TITLE:  Quality Trust, Inc., B-289445, February 14, 2002
BNUMBER:  B-289445
DATE:  February 14, 2002
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Decision

Matter of: Quality Trust, Inc.

File: B-289445

Date: February 14, 2002

Robert J. Symon, Esq., Spriggs & Hollingsworth, for the protester.

Col. Michael R. Neds and Maj. Ralph J. Tremaglio, III, Department of the
Army, and John W. Klein, Esq., and Gene Marie M. Pade, Esq., Small Business
Administration, for the agencies.

Henry J. Gorczycki, Esq., and James A. Spangenberg, Esq., Office of the
General Counsel, GAO, participated in the preparation of the decision.

DIGEST

Where, following a contracting officer's determination that the protester is
not responsible, the Small Business Administration declines to issue a
certificate of competency, the contracting officer is not required to again
review the protester's responsibility where the protester does not present
new information on this subject.

DECISION

Quality Trust, Inc. (QTI) protests invitation for bids (IFB) No.
DAKF19-01-B-0009, issued by the Department of the Army for asbestos
abatement at Fort Riley, Kansas. QTI protests the agency's determination
that QTI is a nonresponsible offeror, and the subsequent cancellation of the
IFB.

We deny the protest.

On July 20, 2001, the agency issued the IFB as a total set-aside for HUBZone
small business concerns. Five bids were submitted by the August 31 bid
opening. The agency rejected the lowest-priced bid for failing to qualify as
a HUBZone small business concern. The protester submitted the next-lowest
bid of $2,180,735.

After QTI verified its bid price, the agency conducted a pre-award survey to
determine the responsibility of the firm. The agency interviewed financial
and past performance references identified by QTI. The financial reference
provided information, from which the contracting officer concluded that QTI
did not have adequate financial resources to perform this contract. Army
Report, Tab I, Army's Referral to Small Business Administration (SBA), encl.
1, Determination of Non-responsibility (Sept. 18, 2001), at 1, 3. The past
performance references rated QTI's performance on prior contracts from
satisfactory to unsatisfactory, and did not recommend the firm for large
jobs or jobs dealing with hazardous materials. The references identified a
variety of concerns, including various problems concerning the firm's
management of subcontractors, and noted that QTI was very dependent on
subcontractors. Id. at 1-3. Although QTI identified an asbestos abatement
contract as a reference, it turned out that QTI had not performed that
contract and that this reference was for an asbestos abatement subcontractor
that QTI intended to use (hereinafter "Company A") to perform the majority
of work under the contract. Army Report, Tab I, Agency's Referral to SBA,
encl. 8, E-mail Correspondence Between Army and QTI, at 1-2. On September
18, the contracting officer determined that QTI was not responsible because
it did not have either the financial resources or technical capability to
perform the requirements of a contract of this magnitude. Army Report, Tab
I, Army's Referral to SBA, encl. 1, Determination of Non-responsibility
(Sept. 18, 2001), at 3.

The contracting officer referred the matter of QTI's responsibility to the
SBA pursuant to certificate of competency (COC) procedures. QTI applied to
the SBA for a COC and, on October 16, the SBA declined to issue one because
QTI "did not adequately demonstrate satisfactory past performance in a
manner sufficient to give . . . reasonable assurance that all requirements
of this solicitation would be met." Protest, exh. 3, Letter from SBA to QTI
(Oct. 16, 2001). The SBA's decision was based in part on interviews with
references provided by QTI in its COC application, who noted management and
performance problems, as well as a dispute with a subcontractor. SBA Report,
exh. B, Industrial Specialist's Report, Oct. 4, 2001, at 3-4. The COC
committee considered QTI's proposed use of a subcontractor to perform
asbestos abatement as follows:

SBA considered the fact that an apparently well-respected subcontractor
would be performing the majority of the work for the applicant. Reliance
upon the subcontractor's favorable reputation was tempered by the fact that
the applicant has had prior difficulties performing even when relying on
subcontractors to perform.

SBA Report, exh. B, COC Meeting Summary (Oct. 16, 2001), at 2.

Following receipt of the SBA's letter denying its COC application, counsel
for QTI sent a letter to the contracting officer stating the following:

QTI strongly disagrees that it does not adequately demonstrate the requisite
satisfactory past performance record to perform this contract and questions
whether the Army (or SBA) considered the following in reaching this
conclusion:

  1. QTI, if awarded this contract, is committed to awarding a subcontract
     to [Company A] for approximately 75% of the value of the contract.
     [Company A] is currently satisfactorily performing asbestos abatement
     work at Ft. Riley.
  2. Current [Company A] employees are committed to going to work for QTI if
     QTI is awarded the contract. [1]

Army Report, Tab L, Letter from QTI's Counsel to the Contracting Officer
(Oct. 26, 2001.)

