BNUMBER:  B-278276.11; B-278276.12; B-278276.13; B-278276.14 
DATE:  September 22, 1998
TITLE: Patriot Contract Services, LLC; Keystone Shipping Services,,
B-278276.11; B-278276.12; B-278276.13; B-278276.14, September 22,
1998
**********************************************************************

Matter of:Patriot Contract Services, LLC; Keystone Shipping Services, 
          Inc.; MTL Ship Management; V-Ships Marine, Ltd.

File:     B-278276.11; B-278276.12; B-278276.13; B-278276.14

Date:September 22, 1998

Amy E. Sherburne, Esq., and Dennis J. Kelly, Esq., Kelly, Gill, 
Sherburne & Herrera, for Patriot Contract Services, LLC; Ralph Hill, 
Esq., for Keystone Shipping Services, Inc.; William A. Shook, Esq., 
and Kelley Doran, Esq., Preston Gates Ellis & Rouvelas Meeds, for MTL 
Ship Management, Marine Transport Lines, Inc.; and Thomas L. Mills, 
Esq., Robert A. Mangrum, Esq., Eric J. Marcotte, Esq., and Jason I. 
Hewitt, Esq., Winston & Strawn, for V-Ships Marine Ltd., the 
protesters.
Lars Anderson, Esq., J. Scott Hummer, III, Esq., Wm. Craig Dubishar, 
Esq., and Paul N. Wengert, Esq., Venable, Baetjer and Howard, for Bay 
Ship Management, Inc.; Martin P. Willard, Esq., Perkins Coie, for All 
Marine Services, Ltd.; Laura K. Kennedy, Esq., and Kevin M. Kordziel, 
Esq., Jenner & Block, for American Overseas Marine Corp.; Robert J. 
Blackwell, Esq., and Marc J. Fink, Esq., Sher & Blackwell, for Apex 
Marine Ship Management Co., LLC; James A. Kelley, Esq., Donald A. 
Tobin, Esq., and Lori Ann Lange, Esq., Bastianelli, Brown & Kelley, 
for Crowley American Transport, Inc. and Crowley Marine Services, 
Inc.; Harold G. Bailey, Jr., Esq., Garvey, Schubert & Barer, for 
Interocean Ugland Management Corp.; and Raymond S.E. Pushkar, Esq., 
McKenna & Cuneo, for Sea-Land Service, Inc., intervenors. 
Janis Rodriguez, Esq., and Michael Rose, Esq., Department of 
Transportation, for the agency.
Paul E. Jordan, Esq., Office of the General Counsel, GAO, participated 
in the preparation of the decision.

DIGEST

Where agency improperly awarded contracts to an offeror in a manner 
which was inconsistent with that offeror's qualified proposal and the 
record shows that, in assessing the impact of that improper award, the 
agency reasonably determined that the solicitation's price evaluation 
scheme was unworkable and effectively prevented agency from accurately 
determining best value in making multiple awards, agency reasonably 
took corrective action in response to eight protests, including 
rescinding awarded contracts, amending solicitation, reopening 
negotiations, and requesting a second round of best and final offers, 
notwithstanding the disclosure of limited information from the 
awardees' proposals.

DECISION

Patriot Contract Services, LLC, Keystone Shipping Services, Inc., MTL 
Ship Management, and V-Ships Marine, Ltd. protest the decision of the 
Department of Transportation, Maritime Administration (MARAD) to 
rescind contracts previously awarded under request for proposals (RFP) 
No. DTMA-91-97-R-00002, amend the RFP, reopen negotiations, and 
evaluate best and final offers (BAFO) submitted in response to the 
amended RFP.  MARAD's action arises from its conclusion that 
corrective action was required to respond to eight protests which had 
challenged the technical and price evaluations of several of the ten 
awardees.  After reviewing the protests and the procurement, MARAD 
concluded that, under the circumstances, it could not determine 
whether the original awards represented the best value to the 
government.  The protesters assert that more limited corrective 
action, or none at all, would be more appropriate.  

We deny the protests.

The RFP, as amended through amendment No. 0011, sought proposals for 
the operation and management of 89 vessels comprising the Ready 
Reserve Force.  To be eligible for award, offerors were required to 
meet certain special standards including status as a United States 
citizen, status as a current operator or owner/operator of a large dry 
cargo ship and/or tanker, and possession of a document of compliance 
issued under the provisions of the International Management Code for 
Safe Operation of Ships and for Pollution Prevention (ISM Code) 
adopted by the International Maritime Organization. 

