BNUMBER: B-281278
DATE: January 21, 1999
TITLE: Ventura Petroleum Services, Inc., B-281278, January 21, 1999
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Matter of:Ventura Petroleum Services, Inc.
File: B-281278
Date:January 21, 1999
Joseph A. Cagianut for the protester.
William E. Hughes, III, Esq., Whyte, Hirschboeck & Dudek for Laidlaw
Environmental Services, Inc., an intervenor.
George N. Brezna, Esq., Lis B. Young, Esq., and Frank Kotarski, Esq.,
Department of the Navy, for the agency.
Linda C. Glass, Esq. and Paul I. Lieberman, Esq., Office of the
General Counsel, GAO, participated in the preparation of the decision.
DIGEST
1. Protest against award based on higher technically rated,
lower-priced proposal alleging that proposed price is unreasonably low
is denied where the agency reasonably determined that the proposed
price was reasonable on the basis that the awardee, which was
experienced and knowledgeable with respect to the work to be
performed, proposed a price that was substantially comparable to the
government estimate and to another offeror's price.
2. Protester's contention that agency misevaluated its proposal with
respect to past performance is denied where the record shows that the
evaluation was reasonable and in accordance with the stated evaluation
factors.
DECISION
Ventura Petroleum Services, Inc. (VPS) protests the award of a
contract to Laidlaw Environmental Services, Inc. under request for
proposals (RFP) No. N68711-98-R-4008, issued by the Department of the
Navy for hazardous waste management services for the Naval Air Weapons
Station, Point Mugu, California. VPS challenges the agency's
evaluation of its proposal and the reasonableness of the awardee's
proposed price.
We deny the protest.
The RFP, issued February 20, 1998, provided for the procurement of
various hazardous waste management services through the award of a
fixed-price contract with an indefinite-quantity component for a
1-year base period with four 1-year options. Award was to be made to
the offeror whose proposal represented the best value in accordance
with solicitation factors and subfactors. RFP sec. L.2(f). The RFP
further stated that the government intended to award a contract
without discussions. RFP sec. L.2(f)(4). The RFP identified price and
technical as evaluation factors to be weighted approximately equal,
with price to be evaluated for realism and reasonableness. RFP sec.
M.1(a). The technical evaluation factors consisted of past
performance, key personnel and commitment to small business, in
descending order of importance. Under the past performance subfactor,
the RFP required offerors to provide information on past performance
in the public and/or private sector, including any proposed
subcontractors' past performance over the last 3 years in providing
the services required by the solicitation. The RFP also stated that
the government may contact clients other than those identified. RFP sec.
M.1(II)(1)(a).
VPS submitted written questions concerning the solicitation
requirements 15 days after a March 11 cutoff date for questions and
only a day before the amended closing date for receipt of proposals.
VPS's questions were responded to orally by the agency on March 27.
Agency Report at 2. The agency received five proposals by the March
27 amended closing date, which were evaluated as follows:
Technical Technical Risk Price
Rank Rating
Laidlaw Exceptional Low/None $2,780,150
VPS Good Low/None $8,690,996
Offeror A Acceptable Med/Low $9,879,200
Offeror B Capable Medium $3,514,982
Offeror C Capable High $3,531,537
Agency Report, Tab 7, Business Clearance Memorandum, at 5.
The government estimate for this effort was $3,669,815. Agency Report
at 1.
The Laidlaw proposal, ranked first technically, received an
exceptional rating under all technical evaluation factors. The
evaluators determined that Laidlaw had notable strengths in that its
past and current contract work on government contracts as a prime
contractor was very similar to the work required by the solicitation.
Agency Report, Tab 7, at 6. Laidlaw's references stated that
Laidlaw's timeliness, quality control, cooperation and customer
satisfaction were above average and it received exceptional ratings
for all factors. Id. The evaluators especially noted Laidlaw's above
average performance and outstanding customer service in identifying
and fixing major compliance problems at Public Works Center San
Francisco.
