TITLE:   Diversified Technology & Services of Virginia, Inc., B-282497, July 19, 1999
BNUMBER:  B-282497
DATE:  July 19, 1999
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Diversified Technology & Services of Virginia, Inc., B-282497, July 19, 1999

Decision

Matter of: Diversified Technology & Services of Virginia, Inc.

File: B-282497

Date: July 19, 1999

Virginia Smith and E. D. David for the protester.

Marion T. Cordova, Esq., Agricultural Research Service, for the agency.

Christina Sklarew, Esq., and Paul I. Lieberman, Esq., Office of the General
Counsel, GAO, participated in the preparation of the decision.

DIGEST

Protest that sole-source extension of contract is an improper result of poor
planning on the agency's part is denied where the record shows that the
agency engaged in extensive planning (once it determined that a change in
contract type would better serve the government's interests), properly
justified its use of sole-source authority, and reasonably limited the
sole-source extension to a 3-month period, with additional 1-month options.

DECISION

Diversified Technology & Services of Virginia, Inc. protests the Department
of Agriculture, Agricultural Research Service's sole-source extension of
contract No. 53-3K06-8-8 for operations and maintenance support services for
its Southern Regional Research Center in New Orleans, Louisiana. Diversified
alleges that the extension is improper because it is due to a lack of
planning on the agency's part.

We deny the protest.

In September 1997, Diversified was selected for award under request for
proposals (RFP) No. 01-3K06-97 for these same services. Three offerors
protested improprieties in the evaluation and source selection process, and
a hearing was held in our Office in November. During the course of that
hearing, the agency recognized that the evaluation had been improper, and
proposed to reevaluate proposals and make a new source selection based on
that reevaluation. As a result, Diversified's contract was terminated for
the convenience of the government.

In January 1998, responsibility for the procurement was transferred to a
different branch of the Agricultural Research Service and assigned to a
different contracting officer. The new contracting officer reviewed the
procurement and determined that the contract type should be changed from
cost-reimbursement to fixed-price, and that a reevaluation of the initially
submitted proposals would no longer be practical. Agency Report, Tab C, Jan.
1998 Initial Proposal Review Assessment, at 1. [1] The contracting officer
expected that new proposals could be requested without changing the
performance work statement (PWS), thus limiting the time and effort required
for a complete rewrite. Id. The agency sent a revised solicitation package
to the original competitive range offerors on March 5. Protest, Tab 6.
Although the PWS was unchanged, the revised RFP generated 119 questions from
prospective offerors, seeking clarification of the PWS in light of the
higher level of risk that a contractor would bear under a fixed-price
contract. Agency Request for Dismissal at 5. After reviewing the questions,
the contracting officer determined that the PWS should be rewritten, in
order to respond to the questions and to reflect the agency's approach to
performance-based service contracting. Id. The agency notified offerors that
the PWS was being substantially revised, established a deadline for the
submission of any additional questions, and stated that a consolidated
amendment would be issued to reflect the revisions. Protest, Tab 7, Letter
from Contracting Officer to Offerors (Mar. 12, 1998).

Agency personnel in Washington and New Orleans coordinated efforts to edit
and redraft the new PWS. When it became apparent that their workload was
preventing them from finishing the redraft as quickly as was necessary, they
decided in August 1998 to hire a contractor to write a second PWS draft.
Agency Request for Dismissal at 6. In November, the contractor delivered its
final PWS draft, which the agency then reviewed and finalized for release.
On March 5, 1999, the agency published in the Commerce Business Daily a
notice of its intent to negotiate on a sole-source basis an extension to its
contract with J.A. Jones Management Services. Protest, Tab 9. On March 15,
the agency issued a proposed schedule for the procurement, projecting
milestones such as the release of the amended RFP on April 16, 1999, closing
date for receipt of proposals on May 14, and (after negotiations and the
submission of best and final offers) award in September. [2] Protest, Tab
15, Letter from Contracting Officer to Offerors at 2 (Mar. 15, 1999). On
March 22, the agency's competition advocate signed a justification and
approval (J&A) for other than full and open competition to support the
proposed contract extension.

