TITLE:  Patriot Contract Services -- Advisory Opinion, B-294777.3, May 11, 2005
BNUMBER:  B-294777.3
DATE:  May 11, 2005
**********************************************************************
   Decision

   Matter of: Patriot Contract Services -- Advisory Opinion

   File: B-294777.3

   Date: May 11, 2005

   Eric J. Marcotte, Esq., Thomas L. Mills, Esq., Bryant E. Gardner, Esq.,
and Nathan C. Guerrero, Esq., Winston & Strawn, for the protester.

   David A. Churchill, Esq., Kevin C. Dwyer, Esq., and David B. Dashefsky,
Esq., Jenner & Block, for American Overseas Marine Corporation, an
intervenor.

   David Townsend, Esq., Department of the Navy, for the agency.

   Glenn G. Wolcott, Esq., and Michael R. Golden, Esq., Office of the General
Counsel, GAO, participated in the preparation of the decision.

   DIGEST

   Where solicitation required that offerors provide letters of commitment
for key personnel and further required that such commitment letters
"reflect mutually agreed position, salary, and benefits," and record
establishes that, contrary to the awardee's representations, awardee did
not discuss salary, benefits or location of employment with certain key
personnel it proposed, GAO finds, in an advisory opinion, that the protest
is meritorious.

   DECISION

   Patriot Contract Services (PCS) challenges the Department of the Navy's
award of a contract to American Overseas Marine Corporation (AMSEA) under
request for proposals (RFP) No. N00033-03-R-5556 for the operation and
maintenance of nine large, medium speed, roll-on/roll-off ships (LMSR) to
move cargo in support of United States military forces worldwide.  PCS,
the incumbent contractor, filed a protest with our Office in September
2004, challenging various aspects of the procurement, including the
assertion that AMSEA's proposal contained misrepresentations regarding the
availability of certain key personnel it proposed.

   In December 2004, Patriot withdrew its protest with our Office and filed a
similar action with the United States District Court for the Northern
District of California.  In March 2005, the Court requested that our
Office issue an advisory opinion regarding Patriot's protest.  See 4
C.F.R. S 21.11(b) (2005).  Our opinion here is issued in response to the
Court's request, and is presented in the same general format as we
normally employ to issue decisions responding to bid protests.  As
explained below, our Office finds the protest meritorious.

   BACKGROUND
    

   The agency issued RFP No. N00033-03-R-5556 in December 2003, seeking
proposals for the worldwide operation and maintenance of nine LMSRs.[1] 
The solicitation provided that the ships will be maintained at various
layberth ports in "reduced operational status," but requires that the
contractor be able to transition the ships to fully operational status
within 96 hours.  Agency Report, Tab 3, RFP at 8.  Offerors were advised
that award would be based on the proposal offering the best overall value
to the government, as measured against the following evaluation factors: 
technical, past performance and price.[2] 

   With regard to the technical evaluation factor, the solicitation
established four subfactors, one of which was management organization. 
Agency Report, Tab 3, RFP, at 135.  With regard to the management
organization subfactor, the solicitation required each offeror to identify
the key personnel being proposed, including proposed port engineers for
each layberth port.[3]  Agency Report, Tab 3, RFP, at 12, 128.  With
regard to key personnel, the solicitation required each offeror to submit
resumes and signed commitment letters for each individual proposed. 
Specifically, the solicitation stated:  

   The offeror is required to submit up-to-date resumes of all "Key
Personnel" to be employed in accomplishing the stated requirements . . . .

   With the resumes of key personnel, the offeror shall submit a letter of
commitment from the individual, stating his/her intention on the resultant
contract (if awarded to the offeror).  Such letters of commitment must be
submitted for both current employees, as well as individuals that will
accept employment after contract award.  The letter of commitment must
reflect mutually agreed position, salary, and benefits.   

   Agency Report, Tab 3, RFP, at 128-29 (emphasis added).

   The solicitation provided that "[t]he Contractor agrees to assign to this
contract those people identified as key personnel whose resumes were
submitted with [its] proposal."  Agency Report, Tab 3, RFP, at 77. 
Further, the solicitation strictly limited the awardee's substitution of
proposed key personnel, stating:  "During the first ninety (90) days of
the contract performance period no personnel substitutions by the
contractor will be made unless such substitutions are necessitated by an
individual's sudden illness, death or termination of employment."  Id.  

