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.