BNUMBER: B-274992.2; B-274993.2
DATE: February 26, 1997
TITLE: HSG-Holzmann Technischer Services GmbH; HSG-GeBe
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Matter of:HSG-Holzmann Technischer Services GmbH; HSG-GeBe
File: B-274992.2; B-274993.2
Date:February 26, 1997
John S. Pachter, Esq., and Jonathan Shaffer, Esq., Smith, Pachter,
McWhorter & D'Ambrosio P.L.C.; 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.
Nancy van Noortwijk-Sommer, Esq., Department of the Army, for the
agency.
Mary G. Curcio, Esq., and John M. Melody, Esq., Office of the General
Counsel, GAO, participated in the preparation of the decision.
DIGEST
1. Price realism analysis of awardee's proposal for fixed-price
contract was reasonable where agency compared proposal to government
estimate and other price proposals; although certain proposed labor
rates were low, there was no reason to question awardee's
understanding of the requirements or to assume increased performance
risk, given agency's awareness of labor surplus due to current state
of German construction industry.
2. Agency was not required to downgrade awardee's proposal for lack
of extensive experience performing contracts in fully operational
hospitals, where solicitation did not require such experience and
awardee was found to have required experience based on performance of
maintenance contract at a contingency hospital, as well as numerous
base maintenance contracts that the agency determined involved work
similar to the current requirement.
DECISION
HSG-Holzmann Technischer Services GmbH protests the award of a
contract to Pacific Architects and Engineers GmbH Planning and
Construction (PAE) for total maintenance and minor construction at the
U.S. Army Hospital in Heidelberg, Germany, and its outlying clinics,
under request for proposals (RFP) No. DACA90-96-R-0075, issued by the
Army Corps of Engineers. HSG-GeBe, a joint venture of HSG-Holzmann
Technischer Services GmbH and GeBe Gebaude-und Betriebstechnik GmbH,
protests the award of a contract to PAE under RFP No.
DACA90-96-R-0076, for total maintenance and minor construction at the
Landstuhl Hospital at Landstuhl, Germany, and its outlying clinics,
also issued by the Corps.[1]
We deny the protests.
BACKGROUND
Both solicitations were comprised of a number of line items for which
offerors were to submit prices. Line items AA (management), AB
(preventative maintenance-hospital), and AC (preventative
maintenance-clinics and repair and new work) called for fixed prices.
Line items AF through CM called for offerors to provide fixed hourly
rates for different types of workers (e.g., plumbers and electricians)
to perform demand maintenance, minor construction and emergency work;
when the services are required, the Corps will negotiate a work order
with the contractor based on the proposed labor rates. The
solicitations set forth four equally weighted evaluation factors:
management; technical; past performance/experience; and price, and
provided that the contract would be awarded on the basis of the
proposal representing the best value to the government.
The agency received and evaluated three proposals under each RFP.
While in each case the protester's score out of 450 under the nonprice
factors was higher than PAE's (393 versus 387 for Heidelberg, and 417
versus 365 for Landstuhl), PAE's proposed prices under both
solicitations were low (DM 6,461,908.50 versus DM 7,230,194.42 for
Heidelberg, and DM 11,149,323 versus DM 13,620,118.38 for Landstuhl).
The agency determined in both cases that the protesters' higher
technical scores were not worth the higher prices and awarded the
contracts to PAE.
PRICE EVALUATION
The protesters argue that the agency did not properly evaluate PAE's
proposal for price realism and failed to downgrade the proposal based
on unrealistically low labor rates under line items AF through CM.
The protesters assert that these low rates should have resulted in a
finding of increased performance risk and a lack of understanding of
the requirements.
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.[2] PHP
Healthcare Corp.; Sisters of Charity of the Incarnate Word, B-251799
et al., May 4, 1993, 93-1 CPD para. 366. However, an agency may, as here,
provide for the use of a price realism analysis in a solicitation for
the award of a fixed-price contract for the limited purpose of
measuring an offeror's understanding of the solicitation's
requirements, or to assess the risk inherent in an offeror's approach.
PHP Healthcare Corp., B-251933, May 13, 1993, 93-1 CPD para. 381.
There is no basis for objecting to the price realism analysis. While
the protesters are correct that PAE's proposed rates for line items AF
through CM appear low, the record establishes that the agency
reasonably concluded that these rates evidenced neither a lack of
understanding nor increased risk. In this regard, we note that the
identical issue was raised in a protest by HSG-SKE, a joint venture of
HSG-Holzmann Technischer Service GmbH and SKE Maintenance GmbH & Co.
KG, with regard to an award to PAE under an RFP for similar services
at the 67th Combat Support Hospital in Wurzburg, Germany. We denied
the protest based on the Corps' having found there that PAE's low
hourly rates were acceptable "given the present situation in the
German construction industry." In other words, the Corps found no
basis for assuming that PAE's rates were unrealistic given that the
labor categories in question were in surplus. See HSG-SKE, B-274769;
B-274769.3, Jan. 6, 1997, 97-1 CPD para. 20, recon. dismissed, B-274769.4,
Jan. 31, 1997. While it is not apparent whether the Corps reexamined
the German labor market and arrived at the same conclusion for
purposes of the current procurement, we do not think it was required
to do so; given the recency of its prior determination in connection
with a similar procurement involving the same labor categories, the
Corps' prior determination supports its conclusion that PAE's rates
were realistic such that downgrading of PAE's proposal based on risk
or lack of understanding was not warranted.
TECHNICAL EVALUATION
Non-Critical Equipment Plan
The protesters complain that PAE's technical score should have been
reduced because PAE did not provide a draft of its preventative
maintenance plan for noncritical equipment with its proposal, as
required by the RFP's statement of work.
