TITLE:  One Source Mechanical Services, Inc.; Kane Construction, B-293692; B-293802, June 1, 2004
BNUMBER:  B-293692; B-293802
DATE:  June 1, 2004
**********************************************************************
One Source Mechanical Services, Inc.; Kane Construction, B-293692; B-293802,
June 1, 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:   One Source Mechanical Services, Inc.; Kane Construction
    
File:            B-293692; B-293802
    
Date:              June 1, 2004
    
Johnathan M. Bailey, Esq., Bailey & Bailey, for the protesters.
Joseph A. Gonzales, Esq., and Larry E. Beall, Esq., United States Army
Corps of Engineers; and Kenneth Dodds, Esq., Small Business
Administration, for the agencies.
Paul N. Wengert, Esq., and Michael R. Golden, Esq., Office of the General
Counsel, GAO, participated in the preparation of the decision.
DIGEST
    
Protest that the agency failed to provide maximum practicable preference
to making multiple awards under solicitations for services, as required by
the Federal Acquisition Regulation, is sustained where contracting
officer*s conclusion that multiple-award approach could not be used is not
supported by the record.
DECISION

   One Source Mechanical Services, Inc. (OSMS), a small business, protests
the terms of request for proposals (RFP) No. W91278-04-R-0007, issued by
the United States Army Corps of Engineers, for the award of a single
indefinite-delivery, indefinite-quantity (ID/IQ) contract for the
operation, maintenance, repair, and minor construction of Army Medical
Command (MEDCOM) facilities in the United States (the O&M RFP). OSMS
protests the Corps*s decision not to set aside part or all of the
procurement for small businesses, and objects to the Corps*s decision not
to permit multiple awards under the solicitation.

   Kane Construction, a small business, protests the terms of solicitation
No. W91278‑04‑R‑0012, issued by the United States Army
Corps of Engineers, for the award of a single ID/IQ contract for the
renovation, repair, and minor construction at various MEDCOM facilities in
the United States (the Renovation RFP).Kane protests the Corps*s decision
not to permit multiple awards under this RFP as well.
    

