TITLE: Greenlee Construction, Inc., B-294338, October 26, 2004
BNUMBER: B-294338
DATE: October 26, 2004
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Decision
Matter of: Greenlee Construction, Inc.
File: B-294338
Date: October 26, 2004
Gary Greenlee for the protester.
Sandra Balmer, Esq., General Services Administration, for the agency.
Paul N. Wengert, Esq., and Michael R. Golden, Esq., Office of the General
Counsel, GAO, participated in the preparation of the decision.
DIGEST
Protest is sustained where agency had no basis to cancel solicitation
because, notwithstanding the agency's claim that cancellation was
justified because the solicitation allegedly indicated two different
methodologies by which to determine the lowest-priced offer entitled to
award, the agency was unable to articulate an example or methodology that
would, while remaining consistent with the solicitation, establish that
the protester's price was not the lowest price received.
DECISION
Greenlee Construction, Inc., a small business, protests the award of a
contract to another offeror by the General Services Administration (GSA)
under solicitation for offers (SFO) No. GSa**04P-04-RBD-0015. Prior to
filing the agency report, GSA announced that it intended to take
corrective action by terminating the awarded contract and soliciting new
offers. Greenlee then amended its protest to object to the cancellation,
asserting that the agency lacked a basis to cancel the solicitation and
arguing that it was entitled to the award because it had submitted the
lowest-priced acceptable offer.
We sustain the protest.
The solicitation, issued on October 28, 2003 as a total small business
set-aside, sought "bids" for two main elements: "partition" and
"asbestos" within the Atlanta South Property Management Center.[1]
Partition (or "partitioning") involves various tasks for a range of
construction disciplines, while "asbestos" (or "asbestos removal")
involves removal and abatement of asbestos. Contracting Officer's (CO)
Statement atA 1. The solicitation anticipated the award of an
indefinite-delivery, indefinite-quantity contract for a base year,
followed by 2 option years. SFO atA 189.
The SFO contained 1,757 line items, each indicating the quantity and unit
cost estimate for performing a particular piece of work. SFO amend. 5.
Rather than inviting firms to propose prices for the work, the SFO
directed interested firms to submit a bid in the form of percentage
discounts from (or increases to) the estimated prices in the SFO. Firms
were cautioned not to offer separate specialized discounts for any
discrete line items; rather, a bid was required to consist of separate
percentages for four categories of work: partition work performed during
regular working hours,[2] partition work performed outside working hours,
asbestos work performed during regular working hours, and asbestos work
performed outside working hours. SFO at 5. Thus, each responsive bid
would provide only four separate percentage figures for each of the
3A years--a total of 12 figures.
The SFO also indicated that, for purposes of price evaluation, 75 percent
of the work would be assumed to be partition work and 25 percent would be
asbestos work. CO Statement atA 1; SFO atA 187. For the purpose of
evaluating prices, the SFO stated that 80 percent of the partition work
would be assumed to be performed during regular working hours and 20
percent of the work outside of regular working hours. Of the asbestos
work, the evaluation was to be based on 75 percent of the work being
performed during regular working hours and 25 percent of the work being
performed outside regular working hours.[3] SFO at 186-88.
The SFO stated that "award will be made to the responsive, responsible
offeror submitting the lowest total evaluated bid price." SFO at 187.
The SFO described a formula for evaluating the bids and provided an
example of the application of the formula. According to the formula, for
each category of work, GSA would multiply the proportion of the work
(partition vs. asbestos) by the distribution of the work (regular working
hours vs. outside working hours) by the sum of the percentages bid for
each of the 3 years.[4] SFO at 187-88.
A corresponding calculation would be performed for each of the three other
categories of work (partition work outside working hours; asbestos work
during working hours; and asbestos work outside working hours). The
resulting four percentages would be added together to arrive at a total
percentage.[5]
GSA applied the formula to each of the three bids received. As evaluated
in accordance with the formula, the protester bid the largest discount.
In each year, the protester bid "NET" (i.e., accepting the government
estimate without discount or markup) on partition work, but on asbestos
work, it bid a 45 percent discount during working hours, and a 30 percent
discount outside of working hours. The awardee's bid ranged from 1
percent to 6 percent discounts in the base year, and escalated its bid in
the option years, to a range from a 2 percent discount to a 3 percent
markup in the second option year. For reasons that are not clearly
documented in the record, although Greenlee bid the largest discounts, the
agency nevertheless made award to Adams-Brown Service, Inc. GSA'sA letter
announcing the award simply identified the awardee's base year percentage
discounts, but did not otherwise explain why the protester did not receive
the award, given its greater discounts. Protest, exh. E, Letter from
Contracting Officer to Protester (July 13, 2004).
