BNUMBER:  B-274627; B-274627.2
DATE:  December 20, 1996
TITLE:  Morganti National, Inc.

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Matter of:Morganti National, Inc.

File:     B-274627; B-274627.2

Date:December 20, 1996

J. Randolph MacPherson, Esq., Sullivan & Worcester LLP, for the 
protester.
Robert S. Brams, Esq., Patton Boggs, L.L.P., for Sayed Hamid Behbehani 
and Sons, Co. W.L.L., an intervenor.
Paul W. Manning, Esq., United States Information Agency, for the 
agency.
Linda S. Lebowitz, Esq., and Michael R. Golden, Esq., Office of the 
General Counsel, GAO, participated in the preparation of the decision.

DIGEST

An agency may reasonably accept an offeror's certification and 
worksheets as demonstrating compliance with the solicitation's 
mandatory domestic content requirements in the absence of information 
suggesting that the offeror otherwise does not intend to comply with 
those requirements.

DECISION

Morganti National, Inc. protests the award of a contract to Sayed 
Hamid Behbehani and Sons, Co. W.L.L. (SHB) under request for proposals 
(RFP) No. IA2101-S5234574-EP, issued by the United States Information 
Agency for the design, fabrication, and construction of a Voice of 
America (VOA) shortwave relay broadcasting station on the Island of 
Tinian, Commonwealth of the Northern Mariana Islands.  Morganti 
basically contends that SHB was ineligible for award because it failed 
to demonstrate compliance with the RFP's mandatory domestic content 
requirements.

We deny the protests.

The RFP contemplated the award of a fixed-price contract to the 
offeror whose proposal was most advantageous to the government, price 
being considered more important than the technical evaluation factors.  
The Tinian station, which will broadcast VOA radio programs to 
mainland China, was the last VOA relay station modernization project.  
Like the other projects, this procurement was subject to domestic 
content requirements, as described in the Foreign Relations 
Authorization 

Act for Fiscal Years 1988 and 1989, Pub. L. 100-204,  sec.  403(b), 101 
Stat. 1381 (1987), which provides as follows:

     "A bid shall not be treated as a responsive bid for purposes of 
     the facilities modernization program of the Voice of America 
     unless the bidder can establish that the United States goods and 
     services content, excluding consulting and management fees, of 
     his proposal and the resulting contract will not be less than 55 
     percent of the value of his proposal and the resulting total 
     contract."

To implement the statutory provision, the RFP included clause L.8, 
captioned "United States Goods and Services Content Requirements (Pub. 
L. No. 100-204)," and clause L.18, captioned "Computing United States 
Goods and Services Content as a Percentage of the Value of the 
Contract and Percentage of Value of the Proposal."  Clause L.8 
required offerors to submit completed domestic content percentage 
worksheets prepared in accordance with the format and instructions 
provided in clause L.18 for all goods and services included in the 
RFP's pricing schedule.  The worksheets were included as attachments 
to the RFP.  Basically, on the worksheets, offerors were required to 
provide their total price for domestic and foreign goods and services, 
and to state a total price percentage of domestic to foreign goods and 
services content.  A footnote at the end of clause L.18 explained that 
an offeror's satisfaction of the domestic content requirements 
constituted a "threshold mandatory evaluation factor," that is, if an 
offeror's proposal did not meet the 55-percent value of the proposal 
and 55-percent value of the contract requirements, the offeror would 
be considered unqualified and its proposal would be considered 
ineligible for award.

As relevant to these protests, included as another attachment to the 
RFP was a list of government-furnished equipment (GFE).  Specifically, 
the government was furnishing four generators, with auxiliary 
equipment and materials, for installation and integration by the 
contractor.  The RFP advised, however, that because the generators 
were GFE, offerors should not include the value of these items in 
their price proposals.  Neither the RFP's pricing schedule nor the 
domestic content worksheets included a line item for GFE.

Prior to the submission of initial proposals, clause K.19 was added to 
the RFP by amendment No. 1.  This clause provided as follows:

     "By submission of this offer, the offeror hereby certifies that 
     its offer is responsive under requirements of Section 403(b) of 
     P.L. 100-204.  An offeror will not be considered responsive 
     unless the offeror can establish that the United States goods and 
     services content, excluding consulting and management fees, of 
     its proposal and the resulting contract will not be less than 55 
     percent of the value of its proposal and the resulting total 
     contract."

