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22 U.S.C. sect. 4852: "United States persons" and "qualified United States joint venture persons"

Comptroller General - Key Excerpts

Caddell next argues that Framaco has not built any projects similar in complexity, type of construction, and value to the three 2009 projects which, as identified above, ranged in value from $85 to $150 million. As quoted above, subparagraph D of the Security Act requires that an entity seeking contracts for diplomatic construction projects over $10 million must have performed construction services “similar in complexity, type of construction, and value to the project being bid.” 22 U.S.C. sect. 4852(c)(2)(D). In addition to having no experience with projects of this magnitude, Caddell maintains that Framaco has no experience whatsoever building embassies or working through the challenges of performing “secure” work.

The agency acknowledges that it initially refused to pre-qualify Framaco for any of its 2008 projects on the basis that Framaco could not identify a single project that approached the value of any of the 2008 projects. After Framaco protested this decision to our Office, the agency elected not to defend its decision, and adopted Framaco’s view that an offeror should be permitted to establish that it has performed similar construction services by identifying a number of projects it has performed, that, in total, match or exceed the estimated value of the upcoming project.

In this regard, in its 2008 submission--which, again, forms the basis for the 2009 pre‑qualification decision--Framaco identified the following projects that it contended should be viewed as similar projects. In addition, it noted that it had performed these projects for the agency in a joint venture with two Turkish construction firms.

Name and Location of Project

Value (US$)

Interim Embassy Renovation (Baghdad)

$ 41,656,220

500 Man Camp (Kabul)

$ 14,915,379

Cafeteria-Health Center (Kabul)

$ 5,305,646

Existing Office Renovation and Annex Construction (Kabul)

$ 9,994,125

Anti-Ram Perimeter Wall (Mosul and Kirkuk)

$ 4,463,725

Geotechnical Construction Services for NEC Baghdad, Iraq

$ 2,715,074

NOX Building Construction (Bamako)

$ 15,825,748

NOX Building Construction (Accra)

$ 17,749,994

Cantonment and Facilities (Kabul)

$ 9,724,420


$ 122,350,332

AR, Tab 6, Letter from Framaco to the Agency, Mar. 17, 2008.

As a preliminary matter, we note that the agency report contains no documentation of any review associated with pre-qualifying offerors for the 2009 projects. Instead, the agency accepted as qualified any contractor that was pre-qualified for 2008. AR, Tab 3, TEP Pre-qualification for 2008 Projects, Feb. 15, 2008. In our view, the agency’s failure to perform any type of evaluation contradicts both the letter and spirit of the Security Act, as well as the sources-sought announcement published in FedBizOps. At a minimum, the 5-year period of review anticipated by the Security Act, by definition, changes each year. It appears from the record that Framaco submitted only a letter of interest for the 2009 projects. Moreover, while Framaco indicated in its letter that no changes had occurred in Framaco’s or [DELETED] (its partner) structure or size status, Framaco did indicate that it was adding another firm to its team. Thus, we believe that some type of evaluation was necessary to ensure that even previously qualified offerors remained in compliance with the requirements of the Security Act.

Turning to the analysis that was performed, we do not think the aggregated list of projects provided by Framaco in its 2008 pre-qualification submission could form the basis for a reasonable conclusion that Framaco has shown the requisite experience performing services “similar in complexity, type of construction and value to the project being bid,” as required by 22 U.S.C. sect. 4852(c)(2)(D). In our view, the Security Act’s experience requirements anticipate a demonstration that an offeror has completed at least one construction project of similar complexity, size, and value as the 2009 embassy construction projects. As shown above, considering simply the value of Framaco’s projects, Framaco did not identify a single completed project that reaches even half the value of the low end of the estimated range for the Bujumbura construction project (i.e., a $41.7 million project offered to show a comparable value for a project estimated between $85 and 105 million); moreover, its largest identified project ($41.7 million) is less than one-third of the estimated value of the Dakar project ($135 - $150 million). Since Framaco’s experience consists of contracts of relatively low dollar values compared to the estimated dollar values of the 2009 projects, we see no basis for the agency’s conclusion that Framaco has the requisite experience based on contract values. See Sytronics, Inc., B-297346, Dec. 29, 2005, 2006 CPD para. 15; J.A. Farrington Janitorial Serv., B-296875, Oct. 18, 2005, 2005 CPD para. 187.

