TITLE: B-298949.2, Caddell Construction Company, Inc., June 15, 2007
BNUMBER: B-298949.2
DATE: June 15, 2007
*************************************************************
B-298949.2, Caddell Construction Company, Inc., June 15, 2007

   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: Caddell Construction Company, Inc.

   File: B-298949.2

   Date: June 15, 2007

   James F. Archibald, III, Esq., Bradley Arant Rose & White LLP, for the
   protester.

   Scott M. Heimberg, Esq., Mark J. Groff, Esq., Andrea T. Vavonese, Esq.,
   and Lauren R. Bates, Esq., Akin Gump Strauss Hauer & Feld LLP, for
   American International Contractors (Special Projects), Inc., an
   intervenor.

   Dennis J. Gallagher, Esq., Department of State, for the agency.

   Linda C. Glass, Esq., Glenn G. Wolcott, Esq., and Ralph O. White, Esq.,
   Office of the General Counsel, GAO, participated in the preparation of the
   decision.

   DIGEST

   The Omnibus Diplomatic Security and Antiterrorism Act of 1986, 22 U.S.C.
   sect. 4852 (2000), established statutory qualification requirements for
   construction firms seeking to build a U.S. embassy, including a
   requirement that contractors 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. Where the
   agency's determination that an awardee has met this requirement is
   inconsistent with the ordinary meaning of the words of the statute, has
   the effect of "reading out" portions of the statute, and is inconsistent
   with the statute's legislative history, the awardee is not eligible for
   award, and the protest is sustained.

   DECISION

   Caddell Construction Company, Inc. protests the Department of State's
   (DOS) decision to reaffirm its earlier award of a contract to American
   International Contractors (Special Projects), Inc. (AICI-SP), after a
   review of AICI-SP's eligibility to perform this work, conducted in
   response to our decision in Caddell Constr. Co., Inc., B-298949, Jan. 10,
   2007, 2007 CPD para. 24. In that decision, we sustained Caddell's protest
   of an award to AICI-SP under request for proposals (RFP) No.
   SALMEC-06-R-0009, issued by DOS's Overseas Buildings Operations division,
   for the design and construction of a new U.S. embassy compound in
   Djibouti, in eastern Africa. The solicitation was subject to the Omnibus
   Diplomatic Security and Antiterrorism Act of 1986, as amended,
   (hereinafter, the "Diplomatic Security Act"), 22 U.S.C. sect. 4852 (2000),
   which provides that only "United States persons" and "qualified United
   States joint venture persons" are eligible to compete for certain
   diplomatic construction projects.[1]

   As discussed in greater detail below, DOS sought additional information
   from AICI-SP, after our earlier decision, in an effort to determine
   whether the company could properly be viewed as eligible for award of this
   contract given the restrictions of the Diplomatic Security Act; with this
   information DOS again concluded that AICI-SP is eligible here. Caddell
   argues that AICI-SP cannot qualify as a "United States person" or
   "qualified United States joint venture person" as those terms are defined
   by the Dipomatic Security Act, and, with respect to one provision of the
   statute, we agree.

   We sustain the protest.

   BACKGROUND

   On October 27, 2005, the agency posted a "Sources Sought Notice" on the
   Federal Business Opportunities (FedBizOpps) website, announcing its
   planned fiscal year 2006 Standard Embassy Design projects. The notice
   invited interested firms to file prequalification submissions, and advised
   that potential offerors for the various construction projects "are limited
   to United States person bidders." The prequalification submission package
   contained a total of nine separate certifications so that offerors could
   establish their eligibility to construct a U.S. Embassy by addressing
   their compliance with each of the restrictions established in the
   Diplomatic Security Act.

   In December 2005, AICI-SP submitted a prequalification package, stating in
   its cover letter that AICI-SP was established in November 2005 (i.e., 35
   days earlier) to perform classified contracts for DOS and was wholly owned
   by American International Contractors, Inc. (AICI). AICI-SP's
   prequalification submission indicated--in response to certification
   question No. 8 concerning joint venture status--that it was not seeking
   qualification on the basis of either a formal or de facto joint venture.
   Consistent with this statement, AICI-SP did not provide any of the
   information required from joint venture offerors--such as identifying the
   "U.S. person participant" in the joint venture, or identifying "all
   co-venturers."

