B-216635, DEC 17, 1984, 84-2 CPD 676

B-216635: Dec 17, 1984

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THE CONTRACTING OFFICER'S REJECTION OF SMALL BUSINESS SUBCONTRACTOR OFFERED BY SURETY FOR COMPLETION OF DEFAULT TERMINATED CONTRACT BECAUSE THE CERTIFICATE OF COMPETENCY PROGRAM IS RESERVED FOR PRIME CONTRACTORS ONLY. A CONTRACTING OFFICER'S DETERMINATION THAT THE COMPLETION CONTRACTOR OFFERED BY A DEFAULTED FIRM'S SURETY IS NOT COMPETENT AND QUALIFIED IS NOT REVIEWABLE UNDER GAO'S BID PROTEST PROCEDURES. WHICH ARE RESERVED FOR CONSIDERING THE PROPRIETY OF CONTRACT AWARDS AND PROPOSED AWARDS. THE PROTEST IS SUMMARILY DENIED. PAUL FIRE AND MARINE INSURANCE COMPANY WAS MARGUAX'S SURETY ON THAT CONTRACT. MARGUAX'S CONTRACT WAS TERMINATED FOR DEFAULT BY THE ARMY. "UNLESS THE CONTRACTING OFFICER HAS REASON TO BELIEVE THAT THE PERSONS OR FIRMS PROPOSED BY THE SURETY TO COMPLETE THE WORK ARE NOT COMPETENT AND QUALIFIED AND THE INTERESTS OF THE GOVERNMENT WOULD BE SUBSTANTIALLY PREJUDICED.".

B-216635, DEC 17, 1984, 84-2 CPD 676

CONTRACTS - SMALL BUSINESS CONCERNS - AWARDS - SMALL BUSINESS ADMINISTRATION'S AUTHORITY - CERTIFICATE OF COMPETENCY - PRIME OR SUBCONTRACTOR STATUS DETERMINATION DIGEST: 1. SBA PROPERLY DECLINED TO REVIEW, UNDER ITS CERTIFICATE OF COMPETENCY PROGRAM, THE CONTRACTING OFFICER'S REJECTION OF SMALL BUSINESS SUBCONTRACTOR OFFERED BY SURETY FOR COMPLETION OF DEFAULT TERMINATED CONTRACT BECAUSE THE CERTIFICATE OF COMPETENCY PROGRAM IS RESERVED FOR PRIME CONTRACTORS ONLY. CONTRACTS - PROTESTS - CONTRACTS ADMINISTRATION - NOT FOR RESOLUTION BY GAO 2. A CONTRACTING OFFICER'S DETERMINATION THAT THE COMPLETION CONTRACTOR OFFERED BY A DEFAULTED FIRM'S SURETY IS NOT COMPETENT AND QUALIFIED IS NOT REVIEWABLE UNDER GAO'S BID PROTEST PROCEDURES, WHICH ARE RESERVED FOR CONSIDERING THE PROPRIETY OF CONTRACT AWARDS AND PROPOSED AWARDS.

RADIX II, INC.:

RADIX II, INC., PROTESTS THE FAILURE OF THE ARMY CORPS OF ENGINEERS TO RECONSIDER ITS REJECTION OF RADIX AS A COMPLETION CONTRACTOR OFFERED UNDER FEDERAL ACQUISITION REGULATION (FAR), SEC. 49.404(C), 48 FED. REG. 41,102, 42,461 (1983) (TO BE CODIFIED AT 48 C.F.R. SECS. 49.404(C)), AND THE FAILURE OF THE SMALL BUSINESS ADMINISTRATION (SBA) TO REVIEW THE ARMY'S REJECTION UNDER THE SBA CERTIFICATE OF COMPETENCY PROGRAM. SEE 13 C.F.R. SEC. 125.5 (1984). THE PROTEST IS SUMMARILY DENIED.

THE ARMY AWARDED CONTRACT NUMBER DACA 31-82-C-0253 TO MARGUAX SYSTEMS, INC., FOR INSTALLATION OF AN ENERGY MONITORING CONTROL SYSTEM (EMCS) AT THE DEFENSE ELECTRONICS SUPPLY CENTER IN DAYTON, OHIO. ST. PAUL FIRE AND MARINE INSURANCE COMPANY WAS MARGUAX'S SURETY ON THAT CONTRACT. MARGUAX'S CONTRACT WAS TERMINATED FOR DEFAULT BY THE ARMY, THEREBY MAKING ST. PAUL LIABLE UNDER ITS PERFORMANCE BOND.

