TITLE:  Nova Group, Inc., B-282947, September 15, 1999
BNUMBER:  B-282947
DATE:  September 15, 1999
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Nova Group, Inc., B-282947, September 15, 1999

Decision

Matter of: Nova Group, Inc.

File: B-282947

Date: September 15, 1999

Carol L. O'Riordan, Esq., O'Riordan & Associates, for the protester.

Michael H. Payne, Esq., Starfield & Payne, for Healy Tibbitts Builders,
Inc., the intervenor.

Ron R. Ashlock, Esq., and Richard G. Welsh, Esq., Department of the Navy,
for the agency.

Henry J. Gorczycki, Esq., and James Spangenberg, Esq., Office of the General
Counsel, GAO, participated in the preparation of the decision.

DIGEST

1. Agency reasonably evaluated protester's construction management plan as
satisfactory, rather than outstanding, on the basis that the plan does not
contain sufficient details to satisfy the agency that the plan had a high
probability of success, but only contained promises to perform acceptably.

2. Protest is sustained where agency improperly downgraded protester's past
performance based merely on protester's history of contract claims, with no
allegation that protester abused the claims process.

DECISION

Nova Group, Inc. protests the award of a contract to Healy Tibbitts
Builders, Inc. under request for proposals (RFP) No. N62742-97-R-1313,
issued by the Department of the Navy, Naval Facilities Engineering Command,
for pierside construction projects at the Naval Station, Pearl Harbor,
Hawaii. Nova protests the agency's evaluation of technical proposals.

We sustain the protest because the Navy's evaluation of past performance
improperly penalized the protester simply for using the contract claims
process.

The RFP, issued on December 11, 1998, contemplated the award of a
fixed-price construction contract for two projects with options for eight
additional projects. The RFP stated a best value evaluation plan under which
the technical evaluation factors were said to be approximately equal to
price. The RFP listed the technical evaluation factors in descending order
of importance as follows: (a) construction management plan; (b)
experience/past performance; (c) experience of key personnel; and (d) small
business subcontracting. RFP amend. 0004, sect. 00202, at 1-4.

Under factor a, construction management plan, the RFP stated:

The Offeror's construction management plan will be evaluated for management;
coordination; phasing; conflict resolution and scheduling of the various
trades to minimize disruption of the Navy's dock operations.

Id. at 1.

Under factor b, experience/past performance, the RFP stated:

(1) The Offeror's experience will be evaluated for completed projects of
similar dollar value/scope/complexity projects (e.g.,
construction/renovation of piers/wharves that included waterfront concrete
piles and steel sheet pile installation; and pierside electrical utilities).

(2) The Offeror's past performance will be evaluated for customer
satisfaction in similar dollar value/scope/complexity projects (e.g.,
construction/renovation of piers/wharves that included waterfront concrete
piles and steel sheet pile installation; and pierside electrical utilities)
completed within the past fifteen years. Customer satisfaction will be
measured based on quality of workmanship; timely completion of work;
reasonableness of price; cooperation/responsiveness and safety.

(3) The Offeror's past performance will be evaluated for general trends in
customer satisfaction (as defined above) in all types of completed projects
for the past fifteen years.

Id. at 1-2.

The corresponding proposal submission requirements for factor b required
offerors to submit the experience/past performance information for similar
projects as well as to submit other past performance information that may
not be related to such projects. The other past performance information that
was requested included "identify[ing] any and all claims submitted, reason
for claim and disposition." Id. at 2.

Initial proposals were due by February 16, 1999. The Navy convened a
technical evaluation board (TEB) that evaluated the seven proposals
received, including Nova's and Healy Tibbitts'. The TEB evaluated technical
proposals on an adjectival scale (outstanding, satisfactory, marginal,
unsatisfactory) detailed in the RFP. RFP amend. 0004, at 5-6. The initial
evaluation ratings for Nova and Healy Tibbitts were as follows:

                               Nova           Healy Tibbitts

 Construction Management       Marginal       Marginal
 Plan

 Experience/Past Performance   Satisfactory   Outstanding

 Experience of Key Personnel   Satisfactory   Outstanding

 Small Business                Outstanding    Satisfactory
 Subcontracting

 Overall                       Satisfactory   Satisfactory

Agency Report at 4, encl. 4, at 8.

