BNUMBER: B-276425
DATE: May 30, 1997
TITLE: Fidelity Technologies Corporation, B-276425, May 30, 1997
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Matter of:Fidelity Technologies Corporation
File: B-276425
Date:May 30, 1997
Jacob B. Pompan, Esq., Pompan, Ruffner & Werfel, for the protester.
John A. Evans, Esq., Department of the Navy, for the agency.
Jacqueline Maeder, Esq., and Paul Lieberman, Esq., Office of the
General Counsel, GAO, participated in the preparation of the decision.
DIGEST
Protest is sustained where protester's proposal included an apparently
erroneous small disadvantaged business certification, which caused
protester's proposal not to be selected for award, and where agency,
which
conducted discussions with offerors, was on notice of the apparent
error and
failed to provide protester an opportunity to correct it.
DECISION
Fidelity Technologies Corporation protests the award of a contract by
the Department of the Navy, Naval Air Warfare Center (NAWC), Orlando,
Florida, to Lockheed Martin Aerospace Corporation under request for
proposals (RFP) No. N61339-96-R-0029 for simulator operation and
maintenance (COMS) at various naval facilities. The protester
contends that it was improperly denied the award on the basis of a
clerical error in its proposal concerning its status as a small
disadvantaged business (SDB) concern which should have been apparent
to the agency or, alternatively, put the agency on notice of a
possible certification error, and that the agency failed to hold
meaningful discussions with Fidelity because the agency failed to
raise the certification anomaly.
We sustain the protest.
The RFP, issued on July 22, 1996, contemplated the award of a firm,
fixed-priced contract for a base 2-month mobilization phase-in period
(lot 1) and a 5-month COMS services period (lot 2) with options to
continue the COMS services up to an additional 53 months. Award was
to be made to the responsible offeror whose technically acceptable
proposal offered the lowest reasonable and realistic price.
The RFP contained the clause at Defense Federal Acquisition Regulation
Supplement (DFARS) sec. 252.219-7006, entitled "Notice of Evaluation
Preference for Small Disadvantaged Business (SDB) Concerns," a clause
which provides for a 10-percent price preference in favor of proposals
submitted by SDB concerns.
For purposes of determining eligibility for the price evaluation
preference, the RFP contained the standard "Small Disadvantaged
Business Concern Representation" clause found in Federal Acquisition
Regulation (FAR) sec. 52.219-1, which requires an offeror to represent
its status as a small business. Specifically, the clause, in relevant
part, contains the following required representations:
"(b) Representations. (1) The offeror represents and certifies
as part of its offer that it is � a small business concern, � is
not a small business concern.
"(2) (Complete only if offeror represented itself as a small
business concern in block (b)(1) of this section.) The offeror
represents as part of its offer that it � is, � is not a small
disadvantaged business concern.
"(3) (Complete only if offeror represented itself as a small
business concern in block (b)(1) of this section.) The offeror
represents as a part of its offer that � it is, � is not a
women-owned small business concern."
The RFP also contained DFARS sec. 252.219-7000, "Small Disadvantaged
Business Concern Representation," a clause which requires an offeror
to indicate membership, if applicable, in any of a list of specified
ethnic groups which are generally presumed to be socially and
economically disadvantaged and which also calls for the offeror to
represent its SDB status.
Six technically acceptable proposals, including Fidelity's, were
received by the October 28, 1996, closing date. In Fidelity's
proposal, it had marked the boxes under the FAR sec. 52.219-1
representations clause which indicated that it was not a small
business and not an SDB, and, under the DFARS sec. 252.219-7000 clause,
it had again certified that it was not an SDB. On the other hand, it
also affirmatively executed paragraph (b) of the SDB representation
clause by identifying its ownership as Subcontinent Asian American,
and it had listed, under its past performance record, contracts which
it was awarded as an SDB contractor. The agency conducted discussions
with offerors, including with Fidelity, but did not raise the question
of Fidelity's SDB status and the apparent inconsistencies in its
SDB-related certifications during those discussions.
Fidelity, whose proposal price was $10,052,948, was treated as a large
business and award was made to Lockheed Martin Aerospace Corporation
on February 28, at a price of $9,510,760. Had Fidelity been treated
as a qualified SDB, the applicable price preference would have caused
Lockheed Martin's price to be evaluated as $10,461,836 and Fidelity's
low technically acceptable offer would have been in line for award.
