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.