TITLE:  Universal Yacht Services, Inc., B-287071; B-287071.2, April 4, 2001
BNUMBER:  B-287071; B-287071.2
DATE:  April 4, 2001
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Universal Yacht Services, Inc., B-287071; B-287071.2, April 4, 2001

Decision

Matter of: Universal Yacht Services, Inc.

File: B-287071; B-287071.2

Date: April 4, 2001

Edward J. Tolchin, Esq., Fettmann, Tolchin & Majors, for the protester.

Anthony Savas, Petchem, Inc., an intervenor.

Robert M. Elwell, Esq., and George N. Brezna, Esq., Department of the Navy,
for the agency.

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

DIGEST

Proposal that failed to conform to a material solicitation requirement was
technically unacceptable and could not form the basis for award.

DECISION

Universal Yacht Services, Inc. (UYS) protests the award of a contract to
Petchem, Inc. under request for proposals (RFP) No. N00033-00-R-1033, issued
by the Department of the Navy, Military Sealift Command, for a personnel
transfer vessel (PTV) which will be used to conduct open ocean transfers of
passengers and cargo between sea-borne submarines and the shore in the area
of Port Canaveral, Florida. UYS contends that the agency improperly waived a
material solicitation requirement for Petchem and improperly accepted
Petchem's nonconforming proposal for award.

We sustain the protest.

The RFP, issued as a total small business set-aside on September 22, 2000,
contemplated the award of a fixed-price time charter contract for a base
period and three 1-year option periods. [1] RFP Cover Sheet; RFP at 2-4, 26.
The RFP's statement of work contained a 2-page list of required minimum
vessel characteristics. As relevant here, the RFP listed a transit speed
requirement of "9 knots in moderate weather @ 80% rated horsepower." RFP at
6. The agency explains that this phrase means that a vessel must be capable
of making a speed of 9 knots (nautical miles per hour) at 80 percent of its
engine's total maximum rated horsepower in moderate weather conditions, that
is, in winds of 11 to 16 knots and seas of 3 to 5 feet. The agency states
that the requirement for 9 knots reflects its need for a reasonable transit
time between shore facilities and submarines. The agency further states that
its requirement that 9 knots be attained under moderate weather conditions
at 80 percent rated horsepower will ensure that adequate (in this case, 20
percent) emergency reserve power exists. [2] Memorandum from CO to GAO (Mar.
8, 2001).

The RFP stated that the award would be made to the responsible offeror whose
proposal was determined to be most advantageous to the government,
considering price, technical characteristics of the proposed vessel, and an
offeror's past performance. RFP at 32.

Eight firms, including UYS, a recently incorporated firm, and Petchem, the
incumbent contractor, submitted proposals by the closing time on October 20.
UYS proposed a vessel (the "Ocean Discovery") which had been out of service
since 1996. Petchem proposed the same vessel (the "Christine S") which it
used to perform the PTV requirements under the predecessor contract. With
respect to the RFP's transit speed requirement, UYS inserted on its vessel
characteristic sheet [3] that its vessel's speed was ">15Kts in moderate
weather @ 80% rated horsepower." Agency Report (AR), Tab 5, UYS Initial
Proposal, attach. 3-2. Petchem inserted on its vessel characteristic sheet
that its vessel's speed was "9 kts. in mod. weather @ 80%." [4] AR, Tab 6,
Petchem Initial Proposal, attach. 3-2.

The proposals of three firms, including UYS and Petchem, were included in
the competitive range. AR, Tab 11, Pre-Negotiation Business Clearance
Memorandum, at 10. Following two rounds of discussions with each of the
competitive range offerors, the offerors submitted final proposal revisions.
As relevant here, in its final proposal revision, UYS remained committed to
the transit speed proposed in its initial proposal, as referenced above. In
its final proposal revision, Petchem committed to "9 kts. in mod. weather"
without any reference to "@ 80% rated horsepower." AR, Tab 16, Petchem's
Revised Proposal, attach. 3-2.

