BNUMBER: B-279161.2
DATE: October 13, 1998
TITLE: Ervin & Associates, Inc., B-279161.2, October 13, 1998
**********************************************************************
Matter of:Ervin & Associates, Inc.
File:B-279161.2
Date:October 13, 1998
John J. Ervin for the protester.
Virginia Kelly Stephens, Esq., Department of Housing and Urban
Development, for the agency.
Aldo A. Benejam, Esq., and Christine S. Melody, Esq., Office of the
General Counsel, GAO, participated in the preparation of the decision.
DIGEST
1. Allegation that agency improperly evaluated protester's proposal
is denied where the record shows that the agency evaluated the
proposal in accordance with the evaluation factors announced in the
solicitation and record reasonably supports protester's overall lower
technical score.
2. Protester's proposal was properly excluded from the competitive
range as not having a reasonable chance of being selected for award in
view of agency's receipt of significantly higher-rated, lower cost
proposals.
DECISION
Ervin & Associates, Inc. protests the exclusion of its proposal from
the competitive range under request for proposals (RFP) No.
DU100C000018561, issued by the Department of Housing and Urban
Development (HUD) for due diligence services[1] and other related
work.
We deny the protest.
The RFP, issued November 21, 1997, anticipates the award of multiple
indefinite-quantity task order contracts. RFP sec. B-1(b), B-2, I-16.
The RFP guarantees a minimum order of $250,000 per contract and a
maximum of $30 million per contract. RFP sec. B-3. Offerors were
required to submit separate technical and business (cost) proposals.
RFP sec. L-1. With respect to costs, offerors were instructed to provide
information to support their proposed costs only for two sample tasks
included in the solicitation. RFP sec. L-1, L-6.
Section M-3 listed the following technical evaluation factors (maximum
number of possible points under each factor shown in parenthesis):
(1) documented evidence demonstrating the experience of the offeror in
performing work that is the same as, or substantially similar to, that
required under section C, the statement of work (SOW) (30); (2)
demonstrated record (as confirmed by references) of successful past
performance of the same or similar work as that to be required under
the prospective contract within the last 2 years (20); (3) the
qualifications of all proposed key personnel, as outlined only in
their resumes (20); (4) demonstrated ability to effectively and
efficiently manage the proposed contract (15); and (5) the extent to
which the offeror's proposal presents efficient and realistic
approaches to performing due diligence services under the sample task
orders (included in section J of the RFP) (15). The RFP states that
while cost would not be numerically scored, it would be considered in
the overall evaluation, and that "proposed cost or price must be
considered reasonable and must reflect the proposed technical
approach." RFP sec. M-2. The RFP provides that award will be made to
the offeror(s) whose proposal(s) are considered most advantageous to
the government, cost and other factors considered. Id.
A technical evaluation panel (TEP) evaluated the proposals the agency
received. Each member of the TEP assigned individual technical scores
to each proposal under the evaluation factors. The TEP then met to
discuss the merits of the proposals; arrived at a consensus score for
each proposal; and determined which proposals were technically
acceptable. Proposals were then ranked on the basis of consensus
scores ranging from a total of 10 to 96 points. Several proposals
with total scores of between 10 and 68 points were determined to be
technically unacceptable; Ervin's proposal received a total of 76
points (out of 100 possible points) and was found technically
acceptable.
The contract specialist then evaluated business proposals based on the
costs proposed to perform the two sample task orders included in the
RFP. The contract specialist's analysis shows that Ervin's total
proposed cost for both sample task orders was from 40 to 62 percent
higher than the total estimated costs proposed by several firms whose
proposals were rated technically superior and were included within the
competitive range.[2]
Based on the results of the technical and cost evaluations, the
contracting officer concluded that Ervin's proposal did not have a
reasonable chance for award, and eliminated the proposal from the
competitive range. By letter dated May 15, 1998, the agency informed
Ervin that based on the results of the TEP's evaluation, its proposal
was no longer being considered for award. This protest to our Office
followed a written debriefing by HUD.
