TITLE:  Inter-Con Security Systems, Inc., B-295352; B-295352.2, February 8, 2005
BNUMBER:  B-295352; B-295352.2
DATE:  February 8, 2005
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   Decision

   Matter of:   Inter-Con Security Systems, Inc.

   File:            B-295352; B-295352.2

   Date:             February 8, 2005

   David F. Innis, Esq., and Neil H. O'Donnell, Esq., Rogers Joseph O'Donnell
& Phillips, for the protester.

   David B. Dempsey, Esq., Caitlin K. Cloonan, Esq., and Kristen E. Ittig,
Esq., Holland & Knight, for Wackenhut International, Inc., an intervenor.

   Dennis J. Gallagher, Esq., Department of State, 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.  Where solicitation for local guard services provided for 10-percent
price evaluation preference for offerors qualifying as "U.S. persons,"
fact that awardee has a foreign parent did not preclude awardee from
receiving the preference, since nothing in the solicitation or underlying
statute required offerors to establish ownership and control by U.S.
citizens to qualify for the preference.

   2.  Awardee's proposal was not entitled to application of "U.S. person"
evaluation preference, and protest is sustained, where solicitation
provided that offerors would qualify for preference if required
certification showed offeror had achieved a specified business volume, and
awardee's certification, which consisted solely of consolidated (i.e.,
corporate parent and subsidiary) financial information, failed to show
that awardee had adequate business volume; agency's knowledge of awardee's
other contracts was insufficient to establish that awardee met the
requirement, since a majority of those contracts were performed by awardee
as a joint venturer, and there was no breakdown information showing amount
of business volume attributable to awardee.

   DECISION

   Inter-Con Security Systems, Inc. protests the award of a contract to
Wackenhut International, Inc. (WII) under solicitation No.
S-IV100-2002-Q-0567, issued by the Department of State for guard services
in Abidjan, Ivory Coast.  Inter-Con asserts that WII's offer was
improperly given a 10-percent price preference, which put WII in line for
the award.

   We sustain the protest.

   The solicitation sought proposals for providing local guard services at
the U.S. Embassy in Abidjan, Ivory Coast.  Award was to be made to the
offeror with the lowest-priced, technically acceptable proposal, for a
base year, with 4 option years.  Proposals were evaluated on the basis of
several technical factors and price, including application of a 10-percent
price evaluation preference for offerors meeting the qualifications of a
"U.S. person."  Application of the preference was primarily based on
information provided by each offeror in a qualification
statement/certification required by section K.11 of the solicitation,
which provided that an offeror's status as a U.S. person was to be based
on the Foreign Relations Authorization Act for Fiscal Years 1990-1991,
P.L.A 101-246 (22A U.S.C. SA 4864A (2000)). 

   Inter-Con, WII, and a third offeror submitted proposals, which were
evaluated by the agency.  Subsequently, WII's corporate parent, Group 4
Falck, a Danish firm, merged with Securicor, a United Kingdom firm.  Based
on its evaluation of the offerors' revised proposals, including revised
qualification statements, the agency determined that the third firm's
proposal was technically unacceptable, but that Inter-Con's and WII's
proposals were acceptable.  The agency also found that both technically
acceptable firms qualified as U.S. persons eligible for the price
preference.  With application of the price preference to both proposals,
WII's price of $11,997,256 was lower than Intera**Con's, and the agency
thus made award to WII.  After a debriefing, Inter-Con filed this
protest. 

   Inter-Con asserts that WII does not meet the definition of a U.S. person
because it is owned by a foreign corporation, Securicor, and because it
failed to provide adequate information in its section K.11 qualification
statement to establish its status as a U.S. person.  If WII does not
qualify as a U.S. person for purposes of the preference, then Inter-Con,
which does qualify, will be in line for the award.

   This argument is without merit.  Under the statute (and solicitation
section K.11), a firm qualifies as a U.S. person if it:  "is incorporated
or legally organized under the laws of the [U.S.]"; "has its principal
place of business in the [U.S.]"; "has been incorporated or legally
organized in the [U.S.] (i) for more than 2 (two) years before the
issuance date of the [solicitation]"; "has performed within the [U.S.] or
overseas security services similar in complexity to the contract being
bid"; "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]"; "employs [U.S.] citizens in at least 80
percent of its principal management positions in the [U.S.]"; "employs
[U.S.] citizens in more than half of its permanent full-time positions in
the [U.S.]"; and "has the existing technical and financial resources in
the [U.S.] to perform the contract."  22A U.S.C. SA 4864(d); Solicitation
SA K.11.  Under this definition of a U.S. person, ownership of a firm by a
foreign firm, such that it is not owned or controlled by U.S. citizens,
does not preclude the firm from receiving the preference, so long as it
meets the listed requirements.  Inter-Con Sec. Sys., Inc., Ba**290493,
Ba**290493.2, Aug. 14, 2002, 2002 CPD P147 at 3.  Thus, the fact that WII
is owned by a foreign firm, Securigard, was not a basis for denying WII
the preference.

