BNUMBER: B-277545
DATE: October 27, 1997
TITLE: Roxco, Ltd., B-277545, October 27, 1997
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Matter of:Roxco, Ltd.
File: B-277545
Date:October 27, 1997
William R. Purdy, Esq., Lynn H. Patton, Esq., and Christopher Solop,
Esq., Ott & Purdy, for the protester.
Thomas F. Gardner, Esq., and David C. Clement, Esq., Gardner & Kewley,
for Spartan Building Corporation, an intervenor.
George N. Brezna, Esq., and Vicki E. O'Keefe, Esq., Department of the
Navy, for the agency.
Christine Davis, Esq., and James A. Spangenberg, Esq., Office of the
General Counsel, GAO, participated in the preparation of the decision.
DIGEST
Agency reasonably decided to reopen discussions and amend the
solicitation's evaluation criteria after making award, where the
agency found that the unamended evaluation criteria may not have
allowed for selection of the most advantageous offer.
DECISION
Roxco, Ltd. protests the agency's decision to reopen discussions and
reevaluate proposals after making award to Roxco under request for
proposals (RFP) No. N62467-95-R-1156, issued by the Department of the
Navy, Naval Facilities Engineering Command (NAVFAC), to design and
build Bachelor Enlisted Quarters (BEQ) at the Naval Support Activity,
New Orleans, Louisiana. Roxco argues that this is unwarranted and
will result in an improper auction.
We deny the protest.
The RFP required the design and construction of a BEQ to include
individual living units, common areas (e.g., lobbies, laundry rooms,
and administration spaces), and landscape work. Each individual BEQ
unit was to include two living/sleeping rooms, a kitchenette, a
bathroom, and storage space. The RFP, as amended, did not require a
specific number of BEQ units, but invited offerors to propose between
60 and 80 units, with an option reserved by the agency to order 12
units more than the basic quantity proposed by the offeror.
The RFP solicited price and technical proposals for evaluation on a
best value basis. Price and technical factors were of equal
importance. There were five technical evaluation factors: (1)
Project Organization, Quality Control and Safety, (2) Square Footage,
(3) Roof, (4) Energy Considerations, and (5) Quality of Life. Square
Footage was to be significantly more important than any of the other
factors.
The RFP requested lump-sum, firm, fixed prices for the basic and
optional work; these lump-sum prices, as adjusted by a completion
schedule price factor and the offeror's change order markup prices,
were to yield the offeror's total evaluated price. Unit pricing was
neither solicited nor considered in determining an offeror's total
evaluated price.
The agency received three proposals, including Spartan's and Roxco's,
on March 10, 1997. The agency included Spartan's and Roxco's
proposals in the competitive range, conducted two rounds of
discussions, and requested best and final offers (BAFO). Spartan
proposed a basic quantity of 76 BEQ units, plus the 12 option units,
for a total evaluated price of $6,565,049; Roxco proposed a basic
quantity of 62 BEQ units, plus the 12 option units, for a total
evaluated price of $6,481,512.
Spartan's proposal received four acceptable ratings and an exceptional
rating under the most important Square Footage factor based upon its
offer of 76 BEQ units. Roxco's proposal received two exceptional
ratings and three acceptable ratings, including an acceptable Square
Footage rating based upon its offer of 62 BEQ units. In evaluating
proposals under the Square Footage factor, the technical evaluation
board (TEB) estimated the life-cycle savings represented by the
additional units in each proposal.[1] Regarding Spartan's proposal,
the TEB stated:
The offeror has proposed 76 modules. This exceeds the minimum
requirements in the RFP by 16 modules. This is a tremendous
increase over the minimum requirements. . . . the life cycle
savings of these additional 16 modules is $1,158,336. [Emphasis
in original.]
In contrast, the TEB estimated the life-cycle savings represented by
Roxco's proposal, which offered 2 units more than the minimally
required 60 units, to be $144,792.
