TITLE:  Burns and Roe Services Corporation, B-282437.3, November 30, 1999
BNUMBER:  B-282437.3
DATE:  November 30, 1999
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Burns and Roe Services Corporation, B-282437.3, November 30, 1999

Decision

Matter of: Burns and Roe Services Corporation

File: B-282437.3

Date: November 30, 1999

Lee Curtis, Esq., and Mitchel Neurock, Esq., Howrey & Simon, for the
protester.

Katherine S. Nucci, Esq., and Timothy Sullivan, Esq., Adduci, Mastriani &
Schaumberg, for Kvaerner Process Services, Inc., an intervenor.

Vicki E. O'Keefe, Esq., and Robert Roylance, Esq., Department of the Navy,
for the agency.

Linda S. Lebowitz, Esq., Office of the General Counsel, GAO, participated in
the preparation of the decision.

DIGEST

Protest of an alleged solicitation impropriety--that the agency improperly
considered crew berthing costs in the evaluation of price proposals--is
dismissed as untimely where the protester waited until after award to raise
this issue.

DECISION

Burns and Roe Services Corporation (BRSC) protests the award of a contract
to Kvaerner Process Services, Inc. (KPSI) under request for proposals (RFP)
No. N62470-98-R-4510, issued by the Department of the Navy for base
operating services at the U.S. Naval Base, Guantanamo Bay, Cuba. BRSC
challenges the agency's decision to consider an offeror's proposed crew
berthing costs in the price evaluation.

We dismiss the protest.

BACKGROUND

Solicitation and Amendments

The RFP, issued on December 7, 1998, contemplated the award of a combination
fixed-price/indefinite quantity award fee contract to the responsible
offeror whose proposal was determined to represent the best value to the
government, technical evaluation factors (past performance, corporate
experience, work accomplishment/staffing, and financial capability) and
price considered. RFP at L-3, M-7. [1]

As relevant here, the RFP as initially issued contained a provision at
section C1.6.8, captioned "Crew Berthing," which provided that the
government would reimburse the contractor for actual crew berthing costs at
$6 per day per person at the Gold Hill Contractor Berthing Facility,
operated by the Naval Station under a Memorandum of Understanding with the
Morale, Welfare, and Recreation (MWR) Department, a non-appropriated fund
instrumentality of the government. RFP at C.1-7. The RFP schedule, line item
No. 0001AA, listed crew berthing as a direct cost at $6 each. RFP at B-3.
Under the RFP as initially issued, an offeror's proposed crew berthing costs
would not be evaluated, at least up to the RFP's $6 rate. Contracting
Officer's (CO) Statement at 2.

During the conduct of this procurement, the agency issued several amendments
addressing crew berthing costs. Amendment No. 1, issued on February 12,
1999, removed from section C1.6.8 any reference to the $6 per day per person
reimbursable crew berthing rate and removed line item No. 0001AA from the
RFP schedule. RFP amend. 1, at C.1-7, B-3. Under amendment No. 1, crew
berthing costs would be considered as part of an offeror's total proposed
cost. CO Statement at 2. In section C1.6.8 of amendment No. 3, issued on
February 28, the crew camp known as Hibiscus Hollow, currently owned and
operated by KPSI, was added as a second location for crew berthing. RFP
amend. 3, at C.1-7. This amendment also stated that the government would not
reimburse the contractor for crew berthing costs, id., and accordingly,
these costs would be evaluated as part of an offeror's total proposed cost.
CO Statement at 2.

Amendment No. 5, issued on March 19, made no changes to section C1.6.8, but
amended section L.11 by requiring offerors to submit supplemental pricing
information, including information on crew berthing costs. This amendment
added the following provision:

NOTE. The Offeror must furnish the pricing information for the base year and
four option years. Any significant price changes in the option years must be
explained. Pricing for Crew Berthing will not be considered when evaluating
price.

RFP amend. 5, at L-7.

