BNUMBER: B-266034.2
DATE: March 18, 1996
TITLE: Ameriko, Inc.
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DECISION FOR PUBLIC RELEASE
A protected decision was issued on the date below and was subject to a
GAO Protective Order. This version has been redacted or approved by
the parties involved for public release.
Matter of:Ameriko, Inc.
File: B-266034.2
Date:March 18, 1996
Christopher Solop, Esq., and William R. Purdy, Esq., Ott & Purdy, for
the protester.
Joseph G. Billings, Esq., and Dennis J. Riley, Esq., Riley & Artabane,
for Maintenance, Inc., an interested party.
William J. Hemmer, Esq., and Clarence D. Long III, Esq., Department of
the Air Force, for the agency.
Marie Penny Ahearn, Esq., and John M. Melody, Esq., Office of the
General Counsel, GAO, participated in the preparation of the decision.
DIGEST
1. Agency reasonably classified painting work as covered by the
Service Contract Act rather than the Davis-Bacon Act, where vast
majority of painting work was to be performed in conjunction with
change of occupancy maintenance services for military housing, rather
than as part of construction projects.
2. Protest challenging rejection of proposal for failure to comply
with Service Contract Act (SCA) wage rate is denied where, even if
protester were correct that agency should have held discussions rather
than reject the proposal--because solicitation was confusing as to
whether SCA or Davis-Bacon Act wages applied--protester's late best
and final offer based on SCA wages shows that protester's price would
not have been low, and that protester therefore would not have been in
line for award in any case.
DECISION
Ameriko, Inc. protests the award of a contract to Patriot Maintenance,
Inc. under request for proposals (RFP) No. F25600-94-R-0111, issued by
the Department of the Air Force for military family housing
maintenance at Offutt Air Force Base, Nebraska. Ameriko contends that
the agency improperly rejected the firm's best and final offer (BAFO)
based on noncompliance with the Service Contract Act (SCA), while
accepting the awardee's BAFO, which included cost data showing a wage
rate below the applicable SCA rate.
We deny the protest.
The RFP contemplated award of a contract for a base year with 4 option
years. Offers were to provide a fixed, lump-sum price for definite
quantity basic maintenance work and fixed-unit prices (but not labor
rates) for indefinite quantity change of occupancy maintenance (COM)
work, such as major painting, and other work not included in basic
maintenance. There were two indefinite quantity painting line items:
major interior painting of more than 200 square feet and exterior
painting of any square footage.[1] Also included as indefinite
quantity work was various repair work, e.g., major roof repair.
Award was to be made on "a technically acceptable, realistically low
price basis." Price proposals were to be evaluated for
reasonableness, completeness, and realism, and all necessary data was
to be furnished for this analysis. For realism, proposed costs were
to be evaluated only to determine if any costs were unrealistically
high or low in relation to the offeror's technical approach and the
government estimate.[2]
Since the RFP required performance of both service and construction
work, it contained the applicable SCA (minimum wage rates applicable
to service contracts) and Davis-Bacon Act (DBA) (minimum wages
applicable to construction work) provisions.[3] The RFP did not
specify which wage rate determination applied to the various line
items; however, both determinations included a minimum wage rate for
painter--$13.26 under the SCA (maintenance painter) and $10 under the
DBA (painter). During the preproposal conference, three attendees
asked whether any of the work or line items were considered covered by
the DBA. The contracting officer responded, "[i]t is the contractors'
responsibility to correctly categorize their employees. . . . [Any]
questions concerning labor laws . . . should be directed to the [DOL]
Wage and Hour Division."
Seventeen proposals were received. The agency determined that 12,
including Ameriko's and Patriot's, were technically acceptable and in
the competitive range. It held written discussions, and requested and
received BAFOs. Ameriko's BAFO price was low ($12,674,247) and
Patriot's was second low ($13,057,750). In its cost realism analysis,
the agency determined that "each offeror's BAFO reflect[ed] each
offeror's ability to perform the requirements . . . and does not over
inflate costs."
