TITLE:  York Building Services, Inc.; Olympus Building Services, Inc.--Costs, B-282887.10; B-282887.11, August 29, 2000
BNUMBER:  B-282887.10; B-282887.11
DATE:  August 29, 2000
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York Building Services, Inc.; Olympus Building Services, Inc.--Costs,
B-282887.10; B-282887.11, August 29, 2000

Decision

Matter of: York Building Services, Inc.; Olympus Building Services,
Inc.--Costs

File: B-282887.10; B-282887.11

Date: August 29, 2000

Thomas J. Madden, Esq., and Fernand A. Lavallee, Esq., Venable, Baetjer,
Howard & Civiletti, for York Building Services, Inc., and Ruth E. Ganister,
Esq., Rosenthal & Ganister, for Olympus Building Services, Inc., the
protesters.

Kathy B. Cowley, Esq., and John A. Thompson, Esq., Department of the Navy,
for the agency.

Paula A. Williams, Esq., and Michael R. Golden, Esq., Office of the General
Counsel, GAO, participated in the preparation of the decision.

DIGEST

General Accounting Office (GAO) recommends that protesters be reimbursed the
reasonable costs of filing and pursuing their protests challenging the
Navy's evaluation and selection process where the contracting agency unduly
delayed taking corrective action in response to the protests, which were
clearly meritorious; Navy took corrective action only after GAO conducted
"outcome prediction" alternative dispute resolution based on various
improprieties readily apparent in the evaluation documents.

DECISION

York Building Services, Inc. and Olympus Building Services, Inc. request
that our Office recommend that they recover the costs, including attorneys'
fees, incurred in filing and pursuing a series of protests challenging the
award of a contract to Federal Services, Inc. under request for proposals
(RFP) No. N00600-99-R-1335, issued by the Department of the Navy, Fleet and
Industrial Supply Center Norfolk, for janitorial services to be provided at
the Department of Agriculture's headquarters in Washington, D.C.

We recommend that the agency reimburse York and Olympus the reasonable costs
of filing and pursuing their protests.

After learning of the award to Federal Services and receiving a debriefing,
York filed its initial protest on January 28, 2000. York argued that the
Navy improperly evaluated proposals; failed to follow the RFP evaluation
scheme; improperly applied an unstated evaluation factor, i.e., a mandatory
minimum staffing level; misled the protester during discussions, resulting
in York raising its price; and made an improper best value determination
that Federal Services' proposal was most advantageous to the government. On
February 4, York filed its first supplemental protest alleging, among other
things, that the agency's price analysis and risk assessment of its own and
Federal Services' proposal were intrinsically flawed because the Navy lacked
the information necessary to reasonably determine whether either offeror's
proposal complied with the unannounced minimum staffing requirement.

The Navy filed a consolidated agency report in response to York's initial
and first supplemental protests, which denied the protest allegations and
provided evaluation documents to support its position. [1] York then filed
two additional supplemental protests asserting new allegations derived from
these documents. Among other things, the firm alleged that Federal Services'
proposal failed to meet the RFP requirements regarding key personnel; that
the Navy's acceptance of Federal Services' noncompliant proposal was
improper and prejudicial to York; and, that the Navy improperly failed to
apply the weighted technical evaluation scheme when it evaluated York and
Federal Services' revised proposals. [2] In its April 6 agency report on
these supplemental protests, the Navy defended its evaluation of both
offerors' technical and price proposals.

On February 4, Olympus filed an initial protest challenging the exclusion of
its proposal from the competitive range and the subsequent award to Federal
Services. Among other allegations, Olympus protested the evaluation of its
proposal under three of the four evaluation factors and the agency's use of
an undisclosed minimum staffing requirement. On March 1, the Navy requested
that we dismiss Olympus's protest; the protester responded on March 6. We
declined to dismiss Olympus's protest and the agency filed its report on the
scheduled due date. Following receipt of Olympus's March 18 comments on the
agency report, the Navy sought permission from our Office to respond to
certain issues in those comments which it characterized as new bases of
protest. Our Office granted the agency's request to file a supplemental
agency report; that report was filed on March 28.

