TITLE: Omega World Travel, Inc.; SatoTravel, Inc., B-288861.5; B-288861.6; B-288861.7, August 21, 2002
BNUMBER: B-288861.5; B-288861.6; B-288861.7
DATE: August 21, 2002
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Omega World Travel, Inc.; SatoTravel, Inc., B-288861.5; B-288861.6; B-288861.7,
August 21, 2002
DOCUMENT FOR PUBLIC RELEASE
The decision issued on the date below was subject to a GAO Protective
Order. This redacted version has been approved for public release.
Decision
Matter of: Omega World Travel, Inc.; SatoTravel, Inc.
File: B-288861.5; B-288861.6; B-288861.7
Date: August 21, 2002
Barry Roberts, Esq., and Brian J. Hundertmark, Esq., Roberts &
Hundertmark, for Omega World Travel, Inc., and James H. Roberts, III,
Esq., Van Scoyoc Kelly, for SatoTravel, Inc., the protesters.
J. Scott Hommer, III, Esq., Rebecca E. Pearson, Esq., Paul N. Wengert,
Esq., and Sharon L. Larkin, Esq., Venable, Baetjer and Howard, for Carlson
Wagonlit Government Travel, the intervenor.
Raymond M. Saunders, Esq., Maj. Robert W. Clark, and Capt. Ronald
Sullivan, Department of the Army, for the agency.
Paul I. Lieberman, Esq., and Michael R. Golden, Esq., Office of the
General Counsel, GAO, participated in the preparation of the decision.
DIGEST
1. Agency consideration of discount offered by firm for award of
contracts for all regions listed under solicitation, and award to that
firm of contracts for all regions, is unobjectionable and consistent with
solicitation evaluation and award provisions, which contemplated multiple
awards but permitted awards for any combination of regions.
2. Agency properly declined to consider contingent discount offered by
protester under solicitation that called for fixed prices.
3. Agency properly declined to consider *alternative* monthly management
fee pricing structure that did not provide any prices on the basis of
transaction fees, as required by the solicitation.
4. Agency reasonably did not downgrade proposal under past performance
evaluation factor because of 5-year old contract fee dispute under
predecessor contract that did not affect contract performance and that had
been resolved by a settlement favorable to the offeror.
DECISION
Omega World Travel, Inc. and SatoTravel, Inc. protest the award of
contracts for commercial travel services for five travel regions to
Carlson Wagonlit Government Travel by the Military Traffic Management
Command, Department of the Army (MTMC), under request for proposals (RFP)
No. DAMT01-01-R-0175. Omega objects that the agency improperly considered
a discount offered by Carlson for the award of contracts for all five
regions and improperly awarded contracts for all five regions to Carlson,
and improperly declined to evaluate a contingent pricing discount proposed
by Omega. SatoTravel primarily objects that the agency refused to
consider its alternate proposal for a flat monthly management fee, and
misevaluated Carlson's past performance.
We deny the protests.
BACKGROUND
The solicitation, issued on May 3, 2001, sought proposals to operate and
manage commercial travel offices for five defense travel regions
throughout the United States, providing travel services that include
issuing airline tickets, booking car and hotel reservations for official
travel, and issuing tickets for emergency leave travel. The RFP permitted
offerors to propose on any or all of the regions listed in the schedule,
and stated that the agency *contemplated* the award of multiple
fixed-price contracts for a base year with eight 6-month option periods.
RFP amend. 10, at 421. The RFP did not specify that any minimum number of
firms would be selected for award, stating instead that *[a] maximum of
five (5) contracts shall be awarded . . . .* Id. The RFP required that
these services be provided by means of traditional service methods with
travel agents at on-site facilities, and that offerors supply an on-line
booking application as well. An agency pre-proposal conference was held
on May 31, 2001, and was attended by representatives of all of the
eventual offerors, after which the solicitation was amended and an October
11 closing time was set for receipt of initial proposals.
