DIGEST
1. Department of Labor has requested that certain funds withheld from
a contractor for violations of the Contract Work Hours and Safety
Standards Act (CWHSSA) be paid to workers in accordance with a Wage
Appeals Board decision. As a matter of current policy, GAO's sole
functions under the CWHSSA are purely ministerial, i.e., to place the
contractors' names, as determined by DOL, on the Ineligible Bidders
List, and to disburse funds, as determined by DOL, to the parties
involved. Thus, GAO will pay the workers in accordance with the Wage
Appeals Board decision.
2. Contracts subject to the Contract Work Hours and Safety Standards
Act were made between an agency and a contractor before a 1983 change to
a relevant DOL regulation. Where, as here, an agency engages in
cross-withholding, but a contractor gives actual or constructive consent
to it, the previous general prohibition on cross-withholding in 48 Comp.
Gen. 387 (1968) is not applicable. Furthermore, this previous general
prohibition on cross-withholding, at least insofar as it prohibits
cross-withholding by the Government against a contractor, has been
superseded by a 1983 change in the relevant Department of Labor
regulations, now codified as 29 C.F.R. Sec. 5.5(a)(2) (1986).
Memorandum
Date: February 20, 1987
To: Group Director, Claims Group/GGD - Gerald R. Miller
From: Associate General Counsel - Henry R. Wray
Subject: Harlow Restoration Corp., B-225091-O.M.
By your Group's transmittal, dated October 21, 1986, you have
questioned whether, in view of 48 Comp. Gen. 387 (1968), you may
distribute the funds involved in this case, which were withheld solely
for violations of the Contract Work Hours and Safety Standards Act, 40
U.S.C. Secs. 327-332 (1982), (CWHSSA), in accordance with the Department
of Labor's certification. For the following reasons, you should do so
immediately.
By a letter dated September 15, 1983, the Department of Labor (DOL)
requested that GAO distribute the amount of $23,721.11, which is on
deposit with your Group, to the workers involved on two contracts,
GS-01B-01634, (the first contract), and GS-01B-01716 (the second
contract), between the General Services Administration (GSA) and Harlow
Restoration Corp. The basis for this request was the decision of the
Wage Appeals Board, Harlow Restoration Corp., WAB Case No. 81-14 (May
11, 1983), which found, after holding an adversarial hearing, that
Harlow Restoration Corporation had violated the CWHSSA as follows:
Contract CWHSSA
Number Back Wages Due
GS-01B-01634 $20,907.31
GS-01B-01716 2,813.80
Total $23,721.11
We note that DOL did not request debarment under CHWSSA, and that
DOL's letter states that Harlow Restoration Corp. has expressed no
interest in seeking a reconsideration of the decision of the Wage
Appeals Board, which has become final. Furthermore, the only violations
which DOL found were CHWSSA violations. No Davis-Bacon Act violations
were found.
The sum of $23,721.11 was withheld under the two contracts and sent
to GAO by a letter from GSA, dated March 29 1985. At that time your
Group discovered that GSA had employed cross-withholding on the two
contracts involved in order to come up with the total amount of
$23,721.11. This cross-withholding may be illustrated as follows:
First Contract: $20,907.31 (wages due)
-17,500.00 (wages withheld)
$ 3,407.31 (deficiency)
Second Contract: $6,221.11 (wages withheld)
-2,813.80 (wages due)
$3,407.31 (excess withholding)
In order to make up the deficiency on the first contract, GSA
withheld excess funds from the second contract. Thus, GSA was able to
forward the amount of $23,721.11, to GAO, which was the total amount the
Wage Appeals Board had found was due the workers on the two contracts
involved.
In regard to the proper resolution of this case, we first note that,
as a matter of current policy, GAO's sole functions under the CWHSSA are
purely ministerial, i.e., to place the contractors' names, as determined
by DOL, on the Ineligible Bidders List, and to disburse funds, as
determined by DOT, to the parties involved. B-205949-O.M., March 29,
1982.
In order to respond more fully to the issue which your transmittal
raised, we note that, before the 1983 revision to DOL regulations, in
the context of the Davis-Bacon Act, it has been held that while the
Government may withhold payments from a contractor for violations, it
does not have any right under that Act, at least as the Government's
standard form contract and DOL regulations were formerly written, to
withhold payment due under one contract to satisfy the claims of unpaid
workers under another contract. Whitney Brothers Plumbing and Heating,
Inc. v. United States, 224 F. Supp. 860 (D. Alaska 1963), and see
B-207659-O.M., October 22, 1982. The principle enunciated in Whitney
Brothers is not applicable, however, where the contractor has given
actual or constructive consent to the cross-withholding. Relying on the
same rationale as Whitney Brothers, our decision in 48 Comp. Gen. 387,
389-390 (1968) applied the same principle to cases arising under the
CWHSSA, and it has also been followed in our previous office memoranda.
See e.g., B-214963-O.M., May 22, 1984.
Applying the above principles to the instant case, we note that while
it is true that the regulations in effect at the time the two contracts
involved in this case were issued did not provide for cross-withholding,
see 29 C.F.R. Sec. 5.5(a) (2) (1978), nevertheless, on the basis of
DOL's report that Harlow Restoration Corp. has expressed no interest in
seeking a reconsideration of the decision of the Wage Appeals Board and
the length of time which has passed, we find that the contractor
involved has given constructive consent to the cross-withholding. Thus,
the principle enunciated in 48 Comp. Gen. 387 (1968) is not applicable
to the instant case.
In 1983, the relevant DOL, regulations were revised. See 48 Fed.
Reg. 19540 et seq. (1983). They now provide that the contractor must
consent to cross-withholding by an explicit clause in the contract. See
e.g., the current regulation in 29 C.F.R. Sec. 5.5(a)(2) (1986). Thus,
in view of this regulation, the previous general prohibition on
cross-withholding enunciated in Whitney Brothers and 48 Comp. Gen. 387
(1968), as applicable respectively to the Davis-Bacon Act and the
CWHSSA, has been superseded, at least insofar as it prohibits
cross-withholding by the Government against a contractor.
Accordingly, in view of the age of this case, please immediately
distribute the $23,721.11 on deposit to the workers involved in
accordance with established procedures. Also, please notify us and DOL
when these funds have been distributed.
Matter of: Joan M. Jenkins - Temporary Lodgings at Permanent Duty
Station - Threatened Employee
File: B-225089
Date: September 21, 1987
DIGEST
A Social Security Administration claims representative whose life was
threatened by a disability applicant was advised by police to leave home
that night and she spent the night at a local hotel. Agency's
appropriated funds are available in circumstances of extreme emergencies
involving danger to human life or destruction of Federal property.
Here, there was a direct threat to the employee's life arising out of
her performance of assigned duties and a clear need for immediate
protection. Accordingly, the agency's funds may be used for the
expenses incurred.
DECISION
An official of the Social Security Administration (SSA) requests an
advance decision concerning the availability of agency funds to pay for
protection of an employee in circumstances where the employee was in
immediate lifethreatening danger arising from the performance of
official duties.
BACKGROUND
The agency reports that on June 12, 1986, an incident alert was filed
with the Federal Protective Service on behalf of Ms. Joan Jenkins, a
Claims Representative in the San Diego, California, district office.
Ms. Jenkins had been receiving harassing phone calls and letters both at
home and at work from a disability applicant. In the midst of this
pattern of harassment, Ms. Jenkins received a telephone call on the
night of June 17, 1986, from a doctor who was treating the disability
applicant and who informed Ms. Jenkins that the individual had
threatened to kill her. The doctor further reported his belief that the
threat was real and his opinion that the individual was capable of
carrying out the threat. Ms. Jenkins immediately notified the police
who advised her to leave her home. Acting upon this recommendation Ms.
Jenkins and her roommate obtained lodging for the remainder of the night
at a local hotel. Ms. Jenkins claims expenses in the amount of $53.18
covering the cost of the hotel room and mileage. The agency further
reports that Ms. Jenkins obtained a restraining order and the disordered
applicant was arrested and put in jail.
OPINION
In submitting the question to us, the Social Security Administration
suggests that Ms. Jenkins should be reimbursed based on a recent law
authorizing payment of certain expenses to threatened employees. Public
Law 99-234 January 2, 1986, 99 Stat. 1756, 1757, 5 U.S.C. Sec. 5706a,
was enacted to provide specific authority for the payment of subsistence
and transportation expenses when the life of an employee who is employed
in a law enforcement, investigative, or similar capacity, or members of
the employee's immediate family, is threatened as a result of the
employee's assigned duties. However, the new law did not become
effective until July 1, 1986, 180 days after enactment, and after Ms.
Jenkins' incident occurred on June 17, 1986. See also General Services
Administration Bulletin FPMR A-40, Federal Travel Regulations (FTR),
Supplement 20, dated May 30, 1986, which implements the new statutory
provisions, effective July 1, 1986. We note that FTR para. 1-14.2
provides that agency heads are responsible for issuing regulations or
guidelines to implement the new authority. This would include the
determination of those employees who are eligible individuals under FTR
para. 1-14.4 (Supp. 20).
Still, there is no doubt that Ms. Jenkins responded reasonably to an
emergency police advisory and that the urgent and unforeseen emergency
clearly involved a direct threat to her life arising out of the
performance of her assigned duties. Under very limited circumstances in
cases cited by the agency, 53 Comp. Gen. 71 (1973) and B-189003, July 5,
1977, we have allowed agencies to use appropriated funds to absorb costs
incurred by the protectors of life or Federal property in an emergency
situation. We find that this case involves a similar situation where
the agency was authorized to act on behalf of its employee. Therefore,
the agency's appropriated f unds are available to pay for the protection
of an employee under these circumstances of immediate danger arising
from performance of official duties.
Accordingly, we would not object to the agency's determination to pay
the expenses incurred by Ms. Jenkins.
Comptroller General
of the United States
Matter of: R & E. Hauling, Inc. - Actual v. Constructive Miles -
Retroactive Modification of Rate Tender
File: B-225087
Date: September 25, 1987
DIGEST
1. Where it is the custom to apply mileages from an industry mileage
guide to rates offered in a carrier's rate tenders, the mileage guide,
rather than actual miles, applies even though a particular tender's rate
schedule does not specify whether it is governed by actual miles or the
mileage guide.
2. Where no benefit results to the government from a carrier's tender
supplement that retroactively increased freight charges by application
of actual miles rather than lower constructive miles published in a
mileage guide, the supplement is legally ineffective because no
government officer or employee has authority to waive the government's
contractual rights in these circumstances.
DECISION
R & E Hauling, Inc. (R & E), asks the Comptroller General to review
actions taken by the General Services Administration (GSA) to make
deductions from monies otherwise due the carrier to recover overcharges
allegedly collected for the transportation of as many as 298 shipments
of Department of Defense property. We conclude that R & E has not shown
that GSA's deduction actions were improper; therefore, the actions are
sustained.
BACKGROUND
R & E issued its Tender No. ICC 104, effective for 1 year, from
November 10, 1984, until November 9, 1985. The tender offered mileage
rates to the government for the transportation of Freight All Kinds,
including hazardous materials, from the Defense General Supply Center,
Bellbluff, Virginia, to various points in the State of Virginia. R & E
offered the tender as a means of participating in the Military Traffic
Management Command's (MTMC) Guaranteed Traffic Program under which
sealed rates are tendered in response to a solicitation. The tenders
are publicly opened and evaluated and a carrier is selected on the basis
of the lowest overall cost and the ability to provide responsive,
responsible service in a specific traffic lane. See 65 Comp. Gen. 563
(1986). R & E, apparently, as the low-cost carrier, received award of
the exclusive right to handle traffic from Bellbluff to various
destinations in Virginia at fixed rates for a 12-month period. In
December 1984, the carrier noticed that the Government Bills of Lading
(GBL) being issued showed mileages that were less than the actual
mileages recorded by the carrier during transportation. This was
particularly noticeable, apparently, in the transportation of hazardous
materials which were required to be transported over circuitous routes.
The mileages noted on the GBLs were obtained from the Household Goods
Carriers Bureau Mileage Guide No. 12.
In response to R & E's proposal the traffic manager of the Defense
General Supply Center, Richmond, Virginia, informally agreed that the
Tender 104 rates would be governed by actual miles rather than mileages
published in the Mileage Guide. After being informed of the informal
arrangement MTMC officials apparently authorized issuance of Supplement
1 to Tender 104, to give effect to that arrangement by specifying the
application of actual mileage "as verified by carrier certification of
actual speedometer miles." Supplement 1 was issued on July 12, 1985, for
retroactive application to shipments transported during the period from
November 10, 1984, to May 31, 1985. Supplement 2 was issued on the same
date specifically requiring application of the Mileage Guide effective
June 1, 1985, until expiration of Tender 104, on November 9, 1985.
R & E billed and collected charges under Tender 104 on the basis of
actual miles for shipments transported during the period between
November 10, 1984, and June 1, 1985. In the audit of R & E's bills GSA
determined that the lower mileages contained in the Mileage Guide were
applicable and directed deduction of the difference between the freight
charges collected by R & E on the basis of actual miles and what the
charges would have been if based on the Mileage Guide.
R & E contends that its informal agreement with the Defense General
Supply Center, formalized by issuance of Supplement 1 with MTMC
approval, governs the transactions between November 10, 1984, and June
1, 1985; therefore, the actual miles were applicable.
GSA acknowledges that Tender 104 did not expressly provide for
application of the Mileage Guide generally, and the rate schedule in
Item 23 did not specify either the Mileage Guide or actual miles. GSA
notes, however, that most carriers use the Mileage Guide. It also notes
that Item 47 of Tender 104, which pertains to stop off in transit and
split delivery, is expressly governed by the Mileage Guide, and this
reference to the Guide implies its general applicability.
MTMC states that it was the agency's intent that the Mileage Guide
would apply. Further, it too states that it is the custom to apply the
Mileage Guide, rather than actual miles, and all other carriers apply
the Mileage Guide as a matter of accepted practice. It is contended
that R & E's insistence on amending Tender 104 is evidence of the
carrier's understanding that Tender 104 originally contemplated
application of the Mileage Guide.
MTMC now contends, and GSA agrees, that issuance of Supplement 1,
purporting to retroactively modify Tender 104 so as to expressly apply
the Mileage Guide, is without legal effect under the principles applied
in a somewhat similar case involving transportation from Bellbluff under
the Guaranteed Traffic Program since the government received no benefit
from the modification. See 65 Comp. Gen. 563, supra.
OPINION
We grant substantial deference to administrative agencies concerning
the existence of material facts since the agencies are in a better
position to know them. See Dan Barclay, Inc., B-217354, June 11, 1985,
and 45 Comp. Gen. 99 (1965). Here, MTMC, the traffic manager of the
Department of Defense, and GSA, the agency responsible for the
government's transportation audit, state that it is the custom to apply
the Mileage Guide to shipments governed by mileage rates, and that all
other carriers apply the Mileage Guide. We have recognized that the
government and carriers contract with reference to custom. See Ultra
Special Express, 55 Comp. Gen. 301, 304 (1975). A rebuttable
presumption flows from these facts that the carrier knew the rates
solicited by the procuring agency would be applied based on the mileages
published in the Mileage Guide. The carrier points to no legal
authority for the modification secured from the agency or for MTMC's
ratification thereof.
The principles applied in 65 Comp. Gen. 563, supra, govern. In that
case we considered the legal effect of a tender supplement that
increased freight charges to the government. It had been issued with
MTMC's approval for application to transportation services that had
already been performed. We held that in the absence of a showing that
the government received a benefit from the modification, such as the
performance of special services not contemplated originally by the
parties, government officers and employees have no authority to waive
the government's contractual rights.
Here we agree with MTMC that the government received no benefit from
the Supplement 1 modification of Tender 104, and we find that the
modification was to the government's detriment.
Unlike the usual arrangement where the government distributes traffic
in particular markets among various carriers at uniform or
individually-published tender or tariff rates, the Defense General
Supply Center, Bellbluff, Virginia, under DOD's Guaranteed Traffic
Program, awarded traffic to R & E exclusively for 1 year, as the
low-cost carrier determined on the basis of sealed bids. Since carriers
customarily apply rates to mileages in the Mileage Guide, the government
received nothing from that part of the modification which provided for
application of the Mileage Guide from May to November 1985. That basis
is what the government bargained for. The government lost what it had
bargained for to the extent that actual mileages applied from November
1984 to May 1985. Further, it would appear that to permit the low-cost
carrier, which received the exclusive 1-year award of traffic, to alter
the basis of rate application to actual miles could undermine the
integrity of DOD's Guaranteed Traffic Program if other carriers which
bid on the traffic understood that their rates would be applied based on
mileages in the Mileage Guide.
Although R & E may have been required to follow circuitous routes in
the transportation of hazardous materials, the carrier's offer expressly
included the transportation of hazardous materials. When R & E
submitted its bid the carrier knew that the traffic being offered was
Freight All Kinds which, as evidenced by Tender 104, would include
hazardous as well as non-hazardous commodities, all being transported
under the same rating system. Compare Mercury Motor Express, Inc.,
B-193029, December 7, 1978.
In view of our policy to accept the government's version of the facts
unless it is shown to be clearly wrong, and two government agencies have
stated that the custom was to apply the Mileage Guide, we find that GSA
reasonably interpreted the tender to apply the mileages in the guide,
despite the carrier's disagreement.
Accordingly, GSA's audit actions are sustained.
Comptroller General
of the United States
Matter of: Henry L. Huffman, Jr.--Reimbursement of cost of
commercial lodgings
File: B-225082
Date: September 3, 1987
DIGEST
Civilian employee of Air Force on temporary duty may be reimbursed
for commercial lodging although he did not obtain a certificate of
nonavailability of Government quarters as required by 2 JTR para. C1055.
Employee's travel orders referenced agency regulation that orders were
complete as regards use of quarters. Therefore, since he received
travel advance including a portion of per diem for lodging expenses, his
travel orders effectively provided that Government quarters were not
available to him, and he may be reimbursed his lodging expenses.
DECISION
We are asked to decide whether Mr. Henry L. Huffman, Jr., an employee
of the Defense Logistics Agency in Jacksonville, Florida, may be
authorized additional per diem for lodging costs he incurred while on
temporary duty at a military installation when he failed to obtain a
certificate of nonavailability of Government quarters. 1/ Under the
unique circumstances of this case he may be reimbursed the claimed
expenses.
BACKGROUND
From August 19 to 28, 1985, Mr. Huffman was in a temporary duty
status while attending a training course at McDill Air Force Base,
Florida. On August 6, 1985, he was issued travel orders indicating,
among other things, that the estimated per diem was $671 and the
estimated cost of his travel was $60, resulting in an authorized travel
advance of $584, which he received. The $671 cost estimate was based on
the cost for commercial lodgings and meals while on temporary duty.
Additionally, his travel orders indicated that payment of mileage
expenses was authorized for driving his car from his motel to the
temporary duty site. His travel orders also stated that they met "the
criteria for DLA 5000.1 Travel," an internal agency regulation which
according to the submission states that "travel orders should be
specific as to requirements for use of quarters."
Mr. Huffman performed his temporary duty and stayed in commercial
lodgings. When he submitted his travel voucher, the cost of his
commercial lodgings, which totaled over $500, was disallowed.
When Mr. Huffman questioned the disallowance of his lodging expenses,
he was advised that, under the applicable travel regulations, he had to
obtain a certificate of nonavailability of Government quarters at McDill
Air Force Base before he could be reimbursed for his motel expenses. He
indicates that he had been unaware of this requirement and if he had
known of it he would have obtained the certificate or stayed in
Government quarters. He considers it unfair to be denied his commercial
lodgings, especially since he was not informed on his travel orders that
he needed to obtain a certificate of nonavailability. Moreover, he
questions whether he can be denied reimbursement of these lodging
expenses since DLA 5000.1, the regulation referenced on his travel
orders, mandates the agency to be specific as to requirements for use of
quarters, and he was not apprised of his need to obtain the certificate.
Supervisory personnel at Mr. Huffman's agency support his
contentions, and indicate that the notification of the requirement to
obtain a certificate of nonavailability of Government quarters was not
included in his travel orders because of an administrative oversight.
DLA personnel contacted the billeting of fice at McDill Air Force Base
in July 1986, but by that time nearly a year had gone by since Mr.
Huffman's travel and the billeting office personnel were unable to
determine whether or not quarters had been available for him in August
1985.
ANALYSIS
Section 5702(a) of title 5, United States Code (1982), provides that
under regulations prescribed under 5 U.S.C. Sec. 5707, an employee,
while traveling on business away from his designated post of duty, is
entitled to a per diem allowance for travel inside the continental
United States. Furthermore, with limited exceptions, such per diem
allowances must include an amount for commercial lodgings.
Specifically, under 5 U.S.C. Sec. 5911(e), a civilian employee cannot be
required to occupy Government quarters in the absence of a determination
by the agency head that such occupancy is necessary for the proper
completion of the employee's mission or for the protection of Government
property. See B-195859, March 18, 1980. Thus, if an employee stays in
commercial lodgings instead of available Government quarters he is
entitled to receive the appropriate lodging portion of his per diem
allowance.
For Department of Defense employees, however, there is a different
rule regarding the use of Government quarters while on temporary duty or
training. For many years, Congress has placed a limitation in the
Department of Defense annual appropriation providing that none of the
funds appropriated are available to pay lodging expenses incurred by any
person on official business away from his home or regular place of duty
when adequate Government quarters are available, but are not occupied by
such person. See e.g., the Department of Defense Appropriation Act,
1985, Pub. L. No. 98-473, Sec. 8038, October 12, 1984, 98 Stat. 1837,
1930 (the appropriation limitation in effect when Mr. Huffman traveled).
Consequently, if a DOD employee stays in commercial lodging while on
temporary duty and adequate Government quarters are available, then
generally he cannot receive the lodging portion of his per diem
allowance.
To implement the appropriation limitation, the Department of Defense
has promulgated paragraph C1055 of Volume 2, Joint Travel Regulations,
2/ which states the conditions under which a Department of Defense
employee may be reimbursed for use of commercial quarters:
"1. GENERAL. Although an employee may not be required to
utilize Government quarters, when adequate Government quarters are
available but not used, the payment of the quarters portion of the
per diem or actual expense allowances of any employee on temporary
duty away from his designated post of duty may not be made except
under the following conditions:
"1. when the order-issuing authority, either prior or
subsequent to the travel involved, issues a statement to the
effect that the utilization of Government quarters at the
temporary duty station or delay point would adversely affect the
performance of the assigned mission (this exception is not
applicable to personnel attending training courses at an
installation of the Uniformed Services);
"2. when, prior to the travel involved, the order-issuing
authority, as a result of direct communication with the commanding
officer (or designated representative) responsible for Government
quarters at the temporary duty station or delay point concerned,
issues a statement to the effect that adequate Government quarters
at the temporary duty station or delay point will not be
available;
"3. when the commanding officer (or designated representative)
responsible for Government quarters at the temporary duty or delay
point furnishes a statement to the effect that utilization of
Government quarters was impracticable;
* * * * *
"2. EFFECT OF ABSENCE OF STATEMENT. In the absence of a
statement issued under the provisions of subpar. 1 or unless the
nonavailability of adequate Government quarters can be ascertained
by reference to a publication issued by the Uniformed Service
concerned, it shall be assumed that adequate Government quarters
were available on any day for which the employee fails to submit
an appropriate statement * * * indicating that such quarters were
not available or not utilized on that date. * * *"
The limitation in the Appropriation Act and the implementing
regulation clearly set out that payment of the quarters portion of per
diem expenses is prohibited when adequate Government quarters are
available, but not used. Therefore, generally, unless an employee can
produce a certificate of nonavailability, he may not receive
reimbursement of commercial lodging expenses. See e.g., Jerry Cardinal,
B-191297, August 2, 1979; Ronald Miele, B-192271, November 8, 1978. In
the absence of the certificate, the assumption that there were adequate
Government quarters is usually dispositive of the matter.
Under the unique circumstances of this case, we do not consider that
our precedents in this area, as exemplified by the two above-cited
cases, are applicable to Mr. Huffman's situation. They are factually
distinguishable, since the employee in each instance either knew that
Government quarters were available or knew that he was required to
obtain a certificate of nonavailability. Mr. Huffman's travel orders,
however, led him to believe that he was to stay in commercial lodgings
since his orders cited to DLA 5000.1, and he had received a travel
advance including an amount for lodging.
DLA 5000.1, Paragraph VIII B6 entitled "TDY to Attend Training
Courses" in the third sentence states "to preclude misunderstanding on
the part of the travelers or subsequent erroneous reimbursement
applicable travel orders should be specific as to requirements for use
of quarters or should specify the applicable per diem rate." Mr.
Huffman's orders specifically stated that " t his request meets the
criteria for DLA 5000.1 Travel." However the orders did not contain a
statement concerning Quarters.
We, therefore, conclude that his orders were consistent with
paragraph C1055 1.2 of 2 JTR. That is, the effect of Mr. Huffman's
orders specifying that the orders meet the requirements of DLA 5000.1
coupled with the travel advance he received may be considered
constructive notice to Mr. Huffman that adequate Government quarters
were not available to him at the training site. Accordingly, he may be
reimbursed his lodging expenses notwithstanding the fact that he lacks a
certificate of nonavailability. C.f. 48 Comp. Gen. 216 (1968). In a
situation of this type, there is no presumption that adequate Government
quarters were available.
Comptroller General
of the United States
FOOTNOTES
1/ The question was submitted by Mr. Peter H. Tovar, Chief Accounting
and Finance Division, Office of the Comptroller, Defense Logistics
Agency, Headquarters, Cameron Station, Alexandria, Virginia.
2/ Volume 2 of the Joint Travel Regulations is applicable to all
civilian employees of the Department of Defense.
Matter of: Landscape Builders Contractors
File: B-225808.3
Date: May 21, 1987
DIGEST
A low bid for a requirements type contract that is mathematically
unbalanced is not materially unbalanced unless it can be shown that the
government estimates are so unreliable that award to the low bidder will
not result in the lowest cost to the government.
DECISION
Landscape Builders Contractors (LBC) protests the award of a contract
for landscape maintenance services to A.J. Fowler under solicitation No.
DAEA18-87-B-0007 issued by the Department of the Army. LBC alleges that
Fowler's bid must be rejected because it is nonresponsive and
mathematically and materially unbalanced.
We dismiss the protest pursuant to our Bid Protest Regulations, 4
C.F.R. Sec. 21.3(f) (1986) without obtaining an opening report because
it is clear on the face of the protest that it is without merit.
The Army solicited bids for landscape maintenance services at Ft.
Huachuca, Arizona on November 24, 1986. According to the protester, the
services generally include all landscaping maintenance services at the
site, including those necessary to maintain the golf course and all
other areas at the location. The solicitation contained some 18 items
which represented various categories of work to be performed, such as
playgrounds maintenance (item 0001), airfield mowing (item 0006), golf
course maintenance (item 0007) and edging (item 0008). Each of the
items had complete and detailed specifications for the services to be
performed, with some items broken down in the solicitation for pricing
purposes by the month in which services are to be performed. For
example, Item 0008, golf course maintenance, requested prices for golf
course maintenance separately by month, since the required services
differed depending on the time of year. Each of the items in the
solicitation carried the government's estimate of the services required,
with the total estimated price being determined on the basis of the unit
prices bid for the various items, times the estimated quantities shown
in the solicitation.
Fowler bid a level unit price for golf course maintenance ($3,000 per
month according to LBC), instead of pricing each month separately.
According to LBC such a pricing scheme is grossly unbalanced, since the
work required for the months of March through October is some 800
percent higher on the fairways and 200 percent higher in the roughs than
is required in the remaining months. LBC ciaims that Fowler cannot
complete the work in the higher cost months at the price bid.
Similarly, LBC complains, Fowler's bid of $5,135 for each unit of edging
is "absurdly high," being overstated by more than $4,500 for the work
required by the specifications. LBC believes the bid should be rejected
as nonresponsive because it is mathematically and materially unbalanced
because it is based on prices that are significantly understated for
some work and significantly overstated for other work. LBC has not
challenged the government estimates for each item as stated in the
solicitation for the base year or for the option years.
We find no merit to this protest.
There is a twofold nature to bid unbalancing. First, the bid must be
evaluated mathematically to determine whether each item carries its
share of the cost of the work specified for that item as well as
overhead and profit. If the bid is based on nominal prices for some of
the work and enhanced prices for other work, it is mathematically
unbalanced. The second part of the test is to evaluate the bid to
determine whether award to a bidder that has submitted a mathematically
unbalanced bid will result in the lowest overall cost to the government.
If award to a party that submits a mathematically unbalanced bid will
not result in the lowest overall cost to the government, the bid is
materially unbalanced and cannot be accepted. The key to this latter
determination is the validity of the government estimate, for it is that
estimate upon which bids are evaluated for cost impact. Thus, unless it
can be shown that the government estimate is invalid, 1/ a low evaluated
bid cannot be rejected merely because it is mathematically unbalanced.
We have found material unbalancing only where it is shown that the
government estimates are invalid. See Weather Contractors, Inc.,
B-217242, July 23, 1985, 85-2 CPD P 71. But see Nebraska Aluminum
Castings,Inc., B-222476, June 24, 1986, 86-1 CPD P 582 (concerning
grossly overstated first article costs which were found to render the
bid materially unbalanced per se).
Here, the protester has offered no challenge to the government's
estimates included in the solicitation. Its complaint, therefore, is
only that Fowler's bid is mathematically unbalanced. It does not
follow, however, that the bid is also materially unbalanced.
The protest is dismissed.
Ronald Berger
Deputy Associate
General Counsel
FOOTNOTE
1/ The government estimate need only be based on the best available
information. There is no requirement that the estimates be absolutely
correct.
Matter of: JGB Enterprises, Inc.
File: B-225058
Date: March 13, 1987
DIGEST
The General Accounting Office sustains a protest where the procuring
agency awarded a contract on the basis of initial proposals, but there
was a reasonable chance that by conducting discussions the agency would
find a proposal offering a lower overall cost to the government to be
more advantageous under the evaluation factors listed in the
solicitation.
DECISION
JGB Enterprises, Inc., protests the award of a contract to Heale
Manufacturing Co., Inc., under request for proposals (RFP) No.
DLA700-86-R-2761, issued by the Defense Construction Supply Center
(DCSC), Columbus, Ohio, for 653 wiring harness units. JGB contends that
DCSC improperly rejected its low priced alternate product as technically
unacceptable.
We sustain the protest.
The RFP listed two acceptable small business sources of supply, Heale
part No. XH-7860 and Murdock Enterprises part No. 871-5102671, and also
listed the prototype large business part, Detroit Diesel Allison part
No. 5102671. Offerors were permitted to submit alternate products
pursuant to the RFP's "Products Offered" clause. The clause requires
offerors of alternate products to furnish drawings, specifications, or
other data to enable the government to determine the acceptability of
the product and further warns offerors that the failure to furnish
sufficient information may preclude consideration of the offer. The
clause further advises that if the government cannot determine the
acceptability of the product by the expected award date then the product
will be considered unacceptable.
On May 27, 1986, the closing date for the receipt of initial
proposals, DCSC received five offers in response to the RFP. JGB was
the lowest priced offeror and it offered an alternate product, which it
had reverse engineered from the Detroit Diesel part. JGB's offer
included the necessary drawings for DCSC's evaluation. On July 10,
1986, after performing the initial evaluation, DCSC determined that
JGB's drawings were insufficient to establish the acceptability of its
product. On July 31, 1986, after reevaluating JGB's drawing, DCSC
determined that JGB needed to furnish the Detroit Diesel part so that it
could be compared with JGB's drawing. Following receipt of the part
from JGB, on August 11, 1986, DCSC determined that JGB's alternate
product was technically unacceptable because of an ambiguity between
label No. 5 on the drawing and the parts list on the drawing. The
balloon label designated on the drawing as No. 5 pointed to a connector
assembly while the parts list No. 5 referred to a lug terminal. The
part called for a connector assembly. Concluding that the ambiguity
might give rise to the possibility for improper assembly, DCSC rejected
the proposal. On October 20, 1986, DCSC awarded the contract to Heale,
the next lowest offeror, which offered its approved part. On October
30, 1986, performance was suspended because of the protest.
DCSC reports that the inaccuracies in JGB's drawing could not have
been corrected without requesting the details of the connector assembly.
JGB contends that the ambiguity was a patent one that could have been
easily corrected. JGB advises that the line from balloon label No. 5
pointed to a connector, not a terminal and that on the Detroit Diesel
part a connector also appears at this point. JGB states that more than
2 months elapsed between the time it was rejected and the award to
Heale. JGB argues that had there been meaningful negotiations, DCSC
would have allowed it to make this minor revision to its drawing.
We have held that the procuring agency is responsible for evaluating
the data supplied by an offeror and ascertaining if it provides
sufficient information to determine the acceptability of the offeror's
item and that we will not disturb the technical determination by the
agency unless it is shown to be unreasonable. See Rotair Industries,
Inc., B-219994, Dec. 18, 1985, 85-2 C.P.D. P 683.
However, the Competition in Contracting Act of 1984 (CICA) requires
that in negotiated procurements agencies must conduct discussions with
all responsible offerors who submit proposals within the competitive
range except "when it can be clearly demonstrated from the existence of
full and open competition or accurate prior cost experience with the
product or service that acceptance of an initial proposal without
discussions would result in the lowest overall cost to the government."
41 U.S.C. Sec. 253B(d)(1)(B) (Supp. III 1985). Offerors in the
competitive range are those whose proposals have a reasonable chance of
being selected for award. Federal Acquisition Regulation (FAR), 48
C.F.R. Sec. 15.609 (1986). In our view, this provision of CICA
prohibits agencies from accepting an initial proposal that is not the
lowest considering only cost and cost related factors listed in the RFP,
where there is a reasonable chance that by conducting discussions,
another proposal would be found more advantageous to the United States
under the evaluation factors listed in the solicitation. Training and
Information Services, Inc., B-225418, Mar. 9, 1987, 87-1 C.P.D. P .
Based on our examination of the discrepancy in JGB's drawing, we find
that it was inappropriate for DCSC to have rejected JGB's low proposal
without first conducting discussions because of the CICA requirement for
full and open competition so as to assure award at the lowest overall
cost to the government. The ambiguity contained in JGB's drawing
appears to be the kind of deficiency that could have been resolved
through negotiations, but JGB was not advised of the deficiency until
after award to Heale. JGB alleges that the label No. 5 pointing to a
connector accurately reflects the part as a connector and DCSC has not
rebutted this allegation. Given that the ambiguity in the drawing could
have been removed by simply having JGB correct the parts list drawing,
we believe that JGB had a reasonable chance of being selected for award.
JGB correctly notes that the reason given for the rejection of its
offer was the ambiguity in its drawing, and not the need to supply
greater detail with respect to the connector assembly. Even accepting
DCSC's position that it would have been necessary to require JGB to
submit the details of the entire connector assembly, we find that DCSC
could have remedied the problem with JGB through the discusssion of the
need for greater specificity. Since DCSC did not make award until
October 20, 1986, we conclude that there was no reasonable basis for
DCSC not to have conducted discussions with JGB.
The protest is sustained. By separate letter, we are recommending
that DCSC enter into discussions under the RFP with JGB and all other
offerors who fall within the competitive range. If best and final
offers show that a firm other than the awardee is entitled to the
contract, DCSC should terminate the awarded contract and award a new
one. If the current awardee submits the best proposal and the price is
lower than the contract price, the contract should be modified
accordingly. See Consolidated Bell, Inc., B-220425, Mar. 11, 1986, 86-1
C.P.D. P 238.
Comptroller General
of the United States
Matter of: Daylight Plastics, Inc.--Reconsideration
File: B-225057.3
Date: August 18, 1987
DIGEST
Information available to but not submitted by the protester during
the pendency of its protest was properly not considered by General
Accounting Office (GAO) in reconsideration of a decision denying a
protest.
DECISION
Daylight Plastics, Inc., requests that we reconsider our decision in
Daylight Plastics, Inc.--Reconsideration, B-225057.2, Apr. 28, 1987,
87-1 C.P.D. P 440, in which we denied its request for reconsideration of
our decision in Daylight Plastics, Inc., B-225057, Mar. 10, 1987, 87-1
C.P.D. P 269. Our March 10 decision denied Daylight's protest against a
sole-source award of a quantity of plastic combat and training magazines
to Proll Molding Co., Inc., by the Department of the Army under request
for proposals No. DAAA09-86-R-2066. We denied Daylight's request for
reconsideration.
We affirm the prior decisions.
A primary basis for Daylight's initial request for reconsideration
was that information it acquired from the Army under the Freedom of
Information Act during the pendency of its protest allegedly refuted the
agency's stated justification for its decision to make a sole-source
award. Daylight stated that these documents indicate that the combat
and training magazines were not in critically short supply at the time
the Army made that finding and that Proll's proposed price was
unreasonable. Daylight obtained this information from the Army on or
about December 30, 1986. However, Daylight first submitted this
information to our Office with its initial request for reconsideration
on March 26, 1987.
In our April 28 decision denying Daylight's initial request for
reconsideration, we declined to consider the newly submitted information
since Daylight could and should have furnished it during the pendency of
the protest.
In this second request for reconsideration, Daylight now states that
but for advice allegedly received from a General Accounting Office (GAO)
attorney handling the protest, the additional information it received
would have been timely submitted to our Office. The protester's counsel
alleges that in a telephone conversation with the GAO attorney regarding
this matter, he was advised not to file the information because to do so
would "prolong" the resolution of the protest. Daylight claims that the
attorney did not respond when advised the information would be submitted
in a reconsideration request if the protest was denied. Thus, the
inference Daylight drew was that it "ha d already proven its case."
Our attorney denies advising the protester's representative not to
submit the information in question. She states the protester was
advised that parties would be given an opportunity to respond to any
arguments made in connection with the submitted information. We think
that Daylight could not reasonably rely on this advice as an excuse not
to timely submit all relevant material supporting its protest.
Daylight's alleged presumption that it had already "proven its case" was
clearly unreasonable since the case was still under active consideration
by this Office. Further, the burden is on the protester to submit all
relevant material to support its protest contentions; a protester who
fails to do so suffers the risk that its protest will be denied. That
is what happened here.
Daylight finally contends that even if the information was not timely
submitted, it should be considered under the good cause exception to the
timeliness requirements in our Bid Protest Regulations, 4 C.F.R. Sec.
21.2(c) (1987). The good cause exception to the timeliness requirements
in our Bid Protest Regulations is limited to circumstances where some
compelling reason beyond the protester's control prevents the protester
from filing a timely protest. See Tremco Inc.--Request for
Reconsideration, B-223623.3, Sept. 4, 1986, 86-2 C.P.D. P 260. That is
not the case here.
Our prior decisions are affirmed.
Harry R. Van Cleve
General Counsel
Matter of: Daylight Plastics, Inc.--Reconsideration
File: B-225057.2
Date: April 28, 1987
DIGEST
1. Where agency properly determined due to urgent circumstances that
it must use noncompetitive procedures provided for under the Competition
in Contracting Act, agency properly may limit the procurement to the
only firm it reasonably believes can promptly and properly supply the
requirements, and need not solicit all firms interested in the
acquisition. Agency is not required, under these circumstances, to
refer agency conclusion that a firm is not capable of meeting delivery
schedule to Small Business Administration for a certificate of
competency determination.
2. A protester cannot use a request for reconsideration to furnish
information that was available, but not submitted, at the time of its
original protest.
DECISION
Daylight Plastics, Inc. requests reconsideration of our decision,
Daylight Plastics, Inc., B-225057, Mar. 10, 1987, 87-1 C.P.D. P . In
that decision, we denied Daylight's protest of the Army's sole-source
award to Proll Molding Co., Inc., under request for proposals (RFP) No.
DAAA09-86-R-2066, and the cancellation of RFP No. DAAA09-86-R-0127. We
deny the request for reconsideration.
In its protest filed with our Office on October 27, 1986, Daylight
protested the Army's finding that the plastic combat and training
magazines--components of the M249 Squad Automatic Weapon System
(SAWS)--were in critically short supply. The agency found that this
shortage could be alleviated by making an immediate award for these
requirements provided delivery would commence 90 days after award,
thereby preventing a line shutdown of SAWS ammunition production at its
munitions plant. The agency further determined that Proll was the only
firm capable of meeting this delivery schedule and a sole-source award
for these items was therefore made to Proll.
Daylight challenged the noncompetitive award on the basis that the
alleged critical shortage was artificially created and that consequently
there was no urgent need for a 90-day delivery schedule. Alternatively,
the protester argued that if the urgency determination was reasonable,
award to Proll at prices considerably higher than Daylight's was per se
improper because the agency had not solicited Daylight, a known
potential supplier of these magazines. We denied Daylight's protest
primarily because we found that an urgent need for these items did in
fact exist; that a 90-day delivery schedule would satisfy the agency's
need for these items; and that the Army reasonably determined under
these circumstances that Proll was the only firm capable of meeting the
delivery schedule.
In its request for reconsideration, Daylight for the first time
alleges that the Army's determination that the firm was not capable of
meeting the 90-day delivery schedule constitutes a de facto
determination of nonresponsibility and that the Army could not preclude
Daylight from competing because of its alleged nonresponsibility without
first referring the matter to the Small Business Administration (SBA)
for a certificate of competency determination. 15 U.S.C. Sec. 637(b)
(7) (A). Since Daylight's original protest alleged that the contracting
officer erroneously concluded that Daylight was not capable of meeting
the 90-day delivery schedule, it is apparent that Daylight then knew or
should have known whether that determination was referred to the SBA.
Thus this basis for protest, first filed in the reconsideration request
more than 10 working days after Daylight knew or should have known about
it, is untimely. 4 C.F.R. Sec. 21.2(a)(2) (1986).
In any event, there is no merit to Daylight's contention. In
Industrial Refrigeration Service Corp., B-220091, Jan. 22, 1986, 86-1
C.P.D. P 67, we held that under the urgency justification for use of
noncompetitive procedures under the Competition in Contracting Act of
1984, the agency can limit the sources solicited to those it reasonably
believes can perform the work and to which it could expect to make a
prompt award, and is not required to refer the issue of an excluded
source's apparent nonresponsibility to the SBA.
Daylight also requests that we consider additional information it
obtained on or about December 30, 1986, in response to a Freedom of
Information Act (FOIA) request it filed with the Army. This additional
information concerns two protest issues we addressed in our previous
decision: the validity of the inventory for the combat and training
magazines at the time the agency made its finding that these items were
in critical short supply as well as the reasonableness of the award
price.
Our Office will not reverse or modify a decision unless the request
for reconsideration demonstrates that errors of fact or law exist in the
original decision that warrant reversal or specifies information not
previously considered. 4 C.F.R. Sec. 21.12(a); Evans, Inc.--Request
for Reconsideration, B-218963.2, June 26, 1985, 85-1 C.P.D. P 730.
Information not previously considered means information that was not
previously available to the protester. Otherwise, a protester could
present its protest in a piecemeal fashion, possibly disrupting the
procurement process indefinitely. See SER-Jobs for Progress,
Inc.--Request for Reconsideration, B-222469.2, June 6, 1986, 86-1 C.P.D.
P 532.
Here, Daylight is merely reiterating its original arguments based on
evidence previously available but not submitted to us. Daylight could
and should have provided this additional information for our
consideration during the pendency of its protest; and, in the absence
of a showing of good cause for failure to timely present the
information, this information will not be considered. See Evans,
Inc.--Request for Reconsideration, B-218963.2, supra; SER-Jobs for
Progress, Inc.--Request for Reconsideration, B-222469.2, supra.
Daylight has not made such a showing.
Accordingly, the request for reconsideration is denied.
Harry R. Van Cleve
General Counsel
Matter of: Daylight Plastics, Inc.
File: B-225057
Date: March 10, 1987
DIGEST
1. Where agency properly determined, due to urgent circumstances,
that it must use noncompetitive procedures provided for under the
Competition in Contracting Act, agency properly also may limit the
procurement to the only firm it reasonably believes can promptly and
properly supply the requirements, and is not required to solicit all
firms interested in the acquisition.
2. Protest against agency determination that sole-source contract
price was fair and reasonable is denied where record shows that prices
obtained were lower than under prior contracts and were in line with
prices obtained under the most recent competitive procurement.
3. In a negotiated procurement, a contracting officer need only
establish a reasonable basis to support a decision to cancel a
solicitation. A reasonable basis exists where the agency determines
that there is an urgent need for the requirements and that need can only
be met, within the timeframe required, by the reissuance of the
solicitation to the only known source capable of meeting the delivery
requirements.
DECISION
Daylight Plastics, Inc. protests the sole-source award of contract
No. DAAA09-86-C-1551 to Proll Molding Co., Inc. under request for
proposals (RFP) No. DAAA09-86-R-2066 and the cancellation of RFP No.
DAAA09-86-R-0127, issued by the Department of the Army. The procurement
is for the supply of 216,731 Plastic Magazines for Combat and 107,686
Plastic Magazines for Training. Both magazines are components of the
M249 Squad Automatic Weapon System (SAWS). Daylight contend that the
noncompetitive award to Proll was improper because the award cannot be
justified on the basis of an urgent and compelling need for the items.
Additionally, Daylight alleges that cancellation of solicitation -0127
was a "subterfuge" designed to deny the firm the award. For the reasons
that follow, we deny the protest.
RFP -0127 was issued March 3, 1986, as a competitive procurement for
the combat and training magazines. The solicitation invited firms to
submit offers based on first article testing or based on waiver of the
requirement. The RFP further provided that if first article testing was
required, delivery of the magazines was to begin 210 days after award.
If first article testing was waived, delivery was to begin 90 days after
award. The protester was the low offeror on both items, with and
without first article testing.
The agency reports, however, that the contracting officer was
notified on August 18--4 days after receipt of proposals and before a
preaward survey was requested on Daylight--that the magazines were
urgently needed to avoid a line shutdown of SAWS ammunition production
at the Lake City Army Ammunition Plant (LCAAP). The contracting officer
determined that if an immediate award without first article was made,
the shorter delivery schedule of 90 days would meet the delivery needs
at LCAAP. The contracting officer therefore waived the first article
testing requirement for Proll--the only prior producer of these
items--and made award to that firm on August 29 (Contract No.
DAAA09-86-C-1418). When Daylight learned that award was made at prices
"significantly greater than those offered by the firm and the reasons
therefor, it protested the award to our Office on September 15.
Subsequently, on September 24, the Army terminated contract -1418 for
the convenience of the government and issued sole-source solicitation
-2066--an oral noncompetitive repurchase of the same requirements--to
Proll. According to the Army's justification for use of noncompetitive
procedures, the sole-source solicitation was issued to Proll under the
authority of the Competition in Contracting Act of 1984 (CICA), 10
U.S.C. Sec. 2304(c)(2) (Supp. III 1985), because a critical short supply
of these magazines existed which would severely limit the SAWS
ammunition production at LCAAP if delivery of these items did not begin
by November 30, 1986. The justification statement, which was approved
by the Competition Advocate, further identifies Proll as the only firm
capable of meeting the urgent delivery requirements because only Proll
was eligible for waiver of first article testing. According to the
statement, first article testing "would cause a minimum of 16 weeks
delay... before delivery of production quantity could be achieved." On
September 30 contract -1551 was thereafter awarded to Proll.
We dismissed Daylight's original protest B-224676 by notice dated
October 29 upon a finding that the protest was academic in view of the
termination action. Daylight filed the instant protest against the
sole-source award and cancellation of the original solicitation with our
Office on October 27.
Daylight protests that the Army's sole-source determination was
improper because the factual bases upon which it was made were
inaccurate. In this regard, Daylight specifically disputes the critical
urgency of this procurement and the finding that only one firm was
capable of meeting the agency's needs. Contrary to the agency's
assertions that the magazines were in "critical short supply," the
protester alleges that present inventory for these items reveals that a
shortfall would not be experienced, if at all, until March 1987 and not
November 1986, as alleged by the Army. Thus, the protester argues,
there was ample time to procure these items competitively without any
shutdown or line stoppage of ammunition production at LCAAP. In any
events, the protester contends that if there was an "attendant urgency"
for these magazines, the Army should have solicited Daylight as well as
Proll since Daylight was a known potential offeror and agencies are
required to "request offers from as many potential sources as is
practicable under the circumstances." Federal Acquisition Regulation
(FAR), 48 C.F.R. Sec. 6.302-2(c)(2) (1986).
As indicated above, the Army relied on 10 U.S.C. Sec. 2304(c) (2),
to justify the expedited competition. That provision authorizes an
executive agency to use noncompetitive procedures when:
"the agency's need for the property or services is of such an
unusual and compelling urgency that the United States would be
seriously injured unless the agency is permitted to limit the
number of sources from which it solicits the bids or proposals;"
In using noncompetitive procedures, however, the agency must request
offers from "as many potential sources as is practicable under the
circumstances." 10 U.S.C. Sec. 2304(e).
We believe the Army's decision that there was sufficient urgency to
use noncompetitive procedures and to exclude the protester under these
procedures was reasonable. The Production Directorate whose office is
charged with the responsibility to assess the requirements needed to
sustain production at the Army's ammunition plants made a specific
finding that SAWS ammunition "is in critical short supply," thereby
requiring delivery of the stated quantity of combat and training
magazines within 90 days. The Production Directorate further stated that
component inventories were required to "be maintained at approximately
60 day levels, and pass through normal material handling at the plant,"
and concluded that delivery of these magazines should begin by November
30.
The protester argues that the Army has overstated the projected
monthly requirements to support an adequate inventory of combat and
training magazines. Daylight states that based upon data furnished it
by the Army relative to present inventory, projected requirements and
actual usage, the inventory available as of January 1987 "would be
adequate" to support SAWS ammunition production "until late January
1987." Consequently, the protester argues, the facts do not support the
conclusion that November 30, 1986 was the critical date which had to be
met to avoid a shutdown of the load lines and possible furlough of
personnel at LCAAP.
The protester's argument fails to address the agency's concern that
its supplier under the prior contract, Fabrique Nationale, had as of
early November delivered only 11,628 magazines of the 48,000 due under
its contract and that the agency anticipated further delays due to a
labor strike at Fabrique Nationale's Plant. This delivery delay under
the prior contract was apparently a primary reason for the Army's
anticipated shortage. Thus, the Army's delivery projections, which were
relied on by the protester were no longer valid. Under these
circumstances, the Army's determination that award of a new contract was
urgently needed was reasonable.
We also find that the record supports the view that only Proll was
capable of timely meeting the agency's urgent need based on its prior
established production of the product which would permit waiver of the
first article requirement. Thus, the Army's decision to limit the
noncompetitive award to Proll was reasonable. Since Daylight had never
produced the product, Daylight was subject to first article approval
which necessarily would have unacceptably prolonged the delivery
schedule. In addition, the agency states that Daylight could not be
considered for award until a thorough preaward survey was conducted to
ensure Daylight could meet delivery schedules. The contracting officer
believed that given the urgency for the requirements, the time needed to
determine Daylight's responsibility and to grant first article approval
would result in unacceptable delays which would severely impair the
government's ability to maintain the production of SAWS ammunition.
Daylight also argues that the agency could have made a noncompetitive
award of a shorter duration, of 2 months, to satisfy the agency's urgent
need and continue with the competitive procurement. The basic contract
award to proll was for deliveries from November to February. The agency
also indicates that it has issued a competitive solicitation for its
1987 needs. We cannot say that an award for 4 months was unreasonable
here in view of the anticipated shortage of the item, and since the
record shows that the Army needs at least 4 months lead time to award a
new contract including the conduct of a complete preaward survey and to
permit a contractor to comply with first article requirements once the
contract has been awarded.
Next, Daylight contends that the award price is unreasonable.
Essentially, the protester asserts that the agency has not clearly
demonstrated that the award was made at a fair and reasonable price as
required by regulation. In accordance with FAR 48 C.F.R. Sec. 6.302-4,
the justification for use of noncompetitive procedures contains the
contracting officer's finding that the anticipated cost to the
government of Proll's contract was fair and reasonable. The record
shows that the sole-source contract prices are the same as those offered
by Proll under RFP -0127. Furthermore, the contracting officer reports
that sole-source contract prices are 43.9 and 23 percent lower for
combat and training magazines, respectively, than the prices paid to
Proll under two previous contracts for the same items. Daylight does
not rebut these statements.
We consistently have held that a determination concerning price
reasonableness is a matter of administrative discretion involving the
exercise of business judgment by the contracting officer. We will not
question that determination unless it is clearly unreasonable or there
is a showing of bad faith or fraud. See Reyes Industries, Inc.,
B-219348.3, Apr. 3, 1986, 86-1 C.P.D. P 316.
Daylight, in arguing that Proll's price is unreasonable, relies on a
comparison of Proll's item prices with its own and its contention that
adequate price competition was not obtained under RFP -0127. The
parties have requested that we not disclose the prices obtained under
RFP -0127. The abstract of proposals indicates that adequate price
competition was obtained under RFP -0127. Six offers were received for
delivery of combat magazines without first article, FOB origin and FOB
destination, and Proll was the second low offeror. Of six offers
received for delivery of training magazines without first article, FOB
origin and FOB destination, Proll was again the second low offeror. The
record thus shows that adequate price competition was obtained and that
the award was made at a fair and reasonable price.
Finally, Daylight protests the cancellation of the original
solicitation (-0127) stating that the cancellation was an attempt by the
Army to "deny Daylight the award" and to avoid "its obligation to
conduct its procurements" in accordance with applicable procurement
regulations. Since we have found the Army's decision to make a
noncompetitive award to Proll was proper, based on an urgent need, we
conclude that a reasonable basis existed which supports the cancellation
of RFP -0127.
Daylight requested that it be awarded its proposal preparation costs
and the costs of pursuing the protest. Recovery of costs is allowed
only where a protest is found to have merit. 31 U.S.C. Sec. 3554(c)(1)
(Supp. III 1985); 4 C.F.R. Sec. 21.6(d) (1986). Since we have denied
the protest, we also deny Daylight's claim for recovery of costs.
Harry R. Van Cleve
General Counsel
Matter of: Systems Integrated
File: B-225055
Date: February 4, 1987
DIGEST
Although the General Accounting Office will closely scrutinize an
agency decision which results in the inclusion of only one proposal in
the competitive range, an initial proposal was properly excluded from
the competitive range where it enjoyed no significant technical
advantage over that of its closest competitor and where its proposed
cost to perform a specified level of effort was some 30 percent higher
than the cost of the selected proposal--a quantum differential of more
than $600,000--with no reasonable chance that significant cost
reductions would be achieved if discussions were held and a best and
final offer requested.
DECISION
Systems Integrated (SI) protests the award of a contract to Trident
Systems, Incorporated under request for proposals (RFP) No.
N00039-86-R-0236(Q), issued by the Department of the Navy. The
procurement was for technical and analytical services in support of the
Navy's antisubmarine warfare (ASW) mission. SI complains that the award
was improper because it was not consistent with the RFP's stated
evaluation criteria.
We deny the protest.
BACKGROUND
The RFP was issued on May 6, 1986 and contemplated the award of a
cost-plus-fixed-fee level of effort contract for a base year period with
two 1-year options. The level of effort required in each year of the
contract was stated to be 15,600 man-hours of direct labor. The RFP
provided that submitted proposals would be evaluated as to both their
tecnnical and cost elements with technical considerations being
"substantially more important" than proposed cost.
Although not set forth in the RFP, the Navy's proposal evaluation
scheme reflected this description by assigning a weight of 80 percent to
technical factors and 20 percent to cost. The stated technical
criteria, in descending order of importance, were: (1) Technical
Structure (Approach); (2) Technical Structure (Qualifications); (3)
Management Structure; and (4) Facilities. (Respectively, these
criteria were weighted 40, 20, 10, and 10 percent.) The cost evaluation
criteria set forth in the RFP were: (1) Cost Realism (reasonableness
and realism of total proposed cost); and (2) Cost Labor (reasonableness
and realism of labor costs with respect to the proposed lahor mix).
These cost criteria, each weighted at 10 percent, were described as
being of equal importance.
Ten proposals were received in response to the RFP and were
evaluated. SI's technical proposal was awarded 68.1 points out of a
maximum total of 80 possible points, the highest rating. Trident's
proposal received 66.7 points, the secondhighest rating. The remaining
technical scores ranged from 64.7 to 35.8.
SI's proposal enjoyed a scoring advantage over Trident's in the
Technical Structure (Approach) and Facilities areas, but received lower
scores for Technical Structure (Qualifications) and Management
Structure. The Navy's evaluators described Trident's proposal overall
as "top notch" with a "very mature approach to ASW," and characterized
SI's as "a strong proposal, along with Trident. . . ." These
narrative descriptions are consistent with the agency's ultimate
conclusion that, although SI's proposal was scored some 2 percent higher
than Trident's, both proposals were essentially equal technically, with
no reported weaknesses or deficiencies in either offer.
The Navy then evaluated the proposals with respect to proposed cost
for both the hase performance period and the two options. Under the
Navy's approach to evaluation of overall cost reasonableness/realism,
the proposal with the lowest proposed cost received the maximum number
of possible points, 10, with higher-cost offers receiving proportionally
fewer points. Trident's total proposed cost of $2.1 million was fourth
low and, accordingly, the proposal was awarded 5.79 points. Because
SI's proposed cost of $2.7 million was the third highest, the proposal
only received a rating of 1.72 points for cost reasonableness/realism.
(The other proposed costs ranged from a low of some $1.5 million to a
high of approximately $3.4 million, with corresponding evaluation scores
of 10 to 0 for that factor).
Finally, the Navy evaluated the proposals for the
reasonableness/realism of the proposed labor mix which was also worth a
maximum of 10 points as an evaluation factor. The Navy's evaluators
awarded Trident's proposal the full 10 points, describing the proposal
as having an "excellent labor mix." SI's proposal received 8 points for
this criterion, the second-highest rating, because of the firm's "good
subcontractor mix."
At the conclusion of the agency's evaluation of initial proposals,
Trident's proposal received the highest overall rating at 82.49 points,
followed by SI's proposal with an overall rating of 77.82. The ratings
for the remaining eight proposals ranged from 76.09 to 42.8. The Navy
determined that none of the proposals was technically unacceptable or
unrealistic with respect to proposed cost.
However, the Navy also felt that because Trident's proposal in
technical terms was essentially equal to SI's and superior to the
others, and because its proposed cost was some 30 percent lower than
SI's, the competitive range for discussion purposes should be limited to
Trident, in the Navy's judgment, the only firm with a proposal having a
reasonable chance of being selected for award. Accordingly, the Navy
held discussions with only Trident. These discussions were limited to
cost concerns, the Navy having questioned certain elements of Trident's
cost proposal, such as the labor rate for the Project Engineer and the
escalation factor for the option years. As a result of these
discussions, the Navy was able to negotiate a 3.5 percent reduction in
Trident's total cost. The firm was awarded the contract on October 24,
and SI then filed this protest with our Office.
PROTEST POSITION
SI's essential ground of protest is that it was improper for the Navy
to award the contract to Trident on the basis of its lower proposed
cost, since this was not consistent with the stated evaluation citeria.
SI points out that, under the express terms of the solicitation,
technical considerations were weighted much higher than cost factors,
and that its proposal, in fact, had received the greatest number of
technical evaluation points. The firm contends that the Navy therefore
deviated from the established evaluation scheme and misled the firm to
its prejudice. SI argues that, at a minimum, if the Navy believed that
cost had become the determinative factor for selection purposes, the
agency should have requested best and final offers to allow the other
firms the opportunity to submit revised proposals.
SI urges that it would have substantially reduced its proposed cost
had it been able, as the result of discussions, to submit a best and
final offer.
ANALYSIS
Although SI argues that the award was a reflection of the Navy's
improper deviation from the evaluation criteria set forth in the RFP, we
view the protest as essentially a challenge to the agency's competitive
range determination which resulted in the exclusion of all but one
offeror, Trident, from further award consideration.
The purpose of a competitive range determination in a negotiated
procurement is to select those offerors with which the contracting
agency will hold written or oral discussions. Federal Acquisition
Regulation (FAR), 48 C.F.R. Sec. 15.609(a) (1986); S&O Corp.,
B-219420, Oct. 28, 1985, 85-2 CPD P 471. We have consistently defined
the competitive range as consisting of all proposals that have a
"reasonable chance" of being selected for award, that is, as including
those proposals which are technically acceptable as submitted or which
are reasonably susceptible of being made acceptable through discussions.
Information Systems & Networks Corp., B-220661, Jan. 13, 1986, 86-1 CPD
P 30; Fairchild Weston Systems, Inc., B-218470, July 11, 1985, 85-2 CPD
P 39. The FAR, 48 C.F.R. Sec. 15.609(a), supra, mirrors this definition
and provides that if doubt exists as to whether a proposal is in the
competitive range, the proposal should be included. This is consistent
with the overriding mandate of the Competition in Contracting Act of
1984 that military agencies obtain "full and open competition" in their
procurements. 10 U.S.C. Sec. 2304(a) (1)(A) (Supp. III 1985). Thus, as
a general rule, an agency should endeavor to broaden the competitive
range since this will maximize the competition and provide fairness to
the various offerors. See Cotton & Co., B-210849, Oct. 12, 1983, 83-2
CPD P 451.
However, we also recognize that the determination of whether a
proposal is in the competitive range is principally a matter within the
contracting agency's reasonable exercise of its discretion. Id at 4.;
see also Tracor Marine, Inc., B-222484, Aug. 5, 1986, 86-2 CPD P 150.
Hence, although we always closely scrutinize an agency decision which
results, as here, in a competitive range of one, Art Anderson Assocs.,
B-193054, Jan. 29, 1980, 80-1 CPD P 77, we will not disturb that
determination absent a clear showing that it was unreasonable,
arbitrary, or in violation of procurement laws or regulations. Intelcom
Support Services Inc., B-222547, Aug. 1, 1986, 86-2 CPD P 135;
Communication Mfg. Co., B-215978, Nov. 5, 1984, 84-2 CPD P 497.
It is an acceptable practice for an agency to determine whether or
not to include a proposal within the competitive range by comparing the
initial proposal evaluation scores and the offeror's relative standing
among its competitors. Joule Engineering Corp.--Reconsideration, 64
Comp. Gen. 540 (1985), 85-1 CPD P 589; JDR Systems Corp., B-214639,
Sept. 19, 1984, 84-2 CPD P 325. This "relative" approach to determining
the competitive range may be used even where the result is a competitive
range of one. See Information Systems & Networks Corp., B-220661,
supra. Therefore, a proposal that is technically acceptable as
submitted need not be included in the competitive range when, relative
to other acceptable offers, it is determined to have no reasonable
chance of being selected for award. Lee J. Kriegsfeld, B-222865, Aug.
22, 1986, 86-2 CPD P 214; Cosmos Engineers, Inc., B-218318, May 1,
1985, 85-1 CPD P 491.
Moreover, in this regard, cost or price may emerge as the dominant
factor in a competitive range decision. See Communication Mfg. Co.,
B-215978, supra. This is properly so because, by low and implementing
regulation, the competitive range is to be determined on the basis of
"cost or price and other factors" that were stated in the solicitation.
FAR, 48 C.F.R. Sec. 15.609(a), supra. Hence, pertinent to this case,
the fact that the evaluation criteria under a solicitation contemplating
the award of a cost-type contract placed greater emphasis on technical
factors than on cost did not waive the agency's right to consider cost
in determining the competitive range for that procurement. 10 U.S.C.
Sec. 2305(b)(4)(B); Tracor Marine, Inc., B-222484, supra, 86-2 CPD P
150 at 3.
In Tracor, we held that the protester's clearly technically superior
initial proposal (with a score of 896 versus 780 for the next-ranked
offeror) was properly excluded from the competitive range on the ground
that its proposed cost, which greatly exceeded the costs of the two
other technically acceptable proposals, was so high that it had no
reasonable chance of being selected for award. For similar reasons, we
raised no objection to an agency's exclusion from the competitive range
of the third-ranked initial technical proposal (receiving 70.2 points
versus 78.8 and 77.1 for its competitors) where the agency, after
conducting a cost analysis, determined that the reasonable cost of the
proposal was approximately 35 percent higher than the more costly of the
other two technically acceptable proposals. Jack Faucett Assocs.,
B-224414, Sept. 16, 1986, 86-2 CPD P 310.
We believe the same rationale which allows cost to become the
dominant factor for competitive range purposes applies here to justify
the Navy's exclusion of SI's proposal from further award consideration.
Although SI's proposal may have enjoyed a slight advantage over
Trident's in terms of the number of technical points awarded, under our
prior precedent we see nothing improper in the agency's determination
that this 2 percent higher rating did not represent any meaningful
superiority in the technical merit of SI's proposal. See Polaris, Inc.,
B-220066, Dec. 16, 1985, 85-2 CPD P 669; cf. Harrison Systems Ltd., 63
Comp. Gen. 379 (1984), 84-1 CPD P 572; Grey Advertising, Inc., 55 Comp.
Gen. 1111 (1976), 76-1 CPD P 325 (proposals with, respectively, 14.4
and 15.8 percent scoring differentials reasonably found to be
essentially equal technically for source selection purposes). Thus, as
in those source selection decisions, the Navy's finding of technical
equivalency between Trident's and SI's proposal meant that cost
necessarily became the determinative consideration affecting SI's
entitlement to inclusion in the competitive range.
As indicated, the Navy's ultimate conclusion that SI's proposal had
no reasonable chance of being selected for award rested on the fact that
its proposed cost was 30 percent higher than Trident's. We have
examined SI's cost proposal, and we have no basis to question the Navy's
implicit finding that SI, even if given the opportunity to submit a best
and final offer, would not be able to make cost reductions significant
enough to make the proposal more advantageous to the government. See
Cotton & Co., B-210849, supra, 83-2 CPD P 451 at 5. We note that the
contemplated contract was for a specified level of effort (man-hours) in
which the final cost would largely depend upon the proposed mix of
personnel. Since SI in fact received a high score under that very
evaluation criterion, it is reasonable to assume that the proposed cost
of the offer in terms of direct labor charges reasonably reflected what
it would actually cost the government if the contract were performed by
SI using that labor mix. Hence, major cost rejections, even if made by
SI, night well have served to reduce the quality of the proposed labor
mix or weaken the favorable technical aspects of the offer. In this
regard, Trident, proposing what the agency regarded as an excellent
labor mix, made no significant reductions in its proposed cost even
after the agency conducted discussions with the firm to achieve its cost
realism negotiation objectives. We do not think that the record,
therefore, indicates that SI, whose proposal was also favorable
evaluated in this area, would have been able to make cost reductions
proportionally much greater than those made by Trident.
It is significant to note that the cost differential between SI's
offer and Trident's is not only 30 percent but also represents a cost
quantum in excess of $600,000. In our view, this fact fairly suggests
that despite SI's present assertion that it would have reduced its cost
substantially if given the opportunity to do so through discussions, the
Navy had no reason to believe at the time the competitive range
determination was made that SI could make a significant reduction and
still have a reasonable chance for award. See Jack Faucett Assocs.,
B-224414, supra, 86-2 CPD P 310 at 3. It is well settled that initial
competitive range determinations are based upon initial proposals, so
that a firm that does not submit its best cost or price at the first
opportunity always runs the risk of being excluded from further
competition for the award. Cosmos Engineers, B-218318, supra;
Informatics General Corp., B-210709, June 30, 1983, 83-2 CPD P 47. We
do not find that SI has a legally sufficient basis to complain of its
exclusion here.
The protest is denied.
Harry R. Van Cleve
General Counsel
Matter of: Ingersoll-Rand Company
File: B-225052
Date: January 27, 1987
DIGEST
Protest raising same issues as those resolved in a recent decision on
a protest by the same protester and involving the same agency and
awardee is dismissed as no useful purpose would be served by further
consideration of the protest.
DECISION
Ingersoll-Rand Company protests a contract award to Compressor
Engineering Corporation (CECO) by the Defense Logistics Agency (DLA)
under request for quotations (RFQ) No. DLA700-86-Q-E556. This RFQ
requested prices for a quantity of channel and spring sets to be used on
oil free compressors for which Rand was the original manufacturer.
CECO's items were found to be acceptable after some 500 hours of
testing. Rand contends that it was improper for DLA to test these
critical items from CECO for only 500 hours when Rand had been required
previously to conduct 2,000 hours of acceptance testing for the
compressor parts at its own expense. Rand further contends that the
contracting officer acted improperly in disregarding the testing costs
that it argues should have been added to the prices offered by CECO.
The protest is dismissed.
The two issues raised here are identical to two of those resolved in
our decision in Ingersoll-Rand Co., B-224706, et al., Dec. 22, 1986,
86-2 CPD P . In that decision, we denied Rand's contention that the
product tests it was required to conduct in eariier procurements should
have been required of all offerors on the two solicitations in question,
because no such testing resquirements had been included in the
solicitations and because proposals must be evaluated only on the basis
of factors specified in the solicitations. For this same reason, we
rejected Rand's argument that DLA should have added the agency's costs
of testing the products to CECO's prices. Moreover, we pointed out that
as the objective of our bid protest function is to insure full and open
competition for government contracts, a protester's presumable interest
as the beneficiary of a more restrictive specification generaiiy is not
protectable under our bid protest function.
Since the issues raised by Rand in this protest are the same as the
issues that were resolved in our decision of December 22, we see no
useful purpose to be served by our further consideration of the protest.
Canon U.S.A., Inc., B-213554, Aug. 20, 1984, 84-2 CPD P 195 at 7.
The protest is dismissed.
Ronald Berger
Deputy Associate
General Counsel
Matter of: Richlyn Laboratories, Inc.--Reconsideration
File: B-225046.2
Date: May 6, 1987
DIGEST
1. Protester was not prejudiced by contracting officer's premature
award of a contract for a drug to the low bidder evaluated without the
Buy American Act preferences where the contracting officer relied on
advice from the Directorate of Medical Materiel that the drug was only
available from foreign sources and where the Directorate of Medical
Materiel subsequently determined in writing that the drug was not
available in the United States in sufficient and reasonably available
commercial quantities and that therefore the Buy American Act should be
waived.
2. Arguments that amount to a reiteration of those previously
considered do not provide a basis for reconsideration.
DECISION
Richlyn Laboratories, Inc. (RLI) requests reconsideration of our
decision, Richlyn Laboratories, Inc., B-225406, Jan. 29, 1987, 87-1 CPD
P , denying a protest against the award of a contract to Barr
Laboratories, Inc. by the Defense Personnel Support Center, Defense
Logistics Agency (DLA), Philadelphia, Pennsylvania under invitation for
bids (IFB) No. DLA120-86-B-1605 for 71,604 bottles of
hydrochlorothiazide tablets.
We affirm our prior decision.
RLI had contended that it offered a domestic end product manufactured
in the United States with a component drug from a qualifying country
(Italy), exceeding 50 percent of the costs of all components, under the
Buy American Act, 41 U.S.C. Sec. 10a-d (1982), and therefore should have
been evaluated with the Buy American preferences as the low, responsive,
domestic offeror entitled to award. DLA, however, did not apply the Buy
American Act to the procurement because the Directorate of Medical
Materiel determined that the major component in question was available
only from foreign sources without a domestically available substitute,
i.e, that the drug was not available in the United States "in sufficient
and reasonably available commercial quantities." 1/ Accordingly, DLA
proceeded to make an award to the low offeror (evaluated without the Buy
American Act preferences) which offered an end product manufactured in
the United States with the foreign drug component, exceeding 50 percent
of the costs of all components, from a nonqualifying country
(Yugoslavia).
In our initial decision, we found that since all seven bidders that
competed had proposed foreign sources ( some albeit qualifying country
sources) for the active ingredient, the Directorate of Medical
Materiel's determination that only a foreign drug will fulfill the
requirement had not been shown to be unreasonable. We concluded that
the Buy American preferences were properly not invoked in favor of the
RLI bid. This is because the Buy American Act does not apply to
"components of end products manufactured in. . . a qualifying country if
the component is . . . not mined, produced, or manufactured in the
United States in sufficient and reasonably available commercial
quantities." See Department of Defense FAR Supplement, 48 C.F.R. Sec.
225.102 (70) (3). We therefore denied the protest.
In its request for reconsideration, RLI principally contends that the
Buy American Act was not properly waived because the contracting officer
made a premature award prior to the determination by the Directorate of
Medical Materiel that the drug was not available from domestic sources.
The record in fact does show that bid opening was on August 12, 1986,
that the award to Barr was made on September 11, 1986, and that the
determination of domestic unavailability by the Directorate of Medical
Materiel was made on October 3, 1986.
In response, the contracting officer explains that he determined
after bid opening that the drug was unavailable domestically but he also
recognized that he had to obtain a determination of unavailability from
the Directorate of Medical Materiel. The contracting officer states
that he "was aware that it would take at least a week to obtain the
determination from the Directorate in view of the many layers of
coordination required." To save time, he had his procurement
representative call the Directorate which apparently informally
confirmed that only foreign drugs were available for the requirement
(the foreign sources proposed by the bidders in this procurement were on
a list of approved foreign suppliers at the Directorate). The
contracting officer therefore proceeded to make an award "rather than
wait a week or more for confirmation of information already known."
Even if we assume that the contracting officer should have waited
until he obtained a written determination by the Directorate of the
unavailability of the drug, we find that his failure to do so did not
harm the protester. The Directorate here subsequently made a valid
determination for this specific solicitation. The Directorate is the
designated authority under the regulations for making such
determinations. See Department of Defense FAR Supplement, 48 C.F.R.
Sec. 225.102(72)(2). In short, we think that had the contracting
officer waited, the same determination by the Directorate for this
solicitation would have been issued so that we fail to see any prejudice
to RLI solely because of the premature award.
In this regard, RLI again argues, as it did in its initial protest,
that it did not offer a foreign drug. In essence, RLI argues that it
offered a domestic end product with a qualifying country component and
therefore DLA could not consider the component unavailable because the
qualifying country component was the "contextual equivalent of a
domestic component" and should be treated for all purposes as a purely
domestic end product with domestic components. As we stated in the
initial decision, a determination of nonavailability of a component in
the United States must be made on the basis of whether the component is
mined, produced or manufactured in the United States in sufficient and
reasonably available commercial quantities and not whether it is
available from a foreign qualifying country.
Finally, RLI, after the award to Barr, found a domestic supplier of
the drug and now again argues that the component is available
domestically which allegedly shows that the DLA determination was
"incompetent." In our initial decision, we concluded that since all
seven bidders offered foreign sources for the component, the Directorate
reasonably concluded that the component was "not mined, produced or
manufactured in the United States in sufficient and reasonably available
commercial quantities." RLI has added nothing to what we previously
considered on this issue. Arguments that amount to a reiteration of
those previously considered do not provide a basis for reconsideration.
Vulcan Engineering Co.--Request for Reconsideration, B-214595.2, Feb.
27, 1985, 85-1 CPD P 243.
Our prior decision is affirmed.
Harry R. Van Cleve
General Counsel
FOOTNOTE
1/ This determination by the Directorate of Medical Materiel was the
authority relied upon by the agency for not applying the Buy American
Act; when such a determination is made by the Directorate of Medical
Materiel, the agency is not required to make a separate nonavailability
determination under the Buy American Act. See Department of Defense FAR
Supplement, 48 C.F.R. Sec. 225.102(70)(3), (71), and (72)(2).
Matter of: Richlyn Laboratories, Inc.
File: B-225046
Date: January 29, 1987
DIGEST
Agency determination whether a component is available in the United
States for purposes of the Buy American Act must be based on whether the
component is mined, produced, or manufactured in the United States in
reasonable commercial quantities and not whether it is available from a
qualifying country.
DECISION
Richlyn Laboratories, Inc. (RLI) protests the award of a contract to
Barr Laboratories, Inc. (Barr) by the Defense Personnel Support Center,
Defense Logistics Agency (DLA), Philadelphia, Pennsylvania under
invitation for bids (IFB) No. DLA120-86-B-1605 for 71,604 bottles of
hydrochlorothiazide tablets. RLI contends that it offered a domestic
end product manufactured in the United States with a component from a
qualifying country, exceeding 50 percent of the costs of all components,
under the Buy American Act, 41 U.S.C. Sec. 10a-d (1982), and therefore
should have been evaluated with the Buy American preferences as the low,
responsive, domestic offeror entitled to the award. 1/
DLA, however, determined that the Buy American Act did not apply to
the procurement because the major component in question, a foreign drug,
was not produced in the United States in sufficient and reasonably
available commercial quantities. Accordingly, DLA proceeded to make an
award to the low offeror (evaluated without the Buy American Act
preferences) which offered an end product manufactured in the United
States with the foreign drug component, exceeding 50 percent of the
costs of all components, from a nonqualifying country. Thus, the
propriety of the agency's decision not to apply the Buy American Act is
at issue.
We deny the protest.
The solicitation contained the standard Buy American Act clause (48
C.F.R. Sec. 252.225-7006 (1986)) which generally gives preferences to
domestic end products over foreign end products except, as noted above,
for certain foreign end products which meet the requirements for
classification as qualifying country end products. Seven bids were
received. The two low bids were as follows:
Firm Bid Price Source of Active Ingredient
(per bottle) (more than 50 percent of costs
of all components)
Barr $2.90 Yugoslavia/Italy
RLI $2.95 Italy
The other five bidders also offered foreign sources for the end
item's active ingredient with costs for the ingredient exceeding the
costs of all other components of the end product. In accordance with
our decision in Airpro Equipment, Inc., B-209612, Jan. 31, 1983, 83-1
CPD P 105, the contracting officer interpreted the Barr bid as supplying
the major component from a nonqualifying country because the bid could
reasonaoly be construed to permit the bidder to furnish either a
qualifying (Italian) or a nonqualifying (Yugoslavian) component.
Further, since RLI proposed a qualifying country as the source for the
active ingredient, the contracting officer determined that the RLI bid
was an offer for a domestic end product which is defined as including an
end product manufactured in the United States if the costs of its
qualifying country components and any United States components together
exceed 50 percent of the costs of all its components. See Department of
Defense FAR Supplement, 48 C.F.R. Sec. 225.001.
However, since all seven bidders proposed foreign sources (some
albeit qualifying country sources) for the active ingredient, the
Directorate of Medical Material, under authority granted by the
regulation in cases concerning foreign drugs (see Department of Defense
FAR Supplement, 48 C.F.R. Sec. 225.102 (72)(2), determined that the Buy
America Act aid not apply to the procurement in question because the
component was a class or kind not mined, produced, or manufactured in
the United States in sufficient and reasonably available commercial
quantities. Accordingly, the Buy American preferences were not invoked
in favor of RLI against the foreign bid of Barr which therefore received
the award. This protest followed.
RLI argues that since it offered a domestic end product with a
qualifying country component, DLA could not consider the component
unavailable because the qualifying country component was the "contextual
equivalent of a domestic component." In other words, RLI is arguing that
an end product manufactured in the United States with a qualifying
country component should be treated for all purposes as a purely
domestic end product with domestic components, even for purposes of
determining availability of that component in the United States under
the Buy American Act.
We reject this argument. The regulations do define domestic end
product as including a product manufactured in the United States with
qualifying country components. However, the applicable regulation,
entitled "Nonavailability in the United States," (48 C.F.R. Sec.
225.102(70)(3)), does not include consideration of qualifying country
components for purposes of determining whether the Buy American Act
applies in the first instance. That regulation states, in part, as
follows:
"The Buy American Act does not apply to.. . (ii) components of
end products manufactured in the United States or a qualifying
country if the component is of a class or kind determined by the
Government to be not mined, produced, or manufactured in the
United States in sufficient and reasonably available commercial
quantities...."
Thus, we think that a determination of nonavailability of a component
in the United States must be made on the basis of whether the component
is mined, produced or manufactured in the United States in sufficient
and reasonably available commerical quantites and not whether it is
available from a qualifying country. Accordingly, we think the
contracting officer properly declined to apply the Buy American Act in
favor of the RLI bid.
Finally, RLI, after bid opening, found a domestic supplier of the
active ingredient and now argues that the component is available
domestically. However, since all seven bids received offered foreign
sources for the component, we think that the Directorate of Medical
Material reasonably determined that the component was "not mined,
produced, or manufactured in the United States in sufficient and
reasonably available commercial quantities." The fact that the protester
found one domestic source after bid opening does not detract, in our
view, from the reasonableness of the agency's determination.
The protest is denied.
Harry R. Van Cleve
General Counsel
FOOTNOTE
1/ The Department of Defense has determined under the Buy American
Act that it is inconsistent with the public interest to apply the
restrictions of the Act to its acquisition of certain supplies mined,
produced, or manufactured in certain countries. See Federal Acquisition
Regulation (FAR), 48 C.F.R. Sec. 25.103 (1986). These countries have
been designated as "qualifying countries." See Department of Defense FAR
Supplement, 48 C.F.R. Sec. 225.001 (1986).
Matter of: Photosonic, Inc.
File: B-225043.5
Date: October 20, 1987
DIGEST
1. Protest is dismissed where the record shows that protester, as
third low bidder, would not be in line for award even if the protest was
sustained.
2. A firm that manufactures a product that would be supplied by
second low bidder is not an interested party since only an actual or
prospective offeror in line for award is an interested party eligible to
protest under GAO's Bid Protest Regulations.
DECISION
Photosonic, Inc., protests the award of a contract under invitation
for bids (IFB) No. DMA800-87-B-0038 issued by the Defense Mapping Agency
(DMA) for two ultrasonic rack cleaners. Photosonic alleges that the
awardee's product does not meet the contract's specifications.
We dismiss the protest because Photosonic is not an interested party
as required under the Competition in Contracting Act of 1984 (CICA), 31
U.S.C. Sec. 3551(a) (Supp. III 1985), and our Bid Protest Regulations, 4
C.F.R. Sec. 21.0(a) (1987).
Both CICA and our Regulations define an interested party as an actual
or prospective bidder or offeror whose direct economic interest would be
affected by the award of a contract. We have held that a party does not
have the necessary economic interest where there are other intervening
bidders or offerors that would be in line for award if the awardee were
eliminated from the competition. Alfa-Laval, Inc., B-224330, Nov. 5,
1986, 86-2 C.P.D. P 520.
DMA reports that Photosonic is the third-low evaluated bidder and
that even if the protest is sustained, the second-low bidder would be
next in line for award. In response, Photosonic argues that it does
have a direct economic interest because the second-low bidder is its
direct dealer and was offering its Photosonic system.
Photosonic's interest as a manufacturer of the product to be supplied
by the second low bidder is not sufficient for the protester to be
considered an interested party under CICA and our Regulations because an
interested party must be an actual bidder in line for award if the
protest were sustained. The Wollongong Group, B-224531, Dec. 18, 1986,
86-2 C.P.D. P 682.
The protest is dismissed.
Robert M. Strong
Deputy Associate
General Counsel
Matter of: Air Force - Tuition Assistance to Members ofArmed Forces
in North Carolina
File: B-225035
Date: September 15, 1987
DIGEST
Off-duty college tuition assistance provided by military departments
is subject to percentage limitation on "charges" of educational
institution. 10 U.S.C. Sec. 2007. Under North Carolina statute,
non-domiciliary military personnel are "charged" out-of-state tuition
rate, but portion to be paid by individual is reduced in accordance with
statutory formula. Although application of percentage limit to full
tuition rate will result in government's paying more than that
percentage of actual costs, payment on this basis will not violate 10
U.S.C. Sec. 2007 nor constitute improper use of appropriations.
DECISION
The Deputy Assistant Comptroller of the Air Force for Accounting and
Finance requested our decision on what effect, if any, a recent North
Carolina statute has on the amount of higher education tuition
assistance the Air Force may pay to military personnel stationed in
North Carolina but domiciled elsewhere. More specifically, the question
is whether the operation of the North Carolina statute causes the Air
Force to exceed the ceiling on tuition assistance provided in 10 U.S.C.
Sec. 2007. As explained below, although the North Carolina statute has
the effect of increasing the proportion of actual tuition costs paid by
the Air Force, it does not, in our opinion, produce a violation of 10
U.S.C. Sec. 2007.
Background
The Air Force is authorized to provide tuition assistance to its
military personnel for education and training during off-duty periods.
However, the assistance is subject to statutory limitations found in 10
U.S.C. Sec. 2007, which provides in relevant part:.
"The Secretary of a military department may not pay more than
75 percent of the charges of an educational institution for the
tuition or expenses of a member of the armed forces enrolled in
such institution for education or training during his off-duty
periods, except
that"(1)
In the case of an enlisted member in the pay grade of E-5 or
higher with less than 14 years' service, not more than 90 percent
of the charges may be paid;
"(2) in the case of a member enrolled in a high school
completion program, all of the charges may be paid; and
"(3) in the case of a commissioned officer, no part of the
charges may be paid unless the officer agrees to remain on active
duty for a period of at least two years after the completion of
the training or education."
Thus, under section 2007, the Air Force generally pays 75 percent of
a member's tuition and the member pays 25 percent, or in the case of an
enlisted member qualifying under subparagraph (a) (1), the Air Force
pays 90 percent and the member 10 percent.
The recent enactment of a North Carolina statute has raised a
question concerning the proper amount of the contribution the Air Force
is authorized to make toward tuition for that State's schools on behalf
of non-domiciliary personnel. General Statutes of North Carolina, Sec.
116-143.3(b), provides:
"Any member of the armed services qualifying for admission to
an institution of higher education... but not qualifying as a
resident for tuition purposes . . . shall be charged the
out-of-State tuition rate; provided, that the out-of-State
tuition shall be forgiven to the extent that the out-of-State
tuition rate exceeds any amounts payable to the institution or the
service member by the service member's employer by reason of
enrollment pursuant to such admission while the member is abiding
in this State incident to active military duty, plus the amount
that represents the percentage of the out-of-State tuition rate
paid to the institution or the service member by the service
member's employer multiplied by the in-State tuition rate and then
subtracted from the in-State tuition rate."
Under this provision, military personnel domiciled outside of North
Carolina are charged the out-of-state tuition rate, but the portion to
be paid by the individual is reduced in accordance with the statutory
formula.
The Issue
Understanding the issue in this case is aided by use of the example
provided in the Air Force's submission. The illustration is as follows:
"Fayetteville State University charges domiciliaries $205 per
semester and nondomiciliaries $1,628 per semester. The university
expects to collect $1,465.20 from a military department for a
nondomiciliary who meets the "90 percent" criteria. It does not
collect the remaining 10 percent ($162.80) from the military
member. Instead, it applies the 10 percent rate against the
in-state tuition charge of $205 and bills the member $20.50.
Under this formula, the net cost paid, the Federal and member's
contribution combined, is $1,485.70. The Federal contribution as
a share of that net cost is not 90 percent, but 98.6 percent."
In essence, the issue is whether, under 10 U.S.C. Sec. 2007, the Air
Force may pay an amount equaling up to 90 percent (or 75 percent if
applicable) of North Carolina's usual out-of-state tuition which, but
for the forgiveness provision in the North Carolina statute, would be
the total owed to the State's institution, or whether the Air Force may
pay only 90 percent (or 75 percent) of the "net costs" as that term is
used in the illustration.
Restated, the question is whether the term "charges," as used in 10
U.S.C. Sec. 2007 with reference to public institutions of higher
education in North Carolina, means the out-of-state tuition rate or the
amount of dollars the institution will actually receive. If it means
the latter, then, as the submission points out, "the North Carolina
approach significantly increases the cost to the Air Force, which could
result in an unfair and unintended distribution of the limited training
funds available."
Discussion and Conclusion 1/
We start first with the language of 10 U.S.C. Sec. 2007 to determine
if there is a "plain meaning" that will resolve our inquiry. The
statute refers to the "charges" of an educational institution. The
North Carolina statute also uses the word "charge" to mean the full
out-of-state tuition rate, but this is of little relevance in construing
the federal statute. For purposes of the federal statute, there are two
possible interpretations of the term "charge"--the full amount assessed
or the amount actually paid. (Normally, the two would be the same.) We
find no basis for concluding that either interpretation is legally
mandated. Thus, we do not find a "plain meaning."
We turn next to the legislative history (discussed below), and find
that it too offers no specific guidance on this question. This is not
surprising. It is unlikely that Congress would have envisioned a
situation in which the amount assessed and the amount paid would be
different.
Finding no answer using the more traditional approaches, we seek that
interpretation which seems best designed to further the overall purpose
and objective of the program. Approaching the problem from this
direction, we think the better view is to define "charges" for purposes
of 10 U.S.C. Sec. 2007 as meaning the full out-of-state tuition rate
under the North Carolina statute, without regard to the forgiveness
provision.
The provision that is now 10 U.S.C. Sec. 2007 evolved from similar
provisions included in annual Department of Defense appropriation acts
for 30 years prior to permanent codification in 1984. To determine the
congressional purposes, we examined the legislative history of three key
stages in the statutory evolution: the first appearance of the 75
percent limitation, 2/ the first appearance of the provision allowing
100 percent assistance for high school completion, 3/ and the first
appearance of the 90 percent limitation for middle rank enlisted
personnel. 4/ (We thought it unlikely to find any useful discussion in
those interim years in which the statute did not change.)
Viewing this material as a whole, the essential purpose of the
tuition assistance program was to improve the efficiency of operations
within the Defense Department by enhancing the educational level of its
personnel. Educational assistance was seen as an important benefit of
military service, and thus a key incentive to retention. The amount of
assistance was set at a high level because military personnel generally
earn less than their civilian counterparts.
The 75 and 90 percent limitations appear in the statute because the
services requested them. At least with respect to post-high school
education, it has been the view of the services that the individual
should pay a portion of his or her tuition, 5/ apparently out of
recognition that one tends to place a higher value on that for which one
is required to pay. Reducing or minimizing the cost of the program, to
the extent relevant at all, appears to have been a secondary
consideration.
Against this background, it seems more consistent with the purpose
and intent of 10 U.S.C. Sec. 2007 to permit the benefit of the North
Carolina statute to fall upon the individual, that is, to construe the
statute as authorizing payment of 75 or 90 percent, as the case may be,
of the tuition rate charged by the state (again assuming the rate is
nondiscriminatory) without regard to the forgiveness provision.
It would certainly be possible to construe the statute in a manner
that would reduce the expense to the services. The options are noted in
a memorandum dated August 22, 1985, from the Director of Legal Programs,
Headquarters Tactical Air Command, USAF, Langley Air Force Base,
Virginia:
"The magnitude of the federal "loss" (if it is a loss) can be
assessed by following a little further the FSU example.... The
actual cost paid in that example was $1,485.70 for one semester.
The federal contribution was, by the ordinary method, $1,465.20.
If we recalculated that contribution at 90% of the cost actually
paid, it would be $1,337.13, a difference of $128.07 for 12 to 15
credit hours, or $8.54 to $10.67 per credit hour. There are two
possible solutions, both deficient for the same reason. The first
would be to calculate the federal contribution based on the
predicted actual cost to be paid, letting the soldier or airman
make up the difference. The other is to administer the program
without considering the "forgiveness provision," then recoup the
"excess" federal contribution from the GI-student. In each case
the predictable result is that the GI-student will believe himself
cheated of a military "entitlement" by its administrators, not the
kind of result that our program was intended to get."
Apart from the undesirable result suggested in the Langley memo, this
approach would have the effect in large measure of shifting to the
United States the benefit that North Carolina intended to confer on the
individual students. The North Carolina statute seems clearly designed
to assist in the education of service members while retaining the
maximum available federal contribution. Referring again to the
Fayetteville example, it is important to note that the university will
actually receive less than the full out-ofstate tuition rate. Thus, the
North Carolina statute is saying in effect, "Although we charge the
normal out-ofstate tuition rate, we will accept somewhat less in the
case of nondomiciliary military personnel, provided that the benefit of
that reduction accrues to the individual student."
To summarize, the solution to the problem at hand is, in our view,
derived from identifying the possible alternatives and evaluating those
alternatives in light of the objectives of the federal program. The
federal program in this case is designed to encourage the formal
education of military personnel while minimizing the financial burden on
the individuals. Recognizing that these objectives will not be enhanced
by any alternative which increases the financial burden placed on
individual members, we conclude that the percentage limitations of 10
U.S.C. Sec. 2007 should be applied to the full out-of-state tuition rate
under the North Carolina statute, without regard to the forgiveness
provision. At the very least, payment on this basis would not, in our
opinion, violate 10 U.S.C. Sec. 2007 nor in any way constitute an
improper use of appropriated funds.
Comptroller General
of the United States
FOOTNOTES
1/ At the outset, it is important to point out that the state in this
case is not discriminating against military personnel or the United
States. The out-of-state tuition rate being charged nondomiciliary
military personnel is the same as that charged other out-of-state
students. It should not be assumed that our answer would be the same if
the state were charging military personnel a higher rate in order to
take advantage of the federal contribution.
2/ Department of Defense Appropriation Act, 1955, Pub. L. No. 83-458
(June 30, 1954), Sec. 730, 68 Stat. 355.
3/ Department of Defense Appropriation Act, 1980, Pub. L. No. 96-154
(December 21, 1979), Sec. 722, 93 Stat. 1156.
4/ Department of Defense Appropriation Act, 1981, Pub. L. No. 96-527
(December 15, 1980), Sec. 722, 94 Stat. 3084.
5/ E.g., Department of the Army Appropriations for 1955: Hearings
Before a Subcomm. of the House Comm. on Appropriations, 83d Cong., 2d
Sess. 649 (1954).
Matter of: Yowell Transportation Services, Inc.
Exclusive-Use-of-Vehicle Charges
File: B-225014
Date: September 30, 1987
DIGEST
The General Services Administration (GSA) disallowed a carrier's
supplemental bill for exclusive-use-of-vehicle charges on grounds that
the carrier's exclusive-use rule was inconsistent with other provisions
in its rate and rules tenders, and the ambiguity thus created should be
construed against the carrier. Where, however, a reasonable
construction of the provisions conforms to the carrier's intent and the
shipper's understanding the provisions are not considered ambiguous.
Thus, the exclusive-use charge is applicable and it was improper for GSA
to disallow the carrier's claim.
DECISION
Yowell Transportation Services, Inc. (Yowell) asks the Comptroller
General to review action taken by the General Services Administration
(GSA) under 31 U.S.C. Sec. 3726, in its settlement of a transportation
claim. The carrier had been paid its original transportation charges,
but GSA disallowed the carrier's supplemental bill for additional
exclusiveuse charges. We conclude that it was improper for GSA to
disallow the carrier's claim.
BACKGROUND
In February 1986, Yowell transported a 2,700-pound shipment described
on Government Bill of Lading No. S-9003057 as "ELECTRICAL INSTRUMENTS,
NOI," for the Department of the Navy, 2,615 miles from Silver Spring,
Maryland, to San Diego, California. The shipper requested and Yowell
provided exclusive use of an air-ride, padded van in performing the
transportation services.
The carrier originally billed and collected charges of $2,745, which
were computed by applying a per 100-pound mileage rate to a constructive
weight of 10,000 pounds. These were derived from Yowell's Rate Tender
13, as governed by Rules Tender 14. GSA disallowed Yowell's
supplemental bill for exclusive-use-of-vehicle charges of $2,353.50.
These were derived from Rule 27 of Rules Tender 14. 1/
There is no dispute that exclusive-use service was requested and
performed. GSA disallowed the additional exclusive-use charges on the
theory that the carrier's intentions, concerning their applicability,
were ambiguous, and since ambiguous, carrier-drafted tenders are
construed against the carrier, GSA concluded that the charges already
paid were the only applicable charges.
Yowell's supplemental claim for exclusive-use charges was derived
from the mileage rate (which is unrelated to weight) in Rule 27 of Rules
Tender 14, as amended by supplement 6, effective January 10, 1986, which
states that:
"shipments accorded exclusive use of vehicle service will be
rated at an additional charge of $.90 per tariff mile per vehicle
used."
In GSA's opinion the ambiguity appears in the form of inconsistency
between Rule 27, Tender 14, supplement 6 (Yowell's supplemental claim
basis) and other tender supplements, notably supplement 5 to Tender 14
and supplement 3 to Rate Tender 13, which GSA emphasizes, were all in
effect at the time of transportation.
Supplement 3 of Rate Tender 13 was the basis for Yowell's original
charges and the only basis that GSA recognizes as applicable. It
consists of per 100-pound mileage transportation rates which are applied
to a constructive weight of 10,000 pounds for exclusive-use service on
shipments, as here, weighing less than 10,000 pounds. GSA points out
that one of the express purposes of supplement 3, when first issued in
May 1984, was to set maximum charges for exclusive-use service.
Supplement 5 of Rules Tender 14, effective January 15, 1985, also
contained exclusive-use provisions. Rule 27, which offered
exclusive-use service upon shipper request, referred to Rule 30 for the
actual mileage rates which were subject to a minimum weight of 15,000
pounds.
To underline the alleged inconsistency between Rule 27 of supplement
6 and Rules 27 and 30 of supplement 5, GSA points out that block 2D of
supplement 6 stated that supplements 5 and 6 contained all changes. GSA
infers from this that all the provisions in both supplements,
necessarily, are cumulative, particularly since all the noted
supplements were concurrently in effect. GSA argues that the cumulative
effect of all the supplements was to reflect a general trend toward
reduction of the carrier's overall charges.
GSA also suggests that the Military Traffic Management Command (MTMC)
may have been misled by a customary supplement format into accepting
supplement 6, Tender 14, without reading its various substantive
provisions, especially Rule 27. Previously, Yowell had noted the
general purposes and specified the major changes on page 1 of each
supplement, while page 1 of supplement 6 did not highlight the specific
change in Rule 27, assessing the additional exclusive-use charges. GSA
points out that when MTMC, Eastern Area, eventually noted the
exclusive-use change in supplement 6, the agency ceased releasing
traffic to Yowell until the carrier again changed its tender. Yowell
argues that from MTMC's traffic embargo flows the inference that MTMC
considered the exclusive-use charges in Rule 27 to be applicable during
the period that supplement 6 was in effect, which included the shipment
in issue. 2/
There appears to be no dispute over some material facts. Tender 13
is a rate tender offering, basically, line-haul service at mileage rates
for the transportation of electrical instruments. By its express terms
and those of its pertinent supplements the rate tender is governed by
Rules Tender 14, which, generally, contains the terms and conditions,
along with some charges, for the performance of accessorial
transportation-related services, such as exclusive-use-of-vehicle
service.
DISCUSSION
We find that GSA's premises for the theory of ambiguous carrier
intent, concerning applicability of the additional exclusive-use
charges, are tenuous. It is clearly implied that supplement 6, Tender
14, Rule 27 was published as a substitute for all previously-published
exclusive-use provisions. This conclusion is based on the facts that
traffic under Rate Tender 13 was expressly governed by the rules in
Tender 14 relating to accessorial services, and that line-haul
transportation is a distinct service from the provisions of
exclusive-use-of-vehicle service. Applicability, apparently, was
assumed by MTMC when it embargoed traffic from Yowell from April 9
through the end of April 1986.
A carrier may by reference incorporate into a government rate tender,
accessorial or additional transportationrelated services and charges
published in other tariffs. See Wells Cargo, Inc., 54 Comp. Gen. 610
(1975). As GSA points out, where there is doubt concerning the meaning
of a tender, it is generally resolved against the carrier that drafted
it. This rule of construction was noted by the court in a case cited by
GSA, Penn Central Co. v. General Mills, Inc., 439 F.2d 1338, 1341 (8th
Cir. 1971). The rule is not applicable, however, where it would ignore
a permissible, reasonable construction which conforms to the objective
intentions of the framer and accords with the practical application
given by shippers and carriers alike. National Van Lines, Inc. v.
United States, 355 F.2d 326, 333 (7th Cir. 1966). See also E. L. Murphy
Trucking Co., 56 Comp. Gen. 529 (1977). We conclude, after reading both
Tenders 13 and 14 together, that they offer a reasonable construction
which conforms to the original intent of the carrier and accords with
the practical application of the parties.
Supplement 6, Rules Tender 14, introduced a new basis for applying
exclusive-use charges. Rule 27, supplement 6 substituted a mileage
per-vehicle basis for the mileage and weight basis previously published
in supplement 5 of Tender 14 and supplement 3 of Tender 13. The patent
inconsistency between new Rule 27 and the previous exclusive-use
provisions clearly implies the intent to replace the previous provisions
with a new Rule 27. To narrowly interpret the concurrent effectiveness
of three tender supplements and to view the fact that supplements 5 and
6 of Tender 14 expressly contained all changes, to mean that all
substantive provisions continuously remain in effect (thereby creating
inconsistencies, as urged here by GSA) overlooks the obvious operation
of these tender supplements to also revise, substitute, and delete
previously-published provisions, as well as add new ones.
We are cited to no rule of interpretation or precedent for viewing a
general trend in carrier supplements, to reduce overall charges, as a
substitute for specific tender provisions, in effect at the time of
movement, providing for separate line-haul and exclusive-use charges. 3/
The fact that the carrier may have deviated from its own practice of
highlighting substantive supplement changes did not prevent MTMC from
reading all their substantive provisions before accepting the
supplements for filing.
Supplement 6, Tender 14, which governed the offer under Tender 13 to
transport electrical instruments for the government, was in effect on
February 6, 1986, and when the Navy tendered the shipment to Yowell on
that date, the offer ripened into an agreement to pay for the additional
exclusive-use services that the shipper requested. Compare B-177354,
June 21, 1973.
Accordingly, the additional 90 cents per-vehicle-mile charges for
exclusive-use service is allowed.
Comptroller General
of the United States
FOOTNOTES
1/ GSA disallowed the claim in a settlement certificate of May 22,
1986.
2/ According to papers subsequently submitted by Yowell, least 33
other shipments may have been involved during the effectiveness of Rule
27.
3/ As noted in the text, it appears that some supplements actually
added new charges for the performance of some accessorial services.
Matter of: Joseph J. Wuscher, Robert J. Rosen, and Sebastian P.
Luizzi
File: B-225013
Date: October 28, 1987
DIGEST
On September 8, 1982, 5 U.S.C. Sec. 5728 was amended to restrict tour
renewal travel for employees assigned to Alaska and Hawaii to situations
in which travel was necessary to recruit or retain an employee for a
tour of duty in Alaska or Hawaii. That statute and the implementing
regulations now provide that only employees who have been continuously
stationed in Alaska and Hawaii on and since September 8, 1982, may
retain unrestricted tour renewal travel rights. Under the plain terms
of the applicable statute and regulations three civilian employees of
the Air Force who were recruited for an assignment in Hawaii prior to
September 1982 but who were later reassigned away from Hawaii and were
not stationed in Hawaii on September 8, 1982, did not retain the
unrestricted renewal travel entitlements when they subsequently returned
to Hawaii in 1983.
DECISION
Messrs. Joseph J. Wuscher, Robert J. Rosen, and Sebastian P. Luizzi
each claim entitlement to additional paid "Renewal Agreement Travel" in
connection with their civilian employment with the Department of the Air
Force. We have concluded that their claims may not be allowed.
BACKGROUND
Tour renewal travel for Federal employees stationed overseas is
authorized by 5 U.S.C. Sec. 5728. Implementing regulations applicable to
civilian employees of the Department of the Air Force are found at
paragraph C4150 et seg. of Volume 2 of the Joint Travel Regulations (2
JTR).
Prior to September 8, 1982, employees stationed outside the
continental United States--including those stationed in Alaska and
Hawaii--were eligible for tour renewal travel upon completion of an
agreed period of service overseas and the signing of a written agreement
to serve another period of service at the same or another overseas
location. However, section 351 of the Omnibus Budget Reconciliation Act
of 1982, Public Law 97-253, 96 Stat. 763, 800, September 8, 1982,
amended 5 U.S.C. Sec. 5728 to change the conditions under which tour
renewal agreement travel could be authorized for Federal employees
assigned to Alaska and Hawaii. The amendment provided that, under
regulations prescribed by the President, tour renewal travel could be
allowed to employees assigned to Alaska and Hawaii after September 8,
1982, only when such travel was necessary for recruiting or retaining an
employee for a tour of duty in Alaska or Hawaii.
On August 1, 1984, the applicable regulations were amended to
authorize tour renewal travel for employees assigned to a post of duty
in Alaska or Hawaii after September 8, 1982, only if it is determined
under directives by the Department of Defense component involved that
payment of these expenses is necessary for the purpose of recruiting or
retaining an employee. Paragraphs C4152 and C4153, 2 JTR (Change 226,
August 1, 1984). The Air Force then issued a directive on September 1,
1984, specifying categories of employees in positions to be authorized
tour renewal agreement travel when transferred to Alaska or Hawaii after
September 8, 1982. Paragraphs C4152 and C4153, 2 JTR, and the Air Force
directive differentiate between employees serving in Alaska or Hawaii on
September 8, 1982, and those assigned, appointed or transferred to a
post of duty in Alaska or Hawaii after September 8, 1982. Under these
published rules only employees "who have been continuously stationed in
Hawaii on and since" September 8, 1982, continue to have the entitlement
for periodic renewal agreement travel, but those not so assigned are not
authorized the entitlement unless their positions have been identified
by the Air Force as hard to fill. In addition, however, specific
provision was made to allow two round trips within a 5-year period to
any employee regardless of position who was assigned to Hawaii after
September 8, 1982, but prior to the date the regulations were amended on
August 1, 1984.
The claimants' cases and contentions here are typified by Mr. Wuscher
who was employed by the Air Force in Hawaii between 1966 and 1978. In
November 1978 he left Hawaii to accept a position of civilian employment
with the Navy in the Philippines. He returned to Hawaii 5 years later
in November 1983 and was again employed by the Air Force. He reports
that he was later advised by the Air Force that since he completed a
transportation agreement after September 8, 1982, but prior to the
subsequent retroactive change to the JTR on August 1, 1984, he would be
entitled to two renewal agreement tour trips within a 5-year period
beginning with the date of his Hawaii tour, rather than losing the
entitlement altogether.
Mr. Wuscher further reports that at the same time the Air Force
determined that his permanent change-of-station move to the Philippines
in 1978 was based on his registration for that area after a
reduction-in-force at his Hawaii station. The Air Force therefore
concluded that when Mr. Wuscher moved, he entered a new transportation
agreement for the Philipoine station. While neither his return rights
to a position in Hawaii nor his entitlement to file for return
transportation to the continental United States were affected, because
of the intervening overseas tours the Air Force concluded that Mr.
Wuscher's entitlement to continual renewal agreement tour travel--based
on consecutive tours in Hawaii--was lost because he was no longer
serving under a continual agreement in Hawaii. In short, the Air Force
determined that because Mr. Wuscher was not serving a tour of duty in
Hawaii on September 8, 1982, he could not receive continuing coverage
under 5 U.S.C. Sec. 5728, as amended by Public Law 97-253, supra.
Mr. Wuscher counters that he only took the assignment in the
Philippines due to the reduction-in-force action in Hawaii. His
understanding was that the job in the Philippines was an offer which, if
not accepted, would remove nim from priority reinstatement to his prior
grade in the Hawaii position. Therefore, he stated, he took the job in
the Philippines without any knowledge that he would be relinquishing his
renewal agreement tour travel rights when he returned to a position in
Hawaii. Thus, it was his expectation that when he returned after 5
years to Hawaii and was restored to the higher grade position he had
left, that position would also carry with it a continuing entitlement to
renewal agreement travel and thus he would be "grandfathered" on the
basis of his previous entitlement.
ANALYSIS AND CONCLUSION
Paragraph C4152, 2 JTR, reads as follows:
"An employee whose status on 8 September 1982 was any of the
situations listed in items 1, 2, or 3, involving a post of duty in
Alaska or in Hawaii will continue to be eligible to receive
allowances for travel and transportation expenses for tour renewal
agreement travel provided that the employee continues to serve
consecutive tours of duty within Alaska or Hawaii. Transfers
between Alaska and Hawaii will not constitute consecutive tours of
duty for purposes of continuing eligibility under the provisions
of this paragraph. On 8 September 1982, the employee must have
been:
"1. serving a tour of duty in Alaska or Hawaii on that date;
"2. en route to a post of duty in Alaska or Hawaii under a
written agreement to serve a tour of duty; or
"3. engaged in tour renewal agreement travel and have entered
into a new written agreement to serve another tour of duty in
Alaska or in Hawaii."
As indicated, this regulation was issued to implement 5 U.S.C. Sec.
5728, as amended by Public Law 97-253, supra. We have no basis to
question the validity of this regulation restricting continued unlimited
entitlement to periodic renewal agreement travel to employees who have
been continuously stationed in Hawaii and Alaska on and since September
8, 1982.
Our view is that under the plain terms of the regulation, in order to
have continued unrestricted eligibility for renewal agreement travel,
employees such as Mr. Wuscher must have been serving a tour in Alaska or
Hawaii on September 8, 1982. In our view the fact that he may have been
stationed in Hawaii between 1966 and 1978, and that he may have had
return rights to Hawaii in 1983 following his period of employment
elsewhere, does not meet that criteria. Furthermore, there is nothing
in the record before us to suggest that his transfer away from Hawaii in
1978 was effected in contravention of the applicable civil service
rules, nor does the record provide any indication that the transfer
might otherwise have been improper or invalid. We consequently have no
basis to treat the transfer as a nullity. Since Mr. Wuscher was
properly transferred to the Philippines in 1978 and remained stationed
there until 1983, he cannot be accorded the status of an employee who
was serving in Hawaii on September 8, 1982. Hence, since there has
apparently been no determination that an authorization of renewal
agreement tour travel was necessary to recruit and retain an employee
for the position he filled when he returned to Hawaii in November 1983,
his entitlement is now limited to two round trips within a 5-year period
computed from November 28, 1983, to November 27, 1988.
Comptroller General
of the United Stated
B-225011
January 13, 1987
Digest
In June 1984, Atlanta Regional Office of OPM issued a classification
appeal decision which concluded that the employee's position was
properly classified as a GS-301-12. In May 1986, employee requested OPM
to reconsider the decision, in citing certain extenuating circumstances.
OPM declined to reconsider, citing the delay in the request of almost 2
years. The classification decision issued by OPM and its decision not
to reconsider are mandatory and binding on all administrative,
certifying, payroll, disbursing, and accounting officials of the Federal
Government. 5 U.S.C. Sec. 5112 (1982); 5 C.F.R. Sec. 511.612 (1982).
The GAO has no authority to waive or modify the application of the
previously cited law, regulations, or decisions of OPM in classification
matters. Moreover, U.S. v. Testan, 424 U.S. 392 (1976), precludes
backpay for wrongful classification actions.
The Honorable Charlie Rose
House of Representatives
Dear Mr. Rose:
This letter is in response to your letter of September 29, 1986, on
behalf of your constituent, Mr. Jarvis E. Gust, an employee of the
Department of the Army, concerning his request for reconsideration of
the classification appeal decision by the Atlanta, Georgia, Region,
United States Office of Personnel Management (OPM).
In your letter, you request that we review Mr. Gust's case with OPM
and make a valid interpretation of the Supreme Court ruling in United
States v. Testan, 424 U.S. 392 (1976). The primary issue presented by
Mr. Gust is whether, under the facts and circumstances surrounding his
classification appeal, he is entitled to a review by the Classification
Appeals Office of OPM of the classification appeal decision by the
Atlanta Region.
The record shows that Mr. Gust filed a classification appeal of his
position as Plans and Operations Officer, GS-301-12, with the Southeast
Regional Office of OPM in Atlanta. By decision dated June 29, 1984, the
regional office determined that Mr. Gust's position had been properly
classified at GS-301-12. In the letter accompanyinq the decision, OPM
stated that the appellate decision constituted a certificate which is
mandatory and binding on all administrative, certifying, payroll,
disbursing, and accounting officials of the Government; that it was the
final administrative decision on the classification of the position;
and that it was not subject to further appeal. The letter also stated
that administrative procedures for possible further review included
specified time limits. Mr. Gust was instructed to contact his servicing
personnel office if he desired further information or assistance.
Upon receipt of the OPM classification appeal decision, Mr. Gust
reports that he discussed the classification appeal decision with his
civilian personnel office and was given an outdated (May 6, 1968) OPM
regulation which stated there were no time limits in appealing the
decision. Mr. Gust requested OPM to reconsider the classification
appeal decision of the Atlanta Region by letters dated May 29 and June
20, 1986.
In letters addressed to Mr. Gust dated June 16 and July 28, 1986, OPM
explained that the May 6, 1968, regulation had been superseded by
Federal Personnel Manual (FPM) Letter 511-9 dated March 20, 1981.
Chapter 511, subchapter 6-11c, of the current regulation requires that a
request for reconsideration of a classification appeal decision by OPM
must be submitted to the appropriate OPM official not later than 45
calendar days following the date of the original decision. The OPM
concluded that irrespective of the reasons cited by Mr. Gust which
caused the delay in pursuing his appeal, the delay of almost 2 years
precluded OPM from accepting his request for reconsideration of the
classification appeal decision by the Atlanta Regional Office.
In his letter to you of August 21, 1986, Mr. Gust expresses
frustration about further dealings with OPM and requests your assistance
in achieving his goal of a retroactive reclassification with backpay.
We can sympathize with his viewpoint, but unfortunately we cannot remedy
the situation he finds himself in. The reason is that the authority to
classify and to grant appeals of classification actions of positions
under the General Schedule is vested by law not in the General
Accounting Office, "but in the employing agencies and in OPM. See 5
U.S.C. Secs. 5107 and 5112 (1982) and the implementing regulations in
Part 511, title 5, Code of Federal Regulations, 1982. A classification
appeal decision made by OPM is final unless reconsidered by OPM. There
is no further right to appeal. The decision constitutes a certificate
which is mandatory and binding on all administrative, certifying,
payroll, disbursing, and accounting officials of the Federal Government.
5 U.S.C. Sec. 5112; 5 C.F.R. Sec. 511.612. The General Accounting
Office has no authority to waive or modify the application of the
foregoing provisions of law and regulations or decisions of OPM rendered
pursuant thereto.
Moreover, we regretfully must advise that, even if OPM did reconsider
its classification decision, it could not be given retroactive effect.
The OPM correctly stated that, in United States v. Testan, 424 U.S. 392
(1976), the Supreme Court held that neither the classification statutes,
5 U.S.C. Secs. 5101-5115 (1982), nor the Back Pay Act, 5 U.S.C. Sec.
5596 (1982), creates a substantive right to backpay by an employee
against the United States during a period of claimed wrongful
classification. See also Robert D. Warren, B-197474, June 9, 1980.
Mr. Gust also refers to FPM Bulletin No. 751-2, July 21, 1983, in
support of his claim for retroactive benefits. The Bulletin in turn
refers to the Supreme Court decision in Bush v. Lucas, 462 U.S. 367
(1983). In that decision, the Court ruled that Federal employees cannot
sue their supervisors for money damages when a personnel action results
in an alleged violation of constitutional rights. The Court did not in
any way modify its prior decision in Testan and, hence, the Bush
decision does not help Mr. Gust.
We hope that this letter adequately responds to your constituent's
questions. If we may be of further help, please let us know.
Sincerely yours,
Harry R. Van Cleve
General Counsel
B-225008
February 24, 1987
DIGEST
Without express or reasonably implied statutory authorizations, the
head of a department or agency of the Government is powerless to dispose
of property of the United States. Under various provisions of law, law
enforcement agencies seizing property, or having custody of forfeited
property, may retain it for official use or dispose of it as otherwise
authorized by law. However, authorized methods of disposition do not
appear to include giving the property to the states for legal
fund-raising activities.
The Honorable David L. Boren
United States Senator
621 N. Robinson
Oklahoma City, OK 73102
Dear Senator Boren:
This is in response to your letter dated December 30, 1986,
forwarding to this Office a suggestion you received from Mr. Dick
Rudolph, Secretary for the Oklahoma Tourism and Recreation Department.
Mr. Rudolph asks if goods seized by Federal agents and customs personnel
can be donated to nonprofit organizations for legal fund-raising
activities. You sought our views regarding the possibility of using
this property in this manner.
It has uniformly been held in the decisions of the courts and the
opinions of the Comptroller General and the Attorney General that
Article IV, section 3, clause 2 of the Constitution of the United States
gives the Congress exclusive jurisdiction to dispose of real or other
property of the United States. 1/ This includes property forfeited to
the United States as a result of the conduct of its various law
enforcement activities. Therefore, without express or reasonably
implied statutory authorization, the head of a department or agency of
the Government is powerless to dispose of the property of the United
States.
Prior to 1984, under the authority of sections 303 and 304 of the act
of August 27, 1935, as amended, 40 U.S.C. Secs. 304h and 304i (1982),
law enforcement agencies seizing property, or having custody of
forfeited property, could either retain it for official use or dispose
of it as otherwise authorized by law. Disposal is authorized under the
surplus property provisions of the Federal Property and Administrative
Services Act of 1949, as amended, 40 U.S.C. Sec. 484 (1982), either by
sale or in limited circumstances by donation for specified purposes
which do not include legal fund-raising.
The Comprehensive Crime Control Act of 1984, title II of Public Law
98-473, amended various provisions of law to give Federal law
enforcement agencies such as the Drug Enforcement Administration, the
Immigration and Naturalization Service, the Federal Bureau of
Investigation, the Customs Bureau, and the Coast Guard, increased
authority to seize and obtain forfeiture of assets used in the
commission of crimes or acquired with the proceeds from those crimes.
The act also gave Federal law enforcement agencies increased options
depending on the crime, for the disposition of the forfeited property,
which now include:
retaining the property for official Government use;
selling the property and depositing the proceeds in asset
forfeiture funds (28 U.S.C. Sec. 524(c) and 19 U.S.C. Sec.
1613a), which are used to finance management of the seized
property programs;
sharing the property with the state and local law enforcement
agencies that participated in the investigation that led to
seizure of the property;
sharing the property with state agencies for medical or
scientific research; or
transferring the property to the appropriate Government agency
for disposition in accordance with law. 2/
None of the authorized uses or dispositions of the seized or
forfeited property would seem to include donating the property or the
proceeds from its sale to states or to non-profit organizations for
legal fund-raising activities. Thus, unless the law is amended to
authorize this use of seized or forfeited property, we are unaware of a
legal basis upon which such action would be authorized.
We trust the foregoing is of benefit to you.
Sincerely yours,
Comptroller General
of the United States
FOOTNOTES
1/ See e.g., United States v. Nicoll, 27 Fed. Cas. 149, No. 15,879
(C.C.D. N.Y., 1826); Irvine v. Marshall, 61 U.S. (20 How.) 558 (1857);
Wisconsin R. Co. v. Price County, 133 U.S. 496 (1890); Light v. United
States, 220 U.S. 523 (1911); Royal Indemnity Co. v. United States, 313
U.S. 289 (1941); 34 Op. Atty. Gen. 320 (1924) and opinions cited
therein; and B-191943, Oct. 16, 1978; 50 Comp. Gen. 63 (1970); 44
id. 824 (1965); 38 id. 36 (1958); 25 id. 909 (1946); 22 id. 563
(1942); 15 id. 96 (1935); and 14 id. 169 (1934).
2/ See, for example, 18 U.S.C. Sec. 1963(h), (i) (Supp. III 1985);
19 U.S.C. Secs. 1616(a) and 1616a (Supp. III 1985); 21 U.S.C. Sec.
853(h), (i) (Supp. III 1985); and 21 U.S.C. Sec. 881(e) (1982 and
Supp. III 1985).
Matter of: Certification of Voucher for Materials used in Savings
Bond Campaign
File: B-225006
Date: June 1, 1987
DIGEST
Internal Revenue Service lump-sum appropriation for processing tax
returns can be used to fund limited amounts of promotional materials for
United States savings bond campaigns if administratively determined to
be appropriate. Such expenditures, which further governmental
interests, are properly incidental to that appropriation.
DECISION
An Internal Revenue Service (IRS) certifying officer questions the
propriety of certifying for payment an imprest fund subvoucher of $289
which covers the cost of crepe paper used in promoting sale of United
States savings honds. For the reasons given below, we find that the
voucher can be certified for payment provided that the head of the IRS
or his delegate finds that the expenditure is reasonable.
Background
The record shows that the IRS Ogden Service Center (Center) in Ogden,
Utah, ordered 80 rolls of crepe paper to make posters that served as
campaign incentives for the Center's United States savings bond
campaign. The Center claims a 30-year trend of high level employee
participation. No particular justification is given for the apparently
large amount of crepe paper that was used.
The imprest funds that were expended for the crepe paper come from
the IRS' fiscal year 1986 appropriation for "Processing Tax Returns,"
one of several lump-sum appropriations to the IRS. Pub. L. No. 99-103,
99 Stat. 471 (H.R. 3036, 99th Cong., 1st. Sess. (1985)). The
appropriation is for necessary IRS expenses not otherwise provided for,
including processing tax returns, revenue accounting and computer
services. The IRS informs us that this appropriation was used because
it is the appropriation supporting the Center's operations.
The IRS certifying officer questions the propriety of the
expenditure. He contends that since the Treasury Department's Bureau of
Public Debt (Bureau) is responsible for administering the savings bond
program and Treasury's Savings Bond Division (Division) is responsible
for promoting and selling bonds, those offices should be the sources for
promotional materials.
In response to our request for Treasury comments, the Department's
Assistant Secretary for Management took a contrary view. He
acknowledged that the Bureau's appropriation "Administering the Public
Debt" is the general appropriation under which Treasury's promotion of
savings bonds is. funded. The Savings Bond Division of the Bureau
receives funding from that appropriation, among other things, for
printing and distributing promotional materials and for public service
announcements. He said, however, that the Division does not conduct
campaigns at individual federal agencies; nor does the appropriation
cover the costs of activities or events put on by individual agencies.
In this regard, he thought that agency use of appropriated funds for
small scale expenditures to support savings bond campaigns, such as the
$289 expenditure for the crepe paper, is proper. The sale of savings
bonds both assists employees to save conveniently and aids the
government in financing the public debt.
Legal Discussion
Section 1301 of title 31 of the United States Code provides that
public funds may only be used for the purpose or purposes for which they
are appropriated. Nevertheless, it is well-settled that where an
appropriation is made for a particular object, by implication it confers
authority to incur expenses that are necessary or proper or incident to
the proper execution of the object. 50 Comp. Gen. 534, 536 (1971).
Consistent with these principles, when governmental interests are
served, we have allowed certain kinds of expenditures absent specific
appropriations providing therefor. For example, we have not objected to
the long-established practice of government agencies cooperating in
charity fund raising campaigns for health and welfare activities, even
though these activities are not specifically authorized by statute.
See, e.g., B-155667, Jan. 21, 1965; B-154456, Aug. 11, 1964. These
campaigns have required some work time of federal employees, government
supplies and equipment, and undoubtedly, limited purchases of
promotional materials.
Similarly, although there is no particular statutory program for
promoting the purchase of United States savings bonds, it is the policy
of the federal government to do so. This policy is expressed both by
statute and executive order. Sections 3105 and 3106 of title 31
delineate the terms of issuance, purchase and sale of savings bonds.
Executive Order No. 11981, 42 Fed. Reg. 17095, Mar. 29, 1977,
established an Interagency Committee for the Purchase of United States
Savings Bonds. Among other things, the order directs federal agencies
to institute the Committee's recommended plans for organizing and
selling bonds. Moreover, as mentioned by the Treasury Department, sales
of savings bonds furthers the governmental interest of financing the
public debt and also provides an easily available investment opportunity
for federal employees.
