BNUMBER: B-281331.3
DATE: March 22, 1999
TITLE: Kellie W. Tipton Construction Company, B-281331.3, March 22,
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:Kellie W. Tipton Construction Company
File: B-281331.3
Date:March 22, 1999
Sam Z. Gdanski, Esq., and Jeffrey I. Gdanski, Esq., for the protester.
Thomas J. Keuler, Esq., Denton & Keuler for Terry Land Development,
Inc., an intervenor.
Col. Nicholas P. Retson, LTC Richard B. O'Keefe, Jr., and Fredrick M.
Lewis, Esq., Department of the Army, 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. Agency termination of contract for the convenience of the
government is unobjectionable where, shortly after award, the agency
reasonably determined that the award had been predicated on an
obviously mistaken evaluation of another offeror's past performance
and that the corrected evaluation resulted in that other offeror
becoming in line for award.
2. Allegation that agency misevaluated proposals with respect to past
performance is denied where the record shows the agency evaluation was
reasonable and did not conflict with the solicitation evaluation
criteria. While the solicitation called for offerors to submit at
least 10 references, and the awardee did so, the solicitation did not
state that all 10 references would be evaluated, and the agency's
decision to evaluate only 5 references for all offerors did not
prejudice the protester and was otherwise unobjectionable.
3. Agency determination that allegedly enhanced hourly rates for two
line items did not represent a risk that the government would pay
unreasonably high prices is reasonable where award to offeror
proposing those labor rates results in lower price because the rates
apply only to two contingent labor categories which affect only a
small percentage of the total price.
DECISION
Kellie W. Tipton Construction Company (Tipton) protests the
termination for convenience of its contract for installation and
replacement of water and sewer lines at Fort Campbell, Kentucky
awarded by the Department of the Army, under request for proposals
(RFP) No. DAKF23-98-R-0219, and the Army's decision to award a
contract for these services to Terry Land Development, Inc. (TLD).
We deny the protest.
The RFP, issued on August 17, 1998, contemplated the award of a
fixed-price, indefinite-delivery, indefinite quantity (IDIQ) contract
for a base period with two
12-month option periods. RFP sec. 00100, para. 8. The RFP contained a price
list for the specific tasks to be performed which included cost for
labor, materials, and equipment. RFP amend. No. 0001, sec. 00010, at
00010-4. Additionally the schedule required prices to be submitted
for contract line items (CLIN) Nos. 0004 and 0005 for labor costs for
work to be performed in Kentucky and Tennessee, respectively, to be
used when required work was not included in the price list. RFP
amend. No. 0005, sec. 00010, at 00010-3. The RFP provided for award to
the offeror whose offer represents the best value after evaluation in
accordance with the factors and subfactors in the solicitation. RFP sec.
00100, para. 19.c(1). The RFP stated that the technical evaluation factor
was past performance, consisting of the two subfactors of customer
satisfaction (CS) and experience modification factor (EMF).[1] Id. para.
19.c(2). Technical (i.e., past performance) was significantly more
important than price, and of the technical subfactors, CS was
significantly more important than EMF. Id.
CS was to be evaluated based on information obtained from customer
references provided by offerors.[2] Id. para. 19.b.(1)(a)(1). Offerors
were required to identify a minimum of 10 contracts and subcontracts
performed within the last 3 years and similar to the current
requirement. Id. Specifically, the agency sent PPQs to firms
identified by the offerors as references regarding prior construction
work. Agency Report (AR), Tab 4, Source Selection Plan, at 1. The
PPQ consisted of a series of 10 questions regarding the quality of
work performed by the offeror for the firm responding to the
questionnaire. The questions were answered by circling a number from
1 through 5, with 5 denoting "EXCELLENT" and 1 denoting
"UNSATISFACTORY." Id. at 5th unnumbered page. The PPQ total was
calculated by adding the numerical results selected for each of the 10
questions. This result in turn was averaged with other PPQ and CS
results to arrive at a total CS score. AR, Cover Letter at 3.
