TITLE:  Carr's Wild Horse Center, B-285833, October 3, 2000
BNUMBER:  B-285833
DATE:  October 3, 2000
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Carr's Wild Horse Center, B-285833, October 3, 2000

Decision

Matter of: Carr's Wild Horse Center

File: B-285833

Date: October 3, 2000

David B. Dempsey, Esq., Piper Marbury Rudnick & Wolfe, for the protester.

Sherry K. Kaswell, Esq., and Alton E. Woods, Esq., Department of the
Interior, for the agency.

Linda C. Glass, Esq., and Michael R. Golden, Esq., Office of the General
Counsel, GAO, participated in the preparation of the decision.

DIGEST

  1. Under solicitation contemplating award of multiple indefinite-delivery/

indefinite-quantity contracts for handling horses/burros at adoption events,
protest that minimum guaranteed quantity of 100 horses/burros for life of
contract is insufficient consideration to bind parties is denied where
nature of acquisition dictates possibility that government may order only
this quantity, and where other factors surrounding acquisition show an
intent to form binding contracts.

2. Solicitation will not result in impermissible personal services contract
where under contract government will not exercise continuous supervision and
control over contractor personnel performing the contract.

DECISION

Carr's Wild Horse Center protests the terms of request for proposals (RFP)

No. NAR-00052, issued by the Department of Interior, Bureau of Land
Management (BLM), for services related to the conduct of satellite
(temporary) adoptions of animals under BLM's horse and burro program. Carr's
contends that the solicitation is defective for a variety of reasons.

We deny the protest.

The RFP, issued as a small business set-aside, contemplates the award of a
fixed-priced, indefinite-delivery/indefinite-quantity (ID/IQ) contract for a
base year, with two 1-year options. The contractor is to provide assistance
to BLM in conducting satellite adoptions. These satellite adoptions
(including travel and set-up) will be 2- to 6-day events at various
locations in the eastern United States. In Type I events, BLM will require
only set-up and feeding services, and BLM personnel will perform wrangling
duties. In Type II events, BLM will require the contractor to set up
equipment, feed animals, and perform wrangling. At all satellite adoptions,
BLM will process adoption applications, help potential adopters select
animals, collect adoption fees, and issue maintenance and care agreements.

The RFP provides for award on a best value basis, with technical merit
significantly more important than price. As relevant here, the RFP provides
for the evaluation of price reasonableness and, as necessary, the evaluation
of the realism of proposed prices. The RFP also provides a procedure for
conducting a price realism evaluation. The RFP sets forth a minimum
guaranteed quantity of 100 animals for the life of the contract and a
maximum quantity of 10,000 animals during the life of the contract. The
solicitation also allows for the award of multiple contracts. BLM will issue
individual delivery orders based upon technical approach, price, and past
performance. Proposals were to be submitted by July 12, 2000. [1]

On July 3, Carr's, the incumbent contractor, filed an agency-level protest
challenging numerous solicitation provisions. Prior to the agency's
response, Carr's filed a timely protest with our Office on July 12.

The protester contends that the solicitation should be issued as a
requirements contract and not as an ID/IQ contract because the proposed
ID/IQ contract lacks consideration. [2] Specifically, the protester argues
that the RFP's minimum guaranteed quantity of 100 animals is nominal and
that any resulting contract would be illusory and unenforceable because it
lacks consideration. It is the protester's position that a 100-animal
minimum for the entire contract period is a nominal amount because based on
historical data, prior year contracts involved more than 100 animals at each
adoption. [3]

The agency argues that its choice of contract type was proper, appropriate,
and in accordance with FAR sect.16.504 governing use of ID/IQ contracts. The
agency states that it has a recurring need for animal adoptions and that it
cannot precisely determine the exact number of adoptions that it will
require, since the number of adoptions varies significantly from month to
month and year to year. The agency also states that its guaranteed minimum
is reasonable because the average number of animals at any given adoption is
approximately 100 animals.

