BNUMBER:  B-274769; B-274769.3
DATE:  January 6, 1997
TITLE:  HSG-SKE

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DOCUMENT FOR PUBLIC RELEASE
A protected decision was issued on the date below and was subject to a 
GAO Protective Order.  This version has been redacted or approved by 
the parties involved for public release.
Matter of:HSG-SKE

File:     B-274769; B-274769.3

Date:January 6, 1997

John S. Pachter, Esq., and Jonathan Shaffer, Esq., Smith, Pachter, 
McWhorter & D'Ambrosio, and Otto K. Weixler, for the protester.
Reed L. von Maur, Esq., and J. Casey Fos, Esq., von Maur & Partners, 
and Kevin P. Mullen, Esq., Piper & Marbury, for Pacific Architects and 
Engineers GmbH Planning and Construction, an intervenor.
Laura Smith, Esq., Department of the Army, for the agency.
Adam Vodraska, Esq., and James A. Spangenberg, Esq., Office of the 
General Counsel, GAO, participated in the preparation of the decision.

DIGEST

In a solicitation for hospital facility operations and maintenance 
services, the agency reasonably, and in accordance with the evaluation 
criteria, found the awardee's low priced proposal, which was 
reasonably found to be essentially technically equivalent to the 
protester's proposal and realistically priced, represented the best 
value to the government.

DECISION

HSG-SKE, a joint venture of HSG-Holzmann Technischer Service GmbH and 
SKE Maintenance GmbH & Co. KG, protests the award of a contract to 
Pacific Architects and Engineers GmbH Planning and Construction (PAE) 
for physical plant operations and maintenance services at the 67th 
Combat Support Hospital, Wï¿½rzburg, Germany, and its outlying clinics, 
under request for proposals (RFP) No.
DACA90-96-R-0053, issued by the United States Army Corps of Engineers, 
Wiesbaden, Germany.

We deny the protests.

BACKGROUND

The RFP contemplated the award of a firm, fixed-price contract with an 
indefinite delivery/quantity feature for a base year with 2 option 
years to the offeror whose proposal represents the best value to the 
government.  The RFP's evaluation scheme consisted of 3 equally 
weighted evaluation factors:  management; technical and experience; 
and price.  The management, and technical and experience factors were 
each worth 150 points for a total possible 300 points.  Price was not 
separately scored, but was to be evaluated for reasonableness and 
realism.  The management, and technical and experience factors 
contained various stated subfactors.

Line items AA (management), AB (preventative maintenance-hospital), 
and AC (preventative maintenance-clinics and repair and new work) 
called for fixed lump sum prices for the base year and option years.  
Line items AL through AZ, BA through BZ, and CA through CL requested 
various fixed hourly rates for different types of crafts personnel 
(e.g. plumbers and electricians) for the base year and option years to 
perform demand maintenance, minor construction, and emergency work; 
when such demand services were required, the Corps would negotiate a 
work order with the contractor based on the proposed labor rates.  The 
RFP informed offerors that prices, including the hourly labor rates, 
should be inclusive of all general administrative costs, 
direct/indirect costs, profit, and any other incidental costs 
associated with performance of the contract.

The agency received 4 proposals in response to the RFP, including 
HSG's and PAE's.  After the management, and technical and experience 
proposals were evaluated by an evaluation team, the contracting 
officer, who was also the source selection authority, established a 
competitive range of 3 proposals, including HSG's and PAE's.  The 
contracting officer conducted discussions with, and requested best and 
final offers (BAFO) from, the competitive range offerors.  In the 
final evaluation, PAE's and HSG's proposals were considered to be 
essentially technically equivalent, with PAE's BAFO receiving a 
management/technical/experience score of 266 points and HSG's BAFO a 
score of 262 points.[1]  Because PAE's BAFO had the lowest total 
evaluated price of Deutsche Mark (DM) [DELETED] (as compared with 
HSG's BAFO's DM [DELETED] total evaluated price), the contracting 
officer determined that PAE's proposal represented the best value to 
the government.

