TITLE:  Marathon Construction Corporation, B-284816, May 22, 2000
BNUMBER:  B-284816
DATE:  May 22, 2000
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Marathon Construction Corporation, B-284816, May 22, 2000

Decision

Matter of: Marathon Construction Corporation

File: B-284816

Date: May 22, 2000

Michael H. Payne, Esq., Starfield & Payne, for the protester.

Carol L. O'Riordan, Esq., and William K. Helwagen, Esq., O'Riordan &
Associates, for Nova Group/R.E. Staite, a Joint Venture, an intervenor.

Vicki E. O'Keefe, Esq., Department of the Navy, for the agency.

Andrew T. Pogany, Esq., and John M. Melody, Esq., Office of the General
Counsel, GAO, participated in the preparation of the decision.

DIGEST

In procurement for the construction of a berthing wharf for nuclear powered
aircraft carriers, protest by offeror that it should have received higher
rating for its experience and past performance based on numerous small
projects, even though it never successfully completed a project of this
magnitude, is denied; agency reasonably concluded that offeror with no
comparable large project experience presents higher performance risk than
contractor with comparable large project experience.

DECISION

Marathon Construction Corporation, a small business, protests the award of a
contract to Nova Group/R.E. Staite, A Joint Venture, under request for
proposals (RFP) No. N68711-98-R-5408, issued by the Department of the Navy
for the construction of a new berthing wharf for homeporting of nuclear
powered aircraft carriers at San Diego, California. Marathon principally
argues that the Navy misevaluated proposals by "discounting" its experience
and past performance, and that the Navy's evaluation process discriminated
against it as a small business.

We deny the protest.

The RFP, issued August 19, 1999, contemplated a fixed-price contract (with
options) for the construction of the berthing wharf. Agency Report (AR),
Contracting Officer's Statement (COS), at 1. The RFP stated that evaluation
would be based on best value to the government and that award of the
contract would be made based on the proposal determined by the source
selection authority (SSA) to be the most advantageous to the government. AR,
encl. 1, RFP sect. 00202. The RFP contained the following evaluation factors:
past performance (with 8 subfactors), technical expertise (15 subfactors),
proposed subcontracting effort, and price. The RFP also stated that the
price and technical factors were equal in importance. Id. With respect to
past performance subfactor 1, past performance was to be evaluated based on
the construction of new concrete berthing wharves or piers with high voltage
power, potable water, steam, sanitary sewer, oily waste, fuel, compressed
air, and salt water for deep draft (draft greater than 25 feet) vessels in
the last 10 years. Other subfactors also required evaluation of past
performance on dredging projects in the last 5 years and past performance of
contracts involving the placement of rock dikes and fill, and fill
densification in the last 5 years. Id.

Concerning technical expertise subfactor 1, prime contract experience and
technical expertise in concrete piers/wharves construction, dredging, rock
dikes and fill, fill densification, and creation of environmental habitat
was to be evaluated. The RFP also separately explained that the technical
evaluation under the technical expertise factor would encompass "prior
experience and technical expertise in waterfront construction and dredging
in Government or comparable civilian projects of the same or similar size,
scope and complexity contemplated by this proposed contract." AR, encl. 1,
RFP sect. 00202.

Five proposals, including Marathon's and Nova's, were received by the
initial proposal due date of October 4, 1999. AR, COS, at 3. A technical
evaluation board (TEB) was tasked with the evaluation and rating of the
first 10 subfactors under the technical expertise factor. A source selection
board (SSB) rated the proposals under all remaining factors and subfactors
(i.e., the remaining technical factors, past performance, proposed
subcontracting effort, and price). The SSB report, contained in the
Pre-Negotiation Business Clearance Memorandum, included excerpts from the
TEB's written report indicating items identified for discussions. All
proposals were found to be unacceptable but susceptible of being made
acceptable. Id. The SSB recommended that discussions be held with all
offerors.