The RFP set forth four evaluation criteria, technical
acceptability/capability, participation of small and disadvantaged
business concerns, experience/past performance, and transaction fees, in
descending order of importance, and stated that *[t]he government intends
to award based on the best overall value . . . .* Id. at 425. The RFP
instructed offerors to submit a single proposal demonstrating their
technical acceptability and capability, without any requirement to
differentiate by region, and called for offerors to submit a pricing
schedule listing prices by region for the required transaction fees.
Three firms, Carlson, SatoTravel and Omega submitted proposals by the
closing time, and based on the initial evaluation all were included in the
competitive range. Thereafter, MTMC conducted discussions with all three
offerors, and all three submitted final proposal revisions by the December
14, 2001 closing time.
Omega's proposal was evaluated as good under all three non-price factors;
Carlson's proposal was evaluated as excellent under all three; and
SatoTravel's proposal was evaluated as excellent under capability and past
performance and good under the small and small disadvantaged business
participation factor. In evaluating the prices, the agency considered the
pricing by separate region and the proposed multi-region discounts offered
by SatoTravel and Carlson, as well. The agency determined that the lowest
overall pricing was available if the all-region discount proposed by
Carlson, the offeror whose technical proposal was highest rated, was
applied. Agency Report (AR), Tab P-1, Price Analysis, at 5. Applying the
multi-region discounts, the proposed transaction fees, that is, the total
prices for all regions, were evaluated as $129,358,939 for Omega,
$128,323,554 for Carlson, and $132,950,393 for SatoTravel. AR, Tab Q-2
Price Negotiations Memorandum, at 17.[1] The source selection authority
(SSA) determined to make an award to Carlson for all five regions, and by
letter of February 27, 2002, advised the two unsuccessful offerors that
the SatoTravel and Carlson proposals had been evaluated as essentially
equal technically, and that Omega's proposal had lower rated technically,
and was higher priced than SatoTravel's, as a result of which Carlson's
lower price had become determinative. AR at 3. After receiving
debriefings, Omega filed an agency-level protest and a subsequent protest
with our Office, and SatoTravel filed a protest with our Office, objecting
to the award determination.
In the course of reviewing these protests, MTMC recognized that both the
Carlson and SatoTravel proposals had failed to comply with an RFP
requirement regarding the mandatory narrative describing the offeror's
small and small disadvantaged business participation plan, and that this
deficiency had not been raised with either offeror during discussions. As
a result, MTMC determined that it would take corrective action in the form
of permitting all three offerors to submit revised narratives, after which
MTMC would perform a reevaluation. Thereupon, our Office dismissed the
protests as academic, and all three offerors submitted revised narratives
by a May 2, 2002, due date.
After evaluating the revised narratives,[2] the SSA made a new award
determination on May 9, and again selected Carlson's proposal for awards
for all of the regions. The SSA determined that Omega's proposal
*continues to be technically inferior to both CWGT [Carlson] and
SatoTravel and its overall prices remain higher than CWGT's.* AR, Tab
Q-4-A, Addendum to Source Selection Decision, at 2. The SSA concluded
that *CWGT and SatoTravel submitted essentially equal technical proposals*
and *because CWGT's overall evaluated prices are over $4 million lower
than SatoTravel's, I determine that CWGT's offer represents the best
overall value to the Government . . . for all of the awards under
Solicitation No. DAMT-01-01-R-0175.* Id. Thereupon, Omega and
SatoTravel[3] filed these protests with our Office.
AWARD OF CONTRACTS FOR ALL FIVE REGIONS TO CARLSON
Omega states that it *understood that there were five competitions in
place--one for each region,* and objects to the agency's evaluation of
Carlson's proposed price discount for awards of contracts for all five of
the regions, and to the resulting award of contracts for all five regions
to one firm. Omega's Comments at 5. Omega argues that *the
[s]olicitation gave the impression that the Army would finally maximize
competition by breaking up the single national contract into regions, and
the terms of the [s]olicitation did not give the appearance that a single
national contract was still a possibility.* Id. at 4. However, contrary
to Omega's understanding, as noted above, while the RFP states that award
of multiple contracts was contemplated, it also explicitly permitted
offerors to propose on any or all regions, and allowed for award of up to
five contracts to different offerors. In our view, the RFP did not
preclude awards of combinations of regions to a single offeror.
