TITLE:  Beautify Professional Services Corporation, B-291954.3, October 6, 2003
BNUMBER:  B-291954.3
DATE:  October 6, 2003
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Beautify Professional Services Corporation, B-291954.3, October 6, 2003

   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:   Beautify Professional Services Corporation
    
File:            B-291954.3
    
Date:              October 6, 2003
    
Janice Davis, Esq., Davis & Steele, for the protester.
Donald E. Barnhill, Esq., Law Offices of Barnhill & Associates, for
Southway Services, an intervenor.
Maj. Lawrence M. Anderson, Department of the Air Force, 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 of the award to a firm with a higher past performance rating and a
higher price is sustained where the source selection authority ignored the
protester*s significantly lower price and, as a result, failed to justify
the payment of a substantial price premium.
DECISION
    
Beautify Professional Services Corporation protests the award of a
contract to Southway Services under request for proposals (RFP) No.
F05611-02-R-0027, issued by the Department of the Air Force for custodial
services for the academic area at the United States Air Force Academy in
Colorado Springs, Colorado. Beautify challenges the agency*s decision to
award a contract to an offeror submitting a higher-priced proposal.
    

   We sustain the protest.
    
BACKGROUND
    
The RFP was issued on July 19, 2002, as a total small business set-aside,
commercial item acquisition conducted in accordance with Federal
Acquisition Regulation (FAR) Parts 12 and 15.  The RFP contemplated the
award of a fixed-price contract for the base period and four 1-year option
periods.  The RFP, which included the clause at FAR S: 52.212-2, captioned
*Evaluation--Commercial Items,* stated that the agency would award a
contract to the responsible offeror whose proposal, conforming to the RFP,
was determined most advantageous to the government, with past performance
being of significantly greater importance than price.  (The RFP did not
include any technical evaluation factors.)
    
With respect to past performance, the RFP required an offeror to provide
reference information identifying similar contracts performed by the firm
in its capacity as a prime contractor over the past 3 years; these
contracts were required to exceed an annual total (per contract) of
$2.2 million.  Under the RFP, the agency would contact an offeror*s
references and request that these references complete a written past
performance survey for the firm.  This survey, a sample of which was
included in the RFP, contained 21 questions focusing on specific aspects
of the firm*s past performance (e.g., abilities of the management team;
staffing; quality control; and timeliness of contract performance); for
each question, the reference could assign one of the following past
performance/performance risk ratings:  unsatisfactory/no confidence;
marginal/little confidence; neutral/unknown confidence;
satisfactory/confidence; very good/significant confidence; and
exceptional/high confidence.  As relevant here, the RFP defined a very
good/significant confidence rating as *little doubt exists that the
offeror will successfully perform the required effort,* and the RFP
defined an exceptional/high confidence rating as *essentially no doubt
exists that the offeror will successfully perform the required effort.* 
RFP at 44.  The final additional question--whether the reference would
award another contract to the firm--required the reference to check either
*yes* or *no* and to provide a narrative explanation of the reference*s
answer.
    
Thirty-seven small business concerns, including Beautify and Southway (the
incumbent contractor), submitted proposals by the initial closing time. 
Southway*s proposal received an exceptional/high confidence past
performance rating; Beautify*s proposal received a very good/significant
confidence rating.  Southway*s price ($12,962,825.00) was approximately 25
percent higher than Beautify*s price ($10,353,610.00).  Out of the 37
proposals received, Beautify*s proposal contained the lowest price.
    
