Opinion ID: 185063
Heading Depth: 2
Heading Rank: 3

Heading: Present Controversy

Text: 15 This brings us to the present controversy. On January 30, 1998, the Army 1 issued a solicitation for the Iceland trade, specifically stating that awards would be allocated [p]ursuant to the Treaty and its implementing Memorandum of Understanding. Of course, the solicitation stated numerous other requirements for bidders to meet. Those we mention here are relevant to appellees' non-treaty related challenges. The solicitation required the Contracting Officer to make an affirmative determination of offer or responsibility. It cited to Federal Acquisition Regulation (FAR), Subpart 9.1 on Responsible Prospective Contractors, which mandates that an awardee [h]ave adequate financial resources to perform the contract, or the ability to obtain them. 48 C.F.R. S 9.1041(a) (1998). The solicitation also stated that each offer should include sufficient evidence to establish control or irrevocable right to gain control of the necessary vessels in sufficient time to commence service on [the contract start date]. 16 The solicitation stated that offers were due on March 5, 1998, and the contracts had a proposed starting date of May 1, 1998 because the prior contracts were set to expire on April 30, 1998. Due to delays in the bidding process, the proposed start date was moved back to November 1 and the incumbent carriers given a six month extension. 17 TLI and TLL each submitted bids. 2 TLI and TLL have substantially similar ownership and are principally managed by Gudmundur Kjaernested, who is a citizen of Iceland and United States resident. At the time the original bids were submitted, Kjaernested and Brandon C. Rose, a United States citizen, were the primary owners of both companies. Despite this close relationship, TLI and TLL are separate corporate entities. TLL is a limited liability company registered in Delaware, and TLI is an Icelandic company registered in Iceland. 18 The Army announced the awards on September 18, 1998.TLI, the Icelandic company, was the lowest overall bidder and the Army awarded it a contract covering 65 percent of the trade. The Army awarded TLL a contract for the remaining 35 percent because it was the lowest bid among U.S. flag carriers. 19 The Contracting Officer also made the required determination that each company was a responsible contractor. As to TLI, the Contracting Officer cited a bank letter tentatively approving a $1 million credit line to TLL. This letter noted the bank's prior history with TLI and TLL stockholder Brandon Rose as being important in setting up the line of credit. The Contracting Officer also had a letter from Kjaernested stating that the credit line was available to both TLI and TLL. As toTLL, the Contracting Officer's responsibility determination concluded that TLL had the necessary equipment and facilities to perform this contract. Before the officer were four letters from marine companies pledging vessels, with varying levels of specificity. 20 Eimskip and Van Ommeren filed protests with the U.S. Government Accounting Office (GAO). Under the Competition in Contracting Act, this action automatically stayed the awards. See 31 U.S.C. § 3553(b)-(d) (1994). On October 23, 1998, approval to override the stay was granted by the Assistant Secretary of the Army. Eimskip then filed this suit in the district court causing the GAO to dismiss the bid protest. See 4 C.F.R. § 21.11 (1997). TLL, TLI, and Van Ommeren timely intervened. 21 During this same period, the government of Iceland sent a diplomatic note to the U.S. Department of State protesting the awards. Citing the Treaty and MOU, Iceland stated two problems it had with the awards to TLI and TLL: (1) that as commonly owned companies, TLI and TLL could not be awardees, and (2) that TLI was not a true Icelandic shipping company. Specifically, the note stated: 22 The Government of Iceland has concluded, based on available information, that [TLI and TLL] are affiliated companies under common direction, ownership and/or control of Icelandic citizens, and that [TLI] lacks the necessary experience, technical capability, financial responsibility, and material connection with Iceland 23 ........ 24 ...[T]he Government of Iceland interprets the Treaty and [MOU] to preclude awards by the [Army] of both the Icelandic and United States portions of the trade subject to the Treaty and [MOU] to affiliated companies under common direction, ownership and/or control. 25 ... [T]he Government of Iceland interprets the Treaty and [MOU] to preclude any award of the Icelandic portion of that trade to any company that lacks the experience, technical capability, financial responsibility, and material connection with Iceland that are necessary to ensure ... maintenance of a viable presence of Icelandic shipping companies in that trade providing for the security of Iceland and the equitable participation of Iceland in the benefits of the Defense Agreement.... 26