The Army received seven proposals in response to the RFP. As a result
of the initial evaluation, Tipton's proposal was ranked first and
TLD's was ranked third. AR, Tab 7, Price Negotiation Memorandum, at
13th unnumbered page. The results of the initial evaluation were as
follows:
Offeror EMR/pts.[3]CS Total Tech. Score[4]Price ScoreTotal Score
Tipton (.81)/40 45.6 85.6 300 204.59 504.69
Offeror A (.87)/40 50.9 90.9 400 74.08 474.08
TLD (.82)/40 38.8 78.8 200 266.67 466.67
AR, Cover Letter at 3.
Tipton's proposal received the high total score of 504.69 and was
determined to represent the best value; award was made to Tipton on
September 30. AR, Tab 7, Price Negotiation Memorandum, at 3d
unnumbered page.
On October 14, TLD was debriefed by the agency. On October 19, TLD
filed a protest with our Office alleging that it had submitted the
lowest-priced offer and was qualified to perform the work and
complaining that it had been advised that the selection of an awardee
was based on considerations other than price. On
October 20, we dismissed that protest for failure to state a valid
protest basis. On October 23, TLD filed another protest which we
subsequently dismissed as academic on November 25 because the agency
determined that it would reevaluate the proposals.
The agency reports that the procurement files had been forwarded to
the Army Contract Appeals Division (CAD) on November 10, to facilitate
presentation of the agency's position before our Office. AR, Tab 2,
Memorandum of Law, at 2d unnumbered page. In reviewing the file, the
CAD attorney noted that TLD had received an unusually low score (12
out of a possible 50 points) on a PPQ submitted by the Paducah &
Louisville Railway Company (P&L). On 8 out of 10 questions, a P&L
engineer had graded TLD as a 1 or "unsatisfactory"; on the remaining 2
questions, he had graded TLD as 2, or "below average." Because this
score seemed unusual, the CAD attorney contacted the P&L engineer to
verify the accuracy of the ratings. Id. At approximately the same
time, the contracting officer in her review also noted the
unsatisfactory rating and contacted the P&L engineer to determine if
TLD had been informed about the unsatisfactory evaluation submitted by
P&L. AR, Tab 1, Contracting Officer's Statement, at 2d unnumbered
page. The P&L engineer stated that he had misread the evaluation
criteria/instructions, and mistakenly thought that 1 was the highest
score and 5 was the lowest score, and subsequently provided an
affidavit to the same effect. The result of this transposition error
was that TLD received a score of 12 when the P&L engineer's intended
replies would have resulted in TLD receiving a score of 48 based on
the outstanding performance of its contracts with P&L. AR, Tab 16,
Affidavit of Chief Engineer, P&L, at 1.
The CAD attorney and the contracting officer then re-evaluated the TLD
score based on the P&L engineer's statement, which resulted in TLD's
proposal receiving an overall CS score of 47.5 instead of the 38.8 as
originally computed. As a result of the re-evaluation, TLD's proposal
was, not only lower priced, but also higher technically scored than
Tipton's; overall, TLD's proposal was highest ranked with a total
score of 566.67. Subsequently, on November 19, a suspension of work
order was issued to Tipton. AR, Tab 18. On November 23, the
contracting officer issued a corrective action report stating that the
award to Tipton was improper and that in order to protect the
integrity of the procurement system, she was terminating Tipton's
contract for convenience and would make an award to TLD. AR, Tab 19,
Memorandum from the Contracting Officer to the Commander, U.S. Army
Legal Services Agency (Nov. 23, 1998). On December 3, the contract
with Tipton was terminated for convenience and, on December 11, Tipton
filed this protest with our Office.
Tipton contends that the agency's decision to terminate its contract
based on the discovery of the P&L's engineer's erroneous completion of
the PPQ was improper, that the evaluation of past performance was
improper because some offerors submitted fewer than the required
number of references, and that TLD's offer should be rejected as
unbalanced.
Contracting officials in negotiated procurements have broad discretion
to take corrective action where the agency determines that such action
is necessary to ensure fair and impartial competition. Patriot
Contract Servs., LLC et al.,
B-278276.11 et al., Sept. 22, 1998, 98-2 CPD para. 77 at 4; Rockville
Mailing Serv., Inc., B-270161.2, Apr. 10, 1996, 96-1 CPD para. 184 at 4.