We have no objection to the IRS using its appropriations for limited
support of United States savings bond campaigns. Such expenditures
carry out governmental policy and further the governmental interest
described. The expenditure of $289 for the crepe paper, if otherwise
proper, may be considered incidental to the IRS lump-sum appropriation
for "Processing Tax Returns." This appropriation, which specifically is
intended for necessary IRS expenses not otherwise provided for, is both
broad enough to cover limited expenditures for savings bond campaign
promotional materials and is the appropriation supporting the Center's
activities.
Since we have no information about the size of the facility, nor
about how the crepe paper was used, we cannot conclude from the record
that the expenditure was or was not unreasonable. Consistent with the
administrative discretion afforded federal agencies, see B-155667, Jan.
21, 1965, we leave resolution of that issue to the IRS.
Accordingly, we find that the voucher can be certified for payment
provided that the head of the IRS or the appropriate delegate finds that
the expenditure is reasonable.
Comptroller General
of the United States
Matter of: Systematics General Corporation-- Reconsideration
File: B-224991.2
Date: April 10, 1987
DIGEST
When contracting agency orally requests a bidder to extend its bid
before expiration of the acceptance period, and the bidder agrees, both
orally and in writing, to do so, an award within the period for which
the bid is extended is proper. Under these circumstances, the General
Accounting Office nee not consider the propriety of the agency's
request, made after expiration of the acceptance period, that the
protester also extend its bid.
DECISION
Systematics General Corporation requests reconsideration of our
decision, Systematics General Corp., B-224991, Feb. 20, 1987, 87-1 CPD P
190, in which we denied a protest against the award of a contract to
Datasec Corporation under invitation for bids (IFB) No.
DABT62-86-B-0021, issued by the United States Army Training and Doctrine
Command, Fort Hood, Texas. The solicitation was for 18 TEMPEST approved
video display terminals. We affirm our prior decision.
Systematics originally contended that the contract should be
terminated and the requirement readvertised because the Army failed to
make an award within a 60-day bid acceptance period, i.e., between bid
opening on July 2, 1986 and expiration of bids on September 2. Rather,
because it required additional time to determine which of the 14 bids
that it had received actually complied with the specifications, the Army
asked the 5 firms that it concluded were responsive to extend their
bids. When the low bidder did not agree to do so, the Army made award
to the second-low bidder, Datasec, on September 24.
The protester, which in the interim had implemented an overall price
reduction for the terminals in question, conditioned its bid extension
on the Army's acceptance of a reduced bid. When the contracting officer
refused to consider such a bid, the firm did not extend.
As indicated in our prior decision, Systematics argued that the
Army's delay in making the award violated Federal Acquisition Regulation
(FAR), 48 C.F.R. Sec. 14.101 (e) (1986), which requires that awards be
made with reasonable promptness. In denying this protest, we found that
although the delay had resulted in the expiration of the low bid, this
fact alone did not warrant cancellation of the IFB because there was no
prejudice to the other bidders, and the second-low bid would meet the
Army's needs at a reasonable price. We also found no evidence to
support the protester's vague and unsupported allegations regarding the
potential for collusion caused by the delay.
In requesting reconsideration, Systematics argues that both the
agency report and our decision ignored another alleged impropriety that
it raised. According to the protester, the contracting officer violated
applicable regulations by not requesting extensions until after bids had
expired. FAR, 48 C.F.R. Sec. 14.404-1 (d), states that the several
lowest bidders should be asked to extend their bids before they expire;
in Systematics' case, the contracting officer did not request an
extension until September 16, or 2 weeks after the firm's bid had
expired.
In its request for reconsideration, the protester describes a
hypothetical situation in which, after expiration of bids, the low
bidder agrees not to extend in return for a payoff by the second-low
bidder. Although it does not allege that any collusion occurred in this
case, Systematics concludes that it was prejudiced by the allegedly
improper extensions because it might be successful upon resolicitation.
We continue to find the award proper. The record indicates that the
contracting officer, by telephone on August 28, requested the low bidder
to extend its bid which, as noted above, was to expire on September 2.
The low bidder declined to do so and subsequently confirmed this in
writing. On September 1, the contracting officer requested and the
second-low bidder orally agreed to extend its bid for at least 45 days;
Datasec subsequently confirmed in writing that the bid would remain open
until October 30. Thus, the second-low bid had not expired before the
Army requested an extension or before the Army accepted it on September
24.
The record further indicates that the contracting officer waited
until September 16 to request extensions from the protester and the
remaining firms that had submitted responsive bids. While bids that
have expired generally may be revived, so long as the action would not
compromise the integrity of the competitive bidding system, Trojan
Industries, Inc., B-220620, Feb. 10, 1986, 86-1 CPD P 143, in view of
the fact that Datasec's bid never expired, we need not consider the
propriety of the attempt to revive the protester's bid (or the alleged
potential for collusion) here.
Nothing else in Systematics' request for reconsideration warrants
modifying or reversing our prior decision. It is affirmed. Bid Protest
Regulations, 4 C.F.R. Sec. 21.12 (1986).
Harry R. Van Cleve
General Counsel
Matter of: Systematics General Corporation
File: B-224991
Date: February 20, 1987
DIGEST
1. Protest that invitation for bids should be canceled and
resolicited because the agency delayed 3 months before making an award
and the low bidder refused to extend its bid is without merit where the
other bidders were not prejudiced by the delay and award to the
second-low bidder would meet the needs of the government at a reasonable
price.
2. The desire of a bidder to lower its bid price after bid opening
does not constitute a compelling reason that would justify cancellation
of an invitation for bids and resolicitation.
DECISION
Systematics General Corporation protests the award of a contract to
Datasec Corporation under invitation for bids (IFB) No.
DABT62-86-B-0021, issued by the United States Army Training and Doctrine
Command, Fort Hood, Texas, for 18 TEMPEST approved video display
terminals. Systematics contends that the contract should be terminated
and the requirement readvertised because the Army failed to make award
with reasonable promptness. In addition, Systematics independently
lowered its price during the period of bid extension, and argues that
the agency should have requested additional bids to take advantage of
changes in the market.
We deny the protest.
The Army received 12 bids by the July 2, 1986 bid opening date.
Because of a wide variation in bid prices, the Army was concerned that
the offered products might not comply with the specifications. After
investigation, the Army determined that five bids were responsive. This
determination was reached shortly before expiration of the minimum
60-day bid acceptance period, and the Army asked the firms bidding
acceptable products to extend their bid acceptance periods. Systematics
responded with an offer to reduce its bid price, and after being told
that this would not be acceptable, did not extend its fourth-low bid.
The low bidder also did not extend its bid, and on September 24, the
Army awarded a contract to Datasec, the second-low bidder.
Systematics argues that the Army could have determined the
responsiveness of the bids in a short period, and that the delay in
awarding a contract violated the Federal Acquisition Regulation (FAR)
requirement that award be made with "reason able promptness." 48 C.F.R.
Sec. 14.101 (e) (1986). The protester contends that the delay limited
competition since only two bids remained eligible for award (only the
second-low and fifth-low bidders extended their acceptance periods).
The protester also contends that the delay gave rise to a loss of
confidentiality about the bids, resulting in the opportunity for
"collusion" between the low bidder and other bidders. Faced with a 60
day delay, the protester argues, the agency should have recompeted the
procurement to "insure competition and to take advantage of changes of
the market, not the least of which was its own lower price."
In order to preserve the integrity of the sealed bid system, the FAR
requires that award be made to the lowest responsible bidder unless
there is a "compelling reason to reject all bids and cancel the
invitation." 48 C.F.R. Sec. 14.404-1 (a) (1) Generally, no compelling
reason justifies cancellation when award under the IFB would meet the
needs of the government without prejudice to the other bidders. See
Energy Maintenance Corp., et al., 64 Comp. Gen. 425 (1985) 85-1 CPD P
341; Pacific Coast Utilities Services, Inc., B-220394, Feb. 11, 1986,
86-1 CPD P 150; FAR, 48 C.F.R. Sec. 14.404-1(c). In our view, none of
the issues raised by Systematics warrants cancellation of the IFB and
resolicitation in this case.
Although the law, 10 U.S.C. Sec. 2305(b) (3) (Supp. III 1985), and
the implementing FAR provision require awards to be made with reasonable
promptness, there is no requirement for the government to make an award
within a bidder's initial bid acceptance period. It is generally within
the contracting agency's discretion to request an extension in order to
avoid the need for recompetition where administrative difficulties delay
an award. FAR, 48 C.F.R. Sec. 14.404-1 (d); Boyd-Ferm, Inc., B-218081,
Feb. 21, 1985, 85-1 CPD P 222. Bidders are, of course, free to refuse
such a request and to withdraw their bids. MEMM General, Inc.,
B-210939, May 31, 1983, 83-1 CPD P 579.
Here, the Army's delay did result in the withdrawal of the low bid.
In our view, this fact alone would not warrant cancellation of the
IFB--there was no prejudice to the other bidders, and the Army found
that the second-low bid would meet its needs at a reasonable price. As
discussed above, Systematics complains that the delay also caused a loss
of conf identiality and potential for collusion. Sealed bids are
publicly opened and neither the identity of the bidders nor their bid
prices are confidential. Also, the protester does not describe the
nature of the potential "collusion" that it envisions, or how any
collusion in this case might have prejudiced Systematics' competitive
position. Consequently, we find no merit in these suggested
justifications for a recompetition.
Finally, the possibility of obtaining a lower price from Systematics
clearly would not justify reprocurement. To do so would be tantamount
to the conduct of an auction, in which a bidder, knowing the original
prices of others, would have an opportunity to bid again for the
identical items. We strictly construe the FAR prohibition against bid
modifications after bid opening, including circumstances where, as here,
a bidder seeks to condition extending its bid on the agency's acceptance
of a lower price. See Milwaukee Valve Co., Inc., B-205937, June 14,
1982, 82-1 CPD P 575. We do not consider Systematics' desire to lower
its price to be a "compelling reason" to reject all bids and cancel the
solicitation.
We deny the protest.
Harry R. Van Cleve
General Counsel
Matter of: Kora & Williams Corporation
File: B-224987
Date: February 27, 1987
DIGEST
1. Doubt as to when the protester first knew its basis of protest is
resolved in favor of the protester for timeliness purposes.
2. Agency properly canceled an invitation for bids (IFB) where all
bid prices exceeded the funds available for the construction project.
The protester's contention that award is required because a provision on
the cover sheet of the IFB expressed the agency's intention to fund the
project either with fiscal year 1986 or fiscal year 1987 appropriations
is clearly unreasonable, since no government official has the authority
to award a contract or to obligate funds when to do so would violate a
statute or regulation.
3. Protester's request for reimbursement of its bid preparation costs
is denied because recovery of such costs is not permissible where a
decision on the merits denies the protest.
DECISION
Kora & Williams Corporation (K&W) protests the cancellation, because
of a lack of funds, of invitation for bids (IFB) No. F49642-86-B-0452,
issued by the Department of the Air Force for additions and alterations
to a commissary on Andrews Air Force Base, Maryland. K&W, whose bid was
low, contends that a provision in the IFB committed the government to
make an award funded by fiscal year 1986 appropriations if available or,
if not, by fiscal year 1987 appropriations. K&W contends that it relied
on this alleged commitment when it assigned its estimating staff for 3
weeks to prepare its bid. K&W requests that the Air Force be directed
to reinstate the procurement and make award to K&W when funds become
available or, alternatively, to reimburse K&W for its bid preparation
costs.
We deny the protest and the request for bid preparation costs.
The Air Force contends that, since it informed K&W on September 29,
1986, that the procurement was being canceled, K&W's protest filed on
October 16 is untimely under our Bid Protest Regulations. These
regulations require that protests, other than those based on alleged
improprieties apparent prior to bid opening or the closing date for
receipt of proposals, must be filed not later than 10 working days after
the basis for protest is known or should have been known, whichever is
earlier. 4 C.F.R. Sec. 21.2(a) (2) (1986).
Although the contracting officer states that K&W was told on
September 29 that the procurement was being canceled because of the lack
of funds, the Air Force concedes that K&W was not given the reason for
the cancellation at that time. K&W insists that the telephone call of
September 29 was from a secretary in the procurement office who advised
that the Air Force was not certain at that time what the status of the
procurement was. Moreover, the record indicates that it was not until
October 3 that a written determination to cancel was made because all
bids exceeded "the funds available/ authorized." Thus, it is not clear
when K&W first knew the reason for the cancellation. In such cases, it
is our policy to resolve any doubt as to when the protester first knew
the basis of its protest in favor of the protester for timeliness
purposes. Benco Contract Services Co., B-218465.2, Jan. 15, 1986, 86-1
CPD P 40. Accordingly, as we received K&W's protest within 10 working
days of October 8 (when K&W received the October 3 amendment canceling
the procurement), we consider the protest to be timely and will consider
it on it merits.
The provision on which K&W bases its contention that the Air Force is
committed to make an award appears in the cover sheet to the IFB and
reads as follows:
"While funds are not presently on hand to fund this project, we
anticipate that the funds will be available within 30-45 days. It
is this command's intention to fund this project using FY 86
appropriations. In the remote possibility that this project
cannot be funded with FY 86 appropriations, it will be funded with
FY 87 money."
A total of four bids was received and K&W's bid price of $3,967,000
was low but exceeded the government estimate by $1,069,289 and the
available funding. On October 3, the procurement was canceled on the
basis that all bids exceeded the available funds.
We find that the cancellation was within the authority of the Air
Force. Although cancellation of a solicitation is not permitted after
bids have been opened and the prices have been exposed unless a
compelling reason for the cancellation exists, an agency's determination
that funds are not available for obligation to the contract is such a
reason. NDT-1, Inc., B-220570, Nov. 20, 1985, 85-2 CPD P 576, aff'd on
reconsideration, B-220570.2, Apr. 15, 1986, 86-1 CPD P 364.
The record indicates that Congress appropriated $2,650,000 for the
project. In addition, Air Force Regulation 86-1, Sec. G (26) (May 7,
1984), authorizes funding of Air Force Commissary projects to a maximum
of 125 percent of the approved, (appropriated) amount 1/, for a maximum
for this project of $3,312,500. There is nothing in the record here to
indicate that the cancellation was due to anything other than the
unavailability of adequate funds to obligate to a contract at the price
bid by K&W. Furthermore, the Air Force reports that it plans to
reevaluate the requirement and to make appropriate design modifications
to bring the project within the applicable funding limitation.
Therefore, because its price exceeded the applicable cost limitation,
K&W's bid was properly rejected since no government official has the
authority to award a contract or to obligate funds when to do so would
violate a statute or regulation. See Vanport Manufacturing Co.,
B-186559, Oct. 19, 1976, 76-2 CPD P 343 at 4.
Moreover, the Federal Acquisition Regulation, 48 C.F.R. Sec. 1.602-1
(1986), specifically states that contracting officers may bind the
government only to the extent of the authority delegated to them and
that no contract shall be entered into unless the contracting officer
ensures that all requirements of law have been met. In our view, the
provision relied upon by K&W to support its position indicates only the
contracting activity's optimistic intention to obtain funds for the
project if legally possible. An interpretation that the provision
requires an award to K&W even though it would exceed the available funds
and violate the statutory ana regulatory limitation on costs is clearly
unreasonable.
Finally, this deficiency and the circumstances of this case do not
warrant reimbursement of K&W's bid preparation costs since recovery of
such costs is not permitted where the solicitation has been properly
canceled. R.H.G. Systems-- Request for Reconsideration, B-224176.2,
Nov. 19, 1986, 86-2 CPD P 589; Contemporary Roofing, Inc., B-222691,
June 2, 1986, 86-1 CPD P 510.
The protest and the claim for bid preparation costs are denied.
Harry R. Van Cleve
General Counsel
FOOTNOTE
1/ Authorized by 10 U.S.C. Sec. 2853(a)(2) (1982).
B-224978
June 2, 1987
DIGEST
We are unaware of any specific requirement or condition upon
Department of Justice grant programs which would restrict a local unit
of government from adopting a resolution supporting the provision of
sanctuary to refugees. Whereas the resolutions do not permit or condone
city officials acting outside the authorities incident to their offices,
we cannot foresee what activities contemplated that would conflict with
grant requirements. To the extent some conflict may exist, the
Department must comply with established procedures for withholding grant
funds.
The Honorable Vic Fazio
House of Representatives
Dear Mr. Fazio:
This responds to the request made by you and Representative Joe
Moakley for our views regarding the Department of Justice's authority to
withhold federal assistance funds in light of letters sent by a U.S.
Attorney to city council members of Davis and Sacramento, California.
The U.S. Attorney's letters were in response to resolutions by the two
cities in support of providing sanctuary to refugees from El Salvador
and Guatemala. The U.S. Attorney said such resolutions were
"irreconcilable with continued federally financed assistance to
Sacramento and Davis law enforcement and other programs." The U.S.
Attorney later denied that the letters were intended as a threat to cut
off funding. You also ask whether there are any circumstances which
would authorize the Justice Department to withhold federal program funds
from these cities.
As discussed with your staff, we have solicited comments from the
Department of Justice concerning this situation. According to the
Department's response, the U.S. Attorney involved intended "merely to
urge the cooperation of fellow law enforcement officials in the
enforcement of immigration laws." The Department declined to render
further legal comment because it is not considering a cut-off of funds
at this time. As explained below, while the Department's authority to
administer its grant programs includes the power to terminate a specific
grant or withhold its funds, basically the exercise of this authority
must be directly related to violations of the grant purposes and
conditions placed on the grant in question. The resolutions presented
in this case specifically do not permit city officials to act contrary
to what is required of them by law. Therefore, these resolutions do not
appear to be the kind of activity that would justify such a response.
BACKGROUND
The Department of Justice administers a number of federal assistance
programs aimed at strengthening and improving law enforcement and
criminal justice through assistance to state and local governments. 1/
All of these programs contain a variety of statutory and regulatory
restrictions or conditions to which state and local government
recipients are subject. Besides these restrictions, grant conditions
may also appear in the actual grant documents, including any particular
grantee's assurances embodied in a proposal plan and other grant
materials such as handbooks and manuals. In general, grant conditions
are intended to ensure that grantees effectively carry out the
activities for which they receive federal funds and are able to account
for these funds. In addition, there are a number of generally
applicable conditions to the receipt of federal funds such as civil
rights provisions and other cross-cutting and mandated requirements. 2/
The Department has the authority to suspend or terminate federal
funding under any of its assistance programs in the event of substantial
non-compliance by a grant recipient with any substantive program
condition. Further, absent explicit statutory authority to do so, a
grantor agency may not shut off the funding of one grant program to a
recipient in order to force the same recipient to comply with the
requirements of another program. Each program has its own independent
existence under law and as such, non-compliance must be judged
individually. 3/
CONCLUSION
We are unaware of any specific requirement or condition upon federal
grant assistance which would restrict a local unit of government from
adopting a resolution such as described in your request. We cannot
foresee what activities might be contemplated under these resolutions
that would conflict with Justice Department grant requirements.
To the extent some conflict may exist, the Department, as any agency,
must comply with established procedures for withholding grant funds.
This letter will be available to the public 30 days from today unless
you release it earlier.
Sincerely yours,
Comptroller General
of the United States
FOOTNOTES
1/ See, e.g., (1) Formula grants for juvenile justice and delinquency
programs established by the Juvenile Justice and Delinquency Prevention
Act of 1974, as amended, 42 U.S.C. Sec. 5601 et seq., 28 C.F.R. Part 31
(1986); (2) Block grants for criminal justice programs established by
the Act now referred to as the Justice Assistance Act of 1984, 42 U.S.C.
Sec. 3711 et seq., 28 C.F.R. Part 33 (1986); and (3) Emergency
Assistance under the Emergency Federal Law Enforcement Assistance
provision of the Justice Assistance Act of 1984, 42 U.S.C. Sec. 10501 et
seq., 28 C.F.R. Part 65 (1986).
2/ See, e.g., Title VI of the Civil Rights Act of 1964, which states
"no person in the United States shall, on the ground of race, color or
national origin, be excluded from participation in, be denied the
benefits of, or be subjected to discrimination under any program or
activity receiving Federal financial assistance." 42 U.S.C. Sec. 2000d
(1986). Federal agencies are required to carry out this provision in
administering their programs. 42 U.S.C. Sec. 2000d-1. The Department's
regulations covering suspension or termination of financial assistance
for discrimination prohibited by Title VI are found at 28 C.F.R. Part
42.108(c).
3/ See Cappalli, Rights and Remedies Under Federal Grants, Bureau of
National Affairs, Inc., 1979, p. 97-98.
Matter of: CDA Inc.
File: B-224971
Date: February 13, 1987
DIGEST
1. Proposal that offered to supply one building did not meet material
requirement for supplying two buildings and was, therefore, properly
found to be technically unacceptable.
2. Where full and open competition and reasonable prices are obtained
by the government and the record does not show--and the protester does
not allege--a deliberate attempt by the contracting agency to exclude
the protester from competition, the protester's faiiure to receive an
amendment materially changing solicitation requirements does not affect
the validity of the award made to another offeror.
DECISION
CDA Inc. protests the award of a contract to International Shelter
Systems, Inc. for a steel building under Defense Construction Supply
Center (DCSC) request for proposals (RFP) No. DLA700-86-R-7733. The CDA
proposal was rejected by DCSC as technically unacceptable due to CDA's
failure to acknowledge RFP amendment No. 0001, which contained certain
drawings that DCSC judged to be essential to proper contract
performance. CDA maintains that its low-priced offer contained
sufficient data to make it technically acceptable and requests that the
award be made to it.
We deny the protest.
The RFP requested offers for one steel building (Federal Supply Class
5410) "per attached drawings and specifications" and for two sets of
erection drawings. The RFP also advised that the drawings were "FOR
REFERENCE ONLY." Initial proposals were to be submitted by June 18. CDA
submitted a timely proposal dated June 16. Amendment No. 0001 to the
RFP was issued on June 20. The amendment provided the "attached
drawings," which had not been included with the RFP as originally
issued, and again advised that these were "for reference only." These
drawings provided no information not already in the RFP specifications
except for the locations of the door, window, and framed opening on the
front of the building; the locations of the side windows, one on each
side of the building; and the location of the vents on the roof of the
building. The amendment also extended the deadline for submitting
proposals to July 2.
Amendment No. 0002 to the RFP was issued on August 6. This
amendment, among other things, extended the proposal receipt date to
August 20 and increased from one to two the number of buildings that
would be purchased. The amendment also requested the submission of best
and final offers by the August 20 receipt date.
CDA acknowledged neither amendment, nor did it submit a best and
final offer. Award was made on September 5. By letter dated September
25, CDA was notified of the rejection of its offer and of the award.
DCSC states that an unnamed employee of CDA called prior to the
August 20 deadline for the submission of best ana final offers and that
it advised that person that RFP amendments had to be acknowledged in
order for a proposal to be considered for award. In any event, each
amendment did advise offerors that acknowledgment should be made and
that a failure to do so could result in the rejection of the offer.
CDA, noting that it did receive amendment No. 0001, contends that the
information in the first amendment regarding the location of the
windows, door, framed opening, and vents is not such as to require
acknowledgment since these matters are always dealt with during contract
performance. Accordingly, it believes that its offered building was
technically acceptable. CDA states that, contrary to the assertions of
DCSC, it did not call DCSC nor did it receive amendment No. 0002
requiring a second building.
We will assume for the purposes of our decision that no CDA employee
called DCSC regarding this procurement from the time proposals were
submitted on June 18 until after the August 20 deadline for the
submission of best and final offers. We will also assume that CDA did
not receive amendment No. 0002. Even making these assumptions, we
conclude that the rejection of the CDA proposal was proper.
While the concept of responsiveness is not technically applicable to
negotiated procurements, where an offer does not meet a material
requirement of the RFP, it is permissible for the contracting officer to
reject that offer as technically unacceptable. B&D Supply Co. of
Arizona, B-210023, July 1, 1983, 83-2 CPD P 50. Here, it is clear that
the CDA proposal did not meet a material requirement of the RFP--CDA
offered to supply only one building rather than the two required,
contrary to the amended RFP requirements. 1/ Consequently, the
materiality of amendment No. 0001 need not be considered.
Finally, while CDA denies having received amendment No. 0002, we note
that the risk of nonreceipt of an amendment generally rests with the
offeror. The fact that one offeror does not receive a material
amendment to the RFP, and is thereby precluded from receiving the award,
has no effect on the validity of the award to another offeror where full
and open competition and reasonable prices are obtained and the recor
does not show a deliberate attempt by the contracting agency to exclude
the offeror from the competition. International Association of Fire
Fighters, B-220757, Jan. 13, 1986, 86-1 CPD P 31. The record indicates
that four acceptable offers were received and that reasonable prices
were obtained on this procurement. CDA has not alleged that the agency
was deliberately attempting to exclude it from the competition and the
record does not suggest such an attempt.
Accordingly, the protest is denied.
Harry R. Van Cleve
General Counsel
FOOTNOTE
1/ Parenthetically, we note that CDA's offer expired by its own terms
on August 17, 1986 and thus was unavailable for acceptance in any event,
since the offer was not revived prior to award.
B-224961
September 8, 1987
DIGESTS
1. Relief granted to finance and accounting officers for loss due to
improper payment of active duty pay to individual who had been
discharged. Both officers maintained and implemented an adequate system
of procedures and controls. Initial filing error appears to be the type
of clerical error which will occur even in a well-supervised office.
Subsequent failures in the established safeguard system occurred beyond
the control of the Finance and Accounting Officers.
2. Personal pecuniary liability of a Finance and Accounting Officer
is limited pursuant to 31 U.S.C. 3711(d) which provides that an
accountable officer is not liable for an amount paid if the amount is
not recovered because of a compromise.
Brigadier General B. W. Hall
Deputy Commander for Operations
U.S. Army Finance and Accounting Center
Indianapolis, IN 46249
Dear General Hall:
This responds to your request of October 7, 1986, that we relieve
Maj. D. E. Wallace and his predecessor, Maj. R. A. Arteaga, Finance and
Accounting Officers, 27th Finance Company, Fort Hood Texas, under 31
U.S.C. Sec. 3527(c) for six improper payments totaling $6,481.39,
reduced by plea agreement to $5,776.93. These improper payments began
sometime before Maj. Wallace replaced Maj. Arteaga and continued during
the time Maj. Wallace was the Finance and Accounting Officer.
The improper payments involved six checks paid to Sp.4 Teresa E. King
who was discharged on April 5, 1985, but continued to receive active
duty pay through September 30, 1985. These payments resulted from an
absence of information concerning Sp.4 King's separation in her finance
files and the subsequent failure of procedural safe-guards that would
have prompted discovery of the omission in the files. We grant relief
to both Finance and Accounting Officers because they both maintained and
enforced adequate procedures and controls to avoid errors.
BACKGROUND
Sp.4 King enlisted in the U.S. Army for a term of 3 years on April 6,
1982. In August of 1983 she requested and received a 2-year extension
which was posted to both her personnel and finance records. Later she
requested that her extension be canceled and her original separation
date of April 5, 1985, be restored. The request was approved, but
apparently not noted in either her personnel or finance records. In any
event, Sp.4 King's Company, the 546th Personnel Service Company (546th
PSC), issued orders in anticipation of Sp.4 King's separation. At the
time of her outprocessing, the omission of information was detected in
her personnel file and the approved cancellation request was noted in
personnel records by January 23, 1985. The finance records contained no
such information, but it is not clear whether such information was noted
in Sp.4 King's personnel file only or whether a later re-enlistment
action by another individual was mistakenly entered in the finance file,
negating the cancellation of the extension. Sp.4 King was processed for
separation on February 12, 1985 and departed on a 50- day terminal leave
status. On September 16, 1985, Sfc. Walter Teal of the 27th Finance
Company received a call from S. Sgt. Arnold L. Buchanon, who informed
Sfc. Teal that he had heard rumors that a Teresa E. King was receiving
Army pay although separated from active duty. After looking into the
matter, Sfc. Teal found the rumored information to be true and reported
his findings to his supervisors. Maj. Wallace was notified and by
September 30 he had frozen Sp.4 King's bank account where the pay checks
were being directly deposited. On October 3, Maj. Wallace notified the
Finance Center of the irregularity and started an investigation. Maj.
Wallace immediately initiated steps to recover the improper payments.
As he was unsuccessful, he referred the matter to the Collections
Division.
Sp.4 King was convicted of fraudulently converting government money
in U.S. District Court, sentenced to 5- years supervised probation, and
pursuant to a plea agreement, ordered to make restitution in the amount
of $5,776.93 to the United States Government. The Finance and
Accounting Officers are subject to personal pecuniary liability for only
this amount and not the full amount of $6,481.39, pursuant to 31 U.S.C.
Sec. 3711(d), which provides that an accountable officer is not liable
for an amount paid if the amount is not recovered because of a
compromise. 65 Comp. Gen. 371, 373 (1986).
Under 31 U.S.C. Sec. 3527(c) (1982), this Office has the authority to
relieve a disbursing official from liability for an improper payment
when the improper payment was not the result of bad faith or lack of
reasonable care by the official. The good faith and reasonable care of
a supervisory disbursing official is shown by evidence that the
supervisor maintained adequate procedures and controls to avoid errors
and that the supervisor took steps to implement these controls.
B-223285, August 28, 1986.
There were three failures in the system that led to the incorrect
payments, none of which were the proximate result of bad faith or lack
of due care by these two officials. The initial failure was a filing
error by a subordinate that that appears to be the type of clerical
error which will occasionally occur, unnoticed, in even a
well-supervised office. The double check and verification procedures in
place for posting information in the finance files would have been
adequate had they been followed in this instance. A disbursing official
cannot be expected to design a system which reliably eliminates every
clerical error that may occur. B-212336, August 8, 1983.
The other two safeguard system failures were beyond the control of
these accountable officers. One of these failures was a temporarily
inoperative computer system used by the Finance Center and the Enlisted
Personnel Records Center. The other failure was an inexperienced
personnel clerk who did not return the unclaimed LES's of Sp.4 King to
the 27th Finance Company. Neither of these failures were subject to the
control of these officials. Accordingly, relief is granted to both Maj.
Wallace and Maj. Arteaga.
Sincerely yours,
(Mrs.) Rollee H. Efros
Associate General Counsel
Matter of: Sergeant First Class James L. Dunlap, U.S. Army, Retired
- Correction of Military Records - Waiver of Deductions from Pay and
Allowances
File: B-224946
Date: September 25, 1987
DIGEST
1. In the absence of a mutual mistake in numerical computation or
similar undisputed error which remains undetected at the time of
settlement, acceptance of settlement by Army member incident to
administrative action to correct his military records bars pursuit of
further claims by the member against the government in the matter.
2. When an Army member is found to have been erroneously separated
from active duty and is retroactively restored to active duty status
under the provision of law authorizing the correction of military
records, he may properly claim the military "pay, allowances,
compensation, emoluments, or other pecuniary benefits," which he lost
during the interim period, but payment may not be made on any additional
claim he may bring for compensatory damages which may have resulted from
his erroneous separation from active military service.
3. If an Army member is involuntarily separated from but later
retroactively restored to active duty through the correction of his
military records, he thereby becomes entitled to retroactive payment of
interim active duty military pay and allowances; however, his interim
civilian earnings must be deducted from that award of military
readjustment pay and allowances in the settlement of his military pay
accounts incident to the records correction proceedings.
4. The Federal and State tax consequences of military records
correction proceedings concluded under 10 U.S.C. Sec. 1552 are matters
primarily for consideration by the concerned revenue authorities;
hence, if a retired Army member's records are corrected nullifying his
retirement and retroactively restoring him to active duty status, his
application for a tax refund believed due for Social Security (FICA)
taxes debited against the active duty military readjustment pay credited
to him in the settlement of his military pay accounts would be a matter
for submission to the United States Internal Revenue Service.
5. Interest on unpaid accounts may not be assessed against the United
States in the absence of express statutory authority. Provisions of 10
U.S.C. Sec. 1552 governing military records correction proceedings
contain no authority for the payment of interest on readjustment pay;
hence, interest does not accrue on military pay due to a service member
on account of a correction of his records under 10 U.S.C. Sec. 1552.
6. Acceptance of settlement by an Army member incident to the
administrative correction of his military records would not operate to
bar his subsequent request for waiver of erroneous payments of military
pay and allowances shown as debits to his account in the settlement
statement; and the gross amount of such erroneous payments could be
considered for waiver.
DECISION
Sergeant James L. Dunlap, U.S. Army, Retired, 000-00-3659, requests
reconsideration of our Claims Group's July 18, 1986, settlement which
disallowed his request for waiver of amounts deducted from the
retroactive pay and allowances due as a result of the correction of his
military records. In view of the facts presented and the applicable
provisions of law and regulation, we sustain the Claims Group's
settlement.
BACKGROUND
On April 21, 1977, Sergeant Dunlap was involuntarily separated from
active duty in the grade of Sergeant First Class (E-7). After he was
separated from active duty with the Army, he worked in a civilian
capacity in the years 1977, 1978, and 1979.
Sergeant Dunlap was restored to active duty on May 21, 1979, by
administrative action of the U.S. Army Military Personnel Center. The
Army Board for the Correction of Military Records under the statutory
authority of 10 U.S.C. Sec. 1552 subsequently corrected his records to
show that his release from active duty on April 21, 1977, was void and
without effect and that he remained on active duty from April 22, 1977,
to June 7, 1979. Consequently, he was entitled to retroactive payment
of military pay and allowances which he would have earned during the
period he was separated. He was entitled to readjustment pay and
allowances for the period in the amount of $34,602.53, less required
deductions of $16,005.23, resulting in a net payment of $18,597.30. His
net payment was determined by deducting his net civilian earnings of
$12,502.96 from the balance due him after offset of his debts to the
government. Sergeant Dunlap accepted the readjustment pay settlement in
the amount of $18,597.30. The settlement contained a detailed statement
of the various debits and set-off of civilian earnings and contains the
statement "My acceptance of this settlement constitutes a complete
release by me of any claim against the United States on this matter."
The settlement bears Sergeant Dunlap's signature and the date of
December 1, 1980.
Subsequent to Sergeant Dunlap's acceptance of the settlement, he
disagreed with the computation of the amounts due by inclusion of
deductions for money previously paid for accrued leave and for his
civilian earnings from the period April 1, 1977, to June 17, 1979, which
were prorated to match the period of the computation. He further
questioned the application of Reserve Members Restored to Duty, 56 Comp.
Gen. 587 (1977), and Reserve Members Restored to Duty, 57 Comp. Gen. 554
(1978), to his particular case and requested waiver of all the amounts
withheld from his gross entitlement.
Our Claims Group granted waiver in the amount of $254.97, which
represents collection of 9 days' accrued leave when restoration could
not be made due to the statutory leave limitation and denied waiver of
$15,750.26, the balance of his deductions which included his net
civilian earnings.
In his appeal, Sergeant Dunlap has expressed disagreement with the
Claims Group's settlement concerning the amount of leave time credited,
the set-off of the interim civilian earnings, the Federal Insurance
Contribution Act (FICA) tax withheld, the collection for Servicemen's
Group Life Insurance and failure to pay interest on the readjustment pay
received incident to his restoration to active duty. In addition, he
asks for compensatory damages for failure to timely process his claim
for readjustment pay, compensation for part-time civilian earnings lost
and payment for separate rations, basic allowance for quarters and per
diem for the period he was separated from active duty.
OPINION
Discussion
The settlement which Sergeant Dunlap signed on December 1, 1980, was
calculated in accordance with 56 Comp. Gen. 587, supra, and 57 Comp.
Gen. 554, supra. These decisions held that service members separated
from but later retroactively restored to active duty by administrative
record correction thereby became entitled to readjustment pay of
military pay and allowances they would have received had they been
retained on active duty with appropriate set-offs of debts properly
collectable during the period restored and that interim civilian
earnings are deductible from the net balance due the member after
set-off of his debts to the government.
The fact is that Sergeant Dunlap signed a release and accepted
payment under a claim certificate dated December 1, 1980. The claim
certificate contained a detailed statement of all of the debits and
credits of payments due him under 10 U.S.C. Sec. 1552. The claim
certificate specifically provided three options for Sergeant Dunlap. He
chose the option and checked the box in front of an item which reads as
follows:
"X I hereby claim the amount shown above as being the correct
settlement amount due me for this correction of my military
records. I have not received any payment from the United States
and I will not accept any other payment from the United States for
this correction of my records. My acceptance of this settlement
constitutes a complete release by me of any claim against the
United States on account of this matter."
In the absence of a mutual mistake in numerical computation or
similar undisputed error which remains undetected at the time of
settlement, acceptance of settlement by Army member incident to
administrative action to correct his military records bars pursuit of
further claims by the member against the government in the matter. 10
U.S.C. Sec. 1552(c) (1976); 57 Comp. Gen. 554, supra. While the
acceptance of the settlement by Sergeant Dunlap is considered
dispositive of all the other issues raised, we offer the following
comments as further clarification.
Accumulated Leave Computation
At the time Sergeant Dunlap was involuntarily separated on April 21,
1977, he was paid $254.97 for 9 days' leave he had accumulated through
that time. When his records were corrected, the 9 days were restored in
order to reestablish his leave record as though he had not been
separated. Thus, upon the restoration of this leave to his account an
indebtedness was automatically created to the extent of the payment he
received for such leave since leave payments are authorized only upon
discharge. See 37 U.S. C. Sec. 501 (b). This indebtedness is subject
to waiver as an erroneous payment. This Office has no objection to this
indebtedness being waived. 10 U.S.C. Sec. 2774 (1976); 57 Comp. Gen.
554, supra.
Payment for Rations, Quarters, and Per Diem
The records of Sergeant Dunlap were corrected to expunge the fact of
his release and to show his continuation on active duty from April 22,
1977, to June 7, 1979. The correction authorized active duty pay and
allowances which he lost during the interim period and no extra
entitlement. He was paid the appropriate base pay, basic allowance for
quarters, and separate rations of his grade and years of service for the
entire period he was involuntarily separated. There is no legal basis
for additional payments for quarters not being furnished or government
mess not being available nor was any per diem authorized.
Claim for Compensatory Damages
An Army member involuntarily separated from but later retroactively
restored to active duty by administrative record correction action under
10 U.S.C. Sec. 1552 may properly claim the military "pay, allowances,
compensation, emoluments, or other pecuniary benefits," which he lost
during the interim period. See 56 Comp. Gen. 587 (1977), supra.
However, neither 10 U.S.C. Sec. 1552 nor any other provision of Federal
law authorizes payment on additional tort claims brought by the member
for compensatory and consequential damages for the loss of part-time
civilian employment opportunities, etc., premised on the wrongful acts
of government agents in causing his severance from military service in
contravention of a statute or regulation. See 57 Comp. Gen. 554, 558
(1978), supra, and compare Clark v. United States, 198 Ct. Cl. 593
(1972), cert. denied, 409 U.S. 1028 (1972); 55 Comp. Gen. 564 (1975),
supra, Lieutenant Colonel Louis D. Gaddini, AUS, B-195558, December 14,
1979; Lieutenant Colonel Carlo J. Montisano, AUS (Retired), B-196688,
February 15, 1980. Therefore, payment may not be made on Sergeant
Dunlap's claim for additional compensation for his loss of a part-time
civilian job or loss of part-time employment opportunities which may
have resulted from his involuntary and erroneous separation from active
duty with the Army in April 1977. Also, a claim for damages for failure
to timely process a claim for readjustment pay may not be allowed.
Set-Off of Interim Civilian Earnings
Administrative procedures established for the correction of military
records and payment of claims under the statutory authority of 10 U.S.C.
Sec. 1552 which apply to members of the United States Army are contained
in Army Regulation (AR) 15-185, dated May 18, 1977. Paragraph 25, AR
15-185, specifically requires that when an Army member is retroactively
restored to active duty through record correction proceedings, "Earnings
received from civilian employment during any period for which active
duty pay and allowances are payable will be deducted from the
settlement." Therefore, in concluding the settlement with Sergeant
Dunlap, the amount of the interim civilian earnings he received from
April 1, 1977, through June 17, 1979, were properly set off against the
military readjustment pay due to him for that period. Compare
Lieutenant Colonel Carlo J. Montisano, supra.
Settlement Debits--FICA Taxes
The Federal and State tax consequences of a correction of military
records under 10 U.S.C. Sec. 1552 are matters primarily for
consideration by the concerned revenue authorities, and not this Office.
Lieutenant Colonel Major T. Martin, USAF, Retired, 58 Comp. Gen. 528
(1979); Lieutenant Colonel Louis D. Gaddini, supra. If Sergeant Dunlap
has reason to believe that he should have a refund of any FICA taxes
imposed on the military readjustment pay credited to him, it is a matter
he should submit to the United States Internal Revenue Service. Compare
Lieutenant Colonel Carl F. Johnston, AUS, B-195129, April 28, 1980.
Collection for Servicemen's Group Life Insurance (SGLI)
The amount of active duty pay and allowances found due by a
correction of military records under 10 U.S.C. Sec. 1552 shall in no
case exceed the amount which would have been paid or become due under
applicable laws had no error or injustice occurred. When Sergeant
Dunlap's records were corrected to show that he remained on active duty
from April 22, 1977, to June 7, 1979, the correction included receipt of
SGLI and he became liable for collection of the premiums on the coverage
as a part of his active duty pay and allowances. Thus, he was restored
to the same position he would have been if he had not been separated.
56 Comp. Gen. 587, supra. See also Captain Albert W. L. Moore, Jr., 46
Comp. Gen. 411 (1966). In addition, under the provisions of 38 U.S.C.
Sec. 785 (1982) any decision concerning whether collection of the
insurance premiums should have been waived under the circumstances of
this case would have to be addressed to the Administrator of the
Veterans Administration who, except in the event of suit in the U.S.
District Court, has final and conclusive authority to make decisions in
such matters.
Claim for Interest
Interest on unpaid accounts may not be assessed against the
government in the absence of statutory authority. Since 10 U.S.C. Sec.
1552 does not authorize the assessment of interest on military
readjustment pay awards, Sergeant Dunlap is not entitled to interest on
the net amount of readjustment pay he received incident to his return to
active duty. 58 Comp. Gen. 528, supra.
Accordingly, we deny Sergeant Dunlap's claim for the additional
amounts believed due as the result of the correction of his military
records, and we sustain our Claims Group's settlement in the matter.
Comptroller General
of the United States
B-224943
February 27, 1987
DIGEST
Private inquirer questions Provision in Bureau of Public Debt's
TREASURY DIRECT Regulations which requires that payments accruing to
owners of Government securities must be made by direct deposit into
financial institution accounts, 31 C.F.R. Sec. 357.26 (1986). Sections
3102-04, and 3121 of title 31 expressly authorize the Secretary of the
Treasury to prescribe by regulation the conditions under which
securities will be offered for sale. Since the method to be used for
making payment on a security is a condition pertaining to its issuance
and sale, a regulation requiring payment by direct deposit is not
legally objectionable.
Mr. John L. Macbeth
2702 Wisconsin Avenue, N.W.
Washington, D.C. 20007
Dear Mr. Macbeth:
This responds to your letter concerning the Bureau of the Public
Debt's (Bureau) recently finalized regulations governing its new
book-entry system for Treasury bonds, notes and bills (referred to as
"TREASURY DIRECT," as you note). 31 C.F.R. pt. 357 (1986). In
particular, you question the legality of the regulation provisions which
require that, except under extraordinary circumstances, payments
accruing to owners of Government securities must be made by direct
deposit into financial institution accounts rather than by checks sent
directly to the owners. 31 C.F.R. Sec. 357.26. In your view, this
requirement represents an unwarranted limitation upon the freedom of
choice of the investor.
In response to your request, we reviewed the Bureau's TREASURY DIRECT
regulations, and the relevant statutes. The TREASURY DIRECT regulations
govern the issuance of book-entry Treasury bonds, notes and bills. The
authority for the issuance of these securities is found at 31 U.S.C.
Secs. 3102, 3103, and 3104, respectively. Each of the three sections,
in authorizing the Secretary of the Treasury to issue the security it
relates to, also gives the Secretary the authority to prescribe the
conditions pertaining to its issuance pursuant to the provisions of 31
U.S.C. Sec. 3121. That section expressly provides that, "in issuing
obligations under sections 31 02-3104 of this title, the Secretary of
the Treasury may prescribe * * * regulations on the conditions under
which the obligation will be offered for sale * * * and other
conditions." 31 U.S.C. Sec. 3121 (a). The direct deposit requirement
would seem to be authorized under this statute as a "condition under
which" the securities are being offered for sale.
The Bureau, when it published its proposed regulations on December 2,
1985, explained that the direct deposit payment method was preferable
for reasons of economy and safety. 50 Fed. Reg. 49413 (1985). The
Bureau then, as required by law, allowed time for public comment and
evaluated the comments it received. In its section-bysection analysis,
printed at the time it issued the final TREASURY DIRECT regulations, the
Bureau stated, "the Department has concluded that while the direct
deposit payment method is not without risks, it is far superior to the
use of checks, in terms of the risks, potential losses and costs." It
further indicated that "in a case where a receiving institution fails to
act in accordance with the instructions given it, the Bureau intends to
use its best efforts to assist investors in rectifying the error." 51
Fed. Reg. 18261 (May 16, 1986).
In view of the foregoing, the Bureau appears to have acted within its
legal authority, and we see no basis to question the matter further.
Sincerely yours,
Robert H. Hunter
Assistant General Counsel
Matter of: Achievement Products, Inc.
File: B-224940
Date: February 6, 1987
DIGEST
General Accounting Office denies protest that bid to supply tie tacks
was improperly found nonresponsive, where a handwritten notation on the
bid was inconsistent with the required minimum thickness for a part of
the tie tack.
DECISION
Achievement Products, Inc. protests the rejection of its low bid as
nonresponsive under invitation for bids No. DTFA0186-B-08662, issued
August 26, 1986, by the Federal Aviation Administration for brass tie
tacks. The agency rejected Achievement's bid as nonresponsive because
the firm wrote "3/64 inches plus" next to the specification requiring a
minimum thickness for the pin portion of the tie tack of .05 inches.
The FAA believed that Achievement had qualified its bid by offering less
than the required minimum thickness or, at best, that the bid was
ambiguous.
The protester contends that it converted .05 inches to the nearest
fraction of an inch, which is 3/64 (equal to .046 inches). The
protester argues that it is unreasonable to question its commitment to
meet the specifications. Achievement states that in view of the fact
that it did not specifically state that its price was contingent upon
making the tie tacks thinner than specified, the agency should expect
that the firm would meet all of the specifications.
To be responsive, a bid as submitted must comply in all material
respects to the invitation's terms. Mountain Air Helicopters, Inc.,
B-223099.2, Aug. 6, 1986, 86-2 CPD P 162. Bidders must unconditionally
offer to provide exactly what is called for in a solicitation. Repco,
Inc., B-221286, Mar. 12, 1986, 86-1 CPD P 245.
We agree with the FAA that Achievement's handwritten notation next to
the minimum thickness requirement in its bid raised a question of
whether Achievement intended to comply with the requirement. In
negotiated procurements, where agencies may conduct clarifying
discussions, ambiguities raised by notations such as Achievement's can
be resolved by questioning the offeror. Where, as here, an agency
conducts a sealed bid procurement, any bid containing a deficiency or
deviation that goes to the substance of a bid by affecting the price,
quality, quantity or delivery of the items offered must be rejected as
nonresponsive. See Federal Acquisition Regulation, 48 C.F.R. Sec.
14.4042(e) (1986).
Similarly, where a bid that is ambiguous with respect to a material
requirement, i.e., is subject to two reasonable interpretations, and
under one of the interpretations the bid is nonresponsive, the bid must
be rejected as nonresponsive. See Discount Machinery & Equipment
Inc.-Request for Reconsideration, B-223048.2, July 1, 1986, 86-2 CPD P
5. Achievement noted on its bid a thickness less than that required,
and we find that the contracting officer reasonably considered the bid
to be nonresponsive.
The protest is denied.
Harry R. Van Cleve
General Counsel
B-224938
January 2, 1987
DIGEST
Review of our decision in B-200440, Apr. 9, 1986, was undertaken at
the request of Congressman Hoyer. We advised the Congressman that our
Office may not effect payment of claims against the United States where
the claimant has not met his burden of proof to show the validity of his
claim.
The Honorable Steny H. Hoyer
House of Representatives
Dear Mr. Hoyer:
This responds to your letter dated September 25, 1986, concerning our
decision in Matter of Chan Sambo, B-200440, Apr. 9, 1986. In that
decision we denied the claim of Chan Sambo (Chan), a Cambodian National
who claimed the United States owed him monies for contract work he
allegedly performed for the United States Embassy in Cambodia just prior
to the Khmer Rouge takeover in April 1975.
Enclosed with your letter were comments sent to you by Mrs. Cathy
McGowan, one of your constituents. Mrs. McGowan was reacting to an
article about our decision published in the Washington Post. See
Anderson & Van Atta, Refugee Says Uncle Sam Owes Him, Washington Post,
Aug. 29, 1986, at C15.
Our claims settlement determinations are based on the written record
as submitted by the parties. Our claims procedures as set forth in 4
C.F.R. pt. 31 (1985) do not provide for investigations, interviews of
witnesses, or adversary hearings. Notwithstanding the above principles,
in light of the unusual facts presented in this matter, our Office
undertook efforts to find evidence supporting Chan's claim. The
evidence we found did not support Chan's assertions.
Chan's most recent claim 1/ contained the names of several State
Department employees who he stated would support his claim. We were
able to locate only one--Sidney T. Telford, Jr. Mr. Telford was the
Security Officer at the United States Embassy in Cambodia up until the
Khmer Rouge takeover.
Mr. Telford did not recall anyone named Chan Sambo who had done work
for the Embassy. He stated that the prime contractor responsible for
sandbagging the compound was a man named Li Chi. Mr. Telford referred
us to Ed Paukert, the Senior Administrative Officer at the Embassy in
1974-75, suggesting that Mr. Paukert might have a better recollection of
individual contractors.
We located Mr. Paukert and found that he did indeed recall Chan.
However, his recollections did not lend support to Chan's claim. In a
telephone interview with one of our attorneys, he remembered an instance
approximately a year before the Khmer Rouge takeover when Chan had
performed unsatisfactorily on a contract with the Embassy. He
specifically recalled that Chan had been paid a reduced amount for the
unsatisfactory services he had rendered. Mr. Paukert stated that he
left the Embassy in March 1975 and therefore could not verify whether
Chan was employed following that time.
Nevertheless, we sought to give Chan the benefit of every doubt.
Although not mentioned in Chan's letter as a supporting reference, we
called the American Embassy in Dhaka, Bangladesh, and spoke with James
Horn, who was the building and maintenance officer for the Embassy in
Cambodia in 1974 through 1975. Mr. Horn was the official who was
interviewed for the Jack Anderson article you sent us.
Since his conversation with Jack Anderson's associate, Mr. Horn told
us he reviewed some detailed notes he had written in 1975 about the
sandbagging contract at issue. According to Mr. Horn, the sandbagging
work was far from a last minute "scramble," as the Anderson article
suggested. Mr. Horn prepared and posted the bid solicitation in
November 1974, and the contract was awarded to the low bidder, Li Chi, a
competitor of Chan's, following all the usual procurement procedures.
(This is consistent with the information obtained from Mr. Telford,
discussed above.) However, before the award was made, Chan started to do
some sandbagging, knowing quite well, Mr. Horn stated, that the work was
unauthorized but hoping to be selected for the contract instead of Li
Chi. Mr. Horn said that Chan was asked to "dismantle" (empty) the
sandbags he had prepared because the Embassy staff did not trust the
quality of his work, based on his poor performance the previous year.
(This confirms the information provided by Mr. Paukert, also discussed
earlier.) Chan never did empty the sandbags.
As stated above, we do not normally conduct investigations,
interviews of witnesses, or adversary hearings in connection with our
claims settlement function. We believe we went well beyond our normal
procedures in our attempts to establish the validity of Chan's claim.
We do not think a formal contract ever existed, notwithstanding the
statement in the newspaper article that Chan had to destroy his records
when the Khmer Rouge guerrillas laid siege to the city. Moreover, we
are unable to establish any of the elements necessary to establish an
implied contract, for which Chan could be paid on a quantum meruit
basis. While he may well have performed some part of the work for which
he seeks payment, he was never authorized to do so. Chan must have
known that he had no authority at the time of his performance since the
contract award had not yet been made. Thus, we are unable to find good
faith on the part of Chan or reliance on embassy inducements. Finally,
Chan's work was never accepted by the Government. On the contrary, his
work was expressly rejected and he was asked to empty the sandbags he
had filled.
In conclusion, although we appreciate Mrs. McGowan's concerns, we
lack the authority to grant claims on the basis of unsupported
allegations. In accordance with our normal procedures, this letter will
be restricted from general distribution for 30 days.
Sincerely yours,
Comptroller General
of the United States
Enclosures
FOOTNOTE
1/ Our decision of April 9, 1986, affirmed an earlier decision
(B-200440, Oct. 18, 1980), which in turn had affirmed a disallowance by
our Claims Division (Settlement Certificate Z-2819882, dated Apr. 30,
1980). Copies of all three documents are enclosed.
File: B-249332
Date: November 9, 1992
Matter of: Pavel Enterprises, Inc.
DIGEST
Compelling reason exists for canceling invitation for bids (IFB) for
office space renovation after bid opening in order to delete requirement
in specifications for foreign-made floor covering which the buy American
Act prohibits the use of in the construction contract to be awarded
under the IFB and in order to delete unnecessary environmental control
and monitoring equipment and modular furniture.
COUNSEL
Douglas L. Patin, Ssq., Kilcullen, Wilson and Kilcullen, for the
protester.
Michael Colvin, Department of Health and Human Services, for the
agency.
John Van Schaik, Esq., and John Brosnan, Ssq., Office of the General
Counsel, GAO, participated in the preparation of the decision.
DECISION
Pavel Enterprises, Inc. protests the cancellation of invitation for
bids (IFB) No. 263-92-B (CC) -0439, issued by the Department of Health
and Human Services (HHS) for renovation of office space at the agency's
Twinbrook II Building in Rockville, Maryland.
We deny the protest.
The IFB stated that the contractor was to provide labor, materials,
supervision and equipment required to renovate the space. To bid on the
project, offerors were not required to separately specify the materials
to be provided, but were simply to insert a total price in tie
appropriate space in the solicitation, thereby agreeing to perform the
contract in accordance with the drawings and specifications included in
the IFB.
The specifications included the following provision:
"VINYL SHEET FLOORING
A. Provide vinyl sheet flooring complying with FS L-F-4?5A(2),
Type II, Grade A, and as follows:
1. Forbo Flooring, 'Mormoleum.'
2. Armstrong 'Possibilities.'"
The agency received 21 bids in response to the solicitation. The
bids ranged from Pavel's bid of $1,035,000 to $1,212,000. After bids
were opened, one of the bidders, S.B. Construction Company, complained
that the solicitation specified a brand name, foreign-made vinyl floor
covering.
As a result of that protest, HHS reviewed the solicitation and found
that one of the two specified brand name floor coverings--Forbo Flooring
"Mormoleum"--is foreign made. In the agency's view, acquisition of that
product under this solicitation for a construction contract is
prohibited by the Buy American Act. Also, the agency determined that
the two brand name floor coverings were specified for aesthetic reasons
only and that it therefore had no authority to limit bidders' selection
of floor coverings to the brand names. The contracting officer states
that she assumed that all bidders prepared their bids based on the
specified brand name floor coverings and, since there was no reason to
limit bidders to those products, the solicitation was unduly
restrictive.
In addition, according to the agency, although it had amended the
solicitation before bid opening in an attempt to remove defects in the
specifications, upon further review agency officials discovered numerous
other mistakes and ambiguities which the agency states resulted in
overstated requirements. The agency explains that requirements for fire
treated millwork materials and several items of modular furniture should
have been deleted. The agency further states that the computerized
environmental control and monitoring equipment specified was more
sophisticated than necessary and that the configuration of the doors at
the building entrance was more elaborate and expensive than necessary.
In addition, the agency states that the specifications lacked
measurements for vertical blinds, a requirement for field painted steel
doors and frames needed to be replaced by factory painted doors and that
there were 39 other minor defects in the solicitation that needed to be
corrected. According to the agency, as a result of these solicitation
defects and ambiguities, the bids were overstated by approximately
$93,000.
Pavel argues that there was no reason to cancel the solicitation and
that it was prejudiced by the cancellation since its low price was
exposed. According to the protester, HHS' original reasons for the
cancellation--that the solicitation required a foreign-made floor
covering and that it improperly restricted offerors to providing brand
name products--are mistaken.
First, Pavel argues that offerors were not restricted to the
foreign-made Forbo flooring covering since the solicitation also listed
the Armstrong product, which is an American-made alternative. Second,
the protester maintains that offerors were not restricted to providing
either of the brand name floor coverings listed in the solicitation.
According to Pavel, under the Material and Workmanship clause set forth
at Federal Acquisition Regulation (FAR) Sec. 52.236-5(a), which was
referenced in the solicitation, where the solicitation listed the brand
name of a required product, bidders had the right to prepare their bids
based on "equal" products. Pavel maintains that this is the case even
where, as here, the solicitation did not state that contractors could
provide either the "brand name" or an "equal."
Finally, Pavel argues that the other alleged mistakes and ambiguities
in the specifications do not justify canceling the solicitation.
According to the protester, most of these additional flaws in the
specifications were corrected by the amendment issued before bid
opening. For instance, Pavel states that the requirements for fire
treated millwork and field painted steel doors had already been deleted
by the amendment. Also, Pavel argues that most of the other
clarifications were minor and the other specification changes could have
been made without canceling the solicitation. For example, Pavel
maintains that the unnecessary environmental control and monitoring
equipment and modular furniture could have been deleted by a change
order under the contract and this would not have prejudiced any bidder
since those deletions would affect them all equally.
Because of the potential adverse impact on the competitive bidding
system of canceling an IFB after prices have been exposed, any
cancellation after bid opening must be based on a compelling reason.
FAR Sec. 14.404-1(a) (1); Deere & Co., B-241413.2, Mar. 1, 1991, 91-1
CPD Par. 231. A compelling reason for cancellation exists when it is
determined that an IFB overstates the agency's minimum needs or fails to
express them properly. Id. Here, we find tee agency had a compelling
reason to cancel the solicitation since it required the use of a
prohibited foreign-made floor covering and since the solicitation
otherwise overstated the agency's needs.
The use of the foreign-made floor covering is prohibited by the Buy
American Act, 41 U.S.C. Sec. 10b (1988). The Act and its implementing
regulations require that only domestic construction materials be used on
construction contracts, except under circumstances not present here.
See FAR Sec. 25.202. Under the implementing regulations, construction
materials are articles and supplies brought to the work site for
incorporation into the building. FAR Sec. 25.201. Pavel does not
dispute that the floor coverings in question are construction materials
and that use of those materials here is prohibited.
Pavel argues, however, that firms were not restricted to the
foreign-made floor covering since the solicitation also listed the
Armstrong floor covering, which is an Americanmade alternative. While
the solicitation did list a domestic floor covering in addition to the
prohibited foreign product, the two were not interchangeable; as the
agency explains, each of the floor coverings was required for
installation in different areas. Under the circumstances, we agree with
the agency that the solicitation required the use of a foreign-made
floor covering which is prohibited by the Buy American Act.
We do not agree with Pavel that because of the presence of the
Material and Workmanship clause bidders knew that they could provide
other products equal to the foreign-made floor covering or the other
brand name floor covering called for in the solicitation. In relevant
part, that clause reads as follows:
"References in the specifications to equipment, material,
articles, or patented processes by trade name, make, or catalog
number, shall be regarded as establishing a standard of quality
and shall not be construed as limiting competition. The
contractor may, at its option, use any equipment, material,
article, or process that, in the judgment of the contracting
officer, is equal to that named in the specifications, unless
otherwise specifically provided in this contract."
Under the clause, during contract performance, a contractor is
permitted to propose to use equipment or materials equivalent to those
specified by brand name referenced in the solicitation. See M.C. & D.
Capital Corp., B-225830, July 10, 1987, 87-2 CPD Par. 32. If the
contracting officer approves, the awardee can perform the contract using
products other than the brand name products specified in the
solicitation. Pavel maintains that the Material and Workmanship clause
should be interpreted as the equivalent of a Brand Name or Equal clause
that specifically informs all prospective bidders that they can base
their bids on products equal to the listed brand name products.
As we stated above, for at least those locations where the Forbo
flooring material was required, the specifications called for an item
which would be unacceptable under the terms of the Buy American Act for
this construction contract. Therefore, even if bidders understood the
Material and Workmanship clause as permitting them to base their bids
upon the use of an equal product, the solicitation still stated
incorrectly that the Forbo flooring product was acceptable when, in
fact, it could not be accepted.
Moreover, at least one bidder, S.B. Construction, understood the
solicitation to require that bids be based only on the listed brand name
floor covering. Under the circumstances, we do not think that was an
unreasonable interpretation of the solicitation since the Material and
Workmanship clause pertains to contract performance. While it is true
that the Material and Workmanship clause does permit the substitution of
equal materials during performance, that clause does not, like the
standard Brand Name or Equal clause, concern the bid submission. Under
the terms of the Material and Workmanship clause if the agency properly
concludes that the contractor's substitution does not meet its concept
of an equivalent product then the contractor is obligated to supply the
brand name product.
We therefore believe that since the solicitation specified a
particular brand name product which could not be used in the performance
of this construction contract and considering the fact that the Material
and Workmanship clause does not pertain to bid submission and entails a
performance risk if the substituted material is not acceptable to the
agency, there was a reasonable basis for concern that the mistaken use
of the brand name item in the solicitation adversely impacted the
competition. See Display Sciences, Inc.-- Recon., B-222425.2, Aug. 26,
1986, 86-2 CPD Par. 223 (IFB based on brand name or equal specification
properly canceled where brand name product exceeded the government's
needs).
Although the protester challenges most of the additional reasons
offered by the agency for the cancellation, we think that the agency had
a compelling reason to cancel because the solicitation specified the
prohibited foreign-made floor covering and because of two of the
addition problems the agency discovered in its review of the
solicitation: the unnecessary environmental control and monitoring
equipment and unnecessary modular furniture.
As far as the monitoring equipment is concerned, the agency explains
that the specifications were ambiguous and led bidders to propose
equipment more elaborate than necessary. Also the environmental control
and monitoring system is required to be expandable and, according to the
agency, although the specified system is inherently expandable,
ambiguous language in the specifications led bidders to propose
additional unnecessary equipment to assure expandability. The agency
reports that this more elaborate. and additional hardware was worth
approximately $60,000.
With respect to modular furniture, the agency reports that when it
issued the amendment before bid opening, it intended to delete all
required furniture. Nonetheless, according to the agency, modular
furniture worth approximately $27,000 was not deleted. The agency
states that as a result of these two defects in the specifications, the
bids were approximately $87,000 higher than they would have been without
the defects.
Although Pavel argues that many of the other defects alleged by the
agency were minor, the protester does not dispute the agency's
assertions that the ambiguous specifications for the environmental
control and monitoring equipment caused bids to be inflated by
approximately $60,000 or that the furniture requirements which the
agency intended to delete inflated bids by approximately $27,000.
Rather, Pavel argues that these specification defects do not justify the
cancellation since the unnecessary equipment and furniture could simply
be deleted from the contract by means of a deductive change order.
According to Pavel, the environmental control and monitoring equipment
would be supplied to any bidder by the same vendor so deletion of the
extra equipment would result in the same credit under the contract for
any bidder. Pavel maintains that the extra furniture also could be
deleted after the contract is awarded. According to Pavel, since
deletion of the unnecessary equipment and furniture from the contract
would affect all bidders equally, no bidder would be prejudiced by
awarding the contract so the cancellation is not justified by the
deletion of those items.
The range of bids submitted under the solicitation was extremely
close with all 21 bids within a range of $177,000 and the 10 lowest bids
within $15,000 of each other. Under the circumstances, although Pavel
maintains that deletion of the unnecessary furniture and equipment would
be accounted for in the same by all of the competitors and thus have the
same effect on all bidders, given the close range of the bids, we cannot
assume that the deletion of these items would be accounted for in the
same manner by all of the competitors and thus have no effect on a
recompetition. An agency may not award a contract competed under given
specifications with the intention of significantly modifying its terms
after award since such a procedure would be prejudicial to other bidders
under the invitation and thereby have the effect of circumventing the
competitive procurement statutes. Adrian Supply Co., B-246207.2;
B-246207.3, Mar. 13, 1992, 92-1 CPD Par. 282./1/
It is our view that the cumulative effect of the overly restrictive
requirements for brand name floor covering, including the prohibited
foreign-made product, along with the overstatement of the agency's needs
for the environmental control and monitoring equipment and furniture
constituted the requisite compelling reason for cancellation of this
solicitation.
The protest is denied.
James F. Hinchman,
General Counsel
FOOTNOTES
/1/ Pavel notes that the original written justification for the
cancellation referred only to the requirement of foreignmade floor
covering and the specification of brand name products to support the
cancellation. That written justification did not refer to the
additional reasons later offered by the agency to support the
cancellation and Pavel argues that we should not consider those later
offered reasons. We do not agree. Information justifying the
cancellation of a solicitation can be considered no matter when the
information surfaces or should have been known. Zwick Energy Research
Organization, Inc., B-237520.3, Jan. 25, 1991, 91-1 CPD Par. 72.
Matter of: Automation Management Corp.
File: B-224924
Date: January 15, 1987
DIGEST
1. Protest that delivery orders are outside the scope of a contract
is untimely where protester waited until after the first year of
contract performance was complete before seeking the information on
which its protest is based.
2. Protester has not met its burden of affirmatively proving its case
where it does not rebut the agency's specific responses to the
protester's general allegations that certain delivery orders are outside
the scope of the protested contract.
3. Protest that agency improperly exercised an option to extend the
term of a contract is denied where the protester has not shown that the
agency failed to follow applicable regulations or that the agency's
determination to exercise the option was unreasonable.
4. Firm that did not submit an offer in response to the solicitation
is not an interested party to protest the evaluation of the awardee's
cost proposal.
DECISION
Automation Management Corporation (AMC) protests that certain
delivery orders issued by the Naval Ocean Systems Center under contract
No. N66001-85-D-0204 are outside the scope of the contract and therefore
improper. In addition, AMC asserts that the agency's evaluation of the
awardee's cost proposal was defective and that the agency improperly
exercised an option to extend the contract for an additional year. We
deny the protest in part and dismiss it in part.
BACKGROUND
The contract is for an independent verification and validation (IV&V)
program on the design and development (by another contractor) of the
Advanced Combat Direction System.
Essentially, the IV&V contractor's function is to independently
monitor and assess the design and development contractor's product and
performance. The objective of the IV&V program is to provide early
error detection and correction in the system design and development.
The IV&V contract was awarded to American Defense Systems, Inc.
(ADSI) on June 12, 1985, for 1 year, with three 1-year renewal options.
The agency exercised the first of these options on June 12, 1986.
On July 2, 1986, AMC, which had not responded to the solicitation
originaily, filed a Freedom of Information Act (FOIA) request with the
Navy, asking for copies of the contract and delivery orders. It
subsequently filed a second FOIA request, and on September 11, 1986,
received a written response from the Navy to that request. Based on
this information, AMC filed a protest with the Navy raising the same
issues as it now raises here. The Navy responded to AMC's protest by
letter of September 24, 1986, and found both that the protest was
untimely under this Office's Bid Protest Regulations, 4 C.F.R. Pt. 21
(1986), and that AMC's allegations were without merit. AMC filed its
protest with our Office on October 7.
SCOPE OF CONTRACT/CONFLICT OF INTEREST
AMC alleges that several delivery orders issued to ADSI are outside
the scope of its contract. AMC notes that the statement of work (SOW)
attached to the solicitation and contract states:
"The Contractor, as the government's designated IV&V agent,
shall provide engineering support to verify requirements,
determine functional/ performance correctness and traceability,
evaluate design alternatives, conduct necessary system and
software analyses, develop supporting system models, and software
tools, conduct validation of system and software engineering
products, develop test documentation, and support testing.
Excluded from this contract shall be the fabrication of any
hardware or the production of tactical application computer
programs." (emphasis added).
AMC also notes that the solicitation contains an organizational
conflict of interest provision that prohibits the contractor from
involvement in "specification or computer program development for CV
block 0 or CG/CV block 1 Combat Direct System (CDS) or Command Control
Process (C2P)" for the duration of the contract. AMC contends that the
delivery orders in question are outside the scope of the contract and
contrary to the conflict of interest provision. AMC also asserts that
the reason it did not respond to the solicitation for the IV&V contract
was the restrictive nature of the conflict of interest provision, which
would have excluded it from significant business opportunities for a
4-year period.
The Navy argues that we should dismiss the issue as untimely because
AMC admits that it knew the contract had been awarded in July 1985 but,
nevertheless, waited for more than a year before it requested copies of
the delivery orders. The general rule is that a protest based on
information received pursuant to FOIA will be considered timely if filed
within 1 working days after receipt of the information, provided that
the protester diligently pursued the release of the information under
FOIA. See Marathon LeTourneau Co.--Reconsideration, B-221234.2, Jan. 9,
1986, 86-1 CPD P 24. The Navy concedes that AMC filed its protest
within 10 working days after receipt of the delivery orders under FOIA,
but contends that AMC did not diligently pursue this information.
AMC offers no explanation for its failure to file a FOIA request for
the delivery orders until after the first year of contract performance
was complete. Absent any such explanation, we agree with the Navy that
the protester did not diligently pursue the information on which its
protest is based. See M. Dyer & Sons, Inc.--Request for
Reconsideration, B-222648.2, Aug. 18, 1986, 86-2 CPD P 198;
ElectroMethods, Inc., B-218180, Mar. 4, 1985, 85-1 CPD P 272, aff'd,
B-218180.2, Apr. 17, 1985, 85-1 CPD P 438. Since the protester admits
that it was aware of the scope of work under the contract and knew that
an award had been made, we do not think it was entitled to wait until
after contract performance was complete before it made any effort to
acquire the information necessary to determine whether a basis for
protest existed. See Policy Research, Inc., B-200386, Mar. 5, 1981,
81-1 CPD P 172. We therefore consider this issue to be untimely.
Furthermore, even if we were to consider the matter on its merits, we
would deny AMC's protest because the protester has failed to meet its
burden of proving its case. In its original protest, AMC simply cited
several delivery orders and alleged that they involved "various
development activities" such as "requirements allocation, network (PERT)
analysis, risk assessment and management activities . . . ." AMC also
alleged that certain other delivery orders involved computer program
development. The protester provided no further explanation for its
opinion that these delivery orders are outside the scope of the
protested contract. Nor did AMC's comments on the agency report on its
protest provide any further detail in this regard. Rather, the
protester simply alleged that the agency report contains blatantly false
information and asserted that an investigation would substantiate this.
In contrast, the agency report specifically addresses each delivery
order cited by AMC and explains why the agency considers the order to be
within the scope of the contract. For example, the agency admits that
one of the protested delivery orders required ADSI to develop a risk
management plan for the combat direction system tactical software
program, which is being developed by another contractor. The agency
contends, however, that this clearly does not involve the development of
tactical application computer programs by ADSI (a task that is excluded
from ADSI's contract) but instead simply requires ADSI to assess the
risk associated with the programs developed by the software development
contractor. The agency asserts that this is precisely the type of work
that ADSI's contract requires.
A protester bears the burden of submitting sufficient evidence to
prove its case, and this burden is not met where the only evidence is
the protester's self-serving statements that conflict with the agency's
report. Sun Enterprises, B-221438.2, Apr. 18, 1986, 86-1 CPD P 384.
Since AMC merely alleges that the protested delivery orders were outside
the scope of the contract and has not specifically rebutted the agency's
reasons for concluding that the orders are within the contract's scope,
the protester has failed to meet its burden of proof. Although the
protester suggests that this Office should investigate the protest
allegations, we do not conduct investigations for the purpose of
establishing the validity of a protester's assertions. Alan Scott
Industries, B-219096, June 20, 1985, 85-1 CPD P 706. Rather the
protester has the burden of proof, and AMC clearly has not met that
burden here.
OPTION EXERCISE
AMC also alleges that the Navy improperly exercised the first
contract option to extend performance for another year. The protester
contends that the agency did not perform a proper cost analysis before
exercising the option.
The Navy states that it performed a complete cost analysis at the
time of contract award, when the options were evaluated. The Navy notes
that ADSI's price for the first option year was less than its price for
the base year, and that the rates proposed were well within those
recommended by the Defense Contract Audit Administration (DCAA). The
Navy also asserts that the contracting officer made a reasoned
determination that exercising the option was the most advantageous
method of fulfilling the government's needs. See Federal Acquisition
Regulation (FAR), 41 C.F.R. Sec. 17.207 (FAC 84-13, Feb. 3, 1986). The
agency therefore argues that there is no merit to the protester's
position.
Our review of the record, which contains the DCAA report and the
contracting officer's memorandum justifying the option exercise,
discloses no basis to question the propriety of the option exercise
here. Further, the protester has provided no rebuttal to the agency's
position on this issue. We will not question the exercise of a contract
option unless the protester snows that applicable regulations were not
followed or that the agency's determination to exercise the option was
unreasonable. See Astronautics Corp., B-222414.2 et al., Aug. 5, 1986,
86-2 CPD P 147. AMC has made no such showing. We therefore deny this
aspect of its protest.
COST EVALUATION
The protester contends that the agency did not conduct a proper
evaluation of ADSI's cost proposal at the time of contract award.
Specifically, the protester asserts that the Navy did not comply with
FAR, 41 C.F.R. Sec. 15.805-3 (1985) "Cost analysis" and 41 C.F.R. Sec.
5.805-5 (1985) "Field price support."
We dismiss this aspect of the protest because we find that AMC is not
an interested party under our Bid Protest Regulations. See 4 C.F.R.
Sec. 21.0 (1986). AMC did not submit an offer in response to the
solicitation for the protested contract. The agency did, however,
receive one other acceptable offer in addition to ADSI's offer. AMC
therefore does not have the direct economic interest that is necessary
to make it an interested party under our regulations. See Tate
Engineering, Inc., B-213854, Mar. 26, 1984, 84-1 CPD P 350. Rather, the
direct economic interest at stake here is that of the other offeror who
participated in the procurement but did not receive the contract award.
Id. Accordingly we will not consider this aspect of AMC's protest.
CONCLUSION
The protest is dismissed in part and denied in part.
Harry R. Van Cleve
General Counsel
B-224915
March 30, 1987
Digest
1. Under Section 9508 of the Consolidated Omnibus Reconciliation Act
of 1985 (COBRA) Pub. L. No 99-272 100 Stat. 210-211 (1986) a state plan
amendment for case management services is effective no earlier than the
first day of the calendar quarter in which it was submitted, but no
earlier than April 7, 1986, the date of COBRA's enactment.
2. Section 9508 of the Consolidated Omnibus Reconciliation Act of
1985 (COBRA), Pub. L. No. 99-272, 100 Stat. 210-211 (1986), was intended
to allow states to amend their state plans to cover case management
services without requiring that the services be available throughout a
state and without requiring that covered service be equal in amount,
duration and scope for certain Medicaid beneficiaries.
The Honorable Guy Vander Jagt
House of Representatives
Dear Mr. Vander Jagt:
This responds to your September 29, 1986, letter transmitting a
letter for our comment from Ms. L. Annette Abrams, Deputy Director,
Bureau of Intergovernmental Relations and Human Resources, of the
Michigan Department of Mental Health. Ms. Abrams' letter requested
clarification of section 9508 of the Consolidated Omnibus Reconciliation
Act (COBRA) as it pertains to states seeking Medicaid reimbursement for
case management services. Specifically, Ms. Abrams wanted to know the
effective date of section 9508, particularly with respect to the state's
plan to amend its Medicaid plan to provide these services effective
October 1, 1986. She also asks whether this provision was intended to
allow states the option of adding case management services to their
state plans.
We requested and received the views of the Health Care Financing
Administration (HCFA) on these issues. As explained below, it appears
that the Michigan Medicaid plan may be amended to provide case
management services coverage at the beginning of any quarter, if
Michigan has submitted an amendment to the state plan covering this
service during that quarter, but in no case earlier than April 7, 1986.
The general scope of section 9508 is also discussed.
What is the effective date of section 9508 of the Consolidated
Ominibus Reconciliation Act of 1985?
Section 9508 provides that " t he amendments made by this section
shall apply to services furnished on or after the date of the enactment
of this Act." Pub. L. No. 99-272, 100 Stat. 210-11 (1986). Since the
Consolidated Omnibus Reconciliation Act of 1985 was enacted on April 7,
1986, Ms. Abrams believed that states should be allowed to be reimbursed
for case management services as of that date. However, it was Ms.
Abrams' understanding that HCFA was not going to approve case management
proposals until after implementing regulations had been issued.
According to HCFA, it is not delaying implementation of section 9508
until final regulations are issued. HCFA indicates that a number of
state plan amendments for case management services are currently under
review and some have been approved. HCFA also explains that a state
plan amendment is effective no earlier than the first day of the
calendar quarter in which it was submitted, and for case management
services, no earlier than April 7, 1986. See 45 C.F.R. 201.3(g) (1985).
We find HCFA's interpretation to be reasonable. Medicaid services
are reimbursable only if the services in question are part of a state's
approved plan. Thus, even though the amendment applies to services
furnished on or after the date of enactment, reimbursement is only
allowed if the plan provides for such services.
What is the scope of section 9508 of the Consolidated Omnipus
Reconciliation Act of 1985?
Ms. Abrams requests clarification of the effect section 9508 of COBRA
had on the provision of case management services under Medicaid. She
questions the effect of this amendment and is concerned that, if section
9508 refers to home and community-based waivers, it may jeopardize
Michigan's case management plan amendment. According to the response we
received from HCFA and our own review of recent legislation concerning
case management services, including COBRA, we think the recent
amendments did not have the effect feared by Ms. Abrams.
Prior to the amendment, states could provide case management services
under freedom-of-choice or home and communitybased services under
waivers to state plan requirements granted by the Secretary of HHS as
authorized under section 1915(b) and 1915(c) of the Social Security Act.
42 U.S.C. Sec. 1396n(b)-(c). States could also receive administrative
funds under their Medicaid plans for certain case management activities
such as pre-admission screening when offered to all Medicaid
beneficiaries in all areas of the state.
Section 9508 allows states the option of amending their state plans
to cover case management services without requiring that the services be
available throughout a state and without requiring that covered services
be equal in amount, duration and scope for certain Medicaid
beneficiaries. This change was added to section 1915 of the Medicaid
law even though it provides authority to states to amend their plans
without getting a waiver. It was apparently placed in this section to
make it optional rather than a state plan requirement under section
1902(a).
HCFA's interpretation, which is supported by the legislative history,
is in accord with this view. See H.R. Rep. 453 (Conference Report),
99th Cong., 1st Sess. 545-46 (1985).
Moreover, under the Tax Reform Act of 1986, Pub. L. No. 99-514, 101
Stat. (1986), technical amendments to COBRA relating to the Medicaid
program clarify case management further. Case management services are
now classified as medical assistance which may be provided for under a
state plan. Section 1905(a); id., at section 1895(c) (3). HCFA also
notes that section 9411 (b) of the Omnibus Budget Reconciliation Act of
1986, Pub. L. No. 99-509, 101 Stat. (1986), amended section 1915(g)(1)
to provide that a state may limit case management services to
individuals with Acquired Immune Deficiency Syndrome (AIDS), with
AIDS-related conditions, or with chronic mental illness.
We hope that the foregoing information will enable you to respond to
your constituent.
Sincerely yours,
Comptroller General
of the United States
Matter of: C&L Diversified Enterprises, Inc.--Request for
Reconsideration
File: B-224912.2
Date: March 10, 1987
DIGEST
Request for reconsideration is denied where protester basically
reiterates arguments previously made; does not challenge the facts upon
which initial decision was based; and does not identify errors of law
allegedly made.
DECISION
C&L Diversified Enterprises, Inc. requests reconsideration of our
decision in C&L Diversified Enterprises, Inc., B-224912, Jan. 30, 1987,
87-1 CPD P . C&L had protested the Forest Service's determination that
C&L was ineligible for award of a contract because of its affiliation
with C.R. Jones, a debarred contractor. In our decision, we held that
the Forest Service reasonably concluded that C.R. Jones had a
substantial interest in C&L, based on the facts that C.R. Jones had
served as company president up until his debarment; the firm is
operated and partially owned by his wife, Linda M. Jones, as its current
president; and C.R. Jones continues, as a company employee, to perform
an active and substantial role in the company's business.
In its request for reconsideration, C&L asserts that we overlooked
the facts that C&L was performing on government contracts for several
years prior to when C.R. Jones was debarred, and that C.R. Jones has
never owned any stock in the company and therefore, has never held any
"interest" in C&L. The protester argues, in effect, that for purposes
of determining whether a debarred contractor has a "substantial
interest" in a firm seeking a government contract, "interest" should be
defined as "ownership interest."
This argument basically reiterates the protester's position in the
initial protest. C&L has not in any way challenged those facts on which
our decision was based. Specifically, no evidence has been presented
which questions our conclusion that C.R. Jones served as company
president, that he is married to the company's current president and
part-owner, and that he continues to perform an active and substantial
role in the company business. In fact, as we pointed out in our prior
decision, C.R. Jones would be the sole company employee at the job site
were C&L to be awarded this contract. Accordingly, we do not find that
the facts C&L presents affect our prior holding that it was not
unreasonable for the Forest Service to conclude that C.R. Jones had a
substantial interest in C&L.
C&L also asserts that our decision is "contrary to the laws." It does
not, however, elaborate on this assertion.
Our Office will not consider any request for reconsideration which
does not contain a detailed statement of the factual or legal grounds
upon which reversal is deemed appropriate, specifying any errors of law
made or information not previously considered. 4 C.F.R. Sec. 21.12(a)
(1986).
The request for reconsideration is denied.
Harry R. Van Cleve
General Counsel
Matter of: C & L Diversified Enterprises, Inc.
File: B-224912
Date: January 30, 1987
DIGEST
1. Provisions of the Service Contract Act preclude award of a
contract to firm in which a debarred contractor has a substantial
interest. 41 U.S.C. Sec. 354.
2. Issue of whether debarred contractor has a substantial interest in
firm seeking a government contract is for determination by the
contracting agency and the Secretary of Labor, and our review of the
matter is limited to whether that determination was reasonable.
3. It was reasonable for agency to conclude that an individual
debarred from contracting with the government had a substantial interest
in a company where he served as company president up until his
debarment, the firm is in part owned and is operated by his wife as its
current president, and the debarred individual continues to be employed
by the firm.
DECISION
C & L Diversified Enterprises, Inc. (C & L), protests the Forest
Service's rejection of the bid it submitted pursuant to invitation for
bids (IFB) No. R6-6-86-93. C & L contends that it is entitled to award
of the contract as the low responsive bidder. The Forest Service
responds that C & L is ineligible for award due to its affiliation with
C. R. Jones, a contractor debarred by the Department of Labor for
violations of the Service Contract Act, 41 U.S.C. Sec. 351 et seq.
(1982). 1/ We deny the protest.
The IFB issued by the Forest Service sought bids to bulldoze the
debris generated by logging operations in the Mt. Hood National Forest.
By letter dated September 10, 1986, the Forest Service's contracting
officer notified C & L that it had submitted the low bid. In this
letter, the contracting officer also inquired as to the "current status"
of C. R. Jones in view of his debarment; advised that the bidder would
have to positively show that it had taken steps to improve its
performance which had resulted in its failure to complete a prior
contract on time; and, because the bid price was 35 percent below the
government estimate, asked the bidder to verify the bid if no mistakes
were claimed. A verified bid was to be supported by the submission of a
cost estimate worksheet.
In response, by letter signed by "Linda M. Jones, President," the
bidder advised that C. R. Jones was "removed from holding any office" in
the corporation upon his debarment and was now "only a dozer operator"
for the firm; that Linda Jones currently was the firm's president; and
that repairs to existing equipment and the purchase of another bulldozer
should correct the problems experienced under the prior contract. In
addition, the bidder verified the correctness of its bid price, in
support of which it submitted a cost estimate worksheet showing that its
payroll costs for this contract were limited to a crew of one with the
same individual also serving as foreman.
On September 26, the contracting officer advised C & L that it would
not be awarded the contract due to his determination that C. R. Jones
had a substantial interest in the company. Linda Jones, wife of C. R.
Jones as well as part-owner of C & L (together with their two children)
and its current president, protests that determination.
Ms. Jones acknowledges that her husband was president of C & L prior
to his debarment. However, she states that she assumed the role of
company president after her husband was debarred, and asserts that he is
now merely an employee, retained by the company as a "dozer" operator.
She argues that since her husband has no stock in the company and is no
longer an officer, he has no interest in the firm. Ms. Jones maintains
that the regulations concerning debarment should not he construed in
such a way as to prevent her husband from retaining his employment.
The Forest Service responds that, as a former president of the
corporation and the spouse of a part-owner and its current president, C.
R. Jones has a substantial interest in C & L. Further, the Forest
Service believes that C & L intends to use C. R. Jones as its agent on
this contract, based on C & L's cost estimate worksheet and
correspondence from Ms. Jones which suggests that C. R. Jones will be
the only employee on the jobsite. The Forest Service notes that the
terms of the IFB require the site representative to have authority to
act for the contractor, and the agency anticipates that, if awarded the
contract, C & L intends to use C. R. Jones as its site representative
and agent.
The Service Contract Act provides that no government contract may be
awarded to any firm in which a debarred contractor has a substantial
interest. 41 U.S.C. Sec. 354 (1982). However, our Office will not
conduct an in-depth inquiry into the issue of whether C & L is
affiliated with C. R. Jones, since such determinations are to be made by
the federal contracting agency and the Secretary of Labor. Atchison
Engineering Co., B-208148.5, Aug. 30, 1983, 83-2 C.P.D. P 278. Our
review of this matter is restricted to an examination of whether the
contracting officer's determination was reasonable. Solid Waste
Services, Inc., B-218445 et al., June 20, 1985, 85-1 C.P.D P 703.
Based on the record presented, we believe the contracting officer
reasonably rejected C & L's bid. Our Office previously considered a
case involving a married couple in a similar situation. See ALB
Industries, Inc., B-207335, Aug. 9, 1982, 82-2 C.P.D P 119. There, as
here, the husband and his company had been debarred and the wife sought
to contract with the government through a corporation previously
controlled by her husband. In that case, we stated that, in the context
of contract performance, it is reasonable for a contracting officer to
conclude that family members, and specifically a married couple, have an
identity of interest. 2/ We believe that principle is applicable here.
C. R. Jones' proposed involvement in the performance of this contract
provides additional support for the conclusion that he has a substantial
interest in the company. After reviewing the record, we believe the
contracting officer reasonably concluded that C & L intends to use C. R.
Jones as its agent in performing this contract. In addition to the
letter in which Ms. Jones stated that C. R. Jones is employed as a
"dozer" operator, and with which she submitted a cost estimate worksheet
showing only one employee will be used to perform the required work, in
her response to the Forest Service's administrative report, Ms. Jones
indicates that the effect of the ineligibility determination will be to
keep her husband from working.
In summary, we believe that the contracting officer's determination
that C. R. Jones has a substantial interest in C & L is amply supported
by the fact that he served as president of that company up until his
debarment, he is married to the current president and part-owner, and he
continues to perform an active and substantial role in the company's
business. Accordingly, we find nothing improper in the Forest Service's
rejection of C & L's bid.
The protest is denied.
Harry R. Van Cleve
General Counsel
FOOTNOTES
1/ Records on file in our Office indicate that, on June 26, 1985, a
Department of Labor Administrative Law Judge (ALJ) issued a decision
which found C. R. Jones had violated the minimum wage provisions of the
Service Contract Act in his performance of another government contract.
On February 28, 1986, the Undersecretary of Labor affirmed the ALJ's
decision. Effective May 1, 1986, C. R. Jones was placed on the list of
debarred bidders.
2/ Ms. Jones asserts here, as did the protester in ALB Industries,
Inc., supra, thdt a denial of her protest will constitute sexual
discrimination. There is no merit in this argument since our decision
today would be the same if the roles were reversed, i.e., if the wife
had been suspended and her husband owned another company seeking to
contract with the government. See ALB Industries Incorporated--Request
for Reconsideration, B-207335.2, June 27, 1983, 83-2 C.P.D. P 20.
Matter of: Gordon Field, M.D.--Waiver of Erroneous
Overpayments--Insurance Premiums
File: B-224910
Date: June 22, 1987
DIGEST
Employee received overpayments of pay because agency failed to deduct
full insurance premiums from his pay. Overpayments may not be waived
under 5 U.S.C. Sec. 5584. Record shows that the employee requested the
insurance, was covered by the insurance, and was furnished a booklet
which explained the coverage and applicable rates. Therefore, employee
was partially at fault for not questioning the lack of sufficient
deductions for insurance, and since he failed to effectively examine
Earnings and Leave Statements provided by agency which would have
alerted him to the error.
DECISION
In this decision we hold that Dr. Gordon Field, a physician with the
Veterans Administration (VA), may not be granted waiver of erroneous
payments made to him as a result of his agency's underdeduction for
Federal Employees Group Life Insurance (FEGLI) premiums. This decision
sustains a denial of his application for waiver under 5 U.S.C. Sec. 5584
made by our Claims Group on March 17, 1986.
BACKGROUND
Dr. Field was appointed to the position of staff physician at the
Veterans Administration Outpatient Clinic, Jacksonville, Florida, on
April 6, 1983. He had not previously worked for the Federal Government.
On April 6, 1983, the first day of his appointment, Dr. Field enrolled
in the FEGLI program, electing "Option B-Additional" insurance at 3
times the amount of his salary in addition to the basic coverage.
However, the personnel of f ice did not enter on the enrollment form the
proper code signifying the additional insurance coverage. Dr. Field
received his first Earnings and Leave Statement showing a payroll
deduction for life insurance premiums effective for the biweekly pay
period ending April 18, 1983. It understated the correct deduction by
$126 because of the failure to include the optional additional coverage,
while correctly showing a proper deduction for the basic life insurance
in the amount by $17.28. The error continued in successive pay periods
and on successive Earnings and Leave Statements until discovered in
September 1984 by the agency as a direct result of questions raised by
Dr. Field's wife, who was reviewing his Statements on his behalf. Dr.
Field has reported that his wife always handled the business and
financial aspects of his previous private medical practice. Since it
was necessary for Dr. Field's wife to close out the corporation through
which he operated his prior private medical practice, and sell their
previous home before joining him in Florida, she did not have an earlier
opportunity to review his Earnings and Leave Statements. The cumulative
effect of the error resulted in the employee being in debt in the amount
of $4,885.20.
The Committee on Waivers and Compromises (Committee) of the VA
Regional Office, St. Petersburg, Florida, denied waiver based upon its
view that Dr. Field should have known deductions were not being made in
the proper amount by reviewing his Earnings and Leave Statement (VA Form
4-5632, August 1981) which he received each pay period. Additionally,
the Committee noted the fact that Dr. Field was provided with a booklet
on insurance rates at the time of his preemployment interview. The
Committee concluded that Dr. Field's failure "to properly reconcile his
pay status represents material fault on his part, and establishes a lack
of good faith * * *."
The Claims Group sustained the denial of Dr. Field's waiver request
by the VA Committee on Waivers, concluding that " s ince Dr. Field did
not carefully examine his Earnings Statement in a timely manner, we must
hold him at least partially at fault in his matter, which statutorily
precludes waiver of the claim."
Dr. Field appealed this determination on the basis of Hollis W.
Bowers, 65 Comp. Gen. 216 (1986), which Dr. Field believes to be
indistinguishable in all material respects from his situation.
DISCUSSION
The provision of law authorizing the waiver of claims of the United
States against employees arising out of erroneous payments of pay, 5
U.S.C. Sec. 5584 (1982), permits such waivers only when there is no
indication of fraud, misrepresentation, fault, or lack of good faith on
the part of the employee, or any other person having an interest in
obtaining the waiver, and when the collection of the erroneous payments
would be against equity and good conscience and not in the best interest
of the United States.
The word "fault" as used in 5 U.S.C. Sec. 5584 has been interpreted
more broadly than being limited to proven overt acts or omissions by an
employee. Fault is considered to exist if in the light of all the
facts, it is determined that an employee exercising reasonable diligence
should have known that an error existed and taken action to have it
corrected. The standard employed by this Office is to determine whether
a reasonable person should have been aware that he was receiving payment
in excess of his proper entitlements. 4 C.F.R. Sec. 91.5 (c) and George
R. Beecherl, B-192485, November 17, 1978. Employees are under a duty to
bring pay questions to the attention of appropriate agency officials.
See Vivian J. Lucas, B-190643, July 6, 1978. Consequently, if a notice
of personnel action and an Earnings and Leave Statement timely received
by the employee clearly reveal an underdeduction of FEGLI premiums, the
employee is on notice of the error. The failure of the employee to
inspect such documents ordinarily requires the employee to be considered
to be at least partially at fault if he fails to take corrective action
and waiver will not be granted. Rosalie L. Wong, B-199262, March 10,
1981; Roosevelt W. Royals, B-188822, June 1, 1977; Annie E. Strom,
B-204680, February 23, 1982.
The fact that the overpayments were made through administrative error
does not relieve an individual of responsibility to determine the true
state of affairs in connection with overpayments. It is fundamental
that persons receiving money erroneously paid by a Government agency or
official acquire no right to the money; such persons are bound in
equity and good conscience to make restitution. James T. Fielding,
B-194594, September 27, 1979.
We cannot find that Dr. Field was free from fault in this case. Dr.
Field elected on his appointment date additional FEGLI coverage at 3
times the standard rate. He was furnished with a booklet which
explained the coverage available and the applicable rates. Thus, it
appears to us that a reasonable and prudent person would have
ascertained the cost of this additional insurance and later verified
this amount on his Earnings and Leave Statements. Dr. Field did not do
this. Therefore, he is not without fault and it would not be against
equity and good conscience for him to make restitution.
We also note that Dr. Field's beneficiary would have been paid the
full amount of the life insurance that he had elected had he died during
the period after he elected coverage even though insufficient premium
payments were deducted from his wages. See 5 C.F.R. Sec. 870.203; Ann
Wildey B-204975, January 5, 1982.
Hollis W. Bowers, supra, upon which Dr. Field bases his appeal,
affirms the general principle that the employee is expected to review
copies of documents given him in order to detect and report
overpayments. We held, however, that, under the circumstances of that
case, the determinative question was whether the deduction for FEGLI
shown on the employee's Earnings and Leave Statements appeared
reasonable. If the deduction appears reasonable on its face, we stated
that we were aware of no reason to expect or require an employee to
audit the amounts shown.
A deciding factor in Bowers was that the biweekly Earnings and Leave
Statements received by Mr. Bowers contained only a composite dollar
amount for the total of all FEGLI premiums. This required Mr. Bowers to
rely on factors external to his Earnings and Leave Statements to
determine whether premiums for all elected portions of FEGLI were being
withheld from his pay. Contrary to the Earnings and Leave Statements
furnished Mr. Bowers, the Earnings and Leave Statements provided to Dr.
Field each biweekly pay period contained a blank entitled "Additional
Optional" in addition to the blank captioned "Basic." The "Additional
Optional" blank was always left blank, when in fact it should have
contained the amount of $126. Therefore, if Dr. Field had examined
diligently his Earnings and Leave Statements he would have noticed that
no premiums were being withheld for the "Additional Optional" insurance
which he had elected. Since the Earnings and Leave Statements provided
to Mr. Bowers did not contain a separate blank for "Additional Optional"
premiums he could not have as easily determined the absence of a
deduction for this additional insurance. Therefore, we do not find
Bowers controlling in Dr. Field's case.
Accordingly, Dr. Field's request for waiver is denied.
Comptroller General
of the United States
Matter of: Loral TerraCom--Request for Costs
File: B-224908.6
Date: September 15, 1987
DIGEST
Where the General Accounting Office finds that the protester has not
been unreasonably excluded from competing in the procurement, the award
of proposal preparation and protest costs is inappropriate.
DECISION
Loral TerraCom requests reimbursement of its proposal preparation and
protest costs pursuant to our decision in The Aydin Corporation;
Department of the Army--Request for Reconsideration, B-224908.3;
B-224908.4, May 19, 1987, 87-1 CPD P 527, in which we affirmed a
previous decision sustaining the protest of Marconi Italiana against the
Army's award of a contract to Aydin Corporation under request for
proposals (RFP) No. DAAB07-86-R-J006.
We deny Loral's request for costs.
This is our third decision in this matter. Our first decision, Loral
Terracom; Marconi Italiana, B-224908; B-224908.2, Feb. 18, 1987, 66
Comp. Gen. , 87-1 CPD P 182, was in response to protests filed by
Marconi and Loral in which both firms argued that the Army had failed to
conduct meaningful discussions before making award to Aydin. Loral also
argued that it had been improperly found to be nonresponsible by the
Army. In addition, Marconi argued that the Aydin proposal failed to
technically conform to the requirements of the solicitation in one
crucial aspect. It is upon this latter basis that the protest of
Marconi was sustained. We therefore recommended that the Army reopen
negotiations and terminate for the convenience of the government the
contract awarded to Aydin, if, after the renewed negotiations, it
appeared that another offeror was properly in line for award.
Significantly, we did not reach the merits of the remaining arguments
and accordingly did not reach the merits of Loral's protest; we stated
in our original decision that we deemed it unnecessary to reach the
merits of Loral's protest since, by virtue of Marconi's success in its
protest, Loral would be afforded an opportunity to participate in the
reopened negotiations.
Subsequently, the Army and Aydin requested reconsideration of that
initial decision and specifically urged us to either reverse our
original holding on the merits or, failing that, modify our original
recommendation so as not to include the recommendation of renewed
negotiations. In our second decision, The Aydin Corporation;
Department of the Army-- Request for Reconsideration, B-224908.3;
B-224908.4, supra, we affirmed our original holding sustaining Marconi's
protest but withdrew our recommendation for renewed negotiations on the
ground (advanced by the Army) that renewed negotiations were not in the
best interest of the government because of the urgency of the
requirement. We nevertheless awarded proposal preparation and protest
costs, including attorney's fees, to Marconi on the ground that the firm
had been unreasonably excluded from competing for award under the
solicitation. Loral now asks that we award the firm proposal
preparation and protest costs since, by modifying our original
recommendation to reopen negotiations, Loral was never afforded another
opportunity to obtain the award and since the firm was initially
unreasonably excluded from the competition by the Army.
The Army argues, however, that we must now decide the merits of
Loral's original protest before reaching the issue of costs since we
never expressly ruled that Loral was unreasonably excluded from the
competition which is a prerequisite to award of costs. 4 C.F.R. Sec.
21.6(e) (1986). We agree with the Army that it is appropriate to
consider the merits prior to reaching the issue of costs.
In its initial protest, Loral principally argued that " a t no time
did the contracting agency ever identify to Loral any deficiency in
its proposal or its subsequent submission." Our review of the record
indicates that Loral's allegations are without foundation.
Of particular importance in the technical evaluation of Loral's
proposed design was a unique feature of Loral's radio; the Loral design
included a "mast-mounted RF module" (RF module). Although the Army also
found Loral's best and final offer technically unacceptable on one other
ground as well, the technical evaluation team concluded that the RF
module posed an unreasonable risk. Specifically, the technical
evaluation team was concerned with the thermal dispersion qualities of
the RF module when operating the Loral radio under extreme temperature
conditions. According to Loral, there was no risk associated with this
feature of its radio but that, because of the Army's failure to conduct
meaningful discussions with the firm, it was unable to demonstrate this
to the satisfaction of the technical evaluation team.
We believe that the Army conducted adequate discussions with Loral.
The Federal Acquisition Regulation (FAR), 48 C.F. R. Sec. 15.610(b)
(1986), provides that the content and extent of competitive negotiations
is a matter of judgment to be exercised by the contracting officer based
on the particular facts at hand. The contracting officer should advise
an offeror of deficiencies in its proposal so that they may be
corrected, but should not engage in technical leveling--that is, helping
an offeror to bring its proposal up to the level of the other proposals
through successive rounds of discussions, such as by pointing out
weaknesses resulting from the offeror's lack of diligence, competence or
inventiveness in preparing its proposal. FAR, 48 C.F.R. Sec. 15.610
(d); Creativision, Inc., B-225829, July 24, 1987, 66 Comp. Gen.
, 87-2 CPD P 78.
The record shows that Loral was afforded an adequate opportunity,
within the framework of the original discussions, to address the
technical concerns of the Army. During written discussions, the Army
explicitly requested that Loral provide a thermal analysis of the RF
module. We believe that this question reasonably should have led Loral
into this area of its proposal which the Army found technically
deficient. Further, oral discussions were held after the written
questions were propounded to Loral and Loral was at that time afforded
an opportunity to make inquiries regarding the original written
questions. However, Loral failed to satisfy the government's concerns
in the thermal analysis area and the evaluators, during the final
evaluation of best and final offers, found that Loral did "... not
provide sufficient analysis to show that the mast mounted circuitry. .
. can be kept from overheating from the combination of power dissipation
and solar radiation." We agree with the Army that this deficiency was
brought to Loral's attention during discussions. Consequently, we
believe that meaningful discussions were held with Loral and that
therefore Loral has not shown its proposal was improperly rejected.
Where an agency properly determines that a particular proposal is
technically unacceptable based on information contained in the offeror's
best and final offer, it is not required to reopen negotiations to
permit the offeror to demonstrate the merits of its proposal. Digital
Devices, Inc., B-225301, Mar. 12, 1987, 87-1 CPD P 278. Further, we
have held that even if a proposal is initially determined to be within
the competitive range, the contracting agency is not required to hold
discussions with an offeror once it is determined that its proposal is
outside the acceptable range and can exclude firms initially determined
to be within the competitive range from further award consideration
after their revised proposals are found to be technically unacceptable
and no longer within the competitive range. See 52 Comp. Gen. 198, 208
(1972). Therefore, since we find that Loral was not unreasonably
excluded from the procurement, we deny its request for costs. To the
extent this decision is inconsistent with out original holding that all
offerors including Loral should be allowed to participate in any renewed
discussions, we modify that decision.
Comptroller General
of the United States
Matter of: The Aydin Corporation; Department of the Army--Request
for Reconsideration
File: B-224908.3; B-224908.4
Date: May 19, 1987
DIGEST
1. Prior decision is affirmed where requests for reconsideration
filed by the contracting agency and the awardee fail to establish that
the prior decision rests upon the protester's material misrepresentation
of fact.
2. Recommendation that competitive range discussions be reopened is
withdrawn where it is determined upon reconsideration that the remedy is
no longer feasible given the extent of contract performance and the
critical nature of the requirement to the agency's mission. Protester,
however, is nevertheless entitled to its protest costs, including
attorney's fees, and its proposal preparation costs.
DECISION
The Aydin Corporation and the Department of the Army request
reconsideration of our recent decision in Loral Terracom; Marconi
Italiana, B-224908 et al., Feb. 18, 1987, 66 Comp. Gen. , 87-1 CPD P
182, sustaining a protest by Marconi Italiana against the Army's award
of a contract to Aydin under request for proposals (RFP) No.
DAAB07-86-R-J006. The procurement was for the supply of a quantity of
AN/GRC222(v) variable function radio sets. The radio sets were to be
furnished in two specific operational modes, the "(v)1" wide-band and
"(v)2" narrow-band configurations, and a prime requirement of the
acquisition was that the (v)1 configuration be readily convertible by
user personnel to perform functionally as a complete (v)2 configuration.
We sustained the protest as we found that the Army had failed to
advise Marconi that technical approaches to effect the convertibility
requirement other than strictly by use of a separate conversion kit--the
method proposed by Marconi in reliance on the express terms of the
RFP--were aiso acceptable. Aydin's technical approach to accomplish the
(v)1/(v)2 reconfiguration was by means of an internal embedded switch.
We did not criticize the Army for judging that Aydin's concept was
superior to the conversion kit approach originally sought by the agency,
as reflected in the specific terms of its own solicitation. However, we
concluded that the Army's failure to clarify its needs, either through
the issuance of a formal written amendment or through competitive range
discussions, had misled Marconi to its competitive prejudice.
We recommended that competitive range discussions be reopened to
allow for the submission of another round of best and final offers under
an amended solicitation clearly stating the Army's needs regarding the
(v)1/(v)2 reconfiguration requirement. We further recommended that
Aydin's contract be terminated for the convenience of the government if
it were not the successful offeror at the conclusion of these
discussions.
Aydin and the Army now request reconsideration of our February 18
decision on the principal ground that this Office erred in concluding
that Marconi had had no actual knowledge that the (v)1/(v)2
reconfiguration effort could be met by technical approaches other than
expressly called for by the solicitation. The Army also contends that
Marconi's assertion that the RFP permitted only one conversion
methodology was untimely raised and should not have been considered by
this Office in resolving the protest. Finally, the agency urges that,
even if we should affirm our prior decision from a legal standpoint, our
recommendation for corrective action should not be implemented because
it clearly will not be in the government's best interest.
We affirm our prior decision but withdraw our recommendation.
The particular details of this case are set forth in our prior
decision and need not be repeated at length here. To the extent Aydin
and the Army contend that Marconi knew that a separate conversion kit
was not required to effect the (v)1/(v)2 reconfiguration, the record
does not establish the validity of the parties' contention.
Marconi had argued in its initial protest submission that the Army
had, in effect, been biased in favor of the embedded switch approach
adopted by Aydin to accomplish the (v)1/(v)2 convertibility requirement
during the evaluation of proposals. In its report on the protest, the
Army responded to the assertion by stating that the RFP, which sought a
nondevelopmental item, had not required any one particular technical
approach to accomplish the overall reconfiguration effort, and that
Aydin's proposal, therefore, had not been improperly evaluated.
However, at the administrative conference convened on the protest, and
in its written submission following that conference, Marconi countered
the agency's position by urging that the RFP, by its express terms, had
in fact required that the conversion of the radio set from the (v)1 to
the (v)2 configuration be effected by means of a separate conversion
kit.
Although Marconi furnished a draft copy of its conference comments to
the Army two days prior to the December 12, 1986, due date set for the
submission of conference comments by all parties, the Army did not file
its own conference comments until January 2, 1987. The Army never
requested an extension of time to file its comments, and its submission,
therefore, was untimely under our Bid Protest Regulations, 4 C.F.R. Sec.
21.5(c) (1986), which provide that comments on any bid protest
conference must be filed within five working days of the date on which
the conference was held. Nevertheless, even though the Army's filing
was late, and the matter at hand already under active review, we did
consider the Army's comments upon receipt, but, as noted in our prior
decision, we found nothing in them to be material to our conclusion that
the RFP required a separate conversion kit.
The Army had argued that a statement in Marconi's technical proposal
clearly indicated that the firm knew that a separate conversion kit
methodology was not a mandatory requirement of the solicitation.
Specifically, Marconi's proposal had provided at section 2.1.1:
"The AN/GRC-222(v) radio will be installed in the existing
radio assemblages, modified Radio Repeater Set... which will house
two... (v)1 radio sets and the modified Radio Terminal
Assemblage... which will house one... (v)1 radio set, two... (v)2
radio sets, and a conversion kit if needed."
The Army contended at that time, and now contends in its request for
reconsideration, that the qualifying phrase "if needed" in the above
statement establishes Marconi's misrepresentation on this crucial issue.
Accordingly, it is urged that our prior decision, sustaining the
protest on the ground that Marconi was not properly advised that
alternative methods were permissible, is founded on a material error of
fact and should now be reversed. We do not agree.
Our prior decision was based upon our reading of the express language
of the solicitation documents, which, as detailed in that decision, were
replete with references to a conversion kit requirement, but which made
no mention of any other method of (v)1/(v)2 convertibility as being
acceptable. Thus, the phrase "if needed" in Marconi's proposal was not
viewed at the time of our decision as sufficient to overcome Marconi's
position that a separate conversion kit was mandated by the
solicitation, and that the firm, with no clear indication to the
contrary, had literaily relied upon the RFP's terms in preparing its
proposal to its ultimate competitive detriment.
In fairness to all parties on this issue, we have closely reviewed
the record in response to the requests for reconsideration now filed, to
the extent of obtaining both Marconi's and Aydin's complete proposals
for examination, but we are not persuaded by the single phrase "if
needed" existing in Marconi's offer that the firm misrepresented its
lack of actual knowledge that alternative approaches were allowable.
Rather, our review provides additional support for our original
conclusion that the Army deviated from the terms of its own soiicitation
in accepting Aydin's offer which, although perhaps technically superior
to Marconi's, was nonetheless noncompliant with the agency's stated
requirements.
Marconi explains that the phrase in issue merely referred to those
equipment assembiages where no conversion kit was necessary, that is,
those shelters housing (v)2 configurations only, since it is only the
(v)1 configuration which must be readily convertible to the (v)2 mode,
an explanation we find to be consistent with the language used by the
protester in its proposal. Marconi urges that it never proposed
anything other than a separate conversion kit and, therefore, the
language in question "cannot be reasonably interpreted as Marconi's
"recognition" that any other means of conversion were acceptable."
Examination of Marconi's proposal supports the firm's position, since
it is obvious from the various provisions of the proposal that Marconi
intended to offer only a separate conversion kit and, apart from the
single phrase in issue, there is no qualifying language to impeach
Marconi's representation that it was unaware of the acceptability of
alternative approaches to convertibility. For example, under section
2.1.3, "PROGRAM OBJECTIVES," Marconi's proposal states that, "Conversion
kits will facilitate conversion of ... the (v)1 configuration to ...
the (v)2 configuration by operating personnel." Section 2.2.3.3
describes the three components comprising the "Conversion kit (v)1 to
(v)2." Section 2.3.4. specifically provides that the conversion kit
offered by Marconi "to effect the . . . said conversion and referred to
in the solicitation documents as . . . (v)2 Conversion Kit" is
Marconi's model CK344 which "contains all the items that must be
interchanged in a... (v)1 to transform it into a...(v)2...."
Thus, we regard the clear import of Marconi's proposal as the offer
of a conversion kit approach in accordance with what the firm reasonably
regarded as a mandatory aspect of the overall convertibility
requirement. The sole qualifying phrase "if needed" cannot be given the
materiality Aydin and the Army give it in the face of both the express
terms of the solicitation and the provisions of Marconi's own proposal
as set forth above.
Moreover, our examination of Aydin's proposal and the Army's
evaluation statements regarding that proposal only serve to confirm our
view that a conversion kit was, at least as originally contemplated, a
firm requirement. In the introduction to its technical proposal, Aydin
specifically described its offered AMLD-3 LOS Digital Radio Set as
having the capability to be changed from the (v)1 to the (v)2 mode
simply by means of switch selection by the operator. In Aydin's words:
"This ease of reconfiguration makes this Digital Radio Set
unique in that no Conversion Kit is required to convert the v1...
to the v2...." (Emphasis supplied.)
The fact that Aydin describes its approach as "unique" reasonably
indicates to us that the firm originally perceived the acquisition as
one seeking a conversion kit methodology to effect the (v)1/(v)2
reconfiguration. More telling, however, is the following statement from
the Army's subsequent evaluation of Aydin's proposal:
"The proposed approach combines the features of the...(v)1 and
(v)2 into a single radio set, thereby obviating the requirement
for a conversion kit. . . ." (Emphasis supplied.)
We read the words "the requirement," as opposed to terms which would
convey a more general technical necessity, as referring specifically to
the concept of a separate conversion kit as mandated by the terms of the
RFP.
The Army, nonetheless continues to assert that Marconi knew that
alternate approaches would be considered and insists that Marconi was so
advised during negotiations on August 14, 1986. Marconi in turn
vehemently denies it was ever made aware that the Army would consider an
approach that differed from the one stated in the solicitation--a
separate conversion kit. We need not resolve this factual dispute
because the Army never amended the RFP and we remain convinced that the
RFP clearly mandated the use of a separate conversion kit.
As noted in our February 18 decision, this Office will resolve a
dispute as to the meaning of a particular solicitation requirement by
reading the solicitation as a whole and in a manner giving effect to all
of its provisions. System Development Corp., B-219400, Sept. 30, 1985,
85-2 CPD P 356. In doing so, we assign words and terms their plain
meaning, see Wheeler Bros., Inc. et al., B-214081.3, Apr. 4, 1985, 85-1
CPD P 388, and an agency generally will not be permitted to deny the
express provisions of its own solicitation. See Senstar Corp.,
B-225744, Apr. 2, 1987, 87-1 CPD P . Thus, to the extent Aydin and the
Army continue to argue that the RFP ailowed for approaches other than a
separate conversion kit to effect (v)1/(v)2 reconfiguration, we continue
to reject the argument given the literally dozens of specific references
to a conversion kit, but to no other allowable method of convertibility,
in the operative solicitation documents. 1/
We also reject the assertion by Aydin and the Army that the word
"kit" encompassed Aydin's conversion approach. The word "kit" is
defined as a "packaged set of parts," Webster's Third New International
Dictionary, 1971, p. 1246, or a "set of materials or parts." The Random
House College Dictionary, Rev. Ed., 1980, p. 739. We see no reasonable
manner in which such definitions could be extended to include Aydin's
integral embedded switch concept as opposed to the approach offered by
Marconi, which, in literal compliance with the terms of the RFP,
comprised a "kit" of three modular, exchangeable components.
Accordingly, we affirm our holding that Marconi was misled to its
prejudice by the Army's failure to advise the firm that the offer of a
separate conversion kit to effect (v)1/(v)2 convertibility was not a
requirement of the acquisition. Aydin and the Army have failed to meet
their burden as the parties requesting reconsideration to establish
otherwise. See Dept. of Labor--Reconsideration, B-214564.2, Jan. 3,
1985, 85-1 CPD P 13.
We are not persuaded by the Army's argument that Marconi's assertion
regarding the conversion kit issue was untimely raised. As indicated
earlier in this discussion, Marconi had urged the mandatory nature of
that feature at the bid protest conference, and then in its conference
comments, directly in response to the Army's position in its
administrative report that Aydin's proposal was not improperly
evaluated. We did not view Marconi's response as an attempt to raise a
wholly new issue, which had to satisfy independently our timeliness
requirements, see Consolidated Group, B-220050, Jan. 9, 1986, 86-1 CPD P
21 at 14, but rather as a further development of the firm's original
protest assertion that its offer had not been fairly considered due to
the Army's preference for Aydin's integral switch concept. Therefore,
the issue was not untimely and was properly considered in reaching our
decision on the protest.
The Army now urges that implementation of our recommendation for
corrective action will not be in the government's best interest and that
the award to Aydin, therefore, should be allowed to stand. Principally,
the Army voices concerns regarding the impact any termination of Aydin's
contract would have upon mission needs by advising that the AN/GRC222(v)
variable function radio set sought under this procurement is an integral
part of a much larger system, the Tri-Service Tactical Communications
System (TRI-TAC), and that TRI-TAC equipment is used by the Army for
essential communications for organizational elements above the corps
level on a world-wide basis. According to the Army, the AN/GRC-222 is
being procured to outfit all signal battalions supporting these elements
and that deliveries of the production radio sets must commence no later
than January 1988, as contemplated under Aydin's contract, in order not
to compromise the overail capability of the TRI-TAC system. The Army
states:
"... I mplementation of the... recommendation would cause
irreparable harm to the Army because communication capabilities of
all theater Army commanders would be significantly degraded for an
extended period of time."
The Army believes that if Aydin's contract is terminated for the
convenience of the government and the requirement then awarded to
Marconi, Marconi will not be able to meet the necessary delivery
schedule so that the radios can be properly fielded to support the
TRI-TAC system.
We note that we did not expressly recommend that Aydin's contract be
terminated and the requirement awarded to Marconi. Rather, our
recommendation was that the impropriety existing in the conduct of the
procurement be remedied by the reopening of discussions under a
clarified RFP to allow for the submission of a new round of best and
final offers.
Nevertheless, we view the Army's concerns that any delays in
procuring these radios will have a serious impact upon its mission needs
as significant. Performance of Aydin's contract has continued
throughout both the original protest resolution process and the present
reconsideration period because the protest was not filed within 10
calendar days of the award to Aydin. The Army, therefore, was not
required to suspend the work. See 31 U.S.C. Sec. 3553(d) (1). Since
the procurement has reached an advanced stage, a reopening of
discussions to obtain revised proposals at this point, with the delays
to be occasioned by such action, and with the possibility as well that
Aydin's contract ultimately might be terminated as a result of those
discussions, would not be in the best interest of the government. We
are persuaded that a reopening of the competition is no longer a
feasible remedy. See 4 C.F.R. Sec. 21.6(b). Accordingly, we withdraw
the recommendation for corrective action made in our February 18
decision, and the award to Aydin is allowed to stand. See Leland
Limited, Inc.--Reconsideration, B-224175.2, Feb. 17, 1987, 87-1 CPD P
168.
At the same time, however, we find Marconi entitled to its costs of
filing and pursuing the protest, including attorney's fees, and its
proposal preparation expenses. Protest costs may be recovered where the
agency has unreasonably excluded the protester from the procurement,
except where this Office recommends that the contract be awarded to the
protester and the protester receives the award. 4 C.F.R. Sec. 21.6(e).
The recovery of proposal preparation costs may be allowed where the
protester, having a substantial chance of award, was unreasonably
excluded from the procurement, but no other practical remedy is
feasible. Id.; see Temps & Co.--Claim for Costs, B-221846.2, Aug. 28,
1986, 65 Comp. Gen. , 86-2 CPD P 236 at 3.
Here we have affirmed our original conclusion that the Army's failure
to advise Marconi of the agency's true acquisition needs misled the
firm, whose offer in fact was later found to be lower in price than
Aydin's and, therefore, unreasonably excluded it from the procurement.
The firm is accordingly allowed the recovery of its protest and proposal
costs. Leland Limited, Inc.--Reconsideration, B-224175.2, supra, 87-1
CPD P 168 at 4. Marconi should submit its claim for reimbursement of
these costs directly to the Army, and if the parties cannot reach
agreement within a reasonable time, this Office will determine the
appropriate amount to be paid. 4 C.F.R. Sec. 21.6(f).
Our prior decision is affirmed. Our prior recommendation is
withdrawn.
Acting Comptroller General
of the United States
FOOTNOTE
1/As noted in our prior decision, the Army's presolicitation
documents as provided for industry comment indicated that other
methodologies to accomplish the reconfiguration effort might be
acceptable, by using such qualified terms as "Conversion Kit (if
required)" and "Kit or Method." But Marconi's point all along has been
that the RFP and its attachments, when finally issued, had no such
qualifying language, and that the firm, without actual knowledge to the
contrary, was therefore bound by the terms of the solicitation which
repeatedly referenced a conversion kit exclusively.
Matter of: Commander Loyd F. Galyean, USN (Retired)
File: B-224900
Date: February 24, 1987
DIGEST
A retired Navy officer who was aware of the Dual Compensation Act did
not notify the Navy Finance Center when he obtained a civil service
position with the Department of Energy. As a result his retired pay was
not reduced as it should have been under the Dual Compensation Act, and
he was overpaid $26,024.45. Since he should have notified the Navy of
his Federal civil service employment, he was not without fault in
accepting the resulting overpayments. Such fault precludes favorable
consideration of his application to be relieved of his repayment
obligations under the provisions of the waiver statute, 10 U.S.C. Sec.
2774.
DECISION
This action is in response to a request from Commander Loyd F.
Galyean, USN (Retired), for reconsideration of our Claims Group's August
15, 1986 denial of his application for a waiver of the claim against him
for a refund of overpayments of military retired pay he received between
1975 and 1981. It is our view that Commander Galyean is not without
fault in this matter, and thus his waiver application was properly
denied.
BACKGROUND
Commander Galyean retired from active service with the Navy in 1967.
On July 6, 1975, he began civil service employment with the Department
of Energy, and he remained an employee of that Federal agency until
April 4, 1981. During the entire period of his civilian employment with
the Federal Government he continued to receive full military retired
pay, in contravention of the Dual Compensation Act. As a result, he was
overpaid military retired pay in the total aggregate amount of
$26,024.45. After the discrepancy was discovered, a claim for a refund
of that amount was brought against him. He then applied for a waiver of
his repayment obligations.
Commander Galyean asserts that he made a significant contribution to
the government while employed by the Department of Energy, recovering
$2.4 million during the course of an audit. He also indicates that his
employment as an auditor at the Department of Energy was unrelated to
the skills he developed while in the Navy, where he served as an
aviator. He further asserts that while at the Department of Energy he
read a memorandum which he believed inferred the Dual Compensation Act
did not apply to that agency because of emergency conditions, and that
he "felt a sense of relief" at the time. For these reasons, he asserts,
either the Dual Compensation Act should not apply to his situation, or
if it does apply a waiver should be granted with respect to the
overpayments of retired pay he received.
ANALYSIS AND CONCLUSION
The Dual Compensation Act of 1964, as amended, and as codified at 5
U.S.C. Secs. 5531 et seq., provided at all times pertinent to this
matter for a reduction in the retired pay of a retired officer of a
regular component of a uniformed service during a period in which he
holds a "position." A "position" is defined as a civilian office or
position (including temporary, part-time or intermittent), appointive or
elective, in the legislative, executive or judicial branch of the United
States. See 5 U.S.C. Sec. 5531.
Since Commander Galyean was a retired officer of the Navy receiving
retired pay, holding a position at the Department of Energy, an agency
in the executive branch of the United States Government, and since there
is no evidence indicating he was exempt from the Act, we are required to
assume that he was in fact subject to its restrictions, and thus payment
of his full retired pay in addition to the salary received from the
Department of Energy resulted in overpayments to him.
Section 2774 of title 10 of the United States Code provides that a
claim of the United States against a person arising out of an erroneous
payment of any pay to or on behalf of a member or former member of the
uniformed services, the collection of which would be against equity and
good conscience and not in the best interest of the United States, may
be waived in whole or in part by the Comptroller General. Waiver may
not be granted, however, if there exists in connection with the claim,
an indication of fault on the part of the member.
The word "fault" as used in 10 U.S.C. Sec. 2774 has been interpreted
as including something more than a proven overt act or omission by the
member. Thus, fault is considered to exist if in light of all the facts
it is determined that the member should have known that an error existed
and taken action to have it corrected. The standard employed by this
Office is to determine whether a reasonable person should have been
aware that he was receiving payment in excess of his proper entitlement.
See, generally, 4 C.F.R. Part 91; and Colonel Robert L. Johnston,
USAF, Retired, B-178042, May 19, 1977. See also Price v. United States,
621 F.2d 418 (Ct. Cl. 1980). In addition, we have specifically held
that a retired officer of the uniformed services who accepts civilian
government employment may not reasonably rely on vague assurances
concerning an exemption from the Dual Compensation Act, and is instead
at fault in drawing military retired pay in an unreduced amount if he
fails to notify his agency and his military finance office of his dual
status, to obtain a definite determination of his entitlements. Rear
Admiral Harvey E. Lyon, USN (Retired), B-198955, April 13, 1981.
