BNUMBER: B-277266
DATE: September 12, 1997
TITLE: Property Analysts, Inc., B-277266, September 12, 1997
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DOCUMENT FOR PUBLIC RELEASE
This version has been redacted or approved by the parties involved for
public release.
Matter of:Property Analysts, Inc.
File: B-277266
Date:September 12, 1997
James L. Babb, Jr., for the protester.
Lewis M. Nixon, Esq., and Elisa J. Yochim, Esq., Department of Housing
& Urban Development, for the agency.
Paula A. Williams, Esq., Office of the General Counsel, GAO,
participated in the preparation of the decision.
DIGEST
1. Firm which submitted the highest priced of three technically equal
proposals is not an interested party to protest an award since price
properly was the determinative factor for award and protester would
not be in line for award if the protest were sustained.
2. General Accounting Office will not consider challenges to
contracting officer's affirmative determination of awardee's
responsibility absent evidence of bad faith; protester's
unsubstantiated allegations that contracting officer ignored awardee's
noncompliance under prior contracts do not meet this standard.
DECISION
Property Analysts, Inc. (PAI) protests the award of a contract to MT
Mullen Corporation under request for proposals (RFP) No.
HO5R96010800000, issued by the Department of Housing & Urban
Development (HUD) for field review of appraisals for single family
homes in the Northern Indiana geographic area. PAI protests the
technical acceptability of Mullen's proposal and contends that the
contracting officer otherwise improperly determined Mullen to be a
responsible contractor.
We dismiss the protest.
The RFP, issued as a total small business set-aside, contemplated the
award of a fixed-price requirements contract for a base period and two
1-year options, not to exceed 36 months in total. The contractor will
perform on-site field reviews of appraisals to determine the accuracy
and quality of the appraisals completed by authorized appraisers.
Offerors were advised that field review appraisers must be licensed by
the State of Indiana and that this licensing requirement could be
satisfied through reciprocity or temporary practice provisions to the
extent permitted by state law.
The RFP provided that award would be made to the offeror whose
proposal was determined most advantageous to the government, price and
other factors considered. The RFP stated that technical merit would
be more significant than price in the award selection, and listed the
following technical evaluation factors to be scored on a 100-point
scale: work accomplishment (25 points), ability to perform (25
points), capacity (20 points), appraisal knowledge (20 points), and
management plan (10 points). Price was not rated or scored but would
be evaluated for reasonableness. The RFP further advised offerors
that total evaluated price could be the determining factor for award
if there were no significant technical or management differences among
proposals.
Proposals were received from five firms, including PAI and Mullen, by
the
July 1, 1996, closing date.[1] The proposals were evaluated by a
three-member technical evaluation panel (TEP) and four proposals,
including those submitted by PAI and Mullen, were determined to be
technically acceptable and within the competitive range. On August
21, discussions were held, best and final offers (BAFOs) were
requested, and three BAFOs were timely received and evaluated.
Because the TEP considered the three competing proposals technically
equivalent, the TEP recommended Mullen for award, noting that the firm
has successfully performed under prior FRA contracts and offered the
lowest evaluated price.
However, the contracting officer was aware of a June 25, 1996, Small
Business Administration (SBA) determination that MTB Investments, Inc.
(the incumbent contractor) was other than a small business. Since
this determination indicated that Mullen was affiliated with MTB
Investments, the contracting officer questioned Mullen's
self-certification as a small business concern. On September 13, the
contracting officer filed a size status protest with the SBA regarding
the business size standard representation of Mullen. After various
appeals to the SBA's Office of Hearings and Appeals and the submission
of additional information by MTB Investments, the SBA ultimately
determined that MTB, and its affiliate Mullen, was small under the
size standard in this procurement and, as of February 19, 1997,
recertified the firm as small and therefore eligible to participate in
this procurement.
Thereafter, on February 28, the contracting officer sent discussion
letters to the three offerors who had submitted BAFOs. Each was asked
to update/supplement its prior BAFO submission, including any changes
to proposed key personnel and the use of subcontractors/appraisers,
and to provide the names and current appraisal licenses for each
proposed appraiser. A two-member TEP reconvened to evaluate the three
offerors' responses to the contracting officer's discussion request.
A second round of oral discussions was conducted and a second round of
BAFOs was requested for evaluation.[2] While the TEP concluded that
all three proposals still remained technically acceptable, it
increased the technical scores of PAI and the second offeror and
decreased Mullen's technical score with the following results:
Offeror Consensus Score Rating Total Price
PAI 99 Acceptable $215,600
A [deleted] Acceptable [deleted]
Mullen 80 Acceptable $166,180
In its final evaluation report, the TEP recommended award to either
PAI or the second offeror, stating that selecting either firm (both
are located within the state) would save the agency time in packaging
and mailing assigned reviews and noting that the evaluated prices of
both firms were about equal and considered adequate to ensure either
firm's ability to hire quality appraisers.
