BNUMBER: B-274365
DATE: December 6, 1996
TITLE: C.W. Over and Sons, Inc.
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Matter of:C.W. Over and Sons, Inc.
File: B-274365
Date:December 6, 1996
William J. Spriggs, Esq., Spriggs & Hollingsworth, for the protester.
Michael H. Horrom, Esq., Maryland Procurement Office, National
Security Agency, 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
1. Federal Acquisition Regulation requirement that the value of an
indefinite quantity contract be more than nominal does not apply to
individual tasks under a contract that includes a provision
guaranteeing that minimum contract value will be $800,000.
2. Solicitation requirement that contractor perform certain tasks
that cannot be definitively priced prior to award does not create
unreasonable risk where such potential tasking requirements are
minimal and the price for such work will be the subject of negotiation
between the contractor and the agency.
3. Where solicitation lists prices for more than 25,000 tasks,
protester's identification of a small number of prices that may not
reflect the most recent actual costs does not require canceling the
solicitation because offerors' proposed coefficients are intended to
reflect the risk associated with such price variations.
DECISION
C.W. Over and Sons, Inc. (Over) protests the provisions of request for
proposals (RFP) No. MDA904-96-R-0702, issued by the Maryland
Procurement Office, National Security Agency (NSA), to perform a
variety of construction, renovation, and repair services. The
solicitation contemplates award of an indefinite delivery/indefinite
quantity contract under which the agency will issue delivery orders
for specific tasks. Over, the incumbent contractor, asserts that the
solicitation contains various flaws.
We deny the protest.
BACKGROUND
Over is currently performing a contract under which it provides
construction services to NSA which Over describes as "identical" to
the services sought under the protested solicitation. Over's current
contract was awarded in 1994; there are two remaining options, each
for a 1-year period, which the agency does not intend to exercise due,
in part, to the agency's belief that it can reduce its costs through
competition.
Prior to the agency's issuance of this solicitation, Over requested
the agency to exercise the remaining options of its current contract.
By letter to the agency dated July 3, 1996, Over stated:
The purpose of this letter is to offer you an unsolicited
proposal . . . . In return for an agreement from you that the
government will exercise the remaining two options of your
contract with my firm, I will relocate my warehouse and project
management functions off of Ft. Meade and into facilities under
my control[[1]] without passing these additional costs I am
incurring to the government. At the same time, I am willing to
enter into a discussion of adjusting my coefficients contained in
these two remaining option[s] to achieve some reduction in their
cost to you."
Declining to accept Over's offer, the agency issued the solicitation
on July 5, 1996, and, as in Over's current contract, incorporated a
unit price book (UPB) containing more than 25,000 line items of
pre-priced construction tasks.[2] The prices in the UPB are
calculated to reflect the standard direct labor costs and materials
for each task, but not the contractor's overhead and profit. The
solicitation calls for offerors to propose various fixed coefficients
reflecting the offerors' overhead and profit; the coefficients will be
applied to the UPB prices to establish contract prices for the listed
tasks.[3] Regarding tasks not listed in the UPB, the solicitation
references various Means Cost Data publications,[4] from which the
levels of effort necessary to perform unlisted tasks may be derived,
stating that contract prices for such non-prepriced items will be
derived from the Means Cost Data publications, applicable Davis-Bacon
Act wage rates, and the contractor's coefficients.
The solicitation provides that proposals will first be evaluated for
technical acceptability, and that award will be made on the basis of
the technically acceptable proposal offering the best value to the
government, considering price and past performance, and that price
will be the most significant factor. Consistent with the requirements
of the Federal Acquisition Regulation (FAR) sec. 15.608(a)(2)(iii) (FAC
90-31), section M also states that "firms lacking relevant past
performance history shall receive a neutral evaluation for past
performance."
The deadline for submission of proposals was 3 p.m. on August 28,
1996. This protest was filed at 10 a.m. on that date.
DISCUSSION
Over first protests that the solicitation violates FAR sec. 16.504(a)(2)
which states: "To ensure that the [indefinite-quantity] contract is
binding, the minimum quantity must be more than a nominal quantity."
Although RFP section H.25 states: "The minimum contract value which
will be required and paid under this contract is $800,000," Over
refers to an RFP provision which establishes a nominal value ($0.01)
as the minimum for any individual delivery order, arguing that this
provision violates the FAR requirement.
