TITLE:  Pacific Island Movers, B-287643.2, July 19, 2001
BNUMBER:  B-287643.2
DATE:  July 19, 2001
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Pacific Island Movers, B-287643.2, July 19, 2001

Decision

Matter of: Pacific Island Movers

File: B-287643.2

Date: July 19, 2001

Wayson W.S. Wong, Esq., Lee, Kim, Wong, Yee & Lau, for the protester.

Marjorie A. Stender, Esq., Luce, Forward, Hamilton & Scripps, for Dewitt
Transportation Services of Guam, an intervenor.

Elizabeth Rivera, Esq., Department of the Navy, 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 negotiated procurement which provided for a reverse auction, an agency
reasonably determined to request revised price proposals after the end of
the auction, in response to a protest which raised reasonable concerns that
there were errors in the conduct of the reverse auction.

DECISION

Pacific Island Movers protests the agency's decision to obtain revised
proposals under request for proposals (RFP) No. N00604-01-R-A006, issued by
the Department of the Navy, for packing and crating services. Pacific
contends that it was entitled to award on the basis of its low price under a
reverse auction conducted by the agency prior to the request for revised
proposals.

We deny the protest.

The RFP, issued as a total small business set-aside under the commercial
item acquisition procedures of Federal Acquisition Regulation (FAR) Part 12,
provided for the award of a fixed-price, requirements contract to perform
packing and crating services on Guam for a 6-month base period with 4 option
years. The RFP contained 173 contract line items (CLIN), each of which
stated an estimated quantity of services. The RFP also listed an "EST MIN
AMOUNT," presumably meaning an estimated minimum amount, for each CLIN.

As originally issued, the RFP identified technical acceptability, past
performance, and price as the evaluation factors, and stated that technical
acceptability and past performance together were significantly more
important than price. RFP at 155. Notwithstanding this indication that award
would be made on the basis of a cost/technical tradeoff, the contracting
officer informed offerors at a pre-proposal conference that the basis for
award would be "low cost technically acceptable." Agency Report, Tab 8,
Pre-Proposal Conference Slides (Mar. 26, 2001), at 3. Subsequently, on April
3, the Navy amended the RFP evaluation criteria to state that proposals
would be evaluated under the following factors: "technical acceptable
(Interstate Commerce Commission certificate to perform drayage services),
past performance (References shall be used as responsibility checks), and
price." The RFP, as amended, also stated that the "technical acceptable" and
past performance factors were together approximately equal to price (which
again suggested that award would be based on a cost/technical tradeoff,
contrary to the contracting officer's pre-proposal conference statement).
RFP amend. No. 2 at 181.

The RFP also provided for a reverse auction price competition after
submission of proposals. Detailed instructions were provided for the conduct
of the reverse auction. RFP, attach. 2, Reverse Auction Instructions. Among
other things, offerors were informed that price revisions could only be made
during the reverse auction, and that submission of a proposal in response to
the RFP was considered consent to participate in the reverse auction and to
reveal the offeror's prices (although the identity of the offeror would
remain anonymous). The RFP allowed for revisions to any or all of the 173
CLINs during the reverse auction, and promised to provide during the auction
a real-time software analysis showing the offerors' relative position in the
competition. The RFP also provided that the reverse auction would be
conducted for 60 minutes, but that offers submitted within 5 minutes before
expiration of the auction would extend the auction for an additional 15
minutes. Id. at 3-4.

In response to the RFP, the Navy received offers from Pacific and Dewitt
Transportation Services of Guam. Agency Report at 3. Both were found
technically acceptable. The reverse auction began on April 18 and continued
on April 19. The reverse auction took far longer than the 60 minutes
provided for by the RFP apparently because of the provision that the auction
would be extended if offers were submitted in the last 5 minutes of the
auction. On April 19, at 2 p.m. (Hawaii Standard Time (HST)), the Navy
issued RFP amendment No. 4, which provided that the reverse auction would
end that day at 3 p.m. HST, notwithstanding the provision that offers
submitted within 5 minutes of the expiration of the auction would extend the
auction. At the conclusion of the auction, Pacific was found to have
submitted the lowest overall priced proposal.

On April 26, Dewitt protested to our Office, challenging the conduct of the
reverse auction. Among other things, Dewitt complained that, because of a
malfunction, offerors did not have access to promised real-time analysis
showing the offerors' relative position in the competition and that
amendment No. 4 arbitrarily established an end to the auction, which did not
allow offerors to actively or fairly compete with each other as was
contemplated by the reverse auction procedures. Dewitt also alleged that
although Pacific had ostensibly submitted a lower-priced proposal, Dewitt
might be entitled to award on the basis of a higher past performance rating.
Dewitt also protested that Pacific's proposal was materially unbalanced.

Prior to the submission of its report on the protest, the Navy informed our
Office that it would not defend the reverse auction, but would take
corrective action by amending the RFP and requesting "final price
revisions." The Navy also proposed to amend the RFP to delete the reference
to minimum amounts for each line item and to clarify that award would be
based on the low-priced, technically acceptable proposal. The Navy asserted
that by reverting to a traditional negotiated competition and requesting
final proposal revisions, the agency was addressing all of Dewitt's protest
challenges.

