BNUMBER: B-277391
DATE: September 25, 1997
TITLE: The Charles E. Smith Companies, B-277391, September 25, 1997
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Matter of:The Charles E. Smith Companies
File: B-277391
Date:September 25, 1997
Mary Beth Bosco, Esq., James A. Hughes, Esq., Lynn T. Burleson, Esq.,
and Rodney A. Grandon, Esq., Patton Boggs, L.L.P., for the protester.
Ronald R. Raider, Esq., Kilpatrick Stockton LLP, for Hoffman Family
Limited Partnership; Robert E. Gregg, Esq., Hazel & Thomas, P.C., for
Commonwealth Atlantic Properties, Inc.; and R. William Hard, for LCOR
Incorporated, the intervenors.
Barry D. Segal, Esq., and Jeffrey M. Hysen, Esq., General Services
Administration, for the agency.
Linda S. Lebowitz, Esq., Office of the General Counsel, GAO,
participated in the preparation of the decision.
DIGEST
In a procurement for leased office space where the solicitation
contemplated a two-phase proposal submission and evaluation process,
an offeror may not wait to protest the terms of the solicitation until
it learns that its phase I proposal was acceptable and that it was
selected to submit a phase II technical and design proposal where the
alleged improprieties in the terms of the solicitation were apparent
prior to the closing time for receipt of phase I proposals.
DECISION
The Charles E. Smith Companies[1] protests the terms of solicitation
for offers (SFO) No. 96.004, issued by the General Services
Administration (GSA) for the long-term, consolidated headquarters
space requirements for the Patent and Trademark Office (PTO). The
protester, the incumbent lessor which is offering the site of its
existing buildings, basically contends that the technical
specifications and other terms of the SFO are defective as they unduly
favor newly constructed buildings.
We dismiss the protest.
The SFO was issued on June 26, 1996, and contemplated a two-phase
proposal submission and evaluation process. Under the terms of the
SFO, phase I proposals, which were evaluated for quality of site,
quality of design team, and quality of developer, were submitted by
the amended closing date of December 23, 1996. Based on the phase I
proposals, GSA selected the protester, the incumbent lessor which
proposed the site of its existing buildings, and three other firms,
which proposed sites where new buildings would be constructed, to
continue to participate in the procurement by submitting phase II
proposals by the amended closing date of October 27, 1997.[2] Phase
II proposals will be evaluated for quality of site, quality of
facility design, quality of interior architect, quality of operations
and maintenance firm, and price. The SFO stated that the award would
be made to the firm whose proposal provides the greatest value to the
government, with price being considered significantly less important
than the combined weight of the technical evaluation factors. By
letter dated March 11, 1997, the contracting officer advised the
protester that it had been selected to proceed to phase II of the PTO
space consolidation project. This protest, challenging the technical
specifications and other terms of the SFO, was filed on June 30, 1997.
Technical specifications
Section G of the original SFO, captioned "Lessor's Base Building
Requirements," contained 43 pages of detailed building specifications.
In its protest, the protester challenged as unduly restrictive of
competition several of these specifications, including the following:
structural live load requirements ( para. G.7.6); toilet rooms ( para. G.8.6);
passenger elevator performance criteria ( para. G.8.12); service elevators
( para. G.8.13); environmental requirements ( para. G.10.2); primary electrical
service ( para. G.11.1); electrical distribution ( para. G.11.2); communication
rooms ( para. G.12.4); and floor-to-ceiling heights in the central computer
facility ( para. G.15.2). The protester contends that the substantive
requirements of these specifications exceed the government's minimum
needs, effectively limiting the competition to new buildings, and
therefore should be relaxed. For example, the structural live load
requirements of the SFO call for a capacity of 150 pounds per square
foot in 20 percent of the space. The protester objected, requesting
that the requirement be relaxed to 150 pounds per square foot "as
needed." As another example, the SFO required single use service
elevators with an amended minimum loading capacity of 4,000
(originally 6,000) pounds. The protester objected, requesting that
the requirement further be relaxed to permit dual use service
elevators with a minimum loading capacity of 3,000 pounds.