   We sustain the protests.
These protests involve two solicitations of a planned set of 13 ID/IQ
*toolbox* contracts to provide assessment, construction, renovation,
repair, and maintenance services to support MEDCOM.  Agency Report (AR)
for O&M RFP, Tab H, Revised Acquisition Plan, at 3.  The acquisition plan
contemplated that the 13‑contract *toolbox* would consist of three
contracts for architect-engineer services, three contracts for renovation,
repair, and minor construction, three contracts for construction repair
and maintenance services (5‑year contracts, awarded separately at
2-year intervals), two contracts for asbestos abatement and removal
services, one contract for facility assessment studies, and one contract
for preventative maintenance and inspections.  Id. 
The O&M RFP was issued on December 17, 2003.  The Corps anticipated making
a single contract award to the *best value* offeror selected through full
and open competition.  As revised by amendment No. 3, the RFP provided
that initial proposals were due on February 26, 2004.  On February 20, the
Corps postponed the due date for receipt of initial proposals pending a
decision from our Office on OSMS*s timely protest. 
The Renovation RFP was issued on February 10, 2004.  The Corps anticipated
making a single contract award to the best value offeror selected through
full and open competition.  As revised by amendment No. 1, the RFP
provided that initial proposals were due on March 11.  On March 9, the
Corps postponed the due date for receipt of initial proposals pending a
decision from our Office on Kane*s timely protest. 
From the time of acquisition planning through the issuance of the two
solicitations at issue in these protests, the Corps*s intent has been to
make a single award under each solicitation.  After issuance of the O&M
RFP, a potential offeror (not one of the protesters) complained to the
Corps that multiple awards were required for that solicitation, as well as
for any subsequent solicitations.  AR for O&M RFP, Tab J, Letter from
Potential Offeror to Contracting Officer, at 3 (Dec. 29, 2003). 
Responding to that company*s argument, the contracting officer executed a
document, entitled *Determination and Findings Decision to Use Single
Award Task Order Approach,* which was dated January 22, 2004 for the O&M
RFP.  AR for O&M RFP, Tab I, Determination & Findings.  The contracting
officer executed an identically-entitled (and substantially similar)
document for the Renovation RFP on the same date.  AR for Renovation RFP,
Tab J, Determination & Findings. 
The Federal Acquisition Streamlining Act of 1994 requires that the
implementing regulations--here, the Federal Acquisition Regulation
(FAR)--express a preference for awarding multiple task or delivery order
contracts for the same or similar services or property, and establish
criteria for determining whether multiple contracts would not be in the
best interest of the government.  10 U.S.C. S: 2304a(d) (2000). 
Accordingly, the FAR provides that during acquisition planning, the
contracting officer must, to the maximum extent practicable, give
preference to making multiple awards of indefinite-quantity contracts
under a single solicitation for the same or similar supplies or services
to two or more sources.  FAR S: 16.504(c).  However, the FAR provision
identifies a number of circumstances where, if applicable, the contracting
officer cannot use the multiple-award approach.  The contracting officer
is required to document his decision.  Id.  Specifically, the FAR provides
as follows:
(c) Multiple award preference -- 
(1) Planning the acquisition.
(i) Except for indefinite-quantity contracts for advisory and assistance
services as provided in paragraph (c)(2) of this section, the contracting
officer must, to the maximum extent practicable, give preference to making
multiple awards of indefinite-quantity contracts under a single
solicitation for the same or similar supplies or services to two or more
sources.
(ii)(A) The contracting officer must determine whether multiple awards are
appropriate as part of acquisition planning.  The contracting officer must
avoid situations in which awardees specialize exclusively in one or a few
areas within the statement of work, thus creating the likelihood that
orders in those areas will be awarded on a sole-source basis; however,
each awardee need not be capable of performing every requirement as well
as any other awardee under the contracts.  The contracting officer should
consider the following when determining the number of contracts to be
awarded:
(1) The scope and complexity of the contract requirement.
(2) The expected duration and frequency of task or delivery orders.
(3) The mix of resources a contractor must have to perform expected task
or delivery order requirements.
(4) The ability to maintain competition among the awardees throughout the
contracts* period of performance.
(B) The contracting officer must not use the multiple award approach if-
(1) Only one contractor is capable of providing performance at the level
of quality required because the supplies or services are unique or highly
specialized;
(2) Based on the contracting officer*s knowledge of the market, more
favorable terms and conditions, including pricing, will be provided if a
single award is made;
(3) The expected cost of administration of multiple contracts outweighs
the expected benefits of making multiple awards;
(4) The projected task orders are so integrally related that only a single
contractor can reasonably perform the work;
(5) The total estimated value of the contract is less than the simplified
acquisition threshold; or
(6) Multiple awards would not be in the best interests of the Government.
(C) The contracting officer must document the decision whether or not to
use multiple awards in the acquisition plan or contract file.  The
contracting officer may determine that a class of acquisitions is not
appropriate for multiple awards (see subpart 1.7).
FAR S: 16.504(c)(1). 
As indicated above, in each of these procurements, the contracting officer
prepared a justification document, which concluded that multiple awards
were not in the best interest of the government for these solicitations. 
In the justification documents, the contracting officer relies on four of
the exceptions identified in the FAR for his conclusion that he could not
use the multiple-award approach for these acquisitions.  The contracting
officer*s reasons were first, that more favorable terms and conditions
could be obtained through a single award (see FAR
S: 16.504(c)(1)(ii)(B)(2)); second, that the cost of administering
multiple awards outweighed the expected benefit (see FAR
S: 16.504(c)(1)(ii)(B)(3)); third, that orders were so integrally related
that only one contractor could reasonably perform the work (see FAR
