first asked for the list, and the time that DLC
provided it. See Letter of Ikon Office Solutions to DLC, supra. Thus, DLC
benefited from the delay caused by its omission.

6. We note for the record that the COR testified that this contract calls
for 15 different types of paper. We count only 14 types, IFB at 7, and
assume that the de minimis difference between his testimony and the terms of
the IFB would not change his conclusion that DLC did not have sufficient
stock to perform this contract.