It is our view that Commander Galyean is not without fault in this
matter. As noted by the Navy, dual compensation is routinely discussed
in Navy briefings for retired officers as well as in retirement booklets
provided to retiring members. It is our view that a reasonable person
of Commander Galyean's rank and experience should have known that his
military retired pay could be affected by his acceptance of a civilian
government position and, indeed, Commander Galyean indicates that he was
concerned by such a possibility. Based on his awareness of this
possibility, our view is that he should have taken affirmative action to
determine definitely whether or not he was affected by contacting the
the proper Department of Energy officials and the Navy Finance Center to
verify his status. Compare Rear Admiral Harvey E. Lyon, USN (Retired),
supra.
While Commander Galyean's efforts as an employee of the Department of
Energy may have resulted in a benefit to the government, that does not
provide a basis for determining whether he was without fault in
accepting the overpayments of military retired pay. Similarly, the fact
that the skills needed by Commander Galyean to qualify for the civil
service position were skills not developed while in the Navy does not
affect the issues involved in this matter. In addition, while there may
have been a possibility of exemption from the Dual Compensation Act
based on employment needs that could not otherwise be readily met (5
C.F.R. Sec. 550.603 (1975)), there is no evidence that such an exemption
was ever requested by or for Mr. Galyean. The overriding fact remains
that when he accepted a civil service position with the Department of
Energy in 1975, he either knew or suspected that under the Dual
Compensation Act this could affect his military retired pay
entitlements. Since he did not make a prudent inquiry concerning the
consequences of his dual status, we are unable to conclude that he was
without fault in accepting the resulting overpayments of retired pay.
Accordingly, the denial of the waiver is affirmed.
Comptroller General
of the United States
Matter of: JG Engineering Research Associates
File: B-224892.2
Date: March 3, 1987
DIGEST
1. Agency's low rating of a technical proposal for a developmental
computer program is reasonable when the proposal relies on equations
that the agency considers very old; the equations do not account for
numerous variables or produce all the results required by the
solicitation; and the agency considers the risks involved in proposed
modifications to the equations to be unacceptable.
2. Agency's allegedly misleading advice that protester should
increase certain proposed costs to cover verification of a developmental
computer program does not necessarily indicate unequal competition when
the extent and type of verification required depends upon the program
offered and the testing to which it has previously been subjected.
3. Even if solicitation and discussions could have been more specific
as to verification requirements for a developmental computer program,
when the protester is the lowest-ranked of six offerors and its
technical score is 48.5 points less than the awardee's, the protester is
not prejudiced by the alleged deficiencies, since it had no reasonable
chance for award.
DECISION
JG Engineering Research Associates protests the evaluation of its
proposal for the development of a computer program to be used by the
U.S. Army Tank Automotive Command, Warren, Michigan. The activity
issued request for proposals (RFP) No. DAAE07-86-R-R038 on February 28,
1986, and on September 5 awarded a $196,934 cost-plus-fixed-fee contract
to the University of Denver's Denver Research Institute.
The protester disagrees with the agency's low rating of its technical
proposal and contends that the Army improperly advised it to increase
certain elements of its cost proposal to cover verification and testing
of its program. The firm contends that competition was unequal because,
without a formal written amendment to the RFP, its understanding of the
testing requirement differed from the agency's. We deny the protest.
BACKGROUND
The RFP sought a contractor to devise, develop, and assemble a
"Composite multi-layer Armor Model" computer code that could calculate
and graphically display the effect of various types of small arms on
different armor systems. The RFP indicated that the Army's current
models can analyze the effect of a limited ranqe of materials and
threats on a single layer of armor. Future vehicle concepts and
designs, however, will require multi-layer armor plates of various
materials and thicknesses, separated by air and "exposed to a wide range
of threats." The model to be developed by the contractor will be used as
a design and evaluation tool for such future vehicles.
The RFP listed two major areas of evaluation: technical and cost.
The technical criteria, which were significantly more important than
cost, included (1) plan element; (2) usability of results; (3)
experience; and (4) problem statement. The cost criteria were realism
and completeness. Award was to be made to the offeror submitting the
best technical proposal at an affordable cost.
The agency received six proposals by the April 14 opening date. In
the initial evaluation, it gave Denver Research Institute the highest
weighted technical score, 95, and JG the lowest, 39; the scores of the
remaining offerors ranged from 59.5 to 85. Proposed costs ranged from
JG's low of $94,500 to a high of $327,332. All offerors received
adequate cost ratings except JG, which received an inadequate rating.
During discussions, the Army advised JG, among other things, that it
would need to add to its cost proposal. Specifically, the agency
recommended an overall increase of 25 percent in direct labor hours,
plus $15,000 for material and equipment and 300 hours for a testing
phase to verify its computer code development. In its best and final
offer, JG offered to develop and monitor a ballistics testing program to
be carried out by the Army for an additional $65,978, resulting in a
total proposed cost plus fee of $160,478.
After evaluation of best and final offers, the agency increased JG's
technical score to 46.5 and its cost rating to adequate. Denver
Research Institute's technical score remained 95, and its best and final
offer and the resulting contract price, as noted above, was $196,934.
JG's TECHNICAL PROPOSAL
JG's protest consists first of responses to the Army's criticisms of
its technical proposal, made during its October 9 debriefing. The
primary area of disagreement is JG's reliance upon certain equations,
designated "THOR." As discussed in JG's proposal, THOR equations are
based on experiments (rather than theoretical analysis) conducted for
the Army over a period of years. The equations provide values for the
residual velocity and residual mass of steel fragments after they
perforate metallic and nonmetallic materials. In its proposal, JG
recognized that one of the drawbacks of these "purely experimental"
equations is that results cannot be extrapolated for materials end
configurations that have not been tested. However, the proposal stated,
in 1976 JG had developed a method to rectify this drawback that it
proposed to use to develop the Composite Armor Model.
In its evaluation, the Army criticized JG's reliance on the THOR
equations, describing them as very old and stating that JG's failure to
realize that use of the THOR equations alone was not sufficient was
evidence of its failure to understand the problems presented by the
contract. The protester, however, maintains that there is no other "set
of experiments for residual mass which is as extensive, accurate, and
reliable as the THOR experiments."
Based on our review of the proposal and the evaluation record, we
believe that the agency's low rating of JG's technical proposal was
reasonable. The agency lacked confidence that the protester could in
fact adapt the THOR equations to meet its needs and questioned whether
this could be done without further testing, as the protester initially
proposed.
(In contrast, the awardee's approach was to rely on a number of
existing ballistics penetration models and to develop other models
during the contract.)
For example, as noted above, JG stated in its proposal that the THOR
equations provide values for residual velocity and residual mass
following penetration of a single armor plate. As stated in the RFP,
however, the computer program to be developed for TACOM must be
applicable to multi-layer armor plates of different materials and
thicknesses, with different amounts of space between them. In addition,
the program must allow for projectiles of different sizes and types,
perforating (or not perforating) an armor system at different angles and
speeds. The program must calculate and graphically display the path of
the projectile, and it must not only provide values for residual
velocity and residual mass, but also show the angle of exit and the
angle of penetration for armor layers after the first. In the Army's
judgment, the THOR equations do not account for these variables or
produce all the results required by the RFP, and it apparently considers
the risks involved in modifying the equations unacceptable.
In addition, the Army states that certain of JG's assumptions, as set
forth in its proposal, are faulty. For example, the proposal assumes
that there is no change in a projectile's angle after penetration, i.e.,
that the angle of incidence on a second layer of armor is equal to the
original angle. The proposal references a December 1969 report prepared
by the Denver Research Institute, and, in its protest, JG asks whether
the Institute has changed its mind in this regard. In its
administrative report, the Army responds that the Institute and "almost
everybody else" now understands that there can be a change in a
projectile's direction and exit angle. JG did not attempt to rebut this
aspect of the Army's evaluation, but rather stated in its comments that
its protest was based primarily on the Army's allegedly misleading
instructions regarding its cost proposal.
In view of the above, we cannot conclude that the Army's evaluation
of JG's technical proposal was unreasonable. We deny the protest on
this basis.
JG's COST PROPOSAL
Remaining at issue is the protester's allegation that it was not
adequately informed of the agency's requirement concerning the
verification during discussions, resulting in unequal competition.
To the extent that JG is arguing that this was an entirely new
requirement that should have been the subject of an amendment to the
RFP, we find the protest untimely. JG should have protested on this
basis within 10 days of being orally advised that it should increase its
proposed costs for verification and testing, and in any event no later
than the due date for best and final offers, 4 C.F.R. Sec. 21.2 (1986),
rather than waiting until after its debriefing.
To the extent that JG may not have been aware until the debriefing
that its own and the agency's interpretation of the verification
requirement differed, allegedly resulting in unequal competition, we
find the protest without merit. We note first that the solicitation did
indicate that some sort of verification was required. The list of
contract deliverables attached to the RFP (DD Form 1684) included
"Adequate test cases demonstrating that the program is operational and
fully debugged."
The agency maintains that while the RFP had no other specific
requirement for computer code verification, it considered the task
"inherent" in the scope of work end necessary for successful completion
of the contract. We note that the awardee proposed ballistics testing
for numerical verification of its program's output, while other offerors
proposed to use data that had been verified through previouslyconducted
ballistics testing.
JG's initial proposal, however described only those tasks that it
proposed to undertake in revising the THOR equations; it did not
indicate whether or how it planned to verify the Composite Armor Model.
Moreover, when the subject of verification was raised during
discussions, there is no evidence that the firm sought specific
information as to the extent or type of testing that the Army expected
to be covered by an increase of $15,000 for materials and of 300 labor
hours.
Following, the discussions, JG added a ballistics test phase to its
best end final offer, which it increased to $160,478. As indicated
above, it offered to develop and monitor tests that actually would be
conducted by the Army. In its report on the protest, the agency
criticizes this approach because the government would incur additional
costs if it ran the verification program. JG responds that had it
offered to perform ballistics tests without government involvement, its
costs would have been higher than the awardee's and its proposal would
have been noncompetitive.
A concept basic to federal procurement is that all offerors compete
on an equal basis, proposing to the same terms, conditions, and
specifications. See Macro Systems, Inc., B-208540.2, Jan. 24, 1983,
83-1 CPD P 79. Here, however, it appears that the extent and type of
verification required depended upon the type of computer program offered
and the testing to which it had previously been subjected. In several
cases, evaluators noted that no testing was required. Thus, the advice
to JG that it should increase certain of its proposed costs to
accommodate a verification program does not necessarily indicate unequal
treatment.
Even if we view the RFP as deficient or the discussions inadequate in
not providing details of the verification requirement, we do not find
any prejudice to the protester. The record indicates that JG did not
have a reasonable chance for award without substantial and basic changes
to its approach. It was the lowest-ranked of six offerors; there was a
48.5 point difference between its score and that of the awardee, and
technical factors were significantly more important than cost. In view
of these circumstances, we question whether the agency should even have
discussed costs with JG or requested a best and final offer from the
firm.
The protest is denied.
Harry R. Van Cleve
General Counsel
Matter of: Elliott Company
File: B-224887.3
Date: May 4, 1987
DIGEST
1. Protest of negative responsibility determination based on preaward
survey is timely where protester promptly filed Freedom of Information
Act request for preaward survey report after it was found nonresponsible
and filed protest within 10 working days of receipt of the report.
2. Protest of contracting officer's negative responsibility
determination is denied where the determination was based on a negative
preaward survey report which found that the prospective contractor had
an unsatisfactory record of prior performance and the record contains
documentation that provides a reasonable basis for the preaward survey
findings and the contracting officer's determination.
DECISION
Elliott Company protests the Navy's determination that the firm is
nonresponsible under request for proposals (RFP) No. N00104-86-R-WH27
for the repair and overhaul of a pressure fired boiler supercharger from
the U.S.S. Koelsch. Elliott disputes the preaward survey relied on by
the contracting officer to find the firm nonresponsible. We deny the
protest.
Proposals were submitted under the RFP by Elliott at $283,203.72 and
BWC Technologies, Inc. at $287,765; both were found technically
acceptable. The contracting officer then requested a preaward survey of
Elliott's Donora, Pennsylvania facility, where Elliott would perform the
contract, based on the belief that the firm's performance on previous
Navy supercharger repair contracts had been deficient. The survey was
performed by the Defense Logistics Agency's Defense Contract
Administration Services Management Area, Pittsburgh (DCASMA) on November
18, 1986.
On December 4, DCASMA recommended against award because Elliott
lacked sufficient skilled shop personnel with experience in supercharger
repairs at its Donora facility, which had resulted in deficient
performance on previous Navy supercharger repair contracts.
The survey report states that two superchargers repaired by Elliott
for the U.S.S. Sample in 1984, and a third unit repaired for the U.S.S.
McDonnell in 1985 had to be returned to Elliott for further work. The
survey report also describes Elliott's unsatisfactory work on an air
compressor unit for the U.S.S. Midway as another incident reflecting
adversely on the firm's capability.
The survey team noted that Elliott had not significantly improved its
Donora staff and that the firm proposed to use essenTially the same
employees under this contract as it had used on the contracts for the
U.S.S. McDonnell and the U.S.S. Sample. Although Elliott planned
further training for its Donora employees, DCASMA concluded that the
proposed training would not solve the personnel problems in time for
this contract.
On December 17, based on the DCASMA preaward survey and on the
contracting officer's familiarity with Elliott's poor performance on
previous contracts, the contracting officer determined Elliott to be
nonresponsible. Award was made to BWC on December 17 and, by letter
received by Elliott on December 22, the contracting officer informed
Elliott that it had been found nonresponsible because of the firm's
unsatisfactory performance record.
On December 23, Elliott requested, under the Freedom of Information
Act (FOIA), a copy of the preaward survey report. Based on information
in the survey report, which Elliott received on January 8, 1987, Elliott
filed this protest on January 22, disputing DCASMA's conclusions
regarding the firm's capability. Elliott argues that it has added five
qualified employees since it overhauled superchargers for the U.S.S.
Sample and U.S.S. McDonnell so it now has sufficient personnel skilled
in supercharger repair. Also, Elliott says that it is using personnel
from its Jeannette, Pennsylvania plant to train and consult with Donora
employees to insure a satisfactory overhaul. Elliott says that it
demonstrated its current capability by recently correcting, at no cost
to the Navy, problems with the U.S.S. McDonnell supercharger originally
overhauled by Elliott in 1985.
Elliott also contends that the survey report contains incomplete,
inaccurate and misleading information on the firm's past performance.
Although the report says that the firm previously had five Navy
supercharger repair contracts, Elliott maintains that actually it has
worked on only four Navy superchargers, two for the U.S.S. Sample, and
one each for the U.S.S. McDonnell and the U.S.S. Garcia. Elliott notes
that its work for the U.S.S. Garcia was acceptable, but this fact was
not included in the survey report. Further, Elliott says that its work
on an air compressor unit for the U.S.S. Midway should have no bearing
on the survey since this solicitation is for the repair of a
supercharger unit and, in any event, its work for the U.S.S. Midway is
still under review. Elliott also disagrees with DCASMA's conclusion
regarding the firm's repair of one supercharger for the U.S.S. Sample.
Elliott says that the supercharger ran for more than 15 months after the
repair and recent problems with the supercharger cannot be attributed to
Elliott since it has not been formally inspected yet.
Initially, the Navy contends that Elliott's protest should be
dismissed as untimely. According to the Navy, on November 18, the
survey team informed Elliott that it would recommend against award
because of the firm's previous performance and inadequate personnel. On
December 22, Elliott received the contracting officer's
nonresponsibility determination, and on December 23, Elliott discussed
the results of the DCASMA survey with a Navy program manager. The Navy
argues that on or before December 23, Elliott was aware of "the general
reasons" for the negative preaward survey which led to the finding of
nonresponsibility. Thus, the Navy argues that Elliott's protest should
be dismissed because it was not filed until January 22, 1987, more than
10 working days after the basis of protest was known or should have been
known, as provided by our Bid Protest Regulations. 4 C.F.R. Sec.
21.2(a) (2) (1986). The protester, however, argues that it could not
specifically detail its objections to the DCASMA survey until after it
received the written survey report on January 8.
We find that the protest is timely. Even assuming, as the Navy
argues, that Elliott was generally aware of the survey team's judgment
of the firm's capability before receiving the DCASMA report, Eliiott's
January 22 protest challenges specific facts and conclusions contained
in the written survey report. Elliott promptly filed a FOIA request for
the survey report after it was informed of the nonresponsibility
determination, and filed its protest objecting to the survey within 10
working days of receiving it. Under these circumstances, we consider
the protest diligently pursued and timely filed. See Carrier Corp.,
B-214331, Aug. 20, 1984, 84-2 CPD P 197. We therefore will consider the
merits of Elliott's protest.
The determination of a prospective contractor's responsibility rests
with the contracting officer and, in making that determination, he is
vested with a wide degree of discretion and business judgment. Martin
Electronics, Inc., B-221298, Mar. 13, 1986, 86-1 CPD P 252. While a
responsibility determination should be based on fact and reached in good
faith, the ultimate decision should be left to the discretion of the
contracting agency since it must bear the brunt of any difficulties
experienced during performance of the contract. Firm Reis GmbH,
B-224544, et al., Jan. 20, 1987, 87-1 CPD P 72. We, therefore, will not
question a negative determination of responsibility unless the protester
can demonstrate bad faith on the agency's part or a lack of any
reasonable basis for the determination. Amco Tool & Die Co., 62 Comp.
Gen. 213 (1983), 83-1 CPD P 246. Here, Elliott has not alleged bad
faith by the Navy, nor has it demonstrated that the nonresponsibility
determination lacked a reasonable basis.
A prospective contractor that has recently been seriously deficient
in contract performance is presumed to be nonresponsible, unless the
contracting officer determines that the circumstances were beyond the
contractor's control or that the contractor has taken appropriate
corrective action. Federal Acquisition Regulation (FAR), 48 C.F.R.
Sec. 9.104-3(c) (1986). Here, we have no reason to question the
determination by DCASMA and the contracting officer that Elliott's
performance record is deficient. That determination primarily was based
on Elliott's work on two superchargers for the U.S.S. Sample and one for
the U.S.S. McDonnell. The U.S.S. Sample units both experienced
problems when they were reinstalled after being overhauled by Elliott.
Navy engineers attribute those problems to rotor misalignment during
overhaul by Elliott. Elliott does not dispute that one of the units has
been returned to the firm for warranty repairs. Nor does Elliott
question the Navy's judgment that its repair of the U.S.S. McDonnell
supercharger was unsatisfactory.
Elliott says that the DCASMA survey team neglected to report the
firm's successful repair of a supercharger for the U.S.S. Garcia and
that the survey team should not have considered the firm's work for the
U.S.S. Midway since that work involved an air compressor, not a
supercharger. Although the survey report does not mention the U.S.S.
Garcia, we do not believe that Elliott was prejudiced by this omission
since, as the Navy explains, the U.S.S. Garcia unit needed only minor
repairs while the U.S.S. Koelsch supercharger needs extensive
overhauling similar to that required by the U.S.S. Sample and U.S.S.
McDonnell superchargers. Further, it is clear that neither the survey
team nor the contracting officer placed undue reliance on the U.S.S.
Midway air compressor repair. The contracting officer, who ultimately
determined Elliott to be nonresponsible, did not mention the U.S.S.
Midway in his nonresponsibility determination. Thus, we see no basis on
which to question the contracting officer's judgment regarding Elliott's
previous performance.
Although Eliiott maintains that it has taken corrective action since
its work on the U.S.S. Sample and the U.S.S. McDonnell, we see no basis
to challenge the Navy's determination that the actions taken by Elliott
were not sufficient. Elliott says that it added five qualified skilled
employees to its Donora staff and that it recently repaired the U.S.S.
McDonnell supercharger that it had unsuccessfully overhauled in 1985.
According to the Navy, however, the second repair of the U.S.S.
McDonnell supercharger was done with close monitoring and assistance by
Navy personnel and Elliott still did not correctly align the rotor
casing. Moreover, three of Elliott's "additional" employees were
managers already at the Donora plant, were known to the survey team and
were not involved in hands-on repair of superchargers. Further, the
addition of the other employees to its Donora staff was not mentioned by
Elliott until its protest was filed. The DCASMA recommendation was
based on information made available at the time of the survey, however,
and the contracting officer was entitled to make his determination on
the basis of the facts on hand immediately prior to award; this
determination was not affected by personnel changes after the date of
award. See Martin Electronics, Inc., B-221298, supra.
Finally, with respect to the training and in-house consultation
proposed by Elliott, since the U.S.S. Koelsch supercharger was in need
of immediate repair, the Navy determined that these actions would not
improve the firm's capabilities soon enough. Elliott has shown no basis
on which to question this determination.
The protest is denied.
Harry R. Van Cleve
General Counsel
Matter of: Arthur P. Meister - Extension of Temporary Quarters
File: B-224884
Date: September 23, 1987
DIGEST
To justify an extension of temporary quarters subsistence expenses,
the employing agency's policy directive and the Federal Travel
Regulations require a need for an extension due to circumstances
occurring beyond the employee's control (short-term delay) within the
first 60 days in temporary quarters. The employing agency's policy
directive also requires scheduling of construction of a new home so that
its occupancy can be expected within the first 60 days of temporary
quarters. Since construction was not scheduled for completion under the
employee's contract until after the first 60 days in temporary quarters,
the employee is not entitled to an extension.
DECISION
Mr. William E. Burrows, Jr., Authorized Certifying Officer, Federal
Bureau of Investigation (FBI), requests our opinion concerning the
entitlement of an employee, Mr. Arthur P. Meister, to an extension of
temporary quarters subsistence expenses (TQSE). We hold that the FBI
properly denied the extension under its policy directive implementing
the Federal Travel Regulations (FTR), para. 2-5.1 and 2a (Supp. 10,
March 13, 1984), incorp. by ref., 41 C.F.R. Sec. 101-7.003 (1985),
which requires that the construction of a new home be scheduled for
completion during the first 60 days an employee or his family occupies
temporary quarters. Mr. Meister's purchase contract did not schedule
completion of construction until after the first 60 days in temporary
quarters had expired.
BACKGROUND
Mr. Meister was notified by letter dated March 12, 1985, that he
would be transferred from Newark, New Jersey, to Quantico, Virginia,
effective May 12, 1985. He entered the agency's relocation program on
March 25, 1985, for the purpose of selling his New Jersey residence.
On April 28, 1985, Mr. Meister while on an authorized househunting
trip and 2 weeks before his transfer to Quantico, Virginia, entered into
a contract for the purchase of a permanent residence to be constructed
in the vicinity of Quantico. The scheduled completion date of
construction as provided in the contract was on or before August 31,
1985. His family entered into temporary quarters on June 28, 1985, the
FBI having authorized an initial period of up to 60 days TQSE.
According to Mr. Meister, a concrete strike lasting several weeks caused
construction delays, including a delay in pouring the foundation. He
states that the strike was a well publicized event capturing the
attention of the news media throughout its duration. It became evident
that the home would not be completed by August 31 as scheduled under the
contract and that TQSE would be required beyond the initial 60 days
authorized. Consequently, near the end of that period Mr. Meister
requested a 41-day extension of TQSE.
The FBI denied the request on the basis of a policy directive issued
May 31, 1985. Employees were advised that every effort should be made
to reduce or even eliminate the need to occupy temporary quarters if a
househunting trip was taken. Additionally, the directive indicated that
employees who used the Bureau's relocation program for selling their
houses should not be required to occupy temporary quarters beyond the
initial 60-day period. The policy directive further indicated that
employees electing to build a new permanent residence and commencing
occupancy of temporary quarters after June 15, 1985, would not be
granted an extension of TQSE unless the employee could show that the
construction completion date was scheduled to occur during the initial
60 days of the employee's temporary quarters occupancy.
The FBI's specific reason for denying Mr. Meister's extension was the
failure to schedule completion of the construction within the first 60
days of temporary quarters, as required by the FBI directive. On the
other hand, Mr. Meister argues that the strike was an unanticipated
circumstance resulting in a delay occurring during the first 60 days of
temporary quarters, so that he was entitled to an extension despite his
failure to schedule completion of construction within that period.
OPINION
Paragraph 2-5.1 of the FTR provides as follows:
"2-5.1. Policy. Heads of agencies shall prescribe procedures
for administering these provisions reasonably and equitably so
that the necessity for allowing subsistence expenses and the
amount of time an employee and members of his/her immediate family
use temporary quarters is justified in connection with the
employee's transfer to a new official station. As a general
policy, the period for temporary quarters shall be reduced or
avoided if a roundtrip to seek permanent residence quarters has
been made or if, as a result of extended temporary duty at the new
official station or other circumstances (for example, if the
family does not move until some time after the employee's
transfer), the employee has had adequate opportunity to complete
arrangements for permanent quarters. The administrative
determination as to whether the occupancy of temporary quarters is
necessary and the length of time for occupancy shall be made on an
individualcase basis."
An employee who is transferred shall be allowed subsistence expenses
for himself or herself and for each member of the immediate family for a
period of not more than 60 days. FTR para. 2-5.1.
Paragraph 2-5.2a of the FTR authorizes extension of this period only
where there is a demonstrated need for an extension due to circumstances
occurring within the initial 60-day period of temporary quarters and
determined to be beyond the employee's control and acceptable to the
agency. One of the examples of such a circumstance causing the need for
an extension is presented in para. 2-5.2a:
"(b) new permanent residence cannot be occupied because of
unanticipated problems (i.e., delays in settlement on new
residence, short-term delay in construction of new residence,
etc.)."
The FBI's scheduling requirement is consistent with these provisions
and is a reasonable implementation of these provisions.
Before Mr. Meister's family entered temporary quarters on June 28,
1985, his purchase contract had scheduled construction to be completed
by August 31, 1985, after the first 60 days of authorized TQSE had
expired. Thus, although the concrete strike may have delayed completion
of the construction of the home, the fact remains that he and his family
entered occupancy of temporary quarters at a time when he could
anticipate that an extension would be needed.
Accordingly, we decide that Mr. Meister is not entitled to an
extension of the initial period of temporary quarters.
Comptroller General
of the United States
Matter of: Custom Training Aids, Inc.
File: B-224868
Date: February 6, 1987
DIGEST
1. Protester need not anticipate improper actions by agency
officials. When agency awards a contract to an allegedly nonresponsive
bidder basis of protest is contract award, and protest must be filed
within 10 days after the basis for protest was known or should have been
known, whichever is earlier.
2. Where agency has in its possession missing attachments to a
protest and is not prejudiced by protester's failure to supply those
attachments within 1 day of protest filing, no useful purpose would be
served by dismissing protest after timely receipt of agency report.
3. Bidders need only submit with their bids descriptive literature
sufficient for the stated evaluation purpose. Where solicitation
requires engineering drawings of manufacturing quality to be used only
to determine functional operability, sketches demonstrating functional
operability are sufficient.
DECISION
Custom Training Aids, Inc. (CTA), the incumbent contractor, protests
the award of a contract to Technical Plastics Corporation (TPC) under
invitation for bids (IFB) No. DABT60-86-B-0133, issued by the Department
of the Army for the supply of combination smoke and inert training
mines. CTA complains that TPC furnished insufficient descriptive
literature and its bid therefore is nonresponsive. We deny the protest.
Bids were opened on August 8, 1986, and the contract was awarded on
August 27. CTA protested to the contracting officer on August 29, and
the contracting officer mailed his reply denying the protest on
September 16. On October 3, CTA filed its protest in our Office.
At the outset, the Army points out that an initial protest to the
agency must be filed within 10 working days after the basis for protest
was known or should have been known, whichever is earlier, 4 C.F.R.
Secs. 21.2(a) (3) and 21.2(a)(2) (1986), and argues that CTA knew or
should have known that TPC's descriptive literature did not meet CTA's
interpretation of the solicitation requirements when bids were opened on
August 8. The Army contends that CTA's protest to the contracting
officer on August 29 and the subsequent protest to our Office are
untimely. In response to the Army's arguments, CTA contends that it was
not until the Army accepted TPC's bid on August 27 that CTA had a basis
for its protest.
We agree with CTA. We do not require prospective protesters to file
"defensive" protests before actual knowledge that a basis for protest
exists or in anticipation of improper actions by the contracting agency.
Gulton Indus., Inc., Engineered Magnetics Div., B-203265, July 20,
1982, 82-2 CPD P 59. Further, with regard to CTA's filing in our
Office, our Bid Protest Regulations provides that if an initial protest
has been filed timely with the contracting agency, we will consider a
subsequent protest to this Office if it is filed within 10 working days
after formal notification of, or actual or constructive knowledge of
initial adverse agency action. 4 C.F.R. Sec. 21.2(a). Absent evidence
otherwise, we assume that it takes one calendar week for mail to arrive.
See Mammoth Firewood Co., B-223705, Sept. 4, 1886, 86-2 CPD P 261.
Here, even if the Army's September 16 denial of CTA's protest was
received by CTA as early as September 19, CTA's filing of its protest in
our Office on October 3 was timely. Since there is no evidence that the
Army's September 16 letter was received by CTA earlier than September
18, we have no basis to view the protest as untimely.
The Army also complains that CTA failed to furnish the Army with
copies of the attachments referenced in its protest to our Office. The
Army argues that our Bid Protest Regulations, 4 C.F.R. Sec. 21.1(d),
require that a copy of the protest to our Office be received by the
contracting officer within one day of the date it is filed with our
Office, and that CTA's protest should be dismissed.
Our Regulations provide that a protest may be dismissed where the
requirement of Section 21.1( d) is not met; they do not require
dismissal. See 4 C.F.R. Sec. 21.1 (f); Contemporary Roofing, Inc.,
B-222691, June 2, 1986, 86-1 CPD P 510. Here, the Army filed its
administrative report on the protest in a timely manner and never
informed our Office prior to the submission of its report that the
contracting officer failed to receive a complete copy of the protest.
In fact, the Army admits in its report that it had copies of all the
attachments in its files. Under these circumstances, it is clear that
the Army's ability to meet the 25-day statutory deadline for filing its
report was not impaired. Dismissal of the protest under these
circumstances would serve no useful purpose. Contemporary Roofing,
Inc., B-222691, supra. We will therefore consider the protest on its
merits.
The solicitation required either a bid sample or descriptive
literature and referenced the standard clauses regarding these
requirements in the Federal Acquisition Regulation, 48 C.F.R. Secs.
52.214-20 and 52.214-21 (1985). In addition, the solicitation also
stated that descriptive literature must be in the form of the following:
"Engineering drawings (manufacturing quality) showing all
materials/components, design details required for the fabrication
of the mine which would be delivered under any resultant
contract."
The IFB further provided that the bid samples/descriptive literature
would be evaluated to determine whether or not the product which the
bidder proposes to furnish is functionally operable for the purpose
intended, i. e., combination smoke and inert mine.
CTA submitted a bid sample, and TPC, along with the other bidders,
submitted descriptive literature containing drawings. CTA contends that
the drawings TPC submitted with its bid failed to conform with the
requirement for engineering drawings (manufacturing quality) because
they omitted dimensions, scales and allowable tolerances. We disagree.
We have held that bidders need only submit with their bids the
descriptive literature necessary for the stated evaluation purpose and
any requirement for additional or more precise data must be viewed as
being for informational purposes, not affecting the responsiveness of
the bid. Patterson Pump Co., B-216133 et al., Mar. 22, 1985, 85-1 CPD P
333; see also Tenavision Inc., B-221540, Apr. 21, 1986, 86-1 CPD P 387.
Further, we will not disturb an agency's determination concerning the
adequacy of required descriptive literature absent a clear showing of
unreasonableness, abuse of discretion, or a violation of procurement
statutes and violations. DeVac, Inc., B-224348.2, Sept. 3, 1986, 86-2
CPD P 254.
In this case, the solicitation stated that the only purpose for the
descriptive literature was to determine whether or not the product which
the bidder proposed to furnish was "functionally operable" for the
purpose intended. Since the specification only left certain parts of
the mine for the bidders to design, and specified dimensions and design
characteristics for the other parts, the Army viewed TPC's drawings in
conjunction with the specifications for the mine as establishing the
necessary basic dimensions and operability of TPC's design. On their
face, the Army's actions appear reasonable and CTA has failed to provide
any evidence to show otherwise except to say that the drawings were not
sufficient to manufacture tooling for the mine. The purpose of the
descriptive literature requirement, however, was not to obtain data and
diagrams from which such tooling could be manufactured, and there is no
indication that absent such drawings the Army would be unable to
determine the overall feasibility of TPC's design. For the purpose of
determining whether the actual mine complies with the specifications, we
note that the IFB provides for a preliminary inspection of the first 3
mines during performance at the contractor's plant. We therefore find
no merit to the protest that TPC's descriptive literature was
insufficient.
The protest is denied.
Harry R. Van Cleve
General Counsel
Matter of: USA Pro Co., Inc.
File: B-224857
Date: January 30, 1987
DIGEST
1. Allegation of vague or ambiguous solicitation provisions is
rejected where requirements are stated clearly and allegation is based
on an unreasonable interpretation of the solicitation.
2. Where a solicitation requires a bidder to bid all items, a bid
which fails to include a price for an item will be rejected where
evaluation and award includes the item not bid.
DECISION
USA Pro Co., Inc. (USA) protests the rejection of its bid as
nonresponsive under invitation for bids (IFB) No. N62474-86-B-4104,
issued by the Officer In Charge of Construction, Marine Corps Logistics
Base Barstow, California, to replace sidewalks. We deny the protest.
The IFB solicited separate bid prices for a base bid item and four
additive items (Base Bid Items 1A, B, C, D). Additionally, the IFB
advised that a bid which did not contain separate bid prices for the
items might be considered nonresponsive and that failure to bid on all
items would disqualify the bid. Amendment No. 0001 advised bidders that
the low bidder for purposes of award would be the conforming responsible
bidder offering the low aggregate amount for the base bid item, plus or
minus (in the order of priority listed in the schedule) those additive
or deductive bid items providing the most features of the work within
the funds determined by the government to be available before bid
opening. Amendment No. 0002 to the IFB advised bidders of certain
revisions to drawings which were a part of the original IFB. Bidders
were advised on one drawing to delete note "DESERT VIEW BASE BID ITEM
1A-38,727 sq ft" in its entirety and add "DESERT VIEW BASE BID ITEM
1-110,660 sq ft."
At bid opening on September 3, 1986, six bids were received. USA was
the apparent low bidder. However, the Marine Corps rejected USA's bid
because it did not submit a separate bid price for additive bid item 1A.
USA contends that amendment No. 0002 deleted the requirement for
bidders to bid a separate price for bid item 1A and that its price for
the base bid item included bid item 1A. USA essentially contends that
the IFB was ambiguous and further, even assuming that its interpretation
may be incorrect, the Marine Corps need not have rejected its bid
because the IFB only states that the bid "may" be found nonresponsive.
We do not believe that amendment No. 0002 can be reasonably
interpreted to have deleted the requirement for a separate price for bid
item 1A. The drawing involved contained not only the legend that was
deleted but also a separate legend indicating that additive bid item 1A
is 38,727 sq. ft. Thus, as originally issued, the drawing legends
showed the same square footage for the base bid item as for item 1A.
The amendment corrected the square footage of the base item from 38,727
to 110,660; the square footage of additive item 1A remained the same.
Accordingly, it is apparent that the Marine Corps was correcting the
original drawing so that it would reflect the proper square footage of
the base bid item. Since amendment No. 0002 only made the distinction
between the square footage of the base bid item and item 1A clearer, we
find USA's interpretation of the amendment, that item 1A was no longer a
separate item, was unreasonable and its allegation that the amendment
created an ambiguity with respect to the requirement for bidding
separate prices for each item is without merit.
Where an IFB states that failure to bid on every item in the base bid
and the additives will cause rejection of the bid, and award and
evaluation under the IFB are based on all the items, a bid which fails
to include prices on some items must be rejected as nonresponsive.
Calalaska Air Transport, Inc., B-221628, Feb. 26, 1986, 86-1 C.P.D. P
199. Since the IFB advised bidders of the requirement to bid separate
prices on the base bid and additive items, we find that the Marine Corps
properly rejected the bid as nonresponsive. Although USA indicates that
it inciuded its price for item 1A in its price for the base bid item, a
post-bid opening explanation cannot be used to make a nonresponsive bid
responsive. Id.
The protest is denied.
Harry R. Van Cleve
General Counsel
File: B-224854.2
Date: May 16, 1991
Matter of: Ronald O. Bonucchi, et al. - Claims for Overtime Pay -
Hours Not Actually Worked
DIGEST
Forty-seven wage board employees of the Corps of Engineers river bank
protection parties, non-exempt from the Fair Labor Standards Act (FLSA),
claim overtime compensation for allegedly scheduled hours of overtime
not actually worked. Their claims for overtime pay are denied because
the provisions of both the Fair Labor Standards Act and 5 U.S.C.
5544(a), as they relate to the facts of the employment in this case,
clearly contemplate that employees must actually work overtime hours in
order to receive overtime pay. Further, the scheduling of overtime
hours of work, even if "regularly scheduled" under 5 C.F.R. Sec.
610.121(b), does not result in entitlement to premium pay unless the
hours were actually worked. Accordingly, there exists no authority for
payment of overtime compensation.
DECISION
The issue in this case is whether forty-seven "prevailing rate"
(wage-board) employees, who are non-exempt from the Fair Labor Standards
Act (FLSA), are entitled to overtime pay under either the FLSA or title
5, United States Code, based on their claim that they were scheduled for
hours of overtime which they did not actually work. 1/ We hold that they
are not entitled to the overtime claimed.
BACKGROUND
The claimants are employees of the Corps of Engineers Memphis
District's Revetment Section working on units called Bank Protection
Party Nos. 8, 9, and 11, performing river bank stabilization on the
Mississippi River. At the end of the work day, which may be less than 8
hours or as many as 10 hours, the employees are released from duty and
have no further work responsibilities until their reporting time the
next morning. It is undisputed that each employee is paid for a minimum
of 8 hours of duty time per scheduled work day regardless of the actual
number of hours he has worked on that particular day, and that each
employee is paid time and one-half for each hour of overtime worked on
any particular day.
It is the claim of the employees that the Corps of Engineers failed to
schedule overtime as "regularly scheduled" even though management
allegedly knew in advance that overtime was necessary to accomplish
specific mission requirements. For this reason the employees believe
that they are entitled to additional overtime compensation for hours
which were in effect regularly scheduled overtime, notwithstanding that
because of operational conditions those hours were not actually worked.
The employees contend that their regularly scheduled administrative
workweek consists of 60 hours: the basic workweek of 40 hours (5 C.F.R.
Sec. 610.111(a)(1)) plus 20 hours of regularly scheduled overtime (5
C.F.R. Sec. 610.102(g) and 5 C.F.R. Sec. 610.111(a)(2) and (b))
regardless of the categorization by the Corps of all hours over the
40-hour basic workweek as "irregular." The employees point out that 5
C.F.R. Sec. 610.121(b)(1) requires heads of agencies to "schedule an
employee's regularly scheduled administrative workweek so that it
corresponds with the employee's actual work requirements." Furthermore,
the regulations state that if an agency knowingly fails to do so, the
employee is entitled to premium pay for that period of work as if it
were regularly scheduled. 5 C.F.R. Sec. 610.121(b)(3). 2/ The employees
assert that, although their overtime is known by the Corps to be regular
in nature and is regularly approved in advance, management erroneously
labels it as irregular or occasional overtime and pays the employees
only for the hours actually worked during the week, even though the
employees contend that they are regularly scheduled for additional
hours. In fact, the employees assert that it is rare for them to work
an 8-hour day.
The Corps of Engineers asserts that the basic tour-of-duty of each crew
member is a 40-hour workweek of 5 consecutive 8-hour days, and this
basic tour-of-duty is Monday through Friday, with off days of Saturday
and Sunday. There is an irregular overtime schedule that is anticipated
and approved, but the Corps maintains is not regularly scheduled for
each pay period for each of the units. This irregular overtime schedule
is stated to be 2 hours per day during the basic workweek, and 10 hours
on Saturday of the first week of the pay period, and 10 hours on Sunday
of the second week of the pay period. The Corps of Engineers asserts
that the overtime worked by the Memphis District is performed on a
project (location) basis. When a certain project is finished, the Bank
Protection Party moves on and construction stops during the move.
Although it is anticipated that this overtime often will be necessary
and it frequently occurs, the Corps asserts that it is not regularly
scheduled overtime. The Corps maintains that although the project on
which the crew of the plant is working may require overtime, it is the
project and its time of completion that controls whether the overtime
must be worked. It is maintained that because operating conditions
necessitate unanticipated changes to the work schedule, the district
overtime regulation 3/ specifically states that overtime worked by
revetment personnel is considered irregular overtime. The Corps
concludes that, even if it was factually correct that the duty could be
anticipated and occurred frequently and regularly, it would still be
insufficient to support a legal conclusion that the work was compensable
as regularly scheduled overtime.
OPINION
As federal employees, the claimants are covered by two statutes
requiring compensation for overtime work. The Fair Labor Standards Act
(FLSA), 29 U.S.C. Sec. 201 et seq. (1988), generally requires that all
hours worked over 40 in a given workweek are compensable as overtime.
The Federal Employees Pay Act, as pertaining to wage-board employees in
5 U.S.C. Sec. 5544(a) (1988) and commonly called "title 5" overtime,
requires pay for work in excess of 40 hours in an administrative
workweek or in excess of 8 hours in a day. Under this dual coverage,
where there is an inconsistency between the statutes, employees are
entitled to the greater benefit. 4/ See 54 Comp. Gen. 371 (1974).
Under the FLSA all hours worked over 40 in a given workweek are
compensable as overtime pay. Therefore, under the FLSA, the issue of
whether hours of work were scheduled or should have been scheduled is
not determinative of whether overtime pay is applicable. As indicated
above, it is undisputed that each employee has been paid the proper
overtime pay for each hour of overtime actually worked on any particular
day. Therefore, since only hours actually worked are compensable under
the FLSA, any additional compensation which may be payable would have to
be payable under title 5 and not under FLSA. See Robert L. Moore, Jr.,
B-239097, Sept. 17, 1990.
Regarding title 5 overtime in general, decisions of this office
addressing compensable hours of work for purposes of an overtime
entitlement under 5 U.S.C. Sec. 5544 have generally required the
performance of actual work. The rule applicable for both classified and
wage board employees 5/ is that since the authority for payment of
overtime compensation contemplates the actual performance of duty, an
employee may not be compensated for overtime work when he does not
actually perform work during the overtime period. 59 Comp. Gen. 578
(1980); B-191619, May 9, 1978. See also Presser v. United States, 15
Cl. Ct. 672 (1988). 6/ Consequently, the existence of a designated
"workweek" which may not have reflected the employees' actual hours of
work, cannot alone form a basis for treating the unworked hours during
the week as "hours of work." See Nathaniel R. Ragsdale, B-181237, Apr.
15, 1975.
The claimants contend that regardless of what label the Corps of
Engineers chose to place on the scheduled hours of overtime, those hours
in excess of 40 in each workweek constituted regularly scheduled
overtime approved in advance, and as a result they are entitled to be
paid for overtime under 5 C.F.R. Sec. 610.121(b)(3) even though as
indicated above, the hours in question were not actually worked. We do
not agree. The operative language of 5 C.F.R. Sec. 610.121(b)(3) is:
"If it is determined that the head of an agency should have scheduled a
period of work as part of the employee's regularly scheduled
administrative workweek and failed to do so . . . the employee shall be
entitled to the payment of premium pay for that period of work as
regularly scheduled work under (the overtime provisions) of this
chapter." (Emphasis added.) We believe that by the underscored language
the regulation clearly contemplates the actual performance of work as a
condition precedent to the payment of premium pay regardless of whether
those scheduled hours were "regularly scheduled" as the claimants
contend or "irregular" overtime as maintained by the Corps of Engineers.
Therefore, the scheduling of overtime hours of work, as the Corps did,
even if, arguendo, those hours should properly be categorized as
"regularly scheduled" by operation of 5 C.F.R. Sec. 610.121(b), does not
result in an a entitlement to premium pay for those hours unless they
were actually worked. 7/
Since the Bank Protection Party employees were paid overtime
compensation for all hours of overtime actually worked and no allegation
has been made or proved that the employees have been denied overtime
work as a result of a violation of the requirement of an agency
regulation or mandatory provision of a negotiated labor-management
agreement (see footnote 6), there is no authority for the payment of
additional overtime pay for hours not actually worked. Accordingly,
payment of these employees' claims is not authorized.
James F. Hinchman, General Counsel
FOOTNOTES
1/ This decision is in response to a request from the National
Federation of Federal Employees on behalf of 47 Army Corps of Engineers
employees. The agency questions some of the individual claims on the
basis that they are supervisors, are duplications or contain
questionable signatures. In view of our determination on the basic
issue here, it is not necessary for us to resolve these matters.
2/ See Mike Monroney Aeronautical Center, B-221630, July 10, 1986.
3/ Memphis District Regulation No. 690-1-600, dated February 13, 1989.
(The record indicates that all superseded regulations on regular and
irregular overtime contain the same relevant language.)
4/ The Federal Employees Pay Comparability Act of 1990, Public Law
101-509, Sec. 210, 104 Stat. 1427, 1464 (1990), removed the requirement
to compute overtime pay under both title 5 and the FLSA. That change
does not affect the claims of these employees which arose prior to this
change.
5/ The statutory provisions of 5 U.S.C. Sec. 5542, pertaining to
general schedule employees, and Sec. 5544 are similar and are generally
to be construed in the same manner. See B-163730, Apr. 25, 1968.
6/ We have recognized that there are instances and authorities which
permit the payment of overtime compensation where no actual work was
performed. A primary instance is standby overtime. Under 5 U.S.C. Sec.
5544(a), a wage-board employee who regularly is required to remain at or
within the confines of his post of duty in a standby or on-call status
in excess of 8 hours a day is entitled to overtime pay for hours of
work, exclusive of eating and sleeping, for such time in excess of 40
hours a week. Generally, overtime pay under the standby provision has
been allowed only where the employee's movements were narrowly limited
and his activities severely restricted and where his status was in
effect one of ready alert. Daniel W. McConnell, 61 Comp. Gen. 301
(1982). Another example is where an employee has been denied overtime
work in violation of a mandatory provision in a negotiated
labor-management agreement or in accordance with requirements of agency
regulations. In this type of case we have held that the employee may
receive backpay under 5 U.S.C. Sec. 5596 (1988), for the overtime
although work was not actually performed. See 59 Comp. Gen. 578 (1980)
and cases cited. However, none of the exceptions apply to the facts in
this case.
7/ We informally contacted knowledgeable individuals in the Office of
Personnel Management regarding this point, and they concurred in this
view.
Matter of: American Development Corporation-- Request for
Reconsideration
File: B-224842.3
Date: March 18, 1987
DIGEST
Request for reconsideration is denied where request by protester who
challenged rejection of its proposal as technically unacceptable does
not show any error of fact or law in original decision but only
reiterates argument made in initial protest that it was misled by
contracting officer's remarks during discussions into concluding that no
further revisions to its technical proposal should be attempted.
DECISION
American Development Corporation (Adcor) requests reconsideration of
our decision, American Development Corp., B-224842, Jan. 7, 1987, 87-1
CPD P , denying Adcor's protest concerning the rejection of its offer as
technically unacceptable under request for proposals (RFP) No.
DAAB0786-R-J010, issued by the Army for communications systems control
elements. We denied the protest based on our finding that Adcor had not
shown that the Army's technical evaluation of its proposal lacked a
reasonable basis or that the Army had failed to conduct meaningful
discussions. Adcor's request for reconsideration is limited to the
second issue raised in its protest, Adcor's contention that it was not
given a meaningful opportunity to address deficiencies in its proposal.
We deny the request for reconsideration.
As discussed in detail in the original decision, the RFP provided
that award would be made to the firm submitting the conforming offer
representing the best value to the government. The RFP listed four
evaluation criteria in descending order of importance (technical;
cost/price; logistics; management) and required that proposals be
rated at least acceptable in each category. The Army found Adcor's
initial proposal to be reasonably susceptible to being made acceptable
and included it in the competitive range. The Army then furnished Adcor
a list of 113 questions, covering 38 deficiencies and 27 weaknesses
identified in Adcor's proposal. Adcor responded in writing to those
questions, after which oral discussions were held, followed by the
submission of proposal revisions based on the oral discussions and a
best and final offer. The Army ultimately found Adcor's proposal
unacceptable under the technical category.
In its request for reconsideration, Adcor does no more than reiterate
its original argument, which we found to be without merit.
Specifically, Adcor contends that during discussions the contracting
officer advised Adcor that its proposal was technically acceptable and,
as a result, Adcor was misled into believing that no further revisions
to its technical proposal should be attempted. As we stated in our
original decision, even accepting Adcor's version of the contracting
officer's remarks, 1/ it was not reasonable for Adcor to conclude that
no further technical revisions should be attempted. In our view,
Adcor's contention that it did not want to jeopardize its chance for
award by making further revisions to its proposal might apply only where
award was to be made to the lowest priced, technically acceptable
offeror; here, in contrast, the RFP provided that the technical
category was the most important of the four evaluation factors and that
award would be made to the offeror representing the best value to the
government. The selection decision was to be based in part on an
offeror's relative technical rating, superior, good or acceptable.
Thus, even if Adcor believed based on the oral discussions that the Army
regarded its proposal as technically acceptable, Adcor could not
reasonably assume in view of the evaluation scheme in the RFP that
further revisions to its proposal which might improve its rating were
unnecessary.
Since Adcor has failed to show any error of law or fact in our
original decision, the request for reconsideration is denied. Bid
Protest Regulations, 4 C.F.R. Sec. 21.12(a) (1986).
Harry R. Van Cleve
General Counsel
FOOTNOTE
1/ The Army disputed Adcor's contention that the contracting officer
had said that Adcor's proposal was technically acceptable.
Matter of: Telecommunications Specialists, Inc.
File: B-224842.2
Date: February 26, 1987
DIGEST
Protest alleging that contracting officials were biased and
improperly rejected the protesters proposal is denied because these
allegations are not supported by the record which shows that
deficiencies in the protester's proposal were not corrected following
meaningful discussions, and that the proposal was properly rejected as
unacceptable.
DECISION
Telecommunications Specialists, Inc., (Telspec) protests the
rejection of its proposal as technically unacceptable under request for
proposals (RFP) No. DAAB07-86-R-J010, issued by the Army for
communications equipment shelters containing computer and communications
equipment--referred to by the Army as communications systems control
elements (CSCE shelters and equipment). 1/ CSCE shelters and equipment
are to be used to control a tactical communications network. According
to Telspec, the Army evaluated its proposal arbitrarily and unfairly.
We deny the protest.
The RFP called for fixed-price offers, and provided in Section M.55
that award would be made to the firm submitting the conforming offer
representing the best value to the government. Section M.55 further
provided that, to be considered for award, a proposal had to be rated as
at least acceptable under four evaluation factors, listed in descending
order of importance, as follows:
"1. Factor I - Technical. This factor consists of the
following subfactors listed in descending order of importance. To
receive consideration for award, a rating of no less than
acceptable must be achieved for each of the three subfactors
listed.
a. System Performance (Subfactor)
b. Operational Suitability (Subfactor)
c. Production Readiness (Subfactor)
2. Factor II - Cost/Price.
3. Factor III - Logistics.
4. Factor IV - Management."
Proposals were received from three firms, Telspec, American
Development Corp. (Adcor) and Electrospace Systems, Inc. An initial
evaluation of the technical proposals was conducted, using adjectival
ratings ("superior," "good," "acceptable," "reasonably susceptible to
being made acceptable," and "unacceptable"). Telespec's proposal was
rated susceptible to being made acceptable.
By letter dated July 21, 1986, the contracting officer sent Telspec a
list of questions concerning weaknesses and deficiencies identified in
Telspec's proposal. Telspec responded by offering revisions and
clarifications to its proposal, after which oral discussions were held
with Telspec, as well as with the other two offerors. A request for
best and final offers followed. The Army's final evaluation found
Telspec's best and final offer to be unacceptable with respect to both
the technical and logistics factors. Accordingly, the Army rejected
Telspec's proposal. Since the Army also rejected Adcor's proposal, it
made award to Electrospace.
The protester complains that it submitted the low priced proposal and
should have received the award. Moreover, Telspec believes that the
contracting officer was biased and sought to prevent Telspec from
getting the award. Specifically, Telspec complains that the contracting
officer reprimanded the firm for seeking clarification of the statement
of work and did not fully answer Telspec's concerns at the debriefing.
In this regard, Telspec says it was not given a satisfactory explanation
as to why if its proposal was unacceptable, Telspec was invited to
submit a best and final offer, and why in view of its lower price the
Army did not conduct further discussions to correct any remaining
deficiencies. Further, the protester questions the Army's failure to
furnish it information regarding the evaluation and selection of
Electrospace and notes that the date on the rejection letter it received
was the same as the date of the award to Electrospace, but that letter
implied that award had not yet been made. Telspec finally states that
it was advised by the contracting officer during the procurement that he
did not expect to be reassigned yet he was reassigned shortly after the
Electrospace award was made.
The protest is without merit.
Telspec did submit the lowest priced proposal. However, as the Army
points out, its price was low by only $750,000 out of approximately $100
million, when evaluated on the basis of total price, including options,
as required by the RFP. In any event, the Army properly did not make
award to Telspec whose proposal was unacceptable. It was irrelevant
that that firm's proposal was lower in price. See Thomas Engineering
Co., B-220393, Jan. 14, 1986, 86-1 CPD P 36.
Next Telspec asserts that it should not have been invited to submit a
best and final offer if its proposal was unacceptable, and complains
that the Army should have conducted further discussions with it to
correct any deficiency the Army may have believed remained after the
protester had submitted its best and final offer. As the Army observes
it is proper to include in the competitive range those firms whose
proposals are considered to have a reasonable chance of receiving award,
whether the proposal is considered acceptable or like Telspec's proposal
merely susceptible of being made acceptable. GTE Government Systems
Corp., B-222587, Sept. 9, 1986, 86-2 CPD P 276. To afford Telspec an
opportunity to correct deficiencies in its proposal, discussions (both
written and oral) were held. The protester was furnished with a list of
146 questions covering all aspects of its proposal.
Although Telspec subsequently corrected some of the deficiencies, the
Army's final evaluation report on Telspec's best and final proposal
lists 21 weaknesses and 24 deficiencies remaining under the technical
evaluation factor alone. The final evaluation report also indicates
that 23 weaknesses and 19 deficiencies remained under the logistics
evaluation factor. The proposal was rated unacceptable under all three
technical subfactors and on the overall technical and logistics
evaluation factors.
To focus on only a few of the many deficiencies that remained, as the
Army explains, Telspec's proposal failed to show that its uninterrupted
power supply (UPS) would meet the requirements of the puchase
description to supply power for all equipment except ECUs (environmental
control units) and remote terminal clusters. In fact, Telspec
specifically excluded shelter lighting and utility outlets in responding
to the UPS requirement.
Telspec says that during oral discussions it agreed to include
shelter lighting and utility outlets, albeit without increasing the
capacity of its UPS (a point the Army had also questioned), but it
failed to modify its proposal by correct ing the deficiency in its best
and final offer. The solicitation, at section M.56 specifically stated
that each proposal would be rated strictly on its written content and
warned that the evaluators would "not assume that the offeror's
performance will include areas of investigation or tasks and efforts to
be performed that are not described in the written proposal."
Further, under the logistics factor, the RFP required that offerors
submit detailed information concerning how they would provide fully
documented manuals for the equipment furnished with the CSCE shelters.
Telspec, in its initial proposal, furnished only minimal information and
was asked, both in writing and during oral discussions, to address in
detail how it would meet this requirement. The Army viewed the
protester's response as superficial and inaccurate. Telspec did not
even correctly identify the types of documentation (related to
maintenance levels) explicitly required and described by the RFP.
Telspec asserts that it could have corrected the remaining
deficiencies had it been given a further opportunity to do so. We have
held that discussions are adequate if, following a diligent effort by
the agency to identify deficiencies, an offeror is made aware of the
agency's concerns, and is subsequently afforded an opportunity to revise
its proposal. Agencies are not required to reopen discussions to afford
an offeror a second chance to correct its proposal or to correct
deficiencies that, through no fault of the agency, become apparent only
after the agency has evaluated data an offeror submits to correct
informational deficiencies that were addressed during discussions.
Cosmodyne, Inc.; et al., B-216258, et al., Sept. 19, 1985, 85-2 CPD P
304. In short, it is the offeror's duty to include sufficiently
detailed information in its proposal to establish that the equipment
offered will meet the solicitation requirements. Johnston
Communications, B-221346, Feb. 28, 1986, 86-1 CPD P 211. The protester
did not do so.
Telspec has not shown that the Army acted arbitrarily in rejecting
its proposal, and we see no basis on which to question the Army's
action.
Since we think that Telspec's proposal was properly rejected, we need
not treat in detail the remaining issues it has raised regarding its
treatment by the contracting officer.
We note, however, that Telspec's concerns appear groundless. There
is no legal prohibition preventing the Army from making award on the day
that it wrote Telspec, advising that firm of the rejection of its
proposal. The Army's rejection notice, which Telspec says implied that
award had not been made, was merely a standard form letter. Further,
the record indicates that the Army did respond to Telspec's requests for
information regarding the solicitation. The alleged reprimand, Telspec
concedes, consisted of advice to Telspec that it was up to it, as the
offeror, to decide how best to frame its proposal and of a statement
that some of Telspec's questions were "irrelevant"--the latter,
apparently, in reference to a concern expressed by Telspec that two
pages in the solicitation had been collated out of sequence. We also
note that, contrary to Telspec's apparent expectations, contracting
agencies are not to disclose details of other offeror's proposals during
debriefings. Federal Acquisition Regulation, 48 C.F.R. Sec. 15.1003
(1986). Finally, the contracting officer's reassignment to other duties
appears to have been a routine reassignment having no connection with
the conduct of this procurement.
The protest is denied.
Harry R. Van Cleve
General Counsel
FOOTNOTE
1/ American Development Corporation also protested the rejection of
its proposal under the same solicitation. See American Development
Corp., B-224842, Jan. 7, 1987, 87-1 CPD P , denying Adcor's protest.
B-224832
July 2, 1987
DIGEST
U.S. Army Finance and Accounting Officer and his Deputy are relieved
of liability for improper payments actually certified and disbursed by
subordinates because they both maintained and supervised an adequate
system of procedures to prevent improper payments. The improper
payments in this case were the result of an officer making fraudulent
travel vouchers. The cashiers responsible for making payment are
accountable officers as well and are relieved because there is nothing
in the record which suggests the cashiers should have been suspicious of
the fraudulent nature of the transaction. A cashier who is presented a
properly certified document may rely on that certification.
Brigadier General B. W. Hall
Deputy Commander for Operations
U.S. Army Finance and Accounting Center
Indianapolis, Indiana 46249-0160
Dear General Hall:
This responds to your request of September 22, 1986 that relief be
granted under 31 U.S.C. Sec. 3527(c) for improper payments totaling
$1,120.18 chargeable to the account of Major (MAJ) P.L. Capestany,
Finance and Accounting Officer, (DSSN 6388) Fort Eustis, Virginia.
Relief is also requested for his Deputy, Captain (CPT) Virdette
Woodford, Chief of Finance Services Division, Fort Monroe Finance
Liaison Office, Virginia. For the reasons stated below, we grant the
requested relief. In addition, we also relieve the cashiers, although
not identified in the submission, who actually made the improper
payments.
BACKGROUND
The improper payments in this case resulted from payments made by the
Disbursing Center of the Fort Monroe Finance Liaison Office on
fraudulent travel claims of Lieutenant (LT) George Parker. The
fraudulent travel vouchers were certified for payment by the Voucher
Examiner Supervisor of the Travel Section and sent to the Disbursing
Center where cashiers paid Parker on the basis of these certified
vouchers. The first payment was on a travel voucher for TDY at Ft.
Leonard Wood from July 28 to August 1, 1985. The other payment was on a
travel voucher for housing and subsistence while on tour at Ft. Monroe
from July 8 to September 20, 1985. A criminal investigation into these
payments was prompted by a call from Lt. Michael, who accompanied LT
Parker on TDY to Ft. Wood. LT Michael expressed concern over comments
LT Parker had made which indicated that he was falsifying his lodging
expenses at Ft. Monroe. LT Michael was permitted to examine LT
Parker's paid travel voucher for the Ft. Wood TDY and identified
specific expenses that LT Parker claimed but which either were not
incurred or were, in fact, paid by LT Michael. It was concluded that
fraudulent claims were made on 4 days, and as such, all other aspects of
the entitlement for those days were tainted by such fraud and thus not
properly payable. This first payment, therefore, results in an improper
payment of $182.66. The second payment was similarly discovered to
contain false claims in the amount of $1,584.24 in excess lodging
expenses.
LT Parker was apprehended on October 8, 1985 and charged with the
offenses of larceny and making and presenting a false claim. LT Parker
was administered nonjudicial punishment and discharged from the U.S.
Army Reserve Corps. LT Parker's final pay of $646.72 was used to offset
his initial indebtedness of $1,766.90.
REQUEST FOR RELIEF
Relief is requested for MAJ Capestany, in whose name the account is
held, and CPT Woodford, CPT Capestany's deputy, who was responsible for
all Finance and Accounting activities at the Liaison Office in Ft.
Monroe, where these improper payments were actually made. A disbursing
official who is responsible for an account is liable for payments on
fraudulent vouchers made out of his or her account. Under 31 U.S.C.
Sec. 3127(c) (1982), this Office has the authority to relieve a
disbursing official from liability for an improper payment when the
record shows that the payment was not the result of bad faith or lack of
reasonable care. B-217114, 65 Comp. Gen. (1986).
CPT Woodford noted that as a practical matter, because of the large
volume of travel claims which must be processed daily by Ft. Monroe, she
does not personally examine the travel vouchers, which are certified for
payment by the voucher examiner supervisor. A certifying officer
delegated this responsibility is not an accountable officer according to
AR 37-107.1-7F. This regulation provides that while certifying officers
are administratively liable, pecuniary liability remains with the
Finance and Accounting Officer.
In cases where subordinates rather than the Finance Officer are
actually responsible for the certification and disbursement, we have
granted relief upon a showing that the finance officer properly
supervised these subordinates by maintaining an adequate system of
procedures and controls and took steps to ensure the system's
implementation and effectiveness. Cf. B-221395, March 26, 1986.
According to your initial and subsequent supporting documents, MAJ
Capestany, through his Deputy, CPT Woodford, had established and
maintained an adequate system of controls to safeguard the funds for
which he was responsible. CPT Woodford provided copies of the Standard
Operating Procedures in effect at the Ft. Monroe office and in addition
stated that her office conducts training on travel fraud awareness.
Through a reasonable inspection of both vouchers, there was nothing
which would have put the examiners on notice of any possible fraud. The
improper payments in this case were largely the result of criminal
activity that even a carefully established and effectively supervised
system cannot reasonably prevent. Although you did not mention the
cashiers responsible for making payments on the fraudulent vouchers to
Parker, these individuals are accountable officers as well. The record
indicates that proper procedures existed for redeeming vouchers and
there is nothing in the record which suggests the cashiers should have
been suspicious of the fraudulent nature of the transaction. A cashier
who is presented a properly certified document is under no obligation to
investigate the circumstances which led to the certification, but may
properly rely on that certification. See, B-221395, supra. Since there
is no indication that the improper payments were the proximate result of
bad faith or lack of reasonable care on their parts, relief is granted
to MAJ Capestany, CPT Woodford, and the cashiers.
Finally, we note that collection action initiated by the finance
officer to recover the outstanding balance has not been successful. The
matter has been referred to the Collections Division and we acknowledge
the Army's pledge to aggressively pursue collection action against LT
Parker.
Sincerely yours,
(Mrs.) Rollee H. Efros
Associate General Counsel
File: B-224827.4
Date: November 21, 1990
Matter of: American Ensign Van Service, Inc.
DIGEST
1. Where correction notice to government bill of lading, providing for
a stated lump sum released valuation, is mailed to carrier and delivered
to carrier's agent prior to shipment, and freight bills and bills of
lading accompanying shipment reflect release of shipment based on a lump
sum valuation, the carrier's maximum liability for loss or damage to the
shipment is contractually set at the amount of the lump sum valuation.
2. The government, in recovering under a contract with a carrier for
loss or damage to a service member's household goods, is not limited in
recovery to the amount it paid to the member under the Military
Personnel and Civilian Employees' Claims Act of 1964, 31 U.S.C. Sec.
3721.
3. Where a carrier liable for damage to a shipment of household goods
has been accorded the pre-offset procedural rights specified in the Debt
Collection Act, collection by administrative offset is proper.
DECISION
American Ensign Van Service, Inc., appeals our Claims Group's denial of
its claim for $12,000 as a refund of amounts the Marine Corps withheld
from American Ensign for damage and loss sustained to Staff Sergeant
William A. Hollis's household goods while being transported under a
Government Bill of Lading (GBL). We affirm the Claims Group's
determination, except for $94.87 that we find is due the carrier.
Sergeant Hollis's household goods were picked up at his residence in
Pittsburgh, Pennsylvania by Pioneer Movers as agent for American Ensign
and transported to Grandview, Missouri. Two days before the pick-up,
Sergeant Hollis requested release of his shipment based on a lump sum
valuation of $12,000 instead of the $1.25 per pound of released
valuation provided in the GBL as issued. The cognizant transportation
office immediately called Pioneer Movers and advised the carrier of the
change, and mailed a GBL correction notice reflecting the change to
American Ensign on the same day. Two days later, transportation office
personnel handcarried copies of the correction notice to Sergeant
Hollis's residence and delivered them to the Pioneer agent who was
packing and loading the shipment.
Upon receipt of the shipment, Pioneer issued a Household Goods Bill of
Lading and Freight Bill in accordance with 49 C.F.R. Sec. 1056.5, which
requires a carrier to prepare an order for service before accepting a
shipment, and which also provides for bilateral amendment of such an
order before loading. Pioneer submitted these documents, together with
the GBL reflecting a charge of $60 for the increased valuation, to the
transportation office.
A number of oil paintings and a gun included in the shipment were lost
in transit. There appears to be no dispute that the value of these
exceeds $12,000. Pursuant to the Military Personnel and Civilian
Employees' Claims Act of 1964, as amended, 31 U.S.C. Sec. 3721, Sergeant
Hollis filed a claim against the government, but was allowed only
$6,136.76 based on agency regulations that limit the amount recoverable
for lost paintings to $1,500 per claim. The government then made a
claim against American Ensign for the full $12,000, subsequently
collected the amount by administrative setoff, and reimbursed the
additional remaining $5,863.24 to Sergeant Hollis.
American Ensign argues that its liability for the shipment should have
been limited to $.60 per pound per article, not $12,000. The carrier
further contends that its liability should be "capped" at the amount
paid by the Corps to the member. Finally, the carrier complains that
the administrative offset of $12,000 was not initiated in accordance
with the Debt Collection Act of 1982 and the Federal Claims Collection
Standards, and the amount offset therefore should be refunded.
We find no merit in American Ensign's first argument. The government's
preparation and delivery of the correction notice to American Ensign and
its agent, and Pioneer's acceptance of the shipment for movement under
the GBL as corrected, clearly establish agreement between the government
and the carrier that in moving the shipment the carrier would be liable
for up to $12,000. See Hughes v. United Van Lines, Inc., 829 F.2d 1407
(7th Cir. 1987). Furthermore, the freight bills and bills of lading
accompanying the shipment all reflect a valuation charge for a declared
value of $12,000.
American Ensign's second contention is that the government's right to
recover from the carrier for the loss of the shipment is limited by the
amount initially paid to Sergeant Hollis on his claim under the 1964
Claims Act, $6,136.76, and that the carrier therefore is not liable for
the remaining $5,863.24.
American Ensign's position does not reflect its legal obligations with
respect to the transportation. The government's right to recover from
American Ensign arises from a contract with the carrier which, in our
view, clearly sets the carrier's liability at up to $12,000 for the
shipment. The 1964 Claims Act, on the other hand, is intended to
provide the authority for the administrative settlement and payment of
claims by service members against the government for loss and damage to
personal property incident to service. We see no legal basis to carry
the government-member relationship over to the contractual one in the
manner argued, that is, to alter the terms of the contract to limit the
obligation to which the carrier agreed based on agency limitations on
member recovery from the government under the 1964 Claims Act.
American Ensign also claims that the Marine Corps' administrative
deduction from other sums payable to the carrier was improper because
the Marine Corps failed to comply with section 10 of the Debt Collection
Act of 1982, 31 U.S.C. Sec. 3716. Section 10 provides that an agency
may collect a claim owed to the United States by means of administrative
offset, after the agency has prescribed regulations for offset and after
the debtor has been accorded certain procedural rights. These rights
include written notice of the claim, intended offset, and the debtor's
rights; opportunity to review agency records and respond; provision
for further review within the agency; and opportunity to enter into a
repayment agreement. 31 U.S.C. Sec. 3716(a), (b). In this regard,
American Ensign maintains that the Marine Corps has not promulgated
implementing regulations in accordance with section 10.
We find no merit in American Ensign's position. By letter of August 7,
1987, the Marine Corps notified our Claims Group that American Ensign
was accorded the procedural requirements provided in Chapter XXI, Navy
Judge Advocate General Manual, which the Marine Corps advised implements
the 1964 Claims Act for the Corps. Our review of the Manual, and of the
record on American Ensign's debt and appeal, confirms that the carrier
has been offered and afforded all required rights and opportunities in
its pursuit of the matter.
Finally, American Ensign claims an additional $43.00 for the $12,000
released valuation that it failed to bill, plus $51.87 offset as the
freight cost for items that originally were misplaced but later were
recovered. The record supports the carrier's entitlement to those
amounts.
In sum, we find the setoff of $12,000 from funds due American Ensign to
have been proper. We also find that the firm is entitled to a refund
totalling $94.87.
Comptroller General of the United States
Matter of: Denison Machine Co., Inc.
File: B-224823
Date: January 21, 1987
DIGEST
Award to second-low bidder was not improper where protester has not
established that agency ever received verification of protester's
low--and possibly mistaken--bid and where protester permitted its bid to
expire after agency unsuccessfully had requested its verification over a
2-month period.
DECISION
Denison Machine Co., Inc. (Denison), protests the award of a contract
under invitation for bids (IFB) No. DLA500-86-B1865, issued by the
Defense Logistics Agency (DLA), for a quantity of large round nuts made
of special alloy. Denison, the apparent low bidder, alleges that the
contract was improperly awarded to ADAC, the second low bidder, even
though Denison had verified its low bid.
We deny the protest.
DLA issued the subject solicitation on May 13, 1986, and opened the
22 bids received on June 12. The seven lowest bids were as follows:
Offeror Unit Price
Denison $ 9.63
ADAC 11.65
H & R Parts Co., Inc. 13.20
G T Machine & Tool Co. 13.66
Mays' Precision Machine
Corp. 13.80
X-Pert Mfg., Inc. 14.30
Maco Precision Mfg., Inc. 17.30
Since Denison's unit price was approximately $2 below the next low
bid, and since all of the remaining 20 bids were approximately $2 or
more above the second low bid, on June 16 the agency contacted the
president of Denison hy telephone to request that he verify the
company's bid. A letter, also dated June 16, was sent to Denison by the
agency requesting that Denison verify its bid price or provide evidence
of any alleged mistake, in writing, by June 30. The president of
Denison stated that he would have to inquire into the matter and
indicated that he would return the agency's call. The record indicates
that Denison's president failed to return not only this call but some
five other calls to him by the agency between June 16 and August 21.
The contracting agency was therefore never able to verify the bid
telephonically.
On August 11, the six lowest bidders, including Denison, were called
and requested to extend the times for acceptance of their bids due to
the administrative delay associated with the attempts to verify
Denison's bid. As of August 21, all of those bidders except Denison had
extended the time for acceptance of their bids and on August 26, the
contract was awarded to ADAC, the second low bidder, the contracting
officer having treated Denison's unverified bid as expired 60 days after
bid opening.
Denison argues that the contract was improperly awarded to ADAC,
because Denison was the low bidder and in fact had confirmed its bid in
writing on July 18. Attached to Denison's protest is a copy of a letter
dated July 18 from Denison to the agency verifying the bid, which
Denison alleges was mailed on that date.
The agency responds that it reasonably suspected an error in
Denison's bid, that it followed the procedures outlined in the Federal
Aquisition Regulation (FAR), 48 C.F.R. Sec. 14.406 (1985), in attempting
to verify Denison's bid and that it never did receive the requested
verification. In this regard, the agency states that it never received
the protester's July 18 letter. Finally, the agency states that
Denison's bid had expired, which Denison does not dispute.
There is no merit to this protest. Where a contracting officer,
acting in good faith, suspects an error in a bid, he must seek
verification of that bid. FAR, 48 C.F.R. Sec. 14.406-1. Although the
protester asserts that it verified its bid in writing, the agency denies
receiving that verification letter, and reports that it continued
calling the protester into August to obtain verification, which the
protester also does not dispute. Thus, while the protester may have
sent the letter, it also appears that DLA did not receive it. Under the
circumstances, given how far out of line Denison's bid price was
relative to the other bids, we think the contracting officer properly
could refuse to accept the bid in the absence of verification pursuant
to the FAR, 48 C.F.R. Sec. 14.406-3(g)(5). Moreover, it is also clear
that Denison allowed its bid to expire, so that, by the date the agency
was prepared to make award, the Denison bid was no longer available for
acceptance.
Accordingly, the protest is denied.
Harry R. Van Cleve
General Counsel
Matter of: Mason E. Richwine - Per Diem on Temporary Duty Barring
Act
File: B-224811
Date: September 25, 1987
DIGEST
1. An employee of the Forest Service claims per diem in connection
with tours of duty at two worksites for the period from May 14, 1979, to
November 16, 1984. His claim was received in the General Accounting
Office (GAO) on October 8, 1985. That portion of his claim prior to
October 8, 1979, is barred and may not be considered by GAO since it
accrued more than 6 years prior to the date it was received by GAO. 31
U.S.C. Sec. 3702(b) (1982).
2. A Forest Service employee claims per diem while assigned to a
remote, seasonal worksite 6 months of every year. Although the agency
designated two official duty stations for this employee and officially
transferred him every 6 months from one station to the other, we
conclude that the remote, seasonal worksite was a temporary duty
location. The employee is entitled to appropriate per diem and mileage
allowances while performing this temporary duty.
DECISION
This decision is in response to a request from Mr. Clarence E.
Tipton, Authorized Certifying Officer, Forest Service, United States
Department of Agriculture, concerning the entitlement of Mr. Mason E.
Richwine, an employee of the agency, to per diem, mileage allowances,
and miscellaneous expense allowances for tours of duty at two worksites,
the Hungry Horse Ranger Station and the Spotted Bear Ranger Station,
both located in the Flathead National Forest, Montana.
The basic issue is whether, as the agency contends, Mr. Richwine was
properly transferred between the two ranger stations, thus making each
ranger station an official duty station or whether, as the employee
asserts, Hungry Horse was his official duty station and the duty he
performed at Spotted Bear was temporary duty, which entitles him to
reduced per diem allowances. For the reasons stated later in this
decision, we conclude that Mr. Richwine was in a temporary duty status
at Spotted Bear and is entitled to reduced per diem, except for that
portion of his claim which is time-barred for the period more than 6
years prior to the receipt of his claim by this Office. The claims for
mileage allowances submitted by Mr. Richwine are also allowed, subject
to deduction of the commuting allowances previously paid to him.
BACKGROUND
Mr. Richwine is a Forestry Technician employed by the Forest Service
in the Flathead National Forest, Montana. During the winter and early
spring (approximately November 15 to May 14), he works at the Hungry
Horse Ranger Station, and his residence is located nearby in Columbia
Falls, Montana. During the remaining 6 months of the year, Mr. Richwine
works at the Spotted Bear Ranger Station which is located 55 miles away
from Hungry Horse. Spotted Bear is in an isolated area of the Flathead
Forest and has no commercial amenities. The Forest Service furnished
living quarters and utilities to Mr. Richwine at Spotted Bear, without
charge, but these government-furnished quarters at Spotted Bear are
rudimentary.
During the period of the claim, May 14, 1979, to November 16, 1984,
the Forest Service established two (dual) official duty stations for Mr.
Richwine at the Hungry Horse and Spotted Bear Ranger Stations. Since
the Spotted Bear Ranger Station is only accessible for one half of the
year, mid-May to mid-November, field work is performed at Spotted Bear
for approximately 6 months and office work is performed at Hungry Horse
during the winter months. The Forest Service issued transfer-of-station
travel authorizations and SF-50's, Notifications of Personnel Action,
transferring Mr. Richwine to and from the two ranger stations each year.
Forest Service officials state that each ranger station was designated
as an official duty station because about equal amounts of work time
were spent at each station. These officials report that Mr. Richwine
performed major work activities at each station and, therefore, the
Forest Service felt that the designation of dual official duty stations
was appropriate, based upon our decision, 32 Comp. Gen. 87 (1952). The
Forest Service does not believe that our holding in Frederick C. Welch,
62 Comp. Gen. 80 (1982), was intended to override the concept described
in 32 Comp. Gen. 87, if the agency has properly changed the employee's
official duty station as was done in this case.
Since Spotted Bear had been designated as one of Mr. Richwine's
official duty stations, the Forest Service determined that he was not
entitled to per diem. On the other hand, Mr. Richwine contends that he
was performing temporary duty at Spotted Bear and that he is entitled to
a reduced per diem allowance of $9 per day. This rate of per diem is
authorized for all Flathead National Forest employees while traveling or
performing official duties in field situations in Flathead, away from
their official duty stations, when commercial facilities are not
available, when lodging facilities and utilities are provided by the
government, and when the employees are required to provide their own
meals.
In the spring of 1985, the Forest Service reorganized the Hungry
Horse and Spotted Bear Districts. Under the reorganization, Hungry
Horse was designated as the official duty station for all employees
working at Spotted Bear, and an on-forest field per diem of $9 per day
was authorized. Thus, while working at Spotted Bear, employees are now
paid reduced per diem allowances. The change was effective in June
1985, to coincide with the commencement of the field season for that
year.
The Forest Service points out that the Office of Personnel Management
(OPM) designated the Spotted Bear Ranger Station as a remote worksite
and authorized $10 per roundtrip for commuting between Spotted Bear and
Hungry Horse. The OPM determined that it was practical to commute
between Spotted Bear and Hungry Horse on a daily basis. However, both
the Forest Service and Mr. Richwine have stated that daily commuting
between the two ranger stations is impractical since the distance
between the ranger stations (55 miles) must be traveled over a winding
and curvy gravel road which is very dusty, with huge pot holes, and
which traverses over mountainous terrain. The commuting time is about 2
hours each way.
Mr. Richwine is also claiming mileage allowances for his travel by
privately-owned vehicle (POV) between Spotted Bear and his residence
each time (usually weekly) he traveled to or from Spotted Bear in his
POV. Mr. Richwine has been reimbursed for each round trip he made
between Spotted Bear and his residence at the $10 commuting allowance
per round trip as estahlished by OPM.
Mr. Richwine has not claimed reimbursement for any miscellaneous
expenses he may have incurred in relocating between Hungry Horse and
Spotted Bear each year. However, the Forest Service requests that we
clarify whether reimbursement for miscellaneous expenses is appropriate
in this case should Mr. Richwine's claim for per diem be denied.
OPINION
The Barring Act
The Barring Act of October 9, 1940, as amended, now codified at 31
U.S.C. Sec. 3702(b) (1982), provides that every claim or demand against
the United States presented to the General Accounting Office (GAO) must
be received in GAO within 6 years from the date the claim first accrued.
The record shows that a portion of the claim asserted by Mr. Richwine
(May 14 to October 8, 1979) arose prior to the 6-year time limitation.
Although this portion of his claim may otherwise be valid, it is barred
and may not be considered by this Office since it accrued more than 6
years prior to the date his claim was received by GAO, October 8, 1985.
Dual Duty Stations
The Forest Service contends that an employee can have alternate
official duty stations where his duties are equally split between the
two locations. We disagree with the contention that an agency may
establish alternate or "dual" duty stations for an employee. Our Office
has repeatedly held that an agency may not designate an employee's
official duty station at some place other than the place at which he is
expected to perform the preponderance of his or her duties in order to
pay (or not to pay) a per diem allowance at such place. 31 Comp. Gen.
289 (1952); B-172207, July 21, 1971. In 25 Comp. Gen. 136 (1945), we
stated at page 138:
"The post of duty of an employee is required by regulation to
be the place at which the employee actually is stationed; and,
under rulings of many years standing, such post of duty is the
place where the employee expects, and is expected, indefinitely to
spend the greater part of his time - where, normally, his
residence would be established and there would be no extra
subsistence expenses to be incurred or to be reimbursed through
the medium of a per diem." (Emphasis supplied.)
We have also long held that the location of an employee's official
station is a question of fact, not limited by the agency's designation,
to be determined from the orders directing the assignment and from the
nature and duration of the assignment. Frederick C. Welch, 62 Comp.
Gen. 80, cited above. We have stated that the duration and nature of
the duties assigned are of particular importance in making the
determination of whether an assignment to a particular duty station is a
permanent change of station. 36 Comp. Gen. 757 (1957); 33 Comp. Gen.
98 (1953). We have also determined that there is no hard and fast rule
as to the length of time for which an employee may be entitled to
subsistence at a particular place. It is dependent not so much on the
length of time as upon the nature of the duties and whether, as a matter
of fact, that place constitutes his permanent duty station or a
temporary assignment. 18 Comp. Gen. 423, 424 (1938).
The Federal Travel Regulations, FPMR 101-7 (September 1981) incorp.
by ref., 41 C.F.R. Sec. 101-7.003 (1986) (FTR), do not contain a formal
definition of a temporary duty assignment. However, under the
provisions of FTR para. 1-7.6a, an employee may not be paid per diem at
his permanent duty station or at the place of abode from which he
commutes daily to his official station.
In the instant case, the Forest Service issued transfer-ofstation
travel authorizations to Mr. Richwine each time he was reassigned to and
from Spotted Bear. However, due to the onset of winter at Spotted Bear,
neither the Forest Service nor Mr. Richwine expected the employee to
perform the preponderance of his duties at Spotted Bear. Mr. Richwine
was not expected, indefinitely, to spend the greater part of his time at
Spotted Bear; his residence was not at that location; and he did, in
fact, incur extra subsistence expenses at Spotted Bear. The Forest
Service and Mr. Richwine knew that the performance of duty at Spotted
Bear would only be permitted for a short period of time, and would
terminate each year in approximately 6 months. Thereafter, Mr. Richwine
would return to Hungry Horse where his residence is located to perform
his official duties for approximately 6 months. Therefore, recognizing
the facts and circumstances as they actually occurred, we hold that the
designation of Spotted Bear as Mr. Richwine's official or "dual" duty
station was improper and that his performance of his duties at Spotted
Bear was, in fact, temporary in nature. Even though Mr. Richwine
performed official duties for about 6 months of the year at Spotted Bear
in the summer and fall, his assignment at that location was more in the
nature of a long-term temporary assignment away from his official duty
station at Hungry Horse. See Welch, supra; Robert E. Larrabee, 57
Comp. Gen. 147 (1977); Don L. Hawkins, B-210121, July 6, 1983.
Our conclusion that the designation of both Hungry Horse and Spotted
Bear as dual duty stations was inappropriate is supported by the
subsequent actions of the Forest Service which, effective June 1985,
designated Hungry Horse as the official duty station for employees
working at Spotted Bear. An on-forest field per diem of $9 per day is
now being paid for temporary duty performed at Spotted Bear.
The Forest Service relies upon our earlier decision, 32 Comp. Gen. 87
(1952), as supporting their designation of dual duty stations for Mr.
Richwine. However, the cited decision does not support this conclusion
made by the Forest Service. Our decision in 32 Comp. Gen. 87 stands for
the proposition that the official station of an employee is a matter of
fact and not merely one of administrative determination and that it is
the place where the employee expects, and is expected, to spend the
greater part of the work time. See also Welch, supra; 31 Comp. Gen.
289 (1952). In Welch, we agreed with the agency grievance examiner who
determined that the duty performed by Mr. Welch at a seasonal worksite
for 6 months of the year (similar to Spotted Bear) was in the nature of
a long-term temporary assignment away from his official duty
headquarters. Thus, the holding in Welch is applicable to the facts and
circumstances of the case under consideration.
Entitlement to Reduced Per Diem
The statutory authority for the payment of per diem allowances is
contained in 5 U.S.C. Sec. 5702 (1982) and provides, in pertinent part,
that "an employee while traveling on official business away from his
designated post of duty * * * is entitled to * * * a per diem allowance
* * *." The implementing regulations, Federal Travel Regulations, FPMR
101-7 (Septemher 1981), provide, at paragraph 1-7.1a, that " p er diem
allowances * * * shall be paid for official travel." Thus, Federal
employees have a basic statutory entitlement to be paid per diem
allowances while traveling on official business away from their official
duty stations. Jack C. Smith, et al., 63 Comp. Gen. 594 (1984). At
the same time, paragraph 1-7.3a of the FTR states that it is the
responsibility of the agency to authorize only such per diem allowances
as are justified by the circumstances affecting the travel. Further, we
have upheld the refusal by an agency to authorize or approve the payment
of any per diem where the employee was performing temporary duty in
close proximity to his official duty station for a relatively short
period of time and where the employee incurred no additional expenses.
See Gilbert C. Morgan, 55 Comp. Gen. 1323 (1976); 31 Comp. Gen. 264
(1952); B-176477, February 1, 1973.
In the situation where an employee is performing temporary duty a
substantial distance from his or her permanent duty station, our
decisions have recognized that the required use of government quarters,
with a consequent lowering of the rate of per diem, is permissible where
an appropriate administrative determination has been made that the use
of government quarters is essential to the accomplishment of the mission
of the employee. B-177752, May 17, 1973. The record in this case
reveals that the Forest Service has apparently made such a determination
because of inadequate housing facilities for its employees at Spotted
Bear.
We have denied the payment of any per diem where the employees
incurred no additional living expenses or were provided both quarters
and meals. B-180111, March 20, 1974; Barbara J. Protts, B-195658,
March 19, 1980. However, we have also held that it is unreasonable to
deny the payment of a per diem allowance where the employee has incurred
additional expenses over those that would have been normally incurred
had the employee remained at his or her designated post of duty. Smith,
cited above. Only in the unusual circumstance where the employee has
not incurred any additional living expenses is an agency justified in
not paying any per diem allowance.
With respect to Mr. Richwine's claim, we note that additional
expenses were, in fact, incurred by him since he was required to
purchase groceries for himself while working at Spotted Bear and also
purchase groceries for his family and maintain the family residence at
Columbia Falls. We have been informally advised that he also was
required to purchase cooking utensils, brooms, mops, cleaning materials,
etc., while occupying the government-furnished temporary quarters at
Spotted Bear. Thus, since the employee did, in fact, incur additional
expenses by virtue of his temporary duty assignments at Spotted Bear, we
conclude that he is entitled to a reduced per diem allowance during
those assignments.
In reaching our conclusion to permit the payment of a reduced per
diem, we again point out that effective in June 1985, by virtue of a
reorganization, Hungry Horse has been designated as the official duty
station for Forest Service employees working at Spotted Bear and an
on-forest field per diem of $9 per day was authorized. Thus, the Forest
Service now recognizes that Mr. Richwine's permanent duty station is
Hungry Horse and that his performance of work at Spotted Bear
constitutes temporary duty for which a reduced per diem allowance is
currently being paid.
Allowances at Remote Worksite
As noted above, OPM designated the Spotted Bear Ranger station as a
remote worksite and allocated the sum of $10 per round trip for
commuting between the Spotted Bear and Hungry Horse Ranger stations.
The OPM, under the authority granted by 5 U.S.C. Sec. 5942 (1982), and
the implementing regulations, 5 C.F.R. Part 591, Subpart C and Appendix
A of Subpart C, has determined that daily commuting is practical between
Spotted Bear and Hungry Horse and established a commuting allowance rate
of $10. However, section 591.302(b) states that payment of the remote
worksite allowance applies to each employee assigned to a permanent duty
station at or within a designated remote duty post.
Inasmuch as we concluded earlier in this decision that Spotted Bear
Ranger Station is a temporary duty station and not a permanent duty
station for Mr. Richwine, the allowances based on duty at a remote
worksite are not payable. Therefore, Mr. Richwine is entitled to
payment of appropriate mileage allowances, at the mileage rates in
effect at the time the travel was performed, while driving his POV
between Spotted Bear and Hungry Horse. However, such mileage allowances
should be offset by the $10 remote duty station allowance previously
paid to Mr. Richwine for each round trip between the two ranger
stations.
Finally, since we have concluded that no permanent changes of station
were involved in this claim, there would be no entitlement to
reimbursement for miscellaneous relocation expenses.
Therefore, we conclude that Mr. Richwine is entitled to the payment
of reduced per diem allowances at the rate in effect during the periods
he performed temporary duty at Spotted Bear. We also hold that he is
entitled to the payment of mileage allowances, at the mileage rates in
effect at the time the travel was performed, between the Spotted Bear
and Hungry Horse Ranger stations, but the payment of such allowances is
subject to deduction of the $10 commuting allowance previously paid to
Mr. Richwine for each round trip between the two ranger stations. Both
claims are barred for the period of time prior to October 8, 1979, by
the provisions of the Barring Act, 31 U.S.C. Sec. 3702(b) (1982).
Comptroller General
of the United States
Matter of: Toolmate, Inc.
File: B-224804.2
Date: February 4, 1987
DIGEST
Fact that protester may have meant to bid on a basis other than that
reflected in the bidding documents is irrelevant to the award decision,
since a firm's bidding intent must be determined solely from those
documents.
DECISION
Toolmate, Inc., protests the award of line item No. 35 to a higher
bidder under invitation for bids (IFB) No. FCSN-STA6115-S-7-1-86,
issued by the General Services Administration (GSA) for retaining ring
pliers. The protest is related to an earlier protest filed by the firm
under the same solicitation, which we denied in our decision in
Toolmate, Inc., B-224804, Dec. 19, 1986, 86-2 C.P.D. P .
We dismiss the current protest pursuant to our Bid Protest
Regulations, 4 C.F.R. Sec. 21.3(f) (1986).
The IFB included 35 line items, each corresponding to a particular
kind of plier, and contemplated the item-by-item award of firm,
fixed-price indefinite quantity requirements contracts. To prevent the
award of contracts in excess of a contractor's production capacity, the
IFB stated an estimated peak monthly requirement (EPMR) for every plier;
the highest EPMR was 4,000 units for line item No. 17. To receive an
award, a firm had to bid the lowest price for the item and furnish a
statement of monthly supply potential (MSP) equal to or greater than the
government's EPMR for the applicable item or group of items. In this
respect, the IFB urged a bidder to bundle as many items or groups of
items as possible in setting its MSP. Bidders were given the option of
filling in an MSP schedule providing their respective MSP limitations or
leaving the schedule blank, in which case the MSP would be 125 percent
of the government's EPMR for the particular item or group of items. For
example, if a firm left the MSP schedule blank it would have been
indicating an MSP of 5,000 units for line item No. 17.
Toolmate elected to fill in the MSP schedule as follows, with the
bidder's entries in brackets.
"ITEMS OR GROUPS OF"
SEE ATTACHED
LIST
OFFEROR'S MONTHLY SUPPLY
POTENTIAL
10,000
Toolmate's attached list consisted of a sheet of paper entitled
"G.S.A. SNAP RING PLIERS QUOTE" with the subheading "ITEM NUMBER," under
which Toolmate listed 24 item numbers.
GSA interpreted Toolmate's submission as a single overall limitation
applicable to all 24 items collectively, i.e., GSA understood that
Toolmate's plant could only produce a maximum of 10,000 items per month.
As a result, even though Toolmate was the low bidder on 21 line items,
GSA awarded Toolmate a contract for only 3 items bid, not including line
item No. 35, which in combination had an aggregate EPMR of 10,000 units.
Toolmate initially protested that the only reasonable interpretation
of its bid was that Toolmate's MSP was 10,000 units for each of the 24
listed line items. We agreed with GSA's reading of Toolmate's bid,
however, and we denied the protest in our December 19, 1986, decision.
Toolmate notes in its current protest that GSA did not award a
contract for line item No. 35 until after we issued our decision.
Toolmate argues that before awarding that contract it should have been
clear to GSA, by virtue of the earlier bid protest proceedings, that
Toolmate in fact had intended to indicate an MSP of 10,000 units for
each of the 24 line items for which it competed, and had the capacity to
furnish 10,000 units of line item No. 35 as well as the items already
awarded. On that basis, Toolmate argues it was entitled to a contract
for line item No. 35 since it was the low bidder.
There is no legal merit to the protest. We stated in our prior
decision:
"... there simply is nothing on the face of the bid to indicate
that Toolmate did not intend to limit its total liability to
10,000 units per month. The MSP schedule asked for a monthly
plant capacity figure, and Toolmate provided a single unambiguous
figure applicable to a group of 24 line items. If Toolmate had
not intended to bid a limited production capacity of 10,000 units
and instead desired to indicate its ability to meet the EPMR for
all 24 line items, it could have left the MSP schedule blank.
Given the structure and instructions of the invitation, we do not
think it unreasonable to assume Toolmate intended to bid on any
combination of the 24 listed items that had an aggregate MSP of
10,000 units or less."
A firm's intention in terms of the basis for its bid must be
determined solely from the bidding documents. See Harnischfeger Corp.,
B-224371, Sept. 12, 1986, 86-2 C.P.D. P 296. Thus, the fact that
post-bid opening events or explanations show that a firm actually may
have intended something other than that reflected in the bid is
irrelevant in terms of whether or to what extent the bid might be
acceptable. Cf. Meyer Tool ana Mfg., Inc., B-222595, June 9 1986, 86-1
C.P.D. P 537 (concerning bid responsiveness). Since we agreed with GSA
that Toolmate's bid indicated an intent to limit the firm's total
liability under the contract to 10,000 units per month, the fact that
after bidding Toolmate said it did not mean to do so simply does not
provide a basis on which to disregard Toolmate's actual bid.
Accordingly, GSA properly limited award to Toolmate to line items
with an aggregate EPMR of 10,000 units. The protest of award of line
item No. 35 to another firm therefore is dismissed.
Robert M. Strong
Deputy Associate
General Counsel
B-224791
March 19, 1987
DIGEST:
Under the Foreign Service Act of 1980, certain employees of the
Department of State were to be involuntarily converted to the General
Schedule without a reduction in class, grade, or basic rate of pay.
During a transition period of 3 years, the individuals converted had a
right to be paid under the Senior Foreign Service Schedule. Employee
alleges that during conversion to Senior Foreign Service Schedule, he
was reduced in grade. Employee was converted consistent with
regulations and his belief that he was downgraded was due to ambiguity
in and resulting misunderstanding about a form memorializing his
conversion.
The Honorable Austin J. Murphy
House of Representatives
Dear Mr. Murphy:
This is in response to your letter of September 18, 1986, with
enclosures, regarding the concern of your constituent, Mr. Kenneth R.
Strawberry, that the Department of State may have improperly converted
him from the Foreign Service Schedule to the General Schedule. Mr.
Strawberry's specific concern is that the Department of State
arbitrarily downgraded him and reduced his basic rate of pay when he was
converted from the Foreign Service Schedule to the General Schedule as
required by the Foreign Service Act of 1980, Public Law 96-465, 94 Stat.
2071, codified at 22 U.S.C. Sec. 3901 et seq. We conclude that the
Department acted within its authority when it converted Mr. Strawberry.
Under certain sections of the Foreign Service Act of 1980, codified
at subchapter 12 of title 22, United States Code, individuals such as
Mr. Strawberry, who held positions under the Foreign Service Schedule
but were not available for worldwide assignment, were to be converted to
the General Schedule by February 15, 1984. During the transition period
between the passage of the Act, October 17, 1980, and the time of
conversion to the General Schedule, Mr. Strawberry was entitled to be a
member of the Senior Foreign Service, a system set up by the Act
analogous to the Senior Executive Service. Individuals were to be
placed in the Senior Foreign Service within 120 days of February 15,
1981, and then converted to the General Schedule within 3 years of the
effective date of the Act.
When the agency converted Mr. Strawberry and others similarly
situated, it was required to comply with a provision of the Act
mandating that the converted individuals suffer no pecuniary or other
detriment. Specifically, the law provided that:
"Every individual who is converted under this subchapter shall
be converted to the class or grade and pay rate that most closely
corresponds to the class or grade and step at which the individual
was serving immediately before conversion. No conversion under
this subchapter shall cause any individual to incur a reduction in
his or her class, grade, or basic rate of salary." 22 U.S.C. Sec.
4156 (a) (1).
The Secretary of State was given the authority to promulgate
regulations to implement the revised personnel system set up under the
Act. See 22 U.S.C. Sec. 4157. Under this authority, the Secretary
established a system of conversion explained in detail in Foreign
Affairs Manual Circular (FAMC) No. 7, Vol. 3 - Personnel, February 13,
1981 (copy enclosed). Of particular relevance to the present inquiry is
Appendix B, "Domestic Pay and Conversion Process," which set out the
conversion process for individuals in Mr. Strawberry's situation.
When the Act was passed, Mr. Strawberry held the position of
Information Officer or Foreign Service Reserve Unlimited (FSRU) Officer
under Part I of the Foreign Service Schedules at the class 2, step 7,
level. As an FSRU Officer at level 2/7, his scheduled rate of
compensation prior to conversion was $62,241 although his rate of pay
was statutorily limited to $50,112.50. See Executive Order No. 12248,
October 16, 1980.
Upon passage of the Act Mr. Strawberry was to be converted to the
Senior Foreign Service without suffering a reduction in his class, grade
or basic rate of salary. That is, he was to be placed in the SFS in a
level comparable to his former FSRU level. Also, he was entitled to be
converted later to the General Schedule without reduction in his class,
grade or basic rate of salary. Thus, we must examine what transpired
upon the initial conversion in 1981 and the subsequent conversion in
1984, although, as will be illustrated below, it was the initial
conversion that was the critical one.
The Senior Foreign Service was set up under Executive Order No.
12293, February 23, 1981. The SFS adopted the SES levels and pay scales
set out in Executive Order No. 12248, October 16, 1980, so that the
SFS, as did the SES, had six levels with the scheduled rates ranging
from $52,247 for SFS-1 to $61,600 for SFS-6. The actual rate of pay,
with certain exceptions not relevant here, for all SES levels was
limited to $50,112.50.
Mr. Strawberry and all FSRU's at level 2/7 were placed in SES level 4
with a scheduled rate of pay of $57,673 and an actual rate of pay of
$50,112.50. Mr. Strawberry has two basic complaints about this initial
conversion process, namely that he suffered reductions in both grade and
basic rate of salary.
His complaint relative to his reduction in grade appears to arise
from certain agency forms he received which are ambiguous. In regard to
his conversion, the agency sent Mr. Strawberry a Notification of
Personnel Action dated January 15, 1982, effective September 28, 1981,
to which you refer in your letter, advising him that his grade had been
changed from "0207" to "0204." Subsequently he received a corrected
Notification of Personnei Action dated March 11, 1982, which again
seemed to indicate his grade had been changed from 02/07 to 02/04. Mr.
Strawberry indicates the belief that he may have been arbitrarily
reduced from FSRU class 2, step 7, to FSRU class 2, step 4. From a
perusal of the forms and an agency letter explaining their meaning, we
could not establish if his interpretation was correct, although we noted
that the forms indicated that no reduction in salary would result from
the personnel action. Therefore, we informally contacted the agency and
were advised that the change on the form should be read as an 02/07
being changed to SFS level four. The "0204" means that Mr. Strawberry
was a former class 2 foreign service officer being converted to SFS
level 4. Thus, the agency had not reduced Mr. Strawberry's grade.
In view of the above, the only real issue is whether Mr. Strawberry
suffered a reduction in his basic rate of salary since his new scheduled
rate (at SFS level 4) was less than his former scheduled rate. In this
regard Mr. Strawberry suggests that his agency should have converted him
to SFS level 6 since his scheduled rate as an FSRU 2/7 was slightly in
excess of an SFS-6.
Obviousiy, had Mr. Strawberry simply been converted into the SFS on
the basis of placing him in the level with the scheduled salary most
nearly approximating his under the repealed Foreign Service Schedule, he
would have been placed in level SFS-6 which had a scheduled pay rate of
$61,300. This type action, however, does not appear to be mandated by
the Act. The Department of State, recognizing the discretion afforded
to it as the agency responsible for implementing the Act, chose not to
convert former FSRU's at level 2/7 to SFS-6 since this effectively would
have given these individuals an increase in their class or grade.
Specifically an FSRU 2/7 was not the top grade or class under the
Foreign Service Schedule and, therefore, need not have been placed at
the top grade or class under the SFS.
The agency devised a system whereby individuals such as Mr.
Strawberry would suffer no loss in either their scheduled rate of pay or
their actual rate of pay. Since both before and when placed on the SFS
schedule Mr. Strawberry was receiving the maximum amount payable by law,
$50,112.50, it is clear that he suffered no loss of actual pay.
The agency, however, also ensured that he would never suffer a loss
in his scheduled rate of pay of $62,241. The agency ensured that Mr.
Strawberry's previous scheduled rate would be maintained when he was
placed in SFS-4, which had a scheduled rate of $57,673, by providing him
a special "protected rate" of $62,241. The "protected rate" was the
rate of pay Mr. Strawberry could receive unless precluded by some other
law. For example in 1981, Mr. Strawberry was statutorily limited to
actual pay of $50,112.50 although his scheduled rate as an SFS-4 was
$57,673. If, however, the statutory maximum had been $63,000 in 1981,
Mr. Strawberry would have been paid at the "protected rate" of $62,241
although his scheduled rate as an SFS-4 was only $57,673.
Thus, Mr. Strawberry never had his scheduled rate of pay reduced.
During the 3-year period he was paid as an SFS-4, he was always entitled
to receive the "protected rate" of $62,241 if this was more than the
scheduled rate for SFS-4 but less than the maximum payable under the
law. In fact he never received pay at the protected rate, since for
fiscal years 1981 and 1982, both the scheduled rates and protected rates
for Mr. Strawberry exceeded the maximum rate payable under the law. In
fiscal year 1983, he no longer had a "protected rate," since his
scheduled rate of $63,800 as an SFS-4 exceeded his "protected rate."
When Mr. Strawberry's 3-year period of entitlement to be paid under
the SFS ended, he was being paid $66,400 as an SFS-4. See Executive
Order No. 12477, May 23, 1984 (effective the first pay period beginning
after January 1, 1984). At this point, the agency converted him to the
General Schedule at grade 16, step 5, at scheduled salary of $67,119,
which was limited to a maximum payable rate of $66,400 at that time.
Thus, the agency ensured that Mr. Strawberry suffered no reduction in
class, grade or basic salary.
Mr. Strawberry suggests, however, that he should have been converted
to the General Schedule at grade 16, step 7, on the basis that had he
originally been converted to SFS-6 then upon conversion to the General
Schedule, he would have been a grade 16, step 7. Since it appears that
the agency's action of placing him in SFS-4 was consistent with the law,
the agency correctly placed Mr. Strawberry in grade 16, step 5.
Also, it should be noted that at all times since his conversion to
the schedule, Mr. Strawberry's scheduled rate as a grade 16, step 5, has
been in excess of the maximum payable in law. Therefore, even if he had
been converted to a step 7, he would not have received any greater
remuneration.
Accordingly, Mr. Strawberry suffered no reduction in basic rate of
pay and his conversion to the General Schedule, consistent with FAMC No.
7, Vol. 3, was in accord with the provisions of the Foreign Service Act
of 1980.
Sincerely yours,
Comptroller General
of the United States
Enclosures
Matter of: Hooven Allison--Request for Reconsideration
File: B-224785.2
Date: March 6, 1987
DIGEST
1. Where it is unclear from record when the protesterwas advised that
its bid had been found nonresponsive, anevent which would start the time
for filing a protest running, protest filed with the General Accounting
Office following denial of an agency-level protest against agency
determination that firm's bid was nonresponsive will not be considered
untimely for failure to file initial timely protest with agency.
2. Bid for the supply of rope, submitted on the basis of price per
pound, rather than price per reel as required by the solicitation, is
nonresponsive where bid does not contain precise basis to convert price
per pound to price per reel and thus bidder's price per reel cannot be
determined from the face of the bid.
3. When a bidder does not bid on the precise quantity, measurement or
volume called for in the invitation for bids, the bid must be rejected
as nonresponsive unless the intended price for the proper quantity,
measurement, or volumecan be determined from the face of the bid or the
effect orthe deficiency on the price of the bid is clearly de minimus
and waiver would not be prejudicial to other bidders.
DECISION
Hooven Allison requests reconsideration of our decision in Hooven
Allison, B-224785, Oct. 10, 1986, 86-2 C.P.D. P 423, in which we
dismissed as untimely Hooven's protest of the General Services
Administration's (GSA) rejection of Hooven's bid as nonresponsive under
invitation for bids (IFB) No. 7PRT-52878/B5/7SB. Hooven's bid was
rejected because the firm bid on the basis of "per pound" of rope
instead of "per reel" as required by the IFB Schedule and Hooven's price
per reel could not be determined from its bid. Hooven not only objected
to the rejection of its bid but claimed the IFB was ambiguous as to the
requirement to bid "per reel."
On reconsideration, we reverse our dismissal of Hooven's protest,
consider it on the merits and deny it.
We dismissed Hooven's protest as untimely under our Bid Protest
Regulations which require that protests be filed with either the
contracting agency or our Office within 10 working days after the basis
of the protest is known or should have been known, whichever is earlier.
4 C.F.R. Sec. 21.2(a) (2) (1986). Hooven's protest submissions
indicated that Hooven's protest to the agency, filed on September 4,
1986, was untimely since it was filed more than 10 working days after
August 13, when Hooven first learned that the agency had concluded its
bid was nonresponsive and would not be considered for award. See 4
C.F.R. Sec. 21.2(a) (2); AMI Industries, Inc., B-222561, June 5, 1986,
86-1 C.P.D. P 527. Where, as in this case, a protest is first filed
with the contracting agency, a subsequent protest to our Office will be
considered timely only if the initial protest was timely. 4 C.F.R. Sec.
21.2(a) (3). Since we concluded that Hooven's initial protest to the
agency was not timely filed, the subsequent protest to our Office filed
on September 25 was also untimely and could not be considered on the
merits. AMI Industries, Inc., B-222561, supra. We also noted that the
fact that the agency considered the untimely protest on the merits did
not alter this result, since our timeliness regulations may not be
waived by action or inaction of a procuring activity. Ardrox, Inc.,
B-221241.2, Apr. 30, 1986 86-1 C.P.D. P 421.
In its request for reconsideration, Hooven confirms that the
contracting officer advised it on August 13 that its bid was
nonresponsive and of the basis for her decision. Hooven also admits
that GSA discussed with Hooven its right to protest if it disagreed with
the decision. Hooven states, however, that when it asked the
contracting officer if it would receive a written notice of the agency's
position, it was told that it would, but because of a heavy workload,
the contracting officer could not state when it would be sent. Hooven
states it was never advised at this meeting that the contracting
officer's decision was "official" or that under our Bid Protest
Regulations, Hooven had 10 working days to file its protest. Hooven
asserts that it acted diligently in pursuing a written decision from GSA
that its bid was nonresponsive and that GSA never advised it of the
filing rules under our Bid Protest Regulations, even though Hooven
continued to ask about its options if it disagreed with the decision.
In response to Hooven's request for reconsideration, we requested
that GSA provide us with a complete report concerning the circumstances
of Hooven's protest and its merits. GSA argues that our dismissal of
Hooven's protest as untimely was correct and should be affirmed.
Although we have stated that an oral notification of the basis for
protest is sufficient to begin the 10-day period for filing a protest
running, and that a protester may not delay filing of protest until
receipt of written confirmation of the contracting agency's position,
see Koenig Mechanical Contractors Inc., B-217571, Apr. 4, 1985, 85-1
C.P.D. P 389, it is not clear from the record of the August 13 meeting
that Hooven understood that the contracting officer had made a
final determination that the firm's bid was nonresponsive. Rather,
it appears that the protester viewed the meeting as informational and as
an opportunity to present the firm's position before a determination of
nonresponsiveness was made. In this connection, the contracting
officer's memorandum of the meeting states that:
" Hooven wanted to know if our Legal Counsel or Engineering
department could override my decision. I told him that I was
required to obtain legal concurrence on the determination of
non-responsiveness and would be required to obtain legal
concurrence of my response to a protest. . . "
It appears from this record that Hooven reasonably may have believed
that a final decision to reject its bid had not yet been made and that
it had a right to wait for this determination. It is our practice to
resolve doubts about timeliness in favor of the protester. Consolidated
Bell, Inc., B-220412, Feb. 6, 1986, 86-1 C.P.D. P 136. We shall
therefore consider the protest on the merits.
Hooven's bid was rejected because Hooven bid on the basis of per
pound of rope, not per reel as required by the IFB Schedule and Hooven's
price per reel could not be determined from its bid. Hooven contends
that under the IFB the price per pound could be converted to a price per
reel and thus its bid was responsive.
Initially, Hooven complains that the IFB was ambiguous. Although
Hooven apparently recognizes that the IFB generally called for prices
per reel, it maintains that, under prior solicitations, bidding was
permitted on a price per pound basis and that the current solicitation
failed to highlight the change in unit of measure or otherwise indicate
that price per pound was an unacceptable basis for bidding. We disagree
with Hooven that the IFB was ambiguous.
The solicitation expressly notified bidders that prices were being
solicited on a price per reel basis. The IFB's item description
solicits nylon rope on a 600 foot reel. The packing and packaging
information similarly states the "rope shall be furnished on a reel." In
the IFB Schedule, the unit of rope is indicated as "RL" and a price per
unit is requested in the blank immediately to the right of the letters
"RL," thus indicating that a price per reel of rope was being solicited.
Also, the record indicates that GSA, by an amendment to the IFB,
receipt of which was acknowledged by Hooven, deleted a statement
indicating "prices per pound based on net weight," for items 36-52,
which apparently had been included in the original IFB through
inadvertence. This should further have notified Hooven that GSA was
soliciting reels of rope.
Hooven points out item H of paragraph 6.2 of the specification
provides that ". . . rope shall be purchased on a price per pound
basis. . . ." However, the IFB Schedule, purchase description and
amendment all specify the reel as the unit of purchase and, thus, it
would have been unreasonable for a bidder to rely on this isolated
reference to price per pound. Furthermore, the order of precedence
clause applicable to sealed bidding provides that where there is an
inconsistency in the solicitation, the Schedule (excluding the
specification) takes precedence and here, the Schedule solicits "reels."
Next, Hooven argues that the IFB referred to military specification
(Milspec) MIL-R-173430 and amendment No. 1, dated August 9, 1971, which
would have permitted GSA to convert Hooven's price per pound to a price
per reel. Hooven claims that the weights contained in Table II or Table
III of the Milspec provide an accurate basis for conversion.
Alternatively, the rope industry has specifications issued by the
Cordage Institute which would also permit a basis for conversion of the
bid for evaluation. In rejecting Hooven's bid as nonresponsive because
it failed to submit prices per reel as required by the IFB Schedule, GSA
has also rejected Hooven's contention that the Milspec provides a proper
basis to convert Hooven's prices from "per pound" to "per reel."
Responsiveness is determined as of the time of bid opening and
involves whether the bid as submitted represents an unequivocal offer to
provide the products or services as specified, so that acceptance of it
would bind the contractor to meet the government's needs in all
significant respects. Johnson Moving & Storage Co., B-221826, Mar. 19,
1986, 86-1 C.P.D. P 273. Any bid that is materially deficient must be
rejected; a defect in a bid is material if it significantly affects
price, quality, quantity, or delivery. Johnson Moving & Storage Co.,
B-221826, supra.
When a bidder does not bid on the precise quantity, measurement, or
volume called for in the IFB, the bid must be rejected as nonresponsive
unless the intended price for the proper quantity, measurement, or
volume can be determined from the face of the bid, Tabco Products, Inc.,
B-222632, Aug. 27, 1986, 86-2 C.P.D. P 231, or the effect of the
deficiency on the price of the bid is clearly de minimus, and waiver
would not be prejudicial to other bidders. See, e.g., Leslie & Ellicott
Co., 64 Comp. Gen. 279 (1985), 85-1 C.P.D. P 212.
Neither exception applies here. Hooven bid on a per pound basis and
thus it is not possible to determine its price per reel from the face of
the bid. Although Hooven argues its price per reel could be determined
by converting its price per pound by use of the Milspec incorporated
into the IFB, we are not persuaded that this is the case. GSA points
out that Milspec Table II was not intended for use as a conversion
chart. It asserts that Table II of the Milspec for nylon rope, for
example, is intended for evaluation of the performance of the finished
rope consistent with specified quality assurance provisions. If the
rope does not conform to the dimensions for tolerance and hardness, for
example, contained in Table II, the rope does not meet the IFB
specifications. Table III provides approximate weights, and these
weights also are not for conversion purposes.
In any event, even if we were to assume that the Milspec tables or
some industry standard could be used for conversion of Hooven's bid, we
conclude that Hooven's bid is nonresponsive because its prices per reel
cannot be determined with certainty. Hooven's final submission to our
Office includes a chart in which Hooven provides the results of
converting its bid to prices per reel under Tables II and III of the
Milspec and under the industry specification standard and compares these
prices with those of the low bidders. Hooven's own chart shows its
price per reel changes depending on which conversion factor is used.
For example, for items 1-6, the low bid was $163.40 per unit. When
Hooven's bid of $1.93 per pound is converted to reel, Hooven's bid is
$160.85 per unit using Table II, $165.98 per unit using Table III, and
$167.91 per unit using the Cordage Institute specifications. Thus,
Hooven is low when evaluated using Table II or Table III, but not when
the Cordage Institute specifications are used. In another example,
items 36 to 41, Hooven would be low using Table II, but not low under
Table III. Thus, even accepting the accuracy of this information for
conversion, which GSA challenges, Hooven's actual price still cannot be
determined. Furthermore, we note that after bids had been opened and
GSA asked Hooven to verify its price, in writing, on a "reel" basis,
Hooven sent a letter to GSA giving a breakdown of its bid in terms of
"price per coil." These prices, which in its bid protest calculations
Hooven refers to as its "clarified bid," are in every instance lower
than those prices at which it arrives through its pounds-to-reel
conversion exercise using the Milspec tables and Cordage Institute
weights. In our view, Hooven's bid prices cannot be ascertained from
its bid. Thus, in view of the uncertainty as to Hooven's price per reel
and the fact that under certain scenarios, Hooven clearly displaces the
low bidder, the effect of this deficiency in Hooven's bid clearly is not
de minimus and may prejudice other bidders.
We deny the protest.
Harry R. Van Cleve
General Counsel
B-224782.5
August 6, 1987
DIGESTS
General Accounting Office comments on a proposal to revise paragraph
(c) of Federal Acquisition Regulation Sec. 31.205-43 concerning the
allowability of costs incurred in connection with business meetings by
suggesting that the revised cost principle provide examples of the
classes of individuals intended to be encompassed by the term
"noncontractor personnel."
General Accounting Office has no objection to a proposal to (1) amend
Federal Acquisition Regulation (FAR) Sec. 31.205-6, by adding paragraph
(1) to make unallowable the costs of socalled "golden parachutes" and
"golden handcuffs" and (2) revise FAR Sec. 31.205-27(a) to make
unallowable the costs of resisting a corporate takeover.
Ms. Margaret A. Willis
FAR Secretariat
General Services Administration
Dear Ms. Willis:
This responds to your letter of May 29, 1987, requesting our comments
on two proposed changes to the contract cost principles contained in
Federal Acquisition Regulation (FAR) Sec. 31.205. These are FAR case
Nos. 87-18 and 87-19.
FAR case No. 87-18 is a proposal to revise paragraph (c) of FAR Sec.
31.205-43 to clarify the circumstances under which costs incurred in
connection with meetings, conferences, seminars, and the like are
allowable. Our only comment is that the revised cost principle could be
improved if it were to contain examples of the classes of individuals,
such as speakers or technical experts, that the term "noncontractor
personnel" is intended to encompass.
FAR case No. 87-19 is a proposal to amend FAR Sec. 31.205-6 by adding
paragraph (1) to provide coverage on special compensation paid to a
contractor's employees in connection with changes in management or
control of the contractor or its assets. Costs incurred pursuant to
such compensation agreements, known as "golden parachutes" or "golden
handcuffs," would be unallowable. Also proposed is a revision of
paragraph (a) of FAR Sec. 31.205-27 that would state that costs incurred
in resisting a corporate takeover are unallowable. We have no objection
to these proposed changes.
Sincerely yours,
Harry R. Van Cleve
General Counsel
B-224782.4
July 31, 1987
DIGEST
General Accounting Office is not in favor of proposed revision of
Federal Acquisition Regulation Sec. 31.204(c), which concerns
application of the contract cost principles, because the proposed
revision would not be sufficient to preclude the reimbursement of costs
specifically made unallowable.
Ms. Margaret A. Willis
FAR Secretariat
General Services Administration
Dear Ms. Willis:
This responds to your letter of May 19, 1987, requesting our comments
on a proposal to amend Federal Acquisition Regulation (FAR) Sec. 31.204
(c), which concerns application of the contract cost principles. This
is FAR case No. 85-63.
The Federal Register notice announcing the proposed revision, 52 Fed.
Reg. 15884 (1987), indicates that the change is intended, at least in
part, to implement a recommendation contained in a letter from this
Office to the Secretary of Defense dated May 7, 1985. In that letter,
we noted that while various subsections of FAR Sec. 31.205 list specific
costs as unallowable, other provisions of FAR Subpart 31.2 arguably
provide a basis for concluding that the same costs may be allowable. As
a result, contractors, contracting officers, and Defense Contract Audit
Agency personnel frequently come to different conclusions regarding the
allowability of the same costs, and in some cases reimbursement may be
made, either in full or in part, for costs that the regulations
expressly list as unallowable. We therefore recommended that steps be
taken to amend the FAR to provide that costs specifically made
unallowable under any subsection of FAR Sec. 31.205 are not allowable
under other provisions of FAR Subpart 31.2. Public comments on such an
amendment were solicited in December 1985. 50 Fed. Reg. 51776 (1985).
The latest proposed amendment does not incorporate the provision we
recommended in our 1985 letter. Rather, in essence the amendment merely
suggests that the allowability of a cost be determined under the most
relevant cost principle. While we do not quarrel with the proposition
that the most relevant cost principle should be used in making an
allowability determination, we think the proposed revision will not be
sufficient to preclude the reimbursement of costs specifically made
unallowable. In our view when a cost principle expressly makes a
particular cost unallowable, that principle should be considered the
only one relevant to the question of the allowability of that cost. The
suggestion that another cost principle also may be relevant is contrary,
we believe, to the policy that certain specified costs not be reimbursed
under a government contract. In this connection, we point out that at
least with respect to certain defense contracts, Congress has specified
a number of costs that may not be allowed. See 10 U.S.C. Sec.
2324(e)(1) (Supp. III 1985).
In addition, the proposed amendment provides that when more than one
cost principle may have "reasonable applicability," the rules and
standards of each principle shall be considered in determining the
respective amount of allowable and unallowable costs. This provision
suggests that where the allowability of a particular item is open to
question, the issue may be resolved by allowing part of the item and
disallowing the remainder. In our view, such compromises ought not to
be encouraged, particularly with respect to an item that is specifically
or expressly unallowable under one of the cost principles. In this
connection, Cost Accounting Standard (CAS) 405, "Accounting for
Unallowable Costs" requires that such costs be identified and excluded
from any billing, claim, or proposal applicable to a government
contract. We think that CAS 405 contemplates that contracting officers
will make determinations that particular costs are either allowable or
unallowable rather than make the kind of compromise allocations
seemingly permitted by the proposed amendment.
For the reasons stated, we are not in favor of the proposed change.
We suggest that the words "more relevant" be deleted from the
penultimate sentence of the proposed revision and that the last sentence
be deleted entirely.
Sincerely yours,
Harry R. Van Cleve
General Counsel
B-224782.2
March 27, 1987
DIGEST
General Accounting Office's Office of General Counsel concludes that
the provisions of Department of Defense Federal Acquisition Regulation
Supplement (DFARS) Subpart 231.70 and two contract clauses to be set out
at DFARS Secs. 252.231-7001 and 252.231-7002 are consistent with the
provisions of 10 U.S.C. Sec. 2324 (Supp. III 1985), which pertains to
penalties for the inclusion of unallowable costs in settlement
proposals, and also appear to be consistent with the intent of the
Congress to eliminate the charging of unallowable costs to defense
contracts.
Memorandum
Date: March 27, 1987
To: Associate Director, NSIAD/RDAP - Paul Math
From: Associate General Counsel, OGC - Seymour Efros
Subject: Penalties for Unallowable Costs (B-224782.2)
This responds to your request for our comments on a recent change to
the Department of Defense Federal Acquisition Regulation Supplement
(DFARS) implementing portions of 10 U.S.C. Sec. 2324 (Supp. III 1985),
which concerns unallowable costs under covered defense contracts. Under
10 U.S.C. Sec. 2324(j), this Office is required to evaluate Department
of Defense (DOD) implementation of section 2324 and to report on our
evaluation to specified committees of the Congress within 90 days of
publication in the Federal Register of changes in DOD's regulations
pertaining to unallowable costs. The changes discussed below were
published in the Federal Register as an interim regulation on February
26, 1987.
By way of background, section 2324 of title 10 was enacted as part of
the Department of Defense Authorization Act, 1986, Pub. L. No. 99-145.
The section listed specified costs as unallowable and required DOD to
define in detail by regulation the allowability of other costs. We
issued a report on October 10, 1986, discussing our evaluation of
changes made to the cost principles under section 2324. See Unallowable
Costs: Improved Cost Principles Should Reduce Inconsistent Treatment of
These Costs, GAO/NSIAD-87-11 (Oct. 1986).
Section 2324 also provides for DOD to assess penalties against
contractors whose proposals for settlement of indirect costs contain
unallowable costs. There are three categories of penalties:
(1) If it is determined by clear and convincing evidence that a
cost included in a settlement proposal is unallowable, a penalty
shall be assessed equal to the amount of the disallowed cost plus
interest.
(2) If a contractor includes in a settlement proposal a cost
that had been determined to be unallowable in the case of that
contractor prior to the submission of the proposal, the penalty is
to be twice the amount of the unallowable cost. This is in
addition to the penalty assessed under (1).
(3) If a penalty is assessed under either (1) or (2), DOD may
assess an additional penalty of not more than $10,000.
