TITLE: B-297425.2, KIC Development, LLC, January 26, 2006
BNUMBER: B-297425.2
DATE: January 26, 2006
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B-297425.2, KIC Development, LLC, January 26, 2006

   Decision

   Matter of: KIC Development, LLC

   File: B-297425.2

   Date: January 26, 2006

   Anthony Acri for the protester.

   Rebecca L. Taylor, Esq., Leftwich & Ludaway, for Legin Group, Inc., an
   intervenor.

   Jud E. McNatt, Esq., Department of Housing and Urban Development, for the
   agency.

   Ralph O. White, Esq., and Christine S. Melody, Esq., Office of the General
   Counsel, GAO, participated in the preparation of the decision.

   DIGEST

   Protest challenging agency's determination that protester's proposal was
   technically unacceptable is sustained where the agency's determination
   that the proposal was unacceptable because it did not show that the
   protester itself met the solicitation's experience requirement--while its
   subcontractor clearly did--was inconsistent with the solicitation's
   evaluation scheme, which allowed offerors to meet experience requirements
   using the experience of properly-committed key employees or
   subcontractors.

   DECISION

   KIC Development, LLC protests the award of a contract to Legin Group, Inc.
   by the Department of Housing and Urban Development (HUD) pursuant to
   request for proposals (RFP) No. R-ATL-01810, issued to procure lead
   evaluation services for single-family properties owned by HUD and located
   within specified geographic regions; the award at issue here is for lead
   evaluation services within HUD's Atlanta region. KIC argues that HUD
   unreasonably concluded that KIC's proposal was technically unacceptable.

   We sustain the protest.[1]

   BACKGROUND

   The RFP was issued on July 27, 2005, and anticipated the award of up to
   four contracts for lead evaluation services, one for each of the four
   areas comprising the jurisdictions of HUD's Homeownership Centers in
   Atlanta, Denver, Philadelphia, and Santa Ana. The competition was limited
   to firms participating in the Small Business Administration's (SBA) 8(a)
   program.

   The RFP anticipated that awards would be made to the offerors submitting
   the lowest-priced, technically acceptable proposals for each area. RFP at
   M-2.[2] Offerors could propose to perform in one, or any combination, of
   the four areas. The RFP identified three evaluation factors:
   (1) certification; (2) experience and past performance; and (3) management
   plan. RFP at M-2; RFP amend. 2, at M-4. The evaluation scheme advised
   potential offerors that proposals must be rated acceptable under all three
   evaluation factors to be eligible for award. RFP at M-2. In addition,
   under each of the three evaluation factors, the solicitation also
   identified a question, or questions, which had "to be answered in the
   affirmative, during proposal evaluation phase, in order for the offeror to
   be deemed acceptable for this factor." See RFP at M-2 (for the question
   under the certification factor); RFP at M-3 (for the three questions under
   the experience and past performance factor); and RFP amend. 2, at M-4 (for
   the question under the management plan factor).

   Under the certification evaluation factor, the RFP required submission of
   all required certifications and licenses to perform these services. RFP at
   M-2. There is no issue in this protest regarding KIC's evaluation as
   acceptable under this factor.

   Instead, this protest turns on KIC's evaluation under the experience and
   past performance factor. Under this factor, the RFP required that "[t]he
   Offeror and/or its proposed key personnel and/or its proposed
   subcontractors must have performed the same or similar services as
   required by the solicitation over approximately the last three years." RFP
   at M-2. If an offeror wanted to meet this experience requirement with
   individuals not currently employed, or with other corporate entities with
   which it would subcontract, the RFP required the submission of commitment
   letters with the proposal. The RFP also required that offerors "identify
   all contracts, either ongoing or completed within the last three years,
   which demonstrate performance relevant to the solicitation requirements."
   Id. Offerors with more than five relevant contracts were required to
   identify only the five most recent contracts where they performed these
   services.

   As indicated above, the RFP set forth three questions that had to be
   answered in the affirmative for offerors to be deemed acceptable under the
   experience and past performance evaluation factor. These were:

   Has the offeror and/or its proposed key personnel and/or its proposed
   subcontractors (if applicable) provided the same or similar services
   required by the solicitation over approximately the last three years?

   If the experience requirement is met by the experience of individuals or
   corporate entities not currently employed by or a part of the offeror, has
   the offeror submitted commitment letters for these individuals and/or
   corporate entities?

   Did the reference checks clearly indicate that the offeror and/or its
   proposed key personnel and/or its proposed subcontractors (if applicable)
   have a successful record of providing quality customer service and timely
   performance?

   RFP at M-3.

   Under the third evaluation factor, management plan, the RFP's guidance in
   section M was brief. In its entirety, the provision stated:

   Contractor will submit a management plan, including timeline, that
   demonstrates the contractor understands and can meet the 6-day turnaround
   required in paragraph 4.2.1 of section C.

