TITLE: B-298866.3, The Salvation Army Community Corrections Program--Costs, August 29, 2007
BNUMBER: B-298866.3
DATE: August 29, 2007
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B-298866.3, The Salvation Army Community Corrections Program--Costs, August 29, 2007

   Decision

   Matter of: The Salvation Army Community Corrections Program--Costs

   File: B-298866.3

   Date: August 29, 2007

   Luke Levasseur, Esq., Mayer, Brown, Rowe & Maw LLP, for the protester.

   Tracey L. Printer, Esq., Department of Justice, for the agency.

   Charles W. Morrow, Esq., and James A. Spangenberg, Esq., Office of the
   General Counsel, GAO, participated in the preparation of the decision.

   DIGEST

   1. Government Accountability Office (GAO) recommends that protester be
   reimbursed the costs of filing and pursuing a protest where the agency
   unduly delayed taking corrective action in response to clearly meritorious
   protest.

   2. In determining whether claimed protest costs should be severed, GAO
   generally considers all issues concerning the evaluation of proposals to
   be intertwined--and thus not severable--and therefore generally will
   recommend reimbursement of the costs associated with both successful and
   unsuccessful evaluation challenges.

   DECISION

   The Salvation Army Community Corrections Program requests that the
   Government Accountability Office (GAO) recommend that the Salvation Army
   be reimbursed the costs of filing and pursuing various protests
   challenging the award of a contract to Paladin East Side Psychological
   Services, Inc. under request for proposals (RFP) No. 200-0888-NC, issued
   by the Department of Justice, Federal Bureau of Prisons (BOP), for a
   "Comprehensive Sanctions Center" (CSC).[1]

   We recommend that the Salvation Army be reimbursed the reasonable costs of
   filing and pursuing its initial and supplemental protests, as well as the
   costs of pursuing this request.

   The RFP, issued on November 15, 2005, sought proposals for providing CSC
   services for male and female offenders held under the authority of the
   United States and located in the greater Chicago metropolitan area. The
   CSC is to provide comprehensive community-based services for offenders,
   including confining offenders in a controlled and appropriately secure
   environment, and providing work and other self-improvement opportunities
   to assist federal offenders in becoming law-abiding citizens. The RFP
   contemplated the award of a fixed-price requirements contract for a base
   period with 3 option years.

   The award was to be based upon a "comparative" assessment of proposals in
   three areas: past performance, technical/management, and price. Past
   performance was said to be more important than technical/management, and
   when combined these two areas were significantly more important than
   price.

   The RFP stated that past performance would be judged as follows:

     The Past performance area addresses the Government's confidence in the
     offeror's probability of successfully performing the effort as proposed
     based on their record of performance in current and past relevant
     contract efforts. The Past Performance evaluation will be accomplished
     by reviewing aspects of an offeror's relevant present and recent past
     performance, focusing on and targeting performance that is relevant to
     the Past Performance factors [(1) accountability, (2) programs,[2] (3)
     community relations, (4) personnel, and (5) communications and
     responsiveness].

     The recency and relevancy of Past Performance information is critical to
     the Government's evaluation. More recent, more relevant performance
     information will have a greater positive impact on the Past Performance
     evaluation than less recent, less relevant performance.

   RFP at 43. The RFP requested past performance information regarding the
   offeror's five most relevant contracts and or subcontracts that were or
   are currently being performed in the past 3 years. The RFP explained that
   "`[r]elevant' refers to contracts, which are of similar size, scope and
   complexity [as] being acquired under this solicitation." In addition, the
   RFP cautioned that "[o]fferor's past performance evaluations may be
   negatively impacted if they submit contracts in response to these
   instructions which are considered less relevant or irrelevant." RFP sect.
   J.

