TITLE:  Parcel 47C LLC, B-286324; B-286324.2, December 26, 2000
BNUMBER:  B-286324; B-286324.2
DATE:  December 26, 2000
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Parcel 47C LLC, B-286324; B-286324.2, December 26, 2000

Decision

Matter of: Parcel 47C LLC

File: B-286324; B-286324.2

Date: December 26, 2000

Richard J. Conway, Esq., and Charlotte Rothenberg Rosen, Esq., Dickstein
Shapiro Morin & Oshinsky, for the protester.

Barry D. Segal, Esq., and Edith L. Toms, Esq., General Services
Administration, for the agency.

Guy R. Pietrovito, Esq., and James A. Spangenberg, Esq., Office of the
General Counsel, GAO, participated in the preparation of the decision.

DIGEST

In a solicitation for the design, build, and lease of space, the contracting
agency reasonably found that requiring post-award evidence that the awardee
has site control represents an actual need of the government.

DECISION

Parcel 47C LLC protests the terms of solicitation for offers (SFO) No.
99-016, as amended, which was issued by the General Services Administration
(GSA) for the design, build, and lease of space for a headquarters building
for the Department of Transportation (DOT). Parcel objects to the SFO's site
control and parking space provisions.

We deny the protest.

The SFO, issued on November 23, 1999, sought proposals for a new
headquarters for DOT, consisting of approximately 1.35 million square feet
of space and 145 parking spaces [1] to be provided under a fixed-price,
15-year lease with a 10-year extension option. [2] SFO sect. A.7. Besides the
145 official parking spaces to be included in the rental rate, the offeror
was required to offer at least the number of parking spaces required under
zoning laws of the District of Columbia (D.C.). Such additional parking was
required to be made available to DOT employees and contractors on a daily or
month-to-month basis at prevailing market rates. Offerors were informed that
the government had the right to impose security restrictions on access to
the garage during the lease term and that no parking of third-party vehicles
would be allowed. SFO sect. A.8.

Offerors were also informed that after lease award the lessor would, with
the government's participation, design a project to satisfy DOT's needs
within the budget offered. SFO sect. D.5. Offerors were also informed that the
lessor would be required to provide the total funding commensurate with its
proposed budget. SFO, Executive Summary, at i.

The SFO provide for a two-phased evaluation process. SFO sect. C.1. Under phase
I, offers would be evaluated for the quality of the proposed site, design
team, and developer and for compliance with stated minimum requirements. Two
of the stated requirements under phase I were the following:

For privately owned sites, evidence by the Offeror, acceptable to the
[contracting officer], of site ownership, access to ownership through held
options, ground lease, or other evidence that ownership or access to
ownership will be achievable by the due date for Phase II submissions[;]

and

[a]bility to deliver 1.3 -- 1.35 million rentable square feet fully in
compliance with this SFO under current land use approval processes within
six years of lease award either individually or in combination with an
adjacent Offeror.

SFO sect. C.2.2. The SFO provided that a maximum of five offerors would be
selected to proceed to phase II. SFO sect. C.1.

The following technical evaluation factors were identified for the
evaluation of offers under phase II: financial considerations; massing
design; site; schedule; environmental mitigation; and operations and
maintenance plan. The relative importance of each of the factors was
identified, as well as subfactors (and their weighting) for each of the
evaluation factors. SFO sect.sect. C.1, C.5. The SFO provided for award on the basis
of a cost/technical tradeoff and informed offerors that price was
significantly less important than the technical factors combined. SFO sect.sect.
A.19, C.1.

The SFO also stated a number of pre-award and post-award development
requirements. SFO sect. D. Among other things, the SFO provided as follows:

No less than 10 working days prior to Lease award, the Government shall
notify the preferred Offeror of its intent to award the Lease to that
Offeror. During the subsequent 10 days, the Offeror shall either deposit or
post an irrevocable letter of credit in an amount equal to $20,000,000.

SFO sect. D.1.1. In addition, the lessor was required within 5 working days of
the lease award to demonstrate, "[t]o the extent control of all or a portion
of the site was evidenced by purchase contracts or other agreements" that
"required closing(s) have occurred and that title is unconditionally and
irrevocably vested in the Lessor." SFO sect. D.1.2.a. The SFO provided that
failure to comply with section D.1 of the SFO would constitute default by
the lessor, which would allow the government to terminate the lease. SFO
sect. D.1.5.

