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FAR 9.103:  Responsibility determination 

Comptroller General - Key Excerpts

New Finally, the protester argues that the agency unreasonably determined that ISCI was a responsible offeror. The protester contends that the contracting officer ignored the awardee's alleged debts and pending bankruptcy litigation.

As a general matter, our Office does not review affirmative determinations of responsibility by a contracting officer. 4 C.F.R. § 21.5(c) (2017); FCi Fed., Inc., B-408558.4 et al., Oct. 20, 2014, 2014 CPD ¶ 308 at 7. We will, however, review a challenge to an agency's affirmative responsibility determination where the protester presents specific evidence that the contracting officer may have ignored information that, by its nature, would be expected to have a strong bearing on whether the awardee should be found responsible. 4 C.F.R. § 21.5(c); Southwestern Bell Tel. Co., B-292476, Oct. 1, 2003, 2003 CPD ¶ 177 at 8.

The record demonstrates that the contracting officer considered the awardee's alleged debts and pending bankruptcy litigation. AR, Tab 19, Post-Negotiation Business Clearance Memorandum at unnumbered page 12-13. Indeed, that document shows that the contracting officer specifically found that the awardee "has adequate financial resources to perform the contract, or the ability to obtain them" and specifically mentions that an involuntary bankruptcy notice was provided to the government. Id. Further, the agency inquired with the awardee's current clients, and determined that neither its debts nor pending bankruptcy litigation had an impact on its contract performance. Id. Lastly, the agency checked the Federal Awardee Performance and Integrity Information System, and identified no information indicating that the awardee had a history of failing to pay its subcontractors. Contracting Officer's Supplemental Statement of Facts at 5. Given this level of detail, we do not find that the agency ignored either the awardee's alleged debts or any pending bankruptcy litigation. Cf. CapRock Gov't Solutions, Inc.; ARTEL, Inc.; Segovia, Inc., B-402490 et al., May 11, 2010, 2010 CPD ¶ 124 at 26.  (SaxmanOne, LLC B-414748, B-414748.3: Aug 22, 2017)

As noted above, Bunzl argues that the CO unreasonably determined it to be nonresponsible. In making a negative responsibility determination, a contracting officer is vested with a wide degree of discretion and, of necessity, must rely upon his or her business judgment in exercising that discretion. Torres Int’l, LLC, B‑404940, May 31, 2011, 2011 CPD ¶ 114 at 4. Although the determination must be factually supported and made in good faith, the ultimate decision appropriately is left to the agency, since it must bear the effects of any difficulties experienced in obtaining the required performance. For these reasons, we generally will not question a negative determination of responsibility unless the protester can demonstrate bad faith on the part of the agency or a lack of any reasonable basis for the determination. Colonial Press Int’l, Inc., B-403632, Oct. 18, 2010, 2010 CPD ¶ 247 at 2. An offeror’s responsibility is to be evaluated based on any information received by the agency up to the time award is proposed to be made, Sygnetics, Inc., B-404535.5, Aug. 25, 2011, 2011 CPD ¶ 164 at 4, and our review is based on the information available to the contracting officer at the time the determination was made. Acquest Dev. LLC, B-287439, June 6, 2001, 2001 CPD ¶ 101 at 3.

Here, the CO concluded that, even if the April 11 email in question had been timely received, there were “still many significant issues that would preclude Bunzl from being considered.” SSDD at 5. The CO pointed out that letters of supply were not submitted for 25 items and letters of supply for 7 items did not state a country of origin. COS at 5. Because the protester “failed to demonstrate that it had or would have the ability to comply with TAA sourcing requirements” for 32 of the 316 items to be supplied under the contract, the CO determined that Bunzl was not a responsible offeror. MOL at 7. We find no reason to conclude that this determination was not factually supported and made in good faith.

Bunzl argues that DeCA could have engaged in clarifications to remedy the missing information. Protest at 8; see also Comments at 9. We find this argument unpersuasive. Even to the extent that the CO could have elected to seek further information from Bunzl to address responsibility concerns, she was not required to do so. In this regard, we have previously held that while the CO may elect to open a dialogue with an offeror to address responsibility concerns, such a dialogue is not required where an agency has an otherwise reasonable basis for assessing the firm’s responsibility. Rotech Healthcare, Inc., B-409020, B-409020.2, Jan. 10, 2014, 2014 CPD ¶ 28 at 6.  (Bunzl Distribution California, LLC B-412475.4: Oct 21, 2016)


Engility argues that the agency unreasonably found it nonresponsible. The protester maintains that it engaged in a merger transaction between Engility Corporation and TASC, Inc. The protester explains that in February 2015, Engility Corporation acquired TASC, Inc., and that, on January 1, 2016, Engility consolidated contracts from a number of legal entities to one entity by asset transfers. The protester further explains that, as part of the January 1, 2016 transaction, a number of contracts were novated to TASC, Inc. and TASC, Inc. changed its name to Engility Corporation. The protester states that, contemporaneously with these changes, Engility submitted a name change and novation agreement to DCMA, and also advised the DSS of the changes. The protester therefore maintains that the facility it identified in its proposal in Chantilly, Virginia, is now, and at all relevant times has been, an Engility Corporation facility approved as a top secret facility that meets the requirements of the solicitation.

The agency essentially takes the position that the solicitation required Engility to have the required clearance in order even to submit a proposal. According to the agency, Engility did not have the required top secret facility clearance for its Chantilly, Virginia facility at the time it submitted its proposal, and it was therefore reasonable to find the firm nonresponsible.

In making a negative responsibility determination, a contracting officer is vested with a wide degree of discretion and, of necessity, must rely upon his or her business judgment in exercising that discretion. Torres Int’l, LLC, B-404940, May 31, 2011, 2011 CPD ¶ 114 at 4. Although the determination must be factually supported and made in good faith, the ultimate decision appropriately is left to the agency, since it must bear the effects of any difficulties experienced in obtaining the required performance. For these reasons, we generally will not question a negative determination of responsibility unless the protester can demonstrate bad faith on the part of the agency or a lack of any reasonable basis for the determination. Colonial Press Int’l, Inc., B-403632, Oct. 18, 2010, 2010 CPD ¶ 247 at 2.

Here, while the record submitted by the agency appears facially to support its determination that Engility did not possess the required top secret facility clearance, Engility has tendered evidence that draws the agency’s conclusion into question. In addition, the record shows that the agency was aware of the merger transaction between TASC and Engility, and also was aware of inconsistencies between the information in the ISFD data base and other contractor databases (such as the SAM database). Despite the agency’s knowledge and these evident inconsistencies, the agency made no effort to obtain accurate, up-to-date information from either the protester, or directly from the DSS office identified in the protester’s proposal, regarding either the status of that transaction or its possible effect on the top secret facility clearance for its proposed place of performance in Chantilly, Virginia.

On the question of the agency’s knowledge of the merger between Engility and TASC, along with its knowledge of the inconsistencies between the ISFD database and other contractor databases, the record shows that the agency was aware of this transaction, as well as inconsistencies between the ISFD database and other contractor databases. In his initial e-mail to the security specialist the contract specialist stated as follows:

We know Engility purchased TASC Inc. last year in a stock buyout, but the ISFD does not reflect this change. However, the System for Award Management (attached) does show Engility Doing Business as TASC under the subject cage code and the MA [Massachusetts] address. Given the difference between the submitted information and ISFD, we are trying to conclude whether the Gov't can definitively determine the Offeror (Engility) does indeed hold the appropriate security clearance.

AR, exh. L, E-Mail Exchange between the Contract Specialist and the Security Specialist, at 8. The record includes subsequent references to the Engility-TASC merger transaction, but these references amount to unsupported conjecture on the part of either the security specialist or the unidentified DSS representative in the Chantilly, Virginia field office with whom the security specialist spoke. In this connection, the security specialist stated to the agency’s contracting officer as follows: “My guess is that the buyout has not gone through novation.” Id. at 5. She subsequently spoke with the unidentified DSS representative in Chantilly, Virginia, about the Engility-TASC merger transaction and characterized that discussion as follows:

He was not sure when Engility and TASC will complete the buyout. He thinks they are close, he really could not [say] when they will finalize the [sale]. And he would probably know more in a couple of weeks. However, there will be a lot of paperwork that is required by DSS to process the change. It depends on what is in the final agreement.

Id. at 3.

Of significance, this unsupported conjecture attributed to the unidentified DSS representative in Chantilly, Virginia was expressly relied on by the contracting officer in his determination finding Engility nonresponsible. That determination states as follows:

The Security Specialist also contacted the DSS Industrial Security Representative for Chantilly, VA. The DSS Representative in VA confirmed that he was not aware of a finalized buyout between Engility and TASC, Inc. The DSS Representative for VA stated that once a buyout is actually finalized, there is a significant amount of paperwork that must be processed, and therefore a significant amount of time and effort that must be expended in order for DSS to process changes to facilities clearances as the result of the buyout.

AR, exh. N, Nonresponsibility Determination at 2-3.

Against this backdrop, Engility has proffered evidence that appears to show that the firm does, in fact, have the required facility security clearance in the name of Engility Corporation at the Chantilly, Virginia location where it offered to perform the task order. First, the record includes evidence showing that TASC, Inc. changed its name from TASC, Inc. to Engility Corporation. In this connection, the record includes a document provided to the DCMA administrative contracting officer at the time of the January 1, 2016 name change and asset consolidation transaction. That document represents that TASC, Inc. amended its certificate of incorporation on January 1, 2016 to change its name to Engility Corporation and provided documentary evidence to the government in support of that representation. Supplemental Protest Exhibit, Change of Name and Novation Agreement, at 2.

The record also includes a Department of Defense Security Agreement executed between Engility Corporation and a representative of the DSS on January 21, 2016. Protest, exh. 5, Department of Defense Security Agreement. That document memorialized the name change from TASC, Inc. to Engility Corporation for the facility security clearance at the Chantilly, Virginia facility location identified by Engility as the place of performance for the subject task order. Id. Moreover, the protester also has submitted an e-mail from a Chantilly, Virginia DSS representative dated March 9, 2016. That e-mail acknowledges that the TASC CAGE code 9G924 (the CAGE code for the Chantilly, Virginia facility) is now an Engility Corporation CAGE code, and advised Engility to report the name change in the electronic facility clearance system: “Yes, since TASC – CAGE: 9G924 is now Engility Corporation you will also need to report the name chance in e-FCL.” Protester’s Comments, exh. 6, E-mail from the Chantilly, Virginia DSS Representative to Engility Corporation’s Director of Security, March 9, 2016.

The record also includes an e-mail from the DCMA administrative contracting officer for Engility acknowledging the name change from TASC, Inc. to Engility Corporation and identifying the reassignment of the headquarters CAGE code originally included in Engility’s proposal (4A457) to Engility Corporation. That e-mail provides: “As the result of company restructuring, TASC, using CAGE Code 4A457, became Engility, dba TASC, using CAGE Code 4A457 on Jan 1, 2016.” Protester’s Comments, exh. 7, E-mail from Engility’s DCMA Administrative Contracting Officer to Various Parties.

In sum, the record includes evidence that appears to show that, as of no later than January 21, 2016--prior to the submission of proposals--Engility Corporation had a facility with the required security clearance in Chantilly, Virginia, and this is the facility where Engility proposed to perform the task order. While we offer no dispositive opinion about the sufficiency of Engility’s security clearance for the proposed facility, the evidence presented by the protester draws into question the agency’s nonresponsibility finding.

The agency suggests that firms were advised by the RFP that this was a Federal Acquisition Regulation (FAR) part 16 acquisition and that the FAR part 15 evaluation and discussion procedures did not apply. Contracting Officer’s Statement of Facts/Agency Legal Memorandum at 19. However, the rules relating to clarifications and discussions have no application to possible inquiries regarding matters of responsibility. Simply stated, an agency’s exchanges with an offeror regarding matters of responsibility do not constitute discussions. McKissack+Delcan JV II, B-401973.2, B‑401973.4, Jan. 13, 2010, 2010 CPD ¶ 28 at 6-8. Here, any information furnished by Engility concerning its Chantilly, Virginia facility would not have related to the technical acceptability of its proposal, but rather would only have related to the firm’s responsibility. In view of the foregoing considerations, we sustain the protest.  (Engility Corporation B-413202, B-413202.2: Sep 2, 2016)


On February 24, 2015, the IFB was issued as a set-aside for service-disabled, veteran-owned small businesses (SDVOSB). IFB at 1, 5. As relevant here, the IFB stated that award would be made to the responsible bidder who submits the lowest-priced, responsive bid. IFB at 64. Additionally, the IFB stated that prior to award, the bidder shall provide three references demonstrating successful performance within the last three years of projects similar in scope and magnitude to the current procurement. IFB at 18. When bids were timely submitted and opened on April 14, Check 6 was determined to be the apparent low bidder.

(sections deleted)

The protester challenges the agency’s responsibility determination and asserts that it unreasonably failed to consider the past performance offered in Check 6’s proposal. Specifically, Hyland alleges that the projects offered were for IT projects and were completed by the President of Check 6, rather than by Check 6. Protest at 1-2; Comments at 2.

Our Office generally will not consider a protest challenging an affirmative determination of responsibility except under limited specified exceptions. Bid Protest Regulations, 4 C.F.R. § 21.5(c) (2013); Triple H Services, B-298248, B-298248.2., Aug. 1, 2006, 2006 CPD ¶ 115 at 2. One exception is where a protest identifies evidence that raises serious concerns that, in reaching a particular responsibility determination, the CO unreasonably failed to consider available relevant information or otherwise violated statute or regulation. 4 C.F.R. § 21.5(c) (2015). In this context, we will review a challenge to an agency’s affirmative responsibility determination where the protester presents specific evidence that the CO may have ignored information that, by its nature, would be expected to have a strong bearing on whether the awardee should be found responsible.

As an initial matter, we note that it is undisputed that the agency’s responsibility determination acknowledged that Check 6 had not completed any government contracts and that Check 6’s past performance was based on its President’s prior personal experience. See AR, Tab 12, Check 6 Responsibility Determination, at 3.

Despite the protester’s assertions to the contrary, the record shows that the CO specifically considered this past performance in making his responsibility determination. Additionally, we find unpersuasive the protester’s unsupported assertions that the projects presented by Check 6’s president were IT, rather than construction projects. As the protester has not shown that the CO failed to consider any available information in making his responsibility determination, the protest fails to state a sufficient legal or factual basis for consideration. (Robert F. Hyland & Sons, LLC B-411726: Sep 22, 2015)  (pdf)


UCIG argues that the agency unreasonably found LOD to be a responsible contractor. The protester contends that there is an outstanding judgment against LOD in Djibouti that the agency failed to consider in making its responsibility determination. UCIG maintains that LOD does not intend to pay fines imposed by the judgment, and that the monetary value of those fines is sufficiently large that it is reasonable to be concerned that LOD may terminate its operations in Djibouti rather than perform the awarded contract.

Our Office will consider a protest challenging an agency’s affirmative determination of responsibility where the protester identifies evidence raising serious concerns that, in reaching the responsibility determination, the contracting officer unreasonably failed to consider available relevant information or otherwise violated statute or regulation. Bid Protest Regulations, 4 C.F.R. § 21.5(c) (2014). In this connection, the protester must present specific evidence that the contracting officer may have ignored information that, by its nature, would be expected to have a strong bearing on whether the awardee should be found responsible. The Geo Group, Inc., B‑405012, July 26, 2011, 2011 CPD ¶ 153 at 6-7. The information in question must concern very serious matters, for example, potential criminal activity or massive public scandal. Id.

We find no merit to UCIG’s protest. The record shows that the judgment in question stems from the activities of a predecessor concern, Shell Djibouti, during the time frame of 1997-2001. Agency Report at 1. During that time, Shell Djibouti was found to be responsible for polluting activities resulting in a judgment imposing fines on the concern. In 2008, Shell Djibouti was acquired by LOD and, as part of that acquisition, Shell Djibouti’s potential liability for the judgment was transferred to LOD. Id. The record shows that there was continuing litigation concerning the fine, and that the Court of Appeals of Djibouti and, ultimately, the Supreme Court of Djibouti, found the awardee liable for the fine as the successor in interest to Shell Djibouti in June, 2014. Protest, exhs. 4, 5. All parties agree that these judgments were entered.

The only evidence offered by the protester in support of its allegation that LOD intends to terminate its operations in Djibouti as a consequence of the judgment is a story included in two news sources, one entitled “Maghreb Confidential” and another entitled “African Intelligence” published more than a month after the agency’s affirmative responsibility determination. Protester’s Comments, exhs. 1 and 2. The story represents that an unidentified source of the publication reported that LOD had informed the Djibouti Ministry of Energy that the firm will be unable to pay its fines. Id.

In contrast to the protester’s news story, the record includes a letter from the Djiboutian Minister of Energy. In that letter, the Minister states that LOD and the Ministry are engaged in good faith negotiations concerning the fines. Specifically the Minister states:

Libya Oil Djibouti is one of the two major oil operating companies in Djibouti together with TOTAL Djibouti. It is fully licensed by the Ministry of Energy to operate in the territory of the Republic of Djibouti. In addition, Libya Oil Djibouti is a reputable corporate citizen in the sense that it employs a sizable number of manpower and substantially contributes to the tax revenue of the Republic of Djibouti.

With regards to the environmental legal issue, it is worth noting that the origin of the case dates back to over 14 years and the companies who were [involved in the litigation] were Shell Djibouti, TOTAL Djibouti and Mobil Djibouti respectively. Therefore Libya Oil who purchased Shell Djibouti in 2008 only inherited the problem and accordingly the related legal judgment whose implementation is currently under negotiation.

Agency Report, exh. 17, Letter from Djibouti Ministry of Energy, at 3. The record also includes a supply agreement between LOD and the Djibouti Oil Supply company, a Djiboutian government-owned oil supplier that all offerors were required to use in connection with performance of the contract. AR, exh. 4, Supply Agreement. Finally, the agency notes that LOD already has been delivering petroleum supplies within Djibouti under other CLINS of the contract that was awarded to LOD. Agency Report at 6.

In the final analysis, the protester’s argument essentially relies on a single news story, published more than a month after the agency’s affirmative responsibility determination. That news story, in turn, relies on an unidentified source for its information. We conclude that the protester has not shown that the contracting officer unreasonably failed to consider available, relevant information, the nature of which would be expected to have a strong bearing on whether LOD should be found responsible.  (United Capital Investments Group, B-410284: Nov 18, 2014)  (pdf)


ATL protests that it should have been awarded a contract, complaining that the agency has not provided ATL with the information which led to the agency’s non‑responsibility determination and asserting that “[s]uch information was required to be provided.” Protest at 5.

As the United States Court of Federal Claims has stated, although the vendor vetting rating process does not provide a contractor with prior notice of its ineligible status or an opportunity to present rebuttal evidence, requiring traditional due process in the rating process would adversely affect national security. NCL Logistics Co. v. United States, 109 Fed. Cl. 596, 620 (2013). The court elaborated that the requirements of due process vary given the circumstances and, in the environment of a warzone, when the required notice would necessarily disclose classified material and could compromise national security, normal due process requirements must give way to national security concerns. Id. We agree.

Here, in considering ATL’s protest, and the agency response thereto, our Office reviewed classified information supporting the agency’s risk assessment and non‑responsibility determination. Based on our review, we think the agency’s decision to reject this proposal was reasonable.  (Aria Target Logistics Services, B-408308.23: Aug 22, 2014)  (pdf)


Affirmative determination of responsibility

The protester challenges the contracting officer’s affirmative determination of Rotech’s responsibility. B&B contends that the contracting officer failed to consider available relevant information in determining that Rotech had the financial resources to perform the contract and a satisfactory record of integrity and business ethics.

Contracts may only be awarded to responsible prospective contractors. Federal Acquisition Regulation (FAR) § 9.103(a). In making a responsibility determination, the contracting officer must determine, among other things, that the contractor has “adequate financial resources to perform the contract, or the ability to obtain them,” FAR § 9.104-1(a), and that the contractor has “a satisfactory record of integrity and business ethics.” FAR § 9.104-1(d). In the absence of information clearly indicating that the prospective contractor is responsible, the contracting officer is to make a determination of nonresponsibility. FAR § 9.103(b).

Because the determination that an offeror is capable of performing a contract is largely committed to the contracting officer’s discretion, our Office will generally not consider a protest challenging such a determination. Bid Protest Regulations, 4 C.F.R. § 21.5(c) (2013). One of the circumstances in which we will make an exception to the general rule is where a protest identifies evidence raising serious concerns that, in reaching a particular responsibility determination, the contracting officer unreasonably failed to consider available relevant information. Id.; Verestar Gov’t Servs. Group, B-291854, B-291854.2, Apr. 3, 2003, 2003 CPD ¶ 68 at 3. This exception was intended to encompass protests raising supported allegations that the contracting officer had ignored information that, by its nature, would be expected to have a strong bearing on whether the awardee should be found responsible. Greenleaf Constr. Co., Inc., B-293105.18, B-293105.19, Jan. 17, 2006, 2006 CPD ¶ 19 at 14.

Here, in accordance with internal VA guidance instructing contracting officers to request Dun & Bradstreet (D&B) supplier qualifier reports to assist with contractor responsibility determinations, AR, Exh. 13, VA Information Letter 049-08-03, at 1, the contracting officer obtained a D&B report to assist her in determining whether Rotech had the financial resources to perform the contract. D&B reported that Rotech had a supplier evaluation risk (SER) rating of 9 on a scale of 1 (lowest risk) to 9 (highest risk). AR, Exh. 6, D&B Supplier Analysis Report for Rotech, at 1. D&B further reported that Rotech’s SER rating showed a financial condition rated as unbalanced; a high proportion of past due balances to total amount owing; a low proportion of satisfactory payment experiences to total payment experiences; and a high proportion of slow payment experiences to total number of payment experiences. Id. at 2.

The report included the following entries under the heading “Special Events:”

As of 12/27/2012

LINE OF CREDIT: According to published reports, Rotech Healthcare Inc. announced that it has entered into a new term loan credit agreement with Silver Point Finance, LLC relating to a new term loan credit facility in an aggregate principal amount of $25 million. The Company borrowed $23.5 million under the new facility on December 21, 2012. The remaining $1.5 million portion of the new facility not yet borrowed may be borrowed on a delayed draw basis on or before January 1, 2014, so long as certain limited conditions as set forth in the credit agreement are satisfied. The facility replaces and repays the Company’s existing commitments and loans under our prior credit agreement, and, assuming the Company will borrow the $1.5 million portion of the facility not yet borrowed, increases our available liquidity by approximately $15 million.

* * *

As of 11/15/2012

EARNINGS UPDATE: According to published reports, comparative operating results for the 9 months ended September 30, 2012: Revenue of $347,300,000, Net Income of $43,800,000; compared to Revenue of $365,400,000, Net Income of $7,700,000 to the comparable period in the prior year.

Id. at 4.

After reviewing the information in the D&B report, the contracting officer concluded that Rotech had adequate financial resources to perform the contract. The contracting officer documented the basis for her conclusion as follows:

Although their D&B [SER] rating reflected a score of 9 indicating they are financially sound to perform the services in accordance with the Statement of Work and performance schedule. D&B shows Rotech Healthcare Inc. would have a low risk of late payment beyond terms. According to published reports as of 12/27/2012 Rotech Healthcare Inc. announce[d] that it has entered into a new term loan credit agreement with Silver Point Finance, LLC relating to a new term loan credit facility in an aggregate principal amount of $25 Million. As of 11/15/2012 comparative operating results for the 9 months ending September 30, 2012 show Rotech continues to grow net income. Revenue during this 9 month period was $365,400,000 compared to $347,300,000 in the comparable period of the prior year and Net income was $43,800,000 compared with $7,700,000 in the comparable period. Furthermore, the contractor is successfully performing these services for the Department of Veterans Affairs in VISN 18, VISN 20, and for the Coatesville VAMC centers and commercial entities.

