,3 4% Chicago Veddermaa Washington, DC London San Francisco Public Version L98 Angeles Singapore 2/5/2018 vedderpricecorn Eric .J. Marcotte Shareholder +1 202 312 3336 emarcotte@vedderprice.com VIA ELECTRONIC MAIL Peter D. Verchinski, Esq. Senior Attorney US. Government Accountability Of?ce Procurement Law Control Group 441 Street, NW. Washington, DC 20548 Re: B-415969, First Supplemental Protest of ANHAM FZCO Under Solicitation No. SPE3 00-15-R-0042 Dear Mr. Verchinski: ANHAM ZCO through counsel Vedder Price PC. and DLA Piper LLP, timely ?les this supplemental protest of the contract awarded to KGL Food Service WWL by the Defense Logistics Agency Troop Support or the ??Agency?) for Subsistence Prime Vendor food service support to customers located in Kuwait, Iraq, Syria, and Jordan under Solicitation No. SPE300-15-R-0042 (?Solicitation? or In addition to the bases for protest detailed in initial protest ?led on January 29, 2018, the Agency?s decision to award the SPV contract to KGL is also ?awed for the reasons detailed herein. SUMMARY ANHAM brings this supplemental protest because the awardee, KGL S, was ?blacklisted? on November 28, 2017, by the Kuwait Ports Authority and, as a result, cannot meet the contract?s requirements. The ?blacklisting,? which precludes any ?dealings? with the KPA and other . Peter D. Verchinski, Esq. February 2, 2018 Page 2 entities of the Kuwait government, applies to KGL S?s parent company and a_ll of its af?liates, subsidiaries, and associates. Thus, the awardee is effectively banned from importing and exporting food into and out of Kuwait, as well as from operating any warehouses owned by or operating on KPA property. This means that, at the time of contract award, KGL was unable to meet the requirements of the contract. It is unclear if DLA knew of KGL S?s inability to perform, or if KGL hid this fact from the Agency. For purposes of this protest, it does not matter. In either case, KGL was ineligible for award and should have been eliminated from the competition. Importantly, there is precedent for this conclusion within the Department of Defense. In 2016, the US. Transportation Command was compelled to terminate a cargo-handling contract with a KGL entity due to port restrictions imposed by the KPA. And that was @Le the November 2017 ?blacklisting.? The same result is inevitable here. KGL S-cannot meet the contract requirements, and it appears to have misled DLA about its ability to do so. KGL also appears to have misled DLA regarding the recent criminal charges against the Chairman of the Board of its parent company?who is also a ?Partner? of KGL FS?which consist of, inter alia, fraud, embezzlement of government funds, and destruction of records. In November 2017, the Chairman of KGL S?s parent company was arrested on these charges among others, and, on the date of contract award, he was in a Kuwaiti prison. Yet KGL never updated its on-line certi?cation of ?responsibility? to re?ect these serious charges, and it apparently never advised DLA of the charges either. In fact, KGL S?s on-line certi?cations falsely represent that KGL has parent corporation?an assertion that is demonstrably untrue. Presumably, this false certi?cation precluded Peter D. Verchinski, Esq. February 2, 2018 Page 3 the Agency from learning the full scope of the adverse criminal, civil, and administrative matters pending against KGL S?s parent and its af?liates and, thus, from making an informed ?responsibility? determination. It is not rational, for example, that the Agency found KGL F8 to be responsible when?in addition to its ?blacklisting? and false certi?cations?all evidence indicates that it is nothing more than a shell company, with inadequate facilities, meager ?nancial resources, and no legitimate business operations or experience. Because the SPV contractor?s ability to access the ports of Kuwait and to maintain suitable warehouse facilities constitute material requirements of the Solicitation, KGL had an af?rmative duty to notify the Agency of changes to its proposal concerning these requirements. Given that KGL was selected for award despite its inability to meet these contract requirements, KGL FS apparently failed to advise DLA of its ?blacklisting? by the KPA in late November 2017. Indeed, had KGL noti?ed the Agency that it has been ?blacklisted? by the KPA and no longer has access to the ports or to warehouse facilities owned by KPA, the Agency reasonably would have concluded that KGL FS is technically unacceptable and, as such, ineligible for award. These circumstances, taken individually or collectively, yield an award decision that is not in the interest of Government and cannot withstand scrutiny. Accordingly, this protest should be sustained. PRELIMINARY MATTERS A. Contact Information: The initial protest ?led by ANHAM on January 29, 2018, provides contact information and details regarding the Agency and the Contracting Of?cer. This information is hereby incorporated herein. B. Timeliness: With regard to timeliness, this supplemental protest is timely ?led Within 10 days of the Agency?s debrie?ng, which concluded on January 26, 2018, when the Agency provided written responses to questions submitted by ANHAM. See 4 C.F.R. Peter D. Verchinski, Esq. February 2, 2018 Page 4 (providing that, in cases of a required debrie?ng, the protest shall be ??led not later than 10 days after the date on which the debrie?ng is held?). See Protest at 3, n. 3. C. Request for Documents: In accordance with 4 C.F.R. a supplemental request for documents is included at the end of this letter. D. Request for Protective Order: Because this supplemental protest contains con?dential, proprietary, and source?selection sensitive information, ANHAM requests that it be treated by all parties as being subject to the protective order requested in initial protest. See Protest at 4. E. Interested Party Status: ANHAM is an actual offeror under the Solicitation whose direct economic interest has been affected by the improper award of the contract to another offeror FS. But for the Agency?s ?awed evaluation and award decision, ANHAM would have been selected for award. As such, ANHAM is an interested party. See 4 C.F.R. 21 F. Reservation of Right to Request Hearing: In accordance with 4 C.F.R. 21 ANHAM reserves the right to request a hearing if, after the Agency?s production of the procurement record, it is becomes clear that a hearing is necessary to meaningfully evaluate the reasonableness of the Agency?s evaluation of proposals and award decision. STATEMENT OF FACTS AND RELEVANT BACKGROUND 1. OVERVIEW OF THE PROCUREMENT AND THE SOLICITATION initial protest, which was ?led on January 29, 2018, contains a detailed summary of the procurement and a recitation of the Solicitation?s key provisions and requirements. See Protest at 4-7. As relevant to this supplemental protest, the Solicitation also contained speci?c provisions and requirements regarding offeror responsibility matters, certi?cation requirements addressing corporate organization and responsibility matters, and technical requirements addressing the offeror?s access to the ports of Kuwait and warehouse facilities, as well as requisite experience and ?nancial resources. These provisions and requirements are summarized immediately below. Peter D. Verchinski, Esq. February 2, 2018 Page 5 A. Responsibility Matters and Related Certi?cations The Solicitation stated that the SPV contract would be awarded on a best value trade?off basis ?to the responsible offeror whose offer conforming to the solicitation will be most advantageous to the Government, price and other factors considered145 (emphasis added).1 Accordingly, the Solicitation incorporated Federal Acquisition Regulation clauses intended to address responsibility matters.2 See(FAR 52.209-7, Information Regarding Responsibility Matters (JUL 2013)); EX. 16 at 17, 20 (FAR 52.209-9, Updates of Publicly Available Information Regarding Responsibility Matters (JUL 2013)). Relevant to this supplemental protest, the Solicitation incorporated FAR 52.212-3, Offeror Representations and Certi?cations Commercial Items (NOV 2015). Ex. 16 at 31?39. Paragraph of that clause required the disclosure of responsibility-related matters involving the offeror and/or any of its principals. Ex. 16 at 36. Among other things, the offerors were required to certify whether the offeror and/or any of its principals have, within the three-year period preceding the offer, ?been convicted of or had a civil judgment rendered against them for [c]0mmission of embezzlement, theft, forgery, bribery, falsi?cation or destruction of records, making false statements, tax evasion, violating Federal criminal tax laws, or receiving stolen property.? Id. (FAR 52.212-3 Unlike other disclosure items addressed within FAR 52.212-3 the speci?c 1 initial protest included Exhibits 1-15. References in this supplemental protest will refer to those same Exhibits 1-15, which are hereby incorporated by reference. The numbering of additional exhibits relevant to this supplemental protest will begin at Exhibit 16. 2 The entire conformed RFP cited herein is attached as Exhibit 16. The entire conformed Statement of Work cited herein is attached as Exhibit 16A. Only selected excerpts of these documents were included with initial protest. See Ex. 6 and Ex. 6A. Peter D. Verchinski, Esq. February 2, 2018 Page 6 certi?cation regarding the commission of embezzlement, theft, etc. is generic in nature and is not linked to the formation or performance of a Federal, state or local government contract. In addition, the offerors were also required to certify whether the offeror and/or any of its principals are ?presently indicted for, or otherwise criminally or civilly charged by a Government entity with, commission of any of the offenses enumerated [at FAR Id. (FAR 52.212-3 Notably, this certi?cation uses the generic term ?a Government entity,? rather than the more speci?c term ?Federal, state or local? Government entity, as employed elsewhere within FAR B. Certi?cation Regarding Corporate Organization In addition to including a certi?cation addressing responsibility matters, FAR 52.212?3 also required a certi?cation addressing the offeror?s corporate organization. Speci?cally, subparagraph required the offeror to disclose whether it had ?an immediate owner.? Ex. 16 at 39 (FAR 52.212- If the offeror had an immediate owner, it was required to disclose the Commercial and Government Entity code and legal name of the entity or entities. Id. (FAR 52.212- Further, if the immediate owner is ?owned or controlled by another entity,? information regarding that higher-level owner was also required to be disclosed. Id. (FAR C. Incorporation and Updating of SAM Registration Prospective contractors are required to complete electronic annual representations and certi?cations, including the above?described certi?cations regarding responsibility matters and corporate ownership, in the System of Award Management database. See FAR In addition, prospective contractors are required to ?update the representations and certi?cations Peter D. Verchinski, Esq. February 2, 2018 Page 7 submitted to SAM as necessary, but at least annually, to ensure they are kept current, accurate, and complete.? Id. These obligations were incorporated into both the Solicitation and the offerors? proposals through FAR which states: The offeror has completed the annual representations and certi?cations electronically Via the SAM website at After reviewing the SAM database information, the offeror veri?es by submission of this offer that the representations and certi?cations currently posted electronically at FAR 52.212-3, Offeror Representations and Certi?cations-Commercial Items, have been entered or updated in the last 12 months, are current, accurate, complete, and applicable to this solicitation . . ., as of the date of this offer and are incorporated in this offer by reference (see FAR 4.1201, except for paragraphs Ex. 16 at 32-33 (FAR emphasis added). In short, each offeror represented that its online SAM.gov certi?cations were current, accurate, and complete?and could be relied upon by the contracting of?cer in making a responsibility determination?unless otherwise speci?ed in the offeror?s proposal. D. Technical Requirements As summarized below, the Solicitation made abundantly clear that successful performance of the technical requirements would require the contractor to 1) have access to the ports of Kuwait, (2) maintain suitable warehouse facilities, and (3) possess the requisite experience and ?nancial resources. 1. Access to the Ports of Kuwait The Solicitation?s Statement of Work details the critical work to be performed by the contractor at the ports of Kuwait. See Ex. 16A. Simply stated, without the ability to access the port properties owned and managed by the KPA, the contractor cannot perform the contract?s Peter D. Verchinski, Esq. February 2, 2018 Page 8 technical requirements. The technical requirements summarized in the table below illustrate the importance of port access to successful contract performance. So?e-Ration Requirements - Citation ?[T]he Prime Vendor is only responsible for from his Ex 1 6 A at 44 OCONUS fac111ty(s) to the ?nal delivery pomts Within the region. Customs?) The DLA Distribution Representative in coordination With the Prime Ex. 1 6 A at 45 Vendor will be responsible for making ocean transportation bookings that 2 provide transportation from the Prime Vendor?s CONUS facility to the door Government of the OCONUS facility to include setting up transportation ?om the Responsibilities OCONUS port to the Prime Vendor?s OCONUS facility.? Regarding Transportation?) 0 ?As directed by the Contracting Of?cer, the Prime Vendor may be required transport product to or from the APOD and SPOD locations closest to the 2 Overland OCONUS Prime Vendor warehouse locations in support of US government Transport of Product sponsored air shipments or port to port movements.? In Support of Aerial Ports of Debarkation And Sea Ports Of Debarkation and Port to Port Shipments? ?The Prime Vendor shall be responsible for managing the ?containers from the port through the warehouse and into the theater. Container Management?) 