BNUMBER:  B-276472 
DATE:  June 23, 1997
TITLE: McHugh/Calumet, a Joint Venture, B-276472, June 23, 1997
**********************************************************************

DOCUMENT FOR PUBLIC RELEASE
A protected decision was issued on the date below and was subject to a 
GAO Protective Order.  This version has been redacted or approved by 
the parties involved for public release.
Matter of:McHugh/Calumet, a Joint Venture

File:     B-276472

Date:June 23, 1997

Frederick P. Hink, Esq., and Ronald S. Perlman, Esq., Porter, Wright, 
Morris & Arthur, for the protester.
David T. Case, Esq., Leslie A. Leatherwood, Esq., and Joseph J. 
Brigati, Esq., Kirkpatrick & Lockhart, for Huber, Hunt & Nichols, 
Inc., an intervenor.
Marcy Sherrill, Esq., General Services Administration, for the agency.
Marie Penny Ahearn, Esq., David A. Ashen, Esq., and John M. Melody, 
Esq., Office of the General Counsel, GAO, participated in the 
preparation of the decision.

DIGEST

1.  Protest challenging evaluation of awardee's proposal as 
technically superior to protester's proposal under factor for past 
performance of similar projects, based on greater relevance of 
awardee's projects, is denied where record shows awardee's experience 
was reasonably determined to include projects more directly comparable 
to the proposed project.     

2.  Protest that agency violated Federal Acquisition Regulation  sec.  
15.610(c)(6) by not advising protester of adverse past performance 
reference is sustained as the regulation clearly requires such 
discussions where, as here, the protester has not otherwise had an 
opportunity to reply to the information and the record shows a 
reasonable possibility of prejudice.

DECISION

McHugh/Calumet, a Joint Venture (McHugh) protests the award of a 
contract to Huber, Hunt & Nichols, Inc. (HHN) under request for 
proposals (RFP) No. GS-05P-GBC-0015, issued by the General Services 
Administration (GSA) for construction of a new federal courthouse in 
Hammond, Indiana.  The protester argues that the agency improperly 
evaluated proposals and failed to conduct adequate discussions.

We sustain the protest.

BACKGROUND

The RFP contemplated award of a fixed-price contract for the 
construction of a 270,000-square-foot, four-story, limestone-clad 
courthouse housing seven courtrooms, federal office space, a 
cafeteria, and a firing range.  The solicitation provided for award to 
the offeror whose proposal provided the greatest value to the 
government, with price equal to technical factors.  The technical 
factors, in descending order of importance (along with evaluation 
weighting), were as follows:  (1) quality control plan (40 percent), 
(2) past performance on similar projects (35 percent), and (3) key 
personnel qualifications (25 percent).  

Four proposals were received by the closing time, three of 
which--including HHN's and  McHugh's, the only ones relevant 
here--remained in the competitive range until the source selection.  
The agency conducted three rounds of discussions and afforded offerors 
opportunities to submit revised offers and two rounds of best and 
final offers (BAFO). 

Although the (base) cost of McHugh's final BAFO ($49,237,200) was 
lower than HHN's ($50,263,000), HHN's BAFO received a consensus 
technical score of 78.3, which was 1.2 points higher than the score of 
77.1 received by McHugh's BAFO. While McHugh's technical proposal 
received slightly higher consensus scores for quality control (32.25 
versus 32), which was the most important factor, and key personnel 
(19.2 versus 18.3), the least important factor, HHN's proposal 
received a somewhat higher score for past performance (28 versus 
25.56), the second most important factor.  According to the agency, 
the evaluated difference with respect to past performance was "the 
major difference" between the offerors.  Specifically, the SSEB 
concluded that HHN's past performance (1) was more relevant to the 
proposed project than McHugh's, and (2) showed that the firm is more 
willing to work as a part of a team in order to keep costs down, the 
project on schedule, and the building tenants happy.  The SSEB 
determined that the advantages of HHN's technical proposal were worth 
the associated $1,026,000 price premium, and that HHN's BAFO offered 
the greatest value to the government.  Upon learning of the resulting 
award to HHN, McHugh filed this protest.  

McHugh challenges the agency's evaluation of, and conduct of 
discussions with respect to, past performance on similar projects.  We 
find that the evaluation was unobjectionable, but that GSA improperly 
failed to discuss past performance information with McHugh.

