BNUMBER:  B-277916.2 
DATE:  March 4, 1998
TITLE: Mechanical Contractors, S.A., B-277916.2, March 4, 1998
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Matter of:Mechanical Contractors, S.A.

File:     B-277916.2

Date:March 4, 1998

Fredrick Kunkel for the protester.
Carlos A. De Obaldia, Esq., De Obaldia & Garcia De Paredes, for Formal 
Management Systems, Inc., an intervenor.
Glenn A. Heisler, Esq., Panama Canal Commission, for the agency.
Peter A. Iannicelli, Esq., and Michael R. Golden, Esq., Office of the 
General Counsel, GAO, participated in the preparation of the decision.

DIGEST

Contracting agency did not conduct meaningful discussions with the 
protester, where the agency did not inform the protester of the 
deficiencies in its proposal, the deficiencies were essentially 
informational in nature, and the contracting officer cited the 
deficiencies as reasons for not selecting the protester's proposal for 
contract award.  

DECISION

Mechanical Contractors, S.A. (MCSA) protests the award of a firm, 
fixed-price contract to Formal Management Systems, Inc. (FMS), under 
request for proposals (RFP) No. CC-97-33, issued by the Panama Canal 
Commission (PCC) for cleaning and painting of four miter gate leaves 
in the Panama Canal.  The contract was awarded to FMS on August 21, 
1997.  MCSA protested the award and, in Mechanical Contractors, S.A., 
B-277916, Oct. 27, 1997, 97-2 CPD  para.  121, we sustained MCSA's protest 
because the evaluations of MCSA's and FMS's proposals were not 
adequately supported and lacked reasonable bases.  Id. at 3-6.  We 
recommended, among other things, that the PCC reevaluate both MCSA's 
and FMS's proposals and make a new selection decision.  Id. at 7.  

After reevaluating the proposals, the PCC affirmed its original 
decision to award FMS the contract.  MCSA protests that the agency 
improperly did not hold discussions with it concerning deficiencies 
that the new evaluation board found in MCSA's proposal during the 
reevaluation.  MCSA also contends that the new evaluation board 
unreasonably downgraded its proposal.

We sustain the protest.

Issued on May 12, 1997, the RFP solicited proposals for abrasive blast 
cleaning and exterior painting above the water line using inorganic 
zinc primer and coal tar polyurethane; and below the water line using 
hot-applied coal tar enamel; and for performing mechanical, 
electrical, and other related work.  The RFP specified that the work 
would be performed in 13 separate phases and included performance 
specifications describing in great detail the manner in which the work 
was to be done.  Offerors were to submit technical proposals and price 
schedules. 

Technical proposals were to be evaluated on the basis of two equally 
weighted technical factors (worth 100 technical points each):  
technical approach and performance capability.  The technical approach 
factor included seven subfactors:  (1) removal of existing coatings; 
(2) surface preparation and paint application procedures; (3) 
equipment to be utilized; (4) safety plan; (5) ventilation system; (6) 
air cleaning system; and (7) handling and disposal of waste materials.  
The performance capability factor included five subfactors:  (1) 
organization; (2) specific personnel; (3) specialized experience; (4) 
past performance; and (5) quality control plan.  The RFP stated that 
price would be evaluated for fairness and reasonableness.  The RFP 
further stated that the contract would be awarded to the offeror whose 
proposal was determined to be most advantageous to the government 
after consideration of price and other evaluation factors.  In 
determining which proposal was most advantageous, the RFP indicated 
that the agency would consider the relative advantages and 
disadvantages of offers and the relative price for each technical 
point received by each offer. 

Three proposals, including those of MCSA and FMS, were received by the 
July 3, 1997, deadline for submission.  After evaluation of the 
technical portion of each proposal by the evaluation board, all three 
proposals were included in the competitive range.[1]  Subsequently, 
each offeror was advised of areas of its proposal which needed to be 
further addressed and each was requested to submit a best and final 
offer (BAFO).  The BAFO scores were as follows:
                                      
                Technical
                Approach        Performance
                                Capability      Total Points

