TITLE: B-298835, Tessa Structures, LLC, December 14, 2006
BNUMBER: B-298835
DATE: December 14, 2006
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B-298835, Tessa Structures, LLC, December 14, 2006

   Decision

   Matter of: Tessa Structures, LLC

   File: B-298835

   Date: December 14, 2006

   Raymond J. Sherbill, Esq., and Stuart A. Schwager, Esq., Ridberg, Sherbill
   & Aronson LLP, for the protester.

   Julia L. Perry, Esq., Federal Highway Administration, and Kenneth Dodds,
   Esq., Small Business Administration, for the agencies.

   Peter D. Verchinski, Esq., and John M. Melody, Esq., Office of the General
   Counsel, GAO, participated in the preparation of the decision.

   DIGEST

   Agency's rejection of protester's bid based on determination that
   protester could not perform in the number of days specified in its bid
   constituted a finding of nonresponsibility--rather than one of
   nonresponsiveness, as characterized by the agency--which, because
   protester was a small business, had to be referred to Small Business
   Administration for certificate of competency review.

   DECISION

   Tessa Structures, LLC protests the award of a contract to Fort Myer
   Construction Co. under invitation for bids (IFB) No. DTFH71-06-B-00014,
   issued by the Department of Transportation, Federal Highway Administration
   (FHWA), for bridge-related repairs. Tessa maintains that the agency
   improperly rejected its bid as nonresponsive.

   We sustain the protest.

   The IFB, issued on May 26, 2006, contemplated the award of a fixed-price
   contract for construction and painting on three bridges on the George
   Washington Memorial Parkway in Washington, D.C. and Arlington, Virginia.
   The IFB stated that award would be based on the lowest total project
   price, which would be the sum of the bid price and the contract
   administrative costs associated with the length of the performance period
   stated in the bid ($2,200 per calendar day bid). In this regard, the bid
   schedule included a summary page on which bidders were to state the number
   of calendar days it would take to complete the work starting from the
   notice to proceed, or from the date stated in the notice to proceed. The
   IFB stated that the performance period could not exceed 305 days, but the
   IFB did not specify a minimum number of days. The IFB also informed
   bidders that the performance period calculation should take into account
   work limitations found in the solicitation, such as holidays, weekends,
   rush hours, night work, and no-work periods, and weather sensitive items,
   such as ambient air temperature requirements, minimum surface temperature
   requirements, and specific planting seasons. Finally, the IFB stated that
   cleaning and painting operations--the last work to be performed--could not
   be performed between January 1 and April 1, 2007.

   Three bids were received by the July 13 opening date. Tessa's evaluated
   price of $2,542,730--based on a bid of $2,278,730 and a performance period
   of 120 days--was the lowest, and Fort Myer's evaluated price of
   $2,546,430--based on a bid of $1,996,430 and a performance period of
   250 days--was second lowest. (The third bidder's evaluated price was
   $3,024,415, based on a bid price of $2,386,415 and a performance period of
   290 days.)

   By letter dated July 21, the agency informed Tessa that it was "very
   concerned" with the 120-day performance period it had submitted in its
   bid. Protest, exh. 2. The letter noted that the other bidders and the
   government estimate used longer performance periods, that the heavy volume
   of traffic on the highway would limit daily construction time, and that
   the construction limitations contained in the solicitation would be
   strictly enforced. The letter requested that Tessa submit a construction
   schedule and a written explanation of how it expected to complete all work
   within the 120-day time period. Id.

   Tessa responded by providing the agency with its preliminary critical path
   method (CPM) schedule, as well as a list of some of the assumptions the
   firm had made in creating the schedule. One of those assumptions was that
   the firm would start performance on August 28, and thus be finished by
   December 25, 120 days later. Protest, exh. 3.

   By letter dated August 3, the agency informed Tessa that its August 28
   start date was contrary to the requirements of the IFB, since the
   performance period "starts with the [n]otice to [p]roceed," which could
   occur as late as 104 days after bid opening, that is, October 24. Protest,
   exh. 4, at 1. According to the agency, Tessa should have used this date as
   the start date, not August 28. The letter went on to state that Tessa had
   not shown how it could complete the work in as few as 68 days--from
   October 24 to January 1, 2007. It further noted that, as stated in the
   solicitation, liquidated damages (in the amount of $2,200 a day) would be
   assessed against Tessa once its performance period passed, and concluded
   by informing Tessa that either it could withdraw its bid or the agency
   could find the bid nonresponsive.