The VPS proposal, ranked second technically, was considered by the
evaluators as having done an excellent job of explaining VPS's past
performance at Point Mugu as the subcontractor for the waste
management services contract, and as demonstrating knowledge of the
work requirements since VPS has performed them for the last 5 years.
However, the contracting officer's technical representative (COTR) for
the hazardous waste portion of the Point Mugu contract stated that
although VPS's timeliness and quality control had improved with time,
its timeliness and correction of inventory reports on the hazardous
waste database were slow at the beginning of the contract. Id. VPS's
performance was considered acceptable, but the COTR believed that
VPS's cost proposal was moderately inflated and not reasonable. The
evaluators also interviewed the customer for the underground tank
construction at San Nicolas Island. On a scale of 1-10, the customer
rated VPS's overall performance as a 3. This customer stated that
VPS's work was untimely, its quality control was unsatisfactory, and
that VPS was uncooperative with the customer with respect to certain
severe differences of opinion. Id.
In its price analysis, the evaluators found that the data available
for the price analysis made it difficult to determine the
reasonableness of the total proposals. Price Evaluation Board Report
at 2. However, the evaluators determined that an analysis of the
fixed-price component of the contract established that Laidlaw's
proposed prices compared favorably to those of another offeror and to
the government estimate and, primarily on this basis, determined that
Laidlaw's prices were reasonable. Laidlaw's fixed-price proposal
component was for $1,526,400, while VPS's comparable proposal was for
$1,744,573.60. The indefinite-quantity component of the RFP consisted
of contract line items (CLIN) for work that exceeded the fixed-price
component, for which the RFP provided detailed estimates, including
the specific quantity of tasks to be performed for a listed range of
services for removal, disposal and cleaning of hazardous waste
materials. RFP sec. B. For example, under CLIN No. 0002AA, Pumping and
Transportation for Bulk Fluid Waste, the RFP required offerors to
provide prices for the following estimated quantities:
Supplies/Services Estimated Quantity Unit
0 to 1,000 Gallons 4 Hauls
1,001 to 2,000 Gallons 4 Hauls
2,001 to 3,000 Gallons 4 Hauls
3,001 to 4,000 Gallons 4 Hauls
4,001 to 5,000 Gallons 4 Hauls
RFP sec. B.
The proposed prices for each estimated quantity were to include the
cost of all material, labor and equipment necessary to perform the
work. RFP sec. C.6. The CLIN price consisted of the total of the prices
for each of the estimated quantities. Thus, all offerors were
proposing fixed prices for the identical estimates of work, and the
variations in the proposed prices appear to have resulted from the
offerors' use of different approaches, such as varying mixes of labor,
material and equipment, to satisfy the specified requirements. The
offerors' total proposal prices were determined by adding the prices
for the fixed-price component of the proposal to all of the CLINs
under the indefinite-quantity portion. RFP sec. B at B-17.
The source selection board (SSB) recommended award to Laidlaw based on
Laidlaw's exceptional technical rating coupled with its low and
reasonable price. The SSB concluded that although Laidlaw's total
price was 24 percent lower than the total government estimate, it was
apparent from Laidlaw's proposal that it had performed these types of
services before, had extensive knowledge of the work required, and was
in a good position to accurately assess what costs were associated
with the work requirements. As a result, the SSB found that Laidlaw's
proposed prices were reasonable. Agency Report, Tab 7, at 9.
On September 14, the source selection authority (SSA) determined that
discussions would not be necessary, that Laidlaw's proposed price was
reasonable, and that award based on the initial proposals should be
made to Laidlaw as offering the best value to the government because
Laidlaw had submitted the lowest priced, highest rated technical
offer. Memorandum From the SSA at 1. Award was made to Laidlaw on
September 24.
