TITLE:  Wackenhut International, Inc., B-286193, December 11, 2000
BNUMBER:  B-286193
DATE:  December 11, 2000
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Wackenhut International, Inc., B-286193, December 11, 2000

Decision

Matter of: Wackenhut International, Inc.

File: B-286193

Date: December 11, 2000

Richard J. Webber, Esq., Matthew S. Perlman, Esq., William W. Goodrich, Jr.,
Esq., and David A. Vogel, Esq., Arent Fox Kintner Plotkin & Kahn, for the
protester.

Dennis J. Gallagher, Esq., Department of State, for the agency.

Susan K. McAuliffe, Esq., and Christine S. Melody, Esq., Office of the
General Counsel, GAO, participated in the preparation of the decision.

DIGEST

Protest of evaluation of proposals and source selection is sustained where
agency failed to evaluate proposals in accordance with solicitation
provision calling for a comprehensive review of offerors' compensation
plans.

DECISION

Wackenhut International, Inc. protests the award of a contract to U.S.
Defense Systems, Inc. (USDS) under request for proposals (RFP) No.
SOTH200-99-R-0001, issued by the Department of State for guard services at
the American Embassy in Bangkok, Thailand. [1] Wackenhut, the incumbent
contractor of the guard services, protests the agency's failure to evaluate
the offerors' proposed compensation plans in accordance with the RFP.

We sustain the protest.

The RFP, issued September 27, 1999, contemplated the award of a
time-and-materials contract, with fixed prices for vehicles and equipment,
for a base year and 4 option years, to the technically acceptable offeror
with the lowest evaluated price. RFP sect.sect. F.4.1, L para. 52.216-1, M.1.2. Section
M of the RFP set out the following evaluation criteria to be used in
determining the acceptability of the offerors' technical proposals:
management plan (i.e., for timely, professional, and quality contract
performance, including anticipated incentive and payment terms); experience
and past performance; and preliminary transition plan. RFP sect.sect. L.1.3.3, M.2.
Section M, incorporating instructions provided in section L, advised
offerors that, in order for a proposal to be considered technically
acceptable, it "must provide the information requested in Section L and
conform to the requirements of the solicitation as described in [the
statement of work] . . . and the technical aspects of the remainder of the
solicitation." Id. Price proposals were to be evaluated based on the total
price to the government, including options and the application of a
10-percent price preference for U.S. firms. RFP sect.sect. M.3, M.4.

Offerors were to provide, in the price schedules at section B of the RFP,
their proposed prices in terms of fixed hourly rates based on the estimated
number of labor hours for an extended "ceiling price" per stated labor
category; certain fixed prices for vehicles and equipment were also
required. RFP sect. B.3. The stated labor categories included the following:
guard; guard/driver; detector operator; senior guard; surveillance detection
(SD) specialist; SD supervisor; and supervisor. RFP sect. C.1.2.1-1.2.4. Most of
the estimated labor hours for the contract were for the guard and senior
guard positions. [2]

Each offeror was required to provide a total compensation plan for
performance of the contract, since, according to the RFP, recompetition
might result in lower compensation paid to employees, which could be
"detrimental" to a firm's ability to obtain the quality of services needed
for adequate contract performance. RFP sect. L.1.3.4(2)(a). The solicitation
included the following provision as to the required review of each offeror's
compensation plan:

The Government will evaluate the plan to assure that it reflects a sound
management approach and understanding of the contract requirements. This
evaluation will include an assessment of the offeror's ability to provide
uninterrupted high-quality work. The compensation proposed will be
considered in terms of its impact upon recruiting and retention, its
realism, and its consistency with a total plan for compensation. . . . The
compensation levels proposed should reflect a clear understanding of work to
be performed and should indicate the capability of the proposed compensation
structure to obtain and keep suitably qualified personnel to meet mission
objectives. . . . Additionally, proposals envisioning compensation levels
lower than the current contractor for the same work will be evaluated on the
basis of maintaining program continuity, uninterrupted high-quality work,
and availability of required competent service employees. Offerors are
cautioned that lowered compensation for essentially the same work may
indicate lack of sound management judgment and lack of understanding of the
requirement. . . . Failure to comply with these provisions may constitute
sufficient cause to justify rejection of the proposal.

RFP sect. L.1.3.4(2)(a)-(d) (emphasis added).

