Protest of Proposal Rejection Based on Suspension by Another Agency

A small business firm protested the award of a National Institute of Mental Health, Department of Health Education and Welfare (HEW) contract to another firm. The protester was eliminated from consideration when HEW learned that the Department of Labor (DOL) had suspended the protester from DOL contracting preliminary to a debarment proceeding. The protester argued that if HEW desired to disqualify it from receiving contracts it must follow the proper procedures for the suspension of contractors and may not suspend the protester on the basis of information received from another agency. The protester also maintained that the HEW action violated other legislation in that the protester was entitled to have the matter referred to the Small Business Administration for the possible issuance of a certificate of competency. HEW conceded that the protest had merit, but believed that the regulations concerning suspension of contractors contain ambiguities. A DOL Administrative Law Judge issued an order terminating the protester's suspension after finding that DOL had failed to comply with its own rules regarding suspension of contractors, and that the protester's alleged misconduct was not of such a serious nature as to warrant suspension within the meaning of the applicable law. The HEW decision to eliminate the protester from consideration for award was based on an improper DOL suspension. GAO believed that the regulations pertaining to the suspension of contractors indicate clearly that each agency must determine on its own whether or not a particular contractor should be suspended, and provide the contractor with the necessary procedural rights. HEW intended to suspend the protester when it eliminated it from further consideration. That the protester was never notified or given an opportunity to rebut the charges against it was contrary to the regulations. The protest was sustained.