AR, Exh. 6, Determination of Contractor’s Responsibility at 1. The contracting officer also found that Rotech had a satisfactory record of integrity and business ethics and that it otherwise met the general standards to be determined a responsible prospective contractor. In this regard, the record shows that she reviewed the Federal Awardee Performance and Integrity Information System (FAPIIS), which did not contain any records regarding Rotech. Additionally, the contracting officer noted that Rotech did not appear on any of the debarred or suspended contractor lists or on the Office of the Inspector General excluded entities list. She also noted that Rotech was successfully performing other VA home oxygen services contracts of the same magnitude and scope as the contemplated contract. Id.; AR, Exh. 5, Contracting Officer’s Statement at 3.

The protester argues that the contracting officer unreasonably failed to consider available relevant information in concluding that Rotech had adequate financial resources to perform.[6] In this connection, B&B maintains that the contracting officer ignored information in the D&B report concerning Rotech’s payment problems; considered only selected portions of the information pertaining to its new $25 million loan facility; and unreasonably failed to consider financial reports filed by Rotech with the Securities Exchange Commission (SEC), which showed that Rotech had a loss of $43.7 million, rather than a net income of $43.7 million, for the first 9 months of 2012. The protester also argues that in finding Rotech financially responsible, the contracting officer either ignored or unreasonably failed to consider information indicating that the company had emerged from Chapter 11 bankruptcy in 2002 with a significant debt burden.

The record does not support the protester’s contention that the contracting officer ignored information in the D&B report concerning Rotech’s payment problems; rather, it supports the view that she considered the information and concluded that it showed a low risk of late payment. Similarly, the record fails to establish that the contracting officer ignored information in the D&B report pertaining to Rotech’s new loan facility. In this regard, the contracting officer states that she viewed Rotech’s D&B report, and the mere fact that she cited only the aggregate principal amount of the loan credit facility in her responsibility determination does not show that she failed to consider other information in the report pertaining to the loan. With regard to B&B’s argument that the contracting officer unreasonably failed to consider the content of financial reports filed with the SEC, the protester has not shown that the contracting officer acted unreasonably in relying on information contained in the D&B report as opposed to conducting a further investigation regarding the validity of the information in the report. In any event, to the extent B&B is challenging the adequacy and reasonableness of the contracting officer’s investigation, this challenge does not present an exception to our rules barring consideration of challenges to an agency’s affirmative determination of responsibility. See USS Chartering, LLC, B-407601, Jan. 15, 2013, 2013 CPD ¶ 69 at 4.

Additionally, we are not persuaded that the contracting officer unreasonably failed to consider information indicating that Rotech had emerged from Chapter 11 bankruptcy in 2002 with a significant debt burden. Rotech’s involvement in bankruptcy proceedings a decade ago is not a matter that, by its nature, would be expected to have a strong bearing on whether Rotech should be found responsible now. To the extent the protester’s focus is on the debt burden that resulted from the bankruptcy proceedings, the record does not establish that the contracting officer failed to consider Rotech’s heavy debt burden; rather, it indicates that she thought the company had the financial resources to perform despite its debt burden.

The protester also argues that in finding Rotech to be responsible, the contracting officer failed to consider available relevant information pertaining to Rotech’s record of integrity and business ethics. In this connection, B&B contends that she failed to consider that: (1) in 2002, Rotech paid the United States $17 million to resolve allegations that the company had fraudulently overbilled government healthcare programs for respiratory equipment, supplies, and services; (2) in 2004, Rotech did not comply with all delivery schedules for medical equipment contracts within VISN 16; (3) in 2008, Rotech entered into a 3-year Corporate Integrity Agreement with the Office of Inspector General of the U.S. Department of Health and Human Services in connection with the resolution of a qui tam complaint brought by one of Rotech’s former employees, which alleged false and fraudulent conduct in billing for medical equipment; (4) in 2010, Rotech had problems complying with delivery schedules and performance requirements in performing home oxygen and medical equipment contracts for VISN 21; and (5) on May 25, 2012, Rotech publicly reported that it had identified an error in its billing system that had resulted in its being overpaid in fiscal years 2009-2011.

Some of the foregoing items concern matters that occurred a number of years (i.e., approximately 10 or more) years in the past; others concern matters apparently resolved by Rotech with the government, matters that involve relatively low dollar values, and/or matters that reflect Rotech’s voluntary efforts to comply with its contractual obligations. We find that these matters fail to meet the threshold for our review since the information allegedly not considered by the contracting officer is not the sort of information that would be expected to have a strong bearing on her responsibility determination. See Wild Building Contractors, Inc., B-293829, June 17, 2004, 2004 CPD ¶ 131 at 5; The GEO Group, Inc., B-405012, July 26, 2011, 2011 CPD ¶ 153 at 7. Accordingly, this aspect of B&B’s protest is dismissed.  (B&B Medical Services, Inc., B-407113.3, B-407113.4, Jun 24, 2013)  (pdf)


Colonial Press argues that, as a small business, concerns over its responsibility should have been referred to the Small Business Administration (SBA) for consideration under that agency’s certification of competency (COC) process. Colonial Press also argues that, even if the GPO is not subject to the SBA’s COC process, the nonresponsibility determinations were unreasonable. As explained below, we disagree with Colonial Press on both points, and deny the protest.

First, our Office has consistently held that GPO, as a legislative branch agency, is not subject to the COC referral requirements of the Small Business Act, 15 U.S.C. § 637(b)(7) (2006 & Supp. V 2011). Downtown Legal Copies, B-289432, Jan. 7, 2002, 2002 CPD ¶ 16 at 4; Shepard Printing, B-260362 et al., June 6, 1995, 95-2 CPD ¶ 119 at 3 n.2; Computer Support Sys., Inc., B-261166, July 18, 1995, 95-2 CPD ¶ 30 at 2 n.2; Fry Commc’ns, Inc., B-207605, Feb. 1, 1983, 83-1 CPD ¶ 109 at 2-5. Although Colonial Press argues that the Small Business Act should not be interpreted as exempting the GPO, we have consistently rejected essentially the same argument. See, e.g., Fry Commc’ns Inc., supra, at 5. Accordingly, the GPO was not required to refer its nonresponsibility determinations of Colonial Press to the SBA.

Second, we conclude that the contracting officer reached a reasonable determination that Colonial Press’s late deliveries rendered the firm not responsible. The GPO awards contracts under the authority of the GPO Printing Procurement Regulation (PPR). In a policy analogous to the Federal Acquisition Regulation responsibility requirements, the PPR provides that GPO contracts may be awarded to “responsible prospective contractors only.” PPR chapt. I, § 5.1. The PPR also establishes the minimum standards of responsibility which include the ability to “comply with the proposed delivery schedules” and possession of a “satisfactory record of performance in regard to both quality and timeliness on previously awarded contracts.” Id. at § 5.4.

Colonial Press concedes that it made late deliveries under three printing contracts, but it argues that those contracts are distinguishable from the work under these IFBs (such as a shorter delivery time in one case, and a longer time in another). Colonial Press also states that the late deliveries were excusable, and the reasons for them have been corrected. As a result, Colonial Press argues, the GPO’s nonresponsibility determinations were unreasonable. Protester’s Comments (B-408055) at 3-5.

A contracting officer is vested with broad discretion in exercising his or her business judgment in making a nonresponsibility determination. Document Printing Serv., Inc., B-256654, B-257051, July 8, 1994, 94-2 CPD ¶ 13 at 3. Our Office generally will not disturb a nonresponsibility determination unless a protester can show either that the procuring agency had no reasonable basis for the determination or that it acted in bad faith. Id. In our review of nonresponsibility determinations, we consider only whether the negative determination was reasonably based on the information available to the contracting officer at the time it was made. IPI Graphics, B-286830, B-286838, Jan. 9, 2001, 2001 CPD ¶ 12 at 3 (protest denied where record of protester’s failures to meet printing quality requirements in recent contracts were a reasonable basis for nonresponsibility determination by GPO).

The record here supports the reasonableness of the contracting officer’s determination, with respect to Colonial Press’s bid under each IFB, that the firm was not responsible because its recent performance on printing contracts had shown an inability to meet delivery requirements. Although Colonial Press argues that it successfully delivered on time on other GPO contracts, this does not render the contracting officer’s judgment that late deliveries on 16 percent (three out of 18) of its contracts represented an unsatisfactory record of recent performance. Also, while Colonial Press argues that each of the late deliveries was distinguishable from the work required under these IFBs--and that Colonial Press was not at fault--the firm does not dispute that each delivery was late. We do not think that the contracting officer was limited to considering only contracts that were effectively indistinguishable from the scope of work here in considering whether Colonial Press was responsible. Rather, the contracting officer reasonably considered multiple late deliveries in relatively recent GPO contracts for printing, and concluded that Colonial Press’s explanations left doubt as to whether the firm had the capability to fulfill the delivery requirements of the contracts under consideration. Those facts provide a reasonable basis for the contracting officer’s nonresponsibility determination.  (Colonial Press International, Inc. B-408031, B-408055, May 6, 2013)  (pdf)


Responsibility

Supreme argues that its October 26 letter put the agency on notice that ANHAM may lack the capacity to perform the contract. Protest at 24-25. Supreme argues that the agency failed to consider this information in its affirmative responsibility determination for ANHAM, and, therefore, the agency’s determination was improper. Protest at 24-25; Supreme Comments at 16-20; Supreme Supp. Comments at 6-10; Supreme Post-Hearing Comments at 15-30.

The agency and ANHAM maintain that Supreme’s claim is untimely based on the same arguments raised against Supreme’s misrepresentation claim. AR at 35-36; ANHAM Comments at 15-16.

The factual basis of Supreme’s claim is that actions of Afghanistan’s government may jeopardize ANHAM’s ability to perform the SPV contract. Supreme first learned of the governmental action through the August 27 NEC letter, which Supreme obtained on October 4. On October 11, less than 10 days later, our Office sustained Supreme’s initial post-award protest. Thus, within 10 days of receiving the August 27 letter, the only responsibility determination that the information in the letter could have been used to challenge was the prospective responsibility determination that would occur if the agency affirmed the award to ANHAM.

A protester need not file a “defensive” protest where an agency has not made a final determination regarding responsibility since a protester may presume that the agency will act properly. See Dock Express Contractors, Inc., B-227865.3, Jan. 13, 1988, 88-1 CPD ¶ 23 at 6; see also American Multi Media, Inc.--Recon., B-293782.2 , Aug. 25, 2004, 2004 CPD ¶ 158 at 3. If Supreme had protested within 10 days of receiving the NEC letter, the protest would have been premature because, at that time, the agency had not yet acted in response to our decision. See Alatech Healthcare, LLC--Protest; Custom Servs. Int’l, Inc.--Costs, B-289134.3, B-289134.4, Apr. 29, 2002, 2002 CPD ¶ 73 at 6 n.6; Johnson Controls World Servs., Inc., B-286714.3, Aug. 20, 2001, 2001 CPD ¶ 145 at 5. After the agency affirmed ANHAM’s award (which implicitly meant that the agency had found ANHAM to be responsible), Supreme filed a protest with our Office within 10 days. Accordingly, we consider Supreme’s challenge to the agency’s responsibility determination here to be timely.

The agency and ANHAM also assert that we should dismiss Supreme’s responsibility claim because in their view, it is outside the scope of matters that our Office will review. Because the determination that an offeror is capable of performing a contract is largely committed to the contracting officer’s discretion, our Office generally will not consider a protest challenging an affirmative determination of responsibility except under limited specified exceptions. 4 C.F.R. § 21.5(c); ESCO Marine, Inc., B-401438, Sept. 4, 2009, 2009 CPD ¶ 234 at 13. One specific exception is where a protest identifies evidence raising serious concerns that a contracting officer, in making an affirmative determination of responsibility, unreasonably failed to consider available relevant information. 4 C.F.R. § 21.5(c); ESCO Marine, Inc., supra. In this context, we will review a challenge to an agency’s affirmative responsibility determination where the protester presents specific evidence that the contracting officer may have ignored information that, by its nature, would be expected to have a strong bearing on whether the awardee should be found responsible. Marinette Marine Corp., B-400697 et al., Jan. 12, 2009, 2009 CPD ¶ 16 at 24; ESCO Marine, Inc., supra.

Here, we conclude that the protest is within our jurisdiction to review because Supreme has argued that the contracting officer unreasonably failed to consider specific information--namely, the October 26 letter--regarding whether ANHAM would have the capacity to perform the contract. See Active Deployment Sys., Inc. B-404875, May 25, 2011, 2011 CPD ¶ 113 at 3; ESCO Marine, Inc., supra, at 13.

The agency responds to the merits of Supreme’s claim by asserting that the contracting officer did consider the October 26 letter, as documented in his memorandum for the record. AR at 78. The contracting officer’s memorandum is the only contemporaneous document that addresses Supreme’s October 26 letter. In relevant part, the memorandum states:

Anham was determined responsible at the time the original award was made. If the original award decision is affirmed, [the agency] would not need to reconsider the original responsibility determination because the requirements of the solicitation were not otherwise amended or changed. Similarly, the Contracting Officer is not aware of any independent information substantiating the allegations raised by Supreme which would warrant further inquiry. To the extent any of the concerns raised by Supreme affect the ultimate awardee’s performance, such issues will be dealt with as a matter of contract administration.

AR, Tab 72, Memorandum for Record, at 1. In our view, these statements do not adequately reflect whether or not the contracting officer, in making his responsibility determination, unreasonably failed to consider the information in Supreme’s letter. Accordingly, our Office convened a hearing to take testimony from the contracting officer regarding his consideration of the letter.

In the course of the hearing, the contracting officer testified that after receiving the letter, he shared and discussed it in multiple meetings with two other contracting officers involved with Afghanistan food service contracts, his supervisor, counsel, and the director and deputy director of the agency’s subsistence directorate. Tr. at 15, 31, 155-57. He testified that based on these meetings and his experience with other relevant contracts, he determined that the allegations in the letter were not credible. See id. at 51, 93, 116, 155.

The contracting officer also provided testimony regarding specific reasons that he did not find the letter credible. For example, he testified that in his view, the allegations were undercut by the footnote in the letter stating that Supreme itself could not verify the allegations. Id. at 51, 133-34. He also testified that with regard to the state-ordered removal of a fence at an ANHAM facility in Kuwait, he was aware that ANHAM eventually prevailed in the dispute and rebuilt the fence. Id. at 53-55, 62-63. As another reason why he did not find the letter credible, he testified that he was not aware of any press coverage of an issue with the Bagram facility, and that he had not received any information about such an issue from agency personnel in Afghanistan, the Department of State, or from any other United States agency. Id. at 42-43, 52, 71-72, 135-36. He testified that ordinarily he would receive communications regarding such issues in the normal course of business, although he also testified that he did not solicit information to substantiate the letter from anyone outside of his contracting office. Id. at 52, 92-93.

The contracting officer also testified that he did not find the letter credible because the NEC letter was from a committee of Afghanistan’s lower legislative body, rather than from an executive branch of the government, and because the NEC letter was not specifically addressed to ANHAM. Id. at 45, 47-48. He testified that in his experience, when the government of Afghanistan has a concern about a contractor’s compliance with a local law, the executive branch of government--i.e., one of the ministries--communicates directly with the contractor. Id. at 46-48, 108. Finally, he testified that he had seen photographs of the Bagram facility that ANHAM had submitted on October 4, and the photographs seemed to him to be consistent with ANHAM’s proposed use of the land. See id. at 141-42.

The record here shows that the contracting officer was aware of and considered the specific allegations and information in Supreme’s October 26 letter. For various reasons, including those discussed above, the contracting officer concluded that the allegations were not credible enough to warrant further inquiry. While Supreme maintains that the contracting officer gave “virtually no consideration” to the October 26 letter, Supreme Post-Hearing Comments at 10, the record shows otherwise. Accordingly, Supreme’s claim that the agency unreasonably failed to consider available relevant information in connection with the responsibility determination is denied. See USS Chartering, LLC, B-407601, Jan. 15, 2013, 2013 CPD ¶ __ at 4; T.F. Boyle Transp., Inc., B-310708, B-310708.2, Jan. 29, 2008, 2008 CPD ¶ 52 at 6; Brian X. Scott, B-298568, Oct. 26, 2006, 2006 CPD ¶ 156 at 4.

Supreme argues that the contracting officer did not adequately investigate the allegations in the October 26 letter, and that if he had, he would have found information to substantiate the allegations. Protest at 18; Supreme Comments at 19; Supreme Post-Hearing Comments at 8-9, 21-22, 30-33, 38, 40, 47. We recognize that Supreme is able to point to certain evidence that the contracting officer apparently did not consider--e.g., the lease and transcripts of certain Afghanistan parliamentary sessions. However, a dispute over the amount of information on which an affirmative responsibility determination is based, or disagreement with the contracting officer’s determination, does not fall within the circumstances under which our Office will review such a determination. See USS Chartering, LLC, supra, at 4; Nilson Van & Storage, Inc., B-310485, Dec. 10, 2007, 2007 CPD ¶ 224 at 4; Universal Marine & Indus. Servs., Inc., B-292964, Dec. 23, 2003, 2004 CPD ¶ 7 at 4; see also 67 Fed. Reg. 79,833, 79,834 (Dec. 31, 2002) (GAO’s review of protests under the exceptions specified in 4 C.F.R. § 21.5(c) involves “a contracting officer’s failure to consider ‘available relevant information,’ rather than the reasonableness of the contracting officer’s judgments based on that information, or his or her failure to obtain information through an exhaustive investigation”); but see FN Mfg., Inc., supra, at 11-12; Southwestern Bell Tel. Co., B-292476, Oct. 1, 2003, 2003 CPD ¶ 177 at 7-11. Our inquiry is whether the contracting officer unreasonably failed to consider available relevant information in making the responsibility determination. Based on the record here, we cannot conclude that such a failing occurred. Supreme’s challenge to the agency’s responsibility determination is denied.  (Supreme Foodservice GmbH, B-405400.6, B-405400.7, Mar 27, 2013)  (pdf)


Affirmative Determination of Responsibility

USS Chartering objects to the agency’s affirmative responsibility determination of Crowley Petroleum, arguing that the CO failed to consider relevant information and unreasonably ignored adverse information pertaining to Crowley Liner’s integrity. In this regard, the protester points to evidence that it gathered from public records, including court documents, which the protester contends shows that the two firms share key personnel, office space, and operations structures, such that the agency should have found the two firms to be “a single entity.” Protest at 6, 7.

As a general matter, our Office does not review an affirmative determination of responsibility by a CO. 4 C.F.R. § 21.5(c) (2012); CapRock Gov’t Solutions, Inc.; ARTEL, Inc.; Segovia, Inc., B-402490 et al., May 11, 2010, 2010 CPD ¶ 124 at 26; Navistar Defense, LLC; BAE Sys., Tactical Vehicle Sys. LP, B-401865 et al., Dec. 14, 2009, 2009 CPD ¶ 258 at 20. We will, however, review a challenge to an agency’s affirmative responsibility determination where the protester presents specific evidence that the CO may have ignored information that, by its nature, would be expected to have a strong bearing on whether the awardee should be found responsible. Compare Southwestern Bell Tel. Co., B-292476, Oct. 1, 2003, 2003 CPD ¶ 177 (CO generally aware of allegations of misconduct by awardee and took no steps to consider the awardee’s record of integrity and business ethics) with Verestar Gov’t Servs. Group, B-291854, B-291854.2, Apr. 3, 2003, 2003 CPD ¶ 68 at 4-5. (CO aware of adverse information concerning the awardee’s integrity and considered it).

As described above, the record here shows that the CO was aware of the adverse information concerning Crowley Liner and considered the relationship of the two firms. The CO concluded from his review that the two firms were not so closely affiliated or jointly controlled such that the adverse information concerning Crowley Liner should be imputed to Crowley Petroleum. Thus, the record shows that the CO was aware of and did consider whether the misconduct of Crowley Liner affected Crowley Petroluem’s responsibility. Although USS Chartering challenges the adequacy and reasonableness of the CO’s investigation, this challenge does not present an exception to our rules barring consideration of challenges to an agency’s affirmative determination of responsibility. See CapRock Gov’t Solutions, Inc.; ARTEL, Inc.; Segovia, Inc., supra, at 26. Moreover, we also conclude that the protester’s arguments concerning the allegedly close affiliation of Crowley Petroleum and Crowley Liner reflect disagreement with the CO’s judgment that the two firms were not so closely affiliated or jointly controlled.  (USS Chartering, LLC, B-407601, Jan 15, 2013)  (pdf)


With regard to the license requirement, PS asserts that DLG did not comply with a phase 2 solicitation provision (clause I.77) that required each offeror to possess a license to do business in Iraq. PS argues that the license must be held by the joint venture, not just one of the joint venture members, and that the clause imposes a definitive responsibility criterion that DLG did not satisfy.

Normally, a general solicitation provision mandating that the contractor obtain all necessary licenses or permits needed to perform the work does not require that a bidder or offeror demonstrate compliance prior to award. Mid-America Mgmt. Servs., Inc., B-244103, June 5, 1991, 91-1 CPD ¶ 537 at 1-2. Instead, the securing of licenses and permits is a performance requirement that may be satisfied during contract performance and does not affect the award decision except as a general responsibility matter. HAP Constr., Inc., B-278515, Feb. 9, 1998, 98-1 CPD ¶ 48 at 2-3. Our Bid Protest Regulations generally preclude our review of a contracting officer’s affirmative determination of an offeror’s responsibility. 4 C.F.R. § 21.5(c) (2012).

However, there is an exception to that rule where a protester shows that a definitive responsibility criterion in the solicitation was not met. Id. A definitive responsibility criterion is a specific and objective standard, qualitative or quantitative, that is established by a contracting agency in a solicitation to measure an offeror's ability to perform a contract. Supreme Foodservice GmbH, B-405400, B-405400.2, Oct. 31, 2011, 2011 CPD ¶ 244 at 14. In order to be a definitive responsibility criterion, the solicitation provision must reasonably inform offerors that they must demonstrate compliance with the standard as a precondition to receiving the award. Public Facility Consortium I, LLC; JDL Castle Corp., B-295911, B-295911.2, May 4, 2005, 2005 CPD ¶ 170 at 3. As applied to a requirement for licensing, if the solicitation does not obligate a bidder to possess or show the ability to obtain a particular license before award, it is not a definitive responsibility criterion; rather, it is a contract performance requirement that does not affect a decision to award a contract. Restec Contractors, Inc., B-245862, Feb. 6, 1992, 92-1 CPD ¶ 154 at 4; see also Evergreen Int’l Airlines, Inc., B-244284, Aug. 15, 1991, 91-2 CPD ¶ 154 at 3 (solicitation clause requiring a government approval document was not a definitive responsibility criterion because clause was addressed to “contractor,” rather than “bidders,” and did not state that requirement applied before award).

Our review of the RFP does not support PS’s argument that clause I.77 imposes a definitive responsibility criterion. As noted above, clause I.77 appeared in section I of the RFP, which was a list of “contract clauses.” AR, Tab 7, RFP, at 74. Clause I.77 by its own terms states that the “contractor warrants” that it has various licenses to do business in the relevant country, and has other licenses needed to perform. Id. In our view, such a standard warranty--particularly one that, by its terms, states that the “contractor” (rather than the “offeror”) is to make the representation--is not a definitive responsibility criterion. See Evergreen Int’l Airlines, Inc., supra, at 3. Clause I.77 does not reasonably inform offerors that they must demonstrate compliance before award. Accordingly, PS’s challenge to the award on the basis that DLG failed to meet a definitive responsibility criterion in clause I.77 is denied.  (Pernix-Serka LP, B-407656,B-407656.2, Jan 18, 2013)  (pdf)


The central issue in this protest is whether certain questions about the compliance of PK’s bid with the solicitation’s key personnel requirements concern the responsiveness of the bid or the responsibility of the bidder. Coastal asserts that the awardee’s bid should have been rejected as nonresponsive for submitting key personnel resumes that failed to demonstrate the required experience.[1] In addition to Coastal’s arguments that the resumes submitted by PK were so inadequate that PK’s bid should have been viewed as taking exception to the IFB’s experience requirements, Coastal contends that certain unique performance requirements in the IFB’s PWS shifted what might traditionally be viewed as a matter of responsibility to one of responsiveness. We disagree.