The contracting officer, who served as the source selection authority,
determined that the proposals of UYS and Petchem were both technically
acceptable, but that Petchem's proposal provided the best technical
solution, followed by the proposal of UYS. More specifically, the
contracting officer noted that Petchem proposed a proven vessel which was
currently performing the agency's PTV requirements (including the same
minimum transit speed requirement as included in this RFP). The contracting
officer acknowledged that UYS proposed a vessel that was warranted to meet
all of the RFP requirements, specifically recognizing that this vessel "does
provide for higher transit speeds." However, the contracting officer was
concerned that since the vessel proposed by UYS had not been operated since
1996, there was a high risk that this vessel would encounter problems until
it was properly broken in and would require major modifications to satisfy
two critical RFP requirements involving the installation of subsurface
fendering and a brow. AR, Tab 22, Source Selection Decision, at 2; AR, Tab
25, Post-Negotiation Business Clearance Memorandum, at 5.

With respect to past performance, the contracting officer noted that Petchem
had corporate experience and past performance directly relevant to the type
of mission encompassed by the current PTV requirements. The contracting
officer noted that Petchem had not missed a mission during its performance
as the incumbent contractor and that the firm had not encountered even minor
performance deficiencies. The contracting officer rated Petchem's past
performance as excellent. In contrast, the contracting officer commented
that UYS was a relatively new company with no corporate experience and past
performance. While UYS proposed experienced personnel, the contracting
officer did not view the experience and past performance of these personnel
as comparable to corporate experience and past performance since, as a new
company, there was no information available about how the individuals
proposed by UYS would perform collectively as a team. Accordingly, the
contracting officer assigned a neutral rating to UYS for past performance.
[5] AR, Tab 22, Source Selection Decision, at 3; AR, Tab 25,
Post-Negotiation Business Clearance Memorandum, at 6.

Based on Petchem's overall higher ranking on non-price evaluation factors,
the contracting officer concluded that Petchem's proposal, which was priced
approximately [deleted] percent higher than the UYS proposal, represented
the best value to the government. AR, Tab 22, Source Selection Decision, at
4-5. On January 3, 2001, the contracting officer executed Petchem's
contract. Of relevance here, the transit speed as listed in Petchem's
contract was "9 knots in moderate weather." AR, Tab 29, Petchem Contract, at
6.

UYS argues that in awarding the contract to Petchem, the agency improperly
waived the RFP's minimum transit speed requirement (i.e., "9 knots in
moderate weather @ 80% rated horsepower"). [6] UYS points out that while
Petchem agreed in its initial proposal to meet this requirement, Petchem
committed in its final proposal revision only to a 9-knot transit speed in
moderate weather, but omitted any reference to the RFP's "@ 80% rated
horsepower" requirement. In addition, UYS points out that the "@ 80% rated
horsepower" requirement was omitted from Petchem's contract. Protester's
Comments at 4.

The agency maintains that there was no difference between Petchem's initial
proposal and its final proposal revision in terms of the firm's commitment
to satisfy the RFP's transit speed requirement, especially since under the
predecessor contract, Petchem's vessel was required to satisfy the same
transit speed requirement. Memorandum from CO to GAO (Mar. 8, 2001). The
agency notes that the reference to "@ 80%" in Petchem's initial proposal had
been inserted by hand to the vessel characteristic sheet completed by
Petchem for the "Christine S"; the agency viewed the failure of Petchem to
add that handwritten notation to the same sheet in its final proposal
revision and the failure of the agency to include "@ 80% rated horsepower"
in Petchem's contract as clerical errors.

It is well-settled that, in a negotiated procurement, a proposal that fails
to conform to one or more of the solicitation's material requirements is
technically unacceptable and cannot form the basis for an award. Farmland
Nat'l Beef, B-286607, B-286607.2, Jan. 24, 2001, 2001 CPD para. 31 at 8.

