BNUMBER: B-274689.4
DATE: November 26, 1997
TITLE: CitiWest Properties, Inc., B-274689.4, November 26, 1997
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DOCUMENT FOR PUBLIC RELEASE
The decision issued on the date below was subject to a GAO Protective
Order. This redacted version has been approved for public release.
Matter of:CitiWest Properties, Inc.
File: B-274689.4
Date:November 26, 1997
Anthony F. Radd, Esq., Payne, Gates, Farthing & Radd, P.C., for the
protester.
Arthur Serratelli, Esq., and Howard W. Roth III, Esq., Vandeventer,
Black, Meredith & Martin, L.L.P., an intervenor.
Virginia Kelly Stephens, Esq., Department of Housing & Urban
Development, for the agency.
Charles W. Morrow, Esq., and Guy R. Pietrovito, Esq., Office of the
General Counsel, GAO, participated in the preparation of the decision.
DIGEST
An agency failed to conduct meaningful discussions with the protester,
where the agency did not inform the protester during discussions of
the weaknesses or deficiencies in its proposal that led to its
exclusion from the second, post-discussions competitive range.
DECISION
CitiWest Properties, Inc. protests the award of a contract to
Tidewater Homes Realty, Inc. under request for proposals (RFP) No.
H03R95062400000, a total small business set-aside, issued by the
Department of Housing and Urban Development (HUD), for real estate
asset manager services for single-family properties owned by HUD or in
its custody in the Virginia Beach, Virginia area. Although CitiWest
originally received award under the RFP, in Tidewater Homes Realty,
Inc., B-274689, Dec. 26, 1996, 96-2 CPD para. 241, we sustained
Tidewater's protest because we found that Tidewater's proposal was
evaluated unequally vis-�-vis CitiWest's proposal. In response to our
recommendation, HUD reevaluated proposals, determined that CitiWest's
proposal was not in the competitive range, and selected Tidewater's
proposal for award.
We sustain the protest.
The RFP, issued on June 1, 1995, provided for the award of a firm,
fixed-price indefinite quantity, contract for a base year with 3
option years, on a best-value basis with technical worth more than
cost/price. The technical evaluation factors and corresponding values
were as follows:
1. Demonstrated experience in the management of single-family
properties similar to and in a like area as those covered by this
solicitation. [25 points]
2. Demonstrated experience in developing lists of needed
repairs, such as is required by HUD's Minimum Property Standards
(MPS), and estimating the costs of repairs. [25 points]
3. Demonstrated experience in soliciting repair bids,
coordinating and overseeing repair work, and inspecting for
satisfactory work completion. [15 points]
4. Demonstrated experience in managing a rental program,
including establishing fair market rentals and collections from
present and former tenants, for single family properties. [10
points]
5. Understanding of HUD objectives and the required tasks as
specified in the solicitation. [10 points]
6. Evidence of adequate office--staffed with appropriately
trained staff and equipped appropriately (or the ability to
establish such), reasonably located so as to provide convenient
service to HUD and its clients in the area to be served, and to
carry out all duties specified in the solicitation. [15 points]
Among other things, the RFP required offerors to submit a completed
Form 477, List of Repairs (included in RFP), for a specified property
in Virginia Beach and cautioned that omission of the form may
adversely affect the evaluation of the offeror's proposal under factor
2. The RFP also required that the offeror submit with its proposal
evidence of its Virginia real estate broker license.
Twelve proposals were received in response to the RFP, including one
from Tidewater, whose principals were a manager and former employee of
the local incumbent contractor, and one from CitiWest from Tucson,
Arizona. Five proposals, including CitiWest's, which received a score
of 91 points, and Tidewater's, which received a score of 37 points,
were found to be in the competitive range and received discussions.
HUD advised Tidewater and the other offerors of the
weaknesses/deficiencies in their technical proposals. Among other
things, HUD asked Tidewater to provide additional information
detailing its experience, more specificity in its Form 477, and
information establishing the adequacy of its proposed office.
