TITLE:  Beneco Enterprises, Inc., B-283154, October 13, 1999
BNUMBER:  B-283154
DATE:  October 13, 1999
**********************************************************************
Beneco Enterprises, Inc., B-283154, October 13, 1999

Decision

Matter of: Beneco Enterprises, Inc.

File: B-283154

Date: October 13, 1999

Clark B. Fetzer, Esq., Kirton & McConkie, for the protester.

Robert J. Marks, Esq., Marks & Golia, for Straub/Pacific LLC, an intervenor.

Daniel J. Dykstra, Jr., Esq., U.S. Army Corps of Engineers, for the agency.

Christine F. Davis, Esq., and James Spangenberg, Esq., Office of the General
Counsel, GAO, participated in the preparation of the decision.

DIGEST

1. Where a solicitation provided for multiple awards based on a
price/technical tradeoff, in which technical factors were to be
significantly more important than price, an agency improperly rejected the
protester's highest-rated proposal without considering its significant
technical superiority and without comparing it to each of the three
awardees' lower-rated proposals.

2. Where a solicitation stated two price evaluation factors, but did not
state their relative importance, the solicitation gave rise to a presumption
that the factors were approximately equal, and the agency erred in according
one of the price factors virtually no weight in determining each proposal's
evaluated, composite price.

DECISION

Beneco Enterprises, Inc. protests the award of three contracts to [Offeror
A], Straub/Pacific LLC, and [Offeror B], under request for proposals (RFP)
No. DACA09-99-R-0006, issued by the U.S. Army Corps of Engineers, for
construction services at installations under the jurisdiction of the Corps's
Los Angeles District and the Bureau of Prisons' Western Region. Beneco
protests that the Corps misevaluated price and did not treat it as
significantly less important than technical concerns in the price/technical
tradeoff, as required by the RFP evaluation scheme.

We sustain the protest.

The RFP contemplated the award of three indefinite delivery, indefinite
quantity (IDIQ) contracts, with an overall maximum amount of $90 million for
the 36-month duration of the contracts. [1] RFP amend. 3, at 00100-6 and
Defense Department Form 1707. The RFP explained that, after award, the three
successful contractors would be eligible to compete for fixed-price or
time-and-materials task orders or might be awarded sole-source task orders,
if circumstances dictated. RFP amend. 3,

at 00850-1. The RFP stated that the government anticipated awarding most
task orders based on a competition between the awardees. Id.

The RFP contained general specifications that were to apply to the task
orders. RFP sect. 01005. In addition, the RFP included detailed specifications
that were to apply to a "sample project" task order calling for repairs and
additions to a military dining hall. The solicitation advised that the
government might or might not issue a task order for the sample project. RFP
amend. 3, Bid Schedule for Sample Project, Note 1 and at 00010-3.

The solicitation contemplated an initial proposal award based on a
price/technical tradeoff. The RFP identified six technical evaluation
factors and their relative importance, which the source selection plan (SSP)
quantified on a 1,000-point scoring scale, consistent with the RFP, as
follows: (1) past performance/quality (350 points), (2) management (200
points), (3) customer satisfaction (200 points), (4) understanding of
requirements (100 points), (5) scheduling (100 points), and

(6) small, small disadvantaged, and women-owned business participation (50
points). RFP amend 3, at 00150-6; SSP at 5-1 to 5-6.

The RFP also listed two price evaluation factors, sample project price and a
"pricing factor," but did not state their relative importance. RFP amend. 3,
at 00150-1, 00150-4. For the sample project price, the RFP sought lump-sum
prices for three line items comprising the sample project requirements. [2]
RFP amend. 3, Bid Schedule for Sample Project. For the pricing factor, the
RFP asked offerors to propose a factor representing their indirect costs and
profit; the RFP advised that the government would determine the prices for
any sole-source task orders by multiplying this factor against predetermined
unit prices appearing in a specified industry handbook (the R.S. Means
Western Edition Book). RFP amend. 3, at 00010-3, 00850-6, 00850-7.

As the basis for award, the solicitation stated:

The technical evaluation factors, when combined, are significantly more
important than cost or price. The Government is more concerned with
obtaining superior technical, management, quality, and/or past performance
features than with making award at the lowest overall price/cost to the
Government.

