BNUMBER: B-281285
DATE: January 21, 1999
TITLE: Browning Ferris Industries of Hawaii, Inc., B-281285, January
21, 1999
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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:Browning Ferris Industries of Hawaii, Inc.
File: B-281285
Date:January 21, 1999
Kenneth D. Brody, Esq., McMahon, David & Brody, for the protester.
Vernon F.L. Char, Esq., Char, Sakamoto, Ishii, Lum & Ching, for
Honolulu Disposal Services, Inc., an intervenor.
Richard G. Welsh, Esq., and Jan E. Takamine, Esq., Naval Facilities
Engineering Command, for the agency.
Paula A. Williams, Esq., and Michael R. Golden, Esq., Office of the
General Counsel, GAO, participated in the preparation of the decision.
DIGEST
1. Protest that contracting agency's evaluation of awardee's proposal
was flawed and otherwise improper is denied where the evaluation was
reasonable and consistent with the solicitation's stated evaluation
factors. Agency was not required to conduct a more extensive
investigation of the awardee's past performance as a result of False
Claims Act litigation involving the awardee, where the litigation had
been resolved through a settlement agreement.
2. Evaluation of protester's proposal was reasonable where it was
performed in accordance with stated evaluation factors and reflected
valid criticisms of protester's past performance and proposed
subcontracting commitments.
3. Agency reasonably may evaluate an offer as posing a higher past
performance risk where the offeror's performance history as stated in
its proposal is less relevant to the solicited requirements than that
of offerors rated as having a low performance risk.
DECISION
Browning Ferris Industries of Hawaii, Inc. (BFI) protests the award of
a contract to Honolulu Disposal Services, Inc. (HDS) under request for
proposals (RFP) No. N62755-98-R-7014, issued by the Department of the
Navy, to obtain refuse collection services at various military
installations on Oahu, Hawaii. BFI contends that the agency's past
performance and small business evaluations were flawed and that, as a
consequence, the agency failed to award the contract on the basis of
the best value to the government, as required by the RFP.
We deny the protest.
The RFP, which consolidates two existing refuse service contracts, was
issued on an unrestricted basis and contemplated award of a contract
for a base period and four 1-year options. The solicitation provided
a best value basis for award and identified the following evaluation
factors: past performance, small business, and price. Past
performance was of greater importance than the small business factor,
and the past performance and small business factors combined were of
equal importance to price. RFP, Amend. No. 0002, sec. M.2, M.5.
As relevant here, past performance was to be evaluated on similar
contracts completed within the past 3 years or currently in progress
using a past performance survey to determine the quality of work
previously performed and to assess the relative capability of the
offeror to effectively accomplish the solicitation requirements. In
addition, the solicitation advised that the agency would obtain past
information from other sources. The past performance factor was
comprised of the following equally weighted past performance elements:
(1) quality of service, (2) schedule, (3) business relations, and (4)
management of key personnel.[1] Id.
Under the small business evaluation factor, large business offerors
were to submit (1) a subcontracting plan in which the offeror
identifies and commits to utilizing small business (SB), small
disadvantaged business (SDB), women-owned small business (WOSB), and
historically black college and university or minority institution
(HBCU/MI), and (2) a past performance report on five most recently
completed contracts showing compliance with the firm's plan for the
utilization of SB, SDB, WOSB, and/or HBCU/MI; any ratings obtained on
implementation of subcontracting plans on five recently completed
Department of Defense (DOD) contracts; and information on existing or
pending mentor-protege agreements. RFP, Amend. 0002, sec. M.5.2.
Five firms, including BFI and HDS, submitted initial proposals.[2]
The agency included the proposals of the protester and HDS in the
competitive range; conducted discussions and evaluated revised
proposals; and requested and evaluated final proposal revisions. The
final evaluation results for the three remaining competitive range
offerors were as follows:
CRITERIA HDS BFI [DELETED]
Past PerformanceSatisfactory Satisfactory Satisfactory
Past Perf. Risk[3]Low Moderate Low
Small Business Acceptable Acceptable Acceptable
Total Price $10,887,956.57 [DELETED] [DELETED]
Post-Negotiation Business Clearance Memorandum, Sept. 30, 1998, at 5.