   In January 2006, the agency evaluated AICI-SP's submission with regard to
   the requirements concerning a "United States person" and "qualified United
   States joint venture persons." In reviewing AICI-SP's submission, the
   agency concluded that, because of AICI-SP's recent incorporation, it did
   not qualify as a "United States person" in its own right.[2]
   Nonetheless--and directly contrary to AICI-SP's representation that it was
   not part of either a formal or a de facto joint venture--the agency
   concluded that AICI-SP was a de facto joint venture and should be
   considered eligible as a United States person.

   After receiving the prequalification submissions, proposals were received
   from six prequalified firms, including Caddell and AICI-SP. After a
   technical and price evaluation, only the proposals of Caddell and AICI-SP
   were included in the competitive range. After evaluation of revised
   proposals, both offerors were determined to be technically qualified, and
   award was made to AICI-SP with a final evaluated price of $74,988,000,
   compared to Caddell's evaluated price of $90,115,000.

   Caddell protested to our Office arguing that the agency unreasonably
   determined that AICI-SP was a "United States person" or a "qualified
   United States joint venture person" within the meaning of the Diplomatic
   Security Act and, accordingly, that it was improper to award the contract
   to AICI-SP.

   We sustained Caddell's earlier protest because the contemporaneous
   documentation supporting the agency's summary conclusion that AICI-SP was
   eligible to participate in the procurement on the basis of a de facto
   joint venture provided no explanation as to how the agency could reach
   this conclusion in light of AICI-SP's expressly contrary representation.
   We were therefore unable to conclude that the agency's determination
   regarding AICI-SP's eligibility for award was reasonable.

   Our decision sustaining the earlier protest was limited to the express
   terms of AICI-SP's submission; we did not reach the underlying issue of
   the agency's interpretation of the requirements of the Diplomatic Security
   Act. We recommended that the agency review the qualification submission of
   AICI-SP, specifically consider and address AICI-SP's representation that
   it was not part of a formal or de facto joint venture, and fully document
   its review and analysis regarding this matter. We noted that in the event
   the agency concluded that additional information was required, it should
   seek such information in a manner consistent with applicable procedural
   requirements. We further noted that in the event the agency determined
   that AICI-SP was ineligible for award, it should terminate the contract
   with AICI-SP and make a new award consistent with the solicitation
   provisions and applicable law and regulation.

   In response to our decision and recommendation, the agency, by letter
   dated January 22, 2007, requested that AICI-SP clarify its intentions by
   submitting a new statement of qualifications and, if a de facto joint
   venture was intended, provide a statement from AICI guaranteeing AICI-SP's
   performance. In response, AICI-SP provided the agency with a revised
   Statement of Qualification indicating that it was a de facto joint
   venturer with AICI, and a guarantee letter from AICI. After a review of
   the revised statement, the agency confirmed the original award. Caddell
   filed this protest on March 8.

   DISCUSSION

   The Diplomatic Security Act, Pub. L. No. 99-399, 100 Stat. 853 (1986), was
   enacted in response to terrorist and state-sponsored attacks upon United
   States citizens and embassies in the early and mid-1980s. After the
   passage of similar bills by the House and the Senate, a conference
   committee was appointed to negotiate a final version of the bill. The
   conferees explained in the Joint Explanatory Statement that the Act was
   intended "to provide enhanced diplomatic security and combat international
   terrorism." H.R. Rep. No. 99-783, at 53 (1986) (Conf. Rep.). Among other
   things, the Diplomatic Security Act established several statutory
   qualification requirements for construction firms seeking to build a U.S.
   embassy.

