TITLE: B-311314.3, New Jersey & H Street, LLC, June 30, 2008
BNUMBER: B-311314.3
DATE: June 30, 2008
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B-311314.3, New Jersey & H Street, LLC, June 30, 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: New Jersey & H Street, LLC
File: B-311314.3
Date: June 30, 2008
Alex D. Tomaszczuk, Esq., and Daniel S. Herzfeld, Esq., Pillsbury Winthrop
Shaw Pittman LLP, for the protester.
Fernand A. Lavallee, Esq., Jeffrey R. Keitelman, Esq., and J. Philip
Ludvigson, Esq., DLA Piper US LLP, for the intervenor.
Robert A. Hauser, Esq., General Services Administration, for the agency.
Peter D. Verchinski, Esq., David A. Ashen, Esq., and John M. Melody, Esq.,
Office of the General Counsel, GAO, participated in the preparation of the
decision.
DIGEST
1. Protest is sustained where agency credited awardee's proposed building
with availability of certain future amenities based solely on promise in
offer, without requiring supporting evidence that amenities would exist,
which was required by solicitation; agency essentially relaxed evidence
requirement only for awardee, without providing protester with opportunity
to propose amenities under relaxed standard.
2. Protest that agency failed to engage in meaningful discussions is
sustained where agency failed to raise during discussions significant
weaknesses associated with access to amenities in or near protester's
proposed office building.
DECISION
New Jersey & H Street, LLC (Justice Plaza Development Team or JPDT)
protests the General Service Administration's (GSA) award of a lease to CS
Master V, LLC (Stonebridge), under solicitation for offers (SFO) No.
07-018, for office and related space to be occupied by the Department of
Justice (DOJ) in Washington, DC. JPDT alleges several evaluation and other
improprieties in the procurement.
We sustain the protest.
The solicitation, which anticipated the award of a 15-year lease, provided
for a "best value" award based on four evaluation factors (with
subfactors): location (access to DOJ facilities, access to Metrorail, and
access to amenities); building characteristics (quality of building
architecture, building systems, construction, and finishes; planning
efficiency and flexibility; and access to natural light); key personnel
and past performance (key personnel and past performance); and price.
Agency Report (AR), Tab 2, SFO, at 20-21. The location factor was
approximately equal in importance to the building characteristics factor,
and each was significantly more important than the key personnel/past
performance factor; the technical evaluation factors combined were
significantly more important than price. Id. In addition, the SFO stated
that the phased occupancy of the building was to begin no earlier than
January 1, 2010, and was to be completed no later than June 30, 2010. Id.
at 8.
Following the submission and evaluation of initial offers, a round of
discussions, and the submission and evaluation of final revised offers,
Stonebridge's offer and JPDT's offer were among the highest rated, both
receiving an overall technical score of "highly successful plus." JPDT's
price (annual present value [DELETED] per square foot) was higher than
Stonebridge's ([DELETED] per square foot), resulting in an overall
difference of approximately $38,000,000 in net present value terms. The
ratings under the individual technical evaluation factors and subfactors
were as follows (including specific weights of each factor and subfactor,
which were not disclosed in the SFO):[1]
+------------------------------------------------------------------------+
|Factor |Subfactor |JPDT |Stonebridge |
|----------------+---------------------+---------------+-----------------|
|Location |Access to DOJ (20%) |Highly |Successful Plus |
| | |Successful | |
|(45%) |---------------------+---------------+-----------------|
| |Access to Metro (15%)|Poor |Highly Successful|
| |---------------------+---------------+-----------------|
| |Access to Amenities |Successful |Highly Successful|
| |(10%) | | |
| |---------------------+---------------+-----------------|
| |Factor Score |Successful |Highly Successful|
| | | |Minus |
|----------------+---------------------+---------------+-----------------|
|Building |Quality of Building |Superior |Superior |
|Characteristics |Architecture, etc. | | |
| |(20%) | | |
|(45%) |---------------------+---------------+-----------------|
| |Planning Efficiency |Superior |Highly Successful|
| |and Flexibility (20%)| | |
| |---------------------+---------------+-----------------|
| |Access to Light (5%) |Superior |Superior |
| |---------------------+---------------+-----------------|
| |Factor Score |Superior |Superior Minus |
|----------------+---------------------+---------------+-----------------|
|Key Personnel/ |Key Personnel (5%) |Superior |Superior |
|Past Performance|---------------------+---------------+-----------------|
| |Past Performance (5%)|Superior |Successful |
|(10%) |---------------------+---------------+-----------------|
| |Factor Score |Superior |Highly Successful|
|--------------------------------------+---------------+-----------------|
|OVERALL SCORE |Highly |Highly Successful|
| |Successful Plus|Plus |
+------------------------------------------------------------------------+
AR, Tab 5, at 49. Because the two offers were considered equal overall
technically, Stonebridge's offer was ultimately selected as the best value
to the government based on its lower price.[2] This protest followed.
