BNUMBER:  B-274870
DATE:  January 10, 1997
TITLE:  Basile, Baumann, Prost & Associates, Inc.

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Matter of:Basile, Baumann, Prost & Associates, Inc.

File:     B-274870

Date:January 10, 1997

Michael P. Darrow, Esq., Hillman, Brown & Darrow, P.A., for the 
protester.
Edward Wasilewski, Esq., Department of the Army, for the agency.
Henry J. Gorczycki, Esq., and James A. Spangenberg, Esq., Office of 
the General Counsel, GAO, participated in the preparation of the 
decision.

DIGEST

Agency properly excluded a firm from competing under a solicitation 
where the firm has an organizational conflict of interest with respect 
to competing under that solicitation because it prepared the statement 
of work and cost estimate which the agency used for the solicitation.

DECISION

Basile, Baumann, Prost & Associates, Inc. (Basile) protests the 
elimination of its proposal from consideration under request for 
proposals (RFP) No. DACW31-96-R-0028, issued by the U.S. Army Corps of 
Engineers, Baltimore, Maryland District, for services to develop and 
implement a private sector outreach program for the Recreational 
Partnerships Initiative (RPI).
  
We deny the protest.

The RFP identified seven potential sites for the RPI, and requested 
prices for 14 separate tasks to develop and implement the program.  
The goal of RPI is to cause private developers to lease property at 
selected Corps water resource projects, and to develop and operate 
public recreation facilities on these properties at no cost to the 
government.  

In 1992, Basile was awarded contract No. DACW31-92-C-0097 by the 
Corps, under which Basile assessed the potential for recreational 
development at each of 460 sites, ranked the sites according to 
development potential, prepared development feasibility reports for 38 
of these sites, and prepared an implementation strategy for 
successfully realizing the current potential for private sector 
recreation development.

In 1994, the Corps considered modifying Basile's contract to include 
the services solicited under the current RFP.  At the request of the 
contracting officer's representative (COR), Basile submitted a 
proposed statement of work (SOW) and cost estimate for such a 
modification.  The SOW identified 25 tasks to be performed by either 
the contractor or the government.  The cost estimate provided the 
estimated cost for each of the tasks to be performed by the 
contractor--14 tasks in all--as well as for three "additional items."  

The Corps determined not to modify the 1992 contract to include these 
services.  The COR then prepared a memorandum requesting that the 
services be acquired from Basile using sole source procedures.  This 
memo included an SOW with the same 25 tasks identified by Basile using 
Basile's SOW almost verbatim.  The memo also included a government 
cost estimate which stated the same estimates as Basile's estimate had 
stated for 13 of 14 of the contractor's tasks and within $100 for the 
remaining task.  The government estimate also included the three 
additional items at the same cost as estimated by Basile.  A sole 
source procurement was not approved.  

The Corps instead determined that this need should be satisfied 
through full and open competition and, on March 4, 1996, issued the 
current RFP.  The RFP contemplated award of a firm, fixed-price 
contract.  The SOW in the RFP identified the same 25 tasks almost 
verbatim from Basile's earlier SOW.  The schedule of prices listed 15 
contract line items--one for each of the 14 tasks to be performed by 
the contractor and one for total price.

A number of proposals were submitted on April 23 in response to the 
RFP.  The agency's technical evaluators evaluated the proposals and 
determined that, although some proposals were considered technically 
acceptable, only Basile submitted an "outstanding" proposal.  One of 
the cost evaluators determined that Basile was the only offeror that 
appeared to fully understand the RFP requirements.  Upon requesting 
the government estimate,[1] this evaluator noticed that Basile's 
proposed price was nearly identical to the government estimate.  She 
also noticed that Basile proposed prices for optional items which were 
not in the RFP, but which were in the government estimate.

An investigation was conducted by the Army's Criminal Investigation 
Command.  It was determined that the COR had used Basile's SOW for the 
description of the 25 tasks in the RFP's SOW, and its cost estimate 
for the government cost estimate with only a minor adjustment.[2]  The 
contracting officer states that she was unaware when the RFP was 
issued and evaluations performed that Basile had prepared the SOW and 
government estimate.[3]

The contracting officer determined that, since Basile had prepared the 
work statement used in this RFP, a conflict of interest existed which, 
under Federal Acquisition Regulation (FAR)  sec.  9.505-2(b)(1), prohibited 
Basile from providing these services.  She subsequently eliminated 
Basile from the competition.  This protest followed.

