BNUMBER: B-275803; B-275803.2
DATE: March 31, 1997
TITLE: Dorris, Helen, and William McMurtry, B-275803; B-275803.2,
March 31, 1997
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DOCUMENT FOR PUBLIC RELEASE
The decision issued on the date below was subject to a GAO Protective
Order. This version has been approved for public release.
Matter of:Dorris, Helen, and William McMurtry
File: B-275803; B-275803.2
Date:March 31, 1997
Mark S. Sifferman, Esq., Norling, Kolsrud, Sifferman, Svejda & Davis,
for the protester.
Thomas A. McCarville, Esq., for McCarville, Cooper & Vasquez, an
intervenor.
Emily C. Hewitt, Esq., Donald R. Jayne, Esq., and Marilyn M. Paik,
Esq., General Services Administration, 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
1. The issuance of an unsigned lease document by a contracting
officer to an offeror does not constitute an award of a contract to
that offeror where the letter accompanying the lease clearly indicates
that no contract will arise unless the government signs the lease and
the government never signed the lease.
2. An agency properly reopened discussions to address existing
proposal deficiencies with, and obtain proposal revisions from, all
offerors in the competition where no proposal is acceptable under the
solicitation and eligible for award, and the solicitation has been
amended in a material manner; under such circumstances, there is no
improper technical leveling in reopening discussions.
3. Where a solicitation for leased space defines a late proposal as
one received after the due date for submission of best and final
offers (BAFO), a protest alleging that a proposal is late if received
after the date for submission of initial proposals, but before the
BAFO date, constitutes a protest based upon an alleged impropriety in
a solicitation apparent prior to the time set for receipt of initial
proposals, which is untimely if not filed prior to the time set for
receipt of initial proposals.
4. An ambiguity concerning the identity of an offeror or the possible
improper transfer of the offeror's proposal during the course of an
ongoing procurement may properly be resolved during discussions prior
to award.
DECISION
Dorris, Helen, and William McMurtry protest solicitation for offers
(SFO) No. RAZ- 95816, issued by the General Services Administration
(GSA), for leased space for use by the Social Security Administration
(SSA). The McMurtrys protest the reopening of discussions and award
to any offeror other than the McMurtrys.
We deny the protest.
The SFO, issued September 6, 1995, contemplated the award of a firm,
fixed-price lease for 15 years to the lowest-priced, technically
acceptable offeror.[1] The date established for submission of initial
proposals was November 9.
The SFO stated that negotiations would be conducted, proposal
revisions would be permitted, and award would be based on best and
final offers (BAFO). The SFO incorporated by reference GSA Form 3516,
which included selected solicitation provisions from the Federal
Acquisition Regulation (FAR) and the GSA Acquisition Regulations
(GSAAR), including GSAAR sec. 552.270-3, "Late Submissions,
Modifications, and Withdrawals of Offers (AUG 1992)" which stated in
pertinent part:
(a) Any offer received at the office designated in the
solicitation after the exact time specified for receipt of
[BAFOs] will not be considered unless it is received before award
is made and it [satisfies one of four possible exceptions.]
GSA received initial proposals by November 9 from the McMurtrys and
from McCarville, Cooper & Vasquez. GSA also received requests for
clarification of the solicitation from Mr. William O'Connor, the
incumbent lessor. The contracting officer opened negotiations with
the McMurtrys and McCarville, and corresponded with Mr. O'Connor
concerning the requested clarification. On March 1, 1996, the
contracting officer requested submission of BAFOs by March 29;
however, after learning that neither the McMurtrys nor McCarville was
prepared to submit BAFOs, she canceled the BAFO request.
On May 5, Mr. O'Connor submitted his initial proposal. By letter of
May 23, the contracting officer requested submission of BAFOs by June
10. The McMurtrys and McCarville submitted BAFOs. By letter of July
29, the contracting officer reopened negotiations and requested
receipt of revised BAFOs by August 9, in response to which all three
offerors submitted BAFOs.
The McMurtrys proposed constructing a new building; the other two
offerors proposed modifying existing buildings. The McMurtrys's BAFO
was the highest- priced offer.
By letter of August 22, the McMurtrys filed a protest with GSA,
alleging that "the competing offeror" did not comply with certain SFO
requirements and that the successive rounds of negotiations may have
constituted technical leveling in favor of "the competing offeror."
By letter of September 10, the contracting officer sent an unsigned
lease agreement to the McMurtrys. The letter stated:
Execution of this contract by you constitutes your offer to the
Government. The offer shall be interpreted as remaining open
until either accepted by the Government or withdrawn by you.