   Tessa responded on August 9, outlining why it believed it could still
   perform the work even if it could not start the work until October 24.
   Protest, exh. 5. Tessa explained that it would use a later completion date
   (December 29), work 7 days a week, work multiple shifts if necessary, and
   use tents and heating for various aspects of the painting work if
   inclement weather were encountered. Tessa further stated that it had funds
   in its bid amount to account for exposure to possible liquidated damages
   if they should be assessed.

   By letter dated September 6, the agency advised Tessa that it was
   rejecting its bid as nonresponsive. The letter stated that Tessa had
   failed to address all of the government's concerns regarding its 120-day
   schedule, and that this time period was not realistic given the special
   weather conditions that were to be taken into consideration. The agency
   further stated that "an assumption that the work can be performed under
   liquidated damages is a failure to comply with the requirements of the
   contract." Protest, exh. 1. This protest followed.

   Tessa asserts that its bid did not take exception to the contract
   requirements and that the agency therefore improperly rejected its bid as
   nonresponsive. Tessa maintains that the agency's determination here
   constitutes a finding of nonresponsibility, and that the agency was
   required to allow Tessa, a small business, to challenge this determination
   through the Small Business Administration's (SBA) certificate of
   competency (COC) procedures.

   Responsiveness concerns whether a bidder has unequivocally promised, as
   shown on the face of its bid, to provide the items or services called for
   by the material terms of the IFB. A bid is nonresponsive where it takes
   exception, or fails to conform, to the requirements of the IFB.
   CardioMetrix, B-255748.2, June 13, 1994, 94-1 CPD para. 364 at 2. Bidder
   responsibility, on the other hand, concerns whether a bidder can perform
   as promised in its bid. Red John's Stone, Inc., B-280974, Dec. 14, 1998,
   98-2 CPD para. 135 at 3. Furthermore, under the Small Business Act, 15
   U.S.C. sect. 637(b)(7) (2000), agencies may not deny award to a small
   business based on a finding that the firm is nonresponsible without
   referring the matter to SBA, which has the ultimate authority to determine
   the responsibility of a small business under its COC procedures. Federal
   Acquisition Regulation (FAR) subpart 19.6; Phil Howry Co., B-291402.3,
   B-291402.4, Feb. 6, 2003, 2003 CPD para. 33 at 5.

   Tessa's bid was responsive. The only restriction the solicitation placed
   on the schedule was that the specified number of days could not exceed 305
   days. Since the IFB thus permitted bids for any performance period shorter
   than 305 days, Tessa's bid of a 120-day performance period was not
   inconsistent on its face with any IFB requirement. Tessa's bid also did
   not take exception to performing the work consistent with the limitations
   contained in the solicitation, including the weather restrictions and the
   prohibition on certain tasks between January 1 and April 1, 2007. While
   the agency may believe that the protester failed to allow a sufficient
   number of days to perform the work, the IFB simply was not structured in a
   manner to permit the agency to reject a bid as nonresponsive based on the
   sufficiency of the number of days specified for performance.

   The agency argues that Tessa's bid was nonresponsive because its specified
   120-day performance period was not based on starting from the notice to
   proceed, as required by the solicitation. This argument is without merit.
   The IFB did not specify a particular notice to proceed date, and Tessa's
   bid did not specify a particular start date. This being the case, Tessa's
   bid could not be read as taking exception to any IFB requirements; Tessa's
   bid obligated Tessa to perform the contract in a period of 120 days from
   the notice to proceed, exactly as called for by the IFB.[1]

   In our view, the agency's decision to reject Tessa's bid clearly was based
   on considerations relating to whether Tessa would be able to perform the
   contract in the 120 days specified in its bid. Since, again, rejection of
   a bid based on a determination that a bidder will not be able to perform
   as promised in its bid concerns the bidder's responsibility, we conclude
   that Tessa was denied the award here based on a nonresponsibility
   determination.

