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Matter of:	Inter-Con Security Systems, Inc.	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.
File:	B-290493; B-290493.2
Date:	August 14, 2002

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

Richard J. Webber, Esq., and Benjamin I. Fishman, Esq., Arent Fox Kintner Plotkin & Kahn, 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 firm was being acquired by foreign firm, and thus would not be owned and controlled by U.S. citizens, 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. Where solicitation provided that offerors would qualify for evaluation preference as “U.S. person” if required certification showed U.S. citizens were employed in at least 80 percent of “principal management positions in the U.S.,” awardee's reporting of a non-U.S. citizen in one of three positions amounted to a showing of less than the required 80 percent; awardee's proposal therefore was not entitled to application of the preference, and protest is sustained on this basis.

DECISION

Inter-Con Security Systems, Inc. protests the award of a contract to Wackenhut International Inc./Wackenhut de Guatemala S.A. (WII) under request for proposals (RFP) No. S-GT50002R0001, issued by the Department of State for local guard services in Guatemala. Inter-Con asserts that WII's offer was improperly given a 10 percent price evaluation preference.

We sustain the protest.

The RFP sought proposals for providing guard services, vehicles, radio network equipment, and surveillance detection equipment at the U.S. Embassy in Guatemala City, Guatemala. Award was to be made to the offeror with the lowest priced, technically acceptable proposal for a base period, with 4 option years. Proposals were evaluated on the basis of management plan, experience and past performance, preliminary transition plan, compensation plan, and price, including application of a 10 percent evaluation price preference for offerors meeting the qualifications of a “U.S. person.” Application of the price preference was primarily based on information provided by each offeror in a certification required by § K.11 of the RFP. According to § K.11, determination of an offeror's status as a U.S. person was to be based on the Foreign Relations Authorization Act for FYs 1990-1991, P.L. 101-246 (22 U.S.C. § 4864 (2000)).

Five proposals were received, three of which, including Inter-Con's and WII's, were included in the competitive range. Following discussions and evaluation of final proposal revisions, the contracting officer determined that all three proposals were technically acceptable, and also found that all three offerors qualified as a U.S. person eligible for the price preference. Aware that acquisition of WII by a Danish company (Group 4 Falck) was pending, the contracting officer sought clarification from WII regarding whether its acquisition would have any effect on its eligibility for the U.S. person preference. WII responded that the merger had not yet taken place and that, even after the merger, it would remain qualified as a U.S. person under the applicable statute. Agency Report (AR), Tab 17. Since WII's proposed price was low after application of the preference, the contracting officer awarded it the contract. After receiving notice of the award and 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 now owned by a foreign corporation and because it fails to meet certain of the criteria listed in the RFP's definition. If WII does not qualify as a U.S. person for purposes of the evaluation preference, then Inter-Con, which does qualify, will be in line for the award.

FOREIGN OWNERSHIP

Inter-Con asserts that WII's acquisition by Falck, pending at the time of award, deprived WII of its status as a U.S. person under 22 U.S.C. § 4864 and the RFP. Specifically, Inter-Con asserts that, in order to qualify for the preference, an offeror must be both a U.S. firm--that is, one “owned and controlled by [U.S.] citizens”--and meet the definition of a U.S. person. Protest at 3.

The statute at issue, 22 U.S.C. § 4864, was enacted as a result of findings that domestic security firms were often at a disadvantage in bidding for local guard contracts abroad because, among other things, some U.S. foreign missions chose only to advertise locally the availability of a security guard contract abroad. 22 U.S.C. § 4864(a). In order to ensure maximum domestic competition for these contracts, 22 U.S.C. § 4864 establishes domestic solicitation requirements, and among other things, provides for a 10 percent evaluated price preference to be given to “United States persons and qualified United States joint venture persons.” 22 U.S.C. § 4864(c)(3). Under the statute (and RFP § 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.] for more than 2 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 3 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 United States to perform the contract.” 22 U.S.C. § 4864(d); RFP § K.11. These statutory criteria were the basis for determining entitlement to the preference. See Wackenhut Int'l, Inc./Instituto di Viglanza Città di Roma S.r.l. (Mettronotte)--a joint venture, B‑251398.2, Jan. 26, 1996, 96-1 CPD ¶ 25, aff'd, United Mondialpol Int'l S.r.l.; Department of State--Recon., B‑251398.3, B‑251398.4, May 21, 1996, 96--1 CPD ¶ 245 at 3; United Int'l Investigative Servs., B‑253271, Aug. 26, 1993, 93-2 CPD ¶ 138 at 4 (a U.S. person is not based on whether it is a U.S. firm in some general sense, but on whether the statutory criteria have been met).

