TITLE: Enola-Caddell JV, B-292387.2; B-292387.4, September 12, 2003
BNUMBER: B-292387.2; B-292387.4
DATE: September 12, 2003
**********************************************************************
Enola-Caddell JV, B-292387.2; B-292387.4, September 12, 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: Enola-Caddell JV
File: B-292387.2; B-292387.4
Date: September 12, 2003
Thomas E. Abernathy, IV, Esq., Smith, Currie & Hancock, for the protester.
Gary L. Brooks, Esq., National Archives and Records Administration, and
John W. Klein, Esq., and Kenneth Dodds, Esq., Small Business
Administration, for the agencies.
Jennifer D. Westfall-McGrail, Esq., and Christine S. Melody, Esq., Office
of the General Counsel, GAO, participated in the preparation of the
decision.
DIGEST
1. Protester was not prejudiced by downgrading of its technical
evaluation rating from excellent to good where, based on its higher price,
it would not have been in line for award even had it received technical
rating of excellent.
2. Pursuant to Small Business Administration guidance, small business
that is not a HUBZone small business cannot benefit from application of
the HUBZone price evaluation preference to gain the award of a contract.
DECISION
Enola-Caddell JV, a mentor-protege joint venture consisting of Enola
Contracting Services, Inc., a small disadvantaged business (SDB) that is
also a Historically Underutilized Business Zone (HUBZone) small business
concern, and Caddell Construction Co., Inc., a large business, protests
the award of a contract to Batson-Cook Company under request for proposals
(RFP) No. NAMA02SEM0009, issued by the National Archives and Records
Administration (NARA) for construction of an archives facility in Morrow,
Georgia. Enola-Caddell contends that the agency improperly downgraded its
technical evaluation rating based on Enola*s lack of experience and
applicable past performance.
We deny the protest.
The RFP, which was issued on an unrestricted basis on November 15, 2002,
contemplated the award of a fixed-price contract to the offeror whose
proposal represented the best value to the government, with technical
factors significantly more important than price. Technical factors and
their corresponding weights were as follows: experience (20 percent),
past performance (20 percent), key personnel (20 percent), management plan
and schedule (35 percent), and subcontracting plan (5 percent).
The RFP incorporated both Federal Acquisition Regulation (FAR) S:
52.219-23, Notice of Price Evaluation Adjustment for Small Disadvantaged
Business (SDB) Concerns, and S: 52.219-4, Notice of Price Evaluation
Preference for HUBZone Small Business Concerns. Pursuant to the former
clause, the price of each non-SDB offeror*s proposal was to be evaluated
by adding a factor of 10 percent to the actual price offered, while
pursuant to the latter, the price of the proposal of each non-HUBZone
small business, with the exception of an *[o]therwise successful offer[]
from [a] small business concern[],* was to be evaluated by adding a factor
of 10 percent to the actual price offered. RFP, Part II, S: I, at 48, 49;
Part IV, S: K at 10. FAR S: 52.219-4(b)(3) further states that *[a]
concern that is both a HUBZone small business concern and a small
disadvantaged business concern will receive the benefit of both the
HUBZone small business price evaluation preference and the small
disadvantaged business price evaluation adjustment.*
The RFP at S:S: M3.3 and M3.4 furnished additional guidance with regard to
the application of the SDB price evaluation adjustment and the HUBZone
price evaluation preference, as follows:
M3.3. Price Evaluation Adjustment (PEA)
The PEA will be used in the event that a small disadvantaged business
(SDB) meets the following three criteria:
a. The SDB must be located within the following regions: middle
atlantic, east south central, east north central and west south central.
b. The SDB must perform work in the following (formerly) SIC Major
Group: 15.
c. The SDB has not waived the right to a PEA.
If a SDB meets the above criteria and its price is fair and reasonable, a
PEA factor of 10% will be added to the prices of non-qualifying
contractors.
M3.4. HUBZone Price Evaluation Preference (PEP)
The Hub Zone PEP will be used in the event that a company is certified to
be a Hub Zone by the Small Business Administration and its price is fair
and reasonable. A PEP factor of 10% will be added to the prices of
non-qualifying contractors.
