BNUMBER:  B-270860.5
DATE:  July 18, 1996
TITLE:  Department of the Army--Reconsideration

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Matter of:Department of the Army--Reconsideration

File:     B-270860.5

Date:July 18, 1996

James H. Roberts III, Esq., Manatt, Phelps & Phillips, for Holiday 
Inn-Laurel.
J. William Bennett, Esq., for Convention Marketing Services, Inc.
Col. Nicholas P. Retson and Capt. Bryant S. Banes, Department of the 
Army, for the agency.
Tania L. Calhoun, Esq., and Christine S. Melody, Esq., Office of the 
General Counsel, GAO, participated in the preparation of the decision.

DIGEST

Request for reconsideration is denied where the requesting party has 
not shown that our prior decision contained legal or factual errors 
which would warrant a reversal or modification of our decision.

DECISION

The Department of the Army requests that we reconsider our decision in 
Holiday Inn-Laurel--Protest and Request for Costs, B-270860.3; 
B-270860.4, May 30, 1996, 96-1 CPD  para.  259, concerning the Army's 
procurement of meals, lodging, and transportation to support the 
Baltimore Military Entrance and Processing Station in Baltimore, 
Maryland under request for proposals (RFP) No. DAHC36-95-R-0012.  In 
that decision, we granted Holiday Inn-Laurel's request that it be 
reimbursed the reasonable costs of filing and pursuing its protest of 
the evaluation of its proposal, and sustained its protest of the 
Army's refusal to award it the contract in light of the fact that the 
Small Business Administration (SBA) issued the firm a certificate of 
competency (COC).

We deny the request for reconsideration.

Holiday Inn-Laurel filed a protest[1] in which it asserted that the 
Army had improperly evaluated its proposal as marginal and, more 
specifically, that the Army had improperly evaluated its proposal with 
respect to past performance.  The firm also challenged the Army's past 
performance evaluation to the extent that it constituted a 
nonresponsibility determination.  After the protest was filed, the 
contracting officer determined that the firm's poor past performance 
justified a finding that it was nonresponsible.  Since the firm is a 
small business concern, the Army, pursuant to Federal Acquisition 
Regulation (FAR)  sec.  19.602-1(a)(2), referred the matter to SBA for 
review under its COC procedures.  The Army also issued a stop-work 
order to the awardee.

In its report, the Army summarily rebutted the protest allegations and 
referred to enclosed evaluation documents.  Our review of those 
documents showed that the evaluation was flawed, and we asked the 
agency to respond to our concerns.  The day before the protester's 
comments were due, the Army advised us that it had taken corrective 
action and reevaluated the proposals consistent with our concerns.  As 
a result, Holiday Inn-Laurel was determined to be the lowest-priced, 
technically acceptable offeror, and thus in line for award.  However, 
the Army did not make award to the firm because it had been determined 
nonresponsible, and SBA's decision on the COC was still pending.  
Under the circumstances, we dismissed the protests as academic with 
respect to the evaluation challenge, and as premature with respect to 
the nonresponsibility determination challenge. 

Holiday Inn-Laurel subsequently filed a request for costs with our 
Office, arguing that the Army had unduly delayed taking corrective 
action in response to the firm's meritorious protest.  On that same 
day, SBA declined to issue the firm a COC, but then subsequently 
issued the COC.  Holiday Inn-Laurel then protested the Army's refusal 
to acknowledge the SBA's issuance of the COC and award the contract to 
the firm.

As to the request for costs, we determined that the Army had unduly 
delayed taking corrective action in the face of Holiday Inn-Laurel's 
clearly meritorious protest, and recommended that the firm be 
reimbursed the costs of filing and pursuing that protest.  See Bid 
Protest Regulations, 4 C.F.R.  sec.  21.8(e) (1996).  The Army did not 
dispute that its corrective action was taken in response to our 
queries bearing directly upon issues implicit in those allegations, 
leading to our conclusion that they were clearly meritorious, and the 
record showed that the Army unduly delayed taking its corrective 
action by not promptly undertaking a reasonable factual investigation 
before filing its report.  See Tucson Mobilephone, Inc.--Request for 
Entitlement, 73 Comp. Gen. 71 (1994), 94-1 CPD  para.  12.

