TITLE:  Ocean House Builders, B-283057, September 21, 1999
BNUMBER:  B-283057
DATE:  September 21, 1999
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Ocean House Builders, B-283057, September 21, 1999

Decision

Matter of: Ocean House Builders

File: B-283057

Date: September 21, 1999

Rex K.C. Kim, Esq., White & Tom, for the protester.

Paralee White, Esq., and Brian A. Darst, Esq., Gadsby & Hannah, for Landmark
Construction Corporation, an intervenor.

Sharon A. Jenks, Esq., John E. Lariccia, Esq., and Lt. Col. Clifford J.
McKinstry, Department of the Air Force, for the agency.

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

DIGEST

Protest of technical and price evaluation is denied where evaluation was
reasonable and consistent with solicitation's evaluation criteria.

DECISION

Ocean House Builders (OHB) protests the award of a contract to Landmark
Construction Corporation (LCC) under request for proposals (RFP) No.
F45603-99-R8002, issued by the Department of the Air Force for simplified
acquisition base engineer requirements. OHB challenges the evaluation of its
proposal and the agency's award determination.

We deny the protest.

The RFP, issued on February 16, 1999, contemplated the award of a
fixed-price, indefinite-delivery/indefinite-quantity contract for a base
period and four 1-year option periods. RFP cover sheet. The RFP, as amended,
provided that the award would be made to the offeror whose proposal was
determined most advantageous to

the government, technical/management evaluation factors and price
considered. RFP amend. 2, at 63.

More specifically, the RFP provided that the technical/management evaluation
factors were significantly more important than price and would be afforded
primary emphasis in the evaluation. Id. The technical/management evaluation
factors, which each included two or more subfactors (for a total of 14
subfactors), were listed in descending order of importance as follows: (1)
project management ability; (2) project development/planning and minimal
design; (3) subcontracting support capability; (4) experience/past and
present performance; and (5) project execution and technical capability. Id.
at 64-65. The RFP stated that these factors would receive a color rating
(showing how well the offeror's proposal met the evaluation standards and
solicitation requirements) and a proposal risk rating (assessing the risk
associated with the offeror's proposed effort to accomplish the solicitation
requirements). Id. at 63. [1]

The RFP provided that although price was second in importance, it would
contribute substantially to the source selection decision and would be
evaluated for completeness, realism, and reasonableness. Id. at 63. Offerors
were required to submit a fixed-price coefficient/price multiplier
(representing contractor overhead, contingencies, and profit) for military
family housing (line item No. 2) and other real property (line item No. 1);
these coefficients would be used by the agency to determine the price of
work for each task order. Id. at 3. Essentially, standardized unit prices in
the current RS Meansï¿½ Computerized Pricing Guide, a trade publication which
provides cost information on various construction projects, would be
multiplied by an offeror's relevant fixed-price coefficient to determine the
actual price for a unit of work. Contracting Officer's (CO) Statement at 1.
[2]

Six firms submitted proposals by the closing time on March 29. As relevant
here, technical proposals were evaluated by the agency's four-member
technical evaluation team. Basically, for each of the 14 subfactors, the
evaluators individually rated each proposal and prepared narratives of the
proposal strengths and weaknesses, which supported the assigned
color/adjectival ratings, and prepared narratives explaining the assigned
proposal risk ratings. The evaluators subsequently met as a group, discussed
the proposals and individual ratings, and assigned consensus ratings. The
agency included three proposals, including those of OHB and LCC, in the
competitive range. During discussions, clarification requests and deficiency
reports were presented to each competitive range offeror. Responses to these
items were considered by the individual evaluators who added or deleted
information from their respective narratives as deemed appropriate based on
an offeror's responses. The evaluators then reconvened as a group in order
to reach what became final consensus ratings. While each competitive range
offeror was provided an opportunity to submit final proposal revisions for
both technical and price areas, each offeror submitted final price
(coefficient) revisions only. Id. at 1-2.