In reviewing competitive range determinations, our Office will not
independently reevaluate proposals; rather, we will examine the record
to ensure that the evaluation is reasonable and in accordance with the
solicitation's evaluation criteria. Mobility Sys. and Equip. Co.,
B-261072, Aug. 8, 1995, 95-2 CPD para. 66 at 4. A protester's
disagreement with the agency's technical judgment does not show that
such judgment was unreasonable. Id.; Mictronics, Inc., B-228404, Feb.
23, 1988, 88-1 CPD para. 185 at 3.
Based on our review of the evaluation record, including the
protester's technical proposal and the agency's evaluation
documentation, we conclude that HUD reasonably eliminated Ervin's
proposal from the competitive range. The record shows that Ervin's
low consensus score stemmed from several deficiencies the TEP
identified in its proposal under all evaluation factors. Below, we
summarize the most significant of the TEP's findings under the three
most important evaluation factors.
Ervin's proposal was downgraded primarily under the three most
important technical evaluation factors listed in the RFP. The first
factor concerned the experience of the offeror in performing work that
is the same as, or substantially similar to, that required under the
SOW.[3] Under this factor, the agency was to assess the offeror's
demonstrated experience as a business in performing due diligence on
transactions with various listed criteria, including: representation
of both buyers and sellers, including private and public entities;
real estate or real estate based assets similar to those being
offered; transactions substantially equivalent in structure to those
contemplated under the contract (i.e., whole loan sales, securitized
transactions, "N-series" debt-equity transactions, single asset
auctions, negotiated transactions, etc.); transactions substantially
equivalent in assets to those contemplated under the contract (i.e.,
transactions with multiple, complex, nonperforming, subperforming,
and/or performing residential, single and multifamily, and commercial
assets); and varying levels of rent subsidies and/or with substantial
low and moderate income residents. RFP sec. M-3.
The TEP's consensus score for Ervin's proposal under this factor was
24 of 30 points. The TEP found that Ervin's proposal demonstrated
"very good experience" in performing some tasks that are the same as
or substantially similar to those required by the RFP. In this
regard, the TEP found that Ervin has performed delegated processing
(multifamily loan underwriting) for HUD in the past and has performed
valuations of loans included in a HUD multifamily sale for a potential
loan purchaser. In addition, the TEP found that Ervin's proposed
subcontractor has demonstrated experience in multifamily and
single-family loan underwriting and has performed due diligence
services for the Resolution Trust Corporation (RTC) for a
single-family loan sale and a "multi-product" loan sale. However, the
TEP found that Ervin's proposal did not demonstrate any experience by
either Ervin or its proposed subcontractor in performing comprehensive
due diligence services for multifamily loan sales held by public
entities. The TEP concluded that this was a significant deficiency in
Ervin's proposal because such services are a major part of the SOW.
The TEP also found that Ervin's proposal did not demonstrate
experience providing due diligence services for either single or
multifamily loan or property sales held by private entities, which
also was to be assessed under this evaluation factor.
Although in its initial protest letter Ervin took issue with the TEP's
evaluation under this factor, in its comments on the agency report
responding to the protest, Ervin does not rebut any of the specific
findings by the evaluators. In our view, the TEP's consensus score of
24 out of 30 points under this factor reasonably reflected the panel's
concern with Ervin's lack of experience in providing the full range of
services that are the same as, or substantially similar to, those
required by the RFP.
Under the second most important technical evaluation factor, the TEP
was to assess the offeror's demonstrated record (as confirmed by
references) of successful past performance within the last 2 years of
the same or similar work as that required under the RFP. Offerors
were instructed to provide references, including contract number and
description of services; contracting officer, project officer and
their telephone numbers; federal agency or organization; dollar
amount; and contract performance period. RFP sec. M-3.
The TEP's consensus score for Ervin's proposal under this factor was
11 of 20 points. The TEP noted that Ervin stated in its proposal that
its proposed subcontractor has experience in performing multifamily
and single-family loan underwriting and has performed comprehensive
due diligence services for the RTC for single-family loan sales and a
"multi-product" loan sale. However, the TEP was
unable to assess the subcontractor's past performance because Ervin
failed to provide any references in its proposal for the firm as
specifically instructed in the RFP. Moreover, the TEP found that
Ervin's proposal indicated that the subcontractor's experience was for
services performed more than 2 years ago, while the evaluation factor
assessed experience within the last 2 years.
