BNUMBER: B-278903.2
DATE: February 12, 1999
TITLE: Encore Management, Inc., B-278903.2, February 12, 1999
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Matter of:Encore Management, Inc.
File: B-278903.2
Date:February 12, 1999
J. Patrick McMahon, Esq., McMahon, David & Brody, for the protester.
Wilsie Y. Minor, Esq., Corporation for National and Community Service,
for the agency.
Henry J. Gorczycki, Esq., and James A. Spangenberg, Esq., Office of
the General Counsel, GAO, participated in the preparation of this
decision.
DIGEST
Agency has reasonable basis to cancel solicitation for clerical and
administrative support services where agency's actual requirement is
for personal services which the agency intends to satisfy with civil
service personnel.
DECISION
Encore Management Inc. protests the cancellation of request for
proposals (RFP) No. 97-PB-05, issued by the Corporation for National
and Community Service (CNCS) for clerical and administrative support
services.
We deny the protest.
The RFP, issued on June 3, 1997 as a competitive section 8(a)
set-aside, contemplated the award of a time-and-materials contract for
1 year with 4 option years to provide support services at all or most
of the agency's offices.[1] RFP at 1, 5, 9, amend. 2, at 2; Agency
Report at 5.
The agency awarded a contract to Lionel Henderson Corporation on
December 15. Agency Report at 2. Encore protested the award on
December 23. On January 22, 1998, the agency proposed to take
corrective action in response to the protest, which rendered the
protest allegations academic. Id. at 2-3. The agency's corrective
action included reopening negotiations, conducting additional
discussions, and making a new source selection decision based on
revised proposals. Id. at 3. Our Office subsequently dismissed the
protest.[2]
While the agency was proceeding with this corrective action, the
agency's Office of the Inspector General (OIG) initiated an audit of
the agency's procurement and contract administration processes.
Agency Report at 3, Tab 20. On August 7, the OIG issued report No.
98-24, which determined that the agency was administering the
incumbent contract for clerical and administrative services, and other
contracts, as personal services contracts in violation of Federal
Acquisition Regulation (FAR) sec. 37.104 (June 1997), and recommended
that the agency either cease using personal services contracts or
obtain authority to issue such contracts. Agency Report at 4, Tab 23
at 19-24.
CNCS's chief operating officer subsequently determined that the agency
would hire government employees to perform the work covered by the
RFP, which was being performed under the incumbent clerical and
administrative services contract. Agency Report, Contracting
Officer's Statement at 6, Tab 24. The incumbent contract with Encore
was extended to allow sufficient time to hire government employees for
all necessary positions. Contracting Officer's Statement at 6. As a
result, the RFP was canceled and offerors were so notified by letter
of October 23. RFP amend. 3; Agency Report at 4, Tabs 26, 27. This
protest followed.
Encore alleges that, although the incumbent contract may have been
administered as a personal services contract, nothing in the terms of
that contract or the canceled RFP requires its administration as a
personal services contract, and thus there is no reasonable basis to
cancel the RFP. Protest at 3-4; Comments at 4-7.
In a negotiated procurement, such as this, the contracting officer has
broad discretion in deciding whether to cancel a solicitation; the
contracting officer need only have a reasonable basis to do so, as
opposed to the cogent and compelling reason required for the
cancellation of a solicitation after sealed bids have been opened.
G.K.S. Inc., B-235208, Aug. 9, 1989, 89-2 CPD para. 117 at 3. An agency
may properly cancel a solicitation no matter when the information
precipitating the cancellation first surfaces or should have been
known, even if the solicitation is not canceled until after offers
have been submitted and evaluated. Jack Faucett Assocs., supra.
Cancellation of a solicitation is proper where award under the
solicitation would not serve the government's actual needs.
Constructive Solutions, Inc., B-278227, Jan. 9, 1998, 98-1 CPD para. 9 at
2; Waste Management Envtl. Servs., Inc., B-252553, July 12, 1993, 93-2
CPD para. 14 at 4-5. It is the responsibility of the contracting activity
to determine its requirements, and our Office will defer to the
activity's judgment in that regard. Peterson-Nunez Joint Venture,
B-258788, Feb. 13, 1995, 95-1 CPD para. 73 at 4. Here, the agency has a
reasonable basis to cancel the RFP because its actual needs require
personal services which must be satisfied by hiring civil service
employees.
A personal services contract is one that, by its express terms or as
administered, makes the contractor personnel appear, in effect,
government employees. FAR sec. 37.101, 37.104(a). The government is
normally required to obtain its employees by direct hire under
competitive appointment or other procedures required by the civil
service laws. FAR sec. 37.104(a). Obtaining personal services by
contract, rather than by direct hire, circumvents those laws unless
Congress has specifically authorized acquisition of the services by
contract. Id. Agencies may not award personal services contracts
unless specifically authorized by statute to do so. FAR sec. 37.104(b).