An ID/IQ contract requires the government to order and the contractor to
furnish at least a stated minimum quantity of supplies or services and, if
ordered, the contractor to furnish any additional quantities, not to exceed
a stated maximum. FAR sect.16.504(a)(1). In order to be binding, the minimum
quantity must be more than a nominal quantity but should not exceed the
amount the government is fairly certain to order. FAR sect.16.504(a)(2). In
other words, an ID/IQ contract is binding so long as the buyer agrees to
purchase from the seller at least a guaranteed minimum quantity of goods and
services; the stated minimum quantity forms the consideration for the
contract. Sea-Land Serv., Inc., B-278404.2, Feb. 9, 1998, 98-1 CPD para. 47 at
11. Since the prohibition against a nominal minimum quantity is designed to
ensure that the intent to form a binding contract is present, the
determination whether a stated minimum quantity is nominal must consider the
nature of the acquisition as a whole. Id. at 12.

While Carr's contends that the quantity of 100 animals for the life of the
contract is insufficient consideration, the historical data indicates that
this quantity is not insufficient or nominal. The data shows that there is a
great disparity in the number of animals processed from year to year and at
various adoption locations. For example, 96 and 98 animals were processed at
Rutland, Vermont in 1997 and 1998, respectively; however, no animals were
processed at this location in 1996 and 2000. Agency's Rebuttal Comments at
1. At Windom, Minnesota, 158 animals were processed in 1997, while only 97
were processed in 1998. At a third location, 237 animals were processed in
1997, 185 in 1998, 104 in 1999, and 73 in 2000. Id. The record shows that
BLM has a recurring need for animal adoptions and that the 100-animal
minimum guarantee is not out of line with the numbers handled at previous
adoption events. Here, multiple awards are contemplated and there is no
certainty that individual contractors will assist and handle more than the
minimum guaranteed quantity of 100 animals. Considering all of the
circumstances here and the historical data, we cannot conclude that the
stated minimum quantity for the life of the contract represents insufficient
consideration to form a binding contract.

The protester next contends that the agency's failure to include the
appropriate Department of Labor (DOL) wage determination in the solicitation
violates the Service Contract Act of 1965 (SCA), 41 U.S.C. sect.sect. 351-358
(1994), and makes it impossible for any offeror to properly anticipate labor
costs. The protester maintains that without the appropriate wage
determination available as a method of leveling the playing field, an
offeror with better geographic proximity and experience with that location
will have a competitive advantage over the remaining offerors in preparing
its proposal.

The contracting officer requested that DOL provide wage rates for the states
set forth in the solicitation. Contracting Officer's Statement at 5.
Offerors were advised, in attachment A to section J of the solicitation,
that the wage rates had been requested and would be forwarded when received.
The agency contends that the SCA provision at FAR sect. 52.222-41, incorporated
by reference in the solicitation, provides more than adequate direction for
offerors to estimate applicable wages for proposal purposes.

Here, the agency complied with its obligation to obtain a wage determination
for inclusion in the solicitation. While the absence of particular wage
determinations might affect prices, all offerors are affected equally.
Moreover, the wage determinations specify minimum wages; they are not a
guarantee that a firm can employ the appropriate workforce at those rates.
We think that some risk is inherent in projecting costs, and firms are
expected to allow for that risk in computing their offers. PacOrd, Inc.,
B-253690, Oct. 8, 1993, 93-2 CPD para. 211 at 11; see West Coast Fire Serv.,
Inc., B-228170, Dec. 16, 1987, 87-2 CPD para. 599 at 2. Further, to the extent
the protester argues that offerors, because of their geographic proximity to
certain locations may have a competitive advantage in preparing wage and
fringe benefits estimates, there is no requirement that an agency equalize a
competitive advantage that a firm may enjoy because of its own particular
business circumstances where those advantages do not result from a
preference or unfair action by the government. Geographic Resource
Solutions, B-260402, June 19, 1995, 95-1 CPD para. 278 at 3.

Carr's also objects to the solicitation provision for the submission of cost
or pricing data on the grounds that the acquisition of commercial services
is exempt from the requirement for the submission of cost or pricing data.
The agency maintains that the services--the handling of wild horses and
burros--are not commercial services as defined by FAR sect. 2.101 because the
services being procured are not "[s]ervices of a type offered and sold
competitively in substantial quantities in the commercial marketplace based
on established catalog or market prices for specific tasks performed under
standard commercial terms and conditions," and that the contracting officer,
in her discretion, properly included the cost or pricing data provision.