In its administrative report filed in response to the protest, GSA
argues that the protester's objections to the technical specifications
should be dismissed as untimely since those matters were not raised
prior to the closing time for the submission of phase I proposals. In
response, the protester maintains that its protest of the technical
specifications is timely because it was filed prior to the closing
time for the submission of phase II technical and design proposals.
The protester maintains that a protest of the specifications filed
prior to the phase I closing time would have been premature since at
that point, the protester did not know, based on its phase I proposal,
whether it would be selected to proceed to phase II of the procurement
and the SFO did not require that the section G specifications be
addressed in an offeror's phase I proposal for evaluation.
Protests based upon alleged improprieties in a solicitation which are
apparent prior to the closing time for receipt of initial proposals
must be filed prior to that closing time. Bid Protest Regulations, 4
C.F.R. sec. 21.2(a)(1) (1997). Here, we conclude that the protester
could not wait to protest the technical specifications, as well as
other terms of the SFO, until it learned that its phase I proposal was
acceptable and that it had been selected to submit a phase II
technical and design proposal where the alleged improprieties in the
specifications and other terms of the SFO were apparent prior to the
closing time for receipt of phase I proposals. See, e.g., University
of New Orleans, B-184194, Jan. 14, 1976, 76-1 CPD para. 22 at 4-5, 7-8
(the protester's failure to timely protest allegedly defective
solicitation terms prior to the closing time for receipt of phase I
proposals is analogous to an untimely protest of alleged solicitation
improprieties after an offeror's proposal is included in the
competitive range (in the cited case, after the firm's protest is
sustained and corrective action is recommended), that is, an offeror
is not timely to protest terms which appeared in the solicitation at
the initial closing time after it learns its proposal is included in
the competitive range). Therefore, the protester's objections, raised
6 months after the closing time for receipt of phase I proposals on
December 23, 1996, are clearly untimely.
More specifically, while the agency contemplated a two-phase proposal
submission and evaluation process, the agency issued the entire SFO,
that is, all requirements for both phase I and phase II submissions
and evaluations, as a single package on June 26, 1996. Although phase
I was essentially a qualifying round where offerors which did not have
a reasonable chance for award were eliminated from further
participation and therefore not required to expend additional time and
costs in preparing and submitting phase II technical and design
proposals, it is clear from a review of the SFO that in order to
submit an acceptable phase I proposal to qualify to advance to phase
II, an offeror had to select and propose a qualified design team (lead
designer and architect/engineer firm) and developer in light of the
technical specifications and other requirements contained in the SFO.
The protester recognized that an understanding of the technical
specifications was necessary for the preparation of its phase I
proposal. The record shows that in response to the contracting
officer's request that potential offerors submit questions, comments,
and concerns regarding the SFO prior to the closing time for the
submission of phase I proposals, the protester, on August 13, 1996,
met with officials from GSA and PTO and submitted to these officials
an 18-page document, captioned "Items for Clarification--PTO Space
Consolidation Project." Numerous questions from the protester
involved section G specifications. In addition, by letter dated
August 26, 1996, the protester submitted a supplemental 6-page
document to the contracting officer in which it outlined, among other
things, section G requirements which in its view were "impossible or
impractical to comply with for existing buildings."[3] On September
16, 1996, the agency issued amendment No. 1 to the SFO which made
various changes to the terms of the SFO, including section G
specifications, and provided answers to the concerns raised by the
potential offerors. By letter dated September 20, 1996, the protester
thanked the contracting officer for "responding to our items for
clarification and issuing Amendment Number One. This will now enable
us to focus on preparation of our response to Phase I." The protester
continued by requesting a 3-month extension of the closing date for
the submission of phase I proposals to "enable us to properly prepare
our response armed with the new information that has just been
provided [in amendment No. 1 to the SFO]." The contracting officer
extended the closing date for all offerors by 6 weeks.
