TITLE: Colorado Construction Corporation, B-290960, September 6, 2002
BNUMBER: B-290960
DATE: September 6, 2002
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Colorado Construction Corporation, B-290960, September 6, 2002
Decision
Matter of: Colorado Construction Corporation
File: B-290960
Date: September 6, 2002
Gary E. DiGrazia, Esq., Goicoechea, DiGrazia, Coyle and Stanton, for the
protester.
James L. Weiner, Esq., and Alton E. Woods, Esq., Department of the
Interior,
for the agency.
John L. Formica, Esq., and James A. Spangenberg, Esq., Office of the
General Counsel, GAO, participated in the preparation of the decision.
DIGEST
Agency's rejection of a bid submitted in response to a solicitation
set-aside for Indian economic enterprises is unobjectionable where the
agency reasonably questioned whether the Native American owner of the
enterprise would be involved in the daily business management of the
enterprise and whether the majority of the earnings from the contract
would accrue to the Native American owner.
DECISION
Colorado Construction Corporation protests the rejection of its bid and
award
of a contract to Laguna Construction Company under invitation for bids
(IFB) No. RBH00020006, issued as a total set-aside for Indian-owned and
controlled firms by the Bureau of Indian Affairs (BIA), Department of the
Interior, for the removal and disposal of existing bridges, and
construction of new bridges. Colorado Construction's bid was rejected by
the agency because of its determination that Colorado Construction was not
an eligible Indian economic enterprise.
We deny the protest.
The IFB was issued as a total set-aside for Indian-owned and controlled
concerns pursuant to the Buy Indian Act, 25 U.S.C. S: 47 (2000). To be
considered for award, the IFB required that bidders certify that they were
at least 51 percent Indian-owned, that one or more of the Indian owners
would be involved in daily business management of the enterprise, and that
the majority of the earnings from the contract would accrue to the Indian
owners. IFB at 88-89.
The agency received six bids by the April 17, 2002 bid opening. Colorado
Construction, which submitted the second-low bid of $1,737,800, became the
apparent low eligible bidder after the low bidder declined the agency's
request
to extend its bid acceptance period.
By letter dated June 3, the contracting officer requested that Colorado
Construction submit certain information required for the assessment of the
firm's responsibility. The contracting officer requested, for example,
that Colorado Construction provide its articles of incorporation;
principal place of business and location of equipment yard; evidence that
it had the production, construction, and technical equipment and
facilities necessary to complete the project or the ability to obtain
them; current financial statements; and a list of past road construction
experience. Agency Report (AR), Tab 6, Contracting Officer's Letter to
Colorado Construction (June 3, 2002).
Colorado Construction responded to the agency's request on June 14.
Because of certain issues raised in Colorado Construction's response, the
contracting officer requested by letter dated June 24 that Colorado
Construction *submit further documentation* demonstrating its eligibility
for award as an Indian-owned enterprise. AR, Tab 11, Contracting
Officer's Letter to Colorado Construction (June 24, 2002). Colorado
Construction responded by letter dated June 26, and after reviewing the
information, the contracting officer informed Colorado Construction, by
letter dated July 10, that its bid had been rejected because *[t]he
documents for Colorado Construction Company provide insufficient evidence
that the control and daily management of the company lies with an
Indian-owned enterprise.*[1]
AR, Tabs 13 & 15, Colorado Construction's Response to the Agency's Request
(June 26, 2002); Contracting Officer's Letter to Colorado Construction
(July 15, 2002). This protest followed.
Colorado Construction argues that the agency's determination that it was
ineligible for award was unreasonable. The protester points out that in
response to the agency's requests it provided, among other things,
evidence that the president of the firm owns 51 percent of the firm's
common stock, is an enrolled member of a Native American tribe, and would
serve as the superintendent for the project. The protester also notes
that *[a]s majority shareholder, [the Native American president of
Colorado Construction] would be entitled to a majority of the dividends,
if any.* Protester's Comments at 6 n.2.
The Buy Indian Act, 25 U.S.C. S: 47, provides as follows:
So far as may be practicable Indian labor shall be employed, and purchases
of the products . . . of Indian industry may be made in open market in the
discretion of the Secretary of the Interior.
The Secretary of the Interior, acting through the BIA Commissioner, has
broad discretionary authority to implement the Buy Indian Act; defining
the criteria a firm must meet to be eligible for award under a Buy Indian
Act set-aside, and determining whether the information provided by the
firm to establish compliance with those criteria, fall within that broad
discretion. We will disturb a BIA conclusion regarding a firm's
eligibility only where it is shown to be arbitrary, unreasonable, or in
violation of law or regulation. Lewis, Oberly, Sloan & Assocs., P.C.,
B‑266164, Jan. 11, 1996, 96-1 CPD P: 81 at 2.