   Proposals were timely submitted by several offerors, including PCS and
AMSEA.[4] 

   AMSEA's proposal included resumes and commitment letters for six
individuals that AMSEA proposed as port engineers.  As required by the
solicitation, each of the six commitment letters represented that
agreement had been reached with respect to salary, benefits, and position;
specifically, each letter stated, "I am in agreement with American
Overseas Marine with respect to salary, benefits, and position."  Agency
Report, Tab 5, AMSEA Proposal, Chap. 3, attach. 3A.  

   Thereafter, the agency conducted discussions with the offerors, and
subsequently requested, received and evaluated final revised proposals. 
The results of the agency's evaluation of AMSEA's and PCS's final
proposals were as follows:

   +------------------------------------------------------------------------+
|                                 |AMSEA            |PCS                 |
|---------------------------------+-----------------+--------------------|
|Tech. Experience/Capability      |                 |                    |
|---------------------------------+-----------------+--------------------|
|  --Ship Maintenance             |Exceptional      |Exceptional         |
|---------------------------------+-----------------+--------------------|
|  --Ship Operation               |Exceptional      |Exceptional         |
|---------------------------------+-----------------+--------------------|
|Mgmt. Of Purchasing System       |Exceptional      |Exceptional         |
|---------------------------------+-----------------+--------------------|
|Mgmt. Organization               |                 |                    |
|---------------------------------+-----------------+--------------------|
|  --Key Personnel                |Very Good        |Exceptional         |
|---------------------------------+-----------------+--------------------|
|  --Organizational Structure     |Very Good        |Very Good           |
|---------------------------------+-----------------+--------------------|
|Mgmt. Systems                    |                 |                    |
|---------------------------------+-----------------+--------------------|
|  --Property Control             |Exceptional      |Exceptional         |
|---------------------------------+-----------------+--------------------|
|  --Quality                      |Very Good        |Exceptional         |
|---------------------------------+-----------------+--------------------|
|Small Business Subcontractors    |Very Good        |Very Good           |
|---------------------------------+-----------------+--------------------|
|Overall Technical Rating         |Exceptional      |Exceptional         |
|---------------------------------+-----------------+--------------------|
|Past Performance                 |Exceptional      |Exceptional         |
|---------------------------------+-----------------+--------------------|
|Price                            |$122,643,747     |$129,209,967        |
+------------------------------------------------------------------------+

   Agency Report, Tab 11, Business Clearance Memorandum, at 5-8.

   Although PCS's technical proposal received higher adjectival ratings
regarding two evaluation subfactors--one of which related to key
personnel--the agency's source selection authority determined that AMSEA's
and PCS's proposals were essentially equivalent with regard to the
non-price evaluation factors; accordingly, AMSEA's proposal was selected
for award on the basis of its lower evaluated price. 

   As discussed above, PCS filed this protest with our Office in September
2004, subsequently withdrew that protest and thereafter filed a similar
action in United States District Court.  In March 2005, the District Court
requested that our Office issue an advisory opinion regarding PCS's
protest.    

   DISCUSSION

   In its September 2004 protest, PCS challenged the agency's selection of
AMSEA on several bases including an assertion that the agency improperly
evaluated AMSEA's proposed key personnel.  Specifically, PCS's protest
noted that immediately after contract award AMSEA placed various
employment advertisements for port engineers; therefore, PCS asserted that
"AMSEA proposed personnel it did not have."  PCS Protest at 13-14 (Sept.
17, 2004).  In pursuing this issue before our Office, PCS subsequently
argued that AMSEA, knowingly or negligently, offered to provide employees
that it could not reasonably expect to furnish during contract
performance, that AMSEA's misrepresentations were relied upon in the
agency's evaluation, and that the misrepresentations had a material impact
on the evaluation results. [5]  PCS Comments on Agency Report (Oct. 28,
2004) at 17-18. 

   At the time PCS withdrew its September 2004 protest in order to file at
the U.S. District Court, our protest record did not contain information
indicating that AMSEA's proposed port engineers would not perform under
the contract.  However, following the District Court's March 2005 request
for our advisory opinion, counsel for PCS provided our Office with a
declaration that AMSEA's president had recently made to the District Court
which included the following statements: 

   35. . . .  At the time [AMSEA] submitted its proposal and its revised
proposal, AMSEA intended in good faith that its proposed port engineers
would serve as AMSEA's port engineers in the event it was awarded the LMSR
contract.  At those times, it was unaware that any of the six proposed
port engineers would subsequently be unavailable. 

