BNUMBER: B-280429; B-280429.2; B-280429.3
DATE: September 30, 1998
TITLE: Securiguard/Group 4 Joint Venture, B-280429; B-280429.2; B-
280429.3, September 30, 1998
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DOCUMENT FOR PUBLIC RELEASE
The decision issued on the date below was subject to a GAO Protective
Order. This redacted version has been approved for public release.
Matter of:Securiguard/Group 4 Joint Venture
File: B-280429; B-280429.2; B-280429.3
Date:September 30, 1998
Karen D. Powell, Esq., and Joseph J. Petrillo, Esq., Petrillo &
Powell, for the protester.
Dennis J. Gallagher, Esq., Department of State, for the agency.
Christina Sklarew, Esq., and Paul Lieberman, Esq., Office of the
General Counsel, GAO, participated in the preparation of the decision.
DIGEST
Protest that agency improperly downgraded joint venture's past
performance evaluation based on reported allegations of corruption
during past contract performance by one joint venture partner is
denied where agency raised its concern about the allegations during
discussions and the protester's response substantially corroborated
the agency's concern by conceding the existence of "irregularities"
and acknowledging that the protester was conducting an ongoing
investigation, and the response failed to provide adequate explanation
of past actions, give specific assurance of how any recurrence would
be prevented, or otherwise resolve agency's legitimate concerns.
DECISION
Securiguard/Group 4 Joint Venture (S/G4)[1] protests the Department of
State's award of a contract to Securis under request for proposals
(RFP) No. S-BE200-97-R-0036, for guard services for the American
Embassy in Brussels, Belgium. S/G4 primarily alleges that the agency
misevaluated the protester's past performance.
We deny the protest.
The RFP, issued on July 18, 1997, contemplated the award of a 1-year
guard services contract with four 1-year options. Section L of the
solicitation instructed offerors to submit their offers in five
volumes, which were to include executed standard forms, price
proposal, technical proposal, business management proposal, and a
statement regarding the offeror's eligibility for preference as a U.S.
entity. For the technical proposal, the RFP required offerors to
include a management plan and a description of past performance and
experience. Under the past performance requirement, offerors were to
list all contracts and subcontracts that the firm (or each partner in
a joint venture) had performed over the past 3 years for the same or
similar work. The RFP provided a detailed list of the information
that should be included for each contract and subcontract, and stated
the type of information that might be discussed with references
provided in the proposal. In addition, section L.1.3.3(b)(1) of the
RFP advised that:
in the Government's evaluation of past performance, it may use
past performance information obtained from sources other than
those identified by the Offeror. However, if any information
obtained is considered unfavorable, an Offeror will have an
opportunity to address this information as a part of its Best and
Final Offer (BAFO), if BAFOs are requested.
In Section M, the RFP advised offerors that technical proposals would
be scored on a 60-point scale, and set forth the relative weight to be
assigned to each of the factors and subfactors, as follows:
A. Management Plan 30 points
1. Organization and Management 10
2. Inspection System 5
3. Key Personnel 10
4. Training Program 5
B. Experience and Past Performance 20 points
1. Past Performance and Experience15
2. Experience in use and maintenance
of property 5
C. Preliminary Transition Plan 10 points
In section M.3, the RFP provided the applicable formula for
calculating price scores, based on a 40-point scale. Each proposal's
technical score would be added to its price score to calculate overall
score. An additional 5 points would be added to the scores of firms
that were determined eligible to receive a preference as a U.S. person
or qualified U.S. joint venture, as established by statute, 22
U.S.C.A. sec. 4864(c)(7) (West Supp. 1998), and explained in the RFP, and
the proposal receiving the highest total point score would be
considered to represent the best value to the government.
The Department of State received six offers by the closing date for
receipt of initial proposals, including S/G4's and Securis's. A
technical evaluation panel (TEP) reviewed and scored the initial
proposals. The TEP awarded S/G4's technical proposal 46 points,
assigning a score that was at or within 1 point of the maximum
attainable score for each of the subfactors except past performance
and experience; under this subfactor, S/G4 received only 5 of the
available 15 points. The TEP recognized that the protester
demonstrated recent experience in successfully managing guard
contracts of similar nature, but noted no strength, and indicated the
following weakness:
Reference checks revealed public information indicating possible
unscrupulous business practices. (See attached newspaper clips
dated August 1997). Until this matter is resolved, it raises the
question of whether the U.S. Government can afford to be
associated with this company.