HSG protests that PAE's high technical score was unwarranted because 
PAE
(1) failed to propose sufficient personnel to perform the contract; 
(2) lacked experience in operating and maintaining a fully operational 
hospital; and
(3) failed to submit a draft preventative maintenance plan for 
non-critical equipment as required by the RFP.  HSG also contends that 
had the agency conducted a proper price evaluation, PAE's low prices 
would have been considered unreasonable and unrealistic.[2]

TECHNICAL EVALUATION

In reviewing protests against the propriety of an agency's evaluation 
of proposals, it is not the function of our Office to independently 
weigh the merits of the offers.  Microeconomic Applications, Inc., 
B-258633.2, Feb. 14, 1995, 95-1 CPD  para.  82.  Rather, the evaluation of 
proposals is a matter within the discretion of the procuring agency 
since the agency is responsible for defining its needs and the best 
method of accommodating them and must bear the burden of any 
difficulties resulting from a defective evaluation.  Engineering Inc., 
B-257822.5, Aug. 18, 1995, 95-2 CPD  para.  130.  Consequently, we will not 
question an agency's evaluation of proposals unless the agency 
deviated from the solicitation evaluation criteria or the evaluation 
was otherwise unreasonable.  HSG-Intelcom, B-254750.2; B-254750.3, 
Feb. 7, 1994, 94-1 CPD  para.  74.

The protester first complains that PAE's proposed preventative 
maintenance workforce of [DELETED] personnel was insufficient to 
perform this portion of the contract, and that this insufficiency was 
not adequately considered in the award selection.  The record shows 
that the agency's evaluation team downgraded PAE under both the 
management staffing and structure subfactor of the management factor 
and the preventative maintenance program subfactor of the technical 
and experience factor because of the evaluators' concern that PAE may 
have proposed an inadequate preventative maintenance workforce.  The 
contracting officer, with the concurrence of the evaluation team 
chairman, considered PAE's staffing level in this area to be merely a 
relative weakness of PAE's proposal, but noted that PAE's proposed 
staffing was consistent with the government's estimate of the 
[DELETED] person staffing level required to perform this line item.  
The protester has not persuasively shown that the contracting 
officer's judgment in this matter was unreasonable or that PAE's 
staffing level in this area should render its proposal unacceptable.

The protester also contends that PAE failed to identify by name all of 
its key personnel as required.  The RFP required names of individuals 
"from top management down to first-line management or project 
manager(s) level, technical personnel, master tradesmen, 
administrative personnel and any other person who will work in key 
roles on projects performed under the contract."  The record shows 
that besides identifying its top management, PAE's proposal provided 
the names, resumes, and job descriptions of its [DELETED]--these are 
the individuals who will have the primary management roles for this 
project.[3]  Thus, PAE's proposal adequately identified the key 
personnel as required.  

The protester next objects to PAE's receiving a higher score than HSG 
for the ability to organize and perform hospital facilities 
maintenance, and the same score as HSG for past performance and work 
completion, both subfactors of the technical and experience factor, 
because HSG is the incumbent contractor with directly relevant 
experience whereas PAE assertedly lacks experience in the operations 
and maintenance of a fully operational hospital. 

With regard to the first mentioned of these subfactors, the RFP 
required offerors to provide evidence of their ability to organize and 
perform hospital facilities maintenance, repairs and operations in 
each of the following areas:  facility maintenance; heating, 
ventilating, air conditioning, and refrigeration equipment; elevators 
and other moving equipment; gas and petroleum products storage and 
distribution systems; food service equipment; and communications 
systems and equipment.  We find that this subfactor contemplated that 
more credit would be given a proposal demonstrating greater ability 
and experience in organizing and performing these specific operations 
and maintenance areas as opposed to merely showing experience with 
hospital facilities.  Although both PAE and HSG were noted as having 
such hospital facilities experience, the evaluators found that  
operations and maintenance of the type identified in this subfactor 
was PAE's "primary business," and that PAE's "repair/maintenance 
approach is well-documented and very comprehensive."  (In contrast, 
even though HSG was the incumbent, its proposal did not include some 
details of its approach.)  Our review of the record confirms that 
PAE's proposal demonstrated its superior capabilities in this regard, 
and while HSG disagrees with the relative scores, it has not convinced 
us that PAE's higher score was unwarranted.  

