TITLE:  Vero Property Management, Inc., B-285563.2, October 19, 2000
BNUMBER:  B-285563.2
DATE:  October 19, 2000
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Vero Property Management, Inc., B-285563.2, October 19, 2000

Decision

Matter of: Vero Property Management, Inc.

File: B-285563.2

Date: October 19, 2000

Terrence M. O'Connor, Esq., for the protester.

Gary A. Nemec, Esq., Department of Housing & Urban Development, for the
agency.

Katherine I. Riback, Esq., and James Spangenberg, Esq., Office of the
General Counsel, GAO, participated in the preparation of the decision.

DIGEST

Agency reasonably determined protester's proposal for property inspection
services was unacceptable because the proposal, which offered a very short
timeframe for each inspection, indicated that the protester did not
understand the nature of the detailed inspection required by the
solicitation and the realities of traveling in the metropolitan and urban
areas where the inspections were required.

DECISION

Vero Property Management, Inc. protests the rejection of its proposal for
special property inspections (SPI) services as technically unacceptable
under request for proposals (RFP) No. R-DEN-01108, issued by the U.S.
Department of Housing and Urban Development (HUD).

We deny the protest.

Upon foreclosure of Federal Housing Administration insured mortgages,
insured lenders' claims are paid and ownership interests are transferred to
HUD, which then contracts with managing and marketing contractors (M&M) to
manage the properties. The services provided by the M&Ms include providing
maintenance and repair services, as well as marketing and selling the
properties in order to recoup funds HUD paid on the mortgage insurance
claim. HUD then contracts for SPI services to inspect the condition of
HUD-owned single family properties that are maintained by the M&Ms to insure
that they remain in marketable condition. Contracting Officer's Statement at
1.

The RFP, issued on November 30, 1999, requested proposals for SPI services
for HUD's single family properties located within the jurisdiction of HUD's
Santa Ana Homeownership Center in four geographic areas, including area 1a
(Southern California counties of Los Angeles, San Luis Obispo, Santa Barbara
and Ventura) and area 1b (Southern California counties of San Bernadino,
Riverside, Orange, Inyo, Mono and San Diego). RFP sect. B.2.

The RFP statement of work (SOW) specified that the contractor shall furnish
all personnel, material, equipment and transportation to provide the
required services. RFP sect. C.1.3; the contractor "shall inspect and assess the
physical condition of each assigned property to determine the cognizant M&M
compliance with the property maintenance standards specified in the M&M
contract," RFP sect. C.3.1.1; and that the inspector is required to complete a
two-page Property Inspection Form that outlines the inspector's
responsibilities in the form of questions. [1] RFP attach. 1. Some of the
items required during an inspection are a physical walk-through of the
entire property, including every interior room, walk-up attic and the
complete exterior of the property; a physical examination of the inside of
closets, drawers, and cabinets, to determine if the M&M has performed
required clean-out and housekeeping; an examination of any repairs performed
by the M&M or its subcontractors; and a reporting of any damage or vandalism
to the property. RFP sect. C.3.1.1.1-8. The inspector is required to include
with each inspection report a photograph of the exterior front and rear of
each property, and a photograph "showing in detail" each deficiency item
noted in the inspection report with a description. RFP sect. C.3.1.2.

The RFP contemplated the award of an indefinite-quantity contract with
fixed-price line items for a base year with 4 option years for each
geographic area. RFP sect.sect. L.1.2.2, M.1.3. The RFP lists the estimated number
of inspections that are expected for each area. Of relevance to this
protest, for area 1a, HUD estimated a quantity of 7,260 scheduled and
special inspections per contract year (605 per month), and for area 1b, a
quantity of 7,884 scheduled and special inspections per contract year (or
657 per month). RFP sect. B.4.

The awards under the RFP were to be based on the best value to the
government, cost or price and other factors considered. RFP sect. M 1.5.a. The
following technical factors were listed: (1) prior experience, (2) technical
understanding, (3) management and oversight capability, and (4) past
performance. Of particular relevance to this protest is the technical
understanding factor, which required that an offeror "demonstrate that it
will dedicate sufficient key personnel that possess technical skills and
knowledge necessary to perform the scope of work required by the
solicitation." The RFP stated that the failure of the offer to be found
acceptable for any one of the first three listed factors would render the
entire proposal unacceptable. RFP sect. M.1.6.