Responsiveness concerns a bidder’s commitment to provide the required goods or services and must be determined by the agency from the face of the bid at bid opening, Propper Manufacturing Co., Inc.; Columbia Diagnostics, Inc., B-233321, B-233321.2, Jan. 23, 1989, 89-1 CPD ¶ 58; nonresponsive bids may not be accepted. Sac & Fox Indus., Ltd., B-231873, Sept. 15, 1988, 88-2 CPD ¶ 250. In contrast, responsibility relates to a bidder’s capability to perform the contract. Beta Construction Co., B-274511, Dec. 13, 1996, 96-2 CPD ¶ 230 at 2. Specifically, the Small Business Act identifies the elements of responsibility as “including, but not limited to, capability, competency, capacity, credit, integrity, perseverance, and tenacity.” 15 U.S.C. § 637(b)(7)(A) (2006).

Under the Small Business Act, the SBA has conclusive authority to determine the responsibility of small business concerns. In this regard, when a procuring agency finds that a small business is not eligible for award based on a nonresponsibility determination or a failure to satisfy definitive responsibility criteria, the agency is required to refer the matter to SBA for a final determination under its certificate of competency procedures. Federal Acquisition Regulation (FAR) §§ 19.602-1(a)(2), 19.602-4(b); see also Specialty Marine, Inc., B-292053, May 19, 2003, 2003 CPD ¶ 106 at 3.

As an initial matter, we conclude that the solicitation requirements at issue here involved matters of responsibility, not responsiveness. For example, in Joint Venture Conscoop-Meyerinck, B-278243.4, Mar. 18, 1998, 98-1 CPD ¶ 83 at 3, an IFB required bidders for a contract to extend a refueling system to employ an experienced systems integrator, and to submit with their bids a resume for its system integrator with a certification of experience to include three similar projects. We held that the agency properly considered supplemental information about the experience requirement that was furnished after bid opening because the requirement for the use of an experienced systems integrator was a matter of responsibility, that is, the bidder’s ability to perform the work.

Likewise, in DAVSAM Int’l, Inc., B-218201.3, Apr. 22, 1985, 85-1 CPD ¶ 462, an IFB required bidders for a food service contract to submit with their bids resumes of supervisory personnel, as well as information on the bidder’s previous experience, the role of the project manager, and management plans and procedures. While the IFB indicated that failure to provide the information would render the bid nonresponsive, we held that such information clearly related to responsibility, that is, the bidder’s apparent ability and capacity to perform the contract requirements, and that a contracting agency cannot, merely by the terms of the solicitation, change a matter of responsibility into one of responsiveness. DAVSAM Int’l, Inc., supra, at 3.

Similarly, in Science Applications, Inc., B-193479, Mar. 8, 1979, 79-1 CPD ¶ 167, an IFB required bidders, “[i]n order to be responsive,” to submit resumes for professional employees establishing that the employees met specific minimum experience requirements. Science Applications, Inc., supra, at 2. In addressing this requirement, we first observed that a contracting agency cannot make a matter of responsibility into a question of responsiveness by the terms of the solicitation. Id. at 3. We then held that the failure of one of the bidder’s resumes to establish that the project coordinator had the required three years of progressively responsible experience in a related educational or technical field concerned the responsibility of the bidder, amounting to a definitive responsibility criteria, and did not relate to responsiveness. In this regard, our Office stated that

[i]t is well settled that solicitation provisions requiring the submission of information necessary to determine compliance with specified bidder experience requirements pertain solely to the bidder’s responsibility, i.e., its overall capacity to perform the prospective contract, and that such information need not be submitted with the bid but may be furnished up to the time of award.

Id. at 2-4.

Coastal also argues that the experience requirements in this IFB have been changed to matters of responsiveness in light of the PWS requirement in this solicitation barring any changes to key personnel within 180 days of contract award. PWS § 2.1. In Coastal’s view, this requirement creates a performance obligation out of the experience requirement, transforming an otherwise responsibility matter into a responsiveness one.

We disagree with Coastal that the specific language of the PWS here changes the nature of these experience requirements from matters of responsibility to matters or responsiveness. Whenever an agency requests resumes as part of the submission of bids or proposals, there is a reasonable expectation that those individuals for whom resumes have been submitted are the personnel who will perform the contract. For that reason, a firm that knowingly or negligently represents that it would rely on specific personnel that it did not expect to furnish during contract performance may be found to have established an impermissible bait and switch scheme, where that misrepresentation was relied on by the agency and had a material effect on the evaluation results. Data Mgmt. Servs. Joint Venture, B-299702, B-299702.2, July 24, 2007, 2007 CPD ¶ 139 at 10. In our view, a responsibility-type factor going to the capability of the bidder remains a matter of responsibility, notwithstanding any subsequent, associated, performance obligations.

Coastal’s assertion that PK’s bid, in essence, took exception to the IFB’s experience requirements arises from the fact that, although the bid included resumes and described experience, the resumes, on their face, did not clearly establish the ways in which the experience proffered was related to the experience sought. In TYBRIN Corp., B-298364.6 et al., Mar. 13, 2007, 2007 CPD ¶ 51, our Office held that a proposal which on its face took exception to a limitation on subcontracting was nonresponsive for failure to comply with a material term of the solicitation. We noted in that decision that the issue

does not concern whether a bidder or offeror can or will comply with the subcontracting limitation requirement during performance of the contract (where we recognize that the matter is one of responsibility (or in certain cases, contract administration . . . )), but rather, whether the bidder or offeror has specifically taken exception to the subcontracting limitation requirement on the face of its bid or proposal.

Id. at 6. Because the proposal at issue in TYBRIN specifically took exception to a material term, the limitation on subcontracting, it was unacceptable. Id. at 6-7. Here, in contrast, we do not think that PK’s bid, on its face, took exception to the key personnel requirements. While the bid cannot reasonably be described as fully addressing the experience requirements, we are not prepared to conclude that the bid took issue with those requirements, as in TYBRIN.

Finally, Coastal also argues that in negotiated procurements, our Office has treated personnel experience and qualifications requirements as a matter of technical acceptability, akin to a question of responsiveness, and that therefore we must likewise view the key personnel experience requirements in this IFB as a matter of bid responsiveness. We again disagree. Our Office treats questions of responsibility consistently under sealed bidding and under negotiated procurement procedures. See Docusort, Inc., B-254852, Jan. 25, 1994, 94-1 CPD ¶ 38 (when a minimum management experience requirement, a traditional responsibility factor, is evaluated on go/no go basis, rejection of proposals solely on the basis of the offeror’s failure to comply with such a factor must be referred to SBA); Paragon Dynamics, Inc., B-251280, Mar. 19, 1993, 93-1 CPD ¶ 248 at 4 (failure on the part of the offeror's proposed software development engineer to meet the minimum experience and capability requirements concerned a responsibility-related factor); ASR Mgmt. & Tech. Servs., B-244862, B-247422, Apr. 23, 1992, 92-1 CPD ¶ 383 at 7 (noting that, although personnel qualifications are a “responsibility-type factor,” when they are evaluated on a comparative basis, they may properly be considered in an agency’s selection decision). In addition, the Small Business Act requires referral to SBA of questions of responsibility even where negotiated procurement procedures are used. See, e.g., Phil Howry Co., B-291402.3, B–291402.4, Feb. 6, 2003, 2003 CPD ¶ 33 at 5.

In sum, given the above case law with respect to key personnel requirements used to assess the capability of a bidder, we find no basis to object to EPA’s determination to make award to PK following SBA’s issuance of a COC to the firm in response the contracting agency’s nonresponsibility determination.

The protest is denied.  (Coastal Environmental Group, Inc., B-407563, B-407563.3, B-407563.4, Jan 14, 2013)  (pdf)


With regard to Orion’s remaining ground of protest, Orion essentially argues that, notwithstanding the SBA’s refusal to issue a COC, the contracting officer should have reversed his prior negative responsibility determination and made award to Orion after he received the September 22 Northrop Grumman e-mail stating that it would not let Orion fail. In this regard, Orion cites FAR § 19.602-3(c)(3), and the SBA’s regulations at 13 C.F.R. § 125.6(n), which state that “[d]enial of a COC by SBA does not preclude a contracting officer from awarding a contract to the referred firm, nor does it prevent the concern from making an offer on any other procurement.”

Where, as here, a small business is determined to be non-responsible, the matter must be referred to SBA for review under SBA’s COC procedures since, under 15 U.S.C. § 637(b)(7) (2006), SBA has the conclusive authority to determine a small business firm’s responsibility by issuing or refusing to issue a COC. Because SBA, not our Office, has conclusive authority to determine a small business firm’s responsibility, we generally will not review the SBA’s refusal to issue a COC, absent a showing of bad faith or failure to consider vital information. Bid Protest Regulations, 4 C.F.R. § 21.5(b)(2) (2011).

Notwithstanding SBA’s conclusive authority to determine a small business firm’s responsibility through the COC procedures, our Office has previously concluded that where new information probative of small business responsibility comes to light for the first time after denial of a COC, but before award, the contracting officer may reconsider his or her initial responsibility determination. Goshen Excavators, B-279093.2, Apr. 20, 1998, 98-1 CPD ¶ 114 at 3; West State, Inc., B-255692, B-255693, Mar. 23, 1994, 94-1 CPD ¶ 211 at 4. On the other hand, where, after the SBA’s denial of a COC, no new information is presented to lead the contracting officer to determine that the concern is responsible, the contracting officer should proceed with award to another appropriately selected and responsible firm. Id.

Here, the contracting officer received the Northrop Grumman e-mail one day prior to SBA’s refusal to issue a COC determination. Because the e-mail was not relayed to, or considered by the SBA prior to its refusal to issue a COC, Orion contends that it constitutes new information probative of Orion’s responsibility. Orion argues that when the contracting officer received the SBA’s refusal to issue a COC on the basis that Orion lacked the required financial capability, the contracting officer should have recognized that the refusal was not consistent with the relevant facts, including “Northrop Grumman’s direct assurance to him that it would not let a contract awarded to Orion fail.” Orion Comments, at 6. According to Orion, the information in the e-mail should have caused the contracting officer to question the basis for the SBA’s refusal to issue a COC as well as his own initial non-responsibility determination.

The agency responds that the e-mail from Northrop Grumman was not new information probative of Orion’s responsibility, in that the e-mail did not include any information directly relevant or pertinent to the contracting officer’s negative responsibility determination, or the SBA’s refusal to issue a COC. Accordingly, the agency contends that the e-mail did not provide a basis for the contracting officer to reconsider the non-responsibility determination. The agency further contends that, contrary to Orion’s assertion, it would have been improper for the contracting officer to have reversed his initial non-responsibility determination on the basis of an unsolicited e-mail “pledge” that “Northrop Grumman would ‘not let Orion fail,’ in lieu of verification from the DCAA that the offeror has an adequate accounting system,” or evidence that Orion possessed the financial capability to perform the contract following the SBA’s refusal to issue a COC on that basis. Agency Comments, at 5.

We agree with the agency that the contracting officer acted reasonably in not revisiting his initial non-responsibility determination on the basis of the Northrop Grumman e-mail. The e-mail in question failed to provide any specific evidence rebutting the findings that Orion lacked an approved accounting system or the financial capability to perform the contract. The e-mail merely made a blanket assertion that Northrop Grumman “will not let Orion Technology fail,” without specific evidence to establish the existence of accounting, financial, or other support provided by Northrop Grumman, and without even establishing that the e-mail sender had authority to obligate Northrop Grumman to provide such assistance.

Under these circumstances, the e-mail message cannot be considered probative of Orion’s responsibility, and was properly disregarded by the contracting officer. See UAV Sys., Inc., B-255281, B-255281.2, Feb. 17, 1994, 94-1 CPD ¶ 121.  (Orion Technology, Inc., B-405970, Jan 13, 2012)  (pdf)


MANCON challenges the agency’s rejection of its proposal as unacceptable, arguing that since the RFP’s small business subcontracting plan evaluation factor was to be assessed on a pass/fail basis, the matter concerns the firm’s responsibility, and not the evaluation of its technical acceptability. Protest at 19-21. MANCON also contends that the agency unreasonably determined that the firm had not provided adequate assurance that its subcontractors would comply with all of the requirements of FAR § 19.704.

We agree with MANCON. Because the requirement for an acceptable small business subcontracting plan generally is applicable to the “apparently successful offeror,” this requirement relates to an offeror’s responsibility, even where the solicitation requests the offeror to submit its plan with its offer. See, e.g., General Dynamics-Ordnance & Tactical Sys., B-295987, B-295987.2, May 20, 2005, 2005 CPD ¶ 114 at 10; see also Southwest Mobile Sys. Corp., B-223940, Aug. 21, 1986, 86-2 CPD ¶ 213 at 2. In addition, while an agency may provide for the technical evaluation of responsibility-type factors, such as a small business subcontracting plan, it may only do so when it is making a comparative assessment of those plans. See Computer Sciences Corp.; Unisys Corp.; Northrop Grumman Info. Tech., Inc.; IBM Business Consulting Services-Federal, B-298494.2 et al., May 10, 2007, 2007 CPD ¶ 103 at 10. A comparative evaluation means that competing proposals will be rated on a scale relative to each other rather than on a pass/fail basis. Zolon Tech, Inc., B-299904.2, Sept. 18, 2007, 2007 CPD ¶ 183 at 8. Here, the plans were evaluated on a pass/fail basis, and therefore, the agency’s evaluation of those plans concern an offeror’s responsibility.

Responsibility is to be determined based upon information received by the agency up to the time award is proposed to be made. PMO Partnership Joint Venture, B-401973.3, B-401973.5, Jan. 14, 2010, 2010 CPD ¶ 29 at 5. The determination of a prospective contractor’s responsibility rests within the broad discretion of the contracting officer, who, in making that decision must rely upon his or her business judgment in exercising that discretion. We therefore generally will not question a negative determination of responsibility unless the determination lacked any reasonable basis. Id.; see also Torres Int’l, Inc., B-404940, May 31, 2011, 2011 CPD ¶ 114 at 4. A negative responsibility determination will not be found to be reasonable where it is based primarily on unreasonable or unsupported conclusions. PMO Partnership Joint Venture, supra., at 6.

Here, it appears that the agency’s insistence upon the use of the exact wording concerning the provision of DUNS numbers and addresses so that its subcontractors can properly report certain information puts undue emphasis on form over substance. The record nowhere indicates that MANCON did not intend to comply with these sections. Rather, MANCON’s revised submission assures the agency that its first-tier subcontractors will comply with all of FAR § 19.704(a)(10), confirms that the subcontractors will report their small business sales in eSRS and confirms that summary reports will be provided once eSRS reporting has been completed. See MANCON Revised Volume IV at 8. Other than stating that MANCON failed to parrot the exact language of section 19.704(a)(10) of the FAR, see Navy Response to Comments at 2, the Navy does not explain why MANCON’S assurances were inadequate.

We also believe that the agency erred in its belief that further exchanges with MANCON concerning its subcontracting plan would constitute discussions. We have found that where acceptability of a small business subcontracting plan is a responsibility issue, exchanges between the agency and an offeror concerning such plans are not discussions. General Dynamics-Ordnance & Tactical Sys., supra. To the extent that the contracting officer believed the agency needed additional assurances from MANCON, these communications would not have constituted discussions requiring the reopening of discussions with all offerors. Therefore, the contracting officer’s refusal to have further communication with MANCON was based primarily upon the unreasonable and unsupported conclusion that such an exchange would constitute discussions.  (MANCON, B-405663, Feb 9, 2012)  (pdf)


ADS argues that the Army failed to reasonably evaluate ASP's responsibility because, the protester contends, the awardee intends to subcontract with, and is otherwise affiliated with, three firms proposed for debarment: GEC, SES, and SCL. As discussed below, we find no merit to the protester's arguments.

Agencies may not award contracts to contractors that are debarred, suspended, or proposed for debarment, nor may they award contracts to firms that are affiliated with firms that are debarred, suspended, or proposed for debarment. FAR sections 9.403, 9.405. Additionally, agencies may not consent to a subcontract with a firm that is debarred or proposed for debarment, unless the agency head states in writing the compelling reasons for this approval action. FAR sect. 9.405-2.

Our Office views an agency's determination of whether an offeror is affiliated with or is subcontracting to, a firm that is debarred, suspended or proposed for debarment to be matters of offeror responsibility. See Bilfinger Berger AG Sede Secondaria Italiana, B-402496, May 13, 2010, 2010 CPD para. 125 at 3-5; Hunt Pan Am Aviation, Inc., B-246092.3, Apr. 8, 1992, 92-1 CPD para. 351 at 5; U.S. Constructors, Inc., B-248757, Aug. 31, 1992, 92-2 CPD para. 146 at 2. As a general matter, our Office does not review a CO's affirmative determination of responsibility. Bid Protest Regulations, 4 C.F.R. sect. 21.5(c) (2011); Navistar Defense, LLC; BAE Sys., Tactical Vehicle Sys. LP, B-401865 et al., Dec. 14, 2009, 2009 CPD para. 258 at 20. We will, however, consider a challenge to a CO's affirmative determination of responsibility where it is alleged that definitive responsibility criteria in the solicitation were not met, or where the protester identifies evidence raising serious concerns that, in reaching the responsibility determination, the CO unreasonably failed to consider available relevant information or otherwise violated statute or regulation. 4 C.F.R. sect. 21.5(c); T.F. Boyle Transp., Inc., B-310708, B-310708.2, Jan. 29, 2008, 2008 CPD para. 52 at 5.

Here, we conclude that the protest is within our jurisdiction to consider because ADS has argued that the CO unreasonably failed to consider available relevant information regarding ASP's relationships with firms proposed for debarment.

Subcontracting with Firms Proposed for Debarment

With respect to the merits of ADS's contentions that the Army failed to consider available relevant information regarding ASP's possible use of the resources and personnel of the three firms, we note first that this solicitation did not require offerors to submit subcontracting plans, and ASP did not provide this information. CO Statement at 1-2. Thus, we think the CO had no reason to know, prior to making her pre-award responsibility determination, whether ADS intended to subcontract with firms proposed for debarment.

Nonetheless, in response to allegations raised by ADS prior to filing its protest with our Office, the CO obtained from ASP a list of all of its proposed subcontractors, and was able to verify that none of them were debarred or proposed for debarment. While ASP acknowledged that it had planned to purchase certain assets to be used in performing this contract from GEC--which was proposed for debarment--during that firm's bankruptcy proceeding, the CO reasonably concluded that ASP would not be subcontracting with a debarred firm to perform this contract. Thus, this protest ground provides no basis to challenge the agency's determination that ASP was responsible.

Affiliation with Firms Proposed for Debarment

ADS also argues that ASP is affiliated with the three firms proposed for debarment, and is therefore ineligible for award. Specifically, the protester contends that the awardee is a new company "formed by officers and high-ranking employees" of GEC, SES, and SCL. Protest at 9. The protester's arguments concerning ASP's alleged affiliation with the three firms proposed for debarment were first brought to the agency's attention after award, and there is no evidence that the CO considered this matter as part of her pre-award responsibility determination. See AR at 10; CO Statement at 2. The protester thus contends that the responsibility determination was flawed because the CO did not consider whether the firms were affiliated.

The Army contends that this argument lacks merit because the Small Business Administration (SBA) has determined that ASP is not affiliated with these firms, in connection with a size-status protest. As relevant here, on February 25, the Small Business Administration issued a decision concerning a size-status protest filed by ACD challenging the award of a different contract to ASP for lease of shower and sink trailers at Fort Irwin. AR, Tab 12, SBA Size Determination No. 11-03-NTC-12A, at 1. The size protest, filed on January 11, argued that ASP was not a small business due to affiliations with GEC, SES, and SCL. Id. at 2. The SBA acknowledged that individuals who control ASP had "ties" to the three firms, and in some cases those ties were described as "close." Id. at 5-7. The SBA concluded, however, that ASP was not affiliated with any of these firms for purposes of determining its size status under the standards set forth in 13 C.F.R. sect. 121.103, and that ASP was therefore a small business for purposes of the award of the contract. Id. at 7.

Because the analysis of a firm's affiliation for purposes of debarment under FAR subpart 9.4 addresses the same considerations as the SBA's affiliation analysis under the SBA's size status regulations, we think that the SBA's ruling here supports the agency's affirmative responsibility determination, even though the CO did not review this matter at the time of award. See Atchison Eng'g Co., B‑208148.5, Aug. 30, 1983, 83-2 CPD para. 278 at 6. In this regard, the FAR states that firms are affiliates of each other for purposes of debarment if "directly or indirectly, (1) either one controls or has the power to control the other, or (2) a third party controls or has the power to control both." FAR sect. 9.403. Similarly, the SBA regulations concerning affiliation for purposes of determining a firm's size state that firms are affiliates "when one controls or has the power to control the other, or a third party or parties controls or has the power to control both." 13 C.F.R. sect. 121.103(a)(1). Indicia of control common to both regulatory provisions, and addressed by the SBA in its decision, include common management, ownership, key employees. See FAR sect. 9.403; 13 C.F.R. sect. 121.103; AR, Tab 12, SBA Size Determination No. 11-03-NTC-12A, at 5-7. Thus, the record provides no basis to find that ASP was affiliated with firms that were proposed for debarment.

In sum, we find no basis to question the agency's determination that ASP was responsible.  (Active Deployment Systems, Inc., B-404875, May 25, 2011)  (pdf)


ERKA raises a number of challenges to the agency's evaluation, source selection decision, and determination that ERKA was not responsible. Because, as described below, we find reasonable the agency's negative determination of ERKA's responsibility, we need only address that determination.

The protester complains that the CO's negative determination of ERKA's responsibility ignored the firm's positive performance history on projects in Romania, Iraq, and Africa. See Comments at 27-28. The protester also argues that it was improper for the agency to consider the default termination of the Eagle Family Housing contract because the matter is currently under appeal to the ASBCA. See id. at 26-27. Moreover, the protester asserts that it should not be held accountable for this contract, because it was only a junior member of the joint venture holding that contract. Protest at 15. ERKA also disputes the agency's interpretation of the D&B report that showed that ERKA had a history of making slow payments.

The agency responds that it performed a detailed, documented responsibility analysis consistent with the FAR and considered all the information regarding ERKA that was available to the agency. AR, Tab 2, at 28-30. The agency asserts that there was uncertainty as to whether ERKA could comply with the current delivery schedule based on prior problems with timeliness and its negative performance on several relevant projects, including the termination for default. The agency states that ERKA's projects in Africa, Iraq, and Romania were of little relevance or predated the default termination. The agency also complains that ERKA was offered several opportunities to mitigate risks associated with its past performance record, but that the protester only blamed its joint venture partner and offered excuses for its performance problems. Id.; CO's Statement at 18-19.

In making a negative responsibility determination, a contracting officer is vested with a wide degree of discretion and, of necessity, must rely upon his or her business judgment in exercising that discretion. See International Paint USA, Inc., B-240180, Oct. 30, 1990, 90-2 CPD para. 349 at 3. Although the determination must be factually supported and made in good faith, the ultimate decision appropriately is left to the agency, since it must bear the effects of any difficulties experienced in obtaining the required performance. For these reasons, we generally will not question a negative determination of responsibility unless the protester can demonstrate bad faith on the part of the agency or a lack of any reasonable basis for the determination. Colonial Press Int'l, Inc., B-403632, Oct. 18, 2010, 2010 CPD para. 247 at 2. Our review is based on the information available to the contracting officer at the time the determination was made. Acquest Dev. LLC, B-287439, June 6, 2001, 2001 CPD para. 101 at 3.

Here, we find that the CO's negative determination of ERKA's responsibility was reasonable. The contemporaneous record evidences the CO's consideration of all ERKA's past performance and supports her determination that ERKA had performance problems under at least four construction contracts for requirements that were similar to those solicited here. With respect to the Eagle Family Housing contract that was terminated for default, for example, the contractor's performance was found unsatisfactory with regard to quality control, timeliness, cooperation and responsiveness, resource management, jobsite supervision, non-payment of subcontractors, site cleanup, and compliance with safety standards. See, e.g., Tab 25, Final Performance Evaluation, Eagle Family Housing Contract, at 2248-53. The record also shows that with respect to other contracts ERKA was issued numerous non-compliance reports. See id., Tab 20, ERKA Past Performance Information, at 2161-2200 (Fire Training Facility Contract); id. at 2156-57, 2201‑02, 13‑27 (Pavement ID/IQ Contract; Family Housing Electrical Substation Contract).

