THIS OPINION WAS INITIALLY ISSUED UNDER PROTECTIVE ORDER AND IS BEING RELEASED TO THE PUBLIC IN ITS ENTIRETY ON NOVEMBER 8, 1993 ___________________________________________________ DENIED IN PART/DISMISSED IN PART: November 2, 1993 ___________________________________________________ GSBCA 12611-P INTEGRATED SYSTEMS GROUP, INC., Protester, v. DEPARTMENT OF THE ARMY, Respondent. Shelton H. Skolnick, Judy D. Leishman, Amy M. Hall, Wayne W. Finegar, II, and Bruce Trimble of Skolnick & Leishman, Derwood, MD, counsel for Protester. Col. Riggs L. Wilks, Jr., Maj. Charles R. Marvin, Jr., Maj. Karl M. Ellcessor, III, and Capt. Gerald P. Kohns, Office of the Chief Trial Attorney, Department of the Army, Arlington, VA, counsel for Respondent. Before Board Judges HYATT, WILLIAMS, and DEGRAFF. HYATT, Board Judge. Integrated Systems Group, Inc. (ISG) has challenged the rejection of its proposal by respondent, the Department of the Army, to supply automated data processing equipment and services pursuant to solicitation number DAKF49-92-R-0017. Respondent has filed a motion to dismiss the protest for lack of an interested party or, in the alternative, a motion for summary relief[foot #] 1. The basis for the motion is ISG's incorrect certification that it had not been subject to any ----------- FOOTNOTE BEGINS --------- [foot #] 1 Hereinafter, for the purpose of citing to the attached exhibits, respondent's motion is referred to as "Motion for Summary Relief." ----------- FOOTNOTE ENDS ----------- terminations for default of any contract with a federal agency for the three years preceding its offer. Background 1. Solicitation number DAKF49-92-R-0017 sought offers to configure, furnish, deliver, install, and provide software technical support and training for a computer system for the Army Medical Department Center and School in Fort Sam Houston, Texas. The equipment to be provided included 80486 central processing unit (CPU) workstations. Protest File, Exhibit 1. 2. Pursuant to Federal Acquisition Regulation (FAR) clause 52.209-5, section K of the solicitation included the following certification, which provides in pertinent part: CERTIFICATION REGARDING DEBARMENT, SUSPENSION, PROPOSED DEBARMENT, AND OTHER RESPONSIBILITY MATTERS (MAY 1989) (a)(1) The Offeror certifies, to the best of its knowledge and belief, that -- . . . . (ii) The Offeror has / / has not / /, within a three year period preceding this offer, had one or more contracts terminated for default by any Federal agency. . . . . THIS CERTIFICATION CONCERNS A MATTER WITHIN THE JURISDICTION OF AN AGENCY OF THE UNITED STATES AND THE MAKING OF A FALSE, FICTITIOUS, OR FRAUDULENT CERTIFICATION MAY RENDER THE MAKER SUBJECT TO PROSECUTION UNDER SECTION 1001, TITLE 18, UNITED STATES CODE. (b) The Offeror shall provide immediate written notice to the Contracting Officer if, at any time prior to contract award, the Offeror learns that its certification was erroneous when submitted or has become erroneous by reason of changed circumstances. . . . . (e) The certification in paragraph (a) of this provision is a material representation of fact upon which reliance was placed when making award. Protest File, Exhibit 1, K.12. 3. In letters dated February 16, 1993, addressed to Valix Federal Partnership I, the Army terminated for default two contracts for the delivery of 80486 personal computers. The reasons stated included failure to deliver conforming goods. Motion for Summary Relief, Exhibits 2-3. Valix appealed these termination decisions to the Armed Services Board of Contract Appeals (ASBCA) on March 11, 1993. Motion for Summary Relief, Exhibit 4. A settlement agreement, signed by the contracting officer on September 30, 1993, subsequently converted the two terminations for default to terminations for the convenience of the Government. Motion for Summary Relief, Exhibit 14. 4. ISG submitted an initial proposal responding to the subject solicitation on April 10, 1993. At that time, ISG affirmatively certified that it had not "had one or more contracts terminated for default by any Federal agency." Protest File, Exhibit 6. 5. In a letter addressed to Integrated Systems Group, and dated May 15, 1993, the U.S. Army Information Systems Selection and Acquisition Agency (ISSAA) terminated for default a contract to supply computer equipment for, among other reasons, failure to deliver conforming equipment. ISG acknowledged receipt of this letter on May 26, 1993. Motion for Summary Relief, Exhibit 6. 6. In a revised offer submitted to the Army on June 15, 1993, ISG included what it referred to as "corrected Section K pages." None of these corrected pages altered the prior certification concerning default terminations. Protest File, Exhibit 6. 