Agency Failed to Determine Whether Awardee Was Same Entity as Contractor on Approved Source List; GAO B-416277, United Valve Company

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Protest arguing the agency failed to determine the identity of the entity selected for award is sustained, where the solicitation required the contract be awarded to one of the approved sources identified in the solicitation by specific CAGE codes, but the agency made award to an entity that identified itself by a different CAGE code.

United Valve Company protested the Defense Logistics Agency’s award of a contract for stability damper assemblies for the UH-1 helicopter to Logistical Support LLC, arguing that the entity receiving award does not appear to be an approved source as required by the solicitation.

The RFP identified four approved sources for the assemblies, including the protester and awardee, including their commercial and government entity codes and the firm’s part number for the product. The RFP mandated that the item be procured in accordance with the approved source(s), the respective CAGE code, and the part numbers identified in the solicitation.

The solicitation identified LSL’s CAGE code as 55064. However, LSL’s proposal and SAM entry used CAGE code 1HFE7. In addition, LSL’s documentation referenced at least two different business locations. The proposal did not reference CAGE code 55064. When the agency contracted LSL to address the discrepancy, LSL explained that both CAGE codes belonged to the same facility as stated in the SAM registration, and indicated the quote could be changed to reflect code 55064. The agency accepted this explanation and found LSL’s proposal to be technically acceptable. After being informed of the award decision, United filed an agency-level protest and a separate challenge with GAO.

United argued that the entity that submitted the proposal accepted for award is not the same as the approved source in the solicitation, and therefore LSL is not eligible for award. According to United, it was unreasonable for the agency to conclude the entities were the same legal entity merely because they shared a location.

As an initial matter, the agency argued that United’s protest was an untimely challenge to the terms of the solicitation. The agency argued United should have challenged LSL’s inclusion as an approved source, which was apparent from the face of the solicitation, prior to the closing date, rather than after award. In response, United explained that it did not challenge the sources identified in the solicitation, but LSL’s status as one of those sources.

GAO agreed. The solicitation required that a product, manufacturer, or source be qualified prior to award whether or not the product, manufacturer, or source was included on the qualified products, manufacturer, or bidders list. Therefore, the protester’s argument—that LSL was not the same entity identified as an approved source in the solicitation and could not meet the Qualification Clause at the time of award—could only have been brought after award.

On the merits, United argued the award was improper because the CAGE code identified in LSL’s proposal did not match the approved source’s CAGE code required by the RFP. Additionally, because CAGE codes and DUNS numbers are used to identity discrete businesses, United argued it was unreasonable for the agency to conclude that the presence of two different CAGE codes at the same address must belong to the same entity. Finally, United maintained that the agency’s statements and the record did not support the agency’s conclusions.

In support of its arguments, United offered a decision in which DLA sustained an agency-level protest against a similar award to LSL for damper assemblies identified by the same NSN as this solicitation. In that decision, United asserted that LSL did not exist any longer and DLA concluded that the company that submitted a quotation in LSL’s name lacked the capacity to do so.

In response, the agency explained that SAM listed the different CAGEs as being part of the same parent company. Further, the agency noted that each CAGE is required to have a different DUNS number even if they are in the same location. The agency’s response also included a SAM Registration and a Dun & Bradstreet business information report, both of which were dated April 26, after the protest was filed. The SAM registration printout included an “entity list” showing multiple entities, including LSL. The D&B Report for the approved source stated that LSL is an affiliate of the approved source.

According to GAO, the record did not establish that LSL is the same legal entity as the approved source or that LSL was qualified to offer the item. While the SAM registration showed that the entities associated with CAGE codes 55064 and 1HFE7 are both named Logistical Support LLC and have the same address, GAO noted that each entity possessed a different CAGE code, DUNS number, DBA name, and activation date. The SAM registration and D&B report offered by the agency identify multiple entities associated with the single address and a parent/affiliate relationship between LSL and the approved source. Finally, various sources—including LSL’s proposal, the SAM registration, and the D&B report—demonstrate the two entities had different identifying information.

Despite these discrepancies, GAO found no evidence documenting the specific relationship between the two entities. Moreover, the agency failed to explain how it concluded that the entities being co-located at the same facility allowed LSL to use the approved source’s CAGE code. Given the RFP’s requirement that the item be obtained through an approved source, GAO found the agency’s conclusions regarding LSL’s status to be unreasonable. GAO recommended the agency determine and document whether LSL is qualified and eligible for award and, if not, make a new award decision.

United Valve Company is represented by David T. Ralston Jr., Frank S. Murray, Micah T. Zomer, and Krista A. Nunez of Foley & Lardner LP. The government is represented by Niketa Wharton, Defense Logistics Agency. GAO attorneys Lois Hanshaw and Christina Sklarew participated in the preparation of the decision.

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