As described above, the protester had several opportunities to address its performance of the defaulted contract or to explain what efforts the firm would take to mitigate future performance risks. ERKA's responses to the agency's discussions, however, neither demonstrate why it should not be held responsible for the default termination nor provide any statement as to how the firm would mitigate future performance risk to the agency. See id., Tab 14A, First Discussions at 3 and Tab 14B, Second Discussions at 3. To the extent that the protester contends that its positive performance on other projects should have outweighed the negative past performance presented by the defaulted contract and other contracts, this disagreement does not demonstrate that the CO's judgment with respect to the firm's past performance was unreasonable.

With respect to the CO's consideration of the Eagle Family Housing contract, we disagree with the protester that the agency could not properly consider this termination in its responsibility determination because the matter has been appealed to the ASBCA. See MCI Constructors, Inc., B‑240655, Nov. 27, 1990, 90-2 CPD para. 431 at 4. An agency may properly rely upon its reasonable perception of a contractor's inadequate performance even where the contractor disputes the agency's position. See MAC's Gen. Contractor, B-276755, July 24, 1997, 97-2 CPD para. 29 at 3-4.

We also disagree with ERKA that the agency could not consider the protester's performance as a joint venture partner of the Eagle Family Housing contract. See MCI Constructors, supra, at 5 (reasonable for agency to give significant consideration to affiliate's prior performance in assessing contractor's responsibility); Bluff Springs Paper Co., Ltd./R.D. Thompson Paper Prod. Co., Inc. Joint Venture, B-286797.3, Aug. 13, 2001, 2001 CPD para. 160 at 3 (agency generally may consider an individual venturer's performance in assessing joint venture's past performance). In this regard, the record does not support ERKA's assertion that it was only a junior venture partner. Rather, the firm's joint venture agreement for this project shows that ERKA was a 50 percent partner at the time of contract award. See AR, Tab 19, Joint Venture Agreement, at 1-4.

In sum, the record supports the reasonableness of the CO's determination that ERKA was not responsible. Because ERKA was reasonably determined to be nonresponsible, we need not address its remaining protest issues.  (M. Erdal Kamisli Co. Ltd. (ERKA Co., Ltd.), B-403909.2; B-403909.4, February 14, 2011)  (pdf)


BBSSI generally challenges the contracting officer's negative responsibility determination. It specifically asserts that the determination was unreasonable, since it advised the agency that it would perform the contract without any involvement of BBH. Protest at 11-12. Further, the protester asserts that the Cosmelli opinion, as interpreted by the contracting officer, could not form the basis for a reasonable nonresponsibility determination. Supp. Protest, Mar. 12, 2010. BBSSI also asserts that the SOA requirement was a definitive responsibility criterion, which it satisfied. Protest at 9‑13. Finally, the protester asserts that the contracting officer's determination constituted a wrongful de facto debarment. Protest at 19-20.

In making a negative responsibility determination, a contracting officer is vested with a wide degree of discretion and, of necessity, must rely upon his or her business judgment in exercising that discretion. Although the determination must be factually supported and made in good faith, the ultimate decision appropriately is left to the agency, since it must bear the effects of any difficulties experienced in obtaining the required performance. For these reasons, we generally will not question a negative determination of responsibility unless the protester can demonstrate bad faith on the part of the agency or a lack of any reasonable basis for the determination. Miklin Corp., B‑236746.2, Jan. 19, 1990, 90-1 CPD para. 72 at 1-2, recon. den., B-236746.3, June 8, 1990, 90-1 CPD para. 540; see, e.g., Blocacor, LDA, B-282122.3, Aug. 2, 1999, 99-2 CPD para. 25. Our review is based on the information available to the contracting officer at the time the determination was made. Acquest Dev. LLC, B-287439, June 6, 2001, 2001 CPD para. 101 at 3.

Here, as indicated above, based on the information available to him, the contracting officer concluded that BBSSI had provided indications that it may have been "a mechanism for [BBH] to submit proposals and to continue to contract with the U.S. Government." SSDD at 001133. In support of this conclusion, the agency supplies a statement by the head of its contract administration office, who states that "the same personnel have simultaneously represented [BBSSI and BBH] on the contracts we have administered there both prior to and during the period in which BBH has been debarred," and that there has been "no differentiation between the operations, insofar as the same key personnel have been identified and have signed documents for contracts with both companies." AR exh. 15a, Declaration of William Thievon, Mar. 4, 2010; see AR exh. 15d (organizational chart showing identical Bilfinger representatives on BBSSI and BBH contracts). The agency asserts that the two firms utilized common facilities and equipment, common and shared employees, including key personnel and management, and common bank accounts and that this resulted in the lack of a practical differentiation between either company in their daily work. AR at 7, 18.

The protester generally does not dispute the information on which the agency based its determination. Rather, it asserts that the information is irrelevant, since it does not "invalidate the very clear and explicit representation in BBSSI's discussion response, whereby it was unequivocally represented that BBSSI would perform on this [contract] without any involvement of BBH." Comments at 25 (emphasis in original).

We find that the extensive information on which the contracting officer relied fully supported the view that BBSSI and BBH were closely related, and the resultant appearance that BBH, a debarred contractor, would be involved in performing the contract, as it had been under prior contracts. Debarred contractors generally may not receive contracts from the government or subcontracts from government contractors, and "are also excluded from conducting business with the Government as agents or representatives of other contractors." FAR sect. 9.405. Further, the FAR prohibits debarred firms from submitting offers for government contracts either directly or "indirectly (e.g., through an affiliate)." FAR sect. 9.403 (definition of "contractor") and sect. 9.405(a) ("contractors" debarred, suspended, or proposed for debarment are excluded from receiving contracts); Detek, Inc., B‑261678, Oct. 16, 1995, 95-2 CPD para. 177 (firm not eligible for award where circumstances indicated that debarred affiliate was attempting to submit offer through affiliated offeror). While BBSSI represented that BBH would not participate in performance, the contracting officer was not required to take BBSSI's representations at face value; he reasonably could rely on the historical and other information evidencing a close working relationship between BBSSI and BBH in concluding that BBH essentially was proposing through BBSSI, and that BBSSI therefore was nonresponsible.

We also find that the contracting officer's concerns about BBSSI's reliance on BBH's SOA was reasonable. SSDD at 001133-34. Based on the Cosmelli opinion, the contracting officer found that BBSSI's use of BBH's SOA further supported the conclusion that BBH would be involved in contract performance and was essentially offering on the solicitation through BBSSI. Id. The protester asserts that its use of BBH's SOA was "simply for the sake of satisfying the ministerial requirement of having a SOA certificate," Protest at 11-12; AR at 3, and reiterates that it intended to perform the contract wholly by itself, without participation by BBH. Again, however, the agency was not bound to accept BBSSI's representations and disregard its SOA arrangement with BBH, together with the other substantial information bearing on the firms' relationship.

The protester asserts that the legal opinion reviewed by the agency could not form the basis for a reasonable nonresponsibility determination due to deficiencies in the agency's acquisition of the opinion, the opinion itself, and the contracting officer's interpretation of the opinion. Comments at 4-21; Supp. Protest, Mar. 12, 2010. In this regard, the protester asserts that the Request for Quotations seeking the legal opinion did not provide sufficient background material, including information setting forth BBSSI's views regarding the legal effect of the SOA. Comments at 4-9, 18-21. We do not agree with BBSSI, however, that the absence of its views from the RFQ diminished the reliability of the opinion.[1] The RFQ adequately described the subject matter the opinion was to address, and there was no requirement that the agency turn the opinion into a vehicle for debate by setting forth BBSSI's views on the matter. Contracting officers generally are entitled to rely on information available to them at the time of a responsibility determination, absent any indication that the information is defective, unsupported, or suspect. M. Matt Durand, LLC, B-401793, Nov. 23, 2009, 2009 CPD para. 241 at 7.

BBSSI also asserts that the agency misinterpreted the legal opinion and that the opinion does not support the contracting officer's conclusions. Comments at 9-11, 15-19. However, BBSSI has not established that the agency's interpretation of the opinion was incorrect or unreasonable. The opinion comments on the law surrounding an SOA, rather than the precise question of one firm's use of another firm's SOA. However, the opinion does indicate that, under the SOA system, a contractor may "prove to have the technical capabilities and the economic and financial standing necessary" to compete for the award of a public contract "by relying on the resources … of other entities, provided that, in such case, the bidder can prove to the contracting authority that it will have in its disposal the resources of such other entities to carry out the works." Cosmelli Opinion at 3-4. The opinion also indicates that "the bidder who intends to avail itself of the third party's resources shall produce … a declaration certifying that it intends to avail itself of the third party's resources in order to meet the necessary requirements … ." Id. at 5. These statements are all reasonably supportive of the contracting officer's conclusion that BBSSI's reliance on BBH's SOA was indicative of an intent to "have at its disposal the resources of [BBH] to carry out the [contract]." SSDD at 001134. The protester has provided no definitive information, other than its own legal opinion, establishing that the law permits it to use another firm's SOA without involving that other firm in performance of the contract.

BBSSI also asserts that the SOA requirement was a definitive responsibility criterion, which it satisfied when it submitted BBH's SOA, and that further examination of the SOA is unwarranted and an improper application of an unstated evaluation factor. Protest at 9-13. This argument is without merit. BBSSI was not found nonresponsible due to failure to meet the solicitation requirement for submission of an SOA; rather, it was found nonresponsible based on the circumstances discussed above and its submission of BBH's SOA. FAR part 9.4.

Finally, the protester asserts that the contracting officer's negative responsibility determination constituted a wrongful de facto debarment, without affording BBSSI the procedural protections of FAR sect. 9.406-1(b). This argument is without merit. A de facto debarment occurs when the government uses nonresponsibility determinations as a means of excluding a firm from government contracting or subcontracting, rather than following the debarment regulations and procedures set forth at FAR subpart 9.4. Firm Erich Bernion GmbH, B-233106, Dec. 28, 1988, 88‑2 CPD para. 632 at 4. A necessary element of a de facto debarment is that an agency intends not to do business with the firm in the future. Id.; Lida Credit Agency, B‑239270, Aug. 6, 1990, 90-2 CPD para. 112 at 3 n.2. The nonresponsibility determination here was based on current information regarding BBSSI and BBH's close business relationship, and BBSSI's use of BBH's SOA. The record does not show that the agency intends to exclude the firm from other procurements based on its specific determination here.  (Bilfinger Berger AG Sede Secondaria Italiana, B-402496, May 13, 2010)  (pdf)


LP challenges the agency’s determination that its proposal was technically unacceptable. The protester also argues that the agency treated the two offerors unequally by conducting a thorough investigation of its manufacturing subcontractor’s facilities, while failing to visit EFI’s production facility.

At the outset, we note that where an agency determines the proposal of a small business such as the protester to be unacceptable under a responsibility-related factor, that is, a factor pertaining to its ability to perform, such as whether it has adequate corporate experience or production equipment and facilities, the determination is essentially one of nonresponsibility, meaning that referral to the Small Business Administration (SBA), which has the ultimate authority to determine the responsibility of small business concerns, is required. Joanell Labs., Inc.; Nu‑Way Mfg. Co., Inc., B-242415.8 et al., Apr. 15, 1992, 92-1 CPD para. 369 at 6; Sanford and Sons Co., B-231607, Sept. 20, 1988, 88-2 CPD para. 266 at 2-3. Where an agency rejects a proposal as technically unacceptable on the basis of factors not related to responsibility as well as responsibility-related ones, referral to the SBA is not required, however. Paragon Dynamics, Inc., B-251280, Mar. 19, 1993, 93-1 CPD para. 248 at 4.

Here, while it is clear from the record that the agency determination of technical unacceptability was based in large part on concerns pertaining to the manufacturing capabilities of the protester’s proposed subcontractor, which are responsibility-related, it is also apparent that those concerns were not the only basis for the determination of technical unacceptability; as a consequence, we conclude that the determination of technical unacceptability was not essentially one of nonresponsibility requiring referral to the SBA. In particular, LP’s final proposal failed to demonstrate compliance with the RFP requirement that the dimensions of the proposed luminaires not exceed the dimensions of the legacy fixtures. While the protester furnished an acceptable response to the agency discussion letter notifying it that four of its proposed luminaires exceeded the allowable dimensions, LP did not incorporate this response into its final revised proposal; rather, LP’s final proposal repeated the information contained in its initial proposal. Given that LP’s final proposal did not demonstrate compliance with the solicitation requirement pertaining to fixture dimensions, we think that the evaluators reasonably determined it technically unacceptable under the design and performance subfactor. See Capitol CREAG LLC, B-294958.4, Jan. 31, 2005, 2005 CPD para. 31 at 7-8.

We also think that the evaluators had a reasonable basis for determining the protester’s proposal unacceptable under the logistic support subfactor. The solicitation provided for the evaluation of the offeror’s ability to furnish repair and replacement parts under this subfactor. In its initial proposal, LP furnished the following information regarding its capability to provide replacement parts:

Hubbell has agreed to release spare parts which would include LED boards, LED Ballasts, Fluorescent Ballasts, Lids, Latches and screws through electrical distribution in key strategic NAVY based areas around the United States.

LP Initial Proposal at 80. In its initial evaluation, the evaluation team found this response to be acceptable. During discussions, however, LP replaced Hubbell as its manufacturing subcontractor, without making any corresponding revisions to its approach to furnishing replacement parts. That is, LP’s final proposal still identified Hubbell as the source for its spare parts. We think that the evaluators reasonably determined unacceptable the protester’s proposed approach of relying upon Hubbell as its source for spare parts for fixtures that Hubbell was not manufacturing.

Turning then to the protester’s complaint that the agency treated the two offerors unequally by conducting a site visit to its manufacturing subcontractor’s facilities, but failing to inspect EFI’s production facilities, the agency explains that it had concerns regarding the protester’s, but not EFI’s, production capabilities. To the extent that the protester argues that the agency should have had concerns regarding EFI’s production capabilities, it is essentially challenging the agency’s affirmative determination of EFI’s responsibility, and absent conditions not present here, we will not consider a protest challenging such a determination. Bid Protest Regulations, 4 C.F.R. sect. 21.5(c) (2009).  (Light-Pod, Inc., B-401739; B-401739.2, November 12, 2009) (pdf)


ESCO protests the reasonableness of the cash-flow assessment that the Navy performed to determine ISL’s financial ability to perform at the proposed price of $.06. Specifically, the protester argues that the Navy’s cash-flow analysis was improperly premised on the assumption that ISL would generally work on only one ship at a time (and thereby incur the estimated upfront costs of performance sequentially), although ISL’s own proposed schedule stated otherwise. ESCO also argues that the Navy’s cash-flow analysis was improperly computed, thereby underestimating the total upfront costs that ISL was likely to incur in advance of any scrap sale proceeds. Since the total upfront costs that ISL would incur were substantially higher than the offeror’s documented line of credit, ESCO argues, the Navy’s determination that ISL possessed the financial ability to perform the task order at the price proposed was materially flawed.

The record shows that the Navy evaluators recognized both the substantial price disparity between the ISL and ESCO proposals, and that ISL would not be receiving any significant payment from the agency as part of performance of the awarded task order (i.e., task order payments could not finance the offeror’s performance). In light thereof, in order to ensure that ISL was “financially responsible at the price [it] proposed,” AR, Tab 13, Evaluation Report, at 15, the Navy evaluators decided to conduct a cash-flow analysis of ISL and determine whether the offeror possessed sufficient financial resources to cover the total estimated upfront costs of towing and dismantling the ships in advance of any returns on scrap sale.

The Navy’s cash-flow assessment of ISL was based on information that the agency possessed regarding the dismantling of a similarly sized ship, the ex-Camden. The evaluators assumed that the contractor would incur 10 percent of total dismantling costs, as well as the estimated towing costs, before it would begin to realize any cash inflow from scrap. The evaluators then made the following calculations:
 

Ship Tonnage Cost/Ton Total Dismantling Costs Costs at 10% Completion Tow Estimate Total Up Front Cost
ex-Camden 20,717 $126 $2,611,617 $261,161    
ex-Saipan 27,165 $126 $3,422,790 $342,279 $869,280 $1,211,599
ex-Austin 9,201 $126 $1,159,326 $115,932 $300,000 $415,932
ex-Fort Fisher 8,714 $126 $1,097,694 $109,769 $1,300,000 $1,409,769

Id.

After completing this computation, the Navy found ISL to be financially responsible at the price proposed. Specifically, the evaluators concluded, “The contractor stated that they were free of debt and has an unused and revolving credit line of $[DELETED]. Whereas, their proposed schedule plans staggered start dates for each ship, this should be sufficient to cover expenses.” Id.

The Navy’s determination that ISL’s financial resources were sufficient to meet estimated total upfront costs was premised on the assumption that ISL would incur the estimated upfront costs sequentially (i.e., that ISL’s staggered start dates for each ship would result in the estimated upfront costs for each ship not occurring simultaneously). Contrary to the agency’s assumption, however, ISL’s proposal included a work schedule indicating that the three ships essentially would be towed and dismantled simultaneously: the towing and dismantling of the ex-Saipan was to occur from May 6, 2009, to July 7, 2010; the towing the dismantling of the ex-Austin was to occur from June 3, 2009, to April 21, 2010; and the towing and dismantling of the ex-Fort Fisher was to occur from June 3, 2009, to July 7, 2010. AR, Tab 7, ISL Proposal, exh. 1, 3-Ship Work Schedule. Moreover, ISL’s schedule indicated that the towing of all three ships would occur before the point in time at which the Navy estimated that ISL would begin to realize returns on the sales of scrap from any ship.[5] Id. As computed by the Navy, the upfront costs for all three ships total $3,037,300, substantially higher than ISL’s $[DELETED] line of credit.

Further, in computing the dismantling costs that ISL would incur before realizing the sale of any scrap, the Navy utilized an average dismantling cost of $126 per ton. This figure was apparently derived by dividing the dismantling costs for the ex-Camden by its tonnage ($2,611,617 / 20,717 = $126).[6] ESCO Comments, July 10, 2009, exh. 2, ex-Camden Cost Report Summary, at 1. In fact, the $2,611,617 figure represented only the direct dismantling costs for the ex-Camden, and did not include the contractor’s costs for hazardous waste services, overhead, and general and administrative (G&A) expenses. Id.; Contracting Officer’s Statement, Aug. 28, 2009, at 3. (The agency does not dispute that ISL’s dismantling work for the three ships here would also include costs for hazardous waste services, overhead, and G&A expenses.) As the total dismantling costs for the ex-Camden were actually $5,240,792, ESCO Comments, July 10, 2009, exh. 2, ex-Camden Cost Report Summary, at 1, the average cost is $252 per ton ($5,240,792 / 20,717 = $252). Using this per ton figure, the upfront dismantling costs computed by the Navy as part of ISL’s cash-flow assessment were understated by a total of $567,980, thereby resulting in an adjusted total estimated upfront cost for all three ships of $3,605,280.

The record shows that the Navy’s decision to perform a cash-flow assessment was done “to ensure that ISL [was] financially responsible at the price they proposed.”[7] AR, Tab 13, Agency Evaluation Report, at 14. Responsibility is a contract formation term that refers to the ability of a prospective contractor to perform the contract for which it has submitted an offer; by law, a contracting officer must determine that an offeror is responsible before awarding it a contract. See 41 U.S.C. sect. 253b(c), (d); FAR sect. 9.103(a), (b); Advanced Tech. Sys., Inc., B-296493.6, Oct. 6, 2006, 2006 CPD para. 151 at 5. Consistent with this statutory and regulatory framework, once an offeror is determined to be responsible and is awarded a contract, there is no requirement that an agency make additional responsibility determinations during contract performance. Advanced Tech. Sys., Inc., supra. While there likewise exists no requirement that an agency conduct an additional responsibility determination when placing a task order under an ID/IQ contract, see FAR sect. 16.505, neither is an agency precluded from doing so, as the Navy chose to do here.

Since the determination of whether a particular contractor is responsible is largely a matter within the contracting officer’s discretion, our Office, as a general matter, will not consider a protest challenging an affirmative determination of responsibility, except under limited, specified circumstances--where it is alleged that definitive responsibility criteria in the solicitation were not met or evidence is identified that raises serious concerns that, in reaching a particular responsibility determination, the contracting officer unreasonably failed to consider available relevant information or otherwise violated statute or regulation. 4 C.F.R. sect. 21.5(c); Greenleaf Constr. Co., Inc., B-293105.18, B-293105.19, Jan. 17, 2006, 2006 CPD para. 19 at 13-14. This includes protests where, for example, the protester offers specific evidence that the contracting officer may have ignored information that, by its nature, would be expected to have a strong bearing on whether the awardee should be found responsible. Greenleaf Constr. Co., Inc., supra, at 14 (contracting officer ignored known information and instead based his determination of the awardee’s financial responsibility on information known to be inaccurate); Southwestern Bell Tel. Co., B-292476, Oct. 1, 2003, 2003 CPD para. 177 at 8-10 (contracting officer failed to consider serious, credible information regarding awardee’s record of integrity and business ethics in making his responsibility determination). We think the circumstances here warrant our review of the reasonableness of agency’s responsibility determination regarding ISL.

As set forth above, the Navy’s determination that ISL had sufficient financial resources to cover estimated upfront costs for all three ships was premised on the assumption that ISL would incur the estimated upfront costs sequentially (i.e., that ISL’s staggered start dates for each ship would result in the estimated upfront costs for each ship not occurring simultaneously). In making this assumption, the Navy ignored the information in ISL’s own proposal which clearly indicated that the offeror planned to tow and dismantle the three ships simultaneously, and would thereby incur the estimated upfront costs for each ship largely simultaneously. This erroneous assumption was key to the contracting officer’s affirmative responsibility determination. When it is corrected to account for ISL’s plan to service the ships simultaneously, it appears from the record that, using the Navy’s own method of calculation, ISL does not in fact have adequate financial resources to cover the estimated upfront costs of all three ships simultaneously. For example, ISL’s schedule indicates that the firm plans to tow all three ships before the point in time at which the Navy estimated that ISL would begin to realize returns on the sales of scrap from any ship. The towing expenses estimated by the Navy alone total $2,469,280, substantially more than the financial resources that the agency’s analysis deemed available to cover the estimated upfront costs (a $[DELETED] line of credit). In addition, the Navy’s analysis underestimated by half the upfront dismantling costs that ISL would occur for each ship. When corrected, at the point in time at which the Navy estimated that ISL would first begin to realize returns on the sales of scrap, the contractor would have total upfront costs of approximately $3,153,838--towing costs of $2,469,280 plus $684,558 in upfront dismantling costs for the ex-Saipan.

Subsequent to the filing of the ESCO protest, the Navy presented additional, new information that purportedly supports its financial responsibility determination of ISL--for example, that ISL would realize profits from its recent completion of another ship-dismantling contract. Contracting Officer’s Statement, Aug. 28, 2009, at 3. The record clearly reflects that the agency did not consider this information in its evaluation of ISL’s financial responsibility. To the extent the Navy now asserts that its conclusion regarding ISL’s financial responsibility should be based on this information, we give this post hoc justification little weight. See Boeing Sikorsky Aircraft Support, B-277263.2, B-277263.3, Sept. 29, 1997, 97-2 CPD para. 91 at 15.

In sum, we conclude that by ignoring what ISL actually proposed and instead basing his determination of financial responsibility on information contradictory to what the offeror has proposed, the contracting officer unreasonably failed to consider available relevant information and ignored information that, by its nature, would be expected to have a strong bearing on whether the awardee should be found responsible. As a result, we sustain the challenge to the affirmative responsibility determination.  (ESCO Marine, Inc., B-401438, September 4, 2009)  (pdf)


The Navy found that GDMA had not demonstrated that it would satisfy the licensing requirement for doing business in the Northern Mariana Islands and rejected GDMA's quotation. Award was made to Ambyth, and this protest followed.

GDMA contends that the Navy improperly rejected the firm's quotation where GDMA had relied upon the Navy's previous assurances that its business arrangement with [DELETED] would satisfy the licensing requirement. In this regard, GDMA argues that "a bidder is entitled to rely on interpretations provided by Government officials who lead the bidder to reasonably regard what they say as being authoritative." Comments at 9, citing, North Coast Elec. Co.--Recon., B-202208, Nov. 4, 1981, 81-2 CPD para. 382 at 4 GDMA argues that the Navy should have either amended the solicitation to notify offerors that the Navy's interpretation of the business license requirement had changed, or provided GDMA with an opportunity to modify its quotation.

