BNUMBER:  B-276425 
DATE:  May 30, 1997
TITLE: Fidelity Technologies Corporation, B-276425, May 30, 1997
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Matter of:Fidelity Technologies Corporation

File:     B-276425

Date:May 30, 1997

Jacob B. Pompan, Esq., Pompan, Ruffner & Werfel, for the protester.
John A. Evans, 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

Protest is sustained where protester's proposal included an apparently
erroneous small disadvantaged business certification, which caused
protester's proposal not to be selected for award, and where agency, 
which
conducted discussions with offerors, was on notice of the apparent 
error and
failed to provide protester an opportunity to correct it.

DECISION

Fidelity Technologies Corporation protests the award of a contract by 
the Department of the Navy, Naval Air Warfare Center (NAWC), Orlando, 
Florida, to Lockheed Martin Aerospace Corporation under request for 
proposals (RFP) No. N61339-96-R-0029 for simulator operation and 
maintenance (COMS) at various naval facilities.  The protester 
contends that it was improperly denied the award on the basis of a 
clerical error in its proposal concerning its status as a small 
disadvantaged business (SDB) concern which should have been apparent 
to the agency or, alternatively, put the agency on notice of a 
possible certification error, and that the agency failed to hold 
meaningful discussions with Fidelity because the agency failed to 
raise the certification anomaly.

We sustain the protest.

The RFP, issued on July 22, 1996, contemplated the award of a firm, 
fixed-priced contract for a base 2-month mobilization phase-in period 
(lot 1) and a 5-month COMS services period (lot 2) with options to 
continue the COMS services up to an additional 53 months.  Award was 
to be made to the responsible offeror whose technically acceptable 
proposal offered the lowest reasonable and realistic price.

The RFP contained the clause at Defense Federal Acquisition Regulation 
Supplement (DFARS)  sec.  252.219-7006, entitled "Notice of Evaluation 
Preference for Small Disadvantaged Business (SDB) Concerns," a clause 
which provides for a 10-percent price preference in favor of proposals 
submitted by SDB concerns.  

For purposes of determining eligibility for the price evaluation 
preference, the RFP contained the standard "Small Disadvantaged 
Business Concern Representation" clause found in Federal Acquisition 
Regulation (FAR)  sec.  52.219-1, which requires an offeror to represent 
its status as a small business.  Specifically, the clause, in relevant 
part, contains the following required representations:

     "(b)  Representations.  (1) The offeror represents and certifies 
     as part of its offer that it is ï¿½ a small business concern, ï¿½ is 
     not a small business concern. 

     "(2) (Complete only if offeror represented itself as a small 
     business concern in block (b)(1) of this section.)  The offeror 
     represents as part of its offer that it ï¿½ is, ï¿½ is not a small 
     disadvantaged business concern.

     "(3) (Complete only if offeror represented itself as a small 
     business concern in block (b)(1) of this section.)  The offeror 
     represents as a part of its offer that ï¿½ it is, ï¿½ is not a 
     women-owned small business concern."  

The RFP also contained DFARS  sec.  252.219-7000, "Small Disadvantaged 
Business Concern Representation," a clause which requires an offeror 
to indicate membership, if applicable, in any of a list of specified 
ethnic groups which are generally presumed to be socially and 
economically disadvantaged and which also calls for the offeror to 
represent its SDB status.  

Six technically acceptable proposals, including Fidelity's, were 
received by the October 28, 1996, closing date.  In Fidelity's 
proposal, it had marked the boxes under the FAR  sec.  52.219-1 
representations clause which indicated that it was not a small 
business and not an SDB, and, under the DFARS  sec.  252.219-7000 clause, 
it had again certified that it was not an SDB.  On the other hand, it 
also affirmatively executed paragraph (b) of the SDB representation 
clause by identifying its ownership as Subcontinent Asian American, 
and it had listed, under its past performance record, contracts which 
it was awarded as an SDB contractor.  The agency conducted discussions 
with offerors, including with Fidelity, but did not raise the question 
of Fidelity's SDB status and the apparent inconsistencies in its 
SDB-related certifications during those discussions.

Fidelity, whose proposal price was $10,052,948, was treated as a large 
business and award was made to Lockheed Martin Aerospace Corporation 
on February 28, at a price of $9,510,760.  Had Fidelity been treated 
as a qualified SDB, the applicable price preference would have caused 
Lockheed Martin's price to be evaluated as $10,461,836 and Fidelity's 
low technically acceptable offer would have been in line for award.

Upon notification of award, Fidelity contacted the Navy, alleging that 
it had incorrectly represented in its proposal that it was neither a 
small business nor an SDB.  Fidelity stated that these certifications 
were errors and that it is, in fact, a certified SDB and therefore 
eligible for the 10-percent price preference.  The agency responded 
that there was no reason for the agency to question Fidelity's 
representations and certifications in its review of proposals and that 
it had relied on Fidelity's submissions.  Thereupon, Fidelity 
protested to our Office on March 7. 

