TITLE:  PCA Aerospace, Inc., B-293042.3, February 17, 2004
BNUMBER:  B-293042.3
DATE:  February 17, 2004
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PCA Aerospace, Inc., B-293042.3, February 17, 2004

   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:   PCA Aerospace, Inc.
    
File:            B-293042.3
    
Date:              February 17, 2004
    
Michael L. Steele, Esq., for the protester.
Maj. Jacqueline B. Posner, Department of the Air Force, for the agency.
Jacqueline Maeder, Esq., and John M. Melody, Esq., Office of the General
Counsel, GAO, participated in the preparation of the decision.
DIGEST
    
Protest of corrective action taken in response to a post-award
protest--reopening discussions, reevaluating proposals and making new
award determination--is denied where widely disparate pricing among
offerors reasonably led agency to conclude that instructions regarding
pricing may have confused offerors.
DECISION
    
PCA Aerospace, Inc. protests the decision by the Department of the Air
Force to terminate its contract awarded under solicitation No.
F09603-03-R-22453, reopen discussions to clarify pricing, and conduct a
new evaluation and new source selection decision based on the new offers.
The Air Force*s action was in response to two protests challenging the
award on a number of grounds, which led the agency to conclude that its
instructions regarding pricing may have caused confusion among offerors.
PCA asserts that the Air Force lacks a reasonable basis for the corrective
action because the instructions provided by the agency were clear.
    

   We deny the protest.
    
The RFP, posted on the Federal Business Opportunities (FedBizOpps) website
on August 5, 2003 as a small-business set-aside for the acquisition of up
to 1,900 titanium pylon ribs for F-15 aircraft, contemplated the award of
a fixed-price requirements contract for a base year, with five 1-year
options.  The RFP provided for award on the basis of price, first article
evaluation, and other non-price factors, in descending order of
importance.  RFP at 43.  All evaluation factors other than price, when
combined, were approximately equal in weight to price. 
    
In order to mitigate the risk associated with the purchase of titanium, a
material with widely-fluctuating prices, the RFP included a Contractor
Acquired Property (CAP) line item, which would allow for reimbursement of
the contractor*s actual incurred titanium costs under each order.  Agency
Report (AR), Tab 2, Contracting Officer*s Statement (COS), at 1.  On
August 20, the agency issued amendment No. 0001 to explain how offerors
were to price the CAP line item.  The amendment provided that the
estimated total cost for the CAP line item for the base and all options
years was *to be determined by the government.*  RFP, amend. 1, at 2.  On
August 22, to further clarify pricing for this line item, the agency
posted a memo to offerors at the FedBizOpps website, advising offerors
that
    
               [b]ecause of volatility of titanium prices, the Government
will assume
               the risk of the potential for price increases by reimbursing
this cost
(with allowable and allocable G&A [general and administrative] expenses). 
For this reason, your submitted unit prices SHOULD NOT include these
           costs.  At the time individual orders are issued, that line item
will
               contain funds estimated to be sufficient to cover these costs.
    
AR, Tab 4B, FedBizOpps Memo to Offerors, at 1. 
    
The agency received [DELETED] proposals by the extended September 12
closing date.  The offers ranged in price from [DELETED] to [DELETED]. 
The agency established a competitive range of [DELETED] offers by
eliminating offers priced above [DELETED].  AR, Tab 2, COS, at 1.  Because
of the wide price disparity even among the competitive range offers, the
agency opened discussions by letters to the offerors dated September 15. 
AR, Tab 2, COS, at 2.  Each letter began with an identical paragraph
advising offerors of the disparity in the prices received, and that the
agency considered this disparity to be *constructive notice of the
possibility of a mistake.*  AR, Tab 6, Air Force Letter Opening
Discussions, at 1.  Therefore, all offerors were urged
    
               to critically and carefully examine the constitution of your
               proposal, the elements from which you derived your unit prices
. . .
               and the mathematical calculations contained therein to ensure
               that your offer is based upon the Government*s requirements as
               stated in the solicitation and Amendments 0001 and 0002
thereto
               as well as the additional information notices subsequently
added
               to the www.fedbizopps.gov website.  In accordance with those
               postings please ensure that your submitted unit prices DO NOT
               include the cost of titanium forgings and associated allowable
               and allocable G&A for that material.
    
Id. at 3.  Following this introductory paragraph, the letter advised each
offeror of the deficiencies in its proposal, and advised offerors to
submit revised proposals by September 25.  By letter dated September 29,
the agency notified offerors that PCA was the apparent successful
offeror.  AR, Tab 8, Notification of Apparent Successful Offeror, at 1.
    
