TITLE: Department of State; Wackenhut International, Inc.--Reconsideration and Modification of Recommendation, B-295352.3; B-295352.4, April 19, 2005
BNUMBER: B-295352.3; B-295352.4
DATE: April 19, 2005
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DOCUMENT FOR PUBLIC RELEASE
The decision issued on the date below was subject to a GAO Protective
Order. This redacted version has been approved for public release.
Decision
Matter of: Department of State; Wackenhut International,
Inc.--Reconsideration and Modification of Recommendation
File: B-295352.3; B-295352.4
Date: April 19, 2005
Dennis J. Gallagher, Esq., Department of State, for the agency, a
requester.
David B. Dempsey, Esq., Kristen E. Ittig, Esq., and Caitlin K. Cloonan,
Esq., Holland & Knight, for Wackenhut International, Inc., a requester.
David F. Innis, Esq., and Neil H. O'Donnell, Esq., Rogers Joseph O'Donnell
& Phillips, for the protester.
Henry J. Gorczycki, Esq., and Jerold D. Cohen, Esq., Office of the General
Counsel, GAO, participated in the preparation of the decision.
DIGEST
1. Requests for reconsideration of decision finding that the contracting
agency improperly applied an evaluation preference for U.S. persons to the
awardee's proposal absent the information required by the agency's
regulation and the solicitation are denied, where the requests do not show
that the required information was provided to, or otherwise known by, the
agency at the time of the evaluation.
2. Agency's request for modification of GAO recommendation that guard
services contract at a foreign embassy be terminated immediately and a new
contract awarded to the protester is granted, in view of security concerns
at the embassy, as well as significant change in the agency's needs for
guard services.
DECISION
The Department of State (DOS) and Wackenhut International, Inc. (WII)
request that we reconsider our decision in Inter-Con Sec. Sys., Inc.,
B-295352, B-295352.2, Feb. 8, 2005, 2005 CPD P __, sustaining Inter-Con's
protest of an award to WII under solicitation No. S-IV100-2002-Q-0567,
issued by DOS for guard services in Abidjan, Ivory Coast. DOS
alternatively requests that we modify the recommendation in our decision.
We deny the requests for reconsideration; we grant the request for
modification of the recommendation.
Under our Bid Protest Regulations, to obtain reconsideration the
requesting party must show that our prior decision contains errors of
either fact or law, or must present information not previously considered,
upon which reversal or modification of the decision is deemed warranted.
4 C.F.R. S 21.14(a) (2004).
The issue on which we sustained Inter-Con's protest concerned DOS's
application of an evaluation preference to WII's proposal. The Foreign
Relations Authorization Act for Fiscal Years 1990-1991, Pub. L.A No.
101-246, 104 Stat. 15, 33 (codified as amended at 22A U.S.C.
SA 4864A (2000)), requires the agency to apply a 10-percent price
evaluation preference to the proposals of offerors qualifying as either
"United States persons" or "qualified United States joint venture
persons." 22A U.S.C. SA 4864(c)(3). The Act defines a U.S. person as a
person that meets a number of specific requirements, and defines a
qualified U.S. joint venture person as a joint venture in which a U.S.
person(s) owns at least 51 percent of the assets of the joint venture. 22
U.S.C. SA 4864(d)(1), (2). Pertinent to the protest is the requirement in
the definition of a U.S. person that the person "has achieved a total
business volume equal to or greater than the value of the project being
bid in 3A years of the 5-year period before the [solicitation issuance
date]." 22A U.S.C. SA 4864(d)(1)(E). Total business volume, though not
defined in the Act, is defined in a questionnaire that an offeror is
required to complete if it represents that it is eligible for the
evaluation preference. The questionnaire derives from Department of State
Acquisition Regulation (DOSAR) SA 652.237-73, "Statement of Qualifications
for Preference as a U.S. Person," which defines total business volume as
"the U.S. dollar value of the gross income or receipts reported by the
prospective offeror on its annual federal tax returns." DOSAR
SA 652.237-73(d)(5). The questionnaire, with this definition, was
included in the solicitation at SA K.11.