An indefinite quantity contract is binding only if the buyer agrees to
purchase a guaranteed minimum quantity of goods or services. Mason v.
United States,
615 F.2d 1343 (Ct. Cl.1980). However, individual delivery orders
issued under such a contract do not have to be in some minimum amount
in order to be binding. See Sunbelt Properties, Inc., B-249307, Oct.
30, 1992, 92-2 CPD para. 309; International Creative and Training, Ltd.,
B-245379, Jan. 6, 1992, 92-1 CPD para. 26. Here, there is a guaranteed
minimum value of $800,000 for the base contract period. FAR sec.
16.504(a)(2) requires no more.
Over next asserts that the solicitation provisions regarding
non-prepriced items render the procurement defective. Over complains
that the nature of non-prepriced work is "unpredictable, unknown and
risky" and maintains that, due to inclusion of these items, the
solicitation lacks sufficient certainty for offerors to compete.[5]
The agency first responds that the quantity of non-prepriced work
contemplated under this solicitation is minimal. Under Over's current
contract, non-prepriced tasks have made up approximately 15 percent of
the total contract value.[6] The agency explains that these items
have been added to the UPB in the current solicitation, thereby
substantially decreasing the level of non-prepriced tasking reasonably
anticipated. The agency also notes that, under the terms of the
solicitation, the contract price for any non-prepriced items will be
subject to negotiation between the agency and the contractor.
Specifically, section H.18 of the solicitation provides that the
contractor will prepare a pricing proposal for non-prepriced tasks
based on its own inspection of the work site as well as the Means Cost
data, applicable Davis-Bacon Act wage rates, and its coefficients. On
the basis of these facts, the agency maintains that the risk flowing
from non-prepriced tasks under the solicitation is not excessive.
A solicitation need not be so detailed as to remove every uncertainty
from the minds of prospective offerors or eliminate every performance
risk for the contractor. LBM, Inc., 70 Comp. Gen. 493 (1991), 91-1
CPD para. 476. Bean Dredging Corp., B-239952, Oct. 12, 1990, 90-2 CPD para.
286; AAA Eng'g & Drafting, Inc., B-236034, Oct. 31, 1989, 89-2 CPD para.
404; I.T.S. Corp., B-228919, Nov. 25, 1987, 87-2 CPD para. 521. As risk
inheres in any contract, offerors are expected to use their
professional expertise and business judgment in anticipating a variety
of influences affecting performance costs. See Custom Envt'l Serv.,
Inc., 70 Comp. Gen. 184 (1991), 91-1 CPD para. 38; McDermott Shipyards,
Div. of McDermott, Inc., B-237049, Jan. 29, 1990, 90-1 CPD para. 121.
Over's current contract includes similar provisions regarding
non-prepriced items. As discussed above, by letter dated July 3,
1996, Over expressly offered to make certain concessions to the
agency, including a reduction of its coefficients, if, rather than
re-competing the requirements, the agency agreed to exercise the
remaining contract options. Over does not explain how the nature of
the non-prepriced work can be so "unpredictable, unknown and risky" as
to preclude meaningful competition under the protested solicitation
when it forms a part of a contract that Over is requesting the agency
to extend--at a reduced price from that currently in effect. In any
event, in light of the limited amount of non-prepriced work to be
performed, along with the fact that such work will be the subject of
negotiation between the parties, we see no basis to conclude that the
level of risk in this solicitation is unacceptable.
Over next challenges a provision in the statement of work (SOW)
regarding scheduling of work. Section VI(d) of the SOW provides that,
prior to award of individual delivery orders, the contractor will
submit a critical path method (CPM) schedule and states that such
schedules are generally based on a production rate of 600 square-feet
per day. Over complains that this production rate may not be
reasonable for smaller projects.
Prior to Over's protest, the agency responded to various requests for
clarifications, amending the solicitation to incorporate the answers
provided. A question regarding the appropriate production rate for
purposes of creating a schedule was raised and responded to by the
agency. Specifically, the agency stated that, while a 600 square-foot
production rate would normally be applicable to large projects,[7] the
production rate applied to any given project could vary, depending on
the facts and circumstances of the project.