On November 30, the agency sent out its first discussion letters to
offerors. The letter to Marathon concerning the past performance factor
stated that "[n]one of the projects submitted by Marathon appear to be of
the size, complexity of scope, and associated dredging amounts required by
the solicitation." AR, encl. 7, at 3. Marathon responded in its revised
proposal as follows:

Although Marathon has not been awarded a project with the exact scope and
dollar amount of [this] contract . . . [w]e believe our project team is
certainly qualified for the construction of [this] Berthing Wharf Project
since we have self-performed every major portion of [this] contract under
other contracts, including the construction of wharves and piers,
construction of environmental habitats, dredging, construction of fill
projects, soil densification, and the construction of rock dikes.

AR, encl. 4, Revised Proposal, Dec. 7, 1999, at 1.A.i. Marathon also
explained that its predecessor company had performed a pier construction
project for $25 million dollars in 1981 and that some of the former
principals still worked for Marathon. Id.

The contracting officer sent out three more rounds of discussion letters to
the offerors. On December 14, the agency received and reviewed revised
offers. Final revised proposals (FRP) were received by December 20, AR, COS,
at 3, and the agency proceeded to evaluate them. Under past performance
subfactor 1 (requiring evaluation of past construction of new concrete
berthing wharves or piers with high voltage power, and associated items for
deep draft vessels in the last 10 years), the agency found that none of
Marathon's projects were of the magnitude and complexity of the current
procurement and did not satisfy the requirements of this evaluation
subfactor. AR, encl. 13, Post-Negotiation Business Clearance Memorandum, at
17. The agency therefore assigned the proposal a rating of "NR" (Not Rated)
for this subfactor in accordance with the solicitation, which stated that if
an offeror does not "have a past performance history relating to this
solicitation, the offeror will not be evaluated favorably or unfavorably on
this factor." AR,
encl. 1, RFP sect. 00202. Nevertheless, Marathon's proposal was rated acceptable
for the past performance factor as a whole, with all subfactors evaluated.

In contrast, Nova, as explained below, was found to have extensive and
excellent past performance, and had recently completed a virtually identical
nuclear carrier berthing wharf in San Diego at the same base. Nova had
received an outstanding evaluation for its performance of that construction
project. AR, COS, at 4. Consequently, Nova received a highly acceptable
rating for the past performance factor as a whole.

With respect to technical expertise subfactor 1 (prime experience and
technical expertise), the TEB made similar findings. The TEB found that
Marathon did not appear to have any recent experience in new pier and wharf
construction projects similar in size and complexity to the current project,
AR, encl. 5, at 20-21; COS, at 6, and that Marathon's experience was
generally limited to repair and rehabilitation of existing facilities, not
construction of new facilities on an undeveloped site. The firm's most
recent projects involved less than $5 million in construction costs and were
constructed for smaller vessels. AR, encl. 5, at 20-21. Similarly, the TEB
found that the firm's experience in dredging was limited to small jobs,
which were below the scope and complexity of the current project. AR, encl.
5, at 21. Finally, the TEB found that Marathon had limited experience in
rock dikes, fill, and fill densification, having completed only one recent
project. Id. Nevertheless, while receiving an unsatisfactory but susceptible
of being made acceptable rating for this subfactor, Marathon's proposal was
rated acceptable for the factor as a whole, with all subfactors evaluated.

In contrast, the TEB found that Nova had recent experience in concrete pier
and wharf construction, including the new aircraft carrier wharf at the same
site in San Diego. AR, encl. 5, at 1. All listed projects were found to be
"notably comparable" to the current project, as they accommodated deep draft
vessels, provided identical berthing utilities, and were of a similar dollar
value. Id. The TEB noted that the aircraft carrier wharf recently
constructed in San Diego was the project on which the current project's
design was based, making it the "most similar" in size and complexity to the
current procurement. The firm was also found to possess recent experience in
the administration of dredging projects "similar in size and complexity" to
the current project. Id. The firm also had the required experience in rock
dike construction and fill and fill densification, as well as the creation
of environmental habitats.

