Government Contracts Protester Loses Award Due to Unresolved FOCI Concerns
Thursday, January 24, 2019

Protester Loses Award Due to Unresolved FOCI Concerns

By Government Contracts Editorial Staff

The government reasonably concluded the protester was ineligible for award under the responsibility provisions of a request for proposals for penetrator warhead production because the protester did not adequately respond to the government’s concerns regarding impermissible foreign ownership, control, or influence. The RFP included a special responsibility criterion pursuant to FAR 9.104-2(a), stating in accordance with “[s]ection 3 of the National Industrial Security Program Operating Manual …, foreign firms or U.S. companies determined to be under [FOCI] will not be permitted to participate.” The RFP also included the clause at FAR 52.204-17, which requires the offeror to identify any “immediate owner,” and if the immediate owner is owned or controlled by another entity, the highest-level owner. The protester initially received a $420 million award, but after another offeror alleged the protester was owned and controlled by a Swiss corporate parent, the government sent an evaluation notice to the protester with questions regarding its relationship with the Swiss company. Unsatisfied with the protester’s response, the contracting officer found the protester “misrepresented its foreign ownership status” and was non-responsible. The government then terminated the protester’s contract for convenience.

Reasonable Determination. The Comptroller General denied the protest. The RFP provided that U.S. companies determined to be under FOCI under NISPOM were ineligible for award, and it was unquestionable that the government’s analysis considered NISPOM’s enumerated factor of “[t]he source, nature, and extent of FOCI, including whether foreign interests hold a majority or substantial minority position in the company, taking into consideration the immediate, intermediate, and ultimate parent companies.” Also, the government’s concerns reasonably extended to the accuracy of the protester’s certified disclosures, which failed to reflect its foreign ownership. Then, in response to the government’s clarification questions, the protester failed to rebut the government’s reasonable presumption that the protester’s foreign ownership presented FOCI concerns, and the protester did not address the government’s request for any mitigation-related information. Analogous rulings have found that an offeror that does not adequately respond to the government’s request for additional information during discussions risks having its proposal rejected. With no mitigating information from the protester demonstrating why its foreign ownership did not pose FOCI concerns, there was no basis for concluding the non-responsibility determination was unreasonable. (A. Finkl and Sons, Co., 34 CGEN ¶116,214).

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