MCSA            60.85 points    66.2 points     127.05 points

FMS             72.7 points       81.55 points  154.25 points
MCSA's price of $2,564,500 was lower than the FMS price of $2,640,000.  
The evaluation board performed a price/technical tradeoff analysis and 
determined that the FMS proposal was the most advantageous because it 
had a lower price per technical point than the MCSA proposal.  The 
evaluation board's recommendation was adopted by the source selection 
official, and the contract was awarded to FMS.  Shortly thereafter, 
MCSA filed its original protest, which we sustained because we found 
that the technical evaluation was not adequately documented and 
because there were multiple, material errors in the PCC's evaluation 
of both MCSA's and FMS's proposals on the specialized experience and 
past performance evaluation subfactors of the performance capability 
evaluation factor.  In light of the conclusions contained in our 
decision and the prejudicial errors contained in the evaluation, we 
recommended that the PCC reevaluate both proposals; document the 
reevaluation; and make a new selection decision.[2]  

Subsequently, the PCC empaneled a new evaluation board and reevaluated 
MCSA's and FMS's proposals.  The new evaluation board did not limit 
its reevaluation to those portions of the original evaluation in which 
we had found prejudicial errors (i.e., the specialized experience and 
past performance evaluation subfactors).  The PCC also decreased the 
weight given to the specialized experience and past performance 
evaluation subfactors before conducting its de novo reevaluation.  
Based upon the FMS proposal's higher technical score in the 
reevaluation, the evaluation board recommended that the award to FMS 
be affirmed.  

The contracting officer made several revisions to the evaluation 
board's scoring, and the revised BAFO scores were as follows:
                                      
                Technical
                Approach        Performance
                                Capability      Total Points

MCSA            50.0 points     64.0 points     114.0 points

FMS               69.5 points    71.25 points   141.25 points

After conducting a cost/technical tradeoff analysis, which favored the 
award to FMS, the contracting officer looked at the advantages and 
disadvantages of both proposals.  Based primarily upon the evaluation 
board's determinations that MCSA's proposal was deficient on three 
items (i.e., removal of existing coatings, surface 
preparation and paint applications, and specific personnel), the 
contracting officer concluded that:  "In my opinion the project's 
schedule would be put at risk were the contract awarded to [MCSA] 
since, based on the information submitted, it is not established that 
[MCSA] has a good understanding of all phases of the work."

By letter of November 13, 1997, the contracting officer affirmed the 
award to FMS and notified MCSA of his decision.  After being 
debriefed, MCSA filed this protest.  The head of the contracting 
activity determined that urgent and compelling circumstances would not 
permit the PCC to await our resolution of the protest and authorized 
FMS to proceed with performance under the contract.  

The protester points out that, upon reevaluation, its proposal 
received poor ratings (25 percent) on two evaluation subfactors--the 
removal of existing coatings subfactor of the technical approach 
evaluation factor and the specific personnel subfactor of the 
performance capability evaluation factor.  MCSA also points out that 
its proposal received a fair rating (49 percent) upon reevaluation on 
the surface preparation and paint application procedures subfactor of 
the technical approach evaluation factor.  MCSA argues that the PCC 
should have held discussions with it concerning these perceived 
deficiencies because the reevaluation went beyond the scope of the 
original protest (the original protest and our decision on it were 
limited to a discussion of the PCC's evaluation of the specialized 
experience and past performance evaluation subfactors of the 
performance capability evaluation factor).

In negotiated procurements, contracting agencies generally must 
conduct discussions with all offerors whose proposals are within the 
competitive range.  41 U.S.C.  sec.  253b(d)(1)(A) (1994); Federal 
Acquisition Regulation  sec.  15.610(b) (June 1997).  Although discussions 
need not be all-encompassing, they must be meaningful; that is, an 
agency is required to point out weaknesses or deficiencies in a 
proposal as specifically as practical so that the agency leads the 
offeror into areas of its proposal which require amplification or 
correction.  Professional Servs. Group, Inc., B-274289.2, Dec. 19, 
1996, 97-1 CPD  para.  54 at 3.  Discussions cannot be meaningful if an 
offeror is not advised of the weaknesses, deficiencies, or excesses 
that must be addressed in order for the offeror to be in line for the 
award.  CitiWest Properties, Inc., B-274689.4, Nov. 26, 1997, 98-1 CPD  para.  
3 at 5; Columbia Research Corp., B-247631, June 22, 1992, 92-1 CPD  para.  
539 at 5.  

