TITLE: Consolidated Engineering Services, Inc., B-291345; B-291345.2, December 23, 2002
BNUMBER: B-291345; B-291345.2
DATE: December 23, 2002
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Consolidated Engineering Services, Inc., B-291345; B-291345.2, December 23, 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: Consolidated Engineering Services, Inc.
File: B-291345; B-291345.2
Date: December 23, 2002
William A. Roberts, III, Esq., Timothy W. Staley, Esq., and Jonathan L.
Kang, Esq., Wiley Rein & Fielding, for the protester.
John S. Albanese, Esq., and Andrew B. Blumenfeld, Esq., Department of
Defense, 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
Protest is sustained where the record fails to reasonably support the
agency's decision to eliminate from consideration as technically
unacceptable the only proposal received from a commercial offeror in the
private-sector portion of the competition conducted pursuant to Office of
Management and Budget Circular A-76.
DECISION
Consolidated Engineering Services, Inc. (CESI) protests the decision of
the Department of Defense (DOD) to eliminate from consideration its
proposal to operate, maintain, and repair the Pentagon Heating and
Refrigeration Plant (H&RP) in Arlington, Virginia. CESI argues that the
agency's decision was unreasonable.
We sustain the protest.
BACKGROUND
The Pentagon H&RP requirements at issue here are for steam production,
chilled water production, electrical distribution, steam distribution,
chilled water distribution, and sewage. Historically, the annual
operating cost of the Pentagon H&RP has been approximately $5.4 million.
Agency Report (AR), Tab 1, Acquisition Plan, at 1. On May 11, 2001,
pursuant to the provisions of Office of Management and Budget (OMB)
Circular A-76, the agency issued solicitation No. MDA946-00-R-0034 in
order to select a commercial offeror to compete against the government's
*most efficient organization* (MEO) under the A-76 cost comparison
process.[1] Here, the private‑sector competition was conducted in
two phases--phase 1 (request for qualifications) and phase 2 (request for
proposals). The cost of the phase 2 private‑sector proposal
selected as representing the best value to the government would then be
compared to the cost of the government's MEO in accordance with OMB
Circular A-76. The agency contemplated the award of a fixed-price with
award fee contract to the offeror who successfully competed against the
MEO.
Phase 1--Request for Qualifications (RFQ)
For phase 1, the agency issued an RFQ under which offerors were to provide
written submissions and to make oral presentations regarding two technical
evaluation factors--past performance and management approach. RFQ S:S:
L-3, L-4, at 133-135. With respect to past performance, offerors were
required to provide a *Project Master List* of all contracts for operation
and maintenance activities, ongoing or completed, within the last 5 years
in excess of $1 million. RFQ S: L-4.1.a, at 134. Offerors were also to
provide *Relevant Project Summaries,* which were to detail the work
performed on five *relevant* contracts selected from the offeror's project
master list. As pertinent here, the RFQ defined *relevant* as follows:
those operation and maintenance contracts, ongoing or completed, within
the last 5 years, with comparable levels of complexity to the operation
and maintenance of the Pentagon H&RP. These may include, but are not
limited to, experience with: operation and maintenance of central plant
facilities, operation and maintenance of large utility distribution
systems, coordination with on-going adjacent renovation projects,
integrated environmental management as part of operation and maintenance
of facilities.
RFQ S: L-4.1.b, at 135.
For the five relevant contracts selected, offerors were to provide, for
example, the following information: the relevance to the Pentagon H&RP
contract; major systems operated and maintained, to include boilers
(number, make, model number, capacity, and fuel type); chillers (number,
make, model number, capacity, and refrigerant type); steam distribution
systems (sizes and types); chilled water distribution systems (sizes);
electrical distribution systems (sizes); and sewage distribution systems
(sizes and types). Id.
With respect to management approach, offerors were to describe the
management approach they would apply to meet the Pentagon H&RP
requirements. RFQ S: L-4.2, at 136.
