BNUMBER:  B-278732 
DATE:  March 9, 1998
TITLE: Strategic Resource Solutions Corporation, B-278732, March 9,
1998
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Matter of:Strategic Resource Solutions Corporation

File:     B-278732

Date:March 9, 1998

James C. Dever, III, Esq., Maupin Taylor & Ellis, P.A., for the 
protester.
John E. Lariccia, Esq., and Capt. Christopher J. Aluotto, Department 
of the Air Force, for the agency.
Jennifer Westfall-McGrail, Esq., and Christine S. Melody, Esq., Office 
of the General Counsel, GAO, participated in the preparation of the 
decision.

DIGEST

1.  Where, pursuant to 10 U.S.C.  sec.  2865 (authorizing simplified method 
of awarding energy savings performance contracts (ESPC), including use 
of a list of prequalified firms), agency initiated process of 
selecting firms for award of ESPCs in 1997, agency reasonably limited 
consideration of firms to those on the 1997 prequalified list, the 
only list available at the time.  Even though the actual selection 
will not be made until 1998, agency is not required to consider firms 
which subsequently were included on the 1998 list; the resulting delay 
and cost would be inconsistent with the simplified and cost-conscious 
selection process authorized by the statute and the statutory goal of 
accelerating the use of ESPCs.

2.   Agency did not violate 10 U.S.C.  sec.  2319 (regarding imposition of 
qualification requirements) by refusing to allow protester, which was 
able to demonstrate its qualifications prior to the date of award, to 
submit an offer for an energy savings performance contract, since 
statute governing award of such contracts by the Department of 
Defense, 10 U.S.C.  sec.  2865, does not require that all qualified firms 
be permitted to submit offers.

DECISION

Strategic Resource Solutions Corporation (SRS) protests the 
restriction of competition for four Energy Savings Performance 
Contracts to be awarded by the Department of the Air Force to 
companies on the 1997 List of Prequalified Energy Savings Performance 
Contractors for the Department of Defense.  The solicitations at issue 
are request for proposals (RFP) Nos. F0426-98-R-0101; 
F44650-98-R-0002; F08637-97-R-6009; and F41689-97-R-0030.  SRS, which 
was not on the 1997 prequalified list (having not been incorporated in 
time to apply for it), but which is on the 1998 prequalified list, 
argues that firms on the 1998 list should also be eligible for 
consideration.

We deny the protest.

BACKGROUND

To help reduce their consumption of energy, federal agencies are 
authorized to award energy savings performance contracts (ESPC) for 
periods of up to 25 years. 42 U.S.C.  sec.  8287(a)(1) (1994).  Under an 
ESPC, a private contractor evaluates, designs, finances, installs, and 
maintains energy saving equipment at a government installation.  The 
contractor receives compensation for its efforts only if and when 
energy cost savings are realized by the government; if the government 
realizes no savings, the contractor receives no compensation.

To accelerate the use of these contracts on military installations and 
to reduce the administrative effort and cost on the part of the 
Department of Defense (DOD) and the private sector, Congress 
authorized the Secretary of Defense to develop a simplified method of 
awarding ESPCs.  10 U.S.C.  sec.  2865(c)(1) (1994). To this end, the 
Secretary was authorized to request statements of qualifications, 
including financial and performance information, from firms engaged in 
providing shared energy savings contracting; to designate from the 
statements received, with an update at least annually, those firms 
that are presumptively qualified to provide shared energy savings 
services; to select at least three firms from the qualifying list with 
which to conduct discussions concerning a particular project; to 
request technical and price proposals from each of the firms selected; 
and to select from among these firms, the one most qualified for 
award.  10 U.S.C.  sec.  2865(c)(2)(A).

The Air Force decided that, rather than having each Air Force 
installation in the country award its own ESPC, it would divide the 
nation into six regions and award one 25-year ESPC for each region.  
The awardee for each region would then evaluate, design, finance, 
install, and maintain energy savings equipment at every Air Force 
installation located within its region.  For each region, one 
contracting activity was designated as the lead installation for 
soliciting and evaluating offerors' qualifications to perform the 
solicitation's requirements and the offerors' proposals.  For region 
I, Tyndall Air Force Base (AFB) was designated as the lead 
installation; for region II, Wright-Patterson AFB, Ohio was 
designated; for region III, AFSPC/CONF in Colorado Springs was 
designated; for region IV, Langley AFB was designated; for region V, 
Travis AFB was designated; and for region VI, Randolph AFB was 
designated.[1] 

The Air Force desired to solicit proposals from the prequalified firms 
best qualified to meet its needs, but determined that it would need to 
obtain further information to make such a selection.  In this regard, 
the DOD prequalified list identifies the firms that have been 
determined qualified, but provides no detail concerning their 
particular qualifications.  The Air Force thus decided to issue a 
request for qualifications to interested firms on the 1997 
prequalified list to obtain more detailed information regarding their 
financial strength, technical capability, and ability to perform its 
specific effort.