Execution of this contract by the Government shall constitute
acceptance of the offer. No contract is established until this
agreement is executed by the Government. . . .
This letter also included new "special space requirements" applicable
to the lease. [2] The revisions included the addition of certain
lump-sum reimbursable items, such as push-button automatic doors,
peepholes, chair rail, bracing cabinets, a barrier wall between the
reception and work areas, and a folding wall in the multi-purpose
room, as well as certain changes to the space to accommodate a
different computer system. By letter of October 4, the McMurtrys
returned the lease with a few corrections and their signatures as the
lessors under the lease agreement. The lease was never executed by
the government.
Meanwhile, by letter of September 24 to McCarville, the contracting
officer advised McCarville that it would not receive the award because
the offered space:
would not lend to an efficient layout for systems furniture,
which SSA plans to install at their new lease location. The
[SFO] - Space Efficiency, Paragraph 4.4 states, "The design of
the space offered must be conducive to efficient layout and good
utilization."
By letter of September 25, McCarville filed a protest with GSA
challenging the rejection of its BAFO.[3] In pertinent part, the
protest alleged that although the agency had raised concerns about a
center wall in the existing structure and floors having more than one
level, McCarville had addressed the concerns, prior to the last BAFO,
by offering to remove the wall and explaining that its renovation
plans always included bringing all of the floors to a single level.
By letter of October 17 to McCarville, the contracting officer
referenced a July 24 letter from that firm stating that a central wall
in the existing structure is not load bearing and can be easily
removed. The contracting officer requested a certification from a
structural engineer regarding the structural integrity of the building
with the removal of the entire wall, including certification that the
building conforms to applicable seismic requirements.
The record also indicates that Mr. O'Connor's proposal was not
considered acceptable because it appeared that he did not propose
sufficient available space, and that certain discussions had been held
with Mr. O'Connor on the matter.
In November, the contracting officer's supervisor reviewed the entire
procurement and determined that the procurement should be reassigned
to another contracting officer. On November 19, a replacement
contracting officer was assigned to the procurement.
The replacement contracting officer reviewed the proposals, and
determined that areas of concern and deficiencies still existed in
each proposal and that the record did not document that these matters
had been sufficiently brought to each offeror's attention for
resolution. By letter of November 29, the replacement contracting
officer reopened negotiations with all offerors, identified areas of
concern and proposal deficiencies for each offeror, and scheduled a
site inspection with each offeror. The replacement contracting
officer also issued amendment No. 1 revising the terms of the SFO,
which included changing the required occupancy date from "June 1996"
stated in the initial SFO to "120 days after receipt of the
GSA-approved layout," and replacing the SSA special space requirements
with the latest revised version (which had been previously provided to
the McMurtrys).[4] Another round of BAFOs was contemplated.
By letter of December 4, the replacement contracting officer denied
the McMurtrys's protest, stating, among other things, that the
McMurtrys's proposal was not technically acceptable, and thus an award
could not be made to that firm. Among the reasons that the
McMurtrys's proposal was not considered acceptable were that its price
was considered too high, its proposed space had windows only on one of
the four exterior walls,[5] and it proposed an occupancy date of 210
days after award and receipt of the GSA-approved layout.
The McMurtrys's protest to our Office followed. The agency has not
obtained revised BAFOs.
The McMurtrys first allege that the lease document sent to it on
September 10 is a legally binding contract and further competition is
therefore improper. We disagree.
It is a fundamental rule that in order for the government to enter
into a contract with an offeror, the government must clearly,
unequivocally, and unconditionally accept the offer. American
Management Co., B-228279; B-228280, Jan. 15, 1988, 88-1 CPD para. 38 at 3.
The facts here clearly establish that GSA never entered into a lease
contract with the McMurtrys. The letter accompanying the lease stated
that the offeror was to execute the lease, which would constitute the
offer, and return it for execution by the government. The letter
explicitly stated that acceptance of the offer by the government would
not occur until the government executed the lease. Indeed, the
McMurtrys's October 4 letter returning the lease, stating that the
McMurtrys were awaiting commencement of the contract "upon receiving
the final lease approval from [the contracting officer]," recognizes
this. Since the lease remains unsigned by the government, there has
been no acceptance of the McMurtrys's offer. Thus, a lease contract
between the McMurtrys and GSA does not exist. Id.; TSCO, Inc., 65
Comp. Gen. 347, 349 (1986), 86-1 CPD para. 198 at 4.