   Of relevance here, the Diplomatic Security Act requires that, where
   adequate competition exists, only United States persons and qualified
   joint venture persons may bid on a diplomatic construction or design
   project with an estimated value in excess of $10 million; this provision
   is now codified at 22 U.S.C. sect. 4852(a)(1). The Act defines the term
   "United States person," as an entity which:

     (A) is incorporated or legally organized under the laws of the United
     States, including State, the District of Columbia, and local laws;

     (B) has its principal place of business in the United States;

     (C) has been incorporated or legally organized in the United States-- 
     (i) for more than 5 years before the issuance date of the  invitation
     for bids or request for proposals [for the project];

                                     * * * * *

     (D) has performed within the United States or at a United States
     diplomatic or consular establishment abroad administrative and
     technical, professional, or construction services similar in complexity,
     type of construction, and value to the project being bid;

     (E) with respect to a construction project under (a)(1) of this section,
     has achieved 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 date
     specified in subparagraph (C)(i);

     (F)(i) employs United States citizens in at least 80 percent of its
     principal management positions in the United States,

                                     * * * * *

     (G) has the existing technical and financial resources in the United
     States to perform the contract[.]

     22 U.S.C. sect. 4852(c)(2).

   The current protest challenges both the agency's decision to allow AICI-SP
   to submit a revised prequalification statement, and its conclusion that
   the company meets the requirements of the Act. Caddell argues that even if
   AICI-SP is considered a de facto joint venture offeror with AICI, AICI-SP
   cannot reasonably be viewed as meeting the Act's requirement that only a
   United States person can construct a project of this magnitude. As
   discussed below, Caddell specifically contends that AICI-SP cannot meet
   the requirements of subparagraphs C, D, and E of the statutory provision
   set forth above.[3]

   The 5-Year Incorporation Requirement

   With respect to subparagraph C of the statute--requiring that an entity
   seeking contracts for diplomatic construction projects over $10 million be
   incorporated, or legally organized, for more than 5 years before the
   RFP--Caddell argues that AICI-SP cannot possibly meet this requirement. As
   mentioned above, AICI-SP was created approximately 35 days before the date
   it submitted its prequalification package.

   In answering this contention, the agency first explains that AICI-SP has
   clarified any ambiguity about whether the company was offering to perform
   as a de facto joint venture with its parent entity, AICI. In addition, DOS
   explains that, given the clear indication of commitment from AICI-SP and
   AICI, it decided that AICI-SP could meet this requirement through its
   joint venture partner and parent company. In this regard, the agency
   explains that it has relied on the concept of de facto joint ventures for
   diplomatic construction projects since the 1980s as several major American
   firms have adopted a business practice of relying on wholly-owned
   subsidiaries to perform international projects, and using such
   subsidiaries to perform classified construction projects. In addition, the
   agency notes that this practice is consistent with its regulations. Agency
   Report (AR) at 8. Under this approach, the affiliated firm is treated as a
   guarantor, not an offeror. Id.

   The DOS regulations implementing the requirements of the Diplomatic
   Security Act are consistent with the agency's decision on this matter.
   Specifically, the regulations provide that, for submissions by a joint
   venture, the joint venture must have at least one firm or organization
   that meets all the requirements of a "United States person." 48 C.F.R.
   sect. 652.236-72. Since AICI-SP (having only been incorporated for 35 days
   prior to its prequalification submission) could not meet the requirement,
   the agency looked to the incorporation date of AICI (i.e., 1974), which
   clearly meets the incorporation requirements in the statutory definition
   of a "United States person."

   Caddell argues that there is nothing in the statute that allows a bidder
   existing less than 5 years to utilize a parent company's longer period of
   incorporation through a de facto joint venture to meet this requirement.
   In addition, Caddell points out that in a previous case before our Office,
   the agency refused to allow a bidder to rely upon the incorporation status
   of its affiliates through a de facto joint venture to meet the requirement
   that the entity be organized for at least 5 years before the issuance of
   the current solicitation; Caddell also points out that our Office agreed
   with the agency's interpretation of this requirement. See Wallace
   O'Connor, Inc., B-227834, Aug. 19, 1987, 87-2 CPD para. 181.

