TITLE: B-296435.4; B-296435.9, R&G Food Service, Inc., d/b/a Port-A-Pit Catering, September 15, 2005
BNUMBER: B-296435.4; B-296435.9
DATE: September 15, 2005
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B-296435.4; B-296435.9, R&G Food Service, Inc., d/b/a Port-A-Pit Catering, September 15, 2005
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: R&G Food Service, Inc., d/b/a Port-A-Pit Catering
File: B-296435.4; B-296435.9
Date: September 15, 2005
John Lukjanowicz, Esq., and B. Michael Schestopol, Esq., Oles Morrison
Rinker & Baker LLP, for the protester.
Byron W. Waters, Esq., Department of Agriculture, for the agency.
Louis A. Chiarella, Esq., and Christine S. Melody, Esq., Office of the
General Counsel, GAO, participated in the preparation of the decision.
DIGEST
Agency unreasonably determined that the protester's prices were not fair
and reasonable where the agency's price evaluation considered only
offerors' unit prices and, in so doing, failed to provide a reasonable
basis for comparing the relative costs to the government of offerors'
competing proposals.
DECISION
R&G Food Service, Inc., d/b/a Port-A-Pit Catering (Port-A-Pit) protests
its nonselection for contract award under request for proposals (RFP) No.
49-05-07, issued by the National Interagency Fire Center, Forest Service,
Department of Agriculture, for mobile food services in various locations;
for certain locations, the Forest Service awarded contracts to offerors
other than Port-A-Pit and, for other locations, elected not to make
contract award. Port-A-Pit argues that the agency's evaluation of
proposals, including the evaluation of its price proposal, was improper.
We sustain the protest.
BACKGROUND
The RFP, issued on February 9, 2005, contemplated multiple awards of
fixed-price requirements contracts for a base year and four 1-year
options. The successful contractors under the RFP would be required to
provide hot and cold meals and various supplemental items at 27 field
locations (referred to as designated dispatch points, or DDPs) during
wildland fires and other types of activities throughout the contiguous
western United States and Alaska by means of mobile food service units
(MFSU). The RFP permitted offerors to propose for multiple DDPs, but
contemplated the award of one contract for each location.
The solicitation required offerors to submit unit prices for meal services
(e.g., breakfast, sack lunch, dinner), MFSU mileage, and handwashing
units, which would form the basis of a requirements-type contract, as well
as unit prices for additional refrigeration storage space, additional
tents and seating, and supplemental food and beverage items, which would
form the basis of a blanket purchase agreement (BPA). RFP sect. B, at 1-4.
In addition to price, the solicitation identified the following technical
evaluation factors, in descending order of importance: proposed equipment;
past performance; experience; and technical approach. The RFP informed
offerors that the technical factors, when combined, were approximately
equal in importance to price. Contract awards were to be made to the
offerors submitting the proposals determined to meet the minimum
requirements of the solicitation and to be the most advantageous (i.e.,
"best value") to the government. The RFP also stated that the Forest
Service might reject any or all offers and not award all DDP locations if
doing so were determined to be in the government's best interest. RFP
sect. M.2, at 105.
The RFP contained detailed instructions for the preparation of proposals,
and required that the offerors' proposals consist of two parts--a
technical proposal and a business/price proposal. Offerors were instructed
that the technical proposals would be used to determine, among other
things, whether the proposals met the requirements of the RFP. The
solicitation also established minimum equipment requirements for an MFSU,
and required offerors to complete an equipment requirements checklist for
each unit offered. RFP sect. C.3, at 21-27, exh. M.2, at 112-18. The RFP
stated that the equipment requirements would be evaluated on a pass/fail
basis, and that "any unit that fails to meet any of these minimum
requirements will be unacceptable and may not be considered any further."
Id. at 112. With regard to an offeror's proposed price, the solicitation
stated that the offeror's business/price proposal would be evaluated to
determine the reasonableness of the offeror's price for the effort
proposed. Id. sect. M.3, at 108. The solicitation also stated that, for
purposes of contract award, only an offeror's pricing for meals, mileage,
and handwashing units under the requirements contract would be
considered.[1] Id.
