BNUMBER: B-274201; B-274202
DATE: November 26, 1996
TITLE: New Breed Leasing Corporation
**********************************************************************
Matter of:New Breed Leasing Corporation
File: B-274201; B-274202
Date:November 26, 1996
Matthew A. Simchak, Esq., Philip J. Davis, Esq., and Phillip H.
Harrington, Esq., Wiley, Rein & Fielding, for the protester.
William E. Franczek, Esq., Vandeventer, Black, Meredith & Martin, an
intervenor.
Dana N. Smith, Esq., and Anita D. Polen, Esq., Department of the Navy,
for the agency.
Glenn G. Wolcott, Esq., and Paul Lieberman, Esq., Office of the
General Counsel, GAO, participated in the preparation of the decision.
DIGEST
Protests are sustained where agency's failure to recognize and correct
obvious flaws in prior solicitations and contracts constituted lack of
advance planning which precluded meaningful competition for
requirements and resulted in sole source extensions of concededly
flawed contracts with the incumbent contractor.
DECISION
New Breed Leasing Corporation protests the Department of the Navy's
cancellation of solicitation Nos. N00189-94-R-0304 and
N00189-94-R-0315 (hereinafter "R-0304" and "R-0315") for material
handling and logistics support services at various sites throughout
the world,[1] and the sole source extensions of contract Nos.
N-00189-94-D-0003 and N-00189-94-D-0006 (hereinafter "D-0003" and
"D-0006") for those services. The solicitations were issued as small
business set-asides; the incumbent contractor, Management Consulting,
Inc. (Mancon) is a large business, not eligible to compete under the
canceled solicitations. New Breed maintains there is no rational
basis for the cancellation of the solicitations or for the sole source
extensions of Mancon's contracts, and that the agency's actions
resulted from a lack of advance planning.
We sustain the protests on the basis that the agency's actions
resulted from a lack of advance planning.
BACKGROUND
The requirements at issue are sought by the Department of the Navy's
Fitting Out and Supply Support Assistance Center (FOSSAC), which
provides logistical and material support services to the Department of
Defense (DOD) and other federal agencies throughout the world under
the Intra-Fleet Supply Support Operations Program (ISSOP).[2]
Mancon's contracts were awarded in October 1993, for a base year with
2 option year periods extending through September 30, 1996. On July
5, 1994, FOSSAC submitted requisitions to the Fleet and Industrial
Supply Center (FISC), Norfolk Acquisition Group to initiate follow-on
procurements for the ISSOP support provided under Mancon's contracts.
The requirements for the east coast solicitation (RFP No. R-0304) and
west coast solicitation (RFP No. R-0315) were synopsized in the
Commerce Business Daily (CBD) on September 5 and 6, 1994,
respectively. Acquisition plans were approved approximately 7 months
later, on April 25 and June 6, 1995, respectively; the two
solicitations were subsequently issued in June of 1995.
Each solicitation contained a total of 112 contract line item numbers
(CLINs), broken down into 75 firm, fixed-price CLINs, 26
time-and-materials CLINs, and
11 direct reimbursement CLINs. Each CLIN had sub-CLINs for the
specific sites to be serviced.[3] For each of the 75 fixed-price
CLINs, offerors were required to propose fixed prices, reflecting
differing labor rate mixes, for the performance of various tasks.[4]
The solicitation provided for award on the basis of the low-priced,
technically acceptable offer. Solicitation No. R-0304 was amended
three times and solicitation No. R-0315 was amended twice. None of
the solicitation amendments significantly altered the description of
tasks to be performed and, as amended, solicitation Nos. R-0304 and
R-0315 required that proposals be submitted by September 21, and
October 5, 1995, respectively.
Four offerors, including New Breed, timely submitted proposals for
both solicitations which were subsequently evaluated by FISC Norfolk
personnel. Technical evaluation of proposals under both solicitations
was completed by November 17, 1995; all four proposals were determined
to be technically acceptable. Evaluation of cost/price proposals
under RFP No. R-0304 was completed in March 1996, and for proposals
under RFP No. R-0315, in June 1996. By memoranda dated April 16 and
July 10, FISC Norfolk personnel sought authority from Headquarters,
Naval Supply Systems Command (NAVSUP), to proceed with the procurement
by conducting discussions with all offerors. The memoranda stated
that the evaluators had found significant disparities in prices among
offerors, noting that the disparities were particularly prevalent
among the 75 fixed-price CLINs.
