Matter of: Adrian Supply Co. File: B-258769 Date: February 14, 1995

Matter of: Adrian Supply Co. File: B-258769 Date: February 14, 1995

The Bureau of Indian Affairs (BIA) did not clearly abuse its discretion in restricting a procurement for exclusive Indian participation, where the record does not support the protester's allegations that the set-aside was a ploy to award the contract to a bidder, with which BIA may have had a prearrangement even though the bidder is not an eligible Indian economic enterprise.

Attorneys

DECISION

Adrian Supply Co. protests the terms of invitation for bids (IFB) No. SB- 94-0060 (IFB -0060), issued by the Bureau of Indian Affairs (BIA), Department of the Interior, for the provision and installation of three substation transformers at BIA's San Carlos Irrigation Project, Coolidge, Arizona. BIA issued the IFB as a total set-aside for Indian economic enterprises, pursuant to the Buy Indian Act, 25 U.S.C. Sec. 47 (1988). Adrian, a non-Indian firm, protests that BIA abused its discretion, in that the set-aside was assertedly a ploy to award the contract to Shawnee Electric Company, with which BIA may have had a prearrangement, even though Shawnee cannot be considered an eligible Indian economic enterprise for this IFB.

We deny the protest.

On October 22, 1993, BIA issued an unrestricted solicitation, IFB No. SB- 94-0002 (IFB -0002), to acquire three substation transformers. BIA did not restrict the acquisition because no Indian economic enterprises had responded to previous solicitations for similar power utility supplies. On January 20, 1994, seven firms, including Adrian and Shawnee, submitted bids in response to the IFB. Sometime after bid opening, Shawnee advised the agency that it qualified as an Indian economic enterprise. After evaluating bids, the contracting officer determined that all bids, except for Adrian's, were nonresponsive and that Adrian's bid was unreasonably priced. On June 17, the contracting officer obtained the necessary approval to cancel the IFB pursuant to Federal Acquisition Regulation (FAR) Sec. 14.404-1(c).

On August 12, BIA issued the instant IFB -0060 as a total Indian economic enterprise set-aside and mailed the IFB to nine firms. The IFB required each bidder to certify that it was an "eligible Indian economic enterprise"--that is, an enterprise whose majority owner(s) belonged to a federally recognized Indian tribe, participated in the daily business management of the enterprise, and received the majority of the earnings accruing to the enterprise. [1] In addition, the instant IFB required each bidder to certify that it was a regular dealer or manufacturer of the supplies offered, as required by the Walsh-Healey Public Contracts Act, 41 U.S.C. Sec. 35 (1988), and the Department of Labor (DOL) implementing regulations, 41 C.F.R. Chapter 50 (1994).

Two firms, Shawnee and PLM Power Systems, submitted bids on IFB -0060 by the August 30 bid opening date. PLM's bid was $1,306,645 and Shawnee's bid was $1,425,000. Both bidders certified that they were eligible Indian economic enterprises and were regular dealers of the supplies offered. BIA determined that PLM's apparent low bid was nonresponsive and awarded the contract to Shawnee on September 2. On September 19, BIA published a synopsis of the award in the Commerce Business Daily (CBD). On October 3, Adrian protested the issuance of IFB -0060 as a set-aside. [2]

The Buy Indian Act provides discretionary authority to the Secretary of the Interior to acquire the supplies and services of Indian industry. The Act provides that, "[s]o far as may be practicable Indian labor shall be employed, and purchases of the products . . . of Indian industry may be made in open market in the discretion of the Secretary of the Interior." 25 U.S.C. Sec. 47. In order to fulfill this statutory mandate, the Secretary of the Interior, acting through the Assistant Secretary for Indian Affairs, has authorized the use of Indian set-asides so long as there is one qualified Indian contractor within the normal competitive arena that could fill the procurement requirement. [3] Considering the broad discretion granted to the Secretary in purchasing the supplies and services of Indian industry, our Office will object to the determination to set aside a procurement for exclusive Indian participation only if there is a clear showing of an abuse of discretion. See Department of Health and Human Servs.--Request for Advance Decision, supra.

