TITLE:  Islandwide Landscaping, Inc., B-293018, December 24, 2003
BNUMBER:  B-293018
DATE:  December 24, 2003
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Islandwide Landscaping, Inc., B-293018, December 24, 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:   Islandwide Landscaping, Inc.
    
File:            B-293018
    
Date:              December 24, 2003
    
Timothy H. Power, Esq., for the protester.
Maj. Gregg A. Engler, Department of the Army, for the agency.
Peter Verchinski, Esq., and John M. Melody, Esq., Office of the General
Counsel, GAO, participated in the preparation of the decision.
DIGEST
    
Protest that agency improperly determined that protester*s proposed fixed
price was unrealistically low is denied where solicitation called for
price realism analysis and protester*s price was substantially lower than
other offerors* prices; based on comparison with these prices, it was
reasonable for agency to conclude that protester*s proposal posed a
significant risk of nonperformance.
DECISION
    
Islandwide Landscaping, Inc. (ILI) protests the Department of the Army*s
award of a contract to Paradise Landscape Maintenance, Inc. under request
for proposals (RFP) No. DAPC50‑02‑R‑0037, for tree
maintenance and removal services at Aliamanu Military Reservation, Hawaii.
ILI contends that the Army improperly evaluated its offered price.
    

   We deny the protest.
    
The RFP, as amended, contemplated the award of a fixed-price,
indefinite-delivery/indefinite-quantity contract for a 1-year base period,
and an option to extend services for up to 12 months, for various
tree-related services, including tree trimming, tree maintenance, tree
survey, tree tagging, root removal, stump removal, and debris removal. 
The RFP informed offerors that the evaluation would be based on three
factors:  technical capability, performance risk (comprised of past
performance and work experience), and price.  Technical capability and
performance risk combined were approximately equal in weight to price. 
The RFP stated that price would be analyzed to determine the extent to
which it was *reasonable, realistic, and consistent with the proposal,*
and that unrealistically high or low prices may be grounds for eliminating
a proposal.  RFP at 59.  Award was to be made to the offeror whose
proposal was found to be most advantageous to the government, price and
other factors considered.
    
Five proposals were received, including ILI*s and Paradise*s.  ILI*s
initial price was significantly lower than the four others* prices--it was
less than 50 percent of the closest competitor*s price--but the agency
nonetheless included ILI*s proposal in the competitive range along with
those of Paradise and two other offerors.  The agency conducted
discussions, and invited offerors to submit revised proposals.  Although
the agency brought its concern regarding ILI*s low price to the firm*s
attention, ILI did not submit a revised proposal.  The agency conducted a
second round of discussions, and again brought its concern regarding ILI*s
low price to ILI*s attention.  This time, the protester responded by
raising its price, although it remained substantially lower than all other
prices submitted; the price proposed by Paradise was the second lowest. 
In a price/technical tradeoff comparing ILI*s and Paradise*s proposals,
the agency decided, in light of Paradise*s technical superiority and ILI*s
unrealistic pricing, which the agency believed posed a risk of
nonperformance, to make award to Paradise, notwithstanding ILI*s lower
price.
    
ILI filed a protest challenging the agency*s technical and price
evaluations.  We summarily dismissed the protest ground relating to the
technical evaluation because it failed to state a sufficient basis for
protest.  We therefore address here only the protester*s assertion that
the agency improperly determined that its proposal was unrealistically
priced.  ILI states that it is performing similar work at the prices it
lists in its offer, and that its pricing therefore was realistic. 
    
Where, as here, an RFP contemplates the award of a fixed-price contract,
an agency may provide for the use of a price realism analysis for the
limited purpose of measuring an offeror*s understanding of the
requirements or to assess the risk inherent in an offeror*s proposal.  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.  Star Mountain, Inc., B‑285883, Oct. 25,
2000, 2000 CPD P: 189 at 6.  Among the price analysis techniques that may
be used is comparison with other prices received under the solicitation,
Federal Acquisition Regulation (FAR) S: 15.404‑1(b)(2), and we
believe that such a comparison can be appropriate in a price realism
analysis.
    