Two offerors filed agency-level protests against the award.  As relevant
here, one of the protesters, Air Industries Machining Corporation (AIM),
alleged that it *did not properly understand the instructions intended* in
the FedBizOpps memo.  AR, Tab 10, AIM*s Agency-Level Protest, at 1.  The
Air Force denied the protest, stating that AIM had acknowledged receipt of
the FedBizOpps memo and the September 15 letter, and that the award was
proper.  AR, Tab 11, Air Force Denial of AIM*s Agency‑Level Protest,
at 2.  Subsequently, AIM and another offeror protested to our Office.  As
relevant here, AIM argued that the solicitation did not clearly explain
that the government would absorb the full cost of the titanium forgings
under the CAP line item, and that the instructions regarding the pricing
of this item were inconsistent among offerors.  AIM Protest at 1-2.  AIM
asserted that its price *was based on including the cost of the Titanium
Forging with the understanding that the Government would reimburse [it]
for the difference as the cost of Titanium fluctuates due to the index
price.*  Id. at 1.
    
In reviewing the protests, the agency determined that the introductory
paragraph in its September 15 letters opening discussions was not
identical in all [DELETED] letters; [DELETED] of the [DELETED] letters
(including AIM*s and PCA*s) did not include the last sentence, which was
intended to clarify the CAP line item (*In accordance with those postings
please ensure that your submitted unit prices DO NOT include the cost of
titanium forgings . . . .*)  The Air Force determined that, despite
amendment No. 0001 and the FedBizOpps posting, some offerors had been
confused regarding the pricing instructions, and that corrective action
was appropriate.  On October 23, the Air Force notified PCA of its
intended corrective action, and on November 3 the agency rescinded the
award. 
    
PCA contends that corrective action was unwarranted and *not supported by
any credible evidence.*  Supplemental Comments at 2.  The protester argues
that the corrective action would be proper only if AIM *was in fact
misled* by the solicitation or by the agency*s letters and amendments
aimed at clarifying the pricing.  Id.  In this regard, PCA argues that *no
one was disadvantaged by the omission (on some [September 15] letters) of
the *critical sentence*,* because all letters advised offerors to refer to
amendment No. 0001 and to the FedBizOpps memo, receipt of which AIM
acknowledged in its protest.  Comments at 2.   
    
In negotiated procurements, agencies have broad discretion to take
corrective action where they determine that such action is necessary to
ensure fair and impartial competition.  Patriot Contract Servs., LLC et
al., B-278276.11 et al., Sept. 22, 1998, 98‑2 CPD P: 77 at 4.  Where
an agency has reasonable concerns that there were errors in a procurement,
the agency may take corrective action, even if it is not certain that a
protest of the procurement would be sustained.  Main Bldg. Maint., Inc.,
B‑279191.3, Aug. 5, 1998, 98-2 CPD P: 47 at 3.  We will not object
to proposed corrective action, so long as it is appropriate to remedy the
concern that caused the agency to take corrective action.  Network Elec.
Corp., B-290666.3, Sept. 30, 2002 CPD P: 173 at 3. 
    
The corrective action here is unobjectionable.  The prices received varied
dramatically--as noted above, from approximately [DELETED] to [DELETED]
for all offerors and from [DELETED] to [DELETED] for competitive range
offerors--and the agency concluded that the offerors* approaches to
pricing titanium was the likely cause of the disparity, notwithstanding
its efforts to clarify the CAP line item.  We have recognized that such
dramatic price differentials may reasonably be interpreted to suggest that
offerors had dissimilar understandings of the requirements.  See Federal
Sec. Sys., Inc., B-281745.2, Apr. 29, 1999, 99-1 CPD P: 86 at 5.  In these
circumstances, agencies are not required to ignore the reasonable
possibility that the disparate prices received do not accurately reflect
the competitive marketplace, and that the award based on those prices may
not reflect the most advantageous proposal.  Thus, notwithstanding the
protester*s arguments to the contrary--to the effect that all offerors
should have understood titanium pricing under the CAP line item--there was
nothing unreasonable in the agency*s determination that corrective action
was necessary to ensure both that the competition was fair and that the
award would be based on the most advantageous proposal. 
    
PCA argues that, because offerors were informed of its low price,
rescinding the original award and reopening the competition will foster an
auction and put PCA at a competitive disadvantage.  However, the Federal
Acquisition Regulation does not prohibit auctions, and agencies are not
otherwise prohibited from taking corrective action in the form of
requesting revised price proposals where the original awardee*s price has
been disclosed.  In this regard, the possibility that the contract may not
have been awarded based on a fair determination of the most advantageous
proposal has a more harmful effect on the integrity of the competitive
procurement system than does the possibility that the original awardee
will be at a disadvantage in the reopened competition.  See generally
Strand Hunt Corp., B-292415, Sept. 9, 2003, 2003 CPD P: 167 at 6. 
    
Finally, the protester requests that all prices be disclosed so that *the
other offerors would then be placed in the same predicament as PCA.* 
Supplemental Comments at 2.  However, there is no requirement that
agencies disclose other offerors* prices under circumstances such as those
here, where the awardee*s contract price has properly been disclosed. 
Alatech Healthcare, LLC--Protest; Custom Servs. Int*l, Inc.--Costs,
B-289134.3, B-289134.4, Apr. 29, 2002, 2002 CPD P: 73 at 4.  
    
The protest is denied.
    
Anthony H. Gamboa
General Counsel