FAR 9.207 (a):  Qualification Requirements, Change in Ownership, Location, etc.

Comptroller General - Key Excerpts

Corporate Restructuring of Awardee’s Parent

On November 1, 2015, approximately five weeks after the agency selected Hewlett Packard Enterprise Services for award, the awardee’s corporate parent, Hewlett Packard Company, split into two companies: Hewlett Packard Enterprise Company, which will continue to focus on enterprise services; and Hewlett Packard Inc., which will focus on printer and personal systems business. Intervenor’s Comments, Exh. 3, at 202; Intervenor’s Supp. Comments at 4; Protest at 30; CO Statement at 29. Although the split was not finalized until the fall of 2015, Hewlett Packard Company announced its plans for this split in October 2014. Intervenor’s Comments, Exh. 3, at 202.

The protester argues that the agency unreasonably failed to consider the corporate reorganization of the awardee’s corporate parent when evaluating the awardee’s proposal. Protest at 29-33; Protester’s Comments & Second Supp. Protest at 5-14. In this regard, the protester claims that numerous references in the awardee’s proposal to “HP” must refer to the Hewlett Packard Company, the former parent of the awardee, rather than to the awardee, Hewlett Packard Enterprise Services. Protester’s Comments & Second Supp. Protest at 8. The protester also premises its argument on the incorrect belief that the awardee will become a subsidiary of Hewlett Packard, Inc.--the newly formed printer and personal devices company. Protester’s Comments & Second Supp. Protest at 13‑14; see Intervenor’s Supp. Comments at 4 (citing Intervenor’s Comments, exh. 3, Letter to CIO-SP3 Contracting Officer; Intervenor’s Supp. Comments, exh. 8, Letter to Hewlett Packard Enterprise Form 10 at 184 (identifying HPES as “a wholly owned subsidiary of Hewlett Packard Enterprise”). The protester thus concludes that the agency unreasonably failed to consider how the corporate reorganization of Hewlett Packard Company would affect Hewlett Packard Enterprise Services’ proposed performance of the contract.

We find no merit in this protest ground. As an initial matter, we do not agree with the protester’s assumption that any references in the proposal to “HP” must refer to, and indicate reliance on, the Hewlett Packard Company, rather than to the awardee or to the awardee’s new corporate parent, Hewlett Packard Enterprise Company. Although the protester contends that the awardee’s proposal only used the acronym HPES to refer to itself, Protester’s Comments & Second Supp. Protest at 8, we note that the awardee’s proposal alternately referred to itself as Hewlett Packard Enterprise Services, HP Enterprise Services, and HPES, and contained a logo reading “HP” on each page of the proposal. See, e.g., AR, Tab M, Hewlett Packard Proposal, at 6, 10, 114.

Further, while the term “HP” read alone may have been ambiguous as to whether it referred to Hewlett Packard Enterprise Services, the proposal read as a whole demonstrates that references to “HP” referred to the awardee here. For example, the protester cites the following language from the awardee’s proposal: “The MDC [Mid-Atlantic Data Center] that will support FSA is an HP-owned facility.” Protester’s Comments & Second Supp. Protest at 7 (quoting AR, Tab M, Hewlett Packard Proposal, at 5). However, other language in the proposal makes clear that the MDC is owned by HPES, that is, the awardee Hewlett Packard Enterprise Services. See, e.g., AR, Tab M, Hewlett Packard Proposal, at 38. (referring to “the HPES MDC”). Thus, the proposal’s references to “HP” provide no basis to conclude that the awardee planned to rely on the resources of any corporate parent. In sum, we find that the protester has failed to establish that the awardee’s proposal relied, to any extent, upon the corporate resources of its parent. In these circumstances, we find that the agency reasonably did not consider the restructuring of the awardee’s parent when evaluating proposals. Cf. FCi Federal, Inc., B-408558.7; B‑408558.8, Aug. 5, 2015, 2015 CPD ¶ 245 at 11-12 (protest sustained where agency in undertaking corrective action approximately nine months after its initial award decision, and after the awardee had been sold to another company, failed to consider that awardee’s proposal no longer reflected the manner in which the contract will be performed and the resources, experience, and past performance to be relied upon in the performance of the contract).  (Dell Services Federal Government, Inc., B-412340, B-412340.2, B-412340.3: Jan 20, 2016)  (pdf)

The protester’s argument is based on a misreading of FAR § 52.209-1. The plain language of that provision requires only “reevaluation of a qualification” where the location or ownership of the manufacturing facility of an approved source changes; it does not require that the purchasing entity undergo testing or be formally re‑approved, as the protester suggests. The FAR does contemplate that firms will request reevaluation of their approved status for a product where the location or ownership of the manufacturing facility has changed, and FAR § 9.207 (a)(3) addresses the situation where a firm fails to do so, providing as follows:

The contracting officer shall promptly report to the agency activity which established the qualification requirement any conditions which may merit removal or omission . . . or affect whether a source should continue to be otherwise identified as meeting the requirement. These conditions exist when--
. . . .

(3) A supplier fails to request reevaluation following change of location or ownership of the plant where the product that met the qualification requirement was manufactured (see the clause at 52.209‑1, Qualification Requirements).

Signal’s request in its proposal that it be given Innowave’s source approval status appears to have served this purpose. In response to that request, DLA reported the change in ownership to the ESA responsible for source approval, and the ESA agreed that Signal could rely upon Innowave’s source status. This is all that was required by the FAR. Associated claims that Signal had to be formally re-approved in order to be eligible for award, because Innowave has not manufactured the item since 1988, and Signal itself has not manufactured the item since it purchased Innowave in 1993. This argument is untimely. Innowave was listed in the solicitation as an approved source. Thus, if Associated believed that Innowave should not be considered approved due to its years of inactivity, it was required to protest on this basis prior to the closing time for receipt of proposals. See 4 C.F.R. § 21.2(a)(1) (2003).  (Associated Aircraft Manufacturing & Sales, Inc., B-293529, March 22, 2004) (pdf)

Comptroller General - Listing of Decisions

For the Government For the Protester
Dell Services Federal Government, Inc., B-412340, B-412340.2, B-412340.3: Jan 20, 2016  (pdf)  
Associated Aircraft Manufacturing & Sales, Inc., B-293529, March 22, 2004  (pdf)  


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