   36.  Upon the award of the LMSR contract to AMSEA, AMSEA advertised
certain port engineer positions on internet websites.  It did so for
several reasonas.  First, the Navy had changed the location of the
layberths (the homeport during reduced operational status) of several of
the LMSR ships, meaning that . . . several of the proposed port engineers
would have had to relocate to different cities if they were to accept the
position.  Several of them declined to relocate. 

   Letter from PCS Counsel to GAO (Mar. 31, 2005), attach. 2, PP 35-36.

   Counsel for PCS noted that, in fact, the location of the layberths had not
been changed.  Id. at 3.  

   On April 5, 2005, counsel for AMSEA responded, acknowledging that the
layberth locations had not been changed, and submitting another
declaration of AMSEA's president which included the following statements:

   5. . . .  Prior to listing the six proposed port engineers in its
proposal, AMSEA ascertained their availability for work on the LMSR
contract by communicating with them and by obtaining a signed Letter of
Commitment from each proposed port engineer.  Those Letters of Commitment
attested both to the proposed port engineers' agreements to work for AMSEA
in the event it would be awarded the LMSR contract and to their agreements
with AMSEA with respect to salary, benefits, and position. . . .    

   6.  Upon the award of the LMSR contract to AMSEA, AMSEA advertised certain
port engineer positions on internet websites.  In a Declaration filed in
the District Court for the Northern District of California, I indicated
that these advertisements were triggered, in part, by the changes in the
layberth locations (the home ports during reduced operational status) of
several of the LMSR ships and the unwillingness of several of the proposed
port engineers to relocate.  My statement was mistaken.  In Amendment 5 to
the LMSR Solicitation, the Navy had reserved the right to change the
layberth locations of the LMSR ships and I recalled, incorrectly, that
several of the proposed port engineers had declined to accept port
engineer assignments because of LMSR layberth relocations.  I have since
rechecked, and determined that the layberths have not changed and,
therefore, that layberth relocations were not a cause of the need to
obtain several new port engineers. 

   Letter from AMSEA Counsel to GAO (Apr. 6, 2005), attach., PP 5-6.

   Thereafter, during telephone conference calls with counsel for all of the
parties, GAO was advised that five of the six port engineers proposed by
AMSEA would not perform under the contract.  In light of AMSEA's
significant substitution of key personnel, along with the inaccurate
representation of AMSEA's president regarding the purported rationale for
those substitutions, our Office conducted a telephone hearing during which
testimony was obtained from seven witnesses:  AMSEA's president; an AMSEA
employee who was responsible for preparing AMSEA's proposal; and the five
proposed port engineers who will not perform under the contract as
proposed.  The testimony provided during that hearing disclosed the
following information. 

   Among other things, the AMSEA employee who was responsible for preparing
AMSEA's proposal and for communicating with the proposed port engineers
regarding their commitment letters testified that, despite the RFP's
requirement that commitment letters "must reflect mutually agreed
position, salary, and benefits," Agency Report, Tab 3, RFP, at 129, there
had been no discussion of salary, benefits, or location of employment with
the proposed port engineers.  Specifically, this AMSEA employee testified
as follows: 

   GAO:  . . .  I assume that you asked them [the proposed port engineers] if
they would perform as a port engineer under this contract, is that
correct?

   AMSEA Employee:  That's correct.

   GAO:  Did you identify a particular location that they would be performing
at?

   AMSEA Employee:  No we did not.

   . . . .

   GAO:  . . . [Y]ou didn't talk any specifics about where they would be
working?  Let me back up, I assume you did talk about salary and things
like that?

   AMSEA Employee:  I did not talk to them about salary nor do I remember it
coming up specifically. 

   . . . .

   GAO:  And it is your testimony that you were responsible for the proposal
and that to your knowledge you did not discuss salary, benefits or the
location of their positions with them prior to the submission of the
proposal, is that correct?

   AMSEA Employee:  That's correct.

