TITLE:  Shinwha Electronics, B-290603; B-290603.2; B-290931; B-290932, B-290932.2, B-291064, September 3, 2002
BNUMBER:  B-290603; B-290603.2; B-290931; B-290932, B-290932.2, B-291064
DATE:  September 3, 2002
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Shinwha Electronics, B-290603; B-290603.2; B-290931; B-290932, B-290932.2,
B-291064, September 3, 2002

   Decision
    
    
Matter of:   Shinwha Electronics
    
File:            B-290603; B-290603.2; B-290931; B-290932, B-290932.2,
B-291064
    
Date:              September 3, 2002
    
Holly A. Roth, Esq., and Stephen M. Ryan, Esq., Manatt, Phelps & Phillips,
for the protester.
Captain Gregory A. Moritz, Department of the Army, for the agency.
Louis A. Chiarella, Esq., and Christine S. Melody, Esq., Office of the
General Counsel, GAO, participated in the preparation of the decision.
DIGEST
    
1.  Protest that offeror was improperly suspended from receiving
government contracts is denied where there is no evidence that the agency
acted arbitrarily to avoid making an award to an offeror otherwise
entitled to award and where the minimum standards of due process have been
met.
    
2.  General Accounting Office, under its bid protest function, will no
longer review protests that an agency improperly suspended or debarred a
contractor, as the contracting agency is the appropriate forum for
suspension and debarment disputes.
DECISION
    
Shinwha Electronics protests its exclusion from the competition for award
of a contract under request for proposals (RFP) No. DAJB03-02-R-0084,
issued by the Department of the Army for the maintenance and repair of
fire alarm and detection systems at Kunsan Air Base, Korea.  Shinwha was
precluded from competing on the basis of its status as a suspended
contractor.  Shinwha contends that its suspension was improper, and that
the company's resulting exclusion from the competition was, therefore,
also improper.  We deny this protest (B-290932).
    
Shinwha also filed five other protests raising issues in addition to those
concerning its suspension.  As explained below, we dismiss these protests
on the ground that, as a suspended contractor, Shinwha is not an
interested party to maintain the protests.
    
The RFP, issued on April 29, 2002, contemplated the award of a fixed-price
contract for a 6-month base period, with one 3-month option period, to
provide maintenance and repair services of fire alarm and detection
systems at Kunsan Air Base, Korea.  Six offerors, including Shinwha,
submitted proposals by the amended closing date.  The agency determined,
after conducting an evaluation, that none of the proposals were
technically acceptable and decided to clarify the technical requirements
in a revised solicitation.  Shinwha was precluded from further competition
on the subject procurement on June 25 when the Army suspended the company
and its president from receiving government contracts.
    
The Army notified Shinwha that the company had been suspended from
government contracting, pending completion of a criminal investigation of
fraud allegedly committed by Shinwha under contract No. DAJB03-00-D-0082,
for the maintenance and repair of fire life safety systems at American
military installations throughout Korea.  According to the Army, the basis
for the suspension was that *Shinwha, with the knowledge of [its
president] and its other officers and managers, uttered and transmitted to
the United States, with the intent of obtaining unearned payment, false
records of and false invoices for work purportedly but not actually
performed, and obtained payment for some of the work falsely alleged by
Shinwha.*[1]  Agency Report, July 22, 2002 (AR 1), Tab G, Notification of
Suspension of Shinwha.  The letter also stated that Shinwha was permitted
to submit information and argument in opposition to the suspension.
    
On June 26, Shinwha advised the agency that it opposed the suspension and
would prove the underlying allegations were wrong.  Shinwha also asked the
Army to provide it with a copy of all documents forming the basis of the
suspension decision, and requested a fact-finding proceeding.  AR 1, Tab
F, Acknowledgment of Receipt of Suspension.  In a subsequent letter,
Shinwha requested greater specificity about the fraud allegations,
asserted that certain information obtained as part of the Army's
investigation of Shinwha violated attorney-client privilege, and alleged
continuing misconduct against Shinwha by agency contracting officials. 
Agency Report, August 12, 2002 (AR 2), Tab F, Shinwha Letter to Suspending
Official, July 12, 2002.  Other than these tangential matters, however,
Shinwha offered no specific information which purported to refute the
substance of the fraud allegations.[2]
In its protest, Shinwha argues that its suspension from government
contracting was improperly imposed.  Specifically, Shinwha asserts that
the allegations contained in the agency's suspension record are so vague
as to be incompatible with due process.  The protester also challenges the
credibility of its former managers as well as the government employee who
provided statements upon which the agency based its suspension decision. 
Shinwha also alleges that the Army both manipulated the facts to produce
adequate evidence to suspend Shinwha and intentionally delayed awarding a
contract under the solicitation until the suspension was issued.[3]
    
The Federal Acquisition Regulation (FAR) sets forth procedures for the
suspension and debarment of contractors, and prohibits agencies from
soliciting offers from, or making award to, suspended or barred
contractors unless the agency's head or his or her designee determines
that there is a compelling reason for such action.  FAR S: 9.405(a).
    
