TITLE: B-298281.2, Bannum, Inc., October 16, 2006
BNUMBER: B-298281.2
DATE: October 16, 2006
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B-298281.2, Bannum, Inc., October 16, 2006
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: Bannum, Inc.
File: B-298281.2
Date: October 16, 2006
Michael A. Gordon, Esq., and Fran Baskin, Esq., Holmes & Gordon, for the
protester.
Alex D. Tomaszczuk, Esq., Daniel S. Herzfeld, Esq., and Orest J. Jowyk,
Esq., Pillsbury Winthrop Shaw Pittman LLP, for Dismas Charities, Inc., the
intervenor.
Tracey L. Printer, Esq., Federal Bureau of Prisons, for the agency.
Jennifer D. Westfall-McGrail, Esq., and Christine S. Melody, Esq., Office
of the General Counsel, GAO, participated in the preparation of the
decision.
DIGEST
Where solicitation provided for award on the basis of initial proposals to
the offeror whose proposal was determined to be in the best interests of
the government, agency properly awarded contract without discussions where
record shows that discussions were not necessary to determine which
proposal represented the best value to the government.
DECISION
Bannum, Inc. protests the award of a contract to Dismas Charities, Inc.
under request for proposals (RFP) No. 200-0800-SE, issued by the
Department of Justice, Federal Bureau of Prisons for community corrections
center (CCC) services for federal offenders in the Orlando, Florida area.
Bannum contends that the agency improperly awarded to Dismas on the basis
of initial proposals.
We deny the protest.
The RFP, which was issued on November 30, 2005, contemplated the award of
an indefinite-delivery requirements contracts for a 3-year base period and
seven 1-year award terms.[1] The solicitation provided for award to the
offeror whose proposal was determined to be in the "best interests" of the
government, RFP sect. M.2, with proposals to be evaluated on the basis of
the following three criteria, listed in descending order of importance:
past performance, technical/management, and price. RFP sect. M.5. The RFP
advised that past performance and technical/management, when combined,
were significantly more important than price. Subfactors to be considered
under the technical/management factor were site location, accountability,
programs, facility, and personnel. The RFP advised offerors that the
agency intended to evaluate proposals and make award without discussions,
but reserved to the government the right to conduct discussions if the
contracting officer determined them to be necessary. RFP sect.
L.2(f)(4).[2]
Four proposals were received by the March 1, 2006 closing date. A source
selection evaluation board evaluated the technical/management proposals
and forwarded to the contracting officer a memorandum summarizing items to
be discussed and/or clarified with the various offerors. After reviewing
the memorandum, the contracting officer concluded that award could be made
without discussions, as "at least one offeror had no deficiencies or major
weaknesses that required discussions." Agency Report, Aug. 11, 2006, at 4.
By letter dated May 3, the contracting officer notified the protester that
its proposal had been eliminated from consideration because Bannum had
failed to provide the contracting officer with valid proof of zoning
within 60 days after the date of its initial proposal submission. Bannum
protested the agency's action to our Office on May 8, arguing that the
solicitation required the submission of proof of zoning only if
discussions were required, and that discussions had not been conducted in
connection with the subject procurement.[3] The protester further noted
that, if and when reinstated, it intended to request a change in its
proposed facility.[4] Protest, May 8, 2006, at 4. By letter dated May 12,
the contracting officer notified the protester that "[t]he correspondence
dated May 3, 2006 eliminating Bannum Inc.'s proposal . . . is rescinded
and Bannum's proposal is reinstated." Bannum subsequently withdrew its
protest.
