TITLE: B-299533, Battelle Memorial Institute, May 14, 2007
BNUMBER: B-299533
DATE: May 14, 2007
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B-299533, Battelle Memorial Institute, May 14, 2007

   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: Battelle Memorial Institute

   File: B-299533

   Date: May 14, 2007

   Richard B. Oliver, Esq., and David J. Ginsberg, Esq., McKenna Long &
   Aldridge LLP, for the protester.

   Scott C. Briles, Esq., and Elise Harris, Esq., Department of Health &
   Human Services, for the agency.

   Sharon L. Larkin, Esq., Guy. R. Pietrovito, Esq., and James A.
   Spangenberg, Esq., Office of the General Counsel, GAO, participated in the
   preparation of the decision.

   DIGEST

   Agency's decision to exclude protester's proposal from competition for
   failing to include option year pricing was reasonable, where the
   solication required that proposals contain this pricing and provided for
   award without discussions; agency was not required to allow protester to
   correct mistake because, although the omission was evident on the face of
   the proposal, the protester's intended pricing for the option years was
   not apparent.

   DECISION

   Battelle Memorial Institute protests the exclusion of its proposal from
   the competition under request for proposal (RFP) No. 2006-N-08556, issued
   by the Department of Health and Human Services (HHS) for comprehensive
   technical, scientific, research, and public health support for the
   National Center on Birth Defects and Developmental Disabilities. Battelle
   contends that the agency improperly rejected its proposal for omitting
   option year pricing and that the agency should have, instead, allowed the
   firm to correct the omission.

   We deny the protest.

   The RFP provided for either a single award or multiple awards of
   fixed-price indefinite-delivery/indefinite-quantity (ID/IQ) contracts with
   cost-plus-fixed-fee task orders. RFP at 67-68. Each ID/IQ contract award
   was to be for a 12-month base period with nine 1-year options, and the
   maximum value for each awarded contract was stated to be $92 million. Id.
   at 2-3.

   The RFP required offerors to provide two technical proposals: one was to
   address the RFP, and the other was in response to a "request for task
   order proposal" (RFTP) that was attached to the solicitation. Id. at
   70-72; RFTP at 1. In addition to the technical proposals, offerors were
   required to submit a "business proposal," that is, a cost proposal, based
   on the RFTP. This proposal was to be "supported by detailed cost data" and
   was to include, among other things, the "total proposed amount of the
   RFTP, including all phases, options or segments." RFP at 66. The RFTP
   included a discussion of the base and option period requirements and
   required that offerors "identify each labor category, labor hours by
   category, indirect cost rates and respective allocation bases, other
   direct costs including travel costs for each of the performance periods as
   well as a summary for all performance periods," and to provide a "full
   budget justification" for costs including cost differences from period to
   period." Id., RFTP at 1. The RFP also required that "the estimated cost of
   each phase, option or segment of the offered work for the RFTP shall be
   itemized." RFP at 66.

   The RFP contemplated a "two-step" evaluation process. In the first step,
   the agency was to evaluate technical proposals for the RFP (not the RFTP)
   and "[a]s a result of the RFP technical proposal evaluation, a competitive
   range will be established." In the second step, the agency was to evaluate
   RFTP proposals and cost proposals and make award of one or more ID/IQ
   contracts and one task order award. Id. at 73.The RFP stated that the
   government intended to make award without discussions, but also that the
   government reserved the right to conduct discussions with those offerors
   in the competitive range "if the Contracting Officer later determines them
   to be necessary." Id. at 63, 73.

   Battelle and eight other offerors submitted technical and business
   proposals by the November 29, 2006 closing date. Battelle's business
   proposal omitted the pricing for all of the option years.[1] In early
   December, the contracting officer reviewed proposals for compliance with
   the RFP and excluded Battelle's proposal from further consideration "due
   to noncompliance with the requirements of the RFP," specifically the
   requirement to itemize the costs for the option years.[2] Contracting
   Officer's Statement at 2; Agency Report, Tab B, Letter from HHS to
   Battelle (Jan. 9, 2007), at 1.

   After receiving notice from the agency that its proposal was excluded from
   the competition, Battelle filed a timely agency-level protest. Battelle
   argued that its omission was a "mistake," which Federal Acquisition
   Regulation (FAR) permits to be corrected at any time up until award, and
   that the agency should have brought this mistake to Battelle's attention
   and allowed Battelle to make the correction. Battelle attached to its
   agency-level protest 24 pages of detailed spreadsheets itemizing the costs
   for the 9 option years, along with additional proposal pages that modified
   the narrative portion of the business proposal to include a discussion of
   the option years. Agency Report, Tab C, Agency-Level Protest, attach. D.
   HHS denied the agency-level protest, and Battelle protested to our
   Office.[3]

   Battelle argues that the agency improperly rejected its initial proposal
   based on Battelle's omission of the option year pricing. Battelle contends
   that the agency should have suspected that Battelle had made a "mistake or
   clerical error" in its proposal and had a "duty to verify" Battelle's
   proposal and conduct "clarifications" to allow Battelle to correct the
   omission. Protest at 3-4, 6-8. In support of its argument, Battelle cites
   FAR sect. 15.306(a)(2), which permits clarifications to "resolve minor or
   clerical errors," and FAR sect. 15.306(b)(3)(i), which permits
   communications before the establishment of the competitive range to
   address proposal ambiguities such as "errors, omissions, or mistakes."