Twenty-five offerors, including Port-A-Pit, submitted proposals by the
March 11 closing date. Port-A-Pit offered three MFSUs for 10 DDP
locations. An agency technical evaluation board (TEB) evaluated offerors'
technical proposals using an adjectival rating system: exceptional,
acceptable, marginal, or unacceptable for those technical factors other
than past performance; and exceptional, acceptable, neutral, marginal, or
unacceptable for past performance.[2] The TEB completed its evaluation of
offerors' technical proposals on June 2. The overall ratings for the MFSUs
proposed by Port-A-Pit were: Acceptable (+) for Unit 01; Exceptional (-)
for Unit 02; and Acceptable (+) for Unit 03. Agency Report (AR), Tab 14,
TEB Consensus Report, at 2.
The TEB subsequently considered the offerors' proposed prices and
technical ratings, and made award recommendations for each DDP. Id., Tab
15, TEB Best Value Analysis Report. In certain instances the TEB
recommended that no contract award be made because of the lack of
proposals that were considered technically acceptable with fair and
reasonable prices. The contracting officer concurred with the TEB's
recommendations, decided not to conduct discussions with the offerors, and
forwarded the award recommendations and associated materials to the
agency's source selection authority for review and approval. Id., Tab 16,
Source Selection Decision; Contracting Officer's Statement, July 18, 2005,
at 6-7. The source selection authority accepted the findings and
recommendations of the TEB and made contract award to 12 offerors for 21
DDPs. AR, Tab 16, Source Selection Decision.
Port-A-Pit received no awards because of the agency's determination that
the firm's prices were not fair and reasonable, thereby making Port-A-Pit
ineligible for award.[3] This protest followed. The agency proceeded with
award and authorized the contractors to begin performance notwithstanding
the protests, based on a written determination that urgent and compelling
circumstances significantly affecting the interests of the United States
would not permit waiting for the decision of our Office. See 31 U.S.C.
sect. 3553(d) (2000).
DISCUSSION
Port-A-Pit's protest primarily focuses upon the agency's evaluation of the
firm's prices. The protester argues that the agency's determination that
its prices were not fair and reasonable was improperly based upon only one
component of its proposed price (i.e., its mileage price). Port-A-Pit
argues that given the relative proportions of the items likely to be
required under the contracts (meals, mileage, handwashing units), an
offeror with a higher mileage price could nevertheless represent a lower
overall cost to the government. The protester also contends that the
Forest Service's price evaluation was irrational because it only
considered offerors' unit prices. We agree.
Where a protester challenges an agency's evaluation of proposals,
including the evaluation of an offeror's proposed cost or price, our
Office will not reevaluate proposals, but instead will examine the record
to determine whether the agency's judgment was reasonable and consistent
with the stated evaluation criteria and applicable procurement statutes
and regulations. Liquidity Servs., Inc., B-294053, Aug. 18, 2004, 2005 CPD
para. 130 at 5; SAMS El Segundo, LLC, B-291620.3, Feb. 25, 2003, 2003 CPD
para. 48 at 8. When an agency evaluates proposals for the award of a
fixed-price contract, in which the government's liability is fixed and the
contractor bears the risk and responsibility for the actual costs of
performance, the analysis of an offeror's price need only determine that
the price offered is fair and reasonable to the government (i.e., price
reasonableness), and focuses primarily on whether the offered price is
higher--as opposed to lower--than warranted.[4] FAR sections 15.402(a),
15.404-1(a); see Dismas Charities, Inc., B-289575.2, B-289575.3, Feb. 20,
2004, 2004 CPD para. 66 at 4; SAMS El Segundo, LLC, supra.