In evaluating phase 1 submissions, the RFQ stated:
Past performance will be evaluated in both Phase 1 and Phase 2. In Phase
1, past performance is evaluated to determine the Government's confidence
in the offeror's ability to perform the requirements to operate and
maintain the H&RP, based on the offeror's past performance on contracts of
a similar size and complexity. Special emphasis is placed on past
performance on contracts that are relevant and recent. In Phase 2, an
evaluation of the Offeror's proposed management team's past performance
and experience will be made to ascertain the Government's confidence level
in the Offeror's ability to perform the requirements of the contract.
RFQ S: M-1.1, at 146.
The RFQ also listed, in descending order of importance, two evaluation
factors-- recent and relevant past performance and management approach.
Recent and relevant past performance was to be evaluated
based on the Government's confidence in the offeror's ability to
successfully execute the requirements of operating and maintaining the
H&RP, based on the recency and relevance of the past experience and
performance described in the offeror's submission. Relevant contracts are
defined for this solicitation as those with comparable levels of
complexity and scope to the operation and maintenance of the H&RP. This
may include, but is not necessarily limited to, experience with:
operation, maintenance and repair of steam plants, chilled water plants,
sewage/wastewater services and major utility distribution systems, which
are required to provide utility services 24 hours a day/7 days a week with
no interruptions.
RFQ S: M-1.2.1, at 146.
Management approach was to be evaluated as
a measure of the Government's confidence in the Offeror's ability to
successfully perform the required effort, while ensuring the optimum
levels of quality, operational efficiency and continuity of operations.
The evaluation of this factor will be based on the Offeror's described
approach to the operation and maintenance of the H&RP.
RFQ S: M-1.2.2, at 146.
Three firms, including CESI and Chemical & Engineering Services, Inc.
(C&E), [2] submitted phase 1 proposals by June 12. The proposals were
individually evaluated by each member of the technical evaluation panel
(TEP). The TEP then convened as a group and assigned a final consensus
rating to each of the proposals for each of the phase 1 evaluation
factors. AR, Tab 6, TEC Report for Phase 1 Proposals, at 1. CESI
received a *significant confidence* rating for both past performance and
management approach; C&E received a *confidence* rating for past
performance and a *significant confidence* rating for management
approach. Id. at 2.[3] For both offerors and for both evaluation
factors, the TEC listed *strengths* and *weaknesses* (which were not
characterized as *significant* weaknesses). As relevant here, the TEC
noted as a weakness that CESI had commercial, as opposed to industrial,
experience. Id. at 9.
The source selection authority (SSA) selected CESI and C&E to participate
in phase 2 of the competition. With respect to CESI, the SSA determined
that the firm demonstrated *excellent overall performance.* AR, Tab 7,
SSA's Undated Memorandum for the File Regarding CESI, at 1. Among other
things, the SSA noted that CESI's master project list and relevant project
summaries *indicated across the board experience with equipment and
systems of the same capacities and complexity.* Id. The SSA commented
that CESI demonstrated *significant experience in providing [operation and
maintenance services] for a wide variety [o]f facilities and systems
similar to those at the [Pentagon] H&RP.* Id. The SSA concluded that
*[c]ollectively, [CESI's] experience demonstrate[d] a high degree of
relevancy and ability to meet the requirement of operating and maintaining
a large, complex central plant. . . . [CESI] also demonstrated significant
experience in operating and maintaining large utility distribution
systems.* Id. [4]
With respect to C&E, the SSA stated, among other things, that the firm
demonstrated *excellent overall performance,* and that the firm was an
*expert in the industrial water treatment and sewage fields.* AR, Tab 7,
SSA's Undated Memorandum for the File Regarding C&E, at 1. The SSA noted
that C&E demonstrated that it *[could] successfully manage multi-million
dollar facilities [operation and maintenance] contracts, [and that] all of
their contracts were renewed and reissued.* Id. The SSA pointed out that
a *[s]trong demonstration of [C&E's] successful past performance was the
award of 100% of the available award fee from another contract . . .
