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, W�rzburg, 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.