Phase I proposals were received from a number of firms, including Parcel.
Parcel proposed to develop its privately owned "Portals site" in Southwest
Washington, D.C., on 14th Street across from the U.S. Bureau of Engraving
and Printing (BEP) and GSA's central heating plant. Parcel obtained
ownership of this site from D.C., subject to the pre-existing use of the
property by GSA for a coal shaker [3] and by BEP for an ink storage
building. [4] At the time the SFO was issued, GSA's contracting officer
wrote Parcel with respect to the SFO to inform Parcel that:

I am aware that the . . . Portals site is presently encumbered by [GSA's]
coal shaker and associated facilities. . . [DELETED].

The SFO provides detailed guidance to offerors regarding Phase I submittal
requirements. For privately owned sites, offerors are to provide evidence,
acceptable to the Contracting Officer, that ownership or access to ownership
will be achievable by the due date for Phase II submissions.

Should you desire to submit a Phase I proposal based on the Portals site,
this letter will constitute acceptable evidence of compliance with the SFO's
requirement in Section B.1.2.g with respect to site control. Of course,
should you desire to submit a Phase I proposal, you will be required to
satisfy all minimum SFO requirements and you should not construe this letter
as waiving any requirement in the SFO.

Agency Report, Tab 2, Letter from Contracting Officer to Parcel (Nov. 23,
1999), at 1-2.

Five offerors, including Parcel, were selected to proceed to phase II. When
the contracting officer requested Parcel's phase II proposal, he noted:

[A]s per my letter to you dated November 23, 1999, that while I am aware
that an encumbrance exists on the site, we have accepted the site as meeting
the requirements of site control under Section B.1.2.g. of the SFO pending
[DELETED]. You will be required to meet all of the minimum SFO requirements
in order to be considered for award.

Id., Tab 8, Letter from Contracting Officer to Parcel (Mar. 10, 2000), at 1.

Negotiations were conducted with the offerors, including Parcel. In
face-to-face discussions, Parcel was informed that there was a portion of
its site that it did not "own or control" and that "[a]rguably, you are
non-compliant at this point. You own it but don't control it." In addition,
Parcel was informed that the

[b]ottom line is that you will have to tie up control by date of submission
for Revised Proposals. If you don't have control by this date, you will be
excluded from the competition. Evidence would be a legal document executed
by all parties showing control and an ability to consummate the transaction.

Id., Tab 16, Transcript of Negotiations between GSA and Parcel (July 17,
2000), at 12.

On August 24, GSA issued amendment No. 7 to the SFO to require, among other
things, that offerors provide, prior to the due date for receipt of revised
phase II proposals, evidence of "site ownership or control so as to permit
[the] development, construction and lease of the DOT Headquarters facility,"
or evidence of "access to such ownership or control through fully executed
agreements that vest the Offeror with the ability to obtain such ownership
or control in a timeframe consistent with the requirements of this SFO and
its offer." SFO amend. 7, at 5.

Parcel protested to the agency the terms of SFO amendment No. 7, arguing
that the site control requirements did not represent the agency's minimum
needs, but were [DELETED]. [5] Agency Report, Tab 25, Parcel's Agency-Level
Protest (Sept. 8, 2000). On September 18, GSA invited Parcel to submit a
revised proposal; GSA also informed Parcel that if Parcel did not comply
with the SFO (which the agency did not amend in response to Parcel's
agency-level protest), the offer would be found technically unacceptable.
Id.; Tab 29, GSA Request for Revised Proposal (Sept. 18, 2000). Parcel
protested the terms of SFO amendment No. 7 to our Office on September 21. On
that same date, GSA issued amendment No. 8 to the SFO, which deleted the
site control requirements added by amendment No. 7 and added the following
post-award site control requirement:

Notwithstanding any other provisions of this Solicitation for Offers,
Offerors of privately owned sites shall provide, not later than thirty (30)
days after Lease award, evidence acceptable to the [contracting officer]
that the Offeror has obtained (a) site ownership or control so as to permit
its development, construction and lease of the DOT Headquarters facility as
required by this SFO and as proposed in its offer, or (b) access to such
ownership or control through fully executed agreements that vest the Offeror
with the ability to obtain such ownership or control in a timeframe
consistent with the requirements of this SFO and its offer.

SFO amend. No. 8. Parcel then protested the terms of SFO amendment No. 8 to
our Office.

