BNUMBER:  B-274944.5 
DATE:  August 25, 1997
TITLE: DynaLantic Corporation, B-274944.5, August 25, 1997
**********************************************************************

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:DynaLantic Corporation

File:     B-274944.5

Date:August 25, 1997

John S. Pachter, Esq., Jonathan D. Shaffer, Esq., and Christina M. 
Pirrello, Esq., Smith, Pachter, McWhorter & D'Ambrosio, for the 
protester.
David S. Cohen, Esq., Cohen & White, for Marine Safety International, 
an intervenor.
Brian F. Zeck, Esq., Kathy B. Cowley, Esq., and Eric A. Lile, Esq., 
Department of the Navy, for the agency.
Behn Miller, Esq., and Christine S. Melody, Esq., Office of the 
General Counsel, GAO, participated in the preparation of the decision.

DIGEST

Where General Accounting Office sustained protester's original 
contention that its proposal had been improperly excluded from the 
competitive range, and  recommended that the procuring agency issue 
discussion questions to the protester and solicit best and final 
offers from all competitors, subsequent protest challenging revised 
terms of original solicitation on the ground that the revisions 
nullify prior recommendation and preserve the original improper 
contract award by favoring the prior awardee's pricing approach is 
denied where:  (1) on their face, the challenged revisions reflect 
reasonable procurement practices; and (2) any possible competitive 
advantage enjoyed by the original awardee is mitigated by the 
protester's opportunity to submit a revised proposal responding to the 
revised terms.

DECISION

DynaLantic Corporation protests several of the Navy's revisions to 
request for proposals (RFP) No. N00600-96-R-0749, issued for ship 
handling simulation services.  The Navy made the revisions as a result 
of implementing our corrective action recommendation in DynaLantic 
Corp., B-274944.2, Feb. 25, 1997, 97-1 CPD  para.  101.  In that decision, 
our Office sustained DynaLantic's protest that its proposal had been 
improperly excluded from the competitive range and recommended that 
the Navy  conduct discussions with DynaLantic and solicit best and 
final offers (BAFO) from both DynaLantic and Marine Safety 
International (MSI), the only other offeror.  In its current protest, 
DynaLantic contends that the Navy's removal of the original RFP's 
35-percent maximum price premium provision, the incorporation of a 
present value evaluation factor, and the addition of a funding profile 
provision improperly favor--and thus preserve the original contract 
award to--MSI, in contravention of our prior decision's recommended 
corrective action.

We deny the protest.

BACKGROUND

The original RFP was issued on February 7, 1996, and contemplated the 
award of an indefinite quantity fixed-price contract for a base year 
and 9 option years to the offeror whose proposal provided the best 
value to the government.  The solicitation called for the contractor 
to perform essentially four tasks:  (1) construct a facility to house 
the ship handling simulator complex on government-owned property 
within 9 months of award, (2) install and configure the simulator 
equipment and training stations, (3) provide all personnel and 
technical services necessary to run the ship handling simulator 
complex for a period of up to 10 years, and (4) "upon completion or 
termination of the contract [be] responsible for the removal of the 
building and restoration of the grounds to original condition at no 
additional cost to the government."

The solicitation required offerors to submit both technical and price 
proposals.  Technical proposals were to be organized according to the 
following evaluation factors, which were listed in the RFP in 
descending order of importance:  Technical Approach; Personnel; and 
Management Plan.  For their price proposals, offerors were directed to 
complete and submit the fixed-price schedule set forth at section B of 
the RFP which required unit prices for estimated quantities of 3,360, 
4,300, and 5,000 hours per contract year.  Of significance to 
DynaLantic's current challenge, the RFP required offerors to propose 
one comprehensive hourly rate for performing any hour of required 
service; no separate contract line items were included for 
nonrecurring costs such as building construction or equipment 
expenses.

The original RFP also contained a maximum price premium provision 
which provided, in relevant part:

     The Government may elect to pay a price premium of up to 
     approximately 35 [percent] to select an Offeror whose 
     non-cost/price evaluation factors (e.g. technical . . .) are 
     superior.

Only two offerors--DynaLantic and MSI--submitted proposals.  After 
evaluating DynaLantic's technical proposal as unacceptable, the Navy 
excluded it from the competitive range and awarded the contract to 
MSI--whose technical proposal was rated outstanding.

On October 7, 1996, DynaLantic filed a protest in this Office 
challenging the exclusion of its proposal from the competitive range 
on the ground that the Navy had improperly evaluated the proposal as 
technically unacceptable.  By decision dated February 25, 1997, we 
sustained DynaLantic's protest and recommended that "discussions be 
held with DynaLantic" and BAFOs "solicited from both competitors and 
evaluated by a new TEP [Technical Evaluation Panel]."[1]

On March 17, the Navy convened a new TEP, which conducted a fresh 
evaluation of both DynaLantic's and MSI's initial proposals; from May 
2 until May 9, written and oral discussions were conducted with both 
offerors.  During this period, the Navy issued two amendments to the 
RFP, which incorporated the revised terms currently challenged by 
DynaLantic.