S: 16.504(c)(1)(ii)(B)(4)); and fourth, that multiple awards would not be
in the best interest of the government (see FAR
S: 16.504(c)(1)(ii)(B)(6)).[2]  The contracting officer*s reasoning in
both procurements was largely the same on each point.  We recognize that
the existence of circumstances supporting any one of the exceptions would
be sufficient to justify making a single award.  However, in our view, the
contracting officer*s rationales contained in the justification documents
are not sufficient to reasonably overcome the preference for multiple
awards under these RFPs.
Regarding the first exception, that *more favorable terms and conditions,
including pricing, will be provided if a single award is made,* the
contracting officer does not identify any more favorable terms and
conditions that would result from a single award.  Rather, the contracting
officer focuses on the administrative convenience of issuing task orders
under an ID/IQ contract to a single firm versus awarding individual
contracts for each discrete project.  The contracting officer explains
that the Corps requires the ability to *efficiently facilitate the
resolution of varying sustainment and maintenance problems that
continually develop in the facility infrastructure of hospitals and
clinics throughout MEDCOM.*  The contracting officer then emphasizes that
the Corps seeks to *alleviate[s] the regulatory mandated lead times
normally required for repeated advertisement and award of individual . . .
contracts.*  The justifications also point out the importance of allowing
*maintenance repair activities to begin within a few days (hours for
emergencies) due to the pre-priced nature of the contract . . . and its
ability to issue individual task orders in a rapid fashion.*  Finally the
justifications emphasize the *intense price competition *up-front** and
refer generally to the prospect of obtaining *[e]conomies of scale.*  AR
for O&M RFP, Tab I, Determination & Findings, at 3; AR for Renovation RFP,
Tab J, Determination & Findings, at 2. 
In response, OSMS argues that, typically, task order competitions under a
multiple-award approach *will certainly provide an advantage to the
Government, by potentially receiving a true *best value* proposal and
providing a competitive savings.*  O&M RFP Protest at 8.  Similarly, Kane
argues that as a *fundamental tenet . . . more competition produces better
quality services at a lower price.*  Renovation RFP Protest at 5.  Thus,
the protesters argue that better terms and conditions, including better
quality services and pricing, will result from awarding multiple
contracts.
We do not think the contracting officer has justified an exception to the
preference for the multiple-award approach under this basis.  As stated
above, the contracting officer has not identified any more favorable terms
and conditions that would result from a single award.  His reasoning
addresses the benefits of using an ID/IQ contract generally, as opposed to
conducting full and open competition and then awarding an individual
contract for each discrete project.  However, this reasoning alone does
not provide support for the claim that a single-award contract will result
in more favorable terms and conditions than using a multiple-award
approach.  The contracting officer does not explain how concerns about
lead times and flexibility cannot also be eliminated or minimized through
the use of multiple awards.  Also, where a more formal source selection
procedure is necessary to evaluate multiple-award vendors, the contracting
officer provides no explanation why such a competition cannot be conducted
in a short period among multiple-award contractors prior to issuing a task
order.  See, e.g., SMF Sys. Tech. Corp., B‑292419.3, Nov. 26, 2003,
2003 CPD P: 203 at 5 (for a multiple-award task order competition, time
from issuance of a request for quotations to announcement of results was
approximately 2 weeks when using negotiated procurement techniques).  Nor
do vague references to the prospect of obtaining greater economies of
scale through a single award, without more supporting detail, overcome the
preference for multiple awards in statute and regulation.  See WinSTAR
Communications, Inc. v. United States, 41 Fed. Cl. 748, 762 (1998) (agency
reliance on predicted economies of scale, *[did] not provide a reasonable
basis for overriding the Congressional preference for multiple awards*). 
In short, we do not think the contracting officer has shown why this
exception to the use of multiple awards is applicable here.
Regarding the second exception, that administrative costs of multiple
awards will outweigh the benefits, the contracting officer in his
justifications asserts that if multiple contracts were to be awarded, the
Corps would be required to use a complex evaluation process to issue task
orders, and often would not select the low-priced task order response. 
Thus, the contracting officer asserts that the administrative costs of the
process would eliminate any anticipated savings from competitions among
multiple contractors. 
The protesters respond that the administrative burden of selecting among
multiple awardees should not be much greater than issuing a task order to
a single contractor, particularly given a decade of experience by the
Corps in obtaining these services under task order contracts.  O&M RFP
Protest at 9; Renovation RFP Protest at 5.  The protesters also argue that
the savings accruing to the Corps are more significant than the costs, and
that competition for task orders does not need to be elaborate. 
Protester*s Comments on O&M RFP at 5; Protester*s Comments on Renovation
RFP at 7. 
In his justification documents, the contracting officer provides no
meaningful support for his conclusion that the administrative costs of
multiple awards will outweigh the benefits.  For example, the contracting
officer does not explain why a *formal* competition among contract holders
for each task order would be necessary.  The regulations applicable to the
task order competitions urge agencies
to employ a streamlined process in placing task orders.[3]  Indeed, the
purpose of multiple-award ordering is to provide a simplified process and
to permit flexibility in issuing task orders.  S. Rep. No. 103-258, at 16
(1994), reprinted in 1994 U.S.C.C.A.N. 2561, 2576 (seeking to provide
*agencies broad discretion in establishing procedures for the evaluation
and award of individual task orders under multiple award contracts*).  The
record contains no indication that the effect of competition among
multiple contractors or the flexibility of having multiple contractors
available was meaningfully considered by the contracting officer.  Cf.
Office of Federal Procurement Policy, Office of Management & Budget, Best
Practices for Multiple Award Task & Delivery Order Contracting (interim