Parcel complains that the post-award requirement for site control does not
reflect GSA's needs, as required by the Competition in Contracting Act of
1984 (CICA), 41 U.S.C. sect. 253b, Federal Acquisition Regulation (FAR) sect. 6.101,
and General Services Acquisition Regulation (GSAR) sect. 570.302(c), [6] but was
motivated, instead, by an alleged conflict of interest on the part of GSA.
Parcel argues that the site control requirements are not necessary because
the SFO, as issued, contained sufficient protection for GSA. Specifically,
Parcel notes that the SFO already required evidence of site ownership and
contained a number of performance requirements in section D of the SFO that,
with the requirement for a $20 million irrevocable letter of credit, would
require the lessor to make progress in the design and construction of the
building. Underlying Parcel's conflict of interest argument is the fact that
[DELETED]. [7]

GSA disagrees with Parcel's characterization of GSA's actions and notes that
since the issuance of the SFO and throughout its discussions with Parcel the
agency has consistently expressed its concern to the protester that Parcel
did not have site control. See, e.g., Agency Report, Tab 2, Letter from
Contracting Officer to Parcel (Nov. 23, 1999), and Tab 16, Transcript of
Negotiations between GSA and Parcel, at 12 (July 17, 2000). GSA states that
it "has a legitimate interest in ensuring that its contractor is making
satisfactory progress toward providing the promised performance in a timely
fashion" and that an offeror's lack of site control could adversely affect
the lessor's ability to satisfactorily perform its lease obligations. Agency
Report at 11; Contracting Officer's Statement at 10-11.

The determination of a contracting agency's needs and the best method for
accommodating them are matters primarily within the agency's discretion,
which we will question only if the agency's judgment is shown to be
unreasonable. Tucson Mobilephone, Inc., B-250389, Jan. 29, 1993, 93-1 CPD para.
79 at 2, aff'd, B-250389.2,

June 21, 1993, 93-1 CPD para. 472. Mere disagreement with the agency's judgment
concerning the agency's needs and how to accommodate them does not show that
the agency's judgment is unreasonable. AT&T Corp., B-270841 et al., May 1,
1996, 96-1 CPD para. 237 at 7-8. In reviewing an allegation that a requirement
exceeds an agency's needs, we will not substitute our judgment for that of
the agency. Id.

Here, we conclude that GSA reasonably found that the imposition of a
post-award requirement for evidence of site control satisfies an actual need
of the government. [8] The essential purpose of the lease is to obtain the
design and construction of a building that can then be leased to provide DOT
with a new headquarters facility. Unquestionably, one of the government's
needs is to have this done in a timely fashion. It is also indisputable that
a lessor's failure to have site control can affect the lessor's ability to
timely construct the building. Although Parcel argues that other SFO
provisions (e.g., section D of the SFO) protect the government's interest in
timely performance of the lease, we think that GSA could reasonably conclude
that these provisions do not suffice. That is, although the provisions of
SFO section D provide the government with various progress protections and
with financial protection (through the requirement for a $20 million letter
of credit), these provisions do not alleviate the risk attendant upon
continuing lease performance with a firm which does not have site control.
[9] In our view, it is within the agency's reasonable exercise of discretion
to determine how much risk the solicitation should place upon an agency (and
how much risk will be placed upon an offeror) in entering a contract. See
AT&T Corp., supra, at 8. Here, GSA has determined that, with respect to the
question of whether a lessor has site control, the government will bear
little risk. We have no basis to question that exercise of discretion.

Parcel also argues that the decision to require the post-award submission of
evidence of site control is tainted by an organizational conflict of
interest (OCI). Specifically, Parcel argues that the contracting officer
"[DELETED]." Protester's Comments at 31. Citing FAR sect.sect. 3.101 and 9.505-2,
Parcel contends that this OCI impugns the contracting officer's judgment to
require site control because [DELETED]. [10] Protester's Comments at 32.

The government is directed to strictly avoid any conflict of interest or
even the appearance of a conflict of interest in government-contractor
relationships. FAR sect. 3.101-1. An OCI occurs where, because of other
activities or relationships with other persons, a person is unable or
potentially unable to render impartial assistance or advice to the
government, or the person's objectivity in performing the contract work is
or might be otherwise impaired, or a person has an unfair competitive
advantage. [11] FAR sect. 9.501; Aetna Gov't Health Plans, Inc.; Foundation
Health Fed. Servs., Inc., B-254397.15 et al., July 27, 1995, 95-2 CPD para. 129
at 12. Underlying the FAR rules governing OCI is that the contracting
officer should avoid, neutralize or mitigate: (1) the existence of
conflicting roles that might bias a contractor's or the government's
judgment, and (2) unfair competitive advantage by competing contractors. See
FAR sect.sect. 9.504, 9.505.