PARTIES' POSITIONS

Under the prior competition, there were two principal differences 
between MSI's and DynaLantic's proposals.  First, MSI's technical 
proposal was rated "outstanding" while DynaLantic's was found 
technically unacceptable.  The second principal difference between the 
offerors' proposals was their prices--DynaLantic's offered price was 
[deleted].  In this regard, whereas DynaLantic relied on a pricing 
strategy [deleted].

In its current protest, DynaLantic contends that the revised RFP 
"ha[s] the effect of frustrating" our corrective action recommendation 
because "the Navy has attempted to re-write the basis on which the 
evaluation was conducted, to the advantage of MSI and the prejudice of 
DynaLantic."  According to the protester, each of the challenged 
solicitation revisions favors MSI's [deleted], or otherwise prejudices 
DynaLantic's.  By removing the original RFP's 35-percent maximum price 
premium provision, the protester asserts, the agency has guaranteed 
its ability to select the technically superior MSI proposal, 
regardless of the offered price.  DynaLantic similarly objects to the 
agency's incorporation of a present value evaluation factor because, 
according to the protester, this formula [deleted] which favors MSI's 
competitive position.  DynaLantic also objects to the incorporation of 
a funding profile provision--which sets out the dollar amount 
allocated to each fiscal year (FY) of contract performance and advises 
offerors that "the solicitation may be unawardable" if the offeror's 
proposed contract year "minimums are more than the dollars per year in 
the funding profile"--because this provision penalizes DynaLantic's 
[deleted].

The Navy responds that the challenged revisions "reflect sound 
business practice" and do not nullify the corrective action 
recommendation in our decision since, consistent with that 
recommendation, the agency has apprised the protester--through 
discussions--of the deficiencies in its initial proposal and is 
soliciting BAFOs from both DynaLantic and MSI.  The Navy further 
explains the rationale for the challenged revisions as follows.  
First, the Navy reports that its decision to remove the 35-percent 
price premium clause from the RFP reflects a procurement policy 
decision that was made prior to our decision in DynaLantic; according 
to the Navy, the Navy decided to discontinue its use of price premium 
limitations because such provisions unnecessarily restrict a 
contracting agency's "flexibility . . . to make a true best value 
award," thereby contradicting the rationale behind using a best value 
procurement approach.  With regard to the present value evaluation 
factor, the Navy maintains that this provision was incorporated into 
the RFP to enhance the accuracy of the Navy's pricing evaluation and 
to ensure that different pricing strategies are evaluated on an equal 
basis--the present value of the estimated cost to the government over 
time.  The agency also reports that the challenged funding profile 
provision was added to the RFP to ensure that any subsequent contract 
award would not exceed available funds. 

ANALYSIS

The details of implementing our protest recommendations for corrective 
action are within the sound discretion and judgment of the contracting 
agency.  OMNI Int'l Distribs., Inc., 67 Comp. Gen. 123, 124 (1987), 
87-2 CPD  para.  563 at 2.  We will not question an agency's ultimate manner 
of compliance, so long as it remedies the procurement impropriety that 
was the basis for the decision's recommendation.[2]  QuanTech, Inc., 
B-265869.2, Mar. 20, 1996, 96-1 CPD  para.  160 at 2.  In this regard, it is 
well established that contracting agencies have broad discretion to 
amend the terms of a solicitation, see Singer Co., Librascope Div., 
B-227140, Sept. 8, 1987, 87-2 CPD  para.  225 at 2, and to make these 
revisions at any time prior to contract award--so long as offerors are 
advised and provided an opportunity to amend their proposals in a 
BAFO.  See Federal Acquisition Regulation (FAR)  sec.  15.606; PI Constr. 
Corp., B-270576.2, Dec. 15, 1995, 95-2 CPD  para.  270 at 2.  

In its protest, DynaLantic relies heavily on our decision in Ford 
Aerospace Corp. et al., B-239676.2 et al., Mar. 8, 1991, 91-1 CPD  para.  
260, wherein our Office concluded that a contracting agency's 
implementation of a prior recommendation--to remedy the agency's 
improper relaxation of a mandatory solicitation specification by 
amending the RFP to reflect the agency's actual needs and requesting 
BAFOs from all offerors in the competitive range--was improper because 
one of the solicitation revisions effectively prevented any competitor 
except the original awardee from winning the competition.  In that 
case, as part of its purported corrective action, the contracting 
agency incorporated a new evaluation factor into the RFP which added 
$13.1 million--the agency's estimated cost of terminating the improper 
contract award--to every offeror's price except that of the firm which 
had been improperly awarded the contract.  We found the pricing factor 
improper because, on its face, this provision lacked "any 
justification in law, regulation, or policy" and otherwise operated as 
a $13.1 million "penalty" and essentially guaranteed that "no offeror 
other than the incumbent ha[d] a reasonable chance of winning the 
competition."  Id. at 4.