Thereafter, on April 11, our Office consolidated the protests filed by York
and Olympus after granting Olympus's request to participate in the hearing
scheduled for April 17 on the York protests so that Olympus could present
its own evidence/arguments in support of certain issues raised in both
firms' protests. On April 13, our Office convened a pre-hearing telephone
conference with the parties to discuss the issues to be considered at the
April 17 hearing, the witnesses who would testify, and other pre-hearing
matters. As part of that telephone conference, the General Accounting Office
(GAO) attorney engaged in "outcome prediction" alternative dispute
resolution (ADR), in which she told the parties that it was her view that
the protests were likely to be sustained, and explained the basis for her
view. [3]

Specifically, the GAO attorney expressed her view that the evaluation and
selection decision were clearly flawed. She addressed certain issues raised
by each protester to illustrate the basis for her view. For instance, she
advised that the record showed that the Navy had used an undisclosed minimum
staffing requirement to determine, in large part, the acceptability of
proposals under the most important evaluation factor--management approach.
The GAO attorney expressed her view that the contemporary evaluation
documents disclosed that the agency had mechanically applied this
undisclosed minimum staffing requirement to both the York and Olympus
proposals without considering the offerors' particular staffing approaches.
She noted that the agency's actions in this regard were particularly
prejudicial to Olympus, whose proposal was rated unacceptable for failing to
meet the minimum staffing requirement and was excluded from the competitive
range. With regard to York, the GAO attorney pointed out that the record
showed that the agency had conducted prejudicially misleading discussions
concerning the firm's staffing proposal, which led York to increase its
proposed staffing and its price.

The GAO attorney also advised the parties that the contemporaneous
evaluation documentation did not appear adequate and what did exist appeared
to support the protesters' contentions. For example, the evaluation record
indicated that the agency evaluated the parties' proposals in a disparate
and unequal manner since, among other things, the resumes provided by
Federal Services for its proposed key personnel failed to satisfy material
solicitation requirements, but this firm's proposal was not downgraded or
rejected as unacceptable. Thereafter, in a telephone conference on April 18,
the Navy notified our Office that it intended to take corrective action and
requested until April 28 to provide the specifics of the proposed corrective
action. [4] By letter dated April 27, the Navy advised that it intended to
amend the solicitation, to request revised proposals, to establish a
competitive range, to conduct discussions, and to request best and final
offers, if necessary. On May 1, we dismissed the protests, since the Navy's
planned corrective action rendered them academic.

York and Olympus filed these requests for reimbursement of their protest
costs, arguing that the Navy had unduly delayed taking corrective action in
response to clearly meritorious protests. The Navy opposes payment of costs
because, in its view, the agency initiated prompt corrective action after
the ADR/pre-hearing conference. According to the agency, "This case involved
two protesters who filed multiple protests over the course of four months
that raised a plethora of issues." Had the "appropriate pleading schedule"
been utilized by our Office, the Navy states that it "would have had until
after the prehearing conference to analyze the supplemental protests and to
file its responses." Agency's Response to Protesters' Applications for
Attorneys' Fees at 5.

Where a procuring agency takes corrective action in response to a protest,
our Office may recommend that the agency reimburse the protester its protest
costs where, based on the circumstances of the case, we determine that the
agency unduly delayed taking corrective action in the face of a clearly
meritorious protest, thereby causing protesters to expend unnecessary time
and resources to make further use of the protest process in order to obtain
relief. Pemco Aeroplex, Inc.--Recon. and Costs, B-275587.5, B-275587.6, Oct.
14, 1997, 97-2 CPD para. 102 at 5. A protest is clearly meritorious when a
reasonable agency inquiry into the protest allegations would show facts
disclosing the absence of a defensible legal position. The Real Estate
Ctr.--Costs, B-274081.7, Mar. 30, 1998, 98-1 CPD para. 105 at 3. As noted above,
a GAO attorney will inform the parties through outcome prediction ADR that a
protest is likely to be sustained only if she or he has a high degree of
confidence regarding the outcome, so that the GAO attorney's willingness to
do so is generally an indication that the protest is viewed as clearly
meritorious.

As indicated by our attorney in the outcome prediction ADR session, the
protests here are clearly meritorious. For example, the protesters'
contention that it was improper for the agency to evaluate proposals against
an undisclosed minimum staffing level is clearly meritorious. Evaluation of
proposals against undisclosed evaluation criteria is clearly improper, and
that indisputably happened here. See  10 U.S.C. sect. 2305(b)(1) (1994); Federal
Acquisition Regulation sect. 15.305(a). Moreover, this and the other violations
of procurement statute and regulation plainly prejudiced the protesters,
through the concrete ways our attorney explained in the ADR session.

Regarding the other prong of our analysis, the question of the promptness of
the agency's corrective action under the circumstances, we review the record
to determine whether the agency took appropriate and timely steps to
investigate and resolve the impropriety. Chant Eng'g Co., Inc.--Request for
Costs, B-274871.2, Aug. 25, 1997, 97-2 CPD para. 58 at 4. We generally do not
consider corrective action to be prompt where it is taken after the due date
for the agency report. CDIC, Inc.--Entitlement to Costs, B-277526.2, Aug.
18, 1997, 97-2 CPD para. 52 at 2. While the agency asserts that it acted with
due promptness, this was not the case with respect to either protester.