The interim regulation adds to DFARS Part 231 a new Subpart 231.70,
consisting of section 231.7001, and two contract clauses, to be set out
at DFARS Secs. 252.231-7001 and 252.231-7002, to implement the penalty
provisions of 10 U.S.C. Sec. 2324(a) through (d). The regulation
provides for the administrative contracting officer (ACO) to determine
whether the penalties described in (1) and (2) above should be assessed
and to initiate recommendations to designated officials with respect to
the penalty described in (3). The contract auditor is to make
recommendations to the ACO regarding all penalties. The interim
regulation also provides examples of instances where the ACO may find
that a cost had been determined to be unallowable with respect to a
particular contractor prior to the submission of a settlement proposal.
Finally, the regulation describes how penalties are to be computed and
provides for a rate of interest equal to that determined periodically by
the Secretary of the Treasury under Pub. L. No. 92-41.
From our review of the interim regulation, we conclude that it is
consistent with the provisions of the statute. In addition, the
regulation appears to be consistent with the intent of the Congress to
eliminate instances of unallowable costs being charged to defense
contracts.
Matter of: Major Pablo Rodriguez, USA
File: B-224780
Date: February 24, 1987
DIGEST
In 1983 an Army officer stationed in Pennsylvania, whose permanent
home of record is Puerto Rico, was authorized emergency leave for the
purpose of returning to Puerto Rico to attend a funeral. Due to time
constraints he was unable to use cost-free government air
transportation, and instead he paid for commercial airline tickets to
provide transportation for himself and the members of his immediate
family to Puerto Rico. Since the applicable statutes in effect in 1983
did not provide authority for reimbursement of travel expenses incurred
by personnel of the uniformed services in such circumstances, his claim
for reimbursement of the cost of the airline tickets may not be paid.
In addition, the subsequent amendment of the applicable statutes in 1984
to provide authority for reimbursement of transportation expenses
incurred in such circumstances does not provide a basis for allowing
payment on the officer's claim, since the legislation cannot be applied
retroactively.
DECISION
This action is in response to a request for reconsideration by Major
Pablo Rodriguez of our Claims Group's October 17, 1983 disallowance of
his claim for travel expenses. We affirm the disallowance of the claim.
BACKGROUND
In 1983 Major Pablo Rodriguez (then Captain Rodriguez), a member of
the U.S. Army, was stationed at Tobyhanna Army Depot, Tobyhanna,
Pennsylvania. On February 22, 1983, he was notified of the death of his
mother-in-law in Puerto Rico (his home of record). He applied for and
was authorized emergency leave. He and his family returned to Puerto
Rico.
The emergency leave orders authorized space-available, cost-free
government air travel for Major Rodriguez and his dependents from
Norfolk, Virginia, to Puerto Rico. Major Rodriguez indicates, however,
that the only scheduled flights from Norfolk to Puerto Rico were on
Saturdays, 4 days from the day he needed to travel. Due to the distance
and the nature of the emergency, he purchased commercial air
transportation from New York to Puerto Rico. Upon his return, he
submitted a claim for reimbursement of his travel expenses. The claim
was denied by the Army because the statutes then in effect authorizing
reimbursement for air transportation for emergency leave travel applied
only to members stationed outside the United States.
The matter was then submitted to our Claims Group. The claim was
denied since in 1983 the authority for reimbursement of travel expenses
for service members on emergency leave was limited in the applicable
statutes and regulations, to those members assigned to a duty station
outside the United States. Thus, there was no authority for
reimbursement of his expenses. Major Rodriguez has recently requested
reconsideration of the matter.
ANALYSIS AND CONCLUSION
Section 411d of title 37, United States Code, as in effect in 1983,
authorized reimbursement of commercial transportation expenses incurred
by service members on emergency leave only when they were stationed
outside of the continental United States and government transportation
was not reasonably available. In Public Law 98-525, October 19, 1984,
98 Stat. 2492, Congress amended 37 U.S.C. Sec. 411d to authorize
reimbursement of emergency leave transportation expenses to service
members domiciled overseas who were assigned to duty stations within the
United States. The legislative history of the amendment contains this
explanation concerning its purpose:
"Section 411d of title 37, United States Code, authorizes
government-funded emergency leave travel from an overseas duty
station to the continental United States, Alaska, Hawaii, the
Commonwealth of Puerto Rico and the possessions of the United
States for members of the uniformed services and their dependents.
The law does not authorize, however, members and dependents
stationed in the continental United States to travel to overseas
locations. This could create a significant financial burden on
members of the armed forces from the possessions of the United
States, such as Guam, who must return home because of family
crises.
"The committee recommends expansion of the present emergency
leave authority to include transportation for military members and
their dependents from the continental United States to overseas
areas. In all cases, this transportation would be authorized only
if government transportation were not reasonably available." H.R.
Rep. No. 691, 98th Cong., 1st Sess. 261, reprinted in 1984 U.S.
Code Cong. & Ad. News 4174, 4218.
Thus, effective October 19, 1984, statutory authorization for
government-funded emergency leave travel was extended to service members
stationed in the continental United States whose permanent home or
domicile is overseas. This legislation cannot be given retroactive
effect, however, and it provides no authority for government-funded
emergency leave travel to service members who, like Major Rodriguez,
performed such travel to overseas locations prior to October 19, 1984.
Compare 31 Comp. Gen. 305 (1952).
Accordingly, we sustain the denial of Major Rodriguez' claim for
reimbursement of the expenses of the emergency leave travel he and the
members of his family performed in 1983.
Comptroller General
of the United States
Matter of: Technical Sergeant James A. Lyles
File: B-224779
Date: May 21, 1987
DIGEST
1. A retired Air Force Sergeant who was employed in a civilian
capacity for 15 years by the Postal Service following his military
retirement, and who then waived his military retired pay in order to
have his military service time added to his civilian service for civil
service retirement purposes, is no longer eligible for military Survivor
Benefit Plan (SBP) coverage for his wife, since under the applicable
statutes his election to have civil service survivor annuity coverage
for her based on his combined Federal military and civilian service
operated to preclude continued SBP coverage.
2. A retired Air Force Sergeant provided Survivor Benefit Plan (SBP)
coverage for his wife while he was in receipt of military retired pay.
He later waived his military retired pay and relinquished the SBP
coverage when he elected to apply his military service toward a civil
service retirement. He is not entitled to a refund of amounts deducted
from his retired pay to cover SBP costs during the period he had SBP
coverage. During that period he had the protection of SBP coverage for
his wife and he paid the appropriate costs. His later election to
combine his military and civilian service for civil service retirement
purposes, and his resulting conversion of SBP coverage to civil service
survivor annuity coverage for his wife, may not serve as a basis for a
refund of the SBP costs.
DECISION
This decision is in response to an appeal submitted by Technical
Sergeant James A. Lyles, USAF (Retired), for reconsideration of our
Claims Group's disallowance of his claim for refund of the amounts he
paid for Survivor Benefit Plan (SBP) coverage during the period
1972-1985. We conclude that his claim was properly disallowed.
BACKGROUND
Sergeant Lyles retired from active military duty after more than 20
years'service in the Air Force on November 1, 1970. On December 28,
1972, he elected survivor annuity coverage under the SBP, designating
his wife as his beneficiary. He thus elected to receive military
retired pay at a reduced rate, to pay for the costs of the SBP coverage,
in order to provide an annuity for his wife in the event she survived
him.
Sergeant Lyles became employed in a civilian capacity with the U.S.
Postal Service after he was separated from military duty in 1970. He
later retired from the Postal Service on August 2, 1985, when he reached
age 55. He waived his military retired pay in order to add his military
service to his civilian service for civil service retirement purposes,
so that he could qualify for a civil service retirement annuity at age
55 on the basis of more than 30 years' total Federal Service. As a
result, he ceased receiving military retired pay and instead began to
receive a civil service retirement annuity computed on the basis of his
combined total years of Federal military and civilian service. He also
received civil service survivor annuity coverage for his wife, with that
survivor annuity to be computed on the basis of his combined military
and civilian service.
The Air Force Accounting and Finance Center then advised Sergeant
Lyles that his SBP coverage and costs were suspended. Sergeant Lyles
claimed a refund of the SBP coverage costs he had paid between December
1972 and August 1985, contending the refund should be paid because he
had never been informed and did not understand that he would lose SBP
coverage if he elected to waive his military retired pay in order to
receive credit for his military career for civil service retirement and
survivor annuity purposes. The Air Force and our Claims Group denied
his claim, and he has requested our further review.
ANALYSIS AND CONCLUSION
The Survivor Benefit Plan, 10 U.S.C. Secs. 1447-1455, is an income
maintenance program for the surviving dependents of retired service
members. The Plan was established on September 21, 1972, with the
enactment of public Law 92-425, 86 Stat. 706. Although the legislation
was designed primarily to benefit the families of service members who
became eligible for retirement after September 21, 1972, subsection 3(b)
of public Law 92-425 gave service members like Sergeant Lyles who had
retired prior to that date an opportunity within specified time limits
to participate in the Plan also. Elections to participate in the Plan
by retirees, including those who retired prior to September 21, 1972,
are binding and irrevocable See 55 Comp. Gen. 158 (1975), and 53 Comp.
Gen. 470, 474 (1973).
Under 10 U.S.C. Sec. 1450 (d), a retired service member who elects
SBP coverage for his spouse and later waives his retired pay for the
purpose of including his military service time in the computation of a
civil service retirement and survivor annuity is entitled to civil
service survivor annuity coverage only. The retiree, who otherwise may
not voluntarily withdraw from the SBP, must withdraw from the Plan once
he waives his retired pay and elects the civil service survivor annuity.
Under 10 U.S.C. Sec. 1452(e) he is no longer required to make payments
to the Plan as long as his waiver is in effect. In addition, however,
10 U.S.C. Sec. 1452(f) prohibits refunds of amounts previously deducted
from military retired pay for the costs of SBP coverage, unless the
amounts were deducted through "administrative error." or, upon the death
of the retiree, no annuity is payable to the beneficiary of the SBP
because of the beneficiary's receipt of Dependency and Indemnity
Compensation from the Veterans Administration. See 55 Comp. Gen. 684
(1976).
These features were included in the original 1972 SBP legislation.
The legislative history of the enactment provides this explanation:
"Military retirees who, after retirement, work in the Federal
civil service and subsequently become eligible to retire from the
civil service may waive their military retired pay and use their
military years of service to increase their civil service
benefits. S. 3905 would not allow a duplication of survivor
benefits based on the same years of service. * * * When a military
retiree waives his military retired pay to increase civil service
retirement benefits and elects to join the civil service retirees
survivor benefit plan, he would cease to contribute to the
military plan during the time his waiver is in effect.
* * * * *
"An example is useful in explaining the application of the
above recommendation. Assume a member retires from the military
with 20 years of service, serves 10 years in the civil service,
and retires from the civil service. Prior to retirement from the
civil service, he would receive military retired pay and
participate in the military survivor benefit plan based on 20
years of service. When he retires from the civil service, he can
waive his military retired pay, receive civil service retired pay
based on 30 years of service, participate in the civil service
retiree survivor benefit plan based on 30 years of service and
cease participation in the military survivor benefit plan based on
20 years of service." Sen. Rep. No. 1089, 92d Cong., 2d Sess.,
reprinted in 1972 U.S. Code Cong. & Ad. News 3288, 3301.
Consistent with the foregoing, we have expressed the view that
survivor benefits may not be paid to an individual under the Civil
Service survivor annuity program and simultaneously under the SBP. See
59 Comp. Gen. 225, 228 (1980).
In the present case, therefore, it appears that Sergeant Lyles
properly elected to participate in the SBP in 1972, and that he was
properly assessed costs for SBP coverage from that time until the time
he waived his military retired pay for civil service retirement purposes
in 1985. His participation in the SBP at that time was not a matter of
"administrative error," and if he had died at any time during that
period, his wife would have become entitled to an SBP annuity.
It further appears that under the laws governing the SBP program,
Sergeant Lyles properly withdrew from that program in 1985 by combining
his military service with his Federal civilian service for civil service
retirement purposes, thus in effect converting from SBP to civil service
survivor annuity coverage. As indicated, his wife is now eligible to
receive a larger civil service survivor annuity based on his total
military and civilian service, if she survives him.
We are unable to find a proper basis, however, for allowing Sergeant
Lyles' claim for a refund of his costs of SBP coverage between 1972 and
1985. During those years he had the protection of SBP coverage for his
wife, and he paid the necessary costs. While it is fortunate that his
wife did not have the occasion to apply for an SBP annuity during those
years, a refund of the costs may not be allowed on that basis.
Furthermore, he may not be allowed a refund on the basis of his election
to convert his SBP coverage to coverage under the Civil Service
Retirement System, notwithstanding that he may not have fully understood
that his SBP coverage would terminate upon that conversion.
Accordingly, we sustain the denial of Sergeant Lyles' claim.
Acting Comptroller General
of the United States
B-224777
February 10, 1987
Digest
The Equal Employment Opportunity Commission (EEOC) requests GAO's
comments on a proposed regulation which assigns the Comptroller General
a role in EEOC's enforcement of its appellate decisions on federal
discrimination complaints. We advise EEOC that we object to the
proposed regulation because: (1) we are aware of no specific legal
authorization for the proposed enforcement arrangement; (2) our
authority to settle claims under 31 U.S.C. Sec. 3702 (a) does not
empower us to enforce other agencies' legal determinations; and (3) we
have traditionally declined to become involved in federal employment
discrimination matters, in view of EEOC's statutory authority for
handling those matters.
Richard D. Komer, Esq.
Acting Legal Counsel
United States Equal Employment
Opportunity Commission
Washington, D.C. 20507
Dear Mr. Komer:
By letter of September 18, 1986, you asked us to comment on one of
the Equal Employment Opportunity Commission's proposed amendments to 29
C.F.R. Part 1613, the regulations which govern EEOC's processing of
discrimination complaints filed by federal employees under section 717
of Title VII of the Civil Rights Act of 1964, as amended, 42 U.S.C.
Sec. 2000e-16 (1982). The proposed amendment in question, 29 C.F.R.
Sec. 1613.239, 51 Fed. Reg. 29,482, 29,491 (1986), establishes a
procedure through which EEOC may enforce its appellate decisions
ordering remedial action in favor of an employee in the event that the
employing agency refuses to comply with the decision. Proposed section
1613.239(c) assigns the Comptroller General of the United States a role
in the enforcement process, stating:
"(c) Certification to the Comptroller General. Where
appropriate, the Commission may certify an agency's refusal to
comply with a decision rendered by the Commission in accordance
with the Comptroller General's authority to adjust all claims or
demands against the Government pursuant to 31 U.S.C. 71 now 31
U.S.C. Sec. 3702(a) ."
You explain in your letter that EEOC has proposed the above-quoted
provision because it does not have authority under section 717 of Title
VII to enforce its own decisions. You suggest that the Comptroller
General has authority to enforce EEOC's decisions by virtue of 31 U.S.C.
Sec. 3702(a) (1982), which provides that the Comptroller General shall
settle all claims by or against the government. Additionally, your
staff explained to us that one enforcement method contemplated by 29
C.F.R. Sec. 1613.239(c) would involve the withholding of payfrom the
agency official who refuses to implement EEOC's decision.
We object to issuance of the proposed amendment in 29 C.F.R. Sec.
1613.239(c) because we find no legal basis sanctioning the proposed
enforcement arrangement. Section 717 of Title VII does not itself
authorize EEOC to certify an agency's failure to comply with its
decisions to the Comptroller General or to order the withholding of pay
from a noncomplying agency official, and we are not aware of any other
source providing such authorization. In contrast, we note that
reculations of the Merit Systems Protection Board (MSPB) which are
contained in 5 C.F.R. Sec. 1201.184 (1986) and prescribe an enforcement
process similar to that which EEOC now proposes are based on 5 U.S.C.
Sec. 1205(d) (2) (1982), which specifically empowers MSPB to enforce its
final decisions by ordering the withholding of pay from a noncomplying
agency official and certifying this withholding order to the Comptroller
General.
In the absence of specific legal authority for the enforcement
arrangement proposed in 29 C.F.R. Sec. 1613.239(c), we do not agree that
the arrangement falls within our claims settlement jurisdiction under 31
U.S.C. Sec. 3702(a). Our authority under section 3702(a) to settle
claims by and against the government permits us to administratively
determine the validity of a claim, not to enforce legal determinations
made by other agencies.
Finally, in view of the exclusive administrative authority which
section 717 of Title VII grants to EEOC, we have traditionally declined
to become involved in EEOC's processing of federal discrimination
complaints. See 62 Comp. Gen. 239, 242 (1983); Clem H. Gifford,
B-193834, June 13, 1979. We have been willing to issue legal decisions
only on questions concerning the legality of awards agreed to by
agencies in the informal settlement of discrimination complaints, and
our assumption of jurisdiction in that context is based on our authority
under 31 U.S.C. Sec. 3526 (1982) to determine the legality of
expenditures of appropriated funds. See 62 Comp. Gen. 239, cited above.
Accordingly, for the foregoing reasons, we urge that you delete the
proposed provisions of 29 C.F.R. Sec. 1613.239(c) from the final
regulations in Part 1613.
Sincerely yours,
Harry R. Van Cleve
General Counsel
Matter of: William H. Selzer Jr. - Real Estate ExpensesChanges of
Official Station
File: B-224775
Date: April 7, 1987
DIGEST
An employee may not be reimbursed for several real estate expense
items incurred incident to two changes of official station since the
expenses were determined not to be customarily paid by the seller or
purchaser, as applicable in each case. In addition, the costs incurred
in termination of a lease are not reimbursable since the payment was not
required by the terms of the lease and did not otherwise meet the
conditions of the applicable regulation. A loan origination fee
incurred in 1974 may not be reimbursed under the regulation in effect at
that time. However, the employee may be reimbursed for the cost of an
appraisal fee incurred in connection with his purchase of a residence
since, under a conventional loan in that area, the purchaser is
customarily required to pay an appraisal fee.
DECISION
Mr. William H. Selzer, Jr., a former employee of the Immigration and
Naturalization Service (INS), Department of Justice, has appealed
Settlement Certificate Z-2621210, November 7, 1977, issued by our Claims
Group, which disallowed his claim for reimbursment of certain relocation
expenses incurred in connection with two changes of his official duty
station in 1971 and 1973. For the reasons stated later in this
decision, we sustain the Claims Group's settlement action, in part, and
overrule the disallowance of one claimed expense.
BACKGROUND
The INS authorized a change of official station for Mr. Selzer from
the Virgin Islands to Phoenix, Arizona, in July 1971, and from Phoenix
to Tucson, Arizona, in November 1973. Mr. Selzer submitted travel
vouchers in which he claimed reimbursement for certain real estate
expenses incurred in the two changes of duty stations. Some of the
claimed expenses were allowed by INS, while other expenses were
disallowed. In his letter of appeal, Mr. Selzer seeks reimbursement of
the expenses which were disallowed by the INS, and he cites to our
decision, William I. Massengale, B-185863, August 25, 1976.
In connection with his transfer from the Virgin Islands to Phoenix,
Arizona, Mr. Selzer is claiming reimbursement for the expenses he
incurred in the termination of a lease in the Virgin Islands. He is
also seeking reimbursement for an appraisal fee incurred incident to his
purchase of a residence in Phoenix. Incident to his transfer from
Phoenix to Tucson, Arizona, and the sale of his residence in Phoenix,
Mr. Selzer is seeking reimbursement of a mortgage title insurance fee,
an appraisal fee, a credit report, a loan service fee, a document
preparation fee, a photo and inspection fee, a bringdown fee, an escrow
fee, and a charge for repairs to a bathroom. In regard to the purchase
of a residence in Tuscon, Mr. Selzer is claiming the costs of a credit
report and a loan origination fee.
OPINION
The authority for reimbursement of real estate expenses incurred by
an employee pursuant to a change of official station is contained in 5
U.S.C. Sec. 5724a and the implementing regulations, Office of Management
and Budget (OMB) Circular NO. A-56 (revised June 26, 1969) and the
Federal Travel Regulations (FTR), FPMR 101-7, May 1973. Under both sets
of regulations, certain real estate expenses are reimbursable provided
they are "customarily" paid by the seller or purchaser in localities
where the old and new residences are located. OMB Circ. No. A-56, para.
4.2d, and FTR para. 2-6.2d. Further, this Office has also held that
the "custom" may vary in accordance with the type of financing, i.e.,
Federal Housing Administration (FHA), Veterans Administration (VA), or
conventional, which is utilized in the sale or purchase transactions.
See Barry C. Nilson, B-218946, November 12, 1985; Judi A. Williams,
B-205584, August 2, 1982; and Massengale, cited above.
With respect to the expenses incurred by Mr. Selzer in the
termination of the lease on his living quarters in the Virgin Islands,
there is no indication that the payment of expenses involved in the
settlement of the lease was required by the terms of the lease or that
such payment met the other conditions set forth in OMB Circ. A-56, sec.
4.2f. Therefore, we find no basis to overturn our prior determination
denying reimbursement for lease termination expenses.
The next item concerns the cost of the appraisal fee paid by Mr.
Selzer in the purchase of a residence in Phoenix under a conventional
loan. The agency and our Claims Group previously denied the claim on
the basis that it was customary for the seller to pay the appraisal fee
in that area. However, the record indicates that while the seller
customarily paid the appraisal fee for FHA or VA financing, the buyer
typically paid the appraisal fee for conventional loans. Therefore, the
claim was denied without taking into consideration the specific type of
loan involved in the purchase. Since Mr. Selzer purchased a residence
in Phoenix under a conventional loan and since the FHA states that in
these circumstances the purchaser customarily paid the appraisal fee, we
conclude that Mr. Selzer is entitled to reimbursement of the $60
appraisal fee which he paid. See Williams, and Massengale, cited above.
As to other expenses incurred by Mr. Selzer in the sale of his
Phoenix residence, the Department of Housing and Urban Development (HUD)
(successor agency to the FHA) advised INS that in the Phoenix area,
these expenses were customarily paid by the purchaser. In determining
whether certain real estate closing costs are customarily paid by the
seller or buyer in a given locality, FTR para. 2-6.3c states that the
local HUD office should be consulted. Since the local HUD office
advised INS that the previously enumerated expenses are customarily paid
by the purchaser, Mr. Selzer may not be reimbursed for these expenses.
See 54 Comp. Gen. 827 (1975), and Burton Newmark, B-190715, March 24,
1978.
Mr. Selzer also claimed reimbursement of two additional expenses
incurred in the sale of his Phoenix residence, an escrow fee ($111) and
repairs to a bathroom ($25). The INS allowed and paid one-half of the
escrow fee service since, in the Phoenix area, it was the prevailing
customary practice for the seller and the purchaser each to pay onehalf
of the escrow fee. This treatment of the escrow fee by INS was proper
and in accordance with FTR para. 2-6.2d. The cost of repair to the
bathroom is a maintenance cost which, in accordance with FTR para.
2-6.2d, may not be reimbursed.
In regard to the purchase of his residence in Tucson, Mr. Selzer
claimed reimbursement for the costs of a credit report ($25) and a loan
origination fee ($422.50). The INS reimbursed Mr. Selzer the sum of $15
for the credit report upon the advice of the local HUD office that the
reduced amount was considered to be reasonable and customary. This
reduction appears to be proper. See 54 Comp. Gen. 827 and Newmark,
cited above. With respect to reimbursement of the loan origination fee,
at the time Mr. Selzer purchased his residence in Tucson, FTR para.
2-6.2d specifically precluded reimbursement of loan origination fees.
Therefore, reimbursement was properly denied.
In accordance with the above discussion, we will instruct our Claims
Group to issue a settlement to Mr. Selzer for reimbursement of the cost
of the appraisal fee incurred in the purchase of a residence in Phoenix,
Arizonia.
Comptroller General
of the United States
Matter of: James H. Bahti - Foreign Service Retirement Separation
Travel
File: B-224767
Date: July 10, 1987
DIGEST
A State Department employee retired from the Foreign Service on
December 31, 1983, and timely performed domestic separation travel from
McLean, Virginia, to his designated place of residence, Tucson, Arizona.
The State Department questions whether he may be reimbursed since he
did not establish a residence in Tucson, but returned to his residence
in McLean. The Foreign Affairs Manual states that an employee who
retires from the Foreign Service is entitled to travel to a designated
place of residence in the United States, provided that the travel is
performed within 6 months of separation, unless extended. Since the
employee traveled before the extended deadline, he is entitled to be
reimbursed his travel expenses even though he did not establish a
residence in Tucson.
DECISION
This decision is in response to a request from the Office of
Financial Operations, Department of State, concerning the entitlement of
a Foreign Service officer to be reimbursed for travel expenses incident
to his retirement on December 31, 1983. We conclude that he is entitled
to reimbursement for the following reasons.
BACKGROUND
Mr. James H. Bahti, a Foreign Service Officer, after service abroad,
retired from the Foreign Service in Washington, D.C., on December 31,
1983. Earlier that month, Mr. Bahti was issued travel orders
authorizing official separation travel from Washington, D.C., to Tucson,
Arizona, by privately owned vehicle, plus travel per diem, as authorized
by Volume 6 of the Foreign Affairs Manual (6 FAM). Mr. Bahti had
designated Tucson, Arizona as his residence for service separation prior
to his retirement. See 3 Foreign Affairs Manual 124.3b(3) (3 FAM).
Pursuant to his travel orders, Mr. Bahti performed travel from
McLean, Virginia, to Tucson, Arizona, on September 19, 1984, as
separation travel. After remaining in Tucson several months, he decided
not to retire at that location. He returned to his McLean residence in
early December 1984, where he continues to reside.
Incident to that travel Mr. Bahti had requested and received a $1,400
travel advance on August 14, 1984. Not until July 2, 1986, did he file
his travel voucher claiming $1,331.78 in expenses against the advance.
After adjustment, a total of $1,164.02 was initially allowed. However,
when it was noted that his residence address was still McLean, Virginia,
an administrative challenge to this entitlement was asserted since it
did not appear that he had performed travel to Tucson for the purpose of
residing there. The agency now questions whether Mr. Bahti properly
effected separation travel as contemplated under the regulations. Mr.
Bahti, in turn, argues that the travel he and his wife performed to
Tucson was for the purpose of establishing a separation residence. He
says that, because they did not find suitable quarters there and for
other reasons, they decided not to establish a retirement residence in
the Tucson area, and instead they returned to their home in McLean,
Virginia.
The question asked by the agency is whether Mr. Bahti's trip to
Tucson, Arizona, qualified under the law and regulations as separation
travel since he did not establish residence at that location.
OPINION
The law governing travel, leave and other benefits for members of the
Foreign Service is contained in Title I, section 901 of Public Law
96-465, October 17, 1980, 94 Stat. 2071, 2124, 22 U.S.C. Sec. 4081
(1982), which provides that the Secretary may pay the travel and related
expenses of members of the Service and their families. Regulations
implementing these provisions are contained in 3 FAM and 6 FAM. Thus, 3
FAM 782.1 provides general eligibility standards for travel and shipment
of household effects of employees separating from the Foreign Service.
This authority is expanded in 6 FAM 125.7, under the heading of
retirement and other separation travel, which provides that official
travel and transportation may be authorized for Foreign Service
personnel, their families, and effects, from their post to a designated
place of residence" in the United States, it possessions, or the
Commonwealth of Puerto Rico. If the employee elects to reside at other
than the designated place of residence, his expenses are allowed,
limited to the constructive cost to his designated place of residence.
Accordingly, the issue to be decided is whether Mr. Bahti qualifies
for reimbursement of separation travel to his designated place of
residence, even though he did not establish a residence there.
This Office has decided a case concerning an employee's entitlement
to travel and transportation of effects to a designated place of
residence upon retirement under similarly worded predecessor regulations
in 6 FAM 125.9. In June Purcilly, B-181475, February 19, 1975, a United
States Information Agency (USIA) employee retired and traveled from Laos
to her designated place of residence in Naples, Florida. Since the
employee had decided to retire and live in Spain, the USIA denied her
request for reimbursement for her travel and shipment of household goods
to her designated place of residence in Naples, Florida, and limited her
entitlement to the cost of travel and shipment from Laos to Spain. We
held that under the provisions of 6 FAM 125.9 (now 6 FAM 125.7) a
separated employee has a vested right to return travel from an overseas
post to his or her designated place of residence in the United States
unless travel is requested to an alternative location.
Since Miss Purcilly exercised her right to travel to her designated
place of residence in the United States and traveled within the time
limitation prescribed in 6 FAM 132.2, we allowed reimbursement for such
travel. Accordingly, since Mr. Bahti performed travel upon separation
to his designated place of residence, Tucson, Arizona, he is entitled to
be reimbursed, even though he did not establish a residence there,
subject only to the following time limitation in 6 FAM 132.2-2:
"132.2-2 Separation From the Service. When an employee is
separated from the Foreign Service and qualifies for travel and
shipment of effects * * * the actual departure of the employee,
the departure of the employee's family, and the transportation of
all effects shall not be deferred more than 12 months (6 months if
only domestic travel is involved). The time limitation will be
calculated from the employee's last day in pay status unless an
earlier or later limitation is specified in the travel
authorization or the time limit is extended."
Mr. Bahti's last day in a Foreign Service pay status was December 31,
1983. Mr. Bahti did not begin travel to Tucson until September 19,
1984, more than 2 months after expiration of the 6-month domestic travel
time limit prescribed in 6 FAM 132.2-2. However, on April 12, 1984, he
specifically requested in writing a 6-month extension until the end of
December 1984, in order to ship his household goods to Tucson. The
State Department authorized an extension, but only until September 30,
1984. Mr. Bahti's request referred only to shipment of his household
goods, however, since the delayed arrangements for his household goods
shipment would also result in an expected travel delay, we construe the
extension as also applicable to the separation travel.
Therefore, since Mr. Bahti and his wife did travel to Tucson before
the September 30 deadline, we conclude that the separate travel was
timely performed under the applicable regulations, and he is entitled to
be reimbursed for the expenses of that travel.
Comptroller General
of the United States
Matter of: Robert D. Good - Relocation Expense
File: B-224765
Date: August 17, 1987
DIGEST
An employee is not entitled to relocation expense reimbursement for a
building inspection fee he paid as a result of his mother's insistence
on the inspection as a condition for her loan to him of a downpayment on
his purchase of a residence at his new duty station. Since she had no
loan security interest in the home, she did not benefit from the
inspection as a lender and such lenders do not customarily require
purchasers to obtain building inspections.
DECISION
In this decision, we hold that Mr. Robert D. Good, an employee of the
Department of Agriculture, is not entitled to reimbursement of a fee to
inspect the residence he purchased at his new duty station. 1/ Although
his mother states she required the inspection as a condition for lending
him funds for a downpayment, she had no security interest in the home
for her benefit, and lenders of such a loan would not customarily
require the purchaser to obtain an inspection.
BACKGROUND
Mr. Good was transferred from Hyattsville, Maryland, to Fort Collins,
Colorado, on August 20, 1984. In addition to a mortgage loan he
obtained to purchase a home in the vicinity of Fort Collins, he borrowed
$17,000 from his mother for a downpayment on the home. He issued a
promissory note without interest stipulated for the amount of the loan
with the debt to be repaid on demand. We assume that she obtained no
mortgage or other security interest in the home to secure the loan. The
record before us indicates that it was a personal loan.
To protect her interest, Mr. Good's mother requested that a building
construction inspection be performed on the Fort Collins home, since she
was informed that in that area they are normally done by inspectors who
are licensed and generally relied upon. The inspection was conducted at
a cost of $132.10. She states that she would not have made the loan
without the inspection.
The employing agency denied Mr. Good reimbursement of the inspection
fee on the grounds that the fee appeared to be for his personal benefit
rather than a requirement to transact the purchase of the home.
DISCUSSION
Under Federal Travel Regulations, para. 2-3.1 (Supp. 4, August 23,
1982), incorp. by ref., 41 C.F.R. Sec. 101-7.003 (1984), a miscellaneous
allowance is authorized for discontinuing a residence at an employee's
old duty station and establishing a residence at the new duty station.
But this provision prohibits reimbursement if the expense item is
disallowed elsewhere in the regulations. See FTR, para. 2-3.1c.
Incidental charges for transfer of a residence are reimbursable only if
they are customarily paid by the seller or the purchaser, as the case
may be, in the local area of the residence. FTR, para. 2-6.2f.
Consistent with these regulations, Comptroller General decisions deny
reimbursement if an inspection is not required for the transfer of the
ownership interest in the property or the security interest acquired by
a mortgage lender in exchange for the loan to finance the purchase.
See, for example, Wayne J. Girton, B-185783, April 29, 1976, where the
expense was disallowed because the inspection was for the benefit of the
purchaser and not his obligation as a required service customarily paid
by purchasers.
In the present case, although Mr. Good's mother may have required the
inspection to make the loan, it could not benefit her directly as a
creditor since she had no security or other property interest in the
home. The inspection served to protect the property rights of Mr. Good
and his mortgage lender, a financial institution not requiring an
inspection to protect its security interest.
Accordingly, we sustain the employing agency's denial of the claim.
When Mr. Good bought an earlier home incident to a previous transfer,
the employing agency reimbursed Mr. Good a building inspection fee
required by his mother making a personal loan for the downpayment in
circumstances substantially identical to the present case. In
accordance with the above discussion, the employee was not entitled to
reimbursement, and therefore collection action should be taken to
recover the overpayment from Mr. Good.
Comptroller General
of the United States
FOOTNOTE
1/ Mr. W. D. Moorman, Certifying Officer, Department of Agriculture,
requested our decision.
Matter of: Collection of Funds Paid on Fraudulent Travel Claims
File: B-224750
Date: September 25, 1987
DIGEST
Collection by offset from employees'salaries for excess amounts they
received for travel expenses due to their submitting allegedly
fraudulent lodging receipts must be made pursuant to 5 U.S.C. Sec. 5514.
Under that statute and implementing regulations they are entitled to
procedural safeguards, including a hearing if they so request.
DECISION
This action is in response to a request from the U.S. Army made
pursuant to 4 C.F.R. Sec. 22.1 et seq., regarding whether funds paid to
several employees, based upon travel claims subsequently found to be
fraudulent, may be collected under 31 U.S.C. Sec. 3716 by administrative
offset or whether collection must be made pursuant to 5 U.S.C. Sec. 5514
which authorizes salary offset to collect general debts owed by
employees to the government, but imposes a number of procedural
requirements before offset can be made. 1/ It is our view that
collection by salary offset of erroneous overpayments made to employees
due to fraudulent travel vouchers in the cases presented must be made
pursuant to 5 U.S.C. Sec. 5514, and the agency must provide the
employees with its procedural protections before offset may be made.
The Army has presented three travel claims submitted by civilian
employees at Letterkenny Army Depot, Chambersburg, Pennsylvania. After
the vouchers were submitted and claims were paid, an investigation
revealed that the claims were fraudulent. Apparently findings of fraud
were based on allegations that the employees had been issued receipts
for lodging for amounts in excess of amounts they actually paid for
lodging, and they had used the higher amounts in making their per diem
claims.
The Army then sought to recoup the payments which were tainted by
fraud. The employees have requested hearings pursuant to 5 U.S.C. Sec.
5514 before an offset is made against their salaries to recoup the
payments. The issue presented is whether the claimants must be provided
a hearing and all the procedural protections set forth in 5 U.S.C. Sec.
5514 before recoupment may be made from their salaries.
The Army has noted that prior to 1982, 5 U.S.C. Sec. 5514 provided
authority for installment deductions from salary because of erroneous
payments made by an agency to an employee. Section 5 of the Debt
Collection Act of 1982, Public Law No. 97-365, 96 Stat. 1749, amended
Sec. 5514 to authorize salary offset to collect general debts owed by
government employees to the United States, but imposes a number of
procedural requirements upon the agency before offset can be made, and
provides employees with certain rights, including an opportunity for a
hearing on the determination of the agency concerning the existence or
the amount of the debt.
The Army further noted that in the past, collection of fraudulent
claims has been treated differently from other claims, citing several
decisions issued by this Office in which we held that when an item of
pay or allowances was wrongly obtained through fraud or
misrepresentation, the payment was considered to be erroneous and
erroneous payments could be deducted under 5 U.S.C. Sec. 5514.
The Army argues that fraud should continue to be an independent basis
for offset collection against civilian employees without regard to the
Debt Collection Act of 1982, since the Debt Collection Act did not
implicitly repeal prior offset procedures, and contends that when claims
have been determined to be fraudulent, or when a reasonable suspicion of
fraud exists, recoupment should be permitted from the claimant's salary
or other amounts due from the government after the employee has been
afforded his rights under section 10 of the Debt Collection Act.
Section 10 of the Debt Collection Act of 1982, 31 U.S.C. Sec. 3716,
amended the Federal Claims Act of 1966 to provide a statutory basis for
administrative offset generally. However, the procedures set out in
section 10 are less stringent than those in section 5 which amended 5
U.S.C. Sec. 5514.
It is our view that collection of erroneous payments by salary
offset, even when determined to be caused by fraudulent claims, must be
made pur suant to section 5 of the Debt Collection Act and provide due
process procedural rights to the employee involved.
While neither the applicable statute nor the legislative history
specifically addresses the issue of fraudulent claims with regard to
administrative offset, there is discussion regarding erroneous payments,
including travel. Senate Report 97-378, May 3, 1982, contains a
discussion of section 5. The section-by-section analysis provides:
"The type of indebtedness that may be deducted would include,
but is not necessarily limited to, erroneous payments made to the
employees, overpayments of benefits, salary or other allowances,
travel allowances * * *."
In addition, we note that while 31 U.S.C. Sec. 3716 generally
provides for administrative offset for a debt owed, 5 U.S.C. Sec. 5514
specifically provides for collection in installments from an employee's
salary, which the Army proposes to do in the cases presented. Offset
under 5 U.S.C. Sec. 5514 is a form of administrative (i.e.,
non-judicial) offset 2/ applicable only to offset against an employee's
current pay account. Offset under 31 U.S.C. Sec. 3716 also applies to
debts owed by federal employees, 3/ but only in certain situations--
specifically, situations which are not governed by some other more
specific offset statute. Offset against current salary is specifically
addressed in another offset statute, 5 U.S.C. Sec. 5514. Hence the
specific authority of that statute applies rather than the more general
authority of 31 U.S.C. Sec. 3716.
With regard to the two Comptroller General decisions cited as
authority to allow disbursing officers to recoup payments made as the
result of fraud or suspected fraud, leaving claimants to seek redress in
the courts, those decisions were issued prior to the enactment of the
Debt Collection Act. In addition, the three decisions cited, dated
1985, as affirming those decissions all deal with claims based upon
fraudulent vouchers in 1980 and recoupment by the disbursing officers in
those cases was made in 1981, prior to the enactment of the Debt
Collection Act.
We have held that salary offsets authorized by statutes other than 5
U.S.C. Sec. 5514 are not subject to the more stringent provisions of
that section. 64 Comp. Gen. 142 (1984). We are not aware of any other
applicable statutory provisions in this case which would allow use of
less stringent provisions than those provided for by 5 U.S.C. Sec.
5514.
We note that Congress recently enacted specific provisions dealing
with collection of fraudulent payments and civil penalties which may be
applied in certain cases involving fraud against the government. See
the Program Fraud Civil Remedies Act of 1986, Public Law No. 99-509,
Secs. 6101-6104, October 21, 1986, 100 Stat. 1874, 1934, which added to
title 31, United States Code, Chapter 38 - Administrative Remedies for
False Claims and Statements. Those provisions, however, apply only to
claims or statements made, presented or submitted on or after the
effective date of the Act, October 21, 1986, and the claims involved
here were made several years prior thereto.
Accordingly, it is our view that recoupment by salary offset of the
erroneous payments made pursuant to fraudulent claims in the cases
presented must be made pursuant to 5 U.S.C. Sec. 5514. With respect to
the form of hearing required, see 5 C.F.R. Sec. 550.1104(g)
Comptroller General
of the United States
FOOTNOTES
1/ The request was made by David L. Gagermeier AttorneyAdviser Chief,
Legal Office U.S. Army Finance and Accounting Center Department of the
Army Indianapolis, Indiana.
2/ See 5 C.F.R. Sec. 550.1102(b) and the corresponding discussion in
the Supplementary Information statement found at 49 Fed. Reg. 27470
(July 3, 1984).
3/ 49 Fed. Reg. 8890 (March 9, 1984) (Supplementary Information
comments on 4 C.F.R. Sec. 102.3).
Matter of: Department of Agriculture, Forest Service-- Request for
Advance Decision
File: B-224730
Date: March 31, 1987
DIGEST
Where prices in timber sale contract under which purchaser is
credited, against bid price, for cost of building roads to reach the
timber, are adjusted downward pursuant to statute to point where no such
credits are available, contract may be modified to provide for
government contribution of funds to offset road construction costs,
since contribution would have been made if such lower rates had been bid
initially.
DECISION
The United States Department of Agriculture, Forest Service, has
requested an advance decision on the propriety of modifying the timber
sales contracts of Mitkof Lumber Company (the Granite sale) and Reid
Timber, Inc. (the Suemez sale), to enable the firms to recover a portion
of the road construction costs incurred during contract performance.
Both sales involve the harvesting of timber in the Tongass National
Forest, Alaska. We conclude that the contracts may be modified.
Under these timber contracts, the contractor agrees to pay for timber
partly in cash and partly in the form of purchaser credits. The
purchaser credits are earned by the contractor when it builds the roads
that permit it access to the timber. Each species of timber covered by
a contract has a specified base rate, which the contractor pays in cash.
Any additional money owed by the contractor for removing timber (the
"bid premium") is offset against the contractor's road construction
costs, through the purchaser credits. For example, in the case of the
Suemez timber sale, Reid bid $250 per thousand board feet (MBF) for
sitka spruce utility logs, for which the base rate was $10 per MBF.
Thus, Reid was required to pay cash of $10, and the balance of $240 per
MBF was to be credited to Reid against its road construction costs. The
contract provided that the total of these credits could not exceed
$5,038,743, the total estimated road construction cost. 1/
The sales prospectus for each of these contracts contained an
additional provision, which gives rise to the Forest Service's request.
As explained by the Forest Service, when these sales were being prepared
for bidding the agency estimated that the value of the timber in both
sales would not be sufficient to offset the contractors' road
construction costs. The sales prospectuses therefore provided that if
the bid price was not high enough to offset the cost of road
construction, the agency would provide the contractor with contributed
funds, up to a specified amount, to help make up the difference. The
provision in the Granite sales prospectus stated:
"It is estimated that there will be $4,326,157.00 insufficient
value of timber at advertised i.e., the specified base rates to
permit purchaser to apply the full amount of purchaser credit. If
an insufficient value of timber is still indicated after including
the bid premium if any following sale award Forest Service shall
offset the deficit in whole or in part by providing contributed
funds. The offset may be in the form of materials needed in
construction of specified roads in the sale and/or cash. The
maximum value of cash and/or materials that can be provided to
offset is $2,278,438.00. The amount of contribution to be
furnished by the Forest Service will be decreased by an amount
equal to the bid premium.,
Since both Mitkof and Reid quoted prices in excess of the estimated
values (prices that were high enough to offset their respective road
construction costs), neither contract included the prospectus provision
about contributed funds.
After the award of these contracts in 1981, the price of timber fell
drastically. As a result, in 1984 Congress enacted the Federal Timber
Contract payment Modification Act (FTCPMA), 16 U.S.C. Sec. 619(b) (Supp.
III 1985), to provide for emergency timber rate redetermination for
companies holding short-term contracts like these. Section 4 of the act
allows contractors like Mitkof and Reid to apply for retroactive rate
redeterminations, and further provides that in making the
redeterminations the government "may modify existing contract terms" to
provide rates that allow the contractors to be competitive with timber
purchasers holding long-term contracts, who themselves were afforded
other terms of relief.
Reid applied for and received an emergency rate redetermination by
contract modification on September 10, 1985. As a result, Reid's new
timber rates are much lower than the original advertised rates and
Reid's bid, as follows:
Advertised Reid's Redetermined
Species and product Rate* Bids* Rate*
Sitka spruce sawlogs $10.00 $250.00 $3.00
Sitka spruce utility logs 10.00 250.00 1.00
Hemlock sawlogs 6.00 60.25 1.00
Hemlock utility logs 6.00 60.25 1.00
Western Red cedar logs 1.00 1.00 1.00
Alaska-cedar logs 10.00 10.00 3.00
*per MBF
The Forest Service reports that Mitkof's request for an emergency
rate redetermination on the Granite sale has not yet been finalized.
The Forest Service points out that with the reduction in rates and
the consequent elimination of the bid premium, the timber companies do
not have purchaser credits to offset road construction costs, and the
agency therefore wants to give the contractors contributed funds for the
same reason contemplated when the sales were advertised. In the Forest
Service's view, coupling rate redetermination with the payment of
contributed funds would be consistent with the remedial purpose of the
1984 act, even though the act specifically mentions only rate
redetermination.
We agree with the Forest Service's view. As the agency points out,
the result of retroactive rate determination is that there are no
purchaser credits available at all to these contractors to offset the
estimated costs of road construction under the contracts. If the
redetermined rates had been bid originally, contributed funds would have
been available to the contractors, that is, based on these rates the
record shows that the government was willing, in 1981, to contribute up
to $1,365,000 for road construction to the Suemez sale and up to
$2,278,438 for road construction in the Granite sale. Since the
condition for application of the contributed funds provision has arisen
at this time based on the 1984 statute's provision for emergency rate
redetermination, we think it only logical to read the statute as further
contemplating modification of the contracts too, as if the redetermined
rates initially were bsid by the contractors.
Accordingly, we concur in the Forest Service's proposal to modify the
Mitkof and Reid contracts to provide for contributed funds.
Comptroller General
of the United States
FOOTNOTE
1/ Any remaining amount cannot be credited, and therefore is paid in
cash along with the base rate payment.
B-224713
April 29, 1987
DIGEST
The Legal Services Corporation's fiscal year 1984 appropriation act
(P.L. 98-166) required that all LSC funds made available to basic field
programs (grantees) for the general provisions of legal services to the
poor would be computed on a census-based formula, while funds awarded to
non-field programs would be subject to a more generous straight per
centage increase. Solano County Legal Assistance argued unsuccessfully
that a litigation coordinator position should be funded as a non-field
position.
The Honorable Barbara Boxer
House of Representatives
Dear Ms. Boxer:
This responds to a joint letter from you and Representative Vic Fazio
dated September 12, 1986, requesting a legal opinion on whether the
Legal Services Corporation (LSC) has used the correct formula for the
past few years to fund the Solano County Legal Assistance (SCLA) office.
In addition to providing legal services to eligible persons in Solano
County, SCLA administers a program that provides a litigation
coordinator for Solano and two neighboring counties served by two other
grantees. At issue is whether the litigation coordinator position
should be funded as a separate grant or included as a part of the basic
grant for SCLA. As explained below, we have concluded that the formula
applied by the Corporation in funding the litigation coordinator
position as part of the SCLA basic field program grant was proper.
BACKGROUND
There are LSC grantees in each of the California counties of Napa,
Marin and Solano. In 1979, the LSC Regional Office decided that a
litigation coordinator was needed to coordinate litigation among the
three grantees and awarded a one-time special needs grant to the Marin
County grantee. In 1980, the Regional Office annualized the grant and
by agreement among the programs, SCLA was designated to administer the
grant. However, the three programs agreed that the litigation
coordinator was to be "employed jointly." The separate litigation
coordinator funding continued until fiscal year 1984, when it was
discontinued as a separate funding entity and the funding for all basic
field programs was computed on a census-based funding formula mandated
by Congress in LSC's 1984 fiscal year appropriation act. SCLA contends
that the litigation coordinator position is not a census-based position,
because its funding is not based on the number of eligible clients in
the grantee's geographical area. Therefore, SCLA argues that the
position's funding should be separated out from the funding provided for
the census-based grant to SCLA. On the other hand, LSC maintains that
the fiscal year 1984 and subsequent LSC appropriation acts required it
to fund basic field programs such as SCLA on a census-based formula and
did not permit it to continue the litigation coordinator grant as a
separate funding entity.
LEGAL ANALYSIS
Beginning in fiscal year 1984, the Corporation's appropriation act
changed the way that various Legal Services programs were funded. 1/ The
act set forth two methods that LSC was to employ in computing annual
funding for grantees. In fiscal year 1984, LSC was instructed to
increase the total annual funding for programs in the same proportion by
which its fiscal year 1984 appropriation was increased over its fiscal
year 1983 appropriation, which turned out to be 14.1 percent. However,
with respect to programs that had received funding during FY 1983 based
on the number of poor people within the grantee's geographical area, LSC
was instructed to compute the increase in fiscal year 1984 funding for
such programs on a formula that provided a lower increase in funding.
The grantees covered by this provision were to receive at least a 5
percent increase over fiscal year 1983 funding, plus other adjustments
that would increase the grantees' funding to higher levels under certain
circumstances.
In describing the two different funding methods, the legislative
history makes it clear that the first method is directed at "non-field
programs" and the second method is directed at "field," i.e.,
censusbased, programs. Non-field program grantees received the 14.1
percent increase in funding over fiscal year 1984 funding. Field
program grantees, whose funding is based on the number of poor people
within their areas, were given various percentage increases based on the
formula set forth in the appropriation act.
The congressional intent behind the funding formula set forth in
LSC's appropriation was explained in detail in the section-by-section
analysis contained in Senate Report 98-206, 98th Cong., 1st Sess. 47-48,
August 2, 1983, accompanying the Senate Appropriation Bill, which reads
as follows:
"However, the Committee added a provision to this limitation
which is intended to deal specifically with the basic field
programs, those grantees and contractors whose funding is based in
whole or in part upon the number of poor people determined by the
Bureau of the Census to be within the grantee's or contractor's
geographical area. * * *
* * * * *
"* * *The Committee intends that this formula apply to all
funds received by the basic field programs for the general
provision of legal services to the poor. The formula does not
apply to funds received for other purposes, such as the special
funds for migrants, the special funds for Native Americans, State
support grants, or to funds going to other than basic field
programs, all of which are covered by the mandatory refunding
provision being continued from fiscal year 1983.* * *"
The above-quoted report supports the view that the census-based
formula was intended to apply to all funds received by basic field
programs for the general provision of legal services to the poor and not
just to funds received for the provision of legal services to the poor
located in the grantee's geographical area.
SCLA argues that, for funding purposes, the coordinator position
should be considered as a non-field program. SCLA maintains that the
coordinator provides support services for the three basic field programs
in the three-county area. It coordinates and assists in the litigation
and training efforts of the Legal Aid Society of Marin County, Napa
County Legal Assistance Agency, and Solano County Legal Assistance. The
coordinator coordinates Federal, appellate and other significant
litigation of the three programs, works with field attorneys in a team
approach, and insures that the work products of each program are shared
with the others. The grantees appear to concede that the litigation
coordinator is involved in the general provision of legal services to
the poor, through the coordination of litigation on their behalf in the
three-county area. Because these services are performed for residents
of all three counties, SCLA argues that grant funds to support them
should not be based on Solano County census data. Hence it is SCLA's
position that the position of litigation coordinator should be
considered as a non-field program for funding purposes.
LSC, on the other hand, has concluded that the appropriation act and
its legislative history do not permit the position to be funded as a
non-field program. The Senate report makes it clear that if a field
program such as that conducted by SCLA receives any part of its grant
based on the number of poor people in its geographical area, it becomes
a field program. Accordingly, any activity that directly supports that
program, including the funding for the litigation coordinator position,
should be computed on the census-based formula. Although the litigation
coordinator may not actually represent poor people in court, he does
provide support and assistance to field attorneys who do represent poor
people, much the same as the clerical staff and management of the three
field programs provide support for attorneys who represent eligible
clients. Accordingly, LSC has adopted the position that the
census-based formula must be applied to all funds received by SCLA for
the general provision of legal services to the poor, including the funds
for the coordinator position.
A reviewing authority will afford great weight to administrative
decisions properly rendered by agencies vested with authority to act on
such matters, such as LSC in this case, and will not set aside the
decision unless it is arbitrary, capricious, an abuse of discretion or
otherwise not in accordance with law. Glass v. United States, 506 F.2d
379 (1974). LSC has construed its 1984 appropriation act and concluded
that the litigation coordinator position should be funded as a part of
SCLA's basic grant and therefore subject to the formula providing the
lesser increase. While we understand SCLA's argument that the position
serves the three-county area, we cannot say that LSC's determination
regarding the funding of the position is unreasonable.
Under the census-based formula for fiscal year 1984, LSC determined
that SCLA was entitled to receive minimum funding of $144,854. However,
LSC awarded SCLA $171,829 exceeding the minimum requirement for the
formula by $26,975. We are not aware if this extra amount was made
available because of the litigation coordinator position, but these
funds certainly are available for this purpose. Overall, LSC increased
SCLA's fiscal year 1984 basic program grant by 8.2 percent. LSC's
appropriation act for fiscal year 1985 incorporated the formula set
forth in the fiscal year 1984 appropriation act. See Pub. L. No.
84-411, August 30, 1984, 98 Stat. 1545. LSC was guided by this formula
in funding grantees in fiscal year 1986. Therefore, SCLA's funding for
those years was handled in the same manner as explained above.
In summary, LSC was required by the provisions of its fiscal year
1984 appropriation act to decide if the litigation coordinator position
was to be funded as an integral part of SCLA's basic field program
funding. The terms and conditions of the appropriation act as explained
by the legislative history expressly prohibit LSC from considering the
position's funding as if it were a non-field program if it was part of
the basic field program, as SCLA urges it to do. We are compelled to
defer to LSC's determination that the coordinator's position is part of
the basic field program. This is a reasonable conclusion despite the
considerable merit of the SCLA argument. Accordingly, we believe LSC
has complied with the appropriation act provisions in funding the SCLA
with regard to the position. While under LSC's determination that the
litigation coordination position funding must come out of SCLA's basic
grant, we recognize that the litigation coordinator's services also
benefit persons outside Solano County. We would, accordingly, have no
objection to LSC increasing the basic grant, on a retroactive basis if
necessary, to provide additional funds for the position. As an
alternative, LSC might consider awarding a supplementary grant to NAPA
and Marin counties based on the appropriate census figures for each
county to enable them to contribute their respective shares to the costs
of the litigation coordinator position, since the coordinator serves all
three counties.
Unless you publicly announce its contents earlier, we plan no further
distribution of this opinion until 30 days from the date of issuance.
At that time, we will send copies to interested parties and make copies
available to others on request.
Sincerely yours,
Comptroller General
of the United States
FOOTNOTES
1/ A specific funding formula was set forth in the fiscal year 1984
appropriations act, Pub. L. No. 98-166, November 28, 1983, 97 Stat.
1088, and also included in the fiscal year 1985 appropriations act, Pub.
L. No. 98-411, August 30, 1984, 98 Stat. 1563. Although the funding
formula was not included in the fiscal year 1986 appropriation act, Pub.
L. No. 99-180, December 13, 1985, 99 Stat. 1162, LSC continued to be
guided by the formula in the funding of its programs. However, the
issue we have been requested to decide is whether LSC properly
implemented the fiscal year 1984 appropriations act formula with regard
to funding the Litigation Coordinator position.
Matter of: Acumenics Research and Technology, Inc.-- Contract
Extension
File: B-224702
Date: August 5, 1987
DIGEST
1. An 8(a) services contract with no options may not be extended by a
procuring agency after the contractor loses its eligibility to
participate in the 8(a) program from the Small Business Administration.
2. Sole-source extension of litigation support services contract
consisting mainly of clerical tasks is not justified where the agency
has not established that these services are unavailable from other
responsible sources. In any case, since the agency did not comply with
mandatory justification and publication procedures, the extension was
not authorized.
3. Noncompetitive award pursuant to provision in Competition in
Contracting Act, 41 U.S.C. Sec. 253(c) (7) (Supp. III 1985), which
permits such awards where the secretary of an executive agency
determines that it is necessary in the public interest, is only
authorized if the secretary has complied with statutory "report and
wait" provision 41 U.S.C. Sec. 253(c) (7) (b), under which the secretary
must give 30 days notice to Congress prior to contract award.
4. Where an agency has no legal authority to extend a contract and
the contractor does not sign the contract extension, no binding contract
extension came into effect and the agency is without legal authority to
continue to obtain the services under the contract extension. However,
the contractor is entitled to be paid for the services it performed on a
quantum meruit basis.
5. Litigation support services to support particular litigation,
which are primarily clerical in nature and which require no final report
or product to be delivered, are continuing and recurring in nature and
thus severable into the various pertinent time periods encompassing the
service.
6. An executive agency may not obligate its expired fiscal year funds
on a contract for litigation support services, where the obligation is
not authorized by law and the services extend beyond the fiscal year
whose appropriation has been charged.
DECISION
The Inspector General's Office of the United States Department of
Labor requests the Comptroller General's legal opinion on certain issues
related to a contract held by Acumenics Research and Technology, Inc.,
for litigation support services in connection with certain litigation
under the Employee Retirement Income Security Act of 1974 (ERISA), 29
U.S.C. Secs. 1001 et seq. (1982).
I. BACKGROUND
On June 8, 1982, Labor awarded cost-plus-fixed-fee contract No.
J-9-N-2-0061 to the Small Business Administration (SBA), which, in turn,
subcontracted under the SBA's section 8(a) program to Acumenics. See 15
U.S.C. Sec. 637(a) (1982 and Supp. III 1985). The contract ran to
September 30, 1982, with total funding of $395,451. The contract was
transferred to the Department of Justice, which shares ERISA litigation
responsibility, and back to Labor by various agreements. By a number of
unilateral and bilateral contract modifications, this contract (now No.
J-9-P-4-0082) has been extended through March 30, 1989, even though
Acumenics lost its eligibility to participate in the 8(a) program in
fiscal year 1983. The departments of Labor and Justice have increased
the contract value to $9,005,756 and fully funded the contract with
fiscal year 1982 and 1983 funds. Labor considers the litigation support
services to be nonseverable because the ERISA litigation in question is
ongoing.
The Inspector General has raised three questions concerning the
propriety, legal enforceability and funding of the various modifications
to the contract. We requested Labor's Solicitor to respond and submit
his views on these questions. In response, the Solicitor stated that
"in order to avoid even the appearance of impropriety," Labor was
terminating the Acumenics' contract, but he did not respond to the three
questions. This contract termination occurred effective July 2, 1987.
The Inspector General has reiterated its request that our Office respond
to its questions, notwithstanding the contract termination.
II. QUESTIONS AND SUMMARY RESPONSES
The Inspector General's questions and our summary responses are
contained in this section. The subsequent sections set forth the
underlying legal and factual bases for our responses.
The Inspector General first asks:
"Is the current Contract No. J-9-P-4-0082 a legal, enforceable
document? If so, who are the parties? Is it proper to award
modifications for additional work and additional funds with only
the signature of the government? Is it acceptable to award these
modifications on an 8(a) basis after the subcontractor has lost
8(a) status?"
Response: The last two contract extensions were done without legal
authority, either under section 8(a) of the Small Business Act, the
Competition in Contracting Act of 1984 (CICA), 41 U.S.C. Sec. 253 (Supp.
III 1985), or any other law. An 8(a) contract may not be extended as an
8(a) contract after the subcontractor has lost its 8(a) eligibility.
Under the circumstances, no binding contract extension came into effect
under modification No. 9, and Labor was without legal authority to
continue obtaining these services through the SBA/Acumenics contract.
In view of this response, it is not necessary to address the remaining
parts of the question.
The Inspector General's second question is:
"Are the litigation support services to be provided by
Acumenics severable?"
Response: Yes. Since the SBA/Acumenics litigation support services
contract only obligates the contractor to perform essentially clerical
services within specified periods of performance and funding and does
not require a final report or product, the services to be provided under
the contract and its modifications are severable on a yearly basis.
The third question is:
"Can fiscal year 1982 and fiscal year 1983 funds be
obligated in fiscal years 1983 through 1986 to pay for services
in those years through fiscal year 1989?"
Response: No. Where, as here, the services are severable, expired
fiscal year appropriations cannot be charged to the contract to fund
contract extensions beyond those fiscal years.
III. FACTS
On June 8, 1982, Labor entered into an 8(a) contract with
SBA/Acumenics with an estimated cost and fixed fee of $395,451 to
support specific litigation of the departments of Labor and Justice
under ERISA. This contract was funded with Labor's 1982 fiscal year
appropriation. The contract was a standard cost-plus-fixed-fee
contract, whereby the government agreed to reimburse the contractor for
its reasonable and allocable costs in performing the contract tasks up
to the contract's stated estimated cost of performance. The contract
was for a fixed period of performance ending September 30, 1982, and
several modifications have extended the contract period of performance
for additional fixed periods. The contract contained no options to
extend the period of performance or increase the contract quantities.
The subsequent contract extensions have not substantively changed the
five basic contract tasks, but have increased the contract value and
funding to $9,005,756 and extended the period of performance to March
30, 1989.
The contract statement of work requires the development of a
"litigation support services data base" for specific ERISA litigation.
To accomplish this purpose, the contractor is required to perform five
specific tasks. Task 1, "Document Processing," requires the contractor
to code the documents by "provid ing clerical and paralegal support
services to inventory, copy control, retrieve, bind, number, index,
quality control and provide evidentiary research on the documents
required for processing." Task 2, "Microfilming," requires the
contractor to provide personnel to operate microfilming equipment to
establish an on-site microfilming facility at Labor. Task 3,
"Transcript and Pleading Conversion," requires the contractor to convert
transcripts, pleading and legislative history into machine-readable form
for loading in the "JURIS" computer system for retrieval. Task 4,
"Computer Processing," requires the contractor to provide computer
processing services in preparing programs and queries for the "INQUIRE"
and "JURIS" computer systems. Task 5, "Trial Support," requires the
contractor to provide clerical, secretarial and paralegal personnel and
office and equipment necessary to a trial support facility at various
trial sites during the performance of the contract. The first three
contract tasks each had a total estimated quantity expressed in "pages."
These quantities were increased as the contract was extended.
The Inspector General reports that Justice took over this contract in
September 1982 because the Labor contracting officer became aware that
Acumenics was losing its section 8(a) eligibility and status from the
SBA and he found no basis to extend the contract further. Justice then
entered into an 8(a) contract with SBA/Acumenics (No. JRATR82-C0011)
extending from September 30, 1982, to September 30, 1983, in the amount
of $1,142,756. This was funded with Justice's supplemental
appropriations. Pub. Law 98-63, 97 Stat 301, 353, July 30, 1983.
Contract modification No. 3, dated August 16, 1983, extended the
contract to June 30, 1985. This additional work increased the contract
value by an additional $2,563,000 to $3,705,756, which was fully funded
from the 1982 fiscal year appropriation of Labor. 1/
Acumenics reportedly lost its eligibility to participate in SBA's
8(a) program by September 30, 1983. On May 21, 1984, by modification
No. 5, the contract was transferred back to Labor, which assigned it
contract No. J-9-P-4-0082. Modification No. 6, dated January 11, 1985,
increased the contract value to $5,305,756, and fully funded the
additional $1,600,000 contract increase from Labor's 1982 fiscal year
appropriation. Modification No. 7, dated July 25, 1985, further
extended the contract to March 30, 1986, but provided no further
funding.
Modification No. 9, dated March 28, 1986, extended the contract
period to March 30, 1989, and increased the contract value and funding
to $9,005,756. Additional funding of $842,000 was charged to Labor's
fiscal year 1982 appropriation and $2,858,000 was charged to Labor's
fiscal year 1983 appropriation. This modification was signed only by
Labor's Assistant Secretary for Administration and Management and not by
the SBA or Acumenics. This modification was expressly approved by the
Secretary of Labor, who, on the same date advised Congress that this
contract extension was "necessary in the public interest" to complete
the "nonseverable litigation support services required by the
prosecution of" the ongoing ERISA cases.
IV. FIRST QUESTION
A. No Authority to Extend 8(a) contract
Under the 8(a) program, SBA may enter into contracts with socially
and economically disadvantaged small business concerns found eligible by
SBA. See 15 U.S.C. Sec. 637(a); Federal Acquisition Regulation (FAR),
48 C.F.R. subpart 19.8 (1986). Where a contractor remains eligible to
participate in the 8(a) program, options in 8(a) contracts can be
exercised under the section 8(a) authority. See Gallegos Research
Corp.--Reconsideration, B-209992.2, B-209992.3, Nov. 21, 1983, 83-2
C.P.D. P 597; B-215350, June 27, 1984 (letter to Representative Robert
E. Badham). Moreover, it is proper to exercise, in accordance with the
FAR, existing options in 8(a) contracts after an 8(a) firm has lost its
8(a) status. Id. However, an agency may not continue or extend an 8(a)
contract, which contains no options, with a party no longer eligible to
participate in the 8(a) program. Id. Even if there is a need for
further litigation support services, this does not provide a legal basis
to extend an 8(a) contract with an ineligible firm beyond the contract
completion date. 15 U.S.C. Sec. 637(a); 13 C.F.R. Secs. 124.11(d)(4)
and (e) (4) (1986); cf. Data Transformation Corp., B-220581, Jan. 16,
1986, 86-1 C.P.D. P 55 (because an incumbent 8(a) contractor's status
had expired, a procuring agency justified a new noncompetitive contract
to that contractor instead of extending the 8(a) contract to meet its
urgent requirements).
In this case, modifications Nos. 7 and 9 improperly extended the
SBA/Acumenics contract. Modification No. 7 was executed in July 1985,
almost 2 years after Acumenics lost its 8(a) status, and extended the
8(a) contract to March 30, 1986. Modification No. 9 was executed more
than 2-1/2 years after Acumenics lost its 8(a) status and extended the
Acumenics/ SBA contract yet another 3 years. It is notable that the SBA
has not executed modification No. 9 and there is no indication that the
SBA approved or agreed to the contract extension. See FAR, 48 C.F.R.
Sec. 19.809-1. Therefore, Labor had no legal authority to extend this
contract with the SBA/Acumenics in modifications Nos. 7 and 9.
B. Extension of Contract Not Authorized by CICA
The record indicates that Labor contracting officials properly
concluded before the execution of modification No. 9, that this contract
could not be extended under the 8(a) authority since Acumenics' 8(a)
status had expired. Consequently, the using activity, the Solicitor's
Office, was requested to justify this noncompetitive contract extension
in accordance with CICA, since the contract extension was beyond the
scope of the contract.
A contract extension beyond the scope of a contract is only proper if
separately justified as a noncompetitive procurement under CICA. See
Washington National Arena Limited Partnership, 65 Comp. Gen. 25 (1985),
85-2 C.P.D. P 435; Resource Consultants, Inc., B-221860, Mar. 27, 1986,
86-1 C.P.D. P 296; Data Transformation Corp., B-220581, supra; cf. WSI
Corp., B-220025, Dec. 4, 1985, 85-2 C.P.D.P 626 (exercise of an "option"
not within the scope of the initial award is equivalent to the issuance
of a sole-source contract and must be justified under CICA). CICA
requires agencies to use competitive procedures to obtain full and open
competition unless the procurement is found to fall under one of the
seven specific instances where other than competitive procedures are
authorized. See 41 U.S.C. Secs. 253(a)(1) and (c).
The record shows that the Solicitor's Office tried to justify to
Labor procurement officials this noncompetitive award under the first
exception contained in 41 U.S.C. Sec. 253(c) (1). 2/ That section
provides that other than competitive procedures can be used:
". . . only when the property or services needed by the
executive agency are available from only one responsible source
and no other type of property or services will satisfy the needs
of the executive agency."
The record shows that the propriety of extending the contract by
modification No. 9 was the subject of considerable debate within Labor.
The Solicitor's Office found that they required the same contractor to
complete the "nonseverable support services" to assure continuity in the
ERISA cases. The Solicitor's Office states that this extension was
required solely by court directed changes in the ERISA litigation
timetables and these changes were beyond the control of Labor and
Acumenics. The Solicitor's Office also stated that uncertainties in the
future stages of the litigation made it impracticable to obtain another
contractor.
Labor procurement officials found that this last contract extension
was readily severable from the previously performed services. In this
regard, they found that 99 percent of all documents pertinent to the
litigation had already been coded and put into the system under the
contract. The remaining work to be done under the modification is
document and transcript retrieval and the supplying of clerical,
secretarial and paralegal support plus office space at trial locations.
Since virtually all of the documents had been coded, the procurement
officials did not find this noncompetitive extension of the contract
could be justified under CICA, since other firms could perform the
remaining clerical work.
The record indicates that Labor did not establish that only Acumenics
could complete the litigation support services, which mainly consist of
clerical tasks, or that other responsible sources could not perform
these services. In this regard, the Solicitor's Office, in its recent
response to our query, admitted that the data base was substantially
completed and that primarily administrative and clerical tasks remained
to be provided under the modification. Consequently, this
noncompetitive procurement was not authorized by 41 U.S.C. Sec.
253(c)(1).
In any case, 41 U.S.C. Sec. 253(f) requires that the contracting
officer prepare a written justification before effecting a sole-source
procurement. This justification must identify the specific statutory
exception from the requirement to use competitive procedures and
demonstrate, why, based on the proposed contractor's qualifications or
the nature of the procurement, the exception is applicable. See EDO
Corp., B-224386, Sept. 18, 1986, 86-2 C.P.D. P 322. The justification
must then be approved at an appropriate higher level official and the
procurement announced in the Commerce Business Daily. Id. The record
indicates that none of these mandatory procedures to justify this
noncompetitive procurement were effected. Cf. WSI Corp., B-220025,
supra (agency substantially complied with the CICA justification
requirements).
C. Public Interest Justification For Sole-Source
Extension
On March 28, 1986, the Secretary of Labor notified Congress that the
public interest required the contract be extended. This determination
may be a justification for a noncompetitive procurement under the
seventh exception to the CICA requirement that competitive procedures be
employed. See 40 U.S.C. Sec. 253(c) (7). That section provides that
noncompetitive procedures can be used if:
"(7) the head of the executive agency--
"(A) determines that it is necessary in the public interest to
use procedures other than competitive procedures in the particular
procurement concerned, and
"(B) notifies the Congress in writing of such determination not
less than 30 days before the award of the contract."
A procurement need not be otherwise justified under 41 U.S.C. Sec.
253(f) (discussed above) if authorized under 41 U.S.C. Sec. 253(c)(7).
41 U.S.C. Sec. 253(f)(2).
This seventh exception was in neither the House nor Senate versions
of the Deficit Reduction Act of 1984 of which CICA is a part. It was
added by the Conference Committee which explained:
"... a conference substitute includes a seventh exception which
allows the head of an agency, on a non-delegable basis, to
determine when it is necessary in the public interest to use
procedures other than competitive procedures for a particular
procurement. This waiver is to be exercised, if at all, on a
case-by-case basis rather than for a class of procurements. The
head of an agency is required to notify both Houses of Congress in
writing of his or her intention to use this exception thirty days
before the contract is awarded."
We have held that determinations by the secretary of an executive
agency that the "public interest" mandates a particular action by the
agency are matters of discretion vested in his or her office and not
subject to question by our Office. See Maremont Corp., 55 Comp. Gen.
1362, 1393 (1976), 76-2 C.P.D. P 181; Lear Siegler, Inc., 64 Comp.
Gen. 452, 456 (1985), 85-1 C.P.D. P 403 ("public interest"
determinations by the concerned secretary pursuant to the Buy American
Act are not subject to question).
However, in this case, if the Secretary's determination was intended
to justify a sole-source award to Acumenics under 41 U.S.C Sec. 253(c)
(7), it did not accomplish this purpose. In this regard, the Secretary
did not give Congress the required "not less than 30 days notice before"
awarding the contract extension. This prior notification of Congress
requirement is a type of "report and wait" provision. See Immigration &
Naturalization Service v. Chadha, 462 U.S. 919, 935, f.n. 9 (1983).
Where there is an applicable "report and wait" statutory requirement, an
agency is without authority to execute a contract until it makes the
requisite determination and waits the required period of time. City of
Alexandria v. United States, 737 F.2d 1022, 1027 (Fed. Cir. 1984); cf.
Alaska Airlines, Inc. v. Donovan, 766 F.2d 1550 (D.C. Cir. 1985) (agency
is without authority to make regulations effective if it has not
complied with applicable "report and wait" provision).
Furthermore, we note that the March 28, 1986, letters notifying
Congress of the contract extension do not indicate the notification is
to satisfy the 41 U.S.C. Sec. 253(c)(7) requirements or that the
extension was justified under that exception. Rather, the Secretary
stated that Labor's Solicitor's Office advised that CICA was
inapplicable and the extension was necessary in the public interest.
D. No Binding Contract
In view of the foregoing, we find that at the time of execution of
modifications No. 9, Labor was without authority under CICA or the Small
Business Act to contract with Acumenics or extend the SBA/Acumenics
contract. 3/ Moreover, neither SBA nor Acumenics signed modification No.
9 so as to bind Acumenics to perform this work. See 1 Corbin on
Contracts, P 70 (1963); FAR, 48 C.F.R. Secs. 4.102, 43.103(a). Under
these circumstances, no binding contract extension came into effect
under modification No. 9 and Labor is without legal authority to
continue obtaining these services from Acumenics through the
SBA/Acumenics contract. See United States v. Amdahl Corp., 786 F.2d 387
(Fed. Cir. 1986). Nevertheless, Acumenics is entitled to be paid for
the services that it has performed pursuant to modification Nos. 7 and 9
on a quantum meruit basis. Id.
V. SECOND QUESTION
Severability of Contract
In support of its continuing noncompetitive extensions of the
contract and obligation of expired 1982 and 1983 fiscal year
appropriations on this contract, Labor's Solicitor's Office has
characterized the contract services as "nonseverable" because of the
ongoing and continuing nature of the ERISA litigation which these
services support. The Inspector General questions whether these
services are severable.
We have held that services performed under a government contract
should be regarded as severable into the various pertinent time periods
encompassed by the services, when the need for the services is
continuing and recurring. 65 Comp. Gen. 741, 743 (1986); 61 Comp.
Gen. 219, 221 (1981). On the other hand, if the services contemplate a
required outcome, product or report, the services may be regarded as
nonseverable. 65 Comp. Gen. 741, 743-744, supra; 64 Comp. Gen. 359,
364-365 (1985).
In the present case, the purpose of the contract was to develop and
provide a data base for the specific ERISA litigations involving the
Teamster's Union pension funds. However, the tasks implementing the
contract's purpose are essentially secretarial and clerical in nature.
Moreover, the contract task "quantities" are expressed in estimated
pages of text; these quantities were increased as the contract was
further funded as extended. This indicates that the services are
continuing and recurring in nature.
There is no final report or product to be delivered under the
contract. Indeed, the contract and modifications only require the
contractor to perform these services to the extent funds have been made
available within the contract's period of performance. There is no
requirement in the contract for the contractor to continuously support
this litigation to conclusion or even until a complete litigation data
base has been developed.
In view of the foregoing, and since the contract was funded with
fiscal year funds, the contract services were severable on a yearly
basis.
VI. THIRD QUESTION
Improper Obligation of Appropriations
Finally, the Inspector General questions whether Labor could obligate
fiscal year 1982 and 1983 funds when it executed contract modifications
in fiscal years 1983 through 1986 to pay for services in those years
through fiscal year 1989. We conclude that Labor charged the wrong
fiscal year accounts to fund these contract modifications.
In this case, both the applicable laws appropriating funds for Labor
for fiscal years 1982 and 1983 state: "No part of any appropriation
contained in this Act shall remain available for obligation beyond the
current fiscal year unless expressly so provided herein." Section 508 of
title V of H.R. 4560, Labor Appropriations Act incorporated into Joint
Resolution Making continuing Appropriations for Fiscal Year 1982, Pub.
Law 97-92, 95 Stat. 1183, Dec. 15, 1981; section 508 of title V of
Labor Appropriations Act in Joint Resolution Making Further Continuing
Appropriations for Fiscal Year 1983, Pub. Law 97-377, 96 Stat. 1830,
1905, Dec. 2, 1982. That is, appropriations made for a fiscal year
cannot be obligated after the expiration of the appropriation's period
of availability, i.e., the end of the fiscal year, unless otherwise
provided by law. 58 Comp. Gen. 321 (1979); 37 Comp. Gen. 861 (1958);
Obligating Letter Contracts, B-197274, Sept. 23, 1983, 84-1 C.P.D. P 90.
The Solicitor's Office argues that Congress authorized the continuing
use of Labor's fiscal year 1982 appropriation in the Conference
Committee Report on the Supplemental Appropriation Act for 1983, Pub.
Law 98-63, 97 Stat. 301, 353, July 30, 1983. See H. Rep. No. 98-308,
129 Cong. Rec. H-5358, H-5375, July 20, 1983. Among other things, that
Act appropriated $1,100,000 for Justice to support Labor's ERISA
activities. The Conference Report explains:
"The conferees are agreed that these funds shall be available
for the cost of continuing the portion of a contract for computer
processing which supports three Labor investigations under
ERISA . The conferees note that Labor has heretofore reimbursed
Justice for this item but has run out of funds for this purpose
for the remainder of fiscal year 1983. Although the conferees
have provided funding for this item under Justice's appropriation
due to this emergency situation, the conferees strongly believe
that such funding should normally be the responsibility of Labor
, and, therefore, expect Labor to include this item in its own
budget in the future." 129 Cong. Rec. H-5375, supra.
This statement of congressional intent does not authorize the
obligation of expired Labor appropriations. To the contrary, it
requires Labor to budget for its ERISA program support in its future
requests for appropriations. Moreover, the conferees were obviously
under the impression that Labor had run out of funds for ERISA's
litigation support for the remainder of fiscal year 1983. Therefore,
they could not have intended that expired 1982 and 1983 appropriations
be used to fund the contract in the future; they thought there were no
such funds remaining. Consequently, Labor was not otherwise authorized
by law to obligate expired 1982 or 1983 appropriations on this contract.
Expired fiscal year funds can only be obligated by subsequent
modifications to contracts entered into that prior fiscal year and if
the modifications represent an antecedent liability enforceable under
the initial contract. 65 Comp. Gen. 741, supra; 59 Comp. Gen. 518
(1980) as modified in 61 Comp. Gen. 609 (1982); 37 Comp. Gen. 861,
supra. Determinations of what constitutes a bona fide need of a
particular fiscal year depends primarily upon the facts and
circumstances of a particular case. 64 Comp. Gen. 359, supra at 364;
61 Comp. Gen. 184, 186 (1981).
Generally, contracts for services may only be made for the duration
of the appropriation period because a bona fide need for a particular
service usually only arises at the time the services are to be
performed. 64 Comp. Gen. 359, supra at 364. The period of performance
of service contracts can extend beyond the duration of the appropriation
period only where the portion of the contract to be performed after the
expiration of the appropriation period is not severable from the portion
performed during the period. 31 U.S.C. Sec. 1502(a) (1982); 65 Comp.
Gen. 741, supra; 64 Comp. Gen. 359, supra at 364; 60 Comp. Gen. 219,
supra. As discussed above, the essentially clerical services involved
here are of a continuing and recurring nature and thus are considered
severable in nature.
Therefore, Justice and Labor were without authority to utilize 1982
and 1983 fiscal year funds to extend this contract beyond the end of
those fiscal years. 64 Comp. Gen. 359, supra at 364. Also, expired
1982 and 1983 fiscal year appropriations were improperly charged when
this contract was funded in three modifications totaling $7,863,000.
Specifically, on August 16, 1983, modification No. 3 improperly
obligated $2,563,000 in fiscal year 1982 funds appropriated for Labor;
on January 11, 1985, modification No. 6 improperly obligated $1,600,000
of Labor's fiscal year 1982 funds and on March 28, 1986, modification
No. 9 obligated $842, 000 of funds appropriated for Labor for fiscal
year 1982 and $2,858,000 of funds appropriated for Labor for fiscal year
1983.
In view of the foregoing, Labor should adjust its accounts to pay for
the reasonable value of the services rendered during each fiscal year
out of that fiscal year's appropriation. Labor should also deobligate
the expired funds that were improperly obligated.
If any of Labor's unobligated fiscal year appropriations are not
sufficient to make the adjustment, then a reportable Anti-Deficiency Act
violation occurred. 63 Comp. Gen. 422, 424 (1984); 57 Comp. Gen. 459
(1978); 31 U.S.C. Sec. 1351 (1982).
Comptroller General
of the United States
FOOTNOTES
1/ As explained below, the conferees on Justice's 1983 Supplemental
Appropriation Act recognized that this work would be funded from Labor's
future appropriations. See H. Rep. No. 98-308, 129 Cong. Rec. 5358,
5375, July 20, 1983.
2/ The other ordinary exceptions to using competitive procedures, 41
U.S.C. Secs. 253(c)(2), (3), (4), (5) and (6), are not applicable.
3/ Unlike modification No. 9, both SBA and Acumenics executed
modification No. 7, although Acumenics' 8(a) status had expired.
Neverthless, Labor and Acumenics may have relied upon SBA's execution of
modification No. 7 as evidence that there was requisite authority.
Therefore, we cannot conclude that this modification was not binding.
Cf. PRC Computer Center, Inc. et. al, 55 Comp. Gen. 60, 68 (where an
executive agency received authorizations from cognizant agencies
(General Services Administration and Office of Management and Budget)
under the Brooks Act, 40 U.S.C. 759 (1982), that it had the authority to
proceed with an automatic data processing procurement, the legal
validity of the award was not questioned under that Act, since the
agency was entitled to rely upon the cognizant agencies' authorizations.
Matter of: Dr. Edward Margulies
File: B-224687
Date: March 9, 1987
DIGEST
A physician who contracted with Indonesia to perform healthrelated
services, and who was paid by funds granted to Indonesia by the United
States Agency for International Development, arranged with a freight
forwarder to move his personal effects from the United States to
Indonesia. The physician's contract provided that he would not be
reimbursed for using foreign air carriers if U.S. air carriers were
available, but the forwarder did not use available U.S. air carriers.
Since the contract provision was based on the requirements of the Fly
America Act, which precludes payment of U.S. funds for international air
transportation on foreign air carriers where U.S. air carriers are
available, the physician may not be reimbursed for the use of the
foreign air carrier. Further, there is no authority to permit waiver of
the act in this case.
DECISION
The question in this case is whether the Fly America Act may be
waived so that the United States Agency for International Development
(AID) may reimburse an AID-financed contractor who paid for the use of a
foreign air carrier in the international air transportation of his
personal effects. 1/ Since the Fly America Act precludes expenditures of
U.S. Government funds for the use of a foreign air carrier in
international air transportation where there is no justification to
demonstrate the necessity for it, and no justification has been shown in
this case, AID may not reimburse the contractor.
BACKGROUND
Dr. Edward Margulies contracted with the Ministry of Health of
Indonesia to provide his services in furtherance of a health improvement
project financed by funds granted by AID to Indonesia. The contract
between the Indonesian agency and Dr. Margulies, the contractor,
reflects certain conditions that AID imposed in connection with the
granted funds. The contract provided that Dr. Margulies would be
reimbursed for moving his personal effects from the United States to
Indonesia, but that he had to use U.S. air carriers if they were
available. The contract provided a definition of availability and also
included a formula for determining the amount Dr. Margulies would not be
reimbursed if he impermissibly used foreign air carriers.
AID informed us that contractors in grant projects of this nature
make their own transportation arrangements for moving their household
effects from the United States to the country involved without
assistance or instructions from AID in dealing with the movers.
Therefore, the mover selected by the contractor would not necessarily be
informed of any transportation requirements involving the sole use of
U.S. air carriers that would apply, even though the mover's bills are
presented directly to AID for payment. The responsibility thus rests
with the contractor to inform the mover of those requirements.
In this case Dr. Margulies indicates that he instructed the mover, a
freight forwarder, to use only American carriers in the transportation
of his personal effects, but the forwarder used a foreign air carrier to
take the effects from Honolulu through Hong Kong, Singapore, and then to
Jakarta. AID's office in Jakarta paid only $163.28 out of the
forwarder's total bill of $616.59 because AID determined that a U.S. air
carrier had been available from Honolulu through Tokyo to Hong Kong,
with a change to a foreign air carrier only being necessary for the last
part of the trip from Hong Kong to Jakarta. The $453.31 difference was
determined under the liability formula in the contract. The forwarder's
agent in Jakarta still had possession of Dr. Margulies' personal effects
when AID refused payment of the total bill, and the agent would not
release the effects until he paid the $453.31 difference. He did pay
that amount and now requests reimbursement from AID, suggesting that in
the circumstances there should be a waiver of the provisions contained
in his contract relating to the requirement that he use U.S. air
carriers.
ANALYSIS AND CONCLUSION
When an agency in furtherance of an agreement, such as the health
improvement project in this case, obtains international air
transportation and pays from funds "* * * appropriated, owned,
controlled, granted, or conditionally granted * * *," the Fly America
Act, 49 U.S.C. App. Sec. 1517, prohibits the use of any of those funds
for a foreign air carrier unless U.S. air carriers are unavailable. The
act applied to the transportation of Dr. Margulies' personal effects
paid for by the funds AID granted in this case. The provision in the
contract between the Ministry of Health of Indonesia and Dr. Margulies
requiring him to use U.S. air carriers was not negotiable but was
instead simply the means AID used to inform him of the mandatory
requirements of the act. Although he indicates that he did make an
attempt to fulfill the requirement by instructing the forwarder to use
U.S. air carriers, because there were no U.S. air carriers offering
direct cargo service from Honolulu to Jakarta the forwarder instead
apparently followed the usual commercial practice of picking the most
expeditious service offering the fewest plane changes. Dr. Margulies
has not furnished a copy of the instructions he gave to, or the
agreement he had with, the forwarder, and it is not clear from the
record before us what mutual understanding may have existed between them
in the matter.
It is our view that AID in any event had no choice but to apply the
Fly America Act when the forwarder's bill was presented and when Dr.
Margulies later applied for reimbursement. The act requires the
disallowance of any expenditure for international air transportation by
a foreign air carrier in the absence of satisfactory proof of necessity
therefor. AID's determination of U.S. air carrier availability, without
any other extenuating circumstances, precludes such a finding of
necessity. Furthermore, there is no provision in the act for waiver of
its requirements. 2/ Therefore, Dr. Margulies may not be reimbursed by
AID.
Comptroller General
of the United States
FOOTNOTES
1/ This responds to a request for a decision from Richard McClure,
the Controller for AID in Jakarta, Indonesia.
2/ See Jasinder S. Jaspal and Claude A. Goode, 80 Comp. Gen. 718
(1981); and Arnold J. Jacobius, B-186007, November 15, 1976. In
addition, the liability imposed under the formula contemplated by and
prescribed through regulation under the act cannot be waived. See,
generally, Arthur R. Thompson, 56 Comp. Gen. 209 (1977).
Matter of: Pride Container Corporation
File: B-224678; B-224679
Date: January 16, 1987
DIGEST
Where agency reasonably determines after bid opening that
solicitations' terms which restrict subcontracting overstate its minimum
needs, do not permit full and free competition on an equal basis, and
may have unnecessarily increased the government's costs, the agency has
a compelling reason for cancellation of the solicitations.
DECISION
Pride Container Corporation (Pride) protests the cancellation after
bid opening of invitation for bids (IFBs) Nos. 160-791 and 160-793, and
the proposed award of contracts to the Georgia Pacific Corporation (GPC)
under the resolicitation of these IFBs issued by the Government Printing
Office (GPO) for the procurement of mailing tubes, express mail boxes,
and instruction sheets and forms for the United States Postal Service.
We deny the protests.
The solicitations were mailed in early August 1986 to more than 30
prospective bidders. Bids were opened under both IFB's as scheduled on
August 18. Three bids were received under IFB No. 160-791, and four
bids were received under IFB No. 160-793. Pride submitted the lowest
bid under each of the IFB's.
On August 19, GPO notified Pride that it was the low bidder under
both solicitations and therefore was in line for the award of both
contracts. Pride then informed GPO that it would be subcontracting the
printing aspects of the contract work. On August 20, GPO again
telephoned Pride, and notified Pride that paragraph 2-4 of GPO contract
terms No. 1 (revised 10/80), 1/ incorporated by reference into the two
solicitations, prohibits the subcontracting of the predominant
production function of GPO contracts, and that if a predominant
production function other than presswork (printing) is not identified in
the specification, it is deemed to be presswork. GPO thereby notified
Pride that it would be prohibited by the solicitations' terms from
subcontracting the presswork. Pride told GPO that it thought the clause
in question created an ambiguity concerning the propriety of
subcontracting the presswork, that Pride did not have any available
presstime, and that notwithstanding the solicitations' alleged
prohibition against it, Pride still planned to subcontract the
presswork.
Pride telephoned GPO on August 21, and reiterated its intention to
subcontract the printing. At that time, the contracting officer for the
solicitations notified Pride that because he believed that the clause in
question prohibited the subcontracting of the presswork, he had no
choice but to find Pride nonresponsible.
By letter dated August 22, Pride filed a protest with GPO against
GPO's rejection of Pride's two bids. Pride argued that since printing
only represented 7.1 percent of its total bid prices, it is not the
predominant production function and therefore Pride should not be
prohibited from subcontracting this aspect of the job under paragraph
2-4 of the contract terms. Pride also contended that GPO should not
readvertise its requirements since bid prices had already been exposed
and resolicitations would prejudice Pride.
GPO denied Pride's protest against the nonresponsibility
determination by letter dated August 28. However, in that letter, GPO
agreed with Pride that the predominant production function could be the
fabrication of the containers. Nonetheless, GPO stated that it decided
that it must cancel the solicitations and resolicit because paragraph
2-4 of GPO contract terms No. 1 states that the predominant function is
presswork unless otherwise stated in the solicitations, and the
predominant function may not be subcontracted. GPO concluded that the
award of contracts to Pride, in conflict wit GPO contract terms, would
be prejudicial to other potential or actual bidders that believed that
the contract terms prohibited subcontracting of the presswork and
therefore either did not bid or varied their prices based on the
prohibition against subcontracting of the printing. Therefore, GPO
decided that in order to protect the integrity of the bidding system and
to obtain the lowest cost to the government, it would cancel and
readvertise the solicitations, giving the bidders the option to
subcontract either the presswork or the construction of mailing
containers.
On September 4, GPO resolicited bids and amended the relevant
specification by stating: "The provisions of the article entitled
"subcontract," GPO Pub. 310.2 are modified to permit subcontracting of
either the presswork or the construction of the container." Telephone
bids were permitted under the resolicitations. Bids were opened as
scheduled, on September 12, and GPC, which had not bid on the earlier
solicitations (for a reason other than any deficiency in the
solicitations), was the low bidder under both resolicitations. Award of
these contracts has not yet been made.
Pride filed its protests with our Office on September 15 against the
rejection of its first bids and the cancellation of the original
solicitations. Citing our decision in American Mutual Protective
Bureau, 62 Comp. Gen. 354 (1983), 83-1 C.P.D. P 469, Pride argues that
although the solicitations contained deficiencies concerning the
subcontracting provisions, there was not a compelling or cogent reason
to cancel the IFB's and resolicit because the government would receive
the goods it wanted and there was no showing of prejudice to bidders.
While we agree with the protester that under the original
solicitation, GPO would have received the product it wanted, we cannot
agree that there was no snowing of prejudice to the bidders at the time
the contracting officer made his determination to cancel the IFB. In
American Mutual Protective Bureau, 62 Comp. Gen. 354, supra, the record
clearly indicated that the six lowest bidders had, notwithstanding an
ambiguity in the IFB which provided two Service Contract Act guard
rates, bid the proper guard rate of the two contained in the IFB.
Thus, no actual prejudice to bidders could be shown based on the
original bids.
Here, however, the protester refers to the resolicitation results to
show that the contracting officer's concern, that prejudice to other
bidders must have resulted from the waiver of the subcontracting
provision, was unjustified. While the solicitation gave the contracting
officer the unilateral right to permit the awardee to subcontract the
predominant function, the protester, prior to award, sought to condition
the award on the contracting officer's waiver of the subcontracting
prohibition, in effect taking exception to an IFB requirement. The
contracting officer, while recognizing that he could waive the
subcontracting prohibition, reasonably concluded, in our view, that
granting a waiver of this provision to Pride without affording the other
bidders the opportunity to bid on the less restrictive basis which would
permit subcontracting of the presswork would be unfair and potentially
prejudicial.
Thus, at the time it canceled the solicitations it appeared to GPO
that other actual and potential bidders were prejudiced by the original
solicitations' more restrictive contract terms. GPO also concluded that
bidders might have had to increase their prices due to the prohibition
against subcontracting of the presswork and therefore the government
could save money by more clearly expressing its minimum needs by
resoliciting. In addition, other potential bidders may have been
precluded from bidding due to the prohibition. In these circumstances,
cancellation of the IFBs was proper. Alliance Properties, Inc., 64
Comp. Gen. 854 (1985), 85-2 C.P.D. P 299; Meds Marketing, Inc.,
B-213352, Mar. 16, 1984, 84-1 C.P.D. P 318.
The protests are denied.
Harry R. Van Cleve
General Counsel
FOOTNOTE
1/ Paragraph 2-4 of GPO Contract terms No. 1 states:
"2-4. Subcontracts. The contractor may make contracts with
any other party for the furnishing of any part of the articles or
work called for in the contract, with the exception that the
predominant production function required in the performance of the
contract shall not be subcontracted, unless prior written approval
is obtained from the Contracting Officer. If the predominant
production function is other than presswork, it shall be so
identified in the specifications."
Matter of: Prevailing Rate Employees - Proper Wage Schedule for
Certain Floating Plant Operators
File: B-224662
Date: August 21, 1987
DIGEST
The National Federation of Federal Employees (NFFE) requests our
decision as to whether certain U.S. Army Corps of Engineers prevailing
rate employees who work aboard a floating plant and are paid under a
special schedule with rates set according to the New Orleans, Louisiana
wage area may be placed under the Lake Charles-Alexandria wage area
schedule or, in the alternative, under a special schedule with rates
comparable to that wage schedule. The NFFE's request may not be granted
since it appears that the employees are being paid in accord with
longstanding Corps practices. Any change in those practices must be
authorized by the Office of Personnel Management after consideration and
recommendation by the Prevailing Rate Committee.
DECISION
The President of the National Federation of Federal Employees (NFFE),
Mr. James M. Peirce, has requested our decision as to whether certain
U.S. Army Corps of Engineers (Corps) prevailing rate employees who work
aboard a floating plant and are paid under a special schedule with rates
set according to the New Orleans, Louisiana wage area should be placed
under the Lake Charles-Alexandria wage area schedule or, in the
alternative, under a special schedule with rates comparable to that wage
schedule. Mr. Peirce submitted this request under our procedures set
forth at Part 22, Title 4 of the Code of Federal Regulations for
decisions on appropriated fund expenditures which are of mutual concern
to agencies and labor organizations. Although the Corps has not
objected to our consideration of this matter, it has declined to submit
any comments. We requested the comments of the Office of Personnel
Management (OPM) on this matter and provided both the Corps and NFFE
with the opportunity to respond to those comments. Only the NFFE
responded. For reasons which we will explain below, we cannot grant the
relief that NFFE seeks.
The seven Corps employees who are the subject of this request work
aboard the picket boat Kent at the Old River Control Structure located
in Concordia Parish, Louisiana. As we understand it, the Old River
Control Structure is a sill, or weir constructed by the Corps which
controls the amount of water flowing from the Mississippi River to the
Atchafalaya River in order to prevent the Mississippi from changing its
course. The picket boat Kent patrols the Mississippi in the vicinity of
the Old River Control Structure, protecting the structure from vessels
and barges which may be drawn from the Mississippi to the Atchafalaya
through its gates. 1/
The operations of the Kent are under the jurisdiction of the Corps'
District Engineer, New Orleans, Louisiana District. All floating plant
personnel under the jurisdiction of the New Orleans District Engineer
are paid according to the Federal Wage System schedule for the wage area
in which the New Orleans District Headquarters is located--the New
Orleans, Louisiana wage area. The Old River Control Structure is
located within the Lake Charles-Alexandria, Louisiana, Federal Wage
System wage area. The NFFE asserts that the floating plant personnel
aboard the Kent should be placed under the Lake CharlesAlexandria wage
area or on a special schedule identical to that schedule because they
are permanently stationed in Concordia Parish, Louisiana, and perform
all of their work within the Lake Charles-Alexandria wage area while the
other floating plant personnel are stationed at the New Orleans District
Headquarters and travel through several wage areas as their workload
dictates.
Under the Federal Wage System, 2/ all prevailing rate employees who
work within a wage area are paid according to rates set by the regular
wage schedules established for that area unless specifically excluded
and paid under a special schedule. Special schedules fall within two
broad categories, those established by OPM pursuant to OPM regulations
found at 5 C.F.R. Sec. 532.231 and those documented" under the Federal
Wage System. The latter category consists of agency-established special
schedules in existence when the Coordinated Federal Wage System was
implemented in 1968. Paragraph 2 of Subchapter 2, Federal Personnel
Manual (FPM) Supplement 532-1, which covers the procedures and
instructions for the operation of the Federal Wage System, provides with
regard to these special schedules:
"There are many special schedules now in use on which
determinations have not been made to either continue to pay the
employees special schedule rates or to bring them under the
regular wage schedules of the wage system. These schedules
described in Appendix V, have been adjusted under policies and
practices of the establishing agency. As an interim measure they
are continued as special schedules under the Federal Wage System
until they have been reviewed and decisions have been made on the
recommendations of the Federal Prevailing Rate Advisory
Committee."
Corps floating plant operators are paid by special schedules within
this category which are documented in Section B of Appendix V to FPM
Supp. 532-1. Section B provides as follows with regard to the basis for
the floating plant schedules:
"Schedules are established identical to the regular Federal
Wage System schedule for wage area in which the District
Headquarters are located, except that when the floating plant
operations are performed exclusively in a wage area other than the
District headquarters wage area, the special schedule is
established identical to the regular wage schedule for the wage
area in which the floating plant operations are performed."
The NFFE's basic contention is that a new special schedule for the
Kent employees is justified under the language of Section B of Appendix
V, quoted above, providing for an exception to the use of the District
headquarters wage area schedule when the floating plant operations are
performed exclusively in a wage area other than the District
headquarters wage area. It points out that the Kent employees perform
all of their work within the Lake Charles-Alexandria wage area and that
the Kent has not moved from the Old River Control Structure since 1981
when it arrived to replace the picket boat Belmont, which had operated
at the Old River Control Structure since 1973. The NFFE further
supports its contention by pointing out that the Kent employees are
permanently assigned to Concordia Parish rather than the New Orleans
District Headquarters.
In 1980 and 1981, the Commander of the New Orleans District and the
Commander of the Lower Mississippi Valley Division of the Corps made
several requests to the Corps Headquarters in Washington, D.C., for
support of the establishment of a special schedule for the employees
assigned to floating plant positions at the Old River Control Structure.
3/ In addition to the reasons cited by the NFFE, it was pointed out in
these requests that the use of the New Orleans wage area schedule
results in a disparity of treatment between the floating plant operators
and a group of lower skilled maintenance employees at the Old River
Control Structure who are paid under the Lake CharlesAlexandria wage
area schedules. These requests also indicated that there was a
disparity between the pay of the Kent floating plant operators and those
permanently duty stationed in New Orleans because the latter received
per diem while the Kent employees stopped receiving per diem at the time
they were transferred to Concordia Parish. 4/ Finally, the New Orleans
District Headquarters pointed out that the application of the New
Orleans wage area schedule to the Kent employees made recruitment and
retention difficult.
The Corps Headquarters in Washington, D.C., responded that it could
not support these requests for implementation of a special schedule. It
stated that the language of Section B, Appendix V of FPM Supplement
532-1 had been misinterpreted because exceptions to the practice of
establishing schedules identical to the regular Federal Wage System
schedule for the wage area in which a District Headquarters is located
are permitted only when the entire floating plant operations of a
District are performed exclusively in a wage area other than the
District headquarters wage area. The Washington Headquarters stated
that this interpretation had been implemented through Corps actual
practices for 25 years. The Washington Headquarters also stated that
OPM would have to approve any new special schedule.
We wrote to OPM for its comments on this case, specifically with
regard to the proper interpretation of the language relating to
exceptions in Section B, Appendix V of FPM Supp. 532-1. The OPM
responded that it believes the Corps interpretation, that the exception
applies only when all floating plant operations performed by the Corps
in the District are located in the non-District wage area, is the
correct interpretation. It went on to state, however, that:
"We recognize that language in Appendix V, as to the basis for
the schedule, may be ambiguous and subject to different
interpretations. However, the overriding fact is that Subchapter
S2-2 of the FPM Supplement requires the Corps to continue its
pre-1972 pay practices for the floating plant employees. Based on
the information available to us, it appears that the Corps has
consistently followed their expressed practice for over 25 years.
The Corps has no legal authority to change that practice unless
approved by OPM."
In its letter to us OPM concluded by stating that:
" I t is our understanding that the Corps is now studying the
set aside floating plant special pay practices preliminary to
making a recommendation for Federal Prevailing Rate Advisory
Committee consideration. The Committee is the proper forum for
studying this particular special schedule practice and some of its
attendant problems. We hope that the National Federation of
Federal Employees, as a member of the Committee, will present its
views relative to pay equity for the employees involved when the
present practice is considered by the Committee."
The NFFE responded to OPM's letter by pointing out that OPM had dealt
only with the Union's interpretation of Section B of Appendix V and the
possibility of establishing a new special schedule. It contends that
OPM ignored its argument that the picket boat Kent cannot be described
as a "floating plant" since it does not move out of the area and, that
as a result, the employees should be placed under the regular schedule
of the Lake Charles-Alexandria wage area.
The NFFE has cited no definition of the term "floating plant," so as
to provide a context for addressing its argument that the Kent is not,
in fact, a floating plant. Moreover, even though the Kent does not move
out of the Lake Charles-Alexandria area and apparently has not done so
for some time, the Union has not demonstrated that the operations of the
Kent or the duties of its employees differ in any way from the
operations and functions performed by other picket boats and their
employees. Therefore, we have no basis to determine that the Kent is
not a floating plant.
It is clear that OPM is the final authority for approving special
schedules and rates under the Federal Wage System. Section 5343(c) (3)
(B) of Title 5, United States Code, provides that OPM shall issue
regulations prescribing requirements for the development of wage
schedules and rates for "non-supervisory and supervisory prevailing rate
employees paid under special wage schedules and rates * * *." The OPM's
regulations regarding special schedules, found at 5 C.F.R. Sec. 532.231,
and the provisions of S4-3, FPM Supp. 532-1 set forth the conditions
under which OPM will approve special schedules.
Both the Corps and OPM assert that the Corps is following its
longstanding practice with regard to the floating plant special
schedule. The NFFE does not challenge that assertion. As a result,
because we concur that it is the special schedule practice which must
control until changes are made through the prescribed channels, the Kent
employees are not entitled to placement under a different special
schedule nor are they entitled to be placed under the Lake
Charles-Alexandria wage area schedule rather receiving a new special
schedule. The latter change should also occur only after consideration
and recommendation by the Prevailing Rate Committee and final
determination by OPM.
Comptroller General
of the United States
FOOTNOTES
1/ The Control of Nature, Atchafalaya, The New Yorker, Feb. 23,
1987, at 39.
2/ The statutory provisions governing the Federal Wage System are
found in Subchapter IV of Chapter 53 of Title 5, United States Code.
3/ The Commanders also requested that employees assigned to floating
plant positions located at Simmesport, Louisiana (Avoyelles Parish), be
included in a new special schedule. The NFFE makes no mention of these
employees.
4/ Under 5 U.S.C. Sec. 5947 Corps employees engaged in floating plant
operations may be furnished quarters or subsistence or both if such is
determined to be equitable and necessary.
Matter of: Richard J. Waldman - Travel, Transportation and Living
Quarters Allowance - Waiver
File: B-224647
Date: September 28, 1987
DIGEST
1. National Security Agency employee transferred to overseas post is
not entitled to any travel, transportation or relocation expenses,
overseas living quarters allowances, or supplementary post allowances,
erroneously paid by the agency on account of employee's dependent son.
Son was in sole legal custody of employee's former spouse by virtue of a
court order and was therefore not a member of the employee's household
as required by the pertinent regulations.
2. With enactment of Public Law No. 99-224, December 28, 1985, the
waiver authority in 5 U.S.C. Sec. 5584 has been extended to include
erroneous payments of travel, transportation and relocation expenses and
allowances. This amendment is not retroactive, so the expanded waiver
authority applies only to overpayments made on or after December 28,
1985. The Comptroller General lacks jurisdiction to consider waiver of
overpaid travel and transportation expenses and supplementary post
allowances for National Security Agency employee's minor son in
connection with employee's overseas transfer, since such expenses were
paid prior to the December 28, 1985, effective date of the expanded
waiver act coverage.
3. Waiver of overpayments covering living quarters allowance for
employee's non-dependent son is denied since misinformation concerning
the status of minor sons which the employee provided to agency
authorizing officials in connection with his request for overseas
transfer allowances constitutes fault on the part of employee within the
meaning of 5 U.S.C. Sec. 5584(b) (1) (1982). This provision precludes
the Comptroller General from exercising equitable waiver authority where
the employee was at fault in providing erroneous information that gave
rise to the erroneous payment.
DECISION
The question presented in this case is whether an employee of the
National Security Agency who was transferred from Fort Meade, Maryland,
to Wiesbaden, Germany, must repay to the agency amounts he received in
connection with that transfer on account of his child who was not a
member of his household. 1/ For the following reasons the transportation
expense and the allowances he received on account of the child must be
repaid, since no authority existed prior to December 28, 1985, to waive
erroneous payments of travel, transportation, and relocation expenses.
Additionally, waiver under 5 U.S.C. Sec. 5584 is inappropriate for those
payments which could be considered for waiver.
BACKGROUND
The agency reports that in connection with his overseas transfer in
June 1984 Mr. Richard J. Waldman identified two sons as dependents under
the entry labeled "Dependent Information" on Standard Form 3920. Mr.
Waldman wrote the names of his current wife and his two minor sons by a
previous marriage, and he indicated that his two minor sons would be
delaying their travel until after he and his wife arrived at the
overseas post. Under the entry "local address and telephone number" he
wrote his Laurel, Maryland, address and telephone number for himself and
his wife only. As a result, agency travel officials had no way of
determining tnat the two minor sons were children of a previous
marriage, living with their natural mother, Mr. Waldman's former spouse,
at a different address in Silver Spring, Maryland. The agency also
could not determine from Mr. Waldman's disclosures that sole legal
custody had been given to the natural mother by a final divorce decree
which provided Mr. Waldman only with visitation rights.
The first of Mr. Waldman's minor sons traveled to Wiesbaden at
Government expense on or about July 29, 1984, and visited with Mr.
Waldman and his wife there until August 25, 1984, when he returned to
his mother's residence in Silver Spring to resume his permanent
residence with her and attend high school there. This son's return
travel to Silver Spring was officially approved as student travel at
Government expense. The second son never traveled to Wiesbaden, because
after his trip was rescheduled for December 1985, the National Security
Agency determined that there was no entitlement to either son's travel
to Wiesbaden. The two minor sons were not members of the employee's
household at the time the employee reported for duty at his new
permanent duty station as required by the definition of
"dependent/immediate family" in Volume 2 of the Joint Travel
Regulations, Appendix D, for the purpose of authorizing transportation
and relocation expenses of the employee's immediate family members. 2/
Since the agency determined that the two sons were in the sole legal
custody of their mother, Mr. Waldman's former spouse, they could not be
members of Mr. Waldman's immediate family for purposes of transfer and
relocation entitlements to the overseas post of duty. As a result, the
National Security Agency requested that Mr. Waldman return to the
Government $796 for travel expenses and $12.38 per diem it paid for the
first son's trip to Wiesbaden on or about July 29, 1984. It also sought
repayment of the $608.56 living quarters allowance expenses and $66
supplementary post allowance which had been paid to Mr. Waldman on
account of his son.
Mr. Waldman does not contest the ruling that his sons do not meet the
definition of "members of the employee's household." He does contend
that the agency knew, or should have known, of his marital status and
the appropriate dependency of his sons prior to any overseas travel. In
addition, Mr. Waldman states that he could not detect the overpayments
in question because the finance office made the computations on the
basis of fluctuating foreign exchange rates and he had to rely on these
computations. Mr. Waldman does not believe he should be required to
repay the Government because the National Security Agency had documents
(health benefit form, life insurance form, and personal personnel
security information) showing that his sons were not members of his
household. Thus, he states that since the agency should have been aware
that there was no entitlement but paid him anyway, and since he did not
know that these payments were unjustified, these overpayments should be
waived.
ANALYSIS AND CONCLUSION
There appears to be no dispute on the basis of the administrative
record before us that Mr. Waldman was not entitled to transportation and
travel expenses for his sons in connection with his transfer to an
overseas post. In order for a divorced employee's child to be a member
of the employee's household, the child must be in the legal custody of
the employee and must reside with the employee beyond the exercise of
mere visitation rights. Ernest F. Gianotti, 59 Comp. Gen 450, at 456
(1980). Also, failure to satisfy a similar requirement in the
Standardized Regulations, governing overseas allowances of civilian
employees, made Mr. Waldman ineligible for the increased living quarters
allowance and supplemental post allowance he received because of his
son's visit. Both allowances may be increased if the employee has
additional "family members." See sections 134 and 932.22 of the
Standardized Regulations concerning the living quarters allowance, as
well as section 233 pertaining to the supplementary post allowance. A
child is within the definition of "family member" in section 040m of the
Standardized Regulations only if the child normally resides with the
employee at the overseas post. Since Mr. Waldman's sons never intended
to perform anything more than visitation travel, the agency correctly
construed that there was no increase in Mr. Waldman's entitlements.
The erroneous overpayments to Mr. Waldman did not bestow any right to
the unauthorized benefits received. When a Government employee makes an
improper payment outside the scope of the employee's authority, the
United States is not estopped to deny the validity of the overpayment
and seek recoupment. See for example Joseph Pradarits, 56 Comp. Gen.
131 (1976), and court cases cited therein. This rule applies even
though the recipient of the payment may have had no actual knowledge
that he was receiving an unauthorized payment.
We have reviewed Mr. Waldman's request for waiver of the erroneous
payments of overseas travel and relocation allowances under 5 U.S.C.
Sec. 5584. Under this authority waivers are permitted only when the
collection of the erroneous payments would be against equity and good
conscience and not in the best interest of the United States. Moreover,
there must be no indication of fraud, misrepresentation, fault or lack
of good faith on the part of the employee receiving the overpayment.
See 5 U.S.C. Sec. 5584(b) (1). Prior to December 28, 1985, waiver
consideration was restricted to overpayments of an employee's "pay and
allowances." Claims arising from erroneous payments of travel,
transportation, and relocation expenses and allowances were excluded.
With the enactment of Public Law No. 99-224, December 28, 1985, the
waiver authority in 5 U.S.C. Sec. 5584 was extended to include erroneous
payments of travel, transportation, and relocation expenses and
allowances. However, this amendment was not retroactive, so the
expanded waiver authority applies only to travel-related overpayments
made on or after December 28, 1985. See generally B-197290, February 4,
1986. As a result, since Mr. Waldman's minor son's travel and
transportation costs to Wiesbaden were paid before December 28, 1985,
there is no jurisdiction to consider waiver of these items under 5
U.S.C. Sec. 5584. Further, as the supplementary post allowance was in
the nature of a relocation expense, its payment prior to the effective
date of the expanded waiver authority is similarly precluded from
consideration.
The erroneously overpaid living quarters allowance is within the
category of "pay and allowances" and may be considered for waiver under
5 U.S.C. Sec. 5584 with respect to overpayments arising both before and
after December 28, 1985. See Clyde A. Finnell, B-199800, August 12,
1981. However, these erroneous overpayments resulted directly from the
misinformation which, however unwittingly, Mr. Waldman provided to the
agency for the purpose of preparing overseas transfer entitlement
authorization documents. Thus, although there is no indication that Mr.
Waldman acted fraudulently to increase his right to compensation, it
would be inequitable to allow Mr. Waldman to profit from his provision
of erroneous information to agency travel officials by waiving the
Government's right to recoup the erroneous payments. In addition
pursuant to 5 U.S.C. Sec. 5584(b) (1), the Comptroller General may not
exercise waiver authority in any claim where there exists in connection
with the claim an indication of fault on the part of the employee. We
conclude that he is not free from fault in the creation of the erroneous
overpayments in this case and therefore waiver would be inappropriate.
Additionally, while the agency has not questioned the son's return
travel from Wiesbaden to Silver Spring, Maryland, it would appear that
no authority existed for this travel. See section 280 et seq.,
Standardized Regulations. The agency should review the circumstances of
that travel and, if appropriate, initiate collection action for it also.
Comptroller General
of the United States
FOOTNOTES
1/ The question was presented by Kenneth F. Chute, Finance and
Accounting Officer, National Security Agency.
2/ A substantially identical definition of immediate family members
is provided in the Federal Travel Regulations, para. 2-1.4d (Supp. A,
August 23, 1982), incorp. by ref., 41 C.F.R. Sec. 101-7.003 (1983).
Matter of: Mary Ann Relford -- Per Diem
File: B-224636
Date: June 1, 1987
DIGEST
Agency's determination that employee cannot be paid per diem for
temporary duty because her lodgings at the temporary duty site were also
the residence or place of abode from which she commuted daily to her
permanent duty station is sustained. Although the employee initially
acted prudently in establishing a residence at the temporary duty site
in view of her recurring assignments there, there is no explanation as
to why she continued to lodge at the temporary duty site and commute to
her permanent duty station after all temporary duty had ended.
Accordingly, we cannot conclude that the agency's determination is
incorrect. See FTR para. 1-7.6a and cases cited.
DECISION
This is a request from Michael J. McAuley, National Counsel, National
Treasury Employees Union, for a decision concerning the claim of Mary
Ann Relford for per diem for the period June 3 through August 30, 1985.
1/ The agency has denied her claim because it found that she had
established a residence at the temporary duty site from which she
commuted daily to her permanent duty station. We sustain the agency's
denial of her claim.
FACTS
Prior to July 2, 1984, Ms. Relford was a tax auditor at the Terre
Haute, Indiana office of the Internal Revenue Service.
On July 2, 1984, she was selected for promotion to the position of
revenue agent in Lafayette, Indiana. She accepted the position but, as
noted below, did not report for duty at Lafeyette at that time.
From July 2 to August 10, 1984, she was detailed to Cincinnati to
teach a tax auditor course. Thereafter, from August 15, 1984, to
January 31, 1985, she was assigned to Indianapolis on a combination work
and training detail. She was informed at that time that after a short
period at her new permanent duty station in Lafeyette, she would have to
return to Indianapolis to continue her training.
Accordingly, she and her daughter lodged in Indianapolis; first at a
hotel, then at a rented condominium, and later at a rented house. Her
daughter attended school in Indianapolis. The union states that Ms.
Relford moved only a few belongings such as beds and a television to
Indianapolis. She left the bulk of her household goods in Terre Haute.
She claimed and was paid per diem for this period.
On February 1, 1985, Ms. Relford reported for duty at her permanent
duty station in Lafayette, but worked there only 2 or 3 days a week.
The other half of the week, she reported to Indianapolis to finish up
her assigned cases there. During this period, she and her daughter
continued to occupy lodgings in Indianapolis and she commuted to
Lafayette 2 or 3 days per week. 2/ She did not claim per diem for this
period because her supervisor told her that the Federal Travel
Regulations precluded her from receiving per diem if she did not move to
Lafayette, her permanent duty station. As expected, from June 3 to
August 30, 1985, Ms. Relford was again detailed to Indianapolis for
training.
The record indicates that Ms. Relford continued to lodge in
Indianapolis and commute to Lafayette even after her temporary duty in
Indianapolis was over. She and her daughter continued to occupy the
same house in Indianapolis and apparently never obtained a permanent
residence in Lafayette. In June 1986, Ms. Relford obtained other
employment in Terre Haute and left the service of IRS.
Thus, from August 1984 through June 1986, Ms. Relford occupied
lodgings in Indianapolis, with only minimal furnishings. She left her
remaining goods in Terre Haute and returned there almost every weekend.
3/ She owned a home in the Terre Haute area and, when that home was
rented out, she maintained a residence at the second floor apartment at
the home of her parents. She also operated an approved outside small
business in Terre Haute. She hoped to return to Terre Haute completely
as soon as an opening as a revenue agent occurred in the Terre Haute
office of IRS.
Ms. Relford submitted a voucher for per diem for the period June 3 -
June 30, 1985, and $1,137.94 was ultimately paid on that voucher.
However, her vouchers for July end August were returned unpaid and the
agency has apparently advised her that it seeks recovery of the amount
they now believe was incorrectly paid on the June voucher.
POSITION OF THE PARTIES
The agency's position that Ms. Relford is not entitled to per diem
for the period June through August 1985 is based upon section 312(1) of
the Internal Revenue Manual (IRM), which provides that per diem is
prohibited at either an employee's permanent duty station or the place
of residence from which he or she commutes daily to the official
station. The agency determined that Ms. Relford had made Indianapolis
her residence and, therefore, she was not entitled to per diem for
periods of temporary duty at Indianapolis.
The union argues that the actual residence of Ms. Relford was Terre
Haute, not Indianapolis, and goes into some detail describing the many
personel and legal ties Ms. Relford has to the community of Terre Haute.
The union argues that since Terre Haute wee Ms. Relford's residence,
the IRM provision referred to above does not apply and she is entitled
to per diem.
Ms. Relford filed a grievence contesting the agency's position and
the record contains a copy of the agency's final decision on the
fourth-step grievance meeting. The union advises that arbitration has
not been invoked because the matter has been referred to the Comptroller
General.
DISCUSSION
We first point out that the fact that Ms. Relford maintained a
residence in Terre Haute for the entire period of her assignments to
Indianapolis and Lafayette is not determinative of her entitlement to
per diem. The agency did not assign her to Terre Haute at any time
after August 1984. Her reasons for continuing to maintain a residence
after that were purely personal and are unrelated to any entitlements
she may have as a result of the government's actions in assigning her to
Lafayette end Indianapolis. Employees are, of course, free to maintain
a second residence away from their duty station if they wish, but the
government is not responsible for any additional costs or inconvenience
arising out of the maintenance of that second residence.
Secondly, we point out that the IRM regulation relied upon by the
agency is based upon paragraph 1-7.6e of the Federal Travel Regulations
(FTR) (Supplement 1, September 28, 1981), which provides, in pertinent
part, as follows:
"a. No allowance at permanent duty station. Per diem instead
of subsistence may not be allowed an employee either at his/her
permanent duty station or at the place of abode from which he/she
commutes daily to the official station. * * *"
The difference in terms--"residence" in the IRM provision and "place
of abode" in the FTR provision--is also not determinative of Ms.
Relford's entitlement to per diem.
Whether the term used is residence or place of abode, the purpose of
the FTR provision and the corresponding IRM provision is to preclude the
payment of per diem at the employee's permanent duty station or, when
the employee chooses to live at a location away from the permanent duty
station end commute to his permanent duty station, to preclude payment
of per diem at that location. Per diem is precluded at these locations
because the purpose of per diem is to compensate an employee for
additional expenses incurred when the government assigns him to duty
away from the location of the residence which he or she maintains in
connection with the permanent duty station. Frederick C. Welch, 62
Comp. Gen. 80 (1982).
In view of the above, the issue in this case is not whether Ms.
Relford maintained a residence or place of abode in Terre Haute. (In
fact, she maintained two residences or places of abode, one in Terre
Haute for personal reasons, and one in Indianapolis in connection with
her assignment there and her assignment in Lafayette.) Rather, the issue
is whether her residence or place of abode in Indianapolis was
maintained in connection with her permanent duty station in Lafayette or
whether it was maintained solely because of her extended temporary duty
in Indianapolis.
If her residence in Indianapolis was maintained solely because of her
temporary duty there, and is not the residence she maintained in
connection with her permanent assignment to Lafayette, she would be
entitled to per diem for the 2 to 3 days per week she reported to
Indianapolis during the period February through May 1985, and for the
period of her training in Indianapolis for the months June through
August 1985. 4/ If, however, her residence in Indianapolis was the
residence from which she commuted daily to her official duty station in
Lafayette, FTR para. 1-7.6a precludes per diem for either period.
There are facts in this case which would support either point of
view. Ms. Relford initially obtained lodgings in Indianapolis because
of her temporary duty assignment to that location. Moreover, she acted
prudently in maintaining her residence or place of abode in Indianapolis
and commuting to Lafayette half of each week for the period February
through May 1985, since she worked the other half of each week in
Indianapolis and knew that she would be reassigned there shortly for
another 3 months of training. Were these the only relevant facts, it
would be difficult to conclude that she was not entitled to per diem.
Compare Nicholas G. Economy, B-188515, August 18, 1977.
However, as noted by the agency, even after all of her temporary duty
in Indianapolis was concluded, Ms. Relford continued to lodge in
Indianapolis and commuted daily to Lafayette. She never established a
residence in Lafayette and resided in Indianapolis (with weekends in
Terre Haute) until she left the agency in June 1986. The record
contains no explanation as to why Ms. Relford continued to reside in
Indianapolis after her temporary duty there ended. Compare Nicholas G.
Economy, supra; and Gary R. Carini, B-203440, February 26, 1982. In
the absence of further information, we cannot conclude that the agency
was incorrect in determining that her residence in Indianapolis was the
residence she maintained in connection with her permanent duty station
in Lafayette, from which she commuted daily.
In view of the above, the agency's denial of per diem for July end
August 1985 is sustained. There remains the question of the $1,137.94
already paid based on the voucher for June 1985. Based upon the present
record, payment of this amount is erroneous and subject to recoupment.
We note that the record does not state when this payment was made. If
the payment was made on or after December 28, 1985, it may be considered
for waiver pursuant to 5 U.S.C. 5584, as amended by Public Law 99-224,
99 Stat. 1741-1742, December 28, 1985. See B-197290, February 24, 1986.
Comptroller General
of the United States
FOOTNOTES
1/This is a labor relations matter filed pursuant to 4 C.F.R. Part 22
(1986). The agency was served with a copy of the union's submission but
has filed no response or comments. Accordingly, this is considered a
joint request. 4 C.F.R. Sec. 22.7(b) (1986).
2/The union states that Ms. Relford commuted approximately 45 miles
between Indianapolis and Lafayette. The atlas lists this distance as 66
miles.
3/The union states that Terre Haute is approximately 65 miles from
Indianapolis and 60 miles from Lafayette. The atlas gives the distance
between Terre Haute and Indianapolis as 71 miles and the distance
between Terre Haute and Lafayette as 84 miles.
4/ Robert E. Larrabee, 57 Comp. Gen. 147 (1977); James H. Quiggle,
B-192435, June 7, 1979; Scott E. MacPherson, B-197227, July 28, 1980;
and Robert Gray, B-203820, October 19, 1981.
Matter of: Ronald Rapka - Relocation Expenses
File: B-224631
Date: September 17, 1987
DIGEST
Department of the Navy employee's transfer to a new duty station 45
miles from his old duty station pursuant to a merit promotion was in the
interest of the Government. Because the distance between the two duty
stations was more than 10 miles and because the employee relocated his
residence from 60 miles to 30 miles from the new station, he is entitled
to relocation expenses.
