TITLE: B-310331.3, Lakeside Escrow & Title Agency, Inc., January 7, 2008
BNUMBER: B-310331.3
DATE: January 7, 2008
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B-310331.3, Lakeside Escrow & Title Agency, Inc., January 7, 2008

   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: Lakeside Escrow & Title Agency, Inc.

   File: B-310331.3

   Date: January 7, 2008

   James S. DelSordo, Esq., Argus Legal LLC, for the protester.

   Courtney B. Minor, Esq., Elisa J. Yochim, Esq., and Russell J. Cohen,
   Esq., Department of Housing and Urban Development, for the agency.

   Louis A. Chiarella, Esq., and Christine S. Melody, Esq., Office of the
   General Counsel, GAO, participated in the preparation of the decision.

   DIGEST

   Protest challenging contracting agency's evaluation of protester's
   proposal and exclusion of proposal from competitive range is denied where
   agency's evaluation and competitive range determination were reasonable
   and in accordance with the solicitation evaluation criteria.

   DECISION

   Lakeside Escrow & Title Agency, Inc. protests the exclusion of its
   proposal from the competitive range under request for proposals (RFP) No.
   R-CHI-00895, issued by the Department of Housing and Urban Development
   (HUD) for real estate closing services in the state of Michigan. Lakeside
   contends that the agency's technical evaluation of its proposal was
   improper.

   We deny the protest.

   BACKGROUND

   HUD, through the Federal Housing Administration (FHA), administers the
   Single Family Mortgage Insurance Program, which helps low- and
   moderate-income individuals and families achieve homeownership. Upon the
   default and foreclosure of an FHA-insured loan, the mortgage lender files
   a claim for insurance benefits and, in exchange for payment of the claim,
   the lender conveys the foreclosed property to HUD. The agency, by means of
   a management and marketing contractor, then manages and sells a sizable
   inventory of single family homes. In order to complete these sales, HUD
   requires closing agent contractors to perform all necessary closing
   activities on its behalf. The solicitation here involves HUD's procurement
   of real estate closing services for single family properties owned by the
   agency located throughout Michigan. RFP sect. B.2, B.3.

   The RFP, issued on February 7, 2007 as a small-business set-aside,
   contemplated the award of one or more fixed-price,
   indefinite-delivery/indefinite-quantity contracts for a base year together
   with three 1-year options. The RFP identified four evaluation factors:
   technical and management approach; prior experience; past performance; and
   price.[1] The solicitation also stated that the three technical factors
   were of equal importance and, when combined, were significantly more
   important than price. Award was to be made to the responsible offeror
   whose proposal was determined to be the "best value" to the government all
   factors considered. Id. sections M.1, M.4.

   The RFP contained detailed instructions regarding the submission of
   proposals.[2] Specifically, the technical approach submission was required
   to demonstrate the offeror's ability to carry out and manage the work to
   be performed and to ensure the quality of performance. The technical
   proposal was also to be clear, concise, and sufficiently detailed so as to
   substantiate the validity of an offeror's stated claims. Further, the RFP
   stated that proposals should not simply rephrase or restate the
   performance work statement requirements, but rather, must provide
   convincing rationales showing how the offeror intended to meet the
   requirements. Offerors were also instructed to assume that HUD had no
   prior knowledge of their facilities and/or experience, and that the
   agency's evaluation would be based on the information included within the
   proposals. Id. sect. L.8. Additionally, the RFP stated that HUD intended
   to evaluate proposals and make award without conducting discussions; the
   agency, however, also reserved the right to conduct discussions if later
   determined by the contracting officer to be necessary. Id. sect. L.2.

   Twenty-two offerors, including Lakeside, submitted proposals by the March
   7 closing date. An agency technical evaluation panel (TEP) evaluated
   offerors' proposals as to the technical factors. As set forth above, the
   RFP established the agency's method of evaluation for each technical
   factor. The TEP also developed an overall rating for each offeror's
   technical proposal, using the following adjectival ratings and
   definitions:

   +------------------------------------------------------------------------+
   |Acceptable       |The proposal contains no deficiencies or significant  |
   |                 |weaknesses. The evaluator is confident that the       |
   |                 |offeror can successfully perform the contract.        |
   |-----------------+------------------------------------------------------|
   |Unacceptable, but|The offer contains enough deficiencies and/or         |
   |capable of being |significant weaknesses to question the offeror's      |
   |made acceptable  |ability to successfully perform the contract. However,|
   |                 |the evaluator believes the offeror may be able to     |
   |                 |remedy enough of the deficiencies and weaknesses      |
   |                 |through discussions to make the offer acceptable.     |
   |-----------------+------------------------------------------------------|
   |Unacceptable     |The deficiencies and weaknesses are great and/or      |
   |                 |numerous enough that any attempt to remedy them       |
   |                 |through discussions with the offeror would be         |
   |                 |equivalent to allowing the offeror to substantially   |
   |                 |rewrite its proposal.                                 |
   +------------------------------------------------------------------------+

   Agency Report (AR), Tab 6, TEP Guide, at 6-7, 12; Tab 10, Competitive
   Range Determination, at 1.