   The agency cites decisions of our Office as holding that an agency
   properly may reject a bid as nonresponsive for specifying an inadequate
   number of days to complete construction work. The agency misreads our
   decisions. In Paulsen Constr. Co., B-231393, Sept. 13, 1988, 88-2 CPD
   para. 230, recon. denied, B-231393.2, Jan. 24, 1989, 89-1 CPD para. 63,
   for example, one of the cases cited, we held that the agency reasonably
   determined that a 210-day performance schedule was so short that the
   bidder had not complied with the IFB's requirement to submit a practicable
   construction schedule. Unlike the case here, that decision did not involve
   rejection of a small business bid. Since rejection of a large business
   bidder as nonresponsible does not require referral to SBA, it made no
   difference there whether the agency's actions were based on responsiveness
   or responsibility, and the decision does not characterize the rejection as
   one or the other. Rather, the decision holds that the rejection was proper
   "regardless of how one characterizes the deficiency in Paulson's offer."
   Id. at 3. Thus, Paulson and the other cited cases do not support the
   agency's position.

   Our Office informed FHWA at an outcome prediction alternative dispute
   resolution (ADR) conference that Tessa's protest was likely to be
   sustained for the reasons explained above. FHWA declined to take
   corrective action in response to the ADR conference, and instead responded
   by advancing a new legal argument--that Tessa's bid is materially
   unbalanced, and, therefore, is unacceptable, because a number of its
   contract line item prices significantly exceed the awardee's.

   Unbalanced pricing exists when, despite an acceptable total evaluated
   price, the price of one or more contract line items is significantly over-
   or understated, as indicated by the application of cost or price analysis
   techniques. FAR sect. 15.404-1(g)(1). The mere allegation that a firm has
   submitted high line item prices does not establish unbalanced pricing; the
   contracting officer also must consider whether the pricing presents a risk
   to the government (in particular, that award to the firm will result in
   the government's paying an unreasonably high price for contract
   performance); a bid properly may be rejected where the agency determines
   that the lack of balance pricing poses an unacceptable risk to the
   government. FAR sect. 15.404-1(g)(2); FAR sect. 14.404-2(g); Burney &
   Burney Constr. Co., Inc., B-292458.2, Mar. 19, 2004, 2004 CPD para. 49 at
   2.

   Here, the agency presented no evidence that it has performed a risk
   analysis; accordingly, there would be no basis for it, or for our Office,
   to conclude that award to Tessa would present an unacceptable risk to the
   government. Moreover, Tessa's was not the only bid with line item prices
   that significantly exceeded those of other bids and the government
   estimate. For example, Fort Myer's price for the line item "contractor
   testing" was $50,000, while Tessa's was $25,000 and the government
   estimate was $25,000. Likewise, the combined amount for two line items
   relating to the crash cushion (the crash cushion itself and moving the
   crash cushion) were $2,150 (Fort Myer), $3,260 (Tessa), and $55,500
   (government estimate). It thus is not apparent from the face of the bids
   how Tessa's pricing would present any greater risk than the awardee's.

   We conclude that the agency's finding that Tessa could not perform within
   the number of days specified in its bid constituted a determination of
   nonresponsibility and that, since Tessa is a small business, the agency
   improperly denied Tessa the award without referring the matter to SBA.[2]
   Accordingly, we recommend that the agency now refer its determination to
   SBA for review under the COC procedures.[3] We also recommend that the
   protester be reimbursed its costs of filing and pursuing the protest,
   including reasonable attorneys' fees. 4 C.F.R. sect. 21.8(d)(1) (2006).
   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.

   Gary L. Kepplinger

   General Counsel

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

   [1] While in response to the agency's questions after bid opening, Tessa
   indicated that it assumed work would begin on a specific date when it
   formulated its schedule, Tessa never conditioned its performance on any
   particular start date. To the contrary, in responding to the agency's
   questions, Tessa accepted that the notice to proceed could be issued as
   late as 104 days after bid opening, and expressly maintained that it
   nonetheless could perform the contract in the time remaining before
   January 1.

   [2] Although this procurement was not set aside for small business
   concerns and Tessa did not identify itself as a small business in its bid,
   Tessa states that it is a small business for purposes of this procurement
   and the agency does not assert otherwise. We note that Tessa is registered
   in the Central Contractor Registration database as a small business under
   the North American Industry Classification System code applicable to this
   procurement.

   [3] In response to our request for its views, by letter dated December 8,
   2006, SBA agreed that the matter here involved a question of Tessa's
   responsibility rather than responsiveness, that Tessa appears to qualify
   as a small business, and that referral under the COC procedures,
   therefore, was required.