BNUMBER: B-271823
DATE: August 1, 1996
TITLE: IGIT, Inc.
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Matter of:IGIT, Inc.
File: B-271823
Date:August 1, 1996
Paul H. Schramm, Esq., and Daniel R. Schramm, Esq., Schramm & Pines,
L.L.C., for the protester.
Lynn H. Patton, Esq., and Christopher Solop, Esq., Ott & Purdy, for
Penn Enterprises, Inc.; Jesse W. Rigby, Esq., Clark, Partington, Hart,
Larry, Bond, Stackhouse & Stone, for Crown American Laundry Services,
Inc.; and Harold W. Robertson, for Robertson & Penn, Inc., the
intervenors.
Col. Nicholas P. Retson, and Maj. Michael J. O'Farrell, Jr.,
Department of the Army, for the agency.
Ralph O. White, Esq., and Christine S. Melody, Esq., Office of the
General Counsel, GAO, participated in the preparation of the decision.
DIGEST
Protest challenging contracting officer's decision to exclude
protester from a competition because the protester possessed a page
from the installation's solicitation register which included a
lump-sum government estimate for the cost of the solicited work is
sustained where there is no basis in the record to support a
conclusion that the protester acted improperly in obtaining the
document--even though the document should have been returned to the
contracting officer--and where the information at issue could be
provided to the other offerors to ameliorate any competitive advantage
obtained by the protester with little damage to the integrity of the
procurement.
DECISION
IGIT, Inc. protests its exclusion from a competition for laundry and
dry cleaning services at Fort Leonard Wood, Missouri, under request
for proposals (RFP) No. DABT31-95-R-0017, issued by the Department of
the Army. IGIT challenges as unreasonable the agency's decision to
exclude it from the competition due to its possession of an agency
document showing the lump-sum government estimate of the cost for
these services.
We sustain the protest.
BACKGROUND
IGIT is the incumbent contractor currently providing laundry and dry
cleaning services at Fort Leonard Wood under a contract awarded
January 31, 1995, using sealed bidding procedures. Although IGIT's
initial contract was awarded for a period of 1 year with four 1-year
options, the Army decided shortly after award to refrain from
exercising the options.[1] Instead, the Army issued a new
solicitation for these services on December 10, 1995. Proposals in
response to the RFP were required by March 28, 1996.
By letter dated March 4, 1996, IGIT's African-American president and
owner, Mr. Dewell Reeves, complained to his congressional
representative that the Army's decision not to exercise the options in
IGIT's laundry services contract reflected a pattern of ongoing bad
faith and racial bias on the part of contracting personnel at Fort
Leonard Wood. Mr. Reeves appended to his letter a page from Fort
Leonard Wood's solicitation register, an internal agency document, to
demonstrate that the decision not to exercise the options was made
within weeks after the initial contract award.[2] The document, as
provided to the congressman, contained one line of information showing
the solicitation number; a short description of the requirement
("laundry"); the status of the procurement ("preparing RFP"); a
lump-sum figure (entitled "estimate"); and two dates representing
internal agency milestones in the preparation of the solicitation.
The document contained no markings indicating that it should be
treated as confidential. It was dated August 18, 1995.
The contracting officer at Fort Leonard Wood first learned of IGIT's
letter to its congressman--and IGIT's possession of the lump-sum
government estimate--on or about April 4, approximately 1 week after
the receipt of initial proposals, when the installation's contracting
personnel were provided the letter and its attachments with direction
to prepare a draft reply to the congressional inquiry that followed
receipt of the letter. Between April 4 and April 12, several
contracting personnel at Fort Leonard Wood attempted to ascertain how
IGIT came into possession of both the page from the solicitation
register and the two internal memoranda prepared by the installation's
Small and Disadvantaged Business Utilization (SADBU) specialist.[3]
By letter dated April 12, the contracting officer disqualified IGIT's
proposal from further consideration in the ongoing competition. The
letter, delivered by hand in a face-to-face meeting, justified the
exclusion as follows:
"Your Congressional inquiry . . . contained an excerpt of this
directorate's solicitation register, which is not releasable to
the general public. The register contains information developed
by [Directorate of Contracting] personnel, and includes
[g]overnment estimates of individualized procurement actions.
"Your possession of the government estimate clearly establishes
an appearance and perception that you had privileged information
which gave you an apparent competitive advantage over the other
offerors."
During this meeting, the Director of Contracting asked Mr. Reeves how
he obtained the page from the solicitation register. Mr. Reeves
explained that the document appeared taped to the front door of the
laundry site in July 1995, and that his secretary found it upon
arriving at work. Handwritten notes from the meeting by the Director
of Contracting also reflect that Mr. Reeves stated he believed the
information was provided to him in order to let him know that there
would be a new solicitation and that the Army would not be exercising
the options in his contract.
By letter dated April 19, IGIT protested to our Office, complaining
that its exclusion was made in bad faith in retaliation for Mr.
Reeves' efforts to bring his claim of racial discrimination to the
attention of his congressional representative.