   Hearing Transcript at 58-62.[6]

   The subsequent testimony of the proposed port engineers was consistent
with the testimony of the AMSEA employee; that is, the five proposed port
engineers testified that, prior to award of the contract, there had been
no discussion of, nor agreement regarding, salary, benefits or location of
employment.  Hearing Transcript at 71, 84-85, 92-94, 106-07. 

   Further, in responding to PCS's assertions regarding the proposed key
personnel, AMSEA's president first represented that AMSEA's failure to
deliver the personnel proposed was because "the Navy had changed the
location of the layberths . . . of several of the LMSR ships, meaning that
. . . several of the proposed port engineers would have to relocate to
different cities."  Letter from PCS Counsel to GAO (Mar. 31, 2005),
attach. 2, at PP 35-36.  When it was pointed out that this representation
appeared to be inaccurate, AMSEA's president acknowledged that his
explanation for AMSEA's substitution of key personnel was "mistaken," but
continued to assert that the commitment letters had been submitted in good
faith, and that they reflected "agreements with AMSEA with respect to
salary, benefits, and positions."  Letter from AMSEA Counsel to GAO (Apr.
6, 2005), attach., PP 5.  Based on the testimony provided during our
Office's telephone hearing, it is clear that the revised representations
of AMSEA's president in this regard are also inaccurate. 

   In Aerospace Design & Fabrication, Inc., B-278896, B-278896.2 et al., May
4, 1998, 98-1 CPD P 139, our Office addressed similar facts.  There, the
awardee stated in its proposal that it had received commitments from
proposed key personnel to work on the contract.  However, at a hearing
conducted by our Office in connection with that protest, the awardee's
representatives acknowledged that there had been no discussion between the
awardee and the proposed managers regarding salary, benefits, or the
particular position to be filled.  Id. at 5-6.  In sustaining that
protest, we noted that an agreement to work for a successful offeror,
without reaching agreement on salary and benefits, is no more than a
promise to negotiate for employment and is not a binding commitment.  Id.
at 7.  Similarly, we have stated that "salary and benefits are generally
major considerations in accepting employment and an agreement contingent
upon these factors is not, we think, the equivalent of a firm commitment
to accept the position offered."  Scientific Mgmt. Assocs., Inc.,
B-238913, July 12, 1990, 90-2 CPD P 27 at 7. 

   Here, based on the record discussed above, we conclude that AMSEA made
material misrepresentations in its proposal regarding compliance with the
solicitation's requirements for proposed key personnel.  Further, because
the solicitation expressly required agreement regarding salary, benefits,
and position, it is clear that the agency relied on AMSEA's
misrepresentations in evaluating AMSEA's proposed key personnel under the
key personnel evaluation subfactor as "very good" and "highly qualified." 
Agency Report, Tab 11, Business Clearance Memorandum, at 5.    Finally, in
light of the relatively close evaluated ratings of AMSEA's and PCS's
proposals and their proposed prices, we conclude there is a substantial
chance that AMSEA's misrepresentations regarding it proposed key personnel
were material to the agency's source selection decision.[7]   

   On the record presented to our Office, we conclude that PCS's protest is
meritorious.   

   We recently stated that an offeror's submission of a proposal containing
material misrepresentations should disqualify the proposal from
consideration for award, noting that the integrity of the procurement
process demands no less.  ACS Gov't Servs., Inc., B-293014, Jan. 20, 2004,
2004 CPD P 18 at 11; see also Informatics, Inc., B-188566, Jan. 20, 1978,
78-1 CPD P 53 at 13.  Accordingly, if our Office were resolving the
protest, we would sustain it and recommend that AMSEA's contract be
terminated and that a contract be awarded to PCS if otherwise
appropriate. 

   Anthony H. Gamboa

   General Counsel

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

   [1] The solicitation also provided for operation and maintenance of two
other LMSRs; competition for those requirements was set aside for small
businesses.  Patriot's protest did not challenge the agency's actions
regarding the set-aside requirements and our recommendation here is
limited to the contract regarding the nine LMSRs. 

   [2] The solicitation provided that the technical factor was more important
than past performance, and that the technical and past performance factors
combined were more important than price.  Agency Report, Tab 3, RFP, at
134-35. 

