BNUMBER:  B-276846.2 
DATE:  February 23, 1998
TITLE: Kongdan Kumnan Restaurant/Good Food Service, B-276846.2,
February 23, 1998
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Matter of:Kongdan Kumnan Restaurant/Good Food Service

File:     B-276846.2

Date:February 23, 1998

John E. Gagliano, Esq., Cohen, Gettings, Dunham & Davis, P.C., for the 
protester.
Col. Nicholas P. Retson, Maj. Jonathan C. Guden, and Maj. Nathanael 
Causey, Department of the Army, for the agency.
Sylvia Schatz, Esq., and John M. Melody, Esq., Office of the General 
Counsel, GAO, participated in the preparation of the decision.

DIGEST

Agency properly rejected protester's proposal for failure to establish 
local (Korean) source status as required by solicitation, where 
claimed local status was based on United States firm's consulting 
agreement with local Korean company, and agency reasonably determined 
that agreement showed U.S. firm, not Korean company, would have 
control and principal responsibility for performance of the contract.

DECISION

Kongdan Kumnan Restaurant/Good Food Service (KKR/GFS) protests the 
rejection of its proposal, under the Department of the Army request 
for proposals (RFP) No. DAJB03-96-R-0098, for food service operations 
at Army dining facilities in the Republic of Korea (ROK). 

We deny the protest.

The RFP contemplated the award of a fixed-price contract to the 
lowest-priced, technically acceptable offeror for a base year, with 
four 1-year options.  Section L of the RFP, relating to the local 
source requirement, provided:

     All sources may submit a proposal, however, the ROK-US SOFA 
     prohibits the U.S. from granting invited Contractor status if a 
     fair and reasonable, technically acceptable offer is received 
     from a responsible local source.  Should this occur, the 
     Government would then consider for award only those offerors that 
     have shown authorization and capability to compete and perform as 
     a local source.  Any U. S. Contractor with capacity to qualify as 
     a local source must submit such documentation in the initial 
     proposal.  If a U.S. contractor provides such documentation in 
     the initial proposal, it may submit a price proposal as an 
     invited contractor and as a local contractor.

Several local source proposals were received, so the contracting 
officer set aside all proposals from U.S. firms and did not consider 
them further.  Since KKR/GFS' proposal cover sheet indicated that it 
was submitted by "Kongdan Kumnan Restaurant and Good Food Service, 
Inc. (consultant)," the contracting officer initially believed the 
proposal was from a local source.  However, after evaluating the 
proposal, the Army suspected collusion between KKR/GFS and another 
offeror, and thus requested it to withdraw the offer.  The protester 
refused and filed a protest with our Office (B-276846), challenging 
the Army's position.  The contracting officer ultimately agreed to 
retain KKR/GFS in the competition, and the firm withdrew its protest.

Three proposals, including KKR/GFS', were included in the competitive 
range.  In reevaluating KKR/GFS' proposal, the agency identified 
several deficiencies.  KKR/GFS attached to its proposal a "consulting 
services agreement," executed on March 5, 1997, for purposes of this 
solicitation, in which GFS, a U.S. company based in Maryland, with 
extensive experience in providing food services to U.S. federal 
agencies, was named "consultant," while KKR, a local Korean company 
engaged in the food service and restaurant business, was named 
"client."  During oral discussions with KKR/GFS, the agency pointed 
out the deficiencies in the proposal, including its failure to show 
the offeror's status as a local source, and confusion and 
inconsistencies with regard to the relationship between KKR and GFS.  
KKR/GFS submitted with its revised proposal an amended "consulting 
agreement" between GFS and KKR.  This agreement stated that the two 
companies would perform the contract under the name of "KKR/GFS," that 
the consultant would have "full authority on all matters pertaining to 
this contract including but not limited to Managing, Operating and 
Administering the dining facilities," and would be responsible for 
"[a]ll invoicing and finance operations," while the Kongdan Kumnan 
Restaurant would provide an "understanding of Korean Law as well as 
recruitment of a labor force as needed to support this contact."

