TITLE:  Military Waste Management, Inc., B-294645.2, January 13, 2005
BNUMBER:  B-294645.2
DATE:  January 13, 2005

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   Decision

   Matter of:   Military Waste Management, Inc.

   File:            B-294645.2

   Date:              January 13, 2005

   A. Gene Watts for the protester.

   Linwood I. Rogers, Esq., Defense Logistics Agency, for the agency.

   Susan K. McAuliffe, Esq., and Christine S. Melody, Esq., Office of the
General Counsel, GAO, participated in the preparation of the decision.

   DIGEST

   Protest that solicitation's weight-based payment terms for solid waste
disposal services are unduly restrictive is denied where record supports
reasonableness of agency's determination that terms are necessary to meet
agency's needs.

   DECISION

   Military Waste Management, Inc. (MWM) protests the terms of request for
quotations (RFQ) No.A SPO410-04-Q-0071, issued by the Defense Logistics
Agency (DLA) for solid waste collection and disposal services at a DLA
installation in Chesterfield County, Virginia. The protester, the
incumbent contractor, contends that the RFQ's weight-based rate structure
is unduly restrictive of competition, on the basis that varying monthly
payments will be difficult for a small business like MWM to budget for,
and will provide a competitive advantage to large and local businesses
with revenue from other contracts, since such firms allegedly will be more
able to budget for business expenses during months of low refuse weights
and agency payments by spreading performance costs among their other
customer accounts.

   We deny the protest.

   The solicitation's statement of work, as amended, requires the contractor,
among other things, to develop a schedule for the collection and disposal
of refuse before the installation's refuse containers become 75-percent
full.  RFQ amend. 4, S 3.2.3.  The contractor is to be paid on the basis
of the actual tonnage of waste it collects.  The RFQ provides alternate
methods for weighing refuse:  the contractor may use an on-board computer
weighing system for collection vehicles that will not be dedicated to the
work under the RFQ (so agency waste can be weighed independent of any
other waste on the vehicle); alternatively, where dedicated vehicles are
used solely for the collection and disposal of agency installation refuse,
the solid waste collected for disposal may be weighed on state certified
scales at the municipal landfill.  Id. P 3.3.1.  Tonnage reports generated
by on-board weighing equipment or the landfill scales are to be submitted
by the contractor for payment at the contractor's tonnage rate.

   MWM challenges the RFQ's weight-based payment terms, which differ from the
payment terms under the protester's prior contract.[2]  That contract
provided for a fixed payment each month for refuse collection performed in
accordance with an agency-imposed collection schedule without
consideration of the amount or weight of refuse actually collected.  The
current RFQ, on the other hand, allows the contractor to set its own
schedule for refuse collection, as long as each refuse container is
emptied before it becomes 75-percent full, and provides for payment
based on the weight of refuse collected.  MWM contends that, as a small
business, it is disadvantaged by the change in payment terms because it
will be difficult for the firm to cover its expenses during any month of
low weight refuse collections and a resulting low payment.  MWM explains
that because many of its business expenses remain constant each month
(e.g., payroll, overhead, and utilities), varying monthly payments will
make it more difficult for the firm to budget for its operations. 
Conversely, MWM believes large businesses and local contractors with other
contracts will have a competitive advantage over a small firm like MWM,
since they will be able to spread their business expenses over other
contracts to more easily budget for the firms' performance costs.

   While a contracting agency has the discretion to determine its needs and
the best method to accommodate them, Mark Dunning Indus., Inc., B-289378,
Feb. 27, 2002, 2002 CPD PA 46 at 3-4; Parcel 47C LLC, B-286324;
B-286324.2, Dec. 26, 2000, 2001 CPD P 44 atA 7, those needs must be
specified in a manner designed to achieve full and open competition;
solicitations may include restrictive requirements only to the extent they
are necessary to satisfy the agency's legitimate needs.  10 U.S.C.
SA 2305(a)(1)(A)(i), (B)(ii) (2000).  Where a protester challenges a
specification as unduly restrictive, the procuring agency has the
responsibility of establishing that the specification is reasonably
necessary to meet its needs.  The adequacy of the agency's justification
is ascertained through examining whether the agency's explanation is
reasonable, that is, whether the explanation can withstand logical
scrutiny.  Chadwick-Helmuth Co., Inc., B-279621.2, Aug. 17, 1998, 98-2 CPD
P 44 at 3.  A protester's mere disagreement with the agency's judgment
concerning the agency's needs and how to accommodate them does not show
that the agency's judgment is unreasonable.  See AT&T Corp., B-270841 et
al., May 1, 1996, 96-1 CPD P 237 at 7-8.