Agencies must consider cost to the government in evaluating proposals, 41
U.S.C. sect. 253a(b)(1)(A), (c)(1)(B) (2000), and while it is up to the
agency to decide upon some appropriate and reasonable method for the
evaluation of offerors' prices, an agency may not use an evaluation method
that produces a misleading result. See Bristol-Myers Squibb Co.,
B-294944.2, Jan. 18, 2005, 2005 CPD para. 16 at 4; AirTrak Travel et al.,
B-292101 et al., June 30, 2003, 2003 CPD para. 117 at 22. The method
chosen must also include some reasonable basis for evaluating or comparing
the relative costs of proposals, so as to establish whether one offeror's
proposal would be more or less costly than another's. Id.; see FAR
sect. 15.405(b)("the contracting officer's primary concern is the overall
price the government will actually pay"). For example, in Health Servs.
Int'l, Inc.; Apex Envtl., Inc., B-247433, B-247433.2, June 5, 1992, 92-1
CPD para. 493, the solicitation contemplated the award of a fixed-price,
indefinite-quantity contract and offerors' proposals were required to
include hourly rates for six categories of labor. We sustained a protest
challenging the agency's price evaluation because it was based solely upon
offerors' average hourly labor rates, without consideration of the
estimated quantities of each labor category the agency expected to order,
and thereby failed to establish whether one offeror's proposal was in fact
more or less costly than another's.
Based on our review of the record here, we conclude that the Forest
Service's price evaluation, including the determination that Port-A-Pit's
prices were not fair and reasonable, was fundamentally flawed because it
did not reflect the actual cost to the government of the offerors'
competing proposals.
As set forth above, the solicitation required offerors to submit unit
prices for meals, mileage, and handwashing units, which were the prices
upon which the agency's contract award determination would be made.[5]
Port-A-Pit's unit prices, in comparison to the agency's government
estimates[6] and offerors' average prices, were as follows:
+------------------------------------------------------------------------+
| | Meals | Mileage | Handwashing Unit |
|-------------------+-----------------+--------------+-------------------|
| Port-A-Pit | $[DELETED][7] | $[DELETED] | $[DELETED] |
|-------------------+-----------------+--------------+-------------------|
| Gov't Estimates | $47.21 | $12.78 | $65.00 |
|-------------------+-----------------+--------------+-------------------|
| Average[8] | $44.24 | $20.00 | $73.82 |
+------------------------------------------------------------------------+
AR, Tab 13, Abstract of Offerors' Prices by DDP, at 8; Tab 15, TEB Best
Value Analysis Report, at 1.
In performing the evaluation of offerors' prices, the contracting officer
did not utilize any quantity estimates for the meals, mileage, and
handwashing unit items, but instead limited her evaluation to offerors'
unit prices. The contracting officer determined that while Port-A-Pit's
unit prices for meals and handwashing units were not objectionable, its
unit price for mileage was not fair and reasonable, in comparison to both
the government estimate and the average price of other offerors.[9] AR,
Tab 15, TEB Best Value Analysis Report, at 1, 4-5. Based on the
contracting officer's determination that Port-A-Pit's price for mileage
was not fair and reasonable, the Forest Service found Port-A-Pit
ineligible for contract award. Id. at 6; Contracting Officer's Statement,
July 18, 2005, at 11 ("I made the determination based on price analysis
that [Port-A-Pit's] mileage price was not fair and reasonable and could
not form the basis for award").
The record reflects that mileage is by no means the largest component of
cost to the government. Rather, the parties agree that meals are the
primary cost for the services to be provided under the contract.[10]
Protest, June 21, 2005, at 8, exh. 1; AR, Tab 15, TEB Best Value Analysis
Report, at 1. For example, the record indicates that under a predecessor
contract, Port-A-Pit provided a total of [DELETED] meals and drove a total
of [DELETED] miles in response to a fire in Ash, Arizona.[11] Protest,
June 21, 2005, exh. 1, at 1. Using the unit prices proposed by Port-A-Pit
here, meal costs would have been approximately $39,644, while mileage
costs, in comparison, would have been approximately $17,100.[12]
Similarly, the record indicates that with regard to a fire in Jimtown,
Montana, meal costs to the government would have been approximately
$69,285 while mileage costs would have been approximately $35,600.[13] In
light of the substantial difference in the relative costs for meals and
mileage, the agency's price evaluation, to the extent that it considered
only offerors' unit prices, failed to reflect the likely actual cost to
the government of the offerors' approaches.