JPDT raises numerous arguments concerning the propriety of the evaluation
and other aspects of the procurement. In reviewing protests of alleged
improper evaluations and source selection decisions, it is not our role to
reevaluate submissions; rather, we will examine the record to determine
whether the agency's judgment was reasonable and in accord with the stated
evaluation criteria and applicable procurement laws and regulations.
Panacea Consulting, Inc., B-299307.4, B-299308.4, July 27, 2007, 2007 CPD
para. 141 at 3. Based on our review of the record here, we find that the
evaluation was unreasonable in two respects and, therefore, we sustain the
protest. We discuss JPDT's meritorious arguments below. [3]
AMENITIES
JPDT challenges the evaluation of its offer under the access to amenities
subfactor. With regard to evaluating amenities, the SFO provided as
follows:
Offers will be evaluated for amenities within the building or otherwise
available within 2,000 walkable linear feet . . . Offers will be
evaluated for both the quantity and variety of the following amenities:
childcare centers, fitness facilities, postal facilities, restaurants,
fast food establishments, dry cleaners, banks and ATM's, convenience
shops, card/gift shops, and drug stores. . . . The best rating will be
given to offers that provide the greatest variety and quantity of
amenities with the most extensive hours of operation existing at the
time of occupancy within the building or adjacent to the building.
AR, Tab 2, SFO, at 21. For purposes of determining whether an offer would
be credited for amenities that were not currently existing but would
likely exist in the future, the SFO stated as follows:
Amenities will be considered "existing" if they currently exist or if
the offeror can demonstrate to the reasonable satisfaction of the
Government (i.e., though evidence of signed leases, construction
contracts, etc.) that such amenities will exist by the Government's
required occupancy date.
Id.
In support of proposed future amenities, the awardee provided a letter
with its final offer revision in which it committed to providing in its
proposed building [DELETED]. Stonebridge's Final Revised Proposal,
Vol. II, Sept. 20, 2007, Commitment on Constitution Square Retail and
Retail Plans. The agency ultimately credited Stonebridge's offer with
these amenities, resulting in a rating of highly successful for the access
to amenities subfactor.[4] AR, Tab 9, Location Technical Advisory Report,
attach. 2.
JPDT asserts that the agency improperly relaxed the SFO's requirements
only for Stonebridge by accepting its letter of commitment as sufficient
proof that the above described proposed amenities will exist. The
protester states that, had it known that a mere letter of commitment to
provide future amenities would suffice, it could have used this
information to propose new amenities that would have increased its score
under the access to amenities subfactor.
It is a fundamental principle of government procurement that a competition
must be conducted on an equal basis, that is, offerors must be treated
equally and be provided with a common basis for the preparation of their
proposals. Continental RPVs, B-292768.2, B-292768.3, Dec. 11, 2003, 2004
CPD para. 56 at 8; Systems Mgmt., Inc.; Qualimetrics, Inc., B-287032.3,
B-287032.4, Apr. 16, 2001, 2001 CPD para. 85 at 8. We will sustain a
protest that an agency improperly relaxed its requirements only for the
awardee where the protester establishes a reasonable possibility that it
was prejudiced by the agency's actions. Datastream Sys., Inc. B-291653,
Jan. 24, 2003, 2003 CPD para. 30 at 6.
