BNUMBER: B-276058.2
DATE: December 11, 1997
TITLE: 440 East 62nd Street Company, B-276058.2, December 11, 1997
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DOCUMENT FOR PUBLIC RELEASE
The decision issued on the date below was subject to a GAO Protective
Order. This redacted version has been approved for public release.
Matter of:440 East 62nd Street Company
File: B-276058.2
Date:December 11, 1997
Melinda L. Carmen, Esq., Carmen & Muss, P.L.L.C., for the protester.
Rebecca L. Kehoe, Esq., Cotten & Selfon, for Arch 1650 Partners, L.P.,
an intervenor.
Robert J. McCall, Esq., General Services Administration, for the
agency.
Andrew T. Pogany, Esq., and John M. Melody, Esq., Office of the
General Counsel, GAO, participated in the preparation of the decision.
DIGEST
Award to offeror submitting technically higher-rated, higher-priced
proposal was unobjectionable, where solicitation stated that price and
technical factors were of equal weight and agency determined that
superior technical merits of successful offer justified higher price.
DECISION
440 East 62nd Street Company protests the award of a lease to Arch
1650 Partners, L.P. under solicitation for offers (SFO) No. MPA95000,
issued by the General Services Administration (GSA) for office space
in Philadelphia, Pennsylvania. 440 East principally contends that the
evaluation of offers and the selection decision by the agency were
seriously flawed, and that its offer should have been selected for
award.
We deny the protest.
As amended, the SFO requested offers to enter into an initial lease
term of 10 years, with 2 consecutive renewal options of 5 years each,
for 265,000 occupiable square feet (o.s.f.) of office space for the
Environmental Protection Agency (EPA). The SFO specified that the
space "must be located in a prime commercial office district with
attractive, prestigious, professional surroundings with a prevalence
of modern design and/or tasteful rehabilitation." The SFO required
parking spaces within the building or within two city blocks for only
two government vehicles, as well as visitor parking at reasonable
rates, also within two city blocks. The SFO additionally required
that a variety of inexpensive fast food establishments and/or
restaurants be located within two blocks and that other services
benefiting EPA employees such as retail shops, cleaners, and banks be
located within three blocks.
The SFO stated that award of the lease would be made to the offeror
whose offer was most advantageous to the government, price and other
factors considered. The SFO provided that price was equal to the
combination of the following factors listed in descending order of
importance: (1) proximity to public transportation;[1] (2) space
layout efficiency;[2] (3) past performance (including technical
comprehension of requirements, construction plan, implementation
schedule/sequencing, and experience with projects of comparable size
and complexity); and (4) ability to provide a quality
workplace/building/location (including consideration of, among other
things, the building's quality, appearance, and systems efficiency, as
well as the surrounding locale). The SFO also contained a "Historic
Preference Clause," which provided for a 10-percent price evaluation
preference for buildings listed in the National Register of Historic
Places, but only if the "offer for space meets the terms and
conditions of [the SFO] as well as any other offer received."
Finally, occupancy was required within 360 calendar days from the
successful offeror's receipt of "design intents" from GSA following
execution of the lease.
Five offers were received, three of which, including 440 East's and
Arch 1650's, were included in the competitive range. Following
extensive discussions, GSA requested and received best and final
offers (BAFO). The agency evaluated BAFOs with the following
technical and price results:[3]
Offeror Overall Technical ScorePrice
(Present value
per o.s.f.) Operating Costs
Arch 1650 5.00 [Deleted] [Deleted]
Offeror A 3.13 [Deleted] [Deleted]
440 East 1.60 [Deleted] [Deleted]
Briefly, concerning 440 East's building, the agency evaluators found
that its location was in an area that "has historically housed
light-industrial, manufacturing, production oriented companies [and
that] the only other large and prominent tenant in [the area] is the
[Philadelphia] Inquirer Building across the street, which has large
elements of quasi-industrial, shipping, receiving, storage type
functions." The evaluators concluded that 440 East's building was in
a location that "cannot be considered a prime commercial office
district." (Emphasis in original.) The evaluators also found that
the 440 East building has direct access to only two of the four major
public transportation systems, lacks amenities, and had an excessively
large floor plate which would make the space inefficient for EPA's
intended use.
In contrast, the agency found that Arch 1650's offer met or exceeded
agency expectations regarding all award factors. The evaluators found
that the 1650 Arch Street building was a "Class A" building which
presented a professional appearance, has been maintained in excellent
condition, and has immediate access to all means of public
transportation. Further, the evaluators found that the building was
located in the central prime commercial core of the city with
excellent amenities.