[which] is unusual and requires exceptional performance.* Id. Finally,
the SSA stated that C&E demonstrated *excellent knowledge and demonstrated
ability to provide a comprehensive water treatment program.* Id.
Phase 2--Request for Proposals (RFP)
On December 21, the agency issued the RFP for phase 2. The RFP stated
that phase 2 proposals would be evaluated in the equally important areas
of past performance and mission capability. The RFP also provided that
past performance and mission capability, when combined, would be
considered significantly more important than price. RFP S: M-2, at 147.
The RFP described the past performance evaluation factor, which was *[n]ot
applicable to [the] government MEO,* as follows:
The Government will evaluate past performance through an integrated
analysis of those risks and strengths the Government identifies in the
offeror's recent, current and relevant contract performance. The
Government will place more weight and consideration on more relevant and
recent past performance information. Essentially, the past performance
assessment is the Government's confidence, based upon the offeror's
performance and experience record, that the offeror will successfully
perform the requirements of this acquisition as proposed. For the
purposes of this evaluation, the term *offeror* includes the offeror and
team members (e.g., subcontractors, key personnel).
RFP S: M-3.a, at 147.
The RFP provided that an offeror's past performance would receive one of
the following ratings: high confidence, significant confidence,
confidence, unknown confidence, little confidence, or no confidence. The
following definitions are relevant to this protest:
Significant Confidence: The Offeror's past performance is consistently
very good, particularly on recent and relevant projects as defined in the
[phase 1] RFQ. The Offeror possesses substantial experience in facilities
of comparable complexity. Comments from prior customers, with few or no
exceptions, reflect very good performance and high levels of customer
satisfaction in both operation and maintenance of complex facilities with
elevated system availability/criticality requirements. There is little
doubt, based on demonstrated past performance, that the Offeror will
successfully operate and maintain the H[&]RP with little Government
oversight or intervention.
Confidence: The Offeror's past performance is above average, particularly
on recent and relevant projects as defined in the [phase 1] RFQ. The
Offeror has adequate experience in facilities of comparable complexity.
Comments from prior customers, with few or no exceptions, reflect above
average performance and a moderately high level of customer satisfaction
in both operation and maintenance of complex facilities with elevated
system availability/criticality requirements. Episodes of poor
performance have been infrequent and isolated. The Government has
confidence based on demonstrated past performance, that the Offeror will
successfully operate and maintain the H[&]RP with a moderate amount of
Government oversight or intervention.
Unknown Confidence: No performance record identifiable (see [Federal
Acquisition Regulation] FAR [S:] 15.305). This is a neutral rating. This
rating does not hinder nor help the offeror.
Little Confidence: The Offeror's past performance is average or below.
The Offeror's performance on recent and relevant projects as defined in
the [phase 1] RFQ is acceptable but undistinguished. The Offeror has
limited experience in facilities of comparable complexity. Comments from
prior customers, with few or no exceptions, indicate adequate performance
and an acceptable level of customer satisfaction in both operation and
maintenance of complex facilities with elevated system
availability/criticality requirements. Episodes of poor performance have
been recurring or moderately severe. The Government has substantial
doubt, based on demonstrated past performance, that the Offeror will
successfully operate and maintain the H[&]RP with a substantial amount of
Government oversight or intervention.
No Confidence: The Offeror's past performance is well below average. The
Offeror's performance on recent and relevant projects as defined in the
[phase 1] RFQ has been deficient in one or more ways. The Offeror['s]
past performance in facilities of comparable complexity is unacceptable.
Comments from prior customers, with one or more exceptions, are generally
negative and indicate a pattern of poor performance and customer
dissatisfaction in both operation and maintenance of complex facilities
with elevated system availability/criticality requirements. Episodes of
poor performance have been frequent, recurring and severe. The Government
has extreme doubt that the Offeror will successfully perform the required
effort. Regardless of the degree of the Government oversight or
intervention, successful performance is doubtful.
RFP S: M-3.b, at 147-48.