For purposes of proposal submission, evaluation, and award, the 89 
ships were divided into 39 groups, each of which included 2 or 3 ships 
of a given class or type.  Offerors were allowed to submit electronic 
price proposals on any number of ships, but, in accordance with 
section M.6 of the amended RFP, MARAD reserved the right "to determine 
the number of ships within the maximum of 12 any offeror can 
effectively handle given the offeror's capabilities."  

The RFP contemplated award of a separate contract for each group of 
ships on a best value basis.  Twenty-three offerors submitted initial 
proposals by the October 27, 1997 closing date.  Nineteen proposals 
were included in the competitive range.  

In preparing their price proposals, in addition to basic pricing 
("section B"), offerors submitted alternative pricing through 
economies of scale (EOS).  RFP section L.11.2.2, amendment No. 0009.  
This EOS pricing was based on "generic" ship group sets applied to any 
ship groups and "preferred" group sets applied to ship groupings 
desired and specified by the offeror.  Attachment A of amendment No. 
0009.  In addition to specifying the number of ships to which the EOS 
would apply, offerors identified whether the EOS applied to groups 
from all coasts ("split coast") or only to ship groups on the east, 
west, or Gulf coasts.  Offerors could propose savings with the split 
coast and additional savings on coast specific designations.  Id. at  sec.  
1.2.4.

These prices were ultimately converted by the agency into average 
annual "notional" prices based upon a schedule in section M.4 of the 
RFP, and then subjected to various comparative price analyses.  These 
analyses included a comparison of the prices for each ship group based 
on the offerors' section B prices and EOS prices.  According to a 
declaration from the source evaluation board (SEB) chairman, the 
primary comparison was of the lowest generic split-coast EOS prices 
for each ship group based on the maximum number of ships the 
evaluators determined each offeror was capable of handling.  The SEB 
also compared the offerors' lowest EOS prices, preferred or generic, 
to determine if a lower price was available under the preferred EOS 
prices.  The SEB also compared the offerors' lowest possible EOS 
prices for each ship group without regard to the evaluators' 
assessment of capability.  The SEB used these comparisons in making 
the price/technical tradeoff decisions on specific ship groups and in 
the assignment of specific combinations of ship groups to offerors.  

After review of the proposals, oral presentations, discussions, 
revised cost proposals, and BAFOs, MARAD awarded the 39 contracts to 
ten offerors.  After receiving notice of the award and debriefings, 
eight of the unsuccessful offerors filed bid protests with our 
Office.[1]

The initial protesters challenged the technical evaluations, including 
consideration of past performance of themselves and of the awardees.  
Several protesters alleged that MARAD had waived or relaxed the 
mandatory citizenship, ISM Code, and current owner/operator status 
requirements.  Some protesters alleged that MARAD had used undisclosed 
evaluation criteria including the agency's assessment of the offerors' 
capability to handle specific numbers of ships.  Some of these 
protesters also challenged the agency's failure to refer technical 
capability evaluations to the Small Business Administration for 
consideration under the certificate of competency procedures.  Some 
alleged a lack of meaningful discussions and unequal discussions.  
Most of the protesters also challenged the price evaluations, the best 
value determinations and the price/technical tradeoffs, including the 
agency's consideration of the EOS prices.

After reviewing the protests, the agency informed our Office on July 2 
that it intended to take corrective action.  The agency's decision was 
precipitated by its discovery that some of the awards were clearly 
improper.  Further, in reviewing the procurement, the agency concluded 
that because of the complexity of the price evaluation scheme, it 
could not determine with a reasonable degree of certainty that the 
awarded contracts represented the best value to the government.  The 
proposed corrective action included rescission of the original awards 
and amendment of the RFP to simplify and clarify the pricing 
structure, evaluation provisions, and required information on 
citizenship, ISM code, and owner/operator status.  The agency also 
intended to reopen negotiations, allow submission of revised technical 
and price proposals based on the amendments, obtain new BAFOs, and 
make new best value determinations.  It is this corrective action that 
triggered this second round of protests.  The current protesters, all 
of whom had been awarded contracts, contend that the corrective action 
is unnecessary and improper because it is overbroad and will result in 
an improper auction.

