TITLE:  Dismas Charities, Inc., B-284754, May 22, 2000
BNUMBER:  B-284754
DATE:  May 22, 2000
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Dismas Charities, Inc., B-284754, May 22, 2000

Decision

Matter of: Dismas Charities, Inc.

File: B-284754

Date: May 22, 2000

Alex D. Tomaszczuk, Esq., Dennis E. Pryba, II, Esq., Shaw Pittman, for the
protester.

Christine S. Trafford, Esq., and Joseph Summerill, Esq., Bureau of Prisons,
for the agency.

Paul E. Jordan, Esq., and Paul Lieberman, Esq., Office of the General
Counsel, GAO, participated in the preparation of the decision.

DIGEST

Protester's proposal was reasonably eliminated from competitive range where
protester failed to provide valid proof of compliance with zoning
requirements by the date of submission of its best and final offer, as
required by the solicitation.

DECISION

Dismas Charities, Inc., protests the elimination of its proposal from the
competitive range under request for proposals (RFP) No. 200-0499-W, issued
by the Bureau of Prisons, Department of Justice for a residential community
sanctions center (CSC) and mothers with infants together (MINT) program
services facility in Phoenix, Arizona. Dismas contends that the agency had
no valid basis for eliminating the Dismas proposal and failed to conduct
meaningful discussions with the protester.

We deny the protest.

The BOP contracts with state and local governments and private organizations
to provide a variety of services to federal offenders in the community
through CSC facilities. These services are designed to assist offenders in
becoming law-abiding, self-sufficient, contributing members of the
community. RFP sect. C.I.B. The MINT program's participants are pregnant
offenders who ordinarily spend 2 months before and 3 months after delivery
in a "home-like" setting in order to promote maternal bonding and parenting
skills. Amended RFP sect. C.II.23. Offerors were required to furnish the
necessary facilities, equipment and personnel to provide for the
safekeeping, care, and program needs of persons residing in the CSC and MINT
programs, to be provided in the downtown Phoenix area. RFP sect. C.I.D.

With regard to location of a proposed center, offerors were required to
submit proof of zoning compliance. The RFP provided:

By the submission date for Best and Final Offers [BAFO], offerors shall
provide the Contracting Officer with valid proof of all zoning and local
ordinance requirements necessary for the operation of Community Corrections
Center, Community Sanction Center, or any other program as specified in the
Statement of Work applicable to any and all proposed performance sites have
been met. An offeror's failure to establish and maintain proof may result in
elimination from the competitive range prior to award and termination for
default following award.

RFP sect. L.8.i.

Two offerors, Dismas, and the incumbent, Behavioral Systems Southwest, Inc.,
(BSSW) submitted offers by the August 10, 1999 closing date for receipt of
proposals. Dismas's proposed facility is located in a commercial area, zoned
"C-1." In order to satisfy the RFP requirements that it establish proof of
its zoning compliance, Dismas submitted a letter, signed by a City of
Phoenix Zoning Administrator, confirming that if Dismas's proposed facility
met the definition of "recovery home" and otherwise operated as represented
to the administrator, then the facility could be located "by right" in a C-1
area. Protest Tab 1, Letter from Zoning Administrator to Protester (July 12,
1999). On or about November 1, Dismas learned that the administrator had
taken the position that Dismas could not operate the facility as planned
because it did not qualify as a "recovery home." Protest at 6. Later in
November, the agency conducted discussions with Dismas and BSSW and both
offerors submitted additional information as requested. The agency did not
question the sufficiency of Dismas's proof of zoning compliance during this
period. On December 23, Dismas appealed the zoning administrator's decision
to the Board of Adjustment.

On December 21, the agency requested BAFOs from both offerors, to be
submitted not later than December 31. BSSW submitted its final proposal by
December 31. Dismas indicates that it did not receive the agency's written
request for BAFOs, but after an oral request by the contracting officer on
January 5, Dismas submitted its final proposal that same day. While Dismas
states that it provided oral notice of its appeals of the zoning
administrator's decision both to the contracting officer and to Phoenix BOP
personnel, it never provided written notice of the appeal to the agency. [1]

The Phoenix Board of Adjustment upheld the administrator's decision on
January 6 and Dismas filed an appeal with the Maricopa County Superior Court
on January 18. Again, Dismas states that it notified the BOP contracting
officer of the January 6 ruling and of its intent to appeal to the Superior
Court, but did not put that notice in writing. After learning of the various
adverse zoning decisions, by letter of January 28 the contracting officer
notified Dismas that its proposal had been eliminated from the competitive
range for failing to comply with the zoning proof requirement in RFP
sect. L.8.i. Dismas protested its elimination to the agency on February 1. [2]
On February 3, the contracting officer received a recommendation to award
the contract to BSSW since it was the only offeror in the competitive range.
The agency denied Dismas's agency-level protest on February 15. On February
18, the Superior Court ruled in Dismas's favor, finding that the decisions
of the zoning administrator and the Board of Adjustment were "clearly
erroneous," because the facility proposed by Dismas met the zoning ordinance
definition of recovery home "in every particular." Protest, Tab 2, at 3. The
Court reversed the determination of the Board of Adjustment and declared
Dismas's proposed use of its property to be in compliance with the express
provisions of the city's zoning ordinance. Id. at 4. On February 25, Dismas
filed this protest. To date, BOP has not awarded the contract.