We do not agree with GDMA that this protest concerns the agency's interpretation, or a change in its interpretation, of the solicitation. Here, the RFQ unambiguously required firms to satisfy licensing requirements to conduct business in the Northern Mariana Islands, see RFQ at 26‑27, and GDMA does not dispute that it is required to satisfy the business licensing requirements of the Northern Mariana Islands. Rather, GDMA's complaint concerns the application of this unambiguous requirement to GDMA's quoted relationship with [DELETED]. Although the Navy initially believed that GDMA's proposed business arrangement would satisfy the licensing requirement, the Navy did not--contrary to the protester's arguments--subsequently change its interpretation of the solicitation's requirement, rather it simply learned that GDMA's quoted business relationship was not acceptable to the government of the Northern Mariana Islands.

From our review of the record, we find reasonable the agency's rejection of GDMA's quotation where the agency was informed by an official of the Northern Mariana Islands that the firm's quoted business relationship would not satisfy the Island's business licensing requirements, and where GDMA did not otherwise show that the firm would satisfy the licensing requirements. Although the protester contends that the official in the Liaison Office of the Northern Mariana Islands, who rendered the judgment that GDMA's quoted business arrangement would not be acceptable, was not a lawyer or qualified to provide such an opinion, that official heads an office that, as noted above, is "the single point of contact and clearinghouse on all matters relative to the U.S. Military and Veterans Affairs in the [Northern Mariana Islands]." We find no merit to GDMA's argument that the Navy could not reasonably rely upon this judgment. Moreover, the record shows that, before rejecting the firm's quotation, the Navy informed GDMA that the Northern Mariana Islands did not accept the firm's quoted business relationship with [DELETED] and provided GDMA with a an opportunity to "fix" its quoted relationship to satisfy the licensing requirements.

We also do not agree with GDMA's apparent belief that the firm could simply rely upon the Navy's assurances that GDMA's quoted business relationship with [DELETED] would satisfy the licensing requirements of the Northern Mariana Islands. Whether or not the contractor satisfies the Island's business licensing requirements is a matter to be decided by the Northern Mariana Islands, and not ultimately by the Navy. Here, the Northern Mariana Islands, through its Liaison Office, stated that GDMA's quoted business relationship with [DELETED], as GDMA's agent, would not satisfy the Island's licensing requirements. Our authority to review the reasonableness of the Navy's reliance upon that judgment does not include reviewing the reasonableness of the judgment of the Northern Mariana Islands.  (Glenn Defense Marine-Asia PTE, Ltd., B-401480, August 17, 2009)  (pdf)


As noted above, the contracting officer rejected Melbourne’s offer on the ground that it was “nonresponsive” to the SFO requirements. Notwithstanding the contracting officer’s characterization, the requirement at issue concerns the offeror’s responsibility, not the technical acceptability of its offer. In this regard, as indicated by the heading under which the requirement was listed--“Evidence of Capability to Perform,” SFO para. 3.16--the requirement concerns the offeror’s ability to perform the contract, rather than the acceptability of its offer. Acquest Dev. LLC, B-287439, June 6, 2001, 2001 CPD para. 101 at 5; Tomasz/Shidler Inv. Corp., B-250855, B-250855.2, Feb. 23, 1993, 93-1 CPD para. 170 at 6. An offeror who is found nonresponsible is not eligible for award. FAR sect. 9.103; Specialty Marine, Inc., B-292053, May 19, 2003, 2003 CPD para. 106 at 3. We will not question an agency’s nonresponsibility determination unless the record shows that it lacks a reasonable basis. Aulson & Sky Co., B‑290159, May 21, 2002, 2002 CPD para. 87 at 5.

Here, Melbourne argues that it was unreasonable for GSA to reject its offer for failing to include the required commitment of funds letter given that it had furnished a commitment of funds letter in connection with a concurrent GSA procurement handled by the same contracting officer for the lease of space for the Internal Revenue Service (IRS). The protester argues that GSA should have recognized based on its submission of the commitment of funds letter for the IRS procurement that it had the financial capability to perform the contract here.

We disagree. The SFO here required evidence of at least a conditional commitment of funds in an amount necessary to prepare the space solicited--thus, clearly, the letter of commitment needed to demonstrate the conditional availability of funds for this project. The letter that Melbourne furnished in connection with the IRS procurement did not demonstrate the availability of funds for the SSA project--rather, it specified that the bank had approved a $2 million loan to finance the IRS Melbourne project. Thus, given that the firm failed to furnish the evidence required by the SFO regarding commitment of funds for the project at issue, we see no basis to question the agency’s decision to reject Melbourne’s offer.  (Melbourne Commerce, LLC, B-400049.2, January 9, 2009) (pdf)


It is well established that licensing-type requirements are matters of responsibility, not responsiveness. Victory Van Corp.; Columbia Van Lines, Inc., B-180419, Apr. 8, 1974, 74-1 CPD para. 178 at 2. We have held that a solicitation requiring a bidder to obtain a specific license or permit concerns the bidder’s responsibility (i.e., its ability to perform), rather than bid responsiveness (i.e., its promise to perform). See Midwest Sec. Agency, Inc., B-222424, Apr. 7, 1986, 86-1 CPD para. 345 at 2 (evidence of having appropriate security guard licenses or of having applied for them is matter concerning responsibility); Carolina Waste Sys., Inc., B-215689.3, Jan. 7, 1985, 85‑1 CPD para. 22 at 2 (evidence of state certification of a waste disposal site is a matter of responsibility). Much like a license or permit, a solicitation term requiring submission of information to a responsible third-party agency (i.e., not the procuring agency) for approval prior to contract performance is also a matter of responsibility. See Astro-Med, Inc., B-232633, Dec. 22, 1988, 88-2 CPD para. 619 at 3 (solicitation requiring Food and Drug Administration approval to become a registered supplier of medical devices prior to performance pertains to responsibility). Here, by signing the DUA and including it in its bid submission to GPO, the bidder is merely indicating a readiness to apply for approval from CMS to use CMS data; approval itself can be given at any time prior to data disclosure. Thus, we find the DUA requirement goes only to the bidder’s ability to perform (i.e., the bidder’s responsibility) and that SourceLink should have been provided a reasonable opportunity to provide a completed DUA prior to award. Therefore, GPO’s rejection of SourceLink’s bid as nonresponsive was improper. (SourceLink Ohio, LLC, B-299258, March 12, 2007) (pdf)


GAO will not consider protests challenging affirmative determinations of responsibility except under limited, specified circumstances--where it is alleged that definitive responsibility criteria in the solicitation were not met or evidence is identified that raises serious concerns that, in reaching a particular responsibility determination, the contracting officer unreasonably failed to consider available relevant information or otherwise violated statute or regulation. Bid Protest Regulations, 4 C.F.R. sect. 21.5(c) (2006); American Printing House for the Blind, Inc., B-298011, May 15, 2006, 2006 CPD para. 83 at 5-6; Government Contracts Consultants, B-294335, Sept. 22, 2004, 2004 CPD para. 202 at 2. This includes protests where, for example, the protest includes specific evidence that the contracting officer may have ignored information that, by its nature, would be expected to have a strong bearing on whether the awardee should be found responsible. Universal Marine & Indus. Servs., Inc., B-292964, Dec. 23, 2003, 2004 CPD para. 7 at 2; Verestar Gov’t Servs. Group, B-291854, B-291854.2, Apr. 3, 2003, 2003 CPD para. 68 at 4. Here, Alutiiq has not alleged that definitive responsibility criteria were not met and, as detailed below, its only evidence that the contracting officer failed to consider available relevant evidence in determining the awardees responsible is the speculation that TW, Chenega SPS, and Doyon did not price their proposals independently. This is not, in our view, a proffer of evidence sufficient to raise serious concerns that the contracting officer ignored relevant information in making her responsibility determinations. The record indicates that the contracting officer inquired into Doyon’s and Santa Fe’s reliance on CIS and gave reasonable consideration to the information the protester contends she failed to review. See Triple H Servs., B-298248, B-298248.2, Aug. 1, 2006, 2006 CPD para. 115 at 3. Likewise, with respect to Chenega SPS and TW, the contracting officer reasonably considered the information the protester contends she failed to review; accordingly, there simply is no evidence showing that the contracting officer ignored the information on which the protester bases its challenge to the affirmative determinations of responsibility. Moreover, the facts relied on by the protester here--that Doyon and Santa Fe had a common subcontractor, and that Chenega SPS and Chenega IS (TW’s subcontractor) have common corporate ownership--do not constitute information that would be expected to have a strong bearing on whether the awardees should be found responsible, as required to trigger our review under 4 C.F.R. sect. 21.5(c). Universal Marine & Indus. Servs., Inc., supra; Verestar Gov’t Servs. Group, supra. In this regard, the requirement that competing concerns prepare their offers independently and without consultation with each other does not preclude competitors from proposing common subcontractors. McCombs Fleet Servs., B-278330, Jan. 16, 1998, 98-1 CPD para. 24 at 4; Ross Aviation, Inc., B-236952, Jan. 22, 1990, 90-1 CPD para. 83 at 2-3. Alutiiq has presented no evidence, beyond its mere speculation, that Doyon’s and Santa Fe’s reliance on CIS for various technical aspects of their proposals must have also resulted in the offerors exchanging price information, and we will not assume that this was the case. Ross Aviation, Inc., supra, at 3. Similarly, with respect to Chenega SPS and TW, it is important to note that there are two different Chenegas involved here--Chenega SPS, which was an offeror, and Chenega IS, which TW proposed as its subcontractor--that are “sister subsidiaries” of the same parent corporation, Chenega Corporation. The fact that two offerors, or an offeror and a second offeror’s subcontractor, have common corporate ownership is not by itself sufficient to establish that the offerors failed to price their proposals independently, and where, as here, a protester presents no other evidence, beyond mere speculation, showing that competitors did not arrive at their prices independently, we will not assume otherwise. See McCombs Fleet Servs., supra, at 4. (Alutiiq Global Solutions, B-299088; B-299088.2, February 6, 2007) (pdf)


The nonresponsibility determination here was reasonable. The record shows that, at the time the CO made her determination, Gray had performed late on 7 of 215 orders for the previous 3 months, for a 3 percent delinquency rate. While, as the protester notes, this is not a large number in absolute terms, the agency took a practical view of the delinquencies; it notes that, had the protester been performing the GAO contract during the previous year--in which there were 337 orders--its delinquency rate would have resulted in 11 late orders. Agency Report (AR), Tab 2, Denial of Agency-Level Protest, at 2. Moreover, the agency was concerned that Grays performance history demonstrated a recent upward trend in late deliveries. AR, Tab6, Findings and Determination. In this regard, of the recent late jobs, Gray was late on 2 of 70 jobs, or 3 percent, in July, 4 of 75 jobs, or 5 percent, in September, and 1 of 10 jobs, or 10 percent, for the first half of October. AR, Tab 5. Considering that GAO Bluebooks are time critical in nature, with an extremely tight schedule with a 2 to 3 day turnaround, the agency determined that Grays recent record of delinquencies brought its ability to timely perform all jobs under this contract into question. AR, Tab 6, Findings and Determination. We find no basis for objecting to this determination. Gray alleges that McDonalds delinquency rate was similar to its own, and concludes that the agency unfairly applied a different, more stringent standard in assessing Grays responsibility. This argument is without merit. While the awardee indeed had a recent record of delinquencies similar to Grays, the agency considered McDonalds perfect record of timely performance as the incumbent GAO Bluebook contractor to be more probative of its ability to perform the new contract than its performance of other, unrelated contracts. We find nothing unreasonable in the agenc'ys according determinative weight to McDonalds performance of the same requirement as that under the IFB. Neither did this constitute application of a different standard; rather, the different responsibility determinations resulted from the fact that the two firms were not similarly situated with regard to past performance.  (Gray Graphics Corporation, B-295421, February 18, 2005) (pdf)


As explained below, however, information regarding the awardees ability to obtain the license is not the type of information that would be expected to have a strong bearing on the awardees responsibility here, so that any contention that the agency failed to consider such information is not sufficient to trigger review by our Office of the agency's responsibility determination. As a general matter, under North Carolina law, a general contractors license is required for the construction of any building, highway, public utilities, grading or any improvement or structure, where the cost of the undertaking is thirty thousand dollars ($30,000) or more . . . N.C. Gen. Stat. 87-1 (2004). Here, the agency maintains that the RFP's requirements are primarily for facility maintenance services, not construction. Specifically, according to the agency, only one area out of the 21 areas described in the statement of work could potentially involve construction work. While Transcontinental asserts generally that the majority of the employees and the value of the work orders are primarily construction in nature, the protester does not explain how, or what part of, the work qualifies as construction under North Carolina law, Protesters Comments at 2-3, and the requirements, on their face, do not suggest that construction work will be required to any significant extent, if at all. In fact, the term construction is not used to describe any of the required services under the RFP; rather, virtually all of the requirements are described as repair, inspection, or maintenance activities. Responsibility ultimately concerns the contracting officers judgment as to a firms ability to perform the work and whether the firm has sufficient integrity for the government to rely on its representations and agreement to perform. See generally FAR subpart 9.1. Because the work under the RFP was not primarily for construction--rather, construction appears to be encompassed, if at all, under only one of the 21 requirements set forth in the RFP it is reasonable to regard the license requirement, as argued by the agency, as having little bearing on Call Henrys ability to perform the required work. As a result, the protesters contention that the agency failed to consider information regarding the awardees ability to obtain the license does not satisfy the threshold requirement for our review of the agency's responsibility determination under 4 C.F.R. 21.5(c). (Transcontinental Enterprises, Inc., B-294765, November 30, 2004) (pdf)


We find that the CO's negative determination of Daisung's responsibility was reasonable. The CO based his determination on the findings from the detailed, yearlong AAA and CID investigations, including, for example, sworn statements by the AAA auditors, dated February 10 and 18, 2004, interviews with Daisung repair shop personnel, dated May 13 and 14, 2003, an interview with the president of Daisung, affirmed by him as true on November 4, 2003, and photographs taken during the unscheduled visit to the Daisung facility. AR, Tab 5, Final CID Report, exhs. 8, 12, 14, and 2G. We have reviewed these documents, and find they contain information from which the CO reasonably could conclude that Daisung's conduct under its recent contract raises serious doubt as to the company's integrity. Specifically, as noted above, the investigators found that Daisung, among other things, did not properly renovate mattresses by inspecting and replacing worn filling with new filling, improperly switched mattress covers, and improperly billed at the higher price work performed on the lower-priced mattresses. Additionally, the record contains more than one statement by Daisung representatives confirming that Daisung employees replaced the blue-striped mattress covers with the more expensive flowered covers. AR, Tab 5, Final CID Report, exh. 2G, Interviews with Repair Shop Personnel, at 4, 9. For example, when one Daisung representative was asked what happened to the "old, blue and white striped mattresses that the units turn in," the auditors reported that he responded, "the mattress contractor takes and renovates them into the yellow-flowered kind ...." AR, Tab 5, Final CID Report, exh.2G, at 4. CID report information such as this properly may be used as the basis for a nonresponsibility determination, without the need for the contracting officer to conduct an independent investigation to substantiate the accuracy of the report. Energy Mgmt. Corp. , B-234727, July 12, 1989, 89-2 CPD 38 at 4; Becker and Schwindenhammer, GmbH , B-225396, Mar. 2, 1987, 87-1 CPD 235 at 4. The contracting officer's determination was reasonable given the information provided by AAA and CID. (Daisung Company, B-294142, August 20, 2004) (pdf)


Our Office generally will not consider a protest challenging an affirmative determination of responsibility, except under limited exceptions, because the determination that a particular contractor is capable of performing a contract is largely committed to the contracting officer’s (CO) discretion. 4 C.F.R. § 21.5(c) (2004). We recently revised our Regulations in this regard to add as a specified exception protests “that identify evidence raising serious concerns that, in reaching a particular responsibility determination, the [CO] unreasonably failed to consider available relevant information or otherwise violated statute or regulation.” Id. We explained in the preamble to the revision that it was “intended to encompass protests where, for example, the protest includes specific evidence that the contracting officer may have ignored information that, by its nature, would be expected to have a strong bearing on whether the awardee should be found responsible. 67 Fed. Reg. 79,833, 79,834 (2002); see Verestar Gov’t Servs. Group, B‑291854, B-291854.2, Apr. 3, 2003, 2003 CPD ¶ 68 at 4. The record shows that the Corps was aware of most of the evidence about the connection between these companies by the time it decided to award to Compton. For example, the cover of the Corps’s preaward survey indicates that Mike Pence is Compton’s point of contact. In addition the survey indicates that Mike Pence was a co-founder and principal of Compton since its founding in 1992, and that for over 25 years he has been an officer of the Pence Company. Finally, the preaward survey recognized that principals of Compton were involved in other Corps construction projects, and the record shows that their involvement was while working for the Pence Company; in fact, the preaward survey drew favorable conclusions about the earlier involvement of Compton’s principals in these projects. AR, Tab 6, at 4. The record also shows that the Corps verified that Compton was listed on SBA’s website listing small businesses eligible to represent themselves as HUBZone concerns. Although the Corps might not have recognized that the telephone and fax numbers listed on the website were Mr. Compton’s home telephone, and the fax machine at the Pence Company, the e‑mail address identified on that website was, as indicated earlier, hwpence@infi.net. In sum, while the record shows that Compton was, and is, closely affiliated with the Pence Company, we see no evidence that Compton was hiding its affiliation with the Pence Company, or that the Corps was unaware of that affiliation, or failed to give it reasonable consideration in the responsibility determination. See Universal Marine & Indus. Servs., Inc. , B-292964, Dec. 23, 2003, 2004 CPD ¶ 7 at 4. (Wild Building Contractors, Inc., B-293829, June 17, 2004) (pdf)


In this regard, the record shows that prior to issuing the purchase order to CMC as the apparent successful vendor, the agency contacted the firm to confirm its understanding of the RFQ’s requirements, particularly regarding replacement parts, sanding, refinishing, reupholstering, laminating, and painting, as well as the required timelines for the work. Contracting Officer’s Statement of Facts at 3. Further, the record shows that the contracting officer noted that CMC’s web site did not mention specific furniture refinishing work. She also noted, however, that it showed that the firm does business in a wide variety of fields, including supplying institutional interior products and services involving furniture and furnishings, food service equipment, construction services and marine products. The firm’s web site also demonstrated that much of its business involved CMC’s representation of specialized firms performing various contract requirements. The contracting officer reasoned that, as an experienced prime contractor, CMC would likely be able to obtain additional technical capability by subcontracting a substantial amount of the work in accordance with the RFQ’s allowance to do so. Moreover, CMC confirmed for the contracting officer that it had recently performed furniture refinishing work for the Department of the Navy aboard vessels in port. Noting CMC’s receipt of government contracts, and the fact that the firm holds an FSS contract (although not for furniture refinishing services), the contracting officer also recognized that other government agencies had affirmatively determined the firm to be responsible. Given all of the supporting information available to the contracting officer, it is clear from the record that not only did the contracting officer indeed consider the information TRT argues was ignored, but that its significance was reasonably considered in conjunction with the overall information she obtained supporting the firm’s responsibility. (The Refinishing Touch, B-293562; B-293562.2; B-293562.3, April 15, 2004) (pdf)


The extent to which the contracting officer was aware of the allegations against Adelphia’s principals and parent company is neither documented in the record nor explained by the agency. Nevertheless, we believe that the contracting officer’s general recognition that there were allegations of misconduct concerning Adelphia is not alone sufficient to establish that the contracting officer reasonably assessed the awardee’s record of integrity and business ethics. In fact, the contracting officer’s statements in response to the protester’s comments suggest that he may not have known relevant facts concerning Adelphia’s integrity and business ethics. That is, the contracting officer appears to argue that members of the Rigas family could not have any influence over Adelphia because these family members had resigned their positions as corporate officers and that “their status as stockholders was and is basically irrelevant.” Contracting Officer’s Affidavit at 2. However, significant evidence has been presented by the protester to show that Rigas family members continued (and continue today) to own a controlling interest in Adelphia due to their majority ownership of class B (voting interest) stock. Moreover, the record supports the protester’s assertion that some amount of “debtor-in-possession” financing has been provided to the awardee by Adephia Communications Corporation, the entity charged by the SEC with fraudulent conduct. Despite the apparent relevance of the potential control and influence of these Rigas family members and of Adelphia Communications Corporation, the record establishes that the contracting officer did not consider the extent of the Rigas family members’ stock ownership in Adelphia, and what influence or control over the awardee this ownership interest accorded them. Also, the record indicates that the contracting officer did not consider, nor was he apparently aware of, the relationship between the awardee and Adelphia Business Solutions (doing business as TelCove).