The record shows that the agency itself was aware of the shortcomings in
its price evaluation methodology. Specifically, when making its source
selection decision for DDP No. 23 (Salt Lake City, Utah), the TEB stated,
"It is difficult to predict if [Port-A-Pit's] lower meal and sink prices
outweigh [the awardee's] lower mileage price due to the uncertainty of the
amount of services that will be required." AR, Tab 15, TEB Best Value
Analysis Report, at 37. Notwithstanding the fact that the Forest Service
had not determined whether Port-A-Pit's proposal would in fact be more
costly than other offerors', the agency found the protester's prices were
not fair and reasonable. In light of the fact that the Forest Service's
price evaluation was not meaningful--because, as explained above, there is
no necessary relationship between an offeror's unit prices and the likely
actual cost of the contract to the government--we find the rejection of
Port-A-Pit's price proposal to be unreasonable.
We recognize that the evaluation of price in the award of an
indefinite-quantity contract can be challenging. Nonetheless, in our view,
the way in which the agency evaluated prices here (i.e., examining only
unit prices without also considering the estimated quantities of each
item) does not satisfy the legal requirement to consider cost to the
government. Moreover, there appears to be no reason why the Forest Service
could not develop estimates for each of the delivery items to be
considered in the contract award determinations. The record reflects that
the Forest Service possesses historical data on both the meals and mileage
billed to the agency under prior contracts for these items. AR, Tab 16,
Source Selection Decision, at 5. In fact, as set forth above, the agency
determined the relative significance of offerors' mileage costs by
examining the total number of miles incurred and billed to the Forest
Service by a selected MFSU during a prior fire season. We see no reason
why the agency could not also develop and apply in the price evaluation
realistic estimates for the meals and handwashing unit quantities
expected. Without using such estimates, the Forest Service's evaluation
here failed to account for the difference in the relative proportions of
the cost for meals and mileage in the total cost to the government, and,
as a result, there was no direct relationship between the evaluated prices
of a particular offeror and the actual price of performance by that
offeror. See Health Servs. Int'l, Inc.; Apex Envtl., Inc., supra, at 3.
Port-A-Pit also challenges the agency's evaluation of other offerors'
proposals. The protester contends that the technical proposals submitted
by two other offerors (i.e., [DELETED] and [DELETED]) failed to meet the
minimum equipment requirements of the solicitation.[14] The agency
specifically addressed and refuted these contentions in its report,
explaining that the proposals submitted by both [DELETED] were properly
determined to have met all minimum equipment requirements. In its
comments, Port-A-Pit expresses disagreement with the agency report but
makes no substantive rebuttal to the agency's position. Comments, Sept. 6,
2005, at 3. Our review of the record provides no basis to find the
agency's evaluation here unreasonable or otherwise objectionable.
RECOMMENDATION
We conclude that the Forest Service's price evaluation, including the
determination that Port-A-Pit's prices were not fair and reasonable, was
improper because it did not provide a meaningful basis to consider
offerors' proposed costs to the government. We recommend that the agency
reevaluate offerors' prices and make a new source selection decision for
all DDP locations for which Port-A-Pit submitted a proposal, employing a
price evaluation method that allows comparison of the relative cost to the
government of the offerors' competing proposals. We also recommend that
the protester be reimbursed the reasonable cost of filing and pursuing its
protest, including attorneys' fees. 4 C.F.R. sect. 21.8(d)(1) (2005). The
protester should submit its certified claim for such costs, detailing the
time expended and costs incurred, directly to the contracting agency
within 60 days of receiving this decision. 4 C.F.R. sect. 21.8(f)(1).