GSA denies that its requirement for post-award evidence of site control
derives from any improper purpose or was motivated by any improper conflict
of interest. Agency Report at 17-19. Rather, the agency states that since
the issuance of the SFO and consistently thereafter the agency has informed
Parcel of the need for site control. The contracting officer also states
that [DELETED]. Contracting Officer's Statement at 9, 11. The contracting
officer states that his actions regarding the site control requirement have
been motivated since the beginning by a desire to maximize competition; that
is, by deferring the time by which the encumbrance must be resolved, GSA
allowed Parcel to offer its Portals site. Id. at 11.

The question here, in the context of the arguments of this case, is whether
the requirement for post-award evidence of site control is reasonably
related to the government's actual needs. If so, we fail to see how it can
be said to be based on an improper conflict of interest. Although Parcel
asks us to find that there is no actual need for site control and that the
requirement of SFO amendment No. 8 is based only upon the GSA's alleged
conflict of interest, we find, as noted above, that GSA reasonably concluded
that site control serves an actual government need. Moreover, the record
shows, as argued by the agency, that Parcel was consistently informed since
the start of the procurement that site control was of importance to the
agency. This belies Parcel's arguments that the site control requirements of
amendment No. 8 were added only [DELETED]. Based upon our review of the
record, we do not find that the post-award requirement for site control was
based on an improper conflict of interest.

Parcel also objects to GSA's interpretation of the parking requirements of
the SFO, as expressed in SFO amendment No. 7. Specifically, Parcel complains
that GSA informed offerors that although the agency would be evaluating an
offeror's site for availability of sufficient parking, the agency stated
that it would not guarantee the sale of any parking spaces and would not
allow the sale of parking spaces at the building to non-government
employees. In Parcel's view, GSA is authorized by its Congressionally
approved prospectus to obtain only 145 parking spaces and therefore may not
restrict a lessor's sale of additional parking spaces to others at the
building or evaluate the parking sufficiency of an offeror's site beyond the
145 official parking sites provided for in the prospectus. We find these
objections to be untimely and/or meritless.

As originally issued, the SFO informed offerors that they would be required
to offer more parking spaces (at least the number of parking spaces required
under D.C. zoning law) than the 145 spaces provided for by the prospectus.
The SFO, as originally issued, also stated that the government reserved the
right to impose security restrictions and that "no parking of third party
vehicles will be allowed." [12] SFO sect. A.8. To the extent that Parcel
believes that these restrictions violate the authority granted GSA by the
Congressional approval of the prospectus, its protest of these alleged
apparent solicitation improprieties is untimely, since they were apparent
from the SFO as issued but were not protested until September 21, after the
submission of initial proposals. The Charles E. Smith Cos., B-277391, Sept.
25, 1997, 97-2 CPD para. 88 at 6.

With regard to the complaint that the amount of parking should not be
evaluated, the SFO included an evaluation factor to evaluate an offeror's
environmental impact and mitigation measures under the National
Environmental Policy Act of 1969. As explained in the public information
packet available for the environmental impact statement for this
procurement, one of the environmental impacts to be considered was "[h]ow
many new parking spaces will be needed and where they would be located?"
Public Information Packet for the Environmental Impact Statement on the
Proposed [DOT] Headquarters Consolidation Project (Apr. 11, 2000) at 2. This
complaint, also first raised in Parcel's September 21 protest, is thus also
untimely. [13] 4 C.F.R. sect. 21.2(a)(1).

Finally, we find meritless Parcel's complaint that GSA would not guarantee
the sale of parking spaces at the DOT headquarters facility. We know of no
authority, nor does Parcel direct us to any authority, that requires GSA to
guarantee the sale of parking spaces.

The protest is denied.

Anthony H. Gamboa

General Counsel

Notes

1. The prospectus, which Congress approved for this procurement, provides
GSA with authority to obtain 145 official parking spaces. Prospectus No.
PDC-97W15.