The RFP continued by describing the past performance evaluation factor as
follows, in relevant part:
The Government will also be evaluating the experience of the Offeror with
the type equipment and the complexity of the systems that are represented
at the [H&RP] (see [S:] L-5.1.2) to assess the Offeror's ability to
perform the requirements of operating and maintaining the plant. The more
experience an Offeror has with equipment and systems similar to those at
the H&RP, the more relevant that past performance will be considered and
thus, the higher the Government's confidence will be in the ability of the
Offeror to properly operate and maintain the H&RP in accordance with the
requirements of this solicitation. Conversely, [t]he lack of experience
will also be considered and shall have an adverse effect on the
Government's confidence in the Offeror['s] ability to operate and maintain
the H&RP.
RFP S: M-3.c, at 148-49.
As referenced above, S: L-5.1.2 of the RFP stated that phase 2 past
performance submissions were distinguishable from those submitted in phase
1 in that they concentrate on *specific past performance experience
related to equipment and systems of similar size and complexity to that of
the Pentagon [H&RP],* whereas phase 1 past performance submissions focused
on corporate experience with similar size facilities and the
qualifications of project personnel. RFP S: L-5.1.2, at 139. In phase 2,
the RFP at S: L-5.1.2 required an offeror to demonstrate experience with
13 specific types of equipment and systems, for example, experience in
(1) *operating large centrifugal chiller[s] (>1000 tons)*; (2) *operating
and maintaining large dual fuel boilers (>20,000 lbs./hour @>100 psig)*;
(3) *operating and maintaining underground steam distribution system
experience*; and (4) *operating and maintaining large (>10,000
gallons/day) sewage lift stations.*
Id. at 139-140.
In phase 2, for purposes of assessing the relevance of an offeror's past
performance, the RFP referred back to the phase 1 definition of relevance
(set out above) at S: L‑4.1.b of the RFP. RFP S: M‑3.c(i), at
149.
In evaluating an offeror's phase 2 proposal under the mission capability
evaluation factor, the RFP advised that a firm's written proposal and oral
presentations (both equally weighted), including responses to impromptu
scenarios, would be considered. RFP S: M-4.a, at 150. The RFP stated
that a firm's mission capability would be assigned one of the following
ratings: high confidence, significant confidence, confidence, unknown
confidence, little confidence, or no confidence.
As relevant here, the *confidence* rating was defined as follows:
The Offeror's mission capability approach is above average. The proposed
method of operating and maintaining the H[&]RP leaves confidence that
optimum levels of quality, operational efficiency and continuity of
operations will be achieved with some Government oversight.
RFP S: M-4.b, at 150.
The RFP stated that an offeror's proposed price would be evaluated for
fairness and reasonableness, as well as to determine the offeror's
understanding of the requirements as reflected in the RFP. RFP S: M-6.a,
at 153.
Finally, the RFP provided that the cost of the phase 2 private-sector
proposal selected as representing the best value to the government would
be compared to the cost of the government's MEO. RFP S: M-2, at 146.
On June 11, 2002, CESI, as the prime contractor, and C&E, as its
subcontractor, submitted a phase 2 proposal. AR, Tab 11, CESI's Phase 2
Proposal--Cover Letter, June 10, 2002, at 1. (This was the only phase 2
proposal received.) The TEC evaluated CESI's phase 2 proposal. For past
performance, CESI received a *little confidence* rating and for mission
capability, CESI received a *confidence* rating. AR, Tab 13, TEC
Consensus Evaluation Report, Aug. 1, 2002, at 8. For both past
performance and mission capability, the TEC consensus evaluation report
listed *strengths* and *weaknesses* (which were not characterized as
*significant* weaknesses) in CESI's proposal; under the sections in the
TEC consensus evaluation report for *deficiencies* and *areas requiring
clarification,* the TEC inserted the word *none* in each instance. Id. at
12-14, 19-21.
In its narrative for past performance, the TEC stated:
After considering all of the offeror's (both prime contractor and
subcontractor) past experiences, the evaluation panel can barely qualify
this offeror. But when applying the Government's 'relevant' criteria to
the offeror, the TEC could not qualify this offeror.