On July 30, NAVSUP personnel met with FISC Norfolk personnel to
discuss concerns regarding the procurement. NAVSUP personnel
expressed specific concern that the RFP "lacked definitive [task]
descriptions." Following this meeting, the contracting officer
acknowledged that the solicitation was fundamentally flawed, stating:
"Although a separate statement of work was provided for each of
the firm fixed contract line items, these statements lacked the
basic information required for the proper use and reasonable
pricing of, firm fixed price items. For example, the thirteen
line items . . . requiring the movement of material do not
provide information relative to the type, size, weight and
quantity of the material, or the distance or location that the
material is to be moved . . . . Without the information relative
to what is to be moved, where it is to be moved, and how much is
to be moved, unacceptable performance uncertainties exist in the
statement of work, rendering them unsuitable for a firm fixed
pricing arrangement."
On August 8, the agency canceled the solicitations, stating that it
intends to completely revise them. Specifically, the agency states
that it intends to perform "a thorough and comprehensive review and
rewrite of the statements of work [for each line item]," noting that
"because of the many sites serviced under these contracts, suitable
statements of work would have to address the peculiarities of each
location." The agency also states that it intends to change the
source selection criterion from award of a contract based on the
technically acceptable, low cost proposal, to a "best value" approach
which will give greater weight to technical capability, management,
and past experience.[5] In light of the magnitude of the proposed
changes, the agency intends to use the entire amount of time normally
allocated under Navy guidelines for processing a procurement of this
size and type.[6]
Accordingly, since Mancon's contracts expired on September 30, agency
officials concluded that those contracts would have to be extended on
the basis of "urgent and compelling circumstances."[7] 10 U.S.C. sec.
2304(c)(2) (1994). Because of the uncertainty resulting from the
solicitation specifications, the agency states that it is "impossible
to determine" whether extensions of Mancon's contracts will be more
expensive to the government than award of a contract to one of the
actual offerors.
DISCUSSION
New Breed protests that there is no rational basis for either the
agency's cancellation of the solicitations or the sole source
extensions of Mancon's contracts, and that the sole source award
resulted from a lack of advance planning. As discussed below, we
conclude that the agency's cancellation of the solicitations was
appropriate, but we sustain the protest on the basis that the need for
the sole source extension of Mancon's contracts was created by the
agency's failure to engage in advance planning.[8]
Based on our review of the record, we agree with the agency that the
solicitations were fundamentally flawed. Among other things, the
solicitations required the movement of material on a fixed-price
basis, but failed to provide information regarding the type, size,
weight, and quantity of the material, or the distance or location that
the material is to be moved. Absent this information, the agency
could reasonably believe that offerors did not have a clear or common
basis for pricing their offers and that the awardee would not
necessarily understand what it would be obligated to do during
contract performance.[9] On this record, we have no basis to disagree
with the agency's belief that cancellation of the solicitations was
appropriate.[10]
We next consider New Breed's assertion that the Navy's sole source
extensions of Mancon's contracts are the result of a lack of advance
planning by the Navy. In responding to this issue, the contracting
officer asserts:
"The determination that the solicitations' requirements were not
adequately defined was not anticipated, and not realized until
the end of July 1996. Therefore, the need for the extension is
not due to lack of planning, [but] rather, to an unanticipated
need for changes realized in the execution of the Navy's
planning."
The record here simply does not support the contracting officer's
assertion that the fundamental flaws in these solicitations were not
reasonably anticipated or realized "until the end of July 1996."
Specifically, the record shows that the solicitation requirements were
identified by FOSSAC in July 1994 and synopsized in the CBD in
September of that year. The agency then spent 7 and 9 months
respectively preparing acquisition plans for each solicitation; a plan
for RFP No. R-0304 was approved on April 27, and for RFP
No. R-0315 on June 6. More time elapsed before each solicitation was
issued: RFP No. R-0304 was issued on June 19; RFP No. R-0315 was
issued on June 28. The solicitations were amended three and two
times, respectively. Proposals responding to RFP No. R-0304 were
submitted on September 21, and proposals responding to RFP No. R-0315
were submitted on October 5. While both sets of technical proposals
were evaluated by November 17, the agency absorbed another 6 months
evaluating the cost/price proposals under RFP No. R-0304, and 8 months
evaluating the cost/price proposals under RFP No. R-0315, completing
those tasks in March and June 1996, respectively. Another month
elapsed before business clearance memoranda, dated April 29, for RFP
No. R-0304 and July 10 for RFP No. R-0315, were prepared and sent to
NAVSUP. These memoranda noted significant pricing disparities among
the proposals.
On this record, we agree with New Breed's position that the agency's
sole source extensions of Mancon's contracts just 2 months prior to
their expiration resulted from a lack of advance planning.