Eight proposals were received by the December 6 closing time and were
evaluated; five of the proposals were excluded from the competitive range
(four were determined technically unacceptable and one was determined to
have offered too high a price). Contracting Officer's Statement at 6, 8. By
letters of February 14, 2000, written discussion questions were sent to the
remaining firms--Wackenhut, USDS, and [deleted]. [3] Id. at 8-9. [deleted]
Technical proposal concerns were raised with USDS in discussions, and both
USDS and Wackenhut were invited to revise their "offered price to be more
favorable to the Government." Discussions Letters to USDS and Wackenhut
(Feb. 14, 2000).

Each of the three final revised proposals was considered technically
acceptable. [4] A 10-percent price preference for U.S. firms was applied to
USDS's and Wackenhut's proposals for evaluation purposes. The USDS final
proposal (at an evaluated price of 167,858,600 Bahts) offered the lowest
evaluated price, the [deleted] final proposal (at [deleted] Bahts) offered
the second lowest evaluated price, and Wackenhut's final proposal (at
[deleted] Bahts) was third lowest. [5] Price Negotiation Memorandum at 3.

On August 11, a contract was awarded to USDS as the firm offering the
lowest-priced technically acceptable proposal. On August 24, Wackenhut
received a debriefing from the agency. This protest followed.

Wackenhut alleges that USDS's and [deleted] compensation plan rates, many of
which are lower than the current wages paid by Wackenhut to its employees
under the incumbent contract for the same services, were not properly
reviewed by the agency. Wackenhut contends that there was no evaluation of
the offerors' lower proposed rates, in terms of their effect on recruiting
and retaining personnel, and maintaining uninterrupted high-quality
performance of the guard services, as required under sect. L.1.3.4(2) of the
RFP. Wackenhut essentially contends that had the proposals been evaluated
properly, it would have been in line for award because the lower
compensation rates in the USDS and [deleted] proposals would have led the
agency to conclude that their proposals were unacceptable. [6]

The agency concedes that under the RFP's compensation plan provision, it is
"the incumbent's current compensation practices . . . that [are] envisioned
as serving as the baseline for evaluation of the compensation plans. . . ."
Supplemental Report at 3. The agency contends, however, that the provision
is to be read in conjunction with other solicitation terms, including
certain of the offeror questions and accompanying agency answers (Q&A)
(namely, Nos. 16 and 13) of amendment No. 2 to the RFP, whereby, the agency
contends, offerors were put on notice that the agency did not have the
current wage information necessary to conduct the required comparison. [7]
Id. at 3-5. Rather, the agency contends, the only minimum standard
applicable to compensation rates was minimum wage amounts required under
Thai law. [8] Id.

The contracting officer further states that she did not contemplate, and did
not perform, a comprehensive review of the compensation plans; she expressly
confirms that no comparison of the plans' rates to the current wages was
made for any offeror. Contracting Officer's Statement at 7. The contracting
officer explains that at the time of proposal evaluation, the agency could
not compare compensation plans to current wages because it did not have
current wage information--the agency states that it was only shortly before
award when the agency learned, as a result of an unrelated contract
administration matter, of the incumbent guard's current wage rates.
Contracting Officer's Response to Question for the Record (Oct. 26, 2000).
The compensation plans were not reviewed by the technical evaluators;
rather, the contracting officer reviewed the offerors' compensation rates in
a "cursory" fashion, comparing those rates to the minimum wage standards set
under Thai law to determine if the rates "reflected a realistic
understanding of the work." [9] Contracting Officer's Statement at 7;
Supplemental Contracting Officer's Statement at 2. The contracting officer
contends that her cursory review of the rates in terms of how they compared
to Thai minimum wage standards was sufficient in light of the depressed
economic climate in Thailand, where workers--even highly educated
professionals--generally earn relatively low wages in a "buyer's market."
Supplemental Contracting Officer's Statement at 3.