   Our Office asked the agency to explain why its position has changed since
   the time of the Wallace decision. The agency pointed out that the current
   regulation did not exist 20 years ago, and that the Wallace case arose
   within the first year after passage of the Diplomatic Security Act.
   Supplemental (Supp.) AR at 5-7. In addition, the agency explained that the
   regulation reasonably accommodates the special steps corporate entities
   must take to meet other requirements, such as the need to treat
   construction details as classified for security purposes. Id. at 6-7.
   Thus, the agency's practices and procedures concerning this issue have
   evolved since the Wallace decision was issued in 1987. For these reasons,
   the agency argues it was reasonable for it to promulgate regulations to
   allow an offeror that relies on a de facto joint venture with a parent or
   affiliate to be considered a "qualified United States joint venture
   person," provided the joint venture has at least one firm or organization
   that itself meets all the requirements of a "United States person" listed
   in the statute. Despite Caddell's arguments to the contrary, we think the
   current regulation does not contradict the statute, and there is no
   dispute that AICI's incorporation date meets the requirement.

   Experience with Projects of Similar Complexity and Value

   Turning next to subparagraph D of the statute--requiring that an entity
   seeking contracts for diplomatic construction projects over $10 million
   must have performed construction services "similar in complexity, type of
   construction, and value to the project being bid," 22 U.S.C.
   sect. 4852(c)(2)(C)--Caddell argues that neither AICI-SP, nor AICI, can
   meet the similar complexity and value requirement. As before, Caddell
   notes that AICI-SP is a new entity that has performed no projects
   whatsoever, and Caddell argues that the agency has reached too far into
   AICI's past to find a project to meet this requirement of the statute.

   As a preliminary matter, now that the agency has received a clear
   statement from AICI-SP and AICI that they should be construed as de facto
   joint venturers--together with the performance guarantee received from
   AICI--we think there was nothing unreasonable or improper about the
   agency's decision to look to AICI to meet this experience requirement.
   That said, the project the agency relied upon to decide that AICI meets
   this requirement presents its own controversy.

   Specifically, DOS found AICI-SP eligible based on AICI's construction of
   the United States Embassy in Amman, Jordan. This embassy was built between
   1987 and 1992 at a cost of approximately $38.7 million. AR, Tab 3, AICI's
   Certification at 11. The agency determined that the value of the Amman
   project as adjusted for inflation was $55 million and thus within the
   $50-$60 million estimate the government originally prepared for the
   current Djibouti project, and which the government was relying on during
   the prequalification process.[4] Therefore, DOS concluded that AICI-SP,
   through its parent, satisfied the similar experience requirement of the
   Diplomatic Security Act with a project that was completed 15 years ago,
   and had a value, adjusted for inflation, that was lower than AICI-SP's
   price for the Djibouti project by more than $20 million.

   Caddell responds that the embassy project relied upon here was too far in
   the past to be taken as a reasonable indication that AICI meets the
   statutory requirement for performing projects of similar complexity. In
   addition, Caddell argues that there is no provision in the statute, or the
   DOS regulations, that anticipates adjusting the contract price of prior
   projects for inflation to determine whether the project can be viewed as
   one of similar complexity.

   To decide whether it was reasonable for the agency to conclude that AICI's
   experience constructing the U.S. embassy in Amman meets the similar
   complexity and value requirements of the Diplomatic Security Act, we look
   first to the express words of the statute--which contain no indication of
   any time limit on the experience requirements--and then to the
   implementing regulations. The regulations define "value" for the purpose
   of interpreting this section as the "total contract price of the project."
   48 C.F.R. sect. 652.236-72(d)(4). The regulations are silent, however, on
   the question of how much time can pass before a project becomes too dated
   for reasonable consideration.

   In our view, prior experience building an embassy is clearly relevant to
   the question of whether an offeror has experience of similar
   complexity--the questions for our Office are whether the project value
   here was appropriately viewed as similar, and whether the information
   about this project is simply too stale to provide any meaningful insight
   into AICI's capabilities.