RFP at 00150-4.

The Corps convened a source selection evaluation board (SSEB) to evaluate
15 proposals received in response to the RFP. The SSEB determined that four
proposals were technically unacceptable and the rest, including the
protester's and the awardees', acceptable. Beneco's technical proposal
received the highest score of 835 points, [Offeror A's] proposal tied for
the second-highest score of 828 points, Straub's proposal received the
seventh-highest score of 730 points, and [Offeror B's] proposal received the
eighth-highest score of 615 points. Agency Report, Tab 8, Best Value
Comparative Analysis, June 15, 1999, para. 5. Beneco's proposal also earned
better adjectival ratings than the awardees' proposals (three "very good"
ratings and three "excellent" ratings, including an "excellent" rating under
the most important past performance/quality factor). Agency Report, Tab 7,
Source Selection Evaluation Report, June 14, 1999, at 2, 4, 8, 21. The SSEB
remarked that Beneco's proposal "demonstrated high quality in all respects
and has the best probability of success among the evaluated offers," as
evidenced by its point score, adjectival ratings and supporting narratives.
Id. at 4.

In its price evaluation, the Corps calculated each proposal's "composite"
(i.e., evaluated) price from the sample project price and the pricing factor
proposed by each offeror. Although the RFP did not state the relative
importance of the two price factors, the agency heavily emphasized the
proposed sample project price in determining each proposal's composite
price. Contracting Officer's Statement para. 14. Specifically, the composite
price was the sum of the proposed sample project price plus a price
representing 10 percent of the sample project price times the proposed
pricing factor. SSP at 6-7.

Based on this price evaluation methodology, [Offeror B's] composite price
was lowest ($1,979,565), Straub's was third lowest ($2,142,801), [Offeror
A's] was fourth lowest ($2,174,355), and Beneco's was ninth lowest
($2,513,998). [3] Agency Report, Tab 8, Best Value Comparitive Analysis,
June 15, 1999, para. 5. Because the sample project prices were weighted so much
more heavily than the pricing factors, the proposals had the same price
ranking and nearly the same relative price difference based on a comparison
of sample project prices as they did based on a comparison of composite
prices. Id. In contrast, offerors' proposed pricing factors bore little
relationship to their composite price rankings: [Offeror B's] pricing factor
was the fifth lowest, Beneco's was the seventh lowest, Straub's was the
eighth lowest, and [Offeror A's] was the highest. Id.

Following the price and technical evaluations, the Corps conducted three
rounds of price/technical tradeoffs to determine the three awardees, based
upon the tradeoff methodology stated in the SSP. [4] Under this methodology,
the Corps conducted a series of tradeoffs, beginning by comparing the
lowest-priced proposal with the highest-rated one, and then comparing the
winner in that tradeoff against the other proposals.

The Corps thus began the first tradeoff round by performing a tradeoff
between [Offeror B's] lowest-priced proposal and Beneco's highest-rated
proposal. The agency prepared a chart, described as a "Comparative Analysis"
of the two technical proposals, which quoted the SSEB's consensus findings
and scores for each proposal, but did not synthesize the information to
reach any findings as to the relative strengths and weaknesses of the two
proposals. Agency Report, Tab 8, Best Value Comparative Analysis, encl. 3.
Beneco's proposal dramatically outscored [Offeror B's] under the most
important past performance/quality factor (307 points versus 200 points on a
350-point scale), where the SSEB downgraded [Offeror B's] proposal because
"[f]ew contracts [were] completed on time," among other past
performance/quality problems. Beneco's proposal also outscored [Offeror B's]
under management ability (150 points versus 125 points on a 200-point
scale); customer satisfaction (175 points versus 125 points on a 200-point
scale); and understanding requirements (80 points versus 40 points on a
100-point scale). Finally, Beneco's proposal earned the same score as
[Offeror B's] under the scheduling factor (75 points on a 100-point scale)
and almost the same score as [Offeror B's] under the small, small
disadvantaged, and women-owned participation factor (48 points versus 50
points on a 50-point scale)--the only two factors under which [Offeror B's]
proposal earned better than a "satisfactory" rating. Id.; Agency Report, Tab
7, Source Selection Evaluation Report, at 2-3.

