BNUMBER:  B-261226
DATE:  September 1, 1995
TITLE:  Integrity International Security Services,     Inc.

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Matter of:     Integrity International Security Services,     Inc.

File:          B-261226

Date:          September 1, 1995
                                                            
Joel S. Rubinstein, Esq., Bell, Boyd & Lloyd, for the protester.
Lyman Goon, Esq., Social Security Administration, for the agency.
Henry J. Gorczycki, Esq., and James A. Spangenberg, Esq., Office of 
the General Counsel, GAO, participated in the preparation of the 
decision.
                                                            
DIGEST

Agency failed to conduct meaningful discussions where the 
preponderance of the evidence in the record does not support the 
agency's account that it advised the protester of the central 
deficiency in the protester's proposal during discussions.
                                                            
DECISION

Integrity International Security Services, Inc. protests an award to 
Areawide Services Limited under request for proposals (RFP) No. 
SSA-RFP-95-1747, issued by the Social Security Administration (SSA) 
for armed guard services at two sites in Baltimore, Maryland.  

We sustain the protest because the agency did not conduct meaningful 
discussions.

The RFP, issued on May 25, 1994, contemplated award of a fixed-price 
contract to an 8(a) contractor for 1 year with 4 option years.[1]  The 
RFP provided a best value evaluation scheme with technical factors 
being more important than price, although price was said to be the 
determining factor between proposals determined to be technically 
equal.

Numerous proposals were submitted and almost all were included in the 
competitive range.[2]  The agency conducted multiple rounds of oral 
discussions and requested four separate BAFOs.  The relevant events 
leading up to the award decision are as follows.

On November 17, after the receipt of the initial BAFOs, SSA issued 
amendment 2 to the RFP, which, among other things, changed the 
contract start date, incorporated a collective bargaining agreement 
into the RFP, added two guard positions to one of the site locations, 
and requested a second round of BAFOs be submitted by December 12.  
The collective bargaining agreement set the wages for security guards 
and corporals, and provided for annual wage and benefit increases 
which would apply to this contract as of the contract start date, and 
as of November 1 in 1995 and 1996.  The two new guard positions added 
approximately 10,000 labor hours per year.

The competitive range offerors submitted a second round of BAFOs.  The 
SSA audit staff audited the second BAFO cost proposals and issued an 
audit report dated December 15.[3]  This audit report determined that 
the majority of offerors had failed to accurately reflect the terms of 
the collective bargaining agreement in their second BAFOs.  SSA 
determined that discussions should be reopened to address the 
widespread failure to comply with the collective bargaining agreement 
requirements.

Integrity's second BAFO did not demonstrate compliance with the 
collective bargaining agreement requirements and did not include the 
hours for two new guard positions added by amendment 2.[4]  A third 
round of discussions was conducted, but not with Integrity, and third 
BAFOs were requested and received, but not from Integrity.  
Integrity's exclusion from the third round of BAFOs was due to 
uncertainty about Integrity's eligibility to compete as an 8(a) 
contractor.[5]

SSA subsequently determined that Integrity was eligible to compete.  
There were oral discussions with Integrity's contract representative 
concerning Integrity's second BAFO cost proposal shortly before final 
BAFOs were received, the content of which is in dispute.  By letter 
dated February 2 to the competitive range offerors, SSA confirmed the 
oral discussions and requested final BAFOs be submitted February 10.  
The text of this letter was basically the same for all of the 
offerors.  Among other things, the letter reminded offerors that the 
cost proposal should be consistent with the collective bargaining 
agreement incorporated by amendment 2 and admonished offerors to 
include all contract requirements in their prices.

Integrity's final BAFO still did not include hours for the two new 
guard positions.  SSA determined that most of the competitive range 
offerors were technically equal and determined that award would be 
made on the basis of price, and preliminarily selected Integrity's 
lowest-priced final BAFO for award.  Based on a February 15, 1995, 
audit report of the final BAFOs, it was determined that Integrity's 
wage rates were slightly higher than required because the effective 
dates of proposed rate increases were not consistent with those 
required in the collective bargaining agreement added by amendment 2.  
The contracting officer also noted the problem with regard to the 
shortfall in the total labor hours as indicated on the spreadsheet in 
Integrity's final BAFO.  

