BNUMBER:  B-265938
DATE:  January 16, 1996
TITLE:  Air Sal Leasing, Inc.

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Matter of:Air Sal Leasing, Inc.

File:     B-265938

Date:     January 16, 1996

Paul F. Khoury, Esq., Craig  A. Johnson, Esq., and David A. Vogel, 
Esq., Wiley, 
Rein & Fielding, for the protester.
Frederick W. Claybrook, Jr., Esq., and Howard Crystal, Esq., Crowell & 
Moring, counsel for K&K Aircraft, Inc., an interested party.
Michael F. Kiely, Esq., Department of Agriculture, for the agency.
Peter A. Iannicelli, Esq., and Michael R. Golden, Esq., Office of the 
General Counsel, GAO, participated in the preparation of the decision.

DIGEST

Agency failure to discuss with the protester the fact that the 
agency's calculation of the protester's total price based on the unit 
prices offered was much higher than the protester's own calculation 
does not warrant overturning the award decision where the protester 
neither shows how the agency's price computation, which appears to be 
proper under the solicitation's evaluation plan, was wrong, nor 
alleges that it would have changed its unit prices (the bases for 
contract payments) had it known the agency's figure. 

DECISION

Air Sal Leasing, Inc. protests the United States Department of 
Agriculture's award of a contract to K&K Aircraft, Inc., pursuant to 
request for proposals (RFP) No. 01-MX-APHIS-96.  The protester alleges 
that: (1) the agency's price evaluation was flawed; (2) the agency 
improperly did not discuss with Air Sal the fact that the agency 
calculated its total price to be approximately 40 percent more than 
the price Air Sal says it offered; and (3) the agency's 
price/technical tradeoff was fatally flawed because of errors in both 
the technical and price evaluations.

We deny the protest.

Issued on April 7, 1995, by the Animal and Plant Health Inspection 
Service (APHIS), the RFP requested offers for air transport and 
dispersal of sterile screwworm flies in various countries in Central 
America in an effort to eradicate screwworm flies.  The RFP 
contemplated award of a fixed-price, requirements-type contract for a 
base period of 1 year with options for 4 additional years.  The RFP 
stated that evaluated price was a significant selection factor, but 
where proposals' evaluated prices were within 10 percent of each other 
the government might award the contract to the offeror of the 
higher-priced, technically superior proposal if the higher price were 
warranted by the technical superiority.  Six offers were received by 
the July 10 closing date for receipt of initial proposals.  After 
evaluation of proposals, discussions, and receipt of best and final 
offers, the agency awarded the contract to K&K on August 22.  Air Sal 
filed its protest in our Office on August 31.[1]    

The protester alleges that the price evaluation erroneously resulted 
in Air Sal's total price being evaluated at roughly $19 million 
instead of the $13,749,800 that Air Sal had entered on a "schedule of 
items" it submitted with its offer.  In a related matter, Air Sal 
asserts that the agency improperly did not discuss with it this 
approximately 40-percent discrepancy between its evaluated and offered 
price.  

The first argument is without merit.  In calculating each offer's 
total evaluated price, the agency followed a formula set forth in the 
RFP.  The RFP required offers to state a unit price (e.g., a basic 
monthly fee per aircraft) for each line item for the base and option 
years; no extended line item prices, total performance period prices, 
or total contract prices were requested.  The RFP included critical 
information such as the number of aircraft needed each month, the 
location of the required dispersal flights, and estimates of the 
number of flights that would be required to each location and the 
total flying time during the contract period.  By multiplying each 
offer's unit prices by the known and estimated quantities set forth in 
the RFP, the agency computed extended prices for each line item.  
Thus, even though the RFP labeled the extended prices as "evaluated 
prices," in reality the agency merely calculated the total price for 
each line item by doing simple mathematical operations; then, after 
discounting option year prices to account for the present value of 
money, the agency summed the extended line item prices to compute each 
offer's total evaluated price.[2]

