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4 CFR 21.5 (c): Affirmative Determination of Responsibility by Contracting Officer

Comptroller General - Key Excerpts

RQC objects to the agency’s affirmative determination of Stronghold’s responsibility, arguing that the contracting officer failed to consider available, relevant information. Specifically, the protester complains that the contracting officer failed to consider allegations made against Stronghold in a wrongful termination complaint filed on August 13, 2013, by a former employee in a California state court. RQC contends that these allegations, if true, would indicate that Stronghold is not a responsible contractor. Protest at 1; Protester’s Comments at 4-5.

As a general matter, our Office does not review an affirmative determination of responsibility by a contracting officer. 4 C.F.R. § 21.5(c) (2013); 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 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. Compare Southwestern Bell Tel. Co., B-292476, Oct. 1, 2003, 2003 CPD ¶ 177 (contracting officer 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. (contracting officer aware of adverse information concerning the awardee’s integrity and considered it).

Here, Navy states that it was not aware of the private state court action, nor any of the allegations involving Stronghold that were included in that complaint. Although the protester asserts that this information was “public knowledge at the time the award of the Contract was made,” Protest at 4, it has neither shown any reason why the agency should have had knowledge of a complaint filed in state court, nor shown any legal obligation on the contracting officer’s part to conduct the type of search that might have produced this information. Moreover, RQC’s argument is based upon unproven allegations in a complaint that is the subject of litigation, and not upon facts establishing that Stronghold has been convicted of any federal, state, or local crime or subject to civil or administrative penalties. In these circumstances, we find that RQC’s challenge to the adequacy and reasonableness of the contracting officer’s determination 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.  (RQ Construction, LLC, B-409131, Jan 13, 2014)  (pdf)


We will consider a protest of an affirmative determination of responsibility only where it is alleged that definitive responsibility criteria in the solicitation were not met, or where the protest 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. sect. 21.5(c) (2008); T.F. Boyle Transp., Inc., B-310708.2, Jan. 29, 2008, 2008 CPD para. 52 at 5. The protest allegations here focus on the latter type of case. In that 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. Verestar Gov’t Servs. Group, B-291854, B-291854.2, Apr. 3, 2003, 2003 CPD para. 68 at 4-5. We therefore have reviewed credible allegations that an agency failed to properly consider that a contractor committed fraud, FN Mfg., Inc., B-297172.2, Dec. 1, 2005, 2005 CPD para. 212 at 11-12, that principals of a contractor had criminal convictions, Southwestern Bell Tel. Co., B-292476, Oct. 1, 2003, 2003 CPD para. 177 at 5, or that a contractor engaged in improper financial practices and improperly reported earnings. Verestar Gov’t Servs. Group, supra. In contrast, we will not review unsupported allegations of illegal action, such as insider trading, MD Helicopters, Inc.; AgustaWestland, Inc., B-298502 et al., Oct. 23, 2006, 2006 CPD para. 164 at 41 n.40, or allegations concerning financial issues confronting a contractor, such as cash on hand and declining net worth. Advanced Tech. Sys., Inc., B-296493.6, Oct. 6, 2006, 2006 CPD para. 151 at 6 n.8.

Here, the allegation that the three RiverHawk principals took action that resulted in the bankruptcy of their former firm and its default on two Coast Guard vessel repair contracts is not a protest ground that we will review. As our cases noted above illustrate, the circumstances under which we will consider a challenge like Hendry’s involve information that, by its nature, would be expected to have a bearing on whether the awardee should be found responsible--proven criminal conduct, for example, but not allegations of poor financial or business performance. Here, the protester alleges that, while the three founders of RiverHawk were affiliated with their previous employer, their performance was sufficiently poor to cause the bankruptcy of the firm and the contract default. Even if the principals of RiverHawk were responsible for their prior firm’s bankruptcy or default, the nature of the allegation is one that concerns poor financial or business performance, and thus is not the type that would meet the threshold showing for review of a challenge to an affirmative responsibility determination.

The second prong of the protester’s challenge to the agency’s responsibility determination is the allegation that the principals of RiverHawk, in contravention of a non-compete agreement, made plans to form that company while affiliated with their prior firm, and then misrepresented the existence of that agreement to the agency. This protest ground likewise does not meet the threshold for our review. As a preliminary matter, the existence and potential enforceability of the non-compete agreement is a private dispute and not for our consideration. See DSG Corp.--Recon., B‑213070.2, Dec. 19, 1983, 83-2 CPD para. 705 at 1-2. In support of its allegation that the RiverHawk principals misled the agency as to the existence of a non-compete agreement, the protester produced a certificate from the relevant state department of corporations in an attempt to show that the bankrupt firm is a viable concern and that the non-compete clause is still enforceable against one of RiverHawk’s principals. That certificate, standing alone, is not sufficient to establish the applicability of the non-compete agreement. Because the non-compete agreement precluded competition by the signers with the products, services, or activities of the prior firm, that firm would have to have remained in the business of ship repair for the RiverHawk principal to be in violation of the agreement; the protester has offered no evidence that the principal’s prior firm is still actively engaged in its former line of work. More important, the non-compete agreement was for the benefit of the lender, not the firm, and by its terms expired on or about January 2, 2008, when the assets securing the loan were sold. See Intervenor’s Response to Motion to Dismiss, Aug. 15, 2008, Exh. D. The record establishes that the three former principals of the bankrupt firm founded RiverHawk after the previous firm had ceased operations and the loan giving rise to the non-compete agreement was no longer in effect; thus this protest ground--that the RiverHawk principals misrepresented the existence of a viable non-compete agreement--lacks a valid legal and factual basis. See Bid Protest Regulations, 4 C.F.R. sect. 21.5(f). (Hendry Corporation, B-400224.2, August 25, 2008) (pdf)