   An offeror bears the burden of submitting and adequately written proposal
   that contains all of the information required under a solicitation, Sam
   Facility Mgmt, Inc., B-292237, July 22, 2003, 2003 CPD para. 147 at 5, and
   an agency may reject a proposal that omits required pricing. Joint Venture
   Penauillie Italia S.p.A; Cofathec S.p.A; SEB.CO S.a.s; CO.PEL.S.a.s.,
   B-298865, B-298865.2, Jan. 3, 2007, 2007 CPD para. 7 at 6.[4]Although, in
   an appropriate case, an agency may allow an offeror to correct a mistake
   or clerical error in a cost or price proposal through clarifications (as
   opposed to discussions), when it does so, both the existence of the
   mistake or error and the amount intended by the offeror must be apparent
   from the face of the proposal. Id. at 8. Here, although the existence of
   Battelle's error was clear from the face of its proposal, it was not
   obvious what pricing Battelle intended to propose for the missing option
   years. Although, as Battelle points out, the initial proposal referred to
   "inflation adjustment[s]" in the narrative portion of the proposal, these
   vague references do not explain Battelle's intended pricing for the option
   years. That is, Battelle's option year pricing, as reflected in the 24
   pages of pricing spreadsheets and additional narrative that Battelle
   provided to the agency in its agency protest, could not be gleaned from
   Battelle's references to inflation adjustments in the initial proposal
   submission, and did not constitute "minor or clerical errors" as
   contemplated by the FAR. Thus, we find that the omission of Battelle's
   option year pricing could not be corrected through clarification or
   verification. See University of Dayton Research Inst., B-296946.6, June
   15, 2006 , 2006 CPD para. 102 at 8.

   Regarding Battelle's argument that "errors, omissions, or mistakes" can be
   corrected by communications before the establishment of the competitive
   range, FAR sect. 15.306(b)(2) specifically provides that communications
   under this section "shall not be used to cure proposal deficiencies or
   material omissions, materially alter the technical or cost elements of the
   proposal, and/or otherwise revise the proposal." See also FAR
   sect. 15.306(b)(3) ("communications shall not provide an opportunity for
   the offeror to revise its proposal"). Again, we agree with the agency that
   Battelle's omission of the option year pricing is material, given the
   RFP's requirements to provide detailed option year pricing for evaluation,
   and any attempt to cure this omission would necessitate submission of a
   revised proposal and would constitute discussions.[5] See Joint Venture
   Penauillie, supra, at 8.

   Finally, Battelle contends that the agency's decision to eliminate its
   proposal from further competition was inconsistent with the RFP. According
   to Battelle, since the RFP provides that the competitive range will be
   established based only on the evaluation of technical proposals, see RFP
   at 73, the elimination of Battelle's proposal based on a cost issue was
   premature and its pricing omissions should have been addressed after
   establishment of the competitive range and through discussions. However,
   unless the agency decides to establish a competitive range, the RFP
   provision referenced by Battelle does not apply, and it does not require
   the agency to conduct discussions. As noted, the agency has not yet
   decided to establish a competitive range and to conduct discussions.
   Rather, the agency rejected Battelle's proposal (along with two others),
   after inspecting proposals for completeness, for not containing all of the
   information required by the RFP, a decision which, as discussed above, was
   reasonable. Consistent with the RFP, if the agency makes award based on
   initial proposals, then Battelle's proposal cannot be considered for
   award. If, on the other hand, the agency decides to conduct discussions,
   we expect that the agency then will have to decide whether or not to
   include Battelle's proposal in the competitive range. See FAR
   sect. 15.306(c)(1).

   The protest is denied.

   Gary L. Kepplinger

   General Counsel

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

   [1] Battelle's proposal references "inflation adjustment[s]," but provided
   no details that would allow the agency to calculate Battelle's option year
   pricing.

   [2] Two other offerors' proposals were also excluded for failing to comply
   with RFP requirements.

   [3] The agency advises that it has not established a competitive range or
   held discussions with any of the offerors.

   [4] Battelle's attempts to distinguish Joint Venture Penauillie, supra,
   are unpersuasive.

   [5] Battelle also contends that it should have been permitted to correct
   its mistake through a "proposal modification," which FAR sect. 15.001
   defines as "a change made to a proposal . . . to correct a mistake at any
   time before award." As noted above, we find that the exchanges that would
   occur here to allow the correction of Battelle's mistake would constitute
   discussions, and such exchanges are governed by FAR sect. 15.306.