   WII'S U.S. PERSON QUESTIONNAIRE

   Inter-Con asserts that WII does not meet the U.S. person criteria based on
its responses to two parts of the sectionA K.11, Statement of
Qualifications for Purposes of Obtaining Preference as a U.S. Person
(Questionnaire).  Specifically, Inter-Con asserts that WII's responses to
questions 5 and 7 included consolidated financial information covering
WII's subsidiaries and the Wackenhut Corporation as a whole, and thus were
inadequate to establish WII's own U.S. person status. 

   Question 5, Total Business Volume

   A noted above, the solicitation provided (consistent with the statute)
that, in order to qualify as a U.S. person, a firm must have "achieved a
total business volume equal to or greater than the value of the project
being bid in 3 years of the 5-year period before the [solicitation
issuance date]."  Solicitation SA K.11, Questionnaire, atA 4.  Total
business volume is defined as the "U.S. dollar value of the gross income
or receipts reported by the prospective offeror on its annual federal
income tax returns."  Id.  To establish status as a U.S. person, the
offeror was required to submit "for at least three of the five
twelve-month income tax periods (fiscal years) defined [in the
questionnaire], the gross receipts of the organization seeking
eligibility."  Id.  The solicitation specifically provided that the
information submitted in response to the questionnaire "shall not include
information pertaining to corporate affiliates or subsidiaries," and
warned that only offerors "submitting a properly completed and certified
[response]" would be considered in the determination of eligibility for
the price preference.  Solicitation SA K.11, Questionnaire, at 1.    

   WII provided a financial statement for [deleted] period, which showed
total income well over the $11.9 million contract value.  However, the
statement covered both WII and its subsidiaries, without any indication of
how much of the income was attributable to WII alone as "income or
receipts reported . . . on its annual federal income tax returns." 
Similarly, WII provided three annual consolidated financial statements for
the Wackenhut Corporation that showed income well in excess of the
contract amount, but did not segregate the income attributable to WII. 
There thus was no way to discern from the information submitted which
portion of the reflected annual receipts was attributable to WII, and thus
no way to conclude that the firm possessed the required business volume. 
Since WII's qualification statement failed to include the information
required to establish its business volume, it did not provide a basis for
finding WII eligible for the price preference. [1]

   The agency asserts that the insufficient financial information did not
preclude a finding that WII was eligible for the preference because it was
not restricted solely to the information submitted by offerors in making
its eligibility determination.  In this regard, the agency points to its
regulations, which provide that, although qualifications will be
determined "primarily" on the basis of information submitted in the
offeror's Statement of Qualifications, "the Government may, at its
discretion, rely on information contained elsewhere in the offeror's
proposal or obtained from other sources."  Department of State Acquisition
Regulation (DOSAR) SA 652.237-73(c).  Thus, in finding that WII possessed
the requisite business volume, the agency turned to other information,
specifically, other contracts that WII had performed for the agency.  In
this regard, the agency reasoned as follows:  "While specific figures for
gross business volume of WII as [an] entity separate from parent Wackenhut
Corporation 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 (AR), Tab 3, at 2. 

   While we agree with the agency that it could rely on other available
information, the record does not support the agency's conclusion. 
Although WII's questionnaire includes evidence of 18 security guard
contracts with an annual, combined contract value in excess of the new
contract's value, WII performed most of these contracts as a joint
venturer with another entity.  Since these contracts are performed
overseas by the foreign joint venture partner using locally-hired
personnel, it is reasonable to infer that some significant portion of the
contract payments flow to the foreign joint venture partner.  Inasmuch as
WII is the entity seeking eligibility as a U.S. person, only that portion
of the annual contract value flowing to WII is relevant to the
determination.  However, there is nothing in the record to indicate how
much of that annual value qualifies as WII's under the question 5
definition of "total business volume."  For example, the contracts with
the largest annual values--$1 million to $6.9 million--were performed as
joint ventures with various of WII's foreign joint venture partners such
as Group 4 Falck (Canada) Ltd., Wackenhut SA (Ivory Coast), Wackenhut
Jamaica Ltd., Wackenhut U.K. Ltd., and Group 4 Falck Korea.  WII
Questionnaire, attach. 1 & 2. Other contracts were performed without WII
as a partner at all, including those performed by Wackenhut Security
Hellas (Greece), Wackenhut El Salvador (El Salvador), and Serenos Victoria
(Venezuela).  Id.  Only two contracts were performed by WII alone--Gambia
and Mozambique--and their combined annual value, even over 3 years, is
less than the new contract value.  Id.  While the requirements for
establishing the requisite business volume are plainly stated in the
questionnaire, nothing in the record indicates that the agency made any
attempt to identify that information for WII; it did not calculate what
portion of the payments to the joint venture represented WII income. 
Likewise, although WII intervened in this protest, it has provided no
information to establish what portion of the identified contract value
represented gross income or receipts reported by WII on its federal income
tax returns.  Absent some information indicating that the identified
annual value of WII's joint venture contracts represents such taxable
income for WII, there was no basis for the agency to conclude that the
firm met the business volume requirement.  Accordingly, we sustain the
protest on this basis.