The Competition in Contracting Act (CICA) permits noncompetitive
acquisitions in specified circumstances, such as when the agency's
need for the services is of unusual and compelling urgency, and they
are available from only one responsible source. 10 U.S.C. sec.
2304(c)(2)(1994). However, under no circumstances may noncompetitive
procedures be used due to a lack of advance planning by contracting
officials. 10 U.S.C. sec. 2304(f)(5); TeQcom, Inc., B-224664, Dec. 22,
1986, 86-2 CPD para. 700.
Our Office has recognized that the requirement for advance planning is
not a requirement that such planning be entirely error-free or that
such planning be successful. See, e.g., Sprint Communications Co.,
L.P., B-262003.2, Jan. 25, 1996, 96-1 CPD para. 24. Nonetheless, as with
all actions taken by an agency, the advance planning required under 10
U.S.C. sec. 2304 must be reasonable. In enacting CICA, Congress
explained: "Effective competition is predicated on advance procurement
planning and an understanding of the marketplace." S. Rep. No. 50,
98th Cong., 2d Sess. 18 (1984), reprinted in 1984 U.S.C.C.A.N. 2191.
The Senate Report also quoted with approval the following testimony
regarding the need for advance planning:
"Opportunities for obtaining or improving competition have often
been lost because of untimely, faulty, or the total lack of
advance procurement planning. Noncompetitive procurement or
inadequate competition also has resulted many times from the
failure to develop specifications . . . . By requiring effective
competition, Congress will serve notice on the agencies that they
will need to do more than the minimum to comply with the
statute." S. Rep. No. 50, 98th Cong., 2d Sess. 19 (1984),
reprinted in 1984 U.S.C.C.A.N. 2192.
In the factual context presented here, the solicitation flaws--as
described and explained by the agency itself--are so fundamental as to
indicate an unreasonable attempt at advance planning. As noted above,
the agency agrees that the statements of work for individual CLINs
lacked "basic information" such as "the type, size, weight and
quantity of the material, or the distance or location that the
material is to be moved." The agency further agrees that "[w]ithout
the information relative to what is to be moved, where it is to be
moved, and how much is to be moved," meaningful competition is
impossible. Nonetheless, the contracting officer asserts that these
fundamental flaws were "unanticipated and not realized until the end
of July, 1996." The agency could not have engaged in reasonable
advance planning, yet first have realized that the solicitation was
fundamentally flawed more than a year after the solicitations were
issued and more than 8 months after proposals were submitted.
The rudimentary omissions in the agency's preparation for this
procurement are not limited to a failure to provide competitors with
"basic information" regarding the tasks to be performed. In July
1996, agency officials concluded that, rather than awarding a contract
on the basis of the technically acceptable proposal offering the
lowest cost, the procurement should be awarded on a "best value"
basis. In a memorandum dated July 30, 1996, the agency notes that
"prior ISSOP contracts were awarded using best value," but
concludes--without further explanation--"we can only speculate why
best value was not used in these solicitations." The acquisition
plans for both procurements were approved by June 6, 1995. It was not
reasonable for the agency to take nearly 13 months to reach the
conclusion that the solicitation was materially flawed regarding the
basis for contract award.
Finally, the extraordinary length of the sole source extension to
Mancon's contract demonstrates that the agency's activities leading up
to that extension were entirely ineffective with regard to meaningful
preparation for a competitive award. The agency maintains that the
sole source modification of Mancon's contract must extend for an
entire year because the solicitation must undergo "a thorough and
comprehensive review and rewrite." Issuance of the revised
solicitations is not anticipated before February 1997, and the agency
maintains it will be unable to make a competitive award "until June
1997 at the earliest." In the event discussions are conducted and
best and final offers submitted, the agency does not anticipate award
until August 1997. The agency asserts that this schedule "is an
ambitious one," noting that its internal guidelines contemplate a
period of 310 days to completely perform a procurement of this size
and type. Clearly, the agency's need to use the entire time period
normally required to complete planning for and implementation of this
type of procurement provides further support for our conclusion that
its prior planning activities were inadequate.
Based on the record summarized above, we conclude that the Navy used
non-competitive procedures because of a lack of reasonable advance
planning by its officials, thereby violating 10 U.S.C. sec. 2304(f)(5).
In short, the agency's failure to provide the basic information
required for meaningful competition, the fact that the solicitations'
basis for award was not sound, and the fact that the agency
contemplates using at least the entire 10-month period normally
allotted for conducting a procurement of this type, leads to the
conclusion that the agency failed in its obligation to engage in
reasonable advance planning as required by CICA. See Freund
Precision, Inc., 66 Comp. Gen. 90 (1986), 86-2 CPD para. 543;
Techno-Sciences, Inc., B-257686; B-257686.2, Oct. 31, 1994, 94-2 CPD para.