We have no basis to object to the contracting officer's decision that she
was not buying a commercial item as defined in the FAR. Other than to
disagree with this decision, the protester provides no information that
establishes that the contracting officer's determination is incorrect, and
on this record, we have no basis to question that decision. As a result, the
cost or pricing data provision was appropriately included in the
solicitation. Furthermore, as the agency points out, the solicitation
permits offerors to seek an exemption to the requirement for the submission
of cost or pricing data if they believe they can establish that these
services are commercial. RFP sect. L.8. An offeror can still make its case for
an exemption to the contracting officer. Agency Report at 8.

The protester next contends that the agency failed to conduct market
research as required by FAR sect.sect. 10.001 and 10.002. The FAR provisions
generally require agencies to conduct market research appropriate to the
circumstances. FAR

sect. 10.001(a)(2). The record here shows that the contracting officer has been
responsible for the wild animal adoption program for approximately 10 years.
Prior to issuing the solicitation, the contracting officer contacted
knowledgeable individuals, both within industry and government, to obtain
information regarding market capabilities as well as input on specifications
and acquisition methods. Contracting Officer's Statement at 8. The
contracting officer also performed market research via the Internet and
contacted horse trainers, auction houses, and other concerns that deal with
livestock to seek out potential sources for the required services. Agency
Report at 9. The FAR recognizes that the extent of market research varies
depending on such factors as estimated dollar value, complexity, and past
experience. FAR sect. 10.002(b)(1). Appropriate techniques for market research
include contacting knowledgeable individuals and participating in
interactive, on-line communication among industry acquisition personnel and
customers. FAR sect. 10.002(b)(2). On the basis of this record, we believe the
agency's market research procedures adequately complied with the
requirements of the FAR. In any event, the protester has not shown how the
firm was prejudiced by the allegedly inadequate market survey. In other
words, we do not see how any perceived inadequacy in the market survey
affects the protester's ability to compete. See, e.g., Johnson Controls
World Servs., Inc., B-285144, July 6, 2000, 2000 CPD para. 108 at 2-4.

Next, the protester contends that the solicitation impermissibly calls for a
cost realism analysis. This allegation is factually erroneous. As stated
above, the RFP price evaluation factor provides for the evaluation of the
reasonableness and, as necessary, the realism of proposed prices. RFP sect. M.3.
Thus, the RFP, by it terms, does not require any cost realism evaluation.
Further, an agency at its discretion may provide for a price realism
analysis in the solicitation of fixed-price proposals, even those set aside
for small business concerns, since the risk of poor performance when a
contractor is forced to provide services at little or no profit is a
legitimate concern in evaluating proposals. Science & Tech., Inc.; Madison
Servs., Inc., B-272748 et al., Oct. 25, 1996, 97-1 CPD para. 121 at 16. The
depth of an agency's price realism analysis is a matter within the sound
exercise of the agency's discretion. Id. We simply have no basis to object
to the agency's requirement in this regard.

The protester next contends that the solicitation language indicates that
BLM is soliciting for a personal services contract. The protester maintains
that by retaining in-house functions related to the adoption services, [4]
BLM will create a situation where a personal services contract will come
into existence because contractor personnel will be subject to the
relatively continuous supervision and control by a government officer or
employee during contract performance. The agency maintains, however, that
the solicitation provisions plainly and unambiguously indicate that the
contractor, not the government, will have the duty of overseeing its
employees and coordinating performance with the contracting officer or her
representative. A personal services contract is one that, by its express
terms or as administered, makes the contractor personnel appear, in effect,
government employees. FAR sect.sect. 37.101, 37.104. The government is normally
required to obtain its employees by direct hire under competitive
appointment or other procedures required by the civil service laws. FAR sect.
37.104(a). Obtaining personal services by contract, rather than by direct
hire, circumvents those laws unless Congress has specifically authorized
acquisition of the services by contract. Id. Agencies should not award
personal services contracts unless specifically authorized by statute to do
so. FAR sect. 37.104(b).

