TITLE: B-310600.3; B-310600.4, Al Qabandi United Company; American General Trading & Contracting--Costs, June 5, 2008
BNUMBER: B-310600.3; B-310600.4
DATE: June 5, 2008
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B-310600.3; B-310600.4, Al Qabandi United Company; American General Trading & Contracting--Costs, June 5, 2008

   Decision

   Matter of: Al Qabandi United Company; American General Trading &
   Contracting--Costs

   File: B-310600.3; B-310600.4

   Date: June 5, 2008

   Paul J. Seidman, Esq., and David J. Seidman, Esq., Seidman & Associates,
   for Al Qabandi United Company; Vonda K. Vandaveer, Esq., for American
   General Trading & Contracting, the protesters.

   Maj. Christina McCoy and Raymond M. Saunders, Esq., Department of the
   Army, for the agency.

   Frank Maguire, Esq., David A. Ashen, Esq., and John M. Melody, Esq.,
   Office of the General Counsel, GAO, participated in the preparation of the
   decision.

   DIGEST

   Reimbursement of costs of filing and pursuing protests is recommended
   where a reasonable agency inquiry into initial protest allegations would
   have shown that agency had failed to conduct price realism evaluation
   required by solicitation, but agency delayed taking corrective action
   until after submission of the agency report.

   DECISION

   Al Qabandi United Company and American General Trading & Contracting (AGT)
   request that we recommend that they be reimbursed the costs of filing and
   pursuing their protests against the Department of the Army's award of a
   contract to International Link Trading, Establishment of Kuwait (ILTE),
   under request for proposals (RFP) No. W912D1-07-R-0047, for laundry
   services at military camps in Kuwait.

   We grant the requests.

   BACKGROUND

   The RFP provided for award of a fixed-price contract to furnish laundry
   services in Kuwait commencing on October 1, 2007 to the offeror with "the
   lowest realistically priced offer judged to have a `Responsible' or
   `Neutral' past performance rating." RFP, amend. 0001, at 19. With regard
   to price realism, the RFP specifically provided that an "[u]nrealistically
   low proposed price may be grounds for eliminating a proposal from
   competition." RFP, amend. 0001, at 23.

   Fifteen timely proposals were received in response to the solicitation;
   seven proposals were included in the competitive range for purposes of
   discussions. Based on the revised proposals subsequently received from the
   offerors, the Army determined that ILTE had submitted the lowest-priced,
   technically acceptable offer. Since ILTE's past performance was evaluated
   as "Neutral" (based on its lack of relevant past performance history),
   thus qualifying it for award under the terms of the solicitation, ILTE was
   awarded the contract on September 25. ILTE, however, did not commence work
   on October 1 as required under the solicitation.

   On October 9, Al Qabandi filed a protest with our Office challenging the
   award to ILTE on several grounds generally related to ILTE's alleged
   inability to meet the RFP's performance requirements, as allegedly shown
   by ILTE's failure to begin performance on October 1. Specifically, Al
   Qabandi asserted that: (1) the Army improperly relaxed the performance
   requirements after award by extending the October 1 start date, resulting
   in an improper modification outside the scope of the contract; (2) the
   Army lacked sufficient information to support its responsibility
   determination; (3) the Army failed to consult required information sources
   in making its responsibility determination; (4) the affirmative
   determination of responsibility was improper because ILTE lacked relevant
   past performance; (5) the award price was unrealistic; and (6) the
   affirmative determination of responsibility lacked a rational basis.
   Al Qabandi Protest at 3-6.

   On October 9, AGT likewise filed a protest (dated October 8) with our
   Office challenging the award to ILTE. AGT generally asserted that: (1) the
   Army's evaluation of ILTE's proposal was unreasonable as demonstrated by
   the fact that ILTE was unable to perform as required under the RFP; (2)
   the Army failed to make a proper responsibility determination; and (3) the
   Army did not provide AGT with an adequate debriefing in that it failed to
   furnish required information regarding the price evaluation. AGT Protest
   at 8-17.

   On November 2, the Army requested summary dismissal of both protests on
   the grounds that they were speculative or challenged the Army's
   responsibility determination without alleging facts sufficient to meet
   GAO's standard for review of affirmative determinations of responsibility.
   The Army also requested dismissal of AGT's third ground of protest, its
   alleged failure to receive an adequate debriefing, on the ground that GAO
   generally does not consider challenges to the adequacy of debriefings. We
   dismissed the protest as to this latter ground but denied the Army's
   overall dismissal requests.

