BNUMBER: B-277988
DATE: December 16, 1997
TITLE: SEEMA, Inc., B-277988, December 16, 1997
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DOCUMENT FOR PUBLIC RELEASE
The decision issued on the date below was subject to a GAO Protective
Order. This redacted version has been approved for public release.
Matter of:SEEMA, Inc.
File: B-277988
Date:December 16, 1997
William E. Franczek, Esq., and Michael L. Sterling, Esq., Vandeventer,
Black, Meredith & Martin, L.L.P., for the protester.
Kenneth B. Weckstein, Esq., Epstein Becker & Green, P.C., for
Centennial Contractors Enterprises, an intervenor.
Col. Nicholas P. Retson, and Maj. Michael J. O'Farrell, Department of
the Army, for the agency.
Mary G. Curcio, Esq., Andrew T. Pogany, Esq., and John M. Melody,
Esq., Office of the General Counsel, GAO, participated in the
preparation of the decision.
DIGEST
1. Discussions regarding protester's low price were adequate where
agency did not specifically tell protester that its price was
unrealistic, but did tell protester that its price was significantly
below the government estimate and not supported by the proposal.
2. Agency decision to award to higher cost, higher technically rated
offeror was proper where awardee's proposal was rated more
advantageous under each nonprice factor, awardee's price was
reasonable and supported by its proposal, and protester's price was
deemed too low and not adequately supported.
DECISION
SEEMA, Inc. protests the award of a contract to Centennial Contractors
Enterprises, Inc. under request for proposals (RFP) No.
DABT57-96-R-0021, issued by the Department of the Army for facility
maintenance and repair, and minor construction projects at Fort
Eustis, Fort Monroe and Fort Story, Virginia. SEEMA argues that the
agency misevaluated proposals, failed to hold meaningful discussions
with the protester, and did not perform a proper price/technical
trade-off.
We deny the protest.
BACKGROUND
The solicitation called for the award of a job order contract (JOC)[1]
and stated that award would be made to the responsible offeror whose
offer was the best overall value to the government. The solicitation
provided that offerors would be evaluated against four equally
weighted factors: management, past performance, small business
participation, and price; subfactors and elements to be evaluated were
listed under each factor. The solicitation included a unit price book
which listed individual unit prices for all types of construction and
repair work. The unit prices included labor, material, and equipment
for completing the job orders. The Army used a factor of 1 to
represent the unit prices. Offerors were required to propose a
coefficient to be applied to the prices in the unit price book for
work performed during normal and other than normal working hours, a
non-prepriced rate for work not included in the unit price book and a
bond factor to be applied to the project price to cover the cost of
performance and payment bonds. The coefficients proposed by the
offerors were required to include all costs for project management and
supervision, overhead, profit, labor burden, contingencies and
subcontractor profit and overhead.
The Army received and evaluated seven proposals, held discussions, and
requested best and final offers (BAFO) from all seven offerors. The
BAFOs were evaluated as follows:
Offeror Total Weighted Tech. Score[2]Avg. Weighted
CoefficientAvg.
Non-Prepriced Rate
Centennial 68.13 1.078 0.42
Offeror A 62.19 1.019 0.26
Offeror B 62.14 1.064 0.15
Offeror C 62.1 1.127 1.22
SEEMA 61.91 0.948 0.2
Offeror D 58.88 1.136 0.22
Offeror E 54.18 1.07 1.15
The Army performed a price/technical trade-off and concluded that
Centennial's proposal represented the best value, since it had no
weaknesses and offered a price that was supported in its proposal.
SEEMA's proposal was rated a lesser value despite its lower proposed
price, since it had weaknesses under each nonprice factor, and its
offered price appeared too low for adequate performance and the
proposal did not explain how SEEMA would be able to perform at its
proposed price. Based on these findings, the Army chose Centennial
for award. This protest followed.
EVALUATION OF TECHNICAL PROPOSALS
Contractor Office Staffing
The Army found that under contractor office staffing, a subfactor of
the management factor, Centennial's proposal was more advantageous
than SEEMA's, which was found to contain weaknesses. The protester
argues that the alleged weakness in its office staffing levels was
"minuscule" in terms of the agency's technical scoring (Centennial
received 23.38 points while SEEMA received 22.91 points) and that this
evaluation subfactor only "concerns how many people will be available
to push the paper to run the contract." In short, SEEMA argues that
"more or less people [do] not automatically translate into more or
less service."
