TITLE:  Integrity Management Services, Inc., B-283094.2, May 3, 2000
BNUMBER:  B-283094.2
DATE:  May 3, 2000
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Integrity Management Services, Inc., B-283094.2, May 3, 2000

Decision

Matter of: Integrity Management Services, Inc.

File: B-283094.2

Date: May 3, 2000

Katherine S. Nucci, Esq., Adduci, Mastriani & Schaumberg, for the protester.

Maj. Howard W. Roth, III, Department of the Army; and Laura J. Mann, Esq.,
Small Business Administration, for the agencies.

Jennifer D. Westfall-McGrail, Esq., and Christine S. Melody, Esq., Office of
the General Counsel, GAO, participated in the preparation of the decision.

DIGEST

  1. General Accounting Office will not consider protest that Small Business
     Administration (SBA) failed to consider vital information bearing on
     awardee's responsibility in issuing it a certificate of competency
     where the allegedly vital information does not concern awardee's
     compliance with a definitive responsibility criterion.
  2. Contracting officer reasonably determined that awardee's pricing
     demonstrated an understanding of the solicitation's requirements and
     supported its proposed approach based on comparison of awardee's
     proposed staffing and overall price to government estimates.

DECISION

Integrity Management Services, Inc. protests the award of a contract to PCT
Services, Inc. under request for proposals (RFP) No. DABT57-98-R-0050,
issued by the Department of the Army for hospital housekeeping services for
various medical facilities located at Forts Eustis, Lee, Monroe and Story in
Virginia. The contract was awarded to PCT after the Small Business
Administration (SBA) issued it a certificate of competency (COC). The
protester contends that in issuing the COC the SBA failed to consider vital
information bearing on PCT's responsibility. The protester also argues that
the agency failed to conduct an adequate price realism analysis.

We deny the protest.

The RFP, which was set aside for small, minority-owned businesses
participating in the SBA's competitive 8(a) program, contemplated the award
of a fixed-price contract for a base and 4 option years to the responsible
offeror submitting the lowest-priced, technically acceptable offer. One of
the factors to be considered in the technical evaluation of proposals was
the offeror's relevant experience and past performance. [1] The solicitation
advised that in the event that an offeror's past performance were determined
unacceptable, the matter would be referred to the SBA for a determination
regarding issuance of a COC. RFP sect. M.3.a.4. The RFP also provided for a
price analysis to determine if the offeror's pricing reflected an
understanding of the scope of the work and supported the proposed method of
performance. RFP sect. M.3.b.

Eleven proposals were received by the April 13, 1999 closing date. W.D.
Enterprises, Inc.'s offer was lowest in price, while PCT's and Integrity's
were second and fifth low, respectively. The contracting officer determined
that W.D. Enterprises was nonresponsible and referred the matter to the SBA
for possible issuance of a COC. The SBA declined to issue a COC, whereupon
the agency conducted a technical evaluation and price analysis of PCT's
proposal. The contracting officer determined that PCT's proposal showed that
it understood the scope of the effort and that its price was realistic.
Agency Report at 6. She further determined that PCT was nonresponsible,
however, and accordingly referred the matter to the SBA.

In her Determination of Contractor Responsibility, the contracting officer
noted that she had found PCT nonresponsible based on certain adverse past
performance information furnished by its references.

After reviewing the contracting officer's determination, the past
performance questionnaires furnished by the references, and PCT's COC
application, the SBA industrial specialist concluded that "most [of the
problems described in the questionnaires] were minor, or attributable to the
financial instability PCT previously encountered." Summary of COC Review at
1. Both the industrial specialist and SBA's financial specialist, who had
reviewed PCT's financial situation, recommended issuance of a COC. The COC
was issued on December 8, and the Army awarded PCT a contract on January 21,
2000.

Integrity protests the award to PCT, [2] arguing that the SBA failed to
consider vital information bearing on that firm's responsibility in issuing
it a COC. In this regard, the protester contends that the Army failed to
bring to the SBA's attention two recent decisions by our Office, PCT Servs.,
Inc., B-279168, May 12, 1998, 98-1 CPD para. 152, and PCT Servs., Inc.,
B-281046, B-281012.2, Dec. 22, 1998, 99-1 CPD para. 10, which discuss ratings
made in 1997 and 1998 of PCT's performance on many of the same contracts
considered by the SBA in evaluating PCT's eligibility for a COC here. The
protester contends that the questionnaires concerning PCT's performance that
were completed by references in 1997-1998 are more negative than the
questionnaires completed in 1999 in connection with this procurement, and
that the SBA would not have determined PCT responsible if it had considered
both sets of questionnaires.

Our Office will review the SBA's determinations regarding the issuance of,
or failure to issue, a COC, only where there is a showing of possible bad
faith on the part of government officials or a failure to consider vital
information bearing on the firm's responsibility. 4 C.F.R. sect. 21.5(b)(2).
Where, as here, one offeror protests the issuance of a COC to a competitor
on the ground that the SBA failed to consider "vital information," we will
consider the protest only where the solicitation contains definitive
responsibility criteria and the issue raised concerns the competitor's
compliance with those criteria. [3] Eastern Marine, Inc., B-212444.2, Aug.
28, 1984, 84-2 CPD para. 232 at 4; Surgical Instrument Co. of Am., B-212653,
Nov. 30, 1983, 83-2 CPD para. 628 at 2; Uniflite, Inc., B-197365, Jan. 23, 1980,
80-1 CPD para. 67 at 2. Here, since neither bad faith nor a failure to comply
with a definitive responsibility criterion has been alleged, we will not
consider the matter.