Based upon this record, we find that the contracting officer simply assumed that Adelphia had an adequate record of integrity and business ethics. This assumption appears to have been based upon the award recommendation of the pre-award survey, which did not address in any way Adelphia’s integrity or business ethics. In any event, the record does not establish that the contracting officer obtained sufficient information to decide, or for that matter even considered, Adelphia’s record of integrity and business ethics. In the absence of any consideration of the involvement, control or influence of the indicted Rigas family members and Adelphia Communications Corporation in the awardee, the contracting officer’s statements of general awareness of alleged misconduct on the part of the Rigas family members and Adelphia Communications Corporation is not sufficient to show that the contracting officer’s affirmative determination of responsibility is reasonable. Compare Impresa Construzioni Geom. Domenico Garufi v. United States, 52 Fed. Cl. 421, 428 (2002) (agency failed to reasonably consider questions concerning an awardee’s integrity and business ethics) with Verestar Gov’t Servs. Group, supra (agency specifically and reasonably considered questions concerning the awardee’s integrity and business ethics in making its responsibility determination). (Southwestern Bell Telephone Company, B-292476, October 1, 2003) (pdf)


In sum, the record establishes that the contracting officer had before him the adverse information that Verestar asserts he failed to consider. More important, the record is also clear that the contracting officer specifically considered the significance of this information in conjunction with other information that he obtained and which he viewed as ameliorating the concerns and risks that had been raised, whereupon the contracting officer made the considered affirmative determination that WorldCom was responsible and could perform. Accordingly, in light of the developed record, the protest does not raise a serious concern that the contracting officer unreasonably failed to consider relevant information or otherwise violated statute or regulation.  (Verestar Government Services Group, B-291854; B-291854.2, April 3, 2003)  (pdf)


Here, it is beyond dispute that the contracting officer had a reasonable basis to find XO nonresponsible prior to the bankruptcy filing. The only new element to which XO points with respect to the bankruptcy filing is the stand-alone plan. This was an alternative, fallback plan to the long promised and long-delayed Forstmann and TELMEX plan, a plan which the contracting officer, in his nonresponsibility determination, had reasonably concluded was unlikely to succeed. Further, the fallback stand-alone plan on its face depends on a series of uncertain contingencies and approvals. In this regard, it is noteworthy that to date, nearly four months after the filing, XO's bankruptcy reorganization plan has not yet been approved. In our view, the contracting officer was not obligated to parse the financial minutiae of XO's fallback bankruptcy restructuring plan as part of his nonresponsibility determination. On the contrary, where the record reflects that the contracting officer is cognizant of the alleged effects of a proposed reorganization plan and does not reference them as part of his nonresponsibility determination, we view this as merely indicating that the contracting officer gives the plan little weight. Harvard Interiors Mfg. Co., supra, at 6. Further, where, as here, the court has not yet given approval to the plan, and there is no indication of when, or if, the court would approve any of the proposed reorganization plans, the agency may reasonably give little or no weight to the proposed plan and to any associated favorable financial projections by the offeror. Id. Accordingly, the bankruptcy filing including the alternative stand-alone fallback restructuring plan provides no basis to call into question the reasonableness of the contracting officer's nonresponsibility determination.  (XO Communications, Inc., B-290981, October 22, 2002)


While the mere fact that a bidder files a petition in bankruptcy under Chapter 11 of the Bankruptcy Act does not require a finding of nonresponsibility, bankruptcy may nevertheless be considered as a factor in determining that a particular bidder is nonresponsible. Wallace & Wallace, Inc.; Wallace & Wallace Fuel Oil, Inc.--Recon., B-209859.2, B-209860.2, July 29, 1983, 83-2 CPD ¶ 142 at 5. Indeed, while not required, a contracting officer may reasonably view bankruptcy as something other than a favorable development. Id. at 5, n.1; see Harvard Interiors Mfg. Co., supra, at 6 (proposed reorganization plan that is unapproved at the time of award, and financial projections based on the plan, do not necessitate an affirmative responsibility determination). The risks to the government arising from the firm’s bankruptcy proceedings were a significant part of the contracting officer’s stated justification for her nonresponsibility determination. The protester has not shown that these risks were not significant or that the agency’s consideration of the risks associated with the protester’s bankruptcy proceedings was unreasonable.  (Global Crossing Telecommunications, Inc., B-288413.6; B-288413.10, June 17, 2002 (pdf))


In making a responsibility determination, a contracting officer is vested with a wide degree of discretion and, of necessity, must rely upon his or her business judgment in exercising that discretion. See Blocacor, LDA, B-282122.3, Aug. 2, 1999, 99-2 CPD ¶ 25 at 4. We generally will not question a negative determination of responsibility unless the protester can demonstrate a lack of any reasonable basis for the contracting officer’s determination. Id. Here, Aulson has failed to make the required showing.   (Aulson & Sky Company, B-209159, May 21, 2002  (pdf))


Matters of an offeror’s integrity, such as involvement in criminal activities, generally concern the offeror’s responsibility.  Federal Acquisition Regulation (FAR) § 9.104-1(d); see Coast Waste Mgmt., Inc., B-251167.3, June 10, 1993, 93-1 CPD ¶ 460 at 4. However, in a negotiated procurement, an agency generally may incorporate traditional responsibility criteria as technical evaluation criteria, and then evaluate proposals under that criterion according to the rules established for technical evaluations. McLaughlin Research Corp., B-247118, May 5, 1992, 92-1 CPD ¶ 422 at 4. The question here, then, is whether the nulla osta statement requirement was converted into a technical evaluation matter that warranted rejecting Lotos’s proposal as unacceptable. There is nothing in the RFP indicating that the agency intended to convert the nulla osta statement into a matter of technical acceptability. Rather, it is fairly clear from the RFP that the agency viewed the entire CCIAA certification as a responsibility matter.  (A.I.A. Costruzioni S.P.A., B-289870, April 24, 2002) (pdf)


Standard asserts that it was improper for the agency to base its nonresponsibility determination on Standard's performance on contract Nos. 0621-S and 477-716, because neither of these contracts concerned performance at its Kirksville facility. In this regard, according to Standard, GPO has traditionally determined a bidder's responsibility based on its performance at the offered production facility. This argument is without merit. First, since past practice lacks the force and effect of law, GPO was not bound by its alleged prior approach to determining responsibility. See BMY, Div. of Harsco Corp., B-233081, B-233081.2, Jan. 24, 1989, 89-1 CPD para. 67 at 6 (internal agency policy not binding on agency because it lack force and effect of law). There is no other reason why the agency could not consider Standard's past performance at facilities other than that proposed for this contract. Considering such past performance information is not precluded by GPO's Printing Procurement Regulation (PPR) (see Ch. 1, sect. 5, para. 5(2), (4)), and it obviously is well within an agency's discretion to consider any relevant past performance information in determining a firm's responsibility. While performance at the same facility well may be the most relevant kind of past performance information, the manner in which a firm has carried out its contractual obligations at other facilities also is relevant to predicting whether it will satisfactorily perform the new contract.  See BMY, Div. of Harsco Corp., supra (contracting officer properly considered delinquent contract performance at different facility in finding firm nonresponsible).  (The Standard Register Company, B-289579, March 5, 2002).  


In this regard, although EPA previously determined that Laucks lacked the technical capability to meet the IFB requirements and thus was not responsible, after reopening the IFB to make additional awards, it found that Laucks now has the technical capability to meet the IFB requirements and thus is responsible. An agency can and should reverse a previous nonresponsibility determination based on additional information brought to its attention prior to award. Henry Spen & Co., Inc., B-183164, Jan. 27, 1976, 76-1 CPD para. 46 at 4.  (American Technical & Analytical Services, Inc., B-282277.5, May 31, 2000)


In making a responsibility determination, a contracting officer is vested with a wide degree of discretion and, of necessity, must rely upon his or her business judgment in exercising that discretion. Although the determination must be factually supported and made in good faith, the ultimate decision appropriately is left to the agency since it must bear the effects of any difficulties experienced in obtaining the required performance. For these reasons, we generally will not question a negative determination of responsibility unless the protester can demonstrate bad faith on the part of the agency, or a lack of any reasonable basis for the contracting officer's determination. Miklin Corp., B-236746.2, Jan. 19, 1990, 90-1 CPD para. 72 at 1-2, recon. denied, B-236746.3, June 8, 1990, 90-1 CPD para. 540. Here, since the protester has not alleged bad faith on the part of the agency, the only issue for our consideration is whether the contracting officer reasonably found Blocacor nonresponsible based on its performance under the earlier contract for asbestos abatement.  (Blocacor, LDA, B-282122.3, August 2, 1999)

Comptroller General - Listing of Decisions

For the Government For the Protester
New SaxmanOne, LLC B-414748, B-414748.3: Aug 22, 2017 Engility Corporation B-413202, B-413202.2: Sep 2, 2016
Bunzl Distribution California, LLC B-412475.4: Oct 21, 2016 MANCON, B-405663, Feb 9, 2012  (pdf)
Robert F. Hyland & Sons, LLC B-411726: Sep 22, 2015  (pdf) ESCO Marine, Inc., B-401438, September 4, 2009  (pdf)
United Capital Investments Group, B-410284: Nov 18, 2014  (pdf) SourceLink Ohio, LLC, B-299258, March 12, 2007 (pdf)
Aria Target Logistics Services, B-408308.23: Aug 22, 2014  (pdf) Southwestern Bell Telephone Company, B-292476, October 1, 2003 (pdf)
B&B Medical Services, Inc., B-407113.3, B-407113.4, Jun 24, 2013  (pdf)  
Colonial Press International, Inc. B-408031, B-408055, May 6, 2013  (pdf)  
Supreme Foodservice GmbH, B-405400.6, B-405400.7, Mar 27, 2013  (pdf)  
USS Chartering, LLC, B-407601, Jan 15, 2013  (pdf)  
Pernix-Serka LP, B-407656,B-407656.2, Jan 18, 2013  (pdf)  
Coastal Environmental Group, Inc., B-407563, B-407563.3, B-407563.4, Jan 14, 2013  (pdf)  
Orion Technology, Inc., B-405970, Jan 13, 2012  (pdf)  
Active Deployment Systems, Inc., B-404875, May 25, 2011  (pdf)  
M. Erdal Kamisli Co. Ltd. (ERKA Co., Ltd.), B-403909.2; B-403909.4, February 14, 2011  (pdf)  
Bilfinger Berger AG Sede Secondaria Italiana, B-402496, May 13, 2010  (pdf)  
Light-Pod, Inc., B-401739; B-401739.2, November 12, 2009 (pdf)  
Glenn Defense Marine-Asia PTE, Ltd., B-401480, August 17, 2009  (pdf)  
Melbourne Commerce, LLC, B-400049.2, January 9, 2009 (pdf)  
Alutiiq Global Solutions, B-299088; B-299088.2, February 6, 2007 (pdf)  
Gray Graphics Corporation, B-295421, February 18, 2005 (pdf)  
Transcontinental Enterprises, Inc., B-294765, November 30, 2004 (pdf)  
Daisung Company, B-294142, August 20, 2004 (pdf)  
Wild Building Contractors, Inc., B-293829, June 17, 2004 (pdf)  
The Refinishing Touch, B-293562; B-293562.2; B-293562.3, April 15, 2004) (pdf)  
Universal Marine & Industrial Services, Inc., B-292964, December 23, 2003  
Kilgore Flares Company, B-292944; B-292944.2; B-292944.3, December 24, 2003  
Verestar Government Services Group, B-291854; B-291854.2, April 3, 2003  (pdf)  
XO Communications, Inc., B-290981, October 22, 2002  
Global Crossing Telecommunications, Inc., B-288413.6; B-288413.10, June 17, 2002  (pdf)  
Aulson & Sky Company, B-209159, May 21, 2002  (pdf)  
A.I.A. Costruzioni S.P.A., B-289870, April 24, 2002  
The Standard Register Company, B-289579, March 5, 2002  (Pdf Version)  
Downtown Legal Copies, B-289432, January 7, 2002  
Baldt Inc., B-288315, August 28, 2001  
KIRA Inc., B-287573; B-287573.2; B-287573.3, July 23, 2001  
Acquest Development LLC, B-287439, June 6, 2001 (pdf)  
IPI Graphics, B-286830; B-286838, January 9, 2001  
American Technical & Analytical Services, Inc., B-282277.5, May 31, 2000  
Calian Technology (US) Ltd., B-284814, May 22, 2000  
Blocacor, LDA, B-282122.3, August 2, 1999  

U. S. Court of Federal Claims - Key Excerpts

New 2. The Government’s Response And Cross-Motion For Judgment On The Administrative Record.

In the March 9, 2017 Cross-Motion For Judgment On The Administrative Record, the Government argues that the CO’s decision to award the contract to Flynn Jensen was supported by the administrative record, because the Solicitation did not require offerors to submit permit or license information as part of their proposals. Gov’t Mot. at 10–11. In addition, an agency is required to evaluate proposals using only stated evaluation criteria, so it would have been a violation of the law for the CO to deem Flynn Jensen as not “responsible,” based on unstated criteria regarding licenses and permits. Gov’t Mot. at 11 (citing NEQ, LLC v. United States, 88 Fed. Cl. 38, 47 (2009) (“[T]he Competition in Contracting Act . . . indicates that an agency shall evaluate competitive proposals and assess their qualities based solely on the factors and subfactors specified in the solicitation.”)).

Although Vintage cites language in the Statement of Work requiring that “[t]he contractor shall provide evidence that it has complied with all laws and ordinances associated with vehicle storage,” nothing therein supports the argument that this was a pre-award requirement. Gov’t Mot. at 12 (quoting AR Tab 14, at 79). Instead, the Statement of Work set forth requirements that governed contract performance, after an award of the contract was made. Gov’t Mot. at 12. This is confirmed by the Statement of Work, that provides:

The contractor, including the contractor’s facility, shall be fully equipped and ready to begin performance within 30 days of the award date. Upon approval by the [CO’s Representative], the contractor has 15 calendar days to tow all vehicles . . . to the proposed storage facility.

AR Tab 14, at 76 (emphasis added).

Therefore, whether Flynn Jensen obtained the required permits is a matter of “contract administration,” that exceeds the United States Court of Federal Claims’ bid protest jurisdiction. Gov’t Mot at 12; see also Control Data Sys. v. United States, 32 Fed. Cl. 520, 524 (1994) (“Once a contract has been awarded, the administration of the existing contract is within the discretion of the agency and disputes are resolved . . . under the contract disputes clause and the Contract Disputes Act.”). In addition, to the extent that Vintage argues that the CO should have known about the importance of permits based upon prior solicitations, those procurements are not part of the administrative record in this case. Gov’t Mot. at 13.

The Government adds that COs are afforded “wide discretion” to make responsibility determinations. Gov’t Mot. at 15 (quoting Impresa, 238 F.3d at 1334–35). In addition, the “contracting officer is the arbiter of what, and how much, information he needs.” Gov’t Mot. at 16 (quoting John C. Grimberg Co. v. United States, 185 F.3d 1297, 1303 (Fed. Cir. 1999)). And, a CO’s responsibility determination is entitled to a “presumption of regularity.” Gov’t Mot. at 16 (citing Southern Foods, Inc. v. United States, 76 Fed. Cl. 769, 782 (2007)).

Therefore, Vintage has not met its burden to identify record evidence showing error in the CO’s responsibility determination. Gov’t Mot. at 17. Instead, Vintage “does no more than simply disagree” with the USMS CO’s finding that Flynn Jensen was a responsible contractor. Gov’t Mot. at 18. In addition, Vintage misunderstands the requirements of the Solicitation. Gov’t Mot. at 19. None of the seven responsibility requirements, 6 identified in FAR 9.104-1, requires consideration of permits. Gov’t Mot. at 19. Although FAR 52.236-7 requires that contractors must obtain necessary permits, this requirement concerns contract performance, and “has nothing to do with a responsibility determination.” Gov’t Mot at 19–20.

For these reasons, Vintage is not entitled to injunctive relief. Gov’t Mot at 22–24.  (Vintage Autoworks, Inc. v. U. S., No. 17-123, May 18, 2017)


A. The CO’s Responsibility Determination is not Supported by the Record.

It is well-settled that a contract may be awarded to only responsible offerors. 48 C.F.R. § 9.103(a); see Bender Shipbuilding, 297 F.3d at 1361. Thus, before awarding any contract, the CO must “make[] an affirmative determination of responsibility.” Bender Shipbuilding, 297 F.3d at 1361 (quoting 48 C.F.R. § 9.103(b)). The fact that Colt  was in bankruptcy is not determinative in this case. As Remington acknowledges, the Federal Circuit found in Bender Shipbuilding that the pendency of a bankruptcy proceeding does not preclude a responsibility finding. Remington argues, however, that this case is distinguishable from others where the responsibility determination was upheld, primarily because at the time the responsibility determination was made it was not certain whether Colt would be reorganized, sold, or even liquidated. Colt’s lease arrangement, and thus production capability, was also uncertain. Remington argues that the CO failed to adequately address how Colt could be responsible in such circumstance. Remington concludes that the CO therefore had no rational basis for concluding that Colt could perform the contract.

The government and Colt argue that the CO carefully considered Colt’s financial status and did not ignore negative information and that the CO rationally determined based on the information she received from Colt’s management and from the bankruptcy filings that Colt was financially capable and would have access to the facilities it needed to perform the contract.

For the reasons that follow, the court finds that the CO’s finding that Colt had the necessary production capability to perform the contract at the time she made her responsibility determination is not supported by the record. First, the court finds that the CO’s stated reasons for disregarding the DCMA report were insufficient in light of the bankruptcy court record before the CO. The CO stated that the DCMA report was based on old information, and that she had discussed Colt’s current situation with Colt’s management. See AR 3614. In explaining why she diverged from the DCMA report management. See AR 3614. In explaining why she diverged from the DCMA report, the CO noted that “Colt’s financial status is now being closely monitored by the Bankruptcy Court.” Id. But the fact that Colt’s status was monitored does not mean that the bankruptcy court would or could ensure Colt’s continued viability, which the record in the bankruptcy court demonstrates was highly in doubt at the time of the responsibility determination. Nor does the CO explain how any more recent data would have altered the DCMA’s conclusion based upon supposedly out of date information.

During the CO’s September 10, 2015 call with Colt’s management, Colt represented to the CO that it was “very close” to reaching agreement on a restructuring plan that would allow it to exit bankruptcy. AR 3613. Colt cautioned that such a deal would have to be consummated by September 30, 2015. Id. The CO signed the responsibility determination on September 23, 2015, thirteen days after that telephone conversation. AR 3620. By this time, the deadline for finding a 363 buyer had expired, no buyer had come forward, and no restructuring deal was in place. See Pl.’s App’x A2219; A2517.10 Indeed, at that time the parties to the bankruptcy case were embroiled in litigation. Id. at A2301-A2327. The CO states that she reviewed all of the filings in the Bankruptcy Case. Dyda Decl. ¶ 3.a. Thus, she knew, or should have known, that the bankruptcy outcome was uncertain. In light of these facts, the court finds that it was not reasonable for the CO to rely only on Colt’s representations to support her conclusion that Colt was financially able to perform the contract. The self-serving comments from Colt’s own employees were not consistent with the facts identified in the bankruptcy court records.

In addition, and equally importantly, the CO’s conclusions regarding Colt’s ability to manufacture M4s at its West Hartford facility are also unsupported. The lease on the Hartford facility was unresolved and the subject of litigation at the time she issued her responsibility determination. Though Colt informed the CO that it intended to stay in the facility, the bankruptcy record shows that that decision did not appear to be within Colt’s control. The CO’s determination did not mention the fact that Colt’s creditors had accused Colt's landlord of using control over the West Hartford Facility as a means of maximizing its claims in the bankruptcy case and that Colt’s ability to stay at the facility was uncertain. See Pl.’s App’x A1652-53.

It is for these reasons that the government and Colt’s reliance on Bender Shipbuilding to support their contention that Colt's bankruptcy did not bar a responsibility finding is misplaced. The facts of this case differ sharply from Bender Shipbuilding, in which the Federal Circuit found that the CO’s responsibility determination was based on ample evidence in the record to show that the company was financially able to perform. In Bender Shipbuilding, the CO relied upon a DCMA report finding that the awardee “has satisfactorily demonstrated the requisite financial capabilities necessary for performance.” Bender Shipbuilding, 297 F.3d at 1361. The CO also considered the fact that the awardee’s parent company had guaranteed the awardee’s performance, and reports and surveys stating that the awardee would acquire the necessary capital from the parent company’s sale of another subsidiary. Id. at 1362. In this case, Colt could not give the CO any comparable assurances. Instead, the CO relied on Colt’s stated expectations of how and when the bankruptcy proceedings would be resolved without undertaking an investigation into the reasonableness of those expectations. Under these circumstances, the court finds that the CO’s decision to take Colt’s word that the lease situation would shortly be resolved and that Colt would emerge largely intact from bankruptcy, when those statements were largely contradicted by Colt’s filings in the bankruptcy case, was arbitrary and capricious. See Alabama Aircraft, 586 F.3d at 1375 (agency action is arbitrary and capricious when the agency “offered an explanation for its decision that runs counter to the evidence before the agency . . . .”).

Colt has argued that because it has now exited bankruptcy, and has entered into a long-term lease for the West Hartford facility, the case is moot. However, Remington’s protest was not limited to the fact that Colt was in bankruptcy, but challenged the CO’s evaluation of the precarious financial situation that led Colt to file for bankruptcy in the first place. Though Colt has emerged from bankruptcy, the Disclosure Statement attached to its Second Amended Joint Plan for Reorganization contains approximately thirty pages of acknowledged risks to Colt’s creditors, including substantial indebtedness. Pl.’s App’x 2600-2631. The CO has not yet evaluated these risks, and as such the court has determined that the case is not moot. Nor does the fact that the army has placed an initial order with Colt render the case moot, because the agency anticipates issuing additional task orders in the future. See Furniture by Thurston v. United States, 103 Fed. Cl. 505, 515 (2012).  (Remington Arms Company, LLC v. u. s. and Colt Defense LLC and FN America, LLC, No. 15-1425C, March 30, 2016)  (pdf)


The Contracting Officer Unreasonably Relied on Instances of Alleged Forgeries In Finding AAA Nonresponsible

In determining AAA nonresponsible for lacking a satisfactory record of integrity and business ethics, the contracting officer found:

d) As provided in paragraph e, below, reported reoccurring instances of submission of forged [Transportation Movement Requests] TMRs under [the [Host Nation Trucking] HNT contract] demonstrates AAA’s integrity issues and lack of business ethics. AAA’s implementation of corrective plans did not prevent the repeated offenses over the last two years and further validates AAA’s inability to successfully manage its employees and subcontractors.

e) On 13 July 2011 a referral for proposed debarment of AAA was submitted by [a military task force] based on what they cited as numerous acts of criminal misconduct such as forgery and false claims, and violations of Title 18 USC 495 and 287 in performance under contract W91B4N-10-D-5000[.] [This] further substantiates AAA’s integrity issues and lacking business ethics.

AR 1159.

Plaintiff contends that the contracting officer acted unreasonably in concluding that there had been recurring instances of forged TMRs under the HNT contract when 1) there had been no allegations of forgery during AAA’s performance of the HNT contract -- no cure notices, no letters of concern and no corrective action requested -- and 2) AAA denied the allegations and requested details so it could conduct an investigation, but the contracting officer did not grant this request. AR 1008. The Court agrees. This combination of circumstances should have raised a red flag and at least prompted the contracting officer to permit AAA to investigate and to respond to the reported allegations of forgery.

In response to these serious allegations, AAA not only denied the forgeries but asked for clarification so it could investigate and respond in the context of the responsibility determination. Instead of granting AAA’s request and obtaining a fuller picture of an anomalous situation, the contracting officer proceeded apace with her nonresponsibility determination and issued that determination just seven days after AAA requested that the Army provide some basis for the forgery allegation. Yet there is nothing in the record to indicate that this nonresponsibility determination had to be made on an expedited basis. The HNT contract was still being performed, and there were a number of other potential awardees for this multiple-award contract. This rush to judgment without obtaining a more complete picture of what transpired was arbitrary and capricious. See Schwendener/Riteway Joint Venture, B-2508625 et al., 1993 WL 67747, at *5 (Comp. Gen. Mar. 4, 1993) (holding that contracting officer’s determination that bidder lacked experience was unreasonable where bidder in fact had the necessary experience, and where information in the record was “sufficient . . . to put the contracting officer on notice to inquire further”); cf. Kilgore Flares Co., B-292944 et al., 2003 WL 23152988, at *8 (Comp. Gen. Dec. 24, 2003) (upholding a responsibility determination because “unlike Schwendener, this is not a matter where the agency was misunderstanding the facts before it, and failing to take opportunities to learn the complete story”).

Indeed, once the suspension and debarment official considered AAA’s position and probed the forgery allegations, a wholly different picture emerged. The SDO, reviewing a more extensive record -- including affidavits from Army personnel, additional investigative reports, and material submitted by AAA -- found that there was “neither direct nor circumstantial evidence to prove that AAA or any of its employees had actually forged unit signatures on TMRs or filed false claims.” Pl.’s Reply Ex. 1, at 6. Statements from Army investigators indicated that 179 TMRs alleged to have been forged by AAA were lost or misplaced by the Army itself. Id. Over one dozen instances of alleged forgery were disproven when the Army admitted that AAA had successfully completed the missions, or when AAA produced copies of the TMRs showing that no forgery had occurred. Id. at 6-7. The SDO also determined that additional allegations of forgery were premised upon contradictory statements by Army personnel. Id. (discrediting seven allegations by Army representatives that signatures on TMRs were forged after AAA produced many of the TMRs in question and demonstrated either that other Army personnel signed the TMRs or that some of the TMRs were reported missing by the Army). AAA also produced several ITV “snapshot records,” tables listing information pertaining to each mission, including TMR number, upload date, ITV transponder number, and the status of the mission sheet, supporting its position that its fuel trucks arrived at their delivery locations. Id. at 7.

Indeed, once the suspension and debarment official considered AAA’s position and probed the forgery allegations, a wholly different picture emerged. The [Suspension and Debarment Officer] SDO, reviewing a more extensive record -- including affidavits from Army personnel, additional investigative reports, and material submitted by AAA -- found that there was “neither direct nor circumstantial evidence to prove that AAA or any of its employees had actually forged unit signatures on TMRs or filed false claims.” Pl.’s Reply Ex. 1, at 6. Statements from Army investigators indicated that 179 TMRs alleged to have been forged by AAA were lost or misplaced by the Army itself. Id. Over one dozen instances of alleged forgery were disproven when the Army admitted that AAA had successfully completed the missions, or when AAA produced copies of the TMRs showing that no forgery had occurred. Id. at 6-7. The SDO also determined that additional allegations of forgery were premised upon contradictory statements by Army personnel. Id. (discrediting seven allegations by Army representatives that signatures on TMRs were forged after AAA produced many of the TMRs in question and demonstrated either that other Army personnel signed the TMRs or that some of the TMRs were reported missing by the Army). AAA also produced several ITV “snapshot records,” tables listing information pertaining to each mission, including TMR number, upload date, ITV transponder number, and the status of the mission sheet, supporting its position that its fuel trucks arrived at their delivery locations. Id. at 7.

This Court does not, of course, charge the NAT contracting officer with knowledge she did not have in performing AAA’s responsibility assessment. Rather, the Court simply holds that the contracting officer should have obtained additional information given the unusual circumstances -- serious allegations of forged TMRs had appeared for the first time in a notice of proposed debarment, yet involved TMRs that the HNT contracting officer had monitored for two years but never brought to AAA’s attention.

