TITLE: Federal Security Systems, Inc., B-281745.2, April 29, 1999
BNUMBER: B-281745.2
DATE: April 29, 1999
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Federal Security Systems, Inc., B-281745.2, April 29, 1999
Decision
Matter of: Federal Security Systems, Inc.
File: B-281745.2
Date: April 29, 1999
Hilary Cairnie, Esq., Dykema Gossett, for the protester.
Ronald H. Uscher, Esq., and Nick R. Hoogstraten, Esq., Bastianelli, Brown &
Kelley, for Federal Lock & Safe, Inc., an intervenor.
James L. Weiner, Esq., Department of the Interior, for the agency.
Jacqueline Maeder, Esq., and Paul I. Lieberman, Esq., Office of the General
Counsel, GAO, participated in the preparation of the decision.
DIGEST
Agency reasonably determined to take corrective action by amending
solicitation and requesting revised proposals after disclosing
protester/awardee's prices where award had been made on the basis of a
materially defective solicitation.
DECISION
Federal Security Systems, Inc. (FSS) protests the corrective action taken by
the Department of the Interior, National Business Center in response to a
protest filed in our Office by Federal Lock & Safe, Inc. under request for
proposals (RFP) No. 14-01-0001-98-R-15 for locksmith services under which
FSS had been awarded a contract. Federal Lock had alleged in its protest,
among other things, that the RFP was ambiguous and that the estimated
quantities were not based on realistic and current usage information. At the
time that Federal Lock filed its protest with our Office, Interior had
already determined that it was necessary to reevaluate the quantity
estimates for the solicitation, which was for the award of an
indefinite-delivery, indefinite-quantity (ID/IQ) contract, and that the
solicitation was unclear about what was actually being requested for several
line items. Agency Report, Mar. 1, 1999, at 2. The agency determined to take
corrective action and issued an amendment which provided definitions for
certain contract line items (CLIN), revised minimum and/or maximum estimated
quantities for approximately half of the CLINs and requested new best and
final offers (BAFO) from competitive range offerors. Id. FSS contends that
the solicitation was not ambiguous and that the amendment did not change the
estimates significantly. FSS also objects that its prices have been
disclosed to the competitive range offerors, placing FSS at a competitive
disadvantage and improperly creating an auction.
We deny the protest.
The RFP, as amended through amendment No. 3, solicited proposals for
providing labor, equipment and supervision to open, repair, replace or
provide various types
of locks, lock mechanisms, and cylinders at Interior buildings in
Washington, D.C. RFP sect. C.1. The RFP contemplated award of an ID/IQ contract
for a base year with four 1-year options. RFP sect. F.1 and amend. 3, at 2. At
section B of the RFP, offerors were required to provide unit prices and
extended prices for 48 CLINs and a total estimated price for the base year
and each option year. Extended prices were to be calculated by multiplying
the unit price by the estimated minimum quantity. The CLINs were divided
into Category A and B items. Category A items included seven numbered
supplies (locks, keys, special needs, additional key blanks, panic bars,
Corbin/Russwin replacement mortise casement and replacement cams for Russwin
mortise casement). Each of these items was broken into sub-items by type
and/or manufacturer (e.g., locks were broken into types, such as desk
cylinder and file cabinet, and into manufacturer, such as Yale, Schlage and
Kwik Set). Category B line items included locksmith labor hours (regular and
overtime) and maintenance labor hours (regular and overtime). RFP amend. 3.
Award was to be made to the offeror whose proposal was determined to be the
best overall value to the government, considering price and technical
factors. RFP sect. M.
Five offerors submitted initial proposals. After discussions, three
proposals, including FSS's and Federal Lock's, were determined to be in the
competitive range. Agency Report, Mar. 1, 1999, at 1. On December 3, 1998,
all three offerors submitted final proposal revisions and prices. Because
Interior found the three proposals technically equal,[1] price became the
determining factor. On December 10, the agency made award to FSS as the
low-priced offeror. On December 15, the contracting officer sent award
notifications, with copies of FSS's price schedule, to the other competitive
range offerors. On the same day, the agency conducted a debriefing with
Federal Lock. During the debriefing, Federal Lock argued that FSS's prices
were unbalanced, that the agency's estimates were faulty, and that the
solicitation contained certain ambiguities.
The contracting officer states that, after the debriefing, she "suspected
that the stated minimum and maximum quantities contained in many line items
of the RFP did not accurately reflect our actual requirements"[2]
and that there were "continuing ambiguities in certain item descriptions" in
the RFP. Contracting Officer's Statement at 3rd unnumbered page. The agency
believed that ambiguities were evidenced by significant differences in
prices offered by the offerors for certain items. For example, prices from
Federal Lock and FSS for the ASSA mortise lock (cylinder only) were $1 and
$39, respectively, $101 and $18.50 for the Yale mortise lock (cylinder
only), $10 and $25 for the special needs dead bolts, and $.20 and $3.50 for
the replacement cams for Russwin casements. As a result of these price
variations, the contracting officer concluded that there was confusion over
terms and as to what Interior was actually requesting under some of the
CLINs. For example, the agency notes that a "mortise cylinder" is a kind of
lock while a "cylinder" is merely a component of a lock. These items may
vary significantly in price. The contracting officer concluded that the
solicitation did not reflect the agency's minimum needs "given both the lack
of support for the estimated quantities and the wide variations in prices on
similar items . . . ." Id.