Nine proposals were received by the January 24, 2003 closing date. The
evaluators rated the proposals of Batson-Cook and Offeror A as technically
excellent; the proposals of Offerors B, C, and D as technically very good;
and the proposals of Enola-Caddell and Offerors E, F, and G as technically
good.[1] The evaluators adjusted offerors* prices by adding to them the
following factors: the six large businesses (Batson-Cook and Offerors A,
B, C, D, and G), 10 percent plus 10 percent; Offeror F, which represented
itself as a HUBZone small business, but not as an SDB,
10 percent; and Enola-Caddell and Offeror E, which claimed both SDB and
HUBZone small business status, 10 percent. With regard to the final
adjustment, the agency explains that the evaluation board believed that it
had discretion to deny the benefit of both the SDB PEA and the HUBZone PDP
to Enola-Caddell and Offeror E because their base offers exceeded the low
base offer by more than 10 percent and could therefore *be determined to
be not fair and reasonable.* Agency Report at 2. Based on the foregoing
adjustments, the board evaluated the price of Offeror F as lowest,
Enola-Caddell*s as fifth lowest, and Batson-Cook*s as seventh lowest. The
evaluators determined that Batson-Cook*s technical excellence was worth
its higher price, and that its proposal represented the best value to the
government. On May 23, the agency awarded a contract to Batson-Cook.
Upon receipt of protests from Enola-Caddell and two other offerors, the
contracting officer reviewed the price analysis and determined that it
contained errors. The contracting officer concluded that the adjustment
to the large businesses* prices had been improperly calculated and that
Enola-Caddell and Offeror E, which claimed both SDB and HUBZone small
business status, *may have been entitled to the benefit of both SDB and
HUBZone adjustments.* Id. at 3. The source selection evaluation board
reconvened to review its award recommendation in light of the following
corrected adjustments:
+-------------------------------------------------------------------------+
|Offeror |Size |Tech. Rating |Base Offer |Base Offer |Base Offer |
| |status | | |with PEA[2]|with PEP[3]|
|-------------+-------+---------------+-----------+-----------+-----------|
|Batson-Cook |LB |90/Excellent |$17,699,000|$19,468,900|$21,238,800|
|-------------+-------+---------------+-----------+-----------+-----------|
|Offeror A |LB |90.02/Excellent|$18,300,050|$20,130,055|$21,960,060|
|-------------+-------+---------------+-----------+-----------+-----------|
|Offeror B |LB |83.56/Very Good|$16,958,586|$18,654,446|$20,350,304|
|-------------+-------+---------------+-----------+-----------+-----------|
|Offeror C |LB |83/Very Good |$17,240,000|$18,964,000|$20,688,000|
|-------------+-------+---------------+-----------+-----------+-----------|
|Offeror D |LB |82/Very Good |$18,867,809|$20,754,590|$22,641,371|
|-------------+-------+---------------+-----------+-----------+-----------|
|Enola-Caddell|HUBZone|78.25/Good |$19,091,048|$19,091,048|$19,091,048|
| |SB/SDB | | | | |
|-------------+-------+---------------+-----------+-----------+-----------|
|Offeror E |HUBZone|77.43/Good |$19,364,073|$19,364,073|$19,364,073|
| |SB/SDB | | | | |
|-------------+-------+---------------+-----------+-----------+-----------|
|Offeror F |HUBZone|77.43/Good |$18,427,604|$20,270,364|$20,270,364|
| |SB | | | | |
|-------------+-------+---------------+-----------+-----------+-----------|
|Offeror G |LB |77.25/Good |$16,950,001|$18,645,001|$20,340,001|
+-------------------------------------------------------------------------+
Supplemental Source Selection Evaluation Board (SEEB) Report at 5. After
reviewing the above information, the evaluation board again determined
that the proposal of Batson-Cook, which was essentially equal technically
to, and lower in price than, Offeror A*s, and which had a technical score
*considerably higher* and an evaluated price up to approximately 10
percent higher than the other seven proposals, represented the best value
to the government. Id. at 7. The Source Selection Authority affirmed the
board*s determination.
In its initial protest to our Office, Enola-Caddell complained that the
agency had failed to give it the benefit of the PEA and the PEP, to which
it was entitled, in evaluating its proposal.[4] NARA responded that
because Caddell was a large business it was not clear that Enola-Caddell
was entitled to the PEP, and that, in any event, it had given the
protester the benefit of both the PEA and the PEP in performing its
evaluation and had nonetheless determined that Batson-Cook*s proposal
represented a better value to the government.