0 ?At the Prime Vendor?s employees and/or Prime Vendor?s expenseits employees shall obtain all passports, visas, badges or other documents 7 necessary to enter and/or exit anv area(s) identi?ed by the Contracting . assports, Visas and Of?cer. Processmg ?The Prime Vendor shall communicate directly with the customer to obtain Procedures?) all access requirements. A plan of action for adherence to access requirements must be submitted to the Contracting Of?cer within 30 days of contract award. The plan of action include the Prime Vendor?s understanding of the access requirements per . . . the Kuwaiti . . . Governments and how long it will take to meet the requirements.? 0 ?All Prime Vendor employees shall be subject to the customs processing procedures, laws, agreements and duties of the country to which they are deploying.? - ?Under normal conditions, all deliveries shall be .O.B. Destination end user delivery points. . . . The Prime Vendor shall pay and bear all Military charges to the speci?ed point of delivery.? Inspection at Destination?) 9.2 Peter D. Verchinski, Esq. February 2, 2018 Page 9 2. Maintenance of Suitable Warehouse Facilities Similarly, the SOW contained multiple requirements demonstrating that an offeror cannot successfully perform the contract without the uninterrupted use of suitable warehousing facilities. The chart immediately below summarizes these mandatory requirements. Solicitation Requirements Citation - ?At a minimum, the Prime Vendor is required to have one (1) Outside the Ex. 16A at 11 Continental United States physical warehouse location and (emphasis added). distribution network located in Kuwai Introduction Kuwait, Ira ria, - ?The Prime Vendor shall be capable of using this facility and distribution and Jordan network to provide subsistence support of those items included on the Distribution resulting contract catalog (at award or added during contract performance) Network?) to any and all customers located Within the countries of Kuwait, Iraq, Syria, and Jordan, including the supply of fresh items fruits and vegetables, bakery, dairy, 0 ?Provided the Prime Vendor has and maintains a physical warehouse location and distribution network located Within Kuwait, which it is capable of using to support any and all customers located within the countries of Kuwait, Iraq, Syria, and Jordan, the Contracting Of?cer may also authorize delivery from an alternate warehouse location(s). However, these circumstances are expected to be the exception to the general rule that all subsistence support will originate from the Prime Vendor?s physical warehouse and distribution network Within Kuwait.? 0 ?All GFM, that meets minimum contractual requirements shall be delivered EX 16A at 14 by the incumbent Prime Vendor to the new Prime Vendor?s Contract Implementation Phase Ramp Up?) Ex. 16A at 39-41 ?The USTRANSCOM contracted carrier will be responsible for the transportation of the Prime Vendor?s products from the speci?ed CONUS manufacturer or CONUS distribution facility to the Prime Vendor?s Transportation?) OCONUS distribution facilities. This transportation method is known as ?Point to Point? delivery.? Ex. 16A at 44 ?The ocean carrier Via the USTRANSCOM contract will be responsible for all customs clearance from the point of debarkation through to the Prime Vendor?s OCONUS facility(s). Therefore, the Prime Vendor is only responsible for customs clearance from his OCONUS facility(s) to the ?nal delivery points within the region. The Prime Vendor is, however, responsible for providing any necessary documentation to assist in customs clearance.? Customs?) 0 ?The DLA Distribution Representative in coordination with the Prime 16A at 45 Vendor will be responsible for making ocean transportation bookings that V-E-Z Government provide transportation from the Prime Vendor?s CONUS facility to the door Peter D. Verchinski, Esq. February 2, 2018 Page 10 So-h?citatian Require- aems Citation of the OCONUS facility to include setting up transportation from the Responsibilities OCONUS port to the Prime Vendor?s OCONUS facim.? Regarding . Transportation?) ?As directed by the Contracting Of?cer, the Prime Vendor may be required EX- 16A at 62 to transport product to or from the APOD and SPOD locations closest Overland OCONUS Prime Vendor warehouse locations in support of US government Transport Of Product sponsored air shipments or port to port movements.? In Support ofAer1al Ports of Debarkation And Sea Ports Of mam?mm and Port to Port Shipments? ?The Prime Vendor will be required to perform supply chain and EX- 16A at 65 warehouse management functions and to position a full line of food and 3 Warehouse beverage, non-food items, and Government Furnished Material items into its ?The Prime Vendor will be required to maintain 60 days of supply of Prime Vendor product at all times at each OCONUS warehouse location.? Management?) ?The Prime Vendor must have the capability to receive, store, distribute, perform open case inspections, perform open case re-work, label, re-label, dispose and account for Government Furnished Material type items such as Operational Ration Type items as described below.? Ex. 16A at 66 Government Furnished Material Operational Rations?) ?The Prime Vendor will be required to station CORs at its various facilities. It is estimated that one (1) to two (2) persons, at a minimum, will be stationed at the Prime Vendor?s main distribution facility in Kuwait during regular of?ce hours.? Ex. 16A at 67-68 Of?ce Space and Equipment for Government Employees?) ?All life support and logistical support will be furnished by the Prime Vendor, with the responsibility of securing real estate, facilities for of?ces and billeting, and motor pool residing with the Prime Vendor.? Ex. 16A at 72 .9 Life Support Sustainment?) ?Any warehouse/storage facility used by the Prime Vendor to store food products intended for DLA customers must be inspected for sanitation and food defense compliance during Joint Quality Audits performed by USDA- and DLA Troop Support ?5 Quality Auditors or by Auditors as requested/directed by Ex. 16A at 76 Product Sanitarily Approved Source Requirements?) ?The Prime Vendor shall develop and maintain a quality program for the product acquisition, warehousing and distribution? Ex. 16A at 77 Quality Program?) ?The Prime Vendor shall develop and maintain an approved, commercial sanitation certi?cation and adhere to a stored product pest management program for the food and other co-located non-food items that comply with industry standard programs such as the Code of Federal Regulations, Title 21, Part 110, Food manufacturing Practices, the Federal Insecticide, Ex. 16A at 86 Warehousing and Sanitation Pro grams/ Stored Product Pest Peter D. Verchinski, Esq. February 2, 2018 Page 1 So-Iieitatien Requirements Citation Fungicide, and Rodenticide Act, the Food, Drug, and Cosmetic Act of 1938 Management? as well as all pertinent state and local laws and regulations.? ?The Prime Vendor is responsible for proper product storage, segregation 1133?- 16A at 86_ and delivery of product in excellent condition.? Examples include (1) IX-G- Dellvery proper packaging and wrapping for frozen items; (2) heat protection Tempsraturesa requirements; (3) storing certain items in chilled conditions.? ghipping and torage Requirements?) ?All packaging and packing shall be in accordance with best commercial practices.? ?The Prime Vendor shall be responsible for complying with any applicable packaging, packing, and marking regulations of the various countries in/through which product will be stored/transported.? ?Semi-perishable items shall be snugly packed in shipping containers that fully comply with the National Motor Freight Classi?cation and Uniform Freight Classi?cation Code, as applicable.? ?All meats, poultry, and seafood will be vacuum packed when practicable. In all instances the packaging must protect the product from freezer burn and contamination.? ?Frozen product must be processed and packed to allow removal of the individual units from the container without damage to that or other units. The intent is to be able to remove only that amount of product required for current needs, without the necessity of defrosting all units.? ?Chill and freeze products must be shipped in re?igerated (Reefer) Vans and appropriately separated per temperature requirements.? Ex. 16A at 91 Packaging, Packing, and Labeling?) ?[T]he Prime Vendor must ensure that ample stock levels are maintained in the OCONUS distribution facility(s) should containers trucks aircraft be detained at the ports, borders, Class I yards, air ramps, and the Prime Vendor?s OCONUS distribution facility(s) due to limited transportation capabilities.? Ex. 16A at 100 Holidays?) 3. Requisite Experience and Financial Resources Further, the SOW contained several requirements demonstrating the quali?cations and ?nancial resources required by a successful offeror. These requirements are detailed below. Solicitation Requirements Citation ?In some instances, the Contracting Of?cer may direct the Prime Vendor to source a domestic equivalent item locally at no additional cost to the Government. In this case, the associated Local Market Ready Distribution Price Category shall be utilized.? Ex. 16A at 23 Domestic Item Preference?) ?The Prime Vendor must have the ability to procure and perform delivery of the local market readv items FF fresh dairy, fresh Ex. 16A at 23 - Local Peter D. Verchinski, Esq. February 2, 2018 Page 12 Solicitation Requirements ?xation juice and beverages, water, olive oil, and fresh baked product from local Market Ready approved sources within Kuwait, Iraq, Syria and Jordan)? Items?) ?Items must be stocked in suf?cient quantities to ?ll all ordering activity Fix 16A at 33 requirements. Fluctuations, increases, decreases, and surges in demand lief? must be taken into consideration when the Prime Vendor determines its supply chain management, including stocking procedures. Also, lead times from CONUS to OCONUS must be considered.? ?The ability to ramp-up quickly to meet early requirements, and to sustain at 34 an increased pace throughout the contingency are critical to the execution IV-M Surge and of U.S. military strategy.? Sustalnment ?The Prime Vendor may be required to supply Food Service Operating EX 16A at 3 5 Supplies to the customers.? IV-N - 00d. Service Operatlng Supplies?) ?When requested, the Prime Vendor is required to furnish beverage dispensing machines and beverage products, as speci?ed herein. The cost and upkeep of the machines consisting of, but not limited to, labor, transportation, and supplies required to repair and maintain the equipment, shall be the sole responsibility of the Prime Vendor. ?The Prime Vendor shall furnish mechanically refrigerated dispensing machines and heads suitable for use with the Prime Vendor?s bag-in-the? box juices and drinks. A suf?cient number of machines and dispensing heads shall be installed in the customers facilities to accommodate the speci?c needs of each ordering activity.? ?The Prime Vendor will provide a technically quali?ed service representative to perform maintenance and quality control inspections on each dispensing system. If more frequent maintenance is deemed necessary, the Prime Vendor must provide the additional service at no additional cost.? ?When requested, the Prime Vendor shall furnish hot soup, ice cream, cereal or other types of dispensers suitable for the types of items needed by the customer. . . . The Prime Vendor will be responsible for the cost of the dispensers.? This section also provided an estimate of the number of dispensers required based on location at current usage levels, totaling 115 dispensers across 9 locations. Ex. 16A at 35-36 Dispensing Supplies and Services?) ?In general, the Government shall not be liable for any disposal costs under this contract.? Ex. 16A at 38 .P Disposal of Products?) ?The Prime Vendor will be required to ship the products from the United States within the United States Defense Transportation System Ex. 16A at 39 Transportation?) ?If an item with an established demand is not properly managed by the vendor, a not-in-stock situation occurs, and the item is projected to be out of stock for more than 21 days, the Prime Vendor will be required to airlift product at its own expense.? Ex. 16A at 39 1. Airlifts?) ?[Safety of Life at Sea] SOLAS requires that the Veri?ed Gross Mass Ex. 16A at 55? 