DECISION
The issue here involves the claim of a civilian employee of the
Department of the Navy for relocation expenses incident to a transfer in
which he relocated his residence from a distance of 60 miles to 30 miles
from his new permanent duty station. The agency questions whether the
transfer was in the interest of the Government and, if so, whether the
employee may be reimbursed relocation expenses in view of the relatively
short distances involved. For the following reasons, the employee is
entitled to reimbursement of allowable relocation expenses.
This decision is in response to a request for a decision from the
Counsel for the Military Sealift Command, Atlantic (agency), concerning
whether the reimbursement of relocation expenses for a civilian
employee, Mr. Ronald Rapka, arising in connection with a permanent
change of station (PCS), is proper.
Prior to 1985, Mr. Rapka was employed at Fort Monmouth, New Jersey,
as a contract price analyst with the Army. In early 1985, the agency
advertised under a merit promotion program for a Deputy Director of
Contracts. They selected Mr. Rapka, who was promoted to a higher-grade
position and began his new job in Bayonne, New Jersey, on June 24, 1985.
The distance between Mr. Rapka's old duty station at Fort Monmouth and
his new duty station in Bayonne is approximately 45 miles. The record
shows that Mr. Rapka inquired about relocation expenses at the time of
his interview for employment and was informed that he would receive any
relocation expenses authorized in the regulations.
At the time of his selection, Mr. Rapka lived in Bricktown, New
Jersey, approximately 17 miles from Fort Monmouth, and 60 miles from
Bayonne. In April of 1986, Mr. Rapka contracted to purchase a house in
Belford, New Jersey, and he assumed occupancy in July 1986. Belford is
approximately 25 miles from Fort Monmouth and 30 miles from Bayonne.
In response to Mr. Rapka's request for reimbursement of his
relocation expenses the Civilian Personnel Office of the agency advised
him by a memorandum dated June 4, 1986, that he was not entitled to
relocation expenses since relocation expenses were not discussed when he
was interviewed and hired and no authority exists to issue retroactive
permanent change-of-station orders. In addition, the agency cited the
fact that it has used a 50-mile radius from job site to residence in
defining a reasonable commuting area for the purpose of determining per
diem and other employment-related entitlements. In this connection, the
agency personnel officials stated that Mr. Rapka "falls within the
50-mile radius in terms of his previous duty station." This statement
would appear to have reference to the 45-mile distance between the old
and new duty stations.
The payment of travel, transportation and relocation expenses is
authorized under 5 U.S.C. Secs. 5724 and 5724a. These provisions are
implemented by the Federal Travel Regulations (FTR). Paragraph 2-1.3
provides generally that relocation expenses are payable if an employee's
transfer is in the interest of the Government and not primarily for the
convenience or benefit of the employee, provided the new station is at
least 10 miles distant from the old station. In the case of a
relatively short distance transfer, FTR para. 2-1.3 requires a
determination under FTR para. 2-1.5b(1) that the relocation was
incident to the transfer. The agency in making such determinations will
take into consideration such factors as commuting time and distance
between the employee's residence at the time of notification of transfer
and the employee's old and new post of duty as well as commuting time
and distance between a proposed new residence and the new post of duty.
The regulation further provides that ordinarily a relocation will not be
considered incident to a transfer unless the one-way commuting distance
from the old residence to the new official station is at least 10 miles
greater than from the old station. Other circumstances may be
considered. Paragraph C4108 of Volume II of the Joint Travel
Regulations provides essentially the same criteria.
While the agency's Civilian Personnel Officer apparently concluded
that Mr. Rapka is not entitled to the relocation expenses, the agency
has expressed doubt concerning proper application of the pertinent
regulations to his case.
Mr. Rapka's change of station was the result of his selection for a
merit promotion. We have held that promotions under a merit promotion
program, and the consequent transfers, while obviously benefiting the
employee are in the interest of the Government and not primarily for the
convenience or benefit of the employee or at his request. Eugene R.
Platt, 59 Comp. Gen. 699 (1980).
With regard to the short distance involved, we note that the transfer
was between duty stations located 45 miles apart. This is well in
excess of the 10-mile minimum required by FTR para. 2-1.3. Moreover,
the facts support a determination that Mr. Rapka relocated his residence
for the purpose of moving closer to his new duty station. Mr. Rapka's
former residence was 17 miles from Fort Monmouth, his old station, and
60 miles from Bayonne, his new station. He moved to a new residence
which is only 30 miles from his new station. Thus, it appears that Mr.
Rapka's relocation conformed with the guidance provided in the
regulations. While the agency may have adopted a 50-mile rule for
determining a reasonable commuting area for per diem and other purposes,
the application of that rule to determine whether the distance between
old and new duty stations meets the criteria for payment of relocation
expenses is contrary to the requirements of the controlling regulations.
Under these regulations a transfer between duty stations 10 miles apart
is sufficient. Commuting distance between residence and duty station
becomes relevant only in determining whether the employee's change of
residence was incident to the change of station. In this regard, we
note that Mr. Rapka moved from a residence more than 50 miles from his
duty station to a residence only 30 miles away.
Where a transfer is in the interest of the Government, and the
standards discussed above are met, an employee is entitled to relocation
expenses regardless of the fact that he may not have received transfer
orders authorizing relocation expenses in advance. Since Mr. Rapka's
transfer was in the interest of the Government and since the relocation
of his residence was incident to the transfer, he should be reimbursed
for his relocation expenses in accordance with the regulations.
Comptroller General
of the United States
Matter of: EEOC - Holiday Pay - Furlough
File: B-224619
Date: August 17, 1987
DIGEST
Employees placed on furlough for a period including both the workday
preceding and the workday succeeding a holiday are not entitled to
holiday pay. They have been removed from duty without expectation of
pay and there is no longer a presumption that, but for the holiday, they
would have worked on that day. However, agencies are cautioned not to
indiscriminately furlough employees for periods when holidays occur.
DECISION
The Management Director, on behalf of the Chairman, U.S. Equal
Employment Opportunity Commission (EEOC), requests an opinion as to
whether an employee who is placed on furlough status before and after a
paid holiday would be entitled to pay for the holiday. For the reasons
that follow, we hold that the employee would not be entitled to such
pay.
BACKGROUND
The EEOC states that, if it carries out its proposal to furlough its
employees, it will follow the prescribed adverse action procedures in 5
U.S.C. Secs. 7512 and 7513 (1982). However, the EEOC asks the question
about entitlement to pay for a holiday because of an interpretation by
the General Services Administration (GSA), the agency charged with
administering its payroll, on the status of the furlough days and the
effect of our decision B-222836, May 8, 1986. The submission does not
fully explain the rationale behind GSA's interpretation. However, we do
not feel that such an explanation is necessary in order for us to
respond to the question as posed by EEOC.
OPINION
Our general rule in this area is that an employee is entitled to pay
for a holiday so long as he or she is in a pay status on either the
workday preceding a holiday or on the workday succeeding a holiday. The
employee is paid for the holiday based on the presumption that, but for
the holiday, the employee would have worked. 45 Comp. Gen. 291 (1965).
This rule applies even if the employee is in an absent without leave
status on the workday preceding a holiday or the workday succeeding a
holiday since the presumption remains that, but for the holiday, the
employee would have worked. See 56 Comp. Gen. 393, at 396 (1977),
modifying several prior decisions which drew a distinction between
employees on leave without pay and those absent without leave.
With regard to a furlough, we held in B-222836, previously cited,
that an agency did not have the authority to furlough ehmployees solely
for a holiday, and then deny them pay for that day. We so held
primarily on the basis of decisions of this Office and our
interpretation of the statutory definition of a furlough in 5 U.S.C.
Sec. 7511 (a) (5) (1982). A furlough is defined in 5 U.S.C. Sec. 7511
(a)(5) as "the placing of an employee in a temporary status without
duties and pay because of lack of work or funds or other nondisciplinary
reasons." Thus, the basic concept of a furlough is to place an employee
into a non-duty status from a duty status, so that the removal of the
employee's ability to work becomes the basis for not paying the
employee. See B-222836 supra, at 4. That case is not on point here
because it involved a proposal to furlough employees only for the
holiday. The EEOC question involves a longer furlough which includes a
holiday within the furlough period.
In the EEOC situation the furloughed employee would be completely
removed from duty without any expectation of pay for the days preceding
or succeeding a holiday. In this case, there is no longer a presumption
that, but for the holiday, the employee would have worked since the
employee's ability to work has been removed by the furlough. Therefore,
where the employee is placed on furlough for both the day preceding and
the day succeeding the holiday, the employee has, by definition, been
removed from a pay status and would no longer be entitled to pay for the
holiday. See 18 Comp. Gen. 206 at 210 (1938), modified, 56 Comp. Gen.
393, supra. Compare, Employees of the Government Printing Office,
B-206655, May 25, 1982. The fact that the employee would normally be in
a pay status immediately before and after the furlough, as suggested by
EEOC, is irrelevant.
Accordingly, employees placed on furlough for both the workday
preceding and the workday succeeding a holiday are not entitled to
holiday pay.
Finally, we wish to point out that our conclusion is based on the
assumption that the selection of the furlough period in question can be
justified on programmatic and administrative grounds that are unrelated
to the fact that the period includes a holiday. In our view, an agency
may not properly furlough employees for a 3-day period, the middle of
which is a holiday, for the purpose of saving 3 days' pay while losing
only 2 days of work.
Comptroller General
of the United States
Matter of: Union Natural Gas Company--Reconsideration
File: B-224607.2
Date: April 9, 1987
DIGEST
1. In order to prevail in a request for reconsideration of a prior
decision of the General Accounting Office, the requesting party must
convincingly show that the decision contains errors of fact or of law or
information not previously considered that warrant its reversal or
modification. The repetition of arguments made during resolution of the
original protest, or mere disagreement with the decision, does not meet
this standard.
2. General Accounting Office views solicitation that prevented
competition on an equal basis, along with procuring activity's need to
reconsider the government's minimum needs, as sufficient reasons to
render cancellation and resolicitation, rather than amendment of the
original solicitation, reasonable.
3. Showing of bad faith requires undeniable proof that procuring
activity had a malicious and specific intent to injure the party
alleging bad faith, and a protester's bare charge regarding intent of
the procuring activity in issuing solicitation and suggestion that
procuring activity may have been negligent in not "doing its homework"
do not constitute such proof.
DECISION
Union Natural Gas Company requests reconsideration of our decision in
Union Natural Gas Co., B-224607, Jan. 9, 1987, 87-1 CPD P . In that
decision, we denied a protest by Union against the cancellation of
request for proposals (RFP) No. 1213, issued by Northrop Worldwide
Aircraft Services, Inc., the Air Force's operations and maintenance
contractor for Vance Air Force Base, Enid, Oklahoma. The solicitation
called for the furnishing of natural gas to the base.
We deny the request for reconsideration.
The particular facts of the case and our legal analysis are set forth
in our January 9 decision and need not be repeated at length here. In
summary, we found the cancellation proper and denied Union's protest
that Northrop had not fairly considered its proposal or negotiated in
good faith. Northrop had canceled the solicitation and rejected all
proposals because it was unable to reach an agreement with Union, the
apparent low offeror, as to pricing and contract structure. Northrop
determined that Union's proposed terms and conditions--in particular a
$248,780 termination liability in the event the contract was terminated
in less than 10 years--were unacceptable and did not meet the best
interests or minimum needs of the Air Force.
However, based on the record, we found that the circumstances of the
procurement involved more than proposal unacceptability. We viewed the
inability of the parties to reach an agreement to be a result of
Northrop's failure to decide in advance upon what basis it could
contract for natural gas and how it would compare offers proposing
differing methods. In the solicitation, Northrop had asked offerors to
specify any contractual provisions that they desired, yet it had not
explained how offers on different bases would be evaluated. For
example, Northrop concluded during discussions with Union that a
termination liability provision offered by Union was unacceptable, yet
the solicitation invited terms, including connection or termination
liabilities if an offeror proposed to construct new distribution lines.
We recognized that the solicitation prevented competition on equal
terms, since offerors did not know in advance the basis on which their
proposals would be evaluated. Accordingly, we found that Northrop had a
reasonable basis for canceling the solicitation, both in order to
correct the deficient solicitation and to reconsider the government's
minimum needs. Further, we found no indication of bad faith on the part
of contracting officials in making the decision to cancel, as suggested
by Union. Rather, we found it apparent from the record that Northrop
did not discover the solicitation deficiencies until it encountered
difficulties in reaching an agreement with Union.
The protester now requests reconsideration of our January 9 decision,
primarily on the basis that it did not address the alleged bad faith
actions of Northrop in issuance of the RFP, evaluation of proposals, and
negotiation. As previously mentioned, we found no indication of bad
faith by Northrop. However, Union now specifically contends that in
order to have good faith negotiations, Northrop should have issued a
written amendment with the changed requirements and allowed offerors an
opportunity to submit revised proposals, rather than cancel the RFP.
Union also repeats its contention that its proposal was not evaluated on
the basis of the evaluation factors contained in the RFP. Additionally,
Union generally contends that the procuring activity exhibited bad faith
in issuing the RFP with the unstated intention of utilizing the
incumbent contractor's pipeline. Union further contends that the
procuring activity failed to "do its homework" before issuing the
solicitation and issued the solicitation in order to determine market
conditions. The protester also questions how there can be a
reconsideration of the government's minimum needs when the "minimum
requirement" is 100 percent of the amount of gas consumed, and will not
change upon reconsideration. Finally, Union maintains that our decision
was based on misinformation supplied by Northrop and the Air Force.
At the outset, we note that the established standard for
reconsideration is that the requesting party must convincingly show that
our prior decision contains either errors of fact or of law or
information not previously considered that warrant its reversal or
modification. See 4 C.F.R. Sec. 21.12(a) (1986); Roy F. Weston,
Inc.--Request for Reconsideration, B-221863.3, Sept. 29, 1986, 86-2 CPD
P 364. Repetition of arguments made during resolution of the original
protest or mere disagreement with our decision does not meet this
standard. Id. Additionally, a showing of bad faith requires undeniable
proof that the procuring activity had a malicious and specific intent to
injure the party alleging had faith. Boone, Young & Associates, Inc.,
B-199540.3, Nov. 16, 1982, 82-2 CPD P 443; see also Kalvar Corp.,
Inc., v. United States, 543 F.2d 1298, 1301 (Ct. Cl. 1976). Mere
inefficiency or negligence does not meet the high standard of proof
required to show bad faith. Boone, Young & Associates, Inc., supra.
We conclude that Union's request for reconsideration provides no
basis for us to question the correctness of our January 9 decision.
Union's request is primarily a repetition of its previous arguments, as
well as disagreement with our decision. The protester has not made a
showing that our decision contained errors of fact or law that warrant
reversal or modification.
In our January decision, although we did not specifically discuss
amendment of the RFP versus cancellation, our determination as to the
reasonableness of the cancellation was based on the other-than-minor
nature of the solicitation deficiencies. When the government's need or
basis for award changes after proposals have been received, the
government may not proceed with award; it must either amend the
solicitation to advise offerors of the change and provide offerors with
an opportunity to submit revised proposals or cancel the solicitation
altogether. Federal Acquisition Regulation, 48 C.F.R. Secs. 15.606(a),
(b)(4) (1986). If the modification is so substantial that it warrants
complete revision of a solicitation, the original should be canceled and
a new solicitation issued. 48 C.F.R. Sec. 15.600(b) (4).
Here, we view the RFP deficiencies that resulted in unequal
competition, along with the procuring activity's need to reconsider the
government's minimum needs, as sufficient reasons to render the
procuring activity's determination to cancel and resolicit reasonable.
Accordingly, the protester has provided no basis for us to question the
propriety of canceling the solicitation, rather than amending it.
Additionally, Union's allegation as to evaluation of its proposal under
the RFP is academic. Award could not have been made under the RFP,
since there was no basis to evaluate proposals solicited on different
bases. Additionally, the government's minimum needs involve more than
simply the amount of gas consumed. They also include the minimum
acceptable terms and conditions for the sale of gas to the government,
such as change of rates, price escalation, construction charges, and
termination liabilities. It is these terms and conditions of the gas
procurement that will be reconsidered by the procuring activity before
it issues a new solicitation.
Further, neither Union's bare charges regarding the bad faith intent
of the procuring activity in issuing the solicitation nor Union's
suggestion that Northrop may have been negligent in not "doing its
homework" constitute proof of bad faith. Finally, as Union has not
detailed the misinformation it alleges our January decision was based
on, this does not provide a basis for reconsideration of our decision.
We deny the request for reconsideration.
Harry R. Van Cleve
General Counsel
Matter of: Orbit Advanced Technologies Ltd.
File: B-224603.2
Date: March 11, 1987
DIGEST
1. Where bidder submits unsolicited descriptive literature with its
bid purporting to propose equipment designed for the solicitation and
including a legend restricting disclosure of the literature, the bid
violates the statutory requirement for public opening of bids and must
be rejected as nonresponsive.
2. Where unsolicited descriptive literature submitted with a bid is
ambiguous regarding whether the bidder intends to comply with material
terms of the invitation for bids, the bid is nonresponsive and must be
rejected.
DECISION
Orbit Advanced Technologies Ltd. protests the award of for bids (IFB)
No. DAAD07-86-B-0029, issued by the Army's White Sands Missile Range for
Kineto Tracking Mounts (KTM) and Mobile Cinetheodolite Mounts (MCM),
both of which are used to track missiles in flight. The Army
interpreted unsolicited descriptive literature that Orbit submitted with
its low bid as taking exception in six instances to requirements of the
IFB, and also regarded a legend restricting disclosure of the literature
as violating the requirement for public disclosure of bids. For those
reasons, the Army rejected Orbit's bid as nonresponsive. Orbit argues
that the descriptive literature was intended only to show Orbit's
capabilities and should not have affected the bid's responsiveness.
We agree with the agency that the literature was intended to be
considered with the bid, that it contained an improper restrictive
legend and that it did not clearly show that Orbit intended to meet all
the solicitation requirements. Consequently, we also agree that the bid
was therefore nonresponsive and deny the protest.
Orbit included a cover letter with its bid which stated " a s
demonstrated by the enclosed technical proposal, the submitted proposal
meets or exceeds the requirements of the purchase description." The
literature described Orbit's AL-2837 KTM system, and further explained
that the system was designed in accordance with the solicitation. The
literature itself contained a cover page bearing the following legend:
"THIS PROPOSAL IS THE SOLE PROPERTY OF ORBIT ADVANCED
TECHNOLOGIES LTD. THE INFORMATION CONTAINED HEREIN IS NOT FOR
PUBLICATION, DUPLICATION OR USE IN WHOLE OR IN PART, WITHOUT THE
CONSENT OF ORBIT ADVANCED TECHNOLOGIES."
The Federal Acquisition Regulation (FAR) provides that when a bid is
accompanied by descriptive literature and the bid imposes a restriction
preventing public disclosure of the literature, the restriction renders
the bid nonresponsive if it prohibits the disclosure of sufficient
information to permit competing bidders to know the essential nature and
type of product offered and those elements of the bid that relate to
price, quantity and delivery terms. FAR, 48 C.F.R. Sec. 14.404-4
(1986). This provision implements 10 U.S.C. Sec. 2305(b) (3) (Supp.
III 1985), which requires the public opening of sealed bids. See VACAR
Battery Mfg. Co., Inc., B-223244.2, June 30, 1986, 86-2 CPD P 21. The
regulation states, however, that the rule does not apply to unsolicited
descriptive literature submitted by a bidder if such literature does not
qualify the bid. FAR, 48 C.F.R. Sec. 14.404-4.
Here, the express language of Orbit's cover letter purporting to
submit a "technical proposal" describing a particular system allegedly
designed "according to" the IFB, clearly indicates in our view that the
literature submitted was intended to qualify Orbit's bid. See Carco
Electronics, B-186747, Mar. 9, 1977, 77-1 CPD P 172. Further, the
disclosure restriction applied to all of the literature submitted by
Orbit. That literature described the nature of the equipment it
proposed to furnish. Consequently, the restriction on the Orbit
literature which qualified its bid rendered it nonresponsive.
Moreover, in at least one respect, the descriptive literature created
an ambiguity as to whether Orbit intended to offer KTM components
complying with material requirements of the IFB. This ambiguity,
notwithstanding the disclosure restriction, requires that the bid be
rejected as nonresponsive because to be responsive, a bid must
unequivocally offer to comply with the material terms of the IFB. A bid
which includes unsolicited literature that describes the offered
equipment in terms that reasonably can be interpreted not to conform
with a material requirement is nonresponsive because it does not
constitute such an unequivocal offer. See McGraw-Edison Co. et al.,
B-217311 et al., Jan. 23, 1985, 85-1 CPD P 93. Further, a bidder may
not explain the meaning of its bid after opening because to permit such
action would be tantamount to granting an opportunity to submit a new
bid, one that could be responsive or nonresponsive at the bidder's
option based on information available to the bidder after bid opening.
Id.
The IFB's purchase description required at paragraph 3.4.3.2 that the
sighting telescope shall be a dual power guide scope with optical powers
of 8 and 24. Orbit's literature stated it could provide the item from
two suppliers, one of which proposed complying equipment while the other
proposed a telescope with optical powers of 4 and 20. The literature
further explained that the second supplier could modify the item "to 8
and 20 power" but that "causes extra costs." 1/ The literature did not
specify which supplier's telescope the bidder intended to furnish.
Thus, it was not clear whether Orbit proposed to supply a telescope from
the first supplier that conformed with the solicitation requirements or
from the second supplier that possibly could be modified to conform, nor
was it clear whether and to what extent it intended to increase its
price to obtain conforming items from the second supplier. Where, as
here, the literature describes a feature that may or may not conform to
the solicitation, the effect of the literature is to render the bid
ambiguous and nonresponsive. McGraw-Edison Co. et al., B-217311 et al.,
supra.
Further, we do not think that the ambiguity in the bid can be waived
as a minor deviation that has only a negligible effect on price,
quantity, or quality of the item offered. FAR, 48 C.F.R. Sec. 14.404.
It is clear that the possibility that Orbit would supply a telescope
with optical powers of 4 and 20 in the face of a request for power of 8
and 24 would plainly affect the quality of the item offered and this
does not meet the test for waiver. McGraw-Edison Co. et al., B-217311
et al., supra.
The protest is denied.
Harry R. Van Cleve
General Counsel
FOOTNOTE
1/The alternate telescope as modified to optical powers of 4 and 20
would still not meet the solicitation requirement of 8 and 24. The
protester claims that it intended to comply but "20" was inserted by
error. Since we decide infra that the bid is ambiguous because it
offered both compliant and noncompliant telescopes we need not decide
the protester's claim that the insertion of "20" should be waived under
FAR, 48 C.F.R. Sec. 14.405 as a minor irregularity.
B-224596
August 21, 1987
DIGEST
Federal Energy Regulatory Commission is authorized to charge fees
established by regulation for its review of administrative appeals of
remedial orders issued by the Department of Energy's Office of Hearings
and Appeals. Authority is found in Title V of the Independent Offices
Appropriation Act, 1952, Chapter 376, Public Law 137, 65 Stat. 268, 290,
August 31, 1951, codified at 31 U.S.C. Sec. 9701.
The Honorable Claude Pepper
House of Representatives
Dear Mr. Pepper:
This is in response to your request of August 21, 1986, for an
opinion regarding the propriety of the $4,600 fee assessed by the
Federal Energy Regulatory Commission for its review of administrative
appeals of remedial orders issued by the Department of Energy's Office
of Hearings and Appeals. Counsel to the two constituents on whose
behalf your request was submitted recently advised us that his clients
no longer consider our opinion on this matter to be necessary. So that
your records may be complete, however, we are providing you with our
conclusions and a summary of the legal basis for them.
In brief, we conclude that the Commission is authorized to charge
fees for the services and benefits it provides, including the specific
filing fees questioned by your constituents. This conclusion is based
on our review of relevant legislation, legislative history, regulations
and other government documents, and Federal court decisions. We also
obtained and considered the views of the Commission on this question.
The Commission's basic authority to assess fees is found in Title V
of the Independent Offices Appropriation Act, 1952 (IOAA), Chapter 376,
Public Law 137, 65 Stat. 268, 290, August 31, 1951, codified at 31
U.S.C. Sec. 9701, which authorizes Federal agencies to prescribe
regulations establishing fees and charges for the services and things of
value they provide. The stated purpose of this provision is that such
services and things of value should be "selfsustaining to the extent
possible." 31 U.S.C. Sec. 9701(a).
In establishing fees of this type, often called "user fees," the
Commission must act in accordance with the IOAA and with controlling
court interpretations of that statute. The specific user fee
regulations in question here were reviewed by a Federal Court of
Appeals, which concluded that the Commission had authority under the
IOAA to issue them, and in so doing "gave careful consideration to the
requirements of the IOAA." Phillips Petroleum Co. v. F.E.R.C., 786 F.2d
370, 377 (10th Cir. 1986). 1/
Our conclusion is based also on the fact that although the fees set
forth in the Commission's regulations governing its review of OHA
remedial orders (18 C.F.R. Sec. 381.303) are in some instances
substantial, the regulations in fact reflect a considerable reduction
from the Commission's determination of the full amount necessary for its
review process to be self-sustaining. Commission letter of October 10,
1986, at 4 (copy enclosed). In addition, the Commission has provided
procedures under which an appellant may request a waiver of these fees
if it is economically unable to pay them. 18 C.F.R. Sec. 381.106.
On the basis of the analysis set forth above, therefore, we
determined that the fees in question are authorized and proper. We hope
this information is useful to you.
Sincerely yours,
Comptroller General
of the United States
Enclosures
FOOTNOTE
1/ The requirements of the IOAA have been developed over time by an
interpretation of the Act set forth in Bureau of the Budget Circular
A-25 (Sept. 23, 1959), and by subsequent Federal court cases construing
and applying this interpretation. See Federal Power Commission v. New
England Power Co., 415 U.S. 345 (1974); National Cable Television Ass'n
v. United States, 415 U.S. 345 (1974); and other cases cited in the
Phillips Petroleum Co. case (copy enclosed).
Matter of: Delany, Siegel, Zorn & Associates
File: B-224578.2
Date: February 10, 1987
DIGEST
Offeror's lack of experience in investigating discrimination
complaints under regulations specific to the contracting agency,
although not separately set out in the request for proposals (RFP) as a
technical evaluation criterion, was not improperly considered as an
undisclosed criterion where RFP indicated that investigators' knowledge
of agency's regulations was important and agency-specific experience was
reasonably related to more general corporate experience and personnel
qualifications evaluation criteria contained in RFP. In addition,
record indicates that other deficiencies, and not lack of
agency-specific experience alone, contributed to downgrading of
protester's proposal.
DECISION
Delany, Siegel, Zorn & Associates, Inc. (DSZ), protests the award of
a contract to A&L Associates under request for proposals (RFP) No.
N00189-85-R-0525 issued by the Department of the Navy. The RFP
contemplated an indefinite quantity, firm-fixed-price contract for
investigating and reporting on Equal Employment Opportunity (EEO)
complaints of discrimination. DSZ contends that its proposal was not
properly evaluated in that the Navy applied to it a technical evaluation
criterion which was not contained in the RFP.
We deny the protest.
The RFP was issued on September 30, 1985, and 22 proposals were
received by the November 13 closing date for receipt of proposals.
Under the RFP, proposals were to be evaluated and point-scored based on
the following factors:
1. Corporate Experience 8 percent
2. Demonstrated
Understanding of the Problem 8 percent
3. Personnel Qualifications 48 percent
4. Project Management 16 percent
5. Cost 20 percent
Technical factors, therefore, accounted for 80 percent of the total
score and price the remaining 20 percent. When the technical factors
were separated from price, considered as a whole consisting of 100
percent, and expressed as points-- rather than as percentages--for use
by the Technical Evaluation Committee (TEC), the maximum point values of
the four technical evaluation criteria were as follows:
1. Corporate Experience 10 points
2. Demonstrated
Understanding of the Problem 10 points
3. Personnel Qualifications 60 points
4. Project Management 20 points
Total 100 points
Whether expressed as percentages, as in the RFP, or as points, as on
the evaluation scoresheets, the relative importance of these criteria
among themselves, and in relation to price, remained the same.
The raw technical scores were weighted by dividing each offeror's
technical score by the highest technical score and multiplying the
quotient by 80. Prices were subject to a two-step weighting process.
Prices for the six categories of investigations first were weighted, for
each offeror, based on a formula in the RFP intended to reflect the
anticipated workload in each category. Then the lowest weighted price
was divided by each offeror's weighted price and the quotient multiplied
by 20 to arrive at a weighted price score for each offeror. Each
offeror's weighted technical score and weighted price score were then
added to obtain a total score for evaluation purposes.
Proposals were evaluated by the TEC and, after the initial
evaluation, nine proposals--including that submitted by DSZ--were found
to be in the competitive range. The TEC gave the protester's initial
technical proposal a raw score of 31.15 out of 100 possible points and
the proposal was ranked 5th. After advising offerors of the weaknesses
and deficiencies in their proposals and providing an opportunity for
submission of revised proposals, the agency submitted the revised
technical proposals to the TEC for reevaluation. DSZ's revised proposal
received a raw technical score of 47 and was ranked 4th. Its price
proposal ranked 8th. Its weighted, combined technical and price score
ranked 4th. The contracting officer reviewed the results of the
technical and price evaluation and selected A&L, the highest-ranked
offeror, for award. At DSZ's request, the Navy debriefed it by
telephone concerning the areas of its proposal which were judged to be
weak or deficient and this protest followed.
In its protest to our Office, DSZ asserted that "the likely reason"
it was not awarded this contract was that "30 points out of a possible
80 points in technical score" were deducted because it lacked
investigative experience specific to the Navy. Prior Navy experience
was not listed in the RFP as one of the criteria for the evaluation of
proposals, the protester states, and the Navy's undue and undisclosed
emphasis on it unfairly penalized offerors with comparable experience in
other federal agencies. The protester argues that if its score was
recalculated with these improperly deducted points restored, its ranking
would be significantly higher and "would likely eliminate any
differences in scoring" between the protester and the awardee.
At the outset, we should point out that the protest reflects some
misunderstanding of the scoring of proposals, perhaps because this was
not accurately explained by the Navy in the telephonic debriefing, or
was misunderstood by the protester, or was not known to it as a result
of the Navy's refusal to release certain information. These
misunderstandings concern (1) the percentage weights given the
evaluation criteria in the RFP versus the points weights used by the
evaluators and (2) the protester's mistaken apparent conclusion that if
the points allegedly deducted from its evaluation in error were
restored, it would be in line for award of the contract. While these
misunderstandings do not affect the outcome of this protest, we think it
incumbent on us to clarify them.
First, the protester states it received the maximum possible score of
8 points under the criterion "Understanding of the Problem," which it
asserts is inconsistent with the downgrading of its proposal in other
areas. The protester was not awarded the maximum possible points under
this criterion, which had an 8 percent weight but a point value of 10;
the protester received 8 out of 10 points under it. The protester also
received 13 points out of 20 under the "Project Management" criterion
(not out of 16 as the protester asserts), a deduction it has not
challenged. The significance of this is that the protester believes it
"lost" only 3 points for reasons unrelated to the allegedly improper
criterion used by the evaluators; in fact, 9 points were deducted under
criteria the protester has not challenged.
Second, the protester states that 2 out of "8 points" were deducted
under the "Corporate Experience" criterion and 28 out of "48 points"
were deducted under the "Personnel Qualifications" criterion, a total
deduction of 30 points, allegedly as a result of the agency's improper
use of an undisclosed "Navy experience" criterion. The "8" and "48,"
however, refer to the percentage values of these criteria as stated in
the RFP, not their point values which were, respectively, 10 and 60 and
under which the protester scored 6 and 20.
To recapitulate the evaluators' point scoring of the protester's
proposal:
Criterion Protester's Score
1. Corporate Experience 6 out of 10
2. Understanding of the
Problem 8 out of 10
3. Personnel Qualifications 20 out of 60
4. Project Management 13 out of 20
Total 47 out of 100
The importance of this is that if, as the protester asserts, all the
points "lost" under criteria 1. and 3. should be attributed to the
improper use of an undisclosed criterion and therefore restored to its
score, one would add not 30 points but 44, for a total raw technical
score of 91.
Third, the protester appears to assume that if the points allegedly
improperly deducted from its technical score were restored, it would
become the highest-scored offeror and in line for the award of this
contract. Our calculations show this is incorrect.
Were the protester to be assigned, for purposes of discussion, a raw
technical score of 91, it would then have the highest technical score,
which when weighted would equal 80, i.e., the maximum of 80 percent.
The awardee's previously high raw technical score of 86.2 (a figure not
released by the Navy to DSZ) would, when recalculated in light of its
changed standing, be weighted at 75.78. The prices would remain
unchanged, however, and the protester's 8th-high price would be weighted
at 8 in contrast to A&L's much lower price, weighted at 14. The
protester's high price places it at a competitive disadvantage, a fact
not acknowledged by it in its protest. The total scores--technical plus
price--would become 88 for the protester (80 plus 8) versus 89.78 for
A&L (75.78 plus 14). Therefore, even if one were to restore to DSZ's
score all the 44 points whose deduction under criteria 1. and 3. it
contests, it would not achieve the highest total score.
The Navy's report on the protest states that the technical evaluation
was performed in accordance with the criteria set forth in the
solicitation, and that DSZ's initial and revised proposals were fairly
evaluated. The Navy explains that although any relevant work in the
public or private sector was regarded as valuable, Navy experience was
considered particularly significant because of special standards the
Navy has for such investigations, which standards were expressly
referred to in the RFP. The agency states that Navy experience,
although an "asset" to any offeror, was only one aspect of the relevant
experience evaluated.
The evaluation of proposals is the function of the contracting
agency, and our review of allegedly improper evaluations is limited to a
determination of whether the evaluation was fair and reasonable and
consistent with the stated evaluation criteria. See Ira T. Finley
Investments, B-222432, July 28, 1986, 86-2 C.P.D. P 112 at 3. Moreover,
the protester has the burden of affirmatively proving its case, and mere
disagreement with a technical evaluation does not satisfy this
requirement. Id.
We find that the technical evaluation of DSZ's proposal was
reasonable. We have examined the entire record of the technical
evaluation for all offerors and find that the evaluation was performed
in accordance with the evaluation criteria set forth in the RFP. The
record does not support the conclusion that all the points whose
deduction the protester contests were attributable to the improper
application of an undisclosed "Navy experience" criterion or that it was
unreasonable for the agency to have given Navy experience some
consideration in the evaluation of proposals.
With regard to the first evaluation criterion, "Corporate
Experience," DSZ was credited with 6 out of a maximum of 10 points in
recognition of the firm's background in federalsector discrimination
investigations performed for other agencies. A higher score was not
given, according to the evaluators' narrative, because the firm lacked
"experience under the DON Department of the Navy system which requires
a more complex analysis under applicable Title VII case law."
As for the third criterion, "Personnel Qualifications," the RFP
instructed offerors to provide resumes for each investigator the
contractor intended to use to perform the contract services. The
resumes should include, among other things, a minimum of 3 years of
relevant experience and appropriate training and clearly demonstrate an
understanding of the technical requirements of Title VII and Naval
Civilian Personnel Instruction (NCPI) 713 and Naval Civilian Personnel
Command (NCPC) Instruction 12713. The Navy found the resumes submitted
with the protester's initial proposal not adequately detailed;
consequently, in requesting additional information from the protester
prior to best and final, the contracting officer identified, among other
things, weaknesses in DSZ's personnel qualifications. Specifically, the
Navy requested DSZ to submit resumes containing greater detail in the
following areas:
"(a) Knowledge of and experience in Federal discrimination
complaint system (Title VII) and complaint adjudication.
(b) Knowledge of and experience in investigative and reporting
techniques.
(c) Knowledge of Federal personnel practices and procedures,
program management processes, and organization structures and
operations.
(d) Knowledge of and experience in investigations which shows a
significant number of acceptable cases of good quality have been
completed.
(e) Length and quality of relevant experience."
In addition, DSZ was required to submit sample reports written by its
proposed investigators.
After evaluating DSZ's revised proposal, the evaluators increased
DSZ's raw score from 9.65 to 20 under the "Personnel Qualifications"
criterion. The evaluators did attribute DSZ's score in part to a "lack
of any experience with the Navy complaint process which requires a
Title VII case law analysis." The record also shows, however, that the
TEC was concerned that only half of DSZ's proposed investigators (the 16
individuals described as "Senior Investigators") satisfied the
experience criteria identified in the contracting officer's request for
additional information. The evaluators noted that seven of the
remaining staff were described as "trainees" without documented
experience indicating a knowledge of federal personnel practices or
procedures, and that while their resumes indicated that they had
"potential" and should be able to "learn the job" no writing samples
were provided which would demonstrate their ability to prepare the kind
of Report of Investigation required. The TEC was also concerned that
the nine individuals labeled as "investigators" had only limited
experience and required more supervision than the firm's "senior"
investigators.
In short, while DSZ did improve its score under the "Personnel
Qualifications" criterion with its revised proposal, the deficiencies
noted above had a significant impact on the additional points assigned.
We find that DSZ has not demonstrated that the agency's conclusions
regarding its personnel qualifications were unreasonable. Although DSZ
attributes the downgrading of its proposal under this criterion to the
fact that the firm does not possess prior Navy experience, which it
states it did not know would be a factor in the evaluation of proposals,
it is clear from the record that DSZ's proposal was reasonably found to
be deficient in this area for a number of reasons including lack of
prior Navy experience.
It does appear, therefore, that 4 points were deducted from DSZ's
score under "Corporate Experience" because it had not previously
performed this type of work within the Navy system. Some portion, but
not all, of the points deducted under "Personnel Qualifications" can be
traced to the same reason although it should be pointed out the
evaluators' narrative commentary placed more emphasis on the proposed
investigators' more general federal-sector experience and their
report-writing ability. We think it fair to conclude, therefore, that
some but by no means all of the deductions made under criteria 1. and 3.
were attributable to DSZ's lack of prior Navy experience. In addition,
as we have mentioned, 9 points not the focus of this protest were
deducted under criteria 2. and 4.
We also are of the opinion, despite DSZ's arguments to the contrary,
that under the terms of the RFP it was proper for the Navy to downgrade
DSZ because of its lack of prior Navy experience. The RFP's
specifications required the successful offeror to conduct discrimination
investigations in accordance with current regulations and in particular,
"Naval Civilian Personnel Command Instruction 12713" and stated that an
investigator's knowledge of NCPI 713 was "essential." That section of
the RFP dealing with the submission of proposals instructed offerors, in
part, with regard to the "Personnel Qualifications" criterion that:
"Resumes shall show clearly an understanding of the technical
requirements of EEO Investigations (Title VII and NCPI 713 and
NCPC Instruction 12713). . . ."
In our view, these references in the RFP reasonably put offerors on
notice that they would be required to demonstrate that their
qualifications included any prior Navy experience. It would not be
reasonable under the circumstances herein to prohibit the agency from
considering in its evaluation under the "Personnel Qualifications"
criterion whether an offeror's qualifications included that experience.
The protest is denied.
Harry R. Van Cleve
General Counsel
Matter of: Hayes International Corporation--Request for
Reconsideration
File: B-224567.2
Date: March 6, 1987
DIGEST
Original decision is affirmed where protester in request for
reconsiDeration fails to show error of law or fact in original finding
that protester was no longer entitled to be considered for award under
request for proposals where protester was suspended from government
contracting before best and final offers were due, and contracting
agency did not make written finding under applicable regulation that
compelling reason existed for continued consideration of protester's
proposal.
DECISION
Hayes International Corporation requests reconsideration of our
decision in Hayes International Corp., B-224567, Feb. 4, 1987, 87-1 CPD
P , denying Hayes' protest of the award of a contract to any other
offeror under request for proposals (RFP) No. F34801-87-R-48000, issued
by the Air Force for programmed depot maintenance of KC-135 aircraft.
We affirm our original decision.
Hayes, an offeror under the KC-135 RFP, was suspended from future
government contracting on July 2, 1986, after discussions had been held
under the RFP, but before best and final offers were due. As described
in the report by the Air Force's Debarment and Suspension Board, the
suspension was based on findings in a Navy investigation regarding
unacceptable performance by Hayes under Navy aircraft maintenance
contracts; concerns regarding the quality of Hayes' performance and
other apparent irregularities, such as inadequate billing practices,
raised during a federal task force investigation of Hayes begun in 1984;
and a pending grand jury investigation of Hayes' performance which
stemmed from the 1984 task force investigation.
Despite its suspension, Hayes submitted a best and final offer under
the KC-135 RFP by the July 21 due date. The suspension later was lifted
on September 29, the same day the Air Force source selection authority
decided to award a contract under the RFP to an offeror other than
Hayes; actual award of the contract took place on October 2.
In its original protest, Hayes challenged the Air Force's reliance on
the suspension and related events as the basis for its decision not to
award a contract to Hayes under the RFP. We denied the protest based on
our finding that Hayes was no longer entitled to further consideration
for award under the RFP once the suspension was imposed. As a result,
we did not reach the issue whether the Air Force acted properly in
relying on the suspension and related events in its consideration of the
Hayes proposal.
Our finding regarding the impact of the suspension on Hayes'
eligibility for award under the KC-135 RFP was based on the Department
of Defense (DOD) Federal Acquisition Regulation (FAR) Supplement, 48
C.F.R. Sec. 209.405(a) (1) (1985), which provides in relevant part:
"Proposals, quotations or offers received from any contractor
on the consolidated list of debarred or suspended contractors
shall not be evaluated for award or included in the competitive
range, and discussions shall not be conducted with such offeror,
unless the Secretary concerned or his authorized representative
determines in writing that there is a compelling reason to make an
exception."
In our view, under this regulation, once a suspension is imposed on
an offeror in the course of a negotiated procurement, the offeror loses
any right to further consideration for award, unless the contracting
agency makes a written finding that a compelling reason exists for
keeping the offeror in the competition. Here, the Air Force did not
make the written determination called for by the regulation; on the
contrary, in its report on the protest, the Air Force stated that the
contracting officials erred in continuing to consider the Hayes proposal
after the suspension took effect. Accordingly, we held that Hayes was
no longer entitled to further consideration for award under the RFP once
the suspension was imposed.
In its request for reconsideration, Hayes argues that a written
finding is not a prerequisite under the DOD FAR Supplement provision to
continued consideration of a suspended contractor, and that the Air
Force's actions after the suspension was imposed were tantamount to an
implicit finding that a compelling reason existed for consideration of
the Hayes proposal. Specifically, Hayes contends that the Air Force's
goal was to maintain Hayes as a competitor for the KC-135 and other
contracts, and to that end the Air Force worked with Hayes to reach a
settlement agreement which would allow expeditious lifting of the July 2
suspension. In addition, Hayes argues that the fact that the Air Force
proceeded to evaluate the Hayes best and final offer after the
suspension took effect confirms the Air Force's intention to keep Hayes
in the KC-135 competition. 1/
As support for its position, Hayes relies on Bauer Compressors, Inc.,
63 Comp. Gen. 303 (1984), 84-1 CPD P 458, in which we held that the Air
Force properly could make award to a suspended contractor whose
suspension, in effect at time of bid opening, was lifted prior to award.
The regulation at issue in Bauer provided for rejection of a bid from a
suspended contractor, unless the contracting agency made a written
finding that there was a compelling reason to make an exception. In
part, we found that, although no written finding had been made
justifying consideration of the awardee's bid, the Air Force's decision
to enter into a plea agreement and consent judgment with the contractor,
together with the subsequent lifting of the suspension, were sufficient
to establish a compelling reason for not rejecting the awardee's bid.
In our view, Bauer clearly is distinguishable from this case. In
Bauer, it was reasonable to interpret the Air Force's actions as an
implicit finding that a compelling reason existed not to reject the
suspended contractor's bid since that interpretation was consistent with
the Air Force's decision to make award to the contractor. Here, in
contrast, the Air Force decided not to make award to Hayes, and in fact
states that the contracting officials erred in not eliminating Hayes
from further consideration once the suspension took effect. Thus,
unlike in Bauer, we do not interpret the Air Force's actions here as an
implicit finding under the DOD FAR Supplement that a compelling reason
existed for continuing to consider the Hayes proposal.
Hayes also challenges our conclusion that it was not entitled to
further consideration under the RFP even though the suspension was
lifted before the actual award was made. As discussed above, the source
selection authority made the selection decision on September 29, the
same day the suspension was lifted; actual award was made on October 2.
Even assuming, as Hayes argues, that the source selection authority
waited until the suspension was lifted before making the selection
decision, 2/ it is not reasonable in our view to interpret the DOD FAR
Supplement provision to require the Air Force to reinstate Hayes in the
competition at that time, since the lifting of the suspension came so
late in the KC-135 procurement.
As support for this conclusion in our original decision, we relied on
Tracor Applied Sciences, Inc., B-221230.2, et al., Feb. 24, 1986, 86-1
CPD P 189, in which we held that the contracting officer properly
rejected a suspended bidder whose suspension was lifted 2 days before
award was made, since the contracting officer was unaware that the
suspension had been lifted. Tracor establishes that the lifting of a
suspension does not necessarily divest the contracting officer of all
discretion with regard to consideration of suspended contractors, or
require putting suspended contractors on equal footing with other
offerors as soon as a suspension is lifted. Thus, in this case, where
the suspension was lifted the same day as the selection decision was
made, the Air Force was not required to further delay the award
decision, which had already consumed several months, in order to
accommodate consideration of the Hayes proposal.
In view of our conclusion that Hayes was no longer entitled to
further consideration for award once the suspension was imposed, our
original decision did not address Hayes' argument that the Air Force
improperly relied on the settlement agreement and related events to
downgrade the Hayes proposal. Even if we consider Hayes' argument on
the merits, however, we see no basis on which to object to the Air
Force's conclusion that the problems underlying Hayes'suspension and
related events warranted a significant reduction in Hayes' rating. In
reviewing challenges to a contracting agency's technical evaluation, we
do not reevaluate the proposals or make our own determination on their
merits; rather, we review the record to determine whether the agency's
evaluation was reasonable and in accordance with the evaluation scheme
in the RFP. Bank Street College of Education, 63 Comp. Gen. 393 (1984),
84-1 CPD P 607. Here, since an offeror's experience or past performance
was listed as a subfactor under all four technical evaluation factors
listed in the RFP, it clearly was consistent with the evaluation scheme
for the Air Force to consider Hayes' past performance problems in
evaluating its proposal.
In addition, based on the record as a whole, we think the Air Force's
determination regarding the impact of the suspension and related events
on Hayes' rating was reasonable. The Air Force concluded that two
fundamental problems in connection with Hayes' past government
contracts--"disregard for business ethics throughout the corporate
structure" and "fraudulent actions"--adversely affected Hayes' rating
under six subfactors under the first and most important evaluation
factor in the RFP, management/experience, and four subfactors under the
second evaluation factor, quality. The affected subfactors relate to
the quality of Hayes' corporate personnel and organization, including
its procurement, contract administration, supply management and quality
control procedures; Hayes' cost control systems; and, most
significantly, Hayes' past performance under similar maintenance
contracts. In our view, the problem areas in Hayes' past performance
identified by the Air Force based on the suspension and related events
clearly have a direct bearing on these evaluation subfactors. In
addition, the problems were sufficiently serious, as evidenced by the
number and scope of concerns with Hayes' performance which surfaced as a
result of the various investigations into Hayes, that the Air Force
reasonably could decide to reduce Hayes' rating in the affected areas
from acceptable to marginal.
Further, the decision to make award to Boeing represented a
determination that the cost saving to be gained by awarding to Hayes was
outweighed by Boeing's higher technical rating. Where, as here, an
agency makes a tradeoff between price and technical considerations, the
essential question is whether the determination to make award to a
particular offeror is reasonable and consistent with the RFP's
evaluation scheme. Grey Advertising, Inc., 55 Comp. Gen. 1111 (1976),
76-1 CPD P 325. Accordingly, award to a higher rated, higher priced
offeror is proper where the agency reasonably concludes that the
technical difference is sufficiently significant to outweigh the price
difference. Prison Health Services, Inc., B-215613.2, Dec. 10, 1984,
84-2 CPD P 643. In this case, the award to the higher rated, higher
priced offeror was consistent with the evaluation scheme, which
emphasized technical considerations over price and specifically reserved
the right to make award at other than the lowest price. In addition, in
view of our conclusion that Hayes' lower technical rating was
reasonable, we see no basis to challenge the Air Force's determination
that the advantages represented by Boeing's higher rating warranted
award at a higher price.
Since Hayes has failed to show any error of law or fact in our
original decision, that decision is affirmed.
Comptroller General
of the United States
FOOTNOTES
1/ In support of its position that the Air Force implicitly waived
Hayes' ineligibility for award after the suspension took effect, Hayes
states that the Air Force, although knowing of the suspension,
nevertheless asked Hayes to submit a best and final offer. The record
shows, however, that best and final offers were requested by letter
dated June 23; the suspension was not imposed until July 2. In
addition, Hayes states that the source selection authority deliberately
waited until the suspension was lifted to make the award decision. The
selection decision was made and the suspension lifted on the same day,
September 29. The record is unclear, however, as to whether the source
selection authority knew the suspension had been lifted before the
selection decision had been made and the award action initiated.
2/As discussed in note 1, supra, the record is unclear as to whether
the lifting of the suspension preceded the source selection authority's
selection decision.
Matter of: Hayes International Corporation
File: B-224567
Date: February 4, 1987
DIGEST
Offeror is no longer entitled to be considered for award under
request for proposals where offeror is suspended from government
contracting before best and final offers are due and contracting agency
does not make written finding under applicable regulation that
compelling reason exists for continuing consideration of offeror's
proposal.
DECISION
Hayes International Corporation protests the award of a contract to
any other offeror under request for proposals (RFP) No.
F34601-87-R-49000, issued by the Air Force for programmed depot
maintenance of KC-135 aircraft. Hayes challenges the Air Force's
reliance on Hayes' recent suspension from government contracting as the
basis for the decision not to award a contract to Hayes under the
current RFP. We deny the protest.
The RFP, issued on February 13, 1986, called for proposals to perform
programmed depot maintenance, including repair and modifications, on the
Air Force's KC-135 aircraft on a fixedprice basis for a 1-year base
period, with four 1-year options. Section M-900 of the RFP provided
that evaluation of proposals would be based on the following factors, in
descending order of importance: (1) management/experience; (2)
quality; (3) production/facilities; (4) safety; and (5) cost/price.
The RFP also provided that award would be made to the offeror whose
proposal was found to be the most advantageous to the government, price
and other factors considered, and specifically reserved the right to
make award at other than the lowest proposed price.
Proposals were received from three offerors, including Hayes and
Boeing Military Airplane Company. Based on its initial evaluation, the
Air Force's Source Selection Evaluation Group (SSEG) rated the Hayes
proposal "green," or acceptable, in all four technical categories. 1/
Discussions then were held with each offeror on June 18 and 19. On June
23, the Air Force advised the offerors that discussions had concluded
and that best and final offers were due on July 21.
On July 2, the Air Force suspended Hayes from future contracting with
any executive agency. As described in the report by the Air Force's
Debarment and Suspension Board, the suspension was based on findings in
a Navy investigation regarding unacceptable performance by Hayes under
Navy aircraft maintenance contracts, following the fatal crash of a Navy
aircraft worked on by Hayes; concerns regarding the quality of Hayes'
performance and other apparent irregularties, such as inadequate billing
practices, raised during a federal task force investigation of Hayes
begun in 1984; and a pending grand jury investigation of Hayes'
performance which stemmed from the 1984 task force investigation. In
connection with the criminal investigation, on July 25, Hayes entered a
guilty plea to 38 counts of felony fraud based on improper alteration of
time cards.
Despite its suspension, Hayes submitted a best and final offer under
the RFP by the July 21 due date. Hayes' proposal then was evaluated by
the Air Force along with the other two best and final offers. Hayes'
rating remained the same, green/acceptable in all four technical
categories. 2/
The evaluation documents prepared by the SSEG included an overall
assessment of each offeror's past performance; with regard to Hayes,
the documents included a brief description of the suspension and guilty
plea. Hayes' price for the base year (ca. $40 million) was
approximately $38 million below Boeing's price (ca. $78 million); over
the life of the contract, including all four option years, Hayes' total
price was approximately $28 million below Boeing's price.
In a briefing to the Source Selection Authority (SSA) on August 5,
the SSEG provided an overview of its evaluation of the offerors'
technical and price proposals, including a "risk assessment" of each
offeror. Hayes was rated a low risk when considered solely on the basis
of the information in its proposal; Hayes was rated a medium risk,
however, when its suspension from government contracting and guilty plea
were taken into account. Boeing was rated as a low risk.
The SSEG's briefing concluded with a recommendation that award be
made to Boeing.
According to the Air Force, on September 4 the SSA received a copy of
a proposed settlement agreement between the Air Force and Hayes
detailing remedial measures to be taken by Hayes in exchange for lifting
the suspension. On September 6, the SSA asked for a new risk assessment
of the Hayes proposal in light of the proposed settlement agreement. On
September 10, the SSA was briefed on the new risk assessment. 3/ The
briefing concluded, and the SSA later agreed, that the remedial actions
proposed by Hayes in the settlement agreement reflected inadequacies in
Hayes' past performance which adversely affected the rating of the Hayes
proposal under the RFP. Specifically, the new risk assessment found
that Hayes' rating should be lowered from green/acceptable to yellow/
marginal in the two most important categories, management/ experience
and quality. As a result, Hayes' technical rating fell below Boeing's
rating.
The Air Force suspension of Hayes was lifted on September 29; that
same day, the SSA directed the contracting officer to make award to
Boeing. The contract was awarded to Boeing on October 2. On October
15, the Air Force authorized Boeing to proceed with contract performance
notwithstanding the protest based on its finding under the Competition
in Contracting Act of 1984 (CICA), 31 U.S.C. Sec. 3553(d)(2)(A)(i)
(Supp. III 1985), that performance of the contract would be in the best
interests of the United States.
Hayes argues that (1) it was inherently unreasonable for the Air
Force to downgrade its offer based on the proposed settlement agreement;
and (2) at a minimum, it was improper for the Air Force not to raise
the suspension issue in discussions with Hayes. We need not reach these
issues, however, since we find that once the suspension took effect,
Hayes was no longer entitled to be considered for award under the RFP.
As discussed above, the Air Force suspended Hayes from government
contracting on July 2, after discussions had been held but before best
and final offers were due under the RFP. With regard to consideration
of proposals from suspended contractors, the Department of Defense FAR
Supplement, 48 C.F.R. Sec. 209.405(a) (1) (1986), provides in relevant
part:
"Proposals, quotations or offers received from any contractor
on the consolidated list of debarred or suspended contractors
shall not be evaluated for award or included in the competitive
range, and discussions shall not be conducted with such offeror,
unless the Secretary concerned or his authorized representative
determines in writing that there is a compelling reason to make an
exception."
In light of this provision, the Air Force states that the SSA erred
in continuing to consider the Hayes proposal after the July 2 suspension
and instead should have eliminated it from the competition. We agree.
The DOD FAR Supplement clearly provides that once suspended, a
contractor is no longer eligible for consideration under pending
procurements in the absence of the appropriate written finding by the
contracting agency. Here, since the Air Force made no such finding, the
Hayes proposal should have been eliminated from further consideration
under the RFP once the suspension was imposed on July 2. In addition,
after Hayes became ineligible for award on July 2, there was no
requirement that the Air Force reinstate the Hayes proposal in the
competition even though the suspension later was lifted 2 days before
award was made. See Tracor Applied Sciences, Inc., B-221230.2, et al.,
Feb. 24, 1986, 86-1 CPD P 189. Since we find that Hayes should have
been eliminated from the competition once the suspension took effect, we
need not decide whether the Air Force acted properly in relying on the
suspension and related events in evaluating the Hayes proposal.
Hayes has requested that it be allowed to recover the costs of filing
and pursuing the protest and its proposal preparation costs. Since we
find the protest to be without merit, we deny the request for costs.
Bid Protest Regulations, 4 C.F.R. Sec. 21.6(d), (e) (1986).
The protest is denied.
Harry R. Van Cleve
General Counsel
FOOTNOTES
1/ The Air Force used the following color-coded scheme for proposal
evaluation: blue, exceptional; green, acceptable; yellow, marginal;
red, unacceptable.
2/ Boeing's rating was equivalent to Hayes' rating. The evaluation
of the third offeror, whose rating was lower than the Hayes or Boeing
ratings, is not at issue in the protest.
3/ The Air Force does not specify whether the official who later
prepared the memo detailing the September 10 briefing was a member of
the SSEG. In a memo explaining the award decision, however, the SSA
states that the briefing represented the SSEG's views.
Matter of: Bell & Howell Company--Reconsideration
File: B-224566.3
Date: January 29, 1987
DIGEST
1. Agency decision to resolicit after termination of a contract due
to procurement irregularities, rather than to make an award under the
original solicitation, is not objectionable where the agency intends to
revise the specifications and evaluation plan.
2. Recovery of proposal preparation costs and the costs of pursuing a
protest of a contract award that agency terminated while protest was
pending is inappropriate when the protester will be afforded an
opportunity to compete in a reprocurement.
DECISION
Bell & Howell Company requests that we reconsider our dismissal of
its protest against the award of a contract to Datagraphix, Inc., under
request for proposals (RFP) No. DAAC09-86-R-0331, issued by the
Sacramento Army Depot, California, for a computer output microfilm
system. We dismissed the protest as academic because the Army
terminated the contract with Datagraphix before we could resolve the
matter. The Army subsequently advised that deficiencies in the
evaluation plan, specifications, and conduct of negotiations made any
award under the RFP improper, and that the agency expects to resolicit,
with a revised evaluation plan and specifications, when new funds have
been acquired for the procurement. In requesting reconsideration, Bell
& Howell argues that the Army should reinstate the original solicitation
and award a contracting to Bell & Howell.
We deny the request for reconsideration.
The solicitation, issued July 25, 1986, provided that the Army would
evaluate proposals with regard to technical and price factors, and that
the technical factor ("Factor 1") was more important than all other
factors combined. The RFP, however, contained a typographical error,
stating that "Factor 2 price is more important than Factor 1;" the
sentence should have read: "Factor 1 is more important than Factor 2."
The solicitation further stated that award would be based on best
overall value to the government, with technical superiority being
carefully considered. Technical factors were accorded a weight of 80
percent, compared to the 20 percent accorded price.
The Army received three proposals by the closing date, and after a
technical evaluation, determined that all three, Bell & Howell, NCR and
Datagraphix, were in the competitive range. Since Datagraphix's best
and final offer was rated technically superior by a wide margin, the
contracting officer determined that the slightly higher price for
Datagraphix's product was justified by its technical superiority, and
that Datagraphix's offer represented the best overall value to the
government. Accordingly, the Army awarded a contract to Datagraphix on
September 30.
Bell & Howell and NCR then protested to our Office, arguing that the
Army's evaluation of their proposals was inconsistent with the
evaluation factors specified in the RFP and patently incorrect, and that
the Army failed to conduct meaningful negotiations with either firm.
During our consideration of the protests, the Army concluded that its
evaluation of proposals had not been in accord with the evaluation
scheme set forth in the solicitation. The Army therefore terminated the
contract with Datagraphix on December 19, 1985, and we dismissed the
protest. The Army later advised that it intends to revise the
specifications and evaluation plan and issue a new solicitation.
Bell & Howell argues in its request for reconsideration that
resolicitation will not adequately protect its rights given the agency's
prejudice in favor of Datagraphix and that, since the agency seemed to
acknowledge by termination that Bell & Howell unreasonably was excluded
from the procurement, the firm is entitled to award of the contract
under the original solicitation.
We find no legal merit to Bell & Howell's argument. First, we will
not presume that the Army will conduct the resolicitation unfairly.
Second, the Army's action does not establish that Bell & Howell should
receive the contract award. The reason the Army terminated
Datagraphix's contract (thereby, the Army advises, losing the fiscal
year 1986 funds allocated to this procurement), was that the agency
became aware, during the pendancy of Bell & Howell's protest, of
deficiencies in the specifications and the evaluation plan, and in the
conduct of negotiations. The Army's decision to revise the solicitation
specifications and evaluation provisions in these circumstances, and to
resolicit when new funds become available, is consistent with prior
decisions of this Office, see, e.g., Koehring Co., Speedstar Division,
B-219667.2, 65 Comp. Gen. 268 (1986), 86-1 C.P.D. P 135, and therefore
we see no reason to object.
As an alternative to award, Bell & Howell requests proposal
preparation costs and the costs of filing and pursuing its protest. The
Competition in Contracting Act of 1984, 31 U.S.C. Sec. 3554 (Supp. III
1986), and our Bid Protest Regulations, 4 C.F.R. Sec. 21.6 (1985),
provide authority for our Office to grant such costs where the claimant
was unreasonably excluded from the procurement. Since Bell & Howell
will be given an opportunity to compete for the entire contract effort
when the Army resolicits, however, recovery of either proposal
preparation or protest costs is inappropriate here. Koehring Co.,
Speedstar Division, B-219667.2, supra; Galveston Houston Co.,
B-219988.4, Nov. 4, 1985, 85-2 C.P.D. P 519.
The request for reconsideration is denied.
Harry R. Van Cleve
General Counsel
Matter of: ISC Defense Systems, Inc.
File: B-224564
Date: February 17, 1987
DECISION
An agency's decision to exercise an option for an additional quantity
that is based upon an examination of the option prices for this quantity
available under existing contracts is reasonable and proper where the
only mobilization base producers for the item participated in the
competition for the base quantity, and the option for the additional
quantity is exercised only 4 days after award.
DECISION
ISC Defense Systems, Inc., protests the U.S. Army Armament, Munitions
& Chemical Command's exercise of an option to procure an additional
quantity of items from Motorola, Inc., under contract No.
DAAA09-86-C-1476. ISC contends that the contracting activity failed to
follow requisite procedures when exercising the option.
We deny the protest.
The Army issued the underlying solicitation request, for proposals
(RFP) No. DAAA89-86-R-1316, on August 1, 1986, for 47,000 FMU-138/13
Electronic Bomb Fuzes. It restricted the procurement to the current
mobilization base producers, Motorola, Inc., and ISC, under authority of
10 U.S.C. Sec. 2304(c) (3) (Supp. III 1985) and the Federal Acquisition
Regulation (FAR), 48 C.F.R. Sec. 6.302-3 (1986). In order to keep both
of these contractors in production and to meet the required delivery
schedule, the Army structured the RFP to result in a split-award, either
60-40 percent or 50-50 percent. It therefore requested both Motorola
and ISC to submit bids for 3 different alternates, namely, 60 percent of
the required quantity or 29,400 units; 50 percent or 24,500 units; and
40 percent or 19,600 units. Moreover, the two firms were to submit
prices for these alternates both with and without first article testing.
The RFP also contained an option clause permitting the government to
order up to 100 percent of the basic quantity for each alternate.
Award, however, was to be based solely on the basic quantity price.
Both eligible producers submitted proposals. Their prices for the
different alternates were as follows:
Alt. Quantity Offeror Unit Price With/Without Option 1/
First Article Price
I. 29,400(60%) Motorola $585.84/$574.00 $574.00
29,400(60%) ISC $602.10/$588.89 $560.29
II. 24,500(50%) Motorola $609.20/$595.00 $595.00
24,500(50%) ISC $620.24/$604.38 $570.04
III. 19,600(40%) Motorola $646.74/$629.00 $629.00
19,600(40%) ISC $647.66/$627.84 $584.96
During evaluation, the contracting activity decided to waive the
first article test requirement for Motorola, but not for ISC. Based on
this fact and the schedule of prices set forth above, the agency decided
to award Motorola a contract under Alternate I (60 percent) at a total
price of $16,875,600, and ISC a contract under Alternate III (40
percent) at a price of $12,694,138. Both of those contracts were
awarded on September 28, 1986.
On September 29 the contracting activity determined that additional
funds in the amount of $19,839,265.92 were available, permitting it to
acquire an additional 29,196 units. The contracting officer determined
that it was in the best interest of the government, price and other
factors considered, to acquire this entire additional quantity from
Motorola under the option clause of its contract. Accordingly, the Army
exercised the option on September 30, 1986.
ISC contends that this action violates the FAR provision entitled
Exercise of Options, 48 C.F.R. Sec. 17.207, which requires, among other
things, a determination that the exercise of an option is the most
advantageous method of fulfilling the government's needs, all factors
considered. Specifically, the protester alleges that the contracting
officer failed to abide by the terms of Sec. 17.207(d) (2), which, the
protester states, requires the government to conduct an informal
analysis of prices available in the market to ascertain whether the
option price is indeed the most advantageous. The contracting officer,
the protester continues, therefore could not simply examine the prices
available under existing contracts, but was required to make a
reasonable and good faith effort to determine the advantages of
exercising the option.
In the present case, ISC contends, the contracting officer did not
make such an effort. Considering that there were only two available
mobilization base producers, ISC concludes that the contracting officer,
before exercising the option, should have contacted these two sources to
determine their respective prices for the additional quantity. The
protester adds that the failure was especially egregious, given that
ISC's quoted price for the additional quantity to be acquired, $560.29
per unit, was less than Motorola's $574.
ISC further contends that the contracting officer's action conflicts
with decisions of our Office, particularly AllisChalmers Manufacturing,
Co., B-169921, Aug. 14, 1970. ISC states that this decision prohibits
the government from exercising an option where an unsuccessful offeror's
proposed option price is less than the price at which the option is to
be exercised without consideration of the lower option price originally
proposed. Hence, the protester argues, the government is clearly
required to evaluate option prices initially proposed by all offerors
despite the fact that the prices are no longer available to the
government.
ISC has misconstrued the applicable regulations. The intent of these
regulations is not to afford a firm that offered a high price for a base
contract an opportunity to remedy this business judgment by undercutting
the options price of the successful offeror. Rather, the intent of the
regulations is to ensure that the contracting officer obtains a price
most advantageous to the government for the option quantity. Cf.
Jaxon, Inc., B-213998, July 10, 1984, 84-2 CPD P 33. The contracting
officer may make such a determination, for example, by conducting an
informal analysis of prices or an examination of the market, 48 C.F.R.
Sec. 17.207(d) (2), or on the basis that the time between award of the
contract containing the option and the exercise of the option is so
short that it indicates that the option price is most advantaqeous. 48
C.F.R. Sec. 17.207(d) (3). Thus, while it may be appropriate in certain
circumstances for a contracting officer to contact all available sources
to determine whether an option price is most advantageous to the
government, such a process is not mandated by regulation. Decisions
rendered by our Office must be interpreted in a consistent manner with
applicable regulatory provisions.
Here, the record reflects that the contracting officer's decision to
exercise the option was primarily based upon an examination of the
option prices set forth by Motorola and ISC in their respective
proposals. In view of this analysis, the contracting officer concluded
that Motorola's option price of $574 a unit represented the most
advantageous offer to the government for the additional quantity of
fuzes to be procured. The only other price available to the government
under existing contracts was ISC's offer of $584.76 a unit for an
additional quantity of 19,600 fuzes. ISC's lower option price of
$560.29 a unit for an additional 29,400 units was not available to the
government under any contract, as this price was predicated upon ISC
receiving an award for 60 percent of the base quantity, rather than the
40 percent that it actually received.
We conclude that the contracting officer's determination was
consistent with applicable regulations, specifically 48 C.F.R. Sec.
17.207(d) (3). Considering that Motorola and ISC were the only sources
available and in view of the fact that the option for the additional
quantity was to be exercised only 4 days after the award of the base
contract, the contracting officer was justified in assuming that
Motorola's option price was the lowest price obtainable for the
additional quantity of fuzes. Accordingly, we find the Army's exercise
of the option in favor of Motorola to be reasonable and proper. See
Astronautics Corp. of America, B-222414.2, et al., Aug. 5, 1986, 86-2
CPD P 147.
The protest is denied.
Harry R. Van Cleve
General Counsel
FOOTNOTE
1/ Motorola did not specify prices for the option quantities and,
therefore, under solicitation clause I-2, the prices specified for the
base quantities were to be Motorola's prices for any quantities awarded
pursuant to the option clause.
Matter of: Telenet Communications Corporation--Request for
Reconsideration
File: B-224561.2
Date: May 22, 1987
DIGEST
Parties to a bid protest, including contracting agencies, that
withhold or fail to submit relevant evidence to the General Accounting
Office (GAO) during consideration of the protest do so at their peril,
since GAO will not reconsider decisions based upon previously available
and relevant evidence that is first presented in a request for
reconsideration.
DECISION
The General Services Administration (GSA) requests reconsideration of
our decision in Telenet Communications Corp., B-224561, Feb. 18, 1987,
87-1 CPD P 181. In that decision, we sustained Telenet's protest that
GSA had improperly awarded a contract to an offeror whose proposal
failed to comply with mandatory technical requirements of the
solicitation and omitted prices for a substantial amount of required
services. We recommended termination of the contract and award to
Telenet.
We affirm our prior decision, and, in addition, we find the protester
entitled to the costs of filing and pursuing its protest, including
reasonable attorney's fees.
GSA issued request for proposals (RFP) No. KECI-86-009 for nationwide
data transmission services to support its Federal Supply Service for a
base year and 5 option years. In connection with its plans to upgrade
its system, GSA required offerors to include two optional services in
their proposals.
The first option is for data transmission of up to 9,600 characters
per second to and from Honeywell "Datanet 8" computers. The RFP stated
that for evaluation purposes, offerors should assume that four circuits
would be installed in each of months 13, 25, and 37 of the contract, and
that each circuit would carry 20 million characters per month. A second
option stemmed from GSA's plan to begin replacing its current basic
terminals with modern 3270 terminals. GSA included transmission
services for the new terminals as the second option in the RFP. The
agency's plan for conversion, which will begin in 1988, is still being
formulated, so GSA established certain assumptions for purposes of
comparing proposals, including an assumed schedule for implementation.
We found that the proposal of Tymnet, the low offeror, had not
included prices for the 20 million characters per month attributable to
each new Datanet 8 transmission circuit, as required by the
solicitation. In responding to Telenet's protest, GSA argued that while
the RFP was "confusing" on the question, the Datanet 8 circuits would
not generate additional data. The agency contended that the data to
enter the communications system through its Datanet 8 terminals would be
the same data that the RFP stated would enter through other terminals
and was otherwise priced by the offerors.
GSA now states that in preparing its request for reconsideration, it
discovered that the Datanet 8 data will be in addition to other data in
the system. However, the agency argues that had Tymnet proposed a price
for the additional data, it only would have charged an additional
$120,960. GSA calculated this amount by assuming that Tymnet would
charge the same for Datanet 8 traffic as for other traffic, and it
argues that the addition to Tymnet's price does not change the ranking
of the offerors. Since, as discussed below, we find that Tymnet failed
to meet another material requirement of the RFP that in itself warrants
termination of the protested contract, we need not consider GSA's
argument that Tymnet's failure to comply with the RFP's mandatory
pricing requirements would not have affected the award.
In our prior decision, we also found that rather than propose 3270
terminals with the ability to dial into the data transmission system
separately--as expressly required by the RFP--Tymnet had proposed
"cluster controllers" that would connect a number of terminals to the
data transmission network at a single entry point. The protester's own
prices for "separate dial-up" service versus "cluster controllers"
indicated that Tymnet's low offer may have been possible because of this
failure to meet a mandatory technical requirement.
In its request for reconsideration, GSA states that Tymnet's proposal
"appears" not to meet the mandatory requirements, particularly since the
proposal states that in each region Tymnet plans to incorporate one
government-furnished cluster controller, to which it will connect a
direct dial unit, a modem, and a switched business line. As GSA points
out, the drawing included in Tymnet's proposal clearly shows use of
cluster controllers without separate dial-up service to GSA's 3270
terminals. The structure of Tymnet's price proposal is consistent with
this approach.
GSA further states that it, too, was concerned about Tymnet's
proposal, and it met with the firm to discuss the matter before award.
GSA asserts that in the meeting, Tymnet explained that it planned to use
a "direct dial-up unit" that would meet GSA's requirements, and that it
had included sufficient auxiliary equipment to meet the RFP requirements
in the price of each unit. GSA states that without knowledge of these
discussions, we "could fairly conclude" that Tymnet had not been
evaluated on the same basis as other offerors. The agency does not
indicate why it had not previously provided information clearly relevant
to Tymnet's protest to our Office. Contracting agencies that withhold
or fail to submit all relevant evidence do so at their peril, since it
is not our function to prepare defenses to allegations raised in the
protest record, and we do not reconsider decisions on the basis of
previously available and relevant evidence first presented in a request
for reconsideration. J.R. Youngdale Constr. Co., Inc.-- Request for
Reconsideration, B-219439.2, Feb. 20, 1986, 86-1 CPD P 176.
In this case, however, we would have reached the same conclusion even
if GSA had initially disclosed the substance of its discussions with
Tymnet. GSA asserts that Tymnet's discussions and the drawing of a
cluster controller in each region referred to a possible approach the
agency might pursue, but that GSA actually evaluated Tymnet's proposal
on a "stand-alone" approach depicted in an "EVALUATION DIAGRAM" that GSA
submitted with its request for reconsideration. The diagram submitted
to us does not show how a Tymnet "direct dial-up unit" would provide the
required service, and GSA does not indicate who prepared the diagram or
when it was prepared. Moreover, GSA's account of Tymnet's
representation--that it planned to provide direct dial-up units plus
necessary modems that would meet requirements for separate dial-up
service--contradicts the description of Tymnet's system in its proposal
and in Tymnet's own drawing of that system.
GSA's memorandum recommending award to Tymnet states that discussions
were held with Tymnet on August 28, 1986 to clarify an issue regarding
"terminal concentrators," and it makes no reference to the discussion
the agency now reports. Not only does the contract file omit the
discussion, but GSA states that it did not ask Tymnet to incorporate
this clarification" in its proposal--a proposal that is clearly
inconsistent with Tymnet's representations. The protester has submitted
a Tymnet commercial pricing brochure to establish that the firm's
"direct dial-up units" do not in fact provide the service mandated by
the RFP. What Tymnet' equipment might actually provide or what Tymnet
told GSA during discussions is not strictly pertinent. Tymnet did not
revise its proposal to conform with the RFP, and its contract with GSA
does not obligate the firm to provide services included in other
offerors' proposals.
As stated in our prior decision, any proposal that fails to conform
to material terms and conditions of the solicitation may not form the
basis for an award. We find no reason to reverse our original
conclusion that GSA improperly accepted Tymnet's proposal. We affirm
our original recommendation that GSA terminate Tymnet's contract, which
was awarded on September 30, 1986, and award to Telenet. Since Telenet
has lost the opportunity to perform more than 7 months of the services
originally procured, we also find that Telenet is entitled to reasonable
costs of filing and pursuing its protest, including attorney's fees. 4
C.F.R. Secs. 21.6(d) and (e) (1986); Pacific Sky Supply, Inc.,
B-225513, Mar. 30, 1987, 87-1 CPD P 358.
We affirm our decision.
Acting Comptroller General
of the United States
Matter of: Telenet Communications Corporation
File: B-224561
Date: February 18, 1987
DIGEST
Protest of award of a contract for data transmission services to an
offeror whose proposal was inconsistent on its face with material
solicitation requirements is sustained because the offeror could not
meet the mandatory grade of service or provide transmission as required
by the solicitation and failed to include prices for all services in its
proposal.
DECISION
Telenet Communications Corporation protests the award of a contract
for data communications services to Tymnet, Inc. under request for
proposals (RFP) No. KECI-86-009, issued by the General Services
Administration (GSA). Telenet contends that the awardee's proposal
failed to comply with mandatory technical requirements of the
solicitation and omitted prices for a substantial amount of required
services.
We sustain the protest.
The RFP, issued on June 19, 1986, was for nationwide data
transmission services to support GSA's Federal Supply Service. Offerors
were required to provide fixed-prices for a basic service with five
annual option periods. The basic service involves connection of GSA's
"TTY-compatible" terminals (terminals that communicate one
character-at-a-time instead of whole screens) in 11 regional offices to
the agency's host computer in Washington, D.C.
GSA plans to expand and upgrade its system, and it required offerors
to include two optional services in their proposals. The first option
is for data transmission of up to 9,600 characters per second to and
from Honeywell "Datanet 8" computers. The RFP stated that for
evaluation purposes, offerors should assume that four circuits would be
installed in each of months 13, 25, and 37 of the contract, and that
each circuit would carry 20 million characters per month. A second
option stemmed from GSA's plan to begin replacing its basic
TTY-compatible terminals with modern equipment, 3270 terminals that
transmit a screen of data at a time. The 3270 terminals will use either
of two different types of communications procedures or "protocols" known
as SDLC (synchronous data link control) and BSC (binary synchronous
communications). GSA included transmission services for these new
terminals as the second option in the RFP. The agency's plan for this
conversion, which will begin in 1988, is still being formulated, so GSA
established certain assumptions for purposes of comparing proposals;
these included an assumed schedule for implementation and an estimated
annual percentage of terminals that will provide each type of
communications procedure (SDLC and BSC).
The solicitation provided that award would be made to the responsive
proposal with the lowest total discounted life cycle cost over a 5-year
period for the basic service and all option periods and services. Four
proposals were received by the August 25, 1986 closing date, including
those of the protester and the incumbent contractor, Tymnet. All were
found to be technically acceptable. GSA concluded that Tymnet offered
the lowest price, and it awarded a contract to the firm on September 30.
Following Telenet's protest on October 10, GSA authorized performance
of the contract upon a finding under the Competition in Contracting Act
of 1984 (CICA), 31 U.S.C. Sec. 3553(d) (2)(A)(i) (Supp. III 1985), that
performance was in the best interest of the government.
MANDATORY SOLICITATION REQUIREMENTS
Telenet contends that Tymnet's proposed system to supply data
transmission services for GSA's planned 3270 terminals cannot meet the
mandatory specifications in the RFP. Specifically, the protester
alleges that because Tymnet proposed to use one "cluster controller" 1/
in each region, Tymnet cannot provide the grade of service mandated by
the specifications. Telenet states that it was clearly prejudiced by
the improper acceptance of Tymnet's offer, since Telenet's total cost
was second low and would have been the lowest had it proposed to use
cluster controllers.
In negotiated procurements, any proposal that fails to conform to
material terms and conditions of the solicitation should be considered
unacceptable and may not form the basis for an award. AT&T Information
Systems, Inc., B-218386, Mar. 20, 1985, 85-1 CPD P 326. It is
fundamental that all offerors for government contracts must compete on
an equal basis. The Federal Acquisition Regulation (FAR) requires
agencies to revise solicitations and give all offerors an opportunity to
submit new or revised proposals if changes occur in requirements or if
the proposal considered most advantageous to the government involves a
departure from stated requirements. 48 C.F.R. Sec. 15.606 (1986). To
do otherwise would violate the requirement of CICA, 41 U.S.C. Sec. 253b
(Supp. III 1985), that award must be based solely upon factors specified
in the solicitation.
The use of cluster controllers was specifically excluded by the
solicitation. In amendment 0005, issued on August 18, GSA responded to
a question regarding whether the 3270 terminals will be clustered or
will require individual access to the network (Question 13). GSA stated
that "for evaluation purposes," offerors should assume that the agency
will provide "separate dial-up" service for the 3270 terminals. In
other words, each terminal must have the ability to dial into the data
transmission system separately.
GSA's response to this issue in the administrative report is simply
to assert that its technical evaluation team had determined that
Tymnet's proposal satisfied the RFP requirements. Following a
conference on the protest, GSA argued that Tymnet was not providing the
cluster controllers, but that they were being furnished by GSA.
Tymnet's proposal does state that it is using "government-furnished
cluster controllers." However, there is no evidence in the RFP that
cluster controllers will be furnished by GSA, and, whoever supplies
them, cluster controllers simply do not provide "separate dial-up"
access for each terminal.
Additionally, it is not clear that Tymnet's proposed system would
provide the grade of service required by the RFP. Paragraph C. 16 of
the RFP states as a "mandatory" requirement that the data communications
networks provide a grade of service for terminal users of P.O.1 or
better, i.e., that the probability of a terminal user receiving a "busy
signal" when attempting to connect to the network will not exceed 1
percent. As discussed above, Paragraph C.18. 1 provides that GSA's 3270
terminals are expected to use SDLC and BSC protocols--the distribution
will be 70 percent SDLC and 30 percent BSC during 1989, 80 percent SDLC
and 20 percent BSC in 1990, and 90 percent SDLC and 10 percent BSC in
1981. The RFP does not suggest that the terminals be segregated by
office, and based on the across-the-board percentages of projected
protocol use, offerors could reasonably assume that some if not all of
the offices will have terminals using both protocols.
Terminals with SDLC protocol require controllers with the same
communications procedures, i.e., the SDLC protocol. Similarly, BSC
terminals require controllers with the BSC protocol. For this reason,
the use of a single cluster controller for each of 11 regional offices
would mean that at all times a number of the terminals could not be
used. Without two different controllers for the SDLC terminals and the
BSC terminals, all of GSA's terminals will not have access to the data
transmission system.
GSA asserts that it does not require simultaneous implementation of
the two 3270 terminal protocols, so that Tymnet can meet the required
grade of service with a single cluster controller in each regional
office. This would presumably require a schedule for alternately using
terminals and some means of changing the communication procedures for
the controllers each time. Irrespective of whether this is possible,
much less practical, the grade of service and separate access
requirements of the RFP contradict GSA's assertion.
Paragraph L.2.3 of the RFP states explicitly that proposals failing
to meet mandatory specifications and optional requirements listed in
paragraph C.16 and C.18 are unacceptable. Tymnet's proposal is
inconsistent on its face with those material requirements and should not
have been accepted by GSA.
DATANET 8 PRICING
Telenet protests that Tymnet failed to include prices for the
optional Datanet 8 transmission services. As discussed above, GSA plans
to initiate service for Datanet 8 computers in 1988 and stated in the
RFP that, for evaluation purposes, offerors should assume service in
specified stages, and should assume that each will generate traffic of
20 million characters per month. The RFP required that offerors include
all costs pertinent to required services in their proposals.
GSA argues that the data to enter the communications system through
its Datanet 8 terminals is the same data that the RFP stated would enter
through its TTY-compatible terminals and replacement 3270 terminals.
GSA states that the RFP could be confusing on this issue, but that the
20 million characters per month for each Datanet 8 circuit will not be
in addition to other data and should not have been separately priced.
We find that GSA's reading of the solicitation is unreasonable. If
the data transmitted through the Datanet 8 terminals were irrelevant to
the offerors' prices, there was no reason to state the assumed volume of
traffic for evaluation purposes. There is no evidence in the RFP that
the Datanet 8 terminals are to be used as a substitute for GSA's basic
terminals--the 3270 terminals, not the Datanet 8 terminals, are intended
to replace GSA's current equipment. If GSA did not anticipate
additional traffic with the installation of Datanet 8 terminals, it
should have deleted charges for this traffic from Telenet's proposal so
that the offerors could be evaluated on the same basis. We sustain this
ground of Telenet's protest.
Based upon GSA's evaluation documents, we find that of those
proposals meeting the mandatory requirements of the solicitation,
Telenet's offered the lowest life cycle cost, whether or not additional
traffic for Datanet 8 circuits is anticipated. It is apparent that GSA
may not have finalized its future requirements for 3270 terminals, e.g.,
how many and in what location the terminals will be required. The RFP
established certain assumptions as a basis for comparing proposals,
including separate access for all terminals to the network, and we have
no reason to believe that those assumptions do not provide a sound basis
for selecting a contractor to meet the agency's actual needs insofar as
they are currently established.
In view of the major revisions that would be required in Tymnet's
proposal for it to comply with the RFP, and the fact that the offerors'
prices have been publicly exposed, we do not believe that reopening the
procurement, conducting discussions, and evaluating additional proposals
would be an appropriate remedy. Consequently, we are recommending to
the Administrator of General Services that the contract with Tymnet be
terminated and reawarded to Telenet.
The protest is sustained.
Comptroller General
of the United States
FOOTNOTE
1/ Cluster controllers primarily function to connect a number
("cluster") of terminals through a single entry point to a data
transmission network, in contrast to direct access by each terminal.
Matter of: Microeconomic Applications, Inc.
File: B-224560
Date: February 9, 1987
DIGEST
1. Allegation that requirement established by agency during
discussions was improper because it had no technical justification and
was never incorporated by amendment into the solicitation is untimely
and therefore will not be considered since it was not raised prior to
the next closing date for receipt of proposals.
2. Agency is not bound to explain reasons for adding technical
requirement during discussions, and where best and final offer
essentially ignores the requirement it is proper for agency to evaluate
the offer as technically deficient.
3. General Accounting Office will not appraise the adequacy of the
qualifications of an agency's contracting personnel absent showing of
possible fraud, conflict of interest or actual bias on their part.
DECISION
Microeconomic Applications, Inc. (Microeconomic), protests the
issuance of a delivery order to Expand Associates, Inc., under
Department of Health and Human Services (HHS) request for proposals
(RFP) No. HRSA86-458(P). The procurement sought proposals to provide
consulting services to evaluate the effectiveness of HHS's assistance to
historically black colleges in preparing grant applications.
Microeconomic challenges the award on several grounds. We dismiss the
protest in part and deny it in part.
HHS determined that 5 of the 29 proposals received were in the
competitive range for negotiation purposes, with Microeconomic's
proposal being the lowest scored of these 5. HHS conducted negotiations
with all five offerors concerning the technical and cost aspects of
their proposals.
The RFP specified that nine low-scored historically black colleges
disapproved for grants were to be interviewed about the effectiveness of
HHS's technical assistance. At least five interviews were to be on-site
at the colleges, with the grant managers that had been proposed by the
colleges asked for their opinions of the strengths and weaknesses of
HHS's technical assistance efforts and their recommendations for
improving the assistance.
Prior to negotiations, the exact interview sites had not been
determined by HHS. During the discussions, HHS expressly instructed the
offerors to prepare their best and final offers (BAFOs) based on
two-person interview teams making two airplane trips to two designated
cities. HHS had concluded that the minimum of five colleges that had to
be visited for on-site interviews could be covered, at a low travel
cost, by the two air trips, with accompanying ground transportation.
After evaluating the companies' BAFOs, HHS determined that
Microeconomic's proposal no longer had a chance at being selected for
award and eliminated it from further consideration. Expand Associates
was determined to have the proposal that was most advantageous to the
government, and the firm was awarded a contract for the effort.
Microeconomic contends that HHS arbitrarily and unfairly placed
constraints on what could be proposed in the BAFOs and misled
Microeconomic as to the reasons for the constraints. Microeconomic
further contends that HHS manipulated the negotiations as well as the
proposal evaluations to favor Expand Associates ana that Expand
Associates was provided with information not furnished to the other
offerors in the competitive range. Finally, Microeconomic complains
that the HHS officials responsible for conducting the discussions were
not competent to do so.
TIMELINESS
One of Microeconomic's principal arguments is that HHS's requirement
for two-person teams had no technical justification and prevented
Microeconomic from proposing a technically superior approach to the
contract work in its BAFO. Essentially, Microeconomic believed it was
preferable from a technical standpoint to have the interviews conducted
by only one person since this would permit on-site visits for all nine
interviews. Microeconomic also argues that it was improper for HHS to
add the two-person interview requirement during negotiations without
issuing a written amendment to this effect.
Under our Bid Protest Regulations, alleged solicitation improprieties
that do not exist in the initial solicitation, but which later are
incorporated therein during discussions, must be protested no later than
the next closing date for receipt of proposals, here the closing date
for receipt of BAFOs. 4 C.F.R. Sec. 21.2(a) (1) (1986). Although,
Microeconomic was made aware of the requirement in issue during
discussions, Microeconomic did not challenge the requirement until after
the award to Expand Associates, when it filed the instant protest.
Therefore, the firm's objections in this respect are untimely and will
not be considered.
DISCUSSIONS
Microeconomic contends that the lower technical rating for its BAFO
and the resulting elimination from the competitive range were directly
attributable to the failure of HHS's negotiators to provide
Microeconomic an adequate opportunity to respond to concerns that HHS's
technical evaluation team had with the firm's initial proposal.
Microeconomic asserts in this regard that it could have written a
higher-scored BAFO had it been specifically advised that HHS considered
using a single interviewer (and visiting all nine sites) a "technically
inferior" approach, compared to the two-person team approach, due to
lower interview reliability. Microeconomic claims it was told that the
two-person team requirement was added oniy to make offerors' proposed
costs (based on five site visits) comparable for evaluation purposes.
We find nothing unreasonable in the nature or extent of HHS's
discussions with Microeconomic. While HHS apparently did not advise
Microeconomic that it considered two-person interview teams technically
preferable, there was no requirement that it do so. No matter the
underlying reason for adding a technical requirement, offerors must
either comply with it or successfully challenge it by protest or some
other means. Microeconomic did neither here. Although Microeconomic
clearly was on notice that HHS wanted proposals based on two-person
interview teams, Microeconomic essentially ignored this requirement and,
as discussed in the next section, instead continued to insist in its
BAFO on the advisability of single-person interviews. It thus was not
improper for HHS to downgrade Microeconomic's proposal in this area.
EVALUATION
Microeconomic contends that the technical evaluation was deficient,
questioning, for instance, whether the firm was properly credited for
past experience and personnel qualifications.
As the evaluators did not prepare detailed written comments on the
proposals, it is not possible to determine the precise impact of
specific deficiencies. We nonetheless observe that Microeconomic itself
acknowledged in its BAFO that HHS's "concern about its experience in
evaluation of social programs of this type is understandable," as the
project director's prior experience was largely in economics. Although
the proposal proceeds to explain why Microeconomic believes this concern
is somewhat misplaced, the evaluation record suggests that HHS's
concerns were not eliminated. At the same time, the evaluation
documents rated as a strength in Expand Associates' proposal its prior
experience with at least one very similar project, evidently
highlighting Microeconomic's relative deficiency in this area. Such a
comparative evaluation is proper in determining whether a proposal has a
reaiistic chance of being selected for award, i.e., whether a proposal
should be included or retained in the competitive range. See JDR
Systems Corp., B-214639, Sept. 19, 1984, 84-2 C.P.D. P 325.
Moreover, it is fairly clear from the record, and Microeconomic seems
well aware, that the principal reason for the downgrading of
Microeconomic's proposal was its failure to address in any detail the
requirement for a two-person interview approach in its BAFO.
Microeconomic's BAFO did not provide a detailed discussion of how the
firm would perform two-person interviews or the composition of the team,
but included instead an extensive discussion of the merits of
Microeconomic's original one-person interview approach. The interview
process was the heart of the entire project and, under the RFP's
evaluation scheme, the technical approach was the most important
criterion, representing 40 percent of the total possible score. We thus
do not think it was unreasonable for HHS to determine Microeconomic's
revised proposal unacceptable based on the offeror's inadequate
treatment of this requirement.
UNEQUAL TREATMENT
Microeconomic alleges that HHS's preference for the twoperson
interview team requirement may have resulted from improper contacts and
discussions with Expand Associates, and that HHS may have provided
Expand Associates with substantially more accurate information regarding
cossts than it gave Microeconomic.
There is no basis in the record for Microeconomic's allegation. We
find no evidence, and Microeconomic points to none, that HHS improperly
met with or provided more accurate information to Expand Associates, or
that HHS otherwise improperly favored Expand Associates for the award.
We therefore dismiss this aspect of the protest as unsubstantiated
speculation. Sperry Rand Corp., 56 Comp. Gen. 312, 319 (1977), 77-1
C.P.D. P 77.
Microeconomic raises several additional issues, asserting, for
example, that it was denied a fair opportunity to submit a competitive
BAFO because the procurement officials who conducted the discussions
lacked knowledge and understanding of the technical issues involved in
the project. The selection of individuals to serve as proposal
evaluators essentially is a matter within the procuring agency's
discretion, and we therefore will not appraise the qualifications of
such individuals absent a showing of possible fraud, conflict of
interest, or actual bias on their part. See Training and Management
Resources, Inc., B-220965, Mar. 12, 1986, 86-1 C.P.D. P 244.
Microeconomic has made no such showing.
Microeconomic's protest is dismissed in part and denied in part.
Harry R. Van Cleve
General Counsel
Matter of: Audits & Surveys, Inc.
File: B-224556
Date: January 30, 1987
DIGEST
1. Protest that agency improperly considered that awardee had direct
experience in conducting national surveys of household food consumption
when evaluating proposals in procurement for nationwide food consumption
survey is denied where solicitation listed as an evaluation criterion
corporate experience in directly related activities. Agencies need not
identify the various aspects of stated evaluation criteria which may be
taken into account if, as here, such aspects are reasonably related to
the stated criteria.
2. An agency is not required to discount a competitive advantage that
might accrue to an offeror by virtue of incumbency so long as the
advantage did not result from preferential treatment or other unfair
government action.
3. Protest contending that agency manipulated protester during cost
discussions to increase its price to its detriment is denied since
record shows that the agency's discussions were fair and reasonable,
consisting only of requests for support or explanations of proposed
costs.
4. Protest that agency failed to hold meaningful discussions is
without merit where agency sent protester questions that should have led
the protester into areas of its proposal with which the agency was
concerned, and protester was given opportunity to revise proposal with
responses to these questions.
5. Protest that agency subtracted technical points for protester's
use of an 8(a) firm and a small business firm as subcontractors is
denied where agency awarded protester the maximum allowable points under
the RFP criterion for use of small or small disadvantaged business
concerns as subcontractors.
6. Protest that technical review panel never had access to
protester's responses to questions raised about its proposal is denied
where record shows otherwise.
DECISION
Audits & Surveys, Inc. (A&S), protests the award of a cost
reimbursement contract to National Analysts (NA) under request for
proposals (RFP) No. 86-60LP, issued by the United States Department of
Agriculture's Food and Nutrition Service (USDA) for conduct of the
Nationwide Food Consumption Survey (NFCS)1987-1988.
We deny the protest.
Offerors were required to submit separate technical and cost
proposals. The RFP contained the following six technical evaluation
criteria worth a total of 900 points.
Adequacy of technical proposal. . . . . . . . . 50
Understanding the purpose and
objectives of the study ........... 150
Technical adequacy of the plan of work. . . . . 400
Efficient utilization of personnel resources.. 200
Corporate experience.............. 75
Use of small or small disadvantaged
business concerns as subcontractors. . . . . . 25
The RFP advised offerors that while award would be made to the
offeror whose proposal represented the combination of technical merit
and cost most advantageous to the government, paramount consideration
would be given to the evaluation of technical proposals.
Proposals from A&S and NA, the only firms which submitted proposals,
were reviewed by a six-member technical review panel (TRP) and found to
be within the competitive range.
After submitting written responses to technical and cost questions,
and participating in oral negotiations, A&S and NA submitted best and
final offers of $6,132,821 and $6,154,150, respectively. NA received a
final technical score 9 percent higher than A&S. In light of the RFP's
direction that paramount consideration would be given to the evaluation
of technical proposals, USDA determined that the NA proposal represented
the best value to the government and awarded a contract to NA.
A&S first protests that the procurement was not open and competitive
based on a statement USDA made at a debriefing that, while A&S had basic
experience, the awardee "had a team ready to go that had worked in this
area and had direct, immediate, relevant experience." A&S asserts that
if the key reason for choosing NA was direct experience and not basic
experience, the RFP should have explicitly required direct experience.
We first note that USDA has denied the protester access to of
portions the technical and cost evaluation material but has provided the
material for our review. A&S has been advised, however, of its
technical ranking. We have reviewed the evaluation material in camera,
but our discussion of its contents is limited because of the agency's
restriction on its disclosure. Associations for the Education of the
Deaf, Inc., B-220868, Mar. 5, 1986, 86-1 C.P.D. P 220.
Solicitations must inform all offerors of the basis for proposal
evaluation, and the evaluation must, in fact, be based on the factors
set forth in the RFP. While agencies are required to identify the major
evaluation factors, they are not required to identify the various
aspects of each which might be taken into account, provided that such
aspects are reasonably related to or encompassed by the stated criteria.
Tidewater Health Evaluation Center, Inc., B-223635.3, Nov. 17, 1986,
86-2 C.P.D. P 563. The solicitation listed as an evaluation criterion,
"corporate experience in directly related activities with emphasis on
experience in projects requiring extensive management." The record shows
that USDA considered NA's proposal superior to A&S's because, among
other reasons, NA had direct relevant experience in conducting national
surveys of household food consumption, and A&S's direct experience was
limited. We believe that experience in conducting national surveys of
household food consumption, the very object of the procurement, was
clearly encompassed by the corporate experience criterion and properly
considered by USDA. See Technical Services Corporation, 64 Comp. Gen.
245 (1985), 85-1 C.P.D. P 152.
To the extent that A&S is contending that NA had an unfair
competitive advantage because it had previously completed nationwide
surveys for USDA, we have previously held that a competitive advantage
accruing to an offeror because of its position as the incumbent need not
be discounted or equalized in favor of the other offerors so long as it
does not result from preferential treatment or other unfair action by
the government. See Engineering & Professional Services, Inc.,
B-224622, Nov. 17, 1986, 86-2 P 570. The record here does not show that
USDA acted unfairly to A&S or showed any particular preference to NA.
Rather, as stated above, USDA properly considered NA's survey experience
under the RFP's category of corporate experience.
A&S also contends that improper auction techniques were employed by
USDA. A&S alleges that its initial cost was substantially lower than
the awardee's but it was given questions and suggestions which raised
its costs, while the awardee was given questions and suggestions which
lowered their costs--as demonstrated by the final cost difference,
three-tenths of 1 percent.
USDA denies any unequal treatment of the offerors during discussions,
and states that its objective was to negotiate issues which, if
unresolved, could result in extensive cost overruns arising from
underestimations by the offerors. According to USDA, some of the
negotiated issues resulted from field pricing audits completed by the
Defense Contract Audit Agency. Pricing modifications were attempts to
either correct cost oversights or make the business proposal consistent
with the technical proposal, states USDA.
We find no substance to A&S's allegation that USDA conducted improper
price discussions. Rather, the questions asked by the agency about each
offeror's cost proposal appear to have been fair and reasonable. As an
example, one proposal task involved participation by project supervisors
in a 5-day training session conducted by USDA. USDA's review of A&S's
business proposal showed that regional field supervisors who were to
train interviewers were listed as attending only 3 days of the session.
In responding to USDA's question about the inconsistency, A&S increased
time allocations for the task. In addition, under another task, no
travel expenses were allocated for attendance by field staff at a dress
rehearsal. When questioned by USDA, A&S budgeted more for the expenses.
Similarly, USDA questioned NA about shortcomings in its proposal,
including what appeared to be incomplete printing cost estimates, and NA
responded by increasing its printing cost estimate.
Nothing in any of the agency's questions indicates any attempt by
USDA to improperly instruct offerors to increase or decrease prices.
Rather, the record shows that USDA merely asked each offeror to clarify
aspects of its proposal which raised some concern on the agency's part
about the adequacy or accuracy of the proposal. We find no impropriety
in this, and note that in fact the agency was obligated to bring
deficiencies to each offeror's attention. See Federal Acquisition
Regulation (FAR), 48 C.F.R. Sec. 15.610 (c) (1986); Indian Community
Health Service, Inc., B-217481, May 15, 1985, 85-1 C.P.D. P 547.
A&S also complains that few technical questions were raised about its
proposal until after the technical reviewers gained access to its cost
proposal, when it was presented with an "avalanche" of questions. A&S
believes major technical issues should have been resolved prior to cost
proposal review.
USDA reports that A&S's responses to the technical questions
initially raised by USDA intensified the concerns that a majority of the
technical review panel had concerning the initial proposal. Evaluation
of the protester's business proposal revealed discrepancies between the
business proposal and A&S's responses to questions on its technical
proposal, and thus generated more questions. As we stated earlier, we
do not think it unreasonable for USDA to ask offerors to clarify aspects
of proposals which appear inadequate or inaccurate.
A&S also protests that USDA did not hold discussions on technical
questions prior to the debriefing session. For example, A&S asserts
that USDA should have held detailed discussions on A&S's processing of
household food consumption survey data, which was cited as a weakness of
A&S at the debriefing.
USDA responds that it discussed technical proposal deficiencies with
A&S either in requests for written clarifications or during oral
negotiations. For example, in written questions submitted to A&S on
July 7, 1986, by USDA, A&S was asked to summarize how it planned to
process data obtained in the household food consumption phase of the
project. It was asked to make particular reference to interfaces with
USDA in regard to missing food nomenclature, weights and assignment of
prices for nonpurchased food items. USDA points out that it stated in
the July 7, 1986, letter that A&S's proposal was unclear as to
differences in handling foods reported as used by the household and
foods reported as eaten by individual household members.
USDA states that at the debriefing it told A&S that its technical
approach had allocated little or no time to resolving data-related
problems when processing household food consumption survey data, and
that this weakness had previously been brought to A&S's attention in a
letter dated August 25, 1986, in which A&S was asked to respond to
questions raised during the evaluation process.
Agencies generally must conduct written or oral discussions with all
offerors in the competitive range, and this includes advising offerors
of deficiencies in their proposals and providing them with the
opportunity to submit revised proposals so that they have a chance to
satisfy the government's needs. Tidewater Health Evaluation Center,
Inc., B-223635.3, Nov. 17. 1986, 86-2 C.P.D. P 563. Consistent with
this rule, it is not necessary for an agency to furnish information in
any particular form or manner, provided that it finds some means which
reasonably communicates the nature and gravity of its concerns.
Cosmodyne, Inc. et al., B-216258, et al., Sept. 19, 1985, 85-2 C.P.D. P
304. We have recognized that meaningful discussions are held when the
agency sends an offeror a letter requesting "clarifications" and
containing questions which lead the offeror to the areas of its proposal
deemed deficient, and the offeror has an opportunity to modify its
proposal to correct the deficiencies. Arthur D. Little, Inc., B-213686,
Aug. 3, 1984, 84-2 C.P.D. P 149.
We believe USDA's questions indicated the deficiencies in A&S's
proposal about processing household food consumption survey data and
that A&S was afforded a reasonable opportunity to correct the
deficiency. The Army presented A&S with written questions on July 7,
July 22, and August 25, 1986. As USDA points out in its report, the
July 7, 1986, questions clearly addressed deficiencies in A&S's
processing of household food consumption data. Furthermore, the August
25, 1986, questions clearly state that a major limitation of A&S's
proposal was its underestimation of efforts involved in collecting and
processing data on food intakes by members of sample households, and in
processing information obtained in the household food consumption phase.
A&S was given the opportunity to respond to these questions about areas
in its proposal deemed deficient and to submit a best and final offer.
Therefore we deny this aspect of the protest.
A&S also protests that while the evaluation criteria called for the
award of up to 25 technical points for use of an 8(a) firm, technical
points were subtracted from its score for its use of an 8(a) firm and a
small business firm. According to A&S, USDA told it at a debriefing
that its use of subcontractors created an "awkwardness" in the movement
of data.
USDA replies that it awarded A&S the full 25-point score for the use
of two small business firms. According to USDA, A&S's references to
comments in the debriefing about awkwardness in the movement of data
were taken out of context. USDA states that it told A&S in the
debriefing that one of the weaknesses in its proposal involved
logistical complexities in its technical plan concerning the flow of
survey materials among A&S and its subcontractors. USDA felt that the
proposed flow pattern raised risks to the timely completion of the NFCS
1987-1988.
A&S comments that it is contradictory for USDA to award it 25 points
for using the subcontractors at the same time it criticizes A&S for the
flow of information among its subcontractors.
We do not see the contradiction, since two different evaluation
criteria are involved. Our review of the record shows that USDA awarded
A&S the maximum 25 points under the evaluation criterion for use of
small or small disadvantaged business concerns as subcontractors. Under
the evaluation criterion, "technical adequacy of the plan of work," USDA
cited as a weakness A&S's proposed procedure for the flow of data among
A&S and its subcontractors, which it considered cumbersome and
time-consuming. We think it entirely consistent for USDA to recognize
A&S's use of small business concerns at the same time it questions the
technical adequacy of A&S's plan of work.
A&S comments that the technical review panel never had access to its
September 4 response to questions raised about its proposal, and that
its answers bore directly on areas where USDA felt its proposal was
unclear. Our review of the record, however, shows that the panel
chairperson prepared information requests and evaluations in
consultation and concurrence from all panel members. The panel
evaluated A&S's September 18 best and final offer, and their review
resulted in no change to the technical scores.
The protest is denied.
Harry R. Van Cleve
General Counsel
Matter of: Hardman Joint Venture
File: B-224551
Date: February 13, 1987
DIGEST
1. Protest that pursuant to solicitation provision concerning cost
realism contracting agency should have rejected competitor's proposal
for unrealistic pricing is denied where provision clearly only
contemplated cost realism analysis and adjustment, not proposal
rejection.
2. Unsupported allegation that awardee's subcontractors' labor rates
included uncompensated overtime hours so that, pursuant to solicitation
provision, they arguably should have been adjusted upward for cost
realism purposes is insufficient basis to challenge contracting agency's
cost realism analysis.
3. Contracting agency can accept an offer with a lower rated
technical proposal to take advantage of its lower price, even though
cost is the least important evaluation criterion, so long as agency
reasonably decides that the cost premium involved in an award to a
higher rated, higher priced offeror is not warranted in light of the
acceptable level of technical competence available at the lower cost.
DECISION
Hardman Joint Venture (HJV) protests the award of a contract to
Logistics Data Research Corporation (LDR) under request for proposals
(RFP) No. N00600-86-R-0298, issued by the Department of the Navy for
services to maintain and update the HARDMAN program (a project to
identify manpower and training requirements for new weapon system
acquisitions). The Navy decided that HJV's proposal was not
sufficiently superior from a technical standpoint to justify award at
its higher proposed price. HJV advances three bases of protest: (1)
the Navy should have rejected LDR's proposal because LDR improperly
calculated its proposed labor rates using "full-time accounting
practices" prohibited by the RFP; (2) LDR's prices should have been
further adjusted upward to compensate for LDR's subcontractors' use of
full-time accounting practices; and (3) the award to LDR was not in
accordance with the RFP's evaluation criteria. We deny the protest.
BACKGROUND
The RFP listed the following evaluation criteria in descending order
of importance:
1. Technical Plan/Approach
2. Corporate Experience and Quality Control
3. Personnel Resources
4. Contractor Facilities.
The first three criteria comprised the bulk of the technical
emphasis. Offerors were advised that the Navy would evaluate proposals
using technical and cost tradeoffs in an evaluation method known as
greatest value scoring (GVS). Offerors were further advised that the
highest rated proposal would not automatically receive the award; the
contracting officer would not be bound by point scores but retained
discretion to weigh scores against significant differences in technical
merit; and the contracting officer's determination could override "the
actual technical scores of GVS rating, or the weight of cost factors set
forth in the evaluation criteria."
Three firms submitted proposals, and all three were found technically
acceptable and included in the competitive range. In this respect, the
Navy used a weighted technical factor of 60 percent and a weighted cost
factor of 40 percent to calculate each proposal's GVS. The firms
subsequently were requested to submit revised technical proposals and,
finally best and final offers (BAFOs). The revised technical evaluation
scores were normalized (i.e., converted from a 0-100 scale to a 0-60
scale) for purposes of evaluating them with the BAFO prices (the lowest
price received a normalized maximum score of 40) and calculating the GVS
scores, as follows:
Raw Normalized Price Price GVS
Technical Technical Score
Score Score
THIRD FIRM
98.99 59 $3,333,552 18 77
HJV
99.38 59 3,004,743 24 83
LDR
85.44 51 2,148,238 40 91
The Navy then reviewed LDR's pricing because the firm's labor rates
were considerably lower than those of the other offerors. The Navy
learned that LDR's rates were based on a 50 hour work week, while the
other offerors' rates were based on a 40 hour work week. Therefore, as
a cost realism measure, the Navy adjusted LDR's rates upward to
$2,454,756 by multiplying LDR's stated rates by a factor of 1.25. This
adjustment changed the GVS as follows:
Offeror Price Price GVS
Score
THIRD FIRM $3,333,552 26 85
HJV 2,962,144 32 92
LDR 2,454,756 40 91
Since LDR's and HJV's scores were nearly identical, and LDR's
evaluated price was $507,388 lower than HJV's, the Navy awarded LDR the
contract.
COST REALISM
HJV's cost realism arguments involve the interpretation of the
following RFP provision, on which the Navy's cost realism adjustment of
LDR's offer was based:
"Accounting Practices: Offerors are required to use
standardized or normalized accounting practices when proposing
individual...labor rates for personnel. Fulltime accounting
practices which propose individual labor rates that are derived by
dividing the salary of the individual by the total hours worked in
a salary period will not be accepted. Any rate that is based on
full-time accounting and includes uncompensated overtime will be
cost realized upward to include such uncompensated overtime."
HJV reads the provision as requiring the rejection of LDR's proposal,
which HJV characterizes as being based on" fulltime accounting
practices," since the provision states that such practices "will not be
accepted." HJV argues that there are a number of variations on
"full-time accounting practices" and that the RFP provision simply
addresses two: the first variation is unacceptable (where labor rates
are calculated by dividing salary by total hours worked in the salary
period), and the second is acceptable out the offered rates will be
adjusted upward. In response, the Navy report that the provision was
included to discourage offerors from proposing labor rates that did not
reflect the offeror's actual rates and which could result in cost
overruns, and to ensure that the labor rates presented to the government
for evaluation were comparable (i.e., based on the same number of
working hours per day in a given salary period). The Navy argues that
the second sentence of the provision cannot be read without the third,
and that read together they clearly mean that an offer based on a
"full-time accounting practice" that does not compensate for overtime
(like LDR's) will not be accepted, as is, for evaluation, but will be
adjusted upward to compensate for overtime hours.
We find no merit in the protester's argument, since we think HJV's
suggestion that the provision is aimed at two separate variations on an
accounting approach, one being prohibited and the other not, is
untenable. The reason is that there generally would be no basis to
object to a labor rate based on salary divided by salary period if the
salary period is a normal 40 hours per week; HJV, however, would have
an offer with such a labor rate rejected out of hand. Instead, the only
arguable basis on which to object to deriving a labor rate that way is
if the salary period exceeds 40 hours per week, since dividing the
weekly salary by more than 40 hours obviousiy faiis to reflect overtime
pay and makes it impossible to judge the labor rate against a 40 hour
per week one. Consequently, we think the only reasonable way to read
the provision is the way the Navy intended for it to be read that is, to
read the whole provision in context as meaning that an hourly rate that
includes uncompensated overtime will not be acceptable on its face, and
instead will be adjusted to take the overtime into account.
HJV argues in the alternative that, even if the Navy can apply a cost
realism analysis to LDR's proposal instead of rejecting it, the Navy
analyzed the proposal incorrectly since no upward adjustment was made to
the labor rates of LDR's subcontractors, at least one of which (DDL
Omni) HJV believes is also using "full-time accounting practices" with
uncompensated overtime. HJV urges that the Navy's omission of LDR's
subcontractors from the cost realism analysis has resulted in more than
one-half of LDR's price being sheltered from upward adjustment. HJV
notes that if the cost realism analysis of LDR's proposal considers
subcontractor use of "full-time accounting practices," HJV's GVS score
increases and the price differential between the two proposals
decreases.
We have held that the analysis of competing cost proposals entails
the exercise of informed judgment, and that we will not disturb a cost
realism determination unless it is unreasonable. Prospective Computer
Analysts, B-203095, Sept. 20, 1982, 82-2 C.P.D. P 234. Furthermore the
extent to which proposed costs are examined is a matter of agency
discretion. Systematics General Corp., B-214171, Jan. 22, 1985 85-1
C.P.D. P 73.
The record shows that HJV is correct in its assertion that the Navy
did not adjust the labor rates of LDR's subcontractors. However, even
assuming a subcontractor's accounting practice should have led to
adjustment under the RFP provision, HJV has not furnished evidence
supporting its allegation that LDR's subcontractor (DDL Omni) actually
bases its labor rates on uncompensated overtime. Consequently, HJV has
not met its burden of showing that the Navy's cost realism determination
was unreasonable. We note, moreover, that even if the Navy had further
adjusted LDR's price upward, and had recomputed HJV's GVS rating, the
result, according to our calculations (using the formula in the record),
still would have been more than a $300,000 difference in price and only
a four point difference in GVS rating (HJV = 95, LDR = 91).
SOURCE SELECTION
HJV contends that the proposal receiving the highest GVS should have
received the award. HJV argues that the Navy abandoned the 60-40
percent approach established for this procurement by allowing the 40
percent factor to control the 60 percent factor; in HJV's view, price
can only be the determining factor if the technical scores are close.
HJV cites our decision DLI Engineering Corp., B-218335, June 28,
1985, 85-1 C.P.D. P 724, affirmed, DLI Engineering
Corp.--Reconsideration, 65 Comp. Gen. 34 (1985), 85-2 C.P.D. P 468, as
supporting its position that award to LDR was improper. In DLI, we held
that a contracting agency improperly decided that the cost of a
technically superior proposal was too high to warrant its selection over
a lower cost, technically inferior proposal, where the evaluation scheme
stated that cost was the least important criterion. HJV also cites our
decision Applied Financial Analysis, Ltd., B-194388.2, Aug. 10, 1979,
79-2 C.P.D. P 113, for the proposition that where an RFP assigns greater
weight to technical criteria than to cost, it is improper to reject a
technically superior proposal simply because an inferior proposal offers
a better price.
Finally, HJV points to the evaluation panel's favorable remarks
concerning the technical merit of its proposal ("Excellent in all areas
of Technical Approach") and the less favorable remarks concerning LDR's
technical proposal ("Technical Approach is very brief and not specific
enough in "Howto-do" tasks"), as well as the fact that the contracting
officer never took issue with the technical scores HJV received, as
further supporting its position that it should have received the award.
We have recognized that in a negotiated procurement, selection
officials have the discretion to make cost/ technical tradeoffs and the
extent of such tradeoffs is governed only by the tests of rationality
ana consistency with the announced evaluation criteria. Grey
Advertising, Inc., 55 Comp. Gen. 1111 (1976), 76-1 C.P.D. P 325. Thus,
even if cost is the least important evaluation criterion, an agency
properly may award to a lower priced, lower scored offeror if it
determines that the cost premium involved in awarding to a higher rated,
higher priced offeror is not justified given the acceptable level of
technical competence available at the lower cost. AMG Associates, Inc.,
B-220565, Dec. 16, 1985, 85-2 C.P.D. P 673. The determining element is
not the difference in technical merit, per se, but the contracting
agency's judgment concerning the significance of that difference. TEK,
J.V. Morrison-Knudsen/Harnischfeger (TEK), B-221320, et al., Apr. 15,
1986, 86-1 C.P.D. P 365.
We note that HJV first raised the issue of source selection after it
received its copy of the agency report disclosing the GVS scores.
Consequently, tne Navy has not had an opportunity to address
specifically the issue of cost/ technical tradeoff. Nevertheless, we
find little merit in HJV's arguments.
The RFP stated that the Navy retained discretion to award to other
than the highest GVS rated offeror. The RFP did not specifically state
that a 60-40 approach would be used in the cost/technical tradeoff, but
even if it had, we have held that the use of a 60-40 approach does not
deny the agency its discretion to decide whether any technical
difference is significant enough to outweigh the cost difference. TEK,
B-221320, et al., supra. Moreover, we do not find our DLI decision
applicable for two reasons. First, under the instant evaluation, cost
carried greater weight (40 percent) than it carried in the DLI
evaluation, where cost was one of five factors rated and the other four
factors each was worth more than cost. It follows that the result in
DLI, based on an evaluation scheme in which price had only minimal
importance, is not directly applicable to the present case where cost
was of much greater importance. Second, in DLI, the proposal we
concluded should have been selected was "nearly perfect," while the
lower cost one, which the government had chosen, was merely "average."
No such marked technical difference exists here. The narrative scores
assigned to the four technical categories show that while HJV was
excellent in all categories, LDR was rated excellent in two categories,
good in one and average in one. Clearly, LDR's proposal was not viewed
by the Navy as technically inferior. Therefore, we find that DLI does
not preclude the Navy from making the tradeoff made here.
As stated above, selection officials have the discretion to make
reasonable judgments about the significance of cost and technical
differences. HJV's arguments provide no legal basis for our Office to
object to the Navy's judgments in this case.
The protest is denied.
Harry R. Van Cleve
General Counsel
Matter of: Wabash DataTech
File: B-224550
Date: February 11, 1987
DIGEST
1. Protest that awardee may have had improper access to the
protester's proposed price and that awardee submitted a late
modification to its best and final offer is denied where there is no
evidence of an improper price disclosure and the record shows that the
awardee lowered its proposed price only after discussions had been
reopened.
2. Protest concerning allegedly improper reopening of discussions is
dismissed as untimely where filed subsequent to the closing date for
receipt of second best and final offers.
DECISION
Wabash DataTech protests the award by the Maryland Procurement
Office, Fort George G. Meade, Maryland, of a contract to 3M Company
under request for proposals (RFP) No. MDA904-86-R-0208. Wabash
contends that the agency allowed 3M to submit a late modification of its
best and final offer and that the agency improperly reopened
discussions. Wabash also alleges that 3M may have had improper access
to Wabash's proposed prices.
We deny the protest in part and dismiss it in part.
The solicitation contemplated the award of two, 2-year, indefinite
quantity, indefinite delivery contracts for computer tape. The primary
contract would be awarded to the offeror with the lowest priced,
technically acceptable offer; the alternate contract would be awarded
to the second lowest, technically acceptable offeror. The solicitation
provided that the agency would issue delivery orders under the primary
contract for as long as the delivery requirements and product
specifications continued to be met. If the primary contractor should
become unable to meet these requirements, delivery orders would be
placed against the alternate contract.
Following the receipt of initial proposals and the agency's technical
review, the agency determined that the products offered by each of the
six offerors responding to the RFP appeared not to meet one or both of
two solicitation requirements. The requirements concerned tape output
and dropout levels. With respect to the Wabash proposal, the agency's
technical evaluators determined that the technical data furnished by
Wabash indicated that the QuadPlus computer tape offered by the firm
would not meet either the output or the dropout requirements. The
contracting officer advised each offeror that failure to meet any
solicitation requirement would render the proposal technically
unacceptable and invited the offerors to confirm in writing that all
solicitation requirements would be met. All offerors responded with
confirmation letters.
Following another technical review, the technical evaluators informed
the contracting officer of their unallayed concerns regarding the Wabash
proposal. The evaluators noted that Wabash had offered computer tape at
the low end of its product line and that its proposed price was
substantially less than the price under the agency's existing computer
tape contract. The evaluator's conclusion was that the Wabash proposal
was unacceptable. The contracting officer then met with the requiring
activity's technical personnel and others and discussed the Wabash
proposal; it was decided that the agency could not exclude the proposal
as technically unacceptable. The agency requested best and final offers
on June 20, 1986, and also requested offerors to extend the time for
acceptance of offers to July 31. After the submission of best and final
offers, Wabash was the low offeror and 3M was second low.
After the receipt of best and final offers, the agency's technical
personnel again raised the concern that the QuadPlus tape offered by
Wabash would not conform to the technical requirements of the
solicitation. The agency decided therefore that representatives from
the contracting office and the requiring activity should visit Wabash's
manufacturing plant in an effort to resolve the technical question. The
agency informed all offerors by telephone on July 14 that negotiations
would be reopened and that it would request new best and final offers in
August. By letter dated July 29, 3M agreed, as requested, to extend its
offer through August 31. In the same letter, 3M lowered its proposed
prices.
Representatives from the agency visited Wabash's manufacturing plant
on July 31. On the basis of the visit, the agency's technical
representatives concluded that Wabash could produce a quality product
and recommended that the Wabash proposal be retained in the competitive
range. The agency requested new best and final offers which, as
evaluated, showed 3M as the low offeror and Wabash as second low.
Hence, on September 30 the agency awarded the primary contract to 3M and
the alternate contract to Wabash.
Wabash filed a protest with this Office on October 9 complaining that
the agency had failed to award the primary contract to the firm on the
basis of the first round of best and final offers. Wabash contends that
the regulations do not permit the reopening of discussions under the
circumstances of this case. Wabash also alleges that the agency
improperly allowed 3M to submit a late modification of its best and
final offer and that it issued the request for second best and final
offers solely in an effort to cure that impropriety. Wabash speculates
that 3M may have had improper access to Wabash's price proposal.
The protester's speculation that 3M may have had improper access to
Wabash's price proposal is totally unsupported by the record. In this
connection, both the agency and 3M firmly deny any knowledge that an
improper price leak occurred. The record also makes clear that 3M
submitted a modification to its best and final offer only after the
agency informed it by telephone that negotiations were being reopened.
In this respect, offerors have the right to change their proposals in
any manner they see fit so long as negotiations remain open. Delta
Electric Construction Co., B-205069, Nov. 4, 1981, 81-2 CPD P 388.
Thus, the protester's contention that 3M's letter to the agency of July
29 was a late modification also is without merit.
With respect to Wabash's contention that the agency did not have a
valid reason for reopening negotiations, the agency argues that the
allegation is untimely. We agree. Wabash's complaint concerns an
alleged impropriety in the solicitation process that under our Bid
Protest Regulations should have been raised prior to August 22, the
closing date for receipt of the second best and final offers. 4 C.F.R.
Sec. 21.2(a) (1) (1986).
On July 31, representatives from the agency visited the protester's
facility. According to the protester, the agency representatives did
not discuss the protester's proposal, and in fact confirmed that there
were no technical problems with the proposal. Also during the plant
visit, however, the agency informed the protester that there would be a
second round of best and final offers. The protester states that its
president expressed surprise that negotiations had been reopened. 1/
The essence of Wabash's complaint now is that the reopening of
discussions was prejudicial to it. In our view, this basis for protest
should have been apparent to the protester on July 31 when the agency
both conducted a plant visit and indicated that it was reopening
negotiations. Wabash did not raise any objection to the solicitation
process, however, until after it submitted a second best and final offer
and after it learned that the agency had awarded the primary contract to
3M. We therefore dismiss this basis for protest as untimely. Research
Analysis and Management Corp., B-218567.2, Nov. 5, 1985, 85-2 CPD P 524.
The protest is denied in part and dismissed in part.
Harry R. Van Cleve
General Counsel
FOOTNOTE
1/ The protester denies learning by telephone on July 21 that
negotiations had been reopened.
Matter of: Firm Reis GmbH
File: B-224544; B-224546
Date: January 20, 1987
DIGEST
1. Contracting officer's findings of nonresponsibility were
reasonable where the findings were based on negative preaward survey
reports which stated that the protester's prior performance on two
similar contracts was unsatisfactory and the preaward survey reports are
supported by the record.
2. An offeror may be found to be nonresponsible even though its
alleged unsatisfactory prior performance did not result in terminations
of its contracts and the alleged performance deficiencies are disputed
and have been appealed by the firm.
3. Agency's nonresponsiblity determination is reasonably based even
though one aspect of the protester's capability may have been
incorrectly evaluated by the preaward survey team. It is only when the
record shows that such determinations are based on unreasonable or
unsupported conclusions in many areas that the General Accounting Office
will recommend reconsideration of the determinations.