Guard Contract Technical Evaluation Sheet, Narrative Supporting
Assigned Scores, Dec. 2, 1997, S/G4 at 2.
The August 1997 newspaper articles attached to the TEP's evaluation
referred to a security contract for more than 60 buildings in the
European Union in Brussels, which Group 4 Securitas began performing
in November 1992, and which was to be completed in November 1997. The
article referred to "large-scale corruption," both in obtaining the
contract and in its performance, alleging, for instance, that a "large
number of persons . . . were paid a salary by [Group 4] Securitas,
without providing any services." Agency Report at 20. The article
also alleged that "the managing director of [Group 4], the person
primarily responsible for the contract and for the related corruption
. . . was removed from the Belgian subsidiary only at the end of 1995,
i.e. two years after the discovery of the fact, and reassigned to the
international department of the group." Agency report at 22.
The TEP awarded Securis's technical proposal 59 points. Securis's
price was [deleted] Belgian Francs (BF), earning it a price score of
[deleted] points, while S/G4's price was[deleted] BF, resulting in a
score of [deleted] points.[2] Thus, Securis's combined technical and
price score for its initial proposal was [deleted] points and S/G4's
combined score, after the addition of 5 U.S. joint venture preference
points, was [deleted] points.
The contracting officer determined that the competitive range should
include the initial offers submitted by S/G4, Securis, and one other
slightly lower-rated firm. Discussion letters were sent to the
competitive range offerors, requesting written responses and best and
final offers (BAFO) by May 8, 1998. The contracting officer's letter
to the protester noted one weakness in S/G4's proposal concerning its
relief guards, and then specified the following agency concern:
Also, in 1997 various articles in the local press revealed
fraudulent practices by some of your company's executive officers
concerning a contract with the European Union. We would like to
know what was the outcome in this case and what measures were
taken to prevent this from reoccurring and how your company will
comply with the contract and maintain applicable standards of
conduct.
Contracting Officer's April 22, 1998 letter to S/G4.
The contracting officer's letter to Securis included only questions
regarding the firm's price proposal. Contracting Officer's April 22,
1998 letter to Securis.
All three competitive range offerors submitted responses to the
discussion questions. In its response, S/G4 provided additional
information regarding its relief guards and responded to the agency's
main concern with the following "European Commission statement":
1. The allegations made against former executive officers of our
company in various articles in the local press in 1997 related to
the acquisition of the European Commission (EC) guarding contract
in 1992 and the implementation of this contract in its early
stages.
2. These allegations have been thoroughly investigated by us as
well as our parent company, Group 4 Securitas (International)
B.V. The investigation has not yet been fully completed. It
seems, however, that in respect of the contract in question
certain irregularities involving our company may indeed have
taken place, whilst other allegations in the press have proven to
be incorrect.
3. Since this episode, new management has been put in place in
our company: the officer, who had management responsibility for
our company at the time, has since left the Group. Since 1994,
we have introduced new procurement and contract compliance
procedures in our company. Our company also obtained ISO 9000
accreditation.
4. It is our policy to continuously strive to improve the
quality of our services and performance. We are confident that
under the present circumstances and modus operandi of our
company, there cannot be a recurrence of any historic bad
practice.
S/G4 Response to Discussion Questions, Enclosure C.
The protester also increased its price to [deleted] BF (approximately
$[deleted]). S/G4 BAFO at 11. Securis submitted its BAFO, reducing
its price to 278,628,853 BF (approximately $7.02 million). Price
Negotiation Memorandum at 1. The TEP reviewed the BAFO submissions
and determined a consensus evaluation score for each of them.[3]
Based on the additional information S/G4 had provided regarding its
guards, the TEP increased its technical score in this area by 1 point.