Adrian protests that BIA's decision to set aside the instant procurement constituted such an abuse of discretion. Adrian alleges that the set-aside was a subterfuge for a prearranged award to Shawnee and that the other bidders on the solicitation mailing list were known not to be viable competitors. Adrian further alleges that BIA contracting personnel knew or should have known that Shawnee was ineligible for the award of this contract. Specifically, the protester disputes that Shawnee is Indian- owned and controlled; disputes that Shawnee is a regular dealer of the substation transformers; and speculates that Shawnee may be secretly controlled by a non-Indian dealer of the solicited transformers, who is the real party-in-interest in this procurement. The protester suspects that BIA contracting personnel may have discovered these facts during a May 3 site visit to Shawnee's facilities, but chose to ignore them in restricting the acquisition.

The record before us neither clearly supports Adrian's contention that BIA used the set-aside as a ploy to award the contract to Shawnee nor establishes that BIA abused its broad discretion under the Buy Indian Act by utilizing a set-aside in this case. Instead, the record indicates that once it became apparent that IFB -0002 would likely be canceled, BIA investigated the possibility of a set-aside in view of Shawnee's statement that it qualified as an Indian economic enterprise. On May 3, BIA contracting officials conducted a site visit of Shawnee's facility, at which BIA satisfied itself of that firm's status as an eligible Indian economic enterprise, as a regular dealer of these substation transformers, and as a responsible potential contractor.

After the site visit, BIA conducted a market survey to identify other potential Indian bidders for this requirement by contacting the National Center for American Indian Enterprise Development. As a result of this survey, BIA identified eight more Indian firms potentially able to fill the government's requirements. While Adrian asserts that BIA was merely padding the solicitation mailing list with unqualified or ineligible bidders to give the appearance of competition, BIA, as it informed the National Center for American Indian Enterprise Development, was seeking Indian-owned suppliers of "electrical and power equipment." [4] We see no basis for concluding that this was simply an attempt to pad the mailing list. [5]

The record also supports BIA's determination that Shawnee was a qualified and eligible Indian firm. During the site visit, Shawnee's owner and president produced his Certificate of Degree of Indian Blood and his Tribal Citizenship Card, reflecting his membership in the Creek tribe. The protester argues that the president's name on this tribal membership documentation did not exactly match the name on Shawnee's bid documents submitted in response to canceled IFB -0002. The tribal membership documentation showed the name "Bennie Joe Shawnego," while Shawnee's bid documents showed the name "Ben Shawneego." In our view, while the names are not identical, they are sufficiently similar to warrant the assumption that they belong to the same individual. During the course of this protest, Shawnee's president has confirmed that he does in fact use both names, explaining that "Shawneego" is an earlier ancestral spelling of "Shawnego." Thus, we disagree that the evidence of Shawnee's Indian-owned status was improperly accepted.

As noted, the site visit persuaded BIA that Shawnee was a regular dealer of power utility equipment, such as the substation transformer, and had the present ability to purchase and install the required supplies. The protester speculates that Shawnee may be a "front" for a non-Indian firm that will actually be supplying the products in this case. The protester points to BIA's memorandum of the May 3 site visit, which notes that "[t]his vendor [Shawnee] does not inventory power utility materials, except for some rebuild spares that are for sale," as well as the vendor's relationship with a non-Indian regular dealer in this equipment. Because Shawnee's facility lacked an inventory of power utility transformers, the protester argues that it should have been obvious that Shawnee was not a regular dealer of the solicited supplies, but a front being used to funnel the supplies of an otherwise ineligible bidder.

We do not believe that the information obtained during the site visit was inconsistent with a finding that Shawnee was a regular dealer of the solicited supplies, nor did it show that Shawnee was merely a front controlled by a non-Indian regular dealer. Under DOL regulations applicable to this procurement, a bidder may qualify as a regular dealer if, among other things, it maintains a true inventory from which sales are made. 41 C.F.R. Sec. 50-206.53(b)(2). Although Shawnee's facility did not include an inventory of these substation transformers, BIA explains that such equipment must be custom-designed and specially manufactured to meet each customer's specific requirements. In addition, BIA states that transformers are bought and sold in small quantities, and are very expensive and quite large. Therefore, BIA states one would not expect a power utility dealer to maintain such an equipment inventory, but to purchase the equipment in response to a specific requirement. Based upon this reasoning--which we find persuasive--BIA reasonably concluded that Shawnee qualified as a regular dealer of the substation transformers, considering the information obtained during the site visit. In this regard, BIA learned during the site visit that Shawnee had an established relationship with many power utility manufacturers and vendors, from whom it could purchase the particular equipment needed for a given contract. BIA also noted that Shawnee was currently performing a Department of Energy contract for the purchase and installation of a substation transformer, and that Shawnee's owner and key personnel all possessed experience in this field and exhibited a thorough understanding of BIA's requirements. The record does not reflect that the agency encountered any evidence during or after the site visit to suggest that the awardee was secretly controlled by a non-Indian firm. Thus, we think that BIA had no reason to find that Shawnee was other than an independent regular dealer of the solicited supplies. [6]

