TITLE: Shindong-A Express Tour Company, Ltd.--Costs, B-292459.3, March 25, 2004
BNUMBER: B-292459.3
DATE: March 25, 2004
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Shindong-A Express Tour Company, Ltd.--Costs, B-292459.3, March 25, 2004
Decision
Matter of: Shindong-A Express Tour Company, Ltd.--Costs
File: B-292459.3
Date: March 25, 2004
Jin Wook Kim, Esq., and Sun Hee Cha, Esq., Kim & Chang, for the protester.
Maj. Gregory R. Bockin, Department of the Army, for the agency.
Ralph O. White, Esq., and Christine S. Melody, Esq., Office of the General
Counsel, GAO, participated in the preparation of the decision.
DIGEST
Protester*s request for a recommendation that it be reimbursed the costs
of filing and pursuing its protest is granted where the record shows that
the initial protest filing was sufficient to put the agency on notice that
the awardee*s proposal was unacceptable under the solicitation*s stated
evaluation scheme yet the agency unduly delayed taking corrective action
until after submission of the agency report and the protester*s comments.
DECISION
Shindong-A Express Tour Company, Ltd. requests that we recommend that it
be reimbursed the costs of filing and pursuing its protest challenging the
Department of the Army*s award of a contract to New Kyungdong Tour Co.,
Ltd. for fare-free mass transit and shuttle bus services at various
military installations in the Republic of Korea. The contract was awarded
pursuant to request for proposals (RFP) No. DABP01-03-R-0035; the protest
was filed on June 19, 2003. On August 12, after receipt of the protester*s
comments on the agency report, and after receipt of additional questions
for the record prepared by our Office, the Army took corrective action in
response to the protest. Based upon the corrective action, we dismissed
the protest as academic. Shingdong-A now seeks reimbursement of its
protest costs on the grounds that the agency unduly delayed taking
corrective action in the face of a clearly meritorious protest.
We grant the request, and recommend that Shindong-A be reimbursed the
reasonable costs of filing and pursuing its protest, including those
incurred in pursuing this request.
BACKGROUND
The solicitation, issued on March 12, 2003, sought offers to provide all
buses, operators, fuel, facilities, and management required to perform
fare-free mass transit and shuttle bus services for specified U.S.
military installations in the Republic of Korea. RFP at 33. The
solicitation contemplated the award of a fixed-price contract to the firm
submitting the lowest-priced, technically acceptable offer. RFP at 75.
Technical proposals were to be evaluated under the following five
evaluation factors: quality control plan, safety plan, equipment vehicle
list/insurance liability, offeror*s qualifications, and past performance.
RFP at 70. These factors were to be rated on a pass/fail basis as either
acceptable or unacceptable. If any factor received an unacceptable
rating, the proposal was to be rated unacceptable overall. Id.; see also
RFP at 75.
The only technical factor at issue here is the one that considered an
offeror*s proposed equipment. The RFP required offerors to include the
following information for evaluation under this factor:
(1) Equipment utilization plan (owned and rented vehicle--provide a
number of bus and plate number which is to be utilized is available).[1]
(2) Provide the type of equipment, giving details on the service and
maintenance contract/adequately described procedures.
(3) Provide insurance for the contractor operated buses with [Republic of
Korea] accredited insurance company.
(4) Bus(es) must be in a safe and serviceable condition at all times and
will not exceed the life expectancy of 7 years of age.
Id. at 71.
The RFP did not require any specific number of buses, but instead required
offerors to furnish all buses *necessary for satisfactory contract
performance,* and to provide bus service in accordance with numerous bus
schedules included as appendices to the solicitation. RFP at 38.
The Army received offers from four firms, including Shindong-A (the
incumbent contractor), and New Kyungdong, and forwarded the proposals for
review to a technical evaluation board (TEB). The TEB rated Shindong-A*s
proposal acceptable under every factor, and acceptable overall; it rated
New Kyungdong*s proposal acceptable under every factor except the
equipment factor, where it was rated unacceptable because the evaluators
believed that the firm did not propose enough buses to perform the
required services.[2] In the TEB*s view, at least 47 buses would be
needed to perform these services.
Although determining the precise numbers of proposed buses is not
necessary for determining the merit of this protest, the Army explains
that New Kyungdong*s proposal: (1) indicated that the company would use
37 buses to perform the contract; (2) acknowledged that the company*s bus
fleet was currently comprised of 32 buses; and (3) advised that the
company had an agreement to procure 25 more buses in the event it received
the contract here.[3] Agency Report (AR) at 4. In answer to the
solicitation*s requirement to provide the license plate numbers and
insurance information for the buses to be used to perform this work, New
Kyungdong provided the plate numbers (and other required information[4])
for its current fleet of buses. New Kyungdong*s Proposal (AR, Tab 9, Part
1) at 6.