However, the contract specialist disagreed with the award
recommendation of the TEP because the final evaluation report did not
document the reasons for the increase or decrease in technical point
scores assigned to the second BAFO submissions nor, in her judgment,
did the evaluators adequately justify their award recommendation.
Therefore, the contract specialist prepared an analysis of the
evaluators' technical findings of the strengths and weaknesses of each
offerors' proposal under each evaluation factor and a price
reasonableness determination, as contemplated by the RFP. The
contract specialist concluded that the technical evaluations did not
support a price/technical tradeoff based on the technical superiority
of one offeror over another and essentially considered all three
proposals--which were each rated technically acceptable--to be
technically equivalent. Consequently, the contract specialist
recommended Mullen's low-priced, technically acceptable proposal for
award.
The contracting officer, who served as the source selection official
(SSO), reviewed the TEP report and the factor-by-factor analysis of
the technical and price evaluations prepared by the contract
specialist, and concurred with the contract specialist's finding that
the [deleted] point difference in the point scores did not represent
technical superiority under the solicitation terms which would warrant
paying the price premium associated with PAI's proposal. For example,
with regard to the technical differences between the proposals of PAI
and Mullen, the TEP report indicated that the evaluators considered
PAI's in-state location to be an advantage for the program office
while Mullen's out-of-state location and proposed method for pick-up
and return of assigned reviews was considered time consuming and
offered no benefits to the program office (the program office staff
would, as it has done under Mullen's two prior FRA contracts, package
and prepare the cases for pick-up by an overnight carrier). In this
regard, the TEP's narrative evaluation noted that under Mullen's
earlier contract, the "last batch of cases took more than 15 days."
However, the contract specialist pointed out that the TEP did not
indicate whether this was a one time occurrence or a documented
pattern of late delivery. An additional weakness noted in the TEP
report was that some of PAI's and Mullen's appraisers did not have
experience in performing FHA appraisals or reviews; however, in her
analysis of the TEP's evaluations, the contract specialist pointed out
that there was no evidence in the proposals themselves which supported
this technical finding. The TEP report further indicated that because
Mullen's principal was not a licensed appraiser, the evaluators
considered this a weakness in Mullen's ability to recruit and train
its appraisers; however, Mullen's proposal identified one of its
employees as the manager who would supervise and train the field
review appraisers.
In short, the SSO concurred with the contract specialist's conclusion
that there were no competitive strengths in PAI's proposal that
outweighed those in the proposal of Mullen, the low-priced offeror,
and considered the reasons memorialized in the TEP report for Mullen's
lower point score as minor with little significant impact on contract
performance. Accordingly, the SSO selected Mullen's proposal for
award. This protest followed.
In its protest, PAI challenges the agency's determination that
Mullen's proposal was technically acceptable. These allegations are
based on the premise that Mullen "has never met [its] contractual
obligations in Northern or Southern Indiana, and [this] noncompliance
has been ignored [by the agency]." The protester states that these
alleged contract performance irregularities and violations by Mullen
were known by other third parties as well as agency officials.
In related arguments, PAI contends that the contracting officer
otherwise improperly determined Mullen to be a responsible contractor
claiming, in essence, that the agency has inadequate assurance that
Mullen will meet the performance requirements of this contract given
its alleged noncompliance with the terms of its previous FRA
contracts. Alternatively, PAI contends that Mullen submitted a
below-cost offer.
We dismiss PAI's protest against the award to Mullen.
Under the bid protest provisions of the Competition in Contracting Act
of 1984, 31 U.S.C. sec. 3551-3556 (1994), only an "interested party" may
protest a federal procurement. That is, a protester must be an actual
or prospective supplier whose direct economic interest would be
affected by the award of a contract or the failure to award a
contract. Bid Protest Regulations, 4 C.F.R. sec. 21.0(a) (1997). Here,
the record shows that three firms--Mullen, offeror A, and PAI--were
found technically equal and that the protester submitted the
highest-priced proposal. If the protester is correct that Mullen
should not have been awarded the contract, offeror A, not PAI, is next
in line for award. Thus, PAI is not an interested party to protest
the award to Mullen. See Watkins Sec. Agency, Inc., B-248309, Aug.
14, 1992, 92-2 CPD para. 108 at 4. See also Premier Nurse Staffing,
Inc.--Recon., B-258288.3, Apr. 3, 1995, 95-1 CPD para. 174. In its
comments, PAI asserts that offeror A is "an independent fee appraiser
who works alone out of his home . . . and could not possibly compete
with [the protester] with respect to a technical evaluation."
However, this unsubstantiated challenge to the capability of offeror A
provides no basis to object to HUD's evaluation and rankings under
which PAI is third-ranked based on its higher price.