The protest is sustained.
Anthony H. Gamboa
General Counsel
------------------------
[1] If an offeror received the award of a requirements contract, the
offeror's prices for the additional optional items would then be
evaluated, and a BPA awarded to the same offeror if the optional item
prices were also determined to be reasonable. Id. sect. M.3, at 108.
[2] The TEB rated each offeror's MFSUs separately. The TEB also employed
the use of "+" and "-" (e.g., "acceptable plus") in its rating system. AR,
Tab 21, TEB Consensus Report, at 2-3.
[3] This included four of the six DDPs where the TEB recommended that no
award be made (i.e., DDPs #7, 8, 16, and 25). AR, Tab 15, TEB Best Value
Analysis Report, at 10, 12, 25, 42.
[4] By contrast, when an agency evaluates proposals for the award of a
cost-reimbursement contract, in which the government bears the risk and
responsibility to pay the contractor its actual allowable costs regardless
of the costs proposed by the offeror, see FAR sect. 16.301-1, the agency's
analysis must also determine the realism of the offeror's proposed costs
and what the costs are likely to be under the offeror's technical
approach, assuming reasonable economy and efficiency (i.e., cost realism).
See Pueblo Envtl. Solution, LLC, B-291487, B-291487.2, Dec. 16, 2002, 2003
CPD para. 14 at 13; PADCO, Inc.--Costs, B-289096.3, May 3, 2002, 2002 CPD
para. 135 at 5.
[5] For evaluation purposes, meal prices were based upon a per-person
per-day (i.e., breakfast, lunch, and dinner combined) rate; MFSU mileage
was based upon a per-mile traveled rate; and handwashing units were based
upon a per-sink per-day rate.
[6] The government estimates were based upon historical price competition,
using MFSUs under contract with the Forest Service during a prior fire
season. AR, Tab 15, TEB Best Value Analysis Report, at 1.
[7] While Port-A-Pit's meal price was $[DELETED] per-person per-day in
most instances, the offeror's meal price for its Unit 03 (all DDPs), as
well as Units 01 and 02 (for the California-based DDPs), totaled
$[DELETED]. AR, Tab 13, Abstract of Offerors' Prices by DDP.
[8] The TEB determined that the average mileage price proposed under the
solicitation was $20 per mile. The agency did not compute an overall
average price for meals and handwashing units, but did so for each DDP.
The average meal and handwashing unit prices set forth above are for DDP
23 (Salt Lake City, Utah), one of the locations upon which Port-A-Pit
proposed. AR, Tab 13, Abstract of Offerors' Prices, at 8.
[9] The contracting officer also considered the mileage price that the
agency had negotiated with Port-A-Pit on an earlier occasion in her
determination here. AR, Tab 15, TEB Best Value Analysis Report, at 5.
[10] The agency determined the relative significance of offerors' mileage
costs by examining the total number of miles incurred and billed to the
Forest Service by a selected MFSU during a prior fire season. AR, Tab 15,
TEB Best Value Analysis Report, at 1. The parties agree that the cost for
handwashing units was not significant to the overall cost to the
government.
[11] While the record demonstrates the actual number of meals and amount
of mileage provided here, it does not also indicate reflect the
contractor's actual rates and thus, the government's actual costs.
[12] [DELETED] total meals / 3 = [DELETED] meals per person per day.
[DELETED] x $[DELETED] per person per day = $39,644. [DELETED] total miles
x $[DELETED] per mile = $17,100.
[13] [DELETED] total meals / 3 = [DELETED] meals per person per day.
[DELETED] x $[DELETED] per person per day = $69,285.04. [DELETED] total
miles x $[DELETED] per mile = $35,600.
[14] Port-A-Pit also protested that the proposal submitted by [DELETED]
was not signed and did not acknowledge the amendments to the RFP; the
protester subsequently withdrew this issue. Comments, Sept. 6, 2005, at 3
n.1.