Contracting officials in negotiated procurements have broad discretion 
to take corrective action where the agency determines that such action 
is necessary to ensure fair and impartial competition.  Rockville 
Mailing Serv., Inc., B-270161.2, Apr. 10, 1996, 96-1 CPD  para.  184 at 4; 
Oshkosh Truck Corp.; Idaho Norland Corp., B-237058.2, B-237058.3, Feb. 
14, 1990, 90-1 CPD  para.  274 at 4.  It is not necessary for an agency to 
conclude that the protest is certain to be sustained before it may 
take corrective action; where the agency has reasonable concern that 
there were errors in the procurement, even if the protest could be 
denied, we view it as within the agency's discretion to take 
corrective action.  Main Bldg. Maintenance, Inc., B-279191.3, Aug. 5, 
1998, 98-2 CPD  para.      at 3.  An agency may amend a solicitation, and 
request and evaluate a second round of BAFOs where the record shows 
that the agency made the decision to take this action in good faith, 
without the specific intent of changing a particular offeror's 
technical ranking or avoiding an award to a particular offeror.  See 
PRC, Inc., B-233561.8, B-233561.9, Sept. 29, 1992, 92-2 CPD  para.  215 at 
3-4; Burns & Roe Servs. Corp., B-248394, Aug. 25, 1992, 92-2 CPD  para.  124 
at 5; Unisys Corp., B-230019.2, July 12, 1988, 88-2 CPD  para.  35 at 5.  We 
will not object to an agency's proposed corrective action where the 
agency concludes that the award, because of perceived flaws in the 
procurement process, 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.  Rockville Mailing Serv., 
Inc., supra.

There is no evidence in the record that suggests the agency is acting 
other than in good faith.  On the contrary, while the protesters 
contend that the agency has not supported its determination to take 
the corrective action proposed, the record supports that the agency's 
corrective action is appropriate and not overbroad. 

In this regard, there is no legitimate dispute that the agency made 
improper awards to one of the offerors.[2]  As part of a price 
revision, that offeror qualified its proposal by explicitly setting 
forth the minimum number of ships it was willing to accept.  The 
agency advises that it overlooked this qualification letter and did 
not consider it in making the awards.  Based upon its determination of 
this offeror's capability, the agency awarded the offeror contracts 
encompassing fewer ships than the proposed minimum.  Having failed to 
consider this matter prior to award, the agency correctly concluded 
that these awards were improper and should be rescinded.[3]  See 
Barents Group, L.L.C., B-276082, B-276082.2, May 9, 1997, 97-1 CPD  para.  
164 at 10; The Orkand Corp., B-224541, Dec. 31, 1986, 86-2 CPD  para.  723 
at 8; Computer Network Corp. et al.--Recon., B-186858, June 13, 1977, 
77-1 CPD  para.  422 at 6 (contract awarded may not materially vary terms of 
offer). 

To determine the appropriate corrective action, the contracting 
officer consulted with the chairman of the SEB to learn whether 
appropriate treatment of the offeror's qualification would have 
affected the best value selections recommended to the source selection 
official.  The SEB chairman reviewed the selections with other members 
of the SEB and ran various pricing scenarios.  Based on this review, 
he concluded that any attempt to correct the original erroneous awards 
would affect the selection decisions for a minimum of two awardees and 
potentially affect four or more offerors. 

The protesters suggest that a reevaluation or recompetition need only 
involve those original offerors, successful and unsuccessful, who 
submitted proposals on the ship groups encompassed by the improper 
awards.  We disagree.  It is evident from this record that more than 
those groups would be affected.  For example, under a limited 
reevaluation which simply excluded the improper awardee, it is 
possible that the "best value" offeror for award of those contracts 
may already have the maximum number of ships, requiring a reallocation 
of its original awards.  Reallocation of these awards may affect 
offerors which did not submit proposals on the improperly awarded 
groups.  Thus, the entire award determination potentially would be 
affected.  A similar cascade effect would be likely if there were a 
recompetition which allowed the improper award recipient to 
participate.  If it demonstrated its capability to handle more ships, 
most, if not all, original awardees could be affected.  Since any 
changes to the ship groups selected for one awardee would affect the 
selection decisions made for other offerors, and potentially affect 
the overall best value decision, the agency reasonably concluded that 
resolving the improper awards would require reevaluations affecting 
more than the original offerors for the affected ship groups.

