TITLE: Reedsport Machine & Fabrication, B-293110.2; B-293556, April 13, 2004
BNUMBER: B-293110.2; B-293556
DATE: April 13, 2004
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Reedsport Machine & Fabrication, B-293110.2; B-293556, April 13, 2004
Decision
Matter of: Reedsport Machine & Fabrication
File: B-293110.2; B-293556
Date: April 13, 2004
Daniel L. Duyck, Esq., Schwabe, Williamson & Wyatt, for the protester.
B. J. Braun, Esq., Department of Homeland Security, 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
Allegation that agency*s combination of two groups of motor lifeboats into
one solicitation unduly restricts competition is denied where agency has
reasonably demonstrated that a single contract is necessary to satisfy its
minimum needs.
DECISION
Reedsport Machine & Fabrication protests the award of a contract to
Modutech Marine, Inc. under invitation for bids (IFB) No.
DTCG85-04-B-66B003 (IFB 003), a small business set-aside issued by the
Department of Homeland Security, United States Coast Guard, for haul out
and repair work on 47‑foot motor lifeboats (MLB) based at a group of
Coast Guard stations near Astoria, Washington. Reedsport also protests the
terms of IFB No. DTCG85-04-B-695133 (IFB 133), which requested bids for
the same work at Coast Guard stations near Seattle, Washington.
We deny the protests.
On August 21, 2003, the Coast Guard issued IFB 003, which provided for the
award of an indefinite-delivery/indefinite-quantity (IDIQ) contract for a
base year, with 4 option years. The IFB contemplated multiple awards and,
towards that end, separated the MLBs into five geographic lots. Lots 1
through 4 were each composed of one Coast Guard group, while Lot 5 was
composed of two groups (Group Seattle and Group Port Angeles).[1] Vendors
were allowed to bid on any lot, provided that its place of repair was
within 300 nautical miles of every MLB in the lot. The IFB provided that
evaluated price would include composite labor rates and foreseeable costs
to the government for transporting MLBs from home moorage to the
contractor*s place of performance. The foreseeable costs consisted of
operating costs for transporting boats, travel and per diem costs for the
Port engineer, costs for a rental car, and costs (on a mileage basis) for
transporting crew members.
By amendment issued on September 10, Station Tillamook was removed from
Lot 4 (Group Astoria), and instead placed in Lot 3 (Group North Bend).
Bid opening was October 28. Two days after bids were opened, in response
to a protest, the Coast Guard removed Lot 5 from the IFB with the intent
of recompeting it by separate solicitation. The contracting officer (CO)
subsequently found Reedsport to be in line for award of Lots 1 and 3, and
that Modutech was in line for award of Lot 4 (a third bidder was in line
for award of Lot 2, not relevant here). On December 18, the contracting
officer issued IFB 133, the resolicitation for Lot 5.
Reedsport raises numerous arguments with regard to the two solicitations.
We have considered its arguments and find all to be without merit. We
discuss the more significant arguments below.
IFB 003
Untimely Arguments
Reedsport alleges that it was improper for the Coast Guard to move Station
Tillamook from Lot 4 into Lot 3, because doing so *reduced the efficiency,
fairness, and predictability of the contracting process.* Protest at 5.
Under our Bid Protest Regulations, protests of alleged solicitation
improprieties must be filed no later than the time set for bid opening. 4
C.F.R. S: 21.2(a)(1) (2004). Reedsport*s challenge to the moving of
Station Tillamook into a different lot constitutes an alleged solicitation
impropriety, and therefore had to be raised prior to the October 28 bid
opening. Because Reedsport did not file its protest until January 7, it
is untimely. 4 C.F.R. S: 21.2(a)(1).