7. On July 12, 1993, ISG appealed the ISSAA default termination action to the Armed Services Board of Contract Appeals. Motion For Summary Relief, Exhibit 7. This appeal is still pending. 8. In an amendment to the solicitation dated July 8, 1993, the Army added the following provision: The Contractor shall submit with his proposal a history of recent experience (within the last five years) in providing services similar to those described in the performance statement. . . ; The description shall include a minimum of three references to include company name, points of contact, addresses with associated telephone numbers and types of equipment. Protest File, Exhibit 5. ISG responded to this solicitation amendment in a letter dated July 20, 1993. The letter provides three references but makes no mention of the terminations of the Valix contracts or of the ISG contract. Protest File, Exhibit 18. 9. In a letter dated September 9, 1993, the contracting officer reopened written discussions with ISG for the specific purpose of addressing concerns regarding the quality of performance. The contracting officer requested further information with respect to a particular contract, awarded to Valix, for similar equipment: 1. Your offer is for Integrated Systems Group (ISG) brand workstations (CLIN 0001AB). There are unresolved problems on a contract awarded by the Contract Administration Division in our Directorate on 29 October 1992 . . . for ninety-four (94) computer workstations (similar to the instant procurement) to Valix Federal Partnership. . . . Numerous memorandums from various users in the contract file indicate problems with the equipment. . . . . 3. Since there are known deficiencies in your equipment, how will the offer on this procurement be different to ensure a high quality, reliable system with sound performance? Are there any other customers who have experienced difficulties with the equipment? What has your research shown to be the cause of the problems? Protest File, Exhibit 16 (emphasis added). 10. ISG responded to this inquiry in a letter dated September 13, 1993. In part, ISG stated: ISG disputes many of the details of the September 9, 1993 letter. ISG chooses not to respond to each allegation at this time. The contract referenced was the first contract requiring delivery of over 90 systems that Valix/ISG won and occurred almost a year ago. Since that time we have performed on PC [personal computer] contracts with an aggregate value of over $2M without any major problems. Major changes to all aspects of the ISG manufacturing facility have been instituted since that time. ISG made these changes in order to eliminate problems and are [sic] convinced that future contract performance will not be an issue. We are not aware of other contracts having difficulties [as] extensive as the ones alleged in your letter. Protest File, Exhibits 6, 18. 11. In a memorandum written on September 17, 1993, the contracting officer issued a determination that ISG's proposal was technically unacceptable. The memorandum details the problems experienced with similar ISG brand workstations delivered under a contract with Valix. Given the problems with this contract, and the unsatisfactory responses provided by ISG to the reopened discussions directed at this issue, the contracting officer deemed ISG to be technically unacceptable. Protest File, Exhibit 16. 12. Subsequently, the contracting officer learned of the terminations for default of the two Valix contracts and the ISG contract. On October 7, 1993, a letter was issued to ISG informing it that its failure to properly notify the contracting officers of those three default termination actions was a material misrepresentation which left the Government no alternative but to eliminate ISG from the procurement. Protest File, Exhibit 16. Discussion The Army contends that ISG's failure to disclose the three termination actions constituted a material misrepresentation which disqualified ISG from the procurement. ISG's protest should therefore either be dismissed for lack of an interested party or, in the alternative, denied summarily since the controlling facts are not in dispute. Since ISG is an interested party to challenge the determination of ineligibility, we deem this issue to be one more properly addressed by the motion for summary relief. The standard by which a motion for summary relief, or summary judgment, should be measured is whether there are any genuine issues of material fact to be resolved that would affect the outcome of the case. Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 248 (1986); Stroh Corp. v. General Services Administration, GSBCA 11029, 93-2 BCA 25,841. In considering a motion for summary relief, we draw all inferences in favor of the non-moving party. See Reliance Insurance Co. v. United States, 931 F.2d 863, 865 (Fed. Cir. 1991). ISG maintains that it should not have been disqualified from the procurement and that its failure to inform the Government of the default actions does not disqualify it from the procurement. ISG further asserts that the Board cannot decide this matter summarily because there are disputed facts material to the outcome of the case. Specifically, ISG contends that the Valix contracts that were defaulted cannot be ascribed to ISG and that the ISG contract that was defaulted was not for ISG equipment. In a recent decision, the Board has extensively addressed the duty to disclose default termination actions under this certification. RMTC Systems, Inc. v. Department of the Air Force, GSBCA 12346-P, 93-3 BCA 26,046, 1993 BPD 129, aff'd on reconsideration, 1993 BPD 169 (June 21, 1993). In RMTC Systems, the offeror had, like ISG, affirmatively certified that it had not been subject to any default termination actions by any federal agencies for the prior three years. In evaluating proposals, the contracting officer received information that RMTC had in fact had a contract terminated for default and that that default action had been upheld by the ASBCA. On the basis of this information, the contracting officer declared RMTC Systems to be nonresponsive and thus ineligible for award. In its defense, RMTC explained that its miscertification was not intentional but was the result of lack of knowledge on the part of a new employee who was simply unaware of the termination action. RMTC further argued that the matter was a clerical error that could readily have been clarified by the contracting officer. The Board rejected RMTC's efforts to diminish the importance of the certification, noting that inclusion of the clause in the solicitation is mandatory under the Federal Acquisition Regulation (FAR) and that the clause itself expressly cautions offerors that the representation made is "material." The Board found the miscertification to be a material misrepresentation that compromised the integrity of the procurement process. Thus, the Board denied the protest on the ground that the contracting officer had properly eliminated RMTC from the procurement because of the false certification. Because the factual record is inadequate to impute the first two default terminations of Valix contracts to ISG, to decide this motion we focus only on the third termination, which plainly involved an ISG contract. Moreover, ISG does not dispute that this contract was terminated for default, nor does it claim to have notified the contracting officer of this fact. Instead, ISG urges that the circumstances in this procurement are distinguishable from those in RMTC Systems because (1) the equipment to be supplied under the defaulted contract was not manufactured by ISG, and (2) in RMTC Systems the ASBCA had upheld the default termination. Here, ISG points out, the default termination has been appealed to the ASBCA and that appeal has not yet been decided. Neither of these distinctions is persuasive. The certification unequivocally calls for disclosure of any default action applicable to the offeror. The fact that different equipment was supplied under the defaulted contract is irrelevant to the offeror's duty to certify accurately and to properly update the certification to inform the contracting officer of termination or debarment actions occurring after submission of the initial proposal and prior to award. ISG failed to correct its certification despite the fact that it had occasion to correct other certifications in a submission that was made subsequent to the third termination action. This is in direct violation of the plain terms of the certification requirement. In addition, the filing of an appeal of the termination did not negate the fact of the termination action which the certification requires ISG to report to the contracting officer. In conclusion, the contracting officer properly disqualified ISG from further participation in the procurement on the basis of its failure to update its certification. ISG's protest of this action is denied. Since ISG is not eligible for award, the remaining allegations of the protest must be dismissed for lack of an interested party. See, e.g., Datasouth Computer Corp., GSBCA 10536-P, 90-2 BCA 22,794, 1990 BPD 74. Decision Respondent's motions are GRANTED. The protest is DENIED IN PART and DISMISSED IN PART. ______________________________ CATHERINE B. HYATT Board Judge We concur: _______________________________ _______________________________ MARY ELLEN COSTER WILLIAMS MARTHA H. DEGRAFF Board Judge Board Judge