In determining that these broader reevaluations could not be made 
based on the existing proposals, the agency also considered the 
allegations of the original protesters regarding some awardees' 
compliance with the citizenship, ISM Code, and owner/operator status 
requirements, compliance with the Service Contract Act (SCA), and the 
evaluation of maximum ship capability.  Since there was some question 
whether all original awardees met these requirements, it became 
necessary to obtain additional information, thereby necessitating 
reopened negotiations with all offerors.

The agency also considered the impact of its complex pricing structure 
on the original competition.  While MARAD anticipated that use of 
electronic price proposals with comparisons conducted by computer 
would permit it to optimize the price/technical tradeoffs to achieve 
the best value, upon review of the original selections the SEB 
chairman concluded that he could not reasonably determine the overall 
best value under the existing evaluation scheme.  In this regard, 
given 39 ship groups, each of which contains 2 or 3 ships, the agency 
states that each offeror could submit up to 7 million generic EOS 
proposals.  In fact, of the offerors submitting EOS proposals, the 
range submitted included 10 to 64 generic EOS proposals and 2 to 573 
preferred EOS proposals per offeror.[4]  According to the SEB 
chairman, because the awarded prices depend upon group configurations 
and coast, "there was almost no way to compare the equivalent of an 
'awarded' price for the other [unsuccessful] offerors."  Declaration 
of SEB Chairman, Attachment 2,  para.  4 at 3.  Due to the inability to 
accurately compare these prices, the SEB chair now concludes that the 
original pricing scheme adversely affected the best value decisions.  

We agree with the SEB chairman's assessment that the original 
evaluation scheme prevented the agency from accurately and reasonably 
determining the overall best value.  This is especially true in view 
of the sheer volume of proposed pricing among 19 offerors and the 
numerous combinations involved in comparing their basic and EOS 
prices.  Further, the original price/technical tradeoff decisions were 
not always based on the actual awarded price.  Some 22 of the 39 
awarded contracts were awarded at prices higher than those in the 
generic split-coast price comparison.[5]  It is not clear whether 
these awards complied with the RFP's provision that awards made on the 
basis of offerors' EOS proposals would have their section B revised to 
reflect the ship groups and EOS prices on which they were awarded.  
See RFP  sec.  M.7.4.1.  Likewise, it is not clear that the evaluated 
combination of prices and technical merit represented a reasonable 
determination of best value.  

Notwithstanding the protesters' observation that no one timely 
challenged the pricing structure and evaluation scheme, where, as 
here, the evaluation as performed was so complex and unworkable as to 
prevent the agency from accurately and reasonably determining the 
overall best value, it is appropriate for the agency to take 
corrective action.[6]  Such action reasonably includes revision and 
simplification of the pricing structure offerors may propose and the 
solicitation of revised offers to allow the agency to reasonably and 
accurately determine the best value in a price/technical tradeoff.  
See Rockville Mailing Serv., Inc., supra.  In sum, the agency 
reasonably concluded that corrective action, including reopened 
negotiations and submission of new price proposals, is necessary to 
resolve the improper awards and the serious doubts about the validity 
of the best value determination.

The protesters also contend that, because offerors were informed of 
the awardees' prices during the agency's debriefings, rescinding the 
original awards and reopening the competition will foster an improper 
auction.  Where, as here, the corrective action proposed by the agency 
is not improper, the prior disclosure of information in an offeror's 
proposal does not preclude the corrective action, and the reopening of 
discussions and request for BAFOs does not constitute an improper 
auction. Unisys Corp., supra; Sperry Corp., B-222317, July 9, 1986, 
86-2 CPD  para.  48 at 4.  The possibility that the contracts may not have 
been awarded based on a true determination of the best value has a 
more harmful effect on the integrity of the competitive procurement 
system than the fear of an auction; the statutory requirements for 
competition take priority over the regulatory constraints on auction 
techniques.  See Unisys Corp., supra.  In any event, the provisions of 
amendment No. 0012 will require significant restructuring of price 
proposals, thereby mitigating any possible auction effects.  For 
example, certain ship groups now must be awarded together, requiring 
offerors to submit proposals on all of those ships, or none.[7]  In 
addition, a wage determination issued after contract award is being 
reevaluated by the Department of Labor and offerors will be required 
to submit revised price proposals and collective bargaining agreements 
which comply with both the SCA and the wage determination.  Further, 
all offerors will have to restructure their pricing to comply with the 
simplified EOS alternatives.  Taken in combination, these changes will 
render much of the disclosed pricing meaningless.[8]  Accordingly, the 
corrective action taken by the agency is unobjectionable.