Suspensions are imposed for a temporary period before suspected misconduct
is proven or disproven, and while an investigation and any ensuing legal
proceedings of the contractor are taking place.  FAR S: 9.407-4(a).  An
agency may, upon *adequate evidence,* suspend a contractor suspected of
fraud or other misconduct indicating a lack of business integrity.  FAR S:
9.407-2.  *Adequate evidence* means information sufficient to support the
reasonable belief that a particular act or omission has occurred.[4]  FAR
S: 2.101(b).  The FAR provides that, in assessing the adequacy of the
evidence, agencies should consider, among other factors, *how much
information is available, how credible it is given the circumstances,
[and] whether or not important allegations are corroborated.*  FAR
S: 9.407.1(b)(1).
    
Because suspensions are imposed in order to provide immediate protection
of the government's interest where contractor misconduct is suspected,
there is no requirement that a contractor be afforded an opportunity to be
heard prior to the suspension.[5]  Following the imposition of a
suspension, however, the contractor must be afforded an opportunity to
submit information and argument in opposition to the suspension.  See FAR
S: 9.407-3(b).
    
In the past, our Office has generally declined to review protests of
suspension or debarment decisions, since the appropriate forum for
challenging the sufficiency or correctness of the agency's reasons for
imposing the suspension or debarment is with the agency after notice of
the suspension or proposed debarment has been given.  FAR S: 9.407-3(b);
SDA, Inc., B-253355 et al., Aug. 24, 1993, 93-2 CPD P: 132
at 3-4.  However, when a protester alleged that it had been improperly
suspended or debarred during the pendency of a procurement in which it was
competing, we have reviewed the matter (in a very few cases) to ensure
that the agency has not acted arbitrarily to avoid making an award to an
offeror otherwise entitled to award, and also to ensure that minimum
standards of due process have been met.  SDA, supra; TS Generalbau GmbH;
Thomas Stadlbauer, B-246034 et al., Feb. 14, 1992, 92-1 CPD P: 189 at 4. 
Applying this standard to the facts of this case, we conclude that the
record does not show that the agency's suspension of Shinwha was
improper.  Further, as explained below, we are changing our scope of
review for future cases. 
    
In its protest, Shinwha contends that the allegations contained in the
agency's suspension record are so vague as to be incompatible with due
process.  Specifically, Shinwha alleges that documents provided by the
Army to the contractor lack the required degree of specificity necessary
for the submission of a meaningful response.  In response, the agency
fully explained its rationale for determining the sufficiency of the due
process afforded Shinwha here.  Because Shinwha's comments did not contain
any rebuttal to the agency's response, we consider this allegation
abandoned.  MPRI, Inc., B-289401, Feb. 20, 2002, 2002 CPD P: 53 at 3 n.4.
    
In any event, we find that the protester was afforded the level of due
process to which it is entitled.   Due process for a suspension requires
notice sufficiently specific of what action is proposed and the grounds
therefor to allow the party to make a meaningful response to the notice. 
Alamo Aircraft Supply, Inc., B-252117, June 7, 1993, 93-1 CPD P: 436 at
4.  Here, in accordance with the FAR, the agency provided Shinwha both
with notice of the suspension and the basis for imposing the suspension
decision, as set forth above.  Further, in accordance with the Defense FAR
Supplement (DFARS) Appendix H, the Army provided Shinwha with a copy of
the record that formed the basis for the suspension decision.  DFARS S:
H-101.  Notwithstanding the protester's desire that the agency furnish it
with additional detailed information--stating exactly what contractually
required services were not provided on what date and at which location,
but were included in which specific report or invoice, submitted to the
government on what date--we conclude that the notice and information
provided to Shinwha adequately enables the protester to marshal evidence
on its behalf so as to make its suspension response opportunity
meaningful.  See TS Generalbau GmbH, supra, at 8-9.
    
Shinwha's second allegation, regarding the adequacy of the evidence
generally and the credibility of the witnesses against it specifically,
are matters generally outside the scope of our review.  SDA, supra, at 4. 
As stated above, under the standard applied to this area in the past, our
review has been limited to a consideration of whether the agency acted
arbitrarily in its suspension of an offeror; our Office has not viewed
itself as the appropriate forum to consider the adequacy or sufficiency of
the evidence relied on by the agency for purposes of the suspension
decision.  Determinations regarding the credibility of witnesses, and the
appropriate weight to be given to eyewitness statements in light of such
credibility challenges, are matters for the suspending official, and not
our Office, to examine. [6]
    
In sum, within the confines of the limited review we have in the past
conducted in this area, Shinwha has not established that the Army acted
improperly in suspending the contractor, and the protester's exclusion
from the competition at issue was therefore also proper.
    