In her source selection decision, the chief of infrastructure contracting
(hereinafter referred to as the source selection authority) explained that
*[b]ased on the nature of the requirement, the [Air Force] Academy does
not consider custodial services to be a highly technical/complex effort
and believes either category of past performance (*High Confidence* and
*Significant Confidence*) poses a risk level which is awardable for these
services.*  Agency Report (AR), Tab 16, Original Source Selection
Decision, Jan. 27, 2003, at 3.  The source selection authority continued
by stating, in relevant part, that *[a]lthough Southway*s performance
record indicates *Exceptional/High Confidence* past performance, the
Government cannot justify a trade-off decision that would increase the
contract price by $2,609,215.00--7 percent above the Government estimate,
and 25 percent difference from the lowest priced *Very Good/Significant
Confidence* rating.  Therefore, Southway*s significantly higher price for
its less significantly higher rating, is not considered to be of
additional value above the rating at the price offered by Beautify.*  Id. 
Accordingly, the source selection authority determined that Beautify*s
lower-priced proposal represented the best value to the government.    
    
On January 31, 2003, the agency awarded a contract to Beautify.  On
February 10, Southway filed a protest with our Office challenging the
agency*s evaluation of proposals and the decision to award to Beautify. 
On February 20, the agency advised our Office, as well as Beautify and
Southway, of its decision to take corrective action in response to
Southway*s protest.  More specifically, by letters dated February 24 to
all offerors, including Beautify and Southway, the source selection
authority explained that corrective action would entail a *re-performance
of the past performance evaluations using only the data already received
and originally evaluated.  The Government does not . . . intend to request
any additional past performance data from the offerors, unless required
during the course of re‑evaluation.  The Government does not intend
to open discussions or [to] request a final proposal revision.  Upon the
close of the re-evaluation period a new award decision will be
announced.*  AR, Tab 11, Corrective Action Letters, Feb. 24, 2003.   On
February 26, our Office dismissed Southway*s protest as academic in light
of the agency*s decision to take corrective action.
    
In February, the agency reevaluated each offeror*s past performance.  With
respect to Southway and Beautify, the agency considered one past
performance survey for each firm.[1]  Southway retained its
exceptional/high confidence past performance rating (i.e., essentially no
doubt that Southway could perform) and Beautify retained its very
good/significant confidence rating (i.e., little doubt that Beautify could
perform).
    
More specifically, with respect to Southway, the agency evaluated its
performance as the incumbent contractor.  In the past performance survey
completed for Southway, the reference (the chief of contract services at
the Air Force Academy) assigned 17 exceptional/high confidence past
performance ratings, 2 very good/significant confidence ratings, and 2
*not applicable* ratings.  AR, Tab 8, Southway*s Past Performance
Evaluation, at 3-4.  For the last question, the reference stated that he
would award another contract to Southway, commenting, among other things,
that this firm is *the best custodial contractor* the Air Force Academy
has ever had; noting that Southway is *very customer oriented* and that
the firm*s management is *very pro-active in identifying and solving
problems*; and concluding that *[t]his is a very demanding contract and
[Southway] ha[s] met the challenge.*  AR, Tab 19, Air Force Academy Past
Performance Survey for Southway, at 3-4.
    
With respect to Beautify, the agency evaluated its performance of
janitorial and related services at the Tobyhanna Army Depot in
Pennsylvania.  The depot*s contract administrator provided past
performance information for Beautify, but did not do so using the past
performance survey contained in the RFP and sent to her for completion. 
In this regard, on the facsimile cover sheet transmitting her past
performance assessment for Beautify, the depot*s contract administrator
wrote that she was submitting the *Performance Assessment Report completed
in accordance with [an Army regulation], at [internet website], which is
the Army*s central repository for past performance information for Service
and Information Technology contracts*; she concluded by stating that she
*hope[s] it [i.e., the referenced Performance Assessment Report, as
opposed to the 22-question survey contained in the RFP] will be sufficient
for [the Air Force*s] needs.*  AR, Tab 20, Tobyhanna Past Performance
Survey for Beautify, at 2.  In this performance assessment report,
Beautify was rated in five categories, receiving two *exceptional* ratings
for management of key personnel and miscellaneous services and receiving
three *very good* ratings for quality of product/service, schedule, and
business relations.[2]  In the two areas where Beautify received
exceptional ratings, the depot*s contract administrator commented, among
other things, that Beautify has *maintained a good team of managers who
are well trained in the contract requirements, cooperative, and
responsive*; that Beautify*s *work is well monitored and performed in a
timely manner with customer complaints addressed and/or corrected
quickly*; and that Beautify*s performance of *additional and emergency
services are performed on short notice and within rigid time frames.*  Id.
at 6.  In the three areas where Beautify received very good ratings, the
depot*s contract administrator commented, for example, that Beautify*s
performance *meets all [of] the contractual requirements*; that Beautify
*follows the schedule of cleaning required by the contract in a timely and
efficient manner*; and that Beautify *maintains an effective quality
control system and record keeping[;] [p]roblems and corrective actions are
identified and resolved in a timely manner[; and] [c]ustomer satisfaction
is high [as] demonstrated by letters of commendation and appreciation.* 
Id.
    