   There were five factors in the technical/management evaluation area: site
   location, accountability, programs, facility, and personnel. The site
   location factor was the most important factor, followed by accountability,
   and then followed by the equally important programs, facility, and
   personnel factors. The site location factor was comprised of two equally
   important subfactors: site validity and suitability, and community
   relations program. The RFP advised that the site validity and suitability
   subfactor considered proposed site location, the validity of the offeror's
   right to use the site and zoning approval, and the suitability of the site
   location with regards to environmental impact and the responsiveness to
   proximity requirements defined in the RFP statement of work (SOW). In this
   regard, the SOW required the contractor to locate the facility in an area
   where the commuting time to the general area of work is no more than one
   and one-half hours each way via public or contractor provided
   transportation. RFP SOW at 25. The RFP also called for a risk assessment
   considering the proposal risks of any aspect of the proposed
   technical/management solution that could pose potential adverse impacts on
   price, schedule or performance of the effort.

   In response to the RFP, the BOP received proposals by the February 6, 2006
   closing date from the Salvation Army (the incumbent contractor) and
   Paladin. The Salvation Army proposed to continue providing the services at
   its current location in downtown Chicago. Paladin proposed to construct a
   new facility in Hopkin's Park, Illinois, which is located approximately 75
   miles from downtown Chicago. Paladin's proposal offered the lower price at
   $28,114,122.75, while the Salvation Army's proposal was priced at
   $32,344,054.75.

   In the final evaluation, the Salvation Army's proposal was assigned an
   overall rating of green/acceptable under the past performance factor,
   based on its performance under the incumbent contract. While the Salvation
   Army's past performance was highly relevant and generally regarded as
   strong (particularly in community relations), it also received a number of
   deficiency reports and improvements were found to be needed in certain
   areas. One of the observations made by the evaluators regarding the
   Salvation Army's past performance was that it "needs to continue working
   on maintaining the 1 to 10 ratio of case manager to inmates." Agency
   Report, Tab 9, Past Performance Evaluation, at 5. In contrast, Paladin's
   proposal received a blue/very good rating under the past performance
   factor. This rating, unlike the Salvation Army's, was not based on a
   contract for CSC services, but was based on a single contract with the
   state of Texas for substance abuse treatment at a 74-bed facility, which
   Paladin had been performing for less than a year and for which its
   performance was considered exemplary. Id. at 6-7.

   With respect to the technical management area, the evaluators assigned
   both Paladin's and the Salvation Army's proposals an overall rating of
   green/acceptable and determined them to be "substantially technically
   equal" under this area. Both the Salvation Army's and Paladin's proposals
   were rated blue/very good under the site location factor, receiving a
   green/acceptable rating for the site validity and suitability subfactor
   and a blue/very good rating for the community relations program subfactor.
   According to the evaluation record, the proposals' green/acceptable
   ratings for the site validity and suitability subfactor were based solely
   on the offerors' submission of valid right-to-use permits, zoning
   approvals, and effective plans for mediating community concerns. Both
   proposals also received a blue/very good rating for the accountability
   factor and green/acceptable ratings for the other three factors of the
   technical management area. Agency Report, Tab 7, SSEB Technical
   Evaluation, at 2-6.

   The source selection official determined that Paladin's proposal was the
   more advantageous to the government of the two proposals received, based
   on its lower price, higher past performance rating, and substantially
   technically equal technical/management rating. Agency Report, Tab 12,
   Source Selection Decision, at 10. The BOP awarded Paladin the contract on
   August 30. The Salvation Army then filed several protests.

   In its September 25 protest, the Salvation Army challenged the
   reasonableness of the relative ratings of the two proposals on a variety
   of bases. For example, the Salvation Army questioned the BOP's rationale
   for assigning the Salvation Army only a green/acceptable rating under past
   performance despite its successful incumbent performance and Paladin a
   blue/very good rating based on operating a much smaller facility offering
   more limited services in a very different area. The protester also argued
   that the BOP had unreasonably evaluated, and failed to make a meaningful
   assessment of the risks of, the technical/management proposals, because
   the Salvation Army proposed an existing facility located where a majority
   of the population was to be served, while Paladin's proposal was to build
   a facility more than 75 miles from Chicago. The protester also asserted
   that the BOP applied an unstated evaluation criterion, by holding the
   Salvation Army to a more stringent (1 to 10) staffing requirement than
   Paladin. In a supplemental protest filed October 4, the Salvation Army
   contended that the BOP failed to reasonably evaluate Paladin's ability to
   finance construction of a new facility and the level of Paladin's
   community support.