In reviewing protests against allegedly improper evaluations, it is not our
role to reevaluate proposals. Rather, our Office examines the record to
determine whether the agency's evaluation was reasonable and in accord with
the solicitation's stated evaluation criteria. MCR Fed., Inc., B-280969,
Dec. 14, 1998, 99-1 CPD para. 8 at 5; All Star Maintenance, Inc., B-271119, June
17, 1996, 96-1 CPD para. 278 at 3. Contracting officials do not have the
discretion to announce in the solicitation that they will use one evaluation
plan, and then follow another. Once offerors are informed of the criteria
against which the proposals will be evaluated, the agency must adhere to
those criteria in evaluating proposals and making its award decision, or
inform all offerors of any significant changes made in the evaluation
scheme. Dewberry & Davis, B-247116, May 5, 1992, 92-1 CPD para. 421 at 5.

Our review of the record shows that the agency failed to evaluate the
proposals as required under the terms of the RFP. As stated above, the RFP
provided for review of each offeror's compensation plan for an evaluation of
the offeror's understanding of, and proposed approach to meeting, the RFP
requirements. RFP sect. L.1.3.4(2). That section L requirement recognized that
recompetition resulting in lower wages for the guards--whose services are
considered vital to the agency, as they relate to the safety of personnel
and property--could have a detrimental effect on contract performance. Id.;
RFP sect. I.1.2 para. 52.237-3. The RFP specifically provided that the compensation
structure was to indicate that the offeror could "obtain and keep suitably
qualified personnel" and that "compensation levels lower than the current
contractor for the same work will be evaluated on the basis of maintaining
program continuity, uninterrupted high-quality work, and availability of
required competent service employees." RFP sect. L.1.3.4.(2)(b). Section M.2
makes clear that the information required by section L was to be considered
in the evaluation of each proposal's technical acceptability. Despite its
concession that the RFP language clearly contemplated a review of the
compensation plans compared to current wages, the agency admits that no such
review was ever attempted; the record confirms the protester's challenge
that no such evaluation was ever performed. See Supplemental Report at 3.

We do not find the arguments raised by the agency in defense of its actions
persuasive as they do not provide a basis upon which to excuse the agency's
failure to evaluate the proposals in accordance with the RFP's stated terms.
For instance, we do not agree with the agency that offerors were reasonably
put on notice that the agency did not intend to compare compensation plan
rates to current wages based upon the information offerors were provided in
the cited Q&As (Nos. 13 and 16) included in amendment No. 2 to the RFP. In
this regard, although Q&A No. 13 provided that Thai minimum wage standards
were applicable to the procurement, that provision in no way established, as
the agency contends, that current wages would no longer be used for
comparative evaluation of the compensation plans. Consequently, we also do
not find the agency's evaluation of the compensation plans by comparison to
Thai minimum wage adequate here--comparison to the Thai minimum wage, which
is significantly lower than current wages for the services, simply was not
the standard required by the solicitation.

Similarly, although Q&A No. 16 mentioned that current wages were a matter of
the contractor's management policy, we do not see how such a statement can
reasonably be viewed, as the agency contends, as having put offerors on
notice that the agency did not have any information about the incumbent's
current wages. In fact, as Wackenhut points out, information about its
current wages under its incumbent contract was included in its final revised
proposal of February 24. Thus, the agency had in its possession the
information necessary for a proper review of the proposals in accordance
with the terms of the solicitation. [10]

As noted above, the RFP stated that an offeror's low compensation rates
could constitute sufficient cause to justify rejection of the proposal. RFP
sect. L.1.3.4(2)(a)-(d). A proper evaluation of the offerors' planned lower
wages simply was not performed here, as required. It is possible that the
lower labor rates included in the USDS and [deleted] proposals could have
affected the agency's determination that the proposals were acceptable, thus
potentially placing Wackenhut in line for award. [11] In light of the
agency's failure to perform the evaluation of the offerors' planned
compensation levels required by the RFP, and the reasonable possibility of
prejudice to Wackenhut as a result, we sustain this aspect of the protest.

Wackenhut also protests that the agency failed to conduct adequate
discussions with the firm. Wackenhut contends that the agency was obliged to
tell it that "its price was too high," that its "proposed hourly rates were
too high," and that its proposal "reflected a misconception about the
Embassy's guard compensation expectations." [12] Protest at 6. The agency
responds that it did not consider Wackenhut's price too high or its
compensation rates excessive in any way. Agency Report at 23; Supplemental
Report at 10-11. The agency also maintains that there was nothing to suggest
any misconception on Wackenhut's part, as Wackenhut now contends should have
been apparent to the agency, since the solicitation in no way required
compensation rates of any specific amount other than the minimum wage rate
under Thai law. In any event, the agency points out that it invited the firm
to revise its price to make it more favorable to the agency, although there
was no requirement for the agency to discuss Wackenhut's otherwise
acceptable price during discussions.

