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.