Under amendment No. 5, "even though crew berthing was a factor in
competitive pricing because it was no longer reimbursable, it was not being
specifically evaluated for any purpose." CO Statement at 2.

Amendment No. 6, issued on May 17, added language to section C1.6.8 that the
current crew berthing rate at Gold Hill was $6 per day per person. RFP
amend. 6, at C.1-7. Amendment No. 6 also deleted page L-7 of amendment No.
5, see id. at 2 (list of deleted pages and replacement pages), which
contained the supplemental pricing information requirement and note that
crew berthing costs would not be considered when evaluating price, as quoted
above. Therefore, the effect of amendment No. 6 "was to reinstate
consideration of crew berthing in [the] evaluation of pricing." CO Statement
at 3.

On a separate page in amendment No. 7, issued on May 25, the agency stated
the following:

PLEASE NOTE:

Amendment 0006 deleted the following paragraph on Page L-7 [of amendment No.
5]:

"NOTE: The Offeror must furnish the pricing information for the base year
and four option years. Any significant price changes in the option years
must be explained. Pricing for Crew Berthing will not be considered when
evaluating price."

RFP amend. 7, at 3.

Amendment No. 7 confirmed that amendment No. 6 removed the language in
amendment No. 5 regarding the non-evaluation of an offeror's proposed crew
berthing costs. In other words, under amendment Nos. 6 and 7, such costs
would be evaluated. CO Statement at 3.

Proposal Submissions and Discussions

BRSC and KPSI, both incumbent contractors at the Guantanamo Bay site, each
submitted initial proposals on April 5. BRSC proposed to house employees at
the MWR Gold Hill facility, while KPSI proposed to use its Hibiscus Hill
facility. In its initial proposal, BRSC stated that "[w]e have included
berthing . . . per Amendments 0003 and 0005. We have priced berthing at a
rate of $[deleted]." Agency Report, Tab 3, BRSC's Initial Price Proposal,
at 4. [2] By letters dated May 25, the agency conducted technical and price
discussions with both BRSC and KPSI.

On June 8, BRSC and KPSI submitted their first revised proposals. (First
revised proposals were submitted after the issuance of amendment Nos. 6 and
7 which, respectively, deleted and confirmed the deletion of language in
amendment No. 5 that had provided for the non-evaluation of an offeror's
proposed crew berthing costs; in addition, amendment No. 6 stated that the
crew berthing rate at the Gold Hill facility was $6 per day per person). In
its submission, BRSC continued "per Amendments 0003 and 0005 . . . [to]
price[] berthing at a rate of . . . $[deleted]." Agency Report, Tab 9,
BRSC's First Revised Price Proposal, at 1. [3] By letters of June 23, the
agency conducted a second round of technical and price discussions with both
BRSC and KPSI. The agency posed the following matter to BRSC:

(4) Your price revision for berthing costs is based on Amendments 0003 and
0005 at a berthing rate of $[deleted]. Amendment 0006 specifically addresses
this issue. Please clarify and acknowledge all amendments addressing
berthing costs.

Agency Report, Tab 13, CO Letter to BRSC (June 23, 1999), encl. 1, at 3.

On June 24, the agency conducted oral discussions with both BRSC and KPSI.
With respect to BRSC, the agency repeated discussion question (4), as quoted
above. According to the agency's minutes of this discussion session, the
agency advised BRSC to address "why [certain] price[s] [were] high or low
rather than they [BRSC] will just take care of it. We [the agency] want to
know how they [BRSC] will do the function. We want to see their economy,
etc." BRSC advised that they were "in a unique position because they ha[d]
accumulated a lot of materials and equipment [at Guantanamo Bay] that they
[could] draw on." Agency Report, Tab 15, Agency Minutes of Oral Discussions
with BRSC, at 6. According to BRSC's proposed project manager who attended
this discussion session, representatives of BRSC stated that the firm "would
review crew berthing costs and address it . . . in light of Amendment 0006."
Declaration of [deleted] BRSC's Proposed Project Manager, attach. 2 to
BRSC's Comments, at 2.

