TITLE:  Contract Management, Inc., B-292760, November 20, 2003
BNUMBER:  B-292760
DATE:  November 20, 2003
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Contract Management, Inc., B-292760, November 20, 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:   Contract Management, Inc.
    
File:            B-292760
    
Date:              November 20, 2003
    
Timothy H. Power, Esq., for the protester.
Jan E. Takamine, Esq., and Damon Martin, Esq., Naval Facilities
Engineering Command, for the agency.
Scott H. Riback, Esq., and John M. Melody, Esq., Office of the General
Counsel, GAO, participated in the preparation of the decision.
DIGEST
    
Protest that elimination of protester*s proposal from competitive range
was improper because agency*s price analysis was based on flawed
government estimate is without merit, where elimination from competitive
range was based on comparison of protester*s price to other offerors*
prices, not to estimate.
DECISION
    
Contract Management, Inc. (CMI) protests the exclusion of its proposal
from the competitive range under request for proposals (RFP) No.
N62742-03-R-2219, issued by the Department of the Navy for secure
facilities custodial services in Oahu, Hawaii. CMI asserts that the agency
failed to perform an adequate price analysis before eliminating its
proposal from further consideration.
    

   We deny the protest.
    
The RFP called for proposals to perform custodial work at several secure
facilities for a base year, with four 1-year options, on a fixed-price
basis.  Offerors were advised that the agency would make award on a *best
value* basis, with price and technical considerations being equally
weighted.  Within the technical area there were two factors, past
performance/experience and technical approach, that also were equally
weighted. 
    
The agency received 14 proposals and, after evaluating the submissions,
established a competitive range of 8 firms, including CMI.  The agency
then engaged in discussions, obtained revised proposals, and established a
second competitive range of two firms, eliminating CMI from further
consideration.  The record shows that the proposal of one of the
competitive range offerors (NMS) was assigned adjectival ratings identical
to the ratings assigned to CMI*s proposal, and NMS submitted a lower price
(NMS proposed a price of [deleted] while CMI proposed a price of
[deleted]).  The other competitive range offeror*s proposal also was
assigned identical adjectival ratings except in the technical management
area (a subfactor under technical approach), where CMI*s proposal received
a rating of [deleted] while the other firm*s proposal received a rating of
[deleted]; this firm also proposed a price that was lower than the price
proposed by CMI ([deleted] versus CMI*s price of [deleted]).  Agency
Report (AR), exh. 5, at 6.  The record shows that, because there were two
lower-priced proposals with non-price ratings that were either equal to or
better than the ratings assigned to the CMI proposal, the agency
determined that CMI had no reasonable chance of receiving the award.  Id.
at 7.
    
CMI maintains that the agency improperly failed to conduct a price
evaluation in connection with its elimination of CMI from the competitive
range.  Much of CMI*s argument focuses on the government estimate used by
the agency in connection with its evaluation.[2]  According to CMI, since
the agency used an estimate reduced by a stated percentage to account for
competition, the agency*s price comparison, and hence its establishment of
the competitive range, was flawed. This argument is without merit.  The
record shows that CMI was not eliminated from the competitive range as a
result of the agency*s comparison of its price to the government
estimate.  Rather, CMI was eliminated because its proposal was rated no
better than equal to the other two competitive range offerors* proposals
(CMI does not challenge the technical evaluation), and its price was
significantly higher than both of those offerors* prices.  AR, exh. 5,
at 7.  Thus, since the government estimate had nothing to do with the
elimination of CMI*s proposal from the competitive range, the manner in
which the estimate was developed does not provide a basis for challenging
the agency*s actions.[3]
    
CMI maintains that, because of the allegedly faulty government estimate,
the agency never considered that the price offered by NMS (one of the two
competitive range offerors) was unreasonably low when compared to the cost
of actually performing the work.  This argument is without merit.  Where,
as here, a lower-priced proposal is found technically equal to the other
proposals under consideration for a fixed-price contract, its lower price
does not provide a basis (in the absence of a solicitation provision
relating to a price realism analysis) for excluding that proposal from the
competitive range.
    
The protest is denied.
    
Anthony H. Gamboa
General Counsel
    
    

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   [1] In its initial protest, CMI asserted that there were improprieties in
the agency*s technical evaluation as well.  In its comments responding to
the agency report, CMI conceded that the agency*s technical evaluation was
unobjectionable.  Protester*s Comments, Oct. 15, 2003, at 6.  We therefore
do not consider this aspect of its protest further.
[2] The record shows that, in developing the government estimate, the
agency first calculated the anticipated price for the services by
developing loaded hourly rates for the labor categories in question. 
Using these hourly rates, it developed loaded task prices, and then
compared these loaded task prices to prices being paid under numerous
current contracts.  Finally, the agency reduced the government estimate by
either 10 or 20 percent (depending on the nature of the task) to account
for what the agency anticipated would be vigorous competition for the
requirement.  AR, exh. 12.
[3] CMI asserts that the agency improperly used only price in establishing
the final competitive range.  This is not the case.  As discussed, the
agency*s conclusion that CMI did not stand a reasonable chance of
receiving award was based on a comparison of both CMI*s technical proposal
and price with those of the two competitive range offerors.  AR, exh. 5,
at 7.