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.