As evidenced by this chronology, several months prior to the closing
time for the submission of phase I proposals, the protester was aware
of what it considered unduly restrictive specifications as described
in the SFO and acknowledged the relevance of section G specifications
in preparing its phase I proposal. The protester was obligated to
raise its objections to the technical specifications prior to the
closing time for receipt of phase I proposals since to do otherwise
would unduly delay the procurement process and GSA's resolution of the
protester's concerns. See Air Inc.--Request for Recon., B-238220.2,
Jan. 29, 1990, 90-1 CPD para. 129 at 2. Having failed to file a timely
protest, the protester must compete according to the original terms of
the SFO unless GSA otherwise amends these terms.[4]
Fit-out allowance
In accordance with the Public Buildings Act of 1959, 40 U.S.C. sec. 606
(1994), on July 18, 1995, GSA submitted to the two appropriate
congressional committees a lease prospectus requesting appropriations
approvals for the PTO space consolidation project. The prospectus
included information such as the justification for the consolidation
project, the maximum annual cost limitation, the rental range per
square foot, the maximum length of the lease, and the range of
rentable square feet to be leased. The prospectus providing for the
lease of space for PTO was approved by each committee in the fall of
1995.
Paragraph A.7.2 of the original SFO contained the following provision:
In order to minimize such risks, the Government will not request
a "turn-key" lease with standard build-out and unit prices.
Instead, the Government will require that the Offeror provide at
its cost a level of build-out approximating a building shell with
core areas and base systems in place, with specialized systems
for certain special purpose spaces in place, but with the bulk of
the tenant spaces resembling a "cold dark shell" (hereinafter
called the "Base Building," and described in more detail in
Section G), together with a tenant improvement allowance (the
"Fit-Out Allowance") of $88,000,000 to provide tenant
improvements, interior finish and fit-out (the "Fit-Out," as
described in more detail in Section G). The Offeror's
construction of the Base Building and the Fit-Out shall proceed
in accordance with the provisions set forth in Sections D and G.
Paragraph A.11 of the original SFO provided that as part of the rental
consideration, offerors were responsible for all lease requirements,
including the $88 million fit-out allowance. Paragraph G.1.2 of the
original SFO provided that this fit-out allowance was to be amortized
over the term of the lease as part of the base rent.
Paragraph A.19.1 of the original SFO contained the following
provision:
Prospectus No. PVA-96WO7, dated July 18, 1995, together with the
Congressional authorizations made in connection therewith,
contains certain limitations. The Offeror acknowledges that the
Government is in no way obligated to make an award to any Offeror
whose offer terms and provisions, including without limitation,
the annual rent (as adjusted), exceed the scope of said
prospectus.
In its protest, the protester complains that the SFO's $88 million
fit-out allowance, standing alone and excluding the first year's rent,
exceeds the maximum annual cost limitation for the PTO consolidation
project as imposed by the congressionally approved prospectus. In
this regard, the protester argues that the $88 million is incurred and
is payable in the first year of the lease, regardless of the fact that
the SFO requires the fit-out amount to be amortized over the term of
the lease as part of the base rent. The protester also complains that
the prospectus itself is deficient because GSA did not separately
obtain prospectus approval for the $88 million fit-out allowance. We
conclude that these complaints, just as those challenging the
technical specifications, constitute alleged solicitation
improprieties which were not timely raised prior to the phase I
closing time. 4 C.F.R. sec. 21.2(a)(1).
In essence, 1 year after GSA issued the SFO and began the formal
proposal submission and evaluation process, the protester decided to
challenge GSA's underlying statutory authority and methodology for
conducting this procurement as described in the SFO. As evident from
the provisions quoted above, it was apparent from the face of the SFO
that GSA expected the $88 million fit-out allowance to be a cost
amortized over the term of the lease as part of the base rent, rather
than a cost incurred and payable in whole in the first year of the
lease. In addition, the SFO specifically referenced the publicly
available prospectus and related congressional authorizations for the
PTO consolidation project. If the protester had concerns with GSA's
underlying statutory authority and methodology for conducting this
procurement, the time to raise these matters was not later than the
closing time for receipt of phase I proposals. See, e.g., Federal
Data Corp., B-211357, Sept. 7, 1983, 83-2 CPD para. 309 at 1-3 (protest of
an apparent solicitation impropriety--the failure of the agency's
solicitation to effectuate the terms in the delegation of procurement
authority which was publicly accessible--was untimely when filed after
the closing time for receipt of initial proposals). This protest,
filed 6 months after the phase I closing time (and 1 year after GSA
began the formal proposal submission and evaluation process under
which the protester has been, and continues to be, an active
participant) is clearly untimely.
