TITLE: AST Environmental, Inc., B-291567, December 31, 2002
BNUMBER: B-291567
DATE: December 31, 2002
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AST Environmental, Inc., B-291567, December 31, 2002
Decision
Matter of: AST Environmental, Inc.
File: B-291567
Date: December 31, 2002
Richard A. Ciambrone, Esq., Thompson Hine, for the protester.
Mark R. Weidner for Water Quality Systems, Inc., the intervenor.
John D. Inazu, Esq., and Carol A. Satterfield, Esq., Department of the Air
Force, for the agency.
Peter Verchinski and James A. Spangenberg, Esq., Office of the General
Counsel, GAO, participated in the preparation of the decision.
DIGEST
Protest that agency failed to perform an adequate price realism analysis
is denied where agency's price analysis was reasonable and legally
sufficient.
DECISION
AST Environmental, Inc. protests the award of a contract to Water Quality
Systems, Inc., under request for proposals (RFP) F33601-02-R-9035, issued
by the Department of the Air Force for all labor, material, and equipment
necessary to clean and monitor oil separators and settling basins at
Wright Patterson Air Force Base. Contending that Air Force's price
realism analysis was inadequate, AST asserts that Water Quality's proposal
should have been rejected because its proposed price was unrealistically
low.
We deny the protest.
The RFP contemplated the award of a requirements contract for a base
period and 4 option years. Proposals were to be evaluated for technical
acceptability, and then, among technically acceptable proposals, award was
to be made on a *best value* basis, with a tradeoff permitted between past
performance and evaluated price. The RFP stated that the agency would
evaluate the proposed prices for realism and reasonableness, and that the
agency might reject proposals where the prices were unreasonably high or
so low as to indicate a lack of understanding of the work to be performed.
The agency received offers from five firms, including AST (the incumbent
contractor) and Water Quality (an incumbent contractor to AST). The
agency awarded the contract to Water Quality, and AST protested.
Specifically, AST protests that the Air Force did not follow the
evaluation criteria laid out in the solicitation because the agency failed
to consider the lack of realism in the prices proposed by the firms who
submitted the three lower priced proposals. AST appears to believe that
those proposals should have been rejected due to their allegedly
unrealistic prices.
Price realism is not ordinarily a consideration in fixed-price contracts,
since the risk of performing the contract at the proposed price is borne
by the contractor. However, an agency may decide to use price realism in
the competition for a fixed-price contract to assess the risk of poor
performance in an offeror's approach or to measure an offeror's
understanding of the solicitation's technical requirements. PHP
Healthcare Corp., B-251933, May 13, 1993, 93-1 CPD P: 381 at 5. The
nature and extent of an agency's price realism analysis are matters within
the agency's discretion, and our review of an agency's price realism
evaluation is limited to determining whether it was reasonable and
consistent with the solicitation's evaluation criteria. Uniband, Inc.,
B-289305, Feb. 8, 2002, 2002 CPD P: 51 at 4.
Here, offerors proposed fixed unit prices for eight tasks, and, as noted
above, the solicitation stated that the agency would evaluate proposed
prices for realism, in particular, to ensure that prices are not so low as
to indicate a lack of understanding of the work to be performed. Having
reviewed the record, we see no basis to find the Air Force's price
analysis legally objectionable. Each offeror submitted detailed
information about its pricing, and the contracting officer compared the
total prices to each other, as well as the estimated total labor hours and
the technical approach for performing the work. Agency Report, Tab 2(g),
Price Competition Memorandum, at 3-4. The contracting officer noted that
AST and Water Quality both have first-hand knowledge of the work, and yet
proposed significantly different prices, with AST's prices substantially
higher. Id. The contracting officer noted in particular that the
offerors assumed a similar number of labor hours to perform the work. Id.
at 4. On this record, we see nothing objectionable in the agency's
ultimate conclusion that Water Quality's prices were not so low as to
indicate a lack of understanding of the work, and that they were
realistic.
AST nonetheless contends that the three lower-priced proposals (including
that of Water Quality) were unrealistically low because they failed to
account for the proper amount of water-disposal required under the
solicitation. In AST's view, the lower-priced proposals were premised on
an underestimate of the amount of liquid required to be disposed of under
the contract, so that the firms underpriced their offers. The only way an
offeror could have learned of the proper amount, AST alleges, was to have
attended the site visit. That site visit *revealed information necessary
to prepare a realistic bid proposal.* Protester's Comments at 2.
AST's argument is untimely. The essence of AST's contention is that a
site visit was critical to its competitors' submitting proposals with
prices that reflect what AST views as the actual amount of liquid required
to be disposed under the contract. This is essentially a challenge to the
terms of the solicitation, which did not make attendance at the site visit
mandatory. Alternatively, AST's presumably believes that the RFP should
have identified the amount of liquid the contractor would be required to
dispose of, or, at the least, it should have required offerors to disclose
the amount of liquid whose removal their proposed prices reflect (which
AST itself appears not to have disclosed in its proposal). Protests
challenging alleged defects in a solicitation must be filed prior to the
time set for receipt of proposals. 4 C.F.R. S: 21.2(a)(1) (2002). As the
incumbent, AST was uniquely knowledgeable of any such defect here and thus
in a position to protest without waiting to learn that it had lost the
competition. See Allstate Van & Storage, Inc., B‑247463, May 22,
1992, 92-1 CPD P: 465 at 5-6. Because it did not protest the alleged
solicitation defects prior to the closing date, its protest is untimely.
In the protester's response to the agency report, the protester alleges
the Air Force also revealed at the site visit that the liquid from the
basins had to be hauled off base. The past practice had apparently been
to treat the liquid at the site and drain off the wastewater there.
*Based upon that representation from the Air Force representative [that
the contract required water from the basins to be hauled off the base],
AST increased its bid significantly to cover this requirement.*
Protester's Comments at 2. Despite two previous submissions laying out
the effects of the site visit, it was in its comments, for the first time,
that AST mentions this new information, which was allegedly not
ascertainable from the SOW, and learned only at the site visit. This
allegation appears to be inconsistent with the minutes of the site visit
(which refers to the wastewater from the basins being drained off).
Agency Report, Tab 2(f), Site Visit Minutes, at 3. To the extent that AST
is contending that an Air Force representative at the site visit disclosed
a performance requirement not set out in the RFP, AST was aware of an
alleged ambiguity in the RFP that it was required to protest before
proposals were due, so that any protest would now be untimely; in
addition, reliance on the alleged oral advice not reflected in the RFP (or
the site visit minutes) would have been unreasonable. Diamond Aircraft
Indus., Inc., B-289309, Feb. 4, 2002, 2002 CPD P: 35 at 2.
Even if the protest were timely, nothing in AST's argument would cause us
to conclude that the agency's price analysis was deficient. First, the
agency denies that the site visit contained essential information, beyond
what was contained in the RFP itself, necessary to prepare a proposal, and
AST has not presented any evidence to support its assertion to the
contrary. The RFP informed offerors of the amount of liquid the basins
could hold, and the size of the basins found in the statement of work is
the same as what was revealed during the site visit. Second, AST has not
explained why Water Quality is incorrect in its assertion that its work as
an incumbent subcontractor provided it familiarity with the work to be
performed, so that attendance at the site visit was not necessary. Third,
AST's assertion that the amount of liquid to be disposed of is a key
variable in a firm's pricing is undercut by the fact that, in setting out
the components of the pricing structure in its own proposal, AST (unlike
Water Quality) does not appear to have disclosed the amount of liquid the
firm estimated must be removed.
The protest is denied.
Anthony H. Gamboa
General Counsel