ed. 1997) at chapter 4, available at
http://www.acqnet.gov/AcqNet/Library/OFPP/BestPractices (*When developing
ordering procedures for multiple award contracts, agencies are encouraged
to . . . develop more streamlined and simplified procedures [than
traditional single-award contracts] in order to take advantage of the
flexibilities envisioned by FASA and the FAR guidance.*). 
In an effort to further support the contracting officer*s position that
the administrative costs of multiple awards will outweigh the benefits,
the agency reports contain analyses that evaluate the costs, time
required, and expected savings resulting from a hypothetical task order
competition among multiple vendors versus issuing an order to the single
awardee under the contract.  AR for O&M RFP, Tab M, Memorandum for Record
(Jan. 22, 2004); AR for Renovation RFP, Tab L, Memorandum for Record (Mar.
5, 2004).  These analyses are based on assumptions that increase the costs
of the multiple-award approach.  For example, the analyses assume that the
process of soliciting *proposals* and issuing the task order would take
twice as long as ordering from a single contractor.  However, the
differing assumptions are unexplained, such as a 10‑day *scheduling
lag* for site visits and a 3‑day pre-proposal conference for a
competition among multiple awardees.  It is not apparent that either
analysis was based on any relevant agency historical experience with
multiple awards.  Further, the analyses assume a more formal source
selection process not required by the FAR or DFARS, which again lacks any
supporting basis.  Without meaningful support for the timeframes and
process assumed in these analyses, we do not believe it is appropriate to
give any weight to them. 
Regarding the third exception, that task orders will be so integrally
related that using multiple contractors would be unreasonable, the
justifications describe how having multiple contractors would necessitate
holding competitions for a task order for each separate part of a project
at a particular site.  Therefore, according to the contracting officer, if
the agency*s source selections result in awards to multiple firms for
different, but related, projects at a particular site, the consequences
would be increased delay in mobilizing to perform the work and greater
likelihood of difficulties in coordinating contractors. 
The protesters basically argue that these concerns are overstated and fail
to take into account the discretion, afforded by the regulations, to a
contracting officer in placing task orders to address projects that are
integrally related at a particular site.  The protesters note that the
Corps also does not appear to argue that all work within a single site is
integrally related, much less that work at different sites is integrally
related.  Protester*s Comments on O&M RFP at 4; Protester*s Comments on
Renovation RFP at 5. 
As pointed out by the protesters, the contracting officer is not required
to consider more than one contractor for a task order where the
contracting officer determines that the order must be issued on a
sole-source basis in the interest of economy and efficiency because it is
a logical follow-on to an order already issued under the contract,
provided that all awardees were given a fair opportunity to be considered
for the original order.[4]  See FAR S: 16.505(b)(2)(iii); DFARS S:
216.505-70(b)(1).  The contracting officer*s justification documents do
not discuss these flexibilities found in the FAR and DFARS.  Moreover, the
Corps does not claim that task orders performed at different facilities
would have any integral relationship--only certain orders at a single site
or facility.  See AR on O&M RFP, Tab B, Contracting Officer*s (CO)
Statement, at 6 (*Task orders for continuing maintenance at a given site .
. . are integrally related*); AR on Renovation RFP, Tab B, CO Statement,
at 7 (*For a given construction and/or repair requirement, the site
survey, work plan, and construction/repair work are integrally
related*).[5]  Thus, it does not appear from the record that the
contracting officer considered the latitude afforded him under the
regulations to address integrally related tasks at a particular site. 
Further, the contracting officer does not provide any information as to
the number of orders under these contracts that are, in his view,
integrally related.  Under these circumstances, the contracting officer*s
reliance on this exception is not reasonably supported. 
Regarding the final exception, that a single award is in the best interest
of the government, as cited in both justifications, the contracting
officer basically refers to his previous conclusions under the other
exceptions and concludes that, together, these grounds support a
determination that the best interest of the government does not support
making multiple awards.  For the same reasons that we found these
rationales insufficient under the previous exceptions, we find them
insufficient to support the best interest exception. 
In the best interest section of the justification for the O&M RFP, the
contracting officer also makes a more extensive argument, asserting that
*it is impossible to accurately shape and articulate the [task order]
maintenance performance requirements in 100% biddable detail,* which
supposedly could be needed in order to permit task order competition.[6] 
AR on O&M RFP, Tab I, Determination & Findings, at 4.  To the extent that
the contracting officer justifies the single-award approach on the basis
that the individual projects are not well defined or cannot readily be
estimated, these difficulties would exist regardless of whether a single
contractor was available, or multiple contractors were available, to
perform the work. 
In summary, we conclude that the contracting officer*s rationale for
employing the exceptions under FAR S: 16.504(c)(1)(B) is not adequately
supported.  Therefore, our Office concludes that the Corps failed to
comply with the FAR in determining whether these solicitations should have
been issued on a multiple-award basis.
The protests are sustained.[7]  Our Office recommends that the Corps
reconsider whether, in accordance with FAR S: 16.504(c), these
solicitations should be competed on a multiple-award basis, and that the
Corps document a well-supported rationale for the conclusion reached with
respect to each solicitation.  Our Office also recommends that each of the
protesters be reimbursed for the reasonable costs of filing and pursuing
its protest.  Bid Protest Regulations, 4 C.F.R. S: 21.8(d)(1) (2004). 
Each protester should submit its certified claim for costs, detailing the
time expended and costs incurred, directly to the Corps within 60 days
after receipt of this decision. 
Anthony H. Gamboa
General Counsel 
    