Id. at 3.
In assigning the *little confidence* rating to CESI's proposal in the area
of past performance, the TEC concluded that CESI had *limited experience
on equipment and systems of similar size and complexity of that found in
the Pentagon [H&RP].* Id. at 4. The TEC recommended as follows:
The evaluation team, after a thorough evaluation of the proposal, cannot
recommend further consideration of [CESI]. The past performance cited by
the offeror falls so far short of the requirements cited in the RFP that
[CESI] would be ill served by continuing to expend bid and proposal costs
pursuing this A-76 competition. The team reaches this conclusion with
reluctance but the criteria cited in the RFP applied in the manner cited
in Section M, commands the conclusion that [CESI] has no past performance
that even approaches the size and complexity of the Pentagon H&RP.
[CESI's] experience in maintaining the smaller and less complex commercial
grade chillers, boilers and electrical distribution systems used in
commercial office space, requires a fundamentally different skill set than
operating and maintaining the larger and more complex industrial equipment
found in the H&RP.
. . . . .
The evaluation team has little confidence in [CESI's] ability to perform
and therefore recommends the elimination of [CESI] from further
consideration.
Id. at 9.
Following the completion of the TEC's consensus evaluation report, the SSA
was briefed. By letter dated August 7, the SSA advised CESI that its
proposal was eliminated from further consideration. More specifically,
the SSA stated as follows:
This evaluation revealed that the great majority of your experience is in
smaller and less complex commercial applications. Your past performance
in the commercial setting, while praiseworthy, is of limited relevance to
an industrial facility like the Pentagon H&RP. This lack of experience in
large-scale industrial applications did not allow the technical evaluation
committee to develop the requisite confidence in your ability to perform
to permit further consideration of your proposal.
AR, Tab 14, SSA's Letter to CESI, Aug. 7, 2002.
Following its debriefing, CESI filed this protest.
ISSUE AND ANALYSIS
As stated above, CESI was the only commercial offeror to submit a proposal
during the phase 2 portion of the private-sector competition. Contrary to
the agency's position that CESI's phase 2 proposal was technically
unacceptable based on the firm's record of past performance, CESI argues
that its proposal was technically acceptable in all respects and,
therefore, should be allowed to compete against the government's MEO.
CESI maintains that nothing in the contemporaneous evaluation record
reasonably supports the agency's decision to eliminate its proposal from
consideration.
In reviewing a protest against an agency's proposal evaluation, we will
consider whether the evaluation was reasonable and consistent with the
terms of the solicitation and applicable statutes and regulations. CWIS,
LLC, B-287521, July 2, 2001, 2001 CPD P: 119 at 2. In order to understand
why the agency rejected CESI's phase 2 proposal as technically
unacceptable, our Office conducted a hearing in which the representative
of the TEC, the contracting officer, and the SSA testified.
In rejecting CESI's phase 2 proposal as technically unacceptable, the
agency relied on the conclusions of the TEC and the SSA that CESI's
experience does not qualify the firm for award.[5] In this respect, the
agency concludes that *[CESI's] experience in maintaining the smaller and
less complex commercial grade chillers, boilers and electrical
distribution systems used in commercial office space, requires a
fundamentally different skill set than operating and maintaining the
larger and more complex industrial equipment found in the H&RP.* AR, Tab
13, TEC Consensus Evaluation Report, at 9; see also AR, Tab 14, SSA's
Letter to CESI (*[CESI's] past performance in the commercial setting . . .
is of limited relevance to an industrial facility like the Pentagon
H&RP.*). However, we do not believe that the contemporaneous evaluation
record reasonably supports the agency's conclusion.