   In the agency report, filed on November 8, the Army raised essentially the
   same defenses, but also contended that neither protester was an interested
   party, since neither was the next lowest price offeror, so that their
   proposals would not be in line for award if their protests were sustained.
   Additionally, with regard to Al Qabandi's price realism argument, the Army
   contended that "there was no requirement in the solicitation to conduct a
   price realism analysis." Agency Report at 12.

   In its November 21 comments on the agency report, Al Qabandi reasserted
   its grounds of protest. Al Qabandi specifically rebutted the Army's
   assertion that "there was no requirement in the solicitation to conduct a
   price realism analysis," pointing out that the solicitation provided that
   award was to be made to the "lowest realistically priced" offeror. RFP,
   amend. 0001, at 19.

   In its November 19 comments, AGT reasserted its initial challenge to the
   technical evaluation and affirmative determination of responsibility. In
   addition, AGT raised two supplemental protest grounds, asserting that
   ILTE's proposal did not meet RFP requirements for a "surge capacity" and
   for the capability to furnish cold water for washing.

   On November 29, the Army advised GAO that it would take corrective action.
   The agency proposed to set aside the award, conduct a price realism
   analysis, and make a new source selection decision. We dismissed the
   protests as academic on December 3 (B-310600, B-310600.2). Al Qabandi and
   AGT thereupon requested that we recommend that they be reimbursed the
   costs of filing and pursuing their protests.

   Where a procuring agency takes corrective action in response to a protest,
   our Office may recommend reimbursement of 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 the protester to expend unnecessary time and resources to
   make further use of the protest process in order to obtain relief. Bid
   Protest Regulations, 4 C.F.R. sect. 21.8(e) (2008); AAR Aircraft
   Servs.--Costs, B-291670.6, May 12, 2003, 2003 CPD para. 100 at 6. A
   protest is clearly meritorious where a reasonable agency inquiry into the
   protest allegations would have shown facts disclosing the absence of a
   defensible legal position. AVIATE L.L.C., B-275058.6, B-275058.7, Apr. 14,
   1997, 97-1 CPD para. 162 at 16. 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.

   AL QABANDI'S REQUEST

   Al Qabandi asserts that reimbursement of its protest costs is warranted
   here because all of the issues raised in its initial protest, other than
   its claim that the start date in its contract was inconsistent with the
   solicitation, were clearly meritorious.

   The Army concedes that its report incorrectly stated that there was no
   requirement for a price realism analysis. Army Comments, Jan. 7, 2008, at
   4. The agency agrees with the protester that, under the terms of the
   solicitation, it was required to conduct a price realism analysis but
   failed to do so. Army Comments, Jan. 7, 2008, at 4-5. In these
   circumstances, Al Qabandi's assertion that the agency had failed to
   conduct a required price realism analysis was clearly meritorious.

   The Army contends, however, that its corrective action was taken promptly,
   making reimbursement of the costs associated with this issue
   inappropriate. In this regard, the agency asserts that it was only after
   the November 8 agency report had been filed that Al Qabandi first raised
   the issue of the Army's failure to conduct a price realism analysis.

   The Army's position is incorrect. In its initial, October 9 protest, Al
   Qabandi asserted that the "award price is not realistic" since it
   "apparently does not factor in the increased cost of beginning performance
   in a few days." Al Qabandi Protest, Oct. 9, 2008, at 6. The agency
   maintains that this language does not represent an assertion that the
   agency failed to conduct a price realism analysis, but instead
   "essentially allege[s] that the Army conducted a flawed, or unrealistic,
   analysis because the awardee's pricing proposal did not reflect contract
   performance beginning on October 1, 2007." Agency Comments, Jan. 7, 2008,
   at 8. In our view, however, the allegation was sufficiently specific that
   a reasonable investigation into the assertion would have led the agency to
   conclude that, contrary to the agency's initial position, the solicitation
   in fact required a price realism analysis, and that it improperly failed
   to perform such an analysis. Accordingly, we find that the Army unduly
   delayed taking corrective action in the face of this clearly meritorious
   protest assertion.