56 Safety of Peter D. Verchinski, Esq. February 2, 2018 Page 13. Se?citation Requirements Citation (VGM) of all loaded containers be provided to the ocean carrier and terminal representative before any container is lifted onboard a vessel.? ?It is the Subsistence Prime Vendor?s responsibility to ensure? all information and documentation submitted is accurate so that containers will not be delayed during transit.? ?The Subsistence Prime Vendor will be responsible for costs incurred for delays due to improper or erroneous documentation, including documentation related to SOLAS requirements.? Life at Sea ?The Prime Vendor will be required to maintain 60 days of supply of Prime Vendor product at all times at each OCONUS warehouse location.? Ex. 16A at 65 Warehouse Management?) ?The Prime Vendor shall provide a work force possessing the skills, knowledge, training, equipment and certi?cations required to satisfactorily perform the services required for this contract. Documentation establishing and/or showing evidence that efnployee(s) possess the certi?cations, quali?cations, and background checks required by contract must be presented to Prime Vendor, the OSC-I Of?ce or designated representative prior to beginning duties.? Ex. 16A at 71 B.3 Personnel?) ?The Prime Vendor will conduct physical and medical evaluations of all its employees at its own expense to ensure that they are capable of enduring the rigors of performance under this contract.? Ex. 16A at 71 B.4 Risk Assessment and Mitigation?) ?The Prime Vendor shall be responsible for managing the ?ow of containers from the port through the warehouse and into the theater. Planned and unplanned delays such as supply route blackouts, local holidays and border closures must be considered in the schedule for container movement. . . . The Prime Vendor must consider all factors impacting the supply chain when making their supply chain management decisions. The Prime Vendor is solely responsible for ensuring its supply chain is properly managed to satisfy contract requirements.? Ex. 16A at 72 Container Management?) ?The Prime Vendor may be required to perform 24 hours per day, 7 days per week, and 365 days per year, to include all holidays. Working hours - will correspond with the supported customer?s mission requirements.? Ex. 16A at 72 Tour of Duty Hours of Operation?) ?Each Prime Vendor will undergo an initial audit once per contract tier pricing period . . . [and] [t]he average cost of one Food Audit is approximately $15,000.00 (product cOst only)? Ex. 16A at 79 Product Quality Audits?) ?The Prime Vendor shall develop and maintain an approved, commercial sanitation certi?cation and adhere to a stored product pest management program for the food and other co-located non?food items that comply with industry standard programs.? Ex. 16A at 86 Warehousing and Sanitation Programs/Stored Product Pest Management?) ?The Prime Vendor is responsible for proper product storage, segregation and delivery of product in excellent condition.? Ex. 16A at 86 Delivery Peter D. Verchinski, Esq. February 2, 2018 Page 14 So?eitatien Requirements Citation Temperatures, Shipping and Storage Requirements?) Ex. 16A at 89 Military Inspection at Destination?) Ex. 16A at 91 Packaging, Packing, and Labeling?) 0 ?Under normal conditions, all deliveries shall be F.O.B. Destination to the end user delivery points.? 0 ?All packaging and packing shall be in accordance with best commercial practices. Labeling shall be in accordance with commercial labeling complying with the Federal Food, Drug and Cosmetic Act and regulations promulgated there under.? 0 ?The required minimum contract order ?ll-rate is 0 ?Fill rates will be documented in the Contractor Performance Review System and low ?ll rates may impact past performance . . . . Reports evaluations on subsequent acquisltions. 0 ?The Prime Vendor shall provide the following reports to the Contracting Ex113 Of?cer in the frequency indicated. Negative reports are required and the Govemment reserves the right to add requirements for additional reports at 34311318513131? eports? no additional cost to the Government.? 0 Section speci?es at least 14 different reports that must be ?led. II. PROPOSAL REQUIREMENTS AND EVALUATION SCHEME initial protest included a detailed summary of the proposal submission requirements and the Agency?s evaluation scheme, which is hereby incorporated herein. See Protest at 7-20. Relevant to this supplemental protest, offerors were required to include in their proposals information con?rming their ability to access the ports of Kuwait and to maintain suitable warehouse facilities satisfying the technical requirements summarized above. These and other proposal submission requirements relevant to this supplemental protest are outlined below. A. Proposal Submission Requirements With regard to the Technical Proposal, the Solicitation required that offerors demonstrate their ability to meet the Agency?s stated requirements, as set forth in the Solicitation, including the Peter D. Verchinski, Esq. February 2, 2018 Page 15 SOW. EX. 16A at 125-126. The Technical Proposal consisted of ?ve technical factors and past performance. Each is addressed immediately below. 1. Factor I Warehouse Location and Capacity Offerors were required to identify the name and location of their Kuwait warehouse(s). Id. at 127. Offerors were further instructed to ?identify the owner and operator of each facility.? Id. (emphasis added). Regarding these instructions, the Solicitation included the following: NOTE: No change in the places(s) of performance shall be permitted between the closing date of the solicitation and the award date except where time permits and then only upon receipt of the Contracting Of?cer?s written approval. Any change in the place(s) of performance cited in this offer and in any resulting contract is prohibited unless it is speci?cally approved in advance by the Contracting Of?cer at no additional charge to the Government. No longer using, possessing, or having access to an offered facility. as described in an offeror?s proposal, may result in an offeror?s proposal being considered unacceptable. Id. at 128 (emphasis added). With respect to the Kuwait warehouse(s), offerors we required to address whether the facilities were owned or leased and, where applicable, to provide a copy of the lease agreement and a narrative explaining the lease. Id. Offerors also had to provide details about any ongoing or proposed construction to support their warehouse facilities, discuss necessary upgrades to support the SPV effort, describe how they would meet quantity demand in terms of their Kuwait warehouse size (providing diagrams/photographs), and discuss available yard space and staging. Id. at 128-129. 2. Factor II Experience The Solicitation required that offerors provide up to ?ve of their highest dollar value and most comparable contracts (Government or commercial) from the 18 months preceding the closing date of the Solicitation, explaining the work performed and how the contract is similar in size and/or Peter D. Verchinski, Esq. February 2, 2018 Page 16 complexity to the SPV work solicited. Id. at 129. The Solicitation also required that, if an offeror was relying on the experience of a team member partners, key subcontractors, or other af?liates), it ME demonstrate how that team member will have meaningful involvement in performance. Id In this regard, the Solicitation made clear that ?[tlhe most relevant experience, and that which will receive the most credit, is the information directly related to the offering entity.? Id. (emphasis added). 3. Factor Quality Control, Assurance, and Warehouse Management System Procedures Offerors were required to discuss their Supply Chain Management Plan (including purchasing, replenishing, and managing inventory), Warehouse Management Systems, quality control procedures (including those used during receipt, storage, and outbound movement of product), inventory rotations methods, and monitoring procedures. Id. at 130. The Solicitation also required that offerors identify the individual that would be assigned to ensure the monitoring of quality procedures, as well as discuss procedures, training, and security protocol for allowing Government personnel access to the Kuwait warehouse(s). Id. 4. Factor IV Resource Availability (Cash Flow, Equipment, and Carrier Agreements) Offerors were required to describe their ?nancial capability to perform during implementation and throughout the life of the contract, including whether additional ?nances will be required and how they would be obtained. Id. 5. Factor Implementation and Management Plans The Solicitation required that offerors discuss all elements of their implementation plan ?from contract award to fully operational capability,? demonstrating how they would ensure a Peter D. Verchinski, Esq. February 2, 2018 Page 17 seamless implementation. Id. at 131. Offerors were also required to provide an organizational/management chart ?for the key personnel or the positions of personnel who are responsible for the day to day management and overall success of the Prime Vendor Program.? Id. at 132. B. Evaluation Scheme initial protest provided details regarding the evaluation scheme, which is hereby incorporated herein. See Protest at 12-20. Summarized below are the relevant criteria for the evaluation of proposals under the technical and past performance factors. 1. Factor I - Warehouse, Location, and Capacity As relevant here under Factor I, the Solicitation speci?cally stated the following: The Government will evaluate the offeror?s proposed distribution network. The location of warehouses and facilities, as well as the nature of and risk attendant with the offeror?s access to and control over said warehouses and facilities will be evaluated. Proposals containing CONUS facility locations that minimize time and/or costs to the Govemment?s Defense Transportation System are likely to result in a higher rating than those that add time and/or costs. EX. 16A at 146 (emphasis added). The Solicitation further advised: Proposals containing OCONUS facilities that are owned and existing as well as those with legally-binding long term lease agreements or commitments to enter into a long term agreement that provide full use of facilities conforming to the requirements of the solicitation are likely to result in a higher rating than a proposal containing a proposed or contingent arrangement, or one which provides only partial use of a facility or otherwise raises questions concerning whether the offeror will have complete facilities available or capacity for contract performance when needed. Proposals containing existing facilities that are owned by the offeror will be rated more favorably than those Peter D. Verchinski, Esq. February 2, 2018 Page 18 proposals providing facilities that are either under construction or leased due to the lower risk involved with ownership. Id. DLA would also evaluate the open capacity, layout, available yard space, and the capability to ship and receive simultaneously for each offeror?s Kuwait warehouse(s). Id. 2. Factor II Experience The Solicitation stated that the Agency would evaluate each offeror?s record of experience as demonstrated by the ?ve ?comparable contracts? submitted with the offeror?s proposal. Ex. 16A at 146-147. In establishing what would be considered relevant for experience, the Solicitation stated: [C]onsideration shall be given to those aspects of an offeror?s contract history which provide the most con?dence that the offeror will satisfy the current procurement. Those aspects of relevancy include experience performingdeliveries as a full line food service distributor, experience performing deliveries in contingencmperations, dollar value, and number of customers. . Id. (emphasis added). To that end, the Solicitation explicitly set forth the following estimates for evaluation considerations: Annual Dollar Value (for Kuwait, Iraq, Syria and Jordan): $137,906,259.67 Number of Customers Supported on a Routine Schedule: 26 Id. at 147 3. Factor - Quality Control, Assurance, and Warehouse Management System Procedures For Factor the Agency indicated that it would evaluate each offeror?s quality control and warehouse procedures so as to determine whether the offeror was capable of meeting the Solicitation?s quality requirements. EX. 16A at 147. The Solicitation warned that offerors Peter D. Verchinski, Esq. February 2, 2018 Page 19 demonstrating existing resources and agreements with carriers would ?generally be rated more favorably than those without.? Id. The Solicitation further advised: ?Product movement procedures, warehouse management systems, inventory rotation methods, quality assurance positions, open date of pack labeling procedures, shelf life procedures, and warehouse management system access for Government personnel will be assessed.? Id. 4. Factor IV Resource Availability (Cash Flow, Equipment, and Carrier Agreements) Under the Resource Availability factor, the Solicitation provided that the Agency would evaluate ?each offeror?s resources ?nancial assessment by the Defense Contract Management Agency, quantity and type of trucks and material handling equipment, plans and personnel utilized for maintaining and servicing vehicles and equipment, and carrier agreements) available? to successfully perform the work. Ex. 16A at 147. (emphasis added). The Solicitation indicated that offerors demonstrating existing resources and agreements with carriers would ?generally be rated more favorably than those without.? Id. 5. Factor Implementation and Management Plans With respect to Factor V, the Solicitation stated that the Agency would evaluate each offeror?s implementation plan from contract award to fully operational capability and proposed procedures for seamless implementation. Ex. 16A at 147. It further provided that offerors who will be less dependent upon Government action will generally be rated more favorably than those who will be more dependent. See id. The Agency would also examine the offeror?s identi?cation of key personnel, by position, and their relevant individual experience, in order to determine the anticipated success of providing service to customers. Id. Peter D. Verchinski, Esq. February 2, 2018 Page 20 RELEVANT DEBRIEFING INFORMATION Following review of ?nal proposal revisions the Agency awarded the SPV contract to KGL F8 on January 12, 2018accordance with the instructions set forth in the award noti?cation, ANHAM timely requested a debrie?ng under FAR 15.506. See EX. 2. On January 22, 2018, the Agency provided ANHAM with an initial written debrie?ng document. EX. 3. The initial debrie?ng provided that the Agency awarded a contract to ?the responsible offeror whose offer conforming to the Solicitation was most advantageous to the Government.? Id. at 3 (emphasis added). With regard to the non-price components of the evaluation, KGL FS received the following ratings: Now-Price Components KGL F5 Factor 1. Warehouse, Location and Capacity Outstanding Factor II. Experience Acceptable Factor Quallty Control, Assurance, and Warehouse Management Outstanding System Procedures Factor IV. Resource Availability Cash Flow, Equipment, and Carrier Good Agreements) Factor V. Implementation and Management Plans Good Past Performance Satisfactory Con?dence Overall Technical Proposal Rating Good Id. at 2. The rationale for award, in its entirety, was