The protester filed a protest with our Office on July 19, objecting to the
award as contrary to the SFO. Protest at 1. On August 11, prior to the
due date for an agency report, GSA requested dismissal of the protest on
the grounds that GSA had "decided to take corrective action in this
matter" and would "terminate the contract for convenience and re-solicit
offers." Letter from Agency Counsel to GAO (Aug. 11, 2004). The
protester subsequently objected to the corrective action, arguing that GSA
was denying the protester a contract as retribution for what the protester
claims was its president's assistance in a federal criminal prosecution
against GSA contracting officials allegedly indicted for corruption. The
protester maintained that award could--and should--be made to it, as the
bidder submitting the lowest price, i.e., the greatest discount. Letter
from Protester to GAO (Aug. 12, 2004).
On August 19, the agency responded by explaining that the SFO contained
references to the award being made both on the basis of "percentage" and
on the basis of "price." The agency argued that while the protester's bid
was lowest on the basis of percentages, "the Awardee was far lower than
the Protester when prices were calculated." According to the agency, "The
Government's savings [by making award to Adams-Brown] using price [to
analyze bids] was more than $120,000,000." Letter from Agency Counsel to
GAO (Aug. 19, 2004). We requested that GSA provide a report on these
issues.
On September 15, the agency submitted a report to our Office. The agency
report provided only two exhibits, a copy of the SFO and an undated price
analysis.[6] According to the contracting officer's statement, prior to
award, the agency determined that the SFO references to "price" meant that
the agency should analyze bids by looking at the effect of discounts on a
sample line item. CO Statement at 2-3. The agency selected a single line
item (valued at $8.63) from the partition work and applied the protester's
and the awardee's base-year regular working hours percentages. Id. In
the base year, since the protester had proposed to discount only the
asbestos work, while the awardee had proposed to discount both the
partition and the asbestos work, GSA concluded that, if award were made to
Greenlee, the agency "would be paying higher prices for partition--a
significant majority of the work--once prices were calculated." Id.
To demonstrate the validity of its conclusion to our Office, the agency
prepared a further price analysis. In its price analysis, the agency
applied an estimated annual ordering level of slightly more than one
billion dollars[7] and calculated the price to be paid to the awardee and
the protester. That analysis appeared to show that the awardee's bid
would result in savings to the government of $104,661,233.61 over the
3-year maximum term of the contract. However, when our Office reviewed
the agency's data, we discovered that GSA's spreadsheet assumed that
99.9804A percent of the cost would be for partition work and only 0.0196
percent for asbestos work (rather than 75 percent and 25 percent,
respectively, as specified in the SFO). Agency Report, exh. 2, Breakdown
of Price Evaluation, atA 3. We then requested that the agency provide a
new spreadsheet, redistributing the estimated annual workload on the basis
specified in the SFO (75 percentA to partition and 25 percent to
asbestos).[8] The agency's corrected spreadsheet shows that the agency
would pay $225,729,148.69 more under the awardee's bid than the
protester's.[9] Agency's Revised Calculation at 4.
In a negotiated acquisition, agencies have broad discretion in deciding
whether to cancel a solicitation; they need only advance a reasonable
basis for the cancellation.[10] Sunshine Kids Serv. Supply Co., B-292141,
June 2, 2003, 2003 CPD PA 119 at 2; Encore Mgmt., Inc., B-278903.2, Feb.
12, 1999, 99-1 CPD P 33 at 3. Where it has an adequate basis, anA agency
properly may cancel a solicitation no matter when the information
supporting the cancellation first surfaces or should have been known.
Pike Creek Computer Co., Ba**290329, June 21, 2002, 2002 CPD P 106 at 2.
Here, we see no basis for GSA's decision to cancel the SFO. The agency
has been unable to articulate how the alleged difference between the
"price" and "percentage" methodologies supports its position that Greenlee
may not have submitted the lowest price under this SFO. The two analyses
GSA has provided in the record were both so flawed as to provide no
support for the agency's position. First, GSA apparently relied on an
analysis applying the offerors' base year discounts to a single $8.63 item
under partition work. That analysis was not representative of the work to
be performed because it was based only on base year discounts and ignored
the asbestos work required under the SFO. GSA's second analysis relied on
a split between the partition and asbestos work that was grossly
inconsistent with the split specified in the SFO. Even if we assume that
there is a difference between a price-based methodology and a
percentage-based one under the SFO, the agency has not furnished a
reasonable price analysis to support the conclusion that the protester was
not the lowest-priced offeror under either of those methodologies. Since
the agency justified cancellation only on a claim that the two
methodologies generated different results, and that claim was unsupported,
the agency has failed to provide any basis for the cancellation.