Alternatively, the McMurtrys object to the reopening of discussions
with any offeror other than themselves, arguing that to do so would
result in improper technical leveling in view of the repeated rounds
of discussions previously held with the other offerors.[6]
In response, GSA states that none of the proposals is technically
acceptable and thus an award cannot be made without further
discussions. We agree. In negotiated procurements, any proposal that
fails to conform to the material terms and conditions of the
solicitation is unacceptable and may not form the basis for award.
Team One USA, Inc., B-272382, Oct. 2, 1996, 96-2 CPD para. 129 at 8.
Here, the McMurtrys do not dispute that their proposal was
inconsistent with the delivery date and window requirements stated in
the SFO. The McMurtrys also have not shown that the replacement
contracting officer's determination that the McMurtrys's proposed
price is too high was unreasonable.
Nevertheless, the McMurtrys allege that the initial contracting
officer waived these terms and conditions of the SFO in prior
discussions with the McMurtrys (e.g., she acceded to the McMurtrys's
proposed deviation to the window requirement), and determined that the
protester's proposed price was reasonable, so that GSA cannot now
conclude that the McMurtrys's proposal is unacceptable for failing to
meet these requirements or for offering an unreasonably high price.
In essence, the McMurtrys assert that GSA should be estopped from now
applying these requirements against the McMurtrys's proposal or
determining that their price is unreasonable.
An equitable estoppel will be found only where, among other things,
the party asserting the estoppel has relied to its detriment upon the
conduct of the party to be estopped.[7] Koch Corp.--Recon.,
B-212304.4, July 31, 1984, 84-2 CPD para. 132 at 2. Here, since the
McMurtrys's proposal remains in the competition and they will have the
opportunity to correct the deficiencies identified for them by the
replacement contracting officer, the McMurtrys have not suffered any
injury from relying on the alleged waiver of SFO requirements.
Furthermore, there exists no basis under the legal doctrine of
estoppel for requiring the government to consider for award a proposal
which does not meet the government's minimum needs. Eastern Marine,
Inc., B-213945, Mar. 23, 1984, 84-1 CPD para. 343 at 9. Thus, there is no
basis to find the GSA estopped from determining the McMurtrys's
proposal to be unacceptable.
Additionally, the SSA's revisions to its special space requirements,
which are clearly material, were not provided to GSA until after the
last round of BAFOs were submitted and were not incorporated into the
SFO until the November 1996 amendment. In such cases, the government
generally must issue an amendment and provide offerors an opportunity
to revise their proposals, as GSA is in the process of doing here.
See FAR sec. 15.606; Media Funding, Inc. d/b/a Media Visions, Inc.,
B-265642, B-265642.2, Oct. 20, 1995, 95-2 CPD para. 185 at 5; United Tel.
Co. of the N.W., B-246977, Apr. 20, 1992, 92-1 CPD para. 374, aff'd,
Department of Energy--Request for Recon. et al., B-246977.2 et al.,
July 14, 1992, 92-2 CPD para. 20. Where, as here, the need for revised
proposals was due to the issuance of a material amendment, it cannot
be said that improper technical leveling has occurred. Media Funding,
Inc. d/b/a Media Visions, Inc., supra, at 5.
Thus, notwithstanding the previous rounds of discussions, the agency
is properly requesting revised BAFOs.[8]
The McMurtrys allege that Mr. O'Connor's proposal should not be
considered in the competition because Mr. O'Connor submitted a "late"
proposal after the due date for initial proposals. We disagree.
Under the terms of the solicitation applicable here, an initial
proposal is late if received after the time set for receipt of BAFOs.
GSAAR sec. 552.270-3 (AUG 1992). Mr. O'Connor submitted his initial
proposal on May 5, 1 month before the June 10 due date for submission
of the first BAFOs. Since GSA received O'Connor's initial proposal
prior to the due date for BAFOs, it is not a late proposal and may be
considered by GSA under the terms of the SFO applicable at the time of
its submission.[9] LSS Leasing Corp., B-259551, Apr. 3, 1995, 95-1
CPD para. 179 at 4. To the extent the protest challenges the terms of
GSAAR sec. 552.270-3 more than 1 year after the time for receipt of
initial proposals, it is an untimely protest of the terms of the
solicitation apparent prior to the time set for receipt of initial
proposals. Bid Protest Regulations, sec. 21.2(a)(1), 61 Fed. Reg. 39039,
39043 (1996) (to be codified at 4 C.F.R. sec. 21.2(a)(1)); LSS Leasing
Corp., supra, at 4.[10]
The McMurtrys finally allege that McCarville should be excluded from
the competition since during the course of the procurement it changed
the name of the corporate entity identified as the offeror in its
initial proposal, thus either improperly transferring the proposal or
rendering the identity of the offeror ambiguous such that award could
not be made to it.