Since Integrity's final BAFO did not take exception to the terms of 
the amended RFP and Integrity proposed a total fixed price for 
contract performance, the contracting officer determined that 
Integrity's final BAFO was acceptable if Integrity verified its price.  
SSA subsequently spoke with Integrity's replacement contract 
representative about the content of its final BAFO, including the 
problem with the effective dates of its wage rate increases as well as 
Integrity's failure to include hours for the two new guard 
positions.[6]  Integrity then submitted a revised final BAFO.  SSA did 
not consider the revised final BAFO, but rejected the original final 
BAFO as technically unacceptable since it did not include the 
additional guard positions in its offered price.  SSA then selected 
the next lowest-priced final BAFO submitted by Areawide for award.  
This protest followed.

Integrity asserts that it was not accorded meaningful discussions 
regarding its second BAFO's failure to include hours for the 
additional guard positions.[7] 

In negotiated procurements, contracting officers generally are 
required to conduct discussions with all offerors whose proposals are 
within the competitive range.  41 U.S.C.  253b(d) (1988); FAR  
15.610; E.L. Hamm Assocs., Inc., B-250932, Feb. 19, 1993, 93-1 CPD  
156.  Although discussions need not be all-encompassing, they must be 
meaningful; that is, an agency is required to point out weaknesses, 
excesses, or deficiencies in a proposal as specifically as practical 
considerations permit so that the agency leads the offeror into areas 
of its proposal which require amplification or correction.  Besserman 
Corp., 69 Comp. Gen. 252 (1990), 90-1 CPD  191; E.L. Hamm Assocs., 
Inc., supra.  Discussions are not meaningful where the agency does not 
inform an offeror of the central deficiency in its proposal.  E.L. 
Hamm Assocs., Inc., supra.  

The one material deficiency in Integrity's final BAFO was Integrity's 
failure to include the additional labor hours added to the RFP by the 
second amendment.[8]  This deficiency was first introduced in 
Integrity's second BAFO and the agency should have pointed it out 
during the final round of discussions with Integrity so that Integrity 
could have addressed it in its final BAFO.  Due to the continuing 
presence of this deficiency in Integrity's final BAFO, the agency 
eliminated Integrity from consideration for award.  Thus, the central 
issue to be resolved is whether the contracting officer advised 
Integrity during the final discussions of this disqualifying 
deficiency.[9]  

The contracting officer states that on February 2 he held discussions 
with the Integrity contract representative, who had been in that 
position from the onset of the procurement.  Tr. at 154, 199.  The 
contracting officer states that he brought to Integrity's attention 
that Integrity's second BAFO was based on incorrect effective dates 
for the wage rate requirements imposed by the collective bargaining 
agreement.[10]  Tr. at 155-156, 203, 215-216.  The contracting officer 
also testified that he had determined, based on his own review, that 
Integrity's second BAFO did not include all of the labor hours added 
by amendment 2 and he brought this issue to the representative's 
attention.  Tr. at 156-157, 206.  The contracting officer states that 
he had the audit report in front of him during these discussions with 
the representative and he inscribed a mark next to the first issue on 
the audit report to indicate that he had addressed it.  Tr. at 154, 
158, 165-66.  He states that he also wrote the word "hours" on the 
audit report and inscribed a mark next to it to indicate that he had 
discussed the second issue.  Tr. at 158, 166.

The Integrity contract representative testified that during this final 
round of discussions, which she believed occurred on February 3, the 
contracting officer told her that Integrity needed to explain the 
composition of the weighted hourly rates which it had proposed in its 
second BAFO.  Tr. at 14-16.  She states that the collective bargaining 
agreement required increases in wage rates in the course of a contract 
year and, in order to minimize the size of the spreadsheet which she 
used to present the wage rates, she provided a weighted average wage 
rate for each year.  Id.  She states that the contracting officer 
wanted her to show how she calculated these weighted hourly rates.  
Tr. at 15-16, 37-38.  She states that she began preparing Integrity's 
final BAFO immediately following this conversation.[11]  Tr. at 32, 
48-49, 56.  She further states that the contracting officer did not 
discuss the collective bargaining agreement effective dates, nor did 
he discuss the number of labor hours proposed or the failure to 
address the two new guard positions in Integrity's second BAFO.  Tr. 
at 16-17, 38, 54.