The protest is sustained.
We recommend that if the agency has not yet terminated the award to
Adamsa**Brown, as the agency proposed to do in announcing corrective
action, it should terminate that contract. If the agency has already
canceled the solicitation, it should reinstate the solicitation. In any
event, if the agency finds the protester otherwise eligible for award, the
agency should make award to the protester as the firm that submitted the
lowest-priced offer. We further recommend that Greenlee be reimbursed its
costs of filing and pursuing this protest, including reasonable attorneys'
fees. Bid Protest Regulations, 4 C.F.R. SA 21.8(d)(1) (2004). The
protester should submit its certified claim for such costs, detailing the
time expended and costs incurred, directly to the agency within 60 days of
receipt of this decision. 4 C.F.R. S 21.8(f)(1).
Anthony H. Gamboa
General Counsel
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[1] As will be seen throughout this decision, the solicitation uses the
terms "bidder" and "bid"--terms usually associated with sealed
bidding--interchangeably with "offeror" and "offer," terms that are
frequently used in connection with a negotiated acquisition. In block 2
(type of solicitation) of Standard Form 1442, the selection for
"Negotiated (RFP)" has an "X." SFO at 3. GSA apparently uses SFOs for
both negotiated procurements, see, e.g., Arsenault Acquisition Corp.; East
Mulberry, LLC, Ba**276959, B-276959.2, Aug. 12, 1997, 97-2 CPD P 74 at 1,
and sealed bidding procurements, see, e.g., Capitol Contractors, Inc.;
Baker Roofing Co., B-248944, Ba**248944.2, Oct. 22, 1992, 92-2 CPD PA 267
at 3. See 48 C.F.R. SA 570.102 (2004) ("Solicitation for Offers (SFO)
means invitation for bids in sealed bidding or request for proposals in
negotiations.") This decision necessarily reflects the seemingly
contradictory language of the solicitation because it is unclear, from the
record produced here, what procedures the agency intended to follow for
this acquisition.
[2] Regular working hours were defined as the period from 8:00 a.m. to
5:00 p.m. SFOA at 186.
[3] The SFO specified for both partition and asbestos work that 80 percent
of the work would be performed during regular working hours and 20 percent
of the work would be performed outside regular working hours. SFO at
186. For partition work, the agency has followed this 80/20 split.
However, the agency has consistently used a split of 75 percent regular
working hours and 25 percent outside working hours for asbestos
worka**a**including in the evaluation example in the SFO. SFO at 188.
While we note the discrepancy, it does not change the outcome of the
decision, and neither party has raised it as an issue.
[4] It appears that the evaluation of the discounts offered in the 3
separate years should not be the sum of those discounts, but rather their
average (assuming the work is spread evenly across the 3 years).
Otherwise, under the formula, a firm that proposes a discount of 33.3
percent in each year would be treated, unreasonably, as if it had proposed
a 100 percent discount. The agency's price analysis corrects this flaw in
the formula by calculating the price for each contract year separately.
[5] According to the protester, GSA has used this formula for at least a
decade, and the protester has produced abstracts appearing to confirm
prior use of the formula in past solicitations. Letter from Protester to
GAO (Aug. 20, 2004), exhs. K, L, M; Letter from Protester to GAO (Sept.
27, 2004), encl. (abstract of offers form dated July 19, 1994).
[6] This document may have been prepared after the protest was filed
because, although the agency reports that it received three bids, the
document contains analysis of only the awardee's and the protester's
bids.
[7] As the protester has pointed out, the agency provides no support in
the record for this figure. Letter from Protester to GAO (Aug. 20,
2004). The protester also points out that the SFO stated, "Government
Cost Range: $50,000 to $1,000,000." SFO at 3.
[8] There is no indication that the 75/25 distribution stated in the SFO
does not reflect expected usage. We note that, even at a split of 90/10,
the protester's offer would still represent the lowest price.
[9] Actually, our own recalculation indicates that Greenlee would be
$225,670,948.66 less expensive. The discrepancy results from a
typographical error in the agency spreadsheet in the raw cost figure for
working hours partition work in the option years for Adams-Brown. Our
recalculation used the correct figure (which is shown elsewhere in six
locations in the agency's spreadsheet).
[10] As noted above, it is not clear on this record whether the agency
intended to use procedures for negotiated acquisition or for sealed
bidding. The analysis in this decision is based on the more deferential
standard employed for negotiated acquisitions. Since the agency's
explanation does not satisfy that standard, it clearly would not meet the
"cogent and compelling" standard for cancellation applicable to sealed
bidding. Nidek, Inc., Ba**272255, Sept.A 11, 1996, 96-2 CPD P 112 at 3.