BNUMBER: B-274990; B-274990.2
DATE: January 14, 1997
TITLE: Master Security, Inc.
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Matter of:Master Security, Inc.
File: B-274990; B-274990.2
Date:January 14, 1997
Robert D. Banfield, Esq., and Paul J. Seidman, Esq., Seidman &
Associates, P.C., for the protester.
Manuel B. Oasin, Esq., and Harmon Eggers, Esq., General Services
Administration, 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
1. Modifications to existing requirements contract for security guard
services which increased the number of hours and added contract sites
were proper since: (1) the solicitation advised offerors that the
winning contractor would perform all the agency's security guard
requirements in the specified geographic area over a 5-year period;
(2) the increase in service hours and locations occurred within the
solicitation's specified geographic scope; and (3) the nature and
price of the required security guard services were not changed by the
modifications and the addition of those requirements therefore would
have had no impact on the original competition.
2. Protest challenging modifications to existing contract for
security guard services on ground that agency used modifications to
improperly add five sites outside the geographic scope of the
originally awarded contract is denied where record shows that agency
properly acquired services at the five new sites using small purchase
procedures.
3. Where record shows that agency had an immediate, critical need for
security guard services at a site, but was not in a position to
proceed with fully competing the requirement, agency's utilization of
small purchase procedures to make interim buys on an as-needed basis
was proper.
DECISION
Master Security, Inc. (MSI) protests several modifications to contract
No. GS-03P-95-DWD-0001, awarded by the General Services Administration
(GSA) to Knight Protective Services for armed and unarmed security
guard services at GSA facilities located in Baltimore City and
Baltimore County, Maryland. MSI contends that GSA has improperly
modified the Knight contract by issuing numerous modifications which
have significantly increased the number of required guard service
hours and contract sites beyond the original requirement.
We deny the protest.
The Knight contract was awarded on June 19, 1995 and called for the
awardee to provide armed and unarmed guard services, on a
delivery-order basis, for GSA facilities located in Baltimore City and
Baltimore County, Maryland. The request for proposals (RFP) listed
nine performance sites in the Baltimore City/Baltimore County area,
and set forth an estimated quantity of 61,257 "basic" guard service
hours and 3,000 "emergency" guard service hours per contract year.
On April 17, 1995, the Alfred P. Murrah federal building in Oklahoma
City was bombed. Thereafter, GSA began receiving increased requests
for security guard services at its federal buildings. With regard to
the Knight contract, the record shows that for the first year of
contract performance, Knight performed 106,407 hours of basic security
guard services: 77,162 hours were performed at the original 9
contract locations, while 29,245 hours were performed at 16 new
Baltimore City/Baltimore County sites which were added during the
course of the base contract year. During option year 1--which began
August 1, 1996--the record shows that Knight performed 135,655 hours
of basic security guard services: 77,108 hours were performed at the
original 9 locations; 52,607 hours were performed at the 16 new sites;
5,047 hours were performed at 5 new sites outside the Baltimore
City/Baltimore County area; and 893 hours were performed at a site in
Woodlawn, Maryland, on an emergency, interim basis.
MSI contends that the increases in the number of hours and sites
constitute improper modifications which exceed the scope of the
original contract award and must be competed as a new requirement.[1]
In making this argument, MSI maintains that because the original
solicitation required offerors to maintain a reserve employee force
"of sufficient size to cover an increase of 20 [percent] to the basic
services," any modification which expands the required number of guard
service hours beyond this percentage constitutes an increase beyond
the scope of the contract. MSI also argues that because the
solicitation identified only nine locations in the Baltimore
City/Baltimore county area, adding 16 new locations beyond those
identified in the RFP similarly constitutes an improper increase in
the contract scope. Finally, MSI challenges the apparent addition of
five sites outside
the Baltimore City/Baltimore County area to Knight's contract, as well
as the orders issued to Knight for services to be performed at the
Woodlawn site.
Because a contract modification that goes beyond the scope of a
contract is tantamount to a sole source award that may not be
justified, we will review a protest challenging a contract
modification where the allegation is that a modification is beyond the
contract's scope and therefore should be the subject of a new
procurement. Insituform East, Inc., B-272399, Oct. 3, 1996, 96-2 CPD para.
134; Webcraft Packaging, Div. of Beatrice Foods Co., B-194087, Aug.
14, 1979, 79-2 CPD para. 120. In determining whether a modification
constitutes a cardinal change, i.e., whether it improperly exceeds the
scope of the contract and should be the subject of a new procurement,
we look to whether there is a material difference between the modified
contract and the contract originally competed. CAD Language Sys.