Based on our review, the record, including the file documentation and 
hearing testimony, does not support the contracting officer's 
testimony as to the contents of his oral discussions with the 
Integrity contract representative.[12]  

The contracting officer states that the December 15 audit report was 
the basis for his oral discussions.  Tr. at 154.  Although the 
contracting officer stated that his oral discussions focused on 
whether Integrity's wage rate effective dates were consistent with 
those required in the collective bargaining agreement, as well as the 
labor hour discrepancy, Tr. at 155-156, 203, 215-216, the December 15 
audit report noted that it was "difficult to determine" whether 
Integrity's second BAFO complied with the required wage rates because 
of the apparent use of "weighted" average wage rates.  This audit 
report did not reference, with regard to Integrity's proposal, any 
problem regarding its wage rate effective dates or any discrepancy 
between the proposed hours represented in the spreadsheets in 
Integrity's second BAFO and those required by amendment 2.  The 
December 15 audit report did note other issues for other offerors 
(e.g., regarding their wage rate effective dates[13]), but not for 
Integrity.  

Moreover, the record indicates that the effective date problem with 
regard to Integrity's proposal was not apparent in Integrity's second 
BAFO because it used weighted rates and did not state the dates when 
the increased wage rates became effective.  Integrity only first 
identified these wage rate increase dates in its final BAFO.  The 
contracting officer could not have known at the time of the final 
discussions that Integrity had used earlier dates for wage increases 
than were required.  

The problem in Integrity's proposal regarding the effective dates was 
first identified in the February 15 audit report reviewing the final 
BAFOs, not the December 15 report reviewing the second BAFOs.  During 
the post-BAFO conversation, the contracting officer explained to 
Integrity's replacement contract representative that Integrity's final 
BAFO used the wrong effective dates for wage increases and failed to 
include the labor hours added by amendment 2.  Tr. at 226-227.  The 
contracting officer states that he explained during this conversation 
that he was seeking a price verification from Integrity, not a revised 
BAFO.  Tr. at 170.  The replacement representative testified that she 
had the file before her during the conversation, made the corrections 
via her computer, and stated for the contracting officer just how the 
corrections changed the proposal.  Tr. at 73-74, 76-78.  

Since the contracting officer could not have identified the effective 
date problem prior to receipt of final BAFOS, his recollection of the 
discussions prior the submission of final BAFOs on this point is 
clearly inaccurate.  Thus, it may be that the contracting officer, in 
stating that he advised Integrity of the labor hour discrepancy, 
recalled his post-BAFO discussions with Integrity's replacement 
representative, particularly given that all parties concede that the 
effective date problem and the labor hour discrepancy in Integrity's 
final BAFO constituted these post-BAFO discussions.  

Another relevant document supporting the protester's account is the 
February 2 request for final BAFOs that confirmed the discussions in 
question.[14]  While the contracting officer states that the February 
2 request for final BAFOs sent to Integrity reflects the content of 
discussions with Integrity, Tr. at 162, this letter did not reference 
the labor hour deficiency, even though Integrity's failure to address 
this point essentially disqualified its proposal.

SSA maintains that the admonition in the February 2 letter that cost 
proposals address all contract requirements is either evidence that 
the deficiency in labor hours was addressed during discussions or 
serves as adequate notice of the deficiency.  The referenced paragraph 
is a general reminder that was provided in all offerors' BAFO requests 
advising them to review their price proposals before submitting BAFOs 
and suggesting a number of areas for review.[15]  SSA also included 
this boiler-plate instruction, which was not intended to apprise an 
offeror of a specific failure to address a contract requirement, 
verbatim in the letter requesting the first round of BAFOs in August 
1994.  The contracting officer admits that the contents of this letter 
incorporated "generic" text sent to all offerors.  Tr. at 184-185, 
199-200.  The contracting officer, who prepared and sent this letter, 
states that it did not address the labor hour deficiency in 
Integrity's proposal.  Tr. at 184.  In our view, this letter is 
neither evidence that the labor hour deficiency was raised during 
discussions with Integrity, nor did it provide sufficient notice of 
this deficiency to satisfy the agency's obligation to conduct 
meaningful discussions on this point.  See Data Preparation, Inc., 
B-233569, Mar. 24, 1989, 89-1 CPD  300.

