BNUMBER: B-270323.3
DATE: August 16, 1996
TITLE: Bionetics Corporation--Entitlement to Costs
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Matter of:Bionetics Corporation--Entitlement to Costs
File: B-270323.3
Date:August 16, 1996
Del Stiltner Dameron, Esq., and Thomas F. Burke, Esq., McKenna &
Cuneo, for the protester.
Richard P. Castiglia, Jr., Esq., Department of the Air Force, 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
The General Accounting Office does not recommend payment of the costs
of filing and pursuing protests where the Air Force amended the
request for proposals (RFP) evaluation scheme after determining that
the original evaluation scheme was flawed and that the requirements
had changed due to planned closure of an Air Force base (i.e., the
user activity) rather than in response to the protest allegations.
Moreover, to the extent that the amendment may have been in response
to the protester's belated request (i.e., made in its comments on the
Air Force reports) that, the Air Force cancel the RFP if it doubted
the accuracy of the RFP's quantity estimates, and resolicit on the
basis of revised estimates, the Air Force acted promptly after the
protester made the request and did not unduly delay taking corrective
action.
DECISION
Bionetics Corporation requests that our Office recommend that the Air
Force pay it the reasonable costs of filing and pursuing two protests.
We deny the request.
On June 7, 1995, the Air Force issued request for technical proposals
No. F04699-95-R-0084, initiating the first phase of a two-step,
negotiated procurement to obtain preventive/remedial maintenance and
calibration services for test measurement and diagnostic support
equipment at McClellan Air Force Base; the solicitation contemplated
award of a requirements contract for a 1-year base period with options
for three additional 1-year periods. The technical proposals of
Bionetics and four other offerors were evaluated and deemed
technically acceptable.
During the second phase of the procurement, request for proposals
(RFP)
No. F04699-95-R-0084 was issued to the five offerors that had
submitted technically acceptable proposals. The RFP required prices
for servicing various quantity ranges of equipment. For example, line
item No. 0002 called for the contractor to staff, manage, and operate
(including preventive and remedial maintenance and calibration) the
test measurement and diagnostic support equipment at McClellan Air
Force Base, required fixed prices for eight possible quantity ranges
of units to be serviced each month (designated as sub-line items), and
indicated the quantity range that was the government's best estimate
of the most likely number of units to be serviced each month.[1] The
RFP stated that the average of the eight quantity-range prices would
be used for evaluation purposes, and the contract would be awarded to
the offeror with the lowest overall price for the basic and all option
periods.[2]
After evaluating price proposals, the contracting officer rejected
Bionetics's proposal as both mathematically and materially unbalanced
and awarded the contract to the next lowest-priced offeror, Kay and
Associates, Inc. (Kay). After a debriefing was conducted, Bionetics
filed its initial protest in our Office on
October 26, 1995, alleging that the contracting officer improperly
rejected its proposal as unbalanced. Bionetics asserted that the Air
Force should terminate the contract with Kay and award Bionetics the
contract under the RFP evaluation scheme.
In a December 4, 1995 report, the Air Force defended its rejection of
Bionetics's offer. The agency's detailed analysis showed that
Bionetics's offer was internally inconsistent with high prices for the
basic and option years for a number of quantity ranges and extremely
low prices for others. Likewise, Bionetics's prices were higher than
Kay's (and other offerors) for the basic and option years for a number
of quantity ranges and drastically lower for others. For example, for
the basic contract period,[3] the monthly prices of Bionetics and Kay
for line item
No. 0002 and its sub-line items were as follows:
LINE ITEM QUANTITY RANGE PRICE[4]
Low High Bionetics Kay
0002AA 2301 2450 $147,788 $112,386
0002AB 2451 2600 $151,893 $119,483
0002AC 2601 2750 $155,977 $126,579
0002AD 2751 2900 $160,150 $133,676
0002AE[5] 2901 3050 $155,997 $140,772
0002AF 3051 3200 $134,805 $147,869
0002AG 3201 3350 $ 99,254 $154,966
0002AH 3351 3500 $ 46,225 $162,062
Based upon its review of Bionetics's offer and cost data Bionetics had
given it[6] regarding some of the line items and sub-line items, the
Air Force reported, among other things, that:
(1) Bionetics's monthly price to service 2,301 units was $147,788
while its monthly price for servicing 3,500 units was only $46,225;
thus, it would cost the Air Force almost 350 percent more to have
Bionetics service roughly 1,200 fewer units per month.
(2) Bionetics's unit price was $60.32 for servicing 2,450 units and
only $13.21 for servicing 3,500 units; thus, the unit price for the
lower quantity was more than 450 percent higher than the unit price
for the higher quantity.
(3) If the actual number of units serviced each month is at or
below the government's best estimate, acceptance of Bionetics's
offer will result in the Air Force's paying hundreds of thousands of
dollars more to have the work done.
(4) If the Air Force consistently orders work in the best estimate
range, then Bionetics's offer will represent a lower total cost than
Kay's only if the basic contract and all three options are fully
performed.
(5) Cost data provided by Bionetics showed the same number of
management, quality, and support service employees to perform work
in each of the five lowest quantity ranges. Since it should take
fewer employees to service fewer units, the Air Force concluded that
Bionetics had inflated its labor costs for the lowest quantity
ranges and, therefore, Bionetics had overstated some of its prices
in these quantity ranges.