It appeared to the contracting officer from the terms of this 
agreement that the KKR/GFS revised proposal failed to establish local 
source status.  He therefore requested a legal review by the Chief 
Counsel to the Korea Contracting Command (CCK).  After reviewing the 
consulting agreement, the CCK determined that, while the Korean 
restaurant is apparently an established local firm, the KKR/GFS 
proposal was not submitted by a local source, since the U.S. firm 
appeared to be using KKR  to obtain local contractor status, while 
having complete authority over and responsibility for performing 
essentially the entire contract.  Subsequently, the International 
Affairs Division, Office of the Judge Advocate, U.S. Forces Korea and 
Eighth U.S. Army, which is responsible for interpreting Korean law for 
all U.S. military forces within Korea, not only concurred that the 
offeror was not a local source, but also found that, since the 
consulting agreement gave the consultant virtually total control over 
the KKR/GFS relationship, this potentially would be viewed as the U.S. 
firm being in violation of Korean law and subject to criminal 
penalties for improperly operating a business in Korea.  Based on 
these legal opinions, the contracting officer concluded that the 
KKR/GFS revised proposal did not establish local source status and 
eliminated it from further consideration.  On November 7, award was 
made to Kumbo Products Co. Ltd. as the offeror submitting the 
lowest-priced, technically acceptable proposal.

KKR/GFS argues that its proposal was from a local source, and 
therefore was rejected improperly, since KKR was the prime contractor 
under the consulting agreement, and had obtained all the requisite 
Korean business licenses and authority to perform the work required in 
the solicitation, and GFS was only KKR's consultant.  KKR/GFS seems to 
assert that KKR, not GFS "would have a substantial role in the 
performance of the contract," as KKR would (1) supply the local labor 
necessary to fulfill the contract; (2) ensure that the contractor is 
in compliance with Korean law; and (3) control the "financial fruits" 
of the contract, since government payments under the contract would be 
deposited directly into KKR's bank accounts, from which GFS would 
merely be paid consulting fees.[1]

In reviewing an evaluation, we will examine the agency's conclusions 
to ensure that they are reasonable.  See Comarco, Inc., B-249697.2, 
Jan. 26, 1993, 93-1 CPD  para.  65    at 4.  Here, we conclude that the 
agency reasonably rejected the KKR/GFS proposal on the basis that it 
did not show that the offeror was a local source.  Rather, as the 
agency found, we think the available information supported the 
conclusion that, based on contract responsibilities and control under 
the consulting agreement, GFS would in reality be the prime 
contractor.  The evidence in this regard was extensive.  First, while 
the offer included references to KKR/GFS, it also referred to Good 
Food Service, Inc., and Good Food Service/KKR as the offeror or 
contractor.  Further, the offer included the following indications 
that it actually was being submitted by GFS:  (1) all offeror 
information in the proposal pertained solely to GFS--the listing of 
prior contracts, place of incorporation (the District of Columbia), 
and business address for remittance of payments; (2) in the sections 
covering independent price determination certification, claims and 
requests for contract adjustment or relief, and individuals authorized 
to negotiate on behalf of the offeror, only officers or employees of 
GFS were listed; (3) the letters of intent submitted by GFS' proposed 
employees state that "Good Food Service, Inc. is offering" the 
employment and that "[t]his offer is contingent upon Good Food 
Service, Inc. becoming the successful bidder" under the solicitation; 
(4) the letter of credit and various debt instruments submitted all 
show the corporate credit and liabilities of GFS or its president; (5) 
only the general manager of GFS signed the certificate of procurement 
integrity; and (6) the offer and amendments were signed only by GFS' 
president, as "contractor/offeror." 
 