After Federal Lock protested to our Office, the agency suspended performance
on the contract. In order to confirm her suspicions regarding the estimated
quantities, the contracting officer examined data for the prior 2-year
(1996) contract. Based on this data, the contracting officer revised a
number of the quantity estimates and prepared definitions for "lock,"
"cylinder," "cylinder lock," "dead bolt," "key and knob lock," and "mortise
cylinder." The revised quantity estimates and the definitions were
incorporated into amendment No. 4, which was issued as corrective action on
January 21, 1999. Offerors were given until January 27 to submit revised
BAFOs.
FSS asserts that this corrective action was unwarranted and also objects
that the agency "improperly released the entirety of FSS's pricing proposal
to all offerors in the competitive range at a time when it knew or should
have known not to do so." Protester's Comments, Mar. 19, 1999, at 2.
Specifically, FSS argues that the revised quantities set forth in amendment
No. 4 are not significantly different from those in amendment No. 3 and that
offerors "will not be able to offer materially different pricing from that
which was originally proposed." Amended Protest, Jan. 25, 1999,
at 3. FSS argues that, of the 48 line items, "24 remained unchanged in the
Amendment No. 4," and, of the remaining 24 items, the minimum/maximum range
was narrowed for 6 and quantities were revised only slightly for 18.
Protester's Comments, Mar. 19, 1999, at 13-14. Thus, FSS argues that,
because quantities did not change significantly, pricing will not be
materially different and offerors therefore were not prejudiced by not
having the most current estimated quantities. To support its position, FSS
also reviewed the invoices for the prior 1996 contract and, while precise
quantities for all CLINs could not be determined because of certain unclear
invoice descriptions, prepared the following comparative table:
supplies amendment 3 amendment 4 1996 actual
quantity
quantity quantity
ASSA Mortise (cylinder 5-150 100-300 152
only)
Desk Cylinder (diamond 5-250 15-50 55
back)
Desk Cylinder (square back) 5-250 15-50 55
Medeco File Cabinet Lock 5-150 3-25 1
Yale Key and Knob Lock 5-50 15-50 4
ASSA Keys 100-600 300-600 500
Dead Bolts (Schlage, Yale, 25-50 10-20 24
ASSA)-Cylinders
Locksmith Labor 8-950 200-450 398.25
Based on these figures, FSS argues that there is no basis for the agency to
"assert that offerors have somehow been prejudiced by not having the most
current estimated quantities, which in any event are not materially
different from the ones originally presented to offerors." Amended Protest,
Jan. 25, 1999, at 3.
The protester also argues that the definitions provided in amendment No. 4
were not needed since they "are based upon the meaning commonly attached to
the subject terms by those practiced in the art of locksmithing . . . ."
Amended Protest,
Jan. 25, 1999, at 4. FSS argues that these definitions are from published
sources and have always been readily available. Moreover, FSS contends that
the agency's reliance on selective price disparities as evidence of
ambiguity is arbitrary and irrational since the solicitation was clear as to
requirements. Indeed, FSS notes that, in its responses to questions
submitted by offerors, the agency in amendment No. 1 stated that the
required ASSA mortise and Yale mortise locks were to be cylinders only and
not the complete lock. FSS argues that the substantial price disparity on
which Interior relies to support its assertion of solicitation ambiguity
merely suggests that offerors ignored the plain terms of the solicitation.
Finally, FSS argues that the disclosure of its prices was improper,
particularly where the agency suspected the need for corrective action but
still released FSS's pricing information.
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. It is not necessary for an agency to conclude that the 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. Patriot Contract Servs., LLC et al., supra. An
agency may amend a solicitation, and request and evaluate another round of
BAFOs where the record shows that the agency made the decision to take this
action in good faith, without the specific intent of changing a particular
offeror's technical ranking or avoiding an award to a particular offeror.
See PRC, Inc., B-233561.8, B-233561.9, Sept. 29, 1992, 92-2 CPD para. 215 at
3-4.
Here, there is no evidence of record which suggests that the corrective
action was improper or that the agency acted other than in good faith. On
the contrary, while the protester contends that the agency has not supported
its determination to take the corrective action in amendment No. 4, the
record, including the protester's own analysis of the historical data,
supports the appropriateness of the agency's action.