The TEP did not change S/G4's technical score for past performance,
noting no strengths in this area in its evaluation report, and noting
the following weakness:
Reference checks revealed publicly known questionable business
practices reported in Belgium news media. Allegations concerning
certain irregularities involving Group 4 are alleged to have
taken place.
Guard Contract Technical Evaluation Sheet, Narrative Supporting
Assigned Scores, May 22, 1998, S/G4 at 2.
In a memorandum documenting the negotiations and source selection
decision, the contracting officer similarly stated:
Best and Final addressed the question of the relief guards in
relation to organization and management. However, allegations
concerning certain irregularities involving Group 4 Securitas are
alleged to have ... taken place and remain a point of concern for
Post.
Price Negotiation Memorandum at 1-2.
S/G4's BAFO received 47 technical points and 38.65 price points, and
after the addition of 5 points for the U.S. person preference, the
total score was 90.65 points. Securis's BAFO received 59 technical
points and 37.08 price points, resulting in a total score of 96.08
points. Price Negotiation Memorandum, Attachment B at 1. The third
offeror's total score was the lowest.
The contracting officer selected Securis for award, based on the
firm's highest total point score. Price Negotiation Memorandum at 2.
After receiving notice of the award to Securis, S/G4 requested and
received a debriefing, and this protest followed.
S/G4 primarily challenges the agency's evaluation of its proposal
under the past performance evaluation factor, alleging that the firm's
low score in this area reflected an arbitrary and unfair evaluation
that was not properly documented.
In reviewing the allegations concerning the propriety of a technical
evaluation, we do not independently evaluate proposals or substitute
our judgment for that of the agency evaluators, but rather review the
evaluation to ensure that it was reasonable and consistent with the
terms of the solicitation and applicable law and regulations. Proteus
Corp.; United Int'l Eng'g, Inc., B-270094, B-270094.2, Feb. 8, 1996,
96-1 CPD para. 165 at 4. A protester's mere disagreement with the
agency's evaluation does not render it unreasonable. CORVAC, Inc.,
B-244766, Nov. 13, 1991, 91-2 CPD para. 454 at 5.
Here, the RFP stated that the agency could use past performance
information obtained from sources other than those identified by the
offeror when it evaluated each offeror's past performance. The agency
report summarizes the allegations that the TEP considered in its
evaluation of S/G4's past performance as follows:
1) Group 4 obtained the European Union security guard services
contract in 1992 by corrupt means;
2) additional corruption problems occurred during contract
performance, including the payrolling of persons who performed no
work on the contract;
3) the practices were sanctioned by senior Group 4 managers; and
4) Group 4 acted slowly and ineffectively in response to the
problems, reassigning the principal culprit rather than
dismissing him.
Agency Report at 34.
S/G4 raises a number of specific objections to the past performance
evaluation: that the allegations were "stale"; that the agency failed
to give evaluation credit for many other, successfully completed
contracts listed in the protester's proposal; that the agency
evaluated the competing proposals in an inconsistent manner; that the
agency failed to consider steps S/G4 has taken to prevent recurrence
of the alleged problems; and that the allegations only concerned one
member of the 3-firm joint venture (Group 4 Securitas), whose role
S/G4 characterizes as "providing administrative resources only and
support in meeting Belgian licensing and labor requirements." Protest
Comments of August 14, 1998, at 4. In essence, S/G4 argues that the
evaluation was unreasonable because the agency gave the allegations of
corruption too much significance: so much significance that they
could not be mitigated by the passage of time, could not be outweighed
by good performance under other contracts, could not be treated like
other types of performance problems, and could not be corrected by the
offeror's generalized assurances that they would not recur. We do not
find these arguments persuasive.
We recognize an agency's interest in ensuring the highest level of
reliability and effectiveness in guard services contracts, see
generally Integrity Int'l Sec. Servs., Inc., B-276012, May 1, 1997,
97-1 CPD para. 157 at 2-3, and find the agency's reasoning here
unobjectionable. In particular, the record does not support S/G4's
assertions; indeed, S/G4's explanation letter in its BAFO
substantially corroborates the agency's concerns. For example, while
the protester characterizes the allegations as "stale," it stated in
its BAFO response that the company's investigation had not yet been
completed. While it argues in its protest comments that "S/G4 made an
appropriate and adequate response . . . which should have completely
allayed the Embassy's concerns," Protest Supplement of July 21, 1998,
at 10, its BAFO response in fact conceded that "certain
irregularities" had taken place and provided only generalized and
conclusory statements regarding corrective steps that had been taken.