In its tradeoff decision, the Corps observed that the technical score of
Beneco's proposal was 220 points (36 percent) higher than [Offeror B's],
while its composite price was $534,433 (27 percent) higher than [Offeror
B's]. The agency then concluded that,

while Beneco is likely to be able to perform the tasks described in the
contract in a manner more technically advantageous to the Government; it is
noted that, based upon the benefits and advantages of the higher-rated
technical proposal . . . payment of the significant additional price for
Beneco . . . is neither justified, nor in the best interest of the
Government.

Agency Report, Tab 8, Best Value Comparative Analysis para. 9. The Corps did not
discuss any portion of the "Comparative Analysis" chart, or state any other
reason, as support for this conclusion.

After reaching its conclusion that [Offeror B's] proposal was more
advantageous, the Corps, pursuant to the SSP tradeoff methodology, rejected
Beneco's highest-rated proposal from consideration for any of the three
awards, and did not compare it to any other lower-rated proposal, including
[Offeror A's] or Straub's proposals. Contracting Officer's Statement para.para. 24,
32, 34; Agency Report, Tab 8, Best Value Comparative Analysis, para.para.  9, 21,
30. Instead, the Corps conducted a tradeoff between [Offeror B's]
lowest-priced proposal and [Offeror A's] next highest-rated proposal, and
determined that [Offeror A's] proposal was worth the $194,790 price premium.
Agency Report, Tab 8, Best Value Comparative Analysis, para. 11. The Corps then
subjected [Offeror A's] proposal to a tradeoff with Straub's third
lowest-priced proposal (not making a tradeoff with the second lowest-priced
proposal because it was lower-rated than [Offeror B's]). Id. at para. 12. After
deciding that [Offeror A's] proposal was worth the $31,554 price premium
relative to Straub's proposal, the agency selected [Offeror A] as the first
awardee because its proposal was higher-rated and lower-priced than any
proposal not eliminated in the first tradeoff round. Id. at para.para. 13, 14, 17.
As the Corps had eliminated Beneco's proposal in a tradeoff with [Offeror
B's], it did not subject [Offeror A's] lower-rated proposal to a tradeoff
with Beneco's highest-rated proposal.

The Corps then began the second round of tradeoffs to select the second
awardee. After rejecting other higher-rated proposals in successive
tradeoffs with [Offeror B's] proposal, [5] the Corps decided that Straub's
seventh highest-rated proposal was worth the $163,236 price premium above
[Offeror B's] proposal. Id. at para. 25. The agency then selected Straub as the
second awardee because its proposal was higher-rated and lower-priced than
any proposal not eliminated in the preceding rounds. Id. at para. 28. Here, too,
as the Corps had eliminated Beneco's proposal in a tradeoff with [Offeror
B's], it did not compare Straub's lower-rated, lower-priced proposal with
Beneco's highest-rated proposal.

Having rejected all proposals rated higher than [Offeror B's] in the
preceding rounds (except for Straub's and [Offeror A's]), the Corps then
selected [Offeror B] as the third awardee. Id. at para.para. 29-33. Despite its
"grave concern" regarding [Offeror B's] low past performance/quality score,
see id. at para. 25(c), the Corps determined that [Offeror B] could successfully
perform the work. Id. at para.para. 34-37.

In the end, the Corps made the three awards based on the lowest-, third
lowest-, and fourth lowest-priced acceptable proposals (only skipping the
second lowest-priced acceptable proposal, which was lower-rated than
[Offeror B's] proposal). The Corps also awarded [Offeror B], under the
contract's first task order, the sample project based upon its lowest sample
project price. Agency Report at 5; Contracting Officer's Statement, para. 35.
This protest followed.

