BNUMBER: B-265931
DATE: January 18, 1996
TITLE: Hellenic Technodomiki, S.A.
**********************************************************************
Matter of:Hellenic Technodomiki, S.A.
File: B-265931
Date: January 18, 1996
James Marketos, Esq., Lane and Mittendorf LLP, for the protester.
Cynthia Guill, Esq., Department of the Navy, for the agency.
Charles W. Morrow, Esq., and Guy R. Pietrovito, Esq., Office of the
General Counsel, GAO, participated in the preparation of the decision.
DIGEST
1. The procuring agency reasonably determined that a joint venture
satisfied the solicitation's definitive responsibility criterion that
a contractor possess a category H license under Greek Law, where one
venturer under the terms of the joint venture agreement was fully
responsible for the work and possessed the required category H
license.
2. Bid allegedly containing some below-cost line item prices is not
unbalanced, where the bid is not alleged to contain overstated prices
for other line items.
DECISION
Hellenic Technodomiki, S.A. protests the award of a contract to
Themeliodomi, S.A. and Contracting, Ltd., a joint venture, under
invitation for bids (IFB) No. N62470-94-B-4044, issued by the Naval
Facilities Engineering Command for construction work in Crete, Greece.
Hellenic contends that the awardee fails to meet a definitive
responsibility criterion, and that its low bid price was unreasonable
and unbalanced.
We deny the protest.
The IFB, which sought a contractor to perform various construction
projects, contained the following qualification requirement:
"BIDDER'S QUALIFICATIONS: Before a bid is considered for award,
the low responsive bidder will be requested to submit . . . proof
that the firm is of the overall . . . category classification "H"
licensed under Greek laws and regulations (Greek Ministry of
Environment, Planning and Public works Presidential Decree 368
dated 30 November 1994) to undertake the construction of this
project. If the bidder is unable to provide this information it
may be considered nonresponsible and will not be further
considered for award."
At bid opening, the Navy received 13 bids. The low bid was submitted
by Themeliodomi/Contracting, while the next low, responsive bid was
submitted by Hellenic. With respect to satisfying the qualification
requirement, Themeliodomi possessed an H category classification
license and its joint venturer, Contracting, possessed a Z category
license.[1] Their joint venture agreement stated that each party
would provide the necessary specialized personnel and equipment to
perform the project, would equally share in any profit or damage, and
Themeliodomi, by virtue of its H class license, would have full
responsibility for the project. Based upon this information, the Navy
determined that Themeliodomi/Contracting satisfied the bidder's
qualifications requirement.
Hellenic protests that the qualification requirement is a definitive
responsibility criterion which the joint venture does not satisfy
because only Themeliodomi possesses an overall H class license.
Specifically, Hellenic asserts that Greek presidential decree 609,
which is referenced by presidential decree 368, provides the rules for
bidding on Greek public works projects and states as follows:[2]
"Joint ventures of firms of the same category are accepted in the
bidding unless otherwise provided in the call for tenders. The
joint venturers must all belong to the class which is called out
in the bidding. If so provided in the call for tenders, one of
the joint venturers can belong to the class called out, and the
others may belong to one or two of the immediately lower classes.
In such latter case, the firm or firms must hold at least 75
percent of the shares."
Hellenic argues that, under decree 609, the Themeliodomi/Contracting
joint venture cannot be viewed as holding an H class license, because
only Themeliodomi possesses an class H license and the venturers have
equal ownership interest in the joint venture.
Definitive responsibility criteria are specific and objective
standards established by an agency as a precondition to award that are
designed to measure a prospective contractor's ability to perform the
contract. See Federal Acquisition Regulation sec. 9.104.2; T. Warehouse
Corp., B-248951, Oct. 9, 1992, 92-2 CPD para. 235. Here, the parties
agree that the bidder qualification requirement is a definitive
responsibility criterion.
We find that the Navy reasonably concluded that the awardee satisfied
this requirement. An agency properly can impute the resources,
capabilities, and facilities of one venturer of a joint venture in
order to determine that a joint venture satisfies a definitive
responsibility criterion, where imputation is compatible with the
purpose for the requirement. See Loyola College and NonPublic Educ.
Servs., Inc., a Joint Venture; Johnson & Wales College, B-205994 et
al., May 16, 1983, 83-1 CPD para. 507. Here, the Navy states that the
qualification requirement was necessary because of the number of
construction contractors the Navy has been required to default due to
insufficient resources and expertise to complete projects in Greece;
the H class licensing requirement is intended to ensure that the
agency obtains a contractor with sufficient labor, expertise,
equipment, management, and resources for the project. The Navy
determined that this purpose was satisfied here because Themeliodomi
holds a class H license and is, by virtue of the joint venture
agreement, fully responsible for the project. We find no basis to
object to this determination.
The Navy also reasonably determined that presidential decree 609,
cited by the protester as governing the license classification of
joint ventures, was not applicable to this procurement. This decree
expressly applies to Greek public works and projects; it does not
apply to procurements of the United States. While the IFB
incorporated the general business licensing requirements of decree 368
and this decree references decree 609, the language of decree 609
makes it clear that this decree applies only to work being performed
on Greek public works. In this regard, the protester has identified
no other laws or regulations that would require the agency to restrict
eligible contractors to those that satisfy the requirement applicable
to firms performing work for the Greek government.
Finally, Hellenic's challenge to the awardee's bid as unbalanced and
unreasonably low on certain line items provides no basis to object to
the award, where, as here, there is no evidence or assertion that the
bid was overstated under other line items. Before a bid can be
rejected as unbalanced, it must be found to be both mathematically and
materially unbalanced, and a bid is only mathematically unbalanced if
it contains both understated and overstated costs. See Advanced
Modular Space, Inc., B-265860, Oct. 6, 1995, 95-2 CPD para. 168.
Furthermore, the submission of a below-cost bid is not illegal, and
the mere fact that a bid includes understated prices does not justify
rejection of the bid. Nissho Iwai Am. Corp.; Patterson Pump Co.,
B-254870; B-254870.2, Jan. 24, 1994, 94-1 CPD para. 34.
The protest is denied.
Comptroller General
of the United States
1. Hellenic asserts that Contracting actually holds an overall license
below category Z. However, given our decision that the agency could
reasonably determine that the joint venture met the overall H
licensing requirement based upon Themeliodomi's H class license and
agreement to be fully responsible for the project, this argument is
irrelevant.
2. While the Navy and the protester have disputed the literal
translation of presidential decree 609 from Greek into English, the
protester agrees that the Navy's translation reflects the substance of
the decree. In any event, we have used the protester's translation.