Nova's proposal was rated marginal under the construction management plan
factor essentially because it did not contain a plan that explained Nova's
strategy for completing the work requirements. Agency Report, encl. 4, at 2.
In this regard, Nova's initial proposal offered to develop such a plan upon
award of the contract. Although Healy Tibbitts' proposal did contain a
construction management plan that addressed its strategy for performing the
work, the TEB rated it marginal under this factor because of certain
specific evaluated weaknesses in the plan. Id. at 1.

With regard to the experience/past performance factor, the TEB found that
both Nova and Healy Tibbitts had successfully performed similar projects.
Nova's proposal was rated satisfactory, rather than outstanding, due to a
number of claims, the dispositions of which were not clearly addressed in
its proposal. Agency Report at 5, encl. 4, at 2. The TEB determined that
Nova's claims record "did not demonstrate a general trend for outstanding
past performance in terms of customer satisfaction." Id. encl. 4, at 2. The
Navy found that Healy Tibbitts did not have any claims under federal
contracts for the past 15 years, although it did have a pending claim under
a contract with the state of Hawaii. [1] Id. at 1-2.

On March 23, the Navy commenced written discussions with all seven offerors.
The Navy discussion letter to Nova addressed the agency's concerns under
every evaluation factor. Under the construction management plan factor, the
letter stated that, given Nova's proposal to develop a plan after award, the
proposal failed to demonstrate a strategy for completing the work and asked
Nova to demonstrate its strategy for successfully completing the work.
Agency Report, encl. 6, Letter from Agency to Nova 2 (Mar. 23, 1999). Under
the experience/past performance factor, the agency requested Nova to provide
information about the dispositions of its claims. Id. at 3.

The Navy requested and received revised proposals by April 16. In its
revised proposal, Nova had rewritten the entire portion of its proposal that
addressed the construction management plan factor. The TEB increased Nova's
marginal rating under the construction management plan factor from marginal
to satisfactory because Nova's plan now met the requirements of the RFP,
albeit with some notable weaknesses. Agency Report, encl. 9, at 3. Among the
evaluated weaknesses in Nova's proposal was that its proposed project
manager would be located in California and would visit the construction site
in Hawaii only 1 week every month, which the TEB determined lowered the
probability of prompt resolution of problems and was not conducive to
addressing issues as they arise on-site. [2] Id. at 4. Also, the TEB found
that Nova's proposed plan to drive fender piles from the pier did not fully
validate the pier capability to proceed with this approach, nor precisely
explain how this work was to be accomplished.

Nova's revised proposal did provide information about the dispositions of
its claims. Of nine claims, one was paid as submitted without dispute, three
were resolved after requesting contracting officer's decisions, and five
were resolved after Nova appealed to the Armed Services Board of Contract
Appeals (ASBCA). Id.; Agency Report, encl. 7, Letter from Nova to the Navy
9-13 (Apr. 14, 1999). The TEB determined that this claims record raised
"question[s] regarding the reasonableness of price, effectiveness of
management (some claims were subcontractor related issues), and
cooperation/responsiveness with regards to customer satisfaction
subfactors." Agency Report, encl. 9, at 4. As a result, the TEB did not
change Nova's satisfactory rating under the experience/past performance
factor.

In addition to the satisfactory ratings under the first two factors, Nova's
revised proposal received outstanding ratings under the final two factors,
which included an increase under the third factor from satisfactory to
outstanding. The TEB determined that Nova's overall rating remained
satisfactory. Id. at 3-5.

The TEB increased Healy Tibbitts' rating under the construction management
plan to outstanding. Id., at 2. Healy Tibbitts' revised proposal addressed
the agency's concerns raised during discussions and provided a detailed
description of its strategy for performing the work. Its proposal included a
plan that was found to significantly reduce the risk of delays due to
unanticipated conflicts; the plan included schedule flexibility,
installation methods with a high probability of success, and an on-site
manager to provide constant oversight of the construction projects. The TEB
did not identify any weaknesses in Healy Tibbitts' revised proposal under
this factor.