DISCUSSION
An agency's decision to exclude an offeror from a competition in order
to remedy a problem related to the integrity of a particular
procurement requires a balancing of competing interests set forth in
the Federal Acquisition Regulation (FAR). On the one hand,
contracting officers are granted wide latitude in their business
judgments to safeguard the interests of the United States in its
contractual relationships. FAR sec. 1.602-2; Compliance Corp., B-239252,
Aug. 15, 1990, 90-2 CPD para. 126, aff'd, B-239252.3, Nov. 28, 1990, 90-2
CPD para. 435. On the other hand, the same section of the FAR requires
contracting officers to ensure impartial, fair, and equitable
treatment of all contractors. FAR sec. 1.602-2(b); KPMG Peat Marwick,
B-251902.3, Nov. 8, 1993, 93-2 CPD para. 272, aff'd, Agency for Int'l
Dev.; Development Alternatives, Inc.--Recon, B-251902.4; B-251902.5,
Mar. 17, 1994, 94-1 CPD para. 201.
A contracting officer may protect the integrity of the competitive
procurement system by disqualifying an offeror from a competition
where the firm may have obtained an unfair competitive advantage, even
if no actual impropriety can be shown, so long as the determination is
based on facts and not mere innuendo or suspicion. NKF Eng'g, Inc. v.
U.S., 805 F.2d 372 (Fed. Cir. 1986); Holmes & Narver Servs.,
Inc./Morrison-Knudson Servs., Inc. a joint venture; Pan Am World
Servs., Inc., B-235906; B-235906.2, Oct. 26, 1989, 89-2 CPD para. 379,
aff'd, Brown Assocs. Management Servs., Inc.--Recon., B-235906.3, Mar.
16, 1990, 90-1 CPD para. 299; Laser Power Technologies, Inc., B-233369;
B-233369.2, Mar. 13, 1989, 89-1 CPD para. 267. We will overturn such a
determination only when it is shown to be unreasonable. Defense
Forecasts, Inc., 65 Comp. Gen. 87 (1985), 85-2 CPD para. 629; RAMCOR
Servs. Group, Inc., B-253714, Oct. 7, 1993, 93-2 CPD para. 213.
In reviewing the reasonableness of an exclusion decision, we examine
both the nature of the information to which the offeror had access,
Textron Marine Sys., B-255580.3, Aug. 2, 1994, 94-2 CPD para. 63, and the
conditions under which access was gained. KPMG Peat Marwick, supra.
For example, we consider whether the information at issue is
cost-related, General Elec. Gov't Servs., Inc., B-245797.3, Sept. 23,
1992, 92-2 CPD para. 196; whether the information is proprietary, KPMG
Peat Marwick, supra; or whether the information is source selection
sensitive. Holmes & Narver Servs., Inc./Morrison-Knudson Servs., Inc.
a joint venture; Pan Am World Servs., Inc., supra. We also consider
whether the information was obtained through improper business
conduct, Compliance Corp., supra, or through more innocuous means,
such as a Freedom of Information Act (FOIA) request pursued through
appropriate agency channels. KPMG Peat Marwick, supra.
IGIT's Possession of the Government Estimate
The contracting officer concluded here that IGIT's possession of the
government estimate gave it an apparent competitive advantage over the
other offerors, and it was IGIT's possession of this estimate that
formed the basis of the decision to exclude IGIT from the procurement.
While the Army concedes that the lump-sum government estimate in this
case was not marked to indicate its confidential nature, it argues
that the information is not normally given to offerors, and that it
clearly imparts a competitive advantage when available to only one
offeror. We agree. Given the obvious competitive value of an
agency's estimate of the cost to perform solicited work, we find
reasonable the contracting officer's determination that steps were
necessary to alleviate the competitive advantage to IGIT. See Holmes
& Narver Servs., Inc./Morrison-Knudson Servs., Inc. a joint venture;
Pan Am World Servs., Inc., supra (protest against failure to take
steps to alleviate an alleged competitive advantage was sustained
where the awardee had access to the independent government estimate,
acquisition plan, and evaluation criteria). Based on our review of
the record, however, we do not find reasonable the Army's conclusion
that excluding IGIT from the competition was appropriate or necessary
to remedy the advantage created by its possession of this information.
Looking first at IGIT's conduct in this matter, we cannot conclude
that IGIT acted improperly in obtaining the solicitation register.
Exclusion of an offeror is a more reasonable sanction if the offeror's
conduct in obtaining a competitive advantage was improper. See
Compliance Corp., supra (exclusion based on "industrial espionage"
involving an attempt to induce an employee of competing offeror to
sell proposal information); NKF Eng'g, Inc., 65 Comp. Gen. 104 (1985),
85-2 CPD para. 638 (exclusion based on the hiring of the contracting
officer's representative between submission of initial proposals and
receipt of best and final offers, and a subsequent significant drop in
that offeror's final price). In contrast, when the record did not
show a likelihood of an actual impropriety or conflict of interest, we
have overturned an agency's decision to exclude an offeror from the
competition. See KPMG Peat Marwick, supra. Here, nothing in the
record before us contradicts IGIT's explanation for its possession of
this document--i.e., that it was taped to the door of the laundry
facility during the summer of 1995, apparently to advise IGIT of the
agency's decision to resolicit for laundry services rather than
exercise the existing options.[4] We, therefore, have no basis to
reject IGIT's version of events.