In negotiated procurements, contracting agencies generally must conduct
discussions with all offerors whose proposals are within the competitive
range. Federal Acquisition Regulation (FAR) sect. 15.306(d)(1). While the FAR
requires the contracting officer to indicate or discuss all aspects of the
proposal that could, in the opinion of the contracting officer, be altered
or explained to enhance materially the proposal's potential for award, the
rule remains that agencies are not obligated to

afford all-encompassing discussions. See Arctic Slope World Servs., Inc.,
B-284481, B-284481.2, Apr. 27, 2000, 2000 CPD para. 75 at 8-9. With respect to
an offeror's price, FAR sect. 15.306(e)(3) provides that "the contracting
officer may inform an offeror that its price is considered by the Government
to be too high, or too low, and reveal the results of the analysis
supporting that conclusion." As we have previously recognized, however, this
language merely gives the contracting officer discretion to inform the
offeror that its cost/price is too high--it does not require that the
contracting officer do so. Hydraulics Int'l, Inc., B-284684, B-284684.2, May
24, 2000, 2000 CPD para. 149 at 19.

The record here shows that the agency did not consider Wackenhut's
compensation plan unreasonable or its rates excessive in any way. Agency
Report at 23. In these circumstances, we cannot find anything improper with
the agency's failure to raise this aspect of Wackenhut's proposal submission
with the protester during discussions. [13]

We recommend that the agency conduct and document an adequate review of the
competitive range offerors' compensation plans consistent with the terms of
the solicitation. If the agency finds that USDS's compensation plan rates
are lower than the incumbent's rates for the same work to such an extent
that the agency has reasonable concerns as to the effect of those rates on,
for example, the ability to recruit and retain personnel and maintain
uninterrupted high-quality performance of the contract, such that the firm's
proposal is found to be unacceptable, we recommend that USDS's contract be
terminated for the convenience of the government and that award be made to
the offeror next in line for award. [14] We also recommend that the
protester be reimbursed the reasonable cost of filing and pursuing its
protest, including attorneys' fees. 4 C.F.R. sect. 21.8(d)(1)(2000). The

protester should submit its claim for costs, detailing and certifying the
time expended and costs incurred, with the contracting agency within 60 days
after receipt of this decision. 4 C.F.R. sect. 21.8(f)(1).

The protest is sustained.

Anthony H. Gamboa

Acting General Counsel

Notes

1. The security guard services are to be provided at the American Embassy in
Bangkok, as well as the following U.S. government installations in Thailand:
American Consulate General, Chiang Mai; International Broadcasting Bureau,
Ban Dung, Udornthani; and the offices and residences of U.S. government
employees in Udornthani and Songkhla. CBDNet Notice, July 7, 1999; RFP exh.
A.

2. The guard/driver position refers to a small number of labor hours
required under the contract for the mobile patrol of four to five buildings
in residential locations in Chiang Mai, where the guard/driver is a guard in
a mobile patrol unit. RFP sect.sect. B.3.1- B.4.4.2, C.1.5.7, and exh. A.

3. These discussion letters amended earlier discussion letters of February 8
to delete a previously reported concern later found to be inapplicable to
the current procurement.

4. The technical evaluation panel had some initial concerns as to the
technical acceptability of the USDS proposal, however, after consultations
with agency counsel and the contracting officer, the evaluators found the
USDS proposal technically acceptable. Contracting Officer's Statement at
10-12.

5. Monetary figures expressed in Bahts, the currency in Thailand, were
converted to U.S. dollars for this procurement at an exchange rate of 38.151
Bahts to a dollar. Price Negotiation Memorandum at 5. At that rate, the USDS
proposal's evaluated price converts to approximately $4,399,848, the
[deleted] proposal converts to approximately $[deleted], and Wackenhut's
proposal converts to approximately $[deleted].

6. In its supplemental report, the agency contends that Wackenhut is not an
interested party to protest the award to USDS because [deleted], not
Wackenhut, would be in line for award if the protest were sustained. As
discussed in this decision, our review of the record confirms the
protester's challenge that the agency failed to evaluate any of the
proposals consistent with the terms of the compensation plan provision.
Therefore, it remains unclear which offeror would be in line for award after
a proper evaluation of the proposals is conducted. Under the circumstances,
we cannot conclude that Wackenhut is not an interested party in this case.