Notwithstanding the RFP's invitation to offer only unit prices for the 
base and option periods, Air Sal, on its schedule of items, extended 
and summed all of its unit prices, discounted the results, and added 
the discounted amounts to arrive at what it termed its "Total 
Evaluated Price (discounted)," $13,749,800.  However, in response to 
Air Sal's general complaint that the price evaluation was 
"dramatically flawed," the agency provided a price evaluation document 
showing in detail exactly how it calculated Air Sal's total price to 
be near $19 million (and its calculation of K&K's total price).  Air 
Sal's initial protest did not criticize any particular facet of the 
agency's price evaluation, which was consistent with the RFP's 
evaluation scheme.  Moreover, despite being given the opportunity to 
review and comment upon the agency's mathematical calculations, the 
protester has not shown that the contracting officer made any 
arithmetic errors in computing Air Sal's total evaluated price;[3] why 
it believes the agency's price evaluation was wrong; or even how Air 
Sal calculated the total price it submitted, which is not apparent 
from its schedule of items.  Consequently, we have no reason to find 
that the agency's price calculations were faulty.  See Science 
Applications Int'l Corp., B-265607, Sept. 1, 1995, 95-2 CPD  99; 
Robert Wall Edge--Recon., 68 Comp. Gen. 352 (1989), 89-1 CPD  335.  

It is not clear from the record whether APHIS failed to discuss with 
Air Sal the discrepancy between the offeror's and the agency's 
calculated total prices because the agency did not notice it or 
because APHIS simply decided that its own number reflected the proper 
application of the solicitation's calculation approach to the 
offeror's unit prices.  In any case, we think that when it engaged in 
discussions with the offeror APHIS should have informed Air Sal of the 
discrepancy and given the firm an opportunity to explain its offer in 
that regard.  Where an agency conducts discussions, the agency is 
required to ensure that the discussions are meaningful, which means 
that the agency must discuss weaknesses, deficiencies, or excesses 
that need to be addressed in order for the offeror to be in line for 
award.   See Inside Outside, Inc., B-250162. Jan. 5, 1993, 93-1 CPD  
7.  As a general matter, therefore, an agency has an obligation to 
tell an offeror during discussions that its price is unreasonable.  
Id.  Here, APHIS' calculation of Air Sal's total evaluated price as 
$19 million meant that Air Sal had little chance at winning the 
competition, under the RFP's evaluation method, whereas Air Sal would 
have had a chance at the total evaluated price of $13,749,800 as 
calculated by Air Sal on its schedule of items.  In such circumstance, 
APHIS, when it decided to ask Air Sal for a best and final offer, 
should have brought the discrepancy between the agency's and Air Sal's 
calculations to the offeror's attention.  

Nevertheless, we do not think that APHIS' failure to discuss the 
matter with Air Sal and give the firm the opportunity to explain its 
offer warrants overturning the award decision.  As noted above, the 
protester, during the course of this protest, has shown no mistakes, 
and none is evident, in the agency's price computations.  Air Sal has 
not shown how, if the matter had been raised by the agency, the 
offeror would have explained its offer to support its own calculation, 
or somehow revised its unit prices sufficiently to affect the 
selection decision.  In this respect, payments under the contract were 
to be based on the unit prices, which is why contractor selection, in 
turn, had to follow their proper extension pursuant to the RFP's 
evaluation method, and cannot be based on a non-conforming total 
calculated by an offeror. Consequently, we cannot conclude that the 
failure to discuss price with Air Sal competitively prejudiced the 
company.  See American Envtl. Servs., Inc, B-257297, Sept. 8, 1994, 
94-2 CPD  97; TRW, Inc., B-243450.2, Aug. 16, 1991, 91-2 CPD  160; 
Alascom, Inc.--Recon., B-227074 et al., Sept. 16, 1987, 87-2 CPD  
257.[4]

Air Sal also argues that it would have received the contract had APHIS 
conducted a proper price/technical tradeoff analysis using an 
evaluated price for Air Sal of $13,749,800, which is close to the 
award amount.  We need not consider this contention, however, since 
the record does not support that calculation of Air Sal's total 
evaluated price, as discussed above.