Ameriko's initial proposal price ($13,294,270) was based on the SCA
painter wage, but its BAFO cover letter stated that the firm reduced
its price based on "the application of Davis Bacon wage rates relative
to interior and exterior painting requirements. . . ." The
contracting officer determined that this change was a violation of the
SCA, and verified with the DOL that the painting work in fact was SCA
work. On August 4, Ameriko was notified that "there was a mistake in
its BAFO" and that the BAFO was "not acceptable" based on its change
of painting wage rate from SCA to DBA. Ameriko, apparently on its own
initiative, then submitted a revised price proposal of $13,081,947,
which again applied the SCA painting wage rate in lieu of the DBA
rate. The agency considered this an unacceptable late BAFO which was
not low in any case. Therefore, the agency made award to Patriot as
the low, technically acceptable offeror.
Ameriko argues that the Air Force improperly rejected the firm's low
initial BAFO; according to the protester, it properly applied the DBA
to the painting work.
Generally, responsibility for determining whether SCA or DBA
provisions apply to a particular contract rests primarily with the
contracting agency, which must award, administer, and enforce the
contract. Dynalectron Corp., 65 Comp. Gen. 290 (1986), 86-1 CPD para.
151; Madison Servs., Inc., B-256834, Aug. 3, 1994, 94-2 CPD para. 54. In
this regard, the determination of whether items of work involve basic
maintenance within the coverage of the SCA, or are more in the nature
of construction, alteration, or repair within the scope of the DBA, is
fundamentally a matter of agency judgment. Id. We will question the
agency's determination only where it lacks a reasonable basis. Id.
DOL regulations provide that, where contracts principally for services
also involve substantial construction work, the provisions of both the
SCA and DBA apply. 29 C.F.R. sec. 4.116(c)(2) (1995). To be covered
by the DBA in a service contract, a work project must be (1)
physically and functionally separate from the service work called for
in the contract and, as a practical matter, capable of being performed
on a segregated basis from the service contract work, and (2) greater
than the statutory threshold of $2,000 applicable to DBA work.
Federal Acquisition Regulation sec. 22.402(b); K & M Maintenance Servs.,
Inc., B-236239, Nov. 21, 1989, 89-2 CPD para. 482.
The agency reasonably determined that the painting work here was
covered by the SCA, not the DBA. It does not appear from the RFP that
the painting work is severable from the COM service work such that it
will be performed apart from the service contract work. The vast
majority of painting work is to be performed inside the housing units,
and the RFP provides that the major painting work will "normally" be
accomplished "in conjunction with COM." Further, it does not appear
that the painting will be performed under individual service calls or
orders; the statement of work listing of categories of job orders
includes COM, but not painting. The agency considers COM to be
service work covered by the SCA, since it generally involves tasks
related to preparing housing units for new occupants, rather than
construction-related work; we find no basis for questioning this
categorization by the agency, and the protester has not argued or
presented evidence showing that the COM work here in fact is in the
nature of construction.[4] Moreover, the agency reports that it
verified with DOL that the SCA wage rates for painters are
applicable.[5] We conclude that the agency reasonably determined that
the painting work is not severable from the services which comprise
the majority of the contract work, and that the SCA, not the DBA, thus
was applicable for purposes of determining the painter wage rate.
Ameriko argues alternatively that its initial BAFO should not have
been rejected without discussions to make it clear whether the SCA or
DBA applied to the painter labor category.[6] However, the record
suggests that, even had such information been presented during
discussions, Ameriko would not have been the low offeror. This is
because Ameriko ultimately did submit a revised BAFO--albeit, one that
was rejected as late--based on the SCA painter wage rate, and that
BAFO was higher priced than Patriot's. Ameriko does not argue, and
there is no reason to believe, that Ameriko's SCA-based BAFO would
have been lower priced had discussions been held. It thus is apparent
that, even had Ameriko been made aware that the SCA (rather than the
DBA) painter wage rate applied, this information would not have led
Ameriko to offer the lowest price, or otherwise put Ameriko in
position to receive the award. See McDonald-Bradley, B-270126, Feb.
8, 1996, 96-1 CPD para. ___ (protest will not be sustained absent showing
of reasonable possibility that protester was prejudiced by agency's
actions); Marwais Steel Co., B-254242.2;
B-254242.3, May 3, 1994, 94-1 CPD para. 291.