   The agency here explains that the change in payment terms reflects its
adoption of several recommendations made after a recent study of the
effectiveness of the installation's solid waste disposal efforts.  The
agency reports that the study found that the agency could not accurately
report the installation's solid waste tonnage, and that refuse containers
were underutilized as they were typically emptied when less than half
full.  In addition, the report concluded that cost savings could be
realized not only by increasing contractor flexibility in scheduling
refuse collections, but by providing for contractor payments based on the
tonnage of refuse actually collected, since the study found that the
installation's average solid waste disposal costs per ton far exceeded the
tonnage rate charged to the contractor at the municipal landfill.  The
agency determined that allowing the contractor to design its own schedule
for servicing the containers, with only a minimum requirement that each
container be emptied prior to becoming 75-percent full, and providing for
payment based on refuse weight, would encourage efficient container use,
and provide a more efficient collection schedule (as the contractor would
be discouraged from making additional refuse collections of minimal
weight), and lower price (for performing fewer collections than previously
had been required).  Agency Report at 2-4.  The agency also points out
that the weight-based rate structure encourages the agency to continue to
reduce its solid waste tonnage to comply with internal directives for it
to increase recycling and to take other measures to divert non-hazardous
solid waste from landfills, since such waste reduction efforts will
directly decrease agency costs under the RFQ.  Additionally, the
weight-based payment and contractor reporting provisions of the RFQ, the
agency explains, will provide it with more accurate records of
installation refuse, in terms of actual weight and management costs, to
meet agency reporting requirements.[3] 

   Our review of the record here shows that MWM has not persuasively refuted
the support provided by the agency for the challenged weight-based payment
terms.  The record shows that the agency has a reasonable basis to expect
that the efficiency of refuse container use should increase under the RFQ,
and that the weight-based payment terms will also provide an economic
incentive for the agency to reduce its solid waste, while promoting
required recycling efforts, and, by so doing, will directly reduce its
solid waste management costs during the 5-year performance period
contemplated by the RFQ.  In short, MWM's disagreement with the agency's
determination of its needs here fails to show that those needs--for a more
accurate record of its installation's solid waste tonnage, to increase
utilization of refuse containers, and to promote cost savings by payment
for actual refuse tonnage, while indirectly encouraging agency recycling
efforts--lack a reasonable basis or that the agency's intended method of
accommodating those needs is otherwise improper.[4]

   Moreover, to the extent MWM contends that large or local businesses will
have a competitive advantage under the weight-based payment terms of the
RFQ, the contention provides no basis to question the propriety of the
RFQ.  An agency is not required to neutralize a competitive advantage that
a potential vendor may have by virtue of its own particular business
structure and circumstances where the advantage does not result from
unfair action on the part of the government.  National Gen. Supply, Inc.,
B-292696, Nov. 3, 2003, 2004 CPD P 47 at 2.  Here, the advantage cited by
MWM, other firms' business revenue from other customers which might be
used to meet those firms' business expenses during performance of this
contract, results not from unfair agency action, but from the particular
business structure and circumstances of those firms.  In sum, since the
protester has not supported its contention that the RFQ's payment terms
are either unduly restrictive or that they convey an unfair competitive
advantage, we have no reason to question the propriety of the challenged
solicitation terms.

   The protest is denied.

   Anthony H. Gamboa

   General Counsel

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

   [1] The installation houses a DLA inventory control point for aviation,
the Defense Supply Center Richmond, and a DLA depot, as well as other
tenant activities such as the Virginia Army National Guard.  The
installation also includes a child care center, an officers' club, a
fitness center, and military housing.

   [2] In its initial filing, MWM challenged several additional provisions of
the RFQ that were subsequently amended by the agency to MWM's
satisfaction; accordingly, we have not reviewed them further.  Further, to
the extent that MWM in its comments on the agency report for the first
time contends that the procurement should be set aside for small
businesses, the challenge is untimely and not for our review, since it
involves an alleged solicitation impropriety apparent prior to the closing
time for the receipt of quotations, that, to be timely, had to be
protested prior to that time.  Bid Protest Regulations, 4 C.F.R.
SA 21.2(a)(1) (2004).  The closing time under the RFQ was November 10,
2004; the protester's comments were filed on December 3.

   [3] The agency's interest in its continuing refuse reduction relates to a
Department of Defense (DOD) policy memorandum directing military agencies
to ensure, by the end of fiscal year 2005, that "the diversion rate for
non-hazardous solid waste is greater than 40%, while ensuring integrated
non-hazardous solid waste management programs provide an economic benefit
when compared with disposal using landfilling and incineration alone." 
Agency Report, Tab 3, DOD Pollution Prevention Measure of Merit (May 13,
1998), at 1.  The DOD policy requires each military installation to report
annually its total solid waste diversion rate, and its cost avoidance (or
additional costs) resulting from the use of integrated solid waste
management.  Id. at 2. 

   [4] Our review of the record also does not support the protester's
challenge to the on-board weighing equipment provisions of the RFQ.  While
MWM alleges that the equipment is costly for a small firm to acquire,
the RFQ does not require the contractor to use such equipment; as 
explained above, the RFQ alternatively allows the contractor to use the 
scales at the municipal landfill.  Further, despite MWM's general 
challenge to the equipment provision, the firm has not provided any 
persuasive support for its contentions that the required equipment is 
unreliable for the intended limited use here, that it lacks required 
certification, or that it is otherwise unavailable to potential vendors.
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