   On the question of similar value, we know of no statute or regulation that
   was violated by the agency's decision to adjust for inflation the price of
   the earlier project to determine its approximate current value. In fact,
   the approach of calculating such an adjustment for the purposes of
   determining a current value for the earlier project seems to fall within
   the reasonable exercise of the agency's discretion. See, e.g., OMNI Gov't
   Servs., LP, B-297420.2 et al., Mar. 22, 2006, 2006 CPD para. 56 at 3 n.4
   (adjusting a prior contract price for inflation in order to compare it
   with a currently proposed price was a reasonable exercise of agency
   discretion). While, as noted above, DOS's implementing regulations define
   "value" as the contract price of the project (AICI-SP's price is
   approximately $75 million), the agency looked instead to a previous
   government estimate of the value of this project (which was $50-$60
   million). It was this early government estimate that the agency used as
   the benchmark for comparison with the adjusted value of the 1992 Amman
   project ($55 million). Nonetheless, since the qualification decision here
   was being made prior to the time proposed prices were received, we are not
   prepared to find that the agency abused its discretion when it decided
   that AICI's 1992 Amman project met the similar value portion of the
   statute.

   On the question of whether the project was too old to be considered, we
   recognize that neither the statute, nor the agency's regulations, address
   this issue, leaving considerable discretion to the agency. On the other
   hand, we think the agency's decision to qualify AICI-SP based on a single
   project from a decade and a half ago clearly reaches toward the outer
   limits of a reasonable exercise of discretion. That said, however, given
   the absence of any language in the statute limiting the time period during
   which an offeror must have performed similar work, we will not
   conclude--on this record--that the agency unreasonably decided that AICI
   met the statute's requirement of performing a construction project of
   similar complexity.

   The Business Volume Requirement

   Turning next to subparagraph E of the statute--requiring that an entity
   seeking contracts for diplomatic construction projects over $10 million
   must have "achieved 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
   issuance of the solicitation, 22 U.S.C. sect. 4852(c)(2)(E)--Caddell
   argues that DOS has adopted an unreasonable interpretation of the statute
   in order to conclude that AICI had the requisite business volume to
   qualify as an offeror for this project. On this ground, and for the
   reasons set forth below, we agree.

   The record here shows that certification No. 5 of the prequalification
   submission required vendors to list their gross receipts for at least 3
   years within the 5-year period beginning with 2000 and extending through
   2004. AR, Tab 1, Statement of Qualifications, at 5. In its initial
   submission in December of 2005 (and prior to providing additional
   information after our Office sustained Caddell's earlier protest), AICI-SP
   submitted the following information about its parent company's business
   volume:

       Jan.--Sept. 2005    [deleted] million  
             2004          [deleted] million  
             2003          [deleted] million  
             2002          [deleted] million  
             2001          [deleted] million  
             2000              [no entry]     

   Leaving aside for now the issue of allowing AICI to provide 2005
   information--contrary to the solicitation's instructions calling for
   information for the years 2000-2004--DOS decided then (and has reaffirmed
   its decision now[5]) that the statute allows the agency to aggregate 3
   years of business volume and compare the total to the project at issue.
   Specifically, DOS determined that AICI-SP satisfied the "United States
   person" business volume requirement through the experience of AICI, its
   corporate parent, by adding together AICI's business volume for years 2003
   through 2005 (i.e., [deleted] million + [deleted] million + [deleted]
   million), and comparing the resulting total of [deleted] million to the
   amount of the government's early price estimate for this project ($50-$60
   million).

   Caddell argues that the agency's approach of adding together 3 years of a
   company's business receipts is not what the statute intended. In fact,
   Caddell contends that the DOS interpretation of the statute effectively
   reads out the term "3 years" because, under the agency's interpretation,
   if only 1 year of business receipts provided sufficient business volume,
   and the remaining 2 years did not, the agency could still add together the
   3 years of business receipts and conclude that the offeror met the
   requirement in 3 of the 5 years. In answer, the agency argues that our
   Office should reject Caddell's contentions and defer to its
   interpretation, as it is the agency charged with interpreting this
   statute.

