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Wednesday, October 22, 2014

The responsibility to consider all factors to make a determination of responsibility

It is too often said to hammer the point, but no government contract award should go to a bidder or offeror who is not responsible. The curious thing about the ABA Model Procurement Code and Guam's version of it is that there is no specific requirement that there be a written determination of responsibility. There is, however, a specific obligation to make a written determination of non-responsibility. (See ABA Model Code § 3-401(1) and Guam law 5 GCA 5230(a).)

What's a determination? Well, it's not definitively clear what a determination per se is, but the Regulations to the Model Code describe a written determination (handy to know because only written determinations are specifically required to be kept (Model Code § 1-201). According to R1-201.01.2, "each written determination shall set out sufficient facts, circumstances, and reasoning as will substantiate the specific determination which is made". It seems reasonable to expect, then, that an unwritten determination must be based in sufficient facts, circumstances and reasoning to substantiate the determination made, even if not put to hand or keyboard.

So what's responsibility, since, "before awarding a contract, the Procurement Officer must be satisfied that the prospective contractor is responsible"? (Model Regulation R3-401.04, Guam regulation 2 GAR § 3116(b)(4).) This is where it gets interesting, because finding responsibility is a judgment call, not easily second-guessed by other bidders, administrative tribunals or courts.

The Model Code, and Guam law likewise, define responsibility in their regulations. The relevant regulations describe responsibility in terms of "Standards of Responsibility", including such factors as availability of appropriate resources (plant & equipment, financial, personnel and otherwise), or ability to obtain them; satisfactory records of performance and integrity; qualification to do business (basically, a general business license), and responding to requests for information to corroborate those things.

The thing that has stood out in my interpretation of these standards is that, while they do not usually all come into play in any given case, the must all be considered in every case. The language of the regulation says, "factors to be considered in determining whether the standard of responsibility has been met include whether the prospective contractor has [met those standards]". The phrase "to be considered" is, to my thinking, mandatory, though I have not yet found a case that says precisely that.

But the following story seems to underline my theory. I have put it together from several indirect sources because I cannot yet find the primary source. As I present it, the story is pieced together from the following articles, and you need to read each for full context, and to find which part of any such article, if any, I borrowed:
GAO upholds FCi protest against security contract to USIS unit
USIS suffers another blow as GAO rules for competitor in wake of fraud allegations
GAO sustains protest of DHS contract to USIS
Bid Protest Ruling Deals Blow to Background Check Contractor
GAO questions fitness of USIS
    The U.S. Government Accountability Office (GAO) on Monday upheld portions of a protest filed by vetting firm FCi Federal Inc against a $190 million contract awarded to a unit of U.S. Investigative Services LLC (USIS) earlier this year by the Department of Homeland Security. The matter was released in a statement. GAO has not released the full protest decision because it contains sensitive acquisition information. GAO will release a redacted version in the coming weeks.

     FCi Federal has filed the protest, arguing that federal fraud charges filed against USIS LLC by the U.S. Justice Department for "dumping" 665,000 background check cases without conducting proper reviews should have disqualified it from winning the contract.

     The GAO said the Homeland Security Department should take another look before deciding whether contractor USIS is “presently responsible” enough to receive a field services contract at the United States Citizenship and Immigration Services.

     GAO concluded that “DHS’s affirmative determination of USIS’s responsibility was not reasonable because the agency failed to consider pending allegations of fraud by the awardee’s parent company under another federal contract,” GAO General Counsel for Procurement Law, Ralph O. White, wrote. “GAO recommended that [DHS] reasonably consider whether USIS can be viewed as a responsible contractor, taking into account USIS’s description of its relationship with its parent company, USIS LLC, as well as the specific allegations of fraud raised by the Justice Department against USIS LLC.

     Asked for a comment, a USIS spokesman said, “This ruling flies in the face of the outstanding ratings awarded to US Investigations Services, Professional Services Division Inc. during the contract award process. PSD won this contract from the incumbent contractor after a rigorous two-year competition, which followed long-standing government procurement procedures, and, since the contract award decision, USCIS has graded PSD’s performance on another significant contract as exceptional or very good across the board.”

     The Justice Department has accused USIS of cheating the government out of millions of dollars through a practice called “dumping,” in which the company purportedly claimed it completed background investigations that remained unfinished from 2008 to 2010.

     But USIS has said it has new leadership and has beefed up oversight at the company. It said the accusations involved a “small group of individuals” who are no longer with USIS. The company also said the Homeland Security contract went to USIS’ professional services division, which is separate from the background check operation.

     "GAO sustained FCi Federal's protest after concluding that DHS's affirmative determination of USIS's responsibility was not reasonable because the agency failed to consider pending allegations of fraud by the awardee's parent company under another federal contract," said Ralph White. "An affirmative determination of responsibility is the legal term that describes the threshold finding, inherent in the award of every federal contract, that the company awarded the contract has the capacity, ability, and requisite integrity to perform a contract for the government."

     The GAO ruling highlighted a portion of federal procurement law that says contractors must be “presently responsible” to get hired. In layman’s terms, that means contracting officers must attest to the fact that companies have the integrity, manpower and finances to complete the contract.

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