In its request for reconsideration, the Army complains that since its 
corrective action did not result in award to Holiday 
Inn-Laurel--because SBA had not yet acted on the COC issue--the 
protest was not clearly meritorious.  The Army is mistaken.

A protest is "clearly meritorious," i.e., not a close question, when a 
reasonable agency inquiry into the protester's allegations would show 
facts disclosing the absence of a defensible legal position.  Id.; 
ManTech Field Eng'g Corp.--Recon., B-246152.5, Dec. 17, 1992, 92-2 CPD  para.  
422.  Hence, the determination as to whether a protest is clearly 
meritorious depends upon the nature of the protest allegations, not 
the final result of the agency's corrective action.  A protest 
challenging the evaluation of proposals, such as this one, may be 
clearly meritorious even where the protester does not receive award as 
a result of the agency's corrective action.  See, e.g., David 
Weisberg--Entitlement to Costs, 71 Comp. Gen. 498 (1992), 92-2 CPD  para.  
91 (corrective action resulted in termination of awardee's contract 
and resolicitation); Carl Zeiss, Inc.--Entitlement to Costs, 
B-247207.2, Oct. 23, 1992, 92-2 CPD  para.  274 (corrective action resulted 
in termination of awardee's contract and decision not to reinitiate 
selection process).  Since Holiday Inn-Laurel's allegations were 
clearly meritorious, that SBA had not yet acted on the COC referral 
was irrelevant to our determination.[2]  
 
Turning to the protest, our decision explained that shortly after SBA 
declined to issue a COC, it learned that its decision might not be 
sound.  SBA immediately requested and received additional time from 
the Army to review its decision, and the Army chose not to lift the 
stop-work order.  After additional review, SBA decided to issue the 
COC.  SBA advised the contracting officer of its intention to do so, 
and the contracting officer asked to submit new or additional 
information bearing on Holiday Inn-Laurel's use of overflow facilities 
and the total number of written complaints of rude or discourteous 
treatment of applicants.  The parties agreed that further action would 
be suspended pending SBA review of this additional information.  
Several days later, the Army advised SBA that it had no additional 
information to provide, and that it needed a final decision.  It was 
not until after SBA issued the COC that the Army lifted the stop-work 
order and informed SBA that it would not acknowledge the COC.

In our decision, we stated that the Army must consider SBA's issuance 
of the COC as conclusive.  SBA has conclusive authority to review a 
contracting officer's negative determination of responsibility and to 
determine a small business firm's responsibility by issuing or 
refusing to issue a COC.  15 U.S.C.  sec.  637(b)(7)(A) (1994); R.T. Nelson 
Painting Serv., Inc., 69 Comp. Gen. 279 (1990), 90-1 CPD  para.  202.  We 
agreed with SBA that the applicable regulations did not bar SBA from 
further review following the issuance of an initial decision under the 
circumstances here.[3]  We also explained that where SBA does not 
notify a contracting agency of its intent to issue a COC until after 
the time period for issuing a COC decision, but the contracting 
officer nevertheless receives such advice from SBA prior to taking any 
contract action, the agency is bound by the COC determination.  Age 
King Indus., Inc., B-225445.2, June 17, 1987, 87-1 CPD  para.  602.  Taking 
these two factors together, we concluded that when the Army was 
advised of the decision to issue a COC, it could not disregard it, 
given that the stop work order had not been lifted and the government 
otherwise would not be materially prejudiced by honoring the COC.  
This result was consistent with the contracting officer's basic 
responsibility under the RFP to make award to the responsible offeror 
offering the lowest priced, technically acceptable proposal, and with 
the statutory scheme that vests conclusive authority for determining a 
small business's responsibility in SBA.  Id.