Price evaluation
Paragraph A.18 of the original SFO explained how an offeror's price
would be evaluated in terms of present value. The SFO did not contain
a provision for the consideration of the value of any existing
fit-out. The protester complains that GSA must consider the cost
savings associated with its existing fit-out.
Again, we conclude that the protester has failed to timely protest
this alleged solicitation impropriety apparent from the face of the
SFO prior to the closing time for receipt of phase I proposals. 4
C.F.R. sec. 21.2(a)(1). We also point out that the SFO does not provide
for the consideration of cost savings associated with any existing
fit-out or cost savings which offerors of new buildings might propose.
Compliance with the National Environmental Policy Act of 1969 (NEPA),
42 U.S.C. sec. 4321 et seq.
Paragraph C.4.1 of the SFO as originally issued contained the
following provision:
If a site has environmental conditions that cannot be mitigated
to an acceptable level to execute the project based upon a joint
determination by PTO and GSA, as such conditions are reflected in
the Environmental Impact Statement record of decision (based on
[NEPA] implementation policy and requirements), then the Offer
will no longer be considered viable.
For the first time in its protest, the protester objected to this
provision,[5] contending that offerors could not submit, and GSA could
not evaluate, phase II proposals because required environmental
mitigation measures and related costs would not be known until the
environmental impact process was completed (completion expected in the
spring of 1998).
In its report, GSA agreed that it would not be possible for offerors
or the agency to appreciate the costs associated with environmental
mitigation measures at the time of submission in October 1997 of phase
II proposals because the draft environmental impact statement would
not be available until the winter of 1998. In addition, GSA
recognized that it could not reject a phase II proposal pursuant to
the provision at para. C.4.1 until the environmental impact process was
completed and only then could it reject a proposal based on this
provision if an offeror failed to demonstrate that its proposed site
would comply with the applicable environmental findings. In other
words, GSA expected an offeror to submit its phase II proposal with
the understanding that pursuant to, and consistent with, the terms of
the SFO, when environmental mitigation measures were identified for
the offeror's site, the offeror would be obligated to demonstrate it
would comply with these measures and incur related costs in order for
its proposal, at that time, to continue to be considered viable in
accordance with the referenced provision.[6]
Nevertheless, to allay the protester's concern with the provision at para.
C.4.1, GSA announced in its report that it would relax this
requirement by issuing an amendment (which GSA did) removing the
referenced provision from the SFO. GSA still required offerors to
comply with "[a]pplicable [l]aw[s] dealing with safety and
environmental matters" in accordance with the provision at para. F.1 of
the SFO. GSA explained in its report, and as reflected in the
amendment, that it would not reject any phase II proposal submitted in
October 1997 based on an offeror's plan to comply with NEPA since the
draft environmental impact statement would not be available at the
time these proposals were submitted and evaluated. In other words, as
stated in the amendment, "all [o]fferors [would] be treated equally."
The amendment stated that an offeror's ability and willingness to
resolve identified environmental impacts and to implement identified
mitigation measures would be evaluated under the quality of site
technical evaluation factor. According to the amendment, once the
draft statement is issued, such environmental impacts, mitigation
measures, and related costs will be the subject of discussions with
the offerors and these matters will be required to be addressed in an
offeror's best and final offer. In addition, GSA stated that no award
will be made before the final environmental impact statement is
completed.