Whether a solicitation would result in a personal services contract must be
judged in the light of its particular circumstances, with the key question
being whether the government will exercise relatively continuous supervision
and control over the contractor personnel performing the contract. FAR sect.
37.104(c)(2); Information Ventures, Inc., B-241641, Feb. 14, 1991, 91-1 CPD
para. 173 at 4.

We do not believe the requirements of this contract will create an
employer-employee relationship between the government and the contractor's
personnel. The protester appears to suggest, without providing any examples,
that BLM's performance of normal contract administration functions, such as
quality assurance requirements, will result in an improper personal services
contract. To the contrary, the solicitation provides specifications for
performance of the requirements by the contractor and provides that it is
the contractor's responsibility to provide administrative support for its
personnel's performance of the requirement. RFP sect. G.7. The solicitation, in
fact, prohibits the contracting officer's representative from providing any
direction which interferes with the contractor's right to perform the terms
and conditions of the contract. RFP sect. H.6(s). We agree with the agency that
the contractor has ultimate control in determining how best to fulfill its
contractual obligations. This protest ground is without merit.

The protest is denied.

Anthony H. Gamboa

Acting General Counsel

Notes

1. Carr's and other firms have submitted proposals and the agency is in the
process of evaluating them. Carr's, in its proposal, took no exception to
the solicitation provisions. Contracting Officer's Statement at 2.

2. In its comments filed with our Office on August 24, Carr's withdrew
several protest issues concerning acquisition planning, ombudsman
information, key personnel, the evaluation team, and the evaluation factors.

3. The protester also argues that the historical data showing the number of
animals processed by year and locality as provided in the solicitation is
inadequate because it does not include the number of animals actually
adopted. However, contractors are to be reimbursed for the number of animals
handled, not the number adopted. We therefore fail to see how offerors are
prejudiced by the failure of BLM to include the number of animals actually
adopted (this is particularly true for Carr's, because it, as the incumbent,
presumably has access to that information). Moreover, the protester raised
this protest issue in its comments to the agency report filed with our
Office on August 24, after the date for proposal submission; the protest
ground is therefore untimely. A protest based on alleged improprieties
apparent on the face of a solicitation must be filed with the contracting
agency or our Office prior to the closing time set for receipt of proposals.
Bid Protest Regulations, 4 C.F.R. sect. 21.2(a)(1) (2000); Engelhard Corp.,
B-237824, Mar. 23, 1990, 90-1 CPD para. 324 at 7. In any event, for an ID/IQ
contract, estimated maximum quantities should be realistic and based on the
most current information available. Federal Acquisition Regulation (FAR) sect.
16.504(a)(1). These estimates need not be precise; rather, such estimates
are unobjectionable so long as they were established in good faith or based
on the best information available, and accurately represent the agency's
anticipated needs. Howard Johnson, B-260080, B-260080.2, May 24, 1995, 95-1
CPD para. 259 at 3; International Tech. Corp., B-233742.2, May 24, 1989, 89-1
CPD para. 497 at 3-4. Here, we have no basis to question the estimates.

4. The protester contends that BLM's decision to perform certain of the
adoption activities with in-house personnel violates OMB Circular No. A-76
and the Federal Activities Inventory Reform (FAIR) Act of 1998, 31 U.S.C. sect.
501 note (Supp. IV 1998), in that BLM personnel are performing services that
contractor personnel had performed under prior contracts. The protester
maintains that BLM should conduct a commercial activities study.

OMB Circular No.A-76 describes the executive branch's policy on the
operation of commercial activities that are incidental to the performance of
government functions. It outlines procedures for determining whether
commercial activities should be operated under contract by private
enterprises or in-house using government facilities and personnel. Our
Office reviews A-76 decisions only if they resulted from an agency's
issuance of a competitive solicitation for the purpose of comparing the cost
of private and governmental operation of the commercial activity to
determine whether the comparison was conducted reasonably. Madison Servs.,
Inc., B-277614, Nov. 3, 1997, 97-2 CPD para. 136 at 4. BLM's solicitation does
not involve an A-76 cost comparison, and we therefore have no basis to
consider the matter. Moreover, we note that the FAIR Act does not address,
let alone expand, the scope of our review authority in any way. See American
Fed'n of Gov't Employees, AFL-CIO; et al., B-282904.2, June 7, 2000, 2000
CPD para. 87 at 7.