Diversified filed a protest with the agency on March 10, contending that the
sole-source extension was improper and that an award should simply be made
on the basis of a reevaluation of existing 1997 best and final offers.
Protest, Tab 10, Letter from Diversified to Contracts Branch, Agricultural
Research Service (Mar. 10, 1999). The agency denied Diversified's protest by
letter of March 31, offering explanations for the various delays that had
occurred in the procurement process and concluding that since the operations
and maintenance services are required on an ongoing basis, the incumbent
contractor is the only feasible source until a new contract can be awarded
on the basis of the revised RFP. Protest, Tab 1, Letter from Contracting
Officer to Diversified (Mar. 31, 1999). This protest followed.

Diversified protests that the extension is improper because it was caused by
a failure on the agency's part to engage in advance planning, arguing that
the agency should have realized when it decided to change the contract type
that this change "could not be made in an expeditious manner." Protest at 6.

While the overriding mandate of the Competition in Contracting Act of 1984
(CICA) is for "full and open competition" in government procurements
obtained through the use of competitive procedures, 41 U.S.C.A.
sect. 253(a)(1)(A) (West Supp. 1999), CICA does permit noncompetitive
acquisitions in specified circumstances, such as when the services needed
are available from only one responsible source or when the agency's need for
the services is of such an unusual and compelling urgency that the agency
would be seriously injured unless permitted to limit the number of sources
solicited. 41 U.S.C. sect.sect.  253(c)(1), (c)(2) (1994). When an agency uses
noncompetitive procedures under 41 U.S.C. sect. 253(c)(1) or (c)(2), it is
required to execute a written J&A with sufficient facts and rationale to
support the use of the specific authority. See 41 U.S.C. sect. 253(f)(1)(A) and
(B); Federal Acquisition Regulation (FAR) sect.sect. 6.302-1(d), 6.302-2(c), 6.303,
6.304. Our review of the agency's decision to conduct a sole-source
procurement focuses on the adequacy of the rationale and conclusions set
forth in the J&A. When the J&A sets forth a reasonable justification for the
agency's actions, we will not object to the award. Marconi Dynamics, Inc.,
B-252318, June 21, 1993, 93-1 CPD para. 475 at 5; Dayton-Granger, Inc.,
B-245450, Jan. 8, 1992, 92-1 CPD para. 37 at 4. However, noncompetitive
procedures may not properly be used where the agency created the urgent need
through a lack of advance planning. 41 U.S.C. sect. 253(f)(5)(A); see Laidlaw
Envtl. Servs. (GS), Inc.; International Tech. Corp.--Claim for Costs,
B-249452, B-250377.2, Nov. 23, 1992, 92-2 CPD para. 366 at 4.

Here, the J&A recites the procurement's history, as described above, and
states that proposals are currently being resolicited, with September 30 as
the anticipated award date. The J&A states that, in the interim, the
research center cannot accomplish its mission without these services. Noting
that the incumbent has provided the services for the past 5 years, the J&A
concludes that Jones's experience and knowledge will permit the firm to
continue to support the research center efficiently and at the lowest cost
to the government. The J&A lists four bases for its conclusion that Jones is
uniquely qualified to provide the services through an extension to its
current contract, which may be paraphrased as follows:

  1. No other offeror could immediately perform all of the services provided
     by Jones without incurring substantial cost and causing unacceptable
     delay.
  2. Any other contractor would incur excessive projected duplicated cost
     and schedule risk to provide the services.
  3. While it would be technically possible for other companies to provide
     the required services, this could only be achieved by expending
     considerable resources and time; the incumbent contractor already has
     the organization in place to provide these services without any
     transition.
  4. These services are needed on an ongoing basis to support the research
     center; any delay would result in critical mission impairment in
     research.

Justification for Other Than Full and Open Competition for Operation and
Maintenance Support at 3.

In essence, the J&A acknowledges that other firms could eventually provide
the services, but that none could immediately perform all of the services
provided by the incumbent without incurring substantial costs and causing
unacceptable delay. The record shows that the agency has been unable to
complete the planning required to conduct a competition for these services
despite its substantial ongoing efforts to do so.