    

   ------------------------

   [1] Although Kane also initially protested the agency*s failure to set
aside the Renovation RFP for small businesses, it withdrew this ground of
protest after receipt of the agency report.  Kane*s Comments on Renovation
RFP at 7.
[2] In each of the agency reports, the Corps adds an additional argument
that, in accordance with FAR S: 16.504(c)(1)(ii)(B)(1), the services
required here are so unique or highly specialized that only one contractor
is capable of providing performance at the level of quality required.  AR
for O&M RFP, Tab B, CO Statement, at 4; AR for Renovation RFP, Tab B, CO
Statement, at 5.  However, the record in each protest contains no basis
for this conclusion.  While, as the agency asserts, it may well be that
the capability to provide some particular services is *not common in every
contractor*s capability, experience, and/or past performance history,*
there is nothing in the form of market research or other information in
the record to support the agency*s view that only one contractor is
capable of performing these contracts.  Id.  Indeed, FAR
S: 16.504(c)(1)(ii)(B)(1) appears to envision a sole-source contract
award, something that clearly is not contemplated here by the Corps.  In
fact, the Corps affirmatively states in each agency report that it *has
knowledge of several contractors capable of competing to provide
performance at the level of quality required.*  Id. 
[3] In fact, the regulations established pursuant to Section 803 of the
National Defense Authorization Act for Fiscal Year 2002, Pub. L. 107-107,
115 Stat. 1012, 1178 (Dec. 28, 2001) (Section 803) states that the
contracting officer should keep contractor submission requirements to a
minimum, and that the contracting officer can use streamlined procedures. 
Defense Federal Acquisition Regulation Supplement (DFARS)
S: 216.505‑70(d) (2003). 
[4] The same exception applies directly for task orders between $2,500 and
$100,000, even though those task orders are governed by the *fair
opportunity* standard of FAR S: 16.505(b)(2), rather than by the
*competitive basis* requirement of Section 803.  FAR
S: 16.505(b)(2)(iii). 
[5] The contracting officer appears to reinforce the protester*s argument
that, even though some construction/repair work at a site is integrally
related, not all of the work at a site must be assigned to one
contractor.  AR on Renovation RFP, Tab B, CO Statement, at 7. 
[6] Rather than relying on preparation of specifications in *100% biddable
detail,* the FAR directs that *[p]erformance-based work statements must be
used to the maximum extent practicable, if the contract or order is for
services.*  FAR S: 16.505(a)(3). 
[7] As indicated above, in its protest, OSMS raised the additional issue
of whether the Corps had reasonably decided not to set aside for small
businesses, either partially or in its entirety, the O&M RFP.  After the
Corps submitted additional documentation (including contemporaneous
approval by the Small Business Administration (SBA) representative), the
SBA provided comments to our Office indicating that the SBA agreed that a
set-aside was not required.  Although OSMS maintains that its research
demonstrates that acceptable offers from two or more small businesses
would be expected if the O&M RFP were to be set aside, based on the
record, we conclude that the Corps conducted a sufficient inquiry and
reasonably concluded that the procurement did not need to be set aside in
any manner.  See Rochester Optical Mfg. Co., B-292247, Aug. 6, 2003, 2003
CPD P: 138 at 3.  We, therefore, deny this ground of protest.