The Court recognizes that the notice of proposed debarment was supported by a [criminal investigation] CID investigative report whose author had “obtained copies of sworn statements and forged [TMRs] . . . which had been originated at various military bases throughout Afghanistan.” AR 1230. The CID report further stated that AAA had submitted 124 forged TMRs for a total of $3,660,000.  Id. Ordinarily, a contracting officer can rely on investigative reports coupled with an ensuing notice of proposed debarment in conducting a responsibility determination. See e.g., Frank Cain & Sons, Inc., B-236893, 1990 WL 277550, at *2 (Comp. Gen. June 1, 1990) (recognizing that a U.S. Army Criminal Investigation Division report may be used as the basis of a nonresponsibility determination without an independent investigation by the contracting officer to substantiate the accuracy of the report); Energy Mgmt. Corp., B-234727, 1989 WL 240948, at *3 (Comp. Gen. July 12, 1989) (acknowledging that the Army had reasonable grounds for finding that contractor lacked integrity and was nonresponsible based on CID report information). Here, however, it was odd that the HNT contracting officer had never identified even a single instance of alleged forgery over a two-year period nor attempted to recoup over $3.6 million from AAA under the HNT contract. This stands in stark contrast to the HNT contracting officer’s course of dealing with respect to other allegations under the HNT contract. The HNT contracting officer consistently issued letters of concern and cure notices for other infractions such as failure to meet PSC arming requirements and noncompliance with ITV utilization rate requirements. Further, the HNT contracting officer withheld $2,971,786.10 from AAA for a combination of failed or cancelled missions, pilferage/backcharges and fuel backcharges. AR 1158.

The contracting officer’s reliance upon the forgery allegations was arbitrary, capricious, and irrational in another respect. The contracting officer erred in concluding that AAA’s “corrective actions” regarding the forgeries had been inadequate when there had been no corrective action implemented in the first place. AAA had never been notified that it had an issue with forgeries, so there was no reason for AAA to initiate corrective action. Thus, the contracting officer’s reference to “AAA’s implementation of corrective plans” was blatantly incorrect. See AR 1159. The contracting officer made the following finding which was wholly unsupported by the record: “AAA’s implementation of corrective plans did not prevent the repeated offenses over the last two years and further validates AAA’s inability to successfully manage its employees and subcontractors.” Id. Given that there had been no “corrective plans,” this predicate for the contracting officer’s nonresponsibility determination cannot stand.

Plaintiff has failed to prove, however, that the contracting officer’s conclusions in AAA’s responsibility determination were arbitrary and capricious with respect to other areas of its HNT contract performance, including ITV utilization rates, failed missions, and improper payment allegations, with the exception of transponder stacking. The Government has conceded that the contracting officer’s finding of “reoccurrence” of transponder stacking was an error, unsupported by record evidence. See Def.’s Mot. for J. upon the Admin. R. 31. AAA engaged in only one instance of transponder stacking. Id.  (Afghan American Army Services Corporation v. U. S., No. 11-520C, October 15, 2012)  (pdf)


A. The Contracting Authority’s Responsibility Determination

Federal Acquisition Regulation subpart 9.1 “prescribes policies, standards, and procedures for determining whether prospective contractors and subcontractors are responsible.” FAR § 9.100. It applies to “all proposed contracts with any prospective contractor that is located . . . [i]n the United States.” FAR § 9.102(a)(1). The regulation requires that “[p]urchases shall be made from, and contracts shall be awarded to, responsible prospective contractors only.” FAR § 9.103(a). A responsible contractor must, among other qualities, “[h]ave the necessary . . . facilities, or the ability to obtain them,” FAR § 9.104-1(f), and “[b]e . . . qualified and eligible to receive an award under applicable laws and regulations.” FAR § 9.104-1(g).

1. Licensing and certification.

Nilson argues that Ken Krause was unqualified under FAR § 9.104-1(g), and therefore not responsible, because it was not properly licensed and certified under paragraph 1.4 of the Solicitation’s Performance Work Statement. Pl.’s Mot. at 4. Nilson Van emphasizes that the pertinent paragraph in the Performance Work Statement requires that “[a] prospective contractor” shall be approved and hold authorization or relevant certificate. Id. at 4-5 (quoting AR 3-101 (Solicitation, Performance Work Statement ¶ 1.4)) (emphasis added). The government responds that the Performance Work Statement required the contractor to “possess and present authorization or certification during performance, not prior to award.” Def.’s Cross-Mot. at 14 (capitals omitted).

Upon the submission of its bid, Ken Krause Company did not have the Federal Department of Transportation certifications, specifically certifications from the Federal Motor Carrier Safety Administration, to carry household goods as a for-hire carrier. AR 12-338 to 339 (Ken Krause’s United States Dep’t of Transportation “Company Snapshot”) (specifying Ken Krause’s operation classification as “Private (Property)”). But, although Ken Krause would need federal certifications to transport household goods for the Army interstate, “there is nothing in the solicitation or contract that requires interstate transportation of household goods.” AR 1-7 (Agency Report (July 6, 2010)). Rather, the solicitation specified that the contract’s area of performance included “Counties of Bladen, Cumberland, Harnett, Hoke, Lee, Moore, Richmond, Robeson, Sampson, and Scotland — all in North Carolina.” AR 3-97 to 98 (Solicitation). No other locations were listed.

Some contract line items noted they might require service “not to exceed 150 miles” “beyond the contract area of performance.” See AR 3-27, 37, 47, 57, 67. The area extending 150 miles from the contract area of performance encompasses some locations outside North Carolina. However, the government has represented that Ken Krause has been performing the contract for ten months and that it has undertaken no interstate transportation activities under the contract in that time. Hr’g Tr. 25:1-3 (July 20, 2011). Although contract performance could theoretically involve interstate transportation, the Solicitation does not appear actually to require the contractor to perform interstate transportation services. Because the performance of the contract does not necessarily involve moving goods interstate, it was reasonable for the contracting officer not to require Ken Krause to hold the licenses it would need to conduct interstate transportation of household goods for hire. There is nothing arbitrary or capricious about her decision in this regard.

Even if Ken Krause were required to transport household goods interstate, Nilson Van’s argument would still fail. Nilson emphasizes the language of the Performance Work Statement, which requires all “prospective contractor[s] engaged in interstate transportation” to be “approved and hold authorization in their own name by the Interstate Commerce Commission.” AR 3-101 (Solicitation, Performance Work Statement ¶ 1.4). Because the language says “prospective contractor[s]”, Nilson argues that bidders must have authorization from the Interstate Commerce Commission before the contract is awarded.
The language of paragraph 1.4 is in tension with FAR § 52.247-2(b), which states that offerors “shall . . . obtain and maintain any permits, franchises, licenses, and other authorities issued by State and local governments,” and which requires offerors to furnish copies of their authorizations to the government, if requested, “before moving the material under any contract awarded.” The mandate that offerors shall “obtain and maintain” licenses and must provide copies of licenses before moving goods under the contract indicates that the required licenses and permits must only be acquired before performance, not before award. By suggesting that an offeror may acquire the requisite authorizations after bidding, FAR § 52.247-2(b) to some extent contradicts paragraph 1.4 of the Performance Work Statement which uses the term “prospective contractor” and the present tense, suggesting that licenses might have to be obtained before a prospective contractor bids.

Section 52.247-2(b) and paragraph 1.4 of the Performance Work Statement must be read together. Paragraph 1.4 begins by declaring that “[t]he provisions of FAR [§] 52.247-2, Permit, Authorities, or Franchises, are applicable for qualification to perform services under this regulation.” AR 3-101 (Solicitation, Performance Work Statement ¶ 1.4). The most reasonable interpretation of the sentence is that FAR § 52.247-2(b) governs qualification. Despite the differences between paragraph 1.4 and FAR § 52.247-2(b), there is no indication that the Solicitation aims to supersede the qualification requirements of FAR § 52.247-2(b). In sum, FAR § 52.247-2(b) and paragraph 1.4 of the Performance Work Statement are best interpreted to require a bidder to obtain the necessary authorizations to perform the contract before performance begins, not at the time of bid.

Finally, Nilson argues that Ken Krause needed to be registered as an interstate carrier, even if the solicitation only requires intrastate travel, because “the goods transported are engaged in interstate commerce.” Pl.’s Mot. at 7. Paragraph 1.4 of the PWS requires a bidder “engaged in interstate transportation [to] be approved and hold authorization . . . by the Interstate Commerce Commission.” The reasonable interpretation of “interstate transportation” in this context is transportation activity for which authorization is required by the Interstate Commerce Commission (“ICC”), not intrastate transportation of goods that have previously traveled in interstate commerce. Accordingly, because the ICC does not require Ken Krause to obtain authorization to transport goods only within North Carolina, Ken Krause had no obligation to gain authorization from the ICC.

2. Storage facilities.

Nilson maintains that Ken Krause was an irresponsible prospective contractor because it did not have the necessary facilities to perform the contract. Pl.’s Mot. at 7. According to Nilson, the facility Krause listed in its bid and in its Online Representations and Certifications Application (“ORCA”) did not satisfy the facilities requirements in paragraph 5.8 of the Performance Work Statement. Id. at 8-10. The government responds that Ken Krause listed its principal business address, not the address of the storage facilities it intended to use in performance, Def.’s Cross-Mot. at 21, and that shortly after bidding, it properly identified the relevant storage facilities for the contracting officer to take into account in evaluating its offer. Id. at 21-22.
Krause listed its place of performance, both in its offer and in ORCA, as “Ken Krause Co[.;] 148 Rice Rd[.;] Vass[,] NC 28394.” See AR 11-264 (Ken Krause Co. Bid, Box 8); AR 38-576 (Ken Krause ORCA Representation (FAR § 52.215-6 Place of Performance)) (“The offeror . . . , in the performance of any contract resulting from this solicitation, . . . does not intend . . . to use one or more plants or facilities located at a different address from the address of the offerer . . . as indicated in this proposal or response to request for information.”). The Vass facility appears to be a location from which Ken Krause Company conducts business. However, it is neither the facility that Ken Krause intended to use or has used to perform the household goods contract, nor is it among the facilities the Contracting Officer inspected pursuant to paragraph 1.4 of the Performance Work Statement.

On April 14, 2010, Ken Krause e-mailed the Army’s Contract Specialist to state that it intended to use facilities in Southern Pines, NC, and Carthage, NC, to store goods during performance of the contract. See AR 22-383 (E-mail from Ken Krause to Sharon Carter (Apr. 14, 2010)). The Contracting Officer, Contract Specialist, and a technical representative from the Directorate of Logistics inspected the facilities on April 19, 2010, took photographs, and determined the facilities met the requirement of the Performance Work Statement. See AR 1-8 to 9 (Agency Report (July 6, 2010)); AR 22-383 (E-mail from Carter to Krause (Apr. 16, 2010)); AR 25-388 to 418 (Photographs from Ken Krause Warehouse Inspection); AR 27-426 (Determination of Responsibility for Ken Krause (May 27, 2010)) (“[W]e found both warehouses to be in full compliance with the Performance Work Statement”). Nilson does not appear to argue that there were any inadequacies in the Southern Pines and Carthage facilities.

Rather, Nilson appears to claim that Ken Krause’s Vass location should have been evaluated instead, or that Ken Krause should have listed its other facilities in its bid initially.
There is plainly no need for inspection of a location Krause did not intend to use for storage to meet the Solicitation’s requirements for storage facilities. The resulting question is whether Krause was an irresponsible bidder by listing the Vass address as its “place of performance.” The Solicitation permitted Ken Krause to change its bid by e-mail. See AR 3-91 (Solicitation (52.214-5(c), Submission of Bids)) (“[B]ids may be modified . . . by written or telegraphic notice.”). Ken Krause effectively modified its bid when it informed the Contracting Specialist via e-mail which facilities it intended to use to store goods under the contract. See AR 22-383 (E-mail from Krause to Carter (Apr. 14, 2010)). This e-mail also had the effect of modifying the intended place of performance in ORCA. See AR 16-353, 367 (Ken Krause’s first ORCA certification of place of performance); AR 38-576 (Ken Krause’s second ORCA certification of place of performance). Accordingly, Ken Krause did not violate the terms of the Solicitation, Performance Work Statement, or any pertinent provision of the FAR. Moreover, based upon the pre-award inspection conducted of the Southern Pines and Carthage facilities, the Contracting Officer reasonably determined that Krause had “the necessary . . . facilities” to perform the contract. FAR § 9.104-1(f). Accordingly, Ken Krause was “qualified and eligible to receive an award under applicable laws and regulations,” and was a responsible bidder. FAR § 9.104-1(g).  (Nilson Van & Storage, Inc. v. U. S., No. 10-716C, August 12, 2011)  (pdf)


A. Rear Admiral Shear Directed Mr. Griffin as to the Pertinent Policy Considerations and Standard of Business Integrity

In issuing the preliminary injunction, this Court stated:

The Navy shall make a new responsibility determination by a new contracting officer within 30 days from the date of this Order. The new contracting officer must obtain written advice from NAVFAC by someone at the flag officer or presidential appointee level as to the pertinent policy considerations and standards of business integrity in order to find awardees responsible in international contracts.

Mod. Prel. Inj., filed Aug. 5, 2008, at 2.

It is clear to the Court that the Navy followed this directive by assigning Mr. Griffin, a member of the Senior Executive Service and NAVFAC’s senior civilian acquisition official, as the new contracting officer. Griffin Decl. at ¶ 1. Further, Rear Admiral Shear identified the “pertinent policy considerations and standards of business integrity in order to find awardees responsible” in cases in which the awardee violated foreign law with respect to foreign government contracts. Id. at Ex. 1. First, Rear Admiral Shear acknowledged TOA’s bid rigging sanctions to Mr. Griffin. Id. In regard to this, Rear Admiral Shear directed Mr. Griffin to treat TOA’s charges and sanctions as being a “commission of an offense lacking business integrity or business honesty” in his consideration of TOA’s present responsibility. Id. Second, Admiral Shear directed Mr. Griffin “to determine whether TOA’s record of integrity and business ethics is satisfactory.” Id. To determine this, Admiral Shear directed Mr. Griffin to “analyz[e] the presence or absence of preventative or corrective measures and mitigation factors, as well as past offenses that necessitated, or occurred despite such measures. In that regard, you should be guided by the relevant factors set forth at Federal Acquisition Regulation § 9.406-1(a).” Id. at 3. And lastly, the Admiral directed Mr. Griffin to “consider any other consideration that [he] believes is germane.” Id. at 2. Thereafter, Mr. Griffin performed his evaluation.

B. Mr. Griffin performed a Reasoned Analysis

This Court’s Order of Injunction further stated:

This reconsideration should involve a reasoned analysis of the conduct of TOA and the statutory and regulatory factors relevant to the purposes of a responsibility determination. The reasons for finding TOA either a responsible contractor or not must be clearly articulated and consistent with the law and Navy policy.

Mod. Prel. Inj., filed Aug. 5, 2008, at 2.

With regard to this portion of the Order, the Navy again followed the Court’s directive. Specifically, Mr. Griffin weighed the evidence with respect to each of the elements in the regulation that Rear Admiral Shear ordered him to follow “address[ing] each of the factors listed at FAR § 9.406-1(a) in turn.” Griffin Decl. at ¶ 6. These regulations would be applied with respect to a responsibility determination for any contractor for which a FAR 9.406-2 “cause for disbarment” has been identified. Id. at Ex. 1 at 2. The “regulations make clear that ‘the existence of a cause for debarment, however, does not necessarily require that the contractor be debarred,’ and directs the agency official to balance the seriousness of the contractor’s actions against the ‘remedial measures or mitigation factors’ before making any debarment decision.” Impresa Construzioni Geom. Domenico Garufi v. United States, 238 F.3d 1324, 1335 (Fed. Cir. 2001) (quoting FAR 9.406-1(a)). “Debarment and suspension are discretionary actions, FAR 9.402(a); however, mitigation factors are used in making responsibility determinations. . . .” Impresa, 238 F.3d at 1335.

Mr. Griffin followed Rear Admiral Shear’s direction and applied the standard. Mr. Griffin held a meeting with the senior officials of International Bridge Corporation; the head of TOA’s international division; and the head of the TOA division that had been found responsible for bid rigging upon Japanese public contracts. At this meeting Mr. Griffin assessed the credibility of these individuals and received assurances they “were personally committed to the elimination of dango [Japanese historical bid rigging practice] at all corporate levels.” Id. at ¶¶ 4,6,9,10. None of the TOA senior executives was involved in the bid rigging subject to the JFTC proceedings relevant to this matter. Id. at 6,9. These TOA executives further provided assurances that they were unaware of any bid rigging activities upon TOA’s contracts with the United States in Japan and that none of those responsible would be involved with the Kilo Wharf contract. Id. Evidence of measures to ensure compliance with legal and ethical standards was also provided. Id. at ¶¶ 4,6,7,8.

C. Mr. Griffin did not abuse his discretion in finding IBC/TOA Responsible

1. The Navy made an “Independent” Determination

It is clear to the Court that the Navy complied with the Court’s directive and made an “independent” determination in its new holding finding TOA responsible. Plaintiff, however, alleges that an email between Navy counsel and IBC/TOA’s counsel demonstrates that Mr. Griffin did not make an “independent” determination. Instead, Plaintiff alleges that this inquiry was a sham and that Mr. Griffin’s determination was nothing but “smoke and mirrors.” Pl. Resp. at 27. Plaintiff alleges this because the email was sent prior to Mr. Griffin’s appointment to review the responsibility determination.

In reviewing the email, the Court notes that the email relates to Navy counsel’s inquiry regarding facts and circumstances surrounding bid rigging and performance of United States Government contracts in Japan. The email further requested specific evidence and/or facts to demonstrate the separateness of TOA’s domestic and international divisions; specific facts concerning mitigative measures with respect to three bid rigging incidents; information concerning performance of other contracts with the United States Government; and additional assurances form high level executives within TOA. Id. at Ex. 1 at 2-3. It is apparent to the Court that the email directly asks the questions needed in order to perform the investigation and evaluation of TOA’s responsibility that was ordered by this Court. Even though Mr. Griffin had not yet been appointed to make the new responsibility determination, the Navy knew this information would be necessary in order for the new Contracting Officer to make the new responsibility determination. Therefore, Plaintiff’s argument that because Mr. Griffin did not ask for the information personally the information obtained was not “independent” is unavailing.

2. The Responsibility Determination is supported by Evidence

Plaintiff alleges that the new responsibility determination was not supported by evidence because the Navy did not investigate but only relied on IBC/TOA’s own statements. Plaintiff asks this Court to re-weigh the evidence and find the investigation insufficient. This, the Court may not do.

In reviewing an agency’s decision in a bid protest, this Court uses the standards set forth in the Administrative Procedure Act (“APA”), 5 U.S.C. § 706 (2006). Arch Chems, Inc. v. United States, 64 Fed. Cl. 380, 384-85 (2005). Thus, a protestor must show that the agency’s decision was “arbitrary, capricious, an abuse of discretion, or otherwise not in accordance with law.” 5 U.S.C. § 706 (2)(A). To determine whether the agency’s decision was one that was arbitrary and capricious, the Court must review whether a rational basis for the agency’s decision was lacking or a violation of an applicable regulation or procedure occurred during the procurement process. Impresa, 238 F.3d at 1333. Furthermore, “[d]eference must be afforded to an agency’s . . . procurement decisions if they have a rational basis and do not violate applicable law or regulations.” M.W. Kellogg Co. v. United States, 10 Cl. Ct. 17, 23 (1986). “Responsibility decisions are largely a matter of judgment, and contracting officers are normally entitled to considerable discretion and deference in such matters. When such decisions have a rational basis and are supported by the record, they will be upheld.” Bender Shipbuilding & Repair Co. v. United States, 297 F.3d 1358, 1362 (Fed. Cir. 2002). Although the Court might not agree with the Navy’s decision finding TOA responsible, it may not “substitute its judgment for that of the agency.” Citizens to Preserve Overton Park, Inc. v. Volpe, 401 U.S. 402, 416 (1971). Congress has established the Navy to make these types of decisions and others. The role of the Court is to ensure the law is upheld. Only if the Navy violates a law, regulation or has no rational basis or an improper purpose may the Court take judicial action.

The evidence and process reflected by the Government’s actions meet the standard for a decision that is not arbitrary and capricious. The Government proffered documents, including evidence concerning the Japanese government’s acceptance of TOA’s mitigative measures, as well as providing Mr. Griffin’s declaration detailing a face-to-face meeting with TOA officials indicating TOA’s assurances of present and future commitments to lawful conduct. Mr. Griffin found that TOA was committed to eliminate bid rigging and that TOA was continuing to do everything possible to avoid future occurrences of bid rigging. In addition, Mr. Griffin reviewed TOA’s past performance evaluations, reputation in the industry and ability to perform the contract. See generally Griffin Decl.

Even though the Court might not agree that it is in the best interest of the United States to contract with a company that has been sanctioned not only once, but on at least three separate occasions for bid rigging, the Court may not “substitute its judgment for that of the agency.” Citizens to Preserve Overton Park, 401 U.S. at 416. It must also be emphasized that the purpose of the responsibility determination and this opinion is not punitive, it is not for the purpose of punishing TOA. Therefore, because Mr. Griffin’s decision is not arbitrary and capricious, the Court must defer to the well-written decision of Mr. Griffin. Thus, the Court cannot find that the agency’s decision was “arbitrary, capricious, an abuse of discretion, or otherwise not in accordance with law.” 5 U.S.C. § 706(2)(A). It should be noted, however, that Plaintiff’s initial concerns were certainly substantially justified. Plaintiff vindicated the public’s right to have an adequate decision made.  (Watts-Healy Tibbitts AJV, v. U. S. and IBC/TOA Corporation No. 08-261C, October 14, 2008) (pdf)


TOA Corporation is a Japanese corporation that specializes in marine construction and dredging and has also performed work on other government contracts, both for Japan and the United States.

On or about June 22, 2007, the Japan Fair Trade Commission filed an administrative disposition order requiring the payment of 111.98 million yen as the surcharge for TOA’s violation of Japan’s Antimonopoly Law. The violation involved bid rigging. See Pl. Mem. Ex. A and B. The Japan Fair Trade Commission (JFTC) usually imposes a surcharge equivalent in the amount to 10% of sales generated as a result of illegal practices, including bid rigging. TOA was ordered to pay 15% because the JFTC stated that the company had previously been involved in other bid rigging cases. Id.

On November 14, 2007, the JFTC ordered TOA to pay 1.92 billion yen, again for bid rigging. See Pl. Mem. Ex. C. On March 24, 2008, the TOA Corporation also received a business suspension order from the Ministry of Land, Infrastructure, Transport and Tourism, following the company’s violation of the Antimonopoly Law. See Pl. Mem. Ex. D.

(Sections deleted)

In this case, based upon information provided by the protestor and gleaned from the testimony of the contracting officer at the hearing, there is strong reason to believe the relevant factors were not considered in determining whether the awardee TOA was a responsible party. It is clear that TOA was levied fines and sanctions by the JFTC requiring the payment of 111.98 million yen, 1.92 billion yen, and a business suspension order from the Ministry of Land, Infrastructure, Transport and Tourism. Defendant argues that the contracting officer did not know about these violations until after the contract was awarded and that after he received this information the contracting officer did re-evaluate the responsibility determination and found TOA to be responsible.