164; K-Whit Tools, Inc., B-247081, Apr. 22, 1992, 92-1 CPD para. 382;
TeQcom, Inc., supra.
The protests are sustained.
RECOMMENDATION
In view of the agency's undisputed need for the services at issue, we
do not recommend that Mancon's contracts be immediately terminated.
However, we do recommend that the agency make expeditious efforts to
finalize competitive procurements for these requirements and terminate
Mancon's contracts upon award of those contracts. We also recommend
that New Breed recover its cost of filing and pursuing these protests
including reasonable attorneys' fees. Bid Protest Regulations, sec.
21.8(d)(1), 61 Fed. Reg. 39045, 39046 (July 26, 1996) (to be codified
at 4 C.F.R. 21.8(d)(1)). The protester should submit its certified
claim for such costs, detailing the time expended and costs incurred,
directly to the agency within 60 days after receipt of this decision.
Bid Protest Regulations, supra
Comptroller General
of the United States
1. Solicitation No. R-0304 covers services for sites in the eastern
half of the United States, Europe, Africa, the Middle East, and the
Caribbean. Solicitation No. R-0315 covers services for sites in the
western half of the continental United States, Hawaii, Guam, and
Japan.
2. Examples of the services provided through the ISSOP include
material offload/backload, relocation, distribution,
packing/packaging, requisitioning, excess material processing,
receiving, stowing, inventorying, data entry, preparing and updating
financial records, word processing/document preparation, sorting/
distributing packages/mail, repairing, testing or modifying
microcomputers, and witnessing household good reweighs.
3. In solicitation No. R-0304 each CLIN had five sub-CLINS for:
Charleston; Europe, Africa & MidEast; Mayport; Philadelphia; and
Portsmouth. In solicitation No. R-0315 each CLIN had six sub-CLINs
for: Bremerton; Guam; Yokosuka; Oakland; Pearl Harbor; and San Diego.
4. For example, under CLIN 001 each offeror was required to propose a
price per ton to "offload material from ships individual storerooms or
complete offload to warehouse." Under CLIN 002, each offeror was
required to propose a price per ton to "load material from warehouse
ashore to storerooms aboard ship."
5. In a "memorandum for the record," dated July 30, 1996, the
contracting officer states:
"The evaluation criteria was the final topic of discussion
[in the meeting between NAVSUP personnel and FISC Norfolk
personnel], and NAVSUP advised [that] best value was the
appropriate form of evaluation. Prior ISSOP contracts
were awarded using best value. Since none of the same
contracting specialists are processing the solicitation
this time, we can only speculate why best value was not
used in these solicitations."
6. The agency refers to Navy Instruction 4200, dated November 27,
1995, entitled "Fiscal Year 1996 Customer Procurement Planning Guide,"
which contemplates "a period of 310 days to process competitively
solicited requirements in excess of $1 million in which the evaluation
is performed on a best value basis."
7. The agency states that there are currently more than 400 delivery
orders being performed at more than 400 different locations, involving
an estimated 1,700 contractor employees performing services that are
critical to the ongoing interests of the United States. The protester
does not dispute the government's ongoing critical need for the
services at issue here.
8. The agency argues that New Breed is not an interested party for
purposes of filing this protest because its initial proposal did not
offer the lowest price. However, that concern is obviously irrelevant
to this issue. See, e.g., Tri Tool Inc., B-229932, Mar. 25, 1988,
88-1 CPD para. 310; Free State Reporting, Inc.; Neal R. Gross and Co.,
Inc., B-225531 et al., Jan. 13, 1987, 87-1 CPD para. 54.
9. We find unpersuasive New Breed's assertion that, because Mancon has
successfully performed the prior contracts awarded under similarly
defective specifications, the agency must now award a contract to a
new contractor on the same basis. The fact that Mancon has been able
to successfully perform the contracts pursuant to similar flawed
specifications provides no assurance that a new contractor will
experience similar success.
10. The agency states that, notwithstanding the flawed specifications,
Mancon has demonstrated its capability to successfully perform the
contract. At New Breed's request, the agency produced all change
orders issued under Mancon's prior contracts. Those documents
demonstrated that virtually no change orders had been issued under
Mancon's prior contracts. As New Breed, itself, recognizes, "in a
world-wide ISSOP program valued well in excess of $100 million . . .
the Navy has paid a total of $13,226.97 in claims [to Mancon] . . . .
To put the claims in perspective, in total those claims represent
.0091 percent of the contract value."