CitiWest, on the other hand, was not advised of any specific
weaknesses/deficiencies in its technical proposal. Rather, HUD
informed CitiWest that:
HUD has completed the initial evaluation of your proposal and
that your proposal was determined to be within the competitive
range for negotiation purposes.
Your are hereby given the opportunity to improve any aspect of
your technical and/or pricing proposal. Please review your
proposal to insure completeness and to assure that all necessary
information is supplied and any deficiencies corrected.
Best and final offers (BAFO) were requested and received. CitiWest's
BAFO, at an evaluated unit price of $1,317, received the same
technical score of 91 points as its initial proposal. Tidewater's
BAFO, at an evaluated unit price of $1,233, received a technical score
of 47 points. HUD determined that CitiWest's technically superior
proposal was worth the additional costs and made award to CitiWest.
In response to Tidewater's protest, we found that CitiWest's and
Tidewater's proposals were evaluated unequally under the RFP's
evaluation factors. For example, under factor 2, Tidewater's proposal
received 6 points, while CitiWest's proposal received 24 points.
Tidewater's low score was attributed to an asserted lack of detail and
clarity contained in the submitted Form 477 on the Virginia Beach
property specified in the RFP and questions regarding Tidewater's
ability to prepare cost estimates. The record established, however,
that the information contained in Tidewater's Form 477 and its overall
response to this factor contained the same substantive detail as
CitiWest's proposal.[1] We found that the evaluators could not have
reasonably rated CitiWest's proposal with the maximum score and much
more favorably than Tidewater's proposal for this factor, given
CitiWest's failure to provide a Form 477 for the specified property as
requested by the RFP.
Another example of unequal treatment involved factor 6. The technical
evaluation panel (TEP) awarded Tidewater's proposal a final score of 7
out of 15 for this factor and CitiWest's proposal 12 points. The
agency downgraded Tidewater's proposal because it allegedly was vague
as to location of the office space and the division of
responsibilities among staff members. However, our review revealed
that Tidewater's BAFO and overall technical response to this factor
were specific as to prospective locations, staff, and equipment.
CitiWest's proposal, in contrast, did not identify any specific
location or staff in its proposal, but stated only how it would do so
if awarded the contract.
In addition, we found that there was no evidence in the record that
CitiWest had provided a Virginia real estate broker license with its
proposal and that the agency had effectively waived a definitive
responsibility criterion for CitiWest.
We recommended that the agency assess whether it required that an
offeror possess a Virginia real estate broker license in order to
receive the award; if it did not, our recommendation was that the
agency amend the RFP, obtain new proposals, and make award in
accordance with the revised RFP. If the agency required the license,
we recommended that the agency reject CitiWest's proposal if CitiWest
did not possess the requisite license (subject to Small Business
Administration review under certificate of competency procedures),
terminate CitiWest's contract, reevaluate the remaining competitive
range proposals in accordance with the RFP, and make a new award
selection. We also recommended that a new TEP be appointed to
evaluate the new proposals to ensure an equal evaluation.
In response to our decision, HUD determined that it did need the
offeror to possess a Virginia real estate broker license, but that it
was enough that the firm possess the license by the time of award
(rather than at the time of proposal submission, as the RFP had
indicated) and amended the solicitation to clarify that the
requirement for the license could be met at that time. HUD also found
that CitiWest satisfied this requirement. A new TEP was convened to
reevaluate the competitive range offerors' BAFOs, as submitted prior
to our decision sustaining Tidewater's protest. CitiWest's BAFO
received a score of 81 points and Tidewater's received a score of 99
points. The increase in Tidewater's technical score reflected the
TEP's view that Tidewater's BAFO had adequately addressed the concerns
raised by the agency during discussions. Two other offerors'
proposals received scores of 97 points and the remaining offeror's
proposal received a score of 67 points.
