TITLE: B-310301.5, Re-Engineered Business Solutions, Inc., April 4, 2008
BNUMBER: B-310301.5
DATE: April 4, 2008
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B-310301.5, Re-Engineered Business Solutions, Inc., April 4, 2008

   Decision

   Matter of: Re-Engineered Business Solutions, Inc.

   File: B-310301.5

   Date: April 4, 2008

   Wayne A. Keup, Esq., for the protester.

   Michael A. Gordon, Esq., for Native American Contracting Services, LLC, an
   intervenor.

   Maj. ChristinaLynn E. McCoy, Department of the Army, for the agency.

   John L. Formica, Esq., and James A. Spangenberg, Esq., Office of the
   General Counsel, GAO, participated in the preparation of the decision.

   DIGEST

   Corrective action, taken by contracting agency in response to prior
   protests, of amending a solicitation and requesting revised proposals, is
   unobjectionable where the solicitation provided for the award of a cost
   reimbursement contract, but erroneously requested the offerors submit
   price (rather than cost) proposals and provided for a price (rather than
   cost realism) evaluation.

   DECISION

   Re-Engineered Business Solutions, Inc. (RBS) protests the amendment of
   request for proposals (RFP) No. W91QV1-07-R-0004, issued by the Army for
   public works and logistics services at Fort Hamilton in Brooklyn, New
   York. The Army issued the amendment to implement corrective action taken
   in response to previous protests.

   We deny the protest.

   The RFP provided for the award of a cost-plus-award-fee contract to the
   offeror submitting the proposal determined to represent the best value to
   the government, considering the evaluation factors of management ability,
   technical merit, past performance, and cost/price. RFP amend. 5, at 13.
   The RFP informed offerors that in determining which proposal represented
   the best value to the government, management ability would be considered
   more important than technical merit, and that technical merit would be
   considered more important than past performance. Id. at 14. The
   solicitation added that the "non-cost/price evaluation factors, when
   combine[d], are significantly more important than price." Id.

   Although the solicitation provided for the award of a cost-plus-award-fee
   contract, it did not provide for a cost realism evaluation by the agency.
   Rather, the RFP stated under the cost/price evaluation factor that "[t]he
   Government will evaluate each offeror's proposed pricing to establish that
   it is reasonable," and added that "[a]t the Contracting Officer's
   discretion, price reasonableness may be presumed without further review
   based on adequate price competition." Id. at 15. The RFP also provided
   here that "[t]he Government reserves the right to reject, without further
   consideration and without notice to the offeror, any offer where the
   proposal pricing is determined to be unreasonable." Id.

   The RFP included detailed proposal preparation instructions, and
   consistent with the solicitation's statements regarding the evaluation of
   price (rather than cost), requested the submission of a "price proposal
   volume." RFP at 122. In this regard, the solicitation requested that
   offerors complete a detailed price schedule, which set forth a number of
   contract line items (CLIN). Each of these CLINs, which contained the
   notation "unit price" and included the acronym "CPAF"
   (cost-plus-award-fee), provided for the insertion of a total "estimated
   cost," including direct and indirect costs, base fee, and maximum award
   fee, for each of the contract line items (CLIN) included in the price
   schedule. RFP at 2-53. The RFP also requested that proposals include "[a]
   justification of proposed cost and price," and added that "[a]ny
   inconsistency, whether real or apparent, between promised performance and
   price shall be explained in the proposal." RFP at 122. The solicitation
   cautioned that "[a]ny significant inconsistency, if unexplained, raises a
   fundamental issue of the offeror's understanding of the nature and scope
   of the work required and may be grounds for rejection of the proposal."
   Id.

   The agency received proposals from seven offerors, including RBS. Agency
   Report (AR), Tab 24, Source Selection Decision, at 1. The agency evaluated
   the proposals, and in doing so conducted a "review of the price
   reasonableness of the submitted pricing proposals containing Cost Plus
   Award Fee contract line items." AR, Tab 20, Price Analysis Review of
   Proposals, at 1. The agency ultimately selected the proposal submitted by
   RBS for award.

   Two other offerors, which had also submitted proposals in response to the
   solicitation, filed protests with our Office, challenging the propriety of
   the award to RBS. The agency subsequently informed our Office that it was
   taking corrective action in response to the protests, stating that it had
   determined that the protests "raise[d] new questions regarding the
   evaluation of proposed costs for realism." Agency Request for Dismissal
   (Oct. 11, 2007), encl. 1, Contracting Officer's Statement. In this regard,
   and as set forth above, the solicitation, while providing for the award of
   a cost reimbursement contract, provided for the submission of price
   proposals and stated that "price" would be evaluated. That is, it did not
   provide for the submission of cost proposals or inform offerors that their
   proposed costs would be evaluated for cost realism. As such, the agency
   stated that it had decided to take corrective action in response to the
   protests by amending the solicitation to reflect that a cost realism
   analysis will be conducted, allowing for the submission of revised
   proposals, and making a new source selection. Id. Based upon these
   representations, our Office dismissed the protests on October 11, 2007.