   As for the additional protest grounds cited in Al Qabandi's request for
   reimbursement, none was clearly meritorious. All but one of the remaining
   arguments concern its challenge to the affirmative determination of ILTE's
   responsibility. We will consider protests challenging affirmative
   determinations of responsibility where: (1) where it is alleged that
   definitive responsibility criteria in the solicitation were not met, or
   (2) where evidence is identified that raises serious concerns that, in
   reaching a particular responsibility determination, the contracting
   officer unreasonably failed to consider available relevant information or
   otherwise violated statute or regulation. 4 C.F.R. sect. 21.5(c); American
   Printing House for the Blind, Inc., B-298011, May 15, 2006, 2006 CPD para.
   83 at 5-6; Government Contracts Consultants, B-294335, Sept. 22, 2004,
   2004 CPD para. 202 at 2.

   Al Qabandi did not assert that definitive responsibility criteria in the
   solicitation were not met. Nor was it clear from Al Qabandi's initial
   protest that there was a serious concern that the contracting officer
   unreasonably failed to consider available relevant information or
   otherwise violated statute or regulation. Such circumstances could occur
   where the protester presents evidence, for example, that the contracting
   officer may have ignored information that, by its nature, would be
   expected to have a strong bearing on whether the awardee should be found
   responsible. See, e.g., Southwestern Bell Tel. Co., B-292476, Oct. 1,
   2003, 2003 CPD para. 177 at 7-11 (GAO reviewed allegation where evidence
   was presented that the contracting officer failed to consider serious,
   credible information regarding awardee's record of integrity and business
   ethics); Verestar Gov't Servs. Group, supra, at 4; Universal Marine &
   Indus. Servs., Inc., B-292964, Dec. 23, 2003, 2004 CPD para. 7 at 2-4.
   However, other than its speculation as to the information the agency may
   not have considered, Al Qabandi's initial protest in this regard amounted
   to little more than the assertion that the agency could not make award to
   a firm with no relevant past performance (resulting in a neutral rating)
   without a preaward survey. Al Qabandi Protest, Oct. 9, 2007, at 4-6. Al
   Qabandi cited no authority for this assertion. See Federal Acquisition
   Regulation sect. 9.104-1(c) (prospective contractor generally shall not be
   determined responsible or nonresponsible solely on the basis of a lack of
   relevant performance history), and sect. 15.305(a)(2) (comparative
   assessment of past performance information is separate from the
   responsibility determination). Further, a dispute over the amount of
   information upon which an affirmative responsibility determination was
   based, or disagreement with the contracting officer's determination, does
   not fall within the circumstances under which our Office will review such
   a determination. Nilson Van & Storage, Inc., B-310485, Dec. 10, 2007, 2007
   CPD para. 224 at 4; see, e.g., Brian X. Scott, B-298568, Oct. 26, 2006,
   2006 CPD para. 156 at 4. Accordingly, we find that Al Qabandi's initial
   challenge to the affirmative determination of ILTE's responsibility was
   not clearly meritorious.

   Our view is the same with regard to Al Qabandi's initial assertion that
   the Army improperly relaxed performance requirements--the start
   date--after award, constituting an improper modification outside the scope
   of the contract. In this regard, the Army explained in the agency report
   that a delay occurred when the government discovered on September 26 that
   it was unable to make available the sites to be used by the new contractor
   for customer turn-in and pickup of laundry because they were occupied by
   the incumbent contractors (Al Qabandi and AGT); according to the agency,
   ILTE could not begin its setup until the incumbent contractors vacated the
   sites. The Army stated that it initially extended the incumbent contracts
   only in order to allow the government sufficient time to arrange for a
   smooth transition between contractors, without disruption to continuing
   laundry service, and then was required to further stay performance as a
   result of the protests filed on October 9. Agency Legal Memorandum, Nov.
   8, 2007, at 11; Contracting Officer's Statement, B-310600, B-310600.2, at
   4. Since, in our view, further development of the record would have been
   necessary in order to resolve the merits of the issue, we do not consider
   the issue clearly meritorious.

   In conclusion, we find that while the Army unduly delayed taking
   corrective action in the face of Al Qabandi's clearly meritorious initial
   challenge to the price evaluation, the other issues raised in Al Qabandi's
   initial protest were not clearly meritorious.

