Kongdan Kumnan Restaurant/Good Food Service, B-276846.2,

B-276846.2 Feb 23, 1998 Jump To VIEW DECISION RELATED PAGES GAO CONTACTS Highlights Where claimed local status was based on United States firm's consulting agreement with local Korean company. Would have control and principal responsibility for performance of the contract. Technically acceptable offer is received from a responsible local source. The Government would then consider for award only those offerors that have shown authorization and capability to compete and perform as a local source. Several local source proposals were received. Since KKR/GFS' proposal cover sheet indicated that it was submitted by "Kongdan Kumnan Restaurant and Good Food Service. " the contracting officer initially believed the proposal was from a local source. Were included in the competitive range. View Decision Matter of: Kongdan Kumnan Restaurant/Good Food Service File: B-276846.2 Date: February 23, 1998 DIGEST Attorneys DECISION Kongdan Kumnan Restaurant/Good Food Service (KKR/GFS) protests the rejection of its proposal, under the Department of the Army request for proposals (RFP) No. DAJB03-96-R-0098, for food service operations at Army dining facilities in the Republic of Korea (ROK). We deny the protest. The RFP contemplated the award of a fixed-price contract to the lowest- priced, technically acceptable offeror for a base year, with four 1-year options. Section L of the RFP, relating to the local source requirement, provided: All sources may submit a proposal, however, the ROK-US SOFA prohibits the U.S. from granting invited Contractor status if a fair and reasonable, technically acceptable offer is received from a responsible local source. Should this occur, the Government would then consider for award only those offerors that have shown authorization and capability to compete and perform as a local source. Any U. S. Contractor with capacity to qualify as a local source must submit such documentation in the initial proposal. If a U.S. contractor provides such documentation in the initial proposal, it may submit a price proposal as an invited contractor and as a local contractor. Several local source proposals were received, so the contracting officer set aside all proposals from U.S. firms and did not consider them further. Since KKR/GFS' proposal cover sheet indicated that it was submitted by "Kongdan Kumnan Restaurant and Good Food Service, Inc. (consultant)," the contracting officer initially believed the proposal was from a local source. However, after evaluating the proposal, the Army suspected collusion between KKR/GFS and another offeror, and thus requested it to withdraw the offer. The protester refused and filed a protest with our Office (B-276846), challenging the Army's position. The contracting officer ultimately agreed to retain KKR/GFS in the competition, and the firm withdrew its protest. Three proposals, including KKR/GFS', were included in the competitive range. In reevaluating KKR/GFS' proposal, the agency identified several deficiencies. KKR/GFS attached to its proposal a "consulting services agreement," executed on March 5, 1997, for purposes of this solicitation, in which GFS, a U.S. company based in Maryland, with extensive experience in providing food services to U.S. federal agencies, was named "consultant," while KKR, a local Korean company engaged in the food service and restaurant business, was named "client." During oral discussions with KKR/GFS, the agency pointed out the deficiencies in the proposal, including its failure to show the offeror's status as a local source, and confusion and inconsistencies with regard to the relationship between KKR and GFS. KKR/GFS submitted with its revised proposal an amended "consulting agreement" between GFS and KKR. This agreement stated that the two companies would perform the contract under the name of "KKR/GFS," that the consultant would have "full authority on all matters pertaining to this contract including but not limited to Managing, Operating and Administering the dining facilities," and would be responsible for "[a]ll invoicing and finance operations," while the Kongdan Kumnan Restaurant would provide an "understanding of Korean Law as well as recruitment of a labor force as needed to support this contact." It appeared to the contracting officer from the terms of this agreement that the KKR/GFS revised proposal failed to establish local source status. He therefore requested a legal review by the Chief Counsel to the Korea Contracting Command (CCK). After reviewing the consulting agreement, the CCK determined that, while the Korean restaurant is apparently an established local firm, the KKR/GFS proposal was not submitted by a local source, since the U.S. firm appeared to be using KKR to obtain local contractor status, while having complete authority over and responsibility for performing essentially the entire contract. Subsequently, the International Affairs Division, Office of the Judge Advocate, U.S.