PAST PERFORMANCE ON SIMILAR PROJECTS 

The solicitation generally provided for evaluation of past performance 
based on "the number and complexity of comparable projects associated 
with the Offeror's key personnel, previous client assessments of 
Offeror's performance, and the Offeror's team experience in working 
together on previous projects."  The RFP specified the following 
"primary considerations":  (1) completion on time and within budget; 
(2) commitment in terms of quality, time and cost; (3) working 
relationship with owner, including problem resolution and change order 
execution; (4) working relationship with architect/engineer; (5) scope 
of services; (6) success in meeting owner's needs and expectations; 
(7) Occupational Safety and Health Administration record; and   (8) 
references.

Proposals were required to include a one-page description and 
references for each of two sample projects, completed within the last 
5 years, with "similar scope, requirements, and/or complexity" to the 
project contemplated by the RFP.[1]  In addition, GSA reserved the 
right to consider projects other than the two sample projects.  In 
this regard, the RFP requested offerors to provide summary 
descriptions, including references, for five completed projects, five 
current projects, and five of the largest projects for which the 
offeror was responsible over the past 5 years.  Further, the RFP 
specifically provided that in addition to the references provided by 
offerors, the agency might inquire about an offeror's projects not 
referenced in the proposal if it had first-hand knowledge of those 
projects.

While the agency found McHugh's past and current projects to be 
"similar in size and budget" and generally "comparable" to the 
proposed project, it found them to be not "specifically" or "directly" 
comparable to the proposed project "in complexity or function," and 
determined that HHN's past and current projects were "significantly 
more similar" than McHugh's.  For example, while McHugh had not 
completed or worked on any courthouse projects within the past 5 
years, HHN had three current courthouse projects, on one of which it 
was the general contractor, and on the other two was the construction 
manager.[2]  Likewise, GSA determined that HHN had superior experience 
with respect to the complexity of the architectural finish of its 
projects.  In this area, the agency concluded that the interior work 
on HHN's construction contract for the renovation of the Civic 
Courthouse in San Francisco, California, consisting of a cherry veneer 
casework paneling system, was "directly comparable" to the interior 
woodwork of the proposed project, and was more similar to that 
interior than the architectural finish on any project submitted by 
McHugh.  GSA further concluded that the architectural finishes on one 
of HHN's sample projects, the San Francisco Library, designed by the 
same architect who designed the Hammond courthouse, were "very similar 
to the proposed finishes and details" of the proposed project and 
demonstrated the firm's "ability to construct the intricate details 
and finishes" typical of a design by this architect.  Additionally, 
the agency viewed the exterior finish on HHN's second sample project, 
the Indiana Government Center, as directly comparable to the proposed 
project, since both have limestone facades.  In contrast, the agency 
considered the complexity of finishes on McHugh's projects as only 
"similar," and not directly comparable, to the proposed project.  For 
example, the agency viewed the finishes on one of McHugh's sample 
projects, the Chicago Place Condominium, as only "approach[ing] the 
level of finishes" for the proposed project.

McHugh maintains that it possesses greater relevant construction 
experience than HHN on projects similar in size and complexity to the 
contemplated project.  In this regard, according to McHugh, it 
possesses extensive experience working as a general contractor, which 
experience, it claims, should have been viewed as more relevant than 
HHN's experience, which McHugh characterizes as that of a construction 
manager rather than a general contractor.

In considering a protest against an agency's evaluation of proposals, 
we will examine the record to determine whether the agency's judgment 
was reasonable and consistent with the stated evaluation criteria and 
applicable statutes and regulations.  ESCO, Inc., 66 Comp. Gen. 404 
(1987), 87-1 CPD  para.  450 at 7.[3]

