BNUMBER:  B-276058.2 
DATE:  December 11, 1997
TITLE: 440 East 62nd Street Company, B-276058.2, December 11, 1997
**********************************************************************

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-ï¿½-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.