4. Agency's nonresponsibility determinations with respect to two
prospective contracts does not amount to de facto debarment, because a
finding of nonresponsibility unlike a debarment does not prevent a firm
from competing for other government contracts and receiving awards if
the firm is otherwise qualified and convinces the agency that it has
corrected its past problems.
DECISION
Firm Reis GmbH (Reis) protests the Department of the Army's findings
that Reis was nonresponsible with respect to requests for proposals
(RFP) Nos. DAJA37-86-R-0806 and DAJA37-86-R-0618. These RFPs asked for
proposals to provide boiler firing services to United States military
installations in the Stuttgart and Berchtesgaden areas of West Germany.
Reis' proposal prices were low on both RFPs and it contends that the
nonresponsiblity determinations were arbitrary, irrational and based
upon erroneous preaward survey reports.
We deny the protests.
The preaward surveys were conducted at the request of the contracting
officer to provide information with respect to Reis' then current
capabilities and facilities so that the required responsiblity
determinations could be made. In each instance, the survey report
recommended against award to Reis because its technical and quality
assurance capabilities were unsatisfactory and its performance on two
similar contracts was poor.
The determination of a prospective contractor's responsibility rests
within the broad discretion of the contracting officer who in making
that decision must of necessity rely primarily on his or her business
judgment. Venusa, Ltd., B-217431 et al., Apr. 22, 1985, 85-1 CPD P 458.
While the determination should be based on fact and reached in good
faith, the ultimate decision should be left to the discretion of the
contracting agency because it must bear the brunt of any difficulties
experienced during performance of the contract. Urban Masonry Corp.,
B-213196, Jan. 3, 1984, 84-1 CPD P 48 at 4,5. The contracting officer
also has broad discretion as to whether a preaward survey should be
conducted and, if conducted, the degree of reliance to be placed on the
results of the survey. Newport Offshore, Ltd., B-219031 et al., June
13, 1985, 85-1 CPD P 683. Because of the broad discretion of the
contracting officer in these matters, our Office generally will not
question a negative determination of responsibility unless the protester
can demonstrate bad faith on the agency's part or a lack of a reasonable
basis for the determination. Pauline James & Associates, B-220152 et
al., Nov. 20, 1985, 85-2 CPD P 573.
Since Reis has not alleged bad faith on the part of the contracting
officials, the only question for our review is whether the contracting
officer's determinations that Reis was nonresponsible were reasonable,
based on the information available at the time the determinations were
made. See Decker and Co. et al., B-220807 et al., Jan. 28, 1986, 86-1
CPD P 100 at 5. In this regard, the Federal Acquisition Regulation
(FAR), 48 C.F.R. Sec. 9.104-3(c) (1985), provides that a prospective
contractor that recently has been seriously deficient in contract
performance must be presumed to be nonresponsible, unless the
contracting officer determines that the circumstances were beyond the
contractor's control or that the contractor has taken appropriate
corrective action. No such determination has been made with regard to
Reis. Moreover, under this FAR provision, past failure to apply
sufficient tenacity and perseverance to perform acceptably is strong
evidence of nonresponsibility.
The contracting officer's determinations of nonresponsibility stated
that Reis' performance on one of the prior contracts (DAJA37-84-C-0882)
was so deficient that 10-day cure notices demanding performance
improvements were issued to Reis on December 13, 1984, and again on
August 14, 1985. The contracting officer also stated that Reis'
performance on another contract (DAJA37-84-C-0881) was even more
unsatisfactory and the record indicates that a 10-day cure notice was
also issued to Reis for its poor performance on this contract and that
deductions from Reis' billings were made for improperly performed
services. Among the many deficiencies cited concerning Reis' poor
performance were poor management and supervision, inexperienced and
unqualified personnel, lack of the required bilingual supervisors,
boiler plants left unattended, boilers without proper water levels,
failure to provide heat and water at the required temperatures, failure
to make required inspections, failure to perform required preventative
maintenance and failure to keep proper records. These and other
deficiencies, including Reis' apparent unfamiliarity with the scope of
work of the contracts, convinced the contracting officer that the option
to extend the contracts should not be exercised. After studying Reis'
current responsibility status, the contracting officer determined that
Reis had a similar vague understanding of the more demanding
specifications for the proposed contracts and that it was unreasonable
to expect adequate performance from Reis under those contracts because
Reis still lacked the proper supervision, personnel, and technical and
quality assurance qualifications.
Reis contends that the Army is irrational in considering as
unsatisfactory Reis' performance on previous contracts because, in each
case, the parties negotiated an agreement under the contract to reduce
payments to Reis to compensate for the reduced services the Army
received. Reis also states that it has appealed these reductions to a
board of contract appeals. Thus, Reis argues, the contracts must be
considered as satisfactorily completed. We do not agree.
Under FAR, 48 C.F.R. Sec. 9.104-1(c), and our prior cases, the
circumstances surrounding an offeror's prior performance should be
considered as one of several factors when reviewing a prospective
contractor's responsibility. See C.W. Girard, C.M., 64 Comp. Gen. 175
(1984), 84-2 CPD P 704. Moreover, we have held that even where alleged
prior performance deficiencies are still in dispute, a contractor may
properly be found to be nonresponsible for failure to comply with
contract specifications. Howard Ferriell & Sons, Inc., B-184692, Mar.
31, 1976, 76-1 CPD P 211; Halo Optical Products, Inc., B-178573 et al.,
May 17, 1974, 74-1 CPD P 263.
Reis further contends that the nonresponsibility determinations were
not based on its alleged poor performance but primarily upon allegations
"relating to personnel and its capability to perform the
specifications." Since adequacy of personnel and capability to perform
are factors on which responsihility determinations can be based, we are
not sure of the thrust of this argument. See Patrick A. Bianchi, M.D.,
B-221539, May 8, 1986, 86-1 CPD P 443. As stated above, however, the
preaward survey reports noted the unsatisfactory performance on Reis'
prior contracts as one of the bases for the recommendation that the
contracts not be awarded to Reis. The reports also stated that Reis'
current technical and quality assurance capabilities were
unsatisfactory. In addition, the contracting officer had responsibility
for Reis' prior contracts since May 1985, and was thoroughly familiar
with the problems. His determinations of nonresponsibility gave
emphasis to the prior poor performance and survey reports indicating
that adequate performance could not be expected from Reis on the
proposed contracts since Reis still lacked the necessary technical and
quality assurance capabilities.
Thus, we find that the record clearly reflects that Reis' prior poor
performance and its failure to convince the Army that corrective
measures had been taken to prevent repetition were the primary reasons
for the nonresponsibility determinations, and we conclude that the
Army's reliance upon them was reasonable.
Reis argues that the Army's record of negotiations with respect to
RFP No. DAJA37-86-R-0806 erroneously stated that the preaward survey
report indicated that Reis was financially as well as technically
incapable of performing the required services adequately. Reis is
correct on this point since the record shows that a requested financial
capability report had not been received and no finding with respect to
Reis' financial capability was made. Moreover, the survey report for
RFP No. DAJA37-86-R-0618 found that Reis' financial capability was
satisfactory. However, an agency's ultimate nonresponsibility
determination is not necessarily impaired even if one aspect of the
firm's capability may have been evaluated incorrectly by the preaward
survey team. Omneco, Inc. et al., B-218343 et al., June 10, 1985, 85-1
CPD P 660 at 10. It is only where the record shows that the agency's
determination is based on unreasonable or unsupported conclusions in
many areas that this Office will recommend that the determination be
reconsidered. See Dyneteria, Inc., B-211525, Dec. 7, 1983, 83-2 CPD P
654. The record here provides ample and reasonable support for the
Army's determinations of nonresponsibility.
Reis also argues that the findings of nonresponsibility constitute a
de facto debarment from competitive contracting with the Army. We
disagree. A debarment prevents a firm from competing for government
contracts for a specified period of time depending upon the seriousness
of the cause and generally does not exceed 3 years. FAR, 48 C.F.R.
Sec. 9.406-4. A finding of nonresponsibility pertains only to the
contract in question and does not bar the firm from competing for future
contracts and receiving awards if it is otherwise qualified and
convinces the agency that the firm's past problems have been corrected.
Finally, Reis contends that it should have been provided the
opportunity to demonstrate its ability to perform the contract "or
correct the alleged personnel difficulties." Responsibility
determinations, however, are administrative in nature and do not require
the procedural due process otherwise necessary in judicial proceedings.
System Development Corp., B-212624, Dec. 5, 1983, 83-2 CPD P 644.
Accordingly, a contracting officer may base a determination of
nonresponsibility upon the evidence in the record without affording
offerors the opportunity to explain or otherwise defend against the
evidence, and there is no requirement that offerors be advised of the
determination in advance of the award. United Aircraft and Turbine
Corp., B-210710, Aug. 29, 1983, 83-2 CPD P 267. In any event, in view
of the 10-day cure notices, the deductions from Reis' billings and the
meetings and letters to discuss performance shortcomings, we believe
that Reis should have known that its prior performance was not
considered acceptahle by the agency. Thus, under FAR, 48 C.F.R. Secs.
9.103(c) and 9.104-3(c), Reis had to demonstrate to the agency that
corrections and changes had been, or would be, made so that a repetition
of the previous poor performance would not occur.
The protests are denied.
Harry R. Van Cleve
General Counsel
Matter of: IBIS Corporation
File: B-224542
Date: February 9, 1987
DIGEST
1. Contention that Army evaluated awardee's proposal on basis
different from others, based on Army's acceptance of offer which
allegedly did not comply with requirements of request for proposals, is
without merit. Record shows that equipment in fact complied with
requirements as modified by letter from contracting officer sent to
competitors during negotiations, which in the circumstances had the same
effect as a formal solicitation amendment.
2. Contention that Army changed requirements without advising
offerors, premised on Army's acceptance of allegedly non-conforming
proposal, is without merit where accepted offer conforms to requirements
of request for proposals.
3. Request, after best and final offers, for submission of samples of
offered equipment does not constitute improper discussions where
evaluation prepared for selection official in advance of submission
establishes that agency already considered awardee's proposal to satisfy
requirements of RFP. Request did not, therefore, require submission of
further best and final offers.
4. Contention that Army failed to conduct meaningful discussions is
denied where record of negotiations shows that protester was advised of
proposal deficiencies and afforded opportunity to respond.
5. Referral of matter of small business concern's responsibility to
Small Business Administration under certificate of competency procedures
is not required where firm was not selected for reasons other than
nonresponsibility.
DECISION
IBIS Corporation protests the Department of the Army's award of a
contract to Syscon Corporation under request for proposals (RFP) No.
DAHC26-85-R-0002. The Army Information Systems Selection and
Acquisition Activity (ISSAA) conducted the procurement. We deny the
protest.
The Army issued this RFP to acquire bar code readers/scanners
(BCR/S), related equipment, software, software development, and
maintenance for use with bar codes (similar to the familiar bar codes on
grocery items) to keep track of inventories of ammunition, blood stocks
in hospitals, etc., in tactical units. The RFP required that commercial
products be adapted to meet the Army's requirements, and precluded
products developed specifically to meet those requirements. The RFP
also required that offerors submit two examples of their equipment in
the offered configuration for testing and mandated that all engineering
changes sponsored by the manufacturer prior to contract award be
included in products delivered under the contract.
The RFP contemplated that the contractor would provide maintenance
for 10 years, and asked for both flat monthly and per-incident
maintenance pricing. The RFP provided that the government could select
either pricing plan. Costs, including maintenance, were to be evaluated
on the basis of the total systems life cycle cost (TSLC), which assesses
just contract costs in what is essentially a cost times quantity
computation. The RFP also advised that the Defense Material System Life
Cycle Cost Method (LCCM), which reflects the costs of ownership, such as
power, storage, transportation, etc., would be considered. Cost was the
most important evaluation criterion, followed in descending order of
importance by technical factors, supportability and project management.
Five offerors submitted proposals by the January 21, 1986, closing
date. Best and final offers (BAFOs) were submitted on July 16. Because
the results of the technical and cost evaluations indicated that the
selection decision had been narrowed to IBIS and Syscon, preaward
surveys were conducted on both of these offerors. Syscon's preaward
survey was favorable; IBIS's survey recommended "no award." The final
technical scores for IBIS and Syscon were only 0.8 points apart, out of
a total of 55 points. The cost evaluation accompanying the report to
the selection official showed that Syscon's TSLC costs were
substantially lower than those of IBIS under either the monthly or
per-incident maintenance plan. IBIS's per-month costs were lower,
however, under the LCCM model. To address this apparent inconsistency,
the report included a third cost model the Army called the total life
cycle cost (TLCC), which included non-duplicative elements from both the
TSLC and LCCM cost models. This analysis showed an advantage in favor
of IBIS of about $8 million using per-month maintenance and an advantage
of more than $200 million in favor of Syscon using perincident
maintenance.
On September 24, 1986, the Army selected Syscon for award of the
contract, principally on the basis that Syscon was the lowest cost
offeror. In further support of the decision, the selecting official
also pointed out that maintenance was important; there was reason to
believe that maintenance should be performed on a per-incident basis;
and as the Army moved in the direction of per-incident maintenance, the
Syscon offer became increasingly more attractive. The selecting
official also noted that Syscon's proposal appeared to offer the best
prospect of maintaining the state-of-theart and avoiding obsolescence,
and that Syscon already had facilities in the Republic of Korea, which
IBIS did not, which provided added assurance that equipment could be
fielded in the Republic of Korea without delay. The contract was
awarded to Syscon on the basis of monthly maintenance, with per-incident
maintenance included as an option.
IBIS challenges this procurement on five bases. IBIS contends that:
(1) the Army improperly evaluated Syscon's proposal on a basis different
from that applied to other offers; (2) the Army changed its
requirements without advising other offerors; (3) the Army conducted
improper discussions with Syscon after BAFOs; (4) the Army failed to
conduct meaningful discussions with IBIS; and (5) the Army failed to
refer to IBIS's negative preaward survey to the Small Business
Administration (SBA) for consideration of a certificate of competency
(COC). We will address each of these allegations in turn.
IBIS's first two allegations are based on related contentions that
Syscon's offered equipment did not meet the mandatory requirement of the
RFP that it be fully operational by the date of contract award, and that
the equipment provided for testing by Syscon with its initial proposal
was different from the equipment Syscon offered with its BAFO and which
will be delivered under the contract. IBIS also contends that the RFP
required the Army to evaluate and award only one maintenance plan. On
the basis of these assertions, IBIS contends that the Army's acceptance
of Syscon's offer reflects an unannounced change in requirements and
demonstrates that the Army evaluated Syscon's proposal on a basis
different from that applied to other offers.
Our assessment of these allegations must necessarily start from a
determination of what the RFP required in terms of product availability.
In Amendment 1 to the RFP, dated October 28, 1985, product availability
was defined as meaning that the product satisfied the terms and
conditions of the RFP and could be delivered in accordance with the
delivery schedule. In conjunction with a requirement in the RFP that
all equipment be "state of the art," this same amendment defined "state
of the art" as the most recently designed components which are or will
be in production, marketed, available, maintained and supported in
accordance with the technical specifications prior to contract award,
and eliminated the specific exclusion of developmental or prototype
equipment contained in the original RFP.
This issue was further addressed in an Army letter dated March 28,
1986, during negotiations, which communicated a second series of
deficiencies to all offerors. In this letter, the contracting officer
stated:
"If you offer equipment, e.g., new technology, which cannot be
delivered for the FAT first article test -- 90 days after
contract award , that is not acceptable. However, if you offer
equipment, including new technology, e.g., equipment which is in
some stage of development or modification, and tell us that you
will deliver the final production version for the FAT, that is
acceptable. Delivery of a beta test version, a pilot run a
prototype, a hand-wired engineering model in lieu of a
mass-producible model, etc., for the FAT would not be acceptable.
"The situation outlined above does not mean that the Government
will accept your unsupported promise to deliver newly manufactured
products. It does not mean that the Government will not view this
alternative as a higher risk than the use of proven technology,
e.g., in terms of reliability and maintainability."
The closing date for this round of discussions was April 7, 1986.
IBIS contends that the "state of the art" definition added by
Amendment 1 to the RFP established a requirement for the equipment
offered to be fully operational by the date of contract award and
asserts that the Army's letter could not change this contract
requirement. The Army, on the other hand, states that the above letter
made it clear that products did not have to be fully operational until
FAT, 90 days after contract award.
Even if we agree with IBIS that Amendment 1 to the RFP established
contract award as the date by which equipment had to be operational, we
find that the contracting officer's letter of March 28 was sufficient to
apprise offerors that the Army was changing this requirement. Although
this letter was not formally designated an amendment, it was in writing,
signed by the contracting officer, and sent to all offerors. These are
the essential elements of an amendment under the Federal Acquisition
Regulation (FAR), 48 C.F.R. Sec. 15.606 (1986), whether or not issued as
a formal numbered amendment. The information in the letter was
therefore binding on all offerors. General Electrodynamics Corp.,
B-221347.2, B-221347.3, May 13, 1986, 86-1 C.P.D. P 454.
Moreover, under our Bid Protest Regulations, if IBIS objected to this
change or to the Army's failure to incorporate it into the RFP by formal
amendment, IBIS should have protested prior to the April 7 closing date
for that round of discussions. 4 C.F.R. Sec. 21.2(a)(1) (1986); see,
e.g., American Indian Business & Technologies Corp., B-224476, July 23,
1986, 86-2 C.P.D. P 101, involving an even more informal oral change to
requirements. IBIS did not do so.
IBIS's related assertion that Syscon's initial and final equipment
offerings differed is premised on a number of underlying contentions.
The record shows that Syscon initially offered a scanner called the "MSI
PDT III LS," but that Syscon's contract provides for delivery of a
scanner called the "MSI PDT LS." MSI Data Corporation manufacturers the
scanner offered by Syscon. IBIS points to the difference in
nomenclature, to MSI's description of the PDT LS as "revolutionary" in
commercial literature, and to several technical differences, such as the
use of a different computer "chip" called the HD64180, between the MSI
PDT LS and the MSI PDT III product line, to bolster its assertion that
sometime between initial offers and BAFOs, Syscon substituted a new
piece of equipment for that originally offered. IBIS contends that this
new equipment never has been subjected to the mandatory qualification
tests specified in the RFP and asserts that the Army could not properly
impute the test results of Syscon's original equipment, on which
Syscon's entry into the competitive range was based, to the new
equipment Syscon offered in its BAFO. On the strength of these
assertions, IBIS argues that the Army could not properly select Syscon
for award of the contract and contends that the Army should have
eliminated Syscon from the competitive range.
The assessment of the relative merits of proposals, particularly with
regard to technical consideration, is primarily the responsibility of
the contracting agency. We consistently have held that agency officials
enjoy a reasonable range of discretion in the evaluation of proposals,
and that their judgments as to the quality of proposals will not be
disturbed unless they are shown to be unreasonable or in violation of
procurement laws or regulations. Becon Construction Co., Inc.,
B-222649, Aug. 18, 1986, 86-2 C.P.D. P 195. We find the Army's
judgment here to be reasonable.
The record shows that the scanner which Syscon provided to the Army
with its initial offer was a pre-production prototype, with a
substantial number of integrated circuits, or "chips," to perform
discrete functions; this model used three circuit boards. Syscon's
production model uses large-scale integration to perform the same
functions with fewer chips on just two boards. 1/ Syscon's proposal
described the technical route Syscon would follow to get from the
prototype to the production model, and included a discussion of future
enhancements, such as the substitution of a newer type of laser scanning
device used to read bar codes. The Army states it understands that MSI
changed the name of the PDT III LS to PDT LS prior to award of the
contract for marketing reasons, to avoid confusion about its product
line. The Army was of the view that Syscon's proposed product evolution
involved little risk.
Notwithstanding IBIS's disagreement with the Army's conclusion, we
think the Army's assessment was reasonable. Most importantly, the RFP
permitted developmental products, as described in the contracting
officer's letter of March 28, and the progression from smaller scale
integration and a higher board count to larger scale integration and a
lower board count is normal and common in the development of electronic
products. Consequently, the evolution of Syscon's product was neither
unusual nor surprising and was not sufficient, in our view, to consider
Syscon's production version to be a totally new product. Moreover, we
would expect differences in appearance between pre-production and
production models, and we find the Army's explanation of Syscon's change
in nomenclature more persuasive than we do IBIS's assertion that it
reflects a "bait and switch" by Syscon. In sum, we are persuaded that
Syscon's initial and final BCR/S offerings are not different products,
but merely the same product in different stages of development.
Moreover, since we reach this conclusion, MSI's use of the term
"revolutionary" in its commercial literature to distinguish this product
from others is not relevant.
We also find IBIS's objection to the Army's evaluation and award of
more than one maintenance plan to be without merit. The RFP stated, as
we noted above, that costs would be evaluated on a TSLC basis. Syscon's
costs under either monthly or per-incident maintenance were
substantially lower than IBIS's costs on this basis, and they remain so
whether just one plan is evaluated or both. Moreover, as the Army
points out, TSLC costs are more certain than LCCM costs because the
latter are based more on estimates and business judgment rather than
hard cost figures, and are subject to variance. Consequently, we cannot
find that the Army was unreasonable in concluding that Syscon was the
lowest cost vendor.
IBIS's contention that the Army improperly conducted postBAFO
discussions with Syscon arises from events that occurred in conjunction
with ISSAA's report to the selecting official. The contracting officer
states that on September 10, ISSAA requested both Syscon and IBIS to
provide production versions of their BCR/S "as bid" as part of ISSAA's
efforts to verify the production capabilities of the offerors and to
show them to the selection official so that he could get the "look and
feel" of what he was buying. In explanation of this latter objective,
the contracting officer states that neither IBIS's equipment nor
Syscon's had been seen in its final production version prior to BAFOs.
Syscon's equipment, submitted on September 11, lacked two custom chips,
which Syscon delivered and installed on September 17. Both samples were
shown to the selecting official. It also appears that during the
preaward survey, Syscon stated that it might be able to incorporate a
newer type of laser scanner in its equipment as early as the FAT.
IBIS contends that the Army needed this examination of Syscon's
equipment to establish the equipment's acceptability and that this
submission therefore constituted improper post-BAFO discussions with
Syscon. IBIS also characterizes Syscon's remark about the newer scanner
as an offer of new equipment which itself amounted to post-BAFO
discussions. The final evaluation report to the selection official,
however, establishes that the Army found Syscon's proposal to be
acceptable well in advance of this equipment submission, and we find no
evidence that this submission affected the Army's assessment that
Syscon's proposal satisfied the requirements of the RFP, notwithstanding
IBIS's speculative comments to the contrary. Moreover, IBIS was
afforded the same opportunity provided to Syscon to submit equipment,
and we fail to perceive the prejudice which may have befallen IBIS as a
consequence. Also, as the Army points out, Syscon's contract does not
include the newer laser scanner and we find no evidence that this
apparently offhand remark influenced the evaluation. Consequently, we
find IBIS's contention that there were imlproper post-BAFO discussions
to be without merit.
IBIS also contends that the Army failed to advise it of the Army's
concerns regarding IBIS's ability to manage this project and asserts
that the Army did not allow IBIS to submit a new BAFO in conjunction
with the submission of equipment noted above. IBIS argues that the Army
therefore failed to conduct meaningful negotiations with IBIS.
We find no merit in these arguments. The records of negotiations
show that the Army did advise IBIS of its concerns regarding IBIS's
management capabilities, contrary to IBIS's assertions here, and
afforded IBIS an opportunity to respond during negotiations. Also,
since the post-BAFO activities noted above did not constitute
discussions, the Army was not obligated to solicit a new BAFO from IBIS.
Consequently, the Army was not obligated to initiate a new round of
discussions to point out IBIS's failure to respond adequately during
negotiations to the Army's concerns.
Last, the Army states that it did not refer IBIS's determination of
nonresponsibility to the SBA for consideration of a COC because IBIS
never was determined to be nonresponsible. The preaward survey
recommendation of "no award" was based essentially on perceived problems
under the RFP evaluation scheme with IBIS's management capability. The
Army considered these problems to pose substantial risk to the program
and reflected this assessment in the final evaluation report. The
selection official does not cite this as a reason for not selecting
IBIS. Where, as here, the contracting agency does not find a firm to be
nonresponsible, the SBA COC procedures are not applicable and referral
is not required. Terry B. Armentrout Engineering & Business Consulting,
B-222311, May 23, 1986 86-1 C.P.D. P 485. IBIS has made other
allegations, such as a contention that Syscon's BCR/S will not operate
on rechargeable batteries, that we will not specifically address. Our
Office has reviewed the extensive record in this case, and we find that
these additional charges are either contradicted by the record or of
little or no consequence and, therefore, without merit.
The protest is denied.
Harry R. Van Cleve
General Counsel
FOOTNOTE
1/ As an example, the "Z-80 compatible" computer chips used in MSI's
PDT III product line do not provide a feature known as direct memory
access, or DMA; it requires another chip to provide the DMA function.
The HD64180 computer chip Syscon uses in its production version of the
PDT LS, which IBIS challenges as a significant change from the PDT III
product, is a Z-80 compatible chip with on-board DMA, so that the DMA
function can be provided without an added chip. See, e.g., Ciarcia,
Steve, "Build the SB180 Single-Board Computer," Byte, September 1985,
Vol. 10, No. 9, pp. 87, 90-92, for a discussion of the HD64180.
Matter of: Loral Electronics Systems
File: B-224540
Date: February 10, 1987
DIGEST
1. Protester's proposal was properly rejected as unacceptable even
though proposal initially was found acceptable, where protester made
significant cost reductions in its best and final offer and, despite
express solicitation warnings, failed to submit detailed explanation of
the impact of the reduction on aspects of the technical proposal;
agency therefore was left with no basis for concluding that the price
reduction would have no effect on technical acceptability.
2. There is no requirement that agency reopen discussions solely to
afford offeror an opportunity to furnish detailed information already
specif ically required in solicitation and best and final offer request.
DECISION
Loral Electronics Systems protests the award of a contract to Dalmo
Victor Division of the Singer Company under request for proposals No.
DAAB07-86-R-S005, issued by the Army Communications Electronics Command,
Fort Monmouth, New Jersey, for 20 research and development models,
technical data and drawings, for a helicopter-mounted radar warning
receiver. Loral alleges that the Army abused its discretion in finding
Loral's best and final offer (BAFO) unacceptable, thereby leaving only
one offeror in the competitive range. Loral also objects to the Army's
acceptance of a firm, fixed-price offer from Dalmo, since the
solicitation called for a fixed-price-incentive contract.
We deny the protest.
BACKGROUND
The RFP provided that a fixed-price-incentive contract would be
awarded to the lowest priced offeror, with technical, management and
cost factors, including cost realism, considered. The RFP also provided
that, in order for an offeror to be acceptable, its design-to-unit
production cost had to be within the ceiling cost of $75,000 after being
evaluated for cost realism. A rating of unacceptable in any factor,
subfactor, or element would make a proposal unacceptable.
Dalmo and Loral were the only two offerors. Both offerors were found
acceptable and thus within the competitive range for discussion
purposes. Following discussions, the Army requested both offerors to
submit best and final offers (BAFO). The BAFO request specifically
cautioned offerors that major revisions were not expected, but that if
revisions were made, complete and detailed support for the revisions and
any other affected part of the proposal was required. The request also
specifically stated that, in the case of a price revision, a complete
cost breakdown and the basis for the revision must be submitted with the
revised offer. The Army reserved the right to reject any proposal if
the required information was not submitted with the revisions or if the
information was inadequate to establish the acceptability of the revised
offer.
Both offerors submitted BAFOs. Dalmo presented a best and final
fixed-price-incentive offer with a target price of $7,950,367 and, as an
alternative, a firm, fixed-price offer at the same price. This offer
represented a reduction of approximately $4,500,000 from its previous
offer due to a management decision to reduce profit to zero percent and
a commitment of company resources to the program such that certain labor
intensive tasks would be accomplished at a reduced cost.
Loral's BAFO presented a fixed-price-incentive offer with a target
price of $6,793,000 and a ceiling price of $7,900,000. Loral proposed
to assume 100 percent of potential cost increases up to $7,020,000 and
to absorb 30 percent of any cost increase up to the ceiling price.
Loral's offer represented a reduction of $8,279,950 from its previous
offer due in part to a decision to establish a new, self-contained,
low-cost, product development center, the consequent reduction in
design-to-unit production cost, and reductions made in manhour estimates
for the production of certain drawings. Loral also reduced its proposed
design-to-unit production cost from $74,186 to $58,922.
The Army found Dalmo's BAFO acceptable in the areas of technical,
management and cost. The Army determined Loral's BAFO to be
unacceptable in all three areas, however, because the agency found that
Loral did not provide adequate supporting documentation for the critical
changes made to its previously-acceptable proposal.
Specifically, the Army found that Loral's BAFO did not provide the
cost or pricing data necessary for a cost realism analysis of the
overhead rate structure of the new low cost center, did not discuss the
cost impact of the new cost center on other work of the contractor, and
did not provide information on personnel and location, all of which, the
Army asserts, had an impact on the technical and management areas of
Loral's proposal. The Army also found that Loral's reduction in its
design-to-unit production cost could not be verified since Loral
provided no explanation of the reduction beyond attributing it to the
reduced overhead rates in the new cost center, a decrease in production
technique cost, and a 15 percent reduction in the cost of materials
(instead of a government-recommended 7 percent material reduction rate).
This price reduction, without explanatory information, also had a
negative impact on Loral's technical rating. Third, the Army found that
Loral's reduced manhour estimate for producing "Level III" drawings was
not supported by adequate data. The government estimate for this effort
was 8,000 to 10,000 hours, and Loral reduced its estimate, without
explanation, from 9,625 to 4,801 hours. The Army states that since the
requirement for complete and detailed Level III drawings is critical,
Loral's failure to bid the minimum required number of hours for those
drawings would have an adverse impact on the Army's ability to enter the
production phase of the devices in question in a timely fashion.
Accordingly, the Army determined that only Dalmo's proposal remained
acceptable, and thus awarded Dalmo a firm, fixedprice contract for
$7,950,367.
TECHNICAL ACCEPTABILITY
Loral argues that the Army abused its discretion in finding Loral's
BAFO unacceptable. Loral first explains that it did not address the
impact of the new cost center on other aspects of its proposal and
operations because the cost center would have no impact on the offer's
technical or management areas. The only change, according to Loral, was
in the establishment of the low cost center to be located in an existing
building at a Loral facility. Moreover, Loral claims that its
submission did identify the elements of its cost submittal, accompanied
by cost breakdowns, which were affected by the creation of the low cost
facility, and specified the dollar amounts attributable to those
changes. Loral also asserts that the Army's rejection of Loral's
reduced design-to-unit production cost of $58,992 was not warranted,
explaining that the reduction in unit price reflected the use of the new
low cost facility, a small decrease in the cost of production
techniques, and an estimated aggregate material cost reduction of 15
percent. Finally, Loral asserts that the reduction in its manhour
estimate for the Level III drawings was merely a correction of an
overstatement of these hours in its original proposal. Loral explains
that it reduced the hours specifically allotted for Level III drawings
to account for the 3,452 hours of drafting time already attributed to
the general labor category "draftsmen." These two categories total 8,253
hours, a number within the government estimate of 8,000 to 10,000.
Based on our examination of the record, including Loral's BAFO, we
find that the Army's rejection of Loral's proposal was reasonable. In
addition to the warnings in the BAFO request regarding substantiation of
revisions, Section M of the solicitation provided that any inconsistency
between promised performance and cost had to be explained in the
proposal for purposes of a proper cost realism analysis. The
solicitation further stated:
"any significant inconsistency, if unexplained, raises a
fundamental issue of the offeror's understanding of the nature and
scope of work and/or his financial ability to perform the
contract, and may be grounds for rejection of the proposal. The
burden of proof as to cost credibility rests with the offeror."
In the face of this emphasis on substantiation of the impact of cost
on performance, Loral's BAFO contained a one-page statement of the new
overhead rates associated with the new low cost center and a one-page
summary of the resulting price reductions. No more detailed information
was furnished to illustrate the impact of the new cost center. The Army
explains that it was unable, based on these summary statements, to
determine precisely what effect the cost reduction would have on Loral's
ability to perform, as judged from its initial proposal. The Army
states that since Loral did not introduce the new cost center concept in
its initial proposal, or even during discussions, and did not explain in
the BAFO how a major cost reduction could have no significant impact on
performance, there was no basis for conclusively finding that there
would be no impact. We agree.
Where an offeror introduces significant proposal changes in its BAFO,
the burden is on the offeror to establish the acceptability of these
changes, or risk having the offer rejected. Logicon, Inc., B-196105,
Mar. 25, 1980, 80-1 C.P.D. P 218. Although Loral argues that no
technical changes resulted from the cost reduction that resulted from
its new cost center approach, where, as here, the RFP clearly expresses
the agency's concern with the relationship between an offeror's proposed
cost and promised performance, we think offerors are on notice that a
significant price reduction will be viewed as having an impact on
performance. It is reasonable for an agency to take this view and,
thus, to reject a proposal where the impact--or non-impact--of a
significant BAFO price reduction is not spelled out in the BAFO.
Our conclusion is the same regarding the reduction of Loral's Level
III drawing manhours. While Loral characterizes the change as a
correction of an error in its initial proposal, Loral did not explain in
its BAFO that 3,452 draftsmen manhours should be added to the 4,801
hours listed for the drawing effort to raise the total to within the
acceptable government estimate. Only during the protest process did
Loral provide this explanation. Thus, when the Army evaluated Loral's
BAFO, it saw only an unacceptable reduction of effort, without any
explanation. Similarly, since Loral did not furnish a detailed
explanation of its reduced design-tounit production cost, the Army was
unable to confirm that performance at the reduced cost would be at the
acceptable level established in the original proposal.
Loral argues that its cost changes were substantiated in cost data it
furnished to the Defense Contract Audit Agency (DCAA), ana that the Army
could have requested that Loral submit this or any other data once it
was found to be necessary. Such explanatory information was
specifically require to be submitted with the BAFO, however, and the
Army was not required to reopen discussions to afford Loral an
additional opportunity to satisfy this requirement. Xerox Special
Information Systems, B-215557, Feb. 13, 1985, 85-1 C.P.D. P 192.
Contrary to Loral's assertion, furthermore, the record indicates DCAA
advised the contracting officer that while it met with Loral to discuss
"accounting changes," Loral never furnished DCAA with any documentation
which would enable the agency to confirm that the new cost center would
have no impact on Loral's technical proposal. Rather, Loral stated it
would submit such documentation if requested by any government agency or
department.
FIRM, FIXED-PRICE CONTRACT AWARD
Loral's allegation that it was improper for the Army to accept a
firm, fixed-price offer from Dalmo, where the solicitation called for a
fixed-price-incentive contract, is without merit. The Army states that
it informed both offerors before the closing date for receipt of best
and final offers that the submission of a firm, fixed-price proposal
would be acceptable. Loral's version is that the contracting officer
stated only that he "believed" such a proposal "would probably be
acceptable," and that Loral interpreted this statement to mean that only
a proposal in accordance with the solicitation, a fixed-price-incentive
proposal, would be acceptable.
Loral's interpretation of the contracting officer's statement was
unreasonable. Even accepting Loral's version of the statement, the
contracting officer's intention to accept firm, fixed-price offers was
at least clear enough to warrant submission of an alternate fixed-price
proposal, as Dalmo did. If Loral considered the statement too ambiguous
to act upon, it should have immediately requested clarification; it did
not do so, however. In any event, since Loral's proposal was rejected
as unacceptable, Loral would not have received the award on any basis.
The protest is denied.
Harry R. Van Cleve
General Counsel
Matter of: Martin G. Imbach, Inc.
File: B-224536
Date: February 25, 1987
DIGEST
Where evidence of record establishes only that commercial carrier
left bid package at military installation's central mail and receiving
office as a result of the routine application of "security measures,"
and does not show that he made a specific attempt to deliver the parcel
to the bid opening room shown on the parcel's address but was refused
permission to do so by government personnel, the bid, when received
late, should have been rejected since improper government action was not
the sole or paramount cause of the bid's late arrival.
DECISION
Martin G. Imbach, Inc., protests the award of a contract by the Naval
Research Laboratory (NRL) to Marine Construction Corporation. Imbach,
the second low bidder, contends that the low bid of Marine was
improoerly accepted by NRL since Marine's hand-carried bid arrived
approximately 20 minutes after the time set for the opening of bids and
improper government action was not the sole or paramount cause of the
bid's late receipt.
We sustain the protest.
Invitation for bids (IFB) No. N62477-86-B-2052, issued by the NRL for
bulkhead renair and construction, as amended, established bid opening
for September 19, 1986, at 2 p.m. With respect to hand-carried bids,
the IFB instructed bidders:
"(d) All hand delivered bids must be deposited in the bid box
of the Office of the Officer in Charge of Construction, Naval
Research Laboratory, Building 34, room 117, Washington, D.C.
20375-5000 prior to the time and date set for bid opening. Any
bids submitted by hand after the time set for receipt will not be
accepted."
Additionally, the Solicitation contained the standard clauses
regarding the conditions under which late bids would be considered. See
Federal Acquisition Regulation (FAR), 48 C.F.R. Sec. 14.304-1 (1986).
Bids were opened as scheduled and, at that time, Imbach was the
apparent low bidder with a bid of $368,600. At approximately 2:19 p.m.,
on the date set for bid opening, the bid of Marine was deposited in the
bid box. Marine's bid was in the amount of $339,790. On October 1, the
contract was awarded to Marine and Imbach protested to our Office
shortly thereafter.
Imbach maintains that the late receipt of Marine's bid was not solely
or principally caused by improper government action, as the Navy
concluded, and that Marine's bid, therefore, should have been rejected
as late and award made to Imbach as the low, responsive and responsible
bidder.
From the documents provided us by the Navy, it appears that Marine
placed its bid in a letter-size envelope which was properly addressed
and on which Marine placed the redbordered sticker, supplied with the
IFB, which indicated that the content was a "sealed bid" and on which
Marine wrote the IFB number and subject, and the time and date of bid
opening. Marine then provided this envelope to a commercial carrier,
Federal Express, which in turn placed it in a larger, opaque cardboard
envelope, on the side of which was a sheet of transparent plastic
through which was visible the Federal Express airbill which was
addressed to:
Officer in Charge of Construction
Naval Research Laboratory
Building 34, Room 117
Washington, D.C. 20375-5000
There was, therefore, no indication on the exterior of the package
that it was a bid required to be delivered to Room 117 of Building 34
prior to 2 p.m. on September 19.
According to delivery records maintained by Federal Express, its
truck containing Marine's bid (along with eight other parcels to be
delivered to the NRL at that time) arrived at the installation at 10:30
a.m. on the day of bid opening. An NRL vehicle pass issued to the
driver of that truck bears a time-date stamp of 10:50 that day.
The Navy states that the Federal Express driver was then directed to
proceed to Building 49, the Central Mail and Receiving Office, in
accordance with the NRL's "security measures." It appears that the
Federal Express driver deposited Marine's bid, along with the other
eight parcels, at Building 49 and then departed the installation.
Marine's bid was then processed through the NRL's internal distribution
system, insofar as the record reveals, in a routine fashion. It left
the Central Mail and Receiving Office at approximately 1:30 p.m.,
accompanied by a "general receipt" issued by that office. This receipt
was signed as of 2:10 p.m. by the clerk for the bid openinq room. The
inner envelope containing Marine's bid was time-stamped at 2:19 p.m.,
after the time set for bid opening.
There is no dispute that the provisions of FAR, 48 C.F.R. Sec.
14.304-1, do not apply to the late arrival of this bid since those
provisions deal with mailed bids and the bid here was not mailed. As
for hand-carried bids, essentially it is the bidder's responsibility to
assure that its bid is received at the proper place at the proper time,
and in the vast majority of instances the rejection of late hand-carried
bids is warranted. We have upheld the rejection of a handcarried bid as
late, for example, where for reasons of its own convenience a commercial
carrier deposited a bid along with other parcels on a loading dock, as a
result of which the bid was committed to the agency's internal mail
distribution system and failed to arrive on time. See Work System
Design, Inc., B-223942, Nov. 26, 1986, 86-2 C.P.D. P 613.
A different result obtains, however, when the delivery person
attempts to deliver a hand-carried bid to the place designated for
receipt but is prevented by government personnel from doing so, and that
action on the part of the government is the sole or paramount cause of
the bid's late receipt.
In Scot, Inc., 57 Comp. Gen. 119 (1977), 77-2 C.P.D. P 425, a leading
case discussed by both parties to this protest, a Federal Express
courier arrived at Redstone Arsenal with a parcel which was properly
addressed, identified as a bid, and which bore on the wrapper the bid
number, opening date and time, and delivery destination. The courier
attempted to deliver Scot's bid to the bid opening office identified in
the address but was not permitted to do so by government personnel, who
directed the courier to deliver the package to the Central Receiving
Warehouse, in accordance with security regulations. The bid was then
forwarded from the warehouse to the bid opening room through normal
channels and was received late.
We sustained Scot's protest of the rejection of its bid as late on
the basis that the government acted improperly in not permitting the
courier to deliver the bid to the location specified in the IFB for its
receipt, as a result of which the courier was forced to deliver the
package to the Central Receiving Warehouse, even though the full text of
the applicable security regulations did not mandate delivery of bid
packages to the warehouse but permitted commercial carriers to deliver
shipments to other activities at the Arsenal, after first reporting to
the warehouse.
The Navy argues that the circumstances of this case are similar to
those in Scot; the protester disagrees. Based on our review of the
record, we think the facts more resemble tnose cases in which a bid
package is deposited at a central warehouse or loading dock at the
carrier's initiative than they do Scot, in which an attempted delivery
to the bid opening room was prevented by government security personnel.
The Navy states that it was "security measures" which prevented the
Federal Express driver from delivering Marine's bid to the location to
which it was addressed and which required that he proceed directly to
Building 49, the Central Mailing and Receiving Office. Although on the
surface this assertion appears to resemble the situation in Scot, it is
not supported by the record.
The record in this case suggests nothing more than that the driver of
the Federal Express truck, a commercial delivery vehicle, was upon
arrival at the installation routinely issued a pass for the Central Mail
and Receiving Office, where he deposited the protester's bid along with
eight other parcels. There is no evidence that the driver brought to
any security guard's attention the fact that he had a parcel destined
for the contracting office in Building 34, or specifically asked for
permission to go to that Building and was told he could visit only the
Central Mail and Receiving Office in Building 49. While we do not
dispute the Navy's assertion that visitors could not "travel freely"
throughout the installation, it does appear it was possible to obtain a
pass for destinations other than Building 49 upon requesting one as
evidenced by the protester's successful delivery of its bid to the bid
box in Room 117, Building 34, after asking for a pass permitting it to
go to that building. We simply believe the person who delivered
Marine's bid did not recognize it as such or understand there to be any
particular urgency to its delivery different from the other eight
parcels to be delivered to the laboratory at the same time and that it
was that circumstance, and not improper government action, which was the
paramount cause of the bid's late delivery.
We are therefore of the opinion that Marine's bid should have been
rejected and the protest accordingly is sustained.
We are informed by the agency that performance of the contract, which
was awarded to Marine on October 1, has been suspended. In light of our
decision, we are recommending to the Secretary of the Navy that the
contract be terminated for convenience and the award be made to Martin
G. Imhach, Inc., if otherwise appropriate. See Howard Management
Group, B-221899, July 3, 1986, 86-2 C.P.D. P 28.
The protest is sustained.
Comptroller General
of the United States
Matter of: N-K Construction Co., Inc.--Reconsideration and Claim for
Protest Costs
File: B-224534.2, B-224534.3
Date: April 24, 1987
DIGEST
1. Decision that contracting agency improperly evaluated option
prices to determine low bidder under solicitation that effectively
indicated such prices would not be evaluated is affirmed on
reconsideration since it has not been shown to be legally or factually
wrong.
2. Protest costs may be paid where protester would have been found
low if bids had been evaluated properly but General Accounting Office
recommends recompetition with revised bid evaluation method instead of
award to the firm.
DECISION
This decision responds to two submissions: (1) a request by J.A.K.
Construction Co., Inc., that we reconsider our decision in N-K
Construction Co., Inc., B-224534, Feb. 19, 1987, 87-1 C.P.D. P , in
which we sustained N-K's protest of the contract award to J.A.K. under
Department of the Army invitation for bids (IFB) No. DAKF27-86-B-0029;
and (2) a request by N-K for the costs of filing and pursuing the
protest.
We affirm our decision, and we find N-K entitled to the claimed
costs.
Prior Decision
The IFB was for building repair and renovation at Fort George G.
Meade, Maryland. The bidding schedule sought lump sum bids for three
items: base bid (repair and renovate the specified building); additive
No. 1 (replace an addition on the building); and option No. 1 (interior
work in the basement). The schedule also required bids on a price per
foot basis for four requirements items: replace floor joists, fascia,
wall studs, and roof sheathing.
N-K submitted the low total bid, $769,118.60, for the base,
requirements and additive items, with J.A.K. second low at $807,424.10.
The Army, which had $843,000 in funds available for the contract at bid
opening, was prepared to award N-K the contract. When additional funds
became available to pay for the option item, however, the Army awarded a
contract for all items to J.A.K., since the firm's total bid, inclusive
of $163,000 bid for the option, was $970,424.10, compared to N-K's
total, inclusive of $225,800 bid for the option, of $994,918.60.
We sustained N-K's protest that the selection of the awardee should
have been based on an evaluation exclusive of the option prices. We
stated the general rule that option prices can be used in an evaluation
only if the solicitation advises bidders that they will be, and we noted
three elements of the Army's solicitation which effectively indicated
that the price offered for the option item would not be used in
evaluating the low bidder. The first was the fact that the IFB did not
include any statement regarding evaluating options exercised at award.
The second was that the only reference in the solicitation to the way
the low bid would be determined did not mention option prices; a note
to bidders following the invitation's schedule stated that for
evaluation purposes extended prices for the requirements items "will be
added to the Base Bid and award will be made to the bidder with the
lowest total." The third element was a further statement in the same
note that the option would be exercised "during the construction" of the
base bid and/or additive item.
Reconsideration Request
J.A.K. challenges our finding that it would be inconsistent with the
IFB to evaluate the option prices. J.A.K. points out that the note
following the bidding schedule stated that award would be based on the
base and requirements bids and did not mention the additive item, yet
the additive prices in fact were evaluated; J.A.K. argues that if the
additive item could be considered, so could the option prices. Second,
J.A.K. argues that the Federal Acquisition Regulation (FAR) does not
require a statement in a construction contract solicitation that options
will be evaluated, so that a bidder cannot rely on the absence of such a
statement as an indication that option will not be evaluated. J.A.K.'s
third point is that the bidding note that the option would be exercised
"during the construction" permitted the government to exercise it at any
time before the completion of the work, including prior to the award.
J.A.K. suggests that even N-K knew this might happen, as evidenced by
the fact that N-K, before the additional funds became available, urged
the Army to include the option work in N-K's anticipated contract.
J.A.K.'s arguments do not persuade us to reverse our decision. As to
the firm's first point, bids indeed must be evaluated on the basis set
out in an invitation, and we recognize that the invitation in this case
mentioned only the base and requirements bids as evaluation factors.
The Army therefore should not have considered the additive item prices
in comparing the bids. We did not object to the evaluation on that
basis, however, because it did not prejudice J.A.K. The reason is that,
unlike the situation with the option item prices, evaluating the
additive prices did not affect the bidders'standing, that is, N-K's
total bid was lower than J.A.K.'s on any evaluation basis exclusive of
the option prices. The total bids including the additives, as set out
above, were $769,118.60 for N-K and $807,424.10 for J.A.K.; N-K's total
base and requirements bid only was $684,618.60, compared to J.A.K.'s
total base and requirements bid of $742,424.10. (N-K's base bid alone
also was lower than J.A.K.'s: $683,364.00 vs. $742,000.00.) Indeed,
Department of Defense Federal Acquisition Regulation Supplement (DFARS),
48 C.F.R. Sec. 236.303 (1985), permits the evaluation and award of an
additive in a military procurement if there are sufficient funds
available at bid opening or, if funds only later become available, so
long as such evaluation does not change the original bidding results.
J.A.K.'s second point is that because the FAR does not require a
statement in these types of contracts that option prices will be
evaluated a bidder could assume they would be considered. We do not
agree. Essentially, the option item was no different from the additive
item except that it could be exercised during the construction period.
As we explained in our prior decision, if the option had been labeled an
additive it could not have been evaluated to cause J.A.K. instead of
N-K to be the low bidder because of the DFARS provision at 48 C.F.R.
Sec. 236.303. We do not think the rules should change just because the
item was labeled an option instead of an additive.
Finally, we continue to view the IFB note about when the option will
be exercised as an indication that exercise will occur, as the note
says, "during the construction" of the other work, not at award. The
fact that N-K may have urged the Army to exercise the option at award
does not establish that N-K knew the option would be evaluated, but
instead suggests that N-K knew it was entitled to the contract as the
low bidder under a proper evaluation according to the IFB's selection
scheme.
To prevail in a request for reconsideration, a firm must show that
our prior decision was legally or factually wrong. Bid Protest
Regulations 4 C.F.R. Sec. 21.12 (1986). J.A.K. has not done so.
Claims for Costs
Although we sustained N-K's protest, finding that the option item
price could not properly be evaluated to determine which bid was low, we
did not recommend award to the firm. The reason was that it was clear
the government needed and could afford to buy the option work, and it
did not make sense to award N-K a contract and solicit separately for
the option work. We therefore recommended that J.A.K.'s contract be
terminated for the convenience of the government and that a new
solicitation be issued, to include what had been designated optional
work, with provisions that insure award is made on the same basis on
which firms are advised their bids will be evaluated.
N-K argues that it should be reimbursed the costs of filing and
pursuing the protest. We agree. Regardless of what happens on
resolicitation, our sustaining N-K's protest furthered the purpose of
the requirement in the Competition in Contracting Act of 1984, 41 U.S.C.
Sec. 253a(b) (1) (Supp. III 1985), that an agency ensure offers in a
sealed bid procurement are evaluated consistent with the solicitation's
statement of the factors the agency expects to consider in selecting an
awardee. See 31 U.S.C. Sec. 3554(c) (1) (Supp. III 1985); Tandem
Computers, Inc., B-221333, Apr. 14, 1986, 65 Comp. Gen. , 86-1 C.P.D. P
362.
Our prior decision is affirmed in response to J.A.K.'s
reconsideration request. N-K should submit its claim for protest costs
directly to the Army. 4 C.F.R. Sec. 21.6(f).
Comptroller General
of the United States
Matter of: N-K Construction Co., Inc.
File: B-224534
Date: February 19, 1987
DIGEST
Contracting agency improperly displaced bidder who was low on all
items except optional work in order to make an award to another bidder
who only became low if the optional work was included in the evaluation
where solicitation effectively indicated that option price would not be
evaluated.
DECISION
N-K Construction Co., Inc. (N-K), protests the Department of the
Army's award of a contract to J.A.K. Construction Co., Inc. (J.A.K.),
under invitation for bids (IFB) No. DAKF2786-B-0029 for building repair
and renovation at Fort George G. Meade, Maryland. N-K contends that the
Army improperly considered the price of an option in its evaluation of
bids. We sustain the protest.
The IFB's bidding schedule sought lump sum bids for three items:
base bid (repair and renovate the specified building); additive No. 1
(replace an addition on the building); and option No. 1 (interior work
in the basement). The schedule also required bids on a price per foot
basis for four requirements items: replace floor joists, fascia, wall
studs, and roof sheathing. A note following the bidding schedule
stated:
"For evaluation purposes, the price of 100 L.F. linear feet
or 62 S.F. square feet , as applicable for each of the
Requirement Items will he added to the Base Bid and award will be
made to the bidder with the lowest total...."
The note also stated that the government "reserved the right to award
Option #1 at any time during the construction period of the Base Bid
and/or Additive #1."
Eight bids were received at the August 11, 1986, bid opening. N-K
and J.A.K. submitted the two lowest total bids on the base,
requirements, and additive items:
N-K J.A.K.
Base Bid $683,364.00 $742,000.00
Requirements 1,254.60 424.10
Additive 84,500.00 65,000.00
Total $769,118.60 $807,424.10
N-K bid $225,800 for the option item; J.A.K. bid $163,000.
The Army, which had $843,000 in funds available for the contract as
of bid opening, held pre-award conferences with N-K on August 19 and 26.
At these conferences, N-K orally asserted that it had misinterpreted
the IFB because of a change in one of the solicitation amendments and,
as a result, had priced $30,000 worth of work that properly belonged in
its base bid in the bid price of $225,800 for option No. 1. On August
27, N-K wrote the Army to attempt to have the bid adjusted by adding
$30,000 to the base bid price and decreasing the price for the option
correspondingly, or by "partially award ing ($30,000.00 only) the bid
item option #1." Included with the letter was a copy of N-K's worksheets
to support its assertion of mistake.
The Army did not treat N-K's letter as a mistake in bid claim.
Instead, the Army sought additional funds so that the option item could
be awarded to N-K.
After the additional funds became available, J.A.K. protested to the
Army against award to N-K on the ground that if the option item were
included in the evaluation, J.A.K. would be the low bidder. Because
J.A.K. bid $163,000 for the option item, the firm's total bid inclusive
of option price would be $970,424.10, compared to N-K's total of
$994,918.60. The contract was awarded to J.A.K. on September 30 for all
items, including the option, on the theory that, notwithstanding the
bidding schedule's statement of the basis of award, an award to N-K was
contrary to the provisions of the IFB's Contract Award--Sealed
Bidding--Construction clause, Federal Acquisition Regulation (FAR), 48
C.F.R. Sec. 52.214-19 (1985), which requires one award based on the
lowest aggregate total bid price.
N-K protests that the selection of the awardee must be based on an
evaluation exclusive of the option prices. We agree.
Initially, we point out that the standard solicitation clause stating
that award will go to the low aggregate bidder simply means that the low
bidder as determined by the invitation's stated evaluation method is
entitled to the contract. It does not establish an alternate,
superseding method to that otherwise set out for determining the low
evaluated bidder, as the theory behind the Army's award to J.A.K. seems
to suggest.
While the use of options in construction contracts is not precluded,
FAR, 48 C.F.R. Sec. 17.200, contracting agencies generally use additive
and deductive items instead of options in such contracts, if it appears
that available funds may be insufficient for all the desired
construction features. See Department of Defense Federal Acquisition
Regulation Supplement (DFARS), 48 C.F.R. Sec. 236.303(c)(S-70) (1985).
Nevertheless, the Army did invite an option price here, and the general
rule is that option prices can be used in an evaluation only if the
solicitation advises bidders that they will be. See 41 Comp. Gen. 203
(1961). Indeed, we have held that a solicitation is defective if it
invites option prices but fails to state whether the evaluation will
include or exclude them, since the bidders, unaware of the evaluation
basis actually intended, may not have bid on the same basis. Temps &
Co., B-221846, June 9, 1986, 65 Comp. Gen. , 86-1 C.P.D. P 535.
The only reference in the Army's solicitation to the way the low bid
would be determined was the note to bidders following the invitation's
schedule that for evaluation purposes extended prices for the
requirements items "will be added to the Base Bid and award will be made
to the bidder with the lowest total." In our view, the absence of any
statement regarding evaluating options exercised at award, the quoted
advice in the note, and the further statement in the note that the
option would be exercised "during the construction of the" base bid
and/or additive item effectively indicated that the price offered for
the option item would not be used in evaluating the low biddder. It is
inconsistent with that indication to use the N-K and J.A.K. option
prices in deciding which firm is entitled to the contract award.
Further, to the extent the Army meant the option work to be
considered a second additive item, 1/ the regulations require that the
contracting officer determine and record, prior to bid opening, the
amount of funds available for the procurement; the low bidder then is
evaluated on the basis of the lowest aggregate price for the most
features of the work within the recorded amount. The agency,
thereafter, may increase funds and additives but only to the extent the
low bidder as initially determined remains low. That is, once the low
bidder is ascertained based on the funding available before bid opening,
that bidder may not be displaced by another bidder when additional
funding later is made available. DFARS, 48 C.F.R. Sec. 236.303. 2/ The
rules that govern the evaluation of additive items thus preclude using
the prices for the option item in the evaluation to N-K's prejudice (if
we treat the option item as an additive item), since N-K was the low
bidder as determined based on the fund available at bid opening.
Finally, we do not think it relevant that N-K asserted a mistake in
its bid at the pre-award conferences. The mistake alleged was the
inclusion of $30,000 in the option item price that properly belonged in
the base bid price. The bid on which the evaluation should be based,
however--base bid plus requirements plus additive--is low with or
without the correction, see FAR, 48 C.F.R. Sec. 14.406-3, and N-K,
during the course of this protest, has withdrawn the allegation anyway.
Accordingly, the option item price could not properly be evaluated to
determine which bid was low. Since it is clear that the government
needs and can afford to buy the option work now, however, in our view it
does not make sense to recommend the Army award a contract to N-K at
this time and solicit separately for the option work. In these
circumstances, by separate letter to the Secretary of the Army, we are
recommending that J.A.K.'s contract be terminated for the convenience of
the government and that a new solicitation be issued, to include what
here was designated optional work, with provisions that insure that
award is made on the same basis on which firms are advised their bids
will be evaluated.
The protest is sustained.
Comptroller General
of the United States
FOOTNOTES
1/ When additive items are used, the government seeks a base bid
price which includes all of the features desired for the particular
construction project. The additive items are in effect options
exercised at the time of award to increase the scope of work to conform
to available funding.
2/ In contrast, in civilian procurements evaluation and award are
based on the circumstances existing at the time of award. Iannuccillo
Construction Co. and Acmat Corp., B-192954, Dec. 13, 1978, 78-2 C.P.D. P
411.
Matter of: Southern Systems, Inc.--Request for Reconsideration
File: B-224533.2
Date: June 2, 1987
DIGEST
Prior decision is affirmed where reconsideration request does not
show any error in fact or law of prior decision.
DECISION
The Air Force requests reconsideration of our decision in Southern
Systems, Inc., B-224533, Feb. 25, 1987, 87-1 C.P.D. P 214. We affirm
our prior decision.
In that decision, we held that the Air Force improperly rejected
Southern's low second best and final offer (BAFO) that contained a
condition that transportation costs for shipping a hoist to the
contractor's facility for repair be "prepaid" by the government. The
solicitation required the contractor to transport the hoist to its
facility. We found Southern's explanation of a claimed clerical error
(the word "prepared" was typed "prepaid") reasonable. We also found
that the Air Force should have realized that Southern did not mean to
take exception to the solicitation requirement that the contractor
transport the hoist because the language in Southern's second BAFO, if
interpreted as requiring the government to accept pecuniary
responsibility for transporting the hoist, was inconsistent with
Southern's first BAFO commitment to pay for these services. Also, under
the Air Force's interpretation, the agency would be required to prepay
transportation costs for a freight carrier that is to be selected by
Southern. We found that such a condition did not seem reasonable since
it would be more reasonable for the Air Force to choose the carrier if
the Air Force was required to "prepay."
Based on our finding that it was more reasonable that Southern did
not intend to take exception to the transportation requirements, we held
that the Air Force should have clarified this matter with Southern
instead of simply rejecting the firm's proposal. We explained that
clarification of such a minor irregularity to correct a clerical
mistake, such as the one made by Southern, would not constitute
discussions requiring reopening discussions with other offerors in the
competitive range. See Federal Acquisition Regulation (FAR), 48 C.F.R.
Sec. 15.601 (1986).
On reconsideration, the Air Force argues that the alleged error made
by Southern cannot be considered a minor irregularity which could be
clarified without reopening discussions with all offerors in the
competitive range. The Air Force maintains that the word "prepaid" as
used in Southern's second BAFO unambiguously and reasonably affects
contract price and performance and, therefore, is not susceptible to
treatment as a minor irregularity.
The Air Force, in its report on Southern's original protest, argued
(as it again argues here) that the language in Southern's second BAFO
that the firm was assuming the hoist would be "prepaid" and packaged on
a pallet "was considered to have a material effect on price" and,
therefore, the firm's proposal could not be accepted without reopening
discussions. We considered this argument in our prior decision and
found it to be without merit. As we stated in that decision, reading
Southern's proposal in its entirety, the most reasonable interpretation
is that Southern did not intend to take exception to the transportation
requirements.
The Air Force contends that it would have been improper to refer to
Southern's first BAFO and its initial proposal to establish the
existence of a mistake, since those documents were outside Southern's
second BAFO. FAR, 48 C.F.R. Sec. 15.607(a) provides that contracting
officers shall examine all proposals for, among other things, apparent
clerical mistakes and that communication with offerors to resolve such
matters is clarification, not discussions. FAR, 48 C.F.R. Sec.
14.406-2, referenced in section 15.607(a), cites as examples of apparent
clerical mistakes, the obvious misplacement of a decimal point, reversal
of prices for f.o.b. destination and price f.o.b. origin and corrected
discounts. It seems clear to us that the word "prepaid", in the context
of the sentence, was such a clerical error. Clarification, unlike
discussions, does not give the offeror the opportunity to revise or
modify its proposal, except to the extent (as here) that correction of a
clerical mistake will result in a revision. See FAR, 48 C.F.R. Sec.
15.601. The clarification of the word "prepaid," to correct a mistake,
would not have risen to the level of discussions.
The Air Force's request for the second BAFO to Southern did not
concern the transportation requirements. We think that the appearance
of the alleged exception to the transportation requirements for the
first time in the last BAFO should have raised a question with the Air
Force as to why Southern would change a part of its proposal not touched
by the request for a BAFO and which would render its proposal
unacceptable. The appropriate response would have been to review the
entire proposal, which consists of the initial offer and all the BAFOs.
This does not require the use of "clairvoyance," as the Air Force argues
on reconsideration, but merely considering the entire proposal. Such a
review would have led the contracting officer to discover the clerical
mistake.
While the Air Force disagrees with our reading of Southern's proposal
and our holding in the prior decision, mere disagreement with our prior
decision does not provide a basis to reverse that decision. See
Maintenance Pace Setters, Inc., B-213595.2, June 18, 1984, 84-1 C.P.D. P
635. Since the Air Force has not shown any error in fact or law, our
prior decision is affirmed.
Comptroller General
of the United States
Matter of: Southern Systems, Inc.
File: B-224533
Date: February 25, 1987
DIGEST
An agency may not reject a low offer that contained a condition that
the government "prepay" transportation costs on a carrier of the
contractor's choice where such a condition does not seem reasonable and
the offeror's explanation of a claimed clerical mistake is reasonable.
The agency should have clarified this minor irregularity to correct the
clerical error. Since this clarification would not constitute
discussions, the agency could not reasonably rely upon any anticipated
further delay caused by reopening discussions to justify rejecting the
low offeror's proposal.
DECISION
Southern Systems, Inc. (Southern), protests the award of a contract
for the retrofit (renovation) of a 15-ton hoist to Worldco, Inc., under
solicitation No. F40650-86-B-0060 issued by the Air Force. We sustain
the protest.
The solicitation, issued on February 12, 1986, requested sealed bids
for two new 20-ton hoists and the retrofit of one 15-ton hoist. The
three bids received (including the protester's bid) were determined
nonresponsive and the decision was made to cancel the invitation for
bids and complete the acquisition through negotiation. See Federal
Acquisition Regulation (FAR), 48 C.F.R. Secs. 14.404-1 (e) (1), 15.103
(1986). The solicitation contemplated multiple awards on the basis of
the low acceptable offer per item.
On April 17, 1986, competitive proposals were requested from the
three firms whose bids were determined nonresponsive and from Worldco
whose bid had not been considered because it was received late. All
proposals were determined unacceptable. The contracting officer
subsequently conducted discussions with all offerors in which they were
advised of proposal deficiencies and requested best and final offers
(BAFO's) by August 27, 1986. Since the BAFO's received failed to comply
with various solicitation conditions, discussions were reopened and new
BAFO's were requested by September 22, 1986. Southern submitted the low
acceptable proposal for the two new 20-ton hoists and award has been
made to Southern for those items. Although Southern's price for the
retrofit of the 15-ton hoist was low, the Air Force determined the
firm's proposal for that item unacceptable based on its finding that
language in Southern's second BAFO took exception to the requirement
that the successful contractor transport the hoist from the base to its
facility for repair at its expense.
Southern's second BAFO provides ". . . we are assuming the retrofit
hoist will be prepaid and packaged on a pallet or other suitable for
shipment container and loaded by the Government on a motor freight
carrier of our selection." The agency determined that the protester's
statement that the "hoist will be prepaid" required the government to
prepay shipping costs.
Southern states that as a result of a typographical error "the word
prepared was typed prepaid." Southern further states that while the
inclusion of the word prepaid in its second BAFO is unfortunate, its
original proposal clearly stated that Southern would pay freight costs
"to and from -its- factory." In this regard, Southern argues that it
should have been apparent that there was a conflict in its proposal and,
thus, the Air Force should have been on notice of or suspected a
mistake. Southern also points out that on September 26, it called the
Air Force to advise the contracting officer of the typographical error
and submitted a corrected second BAFO which the Air Force refused to
consider.
The Air Force responds that "there was nothing in the wording of
Southern's second BAFO to suggest the protester made a mistake," that
is, that the protester actually intended the word "prepaid" to be
"prepared," or that the firm by the above language did not intend the
government to prepay shipping costs. The Air Force further states that
the decision was made not to conduct a third round of negotiations to
allow the protester to remove the exception to the RFP requirements,
since "the procurement had been in process for an exceedingly long time"
(more than 8 months), and the agency previously had conducted two rounds
of negotiations in order to resolve proposal deficiencies.
We find that the Air Force should have realized that Southern did not
mean to take exception to the solicitation's transportation
requirements. First, the statement in question if interpreted as
requiring the government to accept pecuniary responsibility for
transporting the crane to the contractor's facilities is inconsistent
with Southern's initial and first BAFO commitment to perform these
services. Second, under the Air Force interpretation, the agency would
be required to "prepay" the freight for a transportation--carrier that
is to be selected by the contractor. Such a condition does not seem
reasonable; it would be more reasonable for the Air Force to choose the
carrier if the Air Force was required to "prepay." Indeed, when the
statement is corrected, as Southern claims it intended this sentence to
read, "prepared and packaged on a pallet," this condition is
understandable and reasonable. Also, while Southern in its BAFO stated
that if its representative was required at the loading, its offer should
be raised by $600, we do not find this to be inconsistent with the
obligation of Southern to pay the transportation cost. Regardless of
who paid the transportation costs, Southern was simply of the view that
its representative would not be required at the loading site and
therefore its basic offer price did not provide for that service.
Since it was more reasonable that Southern did not intend to take
exception to the transportation requirements, the Air Force should have
clarified this matter with Southern instead of simply rejecting the
proposal. Clarification of such a minor irregularity to correct this
clerical mistake does not constitute discussions requiring reopening
discussions with the other offerors in the competitive range. FAR, 48
C.F.R. Sec. 15.601. Therefore the matter could have been resolved
without a third round of negotiations, and without any further
meaningful delay in the procurement process.
Southern's protest is therefore sustained, on this basis and, since
Southern's offer, as clarified, would be in line for award, we are
recommending that Worldco's contract be terminated and that award be
made to Southern. Consequently, we need not consider other issues
raised by Southern.
Comptroller General
of the United States
Matter of: Howmet Turbine Components Corporation
File: B-224529
Date: February 13, 1987
DIGEST
Procuring agency did not deny vendor a prompt opportunity to attain
source approval for critical aircraft engine part in time to be eligible
for award where the agency notified the vendor of the source approval
requirements in ample time for the protester to have fulfilled them, but
the protester failed to submit necessary information in sufficient time
before the award.
DECISION
Howmet Turbine Components Corporation protests the Department of the
Air Force's rejection of its proposal under request for proposals (RFP)
No. F41608-86-R-7249. The RFP was issued by Kelly Air Force Base,
Texas, for turbine blades as spare parts for the F-100 aircraft engine.
Award under the RFP was restricted to approved sources and Howmet argues
that the Air Force denied the firm a reasonable opportunity to attain
approval prior to award.
We deny the protest.
The RFP was issued on March 31, 1986 and indicated that Kongsberg
Vapenfabrikk and United Technologies Corporation were the only approved
sources for the turbine blades. Other offerors could also submit
proposals and apply for approval as qualified sources by submitting
evidence of having satisfactorily produced the item for a Department of
Defense agency or the prime equipment manufacturer, or by submitting
engineering data sufficient to determine acceptability of the item. The
RFP cautioned that offerors requiring source approval would only be
considered for award if the government could determine the acceptability
of the item and could process the source approval application in
sufficient time to meet the agency's current needs. Howmet submitted a
source approval package on May 9, 1986 that included a blue print for
the turbine blades and information regarding the firm's successful
manufacture of similar items, and submitted its proposal on May 21. In
addition, the Air Force received proposals from the two firms that were
approved sources. Howmet was the apparent low offeror with an overall
evaluated price of $3,607,021. Kongsberg was next in line at a total
price of $3,914,700.75.
The Air Force source approval technician reviewed Howmet's source
approval application and determined that additional information was
necessary, including drawings, shipping orders, data rights, and a list
of the differences between the required item and the similar item
previously produced by Howmet. The technician requested this
information on May 29, and Howmet submitted it the next day. This
information was then forwarded to the agency's source approval engineers
for further review.
The engineering office requested further information and, by letter
of July 17, Howmet was advised that the Air Force required five
additional items. The additional items included an "Engineering Master
Drawing" and "the corresponding Airfoil Data," which were both
identified by number. The letter also requested that Howmet submit
evidence that it or its proposed subcontractors are qualified to provide
the major manufacturing operations required by the original equipment
manufacturer, Pratt and Whitney Aircraft (PWA). In this regard, the
letter stated that "PWA Certification or having PWA engineering source
approval or qualification approval will suffice."
Howmet submitted its response by letter dated July 25. The revised
package was again submitted to the engineering office for review and, on
September 8, the engineering office determined that Howmet could not be
approved as a source because Howmet failed to provide evidence that it
was certified by PWA to utilize its proprietary data. A written
determination was forwarded to the contracting office, which received
the determination on September 19.
The Air Force indicates that, although the requirement was not urgent
at the time the RFP was issued, all offerors were advised in August that
the agency's need for the item was critical. As a result, upon receipt
of the engineers determination not to approve Howmet as an approved
source, the contracting officer decided to make an award to Kongsberg
since further delay in the approval process was unacceptable.
On September 19, Howmet requested that a meeting be held, and on
Septemer 24 the protester met with the Air Force's source evaluation
office and the cognizant engineering office. At that time, Howmet
provided a letter from PWA, dated January 20, 1984 and received by
Howmet on February 7, which indicated that Howmet was certified by PWA
to utilize the company's technical documentation and tooling to perform
military contracts with the government. This information was forwarded
to the engineering office for review. Nevertheless by letter dated
September 26, 1986, the contracting officer advised Howmet that the firm
had not been granted approval as a source for the turbine blade because
Howmet had failed to provide evidence of PWA certification that Howmet
could provide the necessary manufacturing operations. The contracting
officer indicates that he was not aware that Howmet had submitted
additional information on September 24 and proceeded to award Kongsberg
the contract on September 30 On October 6, the Air Force advised Howmet
of the award, and Howmet's protest was received in our Office on October
8.
The engineering office nevertheless evaluated the letter from PWA for
the purpose of source approval for future procurements. By letter of
October 14, the Air Force advised Howmet that it had been granted source
approval to produce the turbine blade.
Howmet contends that the agency's repeated requests for additional
information, particularly the requirement for PWA certification of
Howmet's manufacturing operations, were used to postpone the decision on
source approval. Howmet also contends that PWA certification was not
necessary to manufacture the turbine blades. The protester argues that
it took 5 months to disapprove Howmet as a source and then only 2 weeks
to completely reverse this decision, and complains that the Air Force
clearly had sufficient time to approve Howmet. Howmet contends that the
Air Force's failure to do so unfairly excluded the firm from competing
for the contract.
The Air Force argues that the requirement was urgent and the agency
was unable to delay the award until Howmet had satisfied all the
requirements for source approval. The Air Force also indicates that
although Howmet submitted the additional information on September 24 and
was then granted approval based on that information on October 14, the
contracting office was unaware that the required information had been
supplied at the September 24 meeting or that the application had been
resubmitted for review. In the meantime, the contracting office had
informed the source evaluation office that the urgency of the
requirement would not permit further delay in the award process, and,
consequently, Howmet's source approval application was found applicable
only to future requirements. The Air Force argues that it acted
properly throughout the approval process and repeatedly requested Howmet
to submit the data required for evaluation purposes. Since Howmet was
not an approved source at the time the contract was awarded, the Air
Force contends that the award to Kongsberg was proper.
Under section 1216(a) of the Department of Defense Authorization Act,
1985 (Act), 10 U.S.C. Sec. 2319(c) (3) (Supp. III 1985), a potential
offeror may not be denied the opportunity to submit an offer (or
quotation) and have it considered for a contract solely because the
potential offeror has not met a prequalification requirement if the
offeror can demonstrate to the satisfaction of the contracting officer
that its product meets the standards established for qualification or
can meet such standards before the date specified for award. The Act
defines a prequalification requirement as a requirement for testing or
other quality assurance demonstration that must be completed by an
offeror before award of a contract. 10 U.S.C. Sec. 2319(a). Thus, an
offeror may not be excluded from consideration merely because it is not
an approved source.
The Act further provides that before establishing a prequalification
requirement, the contracting agency must specify in writing and make
available to a potential offeror upon request all requirements which a
prospective offeror or its product must satisfy in order to become
qualified, such requirements to be limited to those no more restrictive
than necessary to meet the agency's needs. 10 U.S.C. Sec. 2319(b) (2).
The agency also must ensure that a potential offeror is provided, upon
request, a prompt opportunity to demonstrate its ability to meet the
prequalification standards. 10 U.S.C. Sec. 2319(b)(4). These
provisions effectively create a duty on the part of a contracting agency
to take certain action towards qualifying new sources. See American
Ballscrew, B-223915, Dec. 10, 1986, 86-2 CPD P 664.
Consistent with its duty, the Air Force, in its July 17 letter,
advised Howmet of the specific information necessary for source approval
of Howmet's turbine blades. The record does not indicate that Howmet
previously had requested the agency to make available the specific
requirements which an offeror must meet for source approval, and
therefore the agency had no duty to advise Howmet of these requirements
until the Air Force reviewed Howmet's source approval application within
a reasonable period of time. We point out that the source evaluation
technician reviewed the application and requested more information on
May 29, at which time he could have advised Howmet of the specific
requirements for source approval, assuming that the Air Force had
prepared those requirements in advance as required by 10 U.S.C. Sec.
2319(b) (2). Even if there was a delay in notifying Howmet of the
specific requirements for source approval, however, there is no showing
that the delay prejudiced Howmet since there still remained ample time
for Howmet to submit the required evidence of PWA certification, which
Howmet already possessed and subsequently provided to the Air Force on
September 24. The failure to submit such evidence in sufficient time
before the award to allow for its evaluation was the only basis for not
approving Howmet's blades.
While Howmet asserts that PWA certification was not necessary for the
production of this item, this basis for protest is untimely. Since our
Bid Protest Regulations require that a protest be filed not later than
10 working days after the basis of protest was known or should have been
known, whichever is earlier, 4 C.F.R. Sec. 21.2(a)(2) (1986), any
protest of the requirement for PWA certification should have been filed
within 10 days after Howmet's receipt of the Air Force's July 17 letter
setting forth the requirement.
In addition, we are unable to conclude that the Air Force was
required to withhold award pending the submission of additional
information by Howmet. After being advised by the engineering office on
September 19 that Howmet's source approval application had been denied,
the contracting officer determined that urgency necessitated the
immediate award of a contract for its current requirements. Although
Howmet met with the Air Force on September 24 and submitted additional
information, review of that information was not completed until after
the contract had already been awarded to Kongsberg. In view of the fact
that Howmet was requested to provide such information and had ample
opportunity to submit this information at a much earlier date, we are
unable to agree with Howmet's assertion that it was the agency's delays
which resulted in Howmet's not being approved for this procurement. We
find no basis to question the agency's determination of urgency and
since Howmet was not an approved source at the time of contract award,
the award to Kongsberg, as the lowest-priced qualified offeror, was
proper.
Accordingly, the protest is denied.
Harry R. Van Cleve
General Counsel
Matter of: The Sandtex Corporation
File: B-224527
Date: January 30, 1987
DIGEST
1. Defense Logistics Agency properly includes a clause in a
solicitation for silica cloth that applies a 50-percent evaluation
factor to foreign offers, since Department of Defense (DOD) Federal
Acquisition Regulation Supplement provides that such a factor must be
applied to foreign offers for DOD acquisitions, and the regulation is a
proper implementation of the Buy American Act.
2. Contracting officer may cancel an invitation for bids where he
reasonably determines that the acceptable bids offering domestic end
products are unreasonable in price notwithstanding that a foreign offer,
before the addition of a 50-percent Buy American Act evaluation factor,
would be reasonably priced, since the foreign offer is properly
evaluated at a higher price than the domestic offers.
DECISION
The Sandtex Corporation protests the provision in request for
proposals (RFP) No. DLA100-86-R-0864, issued by the Defense Logistics
Agency's Defense Personnel Support Center (DPSC), Philadelphia,
Pennsylvania, applying an evaluation factor of 50 percent to the price
of any bid that offers a foreign end product (foreign offer). This
factor was included in the RFP pursuant to the Department of Defense
Supplement to the Federal Acquisition Regulation (DOD FAR Supp.), 48
C.F.R. Sec. 225.105 (1985), which implements the Buy American Act, 41
U.S.C. Sec. 10a-10d (1982).
We deny the protest.
The RFP is a resolicitation for 110,000 yards of silica cloth
originally sought under invitation for bids (IFB) No. DLA10086-B-0469
that was canceled after the contracting officer determined that all
acceptable bids were unreasonable in price. Under the original IFB,
Sandtex's price was low (and apparently reasonable) before the
application of the 50percent evaluation factor to the price of its
offered Japanese end product, but was evaluated as being higher than two
unreasonably priced acceptable bids offering domestic end products
(domestic offers). Sandtex contends that the DOD FAR Supp. provision
does not apply to silica cloth but only to certain specific items of
defense equipment covered by agreements with foreign governments, and
that DPSC erroneously applied the 50 percent evaluation factor to this
procurement. Sandtex also questions the fairness of canceling the IFB.
The Buy American Act creates a preference for the acquisition of
domestic end products unless the head of the contracting agency
determines it to be inconsistent with the public interest or the cost to
be unreasonable. 41 U.S.C. Sec. 10a. Under Executive Order No. 10582,
Dec. 17, 1954, implemented by FAR, 48 C.F.R. subpart 25.1 (1986), the
preference is applied by adding to the price of a foreign offer either:
1) a 6-percent evaluatidn factor, inclusive of duty, if the competing
domestic offer is a large business that is not a labor surplus concern;
or 2) a 12-percent factor if the competing domestic offer is from a
small business or labor surplus area concern. If the price for the
domestic offer exceeds the evaluated price of the foreign offer the
domestic offer's price is unreasonable and the preference under the Buy
American Act does not apply.
Executive Order No. 10582 also authorizes the head of an agency to
apply a larger evaluation factor to foreign end products. We have held
that DOD FAR Supp., 48 C.F.R. Sec. 225. 105, applying a 50-percent
differential to foreign offers of defense equipment, is a proper
exercise of that authority and does not conflict with the FAR.
Westinghouse Elec. Corp., B-223992 et al., Sept. 4, 1986, 86-2 CPD P
263.
The procurement regulations, particularly the DOD FAR Supp., include
several instances where the preference under the Buy American Act has
been determined to be inconsistent with the public interest and certain
qualifying country end products may be evaluated without regard to the
preference. See FAR, 48 C.F.R. Sec. 25. 103; DOD FAR Supp. subparts
25.73-25.75. The qualifying countries generally are members of the
North Atlantic Treaty Organization and certain other countries, but not
Japan, with whom the United States has cooperative defense and foreign
military sales/offset agreements.
Further, there are regulations implementing the Trade Agreements Act
of 1979, 19 U.S.C. Secs. 2501-2581 (1982 and Supp. III 1985) providing
that the Buy American Act preference does not apply to procurements of
certain eligible products from designated countries over a dollar
threshold. FAR, 48 C.F.R. subpart 25.4, DOD FAR Supp., 48 C.F.R.
Subpart 25.4; Leland Ltd., B-224175, Dec. 24, 1986, 86-2 CPD P . While
Japan is a designated country, silica cloth is not an eligible product
for the purpose of applying an exception to the Buy American Act
preference.
The crux of the Protester's argument is that since DOD FAR Supp., 48
C.F.R. Sec. 225.105, by its own terms applies only to the acquisition of
"defense equipment," the intent of the regulation is to apply the
50-percent factor only to nonqualifying foreign offers of the specific
equipment exempted from the Buy American Act preference based on
cooperative defense and foreign military sales/offset agreements. In
all other cases, according to the protester, the 6-percent or 12-percent
factor provided in the FAR should be applied.
We find no merit in this argument since DOD FAR Supp., 48 C.F.R. Sec.
25.001, broadly defines defense equipment for the purpose of applying
the Buy American Act preference to mean any equipment, item of supply,
component, or end product purchased by DOD. Furthermore; the
protester's argument ignores the plain purpose of the Buy American Act
to protect domestic sources as opposed to protecting qualifying
countries'sources for certain items for which it has been determined in
the government's interest not to apply the Buy American Act's
preference. The terms of DOD FAR Supp. purport to implement the Buy
American Act, not certain foreign agreements, by applying a 50-percent
evaluation factor, see DOD FAR Supp., 48 C.F.R. Secs. 24.102(70) and
205.105, and the protester has failed to show that the regulation is
improper or should be interpreted otherwise. The inclusion of the
50-percent evaluation factor in both the original IFB and the current
RFP therefore was proper.
The protester also argues that notwithstanding the inclusion in the
IFB of a provision stating that offers will be evaluated in accordance
with the procedures of FAR, 48 C.F.R. Part 25, and DOD FAR Supp., 48
C.F.R. Part 225, the agency's application of the 50-percent evaluation
factor was inconsistent with a clause requiring an indication of the
amount of duty to evaluate foreign offers "under FAR Subpart 25.1." The
protester relies on the failure of the cited clause to reference the
applicable DOD FAR Supp. provision. We point out that the purpose of
the cited clause was only to ascertain the applicable duty, not to
establish how foreign offers would be evaluated, and that the IFB as a
whole was clear that DOD FAR Supp., 48 C.F.R. Subpart 25, would be
applied for evaluation purposes.
Finally, as regards the fairness of canceling the IFB, the
contracting officer canceled the IFB pursuant to FAR, 48 C.F.R. Sec.
14.404-1 (c) (b), which expressly authorizes canceling an IFB where the
head of the agency determines that "all otherwise acceptable bids . . .
are at unreasonable prices." (The authority to make this determination
generally is delegated to the contracting officers.) Sandtex's foreign
offer was not an otherwise acceptable bid since the FAR permits the
acceptance of a foreign offer only where acceptable domestic offers
exceed the evaluated price of the foreign offer including the Buy
American Act differential, and the two acceptable domestic offers did
not exceed Sandtex's evaluated price. Nothing in Executive Order No.
10582 or its implementing regulations requires the contracting officer
to accept domestic offers evaluated at a lower price than the foreign
offer if the contracting officer reasonably determines the domestic
prices to be unreasonable. In such cases, the contracting officer
properly may cancel the IFB and resolicit.
Sandtex further questions the fairness of the cancellation by
pointing out that its prices were exposed. Although Sandtex's price was
disclosed under the canceled IFB, the resolicitation provides Sandtex
with another opportunity to bid for a contract it otherwise would have
been ineligible to obtain. The protester therefore was not prejudiced
by the disclosure of its price under the canceled IFB. See Western
Roofing Serv., B-219324, Aug. 30, 1985, 85-2 CPD P 255.
The protest is denied.
Harry R. Van Cleve
General Counsel
Matter of: Pacord, Inc.
File: B-224520.2
Date: March 6, 1987
DIGEST
Contracting agency's decision to award a contract for the
installation of technical training equipment at a cost higher than that
proposed by the protester was not unreasonable where the awardee's
technical proposal was considered superior and worth the cost premium
involved.
DECISION
Pacord, Inc., has protested the award of a contract to Unidyne, Inc.,
under request for proposals (RFP) No. N0014085-R-4238 which was issued
by the Naval Regional Contracting Center, Philadelphia, Pennsylvania, in
1985 for an estimated 460,000 work-hours to provide services and
material necessary to install technical training equipment at various
naval training schools throughout the United States under a
costplus-fixed-fee contract to be entered into on a "time and materials"
basis.
Offerors were asked to submit technical and price proposals and were
informed that the contract would be awarded to the offeror whose offer,
conforming to the RFP, was determined to be most advantageous to the
Navy, price and other evaluation standards considered. The RFP also
listed the following evaluation standards in descending order of
importance: corporate experience, personnel resources, contractor
facilities, management plan/approach and price. As to price, the RFP
stated that although price was the least important standard, price was
important and should not be ignored. The RFP also stated that the
degree of price importance would increase with the degree of equality of
the proposals in relation to the other, nonprice standards on which the
selection would be based.
Four offerors, including Pacord and Unidyne, submitted proposals.
Two of the offers were eliminated from the competitive range leaving
Pacord's and Unidyne's proposals for consideration. Pacord's proposal
was roughly 12 percent less in price compared with Unidyne's proposal.
As to the scoring of technical proposals, Unidyne was given an overall
technical rating of "highly qualified," with the highest ratings
possible in corporate experience, personnel resources, and facilities
and with the second highest rating possible in management approach.
Pacord was rated "qualified" overall with the highest rating in
management approach and facilities and the second highest ratings
possible in corporate experience and personnel resources.
Discussions were then held with Unidyne and Pacord, and final offers
were requested from both offerors by the Navy which identified the areas
of Pacord's proposal to be addressed in the final offer. Both offerors
submitted final offers which were then evaluated. The evaluated price
of the final offers modified the original proposals as follows:
INITIAL FINAL
Unidyne $12,188,019 $11,960,918
Pacord $11,257,238 $10,673,062
Although slight changes were noted in both proposals, the Navy's
evaluators concluded that the revisions had not altered the relative
standing of the two offerors. The overall ratings remained:
Unidyne--highly qualified; Pacord--qualified. Because of the
difference in the cost proposals (12 percent), the contracting officer
then requested another opinion within the Navy as to whether the
technical superiority of the Unidyne proposal warranted the higher
price. The Navy then concluded that the overall technical superiority
of the Unidyne proposal justified the higher cost.
Based upon the evaluation of the technical and price proposals, the
contracting officer determined that Unidyne's offer was the most
advantageous to the government, price and other factors considered, and
awarded a contract to Unidyne. Pacord essentially contends that its
proposal should have been considered relatively equal to Unidyne's in
technical merit and, thus, Pacord should have been selected based on its
lower cost. We deny the protest.
Our Office does not determine independently the relative merit of
proposals, as the evaluation of proposals is properly the function of
the contracting agency which must bear the burden of any difficulties
resulting from a defective evaluation. Litton Systems, Inc., Electron
Tube Division, 63 Comp. Gen. 585, 588 (1984), 84-2 C.P.D. P 317 at 4.
Further, contracting agencies are relatively free to determine the
manner in which proposals will be evaluated so long as the method
selected provides a rational basis for source selection and the actual
evaluation is conducted in accordance with the established criteria.
Joint Action in Community Service, Inc., B-214564, Aug. 27, 1984, 84-2
C.P.D. P 228 at 2, 3. Also, we will question a contracting official's
determination concerning the technical merits of proposals only upon a
clear showing of unreasonableness. Bank Street College of Education, 63
Comp. Gen. 393, 400 (1984), 84-1 C.P.D. P 607 at 10. The protester's
mere disagreement with the agency's evaluation of its proposal does not
in itself render the evaluation unreasonable. Intelcom Educational
Services, B-220192.2, Jan. 24, 1986, 86-1 C.P.D. P 83.
Pacord's position that its proposal is substantially equal in
technical merit to Unidyne's is based on the specific argument that the
Navy failed to properly apply the RFP's evaluation standards concerning
corporate experience, personnel resources, and cost.
CORPORATE EXPERIENCE
In this section of the RFP, a two-part evaluation standard was
described. Under the first part of the standard, offerors were asked to
provide a narrative relating to the company's history, organization, and
experience in the area of installing technical training equipment,
including details about prior similar contracts. In the second part of
the standard, offerors were to submit a sample of "on-going installation
effort" within the past 3 years. In its evaluation, the Navy found that
Pacord's proposal primarily showed experience in overhaul and repair of
electronic test equipment, rather than installation of new equipment.
Consequently, the Navy's request for Pacord's final offer informed
Pacord of this concern about the company's experience. In evaluating
Pacord's final proposal, the Navy decided that, while Pacord's proposal
should be slightly upgraded in this area, Pacord's rating was still
considered to be significantly below Unidyne's. In contrast, the Navy's
evaluation of Unidyne's corporate experience showed that the Navy felt
Unidyne had the "most applicable and most extensive service" based, in
part, on Unidyne's performance on contracts in 1979 and 1981.
Pacord specifically questions the Navy's evaluation in the corporate
experience area by suggesting, in part, that the Navy rated Pacord's
experience lower than Unidyne's because of alleged "cost inefficiencies"
on previous contracts and that this comment was not disclosed to Pacord
during negotiations. Pacord also generally questions the overall
evaluation of the proposals in this area and suggests that Pacord's
experience should have been rated substantially higher.
As noted above, the Navy's request for Pacord's final offer
specifically informed the company that it had a relative weakness in the
area of corporate experience because the Navy felt that the company's
experience was related more to overhauling, rather than to installing
equipment, as described under the RFP. Pacord did not sufficiently
change the Navy's basic opinion of its experience despite the slight
upgrading of the company's final offer. Although Pacord argues that its
final rating was due to the Navy's alleged improper evaluation of "cost
inefficiencies" on its earlier contracts the record of evaluation shows
that the evaluators of the initial and final proposals also found that
Pacord's cited experience was mainly in the overhaul, rather than the
installation area, and that Unidyne had greater experience
installing--both as to quantity and variety--over 90 percent of the
types of equipment listed in the RFP. Thus, we cannot question the
corporate experience rating assigned to Pacord regardless of the issue
of "cost inefficiencies."
Further, we do not agree with Pacord's contention that the Navy
improperly accepted Unidyne's contracts in 1981 and 1983 for experience
evaluation. As pointed out by the Navy, only the second part of the
experience standard required a prior sample--within the past 3 years--of
on-going installation effort. However, the first part of the experience
evaluation standard looked for relevant experience without time limit.
Thus, Unidyne's 1981 and 1983 contracts were properly evaluated, and the
record of that evaluation supports the Navy's findings concerning
Unidyne's specific experience.
PERSONNEL RESOURCES
Section L of the RFP required offerors to provide resumes for the
types of key program management and professional personnel who were to
be assigned to work under the contract. The resumes were to cite
education, training, employment and experience with emphasis on those
elements of experience with specific applicability to the contract
requirements.
The Navy ranked Unidyne highly qualified in this category because the
Navy considered Unidyne's program managers and engineers to be very well
qualified to perform the contract. In contrast, Pacord's proposal was
rated qualified but was considered to contain two, inexperienced program
managers. The Navy told Pacord that two of the resumes which the
company submitted with its initial proposal did not show strong program
manager experience. In its final offer, Pacord submitted resumes to
replace these program managers, but the Navy felt that the replacements
proposed did not affect the company's evaluation since one individual's
accomplishments was considered limited and the other proposed individual
was considered to be lacking in required experience.
Pacord essentially questions the Navy's final evaluation in this area
by insisting that the Navy ignored the changes it made in its final
proposal especially in regard to one manager who, Pacord argues, has
good experience. Nevertheless, even if this one individual should be
seen as entitled to greater scoring merit, we cannot say that this fact
should, in itself, raise Pacord's score in this area to Unidyne's
"highly qualified" rating which is substantiated in detail in the
record.
COST
Finally, Pacord argues that the Navy apparently made no balanced
trade-off between cost and technical considerations under the proposals.
However, based on our review of the record of evaluation, as noted
above, we cannot question the "highly-qualified" rating assigned to
Unidyne's technical proposal as compared with the "qualified" rating
assigned to Pacord and the Navy's conclusion that the "prospect of
greater contractor productivity, reduced Government contract
administration effort and consistent reliability in meeting installation
schedules clearly outweighs any price difference attributable" to lower
man-hour rates proposal by Pacord. In these circumstances, we cannot
question the Navy's view that the award to Unidyne was worth the cost
premium involved.
Protest denied.
Harry R. Van Cleve
General Counsel
Matter of: Pacific Computer Corporation
File: B-224518.2
Date: March 17, 1987
DIGEST
1. Protester's contention, that its elimination from the competitive
range will result in a de facto sole-source award to another firm, is
without merit where the final competitive range actually contains more
than one offer.
2. Protester's contention, that the agency improperly eliminated it
from the competitive range based on requirements not stated in the
solicitation, is without merit where the protester either was on actual
notice of the agency's requirements or has misinterpreted the agency's
reasons for finding that the offer was technically unacceptable.
3. Where protester in fact was advised of deficiencies in its
proposal and given an opportunity to correct them, there is no merit to
its contention that it should have been included in the competitive
range because all of the deficiencies in its proposal could have been
resolved through discussions.
4. Where a small business offer was found unacceptable under the
evaluation criteria in the solicitation, the matter is one of technical
acceptability rather than responsibility, and there is no requirement
for referral to the Small Business Administration under the certificate
of competency program.
DECISION
Pacific Computer Corporation (PCC) protests the Department of the
Interior's rejection of its proposal under request for proposals (RFP)
No. 7176 for maintenance of government-owned automated data processing
equipment. PCC primarily contends that Interior improperly eliminated
PCC's proposal from the competitive range based on requirements that
were not stated in the RFP, and that this will result in a de facto
solesource award to the original equipment manufacturer. We deny the
protest.
BACKGROUND
The agency received four offers in response to the RFP, which
provided for award to the low cost, technically acceptable offeror.
After an initial technical evaluation, PCC's proposal was rated as
conditionally acceptable. The evaluators formulated a list of eight
questions and comments designed to point out the major deficiencies in
PCC's proposal and forwarded them to the firm by mail. After receiving
and evaluating PCC's response to these questions, the evaluators
determined that PCC's proposal was unacceptable. The basis for this
determination included inadequate parts availability and lack of more
than one engineer with experience on the type of equipment to be
maintained. The evaluators also found that PCC's maintenance plan was
inadequate, and that the proposal generally was incomplete.
Subsequently, the contracting officer called PCC and requested
further clarification of its proposal. PCC's response again was
forwarded to the evaluators, who again determined that the proposal was
unacceptable. The contracting officer then notified PCC that it had
been eliminated from the competition. This protest followed. The
agency is withholding contract award pending our decision.
PCC questions the evaluator's conclusions that the firm's parts
availability and maintenance plan were inadequate and that it lacked a
sufficient number of experienced engineers. Generally, PCC alleges that
in evaluating these aspects of its proposal, the agency imposed
requirements that were not included in the solicitation. In this
connection, PCC does not dispute the agency's contention that the
evaluation factors listed in the RFP included the proposed maintenance
plan, spare parts availability, and experience of the proposed
personnel. Rather, PCC asserts that these aspects of its proposal met
the requirements stated in the RFP and that in rejecting the firm's
proposal, the agency unreasonably imposed additional requirements in
order to eliminate PCC from the competition and make award to the
original equipment manufacturer.
MERITS
At the outset, we find no merit to PCC's contention that its
elimination from the competition necessarily will result in a de facto
sole-source award to the original equipment manufacturer (which had
performed the solicited maintenance services on a sole-source basis
prior to the present procurement). In fact, the record shows that the
final competitive range established by the evaluators included more than
one proposal. Accordingly, we reject the protester's assertion that
this is a de facto sole-source procurement. See Bell Atlantic Mobile
Systems, B-219468, Sept. 25, 1985, 85-2 CPD P 337.
We turn then to the propriety of the evaluation of PCC's technical
proposal, and the elimination of the proposal from the competitive
range. The evaluation of proposals and resulting determination as to
whether an offeror is in the competitive range are matters within the
discretion of the contracting agency, as it is responsible for defining
its needs and the best methods of accommodating them. Harbert
International, Inc., B-222472, July 15, 1986, 86-2 CPD P 67. Our review
of an agency's technical evaluation is limited to considering whether
the evaluation was fair and reasonable and consistent with the
evaluation criteria set forth in the RFP. Ametek, Stroza Division,
B-220384, Feb. 11, 1986, 86-1 CPD P 149. Further, our Office will not
disturb a determination to exclude a proposal from the competitive range
unless the determination is shown to be unreasonable or in violation of
procurement law or regulation. Metric Systems Corp., B-218275, June 13,
1985, 85-1 CPD P 682.
The first major deficiency identified by the evaluators in PCC's
proposal was that the firm's remedial maintenance plan was unacceptable.
Specifically, the evaluators found unacceptable PCC's offer to meet
with the agency to decide what further action should be taken if the
system had been down for more than 12 hours and PCC still had been
unable to resolve the problem. The evaluators stated that PCC should
have an agreement with the original equipment manufacturer to supply
assistance if PCC could not correct the problem. This deficiency was
among those pointed out to PCC in the letter sent to the firm after the
initial proposal evaluation. In its reply to the agency's letter, PCC
essentially repeated its offer to meet with the agency if the problem
had not been resolved in 12 hours, and listed options that could be
discussed then, such as having additional specialists come on-site. The
evaluators again concluded that this approach was unacceptable.
PCC asserts that there was no requirement in the RFP that offerors
have an agreement with the original equipment manufacturer like the one
the evaluators suggested. PCC also argues that its remedial maintenance
plan will work and should be considered acceptable.
We agree that the RFP did not require an agreement with the original
equipment manufacturer for assistance. However, the RFP did clearly
indicate that length of system downtime was a major concern. For
example, the RFP provided for credits to the agency if the system was
down for more than 12 hours, and stated that excessive downtime (which
also was defined) would be sufficient cause for termination for default.
Furthermore, the agency's latter to PCC specifically identified the
lack of any agreement with the original equipment manufacturer for
assistance as a deficiency in PCC's proposal. We have held that when an
offeror is informed of an agency's requirement during negotiations,
notwithstanding its absence in the solicitation, the offeror is on
notice of the requirement. Centennial Computer Products, Inc.,
B-212979, Sept. 17, 1984, 84-2 CPD P 295. Moreover, an offeror may not
disregard information provided by the agency even though it may be
absent from, or not clearly stated in, the solicitation. Southwest
Marine, Inc., B-219423, Sept. 23, 1985, 85-2 CPD P 321. Here, PCC
clearly received actual notice that the agency considered an agreement
with the original equipment manufacturer to be necessary. We therefore
find no merit to PCC's complaint that the evaluation was improper
because the solicitation did not specifically require such an agreement.
We also find that the agency reasonably determined that PCC's
remedial maintenance plan was unacceptable. We base this conclusion on
the fact that despite having been informed that this aspect of its
proposal was deficient, PCC's response contained no indication that it
had made any attempt to secure the desired agreement with the original
equipment manufacturer. Nor did it suggest any other alternative to its
original offer to meet with the agency to discuss the situation if the
system remained down for more than 12 hours. Accordingly, we find no
merit to PCC's contention that the evaluation of this aspect of its
proposal was unreasonable.
A second major deficiency identified by the evaluators in PCC's
proposal was inadequate spare parts availability. The evaluators found
that PCC's plan to provide spare parts by purchasing and stripping used
equipment was unacceptable. This was the subject of the contracting
officer's phone call to PCC, which was placed after the agency had
received PCC's response to the letter identifying the deficiencies in
the firm's initial proposal. Although the letter had contained some
indication that this was a concern, the contracting officer felt that it
could have bean more clear, and phoned both PCC and another offeror to
give them an additional chance to respond to the evaluator's concerns.
In his conversation with each of the firms, the contracting officer
clearly informed them that the agency considered lack of spare parts
availability to be a major concern. Further, he asked each firm to
certify that spare parts would be new or refurbished as good as new,
including the most recent original equipment manufacturer changes. In
addition, he asked each offeror to identify the alternative sources it
would utilize in the event that a needed part was unavailable in the
local parts depot, including any agreement with the original equipment
manufacturer.
PCC responded and certified that any replacement parts would be new,
or parts of equal quality, and would be current. It also explained that
it would keep frequently used parts stocked on-site, and would have an
adequate supply of spare parts in stock at its local warehouse.
Further, PCC stated that in the unlikely event that a part was not
available locally, it would be acquired from one of several other
company warehouses throughout the United States, depending on which
location could provide the earliest delivery. The evaluators considered
this plan to be unacceptable because PCC had no agreement with the
original equipment manufacturer or any other firm for spare parts. They
noted that PCC did not currently own used equipment to satisfy all the
parts requirements, although it planned to purchase one machine of each
type it would be required to maintain, for this purpose.
PCC asserts that the RFP did not require an offeror to have an
agreement with the original equipment manufacturer for spare parts, and
argues that its plan to provide spare parts was more than adequate. PCC
notes that it currently successfully maintains similar equipment for
other federal agencies with used spare parts which have been
refurbished, and that it included this information in its proposal. The
firm also asserts that the original equipment manufacturer will not
agree to supply it with spare parts, and therefore that the agency is
asking it to do the impossible.
We believe that PCC has misinterpreted the agency's basis for finding
this aspect of the firm's proposal unacceptable. The basis for this
determination was not that PCC lacked an agreement with the original
equipment manufacturer for spare parts, but rather that it lacked an
agreement with any firm for spare parts, in the event they were
unavailable from PCC's own stocks. In this connection, we note that at
least one other offeror, whose proposal was included in the final
competitive range, in fact did secure an agreement with another firm to
serve as an alternative source for spare parts. Both this offeror and
its alternative source for spares acquire them in the same way PCC
does--they depend on used equipment for the parts.
Thus, the agency did not impose a requirement that offerors have an
agreement with the original equipment manufacturer for spare parts. Nor
did it reject PCC's offer because the firm proposed to supply used parts
that had been refurbished. Rather, it simply found that PCC's plan to
provide spare parts exclusively from its own stock was inadequate,
particularly in view of the questionable sufficiency of that stock. PCC
has not shown that this conclusion was unreasonable, and the mere fact
that PCC disagrees with the conclusion does not make it unreasonable.
See Harbert International, Inc., B-222472, supra, 86-2 CPD P 67. We
therefore find that this aspect of the protest lacks merit.
The third major deficiency found by the evaluators in PCC's proposal
relates to the experience of its personnel. The evaluators noted that
the solicitation required that all services be performed by personnel
with experience on the specific equipment to be maintained, and that PCC
had proposed only one engineer with experience on one of the major types
of equipment covered by the RFP. The evaluators considered this to be
inadequate. PCC disputes this determination and argues that the
engineer with the relevant experience will supervise the others working
on the equipment, each of whom have experience on similar equipment.
PCC also notes that in their evaluation memorandum to the contracting
officer, the evaluators stated that at least three engineers with the
relevant experience were required. PCC asserts that there was no such
requirement in the RFP.
The determination of an agency's minimum personnel needs is primarily
the responsibility of the procuring agency. Logistic Services
International, Inc., B-218570, Aug. 15, 1985, 85-2 CPD P 173. Thus, the
fact that PCC believes its proposed personnel were adequate to meet the
agency's requirements does not make the evaluation improper. In
addition, while the solicitation did not require a minimum of three
engineers with each type of relevant experience, it did provide that the
work must be performed by personnel with such experience. The real
basis for the finding of technical unacceptability here was not PCC's
failure to propose exactly three experienced engineers, but rather that
the number of engineers it did propose with the required relevant
experience (one) was inadequate. We do not find any basis to conclude
that this determination was unreasonable.
While PCC points out that the RFP permitted work to be performed by
trainees under the supervision of experienced personnel, we do not agree
with PCC's suggestion that the agency therefore was required to consider
acceptable the performance of work by personnel without the relevant
experience, who were supervised by an employee with the relevant
experience. In fact, the solicitation provided that in no case would
the government pay for trainee costs. Thus, while the agency was
willing to accommodate trainees, it was not willing to pay them. The
agency therefore in no way indicated that it considered trainees, or any
other inexperienced personnel, adequate substitutes for experienced
personnel simply because they were supervised by experienced personnel.
PCC also argues that it should have been included in the competitive
range because of its low cost, and because all of the deficiencies in
its proposal could have been resolved through discussions. It is
well-established, however, that where a proposal is properly rejected as
technically unacceptable, the cost proposed by the offeror is irrelevant
as the proposal is ineligible for award. Advanced Technology Systems,
B-221068, Mar. 17, 1986, 86-1 CPD P 260. Further, we note that PCC in
fact was notified of the deficiencies in its proposal, and was given an
opportunity to correct them. Although the agency has characterized this
as a "clarification" process conducted prior to establishing the
competitive range, it nevertheless served the same function as
discussions since it afforded PCC an opportunity to revise or modify its
offer and was essential for determining the acceptability of the firm's
proposal. See Greenleaf Distribution Services, Inc., B-221335, Apr. 30,
1986, 86-1 CPD P 422. Accordingly, we find that PCC was given an
adequate opportunity to correct the deficiencies in its proposal and
that its failure to do so, as previously discussed, provided a
reasonable basis for its exclusion from the competition.
In addition, PCC contends that its elimination from the competition
as technically unacceptable was in reality a finding of
nonresponsibility which should have been referred to the Small Business
Administration (SBA) under the certification of competency program,
since PCC is a small business. PCC asserts that every alleged
deficiency in its proposal actually pertains to the firms capability to
perform, and thus relates to its responsibility rather than its
technical acceptability. We find no merit to this contention.
The deficiencies identified in PCC's offer in fact related to
specific and identified evaluation factors set forth in the RFP. These
included maintenance plans, spare parts availability, and past
experience of individuals proposed to perform the work. Where an offer
is found deficient when evaluated under the criteria specified in an
RFP, the matter is one of technical acceptability, not responsibility.
Johnston Communications, B-221346, Feb. 28, 1986, 86-1 CPD P 211.
Moreover, in negotiated procurements, traditional responsibility factors
may be used as technical evaluation criteria, and if a small business is
found to be deficient in those areas, referral to SBA is not required.
Essex Electro Engineers, Inc. et al., B-211053.2 et al., Jan. 17, 1984,
84-1 CPD P 74.
CONCLUSION
We find no merit to the protester's contentions that its proposal was
improperly eliminated from the competitive range based on requirements
not stated in the RFP, and that the procurement will result in a de
facto sole source award to the original equipment manufacturer. We also
find reasonable the agency's conclusion that the proposal was
technically unacceptable.
The protest is denied.
Harry R. Van Cleve
General Counsel
Matter of: Chromatics, Inc.
File: B-224515
Date: February 17, 1987
DIGEST
When significant error in specifications is discovered prior to award
of contract, specifications should be revised and offerors who were in
the competitive range up to that point, including an offeror whose best
and final offer was late, should be given an opportunity to respond to
government's actual requirements.
DECISION
Chromatics, Inc., protests the rejection of its best and final offer
as late under Department of the Army request for proposals (RFP) No.
DAAD05-88-R-0221. Chromatics also contends that the offer submitted by
Silicon Graphics, which the Army accepted, did not meet a mandatory
requirement of the solicitation.
We sustain the protest.
The Army issued this RFP to acquire color graphics workstations for
the Army Test and Evaluation Command at the Aberdeen Proving Ground.
Workstations of this type are computer-based devices used to draw finely
detailed pictures of engineering assemblies, such as vehicle suspension
systems, on a computer screen with different parts of the assembly, such
as the axle and shock absorber, depicted in different colors. These
systems can also simulate and display the assembly in motion, much like
an animated cartoon, so that an engineer can see on the computer screen,
for instance, the effect on the suspension of a vehicle moving over an
uneven surface.
For technical reasons, the ability of workstations to display
multiple colors is dependent on the number of color planes.
Also for technical reasons, animation generally requires the use of a
process called double-buffering, which allows the computer to draw the
screen picture to one buffer, which holds the drawing's image in the
computer's memory, while the second buffer is displayed, and then
quickly swap so that the second buffer is displayed while the first is
redrawn. 1/ The specifications required that the basic system have 8
double-buffered color planes, or a total of 16 planes, with a mandatory
option for an additional 16 double-buffered (32 single) planes. This
requires a total of 48 single planes.
After conducting discussions, the contracting officer orally
requested that best and final offers be submitted by 4:30 p.m. on
September 24, 1986. Chromatics sent its offer by private courier. Upon
arrival at the Baltimore-Washington International Airport, the courier's
employee telephoned Aberdeen Proving Ground and, according to
Chromatics, asked the contract specialist how long he would be there to
receive the offer. According to the protester, the contract specialist
stated that he would be available to receive the offer until 6:00 p.m.
Chromatics' offer was not delivered until 5:30 p.m. and was rejected as
late. Silicon Graphics was the only remaining offeror.
The Army accepted Silicon Graphics' offer which provides for 24
single color planes, or 12 double-buffered planes. The Army states that
its functional requirement is to perform high speed double-buffered
graphics most of the time with the capability of also producing
high-resolution, 24 color plane still drawings, although it does not
need these capabilities simultaneously. The Army states that at the
time it wrote the specification it believed that it needed 48 planes to
accomplish these functions because it was unaware of Silicon
Graphics'solution, which provides a relatively simple method for the
user to reconfigure the 24 single planes as 12 double-buffered planes.
The Army says that if it had known of this solution, it would have
described its functional requirements in the specifications. The Army
asserts that Chromatics was not prejudiced by this omission, however,
because Chromatics configures its buffers at the factory and would still
have had to provide 48 planes to satisfy the requirement.
Chromatics has not had the opportunity to respond to the Army's
contention that it was not prejudiced because this argument was
submitted after Chromatics' final comments on the protest. In an
earlier submission, however, Chromatics asserted that had it known of
the Army's actual requirements, it could have offered considerably less
expensive equipment.
In our view, the Army's comments regarding its functional
requirements and the offer it accepted from Silicon Graphics amount to a
concession by the Army that the specifications in the RFP overstated its
actual minimum needs. As we noted above, the ability of the
workstations to support color planes and double-buffering is an
important determinant of their performance; we therefore consider this
error in the Army's specifications to be significant.
When an agency discovers, after receipt of proposals, that it has
initiated a negotiated competition based on defective specifications,
the agency either should conduct another round of discussions or a
resplicitation, depending on the circumstances, based on corrected
specifications. See Federal Acquisition Regulation, 48 C.F.R. Sec.
15.606 (1986). It does not appear that the correction of the
specifications here can be viewed as warranting a "complete revision" of
the RFP such as to require cancellation and resolicitation. See 48
C.F.R. Sec. 15.606(b)(4). Accordingly, under 48 C.F.R. Sec. 15.606,
the agency, prior to accepting any proposal, was required to issue an
amendment, correcting the specifications, to the offers in the
competition and allow them to submit revised proposals. In other words,
while the Army could not properly have accepted either best and final
offer--the Silicon Graphics proposal did not meet the specifications,
and the Chromatics proposal was late--the proper course of action after
receipt of best and finals in this case would have been the correction
of the specifications and providing the vendors in the competitive range
up to that point an opportunity to submit revised proposals in response
to the amendment. Since both Chromatics and Silicon Graphics were in
the competitive range up to that point, both should have been given the
chance to submit an offer based on the agency's actual needs.
The protest is sustained. By separate letter to the Secretary of the
Army, we are recommending that the Army reopen negotiations with both
Chromatics and Silicon Graphics consistent with the above decision and
reassess its award decision based on the outcome of these negotiations.
Comptroller General
of the United States
FOOTNOTE
1/ See Davis, Dwight B., "Chip-Based Graphics," High Technology,
February 1985, Vol. 5, No. 2, p. 46, ff.
Matter of: Wormald Fire Systems
File: B-224514
Date: February 20, 1987
DIGEST
1. Where the evaluation criteria provide that technical factors have
more than twice the importance of price, the agency reasonably may
determine that the slight technical advantage of the protester's
proposal is outweighed by a proposal 8-percent or $56,000 lower in
price.
2. Source selection officials are not bound by the scoring of
technical evaluators and may conceptually rescore proposals subject to
the test of rationality and consistency with the solicitation's
evaluation criteria.
DECISION
Wormald Fire Systems (Wormald) protests the award of a
firm-fixed-price contract to Chemetron Fire Systems, Inc. (Chemetron),
under request for proposals (RFP) No. DTCG23-86R-40011, issued by the
U.S. Coast Guard for 53 bromotrifluoromethane (Halon 1301) firefighting
systems for patrol boats and also Halon 1301 firefighting system design
drawings and installation instructions for certain cutters and harbor
tugs. Wormald contends that Chemetron's fire alarm, a component of its
offered system, has not been Coast Guard and Underwriters Laboratories
(U.L.) approved as required by the specifications and that Chemetron
does not comply with an alleged requirerment for experience in supplying
and installing the Halon 1301 firefighting system. Further, Wormald
maintains that the Coast Guard's determination to proceed with contract
performance on the basis of the urgent requirement for the systems was
not proper because Chemetron cannot meet the contract's delivery
schedule.
The protest is denied.
The RFP required Halon 1301 firefighting systems consisting of Halon
storage and distribution equipment complying with Military Specification
MIL-E-24572, except where the RFP provided specifications for certain
components, and a fire alarm system complying with detailed
specifications contained in the RFP. The specifications for the fire
alarm system stated that the fire alarm must be Coast Guard and U.L.
approved for shipboard use and included as an example the Pyrotronics
System 3.
The RFP advised that contract award would be made on the basis of the
proposal determined to be most advantageous to the government based on
the following factors, listed in descending order of importance:
technical; program management; and price. The RFP further advised
that the technical factor would be more important than the other two
factors combined, and that those other factors might be equally
important. The technical subfactors included, in descending or equal
order of importance, the following: 1) documentation of being a
MIL-E-24572 equipment manufacturer or approved distributor; 2)
capability to design and furnish a Halon firefighting system complying
with MIL-E-24572 (i.e., proof of employment of an engineering and
technical staff capable of meeting this requirement); 3) experience in
"supply and installation" of MIL-E-24572 Halon systems or Coast
Guard-approved systems within the last 5 years; 4)capability of the
offeror's quality assurance program to assure the systems' conformance
with the specifications; 5) completeness of the offeror's plan for
furnishing the systems within the required timeframe; and 6)
completeness of the offeror's plan for meeting the require delivery
schedule.
Offerors were required to submit their proposals in three volumes
separately addressing each factor. For evaluation purposes, only the
technical volumes were to be numerically scored on a
subfactor-by-subfactor basis, after which the program management volume
would be presented to the technical staff for evaluation of
acceptability only.
The Coast Guard received three proposals. After evaluating and
numerically scoring the technical volumes, the Coast Guard considered
only the proposals of Wormald and Chemetron as being technically
acceptable, and requested best and final offers (BAFOs) from both firms.
The evaluation of the BAFOs resulted in Wormald's BAFO receiving almost
a 7-percent higher technical score than Chemetron's BAFO, while
Wormald's price of $670,517 was slightly more than 9-percent higher than
Chemetron's price of $614,477. The Coast Guard determined that both
offers were technically superior, meaning that they conformed to the
specifications in a manner that was likely to exceed the minimum
requirements and reduce performance risks, with Wormald having a slight
lead. The contract was awarded to Chemetron on the basis of its low
price.
Chemetron was awarded the contract on September 26, 1986. Wormald
filed its protest on October 3, 1986, within 10 days of contract award.
In accordance with the Competition in Contracting Act of 1984 (CICA), 31
U.S.C. Sec. 3553(d)(2)(A)(i) (Supp. III 1985) and FAR, 48 C.F.R. Sec.
33.104(c) (2)(i) (1986), the Coast Guard determined that it was in the
best interest of the United States to proceed with contract performance
based on a finding that a delay in delivery of the fire extinguishing
systems would adversely affect the deployment schedules and availability
of the patrol boats for critical drug interdiction mission requirements.
The determination states the vessels' fire extinguishing systems are
obsolete and could seriously jeopardize the crew and vessels, which on
many occasions must operate alone and have the capability to extinguish
fires without other assistance.
Wormald challenges the Coast Guard's evaluation of Chemetron's
proposal for basically three reasons. Wormald alleges that Chemetron
does not have an approved fire alarm, and only Wormald and Pyrotronics
have approved alarms. Wormald further alleges that Chemetron has not
supplied a MIL-E-24572 Halon system since being included on the Navy's
qualified products list in 1983. Lastly, Wormald maintains that
Chemetron has no experience installing such systems, as allegedly
required by technical subfactor No. 3 and related to the RFP's
requirement that the contractor provide installation instructions.
Wormald states that it, on the other hand, meets all of the above
solicitation requirements and should have been awarded the contract.
The Coast Guard states that the solicitation did not require offerors
themselves to have produced an approved fire alarm or to certify that
they have an approved alarm prior to award; rather, the requirement for
such an alarm was a performance specification. The Coast Guard notes
that Chemetron took no exception to the approved-alarm requirement and
has indicated its intention to provide the Pyrotronics system cited in
the specifications.
While the Coast Guard does not refute the protester's contention that
Chemetron has not furnished a MIL-E-24572 Halon system for marine
installation within the last 5 years, the Coast Guard contends that
Chemetron provided evidence of having furnished Coast Guard-approved
systems. The agency points out that such evidence was sufficient to
comply with the pertinent technical subfactor No. 3, which only required
evidence of having provided MIL-E-24572 Halon systems or Coast Guard
approved commercial marine systems for installation within the last 5
years.
With regard to Wormald's contention that Chemetron has no
installation experience, the Coast Guard states that the specifications
did not require the contractor to install the required systems, and the
Coast Guard apparently did not regard installation experience as an
evaluation subfactor. In this regard, we note that subfactor No. 3 is
unclear since it literally states " e xperience in supply and
installation of shipboard marine fire extinguishing systems including
documentation regarding MIL-E-24572 Halon Systems or Coast Guard
approved Commercial Marine Systems furnished for installation within the
last five years." (Emphasis added.) It is not clear whether the
subfactor involves only experience in supplying systems for
installation, or experience in supplying and installing systems.
The evaluation of proposals is primarily within the discretion of the
contracting agency, not our Office. Since the agency must bear the
burden of problems resulting from a defective evaluation, our review is
limited to an examination of whether the agency's evaluation was fair
and reasonable, and consistent with the stated evaluation criteria.
Sixth and Virginia Properties, B-220584, Jan. 14, 1986, 86-1 CPD P 37.
We have no basis to find the Coast Guard unreasonably evaluated
Chemetron's proposal as being technically acceptable, since the Coast
Guard has shown that Chemetron's proposal was creditable under each of
the technical subfactors, regardless of the interpretation afforded
subfactor No. 3. Consistent with Wormald's complaints about Chemetron's
experience, Chemetron's scores under subfactor No. 3 were lower than
Wormald's. The failure to increase the scoring differential based on
Chemetron's alleged lack of installation experience was consistent with
a reasonable interpretation of the subfactor, that is, it involved only
experience supplying systems for installation by other than the
contractor. Even if Wormald's interpretation also is reasonable,
Wormald did not protest the obviously unclear and ambiguous subfactor
before the closing date for receipt of proposals, or request
clarification of the subfactor. The protester therefore contributed to
the situation in which it finds itself, and cannot rely on its own
interpretation. See Datron Sys., Inc., B-220423 et al., Mar. 18, 1986,
86-1 CPD P 264.
We point out, however, that under the evaluation criteria, a finding
of technical acceptability was not sufficient to justify an award to
Chemetron based on its low price. The evaluation criteria listed in the
RFP expressly stated that the technical factor would have more than
twice the importance of price. A direct comparison of the technical
scores to price under the commonly-used price normalization method, see
Douglas County Aviation, Inc. et al., 84 Comp. Gen. 888 (1985), 85-2 CPD
P 345, would result in Wormald's total score slightly exceeding
Chemetron's.
We recognize that technical evaluators' point scores are merely aids
for selection officials who are not bound by the scoring or
recommendations of the evaluators. See Grey Advertising, Inc., 55 Comp.
Gen. 1111 (1976), 76-1 CPD P 325. The extent to which source selection
officials use the results of technical evaluations and make
technical/cost tradeoffs are governed only by the tests of rationality
and consistency with the evaluation criteria established by the RFP.
Mantech Servs. Corp., B-222462, Aug. 5, 1986, 86-2 CPD P 149.
Therefore, even if technical factors are weighted heavily, price may
become a determinative factor where the selection officials reasonably
determine that proposals are essentially equal in technical merit or the
cost advantage of a lower priced proposal significantly outweighs the
technical advantages of a technically superior proposal. See Id.
In this case, the Coast Guard's selection officials needed only to
conceptually rescore Wormald's slight technical advantage by reducing it
slightly more than two points, using the normalization method, for
Chemetron's overall score to exceed Wormald's. While it appears that
Wormald's proposal afforded a technical advantage in terms of its recent
experience in supplying Halon systems, we do not find that the Coast
Guard lacked a reasonable basis, consistent with the stated evaluation
criteria, to disregard this advantage in view of the $56,000 (8 percent)
savings afforded by Chemetron's proposal. The relative experience in
supplying Halon systems was the third of six technical subfactors, and
Chemetron scored virtually equally as well as Wormald under the first
two subfactors. Further, Chemetron was entitled to some credit under
subfactor No. 3 based on its having supplied Cost Guard-approved systems
within the last 5 years. The Coast Guard therefore reasonably exercised
its discretion awarding the contract to Chemetron.
Finally, Wormald questions the propriety of the Coast Guard's
determination to proceed with contract performance. We need not
consider this because the award to Chemetron was proper and thus Wormald
was not prejudiced by the determination.
The protest is denied.
Harry R. Van Cleve
General Counsel
Matter of: Interand Corp.--Reconsideration
File: B-224512.3; B-224512.4
Date: April 17, 1987
DIGEST
1. When a solicitation contains a brand name or equal purchase
description and a requirement for descriptive literature, a bid offering
an "equal" product and containing an unequivocal promise to comply with
solicitation requirements is not necessarily responsive; there must
also be available to the agency sufficient descriptive literature to
enable the agency to determine that the offered product possesses the
salient characteristics of the brand name item listed in the
solicitation.
2. Where a bidder simply provides the agency with a verbatim list of
the salient characteristics contained in the solicitation, a
solicitation requirement for descriptive literature has not been met.
3. There is no merit to the contention that a bid is nonresponsive
when it is accompanied by a statement offering to supply additional
equipment as options where the solicitation did not require the
additional equipment to be supplied.
DECISION
Interand Corporation requests reconsideration of our decision in
Interand Corp., B-224512.2, Dec. 31, 1986, 66 Comp. Gen. (1987), 87-1
CPD P , in which we denied Interand's protest of the rejection of its
low bid as nonresponsive under invitation for bids (IFB) No.