The agency also references the handwritten marks and the word "hours" 
appearing on a copy of the December 15 audit report as evidence that 
the contracting officer advised Integrity's contract representative 
that its second BAFO did not address the additional labor hours added 
by amendment 2.  The marks and the word "hours" on the December 15 
audit report have no meaning without explanation from the contracting 
officer, whose testimony on this issue is contradictory.  At the 
hearing, the contracting officer first testified that he wrote the 
inscription when he raised the issue during the oral discussions with 
the Integrity contract representative,[16] Tr. at 154-155, 158, 166, 
but later testified that he wrote the inscription sometime prior to 
discussions (perhaps more than a month before) in order to remind 
himself of an issue to raise during discussions.[17]  Tr. at 182-183, 
203-206, 220-221.  As for the other marks inscribed on the audit 
report, the contracting officer states that not only did these marks 
mean a matter had been discussed, but the marks in some cases meant 
other things as well, including that a particular item on the report 
was not discussed.  Tr. at 207-210, 219-220.  

As noted by the agency, the undated 15-page negotiation memorandum 
outlining the events in the procurement from acquisition planning 
through the source selection recommendation indicates that the 
contracting officer discussed Integrity's labor hour discrepancy in 
the final round of discussions.[18]  However, this was a procurement 
that had run nearly the course of a year and the events are such that 
confusion of facts and events could easily occur without 
contemporaneous notes of the events.  For example, the procurement 
included a large number of competitive range offerors, several rounds 
of oral discussions, and several rounds of BAFO requests, which 
produced many events to recall, some quite similar or repetitive.  As 
previously noted, the contracting officer did not have a clear 
recollection of the pre-final discussions vis-a-vis the post-BAFO 
discussions.

The preponderance of the evidence in the record, in particular the 
consistency of the December 15 audit report with the protester's 
account of the discussions, the contracting officer's inaccurate 
recollection of the wage rate increase effective date issue, and the 
absence of any mention of the labor hour deficiency in the request for 
final BAFOs, supports that SSA did not identify during discussions 
with Integrity the deficiency in labor hours in Integrity's second 
BAFO.  Thus, we conclude that SSA failed to conduct meaningful 
discussions with Integrity.  See E.L. Hamm Assocs., Inc., supra.

We recommend that the agency reopen discussions consistent with this 
decision, request another round of BAFOs, make a new source selection 
decision, and terminate the contract to Areawide if appropriate.  
Integrity is also entitled to recover the reasonable costs of filing 
and pursuing its protest, including attorney's fees.  4 C.F.R.  
21.6(d)(1).  Integrity should submit its certified claim for protest 
costs directly to the agency within 60 days of receiving this 
decision.  4 C.F.R.  21.6(f)(1).

The protest is sustained.

 /s/ Robert H. Hunter
 for Comptroller General
     of the United States

1. Section 8(a) of the Small Business Act, 15 U.S.C.  637(a) (1994), 
established a program that authorizes the Small Business 
Administration (SBA) to enter into all types of contracts with other 
agencies and let subcontracts for performing those contracts to firms 
eligible for program participation.  The SBA's subcontractors are 
referred to as "8(a) contractors."  Federal Acquisition Regulation 
(FAR)  19.800(a).

2. A technical evaluation panel evaluated and ranked by evaluation 
score the initial proposals and the first round of best and final 
offers (BAFO).  The record contains no evidence of technical 
evaluation of subsequent BAFOs.

3. The SSA auditors reviewed the cost proposals for mathematical 
accuracy of proposed prices and compliance with minimum required wage 
rates.  

4. This latter discrepancy was not noted in the December 15 audit 
report.  The Integrity contract representative testified that she 
apparently overlooked these added hours in preparing the staffing 
tables for the second BAFO.  Transcript (Tr.) at 22, 30, 54, 56.

5. Integrity graduated from the 8(a) program in November 1994, and it 
was erroneously believed that this meant that the firm could not 
participate in this procurement.  It is disputed whether Integrity 
indicated that it was ineligible or the agency unilaterally made this 
determination and did not invite Integrity to submit the third BAFO.  
An 8(a) contractor's eligibility for award is determined as of the 
time of submission of initial proposals.  15 U.S.C.  637(a)(1); FAR  
19.805-2(c); Gutierrez-Palmenberg, Inc., B-255797.3 et al., Aug. 11, 
1994, 94-2 CPD  158.  Here, Integrity was an 8(a) contractor eligible 
for award at the time of initial proposals and was thus eligible to 
compete for this award.  Integrity's eligibility for award is not now 
in dispute.