For the 14 technical/management evaluation subfactors, OHB received
13 acceptable/low risk ratings and 1 exceptional/low risk rating (for the
warranty subfactor under the project management ability evaluation factor).
LCC received 11 acceptable/low risk ratings and 3 exceptional/low risk
ratings (for the initial startup/management of contingency situation and
warranty subfactors under the project management ability evaluation factor
and for the number of proposed design alternatives subfactor under the
project execution and technical capability evaluation factor). LCC's price,
based on its fixed-price coefficients, was approximately 17 percent less
than OHB's price. Agency Report, Tab 15, Final Consensus Abstract.

Based on his integrated assessment of proposals and the stated evaluation
factors, the source selection authority (SSA) selected the proposal of LCC
for award. The SSA concluded that LCC's proposal clearly provided the best
effort in terms of project management ability, project execution, and
technical capability. The SSA viewed LCC's proposal as superior in terms of
startup/contingency management and warranty considerations. The SSA noted
that LCC provided outstanding alternatives in project execution and
technical capability and that LCC had a very good to exceptional track
record on other construction projects. In addition, the SSA noted the price
savings associated with LCC's proposal. Accordingly, the SSA awarded the
contract to LCC, whose highest technically rated, lowest priced proposal was
determined to represent the best overall value to the government. Agency
Report, Tab 21, Source Selection Decision Document.

OHB maintains that its proposal exceeded the RFP requirements in the
following areas, and therefore, should have received exceptional ratings:
key staff and quality control plan subfactors under the project management
ability evaluation factor; development and planning subfactor under the
project development/planning and minimal design evaluation factor; project
execution and technical capability evaluation factor; and experience/past
and present performance evaluation factor.

In reviewing an agency's evaluation of proposals, we will question the
agency's evaluation only where it lacks a reasonable basis or is
inconsistent with the stated evaluation criteria for award. Suddath Van
Lines, Inc.; The Pasha Group, B-274285.2, B-274285.3, May 19, 1997, 97-1 CPD
para. 204 at 5.

The source selection evaluation guide for this procurement defines the
relevant color/adjectival ratings as follows: blue/exceptional--"[e]xceeds
specified

performance or capability in a beneficial way to the Air Force, and has no
significant

weakness" and green/acceptable--"[m]eets evaluation standards and any
weaknesses are readily correctable." Agency Report, Tab 13, at 11. The
record shows that in evaluating OHB's initial proposal, the evaluators
identified and documented several areas where the proposal failed to meet
the RFP requirements. These areas were the subject of discussions for which
OHB submitted responses to clarification requests and deficiency reports. In
evaluating OHB's responses, the evaluators assigned acceptable, as opposed
to exceptional, ratings as they did not believe that OHB's proposal after
discussions contained any notable advantages that would be beneficial to the
agency. The evaluation narratives were revised to reflect that OHB's
proposal after discussions satisfied the RFP requirements and was considered
technically acceptable. Agency Report, Tab 14, Technical Evaluation
Narratives for OHB Proposal. Except for one aspect of the evaluation, as
discussed below, we believe there is no basis on this record to question the
reasonableness of the agency's evaluation of OHB's proposal.

With respect to the project management ability evaluation factor, OHB
complains that it should have received exceptional ratings for the key staff
and quality control plan subfactors because it proposed the same
organizational structure and quality control plan which it successfully
implemented on three job order contracts for the Army and Navy. However,
under this evaluation factor, an offeror's proposed technical approach, not
how successful the offeror performed other contracts using the same
approach, was the appropriate focus of the evaluation in accordance with the
terms of the RFP. Although OHB believes that its proposed organizational
structure and quality control plan offered benefits to the agency, it was
within the agency's discretion to conclude that OHB's proposed approach was
acceptable, but not exceptional. OHB has not demonstrated that the agency's
evaluation in this respect was unreasonable.

For the development and planning subfactor under the project
development/planning and minimal design evaluation factor and for the
project execution and technical capability evaluation factor, OHB complains
that some of the individual evaluators assigned exceptional ratings, yet its
final consensus rating in these areas was only acceptable. (We note that
even for the areas in question, OHB did not have a majority of the
individual evaluators rating its proposal exceptional. See Comments at 14,
17.)

