BNUMBER: B-280180.2; B-280180.3; B-280180.4
DATE: September 28, 1998
TITLE: The Xerxe Group, Inc., B-280180.2; B-280180.3; B-280180.4,
September 28, 1998
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Matter of:The Xerxe Group, Inc.
File: B-280180.2; B-280180.3; B-280180.4
Date:September 28, 1998
Andrew Searcy, Jr. for the protester.
Louise E. Hansen, Esq., Defense Logistics Agency, for the agency.
John L. Formica, Esq., and James A. Spangenberg, Esq., Office of the
General Counsel, GAO, participated in the preparation of the decision.
DIGEST
Neither the Small Business Act nor any other statute precludes a
contracting agency from comparatively evaluating the proposal of a
small disadvantaged business concern where the solicitation's
evaluation factors contemplate such an evaluation.
DECISION
The Xerxe Group, Inc. protests the award of contracts to any other
offerors under requests for proposals (RFP) Nos. SP0600-97-R-0055-0109
(-0109), SP0600-R-0055-0110 (-0110), and SP0600-97-R-0055-0111
(-0111), issued by the Defense Energy Support Center, Defense
Logistics Agency (DLA), for the direct supply of natural gas to
various installations in the United States. Xerxe, a small
disadvantaged business (SDB) concern, protests the agency's evaluation
of its proposals.
We deny the protests.
The protested natural gas requirements were originally to be procured
under RFP No. SP0600-97-R-0055 (-0055), issued on June 4, 1997. This
RFP provided for the award of fixed-price with economic price
adjustment, indefinite-delivery type contracts, or the issuance of
basic ordering agreements (BOA), depending on the contract line item
number (CLIN). RFP -0055 stated that award would be made to the
offeror submitting the offer determined to be the best value to the
government, and listed the following evaluation factors in descending
order of importance:
(1) Technical Experience
(A) Transportation
(B) Supply Management
(C) Quality of Previous Experience
(2) Past Performance
(A) Timeliness
(B) Reliability
(C) Customer Satisfaction[1]
(3) Price
(4) Socioeconomic Commitment
The RFP specified that technical experience was more important than
past performance, and that technical experience and past performance
combined were significantly more important than price. RFP at 176.
The RFP added that price was significantly more important than
socioeconomic commitment. In addition, the RFP provided for a
10-percent evaluation preference for SDB concerns, whereby 10 percent
would be added to the total prices (for evaluation purposes only) of
all non-SDB concerns' offers prior to the source selection decision.
RFP at 203.
The RFP set forth detailed instructions for the preparation of
proposals. Specifically, it required that offerors, among other
things, complete the pricing sheets and technical experience form
included in the RFP. RFP at 175. The technical experience form
solicited detailed information regarding, among other things, the
offeror's experience in transporting natural gas, in performing supply
management, and in handling previous or current contracts with similar
end users, and the experience of certain of the offeror's personnel.
RFP Attachment II. The RFP explained that the offerors' completed
technical experience forms would be used in evaluating the offerors'
proposals under the technical experience and past performance
evaluation factors and their relevant subfactors. RFP at 176-77.
Xerxe responded to RFP -0055 by completing certain of the
solicitation's standard forms, indicating its intention to enter into
BOAs and/or contracts, and providing a narrative technical proposal,
which included a "Company Profile & Capability Statement," a
"Financial Information" section, and a section purportedly describing
its "Natural Gas Supply Sources." Xerxe's submission did not,
however, include a completed technical experience form or much of the
information required for completion of the form.
The agency subsequently informed Xerxe that it could not evaluate
Xerxe's proposal as submitted, and sent Xerxe a blank copy of the
technical experience form that had been included in the RFP, and
requested that Xerxe complete it. Xerxe responded by completing a
small portion of the form, identifying three transportation agreement
numbers and the CLINs it expected to deliver via the applicable
pipelines, and the names of three individuals and each individual's
years of experience. Xerxe's submission did not include any other
information.
