BNUMBER:  B-281497 
DATE:  February 17, 1999
TITLE: Ciaschi Rentals, Inc., B-281497, February 17, 1999
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Matter of:Ciaschi Rentals, Inc.

File:     B-281497

Date:February 17, 1999

Edward C. Hooks, Esq., Harris, Beach & Wilcox, for the protester.
Lynn W. Flanagan, Esq., Department of Agriculture, for the agency.
Wm. David Hasfurther, Esq., and Michael R. Golden, Esq., Office of the 
General Counsel, GAO, participated in the preparation of the decision.

DIGEST

Agency reasonably decided to take corrective action and resolicit for 
lease of office space to ensure a fair and impartial competition, 
where agency review of proposed award of lease disclosed that source 
selection was not documented and was based on unsupported evaluation 
conclusions, and where pricing information and other source sensitive 
information apparently had been disclosed to several offerors.  

DECISION

Ciaschi Rentals, Inc. protests the cancellation of a solicitation for 
offers (SFO), issued by the Farm Service Agency (FSA), US Department 
of Agriculture (USDA), for the purpose of obtaining a 5-year lease for 
6665 square feet of office space in Ithaca, New York, to serve as the 
new USDA Service Center for Tompkins, Schuyler, Chemung, and Seneca 
counties.  

We deny the protest.

The SFO was issued by the FSA's Tompkins/Schuyler County Food and 
Agriculture Council (local FAC), which was also responsible for 
evaluating the offers received and awarding the lease, with the 
concurrence of the New York State FAC (state FAC).  The local FAC was 
comprised of members of FSA and other locally based agencies which 
would occupy the leased office space.  USDA Memorandum of Law at 1-2.  
Lease offers were to be evaluated on the basis of cost (the annual 
price per square foot) and technical merit (in accordance--after the 
space was determined to be in conformity with SFO requirements--with 
nine evaluation factors listed in descending order of importance).  
Price and technical merit were each to constitute 50 percent of the 
total evaluation score awarded.  SFO at 8.  After the successful 
offeror was determined on the basis of the cost and technical merit 
scoring, award was to be made "upon written notification, or execution 
of the lease" by the County Executive Director of the local FAC.  Id. 
at 9.

The local FAC evaluated the six offers received with the following 
results:

    Offeror   Total Cost   Cost Score   Tech. Score Total Score

William Fransden #2$21.10/sq. ft.39         47          86

ICS Development Partners$19.00 43           43          86

William Fransden #1$22.10      37           48          85

Ciaschi Rentals$17.00          48           33          81

Poalangeli Contractors$22.65   36           35          71

Center Ithaca TSDAssocs.$16.44 50           13          63
Technical Evaluation Scoring at 1-6; Cost and Technical Analysis at 
1-2.

Based upon this evaluation, award of the lease to Fransden on the 
basis of its #2 offer was recommended.  By letter of July 30, 1998, 
the local FAC forwarded the award recommendation to the state FAC.  
Memorandum from Local FAC to State FAC (July 30, 1998); FAC Minutes of 
July 29, 1998, at 1. 

After the submission of the award recommendation, by letter of August 
11, Tompkins County Soil and Water Conservation District protested to 
the state FAC the location and road safety of the site proposed by 
Fransden.  Letter from Tompkins County Soil and Water Conversation 
District to State FAC (Aug. 11, 1998).  By letter of August 19, the 
USDA Natural Resources Conservation Service requested the state FAC to 
further study what constituted a reasonable price for the lease.  
Letter from Natural Resources Conservation Service to State FAC (Aug. 
19, 1998).  By letter of August 20, USDA New York Rural Development 
contended that three of the offers received were nonresponsive and 
requested an explanation of why the Fransden lease was so beneficial 
as to merit the price.  Letter from New York Rural Development to 
State FAC (Aug. 20, 1998).  By memorandum of August 20, the state FAC 
requested the local FAC to reevaluate the market survey for the lease 
and to request clarifications from Ciaschi and Center Ithaca regarding 
their costs.  Memorandum from State FAC to Local FAC (Aug. 20, 1998).  
Also, on August 24 and 25, respectively, Center Ithaca and Ciaschi 
responded to requests for clarifications.  The local FAC informed the 
state FAC that realistic lease prices could not be obtained without 
providing potential lessors with the agency's building specifications 
and that the parking available at Ciaschi's site could be inadequate.  
Memorandum from Local FAC to State FAC (Aug. 20, 1998).  A lease 
market survey was completed in late August which showed that only one 
site (which was outside the area to which this lease had been 
restricted) was available at that time, and that  the lease, if there 
were available sites, should cost from $12 to 18 per square foot.  
Memorandum to State FAC (Sept. 2, 1998).

On September 9, the state FAC met to discuss the site location that 
would best meet the concerns of the parties that would occupy the 
Service Center and how Fransden's rent could be justified in view of 
the lower rent offered by Ciaschi.  Minutes of State FAC Meeting, 
September 9, 1998.  The state FAC selected Ciaschi's offer.  Id.; 
Memoranda from State FAC to Local FAC (Sept. 10 and 18, 1998).  The 
state FAC then directed the local FAC to award the lease to Ciaschi.  
Id.  By letter of September 21, the County Executive Director advised 
Ciaschi that, in accordance with instructions from the state FAC, 
"this letter confirms the lease award to Ciaschi . . .  We will 
contact you in the near future to arrange a time and date for you to 
stop to sign the lease agreement."  Letter from Local FAC to Ciaschi 
(Sept. 21, 1998).

