Government Contracts Responsibility Determination Didn’t Resolve Antitrust Issues
Wednesday, December 9, 2020

Responsibility Determination Didn’t Resolve Antitrust Issues

By Government Contracts Editorial Staff

The Comptroller General sustained protests of a responsibility determination because the contracting officer never resolved conflicts concerning the involvement of two of the awardee’s affiliates in contract performance. The protests arose from a $20 billion contract award for global household goods relocation services. In response to a prior protest alleging criminal antitrust misconduct by the awardee’s corporate parent, the government took correction action and made a second responsibility determination for the awardee. The CO noted that, over a 12-year period, the parent allegedly participated in suppressing and eliminating competition by allocating customers and routes, rigging bids, and fixing prices for international ocean shipping for roll-on, roll-off cargo. The company also agreed to plead guilty and pay a $99 million fine for violating the Sherman Anti-Trust Act. However, the awardee attested that it was never owned or controlled by, or was part of the corporate structure of this company. Instead, a third company owned both the awardee and the company at issue, and the awardee and this company were subsidiaries of this third company. The CO also noted a second affiliate had paid civil penalties in response to allegations that it violated section 10(a) of the Shipping Act (46 USC 41102(b)). At the end of the review, the CO concluded that no affiliate of the awardee’s parent company with a record of criminal wrongdoing would have meaningful involvement in contract performance, and the resources of these affiliates would not affect the awardee’s performance.

More Investigation Needed. The Comptroller General explained that an affirmative determination of responsibility will be reviewed only in limited circumstances, such as when the CO fails to consider available relevant information that, by its nature, would be expected to have a strong bearing on a finding of responsibility. Here, the awardee’s technical capability proposal stated the awardee would have access to the vast resources of its affiliates, but this claim was inconsistent with the representations the awardee made in the course of the CO’s investigation. The awardee’s representation that the two affiliates would not participate in contract performance was “at odds with [the awardee’s] proposal” and “beg[ged] the question of precisely” what resources of the parent company would be available to the awardee, and what impact, if any, foregoing the resources of the two affiliates would have on contract performance. In light of this inconsistency, it was incumbent on the CO to further investigate whether the awardee would rely on its parent company for contract performance. Under the circumstances, the “yes or no” questions that the CO asked, and the CO’s reliance on them, were clearly insufficient. Further, the responsibility determination ignored evidence that the affiliate that pleaded guilty to antitrust violations employed two corporate officers of the awardee’s corporate parent and controlled the parent. The Comptroller General also sustained the protesters’ challenges to the conduct of discussions, documentation of oral presentations, evaluation of technical capability proposals, and the best-value tradeoff analysis. (HomeSafe Alliance, LLC, 35 CGEN ¶116,993; Connected Global Solutions, LLC, 35 CGEN ¶116,994) CASB Seeks Conformance of CAS to GAAP.

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