6. The initial Integrity contract representative had resigned during 
the interim for personal reasons, and states that she does not intend 
to return to employment with Integrity.  Tr. at 34, 41, 70-71.  The 
content of the post-BAFO conversations is also in dispute; the 
contracting officer states that he merely asked Integrity to verify 
its bid, whereas Integrity's replacement contract representative 
states that the contracting officer requested a revised final BAFO. 

7. The agency asserts that Integrity's protest that it did not receive 
meaningful discussion should be dismissed as untimely.  We disagree.  
As indicated in its protest, the protester filed its initial protest 
under the belief that, although the agency had failed to raise the 
labor hour deficiency during the pre-final BAFO discussions, the 
agency had subsequently remedied its error by advising Integrity of 
the deficiency and soliciting revisions which Integrity submitted on 
February 21.  When SSA awarded the contract to Areawide, Integrity 
protested on the basis that its February 21 revised proposal should 
have been selected for award.  It was not until issuing its report in 
response to this protest that the agency alleged that the February 2 
discussions adequately addressed the labor hour deficiency.  Since 
Integrity protested the adequacy of these discussions within 10 days 
of receiving the report, its protest of this issue is timely.  4 
C.F.R.  21.2(a)(2) (1995).

8. The issue regarding Integrity's use of higher wage rates than 
minimally required due to the use of incorrect effective dates, 
although present in its final BAFO, was not a basis for eliminating 
Integrity's final BAFO from consideration.  Tr. at 156, 246-247.  

9. None of the participants in the oral conversations took notes 
during the conversations nor recorded the content of these 
conversations soon afterwards.  During the hearing, all witnesses had 
difficulty recalling specific dates of oral conversations and relied 
on what contemporaneous documentation does exist in order to date 
these conversations.  Tr. at 25, 66, 71, 105, 170, 191, 196, 199-200.

10. The contracting officer stated that he thought this discrepancy 
did not have an appreciable effect on Integrity's proposed price.  Tr. 
at 155-156.

11. The contracting officer provided evidence of receipt of 
Integrity's final BAFO corroborating that it must have been prepared 
and sent within 1 day of the discussions.  Tr. at 160.

12. As indicated, the contracting officer conducted multiple rounds of 
undocumented discussions with numerous offerors.  SSA challenges the 
credibility of Integrity's initial contract representative largely 
because she wavered on the timing of her conversations with the 
contracting officer regarding Integrity's 8(a) eligibility and 
subsequent discussions.  As stated previously, all witnesses had 
difficulty with recalling dates, see infra, footnote 9; however, this 
witness, in particular, candidly acknowledged her own difficulty in 
recalling dates (but had no difficulty in recalling the content of 
discussions), and stated that her testimony with regard to dates was 
dependent on her review of documents she had been furnished.  Tr. 
24-25, 66, 257-259.  In this regard, since the representative was not 
employed by Integrity during any part of this protest, she had no 
opportunity to review the contract file.  To the extent that her 
testimony did vary with regard to timing, her responses were always 
consistent with the documents presented to her.  The representative's 
demeanor was calm throughout her testimony and she never appeared 
defensive, even when challenged; this was entirely consistent with her 
decision to end her employment with the protester for non-job-related 
reasons.  In sum, we find her testimony that she received no 
discussions regarding the labor hour shortfalls in Integrity's second 
BAFO to be credible.  

13. An admonition that offerors should make sure they address this 
problem was included in the generic February 2 letters to all offerors 
requesting final BAFOs.

14. The record is unclear as to whether this letter was prepared just 
before or just after the oral discussions.  Tr. at 199-200.

15. The paragraph containing the admonishment reads:

     "[y]ou are hereby reminded to review your price proposal to be 
     sure you have provided pricing for all items to perform the work 
     effort including, but not necessarily limited to, equipment, 
     vehicles, communications, uniforms, bond, and supervisory and 
     production hours which shall include training, relief and walk 
     time. . . ."

16. This was consistent with the position he took in the agency 
report.

17. Presuming the "hours" inscription occurred more than a month prior 
to the discussions in question as now asserted by the contracting 
officer, it seems possible that he may not have recalled the purported 
meaning of this inscription at the time of the discussions, given the 
passage of time and the numerous other discussion sessions with the 
other offerors.

18. While the contracting officer is uncertain as to when this 
memorandum was prepared, it describes events after review of final 
BAFOs, including the post-final BAFO communications with Integrity, 
the rejection of Integrity's low-priced offer, and the selection of 
Areawide, which culminated around March 15.  Tr. at 167-168.