   The TEP's evaluation of the six highest-rated proposals and Lakeside's
   were as follows:

   +------------------------------------------------------------------------+
   |  Offeror   | Technical/Mgmt  |    Prior    |     Past     |  Overall   |
   |            |    Approach     | Experience  | Performance  |            |
   |------------+-----------------+-------------+--------------+------------|
   |     1      |      Good       |  Excellent  |  Excellent   | Acceptable |
   |------------+-----------------+-------------+--------------+------------|
   |     2      |      Fair       |    Good     |  Excellent   | Acceptable |
   |------------+-----------------+-------------+--------------+------------|
   |     3      |    Excellent    |    Fair     |     Good     | Acceptable |
   |------------+-----------------+-------------+--------------+------------|
   |     4      |      Good       |    Fair     |     Fair     |  Capable   |
   |------------+-----------------+-------------+--------------+------------|
   |     5      |      Fair       |    Fair     |     Fair     |  Capable   |
   |------------+-----------------+-------------+--------------+------------|
   |     6      |      Fair       |    Fair     |     Fair     |  Capable   |
   |------------------------------------------------------------------------|
   |                               * * * * *                                |
   |------------------------------------------------------------------------|
   |  Lakeside  |      Poor       |    Fair     |     Fair     |Unacceptable|
   |    (11)    |                 |             |              |            |
   +------------------------------------------------------------------------+

   Id., Tab 9, TEP Report, at 1-20, 68-71; Tab 10, Competitive Range
   Determination, at 2-3.

   The TEP identified numerous weaknesses and deficiencies in Lakeside's
   proposal as to technical and management approach. Specifically, the
   evaluators found that while Lakeside's proposal included a work flow chart
   and an accompanying narrative reflecting general familiarity with the real
   estate closing process, the proposal failed to provide specifics as to how
   the offeror would start up and conduct its operations in Michigan.[3] The
   TEP also found that while the RFP required offerors to disclose the office
   locations for all key personnel, Lakeside's staffing plan was ambiguous
   and never explicitly stated that any key personnel from its Cleveland
   headquarters office would actually work in Michigan.[4] The TEP also
   observed that Lakeside's proposal contained no methodology for determining
   the number of closers needed to perform contract closings. Specifically,
   the offeror utilized no calculus to determine the number of closers
   required based on a number of the hours per closing, travel time,
   distances between closings, and/or closing volume, but simply proposed
   four closers without providing their current or prospective work
   locations.[5] The evaluators concluded that because of Lakeside's failure
   to identify the employees that would be at each office site and the other
   ambiguities and omissions about how contract work would be performed,
   there was considerable doubt that Lakeside would provide timely and
   convenient service to HUD purchasers throughout Michigan. Id. at 69-71.

   As to the prior experience factor, the TEP found that Lakeside's proposal
   had provided the required information regarding its HUD real estate
   closing services contract for Ohio, but did not provide all required
   information for its real estate closing service contracts with the agency
   in other states and regions. The TEP also noted that while Lakeside's
   proposal stated that the offeror intended to employ the services of
   closing agent company LCS, the offeror failed to include the required
   information regarding the prior experience of LCS in its proposal. Id. at
   68.

   With regard to Lakeside's past performance, the TEP found that the
   references regarding the offeror's performance on HUD real estate closing
   service contracts in North Carolina, South Carolina, Florida, and Illinois
   consistently rated the offeror's performance as "good." These contracts,
   however, were smaller in size (i.e., volume) than that anticipated by the
   RFP here. By contrast, Lakeside's reference for real estate closing
   services with HUD in Ohio--the offeror's single prior effort similar in
   size to the requirements here--noted serious performance issues.[6] While
   also considering that Lakeside had responded to and addressed some of
   these concerns, the TEP still deemed the performance deficiencies to be
   serious ones, especially as they had occurred late in the contract (the
   fourth year, as opposed to the initial ramp-up period) and involved a
   contract similar in size to RFP here. Id. at 68-69.

   The contracting officer subsequently decided that discussions with
   offerors were necessary, and established a competitive range consisting of
   the three most-highly-rated proposals. The agency eliminated Lakeside's
   proposal from the competitive range based on its determination that the
   firm's proposal had numerous significant weaknesses, omissions, and
   ambiguities that together constituted a major deficiency in the offeror's
   technical and management approach, resulting in a substantial risk to the
   offeror's ability to successfully meet the agency's requirements. Id., Tab
   9, TEP Report, at 71, Tab 10; Competitive Range Determination, at 2-3.
   This protest followed.