In response to the contracting officer's decision to make award without
discussions, the SSEB reconvened and assigned the proposals color and risk
ratings under each factor.[5] The contracting officer evaluated offerors'
past performance and prices and memorialized her findings in memoranda
dated May 26 (price analysis) and June 2 (past performance). Past
performance ratings, technical/management factor ratings, and offeror
prices were as follows:[6]
+------------------------------------------------------------------------+
|Offeror |Past Performance |Technical/Mgmt |Price |
|-------------+----------------------+--------------------+--------------|
|Bannum |Blue/Very Good |Green/Low Risk |[deleted] |
|-------------+----------------------+--------------------+--------------|
|Dismas |Blue/Very Good |Blue/Low Risk |$16,087,527 |
|-------------+----------------------+--------------------+--------------|
|Offeror A |Blue/Very Good |Green/Low Risk |[deleted] |
|-------------+----------------------+--------------------+--------------|
|Offeror B |Green/Acceptable |Green/Low Risk |[deleted] |
+------------------------------------------------------------------------+
On June 23, the agency amended the solicitation to incorporate a revised
Department of Labor wage determination. In a cover letter accompanying the
amendment, the contracting officer advised each offeror that it could
"revisit [its] pricing schedule" if the revised wage determination
affected its proposal, but to "keep in mind" that the amendment was
"specific to pricing only" and was not "a form of written negotiations to
open and conduct discussions." Agency Report, Tab 13. Bannum responded
with a letter dated June 28, in which it proposed a new performance site
and reduced its pricing based on the new site. The contracting officer did
not approve the change in performance site and did not consider the
revised pricing.
By decision dated June 30, the contracting officer, acting as the source
selection authority, determined that Dismas's proposal represented the
most advantageous offer to the government. The contracting officer noted
that Dismas had the highest rated non-price proposal and concluded that
the superiority of Dismas's proposal over Offeror B's in both the past
performance and technical/management areas, and over Bannum's in the
technical/management area, warranted the payment of a price premium.[7]
The agency awarded Dismas a contract on July 5.
Bannum protested to our Office on July 14, arguing that the contracting
officer had abused her discretion in electing to award to Dismas on the
basis of initial proposals rather than conducting discussions. The
protester asserted that the awardee's proposal was materially deficient in
that Dismas's proposed facility was subject to a restrictive covenant that
would prohibit its use as a community corrections center. The protester
further asserted that the agency's decision not to conduct discussions was
the product of bad faith on the part of agency officials who did not want
to give Bannum the opportunity to substitute a new place of performance
for the one originally proposed and thereby improve its competitive
standing. The protester also argued that the agency had conducted
discussions with Offeror A, and, as a consequence, was required to conduct
discussions with all offerors, and that the agency had violated Federal
Acquisition Regulation (FAR) sect. 15.306(a) by failing to permit Bannum
to clarify allegedly inaccurate negative past performance information.
Restrictive Covenants
Bannum argues that Dismas's proposal was materially deficient and thus
that the agency should have rejected the proposal or, at a minimum, held
discussions with Dismas and all other offerors. As explained below, we
find this argument to be without merit.
Bannum contends that Dismas's proposal is deficient because the property
that Dismas has proposed is subject to a restrictive covenant that
prohibits its use as a community corrections center. In support of its
position, the protester cites the following language from a document
entitled Declaration of Covenants and Restrictions for Edgewater North
Commerce Park:[8]
Land Use and Building Type. No lot shall be used except for commercial,
warehouse, and industrial purposes, including office buildings and office
space. . . .
Protester's Comments, Sept. 1, 2006, exh. A, Declaration of Covenants and
Restrictions at 13. The protester argues that this language precludes use
of the property for residential purposes, such as operation of a CCC. In
this connection, Bannum asserts (without citing any support for its
position) that "[a] CCC is a residential use." Protester's Comments, Aug.
21, 2006, at 10.
In response to the protester's argument, the agency asserts that "a CCC is
an industrial use, and not a residential use" as alleged by Bannum. Agency
Reply Comments, Aug. 25, 2006, at 3. The Bureau of Prisons cites as
support for its position a letter from the Orange County Zoning Division
included by Dismas in its offer. The letter provides in relevant part as
follows:
This is in response to your November 7, 2005 inquiry relating to the
appropriate Orange County zoning district for the operation of a
residential community correction center or "half-way house."
