BNUMBER:  B-281872; B-281872.2; B-281872.3; B-281872.4 
DATE:  April 22, 1999
TITLE: Metro Machine Corporation, B-281872; B-281872.2; B-281872.3;
B-281872.4, April 22, 1999
**********************************************************************

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:Metro Machine Corporation

File:     B-281872; B-281872.2; B-281872.3; B-281872.4

Date:April 22, 1999

Frederick W. Claybrook, Jr., Esq., James J. Regan, Esq., John E. 
McCarthy, Jr., Esq., and Daniel R. Forman, Esq., Crowell & Moring, for 
the protester.
James A. Kelly, Esq., Donald A. Tobin, Esq., and Lori Ann T. Lange, 
Esq., Bastianelli, Brown & Kelley, for Atlantic Dry Dock Corporation, 
an intervenor.
Susan P. Raps, Esq., Craig L. Kemmerer, Esq., Stephen P. Anderson, 
Esq., Catherine Rubino, Esq., Lisa L. Hare, Esq., Frank A. Putzu, 
Esq., and Jannika E. Cannon, Esq., Department of the Navy, for the 
agency.
Glenn G. Wolcott, Esq., and Paul I. Lieberman, Esq., Office of the 
General Counsel, GAO, participated in the preparation of the decision.

DIGEST

Where source selection authority considered protester's proposed 
approach to perform production shop work at a remote location to be 
unacceptable, and believed that the solicitation requirements 
established that only a proposal to perform production shop work 
on-site would be acceptable, agency misled protester during 
discussions by effectively communicating that modifications or 
enhancements to the protester's proposal to perform production shop 
work at the remote location would be sufficient to make proposal of 
that location acceptable. 

DECISION

Metro Machine Corporation protests the Department of the Navy's award 
of a contract to Atlantic Dry Dock Corporation (ADD) under request for 
proposals (RFP) No. N62678-98-R-0025 for drydocking operations and 
ship repair work for four classes of Navy ships homeported at the 
Mayport Naval Station in the Jacksonville, Florida area.  Metro raises 
a number of protest issues, most significantly that the agency failed 
to conduct meaningful discussions. 

We sustain the protest.

BACKGROUND

On March 4, 1998, the Navy issued the RFP at issue for drydocking 
facilities and repair services for four classes of Navy ships over a 
5-year period.  The solicitation provided that offerors could propose 
to use, as government-furnished property, a Navy floating drydock with 
the designation "AFDM-7" and the name Sustain which is currently in 
the Navy's inactive fleet, or alternatively, a contractor-furnished 
drydock.  The RFP contained multiple contract line item numbers 
(CLIN), each of which specified certain contract requirements.  CLIN 
0001 called for preparing the site, towing, setting up the dry dock, 
and obtaining certification.  CLIN 0002 (and corresponding option year 
CLINs) called for operation and normal maintenance of the proposed dry 
dock.  CLIN 0003 (and corresponding option year CLINs), which was 
applicable only to offerors proposing to use the Sustain, called for 
repairs to the Sustain which exceeded the normal maintenance 
contemplated under CLIN 0002.  CLINs 0004 through 0007 (and 
corresponding option year CLINs) called for specific work to be 
performed on each of the four different classes of Navy ships to be 
serviced at the dry dock.[1]  RFP attachment J-5 listed 22 ships which 
the Navy contemplated would be drydocked and repaired under this 
procurement, stating:

     Twenty-two (22) ships make up this requirement.  Currently, there 
     are twelve (12) CNO drydocking availabilities scheduled for FY-99 
     [fiscal year 1999] thru FY-03 [fiscal year 2003].  All of these 
     vessels are subject to unscheduled, emergent drydockings.

Section M of the RFP provided that proposals would be evaluated on the 
basis of six non-price evaluation factors which, taken together, were 
significantly more important than price.  RFP  sec.  M.1.B.  The RFP 
provided that two of the non-price evaluation factors--facility site 
requirements and contractor-furnished drydock requirement--would be 
evaluated on a pass/fail basis.[2]  Id.  sec.  M.2.1, M.2.2.  The four 
remaining non-price evaluation factors, listed in descending order of 
importance, were:  technical;[3] earliest date able to commence 
drydock operations; environmental impact; and past performance.  RFP  sec.  
M.1.C.