In addition, we think Framaco’s argument that the total value of its list of smaller value projects equals the value of the 2009 embassy construction projects ignores the fact that combining the values of a list of projects does not demonstrate the necessary skills to complete and manage an entire embassy construction project, as anticipated by the Security Act. See, e.g., Marathon Constr. Corp., B-284816, May 22, 2000, 2000 CPD para. 94 at 5-6. The identified projects mostly involved office or building construction projects; none of them involved the construction of an embassy (other than an interim renovation for the embassy in Baghdad). In short, we conclude that the agency has not provided a reasonable basis for its decision to pre-qualify Framaco.  (Caddell Construction Company, Inc., B-401596; B-401597; B-401598, September 21, 2009) (pdf)

Caddell argues that the agency’s approach of adding together 3 years of a company’s business receipts is not what the statute intended. In fact, Caddell contends that the DOS interpretation of the statute effectively reads out the term “3 years” because, under the agency’s interpretation, if only 1 year of business receipts provided sufficient business volume, and the remaining 2 years did not, the agency could still add together the 3 years of business receipts and conclude that the offeror met the requirement in 3 of the 5 years. In answer, the agency argues that our Office should reject Caddell’s contentions and defer to its interpretation, as it is the agency charged with interpreting this statute.  In matters concerning the interpretation of a statute, the first question is whether the statutory language provides an unambiguous expression of the intent of Congress. If it does, the matter ends there, for the unambiguous intent of Congress must be given effect. Chevron U.S.A. Inc. v. Natural Res. Def. Council, Inc., 467 U.S. 837, 842-43 (1984). It is a fundamental canon of statutory construction that words, unless otherwise defined by the statute, will be interpreted consistent with their ordinary, contemporary, common meaning. State of California v. Montrose Chem. Corp., 104 F.3d 1507, 1519 (9th Cir. 1997); GAO, Principles of Federal Appropriations Law, vol. 1, at 2-89 (3d ed. 2004); see Mallard v. United States District Court for the Southern District of Iowa, 490 U.S. 296, 301 (1989).  Here, the statute contemplates a significant restriction on an offeror’s eligibility to compete for this type of contract. Specifically, the statute seeks a showing that an entity must have “achieved total business volume equal to or greater than the value of the project being bid in 3 years of the 5-year period” before the issuance of the solicitation. 22 U.S.C. sect. 4852(c)(2)(E). We think the ordinary and common meaning of these words is that eligible offerors will have achieved a business volume equal to or greater than the value of the project in each of 3 years within the 5-year period. That said, given the arguments raised by Caddell and State, we necessarily recognize an element of ambiguity in this provision.  When a statute is silent or ambiguous with respect to the specific issue, deference to the interpretation of an administering agency is dependent on the circumstances. Chevron, 467 U.S. at 843-45; see also United States v. Mead Corp., 533 U.S. 218, 227-38 (2001). Where an agency interprets an ambiguous provision of the statute through a process of rulemaking or adjudication, unless the resulting regulation or ruling is procedurally defective, arbitrary or capricious in substance, or manifestly contrary to the statute, the courts will defer to this agency interpretation (called “Chevron deference”). Mead, 533 U.S. at 227-31; Chevron, 467 U.S. at 843‑44. However, where the agency position reflects only an informal interpretation, “Chevron deference” is not warranted. In these cases, deference to an agency’s interpretation is not mandatory, but rather the weight to be accorded an agency’s judgment will depend on its relative expertise, the thoroughness evident in its consideration, the validity of its reasoning, its consistency with earlier and later pronouncements, and all those factors which give it power to persuade, though lacking power to control. Mead, 533 U.S. at 227-31; Skidmore v. Swift & Co., 323 U.S. 134, 140 (1944).  In our view, DOS’s interpretation of this statute is not entitled to “Chevron deference,” as the interpretation arose in the normal course of a procurement, and is not the result of either a rulemaking or an adjudication. See, e.g., Intertribal Bison Cooperative, B-288658, Nov. 30, 2001, 2001 CPD para. 195 at 4. In fact, while the agency suggests it has used this interpretation before, it has given our Office no examples. In any event, it has not promulgated this interpretation as part of its extensive implementing regulations. Nor, as discussed below, do we think the agency’s interpretation of this statute has the persuasive weight deserving of deference. Our review leads us to conclude that Caddell is correct in its argument that the agency’s interpretation has the effect of rendering meaningless the statute’s requirement for receipts at this level for 3 years within the previous 5-year period. We also think the legislative history of the Diplomatic Security Act does not support the agency’s interpretation.  (Caddell Construction Company, Inc., B-298949.2, June 15, 2007) (pdf)