Whether a solicitation would result in a personal services contract
must be judged in the light of its particular circumstances, with the
key question being whether the government will exercise relatively
continuous supervision and control over the contractor personnel
performing the contract. FAR sec. 31.104(c)(2); Information Ventures,
Inc., B-241641, Feb. 14, 1991, 91-1 CPD para. 173 at 4. The following
descriptive elements guide the assessment of whether a proposed
contract is personal in nature:
(1) Performance on site;
(2) Principal tools and equipment furnished by the government;
(3) Services are applied directly to the integral effort of
agencies or an organizational subpart in furtherance of assigned
function or mission;
(4) Comparable services, meeting comparable needs, are performed
in the same or similar agencies using civil service personnel;
(5) The need for the type of service provided can reasonably be
expected to last beyond 1 year;
(6) The inherent nature of the service, or the manner in which it
is provided, reasonably requires directly or indirectly,
government direction or supervision of contractor employees in
order to--
(i) Adequately protect the Government's interest;
(ii) Retain control of the function involved; or
(iii) Retain full personal responsibility for the function
supported in a duly authorized Federal officer or employee.
FAR sec. 37.104(d).
CNCS's analysis of the services actually provided under the incumbent
contract indicates that they constituted personal services. Although
the incumbent contract started off small and included temporary,
short-term positions for a limited portion of the agency, CNCS's
requirements quickly grew into requirements for permanent clerical and
administrative positions throughout the agency. Contracting Officer's
Statement at 6-7. The contractor's personnel in these positions
worked at the agency's offices alongside CNCS employees performing the
same or similar work and using CNCS's supplies and equipment. Agency
Report at 6-9. CNCS managers supervised contractor personnel by
directing, reviewing and approving their work. Id. CNCS managers
interviewed and selected contractor personnel for assignment to
positions, and routinely requested pay increases and promotions for
contractor personnel. Contracting Officer's Statement at 7. The
agency states that its managers now expect and require this level of
supervision and control over contractor personnel in order to perform
the functions of CNCS. Id. Moreover, the agency no longer needs
temporary personnel for short-term positions; rather, the only purpose
of this contract is to satisfy the agency's needs for full-time,
permanent staff. Id. at 7-8. The record thus shows that CNCS
requires continuous supervision and control over the personnel
performing the work requirements under the RFP, and that contractor
personnel have been, and would continue to be, in effect, government
employees. This is a requirement for personal services. See FAR sec.
37.101, 37.104.
The protester has not directly challenged the reasonableness of the
agency's stated requirement for personal services, but alleges that a
contract awarded under this RFP could be administered so as not to be
a personal services contract. However, Encore provides no support to
show that such administration would satisfy the agency's actual
requirements for permanent clerical and administrative personnel to be
directly supervised and controlled by CNCS employees. Since the
agency's actual needs require personal services, CNCS properly decided
that it must satisfy its needs through employment of civil service
personnel.[3] Therefore, the contract contemplated by the RFP, if it
did not provide personal services, would not satisfy the agency's
requirements, and the cancellation of the RFP is reasonable.
The protest is denied.
Comptroller General
of the United States
1. The positions required under the RFP are secretary I, II, III and
IV, general clerk III, legal assistant, accounting clerk III,
switchboard operator/receptionist, key entry operator II, and project
manager. RFP amend. 2, sec. B.2, at 2-5. The statement of work
described the duties for all of these positions except project
manager. RFP sec. C.2, at 9-13. The RFP did not identify the duties of
the project manager. Agency Report at 9.
2. Alternative to the present protest, Encore requests reimbursement
of its protest costs on the initial protest because of the agency's
corrective action. Comments at 7. Our Bid Protest Regulations, 4
C.F.R. sec. 21.8(e) (1998), provide that where an agency takes corrective
action in response to a protest, we may recommend that the agency pay
protest costs, including attorneys' fees; however, we will make such a
recommendation only where the agency unduly delays taking corrective
action in the face of a clearly meritorious protest. Jack Faucett
Assocs.--Recon., Protest, and Costs, B-278961.2, B-278961.3, Apr. 17,
1998, 98-1 CPD para. 116 at 3. Because our Regulations are designed to
encourage agencies to take prompt corrective action where appropriate,
as a general rule, if an agency takes corrective action by the due
date of its protest report, we will regard such action as prompt and
decline to consider a request to recommend reimbursement of protest
costs. Id. Here, CNCS notified our Office prior to the report due
date for the initial protest of the corrective action to be taken.
(CNCS implemented and nearly completed that corrective action before
the basis for cancellation became apparent. Agency Report at 13-14.)
Accordingly, we decline to recommend reimbursement of protest costs
here.
3. In fact, CNCS has already began, and substantially completed, the
hiring process for these employees. Agency Report at 12, Contracting
Officer's Statement at 6.