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.