In its initial protest, Air Sal also argued that K&K's proposal was 
technically unacceptable because it was based upon using 
government-furnished equipment (GFE) that could not meet some of the 
RFP's performance specifications.[5]  On October 19, we dismissed this 
protest ground as untimely because the RFP clearly indicated that 
offers based upon using GFE for containment and dispersal of screwworm 
flies would be considered acceptable.  Air Sal now maintains that our 
decision was based on a misinterpretation of  the RFP.  Air Sal argues 
that the RFP required the GFE to pass certain USDA tests to 
demonstrate compliance with the RFP's performance requirements and 
indicated that, if the GFE did not pass all performance tests, offers 
based upon using GFE, including K&K's, would be rejected as 
technically unacceptable.  

Air Sal's argument is without merit.  The RFP specifically stated that 
offers were assumed to be based upon the use of GFE unless an offer 
stated that contractor-furnished equipment would be used instead.  The 
RFP further provided that "[i]f the Contractor proposes to use other 
than the [GFE], the equipment must be qualified prior to the start of 
the field operations."  The RFP also stated,

     "The Government will provide the [GFE] unless it is agreed that 
     the Contractor will provide equipment which has been tested and 
     approved for use by the Program.  Any Contractor-furnished 
     equipment must comply with the following specification."

The RFP imposed no similar qualification or testing requirement on the 
GFE.  Thus, it should have been clear to Air Sal from reading the RFP 
that proposed GFE would be considered technically acceptable, with no 
qualification testing required.  

The protest is denied.

Comptroller General 
of the United States 

1. The Administrator of APHIS determined that continued performance is 
in the best interest of the government and, therefore, K&K continues 
to perform notwithstanding the protest.

2. For example, in accord with the RFP's formula, the base fee for 
line item No. 1, transport of screwworm pupae to dispersal bases, was 
computed as follows.  The RFP stated that two airplanes would be 
required for all 12 months of the basic contract period.  Air Sal's 
offer stated a base fee of $18,900 per aircraft per month.  The unit 
price ($18,900 per month) was multiplied by the number of required 
airplanes (2) which was then multiplied by the number of months in the 
contract period (12).  Thus, the extended base fee for line item No. 1 
was $453,600 ($18,900 x 2 x 12).

3. The agency disclosed that the contracting officer had in fact made 
several trivial arithmetic errors that were corrected upon discovery.  
The record shows that these errors did not affect the standing of the 
offers.   

4. The protester also contends that APHIS did not evaluate all of its 
proposal and did not hold meaningful discussions concerning perceived 
technical deficiencies in it.  The agency reports that it evaluated 
the entire technical proposal and conducted discussions as necessary 
with the firm.  The agency also reports that it was very familiar with 
Air Sal's technical ability since Air Sal had been performing the work 
for APHIS for several years and there were no new initiatives in the 
proposal requiring close scrutiny.  The fact is that APHIS determined 
that the proposal was technically acceptable, and Air Sal has shown no 
errors in the technical evaluation.  See Science Applications Int'l 
Corp., supra.

5. The agency does not agree that the offered GFE cannot meet the 
RFP's performance specifications.  Air Sal filed a motion for 
injunctive relief in the United States District Court for the Southern 
District of Florida to prevent K&K from performing the contract.  In 
its response, the agency pointed out to the court that:  (1) the GFE 
was designed by a department in APHIS that has a long history of 
success in aerial dispersal operations to eradicate or control 
dangerous pests; (2) the GFE has been used by APHIS in the past and 
the agency is confident that it will work in the screwworm eradication 
program; and (3) the GFE outperformed Air Sal's equipment in tests 
conducted by the agency.  The court ultimately denied Air Sal's 
motion.