Regarding the phase 2 evaluation of an offeror's past performance, the RFP
stated that the agency would evaluate the offeror's experience with the
type equipment and the complexity of the systems represented at the
Pentagon H&RP, with specific reference to 13 types of equipment and
systems described in S: L-5.1.2 of the RFP. RFP S: M-3.c, at 148-49.[6]
In its phase 2 proposal, CESI addressed its experience with each of these
requirements. At the hearing, the representative of the TEC could not
point to any requirement, as defined in S: L-5.1.2, that CESI did not
meet. In fact, the TEC representative confirmed that CESI satisfied each
of the 13 requirements as defined in S: L-5.1.2 by having at least one
record of past performance for each of the listed requirements. Tr. at
102-03, 106.[7] The TEC representative also confirmed that the agency
neither received, nor was aware of, any negative past performance reports
for CESI, while the contracting officer confirmed that weaknesses in
CESI's proposal were not characterized as significant; that there were no
noted deficiencies in CESI's proposal; and that there were no areas in
CESI's proposal requiring clarification. Tr. at 115, 124, 126.
Under the terms of the RFP, CESI's phase 2 proposal was never found
technically unacceptable. While CESI's proposal under the past
performance evaluation factor received a *little confidence* rating, which
was defined in the RFP as *acceptable but undistinguished,* this is not an
*unacceptable* rating and, in fact, the agency concedes that a rating of
*little confidence* is *definitionally an acceptable rating.* Agency's
Post‑Hearing Comments at 9.[8] The agency even concedes that *there
is a logical defect between a rating of 'Little Confidence' and the
decision to exclude [CESI's] proposal from further consideration.* Id.
The bottom line is that CESI's proposal in the area of past performance
was determined technically acceptable in accordance with the RFP's
evaluation scheme.
With regard to the agency's basis for the rejection of CESI's phase 2
proposal--that CESI lacked *industrial* experience--it is significant that
under phase 1, with the same records of experience, CESI, as well as C&E,
each individually received accolades, as quoted above, from the same SSA
who subsequently eliminated the phase 2 proposal of the team of CESI and
C&E from further consideration. In rejecting CESI's phase 2 proposal on
the basis that CESI had commercial, but not industrial, experience, we
find that the agency used an evaluation factor--*industrial*
experience--that was not set forth in either S: L or S: M of the RFP, a
point that the agency ultimately concedes. Tr. at 36-37; Agency's
Post-Hearing Comments at 3. (It is clear from the record that when
referring to *industrial* experience, the agency meant the actual Pentagon
H&RP requirements. AR, Tab 13, TEC Consensus Evaluation Report, at 9; AR,
Tab 14, SSA's Letter to CESI.) The agency further acknowledges that it
would be difficult for a commercial offeror to establish experience with
the actual Pentagon requirements and, for this reason, the RFP was written
in a manner not only to meet the agency's needs, but also to achieve
competition. See Tr. at 94, 175-76.
Finally, the record does not contain any meaningful explanation from the
agency addressing why *industrial* experience at the Pentagon is
considered so materially different from CESI's *commercial* experience at,
for example, the Ronald Reagan Building and International Trade Center.
While the agency posits that *in reality, the Pentagon is used to and
demands almost zero outage [of its heating and refrigeration plant
systems],* Tr. at 13, the agency has not shown why the same cannot
reasonably be said for any of the other government facilities successfully
operated, maintained, and repaired by CESI, for which, again, there were
no reported problems with CESI's actual performance.[9] As explained
above, the agency structured the experience requirements in the RFP so as
to obtain proposals from commercial offerors which had experience similar
to (as opposed to identical to) the Pentagon H&RP requirements, and,
consistent with the agency's approach in that regard, CESI's proposal had
been favorably evaluated as acceptable throughout the entire
private‑sector competition. In our view, the agency lacked a
reasonable basis to decide, in the penultimate step of this public/private
competition, to depart from the RFP's stated evaluation scheme and to
impose a standard that eliminated CESI's proposal (and that presumably
would have eliminated any private-sector firm's proposal) from the
competition, thus preventing the agency from moving forward to a
public/private cost comparison.