In sum, we cannot say that BIA improperly determined that Shawnee was Indian-owned and controlled, or that Shawnee was a regular dealer of these substation transformers. Nor can we find on this record that BIA rigged the competition to disguise a prearranged award to Shawnee. Since the evidence does not support the protester's contentions in this regard, we find that BIA acted within its discretion in electing to set aside this procurement for exclusive Indian participation.

The protest is denied. [7]

1. In other words, an eligible Indian economic enterprise must be "Indian-owned and controlled."

2. Although Adrian did not protest the set-aside provisions of the IFB prior to bid opening, see 4 C.F.R. Sec. 21.2(a)(1) (1994), we nevertheless consider the protest timely because the agency deprived Adrian of a reasonable opportunity to file its protest before bid opening. Contrary to the requirements of Federal Acquisition Regulation (FAR) Sec. 5.201, BIA did not synopsize the proposed acquisition in the CBD. Also, contrary to FAR Sec. 14.404-3, BIA did not advise Adrian until August 15 that the prior IFB had been canceled, despite the protester's repeated requests for information. BIA also misinformed Adrian on August 15 that no new solicitation had been issued, although the instant IFB had been issued on August 12. Because BIA's actions effectively prevented Adrian from protesting the set-aside before bid opening, we consider Adrian's protest of this issue, filed within 10 working days of the CBD award notice, to be timely. See Ling Dynamic Sys., Inc., B-252091, May 24, 1993, 93-1 CPD Para. 407. In contrast, to the extent that Adrian protests the cancellation of IFB -0002, its protest of this issue, filed more than 10 days after the August 15 telephonic notice, is untimely. See 4 C.F.R. Sec. 21.2(a)(2).

3. Purchases made under the Buy Indian Act are exempt from the "full and open competition" requirements of the Competition in Contracting Act of 1984, 41 U.S.C. Sec. 253. See Department of Health and Human Servs.-- Request for Advance Decision, B-232364, Oct. 5, 1988, 88-2 CPD Para. 325.

4. Contrary to the protester's allegations, this purchase description is sufficiently related to the IFB requirements.

5. In any event, because BIA is authorized to utilize an Indian set-aside if only one qualified Indian firm exists, a fake competition would have been unnecessary if BIA wished to assure award to Shawnee.

6. In a letter submitted during the course of this protest, Shawnee confirmed that it is an independent regular dealer of power utility transformers. Shawnee states that it purchased the transformers for this procurement from a distributor with whom it regularly places order. In this regard, we note that, contrary to the protester's allegations, DOL regulations do not require firms to purchase supplies directly from the manufacturer to be considered regular dealers.

7. The protester also challenges Shawnee's responsibility and bid responsiveness. Adrian is not an interested party for the purpose of challenging the award to Shawnee. See 4 C.F.R. Sec. 21.0(a). As noted, this procurement was properly set aside for exclusive Indian economic enterprise participation and BIA indicates that even if Shawnee's bid were considered nonresponsive (which it asserts is not the case), it would continue the set-aside in any subsequent procurement. As for Shawnee's responsibility, our Office will not review affirmative determinations of responsibility absent a showing of fraud or bad faith, a burden which Adrian has not satisfied in this case. 4 C.F.R. Sec. 21.3(m)(5). Because Adrian is a non-Indian firm ineligible for the award of this contract, it may not protest the conduct of this set-aside. See ARO Corp., B-231438, July 22, 1988, 88-2 CPD Para. 74; Dragon Servs., Inc., B-228912, Oct. 7, 1987, 87-2 CPD Para. 344. Accordingly, these protest issues are dismissed.