The protester argues that the inconsistencies in its certification 
coupled with certain relevant, collateral, and personal knowledge of 
the contracting officer should have made it apparent to the agency 
that Fidelity had made a clerical error in its proposal.  
Specifically, the protester argues that its representations under the 
FAR  sec.  52.219-1 clause are inconsistent since Fidelity marked both that 
it was not a small business and not an SDB, while the clause stated 
that the paragraph related to a firm's SDB status should be completed 
only if the offeror presented itself as a small business.  Since 
Fidelity did not represent itself as a small business, the block 
related to its status as an SDB should not have been completed.  
Fidelity argues that its representations at the DFARS  sec.  252.219-7000 
clause are also inconsistent since the firm represented that its 
qualifying SDB ownership is Subcontinent Asian American, yet it 
checked that it was not an SDB.

Fidelity argues that the contracting officer was on notice of the 
erroneous SDB certification for other reasons as well.  Within the 
past performance section of its proposal, Fidelity specifically 
identified itself as an SDB 8(a) firm on a contract that had been 
awarded in October 1995 by the same contracting officer at NAWC who 
initially served as contracting officer under the solicitation 
here.[1]  Fidelity alleges that this contracting officer had close, 
continuing and relevant contractual dealings with Fidelity since the 
1995 award date.  Specifically, the contracting officer executed eight 
contract modifications showing the Small Business Administration (SBA) 
as the contractor and Fidelity as the subcontractor; one modification 
was completed only 8 days before the contracting officer received 
Fidelity's proposal under this RFP.  Moreover, both before and after 
Fidelity submitted its proposal, the contracting officer discussed 
with a Fidelity representative the firm's status as an SDB and 
Fidelity's anticipated graduation from the 8(a) program in      
November 1997.

In addition, Fidelity's past performance record submitted with its 
proposal referenced two contracts awarded in 1994, with options 
extending to 1999, by the contracting officer who replaced the 
original contracting officer under the solicitation at issue.  The 
protester also points out that the replacement contracting officer was 
personally involved in an 8(a) contract with the same Standard 
Industrial Classification (SIC) code as under the protested contract, 
which Fidelity was awarded on September 26, 1996.  This award was made 
only 28 days before Fidelity submitted its proposal under the 
procurement at issue. 

Finally, Fidelity points out that it requested a copy of the 
solicitation by letter dated March 11, 1996, and in this letter it 
specifically stated that it was an SDB, certified under the SBA's 8(a) 
program.  The protester points out that this letter should have been 
in the agency's files for this procurement.  Because the agency 
neither requested clarification of Fidelity's SDB status nor advised 
the offeror of the possible error in its certification during 
discussions, Fidelity argues that the award was improper because it 
was not afforded meaningful discussions.

The Navy's position is that FAR  sec.  19.301(b) (FAC 90-45) directs the 
contracting officer to accept offerors' self-certifications and 
representations, and that Fidelity's certifications were not 
inconsistent, and thus did not provide any notice to the contracting 
officer of a possible error.  The agency argues that Fidelity's 
representation at the FAR  sec.  52.219-1(b)(2) clause, which is only 
required if an offeror represents itself as a small business--which 
Fidelity did not--is merely "surplusage" that is not inconsistent with 
its certification.  The Navy also takes the position that the 
contracting officer is required to judge a proposal "within the four 
corners of the proposal," and, because only an offeror knows if it 
qualifies for a particular size standard at a particular time, there 
can be no constructive notice, as the protester contends, from 
previous contracts or, presumably, from the contracting officers' 
knowledge of the offeror.  Because its view of the representations and 
past performance records did not suggest inconsistencies or mistakes, 
the Navy argues that it was not required to address Fidelity's 
representations in discussions.  In this respect, the Navy takes the 
position that Fidelity's entries could reflect that it was a former 
SDB which recently became a large business.

As the Navy points out, FAR  sec.  19.301(b) directs that contracting 
officers shall generally accept offerors' representations in their 
offers that they are small businesses, and we think that the Navy is 
correct in adopting the same approach to SDB representations.  
However, FAR  sec.  19.301(b) carves out an exception where "the 
contracting officer has a reason to question the representation."  
Although there is thus generally no obligation on a contracting 
officer to question an offeror's representations about its small 
business or SDB status, we believe that, in the unique factual 
circumstances of this case, the contracting officer had reason to 
question the accuracy's of Fidelity's SDB certification and had an 
obligation to provide the protester an opportunity to correct the 
apparent error in that certification.