In connection with its evaluation of Ervin's past performance under
the second evaluation factor, the TEP considered a "Notice of
Termination for Default" issued to Ervin by HUD's Office of
Procurement and Contracts on February 13, 1997, for a contract
involving annual financial statement reviews for HUD's entire
multifamily project portfolio.
The TEP concluded that the termination notice had only a small
negative effect on Ervin's overall past performance rating, primarily
because the terminated contract was similar to only a portion of the
work expected to be performed under the multifamily loan sales part of
the instant solicitation. Thus, the TEP found that Ervin merited a
"reasonably high rating on past performance even with the default
termination." TEP Report, June 1, 1998 at 29.
Ervin challenges the TEP's reliance on the termination notice,
asserting that the notice was based on altered documents in the
contract file, and that the basis for issuing the notice is under
investigation by HUD's Inspector General (IG). In the absence of any
findings by the IG, however, we cannot conclude that it was improper
for the TEP to consider the notice in its evaluation. In any event,
the record shows that the TEP did not attach great significance to the
termination notice. In sum, based on the record before it, the TEP
reasonably gave Ervin's proposal a consensus score of 11 of 20 points
in this area.
The third evaluation factor concerned the qualifications of all
proposed key personnel, as reflected only in their resumes. The TEP's
consensus score under this factor was 15 out of 20 points. The TEP
found that except for one individual, none of the key personnel's
resumes demonstrated actual experience in performing tasks as part of
due diligence transactions for residential real estate asset sales of
the magnitude required by the RFP. For example, the TEP found that
the proposed Engagement Director has multifamily loan underwriting
experience, but does not have any experience in performing due
diligence services for residential real estate asset sales. In
addition, the TEP found that while one of the proposed project
managers has designed financial strategies for institutions
specializing in asset securitizations and whole loan sales, and has
traded whole loans while employed by two different brokerage houses in
New York City, her resume does not demonstrate any experience in
performing due diligence services for residential real estate asset
sales. The protester does not rebut the TEP's conclusions in this
regard. In view of this factor's focus on the qualifications of key
personnel, and in light of the TEP's findings, we have no basis to
object to the evaluation of Ervin's proposal under this factor.
With respect to costs, the RFP stated that the agency would evaluate
proposed costs of performing due diligence services under two sample
task orders included in section J of the RFP. One task order is for
the sale of HUD-held subsidized multifamily mortgages. The second
task order is for the sale of HUD-held single-family mortgages. The
RFP stated that while cost would not be numerically scored, it would
be considered in the overall evaluation. RFP sec. M-2.
The contract specialist's analysis shows that Ervin's proposal, with a
consensus score of 76 points, had total proposed costs of performing
the two sample task orders that were from 40 to 62 percent higher than
five other firms whose proposals earned consensus scores ranging from
83 to 95 points, and was considered unreasonably high by comparison.
While the protester argues that HUD has included high cost proposals
in the competitive range under other solicitations, each procurement
action is a separate transaction and the action taken in one
procurement is not relevant to the propriety of the action taken under
another procurement. Komatsu Dresser Co., B-251944, May 5, 1993, 93-1
CPD para. 369 at 4. Thus the fact that HUD may have included higher cost
proposals in the competitive range under other solicitations does not
render improper its determination here, given that Ervin's estimated
costs were found to be unreasonably high when compared to other
higher-rated proposals.
The basis for the exclusion of Ervin's proposal was the agency's
determination that, overall, it was not among the most highly rated
offers being considered for award, and its proposed costs were
considered significantly higher compared to several higher-rated
proposals. As a result, the contracting officer determined that
Ervin's proposal had no reasonable chance of being selected for award.
An agency may properly determine whether to include a proposal within
the competitive range by considering the proposal's relative standing.
A proposal that is technically acceptable need not be included in the
competitive range when, relative to other acceptable offers, it is
determined to have no reasonable chance of being selected for award.