With respect to price, Marathon proposed [deleted], and Nova $42,772,800.
[1] (The government estimate for the project was [deleted].) The SSB,
considering the TEB's and its own findings, recommended award to Nova as the
best value. AR, encl. 13, Post-Negotiation Business Clearance Memorandum, at
32-33. The SSB found that Nova submitted the highest-rated proposal and
that, under technical expertise, Nova had the greatest experience of any
offeror. The SSB concluded that Nova's strength in its experience offered
little or no performance risk, and, therefore, warranted the payment of its
higher price. Id. The SSA agreed with and adopted the findings of the TEB
and SSB and selected Nova for award. After a debriefing, this protest
followed. Performance has not been stayed due to the critical operational
needs of the Navy's aircraft carriers.

Marathon challenges the award on several grounds. We have reviewed all of
Marathon's arguments and, based on our assessment of the record, find that
they are without merit. We address Marathon's principal arguments below.

Marathon argues that the Navy improperly discounted its experience and past
performance. It contends that there was no rational basis to conclude that
Nova's recent experience and past performance constructing a berthing wharf
of similar size, scope, and complexity made the firm more qualified to
perform this contract than Marathon, which has equivalent experience and
past performance in the individual construction elements that make up this
project. Protest at 14. This experience in individual smaller construction
elements, according to Marathon, shows capability to successfully complete
this project, "which [itself] is simply a combination of various
straightforward, smaller construction projects." Id. at 15.

The determination of the relative merits of proposals is primarily a matter
of agency discretion, which our Office will not disturb unless it is shown
to be unreasonable or inconsistent with the stated evaluation criteria.
Systems & Processes Eng'g Corp., B-234142, May 10, 1989, 89-1 CPD para. 441 at
5. In a negotiated procurement, the government is not required to make award
to the firm offering the lowest price unless the RFP specifies that price
will be the determinative factor. University of Kansas Med. Ctr., B-278400,
Jan. 26, 1998, 98-1 CPD para. 120 at 6. Thus, as here, in the absence of such an
express provision, the procuring agency retains the discretion to select a
higher-priced, but also technically higher-rated, proposal if doing so is in
the government's best interest and is consistent with the solicitation's
stated evaluation and source selection scheme. Id.

We reject Marathon's arguments. The RFP clearly stated that past
performance, experience, and technical expertise in concrete piers/wharves
construction, dredging, rock dikes and fill, fill densification, and
creation of environmental habitat would be evaluated. The RFP further stated
that these tasks would be evaluated for "Government or comparable civilian
projects of the same or similar size, scope and complexity contemplated by
this proposed contract . . . in terms of extent of experience as well as
relative size and complexity of past projects." It therefore was
appropriate--and should have come as no surprise to Marathon--for the
evaluators to consider whether the past projects referenced in its proposal
were comparable in size, complexity and value to the project being awarded.
As previously stated, Marathon's experience reflected projects that involved
primarily repair or rehabilitation of waterfront facilities, rather than new
construction. In addition, the largest projects identified by Marathon in
its proposal were, for the most part, a third to a quarter of the dollar
value of the current project. AR, COS, at 6. The largest dollar value of any
single project listed by Marathon and performed in the last 10 years was
approximately $14 to $15 million, as compared to the contract award amount
of more than $40 million. [2] Id.

In light of the evaluation scheme, it was reasonable for the Navy to give a
more favorable risk rating to Nova than to Marathon, based on its having
successfully performed more relevant contracts. See, e.g., Browning Ferris
Indus. of Hawaii, Inc., B-281285, Jan. 21, 1999, 99-1 CPD para. 35 at 6; Ogden
Support Servs., Inc., B-270012.4, Oct. 3, 1996, 96-2 CPD para. 137 at 3. While
Marathon may have performed smaller projects that encompassed the elements
of the larger project involved here, its arguments ignore the fact that
combining numerous elements into a single large project may introduce
performance challenges and risks not present in smaller scale projects; the
RFP's focus on the size, scope and complexity of past projects reflects the
agency's concern in this regard. In any event, Marathon's position that
experience with similar elements of work on smaller individual projects
should warrant a higher evaluation rating is inconsistent with the
solicitation's evaluation criteria which, again, emphasized size, scope and
complexity of prior similar contracts. If Marathon believed the evaluation
criteria to be unduly restrictive, it should have raised the argument prior
to the date for submission of proposals. To the extent that Marathon
challenges the agency's application of those criteria now, after contract
award, the challenge is untimely. 4 C.F.R. sect. 21.2(a)(1) (2000).