Inc., 68 Comp. Gen. 376 (1989), 89-1 CPD para. 364. As explained below,
we conclude that the challenged modifications here are
unobjectionable.
The Baltimore City/Baltimore County Modifications
The record shows that by option year No. 1--which began August 1,
1996--GSA had added 16 sites to the Knight contract, resulting in a
total work requirement of 129,715 hours per contract year in the
Baltimore City/Baltimore County area; the original RFP set forth a
basic security guard service estimate of 61,257 basic hours and 3,000
emergency hours at nine identified Baltimore City/Baltimore County
contract sites.
In examining the materiality of a modification, our decisions have
considered such factors as: (1) the contract terms--and whether
offerors should have reasonably anticipated the modification, see
Marine Logistics Corp., B-218150, May 30, 1985, 85-1 CPD para. 614
(modification to requirements contract for shipping services
unobjectionable where consistent with solicitation terms); (2) the
nature of the procured goods or services and the extent of any changes
introduced by the challenged modification, see Stoehner Security
Servs., Inc., B-248077.3, Oct. 27, 1992, 92-2 CPD para. 285 (modification
which incorporated new type of guard service into basic contract
improper); and (3) the impact of the modification on competition, see
Webcraft Packaging, Div. of Beatrice Foods Co., supra (protest
sustained where record showed that more firms would have entered a
competition based on the modification's incorporation of a relaxed
specification).
In this case, we think the challenged Baltimore City/Baltimore County
modifications were within the scope of the awarded contract. This
procurement involved the award of a requirements type contract, which
calls for the government to fill all its actual requirements for
specified supplies or services during a fixed contract period by
purchasing from the awardee, who agrees to provide them at the agreed
price. See Federal Acquisition Regulation (FAR) sec. 16.503(a).
Specifically, Section C of the contract's statement of work (SOW)
described the contract to be awarded as:
"[a] term or requirements contract . . . for filling all of the
agency's requirement for a particular service within a specified
time frame. In this solicitation GSA's requirement is for armed
and unarmed guard service in the Baltimore City and Baltimore
County [area]."
By defining this contract as a requirements-type contract to be
performed over a 5-year period, and by identifying--in seven different
sections of the RFP--the geographic scope of contract performance as
Baltimore City/Baltimore County, GSA clearly placed all offerors on
notice that the agency was soliciting for all armed and unarmed guard
services required by the agency in the Baltimore City/Baltimore County
area. Offerors should have expected fluctuations or increases in the
number of hours and sites; this is because a requirements contract--by
definition--presupposes uncertainty about actual purchases because it
is to be used where, as here, the government anticipates recurring
needs but cannot predetermine the precise quantities or future demands
at the time of award. See FAR sec. 16.501(a); 16.503(b).
In addition to its classification as a requirements contract, other
contract clauses set forth in the solicitation also advised offerors
of the potential for quantity increases. First, the following
disclaimer introduces the solicitation's work description:
"PLEASE NOTE [emphasis in original]: The following listing [of
contract sites and hours] is the government's best estimate at
this time of the total quantity of service required. This
estimate is not a representation that the estimated quantity will
be required or ordered, or that conditions affecting requirements
will be stable or normal."
Moreover, by means of an amendment issued to the original RFP which
set forth the minutes of the pre-proposal conference, offerors were
specifically advised that the 61,257-hour estimate was included for
"evaluation" purposes--and that this figure "[might] not reflect" the
actual total of required hours. Section C of the solicitation also
advised offerors that the 61,257-hour estimate constituted "the
minimum man-hours which have been determined by the [g]overnment as
essential to perform the work required by the contract." Consistent
with this language, the solicitation's pricing schedule required
contractors to propose their pricing by year and type of service,
e.g., "BASIC SERVICES, BASE YEAR. Baltimore City, Baltimore County,
MD," instead of by individual contract site.
Finally, paragraph 3(b) of the contract's statement of work (SOW),
"Additions Deletions to Man-hours Required," advised offerors that:
"[the agency] has the unilateral right to order services in
excess of [61,257 hours], as long as the increase is within the
scope of the contract, and the [c]ontractor will be obligated to
provide services at the specified rate shown in [its submitted
pricing schedule]."
Despite the above-referenced terms, MSI argues that two other
solicitation provisions limited the number of hours by which the
government could increase the basic security guard services contract.
MSI first contends that because paragraph 3(c)(1) of the SOW, "Reserve
Productive Personnel," only required offerors to maintain a "reserve
force" of "sufficient size to cover an increase of 20 [percent] to the
basic services required," any increase in service hours beyond this 20
percent of the estimated basic requirement--an additional 12,251
hours--constitutes an out-of-scope modification. Alternatively, MSI
argues that because the solicitation set forth a 3,000-hour emergency
guard service estimate, any increase beyond 3,000 hours in the basic
service level constitutes an out-of-scope increase.