Although S/G4 stated that "the officer who had management
responsibility for our company at the time has since left the Group,"
S/G4 Response to Discussion Questions, Attachment C, it has not
mentioned any action taken against other employees or managers who
actually participated in the admitted "irregularities," nor does it
address the fact that the managing officer was apparently permitted to
transfer within the organization, and was not dismissed. Regarding
the limited role of Group 4 Securitas, this firm is described in
S/G4's proposal as "the Operating Team Member," which has "full
authority and support of Securiguard Inc. and the Group 4 companies
for implementation and management of the security services provided
under this contract." S/G4 Proposal, Executive Summary at 2.
In sum, S/G4 did not refute the allegations with a detailed factual
account of its past, present or future actions. On the contrary, the
protester conceded both that its own investigation of the matter was
still not complete--without disclosing any specifics regarding the
results of the investigation thus far, or why it was taking so
long--and that "certain irregularities involving our company may
indeed have taken place," without any indication of what those
"irregularities" involved. Further, although the agency expressly
asked for information regarding "what measures were taken to prevent
this from recurring and how your company will comply with the contract
and maintain applicable standards of conduct," the protester's reply
essentially provided only conclusory statements, vaguely referring to
"new procurement and contract compliance procedures" that were
introduced in 1994, without specifying what those procedures were, and
generalized assurances about the firm's policies and its confidence
that there will be no recurrence of bad practices. In these
circumstances, S/G4's explanation essentially confirms its
problematical past performance, and the Department of State reasonably
concluded that S/G4 had not provided any meaningful refutation of the
allegations concerning its past performance, and that those unresolved
charges of corruption in the past cast sufficiently serious doubt
about S/G4's past performance to warrant a low ranking in this area.
While S/G4 also complains that it was not credited for successful past
performance that it listed in its proposal, in fact, the record
discloses that the TEP did recognize and credit S/G4 for
"demonstrat[ing] recent experience in successfully managing guard
contracts of similar nature." Guard Contract Technical Evaluation
Sheet, Narrative Supporting Assigned Scores, May 22, 1998, S/G4 at 2.
S/G4 also argues that the evaluation and source selection were
inadequately documented, and that gaps in the record "make it
impossible to understand the basis for award." Protest Supplement of
July 21, 1998, at 15. On the other hand, the protester asserts that
"[i]t is clear from the record that the major reason why Securis
emerged as the awardee instead of S/G4 was because the firm received a
score of 15 for past performance and S/G4 only received a score of 5."
Id., at 16.
To the extent S/G4 is arguing that the TEP failed to provide any
contemporaneous documentation of the basis for the score it assigned
S/G4's past performance when it reviewed S/G4's response to the
discussion questions, we agree that the evaluation record could have
been more complete. An agency must document its evaluation and source
selection documents in sufficient detail to show that they are not
arbitrary. See U.S. Defense Sys., Inc., B-245563, Jan. 17, 1992, 92-1
CPD para. 89 at 3. Here, we conclude that the agency has met that
standard. There is sufficient information in this record to
demonstrate that the protester's BAFO responses were in fact
considered; the fact that S/G4's score did not increase after it
responded to discussion questions reflects that the inadequate
additional information provided in those responses did not persuade
the evaluators that an increase in S/G4's score for past performance
was warranted. In addition to the consensus evaluation report
prepared by the TEP after discussions, the contracting officer
prepared a memorandum documenting the negotiations, commenting on
S/G4's discussion responses as follows:
Best and Final addressed the question of the relief guards in
relation to organization and management. However, allegations
concerning certain irregularities involving Group 4 Securitas are
alleged to have ... taken place and remain a point of concern for
Post.
Price Negotiation Memorandum at 1-2.