In its comments on the agency report, the protester now objects to
GSA's relaxation of the provision at para. C.4.1, complaining that
offerors must still comply with NEPA, an "applicable law," and
complaining that GSA cannot make an award based on a draft
environmental impact statement. In light of GSA's amendment of the
SFO and the information provided in its report, we believe the
protester's current complaints are academic.
The record shows that while the SFO requires offerors to comply with
applicable laws, which would include NEPA, under the original and
amended terms of the SFO, an offeror's phase II proposal cannot be
rejected on the basis of the offeror's plan to comply with NEPA
requirements until such time as those requirements are identified and
the offeror then fails to demonstrate that it will comply with these
requirements. Further, GSA specifically stated that no award will be
made before the final environmental impact statement is completed.[7]
Conclusion
For the reasons discussed above, we conclude that the protester has
failed to timely pursue its bases of protest involving objections to
the technical specifications and other terms of the SFO prior to the
closing time for receipt of phase I proposals. Accordingly, the
protest is dismissed.
Comptroller General
of the United States
1. Plaza Associates Limited Partnership, First Crystal Park Associates
Limited Partnership, Second Crystal Park Associates Limited
Partnership, Third Crystal Park Associates Limited Partnership, and
Alder Branch Realty Limited Partnership are collectively known as The
Charles E. Smith Companies.
2. GSA extended the phase II closing date by 2 months in response to
the protester's request during the pendency of this protest.
3. Contrary to GSA's position, we do not believe that the protester's
requests in August 1996 for clarification of the specifications, at
GSA's invitation, constituted agency-level protests.
4. The record shows that in response to the protester's concerns, even
those expressed as late during the course of this protest, GSA has
relaxed a number of technical specifications (e.g., service elevator
lobbies ( para. G.8.4); electrical room size and wiring runs ( para. G.11.4);
and ceiling heights in receiving areas ( para. G.15.11)) to accommodate the
protester where to do so would not, in GSA's view, compromise the
minimum needs of PTO.
5. This objection, just like the protester's other challenges to the
technical specifications and other terms of the SFO, was not timely
raised prior to the phase I closing time. 4 C.F.R. sec. 21.2(a)(1).
6. We note that as part of an offeror's phase I proposal, the SFO
required an offeror to provide a legal opinion describing in detail
its site's compliance with all current zoning and other land use
restrictions. The legal opinion was required to confirm that the
master planning and zoning for the site was completed in a manner
sufficient to meet all SFO requirements. The SFO further required an
offeror to certify that all necessary site infrastructure, public
services, utilities, and roadways were available to and at the site,
with limited improvements necessary to satisfy the SFO requirements.
The SFO required an offeror to provide a detailed description of
existing site conditions, including a description of any existing
structures or improvements, vegetation, ponds, streams, unusual
features, wetlands, or particular wildlife habitat. The SFO required
an offeror to identify wetlands, floodplains, and coastal zones on,
adjacent to, or in the immediate vicinity of the site. In addition,
the SFO required the offeror to provide an independent phase I
environmental assessment for the entire site indicating whether there
is any actual contamination or a material potential for environmental
contamination at the site; the offeror also was required to complete
an environmental questionnaire. GSA states that environmental
mitigation measures identified as part of the NEPA process likely will
include a discussion of issues previously identified by an offeror
during the phase I process. Thus, in submitting a phase II proposal,
an offeror should have more than a vague notion, based on the zoning,
infrastructure, environmental, and other site information identified
during phase I, of what the environmental mitigation measures and
related costs for its site may be.
7. We also point out that as the incumbent lessor proposing a
previously developed site, the protester was required to incur costs
to address zoning, infrastructure, and environmental matters in the
original development of its site. It is likely the protester will not
have to incur these same costs in this procurement. In contrast,
offerors of the currently undeveloped sites will have to fully account
for, and include in their proposals, the costs associated with zoning,
infrastructure, and environmental issues as part of the proposed
development of their sites for this procurement. We think in this
respect that the protester arguably has a natural competitive
advantage and as a result cannot reasonably be heard to complain about
the requirement to comply with applicable zoning, infrastructure, and
environmental laws.