Regarding evaluation under the most important "technical" factor, RFP 
section M.2.3 stated:  

     Technical (Organization and Management, Manpower, and Facilities) 
     will be evaluated to determine the offeror's overall risk in 
     being able to perform the requirements of this contract relative 
     to operating and maintaining the dry dock and performing the 
     required dry dock repairs to applicable ships.

Regarding evaluation of price proposals, RFP section M.3 provided that 
proposals would be evaluated by adding the total prices proposed for 
all CLINs, except CLIN 0003 (and corresponding option year CLINs),[4] 
and that price proposals "will be reviewed for . . . cost to the 
Government to accomplish the requirements of the solicitation." 

Metro and ADD submitted proposals by the May 15, 1998 closing date.  
ADD proposed to use the government-furnished dry dock, Sustain, at 
ADD's facility in Jacksonville.  Metro proposed to use its own dry 
dock, the Old Dominion, at a site to be leased from the Jacksonville 
Port Authority (JPA).  Metro also proposed to perform required 
production shop work[5] at its facility in Norfolk, VA.[6]  

In evaluating Metro's proposal, the technical proposal evaluation team 
(TPET) expressed concern regarding Metro's proposed performance of 
production shop work in Norfolk, stating: 

      [deleted]

TPET Summary Report, July 15, 1998 at 9.

On July 17, written discussion questions were sent to both offerors.  
Only one of the 14 agency questions addressing Metro's technical 
proposal referenced Metro's proposed use of its Norfolk production 
shop facilities.  That question stated: 

     It is noted that you expect to heavily utilize Norfolk facilities 
     and resources.  What actions do you propose to mitigate the 
     problems associated with the physical distance between 
     Jacksonville and Norfolk?

Letter from the Contracting Officer to Metro Machine Corp. enclosure 
1, at 3
(July 17, 1998).

Final revised proposals were submitted by Metro and ADD on September 
1.  In response to the agency question quoted above, Metro specified 
the proposed actions that it believed would mitigate the potential 
problems posed by its proposal to perform production shop work in 
Norfolk, stating:

     [deleted]

Metro Final Revised Proposal, Responses to Q&A, at 20-21.

The agency's contemporaneous evaluation documentation shows that the 
agency found Metro's final revised proposal to be unacceptable.  
Specifically, the source selection document states: 

     [deleted]

Business Clearance Memorandum, Dec. 21, 1998, at 9-10.

In part because the agency's documentation regarding its determination 
that Metro's proposal was unacceptable incorporated several different 
factors, GAO conducted a hearing to clarify the specific basis for the 
agency's determination that Metro's proposal was unacceptable.[7]  At 
that hearing, the source selection authority (SSA) testified as 
follows:  

     Q.  [D]id the Navy know, at the time the discussion questions 
     were sent, did the Navy believe at that time that [Metro's] 
     proposing production facilities in Norfolk failed to meet the RFP 
     requirements?

     A.  Yes.
               .    .    .    .    .     

     Q.  It's my recollection that you testified earlier that you 
     believed . . .  Metro's proposal with regard to the production 
     shop facilities in Norfolk made it -- from that you concluded 
     that the proposal failed to meet certain RFP criteria, am I 
     correct?  

     A.  Yes.

     Q.  In your mind, as of the final evaluation, in your mind, did 
     the proposal fail to meet the RFP requirements?

     A.  Yes.

Hearing Transcript (Tr.) at 167, 384-85. 

The SSA also testified:

     Q.  Can you think of an example of something they [Metro] could 
     have done which would have continued to have them propose to do 
     the production work in Norfolk and would have made their proposal 
     acceptable?

     A.  No.  The answer is no to that . . . .

     Q.  No.  In other words, it was the Navy's view that proposing to 
     do the production work in Norfolk made the proposal unacceptable?