Subsequent to this notification, protests were filed by Center Ithaca 
and ICS challenging the selection decision.  Memorandum of Law at 5.  
By letter of Oct. 19, 1998, the state FAC advised offerors that upon 
review of those protests, the September 21 notice of award to Ciaschi 
was cancelled and that the state FAC would shortly issue a new SFO and 
perform the technical evaluations.  Letter from State FAC to Ciaschi 
(Oct. 19, 1998).

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.  We do not 
believe that an agency must conclude that a protest is certain to be 
sustained before it may take corrective action; where the agency has 
reasonable concern that there were errors in the procurement, even if 
the protest could be denied, we view it as within the agency's 
discretion to take corrective action.  See Main Bldg. Maintenance, 
Inc., B-279191.3, Aug. 5, 1998, 98-2 CPD  para.  47 at 3.  Moreover, we will 
not object to the specific proposed corrective action, so long as it 
is appropriate to remedy the concern that caused the agency to take 
corrective action.  Id. 

Center Ithaca's agency-level protest that challenged the award alleged 
that government personnel had disclosed procurement sensitive 
information to other offerors during the competition.  Center Ithaca 
Protest Letter, Oct. 2, 1998, at 1.  Center Ithaca's protest contained 
copies of local FAC evaluation documents including scores and ranking.  
ICS in its agency-level protest also argued that it should have 
received the lease based on its ranking and score.  (Its protest 
letter contained its score and Ciaschi's.)  ICS Protest Letter, Oct. 
8, 1998.  According to Center Ithaca, it received the evaluation 
documents and prices in response to "requests under the Freedom of 
Information Act."  Id. at 2.  As a result, the state FAC was concerned 
that source sensitive information was improperly released.  Further, 
it appears that Ciaschi may also have been provided agency estimates 
for utilities and other services obtained under the prior attempt to 
obtain this office space.  The agency explains that Ciaschi's original 
offer under that SFO did not include the costs for utilities and other 
services.  The local FAC used an estimated figure for these services 
for evaluation purposes.  Ciaschi's subsequent revised offer was 
identical in cost to the estimated figure used by the agency for the 
evaluation.  See Memorandum of Law at 1, 8.  The USDA's Office of 
Inspector General has been asked to review the acquisition for 
possible procurement integrity violations.  Id.  Based on its concerns 
regarding the allegations of procurement irregularities in the local 
competition, the state FAC elected to cancel and resolicit.  An agency 
may properly cancel a solicitation where that decision is reasonably 
based on agency concerns that the integrity of the procurement process 
appears to have been undermined by the improper conduct of an agency 
procurement official.  See DGS Contract Servs., B-243647.2, Sept. 18, 
1991, 91-2 CPD  para.  258 at 2.

Moreover, during the course of this protest the agency identified an 
additional reason for canceling this lease acquisition and to 
resolicit.  The agency reports that, in reviewing the state FAC's 
decision to award to Ciaschi, the agency found no documentation 
supporting the state FAC's apparent reevaluation of the offers that 
led to the reversal of the local FAC's decision.  As the agency points 
out, there is no reference in the state FAC's meeting notes that the 
group used the evaluation scheme in the SFO in selecting Ciaschi.  
After reviewing the record, we have no basis to disagree with the 
agency's conclusion that the state FAC provided no adequate support 
for its determination to make award to Ciaschi, thus reversing the 
local FAC's decision to award to Fransden.  For example, we note that 
although the local FAC determined, as part of its evaluation of 
offers, that the location of Ciaschi's office space was not suitable 
for the FSA's needs because of its layout, the need for extensive 
remodeling, and limited parking, the state FAC simply concluded that 
Ciaschi's location and parking were acceptable without providing any 
reasoning for this conclusion.  See Technical Evaluation Worksheet for 
Ciaschi, undated.  It is also not clear whether the state FAC 
evaluated the ICS offer, which was the second highest scored offer 
(after Fransden's #2 offer), and might arguably have been in line for 
award.  Without adequate support for the state FAC evaluation, a 
proper award could not be made.  Engineering and Computation, Inc., 
B-261658, Oct. 16, 1995, 95-2 CPD  para.  176 at 3.

In view of the flawed evaluation and other possible procurement 
irregularities including disclosure of the technical evaluations, 
scoring, ranking and prices of the competitors, we think the agency's 
decision to cancel and resolicit constituted reasonable and 
appropriate corrective action.[1]

The protest is denied.

Comptroller General
of the United States

1. Even assuming Ciaschi's contention that the September 21 letter 
constituted an award of the lease, Ciaschi's assertion that it is owed 
damages for the agency's breach of that lease concerns a dispute 
between Ciaschi and the agency that is not reviewable by our Office.  
See 4 C.F.R.  sec.  21.5(a) (1998); Aero Realty Co., B-250985, Mar. 2, 
1993, 93-1 CPD  para.  191 at 4 n.6.