|
FAR
9.108: Prohibition on Contracting with Inverted Domestic
Corporations |
|
Comptroller
General - Key Excerpts |
Next, Inchcape asserts that MLS is an inverted domestic
corporation and, therefore, the agency was barred from making
award to the firm. Protest at 13-17; Comments at 2, 6‑16; Supp.
Comments at 2, 6-12. As stated above, FAR § 9.108-2, together
with section 733(a) of the Consolidated Appropriations Act, 2014
(Pub. L. No. 113-76), establishes a prohibition against the
award of a federal contract to an inverted domestic corporation.
As also stated above, MLS’s proposal included a letter
certifying that the firm was not an inverted domestic
corporation. AR, Tab 10, MLS Certifications and Representations,
at 9. The contracting officer states that he relied on this
certification in his affirmative responsibility determination
for MLS. AR, Tab 21, Contracting Officer’s Supp. Statement, ¶ 6.
As noted above, the solicitation advised that an offeror’s
inverted domestic corporation status would be evaluated as a
matter of responsibility. RFP at 95. Our Bid Protest Regulations
provide that our Office will not review challenges to an
agency’s affirmative responsibility determination except when
the protest alleges that definitive responsibility criteria have
not been met (not the case here) or identifies “evidence raising
serious concerns that, in reaching a particular responsibility
determination, the contracting officer unreasonably failed to
consider available relevant information or otherwise violated
statute or regulation.” 4 C.F.R. § 21.5(c) (2014).
Inchcape contends that the contracting officer’s determination
was flawed because FAR § 9.108-3(b) provides that a “contracting
officer may rely on an offeror’s representation that it is not
an inverted domestic corporation unless the contracting officer
has reason to question the representation.” Comments at 9-10
(quoting FAR § 9.108-3(b) (emphasis added)). Inchcape argues
that here, the contracting officer had reason to question MLS’s
representation--and therefore could not rely on it--because
Inchcape raised this issue in prior protests before our Office.
Id. at 10.
The agency acknowledges that prior to award, the contracting
officer was aware of Inchcape’s prior allegations that MLS is an
inverted domestic corporation. See AR, Tab 21, Contracting
Officer’s Supp. Statement, ¶ 3; Agency E-Mail to GAO (Apr. 11,
2014) at 2. In this regard, the agency explains that prior to
award, the cognizant deputy director of contracts as well as an
attorney from the cognizant office of counsel informed the
contracting officer of Inchcape’s prior allegations and advised
him that in this procurement he could rely on MLS’s
representation. AR, Tab 21, Contracting Officer’s Supp.
Statement, ¶¶ 3, 5; AR, Tab 22, Agency Counsel’s Statement, at
1; AR, Tab 23, Deputy Director of Contracts’ Statement ¶ 4;
Agency E-Mail to GAO (Apr. 11, 2014) at 2. The basis for this
course of action, the agency explains, was as follows.
In a protest filed with our Office in 2009, Inchcape asserted
that MLS was an inverted domestic corporation. Agency Ltr. to
GAO (Apr. 3, 2014) at 1. This allegation led the agency’s office
of counsel to analyze the issue. Id.; AR, Tab 20, Agency Legal
Memorandum (July 28, 2010). The office of counsel’s analysis
culminated in a detailed legal memorandum dated July 28, 2010
that set forth factual and legal bases for the conclusion that
MLS was not an inverted domestic corporation. AR, Tab 20, Agency
Legal Memorandum (July 28, 2010), at 2-4. The aforementioned
deputy director of contracts and attorney were aware of these
events. AR, Tab 22, Agency Counsel’s Statement, at 1; AR, Tab
23, Deputy Director of Contracts’ Statement, ¶¶ 3-5. The deputy
director of contracts also was aware that Inchcape had raised
the issue on numerous other occasions, but had “never
demonstrated MLS to be an inverted domestic corporation.” AR,
Tab 23, Deputy Director of Contracts’ Statement, ¶ 4.
Accordingly, the deputy director of contracts and counsel
believed that the issue had been vetted and resolved through the
appropriate agency channels, and they therefore advised the
contracting officer that in this procurement he could rely on
MLS’s representation. See AR, Tab 22, Agency Counsel’s
Statement, at 1.
Based on the circumstances here, we see no basis to question the
contracting officer’s acceptance of MLS’s representation that
the firm is not an inverted domestic corporation. The record
shows that although the contracting officer was aware of
Inchcape’s prior allegations, he nevertheless relied on MLS’s
representation because the agency already had analyzed the issue
and determined that MLS was not an inverted domestic
corporation. The record also shows that the agency’s analysis of
the issue considered relevant and detailed information regarding
MLS’s corporate history, structure, and ownership interests, as
well as whether there was a basis to find that each of the three
mandatory inverted domestic corporation elements set forth in 6
U.S.C. § 395(b) had been met. AR, Tab 20, Agency Legal
Memorandum (July 28, 2010), at 2-4. The agency found that none
of the elements were met. Id.
Inchcape disagrees with the agency’s findings, characterizing
the analysis as “flawed, incomplete, outdated, and
insufficient.” Inchcape Ltr. to GAO (Apr. 15, 2014) at 3, 12-18.
However, based on Inchcape’s arguments and the record, we cannot
conclude that the agency’s analysis was unreasonable. Further,
to the extent that Inchcape believed, prior to filing this
protest, that the contracting officer should have considered
information or arguments that were not raised in its 2009
protest, Inchcape could have--but did not--inform the
contracting officer prior to award. In fact, even during this
protest Inchcape has not provided any substantive new evidence
regarding the issue. Instead, Inchcape simply disagrees with the
agency’s conclusions. In sum, we see no information in the
record--other than Inchcape’s prior protest allegations, which
the agency analyzed and found to be without merit--that would
have provided the contracting officer with a reasonable basis to
question MLS’s representation. Accordingly, this basis of
protest is denied. (Inchcape
Shipping Services (Dubai) LLC, B-409465, B-409465.2: May 12,
2014) (pdf) |
|
|
Comptroller
General - Listing of Decisions |
|
For
the Government |
For
the Protester |
|
Inchcape Shipping Services (Dubai) LLC,
B-409465, B-409465.2: May 12, 2014 (pdf) |
|
|
|