     A.  Yes.

Tr. at 168-69.

Notwithstanding the SSA's testimony, the TPET chair--who was 
responsible for preparing the technical discussion 
questions--testified as follows: 

     Q. Did you view [Metro's] proposal of a production shop in 
     Norfolk as failing to meet the RFP criteria?  Or failing to meet 
     the RFP requirements, I'm sorry.

     A.  I'll have to say no.

Tr. at 253.

ADD's final evaluated price was $238,494,739--[deleted] Metro's 
evaluated price of [deleted].  Nonetheless, the agency selected ADD's 
proposal for award, noting, as discussed above, that Metro's proposal 
was unacceptable.  Apparently because of the agency's determination 
that Metro's proposal was unacceptable, there was no trade-off between 
the relative technical merits of ADD's and Metro's proposals and the 
costs to the government.  

The contract was awarded to ADD on December 29.  This protest 
followed.  

DISCUSSION

Metro contends that the agency conducted materially misleading 
discussions regarding Metro's proposal to perform production shop work 
in Norfolk.  We agree.

It is a fundamental precept of negotiated procurement that 
discussions, when conducted, must be meaningful and must not 
prejudicially mislead offerors.  SRS Techs., B-254425.2, Sept. 14, 
1994, 94-2 CPD  para.  125 at 6; Ranor, Inc., B-255904, 
Apr. 14, 1994, 94-1 CPD  para.  258 at 4.  Specifically, an agency may not 
mislead an offeror--through the framing of a discussion question or a 
response to a question--into responding in a manner that does not 
address the agency's concerns; misinform the offeror concerning a 
problem with its proposal; or misinform the offeror about the 
government's requirements.  Price Waterhouse, B-254492.2, 
Feb. 16, 1994, 94-1 CPD  para.  168 at 9-11; DTH Management Group, 
B-252879.2, B-252879.3, Oct. 15, 1993, 93-2 CPD  para.  227 at 4.  More 
specifically, when an agency asks a general question indicating 
concern regarding a perceived weakness in an offeror's proposal, then 
subsequently rejects the proposal as technically unacceptable on the 
basis of this concern, a question which could not reasonably be 
construed as putting the offeror on notice of the agency's actual 
concern regarding the acceptability of its proposal does not 
constitute adequate discussions.  Data Preparation, Inc., B-233569, 
Mar. 24, 1989, 89-1 CPD 300 at 5-6.  

Here, as noted above, it was the SSA's perception that Metro's 
proposal to perform production shop work in Norfolk was inconsistent 
with a material solicitation requirement, thereby rendering the 
proposal unacceptable.[8]  In explaining the basis for her conclusion 
regarding the solicitation requirements, the SSA referred to the 
provisions under CLIN 0001 in RFP  sec.  C, which state:

     The contractor will prepare and provide an operating basin and 
     mooring site acceptable to the Government and will provide 
     necessary supporting facilities to accommodate the AFDM-7 or a 
     contractor-furnished dry dock.  The proposed mooring location for 
     the dry dock must be within a 75-mile radius and a 90-minute 
     commute of the Mayport Naval Station.

               .    .    .    .    .     

     The proposed facility will have pier facilities, utilities, 
     production facilities, and support facilities to accommodate the 
     dry dock and the ships to be docked as required to accomplish the 
     repairs to be furnished under the contract. 

RFP  sec.  C, at 144, 146; Tr. at 162-64.

In fact, there is nothing in the above RFP provisions that necessarily 
precludes an offeror's use of a Norfolk production shop.  Clearly, the 
75-mile radius and 90-minute commute requirements apply to the 
"mooring location for the dry dock."  The subsequent requirements for 
"pier facilities, utilities, production facilities, and support 
facilities" are not limited by geographic location, but rather may 
reasonably be interpreted as imposing limitations on location only to 
the extent that such facilities must be provided, "as required to 
accomplish the repairs."  