VPS takes exception to the agency's determination that Laidlaw's price
was reasonable. VPS maintains that Laidlaw cannot perform all the
tasks required by the solicitation successfully and effectively at its
proposed price. The protester takes the position that, as indicated
in the agency's price evaluation report, the indefinite-quantity
portion of the contract generated massive price differentials between
offerors, so that the price reasonableness of the proposals cannot be
determined.[1]
Where, as here, the award of a fixed-price contract is contemplated, a
proposal's "cost realism" is not ordinarily considered, since a
fixed-price contract places the risk and responsibility for contract
costs and resulting profit or loss on the contractor. HSG-SKE,
B-274769, B-274769.3, Jan. 6, 1997, 97-1 CPD para. 20 at 5. However,
since the risk of poor performance when a contractor is forced to
provide services at little or no profit is a legitimate concern in
evaluating proposals, an agency in its discretion may, as it did here,
provide for a price analysis in the solicitation of fixed-price
proposals. Volmar Constr., Inc., B-272188.2, Sept. 18, 1996, 96-2 CPD para.
119 at 5. The Federal Acquisition Regulation (FAR) provides a number
of price analysis techniques that may be used to determine whether
prices are reasonable and realistic, including a comparison with other
prices received in response to the solicitation, FAR sec.
15.404-1(b)(2)(i), and with independent government cost estimates, FAR sec.
15.404-1(b)(2)(v). The depth of an agency's price analysis is a
matter within the sound exercise of the agency's discretion, and we
will not disturb such an analysis unless it lacks a reasonable basis.
Ameriko-OMSERV, B-252879.5, Dec. 5, 1994, 94-2 CPD para. 219 at 4; Ogden
Gov't Servs., B-253794.2, Dec. 27, 1993, 93-2 CPD para. 339 at 7.
Here, the RFP simply stated that price proposals would be evaluated
for reasonableness and realism, without specifying the manner or
degree of analysis to which proposals would be subjected. The record
in this case shows that the price evaluation board compared Laidlaw's
price with the other offerors' prices, and with the government
estimate--techniques which are explicitly recommended by the FAR, and
which constituted a legally sufficient price analysis under this RFP.
The price evaluation board examined Laidlaw's price and determined
that Laidlaw's price was 24 percent below the government estimate, and
that Laidlaw's price for the fixed portion of the work was next to the
lowest received and 6 percent higher than the government estimate.
Price Evaluation Board Report at 2. Laidlaw's proposal for the hourly
rate for the environmental technician is $30, compared to the
government estimate of $27.96 and the other offerors' proposed rates
ranging from $24.18 to $55.00 per hour. Based primarily on its
analysis of the fixed-price portion of the requirement, the agency
concluded that Laidlaw's price was reasonable.
VPS's objection to the price analysis is essentially based on the
premise that the indefinite-quantity portion of the requirement is
such that it is not possible to accurately determine the
reasonableness of proposed prices. However, the estimated quantity
structure was set forth in the solicitation. To the extent that the
crux of VPS's protest in this regard is that the requested pricing
structure under the solicitation was defective, this constitutes an
untimely filed allegation of an apparent solicitation impropriety
because the protest was not filed prior to the time set for the
receipt of initial proposals. 4 C.F.R. sec. 21.2(a)(1).
To the extent that VPS also appears to question Laidlaw's ability to
perform the contract at its proposed price, that allegation concerns
Laidlaw's responsibility. Our Office will not review the agency's
determination that Laidlaw was responsible absent a showing of
possible bad faith by government officials, or the misapplication of
definitive responsibility criteria, none of which are present here. 4
C.F.R. sec. 21.5(c); Oshkosh Truck Corp., B-252708.2, Aug. 24, 1993, 93-2
CPD para. 115 at 6 n.3. Further, VPS's allegation that Laidlaw submitted
a below-cost offer provides no basis for protest because there is no
prohibition against an agency accepting a below-cost offer on a
fixed-price contract. Shel-Ken Properties, Inc.; McSwain and Assocs.,
Inc., B-261443, B-261443.2, Sept. 18, 1995, 95-2 CPD para. 139
at 3. In sum, the agency's determination that Laidlaw's proposed
price was reasonable is unobjectionable.