Healy Tibbitts' initial outstanding ratings under the second and third
factors did not change, and its revised proposal earned an outstanding
rating under the final factor. The TEB thus rated Healy Tibbitts' revised
proposal outstanding under each of the four technical factors, and
outstanding overall. [3]

The source selection board (SSB) concurred in the TEB's evaluation of
revised proposals and recommended a competitive range of four proposals,
including Nova's and Healy Tibbitts'. Agency Report, encl. 12, at 2-4. By
letters of May 13, the Navy requested final proposal revisions by May 18.
Other than some revisions to Nova's small business subcontracting plan,
neither offeror's technical proposal changed and the technical ratings
remained unchanged. The SSB elaborated on its evaluation of Nova's
construction management plan, expressing concern about congestion of space
availability on the docks. Agency Report, encl. 17, at 2.

Healy Tibbitts' proposal was ranked first with an overall outstanding rating
and Nova's was ranked second with an overall satisfactory rating. Nova
submitted the lowest proposed total price of $29,214,405, and Healy Tibbitts
proposed the next lowest price of $29,488,058. Id. The SSB recommended award
to Healy Tibbitts as the offeror submitting the best value proposal based on
the following price/technical tradeoff decision:

Although [Healy Tibbitts]'s price proposal exceeded [Nova]'s price by
$273,653 the SSB determined that the 0.94 [percent] difference was
negligible considering [Healy Tibbitts]'s superior technical proposal. The
SSB considered the complexity of this project and concluded that a
contractor such as [Healy Tibbitts] offered a higher probability for
successful completion of this project.

Id. at 3.

On May 26, the Navy awarded the contract to Healy Tibbitts. Nova requested
and received a debriefing. This protest followed. [4]

Nova protests the evaluation of its proposal under the first two evaluation
factors. We will not question an agency's evaluation of proposals unless the
agency deviated from the solicitation evaluation criteria, procurement laws
or regulations, or the evaluation was otherwise unreasonable. HSG-SKE,
B-274769, B-274769.3, Jan. 6, 1997, 97-1 CPD para. 20 at 3. A protester's
disagreement with the agency does not render the evaluation unreasonable.
Sarasota Measurements & Controls, Inc., B-252406.3, July 15, 1994, 94-2 CPD
para. 32 at 4. Although we find that the agency's evaluation under the first
factor was reasonable, its evaluation under the second factor was improper
because the Navy's evaluation of past performance improperly penalized the
protester simply for using the contract claims process.

Under the first factor, construction management plan, Nova basically alleges
the Navy unreasonably found the following weaknesses --(1) a failure to
fully address the pier load restrictions and pier congestion in light of
Nova's proposed shore-side crane and pile driving operations, and (2) the
senior project manager would be stationed off-site and would visit the
construction site only on a monthly basis. Comments at 11-20; Supplemental
Comments at 2-6, 12-14.

Regarding the pier load restriction and congestion weaknesses, Nova's
initial proposal did not state that it intended to locate a crane on the
piers. Its revised proposal stated that it intended to locate a crane on the
piers and perform 95 percent of the operation shore-side, that it had
researched the pier load restrictions and would comply with them, and that
it intended to sequence the work in the order identified in the schedule in
order to minimize disruptions. Agency Report, encl. 7, Revised Factor A, at
4-7. The agency reasonably found that Nova's proposal did not contain
sufficient details about its plan to demonstrate a high probability of
successful performance. For example, although Nova's proposal stated that it
had considered and would comply with the pier load restrictions in locating
a crane on the piers, Nova's proposal did not discuss how it would comply or
provide any calculations to illustrate such compliance. Also, although Nova
proposed to perform 95 percent of the work shore-side, it did not detail how
it would address congestion on the piers that could arise under such a plan.
On the other hand, Healy Tibbitts' proposal provided more precise
information about its strategy for successfully completing the work, which
provided the agency with a construction management plan containing specific
information upon which an outstanding rating under this factor could be
based.

Nova nevertheless alleges that by not rating its plan outstanding for these
reasons, the Navy essentially created an unstated solicitation requirement
for supporting information to validate an offeror's plan and/or an unstated
preference for water-based operations rather than primarily pier-based
operations such as proposed by Nova. Comments at 19. The record does not
support this allegation.

