TITLE:  Acquest Development LLC, B-287439, June 6, 2001
BNUMBER:  B-287439
DATE:  June 6, 2001
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Acquest Development LLC, B-287439, June 6, 2001

Decision

Matter of: Acquest Development LLC

File: B-287439

Date: June 6, 2001

Derek J. Mohr, Esq., Lippes, Silverstein, Mathias & Wexler, for the
protester.

Marilyn M. Paik, Esq., General Services Administration-Public Buildings
Service, for the agency.

Paul E. Jordan, Esq., and John M. Melody, Esq., Office of the General
Counsel, GAO, participated in the preparation of the decision.

DIGEST

1. Agency reasonably determined that protester was nonresponsible to perform
construction/lease contract based on lack of financial capability, where
protester's financial information contained significant discrepancies and
indicated that protester had proposed a rental rate insufficient to cover
the cost of construction.

2. Although solicitation required that information relating to offeror's
ability to perform contract be submitted at time of best and final offers
(BAFO), since such information concerns offeror responsibility, the
information could be submitted any time prior to award; awardee's furnishing
of the information after the BAFO due date therefore was not a basis for
rejecting its offer.

DECISION

Acquest Development LLC protests the award of a contract to Western Devcon,
Inc. under solicitation for offers (SFO) No. 9CA01019, issued by the General
Services Administration (GSA) for the construction and lease of office and
laboratory space. Acquest challenges the agency's evaluation of the
proposals and the award determination.

We deny the protest.

The SFO sought proposals to build and lease 54,119 rentable square feet of
office and laboratory space for the U.S. Drug Enforcement Agency (DEA) in
San Diego, California. The space is to be used by the DEA for chemical
analysis of controlled substances purchased or seized as evidence in illegal
operations. The SFO contemplated a firm lease-term of 18 years. The
procurement was conducted in two phases. The first phase consisted of
evaluation of the technical qualifications of offerors, including past
performance (key personnel and experience on comparable projects) and
quality of the location and site. The second phase consisted of a technical
and price evaluation, plus a carry-over of the offerors' past performance
scores from the first phase. The technical factors combined were weighted
greater than price. Award was to be made to the firm whose offer represented
the greatest value to the government. SFO sect. 2.2.

Both Acquest and Western submitted offers and, after discussions, submitted
best and final offers (BAFO). Due to deficiencies in both BAFOs, the
contracting officer reopened negotiations. Among Acquest's deficiencies were
its failure to submit financial information, its proposal of an unusually
high operating-cost rate, and its continued lack of a detailed construction
budget. After reviewing the revised BAFOs, the contracting officer requested
a financial responsibility check on both offerors. During this period,
Acquest submitted additional information bearing on its financial
capability, and Western on control of its building site. GSA's credit and
finance division found Western's financial capability satisfactory, but
found Acquest's unsatisfactory. GSA's construction management consultant
also found that, based on its construction budget, Acquest would be unable
to recover its construction costs through its proposed rental rate. Based on
these considerations, the contracting officer determined that Acquest was
not financially responsible and awarded the contract to Western. After a
debriefing, Acquest filed this protest. [1]

Acquest's protest centers around an SFO provision, "Evidence of Capability
to Perform," which required that, "[u]pon request of [BAFOs]," offerors
submit "[s]atisfactory evidence of at least a conditional commitment of
funds in an amount necessary to prepare the space," and "demonstrate
evidence of ownership [of its proposed site] through a copy of recorded
grant deed . . . [or show] that it has control of site through a valid,
binding legally enforceable option to purchase the site." SFO sect. 3.10.
Acquest first asserts that the agency erred in finding it nonresponsible
under SFO sect. 310. [2] In this regard, the protester maintains that it
submitted sufficient information to establish its financial capability.

The Federal Acquisition Regulation (FAR) requires that a prospective
contractor have adequate financial resources to perform the contract, or the
ability to obtain them. FAR sect. 9.104-3(a). Contracting officers are vested
with broad discretion in exercising the business judgment involved in a
nonresponsibility determination. Blocacor, LDA, B-282122.3, Aug. 2, 1999,
99-2 CPD para. 25 at 4. Our Office generally will not disturb a
nonresponsibility determination absent a showing either that the agency had
no reasonable basis for the determination, or acted in bad faith. Id. In our
review of nonresponsibility determinations, we consider only whether the
negative determination was reasonably based on the information available to
the contracting officer at the time it was made. Document Printing Serv.,
Inc., B-256654, B-257051, July 8, 1994, 94-2 CPD para. 13 at 4.