In order to obtain the evaluation preference, an offeror had to submit a
properly completed and certified Statement of Qualifications
questionnaire. The questionnaire states that the "Statement of
Qualifications shall provide information correctly applicable to the U.S.
person whose qualifications are being certified, and shall not include
information pertaining to corporate affiliates or subsidiaries." DOSAR
SA 652.237-73(d); Solicitation at SA K.11, Questionnaire, at 1. WII
sought qualification as the U.S. person participant in a joint venture
that consisted of WII and an affiliate that is incorporated in Ivory
Coast; WII certified that it would own at least 51 percent of the assets
of that joint venture. WII's Statement of Qualifications at 7-8. In
response to the total business volume requirement, WII's Statement of
Qualifications provided only consolidated financial statements for WII and
its subsidiaries or corporate affiliates. Id. at 4, attachs. 3, 4.
Recognizing that WII had not provided the required information, the agency
considered other information related to WII's revenues, and stated:
While specific figures for gross business volume of WII as [an] entity
separate from [its corporate parent] cannot be extracted from consolidated
business statements, payments made to WII joint ventures under Embassy
contracts are plainly more than sufficient to meet the business volume
requirement[.]
Agency Report, Tab 3, at 2.
In sustaining Inter-Con's protest of the application of the preference to
WII, we reviewed, among other things, WII's consolidated financial
statements, the embassy contracts relied upon by DOS, and all submissions
by WII during the protest, and found that the record did not contain
information sufficient to identify the gross income or receipts reported
by WII on its federal income tax returns for any of the years in
question. We concluded that there was thus no basis for DOS to find that
WII met the total business volume requirement, and thus no rational basis
for the agency to find WII eligible for the 10-percent evaluation
preference for U.S. persons. Decision at 3-5, 6.
The requesters argue that the record was adequate to show that WII met the
total business volume requirement in a number of ways, including the
following: (1) the consolidated statements for the periods submitted by
WII, either overall or for the most recent period, show revenues in excess
of the required level; and (2) the contract values of WII's prior embassy
contracts, either in total or adjusted for WII's percentage of
distribution under the joint venture agreements applicable under those
contracts, show revenues in excess of the required level.
In our decision, we analyzed all the various financial data in the protest
record, noting that some of the revenue figures did exceed the dollar
amount that WII's total business volume would have to achieve in order for
the firm to be eligible as a U.S. person. However, those revenue figures
could not be attributed solely to WII, apart from its subsidiaries,
corporate affiliates or joint venture partners. The record did not
otherwise establish the gross income or receipts that WII reported on its
federal income tax returns for any period, which, as stated above, was the
applicable definition of total business volume announced by the agency in
its regulation and in the solicitation. The requests for reconsideration
do not show error in our conclusion in that regard, nor do they identify
any document in the record where WII or the agency identified the gross
income or receipts that WII reported on its federal income tax returns for
any period.[1] The parties' repetition of arguments made during
consideration of the original protest and statements of disagreement with
our decision do not meet our reconsideration standard. Social Sec.
Admin.--Recon., B-261226.2, Nov. 30, 1995, 95-2 CPD P 245 at 1-2.
The requesters' allegations otherwise do not provide a basis to reverse
our decision. For example, the agency argues that we should have limited
our review of DOS's finding that the facts supported application of the
preference for WII to whether that finding was arbitrary, capricious, or
contrary to the weight of the evidence. As the agency acknowledges,
however, the "reasonableness" standard of review that our Office applies
is essentially the same as an "arbitrary and capricious" standard. See
A-E Sys. Mgmt., Inc., B-211904.2, Apr. 23, 1984, 84-1 CPD P 454 at 6.
Another example is the agency's advice that it had accepted WII's
submission of consolidated financial statements for WII and its affiliates
and subsidiaries as adequate evidence in prior procurements, so that the
agency believes it was reasonable to accept this information as adequate
evidence of total business volume here. However, since each procurement
must stand on its own, DOS's action in prior procurements is not
determinative of whether similar action is reasonable in this one. See
Johnson Controls World Servs., Inc., B-285144, July 6, 2000, 2000 CPD
PA 108 at 5.