We find MSI's interpretation to be unreasonable. First, interpreting
the reserve force provision as a service hour cap forecloses the
possibility of increases based on unusual conditions--a situation
clearly permitted and contemplated by the disclaimer provision quoted
above. Significantly, the reserve force clause does not set forth any
specific terms or language purporting to limit the amount by which the
basic security guard service hours or number of contract sites may be
increased. Moreover, when read in the context of the entire
solicitation--particularly the fact that this is a requirements
contract--we think it clear that the purpose of the 20 percent reserve
force clause was to cover foreseeable contingencies inherent in
providing the basic contract services, described in the "Reserve
Productive Personnel" clause as "e.g., . . . to replace guards on
scheduled or non-scheduled breaks, sick leave or vacation."
Similarly, with regard to MSI's interpretation of the 3,000-hour
emergency security guard provision, the solicitation clearly
envisioned treating basic security guard services and emergency
security guard services as distinct efforts. In addition to using
separate contract line item numbers for these two service types, and
setting forth different estimates for each (61,257 hours per year for
basic security guard services and 3,000 hours per year for emergency
security guard services), the original solicitation specifically
provided that the need for "emergency" security guard services would
only arise "in the event of an emergency" and would be procured "in
addition to the services specified [in the RFP] for the basic
services."
Although MSI contends that offerors could not reasonably anticipate a
quantity increase from 61,257 to 134,000 hours, as noted above, since
the original contract was a requirements contract and contained
numerous provisions placing offerors on notice of the potential for
fluctuations in guard service quantity, we think the agency was
entitled to order during the contract's term whatever quantity of
guard services the agency actually required in the Baltimore
City/Baltimore County area, so long as the nature of the guard
services did not change. See W. H. Mullins, B-207200, Feb. 16, 1983,
83-1 CPD para. 158. In this regard, it is well established that in a
requirements contract, the stated solicitation estimates do not act as
ceilings--but instead constitute benchmarks used by offerors to
establish their prices, and by agencies to evaluate them. See Caltech
Serv. Corp., B-240726.6, Jan. 22, 1992, 92-1 CPD para. 94 (49 percent
increase in requirements contract for containerization of cargo
tonnage unobjectionable where pricing and nature of services did not
change); Marine Logistics Corp., supra (25 percent increase in
requirements contract quantity unobjectionable where nature of
services did not change). Accordingly, we have sustained challenges
to quantity increases under requirements contracts only where the
nature of the item or services was materially altered by the
modification. See Liebert Corp., 70 Comp. Gen. 448 (1991), 91-1 CPD para.
413 (modification improper where it was inconsistent with original
contract's maximum quantity ceiling); American Air Filter Co., Inc.,
57 Comp. Gen. 285 (1978), 78-1 CPD para. 136 (modification to requirements
contract which substituted diesel for gasoline engines improper since
nature of the competed item was materially altered); W. H. Mullins,
supra (modification of an existing requirements contract for an
estimated 1,700 tons of specified grade of magnetite rock which
permitted the purchase of 5,000 tons of a reduced grade of magnetite
at a newly negotiated price improper).
In contrast, this contract contained no maximum quantity ceilings, and
as discussed above, clearly contemplated increases in the number of
required security guard service hours and individual sites, so long as
the increases were within the specified geographic scope of Baltimore
City and Baltimore County. In light of the clear contract terms, and
consistent with the anticipated duration of contract performance--5
years--we think it was foreseeable to the original competitors that
the agency's needs for security guard services could significantly
increase. Although the number of hours and sites has increased, there
have been no changes or modifications in the type of service to be
performed, in the performance period, or in the prices under the
Knight contract. Under these circumstances, we see no basis to
conclude--nor does MSI allege--that the field of competition would be
materially changed by the modifications. Accordingly, we find the
challenged Baltimore City/Baltimore County modifications to be
unobjectionable.
The Five Remote Contract Sites Award
On July 8, 1996, shortly before option year 1 began, the record shows
that GSA issued 10 delivery order modifications to Knight which
required basic security guard services at 5 contract sites located
outside the solicitation's identified Baltimore City/Baltimore County
geographic area. MSI contends that the addition of these five
sites--Westminster, Frederick, Columbia, Annapolis and Hagerstown--to
the Knight contract constitutes an improper modification because they
are outside the Baltimore City/Baltimore County area.