The agency's assertion that the RFP provisions "clearly" required that 
production facilities, as well as pier facilities, support facilities, 
and utilities, were to be located at or relatively near the proposed 
site," see Agency Post Hearing Brief at 47, is inconsistent with the 
TPET Chair's own testimony that he did not view the RFP requirements 
as precluding Metro's proposed use of its Norfolk production shop.  
Tr. at 253.  In addition, the agency's assertion that the 75-mile 
radius and 90-minute commute requirements apply to all support 
facilities appears inconsistent with the provisions of RFP  sec.  L.2-7 
which states:

     If the company has offices or plants in other areas outside the 
     geographical cognizance of SupShip Jacksonville, the 
     organizational chart must clearly show those involved in this 
     effort.

RFP  sec.  L.2-7, at 206.

In any event, even if the agency had reasonably viewed the RFP as 
mandating the provision of production facilities within the geographic 
limitation applicable to the mooring location, it would have been 
misleading for the agency to suggest during discussions that Metro 
could propose actions to "mitigate the problems associated with the 
physical distance between Jacksonville and Norfolk."  Rather, if the 
SSA's stated views regarding the RFP requirement for production 
facilities to be located near Jacksonville were correct, that fact 
should have been communicated to Metro.[9]
   
Although the SSA testified that it was her belief, at the time the 
discussion questions were sent to Metro, that Metro's proposal failed 
to comply with the solicitation requirements, see Tr. at 167, this 
issue was apparently never discussed with the TPET chair, who was 
responsible for preparing the technical discussion questions.[10]  The 
SSA also acknowledged that, during subsequent face-to-face discussions 
with Metro, the agency did not indicate that Metro's proposed use of 
its Norfolk production shop facilities rendered its proposal 
unacceptable.  Tr. at 160-66.  Nonetheless, as noted above, the SSA 
did not believe there was any acceptable response that Metro could 
have provided other than to propose to perform the production shop 
work in the Jacksonville area.  Tr. at 168-169.  In short, the 
agency's discussions effectively communicated to Metro that its 
proposal to perform production shop work in Norfolk was acceptable, 
though in need of enhancements or modifications to mitigate problems 
associated with distance, when, in fact, only a proposal to perform 
the production shop work in the Jacksonville area would have been 
considered acceptable.  

Under these circumstances, in order for the discussions to be 
meaningful, the agency was required to convey to Metro that its 
proposed approach to performing production shop work would have to be 
fundamentally altered--not merely explained or enhanced.  Accordingly, 
on the record here, the agency failed to conduct meaningful 
discussions with Metro.  

The agency argues that, even if its discussions with Metro were 
inadequate, the protest should be denied for lack of prejudice because 
there were other factors affecting the agency's determination.  The 
agency contends that any defect in its discussions could not have 
prejudiced Metro because Metro's proposal would not have been selected 
in any event. 

Competitive prejudice is an essential element of a viable protest; GAO 
will not sustain a protest where no prejudice is evident.  
Microeconomic Applications, Inc., B-258633.2, Feb. 14, 1995, 95-1 CPD  para.  
82 at 10.  Nonetheless, to establish prejudice, a protester is not 
required to show that, but for the alleged error, the protester would 
have been awarded the contract.  Management HealthCare Prods. & 
Servs., B-251503.2, Dec. 15, 1993, 93-2 CPD  para.  320 at 4; Manekin Corp., 
B-249040, Oct. 19, 1992, 92-2 CPD  para.  250 at 5.  Rather, it is enough 
that the record contain evidence reflecting a reasonable possibility 
that, but for the agency's actions, the protester would have had a 
substantial chance of receiving the award.  McDonald-Bradley, 
B-270126, Feb. 8, 1996, 96-1 CPD  para.  54 at 3; see Statistica, Inc. v. 
Christopher, 102 F.3d 1577 (Fed. Cir. 1996).  