   On October 24, the BOP filed a report responding to the protest
   allegations and defending the propriety of the award. On November 3, the
   Salvation Army filed its comments on the agency report in which it
   reiterated its protest allegations and supplemented these arguments based
   upon its review of the evaluation documentation. While the protester
   asserted that some of these arguments might constitute additional protest
   grounds, our Office did not treat them as such and did not request a
   supplemental agency report.

   Instead, on December 4, the GAO attorney assigned this case advised the
   parties that a hearing was scheduled on December 8 to receive testimony
   regarding the protest issues. The GAO attorney explained that the hearing
   was necessary because the evaluation record did not support the
   reasonableness of the evaluation of Paladin's proposal in certain areas,
   and the hearing would provide the agency with the opportunity to explain,
   among other things, whether the BOP conducted a reasonable evaluation of
   the proposals with regard to past performance, whether the BOP reasonably
   evaluated site validity and suitability, whether the BOP evaluated
   staffing ratio equally between the two proposals, and whether the BOP
   reasonably considered risks associated with Paladin's proposal to
   construct a new facility.

   On December 6, the BOP advised that "[i]n response to the new grounds
   identified in the November 3, 2006 Salvation Army response, [BOP] has
   decided to take corrective action. Specifically, BOP will re-evaluate the
   proposals submitted by the Salvation Army and Paladin in the area of Past
   Performance." BOP Letter, Dec. 8, 2006, at 1. On December 13, we dismissed
   the protest in light of the agency's decision to take corrective action.

   The Salvation Army requests reimbursement of its protest costs, arguing
   that the BOP unduly delayed taking corrective action in response to a
   clearly meritorious protest by not taking corrective action until after
   submission of the agency report.

   Where a procuring agency takes corrective action in response to a protest,
   our Office may recommend that the agency reimburse the protester its
   protest costs, where based on the circumstances of the case, we determine
   that the agency unduly delayed taking corrective action in the face of a
   clearly meritorious protest, thereby causing a protester to expend
   unnecessary time and resources to make further use of the protest process
   in order to obtain relief. AAR Aircraft Servs., B-291670.6, May 12, 2003,
   2003 CPD para. 100 at 6. A protest is clearly meritorious when a
   reasonable agency inquiry into the protest allegations would show facts
   disclosing the absence of a defensible legal position. The Real Estate
   Ctr.--Costs, B-274081.7, Mar. 30, 1998, 98-1 CPD para. 105 at 3.

   The BOP does not deny that the corrective action was in response to a
   clearly meritorious protest, but claims that the corrective action was
   "prompt" because it was only undertaken in response to the new protest
   allegations concerning past performance contained in the protester's
   comments before the hearing was conducted or the agency submitted a report
   on these issues.