Each of the lead activities posted a notice on the CBD on-line 
announcing its intention to award a 25-year ESPC with an estimated 
value of $200-$250 million.  The notices instructed prequalified firms 
interested in competing to notify the bases of their interest so that 
a request for qualifications could be issued to them, with the best 
qualified firms then to be invited to respond to a competitive RFP.  
Each of the CBD notices stated that only firms on the 1997 
prequalified list would be eligible to compete.

A representative of SRS telephoned the contracting office at Tyndall 
AFB on or about June 30, 1997, to express interest in competing for 
the ESPC and to request a copy of the request for qualifications, but 
was informed that only those firms on the DOD prequalified list could 
obtain a copy.  Tyndall issued its request for qualifications on 
October 14, 1997, with responses due by November 25.

Similarly, SRS responded to the Langley AFB CBD notice by e-mail dated 
October 8 and by telephone call of November 10, during which its 
representative was informed that SRS could not submit a qualifications 
package because it was not on the 1997 prequalified list.  Langley 
issued its request for qualifications on October 17, with responses 
due by November 19.

SRS also contacted Travis AFB on October 8 and asked for a copy of the 
request for qualifications.  By letter dated October 22, the 
contracting officer informed SRS that the proposed acquisition was 
restricted to firms on the 1997 prequalified list.  On November 14, 
Travis AFB issued its request for qualifications, with responses due 
by December 23.

The fourth lead activity at issue here, Randolph AFB, issued its 
request for qualifications on October 29, with responses due by 
December 23.

On November 25, DOD released the 1998 prequalified list, which was to 
go into effect on January 1, 1998.  SRS was included on the list.  On 
November 28, SRS protested to our Office.

TIMELINESS

As a preliminary matter, the Air Force argues that SRS' protests of 
the Langley and Tyndall AFB procurements should be dismissed as 
untimely because SRS did not raise its objection to them until after 
the closing date for receipt of responses to the requests for 
qualifications.  The agency contends that where a competitive field is 
to be narrowed on the basis of offerors' qualifications prior to 
issuance of an RFP, firms objecting to terms of the request for 
qualifications must do so prior to the date set for receipt of the 
qualification statements.   See Nomura Enter., Inc., 69 Comp. Gen. 69, 
72 (1989), 89-2 CPD  para.  437 at 4-5.

We think that it would be unreasonable to apply the above rule in this 
case since there is no evidence in the record establishing that SRS 
knew (or reasonably should have known) of the closing dates for 
receipt of the qualifications packages.  The closing dates were not 
set forth in the CBD notices announcing the procurements, and both 
contracting activities refused to furnish the protester with copies of 
their requests for qualifications.  We therefore decline to dismiss 
SRS' protests of the Tyndall and Langley AFB procurements.

DISCUSSION

The protester argues that firms whose names appear on the 1998, even 
if not on the 1997, prequalified list should have been permitted to 
respond to the request for qualifications because the Air Force did 
not anticipate selecting--and, in fact, will not select--the firms 
with which to conduct discussions until 1998.  SRS contends that 10 
U.S.C.  sec.  2865(c)(2)(A)(iii), which permits the Secretary of Defense to 
select at least three firms with which to negotiate from the 
qualifying list, contemplates use of the qualifying list for the year 
in which the selection is made and the RFP is issued.  In the 
alternative, the protester argues that pursuant to 10 U.S.C.  sec.  2319 
(1994), which governs the use of qualification requirements, a 
potential offeror cannot be denied the opportunity to submit an offer 
if it can demonstrate that it meets the standards for qualification 
prior to the date of award.

Under 10 U.S.C.  sec.  2865, the agency has broad discretion in selecting 
the firms with which to negotiate; there is no requirement that 
competitive procedures be used or even that maximum practicable 
competition be sought.  Rather, in the interest of promoting the use 
of ESPCs with minimum administrative effort and cost, the statute 
authorizes the agency to "select at least three firms from the 
qualifying list," and make award to the most qualified firm among 
them.  10 U.S.C.  sec.  2865(c)(2)(A).  The statute does not specify how 
the agency is to go about choosing the firms for negotiation; the only 
relevant restriction is that, once the agency decides with whom to 
negotiate, the firms must be on the list in effect at the time of that 
decision.  Thus, with respect to its selection of firms from that 
list, the agency's discretion is broad and subject only to a test of 
reasonableness.