We find that the agency's evaluation of Stonebridge's proposed amenities
was inconsistent with the solicitation. As stated above, the SFO provided
that "the offeror must demonstrate to the reasonable satisfaction of the
Government (i.e., through evidence of signed leases, construction
contracts, etc.) that such amenities will exist by the Government's
required occupancy date." AR, Tab 2, SFO at 7. We think this language
informed offerors that some level of evidence of a proposed amenity to be
furnished by a third party, beyond a mere promise of its existence, had to
be provided in order for an offer to receive evaluation credit for the
proposed amenity. The agency asserts that Stonebridge's promise is
contractually enforceable, and that it thus was reasonably satisfied that
the awardee would provide the amenity. However, the key consideration here
is not whether a promise could be viewed as providing some level of
assurance that a third party amenity would be available, but whether the
agency's reliance on the promise alone was consistent with the terms of
the SFO. Again, we find that it was not. The SFO stated that offerors
"must demonstrate" that the proposed amenities would exist, indicated in
the parenthetical that this was to be "through evidence," and then gave
examples of satisfactory evidence. We do not think a bare promise
satisfied the SFO requirement that offerors "demonstrate" the existence of
future amenities through "evidence." It follows that, in accepting
Stonebridge's promise, the agency relaxed the evidence requirement only
for the benefit of Stonebridge, without advising JPDT and the other
offerors of the reduced evidence standard.
The agency asserts that "all offerors were informed" during oral
discussions that they could improve their offers by providing amenities in
their building, and that "the government would accept, in addition to
letters of intent or other proof, the guarantee of a financially
responsible offeror as proof that the amenity will be `existing' at the
time of occupancy." AR, Tab 1, Contracting Officer's Statement, at 3. The
agency cites the protester's addition of a fitness center reserved to its
building after discussions as evidence that JPDT was aware that future
amenities could be supported merely by an offeror's contractual guarantee.
Agency Response to Comments, May 16, 2008, at 7.
The record simply does not support the agency's position. JPDT denies that
it was told that the agency would accept an offeror's guarantee as the
sole evidence that the amenity would exist at the time of occupancy. In
support of this denial, JPDT has furnished: (1) a declaration executed by
the vice president of one of its teaming partners who attended the
discussions, in which he reports the information conveyed by the agency
and specifically denies that the agency advised that an offeror's
guarantee would suffice to verify the existence of a future amenity; and
(2) a contemporaneous e-mail reporting in detail the matters raised by the
agency during discussions, which makes no mention of the agency's having
relaxed or even discussed the evidence of future amenities requirements.
Declaration of JPDT Partner Boston Properties Vice President; E-mail From
Bennett Group DC to Boston Properties [JPDT partners], 9-12-07 Meeting
Notes, Sept. 12, 2007.
In addition, the contemporaneous record of discussions provides no support
for the agency's position. Specifically, GSA's statement of objectives for
the negotiations makes no reference at all to the level of evidence
required to establish future amenities, let alone any reference to
permitting JPDT to rely on a promise or guarantee as evidence of third
party amenities. AR, Tab 22, DOJ Negotiation Objectives. There is nothing
else in the record that confirms that the agency advised JPDT of the
relaxed evidence requirement. Further, we do not agree with the agency
that JPDT's offer of a fitness center in its building indicates it
understood the level of evidence required for third party amenities, since
the fitness center was to be furnished by JPDT, not a third party entity.
We conclude that there is no evidence that the agency advised JPDT of the
relaxed requirements.
DISCUSSIONS
JPDT's initial offer included a list of the various amenities surrounding
its proposed office site, as well as a map showing their locations. Among
the amenities proposed, the firm listed 5 restaurants and 13 fast food
establishments (as well as convenience stores, daycare facilities, drug
stores, banks/ATMs, a postal facility, a law library, gift shops and dry
cleaners) within 2,000 walking linear feet (wlf) of the office
building.[5]
The record indicates that, subsequently, during oral discussions on
September 12, 2007, GSA informed the protester that it was unable to
verify the existence of a postal facility or a fitness facility within
2,000 wlf, and that it was "unable to verify" two food establishments
("Andy's Carry Out," and "Domino's Pizza") identified in JPDT's initial
offer, as well as the Sports Club/LA. AR, Tab 22, DOJ Negotiation
Objectives, at 1; Declaration of JPDT Partner Vice-President; E-mail From
Bennett Group DC to Boston Properties [JPDT partners], 9-12-07 Meeting
Notes, Sept. 12, 2007. In addition to these inquiries specific to JPDT,
the agency asserts that "all offerors were informed [during oral
discussions] that they could improve their technical score by providing
amenities within the offered building . . . ." Contracting Officer's
Statement at 3. There is no indication in the record that the protester
was given any further information during discussions regarding the
agency's evaluation of its proposed amenities. AR, Tab 22, DOJ Negotiation
Objectives.