In his November 10, 1997, source selection memorandum, the contracting 
officer cited three deficiencies that the new evaluation board found 
in MCSA's proposal as reasons for not selecting MCSA's proposal for 
contract award.  In his November 13 letter notifying MCSA that the 
award to FMS was affirmed, the contracting officer summarized the 
three deficiencies of MCSA's proposals as follows:

     a.  Removal of existing coating from the interior and the 
     exterior of the miter gates:  You did not include all the 
     information required by the RFP, the description of the work was 
     not adequate for the work required, and you did not show good 
     understanding of the work.
     b.  Surface preparation and paint application procedure:  The 
     proposal did not include all required information, nor does it 
     give details of the different activities to be performed.
     c.  Specific Personnel:  You did not include all required 
     information, and the information submitted was inadequate.  

The record shows that the original evaluation board rated MCSA's 
proposal as excellent or better on the removal of existing coatings, 
surface preparations and paint application procedures, and specific 
personnel evaluation subfactors; therefore, the PCC did not conduct 
discussions with MCSA on areas of its proposal that related to these 
subfactors after the original evaluation was completed.  In its de 
novo reevaluation, the new evaluation board severely downgraded MCSA's 
proposal, finding deficiencies on each of these evaluation subfactors, 
but the PCC did not hold discussions with MCSA regarding the 
deficiencies found in MCSA's proposal.  Because the perceived 
deficiencies were critical to the contracting officer's decision not 
to select MCSA's proposal, we think that the PCC should have conducted 
discussions with MCSA concerning these matters and allowed MCSA an 
opportunity to revise or clarify its proposal after discussions.  
CitiWest Properties, Inc., supra; Columbia Research Corp., supra.      
 
Removal of existing coatings was one of the two equally weighted, most 
important evaluation subfactors of the technical approach evaluation 
factor.  The original evaluation board gave MCSA's proposal a 
60-percent (excellent) rating on this subfactor.  Upon reevaluation of 
MCSA's same proposal, the new evaluation board severely downgraded the 
proposal, giving it only a 25-percent (poor) rating on this subfactor, 
which, under the PCC's evaluation guidelines, meant that the proposal 
contained some deficiencies which could be corrected with further 
explanation/revision by the offeror.  The new evaluation board 
criticized the proposal's narrative because it did not describe who 
would perform the various activities and did not indicate the labor or 
equipment available to perform the work, stating:  "The description of 
work is not adequate for the work required.  It does not show that 
[MCSA] understands fully the project."  

Surface preparation and paint application procedures was the second of 
the two equally weighted, most important evaluation subfactors of the 
technical approach evaluation factor.  The original evaluation board 
gave MCSA's proposal a 60-percent (excellent) rating on this 
subfactor.  Upon reevaluation, the new evaluation board downgraded the 
proposal, giving it just a 49-percent (fair) rating on this subfactor, 
which, under the PCC's evaluation guidelines meant that the proposal 
met all of the RFP requirements but that its disadvantages outweighed 
its advantages.  The new evaluation board criticized MCSA's proposal 
for failing to contain information on several different items of work 
that would be required as part of surface preparation and painting.

Specific personnel was the third most important subfactor within the 
performance capability evaluation factor.  The original board gave 
MCSA's proposal a 77-percent (outstanding) rating on this subfactor.  
Upon reevaluation, the new evaluation board severely downgraded MCSA's 
proposal, giving it only a 25-percent (poor) rating on this subfactor, 
stating:

     Key personnel information was not submitted in accordance with 
     solicitation requirements.  Most of the proposed key personnel do 
     not meet the minimum requirements of the project.  Because the 
     presentation of the key personnel information is so poor, the 
     probability of success is questionable.[3]  