The evaluation in this area was reasonable.  As noted by the 
protester, GSA initially concluded that HHN had more construction 
management experience than general contractor experience, and 
evaluated this as a weakness.  However, based on HHN's explanation 
during discussions of the extent of its role and responsibilities when 
acting as a construction manager, and the benefits of its construction 
management experience, the agency determined that HHN's experience 
acting as both a general contractor and construction manager was a 
strength.  In this regard, the agency concluded that HHN's 
construction management experience "enhances their role as a third 
party problem resolver" and "makes them more sensitive in fostering 
good working relationships with the architect and construction 
manager."  We find nothing unreasonable in the agency's position that 
HHN's construction management experience would enhance its ability to 
maintain working relationships and solve problems, considerations that 
were specifically recognized as primary considerations under the past 
performance factor.  Moreover, the record indicates that HHN did in 
fact possess significant general contractor construction experience; 
the firm was the general contractor on both of its sample projects 
(the San Francisco Library and the Indiana Government Center), as well 
as for the San Francisco Civic Center Courthouse.  Given also that the 
scope of services provided was only one of eight primary 
considerations under the past performance area and, moreover, that the 
focus of the past performance evaluation generally was the "number and 
complexity of comparable projects," not the amount of general 
contractor experience, this aspect of the evaluation is 
unobjectionable. 

DISCUSSIONS

HHN's overall advantage with respect to past performance was based not 
only on the greater similarity of its prior projects to the 
contemplated project, but also on its evaluated more consistent record 
of establishing a successful working relationship.  Specifically, on 
two of the three projects for which GSA obtained a performance 
evaluation from the contacted references, HHN received above- average 
ratings for its working relationships with the owner and 
architect/construction manager and its commitment to problem 
resolution.  HHN received an outstanding rating on a third contract, 
which it held with GSA; SSEB members familiar with HHN's performance 
under that contract reported that HHN displayed an "exceptionally 
cooperative" attitude and that there were very few change orders 
issued on the project and "no negative issues or conflicts with the 
project."  

In contrast, while McHugh's references for two projects furnished 
above-average or outstanding ratings for working relationships and 
commitment to problem resolution, the GSA sources (including the SSEB 
chairman) contacted with respect to McHugh's performance on a GSA 
project for the renovation of a federal building at 536 South Clark 
Street in Chicago, Illinois reported a negative working relationship 
with McHugh and gave the firm generally below-average or poor ratings.  
Specifically, the SSEB chairman, who was the GSA project manager for 
the project, stated that there was "no indication [that McHugh] wished 
to help with delays or resolving problems" and concluded that the 
"project manager was the problem."  On his evaluation worksheet under 
key personnel qualifications, he further indicated that McHugh's key 
person providing executive oversight (different from the firm's 
project manager) "was ineffectual on the 536 Clark project in regard 
to resolving problems and outstanding issues."   Another past 
performance evaluation, completed after the filing of the protest by a 
GSA contractor serving in a project management function on the South 
Clark Street project, stated that the "[g]eneral attitude of McHugh's 
project management was adversarial and opportunistic," and that 
"McHugh's project management was adversarial and change-order 
oriented."[4]  In an addendum to the final SSEB evaluation report 
(prepared after the protest was filed, reportedly to document the 
source selection process), GSA reported that change orders for the 
South Clark Street project "appeared high," that "McHugh was less than 
timely and somewhat combative in addressing potential change order 
situations," and that "McHugh [had an] inadequate ability to deal with 
tenant and project team issues."  As noted above, GSA generally 
concluded that McHugh's past performance indicated an unwillingness by 
the firm to work as a team to keep costs down, the project on 
schedule, and the building tenants happy.[5]  
McHugh argues that the agency failed to hold meaningful discussions on 
past performance, because it did not advise the firm of the negative 
information received concerning its performance on the South Clark 
Street project.  The protester contends that if discussions had been 
held, it could have improved its rating in this area by:  (1) 
discussing the alternate personnel available to assign to the project; 
(2) furnishing additional information concerning its past performance 
history with respect to milestone maintenance and problem resolution; 
(3) explaining how a large portion of the changes on the South Clark 
Street project were related to asbestos conditions that were not 
covered by the contract and how a renovation project such as South 
Clark Street differed from the proposed new construction project; and 
(4) otherwise discussed "steps we have taken to remedy whatever 
problems the GSA perceived with respect to past performance."  McHugh 
also notes that its project manager on South Clark Street is no longer 
employed by McHugh.  In addition, the protester asserts that GSA 
agreed to the changes and maintains that the project was completed on 
time.    