   As a general rule, we consider a successful protester entitled to be
   reimbursed costs incurred with respect to all issues pursued, not merely
   those upon which it prevails. Burns and Roe Servs. Corp.--Costs,
   B-310828.2, Apr. 28, 2008, 2008 CPD para. 81 at 2-3. Nevertheless, in
   appropriate cases, we have limited our recommendation for the award of
   protest costs where a part of those costs is allocable to an unsuccessful
   protest issue that is so clearly severable from the successful issues as
   to essentially constitute a separate protest. See, e.g., BAE Tech. Servs.,
   Inc.--Costs, B-296699.3, Aug. 11, 2006, 2006 CPD para. 122 at 3; Interface
   Floorings Sys., Inc.--Claim for Attorneys' Fees, B-225439.5, July 29,
   1987, 87-2 CPD para. 106 at 2-3. In determining whether protest issues are
   so clearly severable as to essentially constitute separate protests, we
   consider, among other things, the extent to which the issues are
   interrelated or intertwined--i.e., the successful and unsuccessful
   arguments share a common core set of facts, are based on related legal
   theories, or are otherwise not readily severable. See Sodexho Mgmt.,
   Inc.--Costs, B-289605.3, Aug. 6, 2003, 2003 CPD para.136 at 29.

   Here, Al Qabandi's challenge to the affirmative determination of ILTE's
   responsibility and its assertion that the Army improperly relaxed
   performance requirements after award did not involve the same set of core
   facts as did its clearly meritorious challenge to the price evaluation.
   Neither were these protest grounds based on related legal theories.
   Accordingly, we recommend that Al Qabandi be reimbursed the reasonable
   costs of filing and pursuing its protest only as related to its challenge
   to the price evaluation. Al Qabandi should submit its certified claim,
   detailing the time spent and costs incurred, directly to the agency within
   60 days of its receipt of this decision. 4 C.F.R. sect. 21.8(f)(1).

   AGT'S REQUEST

   AGT asserts that it also challenged the agency's price evaluation in its
   initial protest such that we should find that the Army unduly delayed
   taking corrective action in the face of a clearly meritorious protest by
   AGT against the price evaluation. We agree.

   As discussed above, AGT generally asserted in its initial protest that the
   Army did not provide AGT an adequate debriefing in that it failed to
   furnish information regarding the price evaluation. In the course of
   setting forth its concerns in this regard, AGT noted in its initial
   protest that, under the solicitation, "the government was required to
   analyze whether an offeror's price was fair and reasonable . . . . An
   unrealistically low price was grounds for elimination." AGT Protest, Oct.
   8, 2008, at 16. Further, AGT specifically "question[ed] whether the
   government properly followed procedures related to assessing
   reasonableness and fairness of the awardee's price given that ILTE's price
   was . . . about half the price of AGT's as the incumbent." Id. Although
   the focus of AGT's discussion in this area of its protest was on the
   alleged deficiencies in the agency's debriefing, in our view, the above
   language was sufficient to constitute a protest ground that called into
   question the realism of ILTE's price. Further, we think a reasonable
   investigation of this argument would have led the agency to conclude that
   the solicitation required a price realism analysis and that the agency
   improperly failed to perform such an analysis. Accordingly, we conclude
   that the Army unduly delayed taking corrective action in the face of this
   clearly meritorious protest ground. We therefore recommend that AGT be
   reimbursed the reasonable costs of filing and pursuing its protest as
   related to its challenge to the price evaluation.

   We note that, for purposes of determining entitlement to protest costs, 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 challenges to an evaluation. See The Salvation Army Community
   Corrections Program--Costs, B-298866.3, Aug. 29, 2007, 2007 CPD para. 165
   at 7; Blue Rock Structures. Inc.--Costs, B-293134.2, Oct. 26, 2005, 2005
   CPD para. 190 at 3. Here, both AGT's challenge to the price evaluation and
   its challenge to the technical evaluation involved the same set of core
   facts, that is, whether ILTE's proposal adequately accounted for the
   significant work required before a nonincumbent contractor could marshal
   the resources necessary to commence performance in accordance with the
   requirements of the solicitation within a few days after award in a
   difficult environment such as Kuwait. Accordingly, we further recommend
   that AGT also be reimbursed the reasonable costs of filing and pursuing
   its protest as related to its challenge to the technical evaluation. AGT
   should submit its certified claim, detailing the time spent and costs
   incurred, directly to the agency within 60 days of its receipt of this
   decision. 4 C.F.R. sect. 21.8(f)(1).

   The requests are granted.

   Gary L. Kepplinger
   General Counsel