Matter of: Yellowhorse Industries File: B-250282 Date: January 12, 1993
B-250282: Jan 12, 1993
PROCUREMENT Contractor Qualification Responsibility/responsiveness distinctions Question concerning bidder's status as an Indian economic enterprise so as to be eligible for award of a contract with an Indian set aside provision is not a matter of bid responsiveness since question does not relate to bidder's obligation to provide required services in conformance with material terms of solicitation. Rather is a matter of bid responsibility. PROCUREMENT Contractor Qualification Responsibility Contracting officer findings Pre-award surveys Administrative discretion An agency is not required to conduct a preaward survey if there is sufficient evidence in the record for the contracting officer to make a determination of responsibility.
Matter of: Yellowhorse Industries File: B-250282 Date: January 12, 1993
PROCUREMENT Contractor Qualification Responsibility/responsiveness distinctions Question concerning bidder's status as an Indian economic enterprise so as to be eligible for award of a contract with an Indian set aside provision is not a matter of bid responsiveness since question does not relate to bidder's obligation to provide required services in conformance with material terms of solicitation, but rather is a matter of bid responsibility. Consequently, bidder may clarify and explain its status up to award of the contract. PROCUREMENT Contractor Qualification Responsibility Contracting officer findings Pre-award surveys Administrative discretion An agency is not required to conduct a preaward survey if there is sufficient evidence in the record for the contracting officer to make a determination of responsibility, especially since it is the duty of the bidder to provide the necessary documentation for such a determination. PROCUREMENT Socio-Economic Policies Preferred products/services American Indians Joint ventures Bureau of Indian Affairs determination that a joint venture comprised of an Indian-owned firm and a firm not Indian-owned does not qualify as Buy Indian concern, as required by the Bureau, is not unreasonable since protestor failed to establish that Indian owner is involved in daily management of the firm or will receive majority of the venture's earnings. PROCUREMENT Socio-Economic Policies Preferred products/services American Indians An agency's determination that a bidder qualifies as an Indian economic enterprise relates to the time such determination was made and evidence of prior or subsequent matters regarding the Indian ownership of the enterprise, but not directly relating to the time of the agency's determination, generally will not be considered in reviewing the agency's determination.
DECISION Yellowhorse Industries (Yellowhorse) protests the rejection of the bid of Yellowhorse Joint Venture under Invitation for Bids (IFB) No. SB-92-0049, issued by the Bureau of Indian Affairs (BIA), Department of the Interior, for road construction at the Hopi Indian Reservation, Arizona.
Yellowhorse objects to BIA's determination that the joint venture of Yellowhorse and Wheeler Construction, Inc., is not a valid Buy Indian concern for purposes of this procurement. Additionally, the protester contends that the awardee, Blaze Construction, Inc. (Blaze), was not a valid Buy Indian concern.
We deny the protest.
The IFB was issued by BIA's Phoenix Area Office on June 19, 1992, as a set-aside for 51 percent "Buy Indian" concerns pursuant to the Buy Indian Act, 25 U.S.C. Sec. 47 (1988), and required offerors to complete a "Buy Indian Certification Statement." At the July 23 bid opening, five bids were received; Yellowhorse was the apparent low bidder. In evaluating Yellowhorse's bid, the contracting officer questioned the eligibility declaration of Yellowhorse.
In its bid Yellowhorse had self certified that it was an eligible Indian economic enterprise, but Yellowhorse also included a copy of a Construction Management Agreement entered into on July 23, 1992, by the participants in the joint venture. Under this agreement, Wheeler Construction would be performing all management services in connection with the construction and operation of the road building project in the specific areas of subcontracting, negotiating, reporting, scheduling, coordinating, inspecting work by subcontractors, and administering change orders. Moreover, this agreement was silent on the percentage of ownership for each participant. Thus, this agreement did not indicate that the Indian partner would be engaged in management activities or would be the majority owner, both of which are requirements for eligibility for award of an Indian set aside contract.