   RFP amend. 2, at M-4. The only question identified in section M for this
   factor was:

   Does the offeror's management plan and timeline demonstrate that the
   offeror understands the 6-day turnaround time required in paragraph 4.2.1
   of Section C and can meet this requirement?

   Id.

   By the August 26 closing date, HUD received 29 proposals, including 1 from
   KIC. KIC's proposal indicated it is an SBA-certified 8(a) and Historically
   Underutilized Business Zone (HUBZone) contractor; KIC is also an Alaskan
   Native Corporation. Agency Report (AR), Tab 7B, at 1. Although it does not
   appear that KIC itself has performed lead evaluation services, its
   proposal indicates that it has "hired an experienced lead evaluation
   company that has the qualifications that the Government requires in order
   to win this contract opportunity." Id.

   A technical evaluation panel (TEP) reviewed and rated each of the
   proposals, and determined that 17 of the proposals, including the proposal
   submitted by KIC, were technically unacceptable. The TEP's consensus view
   of KIC's proposal was as follows:

   [KIC] provided copies of current certifications/accreditation/licenses for
   all staff proposed as lead inspectors, risk assessors, and clearance
   technicians for region 1 and region 3 for which they proposed. KIC relies
   completely on a sub for the work. Offeror has not detailed any role for
   themselves. They failed to provide any information on its own key
   personnel or performance history, consequently the panel was unable to
   make a reasonable assessment of KIC's ability to manage the contract. All
   experience is with subcontractor, ALC. Its proposed subcontractor, ALC,
   has performed single-family lead base inspections throughout the United
   States. The Offeror's proposal shows a day-by-day timeline.

   AR, Tab 11, at 6.

   The remaining 12 acceptable proposals were ranked by price in the area, or
   areas, for which the firm that submitted the proposal was seeking award.
   After the offerors submitting the lowest-priced acceptable proposal within
   each area were determined to be responsible, awards were made without
   clarifications or discussions. The firm receiving the award for the area
   covered by the Atlanta Homeownership Center was Legin Group, with a total
   evaluated price of $19,308,651.39. KIC's price for these services was
   $19,296,475.

   On October 5, HUD notified KIC that its proposal had been found
   technically unacceptable, and that the agency intended to make award to
   Legin Group. On October 13, the agency provided a debriefing. This protest
   followed, on October 18.

   DISCUSSION

   KIC argues that the agency unreasonably concluded that its proposal was
   technically unacceptable because KIC elected to meet the solicitation's
   experience requirement with the experience of a properly-committed
   subcontractor. KIC contends that the solicitation allowed offerors to meet
   the experience requirement with committed key employees or subcontractors,
   and that its proposal did so in a manner consistent with the
   solicitation's instructions.

   HUD does not argue--nor does the record suggest--that KIC's proposed
   subcontractor fails to meet the experience requirement, or that KIC failed
   to provide a valid letter of commitment from the subcontractor. Rather,
   HUD explains that the evaluation panel found the proposal unacceptable
   under the experience portion of the experience and past performance factor
   because KIC "relied completely on a subcontractor for the work performance
   and work experience," AR, Memorandum of Law, at 2, and "because the
   proposal did not indicate in any fashion that the offeror or any of its
   own staff had any experience whatsoever in the area of lead evaluation
   services." AR, Contracting Officer's (CO) Statement, at 5. HUD also argues
   that KIC's proposal should have been rated unacceptable under the
   management plan factor, although the contemporaneous evaluation concluded
   the proposal was acceptable in this area. Id. Specifically, the CO states
   that he now thinks that KIC's "proposal (1) indicated no management role
   for itself in this effort, (2) identified no key personnel staff from
   [KIC], and (3) did not demonstrate how it would manage subcontractors . .
   . ." Id. at 9.

   Our Office examines an agency's evaluation of experience and past
   performance to ensure that it was reasonable and consistent with the
   stated evaluation criteria and applicable statutes and regulations;
   however, the necessary determinations regarding the relative merits of
   offerors' past performance records are primarily matters within the
   contracting agency's discretion. Kay & Assocs., Inc., B-291269, Dec. 11,
   2002, 2003 CPD para. 12 at 4. In this regard, our Office will not question
   an agency's determinations absent evidence that those determinations are
   unreasonable or contrary to the stated evaluation criteria. Id.