By the closing date of May 16, 1995, Morganti, an American firm, and 
SHB, a Kuwaiti firm, submitted initial proposals, including completed 
worksheets demonstrating their compliance with the domestic content 
requirements.  Both proposals were included in the competitive range.  
Following discussions, each firm submitted a best and final offer 
(BAFO) by the closing date of August 15.

Subsequently, as a result of a congressional budget reduction, the 
agency issued amendment No. 7, reducing the scope of the project.  
This amendment made no changes to the domestic content requirements 
and continued to state that the generators would be provided as GFE.

Following another round of discussions and by the next closing date of 
May 15, 1996, Morganti and SHB submitted second BAFOs.  Both firms 
continued to demonstrate their compliance with the domestic content 
requirements.

Following the next round of discussions and as a result of additional 
budgetary reductions, on June 20, the agency issued amendment No. 9, 
further reducing the scope of the project.  Amendment No. 9 also 
stated that all four generators and all associated equipment and 
materials would be furnished to the contractor, 

     "[which] may use some, all, or none of the GFE and materials in 
     constructing a power generating system that will support the 
     relay station requirements.  Title to all of the listed equipment 
     and materials shall convey to the Contractor at a mutually 
     agreed-upon date not to exceed 12 months after [the notice to 
     proceed]."

The amendment provided that if the offeror decided not to use the GFE 
to perform the contract, an alternate configuration for the power 
generating system would have to be proposed.  Amendment No. 9 did not 
change the domestic content requirements or add a line item for GFE to 
the RFP's pricing schedule or to the domestic content worksheets.

Morganti and SHB submitted third BAFOs by the July 3 closing date.  
Neither offeror proposed to use the generators provided by the 
government as GFE on the Tinian project.  In addition, neither offeror 
considered the value of GFE in calculating its respective percentage 
of domestic content.  Morganti's domestic content was 79 percent and 
SHB's domestic content was 62.26 percent.  Since SHB satisfied the 
threshold mandatory domestic content requirements, that is, the 
domestic content of its proposal exceeded the mandatory 55 percent, 
and since SHB's price was significantly less than Morganti's price, 
the agency awarded a contract to SHB as the offeror whose proposal was 
most advantageous to the government.

Morganti questions the acceptability of SHB's proposal for award since 
none of SHB's proposal submissions, including its third BAFO, 
expressly included the language of clause K.19 certifying compliance 
with the RFP's material domestic content requirements.

Clause K.19 was added to the RFP by amendment No. 1 and provided that 
"[b]y submission of this offer, the offeror hereby certifies that its 
offer is responsive under requirements of Section 403(b) of P.L. 
100-204."  Although SHB did not include the language of clause K.19 in 
any of its proposal submissions, the record shows that in its initial 
proposal and first BAFO, SHB submitted Standard Form 33 on which it 
acknowledged receipt of amendment No. 1.  In addition, in the cover 
letter to its second and third BAFOs, SHB specifically referenced 
amendment No. 1, as well as all other amendments and stated its 
"intention to be fully compliant with the letter and spirit of the 
solicitation."  Since clause K.19, by its terms, recognized the 
submission of a proposal as an offeror's certification of compliance 
with the statutory domestic content requirements, and since SHB 
clearly acknowledged or referenced amendment No. 1 in all proposal 
submissions, we think that SHB's failure to expressly repeat the 
language of this clause in any proposal submission did not render 
these submissions unacceptable.  Rather, we think that such failure 
was properly waivable as an informality or minor irregularity in 
accordance with the clause at Federal Acquisition Regulation  sec.  
52.215-16(b)(3), which was incorporated in the RFP.  Moreover, at no 
time during the multiple rounds of discussions conducted with SHB or 
in any of the firm's proposal submissions did SHB take exception to 
the statutory domestic content requirements or otherwise indicate that 
it would not comply with these requirements.  For these reasons and in 
the absence of any information suggesting that SHB does not intend to 
comply with the RFP's statutory domestic content requirements, we 
conclude that the agency reasonably determined that SHB's proposal 
submissions constituted the firm's certification that it would comply 
with such requirements.[1]

Morganti next argues that SHB overstated its percentage of domestic 
content by ignoring in its calculation of domestic content the value 
of the generators provided as GFE.[2]  According to Morganti, if SHB 
assigned a value of $2 million to the generators, the same value 
assigned by Morganti to the generators, and the costs associated with 
such value represented 100-percent foreign content, SHB's domestic 
content percentage would decrease to 55.82 percent, less than 1 
percent above the mandatory 55 percent.