We find nothing improper in the agency*s analysis or conclusion here.  The
agency evaluated ILI*s price for realism, in accordance with the terms of
the RFP.  This evaluation was based on a comparison of ILI*s price with
other prices received in response to the RFP--one of the acceptable price
analysis techniques under the FAR--which showed that ILI*s final price was
only 69 percent of the next lowest price received.[1]  Based on this
comparison, as discussed, the agency determined that ILI*s price was so
much lower than the other prices received that ILI*s proposal posed a risk
of unsuccessful performance.  ILI disagrees with the agency*s conclusion,
but has not shown that the agency deviated from the terms of the RFP, that
its price was not substantially lower than the other prices, or that the
agency*s conclusion was otherwise unreasonable.  While ILI asserts that it
is performing similar work elsewhere at prices similar to its prices here,
it has provided no evidence supporting this assertion.  Moreover, even if
ILI had provided such evidence, there would be no basis for us to find it
unreasonable for the agency to nonetheless conclude that ILI*s low pricing
presented a heightened risk of nonperformance. 
    
Based on references by the contracting officer to unbalancing in the
evaluation record, see Agency Report, Price Negotiation Memorandum, Tab
25, at 6, ILI argues that the Army improperly rejected its proposal based
on unbalanced pricing.  However, the contracting officer explains that his
use of the term *unbalanced* was a mistake; he only intended to state that
ILI*s pricing was unrealistically low.  We find that the record supports
this interpretation.  Unbalanced pricing exists where the price of one or
more contract line items is significantly overstated, despite an
acceptable total evaluated price (typically achieved through underpricing
of one or more other line items).  Ken Leahy Constr., Inc., B-290186, June
10, 2002, 2002 CPD P: 93 at 2; see FAR S: 15.404-1(g)(1).  Here, rather
than a concern that some prices were too high, the contracting officer was
only concerned that the prices were unrealistically low.  Thus, the
contracting officer wrote in the Price Negotiation Memorandum that
*[ILI*s] price is unreasonably low, 45% to 95% lower in comparison to
other offers received, indicating an unbalanced or skewed pricing
structure, and casts doubt on their ability to adequately perform at these
questionable prices.*  Agency Report, Price Negotiation Memorandum, Tab
25, at 7.  It is clear from this quotation that the contracting officer
was concerned with unrealistically low pricing and not the overstated
pricing that may be indicative of unbalanced pricing.  
    
Finally, ILI argues that the Army failed to follow its source selection
plan in making the award decision.  However, source selection plans
provide internal agency guidelines and, as such, do not give parties any
rights.  Centech Group, Inc., B‑278904.4, Apr. 13, 1998, 98-1 CPD P:
149 at 7 n.4.  It is the evaluation scheme in the RFP, not internal agency
documents such as source selection plans, to which an agency is required
to adhere in evaluating proposals and in making the source selection.  All
Star-Cabaco Enter., Joint Venture, B-290133, B-290133.2, June 25, 2002,
2002 CPD P: 127 at 4 n.1.
    
The protest is denied.
    
Anthony H. Gamboa
General Counsel
    
    

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   [1] ILI argues that the agency improperly calculated the percentage
difference between ILI*s price and the awardee*s price, and consequently
misevaluated the proposals.  In this regard, ILI*s price was 31 percent
lower than the awardee*s price, thus making the awardee*s price 45 percent
higher than ILI*s.  While the agency initially correctly stated that the
awardee*s price was 45 percent higher than ILI*s, the contracting officer
subsequently erroneously stated that ILI*s price was *45% to 95% lower in
comparison to other offers received.*  We find no basis to conclude that
the contracting officer misevaluated proposals.  While the contracting
officer may have, on occasion, expressed the difference between the
proposals incorrectly, nevertheless, it is clear that--as indicated by the
fact that he otherwise correctly expressed the mathematical relationship
between the prices--he in fact understood the very significant price
difference between the proposals.