Based on the final evaluation results, the contracting officer, who
served as the source selection authority (SSA), selected HDS for award
as providing the best value to the government. In this regard, the
Post-Negotiation Business Clearance Memorandum, approved by the SSA,
noted that:
HDS and [DELETED] received overall Satisfactory ratings with low
risk. BFI received an overall Satisfactory rating with moderate
risk since the projects listed in their references were smaller
in size to the subject solicitation, and some doubt exists that
they can perform satisfactorily. None of the proposals contained
anything exceeding the requirements, so there are no tradeoffs to
consider or benefits associated with a higher price. Since all
offerors are equal for past performance, HDS's lower price
provides the best value to the Government.
Id.
Accordingly, on October 2, the agency awarded the contract to HDS.
After receiving notice of the award and a debriefing, BFI filed this
protest.
BFI challenges nearly every aspect of the agency's evaluation that led
to the selection of HDS for award. BFI argues that its ratings under
the past performance and small business factors, in every instance,
should have been higher, while HDS's corresponding ratings should have
been lower. In addition, it argues that its past performance risk
rating should have been better than the rating given to the awardee;
and that the SSA's selection decision was flawed. The overarching
focus of BFI's protest is its allegation that the Navy failed to
properly consider fraud charges brought against HDS under several of
its government contracts.
Where there is a challenge to the evaluation of proposals in a
negotiated procurement, it is not the function of our Office to
evaluate the proposals de novo. Rather, we will examine an agency's
evaluation only to ensure that it was reasonable and consistent with
the stated evaluation criteria and applicable statutes and
regulations, since determining the relative merits of competing
proposals is primarily a matter within the contracting agency's
discretion. Alcan Env't, Inc., B-275859.2, Apr. 11, 1997, 97-1 CPD para.
139 at 3. We have examined the evaluation here and conclude that it
was both reasonable and consistent with the evaluation scheme. We
discuss some key areas of the evaluation below.
PAST PERFORMANCE
As noted above, offerors were to provide references for similar
projects within the past 3 years. For purposes of rating proposals
under this factor, the RFP designated the following adjectival rating
system: exceptional, very good, satisfactory, marginal, and
unsatisfactory. RFP, Amend. 0002, sec. M.5.B.1a(3).
Past performance information for each offeror was obtained by the
agency through the use of past performance surveys. Although BFI's
proposal identified four references, the agency sent past performance
surveys only to the three references with the largest contract value
(i.e., (1) a 5-year contract with an average yearly value of $483,433,
to be completed in September 2002; (2) a contract valued at $425,153
per year, to be completed in July 1999; and (3) a contract valued at
$195,000 per year, completed in June 1998). Based on responses from
each of the three references, BFI was rated "very good" under quality
of service and "satisfactory" under the schedule, business relations,
and management of key personnel areas of the past performance factor.
Since the four areas are equally weighted, BFI's proposal received an
overall past performance rating of "satisfactory." BFI received a
"moderate" performance risk rating because the agency concluded that
some doubt exists that the firm could perform the requirements of this
solicitation, since its past and present contracts were much smaller
in size than the anticipated contract.
In contrast, HDS submitted references for three contracts which are
similar in size and complexity to this solicitation. Based on the
survey responses, HDS received a "satisfactory" rating for each of the
four areas under the past performance factor although some minor
problems were noted, for which the corrective actions taken were
satisfactory. For example, under quality of service, one reference
responded that a "few [deficiency reports] were issued throughout the
course of this contract due to nonperformance of services and
unsatisfactory condition of containers. Contractor [HDS] took
corrective action and provided measures to prevent recurrence."
Contractor Performance Survey for Contract No. N62755-93-D-2982, July
8, 1998, at 2. HDS's proposal received an overall past performance
rating of "satisfactory" with "low" risk since the agency concluded
that little doubt exists that HDS--the incumbent--can satisfactorily
perform the required services.
BFI takes issue with the agency's conclusions regarding HDS's past
performance. The protester insists that the agency improperly failed
to consider information concerning allegations of fraud against HDS
under 20 government contracts. The protester states that on May 20,
1997, the United States Attorney for the District of Hawaii decided to
take over two separate qui tam relator suits filed under the False
Claims Act, 31 U.S.C. sec. 3729-33 (1994), in connection with HDS's
performance of its Army, Navy, and Coast Guard contracts for refuse
collection and disposal services. See 31 U.S.C. sec. 3730(b)(4)(A).