We have reviewed the operation as described in your inquiry and have
determined that the activities are consistent with Standard Industrial
Classification (SIC) Group #8361 as applied to the Orange County Zoning
Regulations.
Uses listed in SIC Group #8361 are a permitted use in the following
industrial districts: I-1/I-5, I-2/I-3 and I-4. But not in the I-1A,
Restricted Industrial District (sic).
Agency Report, Tab 17.
The protester takes issue with the agency's response, maintaining that the
Zoning Division's letter states that CCCs are a permitted use in an
industrial zone, not that operation of a CCC is an industrial use. The
protester further asserts that, in any event, it was the prerogative of
the Edgewater North Commerce Park Property Owner's Association, and not
the county, to determine whether operation of a CCC was an industrial use
permitted by the covenant. According to the protester, it knows--from its
own investigation of a building within the Edgewater North Commerce Park
as a potential site--that the Association will not approve such a use.
As a preliminary matter, even assuming that the covenant the protester
cites has a material bearing on the acceptability of the awardee's
proposal, it is clear that the agency was not on notice of the covenant
since it was not referenced in Dismas's proposal. In this regard, the
agency asserts that, as submitted, Dismas's proposal satisfied all the
requirements of the RFP with respect to demonstrating that it has the
right to use the site in question, Agency Reply Comments, Aug. 25, 2006,
at 3, and Bannum does not take issue with this assertion. Accordingly,
based on the record here, we see no basis to question the agency's
determination that Dismas's proposal complied with the RFP requirements,
or to conclude that the agency was required to hold discussions before
making award to the firm.
To the extent that the protester argues that the awardee's proposal now
should be disqualified based on Dismas's failure to disclose the covenant
in its proposal, this argument is without merit. There simply is no
support in the record for the underlying premise of any such
argument--that the awardee is barred from using the proposed site for
operation of a CCC; Bannum merely states in a conclusory fashion that a
CCC is a residential use, and therefore is not an authorized use of the
proposed site. The protester's argument, as well as any assumption that
the property owners' association will interpret the covenant in question
as prohibiting the operation of a CCC and will choose to take legal action
to enforce such an interpretation, amount to unsupported speculation, and
thus do not give rise to a valid basis of protest.[9] See Janico Bldg.
Servs., B-290683, July 1, 2002, 2002 CPD para. 119 at 2. In any event,
whether Dismas succeeds in performing in the manner that it has proposed
is a matter of contract administration not for review by our Office.
Bid Protest Regulations, 4 C.F.R. sect. 21.5(a) (2006).
Decision to award on the basis of initial proposals
The protester contends that the contracting officer decided to award on
the basis of initial proposals rather than to conduct discussions in order
to deny it the opportunity to improve its proposal. According to the
protester, this action is the latest of a series of actions undertaken by
the agency to retaliate against it for filing grievances against Bureau of
Prisons officials in connection with an earlier contract and for
protesting to our Office.
Where, as here, an RFP provides for award on the basis of initial
proposals without discussions, an agency may make award without
discussions, unless discussions are determined to be necessary. 41 U.S.C.
sect. 253b(d)(1)(B) (2000). While discussions are necessary where the
solicitation provides for award on a best value basis and the source
selection official is unable to determine without further information
which proposal represents the best value to the government, see Sierra
Military Health Servs., Inc.; Aetna Gov't Health Plan, B-292780 et al.,
Dec. 5, 2003, 2004 CPD para. 55 at 6-7 n.5, an agency may dispense with
discussions where there is a reasonable basis to conclude that the
proposal of the intended awardee represents the best overall value.
Facilities Mgmt. Co., Inc., B-259731.2, May 23, 1995, 95-1 CPD para. 274
at 8; see also Lloyd-Lamont Design, Inc., B-270090.3, Feb. 13, 1996, 96-1
CPD para. 71 at 6.