stated as follows in the debrie?ng: Peter D. Verchinski, Esq. February 2, 2018 Page 21 Id. at 5 (emphasis added). The Agency?s debrie?ng letter invited ANHAM to submit questions concerning the evaluation and award process, which ANHAM didCover Email at 3. The Agency?s responses, however, provided little additional insight into the Agency?s evaluation. See Protest at 22?23. IV. PORT ACCESS AND KUWAIT PORTS AUTHORITY As re?ected in the Solicitation, the contractor?s ability to access the ports of Kuwait is critical for successful performance of the SPV contract, as is the long?term access to suitable warehouse facilities located at or very near the ports of Kuwait. The ports of Kuwait (Shuwaikh Port, Doha Port, and Shuaiba Port) are owned by the Kuwait Government and managed by the KPA, an independent Kuwaiti government entity. See KPA Website, (last visited January 31, 2018). The Shuwaikh Port is the main commercial port for Kuwait, which has a total area of 4.4 million square meters. See KPA Website, (last visited January 31, 2018). It has berths that are dedicated to transportation of food products, including berths adjacent to warehouses dedicated for the receipt and storage of refrigerated materials. Id. As described in Section I.D.1 above, port access is essential to performance of the SPV Peter D. Verchinski, Esq. February 2, 2018 Page 22 contract because all food to be distributed under the contract must pass through the Kuwaiti ports. As such, ?dealings? with the KPA are inevitable and, in fact, crucial to successful contract performance. Eir_st, it is understanding that the warehouse(s) proposed by KGL F8 are located on KPA property. Thus, given the ?blacklisting? decree, KGL access to its proposed warehouse(s) has apparently been terminated. Md, every shipping container of food that is imported into Kuwait must receive KPA approval before it is released from the port for transportation to the contractor?s warehouse. Third, Kuwait Customs is physically located on KPA property, so entities conducting business with Kuwait Customs are necessarily subject to dealings with the KPA. In sum, dealings with both the KPA and Kuwait Customs are an essential part of SPV contract performance. Peter D. Verchinski, Esq. February 2, 2018 Page 23 The contract cannot be successfully performed without such access to the ports. V. INFORMATION REGARDING KGL FS A. KGL Corporate Organization Kuwait and Gulf Link Transport Company K.P.S.C. Parent?) is a public company traded on the Kuwait Stock Exchange (ticker symbol: KGL) and headquartered in Safat, Kuwait. See EX. 17, Mint Global Company Report?KGLT Parent, January 19, 2018. Notably, KGLT Parent has direct and indirect investments in _m_ai_1y other corporate entities, including a 99% direct ownership interest in KGL Food Service WWL S?)?the awardee here. See, e. EX. 18, KGLT 2016 Annual Report, June 5, 2016, at 52; EX. 17, at 34?36.3 In addition to KGL S, KGLT Parent holds a 47.35% direct ownership interest in KGL Logistics Company K.P.S.C. which owns the remaining Standard and Poor?s Capital IQ, January 19, 2018; Ex. 20 at 1, KGL Kuwait Business Registration. Other subsidiaries of KGLT Parent include KGL Ports International, KGL Passenger Transport Services, KGL Stevedoring, and KGL Transportation. Ex. 17 at 34?36. Through its subsidiaries, KGL Parent is engaged in providing transportation, logistics, and supply chain management services in the Middle East. 3 See also Mubasher Website Pro?le of KGLT Parent, available at (last visited January 31, 2018). Peter D. Verchinski, Esq. February 2, 2018 Page 24 Saeed Dashti is listed as a ?Chairman (Board of Directors)? for KGLT Parent. See EX. 17 at 29; see also EX. 18 at 5 (listing Mr. Dashti as ?Chairman?). Mr. Dashti also served as ?PartnerMint Global Company Report?KGL FS, January 25, 2018.4 KGL FS is a limited liability company registered to do business in Kuwait. See EX. 20. However, a review of publicly available information reveals that little or no business is actually performed by KGL FS. Indeed, according to a report produced by the Kuwait Ministry of Commerce on January 22, 2018, KGL FS currently is capitalized in the amount of only 50,000 Kuwaiti Dinars (approximately $150,000 USD). Id. Moreover, the address listed on KGL registration is the ?Al-Jahra Area, which is located in the north of Kuwait and is not a center for signi?cant commerce. Id. A review of publicly available information reveals no evidence that KGL FS has ever performed any work for or on behalf of the US. Government or otherwise engaged in any meaningful business operations. See, USASpending.gov (last Visited on January 31, 2018; providing no hits). Tellingly, KGL FS does not have a Standard and Poor?s Capital IQ company pro?le, and is omitted from corporate databases maintained by Bloomberg Law?both of which exist for legitimate business concerns. Finally, KGL FS has no readily identi?able tangible assets warehouses that can be used to perform the SPV contract). Although KGL FS does not own any warehouses, it appears that KGL-Logistics may, which presumably were proposed by KGL FS for use in performing the SPV contract. See KGL-Logistics Website, available at (last visited February 2, 2018). Notably, however, the relevant warehouses owned by KGL?Logistics are 4 Presumably, Mr. Dashti has been removed from these leadership positions, but the details of such an ouster are not known to ANHAM. Peter D. Verchinski, Esq. February 2, 2018 Page 25 located on KPA property and do not appear to be zoned for food storage. In addition, based on the ?blacklisting? decree and the civil litigation between KPA and KGL, it appears that no KGL entity has the ability to access any warehouse on KPA property. B. Recent Responsibility Problems In Kuwait Publicly available information demonstrates that KGLT Parent and its subsidiaries, including KGL-Logistics, have engaged in illegal and improper conduct with regard to the use and disposition of KPA property. This conduct, which involves fraud, embezzlement, money laundering, and the general misuse of KPA funds, has resulted in a series of criminal, civil, and administrative actions against KGL entities and principals as described below.5 Critically, these actions include the ?blacklisting? of all KGL entities, including af?liates, in late November 2017 by the KPA, which means that KGL FS is not able to meet the SPV contract requirements. 1. Criminal Indictment/Charges Regarding Fraud, Embezzlement, Etc. On October 21, 2015, Mr. Dashti?Chairman of KGLT Parent and Partner of KGL along with one other KGL principal was charged with multiple felonies in the Kuwait Criminal Court as a result of misconduct with regard to KPA property. Speci?cally, under Criminal Case No. 1942/2015, the defendants have been formally charged with fraud and embezzlement of KPA funds totaling 21,000,000 KWD (more than $70 million USD), as well as the intentional 5 Sections V.B.1-3 provide a summary of the criminal, civil, and administrative actions against KGL entities and principles. Links to websites are provided that address these matters, and the KPA ?Blacklisting? Decree is attached hereto as Exhibit 22. We also hereby incorporate all source pleadings and ?lings related to these matters. To the extent that DLA or the GAO would like to review translated copies of all or some of these documents, which are voluminous, they will be provided upon request. Peter D. Verchinski, Esq. February 2, 2018 Page 26 destruction of documents relevant to the matter.6 In late November 2017, of?cers from the Kuwait Criminal Investigation Department arrested the defendants, who remain in the Kuwait Central Prison to date after bail was refused on January 14, 2018.7 2. Civil Litigation With KPA Stemming From Misuse Of KPA Property After investigating misconduct with regard to the improper disposition and use of public funds, the KPA issued orders on June 1, 2016, and July 13, 2016, revoking license to perform as a container and general goods contractor at the Shuwaikh and Shuaiba Ports. KGL challenged the revocation of its license in a civil matter ?led at the Kuwait Court of First Instance. On April 22, 2017, that court issued a decision in favor of KGL. KPA ?led an appeal of that decision on May 15, 2017, at the Kuwait Court of Appeals (Appeal No. 3963/2017). On June 11, 2017, the Court of Appeals granted requested stay of the judgment issued by the Court of First Instance. The Court of Appeals issued a ?nal judgment on October 29, 2017, which overruled the lower court?s judgment in favor of 1eaving KGL without the ability to access or otherwise perform work at the ports. KGL appealed the decision of the Court of Appeals to the Kuwait Court of Cessation, which is the court of last resort in Kuwait. An initial hearing on a request for preliminary injunction is scheduled for February 14, 2018. However, a ?nal decision in the matter likely will not to be issued before the end of 201 8. 6 See PressReader Website, (last visited on January 31, 2018). 7 See PressReader Website, 20171 130/ 2817713345 10408 (last Visited January 31, 2018). Peter D. Verchinski, Esq. February 2, 2018 Page 27 Separate but related civil litigation has been initiated to address decision to rescind license to use KPA?owned warehouse facilities located on KPA property, which require the eviction of KGL. Final decision by the Kuwait Court of Appeals in that matter (Appeal No. 23/2017) is expected on February 21, 2018. 3. Administrative ?Blacklisting? By KPA On November 28, 2017, the KPA issued an administrative resolution (No. 659-2017), which was published in the Kuwaiti Gazette - Issue No. 1369. See EX. 22, KPA ?Blacklisting Decree.?8 Effective on the date of publication, the blacklisting resolution states that the State Audit Bureau of Kuwait has ?proven? certain ?violations? by KGL entities, including the following: Handling has encroached upon an area of (523, 970 1n Abdullah Port, and its wrongful seizure and encroachment upon another area of (476,030 1n the same land with total area of (one million square meters) without any legal justi?cation.? KGL-Logistics has wrongfully seized and encroached ?upon an area of (10,149/76 m2) in the fourth warehousing area of the authority without any legal justi?cation.? - KGL Transport has wrongfully seized and encroached ?upon an area of (270,664/45 ml) in the tenth warehousing area in Doha Port of the Authority without legal justi?cation.? KGL Transport has wrongfully seized and encroached ?upon an area of (40,000 m2) in the public transport garage area (former) of the Authority without legal justi?cation.? - KGL Intl. for Ports, Warehousing and Transport ?committed several violations during the execution of the contract resulting from the tender (N on the manufacture, supply, installation, operation and maintenance of bridge cranes at the Shuwaikh Port of the Authority), as well as the acquisition of the keys to the equipment and spare parts stores belonging to the Authority,?which caused many and serious damages to the Authority.? 0 KGL Handling wrongfully seized and encroached ?upon the stores, of?ces and warehouses located in front of the gate No.(5) in Shuwaikh Port of the Authority.? 8 See also Mubasher Website, (last visited January 31, 2018). Peter D. Verchinski, Esq. February 2, 2018 Page 28 - KGL Intl. for Ports, Warehousing and Transport submitted ?false ?nancial claims regarding the compensation for container handling charges in Shabia Port, and these ?nancial claims were proven without any legal justi?cation, which represents an attempt to attack public funds.? - KGL Intl. for Ports, Warehousing and Transport submitted ?false ?nancial claims regarding the compensation for container handling charges in Shabia and Shuwaikh Ports, and these ?nancial claims were proven without any legal justi?cation, which represents an attempt to attack public funds.? Id. at 2. As a result of the myriad Violations by KGL entities, many of which gave rise to the criminal and civil matters outlined brie?y above, KPA decided to ?blacklist? the following companies, as well as ?their subsidiaries, af?liated companies or associates?: KGL Handling Co.; KGL Logistic Co.; KGL Intl. for Ports, Warehousing and Transport; KGL Investment; and KGL Transport. Id. The subsidiaries, af?liated companies, and associates of the aforementioned companies include KGLT Parent, KGL?Logistics, and KGL PS (the awardee). Pursuant to the blacklisting resolution: Under no circumstances may dealing be made with the blacklisted companies, their subsidiaries, af?liated companies or associates and between the Kuwait Ports Authority, and they are not allowed to participate in the tenders, bids and public auctions or consultancy contracts of the Authority, which are offered or to be offered in the future through the Central Agency for Public Tenders or directly by the Authority or any other administrative commitments. Peter D. Verchinski, Esq. February 2, 2018 Page 29 Id. (emphasis added). Importantly, the ?blacklisting? ?which is akin to a ?debarment? in US. terms?applies to a_ll Kuwait governmental entities. See id. (?All the administrative, technical, ?nancial. legal bodies and related departments shall comply with the provisions of this Resolution and implement it within their respective competences?) (emphasis added). C. Obstacles for Successful Performance The criminal and civil matters summarized above reveal recent, signi?cant misdeeds that undercut the Agency?s determination that KGL FS is a ?responsible? offeror. Indeed, given the serious nature of the charges and their extension to the highest levels of the company, it is dif?cult to imagine how the company was deemed ?responsible? if the contracting of?cer was aware of the information. The charges also are serious enough that it is possible?if not likely?that the company could be suspended or debarred in the future by US. contracting of?cials. See FAR 9.406-2 (the debarring of?cial may debar a contractor for, inter alia: a conviction or a civil judgment for