In addition, while we agree with the Army and the intervenors that
IGIT should have returned the document to the contracting officer,
IGIT's responses to the Army's questions suggest that it simply did
not recognize the competitive value of the lump-sum estimate. IGIT's
apparent failure to recognize the sensitive nature of the lump-sum
estimate contained on the solicitation register may be explained by
the fact that the figure included is essentially IGIT's bid price for
the existing contract.[5] On the continuum between improper actions
such as "industrial espionage" and the more innocuous filing of a FOIA
request, we consider IGIT's failure to return the page from the
solicitation register closer to the latter than the former.
Finally, in considering the appropriate remedy for alleviating an
offeror's competitive advantage, in a case where there is little
evidence of improper activity, we view exclusion as a severe remedy
that is reasonable only when other, less drastic, remedies are not
practicable, or are insufficient. For example, in a case where we
sustained a protest on the ground that the awardee had a conflict of
interest--specifically, the awardee employed a former government
official with access to restricted information (including the
government estimate) to help draft the proposal--we expressly rejected
the remedy of excluding the awardee from the competition and instead
recommended releasing the restricted information to all the offerors
and calling for a new round of proposals. Holmes & Narver Servs.,
Inc./Morrison-Knudson Servs., Inc. a joint venture; Pan Am World
Servs., Inc., supra.
Here, as in Holmes & Narver, release of the government estimate to all
offerors is the reasonable remedy for the competitive advantage
accruing to IGIT. Although the agency and the interested parties
argue that the release of the estimate will create an auction, there
are several factors to suggest that any adverse effect from the
release of this estimate will be minimal, and will be consistent with
our prior decisions. In this regard, we note that the government
estimate in this case is considerably less detailed than the one
released in Holmes & Narver, where the estimate included cost
calculations for each of 27 separate functions. In addition, the
estimate here conveys essentially no more information to offerors than
the release of the contract price when the previous award was made to
IGIT via sealed bids. Since the prior price of these services is
clearly public information, and the difference between the two figures
is essentially de minimis, we see no serious damage to the integrity
of the procurement system from the release of this estimate.[6] Thus,
under the circumstances here, eliminating IGIT's competitive advantage
while retaining IGIT as an offeror outweighs the government's interest
in not appearing to conduct an auction.[7] KPMG Peat Marwick, supra;
Holmes & Narver Servs., Inc./Morrison-Knudson Servs., Inc. a joint
venture; Pan Am World Servs., Inc., supra.
RECOMMENDATION
We conclude that the decision to exclude IGIT from the competition
here does not strike a reasonable balance between the agency's
appropriate recognition of the need to ameliorate the competitive
advantage arising from IGIT's possession of the government estimate,
and the requirement to treat IGIT fairly. Thus, the Army's actions,
no matter how well-intentioned, violate the mandate of FAR sec. 1.602
requiring contracting officers to ensure impartial, fair, and
equitable treatment of contractors. We recommend that the Army
eliminate any competitive advantage given IGIT by providing the
lump-sum government estimate to all offerors and requesting a new
round of proposals.
We also recommend that the protester be reimbursed the reasonable
costs of filing and pursuing this protest, including attorneys' fees.
4 C.F.R. sec. 21.8(d) (1996). The protester should submit its certified
claim for protest costs directly to the agency within 90 days of
receipt of this decision. 4 C.F.R. sec. 21.8(f)(1).
The protest is sustained.
Comptroller General
of the United States
1. The written memorandum formally requesting resolicitation of these
services is dated May 25, 1995.
2. Other information appended to Mr. Reeve's letter to his
congressional representative will be discussed below.
3. These memoranda were also attached to the letter to the
congressman. Neither document contains procurement sensitive
information, although one contains sensitive internal information
providing some support for the protester's views regarding his
allegations of racial bias at the installation.
4. For the record, while we have no rebuttal of the protester's
version of how it received the page from the solicitation register,
the agency report's legal memorandum does express doubts about the
protester's explanation. The report points out that: (1) Mr. Reeves
has claimed to have a source in the Directorate of Contracting; (2)
Mr. Reeves states that the SADBU gave him the memorandum for the
record that provides some support for his claims; and (3) certain IGIT
documents were found on the SADBU's computer. Thus, the Army implies
that the SADBU provided the page from the solicitation register, and
explains that it has requested a Criminal Investigative Division
review of whether the SADBU was the protester's source. However, the
SADBU denies providing the document to IGIT, and the doubts expressed
in the agency report amount only to suspicion.
5. Although the two figures are very similar, they are not identical;
nonetheless, the approximate 2.5-percent difference in the figures
suggests that IGIT's successful bid price in the most recent
competition provided the basis for the estimate.
6. Since the previous procurement was awarded using sealed bidding
procedures, under which bids are opened publicly, IGIT's previous
price for these services is publicly available. FAR sec. 14.101.
7. We need not reach the protester's allegation that racial bias was,
in part, a motivating factor in this case as we sustain the protest
and recommend that IGIT be permitted to participate in the
procurement.