The agency received numerous proposals for each geographic area. The
technical evaluation panel (TEP) found Vero's proposal technically
acceptable for the prior experience factor and technically unacceptable for
the technical understanding, and the management and oversight capability
factors in geographic areas 1a and 1b. In this regard the TEP stated that:

The technical plan shows insufficient number of inspectors to perform the
services in Areas 1a, 1b and 4 which clearly reflects the offeror does not
have an understanding of the technical requirements of the SOW and that
timely performance will be accomplished. Offeror indicates that it has in
the past performed up to 44 inspections per day, and that it can average 25
inspections per day in the urban areas of 1a and 1b-- the panel has
determined that the number of daily inspections for that geographical area
is unacceptable, and reflects a lack of understanding of the geographical
area.

Agency Report, Tab 9, Initial Technical Evaluation of Offers, at 7.

Vero was then notified by the agency that its proposal was found to be
technically unacceptable and was therefore excluded from the competitive
range, for geographic areas 1a and 1b. Agency Report, Tab 3, Letter from
Contracting Officer to Vero (June 20, 2000). Vero filed an agency-level
protest contesting this determination, which was denied by the agency.
Agency Report, Tab 10, Vero Agency Protest (June 29, 2000); Agency Report,
Tab 11, Agency Denial of Vero Protest (July 21, 2000). This protest to our
Office followed.

Vero contends that the evaluation documentation shows that the agency either
misunderstood or failed to read its proposal concerning the number of
inspections that it would perform daily. Vero states (and its proposal
indicates) that it broke each geographic area down into metropolitan, urban
and rural areas, and that for geographical areas 1a and 1b, it proposed to
perform 25 inspections a day in metropolitan areas, 20 inspections a day in
urban areas, and 15 inspections a day in rural areas. Vero contends that the
statement in its proposal that it had performed up to 44 inspections in a
day was simply anecdotal, and that the agency improperly used this statement
as evidence that Vero proposed to perform in a similar manner here. Vero
also notes that its proposal demonstrated its experience in performing
numerous inspections of this type with very good performance ratings in
Florida, Atlanta, and in adverse weather conditions on the east coast. Vero
maintains that it will use technology, such as a global positioning system,
that will allow it to more efficiently perform inspections, and that the
agency has exaggerated the work that the inspectors are required to do; for
example, Vero states that it can fill out the Property Inspection Form in
30-40 seconds. Protest at 2-3; Protester's Supplemental Comments at 1-3.

The evaluation of technical proposals is a matter within the discretion of
the contracting agency, since the agency is responsible for defining its
needs and the best method of accommodating them. Marine Animal Prods. Int'l,
Inc., B-247150.2,
July 13, 1992, 92-2 CPD para. 16 at 5. In reviewing an agency's evaluation, we
will not reevaluate technical proposals, but instead will examine the
evaluation to ensure that it was reasonable and consistent with the
solicitation's evaluation criteria. MAR, Inc., B-246889, Apr. 14, 1992, 92-1
CPD para. 367 at 4. An offeror's mere disagreement with the agency does not
render the evaluation unreasonable. McDonnell Douglas Corp., B-259694.2,
B-259694.3, June 16, 1995, 95-2 CPD para. 51 at 18.

