NAVY EYES ALASKA FIRM FOR $22 MILLION GUAM

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Local contractor GFS up in arms

By Mar-Vic Cagurangan HAGÅTÑA, Guam (Marianas Business Journal, March 14, 2011) – The U.S. Navy is seeking to sole-source the Morale Welfare and Recreation (MWR) contract to an Alaskan native corporation, claiming no local company is either interested or qualified to take over the tasks currently being performed by the Guam-based and locally-owned GFS Group LLC.

GFS, whose contract is set to expire this month, urged the Navy to reconsider its plan, pleading to allow local 8(a) companies to participate in a competitive bidding.

Under its US$22-million contract with the Fleet and Industrial Supply Center (FISC), GFS currently operates and manages the Child Youth and Teen Programs, Outdoor Recreation Programs, beaches and pools, Auto Hobby Shop and the library on naval base.

The company's soon-to-expire agreement represents a set-aside contract running under a six-month extension granted by FISC in September 2010.

The contract for MWR services that provide quality of life programs for military personnel and their families falls under the Small Business Administration's 8(a) Program, which prioritizes small businesses for contracting opportunities.

Rear Adm. Paul J. Bushong, commander of Joint Region Marianas, claimed GFS has graduated as an 8(a) company and is therefore no longer qualified to compete for the MWR contract, which under the program rules has a nine-year cap.

"In this case, [GFS] passed its nine-year program participation limit last summer, so is no longer eligible for competitive or sole-source 8(a) awards," Bushong said in a Feb. 22 letter to Guam Delegate to Congress Madeleine Z. Bordallo.

But Clifford A. Guzman, GFS vice president for technical operations, said Bushong was misinformed about the length of the company's participation in the program, which he said is just entering its sixth year.

As for the company's status, Guzman said GFS remains a certified 8(a) company as of Dec. 31, 2010. "Their information is wrong. I don't know where they are getting their information," he said.

Guzman said the Navy, which has yet to post its intention to sole-source the MWR contract, is currently negotiating with Chugach Worldwide Services, an Alaskan native corporation.

While acknowledging that GFS has grown too big for the MWR size standard, Guzman said the company still hopes to be given a fraction of the contract in partnership with a small business that GFS can mentor.

"Every project should be competed in level playing field. Companies in Guam that can compete must be given a chance to compete," Guzman said.

On behalf of GFS, Bordallo first wrote to Bushong on Feb. 9, raising concerns about local companies missing out on federal contracting opportunities - a growing trend that she said she found "deeply troubling."

"Several Guam firms have lost contracts to [an Alaskan native Corporation]," Bordallo said. "Although many of these changes in the result of open and fair bidding processes, I am deeply concerned that a sole-source contract to an ANC would be viewed as arbitrary and capricious, and contrary to Navy assurances to our local community that there would be many opportunities for them during the military buildup."

Bushong, however, defended the sole-sourcing plan for the MWR contract, maintaining the Navy "actively sought interest among on-island firms to compete for all or part of that requirement."

In August last year, he said, a contract specialist from Fleet and Industrial Supply Center (FISC) Pearl Harbor spoke at a Guam Chamber of Commerce Small Business Expo to familiarize local companies with contracting possibilities including the one for MWR.

"Not one company contacted her to follow up on the MWR contract," Bushong said in his letter to Bordallo dated Feb. 22.

He added that the contract specialist tried to make the arrangement more attractive to small businesses by splitting the contract into two parts - one for recreational services and another one for child care.

"She then conducted a data base search for qualified local 8(a) firms. Finding none, she then turned to SBA for assistance," the JRM commander said.

Eventually, Bushong said, the contract specialist and the SBA representative determined that "the Guamanian business community will be better served by a sole-source award to an Alaskan native corporation, which already has an on-island presence than by a competitive 8(a) award to a mainland corporation with likely to no ties to the community."

GFS also rebutted Bushong's claim the Navy tried to bid out the contract openly.

"The Navy/FISC never posted a request for sources sought on the Federal Registry or Fedbizops to establish that there were any eligible 8(a) firms to begin with for these requirements," GFS said.

"It is also our understanding from SBA Hawaii that there has been no paperwork submitted by FISC to change this contract from small business set aside to an 8(a)," the company said.

In a letter signed by its President Lucy Alcorn, Vice President for Business Development David Alcorn and Vice President for Technical Operations Clifford A. Guzman, GFS urged the Navy to reconsider the sole-sourcing plan lest local companies lose their edge to outsiders altogether.

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