In our view, the J&A provides an adequate rationale and conclusions to
support the 3-month contract extension with six 1-month options at issue.
Although Diversified argues that the agency has been moving too slowly and
that its current situation was caused by a lack of advance planning, the
record demonstrates that the delays have, in fact, been caused in part by
the agency's efforts to plan for the long term rather than to opt for a
short-term "fix." The agency's determination that a fixed-price contract
would better serve its needs and be more cost-effective in the long run led
to its conclusion that it could not simply reevaluate existing best and
final offers; and although the contracting officer had hoped to avoid
revising the PWS, questions from competitive range offerors led the agency
to conclude that it could not simply retain its original PWS. While the
revision project has not moved quickly, we do not agree with Diversified's
premise that any delays render the agency's use of a limited sole-source
extension impermissible here. CICA clearly requires advance procurement
planning--and does not recognize the lack of such planning as a valid
justification for a sole-source procurement--but CICA does not require that
such planning be entirely successful or error-free. Sprint Communications
Co., L.P., B-262003.2, Jan. 25, 1996, 96-1 CPD para. 24 at 9. Here, rather than
demonstrating the lack of advance planning, as the protester suggests, the
record establishes that the agency has been very actively engaged in
planning efforts.

Diversified argues in its comments on the agency report that the issue is
whether the agency engaged in advance planning prior to the release of the
initial solicitation in February 1997, and suggests that the planning that
occurred after that date is irrelevant here. Protester's Comments at 1-2. We
disagree. Nothing in the record suggests a lack of advance planning before
the February 1997 release of the solicitation. Instead, Diversified's real
complaint is with the shift from a cost-reimbursement to a fixed-price
contract, which Diversified concedes would necessarily take considerable
time. The agency has, however, provided a reasonable explanation of why the
new contracting officer decided that a fixed-price contract was more
appropriate, in light of the recurring nature of the services being procured
and the agency's intervening experience with a similar contract in another
part of the country. Contracting Officer's Statement at 2. While Diversified
plainly disagrees with that decision, once it was made (in early 1998), the
protester appears to agree that the transition would take considerable time
(in the protester's words, "could not be made in an expeditious manner"). We
thus conclude that the lack of advance planning did not cause the delay.

While Diversified argues that our decision in New Breed Leasing Corp.,
B-274201, B-274202, Nov. 26, 1996, 96-2 CPD para. 202, is dispositive, we
disagree. In that decision, we concluded that an agency had failed to engage
in advance planning when it failed to recognize and correct obvious flaws in
prior solicitations and contracts, leading contracting officials to cancel a
solicitation 8 months after the submission of initial proposals and to
extend admittedly flawed contracts for an entire year. In contrast, here the
agency has taken the initiative, recognizing after a protest brought to
light certain evaluation improprieties that a different type of contract
would be more cost effective and less administratively burdensome for the
government. In addition, the proposed extensions are limited to a 3-month
period, with options to extend for 1 month at a time. [3]

With regard to Diversified's disagreement with the agency's determination to
change contract types, we note that the decision as to the appropriate
pricing format was within the discretion of the agency, and we believe that
the agency's exercise of that discretion here was reasonable. For example,
while the protester appears to disagree with the agency's reference to the
government's interest in shifting risk to the contractor in the context of
recurring requirements, Protester's Comments at 2-3, the FAR supports the
agency's approach. See FAR sect. 16.104(d).

Finally, the protester seeks a decision from our Office recommending that
the agency award the contract on the basis of the 1997 best and final
offers. We cannot make such a recommendation here, both because we have
found that the agency did not violate a procurement statute or regulation
(and we therefore have no reason to recommend relief at all) and because the
particular relief sought by Diversified is unreasonable. Once the agency
reasonably decided that a cost-reimbursement contract did not meet its
needs, there is no plausible basis to recommend that the agency select from
among a range of 2-year-old proposals based on that pricing format. In any
event, since the agency notified Diversified of its determination that it
could not award a contract based on the existing best and final offers by
letter of February 5, 1998, the propriety of that decision cannot now be
timely challenged. Bid Protest Regulations, 4 C.F.R. sect. 21.2(a)(2) (1999).

The protest is denied.

Comptroller General
of the United States

Notes

1. The contracting officer advised offerors of these decisions by letter of
February 5, 1998. Protest, Tab 5.

2. On April 16, the Department of Agriculture released its revised RFP and
established a May 20 closing date for receipt of proposals.

3. In this context, we note that the remedy recommended in New Breed was
that the "agency make expeditious efforts to finalize competitive
procurements for these requirements and terminate [the extended] contracts
upon award of those contracts." New Breed Leasing Corp., supra, at 8. Here,
since the extensions are limited to shorter periods and the agency is
engaged in the process of finalizing its procurement process, that same
result will actually obtain.