We think the case at hand is wholly distinguishable from Ford 
Aerospace.  Unlike in Ford Aerospace, none of the challenged revisions 
or omissions in this case expressly favors MSI.  Instead, as explained 
below, each contested revision reflects a reasonable procurement 
practice.

First, we see no basis to question the Navy's determination that the 
original RFP's 35-percent price premium clause constituted an 
unnecessary restriction on the agency's authority to select the 
proposal which represents the best value to the government.  See 10 
U.S.C.A.  sec.  2305(b)(4)(C) (West Supp. 1997) (agency is to make award 
"to the responsible source whose proposal is most advantageous to the 
United States").  While DynaLantic suggests that the removal of the 
price premium limitation from the solicitation gives the agency 
unbridled discretion to select MSI, we note that any source selection 
decision must be reasonable and consistent with the solicitation's 
evaluation criteria, and supported by a well-documented, rational 
explanation.  See TRW, Inc., B-260788.2, Aug. 2, 1995, 96-1 CPD  para.  11 
at 3-4.  Moreover, despite DynaLantic's suggestion to the contrary, 
removal of the premium price limitation does not automatically 
preclude the government from determining that a less highly rated 
technical approach is the "best value" based on that approach's 
significantly lower price.  See ICF Kaiser Eng'rs, Inc., B-271079.3 et 
al., July 15, 1996, 96-2 CPD  para.  15 at 4 (although solicitation stated 
that technical considerations were more important than price, agency 
reasonably determined that greater technical merit of protester's 
proposal was not worth its significantly higher cost).

Next, where, as here, the government is purchasing goods or services 
over time--and particularly where significant nonrecurring costs are 
expected, and thus disparate pricing strategies may be employed--a 
present value dollar analysis is a well-recognized and useful 
evaluation tool for determining the actual cost in current dollars--or 
present value--of each year of contract performance.  See Engineered 
Air Sys., Inc., B-220392.4, July 8, 1986, 86-2 CPD  para.  43 at 3.  By 
performing a present value evaluation, the government can convert each 
offeror's proposed yearly price to a current dollar value, enabling 
the comparison of all offerors' prices on a common basis--the present 
value of future money--even though different pricing approaches were 
used.  The present value analysis being used in this case--applying a 
6.1-percent discount factor over a 10-year period--is adopted from the 
Office of Management and Budget (OMB) Circular No. A-94, "Guidelines 
and Discount Rates for Benefit-Cost Analysis of Federal Programs," 
whose approach has been recognized by our Office as a reliable source 
for present value evaluation factors and their application.  See, 
e.g., Fort Wainwright Developers, Inc. et al., 65 Comp. Gen. 572, 
579-580 (1986), 86-1 CPD  para.  459 at 10, recon. denied, B-221374.9, Aug. 
11, 1986, 86-2 CPD  para.  172 at 6 (referring to the predecessor Circular 
No. A-104); City of Nenana, B-214269, June 21, 1985, 85-1 CPD  para.  708 at 
5 (same).

Finally, the funding profile provision likewise is unobjectionable.  
Contracting agencies cannot award contracts which exceed available 
funds.  See 31 U.S.C.  sec.  1341(a)(1)(A) (1994); FAR  sec.  32.702; Cellular 
Prods. Servs., Inc.--Recon., B-222614.2, Aug. 18, 1986, 86-2 CPD  para.  196 
at 2.  Given the Navy's funding limitations, and the agency's desire 
to make award within the parameters of its known funding, we think the 
new funding profile provision constitutes a reasonable method of 
achieving this goal.[3]

In sum, unlike the $13.1 million "penalty" in the Ford Aerospace case, 
the three solicitation revisions discussed above all reflect 
reasonable procurement practices which do not on their face result in 
a preference for or against any particular offeror.

Although we agree with the protester that certain evidence in the 
record shows that the agency recognized the impact of the challenged 
solicitation revisions on DynaLantic's initial proposal--i.e., 
[deleted]--given the reasonable and proper rationale for each 
revision,[4] as well as the protester's opportunity to respond to the 
revisions in its BAFO, we do not think that the concerns underlying 
our decision in Ford Aerospace arise here.  In Ford Aerospace, one of 
the key reasons for objecting to the $13.1 million pricing evaluation 
factor was the provision's clear impact on the competition; because 
every offeror but the original awardee was assessed with a $13.1 
million penalty, each began the competition with a $13.1 million 
handicap.  Thus it was clear that this provision improperly steered 
the outcome of the competition to the original incumbent.  This case 
is different. 