In its request for reconsideration, the Army complains that we 
improperly failed to give it the opportunity to provide information 
rebutting SBA's conclusions as to Holiday Inn-Laurel's responsibility, 
and asks that we now consider such information as "vital information" 
bearing upon the firm's responsibility which SBA failed to consider.   

While our bid protest authority encompasses alleged violations of law 
and regulation, 31 U.S.C.  sec.  3552, 3554 (1994), we have been given no 
authority to review SBA's judgments concerning the issuance of COCs.  
We will only review such decisions given a showing of possible bad 
faith on the part of government officials or a failure to consider 
vital information bearing on the firm's responsibility.  4 C.F.R.  sec.  
21.5(b)(2).  In adopting the "failure to consider vital information" 
standard, we were concerned that in certain circumstances SBA, because 
of how information was presented to or withheld from it by the 
procuring agency, could be led to issue or not issue a COC when its 
decision might be otherwise were it given a more accurate picture of 
the facts bearing on a firm's responsibility.  That is, we were 
concerned primarily that SBA could be misled into denying a COC by 
incomplete, misleading, or inaccurate information presented by the 
procuring agency.  See Joanell Labs., Inc., B-242415.16, Mar. 5, 1993, 
93-1 CPD  para.  207.  This concern is not present here.    

Contracting agencies are afforded ample administrative recourse when 
disagreement arises over whether SBA should issue a COC to a firm.  
See FAR  sec.  19.602-3.  In accordance with these provisions, prior to 
issuing the COC, SBA gave the Army the opportunity to submit new or 
additional information in support of its position that Holiday 
Inn-Laurel was nonresponsible.  Specifically, the contracting officer 
advised SBA that he would submit information bearing on the firm's use 
of overflow facilities and the total number of written complaints of 
rude or discourteous treatment of applicants.  SBA agreed to delay 
issuing the COC until it had reviewed this information.  For reasons 
known only to the Army, the contracting officer subsequently informed 
SBA that the Army had no new or additional information to submit.  
There is no evidence that the information now proffered could not have 
been provided to SBA prior to the issuance of the COC.  Indeed, the 
record shows that SBA offered to give the Army additional time in 
which to submit additional information, but that the Army pressed for 
a final decision, effectively waiving its right to appeal to SBA's 
Central Office.  The Army is now asking our Office to provide it with 
the administrative appeal that it declined to pursue with SBA.  Given  
SBA's conclusive authority in this area, and the lack of evidence that 
the information now proffered could not have been provided to SBA 
prior to the issuance of the COC, we will not do so.    

Under our Bid Protest Regulations, to obtain reconsideration the 
requesting party must show that our prior decision may contain either 
errors of fact or law or present information not previously considered 
that warrants reversal or modification of our decision.  4 C.F.R.  sec.  
21.14(a); R.E. Scherrer, Inc.--Recon., B-231101.3, Sept. 21, 1988, 
88-2 CPD  para.  274.  As the Army has not met this standard, its request 
for reconsideration is denied.  In addition, we recommend that Holiday 
Inn-Laurel recover the costs incurred in responding to this request 
for reconsideration.  Banks Firefighters Catering; Dept. of 
Agriculture; Western Catering, Inc.--Recon., B-257547.5 et al., Mar. 
6, 1995, 95-1 CPD  para.  129; General Servs. Admin.--Recon., B-237268.3 et 
al., Nov. 7, 1990, 90-2 CPD  para.  369.

The request for reconsideration is denied.

Comptroller General
of the United States

1. The long history of this disputed procurement is set forth in 
detail in our May 30 decision and will not be repeated here.

2. To the extent that the Army argues that Holiday Inn-Laurel's 
allegation with respect to the nonresponsibility determination was not 
clearly meritorious, as noted in our prior dismissal, that allegation 
was not before this Office.

3. While the Army complains that we did not address the effect of 
revised COC regulations on this case, 61 Fed. Reg. 3,310 (1996), these 
revised regulations were not effective until March 1, 1996, long after 
the COC referral was made.