Agency evaluators may discuss their individual evaluations with each other
in order to reach a valid consensus score since such discussions generally
operate to correct mistakes or misperceptions that may have occurred in the
initial evaluation. I.S. Grupe, Inc., B-278839, Mar. 20, 1998, 98-1 CPDpara. 86
at 5-6. Here, proposals and offeror responses to clarification requests and
deficiency reports were individually evaluated by the four members of the
technical evaluation team and the individual

evaluations were then discussed among the entire team in order to reach
final consensus ratings. While OHB objects to the acceptable consensus
ratings, we point out that a consensus score need not even be the score the
majority of the evaluators initially awarded; a different score may
reasonably be determined after discussions among the evaluators. The
overriding concern in these matters is whether the final scores assigned
reflect reasonable judgments about the relative merits of the proposals. See
id. at 6. Other than OHB's disagreement with the acceptable ratings finally
assigned, OHB has not shown that the agency's evaluation in the referenced
areas was unreasonable or inconsistent with the evaluation criteria.

However, as indicated above, there is one aspect of the agency's evaluation
where we cannot conclude, based on the record, that the evaluation was
reasonable. This aspect involves the evaluation of OHB's experience/past and
present performance under the fourth most important evaluation factor. The
record shows that the agency had for consideration 2 past and present
performance surveys for OHB covering 3 job order contracts for the Army and
Navy. One reference rated OHB "exceptional" in all 20 categories, noting
that OHB "exceeded [the agency's] expectations," and the other reference
assigned 10 "exceptional" and 8 "very good" ratings (plus 2 "not applicable"
ratings), noting "contractor performs extremely well on high priority, high
profile jobs." Agency Report, Tab 27, Past and Present Performance Surveys
for OHB. In its supplemental report, the agency explains that it "did not
find that the manner in which [OHB] managed their past efforts deserved an
exceptional rating. The information provided demonstrated that [OHB]
performs acceptably and the rating assigned reflects that assessment."
Supplemental Agency Report at 5. Given the highly favorable information
reported in these performance surveys, we believe the agency's explanation
that OHB merely demonstrated that it "perform[ed] acceptably" is
inconsistent with the record.

Nevertheless, we conclude that, even if there was error in this area, it did
not affect OHB's competitive standing. In this regard, even if OHB's
proposal had received an exceptional rating for the experience/past and
present performance evaluation factor, OHB would have had only two
exceptional ratings versus three exceptional ratings each for LCC and
Offeror A (whose proposal was ranked second overall in terms of both
technical and price). Moreover, LCC and Offeror A each had one of these
ratings in evaluated areas more important than experience/past and present
performance. Agency Report, Tab 15, Final Consensus Abstract. Thus, even if
OHB's proposal received an exceptional rating for the experience/past and
present performance evaluation factor, its proposal would have retained its
third overall ranking.

OHB next challenges the agency's price realism evaluation of LCC's proposal.
[3] For example, OHB complains that LCC's coefficients were incomplete,
unrealistic, and unreasonable because the firm omitted certain cost elements
in calculating its coefficients, thereby resulting in unreasonably low
coefficients. OHB also questions whether LCC can perform at the coefficients
proposed.

The manner in which a price realism analysis is conducted is a matter
subject to a contracting agency's sound discretion, which we will not
disturb unless it lacks a reasonable basis. OMV Med., Inc., B-281490, Feb.
16, 1999, 99-1 CPD para. 38 at 8. The record shows that in arriving at
fixed-price coefficients, LCC (as well as OHB) made certain assumptions
based on prior construction experience about the costs of performing the RFP
requirements. Agency Report, Tab 19, Final Proposal Revisions for LCC and
OHB. Even if OHB is correct that LCC omitted certain cost elements in
calculating its coefficients, OHB's complaint amounts to no more than a
challenge of LCC's alleged submission of a below-cost proposal. However,
such a complaint does not provide a basis for protest as there is no
prohibition against an agency accepting a below-cost proposal on a
fixed-priced contract. Ventura Petroleum Servs., Inc., B-281278, Jan. 21,
1999, 99-1 CPD para. 15 at 6. To the extent OHB is arguing that LCC cannot
perform at its fixed-price coefficients, this matter concerns LCC's
responsibility, which we will not review absent a showing of possible bad
faith by government officials, or that definitive responsibility criteria
were not met, neither of which is present here. 4 C.F.R. sect. 21.5(c). On this
record, we have no basis to question the reasonableness of the agency's
price realism evaluation of LCC's proposal.