Here, none of the revisions on their face automatically favor or 
otherwise preserve contract award to MSI, nor do any of the revisions 
impose an insurmountable penalty on DynaLantic.  While DynaLantic's 
competitive standing could suffer as a result of the solicitation 
revisions, we think improvement is equally possible.  This is because, 
unlike the $13.1 million fee in Ford Aerospace, which imposed a 
virtually insurmountable restriction on offerors' BAFO pricing, the 
revisions at issue in this case do not force DynaLantic to adopt any 
specific approach or strategy in its BAFO.  Significantly, DynaLantic 
does not argue that it cannot change its pricing method or technical 
strategy; instead, it objects to the timing of the agency's decision 
to change the rules of the competition.  However, as noted above, an 
agency can change its requirements at any time during the competitive 
process--so long as the amendments serve a legitimate government 
purpose and ensure that offerors are provided with a full opportunity 
to respond to the new requirements.[5]   

In sum, since the challenged solicitation revisions otherwise reflect 
proper procurement practices, and since DynaLantic can respond with 
any BAFO revisions it deems appropriate under the circumstances, we do 
not think the agency's solicitation revisions circumvent our prior 
decision's recommendation or are otherwise improper.[6]

The protest is denied.

Comptroller General
of the United States

1. By decision dated July 15, we denied the Navy's request to modify 
our corrective action recommendation.  See Department of the 
Navy--Modification of Remedy, B-274944.4, July 15, 1997, 97-2 CPD  para.  
16. 

2. To the extent DynaLantic suggests that the Navy could not revise 
the terms of the RFP because this was not one of the express 
recommendations set forth in our prior decision, the protest is 
without merit.  The issue is whether the corrective action approach 
remedies the prior procurement impropriety, even if it does not 
precisely track our recommendation.  See Tolen Info. Servs., B-246647, 
Mar. 23, 1992, 92-1 CPD  para.  303 at 2 (agency's alternative corrective 
action of revising solicitation to incorporate new licensing 
requirement and solicit new offers was unobjectionable since further 
competition was conducted, consistent with prior decision's 
recommendation).

3. DynaLantic also contends that this provision is ambiguous because 
the "fiscal year" funding profile is "hopelessly inconsistent" with 
the RFP requirement to propose prices on a "12 month" basis.  However, 
beyond this general statement, DynaLantic does not explain its 
objection, and we see no basis to conclude that any such 
"inconsistency" constitutes a material defect in the RFP.  
Consequently, we will not consider this argument further.  See Imaging 
Equip. Servs., Inc., B-247201, Jan. 10, 1992, 92-1 CPD  para.  50 at 2 
(unsupported assertion that solicitation specifications are overly 
restrictive does not constitute a legally sufficient basis of 
protest).

4. The record contains a November 8, 1996, agency memorandum which was 
prepared to justify the agency's "best interests" decision to override 
the statutory stay on contract performance triggered by DynaLantic's 
prior protest.  See 31 U.S.C.  sec.  3553(d)(3)(C)(i)(I) (1994).  The 
memorandum recognizes that DynaLantic's [deleted].

5. In its comments on the agency report, DynaLantic argues that, 
instead of amending the solicitation, the requirement should be 
resolicited as a new requirement, consistent with FAR  sec.  15.606(b)(4) 
which provides, in relevant part:

            If a change [to a solicitation] is so substantial that it 
            warrants complete revision of a solicitation, the 
            contracting officer shall cancel the original solicitation 
            and issue a new one, regardless of the stage of the 
            acquisition.

Solicitation amendments that do not significantly alter the nature and 
scope of the contract to be awarded, or the obligations of either 
party, are not "so substantial [as to] warrant complete revision of 
the solicitation."  See Loral Fairchild Corp., B-242957.2, Aug. 29, 
1991, 91-2 CPD  para.  218 at 4.  Despite DynaLantic's contentions to the 
contrary, we do not agree that the above-referenced amendments 
substantially changed the nature of the ship handling requirement; 
although offerors may be inclined to revise their pricing strategies 
or otherwise improve the technical merit of their offers, the 
underlying requirement--to provide four stages of ship handling 
simulator services--remains unchanged.  

6. DynaLantic also challenged the RFP's description of the 
construction site as a "vacant lot" because this description does not 
reflect the presence of MSI's partially completed facility.  As such, 
DynaLantic maintains that the "vacant lot" description is an improper 
"fiction" that inures in a competitive advantage to MSI, since only 
MSI will not have to account for potential construction delays 
otherwise attributable to the removal of the building.  The Navy 
reports that DynaLantic will not be required to begin contract 
performance until MSI has removed the building from the construction 
site; since the Navy would thus provide DynaLantic with the "vacant 
lot" described in the solicitation, this protest ground is denied for 
lack of basis.