On May 2, the source selection board (SSB) and source selection
authority (SSA), having reviewed the TEB's findings, recommended award
based upon Roxco's proposal, which was considered technically superior
and low priced under the RFP evaluation scheme. In this regard, the
SSA considered Roxco's technical proposal "slightly better" than
Spartan's because it received two exceptional ratings, whereas
Spartan's proposal received one exceptional rating, albeit in the most
important Square Footage factor. The SSA also found Roxco to have
submitted the low-priced proposal, applying the RFP price evaluation
formula which disregarded unit pricing. Although the SSB and SSA
recognized that Spartan offered more BEQ units than Roxco at a much
lower unit cost, and at significantly greater life-cycle savings, the
SSA stated that "Roxco's total evaluated price, the price that the RFP
states will be the determining factor in evaluating price information,
is lower than Spartan's by $83,537." Award was made to Roxco on May
9.
Spartan received a debriefing on May 15, at which time the Navy
disclosed Roxco's price, proposed number of BEQ units, and technical
proposal ratings. On May 19, Spartan filed an agency-level protest of
Roxco's award. Spartan alleged that its proposal should have been
found the technically superior, low-priced offer in view of the fact
that Spartan offered 14 more BEQ units than Roxco at a much lower unit
price.
In the face of Spartan's protest, the SSA asked the TEB to reevaluate
Spartan's and Roxco's proposals and to decide which proposal
represented the best value. The SSA instructed that, in performing
this cost/technical tradeoff, the TEB was "not tied to the RFP
definition of 'value,'" but should instead consider whether "the Roxco
proposal is worth the approximate $1,000,000 difference . . . for an
equal number of modules" as proposed by Spartan. The SSA described
this $1 million price premium--which was based upon unit, rather than
lump-sum pricing--as "the real cost difference" between the two
proposals.
On June 24, the TEB rendered its opinion that the $1 million savings
represented by the additional BEQ units in Spartan's proposal made it
the best value (regardless of the RFP evaluation criteria). While the
TEB considered Roxco's proposal technically superior, it concluded
that it could not "value the features of the Roxco proposal higher
than the additional modules in the Spartan proposal."[2]
Following the TEB's recommendation, the agency decided that award may
not have been made on the basis of the most advantageous proposal
because the RFP evaluation scheme distorted a meaningful price
comparison between the two proposals. By letter dated July 9, the
agency advised Roxco as follows:
We believe that the criteria for selecting the successful
proposal described in the RFP were flawed because the total
evaluated price, which represented half of the overall
consideration, was disproportionately affected by the proposed
number of units (square footage), which was evaluated as only one
of five technical factors.
The agency stated that it planned to reopen discussions and to
reevaluate revised proposals based upon an amended price evaluation
formula, under which unit pricing, rather than lump-sum pricing, would
determine each offeror's total evaluated price. This protest
followed.
Contracting officials in negotiated procurements have broad discretion
to take corrective action where the agency determines that such action
is necessary to ensure a fair and impartial competition. Aquidneck
Sys. Int'l, Inc., B-257170.2, Sept. 30, 1994, 94-2 CPD para. 122 at 4;
Oshkosh Truck Corp.; Idaho Norland Corp., B-237058.2, B-237058.3, Feb.
14, 1990, 90-1 CPD para. 274 at 4. An agency may conduct a new evaluation
where the record shows that the agency made the decision in good
faith, without the specific intent of changing a particular offeror's
technical ranking or avoiding an award to a particular offeror. PRC,
Inc., 71 Comp. Gen. 530, 532 (1992), 92-2 CPD para. 215 at 3; Burns & Roe
Servs. Corp., B-248394, Aug. 25, 1992, 92-2 CPD para. 124 at 5. We will
not object to an agency's proposed corrective action where the agency
concludes that award was not necessarily made on a basis most
advantageous to the government, so long as the corrective action taken
is appropriate to remedy the impropriety. See Oshkosh Truck Corp.;
Idaho Norland Corp., supra.