In support of his holding TOA a responsible awardee, the contracting officer testified that because bid rigging is common in Japan it does not rise to a level serious enough to render the corporation not responsible. It seems to this Court that the momentous decision to ignore ethical and statutory violations that would almost certainly disqualify an American company cannot be made in an almost unthinking way at the basic operational level of the contracting process. It may well be that the Navy wants to accept these violations as appropriate for foreign policy reasons or other legitimate reasons of national or military policy. The Court cannot say that the Navy cannot do this. If it does so, however, the Navy, not some subdivision of a subdivision, must make the policy call with respect to the level of business integrity that is required in international contracts with foreign policy implications for the responsibility determination to be other than arbitrary and capricious. This requires clear guidance from NAVFAC on the ethical standard applicable to the companies in TOA’s situation, and that must come from either a flag officer or presidential appointee who can speak with the authority of the Navy on the policy at issue. In order to achieve this result, the Court must require the contract’s re-solicitation or as an alternative allow the Navy to designate a new contracting officer to make a new responsibility determination. The Navy through either the flag officer or at presidential appointee level must provide the contracting officer with a clear statement with regard to its policy regarding the level of business integrity required in order to find a contractor responsible. This is not meant to criticize the contracting officer who made a decision based upon limited information without applying any standard for the level of business integrity required for this type of international transaction. There apparently was not a clear Navy policy for him to follow. The contracting officer testified that he also made his decision based upon undisclosed legal advice, which the Government has claimed is privileged, and therefore, did not reveal that information to the Court. Further, even though the contracting officer testified that he did re-evaluate the responsibility determination, the contracting officer alluded to the fact that because the award had already been made he could not disrupt that award. This leads the Court to believe that the responsibility decision was merely a fait accompli. It appears to have been made with little or no reference to the reasons for having such a requirement.

One further note on the standard for arbitrary and capricious decision-making. The Government has placed great weight on the argument that in making the initial determination the award decision was not arbitrary and capricious because the contracting officer did not know of the negative information about the awardee. This argument has an Alice-in-Wonderland ring to it. All the government has to show to prove the decision was not arbitrary and capricious is that the contracting officer was in the dark? There may be a trace of logic here, but the Court has not found it.  (Watts-Healy Tibbitts A JV, v. U. S. and IBC/TOA Corporation, No. 08-261C, July 23, 2008) (pdf)


Plaintiff calls for new limits on the contracting officer’s discretion where debarment decisions by other agencies of the Government are involved. However, a contracting officer is the point person for any government contract. FAR requires procurement officers to rule on present responsibility before making a contract award. A decision by a separate government agency for a different purpose should not bind the contracting officer or limit her discretion.

The contracting officer made an unusually thorough and determined effort to insure that her responsibility determination was fair and reasonable. The record supports her factual conclusions. She was conscientious and persistent in performing the duties required of her. The record of this case and the arguments of the parties make clear that the Government, acting through its contracting officer, performed admirably in handling this procurement.

A. Plaintiff’s Present Responsibility

The contracting officer was concerned about plaintiff's record of integrity and business ethics, particularly in light of OSG’s “recent criminal convictions.” AR 1771. FAR requires the contracting officer to consider the past performance and integrity of a contractor’s affiliate when it “may adversely affect the prospective contractor’s responsibility.” 48 C.F.R. § 9.104-3(c). She investigated Product Tankers and OSG before making a responsibility determination. She reviewed the Joint Factual Statement, the Plea Agreement, and the Environmental Compliance Plan. She considered the settlement agreement between OSG and MarAd and MarAd’s rationale for not debarring OSG. She consulted representatives from the Department of Justice, the Coast Guard, and the Environmental Protection Agency. She sent plaintiff more than thirty questions in an effort to obtain sufficient information.

Plaintiff made an oral presentation before a board of experts whom the contracting officer convened for that purpose. The board included representatives of the Navy, the Coast Guard, and the Military Sealift Command. Its final memorandum expressed doubt concerning plaintiff’s integrity and business ethics.

OSG pled guilty to the felony counts in December 2006. MarAd released its decision in May 2007. MarAd will not debar OSG so long as it complies with the Plea Agreement, but the agency can resume debarment proceedings if violations of the Plea Agreement or the new Environmental Compliance Plan occur. The contracting officer concluded that “[t]he shortness of time between the criminal violations and the award . . . does not allow sufficient time for OSG to reestablish a record of integrity and business ethics.” AR 1779. The board agreed with the contracting officer that OSG would need time to restore its record.

Plaintiff argues that the contracting officer was wrong to consider the potential impact of an OSG violation of the Plea Agreement. Product Tankers guaranteed that it could obtain the necessary clearances, but the contracting officer thought OSG’s completion of its probation without additional violations was uncertain. Such violations could affect plaintiff’s ability to obtain a security clearance. Obtaining the necessary clearances was an important consideration in the contracting officer’s decision-making process. She could not make an unqualified determination that plaintiff would have the necessary facilities and equipment for the job. Lack of clearances would affect plaintiff’s compliance with the performance schedule as well.

B. Contracting Officer’s Decision

The contracting officer issued a report in June 2007 to explain her finding of non-responsibility. The eighteen-page report acknowledged that Product Tankers had adequate financial resources to perform the contract, a satisfactory performance record, sufficient organization and experience, and the necessary accounting and technical skills. See 48 C.F.R. § 9.104-1.

The contracting officer used ten pages to detail her analysis of plaintiff’s record of integrity and business ethics. She considered the remedial measures that OSG instituted, but did not feel that sufficient time had elapsed for the Government to determine the measure’s effectiveness. Six months had passed since OSG pled guilty to the charges against it, and MarAd had issued its debarment report only one month earlier.

1. Effect of Debarring Official’s Decision

Plaintiff contends that the contracting officer in this case was estopped or otherwise prevented from basing her non-responsibility determination on plaintiff’s integrity and business ethics because the debarment proceedings settled this issue for her. That is, MarAd’s decision not to debar OSG necessarily included a review of its integrity and business ethics and a determination that OSG demonstrated its present responsibility. Plaintiff maintains that MarAd’s decision applied to all federal agencies, so the contracting officer did not have the authority to find plaintiff non-responsible.

Debarment is distinguished from a finding of non-responsibility in that the latter excludes the contractor from a specific contract with a single Executive agency, and the former excludes the contractor from all Executive agency contracts. See IMCO, Inc. v. United States, 33 Fed. Cl. 312, 321 (1995) (noting that the contracting officer’s non-responsibility determination “is limited to one particular contract, while the [d]ebarment [o]fficial’s determination considers the responsibility of a contractor in regard to all its dealings with the government.”). The contracting officer’s “determinations of responsibility are based upon different factors [from that of the debarment official’s] and have different underlying purposes.” Id. (internal quotes omitted); see also Peter Kiewit, 714 F.2d at 167 n.18 (noting that “differences in focus, criteria, scope, and decisionmaking personnel make the present responsibility and debarment decisions entirely independent of each other.”).

Debarment is a discretionary government sanction that excludes a contractor from contracting with the government for a “reasonable, specified period,” usually up to three years. 48 C.F.R. §§ 2.101, 9.402(a), 9.406-4(a)(1). “The purpose of debarment . . . is to protect the government from unscrupulous or irresponsible contractors . . . and to safeguard the integrity of government contracting and programs.” Steven D. Gordon, Suspension and Debarment from Federal Programs, 23 Pub. Cont. L.J. 573, 581 (1994). The debarring agency may decide not to debar the contractor even if a cause for debarment exists. 48 C.F.R. § 9.406-1(a). Debarment should be “imposed only in the public interest for the Government’s protection and not for purposes of punishment.” Id. § 9.402(b).

The Government “may debar a contractor for a conviction of or civil judgment for . . . falsification or destruction of records, making false statements . . . [or committing] any other offense indicating a lack of business integrity or business honesty that seriously and directly affects the [contractor’s] present responsibility.” 48 C.F.R. § 9.406-2(a). Additional causes for debarment are breach of a government contract “so serious as to justify debarment” or other causes “so serious or compelling a nature that it affects the present responsibility of the contractor . . . .” Id. § 9.406-2 (b-c).

The debarring official may consider mitigating factors and a contractor’s remedial measures prior to making the debarment decision; however, he must “afford the contractor . . . an opportunity to submit . . . information and argument[s] in opposition to the proposed debarment.”12 Id. § 9.406-3(b)(1). The “existence or nonexistence of any mitigating factors or remedial measures . . . [are] not necessarily determinative of a contractor’s present responsibility.” Id. § 9.406-1(a). “If a cause for debarment exists, the contractor has the burden of demonstrating . . . its present responsibility and that debarment is not necessary.” Id.

The Federal Acquisition Regulation does not mention what actions a contracting officer should take if a contractor’s parent is not debarred. The regulations do not suggest that we consider an affiliate’s “non-debarment” when reviewing a responsibility determination. 

2. Effect of Plea Agreement Violation

Plaintiff points out that MarAd did not name plaintiff as a party in the debarment proceeding against OSG or charge it with violations. An independent basis for debarment would be necessary for the Government to initiate a debarment action against plaintiff. “Consequently, since the debarment proceeding against OSG, Inc. has no bearing on [plaintiff], the CO’s claim that [plaintiff] poses a performance risk . . . is speculative and has no basis in law or the Administrative Record,” plaintiff asserts.

Plaintiff is correct that debarment affects a contractor’s affiliate only if the debarring official names the affiliate in the action. See 48 C.F.R. §§ 9.403, 9.406-1(b) (noting definition of “affiliate” and when the debarring official may include affiliates of the contractor in the proceedings). The Government must give the affiliate written notice and an opportunity to respond. Id. § 9.406-1(b). Plaintiff is an affiliate of OSG, and a separate entity under the law. See 48 C.F.R. § 9.104-3(c) (stating affiliates of the contractor “are normally considered separate entities” when determining the contractor’s present responsibility). Affiliates must have been involved in or affected by the contractor’s wrongdoing to be named in the debarment. MarAd did not name Product Tankers in the debarment proceeding against OSG, or give plaintiff written notice that it was included in the action.

Plaintiff was not a party to MarAd’s debarment proceeding against OSG. MarAd did not evaluate plaintiff’s responsibility or make conclusions concerning plaintiff’s business integrity. The contracting officer’s non-responsibility decision was independent of MarAd’s settlement with OSG. Therefore, plaintiff cannot use the debarment settlement to imply support for Product Tanker’s integrity and business ethics. See IMCO, 33 Fed. Cl. at 321, Peter Kiewit, 714 F.2d at 167 n.18. The Federal Acquisition Regulation requires an independent ruling on present responsibility, and FAR provides the standards for making that ruling.

C. The Contracting Officer’s Decision Was Rational

Plaintiff claims that the contracting officer’s decision was arbitrary and capricious because of material errors of fact and law, omissions of material information, and baseless assumptions. According to plaintiff, the contracting officer failed to distinguish Product Tankers from its parent company, OSG. Plaintiff asserts that the contracting officer held OSG’s criminal actions against plaintiff instead of treating it as a separate entity, and that she applied OSG’s negative record of integrity and business ethics against it.

The contracting officer recognized that plaintiff was an entity separate from its parent company, according to defendant, but it points out that plaintiff did not distinguish itself from OSG in its bid or during the responsibility determination. Plaintiff would not have met the contract requirements without the history and resources of its parent company, the Government asserts. Therefore, OSG’s record of integrity and business ethics is a relevant factor in determining plaintiff’s integrity and business ethics.

The contracting officer did not confuse plaintiff with its parent company as plaintiff alleges, despite plaintiff’s efforts to bolster its application by blurring the line between its corporate organization and that of its parent. Plaintiff’s bid included multiple references to its parent company in an effort to trade on OSG's financial strength.

Product Tankers described itself as having been established in 1948, the year its parent OSG was organized, instead of 2005. Plaintiff used OSG’s international offices and its extensive foreign and domestic fleet in its application. It adopted OSG’s safety, health, and environmental standards as its own. Plaintiff submitted its bid using OSG’s corporate profile. The bid referenced OSG’s familiarity with industry practices and regulations, employee-training programs offered by OSG, and OSG’s extensive foreign and domestic fleet. Plaintiff listed tankers from the OSG’s Strategic Business Unit in its bid, and featured employees of OSG’s U.S. Flag Operations Division.

Defendant’s invitation for bids called for compliance with International Organization for Standardization (ISO) standards. Plaintiff submitted ISO certificates for quality and environmental management systems that applied to an affiliate, OSG Ship Management, Inc. OSG’s quarterly financial report offered support for plaintiff’s corporate financial stability. It listed OSG’s government contract history to establish past performance.

Plaintiff’s correspondence and presentations to the contracting officer and to the expert panel contained citations to OSG’s corporate history, financial statements, past contract performances, regulations, standards, and certifications. Despite these references, the contracting officer discussed plaintiff and OSG separately in her report and made clear plaintiff’s status as a subsidiary of OSG. She raised the issue as one for discussion during the solicitation process.

The contracting officer addressed Product Tankers during the bid proposal period, but received communications from plaintiff’s affiliates during the responsibility investigation. Her list of questions to “OSG Product Tankers, LLC” in April 2007 prompted a response from an officer of “OSG America, Inc.” The letter was on “OSG Ship Management” letterhead. AR 2521. The letter from Eric F. Smith, Vice President, Chief Commercial Officer and Head of Government Affairs, OSG America, Inc., began, “Overseas Shipholding Group, Inc. . . . received your letter of April 27, 2007 . . . . OSG will specifically address each of the questions noted in your letter during our meeting on May 4, 2007.” Id. Plaintiff sent a follow-up letter from “OSG Ship Management” after the meeting: “Overseas Shipholding Group, Inc. . . . and its representatives appreciated meeting with you . . . attached are written responses to the formal questions you posed.” AR 1807.

Plaintiff needed OSG’s citizenship and seventy-five percent ownership to meet Jones Act requirements. Seatrain Shipbuilding Corp. v. Shell Oil Co., 444 U.S. 572, 574-575 (1980) (noting that the United States reserved domestic shipping to “vessels [that were] built in this country and owned by its citizens.”); see 46 U.S.C. § 55102. Without OSG’s corporate history and financial support, plaintiff’s bid would have been rejected before a responsibility determination by the contracting officer became necessary.

OSG created Product Tankers as a subsidiary in May 2005, apparently to separate it from OSG’s legal problems. The record does not contain plaintiff’s performance or financial history. Its employees belong to OSG or one of its subsidiaries. The contracting officer noted that there were excessive amounts of information about OSG and a dearth of information about Product Tankers; she had no choice but to consider Product Tankers’ qualifications in light of OSG’s history. The contracting officer considered factors relevant to plaintiff’s relationship with OSG. Her reasoning was entirely appropriate, and we agree with the result.

(sections deleted)

IV. Conclusion

The contracting officer found plaintiff not responsible after a careful review of the record. She conducted a thorough investigation, received input from multiple sources, and based her decision on the facts before her. Plaintiff may disagree with the emphasis the contracting officer placed on certain facts, but the record shows that she reviewed the entire record before her and issued a detailed analysis of her conclusions. She used her business judgment to determine that plaintiff was not a responsible contractor. See, e.g., Bender, 297 F.3d at 1362 (“[T]he contracting officer made an informed, complicated business judgment based upon ample factual support in the record . . . .”).

Plaintiff’s case depends on its argument that a contracting officer may not disqualify a bidder on the same grounds that a separate government agency thought insufficient to warrant debarment. Procurement officials are obligated by law to make their own responsibility determinations, however. This contracting officer was not bound by rulings made by other agencies for purposes unrelated to plaintiff=s responsibility as a bidder. MarAd’s debarment decision did not preempt, control, or prohibit her responsibility decision; she evaluated that information with the same weight as other facts, as she was legally required to.

The contracting officer did not confuse plaintiff with its parent company to plaintiff’s detriment, but gave plaintiff every benefit of the doubt during her deliberations. She did not act arbitrarily or capriciously, did not treat plaintiff unequally or unfairly during the bid process, and did not abuse her discretion. She conducted an extensive investigation of the record, with the benefit of expert assistance, and used her business judgment to determine that plaintiff was not a responsible contractor.

We do not substitute this court's judgment for that of a contracting officer making determinations of non-responsibility. We see no problems with her factual conclusions; they were fully substantiated by the record.

Plaintiff’s Motion for Judgment on the Administrative Record is DENIED. Defendant’s and intervenor’s Motions for Judgment on the Administrative Record are GRANTED. The Clerk of Court will dismiss plaintiff’s Complaint. No costs. This opinion will be filed under seal. The parties have until June 30 to submit redactions to this court. (OSG Product Tankers LLC, v. U. S. and USS Product Carriers LLC, No. 07-561C, June 30, 2008) (pdf)


Paragraph 7 of the Key Declaration states that the contracting officer directed the local Defense Contract Management Agency (DCMA) office to conduct a search of its Mechanization of Contract Administrative Services (MOCAS) Database to determine whether Hawk was a responsible offeror. Key Decl. ¶ 7. A search of that database indicates whether there are any delinquencies associated with contracts previously awarded to the offeror who is the object of the search. Id. The contracting officer states that “the information obtained from the MOCAS database at the time of contract award did not disclose any negative information about Hawk.” Id. The contracting officer also states that he “did not obtain a printout of the information obtained” “[a]t the time of contract award.” Key Decl. ¶ 7. In addition, the contracting officer states that he “searched the Consolidated List of Debarred, Suspended, and Ineligible contractors (Consolidated List), and Hawk was not on that list.” Id. (directing the court to AR 745); see AR 745 (Prenegotiation Objective Memorandum Data). In order to find that the contracting officer made a proper responsibility determination, the court must infer that DCMA would have reported to the contracting officer any adverse information relevant to the contracting officer’s responsibility determination. The court affords the government the presumption that DCMA and the contracting officer would have acted reasonably in the circumstances and therefore makes the required inference. See Am-Pro Protective Agency, Inc. v. United States, 281 F.3d 1234, 1239 (Fed. Cir. 2002) (recognizing presumption that government officials act in good faith); KSEND v. United States, 69 Fed. Cl. 103, 120 (2005) (recognizing presumption that contracting officer acted in good faith); see also Impresa, 238 F.3d at 1338 (recognizing that “the agency decision is entitled to a presumption of regularity”). The court finds the contracting officer’s direction to DCMA to search the MOCAS database, combined with the contracting officer’s personal search of the Consolidated List, was sufficient to provide a basis for the Contracting Officer’s determination that Hawk was responsible. (Precision Standard, Inc., v. U. S., and Hawk Enterprises, LLC., No. 05-1125C, Filed: February 27, 2006) (pdf)


Rather than request a deposition of the CO, the court offered the Government a less intrusive option either to provide documents or an affidavit that would demonstrate: “1) whether the contracting officer, as required by 48 C.F.R. § 9.105-1(a), possessed or obtained information sufficient to decide the integrity and business ethics issue, including the issue of control, before making a determination of responsibility; and 2) on what basis he made the responsibility determination.” Impresa, 238 F.3d at 1339. The Government made no such demonstration despite the court’s request to do so. The court is mindful that an “agency’s decision is entitled to a presumption of regularity.” Impresa, 238 F.3d at 1338 (citing Bowen v. Am. Hosp. Ass’n, 476 U.S. 610, 626-27 (1986)). In this case, however, that presumption is rebutted by the Government’s abuse of discretion in finding Maximum Thunder acceptable on a technical basis and the Navy’s admission that its due diligence was based on a “quick search on the website that indicates whether a company has been debarred,” TR-II at 38, and that, in fact, the Navy made no meaningful inquiry into the “adequa[cy of Maximum Thunder’s] financial resources . . . record of integrity and business ethics, [and] accounting and operational controls,” although it represented otherwise on the public record. AR at 593. The court does not consider an unverified answer to a “questionnaire” from one customer, about whom the Navy made no inquiry, to satisfy the requirements of 48 C.F.R. § 9.105-1(a). In any event, under the requirements of the Solicitation, Maximum Thunder should have received no rating as to its past performance, rather than one with a []. See AR at 62. For these reasons, the court has determined that the Navy’s decision to award Maximum Thunder with the [] to be a clear error of judgment and “an abuse of discretion.” Advanced Data 12 Concepts, 216 F.3d 1057-58; In re Universal Yacht Services, 2001 WL 360402, *3. (NaplesTacht.com, Inc., v. U. S., No. 04-252C, Filed under seal on April 14, 2004, Filed April 26, 2004) (pdf)


The standard of reasonableness to be applied when evaluating a contracting officer’s decision is not subjective, but objective. See Tidewater Mgmt. Serv., Inc. v. United States, 573 F.2d 65, 74 (Ct. Cl. 1978) (reviewing an unsuccessful bidder’s challenge to the sufficiency of the data on which the Navy based its procurement decision, court found no “objective evidence . . . to indicate that [the agency officials] were unreasonable or acted without basis in this decision”). What Mr. Sellman knew at the time of making the contract award was limited by his lack of experience with court appointed administrators and by his reliance on his own assumptions about the terms of the receivership agreement. Mr. Sellman did not have a sufficient basis (such as past familiarity with similar receivership agreements might have provided him) to support as reasonable the assumptions he made about the terms of the receivership agreement. Because he lacked sufficient information to be in a position to make the assumptions that he did and because he failed to make an affirmative assessment of JVC’s responsibility, the court cannot find that the contracting officer conducted a reasonable responsibility determination.  Impresa Construzioni Geom. Domenico Garufi v. U.S., No. 99-400C c/w 01-708C, May 3, 2002  (Remand from U. S. Court of Appeals for the Federal Circuit)

U. S. Court of Federal Claims - Listing of Decisions

For the Government For the Protester
New Vintage Autoworks, Inc. v. U. S., No. 17-123, May 18, 2017 Remington Arms Company, LLC v. u. s. and Colt Defense LLC and FN America, LLC, No. 15-1425C, March 30, 2016  (pdf)
Nilson Van & Storage, Inc. v. U. S., No. 10-716C, August 12, 2011  (pdf) Afghan American Army Services Corporation v. U. S., No. 11-520C, October 15, 2012  (pdf)
Watts-Healy Tibbitts AJV, v. U. S. and IBC/TOA Corporation, No. 08-261C, October 14, 2008 (pdf) Watts-Healy Tibbitts A JV, v. U. S. and IBC/TOA Corporation, No. 08-261C, July 23, 2008 (pdf)
OSG Product Tankers LLC, v. U. S. and USS Product Carriers LLC, No. 07-561C, June 30, 2008 (pdf) NaplesTacht.com, Inc., v. U. S., No. 04-252C, Filed under seal on April 14, 2004, Filed April 26, 2004 (pdf)
Precision Standard, Inc., v. U. S., and Hawk Enterprises, LLC., No. 05-1125C, Filed: February 27, 2006 (pdf) Impresa Construzioni Geom. Domenico Garufi v. U.S., No. 99-400C c/w 01-708C, May 3, 2002  (Remand from U. S. Court of Appeals for the Federal Circuit)
Impresa Construzioni Geom. Domenico Garufi v. U.S., No. 99-400C, August 12, 1999  (Appealed to the U. S. Court of Appeals for the Federal Circuit)   

U. S. Court of Appeals for the Federal Circuit - Key Excerpts

However, this "preferred course" seems out of place in this area of government procurement. The decision at issue is not the decision of the agency or agency head, but the decision of the contracting officer -- an individual within the agency. Under such circumstances, remand to the agency, here the Department of Defense or one of its constituent agencies, seems unduly cumbersome. Rather, this is one of those "rare circumstances" where the reasons for the contracting officer’s decision should be obtained by the contracting officer’s testimony, as was done in Overton Park.

In ordering the deposition of the contracting officer, we wish to make clear that we are not ordering a deposition into the contracting officer’s mental process, that is, the thought process by which he made his decision. Such inquiries are inappropriate. See, e.g., United States v. Morgan, 313 U.S. 409, 422 (1941). The deposition is to be confined strictly to placing on the record the basis for the contracting officer’s responsibility determination, that is, his grounds for concluding that JVC had a "satisfactory record of performance, integrity, and business ethics," including most particularly his assessment of the control issue. In order to answer the question of whether there was a lack of rational basis for the contracting officer’s decision, we must know: (1) whether the contracting officer, as required by 48 C.F.R. § 9.105-1(a), possessed or obtained information sufficient to decide the integrity and business ethics issue, including the issue of control, before making a determination of responsibility; and (2) on what basis he made the responsibility determination.  (Impresa Construzioni Geom. Domenico Garufi v. U.S., No. 99-5137, January 3, 2001  (Remanded to U. S. Sourt of Federal Claims))

U. S. Court of Appeals for the Federal Circuit - Listing of Decisions

For the Government For the Protester
Bender Shipbuilding Co., Inc., v. United States and Halter Marine, Inc.,  No. 02-5036, July 26, 2002 (MS Word) Impresa Construzioni Geom. Domenico Garufi v. U.S., No. 99-5137, January 3, 2001  (Remanded to U. S. Sourt of Federal Claims)
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