We will not object to an agency's proposed corrective action where the
agency reasonably concludes that the award was tainted by a flaw in
the procurement process, so long as the corrective action taken is
appropriate to remedy the flaw. See Rockville Mailing Serv., Inc.,
supra.
Here, shortly after award had been made, the agency discovered that an
obvious error had been made in its evaluation of TLD's proposal. Once
the agency learned of this error, it was appropriate for the agency to
correct it and reassess the proposal. The record demonstrates that
before determining to take corrective action, the contracting officer
carefully analyzed the record before her, which included numerous
letters of references submitted by TLD that documented its excellent
record of performance, in addition to the P&L engineer's statement and
affidavit, and reasonably concluded that the P&L engineer had
mistakenly transposed his score of TLD's past performance. On that
record, the contracting officer reasonably credited the engineer's
explanation at face value, in part because she found it implausible
that TLD would have intentionally submitted a reference that provided
such an anomalous unsatisfactory rating. Once the contracting officer
properly concluded that there was an essentially clerical error in the
agency's assessment of TLD's past performance, we see nothing
unreasonable in the decision to reassess TLD's proposal using
corrected, accurate reference information. Because the award to
Tipton was predicated on an erroneous evaluation of TLD's proposal, we
see no basis to object to the agency's decision to take corrective
action by terminating Tipton's contract and making an award to TLD,
whose proposal was the lowest-priced offer and whose correctly
evaluated technical proposal was equal to Tipton's.
Tipton also challenges the agency's proposed award to TLD on the
grounds that TLD's offer is unbalanced because it allegedly proposed
an unreasonably high per-hour labor rate for the line items covering
certain work in Kentucky and Tennessee.
Federal Acquisition Regulation (FAR) sec. 15.404-1(g) (FAC 97-02)
provides that unbalanced prices arise where the prices of one or more
contract line items are significantly over- or understated as
indicated by the application of cost or price analysis techniques.
FAR sec. 15.404-1(g)(2) requires that offers with separately priced line
items or sub-line items be analyzed, using cost or price analysis
techniques, to determine if the prices are unbalanced and, if an offer
is found to be unbalanced, the contracting officer should consider the
risks to the government associated with the unbalanced pricing in
making the source selection decision in order to determine whether
award of the contract will result in paying unreasonably high prices
for contract performance. An offer may be rejected if the contracting
officer determines that the lack of balance poses an unacceptable risk
to the government. FAR sec. 15.404-1(g)(3).
Here, the agency concluded that TLD's apparently high labor rates for
work to be performed in Kentucky and Tennessee merely reflected TLD's
erroneous entry of a sum totaling the applicable rates for all trades
rather than averaging the rates for all trades, as called for by the
RFP. AR, Cover Letter at 11. However, based on its price analysis,
the agency determined that the risk of paying unreasonable prices for
TLD's performance was very low because these hourly rates, which will
be used only when the required work is not included in the price list,
apply only to approximately 10 percent of the total contract price,
thus, application of TLD's stated rates results in the lowest total
price. AR, Tab 1, Contracting Officer's Statement, at 7th unnumbered
page. The agency's comparison of Tipton's proposed prices with the
prices for the first nine delivery orders issued to TLD shows that in
all but one instance, even applying TLD's allegedly overstated labor
rates, TLD's prices were lower than Tipton's would have been. AR, Tab
31. Accordingly, we see no basis to question the reasonableness of
the agency's conclusion that whatever unbalancing may exist in the
labor rates proposed by TLD, it does not pose an unacceptable price
risk. Neals Janitorial Serv., B-279633, June 3, 1998, 98-1 CPD para. 156
at 4.
Finally, Tipton challenges the agency's evaluation of TLD's past
performance on the grounds that the RFP required offerors to submit a
minimum of 10 references, and that TLD was evaluated on only three
prior government jobs.
We review an agency's evaluation of proposals to ensure that it is
fair, reasonable, and consistent with the evaluation criteria stated
in the solicitation. Wind Gap Knitwear, Inc., B-261045, June 20,
1995, 95-2 CPD para. 124 at 3. Where a solicitation requires the
evaluation of offerors' past performance, an agency has discretion to
determine the scope of the offerors' performance histories to be
considered, provided all proposals are evaluated on the same basis and
consistent with the solicitation requirements. Federal Envtl. Servs.,
Inc., B-250135.4, May 24, 1993, 93-1 CPD para. 398 at 12.