Here, the agency clearly had a reasonable basis to conclude that the
proposal of Dismas represented the best overall value to the government.
In this regard, Dismas's proposal contained no deficiencies requiring
discussions; was the only proposal to receive the highest rating under
both non-price evaluation factors; and was lower in price than Offeror A's
and only slightly higher in price than Bannum's. Moreover, while the
protester contends that the agency's objective in awarding on the basis of
initial proposals was to deny it the opportunity to improve its proposal
through discussions to the point where it would have been in line for
award, this argument presumes bad faith on the agency's part. To show bad
faith, a protester must submit convincing proof that the procuring agency
directed its actions with the malicious and specific intent to injure the
protester. Strategic Resources, Inc., B-287398, B-287398.2, June 18, 2001,
2001 CPD para. 131 at 6 n.8. The protester has made no such showing here.
Discussions with Offeror A
The protester argues that it is clear from the record that the agency in
fact conducted discussions with Offeror A, and that, as a consequence, the
agency had an obligation to conduct discussions with all offerors. Bannum
cites as evidence that the agency conducted discussions with Offeror A the
fact that in its April 4 memorandum to the contracting officer, the
evaluation board identified a deficiency in Offeror A's technical
proposal, while in its evaluation report of late May, the board stated
that Offeror A's proposal had no deficiencies.[10] According to the
protester, the only explanation for the elimination of the deficiency is
that the agency gave Offeror A the opportunity to cure it through
discussions.
The agency denies that it conducted discussions with Offeror A. According
to the agency, the reason that the item was not mentioned as a deficiency
in the second evaluation report was that subsequent to the April 4
memorandum, the evaluators decided that it was not actually a deficiency.
The agency further argues that even assuming that it had conducted
discussions with Offeror A, the protester suffered no prejudice as a
result because award was not ultimately made to Offeror A.
In its comments on the agency report, Bannum does not rebut the agency's
assertion that it did not conduct discussions with Offeror A. Instead,
Bannum disputes the agency's finding that Offeror A's proposal did not
have a deficiency and the agency's position that Bannum was not prejudiced
as a result of the elimination of the alleged deficiency. Both of these
arguments are wholly unpersuasive. First, since Offeror A was not in line
for award in any event, any deficiency in its proposal which would have
resulted in lowering its rating would have had no effect on the ranking of
the offerors. Second, Bannum argues that it was prejudiced by the agency's
failure to recognize the deficiency in Offeror A's proposal because the
agency would not have elected to award on the basis of initial proposals
if it had not thought that it had two technically acceptable proposals
(i.e., those of Dismas and Offeror A) to trade off against one another in
a best value determination.[11] This theory is simply too speculative to
warrant questioning the agency's actions here.
Adverse past performance information
Finally, the protester argues that the agency violated FAR sect. 15.306(a)
by denying it the opportunity to address adverse information pertaining to
its performance under the preceding contract for the effort solicited
here. In this regard, FAR sect. 15.306(a)(2) provides as follows:
If award will be made without conducting discussions, offerors may be
given the opportunity to clarify certain aspects of proposals (e.g., the
relevance of an offeror's past performance information and adverse past
performance information to which the offeror has not previously had an
opportunity to respond) or to resolve minor or clerical errors.
The agency acknowledges that it considered adverse information pertaining
to Bannum's performance under the predecessor contract, but maintains that
it was not information to which the protester had not previously had an
opportunity to respond. In this connection, the agency contends that
Bannum was furnished with a copy of the Contractor's Evaluation Form
containing the adverse information and given the opportunity to comment on
it, but that Bannum chose not to respond. While the protester disputes the
agency's assertion that it had been given the opportunity to respond to
the negative information, this is not a matter that we need to resolve
because it is clear from the record that the protester, which received the
highest overall past performance rating of blue, suffered no prejudice as
a result of the agency's consideration of the adverse past performance
information at issue. Moreover, to the extent that Bannum argues that, if
the agency had given it the opportunity to address adverse past
performance information pursuant to FAR
sect. 15.306(a)(2), the agency would have decided to conduct discussions,
we fail to see the logic of Bannum's argument since that FAR provision
explicitly permits agencies to give offerors the opportunity to address
such matters where award is to be made without conducting discussions.