Beneco protests the price/technical tradeoffs. The protester claims that the
Corps did not treat technical considerations as significantly more important
than price during the tradeoffs, as required by the RFP, and essentially
ignored the technical superiority of Beneco's proposal over the proposals
selected. Beneco also argues that the Corps disregarded the fact that
Beneco's pricing factor was lower than [Offeror A's] or Straub's, and that
sample project price improperly drove the Corps's tradeoff decisions,
contrary to the RFP evaluation scheme. Protest at 6; Comments at 5. Had the
Corps used a tradeoff methodology and a price formula that comported with
the RFP evaluation scheme, Beneco contends that the Corps would have
selected its proposal for award. [6]

In a negotiated procurement, agency selection officials have broad
discretion in determining the manner and extent to which they will make use
of the technical and price evaluation results. TRW, Inc., B-234558, June 21,
1989, 89-1 CPD para. 584 at 4. However, they do not have the discretion to
announce in the solicitation that a particular evaluation scheme will be
used and then use another in the actual evaluation, unless the offerors are
informed of the change and given the opportunity to revise their proposals
with the new scheme in mind. Kempter-Rossman Int'l,

B-220772, Feb. 4, 1986, 86-1 CPD para. 127 at 3. An agency may not justify an
award based upon adherence to a source selection plan that is inconsistent
with the evaluation scheme set forth in the solicitation. See SDA Inc.,
B-248528.2, Apr. 14, 1993, 93-1 CPD para. 320 at 9-10. After the evaluations,
the selection authority may make price/technical tradeoffs; the extent to
which one may be sacrificed for the other is governed by the test of
rationality and consistency with the established evaluation factors. Coastal
Science and Eng'g, Inc., B-236041, Nov. 7, 1989, 89-2 CPD para. 436 at 3.

The contemporaneous record does not explain why the agency rejected Beneco's
significantly superior proposal to save an evaluated $534,433 represented by
[Offeror B's] proposal--a proposal which earned less than two-thirds of the
available evaluation points, garnered only "satisfactory" ratings under
evaluation factors representing 850 evaluation points, and was the source of
"grave concern" regarding its past performance/quality. The contemporaneous
record simply reflects that the agency was unwilling to pay a 27-percent
price premium to obtain a proposal with a 36-percent higher technical score,
without any discussion of the proposals' relative strengths and weaknesses.
Furthermore, there is no indication in the contemporaneous record that the
agency, in reaching this conclusion, accounted for the fact that technical
factors were significantly more important than price factors under the
stated evaluation scheme.

In responding to this protest, the contracting officer explained the
rationale for selecting [Offeror B's] proposal over Beneco's, as follows:

Given a choice between two technically acceptable offers for a $2
million-plus construction project, it would be unreasonable to pay $400,000
or $500,000 extra to have the same project built by a better contractor.
Technical competency and execution were significantly more important than
mere price, but even a wealthy private enterprise would not pay that much
extra. AFARS [Army Federal Acquisition Regulation Supplement sect.] 15.611
clearly establishes that the selection process is price-driven, and any
departure from the lowest price must be justified by non-price advantages.
This principle was followed throughout the selection process.

Contracting Officer's Statement para. 41.

The foregoing demonstrates, and the record confirms, that the selection
process in the instant procurement was indeed price-driven, contrary to the
stated evaluation scheme. While the contracting officer intoned that
technical considerations were significantly more important than price under
the evaluation scheme, the record shows that the agency did not recognize or
account for the significance of Beneco's technical superiority (which was
greater than [Offeror B's] evaluated price advantage), and essentially
converted the tradeoff to a price competition between two acceptable
proposals.

Furthermore, the contracting officer mistakenly suggested that the RFP was
for the award of a "$2 million-plus construction project" (the sample
project), when, in fact, it was not. Rather, the RFP was for the selection
of three contractors eligible to receive subsequent task orders for up to
$90 million of work, and the RFP evaluation scheme was structured to favor
the selection of contractors who were highly qualified, not those who
proposed the lowest sample project price. Indeed, the RFP did not even
require the agency to award the sample project based on the instant
competition, see RFP amend. 3, Bid Schedule for Sample Project, Note 1, nor
did it suggest that the agency intended to award the sample project based on
the lowest-priced proposal, especially one that earned the tenth lowest
score for understanding the requirements (40 out of 100 points) and the
eighth lowest score for past performance/quality (200 out of 350 points).
See Agency Report, Tab 8, Best Value Comparative Analysis, encl. 2.