On July 6, BRSC and KPSI submitted second revised proposals. In its
submission, BRSC continued "per Amendments 0003 and 0005 . . . [to] price[]
berthing at a rate of . . . $[deleted]." Agency Report, Tab 21, BRSC's
Second Revised Price Proposal, at 1. [4] By letter dated July 14, in
response to a phone call from the agency, BRSC answered three cost questions
which it had failed to address in its July 6 submission. In response to the
previously quoted discussion question (4), BRSC stated that it "acknowledges
all amendments through 0010. We have based our estimate of berthing costs on
our knowledge and ability to provide for berthing at this projected rate."
Agency Report, Tab 23a, BRSC's Response to Discussion Questions, at 3.

By letters dated July 14, the agency advised both BRSC and KPSI that
discussions were concluded and requested that each firm submit a final
proposal revision by July 21. Concerning BRSC, the agency advised the firm
that:

The following weakness[] relative to your proposal [is] noted:

[] Your revised price proposal indicates a berthing rate of $[deleted].
Please price in accordance with paragraph C1.6.8 of the solicitation [i.e.,
amendment No. 6].

Agency Report, Tab 24, CO Letter to BRSC (July 14, 1999), at 1.

On July 21, BRSC and KPSI each submitted final proposal revisions. In its
submission, BRSC stated, "We have included berthing in our supplemental cost
detail per Amendments [sic] 0006. We have priced berthing at a rate of $6.00
per day/per person." Agency Report, Tab 26, BRSC's Final Price Proposal
Revision, at 1. [5]

The agency determined to award the contract to KPSI, the offeror submitting
the technically superior, lower priced (by approximately $[deleted] when
crew berthing costs were considered) proposal. Agency Report, Tab 28, Price
Evaluation Board Report, July 26, 1999, at 7. [6]

ISSUES AND ANALYSES

BRSC argues that the agency wrongfully considered crew berthing costs in the
price evaluation; wrongfully failed to take steps to normalize crew berthing
costs; and wrongfully interfered with its competitive discretion by
directing it to raise its proposed price for crew berthing. Protest at
11-16. BRSC explains that in 1997, in response to an agency-level protest on
a prior procurement at Guantanamo Bay, the agency represented to BRSC that
crew berthing costs either would not be considered or would be normalized in
future procurements to eliminate any unfair cost advantage accruing to KPSI
as a result of its being able to provide crew berthing at a lower rate since
it owned and operated the Hibiscus Hill facility. BRSC's Comments at 2. BRSC
states that it reminded the agency of this commitment early in the course of
this procurement and, as a result, the agency issued amendment No. 5 which
provided that an offeror's proposed crew berthing costs would not be
considered in the price evaluation. Id. BRSC complains, however, that the
agency reneged on its commitment to level the competitive playing field by
considering, and by failing to normalize, crew berthing costs in the price
evaluation and by directing the firm to price crew berthing in accordance
with amendment No. 6 at $6 per day per person.

Our Bid Protest Regulations require that protests based upon alleged
improprieties which do not exist in the initial solicitation, but which are
subsequently incorporated into the solicitation, be filed not later than the
next closing time for receipt of proposals following the incorporation. 4
C.F.R. sect. 21.2(a)(1) (1999). Here, we conclude that BRSC's challenge of the
agency's price evaluation, specifically, the agency's consideration of, and
failure to normalize, offerors' crew berthing costs and the agency's
direction to BRSC to price its proposed crew berthing costs in accordance
with amendment No. 6, is untimely.