On May 14, we dismissed Dewitt's protest, based upon the Navy's corrective
action, which had effectively canceled the reverse auction. On May 15, the
Navy issued amendment No. 5 to the RFP, which requested that "final proposal
revisions" be submitted by May 17, and amended the evaluation criteria to
clearly state that award would be based on the low-priced, technically
acceptable proposal, and to specifically provide that past performance would
only be considered as a matter of responsibility.

Pacific timely protests amendment No. 5 and the Navy's request for "final
price revisions," complaining that it was entitled to award based on the
reverse auction. Specifically, Pacific asserts that Dewitt acted in bad
faith by subverting and unreasonably extending the reverse auction, that
Dewitt's protest of the reverse auction lacked merit, and that the Navy
should have accepted the reverse auction results. Pacific also challenges as
unreasonable the Navy's stated bases for amending the RFP and requesting
price revisions.

An agency has broad discretion in a negotiated procurement to take
corrective action where the agency determines that such action is necessary
to ensure fair and impartial competition. Rockville Mailing Serv., Inc.,
B-270161.2, Apr. 10, 1996, 96-1 CPD para. 184 at 4. Where an agency has
reasonable concerns that there were errors in a procurement, the agency may
take corrective action, even if it is not certain that a protest of the
procurement would be sustained. Main Bldg. Maintenance, Inc., B-279191.3,
Aug. 5, 1998, 98-2 CPD para. 47 at 3. We will not object to the specific
proposed corrective action, so long as it is appropriate to remedy the
concern that caused the agency to take corrective action. Id.

Here, Dewitt's protest raised colorable challenges to the conduct of the
reverse auction and the award selection thereunder. That is, the undisputed
software malfunctions and the arbitrary cut-off of the bidding with only an
hour's notice called into question the fairness of the competition. The Navy
and Pacific do not dispute Dewitt's specific challenges to the reverse
auction. Moreover, Pacific itself expresses concern with the conduct of the
reverse auction, alleging that Dewitt acted in "bad faith" and manipulated
the auction by employing delaying tactics that subverted and extended the
auction. Pacific's Comments at 3-4. Given these concerns, we think the
agency reasonably concluded it should take corrective action by requesting
final price revisions from Dewitt and Pacific. This had the effect of
canceling the reverse auction and placing the two firms in an equally
competitive position with undisputedly sufficient time to prepare their
final price submissions. [1]

Pacific complains, however, that requesting final price revisions is unfair
because the firm's proposed price had been disclosed. See Protester's
Comments at 6-7 (arguing that the Navy should be required to have a cogent
and compelling reason to cancel the reverse auction because offerors' prices
have been revealed). Under the unique circumstances of a reverse auction, we
fail to see how the disclosure of the offerors' prices was unfair. Pacific
and Dewitt expressly agreed to the disclosure of their proposed prices by
participating in the reverse auction. Because both Pacific's and Dewitt's
prices were disclosed through the reverse auction, the firms were in an
equal competitive position at the time revised price proposals were
requested under RFP amendment No. 5.

In sum, we find reasonable the Navy's corrective action of canceling the
apparently flawed reverse auction and obtaining revised price proposals from
the offerors.

Once the agency determined to reopen the competition by requesting revised
price proposals from the offerors, it was appropriate to amend the
solicitation to clarify the basis for award and remove the reference to
estimated minimum amounts. Specifically, the record establishes that the
Navy intended that award would be based upon the low-priced, technically
acceptable proposal, but its earlier (April 3) amendment had not stated this
clearly. While Pacific disagrees that amendment No. 5 is necessary to ensure
that award will be based upon low-priced proposal, it does not show that it
was prejudiced by this clarification. [2] The deletion of the minimum
estimated amount language from the schedule of supplies and services was
also reasonable. Given that the RFP provided for the award of a requirements
contract under which there is generally no guaranteed minimum amount, its
deletion, which the protester does not challenge, is unobjectionable.

The protest is denied.

Anthony H. Gamboa

General Counsel

Notes

1. Pacific likens the Navy's mid-auction establishment of an ending time to
a request for a best and final offer that cured any procedural defects in
the auction. In our view, the issue is not that clear, and we believe that
reasonable concerns could be raised about whether providing offerors with an
hour's notice of the end of the auction was an appropriate means of
correcting the asserted errors in the reverse auction, particularly given
the allegations of the continuing software malfunctions that apparently did
not provide offerors with the promised information regarding their relative
price standing.

2. Pacific also complains that RFP amendment No. 5 provides that past
performance will only be considered as part of the agency's responsibility
determination. Here, however, in accordance with FAR sect. 15.304(c)(3)(iv),
which provides that past performance need not be evaluated if the
contracting officer documents the reason that past performance is not an
appropriate evaluation factor for the acquisition, the contracting officer
did so. Agency Report, Tab 23, Memorandum of Contracting Officer (June 6,
2001). Pacific does not assert or show that the contracting officer's
determination is unreasonable here.