With respect to future cases, our Office will no longer review, even under
a limited standard, protests that an agency improperly suspended or
debarred a contractor from receiving government contracts.  Because the
FAR sets forth specific procedures for both imposing and challenging a
suspension or debarment action, see FAR S:S: 9.406-3(b), 9.407-3(b), we
conclude that the appropriate forum for resolving such disputes is with
the contracting agency.  See SDA, supra.  To the extent that our prior
decisions are inconsistent with our ruling here, we will no longer follow
our prior decisions in this regard.
    
Shinwha also protests the cancellation of purchase order No.
DAJB03-02-P-0830, issued by the Army to Shinwha for the replacement of the
fire receiving alarm system at Camp Walker, Korea (B-290603; B-290603.2);
the award of a contract to OCSE-GBI by the Army under request for
quotations (RFQ) No. DAJB03-02-T-0356 for the replacement of fire alarm
systems at Camp Eagle, Korea (B-290931); the evaluation of Shinwha's
proposal under RFP No. DAJB03-02R-0084, issued by the Army for the
maintenance and repair of firm alarm and detection systems at Kunsan Air
Base, Korea (B-290932.2); and the expansion of work under contract No.
DAJB-03-00-D-0061, issued by the Army to OCSE-GBI for engineering and
design services
(B-291064).  Because the agency's suspension of Shinwha was proper,
Shinwha is not an interested party to challenge these contract actions,
since Shinwha would not be in line for contract award even if its protests
were sustained.[7]  4 C.F.R. S: 21.0(a) (2002); K&K Engineered Prods.,
Inc., B-239838.2, July 9, 1990, 90-2 CPD P: 22; Space Dynamics Corp.,
B-220168.2, Nov. 29, 1985, 85-2 CPD P: 620 at 1.  Accordingly, we dismiss
these protests.
    
The protest assigned file number B-290932 is denied;  the other protests
are dismissed.
    
Anthony H. Gamboa
General Counsel
    

   ------------------------

   [1] The evidence supporting the imposed suspension included detailed
statements from several eyewitnesses, including the Army's chief fire
inspector, Shinwha's two former regional managers, and Shinwha's former
operations manager, all asserting that Shinwha, with the knowledge of the
company's officers, was involved in the falsification of work performance
records and invoices, thereby wrongfully obtaining payment for work not
actually performed.
[2] The agency suspending official determined that while the matters
asserted in Shinwha's July 12 letter did not raise a genuine, disputed
issue of material fact regarding the adequacy of the evidence, thereby
making a fact-finding proceeding unnecessary, the agency would still
consider any further matters submitted by Shinwha in opposition to the
suspension.  AR 2, Tab G, Letter from Suspending Official to Shinwha, July
24, 2002.
[3] In its comments on the agency report, Shinwha argues that the agency's
decision to suspend Shinwha was not based upon adequate evidence, given
the witnesses' lack of credibility, and that the Army has acted in bad
faith during the performance period of contract No. DAJB03-00-D-0082,
under which both the fraud allegations and the suspension of Shinwha have
arisen.  Protester's Comments, August 23, 2002.
[4] *Adequate evidence* may be likened to a probable cause standard,
necessary for the issuance of a search warrant.  Electro-Methods, Inc., v.
United States, 728 F.2d 1471, 1473 (Fed. Cir. 1984).
[5] In contrast to suspensions, which serve as protective measures,
debarments are imposed where contractor misconduct has been established. 
Where an agency proposes a contractor for debarment and, after proceedings
where the contractor is afforded the opportunity to dispute material
facts, the agency concludes that the cause of debarment has been
established by a preponderance of the evidence, the agency may then debar
the contractor for a period commensurate with the seriousness of the
cause.  FAR S:S: 9.406-3, 9.406-4.
[6] Shinwha's remaining arguments regarding the agency's suspension
decision are allegations of bad faith.  Where a protester contends that
contracting officials are motivated by bias or bad faith, it must provide
convincing proof of such, since our Office will not attribute unfair or
prejudicial motives to procurement officials on the basis of inference or
suppositions.  ACC Constr. Co., Inc., B-289167, Jan. 15, 2002, 2002 CPD P:
21 at 4.  Here, Shinwha has not provided convincing proof to support these
allegations.
[7] While an agency has the discretion to consider the proposals received
from a suspended or debarred contractor whose ineligibility expires or is
terminated prior to contract award, see FAR S: 9.405(b)(3), the mere
possibility that a proposal could be considered is insufficient to make a
suspended or debarred contractor an interested party for our purposes.