   In our view, HUD's evaluation strayed from the RFP's stated evaluation
   scheme. As indicated above, the RFP expressly provided that "[t]he Offeror
   and/or its proposed key personnel and/or proposed subcontractors must have
   performed the same or similar services as required by the solicitation
   over approximately the last three years." RFP at M-2. Despite HUD's
   attempt to argue that the term "and/or" immediately following the term
   "Offeror" permits other entities (key personnel or proposed
   subcontractors) to contribute to an offeror's showing of experience, but
   not substitute for it entirely, that is not the commonly understood
   meaning of the term "and/or." Rather, the term "and/or" as used in this
   context indicates that the experience requirement can be met jointly (X
   and Y together meet the requirement) or by one of the named entities
   (either X meets the requirement, or Y meets the requirement). Accordingly,
   KIC's proposed approach of meeting the experience requirement with its
   properly-committed subcontractor was consistent with evaluation scheme;
   HUD's finding that the proposal was technically unacceptable in this
   regard was not.

   As noted above, in the agency report, HUD also argues that the CO now
   views KIC's proposal as unacceptable under the third evaluation factor,
   management plan. (During the contemporaneous evaluation, KIC's proposal
   was rated acceptable under the management plan factor.) Generally, we
   accord little weight to agency efforts to defend, in the face of a bid
   protest, a prior source selection through the submission of new analyses,
   because such reevaluations and redeterminations prepared in the heat of
   the adversarial process may not represent the fair and considered judgment
   of the agency. Boeing Sikorsky Aircraft Support, B-277263.2, B-277263.3,
   Sept. 29, 1997, 97-2 CPD para. 91 at 15. In addition, we note that the
   management plan factor in section M of the RFP was focused entirely on
   whether an offeror's proposal indicated sufficient awareness of the 6-day
   turnaround for inspections required by the solicitation. As mentioned
   above, the contemporaneous evaluation materials indicate that HUD's
   evaluators thought the proposal met this requirement, and based on our
   review of the record here, we see no basis to question that conclusion.[3]

   RECOMMENDATION

   Because we conclude that the evaluation of KIC's proposal was not
   consistent with the solicitation's stated evaluation scheme, we sustain
   the protest. We recommend that HUD reevaluate KIC's proposal in accordance
   with the solicitation's scheme, and make a new determination about whether
   the proposal is acceptable. If the proposal is found acceptable, we
   recommend that HUD determine whether KIC is a responsible offeror, subject
   to the SBA's certificate of competency procedures. See 13 C.F.R.
   sect. 125.6(f) (2005). In the event HUD decides that KIC's proposal is
   acceptable, and that KIC is a responsible offeror, we recommend that the
   agency terminate the award to Legin Group and make award to KIC as offeror
   with the lowest-priced, technically acceptable proposal for the area
   covered by HUD's Atlanta Homeownership Center. We also recommend that the
   agency reimburse the protester the costs of filing and pursuing the
   protest, including attorneys' fees, if any. Bid Protest Regulations, 4
   C.F.R. sect. 21.8(d)(1) (2005). As required by section 21.8(f) of our
   Regulations, KIC's claim for such costs, detailing the time expended and
   the costs incurred, must be submitted directly to the agency within 60
   days after receipt of the decision.

   The protest is sustained.

   Anthony H. Gamboa

   General Counsel

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

   [1] A related protest, brought by a different offeror and challenging
   HUD's award in the Denver region, was denied by our Office on January 5,
   2006. See Prudent Techs., Inc., B-297425, Jan. 5, 2006, 2006 CPD
   para. ___.

   [2] The RFP here numbers pages serially within each section, and starts
   each section with page 1 (e.g., L-1, L-2...M-1, M-2); it also numbers
   paragraphs within each section (M.1, M.2...). The RFP citations in this
   decision are to the page numbers.

   [3] The record indicates that HUD, in essence, is concerned about KIC's
   intent to comply with the RFP's limitations on subcontracting. See AR,
   CO's Statement, at 8. Our discussion above should not be read to suggest
   that HUD reasonably can have no concerns about KIC's proposed approach in
   this area. In fact, we think the very issues the evaluators identified in
   their assessment of the experience and past performance factor could give
   rise to reasonable agency concerns related to either the technical
   acceptability of KIC's proposal or KIC's responsibility. Specifically, the
   RFP at I-6 incorporated the requirement that at least 50 percent of the
   cost of contract performance incurred for personnel be expended for
   employees of the prime contractor. See Federal Acquisition Regulation
   sect. 52.219-14. Since KIC's proposal anticipates extensive
   subcontracting, the agency may want to review this matter. Where a
   proposal leads an agency to the conclusion that the offeror could not and
   would not comply with the subcontracting limitation, we have considered
   this to be a matter of the proposal's technical acceptability; a proposal
   that fails to conform to a material term or condition of the solicitation
   such as the subcontracting limitation is unacceptable and may not form the
   basis for an award. KIRA, Inc., B-287573.4, B-287573.5, Aug. 29, 2001,
   2001 CPD para. 153 at 3. Otherwise, the agency's judgment as to whether
   KIC will comply with the subcontracting limitation is a matter properly
   considered as part of the agency's responsibility determination. Id.