   [3] The solicitation advised offerors to "assume six separate layberth
locations" and provided, "[t]he Contractor shall employ a minimum of one
port engineer per lay berth in support of this contract."  Agency Report,
Tab 3, RFP, at 7, 13.

   [4] The other offerors' proposals are not relevant to resolution of PCS's
protest; accordingly, they are not discussed.

   [5] In addition to challenging AMSEA's proposal regarding key personnel,
PCS's protest challenged various other aspects of the agency's evaluation
of PCS's and AMSEA's proposals.  In light of our conclusion that AMSEA
materially misrepresented the commitment of its proposed port engineers,
our opinion does not address, in detail, PCS's additional bases for
protest.  In summary, we found no merit in PCS's other protest allegations
and provide the following brief discussion of those matters.  PCS's
protest generally maintained that AMSEA's experience and capability with
regard to ship operation and maintenance should not have been evaluated as
favorably as that of PCS, due to PCS's status as the incumbent contractor
and its prior work with the specific ships at issue here.  However, the
solicitation provided for the evaluation of an offeror's experience and
capabilities with regard to operating ships "of a similar size and/or
type."  Agency Record, Tab 3, RFP, at 136.  That is, the solicitation's
evaluation terms provided that the agency's evaluation of offerors'
experience and capabilities was not limited to the particular ships at
issue, nor was the agency obligated to evaluate PCS's experience with
those ships more favorably than AMSEA's experience with similar ships. 
Agency Report, Tab 3, RFP, at 136.  On the basis of the record presented
to our Office, which includes evidence that AMSEA has considerable
experience with ships "of a similar size and/or type," we found nothing
unreasonable in the agency's evaluation of AMSEA's proposal regarding
experience and capability.  PCS also protested that the agency improperly
evaluated PCS's proposal as "very good" rather than "exceptional" with
regard to various subfactors, complaining that, absent identification of
specific weaknesses, the agency was obligated to rate PCS's proposal as
"exceptional."  We disagree.  There is no requirement that an offeror
receive the highest possible rating just because its proposal does not
contain specific weaknesses.  See DTH Mgmt. JV, B-283239, Oct. 6, 1999,
99-2 CPD P 68.  Our review of the record identified no basis to question
the agency's ratings of "very good" rather than "exceptional" with regard
to PCS's proposal.  Next, PCS's protest challenged the adequacy of the
agency's discussions, complaining that, because the agency advised PCS
during discussions that its price was "acceptable," PCS "did not offer the
most competitive price that it could have."  PCS Protest at 16-17.  The
record shows that, during discussions, the agency specifically advised PCS
that its "Costs appear high" with regard to multiple, specifically
identified aspects of PCS's proposal.  Agency Report, Tab 10.  On this
record, PCS's assertion regarding the alleged inadequacy of the agency's
discussion of proposed costs is simply without merit.  Finally, PCS's
protest complained that the price model disclosed in the solicitation, on
which the agency relied in evaluating offerors' proposed prices, did not
accurately reflect the costs that PCS maintains the agency is likely to
incur.   Since the basis for the agency's price evaluation was clearly
stated in the solicitation, and PCS did not challenge the solicitation
terms prior to submitting its proposal, its post-award challenge regarding
that matter is not timely raised.  4 C.F.R. S 21.2(a)(1).  In any event,
we see no basis to find the agency's evaluation scheme improper.  In
short, our review of the record identified no basis to question the
agency's source selection decision other than AMSEA's misrepresentation
regarding the commitment of its proposed port engineers and its failure to
comply with the solicitation requirements in that regard.

   [6] The telephone hearing was recorded on audiotape, copies of which were
made available to counsel for each of the parties; the original audiotapes
are part of GAO's protest record in this matter.  Counsel for PCS
subsequently had its copy of the audiotape record transcribed, and
provided copies of that transcription to GAO and to counsel for the agency
and the intervenor.  The above citation is to the transcribed version of
the hearing, which is also part of GAO's protest record in this matter. 

   [7] We believe the importance to the source selection decision of these
commitment letters, and the concomitant assurance that the key personnel
who were proposed and evaluated will actually perform under the contract,
is further indicated by the agency's inclusion of the solicitation
provision, quoted above, which strictly limits key personnel substitutions
during the first 90 days of contract performance to instances of "sudden
illness, death or termination of employment."  Agency Report, TAb 3, RFP,
at 77.