CONCLUSION AND RECOMMENDATION
On this record, where the agency has failed to provide any reasonable
basis to support its decision to reject CESI's technically acceptable
phase 2 proposal, we sustain the protest and recommend that the agency
reinstate CESI's proposal into the competition[10] and compare its
proposal with the proposal of the government's MEO in accordance with the
procedures set forth in OMB Circular A-76 and the Circular's RSH. We also
recommend that CESI be reimbursed the reasonable costs of filing and
pursuing the protest, including reasonable attorneys' fees. Bid Protest
Regulations, 4 C.F.R. S: 21.8(d)(1) (2002). CESI's certified claims for
costs, detailing the time expended and costs incurred, must be submitted
to the agency within 60 days of receiving this decision.
The protest is sustained.[11]
Anthony H. Gamboa
General Counsel
------------------------
[1] The procedures for determining whether the government should perform
an activity in-house, or have the activity performed by a contractor, are
set forth in OMB Circular A-76 and the Circular's Revised Supplemental
Handbook (RSH), which have been made expressly applicable to DOD and its
military departments and agencies. See 32 C.F.R. S: 169a.15(d) (2002).
The process set out in the Circular and the RSH broadly encompasses the
following steps in conducting the public/private competition. First,
after the performance work statement (PWS) has been drafted, the agency
ensures, through certification by an independent reviewing official, that
the government's in-house management plan satisfies the requirements of
the PWS. See RSH, part I, ch. 3, S: I. (The MEO reflects the in-house
management plan, which is prepared by a study team and sets out the
changes that will be made to the current organization.) Second, there is
a competition among private-sector offerors, which is conducted much as
any competed federal procurement is conducted. Third, if that competition
is done on the basis of a comparative technical evaluation (that is, if a
price/technical tradeoff is contemplated), the government's in-house plan
is compared with the winning private-sector proposal to assess whether or
not they are based on a comparable level of performance and performance
quality--and, if not, to make all changes necessary to make the level of
the in-house plan comparable to that of the private‑sector
proposal. Id. S: H.3.d, e. Finally, once the playing field is leveled,
there is a cost comparison between the private-sector proposal and the
in‑house plan. Id. S:S: H, J. This protest involves the
private-sector competition only.
[2] CESI, which was incorporated in 1991, is the professional engineering,
operations, and maintenance arm of The Charles E. Smith Companies, which
was founded in the 1940s and specializes in, among other things, the
development and ownership of more than 50 million square feet of Class A
office properties. AR, Tab 5, CESI's Phase 1 Proposal--Cover Letter, June
12, 2001, at 1. CESI states that it is the largest manager and maintainer
of federal facilities in the Washington, DC region. Id. at 2. Of
significance here, CESI manages the Ronald Reagan Building and
International Trade Center which, at 3.2 million square feet, is the
federal government's second largest office building (with the Pentagon
being the first). Id. CESI also manages, for example, both National
Archives buildings, the Treasury's Office of Thrift Supervision, two
headquarters sites for the Federal Deposit Insurance Corporation, the
Naval Research Lab, the Washington Navy Yard, the main building for the
Department of State, Blair House, the regional headquarters for the
Federal Bureau of Investigation, and the Secret Service Building. Id.
CESI characterizes these facilities as mission-critical. Id. at 2-3.
C&E, a small business concern, is a total facility maintenance company
that provides a wide range of operations, maintenance, and engineering
services and water treatment products. AR, Tab 4, C&E's Phase 1 Proposal,
June 12, 2001, at V.1.
[3] The source selection plan for phase 1 provided that an offeror's past
performance and management approach could receive a rating of high
confidence, significant confidence, confidence, unknown confidence
(neutral), little confidence, or no confidence. AR, Tab 2, Source
Selection Plan for Phase 1, Apr. 30, 2001, app. C, at 22-24. These
ratings have the same definitions in phase 1 and phase 2. The relevant
definitions are set out in the text later in this decision.
[4] The SSA's undated memorandum for CESI basically quotes verbatim from
the TEC's report for phase 1 proposals. In this memorandum, the SSA did
not indicate any concerns with CESI's experience; to the contrary, the SSA
adopted the proposal strengths listed by the TEC for CESI. (The SSA did
the same things in his undated memorandum for C&E--quotes from the TEC's
report, lists no concerns with C&E's experience, and adopts the proposal
strengths listed by the TEC for C&E.