Given the statutory scheme, if the selection of firms with which to 
negotiate had been made in 1997, the Air Force could have selected any 
three firms for negotiations as long as the firms appeared on the 1997 
list.  Similarly, since the selection decision will not be made until 
1998, the Air Force can select any three firms for negotiations as 
long as those firms are on the 1998 list; however, in light of the 
agency's broad statutory authority to select firms from the list on 
any reasonable basis, the fact that the protester appears on the 1998 
list does not entitle the protester, or any other firm on the list, to 
be selected for negotiations.

The Air Force's approach here was to solicit (and evaluate) 
substantial additional financial and technical information from firms 
on the 1997 list (the 1997 list being the only one available at the 
time the agency initiated the selection process) to determine which, 
among them, were best qualified to meet its needs.  As noted above, 
the DOD prequalified list identifies the firms that have been found 
qualified, but provides no detail concerning their particular 
qualifications.  Accordingly, we see nothing unreasonable in the 
agency's decision to solicit additional information in order to 
determine which firms would best meet its needs.  Further, while the 
process was initiated at the end of 1997 and it thus was evident that 
the actual selection might not occur until 1998, we think that it was 
reasonable for the Air Force to limit its review at that point to 
firms on the 1997 list--the only list available at the 
time--particularly given the likelihood that firms on the 1997 list 
would also be on the 1998 list, and the impossibility of predicting 
whether firms not on the 1997 list would be on the 1998 list.

Finally, we have no objection to the agency's declining to consider a 
firm that was added to the list in 1998.  A contrary conclusion would 
require the agency to expend substantial time and effort considering 
the new firms' qualifications at the point in time when the agency is 
ready to make its selection of firms with which to negotiate.  The 
resulting delay and cost--in the interest of considering the 
qualifications of firms which, under the statute, the agency is under 
no obligation to select for negotiations--would be inconsistent with 
the simplified and cost-conscious selection process authorized by the 
statute and would not foster the statutory goal of accelerating the 
use of ESPCs.

Turning to the protester's second argument, we do not think that the 
Air Force violated 10 U.S.C.  sec.  2319(c)(3) by denying SRS the 
opportunity to submit an offer.  Section 2319(c)(3) provides as 
follows:

     A potential offeror may not be denied the opportunity to submit 
     and have considered an offer for a contract solely because the 
     potential offeror (A) is not on a qualified bidders list, 
     qualified manufacturers list, or qualified products list, or (B) 
     has not been identified as meeting a qualification requirement 
     established after October 19, 1984, if the potential offeror can 
     demonstrate to the satisfaction of the contracting officer that 
     the potential offeror or its product meets the standards 
     established for qualification or can meet such standards before 
     the date specified for award of the contract.

Even assuming that the prequalified list is subject to the 
requirements of 10 U.S.C.  sec.  2319,[2] we cannot conclude that the Air 
Force's failure to permit SRS to submit an offer for the ESPCs 
violated that statute.  By its terms, 10 U.S.C.  sec.  2865 authorizes 
selection of only three firms with which to hold discussions leading 
to the award of a contract; thus, as stated above, even if SRS had 
been on the 1997 list which the agency used to make its selection 
here, there was no requirement for the Air Force to select SRS as one 
of the firms with which to negotiate.  As a result, we cannot say that 
SRS was denied the opportunity to submit an offer solely because it 
was not on the qualified list, as stated in 10 U.S.C.  sec.  2319(c)(3).

The protest is denied.

Comptroller General
of the United States

1. This protest concerns only regions I, IV, V, and VI.  The protester 
never complained about region III, and it withdrew its complaint 
regarding region II after Wright-Patterson amended its Commerce 
Business Daily notice inviting expressions of interest from 
prequalified firms to state that the DOD prequalified lists for both 
1997 and 1998 would be used instead of only the 1997 list.

2. It is not clear that the prequalified list is the type of 
qualification requirement contemplated by 10 U.S.C.  sec.  2319, which 
focuses on approval of products.  See 10 U.S.C.  sec.  2319(a); Federal 
Acquisition Regulation  sec.  9.201; Stevens Technical Servs., Inc., 72 
Comp. Gen. 183, 190 (1993), 93-1 CPD  para.  385 at 9.  Similarly, the 
statute makes clear that the purpose behind the contracting scheme 
authorized by 10 U.S.C.  sec.  2865 is to accelerate the use of ESPCs and 
reduce the administrative effort involved by DOD as well as the 
private sector; that purpose could be thwarted if the contracting 
procedures were subject to the limitations of 10 U.S.C.  sec.  2319.