Under the past performance subfactor, for which both PAE's and HSG's 
proposals received the same score, actual hospital maintenance 
experience was, according to the RFP, only one element to be 
evaluated.  While the evaluators credited HSG's experience as the 
incumbent contractor, they noted that this contract represents 
HSG-SKE's only hospital facility maintenance contract experience and 
that PAE also has relevant, if "rather dissimilar," hospital 
maintenance experience at an inactive military contingency hospital.  
Because the record shows that PAE has "a very good range" of 
experience with the kind of operations and maintenance contemplated by 
the RFP, we cannot say that the evaluators' relative ratings of PAE 
and HSG under this subfactor were unjustified, despite PAE's more 
limited experience (as compared to HSG's) in actual operational 
hospital maintenance. 

Finally, the protester argues that PAE failed to provide a draft of 
its preventative maintenance plan for non-critical equipment in its 
proposal, as required by the RFP's statement of work, and should have 
had its score lowered accordingly.  This contention is meritless 
because PAE in fact submitted in its proposal a draft annual work 
schedule of recurring inspections and work including preventative 
maintenance for non-critical equipment and facility components, which 
was evaluated by the agency under the preventative maintenance program 
subfactor.  In fact, PAE's preventative maintenance plan for the 
noncritical equipment was listed as a strength on one of the 
evaluator's scoresheets.
 
PRICE EVALUATION

The protester argues that the Corps did not perform an adequate price 
evaluation of PAE's price proposal.  HSG contends in this regard that 
PAE proposed unrealistically low prices for the preventative 
maintenance line item and labor rates for the demand maintenance and 
emergency repairs line items, which allegedly demonstrates that PAE 
lacks a fundamental understanding of the RFP requirements and would 
present an unacceptable risk of poor performance.  

Where, as here, the award of a fixed-price contract is contemplated, a 
proposal's "cost realism" is not ordinarily considered since a 
fixed-price contract places the risk and responsibility for contract 
costs and resulting profit or loss on the contractor.  PHP Healthcare 
Corp.; Sisters of Charity of the Incarnate Word, B-251799 et al., May 
4, 1993, 93-1 CPD  para.  366.  Rather, under the Federal Acquisition 
Regulation (FAR), the procuring agency in its discretion may provide 
for performance of a price analysis to determine that the proposed 
prices are fair and reasonable.[4]  FAR  sec.  15.805-1 and 15.805-2; 
Ogden Government Services, B-253794.2, Dec. 27, 1993, 93-2 CPD  para.  339.  
The FAR provides a number of price analysis techniques that may be 
used to determine whether prices are fair and reasonable, including a 
comparison of the prices received with each other and with the 
independent government estimate.  FAR  sec.  15.805-2.  The depth of an 
agency's price analysis is a matter within the sound exercise of the 
agency's discretion.  Ameriko-OMSERV, B-252879.5, Dec. 5, 1994, 94-2 
CPD  para.  219.  

Here, the RFP stated that price proposals would be evaluated for 
reasonableness and realism, but did not specify the manner or degree 
of analysis to which proposals would be subjected, nor did the RFP 
require offerors to provide a breakdown of their prices beyond the 
line items solicited.  In our opinion, the Corps did all that was 
required in the way of a price analysis under the RFP.  The record 
shows that in making her price analysis, the contracting officer 
compared PAE's prices with the other offerors's prices and with the 
independent government estimate for each line item, techniques 
recommended by the FAR for price analysis, and utilized an analysis of 
the offeror's prices by the agency's cost estimator.  The contracting 
officer also compared the number of personnel proposed for each 
lump-sum line item with the government estimate.