Upon notification of award, Fidelity contacted the Navy, alleging that
it had incorrectly represented in its proposal that it was neither a
small business nor an SDB. Fidelity stated that these certifications
were errors and that it is, in fact, a certified SDB and therefore
eligible for the 10-percent price preference. The agency responded
that there was no reason for the agency to question Fidelity's
representations and certifications in its review of proposals and that
it had relied on Fidelity's submissions. Thereupon, Fidelity
protested to our Office on March 7.
The protester argues that the inconsistencies in its certification
coupled with certain relevant, collateral, and personal knowledge of
the contracting officer should have made it apparent to the agency
that Fidelity had made a clerical error in its proposal.
Specifically, the protester argues that its representations under the
FAR sec. 52.219-1 clause are inconsistent since Fidelity marked both that
it was not a small business and not an SDB, while the clause stated
that the paragraph related to a firm's SDB status should be completed
only if the offeror presented itself as a small business. Since
Fidelity did not represent itself as a small business, the block
related to its status as an SDB should not have been completed.
Fidelity argues that its representations at the DFARS sec. 252.219-7000
clause are also inconsistent since the firm represented that its
qualifying SDB ownership is Subcontinent Asian American, yet it
checked that it was not an SDB.
Fidelity argues that the contracting officer was on notice of the
erroneous SDB certification for other reasons as well. Within the
past performance section of its proposal, Fidelity specifically
identified itself as an SDB 8(a) firm on a contract that had been
awarded in October 1995 by the same contracting officer at NAWC who
initially served as contracting officer under the solicitation
here.[1] Fidelity alleges that this contracting officer had close,
continuing and relevant contractual dealings with Fidelity since the
1995 award date. Specifically, the contracting officer executed eight
contract modifications showing the Small Business Administration (SBA)
as the contractor and Fidelity as the subcontractor; one modification
was completed only 8 days before the contracting officer received
Fidelity's proposal under this RFP. Moreover, both before and after
Fidelity submitted its proposal, the contracting officer discussed
with a Fidelity representative the firm's status as an SDB and
Fidelity's anticipated graduation from the 8(a) program in
November 1997.
In addition, Fidelity's past performance record submitted with its
proposal referenced two contracts awarded in 1994, with options
extending to 1999, by the contracting officer who replaced the
original contracting officer under the solicitation at issue. The
protester also points out that the replacement contracting officer was
personally involved in an 8(a) contract with the same Standard
Industrial Classification (SIC) code as under the protested contract,
which Fidelity was awarded on September 26, 1996. This award was made
only 28 days before Fidelity submitted its proposal under the
procurement at issue.
Finally, Fidelity points out that it requested a copy of the
solicitation by letter dated March 11, 1996, and in this letter it
specifically stated that it was an SDB, certified under the SBA's 8(a)
program. The protester points out that this letter should have been
in the agency's files for this procurement. Because the agency
neither requested clarification of Fidelity's SDB status nor advised
the offeror of the possible error in its certification during
discussions, Fidelity argues that the award was improper because it
was not afforded meaningful discussions.
The Navy's position is that FAR sec. 19.301(b) (FAC 90-45) directs the
contracting officer to accept offerors' self-certifications and
representations, and that Fidelity's certifications were not
inconsistent, and thus did not provide any notice to the contracting
officer of a possible error. The agency argues that Fidelity's
representation at the FAR sec. 52.219-1(b)(2) clause, which is only
required if an offeror represents itself as a small business--which
Fidelity did not--is merely "surplusage" that is not inconsistent with
its certification. The Navy also takes the position that the
contracting officer is required to judge a proposal "within the four
corners of the proposal," and, because only an offeror knows if it
qualifies for a particular size standard at a particular time, there
can be no constructive notice, as the protester contends, from
previous contracts or, presumably, from the contracting officers'
knowledge of the offeror. Because its view of the representations and
past performance records did not suggest inconsistencies or mistakes,
the Navy argues that it was not required to address Fidelity's
representations in discussions. In this respect, the Navy takes the
position that Fidelity's entries could reflect that it was a former
SDB which recently became a large business.
As the Navy points out, FAR sec. 19.301(b) directs that contracting
officers shall generally accept offerors' representations in their
offers that they are small businesses, and we think that the Navy is
correct in adopting the same approach to SDB representations.
However, FAR sec. 19.301(b) carves out an exception where "the
contracting officer has a reason to question the representation."
Although there is thus generally no obligation on a contracting
officer to question an offeror's representations about its small
business or SDB status, we believe that, in the unique factual
circumstances of this case, the contracting officer had reason to
question the accuracy's of Fidelity's SDB certification and had an
obligation to provide the protester an opportunity to correct the
apparent error in that certification.