   RBS subsequently filed a protest with our Office, arguing that, although
   "it understands that the Army is reconsidering its proposed corrective
   action" and has "not yet made a final decision," the "contemplated
   corrective action is entirely inappropriate." RBS Protest (B-310301.3) at
   2. Specifically, RBS contended that solicitation should not be amended,
   but rather, that the "Army should proceed in this procurement by
   performing a cost realism analysis of proposals already in their
   possession, and that if additional information is allowed from offerors,
   it be limited to providing clarification/detail of the total estimated
   costs already proposed." Id. at 5.

   In dismissing this protest as premature on December 19, our Office noted
   that the Army had not issued an amendment to the solicitation, nor had it
   requested the submission of any "additional information" from the
   offerors. We found that absent the issuance of the amendment, the
   corrective action remained "proposed," and the precise nature and course
   of the corrective action remained unknown. We concluded that until the
   agency made a final determination concerning the terms of the amendment,
   and such amendment was issued, the protest anticipated that the agency
   would proceed in a manner that is impermissible; allegations such as this
   are considered premature and are not for review by our Office. See ITT
   Elec. Sys., Radar Systems-Gilfillan, B-299150 et al., Feb. 2, 2007,
   2007 CPD para. 19 at 3.

   The agency subsequently issued a series of amendments implementing its
   proposed corrective action. The amendments essentially replaced the RFP's
   references to "price" with "cost," which among other things resulted in
   the request for the submission of cost proposals rather than price
   proposals, and added the following paragraph to the solicitation's
   proposal preparation instructions:

     Offerors shall submit all supporting data for all rates and factors in
     their cost proposals; i.e., escalation of costs, G & A, Nonexempt Labor
     Rates, indirect rates, overhead costs, etc., necessary to perform cost
     realism. Offeror's cost proposal should be such that sufficient
     information is provided for an adequate review of costs by Defense
     Contract Audit Agency (DCAA).

   RFP amend. 9, at 5. The amendments also replaced the "price" evaluation
   factor with a "cost factor," and informed offerors here that proposals
   would now "be assessed for completeness, reasonableness, and realism," and
   that the "[c]ost evaluation will be performed on the total estimated costs
   (including fees), to include phase-in, basic performance period, and all
   option years." Id. at 17. The amendments to the RFP added that the agency
   would calculate a "Most Probable Cost to the government . . . based on the
   Government's cost realism analysis," that "[t]he government's most
   probable cost will be determined by adjusting each offeror's proposal to
   reflect any addition or reductions in cost elements to realistic levels
   based on the results of the Government's cost realism analysis," and that
   "[t]he Government's most probable cost may differ from the proposed cost
   and will reflect the Government's best estimate of the cost of any
   contract that is most likely to result from the offeror's proposal." Id.

   RBS protests the agency's corrective action, arguing that because its
   total proposed price and the agency's adjectival ratings of its proposal
   were disclosed to the other offerors during their respective debriefings,
   RBS would suffer "severe competitive prejudice" if the offerors are
   permitted to submit revised proposals.[1] Protest (B-310301.3) at 3. RBS
   argues that offerors should have realized that the agency intended to
   evaluate proposals for cost realism, claiming that it "recognized" that a
   cost realism analysis would be performed by the agency, even though "the
   solicitation speaks in terms of price reasonableness rather than cost
   realism," and that "[o]ther offerors in this procurement should have done
   the same." Id. The protester points out that under the solicitation as
   previously issued, offerors were to provide "a justification of proposed
   cost and price," and asserts based upon its review of the record that it,
   as well as the two other offerors who had previously protested the award
   to RBS, submitted sufficient information in their proposals to allow for a
   cost realism evaluation of proposals by the agency. Protester's Comments
   (B-310301.3) at 5; Protest (B-310301.5) at 4. The protester adds that the
   corrective action proposed by the agency is improper because the agency
   has presented no evidence that other offerors were prejudiced by the
   solicitation's failure to request cost (rather than price) proposals and
   provide for a cost realism (rather than price) evaluation. The protester
   concludes that "[i]f any offeror did not submit sufficient information
   with its initial proposal to perform [a cost realism] analysis, the
   proposal should [be] rejected as unacceptable for failure to meet the
   requirements of the initial solicitation."[2] Protester's Comments
   (B-310301.5) at 13.