Dismas first argues that the agency prematurely eliminated its proposal from
the competitive range. In this regard, Dismas relies on its attempts to
resolve its zoning problem and its oral notice of its efforts to the agency.
The agency maintains that Dismas's failure to meet the requirements of RFP
sect. L.8.i justified the elimination of the protester's proposal. We agree with
the agency.

The determination of whether a proposal is in the competitive range is
principally a matter within the discretion of the procuring agency. Federal
Acquisition Regulation (FAR) sect. 15.306(c) allows an agency to establish a
competitive range consisting of only the most highly rated proposals. In
rating proposals, the agency must evaluate proposals and assess their
relative qualities solely on the factors and subfactors stated in the
solicitation; our Office reviews the agency's evaluation of proposals and
determination to exclude a proposal from the competitive range for
reasonableness and consistency with the criteria and language of the
solicitation. FAR sect. 15.305(a); SDS Petroleum Prods., Inc., B-280430, Sept.
1, 1998, 98-2 CPD para. 59 at 4; WP Photographic Servs., B-278897.4, May 12,
1998, 98-1 CPD para. 151 at 3.

Here we find that the evaluation of Dismas's proposal and its elimination
from the competitive range were reasonable and consistent with the
solicitation. As quoted above, the RFP clearly warned that, by the time of
BAFO submission, "offerors shall provide . . . valid proof of all zoning and
local ordinance requirements" needed for the operation of the proposed
facilities and programs, and that "[f]ailure to establish and maintain proof
may result in elimination from the competitive range prior to award." RFP
sect. L.8.i. While this provision does not mandate the elimination of a
deficient proposal, it clearly gives the agency the discretion to eliminate
a proposal if the offeror fails to provide the requisite proof. At the time
Dismas submitted its BAFO, it did not satisfy the requirement. While the
protester was pursuing its administrative remedies and ultimately succeeded
in overturning the negative zoning ruling, at the time of its BAFO
submission it could not submit "proof" that it met the applicable zoning and
local ordinance requirements. In fact, it did not meet them until some 6
weeks after submission of its BAFO. Our conclusion is not changed by the
absence of an award or BOP's acknowledgment at the hearing conducted by our
Office that it could have extended the due date for BAFOs, had Dismas
requested it. Even though no award had been made, the agency was ready to do
so as early as February 3, when the recommendation to award to BSSW was
made. Agency Report, Tab D, Award Recommendation Memorandum, Feb. 3, 2000.

Likewise, even if we assume that Dismas provided some oral notice (Dismas
does not claim to have submitted written notice) of its efforts to resolve
its zoning problem, that notice alone was not sufficient to require the
agency to provide Dismas with additional time to meet the requirement. We
note that Dismas never requested an extension. In any event, the contracting
officer did not abuse his discretion in deciding to eliminate Dismas from
the competitive range instead of delaying the procurement to permit Dismas
to attempt to become compliant with the RFP requirement. An agency is not
required to delay an award indefinitely while an offeror attempts to cure
the causes for its failure to meet such a requirement. 50 State Sec. Serv.,
Inc., B-272114, Sept. 24, 1996, 96-2 CPD para. 123 at 5.

Dismas also argues that the agency failed to provide it with meaningful
discussions on the issue of its zoning compliance. In negotiated
procurements, contracting agencies generally must conduct discussions with
all offerors whose proposals are within the competitive range. FAR
sect. 15.306(d)(1). While agencies are not obligated to afford all-encompassing
discussions, they must be meaningful, leading an offeror into the areas of
its proposal requiring amplification or revision. Johnson Controls, Inc.,
B-282326, June 28, 1999, 99-2 CPD para. 6 at 4.

In Dismas's view, if the agency was dissatisfied with the protester's proof
of zoning submitted with its initial proposal, then the agency should have
conducted discussions with it. In this regard, at the hearing, the
contracting officer stated that, when reviewing Dismas's initial proof of
zoning in early December, he found that proof was insufficient. [3] If the
contracting officer made this determination prior to the request for BAFOs,
the contracting officer should have reopened negotiations to provide Dismas
with an opportunity to revise its proposal. [4] However, Dismas was not
prejudiced by this failure to conduct appropriate discussions.

Our Office will not sustain a protest unless the protester demonstrates a
reasonable possibility that it was prejudiced by the agency's actions, that
is, unless the protester demonstrates that, but for the agency's actions, it
would have had a substantial chance of receiving the award.
McDonald-Bradley, B-270126, Feb. 8, 1996, 96-1 CPD para. 54 at 3; see
Statistica, Inc., v. Christopher, 102 F. 3d 1577, 1581 (Fed. Cir. 1996).

