Tuesday, January 21, 2014

"Responsibility" Determinations - Not All Negative Information is Relevant

Prior to awarding contracts, the Government performs responsibility determinations in order to ensure that the winning bidder has integrity, a proven track record, financial footing, and other factors. There are several sources of information available to contracting officers to help in those determinations from the self-certifications made thought the SAM (System for Award Management), to past performance information to excluded party database.

The Government can't know everything and sometimes relevant information slips through the cracks and does not get to the person making the responsibility determination. Sometimes however, this so-called relevant information is not so relevant, as demonstrated in the appeal of RQ Construction of the Navy's award to a competitor.

RQ Construction and Stronghold Engineering, both of California, were competitors bidding on some repair work for the Navy. Stronghold won the bid after which RQ appealed the Navy's responsibility determination on Stronghold. According to RQ, a former employee of Stronghold filed a wrongful termination complaint against the company that was (and still is) working its way through the California Judicial System. RQ contends that if those allegations proved to be true, then Stronghold would not be a "responsible" contractor and therefore should not have been awarded the contract.

According to the record, the Navy was not aware of any court actions or allegations making up the complaint. Even though RQ asserted that it was public knowledge at the time of award, RQ was unable to show any reason why the Navy should have had knowledge of a complaint filed in a California state court
nor show any legal obligation on the contracting officer's part to conduct the type of search that might have produced this information (the Navy is not omniscient). Moreover, the Comptroller General stated that RQ's argument is based upon unproven allegations in a complaint that is the subject of litigation, and not upon facts establishing that Stronghold has been convicted of any federal, state, or local crime, or subject to administrative penalties.

RQ also alleged that Stronghold's failure to inform the Navy of the wrongful termination suit, and the allegations contained therein, is a material misrepresentation. RQ contends that Stronghold was required to inform the Navy of the lawsuit as required by the Code of Business Ethics and Conduct clause (FAR 52.203-13). That particular clause requires contractors to disclose "credible evidence that a principal, employee, agent, or subcontractor has committed violations of federal criminal law involving fraud, conflict of interest, bribery, or gratuity violations, or violations of the False Claims Act.

The Comptroller General rejected this argument. It did not agree with RQ that the unsupported allegations contained in a state civil complaint constitute "credible evidence" of the aforementioned violations

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