In its comments on the agency report, OHB also complains that its price
proposal, which included all required cost elements, was compared against an
allegedly defective government estimate and ultimately found too high in
comparison to this estimate. OHB contends that the government estimate was
defective because certain costs were excluded, resulting in an unreasonably
low estimate used for evaluation purposes.

Under our Regulations, a protest based on other than alleged improprieties
in a solicitation must be filed not later than 10 calendar days after the
protester knew, or should have known, of the basis for protest, whichever is
earlier. 4 C.F.R. sect. 21.2(a)(2). By letter dated July 23, OHB acknowledged
receiving the agency report, including a copy of the government estimate, on
July 22; in this letter, OHB also requested additional documents and an
extension of time to file its comments. By notice of July 26, GAO responded
to OHB's supplemental document request and granted a 1-day extension to file
comments. In its comments filed on August 3, 12 days after receiving the
agency report, OHB raised for the first time the issue of the evaluation of
its price proposal against an allegedly defective government estimate. Since
a time extension for purposes of filing comments on an agency report does
not waive the timeliness rules with regard to new grounds of protest, we
conclude that this new basis for protest is untimely. See, e.g., Abre
Enters., Inc., B-251569.2, Mar. 16, 1993, 93-1 CPD para. 239 at 5.

In any event, the record shows that the agency gave little (if any) weight
to the government estimate in evaluating price proposals. Rather, the agency
compared the

coefficients proposed by OHB, LCC, and Offeror A to each other, and the
agency

considered the coefficients at six other Air Force bases. Agency Report, Tab
15, Revised Prices with Market Survey. See FAR sect. 15.404-1(b)(2) (examples of
price analysis techniques, including comparison of prices received in
response to a solicitation; comparison of previously proposed prices and
contract prices with current proposed prices; and comparison of proposed
prices with prices obtained through market research). OHB proposed the
highest coefficients among the three offerors who remained eligible for
award, and its proposed coefficients were higher in all but one category
when compared to the coefficients at the other Air Force bases.

Finally, OHB challenges the agency's tradeoff decision resulting in the
award to LCC. OHB complains that the SSA placed too much emphasis on LCC's
low proposed coefficients, and believes that the SSA disregarded what OHB
characterizes as its technically superior and more realistically priced
proposal.

OHB's argument assumes the technical superiority and more realistic pricing
of its proposal. Because, as discussed above, the agency found that LCC's
proposal was technically superior to OHB's proposal and that LCC's lower
price was realistic, the selection of LCC's proposal is unobjectionable. [4]

The protest is denied.

Comptroller General
of the United States

Notes

1. The color ratings, as well as corresponding adjectival ratings, were:
blue/exceptional, green/acceptable, yellow/marginal, and red/unacceptable.
The proposal risk ratings were: high, moderate, and low. Agency Report, Tab
13, Source Selection Evaluation Guide, at 9, 11. These specifics were not
disclosed in the RFP.

2. The RS Means publication is updated yearly; as stated in the RFP, the
update will provide the only economic price adjustment under the contract.
In other words, an offeror's coefficients will remain the same over the term
of the contract. Id.

3. By notice dated July 9, GAO dismissed, among other issues, OHB's
challenge of the evaluation of LCC's technical proposal, as this issue was
raised 11 days after OHB's debriefing. Bid Protest Regulations, 4 C.F.R.
sect. 21.2(a)(2) (1999).

4. OHB's complaint that the evaluation record was not sufficiently
documented is without basis. As indicated from the discussion above, the
record, including the original and revised evaluation narratives and the
source selection decision, reasonably support the agency's position that
OHB's proposal was not exceptional and did not represent the best value to
the government.