Here, we find that, but for the agency's failure to conduct meaningful 
discussions, there was a substantial chance that Metro would have been 
selected for award.  Our conclusion in this regard is significantly 
affected by the [deleted] difference in the evaluated prices of the 
two proposals.  As noted above, applying the price evaluation 
methodology which the agency established in the solicitation, ADD's 
price of $238,494,739 was [deleted] more than Metro's price of 
[deleted].[11] 

The agency first argues that, although Metro's proposed prices for the 
actual ship repair work (CLINs 0004 through 0007) were considerably 
lower than ADD's corresponding prices, Metro's proposal would not have 
been selected for award in any event because Metro's price proposal 
was unbalanced.  The agency's assertions regarding unbalancing are 
based on the fact that Metro's prices for CLINs 0001 and 0002 were 
considerably higher than ADD's CLIN 0001 and 0002 prices.[12]  The 
agency asserts that there was some risk that ship repair work under 
CLINs 0004 through 0007 would not "materialize," Agency Report at 26, 
and expresses concern about paying Metro's higher CLIN 0001 and CLIN 
0002 prices "regardless of whether any ship repair work was ordered 
under the [CLINs 0004 through 0007] IDIQ line items." Agency Post 
Hearing Brief at 84.

A critical element to determining whether unbalancing exists between 
line items is the accuracy of the government projections regarding the 
quantities of work to be obtained under each line item.[13]  Sanford 
Cooling, B-242423, Apr. 15, 1991, 91-1 CPD  para.  376 at 4.  Estimates must 
be based on the most current information available and be reasonably 
accurate representations of the government's anticipated actual needs.  
Duramed Homecare, B-245766, Jan. 30, 1992, 92-1 CPD  para.  126 at 6.  Where 
the agency concludes that the estimates in the solicitation do not 
have a reasonable probability of being accurate, the solicitation 
should be cancelled.  Food Servs., Inc., B-243173, B-243173.2, July 
10, 1991, 91-2 CPD  para.  39 at 5.[14]  If the solicitation estimates are 
accurate, there can be no material unbalancing.  Landscape Builders 
Contractors, B-225808.3, May, 21, 1987, 87-1 CPD  para.  533 at 2.

As noted above, RFP attachment J-5 listed twenty-two ships that, at 
the time the solicitation was issued, the agency intended to drydock 
and service under this procurement.  In asserting that it was 
concerned that the originally projected drydock and repair work might 
not "materialize," the agency has not suggested that it plans to 
drydock and repair any of the twenty-two vessels elsewhere,[15] nor 
has it identified any other specific factor which suggests that its 
initial projections were inaccurate.[16]  Because of the lack of any 
reasoned analysis which raises a serious question whether the number 
of ships estimated at the time the solicitation was issued will be 
substantially diminished, there is no reasonable basis for the 
agency's concern that Metro's proposal is materially unbalanced.    

Finally, the agency argues that, notwithstanding the inadequate 
discussions, Metro's protest should be denied for lack of prejudice on 
the basis that Metro's site lease with JPA does not comply with the 
solicitation requirements.  In this regard, the agency relies on RFP 
section H-9 which provides: "The contract maximum amount shall be 
defined as 200% of the total amount of CLINs 0003 through 0007 for the 
base year." Because each of the four ship repair CLINs contain 
requirements for a single ship, the agency concluded that offerors 
must be able to drydock a maximum of eight ships per year.  

In its initial proposal, Metro provided a copy of its lease with JPA, 
which the Navy viewed as limiting Metro to five ship dockings per 
year.  During discussions the agency advised Metro of its concern.  In 
response, Metro provided the agency with a letter from JPA stating:  
"Use of the layberth for dockings in excess of 5 drydockings per year 
allowed as part of the lease agreement is available to Metro."  Letter 
from JPA to the President, Metro Machine Corp. (July 22, 1998).  
Metro's final revised proposal further explained that it was not 
limited to five dockings per year, but that, "[f]or emergency 
drydockings and whenever the number of scheduled drydockings exceeds 
five, Metro will be required to pay to JPA its published tariff . . . 
.  The Navy will see no additional charges for any such eventualities 
covered by this contract."  Metro Final Revised Proposal, Responses to 
Q&A, at 17-18.      