Despite its initial view that New Kyungdong*s proposal was unacceptable,
the TEB, after consulting with the contracting officer (CO), changed its
rating of the New Kyungdong proposal to *acceptable.* Specifically, as
explained in the Price Negotiation Memorandum (PNM) provided with the
agency report, the CO reviewed the solicitation*s bus schedules and
decided that only 37 buses would be needed. PNM at 5. Considering New
Kyungdong*s 32 buses on hand, together with its arrangement to procure
additional buses, the CO found that the firm proposed *more than enough*
buses and should be rated acceptable overall. Id. Since New Kyungdong*s
proposed price of 11,265,380,232 Korean won (or $8,174,927), was lower
than that Shingdong-A*s price of 11,338,845,720 won (or $8,228,239), award
was made to New Kyungdong on May 29.[5] Shindong‑A filed its
protest with our Office after a debriefing.
Shindong-A*s protest primarily argued that New Kyungdong*s proposal could
not have provided the information required under the equipment evaluation
factor (such as plate numbers, maintenance records, and proof of
insurance) for the buses the awardee proposed to use to perform this
effort, because the awardee did not yet have many of the buses it would
use to perform.[6] Initial Protest, June 19, 2003, attach. (*Statement of
Factual and Legal Grounds of Protest*) at S-6, S-7. Thus, the protester
argued that the agency was required by the terms of the solicitation to
reject the proposal as technically unacceptable. The protester also
alleged that it was harmed by the Army*s waiver of this solicitation
requirement because the protester assumed that offerors would have to have
obtained the buses to provide the required information, and therefore
purchased additional buses prior to submitting its proposal, which
increased its price. Id. at S-7.
The Army filed its agency report in response to the protest on July 21.
With respect to the contention that the awardee*s proposal had not
identified a sufficient fleet of buses to meet the RFP*s requirements, the
Army responded that the CO reasonably determined that a smaller fleet of
buses than originally estimated would be sufficient, and that the
awardee*s bus fleet was large enough for it to perform successfully. AR
at 7. In addition, the Army disputed the protester*s contention that the
RFP required offerors to have their buses on hand as of the date of
proposal submission. Id. at 9. With respect to the protester*s
contention that the agency improperly waived the RFP*s requirements to
provide license plate numbers, proof of insurance, and maintenance records
for the buses to be used, the Army report was silent.
On August 4, Shingdong-A filed its comments on the agency report. In
support of its contention that New Kyungdong*s proposal should have been
found technically unacceptable, the protester argued that the CO reached
his decision about the adequacy of the awardee*s proposed approach without
regard to--and contrary to--the documentation requirements identified
under the equipment factor. Comments at 5. The protester also challenged
the CO*s conclusions about the number of buses required to perform these
services, and the adequacy of the CO*s decision to reject the requiring
activity*s conclusion about the number of buses required to perform these
services.
One day after receiving the protester*s comments, on August 5, our Office
prepared and transmitted to the Army and the protester several questions
for the record, seeking more detailed explanations from the agency about
the bases for its conclusions. These questions focused on the specific
language of the awardee*s proposal, and of the RFP, and asked how the
awardee*s proposal was rated acceptable under the equipment factor
consistent with the solicitation*s requirements. We also asked the agency
to explain how the awardee*s pending contract for the purchase of new
buses met the requirements for the submission of information required by
the RFP.
One week later, on August 12, the Army advised our Office that it was
taking corrective action, and requested that the protest be dismissed as
academic. Specifically, the Army advised that it would amend the
solicitation, solicit revised proposals, reevaluate, make a new selection
decision, and if New Kyungdong was not selected, terminate the company*s
contract for the convenience of the government. Contracting Officer*s
Corrective Action Memorandum, Aug. 12, 2003. Based on the proposed
corrective action, we granted the Army*s request for dismissal later that
same day.[7] On August 26, Shindong-A filed the instant request for
reimbursement of its protest costs.
DISCUSSION
Shindong-A asks for reimbursement of its protest costs on the grounds that
the agency should not have forced the protester to file comments in this
case given that its initial protest filing stated its protest issues with
sufficient clarity to put the agency on notice of the problems with its
procurement. In response, the Army argues against reimbursement of
protest costs because, in its view, the initial protest filing did not
clearly establish that the awardee*s proposal was unacceptable under the
solicitation*s stated evaluation scheme.