Based on its submission, Xerxe's proposal was rated as "poor" under
the technical experience factor. The proposal received a "neutral"
rating under the past performance evaluation factor because it did not
provide any information regarding Xerxe's experience in supplying
natural gas. Xerxe's proposal received a "good" rating under the
socioeconomic commitment evaluation factor, even though it did not
provide any information in response to this factor, because a rating
of "good" was the lowest permitted by the relevant source selection
plan.
Because of certain delays, the agency was unable to enter into BOAs or
contracts in time to fulfill its monthly requirements for certain of
the locations included in RFP -0055. Instead of proceeding under RFP
-0055 for these locations, the agency decided to issue to all offerors
that had expressed an interest in entering into a BOA or contract for
these locations new RFPs for the relevant locations' monthly
requirements. These RFPs incorporated by reference the terms of RFP
-0055.
Xerxe responded to RFP No. SP0600-97-R-0055-0106 (-0106), which
represented the March requirements for certain locations. Although
Xerxe's prices under the relevant CLINs were low once the SDB
evaluation preference was considered, Xerxe's proposal was determined
not to represent the best value because of the awardee's ratings of
"excellent" under the technical experience and past performance
evaluation factors, and of "very good" under the socioeconomic
commitment evaluation factor--in comparison to Xerxe's ratings of
poor, neutral, and good under, respectively, the technical experience,
past performance, and socioeconomic commitment evaluation factors--and
the awardee's evaluated price, which was only slightly higher
(considering the SDB evaluation preference) than that proposed by
Xerxe.
After being informed that it was not the awardee under RFP -0106,
Xerxe requested and received a debriefing. In response to the
debriefing, Xerxe submitted additional materials concerning its
technical experience and past performance. The additional material
consisted primarily of a narrative technical proposal that was
virtually identical to that initially submitted by Xerxe on RFP -0055.
The agency reevaluated Xerxe's proposal considering this additional
information, and again rated it under the technical experience, past
performance, and socioeconomic commitment evaluation factors as poor,
neutral, and good, respectively, and let the RFP -0106 award stand.
RFPs -0109, -0110, and -0111, which were released in May, June, and
July, respectively, represent the agency's June, July, and August
natural gas requirements for certain locations. Xerxe submitted
offers in response to each RFP. Again, although after the application
of the SDB evaluation preference Xerxe's proposed prices were lower
than the prices of the respective awardees, its proposals were
determined not to represent the best value because of Xerxe's
relatively low ratings vis-�-vis the relatively high ratings of the
awardees, which had only slightly higher evaluated prices (including
the SDB evaluation preference) than those proposed by Xerxe.
Xerxe protests that DLA is without authority to evaluate Xerxe's
proposal, which relies upon its suppliers' experience and technical
capabilities, and rate it negatively under the various evaluation
factors. In Xerxe's view, only the Small Business Administration
(SBA) has such authority because Xerxe qualifies as an SDB concern.
Congress has established for the Department of Defense (DOD) a goal of
5 percent of the contract funds obligated each fiscal year for the
award of contracts and subcontracts to small business concerns owned
and controlled by socially and economically disadvantaged
individuals.[2] 10 U.S.C. sec. 2323(a) (1994 & Supp. II 1996). Section
2323 provides that section 8(d) of the Small Business Act, 15 U.S.C. sec.
637(d) (1994 & Supp. II 1996), and regulations under that section,
govern the determination of whether a business is small and whether it
is owned and controlled by socially and economically disadvantaged
individuals. Consistent with this, the Small Business Act explicitly
vests SBA with the authority to determine whether a prospective
federal government contractor can properly be considered an SDB
concern. 15 U.S.C. sec. 636(j)(11)(F)(vii) (1994); Hatco Corp.,
B-270545, Mar. 21, 1996, 96-1 CPD para. 161 at 3. The SBA also has
conclusive authority to determine the responsibility of an SDB
concern. See 15 U.S.C. sec. 637(b)(7) (1994); Advanced Resources Int'l,
Inc.--Recon., B-249679.2, Apr. 29, 1993, 93-1 CPD para. 348
at 2.