We will review a proposal evaluation only to determine whether it was
consistent with the solicitation and reasonable. HSG-Intelcom,
B-254750.2; B-254750.3, Feb. 7, 1994, 94-1 CPD para. 74.
We addressed this identical issue in our decision, HSG-SKE, supra.
RFP section L delineated the information to be included in the
offerors' proposals with respect to the evaluation under Preventative
Maintenance Program (the first subfactor under the Technical
evaluation factor, and the only subfactor concerning preventative
maintenance). It stated that proposals should include an outline of a
management plan to set up and administer a preventive program. PAE's
proposal included the required plan outline, which included a draft
annual work schedule of recurring inspections and work, including
preventative maintenance for non-critical equipment and facility
components. We held in our prior decision that this information was
responsive to the noncritical equipment maintenance plan requirement.
There is no basis for reaching a different conclusion here.
Experience In Fully Operational Hospitals
The protesters maintain that the evaluation under the technical factor
(subfactor B, ability to organize and perform hospital facilities) and
past performance factor improperly failed to take into account PAE's
lack of experience performing operation and maintenance contracts at
fully operational hospitals.
There was no requirement that offerors demonstrate experience in fully
operational hospitals. Rather, the focus was solely on specified
capabilities. Under subfactor B, offerors were to provide evidence of
their capabilities in each of the following areas: facilities
maintenance; heat, ventilation, air conditioning, and refrigeration
equipment; elevators, dumbwaiters, carlifts, docklifts, levelers, and
conveyors; natural gas, medical gas and petroleum products storage and
distribution systems; food service equipment; and communications
systems and equipment. The agency found that PAE had submitted
sufficient evidence of these capabilities, and the protesters have not
shown otherwise.
The past performance factor also did not require offerors to
demonstrate experience performing operation and maintenance contracts
at a fully operational hospital. Rather, offerors were merely
required to list two or more contracts for similar projects they had
performed in the past 3 years. The evaluators recognized that the
protesters had widely diversified hospital experience and assigned
their proposals 15 points, the highest possible score, under both
solicitations.[3] PAE's past performance, which received scores of 13
and 15 points under the two RFPs, included an operation and
maintenance contract at a contingency hospital (i.e., one that would
be used only in the event that the fully operational hospitals reached
capacity), as well as several base maintenance contracts. The agency
determined that these contracts involved skills and tasks similar to
the current requirement, and concluded that PAE had experience
performing all tasks that would be required under the solicitation, as
well as working experience with the specific applicable medical
standards. In this regard, the agency explains that PAE's experience
at the contingency hospital was valuable because a contingency
hospital must be maintained at the same level as an operational
hospital, and the work to be performed, and standards applied to that
work, thus are the same as in a fully operational hospital. The base
maintenance contracts were deemed relevant because they generally
involved the same types of work performed under a hospital maintenance
contract, except for the specific medical standards to be applied.
Because the record shows that PAE, like the protesters, has experience
performing all the tasks that will be required under the RFP, and
experience with the specific hospital standards required, there is no
basis for objecting to the evaluation in this area.
Proposed Staffing
With respect to the Landstuhl contract, HSG-GeBe argues that PAE's
technical score should have been reduced to reflect inadequate
staffing--PAE proposed a 5-person staff--to perform preventative
maintenance under CLIN AB. The protester notes that the government
estimate for this work was 6 persons, and that its own staffing called
for 7.2 persons.
The government estimate to which the protester refers was developed
for purposes of the cost estimate, and was not made available to the
evaluators for purposes of the technical evaluation. The solicitation
itself did not require a specific number of persons to perform
preventative maintenance, and the evaluators specifically determined
that PAE's staffing of five persons for this work was sufficient to
perform properly. As the protester has not explained why PAE could
not perform adequately with its proposed staffing, its argument
amounts to no more than disagreement with the evaluators' conclusion;
such disagreement is not sufficient to demonstrate that the evaluation
was unreasonable. Atlantic Coast Contracting, Inc., B-259082.3, July
17, 1995, 95-2 CPD para. 21.
GERMAN LAW
The protesters argue that PAE's proposed labor rates are too low to
allow PAE to comply with a German labor law which requires a
contractor on a follow-on contract to hire the incumbent personnel at
the same rates those workers are currently being paid. The Army
states that it is unclear whether these are follow-on contracts and
therefore unclear whether this law will apply. In any case, the
record here shows that PAE is aware of the law and it has not
indicated in its proposal or otherwise that it will not comply with it
if required to do so. In this regard, we point out that the labor
rates offered in PAE's proposal are fixed, so that even if PAE
ultimately is required by German law to pay higher labor rates than
those on which its proposal is based, the increased costs will be
borne by PAE, not the government. Accordingly, this argument does not
provide a basis to object to the award.
The protests are denied.
Comptroller General
of the United States
1. We have consolidated these protests in a single decision because
the solicitations and protest issues are virtually identical.
2. Where, as here, future work orders will be negotiated based on
fixed labor rates, the contract is fixed-price in nature. See ASI
Personnel Serv., Inc., B-258537.7, June 14, 1995, 95-2 CPD para. 44.
3. We note that the protesters' past performance proposals do not
demonstrate performance of numerous operation and maintenance
contracts in fully operational hospitals. Rather, the record shows
that the protesters have performed one operations and maintenance
contract for an operational hospital and two contracts for part of a
hospital. The protesters only list one of these
contracts--Maintenance and Repair of U.S. Hospital Wurzburg Facilities
and Equipment--as similar to the instant solicitations.