   In matters concerning the interpretation of a statute, the first question
   is whether the statutory language provides an unambiguous expression of
   the intent of Congress. If it does, the matter ends there, for the
   unambiguous intent of Congress must be given effect. Chevron U.S.A. Inc.
   v. Natural Res. Def. Council, Inc., 467 U.S. 837, 842-43 (1984). It is a
   fundamental canon of statutory construction that words, unless otherwise
   defined by the statute, will be interpreted consistent with their
   ordinary, contemporary, common meaning. State of California v. Montrose
   Chem. Corp., 104 F.3d 1507, 1519 (9^th Cir. 1997); GAO, Principles of
   Federal Appropriations Law, vol. 1, at 2-89 (3d ed. 2004); see Mallard v.
   United States District Court for the Southern District of Iowa, 490 U.S.
   296, 301 (1989).

   Here, the statute contemplates a significant restriction on an offeror's
   eligibility to compete for this type of contract. Specifically, the
   statute seeks a showing that an entity must have "achieved 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 issuance of the solicitation. 22
   U.S.C. sect. 4852(c)(2)(E). We think the ordinary and common meaning of
   these words is that eligible offerors will have achieved a business volume
   equal to or greater than the value of the project in each of 3 years
   within the 5-year period. That said, given the arguments raised by Caddell
   and State, we necessarily recognize an element of ambiguity in this
   provision.

   When a statute is silent or ambiguous with respect to the specific issue,
   deference to the interpretation of an administering agency is dependent on
   the circumstances. Chevron, 467 U.S. at 843-45; see also United States v.
   Mead Corp., 533 U.S. 218, 227-38 (2001). Where an agency interprets an
   ambiguous provision of the statute through a process of rulemaking or
   adjudication, unless the resulting regulation or ruling is procedurally
   defective, arbitrary or capricious in substance, or manifestly contrary to
   the statute, the courts will defer to this agency interpretation (called
   "Chevron deference").[6] Mead, 533 U.S. at 227-31; Chevron, 467 U.S. at
   843-44. However, where the agency position reflects only an informal
   interpretation, "Chevron deference" is not warranted. In these cases,
   deference to an agency's interpretation is not mandatory, but rather the
   weight to be accorded an agency's judgment will depend on its relative
   expertise, the thoroughness evident in its consideration, the validity of
   its reasoning, its consistency with earlier and later pronouncements, and
   all those factors which give it power to persuade, though lacking power to
   control. Mead, 533 U.S. at 227-31; Skidmore v. Swift & Co., 323 U.S. 134,
   140 (1944).

   In our view, DOS's interpretation of this statute is not entitled to
   "Chevron deference," as the interpretation arose in the normal course of a
   procurement, and is not the result of either a rulemaking or an
   adjudication. See, e.g., Intertribal Bison Cooperative, B-288658, Nov. 30,
   2001, 2001 CPD para. 195 at 4. In fact, while the agency suggests it has
   used this interpretation before, it has given our Office no examples. In
   any event, it has not promulgated this interpretation as part of its
   extensive implementing regulations. Nor, as discussed below, do we think
   the agency's interpretation of this statute has the persuasive weight
   deserving of deference. Our review leads us to conclude that Caddell is
   correct in its argument that the agency's interpretation has the effect of
   rendering meaningless the statute's requirement for receipts at this level
   for 3 years within the previous 5-year period. We also think the
   legislative history of the Diplomatic Security Act does not support the
   agency's interpretation. We address both conclusions in more detail below.

   As mentioned above, Caddell makes the point that the agency's
   interpretation of aggregating 3-years worth of business receipts to
   achieve a total business volume equal to or greater than the value of the
   project could result in a complete "reading out" of the 3-year
   requirement. For example, if AICI had receipts of $75 million in 2005 and
   $0 in each of the other years, under the agency's interpretation, AICI's
   receipts would establish AICI-SP's eligibility. We think this result is
   not consistent with the commonly understood meaning of the words of this
   statute.