According to the protester, the government's decision to take over the
litigation was the result of an investigation by Army, Navy and other
agency investigators into HDS's alleged practice of commingling
government and commercial waste in violation of its government
contracts, resulting in an alleged overstatement of the monthly refuse
tonnage used to bill the government for reimbursement of landfill
fees. Subsequent to the government's decision to take over the
litigation, HDS entered into a settlement agreement on May 21, 1997.
Under the terms of the agreement, HDS denied any wrongdoing but agreed
to pay double damages in connection with the disputed overcharges
under these 20 contracts, and the cases were dismissed with prejudice.
In the context of the broad discretion afforded contracting officials
in the evaluation of past performance, the agency's determination that
the past performance of HDS was satisfactory and posed a low
performance risk is unobjectionable, notwithstanding the False Claims
Act litigation. See University of Dayton Research Inst., B-260709,
July 10, 1995, 95-2 CPD para. 17 at 7. As the protester points out, the
contracts listed in HDS's proposal for purposes of evaluating its past
performance were included in the qui tam litigation. As discussed
above, the agency obtained and reviewed performance survey responses
regarding the firm's work under these contracts with the government.
Even though the survey responses included some negative comments
concerning HDS's performance, the responses were consistently positive
regarding the firm's past performance in spite of the False Claims Act
litigation. When the Navy subsequently requested a past performance
survey from the Army activity that was primarily involved with the
False Claims Act litigation, the survey responses (which included a
copy of the settlement contract modification resolving the False
Claims Act suits) were generally positive. After considering all of
the information in the past performance survey response, the agency
concluded that HDS's past performance under this Army contract was
satisfactory overall, and that the survey comments were consistent
with those received from the three references listed by HDS, i.e., the
local Navy and Coast Guard activities which also had contracts
included in the False Claims Act suits.
Moreover, we do not think the agency was required to do a more
extensive investigation of HDS's past performance than it did here,
notwithstanding BFI's contentions that the False Claims Act litigation
warranted a more in-depth review than that obtained through the use of
past performance surveys. On the basis of the record before us, it
appears that the contract references were aware of the False Claims
Act litigation when they prepared their survey responses; likewise,
the contracting officer/SSA was also aware of the litigation, given
the information provided by the references and a Dun & Bradstreet
report that was obtained by the agency in August 1998. Thus, our
review shows that the Navy's evaluation of past performance was
reasonable.
Similarly, the agency's past performance evaluation supported the
determination of a "low" past performance risk rating for HDS. In our
view, it is reasonable to give a better evaluation rating to offerors
with successful performance on more relevant contracts. See, e.g.,
Ogden Support Servs., Inc., B-270012.4, Oct. 3, 1996, 96-2 CPD para. 137
at 3; University of Dayton Research Inst., supra, at 7. Since HDS
reported more relevant successful experience than BFI, the better
performance risk rating assigned to its proposal was reasonable.
SMALL BUSINESS
Section L of the RFP stated that large business offerors such as BFI
and HDS should submit a subcontracting plan as described in FAR sec.
52.219-9, "Small, Small Disadvantaged and Women-Owned Small Business
Subcontracting Plan."[4] RFP, Amend. 0005, sec. L.10c(2)(a). As
previously stated, the RFP supplied offerors with specific guidance as
to what should be included in these plans and the source selection
plan, which was not disclosed to offerors, described how proposals
would be rated. In evaluating proposals, the Small Business
Specialist would assign ratings, of which the two that are relevant to
this protest are as follows:
[DELETED]
BFI objects to the agency's evaluation of its own and the awardee's
revised proposals under this evaluation factor. According to the
protester, the agency "unfairly minimized or simply ignored the
unassailable fact that BFI demonstrated a commitment to small business
subcontracting that was nine times greater than the virtual
noncommitment of HDS"; as such, the protester claims that the agency's
rating of "acceptable" for both firms was "flawed and irrational."
Protester's Additional Comments, Dec. 10, 1998, at 1. In its view,
had the agency properly evaluated its revised subcontracting plan,
which demonstrated firm commitments to utilize certain small
businesses, its proposal would have received the higher rating of
"exceptional." Protester's Comments, Nov. 23, 1998, at 21.