After reviewing the agency's report on its initial protest, Bionetics
filed a supplemental protest on December 13, 1995, alleging that the
Air Force's price evaluation deviated from the evaluation scheme set
forth in the RFP. Essentially, Bionetics argued that the Air Force's
conclusion that award to Bionetics might cost significantly more than
award to Kay were based upon assumptions that one or more of the
options might not be exercised and that the Air Force most likely
would order work at or below the "best estimate" quantity range.
Bionetics argued that the assumptions were contrary to the RFP's
evaluation scheme which indicated that the evaluated price would be
computed using the average price for all quantity ranges rather than
the "best estimate" price and would include the basic plus all
option-year prices.
On December 14, the Air Force asked us to dismiss the supplemental
protest as "frivolous." By letter of December 22, the protester
responded to the dismissal request[7] and complained that the Air
Force had, in effect, evaluated the offers under several different
hypothetical scenarios, none of which was set forth in the RFP. The
protester also stated for the first time that, if the Air Force had
doubts regarding the accuracy of the RFP's best estimates of the
quantity of services that would be ordered during the base and all
option periods of the contract, the Air Force should cancel the RFP
and resolicit using revised estimates.
By letter of January 29, 1996, the Air Force restated its position
that award of a contract to Bionetics would not likely result in the
government's paying the lowest overall price for contract performance.
The Air Force also asked us to dismiss the protests, stating:
"Because the Air Force has identified a flaw in the evaluation
scheme used for this acquisition, we have decided to amend the
solicitation to include a new evaluation methodology and will
provide each competitor which previously had submitted an acceptable
technical proposal the opportunity to submit a revised Best and
Final Offer."
Because the agency proposed to amend the RFP's evaluation scheme and
to allow offerors to submit revised best and final
offers--essentially, the relief requested by the protester in its
December 22, 1995 comments--we dismissed the protests as academic on
January 30, 1996. Shortly thereafter, Bionetics requested that we
recommend that the Air Force pay Bionetics its costs of filing and
pursuing the protests.
Our Bid Protest Regulations provide that a protester may be entitled
to reimbursement of protest costs where, prior to our issuing a
decision on the merits of the protest, the procuring agency takes
corrective action in response to a clearly meritorious protest. See 4
C.F.R. sec. 21.8(e) (1996); M.E.E., Inc., B-265605.3; B-265605.4, Feb.
22, 1996, 96-1 CPD para. 109. Where the agency's actions do not
constitute corrective action in response to a protest, the protester
is not entitled to reimbursement. Id. Moreover, we will determine
the protester entitled to its protest costs only where the agency
unduly delayed taking corrective action in the face of a clearly
meritorious protest. See LORS Medical Corp.--Entitlement to Costs,
B-270269.2, Apr. 2, 1996, 96-1 CPD para. 171.
The Air Force's amending of the RFP's evaluation scheme was not
corrective action taken in response to either Bionetics's original or
supplemental protest. Bionetics asserted in both its initial and
supplemental protests that the contracting officer improperly had
determined that Bionetics's offer was unbalanced and that the Air
Force should award it the contract in strict accord with the RFP's
evaluation scheme. In defending the protests, the Air Force rejected
Bionetics's allegation that Bionetics's offer was not unbalanced.
Likewise, the Air Force rejected the assertion that Bionetics should
be awarded the contract under the RFP's original evaluation scheme.
However, during the course of investigating the allegations, the Air
Force recognized that the evaluation scheme was defective because the
contract probably would not be awarded to the offeror proposing the
lowest cost for the performance levels that would actually be
required. In addition, the Air Force reported that McClellan Air
Force Base will be closed and, therefore, it is likely that not all of
the options will be exercised; as noted above, Bionetics's proposal is
the least costly alternative only if all options are exercised. Thus,
it is clear that the Air Force took corrective action not in response
to Bionetics's original protests but for reasons that arose and became
apparent during its investigation and defense of Bionetics's protests.
As the Air Force's corrective action was not in response to a clearly
meritorious protest, Bionetics is not entitled to reimbursement of its
protest costs. See 4 C.F.R. sec. 21.8(e); M.E.E., Inc., supra.
Bionetics's belated modification of its protests to include as a
proposed remedy a request that the Air Force cancel the RFP and
resolicit using its best estimates of its actual needs does not
entitle Bionetics to reimbursement of the costs of filing and pursuing
its protests. As noted above, this suggested remedy was first made by
Bionetics in its comments filed on December 22, 1995, and the agency
notified our Office that it was taking corrective action on January
29, 1996. To the extent that the agency's corrective action may have
been the result of the protester's suggestion rather than the Air
Force's own investigation and changed circumstances, we believe that
the Air Force's reaction to the suggested remedy was sufficiently
prompt, especially considering the end of year holidays, and that
there was no undue delay requiring further expense to the protester.
See LORS Medical Corp.--Entitlement to Costs, supra.
The request for costs is denied.
Comptroller General
of the United States
1. Line items Nos. 14, 26, and 38 requested prices for the same
services on eight quantity ranges of equipment to be serviced during
the three option periods.
2. Payment under the contract would be based upon the actual number of
units serviced each month at the price quoted for that number of
units.
3. Similar pricing patterns were shown for the option years.
4. All prices are rounded to the nearest dollar.
5. The RFP stated that this was the government's best estimate of the
most likely number of units to be serviced each month.
6. After receiving Bionetics's initial protest, the Air Force
requested that the protester supply it with cost data to support its
prices for each of the quantity ranges for each year of the contract.
In response, Bionetics submitted cost data only for those line
items/sub-line items that it stated were priced below cost.
7. Several rounds of comments were received from each of the
interested parties.