   With respect to legislative history, we note that reference to the
   legislative history of a statute is an appropriate additional tool of
   analysis "with the recognition that only the most extraordinary showing of
   contrary intentions from such analysis would justify a limitation on the
   `plain meaning' of the statutory language." Garcia v. United States, 469
   U.S. 70, 75 (1984); see Chevron, 467 U.S. at 859-62. Here, the legislative
   history of this provision shows that the Committee Reports from both
   houses of Congress--the Committee on Foreign Affairs in the House, and the
   Committee on Foreign Relations in the Senate--used almost identical
   language to describe these provisions, and, in fact, used identical
   language to tie together the previously-discussed provision requiring
   experience with projects of similar complexity and value, and the business
   volume requirements. Specifically, the Senate Committee on Foreign
   Relations advised:

     -- The firm must have performed services similar to the complexity,
     cost, and construction-type to that of [the][7] project open for bid.

     -- The firm must have achieved a total business volume in 3 of the
     previous 5 years at least equal to the value of the project being bid.
     The previous two requirements will help ensure that a firm is
     technically capable to carry out a given project.

   S. Rpt. No. 99-304, at 15 (1986); see also H. Rpt. No. 99-494, at 17
   (1986) (emphasis added; the underlined language is identical in both
   reports). Given these concerns, it is troubling that the agency's
   interpretation of the business volume requirement will result in the
   eligibility of an offeror who has not, in any of the previous 5 years
   before this solicitation was issued, performed a project of this
   magnitude. In fact, the AICI receipts aggregated by the agency ([deleted]
   million + [deleted] million + [deleted] million, for the first
   determination of eligibility; [deleted] million + [deleted] million +
   [deleted] million, for the second) do not even approach a steady volume of
   one-third of the value of the project here.

   Moreover, the narrative description of this provision provided by both
   Committees, and quoted above, provides additional words not included in
   the statute even though the wording of the bill, on this issue, as
   reported by both Committees, is identical to the wording that was enacted
   into law.[8] While the statute (and both bills as reported) refers to
   business volume "in 3 years of the 5-year period," 22 U.S.C.
   4852(c)(2)(E), both committees describe the provision as looking to the
   business volume "in 3 of the previous 5 years." Id. (Emphasis added.) We
   think the description of this provision in the two Committee Reports
   strongly supports a conclusion that Congress intended that a qualified
   entity have receipts equal to the size of the project in each of 3 years
   within the previous 5-year period. As a result, we think the agency's
   interpretation of this provision--looking to an entity's highest
   cumulative 3-year business volume within the previous 5-year
   period--conflicts with the narrative guidance provided by the agency's
   committees of jurisdiction. In short, we find that DOS's interpretation of
   this statute is inconsistent with its ordinarily understood meaning, and
   with the legislative concerns that led to the statute's enactment.[9]

   RECOMMENDATION

   Since, in accordance with the Diplomatic Security Act, only a United
   States person or qualified United States joint venture person may bid on a
   diplomatic construction project and, as discussed above, AICI-SP
   apparently does not qualify, we recommend that the award to AICI-SP for
   the construction of the embassy in Djibouti be terminated. As the record
   indicates that Caddell was the only other offeror eligible for award, we
   find that, absent a decision to reopen the competitive range, or to
   recompete this contract, the award should be made to Caddell, if otherwise
   appropriate. Finally, we recommend that the protester be reimbursed its
   costs of filing and pursuing the protest, including reasonable attorneys'
   fees. Bid Protest Regulations, 4 C.F.R. sect. 21.8(d)(1) (2007). The
   protester should submit its certified claim, detailing the time expended
   and costs incurred, directly to the contracting agency within 60 days of
   receiving this decision. 4 C.F.R. sect. 21.8(f)(1).

