Chattin/Ashton, Inc., A Joint Venture

B-274956 Jan 15, 1997 Jump To VIEW DECISION RELATED PAGES GAO CONTACTS Highlights Comprised of an Indian-owned firm and a firm which was not Indian-owned. Which was issued by the Bureau of Indian Affairs (BIA). Which is not Indian-owned. The IFB was issued on June 17. The IFB defined "Indian economic enterprise" to mean: "any business entity (whether organized for profit or not) which: (1) is at least 51 percent owned by one or more Indian(s) or an Indian tribe(s). That these requirements had to exist when the firm's bid was submitted. When bids were opened. It was apparent that Chattin/Ashton had submitted the lowest price. The agency concluded that there was some question whether Chattin. Which was designated as the Managing Party. While Ashton's interest is 49 percent. View Decision Matter of: Chattin/Ashton, Inc., A Joint Venture File: B-274956 Date: January 15, 1997 Bureau of Indian Affairs reasonably determined that a joint venture, comprised of an Indian-owned firm and a firm which was not Indian-owned, did not qualify as an Indian economic enterprise eligible for award under Buy Indian set-aside procurement where the joint venture failed to clearly demonstrate that the Indian-owned firm would control the joint venture. Attorneys DECISION Chattin/Ashton, Inc., A Joint Venture protests the rejection of its bid submitted under invitation for bids (IFB) No. SB-96-0011, which was issued by the Bureau of Indian Affairs (BIA), Department of the Interior, for road construction on the Tohono O'Odham Nation, Arizona. The protester contends that the agency improperly determined that the joint venture, comprised of Chattin Industries, Inc., an Indian-owned firm, and The Ashton Company, Inc., which is not Indian-owned, did not qualify for award as an eligible Indian economic enterprise. We deny the protest. The IFB was issued on June 17, 1996, as a total set-aside for Indian-owned concerns pursuant to the Buy Indian Act, 25 U.S.C. Sec. 47 (1994). The IFB required Indian economic enterprises to prepare a Representation Declaration as part of their bids, certifying their status as eligible Indian economic enterprises. The IFB defined "Indian economic enterprise" to mean: "any business entity (whether organized for profit or not) which: (1) is at least 51 percent owned by one or more Indian(s) or an Indian tribe(s); and (2) one or more of those owners must be involved in daily business management of the economic enterprise; and (3) the majority of the earnings of which accrue to such Indian person(s)." The IFB stated, further, that these requirements had to exist when the firm's bid was submitted, at the time of award, and during the term of the contract. Five firms, including Chattin/Ashton, submitted bids. When bids were opened, it was apparent that Chattin/Ashton had submitted the lowest price. However, the contracting officer had some concerns about the joint venture's eligibility as an Indian-owned economic concern and requested some additional information to clarify the issue. After reviewing Chattin/Ashton's response, the agency concluded that there was some question whether Chattin, as the Indian-owned concern, would receive a majority of the earnings under the contract and whether its owner would exercise control over the project. The certification of eligibility as an Indian economic enterprise that Chattin/Ashton submitted with its bid showed that Chattin, which was designated as the Managing Party, has a 51-percent interest in the joint venture, while Ashton's interest is 49 percent. The agency questioned whether Chattin would, in fact, receive 51-percent of the earnings under the contract, since the joint venture agreement showed that Ashton would provide any funding necessary, and would receive 10-percent interest from the joint venture on its loan; in addition, Ashton would perform a number of administrative services, such as preparing the accounts payable, providing accounting services, preparing tax returns, providing safety training, and preparing the bid, for which it would be compensated at an unspecified rate. The contracting officer also questioned whether the joint venture agreement would allow Chattin to exercise control over the project or even be sufficiently involved in the daily management of the joint venture. Although Chattin was to be in the role of "Managing Party," the joint venture agreement provided that Chattin's authority would be "subject to the superior control and authority of the Management Committee," which would hold the ultimate decision-making authority. The Management Committee was to consist of two members, one from each of the two firms, with each member holding equal power. Any disputes between the two members were to be resolved by a third-party arbitrator.