   Our review of the record confirms that the protests were clearly
   meritorious. As indicated to the agency when the hearing was scheduled,
   there was no reasonable explanation in the record for the BOP's evaluation
   in a number of areas.[3] Specifically, Paladin's blue/very good rating for
   past performance was not reasonably supported by the record for a variety
   of reasons: (1) notwithstanding the RFP's statement that the relevance of
   past performance information would be evaluated, the only Paladin contract
   found relevant by the agency involved performance that was at a facility
   significantly smaller than the solicited facility, that did not involve
   CSC services (but only substance abuse treatment), and that had been
   ongoing for less than a year; (2) the services performed at the Paladin
   facility did not include any contemplated by the programs factor; and (3)
   the evaluation documentation supporting the exemplary past performance
   rating appeared to consist of quotes from Paladin's self-assessment
   included in its proposal.[4] In addition, the record confirmed the
   validity of the Salvation Army's allegations that the evaluation of the
   site validity and suitability subfactor of the site location factor
   considered only the offerors' submission of valid right-to-use permits,
   zoning approvals, and effective plans for mediating community concerns,
   even though such issues as the relative suitability and location of the
   sites and commuting time to the general area of work were also required to
   be considered under this factor. Specifically, as noted by the protester,
   whereas the Salvation Army's existing incumbent contract facility was in
   Chicago, Paladin's facility had yet to be constructed (which posed risks)
   and was located 75 miles outside Chicago, yet the evaluation documentation
   did not evidence that the significance or risks of the different proposed
   locations was considered.

   With respect to the promptness of the agency's corrective action under the
   circumstances, we review the record to determine whether the agency took
   appropriate and timely steps to investigate and resolve the impropriety.
   See Chant Eng'g Co., Inc.--Costs, B-274871.2, Aug. 25, 1997, 97-2 CPD
   para. 58 at 4; Carl Zeiss, Inc.--Costs, B-247207.2, Oct. 23, 1992, 92-2
   CPD para. 274 at 4. While we consider corrective action to be prompt if it
   is taken before the due date for the agency report responding to the
   protest, we generally do not consider it to be prompt where it is taken
   after that date. See CDIC, Inc.--Costs, B-277526.2, Aug. 18, 1997,
   97-2 CPD para. 52 at 2.

   Here, the Salvation Army's initial protest contested the past performance
   and site validity and suitability subfactor evaluation of Paladin's
   proposal, and it raised the essential grounds that turned out to be
   clearly meritorious. Our review of the record indicates that if the BOP
   had conducted a prompt and reasonable inquiry at the outset with regard to
   the Salvation Army's protest allegations, it would have disclosed the
   absence of a defensible legal position. See York Bldg. Servs., Inc;
   Olympus Bldg. Servs., Inc.-Costs, B-282887.10, B-282887.11, Aug. 29, 2000,
   2000 CPD para. 141 at 5. Instead, the agency submitted a report defending
   the award. While the BOP asserts that it was the allegations in the
   protester's comments, which the Salvation Army labeled a supplemental
   protest, that caused it to take corrective action, the BOP has not
   identified the specific additional allegations in these comments that
   caused it to take corrective action, and our review of the comments
   reveals that they essentially expand upon the issues initially raised
   based upon the information disclosed in the agency report. We regard the
   BOP's corrective action here as unduly delayed because it was taken after
   the report and the protester's comments thereon were submitted, and only
   after GAO scheduled a hearing after advising the parties that the record
   did not reasonably support the evaluation. Thus, we recommend that the
   Salvation Army be reimbursed its costs of pursuing its protests.

   The BOP alternatively argues that the corrective action should be limited
   to the costs associated with pursuing the past performance issue only. We
   have limited the award of protest costs to successful protesters where a
   part of their costs is allocable to a protest issue which is so clearly
   severable as to essentially constitute a separate protest. See Sodexho
   Mgmt., Inc.--Costs, B-289605.3, Aug. 6, 2003, 2003 CPD para. 136 at 29. As
   a general rule, however, we consider a successful protester should be
   reimbursed the costs incurred with respect to all the issues pursued, not
   merely those upon which it prevails. This is true because limiting
   recovery of protest costs to only those issues on which the protester
   prevailed would be inconsistent with the broad remedial congressional
   purpose behind the cost reimbursement provisions of the bid protest
   provisions of the Competition in Contracting Act of 1984 (CICA). 31 U.S.C.
   sect. 3554(c)(1)(A) (2000). Consistent with this view, we generally
   consider all issues concerning the evaluation of proposals to be
   intertwined--and thus not severable--and therefore generally will
   recommend reimbursement of the costs associated with both successful and
   unsuccessful evaluation challenges. See Blue Rock Structures, Inc.--Costs,
   B-293134.2, Oct. 26, 2005, 2005 CPD para. 190 at 3; AAR Aircraft
   Servs.--Costs, supra, at 5. Accordingly, and especially here since, as
   discussed above, we found that there were other clearly meritorious
   protest issues in addition to past performance, we find no basis to limit
   the Salvation Army's recovery of its protest costs.