Following submission of Metro's final revised proposal, the agency's 
best value advisory committee (BVAC) acknowledged that the lease did 
not limit Metro to five drydockings per year, stating:  "As a result 
of discussions, [JPA] issued a letter allowing Metro, as well as 
others, use of the layberth area in excess of five drydockings per 
year."  Memorandum from the BVAC to the Contracting Officer at 5 (Dec. 
14, 1998).  Similarly, at the hearing, both the SSA and TPET Chair 
acknowledged that Metro's proposal was not limited to 5 drydockings 
per year.  Tr. at 100-101; 258.  

Based on this record, it is clear that Metro's proposal does not take 
any exception to the solicitation requirement establishing the maximum 
quantity of eight ships that may be required to be drydocked in a 
given year.[17]  

The protest is sustained.  

RECOMMENDATION

We recommend that the agency reopen negotiations, conduct meaningful 
discussions with both offerors, request best and final offers, and 
evaluate those proposals consistent with the solicitation's stated 
requirements.  In the event that the RFP does not reflect the agency's 
actual requirements, the solicitation should be modified.[18]  If, as 
a result of this reevaluation, Metro's proposal is selected for award, 
the agency should terminate ADD's contract for the convenience of the 
government and make award to Metro.  We also recommend that Metro be 
reimbursed the reasonable costs of filing and pursuing the protest, 
including attorneys' fees.  4 C.F.R.  sec.  21.8(d)(1) (1998).  The 
protester should submit its certified claim for such costs, detailing 
the time expended and the costs incurred, directly to the contracting 
agency within 60 days after receipt of this decision.

Comptroller General
of the United States

1. CLIN 0004 contemplated work on FFG-class vessels; CLIN 0005 
contemplated work on DDG-class vessels; CLIN 0006 contemplated work on 
CG-class vessels; and CLIN 0007 contemplated work on DD-class vessels.  
For each of these CLINs, the RFP contained an extensive list of 
possible work to be performed.  Offerors were required to submit fixed 
prices for each listed item, and the RFP contemplated issuance of 
delivery orders specifying the particular work to be performed for 
each drydocked vessel.

2. With regard to the facility site requirements evaluation factor, 
section M.2.1 stated:  "[t]he site proposed for the dry dock must meet 
all distance, commute time, water depth, and access requirements 
stated in Section C of the solicitation."  With regard to 
contractor-furnished dry dock requirements evaluation factor, section 
M.2.2 stated:  "the proposed dry dock must have the capacity and size 
requirements to dry dock the ships as stated in Section C of the 
solicitation." 

3. The technical evaluation factor contained three subfactors:  
organization and management, manpower, and facilities.  RFP  sec.  L.2.7, 
at 206-07.

4. Section M provided that, for evaluation purposes, $650,000 would be 
added as an evaluation factor for CLIN 0003 and each corresponding 
option year CLIN for proposals offering to use the Sustain.  RFP  sec.  
M.3.

5. Production shop work generally includes machine shop work, pipe 
shop work, electrical shop work, steel and aluminum fabrication, and 
sheet metal work.

6. The Navy was aware that Metro had previously used its Norfolk 
production shop to successfully perform drydocking and repair of Navy 
ships at remote locations.  In evaluating Metro's past performance, 
the agency stated:  [deleted].

7. As discussed below, in arguing that the protest should be denied 
for lack of prejudice, the agency maintains that each of the factors 
on which the agency relied in finding Metro's proposal unacceptable 
constituted an independent basis for rejecting Metro's proposal.  

8. The agency categorically states:  "[t]he Navy's requirement for 
on-site production facilities was a material requirement."  Agency 
Post Hearing Brief at 51.  Accordingly, if the agency properly 
believed that Metro's proposal failed to comply with a material 
solicitation requirement, the proposal should have been considered 
technically unacceptable.  International Sales Ltd., B-253646, Sept. 
7, 1993, 93-2 CPD  para.  146 at 2.

9.[deleted].

10. The TPET chair testified:

            Q.  Did you ever discuss this issue in terms of the RFP 
            requirements in the context of Metro's proposal of the 
            production shop facility in Norfolk with [the SSA]?