The agency's determination here was reasonable. While Acquest submitted a
great deal of financial information on itself and its related entities, the
agency concluded that the information was insufficient to establish
financial capability and, in fact, raised more questions than it answered.
[3] For example, Acquest's financial statements were considered unreliable,
in part, because the net loss for the relevant period was not shown in the
equity section of the balance sheet, and a deposit on a land purchase was
shown on the November 2000 balance sheet while other documents showed the
deposit had not been made until December 2000. Agency Report (AR), Tab 22,
Preaward Survey, Jan. 30, 2001. Similarly, although Acquest certified that
there had been no material changes in its assets between November 2000 and
January 2001, GSA's reviewer found that Acquest's year-end financial
statement showed material changes, including a one-third reduction in assets
and liabilities, plus an increase in equity although no income was shown.
Id. GSA also found that Acquest's equity "appear[ed] light and no revenues
[were] shown," id.; that there was no current information on a loan that was
to be extended to end of January 2001 or on a purchase option that expired
on January 28; and that Acquest's proposed rental rate was not sufficient
for it to recover its construction costs. AR, Tab 23. In light of these
discrepancies and the inadequate rental rate, we think the contracting
officer reasonably concluded that Acquest was not financially responsible.

Acquest contends that it was treated unequally vis-ï¿½-vis Western since, it
claims, the agency disregarded financial information it submitted after
January 10, but allowed Western to cure a problem with its proposal as late
as January 26. This allegation is based in part on an e-mail in which the
contracting officer advised the official conducting Acquest's preaward
survey that information submitted by Acquest after January 10 (5 days after
the last request for information) "should not be considered." AR, Tab 20,
E-mail, Jan. 25, 2001. [4] Acquest concludes that it should have been given
until the time of award to furnish any further information the agency
needed.

We find nothing improper here; there is no evidence of unequal treatment.
Both offerors were provided post-BAFO opportunities to cure their respective
responsibility deficiencies. Acquest was provided multiple opportunities to
submit financial capability information. Specifically, in discussions, the
agency requested evidence of the SFO sect. 310(a) funding commitment and more
information on its construction budget. AR, Tab 7. In its November BAFO
request, the agency again sought satisfactory evidence of a funding
commitment. AR, Tab 11. In its December BAFO request, the agency advised
Acquest that it had failed the financial responsibility clearance and asked
for financial statements, proof of financing, and evidence of ownership or
control of the building site. AR, Tabs 15, 17. After receiving Acquest's
second BAFO, by letter of January 5 the agency requested a complete
Contractor's Qualifications and Financial Information form (GSA Form 527)
and related reference materials. AR, Tab 19. While Acquest responded to each
of these requests, as discussed above, the information it furnished was
found inadequate to establish its financial responsibility. In contrast,
Western had submitted evidence of a binding option to purchase its proposed
site at the time of its initial BAFO, in November 2000. Although that option
subsequently lapsed, Western's December 22 revised BAFO included a letter
indicating its continuing intent to acquire its proposed building site. AR,
Tab 16. By January 26, well prior to the agency's March 2 award, Western
submitted sufficient evidence of its ownership and control of the property.
AR, Tab 21.

It is clear that Acquest and Western were in entirely different postures
with regard to the informational deficiencies in their proposals. Whereas
Western had provided the agency with reason to believe that it intended, and
would be able, to acquire its proposed site, Acquest, by never providing
adequate information despite multiple opportunities to do so, had given the
agency every reason to doubt its financial capability. This being the case,
there was nothing objectionable in the agency's finally establishing a
cutoff date for Acquest, but not for Western, or in its then
determining--when Acquest still did not provide adequate information by the
cutoff date--that Acquest either could not or would not furnish the
necessary information. We conclude that the agency provided Acquest more
than an adequate opportunity to establish its financial capability, and
treated both offerors fairly based on their individual circumstances.

Acquest also asserts that the award to Western was improper because Western
failed to demonstrate that it had legal control of its proposed site at the
time of BAFO submission, as required by SFO sect. 3.10(b). Acquest maintains
that this rendered Western's proposal technically unacceptable. [5]