   Finally, the Salvation Army requests that we recommend that an upward
   adjustment to the $150 statutory cap rate applicable to attorneys' fees
   incurred by other than small businesses be made. Under CICA, where, as
   here, our Office recommends that a successful protester's costs, including
   reasonable attorneys' fees, be reimbursed, those fees may not exceed $150
   per hour "unless the agency determines, based on the recommendation of the
   Comptroller General on a case by case basis, that an increase in the cost
   of living or a special factor, such as the limited availability of
   qualified attorneys for the proceedings involved justifies a higher fee."
   31 U.S.C. sect. 3554 (c)(2)(B); see Department of the Army; ITT Fed.
   Servs., Int'l Corp.--Costs, B-296783.4, B-296783.5, Apr. 26, 2006,
   2006 CPD para. 72 at 2; Sodexho Mgmt., Inc.--Costs, supra, at 37-43. At
   this juncture, the Salvation Army's request is premature, since it has not
   yet submitted its claim for costs to the agency on this basis.[5]

   Accordingly, we recommend that the Salvation Army be reimbursed the
   reasonable costs of filing and pursuing its protests, including those
   incurred here, i.e., requesting a recommendation for costs. See AAR
   Aircraft Servs.--Costs, supra, at 5-6. The Salvation Army should submit
   its claim for costs, detailing and certifying the time expended and costs
   incurred, directly to the BOP within 60 days of receipt of this decision.

   Gary L. Kepplinger
   General Counsel

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

   [1] The CSC was to house approximately 175 inmates. Protester's Comments
   at 9.

   [2] The programs factor was to evaluate:

     The offeror's record of performance and level of success in assisting
     offenders in successfully reentering the community. The offeror's
     ability to leverage and network with other relevant community resources
     to offer offenders a more comprehensive and robust support structure.

   RFP at 45.

   [3] While we would ordinarily not regard a protest as clearly meritorious
   where resolution of the protest required further record development such
   as a hearing to complete and clarify the record, New England Radiation
   Therapy Mgmt. Servs., Inc.--Costs, B-297397.3, Feb. 2, 2006, 2006 CPD
   para. 30 at 4, there are cases, as here, where corrective action has been
   taken by an agency in response to a protest after a hearing has been
   scheduled and our review of the record establishes, even without further
   record development, that the protest was clearly meritorious. See, e.g.,
   AAR Aircraft Servs.--Costs, supra, at 4.

   [4] We also question the propriety of the SSEB requiring the Salvation
   Army to maintain a 1 to 10 ratio of case manager to inmate under the
   personnel subfactor of the past performance factor, when there was no
   specific staffing composition required by the RFP, and Paladin was not
   held to a similar staffing requirement.

   [5] In our Office's recent decisions, we have found that the justification
   for an upward departure from the $150 per hour cap for attorneys' fees is
   self-evident if the claimant points to an increase in the cost of living,
   as measured by the Department of Labor's Consumer Price Index. For that
   reason, we have declined to impose a requirement that a claimant do more
   than request an adjustment and present a basis upon which the adjustment
   should be calculated; where the claimant meets this standard, and an
   agency does not articulate any objection, we will grant a claimant's
   request for a recommendation in favor of a cost-of-living adjustment to
   the fee cap. See, e.g., EBSCO Publg., Inc.--Costs, B-298918.4, May 7,
   2007, 2007 CPD para. 90 at 3.