7. Question and Answer No. 16 provided as follows:

Question: What are the current billing rates for all labor categories, i.e.,
guard, senior guard, guard/driver, etc? What billing rates do you envision
for the SD Specialists/Supervisors, etc.?

Answer: An extract of Section B, Services and Prices, of the Modification
No. 39 to the current . . . contract, issued October 1999, is enclosed. The
question appears to request the internal rates that the contractor pays to
its employees. This is part of the current contractor's management policy
and it is up to the offeror to develop its own wage scale.

8. Question and Answer No. 13 provided as follows:

Question: Is there any mandated U.S. standards for wages and salaries?

Answer: No. Thai law applies Minimum Wage Rate for Bangkok is Baht 162.00
per day (8 working hours/day); Chiang Mai is Baht 140.00; Udorn is Baht
130.00; and Songkla is Baht 130.00.

9. Wackenhut points out that USDS failed to provide a rate for its guard
category in its compensation plan. The protester challenges the agency's
assumption that USDS intended its stated compensation plan rate for its
guard/driver category to also apply to its guards. Comments at 10-11. We see
no reason to question the reasonableness of the agency's decision to use the
firm's guard/driver rate as its guard rate for evaluation purposes. Our
review of the record confirms that the two categories are similar in terms
of job description (except for the use of the vehicle for patrols), and that
the agency reasonably recognized that the USDS proposal provided similar
compensation rates for all other labor categories that shared similar rates
for contract pricing purposes in schedule B of the RFP (and USDS had priced
its guard and guard/driver categories similarly in schedule B).

10. The agency provides no reason as to why it did not inquire of Wackenhut
as to the firm's current wages for its guard personnel for purposes of
conducting the review of compensation plans in accordance with section
L.1.3.4 of the RFP. The agency, in fact, reports that it later obtained that
information to resolve a contract administration matter unrelated to this
procurement. Contracting Officer's Response to Question for the Record.

11. In its supplemental report, the agency argues that Wackenhut has not
been prejudiced by the agency's actions here, since, the agency contends,
the other offerors' compensation rates were higher than current wages. In
response to a question for the record issued by our Office, however, the
agency concedes that, in fact, some of USDS's rates are at least [deleted]
percent lower than current wages. Our review of the [deleted] compensation
plan's rates confirms that that firm's planned rates for certain labor
categories in some locations are also lower than current wages for the same
services. Thus, we do not find persuasive the agency's argument that the
protester has suffered no possible prejudice from the agency's failure to
evaluate the compensation plans in accordance with the RFP's compensation
plan provision.

12. Although Wackenhut alleges that it was misled into increasing its
compensation rates from its current rates based on earlier communications
with contracting personnel, which Wackenhut believes established a
requirement of some sort to propose wages above current wages for the same
services, there was no requirement in the RFP for higher wages, and there is
no evidence that the protester was misled by the agency in any way in the
preparation of its own compensation plan. Further, we see no reason to
believe that the slight increase in the protester's proposed rates compared
to the current rates, even if the current rates were used as a basis for
evaluation as required, should have put the agency on notice of any
"misconception" on Wackenhut's part about any compensation rate terms of the
RFP.

13. We note that, although Wackenhut infers that it would have lowered its
compensation plan rates if the matter had been discussed with the firm, our
review of the record shows that Wackenhut did, in fact, lower its
compensation rates on its own in its final revised proposal, indicating that
the firm, on its own, identified those rates as an area of its proposal that
it could revise, if it chose to, to make its overall proposal more
attractive to the agency. Wackenhut Revised Business Management Proposal,
Salary Breakdown (Feb. 24, 2000).

14. We recognize that during the course of the protest the agency has stated
that it did not intend to include or apply the compensation plan provision
at issue here. Supplemental Contracting Officer's Statement at 4.
Accordingly, if the agency now decides to delete the provision by amendment
to the RFP, we recommend that revised proposals be requested and evaluated.
If a firm other than USDS is found to be in line for award after such
evaluation, we recommend that USDS's contract be terminated for the
convenience of the government and award made to that firm.