The protester's final revised offer included a response to the agency's
concerns. Specifically, the protester provided additional information
about the four amenities identified by GSA, including a map showing where
Andy's Carry Out and a United States Postal Service facility were located;
the explanation that Domino's Pizza had relocated elsewhere in the city;
and the explanation that, while the cited sports club no longer existed,
JPDT would provide in its building a fitness center reserved exclusively
for DOJ personnel, and that JPDT had also identified a separate, existing
fitness center located at the Government Accountability Office Building,
which DOJ personnel were eligible to use. JPDT's Technical Proposal,
Building Data and Capability to Perform, Final Revised Proposal, Amenities
Clarification.
After evaluating the protester's revised offer with regard to the access
to amenities subfactor, the agency determined as follows:
the Team found a relatively equal balance of significant and minor
strengths and significant and minor weaknesses . . . . The proximity of
amenities generally is a significant weakness, with only an on-site
fitness center and three other amenities available within 1,000 wlf. The
proximity of fast food establishments is a significant weakness, with
only 3 fast food establishments within 1,500 wlf, the closest of which
is 904 wlf away. In addition, the quantity, variety, and proximity of
table service restaurants is a significant weakness, with only three
restaurants available at distances ranging from 1,427 to 1,964 wlf.
AR, Tab 5, at 24. The agency ultimately assigned JPDT's offer a successful
rating under the amenities subfactor. Id.
JPDT asserts that the discussions it received with regard to its amenities
were inadequate, since GSA failed to bring to its attention the several
"significant weaknesses" it had found regarding proposed amenities.
Specifically, the protester points to the above language, noting that the
agency determined that the proximity and limited number of amenities
generally was a "significant weakness"; the proximity and limited number
of fast food establishments was a "significant weakness"; and the
quantity, variety, and proximity of table service restaurants was also a
"significant weakness." JPDT asserts that, had GSA raised these
"significant weaknesses" during discussions, it could have modified its
building to include additional amenities within the building.
Discussions, when conducted, must be meaningful, that is, they may not be
misleading and must identify proposal deficiencies and significant
weaknesses that could reasonably be addressed in a manner to materially
enhance the offeror's potential for receiving award. PAI Corp., B-298349,
Aug. 18, 2006, 2006 CPD para. 124 at 8. While an agency generally need
only lead an offeror into the general areas of concern about its proposal,
the agency must impart during discussions sufficient information to afford
the offeror a fair and reasonable opportunity to identify and correct
deficiencies, excesses, or mistakes in its proposal. Advanced Sci., Inc.,
B-259569.3, July 3, 1995, 95-2 CPD para. 52; Aydin Computer and Monitor
Div., Aydin Corp., B-249539, Dec. 2, 1992, 93-1 CPD para. 135.
The discussions here were not meaningful. While the record shows that the
agency indeed advised JPDT that it could improve its technical score by
providing amenities within its offered building, this information was
conveyed, not to identify deficiencies in JPDT's offer, but as part of the
agency's general advice that every offeror received. This general advice
amounted to no more than a restatement of the SFO's evaluation criteria.
It did not reasonably apprise JPDT that the agency had found its proposal
to contain specific significant weaknesses regarding access to amenities,
including the proximity and number of amenities generally, the proximity
and number of fast food restaurants, and the variety, quantity, and
proximity of table service restaurants. See Integrity Int'l Sec. Sys.,
Inc., B-261226, Sept. 1, 1995, 95-2 CPD para. 98 at 8 (general
boilerplate-type reminder that was provided to all offerors during
discussions was insufficient to provide notice of protester's specific
deficiency).
Further, while the record also supports the agency's claim that it
informed JPDT that it was unable to verify the existence of two of the
identified restaurants and the identified sports club, this very specific
information likewise fell short of advising JPDT that its proposed
amenities were a concern overall. Indeed, by providing its concerns
regarding particular restaurants and a particular fitness facility without
indicating that it considered JPDT's offer to have significant weaknesses
regarding the proximity and number of amenities generally, the proximity
and number of fast food restaurants, and the variety, quantity, and
proximity of table service restaurants, we think GSA led JPDT reasonably
to believe that GSA's concerns were limited to those particular
establishments and were not broader in nature. See Spherix, Inc.,
B-294572, B-294572.2, Dec. 1, 2004, 2005 CPD para. 3 at 14 (agency failed
to conduct meaningful discussions where it determined that offeror's
entire quality control plan was a significant weakness, but identified
only two specific aspects of the quality control plan in discussions). We
conclude that the agency's discussions failed to provide JPDT with
sufficient information to afford it a fair and reasonable opportunity to
identify and correct the evaluated significant weaknesses in its offer.[6]
PREJUDICE
We will not sustain a protest absent a showing of prejudice to the
protester; that is, unless the protester demonstrates that, but for the
agency's actions, it would have had a substantial chance of receiving the
award. McDonald-Bradley, B-270126, Feb. 8, 1996, 96-1 CPD para. 54 at 3;
see Statistica, Inc. v. Christopher, 102 F.3d 1577, 1581 (Fed. Cir. 1996).