   DISCUSSION

   Where, as here, a protest challenges an agency's evaluation and exclusion
   of a proposal from the competitive range, we first review the propriety of
   the agency's evaluation of the proposal, and then turn to the agency's
   competitive range determination. Government Telecomms., Inc., B-299542.2,
   June 21, 2007, 2007 CPD para. 136 at 4; Americom Gov't Servs., Inc.,
   B-292242, Aug. 1, 2003, 2003 CPD para. 163 at 4. In reviewing such
   protests, we do not conduct a new evaluation or substitute our judgment
   for that of the agency, but examine the record to determine whether the
   agency's judgment was reasonable and in accordance with the terms of the
   solicitation and applicable procurement statutes and regulations.
   Wahkontah Servs., Inc., B-292768, Nov. 18, 2003, 2003 CPD para. 214 at 4.
   An offeror's mere disagreement with the agency's evaluation is not
   sufficient to render the evaluation unreasonable. Ben-Mar Enters., Inc.,
   B-295781, Apr. 7, 2005, 2005 CPD para. 68 at 7.

   As explained in detail below, based upon our review of the record, HUD's
   evaluation of Lakeside's proposal and the subsequent exclusion of
   Lakeside's proposal from the competitive range  were reasonable and
   consistent with the solicitation. The record reflects that Lakeside's
   technical proposal was downgraded in large part because the information
   provided lacked sufficient detail for the agency to determine that
   Lakeside would be able to successfully comply with the RFP's requirements.
   Although we do not here specifically address all of the protester's
   arguments about the evaluation of its proposal, we have fully considered
   all of them and find that they afford no basis to question the agency's
   evaluation.

   With regard to HUD's evaluation of its proposal under the technical and
   management approach factor, the protester contends that, contrary to the
   TEP's findings, the proposal clearly described how the firm would be able
   to handle the increase in work (i.e., closing services for Michigan)
   without increasing its staff. Lakeside contends, for example, that its
   proposal stated that all of the individuals listed would perform the
   Michigan work and that they were committed to the contract. The protester
   also asserts that, given the technology and networking software described
   in Lakeside's proposal, it is quite simple to perform any needed closing
   service tasks from Ohio or the local Michigan offices. Further, Lakeside
   argues, because it is a fully-licensed "National Producer" able to do work
   in all 50 states, the company possessed the ability to "move into any
   [new] State and be up and running as a fully functioning title company
   within no time at all." Comments at 5-6.

   Notwithstanding the offeror's view that its proposal had adequately
   addressed the technical and management approach factor, Lakeside does not
   dispute the TEP's finding that its headquarters personnel would not in
   fact be working 100 percent of their time on the Michigan contract,[7] or
   that its proposal failed to disclose the intended office locations of its
   key personnel. Lakeside also does not dispute the TEP's findings that its
   proposal provided no methodology for determining the number of closers
   needed, that the proposal did not explain how interactions,
   communications, and logistics would be handled between its various
   offices, or that Lakeside's proposed staff lacked closing experience.
   Rather, Lakeside essentially argues that the TEP's judgment that there
   existed considerable doubt about the firm's ability to meet the PWS
   requirements was unreasonable. We find the protester's challenge to the
   agency's evaluation here amounts to mere disagreement with the agency's
   judgment and, thus, does not establish that the evaluation was
   unreasonable. JAVIS Automation & Eng'g, Inc., B-293235.6, Apr. 29, 2004,
   2004 CPD para. 95 at 5.

   Lakeside also argues that the TEP's evaluation of its proposal under the
   prior experience factor was improper. Specifically, the protester asserts
   that the agency evaluators believed that Lakeside had no experience in
   Michigan, although its proposal made explicit that the firm was currently
   closing properties and issuing policies in Michigan. Comments at 4-5.
   Lakeside's assertion here, however, is based on the statements of an
   individual evaluator, and the record shows that these statements were not
   carried forward into the agency's consensus evaluation report. See AR, Tab
   9, TEP Report, at 68. Since it was the TEP final report upon which the
   contracting officer relied in making his competitive range determination,
   Lakeside's objections to the statements of an individual evaluator provide
   us with no basis to question the competitive range determination.[8] See
   Instrument Control Serv., Inc., B-285776, Sept. 6, 2000, 2000 CPD para.
   186 at 3 n.6.