First, the proposal itself could have put the contracting officer on
notice of a possible error in Fidelity's SDB representation. The
protester's representations in its proposal were potentially
inconsistent, reflecting both that its ownership is Subcontinent Asian
American and that it is not an SDB concern.[2] Moreover, the past
performance information included in Fidelity's proposal specifically
referenced its status as an SDB.
Moreover, the protester has presented credible arguments that both
contracting officers were aware of its SDB status and, to corroborate
its position, Fidelity has provided us with an affidavit from a
Fidelity representative stating that he discussed the firm's SDB
status with one of the contracting officers immediately before and
after submission of its proposal. The Navy has not denied the
protester's position that its March 11 letter stating it was an SDB
was in its possession and in the procurement file and has not filed
any affidavits from either contracting officer to rebut Fidelity's
statements concerning what the contracting officers knew or should
have known concerning the protester's status. We therefore conclude
that the contracting officer was on notice of the apparent error in
Fidelity's SDB representation.
The Navy argues that it could only consider information within the
four corners of that proposal. This argument is unpersuasive, both
because the inconsistencies within the proposal itself put the
contracting officer on notice of the apparent error and because an
agency may take into account its knowledge in evaluating proposals and
making an award. TRESP Assocs., Inc.; Advanced Data Concepts, Inc.,
B-258322.5; B-258322.6, Mar. 9, 1995, 96-1 CPD para. 8 at 6-7. Indeed,
some information is simply too close at hand for the agency not to
consider it. International Bus. Sys., Inc., B-275554, Mar. 3, 1997,
97-1 CPD para. 114 at 5.
Here, the Navy made no attempt to resolve the protester's SDB status,
even though it could have done so through the clarification process.
See Jimmy's Appliance, 61 Comp. Gen. 444, 446 (1982), 82-1 CPD para. 542
at 2-4. Moreover, despite conducting discussions with the offerors,
it did not mention the SDB status question in its discussions with
Fidelity. Because discussions were held, we need not decide whether
the agency would have been required to clarify Fidelity's SDB status
if award had been made on the basis of initial proposals. When
discussions are held, they are required to be meaningful. See Ashland
Sales & Serv., Inc., B-255159, Feb. 14, 1994, 94-1 CPD para. 108 at 3.
Here, this meant that the Navy had an obligation to raise the SDB
status question in its discussions with Fidelity, in light of the
inconsistencies within the firm's proposal, the significance of the
10-percent evaluation preference under the program whose purpose is to
assist small disadvantaged firms, and the agency's apparent knowledge
of the inaccuracy of the SBD representations in the proposal. See FAR sec.
15.610(c)(4) (FAC 90-44) (during discussions, contracting officer
shall resolve any suspected mistakes by calling them to offeror's
attention). Accordingly, we conclude that, because of the specific
circumstances present in this instance, the agency acted improperly by
not resolving the question of Fidelity's SDB status before award.
We recommend that the agency provide Fidelity the opportunity to
correct the apparent error in its SDB certifications. If, as a
result, Fidelity's proposal is selected for award, that award should
be made and the contract with Lockheed Martin should be terminated for
the convenience of the government. If the agency has any continuing
doubt as to Fidelity's status after receipt of Fidelity's revised SDB
certifications, it should refer the matter to the SBA. We also
recommend that the protester be reimbursed its costs of filing and
pursuing its protest, including reasonable attorneys' fees. Bid
Protest Regulations, 4 C.F.R. sec. 21.8(d)(1) (1997). The protester
should submit its certified claim for costs to the contracting agency
within 60 days of receiving this decision. 4 C.F.R. sec. 21.8(f)(1).
The protest is sustained.
Comptroller General
of the United States
1. Apparently, the person serving as contracting officer at the time
this solicitation was issued, proposals submitted, and evaluations
commenced was replaced with another contracting officer some time
during the evaluations. The agency has identified the two contracting
officers but has not indicated the specific replacement date.
2. The agency argues that in American Imaging Servs., B-242544, Apr.
29, 1991, 91-1 CPD para. 417 at 2, we found no inconsistency where a firm
had a qualifying ownership yet miscertified that it was not an SDB,
since a qualifying ownership alone did not assure a firm of SDB
status. Here, however, as noted above, there are other indicia of an
erroneous certification. Moreover, in American Imaging Servs., there
was evidence that the protester acted deliberately, as opposed to
erroneously, in certifying as a non-SDB firm. While the Navy here
hypothesizes that Fidelity acted deliberately, there is no evidence in
the record to support this allegation.