F05604-86-B0061, issued by Peterson Air Force Base, Colorado. Interand
also protests the proposed award of a contract under the solicitation to
Video Teknix, Inc. (VTI), the third lowest bidder. 1/ We affirm our
prior decision and deny the protest.
The solicitation was for various items of audio, video, and
freeze-frame teleconferencing equipment to be delivered under a 1-year
requirements contract, with two 1-year options. The equipment is needed
by the North American Air Defense Command (NORAD) to verify data
gathered at remote radar sites. The solicitation required unit prices
on various items of brand name equipment or on "equal" items, and
contained the Brand Name or Equal clause prescribed by the Department of
Defense Federal Acquisition Regulation Supplement, 48 C.F.R. Sec.
252.210-7000 (1985). The IFB incorporated by reference the Descriptive
Literature clause prescribed by the Federal Acquisition Reguiation
(FAR), 48 C.F.R. Sec. 52.214-21 (1985).
RECONSIDERATION
The Air Force rejected Interand's bid as nonresponsive because for
two items that Interand bid as "equal" products the descriptive
literature the firm submitted with its bid consisted of merely a
verbatim listing of the salient characteristics contained in the
solicitation, accompanied by a statement that the offered "equal"
products would meet or exceed the specifications of the brand name
items. Further, after reviewing additional material Interand submitted
after bid opening, the agency determined that both of Interand's "equal"
products would require modifications in order to meet solicitation
requirements. Interand's descriptive literature did not describe the
necessary modifications or otherwise indicate that modifications were
needed.
We denied Interand's protest of the agency's rejection of the bid on
the basis that Interand had not complied with the IFB's Brand Name or
Equal clause which required a bidder to describe in its bid any proposed
product modification and to mark clearly its descriptive literature to
show proposed modifications. In addition, we said that the mere listing
of the salient characteristics contained in the solicitation did not
satisfy the descriptive literature requirement since it did not permit
the agency to determine whether the offered products possessed those
characteristics.
In requesting reconsideration, Interand contends that our decision
ignored the fundamental rule governing procurements through sealed
bidding that a bid is responsive if it represents an unequivocal promise
to perform what is required by the solicitation. See, e.g., Spectrum
Communications, B-220805, Jan. 15, 1986, 86-1 CPD P 49. Instead,
Interand complains, we said that in a brand name or equal procurement a
bid offering an ailegediy equal product must contain sufficient
descriptive material to permit the contracting agency to assess whether
the offered product possesses the specified salient characteristics.
Interand complains further that we did not indicate what constitutes
sufficient descriptive material or explain why a verbatim listing of the
salient characteristics would not suffice. In this regard Interand
contends that our statement that it is not enough for a bidder merely to
parrot back listed salient characteristics is in direct conflict with
what Interand says are the controlling decisions on this point, Essex
Electro Engineers, Inc. v. U.S., 3 Cl. Ct. 277 (1983), and Hub Testing
Laboratories, B-199368, Sept. 18, 1980, 80-2 CPD P 204. According to
Interand, these decisions stand for the proposition that a bid that
restates solicitation requirements without taking exception to them is
responsive. Interand also argues, as it did in its initial protest,
that if modifications to its equipment are needed in order to comply
with solicitation requirements, how Interand plans to modify its
equipment is an issue involving the responsibility of the firm, rather
than the responsiveness of its bid. Thus, argues the protester, the
failure of its descriptive literature to describe modifications to its
equipment did not require rejection of the bid as nonresponsive.
Interand is correct in pointing out that a bid that contains an
unequivocal promise to do what the solicitation requires generally is
considered responsive. Where a solicitation contains a brand name or
equal purchase description and a requirement to provide descriptive
literature, however, it is not enough that a bid offering an "equal"
product contain such an unequivocal promise. Rather, as we said in our
prior decision and in numerous others, there also must be available to
the agency sufficient descriptive literature to enable the agency to
determine that the offered product possesses those characteristics of
the brand name item that the solicitation listed as being salient.
Amedco Health Care, Inc., B-215122, Dec. 3, 1984, 84-2 CPD P 599; The
Library Store, Ltd., B-213258, Feb. 9, 1984, 84-1 CPD P 162. Moreover,
the solicitation in this case specifically provided in the Brand Name or
Equal clause that the government wouid evaluate bids based on available
descriptive literature to determine product equivalence. If the
protester believed this procedure to be objectionable, it should have
raised this issue prior to bid opening as required under our Bid Protest
Regulations, 4 C.F.R. Sec. 21.2(a)(1) (1986).
We recognize that our prior decision did not describe the type of
descriptive literature that would have sufficed here.
The reason for this is that the determination regarding whether
specific descriptive literature is adequate is for the procuring agency
to make in the first instance, not this Office. See Calma Co.,
B-209260.2, June 28, 1983, 83-2 CPD P 31. Here, we agreed with the
agency that Interand's repeating the salient characteristics specified
in the IFB did not constitute adequate descriptive literature. We
concluded that a restating of the salient characteristics, though more
detailed, is no better than a blanket offer of compliance for purposes
of permitting an agency to determine for itself whether a particular
offered product possesses all required salient characteristics. We
continue to believe that with respect to the task of determining product
equivalence, a bidder provides no measureable degree of assistance to an
agency by supplying it with the same list of salient characteristics
that the agency included in the solicitation.
We find nothing in the decisions the protester refers to as
"controlling" that is inconsistent with our holding in this case.
First, Essex Electro Engineers, supra, did not involve a brand name or
equal purchase description. The solicitation in that case requested
descriptive literature "for information purposes only," not for purposes
of determining product equivalence. Thus, while the Claims Court in
Essex cited our decision in Hub Testing, B-199368, supra, for the
proposition that this Office considers as responsive bids that
"substantially restate the IFB requirements," Essex does not support
Interand's position that a bid under a brand name or equal solicitation
containing a requirement for descriptive literature is necessarily
responsive where the bid merely repeats the listed salient
characteristics verbatim.
Hub Testing also did not involve a brand name or equal solicitation,
and the decision is not otherwise supportive of Interand's position. In
that case, the IFB, which was for geotechnical analyses of sediment,
soil, and rock samples, specified the methods to be used for sample
preparation and analysis and also required that bids contain a
description of the methods that would be used. Hub Testing's bid
restated the sample preparation and analysis methods specified in the
IFB, but the agency rejected the bid as nonresponsive because, in its
view, such a description was not adequate to enable the agency to
determine that Hub Testing's performance of the contract would meet the
agency's needs. We sustained Hub Testing's protest of the rejection of
its bid on the basis that if the agency desired bids to contain more
exact information concerning contract performance, this desire was not
conveyed by the terms of the IFB and, in any event, how a firm intended
to perform the contract involved the responsibility of the firm, not the
responsiveness of its bid.
The result in Hub Testing was based on our decision in Lapteff
Associates, et al., B-196914 et al., Aug. 20, 1980, 80-2 CPD P 135, in
which we explained more fully the difference between a solicitation
request for literature showing how a bidder would perform a contract for
services and literature requested to demonstrate whether an offered
product possesses specified characteristics. We said that in the case
of a procurement using sealed bidding, literature on how a bidder would
perform (such as that requested in Hub Testing and Lapteff) may be used
to determine bidder responsibility, but not bid responsiveness. This is
in contrast to a procurement, such as that involved here, in which the
solicitation requires data concerning a bidder's product so that the
agency may determine whether thes offered product possesses required
characteristics. While Interand seeks to characterize as responsibility
the issue of whether its "equal" products, as modified, comply with
solicitation requirements, in our view whether a bidder has offered
items meeting solicitation requirements involves solely the
responsiveness of the bid.
PROTEST OF PROPOSED AWARD
The Air Force proposes to award a contract to VTI, the third lowest
bidder, because the agency has determined that the two lower bids were
nonresponsive. Interand protests the proposed award. We find no merit
to the protest.
For one of the contract line items the solicitation listed a Hitachi
FP-Z31 color camera as the brand name equipment and invited offers on
"equal" products. The IFB listed the salient characteristics of the
brand name item that an offered "equal" product would have to possess.
VTI bid on a Hitachi model FP-Z31E camera and included with its bid a
statement that although the IFB did not request that a lens be supplied
with the camera, a "lens is required for operation." VTI offered to
provide a lens as an option.
For another contract line item, the 4 X 1 red-green-blue video
switch, the solicitation did not specify a brand name product but merely
listed functional and performance requirements. VTI bid on a Dynair
model No. SVA 520A. The statement submitted with the bid noted that the
specifications did not require a video switch with a sync channel but,
since the firm believed that a sync channei would be needed, it offered
to supply one as an option.
The basis for Interand's protest of the proposed award to VTI is that
the statements described above rendered VTI's bid nonresponsive.
According to Interand, the statements indicate that the items offered by
VTI do not meet solicitation requirements.
Contrary to the protester's assertions, the list of salient
characteristics contained in the IFB for the brand name color camera did
not specify a lens as a required accessory. 2/ The Air Force reports
that although a lens will be necessary for the camera to operate, the
agency does not seek to acquire a camera with a lens at this time
because the type of lens needed will vary according to how the camera
ultimately will be used. Similariy, with respect to the 4 X 1 video
switch, the solicitation did not require the device to have a sync
channel. Thus, since the solicitatsion did not require these features,
there is no merit to the protester's assertion that the solicitation
contained requirements that VTI's bid indicated would not be met.
Although Interand believes that the Air Force accorded different
treatment here to similarly situated bidders, this is simply not the
case. The agency rejected Interand's bid because Interand failed to
comply with the solicitation's descriptive literature requirement.
Interand does not allege that VTI also did not comply with this
requirement. Rather, while Interand alleges that VTI's bid failed to
offer required features, the record shows that these features in fact
were not required at all.
Our prior decision is affirmed. The protest is denied.
Harry R. Van Cleve
General Counsel
FOOTNOTES
1/ The agency determined that the second lowest bid was
nonresponsive; we denied in part and dismissed in part a protest of
that determination in LVW Electronics, B-224512, Dec. 3, 1986, 86-2 CPD
P 635.
2/ The protester contends that the manufacturer's literature on the
model FP-Z31 brand name color camera (which Interand bid on) lists a
Canon J15 x9.5 lens as "standard" equipment. We reviewed the literature
the protester provided us, however, and found that the Canon lens merely
is listed on page 5 along with other accessories in a "standard
configuration." On page 6 of that literature the Canon J15 x9.5 lens is
listed as an "accessory" for system upgrading. In any event, whether
the brand name camera comes with a lens is irrelevant since bid
responsiveness in a brand name or equal procurement concerns only those
features of the brand name item that the solicitation identifies as
salient. The solicitation here did not list a lens as a salient
feature.
Matter of: American Seating Company
File: B-224487
Date: July 30, 1986
DIGEST
Contracting agency need not apply a Buy American Act evaluation
factor to an offer for a product manufactured in Germany, since that
country is designated under the Trade Agreements Act of 1979, and
agencies must solicit and evaluate offers for products manufactured in
such countries in the same manner as domestic products.
DECISION
American Seating Company protests the award of a contract to Source
International, Inc. for various quantities of desk chairs and rotary
drafting chairs. The General Services Administration (GSA), Federal
Supply Service, made the award under solicitation No.
FCNO-S7-1968-N-3-12-86, issued February 12, 1986.
American states that it offered a product manufactured in the United
States at a unit price of $193.06, while Source International offered a
German product at a price of $159. American contends that under the Buy
American Act, 41 U.S.C. Secs. 10a-10d (1982), and implementing
regulations, its product should have been accorded an evaluation
preference since it is domestic. American cites the Federal Acquisition
Regulation (FAR), 48 C.F.R. Secs. 25.303(b) and 52.225-3 (1985), in
arguing that the unit price of Source International should be increased
by 50 percent to $238. If this were done, American would be the low
offeror.
As GSA advised the firm in response to an agency-level protest, the
solicitation referenced the Trade Agreements Act of 1979, 19 U.S.C.
Secs. 2501-2582 (1982). This Act provides that offers for eligible
products from designated foreign countries must be solicited and
evaluated in the same manner as offers for domestic products. The
Federal Republic of Germany is a designated foreign country. See FAR,
48 C.F.R. Sec. 25.401. The solicitation also specifically indicated
that the provisions of the Buy American Act-Supplies clause do not apply
to contracts involving eligible products from designated countries when
the award price for the product is $156,000 or more.
GSA here has advised our Office that the amount of the protested
contract is $190,402. Therefore, the Buy American Act and the
implementing regulations are not applicable. Since the procurement was
subject to the Trade Agreements Act and the amount of the contract
exceeded $156,000, GSA properly did not apply an evaluation preference
to Source's unit price of $159. See Presto Lock, Inc., B-218766, Aug.
16, 1985, 85-2 CPD P 183.
We dismiss the protest.
Ronald Berger
Deputy Associate
General Counsel
Matter of: Marine Transport Lines, Inc.
File: B-224480.5
Date: July 27, 1987
DIGEST
Protest that a solicitation requirement that certain employees have
prior experience aboard a cable ship is unduly restrictive is denied
where the agency establishes that the requirement contributes to the
safe and effective operation of cable ships, and the protester does not
show otherwise.
DECISION
Marine Transport Lines, Inc. (MTL) protests the experience
requirements for cable ship crewmembers in request for proposals (RFP)
No. N00033-86-R-4006, issued by the Military Sealift Command (MSC),
Department of the Navy, for cablelaying operations. MTL contends that
the experience requirements are unduly restrictive of competition. We
deny the protest.
The RFP was issued as part of a cost comparison, in accord with
Office of Management and Budget Circular A-76, to determine whether
contracting for the work would be more cost-effective than continuing to
perform it in-house. Under a contract, the contractor would operate and
maintain up to five cable ships. RFP section C-1.5.1.2.4 provided that
certain key positions must be staffed by persons with experience aboard
cable ships, the amount of experience varying by position. For
instance, masters on at least three of the ships each must have a
minimum of 12 months experience aboard a cable ship as either masters or
cable officers. Only 30 days experience aboard cable ships, however, is
required of first assistant engineers. No prior cable ship experience
is required for electronics engineers or medical personnel.
The RFP initially required offerors to include in their proposals the
resumes of the persons offered under section C-1.5.1.2.4. The RFP also
required offerors to have such persons in their employ or, in the
alternative, to have firm written commitments from those persons.
MSC issued two amendments after this protest was filed: amendment
0010, deleting the above requirements and permitting both the selection
of employees after award and the submission of resumes 60 days before
the ship is turned over to the contractor; and amendment 0011,
authorizing the contracting officer to waive prior cable ship experience
"with respect to any individual after considering that individual's
experience in conjunction with the mission of the particular ship to
which he will be assigned."
Although the RFP amendments have essentially eliminated the
experience requirements from consideration during the award evaluation,
MTL believes the requirements nevertheless are unduly restrictive
because offerors still must be prepared to satisfy the requirements in
the event they receive the award.
When a protester challenges a solicitation requirement as unduly
restrictive of competition or as unreasonable, the procuring agency must
establish prima facie support for the requirement as essential to meet
the agency's minimum needs. See Ray Service Co., 64 Comp. Gen. 529
(1985), 85-1 C.P.D. P 582. We will uphold the requirement unless the
protester shows that the requirement in fact is unnecessary and
unreasonable. See Professional Helicopter Service, B-202841, et al.,
Mar. 17, 1982, 82-1 C.P.D. P 251.
MSC states that the challenged experience requirements are justified
here because laying and repairing cable demands knowledge and experience
not readily acquired from the performance of other seafaring tasks. MSC
claims that if key personnel do not possess the minimum cable ship
experience established in the RFP, then there is an enhanced risk of:
delays in cable laying that could jeopardize vital
intelligence-gathering operations; loss or damage to expensive cable
systems; and severe injury to the crew due to mishandling of high
voltage cables that are laid at high speeds and under extreme tensions.
MSC states further that cable ship experience, though not required in
the past, is relevant now because these ships have become more
sophisticated over the years, and direct MSC supervision will be limited
if a contract is awarded. MSC explains that it thus established the
experience requirements based upon a staffing study, and tailored the
amount of experience for each of the eight positions that require cable
ship experience to conform to the degree of responsibility inherent in
each position.
MTL raises several arguments in rebutting MSC's justification,
principally asserting that instead of applying a fixed experience
requirement that may or may not ensure capable seamen, MSC could
consider factors such as training, familiarization programs, and other
experience. MTL maintains that MSC essentially acknowledged that this
approach is desirable in adopting amendment 0011. MTL points out that
MSC never has imposed experience requirements in the past when operating
its own ships and claims it is unfair to impose this requirement on
offerors when, if MSC retains the function in-house, it will not be
subject to the same requirement.
We do not believe the experience requirements have been shown to be
unreasonable or unduly restrictive. Rather, the record adequately
establishes that MSC's cable ship operations are sufficiently
sophisticated and hazardous that a reasonable amount of cable ship
experience will help to ensure competent performance and to minimize
mishaps. It appears that MSC went to reasonable lengths both to limit
the crewmember positions needing cable ship experience (9) and to limit
the amount of experience required (12 months for master, who must be
expert at all cable ship operations, and no more than 12 months for any
other position). The reasonableness of MSC's approach also is evidenced
by information in the record that the experience levels were the result
of compromises within MSC.
While MTL does not agree that cable ship operation is significantly
more sophisticated or hazardous than operation of other ships, we think
the record shows MSC reasonably determined otherwise. An MSC chief
engineer states, for example, that whereas senior engineers on most
commercial ship operations are responsible only for maintenance and
operation of the propulsion and auxilliary systems, such engineers on
cable ships are also required to provide all crew training in the
operation and maintenance of all cable and deck machinery. The
engineers also are involved in the actual cable-laying operations, which
tasks, the chief engineer reports, are learned only through actual
experience. Given these responsibilities in the context of the laying
of expensive cable at high speeds to promote Navy intelligence
gathering, we believe the 30 day to 12 month experience requirements for
these positions are unobjectionable.
MSC does not provide similarly detailed information for all other
crewmember categories, but we believe the record as a whole so clearly
establishes that MSC's safety and technical concerns are reasonably
founded given the mission of cable ships, that the requirement that
other crewmembers have up to 1 year of cable ship experience simply does
not appear unreasonable. MTL may believe the consideration of other
crewmember qualifications will adequately ensure safe, effective cable
ship operation, but MSC is of the view, and we agree, that these
experience levels will at least minimize operational risks due to
inexperience on board an operating cable ship.
Our position here is consistent with our general view that, where a
solicitation requirement relates to human safety or national defense, an
agency has the discretion to set its minimum needs so as to achieve not
just reasonable results, but the highest possible reliability and
effectiveness. See American Airlines Training Corp., B-217421, Sept.
30, 1985, 85-2 C.P.D. P 365. Further, when a contractor will be
performing a critical or dangerous task, or will be operating in a
unique work setting, an agency may require that the contractor's
personnel possess prior experience in performing such tasks or operating
in the same type of work setting. Professional Helicopter Service,
B-202841, supra.
The fact that MSC may not previously have required crewmembers
operating its cable ships to have specified levels of cable ship
experience does not render unreasonable or improper the decision to add
the requirements for this procurement. Indeed, we tend to agree with
MSC that, given the fact that its cable ship operations may for the
first time be contracted out under this solicitation, and that MSC
supervision of the operations thus will be reduced, the experience
requirements now are more significant than previously.
MTL's suggestion that MSC unfairly will not be bound by the
experience requirements appears unfounded. MSC reports that, on
average, its crewmembers currently possess far in excess of the cable
ship experience called for under the solicitation. In any case, MSC
would not become subject to the requirements until sometime after the
contracting decision has been made; any argument concerning MSC
compliance at this time therefore is purely speculative.
Finally, MSC's adoption of amendment 0011, providing that cable ship
experience may be waived where the contracting officer deems it
warranted, in no way indicates, as MTL suggests, that the experience
requirements really are unnecessary. Rather, we view this amendment as
a reasonable attempt by MSC to eliminate the requirement to the extent
feasible without compromising a legitimate need for some degree of cable
ship experience. Moreover, assuming, as we must, that MSC will exercise
its discretion under this provision reasonably, the provision could well
operate to alleviate MTL's concern that the experience requirements are
too inflexible.
The protester has claimed reimbursement of its protest costs,
including attorney's fees. Under our Bid Protest Regulations, we will
declare a protester entitled to such fees only if we determine that a
solicitation does not comply with statute or regulation. 4 C.F.R. Sec.
21.6(d) (1) (1986). Because we find the solicitation requirement in
question to have a rational basis, the protester is not entitled to
recover its protest costs.
The protest is denied.
Harry R. Van Cleve
General Counsel
Matter of: The Orkand Corporation; Department of the
Navy--Reconsideration
File: B-224466.2; B-224466.3
Date: January 23, 1987
DIGEST
On reconsideration, General Accounting Office reverses prior decision
sustaining protest, on ground that agency's contracting scheme (two-step
sealed bidding with subsequent negotiation of task orders) renders
conventional rules of sealed bid procurement--applied in prior
decision--inadequate to protect the government from risk of
unsatisfactory performance at other than lowest cost, arising from
bidder's failure to price all labor categories in its bid as instructed
by solicitation.
DECISION
The Orkand Corporation and the Department of the Navy request
reconsideration of our decision in SMC Information Systems, B-224466,
Oct. 31, 1986, 86-2 C.P.D. P 505, in which we sustained SMC Information
Systems' (SMC) protest of the Navy's award of a contract to Orkand under
invitation for bids (IFB) No. N66032-85-B-0018. Orkand and the Navy
contend that our decision is legally erroneous on several grounds. We
reverse the decision.
The IFB is the second step of a two-step, sealed bid procurement of a
requirements-type contract for automatic data processing software
support services. The bidding under the IFB was in the form of fixed
hourly prices for several labor categories; the labor mix for each
individual task is subject to negotiation at the time the task arises.
The IFB required that prices be bid for each category and that each
price carry its proportionate share of wages, overhead, etc. The IFB
also contained several warnings concerning the structuring of bids, one
of which stated the Navy's intention to prevent bidding that could
result in contract costs significantly higher than evaluated costs.
SMC originally contended that the Navy improperly had rejected its
low bid for: (1) bidding "NSP" ("not separately priced") for two labor
categories (program manager and group manager); and (2) for bidding
prices that were unrealistically low. We sustained the protest, finding
SMC's bid acceptable despite the "NSP" bidding, because "NSP" equated
with zero dollars and evidenced SMC's intent to be bound to furnish the
required labor at no charge to the government. We further held that it
was improper to reject SMC's bid for unreasonably low prices because,
while SMC's bid appeared mathematically unbalanced, the record did not
establish that it also was materially unbalanced (i.e., would result in
other than the lowest cost to the government); and because there is no
prohibition against a responsible firm bidding below cost.
Consequently, we recommended that the Navy terminate its contract with
Orkand and make an award to SMC, if SMC were found responsible and an
award was otherwise appropriate. Orkand and the Navy have requested
that we reconsider this recommendation.
Basically, the Navy rejected the bid because of its belief that
acceptance of the bid would subject the government to unacceptable cost
and performance risks during performance. On reconsideration, we agree
and find the rejection properly within the contracting officer's
discretion.
In reaching our prior decision, we considered the protest in the
context of the conventional rules of a sealed bid procurement. On
reexamination, we find these conventional rules insufficient to protect
the government's interests--i.e., proper performance at the lowest
cost--under the somewhat unconventional contracting method employed
here. While, nominally, this was a two-step, sealed bid procurement for
a fixed-price contract, the prices are fixed at the time of award only
in the most technical sense. Whereas under a normal fixed-price
procurement the government knows at the time of award both the exact
nature of the work and its price, here only the hourly prices of the
labor categories were fixed at the conclusion of the bidding. It is
only after the contract award, when each requirement arises, that
specific technical approaches, labor mixes, and fixed total costs are
proposed and negotiated. Thus, merely making award to the low evaluated
bidder may not in all instances result in satisfactory performance at
the lowest cost, and the IFB instructions on the structuring of bids
reflected the Navy's concern in this regard.
The contract structure here created the possibility that if discrete,
proportionate prices were not established for each labor category at the
time of award, the contractor could have a cost incentive to offer to
perform using other than the optimal labor mix to assure recovery of its
costs. The Navy thus believed SMC would have a substantial incentive to
propose skewed labor mixes to recover costs of the two "NSP" management
categories (SMC priced two of the other eight categories at $20 (senior
systems analysts) and $17 (programmers), and the remaining six at $7, $6
or $5). Alternatively, the Navy feared that SMC might minimize the
number of program and group manager hours on each task, and that the
quality of performance would suffer as a result. The Navy also foresaw
that disagreements over labor mixes could result in many disputes under
the contract disputes procedure.
We discounted these Navy concerns in our original decision, citing
the fact that the unpriced management labor categories' contract
responsibilities seemed integral to all tasks that would arise, and the
fact that under this contract structure, any contractor--no matter how
it priced the labor categories--could propose labor mixes designed to
maximize its contract payment. On reflection, we find merit in the
Navy's concerns.
Although the program and group managers were assigned general
supervisory and administrative functions which seemingly would be part
of any contract task, the relevant consideration, we now recognize, is
whether these managers would be made available to perform their duties
fully where the contractor will not be reimbursed for their time. Also,
a contractor clearly would have a significantly greater incentive to
propose skewed labor mixes where only by doing so can the contractor
avoid supplying labor for which it will not be reimbursed. Finally, our
Office has expressed the view that it is desirable for an agency to
design requirements to reduce the likelihood of disagreements that would
have to be resolved under the contract's disputes clause. See Advanced
Technology Systems, Inc., 64 Comp. Gen. 344 (1985), 85-1 C.P.D. P 315.
The Navy attempted to do so here by instructing in the IFB that all
labor categories be priced.
We had occasion to restudy our position in this area in our recent
decision in Computer Data Systems, B-223921, Dec. 9, 1986, 86-2 C.P.D. P
, which concerned a failure to price all labor categories under a
similar Navy solicitation. There, we recognized the propriety of an
agency rejecting an offer on the ground that the offeror would have a
significant incentive to propose only those labor categories for which
it could recover its costs. We reasoned that the government should not
be compelled to accept an offer, albeit evaluated as low, that, because
of its pricing structure, posed significant risk that performance would
be deficient and that the actual cost of performance would not be the
lowest.
The same reasoning applies here. The Navy perceives a significant
risk that, because SMC did not price all labor categories as
specifically instructed by the IFB, SMC may not properly perform the
contract and the actual cost of performance may not be the lowest. We
believe it was proper for the Navy to consider this risk and to deny SMC
the award on this basis.
Accordingly, we reverse our prior decision. By separate letter of
today to the Secretary of the Navy we are withdrawing our recommendation
that the contract with Orkand be terminated for the convenience of the
government and that award be made to SMC.
Comptroller General
of the United States
Matter of: HCA Government Services, Inc.--Reconsideration and Claim
for Proposal Preparation Costs
File: B-224434.2; B-224434.3; B-224434.4
Date: April 24, 1987
DIGEST
1. Request for reconsideration is denied where awardee and agency do
not show errors in law or fact.
2. Claim for costs incurred in preparing a proposal is allowed where
the protester was unreasonably excluded from the competitive range and
the only recommended remedy is that options not be exercised.
DECISION
PHP Corporation and the Defense Supply Service (DSS) Washington,
Defense Logistics Agency, request reconsideration of our decision in HCA
Government Services, Inc., B-224434, Nov. 25, 1986, 86-2 C.P.D. P 611,
where we sustained a protest filed by HCA Government Services, Inc.,
against any award under request for proposals (RFP) No. MDA903-86-0055,
issued by DSS for setting up and operating two uniformed services
primary care (PRIMUS) centers in the Burke and Woodbridge/ Dale City
areas of Virginia. We held that DSS's exclusion of HCA's marginally
satisfactory technical proposal from the competitive range was improper
because DSS did not consider price in determining the competitive range.
We recommended that DSS not exercise any of the options of the contract
and resolicit for its subsequent years' needs. PHP and DSS argue that
we misinterpreted certain precedents cited in our decision, ignored
another key precedent and that our decision was therefore erroneous as a
matter of law.
HCA claims its proposal preparation costs. The costs of filing and
pursuing its protest, including attorney's fees were allowed in our
prior decision.
We affirm our prior decision and allow HCA its proposal preparation
costs.
HCA contends that DSS's request for reconsideration is untimely. DSS
states, however, that it received our decision on December 1, 1986.
Since our office received DSS's request for reconsideration on December
15, within 10 working days of DSS's receipt of our decision, DSS's
request for reconsideration is timely. 4 C.F.R. Sec. 21.12(b) (1986).
In its reconsideration request, PHP cites several decisions of our
Office to support its contention that HCA was properly excluded from the
competitive range. PHP claims that the mathematical score received by
an offeror in relation to the scores of other offerors is a better
measure of acceptability than adjectival ratings. PHP therefore urges
that although HCA's technical proposal was rated marginally
satisfactory, its technical numerical score of 71.5 in relation to PHP's
91.6 and the second ranked offeror's 77 gave the contracting officer
sufficient justification to exclude HCA from the competitive range. PHP
contends that we did not consider our decisions in 49 Comp. Gen. 309
(1969) and 52 Comp. Gen. 718 (1973), in which we upheld agency decisions
to exclude protesters from the competitive range, even though cost was
not considered in determining the competitive range. PHP states that
the technical scores of the highest and lowest scores within the
competitive range and the score of the protester in both 52 Comp. Gen.
718, supra, and the instant case are strikingly similar.
DSS contends that our decision's reliance on Simpson, Gumpertz and
Hager, Inc., B-202132, Dec. 15, 1981, 81-2 C.P.D. P 467, in which we
held that it is improper to exclude some offerors from the competitive
range without considering price because their acceptable proposals are
technically inferior is inapposite here. DSS contends that even if
price were considered HCA would still place third and would have been
excluded. DSS argues that GAO precedents in this area are unclear and
DSS reasonably relied on certain other decisions. In this regard, DSS
argues that our decision in Leo Kanner Associates, B-213520, Mar. 13,
1984, 84-1 C.P.D. P 299, upheld an offeror's exclusion from the
competitive range because of technical considerations alone and cost was
not articulated as a factor in the exclusion. DSS also argues that in
Lloyd E. Clayton & Associates, Inc., B-205195, June 17, 1982, 82-1
C.P.D. P 598, and Virgin Islands Business Association, Inc., B-186846,
Feb. 16, 1977, 77-1 C.P.D. P 114, although cost was considered, the
decision to eliminate an offeror from the competitive range was based on
technical considerations alone.
As stated in our prior decision, it is improper, in a negotiated
procurement, to exclude an offeror from the competitive range solely on
the basis of technical considerations unless the proposal is technically
unacceptable; exclusion from the competitive range is not justified
because a proposal is technically inferior though not unacceptable.
Simpson, Gumpertz and Heger, Inc., B-202132, supra. PHP and DSS argue
that it need only consider the relative technical scores before
eliminating a technically acceptable inferior proposal from the
competitive range. However, even where an offeror's technical score is
significantly less than another score, the agency cannot eliminate that
offeror from the competitive range unless that offeror's technical
proposal is unacceptable or the agency considers cost/price in making
its competitive range determination. See Federal Acquisition
Regulation, 48 C.F.R. Sec. 15.609(a)(1986); Simpson, Gumpertz & Heger,
Inc., B-202132, supra. Here, DSS admits that HCA's proposal is not
unacceptable and that it did not consider cost/price in making its
competitive range determination.
As in the present case, the procuring agency in Simpson, Gumpertz &
Heger, Inc., supra, argued that the protester was not prejudiced because
its acceptable, albeit inferior, proposal would not be in the
competitive range even if its low price had been considered. However,
we found in that case that the agency's argument failed to consider the
possible impact of discussions on improving the protester's acceptable
proposal. In the present case, we find at least some of the evaluated
deficiencies in HCA's technical proposal could have been remedied
through meaningful discussions, such that HCA may have become the
highest rated offeror, considering cost and technical factors. See
Aviation Contractor Employees, Inc., B-225964, Mar. 30, 1987, 87-1
C.P.D. P . Therefore, it was improper for DSS to have excluded HCA's
marginally satisfactory proposal without considering price.
PHP's reliance on 49 Comp. Gen. 309, supra, is misplaced. In that
case, 13 proposals were found to be acceptable in declining degrees.
The tenth technically ranked offeror protested its exclusion from the
competitive range. In that decision, we found that categorizing 13
proposals with adjectival ratings of declining degrees of acceptability
diluted the word acceptable to the point of meaninglessness and found
that the protester's so-called marginally acceptable proposal was
properly not within the competitive range. In the present case,
however, HCA's proposal was rated third technically of 11 offerors and
there is no evidence that its marginally satisfactory" technical
proposal is in reality an "unacceptable proposal," as was the
protester's proposal in 49 Comp. Gen. 309, supra.
PHP's and DSS's reliance on 52 Comp. Gen. 718, supra, in which we
held that an offeror was properly excluded from the competitive range
because of its low technical score is also misplaced. In that case,
cost/price was considered by the agency before the protester, the
eleventh ranked offeror, was eliminated from the competitive range,
which consisted of seven other offerors.
In our prior decision, we addressed DSS's and PHP's allegation that
several decisions of our Office recognize that a marginally acceptable
or generally adequate proposal may be excluded from the competitive
range if it does not have a reasonable chance of award. Leo Kanner
Associates, B-213520, supra; Lloyd E. Clayton & Associates, Inc.,
B-205195, supra, and Virgin Islands Business Association, Inc.,
B-186846, supra. Contrary to DSS's argument, in each of those
decisions, cost/price was considered as a factor prior to determining
the competitive range.
PHP and DSS also challenge our decision on the basis of our decisions
which hold that in procurements of items involving critical human
survival needs agencies may require the highest possible reliability,
effectiveness and safety performance characteristics. See Maremont
Corporation, 55 Comp. Gen. 1362 (1976), 76-2 C.P.D. P 181, and Fenwal,
Inc., B-202283, Dec. 15, 1981, 81-2 C.P.D. P 469. PHP and DSS contend
that since this procurement affects the health and lives of many
individuals, those individuals should not be required to accept medical
care which can be regarded as "marginally satisfactory."
However, as DSS acknowledges, the decisions cited are
distinguishable, since they concern the government's description of its
minimum needs in the specifications. Those decisions have no bearing on
how an agency evaluates proposals or determines the competitive range.
Our prior decision did not dispute the government's minimum needs; the
decision held that when the agency has determined an offeror to be
marginally satisfactory, price must also be considered in setting the
competitive range. As noted above, once in the competitive range and
following discussions, some of the evaluated deficiencies in the HCA's
proposal could be easily remedied.
Therefore, PHP and DSS have not shown any error in law or fact in our
previous decision.
PHP argues that even if the protest should be sustained the
recommended remedy is inappropriate. PHP suggests that if a remedy is
needed we should have the contracting officer redetermine the
competitive range by which price as well as technical factors are
considered. If the contracting officer determines that HCA should have
been included in the competitive range after consideration of price,
then the options can be recompeted as recommended. In this regard, PHP
states that it is unlikely HCA's score on price would raise its total
score to bring it within the competitive range.
PHP's disagreement with our recommended remedy does not demonstrate
an error of law or fact in our prior decision. With respect to PHP's
suggestion for relief in this case, to expect DSS at this point now to
reconstruct on a hypothetical basis the competitive range, even if price
is factored in, is too problematic to give an appropriate remedy. In
any case, as discussed above and in our prior decision, if meaningful
discussions had been conducted with HCA, it may have sufficiently
improved its proposal to be the highest rated offeror. Since HCA should
have been in the competitive range based upon the evaluation record
before our Office when we issued our prior decision, a redetermination
of the competitive range was unnecessary. The shortcoming of the
procurement was the failure to conduct discussions with HCA so that its
technical score may have been raised.
Finally, PHP states that the recommended remedy unreasonably
prejudices PHP. PHP states that all items of equipment costing more
than $5,000 are to be amortized, pursuant to amendment 0004 of the
solicitation, into the fixed prices charged per patient visits. PHP
chose to amortize such costs over the full contract period (base year
plus 4 option years). PHP states that the cost for those items for the
two facilities is approximately $250,000, and that much of this cost is
for installation, a cost which cannot be recovered if the equipment is
moved or sold. PHP states it assumed that the options would be
exercised and it now finds itself in a position of suffering
substantially on account of actions not of its own making.
DSS also argues that our remedy is unduly harsh because if a new
contractor is chosen, the location of the facilities would be changed
causing disruption to the patient population. DSS also alleges that
since the prices of the successful offeror are known, the recompetition
would have asoects of an auction.
In issuing our prior decision, we were cognizant that PHP was
required to amortize much of its equipment expenses on a per patient
basis under the contract and that there may be costs and disruptions
associated with termination of the contract or non-exercise of the
options. Other equipment costs have been reimbursed by the government.
Furthermore, whatever expectations PHP had about the exercise of the
contract option, PHP was clearly aware that exercise of an option is
solely within the discretion of the issuing agency--not the
contractor--and that there is a risk assumed by the contractor that
options will not be exercised.
Moreover, we doubt whether any significant or long term disruption
will occur, such as DSS alleges, if upon recompetition, another offeror
receives the contract to provide these services. A change of
contractors providing the government with the same services is not
uncommon and any disruption can be minimized through such planning as
normally occurs when the government changes contractors.
Because of our awareness of the potential costs and effects of
termination of the contract, we recommended that the options not be
exercised rather than termination. We found that the integrity of the
competitive bid system would not be served if we allowed the options on
this improperly awarded contract to be exercised to extend its term for
the full 5 years. See Honeywell Information Systems, Inc., 56 Comp.
Gen. 505 (1977), 77-1 C.P.D. P 256.
With regard to DSS's complaint that the recompetition would have
aspects of an auction, we note that the recompetition conducted over a
year after the initial solicitation will be for a different time period
with potentially different offerors. Consequently, any potential for an
auction-like atmosphere is mitigated.
Accordingly, after reconsideration, our prior decision is affirmed.
We allow HCA's claim for proposal preparation costs. A protester is
entitled to recovery of proposal preparation costs where as here he is
unreasonably excluded from the procurement for which it had a
substantial chance for award if discussions had been conducted, where
the only remedy recommended by our Office is that options not be
exercised. EHE National Health Services, 65 Comp. Gen. 1 (1985), 85-2
C.P.D. P 362; Hall-Kimbrell Environmental Services, Inc., B-224521,
Feb. 19, 1987, 87-1 C.P.D. P .
Comptroller General
of the United States
Matter of: W.B.&A., Inc.--Request for Reconsideration
File: B-224422.2
Date: July 31, 1986
DIGEST
Prior dismissal of protest challenging omission of wage determination
from a solicitation is affirmed since omission is due to decision by
Department of Labor (DOL), not the contracting agency, not to issue a
wage determination, and any challenge to the decision therefore should
be pursued through DOL's procedures, not a bid protest.
DECISION
W.B.&A., Inc. requests reconsideration of our dismissal of its
protest (B-224422, filed July 7, 1986) challenging the omission of a
wage determination from invitation for bids (IFB) No. F12617-86-B-0012
issued by the Air Force.
The record shows that the Air Force notified the protester that the
IFB would not contain a wage determination because the Department of
Labor (DOL) had advised the Air Force that there was no wage
determination in effect for the locality and class of employees
specified in the IFB. In its subsequent protest to our Office, the
protester objected to the omission of a wage determination from the IFB.
We dismissed the protest because it concerned DOL's decision not to
issue a wage determination rather than any action by the contracting
agency. Although the protester insists that a wage determination should
be required here, a decision not to issue a wage determination is vested
in DOL's discretion, see 51 Comp. Gen. 72, 76 (1971), and any challenge
to such a decision therefore should be pursued through DOL, rather than
through a bid protest to our Office. See Consolidated Marketing
Network, Inc., B-219387, Sept. 3, 1985, 85-2 CPD P 262.
The prior dismissal is affirmed.
Harry R. Van Cleve
General Counsel
FILE: B-224383 DATE: July 7, 1986
MATTER OF: Astrophysics Research Corporation
DIGEST:
1. Protest alleging that agency improperly rejected late offer is
dismissed as untimely when filed approximately 2 months after the
protester received notice of initial adverse action on a protest filed
first with the contracting agency.
2. Protester's assertion that it was unaware of timeliness rules does
not provide a basis for considering an untimely protest since the
protester is charged with constructive notice of Bid Protest Regulations
through their publication in the Federal Register.
3. Untimely protest will not be considered by invoking "significant
issue" exception to timeliness rules where the protest does not raise
issue of first impression which would have widespread interest to the
procurement community.
Astrophysics Research Corporation protests the rejection of its offer
under solicitation No. BO/FS-D-00637 issued by the General Services
Administration (GSA) for security X-ray screening equipment.
Astrophysics' offer was rejected by GSA because it was received after
the closing date for receipt of proposals.
We dismiss the protest.
GSA advised Astrophysics on March 19, 1986 that its offer had been
received late and would not be considered absent evidence of mailing by
certified or registered mail not later than the fifth calendar day
before the February 25 closing date for receipt of offers. In a letter
to GSA dated March 19, Astrophysics requested the agency to review and
reverse its decision. Astrophysics indicated that it had sent GSA
corrections to its offer and although the offer was received late, the
corrected pages were received by GSA prior to the closing date for
receipt of offers. Astrophysics argued that the corrected pages,
together with the cover letter submitted, were sufficient to be
considered an acceptable offer.
GSA reviewed the matter and on April 8, again advised Astrophysics
that its late offer would not be considered. GSA also indicated that
the corrected pages were not by themselves sufficient to constitute an
acceptable offer. Astrophysics' protest of this determination was not
filed with our Office until June 25.
Under our Bid Protest Regulations, 4 C.F.R. Sec. 21.2(a)(3) (1986),
a protest must be filed within 10 working days after notice of initial
adverse action on a protest initially filed with the contracting agency.
Astrophysics' March 19 letter clearly constituted a protest to GSA.
Astrophysics therefore was required to protest to this Office within 10
working days after receiving GSA's April 8 letter stating that the offer
would not be considered. Since Astrophysics did not protest to our
Office until June 25, its protest is untimely and will not be
considered. Systematics, Inc., B-220390.3, Mar. 6, 1986, 86-1 CPD P
222.
Astrophysics argues that GSA did not advise it of any time
limitations on its right to appeal GSA's decision to our Office, and
that its protest was filed in a timely manner after Astrophysics
obtained a copy of our regulations. Also, Astrophysics contends that
the protest raises a significant procurement issue because there are
certain critical government needs which may not be met if Astrophysics
is precluded from competing for this contract.
Astrophysics' allegation that it was not advised of our timeliness
rules does not excuse the untimeliness of the protest. Our regulations
are published in the Federal Register and, therefore, protesters are
charged with constructive notice of their contents. International
Shelter Sys., Inc.--Request for Reconsideration, B-221563.2, May 27,
1986, 86-1 CPD P 295. A protester's professed unawareness of these
published regulations is not a proper basis for waiving their
requirements. Agha Constr.-- Reconsideration, B-218741.3, June 10,
1985, 85-1 CPD P 662.
Bid protests are serious matters which require effective and
equitable procedural standards, both so that parties have a fair
opportunity to present their cases and so that protests can be resolved
in an expeditious manner. Cal. Shorthand Reporting--Request for
Reconsideration, B-221173.2, Feb. 18, 1986, 86-1 CPD P 170. Our
regulations are intended to provide for the expeditious consideration of
protests without unduly disrupting the government's procurement process.
To waive our timeliness requirements for the protester's sole benefit
would be inconsistent with their purpose. Hartridge Equip.
Corp.--Request f or Reconsideration, B-219982.2, Oct. 17, 1985, 85-2 CPD
P 418.
With respect to Astrophysics' assertion that its protest raises a
significant issue, we note that the significant issue exception to our
timeliness rules is used sparingly, and is limited to issues of
widespread importance to the procurement community that we have not
considered on the merits in our previous decisions. Griffin Galbraith,
B-218933, Sept. 19, 1985, 64 Comp. Gen. , 85-2 CPD P 307.
Astrophysic's protest does not fall within this exception. We have
issued numerous decisions in which we considered whether the procuring
agency acted properly in rejecting a late offer. See International
Assoc. of Fire Fighters, B-220757, Jan. 13, 1986, 86-1 CPD P 31; Acoman
Indus., Inc., B-221442, Jan. 7, 1986, 86-1 CPD P 13. Thus, while we
recognize the importance of the matter to the protester, we do not
consider the issue significant as that term is used in our regulations.
Astrophysics also has requested a conference to discuss the merits of
its protest. Where the merits of the protest are not for consideration,
we believe that no useful purpose would be served by holding a
conference. Logus Mfr. Corp., B-216775, Jan. 8, 1985, 85-1 CPD P 25.
The protest is dismissed.
Ronald Berger
Deputy Associate
General Counsel
Matter of: Astrophysics Research Corporation
File: B-224378
Date: July 25, 1986
DIGEST
Protest regarding an alleged solicitation impropriety apparent
on the face of the solicitation must be filed prior to the closing
date for receipt of initial proposals and will not be considered
by GAO when it was initially filed with the contracting agency
after the closing date.
DECISION
Astrophysics Research Corporation (ARC) protests the terms of request
for proposals (RFP) No. N00406-86-R-0280, issued by the Department of
the Navy's Naval Supply Center, Puget Sound, Bremerton, Washington, for
x-ray machines. We dismiss the protest as untimely.
ARC submitted an offer by the February 5, 1986, closing date for
receipt of initial proposals. However, in a cover letter to its
proposal, ARC noted that its machines used a three-phase power supply
rather than the single phase required by the RFP. On March 5, ARC
responded to a first round of best and final offers, stating that its
machine conformed to all salient characteristics of the solicitation
except that it required a three-phase power supply. By letter dated
April 30, 1986, the Navy notified ARC that its proposal to use a
Phasemaster Rotary Phase Converter to obtain three-phase power from a
single-phase power source was unacceptable and gave ARC one last
opportunity to meet the single-phase power requirement. On May 11, ARC
protested to the Navy about the Navy's rejection of its proposal to use
the converter and the Navy's statement that three-phase wiring was not
available. ARC protested the Navy's June 16, 1986, denial of its
protest to our Office on June 24, 1986. ARC requests that an outside
party quote an installation price for installing three-phase wiring and
that if the installation price plus ARC's price for the equipment is
less than the next competitive offer, it be awarded a contract.
Our Bid Protest Regulations state that where an initial protest of an
alleged solicitation impropriety has been filed with the contracting
agency, a protest to our Office, even if filed within 10 working days
after formal notification of initial adverse agency action, will be
considered only if the initial protest to the agency was filed prior to
the closing date for receipt of initial proposals. 4 C.F.R. Sec.
21.2(a)(3) (1986). ARC did not file its protest with the Navy about the
solicitation's requirement for a single-phase power supply until after
the closing date for receipt of initial proposals and, therefore, its
initial protest to the agency was untimely. Consequently, we will not
consider the protest, notwithstanding the fact that the agency may have
considered it, because our timeliness requirements provide objective
criteria which may not be waived by action taken by an agency. See BHT
Thinning, B-217105, Jan. 16, 1985, 85-1 C.P.D. P 44.
The protest is dismissed.
Robert M. Strong
Deputy Associate General Counsel
Matter of: Crown Laundry & Dry Cleaners, Inc.
File: B-224374.2
Date: January 20, 1987
DIGEST
1. Contracting agency's rejection of sole bid for schedule I of the
solicitation requirements on the basis of unreasonable price, resulting
in cancellation of that portion of the solicitation, was proper where
the bid price was significantly higher than the most recent contract
price and a price range developed through a market survey and the record
does not disclose fraud or bad faith on the part of the contracting
agency in reaching this determination.
2. Protest of agency's alleged failure to include reasonable
estimated workload for laundry services concerns an alleged impropriety
that was apparent on the face of the solicitation but the protest was
not filed before bid opening and is therefore untimely.
DECISION
Crown Laundry & Dry Cleaners, Inc. (Crown), protests the rejection
of its all or none bid and the partial award of a contract to Wade Linen
Service, Inc. (Wade), under invitation for bids (IFB) No.
DABT10-86-B-0070 issued by the Department of the Army (Army) for laundry
and dry cleaning services at Fort Benning, Georgia. Crown, the
incumbent contractor, objects to the agency's determination that its bid
price was unreasonable and challenges the partial award to Wade on the
basis that Crown was the low aggregate bidder and should have received
the entire award. Finally, Crown also protests the Army's decision to
cancel and readvertise the requirements in schedule I of the IFB.
The protest is denied in part and dismissed in part.
The solicitation, issued as a total small business set-aside,
contained two bid schedules: schedule I for all laundry and dry
cleaning services at the Fort Benning installation excluding services
for Martin Army Community Hospital, and schedule II for laundry services
at Martin Army Community Hospital. Estimated quantities, generally
expressed in number of pieces or pounds (dry weight), were provided for
each month in the base contract period and 2 option years. The IFB
allowed firms to bid on each schedule and provided for separate awards
to the responsive, responsible bidder "whose aggregate evaluated price
is low for each schedule."
On August 26, bids were received from two firms, as follows:
Bidder Base Year Option Year 1 Option Year 2
Schedule I Aggregate Amount Aggregate Amount Aggregate Amount
Crown
Laundry $2,127,303.50 $2,127,303.50 $2,127,303.50
Wade Linen No bid No bid No bid
Schedule II
Crown
Laundry $249,826.50 $249,826.50 $249,826.50
Wade Linen $194,670.00 $194,670.00 $194,670.00
The contracting officer determined that with respect to the bids
received for schedule II, Wade was the low, responsive bidder and award
was made for those services to that firm. With regard to schedule I,
the protester submitted the only bid in the total amount of
$2,127,303.50. The contracting officer, in comparing the bid to the
current contract for the same services as well as other contract prices
for similar services obtained through a market survey, determined that
the bid was unreasonably priced. The contracting officer therefore
concluded that the Army should reject Crown's bid and cancel the IFB on
that basis. Crown was so informed by letter dated September 5 and was
further notified of the agency's intent to resolicit the services on an
unrestricted basis. This protest followed.
Crown contends that the Army's rejection of its bid was improper
because contrary to the contracting officer's determination, its bid
price was not excessive but simply reflected the reasonable cost for
performing these services at Fort Benning. Since its bid price was
reasonable, Crown argues, it was improper for the Army to cancel
schedule I of the IFB and issue a new solicitation. Crown further
contends that the Army rejected its bid and made an award for the
services under schedule II to Wade despite the fact that Crown submitted
the "low aggregate bid." Finally, Crown objects to the Army's refusal to
reveal to it the market survey and the elements used to develop the
market survey which was used by the contracting officer as a comparative
tool.
As a preliminary matter, the Army reports that because it intends to
resolicit the requirement and to utilize the results of the market
survey for this procurement, it did not release to the protester the
market survey and backup data. The market survey and related analysis
have been furnished to our Office for consideration in camera.
The agency reports that by its terms, the IFB provided for an award
to the bidder whose total evaluated price is "low for each schedule";
therefore, multiple awards were not prohibited by the IFB. Similarly,
the IFB did not prohibit all or none bids. The agency points out that
Crown elected to submit an all or none bid which as to schedule I was
the only bid and as to schedule II was not the lowest abstracted bid.
Thus, in its view, Crown was not the low aggregate bidder on either
schedule and, based upon the contracting officer's findings, Crown's all
or none bid for both schedules was rejected and Wade's low bid on
schedule II was accepted.
The Army states that because there were no other competitive bids for
schedule I with which to compare Crown's price, the contracting officer
compared Crown's bid of $.595 per piece with the current contract price
of $.268 per piece and found the 122 percent increase "unquestionably
not acceptable." The contracting officer then conducted a comprehensive
market survey analysis to determine a reasonable price which took into
account the fact that a portion of the contract services, i.e., the
cleaning and pressing of Battle Dress Uniforms (BDUs) was unique to Fort
Benning in that the pressing of BDUs, was not priced in a similar manner
at any other Army installation. The contracting officer obtained recent
contract prices from four other Army installations with similar services
and volume, recognizing the differences for providing the services in
government-owned, contractoroperated (GOCO) facilities or in a
contractor-owned, contractor-operated (COCO) facility. He also obtained
input from government experts and "disinterested contractors" to assign
a cost for pressing BDUs. Thereafter, the contracting officer
established a price range per piece which, in his view, represented a
reasonable price to provide these services in a COCO facility. In
comparing Crown's bid to this price range, the contracting officer
determined that Crown's bid substantially exceeded the results of the
market survey and therefore concluded that the bid should be rejected
and that portion of the solicitation canceled and resolicited.
Crown recognizes that a solicitation may be canceled after bid
opening where "only one bid is received and the contracting officer
cannot determine the reasonableness of the bid price." See Federal
Acquisition Regulation (FAR), 48 C.F.R. Sec. 14.404-1(c)(6) (1985).
Crown also recognizes that contracting officers enjoy a wide range of
discretion in applying this regulation and that our Office will not
disturb a determination of price unreasonableness unless it is
unsupported or there is a showing of bad faith or fraud on the part of
government officials. See California Scaffold Corp., B-220082.2, Dec.
31, 1985, 85-2 C.P.D. P 729 at 3.
Nevertheless, the protester disputes the agency's finding that its
bid price was unreasonable. Crown maintains that the "price comparison
methods" used by the contracting officer are inappropriate under the
circumstances herein. First, Crown alleges that the difference between
its bid and the current contract is attributable in part to Crown's
"bidding too low on the prior contract" which resulted in "substantial
losses." The protester states that these losses were due in part to:
"erroneous government estimates of work to be performed
(government estimates exceeded actual work by more than 29%) which
resulted in reductions to the contractor under the adjustment
clause of the contract."
Thus, the protester asserts that the costs it actually incurred in
performing these services at Fort Benning "are a reliable indication of
the reasonable costs of performing the services." Consequently, Crown
continues to assert that its bid price under the present solicitation
was reasonable. The Army responds that Crown's documented losses under
the contract were due in part to deductions for damaged and lost
articles in excess of $420,000. The Army further contends that Crown's
allegation that the government overstated its needs by approximately 29
percent is without merit since the estimates were based on the best
information available to the government at that time.
To the extent that the protester is challenging the reasonableness of
the government's estimated quantities for schedule I of this
solicitation this argument is essentially that the IFB was defective
because the IFB overstated the government's actual needs--an alleged
solicitation deficiency which, under our Bid Protest Regulations, should
have been raised before bid opening. 4 C.F.R. Sec. 21.2(a) (1) (1986).
Consequently, this issue is untimely and will not be considered.
Next, Crown argues that the market survey, (which was provided to the
protester without disclosing the pricing pattern) contains "inherently
unreliable data" and the contracting officer's reliance on the results
of that market survey renders his determination, that Crown's bid was
unreasonably priced, unreasonable. According to the protester, there
are significant and unique differences between the laundry services at
Fort Benning and any other Army installations which were a part of the
survey.
For example, Crown argues that the amount of "press work" at the Fort
Benning installation is greater than at any other installation. Related
to this argument is the protester's assertion that "it is unlikely that
any contracts considered in the market survey" include "the expensive
pressing of BDU's which is a significant portion of the press work
performed at Fort Benning," as well as the cleaning of large volumes of
sleeping bags. Additionally, Crown questions whether the contracting
officer made any allowances for the difference in cost of performing
these laundry services at a GOCO versus a COCO facility. The protester
notes that its bid under this IFB was based upon a COCO award.
We have stated that a determination concerning price reasonableness
is a matter of administrative discretion involving the exercise of
business judgment, which our Office will not question unless the
determination is unreasonable or there is a showing of bad faith or
fraud. See The W.H. Smith Hardware Co., B-221792, May 9, 1986, 86-1
C.P.D. P 446 at 3. In this regard, a determination concerning price
reasonableness may be based upon a comparison with such factors as
government estimates, past procurement history, current market
conditions, or any other relevant factors, including any which have been
revealed by the bidding. Id.; see also Sylvan Service Corp., B-222482,
July 22, 1986, 86-2 C.P.D. P 89 at 2-3. In reviewing a contracting
officer's exercise of his broad discretion in this area, we have noted
the inexact nature of government estimates. Western Roofing Service,
B-219324, Aug. 30, 1985, 85-2 C.P.D. P 255 at 2.
The agency report indicates that the unreasonableness of Crown's
price was first determined by using as a base the prior procurement
history for these services at this particular Army installation, i.e.,
the contract price for the most recent contract, which was a COCO-based
award to Crown. As we noted previously, this method of comparison
revealed that Crown's bid price was 122 percent higher.
We do not find persuasive Crown's arguments that the then current
contract should not be used for comparison purposes because the contract
price was too low. We have consistently regarded prior procurement
history to be a valid and proper method to determine if bid prices
received for a similar procurement are reasonable. See Asbestos
Abatement of America, Inc., B-221891 et al., May 7, 1986, 86-1 C.P.D. P
441 at 4. Moreover, the fact that there were no other bids with which
to compare Crown's sole bid for schedule I provides further support for
the price comparison methods used by the contracting officer.
We have examined all data submitted by the Army, including those
provided for in camera review and, on the basis of that review, we see
no reason to question the method used by the contracting officer in
conducting the market survey nor the attendant price analysis. There is
evidence in the record that the contracting officer considered all
relevant factors, such as the differences between a GOCO- and a
COCO-based award and the pressing of BDUs, during the survey.
Although we cannot reveal the exact amount by which Crown's bid
exceeded the government estimate, it was substantial, and since the
protester has neither alleged nor shown fraud or bad faith, we conclude
that the contracting officer's decision to reject Crown's bid and
resolicit was reasonable under the present circumstances. Since we find
the cancellation and resolicitation to be proper, we need not consider
the protester's argument that the resolicitation would be tantamount to
sanctioning a prohibited auction.
Accordingly, the protest is denied in part and dismissed in part.
Harry R. Van Cleve
General Counsel
Matter of: Sony Corporation of America
File: B-224373.3
Date: April 16, 1987
DIGEST
General Accounting Office (GAO) will dismiss protest where issues
raised are before a court of competent jurisdiction; the protester has
not asked that the court seek GAO's opinion; and the court has not
expressed interest in a GAO decision.
DECISION
Sony Corporation of America protests the award of a contract to the
Canadian Commercial Corporation (CCC) and its subcontractor, Matrox
Electronic Systems Limited, under request for proposals No.
DAAB07-86-R-B048, issued by the Army for electronic information delivery
systems (EIDS), computer-based audiovisual equipment to be used as
training devices for soldiers. We dismiss the protest.
Sony contends that the award was improper because the Army failed to
receive timely endorsements of the Matrox proposal from CCC as required
under the Department of Defense Federal Acquisition Regulation
Supplement, 48 C.F.R. Sec. 225.7104 (1985). On March 26, 1987, while
the protest was pending, Sony filed suit in the U.S. District Court for
the District of New Jersey challenging the procurement on the same
grounds on which the protest to our Office was based. 1/ Since the
issues raised in the protest are now before a court of competent
jurisdiction; Sony has not asked that the court seek our opinion on the
issues; and the court has not expressed interest in our decision, the
protest is dismissed. Bid Protest Regulations, 4 C.F.R. Sec. 21.9(a)
(1986); C&M Glass Co., B-218227, Apr. 15, 1985, 85-1 CPD P 430.
Ronald Berger
Deputy Associate
General Counsel
FOOTNOTE
1/The lawsuit also raises other issues which had been raised and
considered on the merits in an earlier protest to our Office. We denied
that protest. Sony Corp. of America, B-224373.2, Mar. 10, 1987, 87-1
CPD P .
Matter of: Sony Corporation of America
File: B-224373.2
Date: March 10, 1987
DIGEST
1. Under request for proposals (RFP) for computer-based audiovisual
training equipment, protester fails to show that provision calling for
commercially available, off-the-shelf "equipment" has more than one
reasonable interpretation and therefore is ambiguous, since only
reasonable interpretation of the broad term "equipment" is that it
includes any product which functions as required in the RFP; the
protester's interpretation of the term as restricted to existing
"systems," and excluding products consisting of "components" brought
together to meet RFP requirements, is not reasonable.
2. Protester's contention that it was misled into assuming a
restrictive interpretation of request for proposals (RFP) provision
calling for commercially available, off-the-shelf "equipment," and
therefore offered a higher priced product, is without merit where RFP
provision on its face does not support protester's interpretation and
there is no evidence in the record that the contracting agency led the
protester to believe the restrictive interpretation applied.
3. There is no basis to object to award to lowest priced, technically
acceptable offeror as provided in request for proposals where there is
no support in the record for protester's contention that contracting
agency gave awardee more favorable treatment than protester in the
course of the procurement.
4. Protester's contention that contract modification proposed by
awardee is outside the scope of the contract is premature where
contracting agency has not yet decided whether proposed change will be
made.
DECISION
Sony Corporation of America protests the award of a contract to the
Canadian Commercial Corporation (CCC) and its subcontractor, Matrox
Electronic Systems Limited, under request for proposals (RFP) No.
DAAB07-86-R-B048, issued by the Army for electronic information delivery
systems (EIDS), computerbased audiovisual equipment to be used as
training devices for soldiers. Sony's principal contentions are that
the RFP requires offerors to propose a commercially available,
off-the-shelf "system," a requirement which the Matrox product does not
satisfy, and that Sony and Matrox were not treated equally in
negotiations under the RFP. We deny the protest.
The RFP, issued on January 15, 1986, called for a fixed-price
contract for 1985 EIDS, with options for an additional 47,900 units, to
be awarded to the lowest priced, technically acceptable offeror. A
preproposal conference was held on February 21. Initial proposals were
received from three offerors by the May 2 due date; only two were
included in the competitive range, Sony and Matrox, a Canadian firm
participating in the procurement as a subcontractor to the CCC, pursuant
to Department of Defense (DOD) Federal Acquisition Regulation (FAR)
Supplement, 48 C.F.R. part 225.71 (1985). 1/ Discussions then were held
with both Sony and Matrox, followed by submission of best and final
offers on August 14.
The Army found the best and final offers technically acceptable
except for restrictive language in both regarding data rights. In order
to clarify the data rights requirements, the Army conducted another
round of discussions with Sony and Matrox limited to that issue. Both
offerors then submitted second best and final offers on September 25,
with changes only to the data rights provisions. On November 4, the
Army made award to Matrox as the lowest priced, technically acceptable
offeror.
Requirement for commercially available,
off-the-shelf equipment
Section L. 10 of the RFP provides:
"OFFERS FOR COMMERCIALLY AVAILABLE,
OFF-THE-SHELF EQUIPMENT ARE REQUIRED.
The Government may accept specially
engineered changes to offered
equipment,
if such changes enable the offered equipment to meet the
specified requirements of this solicitation. Equipment which must
be developed to meet the requirement will be considered
unacceptable."
Sony argues that the use of the term "equipment" in this provision
indicates that offerors were required to propose a complete commercially
available, off-the-shelf "system," not just component parts individually
meeting the commercial availability, off-the-shelf requirement. Sony
states that while it offered such a "system," Matrox did not, and its
proposal thus did not satisfy section L.10. 2/ Sony concludes that in
fact it is the only offeror eligible for award. Further, even assuming
that it reasonably can be interpreted to call for either a "system" or
components, Sony argues, section L.10 is ambiguous and a recompetition
is required since Sony's proposal was based on the more restrictive
interpretation, which significantly increased its price.
Sony also states that although its interpretation of section L.10 was
made clear to the Army throughout the competition, the Army did not
advise Sony that its interpretation was erroneous, and prevented Sony
from making substitutions in its product which would have allowed Sony
to lower its price.
We find Sony's arguments to be without merit. As a preliminary
matter, we do not agree with Sony's contention that section L.10 on its
face limits offers to commercially available, off-the-shelf "systems."
Sony relies on the Army's use of the term "equipment" in section L.10 as
support for its restrictive interpretation. In our view, "equipment" is
a broad term which refers to the components comprising the EIDS, whether
or not already produced and marketed as a "system." While an existing
EIDS system such as Sony's would satisfy section L.10, we see no basis
to interpret section L.10, as Sony suggests, as restricting offerors to
proposing such a "system," rather than commercially available,
offthe-shelf components integrated to function as an EIDS.
Further, for section L.10 to be ambiguous, as Sony contends, there
must be more than one reasonable interpretation of the provision; since
we do not find Sony's restrictive interpretation of the provision to be
reasonable, we see no basis on which to conclude that the provision is
ambiguous. Wild Heerbrugg Instruments, Inc., B-210092, Sept. 2, 1983,
83-2 CPD P 295.
Sony also argues that it was led by the Army to believe that only a
commercially available, off-the-shelf "system" would be acceptable under
section L.10. As support for this position, Sony relies on a view graph
presentation and a series of questions and answers from the preproposal
conference which, according to Sony, indicate that the potential
offerors and the Army understood the RFP to require such a "system."
We see no basis for Sony's interpretation of the proceedings at the
preproposal conference. In our view, the Army's presentation and the
questions and answers at most reflect the Army's desire for an
integrated product to avoid the problems associated with acquiring
components separately; there is no indication that a product composed
of integrated commercially available, off-the-shelf components, rather
than an existing "system" such as Sony's, was unacceptable. For
example, of the ten questions (out of a total of 281) raised at the
preproposal conference on which Sony relies, Sony characterizes question
and answer no. 129 as "most important"; they read as follows:
"Q. When vendors propose commercial, off the shelf products,
and the vendor can provide a lower price by bidding a system or a
partial system made up by commercial, off the shelf products, why
won't the Army permit a systems bid for commercial off the shelf
equipment, if this provides the lowest overall cost to the Army?
"A. We are buying a system. The solicitation may have SLIN's
in it but they are only SLIN's because this is the way the Army
does business. We have to feed our computers, we have to feed our
people who are buying the new supplies. The prices have to be
broken down. I don't see where by us SLINning it in the
solicitation, you are saying that we are not buying a system. I
don't know why a unit price of a system for $1,000 for five
components, why shouldn't the five components cost $200 piece or
some ratio thereof. There is a system cost to the contractor and
he is just rolling it over and breaking it down into sub line
items, parts of a system. I don't see the difference why it
should cost us any more. But of course it is a competitive
procurement, and if you do charge us more, you've got to compete
with someone who is charging us less. You are saying the whole is
greater than the sum of its parts. I don't understand it
mathematically, because this is how we have broken down things in
the past in a solicitation. We are buying this system but if we
happen to put 20 SLIN's down for that system, we are still buying
the system." (Emphasis added.)
Sony states that the question reflects the potential offeror's desire
to propose a product made up of components, and the Army's answer
confirms that only an existing system would be acceptable. We disagree.
Reading the question and answer together, we believe they relate to the
requirement in the RFP for separate prices for each component of the
EIDS, instead of a lump sum, or "systems bid," as the question phrases
it.
Sony also contends that the cover letter submitted with its initial
proposal advised the Army that Sony believed the RFP required a
commercially available, off-the-shelf "system." 3/ In our view, the
letter indicates only that the system Sony proposed consisted of
integrated components that in its judgment would best meet the Army's
needs.
Finally, Sony states that during discussions the Army denied Sony's
request to substitute lower priced components in the system it offered.
Sony does not indicate where its request is recorded in the transcript
of discussions; instead, Sony submitted an affidavit from a Sony
representative stating generally that such a request was made. Even
assuming the request was made, there is no indication of the reason for
the Army's refusal except for Sony's speculation that it was based on
the Army's requirement for an existing "system." Similarly, Sony
contends that the Army's refusal to accept an engineering change
proposal clause offered by Sony demonstrates the Army's refusal to allow
substitutions in Sony's "system." In fact, the transcript of discussions
shows that the Army objected to the blanket nature of the proposed
clause, which would have allowed the EIDS contractor to make engineering
changes without the Army's prior approval as long as the product
continued to meet the Army's specifications. There is no indication
that the Army objected to Sony's proposed clause because of its
purported requirement for a "system."
In our view, Sony has failed to show either that section L.10 was
ambiguous or that it was misled by the Army into assuming that only a
commercially available, off-the-shelf "system" was acceptable.
Acccordingly, even assuming the Matrox product consisted of commercially
available off-the-shelf components rather than a "system," Sony was not
prejudiced by the Army's acceptance of the Matrox proposal, since Sony's
assumption that such a "system" was required, which Sony states caused
it to submit a higher priced proposal, was not due to any defect in the
RFP or any misdirections by the Army in the course of the procurement.
Unequal treatment
Sony raises several areas in which it claims the Army gave Matrox
favorable treatment which allowed it to offer a lower price than Sony.
We do not agree.
(1) Color graphics and microcomputer bus
The RFP called for the EIDS to provide color graphics capability and
a standard microcomputer bus. Sony states that it offered a color
graphics adaptor and microcomputer bus which are IBM-compatible; Matrox
did not offer IBMcompatible features. Sony contends that the Army
should have notified it that IBM-compatibility, a feature which Sony
says increased its price, was not required. We disagree.
Sony does not dispute that the Army's general requirements for color
graphics and a microcomputer bus were clearly set out in the RFP.
Further, Sony could not reasonably assume, and in fact does not contend,
that the RFP specified IBMcompatible features; Sony simply chose to
offer the higherpriced IBM-compatible features to meet the Army's
general needs. Since there is no indication that the IBM-compatible
features so exceeded the Army's needs as to constitute a deficiency in
Sony's proposal, we see no basis for concluding that the Army should
have raised the issue with Sony during discussions. Compare Price
Waterhouse, 65 Comp. Gen. 205 (1986), 86-1 CPD P 54, aff'd on
reconsideration, B-220049.2, Apr. 7, 1986, 86-1 CPD P 333 (offerors'
unreasonably high proposed levels of efforts constituted deficiency
which should have been raised by agency in discussions).
Sony also contends that the Army plans to modify the contract to
require an IBM-compatible bus and color graphics capability and that
such a modification would constitute a significant change in the scope
of the contract requiring a recompetition. The Army states that it
currently is considering informally a value engineering change proposal
from Matrox regarding the substitution in the Matrox product of
IBM-compatible components, in accordance with section H.122 of the
contract, entitled "Current Technology Substitutions/ Additions."
According to the Army, formal submission and consideration of the
proposed change will not take place until the suspension of performance
under the contract imposed as a result of Sony's protest is lifted.
Since the Army has not yet decided whether to accept the change proposed
by Matrox, Sony's challenge to such a change is premature and will not
be considered. See D.D.S. Pac, B-216286, Apr. 12, 1985, 85-1 CPD P 418.
(2) Contract data requirements lists
The RFP calls for offerors to furnish certain technical data, called
contract data requirements lists (CDRLs). According to Sony, CDRLs had
to be provided for items produced by the offeror as well as for
peripheral items obtained from thirdparty suppliers, and Sony increased
its price to reflect the cost of the third-party CDRLs. Sony states
further that it was told by a third-party supplier who provided a
quotation to Matrox for peripheral items, that it did not include CDRLs
in the price it quoted to Matrox. Sony concludes that the cost of the
CDRLs therefore was not included in the Matrox price proposal and, as a
result, Matrox received "preferential treatment" by the Army. We find
this argument to be without merit. Whether the Matrox third-party
supplier included the cost of the CDRLs in the price it quoted to Matrox
does not establish whether the Matrox price proposal included such
costs; in fact, Matrox disputes Sony's contention and states that its
best and final offer did take into account the requirement for CDRLs.
In any event, there is no indication, and Sony does not contend, that
the Matrox proposal took exception to the CDRL requirement.
(3) Technical leveling
Sony speculates that the Army decided to reopen discussions because
the first best and final offer submitted by Matrox was found technically
unacceptable. Sony concludes that since Matrox ultimately was found
technically acceptable, the Army must have made improper suggestions to
Matrox during the second round of discussions to improve its proposal,
which constituted technical leveling. See Federal Acquisition
Regulation, 48 C.F.R. Sec. 15.610(d) (1) (1986) (technical leveling
means helping an offeror bring its proposal up to the level of other
proposals through successive rounds of discussions, such as by pointing
out weaknesses resulting from the offeror's lack of diligence,
competence, or inventiveness in preparing the proposal).
There is no support in the record for Sony's contentions. The record
shows that both Sony and Matrox were found technically acceptable based
on their first best and final offers. The Army reopened discussions
only because of restrictive language regarding data rights in both
proposals, and the revisions in second best and final offers were
limited to that issue.
(4) Progress payment rate
Sony contends that the Matrox initial proposal and first best and
final offer were based on a 90 percent progress payment rate, which also
was incorporated into the contract with Matrox, even though the correct
payment rate is 80 percent. Both Matrox and the Army agree that 80
percent is the correct rate and state that the contract will be amended
to so provide. Sony argues, however, that since Matrox based its price
on the more favorable 90 percent rate, it was able to offer a lower
price than Sony, which used the correct 80 percent rate.
Matrox disputes Sony's contention, stating that its best and final
offers were based on the 80 percent rate. Even assuming Matrox used the
incorrect higher rate, however, we fail to see any prejudice to Sony
from the Matrox error. The RFP did not specify the progress payment
rate and the contract with Matrox, while initially incorrect, will be
amended to reflect the correct 80 percent rate. Thus, there is no
evidence that the Army offered a more favorable progress payment rate to
Matrox than it would have offered to Sony.
The protest is denied.
Harry R. Van Cleve
General Counsel
FOOTNOTES
1/ The third offeror filed a protest with our Office challenging the
Army's determination that it was technically unacceptable and the lack
of a delegation of procurement authority for the procurement; we denied
the protest. Aquila Technologies Group, Inc., B-224373, Oct. 30, 1986,
86-2 CPD P 500.
2/ In its initial protest submission, Sony also argued that the
Matrox "equipment" was not "commercially available." The Army refuted
this contention in its report on the protest. Sony did not respond to
the Army position in its conference comments; instead, Sony recast its
argument to focus on whether the Matrox product qualified as a "system,"
and ironically complained that the agency report failed to respond to
its revamped argument. As a result, we consider Sony to have abandoned
its original contention. The Big Picture Co., Inc., B-220859.2, Mar. 4,
1986, 86-1 CPD P 218.
3/ The excerpt Sony relies on provides:
"An Integrated System
Traditionally, a practical solution to a new system requirement
has been to configure a system from proven but separately designed
components. Experience, however, has shown that trying to apply
pre-conceived solutions to new functional requirements may result
in failures. In contrast, the Sony View-E System is the result of
planning for integration of a videodisc player and a microcomputer
from the very outset of the design process."
B-224357.2
August 31, 1987
DIGEST
In response to allegation of Associated General Contractors of
America and former protester that corrective action taken by Veterans
Administration (VA) in response to Comptroller General decision, Lecher
Construction Co., B-224357, Sept. 30, 1986, 86-2 CPD P 369, did not
comply with the applicable requirements of the Federal Acquisition
Regulation (FAR) for deviation from the FAR, General Accounting Office
(GAO) determines that agency actions in processing the class deviation
appear to be in compliance with the FAR because (1) in accordance with
the FAR exemption from consultation with the Civilian Agency Acquisition
Council prior to authorization of the deviation, the agency properly
determined that urgent circumstances precluded such consultation, and
(2) the FAR does not require publication of Class deviations unless they
are adopted as FAR revisions, which was not the case here.
Mr. John McNerney
Associate Director
Building Division
The Associated General
Contractors of America
1957 E Street, N.W.
Washington, D.C. 20006
Dear Mr. McNerney:
This is in response to your letter dated May 11, 1987, in which you
maintain that the corrective action taken by the Veterans Administration
(VA) in response to our decision, Lecher Construction Co., B-224357,
Sept. 30, 1986, 86-2 CPD P 369, did not comply with the applicable
requirements of the Federal Acquisition Regulation (FAR) for deviation
from the FAR. We find that the agency complied with the applicable
requirements.
At issue in Lecher was a clause in an invitation for bids (IFB),
issued by the VA, for a fixed-price construction contract that limited
the allowable percentage of profit for contract price increases
resulting from change orders. See 48 C.F.R. Sec. 852.236-88(b) (1985).
In the decision, we sustained the protest on the basis that the clause
was inconsistent with the FAR, 48 C.F.R. Sec. 15.901(c) (1986), which
prohibits administrative profit ceilings except when there are
applicable statutory ceilings. Since we concluded that the VA clause
was inconsistent with the FAR, we recommended that the VA follow the
procedures required for deviating from the FAR in 48 C.F.R. subpart 1.4
or revise the IFB for consistency with the FAR. On December 5, 1986,
the VA notified our Office that it chose to continue usage of the clause
at issue, and had complied with the Lecher decision by processing a
"class deviation" (that is, a deviation affecting more than one
contracting action), thereby permitting continued use of the clause.
You maintain in your letter that the VA failed to comply with the
FAR's requirements for consultation with the chairperson of the Civilian
Agency Acquisition (CAA) Council and publication of the deviation for
public comment prior to authorizing the class deviation. Instead, you
contend that the VA merely approved the clause at issue internally and
then transmitted it to the FAR Secretariat.
The FAR does provide that before authorizing a class deviation, the
agency authorizing official generally must consult with the chairperson
of the CAA Council. It exempts such consultation, however, when the
agency determines that urgency precludes it. 48 C.F.R. Sec. 1.404(a)
(1). Here, documents provided us by the VA indicate that on November
24, 1986, the agency approved a class deviation from the FAR for use of
the clause at issue for construction contract changes costing less than
$500,000. The approval was made prior to consultation with the CAA
Council on the basis of urgency, and thus appears to have been proper.
Contrary to your understanding, there is no express requirement that
a proposed class deviation be published for comment prior to its
adoption. The FAR does provide that "when it is known that a class
deviation will be required on a permanent basis, an agency should
propose an appropriate FAR revision" (which, if approved, must be
published). FAR, 48 C.F.R. Secs. 1.404, 1.501 (c). The VA advises us,
however, that although it forwarded the class deviation to the FAR
Secretariat for approval, the Secretariat did not consider the deviation
to warrant a revision to the FAR. Thus, it does not appear publication
of the deviation was required. In any case, the VA reports that it
published notice of the provision in question in the Federal Register on
March 29, 1984, before adopting it as part of the VA supplemental
regulations to the FAR, and that no comments were received.
Sincerely yours,
Ronald Berger
Assistant General Counsel
Enclosure
cc: Veterans Administration
Lecher Construction Co.
B-224357.2
August 31, 1987
Mr. John J. Lecher
President
Lecher Construction Company
1271 N. Maple
Fresno, CA 93703
Dear Mr. Lecher:
This is in response to your letter of May 27, 1987 joining in the
allegation of the Associated General Contractors of America that the
corrective action taken by the Veterans Administration in response to
our decision, Lecher Construction Co., B-224357, Sept. 30, 1986, 86-2
CPD P 369, did not comply with the applicable requirements of the
Federal Acquisition Regulation (FAR) for deviation from the FAR. As
fully described in our letter to the Associated General Contractors,
copy enclosed, we determined that the agency complied with the
applicable requirements.
You further assert that your company filed an additional protest on
September 30, 1986 on the Lecher procurement. You now inform us that
you have not received a response to that protest.
While your September 30 letter did refer to a protest of award, we
did not interpret this as a separate protest, but rather viewed it as
additional comments concerning your first protest. We interpreted your
request that award be withheld until a decision on the protest to refer
to the originally filed protest for which we rendered a decision in
Lecher on September 30. While you now claim that our interpretation of
your September 30 letter was mistaken, and that you intended to file a
separate protest, we believe that bringing the matter to our attention 8
months after the filing, when there had been no response to it from this
Office, was not adequate pursuit of the matter.
Sincerely yours,
Ronald Berger
Assistant General Counsel
Enclosure
FILE: B-224344 DATE: July 7, 1986
MATTER OF: Gracon Corporation
DIGEST:
Failure of offeror for a construction contract to certify itself as a
small business and to include other standard certifications in its bid
is a minor informality which the contracting officer may either waive or
allow the offeror an opportunity to correct.
Gracon Corporation (Gracon) protests the possible award of a contract
to D.L. Norton General Construction, Inc. (Norton) under invitation for
bids (IFB) No. GRCA-871, issued by the National Park Service, Department
of the Interior for the procurement of construction services. Gracon
indicates that the procurement was set-aside for small business concerns
and complains that Norton's bid was nonresponsive because it failed to
include a certification of small business status. Gracon contends that
Norton also failed to complete and submit other certifications contained
in the IFB.
We have consistently treated a bidder's failure to certify its small
business size status as a minor informality since the bidder's size
status is not necessary to determine whether the bid meets the IFB's
material requirements, and, therefore, does not affect the
responsiveness of the bid. See Extinguisher Serv., Inc., B-214354, June
14, 1984, 84-1 CPD P 629. The contracting officer either must waive
such an informality or give the bidder an opportunity to correct it.
Neal R. Gross & Co., B-217508, Apr. 2, 1985, 85-1 CPD P 382.
Gracon argues that Norton gained an unfair competitive advantage by
failing to include its small business certification. Gracon contends
that Norton could make itself ineligible for the set-aside award by
withholding its certification as a small business if it determined after
bid opening that an award was not advantageous to it.
There often exists some risk that a bidder can take steps after bid
opening to render itself ineligible for an award, e.g. by refusing to
take actions necessary to demonstrate its responsihility, that is, its
capability of complying with the solicitation's material terms.
Nevertheless, it is well established that a bid must demonstrate only
the bidder's compliance with the IFB's terms materially affecting price,
quantity, quality and delivery to be responsive and acceptable, see
federal Acquisition Regulation, 48 C.F.R. Sec. 14.405 (1984); the
bidder's responsibility and compliance with other terms may he
determined based on information submitted after bid opening. E.g.,
Devcon Sys. Corp., 59 Comp. Gen. 614 (1980), 80-2 CPD P 46.
Finally, the failure to complete and submit the other standard
certifications in the IFB also does not affect the bidder's material
obligations and, therefore, also may he waived or corrected after bid
opening. See Roy Bennett, B-219938, Dec. 20, 1985, 85-2 CPD P 692.
Thus, Norton's alleged failure to complete and submit the standard
representations and certifications provides no basis to reject Norton's
bid.
The protest is dismissed.
Ronald Berger
Deputy Associate
General Counsel
Matter of: Rotair Industries, Inc.
File: B-224332.2; B-225049
Date: March 3, 1987
DIGEST
Agency process to approve alternate sources for helicopter spare
parts was inconsistent with the statutory and regulatory provisions
calling for "prompt" qualification procedures to the extent of depriving
the protester of a reasonable opportunity to compete where in certain
cases the agency had yet to act on source approval requests submitted by
the protester two years earlier.
DECISION
Rotair Industries, Inc. protests the awards or proposed awards of
sole-source contracts for the supply of helicopter spare parts to United
Technologies Corporation, Sikorsky Aircraft Division (Sikorsky), under
various solicitations issued by the Department of the Army, Aviation
Systems Command (AVSCOM). The gravamen of Rotair's protest is the
assertion that AVSCOM's source approval process is unreasonably long
and, therefore, has served to preclude the firm from an opportunity to
compete for items it is technically capable of furnishing. Rotair also
claims the recovery of its costs of filing and pursuing the protest,
including attorney's fees, and its proposal preparation costs. We
sustain the protest.
PROTEST BACKGROUND
Sikorsky is the original manufacturer of the helicopter types for
which the items in question are being procured. For many items,
Sikorsky has been the only approved source of supply and, accordingly,
has been awarded various contracts for spare parts on a sole-source
basis.
Rotair has actively sought to compete for helicopter spare parts
contracts and has submitted requests to AVSCOM that it be approved as a
source for the items. In many instances,
Rotair has been approved in response to its request and has received
a contract, but the firm complains that AVSCOM's overall process, which
involves the evaluation of a potential source's submitted technical data
for qualification purposes, has become unreasonably long to the extent
that AVSCOM has had to award sole-source contracts to Sikorsky on an
emergency basis. According to Rotair, this is so because the agency had
yet to approve Rotair as a source by the time the inventory of the part
item in question was becoming exhausted, even though the agency
originally may have delayed the making of any award in order to give
Rotair the opportunity to qualify.
Hence, Rotair argues that AVSCOM's delay in processing its requests
not only violates the applicable procurement law and regulation
governing the qualification of new sources, but also, by effectively
precluding Rotair's right to compete, is inconsistent with the
overriding mandate of the Competition in Contracting Act of 1984 (CICA)
that military agencies obtain "full and open" competition in their
procurements through the use of competitive procedures. 10 U.S.C. Sec.
2304(a)(1)(A) (Supp. III 1985).
ANALYSIS
As provided by 10 U.S.C. Sec. 2319(b)(6), as added by the Defense
Procurement Reform Act of 1984, Pub. L. No. 98-525, Oct. 19, 1984, 98
Stat. 2593, an agency imposing a qualification requirement--that is, a
requirement for testing or othe quality assurance demonstration that
must be satisfied by a prospective offeror or its product in order to
become qualified for an award--must ensure that an offeror seeking
qualification is "promptly" informed as to whether qualification has
been obtained and, if not, "promptly" furnished specific information why
qualification was not attained. This statutory provision is mirrored in
the Federal Acquisition Regulation (FAR), 48 C.F.R. Sec. 9.202(a) (4)
(1986).
To the extent Rotair argues that AVSCOM's source approval process has
not been "prompt" within the meaning of the statue and implementing
regulation, we agree. The record shows that, in several instances,
Rotair submitted its source approval requests to AVSCOM more than a year
prior to the agency's ultimate sole-source procurement actions, but
AVSCO still had not completed the qualification procedures at the time
those actions were taken. For example, Rotair has submitted evidence
concerning 10 separate sole-source awards to Sikorsky which indicates
that the firm's source approval requests had been pending from 6 to 17
months without result when the awards were made.
The agency contends that several factors, however, have caused the
qualification process to be extended. Of these, AVSCOM states that the
most important consideration is flight safety. Because the helicopter
types in question recently have been subject to serious and even
catastrophic mechanical failures, the agency has added numerous
helicopter spare parts items to its Flight Safety Parts List (FSPL) in
an effort to reduce these failures by establishing better quality
assurance controls over vendor sources. According to AVSCOM, this has
had the effect of "freezing the prequalification of sources" until more
detailed criteria concerning manufacturing processes can be developed.
Secondly, AVSCOM asserts that another major reason for any delays in
qualifying Rotair as a source for various procurements has been Rotair's
consistent failure to include with its initial source approval request
the requisite complete technical data on the part being procured.
According to AVSCOM, its policy has not been to return the source
approval request to Rotair without action, but to go back to the firm
for the needed data or to attempt to obtain it from AVSCOM's own
resources. AVSCOM urges that Rotair's failure to submit full data, as
well as the "sheer volume" of Rotair's source approval requests and
their timing (it appears that Rotair often submits its approval requests
only upon synopsis of a particular requirement) has caused considerable
delays in qualifying Rotair as an approved source. Thus, AVSCOM
contends that the circumstances clearly show that its process has not
been unreasonably long.
It has been our consistent view that when a contracting agency
restricts a contract award to an approved source, it must give
nonapproved sources a reasonable opportunity to qualify. Vac-Hyd Corp.,
64 Comp. Gen. 658 (1985), 85-2 CPD P 2. A protester's mere allegation
that the agency's procedure for approving alternate products or sources
take more time than the protester believes is necessary, however, is not
a showing that the procedures fail to provide that reasonable
competitive opportunity. See JGB Enterprises, Inc., B-218430, Apr. 26,
1985, 85-1 CPD P 479.
Here, we have extensively reviewed the administrative record and
given due consideration to AVSCOM's asserted reasons why certain Rotair
source approval requests may have been delayed. We recognize AVSCOM's
flight safety concerns and Rotair's failure to submit complete technical
data in all cases, but our overall view of the agency's qualification
process is simply that it has been unreasonable in length. In this
regard, not all of the items at issue in this protest are
FSPL-restricted parts, nor does the record indicate that in each and
every case, Rotair was dilatory or furnished inadequate technical data.
We note that solicitation No. DAAJ09-86-Q-6066 was synopsized more than
a year after Rotair had submitted its source approval request for the
item in question in May 1985. From the record, it appears that AVSCOM
never requested additional data from Rotair nor placed the item on the
FSPL. The agency has responded that Rotair's request has not been
finally processed because the item remains in the product assurance
review stage. However, since flight safety and data concerns are not
evident here, this is not an adequate reason to explain why AVSCOM has
not completed the source approval process for this item after a 22-month
period.
Moreover, we find support for Rotair's contention that, in certain
instances, the agency did not seek additional data from the firm until
many months after its initial source approval request had been filed.
For example, under solicitation No. DAAJ09-85-R-A230, calling for a
non-FSPL item, Rotair submitted its source approval request at the end
of 1984, but AVSCOM did not request additional data from the firm as to
the casting and machining sources of the item until some six months
later, and the agency does not seem to have made any further requests
for information necessary to complete the source approval process until
the middle of 1986. Hence, although more than two years have passed
since Rotair initially submitted its request, the firm has yet to
qualify for the item or be informed why qualification was not obtained.
Recently, we held that the passage of 16 months between the
submission of an offer for an alternate product and the awar of the
contract to another firm was unreasonable, since this delay was due to
the agency's lack of advance planning and its failure to consider
whether the alternate product could be evaluated by such means as first
article testing. Freund Precision, Inc., B-223613, Nov. 10, 1986, 66
Comp. Gen. , 86-2 CPD P 543. Although not directly on point, Freund is
useful here to reflect our concern that AVSCOM could have done more to
enhance the timeliness of its qualification process. As noted above,
certain source approval requests submitted by Rotair are still pending
more than two years after having been submitted. Although Rotair must
bear responsibility for those instances in which it may have failed to
furnish full technical data, see Rotair Industries, Inc., B-219994, Dec.
18, 1985, 85-2 CPD P 683, at the same time our review fairly suggests
that AVSCOM was not as diligent as it could have been in obtaining
necessary additional data from Rotair so as to be able to finalize in a
timely fashion the source approval process. Thus, we believe that
AVSCOM's source approval procedures, as generally effected, did not
provide Rotair with a reasonable opportunity to qualify as an approved
source for numerous items. Vac-Hyd Corp., 64 Comp. Gen. 658, supra.
Since the filing of the agency's administrative report on the protest
and Rotair's subsequent comments on the report, AVSCOM has submitted a
supplemental report which, although rebutting various assertions made by
Rotair in its comments on the earlier report, 1/ nonetheless indicates
that AVSCOM is cognizant of certain flaws in its source approval process
and is taking steps to improve those procedures. For example, AVSCOM
states that the key activity in the process--Breakout Engineering--will
be moved to the Competition Advocate's office from the Directorate of
Engineering. According to AVSCOM, the net effect will be a shortening
of the source approval request cycle because there will be less need for
specialized review. Moreover, especially pertinent to the facts here,
AVSCOM states that the FSPL program has been clarified so that there can
be a faster processing of various source approval requests, and further
states that delays occasioned by the submission of incomplete data by
potential offerors will be minimized since source approval requests
received with incomplete documentation will be returned without
processing.
Although we commend the agency's present actions, our decision here
does not turn on the fact the Army may now be taking steps to improve
its procedures, but rather whether those procedures as previously
implemented with respect to Rotair were consistent with the applicable
provisions governing the qualification of new products and sources and
whether those procedures gave Rotair a reasonable opportunity to
qualify. Since we have found otherwise, we are compelled to sustain the
protest and recommend corrective action to the extent feasible in the
circumstances.
Accordingly, by separate letter of today, we are recommending to the
Secretary of the Army that, to the extent consistent with inventory
requirements and flight safety concerns, AVSCOM refrain from awarding
any parts items for which a Rotair source approval request is still
pending until the activity, with reasonable promptness, either qualifies
Rotair or advises the firm what steps must be taken to obtain
qualification. We further recommend that the activity continue its
efforts to improve its procedures so that they more closely conform to
10 U.S.C. Sec. 2319(b)(6) and the FAR, 48 C.F.R. Sec. 9.202(a)(4),
supra.
Rotair has also claimed the recovery of its costs of filing and
pursuing the protest, including attorney's fees, and also its proposal
preparation costs. See 4 C.F.R. Secs. 21.6(d) and (e) (1986). We allow
Rotair the recovery of its protest costs because we believe that the
firm's action in filing this protest against its unreasonable exclusion
from several procurements will result in improvements in the AVSCOM
source approval procedures so that greater competition can be achieved
consistent with the overall mandate of CICA, 10 U.S.C. Sec. 2304(a) (1)
(A), supra, and future sole-source awards limited or avoided. See AT&T
Information Systems, Inc., B-223914, Oct. 23, 1986, 66 Comp. Gen. ,
86-2 CPD P 447; Freund Precision, Inc., B-223613, supra. Although we
recognize that Rotair in certain instances may have been less than
thorough with respect to the technical data submitted with various
source approval requests, we do not believe the record establishes that
the firm contributed to the unreasonable length of AVSCOM's source
approval process to the extent that it should be precluded from
recovering its protest costs. Cf. Temps & Co.--Claim for Costs,
B-221846.2, Aug. 28, 1986, 65 Comp. Gen. , 86-2 CPD P 236 (protest
costs disallowed where protester lost opportunity to compete for
improperly awarded basic contract by delaying the protest).
However, we do not allow Rotair the recovery of its claimed proposal
preparation costs. By "proposal," Rotair apparently means its source
approval requests, and we do not believe that the costs of such are
embraced by our Bid Protest Regulations, which rather concern the
recovery of the costs of preparing either sealed bids under an
invitation for bids or competitive proposals under a negotiated
procurement. 4 C.F.R. Sec. 21.6(d)(2).
The protest is sustained.
Comptroller General
of the United States
FOOTNOTE
1/ Consideration will not be given to legal arguments raised by the
agency for the first time in this supplemental report because the
submission of a supplemental report in response to a protester's
comments on the original report is not contemplated by our Bid Protest
Regulations. 4 C.F.R. Sec. 21.3(c) (1986).
Matter of: The International Association of Fire Fighters
File: B-224324.2
Date: June 22, 1987
DIGEST
Where, as a result of the filing of a protest with the General
Accounting Office, award of contract was delayed until the fiscal year
following that in which the procurement was competed, there is no
requirement that the procurement be recompeted since agency properly
obtained funding for the contract under the current fiscal year's
appropriations act and an extension of the proposed awardee's acceptance
date.
DECISION
The International Association of Fire Fighters (IAFF) protests the
award of a contract under request for proposals (RFP) No. EMW-86-R-2280
issued by the Federal Emergency Management Agency (FEMA) for the
preparation of a publication, "Manual: Use of Drugs by Fire Department
Members." The protest is denied.
This procurement was the subject of a previous protest filed by IAFF
with our Office on September 12, 1986, in which the protester challenged
FEMA's rejection of its proposal as technically unacceptable. By our
decision, The International Association of Fire Fighters, B-224324, Jan.
16, 1987, 87-1 C.P.D. P 64, we denied the protest because the record did
not support a finding that the exclusion of IAFF's proposal from the
competitive range was without a reasonable basis or that the protester's
proposal had received "minimal" consideration. We also dismissed as
untimely the protester's allegation that certain language in the RFP
impliedly excluded the IAFF from the competition.
Following the issuance of our January 16 decision, FEMA obtained
approval for use of fiscal year (F/Y) 1987 appropriated funds to cover
the cost of the procurement and, on March 18, 1987, awarded the contract
to the firm which it had selected. IAFF then filed the instant protest
with our Office, contending that FEMA "violated the general principle
that an agency is not authorized to compete a contract in one year and
appropriate funds to that contract in a subsequent year." IAFF further
contends that to award the contract in 1987, FEMA must recompete the
requirement in F/Y 1987 since F/Y 1986 funding for the contract lapsed
while IAFF's previous protest of the procurement was being considered by
our Office.
Although this is IAFF's second protest of the subject procurement we
do not consider it a request for reconsideration since it does not
pertain to our prior decision and is not related to the issues raised in
the previous protest.
As a preliminary matter, FEMA takes the position that under our Bid
Protest Regulations, IAFF is not an interested party to protest the
award because it was not next in line for award and, moreover, its
proposal was excluded from the competitive range because it was
determined to be technically unacceptable. To be considered by our
Office, a protest must be filed by an interested party as that term is
defined in the Competition in Contracting Act of 1984 (CICA), 31 U.S.C.
Sec. 3551 (2) (Supp. III 1985), and our Bid Protest Regulations
implementing that act, 4 C.F.R. Sec. 21.0 (a) (1986). An interested
party is defined as an actual or prospective bidder or offeror whose
direct economic interest would be affected by the award of a contract or
by failure to award a contract.
In determining whether a party is sufficiently interested to have its
protest considered, we examine the extent to which a direct relationship
exists between the question raised and the party's asserted interest and
the degree to which that interest is established. Tumpane Services
Corp., B-220465, June 28, 1986, 86-1 C.P.D. P 95 at 2. Since in this
instance IAFF is not protesting the agency's action with respect to the
proposal it initially submitted in responsse to the solicitation, its
status as an interested party to seek award under the solicitation is
not determinative of the sufficiency of its interest concerning the
issue raised here. If, as a consequence of IAFF's protest of the award
of a contract whose original funding lapsed before award was made, the
contracting agency should terminate the contract and recompete the
solicitation, then the protester would gain another opportunity to
compete for the contract. Thus, IAFF's interest as a potential
competitor if the protest is successful is sufficient for it to be
considered an interested party. Tumpane Services Corp., B-220465,
supra; see also Rolen-Rolen-Roberts International, et al., B-218424,
Aug. 1, 1985, 85-2 C.P.D. P 113 at 3.
Award of the contract was delayed as a result of the filing of IAFF's
protest of the rejection of its proposal. In compliance with the
provisions of 31 U.S.C. Sec. 3553(c) (1) and 4 C.F.R. Sec. 21.4(a), FEMA
withheld award of the contract pending resolution of the protest. The
delayed award of a contract for administrative reasons (such as the
pendency of a protest or the unavailability sof funds) is a procedural
matter which does not invalidate the procurement or provide a basis for
protest. Cedar Valley Corp., B-225475; B-225723, Feb. 24, 1987, 87-1
C.P.D. P 211; Boyd-Ferm, Inc., B-218081, Feb. 21, 1985, 85-1 C.P.D. P
222. In such instances, the contracting agency may request an extension
of the proposal acceptance period to avoid the need for readvertisement.
Federal Acquisition Regulation, 48 C.F.R. Sec. 14.404-1 (d) (1986);
Boyd-Ferm, Inc., B-218081, supra.
In this case, after the appropriations act under which the contract
was to have been funded expired during the pendency of the protest, FEMA
properly obtained funding for the contract under the current
appropriations act (see Department of Treasury, Customs Service, 59
Comp. Gen. 431 (1980), 80-1 C.P.D. P 313) and an extension of the
proposed awardee's acceptance period. Under the circumstances of this
case, award of the contract during a fiscal year subsequent to that in
which the procurement was competed is not legally objectionable.
The protest is denied.
Harry R. Van Cleve
General Counsel
Matter of: The International Association of Fire Fighters
File: B-224324
Date: January 16, 1987
DIGEST
1. Determination of whether a proposal should be included in the
competitive range is a matter primarily within the contracting agency's
discretion. Allegation that agency's decision to exclude protester was
unreasonable is denied where agency's technical evaluation and
determination that proposal was technically unacceptable had a
reasonable basis.
2. Protest, filed after closing date for receipt of offers, that
solicitation contained statement which impliedly excluded protester from
competition is untimely since it is a protest of an alleged solicitation
deficiency. Under GAO's Bid Protest Regulations such a protest must be
filed before closing date.
DECISION
The International Association of Fire Fighters (IAFF) protests the
rejection of its proposal under request for proposals (RFP)
EMW-86-R-2280 issued by the Federal Emergency Management Agency (FEMA).
The RFP called for the preparation of a publication entitled "Manual:
Use of Drugs by Fire Department Members." The IAFF's proposal was
determined to be outside the competitive range.
The protest is denied in part and dismissed in part.
The solicitation, issued on July 3, 1986, established as the date of
closing August 4, 1986. Following evaluation of offers, FEMA formally
notified IAFF by letter dated August 26, that its proposal had been
evaluated "in accordance with the Federal Acquisition Regulation and the
evaluation factors set forth in the RFP." The agency further stated:
". . . your proposal has been determined to be outside the
competitive range due to technical factors. It is our opinion
that even with extensive modification, your proposal would not
have a reasonable opportunity for selection. Therefore, it has
been removed from further consideration...."
The IAFF initially protested to FEMA the rejection of its proposal
and requested that the agency immediately provide it a debriefing of the
reasons why its proposal was rejected, stating that without additional
information it was unable to "set forth the bases for its protest. . ."
of the proposal rejection.
It appears, however, that before FEMA issued a formal response to the
IAFF's agency protest, 1/ IAFF protested the matter to our Office,
contending that FEMA violated the provisions of the Federal Acquisition
Regulation (FAR), 48 C.F.R. Sec. 15. 1001 (b) (1), in that it provided
insufficient information concerning the reasons why IAFF's proposal was
rejected. The protester also argues that under the provisions of FAR,
48 C.F.R. Sec. 15.1002, it is entitled to a preaward debriefing on the
reasons its proposal was rejected. IAFF further alleges that "it is now
evident. . . from the face of the RFP" that the agency violated federal
procurement principles prohibiting preselection by including provisions
in the solicitation which, in effect, precluded it from the competition.
Much of IAFF's protest is an expression of frustration at the fact
that the agency advised the protester only that its proposal was
excluded from the competitive range "due to technical factors." As we
indicated above, the protester is of the opinion that not only is this
an inadequately detailed notice under FAR, 48 C.F.R. Sec. 15.1001 (b)
(1), but that the protester is entitled to a full debriefing prior to
award. Although the protest, and the agency's response, have focused on
these questions, the fact remains that the procurement action of which
the protester complains is the rejection of its proposal, and it is the
propriety of that action which it is our function to review pursuant to
our Bid Protest Procedures.
In view of the limited information disclosed to the protester by the
agency in this preaward, negotiated contract situation, our discussion
here must be general as to the technical proposals and the agency's
technical evaluation. We have, however, examined the record in camera
to determine whether the agency's actions had a reasonable basis. We
conclude that they did.
This solicitation was for the development of a manual on drug abuse
for use by fire department personnel, to serve as an aid in the
identification of fire department members with such problems and to
suggest positive, proven intervention strategies to minimize the effects
of drug abuse. Issues to be addressed by the manual, according to the
RFP, would include the economic impact of drug abuse; the role of
unions; the potential legal liability of fire departments whose members
commit negligent acts while on duty and under the influence of drugs;
methods of recognizing the existence of a problem, with emphasis on a
supervisor's role; whether a user should be considered as a "moral
miscreant" or as a "patient;" family involvement; and treatment
protocols.
The RFP advised offerors that the award of a cost-plus-fixed-fee
contract was contemplated and that technical criteria were considered of
"greater importance" than cost, although cost may be the deciding factor
when proposals are ranked technically equal. In addition to cost
proposals, offerors were to submit technical proposals, the general
content of which was discussed in the RFP and which, offerors were
advised, would be evaluated under the following factors:
1. Understanding of the Program Requirement 10 points
2. Project Organization and Management; 45 points
a. Demonstration of ability to accomplish types of work
represented, on schedule (15 points)
b. Ability to commit qualified staff to the project (10 points)
c. Demonstration of management capability: successful
management of similar projects (10 points)
d. Demonstration of ability to compile, write, edit and produce
technical and contractual requirements in a timely manner (10
points)
3. Experience and Qualifications of Key Staff 35 points
4. Facilities and Equipment 10 points Total 100 points
The proposals received were forwarded to a Technical Evaluation Panel
for review based on the evaluation factors set forth in the RFP. The
panel rated the IAFF's proposal as technically unacceptable and it
subsequently was determined to be outside the competitive range.
Although the panel identified deficiencies in the IAFF's proposal with
respect to all four major evaluation factors, and lowered its point
ratings accordingly, the most significant downgrading of the protester's
technical proposal concerned factors 2 and 3.
With regard to factor 2, project organization and management,
subfactor a, ability to accomplish the type of work represented and the
timeliness thereof, the panel was of the opinion that the IAFF's
proposal to conduct an opinion survey among the 100 largest fire
departments would require Office of Management and Budget approval, be
very time consuming and, because of the covert nature of drug abuse,
fail to produce useful and accurate data. In addition, no plan was
presented to involve volunteer fire service members, which constitute a
majority of such personnel, as opposed to paid members. The panel
therefore felt strongly that the plan presented could not be executed in
the time required and the results would be skewed toward large paid fire
departments.
The panel also had reservations about the qualifications of the IAFF
staff for this project (subfactor b) because the experience of the
principal staff was in the development of hardware for fire fighter
protection rather than in programs involving behavior modifications.
Similar concerns were expressed in relation to subfactor c,
successful management of similar projects, because the IAFF's past work
had been in the technical area of hardware development and not one
involving behavior modification management, fire department policy and
economics.
The panel also downgraded the IAFF's proposal under subfactor d,
demonstration of ability to compile, write, edit and produce the
technical and contractual requirements in a timely manner, because the
panel thought the survey effort alone might require a calendar year.
As for factor 3, experience and qualifications of key personnel, the
panel reduced the IAFF's rating because its key staff's experience was
in the area of hardware development and evaluation which require a
different range of skills than those needed to attack departmental drug
abuse, and because the panel saw limited utility in the heavy emphasis
in the proposal upon conducting legal research on issues related to drug
use, such research to be performed by the law firm representing the IAFF
as its General Counsel, which firm also would be the principal
consultant retained by the IAFF for performance under the contract.
The major, although not exclusive, reasons for the panel's conclusion
that the IAFF's proposal was technically unacceptable therefore appear
to have been that it proposed to conduct a time-consuming survey of
doubtful usefulness which would jeopardize its ability to complete the
project on time; that the experience of the organization and its key
staff was in the development of protective devices for fire fighters
rather than in behavioral modification areas such as drug abuse; and
because of the proposal's heavy emphasis on legal research at the
expense of other areas.
In reviewing protests concerning the evaluation of proposals and
competitive range determinations, our function is not to reevaluate the
proposal and make our own determination about its merits. This is the
responsibility of the contracting agency, which is most familiar with
its needs and must bear the burden of any difficulties resulting from a
defective evaluation. Robert Wehrli, B-216789, Jan. 16, 1985, 85-1
C.P.D. P 43. Procuring officials have a reasonable degree of discretion
in evaluating proposals, and we will examine the agency's evaluation
only to ensure that it had a reasonable basis. RCA Service Co. et al.,
B-218191 et al., May 22, 1985, 85-1 C.P.D. P 585. Furthermore, it is
well established that the determination of whether a proposal should be
included in the competitive range is a matter primarily within the
contracting agency's discretion which will not be disturbed unless it is
shown to be unreasonable or in violation of procurement laws or
regulations, Metric Sys. Corp., B-218275, June 13, 1985, 85-1 C.P.D. P
682. Additionally, the fact that a protester does not agree with an
agency's evaluation does not render the evaluation unreasonable or
contrary to law. Logistic Services International, Inc., B-218570, Aug.
15, 1985, 85-2 C.P.D. P 173.
We recognize that the protester has not had an opportunity to address
the technical evaluation panel's criticisms of its proposal because this
information has not previously been disclosed to it. The protester does
speculate that its proposal was given "minimal consideration" at best
and may even have been doomed to rejection from the outset as a result
of the agency's "preselection" of another offeror.
The record contains no support for the protester's assertion that its
proposal received "minimal" consideration. It was reviewed and
point-scored by each member of the technical evaluation panel, whose
members arrived at a consensus as to the rating of every proposal. It
does not appear that the IAFF's proposal was treated any differently
than all the others. Moreover, we are unable to conclude from a reading
of that proposal, the solicitation provisions and the evaluation
documents, that the exclusion of the protester's proposal from the
competitive range had no reasonable basis.
Finally, we find untimely IAFF's allegation that certain language in
the RFP "implies" that FEMA intended to exclude the IAFF from the
competition prior to the evaluation of offers and, thus, engaged in
"preselection" of offerors. Specifically, the protester refers to a
statement in part I, section C of the RFP
(Descriptions/Specifications/Work statement) that, "the Contractor shall
obtain data for this effort development of a manual on drug abuse by
fire department personnel from fire service organizations, such as the
International Association of Fire Fighters, the International
Association of Fire Chiefs, and the National Fire Protection
Association." The IAFF argues that the fact that it is named as one
resource for "the Contractor" raises the possibility that FEMA did not
intend for the IAFF itself to be the contractor. The protester contends
that the implication of this statement in the RFP was not apparent to it
until it was notified of the rejection of its proposal.
Aside from the fact that the statement does not, as alleged, preclude
consideration of a proposal from the IAFF, our Bid Protest Regulations
require that protests based upon alleged solicitation improprieties
which are apparent prior to the closing date for receipt of initial
proposals shall be filed prior to the closing date. 4 C.F.R. Sec.
21.2(a)(1) (1986). Here, where the IAFF protests its "implied"
exclusion from competition based on a statement in the RFP as initially
issued, the protest basis is dismissed as untimely. 4 C.F.R. Sec.
21.3(f)(7).
Harry R. Van Cleve
General Counsel
FOOTNOTE
1/ The record shows that both before and after IAFF protested to the
contracting agency, FEMA informally advised the protester that a
debriefing would be provided following award of the contract.
File: B-224305.2
Date: November 4, 1988
Matter of: Morse Boulger, Inc.--Request for Costs
DIGEST
Award of costs of filing and pursuing protest, including attorneys'
fees, is granted where initial decision sustained protester's challenge
to restrictive design specifications which unreasonably excluded
protester from competition.
DECISION
By this decision, we award Morse Boulger, Inc. (MBI), its costs of
filing and pursuing its protest, including attorneys' fees.
MBI initially protested, in September 1986, the Department of the
Navy's use of unduly restrictive design specifications in invitation for
bids (IFB) No. N62470-83-B-8778 for replacement of two Detroit Stoker
Company incinerator grates (stokers). The IFB restricted bidders to the
Detroit Stoker proprietary design. In our original decision, we held
that the Navy had failed to make a prima facie showing that it required
the protested restrictions to meet its actual needs, and recommended
that the Navy cancel the solicitation, revise its requirements as
appropriate, and resolicit. Morse Boulger, Inc., B-224305, Dec. 24,
1986, 66 Comp. Gen. --- , 86-2 CPD Par. 715.
The Navy has advised our Office that the solicitation was canceled;
however, during its review of the requirement the Navy discovered that
the facility would produce quantities of toxic wastes. The cost of
resolving the environmental issue is expected to exceed available
funding. Consequently, the procurement is on indefinite hold, and will
not be resolicited, until funding is available for the stoker
replacement and to resolve the environmental concerns.
Under these circumstances, we find that MBI is entitled to recover the
costs of filing and pursuing the protest, including attorneys' fees.
See Competition in Contracting Act of 1984, 31 U.S.C. Sec. 3554(c)(1)(A)
(Supp. IV 1986). MBI should submit its claim for reimbursement of these
costs directly to the Navy, and if the parties cannot reach agreement
within a reasonable time, our Office will determine the appropriate
amount to be paid. Bid Protest Regulations, 4 C.F.R. Sec. 21.6(e)
(1988).
Acting Comptroller General of the United States
Matter of: Sterling Supply Corporation--Request for Reconsideration
File: B-224298.2
Date: April 6, 1987
DIGEST
1. The rejection by the Navy of protester's low bid signed by retired
regular Naval officer was not improper where regulation prohibits Navy
from dealing with retired regular Naval officer because the officer's
signing of the bid constituted a sale to the government which violated a
criminal statute.
2. Prior decision is affirmed on reconsideration where it is not
shown to contain any errors of fact or law.
DECISION
Sterling Supply Corporation requests that we reconsider our decision
in Sterling Supply Corporation, B-224298, Jan. 6, 1987, 87-1 C.P.D. P .
In our prior decision, we denied in part and dismissed in part
Sterling's protest against the award to any other bidder under
invitation for bids (IFB) No. N00250-86-B-0073, issued by the Navy for
laundry and dry cleaning supplies, finding that the Navy properly
rejected Sterling's low bid because it was signed by a retired regular
Naval officer, Mr. Clement, Sterling's vice president.
We affirm our prior decision.
Sterling's low bid was rejected by the Navy after the Navy learned
that Mr. Clement was a retired regular Naval officer and determined that
Mr. Clement, through his signing of Sterling's bid, had apparently
violated 18 U.S.C. Sec. 281 (1982), which provides a fine of up to
$10,000 and an imprisonment of not more than 2 years for those "retired
officers" who "represent any person in the sale of anything to the
government through the department in whose service the officer holds a
retired status." According to the Navy, its rejection of Sterling's bid
was mandated by Naval regulations which prohibit Naval personnel from
knowingly dealing "on behalf of the Government with present or former
Government personnel, military or civilian, whose participation in the
transaction would be in violation of a statute, regulation or policy set
forth in this instruction, Sec. 721.15." 32 C.F.R. Sec. 721.6(d) (1986).
Section 721.15 of 32 C.F.R. specifically discusses the prohibition of
18 U.S.C. Sec. 281 as outlined above.
Sterling had argued that the rejection of its bid was improper
because the retired officer's signing of the bid did not violate the
criminal statute since it was not a "sale" under the statute.
We found, however, that the Navy's rejection of Sterling's bid was
reasonable. We stated that under decisions of this Office concerning
similar statutory language, we concluded that signing a bid constitutes
selling to the government. See, e.g., 53 Comp. Gen. 616 (1974). We
concluded, therefore, that Mr. Clement's signing of Sterling's bid
constituted a violation of 18 U.S.C. Sec. 281 and that, consistent with
the purpose of the statute, the Navy properly rejected Sterling's bid.
In its request for reconsideration, citing our decision in Society
Brand, Inc., et al., 55 Comp. Gen. 475 (1975), 75-2 C.P.D. Sec. 327,
Sterling argues that it was improper and inconsistent with precedent for
us to interpret 18 U.S.C. Sec. 281, a criminal statute, because "the
interpretation and enforcement of the criminal laws of the United States
are functions of the Attorney General and the Federal Courts and it is
not within GAO's jurisdiction to determine what does or does not
constitute a violation of a criminal statute."
Sterling is correct in stating that our Office generally will not
address contentions of protesters relating to the enforcement of
criminal laws of the United States. For example, in Society Brand, Inc.
et al., 55 Comp. Gen. 475, supra, for the reasons quoted above, we
declined to address an allegation of a protester that certain bidders
were violating antitrust laws. However, pursuant to our bid protest
jurisdiction, we will review the reasonableness of a contracting
agency's decision to reject a bid where to accept the bid would
apparently require the agency to violate its own regulations against
dealing with certain parties whose participation in the transaction
would be in violation of a statute or regulation. B-1493511 Nov. 5,
1962.
In our decision in B-149351, supra, with facts nearly identical to
those in the case at hand, we found that the Air Force relied upon the
provisions of 18 U.S.C. Sec. 281 and an Air Force regulation worded
almost identically to 32 C.F.R. Sec. 721.6(d) quoted above, to reject a
proposal signed by a retired Air Force officer. We found that the
rejection of the proposal on this basis, to prevent the Air Force from
violating its regulation and policy against dealing with retired Air
Force personnel (when to do so would violate 18 U.S.C. Sec. 281), was
reasonable.
Sterling argues that the purpose of 18 U.S.C. Sec. 281, is to prevent
"influence peddling" and therefore since the record in this case
allegedly does not contain evidence of "influence peddling" the Navy
improperly relied upon 18 U.S.C. Sec. 281 in rejecting Sterling's bid.
This issue was also addressed in B-149351, supra. In denying the
protest we stated that while the purpose of 18 U.S.C. Sec. 281 may be
"to preclude awards in situations where undue influence is manifest, it
is not a condition of the prohibition in the statute that the retired
officer must be shown to have exerted undue influence."
Since Sterling has not shown that our prior decision contains any
errors of fact or law, it is affirmed.
Comptroller General
of the United States
Matter of: Instruments & Controls Service Co.
File: B-224293.2
Date: February 17, 1987
DIGEST
Prior decision denying protest against nonresponsibility
determination is reversed where guarantee of financial backing that
contracting officer declined to consider due to its reference to an
erroneous solicitation number was otherwise clearly identifiable with
the procurement in question.
DECISION
Instruments & Controls Service Co. requests reconsideration of our
decision, Instruments & Controls Service Co., B-224293, Nov. 18, 1986,
86-2 CPD P 581, denying its protest of the rejection of its bid under
General Services Administration (GSA) invitation for bids (IFB) No.
02-PPB-JM086-0038 for mechanical maintenance services at the Federal
Building in Binghamton, New York. For the reasons that follow, we
reverse our decision and sustain the protest.
Instruments & Controls protested the contracting officer's
determination that it lacked the financial resources to perform the
contract. The protester argued that its bid should have been accepted
since its parent company, Eurotherm International, was willing to
quarantee its performance. We held that the contracting officer's
determination of nonresponsibility was reasonable since the initial
letter sent to the agency by the parent prior to award did not in our
view constitute a clearly binding guarantee of financial backing.
In its request for reconsideration, Instruments & Controls contends
that it was unreasonable for the contracting officer to have rejected
its initial guarantee letter as not clearly enforceable given that the
sole defect in the guarantee was a typographical error in the
solicitation number. (Solicitation No. 02-PPB-JM-086-0038 was
incorrectly referenced as No. 02PPM/JM0860038.) Instruments & Controls
argues that the guarantee should have been accepted since it was clearly
identifiable with the procurement in question. The protester points out
that the incorrect solicitation number in Eurotherm's guarantee
referenced no other procurement, either past or present.
We think there is merit to Instruments & Controls' argument. In our
November 18 decision, we concluded that it was reasonable for the
contracting officer to have decided that Eurotherm's letter might not
constitute a binding guarantee for this particular procurehment.
However, we are now persuaded that this decision by the contracting
officer was not reasonable. The agency has not indicated that the
erroneous solicitation number could have referred to another ongoing
procurement or that Instruments & Controls had submitted a bid in
response to another outstanding GSA solicitation. Further, there is
nothing in the record that indicates that the contracting activity had
any other solicitation outstanding for similar services that could be
confused with this procurement. It therefore appears that the guarantee
was clearly identifiable with the procurement in question.
Consequently, we believe that the guarantee was only technically
defective and could in fact be enforced against the parent. See
Custodial Guidance Systems, Inc., B-192750, Nov. 21, 1978, 78-2 CPD P
355. We therefore reverse our decision and conclude that the
contracting officer acted unreasonably in not considering Eurotherm's
guarantee letter. We sustain the protest.
Since the contract term is 3 years and performance commenced on
September 1, 1986, contract performance is less than onesixth complete
at this time, and we therefore recommend that GSA terminate the current
contract for the convenience of the government and make award for the
remainder of the contract term to Instruments & Controls if the
guarantee letter is otherwise sufficient.
Comptroller General
of the United States
Matter of: Nasco Engineering, Inc.
File: B-224292
Date: January 14, 1987
DIGEST
Allegation that 10 U.S.C. Sec. 2319 (Supp. III 1985), enacted by
Congress to encourage competition for qualified items, requires the
agency to afford protester the opportunity to prequalify its product and
bear the cost of testing and evaluation is without merit since 10 U.S.C.
Sec. 2319 applies only to those situations where the agency has imposed
a preaward qualification requirement which limits competition not to
situations, where, as here, protester can compete but is subjected to a
first article test requirement.
DECISION
Nasco Engineering Incorporated (Nasco) protests the first article
test requirement contained in request for proposals (RFP) No.
N00383-86-R-5554 issued by the Department of the Navy for brake
components for the Navy's F-4 aircraft. The aircraft is manufactured by
the McDonnell Douglas Corporation and all of the aircraft's brake
components previously have been procured on a sole-source basis from
Auto Specialities Manufacturing Co., the original equipment
manufacturer. Nasco, a small business, is attempting to qualify as an
approved supplier for these items and argues that the RFP's first
article requirement is inconsistent with the requirements of 10 U.S.C.
Sec. 2319 (Supp. III 1985) which was enacted by Congress to encourage
competition for qualified items.
We deny the protest.
Background
Nasco is a supplier of spare and replacement brake parts for the
Navy's A-4 aircraft and in 1984, Nasco requested the Navy's assistance
in becoming an approved source for brake components for the Navy's F-4
aircraft. Although no manufacturing drawings are available, Nasco
indicated to the Navy that it could successfully reverse-engineer these
components. The Navy states that it advised Nasco at that time that the
F-4 was a declining program and that the procurement of substantial
quantities of F-4 brake components was not foreseen. However, in
response to Nasco's request, the Navy provided Nasco with the brake
components manufactured by Auto Specialties, as well as the performance
specification and indicated that it would include Nasco in future
solicitations for these components if its efforts were successful.
Between 1984 and 1986, Nasco met with Navy officials on several
occasions to discuss, among other things, the Navy's testing
requirements and whether the Navy or Nasco would bear the cost for that
testing. In addition, Nasco contends that the Navy's actions during
this period led the firm to believe that it would be required to qualify
its brake components prior to being allowed to submit an offer on this
contract. Nasco states that there was never any indication that the
Navy would instead rely on a first article test and, as a result,
subject the firm to the significantly greater business risk of paying
reprocurement costs if its brake components were not found acceptable.
The Navy acknowledges that it did discuss with Nasco the possibility
of conducting a precontractual qualification test during this period,
but argues that Nasco was never told that this was the procedure which
would in fact be followed. The Navy indicates that instead it directed
its efforts towards generating an acquisition of sufficient magnitude so
that even with the addition of government testing costs to Nasco's
offer, Nasco would still have a reasonable chance of winning the
competition.
The current RFP was issued by the Navy on July 15 restricted to Auto
Specialties and Nasco and encompasses all the Navy's known requirements
for these components through 1993; the projected life of the F-4
aircraft. The RFP contains a first article test requirement and
indicates that $225,520 will be added to the proposed price of any
offeror whose product requires testing. Based on the last unit price
paid, the Navy's estimate for the cost of this acquisition is
approximately $1 million. Although Nasco submitted an offer, the offer
has been withdrawn because Nasco is unwilling to accept the potential
business risk imposed by the first article requirement.
Applicability of 10 U.S.C. Sec. 2319
The provisions of 10 U.S.C. Sec. 2319, as added by section 1216 of
the Department of Defense Authorization Act, 1985, were enacted by
Congress to encourage competition for qualified items and were
specifically directed towards those acquisitions in which the
contracting agency has established a testing requirement or other
quality assurance demonstration which must be completed prior to award.
The statute contains provisions concerning prequalification, testing,
and other quality assurance procedures. Generally, any qualification
requirement must be justified and standards which a potential offeror
must satisfy in order to be qualified must be specified. Potential
offerors are to be provided an opportunity to demonstrate their ability
to provide an acceptable product and an agency must promptly advise
offerors whether quaiification was attained and if not, why not. In
addition, 10 U.S.C. Sec. 2319(d) (1)(B) provides that the contracting
agency shall bear the cost of testing and evaluating the product of a
small business concern under appropriate circumstances. See Vac-Hyd
Corp., 64 Comp. Gen. 658 (1985), 85-2 CPD P 2.
Nasco argues that 10 U.S.C. Sec. 2319 is directly applicable to this
procurement and that under section 2319(d), the Navy is required to
prequalify Nasco and bear the associated testing and evaluation costs.
