TITLE:  Inland Service Corporation, B-282272, June 21, 1999
BNUMBER:  B-282272
DATE:  June 21, 1999
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Inland Service Corporation, B-282272, June 21, 1999

Decision

Matter of: Inland Service Corporation

File: B-282272

Date: June 21, 1999

Johnathan M. Bailey, Esq., Law Offices of Theodore M. Bailey, for the
protester.

Capt. Patricia A. McHugh, and Lt. Col. Holly M. Stone, Department of the Air
Force, for the agency.

Sylvia Schatz, Esq., and John M. Melody, Esq., Office of the General
Counsel, GAO, participated in the preparation of the decision.

DIGEST

Agency reasonably downgraded protester's proposal under past performance
factor based on past performance information provided by protester's
reference for contract that was similar in scope to current requirements,
where information showed several performance deficiencies and reference
stated it would not renew an option under protester's contract.

DECISION

Inland Service Corporation protests the award of a contract to U.S. Grounds
Maintenance, Inc. (UGM), under request for proposals (RFP) No.
F48608-99-R-0002, issued by the Department of the Air Force for grounds
maintenance at F.E. Warren Air Force Base (AFB), Wyoming. Inland maintains
that the award was improper because the agency's evaluation of its past
performance was flawed.

We deny the protest.

The RFP provided for award of a fixed-price requirements contract for 6
months, with five 1-year options, to the responsible firm whose offer was
found most advantageous to the government, considering past performance and
executed proposal documentation which, combined, were approximately equal in
importance to price. RFP sect. E, at 33. The performance-price tradeoff (PPT)
technique was to be used to arrive at a best value award decision. Id.
Application of this technique involves determining the acceptability of each
offeror's proposal, ranking all acceptable proposals by evaluated price, and
assigning the proposals a performance risk assessment rating of low,
moderate, high, or not applicable. Id. The RFP advised that, although the
agency reserved the right to conduct discussions if necessary, it planned to
make award on the basis of initial proposals. Federal Acquisition Regulation
(FAR) sect. 52.212-1 (incorporated, with tailoring, in RFP at 32).

Thirteen proposals, including Inland's and UGM's, were received, and all
were determined acceptable. Inland's proposal was third low at
$5,410,928.80, while UGM's was fourth low at $5,749,638.36. (The lowest and
second low offerors both received high performance risk ratings.) Agency
Report, encl. 7, at 3-5. In assessing Inland's past performance risk, the
Air Force called the contracting officer at Goodfellow AFB in Texas, one of
the references listed in Inland's proposal, where Inland recently had
performed a grounds maintenance contract with requirements similar to those
here. She declined to complete a past performance questionnaire because
there was an outstanding claim by Inland concerning that contract, but did
forward the 11 contract discrepancy reports (CDR) issued under the contract
during the period from July 14, 1997 to March 3, 1998, Inland's written
responses to the CDRs, and the government's final actions on the CDRs, which
included several deductions (totaling $2,772.85) from Inland's contract
payments. She also stated that Goodfellow AFB had decided not to exercise
the third option under Inland's contract. Based on this information, the
agency assigned Inland's proposal a moderate risk rating. Memorandum of Law

at 3-4. UGM's proposal received a low risk rating, and the agency determined
that this rendered UGM's proposal the best value despite its higher price.
Agency Report,

encl. 7, Price Analysis Report, at 6.

PAST PERFORMANCE EVALUATION

Inland argues that assigning Inland's proposal a moderate risk rating was
unreasonable, since it was based on only one reference involving CDRs
amounting to only $2,772.85 on a contract exceeding $1 million, that
reference did not even complete a questionnaire, and a number of the
questionnaires completed by Inland's other references indicated that Inland
did not present a performance risk.

An agency's evaluation of past performance may be based on its reasonable
perception of inadequate prior performance, even where the contractor
disputes the agency's interpretation of the facts. Quality Fabricators,
Inc., B-271431, B-271431.3, June 25, 1996, 96-2 CPD para. 22 at 7. We will
question the agency's conclusion in this regard only where it is not
reasonably based or is undocumented. PMT Servs., Inc., B-270538.2, Apr. 1,
1996, 96-2 CPD para. 98 at 6.

The evaluation of Inland's past performance was reasonable. While the
Goodfellow AFB contracting officer declined to complete a questionnaire in
light of Inland's pending claim, the CDRs show many instances where Inland
failed to mow or trim the grass to the height specified in the contract, to
irrigate the land such that the grass was brown and withered, or to maintain
the grass as required by the contract specifications.

The solicitation allowed the agency to employ several approaches in
determining a firm's past performance risk, including the use of
questionnaires and "using data

independently obtained from other government and commercial sources." RFP sect.
E, at 34. Thus, the absence of a questionnaire did not preclude the agency
from considering the Goodfellow AFB information. Further, while the dollar
value of the deficiencies under that contract may have been small in
relation to the total contract value, and while the agency ultimately
reduced several of the deductions from Inland's contract payments, the
deficiencies nevertheless reflect on the manner in which Inland performed
the contract and, thus, validly could be considered by the agency in
evaluating the firm's past performance. Finally, while Inland received
several favorable references, there was no requirement that the agency
accord those references greater weight than the Goodfellow AFB information.
Rather, the agency reasonably could conclude, as it did, that any evidence
of good past performance was tempered by the performance deficiencies at
Goodfellow AFB, such that the proposal should receive something lower than
the highest available rating. This is particularly the case given that
Goodfellow AFB was one of Inland's more recent contracts, and involved
services similar to those required here, while many of the other references
were for contracts not solely for grounds maintenance services. [1]