It is clear from the evaluation record that almost all of the 
deficiencies and weaknesses that the new evaluation board found in 
MCSA's proposal were informational in nature.  Where, as here, 
deficiencies and weaknesses identified in a proposal are basically 
informational in nature and discussions are held, during the 
discussions, the agency should alert the protester to the perceived 
informational gaps in its proposal and allow the protester an 
opportunity to provide the desired information.  See Techniarts Eng'g, 
B-234434, June 7, 1989, 89-1 CPD  para.  531 at 6.  Although the PCC asked 
MCSA to clarify certain portions of its original proposal and allowed 
MCSA to submit a BAFO incorporating MCSA's clarifications after the 
original evaluation, such action did not constitute meaningful 
discussions because those clarifications were solicited before the 
reevaluation took place and MCSA was not informed of the critical 
deficiencies that the second evaluation board found in MCSA's proposal 
upon reevaluation.  CitiWest Properties, Inc., supra, at 5.  MCSA was 
competitively prejudiced by the agency's failure to hold discussions 
on the deficiencies identified in the reevaluation since the 
contracting officer specifically cited these later-discovered 
deficiencies in his November 10, 1997, source-selection memorandum as 
the "very basic difference" between FMS's and MCSA's offers, leading 
him to conclude that the contract schedule would be at risk if the 
contract were awarded to MCSA and to affirm the earlier award to FMS.  
As the deficiencies were therefore critical to the PCC's decision to 
select FMS's proposal over MCSA's, the PCC was required to hold 
discussions concerning these matters and to allow MCSA an opportunity 
to respond to the agency's concerns with additional clarifications or 
revisions in a new BAFO.[4]  Id.

Accordingly, we sustain the protest.  However, we are not recommending 
that the PCC hold discussions with MCSA.  The RFP required that all 
work be completed within 9 months after performance began.  
Notwithstanding MCSA's second protest, the PCC authorized FMS to 
proceed with performance on November 26, 1997, on the basis of urgent 
and compelling circumstances, roughly 3 months ago.  On February 9, 
1998, the PCC informed our Office that FMS had already completed 
roughly 25 percent of the contract work.  In view of the PCC's 
determination that urgent and compelling circumstances exist, and 
because it would take at least several additional weeks for the PCC to 
conduct discussions with both offerors and to receive and evaluate new 
BAFOs, we believe that it would be futile to recommend reopening 
discussions at this time.  We therefore recommend that MCSA be 
reimbursed for its proposal preparation costs as well as the 
reasonable costs of filing and pursuing this protest.  4 C.F.R.  sec.  
21.8(d)(1), (2) (1997).  In accordance with 4 C.F.R.  sec.  21.8(f)(1), the 
protester's certified claim for such costs, detailing the time 
expended and the costs incurred, must be submitted directly to the 
contracting agency within 60 days after receipt of this decision.

The protest is sustained.

Comptroller General
of the United States  

1. The third offeror's proposal is not relevant and will not be 
discussed further.

2. See Mechanical Contractors, S.A., supra, for a detailed discussion 
of the circumstances of this procurement, MCSA's original protest 
arguments, PCC's responses, and our rationale for sustaining that 
protest.

3. The original evaluation board apparently did not believe there was 
any great  performance risk associated with MCSA's proposal, since it 
concluded in its overall summary:

            [MCSA] presents an amalgamation of very strong, well 
            experienced and internationally reputed companies . . . .  
            Their plan was very well presented and left no doubt in 
            the Committee that [MCSA} performance would be in 
            accordance with the expected levels.  

4. The agency states that, after reviewing our decision on MCSA's 
original protest, it was uncertain whether our recommendation 
contemplated reopening discussions and requesting new BAFOs.  The 
agency reports that, the day after our original decision was issued, 
its attorney contacted the GAO attorney who had handled the original 
protest and was advised that it did not.  PCC contends that, in 
deciding not to hold discussions with MSCA, it relied on the GAO 
attorney's advice.  The GAO attorney merely confirmed that our 
recommendation did not contemplate renewed discussions or a second 
request for BAFO's.  The PCC attorney did not tell the GAO attorney 
that the PCC intended to conduct a de novo reevaluation of the 
proposals or to reevaluate proposals in areas that were outside the 
scope of the original protest.  

In recommending corrective action, our Office cannot anticipate every 
scenario that may arise.  Our recommendations therefore necessarily 
leave the details of implementing appropriate corrective action to the 
discretion and judgment of the agency.  See CitiWest Properties, Inc., 
supra, at 6.  Such discretion must be exercised reasonably and in a 
fashion that remedies the procurement impropriety that was the basis 
for our protest recommendation.  Id.  Here, the PCC's corrective 
action was not reasonable because, as discussed above, it resulted in 
MCSA being deprived of meaningful discussions.