            A.  I can't remember.  I don't think so. 

Tr. at 253.  

11. The agency suggests that the difference in evaluated prices is not 
a valid measurement of the actual costs of contract performance, 
noting that the prices reflect a summation of all possible tasks that 
could be performed on each of the four classes of ships to be 
serviced.  While it is true that not all tasks priced and evaluated 
will be ordered for any given availability, it is also true that each 
CLIN reflects the pricing for only a single ship, while the agency 
asserts that as many as eight ships may be drydocked and serviced in 
any given year.  

12. The agency acknowledges that it did not develop a government cost 
estimate for CLINs 0001 and 0002 (and corresponding option year CLINs) 
"[b]ecause the scope of work for CLINs 0001 and 0002 could vary among 
offerors."  Agency Report at 24.

13. Although unbalancing in connection with quantity estimates usually 
arises in the context of requirements contracts, we believe that it 
could arise in the context of a single-award, task-order contract such 
as this one.

14. Our Office has previously cautioned the Navy that, in issuing 
solicitations, the agency has an affirmative duty to use the best 
quantity estimates available.  Sanford Cooling, B-242423, Apr. 15, 
1991, 91-1 CPD  para.  376 at 8.

15. In responding to Metro's protest, the agency explained the 
rationale underlying this procurement, as follows: 

            The establishment of a dry dock capability in the 
            Jacksonville homeport area has been a matter of deep 
            importance to the Navy.  Presently, Navy vessels 
            homeported in the Jacksonville area must be sent outside 
            the homeport for dry dock-related repair work.  Requiring 
            the dry dockings to take place outside of the Jacksonville 
            area adversely impacts the quality of life for the ships' 
            crews and their families.  There is significant concern 
            within the Navy that the reduced quality of life produced 
            by extended maintenance periods out of the homeport area 
            will adversely affect crew morale, retention, and 
            readiness.

Agency Report at 7-8.

16. Rather, the Navy asserts, generally, that its "uncertainty" 
regarding the amount of ship repair work that will actually be 
required under this contract is based on "downsizing within the DoD 
and the Navy, ships being decommissioned, or dry dock maintenance 
cycles being lengthened."  Agency Report at 26.

17. To the extent the agency was concerned that, in performing the 
contract, Metro [deleted], such concern does not constitute a failure 
to comply with the solicitation requirements.    

18. Metro also protests that the agency failed to properly assess the 
relative risks associated with ADD's proposed use of the Sustain, as 
required by RFP  sec.  M.2.3, which, as noted above, advised offerors that 
proposals "will be evaluated to determine the offeror's overall risk 
in being able to perform the requirements of this contract relative to 
operating and maintaining the dry dock and performing the required dry 
dock repairs to applicable ships."  The agency acknowledges that it 
"did not qualitatively assess [ADD's] proposed use of Sustain," 
arguing that, despite the express language of RFP  sec.  M.2.3, "It would 
be patently unfair . . . to . . . subject the offerors proposing to 
use Sustain to a comparative assessment against any privately owned 
dry dock that might be offered."  Agency Post Hearing Brief at 34, 37.  
In light of our decision regarding the agency's inadequate 
discussions, we do not reach the merits of Metro's protest regarding 
the agency's evaluation of proposals pursuant to the provision in RFP  sec.  
M.2.3 quoted above.  Nonetheless, we recommend that, concomitant with 
reopening negotiations, the agency consider whether this section of 
the RFP should be revised to clearly reflect the manner in which the 
agency intends to evaluate the revised proposals.  

Finally, Metro has raised various other protest allegations, including 
the assertions that the agency improperly evaluated the costs 
associated with ADD's proposal to use the government-furnished 
drydock, that the agency erred in its evaluation of Metro's proposed 
CAPE (compliant all-position enclosure) system, and that the agency 
improperly evaluated proposals under the past performance factor, the 
environmental factor, and the start-up schedule factor.  We have 
considered these other protest allegations and found they provide no 
basis for sustaining the protest.