Inter-Con asserts that, regardless of whether WII meets the U.S. person criteria, those criteria are only to be applied to firms owned and controlled by U.S. citizens. This argument is not supported by the statutory language. While the statute refers to “[U.S.] security firms,” “[U.S.] contractors,” and “[U.S.] firms,” it does not define those terms. Instead, with regard to those able to qualify for the preference, the statute defines only “[U.S.] person” and “qualified [U.S.] joint venture person,” and the definitions of these terms do not include any requirement for ownership or control by U.S. citizens. Absent such an express requirement, or some other indication that ownership or control by U.S. citizens was intended to be an additional consideration under the statute, there simply is no basis for us to conclude that ownership or control by a U.S. citizen is a prerequisite to an offeror's qualifying for the preference. Where, as here, the language of a statute is clear on its face, its plain meaning will be given effect; that is, if the intent of Congress is clear, “that is the end of the matter.” SmithKline Beechman Pharm., B-271845, Aug. 23, 1996, 96-2 CPD ¶ 82 at 3, citing Chevron, U.S.A., Inc. v. Natural Res. Defense Council, Inc., 467 U.S. 837, 842 (1984). Given the plain language of the statute here, there is no basis for our Office to read in the additional criterion as urged by the protester.

WII'S U.S. PERSON QUESTIONNAIRE

Inter-Con asserts that WII does not meet the U.S. person criteria based on several of its responses to the § K.11 “Statement of Qualifications for Purposes of Obtaining Preference as a U.S. Person” (questionnaire). Specifically, Inter-Con asserts that, in its response to question 6(a), WII indicated that less than the required 80 percent of its principal management positions in the U.S. are held by U.S. citizens, and that, in response to questions 5, 6, and 7, WII improperly provided information based on its corporate parent's, rather than on its own, experience, assets, and personnel.

Question 6(a)

As indicated above, the underlying statute defines a U.S. person, in part, as one that “employs United States citizens in at least 80 percent of its principal management positions in the United States.” 22 U.S.C. § 4864(d)(1)(F)(i). Paragraph 6 of the questionnaire quotes this statutory language and then sets forth the following relevant definitions:

“In the United States” -refers to those personnel positions that are encumbered as of the date of this solicitation and that the prospective offeror maintains in geographic locations within the jurisdictions defined above as constituting the United States.

“Principal management positions”-personnel positions consisting of the chief operating officer [COO] of the organization seeking eligibility, and those management people who report directly to the [COO]. In the case of a partnership, all members of the partnership. In the case of a corporation, those officers of the corporation who are active in the day to day operation of the corporation. Members of corporation boards of directors do not occupy “principal management positions” simply by virtue of their service on the board. In all cases, the term also includes the individual or individuals that will have primary responsibility for this contract if the prospective offeror is awarded the contract. RFP, § K.11 Questionnaire, at 5 (emphasis added). Question 6(a), immediately following paragraph 6, then requires as follows:

WII listed its COO in response to subsection (i) and one individual who reports to the COO under subsections (ii) and (iii). Under subsection (iii), WII also listed a third individual, who is a citizen of Guatemala, but, as indicated elsewhere in its proposal, is based in the United States. WII asserts that listing this third, non-U.S. citizen, did not prevent it from meeting the 80 percent requirement. Specifically, WII asserts that, based on its reading of the questionnaire, only subparts (i) and (ii) pertain to the percentage requirement; subpart (iii) is a separate inquiry that has no bearing on the calculation. WII concludes that it thus meets the question 6(a) requirements because both of its two listed personnel under subparts (i) and (ii) are U.S. citizens, that is, 100 percent. According to WII, had it realized that the employee listed in subpart (iii) would figure in the 80 percent calculation, it would not have listed him because he does not report directly to the COO. WII's Supplemental Comments at 3.

WII's interpretation is not supported by the language of question 6(a). While WII may have misunderstood the requirements of question 6(a), we find it clear that individuals listed in subpart (iii) were intended to be included in the 80 percent calculation. In this regard, the underlying statutory requirement and the corresponding question 6(a) both refer to “principal management positions in the [U.S.],” which the questionnaire then defines in detail. As quoted above (with emphasis added), this definition stated that “[i]n all cases, the term [principal management position] includes the individual or individuals that will have primary responsibility for this contract if the prospective offeror is awarded the contract.” Subpart (iii) then specifically called for the listing of “Individual(s) expected to have primary responsibility for contract if it is awarded.” We think it is clear from these provisions that the individuals listed under subpart (iii) were to be included in the 80 percent calculation, whether or not the individuals report directly to the COO.