These indicia are reinforced by the absence in the proposal or 
consulting agreement of any information to the contrary, and the fact 
that the consulting agreement actually supports the interpretation 
that GFS is the contracting entity.  In this regard, notwithstanding 
the protester's argument that the consulting agreement establishes KKR 
as the prime contractor, the agreement in fact contains no such 
representation; it refers to KKR as the "client," not as the prime 
contractor or offeror.  Further, although the agreement provides that 
KKR would be responsible for supplying the local labor force and 
ensuring that the contractor is in compliance with Korean law, the 
agreement otherwise appears to vest in GFS complete control of and 
responsibility for contract performance, by virtue of the statement 
that GFS has "full authority on all matters pertaining to this 
contract," including managing, operating and administering the dining 
facilities, and responsibility for all invoicing and finance 
operations.  We also see nothing supporting GFS' contention that KKR 
would be in complete control of the "financial fruits" of the 
contract, and that payments under the contract would be deposited 
directly into KKR's local Korean bank accounts.  Indeed, the proposal 
supports the opposite conclusion.  Specifically, as discussed above, 
the proposal cover sheet, signed by the president of GFS, indicates 
only the business address of GFS as the address for remittance under 
the contract, and the section in the RFP requesting the name, address, 
and account number of the bank authorized for delivery of checks due 
under the contract was left blank, in which circumstance the RFP 
provided that checks would be mailed to the contractor's address 
listed on the proposal's cover sheet--that is, GFS'.  

We conclude that the agency reasonably determined that the information 
in the KKR/GFS proposal did not establish the offeror's local source 
status, and therefore properly eliminated the proposal from the 
competition.[2] 

KKR/GFS raises other arguments which we find to be without merit.  
First, KKR/GFS argues that the Army improperly failed to notify it any 
time prior to award that the KKR/GFS proposal failed to show the 
offeror qualified as a local source.  However, the record shows that 
KKR/GFS acknowledged to the Army that the agency raised this 
deficiency with KKR/GFS during discussions.  Specifically, KKR/GFS, in 
its electronic mail message to the Army summarizing the contents of 
the discussions, stated as follows:  "Issue #1:  Clarification on 
local source status, i.e., consultant, subcontractor, Joint Venture, 
etc."  Second, KKR/GFS argues that the agency either does not know or 
failed to try to learn that KKR and GFS were informed by the Korean 
authorities that their business arrangement was acceptable.  However, 
the KKR/GFS proposal did not include any such information; an offeror 
bears the burden of submitting an adequately written proposal 
including all relevant information, and such information cannot be 
submitted after the fact to establish that the agency's evaluation was 
unreasonable.  See Wyle Labs., Inc., B-260815.2, Sept. 11, 1995, 95-2 
CPD  para.  187 at 5.  Finally, KKR/GFS argues that award to Kumbo is 
improper, because the firm failed to meet the RFP requirement for 
offerors to have at least 2 years of food service experience.  Even if 
we sustained the protest on this ground, the other competitive range 
offeror, not KKR/GFS, would be in line for award.  Under these 
circumstances, KKR/GFS is not an interested party eligible to protest 
on this ground.  4 C.F.R.  sec.  21.0(a); Monopole, S.A., B-252745, July 
23, 1993, 93-2 CPD  para.  51 at 7 n.3. 

The protest is denied.

The Comptroller General
of the United States

1. In its December 29 comments on the agency report, KKR/GFS argues 
that the local source issue is only another attempt by the Army to 
improperly eliminate its proposal from the competition.  To the extent 
that the protester means that the Army is biased against it, this is 
an untimely allegation, since KKR/GFS knew of this argument when it 
filed its November 17 protest, but failed to raise it within 10 days 
of this date.  Bid Protest Regulations, 4 C.F.R.  sec.  21.2(a)(2) (1997); 
OHM Remediation Servs. Corp., B-274644 et al., Dec. 23, 1996, 97-1 CPD  para.  
4 at 9.

2. Although we need not decide the issue here, we note that the 
ambiguity in the KKR/GFS proposal also raises a question as to whether 
the identity of the offering entity was sufficiently established in 
the proposal.  Ambiguity as to the offeror/contractor renders an offer 
technically unacceptable, since there is no party
that is clearly bound to perform the obligations of the contract.  See 
Sunrise Int'l Group, Inc.; Eagle III Knoxville, Inc., B-252735, 
B-252735.2, July 27, 1993, 93-2 CPD   para.  58 at 2-3; Dick Enters., Inc., 
B-259686.2, June 21, 1995, 95-1 CPD  para.  286 at 2, recon. denied, 
B-259686.3, Nov. 16, 1995, 95-2 CPD  para.  223.