The record shows that after the replacement contracting officer
reopened discussions, McCarville submitted a form identifying a
different corporate entity (albeit with the same ownership as
McCarville). In response to the protest, McCarville resubmitted the
form with the initial offering entity, McCarville, identified as the
offeror, and stated for the record that McCarville was and is the
offeror, and that there was no transfer of the proposal. Since the
identity of the offeror is no longer ambiguous and no transfer of the
proposal has occurred, there is no basis to exclude McCarville from
the competition. See Dick Enters., Inc.--Protest and Recon.,
B-259686.3, Nov. 16, 1995, 95-2 CPD para. 223 (information on offeror
identity was properly provided after award to address concerns about
ambiguity of offeror or improper transfer of proposals).
The protest is denied.
Comptroller General
of the United States
1. The SFO also contained preferences for space in historic buildings
and handicapped access buildings.
2. The SSA had instructed GSA to make sure that the new special space
requirements were included in the new lease and replaced the old
requirements.
3. The McMurtrys protest not receiving notification of McCarville's
agency-level protest. However, the failure of an agency to notify an
interested party of a protest concerns a procedural defect which has
no substantive remedy; the only remedy would be a rehearing of the
protest, which essentially has occurred via the present protest. BDM
Management Servs. Co, B-211036.2, Apr. 9, 1984, 84-1 CPD para. 392 at 3;
Commonwealth Communications, Inc., B-209322.2, June 6, 1983, 83-1 CPD para.
606 at 5.
4. The amendment also replaced GSA Form 3516 with the revised version
(4/96). The revised form included a revision to GSAAR sec. 552.270-3,
which changed the time for determining whether a proposal is late from
the date for receipt of BAFOs to the date for receipt of initial
proposals.
5. Paragraph 4.9 of the SFO stated, "Office space must have windows in
each exterior bay unless waived by the Contracting Officer."
6. Technical leveling arises when, as the result of successive rounds
of discussions, the agency helps to bring one proposal up to the level
of other proposals, such as by pointing out inherent weaknesses that
remain in an offeror's proposal because of the offeror's own lack of
diligence, competence, or inventiveness after having been given the
opportunity to correct those deficiencies. FAR sec. 15.610(d) (FAC
90-31); Department of the Navy--Recon., 72 Comp. Gen. 221, 225 (1993),
93-1 CPD para. 422 at 3.
7. The other elements required under the doctrine of estoppel are (1)
the party to be estopped must know the facts; (2) the party to be
estopped must intend that its conduct shall be acted on or must so act
that the party asserting the estoppel has a right to believe it is so
intended; and (3) the party asserting the estoppel must be ignorant of
the true facts. Planning Research Corp. Pub. Management Servs., Inc.,
55 Comp. Gen. 911, 931 (1976), 76-1 CPD para. 202 at 28.
8. In any case, while discussions were evidently conducted with all of
the offerors, the record contains little documentation that the
deficiencies in the various proposals were reasonably brought to the
offerors' attention and their responses properly considered. Under
the circumstances, the record does not establish that improper
technical leveling occurred. In addition, we note that since the
McMurtrys's proposal is unacceptable, it is to that offeror's benefit
to reopen discussions.
9. The fact that the initial proposal submitted by Mr. O'Connor was
unacceptable did not require its rejection; rather, its inclusion in
the competitive range for purposes of discussions was permissible.
See ERA Indus., Inc., B-187406, May 3, 1977, 77-1 CPD para. 300 at 4;
Procurement Consultants Inc., B-181779, Dec. 10, 1974, 74-2 CPD para. 321
at 3-4.
10. The McMurtrys base their objection to the terms of GSAAR sec.
552.270-3 on Aerolease Long Beach v. United States, 31 Fed. Cl. 342,
366-368 (1994), aff'd on other grounds, 39 F.3d 1198 (Fed. Cir. 1994)
(GSAAR sec. 552.270-3 inconsistent with the requirement in 41 U.S.C. sec.
253a(b)(B)(ii) and the requirements of FAR sec. 15.412; GSAAR sec. 552.270-3
unfair to offerors who submitted initial proposals at an earlier
date). We follow 60 Key Centre, Inc. v. Administrator of Gen. Servs.,
47 F.3d 55, 58-60 (2d Cir. 1995), cert. denied, 116 S. Ct. 50 (1995),
which rejected the rationale of Aerolease and upheld acceptance of an
offer submitted after the closing date for receipt of initial
proposals but prior to the closing date for receipt of BAFOs pursuant
to GSAAR sec. 552.270-3. LSS Leasing Corp., supra, at 4 n.3.