TITLE:   SSR Engineers, Inc., B-282244, June 18, 1999
BNUMBER:  B-282244
DATE:  June 18, 1999
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SSR Engineers, Inc., B-282244, June 18, 1999

Decision

Matter of: SSR Engineers, Inc.

File: B-282244

Date: June 18, 1999

Craig W. Jardine for the protester.

Marilyn Walter Johnson, Esq., and Richard G. Welsh, Esq., Naval Facilities
Engineering Command, Department of the Navy, for the agency.

Glenn G. Wolcott, Esq., and Paul Lieberman, Esq., Office of the General
Counsel, GAO, participated in the preparation of the decision.

DIGEST

Agency reasonably excluded protester from participating in procurement where
protester has an organizational conflict of interest arising from its
preparation of the statement of work and cost estimates used by the agency
in the procurement.

DECISION

SSR Engineers, Inc. protests the Department of the Navy's determination to
exclude SSR from a procurement for changes to the electrical distribution
system at Keesler Air Force Base, Biloxi, Mississippi, under request for
proposals (RFP) No. N62467-99-R-0883, because of an organizational conflict
of interest. The agency's determination is based on SSR's prior preparation
of the statement of work and development of the cost estimates being used by
the agency for the protested procurement.

We deny the protest.

The record shows that, in April 1996, SSR was awarded an
architect-engineering services contract requiring that it "develop a long
range comprehensive master plan to replace the overhead primary electrical,
cable television, and Energy Management and Control System (EMCS) lines with
new underground lines at Keesler AFB in Biloxi, Mississippi." Contract No.
F22600-96-D-0010, Statement of Work sect. 2.1. The agency states that volume I
of the three-volume master plan prepared by SSR under the prior contract is
being used as the statement of work for the protested procurement, and that
volume I also contains the cost calculations that are the basis for the
agency's budgetary estimates. [1] Contracting Officer's Statement at 1, 3.
Volume II of the master plan, as described by SSR itself, "includes the
power flow analysis, short circuit analysis, and coordination analysis for
the proposed underground distribution system" and "contains printouts from
the computer programs used to evaluate the distributions systems."
Protester's Comments at 1. Volume III of the master plan reflects SSR's
efforts to "develop generic specifications that would be given to an A/E
firm as a guide for developing detailed construction specifications." Id.

On February 5, 1998, the agency's contracting officer advised SSR that, due
to the conflict of interest created by SSR's work under the prior contract,
SSR would not be permitted to participate in this procurement. [2]
Subsequently, this protest was filed with our Office.

Subpart 9.5 of the FAR generally requires contracting officials to avoid,
neutralize or mitigate potential significant organizational conflicts of
interest, including precluding a particular firm from competing, so as to
prevent unfair competitive advantages, the existence of conflicting roles
that might impair a contractor's objectivity, or the existence of biased
ground rules created, whether intentional or not, in situations where, for
example, a firm writes the statement of work or specifications. Aetna Gov't
Health Plans, Inc.; Foundation Health Fed. Servs., Inc., B-254397.15 et al.,

July 27, 1995, 95-2 CPD para. 129 at 12; GIC Agric. Group, B-249065, Oct. 21,
1992, 92-2 CPD para. 263 at 6. Specifically, FAR sect. 9.505-2(b)(1) states:

If a contractor prepares, or assists in preparing, a work statement to be
used in competitively acquiring a system or services--or provides material
leading directly, predictably, and without delay to such a work
statement--that contractor may not supply the system, major components of
the system or the services unless: (i) It is the sole source; (ii) It has
participated in the development and design work; or (iii) more than one
contractor has been involved in preparing the work statement.

The responsibility for determining whether a firm has a conflict of interest
and to what extent a firm should be excluded from competition rests with the
procuring agency, and we will not overturn such a determination unless it is
shown to be unreasonable. Ressler Assocs., Inc., B-244110, Sept. 9, 1991,
91-2 CPD para. 230 at 2-3;

LW Planning Group, B-215539, Nov. 14, 1984, 84-2 CPD para. 531 at 4.