commission of fraud or a criminal offense in connection with performing a public contract; commission of embezzlement, theft, or destructionof records; and commission of any other offense indicating a lack of business integrity or business honesty). But the most immediate and debilitating obstacle to performance is the ?blacklisting? of a? KGL af?liates by the KPA. This means that the awardee, KGL FS, is prohibited from having any ?dealings? with the KPA?including access to the ports of Kuwait, to Kuwait Customs of?ces located on KPA property, and to warehouses located on KPA property. On a contract that requires access to Kuwaiti ports, this is a death blow. This was demonstrated in a recent procurement action taken by the US. Transportation Command In accordance with a Justi?cation and Approval for Other Peter D. Verchinski, Esq. February 2, 2018 Page 30 than Full and Open Competition posted on on January 26, 2018, USTRANSCOM has been forced to continue to receive shipping and cargo-handling services from an incumbent contractor at the ports of Kuwait, because the replacement contractor selected in Transportationg?was ?prevent[ed] from performing any work at the port [due to] port restrictions? imposed by KPA.10 As such, USTRANSCOM terminated the contract awarded to the KGL entity and has been required to secure services from other providers. The same result is inevitable here, especially given the ?blacklisting? made effective in late November 2017. VI. KGL CERTIFICATIONS As outlined above, the Solicitation required the offerors to submit certi?cations addressing corporate organization and responsibility matters. In this regard, KGL FS has a currently active SAM.gov registration.11 It was last ?activated? on November 12, 2017, and expires on November 12, 2018. The entity?s initial registration was completed on January 25, 2016. The ?business start date? for KGL is listed as July 8, 2009. KGL SAM.gov registration contains multiple certi?cations indicating that KGL FS has immediate owner or parent corporation, as well as no predecessors. See Certi?cations under FAR FAR In addition, KGL S?s SAM.gov registration contains multiple certi?cations indicating that no responsibility?related matters exist for KGL or its principals. Specifically, under FAR 52.209- 9 KGL Transport is 97% owned by KGLT Parent, the same entity that owns 99% of KGL FS. See Ex. 18, KGLT 2016 Annual Report, June 5, 2016, at 53. 10 See FedBizOpps.gov Website, 532d6f8517b0143 60c6&tab=core& cview (last Visited January 31, 2018). 11 See Website, available at (Search Records Quick Search, Number: 534737437,? View Details). Peter D. Verchinski, Esq. February 2, 2018 Page 31 KGL FS certi?ed that neither it nor its de?ned to include Of?cers, directors, owners, partners, or individuals having primary management or supervisory responsibilities within a business entity?have, within the three years preceding the Offer, ?been convicted Of or had a civil judgment rendered against them for commission of embezzlement, theft, forgery, bribery, falsi?cation or destruction Of records, making false statements, tax evasion, violating Federal tax laws, or receiving stolen property.? Further, under FAR KGL FS certi?ed that neither it nor its ?principals? are ?presently indicted for, or otherwise criminally or civilly charged by a governmental entity with, commission Of any Of the offenses enumerated in [under FAR Similar certi?cations regarding the absence of any responsibility-related matters were submitted under FAR SUPPLEMENTAL PROTEST COUNTS IV. KGL FAILED TO NOTIFY THE AGENCY OF CHANGES TO ITS PROPOSAL CONCERNING MATERIAL SOLICITATION As detailed in Section ID of the ?Statement of Facts and Relevant Background? provided above, the Solicitation required that the successful Offeror(1) maintain suitable warehouse facilities, and (2) have consistent access to the ports of Kuwait. Because these are mandatory performance requirements, which were tO be addressed in the Offerors? proposals and evaluated by the Agency, they constitute ?material? Solicitation requirements. As material Solicitation requirements, KGL FS was obligated tO notify the Agency when it lost its right to access warehouses on KPA property and 12 initial protest contained three protest counts, Counts As such, protest grounds included in this supplemental protest will begin with Count IV. Peter D. Verchinski, Esq. February 2, 2018 Page 32 the ports of Kuwait. Given that the SPV contract was awarded to KGL FS, such notice was apparently never provided. Because the Agency apparently relied upon proposal information regarding the warehouses to be used and the ability to access the ports of Kuwait, KGL failure to provide notice regarding its changed circumstances constitutes a material misrepresentation, which signi?cantly impacted the evaluation and ultimate award decision. Had KGL FS satis?ed its obligation to notify the Agency of changes to its proposal regarding these material Solicitation requirements, KGL proposal would have been deemed technically unacceptable and, as a result, ineligible for award. A. Compliance With The Requirement To Maintain A Warehouse Satisfying Location And Function Specifications The SOW, incorporated as an amendment into the Solicitation, makes abundantly clear that offerors were required not only to propose suitable warehousing facilities, but also to maintain such facilities throughout the life of the contract. Indeed, the offeror?s access to suitable warehouse facilities was speci?cally made an evaluation criterion (see Factor I ?Warehouse Location and Capacity?) of the Technical Proposal. The importance of warehouse facilities in the evaluation re?ects the fact that, without such facilities, it is impossible to perform the SPV contract requirements. With regard to the warehouse requirement, the Solicitation a_l& expressly required KGL F8 to notify the Agency of changes. Moreover, because maintenance of suitable warehouse facilities was a material Solicitation requirement, KGL FS also had a duty under the law to provide the Agency notice regarding its revoked access to KPA-owned warehouses. Peter D. Verchinski, Esq. February 2, 2018 Page 33 1. The Solicitation Obligated KGL F8 to Update the Agency Regarding the Unavailability of its Warehouse Importantly, the SOW expressly provided the following: At a minimum, the Prime Vendor is required to have one (1) Outside the Continental United States physical warehouse location and distribution network located in Kuwait. The Prime Vendor shall be capable of using this facility and distribution network to proVide subsistence support of those items included on the resulting contract catalog (at award or added during contract performance) to any and all customers located within the countries of Kuwait, Iraq, Syria, and Jordan, including the supply of fresh items fruits and vegetables, bakery, dairy, etc.). EX. 16A at 11 (emphasis added) Introduction Kuwait, Iraq, Syria, and Jordan Distribution Network?). Section I.D.2 of the ?Statement of Facts and Relevant Background? provided above details the numerous instances throughout the Solicitation that demonstrate the material nature of the requirement to propose and maintain a suitable warehouse. Notably, the Solicitation expressly contemplated the possibility of warehouse availability and, as such, imposed an af?rmative duty on the offerors to update the Agency if the proposed warehouse became unavailable. Speci?cally, the Solicitation contained the following proposal instructions: In accordance with FAR 52.215 -6 Place of Performance, the offeror shill identify in the following format the name and location of their OCONUS and CONUS warehouse distribution facilities, CONUS Source Load Manufacturing Facilities, and any Administrative Management Support Of?ces that will be utilized in support of its distribution network for this requirement. Also, identify the owner and operator of each facilim Peter D. Verchinski, Esq. February 2, 2018 Page 34 NOTE: No change in the places(s) of performance shall be permitted between the closing date of the solicitation and the award date except where time permits and then only upon receipt of the Contracting Of?cer?s written approval. Any change in the place(s) of performance cited in this offer and in any resulting contract is prohibited unless it is speci?cally approved in advance by the Contracting Of?cer at no additional charge to the Government. No longer using. possessinm having access to an offered facility, as described in an offeror?s proposal, may result in an offeror?s proposal being considered unacceptable. Ex. 6A at 127?128 (emphasis added). Accordingly, the Solicitation expressly required the offerors to update and obtain approval regarding proposed facilities in the event of unavailability or a change. As a result of the KPA ?blacklisting? and related license revocation order mandating that KGL vacate warehouses on KPA property and to cease operating as a container and general goods contractor at the ports of Kuwait, KGL FS was obligated to notify the Agency of these changed circumstances and how they impact KGL proposed technical solution. The Agency?s award indicates that KGL FS never informed the Agency of changes to its ability to satisfy material Solicitation requirements, including the requirement to maintain suitable warehouse facilities. This non-disclosure constitutes a material misrepresentation given that, had KGL FS satis?ed its obligation to provide the Agency notice of changes regarding its proposed warehouse solution, the Agency likely would have evaluated KGL proposal as being technically unacceptable. As such, KGL misrepresentation directly affected the Agency?s evaluation and award decision. See, e. Technology Concepts Design, Inc., B-403949.2, Mar. 25, 2011, 2011 CPD 11 78 at *9 (A misrepresentation is material where the agency relies upon it, and it likely has a signi?cant impact upon evaluation and the award decision). Peter D. Verchinski, Esq. February 2, 2018 Page 35 2. KGL FS Was Obligated to Update the Agency Regarding the Unavailability of its Warehouse as a Matter of Law In addition to the express notice obligation imposed by the Solicitation?s terms, KGL was also required, as a matter of law, to inform the Agency regarding changes to its ability to access warehouses located on KPA properties. Speci?cally, it is well-settled that a procuring agency cannot award a contract to an offeror that makes a material change in its proposed technical approach, butfails to advise the agency of such a change. See GreenleafConstr. C0., Inc, B- 293105.18, Jan. 17, 2006, 2006 CPD 11 19; Bannum, Inc., B-415227, Dec. 1, 2017, 2017 CPD 1] 372. For example, in Greenleaf, the solicitation required offerors to propose a web-based Electronic Monitoring System (EMS) for managing properties in administering a federal housing insurance program. Greenleaf, supra, at 8. Notably, the solicitation provided detailed requirements for that system. Id. The awardee initially proposed to use one software system, but after submission of its ?nal proposal revision, decided to use a completely different software system without informing the agency. Id. The Government Accountability Of?ce concluded that there was a material change in the awardee?s proposal regarding its proposed resources and technical approach that required notice to the agency in order to ensure that the evaluation was based on a consideration of the resources actually intended for use in contract performance. Id. at 9. As such, the GAO sustained the protest, ?nding that the award decision was based on an unreasonable evaluation because the agency never evaluated the technical approach and resources as they existed at the time of award, and allowing such an award to stand ?call[ed] into question the integrity of the competition.? Id. Peter D. Verchinski, Esq. February 2, 2018 Page 36 Additionally, the recent decision in Bannum illustrates what should have happened in this procurement. In Bannum, the stated evaluation criteria included a sub-factor addressing the proposed facility. Barmum, supra, at l. Offerors were required to provide documentation, such as a lease agreement, supporting the right to use the proposed facility. Id. Due to events beyond the offeror?s control, the proposed facility became unavailable. Id. at 3. The offeror disclosed this fact to the agency prior to award, which resulted in the agency excluding this offeror from the competitive range. Id. The offeror ?led a protest. The GAO held, however, that the agency acted reasonably in rejecting the proposal as technically unacceptable. Id. Speci?cally, the GAO concluded that the offeror ?lost its right to use the proposed facility and did not have a facility with which to perform the contract,? which made it reasonable for the agency to exclude the proposal because ?it had no realistic possibility of award.? Id. at 2?3. Here, as explained above, the Solicitation required KGL PS to propose a suitable warehouse facility. The SOW detailed numerous specific requirements for which this facility was to be used. Further, the Solicitation also advised that such facilities would be evaluated as a part of the technical evaluation (Factor I). Like Greenleaf, KGL FS apparently never disclosed the unavailability or access risks created by the civil litigation and/or ?blacklisting? to the Agency. Also, like Greenleaf, the Agency apparently never evaluated the resources that KGL actually intended to use in contract performance. Therefore, the protest should be sustained. B. Compliance With Requirements Requiring Access To Port Of Kuwait Similar to the warehousing requirement, the Solicitation also required offerors to maintain consistent access to the ports of Kuwait. The failure to inform the Agency of the inability to maintain such access constituted a material breach of KGL S?s duty to notify the Agency regarding Peter D. Verchinski, Esq. February 2, 2018 Page 37 changes to material Solicitation requirements. Accordingly, the Agency?s award decision rested