In her revised source selection decision, the source selection authority
explained that in accordance with the terms of the RFP, which provided
that past performance was of significantly greater importance than price,
she determined that Southway*s proposal represented the best value to the
government.  In this respect, the source selection authority noted that
Southway and one other firm received exceptional/high confidence past
performance ratings, and that within this rating category, because
Southway submitted the lower price, Southway was selected for award.  The
source selection authority continued that *[b]ased on the nature of the
requirement and the evaluation criteria, the [Air Force] Academy has
determined that the category of *Exceptional/High Confidence* is the
appropriate risk level which is awardable for these services.  Due to the
high visibility and standards that the . . . Academy has set, as the *show
case* for the [Air Force], the [selection of Southway] is justified.*  AR,
Tab 8, Revised Source Selection Decision, Apr. 8, 2003, at 3.  In her
source selection decision, the source selection authority did not make any
reference to the fact that Beautify*s price was significantly less than
Southway*s price or that Beautify submitted the overall lowest-priced
proposal.  On June 17, a contract was awarded to Southway.  Following its
debriefing, Beautify filed this protest.
    
ISSUE AND ANALYSIS
    
Beautify challenges the source selection authority*s revised past
performance/price tradeoff that resulted in the award to Southway at a
substantial price premium.  Protester*s Comments, Aug. 1, 2003, at
11-24.[3]
    
An agency must consider cost or price to the government in evaluating
competitive proposals and in making its source selection decision.  10
U.S.C. S: 2305(a)(3)(A)(ii) (2000); FAR S: 15.101-1(c).  In a best value
procurement, it is the function of the source selection authority to
perform a price/non-price factor tradeoff, that is, to determine whether
one proposal*s superiority under the non-price factor is worth a higher
price.  This tradeoff process allows an agency to accept other than the
lowest-priced proposal.  In this respect, the perceived benefit of the
higher-priced proposal must merit the additional price and the rationale
for the tradeoff must be documented in the file.  FAR S: 15.101-1(c). 
Where, as here, the RFP identifies past performance and price as
evaluation factors, it is the role of the source selection authority to
determine whether a proposal submitted by an offeror with a better past
performance rating is worth a higher price.  We will review the selection
decision to ensure that it was reasonable and consistent with the
evaluation scheme set forth in the solicitation.  CSE Constr., B-291268.2,
Dec. 16, 2002, 2002 CPD P: 207 at 5-6; A. G. Cullen Constr., Inc.,
B-284049.2, Feb. 22, 2000, 2000 CPD P: 45 at 4.  In this case, while the
RFP provided that past performance was of significantly greater importance
than price, we conclude that the source selection authority*s decision to
award to Southway at a 25‑percent price premium, as opposed to
Beautify, a firm which submitted the overall lowest-priced proposal and
which received a very good/significant confidence past performance rating,
is materially flawed.
    
The record shows that in making her revised source selection decision, the
source selection authority limited her consideration to the two firms--one
of which was Southway--that received exceptional/high confidence past
performance ratings.  As between these two firms, since Southway submitted
the lower price, the source selection authority selected Southway for
award.  This was the extent of the source selection authority*s
consideration of price, which we find improper.
    