UNDER THE FAR, ST. PAUL, AS SURETY, HAS THE RIGHT TO COMPLETE THE CONTRACT, AS OPPOSED TO REIMBURSE THE ARMY FOR REPROCUREMENT COSTS, "UNLESS THE CONTRACTING OFFICER HAS REASON TO BELIEVE THAT THE PERSONS OR FIRMS PROPOSED BY THE SURETY TO COMPLETE THE WORK ARE NOT COMPETENT AND QUALIFIED AND THE INTERESTS OF THE GOVERNMENT WOULD BE SUBSTANTIALLY PREJUDICED." FAR, SEC. 49.404(C), SUPRA. ST. PAUL PROPOSED THAT RADIX COMPLETE THE CONTRACT. THE ARMY REJECTED RADIX BECAUSE IT WAS AWARE OF PERFORMANCE PROBLEMS ON OTHER ARMY CONTRACTS INVOLVING RADIX. RADIX REQUESTED THAT THE SBA REVIEW THAT REJECTION, ARGUING THAT THE ARMY'S ACTION AMOUNTED TO A NEGATIVE RESPONSIBILITY DETERMINATION.

SIMULTANEOUSLY, RADIX SENT THE CONTRACTING OFFICER A LETTER DISPUTING THE FACTS HE HAD RELIED UPON AS A BASIS FOR REJECTING RADIX, AND REQUESTED THAT HE EITHER RECONSIDER HIS REJECTION OR REFER THE MATTER TO THE SBA FOR REVIEW UNDER THE CERTIFICATE OF COMPETENCY PROGRAM.

THE CONTRACTING OFFICER REAFFIRMED HIS POSITION REJECTING RADIX AS A COMPLETION CONTRACTOR. HE ALSO DECLINED TO REFER THE MATTER TO THE SBA SINCE, IN HIS OPINION, RADIX IS NOT A CONTRACTOR, AS CONTEMPLATED BY THE SMALL BUSINESS ACT AND THE REGULATIONS PROMULGATED THEREUNDER, TO WHICH THE CERTIFICATE OF COMPETENCY PROGRAM IS MADE AVAILABLE. LIKEWISE, THE SBA ITSELF DECLINED TO REVIEW THE MATTER BECAUSE, IN ITS OPINION, THE CERTIFICATE OF COMPETENCY PROGRAM IS ONLY AVAILABLE TO POTENTIAL PRIME CONTRACTORS, NOT TO RADIX, WHICH THE SBA VIEWED AS A POTENTIAL SUBCONTRACTOR. WE DENY RADIX'S PROTEST, BECAUSE WE AGREE WITH THE POSITIONS TAKEN BY THE CONTRACTING OFFICER AND BY THE SBA.

FAR, SEC. 49.404(C), SUPRA, PROVIDES FOR THE POSSIBILITY OF A TAKEOVER AGREEMENT BETWEEN THE DEFAULTED CONTRACTOR, THE SURETY AND THE GOVERNMENT. IF SUCH AN AGREEMENT IS EXECUTED, THEN THE SURETY IS SAID TO STAND IN THE SHOES OF THE ORIGINAL CONTRACTOR. INTERNATIONAL FIDELITY INSURANCE CO., ARMED SERVICES BOARD OF CONTRACT APPEALS NO. 22,309, MAR. 1, 1978, REPRINTED IN 78-1 B.C.A. PARA. 13,060 (CCH 1978). THUS, AT BEST, RADIX WOULD BE A SUBCONTRACTOR TO ST. PAUL IN THE EVENT THE ARMY ACCEPTED THE SURETY'S OFFER TO COMPLETE MARGUAX'S CONTRACT. SINCE THE SBA RESERVES THE CERTIFICATE OF COMPETENCY PROGRAM FOR PRIME CONTRACTORS ONLY, RADIX, AS A POTENTIAL SUBCONTRACTOR, THUS WOULD HAVE NO RIGHT TO A CERTIFICATE OF COMPETENCY REVIEW. SEE GENERALLY FREDERICK A. POTTS & CO., INC., 61 COMP.GEN. 379 (1982), 82-1 CPD PARA. 441.

FURTHER, WE WILL NOT, UNDER OUR BID PROTEST PROCEDURES, INDEPENDENTLY REVIEW THE ARMY'S DECISION TO REJECT RADIX AS A COMPLETION CONTRACTOR, SINCE THOSE PROCEDURES ARE RESERVED FOR CONSIDERING THE PROPRIETY OF CONTRACT AWARDS AND PROPOSED AWARDS. 4 C.F.R. SEC. 21.1(A) (1984). THE DECISION IN ISSUE IS WITHIN THE PROVINCE OF THE CONTRACTING OFFICER IN ADMINISTERING THE INITIAL CONTRACT, AND IT IS OUR SETTLED POSITION THAT WE WILL NOT REVIEW CONTRACT ADMINISTRATION MATTERS AS PART OF OUR BID PROTEST FUNCTION. SEE 4 C.F.R. SEC. 21.3(G). IF THE SURETY IS CONCERNED THAT THE CONTRACTING OFFICER'S DECISION IS INCONSISTENT WITH THE GOVERNMENT'S DUTY TO MITIGATE DAMAGES RESULTING FROM A DEFAULT, THE SURETY CAN PURSUE THE MATTER UNDER THE DISPUTES CLAUSE OF THE DEFAULTED CONTRACT. SEE DIVERSIFIED COMPUTER CONSULTANTS, B-205820, JULY 13, 1982, 82-2 CPD PARA. 47.

WE SUMMARILY DENY THE PROTEST.