The FAR, under subpart 9.5, generally requires contracting officials 
to avoid, neutralize or mitigate potential significant organizational 
conflicts of interest, including precluding a particular firm from 
competing, so as to prevent unfair competitive advantages, the 
existence of conflicting roles that might impair a contractor's 
objectivity, or the existence of biased ground rules created, whether 
intentional or not, in situations where, for example, a firm writes 
the statement of work or specifications.  GIC Agricultural Group, 72 
Comp. Gen. 14 (1992), 92-2 CPD  para.  263; Aetna Government Health Plans, 
Inc.; Foundation Health Fed. Servs., Inc., B-254397.15 et al., July 
27, 1995, 95-2 CPD  para.  129.  Specifically, FAR  sec.  9.505-2(b)(1) states:

     "If a contractor prepares, or assists in preparing, a work 
     statement to be used in competitively acquiring a system or 
     services--or provides material leading directly, predictably, and 
     without delay to such a work statement--that contractor may not 
     supply the system, major components of the system or services 
     unless:
        (i) It is the sole source;
        (ii) It has participated in the development and design work; 
        or
        (iii) More than one contractor has been involved in preparing 
        the  work statement."

The responsibility for determining whether a firm has a conflict of 
interest and to what extent a firm should be excluded from competition 
rests with the procuring agency, and we will not overturn such a 
determination unless it is shown to be unreasonable.  Ressler Assocs., 
Inc., B-244110, Sept. 9, 1991, 91-2 CPD  para.  230; LW Planning Group, 
B-215539, Nov. 14, 1984, 84-2 CPD  para.  531.

It is not disputed that Basile prepared the statement of work and 
government estimate for the specific tasks which are to be performed 
under this RFP.  Although these documents were initially prepared for 
the purpose of modifying Basile's contract, the Corps nevertheless 
used this contractor-prepared work statement and cost estimate for the 
subsequently issued competitive RFP.

Basile contends that its work under the 1992 contract was "development 
or design work" and therefore falls under FAR  sec.  9.505-2(b)(1)(ii), 
quoted above, which permits award to a firm that prepared the work 
statement in the RFP.  The contracting officer responds that under the 
1992 contract:

     "[Basile] was required to evaluate lands at Corps-owned water 
     resources projects for the purpose of determining the suitability 
     of the real estate for development of public recreational 
     facilities by private industry.  The contract did not call for 
     any improvement in technology, materials, processes, or method.  
     Accordingly, the work performed by [Basile] cannot be 
     characterized as 'design and development work' as those terms are 
     used in [FAR subpart 9.5]."

Basile has not refuted this statement.  Because the contracting 
officer's assessment of this issue is consistent with our prior 
decisions on this FAR exception, we have no basis to find as 
unreasonable her determination not to apply the exception.  See GIC 
Agricultural Group, supra; Ressler Assocs., Inc., supra.

Basile also contends that its proposal should not be rejected because 
there is no evidence that this work gave it an unfair competitive 
advantage.  However, the record suggests otherwise.  For instance, 
prior to learning that Basile had prepared these documents, it was 
determined by the technical and cost evaluators that Basile was the 
only offeror to fully understand the requirements.  We think this is 
reasonable evidence that Basile had an inherent advantage over other 
offerors which it gained from preparing the work statement and 
government estimate.  Ressler Assocs., Inc., supra.  In any event, 
when the FAR conditions defining a conflict of interest exist, the 
existence of an unfair competitive advantage is assumed and a 
contacting official may reasonably impose remedies prescribed under 
FAR subpart 9.5.  GIC Agricultural Group, supra.  Since Basile 
prepared the SOW and the cost estimate, the contracting officer 
reasonably determined that a conflict of interest existed and 
reasonably prohibited Basile from providing the services solicited 
under this RFP.  Id.; Ressler Assocs., Inc., supra.

The protest is denied.

Comptroller General
of the United States
f:\projects\pl\274870.wp5

1. The government estimate had not been provided to the cost 
evaluators.  In response to the cost evaluator's request, the COR 
provided the government estimate which he had prepared for the earlier 
request for a sole source procurement.

2. The investigation did not find any evidence of criminal actions.

3. While the protester disputes this statement, it has not shown the 
statement was untrue.