2. The SFO also provided for a purchase option, exercisable by the
government or its assignee or designee.

3. A coal shaker is a device used to shake out and remove coal from
railcars. Presently, GSA does not operate the coal shaker at this location.
GSA currently has a welding shop and allows parking by GSA employees at the
Portals site. [DELETED].

4. [DELETED]. Protester's Comments at 6 n.4.

5. Parcel also challenged the agency's refusal to "guarantee" sale of a
certain number of parking spaces and refusal to allow the lease of parking
spaces to non-government employees.

6. GSAR sect. 570.302(c) provides as follows:

The description [of the requirements] must promote full and open
competition. Include restrictive provisions or conditions only to the extent
necessary to satisfy the agency's needs or as authorized by law.

7. Parcel also complains that it was improper to amend the SFO in amendment
No. 7 after the phase I evaluation to provide for the evaluation of site
control in phase II. However, this part of amendment No. 7 was effectively
cancelled by amendment No. 8, which made evidence of site control a
post-award requirement. Thus, this protest allegation is academic and will
not be considered. Dyna-Air Eng'g Corp., B-278037, Nov. 7, 1997, 97-2 CPD
para. 132.

In its November 13 comments on the report, Parcel makes a number of
contentions regarding some of the specific provisions contained in the
protested site control requirement imposed by amendment No. 8, that is,
questioning why it was only applied to privately owned sites, claiming that
the meaning of site control was not clear, and questioning the timing (30
days after lease award) of when the evidence of site control had to be
presented. These contentions are untimely raised, since they were not in any
way referenced in Parcel's protest of the site control requirement imposed
by amendment No. 8, but were only raised weeks after the September 25
closing date for receipt of revised proposals. Our Bid Protest Regulations
provide that challenges to alleged apparent solicitation improprieties that
were incorporated into the solicitation after the initial issuance of the
solicitation, such as is alleged here, must be filed prior to the time set
for the receipt of proposals following the date of incorporation, 4 C.F.R. sect.
21.2(a)(1) (2000), and do not contemplate the piecemeal development of
protest issues. Since we see no reason why these specific contentions could
not have been raised in Parcel's supplemental protest so that the agency
would have had the opportunity to respond without unduly disrupting the
process, we will not consider these new contentions. Braswell Servs. Group,
Inc., B-276694, July 15, 1997, 97-2 CPD para. 18 at 6-7; A-1 Postage Meters and
Shipping Sys., B-266219, Feb. 7, 1996, 96-1 CPD para. 47 at 3 n.1.

8. Parcel also contends that this post-award requirement was unnecessary
because site control had been resolved in the Phase I evaluation. This
argument is meritless. GSA clearly advised Parcel of its concerns about site
control both before and after Phase I and indicated that they needed to be
resolved later in the procurement process.

9. Requiring evidence of site control within 30 days after lease award
lowers the risk to the government that there will be construction delays
arising from problems with site control. We disagree with Parcel's view that
site ownership by itself guarantees that there will be no problems arising
from a lessor's ability to obtain site control. Even accepting Parcel's
argument that an owner can obtain site control by legal recourse, the likely
delay while the site control dispute is litigated or otherwise settled could
adversely affect lease performance. The government is not required to assume
that risk, but may properly require resolution of site control shortly after
award.

10. In its arguments, Parcel makes clear that it is asserting that a
conflict of interest exists and not alleging that the contracting officer or
others were motivated by bad faith or bias. Protester's Comments at 31-32.

11. Although FAR subpart 9.5 does not specifically apply to government
agencies or employees, we have found that this subpart provides guidance in
determining whether an agency has met its obligation to avoid conflicts
under FAR sect. 3.101-1. DZS/Baker LLC; Morrison Knudsen Corp., B-281224 et al.,
Jan. 12, 1999, 99-1 CPD para. 19 at 4.

12. We disagree with Parcel's suggestion that the restriction on third party
parking did not clearly apply to non-government employees.

13. Parcel also complains that GSA will unfairly evaluate the [DELETED]
available at a proposed site, and other impacts, under the SFO environmental
impact evaluation factor matrix. We dismiss this protest allegation because
it merely anticipates improper action that has not yet taken place. GSA has
completed only a preliminary evaluation of proposals and has not yet made an
award decision. Protests that merely anticipate improper agency action are
speculative and premature. See Saturn Indus.--Recon., B-261954.4, July 19,
1996, 96-2 CPD para. 25 at 5.