First, the proposal itself could have put the contracting officer on 
notice of a possible error in Fidelity's SDB representation.  The 
protester's representations in its proposal were potentially 
inconsistent, reflecting both that its ownership is Subcontinent Asian 
American and that it is not an SDB concern.[2]  Moreover, the past 
performance information included in Fidelity's proposal specifically 
referenced its status as an SDB.

Moreover, the protester has presented credible arguments that both 
contracting officers were aware of its SDB status and, to corroborate 
its position, Fidelity has provided us with an affidavit from a 
Fidelity representative stating that he discussed the firm's SDB 
status with one of the contracting officers immediately before and 
after submission of its proposal.  The Navy has not denied the 
protester's position that its March 11 letter stating it was an SDB 
was in its possession and in the procurement file and has not filed 
any affidavits from either contracting officer to rebut Fidelity's 
statements concerning what the contracting officers knew or should 
have known concerning the protester's status.  We therefore conclude 
that the contracting officer was on notice of the apparent error in 
Fidelity's SDB representation.

The Navy argues that it could only consider information within the 
four corners of that proposal.  This argument is unpersuasive, both 
because the inconsistencies within the proposal itself put the 
contracting officer on notice of the apparent error and because an 
agency may take into account its knowledge in evaluating proposals and 
making an award.  TRESP Assocs., Inc.; Advanced Data Concepts, Inc., 
B-258322.5; B-258322.6, Mar. 9, 1995, 96-1 CPD  para.  8 at 6-7.  Indeed, 
some information is simply too close at hand for the agency not to 
consider it.  International Bus. Sys., Inc., B-275554, Mar. 3, 1997, 
97-1 CPD  para.  114 at 5.

Here, the Navy made no attempt to resolve the protester's SDB status, 
even though it could have done so through the clarification process.  
See Jimmy's Appliance, 61 Comp. Gen. 444, 446 (1982), 82-1 CPD  para.  542 
at 2-4.  Moreover, despite conducting discussions with the offerors, 
it did not mention the SDB status question in its discussions with 
Fidelity.  Because discussions were held, we need not decide whether 
the agency would have been required to clarify Fidelity's SDB status 
if award had been made on the basis of initial proposals.  When 
discussions are held, they are required to be meaningful.  See Ashland 
Sales & Serv., Inc., B-255159, Feb. 14, 1994, 94-1 CPD  para.  108 at 3.  
Here, this meant that the Navy had an obligation to raise the SDB 
status question in its discussions with Fidelity, in light of the 
inconsistencies within the firm's proposal, the significance of the 
10-percent evaluation preference under the program whose purpose is to 
assist small disadvantaged firms, and the agency's apparent knowledge 
of the inaccuracy of the SBD representations in the proposal.  See FAR  sec.  
15.610(c)(4) (FAC 90-44) (during discussions, contracting officer 
shall resolve any suspected mistakes by calling them to offeror's 
attention).  Accordingly, we conclude that, because of the specific 
circumstances present in this instance, the agency acted improperly by 
not resolving the question of Fidelity's SDB status before award.

We recommend that the agency provide Fidelity the opportunity to 
correct the apparent error in its SDB certifications.  If, as a 
result, Fidelity's proposal is selected for award, that award should 
be made and the contract with Lockheed Martin should be terminated for 
the convenience of the government.  If the agency has any continuing 
doubt as to Fidelity's status after receipt of Fidelity's revised SDB 
certifications, it should refer the matter to the SBA.  We also 
recommend that the protester be reimbursed its costs of filing and 
pursuing its protest, including reasonable attorneys' fees.  Bid 
Protest Regulations, 4 C.F.R.  sec.  21.8(d)(1) (1997).  The protester 
should submit its certified claim for costs to the contracting agency 
within 60 days of receiving this decision.  4 C.F.R.  sec.  21.8(f)(1).

The protest is sustained.

Comptroller General
of the United States

1. Apparently, the person serving as contracting officer at the time 
this solicitation was issued, proposals submitted, and evaluations 
commenced was replaced with another contracting officer some time 
during the evaluations.  The agency has identified the two contracting 
officers but has not indicated the specific replacement date.

2. The agency argues that in American Imaging Servs., B-242544, Apr. 
29, 1991, 91-1 CPD  para.  417 at 2, we found no inconsistency where a firm 
had a qualifying ownership yet miscertified that it was not an SDB, 
since a qualifying ownership alone did not assure a firm of SDB 
status.  Here, however, as noted above, there are other indicia of an 
erroneous certification.  Moreover, in American Imaging Servs., there 
was evidence that the protester acted deliberately, as opposed to 
erroneously, in certifying as a non-SDB firm.  While the Navy here 
hypothesizes that Fidelity acted deliberately, there is no evidence in 
the record to support this allegation.