Here, there is no dispute that the RFP's minimum transit speed requirement,
as quoted above, was material. Although Petchem stated in its initial
proposal that its proposed vessel would meet this material requirement, in
its final proposal revision, Petchem did not state that its proposed vessel
would transit at 9 knots in moderate weather "@ 80% rated horsepower." Since
Petchem's final proposal revision did not satisfy the RFP's minimum transit
speed requirement, the agency's acceptance of the firm's proposal meant that
the agency waived this requirement for Petchem. The award to Petchem on the
basis of its nonconforming proposal was improper. [7]

Further, in our view, UYS was prejudiced by the award to Petchem. In this
respect, UYS committed not only to meet, but to exceed, the RFP's minimum
transit speed requirement. In fact, the higher transit speed proposed by UYS
was considered a strength of the UYS technically acceptable, low-priced
proposal. AR, Tab 24, Excerpt from Protester's Debriefing. On this record,
it is clear that, but for the agency's improper award on the basis of
Petchem's nonconforming proposal, UYS would have had a substantial chance of
receiving an award. See McDonald-Bradley, B-270126, Feb. 8, 1996, 96-1 CPD para.
54 at 3; Statistica, Inc. v. Christopher, 102 F.3d 1577, 1581 (Fed. Cir.
1996).

While UYS seeks the award, we do not believe that this is an appropriate
remedy. In this respect, the agency has expressed some concern with the lack
of detail provided by UYS in its proposal regarding how and where UYS
proposes to make necessary vessel modifications, for example, installation
of subsurface fendering and a brow, and the timeframe for completing such
modifications. Accordingly, in order to address these concerns with the UYS
proposal, as well as the issue of the transit speed proposed by Petchem, we
recommend that the agency reopen discussions, request another final proposal
revision from each firm for evaluation, make a new source selection
decision, and terminate the existing contract if an offeror other than
Petchem is selected. We also recommend that UYS be reimbursed the reasonable
costs of filing and pursuing its protest, including reasonable attorneys'
fees. Bid Protest Regulations, 4 C.F.R. sect. 21.8(d)(1) (2000). The UYS
certified claim for such costs, detailing the time expended and the costs
incurred, must be submitted to the agency within 60 days of receiving this
decision.

The protest is sustained.

Anthony H. Gamboa

General Counsel

Notes

1. A time charter is a maritime contract giving the charterer--here, the
agency-- exclusive use of a named vessel for a designated period of time.
Contracting Officer's (CO) Statement at 1 n.2.

2. The agency explains that "9 knots in moderate weather" without reference
to "@ 80% rated horsepower" means that a vessel could be using either more
or less than 80 percent of its rated horsepower to meet the RFP's transit
speed requirement. Memorandum from CO to GAO (Mar. 8, 2001). For example,
and as relevant here, without any reference to a percentage rated
horsepower, in order to attain a speed of 9 knots in moderate weather, a
vessel could be using 90 percent of its rated horsepower capacity, thereby
leaving only a 10-percent reserve for emergencies, as opposed to a
20-percent reserve as required by the RFP. This scenario clearly would not
be in compliance with the RFP's minimum transit speed requirement.

3. The RFP contained as an attachment a blank "Vessel Characteristic Sheet"
on which an offeror was required to insert the particular characteristics
for the vessel being proposed. RFP Attach. 3-2.

4. The "@ 80%" was added in a handwritten notation by Petchem to its vessel
characteristic sheet that otherwise basically was completed in type. AR, Tab
6, Petchem Initial Proposal, attach. 3-2.

5. Contrary to the protester's position, we believe that this neutral rating
was reasonable.

6. In its initial protest, UYS included a declaration from the former
captain of the "Christine S," who stated that he was personally familiar
with the operating characteristics of that ship. Based on his 5 years of
work on the "Christine S," this individual stated that this vessel could not
maintain the transit speed required by the RFP.

7. On February 21, 2001, during the pendency of this protest, the agency
modified Petchem's contract so that the contract would conform to the RFP's
minimum transit speed requirement. Specifically, the agency replaced the "9
knots in moderate weather" contract language with "9 knots in moderate
weather, at 80% rated [h]orsepower." Contract amend. 1, Feb. 21, 2001.
However, the fact that the awardee may, after award, agree to be bound to
the solicitation's material requirements does not render the proposal
acceptable or the award proper. Tri-State Gov't Servs., Inc., B-277315.2,
Oct. 15, 1997, 97-2 CPD para. 143 at 4.