(NOTE:  This decision covers various sections of the law and covers them in detail for this protest.  If you work with the Diplomatic Security and Antiterrorism Act, reading the entire .pdf file may prove useful.)

In reviewing an agency’s source selection decision, we examine the supporting record to determine whether the decision was rational, consistent with the stated evaluation criteria, consistent with applicable laws and regulations, and adequately documented. Johnson Controls World Servs., Inc., B-289942, May 24, 2002, 2002 CPD para. 88 at 6; AIU N. Am., Inc., B-283743.2, Feb. 16, 2000, 2000 CPD para. 39 at 7; Matrix Int’l Logistics, Inc., B-272388.2, Dec. 9, 1996, 97-2 CPD para. 89 at 5. Where an agency’s source selection decision is based on conclusions that appear to be directly contrary to the contemporaneous record, and where the agency’s evaluation record provides no explanation regarding the apparent conflict, we cannot conclude that the decision was reasonable. See AIU N. Am., Inc., supra. As discussed above, the Security Act, and the agency’s stated evaluation criteria regarding the procurement at issue here, limited eligible offerors to “United States persons” or “qualified United States joint venture persons.” The DOS regulations implementing the statement of qualifications for the Security Act provide that:

Organizations that wish to use the experience or financial resources of any other legally dependent organization or individual, including parent companies, subsidiaries, or other related organizations, must do so by way of a joint venture. A prospective bidder/offeror may be an individual organization or a firm, a formal joint venture in which the co-venturers have reduced their arrangement to writing, or a de facto joint venture where no formal agreement has been reached, but the offering entity relies upon the experience of a related U.S. firm that guarantees performance.  48 C.F.R. sect. 652.236-72.

Here, AICI-SP’s own prequalification submission expressly stated: “The prospective offeror . . . is not . . . a joint venture.” AR, Tab 2, AICI-SP Prequalification Submission at 9. This statement appeared directly beneath a definition of the term “joint venture,” which stated the term “refers to a formal or de facto arrangement.” Further, consistent with AICI-SP’s statement that it was not seeking qualification on the basis of either a formal or de facto joint venture, AICI-SP declined to provide any of the necessary information regarding identification of the “U.S. person participant” in the joint venture, nor did it identify “all co-venturers,” as was specifically required. Finally, the contemporaneous documentation supporting the agency’s summary conclusion that AICI-SP was eligible to participate in this procurement on the basis of a de facto joint venture provides no explanation as to how the agency could reach this conclusion in light of AICI-SP’s expressly contrary representation. On the basis of the record here, we are unable to conclude that the agency’s determination regarding AICI-SP’s eligibility for award was reasonable. (Caddell Construction Company, Inc., B-298949, January 10, 2007) (pdf)

Comptroller General - Listing of Decisions

For the Government For the Protester
  Caddell Construction Company, Inc., B-401596; B-401597; B-401598, September 21, 2009 (pdf)
  Caddell Construction Company, Inc., B-298949.2, June 15, 2007 (pdf)
  Caddell Construction Company, Inc., B-298949, January 10, 2007 (pdf)


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