The record shows the agency found that the protester did not have
sufficient office staff to prepare and negotiate work orders.
Further, SEEMA stated in its proposal that it would rely on "corporate
staff" to assist its on-site staff during busy periods, but did not
further identify the corporate staff at issue or state whether they
would be dedicated to this effort. Nor did SEEMA indicate that it had
a system in place to track the need for further staffing. [Delete].
Based on these findings, the Army reasonably found that Centennial's
proposal offered a significant advantage in ensuring that task orders
would be negotiated and carried out quickly and efficiently.
Small Business Participation
SEEMA acknowledges that Centennial's proposal was "marginally"
superior to its own under the small business participation factor, but
argues that this superiority was not significant.
The record shows that the Director of the Army Small and Disadvantaged
Business Utilization (SADBU) program had denied an appeal by the Small
Business Administration to set the procurement aside under the 8(a)
program. SADBU required however, that the contracting officer make
small business participation a significant consideration in the award
decision. Thus, the solicitation specifically advised offerors that
the aggressiveness of their small business participation plan and past
compliance with small business participation goals would be evaluated.
The Army found that Centennial's proposal was more advantageous than
SEEMA's under this factor because, while the protester merely
committed to meeting the small and small disadvantaged business (SDB)
market shares identified in the RFP, Centennial's plan committed to
exceeding them, and therefore was rated more aggressive and
comprehensive. Specifically, Centennial proposed to subcontract 95
percent of the work to small businesses, compared to SEEMA's 93
percent, and proposed to subcontract 20 percent to SDBs, compared to
SEEMA's 12 percent. In addition, Centennial's proposal contained
information showing that it had met or exceeded its goals in the past;
SEEMA had been an SDB until recently and thus had little past
performance history of meeting small business participation goals.
We disagree with SEEMA's characterization of Centennial's
subcontracting goals as "marginally" superior. While its small
business goal was only about 2 percent greater than SEEMA's, its SDB
goal was two-thirds (67 percent) greater; the agency reasonably could
view this difference in goals as significant for purposes of rating
the aggressiveness of the two proposed plans. Further, while SEEMA
believes it should not be penalized for its lack of experience meeting
subcontracting goals (i.e., since until January 1997 it was an SDB
itself), the RFP specifically advised that past compliance with
subcontracting goals would be considered. Thus, whatever the reason
for SEEMA's (or any other offeror's) lack of a track record, there is
no basis for finding that the agency was precluded from recognizing
Centennial's superiority in this area.
Past Performance
SEEMA argues that the Army improperly applied an undisclosed
evaluation criterion--past performance on JOCs in general and on Army
JOCs specifically--in determining that Centennial's past performance
was superior to SEEMA's.
This argument is without merit. Centennial's proposal showed it
performed 19 JOCs and that 9 of those were Army JOCs. In contrast,
SEEMA's past performance consisted of 4 Air Force SABER contracts.
The Army did not rate Centennial superior to SEEMA based on a
JOC/SABER distinction;[3] it considered performance on the SABER
contracts equivalent to work on the JOCs. Rather, Centennial's
superior rating was based primarily on the fact that it had performed
substantially more of this type of contract than SEEMA--19 versus
4--and that this greater experience would minimize performance risk.
There is nothing unreasonable in this conclusion.
PRICE EVALUATION
Alleged Unstated Evaluation Criterion
SEEMA argues that the Army improperly evaluated its proposal for price
realism--finding that its proposed coefficient was unrealistically
low--since price realism was not a stated evaluation factor.
According to SEEMA, since the RFP only indicated that a price analysis
would be performed, and a fixed-price (rather than a cost
reimbursement) contract was to be awarded, price should have been
evaluated only for reasonableness, to ensure it was not too high.[4]
We reject this argument. In our view, it was reasonable for the
agency to consider the risk associated with low proposed prices here,
where the RFP contained an evaluation factor, management, under which
offerors were to be comparatively evaluated based, among other things,
on the "understanding of the work tasks required." Where an RFP
either expressly or implicitly encompasses offeror understanding in
its evaluation factors, the agency's consideration of an unreasonably
low price pursuant to a price analysis is unobjectionable, since it
relates to the evaluation of the offeror's understanding. See ENCORP
Int'l, Inc., B-258829, Feb. 21, 1995, 95-1 CPD para. 100 at 5-6;
Mid-Atlantic Forestry Servs., Inc., B-217334, 85-2 CPD para. 279 at 10.