   Given our determination that the agency's evaluation of Lakeside's
   proposal was reasonable and consistent with the solicitation, and in view
   of the agency's conclusion that the proposal was unacceptable as a result
   of the weaknesses and deficiencies identified in the evaluation, we find
   that it likewise was reasonable for the agency to conclude that Lakeside's
   proposal had no reasonable chance for award and to exclude Lakeside's
   proposal from the competitive range. See TMC Design Corp., B-296194.3,
   Aug. 10, 2005, 2005 CPD para. 158 at 5; Network Sys. Solutions, Inc.,
   B-249733, Dec. 14, 1992, 92-2 CPD para. 410 at 4.

   The protest is denied.

   Gary L. Kepplinger
   General Counsel

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

   [1] The RFP also established the agency's evaluation rating scheme.
   Specifically, with regard to the technical and management approach factor,
   proposals were to be rated as either "Excellent," "Good," "Fair," "Poor,"
   or "Unsatisfactory," while offerors' prior experience was to be evaluated
   as either "Excellent," "Good," "Fair," or "Poor," and past performance was
   to be evaluated as either "Excellent," "Good," "Fair," "Unknown," or
   "Poor." The solicitation also included definitions for each adjectival
   rating. Id. sect. M.2.

   [2] The RFP required each proposal to consist of two parts--a technical
   and management approach proposal, and a business proposal. The technical
   proposal was in turn to be structured as follows: 1) technical and
   management plan; 2) staffing plan; 3) quality control plan; 4) prior
   experience; and 5) past performance. The solicitation also set forth a
   detailed narrative of the various criteria that offerors were to expressly
   address in each section of their technical proposals. Id. sect. L.8.

   [3] The TEP cited, for example, that Lakeside's work flow narrative did
   not explain how interactions, communications, and logistics would be
   handled between its three proposed satellite offices and its proposed main
   office in Michigan, or between the offeror's main office in Michigan and
   its corporate headquarters in Cleveland, Ohio. Id., Tab 9, TEP Report, at
   69.

   [4] The TEP found that Lakeside's proposal had omitted the addresses from
   the resumes for all key personnel except for its corporate president,
   thereby making it impossible for the evaluators to clearly determine where
   these individuals were located, where they worked, and where they may be
   working after contract award. Id. at 70. The resumes that Lakeside
   provided for many of its key personnel also did not include current
   employment. The TEP also noted that while Lakeside's staffing plan
   provided that all corporate headquarters personnel would work 100 percent
   of their time on the Michigan contract, Lakeside did not explain the
   apparent multiple use of these personnel resources on other existing HUD
   real estate closing service contracts (five), as well as other noncontract
   work. Under these circumstances, the TEP concluded that it could not rely
   on Lakeside's representation that all of its corporate personnel would in
   fact work 100 percent on the contract here. Id.

   [5] The TEP also found that, on a collective basis, Lakeside's proposed
   staff lacked closing experience (i.e., only the resume of one of
   Lakeside's four proposed closers evidenced closing experience). Id. at
   70-71.

   [6] Specifically, Lakeside's Ohio reference reported continuous customer
   complaints due to the firm's failure to return telephone calls, a lack of
   professionalism, arrogance by the closing agent's staff, bills and checks
   missing from files, filing late extension requests, deed recordation
   receipts missing from the files, lateness in the electronic wiring of
   sales proceeds, and lateness in delivering closing packages. Id. at 69.

   [7] In fact, the protester acknowledges that while the individuals listed
   in its proposal were "committed to the contract," Comments at 5, they
   would not be spending 100 percent of their time performing the Michigan
   contract, as its proposal represented.

   [8] Lakeside also argues that the agency's technical evaluation was
   improper because, among other things, Lakeside was the incumbent HUD
   closing services contractor for other states and regions, and its proposal
   had been found technically acceptable and included in the competitive
   range when HUD had previously sought real estate closing services for
   Michigan in four separate areas. The protester also contends that HUD
   improperly failed to conduct discussions and inform it of the proposal
   deficiencies prior to making a competitive range determination. Protest
   at 5-8. The agency specifically addressed all these issues in its report
   to our Office, discussing, for example, why Lakeside's status as an
   incumbent contractor in other areas was not relevant to the evaluation of
   its proposal here, and the fact that there exists no requirement that an
   agency conduct discussions with offerors prior to making a competitive
   range determination. AR at 3-6. The protester's comments offered no
   substantive rebuttal of the agency's position, but merely restated
   verbatim the same arguments set forth in its original protest. See
   Comments at 7-9. Where, as here, an agency provides a detailed response to
   a protester's assertions and the protester either does not respond to the
   agency's position or provides a response that fails to substantively rebut
   the agency's position, we deem the initially-raised arguments abandoned.
   Remington Arms Co., Inc., B-297374, B-297374.2, Jan. 12, 2006, 2006 CPD
   para. 32 at 4 n.4; L-3 Commc'ns Westwood Corp., B-295126, Jan. 19, 2005,
   2005 CPD para. 30 at 4.