Reedsport does not argue that its protest is timely; rather, it asserts
that its protest should be heard under section 21.2(c) of our Regulations,
which provides that we may consider an otherwise untimely protest where
there was good cause for the untimely filing--some compelling reason
beyond the protester*s control that prevented the protester from filing a
timely protest--or the protest presents a significant issue--one of
widespread interest to the procurement community that has not previously
been considered. Industrial Acoustics Co., Inc.--Recon., B-246260.2,
Jan. 28, 1992, 92-1 CPD P: 120 at 2. This protest falls under neither
exception. Reedsport does not allege, and there is nothing in the record
to indicate, that Reedsport was somehow prevented from timely protesting
the amendment, and while the issues raised are of interest to the
protester, they are limited to the procurements in issue and are not of
widespread interest to the procurement community. See R & K Contractors,
Inc., B‑292287, July 23, 2003, 2003 CPD P: 149 at 5 n.3.
Reedsport also questions the CO*s justification for removing Station
Tillamook from Lot 4, on the basis that the agency report shows that the
justification was based in part on the CO*s miscalculation of transit
times from Modutech*s and Reedsport*s facilities. This allegation also is
untimely. Even if the protester was unaware of the underlying
justification for the amendment until it received the agency report, a
challenge to an amendment that could have been timely raised cannot
subsequently be revived by an event--such as the protester*s receipt of
documents indicating the agency*s reasoning for the amendment--that only
serves to confirm the untimely protest grounds. All Phase Envtl., Inc.,
B-292919.2 et al., Feb. 4, 2004, 2004 CPD P: __ at 9 n.4. In any case,
prejudice is a necessary element of every viable protest, and since
Reedsport was able to bid on both Lot 3 and Lot 4, it is not apparent how
the firm was competitively harmed. Indeed, Reedsport won Lot 3, and the
MLBs from Station Tillamook therefore will provide additional work for
Reedsport under the contract. Parmatic Filter Corp., B-285288.3,
B-285288.4, Mar. 30, 2001, 2001 CPD P: 71 at 11; see Statistica, Inc. v.
Christopher, 102 F. 3d 1577, 1581 (Fed. Cir. 1996).
Evaluation Arguments
Reedsport maintains that the Coast Guard made numerous mistakes in
evaluating the Lot 4 bids, including incorrectly calculating transit
distances for the boats to the contractors* facilities. Reedsport
principally asserts, in this regard, that these alleged errors resulted in
a miscalculation of the foreseeable costs added to its and Modutech*s
bids.
The agency responds that its calculations are substantially correct, and
that the protester*s calculations are incorrect because they are based on
distances measured from group headquarters (Astoria) rather than from each
boat*s station, as provided for in IFB S: M.3A. The agency further argues
that, in any case, even using the protester*s own calculation of the price
impact of the agency*s miscalculations, Modutech would remain the low
bidder.
We need not resolve the parties* dispute as to the correctness of the
calculations, since we agree with the agency that, even accepting the
protester*s calculations, its evaluated price would not be low. In this
regard, Reedsport maintains that using the correct distances in the
foreseeable cost calculation would increase the costs for Modutech by
$21,240 for each of the 5 contract years (1 base and 4 option years), for
a total of $106,200. Comments, Feb. 17, 2004, at 5. As the agency points
out, since Modutech*s evaluated bid price was $113,047 lower than
Reedsport*s, Modutech*s bid would remain low even if Reedsport*s position
is correct. We note that Reedsport does not rebut the agency*s position
in this regard. See Comments on Supplemental Agency Report, Mar., 1,
2004. We conclude that there is no showing of competitive prejudice, and
that this argument therefore does not provide a basis for sustaining the
protest.[2]
IFB 133
Reedsport alleges that IFB 133 unduly restricts competition by
unnecessarily combining Group Port Angeles and Group Seattle in the same
solicitation. Reedsport states that it is unable to bid on the
solicitation because Station Bellingham (in Group Seattle) is beyond the
300 nautical mile requirement for its repair facility. Reedsport claims
it is unreasonable for the Coast Guard not to remove Station Bellingham
from Lot 5 in order to permit Reedsport to compete, since it removed
Station Tillamook from Lot 4 to increase competition.
The Competition in Contracting Act of 1984 (CICA) generally requires that
solicitations include specifications that permit full and open
competition, and contain restrictive provisions and conditions only to the
extent necessary to satisfy the needs of the agency. See 10 U.S.C. S:S:
2305(a)(1)(A), (B) (2000). Since bundled, consolidated or total-package
procurements combine separate, multiple requirements into one contract,
they have the potential for restricting competition by excluding firms
that can only furnish a portion of the requirement. We review such
solicitations, when they are protested, to determine whether the approach
is reasonably required to satisfy the agency*s legitimate needs. The
Sequoia Group, Inc., B-252016, May 24, 1993, 93-1 CPD P: 405 at 4.