The agency rejected Colorado Construction's bid, after considering that
firm's submissions, based on its determinations that there was
insufficient evidence that the Native American president of Colorado
Construction would be involved in the daily management of the enterprise
and that he would receive the majority of the earnings of the project, as
was required for the firm to be eligible for award. Specifically, the
agency concluded that, despite the assertions of the protester, *the
control, experience, and financial responsibility appears to be with
Canyon Construction Company, a non-Indian entity.* Contracting Officer's
Statement at 5. This determination was based on a number of factors.
For example, the information submitted by Colorado Construction
established that although Colorado Construction had existed for more than
8 years, it had not been *awarded any projects to date,* and, with the
exception of $500 cash, had no assets (such as equipment, materials,
furniture, or real estate). AR, Tabs 9e & 9f, Colorado Construction's
Financial Statement and Completed Experience Questionnaire.
The record also evidenced that the initial incorporators and directors of
Colorado Construction were not Native Americans (and currently own Canyon
Construction), and that the Native American president of Colorado
Construction was issued a certificate of stock for 51 percent of the
firm's common stock and was designated president of Colorado Construction
on March 20, 2002--less than 1 month before
bid opening. The remaining 49 percent of the firm's common stock is held
by the secretary of Colorado Construction (one of the firm's initial
incorporators and directors), and this individual is also an owner of
Canyon Construction.
AR, Tab 13a, Minutes of Special Meeting of Stockholders of Colorado
Construction Corporation; Contracting Officer's Statement at 4.
With regard to the relationship between Colorado Construction and Canyon
Construction, the contracting officer also found that although Colorado
Construction's bid provided only a post office box and no physical
address, the physical address determined to be Colorado Construction's is
at a building which bears the name of Canyon Construction (as well as
certain other businesses), but not of Colorado Construction. Contracting
Officer's Statement at 2. The contracting officer adds that Colorado
Construction's facsimile responses to the agency's queries bear the name
and telephone number of Canyon Construction, and that the Agreement of
Indemnity issued by Colorado Construction's surety was signed by the
owners of Canyon Construction as well as the secretary of Colorado
Construction and its Native American president. Contracting Officer's
Statement at 4; AR, Tab 3, Agreement of Indemnity.
The contracting officer also found that consistent with Colorado
Construction's statement that it had not been awarded any projects, the
firm's completed experience questionnaire states, with regard to work
performed for cities, counties, states, and the federal government, that
in each instance the work had been performed *[u]nder the banner of Canyon
Construction.* AR, Tab 9f, Colorado Construction's Completed Experience
Questionnaire. The questionnaire also stated that the secretary and
Native American president of Colorado Construction *are owners and
employees of Canyon Construction . . . .* This representation was
consistent with the resume of the Native American president of Colorado
Construction, which stated that he is currently employed by Canyon
Construction.
The contracting officer noted that although Colorado Construction claimed
that its Native American president would serve as the *Project
Superintendent* and *makes all construction decisions and controls
Colorado Construction Corporation,* his resume indicated that he had
worked on only one bridge construction project, and did not specify what
his responsibilities were with regard to that project. Contracting
Officer's Statement at 2; AR, Tabs 9, 9h & 13, Colorado Construction's
Letter to the Agency (June 14, 2002); Colorado Construction's Letter to
the Agency (June 26, 2002). The agency also points out that according to
the documents submitted by Colorado Construction, Canyon Construction
would *make available personnel for technical consultation and advise as
necessary,* and that Colorado Construction's non-Native American secretary
(and an owner of Canyon Construction) *serves as the office manager which
includes payroll, taxes, permits, contracts, subcontracts, hiring,
interviews, billings, accounts payable, etc.* Contracting Officer's
Statement at 3; AR, Tabs 9d & 13, Canyon Construction's Letter to Colorado
Construction (June 14, 2002); Colorado Construction's Letter to the Agency
(June 26, 2002).
As already noted, BIA has broad discretion to determine the quantum of
evidence necessary to establish compliance with the criteria that a firm
must meet to be eligible for award under the Buy Indian Act. Although
Colorado Construction complies technically with the eligibility criteria
established by BIA and thus the
Buy Indian Act, we agree with the agency that the record, as detailed
above, provided a reasonable basis to doubt whether the Native American
president of
Colorado Construction would in fact participate in the daily business
management
of the enterprise and whether the majority of the earnings from the
contract would accrue to the president. American Eagle Indus., Inc.;
Yellowhorse, Joint Venture,
B-255251; B-255251.2, Feb. 22, 1994, 94-1 CPD P: 128 at 6. Thus, we find
no basis to object to the rejection of Colorado Construction's bid.
The protest is denied.
Anthony H. Gamboa
General Counsel
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[1] The record reflects that the agency was satisfied that the president
of Colorado Construction, who is an enrolled member of a Native American
tribe, met the definition of *Indian* as required.