Under Federal Acquisition Regulation (FAR)  sec.  15.610(c)(6) (FAC 90-31), 
competitive range offerors shall be provided "an opportunity to 
discuss past performance information obtained from references on which 
the offeror had not had a previous opportunity to comment. . . ."  GSA 
generally asked McHugh to address the increased costs under prior 
projects--including the South Clark Street project--where it had 
indicated a change in the scope of the project, and advised McHugh of 
its general concern that its "excessive emphasis on documentation 
usually is an indication of a contractor that is claim oriented."  
However, GSA did not bring to McHugh's attention, or provide McHugh an 
opportunity to address, the negative past performance references it 
had received bearing on the firm's working relationships and 
commitment to problem resolution on the South Clark Street project, 
notwithstanding that these negative reports were a significant factor 
in the source selection.  Cf. Pacific Architects and Engineers, Inc., 
B-274405.2; B-274405.3, 
Dec. 18, 1996, 97-1 CPD  para.  42 (discussions were adequate where agency 
imparted sufficient information to afford offeror a fair and 
reasonable opportunity to respond to the problems identified).  

GSA contends that it was not required to raise this issue because FAR  sec.  
15.610(c)(6) is inapplicable to internal agency references.  According 
to the agency, the FAR requires discussions only with respect to 
information obtained from third-party references, since third-party 
information is subject to interpretation, but does not require 
discussions concerning internal agency information, since such 
information is unlikely to be misinterpreted.  In any case, argues the 
agency, it was not required to discuss McHugh's performance on the 
South Clark Street project because McHugh had a previous opportunity 
to comment on its performance during the course of that project, that 
is, because the problems on the project were "common knowledge" and 
"GSA expressed its dissatisfaction with McHugh's performance 
throughout the duration of the 536 South Clark Street project."            

There is no basis to conclude that FAR  sec.  15.610(c)(6) was inapplicable 
here.  
Nothing on the face of that FAR section (or elsewhere in the FAR) 
limits its application to third-party (i.e., outside the procuring 
agency) references; the clear language of the regulation conditions 
the requirement for discussions solely on whether the offeror has had 
an opportunity to address past performance information, and carves out 
no exceptions based on the source of such information.  See American 
Combustion Industries, Inc., B-275057.2, Mar. 5, 1997 97-1 CPD  para.  105.  
Neither do the statutory provisions concerning the past performance 
discussion requirement exempt agencies from the requirement for 
information generated by the agency itself.  Indeed, 41 U.S.C.  sec.  
405(j)(1)(C)(i) (1994) appears to explicitly require discussion of 
such information.  Under that provision, the Administrator for Federal 
Procurement Policy is to "prescribe for executive agencies guidance 
regarding consideration of the past contract performance of offerors 
in awarding contracts" that shall include policies for ensuring that 
"offerors are afforded an opportunity to submit relevant information 
on past contract performance, including performance under contracts 
entered into by the executive agency concerned. . . ."  (Emphasis 
added.)  

We also do not agree that McHugh had a previous opportunity to comment 
on the negative information concerning its performance on the South 
Clark Street contract.  McHugh acknowledges that it was aware of 
difficulties which arose relating to asbestos conditions not covered 
by the contract and which it believed had been successfully overcome, 
and that it became aware near the end of the project (when the 
protester believed it was too late to replace him without disrupting 
and delaying the project) of "personality conflicts" between the South 
Clark Street on-site project manager and GSA personnel.  (As noted 
above, that project manager is no longer employed by McHugh.)  
However, the protester denies that it was notified by GSA of any 
problem with its overall organization regarding problem resolution, 
and GSA has furnished no documentary evidence that McHugh was ever 
notified of such a problem or that McHugh otherwise should have been 
aware of the problem, for example, through access to a database 
containing such historical performance information, or by some other 
such mechanism.  See, e.g., United Terex, Inc., B-275962.2, May 30, 
1997, 97-1 CPD  para.  196 (agency system provided offerors access to, and 
an opportunity to dispute, negative historical performance data).  We 
conclude that GSA was required to bring the negative South Clark 
Street project references to McHugh's attention during discussions and 
provide the firm an opportunity to address them.

GSA argues that, even if it failed to comply with FAR  sec.  15.610(c)(6), 
McHugh was not prejudiced, and the protest should not be sustained on 
this basis, since the firm's suggested substitution of key personnel 
would not eliminate the perceived problem with the entire firm's 
overall negative attitude toward problem resolution.