on an unreasonable evaluation of KGL proposal?a prejudicial error that undermines the integrity of the procurement process. Speci?cally, the SOW, as described above, details the numerous Solicitation requirements that demonstrate the critical importance of port access. In addition, the Solicitation made clear that the Prime Vendor is ?responsible for providing any necessary documentation to assist in customs clearance.? EX. 16A at 44. Given the importance of port access and the customs approval process, the ?blacklisting? decree created an insurmountable obstacle to successful contract performance, fundamentally altering KGL ability to perform as proposed moving tons of food supplies in and out of Kuwait). These requirements, like the requirements for maintaining warehouse facilities, were mandatory material Solicitation requirements. As such, KGL was obligated to notify the Agency of any changes to its ability to satisfy these requirements, including changes to its proposed technical solution in this regard. Its failure to do so was prejudicial, and the protest should be sustained accordingly. C. Compliance With Requirement T0 Update Certi?cations As Necessary To Ensure They Remain Current, Complete, And Accurate As explained in Section VI below, KGL FS submitted false certi?cations regarding responsibility matters and corporate organization. In accordance with the principles discussed in Section VI below, the certi?cation concerning responsibility matters is a material Solicitation requirement that puts an agency on notice of information with a direct bearing on the contracting of?cer?s responsibility assessment. Similarly, the corporate organization certi?cation is also a Peter D. Verchinski, Esq. February 2, 2018 Page 38 material Solicitation requirement that, like the responsibility certi?cation, assists the contracting of?cer assess the offeror?s responsibility. As material Solicitation requirements, KGL FS had a duty to update the Agency regarding the content of these certi?cations. Further, FAR (see also FAR imposed an express obligation on KGL PS to update its representations and certi?cations so that they remain accurate and complete. Here, KGL FS not only initially submitted false certi?cations, but it failed to satisfy its obligation to update them so that they are accurate and complete. KGL FS had ample opportunity to do so. Presumably, KGL S?s failure to provide accurate and complete certi?cations regarding responsibility matters and corporate organization was done to avoid alerting the Agency to the adverse criminal, civil, and administrative matters presenting a direct obstacle to KGL eligibility for award and ability to perform the contract?s technical requirements. Such a transparent attempt to undermine the integrity of the procurement process cannot be tolerated. V. THE AGENCY UNREASONABLY CON CLUDED THAT KGL FS IS RESPONSIBLE Although publicly available prior to award and directly relevant to the Agency?s responsibility determination, the Agency?s decision to award the SPV contract to KGL suggests that the contracting of?cer did n_ot meaningfully assess the ample evidence of KGL non? responsibility outlined in Section V.B of the ?Statement of Facts and Relevant Background? provided above. Indeed, had the contracting of?cer reasonably evaluated the criminal and civil matters involving KGL entities and KGL principal (Mr. Dashti), the KPA ?blacklisting? applicable to KGL FS, and the information con?rming that KGL FS is nothing more than a shell company, the contracting of?cer necessarily would have concluded that KGL is not presently responsible and, as such, is ineligible for award. Peter D. Verchinski, Esq. February 2, 2018 Page 39 Given the ample evidence of KGL S?s non-responsibility, it was unreasonable for the contracting of?cer to have concluded that KGL FS has ?adequate ?nancial resources,? ?a satisfactory performance record,? the ability ?to comply with the required or proposed delivery or performance schedule,? ?a satisfactory record of integrity and business ethics,? ?the necessary organization, experience, accounting and operational controls, and technical skills, or the ability to obtain them,? ?the necessary technical equipment and facilities, or the ability to obtain them,? ad is ?otherwise quali?ed and eligible to receive an award under applicable laws and regulations? ??a_ll of which are prerequisites for a ?nding of responsibility under FAR 9.104?1. Because only responsible offerors are eligible for award, KGL FS reasonably should have been excluded from the competition. The contracting of?cer apparently was unaware or did not meaningfully consider relevant responsibility-related information when assessing KGL responsibility prior to award. In accordance with FAR a ?nding of responsibility is to occur only when there is ?information clearly indicating that the prospective contractor is responsible.? FAR 9.103(b) (emphasis added). When there is an absence of such responsibility-af?rming information (including countervailing evidence of non-responsibility), as is the case here, the procuring agency mu_st conclude that the offeror is responsible. Id. Notably, all documents and reports supporting the responsibility determination are required to be included in the contract ?le. See FAR In reviewing responsibility challenges, the GAO will consider such protests where the protester identi?es evidence raising serious concerns that, in reaching a particular responsibility determination, the contracting of?cer unreasonably failed to consider available relevant information or otherwise violated statute or regulation. 4 C.F.R. see, e. Gaver Indus, Inc., B- Peter D. Verchinski, Esq. February 2, 2018 Page 40 412428, Feb. 9, 2016, 2016 CPD Ti 57; T.F. Boyle Trans, Inc., B-310708, Jan. 29,2008, 2008 CPD 1} 52; Verestar Gov?t Servs. Grp., B-291854.2, Apr. 3, 2003, 2003 CPD 1] 68. Consistent with handling of responsibility protests, the U.S. Court of Federal Claims and the U.S. Court of Appeals for the Federal Circuit have taken a similar approach in assessing a challenge to an agency?s af?rmative determination of responsibility. Speci?cally, the Courts review whether an agency lacked a rational basis in ?nding an offeror af?rmatively responsible. See Impresa Construzioni Geom. Domenico Garu? v. United States, 238 F.3d 1324, 1333 (Fed. Cir. 2001). Importantly, the Courts have noted that, although the FAR does not require a written rationale for the responsibility determination, procuring agencies include in the contract ?le the documents and reports supporting a determination of responsibility. Id. at 1334 (citing FAR 9.105- see also Watts-Healy ibbitts A Vv. United States, 82 Fed. Cl. 614 (2008) (explaining that the af?rmative responsibility determination must be supported by the contemporaneous procurement record). In this regard, the Courts will sustain a protest where the protester provides speci?c evidence that the contracting of?cer may have ignored information that, by its nature, would be expected to have a strong bearing on whether the awardee should be found responsible. Impresa, 238 F.3d at 1334; see also Acrow Corp. of Am, v. United States, 97 Fed. Cl. 161 (2011) (explaining that the contracting of?cer?s decision to ignore other adverse information is unreasonable if the rationale for ignoring the information is that other adverse information could have been debunked). To illustrate these principles, outlined below are cases where the GAO, as well as the Courts, have concluded that procuring agencies acted unreasonably by failed to consider adverse evidence Peter D. Verchinski, Esq. February 2, 2018 Page 41 raising serious concerns?i.e., information that would be expected to have a strong bearing on the awardee? responsibility: 0 In Southwestern Bell, the protestor alleged that the agency failed to consider the effect of an indictment against one of the awardee?s principals for extensive ?nancial fraud and allegations of similar misconduct by the offeror?s parent corporation. B-292476, Oct. 1, 2003, 2003 CPD ?11 177, at The GAO concluded that it was unreasonable for the contracting of?cer to ?nd the awardee responsible where the Eli document having any bearing on the awardee?s responsibility?a pre-award survey? did not address the business ethics and integrity issues or those issues raised in the indictment, or any other adverse information concerning the parent company. Id at 7. Importantly, the GAO rejected arguments advanced by the agency in response to the protest that it had adequately considered the awardee?s responsibility because the contracting of?cer had a general awareness of the alleged improprieties through media reports and other information obtained from other of?cials, notwithstanding the lack of documentation in the contract ?le. Id. 0 In Impresa Construzioni Geom. Domenico Garu? v. United States, the protestor alleged that the agency failed to consider the indictment of the awardee?s principal and whether that conduct should have been imputed to the offeror. 52 Fed. C1. 421, 426?27 (2002) (remanded from the Federal Circuit). The Court concluded that the agency acted unreasonably despite having the relevant information available, because the documents suggested that the offeror lacked a satisfactory record of business ethics. See id. at 427 - 28. The agency not only made incorrect assumptions regarding the documents, but failed to determine their signi?cance. Id. In addition, the agency relied on faulty advice regarding matters unrelated to responsibility past performance) in making a ?nding of responsibility. Id. 0 In Watts-Healy ibbits A JV v. United States, the protestor alleged that the agency failed to consider adverse information regarding the awardee?s long history of bid rigging and an administrative ?ne and suspension order issued as a result of such misconduct. 82 Fed. Cl. 614, 617 (2008). The Court concluded that it was unreasonable for the contracting of?cer to ignore this information despite the agency?s contention that it learned of the conduct post?award. Id. In sustaining the protest, the Court found that the agency acted unreasonably in determining that the bid rigging conduct at issue had no bearing on responsibility solely because it was common place in the foreign country where contract performance was to occur. Id. at 618. The Court explained that such conduct, if committed by an American company, would certainly disqualify that company. Thus, it had a signi?cant bearing on responsibility. See id. 0 In Algese United States, the protestor alleged that the agency unreasonably failed to consider the criminal indictment of a principal, who owned 25% of the parent Peter D. Verchinski, Esq. February 2, 2018 Page 42 corporation of the awardee. 125 Fed. Cl. 431 (2016). In sustaining the protest, the Court held that the agency?s acceptance of the offeror?s certi?cation concerning responsibility matters, Without additional examination, was, by itself, arbitrary and capricious. Id. at 443. In sum, the GAO will review and sustain a protest alleging that the procuring agency failed? in the context of the required responsibility determination?to meaningfully consider evidence of the offeror?s misconduct, misconduct by the offeror?s principals, or misconduct by the offeror?s parent company. Here, evidence of such misconduct exists, including the following: (1) The criminal indictment of KGL principal (Mr. Dashti), who also serves as the Chairman of KGLT Parent, for multiple felonies including embezzlement of public funds, fraud, and the intentional destruction of evidence. (2) formal revocation of KGL license to perform as a container and general goods contractor at the Shuwaikh and Shuaiba Ports as a result of KGL entities? misuse of KPA properties. (3) administrative resolution ?blacklisting? KGLT Parent, and all of its subsidiaries, af?liated companies, and associates including KGL FS for multiple proven violations, including the misuse of KPA properties and the submission of false claims. See ?Statement of Facts and Relevant Background,? Section V.B, supra. Additionally, ample evidence exists to con?rm that KGL FS is nothing more than a shell company that lacks meaningful business operations, experience, resources, and facilities, all of which are relevant to the responsibility determination. See id. at Section see also FAR 9.104-1 (listing all criteria for an af?rmative determination of responsibility, including elements other than a record of integrity and business ethics). In sum, the contracting of?cer necessarily should have included in her responsibility determination a meaningful assessment of the misconduct of KGL S?s principal and other KGL entities with common ownership and management, which includes serious allegations and/or charges Peter D. Verchinski, Esq. February 2, 2018 Page 43 of fraud, embezzlement, money laundering, the submission of false claims, and the general misuse of public funds. Information regarding this misconduct is precisely the type of evidence that raises serious concerns and has a strong bearing on whether KGL FS maintains a ?satisfactory record of integrity and business ethics.? FAR In addition, the contracting of?cer should have meaningfully evaluated the evidence that KGL FS is a shell company with inadequate resources to perform the contract. Regrettably, however, it appears that the Agency was unaware of, or unreasonably evaluated, this information in awarding the SPV contract to KGL FS. As such, the protest should be sustained. VI. THE AGENCY UNREASONABLY FAILED TO CONSIDER KGL FALSE CERTIFICATIONS As detailed in Section I.B of the ?Statement of Facts and Relevant Background? provide above, the Solicitation required the offerors to submit certi?cations regarding responsibility matters and corporate organization. By incorporation of FAR the Solicitation obligated the offerors to ensure that their certi?cations, as contained on SAM.gov, remain accurate and complete. Submission of false certi?cations, or the failure to ensure that the