VPS next argues that the agency improperly downgraded its past
performance from exceptional to good because VPS was improperly
appraised for weaknesses in its performance as a subcontractor on the
basis of requirements that were actually the responsibility of the
prime contractor. VPS also objects to the agency's use of references
that were not listed in VPS's proposal.
In reviewing a protest challenging an agency's evaluation of
proposals, including the evaluation of past performance, we will
examine the record to ensure that the agency's evaluation was
reasonable and consistent with stated evaluation factors. Eagle
Design & Management, Inc., B-275062, Jan. 21, 1997, 97-1 CPD para. 79 at
4. We have reviewed VPS's proposal and the evaluation documents and
see no basis to question the reasonableness of the agency's evaluation
of VPS's past performance. In its proposal, VPS listed the work it
performed as a subcontractor for the hazardous waste management
services at Point Mugu, California. VPS specifically stated that it
managed the hazardous waste services portion of the contract and that
its scope of work included, but was not limited to, the following:
pre-collection and identification hazardous waste; collection of
hazardous waste for removal; maintenance of hazardous waste staging
areas; preparation for disposal of hazardous waste; removal of
hazardous wastes from San Nicolas Island and Santa Cruz Island; and
administration, tracking and data processing. VPS technical proposal,
vol. II, sec. 1.A.1. As noted above, the COTR for the hazardous waste
portion of that contract advised the evaluators that although VPS's
timeliness and quality control improved with time, VPS's timeliness
and correction of inventory reports on hazardous waste database were
slow at the beginning of the contract, and that while VPS's
performance was acceptable, he felt that VPS's cost proposal was
moderately inflated and not reasonable. Thus, contrary to the
protester's allegation, the record establishes that the protester was
properly downgraded for performance that its proposal specifically
stated was VPS's responsibility.
The record shows that the evaluators also interviewed the customer for
the underground storage tank construction at San Nicolas Island. This
reference expressed extreme dissatisfaction with VPS's work, stating
that the work was untimely, the quality control was unsatisfactory and
that VPS was uncooperative with the customer with which it had severe
differences of opinion. VPS's main objection is that this reference
should not have been used by the agency as part of the evaluation
because it was not included in VPS's proposal. However, the RFP
specifically advised offerors that in evaluating an offeror's past
performance, the government might contact clients other than those
identified. RFP Amendment
No. 0003 sec. M.1(II) (1). Accordingly, there was nothing improper in
the agency using references other than those provided by VPS. George
A. and Peter A. Palivos, B-245878.2, B-245878.3, Mar. 16, 1992, 92-1
CPD para. 286 at 6. In short, the record confirms the reasonableness of
the "good" rating assigned to VPS's proposal under the past
performance factor--the agency had a legitimate concern about the mix
of negative and positive past performance reference responses
received, and the negative responses justified an assessment of less
than exceptional under the factor.
The protest is denied.
Comptroller General
of the United States
1. VPS also protests that the solicitation contained non-biddable task
description/pricing and that the agency failed to answer certain
written questions. Both of these issues were required to have been
raised prior to the March 27 closing date for receipt of proposals.
Protests alleging improprieties in a solicitation which are apparent
prior to the time set for receipt of initial proposals must be filed
prior to that time. 4 C.F.R. sec. 21.2(a)(1) (1998). In addition, VPS
initially objected to the award having been made on the basis of
initial proposals. The agency addressed this allegation in its
protest report, explaining that the solicitation specifically provided
for award on the basis of initial proposals. Because VPS did not
respond in its comments, we consider VPS to have abandoned this
allegation. D & M Gen. Contracting, Inc., B-259995, B-259995.2, May
8, 1995,
95-1 CPD para. 235 at 2 n.2.