GSA reports that although services at these sites ultimately were
ordered from Knight via modifications to the original Baltimore
City/Baltimore County contract, in fact the awards were not made until
after a competition using small purchase procedures was held among
three small business contractors, including Knight.[2] The record
shows that on June 24, 1996, the GSA Philadelphia Regional
Office--which administers GSA's Maryland requirements--received a
request for basic security guard services at the five sites. Because
the cumulative dollar value for the five sites was below $25,000, a
GSA contracting officer solicited oral quotations pursuant to FAR Part
13. Three contractors--including Knight--were solicited by telephone;
Knight submitted the lowest quote. On June 25, the contracting
officer selected Knight for award. Because Knight was already
performing the Baltimore City/Baltimore County contract, the
contracting officer awarded the small purchase contract through a
series of 10 delivery orders to Knight's current contract; these 10
modifications are the subject of MSI's current challenge.
Although the orders were issued as modifications to Knight's existing
contract, the record shows that the agency properly competed the
requirements and properly selected Knight for award in accordance with
the FAR small purchase procedures.[3] We therefore see no basis to
object to the awards to Knight.
The Woodlawn Requirement
On August 7, 1996, prior to filing its current protest, MSI filed a
protest at this Office challenging a modification issued by GSA under
the current Knight contract--providing for the performance of security
guard services at the Health Care Financing Administration (HCFA)
facility, in Woodlawn, Maryland. In that protest, MSI contended that
the modification was improper in part because it required
substantially different security guard services from those required
under the Knight Baltimore City/Baltimore County contract.
On August 21, GSA took corrective action on the protest, advising MSI
that it would fully compete the HCFA Woodlawn requirement as a
separate procurement. GSA stated that until a new competition could
be conducted, "in the interim GSA [would] obtain the required guard
services for the HCFA building on a month to month basis." On August
27, MSI withdrew the HCFA Woodlawn protest.
Since MSI withdrew its protest, GSA has issued three delivery orders
to Knight--to provide 187 hours of security guard services at the HCFA
Woodlawn facility on a 30-day basis. In its current protest, MSI
contends that the agency is improperly dividing a large purchase into
small purchases in order to circumvent the requirements for full and
open competition.
GSA reports that consistent with its promised corrective action, its
issuance of the three challenged delivery order modifications simply
reflects the need for interim purchases until the agency is in a
position to fully compete this requirement. In this regard, the
record shows that as soon as the Department of Labor provides GSA with
the appropriate wage rate determinations for the Woodlawn services,
the agency will proceed with a fully competitive procurement for this
site.
We find the challenged modifications to be unobjectionable. When an
agency is faced with a critical need while being simultaneously unable
to proceed with a fully competitive award for that item, it may
properly use the small purchase procedures as an interim means to
procure its needs until a fully competitive award is possible.
Mas-Hamilton Group, Inc., 72 Comp. Gen. 6 (1992), 92-2 CPD para. 259.
Here, where the record shows that the agency is using the small
purchase procedures to make short-term buys until a fully competitive
award can be completed, we find the interim use of small purchase
procedures is appropriate.
The protest is denied.
Comptroller General
of the United States
1. On June 27, 1996 MSI requested copies of all modifications issued
under the Knight contract; on September 25, MSI received copies of the
modifications. On October 7, MSI timely filed this protest.
2. The Competition in Contracting Act of 1984 (CICA) authorizes the
use of simplified procedures that "promote competition to the maximum
extent practicable" for small purchases of property and services not
expected to exceed $100,000. 41 U.S.C. sec. 253(g)(1994); 41 U.S.C. sec.
403(11) (1994). An agency is to promote efficiency and economy in
small purchase procurements by using simplified procedures in
soliciting quotations, and is generally considered to have complied
with the mandate that it "promote competition to the maximum extent
practicable" when it solicits quotes from three or more qualified
sources(not exceeding $25,000).
FAR sec. 13.106-2(a)(4); Arcy Mfg. Co., Inc.; Beard Servs., Inc.; Keys
Wholesale, Inc.; Craftmaster Hardware Co., Inc., B-261538 et al., Aug.
14, 1995, 95-2 CPD para. 283.
3. On December 19, 1996, MSI filed a supplemental protest challenging
the agency's failure to solicit the protester for the small purchase
procurement. Under our Bid Protest Regulations, section 21.2(a)(2),
61 Fed. Reg. 39039, 39043 (1996) (to be codified at 4 C.F.R. sec.
21.2(a)(2)), protests such as this one must be filed within 10
calendar days from when the protest basis was known. In its report
dated November 7, 1996, GSA advised that it had procured services at
the five non-Baltimore sites using a small purchase procurement among
three former contractors. Since the protester waited more than a
month to challenge the agency's small purchase methods, its
supplemental protest is untimely.