Integrity next argues that the agency failed to conduct an adequate price
realism analysis pursuant to sect. M.3.b of the RFP, which provides as follows:

The Government will perform a price analysis of [an] offeror's proposal as
part of the evaluation to determine if the offeror understands the scope of
the requirement. As part of this price analysis, the Government will assess
whether the offeror's proposed pricing supports the proposed method of
performance and is realistic. A price found to be unrealistically low in
relation to the proposed work may be rejected on the basis such price
evidences a lack of understanding of the requirement.

The protester contends that the agency should have reviewed the realism of
PCT's proposed costs for supplies and equipment and its site manager's
salary in conducting its price analysis.

Where, as here, the award of a fixed-price contract is contemplated, a
proposal's price realism is not ordinarily considered, since a fixed-price
contract places the risk and responsibility for contract costs and resulting
profit or loss on the contractor. OMV Med., Inc.; Saratoga Med. Ctr., Inc.,
B-281387 et al., Feb. 3, 1999, 99-1 CPD para. 52 at 5. However, an agency may
provide for price realism analysis in the solicitation of fixed-price
proposals for such purposes as measuring an offeror's understanding of the
solicitation requirements, The Cube Corp., B-277353, Oct. 2, 1997, 97-2 CPD
para. 92 at 4, or to avoid the risk of poor performance from a contractor who is
forced to provide services at little or no profit. Ameriko, Inc., B-277068,
Aug. 29, 1997, 97-2 CPD para. 76 at 3. The depth of an agency's price realism
analysis is a matter within the sound exercise of the agency's discretion.
Volmar Constr., Inc., B-272188.2, Sept. 18, 1996, 96-2 CPD para. 119 at 6.

In order to determine whether PCT's price demonstrated an understanding of
the scope of the requirement and supported the proposed method of
performance, the contracting officer compared it to the government estimate
and examined PCT's proposed level of staffing. The contracting officer found
that PCT's proposed number of labor hours (which translated to [deleted]
full time equivalents (FTE)) was only [deleted] percent lower than the
government estimate of 31.4 FTEs and less than [deleted] percent lower than
the protester's and the incumbent contractors' FTEs ([deleted] and
[deleted], respectively). The contracting officer concluded that this
relatively small difference in the level of proposed staffing demonstrated
that PCT understood the scope of the requirement. Contracting Officer's
Statement at 3-4. The contracting officer further concluded that although
PCT's proposed price of $4,311,850.80 was 22 percent lower than the
government estimate of $5,556,362.00, it was nonetheless realistic because
the discrepancy was largely attributable to overstatement of the government
estimate. Memorandum Regarding Price Analysis of PCT Proposal, Jan. 5, 2000,
at 1. Given that the contracting officer examined both the adequacy of PCT's
proposed approach to performing the work and the adequacy of its pricing to
support its proposed approach, we see no basis to question the sufficiency
of her price analysis.

The protester also argues that the agency should have reviewed the realism
of PCT's proposed costs for supplies and equipment and its site manager's
salary in conducting its price analysis. As noted above, the depth of a
price analysis is a matter committed to the agency's discretion, and the
fact that the agency did not examine certain elements proposed by Integrity
provides no basis to question the otherwise reasonable price analysis here.
See Tecom, Inc., B-275518.2, May 21, 1997, 97-1 CPD para. 221 at 6.

The protest is denied.

Comptroller General
of the United States

Notes

1. Other technical evaluation factors were: (1) comprehension and
demonstrated ability to provide necessary management, equipment, and
personnel necessary for successful performance; (2) organization and
staffing; and (3) quality control. RFP, sect. M.3.a.1-3.

2. In its protest, Integrity also challenged the eligibility for award of
the third and fourth lowest-priced offerors, arguing that the former was
ineligible because it had graduated from the 8(a) program the day before
initial proposals in response to this RFP were due, and that the latter was
ineligible because it did not satisfy the RFP's definitive responsibility
criteria. In its report on the protest, the Army did not address Integrity's
challenges to the intervening offerors. Because Integrity has challenged the
eligibility for award of all offerors in line for award ahead of it, and in
light of the agency's failure to dispute those challenges, we will treat
Integrity as an interested party to challenge the award to PCT. See 4 C.F.R.
sect. 21.0(a) (2000);
Tri-Star Indus., Inc.--Recon., B-254767.3, June 28, 1994, 94-1 CPD para. 388 at
2.

3. The protester contends that "vital information bearing on the firm's
responsibility" should be construed more broadly in the context of third
party protests. In modifying our regulations to add this language in 1995,
however, we explained that we were making the change to reflect our
then-current case law. 60 Fed. Reg. 40,737, 40,739 (1995). Our then-current
case law consisted of two strands, one governing protests brought by firms
that had applied for and been denied COCs, see, e.g., COSTAR, B-240980, Dec.
20, 1990, 90-2 CPD para. 509; American Indus. Contractors, Inc., B-236410.2,
Dec. 15, 1989, 89-2 CPD para. 557, and the other governing protests against the
issuance of a COC brought by third parties. See Eastern Marine, Inc., supra;
Surgical Instr. Co. of Am., supra; Uniflite, Inc., supra. The line of cases
dealing with third party protests limited our review of decisions by SBA to
issue a COC to situations in which there was a showing of possible fraud on
the part of government officials or the record indicated that the SBA had
not considered vital information bearing on a small business concern's
compliance with definitive responsibility criteria contained in the
solicitation.