Where an RFP states that it *contemplates* multiple awards, but also
permits award of all solicited items to a single offeror, there is no
obligation on the agency to make multiple awards. Outdoor Venture Corp.,
B‑288894.2, Dec. 19, 2001, 2002 CPD P: 13 at 7. Here, it is
undisputed that the RFP did not contain any provision either requiring or
providing a particular preference for multiple awards. Accordingly, the
agency was under no obligation to make multiple awards, and to the extent
that Omega contends that the agency should have applied a preference for
multiple awards, the allegation is without merit; implementation of such a
preference would have been improper because it would have been
inconsistent with the stated solicitation evaluation and award criteria.
Crofton Diving Corp., B-289271, Jan. 30, 2002, 2002 CPD P: 32 at 7;
Outdoor Venture Corp., supra. Accordingly, we see no basis to object to
the award of contracts for all five regions to a single offeror.
As for the agency's consideration of the discount for multiple region
awards proposed by Carlson (and also by SatoTravel), the agency points out
that the RFP called for pricing by region and stated that alternative
pricing was permitted. In the agency's view, the alternative pricing
provision contemplated the multi-region discount pricing proffered by
Carlson and SatoTravel. More important, it is undisputed that the RFP did
not limit or prohibit such a multi-region discount. Omega's position is
founded on its contention that under this solicitation, in order for a
multi-region discount to be permissible, it was *incumbent on the [a]gency
to explicitly state that multi-region or winner take all pricing will be
considered.* Omega's Protest at 6. Omega is mistaken as a matter of
law. Even where an RFP provides for multiple awards, offerors may
properly condition offers on receipt of all items, or a combination of
items unless the solicitation expressly prohibits *all or none* or
similarly restricted offers. Uniroyal Plastics Co., Inc., B-240319, Nov.
2, 1990, 90-2 CPD P: 360 at 2. Here, Carlson's proposal of a discounted
price for award of all five regions under an RFP which did not proscribe
such a restriction was permissible, and MTMC properly considered Carlson's
discounted pricing for award of all regions.
CONTINGENT ON-LINE PRICING DISCOUNT
Omega asserts that it would have been evaluated as having the lowest
overall price if the agency had properly considered what Omega styles its
*alternate pricing* consisting of a $[deleted] discount per transaction
*if at least [deleted]% of the bookings were on line.* Omega's Comments
at 5. The agency declined to consider this discount in evaluating Omega's
price because the discount was contingent on an event over which neither
MTMC nor the offeror had any control, that is, the volume and percentage
of on-line bookings, which is largely dependent on the level of comfort
and familiarity travelers have with the on-line booking process. AR at
12. Where, as here, a solicitation requests offers on a fixed-price
basis, an offer that is conditional and not firm cannot be considered for
award. Assets Recovery Sys., Inc., B-275332, Feb. 10, 1997, 97-1 CPD P:
67 at 4. Accordingly, MTMC's determination not to consider Omega's
proposed contingent price discount, where there was no basis for the
agency to know whether the contingency would be achieved, is
unobjectionable.
SATOTRAVEL'S MANAGEMENT FEE PRICING PROPOSAL
In addition to offering discounts for combinations of regions, SatoTravel
offered what it characterizes as an alternative form of pricing based on
being paid a preset specific dollar amount each month regardless of actual
reservation activity. SatoTravel's Initial Protest, Mar. 11, 2002, at 4.