Contrary to the agency's position, a prompt and reasonable agency inquiry
would have disclosed the absence of a defensible legal position to the
firms' allegations--raised in their initial protests--that the evaluation of
proposals and the selection decision were improper. Because clearly
meritorious challenges to the procurement were raised by the protesters in
their initial protests in late January and early February, we find
irrelevant the Navy contention's that the schedule set by our Office for
late March and April submissions truncated the agency's time for analyzing
the supplemental protests. The agency waited until after our Office
conducted the combined ADR/pre-hearing conference in April before deciding
to take corrective action. This delay frustrated the intent of CICA by
impeding the economic and expeditious resolution of the protests.
Browning-Ferris Indus. of Hawaii, Inc.--Costs, B-278051.2, Apr. 27, 1998,
98-1 CPD para. 122 at 6. The Navy did not propose corrective action until
April 18, well after the agency had submitted its reports and the protesters
had incurred the time and expense necessary to respond to those reports, as
well as to prepare for the scheduled hearing. Under these circumstances, we
do not consider the corrective action to have been prompt. Tri-Ark Indus.,
Inc.--Declaration of Entitlement, B-274450.2, Oct. 14, 1997, 97-2 CPD para. 101
at 4-5.

The Navy also argues that any reimbursement of costs should be limited to
those incurred prior to April 18 when the agency verbally made known its
intent to take corrective action. [5] Agency's Response to Protesters'
Applications for Attorneys' Fees at 5-6. However, the agency did not file a
written notice of its proposed corrective action containing the specifics of
the corrective action until April 27, 10 days after its verbal notification
of corrective action, and 14 days after the protesters learned the
additional grounds of protest. The agency's verbal notice did not toll our
timeliness requirements, and the agency's delay in filing its written notice
effectively forced the protesters, if they wished to preserve their legal
rights in the event the agency decided not to take corrective action, to
file timely supplemental protests while they awaited the Navy's decision
concerning corrective action. See 4 C.F.R. sect. 21.2(a)(2). Had the agency not
delayed its written notice of corrective action, neither protester would
have needed to file any further submissions.

Accordingly, we recommend that York and Olympus be reimbursed the reasonable
costs of filing and pursuing their protests, including those incurred here,
i.e., requesting a recommendation for costs. Cf. Department of the
Navy--Modification of Remedy, B-284080.3, May 24, 2000, CPD para. __, at 4. York
and Olympus should submit their claims for costs, detailing and certifying
the time expended and costs incurred, directly to the Navy within 60 days of
receipt of this decision. 4 C.F.R. sect. 21.8(f)(1).

Robert P. Murphy

General Counsel

Notes

1. For the record, we note that the Navy's request to file a consolidated
agency report responsive to York's initial and first supplemental protests
was granted and the due date was changed to March 8, 2000. However, the Navy
delivered the consolidated agency report to York late--and in a piecemeal
fashion--with delivery of the complete report accomplished only on March 14.

2. In order to facilitate resolution of these supplemental protests within
the timeframe for a decision on the initial protest, our Office on March 28
established a schedule for the submission of a supplemental agency report,
the parties' comments thereto, a pre-hearing conference, a hearing, and the
submission of post-hearing comments.

3. In outcome prediction ADR, the GAO attorney handling a protest convenes
the parties, at their request or at GAO's initiative, and informs the
parties what the GAO attorney believes the likely outcome will be, and the
reasons for that belief. A GAO attorney will engage in this form of ADR only
if she or he has a high degree of confidence regarding the outcome. Where
the party predicted to lose the protest takes action obviating the need for
a written decision (either through the agency taking corrective action or
the protester withdrawing the protest), our Office closes the case. Although
the outcome prediction reflects the view of the GAO attorney, and generally
that of a supervisor as well, it is not an opinion of our Office, and it
does not bind our Office, should issuance of a written decision remain
appropriate.

4. On April 20, Olympus filed additional grounds of protest based on
information elicited during the April 13 telephone conference. Similarly, on
April 24, York filed an additional basis of protest.

5. In addition, the agency opines that Olympus is not entitled to its costs
associated with the filing of its supplemental protest because those issues
were already before GAO and are unrelated to the agency's decision to take
corrective action. Agency's Response to Protesters' Applications for
Attorneys' Fees at 7. We disagree. Olympus's comments (which the agency
refers to as a supplemental protest) were filed independent of York's
protest (indeed, at the time, there were two separate protective orders in
place). Indeed, it was the agency, not Olympus or our Office, that argued at
the time that Olympus's comments raised issues not raised earlier, so that
we fail to understand the basis for the agency's current contention that the
comments merely restated issues already raised. Moreover, the agency has not
explained the basis for its claim that the issues raised in Olympus's
comments were unrelated to the corrective action decision.