The U.S. Government Accountability Office on March 28 upheld a protest by contractor Pernix Group Inc. to a U.S. State Dept. decision that it was not eligible to bid on a design-build contract for a new $247-million consulate compound in Adana, Turkey.

GAO sustained the protest by its unit Pernix Federal of that decision,  terming the department’s eligibility reversal “unreasonable.” 

It ruled that the firm's link with BE&K Building Group, a wholly owned subsidiary of the parent acquired in 2015, “may reasonably be considered both a de facto joint venture and eligible to bid on the contract” under federal Security Act prequalification requirements.

Pernix, based in Lombard, Ill., submitted a project technical and price proposal last September, after the department’s Bureau of Overseas Buildings Operations, which manages design, construction and operation of all U.S. diplomatic property, had deemed it eligible under the solicitation’s first two phases. Company unit Pernix Federal was awarded the contract.  

One month later, GAO said contractor B.L. Harbert International, which it described as “a disappointed offeror,” protested the award—claiming Pernix should not have prequalified to submit a proposal.

That protest was dismissed after the department said it was taking corrective action to confirm Pernix eligibility. 

On Dec. 8, 2023, State notified Pernix Group that its federal unit as a stand-alone entity was not the offeror that was prequalified and said it was ineligible to submit a technical and price proposal. 

The department said a de facto joint venture of Pernix Federal and BE&K was ineligible for an award because it was not registered to submit a proposal for an overseas construction project. Design firm HOK also was part of the bidding team. 

The consulate serves 22 districts in southeastern Turkey, including those bordering Iran, Iraq and Syria.

“A de facto joint venture where no formal agreement has been reached, but the offering entity relies upon the experience of a related U.S. firm that guarantees performance” can participate in and submit a proposal in response to the RFP, GAO said.

State should not have said Pernix was no longer eligible to compete because its phase 2 submission and phase 3 proposal were from Pernix Federal, and not Pernix Group, GAO said—ruling that Pernix Federal should be considered as a stand-alone entity and be reinstated in the competition. 

Work had been set to start Nov. 30 and complete by Feb. 1, 2028. The Adana compound project includes design and construction of an office building, support annex, access pavilions, mail screening facility, utility building and residential space for the Consul General, staff and security, as well as outdoor construction. The total building program is about 14,432 sq meters, according to State bid documents.

GAO said State has confirmed to Pernix that is is an eligible bidder for the consulate award, which now will be recompeted. The department could not be reached to confirm a new timeline to complete the procurement, start construction and finish the project.

GAO also advised the department to “amend the RFP to eliminate or revise the impossible requirement that a de facto joint venture be registered” in the System for Award Management, a federal registry for all vendors doing business with the government, to clarify registration requirements. Pernix also can claim bid protest costs.