As a threshold matter, the resolution of which becomes dispositive as to the
timeliness of BRSC's substantive price evaluation arguments, BRSC contends
that amendment No. 7 "reinstate[d] the crew berthing cost provision [i.e.,
the pricing note that an offeror's proposed crew berthing costs would not be
considered in the price evaluation] that had been left out of Amendment
0006." BRSC's Comments at 10. While amendment No. 5 contained a note on page
L-7 stating that "[p]ricing for [c]rew [b]erthing [would] not be considered
when evaluating price," this note was deleted in amendment No. 6 (when page
L-7 of amendment No. 5 was removed), and the deletion of this note was
confirmed in amendment No. 7 (where amendment No. 7 specifically stated that
"Amendment 0006 deleted the following paragraph [i.e., the crew berthing
price evaluation note] on Page L-7 [of amendment No. 5]"). Contrary to
BRSC's position, there is nothing in the language in amendment No. 7 which
"reinstated" the crew berthing pricing note from amendment No. 5 to preclude
the evaluation of an offeror's proposed crew berthing costs.

Moreover, even if BRSC misread amendment No. 7, the record of written and
oral discussions with BRSC reveals that the agency focused on the firm's
proposed crew berthing costs, specifically its failure to provide any
meaningful justification for its $[deleted] rate, thereby rendering this
rate, in the agency's view, a "weakness." In this regard, by letter of June
23 (issued approximately one month after amendment Nos. 6 and 7 superseded
amendment No. 5), the agency requested that BRSC clarify its proposed crew
berthing rate of $[deleted] based on amendment Nos. 3 and 5, since amendment
No. 6 addressed the crew berthing issue (i.e., as discussed above, amendment
No. 6 deleted page L-7 of amendment No. 5 with the crew berthing price
evaluation note and amendment No. 6 provided for a $6 per day per person
crew berthing rate at the Gold Hill facility). On June 24, during oral
discussions, the agency addressed this issue with BRSC and basically told
BRSC that it would have to provide meaningful explanations of its pricing.
As a follow-up to its second revised proposal, BRSC advised the agency that
it continued to price crew berthing at $[deleted] in accordance with
amendment Nos. 3 and 5 based on "[its] knowledge and ability to provide for
berthing at this projected rate." The agency obviously rejected this
unsubstantiated justification [7] because by letter of July 14, in
requesting BRSC's final proposal revision, the agency advised BRSC of "[t]he
following weakness[] . . . Your revised price proposal indicates a berthing
rate of $[deleted]. Please price in accordance with paragraph C1.6.8 of the
solicitation [i.e., amendment No. 6]." In its final price proposal revision
submitted on July 21, BRSC finally priced crew berthing in accordance with
amendment No. 6 at $6 per day per person.

Reading the record in the light most favorable to BRSC, we conclude that
BRSC, which was concerned as early as 1997 with an unfair competitive
advantage accruing to KPSI if an offeror's proposed crew berthing costs were
considered as part of the agency's price evaluation, should have known that
when its unsubstantiated $[deleted] crew berthing rate was labeled a
"weakness" in the agency's letter of July 14 and that when the agency, in
this same letter, directed BRSC to raise its crew berthing rate by
approximately [deleted] percent to $6 per day in accordance with amendment
No. 6, that the agency, in fact, was evaluating offerors' proposed costs for
crew berthing. The evaluation of offerors' crew berthing costs should have
been protested, at the latest, by the July 21 closing time for receipt of
final proposal revisions as announced in the July 14 letter to BRSC.
Therefore, BRSC's post-award protest of the agency's evaluation of crew
berthing costs is untimely. 4 C.F.R. sect. 21.2(a)(1). [8]

To the extent BRSC believes that its $[deleted] crew berthing rate was
mischaracterized as a weakness and that it should have been able, since the
RFP contemplated the award of a fixed-price contract, to submit a lower
price for crew berthing at the Gold Hill facility than the $6 per day rate
called for by amendment No. 6 in order to retain its competitive position
[i.e., a "buy-in"], BRSC should have protested these matters prior to its
submission of its final proposal revision on July 21, not after award. 4
C.F.R. sect. 21.2(a)(1). [9] Although BRSC continues to argue that the agency's
final proposal revision instructions were not objectionable in the context
of BRSC's understanding that an offeror's proposed crew berthing costs would
not be evaluated or that such costs would be normalized, as previously
discussed, the RFP, after the deletion in amendment No. 6 of the crew
berthing pricing note in amendment No. 5, clearly contemplated the
evaluation of an offeror's proposed crew berthing costs and there was no
requirement in the RFP to normalize these costs.