Our Office will not sustain a protest unless the protester 
demonstrates a reasonable possibility that it was prejudiced by the 
agency's actions, that is, unless the protester demonstrates that, but 
for the agency's actions, it would have had a substantial chance of 
receiving the award.  McDonald-Bradley, B-270126, Feb. 8, 1996, 96-1 
CPD  para.  54 at 3; see Statistica, Inc., v. Christopher, 102 F.3d 1577 
(Fed. Cir. 1996).  Based on our review of the record, which shows that 
because the competition was very close--with McHugh having submitted 
the lower cost offer and HHN enjoying only a 1.2-point scoring 
advantage--we cannot conclude that the protester would not have had a 
reasonable possibility of receiving the award but for the agency's 
failure to discuss references.

The record shows that the agency's concern about McHugh's ability to 
work as part of a team, including its commitment to problem 
resolution, played a critical role in the source selection decision.  
That concern was directly related to the unfavorable reports from the 
GSA references with respect to McHugh's performance on the South Clark 
Street project.  In that context, the agency's assertion that no 
prejudice was caused by the failure to disclose the unfavorable 
reports during discussions is unpersuasive.

Disclosure of the agency's concern and discussions would have 
furnished McHugh the opportunity to contend, as it has here, that the 
past problems with the South Clark Street project were largely 
attributed to two key individuals and to attempt to persuade the 
agency that those problems should be viewed as less relevant to the 
evaluation of its current proposal.  In light of McHugh's other 
references and the otherwise very close competition, we think that 
there was a reasonable possibility that disclosure during discussions 
of the negative past performance reference may have resulted in a 
different source selection.  In this regard, we note that McHugh's 
proposed cost was low and its technical score was only 1.2 points 
below HHN's.   We conclude that McHugh was prejudiced by the 
inadequate discussions, and sustain the protest.

We recommend that the agency reopen discussions, request another round 
of BAFOs, and reevaluate proposals.  If, based on this reevaluation, 
McHugh's proposal is found to represent the best value to the 
government, the agency should terminate HHN's contract--performance of 
which has been suspended pending the outcome of this protest--and make 
award to McHugh.  We also recommend that the protester be reimbursed 
the reasonable costs of filing and pursuing its protest, including 
attorneys' fees.  4 C.F.R.  sec.  21.8(d)(1) (1997).  In accordance with 
section 21.8(f)(1) of our Regulations, McHugh's certified claim for 
such costs, detailing the time expended and the costs incurred, must 
be submitted directly to the agency within 60 days after receipt of 
this decision.

The protest is sustained.

Comptroller General
of the United States

1. The descriptions were to include project size, award price, space 
types, major project objectives, building features/systems involved, 
delivery dates (start and finish), and whether the project was 
completed on-time, taking into account owner agreed-to negotiated 
delivery schedule changes caused by contract modifications.

2. McHugh listed two courthouse projects--the Illinois Third and Fifth 
District Courthouses--which GSA considered to be "indicative" of 
McHugh's abilities, but the agency noted that they were completed in 
1989, that is, clearly beyond the 5-year period of consideration 
provided for in the solicitation.  Moreover, the agency determined 
that these projects were "not nearly similar" to the proposed project 
because they "did not contain the same level of quality finishes" and 
were not similar in function.  The protester has not specifically 
disputed these conclusions.  

3. McHugh also initially argued that its proposal was improperly 
downgraded under the quality control factor because it was submitted 
by a joint venture.  GSA responded to the protester's initial argument 
on this issue in its report on the protest, and to the protester's 
comments on the report--which recast the argument--in the agency's 
supplemental report on the protest.  McHugh did not dispute the 
agency's position in its comments on the agency's supplemental report.  
Under these circumstances, we consider the issue abandoned.  Datum 
Timing, Div. of Datum, Inc., B-254493, Dec. 17, 1993, 93-2 CPD  para.  328 
at 5.

4. The agency reports that a third GSA reference, a non-voting member 
of the SSEB, who was the building manager at South Clark Street and 
who did not fill out a reference questionnaire, "also termed his 
experience working with McHugh as negative."

5. GSA determined that McHugh's projects reflected a history of 
completion over budget, with none completed under budget, and GSA also 
reports that cost overruns were experienced on this project and that 
it was not completed on time.