Based on the evaluation results, the contracting officer determined
that the Arch 1650 offer was most advantageous to the government and
awarded a contract for the lease to that firm on September 4, 1997.[4]
This protest followed a debriefing provided by the agency to 440 East.
440 East raises numerous arguments concerning the evaluation and the
award decision. We have reviewed the record and find all to be
without merit. We discuss the principal evaluation issues below.
The evaluation of offers is primarily within the discretion of the
procuring agency, not our Office; the agency is responsible for
defining its needs and the best method of accommodating them. Buffalo
Central Terminal, Ltd., B-241210, Jan. 29, 1991, 91-1 CPD para. 82 at 5.
Consequently, we will not make an independent determination of the
merits of offers; rather, we will examine the agency's evaluation to
ensure that it was reasonable and consistent with the stated
evaluation factors. Id.
Concerning the evaluation factor of proximity to public
transportation, 440 East argues that, in addition to two public
transportation systems (one bus line and a subway stop) nearby its
building, [deleted]. Further, the protester argues that its offer was
"clearly superior" to the awardee's inasmuch as the protester offered
[deleted] inside secured parking spaces in its building [deleted], and
also has parking across the street at very low daily and monthly
rates. The protester notes that the 1650 Arch Street building
provides no such parking. Additionally, the protester states that its
building is accessible to major highways and is not located in a
congested traffic area. In short, the protester complains that Arch
1650 unreasonably received a perfect score of 5 under this factor,
while its offer was allegedly improperly downgraded.
The record does not support the protester's position. The evaluators
found that while the 440 East building was 700 feet from the Broad
Street subway and less than 100 feet from one bus line (Route C), it
is more than 1/2 mile to the Market/Frankford subway/surface line and
more than 3/4 mile to PATCO (a regional commuting rail line to New
Jersey). The evaluators recognized that the protester's [deleted] was
an attempt to "somewhat enhance" employee access to public
transportation. However, [deleted], and the agency states that a
great majority of EPA employees use flextime, compressed time, and
alternate work schedules, and therefore leave work prior to 4 p.m.
Further, EPA, with its mission to reduce pollution by fossil-fuel
vehicles, places heavy emphasis on its employees using mass transit,
and 87 percent of its employees do so.[5]
In contrast, the record shows that the 1650 Arch Street building was
1,300 feet from the Broad Street Subway, 950 feet from the
Market/Frankford elevated trains, 400 feet from the regional rail, and
less than a 1/2 mile from PATCO. The evaluators also found that the
building is serviced by several bus routes within a two-block radius.
We conclude that the agency reasonably declined to increase the
protester's proposal rating based on proximity to inexpensive parking,
and that its proposal was reasonably downgraded relative to Arch
1650's under this factor.
Concerning space layout and efficiency, the protester argues that its
office space is on contiguous, open rectangular floors with elevators
dedicated to EPA's use and is "highly efficient." The protester also
states that [deleted] the required 265,000 o.s.f. [deleted] to provide
even greater layout flexibility. The protester asserts that the 1650
Arch Street building, which is configured over 16 floors, offers a
less efficient layout of space.
The record shows that the protester's offered floor plate was more
than [deleted] square feet, which [deleted] the desired maximum of
60,000 square feet as stated in the amended SFO. The protester's
solution for reducing the [deleted] floor plate size was to [deleted].
The evaluators found that [deleted] the floor plate did not resolve
any of the efficiency or space use problems associated with [deleted]
floor plates, including [deleted]. Moreover, EPA states that fit-out
of the general floor area would be extremely difficult due to small
bay sizes in some areas, and that it would have to customize numerous
system furniture workstations to effectively use the space. Floor
space also would be lost due to inefficiencies caused by the number of
columns requiring box-outs. The evaluators also found that
insufficient natural daylighting would result due to the sheer depth
of the floor plate. The evaluators concluded that "[t]he combination
of the aforementioned factors render this space unsuitable for the
agency needs with respect to functionality, space use and employee
efficiency." (Additionally, we agree with the agency that the
protester's offer of [deleted] not required by the SFO could not
properly have been considered by the agency, since giving the
protester credit for this [deleted] would have been inconsistent with
the SFO evaluation criteria.)
In contrast, the record shows that Arch 1650's building offered a
floor plate well within the agency's desired minimum and maximum.