Finally, BRSC contends that the source selection decision was arbitrary and
irrational because it failed to consider the benefit to the government of
housing contractor employees at the Gold Hill MWR facility. Protest at
16-17. In this respect, BRSC states that had it received the award, over the
5-year term of the contract, it would have generated revenue of
approximately $[deleted] million for the MWR program, thus positively
affecting the financial position of this program at Guantanamo Bay.

However, we simply point out that any financial benefit to the Gold Hill MWR
facility was not a stated evaluation factor and, therefore, would have been
an improper consideration in the agency's best value award determination.

The protest is dismissed.

Comptroller General
of the United States

Notes

1. The technical evaluation factors and price were equally weighted.

2. In its initial price proposal, BRSC acknowledged amendment Nos. 1 through
5. Id. at Standard Form (SF) 33.

3. In its first revised price proposal, BRSC acknowledged amendment Nos. 1
through 8. Id. at attachment to SF 33.

4. In its second revised price proposal, BRSC acknowledged amendment Nos. 1
through 10. Id. at attachment to SF 33.

5. In its final price proposal revision, BRSC acknowledged amendment Nos. 1
through 11. Id. at attachment to SF 33.

6. Our Office dismissed as untimely and for failing to state a valid basis
for protest BRSC's protest of the agency's technical evaluation and source
selection decision since specific challenges in these areas were raised for
the first time in BRSC's comments on the agency report, as opposed to in its
initial protest based on information revealed during its post-award
debriefing. Burns and Roe Servs. Corp., B-282437.4, Oct. 29, 1999
(unpublished decision).

7. BRSC states in its protest and comments that it had an oral agreement
with MWR to house employees at the Gold Hill MWR facility at a reduced rate
of $[deleted] in exchange for limited maintenance services. Protest at
16-17; BRSC's Comments at 17-18; Declaration of [deleted] BRSC's Contracts
Manager, attach. 1 to BRSC's Comments, at 4. However, despite being given
numerous opportunities in proposal submissions and during discussions, BRSC
did not refer to such agreement. The agency provided in its report
declarations from the MWR Deputy Director and the MWR Facilities/Logistics
Manager at Guantanamo Bay; each of these individuals stated that "[a]t no
time while acting as an agent from MWR have I made any oral agreements with
[BRSC] to exchange maintenance and custodial services for a discounted room
rate at the Gold Hill berthing facility." Agency Report, Tab 31, Declaration
of [deleted] Deputy Director of MWR, at 1; Agency Report, Tab 32,
Declaration of [deleted] Facilities/Logistics Manager of MWR, at 1. In its
comments on the agency report, BRSC offered no meaningful rebuttal to the
declarations filed by the MWR representatives (specifically, BRSC offered no
rebuttal from its site manager who allegedly reached this agreement with the
MWR officials).

8. The July 14 letters requesting final proposal revisions by July 21 were
signed by a contracting official and sent to both BRSC and KPSI, and
therefore constituted a solicitation amendment. See, e.g., Proteccion
Total/Magnum Security, S.A., B-278129.4, May 12, 1998, 98-1 CPD para. 137 at 3.

In addition, we note that there was no requirement in the RFP for the agency
to normalize crew berthing costs. Thus, the RFP's omission in this regard
constitutes an alleged solicitation impropriety that should have been
protested by BRSC prior to the appropriate closing time, not after award. 4
C.F.R. sect. 21.2(a)(1).

9. In other words, if BRSC believed that the agency was treating crew
berthing costs as a cost reimbursable-type item, in contravention of the
fixed-price nature of the contract, based on the July 14 discussion question
to the firm, BRSC should have raised this issue prior to award. Id.