On August 21 the contracting officer formally determined that Yellowhorse was not eligible for award under the contract because it did not qualify as an eligible Indian Economic Enterprise under the Buy Indian Act.
Consequently, the award of the contract was made to Blaze, the second low bidder. Immediately upon learning of its disqualification, the protester filed a protest with BIA and then met with the contracting officer to discuss the matter of eligibility for award and to seek a reconsideration of this issue. The protester asked the contracting officer why he ignored the joint venture agreement of July 23 that the protester had submitted with its bid, and the contracting officer stated there had been no agreement submitted. The contracting officer then agreed to consider the protester's eligibility for award based on the additional information in the joint venture agreement.
On October 16 the agency denied Yellowhorse's protest. A major basis for the denial was the October 13 decision of the contracting officer that the additional information in the joint venture agreement did not alter his previous conclusions relative to the eligibility of the protester.
The contracting officer noted that the agreement did provide for Yellowhorse to have 100 per cent control of the project and be actively involved with the daily management of the contract and its subcontractors. He further noted that the joint venture agreement provided that the parties would also enter into a Construction Management Agreement. The contracting officer, therefore, concluded that his original determination was correct because the joint venture agreement put into operation the Construction Management Agreement that provided for Yellowhorse not to be involved in the daily management of the joint venture.
The protester disputes the findings of the contracting officer and contends that it is an eligible joint venture for award. Yellowhorse specifically states that the contracting officer's determination was unreasonable, that he failed to adequately investigate the matter, and that he failed to consider other relevant evidence that was before him.
In this regard, the other relevant evidence consisted of a Master Joint Venture Agreement entered into by Yellowhorse and Wheeler Construction on October 8 that, among other things, clarified the right and obligations of the of the parties which were unclear under other agreements.
According to the protester, this Master Joint Venture Agreement was prepared following its receipt of a contract on September 30 from the Federal Highway Administration under its Indian set aside program.
Initially, the protester argues that the BIA erroneously treated the issue of eligibility as one of responsiveness (i.e., the bidder's obligation to provide required services), which must be established at bid opening as opposed to responsibility, which can be established up to the contract award. See e.g., Infab Corporation, B-238423, May 29, 1990, 90-1 CPD Para. 506. Based on this, the protester alleges that the BIA failed to consider relevant information following the bid opening.
Furthermore, as regards this issue of eligibility it is Yellowhorse's position that there was a duty on the contracting officer to conduct a preaward survey so as to verify Yellowhorse's status and his failure to do so is grounds for upholding this protest. We agree with the protester that the question of a firm's legal status for award of a contract such as here is one of responsibility and not responsiveness. See Brunswick Corporation and Brownell & Company, B-225784.2, B-225784.3, July 22, 1987, 87-2 CPD Para. 74; Jimmy's Appliance, 61 Comp.Gen. 444 (1982), 82-1 CPD Para. 542. Therefore, Yellowhorse did have until the time of award to clarify or explain its status and have the contracting officer reconsider his position. RCI Management, Inc., B-239938, Oct. 12, 1990, 90-2 CPD Para. 283. However, any clarification or explanation could only relate to the protester's status at the time of bid opening, since this is when it must qualify as an Indian economic enterprise. See Calvin Corporation, B-245768, Jan. 22, 1992, 92-1 CPD Para. 98.
We do not agree with the protester that the contracting officer was remiss in fulfilling his obligations. There simply is no duty on a contracting officer to conduct a preaward survey and the contracting officer may base a negative determination of responsibility on evidence in the record without affording offerors the opportunity to explain or otherwise defend against the evidence. Victor Graphics,Inc., B-249297, Oct. 19, 1992, 92-2 CPD Para. ___; Appleton Food Service and Management Limited-Reconsideration, B-244519.2; B-244524.2, Nov. 7, 1991, 91-2 CPD Para. 433. It is the duty of the bidder to supply all necessary documentation to establish its responsibility. See McGhee Construction, Inc., B-233763.2, Apr. 4, 1989, 89-1 CPD Para. 352.
