BNUMBER:  B-279161.2           
DATE:  October 13, 1998
TITLE: Ervin & Associates, Inc., B-279161.2, October 13, 1998
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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.