Neither the RFP nor the Navy expressed a preference for any particular
construction methodology. Agency Supplemental Report at 6-8. The RFP did
state that, to be rated outstanding, a proposed construction management plan
had to indicate a high probability of successfully completing the project.
RFP amend. 0004, sect. 00202, at 5. We believe that it was reasonable for the
evaluators to find that a plan that lacks precise details about critical
aspects of the strategy for successfully completing the work does not
provide a sound basis for the agency to evaluate potential performance
risks. Thus, we do not think that the Navy's evaluation of Nova's proposal
indicates an agency preference for anything more than a construction
management plan that demonstrates a high probability of success, as opposed
to offeror promises without adequate supporting details to perform
acceptably. Under the circumstances, the agency's evaluation of Nova's
proposed use of a pier-based crane was reasonable and was not based on
matters not intrinsic to the construction management plan evaluation factor.

Regarding the off-site senior project manager weakness, Nova's revised
proposal eliminated a full-time, on-site assistant project manager and left
unchanged the off-site senior project manager, who would visit the
construction site only once a month. Agency Report, encl. 7, Letter from
Nova to the Navy 14, Revised Factor A, at 7 (Apr. 14, 1999). The Navy
concluded that this was not the best plan for expeditiously addressing
issues as they arise in the field. Agency Report, encl. 9, at 4. Given that
the evaluation factor stated that management and coordination would be
evaluated, we cannot find the agency evaluation of the limited on-site
presence of Nova's project manager to be unreasonable or inconsistent with
the stated evaluation plan. [5]

In sum, the agency reasonably rated Nova's proposal satisfactory under the
construction management plan factor.

Under the second factor, experience/past performance, Nova complains that
the Navy improperly considered Nova's contract claims as the basis for
downgrading its rating. Nova states that there was no basis to support this
downgrade because Nova has an above average record of contract performance
and, although it has used the contract dispute process, it has not exhibited
obstructive or disputatious conduct in the process. Protest at 21; Comments
at 26-27; Supplemental Comments at 18-20.

Absent some evidence of abuse of the contract disputes process, contracting
agencies should not lower an offeror's past performance evaluation based
solely on its having filed claims. AmClyde Engineered Prods. Co., Inc.,
B-282271, B-282271.2, June 21, 1999, 99-2 CPD para. 5 at 6 n.5. Contract claims,
like bid protests, constitute remedies established by statute and
regulation, and firms should not be prejudiced in competing for other
contracts because of their reasonable pursuit of such remedies in the past.
Id.; See Contract Disputes Act, 41 U.S.C. sect.sect. 601-613 (1994).

Here, Nova's performance under past contracts for similar work received
ratings from the respective contracting agencies of average to outstanding.
Agency Report, encl. 9, at 4. The record shows that the sole basis for
Nova's satisfactory rating under the experience/past performance factor was
due to nine claims that were evaluated as actions in which Nova and the
contracting agency "could not reach bilateral agreement," and that Nova's
proposal would otherwise have likely received an outstanding rating under
this factor. [6] Id.; Agency Report, encl. 17, at 3. The final SSB report
stated the following:

[Nova]'s rating of satisfactory was based on [Nova]'s identification of nine
claims since claims was considered a weakness in terms of customer
satisfaction (e.g., effectiveness of management, reasonableness of price
cooperation/responsiveness).

Agency Report, encl. 17, at 3.

There is no evidence in the record that Nova's contract claims lacked merit
or that they had an adverse impact on contract performance. As the TEB
stated, some of Nova's claims involved contracts for which Nova received
outstanding performance evaluations. Agency Report, encl. 9, at 4. Nova's
revised proposal stated Nova's basis for pursuing each of the disputed
claims, and the record shows that the overall disposition of these disputes
was in Nova's favor. Agency Report, encl. 7, Nova's Letter to the Navy 9-13
(Apr. 14, 1999). In this regard, Nova claimed compensation for post-award
contract changes totaling more than $11 million. Of the nine claims, eight
were resolved with the contracting agency agreeing to pay more than
$8 million (the final claim for nearly $2 million is pending). In addition
to this record of resolution favorable to Nova, the number of claims does
not appear extraordinary for a period covering 15 years. The record lacks
even a scintilla of evidence suggesting that Nova's participation in the
contract dispute process was frivolous or was intended by Nova to be
obstructive.