Ameriko maintains that it was unfair for the agency to reject its BAFO
based on noncompliance with the SCA, while accepting Patriot's, whose
cost data was assertedly based on a painter wage rate below both the
SCA and DBA rates. The agency's actions were proper. Because
Ameriko's BAFO cover letter specifically took exception to paying the
applicable minimum SCA wages for painters, and thus indicated an
intention not to be bound by the terms of the SCA, the agency properly
determined that its offer could not be accepted. See Emerald
Maintenance, Inc., 70 Comp. Gen. 355 (1991), 91-1 CPD para. 320. In
contrast, Patriot's BAFO did not take exception to the SCA. See
Northern Virginia Serv. Corp., B-258036.2; B-258036.3, Jan. 23, 1995,
95-1 CPD para. 36. A contracting agency properly may award a contract to
an offeror whose proposal indicates that its price is based on hourly
rates below the SCA wage rates, so long as the proposal does not take
exception to the terms of the solicitation, such that it will be
obligated to pay the applicable wage rates to the employees. See
McDonald-Bradley, supra; PRC/VSE Assocs. Joint Venture, B-240160 et
al., Oct. 30, 1990, 90-2 CPD para. 348.
Ameriko argues that the agency was required to take into account the
pricing data Patriot submitted with its proposal showing a painter
wage below the SCA and DBA rates. This argument is without merit
because Patriot's pricing data did not state the wages it would
specifically pay painters. In any case, under a fixed-price contract,
the awardee is required to pay employees the applicable SCA wages out
of whatever price it has offered the government; labor rates lower
than the required SCA minimum rates may simply constitute a below cost
offer and are legally unobjectionable. See Milcom Sys. Corp.,
B-255448.2, May 3, 1994, 94-1 CPD para. 339.
Finally, Ameriko alleges that the Air Force violated the Competition
in Contracting Act of 1984, 31 U.S.C. sec. 3553(d)(3)(A)(i) (1994), by
not suspending performance of Patriot's contract while the protest was
pending in our Office. In view of our conclusion that Ameriko's
protest is otherwise without legal merit, we will not consider this
alleged technical violation. See BECO Corp., B-219651, Nov. 26, 1985,
85-2 CPD para. 601.
The protest is denied.
Comptroller General
of the United States
1. The exterior painting included wood trim, sheds, fences, and
exterior walls. In this regard, the RFP's statement of work provided
that "[i]t is never the intent of the contract to paint the exterior
of an entire house."
2. The RFP originally called for "such data as necessary to determine
the cost realism of proposed prices as delineated in Section B
[bidding schedule] of [the] solicitation." However, amendment No.
0003 deleted this instruction.
3. The SCA requires that service contracts with the government in
excess of $2,500 contain a provision specifying minimum wages and
fringe benefits, specified by the Department of Labor (DOL), to be
paid to employees in the performance of the contract. 41 U.S.C. sec.
351(a)(1) (1994). The DBA sets forth an equivalent requirement for
contracts in excess of $2,000 for construction, alteration, and/or
repair of public buildings or public works. 40 U.S.C. sec. 276a(a)
(1994).
4. The protester cites our decision in Steel Circle Bldg. Co.,
B-233055; B-233056, Feb. 10, 1989, 89-1 CPD para. 139, for the proposition
that COM interior painting work for military family housing
maintenance is construction work covered by the DBA since it was
included in a solicitation with only DBA provisions. However, while
the solicitation there did include DBA provisions, the propriety of
applying the DBA wage determination (instead of the SCA wage
determination) was not in issue; that decision therefore is not
dispositive here. We note that solicitations for COM and painting
work for military family housing also have included only SCA
provisions. See State Management Servs., Inc. et al., B-255528.6 et
al., Jan. 18, 1995, 95-1 CPD para. 25 (again, the propriety of the wage
determination was not in issue in the decision).
5. We will not substitute our judgment as to the applicability of the
SCA for that of DOL, unless DOL's judgment is clearly contrary to law.
B.B. Saxon Co., Inc.,
57 Comp. Gen. 501 (1978), 78-1 CPD para. 410.
6. We note that Ameriko did not challenge the adequacy of the RFP in a
pre-closing time protest. Bid Protest Regulations, 4 C.F.R. sec.
21.2(a)(1) (1995).