BNUMBER:  B-270828
DATE:  April 3, 1996
TITLE:  Inter-Con Security Services, Inc.

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DOCUMENT 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:Inter-Con Security Services, Inc.

File:     B-270828

Date:April 3, 1996

Patricia A. Meagher, Esq., and Neil H. O'Donnell, Esq., Rogers, 
Joseph, O'Donnell & Quinn, for the protester.
Richard J. Webber, Esq., Arent Fox Kintner Plotkin & Kahn, for 
Wackenhut International, Inc., an intervenor.
Dennis J. Gallagher, Esq., Department of State, 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

Protest of contract award on basis of initial proposals without 
discussions is denied where agency concluded that acceptance of low 
offer would result in lowest overall cost to the government and 
solicitation advised offerors of possibility of award without 
discussions; record does not support protester's position that change 
in exchange rate occurring after submission of initial proposals, but 
before award, indicated that discussions would be advantageous to the 
government.

DECISION

Inter-Con Security Services, Inc. protests award, based on initial 
offers, of a time- and-materials contract to Wackenhut International, 
Inc., under solicitation No. SOJM370-93-R-0002, issued by the 
Department of State (DOS) for security guard services at the United 
States Embassy in Kingston, Jamaica.  Inter-Con, the incumbent 
contractor, argues that discussions should have been held because of 
changes in economic conditions which occurred during the 3-month delay 
in awarding the contract.

We deny the protest.

The RFP contemplated award of a fixed-price contract for a base 
9-month period, with four 1-year options.  The solicitation provided 
for award on a best value basis pursuant to a 60/40 technical/price 
formula, with an additional 5 points for a "United States person" 
preference.  The maximum 40 points available in the price evaluation 
were to be assigned to the lowest-priced proposal, and all other 
proposals were to receive proportionately fewer points based on a 
comparison with the low price.  Prices were to be stated in U.S. 
dollars.  The RFP incorporated Federal Acquisition Regulation (FAR)  sec.  
52.215-16(c) (FAC 90-29), which provides that award may be made on the 
basis of initial offers, without discussions, and advises that initial 
offers should contain the offerors' best terms from a cost or price 
and technical standpoint.    

Five proposals were received by the August 25, 1995, closing date.  
Wackenhut's proposal received the highest total score of 92 points, 
comprised of 47 technical points (second highest technical score), 40 
price points (lowest total price of ($11,528,272), and 5 preference 
points.  Inter-Con received the next highest total score of [deleted] 
points, comprised of [deleted] technical points ([deleted]), [deleted] 
price points ([deleted]), and 5 preference points.  After determining 
that Wackenhut's price was fair and reasonable and that there were no 
significant technical or price deficiencies requiring discussions, the 
contracting officer made a written determination to award to the firm 
without discussions.  

On December 13, before award was made (i.e., before Wackenhut signed 
the contract it had received on December 12), Inter-Con submitted a 
letter to the contracting agency (and a revised price schedule) 
stating that it was prepared to reduce its price by 18 percent, to 
[deleted], based on an approximately 28-percent devaluation of the 
Jamaican currency since submission of initial proposals.      
Inter-Con urged the agency to request best and final offers (BAFO).  
However, the contracting officer determined that discussions were not 
in the government's interest, and proceeded with award to Wackenhut on 
December 19, without discussions.

Inter-Con argues that, based on its indication that it could offer a 
reduced price, and the potential for receiving lower prices from other 
offerors due to the currency devaluation, discussions were in the 
government's interest and should have been conducted.  Additionally, 
the protester contends that, given the opportunity to submit a BAFO, 
its technical score would have been increased, since the evaluated 
weaknesses in its proposal were minor and easily correctable.  
Inter-Con concludes that it would have been in line for award.  

Under FAR  sec.  15.610(a)(3) (FAC 90-29), as it applies to this 
procurement, a contracting agency may award a contract without 
discussions if the solicitation advises offerors of that possibility, 
no discussions are in fact held, and the competition or prior cost 
experience clearly demonstrates that acceptance of the initial 
proposal will result in the lowest overall cost to the government.[1]  
See Energy and Envtl. Research Corp., B-261422; B-261422.2, Aug. 23, 
1995, 95-2 CPD  para.  81.  In this latter regard, discussions need not be 
opened unless a potentially significant proposed price reduction 
indicates that discussions would be highly advantageous to the 
government.  Glar-Ban, B-225709, Apr. 14, 1987, 87-1 CPD  para.  406.  In 
making this determination, an agency properly may balance the 
likelihood that opening discussions will result in a price lower than 
that of the initial low proposal against the government's interest in 
the timely acquisition of its requirements.  Planning Research Corp., 
B-237201; B-237201.3, Jan. 30, 1990, 90-1 CPD  para.  131; Microcom Corp., 
B-225140.2, Mar. 18, 1987, 87-1 CPD  para.  301.