The Corps's improper emphasis on price also appeared in the tradeoff
methodology employed in this procurement, which resulted in the selection of
three of the four lowest-priced proposals, without subjecting each of the
selected proposals to a tradeoff with Beneco's highest-rated proposal. As a
result of the methodology applied, once the agency rejected Beneco's
highest-rated proposal based upon the flawed tradeoff with [Offeror B's]
lowest-priced proposal, Beneco's proposal lost any opportunity to receive
one of the other multiple awards because its proposal was never compared
either to [Offeror A's] or Straub's lower-rated ones. Moreover, even had the
Corps properly documented that Beneco's proposal did not warrant the price
premium relative to [Offeror B's] lowest-priced proposal, it does not
necessarily follow that Beneco's proposal did not warrant the smaller price
premium as compared to [Offeror A's] or Straub's lower-rated proposals. [7]
Where price is secondary to technical considerations, an agency may not
select a lower-priced, lower-scored proposal, as here, unless it determines
that the premium involved in selecting a higher-rated, higher-priced
proposal is not justified. TRW, Inc., supra, at 4.

Finally, the Corps's price/technical tradeoffs also suffered from an
underlying impropriety in the price evaluation. The instant RFP stated two
price factors, the sample project price and the pricing factor, but did not
state their relative importance. RFP amend. 3, at 00150-1, 00150-4. Where,
as here, a solicitation is silent as to the relative importance of the
evaluation factors, offerors can assume that the factors are approximately
equal. Foundation Health Fed. Servs.; Humana Military Healthcare Servs.,
Inc., B-278189.3, B-278189.4, Feb. 4, 1998, 98-2 CPD para.  51 at 6. Here, the
Corps used a formula to determine offerors' composite prices, which gave
virtually no weight to offerors' proposed pricing factors. [8] This
evaluation formula was thus not consistent with the RFP. It also clearly
prejudiced Beneco, whose proposed pricing factor was lower than either
Straub's or [Offeror A's] ([Offeror A] proposed the highest pricing factor
of all offerors).

The agency and the intervenor argue that, because the RFP indicated that the
proposed pricing factor would apply only to sole-source task orders, which
the agency anticipated awarding less frequently than competitive task
orders, offerors should have known that the pricing factor would receive
little weight in the price evaluation. See RFP amend. 3, at 00010-3,
00850-1. We disagree that the RFP indicated that the pricing factor would
have less significance in pricing subsequent task orders than the sample
project. To the contrary, the sample project constituted only one task
order, among a potential $90 million in IDIQ contracts, that the government
might award, and the RFP stated that the government might not even award a
task order for the sample project based on the instant competition. [9] In
any event, we disagree that the RFP reasonably implied that the agency would
effectively disregard the pricing factor in its price evaluation, where the
evaluation scheme provided for the evaluation of both the pricing factor and
the sample project price, presumably in equal measure. See Foundation Health
Fed. Servs.; Humana Military Healthcare Servs., Inc., supra.

The protest is sustained. We recommend that the agency perform new
price/technical tradeoffs based on the proposals submitted, using a tradeoff
methodology and a price evaluation formula that are consistent with the
established evaluation criteria. In the alternative, the agency could amend
the evaluation criteria stated in the RFP to more accurately reflect its
needs and receive and reevaluate revised proposals. If [Offeror A's],
Straub's, or [Offeror B's] proposal is not selected following the new award
decision, the respective contract should be terminated. We also recommend
that Beneco be reimbursed its costs of filing and pursuing its protests,
including reasonable attorneys' fees. Bid Protest Regulations, 4 C.F.R. sect.
21.8(d)(1). Beneco should submit its certified claim for costs, detailing
the time spent and costs incurred, to the contracting agency within 60 days
of receiving this decision. 4 C.F.R. sect. 21.8(f)(1).

The protest is sustained.

