BNUMBER:  B-262177
DATE:  November 20, 1995
TITLE:  Herb Richards Construction Company

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Matter of:Herb Richards Construction Company

File:     B-262177

Date:     November 20, 1995

Dennis E. Lind, Esq., Datsopoulos, MacDonald & Lind, for the 
protester.
Allen W. Smith, Department of Agriculture, for the agency.
M. Penny Ahearn, Esq., and David A. Ashen, Esq., Office of the General 
Counsel, GAO, participated in the preparation of the decision.

DIGEST

1.  General Accounting Office (GAO) will not conduct an in-depth 
inquiry into whether bidder is affiliated with contractor debarred for 
violations of the Contract Work Hours and Safety Standards Act; 
rather, GAO's review is limited to an examination of whether the 
contracting officer's determination of affiliation was reasonable.

2.  Protest against agency determination that firm was ineligible for 
award, based on substantial interest in firm of contractor debarred 
for violations of the Contract Work Hours and Safety Standards Act, is 
denied where debarred individual signed protester's bid in capacity of 
project manager. 

DECISION

Herb Richards Construction Company (HRCC) protests the rejection of 
its bid under invitation for bids (IFB) No. R4-IDAWY-95-14, issued by 
the Department of Agriculture, U.S. Forest Service for construction of 
a campground at the Salmon-Challis National Forests.  HRCC challenges 
the Forest Service's determination that the firm is ineligible for 
award of a contract based on its affiliation with John Richards, a 
contractor debarred by the Department of Labor for violations of the 
Contract Work Hours and Safety Standards Act, 40 U.S.C.  327 et seq. 
(1988) (the Act).  HRCC argues that it is entitled to award of a 
contract as the low, responsive bidder.    

We deny the protest.

The Forest Service determined that HRCC, the apparent low bidder, was 
ineligible for award on the basis that it was affiliated with John 
Richards, a debarred contractor.  Richards signed HRCC's bid in the 
capacity of project manager, and according to the agency, this 
indicates that he has authority to contractually obligate, and is a 
principal employee of, HRCC and has a substantial interest in HRCC.  

The protester challenges the agency's determination, arguing that John 
Richards is merely an employee who has no financial or ownership 
interest in HRCC, and no authority to sign bids and change orders 
without approval by Herb Richards.  HRCC claims that only Herb 
Richards, HRCC's president (and John Richards's father), can 
financially obligate the company; the only officers of the company are 
Herb Richards and his wife; Herb Richards is the only director of the 
company; and bonding is in Herb Richards's name.  

The Act provides that no government contract may be awarded to any 
firm in which a debarred contractor has a "substantial interest."  40 
U.S.C.  333(d)(2).  The Department of Labor is empowered to prescribe 
standards, regulations, and procedures to govern enforcement of the 
Act, 40 U.S.C.  330(d).  Pursuant to these regulations, federal 
contracting agencies and the Secretary of Labor have primary 
responsibility under the Act for determinations regarding affiliations 
with debarred firms.  29 C.F.R.  5.12 (1995); see M. C. & D. Capital 
Corp., B-189450, July 14, 1977, 77-2 CPD  31.  In light of the 
agencies' responsibility--and consistent with the review standard we 
have adopted in similar cases where the Service Contract Act applies, 
see  C & L Diversified Enters., Inc., B-224912, Jan. 30, 1987, 87-1 
CPD  102, aff'd on recon., B-224912.2, Mar. 10, 1987, 87-1 CPD  
268--we will not conduct an in-depth inquiry into whether HRCC is 
affiliated with John Richards; rather, we will limit our review to an 
examination of whether the contracting officer's determination was 
reasonable. 

The contracting officer reasonably rejected HRCC's bid.  While the 
protester's position is based on John Richards's asserted lack of an 
ownership interest, an agency reasonably can conclude that a person 
who is entrusted with the power to sign a bid (as John Richards did 
here), and thereby bind a contractor to perform under a contract, is 
so deeply involved with the company that a substantial interest 
reasonably may be assumed.  Traffic Moving Sys., Inc., B-248572, Sept. 
3, 1991, 92-2 CPD  152.  While the protester asserts that John 
Richards's authority to sign bids is limited by Herb Richards's prior 
review and approval, we note that when the agency specifically 
requested "[a] copy of John Richards's delegated authority to sign and 
obligate the company and his role as project manager regarding 
management decisions," HRCC furnished no documentation delineating the 
limits of John Richards's authority.  Further, we think that, under 
the circumstances, the agency reasonably could view John Richards's 
role as project manager as evidence that he has influence over the 
company's activities.[1]  Finally, although the contracting officer 
does not cite in support of his substantial interest determination the 
fact that Herb Richards, the president of the firm, and John Richards 
are father and son, in the absence of any evidence to the contrary, an 
agency may reasonably assume that family members generally have an 
identity of interest.  See Howema Bau-GmbH, B-245356; B-245386, Sept. 
4, 1991, 91-2 CPD  214; C & L Diversified Enters., Inc. supra.  

We conclude that the agency properly found HRCC ineligible for award 
based on its reasonable determination that the debarred contractor, 
John Richards, had a substantial interest in the company.  

The protest is denied.

Comptroller General
of the United States         

1. We note that while the Act does not define the term "substantial 
interest," additional guidance in this area can be derived from a 
Department of Labor regulation, 29 C.F.R.  4.188(c)(2), which 
discusses the term for purposes of implementing the Service Contract 
Act, 41 U.S.C.  351 et seq. (where the term is also not defined).  
That regulation states that "interest is not determined by ownership 
alone"; rather, "a debarred person will also be deemed to have a 
'substantial interest' in a firm if such person has participated in 
contract negotiations, is a signatory to a contract, or has the 
authority to establish, control, or manage the contract performance 
and/or the labor policies of a firm."  (Emphasis added.)