The case is the Matter of: Integral Systems, Inc., B-405303.1, August 16, 2011:
Integral Systems, Inc. (ISI), of Columbia, Maryland, protests the exclusion from the competitive range of a proposal submitted by its wholly-owned subsidiary, CVG, Inc. (CVG. We dismiss the protest because ISI is not an interested party.
CVG submitted a proposal in response to the solicitation. In various places, the proposal referred to CVG as a “wholly owned subsidiary of Integral Systems, Inc.”
Regarding CVG’s relationship to ISI, the proposal explained as follows: “In early 2010, Integral Systems purchased CVG, which will eventually be renamed Integral Systems SATCOM Solutions Division.”
The proposal further explained that “[i]n the future, CVG will be doing business as Integral Systems SATCOM Solutions.”
Notwithstanding the references to ISI, the proposal reflected that CVG was the offering entity. For instance, the title pages of both the technical/management and corporate experience volumes listed the commercial and government entity (CAGE) code and data universal numbering system (DUNS) number of CVG, rather than the CAGE code and DUNS number of ISI.
Further, the cover letter that accompanied the proposal was signed by a director of CVG, Inc. Finally, throughout the technical/management an corporate experience volumes of the proposal, the entity presenting the proposal was referred to as “CVG.”
The proposal communicated, however, that ISI would have a role in performing the
contemplated contract.
Under the Competition in Contracting Act of 1984 (CICA) and our Bid Protest Regulations, our Office only may decide a protest filed by an “interested party,” which the statute defines as an “actual or prospective bidder or offeror whose direct economic interest would be affected by the award of the contract or by the failure to award the contract.” 31 U.S.C. § 3551(2) (2010); 4 C.F.R. § 21.0 (2011).
Determining whether a party is interested involves consideration of a variety of factors, including the nature of the issues raised, the benefit or relief sought by the protester, and the party’s status in relation to the procurement.
ISI argues that it is an interested party because the proposal indicated that the Integral organization as a whole would provide the proposed solution. However, regardless of the affiliation of the individuals--or the owner of the resources--that would be used perform the contract, ISI has not demonstrated that the entity with which the government would contract would be ISI, and not CVG. To the contrary, ISI states that if the agency awarded a contract pursuant to the proposal, the agency “would be in privity with CVG, Inc.”
ISI also argues that it is an interested party because the proposal indicated that a single, post-acquisition entity--the Integral Systems SATCOM division--would perform the contract. Although ISI asserts that CVG currently is doing business as Integral Systems SATCOM Solutions Division, ISI has not shown that ISI--as opposed to CVG or CVG doing business as Integral Systems SATCOM Solutions Division--is the entity with which the government would enter into a contract pursuant to the proposal.
ISI’s argument relies on Security Assist. Forces & Equip. Int’l, Inc., B-199366, Feb. 6, 1981, 81-1 CPD ¶ 71, a decision in which our Office concluded that the parent of a wholly-owned subsidiary qualified as an interested party. We decline to apply the conclusion reached in Security Assist. here because that decision was rendered before both the enactment of CICA, which defines an “interested party” as an “actual or prospective bidder or offeror,” and before our Bid Protest Regulations expressly defined an interested party. See 4 C.F.R. Pt. 21 (1981).
We note also that the circumstances here are different than those in Bulloch Int’l, B-265982, Dec. 26, 1995, 96-1 CPD ¶ 5, and E & R, Inc., B-255868, Mar. 29, 1994, 94-1 CPD ¶ 218, wherein our Office recognized that an agent may represent an interested party in a protest where the agent specifies the interested party in the protest and has been expressly authorized to act for that party.
Cf. Trandes Corp., B-271662, Aug. 2, 1996, 96-2 CPD ¶ 57 at 4 (no substitution of offerors where unincorporated division of offeror corporation submitted final proposal revision and record reflected that unincorporated division did not exist apart from offeror corporation and only could enter contracts as offeror corporation); Alabama Aircraft Indus., Inc.– Birmingham v. United States, 83 Fed. Cl. 666, 681-682 (2008) (offeror qualified as interested party because offeror was same legal entity following change in name).
Finally, ISI argues that it is an interested party because it would benefit from award of the contract, or, conversely, suffer without award of the contract. We have no doubt that ISI has an economic interest in the award of a contract to its subsidiary, CVG. Such interest, however, is not the direct economic interest of an actual or prospective offeror contemplated by CICA.
Note that the definition of "interested party" is not universally strict. The federal CICA definition hinges on a "direct economic interest" of "an actual or prospective bidder or offeror", as the decision above illustrates.
The ABA Model Procurement Regulation is somewhat broader. Model Regulation R9-101.01.1 defines an “interested party” to mean “an actual or prospective bidder,
offeror, or contractor that may be aggrieved by the solicitation or award of a contract, or by the protest.” Cases have tended to view "economic interest", direct or otherwise, as an element of the "interest" which must be aggrieved, in line, perhaps, with the broader but entirely related question of standing.
This multidimensional test is also used in the CICA context, but with more emphasis, perhaps, on the directness of the economic interest. As the decision above recognized, "determining whether a party is interested involves consideration of a variety of factors, including the nature of the issues raised, the benefit or relief sought by the protester, and the party’s status in relation to the procurement."
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