The agency declined to consider this proposal, and SatoTravel objects that
had its management fee alternative been considered, *there are several
alternative awards scenarios that could have been made resulting in
significant cost savings to MTMC.* Id. at 7. SatoTravel contends the
solicitation encouraged offerors *to submit multiple offers presenting
alternative terms and conditions or commercial items for satisfying the
requirements of the solicitation* and that *MTMC deviated from the
announced terms of the [s]olicitation when it failed to fully and properly
evaluate SatoTravel's alternative pricing method on a region-by-region or
combination of regions basis.* SatoTravel's Comments, July 3, 2002, at
6-7. We disagree.
As noted above, the solicitation expressly set forth *transaction fees* as
the evaluation factor by which the offeror's prices would be evaluated.
To this end, the solicitation included pricing schedules by region on
which offerors were required to enter specified transaction fees, that is,
a charge per transaction. As the agency correctly notes, *[a] flat fee is
. . . the antithesis of a transaction fee, and would not therefore fall
within an alternative pricing scheme contemplated by the RFP.* AR at 5.
MTMC also notes that a flat fee arrangement places an unacceptable risk on
the agency in that the fees would be due even if aircraft were grounded in
an emergency and there were no booking activity. Id. at 5-6. The agency
also states that SatoTravel was advised during discussions held on
December 4, 2001, that MTMC was not interested in pursuing the management
fee approach. Id. at 5. SatoTravel contends that it does not recall this
discussion, but does not dispute that it occurred, as is reflected in
MTMC's discussion minutes. In any event, it is clear that SatoTravel's
management fee proposal is not contemplated by the *alternative* language
in the RFP because it is inconsistent with the transaction fee pricing
that represents the core contract requirement under the RFP. Accordingly,
the agency had no obligation to consider, and properly declined to
consider, SatoTravel's flat fee proposal.
EVALUATION OF CARLSON'S PAST PERFORMANCE
Both SatoTravel and Omega protest that Carlson's past performance
evaluation of *excellent* was improper because of a contract fee dispute
between MTMC and Carlson that occurred in 1997--1998, under the
predecessor contract. Omega denominates the dispute a *default* and
argues that MTMC was required to downgrade Carlson's past performance
rating to something below *excellent.* Omega's Comments at 8-9.
SatoTravel refers to a 1998 edition of a travel trade journal to support a
contention that it was public knowledge that Carlson had violated the
terms of this predecessor contract by unilaterally withholding rebates due
the government for an extended period, which SatoTravel characterizes as
*defaulting,* and objects that in light of this action, the agency could
not reasonably evaluate Carlson's past performance as excellent.
SatoTravel's Initial Protest, March 11, 2002, at 10-13. The agency has
explained that there was no default, that the matter in question concerned
a legitimate dispute pertaining to the calculation of fees, that during
the period in question Carlson had *continued to maintain its high level
of service and was able to keep its small business subcontractors 'alive'
and performing without any disruption in service,* and that the dispute
was eventually resolved by an adjustment favorable to Carlson.[4] AR at
7; AR, Tab A, Contracting Officer's Statement, at 12-13.
In our view, the agency's evaluation is unobjectionable. There is no
evidence in the record of any default by Carlson, and in the face of the
agency's recognition of Carlson's continued high quality of performance
during the period in which the fee dispute occurred, it would have been
inappropriate for the agency to downgrade Carlson's past performance
rating simply on the basis of the fee dispute absent evidence, which is
not present here, that Carlson abused the dispute process. Nova Group,
Inc., B-282947, Sept. 15, 1999, 99-2 CPD P: 56 at 8-9. The record
otherwise supports Carlson's rating of excellent for past performance;
this contract dispute, which was resolved in a manner favorable to
Carlson, provides no basis to object to Carlson's past performance
evaluation.[5]
Both protesters also object that the agency's above-referenced corrective
action was insufficient and improper because it failed to address the
various alleged evaluation deficiencies that are discussed in this
decision. In view of our conclusion that the agency's evaluation is
unobjectionable, this allegation is without merit.[6]
The protests are denied.