This argument is without merit. First, the requirement concerned offeror
responsibility, not technical acceptability. In this regard, the requirement
was listed, not as a technical requirement, but as "Evidence of Capability
to Perform," SFO sect. 3.10, and, more fundamentally, concerned offerors'
ability to perform the contract rather than the acceptability of their
offer. See 3DAV Dev., Inc.; San Sebastian Shopping Ctr., S.E., B-274933.2 et
al., Jan. 16, 1997, 97-1 CPD para. 24 at 2; NFI Management Co., B-238522,
B-238522.2, June 12, 1990, 90-1 CPD para. 548 at 5 (requirement for evidence of
site ownership or control is matter of responsibility). Requirements which
relate to responsibility may be satisfied any time prior to award, id., and
a solicitation cannot convert a matter of responsibility into one of
acceptability by providing for rejection of an offer if information is not
furnished by an earlier date. See generally Integrated Protection Sys.,
Inc., B-254457.2, B-254457.3, Jan. 19, 1994, 94-1 CPD para. 24 at 3 (even though
solicitation required information relating to responsibility to be furnished
at bid opening, agency properly accepted the information after bid opening).
Accordingly, the agency properly considered the site control information
Western submitted after the BAFO date.

Finally, Acquest asserts that GSA improperly evaluated its past performance
and proposed site on a pass-fail basis, even though the SFO listed various
evaluation criteria, and that the agency improperly made the award to the
low, technically acceptable offeror, rather than to the best value offeror.
In order to maintain a protest in our Office, a firm must be an interested
party, that is, an actual or prospective bidder or offeror whose direct
economic interest will be affected by the award of or failure to award a
contract. 4 C.F.R. sect. 21.0(a). A firm is not an interested party if it is
ineligible to receive award under the protested solicitation. The Swanson
Group, Inc., B-249631, Aug, 10, 1992, 92-2 CPD para. 93 at 2. Acquest is
ineligible for award because, as discussed above, the contracting officer
reasonably determined the firm to be nonresponsible. The firm therefore is
not an interested party for purposes of challenging the evaluation.

The protest is denied.

Anthony H. Gamboa

General Counsel

Notes

1. Acquest also protests that its written debriefing was inadequate because
it did not have the opportunity to ask questions. The adequacy of a
debriefing is a procedural matter concerning agency actions after award
which are unrelated to the validity of the award; we generally will not
review such matters. C-Cubed Corp., B-272525, Oct. 21, 1996, 96-2 CPD para. 150
at 4 n.3.

2. In its comments on the agency's report, Acquest, a small business, for
the first time challenged the agency's failure to refer its
nonresponsibility finding to the Small Business Administration (SBA) for a
certificate of competency (COC) review. This allegation is untimely. A
protest such as this, based on other than alleged improprieties in a
solicitation, must be filed no later than 10 calendar days after the

protester knew, or should have known, of the basis for protest. Bid Protest
Regulations. 4 C.F.R. sect. 21.2(a)(2) (2001). In its March 7, 2001 debriefing
letter, the agency advised Acquest that its proposal was deficient under the
"financial responsibility check" and that it had failed to demonstrate
financial capability. Protest Exh. A. From this, Acquest should have known
that the agency had found it nonresponsible and had not referred the matter
to the SBA. Since this protest ground was raised more than 1 month later, it
is untimely and not for consideration on the merits.

3. Complicating the issue of the protester's financial responsibility was
its submission of financial information on various "related" entities
without explaining the legal relationship to Acquest Development LLC, the
name under which the initial proposal was submitted. These related entities
included: Acquest Development Company, Acquest Government Holdings, LLC,
Acquest Government Holdings II, LLC, Acquest Government Holdings III, LLC,
Acquest Development Group, Acquest Company, and Acquest Affiliates. Agency
Legal Memorandum at 7. In this regard, GSA argues that Acquest's BAFO was
unacceptable because it was submitted under the name of Acquest Government
Holdings III, LLC, a different entity than had submitted the original
proposal. Acquest responds that the agency was well aware of, and requested,
the substitution of entities. We need not address this issue, since GSA
considered the financial information submitted on behalf of the entity
before making its determination of nonresponsibility and, as discussed
further below, we find that this determination was reasonable.

4. Acquest also claims that GSA improperly applied an unspecified financial
formula that made its proposal "look like it would generate negative cash
flow." Comments at 6. This argument is untimely. The SFO clearly advised
offerors that the agency's price evaluation would include calculation of a
present value cost-per-square-foot by applying the percentages Acquest now
challenges. To be timely, protests of such alleged solicitation
improprieties must be filed prior to the closing time for receipt of
proposals. 4 C.F.R. sect. 21.2(a)(1).

5. Western's November BAFO met the requirements of SFO sect. 310(b) by providing
evidence of a legally binding option to purchase Western's site. AR, Tab 16.
However, because that option lapsed prior to the second BAFO request,
Western was required to provide additional information confirming its
control of the property before the agency could award it the contract.