certi?cations submitted remain accurate and complete, constitutes a basis for disqualifying the offending offeror from the competition. See Algese 2 125 Fed. Cl. at 431. Although disquali?cation is a harsh result, it is required because false certi?cations and other material misrepresentations ?prevent government of?cials from determining the best value to the government and retard the competitive bidding process.? Id. at 440. It iswell settled that, where a contracting of?cer relies on an offeror?s misstatement, the award is arbitrary, capricious, and cannot stand. Id.; see also Acrow Corp. of Am, 97 Fed. Cl. at 175-76; see also Universal ech, Ina, B-248808.5, 92-2 CPD 1] 212, at *8 (Sept. 28, Peter D. Verchinski, Esq. February 2, 2018 Page 44 1992) (explaining the purpose of certi?cations, such as those in SAM. gov, is to assist the contracting of?cer in determining an offeror?s responsibility). Here, presumably to avoid alerting the Agency to the adverse criminal, civil, and administrative matters that present a direct obstacle to KGL eligibility for award and ability to perform the contract?s technical requirements, KGL FS submitted false certi?cations regarding responsibility matters and corporate organization. Had the Agency received accurate and complete information from KGL FS in this regard, KGL FS likely would not have been selected for award. By awarding the SPV contract to KGL PS, the Agency appears to have relied on KGL misrepresentations, which undermines the reasonableness of the Agency?s award decision. A. The Agency Unreasonably Failed To Consider False Certi?cation Regarding Responsibility Matters Under FAR And FAR Consistent with the policy detailed at FAR 9.103, which requires award to ?responsible? contractors only and requires that the contracting of?cer make an af?rmative determination of responsibility prior to award, the Solicitation indicated that award would be made to ?the responsible offeror145. To facilitate this, the Solicitation incorporated FAR 52.212- 3, which requires offerors to submit, among other things, a certi?cation regarding responsibility matters. EX. 16 at 36 (see FAR KGL FAR 52.212-3 certi?cations are available on SAM. gov. In accordance with FAR KGL FS was required to certify whether it (128., the offeror) and/or any of its ?principals? have, within the three year period preceding the offeror, ?been convicted of or had a civil judgment rendered against them for [c]ommission of embezzlement, M, forgery, bribery, falsi?cation or destruction of records, making false statements, tax evasion, Peter D. Verchinski, Esq. February 2, 2018 Page 45 violating Federal criminal tax laws, or receiving stolen property.? Id. (FAR (emphasis added). This certi?cation is generic in nature and is not linked to the formation or perfOrmance of a Federal, state, or local government contract. Moreover, KGL FS was also required to certify whether it and/or any of its ?principals? are ?presently indicted for, or otherwise criminally or civilly charged by a Government entity with, commission of any of the offenses enumerated [at FAR Id. (FAR (emphasis added). Notably, this certi?cation uses the generic term ?a Government entity,? rather than the more speci?c term ?Federal, state or local? Government entity, as employed elsewhere within FAR 52.212-3 See also FAR 52.209- (requiring identical certi?cation, but using ?a governmental entity? instead of ?a Governmental entity?). Because responsibility matters involving ?principals? were required to be disclosed, KGL FS was obligated to disclose the criminal charges against Mr. Dashti, who is a principal of KGL by virtue of his stated role as ?Partner.? See EX. 21, Mint Global Company Report?KGL FS, January 25, 2018; see also FAR (broadly de?ning ?principal? to include of?cers, directors, owners, Harm, or individuals having primary management or supervisory responsibilities within a business entity). KGL failed to do so. Had KGL FS accurately certi?ed responsibility matters, the Agency would have had no reasonable basis to award the SPV contract to KGL FS. Notably, the conduct covered by the responsibility certi?cations is expansive and includes foreign matters, such as those here involving KGL and its principal. See FAR 52.209- FAR (listing certain civil and criminal convictions related to US. law, but separating the commission of several other more generic offenses by semicolons); Universal ech, Peter D. Verchinski, Esq. February 2, 2018 Page 46 Inc, supra, at *9 (holding that offenses listed in the last of the three clauses in FAR 52.209?5, which is nearly identical to FAR are not limited to violations relating only to public contracts); Watts-Healy, 82 Fed. Cl. at 616 (explaining that an administrative order imposing a ?ne of 1.92 billion Japanese Yen for engaging in illegal business practices and a business suspension order for similar conduct imposed against a Japanese company under Japanese law would have disquali?ed an American company engaging in the same conduct under US. law); Acrow, 97 Fed. Cl. at 177 (describing Watts?Healy and supporting the proposition that foreign convictions constitute a Violation of the certi?cation requirement); Impresa, 238 F.3d at 1340 (?the failure of [the awardee] to report the ?ndings and indictment of the Italian courts, . . . raises serious questions as to whether [the awardee] made a material misrepresentation on the certi?cate?). The broad interpretation of the FAR responsibility certi?cations is further supported by the broadly de?ned terms used elsewhere in FAR Part 9. ?Indictment,? for example, means ?indictment for a criminal offense? and includes a ??ling by competent authom charging a criminal offense.? FAR 9.403 (emphasis added). See Impresa, 238 F.3d at 1335 (recognizing that both the Court and GAO look to the ?more extensive debarment regulations for guidance, at least on questions related to the ?integrity and business ethics??); Algese, 125 Fed. Cl. at 441?43 (?nding that a deferred prosecution agreement fell under the de?nition ?otherwise criminally charged?). The decisions in Algese and Impresa by the Federal Circuit and the Court of Federal Claims, on remand, are illustrative of these legal principles in play. For example, in Algese, the protestor alleged that the awardee failed to properly certify that one of its principals was presently indicted for violating the Foreign Corrupt Practices Act an offense required to be disclosed under FAR 52.209-5 and FAR The individual in question was a 25% shareholder of the Peter D. Verchinski, Esq. February 2, 2018 Page 47 offeror?s parent company. Id. at 441-42. The Court, in holding that the agency acted unreasonably in ?nding that the offeror is responsible, found that the agency?s assessment disregarded the full de?nition of ?principal.? Id at 442. The Court further held that the agency?s acceptance of offeror?s (false) responsibility certi?cation, without any meaningful assessment of same, rendered the responsibility determination arbitrary and capricious. Id. at 443. In Impresa, the Court, after remand, found that the agency unreasonably failed to conduct ?an independent and informed responsibility determination.? Impresa, 52 Fed. C1. at 426-28. Although a principal was presently indicted, this was not disclosed by the offeror in connection with its responsibility certi?cation. Impresa, 238 F.3d at 1340. Because the agency easily could have learned of the indictment and the individual?s ongoing connection with the offeror, the Court held that the agency erred by not investigating the matter, or otherwise probing the accuracy of the offeror?s responsibility certi?cation. Id. at 1329; 52 Fed. Cl. at 426-28. B. The Agency Unreasonably Failed To Consider False Certi?cation Regarding Its ?Blacklisted? Parent Corporation Under FAR And FAR In addition to falsely certifying responsibility matters, KGL FS also failed to submit an accurate and complete disclosure of its corporate organization, which was required under FAR See EX. 16 at 39. Although neither the GAO nor Court of Federal Claims have directly addressed the purpose of corporate disclosure certi?cation requirements under FAR it is generally understood that it is to assist the contracting of?cer in determining an offeror?s responsibility. See, e. Universal 6011., Inc., B-248808.5 at see also FAR Indeed, only if the contracting of?cer has a full appreciation of an offeror?s corporate organization can he/she meaningfully assess the offeror?s responsibility. Peter D. Verchinski, Esq. February 2, 2018 Page 48 Here, KGL is 99% owned by KGLT Parent and 1% owned by KGL-Logistics. KGL- Logistics is 47.35% owned by KGLT Parent, as illustrated in the diagram below: ?1 KGLT Parent KGLT Logistics arr?! See ?Statement of Facts and Relevant Background,? Section V.A, supra. Given this corporate organization, KGL was obligated to certify in the af?rmative the existence of a parent company and, in accordance with FAR disclose the CAGE code and legal name of the parent companies. KGL failed to do so, which deprived the contracting of?cer of a critical piece of information relevant to the required responsibility determination. Had KGL FS accurately certi?ed its corporate organization, the Agency would have had no reasonable basis to award the SPV contract to KGL given the signi?cant criminal, civil, and administrative actions involving KGLT Parent and other KGL entities. As such, KGL false certi?cation in this regard was outcome determinative and highly prejudicial to ANHAM. VII. THE AGENCY UNREASONABLY EVALUATED KGL TECHNICAL PROPOSAL Offerors had to demonstrate a technical approach that met the Solicitation requirements, including the requirements described in the Statement of Work. EX. 16A at 125 -126. As detailed above, a contractor?s ability to access the ports of Kuwait is critical for successful performance of Peter D. Verchinski, Esq. February 2, 2018 Page 49 the SPV contract, as is the long?term access to suitable warehouse facilities located at or very near the ports of Kuwait. Because KGL FS is no more than a shell company and no longer has access to the ports or to warehouse facilities owned by KPA arising out series of criminal, civil, and administrative actions against KGL entities and principals, the Agency unreasonably evaluated KGL S?s proposal under each technical factor discussed below. Had the Agency known of and properly considered this information, it would have downgraded KGL ratings under each criterion or made a determination of technical unacceptability. Since this unreasonable technical evaluation formed the basis of the Agency?s award decision, it was prejudicial to ANHAM, which would have been the highest?rated, and only technically acceptable offeror next in line for award. A. The Agency Unreasonably Evaluated Proposal Under Factor I, Warehouse, Location And Capacity As described in Section I.D.2 of the ?Statement of Facts and Relevant Background? provided above, the Solicitation contained detailed and af?rmative requirements to (1) have access to the ports of Kuwait, (2) maintain suitable warehouse facilities in Kuwait. Importantly, KGL loss of access to the ports and inability to maintain suitable warehOuse facilities (including appropriate zoning for food storage), as explained in Greenlea? gave rise to its duty to disclose. Because KGL FS apparently failed to meet this obligation, the Agency did not properly evaluate the technical approach and resources as they existed at the time of award, nor did such a technical approach accurately represent the intended manner of performance. Therefore, the Agency?s evaluation under Factor I was fundamentally ?awed. As relevant to Factor I, the Solicitation stated that the Agency would evaluate an ?offeror?s proposed distribution network? and ?[t]he location of warehouses and facilities, as well as the nature Peter D. Verchinski, Esq. February 2, 2018 Page 50 of and risk attendant with the offeror?s access to and control over said warehouses and facilities will be evaluated.? Ex. 16A at 146. The Solicitation also provided that the Agency would evaluate the physical OCONUS facilities, open capacity, layout and available yard space for staging of inbound and outbound product and their capability to ship and receive simultaneously. Ex. 16A at 146. It appears painfully and plainly obvious that, in order to be evaluated as ?outstanding? or ?good? or merely ?acceptable? under this factor, an offeror must actually have available ?warehouses and facilities, as well as the . . . access to and control over said warehouses and facilities.? Despite lacking such facilities and access (through ports controlled by the KPA), the Agency for an unknown reason rated KGL FS as ?outstanding.? To that end, the Agency?s evaluation decision under this factor is unreasonable for this fact alone; however, the Agency could have known these facts only if KGL FS had properly disclosed them. Notwithstanding the apparent lack of fault on the part of the Agency, its evaluation is based on a ?awed premise. If the Agency properly considered KGL unavailable facilities and lack of port access as they existed at the time of award, it would have found KGL to be technically unacceptable. B. The Agency Unreasonably Evaluated Experience Under Factor Assignment Of An ?Acceptable? Rating To KGL Was Unreasonable In light of the required experience under Factor 11, a shell company such as KGL S, which holds neither prior or existing US. Government contracts, nor likely any potential commercial contracts of comparable size and scope, could not have reasonably received an ?acceptable? rating. The Agency?s intended method of evaluation of Factor 11 consisted of evaluation of each offeror?s record of experience as demonstrated by the ?ve comparable contracts. Ex. 16A at 146. The Agency considered contracts relevant based on ?experience performing deliveries as a full line Peter D. Verchinski, Esq. February 2, 2018 Page 51 food service distributor, experience performing deliveries in contingency operations, dollar value, and