Further, the Arch 1650 office space is essentially column-free,
allowing for efficient layouts, and is contiguous and uninterrupted,
with the exception of a mechanical equipment floor (15th floor).
Moreover, the floor plate size and nearly continuous perimeter glazing
offer ideal natural daylighting conditions. For these reasons, we
again find that the protester's building was reasonably downgraded
relative to Arch 1650's under this factor.
Concerning the past performance factor, the protester argues that it
offered a "team [with] an outstanding record with GSA and the private
sector" that should have merited a "top score." The protester states
that it has "strong" owner, developer, contractor, and property
management experience as a lessor for which it did not receive proper
credit.
The record shows that the protester received a score of 3 points under
this factor and demonstrated a "good comprehension of the Government's
Solicitation and related technical requirements"; its construction
schedule was "adequately presented" and accounted for major trades and
SFO scheduling elements. Further, the evaluators found that its team
of architects, engineers, and construction managers demonstrated past
experience with large scale projects similar in size or complexity.
However, Arch 1650 also demonstrated a superior understanding of
solicitation requirements and was even able to make viable suggestions
regarding reuse potential, the heating/ventilation/air conditioning
(HVAC) system and lighting, which allowed for significant cost
savings. Further, the evaluators found that its construction
schedule/phase-in was superior and demonstrated a thorough
understanding of the scope of the project. Arch 1650's team of
architects, engineers, and construction managers also demonstrated
past experience with projects of comparable size and complexity. In
short, because both offerors were found to demonstrate good past
performance credentials, the record shows that this factor properly
was not a determinative or material factor in the selection decision.
Under the factor of ability to provide a quality
workplace/building/location, the protester argues that its building
was located in the SFO's delineated area and that it agreed to use a
"top GSA award winning architect for its building renovation and a
nationally renowned, environmentally experienced engineering firm."
The protester states that its offer included major building
renovations to the outside of the building, entrance, lobby,
elevators, and building systems.
While the protester's building was located in the SFO's delineated
area, the evaluators found not only that the protester's building is
in a light industrial area, but that the only tenant in the building
is a "computer disaster recovery firm," which also has large elements
of quasi-industrial and storage functions. The evaluators also noted
that the protester's building is "industrial in appearance [although]
[p]lanned renovations to the facade may serve to alter this somewhat."
In contrast, concerning the 1650 Arch Street building, the evaluators
found as follows:
The building was built to very high standards which adhere to
progressive design principles. The building configuration is
highly functional and efficient. The building's existing
condition, even before any attempt to retrofit, is excellent.
This is a modern office building which projects a highly
desirable professional image. As EPA seeks a high degree of
public 'presence' and professionalism, this building is well
suited to [its] needs. The building is located in a prime
commercial office area and all neighboring buildings are of
similar high quality. Overall the building projects a
professional, aesthetically pleasing appearance.
While the protester disagrees with the agency's assessment, it simply
has not shown that the evaluation was unreasonable under this
factor.[6]
Concerning the selection/tradeoff decision, agency officials have
broad discretion in determining the manner and extent to which they
will make use of the technical and cost evaluation results.
Price/technical tradeoffs may be made, and the extent to which one is
sacrificed for the other is governed by the test of rationality and
consistency with the established evaluation factors. 841 Assocs.,
L.P.; Curtis Center Ltd. Partnership, B-257863, B-257863.2, Nov. 17,
1994, 94-2 CPD para. 193 at 7. This discretion exists even where price
and technical factors are of equal weight. Id. We will not disturb
awards to offerors with higher technical merit and higher prices so
long as the result is consistent with the evaluation factors and the
agency has reasonably determined that the technical superiority
outweigh the price difference. Id.
GSA states that it reasonably paid a [deleted]-percent premium for the
Arch 1650 property. The protester argues that the premium paid was at
least [deleted] percent above its offered price and that this premium
was unjustified. The record does not support the protester's
argument. As discussed, the Arch 1650 building was rated
substantially higher than the protester's under all technical
evaluation criteria--the agency reasonably found that it was a modern
office building with a highly professional image in a prime commercial
area. The record also shows that the agency was fully aware that the
Arch 1650 property would command a substantial premium over the
protester's building. The determination that this premium was
warranted by the superiority of the Arch 1650 property was consistent
with the SFO (technical and price factors were equal), and well within
the agency's discretion.[7] The award therefore was proper.[8]
Finally, the protester argues, as an alternative to its evaluation
challenge, that its offer should have been excluded from the
competitive range since its location precluded a chance for award
vis-�-vis Arch 1650. This argument is without merit. An agency
should not automatically reject a relatively inferior offer in the
same manner that it would reject a nonresponsive bid. See Caldwell
Consulting Assocs., B-242767, B-242767.2, June 5, 1991, 91-1 CPD para. 530
at 11. Rather, an agency may broaden the competitive range to
maximize the competition and provide fairness to the various offerors.
