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).