That being said, there is nothing in the Small Business Act, or any
other statute or regulation, that precludes an agency in its conduct
of a procurement from comparatively evaluating the proposal of an SDB
concern under the evaluation factors or criteria set forth in the
relevant solicitation, as was done here. Advanced Resources Int'l,
Inc.--Recon., supra., at 3. Where an offer receives less than the
highest possible rating in the context of a comparative evaluation
conducted under the criteria specified in an RFP, the matter is one of
technical merit (or lack thereof), and not one of responsibility or
small business or SDB concern status, which could be the subject of
SBA review. D. M. Potts Corp., B-247403.2, Aug. 3, 1992, 92-2 CPD para.
65 at 7. Accordingly, Xerxe's protests that the contracting agency is
without authority to comparatively evaluate its proposal under the
various evaluation criteria are without merit.
Xerxe protests the agency's evaluation of its proposal under the
supply management subfactor of the technical experience evaluation
factor. Specifically, while Xerxe's proposal did not address supply
management, it argues that it should not have been found deficient
with regard to the "pipeline supply management requirement" because
that requirement "simply does not apply to the purchase and resell of
Citygate supplies."[3] Protest, June 19, 1998, at 3.
There is no indication in the RFP that the supply management
evaluation subfactor is not applicable to natural gas supplies
procured through the citygate. According to the agency, this is so
because an offeror is still responsible for supply management by
balancing the particular installation's account with the local
distribution company. Agency Report at 18. The agency reports that,
even when citygate supplies are procured, the contractor must still
monitor the installation's consumption to make sure sufficient natural
gas is available and purchased at the citygate to satisfy the
installation's needs, thus keeping the installation's account with the
local distribution company within balance. Id. Because the protester
has not substantively responded to the agency's explanation, we have
no basis to find it unreasonable.
Xerxe also protests its evaluation under the socioeconomic commitment
factor. The record shows that, even if this aspect of its protest
were meritorious, Xerxe would not be prejudiced since it could not
reasonably affect the award selection, given the very little weight
accorded this factor in the RFP evaluation scheme, and the significant
superiority of the awardees under the other, more heavily weighted
technical factors that offset the awardees' only slightly higher
evaluated prices. See McDonnell Douglas Corp., B-259694.2,
B-259694.3, June 16, 1995, 95-2 CPD para. 51 at 17, 27-28.
Xerxe finally complains that the agency "is without authority . . . to
render an adverse determination as to [Xerxe's] . . . eligibility for
SDB assistance programs." Protester's Comments at 2. The record
reflects that the agency considered Xerxe an SDB concern, and thus
entitled to the SDB evaluation preference set forth in the RFPs, in
making its award determinations under RFPs -0109, -0110, and -0111.
The agency has not, as implied by the protester's assertion,
determined Xerxe to be other than an SDB concern. Although the record
reflects that the agency does have some concern as to whether Xerxe
can properly be considered an SDB for future procurements, and has
requested that Xerxe provide information regarding Xerxe's source of
supply of the natural gas, any protest that the agency may not
consider Xerxe eligible for the SDB evaluation preference essentially
anticipates action in the future that might never arise. Protests
that merely anticipate improper agency action are speculative and
premature, and will not be considered by our Office. Safety-Kleen
Corp., B-274176, B-274176.2, Nov. 25, 1996, 96-2 CPD para. 200 at 6.
The protests are denied.
Comptroller General
of the United States
1. The RFP provided that the technical experience subfactors were
listed in descending order of importance, while the past performance
subfactors were equal in importance. RFP at 177.
2. The DOD implementation of this legislation appears in part 219 of
the Defense Federal Acquisition Regulation Supplement (DFARS). This
regulation lists the inclusion in solicitations of an evaluation
preference for SDBs, as was done here, as one means of meeting this
goal. See DFARS sec. 219.7000-7003, 252.219-7006.
3. The natural gas industry is comprised of three major segments: (1)
the wellhead or production segment, in which natural gas is extracted
from the ground; (2) the pipeline or transmission segment, in which
the gas is transported by pipeline to the citygate; and (3) the local
distribution segment in which utility companies and/or local
distribution companies distribute the gas locally to commercial and
residential customers. The "citygate" is the connection between the
pipeline and the local distribution segment. Commercial Energies,
Inc., B-240148, Oct. 19, 1990, 90-2 CPD para. 319 at 2-3 nn.2, 4.