Avondale Tech. Servs., Inc., B-243330, July 18, 1991, 91-2 CPD para. 72 at
3. Here, the protester was fully aware when it submitted its offer
that the SFO's evaluation criteria would favor an offeror with closer
proximity to public transportation, smaller floor plate sizes, and a
more modern office building which projected a desired professional
image. The protester was therefore cognizant that it would be in an
"uphill battle" to have a chance at award. See Deskin Research Group,
Inc., B-254487.2, Feb. 22, 1994, 94-1 CPD para. 134 at 5. Yet the
protester chose to aggressively pursue competing for this requirement.
Under these circumstances, the protester cannot reasonably claim that
it somehow was misled by its inclusion in the competitive range.[9]
In sum, we find nothing improper in the agency's establishing a
competitive range of three proposals that included 440 East's.
The protest is denied.
Comptroller General
of the United States
1. In response to an offeror's question during a pre-proposal
conference as to whether distance to public transportation would be
evaluated relatively or only to determine whether the building
location was within the specified delineated area of the SFO, GSA
stated that "[p]roximity to public transportation will impact the
score." This response was memorialized in an SFO amendment.
2. The SFO stated that the agency would consider a floor plate size
(the size of the rectangular floor offered) of between 19,000 o.s.f.
(minimum) and 50,000 o.s.f. (maximum). In the amendment containing
the offerors' questions and the agency's responses, GSA, in response
to a question whether these dimensions were "minimum requirements"
that had to be met, stated as follows:
No, these are not minimum requirements. However,
potential offerors [are] informed that a floor plate under
18,000 sf or over 60,000 sf would impact their score in
the technical evaluation process.
3. The agency employed the following technical ratings: excellent (5
points); average (2 to 4 points); and unacceptable (1 point).
4. The protester argues that the agency did not properly award the
lease because the award letter contained additional conditions and
contingencies imposed by the agency. We find this argument to be
factually erroneous. We have reviewed the award letter and find it to
be an unconditional acceptance of Arch 1650's offer without containing
any material conditions or contingencies.
5. This is why the SFO required only minimal parking spaces.
6. The protester also argues that the agency should not have awarded
the lease to Arch 1650 because that firm was sold to new owners prior
to receipt of BAFOs. As the agency points out, however, the transfer
or assignment of rights and obligations of an offeror is permissible
where, as here, the transfer is to a legal entity which is the
complete successor in interest to the offeror by virtue of the sale of
the entire business embraced by a proposal. See Ionics Inc.,
B-211180, Mar. 13, 1984, 84-1 CPD para. 290 at 4-6.
7. Moreover, while the agency has confirmed the accuracy of its
[deleted]-percent calculation and the protester has not demonstrated
that it is inaccurate, even if we were to assume, arguendo, that the
protester's [deleted]-percent figure is correct, in light of the
agency's reasonable preference for Arch 1650's higher-rated building,
we find that an additional [deleted]-percent differential would not
have altered the selection decision.
8. The record shows, contrary to the protester's argument, that no
post-BAFO discussions occurred except for permissible clarifications
and a reduction in price for [deleted] by Arch 1650, also permissible,
since that firm at that time was already evaluated as having submitted
the otherwise successful proposal. See Federal Acquisition Regulation
(FAR) sec. 15.412(c) (FAC 90-45) and 52.215-10(f). The protester also
states that it should have received a preference under the historic
building provision of the SFO since its building is a registered
historic building. However, since its offer did not meet the terms
and conditions of the SFO "as well as any other offer received," we
find no merit to this contention.
9. In a somewhat related contention, the protester also argues that
the agency failed to conduct meaningful discussions by not disclosing
inherent weaknesses in its offer which the protester could not change,
such as location and floor plate size. The protester states that GSA
"should have done so promptly." The record shows that the protester
knew from the beginning of the procurement that such factors as
location and floor size were of central importance to the agency's
evaluation scheme, and the protester obviously knew the location and
size of its own building. We do not think that the agency had to tell
the protester what it already knew, and therefore do not find that
this issue provides a basis to challenge the meaningfulness of the
discussions conducted.