Where a procuring agency takes corrective action in response to a protest,
our Office may recommend that the agency reimburse the protester its
protest costs where, based on the circumstances of the case, we determine
that the agency unduly delayed taking corrective action in the face of a
clearly meritorious protest, thereby causing the protester to expend
unnecessary time and resources to make further use of the protest process
in order to obtain relief. Georgia Power Co.; Savannah Elec. and Power
Co.--Costs, B-289211.5, B-289211.6, May 2, 2002, 2002 CPD P: 81 at 5. A
protest is clearly meritorious when a reasonable agency inquiry into the
protest allegations would show facts disclosing the absence of a
defensible legal position. Martin Electronics, Inc.--Costs, B-291732.2,
Apr. 22, 2003, 2003 CPD P: 84 at __. For a protest to be clearly
meritorious, the issue involved must not be a close question. J.F.
Taylor, Inc.--Entitlement to Costs, B-266039.3, July 5, 1996, 96-2 CPD
P: 5 at 3. Rather, the record must establish that the agency
prejudicially violated a procurement statute or regulation. Tri-Ark
Indus., Inc.--Declaration of Entitlement, B-274450.2, Oct. 14, 1997, 97-2
CPD P: 101 at 3.
As a preliminary matter, we think it is clear that the protest challenged
the acceptability of the awardee*s proposal based on the lack of
information about the buses being proposed. Specifically, the initial
protest here consisted of a two-page cover letter on Shindong-A
letterhead, and numerous attachments, one of which was an eight-page
document titled, *Statement of Factual and Legal Grounds in Support of
Protest.*[8] With great specificity, this attachment set forth the
relevant solicitation provisions, and explained how the protester believed
the awardee could not have met them. In particular, in paragraphs 26, 29,
and 34, the protester questions how the awardee could have provided the
required information about its buses, when *it did not, and does not yet,
possess such buses.* Initial Protest, attach. (*Statement of Factual and
Legal Grounds is Support of Protest*) P: 29.
Next, we think the record shows that the issue raised was clearly
meritorious. In a negotiated procurement, a proposal that fails to
conform to the material terms and conditions of the solicitation should be
considered unacceptable and may not form the basis for an award. For Your
Info., Inc., B-278352, Dec. 15, 1997, 97-2 CPD P: 164 at 3. In the case
at hand, the record clearly shows that the agency*s determination that
Kyungdong*s proposal was overall technically acceptable--and that it met
the solicitation*s requirements concerning the equipment factor--was
inconsistent with the stated evaluation factors.
As indicated above, the solicitation here required offerors to submit
specific information to be evaluated as technically acceptable under each
evaluation factor; the solicitation also advised that if any factor was
rated technically unacceptable, the entire proposal would be considered
unacceptable. Under the equipment factor, offerors were required to
provide plate numbers, maintenance records, and proof of *insurance for
the contractor operated buses with [a] Republic of Korea accredited
insurance company.*[9] RFP at 71. Similarly, the quality control plan
factor required offerors to provide the *[m]aintenance and repair history
for the previous 12 months for each bus proposed to be used in the
performance of the contract.* RFP at 37.
In response to the protest, the Army stated that it did not want to
require any fixed number of buses, and based its finding of technical
acceptability upon New Kyungdong*s pending contract for additional buses.
However, the firm did not submit the required information for these
additional buses. The solicitation here makes no provision for the
submission of pending contracts or purchase orders for future buses in
lieu of the concrete information requested.[10] Thus, in our view, the
agency in effect waived material solicitation requirements only for New
Kyungdong, and its decision to do so resulted in an unfair and unequal
evaluation. For Your Info., supra, at 4.
It is a fundamental principle of federal procurement that offerors be
treated equally; that is, offerors must be provided with a common basis
for the preparation of proposals, and award based upon the requirements
stated in the solicitation, unless the offerors are notified of changes in
(or relaxation of) the agency*s stated requirements. Id.; Meridian Mgmt
Corp.; Consolidated Eng*g Servs., Inc., B‑271557 et al., July 29,
1996, 96-2 CPD P: 64 at 5. Here, since the protester was clearly
prejudiced by the agency*s waiver of solicitation requirements, award to
New Kyungdong on the basis of its unacceptable proposal was improper.