number of customers.? Id. Importantly, the Solicitation pointed out that [t]he most relevant experience, and that which will receive the most credit, however, is the information directly related to the offering entity.? As stated above, KGL FS has neither performed, nor holds, any US. Government contracts. Further, the capitalization of its business, which stands around $150,000, is miniscule in comparison to the dollar value of this contract, which the Agency estimates at $1.3 billion. Ex. 1, BO Award Notice. Thus, it appears unlikely that such a small company?a company that appears to have no operations and no contracts of any kind?has the requisite experience to perform the SPV contract (or any comparable commercial contract), which entails the vetting, procuring, forecasting, transporting, warehousing, inventory managing, picking, packing and delivering over 600 product lines to multiple customers in several countries in varying conditions. Therefore, the Agency unreasonably rated KGL FS as ?acceptable? under this factor and should have determined KGL F8 to be ?unacceptable? C. The Agency 'Unreasonably Evaluated Under Factor By Failing To Give Consideration Circumstances In Kuwait Undermining Quality Control, Assurance, and Warehouse Management System Procedures. Evaluation of Factor consisted of the following: The offeror?s quality control and warehouse procedures will be evaluated to determine if the quality requirements of the instant solicitation will be met. Product movement procedures, warehouse management systems, inventory rotation methods, quality assurance positions, open date of pack labeling procedures, shelf life procedures, and warehouse management system access for Government personnel will be assessed. Ex. 16A at 147. Like Factor I, it would also appear evident that having an available warehouse is a fundamental requirement of assessing whether an offeror?s quality control, assurance and Peter D. Verchinski, Esq. February 2, 2018 Page 52 management system procedures are, at the very least, suitable to that available warehouse. Where an offeror, such as KGL S, proposes a facility, but that facility is not actually available for performance, it begs the question of how effective any sort of quality control and warehouse procedures might be. Furthermore, these procedures are to be evaluated against the ability to comply with the quality requirements of the Solicitation, which, without a facility, would be impossible to meet. In other words, an offeror need not bother to propose any facilities at all if due consideration to the actual and available facility is not given. Moreover, the SOW requires handling of cold, refrigerated, frozen, perishable and semi-perishable foods. E. EX. 16A at 10, 35, 87. Without proper warehousing facilities, these quality requirements could simply not be maintained. Therefore, it is implicit that the actual and available facilities be considered in evaluating a proposal under Factor Where KGL no longer has such facilities, the Agency?s ?outstanding? rating is wholly unreasonable. Accordingly, the Agency should have found KGL FS to be ?unacceptable under this factor. Further, KGL does not have any current business with the US. Government and apparently none in the commercial market. It appears that, without some prior experience, it would be extremely difficult to propose viable procedures that could maintain the quality requirements of this procurement. D. The Agency Unreasonably Evaluated Financial Resources Under Factor IV, Resource Availability As discussed in Section V.A of the ?Statement of Facts and Relevant Background? provided above, publicly available information reveals that KGL has a capitalization of just $150,000. Peter D. Verchinski, Esq. February 2, 2018 Page 53 This is profoundly inadequate in light of the size of the SPV procurement and the requirement to ?nance contract operations. Under the Resource Availability Factor IV, the Solicitation provided that the Agency would evaluate ?each offeror?s resources, including a ?nancial assessment by the Defense Contract Management Agency. Ex. 16A at 147. Importantly, the Solicitation also warned that offerors demonstrating existing resources and agreements with carriers would ?generally be rated more favorably than those without.? Id. Here, KGL exists as company without any apparent tangible assets of any kind and, according to Kuwait Ministry of Commerce, KGL FS currently is severely undercapitalized. The SPV contract has an estimated maximum value of over $1.3 billion (see Ex. I), nearly 8,700 times its capitalization. It is apparent that cash ?ow available to KGL is not nearly suf?cient to store, maintain, and deploy the immense volume of food throughout several countries. Therefore, it appears that the Agency unreasonably rated KGL FS as ?good? and seemingly failed to consider the information regarding its weak ?nancial posture. As such, the Agency should have rated the company ?unacceptable? under this factor. E. The Agency Unreasonably Evaluated Implementation and Management Plans Under Factor V, Implementation And Management Plans; Assignment Of A ?Good? Rating To KGL Was Unreasonable As stated above, the Solicitation stated that the Agency would, under Factor V, evaluate each offeror?s implementation plan from contract award to fully operational capability and proposed procedures for seamless implementation. Ex. 6A at 147. It explicitly cautioned that offerors who will be less dependent upon Government action will generally be rated more favorably than those who will be more dependent. See id. The Agency would also examine the offeror?s identi?cation of Peter D. Verchinski, Esq. February 2, 2018 Page 54 key personnel, by position, and their relevant individual experience, in order to determine the anticipated success of providing service to customers. Id. It is apparent from KGL S?s (1) lack of warehousing facilities and lack of port access due to the ?blacklisting,? and (2), lack of experience and ?nancial resources due to its existence as no more than a shell company with inadequate capitalization and assets, KGL FS cannot have met the requirements under Factor V. Indeed, it is clear that KGL FS will not be able carry out its performance in the manner proposed, primarily as a result of its lack of key assets?warehouse facilities and access to the Kuwait ports. These are crucial components required for implementation of the SPV contract requirements. Thus, KGL FS will be more dependent, not less, upon Government action and therefore should not have been rated ?good.? The Agency apparently failed to consider the full effect of the lack of facilities and port access, as well as the inadequate experience and ?nancial capability in reaching its conclusion. Therefore, it appears that the Agency based its rating on defective information, which is unreasonable. THE AGENCY UNREASONABLY EVALUATED KGL PAST PERFORMANCE KGL FS may have presented an appearance of a legitimate company that is capable of performing the SPV contract. In reality, however, KGL is merely a shell company lacking any legitimate business activities and the requisite experience and resources to perform the contract requirements. As such, the Agency could not have relied on past performance information of KGL FS itself?certainly not any government contracts performed by KGL S?in assessing KGL FS a ?satisfactory confidence? rating under the past performance factor. Indeed, publicly available databases (usaspendinggov; fpds.gov) indicate that KGL has performed US. Government contracts. Peter D. Verchinski, Esq. February 2, 2018 Page 55 Although the Solicitation provides that an offeror may submit commercial contracts as a basis for assessing past performance, it stands to reason that KGL company with only $150,000 in capital and no other identi?able tangible assets?wOuld be hard-pressed to win and successfully perform any commercial contracts of any signi?cance. Here, the Agency estimated that the SPV contract has a total contract value of $689,510,298.37 and a maximum value of $1.3 billion. See Ex. 1. Surely, KGL FS has never performed any commercial contract with a similar size or scope as the SPV contract. The Solicitation provides that ?[t]he most relevant past performance, and that which will receive the most credit, however, is the information directly related to the offeror.? Ex. 16A at 132. The Solicitation also states that, in determining relevance, the Agency would evaluate past performance for ?[t]hose aspects of relevancy include similarity of experience performing as a full line food distributor in contingency operations, dollar value, and number of customers supported.? Id. at 148. Notably, the Solicitation contained no rating scale or de?nitions associated with the Agency?s evaluation of past performance. See Protest at 15, n. 14. Nevertheless, based on these criteria, the Agency gave KGL a ?satisfactory confidence? rating, suggesting that KGL FS submitted some past performance information rather than none (which would have likely resulted in assessment of a ?neutral? rating). Given that KGL FS has never performed a US. Government contract, has not performed a contract awarded by the Government of Kuwait within the last three years, and could not have possibly performed a commercial contract of similar size and scope given its lack of capital and assets, the Agency?s assessment of a ?satisfactory confidence? rating is unreasonable. Peter D. Verchinski, Esq. February 2, 2018 Page 56 To the extent KGL FS submitted the past performance information of other KGL entities, in order to receive evaluation credit, KGL was required to clearly demonstrate ?that team member will have meaningful involvement in the performance of the resultant contract.? EX. 16A at 132. If KGL relied on the past performance of other KGL entities to achieve the ?satisfactory confidence? rating, the Agency?s assignment of this rating suggests that the Agency did not meaningfully evaluate the risks of these other entities? involvement given the ongoing criminal, civil, and administrative actions in Kuwait. CONCLUSION AND REQUEST .FOR RELIEF In consideration of the foregoing and the protest grounds detailed in initial protest, ANHAM respectfully requests a decision by the GAO sustaining this protest and recommending and directing such relief as follows: 1. Issue a ruling sustaining this supplemental protest. 2. Recommend that the Agency terminate KGL S?s award due to KGL S?s non? responsibility and technical unacceptability, and award a contract to ANHAM as the best value offeror. 3. In the alternative, re-evaluate Whether KGL S?s responsibility and technical acceptability with consideration to the information discussed in this protest to determine whether KGL FS is presently responsible and eligible for award and the ratings it was assigned by DLA. 4. Declare that ANHAM is entitled to its reasonable cost of: filing and pursing this protest, including attorneys? fees; and proposal preparation. 5. Make such other recommendation as it determines necessary to promote compliance and any revisions or amendments to the same. Peter D. Verchinski, Esq. February 2, 2018 Page 57 SPECIFIC REQUESTS FOR DOCUMENTS Pursuant to 4 C.F.R. 21 and ANHAM requests that the Agency produce the following documents,13 whether or not the Agency intends to include such documents with the Supplemental Agency Report. ANHAM reserves the right to supplement this request to the extent the existence or relevance of additional documents becomes evident from the Supplemental Agency Report. All of the documents requested below are relevant to this supplemental protest. 1. All documents concerning the Agency?s determination of KGL responsibility. 2. All KGL FS certi?cations reviewed by the contracting of?cer. 3. All communications between KGL and the Agency related to responsibility issues, including any updates of certi?cations. 4. All communications between KFL FS and the Agency regarding KGL S?s proposal, including any updates to re?ect changes to the proposed technical solution. 5. All documents re?ecting the Agency?s knowledge or awareness of termination of a contract awarded to a KGL entity due restriction on port access and privileges imposed by the KPA. 6. All documents and reports supporting the Agency?s determination of KGL responsibility, as required by FAR 9.105-2. 7. All documents addressing the Agency?s assessment of KGL ?nancial resources, including the ??nancial assessment? to be performed by the Defense Contract Management Agency under Factor IV of the evaluation criteria. See EX. 16A at 147. 8. Any documents or communications between the Agency and third parties regarding warehouse facilities proposed by the offerors. 13 The term ?documents? includes, but is not limited to, all written, stored, or recorded communications or information of any kind, including, but not limited to electronic mail. In addition to documents and copies or duplicates of documents, these requests also include electronic documents or communications, whether or not previously printed in hard copy. Peter D. Verchinski, Esq. February 2, 2018 Page 58 9. Any analysis of the work allocation between KGL and proposed team members, including other KGL entities, in connection with the evaluation of past performance and experience. 10. All communications with the KPA and/or Kuwaiti Customs relating to the procurement. 11. All documents relating to investigations of KGL entities relating to this procurement. Respectfully Submitted, Respectfully submitted, Vedder Price P.C. DLA Piper LLP Richard P. Rector C. Bradford Jorgensen Eric J. Marcotte Eric P. Roberson Kelly E. Buroker Tamara Droubi Counsel for ANHAM ZC 0 Counsel for ANHAM ZCO Eric J. Marcotte Vedder Price, PC. 1401 I Street, NW, Suite 1100 Washington, DC 20005 emarcotte@vedderprice.com 202-312-3336 (direct) 202-312-3322 (facsimile) cc: Linda L. Ford (Contracting Of?cer) inda.ford@dla.mil Raynard Jamison raynard.iamison@dla.mil Robert Schaper, Esq. (Counsel for DLA) - Robert.Schaper@dla.mil