The record reflects that the Navy reevaluated proposals in light of an
agency-level protest and concluded that the award may not have been
made on a basis most advantageous to the government because the RFP
price evaluation formula did not consider unit prices. While Roxco
was found to have submitted the technically superior, low-priced
proposal by virtue of the fact that the price evaluation formula did
not account for unit pricing, the Navy, upon reevaluating proposals in
light of Spartan's protest, realized that the price evaluation formula
did not reveal "the real cost difference" between the two proposals,
and it now says the price evaluation should have been based upon unit,
not lump-sum, pricing. Had that evaluation scheme been used, the Navy
concluded, Spartan's proposal might well have enjoyed a decisive price
advantage over Roxco's technically superior proposal, such that the
Roxco award selection may not have truly represented the best value to
the government. Accordingly, the Navy decided to solicit and evaluate
revised proposals based upon an evaluation scheme amended to account
for unit pricing, which, in the Navy's view, was necessary to ensure
an award made on a basis most advantageous to the government.
Roxco protests that there is no need to amend the price evaluation
formula because the SSA, in his selection decision, actually
considered unit price differences between Spartan's and Roxco's
proposals and nevertheless deemed Roxco's proposal to represent the
best value. In the source selection, however, the price evaluation
formula was not based upon offerors' unit prices. The record shows
that when, following Spartan's agency-level protest, the Navy
reevaluated proposals using a unit price comparison, it determined
that Spartan's proposal may have represented the best value to the
government.
Roxco argues that an agency may not amend an evaluation scheme after
making award and revealing the awardee's price and technical scores
unless the procurement suffered from a prejudicial impropriety, which
Roxco claims is not the case here. In particular, Roxco notes that
its proposal satisfied the agency's minimum needs for a BEQ containing
at least 60 units and was found the technically superior, low-priced
proposal pursuant to an unambiguous evaluation scheme.
While we agree that the evaluation scheme in this case was unambiguous
and that the agency still needs a BEQ containing at least 60 units,
the protester is incorrect that an agency lacks discretion to amend an
evaluation scheme which inhibited the government from making award on
the basis of the most advantageous proposal. See ACS Sys. & Eng'g,
Inc., B-275439.3, Mar. 31, 1997, 97-1 CPD para. 126 at 3-4. Here, the
Navy concluded that the evaluation scheme distorted what it now
considers to be "the real cost difference" between the two proposals,
such that an award to Roxco was indicated, even though Spartan's
technical proposal was considered only slightly inferior to Roxco's,
while its unit prices were significantly lower. Roxco has not shown
that the proposed amended evaluation scheme, which gives more credit
to proposals offering more units (up to 80 units) at competitive unit
prices, does not represent a more reasonable statement of the agency's
needs.
Where, as here, an agency has a reasonable basis to reopen
negotiations, it may do so, despite having disclosed an offeror's
price and ratings, because the possibility that an agency may have
awarded a contract on a disadvantageous basis does more damage to the
integrity of the competitive system than the disclosure of offerors'
information. See id. at 4-5. Accordingly, we have no basis to object
to the agency's decision to amend the price evaluation formula to
provide for a comparison of unit prices and to solicit revised
proposals on this basis.
The protest is denied.
Comptroller General
of the United States
1. The TEB estimated life-cycle costs based upon a government
estimate, not upon information in offerors' price proposals.
2. The TEB's statement that it could not "value the features of the
Roxco proposal higher than the additional modules in the Spartan
proposal" belies the protester's contention that the TEB was unable to
decide which proposal represented the best value. Furthermore, it is
irrelevant that the source selection plan charged the SSB, not the
TEB, with responsibility for performing cost/technical tradeoffs
between proposals. Allegations of deviation from a source selection
plan do not constitute a basis for protest, see EG&G Team, B-259917.2,
July 5, 1995, 95-2 para. 138 at 5 n.2, and, in any event, the TEB did not
perform a cost/technical tradeoff to select a proposal for award, but
to assist the agency in determining whether corrective action was
warranted.