RECOMMENDATION
Since Shindong-A*s basis for complaint was clearly stated in its initial
protest filing, and since we conclude that its initial protest provided
ample information to permit the Army to conclude that the awardee*s
proposal was unacceptable under the solicitation*s stated evaluation
scheme, we find that the Army unduly delayed taking corrective action in
the face of a clearly meritorious protest. As a result, we recommend that
the protester be reimbursed the reasonable costs of filing and pursuing
its protest, including the cost of pursuing this request, and including
attorneys* fees. 4 C.F.R. S: 21.8(d)(1) (2003). The protester should
submit its certified claim, detailing the time expended and costs
incurred, directly to the contracting agency within 60 days of receiving
this decision. 4 C.F.R. S: 21.8(f)(1).
The request for a recommendation that the protester be reimbursed the
reasonable costs of filing and pursuing its protest is granted.
Anthony H. Gamboa
General Counsel
------------------------
[1] This subfactor is set forth as it appears in the RFP. The Army*s
August 12 corrective action amended this language to read:
Equipment Utilization Plan (owned and rented vehicles -- provide the total
number of buses and, if available, license plate numbers which are to be
utilized. There is no requirement to own or rent buses prior to award.).
Contracting Officer*s Corrective Action Memorandum, Aug. 12, 2003, at 1.
[2] The other two proposals were rated unacceptable overall and are not at
issue here.
[3] It appears that some portion of New Kyungdong*s current bus fleet may
have been committed to other Army contracts, although we reiterate that
the precise number of buses available to New Kyungdong is both in dispute,
and not material to the determination of whether the protest had merit.
[4] This includes, for example, the requirement to provide 12 months of
maintenance and repair history for each bus proposed for use under the
contract. RFP at 37.
[5] The agency used an exchange rate of 1,378.0404 won to the dollar to
calculate the price in U.S. dollars.
[6] The protester also argued that: (1) the awardee has an insufficient
number of buses due to other contractual commitments; (2) the purchase
orders for additional buses in the awardee*s proposal were mere *window
dressing* to obtain the contract because the buses the awardee eventually
registered do not correspond to those shown in the purchase orders; and
(3) the awardee planned to use a subcontractor to perform, but improperly
failed to disclose its plans to the agency.
[7] Though not relevant here, we note for the record that on August 14,
Shindong-A requested reconsideration of our dismissal of its protest on
the grounds that the agency*s corrective action did not address one of its
protest issues. By decision dated August 19, 2003, B-292459.2, we
dismissed the request for reconsideration on the grounds that amending the
solicitation and seeking revised offers rendered any remaining challenge
to the earlier evaluation academic.
[8] For ease of reference here, and in citations, we have shortened the
title of this attachment. The actual title, in its entirety, is
*Statement of Factual and Legal Grounds in Support of Protest in Respect
of Award for Contract No. DABP01-03-C-0055 (Fare Free Mass Transit and
Shuttle Bus Services for Area I and Area III).*
[9] The RFP*s SOW required actual submission of the insurance policies for
the contractor-operated buses as part of the technical proposal. RFP at
37.
[10] For the record, on this issue we note that the Army contends that one
of the subfactors under the equipment factor relied upon by Shindong-A is
patently ambiguous, and Shindong-A should have raised the matter prior to
submitting its proposal. The provision, quoted earlier in the decision,
read (prior to its proposed modification on August 12, 2003):
Equipment utilization plan (owned and rented vehicle--provide a number of
bus and plate number which is to be utilized is available).
RFP at 72 (emphasis added). This sentence is but one of several in the
solicitation that required submission of information on the buses. While
none is a model of clarity, all do ask for information that an offeror is
likely to have only if the offeror already has access to the proposed
buses prior to performance. Reading these provisions together, we cannot
say that it was unreasonable for the protester to interpret the
solicitation as requiring offerors to have control over all the buses they
proposed using.
The Army asserts that the words *is available* in the sentence above were
intended to read *if available,* and that, if the protester had a
different interpretation, the sentence was ambiguous on its face and the
issue had to be raised in a protest filed before proposals were due. We
disagree. Without any language elsewhere in the solicitation indicating
that the information requirements did not extend to all buses being
proposed, there was no clear signal to offerors of what the Army now says
was its intended meaning. Under these circumstances, we think the
protester could timely protest on this ground once it became evident that
the Army had applied an interpretation different from its own during the
evaluation. See LBM, Inc., B-290682, Sept. 18, 2002, 2002 CPD P: 157 at
6-7.