Anthony H. Gamboa
General Counsel
------------------------
[1] The prices were determined by multiplying the proposed transaction
fees by the estimated numbers of transactions. While Omega asserts that,
on the basis of price, it should have received awards for two of the
regions for which it had the lowest evaluated price, in fact, because of
the effect of the combination award discounts offered by the other two
offerors, as noted above, Carlson's total overall price was lower than any
possible award combination under which Omega would have received awards
for those two regions.
[2] Under the reevaluation, the only substantive change was that
SatoTravel's small and disadvantaged business participation plan
evaluation improved from *good* to *excellent.*
[3] After receiving the agency report, SatoTravel also filed a
supplemental protest allegedly based on information contained in a
document in the agency report entitled *Army Recompete Meeting
Memorandum,* prepared on December 6, 2001, which notes that actual numbers
for air and rail workload estimates and non-air and emergency workload
estimates had not been obtained, and the air workload estimates included
certain non-air workload. SatoTravel contends that this shows that the
RFP estimates were inaccurate, and the solicitation should have been
amended. The agency points out that offerors were advised of this fact on
a teleconference on December 4, 2001, and that amendment 13 to the RFP
specifically advised that a *[a] significant number of the non-air
transactions listed in the technical exhibits and the non-air CLINS are
included in the air/rail transactions technical exhibits and CLINS.*
Supplemental AR at 2. Accordingly, this constitutes an untimely
allegation, first filed in a post-award protest, that the solicitation is
defective because it contained misleading estimates, when the alleged
defect is patently clear by the very terms of the solicitation and,
therefore, was required to have been protested prior to the time for
receipt of initial proposals. 4 C.F.R. S: 21.2(a)(1) (2002).
[4] The agency has explained that the dispute arose when the airline
industry cut travel agency commissions from 10 percent to 8 percent at a
time when Carlson was performing under a contract that required it to
rebate a percentage of these commissions to the agency. Carlson sought an
equitable adjustment and while this claim was pending, it temporarily
suspended rebate payments while performing all requirements under the
contract. After negotiations, the agency agreed to resolve the dispute by
granting the equitable adjustment requested by Carlson. AR, Tab A,
Contracting Officer's Statement, at 12-13.
[5] Omega also complains that the agency's corrective action constituted
technical leveling prohibited under the Federal Acquisition Regulation
(FAR). Omega's Protest at 9. In its agency-level protest, Omega had
referred to the leveling prohibition that had been contained at FAR S:
15.610(d), a superseded section of the FAR. In its protest to our Office,
Omega contends that FAR S: 15.306(e) prohibits leveling. Id. at 9. This
is wrong as a matter of law. In relevant part, this FAR provision
proscribes the agency's revealing of one offeror's technical solution or
price to another offeror. It does not prohibit or even address technical
leveling, which is no longer specifically prohibited by the FAR. Imagine
One Tech. & Mgmt., Ltd., B-289334, Jan. 10, 2002, 2002 CPD P: 18 at 4. In
any event, the agency's remedy clearly falls within the broad discretion
afforded agencies to take corrective action reasonably determined to be
necessary to ensure fair and impartial competition in a negotiated
procurement. Pacific Island Movers, B-287643.2, July 19, 2001, 2001 CPD
P: 126 at 3. Here, the agency took reasonable corrective action in the
form of advising the two out of the three competing offerors that had
failed to comply with a mandatory solicitation requirement, which the
agency had not previously recognized, and thus had not addressed during
discussions, and permitting all offerors to resubmit compliant proposal
revisions. This does not constitute technical leveling, which consists of
an agency's helping one offeror to bring its proposal up to the level of
others through successive rounds of discussions. Imagine One Tech &
Mgmt., Ltd., supra.
[6] The protesters have also raised a number of collateral issues, each of
which we have considered and find without merit.