The record shows that the protester's and the awardee's initial
subcontracting plans were rated "marginal" under this factor. BFI was
assigned a "marginal" rating because its proposal did not address the
solicitation's SDB and WOSB participation goal of 5 percent of the
value of the contract. Following discussions, the protester's
proposal was rated "acceptable" based on its revised subcontracting
plan which satisfied the statutory goal for SDBs and WOSBs and
included firm commitments with named subcontractors.
Our review of the record indicates that the Navy did not consider that
the small business subcontractors proposed or the firm commitments of
these subcontractors included in BFI's revised subcontracting plan was
a sufficient basis to rate BFI's revised proposal "exceptional" rather
than "acceptable." We note that nothing in the protester's revised
subcontracting plan evidences "extensive efforts and commitments in
subcontracting" as contemplated by the rating scheme quoted above.
Offerors also were required to meet a past performance
requirement--the extent to which the prime has historically been
successful in establishing realistic yet challenging goals and
evidences ability to achieve them. In its revised subcontracting
plan, however, the protester noted that since it had not been awarded
a large military refuse contract it could not provide a record of past
performance on DOD contracts to demonstrate its ability to meet the
subcontracting goals. Nonetheless, the protester's proposal was rated
"acceptable" under the past performance subfactor based on its
approval to participate as a mentor in DOD's pilot mentor-protege
program. However, the Small Business Specialist noted that one of the
conditions for approving a mentor-protege agreement is that the
contractor has demonstrated its ability to meet its subcontracting
goals, which BFI could not show. Thus, contrary to BFI's assertions,
while its subcontracting plan was properly credited for the
subcontracting goals, firm commitments with subcontractors, and
participation in the mentor-protege program mentioned here, nothing in
the evaluation record or BFI's revised proposal suggests that a higher
rating under this factor was justified.
With regard to the evaluation of HDS's proposal under this factor, the
record shows that HDS was advised during discussions that it had not
provided any information under the past performance small business
subfactor, and that its proposed plan to subcontract a minimal amount
of the maximum dollars awarded was below the agency's 20-percent goal.
As a result, HDS revised its proposal and increased the percentage of
the total contract price to be subcontracted and specifically
identified the subcontractors with which it has firm commitments.
With regard to the historical rate of subcontracting under prior
agency contracts, HDS disclosed that it had no subcontracting plan
under its previous Navy contract because its policy under that
contract was to perform the services in-house; therefore, its
subcontracting goal for that contract was zero. The record indicates
that the Small Business Specialist reviewed the documentation provided
by HDS and the explanation contained therein regarding the firm's
prior policy on subcontracting and assigned a rating of "acceptable."
While the protester asserts that the Small Business Specialist's
rating of "acceptable" under the past performance small business
subfactor is not supported by HDS's response to discussions, the
record shows that HDS's revised subcontracting plan fully disclosed
its lack of a subcontracting plan under that prior Navy contract, and
provided an explanation for the lack of subcontracting. The record
shows that the agency clearly considered HDS's response to the
discussion questions and decided not to penalize HDS because the firm
did not use subcontractors under the prior contract and performed all
work in-house. Thus, the Small Business Specialist simply rated HDS
acceptable primarily based on its subcontracting plan submitted for
this contract. In short, this is a matter the agency clearly
considered, and our review of the record, and of the protester's
contentions, does not lead us to conclude that the agency's assessment
was unreasonable or inconsistent with the RFP.
Nonetheless, even if, as BFI argues, its rating should have been
higher than HDS under the small business factor, we do not believe
that this change could have reasonably affected the selection
decision. Nothing in the record supports the reasonableness of the
agency paying approximately [DELETED] more for a
somewhat better subcontracting plan, especially where price was the
most
important factor, and the small business factor, the least important.
The protest is denied.
Comptroller General
of the United States
1. The RFP contained an example of the past performance survey which
would be sent to the references identified by each offeror; the survey
included the past performance elements listed above.
2. BFI and HDS are large business offerors; HDS is the incumbent
contractor for one of the contracts which this protested solicitation
will replace.
3.[DELETED]
4. The solicitation contained a sample subcontracting plan.