Here, at the time leading up to submission of BAFOs, Dismas was simply
incapable of providing the requisite proof because its "of right" zoning
approval was, at best, in dispute. It was not until 2 weeks after it had
been eliminated from the competitive range that it obtained a reversal of
the decisions of the zoning administrator's and the zoning board's
decisions. Thus, reopening negotiations prior to the BAFO due date to
apprise Dismas of this perceived deficiency would not have resulted in any
different outcome.

Indeed, reinstating Dismas to the competitive range and reopening
negotiations today would apparently not result in a different outcome. In
this regard, subsequent to the court's reversal of the adverse zoning
decisions, the city of Phoenix has amended its zoning ordinance. The amended
ordinance eliminates the definition of "recovery home" and replaces it with
a similar definition concerning "transitional housing facility" or "halfway
house." Agency Post-Hearing Comments, Tab A, Zoning Ordinance of the City of
Phoenix, Nos. G-4255, G-4256. While most of the RFP requirements fit the
definition of halfway house, a halfway house requires a special use permit,
unlike the recovery home, which Dismas could operate "of right." Id.,
Ordinance No. G-4257. Further, while the RFP requires the successful offeror
to provide a minimum of 80 beds, the amended ordinance restricts the maximum
capacity to 30 beds and prohibits operation of a halfway house within one
mile of any other such facility. Id. The zoning ordinance also was amended
to add the definition of "prison" ("[a] facility in which persons are housed
to serve a sentence as a result of being convicted of committing a criminal
act") and prohibits the operation of a prison within the Phoenix corporate
limits. Id., Ordinance No. G-4255. Because the MINT program requires the
housing of inmates currently serving criminal sentences, that aspect of the
procurement would be classified as a "prison." Based on these amendments,
Dismas would be required to seek a special use permit to operate its
facility, and would have to propose additional facilities, not already in
its proposal, to meet the 80-bed and MINT program requirements. Under these
circumstances, its current proposal would not be technically acceptable and
likely could not be made acceptable without major revision. We note that the
original start date for the new contract was to be May 1, 2000. Having
already postponed award of the contract during this protest, there is no
valid rationale for requiring the agency to wait longer based on the mere
possibility that Dismas could prevail in additional challenges to the city's
zoning ordinance.

In addition, contrary to Dismas's arguments, application of the new zoning
ordinances to BSSW does not appear to prohibit it from operating facilities
complying with the RFP requirements. In this regard, its operation of the
MINT program would not be prohibited because the amended ordinance
"grandfathers" BSSW's facilities by excluding "any prison existing as a
conforming or non-conforming use prior to the adoption of the amendment."
[5] Agency Post-Hearing Comments, Tab A, Ordinance No. G-4255. As the
incumbent contractor, BSSW has special use permits for its two current
facilities, at least one of which is approved for 70 beds. In addition, the
agency states that the chairman of the Phoenix Planning Commission has
indicated that BSSW can continue to operate its current facilities and could
"receive a non-conforming zoning approval (grandfather clause) from the City
of Phoenix." Id., Tab B, BOP Memorandum, Mar. 17, 2000.

The protest is denied.

Comptroller General
of the United States

Notes

1. The contracting officer denies receiving oral notice of Dismas's zoning
problems. On April 18, 2000, our Office conducted a telephone hearing in an
attempt to resolve the factual dispute between the parties regarding oral
notice by Dismas to the agency.

2. Because Dismas's letter to the agency requested "reconsideration" of the
decision to eliminate its proposal rather than "to initiate a protest," BOP
argues that Dismas's letter was not a protest. Agency Report, Tab G. Thus,
in BOP's view, Dismas's subsequent protest to our Office at the end of
February is untimely. We disagree. Notwithstanding the failure to use the
word "protest" to characterize its complaint, Dismas conveyed its
dissatisfaction with the agency's decision and requested corrective action;
it thus qualifies as a protest. Small Bus. Sys., Inc., B-213009, July 26,
1984, 84-2 CPD para. 114 at 2.

3. In our view, the contracting officer was confused about what proof would
be appropriate. At the time Dismas submitted its proposal, it relied upon a
Phoenix zoning ordinance and written interpretation from the zoning
administrator that allowed operation of a facility meeting the definition of
"recovery home" in a commercial (C-1) area "of right." Nothing in the record
suggests that under those circumstances any additional proof of zoning would
be required. The Superior Court's ruling in Dismas's favor also supports
this view.

4. The contracting officer making this determination was not the original
one assigned responsibility for this procurement. There is nothing in the
record to show that the original contracting officer had any question about
the sufficiency of the proof of zoning submitted by Dismas and thus, at the
time discussions were held, the original contracting officer was not
required to conduct discussions on this matter.

5. Dismas argues that it too would be eligible for treatment under any
"grandfather" provision because of the February 18 court decision. This
could be true if Dismas had been able to begin operation of its facility
prior to the effective date of the ordinance amendments. However, since it
did not then begin operations, the fact that it could have does not mean
that its proposed facility would be considered "existing" prior to the
adoption of the amendments.