Here, the agency properly declined to open discussions.  DOS states 
that the devaluation of the Jamaican dollar was actually 19 percent at 
the time Inter-Con submitted its revised offer, not 28 percent; 
Inter-Con has not rebutted the agency's assertion in this regard.  DOS 
states that this devaluation was not deemed sufficient to result in 
lower prices, since legislation was enacted raising the Jamaican 
minimum wage by more than 30 percent on average, effective December 4, 
1995.  DOS determined that this increase in wages "completely 
eliminates any exchange rate wage and benefit gains" that otherwise 
might be expected as a result of the currency devaluation.[2]  The 
agency further determined that, because Inter-Con's reduced price 
([deleted]) was still more than [deleted] million higher than 
Wackenhut's ($11,528,272), there was no reason to believe that a 
similar significant reduction could be expected from Wackenhut.  It 
was for these reasons that the agency determined that discussions 
would not have a significant effect on prices, and that the potential 
benefit from discussions thus did not offset the agency's interest in 
promptly meeting its needs.

On its face, the agency's balancing test was reasonable; the 
significantly higher wages mandated by law properly were weighed 
against the possibility that the devaluation would lead offerors to 
lower their prices significantly in a BAFO.  However, Inter-Con also 
challenges the agency's assumption that the minimum wage increase 
would have a 30-percent impact on revised prices, noting that under 
its current bridge contract for the requirement, the agency has 
allowed reimbursement on only the dollar value of the minimum wage 
increase rather than an increase of the percentage rise in the minimum 
wage (the 30-percent increase was determined in Jamaican dollars, and 
the total then was converted to U.S. dollars).  According to the 
protester, in calculating its late revised price, this method of 
calculating the minimum wage increase raised its first year labor 
costs for the various labor categories from [deleted] percent to 
[deleted] percent, or only [deleted] percent on average.  

Even if Inter-Con is correct that wages (in U.S. dollars) would not 
increase by the full 30 percent, this makes no difference on the 
record here.  This is because it is not apparent, and Inter-Con has 
not shown, why a [deleted] percent increase in wages would not be 
sufficient to justify DOS's determination.  A [deleted] percent wage 
increase is significant, and since the contract here is for guard 
services, where wage costs comprise a significant part of the total 
cost, we think the agency reasonably could assume that such a 
significant increase in wages would lead to a correspondingly 
significant increase in proposal prices.  Nothing in the record 
establishes that the devaluation would have had a stronger downward 
effect on prices than the upward effect of the wage increases.  There 
thus is no basis for taking issue with the agency's determination that 
there was little likelihood of obtaining significant price reductions 
through discussions, even using the 
[deleted] percent wage increase figure urged by Inter-Con; this is 
particularly the case given that, even with its price reduction, 
Inter-Con's price was substantially higher than Wackenhut's.  Under 
these circumstances, the agency was not precluded from proceeding with 
award to Wackenhut based on its initial proposal.[3]

The protest is denied.

Comptroller General 
of the United States   

1. The FAR has since been amended to permit award without discussions 
when the solicitation notifies all offerors that the government 
intends to evaluate proposals and make award without discussions, 
unless the contracting officer determines that discussions are 
necessary.  See FAR  sec.  15.610(a)(3) (FAC 90-31).  

2. The agency states that, rather than resulting from the devaluation, 
"it is much more likely that Inter-Con was able to offer a lower price 
because its first offer was far higher than necessary."

3. Inter-Con contends that its late price reduction would result in 
[deleted] price points and a total score of [deleted] points (versus 
Wackenhut's 92 points).  This is essentially a restatement of the 
argument that Inter-Con's potentially lower price required the agency 
to hold discussions.  Given our conclusion that the agency reasonably 
determined there was little likelihood of receiving a lower price than 
Wackenhut's, the fact that Inter-Con's total score may have increased 
above Wackenhut's had discussions been held did not compel the agency 
to hold discussions.