As noted above, an agency need not identify with absolute certainty
all aspects of contract performance. LBM, Inc., supra; Bean Dredging
Corp., supra. The determination of an agency's minimum requirements
and the best method of accommodating those requirements are primarily
within the agency's discretion, and we will not question the exercise
of that discretion unless the record shows it to be unreasonable.
CardioMetrix, B-257408, Aug. 3, 1994, 94-2 CPD para. 57.
Here, again, the provisions regarding the production rate in this
solicitation are essentially the same as the terms under which Over's
current contract is being performed. Again, we are unpersuaded that
the alleged lack of precision regarding the basis for establishing a
schedule creates an unacceptable level of risk when Over has
repeatedly requested that the agency extend its current contract with
the same provision.
Over next complains that some of the prices in the UPB for this
solicitation are different from the prices for similar tasks performed
under similar Army contracts.[8] Over asserts that the UPB for this
solicitation should be revised to reflect the Army price list.
The agency states that it conducted a market survey prior to issuing
this solicitation but notes that, due to the number of items priced in
the solicitation, it cannot guarantee that each and every one of the
25,000 items reflects the most recent cost data. The agency maintains
that providing offerors an opportunity to submit coefficients to be
applied to the prices in the UPB effectively protects the offerors
from pricing disparities.
We find no merit in Over's challenge to this solicitation based on the
fact that the NSA price list is not identical to the Army's price
list. Over has questioned approximately 200 of the 25,000 items.
Further, as the agency notes, the appropriate price for any given item
will vary based on a variety of every-changing factors. It is
precisely this fluctuation that the offerors' proposed coefficients
are intended to address.
Finally, Over challenges the solicitation provision regarding the
evaluation of offerors' past performance. Over states:
"C.W. Over has no idea what the following sentence means:
'Vendors lacking relevant past performance history will receive a
neutral assessment for past performance.' How is past
performance, the principle evaluation criterion next to price, to
be evaluated when a 'neutral' rating can be given no relevant
history?"
As the agency points out, FAR sec. 15.608(a)(2)(iii) provides, "Firms
lacking relevant past performance history shall receive a neutral
evaluation for past performance." The solicitation language, and the
FAR provision it reflects, clearly provides that proposals submitted
by offerors lacking relevant past performance history will neither be
penalized nor credited with regard to the past performance factor.
See, e.g., Excalibur Systems, Inc., B-272017, July 12, 1996, 96-2 CPD para.
13.
The protest is denied.
Comptroller General
of the United States
1. These were actions the agency had previously sought.
2. As Over explains, "Very few activities involved with construction
projects are new or experimental. Most have been repeated countless
time[s] and the time and level of effort necessary to complete
individual activit[ies] is a known fact."
3. Offerors were required to provide co-coefficients for the base year
and each option year applicable to the following categories of work:
normal working hours; overtime hours; small requirements; and
"fly-away services" ( services performed outside a 50-mile radius of
Fort Meade, Maryland).
4. Section VII of the statement of work referenced the Means
Facilities Construction Cost Data, 53rd Annual Edition; the Means
Mechanical Cost Data, 18th Annual Edition; the Means Plumbing Cost
Data, 18th Annual Edition; and the Means Electrical Cost Data, 18th
Annual Edition.
5. In pursuing this protest, Over repeatedly refers to Army FAR
Supplement (AFARS) Subpart 17.91 which governs the Army's use of job
order contracts, arguing that NSA's solicitation violates the AFARS.
As the agency points out, NSA is not subject to the AFARS.
Accordingly, to the extent Over's protest asserts a violation of that
regulation, it fails to state a valid basis for protest.
6. This amount includes tasking requirements that have been ordered
repeatedly. As the agency points out, a task is truly non-prepriced
only the first time it is ordered.
7. Section VIII of the SOW specifically identified the characteristics
of "small requirements."
8. In pursuing this protest, Over complains that NSA refers to the
contract solicited here as a "delivery order construction contract,"
while the Army and its applicable regulations refer to a substantially
similar contract as a "job order contract." We view these arguments
as extensions of Over's assertions, discussed above, that NSA is
violating the AFARS. Since NSA is not bound by the Army's terminology
or its regulations, we do not consider this issue further.