BNUMBER:  B-270085
DATE:  February 6, 1996
TITLE:  North American Construction Corp.

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Matter of:North American Construction Corp.

File:     B-270085

Date:     February 6, 1996

Thomas E. Hill, Esq., Haynes and Boone, for the protester.
Leonard Crowley, Esq., and Cynthia S. Guill, Esq., Department of the 
Navy, for the agency.
Jacqueline Maeder, Esq., and Paul Lieberman, Esq., Office of the 
General Counsel, GAO, participated in the preparation of the decision.

DIGEST

Agency reasonably determined that protester was nonresponsible, 
despite some indication of satisfactory performance on certain 
contracts, based upon information that the protester's performance on 
five recent contracts was deficient.  

DECISION

North American Construction Corp. protests the agency determination 
that it is nonresponsible under invitation for bids (IFB) No. 
N68711-95-B-7525 issued by the Department of the Navy, the Naval 
Facilities Engineering Command, Southern Division, for the excavation, 
removal, and replacement of underground storage tanks at the Marine 
Corps Base, Camp Pendleton, California.  North American argues that 
the nonresponsibility determination was improper.

We deny the protest.

Nine bids, including one from North American, were opened on the 
August 24, 1995, bid opening date.  The low bid of $2,174,717 was 
eliminated as nonresponsive.   North American, the second low bidder 
at $2,608,517, was then considered for award.  

The Navy requested information from North American about its 
experience in performing similar contracts and made its own inquiries 
as to North American's ability to perform the work.  Specifically, the 
contracting officer relied upon two sources:  a telephone survey, 
including four references submitted by North American, concerning 
recently completed work or current work being performed by North 
American, and, to a lesser extent, information from the United States 
Army Corps of Engineers Construction Contractor Appraisal Support 
System (CCASS), which is a computerized listing of previous contracts 
held by a firm with the Corps.  
The Navy's six telephone inquiries revealed that North American was 
rated highly satisfactory on two contracts, satisfactory on two 
contracts, and unsatisfactory on two contracts.  The two 
unsatisfactory evaluations were for a power system modification at 
Miami International Airport, contract No. DTFA06-94-C-50049, and a 
clinic addition/alteration at Keesler Air Force Base, Mississippi, 
contract                No. 92-C-0779. 

On the Miami International Airport contract, North American was rated 
unsatisfactory for poor management of subcontractors, poor 
subcontractor electrical work which North American had to redo, and 
for being extremely slow.  Also, the government representative faulted 
North American for submitting an overabundance of change order 
requests.  Similarly, on the Keesler Air Force Base project, North 
American was rated unsatisfactory for poor management, requiring the 
redesign and rework of concrete columns, and for being significantly 
behind schedule.  This government representative also characterized 
North American as a "change order artist," stated that there were many 
outstanding claims against North American, and indicated that North 
American was being audited for fraudulent claims by the Defense 
Contract Audit Agency (DCAA).

Additionally, with respect to contract No. N63387-89-E-4924 for 
repairs to a power plant on San Clemente Island, the Navy was apprised 
that, although North American had been rated satisfactory, North 
American's performance was unsatisfactory because of its handling of 
contaminated soil, insulation of engines on concrete, and the 
operation and testing of the engines.  The Navy's report indicated 
that North American was given a satisfactory evaluation to avoid 
liquidated damages and to get the project completed.  Based on the 
telephone interview, the Navy assessed this project as a 
"unsatisfactory" in its overall review.  

The CCASS summarized 23 completed projects from November 1990 through 
January 1996.  Of these 23, North American's performance was evaluated 
as outstanding on 5 projects, satisfactory on 16 and unsatisfactory on 
2.  The two unsatisfactory performance ratings were both for 
construction contracts:  
contract No. DACA4591C0099 at Whiteman Air Force Base, Missouri and 
No. DACW6892C0038 at Walla Walla, Washington.  North American was 
rated unsatisfactory on the Whiteman contract with respect to quality 
of work, timely performance, effectiveness of management and 
compliance with safety standards.  North American was rated 
unsatisfactory on the Walla Walla project on timely performance and 
effectiveness of management.  North American was also criticized for 
not effectively managing its subcontractors, using unsatisfactory 
materials and requiring extensive rework.  