The agency explains that the combined solicitation is necessary because
Group Seattle contains only one MLB (located at Station Bellingham), which
may not generate sufficient repair work to meet the $10,000 minimum amount
under the contemplated IDIQ contract. A separate contract for Group
Seattle also would deprive the agency of the potential cost benefit from a
single contractor*s economies of scale that would result from repairs on
more than one boat, and also would unnecessarily increase contract
administration costs. The agency determined that, notwithstanding that
Reedsport would not be able to compete, combining the Groups would not
result in a limited competition, since 10 firms expressed interest in the
requirement as structured.
The agency*s approach is unobjectionable. We see no reason why the agency
should not be permitted to consider, in configuring the lots for
solicitation purposes, the amount of work that would be generated under
different combinations of groups, stations and boats, and the potential
effect on the prices for that work (due, for example, to economies of
scale), as well as whether the work generated for the single MLB would
satisfy the contract minimum.[3] While these considerations resulted in
Reedsport*s exclusion from the competition, it is clear that the Coast
Guard gave due consideration to the broader competitive impact of its
approach. In this regard, based on the numerous expressions of interest,
the agency concluded that it could achieve the operational benefits of its
approach while possibly receiving greater competition than it did under
IFB 003.[4] In arguing that its own inability to compete renders the
solicitation restrictive, Reedsport ignores other legitimate competitive
considerations that would lead to a different conclusion. For example,
while splitting the requirement would enable Reedsport to compete for the
Station Port Angeles MLBs, this might at the same time result in little or
no competition for the single MLB at Station Bellingham. Similarly,
Reedsport*s position fails to take into account the possibility that
combining the two groups could make the requirement more attractive to
some potential bidders, and ultimately result in greater competition
overall. We conclude that the agency reasonably combined the two groups
under Lot 5.[5]
Reedsport asserts that the Coast Guard has violated various federal
procurement principles and policies, including, for example, the Federal
Acquisition Regulation*s (FAR) general policy of encouraging the
government to use contractors with a successful track record in performing
government contracts, or who demonstrate a current superior ability to
perform. This argument is without merit. There is no evidence that the
procurements here were conducted, or that awards have been made, in
contravention of any policies embodied in the FAR.
The protests are denied.
Anthony H. Gamboa
General Counsel
------------------------
[1] A group is a Coast Guard entity that traditionally encompasses several
Coast Guard stations. Individual MLBs are generally assigned to a
specific Coast Guard station, and have no permanent crew.
[2] Reedsport also alleges that the agency failed to consider certain
foreseeable costs--most notably, the cost of hotel rooms for crew members
who transport MLBs to the repair facility--in its evaluation. However,
the costs cited by the protester were not among the five identified in the
IFB as foreseeable costs that would be considered; they therefore properly
were excluded from the evaluation. To the extent the protester believed
these costs should have been factored into the evaluation, it was required
to protest on this basis prior to bid opening. 4 C.F.R. S: 21.2(a)(1).
[3] The protester does not question the need for a $10,000 minimum to make
the requirement of sufficient magnitude to obtain adequate competition and
a reasonable price.
[4] Reedsport questions how meaningful these expressions of interest are,
given that fairly limited competition (three original expressions of
interest and only one responsive bid) was received for Lot 5 under IFB
003. The agency points out, however, that substantially greater interest
(10 firms) has been expressed in Lot 5 as a stand alone requirement, and
notes further that 4 of the 10 firms have ongoing business relationships
with the agency, leading to greater confidence that they may compete.
Supplemental Report, Feb. 26, 2004, at 4.
[5] Reedsport asserts that, in the past, the Coast Guard has not combined
groups in soliciting for boat repairs. The Coast Guard responds that it
has never combined groups because it has never had a group with only one
MLB in it before, and that it has never issued a solicitation for a single
MLB.