Based upon this reevaluation, HUD made a second competitive range
determination, finding that neither CitiWest nor the other lower
ranked offeror had a reasonable chance of being selected for the
award. Their proposals were therefore excluded from the competitive
range. The remaining offerors, including Tidewater, were allowed to
submit revised price proposals. Tidewater's lowest-priced proposal
was determined to be the best value to the government and selected for
award. This protest followed.
CitiWest complains that in taking corrective action HUD treated it
unfairly and unequally. Specifically, CitiWest contends that the
other offerors were given the opportunity to improve their proposals
through discussions but CitiWest was not. CitiWest argues that it is
improper for HUD in its implementation of our recommendation to
exclude CitiWest's proposal from the competitive range where CitiWest
had not received meaningful discussions.
HUD responds that CitiWest was not treated unequally or unfairly as
compared to the other offerors, because the agency conducted
discussions with CitiWest and provided CitiWest with the opportunity
to submit a revised proposal. HUD also argues that not conducting
discussions following the reevaluation of the proposals was
reasonable, given the specificity with which our decision discussed
the technical weaknesses in Tidewater's and CitiWest's proposals.
In negotiated procurements, contracting agencies generally must
conduct discussions with all offerors whose proposals are within the
competitive range. 41 U.S.C. sec. 253b(d)(1)(A) (1994); Federal
Acquisition Regulation sec. 15.610(b)(FAC 90-44). Although discussions
need not be all-encompassing, they must be meaningful; that is, an
agency is required to point out weaknesses or deficiencies in a
proposal as specifically as practical considerations permit so that
the agency leads the offeror into areas of its proposal which require
amplification or correction. Professional Servs. Group, Inc.,
B-274289.2, Dec. 19, 1996, 97-1 CPD para. 54 at 3. Discussions cannot be
meaningful if an offeror is not advised of the weaknesses,
deficiencies, or excesses that must be addressed in order for the
offeror to be in line for the award. Columbia Research Corp.,
B-247631, June 22, 1992, 92-1 CPD para. 539 at 5. Unequal discussions,
where one competitive range offeror is advised of areas in which its
proposal is believed to be deficient, but another competitive range
offeror is not, do not satisfy the requirement for meaningful
discussions. See SeaSpace, 70 Comp. Gen. 268, 272-273 (1991), 91-1
CPD para. 179 at 5-7.
We find that HUD's actions have resulted in Citiwest being deprived of
meaningful discussions. Although it is true, as asserted by HUD, that
the agency provided CitiWest with the opportunity to revise its
proposal after the first competitive range determination (prior to the
agency's original source selection decision), this does not constitute
meaningful discussions, inasmuch as CitiWest was not informed of, or
given the opportunity to respond to, the specific
weaknesses/deficiencies in its proposal that ultimately resulted, in
the second competitive range determination, in CitiWest's proposal
being excluded from further consideration.
HUD, in its reevaluation of proposals, essentially adopted the
findings of our prior decision. Specifically, the TEP reduced
CitiWest's technical score under factor 5 because CitiWest's proposal
did not include a Form 477 on the Virginia Beach property specified in
the RFP, reduced CitiWest's score under factor 6 because CitiWest did
not identify any specific location or staff in its proposal, and
reduced CitiWest's score under factor 1 because CitiWest did not
demonstrate sufficient experience in a like area. The bases for these
reductions are essentially the same reasons that supported our finding
that Tidewater's and CitiWest's proposals had been unequally
evaluated. Although all these weaknesses/deficiencies were present in
CitiWest's proposal prior to HUD's conduct of discussions, HUD failed
to inform CitiWest of these weaknesses/deficiencies or to allow
CitiWest the opportunity to revise its proposal in response to our
decision, thereby depriving CitiWest of meaningful discussions. The
reduction in CitiWest's technical score due to these
weaknesses/deficiencies is the sole reason CitiWest's proposal was
excluded from the second competitive range.