[5] Under the RFP's past performance evaluation factor, the agency appears
to be more concerned with CESI's alleged lack of relevant experience,
rather than the quality of its performance; the agency neither received,
nor was aware of, any negative past performance reports for CESI. Hearing
Transcript (Tr.) at 115.
[6] To the extent the agency argues that S: C of the RFP describes *the
type equipment and the complexity of the systems* at the Pentagon H&RP,
Agency's Post‑Hearing Comments, Nov. 19, 2002, at 3-4, we point out
that S: M-3.c of the RFP specifically referenced S: L-5.1.2, not S: C.
Moreover, at the hearing, in response to GAO's question concerning where
in the RFP a private‑sector offeror was supposed to look to find out
what the agency was looking for in terms of equipment and systems similar
to those at the Pentagon H&RP, the representative of the TEC responded,
*[S:] L‑5.1.2.* Tr. at 54. As explained by the TEC representative,
*[t]he size and complexity [in S: L-5.1.2 of the RFP] in some cases is
50 times smaller than what you experience at the Pentagon; in other cases
about a quarter to a half.* Tr. at 36. When asked why S: L-5.1.2 was
written in that manner (i.e., less than what the actual requirements were
at the Pentagon), the TEC representative responded, *[t]o try to get as
much competition as possible.* Id.
[7] At the hearing, the TEC representative initially argued that CESI
failed to meet the S: L‑5.1.2 requirement for *operating and
maintaining underground steam distribution system experience* based on the
firm's experience with the National Archives underground steam
distribution system because that system was not connected to boilers that
were greater than 20,000 lbs./hour @>100 psig. Tr. at 103-06. However,
it was pointed out to the TEC representative that S: L-5.1.2 of the RFP
listed two separate requirements--the first for large dual fuel boilers
*>20,000 lbs./hour @>100 psig* and the second for *underground steam
distribution system experience,* without any corresponding numerical
threshold. Tr. at 167-68, 170-74. When queried about where the RFP
stated that in order to meet the underground steam distribution
requirement, an offeror had to *have a boiler make something greater than
100 pounds,* the TEC representative responded, *That's an interpretation,
mine.* Tr. at 167. In any event, the TEC representative stated that even
if CESI did not meet the underground steam distribution requirement, this
alone would not have been enough to find CESI's proposal technically
unacceptable. Tr. at 106.
We also note that to the extent the agency would have liked to have seen
CESI satisfy all of the S: L-5.1.2 requirements at a single facility, the
agency concedes that experience at a single facility was not a requirement
of the RFP. Tr. at 93-94. Further, the TEC representative testified that
there is *no other facility that . . . has everything that the Pentagon
has; and so for competition, [the agency] wrote [the] spec to leave the
door open as much as [it could].* Tr. at 94; see also Tr. at 175-76.
However, the agency does not contend that the specifications, even if
relaxed in that way, do not reflect its needs.
[8] Under the terms of the RFP, only the *no confidence* rating was
defined as *unacceptable* in terms of an offeror's record of past
performance.
[9] To the extent the agency believes that there is a material difference
in the Pentagon heating and refrigeration plant requirements, as compared
to similar requirements performed by CESI at other locations, the agency
was aware of the alleged shortcoming in CESI's experience as early as the
evaluation of CESI's phase 1 proposal, as discussed above. Nevertheless,
the agency did not raise this matter with CESI until it eliminated the
firm's phase 2 proposal from further consideration.
[10] Since CESI submitted the only technically acceptable proposal, there
was no basis for the agency to conduct a price/technical tradeoff to
determine best value.
[11] In light of our decision and recommendation, we need not address
CESI's other arguments involving, for example, the agency's evaluation of
CESI's oral presentations under the mission capability factor (for which
CESI's proposal received a *confidence,* i.e., above average, rating); the
agency's failure to consider CESI's price; and the agency's failure to
conduct meaningful discussions/exchanges in the area of past performance.