Considering both the phone surveys and the CCASS, the Navy determined 
that while North American's work on some current contracts was 
satisfactory, it had been rated unsatisfactory on five other contracts 
from 1992 through 1995.  The following deficiencies were noted in the 
Navy's summary memo concerning North American's responsibility:  
management needs attention, difficulty adhering to approved schedules, 
quality of work, though acceptable, is weak and some projects required 
considerable rework.

After reviewing these findings, the Navy concluded that the above 
information warranted a finding that North American was not 
responsible.  The Navy advised the firm of this nonresponsibility 
determination by letter dated September 29, and award was made to 
Perry Williams, Inc., the next low, responsible, responsive bidder.  
This protest followed.  

Before awarding a contract, a contracting officer must make an 
affirmative determination that the prospective contractor is 
responsible.  Federal Acquisition Regulation (FAR)  sec.  9.103(b).  With 
regard to a prospective contractor's prior performance, the firm must 
have a satisfactory performance record, and a prospective contractor 
that is or recently has been seriously deficient in contract 
performance shall be presumed to be nonresponsible, unless the 
contracting officer determines that the circumstances were properly 
beyond the contractor's control or that appropriate corrective action 
has been taken by the contractor.  FAR     sec.  9.104-1(c) and 
9.104-3(c); Integrated Waste Special Servs., B-257057, Aug. 25, 1994, 
94-2 CPD  para.  80.  We will not question a nonresponsibility determination 
absent a showing of bad faith by the contracting agency or the lack of 
any reasonable basis for the determination, since the determination is 
essentially a matter of business judgment and encompasses a wide 
degree of discretion.  Id.

North American generally argues that it has a satisfactory record of 
performance and integrity and adequate financial resources to perform 
the work.  In its response to the agency report, the protester 
vigorously disputes the various performance deficiencies found by the 
contracting officer in North American's current and previous contracts 
and argues that the Navy ignored favorable information and failed to 
view its evaluations in their entirety.  North American maintains that 
the telephone survey conducted by the Navy is "replete with errors and 
mis-characterizations" and that the Navy's "summary of the CCASS 
evaluations also contains numerous errors and presents an unreasonable 
and irrationally distorted picture of North American's performance on 
these projects."  North American argues that a fair review of each 
project would show that North American is a responsible contractor.  

For example, the protester maintains that the deficiencies under its 
current contract at Keesler Air Force Base are mainly excusable and 
beyond the firm's control.  First, with regard to its being 
significantly behind schedule, North American states that while "it 
may appear to be behind the currently 'approved' schedule, North 
American believes resolution of open issues . . . will result in an 
adjustment to the schedule such that North American's performance will 
be viewed as substantially on time."  Also, North American argues 
that, contrary to the Navy's summary, although there are "open issues" 
to resolve, it has no claims on this project.  North American argues 
that it has claims pending on two other projects, but states that the 
government only contests one of these claims.  As to the required 
rework of concrete columns, North American states that it 
inadvertently misplaced some of the internal reinforcement bars so 
that they were too close to the outside perimeter in a few of the 
columns.  However, the protester maintains that it quickly and 
effectively resolved this problem by hiring an outside engineer and 
consulting with agency engineers and ultimately adding additional 
rebar where necessary.  The protester states that the Air Force's 
characterization of it as a "change order artist" is misleading and 
irrelevant.  The protester states that of the 16 change orders that 
have been negotiated on this project, only two were initiated by North 
American.  Finally, while North American admits that it is currently 
being audited by DCAA, North American states that the audit was 
requested by the Air Force and that  North American believes the audit 
is unnecessary.

With regard to the Miami International Airport project, North American 
agrees that the government has granted a 100-day extension to it under 
the Changes and Differing Site Conditions clauses.  According to North 
American, with that contract extension, it is actually ahead of 
schedule.  The protester also states that it has requested an 
additional extension of up to 80 days.  While the agency has agreed to 
an extension, the parties have not reached an agreement on the length 
of the extension.  North American admits that its electrical 
subcontractor, a minority-owned enterprise, is weak, but argues that 
because it undertakes some remedial work itself demonstrates its 
support of minority-owned businesses and its responsibility as a prime 
contractor. 

North American also disagrees with the Navy's assessment of its 
performance on the San Clemente Island contract.  As noted above, 
North American was rated satisfactory for this contract but the Navy 
considered North American's performance to be less than satisfactory 
in light of the information obtained from its telephone inquiries.   
North American disagrees that its satisfactory rating was the result 
of any "deal" or "agreement" for completion of the project. 