With regard to PAE's price for the preventative maintenance line item, 
HSG alleges that PAE failed to include costs for special maintenance 
tasks to be performed by subcontractors as well as the costs of 
materials required for preventative maintenance.  While PAE did not 
provide (nor was it required to provide) a cost breakdown 
demonstrating that these costs were included in this line item, PAE's 
proposal identified the subcontractors it planned to use for special 
maintenance tasks under the preventative maintenance line item.  PAE 
specifically stated that its price included what it considered 
adequate material for scheduled routine preventative maintenance, and, 
in submitting its offer, obligated itself to provide all services, 
supplies and equipment/property necessary to carry out a comprehensive 
preventative maintenance program, as required by the RFP.  PAE's price 
for this line item was also above the government estimate.  Under the 
circumstances, we think that the agency could reasonably conclude that 
PAE's price for this item was realistic.

Concerning PAE's hourly rates for such craft personnel as 
electricians, plumbers, carpenters, painters, mechanics, and 
plasterers under the demand maintenance, minor construction, and 
emergency repair work line items, it is true that the rates proposed 
by PAE are significantly below the government estimates.  However, the 
agency's cost estimator informed the contracting officer that PAE's 
"low" hourly rates were "acceptable," given "the present situation in 
the German construction industry."  While the protester disagrees that 
the craft personnel for this contract  can properly be considered part 
of the German construction industry for purposes of labor rates, the 
protester has provided no convincing evidence to support its position.
    
Lastly, HSG alleges that the agency should have found PAE's BAFO 
prices unrealistic for not increasing more significantly when PAE, in 
response to a discussion question, removed an offer qualification 
relating to a German labor law, which, according to HSG, would require 
PAE, as the subsequent awardee of an existing contract, to hire the 
incumbent personnel at the same rates those workers are currently 
being paid.  This allegation is meritless since PAE was obviously 
aware of the potential impact of the law on its costs, and when asked 
to remove the qualification, increased its prices accordingly.[5]

In sum, the record evidences that the agency reasonably evaluated the 
proposals consistent with the solicitation's evaluation criteria in 
determining PAE's proposal as representing the best value to the 
government.

The protests are denied.

Comptroller General
of the United States

f:\projects\protdec\274769.wp5

1. After receiving the agency's report, the protester pointed out what 
it perceives was an error in the agency's calculation of HSG's final 
score which, when corrected, would result in an HSG final score of 267 
points.  The agency has explained why the point scores reported above 
are indeed correct, notwithstanding a clerical error in the initial 
evaluation, and this explanation is consistent with the record.  
Nonetheless, even if HSG's final technical score is as the protester 
claims, HSG's and PAE's proposals are still essentially technically 
equivalent.

2. HSG also initially alleged that PAE's pricing was unbalanced 
because PAE understated a significant portion of its prices.  However, 
the protester has not alleged that PAE also overstated its prices for 
any items and appears to have abandoned its contention that PAE's 
prices are unbalanced.  See Aumann, Inc., B-245898.3; B-245898.4, July 
22, 1992, 92-2 CPD  para.  35 (note 1).  

3. HSG contends that PAE should have provided the names of individual 
crafts personnel.  This contention is meritless, inasmuch as this 
information was not required by the RFP because these other positions 
are not key personnel positions.  See DCT Inc., B-261894.2, Nov. 22, 
1995, 95-2 CPD  para.  237.  We also note that HSG's proposal does not 
identify such craft personnel as key personnel. 

4."Price analysis" is a process of examining and evaluating a proposed 
price without evaluating its separate cost elements and proposed 
profit; "cost analysis" involves the examination and evaluation of an 
offeror's separate cost elements and proposed profit.  FAR  sec.  15.801.

5. We note that PAE was involved in a previous protest at our Office 
concerning the Army's decision not to adjust labor rates on the basis 
of this very same law which the agency maintains is also not 
applicable to the type of contract at issue here.  See PAE GmbH 
Planning and Constr., B-250470, Jan. 29, 1993, 93-1 CPD  para.  81, aff'd 
B-250470.2, July 22, 1993, 93-2 CPD  para.  45.