The protest is denied.
Gary L. Kepplinger
General Counsel
------------------------
[1] The "award term" concept is intended as an incentive to the contractor
that permits extensions to the base contract period based on the
contractor's performance. RFP sect. I.11.
[2] Similarly, sect. M.4 advised offerors that "an award may be made
without discussions," and sect. L.7(f)(2) notified them that the "Bureau
of Prisons may award a contract based on the initial submittal of offers."
[3] The RFP provision in question, sect. L.7(i), provides in relevant part
as follows:
The Government reserves the right to conduct discussions if the
Contracting Officer determines them necessary. If discussions are
required, offerors shall provide the Contracting Officer with valid proof
of all zoning and local ordinance requirements necessary for the operation
of a Community Corrections Center . . . within sixty days after the date
of the initial proposal submission.
[4] The RFP permitted offerors to make one request for a change in
facilities. In this regard, sect. L.7(f)(3) provided as follows:
Only one request for a change in an offeror's proposed facility will be
approved by the Contracting Officer. This request must be received by the
Contracting Officer prior to offerors being given an opportunity to submit
final proposal revisions. All requests for a site change must include all
site information required herein. Contractor to reimburse the Government
for all associated costs incurred in the pre-site inspection conducted by
the Government for the change of location.
[5] While the evaluation report is undated, e-mail correspondence under
Tab 3 of the agency report indicates that it was circulated among board
members for approval in late May.
[6] The RFP provided for the assignment of the following color/adjectival
ratings: Blue-Very Good; Green-Acceptable; Yellow-Poor; and
Red-Unacceptable.
[7] The contracting officer noted that no trade-off determination was
required to select Dismas's proposal over Offeror A's because Dismas's
proposal was both higher-rated on the technical/management factor and
lower in price than Offeror A's.
[8] As neither counsel for Dismas nor counsel for the agency has argued
that the property offered by Dismas is not part of the Edgewater North
Commerce Park, we assume that this is the case.
[9] Bannum also cites language from the Declaration of Covenants and
Restrictions providing as follows:
Opening Blank Walls; Removing Fences. No owner shall make or permit any
opening to be made in any masonry wall or fence, except as such opening is
installed by the Developer. No such masonry wall or fence shall be
demolished or removed without, nor shall any opening be made therein
without the prior written consent of the Architectural Control Board.
Protester's Comments, Sept. 1, 2006, exh. A, supra, at 13. As noted above,
the agency was unaware of this covenant. Moreover, while the protester
argues that the prohibition on the destruction of masonry walls "would
likely prevent Dismas' ability to carry out its planned renovation,"
Protester's Comments, Aug. 21, 2006, at 10, the protester has cited
nothing from Dismas's proposal that would indicate an intent to destroy a
masonry wall.
[10] The deficiency identified in the April 4 memorandum was as follows:
Zoning: Offeror shall submit revised zoning letter to accept all
offenders, regardless of their offenses.
Agency Report, Tab 3, Memorandum to the Contracting Officer, Apr. 4, 2006,
at 4.
[11] While the evaluators assigned the proposals of the other two
offerors, Bannum and Offeror B, overall technical ratings of Green, they
also characterized both as containing significant weaknesses that would
need to be resolved for the proposals to be considered acceptable. Agency
Report, Tab 5, Technical/Management Evaluation, at 1. While the agency
does not explain this discrepancy in the record, it has no effect on our
analysis here. Moreover, as noted above, the contracting officer in fact
considered both Bannum's and Offeror B's proposals in her best value
tradeoff decision.