Comptroller General

of the United States

Notes

1. We were unable to locate an RFP provision stating the minimum ordering
amount applicable to each IDIQ contract awarded, as required by Federal
Acquisition Regulation (FAR) sect. 16.504(a)(1). The contracting officer's
statement indicates that the agency intended to include a guaranteed minimum
ordering amount of $1 million per contract during the 36-month performance
period. Contracting Officer's Statement para. 2. Since we sustain the protest
and recommend corrective action, the agency, in implementing the recommended
action, should ensure that the RFP provides for a minimum order.

2. No information was requested as to the cost elements of the proposed
prices.

3. The above price rankings exclude the prices offered by the four
technically unacceptable proposals.

4. The SSP was not incorporated into the RFP or otherwise disclosed to the
offerors.

5. The Corps rejected these other proposals just as it had Beneco's--without
comparing them to any other lower-rated, lower-priced proposal and without
specific rationale for their rejection, other than a reference to their
higher price in relation to [Offeror B's] proposal. Agency Report, Tab 8,
Best Value Comparative Analysis, para.para. 21, 23, 24.

6. Beneco protested within 10 days of its debriefing, at which the agency
first disclosed the information necessary for it to protest, i.e., the
technical scores of Beneco's and the awardees' proposals, as well as the
pricing factors proposed by the awardees. The agency and the intervenor
argue that the protest is untimely because Beneco did not request its
debriefing in writing within 3 days of receiving the award notification,
such that the debriefing was not a required debriefing. As a result, the
agency and the intervenor argue that our Office should find the protest
untimely because it was filed more than 10 days after award notification. We
disagree that the protest is untimely. Non-required debriefings are
permitted, see FAR sect. 15.506(a)(4)(i), and a protest based on information
first revealed in a non-required debriefing, as here, may be filed within 10
days of the debriefing. Trifax Corp., B-279561, June 29, 1998, 98-2 CPD para. 24
at 5; 4 C.F.R. sect. 21.2(a)(2) (1999).

In addition, the intervenor argues that Beneco untimely raised in its
comments to the agency report its argument that offerors' proposed pricing
factors did not receive due weight in the price/technical tradeoffs, when
Beneco could have raised this issue in its protest based on information
obtained at the debriefing. We disagree that Beneco did not raise this issue
in its initial protest, which states, among other things, that "Beneco
clearly should have been awarded a contract, because Beneco's technical
rating was the highest and its Price Factor was the second lowest." Protest
at 6.

7. As noted above, Straub's proposal scored only 730 points as compared to
Beneco's 835 points. Agency Report, Tab 8, Best Value Comparative Analysis,
para. 5. While [Offeror A's] proposal scored 828 points, almost as many as
Beneco's, its adjectival ratings (one "satisfactory," two "excellent," and
three "very good" ratings) were lower than Beneco's (three "excellent" and
three "very good" ratings). Agency Report, Tab 7, Source Selection
Evaluation Report, at 4, 21.

8. As noted above, the composite price was the sum of the proposed sample
project price plus a price representing 10 percent of the sample project
price times the proposed pricing factor. Because this formula made sample
project price the multiplicand for the pricing factor multiplier, sample
project price accounted for well over 90 percent of offerors' composite
prices, e.g., it constituted 97 percent of the composite price in the case
of Beneco's proposal. Furthermore, since the pricing factor was to apply
only to predetermined unit prices to determine the price of subsequent
sole-source task orders, see RFP amend. 3 at 00010-3, 00850-6, 00850-7, it
is unclear why the agency used sample project price as the multiplicand for
the pricing factor in its price evaluation.

9. The intervenor argues that the agency properly emphasized sample project
price because, unlike the proposed pricing factor, it provided "a direct
indication to the Corps of future expectations for competitively bid task
orders." Intervenor's Comments, Sept. 20, 1999, at 3. It is not apparent to
our Office that the sample project price is any more indicative of future
price expectations than the pricing factor or that the offerors' relative
prices for further task orders would be consistent with the sample project
pricing. This is so because the sample project pricing was on a lump-sum
basis with no cost breakdown information and disclosed nothing about
offerors' labor rates or technical efficiencies. Furthermore, because the
sample project comprised only a small fraction of the contract's potential
total value, one could argue that offerors had an incentive to propose very
low sample project prices for evaluation purposes.