The agency responds that it read and understood Vero's proposal, but
determined that Vero was unrealistic in proposing to perform 20-25
inspections per day in the metropolitan and urban portions of areas 1a and
1b, noting that Vero's approach contemplated performing the required
inspections on each property in approximately 25 minutes, including travel
time between properties. [2] Contracting Officer's Statement at 6-9. The
agency notes that, "while it may be possible to visit 25 properties in one
day with a drive-by or windshield inspection, it is physically impossible
for one person to travel between properties and perform 25 of the type of
thorough inspections HUD is seeking in one day." [3] Agency Report, Tab 11,
Agency Denial of Vero Protest, at 2. In this regard, the agency references
the SOW inspection requirements detailed above, including the completion of
the 40-question Property Inspection Form for each property, which required,
among other things, written descriptions where indicated, a rating of the
contractor's performance, and photographs. Contracting Officer's Statement
at 9. The agency also notes that the protester's approach does not
adequately account for the fact that geographic areas of 1a and 1b in
Southern California are notorious for traffic congestion. Contracting
Officer's Statement at 7 n.7. While the agency acknowledges the high
performance ratings that Vero received for its other HUD work, it concludes
that Vero's time estimate per inspection shows that Vero does not understand
"the realities of operating in Southern California." Agency Report, Tab 8b,
TEP Consensus Evaluation of Vero, at 3.

In our view, the agency reasonably determined that Vero's proposal was
technically unacceptable under the technical understanding evaluation factor
for geographic areas 1a and 1b. [4] It is clear from the thoroughness of the
inspection requirements in the RFP that HUD places great emphasis on these
inspections as a way to perform a quality check on the maintenance and
repair work done by the M&Ms indeed, HUD maintains that the SPIs are a
"vital piece of the Government's quality assurance plan to provide oversight
of the M&M contractors," and that "HUD's first priority is on the quality of
inspection conducted by the contractor, not how fast they can be
accomplished." Agency Report, Tab 11, Agency Denial of Vero Protest, at 2.
Based on this record, we think that it was reasonable for the agency to
question whether Vero understood the agency's requirements for detailed
inspections, including the completion of Property Inspection Forms and
necessity of accounting for travel time in the congested Southern California
metropolitan and urban areas, based on the fact that Vero proposed to
perform these functions in such a compressed timeframe. [5] While Vero
contends that HUD has overestimated the time needed for inspections given
Vero's experiences on other HUD contracts and its use of advanced
time-saving techniques, these contentions constitute mere disagreement with
the agency's

evaluation conclusions, which does not render the agency's evaluation
unreasonable. [6]

In sum we see no basis to question the agency's evaluation or rejection of
Vero's proposal as unacceptable.

The protest is denied.

Anthony H. Gamboa

Acting General Counsel

Notes

1. Many of the questions require a yes or no answer that require only a
check mark, but further explanations may be required depending on the
answer; for example, the form asks if appliances and fixtures are in place,
and if so, that they be itemized. RFP attach. 1.

2. Under area 1a Vero proposed three inspectors who were to perform 19.5
daily inspections or 2.4 inspections per hour in an 8-hour day, with each
inspection lasting approximately 25 minutes, including travel time.
Contracting Officer's Statement at 7; Agency Report, Tab 4, Vero Proposal,
at 33, 38, 47. For area 1b, Vero also proposed three inspectors, who were to
complete the inspections, including travel time, in approximately the same
timeframe. Contracting Officer's Statement at 8; Agency Report, Tab 4, Vero
Proposal, at 33, 38, 48.

3. The agency estimates that an individual inspector working for a qualified
contractor could complete an average of 15 inspections per day at the detail
level required by the RFP in the densely populated areas covered by
geographic areas 1a and 1b. Statement from TEP (Sept. 19, 2000) at 1.

4. Because we find that the agency reasonably evaluated Vero's proposal as
technically unacceptable under the technical understanding factor, we need
not address the evaluation of the proposal as unacceptable under the
management and oversight capability factor, since the RFP stated that
failure of the offer to be found acceptable for any one of the three factors
would render the entire proposal unacceptable. RFP sect. M.1.6.

5. While Vero now maintains that it can complete the agency's Property
Inspection Form in 30-40 seconds (Vero Statement, Sept. 22, 2000, at 2) it
did not state this in its proposal and, in fact, included a new inspection
form that it devised that incorporates certain features that will allow
inspectors to complete the form more quickly. Agency Report, Tab 4, Vero
Proposal, at 5-6.

6. Vero also contends that the evaluators may have altered the evaluation
documents that were submitted to this Office as part of the agency report.
We find no basis for these allegations in the record and, in any case, since
we find the agency's evaluation of Vero's proposal reasonable, such
alterations, even if proved, would not affect our view of the evaluation.