Contrary to the protester's assertion, the estimated quantities provided in
amendment Nos. 3 and 4 evidence that the revisions are significant, and that
the amendment provides significantly more precise and current information
with respect to anticipated needs. Twenty-seven CLINs in amendment No. 4
contained revised minimum quantities, including 23 CLINs in Category A and
all 4 CLINs regarding labor requirements in Category B. Additionally, 30
CLINs (26 in Category A and all 4 in Category B) revised either minimum or
maximum quantities. There were substantial quantity changes in several
CLINs, including, for example, estimates for the ASSA mortise lock (cylinder
only), which were revised from a minimum of 5 and a maximum of 150 to a
minimum of 100 and a maximum of 300 and estimates for ASSA keys, which were
revised from a minimum of 100 and a maximum of 600 to a minimum of 300 and a
maximum of 600. Also, all three minimum estimates for file cabinet keys were
decreased by half from 50 to 25. Finally, substantial estimated quantity
revisions were included in each of the four CLINs regarding labor costs. For
example, regular locksmith hours were revised from a minimum of 8 and a
maximum of 950 to a minimum of 200 and a maximum of 450; overtime hours were
revised from a minimum of 8 and a maximum of 150 to a minimum of 20 and a
maximum of 45. The minimum regular maintenance hours were revised from 8 to
50; overtime maintenance hours were revised from a minimum of 8 and a
maximum of 100 to a minimum of 5 and a maximum of 10. These revised
estimates, which the agency states were established by using the invoices
from the most recent 1996 contract are essentially confirmed by FSS's own
summary of the data. For example, FSS calculated that 152 ASSA mortise locks
(cylinders only) were ordered under the 1996 contract; yet, the original RFP
estimated a minimum of 5 and a maximum of 150 for this requirement. The
revised minimum/maximum estimates of 100 and 300 appear to provide a more
accurate estimated quantity based on the historical data. Similarly, the
actual number of ASSA keys required under the 1996 contract was 500. The
original minimum/maximum estimates of 100/600 were revised to 300/600 to
more precisely reflect the actual historical requirement. Finally, the
actual regular labor hours for the locksmith were 398.25. The revised
estimated minimum and maximum of 200 to 400 hours more clearly reflect the
actual 1996 requirement than the minimum/maximum estimate of 8/950 hours
contained in the original solicitation.
Accordingly, the record supports the agency's determination that the
original RFP did not provide the best available estimates based on current
usage information and that the corrective action taken by issuing amendment
No. 4 was warranted in order to provide offerors with more accurate
estimated quantities for the supplies and services required. As the
comparisons show, notwithstanding the protester's generalization regarding
industry pricing practices, the revisions are significant in magnitude,
which provides the agency with a reasonable basis to conclude that the
estimate inaccuracies could have affected offeror pricing.
In addition, the agency had a reasonable concern that the original
solicitation terms may have been misunderstood in view of the dramatic price
differentials for several of the CLINs. First, as noted above, prices for
several CLINs, including, for example, prices of $101 and $18.50 for the
Yale mortise lock (cylinder only) were widely variant. Such prices can
reasonably be interpreted to suggest that offerors did not have a similar
understanding of the requirements, especially where, as here, the
requirements were, for the most part, for common, branded, commercially
available items. Moreover, while amendment No. 1 did state, as the protester
notes, that the entries listed as ASSA mortise and Yale mortise "locks" were
to be "cylinders" only, the schedule still referred to these requirements as
"locks." Under these circumstances, we view as unobjectionable the agency's
determination that corrective action was appropriate to clarify what it
reasonably viewed as a potentially material solicitation ambiguity.
Finally, FSS also argues that, because offerors were informed of its prices,
rescinding the original award and reopening the competition will foster an
auction which will put FSS at a competitive disadvantage. Where, as here,
the corrective action proposed by the agency is not improper, the prior
disclosure of information in an offeror's proposal does not preclude the
corrective action, and the request for BAFOs does not constitute an improper
auction. Patriot Contract Servs., LLC et al., supra, at 7. This is because
the possibility that the contract may not have been awarded based on a true
determination of the most advantageous proposal has a more harmful effect on
the integrity of the competitive procurement system than the fear of an
auction; the statutory requirements for competition take priority over any
possible regulatory constraints on auction techniques. Id.; Unisys Corp.,
B-230019.2, July 12, 1988, 88-2 CPD para. 35 at 5. Here, although only FSS's
prices have been disclosed, we note that under amendment No. 3 there
appeared to be confusion as to what the agency was actually requesting under
several CLINs, so that the significance of any of the pricing is
questionable. Moreover, since the award was made to FSS on the basis of
price, all offerors were aware in any event that their total prices were
higher than FSS's total price, and FSS has not provided any evidence that it
was somehow competitively prejudiced by not being apprised of the specific
prices that were higher than its own. Finally, as discussed above, the
agency made significant changes to the minimum and/or maximum estimated
quantities for many line items, which may render much of the disclosed
pricing meaningless. Accordingly, notwithstanding the disclosure of FSS's
pricing, the corrective action taken by the agency is unobjectionable.
The protest is denied.
Comptroller General
of the United States
Notes
1. Technical scores ranged from 97.25 to 100 points out of a possible 100
points.
2. Federal Acquisition Regulation sect. 16.504(a)(1) provides that maximum
quantity estimates for ID/IQ solicitations may be based on records of
previous requirements and consumption but should be realistic and based on
the most current information available. Although the estimates for
indefinite-quantity contracts need not be precise, they must be established
in good faith and accurately represent the agency's (continued)
anticipated needs. Howard Johnson, B-260080, B-260080.2, May 24, 1995, 95-1
CPD 259 at 3.