The Navy does not allege that Nova's claims were indicative of poor
performance, nor that they were frivolous or filed in bad faith. Rather, the
Navy concludes that the failure to reach bilateral agreement raised
questions under the customer satisfaction subfactors (quoted above) of the
experience/past performance factor concerning reasonableness of price,
effectiveness of management, and cooperation/responsiveness. Agency Report,
encl. 17, at 3. While it is true that these disputes are instances where the
parties failed to reach agreement without recourse to the statutory claims
resolution process, the agency's resulting conclusions are not reasonable.
For example, since Nova's claims have largely been resolved with Nova
receiving most or all of the claimed amounts, this suggests that it was
ultimately found that the prices claimed were not unreasonable. Also, since
there is no evidence suggesting that Nova failed to perform the contract
changes effectively, delayed contract performance, or failed to respond to
or cooperate with the agency in performing the contract changes, the record
does not evidence that these claims indicate problems in management
effectiveness, responsiveness or cooperation.

We find from this evaluation record that Nova was downgraded simply because
it has actively pursued claims through the statutory contract claims
resolution process on nine occasions over 15 years. Such an evaluation
essentially penalized Nova simply for using the contract dispute process.
The RFP did not state or reasonably indicate that this was how claims
histories would be considered in the evaluation process. Nor would such
consideration be proper, given that the protester was merely using the
framework for resolving such disputes that Congress established in the
Contract Disputes Act. We think that it would be improper for contracting
agencies to impose evaluation penalties merely for an offeror's having
availed itself of the contract claims process, such as occurred here;
imposing such penalties would create barriers to legal remedies created by
Congress. See AmClyde Engineered Prods. Co., Inc., supra.

Since, absent this evaluation penalty, the record shows that Nova would
likely have received an outstanding rating under three of the four
evaluation factors, and thus could well have received an overall rating of
outstanding, the same as Healy Tibbitts' proposal, the Navy could reasonably
have selected Nova's lowest-priced proposal for award. Thus, there was a
reasonable likelihood that Nova was prejudiced by the improper evaluation of
its past performance.

We recommend that the agency reopen discussions if necessary, evaluate
proposals consistent with this decision, and make a new source selection
decision. If a proposal other than Healy Tibbitts' is selected for award,
the Navy should terminate the contract previously awarded to that firm. We
also recommend that the protester be reimbursed the reasonable cost of
filing and pursuing its protest, including attorneys' fees. 4 C.F.R.
sect. 21.8(d)(1) (1999). The protester should submit its claim for costs,
detailing and certifying the time expended and costs incurred, with the
contracting agency within 60 days after receipt of this decision. 4 C.F.R.
sect. 21.8(f)(1).

The protest is sustained.

Comptroller General
of the United States

Notes

1. This claim was the only noted weak aspect under this factor and the TEB
did not consider it to detract from Healy Tibbitts' otherwise outstanding
record under this factor.

2. Nova's initial proposal proposed a senior project manager, who would be
located in California and would visit the construction site once a month,
and also proposed an assistant project manager who would be at the
construction site full time and who had full authority to act on behalf of
Nova in matters concerning completing the contract. Nova's Initial Proposal,
Factor A, at 3-4, 15. Nova's revised proposal eliminated the assistant
project manager position in response to a discussion question from the Navy,
which recognized the assistant project manager as the "on site project
manager" and requested additional information on his experience. Agency
Report, encl. 7, Letter from Nova to the Navy 14 (Apr. 14, 1999). Nova
stated that it did not intend to have the assistant project manager in
charge of the project. Nova's revised proposal did not increase the on-site
presence of the senior project manager.

3. Contrary to Nova's allegation, the record shows that the overall ratings
were not assigned based on a curve established by the proposals received.

4. By letter of August 4, 1999, the Navy stated that the head of the
procuring activity made a written finding that performance of the contract
"is in the best interests of the United States; or urgent and compelling
circumstances that significantly affect interests of the United States will
not permit waiting for the decision of the Comptroller General concerning
the protest."

5. Although Nova complains of not being informed of this and other concerns
until after award, Comments at 9-11, 18-19, Nova also explicitly states that
it is not protesting the adequacy of discussions. Supplemental Comments at
11-12.

6. To the extent Nova protests the agency's consideration of safety issues
under this same factor, the record shows, and the Navy states, that the
evaluation of safety did not result in downgrading Nova's rating under this
factor. Agency Report at 12-14, encl. 9, at 4-5, encl. 17, at 3;
Supplemental Agency Report at 14. We thus need not consider this issue
further.