In light of our determination, above, that the agency's conclusions
regarding S/G4's past performance were reasonable and supported by the
record, we are not persuaded that the lack of a fuller,
contemporaneous record of the TEP's analysis on this point calls into
question these conclusions.[4]
To the extent S/G4 is arguing that the source selection decision was
inadequately documented, S/G4 misconstrues the basis for award, as
established in the RFP. Section M of the RFP provides a specific
formula to arrive at the overall proposal score "[t]o determine which
proposal represents the best value according to technical and price
factors." Under this formula, the technical score (calculated on a
60-point scale) and the price score (calculated on a 40-point scale)
were added together, along with 5 points to reflect a preference for
U.S. entities, where applicable. Here, Securis' BAFO received an
overall proposal score of 96.08 points, while S/G4's final score was
90.65 points. The protester argues that the agency was required to
perform a cost/technical tradeoff analysis to determine whether
Securis's technical superiority was worth the associated cost premium.
This argument is misplaced. The cost/technical tradeoff formula stated
in the RFP already accounted for both technical merit and cost. Our
Office has specifically recognized the permissibility of using such a
formula in selecting an offeror. General Offshore Corp.--Riedel Co.,
a Joint Venture, B-271144.2, B-271144.3, July 2, 1996, 96-2 CPD para. 42
at 7-8; Tulane Univ., B-259912, Apr. 21, 1995, 95-1 CPD para. 210 at 4.
Because Securis's BAFO earned the highest combined cost/technical
score under the specified formula, the agency was not required to
perform any further cost/technical tradeoff analysis to justify the
selection decision. Id. To the extent S/G4 is objecting to the use
of the formula to determine the best value, its objection is untimely
raised, since the formula was specified in the RFP; protests based
upon alleged improprieties in a solicitation which are apparent prior
to the closing time for receipt of initial proposals must be filed
prior to that closing time. 4 C.F.R. sec. 21.2(a)(1) (1998).
S/G4 has raised a number of other objections relating to the propriety
of the evaluation of its proposal in connection with certain other
evaluation factors. However, these alleged improprieties could result
in no competitive prejudice to S/G4 under the evaluation, in light of
our determination, above, that the agency's evaluation and rating of
past performance were reasonable. Under the BAFO evaluation, the
protester received scores under each of the remaining evaluation
factors that were at or only 1 point short of the maximum score. Even
if S/G4 had received the maximum number of points available under each
of the remaining evaluation factors, its overall score would remain
lower than Securis's score.[5] Since competitive prejudice is an
essential element of a viable protest, see Lithos Restoration, Ltd.,
B-247003.2, Apr. 22, 1992 92-1 CPD para. 379 at 5, we will not consider
these objections to the evaluation.
The protest is denied.
Comptroller General
of the United States
1. The protesting firm is a joint venture consisting of three
companies: Securiguard, Inc., and Group 4, Inc., both U. S.
corporations, and Group 4 Securitas-IMS S.A., a Belgian firm.
2. Under the exchange rate provided in the agency report, 36.69 BF to
$1, the proposed prices are in the range of $6 to $7 million.
3. Although the protester has questioned whether the technical
evaluation of its BAFO was conducted by the full TEP, because only one
member signed the evaluation sheet included in the agency report, all
four members signed an affidavit submitted to us in a supplemental
agency report attesting to the fact that the evaluation was a
consensus effort, and that the member who signed the evaluation report
did so as a representative of the entire panel.
4. We note, however, that the practices described in the agency
report--maintaining only minimal documentation and routinely
destroying individual evaluations after consensus is reached--intended
to streamline the process and minimize the administrative burdens on
post personnel--might not be adequate in a different fact situation,
for example, where the basis for the consensus scores was not
immediately apparent without additional information.
5. If S/G4 received a perfect score under each of the remaining
technical evaluation factors, it would have 30 points for Management
Plan, 10 points for Experience and Past Performance, and 10 points for
Preliminary Transition Plan, resulting in a technical score of 50
points (on a 60-point scale). Added to its 38.65 price points and its
5 U.S. preference points, its overall total score would have been
93.65 points, which would remain lower than Securis's overall score of
96.08 points.