   Question 7, Existing Technical and Financial Resources The statute
requires that a U.S. person have "the existing technical and financial
resources in the [U.S.] to perform the contract."  Solicitation SA K.11,
Questionnaire, atA 6.  "Existing technical and financial resources" is
defined as the "technical and financial capability within the [U.S.] to
mobilize adequate staffing, equipment and organizational arrangements to
perform the contract."  Id.  Technical resources could be demonstrated by
an organization chart, and resumes of current officers and employees in
the U.S. possessing the skills and expertise necessary to provide
management and oversight of the work.  Id.  Financial resources could be
demonstrated by proof of a combination of net worth, bank lines of credit,
or bank guarantees.  Id.

   Inter-Con asserts that neither the minimal technical information provided
by WII, which did not include an organizational chart or resumes of its
U.S. staff, nor the consolidated financial information WII submitted for
question 5, provided an adequate basis for the agency to conclude that WII
met this aspect of U.S. person status.  It also questions whether WII's
six personnel constitute sufficient technical resources. 

   These assertions are without merit.  While WII's submission was lacking in
the detail suggested by the questionnaire, as discussed above, we agree
with the agency that it had the discretion to consider other information
demonstrating WII's capabilities.  DOSAR SA 652.237-73(c).  In this
regard, the agency noted that WII had provided information on its
organization, key personnel, and financial resources, and that "[w]hile it
is clear that WII is a small subsidiary utilized by Wackenhut Corporation
to manage its foreign operations, successful performance of [a] large
number of Embassy guard contracts plainly evidences that WII in fact has
adequate technical and financial resources.  WII's Florida office is
actively involved in proposal preparation and submission."  AR, TabA 3 at
3.  Although WII has a small staff, the agency explains that none of the
security guard providers with which it contracts furnishes guards or
on-site supervisors from its assets in the U.S., instead relying on
locally-recruited guard forces and, often, locally incorporated
subsidiaries.  Supplemental AR at 4.  WII explains that, given its use of
local resources, its six U.S.a**based personnel are adequate to provide
home office management, contract administration, and responsible oversight
of the work performed by its local subsidiaries.  WII Supplemental
Comments at 5.  We find that the agency's determination was reasonable. 
While Inter-Con believes otherwise, it has not demonstrated that this
level of personnel is per se insufficient, and its mere disagreement with
the agency's judgment is not sufficient to establish that the agency acted
unreasonably.  Command Mgmt. Servs., Inc., Ba**292893.2, June 30, 2004,
2004 CPD P 168 at 3. 

   With regard to financial assets, we note that, even though WII's
consolidated financial information does not differentiate WII from its
corporate parent, affiliates, and subsidiaries, the requirements to
establish financial capability are not as specific as those for business
volume.  In this regard, while total business volume must equal or exceed
the new contract value, there is no minimum value specified for
questionA 7.  In our view, based on its experience with WII's financial
capability in successfully performing numerous other embassy guard
contracts, the agency could reasonably conclude that WII met the question
7 requirements.

   RECOMMENDATION

   We sustain the protest on the ground that WII provided insufficient
information--and the agency lacked any other sufficient information--to
establish that it satisfied the business volume requirements for purposes
of establishing its U.S. person status; there thus was no rational basis
for the agency to find WII eligible for the 10-percent price preference. 
Moreover, given the agency's and WII's failure to present--during the
course of the procurement or in responding to this protest--financial
statements showing adequate revenues for WII itself, or other information
showing that WII had the requisite revenue from its joint venture
contracts, there simply is no reason to believe that WII is able to meet
the business volume requirement.  Accordingly, WII was not entitled to the
preference, and we therefore recommend that the agency terminate WII's
contract and make award to Inter-Con.  We also recommend that the agency
reimburse Intera**Con the reasonable costs of filing and pursuing its
protest, including attorneys' fees.  4 C.F.R. SA 21.8(d)(1) (2004).  The
protester should submit its certified claim for such costs, detailing the
time expended and the costs incurred, directly to the contracting agency
within 60A days after receipt of this decision.

   The protest is sustained.

   Anthony H. Gamboa

   General Counsel

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

   [1] Provision of the consolidated information also casts doubt on WII's
certification that "all of the representations and certifications provided
in response to the questions contained in this *Statement of
Qualifications' are accurate, current, and completeA .A .A .A ." 
Solicitation SA K.11, Questionnaire, at 8.