The contracting officer determined that no further review of QTI's
responsibility would be undertaken, and confirmed that an award would not be
made to QTI. Army Report, Tabs M, Q, Letters from the Army to QTI.
Subsequently, the agency cancelled the IFB because the remaining bid prices
were determined not to be fair and reasonable and because the IFB contained
a potential ambiguity. Army Report at 3. This protest followed.

QTI alleges that the agency improperly failed to consider additional
information submitted by the firm regarding the firm's responsibility, and
that the basis for the Army's non-responsibility determination was
unreasonable, so that the SBA's subsequent denial of a COC to QTI were thus
not applicable to the matter of the protester's responsibility.

The Small Business Act, 15 U.S.C. sect. 637(b)(7) (2000), gives the SBA, not our
Office, the conclusive authority to review a contracting officer's
determination that a small business is not responsible. We therefore do not
review challenges to the contracting agency's initial non-responsibility
determination where the firm subsequently has been denied a COC by the SBA.
Government Contract Advisory Servs., Inc., B-255989, B-255990, Jan. 18,
1994, 96-1 CPD para. 162 at 2-3; Inflated Prods. Co., Inc., B-188319, May 25,
1977, 77-1 CPD para. 365 at 2. Nor do we review challenges to the SBA's decision
not to issue a COC unless there is a showing that the COC denial resulted
from the possible bad faith of a government official, or from a failure to
consider vital information because of how information was presented to, or
withheld from, the SBA by the procuring agency. 4 C.F.R. sect. 21.5(b)(2)
(2001); Joanell Labs., Inc., B-242415.16, Mar. 5, 1993, 93-1 CPD para. 207 at
4-6.

However, Federal Acquisition Regulation (FAR) sect. 19.602-4(a) provides that
"if new information causes the contracting officer to determine that the
concern referred to the SBA is actually responsible to perform the contract,
and award has not already been made . . . the contracting officer shall
reverse the determination of nonresponsibility, notify the SBA of this
action, withdraw the referral, and proceed to award the contract." [2] See
Inflated Prods. Co., Inc., supra, at 2-3; Deval Corp., supra. On the other
hand, where, after the SBA's denial of a COC, no new information is
presented to lead the contracting officer to determine that the concern is
responsible, the contracting officer should proceed with award to another
appropriately selected and responsible firm. FAR sect. 19.602-4(c); Goshen
Excavators, B-279093.2, Apr. 20, 1998, 98-1 CPD para. 114 at 3. Here, since the
SBA has declined to issue a COC and since none of the limited exceptions
exist for our Office to review the SBA's decision, the essential issue for
our consideration raised by this protest is whether new information
requiring reversal of the nonresponsibility determination was presented to
the contracting officer after the denial of the COC.

The information presented by the protester following the SBA's denial of a
COC was not new information. The Army and the SBA had previously considered
the capability and reputation of Company A in performing asbestos abatement
contracts, as well as QTI's proposed substantial reliance thereon to perform
the solicited contract; the SBA explicitly concluded that QTI was a
nonresponsible bidder for this requirement even with Company A as a
significant subcontractor. Moreover, the letter of October 26 from QTI's
counsel to the contracting officer did not indicate that the information in
question was new; to the contrary, the letter only stated that QTI disagreed
with the agency's and the SBA's determinations, and alleged that neither
agency had reasonably considered the identified information.

The protester also asserts that this non-responsibility determination
constitutes a de facto debarment. We disagree. A de facto debarment occurs
when the government uses nonresponsibility determinations as a means of
excluding a firm from government contracting or subcontracting, rather than
following the debarment regulations and procedures set forth at FAR Subpart
9.4. Firm Erich Bernion GmbH, B-233106, Dec. 28, 1988, 88-2 CPD para. 632 at 4.
A necessary element of a de facto debarment is that an agency intends not to
do business with the firm in the future. Id.; Lida Credit Agency, B-239270,
Aug. 6, 1990, 90-2 CPD para. 112 at 3 n.2. The nonresponsibility determination
here was based on current information regarding QTI's performance on the
contracts that QTI had identified for this purpose, and the record does not
show that the agency intends to exclude the firm from other procurements.
Firm Erich Bernion GmbH, supra.

Finally, QTI protests the cancellation of the IFB. Since the protester was
determined to be a nonresponsible contractor, a determination affirmed by
the SBA's denial of QTI's application for a COC, the protester is not
eligible to receive an award under this IFB, and thus it is not an
interested party eligible to protest the cancellation of the IFB. RCI Mgmt.,
Inc., B-239938, Oct. 12, 1990, 90-2 CPD para. 283 at 4.

The protest is denied.

Anthony H. Gamboa
General Counsel

Notes

1. The letter also stated that "other factors exist" bearing on the firm's
responsibility; the firm never presented other information to the
contracting officer.

2. In circumstances where new information arises, our review is limited to
whether the contracting officer acted reasonably. See Deval Corp., B-272001,
Aug. 14, 1996, 96-2 CPD para. 67 at 3; Inflated Prods. Co., Inc., supra.