Accordingly, we find no merit to the protester's argument that, in
considering whether SEEMA's proposed coefficient was unrealistically
low, the agency was applying an unstated evaluation criterion.
Realism of Coefficient Price
As to the substance of the agency's price analysis, SEEMA challenges
the determination that its coefficient price was too low. However,
the record shows that SEEMA's coefficient remained below 1 in its
BAFO, and we find reasonable the agency's determination that SEEMA's
proposal did not adequately explain how it would be able to perform at
its proposed coefficient. In this regard, the proposal merely stated
generally that the proposed price assumed a high work efficiency for
strong team building with subcontracts and a familiarity factor for
long-term contract involvement, as well as economies of scale and
prompt payment discounts with subcontractors and suppliers. The
proposal did not include any details or supporting data whatsoever
showing how SEEMA would be able to perform the contract at its offered
price, or explaining the specific efficiencies or economies of scale
or how they would be realized. Without this explanation, the agency
perceived a risk that SEEMA's price was too low for adequate contract
performance. We see nothing unreasonable in this conclusion; SEEMA's
disagreement with the Army, without any supporting details or data, is
not sufficient to bring the evaluation into question. See Creative
Management Tech., Inc., B-266299, Feb. 9, 1996, 96-1 CPD para. 61 at 6.
PRICE/TECHNICAL TRADE-OFF
SEEMA challenges the price/technical trade-off, noting that there was
only a 7-point difference in SEEMA's and Centennial's nonprice
ratings, while Centennial's proposal is potentially $5 million higher
in price.[5] SEEMA argues that the difference in the technical scores
is not worth the additional cost.
Price/technical trade-offs may be made in deciding between competing
proposals; the propriety of such a trade-off turns not on the
difference in technical scores or ratings, per se, but on whether the
agency's judgment concerning the significance of the difference was
reasonable and adequately justified in light of the RFP evaluation
scheme. AAA Painting and Janitorial Contractors, Inc., B-270168, Feb.
13, 1996, 96-1 CPD para. 72 at 3. In this regard, evaluation scores are
merely guides for the selection official, who must use his or her
judgment to determine what the technical difference between competing
proposals might mean to contract performance. R&A Technical Servs.,
B-270988, May 7, 1996, 96-1 CPD para. 238 at 4. The record shows that the
Army chose Centennial's proposal over SEEMA's because Centennial's
proposal was superior under each nonprice evaluation factor, had no
disadvantages, and offered a coefficient that was justified and
supported by the proposal. In contrast, the agency found that SEEMA's
proposal, while acceptable, contained a number of weaknesses and a
coefficient too low to ensure adequate performance; specifically, the
Army believed SEEMA's low price could lead to additional
administrative burdens as well as a risk of bill padding, the use of
inferior materials or problems with subcontractors. Given the
evaluation results, the Army's concerns, and the fact that the
evaluation factors were weighted 75 percent nonprice, 25 percent
price, the Army reasonably could determine that Centennial's superior
proposal was worth its higher proposed cost.
The protest is denied.
Comptroller General
of the United States
1. A JOC is an indefinite delivery, indefinite quantity (IDIQ)
contract for accomplishment of small- and medium-sized real property
maintenance and repair, and minor construction projects.
2. The total weighted technical score attainable was 75 points.
3. Even had the evaluation been as SEEMA alleges, an agency, under
generally worded experience/past performance criteria, properly may
consider the extent to which an offeror has experience directly
related to the work required by the solicitation. Systems Integration
& Dev., Inc., B-271050, June 7, 1996, 96-1 CPD para. 273 at 4; Human
Resource Sys., Inc.; Health Staffers, Inc., B-262254.3 et al., Dec.
21, 1995, 96-1 CPD para. 35 at 3. This being the case, we think the Army
reasonably could consider the offerors' experience under JOC and Army
JOC contracts.
4. SEEMA also argues that, assuming a realism analysis was
permissible, the Army failed to hold meaningful discussions because
the agency did not specifically tell SEEMA that its price was
unrealistically low. This argument is without merit. By informing
SEEMA that its price was significantly below the government estimate
and that its cost savings measures were not supported by data, the
Army led SEEMA into the area of the deficiency, as required in order
for discussions to be meaningful. Medland Controls, Inc., B-255204,
B-255204.3, Feb. 17, 1994, 94-1 CPD para. 260 at 7.
5. The Army explains that the actual difference in cost will be
between $208,000 and $5.2 million, depending upon whether all options
are exercised and how much work is ordered.