   Contracting officials in negotiated procurements have broad discretion to
   take corrective action where the agency determines that such action is
   necessary to ensure fair and impartial competition. It is not necessary
   for an agency to conclude that a protest is certain to be sustained before
   it may take corrective action; where the agency has a reasonable concern
   that there were errors in the procurement, even if the protest could be
   denied, we view it as within the agency's discretion to take corrective
   action. An agency may amend a solicitation, and request and evaluate
   revised proposals where the record shows that the agency made the decision
   to take this action in good faith, without the specific intent of changing
   a particular offeror's technical ranking, or avoiding award to a
   particular offeror. We will not object to an agency's proposed corrective
   action where the agency concludes that the award, because of perceived
   flaws in the procurement process, was not necessarily made on a basis most
   advantageous to the government, so long as the corrective action taken is
   appropriate to remedy the impropriety. Patriot Contract Servs., LLC, et
   al., B-278276.11 et al., Sept. 22, 1998, 98-2 CPD para. 77 at 4.

   Here, we cannot find that the agency's corrective action was unreasonable
   or that the agency acted in other than in good faith. As set forth above,
   the RFP, while providing for the award of a cost reimbursement contract,
   requested the submission of price proposals and the performance of a price
   analysis.[3] In this regard, although the proposal preparation
   instructions requested that offerors submit price proposals that, as
   pointed out by the protester, included a "justification of proposed cost
   and price," that statement must be considered in the context in which it
   appeared--a solicitation that clearly stated that the agency would
   evaluate the offeror's proposed price, rather than cost for realism.[4]
   Offerors were not specifically required to submit a cost proposal setting
   forth their elements of cost as would be expected for the award of a cost
   reimbursement contract. As such, while it may be true that certain
   offerors submitted proposals that included some cost as well as price
   information, offerors were simply not required to submit cost proposals
   that included sufficient information to allow for the performance of a
   cost realism evaluation and calculation of the proposal's most probable
   cost to the government. Put another way, we fail to see how the agency, as
   suggested by the protester, could reasonably reject proposals as
   unacceptable for failing to include sufficient information to allow for
   the performance of a cost realism evaluation under a solicitation that
   expressly requested the submission of price proposals and provided for the
   performance of a price analysis.[5]

   With regard to RBS's argument that because offerors were informed of its
   price and ratings, amending the solicitation and reopening the competition
   will foster an auction and put RBS at a competitive disadvantage, we note
   that the Federal Acquisition Regulation does not prohibit auctions, and
   agencies are not otherwise prohibited from taking corrective action in the
   form of requesting revised price proposals where the original awardee's
   price has been disclosed. In this regard, the possibility that the
   contract may not have been awarded based on a fair determination of the
   most advantageous proposal has a more harmful effect on the integrity of
   the competitive procurement system than does the possibility that the
   original awardee will be at a disadvantage in the reopened competition.
   PCA Aerospace, Inc., B-293042.3, Feb. 17, 2004, 2004 CPD para. 65 at 4.

   The protest is denied.

   Gary L. Kepplinger
   General Counsel

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

   [1] This protest filed by RBS and docketed by our Office as B-310301.5
   "expressly incorporates by reference the full content" of RBS's previous
   protest that was docketed by our Office as B-310301.3.

   [2] Although the protester had previously argued that if in performing its
   cost realism evaluation of the proposals already received the agency
   required further information from offerors it be somehow limited to
   "clarifications," Protest (B-310301.3), at 2, the protester now argues
   that proposals which lack the requisite information upon which to perform
   a cost realism evaluation should simply be rejected. Protest (B-310301.5),
   at 13.

   [3] We have repeatedly observed that there is a fundamental difference in
   the respective roles of the parties in fixed-price, as compared to cost
   reimbursement, contracts, in that a fixed-price contract places the risk
   and responsibility for contract costs and resulting profit or loss on the
   contractor, whereas under a cost reimbursement contract the government is
   responsible for reimbursing a contractor its reasonable, allowable and
   allocable costs. WinStar Fed. Servs., B-284617 et al., May 17, 2000, 2000
   CPD para. 92 at 9.

   [4] As pointed out by one of the firms that had submitted a proposal and
   had protested the propriety of the award to RBS, "RBS' protest continues
   to be premised on unreasonable speculation that all . . . offerors
   understood that the RFP meant something other than it said." Intervenors's
   Comments (B-310301.5) at 1.

   [5] As pointed out by the agency as well as another firm that had
   submitted a proposal in response to the solicitation and had protested the
   award to RBS, offerors may revise their technical, management, or price
   (now cost) proposals, given that approach is linked to cost, or revise the
   proposals to avoid most probable cost adjustments by the agency. AR at
   9-10; Intervenor's Comments (B-310301.5) at 1.