Marathon also argues that the discussions with the firm were not meaningful.
Marathon states that the agency's November 30, 1999 discussion letter (to
the effect that none of the projects submitted by Marathon appeared to be
the same size and scope of the current project) referred to the past
performance factor, not the experience factor. Marathon notes that none of
the subsequent letters repeated the deficiency with respect to experience or
past performance, and that the letters stated that its proposal was
acceptable unless a deficiency was expressly listed. These arguments are
untimely. Marathon knew or should have known no later than at the time of
the debriefing that its lack of relevant experience had been the determining
factor in the award decision. For example, it was told at the debriefing
that it had received an unacceptable but susceptible of being made
acceptable rating for the experience criterion. Marathon also had in its
possession the discussion letters. Therefore, if Marathon believed
discussions in this area were inadequate, it should have protested this
matter no later than 10 calendar days after the debriefing. However, in its
protest, Marathon did not argue this alleged discrepancy between the past
performance and experience factors in the context of discussion letters;
Marathon did not raise this issue until it filed its comments on the agency
report. 4 C.F.R. sect. 21.2(a)(2). In any event, Marathon's argument ignores the
substance of the agency's letter, which clearly put Marathon on notice that
none of its projects appeared to be of the size, complexity of scope, and
associated dredging amounts required by the solicitation. Given the
solicitation evaluation criteria for past performance and experience, the
notice provided had obvious relevance for both.

Marathon states that the Navy effectively rejected Marathon's proposal on a
pass/fail basis, that this essentially constituted a finding of
nonresponsibility, and that this finding should have been referred to the
Small Business Administration (SBA) for a certificate of competency (COC)
review. This argument is without merit. Traditional responsibility factors,
such as experience, may be used for the comparative evaluation of proposals
in relevant areas; where a proposal is determined to be deficient pursuant
to such an evaluation, the matter is one of relative technical merit, not
responsibility, and does not require a referral to the SBA. See Advanced
Resources Int'l, Inc.--Recon., B-249679.2, Apr. 29, 1993, 93-1 CPD para. 348
at 2. [3]

The protest is denied.

Comptroller General
of the United States

Notes

1. The percentage difference in price is [deleted] percent with all options
considered and [deleted] percent when only the awarded options are
considered. While the protester argues that the [deleted] percent
differential should have been used by the agency for the tradeoff decision,
the RFP required the evaluation of all options. AR, encl. 1, RFP sect. 1.15.
Moreover, the unawarded options, under the terms of the RFP, could be
exercised by the agency at a later date.

2. We also agree with the Navy that the $25 million project Marathon's
predecessor company performed almost 20 years ago was properly disregarded
because it was outdated under any fair reading of the solicitation. See AR,
encl. 1, RFP sect. 00202 (construction past performance--10 years; dredging
projects--5 years; subcontractors' past performance--5 years). In light of
the specific time references in the RFP, furthermore, we reject the
protester's argument that the agency's consideration of only "recent"
projects during its evaluation constituted a new, undisclosed evaluation
criterion.

3. Marathon also maintains that the Navy harbored some bias against
Marathon, or small business in general, that influenced its selection
decision (Nova is a large business). This accusation is unsupported.
Government officials are presumed to act in good faith and where a protester
argues otherwise it must provide convincing proof since our Office will not
attribute unfair or prejudicial motives to procurement officials on the
basis of inference or supposition. Oceanometrics, Inc., B-278647.2, June 9,
1998, 98-1 CPD para. 159 at 6. Marathon has offered nothing but bare assertion.