Finally, WII alleges that the definition of total business volume was not
equally applied to Inter-Con. The record does not support this
allegation. Although DOS stated during the protest that Inter-Con had not
submitted its tax returns, Agency Supplemental Report at 3, the
questionnaire did not require actual submission, but only that the U.S.
person state its gross income as reported on its federal tax returns for
the specified period. Inter-Con stated during the protest that its
Statement of Qualifications did include the gross income amounts reported
on its federal tax Returns, Inter-Con's Supplemental Comments at 3, and
there is no evidence that Inter-Con does not meet the requirement.
In sum, neither the agency nor WII has stated a basis for reversing our
decision.[2] The requests for reconsideration are denied.
MODIFICATION OF RECOMMENDATION
The agency requests that we modify our recommendation to permit DOS to
delay terminating WII's contract and making award to Inter-Con. The
agency states that the delay is needed to accommodate security concerns
arising from civil unrest in Ivory Coast, and which would be exacerbated
by a transition in contractors during a move to new facilities, scheduled
for June 24. DOS asks that we:
offer . . . the alternatives of 1) deferring termination of the WII
contract for up to one year in order to complete the move to the New
Embassy Complex and effect the downsizing of the guard force prior to
changing contractors; or 2) pay Inter-Con's proposal costs on the
protested solicitation and resolicit the changed security guard contract
requirements that will exist after the move to the New Embassy Compound.
The agency explains the "downsizing" and "changed . . . requirements" by
advising that the new embassy complex is designed with physical security
features that have become standard since the 1998 terrorist bombings at
embassies in Africa, and that the new facilities will require a guard
force half the size of the one at the current location.
We find the agency's request reasonable, and we therefore modify our
recommendation for immediate termination and award.[3] See SMF Sys. Tech.
Corp., B-292419.3, Nov. 26, 2003, 2003 CPD PA 203 at 6-7 (disruption to
agency's mission to provide medical services was considered in fashioning
recommendation); JA &A J/BMAR Joint Venture, LLP--Costs, B-290316.7, July
22, 2003, 2003 CPD PA 129 at 2 (wartime exigencies provide reasonable
basis for delay in implementing corrective action). However, given the
agency's advice that its need for guard services at the embassy has
changed substantially--DOS characterizes it as "a major change in
personnel requirements," Recon. Request at 16--the proper approach in
these circumstances is reflected in DOS's second alternative, to issue a
new solicitation that reflects actual needs at the new facilities, and
then award a contract for guard services at the new facilities under that
solicitation.[4]
In light of the above, we recommend that (1) DOS expeditiously conduct a
competition for its needs at the new embassy compound, to include award
and transition (depending on the results of the competition) as close to
the scheduled June 24 move as is practicable[5]; (2) reimburse Inter-Con
its proposal preparation costs; and (3)A reimburse Inter-Con the
reasonable costs of filing and pursuing its protest, including attorneys'
fees (as we initially recommended), as well as the costs of responding to
the agency's reconsideration request.
The requests for reconsideration are denied; the request that we modify
our recommendation is granted to the extent set out above.
Anthony H. Gamboa
General Counsel
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[1] We note that, even now, the record does not identify such data.
[2] WII proffers a number of other arguments to support its
reconsideration request (regarding, for example, provisions in the
Generally Accepted Accounting Principles). We have reviewed those
arguments, and none show that the agency had before it the gross income
amounts reported on WII's federal tax returns.
[3] During the protest, the agency had authorized performance of the
protested contract that was awarded to WII due to urgent and compelling
circumstances attributed to civil unrest in the country; however, the
agency did not advise our Office during the protest that a transition in
contractors could not occur due to security concerns.
[4] We do not believe that it would be appropriate in these circumstances
to simply modify the otherwise improperly awarded contract by half (and
leave it in place for up to a year), given the agency's explanation that
its needs have significantly changed from those under which the
competition was conducted. Cf. Department of Energy--Recon. et al.,
B-246977.2 et al., July 14, 1992, 92-2 CPD PA 20 at 4-7 (even where an
indefinite quantity contract provided flexibility for ordering quantities
different from the agency's estimated need stated in the solicitation, it
was improper for agency to award a contract based on the stated need where
its estimated needs had changed significantly).
[5] We note that in opposing DOS's request for delay, Inter-Con has
identified its experience in dealing with contract transition during civil
unrest in this and other regions.