The RFP provided that past performance would be evaluated using the
information obtained from offerors' references provided with the
proposals and from any other sources and/or records available to the
government. RFP sec. 00100, para. 19.c.3. Here, the agency reports that
while it requested and would have preferred to obtain completed
questionnaires from 10 of the contractor's job references, not all
offerors submitted 10 references and the agency determined that five
past performance records were sufficient to evaluate an offeror. AR,
Tab 28, Memorandum from the Source Selection Team to the Director of
Contracting (Dec. 17, 1998). In evaluating Tipton's past performance
the agency reviewed three government projects ratings and two customer
performance surveys and concluded that there was a high probability
that Tipton would perform well. AR, Tab 6A, Evaluation Factor
Calculations - Tipton. Likewise, the agency reviewed three government
projects and two customer performance surveys in its review of TLD's
past performance. AR, Tab 6B, Evaluation Factor Calculations - TLD.
Using P&L's corrected past performance questionnaire, Tipton and TLD
were rated as equal under past performance.
Notwithstanding Tipton's assertions to the contrary, we see nothing
unreasonable in the Army's manner of assessing TLD's and Tipton's the
past performance. While the RFP requested a minimum of 10 references,
it did not specify the number of references that the agency would
contact for purposes of evaluation. Tipton objects to the agency's
past performance evaluation because not all offerors submitted the
required 10 references. However, TLD submitted 33 references, 15 of
which were for jobs the agency determined were similar in scope to the
current requirement--more than the 10 that were called for by the
solicitation. There is no requirement that an agency contact all of
an offeror's references. IGIT, Inc., B-275299.2, June 23, 1997, 97-2
CPD para. 7 at 6. Since both Tipton and TLD submitted more than the
required number of references, and the past performance of each was
evaluated on the basis of the same number of references, we see no
basis to conclude that either Tipton or TLD was improperly evaluated,
or that Tipton was otherwise prejudiced, as a result of the past
performance evaluation methodology applied here by the agency.[5]
The protest is denied.
Comptroller General
of the United States
1. EMF measures an offeror's safety record and insurance experience.
Agency Report (AR), Cover Letter at 2 n.2. Each offeror's insurance
carrier supplies the EMF rating. Id. The lower the EMF, the better
the safety record. Id.
2. Other CS input was received from governmental agencies with whom
offerors had done business. Each offeror was evaluated on the basis
of input from five entities. If an offeror received past performance
questionnaires (PPQs) from five commercial entities, no input from
governmental agencies was used. If fewer than five PPQS were
received, governmental inputs were used. AR, Cover Letter at 2 n.3.
3. Under the Source Selection Plan, an EMF of 1.0 or less received the
maximum score of 40 points. AR, Tab 4, Source Selection
Plan, at 1.
4. Each offeror's raw technical score was converted into a multiplier
between 0 and 4 (0 being
unsatisfactory and 4 being
excellent), which was then multiplied
by 100 to yield the technical score.
AR, Tab 7, Price Negotiation
Memorandum, Evaluation Matrix. For
example, a score between 60 and 79
was considered average (and therefore
assigned a multiplier of 2), which
would result in a score of 200 (100
multiplied by 2).
5. In its comments on the agency report, Tipton asserted for the first
time that (1) the agency improperly evaluated TLD's past performance
based on only three prior government projects; and (2) the past
performance evaluations were improper because the agency did not use
the same evaluation questionnaire for all competitors. Tipton was
aware of these bases of protest, at the latest, upon its receipt of
the agency report, but did not assert them within 10 days after its
receipt of the report. In this regard, Tipton's comments were not
received within the normal 10-day period, see 4 C.F.R. sec. 21.3(i)
(1998), because our Office granted an extension requested by Tipton.
Since a time extension for purposes of filing comments does not waive
the timeliness rules with regard to new grounds of protest, Anchorage
Enters., Inc., B-261922, Nov. 7, 1995, 95-2 CPD para. 211 at 3 n.2, we
dismiss these bases of protest as untimely.