More specifically, in making her revised past performance/price tradeoff,
the record shows that the source selection authority ignored, contrary to
statute and regulation, as cited above, Beautify*s significantly lower
price vis-`a-vis Southway*s higher past performance rating, as well as the
fact that Beautify, which received a very good/significant confidence
rating, submitted the lowest price among all competitors.  There is
nothing in the source selection document that suggests that the source
selection authority believed that Beautify*s significantly lower price in
this fixed‑price, commercial item acquisition reflected any lack of
understanding by Beautify of the RFP requirements or that Beautify was
otherwise incapable of performing the requirements.[4]  On this record, we
conclude that the source selection authority*s revised tradeoff decision
was materially flawed because she inexplicably gave no consideration to
Beautify*s low price in relation to Southway*s higher past performance
rating (which was only one rating category higher than Beautify*s rating)
and, as a result, she failed to document why it was worth paying a
25-percent price premium to Southway.[5]
      
On this record, we sustain the protest.  We recommend that the agency
perform another past performance/price tradeoff, considering Beautify*s
low price in light of this decision.[6]  If a firm other than Southway is
selected for award, Southway*s contract should be terminated and award
made to that other firm.  We also recommend that Beautify 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) (2003).  Beautify*s certified claim 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.
    
Anthony H. Gamboa
General Counsel   
    
    

   ------------------------

   [1] For each of these firms, four past performance surveys were submitted;
however, the agency determined that only one survey for each firm was
relevant.  In this regard, the agency did not evaluate past performance
surveys covering contracts less than $1.9 million (the RFP requirement of
$2.2 million less 10 percent) and surveys corresponding to contracts under
which these firms were subcontractors, not prime contractors.
[2] There was a sixth category--cost control--which is not relevant to the
discussion here.  
[3] By facsimile notice dated August 4, 2003, GAO requested that the
agency respond by August 11 to Beautify*s supplemental protest (which
involved a challenge to the evaluation of the firm*s past performance, to
be discussed below) and to Beautify*s comments, which contained the
challenge to the revised tradeoff, as stated above.  In its August 11
submission, the agency responded to the supplemental protest, but not to
the arguments made by Beautify in its comments regarding the revised
tradeoff.
[4] In her statement included in the administrative report responding to
the protest, the contracting officer states that Beautify did not have
experience in athletic field, swimming pool, and stadium cleaning. 
Contracting Officer*s Statement, July 8, 2003, at 5.  However, we note
that Beautify*s alleged lack of experience in these areas is not discussed
by the source selection authority in her source selection document.
[5] We think it is significant to point out that in the original source
selection decision, where Beautify*s low-priced proposal was selected for
award, the source selection authority concluded that there was no
meaningful difference in terms of performance risk between a firm which
received an exceptional/high confidence rating versus a firm which
received a very good/significant confidence rating.  In this context, the
source selection authority has provided no meaningful explanation as to
why she now believes that only a firm receiving an exceptional/high
confidence rating could perform these commercially available custodial
services.
[6] In its supplemental protest, Beautify argued that its past performance
was not reasonably evaluated by the Air Force because the contract
administrator at the Tobyhanna Army Depot did not complete the RFP*s
22-question past performance survey.  Beautify argues that had its past
performance been evaluated in 22 specific areas, as opposed to just a
handful of more general areas, as described above, the firm would have
received an exceptional/high confidence past performance rating, as
opposed to a very good/significant confidence rating and, considering its
low price, Beautify maintains that it would have received the award. 
Beautify has raised a legitimate concern and, in light of our
recommendation for corrective action, we think the Air Force should
request that the depot*s contract administrator (the only reference
considered for Beautify) complete the RFP*s 22‑question past
performance survey and that the Air Force use this survey to reevaluate
Beautify*s past performance prior to making a new past performance/price
tradeoff in this procurement.