   The protest is sustained.

   Gary L. Kepplinger
   General Counsel

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

   [1] Specifically, the Diplomatic Security Act provides that: "where
   adequate competition exists, only United States persons and qualified
   United States joint venture persons may . . . bid on a diplomatic
   construction or design project which has an estimated total project value
   exceeding $10,000,000." 22 U.S.C. sect. 4852(a).

   [2] Among other things, the Diplomatic Security Act defines "United States
   person" as a "person" that has been incorporated or legally organized in
   the United States for more than 5 years before the issuance date of the
   solicitation. 22 U.S.C. sect. 4852(c)(2).

   [3] We do not agree with Caddell's argument that the agency improperly
   engaged in discussions by requesting, and allowing, AICI-SP to submit
   revised prequalification materials. The prequalification materials at
   issue here were submitted prior to proposals, and were used to determine
   eligibility to participate in the competition. As such, these materials
   are more analogous to matters of responsibility, than to questions of the
   proposal's acceptability--as Caddell argues. We have specifically held
   that an agency properly may obtain information from a contractor regarding
   its responsibility at any time until award is made. Dock Express
   Contractors, Inc., B-227685.3, Jan. 13, 1988, 88-1 CPD para. 23 at 6.

   [4] The agency's current government estimate for the Djibouti construction
   project is approximately $81 million. AR at 17.

   [5] When the agency sought revised prequalification submissions from
   AICI-SP, all of the numbers above remained the same except for a revised
   number for 2005 receipts. Instead of providing AICI's 2005 business
   receipts from January to September, AICI-SP provided its parent company's
   receipts for the entire year. Hence, DOS's second determination that
   AICI-SP meets the business volume requirements of the Diplomatic Security
   Act relies upon a figure of [deleted] million in AICI business receipts
   for 2005. AR, Tab 4, AICI-SP Prequalification Submission, at 6.

   [6] The absence of authority for an agency to use formal administrative
   procedures to interpret laws does not alone bar this level of deference.
   Mead, 533 U.S. at 231 n.13 (citing NationsBank of N.C., N.A. v. Variable
   Annuity Life Ins. Co., 513 U.S. 251 (1995), for the example that the
   deliberative conclusions of the Comptroller of the Currency as to the
   meaning of banking laws are deserving of this higher level of deference
   due to the Comptroller's specific authority to enforce such laws).

   [7] The Senate Report omits the word "the," which we have added for
   clarity. The missing article does not change the meaning of the quote, and
   is apparently a typographical error.

   [8] Compare Pub. L. No. 99-399 sect. 402(c)(2)(E), 100 Stat. 853, 865
   (1986) with H.R. 4151, 99^th Cong. sect. 402(c)(2)(E) (as reported to the
   House, Mar. 12, 1986) and with H.R. 4151, 99^th Cong. sect. 402(c)(2)(E)
   (as reported to the Senate, May 20, 1986).

   [9] The record here also shows that the agency abandoned the express terms
   of its own solicitation. As previously stated, the solicitation
   specifically required that vendors list their gross receipts for the years
   2000-2004--the calendar years immediately preceding issuance of the
   solicitation, as required by the statute and implementing regulations.
   Nonetheless, the awardee provided receipts for the years 2001-2005.
   AICI-SP was thus allowed to provide more recent information than allowed
   under the solicitation, and other offerors might have been able to
   establish their eligibility had they been allowed to deviate from the time
   period identified by the agency's request for information. Moreover, if
   the agency had limited its consideration to the information the
   solicitation specifically sought, AICI's shortfall in meeting the
   statute's business volume requirement becomes even more striking--even
   applying DOS's cumulative approach to meeting those requirements. In this
   regard, the awardee's business volume was reported as [deleted] million
   for 2004, [deleted] million for 2003, [deleted] million for 2002--its
   three highest volume years. Aggregating these numbers does not approach
   either of the government's estimates for this project, or the $74,988,000
   evaluated price for AICI-SP's proposal on which the award was based.