As to the two unsatisfactory performance ratings reported on the 
CCASS, North American states that the difficulty it experienced on the 
Walla Walla contract was  in part due to the relatively isolated 
location of the site and the limited number of subcontractors 
available.  North American also states that it has terminated its 
project manager for this project.  As for the Whiteman contract, North 
American believes that it was adversely affected by personality 
problems unrelated to performance and that its unsatisfactory rating 
was not fair or objective.  The protester argues that neither of these 
two unsatisfactory ratings should be weighed heavily against North 
American because North American took appropriate corrective action.

In our view, the Navy's nonresponsibility determination is reasonably 
based.  The contracting officer reviewed information concerning North 
American's performance under previous and current contracts and, as 
discussed above, primarily based his decision that North American was 
nonresponsible on North American's deficient performance on five 
contracts--Walla Walla, Whiteman, San Clemente Island, Miami 
International Airport, and Keesler.  North American disputes these 
performance evaluations, arguing generally that the deficiencies were 
minor or mischaracterized in the Navy summary and therefore are an 
inadequate basis for determining that North American was 
nonresponsible.  However, North American's favorable characterization 
of the deficiencies and its mere disagreement with the contracting 
officer's conclusion that the deficiencies in those contracts raised 
questions about North American's ability to perform the work required 
under this contract does not demonstrate that the decision was 
unreasonable.

For example, as to the Navy's alleged mischaracterizations, the record 
shows that the Navy's assessment that North American's management 
needs attention, that North American had some difficulty in adhering 
to approved schedules, that the quality of work, though acceptable, is 
weak and that some projects required substantial rework to meet 
acceptable standards, is reflective of the negative ratings in either 
the telephone inquiries or the CCASS.  Indeed, North American admits 
to significant schedule changes and the need for rework on the Miami 
and Keesler projects.  Additionally, North American received 
unsatisfactory ratings on timely performance on the Whiteman and Walla 
Walla contracts.  While North American may object to the Navy's 
phrasing of the deficiencies or to the emphasis the Navy placed on the 
deficiencies, it is evident from the record that North American has 
experienced timeliness and quality of work problems.  Similarly, the 
Navy's finding that North American's management needs attention is 
supported by the CCASS report on Whiteman and Walla Walla and by 
comments made to the Navy in two of the six phone inquiries.  The 
Navy's assessment that North American's quality of work is weak is 
supported by unsatisfactory ratings as to quality of work on the 
Whiteman, Miami, and Keesler projects.  Therefore, while the protester 
may offer its explanation of what it believes to be the cause of the 
unsatisfactory performance ratings and may disagree with the Navy's 
conclusions regarding these ratings, the Navy's findings are supported 
by the record, and the protester has not demonstrated that the Navy's 
conclusion is unreasonable.  

North American also suggests that the Navy ignored favorable 
information and improperly based its determination solely on a small 
number of unsatisfactory ratings.  This argument is without merit.  
First, the record shows that the premise is inaccurate since, while 
the Navy ultimately focused on deficiencies under five contracts, the 
agency also reviewed other North American contracts with government 
agencies.  Specifically, the Navy's summary acknowledges five 
outstanding evaluations and 21 satisfactory evaluations, including two 
satisfactory ratings on current contracts.  The Navy's summary of the 
phone inquiries acknowledges two highly satisfactory ratings and two 
satisfactory ratings.  In the final analysis, however, the Navy 
considered the firm's poor performance on the five contracts in the 
last 3 years the most significant element in its review.  The fact 
that some of the evidence supplied to the Navy may have been favorable 
to North American does not alter the fact that there was sufficient 
evidence for the agency to conclude that North American has had recent 
performance problems.  See Integrated Waste Special Servs., supra.

Finally, North American suggests that the nonresponsibility 
determination here is unreasonable because it has just been awarded a 
contract by the Corps of Engineers despite its two unsatisfactory 
ratings in the CCASS.  The fact that North American has been found 
responsible for other procurements has no bearing upon the 
nonresponsibility determination at issue here; such determinations are 
inherently judgmental and different contracting officers can reach 
opposite conclusions on the same facts, without either determination 
being unreasonable or the result of bad faith.  Becker and 
Schwindenhammer, GmbH, B-225396, Mar. 2, 1987, 87-1 CPD  para.  235.

The protest is denied.

Comptroller General 
of the United States