Coe-Truman Techs., Inc., B-257480, Sept. 12, 1994, 94-2 CPD para. 136 at
3. We will not disturb a determination to exclude a proposal from the
competitive range unless the record indicates the determination was
unreasonable. Intown Properties, Inc., B-250392, Jan. 28, 1993, 93-1
CPD para. 73 at 3. Here, the agency's evaluation of Ervin's technical
proposal was reasonable, as discussed above, based on the deficiencies
the TEP found in the protester's proposal. Given that there were
several other competitive range proposals that received higher
technical ratings and were lower in proposed costs, the exclusion of
Ervin's proposal from the competitive range is unobjectionable.
The protester also argues that various events at HUD over the last few
years and the elimination of its proposal from the competition here
show that HUD is retaliating against Ervin for its "whistleblowing"
activities against the agency, and that HUD officials have acted in
bad faith to deny Ervin an opportunity to compete fairly for this
contract.[4] When making such an allegation, the protester must
establish not only that the procuring agency acted with a malicious
and specific intent to injure the protester, Industrial Data Link
Corp., B-246682, Mar. 19, 1992, 92-1 CPD para. 296 at 4, but also that the
alleged agency bias translated into action that unfairly affected the
protester's competitive position. Shel-Ken Properties, Inc.,
B-277250, Sept. 18, 1997, 97-2 CPD para. 79 at 6. In its protest letter,
Ervin took issue with virtually all of the TEP's findings with respect
to its proposal. The agency responded fully to the protester's
allegations, including a complete record of the TEP's evaluation of
Ervin's proposal. In its comments on the agency report, however,
Ervin essentially abandoned its claim of an improper evaluation.
Instead, the protester's comments consist of a recitation of events
spanning several years which purport to show bias against Ervin, or
corruption and dishonesty on the part of HUD personnel. Ervin has
provided no argument or credible evidence, however, to show that the
alleged agency bias or dishonesty translated into action that unfairly
affected its competitive position in this procurement. On the
contrary, since the record reasonably supports HUD's evaluation of
Ervin's proposal and its exclusion from the competitive range, and
Ervin has not rebutted any of the TEP's findings, we have no basis to
conclude that any alleged agency bias unfairly affected Ervin's
competitive position in this procurement.
The protest is denied.
Comptroller General
of the United States
1. Due diligence encompasses a wide range of services that facilitate
the sale or restructuring of HUD-held and/or insured single-family and
multifamily mortgages, as well as Title I home improvement and
manufactured housing loans.
2. We note that the highest-rated proposal included within the
competitive range (which earned 96 points), was significantly higher
in cost than several other proposals. The agency explains, however,
that this proposal was included despite its high proposed costs
because of its strong technical merit, and because the contracting
officer believes that discussions could result in a more competitive
proposal.
3. The SOW stated that HUD is seeking due diligence services for the
"sale, disposition, or restructuring of HUD-held mortgage assets and
other related work and for the underwriting and insuring of certain
projects through the issuance of Task Orders." RFP sec. C, Part I.B.
The RFP also identifies the functional areas for which these services
were sought, including: single-family mortgage loan sales;
multifamily portfolio reengineering transactions; multifamily mortgage
insurance and capital advance programs; and pool insurance risk
sharing agreements. RFP sec. C. Section C of the RFP also discusses the
various aspects of due diligence services that may be encompassed in
typical task orders. RFP sec. C, Parts II-VII.
4. Ervin has lawsuits pending which include allegations that HUD is
retaliating against Ervin by "blackballing" the firm from competing
for HUD contracts, as well as allegations of bias, bad faith, and
procurement irregularities at HUD, some of which are referenced in
this protest. Ervin and Assocs., Inc. v. Helen Dunlap, Civil Action
No. 96-CV1253 (D.D.C. filed June 5, 1996) and Ervin and Assocs., Inc.
v. United States, No. 96-504C (Fed. Cl. filed Sept. 24, 1997). To the
extent that Ervin's reference to HUD's bad faith with respect to Ervin
concerns these allegations, our Office generally will not consider any
protest when the matter involved is the subject of litigation before a
court of competent jurisdiction. 4 C.F.R. sec. 21.11(b) (1998); Robinson
Enters.--Request for Recon., B-238594.2, Apr. 19, 1990, 90-1 CPD para. 402
at 2.