The agency views this as simply a matter of an offeror's including “factually correct information that is not responsive to the actual intent of the question,” and asserts that it was entitled to “ignore the obvious mistake.” Supplemental AR (SAR) at 5. This position is untenable. The individual listed under subpart (iii) was identified elsewhere in the proposal as the “regional vice president and embassy liaison” who “handles all the details that enable the Embassy project in Guatemala City to function smoothly.” WII Proposal, Vol. III at 11. Based on the terms of subpart (iii), WII identified this individual as one having “primary responsibility for the contract,” and there was nothing on the face of the questionnaire or elsewhere in the proposal indicating that this was not WII's intent. There thus was no basis for the agency to conclude that the listing of this individual was a mistake. We conclude that WII's response to question 6(a) indicated less than 80 percent of its principal management positions in the U.S. were U.S. citizens. It follows that there was no basis for the agency to determine that WII was a U.S. person entitled to the 10 percent price evaluation preference. Accordingly, we sustain the protest on this basis.

Use of Corporate Parent Information

Inter-Con also asserts that WII improperly used corporate parent information in responding to other “U.S. person” qualification questions concerning an offeror's corporate resources and experience (specifically, nos. 5, 6(b), 6(c), and 7). WII does not dispute the use of corporate parent information, but denies that it intentionally misrepresented its qualifications. Instead, it states that it does not publish its own corporate financial statements, routinely uses its corporate parent's information in response to the § K.11 questionnaire, and that, in any event, the agency is familiar with WII and was not misled. The agency agrees with WII's position and asserts that the challenged WII responses “are at worst 'inadvertent technical mistakes' that don't need to be fixed because it is clear to the Department from information readily available to it that WII as a separate corporate entity certainly meets these criteria . . . .” ^[1] SAR at 7. We disagree.

While section K.11 provides that the agency will take into consideration “all available information” in determining U.S. person status, it also requires offerors to submit documentation to support their representations of staffing and financial resources, and provides that offerors seeking to use the “experience or financial resources of another organization or individual, including parent companies . . . must do so by way of a joint venture.” RFP, § K.11 Questionnaire, at 1. While WII submitted its offer as part of a joint venture, its parent was not part of that venture. In addition, section K.11 required offerors' questionnaires to be “complete and certified,” to the effect that “to the best of [certifier's] knowledge, all of the representations and certifications provided in response to the [questionnaire] are accurate, current, and complete . . . .” Id. at 8. Clearly, WII's responses using corporate parent information and documentary support were inaccurate and thus, did not meet these certification standards.

The agency's view that it may ignore inaccurate questionnaire responses where it is aware of other accurate information essentially renders the certification requirement meaningless; offerors would suffer no competitive consequences for submitting inaccurate responses. On the other hand, it is not clear from the RFP whether any consequences were intended, or how the certification and use of available information provisions of § K.11 were to be reconciled. Accordingly, while we do not sustain the protest on this basis, we believe the agency should clarify the provisions in implementing our recommendation below.

RECOMMENDATION

Inter-Con seeks a directed award. However, we do not believe that is the appropriate remedy here. While we have found it sufficiently clear from the RFP that the 80 percent calculation under question 6(a) was to include the individuals listed under subpart (iii), this apparently was not WII's understanding. In view of the significance of the price preference, there is reason to believe that WII did not understand that its response to subpart (iii) would preclude it from qualifying as a U.S. person. Similarly, it is not clear that this was the agency's intent, as evidenced by its position that WII's response to subpart (iii) was simply “information that is not responsive to the actual intent of the question asked.” SAR at 5.

Accordingly, we recommend that the agency reopen the competition with the offerors in the competitive range, and clarify what is required to satisfy the 80 percent requirement under question 6(a). As discussed above, the agency also should clarify the import of the certification requirement, the effect of an offeror's providing inaccurate information, and the circumstances under which the agency intends to disregard inaccurate information in favor of using other available information to determine U.S. person status. The agency also should review the questionnaire to ensure that it otherwise reflects its intent. The agency then should conduct discussions as necessary, obtain revised proposals, evaluate them, and make a properly documented award determination. We also recommend that Inter‑Con be reimbursed the reasonable costs of filing and pursuing its protests, including attorneys' fees. 4 C.F.R. § 21.8(d)(1) (2002). The protester should submit its certified claim for such costs, detailing the time expended and the costs incurred, directly to the contracting agency within 60 days after receipt of this decision.

The protest is sustained.

Anthony H. Gamboa
General Counsel

Inter-Con Security Systems, Inc., B-290493; B-290493.2, August 14, 2002