TRADEOFF

Inland argues that it is unreasonable for the agency to pay a price premium
of $300,000, in light of the fact that the CDRs under its Goodfellow AFB
contract resulted in deductions totaling only $2,772.85. This argument is
without merit. First, the argument is based on the flawed premise that a low
dollar value for deductions under an offeror's prior contract necessarily
reflects high quality past performance. In fact, we think an agency
reasonably may conclude that the quantity and types of deficiencies are more
significant than the dollar value of deductions, and that a reduced past
performance rating therefore is warranted despite few deductions. Moreover,
there is no requirement that agencies base a source selection tradeoff on a
comparison of the dollar value of deductions under an offeror's prior
contracts with the price premium involved in making award to another
contractor. Rather, agencies may make reasonable price/technical tradeoffs
consistent with the RFP. GTE Hawaiian Tel. Co., Inc., B-276487.2, June 30,
1997, 97-2 CPD para. 21 at 16-17. The RFP here advised offerors that the agency
would make a tradeoff under the PPT

technique if the low offeror did not receive a low performance risk rating.
RFP sect. E, at 33. The Air Force did this and specifically determined that
Inland's performance problems under the Goodfellow AFB contract created a
moderate risk of performance problems under this contract, and that UGM's
somewhat higher price (approximately $31,000 in the base year and $61,500 in
the 4 option years) was a reasonable amount to pay for increased assurance
of receiving satisfactory or better performance. Agency Report, encl. 7,
Price Analysis Report, at 6. See USA Elecs.,

B-275389, Feb. 14, 1997, 97-1 CPD para. 75 at 3-4. This tradeoff was based on
the factors under the RFP, and we find nothing unreasonable in an agency's
paying a premium to avoid a greater risk of unsatisfactory performance.

DISCUSSIONS

Inland maintains that the agency should have discussed with Inland its
concerns over the firm's performance of the Goodfellow AFB; Inland claims it
was not afforded a meaningful opportunity to respond to, explain, or comment
on those concerns, as required by procurement regulations.

There generally is no obligation that a contracting agency conduct
discussions where, as here, the RFP specifically instructs offerors of the
agency's intent to award a contract on the basis of initial proposals.
Robotic Sys. Tech., B-278195.2, Jan. 7, 1998, 98-1 CPD para. 20 at 11. While the
contracting officer's discretion in deciding not to hold discussions is not
unfettered, it is quite broad and has been expanded in recent years. Id. Our
Office will review the exercise of such discretion to ensure that it was
reasonably based on the particular circumstances of the procurement. Id.

There are no circumstances here that call into question the agency's
decision not to engage in discussions. Inland's and the awardee's past
performance information was well-documented, and the price difference
between the proposals was not extreme. Since the information available to
the agency was sufficient to enable it to differentiate between the firms'
proposals in its selection decision, the agency's decision not to conduct
discussions was reasonable. Inland's position that the agency should have
provided it an opportunity to comment on its Goodfellow AFB contract
performance is based on a provision of the FAR--sect.15.610(c)(6)--which was
deleted from the FAR in October 1997 (well before the solicitation here was
issued), and thus has no effect. While FAR sect.15.306(a)(2) (which concerns
"Clarifications and award without discussions") provides that "offerors may
be given the opportunity to clarify certain aspects of proposals," including
past performance information, there is no requirement that agencies provide
such an opportunity. [2] See Rohmann Servs., Inc.,

B-280154.2, Nov. 16, 1998, 98-2 CPD para. 134 at 8.

UNEQUAL TREATMENT

Inland seems to contend that it was treated unfairly vis-ï¿½-vis the awardee,
which also received multiple CDRs from a particular reference, Offutt AFB,
but did not have its risk rating downgraded. This argument is without merit.
First, notwithstanding the CDRs, Offutt AFB stated in its completed
questionnaire that it considered the awardee to be an excellent contractor
to which it would make award again. Specifically, this reference indicated
that despite "[m]inor CDRs for minor incompletions," there was "never a
major problem," the "situations [were] corrected immediately," and UGM's
performance was "excellent considering the scope of the contract." Agency
Report, encl. 10. Further, three of UGM's four references rated the firm's
performance exceptional (the fourth was fully satisfied and reported no
problems), two of UGM's prior contracts involved similarly-sized Air Force
bases, and all of the firm's experience was in the grounds maintenance area.
The agency found that all of these factors indicated low performance risk.
Given the high quality of UGM's references, we find nothing unreasonable in
the agency's determination that UGM's past performance was superior to
Inland's.

The protest is denied.

Comptroller General

of the United States

Notes

1. Inland asserts that the Goodfellow AFB contracting officer told Inland in
a pre-protest conversation that she told the individual who contacted her
from Warren AFB that Inland was still performing on Goodfellow's refuse
contract and was "the best contractor Goodfellow has ever had." Comments at
6-7. This statement is uncorroborated in the record. Even if correct,
however, this information concerned a refuse contract, not grounds
maintenance. As indicated, the agency determined--reasonably, we think--that
grounds maintenance contracts should be accorded the greatest weight in the
past performance evaluation. This being the case, the agency reasonably
could conclude that the deficiencies under Inland's Goodfellow AFB grounds
maintenance contract warranted a less favorable performance risk rating,
notwithstanding the quality of Inland's performance of the refuse contract.

2. In any case, we note that the record shows Inland was well aware of the
specific deficiencies under the Goodfellow AFB contract. Indeed, Inland
contested the deficiency notices and, as indicated, was pursuing a contract
claim at the time the Air Force was gathering performance information for
the past performance evaluation.