We find that there is a sufficient showing of prejudice here. While the
precise effect of the changes that could result from a correct evaluation
and from meaningful discussions with JPDT is difficult to determine, we
think it is sufficiently clear that the award decision could have been
different. In this regard, JPDT asserts that it could have provided
additional amenities in its building if it had been advised of the
evaluated significant weaknesses in its proposal with respect to amenities
and/or if it had known that the agency would accept a commitment from the
offeror without supporting third party evidence. Had JPDT done so, its
subfactor rating of successful could have increased, which likewise could
have increased its successful rating under the location factor. As a
result, JPDT's offer, if evaluated in light of our above findings, could
be found to be technically superior to Stonebridge's, in which case, the
agency would have to conduct a price/technical tradeoff between
Stonebridge's and JPDT's offers in order to determine the best value
offer. While the agency viewed JPDT's offered price as significantly
higher than Stonebridge's, we will not speculate as to the result of such
a tradeoff, particularly in view of the fact that the technical evaluation
factors were significantly more important than price under the SFO's
evaluation scheme. AR, Tab 2, SFO, at 20. We conclude that JPDT was
competitively prejudiced by the deficiencies in evaluation and
discussions, and therefore sustain the protest.
RECOMMENDATION
The lease here has been awarded and signed by the agency and awardee, and
the lease does not contain a termination for convenience clause. In the
absence of a termination for convenience clause, we ordinarily do not
recommend termination of an awarded lease, even if we sustain the protest
and find the award improper. Here, we do not think there is any basis to
recommend termination. Peter N.G. Schwartz Co. Judiciary Square Ltd.
P'ship, B-239007.3, Oct. 31, 1990, 90-2 CPD para. 353 at 11. Consequently,
we recommend that the protester be reimbursed its proposal preparation
costs as well as the costs of filing and pursuing its protest, including
reasonable attorneys' fees. 4 C.F.R. sect. 21.8(d)(1) (2008). The
protester should submit its certified claim for such costs, detailing the
time expended and costs incurred, directly with the agency within 60 days
of receiving this decision. 4 C.F.R. sect. 21.8(f)(1).
The protest is sustained.
Gary L. Kepplinger
General Counsel
------------------------
[1] According to the source selection plan, offers could receive ratings
of superior, highly successful, successful, marginal, or poor. AR, Tab 4,
at 10. In actually evaluating offers, the agency used ratings with pluses
and minuses, which are undefined in the record.
[2] There is confusion in the record as to whether Stonebridge's offer was
rated successful or highly successful under the past performance
subfactor. Since the agency now maintains that the awardee should have
received the lower rating, we use that rating here.
[3] By decision dated June 20, 2008, we sustained a protest filed by
Trammell Crow Company challenging the same source selection in issue here.
See Trammell Crow Co., B-311314.2, June 20, 2008, 2008 CPD para. ___.
[4] With respect to the proposed [DELETED], the agency did not credit
Stonebridge's offer with this amenity because the facilities were not
official [DELETED]. AR, Tab 9, Location Technical Advisory Report, at 6.
[5] JPDT's offer did not include the distance from the proposed building
site to each specific amenity. JPDT's Technical Proposal, Building Data
and Capability to Perform, Vol. I, May 31, 2007, Access to Amenities.
[6] The agency asserts that it was not required to raise these matters
during discussions because the solicitation clearly stated that the
government would rate on-site amenities more highly. Again, however,
agencies are required to discuss with offerors "deficiencies, significant
weaknesses, and adverse past performance information to which the offeror
has not yet had an opportunity to respond." Federal Acquisition Regulation
(FAR) sect. 15.306(d)(3). As noted above, under the agency's evaluation
approach, the failure of JPDT's proposal to provide amenities in close
proximity to its offered building (including on-site) represented
significant evaluated weaknesses in JPDT's offer.