Although Yellowhorse did not have an opportunity to explain or clarify its joint venture agreement prior to award of the contract, it had such an opportunity to do so in the agency protest and still could not establish its eligibility. Likewise, it has been afforded the opportunity in this bid protest with the same negative result. Clearly, it cannot complain of lack of opportunity to contest the negative responsibility determination. See Washington-Structural Venture, 68 Comp.Gen. 593, 598 (1989), 89-2 CPD Para. 130.
As to the factual issue of whether the protester was eligible for award, we have no basis to disturb the decision of the agency. The Buy Indian Act, 25 U.S.C. Sec. 47 states that:
"So far as may be practicable Indian labor shall be employed, and purchases of the products of Indian industry may be made in the open market in the discretion of the Secretary of the Interior."
The Secretary of the Interior, acting through the BIA Commissioner, has broad discretionary authority to implement this statute. Defining the criteria a firm must meet to qualify as an Indian enterprise and the quantum of evidence required to establish compliance with the established criteria falls within that broad discretion. Accordingly, we will disturb such decisions only where they are shown to be arbitrary, unreasonable, or in violation of law or regulation. White Buffalo Construction Co., 67 Comp.Gen. 206 (1988), 88-1 CPD Para. 61. Yellowhorse had not made such a showing here.
Pursuant to BIA policy, firms eligible to compete under the Buy Indian set-asides must be not only Indian owned, they must also be Indian controlled as evidenced by active Indian participation in the business such that would tend to increase Indian self-sufficiency. We agree with the contracting officer that the documents submitted by the protester did not establish that the joint venture was such so that it could be established that it was Indian controlled so as to increase Indian self- sufficiency.
Moreover, the documents submitted by the protester also have other deficiencies. For example, the two documents, when read together, did not establish the proportion of profits to go to each joint venturer even though the Joint Venture agreement seemingly provided for Yellowhorse to receive 51 percent of the profits. See Calvin Corporation, supra, B-245768, Jan 22, 1992, 92-1 CPD Para. 98. To be eligible for award not only must the Indian member of a joint venture be involved in the day-to-day management of the venture, the Indian member must also receive a majority of the profits. See Technical Management Services Company, 69 Comp.Gen. 398 (1990), 90-1 CPD Para. 370, aff'd. upon reconsideration, B-238216.2, July 17, 1990, 90-2 CPD Para. 40.
While the Master Joint Venture Agreement of October 8 purported to clarify the relationship of the parties and indeed does in some respects, this document was not available to the contracting officer when he made his decision on October 13. It was the protester's responsibility to timely submit this document and the contracting officer had no affirmative duty to wait until such time as the protestor submitted this document. See Harvard Interiors Manufacturing Co., B-247400, May 1, 1992, 92-1 CPD Para. 413; McGhee Construction, Inc., supra., B-233763.2, Apr. 4, 1989, 89-1 CPD Para. 352. Furthermore, even had the contracting officer had the document before him, we think that it was not for consideration, since it was prepared long after the bids were submitted and in response to a different contract. See Calvin Corporation, supra., B-245768, Jan. 22, 1992, 92-1 CPD Para. 98.
Yellowhorse has also raised one other issue, namely that the awardee, Blaze is not an eligible Indian Economic Enterprise or at the least BIA should investigate this fact. Since Yellowhorse's bid was properly rejected, Yellowhorse is not an interested party to raise this issue under our Bid Protest Regulation because it would not be in line for award even if we sustained the protest. 4 C.F.R. Sec. 21.0(b)(1992). In any event, while the protester has submitted certain evidence in this regard, none of this evidence goes to the issue of whether for purposes of the instant contract Blaze is an eligible Indian Economic Enterprise.
Consequently, there is nothing in the record to evidence that the contracting officer's acceptance of Blaze as an Indian firm was erroneous or unreasonable at the time it was made. See Eagle Nest, Inc., B-240943, Dec. 19, 1990, 90-2 CPD Para. 505; Northwest Piping, Inc., B-239404, Aug. 16, 1990, 90-2 CPD Para. 133.
The protest is denied.