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-ï¿½-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.