The protests are denied.

Comptroller General
of the United States

1. These protests were filed by All Marine Services, Ltd, Bay Ship 
Management, Inc., Patriot Contract Services, LLC, Stapp Towing Co., 
Inc., American Overseas Marine Corp., Crowley Marine Services, Inc., 
Crowley American Transport, Inc., and Osprey-Acomarit Ship Management, 
Inc.  After receiving notice of the agency's decision to take 
corrective action, our Office dismissed these protests as academic. 

2. Since the identity of this offeror and the precise qualification of 
its offer are considered proprietary information, this decision will 
not disclose that information. 

3. In taking corrective action on the improper awards, the agency also 
correctly concluded that it could not simply request the offeror to 
remove the qualification, thereby changing its price, without engaging 
in discussions with that offeror.  If negotiations are reopened with 
that offeror, they must be reopened with all offerors in the 
competitive range.  See SmithKline Beecham Pharamaceuticals, N.A., 
B-252226.2, Aug. 4, 1993, 93-2 CPD  para.  79 at 4. 

4. For example, one offeror submitted 30 different EOS proposals 
resulting in 33 different prices for one ship group alone.  

5. In this regard, of the 10 offerors awarded contracts, 8, including 
3 of the protesters, received contracts at higher prices than the 
evaluated prices. 

6. One protester argues that a similar evaluation scheme was 
successfully used, without protest, in a prior MARAD procurement 
involving more ships.  It is not clear that the last "similar" 
procurement involved the multitude of alternative pricing proposals 
involved here.  In any event, each procurement action is a separate 
transaction, and the action taken under one is not relevant to the 
propriety of the action taken under another procurement for purposes 
of a bid protest.  Digital Sys. Group, Inc., B-258262.2, Jan. 20, 
1995, 95-1 CPD  para.  30 at 3; Aguirre Architects, Inc.--Recon., 
B-230256.2, May 19, 1988, 88-1 CPD  para.  478 at 2. 

7. This clarification reflects another basis for reopening the 
competition.  It appears that the agency always intended that certain 
ship groups be awarded to the same offerors.  In fact, each of the 
combinations of ship groups now identified were awarded in those same 
configurations.  However, the original RFP did not reveal this 
intention or notify offerors that failure to submit an offer on all 
ships in the combined groups would effectively prevent their receiving 
an award for any of those ships.  Offerors must be advised of the 
basis upon which their proposals will be evaluated, and where a 
solicitation does not set forth a common basis for evaluating offers 
which ensures that all firms are on notice of the factors for award 
and can compete on an equal basis, the solicitation is materially 
defective.  Unisys Corp., supra, at 4.

8. Contrary to the request of some of the protesters, the agency has 
not released pricing information on the unsuccessful offerors which is 
comparable to the award price information released on the successful 
offerors.  While it is sometimes appropriate to release pricing 
information from unsuccessful offerors in order to equalize the 
competition (See Sperry Corp., supra, at 5), under the circumstances 
of this case, we believe the agency has reasonably chosen to withhold 
pricing information of the unsuccessful offerors.  In this regard, the 
agency explains that disclosure of all unsuccessful offerors' 
evaluated prices would prejudice all offerors, including the original 
awardees, since they were unsuccessful offerors on some of the ship 
groups on which they submitted offers.  According to the agency, given 
the volume of pricing information submitted and the number of 
different evaluations using the section B and generic and preferred 
EOS pricing, it is not possible to provide an equivalent price to that 
denominated "amount awarded"; that price was dependent upon the actual 
ship groups awarded.  Since even the original awardees were 
"unsuccessful" on some ships, release of all "unsuccessful" pricing 
would reveal all offerors' pricing strategy and proposal strategy by 
identifying all ships on which each offeror submitted proposals.