SBA also commented on Enola-Caddell*s protest, opining that the protester
was entitled to neither the PEA nor the PEP. SBA explained that
Enola-Caddell was not entitled to the PEA because the SBD joint venturer,
Enola, was located in Florida, whereas the solicitation provided for
application of the PEA only in the event that the SDB (or, in the case of
a joint venture involving an SDB, the SDB joint venturer) were located in
the middle Atlantic (New Jersey, New York, Pennsylvania), east south
central (Alabama, Kentucky, Mississippi, Tennessee), east north central
(Illinois, Indiana, Michigan, Ohio, Wisconsin), or west south central
(Arkansas, Oklahoma, Louisiana, Texas) region. RFP S: M3.3; FAR S:
52.219-22, Alternate I, incorporated into the RFP at Part IV, S: K, pp.
9-10.
SBA further explained that Enola-Caddell was not entitled to the benefit
of the PEP because HUBZone program regulations at 13 C.F.R. Part 126
provide that to compete for a HUBZone contract,[5] a joint venture must
meet the following requirement (among others):
A qualified HUBZone SBC may enter into a joint venture with one or more
other qualified HUBZone SBCs, 8(a) participants, or WOBs [women-owned
businesses] for the purpose of performing a specific HUBZone contract.
13 C.F.R. S: 126.616(a). SBA observed that while Enola was a HUBZone SBC,
Caddell was a large business, and that, as a consequence, Enola-Caddell
did not qualify as a HUBZone joint venture and was not entitled to
application of the HUBZone PEP. SBA further noted that the fact that the
protester has an approved 8(a) mentor-protege agreement is irrelevant
because the 8(a) mentor-protege program provides participants with an
exemption from affiliation for size purposes, but does not provide an
exemption from the HUBZone requirements concerning joint ventures.[6]
In commenting on the NARA and SBA reports, the protester did not take
issue with or attempt to rebut the agencies* arguments; accordingly, we
consider it to have abandoned its complaint that the agency failed to give
it the benefit the PEA and the PEP, to which it was entitled, in
evaluating its proposal. O. Ames Co., B-283943, Jan. 27, 2000, 2000 CPD
P: 20 at 7. Moreover, we see no reason to question SBA*s conclusion that
Enola-Caddell is entitled to neither the PEA nor the PEP.
Upon receipt of the agency report, Enola-Caddell raised a supplemental
basis for protest, arguing that the agency had improperly downgraded its
technical rating from excellent to good based on Enola*s lack of
experience and relevant past performance and the joint venture*s failure
to propose any Enola personnel for key management positions. The
protester argued that the evaluators should not have penalized the joint
venture for the protege*s lack of experience given that the purpose of the
mentor-protege program is to allow small disadvantaged firms that lack
experience to gain it.
Even assuming for the sake of argument that the evaluators downgraded the
protester*s technical rating from excellent to good for the above reasons
and that this was improper, the record does not demonstrate the protester
was prejudiced by the action. Prejudice is an element of every viable
protest, Lithos Restoration, Ltd., B-247003.2, Apr. 22, 1992, 92-1 CPD P:
379 at 5, and we will not sustain a protest unless the protester
demonstrates a reasonable possibility of prejudice, that is, unless the
protester demonstrates that, but for the agency*s actions, it would have
had a substantial chance of receiving the award. McDonald-Bradley,
B-270126,
Feb. 8, 1996, 96-1 CPD P: 54 at 3; see Statistica v. Christopher, 102 F.
3d 1577, 1581 (Fed. Cir. 1996). Here, both Batson-Cook and Offeror A
received technical ratings of excellent and their prices were lower than
Enola-Caddell*s; thus, even if the protester*s proposal had been rated
excellent, both Batson-Cook*s and Offeror A*s proposals would still have
been in line for award ahead of it. While the protester asserts that
because another firm in the competition was entitled to the HUBZone PEP,
the prices of large business competitors--but not small business ones,
such as itself--should have been increased by a differential of 10 percent
for evaluation purposes, which would have made the evaluated prices of
Batson-Cook and Offeror A higher than its own, SBA guidance explicitly
states that *a small business concern that is not a qualified HUBZone SBC
cannot benefit from the application of the HUBZone PEP to gain the award
of a contract.* SBA Procedural Notice regarding Application of the
HUBZone Price Evaluation Preference, effective 11‑04‑2002, at
1; see Universal Constr. Co., Inc., d/b/a Turner-Universal, B-292407, Aug.