We will consider protests challenging affirmative determinations of responsibility only under limited, specified circumstances: 1) where it is alleged that definitive responsibility criteria in the solicitation were not met, or 2) where 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); 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. Nilson’s allegation falls under neither of the exceptions. First, it is clear that the clause is not a definitive responsibility criterion, which 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. In order for a standard to constitute a definitive responsibility criterion, the solicitation must make demonstration of compliance with the standard a precondition to receiving award. Public Facility Consortium I, LLC; JDL Castle Corp., B-295911, B‑295911.2, May 4, 2005, 2005 CPD para. 170 at 2-3; SDA, Inc.--Recon., B-249386.2, Aug. 26, 1992, 92-2 CPD para. 128 at 2-3. Here, rather than specifying a minimum, the clause only provided that offerors will provide information on “up to” three contracts--and it did not state that similarity of work and magnitude were preconditions for award. SDA, Inc.--Recon., supra. Under these circumstances, the clause was merely an informational requirement, noncompliance with which was not a basis for eliminating an offeror from consideration for award. See VA Venture; St. Anthony Med. Ctr., Inc., B‑222622, B-222622.2, Sept. 12, 1986, 86-2 CPD para. 289 at 4‑5; Patterson Pump Co., B‑204694, Mar. 24, 1982, 82-1 CPD para. 279; compare Charter Envtl., Inc., B-297219, Dec. 5, 2005, 2005 CPD para. 213 at 2-3 (standard was definitive responsibility criterion where it required offeror to have successfully completed at least three projects that included certain described work, and at least three projects of comparable size and scope).  Nilson’s allegation also does not raise a serious concern that the contracting officer “unreasonably failed to consider available relevant information or otherwise violated statute or regulation.” Such circumstances could occur where the protester presents evidence, for example, 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. See, e.g., Southwestern Bell Tel. Co., B‑292476, Oct. 1, 2003, 2003 CPD para. 177 at 7-11 (GAO reviewed allegation where evidence was presented that the contracting officer failed to consider serious, credible information regarding awardee’s record of integrity and business ethics); Verestar Gov’t Servs. Group, supra, at 4; Universal Marine & Indus. Servs., Inc., B‑292964, Dec. 23, 2003, 2004 CPD para. 7 at 2. Nilson has identified no such specific information. Rather, it alleges that the agency should have verified the information provided or obtained additional information. A dispute over the amount of information upon which an affirmative responsibility determination was 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, e.g., Brian X. Scott, B-298568, Oct. 26, 2006, 2006 CPD para. 156 at 4. (Nilson Van & Storage, Inc., B-310485, December 10, 2007) (pdf)


We dismiss this aspect of the protest. Where, as here, fixed unit prices are being offered to the government, a protest that a bid should be rejected solely for being too low does not provide a legally cognizable basis for rejection of the bid. SMC Info. Sys., B‑224466, Oct. 31, 1986, 86-2 CPD para. 505 at 5-6. To the extent that an agency has concern that a firm’s pricing is too low, its recourse lies solely in finding the firm nonresponsible. Id. In making award to Conduit, DEA determined the firm to be responsible, see Federal Acquisition Regulation (FAR) sect. 9.105-2(a)(1), and ALC’s protest based on Conduit’s allegedly low price amounts to a challenge to that affirmative determination of Conduit’s responsibility. Our Office does not consider challenges to affirmative responsibility determinations except in limited circumstances not alleged or present in this case. 4 C.F.R. sect. 21.5 (c) (2006). (AllWorld Language Consultants, Inc., B-298831, December 14, 2006) (pdf)


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 an affirmative determination of responsibility except under limited, specified exceptions. 4 C.F.R. § 21.5(c) (2003); Verestar Gov’t Servs. Group, B-291854, B-291854.2, Apr. 3, 2003, 2003 CPD ¶ 68 at 3. One specific exception provided in the revised Bid Protest Regulations is that our Office will consider a protest that identifies serious concerns that a contracting officer in making an affirmative determination of responsibility failed to consider available relevant information or otherwise violated statute or regulation. 4 C.F.R. § 21.5(c). As explained in the preamble to our revised regulations, the revision to our regulations 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. 79,833-834 (2002). We did not dismiss Southwestern Bell’s protest because on its face it fell within this exception, inasmuch as this well-documented, detailed protest raised serious concerns that the contracting officer failed to consider relevant information bearing on Adelphia’s record of integrity and business ethics, such that, if the allegations were true, it could not be said that the agency’s affirmative determination of responsibility was reasonably based. The agency’s dismissal request in response to the protest did not show that the agency gave any consideration to Adelphia’s record of integrity and business ethics in making its responsibility determination.  (Southwestern Bell Telephone Company, B-292476, October 1, 2003) (pdf)

Comptroller General - Listing of Decisions

For the Government For the Protester
RQ Construction, LLC, B-409131, Jan 13, 2014  (pdf) Southwestern Bell Telephone Company, B-292476, October 1, 2003 (pdf)
Hendry Corporation, B-400224.2, August 25, 2008 (pdf)  
Nilson Van & Storage, Inc., B-310485, December 10, 2007 (pdf)  
AllWorld Language Consultants, Inc., B-298831, December 14, 2006 (pdf)  
Universal Marine & Industrial Services, Inc., B-292964, December 23, 2003  
Verestar Government Services Group, B-291854; B-291854.2, April 3, 2003  (pdf)  

U. S. Court of Federal Claims - Key Excerpts

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