SSR does not dispute that it essentially prepared the statement of work and
the cost estimates being used by the agency in this procurement. Further,
SSR does not suggest that any of the exceptions contained in FAR sect.
9.505-2(b)(1), quoted above, are applicable here. Rather, SSR first argues
that the conflict of interest provisions of FAR subpart 9.5 should not be
applied because "FAR [sect.] 36.302 [which deals with construction and
architect-engineer contracts] specifically addresses how the Government can
utilize a consultant to develop a scope of work for a design-build project"
and "[n]o where in [FAR] Part 36 does it state that the firm developing the
scope [of work] is precluded from being part of a design-build team."
Agency-Level Protest, Feb. 25, 1999, at 2. SSR concludes that, "if the
intent of the FAR[] was to preclude the firm developing the scope [of work]
from participating on a design-build team the exclusions would be discussed
or referenced in [FAR] Part 36." Id.

We find without merit SSR's assertion that the provisions of FAR subpart 9.5
are inapplicable to this procurement. FAR sect. 9.502(a) provides that, "[t]his
subpart applies to contracts with either profit or nonprofit organizations,"
and FAR sect. 9.502(b) further states that, "[t]he applicability of this subpart
is not limited to any particular kind of acquisition." Accordingly, the fact
that FAR part 36 does not specifically address conflict of interest
provisions in the context of construction and architect-engineer services
contracts does not somehow render the organizational conflict of interest
provisions of FAR subpart 9.5 inapplicable to such contracts.

SSR also complains that it has not obtained any competitive advantage based
on its prior work. Specifically, while acknowledging that "[n]umerous
contractors have expressed their desire to have SSR on their design/build
team," SSR asserts that "[c]ontractors are interested in using SSR on the
Keesler AFB project not because of any competitive advantage, but because of
the design capabilities SSR brings to the team." Agency-Level Protest, Feb.
25, 1999, at 2. Additionally, while acknowledging that "SSR's cost estimates
established the ceiling for the budget cost," SSR asserts that "[n]o
established contractor . . . would rely on SSR to determine the pricing for
labor and materials to construct the project." [3] Protester's Comments at
5. Finally, SSR maintains that it should be permitted to assist a prime
contractor in preparing its proposal because SSR's fees for such assistance
would not constitute a major portion of the total contract cost, arguing
that "[w]ith an insignificant share of the contract, the so called
competitive advantage is also insignificant." Protester's Comments at 4-5.

Based on the record here, there is no basis to question the agency's
determination that, due to an organizational conflict of interest, SSR
should be precluded from participating in this procurement. Specifically, on
the basis of the undisputed facts that SSR prepared material leading
directly to the statement of work and prepared costs estimates which
established the ceiling for the agency's budgeting of costs, we conclude
that the agency reasonably determined that SSR's prior activities created an
unfair competitive advantage as expressly contemplated by FAR subpart 9.5.
SSR's assertions to the contrary provide no basis to object to the agency's
determination. [4]

The protest is denied.

Comptroller General
of the United States

Notes

1. The cost estimates are being withheld from other offerors in the
competition.

2. The agency asserts that SSR was notified of the determination earlier, on
January 27, 1998. SSR denies that it was notified prior to February 5. SSR
first filed an agency-level protest on February 8.

3. SSR also asserts, without explanation, that "[k]nowledge of the top price
is a competitive disadvantage, not a competitive advantage." Protester's
Comments at 5.

4. SSR also protests that the Mississippi Power Company had access to the
same type of information the agency has determined provides SSR with a
competitive advantage, yet that company was permitted to participate in the
procurement. The agency first notes that the Mississippi Power Company did
not have access to the cost estimates created by SSR and that, while a
sister corporation of Mississippi Power Company submitted an initial
response to the solicitation, that firm "was not determined to be one of the
most highly qualified and will not continue [in the procurement]." Affidavit
of Technical Evaluation Board Chairman para. 7. Accordingly, there is no basis
for further consideration of this portion of SSR's protest.