18, 2003, 2003 CPD P: ___. Accordingly, Enola-Caddell was not entitled to
the benefit of the PEP, and, as a result, its price remained higher than
Batson-Cook*s and Offeror A*s for evaluation purposes.
Enola-Caddell further argues, with regard to the issue of prejudice, that
Batson-Cook*s proposal should not have received a technical rating of
excellent because its own proposal was in fact better than Batson-Cook*s.
The protester first objected to the evaluation of Batson-Cook*s proposal
in its
August 15 comments, despite having received the information providing the
basis for its objection (i.e., the SSEB reports) in the July 9 agency
report; accordingly, the objection is untimely. Bid Protest Regulations,
4 C.F.R. S: 21.2(a)(2) (2003) (protests other than those objecting to
solicitation improprieties must be filed within 10 days after the basis of
protest is, or should have been, known). Moreover, Enola-Caddell is not
an interested party to challenge the evaluation of Batson-Cook*s proposal
because Offeror A, rather than the protester, would be in line for award
if its argument that Batson-Cook*s proposal should have received a rating
lower than excellent were sustained. ECS Composites, Inc., B-235849.2,
Jan. 3, 1990, 90-1 CPD
P: 7 at 1. Finally, the argument is without merit in any event because
the rating of Enola-Caddell*s proposal has no bearing on the rating of
Batson-Cook*s--i.e., there is no reason to believe that had the agency
rated Enola-Caddell*s proposal more favorably, it would have lowered its
rating of Batson-Cook*s.[7]
The protest is denied.
Anthony H. Gamboa
General Counsel
------------------------
[1] In accordance with the source selection plan, point scores of 90-100
received adjectival ratings of excellent; point scores of 80-89 received
adjectival ratings of very good; and point scores of 70-79 received
adjectival ratings of good.
[2] The PEA differential was not added to the prices of Enola-Caddell and
Offeror E based on their status as SDBs.
[3] The PEP differential was not added to the prices of Enola-Caddell and
Offerors E and F based on their status as HUBZone small businesses.
[4] In its initial protest, Enola-Caddell also complained that the agency
had failed to furnish it with a timely debriefing, as required by FAR S:
15.506. Upon receipt of the agency report, the protester abandoned this
argument, noting that its complaint was *now moot due to the information
in the Agency Report and related documents released by the Agency.*
Protester*s Comments, July 25, 2003, at 1.
[5] 13 C.F.R. S: 126.600 defines HUBZone contracts as including contracts
awarded to qualified small business concerns (SBC) through full and open
competition after a price evaluation preference in favor of qualified
HUBZone SBCs.
[6] It appears that Enola-Caddell would have been ineligible for the PEA
even had Enola been located in one of the enumerated regions. Regulations
pertaining to the Small Disadvantaged Business Program, set forth at 13
C.F.R. S: 124.1002(f), provide as follows:
Joint ventures are permitted for SDB procurement mechanisms (such as price
evaluation adjustments . . .), provided that the requirements set forth in
this paragraph are met.
* * *
* *
(4) An SDB must be the managing venturer of the joint venture, and an
employee of the managing venturer must be the project manager responsible
for performance of the contract.
(5) The joint venture must perform any applicable percentage of work
required of SDB offerors, and the SDB joint venturer(s) must perform a
significant portion of the contract.
Enola-Caddell*s proposal did not provide for an employee of Enola to be
the project manager responsible for performance of the contract. In
addition, it is not clear that Enola--which, according to the protester,
will perform 15 percent of the contract work, Protester*s Comments, Aug.
15, 2003, at 9--will perform a significant portion of the contract.
[7] While due to the lack of prejudice, we do not reach the merits of the
protester*s argument that it was improper for the agency to downgrade the
joint venture*s technical rating based on the protege*s lack of similar
experience and relevant past performance, we do note that SBA offers the
following view:
While SBA*s regulations provide no guidance on the technical evaluation of
joint ventures between mentor-protege participants by procuring agencies,
it does appear contrary to both the intent of SBA*s 8(a) BD [business
development] mentor-protege program and FAR S: 15.305(a)(2)(iv) for a
procuring agency to downgrade a proposal based on the lack of
experience/past performance of a protege. In order to be a protege, an
entity must lack experience. 13 C.F.R. S: 124.520(c). In our view, if a
mentor has excellent experience/past performance and is legally obligated
to perform the entire requirement [as was the case here], there is no
reason why the joint venture should not receive an excellent technical
rating in those areas.
SBA Comments, Aug. 6, 2003, at 5.