In contrast, the other offerors, including Tidewater, were provided
the opportunity to address the weaknesses/deficiencies in their
proposals during discussions; these offerors received significantly
higher technical ratings in HUD's reevaluation of proposals due at
least in part to the improvements presented in their revised
proposals. The agency does not contend that the
weaknesses/deficiencies in CitiWest's proposal would have been more
difficult to correct than those that were brought to the attention of
the other offerors during discussions, or that there was any
justifiable basis (such as, for example, concern about technical
leveling) for not raising those issues with CitiWest during
discussions. Instead, the failure to advise CitiWest of the
weaknesses or deficiencies in its proposal arose solely because, at
the time discussions were conducted, the agency had not yet identified
those weaknesses or deficiencies. On the record before us, therefore,
it appears that CitiWest could have adequately addressed the agency's
concerns, if they had been raised with the protester. The agency's
failure to do so thus prejudiced CitiWest.
Accordingly, we conclude that HUD's comparison, in its reevaluation of
proposals, of CitiWest's proposal, which had not received the benefit
of meaningful discussions, with the other offerors' proposals, which
had been revised in response to discussions, was unfair and reflected
unequal treatment. We find that CitiWest's proposal should not have
been excluded from the second competitive range without having the
opportunity afforded the other competitive range offerors to address
the weaknesses/deficiencies in its proposal.[2]
HUD argues that not reopening negotiations to provide CitiWest with
meaningful discussions was within the agency's discretion in
implementing our protest recommendation, particularly because we did
not specify that the agency conduct further discussions with CitiWest.
As recognized by HUD, our protest recommendation was general and did
not precisely address the situation presented here--that is, that HUD
would require the Virginia real estate licensing requirement, that it
would be acceptable for the offeror to present evidence of holding
that license at any time up to the time of award, and that CitiWest's
proposal satisfied that modified requirement. Our recommendation
necessarily left the details of implementing appropriate corrective
action to the discretion and judgment of the agency. See Ford
Aerospace Corp. et al., B-239676.2 et al., Mar. 8, 1991, 91-1 CPD para.
260 at 4. Such discretion must be exercised reasonably and in a
fashion that remedies the procurement impropriety that was the basis
for our protest recommendation. Id. at 4-5. Here, HUD's
implementation of corrective action was not reasonable because it
resulted in CitiWest being deprived of meaningful discussions.
We also do not agree with HUD that the disclosures in our earlier
decision made conducting discussions with CitiWest and the other
offerors inappropriate. While it is true that the decision identified
the concerns that the agency subsequently relied upon to downgrade
CitiWest's proposal, no confidential or proprietary information was
disclosed. While review of our decision would have disclosed to
offerors that, for example, CitiWest's proposal had not included a
Form 477 or identified any specific location or staff, we do not
believe that learning this information would have given any of the
offerors a competitive advantage; the information would have been of
no value to the other offerors, and CitiWest should have been advised
of these concerns during discussions. In any event, the need to
preserve the integrity of the competitive procurement system and the
importance of correcting an improper award through further
negotiations overrides any possible competitive disadvantage to
competing offerors. See NavCom Defense Elecs., Inc., B-276163.3, Oct.
31, 1997, 97-2 CPD para. at 4.
We recommend that HUD reopen and conduct appropriate discussions with
all offerors in the first competitive range, including CitiWest,
request BAFOs, and make a new source selection. In addition, we
recommend that the protester be reimbursed its costs of filing and
pursuing the protest, including attorneys' fees. 4 C.F.R. sec.
21.8(d)(1) (1997). The protester should submit its certified claim,
detailing the time expended and costs incurred, directly to the
contracting agency within 60 days of receiving this decision. 4
C.F.R. sec. 21.8(f)(1).
The protest is sustained.
Comptroller General
of the United States
1. CitiWest's proposal seemed to address the same categories of
information for repairing property as required in a Form 477, but no
Form 477 was included in its proposal and the property that the
proposal addressed under this factor was not the Virginia Beach
property specified in the RFP.
2. CitiWest also protests HUD's evaluation of its proposal and asserts
that HUD's new TEP was biased against it. However, we need not
address the propriety of HUD's evaluation given our recommendation to
reopen the competition, and we have found no support for CitiWest's
speculative allegations of bias.