Morganti fails to state a valid or a timely basis for protest.  In 
this regard, the RFP did not require offerors to provide a value for 
GFE on the pricing schedule or on the worksheets used to calculate the 
offeror's percentage of domestic content.  More specifically, as 
initially issued, the RFP expressly stated that "[b]ecause the four . 
. . generators are [GFE], their value should not be included in 
pricing information."  This term of the RFP was never amended.  Also, 
as conceded by Morganti, the domestic content worksheets did not 
include a line item for GFE.  As evidenced by their proposals, both 
offerors, consistent with the terms of the RFP, treated GFE in the 
same manner--neither proposed to use the generators on the Tinian 
project and neither included the value of GFE in their price proposals 
or in their calculations of domestic content.  If Morganti believed 
that all offerors (including itself, not just SHB) should provide a 
value for GFE on the pricing schedule or on the worksheets used to 
calculate domestic content, its post-award protest concerning defects 
in the RFP's pricing scheme and instructions for calculating domestic 
content should have been raised well before discussions were 
concluded, BAFOs evaluated, and award made.  Bid Protest Regulations, 
section 21.2(a)(1), supra.

In any event, assuming the RFP did require an offeror to consider the 
value of GFE in calculating its domestic content and using Morganti's 
valuation of GFE, Morganti essentially concedes that SHB still 
satisfies the RFP's mandatory 55-percent domestic content 
requirements.  Under such scenario, although SHB's domestic content 
percentage decreases to 55.82 percent, the percentage still exceeds 
the mandatory minimum.[3]  Since offerors need only offer a domestic 
content equal to, but not necessarily exceeding, the 55-percent 
mandatory minimum, we have no basis to question SHB's compliance with 
the RFP's domestic content requirements.[4]

The protests are denied.

Comptroller General
of the United States
   
1. According to the RFP, any post-award failure by SHB to comply with 
its certification of domestic content could result in the rejection of 
foreign goods or services or other appropriate action.

2. In making this argument, Morganti contends that the generators do 
not constitute GFE, as defined by regulation, because title to the 
generators will be transferred from the government to the contractor, 
and before award, the agency knew that the successful offeror (whether 
Morganti or SHB) did not intend to use these generators to perform the 
Tinian project.  Morganti also contends that this is the first time 
the agency has decided to transfer ownership of government property as 
a form of payment to a contractor performing a VOA modernization 
project and that this transfer of ownership is not consistent with the 
agency's prior treatment of such property.  Morganti's contentions 
concerning the treatment of the generators under the RFP constitute 
challenges of the terms of the RFP, as incorporated in the RFP by 
amendment No. 9, issued on June 20, 1996.  Accordingly, Morganti 
should have protested the amended terms of the RFP by the next closing 
date following the incorporation of these terms, that is, by the July 
3 closing date for receipt of third BAFOs.  Morganti's post-award 
challenges are not timely.  Bid Protest Regulations, section 
21.2(a)(1), 61 Fed. Reg. 39039, 39043 (1996) (to be codified at 4 
C.F.R.  sec.  21.2(a)(1)); NASCO Aircraft Brake, Inc., B-237860, Mar. 26, 
1990, 90-1 CPD  para.  330. 

3. Since the RFP did not require an offeror to consider the value of 
GFE in calculating its domestic content, we disregard Morganti's 
speculation that in light of the significant reduction in SHB's total 
price in its third BAFO, SHB must have valued the generators at an 
amount significantly greater than $2 million, which would result in 
SHB's domestic content falling below the 55-percent mandatory minimum.

4. Morganti also complains that SHB overstated its percentage of 
domestic content by ignoring in its calculation of domestic content 
the value of consulting and management fees.  According to Morganti, 
if the value of these fees are included, SHB's domestic content would 
decrease to 58.76 percent.  For the same reason, we have no basis to 
object to SHB's compliance with the RFP's domestic content 
requirements since, as again conceded by Morganti, inclusion of these 
fees still results in SHB having a domestic content exceeding the 
mandatory minimum.

Finally, Morganti argues that in SHB's third BAFO, there were several 
matters, in addition to those involving SHB's domestic content 
certification and its decisions regarding the valuation of the 
generators and consulting and management fees, which should have 
triggered further inquiry by the agency regarding SHB's commitment to 
comply with the RFP's domestic content requirements.  We disagree.  
Our review of the record shows that the agency reasonably determined 
that SHB's worksheets supported the firm's domestic content 
certification.