Regarding PAI's challenge to Mullen's responsibility, before awarding
a contract, the contracting officer must make an affirmative
determination that the prospective contractor is responsible. FAR sec.
9.103(b). The determination of a prospective contractor's
responsibility rests principally within the broad discretion of the
contracting officer, who, in making that determination, must of
necessity rely on his or her business judgment. Mine Safety
Appliances Co., B-266025, Jan. 17, 1996, 96-1 CPD para. 86 at 2. While we
review an affirmative responsibility determination where it is shown
that it may have been made in bad faith, see 4 C.F.R. sec. 21.5(c), there
has been no such showing here.
In any event, with regard to PAI's protest of the award to Mullen, we
note that PAI provides no factual support for its assertions that
Mullen has not met its contractual obligations under its HUD contract.
The record shows that the TEP chairperson, who is the government
technical representative for Mullen's current Southern Indiana
contract, noted in the evaluation record that "[Mullen] is doing a
satisfactory job," and noted as a strength that "[Mullen] has been
handling the appraisals that we have been sending." Further, the
contract specialist found no evidence of poor contract performance,
although she did find an instance where Mullen had taken longer than
the allotted time frame for one batch of appraisals which she
concluded was a "one time occurrence." The contract specialist also
noted that Mullen had made mistakes on some appraisal review forms
which, when pointed out to Mullen, Mullen responded, resulting in
improvement. Further, Mullen furnished a list of other HUD appraisal
contracts which demonstrated its prior appraisal experience. The
evaluation record contains no evidence that Mullen's acceptable rating
and the agency's determination that Mullen was technically equal to
the other two firms were erroneous.
Moreover, while the principal of Mullen is not licensed or certified
as an appraiser, the agency cites Article H-1 which provides that
"[t]he contractor including any of its employees, subcontractors, or
consultants performing Field Review of Appraisals under the contract
shall be state of Indiana [licensed] or [certified]." Mullen proposed
several licensed employees (not the principal) who would be performing
the work, and the TEP reasonably found these individuals met the
license requirement.
PAI's alternative claim that Mullen's proposed price is unreasonably
low to ensure quality contract performance because, in the protester's
view, "three field review appraisers [cannot] review all of Northern
Indiana" within the time required, is not a valid basis for protest.
An offeror, for various reasons, in its business judgment, may decide
to submit a below-cost offer, and there is no prohibition against a
procuring agency's accepting an unreasonably low or below-cost offer
on a fixed-price contract. Intown Properties, Inc., B-256742, July
11, 1994, 94-2 CPD para. 18 at 4. Again, whether an awardee can perform
the contract at the price offered is a matter of responsibility, which
as discussed above, we will not review absent a showing of possible
bad faith or that definitive responsibility criteria have not been
met, exceptions that do not apply here. Id.; see also ENCORP Int'l,
Inc., B-258829,
Feb. 21, 1995, 95-1 CPD para. 100 at 5.
To the extent PAI is arguing that the SSO improperly emphasized price
in the source selection decision, where, as here, the RFP provides
that technical considerations will be more important than price,
agency selection officials have broad discretion in determining the
manner and extent to which they will make use of the technical and
price evaluation results in making price/technical tradeoffs. Red
River Serv. Corp.; Mark Dunning Indus., Inc., B-253671.2 et al., Apr.
22, 1994, 94-1 CPD para. 385 at 6. A contracting agency may properly
award a contract to a lower-priced, lower technically scored offeror
if it decides that the price premium involved in awarding to a
higher-rated, higher-priced offeror is not justified given the
acceptable level of technical competence available at the lower cost.
See Dayton T. Brown, Inc., B-229664, Mar. 30, 1988, 88-1 CPD para. 321 at
4. Evaluation scores are merely guides for the selection official,
who must use his judgment to determine what the technical difference
between competing proposals might mean to contract performance, and
who must consider what it would cost to take advantage of it. Grey
Advertising, Inc., 55 Comp Gen 1111 (1976), 76-1 CPD para. 325.
The protest is dismissed.[3]
Comptroller General
of the United States
1. PAI is the current field review appraisal (FRA) contractor for the
Central Indiana area; Mullen is the current contractor for the
Northern Indiana area (under the name MTB Investments, Inc.) and the
Southern Indiana area.
2. The proposed prices for each firm remained unchanged.
3. PAI argues in its comments on the agency report that the agency
acted in bad faith in order to assure award to Mullen. For example,
PAI asserts that HUD improperly delayed its award decision until the
contracting officer's size determination protest was resolved by the
SBA. However, to show bad faith there must be a showing that the
agency intended to harm the protester; PAI's arguments do not meet
this burden. Complere Inc., B-257946, Nov. 23, 1994, 94-2 CPD para. 207
at 4.