Nasco contends that the underlying Congressional intent of this statute
is to increase competition for spare parts and that under these
circumstances, tshe Navy should be required to apply the statutory
procedures set forth in section 2319 which include payment of the cost
incurred in qualifying Nasco for this procurement.
The Navy contends that Congress enacted section 2319 to deal with
only those situations in which a qualification requirement is the sole
restriction on full and open competition and that the statute does not
apply to situations where, as here, there are inadequate specifications
for the article being procured. The Navy indicates that complete
specifications for these brake components are not available and that it
is only through Nasco's reverse engineering efforts that any competition
for these items is possible. Further, the Navy argues that contrary to
Nasco's assertions, the Navy's actions have been designed to increase
competition and afford Nasco an opportunity to compete for this
requirement. The Navy indicates that it has been responsive in
providing all information requested by Nasco concerning the brake
components and that it has aggregated its requirements for these
components to afford Nasco a greater opportunity to overcome the first
article testing costs which would be added to its offer.
In addition, the Navy argues that testing costs for a small business
are to be borne only where the projected savings from increased
competition exceed the costs of qualfication and that the projected
savings in this case are insufficient to justify such an expenditure.
The Navy indicates that it estimated its total requirements for these
components through 1993 and multiplied those quantities by the last unit
price paid for each item to arrive at a total estimated cost of $972,454
for the acquisition. The Navy assumed that it could save approximately
25 percent due to competition and based on this percentage, calculated
an overall savings of $243,113. The estimated testing costs are
$225,520 and, although this still produces a net savings of $27,593, the
Navy indicates that there are additional administrative expenses, such
as additional supply support cost and review of test reports, which make
it likely that the projected costs would exceed the projected savings.
Consequently, the Navy argues that, even if the statute was applicable,
the agency would be under no obligation to pay for the testing and
evaluation of Nasco's brake components.
In our view, 10 U.S.C. Sec. 2319 is not applicable and does not
require the Navy either to prequalify Nasco or to bear the cost of
testing and evaluating Nasco's brake components for this procurement.
Although the legislation was enacted to encourage competition, it
appears clear that it was intended to deal with those situations in
which the government has imposed a preaward qualification requirement
and limited competition to only approved sources or products that have
been previously listed on a qualified products list. In this regard, we
note that the "qualification requirement" encompassed by section 2319 is
defined as ". . . a requirement for testing or other quality assurance
demonstration that must be completed by an offeror before award of a
contract." 10 U.S.C. Sec. 2319(a). In addition, the procedures
contained in section 2319 are designed to make it more difficult for an
agency to establish a preaward qualification requirement and the
legislation also contains provisions to ensure that interested firms are
not precluded from competing solely because they have not been
prequalified. See 10 U.S.C. Secs. 2319(b)&(c)(3).
We believe that it is in this context that section 2319(d),
concerning the payment of testing costs for small business, must be
viewed. Basically, the provision states that where there are less than
two qualified sources or qualified products available for competition,
the head of the agency concerned shall solicit additional sources and
bear the testing costs for small businesses that successfully qualify
their products where the projected savings justify such action.
However, the "less than two qualified sources or qualified products
available" must be read in conjunction with the type of qualification
requirement covered by section 2319; i.e. a preaward qualification
requirement which prevents a potential offeror from competing. See 10
U.S.C. Sec. 2319(a).
Consequently, we find the statute applicable only in those situations
where the agency limits competition to prequalified sources or products
and where there are less than two eligible firms or products available
to compete. It is only under those circumstances that the head of the
agency is directed to solicit additional sources or products and to
consider whether the increase in competition will yield such savings so
as to recover the costs of qualifying a small business. Here, although
Nasco disagrees with the terms of the solicitation, no prequalification
requirement has been established by the Navy nor has Nasco been
precluded from submitting an offer for this requirement. Nasco has been
afforded an opportunity to compete and we find nothing in the statute
which requires the Navy to prequalify Nasco for this procurement much
less pay for the cost of testing and evaluation under these
circumstances. 1/
Accordingly, we find that the Navy's actions are not inconsistent
with the requirement of 10 U.S.C. Sec. 2319, and the protest is denied.
We note, however, that Nasco initiated this effort prior to the
enactment of 10 U.S.C. Sec. 2319 with no basis to assume that the Navy
would pay the cost of testing its components. While Nasco asserts that
it was led to believe it would be allowed to prequalify, there is
nothing in the record which suggests that the Navy led Nasco to believe
that the government would pay the associated testing costs. If Nasco
remains interested in competing, we see no reason why the Navy should
not provide Nasco an opportunity to qualify its components at its own
expense. This will provide Nasco the opportunity that was available to
the firm when it decided to reverse engineer these components. If Nasco
were successful, the Navy would then have the benefit of a second
competitor. Accordingly, we recommend that the Navy afford Nasco a
reasonable opportunity to have its brake components tested at its own
expense prior to going forward with this acquisition.
Harry R. Van Cleve
General Counsel
FOOTNOTE
1/ Nasco alleges that such a reading of the statute places the firm
in a worse situation than it would have been had Congress not enacted 10
U.S.C. Sec. 2319. We find no merit to this assertion. First, we
disagree that Congress contemplated that agencies bear the cost of
testing and evaluation under these circumstances. Secondly, while Nasco
asserts that a first article requirement subjects a small business to
greater business risk and is therefore contrary to the statute, we note
that this is not the case in all circumstances. To the contrary, the
expense of producing a component for prequalification may itself be
prohibitive for a small business since there is no assurance that the
small business would receive any award under a future acquisition.
Under a first article requirement, the small business is awarded the
contract subject to providing a satisfactory product. While Nasco may
find this risk too great, Congress was concerned with providing firms
the opportunity to compete and there is nothing in the statute which
suggests that Congress favored prequalification over first article
testing as the preferred method for encouraging competition.
Matter of: B&T International, Inc.--Reconsideration
File: B-224284.2
Date: May 13, 1987
DIGEST
Where, in request for reconsideration, an agency that improperly
rejected a bid as nonresponsive for failure to acknowledge an amendment
that merely confirmed the only reasonable interpretation of a
solicitation makes either hypothetical arguments or ones already
considered, there is no basis to overturn a prior decision.
DECISION
The General Services Administration (GSA) requests reconsideration of
our decision sustaining the protest of B&T International, Inc., B&T
International, Inc., B-224284, Dec. 8, 1986, 86-2 CPD P 654. We found
that GSA had improperly rejected B&T's bid as nonresponsive to
invitation for bids (IFB) No. 9FCO-OKU-A-A1337/86 for failure to
acknowledge an amendment. GSA challenges this conclusion, primarily
contending that our Office erred in finding that the amendment did not
change, but merely confirmed, the period of performance specified in the
solicitation. We affirm our prior decision.
BACKGROUND
The solicitation, issued on April 14, 1986, contemplated the multiple
award of requirement contracts for numerous varieties of aluminum alloy
pans to be delivered throughout the United States. B&T was the apparent
low bidder for four items; GSA, however, rejected the firm's bid as
nonresponsive because of B&T's failure to acknowledge an amendment.
We found that B&T's failure to acknowledge this amendment, which
provided that the contracts would be effective from date of award until
June 30, 1986, could properly be waived as a minor informality. The
solicitation as issued included two apparently inconsistent periods of
performance. On page 2, it provided that the period of performance
would be from the date of award through June 30, 1986, while the cover
sheet specified that the contracts were to run through June 30, 1988.
As stated in our original decision, we did not find the solicitation to
be ambiguous, i.e., subject to more than one reasonable interpretation.
Rather, we found that the intended period of performance was clear.
Specifically, we found that the 1986 termination date was obviously in
error, since bid opening had been May 14. We found it unlikely that GSA
would award contracts for a term of at most 45 days, particularly in
view of the estimated quantities included in the IFB. Thus, we
concluded that the protester had properly ignored the 1986 date. We
also found that the period of performance specified in the cover sheet
was incorporated by reference into the solicitation. We concluded that
B&T was on notice of the correct contract term and, although, as
instructed, it did not return the cover sheet with its bid, it clearly
intended to be bound for the entire 2-year period.
DISCUSSION
GSA challenges our decision on two bases. GSA's first contention is
founded upon the fundamental principle of government contract law that
the responsiveness of a bid must be determined from the bid itself.
Since B&T neither acknowledged the amendment nor returned the cover
sheet, GSA maintains that the bid cannot be viewed as manifesting B&T's
intent to perform for the full 2-year period. GSA therefore concludes
that B&T's bid must be rejected as nonresponsive.
The argument essentially repeats one raised by GSA during
consideration of the initial protest. We were not then, nor are we now,
persuaded by this position. In raising this argument anew, GSA
seemingly ignores our initial finding that because the Table of Contents
set forth on page 1 of the IFB (Standard Form 33) identified the cover
sheet as section A of the solicitation, the cover sheet was incorporated
by reference into the solicitation. Therefore, B&T's return of the
signed Standard Form 33 evidenced its intent to be bound by all terms of
the solicitation, regardless of whether the pages of the IFB containing
such terms were also returned.
Alternatively, GSA argues that assuming that the bid submitted by B&T
did incorporate the terms of the cover sheet, B&T's bid was ambiguous
because it contained two inconsistent periods of performance, also
making it nonresponsive. GSA challenges our finding that the 45-day
maximum period of performance specified on page 2 of the solicitation
was clearly in error and thereby properly ignored. GSA argues that a
requirements contract for such a short duration would be possible,
particularly in case of a reprocurement where a solicitation is issued
to cover requirements that were to have been met by a defaulted
contractor. GSA further states that the estimated quantities of pans to
be delivered under the four items for which B&T was the apparent low
bidder were not so great that delivery of the entire amount within 45
days would be inconceivable.
We do not dispute GSA's contention that agencies, in appropriate
circumstances, may issue solicitations for contracts of extremely short
duration. In deciding this protest, however, we are necessarily
concerned with the facts and circumstances surrounding this particular
solicitation and not hypothetical situations. GSA does not state, and
there is nothing in the record to indicate, that this IFB was for a
reprocurement. Moreover, the structure of the bidding schedule
indicated that the contracts were to be for a period of far more than 45
days. The schedule set forth both estimated peak monthly requirements
and estimated total quantities for each item to be procured, and the
total for each item essentially was a multiple of the corresponding
monthly requirement. Had GSA in fact contemplated 45-day contracts, it
is doubtful that the bidding schedule would have been structured this
way.
In summary, the IFB, as initially issued, specified two inconsistent
periods of performance. It was, however, subject to only one reasonable
interpretation, and thus was not ambiguous. The amendment merely
confirmed or clarified the period of performance already imposed by the
solicitation, and B&T's failure to acknowledge it consequently was a
minor informality. Furthermore, B&T's return of a signed Standard Form
33 evidenced its intent to be bound by all the terms of the
solicitation. GSA has not raised any legal or factual grounds that
would warrant reversal of these conclusions.
We affirm our prior decision.
Comptroller General
of the United States
Matter of: United States Marshals Service--Request for
Reconsideration
File: B-224277.3
Date: April 22, 1987
DIGEST
1. A determination not to synopsize a noncompetitive award cannot
itself justify statement for a noncompetitive award, which is subject to
high-level approval must also contain information indicating the basis
for not synopsizing.
2. A justification for using other than full and open competition
which cites 41 U.S.C. Sec. 253(c) (1) (Supp. III 1985) does not meet the
requirements of a justification for using the "urgent need" exception
from using full and open competition under 41 U.S.C. Sec. 253(c)(2)
(Supp. III 1985).
DECISION
The United States Marshals Service (USMS) requests reconsideration of
our decision in World-Wide Security Service, Inc.; Philips Electronic
Instruments, Inc., B-224277; B-224227.2, Jan. 8, 1987, 66 Comp. Gen. ,
87-1 C.P.D. P , where we sustained the protests of World-Wide Security
Service, Inc. and Philips Electronic Instruments, Inc. and recommended
corrective action. We affirm our prior decision.
We sustained the protests of World-Wide and Philips because USMS
failed to synopsize the intended contract action in the Commerce
Business Daily (CBD), as required under 41 U.S.C. Sec. 416(a) (1) (A)
(Supp. III 1985). We found that since USMS' justification for awarding
a sole-source contract to Astrophysics Research Corporation (ARC) was
based on a determination under 41 U.S.C. Sec. 253(c)(1) (Supp. III 1985)
that only one responsible source would satisfy agency needs, the agency
was required by law to synopsize the contract in the CBD unless the
notice requirement was waived by the agency head. 41 U.S.C. Sec. 253(f)
(1) (c) (Supp. III 1985).
The USMS now requests that we reconsider that decision on the grounds
that it was not required to synopsize the intended contract action. In
support of its position, USMS cites the Federal Acquisition Regulation
(FAR), 48 C.F.R. Sec. 5.202(a) (1) (1986), which relieves the
contracting agency from the requirement of publication whenever " t he
synopsis cannot be worded to preclude disclosure of an agency's needs
and such disclosure would compromise the national security," and submits
a document entitled "Determination Not To Synopsize," which was not
submitted during our initial consideration of these protests.
The existence of the document entitled "Determination Not To
Synopsize" does not itself excuse the agency's actions here. The FAR
does permit a contracting officer to determine that synopsizing would
compromise the national security. However, a separate statement,
entitled "Justification for Other Than Full and Open Competition," the
justification for making a noncompetitive award, which must be reviewed
and approved by an official above the level of the contracting officer,
FAR, 48 C.F.R. Sec. 6.304, must include a description of efforts made to
ensure that offers are solicited from as many sources as oossible,
"including whether a CBD notice was or will be publicized . . . and, if
not, which exception under FAR section 5.202 applies." FAR, 48 C.F.R.
Sec. 6.303-2(a)(b). The justification statement did not contain this
information and thus was not subject to review by the approving
official. Since the justification statement was required to contain
this information, and since a contracting officer may not award a
noncompetitive contract under 41 U.S.C. Sec. 253(c) (1) unless such
action is justified and a certified, complete justification statement is
submitted and approved, 48 C.F.R. Sec. 6.303-1 (a), we believe the award
under that statutory provision was not properly made.
The USMS argues in the alternative that although the "Justification
for Other Than Full and Open Competition," prepared before award of the
contract to ARC did not cite urgency as a basis for USMS' decision, the
"spirit" of the justification demonstrates the critical and urgent need
for the equipment as contemplated under the urgent need exception
contained in 41 U.S.C. Sec. 253(c) (2) (Supp. III 1985). According to
the agency, therefore, the decision not to synopsize was permissible
under 41 U.S.C. Sec. 416(c) (2) (Supp. III 1985), which excuses an
agency from the publication requirements of 41 U.S.C. Sec. 416(a) (1)
(A) when the contract action takes place under the authority provided in
41 U.S.C. Sec. 253(c) (2).
We cannot conclude that USMS' justification was based on urgency.
First, we note that under 41 U.S.C. Sec. 253(f) (3) (B), the procuring
agency must cite the statutory exception under which the procurement has
been excepted from full and open competition in its justification
therefor. The USMS justification cites only 41 U.S.C. Sec. 253(c) (1),
and makes no reference to section 253(c) (2). Second, we are not
persuaded that the "spirit" of the justification demonstrates an urgent
need as suggested by the agency. While it is true that the
justification does refer to an "urgent need" to acquire the best
equipment available to meet a perceived security threat and to provide
maximum security, the essence of the narrative addresses the agency's
rationale for choosing ARC as the only responsible source of equipment
which could meet its needs. Third, under 41 U.S.C. Sec. 253(e), an
agency is required to request offers from as many potential sources as
is practicable under the circumstances when procuring under the "urgent
need" exception. Both of the protesters here indicated interest in
submitting offers at the time the solicitation was issued, and the
passage of approximately 3 months from the time the solicitation was
issued to the time of award provided, in our opinion, time in which to
secure offers from the protesters. Finally, although under 41 U.S.C.
Sec. 253(f) (2) an agency may make the justification for an "urgent
procurement" after the contract is awarded, during the 5 months since
the award of this contract, the agency has failed to issue such a
justification. We can only conclude that 41 U.S.C. Sec. 253(c) (2) was
not the basis for using other than full and open competition in this
procurement.
USMS also requests that we modify our recommendation that USMS
terminate its contract with ARC and conduct this procurement in
accordance with the statutory requirements. In our decision, we noted
that the contract schedule called for deliveries beginning in late
January and thus we recommended termination of the entire contract.
USMS reports that at the time that our decision was received by USMS,
more than 50 of the units under the contract had been delivered and were
operating within court facilities, and that the remainder were scheduled
for delivery by March 31, 1987. USMS temporarily has suspended the
contract pending our decision on its request for reconsideration, except
that it had the awardee deliver one other machine on February 13 due to
"critical life threatening circumstances."
In issuing our decision, we were not aware of these facts. With
regard to the 50 machines that have been delivered and are in operation,
there is no indication that these deliveries were made in other than
good faith prior to USMS' receipt of the decision. We also have no
basis to question USMS' finding that the delivery of the one additional
machine was due to critical circumstances. Accordingly, we modify our
decision and recommend termination of the remainder of the contract and
resolicitation of the remaining need. Our decision to award costs is
affirmed.
The prior decision, as modified, is affirmed.
Comptroller General
of the United States
Matter of: Microphor, Inc.
File: B-224264
Date: February 11, 1987
DIGEST
Contracting agency did not abuse its discretion in proceeding with
award, on the basis of initial proposals, to the technically acceptable,
lowest-priced offeror whose price was determined to be fair and
reasonable in face of assertion made by second-low offeror 5 weeks after
proposals were submitted that its competitive position had changed and
it could offer a lower price representing a 7.5 percent saving. Award
to low offeror was legally unobjectionable and possibility of monetary
saving must be weighed against uncertainty whether it actually would be
realized were competition reopened and government's interest in the
timely award of a contract for the goods and services it is procuring.
DECISION
Microphor, Inc., has protested the decision of the Naval Regional
Contracting Center, Long Beach, California, not to conduct discussions
following its receipt of a late price modification to the timely offer
which the company submitted under request for proposals (RFP) No.
N00123-86-R-0838. The solicitation was for the material and services
necessary to outfit 42 "clinical work spaces" (with an option for an
additional 42 units) for the Fleet Hospital Support Office in Alameda,
California.
The RFP provided that award would be made to "that responsible
offeror proposing the lowest price for equipment meeting the
requirements of the RFP" and stated that offerors should make their best
offers initially as the government reserved the right to award without
discussions. The "Evaluation of Options" clause also provided that, for
award purposes, the Navy would evaluate prices for both the basic and
option quantities involved.
Four offerors, including Microphor and Grumman Houston Corporation
(G-H), submitted timely offers by the closing date of August 5, 1986.
In rounded terms, G-H's offer of $1,881,000 was low; Microphor's
second-low offer of $1,902,000 was some $21,000 higher. The Navy
reports that all four proposals were then evaluated and found to be
technically acceptable and that the contracting officer did not conduct
discussions because he anticipated award on the basis of initial
proposals to G-H as the lowest-priced, technically acceptable offeror.
On September 11, more than 5 weeks after receipt of initial offers,
Microphor telephoned the Navy to ascertain whether award had yet been
made, and apparently on being told that it had not, advised that it was
in a position to reduce its price as a result of manufacturing economies
made possible by its performance of another contract for the same items.
By telegram delivered on September 12 and letter received by the Navy
on September 29, Microphor offered to reduce its price by $1,700 per
unit, which when multiplied by the base plus option quantities of 84
units, equaled $142,800. Were this price reduction to be considered in
the evaluation of Microphor's offer, it would oe about $122,000 less
than G-H's.
The Navy concluded that Microphor's offered price reduction was a
late modification of its offer which could not be accepted under the
applicable provisions of the Federal Acquisition Regulation (FAR) and
implementing clauses in the RFP. The agency then proceeded on September
22 to award a contract for the base and option quantities to G-H, on the
basis of its initial proposal, as the lowest and reasonably priced,
technically acceptable offeror. Microphor protested to our Office upon
receipt of notification of the award to G-H.
Microphor concedes that its offered price reduction was "late," if
viewed as an attempted modification to its proposal, and it does not
argue that it falls within any of the exceptions provided for by
regulation under which late modifications to proposals may be considered
for award. It simply argues that the Navy should not have proceeded with
an award on the basis of initial proposals when it was aware that a
better price might be obtained if it conducted a round of discussions
and asked for best and final offers.
Much of the Navy's report to our Office is devoted to a discussion of
the late modifications to proposal rules and an explanation of why,
under them, Microphor's price reduction could not be considered for
award, an understandable emphasis since Microphor's initial letter of
protest could be read as raising that issue and its argument was not
really sharpened until it responded to the Navy's report. Beyond that,
however, the Navy argued that its award on the basis of initial
proposals was legally proper and to do otherwise would not be conducive
to an orderly procurement process. We agree.
As a general rule, a contracting agency may make an award without
holding discussions or requesting best and final offers, provided that
(1) the solicitation advises offerors of this possibility, and (2) there
has been adequate competition to clearly demonstrate that the award will
result in the lowest overall cost to the government at a fair and
reasonable price. Wilson Concepts of Florida, Inc., B-224485, Nov. 14,
1986, 86-2 C.P.D. P 561; FAR, 48 C.F.R. Sec. 15.610(a) (1986). All
these circumstances were present in the Navy's award of the contract to
G-H, as the technically acceptable offeror whose price, the lowest
received in competition, was determined to be fair and reasonable. The
award to G-H was therefore legally unobjectionable.
There may be circumstances where an offered price reduction, although
late, so closely follows the receipt of initial offers and would confer
such a substantial benefit to the government that it would be tantamount
to an abuse of discretion not to ask for best and final offers in order
to take advantage of it. This is not, we believe, such a case. Against
the 7.5 percent cost saving which may be represented by the protester's
offered price reduction must be weighed other considerations.
First, although we have no reason to doubt the good faith of the
protester's assertions concerning the manufacturing economies it is able
to achieve, it must be recognized that a "late modification" by a
second-low offeror transmitted weeks after initial proposals have been
received legally cannot be accepted and has no effect. The sender has
taken no risk but has everything to gain if the receipt of the "late
modification" stimulates a request for best and final offers as a result
of which the anticipated savings may, or may not, be realized depending
on what revised offers actually are made at that time.
Second, and perhaps more importantly, it must be kept in mind that
the government has an interest in the timely award of a contract leading
to the supply of the goods and services it is seeking to procure. Here,
a competition was held in which the protester participated but did not
win because another, technically acceptable firm offered a lower price
which was determined to be fair and reasonable. Over a month after that
competition was held, the protester asserted that its situation had
changed and that it then could offer a lower price. At some point,
however, the procurement process must end and the government must
proceed with a contract. We do not think the Navy abused its discretion
in proceeding with an award to G-H.
The protest is denied.
Harry R. Van Cleve
General Counsel
Matter of: Blue Lake Forest Products, Inc.
File: B-224263
Date: February 9, 1987
DIGEST
While the protester argues that, under combined bid and auction
procedures, the timber sale officer improperly advised and permitted
bidders at bid opening to execute and submit a certificate of small
business status, required to be submitted with the bid but mistakenly
omitted from the bid package, there is no practical basis for objecting
to this procedure where its invalidation would result in canceling the
sale and all bidders had a fair opportunity to compete as qualified
small businesses in the auction.
DECISION
Blue Lake Forest Products, Inc. protests the award of a contract to
Eel River Sawmills under the Scallion Timber Sale conducted by the
Forest Service, U.S. Department of Agriculture, using combined bid and
auction procedures. The sale was set aside for preferential treatment
of small business concerns. The protest is based on the awardee's
failure to self-certify its small business status until after the time
set for bid opening. The awardee did so at the instruction of the
Forest Service which had inadvertently omitted the necessary form from
the bid package.
We deny the protest.
The instructions in the bid package for the sale provided for an oral
auction in which participation would be limited to bidders that
initially submitted acceptable bids at or above a stated minimum price
of $385,163.50. The instructions further provided that to be
acceptable, a bid must include an executed Certificate of Small Business
Status, Forest Service Form R5-2400-152a, in which the bidder certified
that it was a small business and agreed to sell no more than 30 percent
of the timber to large businesses. A bid that did not include the
required certificate would be eligible for award only if no bids were
received from qualified small business concerns.
Because the Forest Service discovered on the day before bid opening
that it had inadvertently omitted the certificate form from the bid
package, a Forest Service sale officer advised prospective bidders to
submit their bids and that the omitted form would be distributed to the
bidders for completion at bid opening. While the awardee and another
bidder relied on this advice, the protester executed and included in its
bid a form from another bid package. Shortly before bid opening, the
other bidders again inquired about the procedure for submitting the
certificate. The sale officer repeated her assurance that they would be
given an opportunity to submit the forms at bid opening and told the
bidders they did not need to reopen their sealed bids to submit the
forms before bid opening.
After the time set for bid opening, the presiding officer announced
that no other bids would be accepted and asked those bidders who did not
submit a certificate to come forward and execute one before the opening
of bids. The two bidders aside from the protester did so.
Eel River Sawmills offered the highest price of $618,925.50 at the
auction, and the protester offered the next highest price of $617,859.
The protester argues, however, that since its competitors'sealed bids
failed to include the required certificate, those bids should have been
rejected and the Forest Service should make award to the protester at
its sealed bid price of $392,273.50. We disagree.
It is not disputed that the Forest Service advised all the bidders
that they could submit their sealed bids and then execute and submit the
required certificate at bid opening. While the protester argues that
this was improper, we are not aware of any statute or regulation that
prohibits obtaining the certificate at bid opening. The protester
argues that this procedure is inconsistent with the Forest Service
Manual, which provides that bidders should not be permitted to certify
their small business status after bids have been opened since a bidder
could deliberately delay self-certification until determining whether
there were any other small businesses competing; if there was none, the
bidder could decide not to complete the certificate in order to avoid
the limitation on the contractor's sales to large businesses. The
Forest Service Manual, however, merely provides internal policy; a
failure to comply with the Manual's provisions, therefore, does not
affect the legal validity of the agency's actions. See Gene Peters, 56
Comp. Gen. 459 (1977), 77-1 CPD P 225. Published Forest Service
regulations provide that the sale procedures must insure that open and
fair competition occurs and that the government receives not less than
fair market value for the timber. 36 C.F.R. Sec. 223.89(a) (1985);
Coultas Logging, Inc., B-222385, July 14, 1986, 86-2 CPD P 64.
Invalidating the bids of the protester's competitors would cause the
protester's written bid of $392,273.50 to be the only acceptable bid,
whereas the auction resulted in a price of $618,925.50. Since it is
clear that the protester's bid offered less than the market value of the
timber, a proper basis would exist for canceling the sale. See 36
C.F.R. Sec. 223. 100 (a); Southwest Forest Indus., B-223646, Sept. 24,
1986, 86-2 CPD P 343. In this regard, the Forest Service indicates the
rejection of the other bids would result in a cancellation due to price
unreasonableness. In these circumstances, sustaining the protest and
requiring a recompetition would serve no practical purpose since the
three bidders had a fair opportunity to compete as qualified small
business concerns in the oral auction. See Southwest Forest Indus.,
supra.
We do recognize that under the procedures employed here, a bidder
might scrutinize the attending bidders to determine whether or not it
would be necessary to obligate itself to the limitation on sales to
large businesses in order to compete for award, which would defeat the
government's interest in promoting small businesses under the set-aside
sale. In this case, it appears reasonably certain that all three
bidders intended to obligate themselves to the limitation on sales to
large businesses, since all of them made repeated inquiries and efforts
to obtain the necessary form. In any event, as stated above, no
practical purpose would be served by cancellation since the three
bidders would be aware of their likely small business competitors in the
recompetition. We nevertheless agree with the protester that the better
course of action would have been for the sales officer to obtain the
executed certificates before bid opening, and we are recommending by
separate letter that the Secretary of Agriculture so advise its sales
officers for future sales.
The protest is denied.
Harry R. Van Cleve
General Counsel
Matter of: State Machine Products
File: B-224260
Date: February 5, 1987
DIGEST
Whether successful bidder to supply field range lids intends to use,
without authorization, government tooling furnished under another
contract, or to provide used lids, does not affect the responsiveness of
the bid since the bid does not take exception to the invitation's
requirements. Rather, the issue involves the bidder's responsibility
and, subsequent to an award, contract administration which the General
Accounting Office does not generally review.
DECISION
State Machine Products (SMP) protests the award of a contract to Nash
Metalware Co., Inc. (Nash) under invitation for bids (IFB) No.
DLA400-86-B-8226, issued by the Defense General Supply Center (DGSC),
Richmond, Virginia. The procurement is for the acquisition of 500 lid
assemblies to be used as spare parts for gasoline field range outfits.
SMP complains that Nash's low price was based on the unauthorized use of
government tooling furnished to Nash under other contracts.
At the time the IFB was issued, DGSC planned to furnish government
tooling to the contractor for use in performing the contract. DGSC
later discovered that the government only inventoried tooling sets for
the entire field range and not just the lid assembly. Accordingly, the
IFB was amended to delete the provision requiring use of government
tooling. Nash has field range tooling in its possession for the
performance of other contracts, and SMP suspects that Nash will use that
tooling to perform this contract. SMP contends that Nash's price
otherwise is too low to account for tooling costs. SMP argues that Nash
therefore has a competitive advantage over other bidders who must
include the costs of tooling in their bids.
DGSC states that Nash intends to purchase the 500 lid assembles from
another supplier which, in turn, purchased the assemblies in a
liquidation sale from yet another supplier, Armstrong Products
Corporation (Armstrong). If that is correct, SMP offers evidence
showing that Armstrong may have used government furnished tooling to
produce its lid assemblies, and contends that Nash will unfairly benefit
from being able to acquire the lids at a resultingly lower price. SMP
also offers a letter from an Armstrong official stating that Armstrong
may not have had 500 lids assemblies in inventory at liquidation.
Initially, we point out that the IFB does not prohibit the use of
government tooling in a bidder's possession, and the unauthorized use of
such tooling would be prohibited by a clause in the contract under which
the tooling was provided. We further point out that since the IFB does
not provide for the successful offeror to use government furnished
property in its possession, the offeror may not do so without the
consent of the contracting officer having cognizance over the property,
and then the contractor must pay the appropriate rental charge. Federal
Acquisition Regulation (FAR), 48 C.F.R. Secs. 45.402 and 45.202-2
(1986).
In any event, Nash's bid did not propose to use government furnished
tooling or to take exception to any of the IFB's requirements, and the
bid therefore was responsive. See Great Lakes Dredge & Dock Co.,
B-221768, May 8, 1986, 86-1 CPD P 444. The agency determined that Nash
was responsible--that is capable of fulfilling the IFB's
requirements--and we will not review that determination absent
circumstances not present here. See Peter Gordon Co., B-224011, Sept.
15, 1986, 86-2 CPD P 300. Whether Nash actually performs in compliance
with contract requirements or uses government furnished tooling under
another contract is a matter of contract administration under the
respective contracts. This Office generally does not review matters of
contract administration. 4 C.F.R. Sec. 21.3(f) (1) (1986); Descomp
Inc., B-220085.2, Feb. 18, 1986, 86-1 CPD P 172.
Regarding Nash's alleged advantage in being able to provide Armstrong
lids, a competitive advantage is improper only where the advantage
results from preferential treatment of an offeror or other unfair action
by the government. A competitive advantage accruing to an offeror due
to other circumstances need not be equalized in favor of the other
offerors. Product Research, Inc., B-223439.2, Sept. 18, 1986, 86-2 CPD
P 317. Thus, the fact that Nash has access to lids previously
manufactured with government tooling is not a valid basis for protest.
To the extent Nash plans to purchase Armstrong lid assemblies, SMP
argues that Nash's bid is nonresponsive for contravening a standard
clause in the IFB requiring that new supplies be delivered. FAR, 48
C.F.R. Sec. 52.210-5 (1985). What Nash intends to deliver does not
affect the responsiveness of its bid because the bid did not take
exception to the requirement for new supplies nor indicate that Nash
intended to purchase Armstrong lids. In any event, the fact that the
lid assemblies may have passed through several suppliers does not mean
that the assemblies are not "new"; moreover, since the bid was
responsive, this issue again involves, in the first instance, Nash's
responsibility and, after award, a matter of contract administration.
SMP also argues that Nash misrepresented to DGSC that it would
manufacture the lid assemblies because Nash represented in its bid that
it was a manufacturer of the supplies offered. This representation is
required by FAR, 48 C.F.R. Sec. 22.608-1 (1986), to determine an
offeror's eligibility under the Walsh-Healey Public Contract Act, 41
U.S.C. Secs. 35-45 (1982), which requires that public supply contracts
be awarded only to regular dealers or manufacturers that agree to meet
certain minimum labor standards. As provided by our Bid Protest
Regulations, our Office does not consider the legal status of a firm as
a regular dealer or manufacturer under the Walsh-Healey Act. 4 C.F.R.
Sec. 21.3(f) (9). The contracting agency determines the bidding firm's
status, subject to review by the Small Business Administration (if a
small business is involved) or the Secretary of Labor. We point out,
however, that a company may certify itself as a manufacturer for
Walsh-Healey Act purposes and nevertheless subcontract for the supplies
to be furnished under a particular contract. See Stellar Indus.,
Inc.--Request for Reconsideration, 64 Comp. Gen. 748 (1985), 85-2 CPD P
127.
Finally, SMP points out that, in completing the "Preference for Labor
Surplus Area Concerns" clause, FAR, 48 C.F.R. Sec. 52.220-1, Nash left
blank the space for identifying subcontractors which account for more
than 50 percent of the contract price. However, the clause itself
provides that failure to fill out the space only precludes consideration
of the offeror as labor surplus area concern.
We therefore find no basis to object to DGSC's awarding Nash the
contract.
The protest is denied.
Harry R. Van Cleve
General Counsel
Matter of: Oxford Medical, Inc.--Request for Reconsideration
File: B-224256.2
Date: February 24, 1987
DIGEST
1. Protest which was dismissed as untsimely, for failure to be filed
with the agency within 10 working days after basis of protest was known
to protester, will be considered on the merits since protester provides
evidence, in its request for reconsideration, which establishes that its
agency-level protest was filed within the 10-day deadline.
2. Technical requirements, stated in clear and unambiguous terms, are
presumed to be material and essential to the needs of the government.
Acceptance of a proposal which does not conform to such a material
solicitation requirement, without first amending the solicitation to
provide an opportunity for all offerors to compete on an equal basis, is
improper.
DECISION
Oxford Medical, Inc. requests reconsideration of our decision, Oxford
Medical Inc., B-224256, Oct. 8, 1986, 86-2 C.P.D. P 409, in which we
dismissed Oxford's protest of a contract award to Del Mar Avionics under
request for proposals (RFP) No. DADA09-86-R-0044, issued by the
Department of the Army for medical monitoring equipment at the William
Beaumont Army Medical Center, El Paso, Texas. In our original decision,
we found that Oxford's protest was not for consideration on the merits
because we determined that the protest was untimely in that it had not
been filed with the agency within 10 working days after the basis of the
protest was known to Oxford. We based our finding of untimeliness on an
assumption of fact, absent contrary evidence, that Oxford's protest,
dated 1 day before the 10-day time period was to expire, did not reach
the agency until after the 10-day deadline.
In its request for reconsideration, Oxford has provided us with a
copy of a Federal Express delivery record, signed by the contracting
officer, which shows that she received Oxford's protest at 10:40 a.m. on
August 28, 1986. The Army has not disputed the timeliness of Oxford's
protest to it. In light of this new factual evidence establishing that
its protest did reach the agency within the 10-day deadline, we find
Oxford's agency-level protest to be timely and its subsequent protest to
our Office for consideration on the merits.
The RFP solicited offers for an ambulatory physiological monitoring
scanner system to analyze electroencephalographic telementry (the
electric activity of the brain). Such a scanner system is used to
analyze data initially recorded by electroencephalographic recording
devices. Section C of the RFP, its specifications, contained 13
"minimum essential requirements," including one that the system "shall
be compatible with Medilog 424 EEGI, 2, 3, 4 and Oxford XC-3" recording
devices. This requirement was included in the specifications because
the Army already owned the listed recording devices and wanted to assure
that any scanner purchased would be compatible with those recorders.
Two offers were received, one from Del Mar and one from Oxford.
Oxford offered to provide one scanner system at a price of $29,450.
Oxford's scanner met all of the minimum essential requirements listed in
the RFP, including the compatibility requirement. Del Mar offered one
scanner system and four recording devices with accessories for a price
of $29,000. Del Mar's scanner system met all of the RFP's minimum
essential requirements except for the compatibility requirement, a
deficiency which Del Mar sought to overcome by including the additional
recording devices in its offer.
The Army awarded the contract to Del Mar stating that Del Mar's offer
was most advantageous to the government since it offered recorders along
with its scanner system, all at a lower price than Oxford proposed for
its scanner system without recorders. The Army also stated that
accepting Del Mar's offer would allow it to use its existing recorders
in other capacities. Oxford protests that the Army's award to Del Mar
was improper because the scanner system Del Mar offered does not meet
the RFP's minimum essential requirement of compatibility with the listed
recording devices.
We sustain the protest.
Technical requirements, stated in clear and unambiguous terms in a
solicitation, which set forth particular features of the product to be
purchased are presumed to be material and essential to the needs of the
government. See SquibbVitatek, Inc., B-205306, July 27, 1982, 82-2
C.P.D. P 81. Consequently, offerors have a right to assume that such
requirements will be enforced and, on the basis of them, to anticipate
the scope of competition for award. SquibbVitatek, Inc., B-205306,
supra, 82-2 C.P.D. P 81 at 4. Therefore, when a contracting agency
determines that a proposal, which involves a material departure from
specified requirements, would nonetheless be acceptable, amendment of
the RFP is required so that all offerors are afforded an opportunity to
compete on an equal basis. Parkson Corporation, B-187101, Feb. 11,
1977, 77-1 C.P.D. P 103.
The Army admits that Del Mar's scanner system did not meet the
compatibility requirement of the RFP but argues that the award was
proper since Del Mar's offer met the government's needs at the lowest
price by offering to provide recorders along with its scanner.
Section M of the RFP, "Evaluation Factors for Award," advise offerors
that award would be made based on the following order of precedence:
(1) "Section C, ability to meet minimum essential technical
requirements"; (2) capability of prospective contractor to meet
required delivery date; and (3) price. One of the "minimum essential
requirements," as we indicated above, was that the scanner system be
compatible with certain existing government-owned equipment. It is
difficult to imagine a more unambiguous statement that the satisfaction
of the agency's technical requirements was of primary importance,
outweighing even time of delivery and price. It is equally clear that
Del Mar's offer did not meet one of the agency's "minimum essential
requirements." Even the Army admits in its report to our Office that it
"questions" whether the medical center's actions could be "legally
supported," however well motivated, and that it:
" . . . would have been better practice if the contracting
officer had revised the solicitation to remove the compatibility
requirement, or resolicited... without the requirement, after
receiving the Del Mar proposal incorporating its own recorders."
We agree. Since the Army did not amend the RFP to delete the
compatibility requirement, we find that the award to Del Mar was
improper. The protest is, therefore, sustained.
The record shows that this contract was substantially, if not wholly,
performed prior to our October 2, 1986, receipt of Oxford's initial
protest. The Army states that Del Mar shipped the equipment on August
27--the day before Oxford's agency-level protest was received by the
Army--and that the equipment was received at the medical center on
September 4, weeks before the Army's denial of Oxford's protest to it
and obviously, even longer before that firm's subsequent filing of a
protest with our Office. In addition, the Army advises that the
necessary ambulatory monitoring was suspended pending receipt of a
scanner system. Removal of Del Mar's equipment, which is now in
satisfactory operation, would thus cause an unnecessary disruption in
the medical center's current monitoring operations. In light of the
above circumstances, we find that disturbance of the award is not
appropriate.
We do allow a protester to recover its proposal preparation costs
where the protester had a substantial chance of receiving the award, but
was unreasonably excluded from the procurement, and where we did not
recommend one of the remedies delineated in 4 C.F.R. Sec. 21.6(a) (2-5)
(1986). Our regulations also permit recovery of the costs of filing and
pursuing a protest in situations where the protester was unreasonably
excluded from the procurement. 4 C.F.R. Sec. 21.6(e). Since the Army
awarded this contract in contravention of the evaluation criteria
contained in its solicitation, which Oxford--the only other
offeror--met, Oxford was unreasonably excluded from the procurement. We
therefore recommend the award to it of proposal preparation costs and
the costs of pursuing the protest. In addition, we are recommending to
the Secretary of the Army that appropriate action be taken to insure
that the deficiency noted in this procurement does not recur.
Comptroller General
of the United States
Matter of: Conversational Voice Technologies Corporation
File: B-224255
Date: February 17, 1987
DIGEST
1. Where the contracting officer determines that urgency necessitates
contract award without giving the unsuccessful offeror 5-day advance
notice of the award to permit a protest of the successful offeror's size
status, the contract award is valid. However, where a timely protest
after award of the awardee's size status results in a Small Business
Administration determination that the awardee was not a small business
and was not eligible for award under the 100-percent small business
set-aside, the agency should consider termination of the contract.
2. Protester-small business would not be prejudiced by continuation
of contract awarded to a lower-priced large business under a small
business set-aside because contracting agency would have resoiicited on
an unrestricted basis due to the protester's unreasonably high price,
and the protester admittedly would not have lowered its price. The fact
that the agency conducted discussions solely with the large business
after the submission of proposals does not affect this conclusion
because the protester's offer was technically acceptable and its price
wouid not have been reduced.
3. Mere contention that awardee misrepresented its small business
size status, absent sufficient evidence, does not constitute a basis for
questioning award.
4. Fact that the contracting agency improperly negotiated with
awardee but not with protester does not require contract termination
where the protester would not have changed its price and the award was
based on price.
DECISION
Conversational Voice Technologies Corporation (CVTC) protests the
September 29, 1986, award to APEC Technology Limited of a contract for a
telephone answering system (and various connected services) under
request for proposals (RFP) No. DABT10-86-R-0230--issued by the
Department of the Army, Fort Benning, Georgia as a 100-percent small
business set-aside.
We deny the protest.
The procurement was originally synopsized in the Commerce Business
Daily (CBD) as a sole-source purchase of CVTC's ConMode Call Handling
System. After APEC advised the activity that it could supply a system
that also met its needs, the procurement was resynopsized in the CBD as
a 100-percent small business set-aside. Two offers were received by the
September 25 closing date--one from CVTC priced at $46,300; the other
from APEC priced at $35,000.
The RFP provided that the contract would be awarded to the
responsible offeror that submitted the lowest-priced responsive offer,
and APEC was in line for award on that basis. Prior to making the
award, APEC was requested to review and confirm its price (in view of
the 32 percent spread between its price and that of CVTC). At the same
time, APEC was also requested to explain why it certified it was a small
business, because it also stated in the offer that "not all" of the
supplies to be furnished under the contract would be
manufactured/produced by an appropriate small business concern. In this
regard, the RFP incorporated the Federal Acquisition Regulation (FAR)
provision at 48 C.F.R. Sec. 52.219-6 (1985) ("Notice of Total Small
Business Set-Aside"), which provided that only offerors offering end
items manufactured/produced by small business concerns would be eligible
for contract award. APEC advised verbally that, while it was true that
not all of the supplies to be furnished would be manufactured by small
businesses, less than 10 percent of its offered price represented
supplies manufactured by large businesses. In confirming its price,
APEC did not formalize this verbal advice, but rather stated that:
"More than 50 percent of the components of this system are domestic end
products."
Prior to receiving this information, the contracting officer
considered withdrawing the small business set-aside under FAR, 48 C.F.R.
Sec. 19.506(a) (1986), apparently in the belief that APEC was not
eligible for an award, and because of the 32 percent higher price
submitted by the only apparent small business offeror. Upon receipt of
the APEC information, the contracting officer determined that there was
no need to resolicit the procurement on an unrestricted basis since APEC
could be considered a nonmanufacturer small business concern pursuant to
FAR, 48 C.F.R. Sec. 19-102(f), which provides that if more than 50
percent of the total value of a "kit", is to be accounted for by
supplies manufactured by small business concerns, the concern which
purchases the items and packages them as a kit may be considered small.
The contracting officer therefore awarded the contract to APEC.
Although the normal procedure is to provide unsuccessful offerors 5
days advance notice of an intended award to protest the size status of
the proposed awardee with the Small Business Administration (SBA), a
contracting officer may make award without giving this notice where it
is determined that urgency necessitates award without delay. FAR, 48
C.F.R. Sec. 15.1001 (b) (2). The contracting officer here determined
award should be made without delay due to a need to relieve severe work
backlogs and work stoppages resulting from delays in processing incoming
calls, and due to the fact that a delay in award would result in the
loss of the funds for the procurement.
Upon learning of the award, CVTC timely protested APEC's small
business status to the contracting officer, who referred the protest to
the SBA. About 6 weeks after award, the SBA ruled that APEC did not
qualify as a small business concern for the purposes of this
procurement. APEC did not appeal.
CVTC contends that the Army improperly awarded the contract to a
large business. Further, CVTC contends that APEC is not-- but
fraudulently represented itself to be--a small business for the purposes
of this procurement since the equipment it is offering is manufactured
by a large business. CVTC states that the contracting officer
improperly failed to give CVTC the required 5-day notice of the proposed
award so that CVTC might request a ruling, prior to the making of an
award, from the SBA as to APEC's small business status. CVTC also
alleges that the system offered by APEC did not meet the RFP
specifications and that the award to APEC on the basis of that system
denied CVTC an opportunity to offer a comparable less expensive system.
Finally, CVTC contends that the APEC offer was unacceptable since APEC
failed to provide the required list of its sources of supply with its
initial offer and that, although the contracting officer did not have
time to permit CVTC to appeal APEC's size status prior to award or to
negotiate with CVTC, the contracting officer unfairly found time for
APEC to correct this deficiency and improperly entered into discussions
with APEC.
Since the contracting officer awarded the contract prior to the size
protest, based upon a determination that urgency necessitated an award
without delay, the award was properly made. Renaissance Enters., Inc.,
B-222201, July 2, 1986, 86-2 CPD P 24. Notwithstanding the validity of
the award, we have held that an agency should consider terminating such
an award for convenience if, pursuant to a timely size protest, the
contractor is found to be a large business. Solon Automated Servs.,
Inc., B-198670, Nov. 18, 1980, 80-2 CPD P 365. We understand that the
contracting agency does not believe termination is appropriate because
the system is urgently needed to shorten the processing time for
incoming calls which has resulted in severe work backlogs.
Regardless of the urgency perceived by the Army, we do not believe
that termination of the APEC contract is warranted. The record shows
that the contracting officer determined that CVTC's price was
unreasonable because it was 32 percent higher than APEC's. A
contracting officer may cancel a small business set-aside where the
price submitted by the sole responsive small business offeror is
considered to he unreasonable. Mid South Indus., Inc., B-216281, Feb.
11, 1985, 85-1 CPD P 175. Thus, if the award had not been made to APEC,
it appears that the contracting officer, rather than award to CVTC,
would have canceled the solicitation. Similarly, if the APEC contract
is terminated, the procurement would be canceled since award cannot be
made to CVTC at an unreasonable price. Moreover, in a resolicitation
(that obviously would be on an unrestricted basis) it appears that CVTC
could not be expected to offer a lower price--CVTC states in its reply
to the agency report that the price of its system was based on item
prices submitted to the General Services Administration for acceptance
by government agencies and complains that it cannot reduce those prices
for this procurement without having to reduce them for all future
procurements. Thus, we conclude that the continuation of the APEC
contract here would not be prejudicial to CVTC.
With respect to any contention that APEC misrepresented its small
business size status, there is insufficient evidence in the protest
record to show that APEC's representation, albeit mistaken, was made in
other than good faith. Had APEC intended to misrepresent its size
status, it is unlikely that it would have created questions as to that
status by indicating in its proposal that "not all" of the supplies to
be furnished would be manufactured/produced by small business concerns.
We note, in this regard, that the SBA determination that APEC is not a
small business for this procurement is based not on the applicable size
standard, but on APEC's intention to supply end items not manufactured
by a small business. Thus, CVTC's contention regarding fraudulent
misrepresentation is not borne out on this record and does not
constitute a basis upon which to question the award. Trail Blazer
Servs., B-220724, Feb. 12, 1986, 86-1 CPD P 275.
We will not consider CVTC's allegation that APEC's system does not
meet the RFP specifications. CVTC did not timely specify any
deficiencies in APEC's proposal; in its original protest, CVTC merely
alleged that the APEC system did not meet the RFP specifications. Our
Bid Protest Regulations require a protest to include a detailed
statement of the legal and factual grounds for the protest, 4 C.F.R.
Sec. 21.1 (c) (4); CVTC did not submit a statement of the alleged
deficiencies in APEC's system until commenting on the agency report.
Our regulations do not permit such piecemeal development of protest
issues. Contel Information Sys., Inc., B-220215, Jan. 15, 1986, 86-1
CPD P 44. For this reason, we will not consider CVTC's detailed reasons
for alleging that the APEC system did not meet the specifications.
Finally, concerning CVTC's contention that the agency unfairly
permitted APEC to furnish information after the receipt of proposals, we
note, first, that APEC did furnish with its proposal the required list
of its sources of supply. The information on these sources that APEC
provided after the submission of its proposal was not information that
had been required for submission with the proposal, and it was furnished
solely for the purpose of assisting the agency in resolving the question
of APEC's small business status. Contrary to CVTC's assertion that APEC
should have provided information on each portion of its system to show
how these met the specifications, the RFP did not require the submission
of such information.
The agency did conduct discussions, however, by permitting APEC to
correct its statement that supplies would not be anufactured/produced by
small business concerns. We do not believe, however, thats this
prejudiced CVTC. Since the agency found the CVTC proposal
acceptable--no deficiencies existed in the proposal which should have
been brought to CVTC's attention--it could have satisfied its obligation
to negotiate with all offerors merely by requesting CVTC to submit a
best and final offer. Action Mfg. Co., B-222151, June 12, 1986, 86-1
CPD P 546. We do not see how such a request would have resulted in CVTC
changing its proposal since the system CVTC offered met the RFP
specifications and since, as mentioned above, CVTC apparently would not
have changed its offered price.
Accordingly, the protest is denied.
Harry R. Van Cleve
General Counsel
Matter of: DALFI, Inc. - Reconsideration
File: B-224248.2
Date: February 19, 1987
DIGEST
Prior decision is affirmed on reconsideration where the protester has
not shown any error of fact or law which would warrant reversal of the
decision.
DECISION
DALFI, Inc., requests reconsideration of our decision in DALFI, Inc.,
B-224248, Jan. 7, 1987, 87-1 C.P.D. P , denying its protest against the
evaluation of proposals under request for proposals (RFP) No.
N00140-84-R-0439, issued by the Naval Regional Contracting Center
(Navy), Philadelphia, Pennsylvania. The RFP solicited automated data
processing and technical support services for the Navy's Metrology
Automated System for Uniform Recall and Reporting (MEASURE). MEASURE is
an automated system which inventories and tracks, on a worldwide basis,
those Naval equipment items which require calibration. We found that
the Navy provided a reasonable basis justifying award to Cerberonics,
Inc., as the higher cost, but technically superior offeror, and that the
record did not support DALFI's allegation that the Navy pave an improper
preference to the incumbent, Cerberonics. For the reason discussed
below, we affirm our decision.
In its request for reconsideration, DALFI contends that we ignored
its contention that the Navy improperly considered extra-solicitation
factors in deciding to award to the incumbent. Specifically, DALFI
complains that we did not refer in our decision to a memorandum entitled
"MOCC Norfolk Move Impact Report." DALFI contends the report shows that
the Navy in its evaluation improperly considered perceived transitional
problems resulting from a change of contractor.
Under our Bid Protest Regulations, a request for reconsideration must
contain a detailed statement of the factual and legal grounds upon which
reversal or modification of a decision is deemed warranted and must
specify any errors of law made in the decision or information not
previously considered. 4 C.F.R. Sec. 21.12(a) (1986). Information not
previously considered refers to information which was overlooked by our
Office or information to which the protester did not have access when
the initial protest was pending. Sunset Realty Sales
Associates--Request for Reconsideration, B-221390.2, May 27, 1986, 86-1
C.P.D. P 488. We considered the memorandum in the context of DALFI's
contention that the Navy showed an improper preference for an incumbent
contractor. The memorandum recited problems the Navy would face in
transition if a new contractor took over the MEASURE program. We noted
that nowhere in the evaluation documents was there any evidence that the
Navy contracting officials considered transition costs in their
selection decision, as alleged by DALFI.
In the portion of our decision discussing the Navy's cost/technical
tradeoff, we addressed DALFI's allegation that the Navy felt at least a
10-percent differential between offers would be required to offset
transition costs. It was clear that the Navy believed a 10-percent
differential in cost between the two proposals would be necessary to
offset the inherent technical superiority of Cerberonics' proposal, not
transition costs as alleged by DALFI. Thus, we drew attention to the
Navy's belief that additional government manhours would be expended if
award were made to DALFI. We explained that the Navy anticipated
significant savings because Cerberonics was expected to perform the
required services in a more effective and efficient manner so that fewer
contractor manhours would be spent on individual tasks, allowing a
greater volume of completed work products within the specified level of
effort. Since this related to differences in the offerors' experience,
a principal evaluation criterion, we held the contracting officer could
properly consider it. Mere disagreement with our prior decision
provides no basis for reversing the decision. Vicinay International
Chain Co., Inc.--Request for Reconsideration, B-222602.3, Aug. 5, 1986,
86-2 C.P.D. P 155.
Since DALFI has not shown any error of fact or law in our prior
decision, it is affirmed.
Harry R. Van Cleve
General Counsel
Matter of: JRW Enterprises, Inc.
File: B-224247
Date: January 22, 1987
DIGEST
Protest against rejection of offer consisting only of price proposal
is denied where solicitation required submission of management and
technical proposal and contained factors for evaluation of the
management and technical aspects of proposals.
DECISION
JRW Enterprises, Inc. (JRW) protests the award of a contract to
Crawford Technical Services, Inc. (CTS) under request for proposals
(RFP) No. DAKF49-86-R-0559, issued by the Department of the Army for the
provision of drivers for scheduled shuttle bus and school bus services
using government-owned buses during the period October 1, 1986 through
September 30, 1987, with two option years, at Fort Sam Houston, Texas.
The Army rejected JRW's proposal because it did not include the
management and technical proposals. JRW states that under the RFP it
was required to submit only a price proposal by the initial closing
date. We deny the protest.
Paragraph L-27 of the solicitation stated the following concerning
proposal format and content:
"a. The overall proposal shall consist of two (2) physically
separated and detachable parts, individually entitled:
"PART I - Request for Proposals - Solicitation Offer and Award
Document.
"PART II - Management and Technical Proposal
"c. All offerors shall submit proposals with the minimum
content as specified herein. Proposals without the minimum
specified content may be rejected as nonresponsive."
Paragraph L-29 stated that the management and technical proposal
should be practicable and be prepared simply and economically, providing
straightforward, concise delineation of what the offeror will do to
satisfy the requirements of the performance work statement (PWS).
Paragraph L-29 called for the proposal to present exhibits of five
aspects which would be evaluated: (1) Management Capabilities of
Contractor; (2) Technical Expertise; (3) Background in Government
Contracting; (4) General Reputation in Customer Service; and (5)
Quality of Plan of Operations. The Army's position is that these
paragraphs required submission of a complete proposal, including the
management and technical portions.
JRW points to paragraph 1.4.2 of section "C" of the solicitation
which states as follows:
"Management Plan: The contractor shall submit a management
plan to the Contracting Officer for review and approval no later
than five days prior to contract award. The management plan shall
encompass quality control, utility conservation, safety, security,
mobilization, and other contingencies. The management plan shall
reflect a clear understanding of tasks in the PWS and describe the
means to satisfy these requirements."
Relying on the latter provision, JRW thought that it did not have to
submit its management and technical proposal with its price proposal and
that it had until 5 days prior to award of the contract for its
submission. JRW believed that the contracting officer would negotiate
with those contractors submitting proposals which were within the
competitive range based on the price proposal.
The Army argues that JRW's protest is untimely because it is based on
an alleged ambiguity in the RFP which was apparent prior to the closing
date for the receipt of proposals and therefore should have been filed
prior to closing. It appears, however, that the ambiguity that is now
alleged was not apparent to JRW until it was informed by the Army that
its proposal was rejected and that the Army attached a different meaning
to paragraph L-27 and section "C" of the solicitation than did JRW. We
therefore find the protest timely.
The RFP provisions in issue called for two separate items (1) a
management and technical proposal and (2) a management plan. The
essence of JRW's position is that these were the same. We find this
interpretation unreasonable. We think it is clear from the RFP that the
content of the two submissions was to be different and that the
evaluation of the five areas listed in paragraph L-29 presumed the
submission of proposals that dealt with those management and technical
areas. While the management plan, to be submitted 5 days prior to
award, was to describe how the contractor would fulfill the PWS as
regards quality control, utility conservation, safety, and security, the
management and technical proposal was to be far more encompassing: it
was to describe the offeror's management capability and technical
expertise along with the offeror's background in government contracting
and provide information bearing on the company's reputation in providing
customer service; it was also to describe a plan of operations covering
quality controls, customer satisfaction, meeting deadlines, and an
inspection system. Although there appears to be some overlap between
the plan of operations and the management plan to be submitted later, we
think they clearly are not the same and that overall the proposal to be
submitted was identified in the RFP as something considerably more
elaborate than the management plan was to be.
Accordingly, we find the rejection of JRW's price proposal to have
been proper. See Traffic Marketing Development Services, U.S.A., Inc.,
B-216916, Nov. 15, 1984, 84-2 C.P.D. P 538.
The protest is denied.
Harry R. Van Cleve
General Counsel
Matter of: NJCT Corporation
File: B-224246
Date: February 13, 1987
DIGEST
1. Where solicitation requires descriptive literature, bidder's
failure to submit descriptive literature with its bid renders the bid
nonresponsive.
2. Where agency makes award to bidder who submits descriptive
literature with its bid, which did not conform to the specifications,
but includes general statement that product will be modified to meet the
specifications, bid must be rejected as nonresponsive because the
descriptive literature did not contain enough information for the agency
to determine that the bidder's product complies with the specifications.
DECISION
NJCT Corporation (NJCT) protests the rejection of its bid as
nonresponsive under invitation for bids No. 620-28-86, issued by the
Chief, Supply Service, Veterans Administration Hospital (VA), Montrose,
New York, for 26 tray delivery carts. NJCT's bid was rejected because
it failed to furnish descriptive literature with its bid as required by
the IFB.
We deny in part, and sustain in part, the protest.
The IFB provided that descriptive literature was required to
establish details of the product that the bidder intended to furnish to
meet the specifications with respect to design, materials, components
and performance characteristics in order to determine the technical
acceptability of the product. Bidders also were advised that the failure
to submit descriptive litetature with the bid would require rejection of
the bid. At the September 26, 1986, bid opening, the VA received 12
bids. The low bidder was rejected as nonresponsive and NJCT, which was
second low, was rejected as nonresponsive because it did not furnish
descriptive literature with its bid. The VA made award to the third low
bidder, Gill Marketing Co. (GMC).
NJCT alleges that the specifications describe a "Carter Hoffman" tray
and that it offered to furnish Carter Hoffman trays by inserting a
Carter Hoffman model number, which will fully meet the specifications.
However, this was not a brand name or equal procurement and the VA
advises that no model of Carter Hoffman trays meets the specifications
without substantial modification. We have held that where an invitation
advises bidders that descriptive literature is needed for bid evaluation
and must be furnished before bid opening or the bid will be rejected, a
bid submitted without the necessary descriptive material is
nonresponsive and must be rejected. Miller Spreader Company, B-215467,
July 23, 1984, 84-2 C.P.D. P 89. Since NJCT did not furnish descriptive
literature with its bid, we find that the VA properly rejected the bid
as nonresponsive.
NJCT also protests that GMC's bid should have been rejected as
nonresponsive because its descriptive literature did not show compliance
with the specifications and because it did not acknowledge an allegedly
material amendment to the IFB. Although a nonresponsive bidder, in many
cases, is not an interested party eligible to protest as required by our
Bid Protest Regulations, 4 C.F.R. Sec. 21.1 (a) (1986), we have held
that a protester whose bid is viewed as nonresponsive should have the
opportunity to have its complaint heard when the complaint is that a
competitor's bid should have been viewed as nonresponsive for the same
reason. See Raymond Corporation, B-224577, Jan. 8, 1987, 87-1 C.P.D. P
. Since NJCT is arguing that GMC's descriptive literature also was
defective, we find that it is appropriate to consider the merits of this
protest.
GMC furnished descriptive literature describing a product that, in
our opinion, did not meet the specifications in several material
respects, including the size and gauge of stainless steel to be used.
On its bid, GMC noted that the product quoted would be modified to meet
the specifications and that shop drawings would be furnished after award
of the contract. We find that this was insufficient to enable the
agency to determine whether the product GMC intended to furnish would
meet the specifications. If a bidder submits literature with its bid
describing a product that it intends to modify to meet the
soecifications, it cannot merely state that it intends to modify its
product to meet the specifications where the agency specifically lists
precise performance or design features, as here. See Waugh Controls
Corporation, B-216236, Apr. 18, 1985, 85-1 C.P.D. P 441. The bidder is
required to show how its proposed modification will meet the
requirements in the specifications. Id. Since GMC only wrote that its
product would be modified, we find its descriptive literature did not
provide sufficient detail for the VA to determine whether its product
met the specifications and the VA also should have rejected GMC's bid as
nonresponsive. Mahon Inc., B-216791, Nov. 13, 1984, 84-2 C.P.D. P 524.
Therefore, we sustain this aspect of NJCT's protest and we need not
discuss whether GMC's bid was nonresponsive for not acknowledging an
alleged material amendment.
In view of the above, we recommend that the VA terminate the award to
GMC and award to the next low responsive bidder. If none of the
remaining bids are acceptable, the requirement should be resolicited.
NJCT is not entitled to its costs of pursuing the protest since such
costs are awarded only to a bidder who was unreasonably excluded from
the competition. NJCT's bid was properly rejected as nonresponsive and
therefore, it was not unreasonably excluded. 4 C.F.R. Sec. 21.6(e)
(1986).
Comptroller General
of the United States
Matter of: Inter-Continental Equipment, Inc.
File: B-224244
Date: February 5, 1987
DIGEST
1. Since the agency's technical evaluation in a negotiated
procurement is based upon information submitted with the proposal, the
burden is on the offeror to submit an adequately written proposal from
the outset. Where protester's alternate proposal fails to include
technical information that is called for by the solicitation and is
necessary to establish compliance with the specifications, there is a
reasonable basis to find the protester's proposal technically
unacceptable.
2. An agency is not required to reopen discussions after receipt of
best and final offers to determine the acceptability of a deficient
alternate proposal first submitted with the best and final offer.
3. The General Accounting Office does not consider whether an offeror
qualifies as a manufacturer under the Walsh-Healey Act.
4. Protest that modification to the delivery terms of a contract
eliminating the contractor's obligation to ship items on U.S.-flag
vessels is denied where there is no evidence that the modification was
planned before contract award; the contractor's obligation is
substantially unchanged; and the competitive position of the protester
would not have changed if the solicitation had contained the modified
delivery terms.
DECISION
Inter-Continental Equipment, Inc. (ICE) protests the award of a
contract to Transtac Management Corporation under request for proposals
(RFP) No. N00033-86-R-3065, issued by the Military Sealift Command,
Department of the Navy, for dry cargo containers to be used on Maritime
Prepositioning Ships. ICE protests the rejection of its alternate
proposal for failing to contain sufficient technical information to
establish compliance with the specifications.
We deny the protest in part and dismiss it in part.
BACKGROUND
The solicitation, issued on June 6, 1986, provided that award would
be made to the lowest-priced, technically acceptable offeror. The Navy
received nine proposals by the closing date and determined that seven
were in the competitive range. Several offerors, including ICE, were
found to have included insufficient technical information in their
proposals for the Navy to determine compliance with the specifications.
The agency conducted oral discussions and requested that best and final
offers be submitted by August 20. In response to the Navy's concerns,
ICE submitted drawings of its proposed containers prepared by a
subcontractor. Although the drawings contained the subcontractor's
proprietary legend restricting reproduction or disclosure, ICE stated
that the drawings would be provided to all of its subcontractors and
that containers supplied to the Navy would conform to the drawings.
Shortly after receipt of the revised offers, the Navy terminated for
default another contract for similar cargo containers. The solicitation
was modified to add the undelivered containers from the defaulted
contract, and additional best and final offers were requested by
September 5. ICE included with its second best and final offer an
alternate proposal for cargo containers assembled in the United States
from parts produced in Korea. The firm's basic proposal was for
containers entirely manufactured by subcontractors in Europe. ICE
provided no technical information or drawings with its alternate
proposal.
Although ICE's alternate proposal offered the lowest price, the Navy
concluded that it could not determine whether the proposal was
technically acceptable because of the omission of technical information,
and that the agency's requirement for timely delivery would not permit
another round of discussions.
On September 16, the Navy awarded a contract to Transtac Management
Corporation, the lowest-priced, technically acceptable offeror. ICE's
basic proposal offered a higher price than Transtac and is not at issue
in this protest. ICE argues that because its basic proposal was
technically acceptable, it was unreasonable for the Navy to reject the
alternate proposal. According to the protester, the Navy should have
assumed that the technical drawings included in the basic proposal were
equally applicable to the alternate proposal. Consequently, ICE
contends the alternate proposal meets all of the requirements of the
solicitation and should have been accepted.
ANALYSIS
As discussed above, in its basic proposal the protester offered to
import completed containers manufactured by several European concerns.
The alternate proposal offered to obtain components from Korean
suppliers for assembly by the protester or another subcontractor in the
United States. The technical information in ICE's basic proposal,
prepared by a planned European subcontractor, evidenced what ICE planned
to require of its subcontractors--fully manufactured cargo containers.
The information largely consisted of elevation drawings of the compieted
item.
In our view, the Navy correctly understood the alternate proposal to
represent a suostantially different means of contract performance. In a
negotiated procurement, it is an offeror's obligation to establish that
what it proposed will meet the government's needs. ASEA, Inc.,
B-216886, Feb. 27, 1985, 85-1 CPD P 247. The RFP expressly stated that
technical information was required to determine compliance with the
specifications, and ICE was told during discussions that technical
drawings would be required. The only technical information in the
Navy's possession arguably applicable to ICE's alternate proposal
consisted of drawings of a completed end item included with ICE's basic
proposal. We cannot say that the Navy's judgment that it could not
determine the acceptability of ICE's alternate proposal without
specifically applicable technical information was unreasonable, and for
this reason, we deny this basis of the protest. See Micronesia Media
Distributors, Inc., B-222443, July 16, 1986, 86-2 CPD P 72.
ICE argues that the Navy's grounds for not discussing the deficiency
in the alternate proposal--an urgent requirement for cargo
containers--is unsupportable. An agency is not required to reopen
discussions when a deficiency is first introduced in a best ana final
offer in order to provide a firm with an opportunity to revise its
proposal. International Imaging Systems, B-224401, Sept. 15, 1986, 86-2
CPD P 302. While an offeror may modify its earlier proposal in its best
and final offer, in doing so it assumes the risk that any change it
makes might result in the rejection of its proposal, rather than in
further discussion, if the agency finds the revised proposal
unacceptable. Xerox Special Information Systems, B-215557, Feb. 13,
1985, 85-1 CPD P 182. It Is up to the procuring agency to decide when
the negotiation and offer stage of a procurement will conclude, and we
do not find that the Navy abused its discretion by failing to reopen
discussions. While these rules generally apply in cases where an
offeror has submitted a single proposal similar to the protester's basic
proposal here, we see no reason why they should not also apply to an
alternate proposal that is submitted for the first time with a best and
final offer.
After ICE's final submissions to our Office regarding its initial
protest, the firm raised a number of additional issues. ICE contends
that the Navy has unreasonably delayed deciding an agency-level protest
concerning Transtac's eligibility for award under the Walsh-Healey Act.
Agency determinations regarding the Walsh-Healey Act are reviewed by the
Department of Labor and not under our bid protest function, Shelf Stable
Foods, Inc., B-222818, June 24, 1986, 86-1 CPD P 586, and we dismiss
this ground of ICE's protest.
The protester argues that the Navy has also delayed deciding a
protest that Transtac has violated the Cargo Preference Act of 1954 by
not shipping cargo containers on U.S.-flag vessels. Additionally, the
protester complains that the Navy has mooted this protest issue by
agreeing to modify Transtac's contract to change the delivery terms from
f.o.b. destination, Albany, Georgia to f.a.s. vessel, Naples, Italy, so
that the contractor is no longer obligated to ship the containers on
U.S.-flag vessels.
This issue is also generally not within our bid protest jurisdiction
because it concerns contract administration. Intercontinental
Equipment, Inc., B-224824, Oct. 19, 1986, 86-2 CPD P 424, aff'd on
reconsideration, B-224824.2, Nov. 12, 1986, 86-2 CPD P 556. ICE argues,
however, that this modification constitutes a "cardinal change,"
essentially a new contract, for which the Navy was required to obtain
competition.
The integrity of the competitive bidding system precludes an agency
from awarding a contract competed under given specifications with the
intent of changing to materially different specifications. U.S.
Materials Co., B-216712, Apr. 26, 1985, 85-1 CPD P 471. Also, a
modification that is outside of the scope of the original contract
should be the subject of a new procurement unless a sole-source award
was appropriate. Indian and Native American Employment and Training
Coalition, 64 Comp. Gen. 460 (1985), 85-1 CPD P 432.
We have no evidence that the modification of delivery terms here was
contemplated before contract award, and we disagree with ICE that the
modification exceeded the scope of the contract. The "Changes-Fixed
Price" clause in the contract, 48 C.F.R. Sec. 52.243-1 (1985),
specifically provides agencies with authority to unilaterally change the
place of delivery. In this case, the modification was agreed to by both
parties, and the Navy received consideration in the form of a decrease
in contract price. Under the contract Transtac still must provide the
identical cargo containers that it included in its proposal; it merely
must deliver them to a different location. The record filed with our
Office contains no evidence that the Navy intended to avoid competition
by its action, or that, had the solicitation provided for delivery
f.a.s. Naples, Italy, the competitive position of the protester would
have materially changed. Consequently, we deny this basis of protest.
We deny the protest in part and dismiss it in part.
Harry R. Van Cleve
General Counsel
Matter of: U.S. Elevator Corporation
File: B-224237
Date: February 4, 1987
DIGEST
1. Contention that the sole responsive bid received under a small
business set-aside is unreasonably priced is without merit where the
contracting officer determined that the price was reasonable and the
protester has not shown this determination to be unreasonable.
2. Recovery of the costs of pursuing a protest may not be allowed
where the protest has been found to be without merit.
DECISION
U.S. Elevator Corporation (USEC) protests the award of a contract to
Hotchkiss Elevator Co., Inc., the sole small business bidder under
invitation for bids No. 678-25-87, issued as a small business set-aside
by the Veterans Administration Medical Center, Tuscon, Arizona. USEC,
the only other bidder and a large business, contends that the Hotchkiss
price of $63,672 for the required elevator/ dumbwaiter maintenance
services was unreasonable since it was nearly twice the price of $32,700
submitted by USEC. The protester principally argues that the agency did
not obtain the adequate competition that is required to insure the
receipt of reasonable prices. USEC contends that the agency should
terminate the contract and should resolicit the requirement on an
unrestricted basis.
We dismiss the protest in part and deny it in part.
Initially, we note that by letter to the contracting officer, dated
August 22, 1986, USEC protested the fact that the procurement was
competed as a small business set-aside, rather than on an unrestricted
basis. The contracting officer orally denied this protest. Bid opening
took place on September 17, and USEC filed its protest with our Office
on September 30. In November, USEC raised with our Office the issue of
whether the procurement was properly competed as a small business
set-aside. USEC also contended that the oral denial of its protest to
the agency was insufficient and should have been made in writing.
These two matters are untimely since they involve the initial protest
to the agency and our regulations require that after an initial agency
protest, any subsequent protest to our Office must be filed within 10
days after actual or constructive knowledge of initial adverse agency
action. At the latest, the protester was on constructive notice of
initial adverse agency action when the agency proceeded to bid opening
without withdrawing the set-aside. See 4 C.F.R. Sec. 21.0(a) (1986);
McAllister Bros., Inc., B-223888, Aug. 27, 1986, 86-2 CPD P 235. We
therefore will not consider these issues.
USEC timely argues that the contracting officer abused his discretion
and acted unreasonably in making the award since insufficient small
business competition was received to enable him to find the Hotchkiss
price reasonable and since a comparison of the Hotchkiss price with the
price submitted by USEC showed the former price to be unreasonable.
USEC notes that in Stacor Corp.; et al., 57 Comp. Gen. 234 (1978), 78-1
CPD P 68, we held that where six of the seven small business bids on a
total small business set-aside were found to be nonresponsive and the
remaining responsive bid was 58 percent higher than the low
nonresponsive bid, the contracting officer's decision to cancel the
solicitation and to resolicit on an unrestricted basis was reasonable
due to the lack of adequate small business competition and the
unreasonably high price of the responsive bid.
USEC also notes that we have stated that a bid submitted by a large
business, even though nonresponsive to the set-aside requirement, may be
considered in determining whether a price submitted by a small business
bidder is reasonable. Tufco Indus., Inc., B-189323, July 13, 1977, 77-2
CPD P 21. In this respect, USEC notes that the Hotchkiss price was
nearly 100 percent higher than the price submitted by USEC. While it
agrees that its bid took exception to the requirement for the
maintenance of plungers and hydraulic lines, it contends that an
appropriate upward adjustment in its price would not have been
significant. Recognizing that the government may pay a premium in order
to award contracts to small businesses under total set-asides, Society
Brand, Inc., et al., 55 Comp. Gen. 475 (1975), 75-2 CPD P 327, USEC
argues that small businesses should not be subsidized to such an extent
that unreasonable prices are paid.
Under Federal Acquisition Regulation, 48 C.F.R. Sec. 14.404-2(f)
(1986), the contracting officer may reject a bid if he determines the
price of the bid to be unreasonable. However, it does not follow that
simply because a small business bidder's price on a small business
set-aside is greater than the price submitted by an ineligible large
business, the small business bidder's price must be deemed unreasonable,
since there is a range over and above the price submitted by the large
business that may be considered reasonable in a set-aside situation.
Any determination regarding price reasonableness is basically a matter
of judgment within the administrative discretion of the contracting
officer. Because of this, we do not question a determination of this
nature unless it is clearly unreasonable or was made fraudulently or in
bad faith. Warren/Dielectric Communications, B-212609, Jan. 26, 1984,
84-1 CPD P 121.
USEC has not alleged that the determination was made fraudulently or
in bad faith. Therefore, the question is whether the contracting
officer reasonably determined the Hotchkiss price to be reasonable.
While USEC has cited decisions of our Office in which various percentage
differentials between bids were found to be indicative that a small
business' bid price was unreasonable, those percentages are not binding
on any determination here because whether a particular price is
unreasonable depends upon the circumstances of each case. Saratoga
Indus.--Reconsideration, B-202698.2, Jan. 22, 1982, 82-1 CPD P 47.
Under the circumstances of this case, we believe that the
determination made by the contracting officer was reasonable. The
record shows that the procurement of these services in fiscal year 1986
resulted in the receipt of a bid of $45,366 from Hotchkiss and a bid of
$56,131 from a large business. The procurement for fiscal year 1987,
which is being protested here by USEC, consists of additional services
to those procured in fiscal year 1986. A comparison of the prices
received in fiscal year 1986 with the Hotchkiss price for fiscal year
1987 reasonably supports the conclusion that Hotchkiss' protested price
is reasonable, taking into account the passage of 1 year and the
additional services being required.
While USEC's price may be considerably lower than the price of
Hotchkiss, USEC's price was based on a refusal to repair or replace
plungers and hydraulic lines because USEC did not want to be responsible
for conditions which did not allow for visual inspection. Thus, USEC's
price cannot be used for the purpose of determining the reasonableness
of the Hotchkiss price. Further, the refusal of USEC to submit a bid
which complied with all requirements of the solicitation creates doubt
as to what USEC actually would have bid had it agreed to comply fully
with all the solicitation's requirements.
Finally, we note that the fact that only one bid was received from a
small buisness has no bearing on the validity of the award in view of
the fact that the price of that bid was properly determined to be
reasonable. See Advanced Constr., Inc., B-218554, May 22, 1985, 85-1
CPD P 587; Warren/ Dielectric Communications, supra.
The protest is dismissed in part and denied in part.
USEC also requests that we award it the costs of pursuing its
protest, including attorney's fees. We deny the claim since we have
found the USEC protest to be without legal merit. Hispanic Maintenance
Servs., Inc., B-220957, Feb. 7, 1986, 86-1 CPD P 142.
Harry R. Van Cleve
General Counsel
Matter of: Gino Morena Enterprises--Reconsideration
File: B-224235.2
Date: May 13, 1987
DIGEST
1. Large business protester contending that it would have competed
for award of a concession agreement had the agency not limited the field
of potential awardees to small businesses is an interested party for
purposes of objecting to the agency's definition of the field of
potential awardees.
2. Where an award of a concession agreement is justified in part on
the basis of urgency, the inclusion in the agreement of options to
extend the term of the agreement is not justified.
DECISION
The Department of the Air Force requests reconsideration of our
decision Gino Morena Enterprises, B-224235, Feb. 5, 1987, 66 Comp. Gen.
, 87-1 CPD P 121, in which we denied a protest by Gino Morena
Enterprises of the award by the Basic Military Training School (BMTS),
Lackland Air Force Base, Texas, of a 1-year concession agreement to
obtain initial haircuts for BMTS recruits. Although we denied the
protest, we recommended that the agency not exercise options contained
in the agreement allowing the agency to extend the agreement up to 2
additional years. The Air Force contends that Gino Morena was not an
interested party for purposes of pursuing the protest and that our
recommendation with respect to the options was unreasonable. We affirm
our prior decision.
Prior to October 1, 1986, Gino Morena was providing initial haircut
services at the BMTS under a subcontract with the Army and Air Force
Exchange Service (AAFES), a nonappropriated fund instrumentality. The
prime contract for these services was between the Air Force and the
AAFES. Because the prime contract was due to expire on September 30,
with no further renewal options available, the Air Force issued a
competitive solicitation, restricting participation to eligible small
business concerns. The solicitation contemplated that the Air Force
would pay for the initial haircut services using appropriated funds.
The AAFES did not submit a bid, nor did Gino Morena Enterprises, which
is not a small business concern. The agency received three bids.
The Air Force canceled the solicitation on September 25 upon learning
that, contrary to earlier assumptions, no appropriated funds would be
available to fund a contract for initial haircuts. Because the BMTS
still needed to have a contractor ready by October 1, however, the BMTS
Commander signed a concession agreement for the initial haircuts with
the low offeror under the canceled solicitation. Under the concession
agreement, the recruits must pay for the haircuts.
We denied Gino Morena's protest of this concession agreement because
in our view the grounds on which the agency justified its action were
reasonable: first, by the time the set-aside solicitation had been
canceled, the BMTS had an urgent need to arrange for initial haircut
services by October 1, when the existing contract with the AAFES would
expire; and second, the record indicated that the BMTS Commander
decided to base the award of the concession agreement on the results of
the recently completed setaside competition in furtherance of the
congressional policy that a fair proportion of contracts be awarded to
small business concerns. We also said, however, that since the agency
justified the award in part on the basis of urgency, the inclusion of
option provisions to extend the contract was not justified. We
recommended that the options not be exercised. Neither Gino Morena nor
the concessionaire has requested reconsideration of our prior decision.
In requesting reconsideration, the Air Force argues first that Gino
Morena was not an interested party under our Bid Protest Regulations, 4
C.F.R. Sec. 21.0 (a) (1986). According to the agency, since Gino Morena
was not a small business concern it lacked standing to challenge an
award that we determined properly to have been made as a continuation of
a small business set-aside. The agency says that the longstanding
position of this Office is that large businesses do not have standing to
protest matters relating to small business set-asides.
We disagree. It is true that once a particular procurement properly
has been reserved for exclusive small business participation, firms that
are not small business concerns are not interested parties for purposes
of objecting to how the procurement is conducted. The question of
whether the procurement properly has been set aside, however, is one
that may be the subject of a protest by a firm that is not a small
business concern. See, e.g., Litton Electron Devices, B-225012, Feb.
13, 1987, 66 Comp. Gen. , 87-1 CPD P 164.
In this case, even though it canceled the small business set-aside
solicitation, the agency decided to base the award of the concession
agreement on the results of competition obtained under that
solicitation. Gino Morena contended that it would have competed for
award of the concession agreement had the agency not selected an awardee
from a field of competitors that it never had an opportunity to join.
In other words, Gino Morena was objecting to how the agency had defined
the field of potential awardees, which in our view is analogous to
objecting to an agency determination to set aside a procurement for
small business. As a prospective offeror whose direct economic interest
was affected by the award of the concession ageement, Gino Morena was an
interested party under our regulations. As we said in our prior
decision, however, we have no basis for objecting to the agency's
decision to consider only small business concerns for award of the
concession agreement.
The agency further requests that we reconsider our recommendation
that the renewal options contained in the concession agreement not be
exercised. The agency argues that the option provisions were an
integral part of the small business set-aside solicitation and that the
prices submitted were based on a high probability that the options would
be exercised. As we understand the agency's position, awarding a
concession agreement that included renewal options was necessary in
order to preserve all of the terms and conditions under which prices
were submitted. In addition, argues the agency, whether the exercise of
the renewal options is appropriate is a matter for the contracting
officer to decide.
We recognize that whether to exercise contract options must be
determined solely by the contracting agency. Nevertheless, we
recommended that the renewal options not be exercised in this instance
based on our view that including renewal options in the concession
agreement was not appropriate. We based our recommendation on the fact
that the agency had sought to justify its award of the concession
agreement (rather than conduct a new competition following cancellation
of the set-aside solicitation) in part on the existence of urgent
circumstances. In our view, when an agency cites the existence of
urgent circumstances to justify the award of a contract on the basis of
less competition than otherwise might be available, the inclusion of
options to extend the contract is not justified. See IMR Systems Corp.,
B-222465, July 7, 1986, 86-2 CPD P 36. While the existence of urgent
circumstances may justify sacrificing competition to some extent in
order to meet a current requirement, it cannot be said that there is any
urgency with respect to future periods covered by renewal options.
Further, we fail to see how any of the firms that participated in the
small business set-aside would be treated unfairly should the agency
adopt our recommendation. There is no reason to conclude that the
relative standing of the bidders would have been different had the
solicitation not contained option provisions.
Our prior decision is affirmed.
Comptroller General
of the United States
Matter of: Ballantine Laboratories, Inc.--Request for
Reconsideration
File: B-224232.2
Date: January 23, 1987
DIGEST
Procuring agency may consider prices for option quantities in the
award evaluation where solicitation provides for such consideration and
agency has made the determination required by section 17.206 of the
Federal Acquisition Regulation.
DECISION
Ballantine Laboratories, Inc. (Ballantine), requests reconsideration
of our decision in Ballantine Laboratories, Inc., B-224232, Dec. 4,
1986, 86-2 C.P.D. P , in which we dismissed as untimely filed
Ballantine's protest concerning award of a contract to Wavetek San
Diego, Inc., under invitation for bids (IFB) No. DAAB07-86-B-N094,
issued by the United States Army Communications-Electronics Command,
Fort Monmouth, New Jersey. The IFB was the second step in a twostep
sealed bid procurement for the multiyear acquisition of signal
generators. We dismissed as untimely Ballantine's objections to the
solicitation's multiyear and option provisions, holding that its protest
of alleged improprieties in a solicitation for two-step sealed bidding
was untimely where the alleged improprieties were apparent prior to bid
opening, but the protest was not filed with the contracting agency or
our Office until after bid opening.
On the basis of material presented in the reconsideration request, we
have considered the merits of Ballantine's objection to the inclusion of
options in the evaluation factors for award. As discussed below,
however, we deny the protest.
Ballantine asserts that it was not aware that the inclusion of
options in the evaluation factors for award was improper until it
received a letter from the Army after award of the contract to Wavetek
stating that the option quantities were
"not a part of the known requirements. Specifically, the
letter, in response to an inquiry from Ballantine about the proper
use of multiyear contracting, stated that:
"The known requirements for solicitation DAAB07-86-B-N094 are
900 units, First Program Year; 900 units, Second Program Year;
and 1800 units Third Program Year. In addition, there is a 200
percent option for each program year. The option quantities are
not a part of the known requirements."
Ballantine contends that since only 3600 units were known
requirements, evaluating offers based on 10,800 units (total units
including the 200 percent option quantity) violates section 17.206 of
the Federal Acquisition Regulation (FAR), 48 C.F.R. Sec. 17.206 (1985).
Ballantine argues that the cited FAR section provides for the award
evaluation to include known requirements only, not "anticipated"
requirements. Since the impropriety alleged by Ballantine is based on
information discovered after award, and was raised within 10 days of its
discovery, it is timely and will be considered.
FAR Sec. 17.206(a) provides that the contracting officer may consider
the option quantity in the award evaluation for a firm-fixed-price
contract provided:
"that an authorized person at a level above the contracting
officer determines, before the solicitation is issued, that-(1)
there is a known requirement that exceeds the basic quantity to be
awarded but (i) the basic quantity is a learning or testing
requirement, or (ii) due to the unavailability of funds, the
agency cannot exercise the option at the time of award; provided,
that in this latter case there is reasonable certainty that funds
will be available thereafter to permit exercise of the option;
and (2) competition for the option quantity may be impracticable
once the initial contract is awarded. This determination shall
reflect factors such as substantial startup or phase-in costs,
superior technical ability resulting from performance of the
initial contract, and long preproduction leadtime for a new
producer."
Documentation submitted by the Army shows that the Acting Deputy for
Contracting approved the contracting officer's justification for
including the option quantity prices in the evaluation for award. 1/ The
justification stated that:
"There are known and anticipated requirements which exceed the
basic quantity to be awarded but due to the unavailability of
funds, the option cannot be awarded at the time of award of the
basic quantity. However, there is a reasonable certainty that
funds will be available thereafter to permit exercise of the
option... Realistic competition for the option quantity is
impracticable once the initial contract is awarded... Hence it is
in the best interest of the government to evaluate options in
order to eliminate the possibility of a "Buy-In."
The Army reports that the 200 percent option quantity was designated
to cover the following anticipated requirements:
Foreign Military Sales-25 percent (900 units) Other service
requirements-100 percent (3600 units) National Guard and Reserve
Units-20 percent (720 units) War Stock-30 percent (1080 units)
Basis of Issue Plan correction factor-25 percent
(900 units)
In arguing that the award evaluation should have included the
evaluation of "known" option requirements only, not "anticipated"
requirements, Ballantine attempts to draw an artificial distinction
between "known" and "anticipated" requirements. However, options by
their nature include foreseeable, or anticipated, requirements. See
FAR, 48 C.F.R. Sec. 17.202 (1985). We have previously recognized that
agencies may use estimated quantities for evaluation purposes when they
cannot predict the exact quantities that may be required, in order to
provide some basis for bidding. See WEMS, Inc., B-222553, June 6, 1986,
86-1 C.P.D. P 533. While the Army's letter to Ballantine may have been
more artfully drafted, it is clear from the Army's documentation that
the Army had foreseeable requirements for the option quantities here,
but due to the unavailability of funds, the option quantities could not
be awarded at the time of award of the basic quantity. An authorized
person above the level of the contracting officer made the requisite
determination to consider the option quantity in the award evaluation.
We note that Ballantine also objects to the Army's reference to
options in terms of percentages in its documentation justifying the use
of options. Ballantine argues that since FAR, 48 C.F.R. Sec. 17.205
(1985), requires the contracting officer to justify in writing the
"quantities" under option, the use of percentages is inappropriate.
However, we think that the Army's reference to a 200 percent option
quantity clearly translates into 200 percent of the base quantity of
3600 units, or 7200 units. Moreover, we point out that FAR, 48 C.F.R.
Sec. 17.204(f) (1985), specifically provides that contracts may express
options for increased quantities of supplies or services in terms of a
percentage of specific line items.
The protest is denied.
Harry R. Van Cleve
General Counsel
FOOTNOTE
1/ Section 925 of the Defense Acquisition Improvement Act of 1986,
Pub. L. 99-591 (1986) (to be codified at 10 U.S.C. Sec. 2301(a) (7)),
in effect for sealed bid solicitations issued after April 30, 1987,
requires options not to be evaluated unless the head of the agency
determines there is a reasonable expectation that the options will be
exercised.
Matter of: Chesapeake and Potomac Telephone Company
File: B-224228, B-224228.2
Date: February 5, 1987
DIGEST
1. A protest filed with the General Accounting Office more than 10
working days after the contracting agency denied the firm's agency-level
protest is untimely and will not be considered.
2. GAO will not consider the merits of an untimely protest by
invoking the significant issue exception to timeliness rules where the
protest does not raise an issue of first impression that would have
widespread significance in the procurement community.
3. Where protester raises a new basis of protest in its comments to
the agency report and the alleged impropriety was apparent on the face
of the request for proposals, the new basis of protest is untimely.
DECISION
The Chesapeake and Potomac Telephone Company (C&P) protests the terms
of request for proposals (RFP) No. A-86-8, issued by the Department of
the Treasury (Treasury) for the procurement of a digital
telecommunications switch (DTS) system. The protester alleges that the
RFP contains terms unfairly favoring alternative procurement methods for
the DTS system and that these terms will not insure the lowest overall
cost to the government. C&P contends that Treasury cannot justify the
use of certain cost evaluation criteria.
We dismiss the protest as untimely based on the contracting agency's
report. See 4 C.F.R. Sec. 21.3(f) (1986), which provides that when the
propriety of a dismissal becomes clear only after information is
provided by the contracting agency we will dismiss the protest at that
time.
On December 31, 1985, Treasury solicited offers for the acquisition
of an integrated voice and data DTS system. The due date for receipt of
proposals was September 2, 1986. The RFP, as amended, advised offerors
that the agency would evaluate all proposals by applying a residual
value factor to the proposed cost of the equipment installed at cutover.
1/ The residual value is the system's assumed value at the end of the
contract life of 9-1/2 years, based on a 15-year useful life, straight
line method of depreciation, which results in a .4667 factor to be
applied to the proposed system's cost of each purchase offer.
In its protest to our Office, filed on September 26, 1986, C&P first
objects to Treasury's dismissal of its agency-level protest which was
filed on September 2. The protester states that "despite the obvious
timeliness" of its protest, by letter dated September 17, the
contracting officer improperly dismissed C&P's protest as untimely
stating that the firm had waived its right to protest for failure to
"formally protest" at some earlier date. C&P takes the position that
the agency's decision contravenes our Bid Protest Regulations, 4 C.F.R.
part 21, and should be rejected.
Next, C&P argues in its agency-level protest and the one filed with
our Office that the solicitation is defective because the use of the
residual value criterion precludes equitable consideration of the
"relative merits of alternative lease procurement options" and would
not result in an award at the lowest overall cost to the government.
Specifically, C&P asserts that the 15-year useful life for this system
is "unrealistic" and exceeds the reasonable useful life for equipment
presently in use. C&P also questions the use of a straight line versus
an accelerated method of depreciation.
As a threshold matter, Treasury asserts that the protest should be
dismissed because C&P's September 2 protest to the agency was filed more
than 10 days following adverse agency action on a similar protest which
Treasury insists C&P filed with it on June 30, 1986. We agree with
Treasury that the protest is untimely.
If a protest is filed initially with the agency, the subsequent
protest filed here must meet two tests to be timely: (1) it must be
filed within 10 days of the protester's learning of the adverse action
on the protest filed with the agency, and (2) the initial protest itself
must have been timely filed. 4 C.F.R. Sec. 21.2(a) (3). Here, neither
of the two tests has been met.
The agency reports that during round six of questions and answers,
C&P, by letter dated June 30, 1986, raised questions about the residual
value factor and the assumptions on which it was based. In that letter
C&P asserted that the 15-year useful system life does not reflect "the
rate at which technology is expected to change." In this regard, the
protester asked "will the Department revise the useful system life to
reflect the effect of technology and the Department's historical
equipment replacement activity?"
Additionally, C&P stated that the .4667 residual value factor:
". . . seems unrealistic, since the current rate of
technological change has resulted in escalated system depreciation
and obsolesence. Is the Department assuming that the system's
value will depreciate constantly over the proposed useful system
life?"
C&P concluded by stating:
"We believe that it would be more realistic to assume that the
system's value will decrease rapidly in the first few years (e.g.,
like a new car) and that the resulting value after 8 years would
be minimal, rather than nearly 50 percent as stated. If the
projected useful life of the system is 15 years, should not the
procurement and the life-cycle costing be based on 15 years?
Using a 15-year evaluated life cycle would ensure that the
Department procures the best possible system at the "lowest
overall cost to the government."
By letter of July 15, the contracting officer advised C&P that after
consideration of all aspects of its objections to this solicitation
requirement, "the Department's position on residual value as stated in
this RFP remains unchanged."
In our view, C&P's letter of June 30 to the contracting officer
constituted an agency-level protest. Under our decisions, a letter does
not have to state explicitly that it is intended as a protest for it to
be so considered. As a minimum, the intent to protest must be conveyed
by an expression of dissatisfaction and a request for corrective action.
Finalco, Inc., B-220651, Jan. 2, 1986, 86-1 C.P.D. P 4 at 4.
We read C&P's letter, although characterized as a "request for
clarifications," as an expression of dissatisfaction with the residual
value criterion and as an attempt to influence the agency to take
corrective action. Under these circumstances, we find the letter was an
agency-level protest and C&P was therefore required to file any
subsequent protest to this office within 10 days after the protester had
formal notification of initial adverse agency action. 4 C.F.R. Sec.
21.2(a) (3); see also Blinderman Construction Co., Inc., B-222523, June
16, 1986, 86-1 C.P.D. P 554 at 3. Here, initial adverse agency action
occurred on July 15, and while C&P repeated its protest to Treasury on
September 2, C&P did not protest to our Office until September 26, thus,
its protest to our Office is untimely and will not be considered. Id.
In a later submission filed with our Office on November 28
(B-224228.2), C&P raises a new basis of protest--the applicability of
the residual value factor to its various proposals--and urges for the
first time that we should consider its protest pursuant to the exception
in our timeliness rules for a protest that raises a significant issue.
See 4 C.F.R. Sec. 21.2(c). However, this exception is strictly
construed and used sparingly to prevent the rules from being rendered
meaningless and is limited to issues of widespread importance to the
procurement community that we have not considered on the merits in
previous decisions. Shaw Aero Development, Inc.--Request for
Reconsideration, B-221980.2, May 28, 1986, 86-1 C.P.D. P 495 at 3. We
do not find C&P's protests significant within the meaning of our
regulations, as it neither presents a unique issue of first impression
nor involves a question that, if resolved, would benef it parties other
than the protester. Id.
We have previously considered the issue of residual value as an
evaluation factor in the context of procurements for typewriters and
have held that residual value comprises a cost element that logically
cannot be ignored despite the difficulty in determining the precise
residual value of each typewriter model. See Swintec Corp., et al.,
B-216106 et al., Jan. 17, 1985, 85-1 C.P.D. P 48 at 6. Additionally, in
the acquisition of telephone equipment, maintenance and related
services, we have indicated that the reasonableness of the residual
value evaluation factor is a matter of administrative discretion that is
not subject to question unless the determination is clearly unreasonable
or resulted from fraud or bad faith (not alleged herein). See General
Telephone Company of California, B-190142, Feb. 22, 1978, 78-1 C.P.D.
P 148, aff'd on reconsideration, 78-2 C.P.D. P 395.
Finally, we point out that each new protest issue must independently
satisfy the timeliness requirements of our regulations, which do not
contemplate piecemeal presentation or development of protest issues.
See Consolidated Group, B-220050, Jan. 9, 1986, 86-1 C.P.D. P 21 at 14.
Our regulations require that a protest based on alleged improprieties in
an RFP that are apparent before the closing date for receipt of initial
proposals be filed by that date. 4 C.F.R. Sec. 21.2(a) (1). Here,
C&P's protest ground was not raised prior to the date for receipt of
proposals.
The protests are dismissed.
Robert M. Strong
Deputy Associate
General Counsel
FOOTNOTE
1/ As the term is used, cutover is that moment in time when the
switch that turns on the new system is thrown.
Matter of: McMahon & Sons
File: B-224226
Date: February 5, 1987
DIGEST
Agency conclusion that protester's proposal was not within the
competitive range was reasonable where the protester's technical score
was significantly lower than the scores of the offerors in the
competitive range, and its price was significantly higher.
DECISION
McMahon & Sons, dba Pikes Peak History Ventures (McMahon), protests
the exclusion of its proposal from the competitive range under request
for proposals (RFP) No. F49642-86-R-0097, issued by the Washington Area
Contracting Center, Andrews Air Force Base (Air Force), Washington,
D.C., for a book length manuscript, "U.S. Army Air Force and
Intelligence in World War II." McMahon contends that the Air Force
improperly concluded that its proposal did not meet the technical
standards of the RFP.
We deny the protest.
The RFP was issued on July 14, 1986, with the scheduled closing date
for the receipt of initial proposals as August 18, 1986. The Air Force
received five proposals in response to the RFP. The offerors proposed
fixed prices and received technical scores (on an 80-point scale) as
follows:
East Inc. 79.25 $197,299
National Security Research 70.25 179,581
Historical Associates, Inc. 61.25 166,984
McMahon 55.75 237,650
Leslie Holbrook 18.25 280,000
The Air Force found that only East and National Security Research
were within the competitive range and requested best and final offers
from these two offerors. East was awarded the contract after final
evaluation as it had the highest technical score and the lowest price
($166,191 after best and final offers).
McMahon indicates that it proposed an exceptional team and cannot
believe its proposal did not meet the technical standards of the RFP.
In this regard, McMahon states that a historian who has published prior
works for the issuing office, a Pulitzer prize nominee with over 23,000
editorials and an intelligence background at the highest national level,
and a novelist with a 24-year military background in operations and
intelligence made up its proposed team.
The Air Force reports that McMahon's protest is based on a
misinterpretation of the letter that the Air Force sent McMahon to
notify it that its proposal was no longer being considered for award.
The letter in part stated that " y our proposal was evaluated on the
basis of your technical and cost response, but did not meet the
technical standards." The Air Force advises that McMahon has mistaken
this to mean that its proposal did not meet the technical requirements
of the RFP, i.e., that it was nonresponsive. The Air Force reports that
this letter was inartfully drafted and what the Air Force meant was that
McMahon's proposal was not in the competitive range.
It is clear from the record provided to our Office that McMahon's
proposal was excluded from the competition because it did not fall
within the competitive range, not because it did not meet technical
standards. McMahon's technical score of 55.75 was well below the scores
received by the two offerors included in the competitive range. Also,
McMahon's price was significantly higher than those offeror's prices.
It is well established that the determination of whether a proposal
should be included in the competitive range is a matter primarily within
the contracting agency's discretion which will not be disturbed unless
it is shown to be unreasonable or in violation of procurement laws or
regulations. Metric Systems Corp., B-218275, June 13, 1985, 85-1 C.P.D.
P 682. We have approved this relative approach to determining the
competitive range based upon the array of scores actually obtained by
the other offerors. The Liberty Consortium, B-215042, Apr. 12, 1985,
85-1 C.P.D. P 416.
Therefore, even assuming McMahon's proposal was technically
acceptable, it need not be included in the competitive range. Id.
In rating the proposals, the evaluation team found that McMahon's
proposal was not strong in translating the RFP's specifications into
precise themes, topics, and the direction of the planned volume.
Further, the proposal presented questions as to the capabilities of the
team to conduct prolonged and in-depth multi-archival,
multi-disciplinary, and possibly multi-national research in the normal
archival repositories of military operational and intelligence source
data for World War II. The Air Force found that while the team had
impressive credentials, none had experience in specific Air Force
intelligence history. Thus, the Air Force concluded that the proposal
did not indicate that McMahon had the ability to complete a definitive
product within the established timeframes. Although McMahon argues that
it believes that the experience of its team was sufficiently relevant,
this does not establish that the evaluation of its proposal was
unreasonable. See Logistics Services International, Inc., B-218570,
Aug. 15, 1985, 85-2 C.P.D. P 73.
Since the foregoing objections to McMahon's proposal were related to
the RFP evaluation criteria, we find that the Air Force's rating of
McMahon and its decision to exclude McMahon from the competitive range
was reasonable.
The protest is denied.
Harry R. Van Cleve
General Counsel
Matter of: Abel Converting, Inc.
File: B-224223
Date: February 6, 1987
DIGEST
1. Protest that requirement for "pop-up" packaging of paper towels
exceeds the agency's needs and is unduly restrictive is denied where the
requirement is reasonable.
2. Agency decision not to set aside procurement for small business
competition is upheld where record supports contracting officer's
conclusion that because of changes in packaging requirement for paper
towels, it was not reasonable to expect to receive bids from two small
businesses.
DECISION
Abel Converting, Inc. protests the General Services Administration's
(GSA) packaging requirements for various categories of paper towels
under invitation for bids (IFB) No. 7PRT-53054/M3/7S8. Abel also
objects to GSA's decision not to set the entire procurement aside for
small businesses Abel argues that the packaging requirements are overly
restrictive, and that adequate small business competition could have
been obtained. We deny the protest.
The IFB contemplated the award of multiple requirements contracts for
delivery of paper towels of six different sizes (identified by National
Stock Numbers) to several locations.
The contracts were to meet the needs of federal agencies using GSA as
a supply source for the period February 1, 1987, or date of award, to
January 31, 1988. Only two types of towels were set aside for small
businesses.
The IFB required that five of the six types of towels be packaged in
"pop-up design dispenser type paperboard" boxes. The IFB for the
previous year's requirements had permitted packaging in either "pop-up"
or "reach-in" boxes. 1/
At the October 22 bid opening, GSA received bids from four different
firms for each of the line items requiring "pop-up" boxes.
The record shows that prior to 1984, the GSA solicitation for towels
required "pop-up" boxes. For 1984, the packaging specification was
relaxed to allow either a paperboard box, a sleeve wrapped in paper or a
shrink or stretch film wrap.
The packaging requirements were again revised for 1985 to mandate
paperboard boxes, either "pop-up" or "reach in" type. Again, the 1986
requirements specified either "pop-up" or "reach in" boxes but specified
that towels must be "C folded" in "reach in" boxes. As a result of a
survey of its user agencies, GSA found that "reach in" packaging was not
satisfactory because after the box was opened its contents were subject
to contamination, the dispensing of single towels was difficult, and the
"reach in" container was not a normal commercial package. GSA thus
concluded that only "pop-up" boxes would meet the user agencies' needs
and included such a restriction for five of the six size towels in the
current solicitation.
Abel argues that the elimination of "reach-in" boxes as an acceptable
form of packaging is unduly restrictive of competition because GSA's
requirement for "pop-up" dispensers is beyond the agency's actual needs.
Abel disputes GSA's characterization of its survey as showing that
"pop-up" packaging was preferred by the user agencies. The protester
contends that the agency complaints concerned packagigg types other than
the "reach in" boxes that it intends to offer.
In preparing a solicitation for supplies or services, a contracting
agency must specify its needs and solicit offers in a manner designed to
achieve full and open competition, so that all responsible sources are
permitted to compete. 41 U.S.C. Sec. 253a(a) (1) (A) (Supp. III 1985).
Consequently, when a solicitation provision is challenged as exceeding
the agency's actual needs, the initial burden is on the procuring agency
to establish support for its contention that the provision is justified.
Daniel H. Wagner, Associates, Inc., 65 Comp. Gen. 305 (1986), 86-1 CPD
P 166. We determine the adequacy of the agency's justification by
examining whether its explanation can withstand logical scrutiny. R.R.
Mongeau Engineers, Inc., B-218356 et al., July 8, 1985, 85-2 CPD P 29.
Once the agency establishes support for the challenged specifications,
the burden shifts to the protester to show that the specifications in
dispute are unreasonable. Information Ventures, Inc., B-221287, Mar.
10, 1986, 86-1 CPD P 234.
We do not find that the protester has shown that the agency
preference for "pop-up" packaging is unreasonable. GSA's conclusion
that only "pop-up" boxes will meet the user agencies' needs is based on
complaints from user agencies and a survey conducted by GSA. One
laboratory complained, for example, that plastic-wrapped towels were
subject to contamination once the package has been unsealed. Two other
complaints focused on the wastefulness inherent to plastic or paper
wrapped packaging which made it difficult to remove one towel at a time.
While the complaints cited by GSA in the protest report relate to
towels packaged in plastic or paper sleeves (forms of packaging
permitted under earlier solicitations) rather than towels packaged in
"reach-in" boxes, the agency concluded that the contamination and
wastefulness problems would also apply to "reach in" boxes which also
expose a number of towels and, according to GSA, can make it difficult
to extract a single towel. Since the "reach in" boxes are open at the
side, we think that GSA's conclusions that these problems will also
affect towels in "reach in" boxes is reasonable.
Further, GSA states that its survey revealed that 30 of the 48
agencies that had been identified as the largest users of towels
required "pop-up" boxed towels. In this regard, GSA notes that
virtually all of the responding agencies that used towels in
laboratories and research centers said they needed the "pop-up"
packaging.
Thus, we find that the record supports GSA's conclusion that its
using agencies need the "pop-up" packaging. See Independent Products
Co., Inc., B-207519.2, Apr. 22, 1983, 83-1 CPD P 434. We, therefore,
have no basis upon which to object to GSA's inclusion of the requirement
for "pop-up" boxes in the solicitation.
We note also that the record does not support Abel's contention that
this requirement has unduly restricted competition. In fact, of the
four bids received on each line item, it appears that the protester is
low on several including some which contain the "pop-up" box
requirement.
In addition, Abel complains about GSA's failure to set aside for
small business portions of the requirement that had in prior years been
set aside.
Here, the record shows that after the specifications were revised to
include the "pop-up" packaging requirement, the contracting officer
attempted to contact all four of the small businesses who had responded
to the previous solicitation. All three of the firms which she
succeeded in contacting, including the protester, said that they did not
themselves have the capacity to meet the requirement, but either would
have to purchase new equipment or subcontract the packaging portion of
the requirement. Based on this information the contracting officer
concluded that because the government could not expect to receive
competitively priced bids from small business, the items should not be
set aside.
The regulations pertaining to small business recognize that a
procurement which has been conducted previously as a setaside may be
withdrawn by the contracting officer when it is determined that there is
no reasonable expectation of receiving bids from at least two
responsible small businesses, and that award cannot be made at a
reasonable price. Federal Acquisition Regulation, 48 C.F.R. Secs.
19.501 (g) and 19.506 (1986). The determination as to whether adequate
competition reasonably may be expected is essentially a business
judgment within the discretion of the contracting agency which we will
not disturb, absent a clear showing of abuse of discretion. The Quality
Inn Midtown, B-219312.3 et al., Apr. 4, 1986, 86-1 CPD P 324. Here,
based on the record before her at the time the decision was made, we
think that the contracting officer reasonably decided that the agency
would not receive bids from two small businesses because of the addition
of the more complex packaging requirement. In fact, in its initial
protest submission the protester, itself, contended that no small
business could compete for the contract because of the packaging
requirement.
The protest is denied.
Harry R. Van Cleve
General Counsel
FOOTNOTE
1/ "Pop-up" boxes are constructed so that removal of one towel
automatically exposes a portion of the next; "reach-in" boxes of the
type supplied by the protester contain a perforated punch-out section
which includes a portion of the top of the box and extends down one side
so that towels can easily be removed one at a time.
Matter of: Professional Coatings--Reconsideration
File: B-224222.2
Date: March 4, 1987
DIGEST
1. General Accounting Office recommendation that acceptability of low
bidder's proposed bid bond sureties be determined based on information
current at time of award is based on well-established standard for
determining responsibility that applies equally to all bidders, and thus
is not unfair to bidders who may have proposed sureties that were
acceptable at time of bid opening.
2. Fact that recommendation may allow protester to benefit from award
delay attending protest resolution is unobjectionable where
recommendation was necessitated by agency's improper rejection of
protester's bid as nonresponsive, and there is no reason to assume
protest was not filed in good faith.
DECISION
Professional Coatings requests reconsideration of the recommendation
in our decision, T&A Painting, Inc., B-224222, Jan. 23, 1987, 66 Comp.
Gen. , 87-1 C.P.D. P , in which we denied T&A's protest under
Department of the Navy invitation for bids (IFB) No. N62766-85-B-2170
for painting services. Although we denied the protest, which challenged
the Navy's methods in determining T&A's individual sureties to be
unacceptable, we found that the Navy improperly had rejected T&A's bid
as nonresponsive, without considering current information on the
sureties. As surety acceptability in these circumstances relates to
bidder responsibility, which may be demonstrated up until the time of
award, and award was withheld pending our decision, we recommended that
the Navy consider current information on the sureties' finances before
determining whether to reject T&A's bid. Professional Coatings was the
next low bidder under the IFB.
We affirm our decision.
Professional Coatings bases its reconsideration request on the
grounds that allowing T&A's sureties' acceptability to be judged at this
late date (1) is unfair to other bidders on the procurement who
submitted bid bonds with acceptable individual sureties at the time of
bid opening; and (2) compromises the integrity of the competitive
process by essentially letting T&A use the protest process to "buy more
time" for its sureties to become acceptable.
Professional Coatings' first argument simply ignores the import of
our decision, and the well-established standard on which it was based,
that is, surety acceptability is a matter of responsibility which may be
established up until the time of award. See, for example, Clear Thru
Maintenance, Inc., 61 Comp. Gen. 456 (1982), 82-1 C.P.D. P 581. The
fact that certain bidders' bid bond sureties here may have been
acceptable at the time of bid opening does not operate to change the
standard and make bid opening the time by which the sureties must be
acceptable. As the same time limits apply to all bidders, we see
nothing inherently unfair in determining the acceptability of T&A's
sureties based on the most current information available prior to award.
We also do not agree that our recommendation compromises the
integrity of the competitive process. Professional Coatings is correct
that T&A possibly will benefit from the award delay attending our
consideration of its protest. This possible benefit derives not from
the mere filing of the protest, however, as Professional Coatings
suggests, but from our conclusion that the Navy improperly rejected
T&A's bid as nonresponsive instead of determining surety acceptability
as a matter of T&A's responsibility, based on then-current information.
In other words, had the Navy determined the acceptability of T&A's
sureties in the proper timeframe initially, we would not have
recommended a new acceptability determination. Under these
circumstances, end because we find no basis for assuming that T&A did
not protest in good faith (rather then merely to "buy more time"), we do
not believe there is anything improper in T&A possibly benefiting from
the situation here.
Professional Coatings cites our decision in Clear Thru Maintenance,
Inc., 61 Comp. Gen. 456, supra, in support of the proposition that
surety acceptability should be treated as a matter of bid
responsiveness, to be determined at bid opening. Specifically,
Professional Coatings relies on the holding in that decision that surety
acceptability is only "technically" a matter of the bidder's
responsibility and, thus, need not be referred to the Small Business
Administration (SBA) for a certificate of competency review even when
the bidder is a small business. If surety acceptability is only
technically a responsibility matter, Professional Coatings reasons, then
there is no reason not to treat it like a matter of responsiveness.
Professional Coatings' reliance on the cited case is misplaced. The
holding in issue was addressed solely to whether a small business
nonresponsibility determination based on surety unacceptability need be
referred to the SBA, not the issue of the proper timing of such a
determination. We characterized an unacceptable surety determination as
only a "technical" responsibility matter in deciding that it does not
constitute a bidder nonresponsibility determination that must be
referred to the SBA; we did not hold or imply that surety acceptability
must be determined at bid opening. Indeed, elsewhere in Clear Thru
Maintenenance, Inc., we specifically noted that surety acceptability is
a matter of bidder responsibility that may be established up until the
time of award.
Our decision is affirmed.
Harry R. Van Cleve
General Counsel
Matter of: National Fire Protection Association
File: B-224221, B-224221.2
Date: February 5, 1987
DIGEST
1. Protest that procuring agency did not grant preference to existing
organizations in area, either by restricting competition or including an
evaluation criterion reflecting preference, is dismissed as untimely
because it was not filed until award was made since it was apparent from
solicitation and amendment thereto that preference was not being
granted.
2. The determination of the relative merits of an offeror's technical
proposal is primarily the responsibility of the procuring agency and
will be questioned only upon a showing of unreasonableness or that the
procuring agency otherwise violated procurement statutes or regulations.
Protest is denied where the record shows a reasonable basis for the
procuring agency's evaluation of the protester's technical proposal as
unacceptable and therefore not in the competitive range.
3. Contrary to protester's allegation, clauses which were changed or
added to awarded contract regarding use of consultants and release of
information gathered during performance of contract did not alter
evaluation criteria nor encourage occurrence of an organizational
conflict of interest. Use of consultants was not prohibited by
solicitation and clauses were merely added to ease contract
administration.
DECISION
The National Fire Protection Association (NFPA) protests the award of a
contract under request for proposals (RFP) No. EMW-86-R-2277 to Tri-Data
Corporation by the Federal Emergency Management Agency (FEMA) for the
investigation of major fires.
NFPA contends that its proposal was improperly excluded from the
competitive range, that FEMA did not comply with the Fire Prevention and
Control Act of 1974 (15 U.S.C. Sec. 2201 et seq. (1982)) and that the
provisions of the contract awarded to Tri-Data differ significantly from
those contained in the RFP.
We deny in part and dismiss in part the protest.
The RFP was issued on July 2, 1986, and six proposals were received
by the August 4, 1986, closing date. Four proposals, including NFPA's,
were found technically unacceptable. Tri-Data's proposal was the only
one placed in the competitive range because Tri-Data was rated 21 points
higher technically (out of 100 points) and was 30 percent lower in cost
than the other acceptable proposal.
Initially, we dismiss NFPA's allegation regarding FEMA's alleged
violation of the Fire Prevention and Control Act of 1974 as untimely.
NFPA contends that FEMA should have restricted competition to existing
fire prevention organizations or given weight during the evaluation
process to the fact that NFPA was such an existing organization,
pursuant to 15 U.S.C. Sec. 2218(3) which states:
"To the extent practicable, the Administrator shall utilize
existing programs, data, information, and facilities already
available in other Federal Government departments and agencies
and, where appropriate, existing research organizations, centers
and universities. The Administrator shall provide liaison at an
appropriate organizational level to assure coordination of his
activities with State and local government agencies, departments,
bureaus, or offices concerned with any matter related to programs
of fire prevention and control and with private and other federal
organizations and offices so concerned."
The RFP, as issued on July 2, 1986, contained no such evaluation
factors and on July 21, 1986, amendment A001 was issued which provided
the answers to questions posed by the offerors and included a list of
the 92 firms which had been sent the RFP. Therefore, NFPA knew from the
terms of the RFP that no special consideration was being given to
existing fire prevention organizations and by amendment A001 that
competition was not being restricted to such firms. Under our Bid
Protest Regulations, 4 C.F.R. Sec. 21.2(a) (1986), protests based upon
alleged improprieties which are apparent prior to the closing date for
receipt of initial proposals must be filed prior to the initial closing
date. Therefore, this aspect of the protest should have been filed
prior to the August 4, 1986, closing date. Since it was not filed until
September 26, 1986, it is untimely and dismissed.
NFPA's proposal was found technically unacceptable and therefore
excluded from the competitive range. NFPA argues that this finding of
technical unacceptability is clearly arbitrary and capricious in view of
NFPA's organizational experience which includes investigating fires for
the United States since 1972. Moreover, NFPA contends that whatever
problems may exist in the proposal could be easily cured with minor
revisions, not a major rewrite as FEMA found would be necessary, and
that through the conduct of discussions, the proposal would be
acceptable for award.
In reviewing protests concerning the evaluation of proposals and
competitive range determinations, our function is not to reevaluate the
proposals and make our own determination about their merits. This is
the responsibility of the contracting agency, which is most familiar
with its needs and must bear the burden of any difficulties resulting
from a defective evaluation. Robert Wehrli, B-216789, Jan. 16, 1985,
85-1 C.P.D. P 43. Procuring officials have a reasonable degree of
discretion in evaluating proposals, and we will examine the agency's
evaluation only to ensure that it had a reasonable basis and was
consistent with the stated evaluation criteria and applicable statutes
and regulations. GTE Government Systems Corp., B-222587, Sept. 9, 1986,
86-2 C.P.D. P 276.
Furthermore, it is well established that the determination of whether
a proposal should be included in the competitive range is a matter
primarily within the contracting agency's discretion which will not be
disturbed unless it is shown to be unreasonable or in violation of
procurement laws and regulations. Metric Systems Corp., B-218275, June
13, 1985, 85-1 C.P.D. P 682. The fact that a protester does not agree
with an agency's evaluation does not render the evaluation unreasonable
or contrary to law. Logistic Services International, Inc., B-218570,
Aug. 15, 1985, 85-2 C.P.D. P 173.
FEMA contends that while NFPA may be a capable offeror, the proposal
which it submitted was inadequate and did not respond to the
requirements of the RFP. The evaluation panel found the NFPA proposal
weak in numerous areas. Under the evaluation criterion "Understanding
of the Program Requirement," the overall proposal was found to be weak
and poorly presented and lacking in detail and description. Under
"Project Organization and Management," the panel felt there was only a
limited description of capabilities for editing and research, that the
methodology for accomplishing the work was lacking and that the proposal
was simplistic in light of the organization's past experience. Under
"Experience and Qualifications of Key Staff," FEMA found the principal
investigators lacked extensive, real-world experience and that the staff
was suppression oriented, not multidisciplinary. Also, the ability of
the investigators to access key officials for fire investigations was
not addressed. Under "Facilities and Equipment," the panel believed the
proposal lacked detail regarding materials research and laboratory
facilities and did not suggest outside contract support for lab work or
computer assistance.
We have reviewed the NFPA proposal and find the characterization of
the proposal by the FEMA technical evaluation panel to be reasonable.
Much of the proposal deals with the past accomplishments of NFPA and
recounts the experience gained in prior investigations. While
Tri-Data's proposal was specific as to methodology and tasks to be
accomplished, NFPA's proposal seemed to assume that the evaluation panel
would recognize that NFPA had performed this contract in the past and
had done an acceptable job. In this regard, for specifics of
methodology and understanding of tasks, the proposal continually
referred the reader to various appendices, which included copies of
previously conducted investigative reports. For example, the proposal
states "NFPA investigators will use the latest techniques in fire loss
analysis in conducting the investigation and have experience in
conducting and writing reports of this type of investigation (See
Appendix B-2)." We believe such a description falls short of the detail
required by the RFP.
A technical evaluation must be based on information submitted with
the proposal. No matter how capable an offeror may be, if it does not
submit an adequately written proposal, it will not be considered in the
competitive range. Health Management Associates of America, Inc.,
B-220295, Jan. 10, 1988, 86-1 C.P.D. P 26. Based upon our review of
the proposal and evaluation sheets of the evaluation panel, we find the
evaluation to have been reasonable and that FEMA did not abuse its
discretion in excluding NFPA's proposal from the competitive range.
NFPA also protests that certain clauses now incorporated in the
Tri-Data contract differ substantially from those contained in the RFP
and affect the manner in which proposals were evaluated and raise a
question of an organizational conflict of interest.
First, the "Services of Consultant's" clause, not contained in the
RFP, is in Tri-Data's contract. It reads:
"Notwithstanding the provision of the clause entitled,
"Subcontract," the prior written approval of the Contracting
Officer shall be required:
"A. Whenever any employee of the Contractor is to be reimbursed
as a "Consultant" under this contract; and
"B. For the utilization of the services of the Consultant under
this Contract except when the Consultant was proposed and accepted
during the negotiations of this contract."
"Whenever Contracting Officer approval is required, the
contractor shall obtain and furnish to the Contracting Officer
information concerning the need of such consultant services and
the reasonableness of the fees to be paid, including, but not
limited to, whether fees to be paid to any consultant exceed the
lowest fee charged by such consultant to others for performing
consuitant services of a similar nature."
NFPA alleges there was no express provision allowing the use of
consultants in the RFP and, if there had been, NFPA would have explored
the possibility of retaining consultants on a part-time basis rather
than its full-time in-house personnel, which it did propose. NFPA
argues it was prejudiced by this change because its personnel were found
to be less qualified than the consultants proposed by Tri-Data.
FEMA states that while the "Services of Consultants" clause was added
to the contract, it has no impact and was added to make the
administration of the contract easier. The RFP did not prohibit the use
of consultants, contends FEMA, and it was left to the discretion of the
offerors as to what mix of personnel would be most effective in
performing the contract. Consultants under the clause are approved in
the same manner that subcontracts need to be approved by the contracting
officer, unless the consultants were proposed and accepted previously.
Also, the clause was added because FEMA's appropriation limits the
amount that consultants may be paid.
Our review of the RFP reveals no prohibition against the use of
consultants ana we do not see how clause G-9 changed the outcome of the
evaluation of the personnel proposed by either offeror. The clause
merely requires contracting officer approval of any new consultants and
the rate at which they will be paid if any are added to the contractor's
work force.
In this same area, NFPA also objects to the addition of clause H.2
"Non-Personal Services," to Tri-Data's contract. This clause merely
states that the contractor and his personnel shall not be subject to
relatively continuous supervision and control of a government officer or
employee. NFPA seems to object on the basis that Tri-Data's consultants
would not be subject to government control but NFPA's fulltime employees
would be. This ground is without merit as neither type of personnel
would be subject to such control or the contract would be an improper
personal services contract.
Also, the RFP, at section H.1 "Publications," contained the following
clause, which was deleted from Tri-Data's contract:
"Information and products from the performance of this Contract
shall not be published or divulged in any form, nor shall they
appear in any thesis, writing, public lecture or presentation, and
the like without prior submission of the manuscript, materials, or
product to the Contracting Officer and Project Officer for
clearance. The Contractor agrees to be bound by the decision of
said officials...."
NFPA contends that this deletion allows a contractor or its
consultants to utilize information gained during an investigation at a
later date by a consultant as an expert witness in litigation.
FEMA States the "Publications" clause was deleted because both the
RFP and the resulting Tri-Data contract contained a similar clause,
"Publications," found at 48 C.F.R. Sec. 4452.2227-72 (1985). The only
significant difference in the clauses is that the deleted clause had no
time limit for required approval while the now incorporated clause
requires contracting officer approval for the first 6 months after a
report is submitted. FEMA contends that a major purpose of this
contract following the conduct of a major fire investigation is the
public dissemination of the information gained. Accordingly, the
government has substantially the same protection under either clause.
NFPA's alleges that the deletion of the clause and the use of
consultants will lead to an organizational conflict of interest. In
this regard, NFPA argues that the expanded use of consultants, rather
than full-time employees, and the deletion of a prior limitation on a
contractor's ability to utilize the information gained from an
investigation, permits Tri-Data to pay its consultants lower wages
because the consultants will be able to make up the difference in salary
by testifying as expert witnesses in private litigation. This ability
to use information at a later date, the protester argues, may affect the
objectivity of the investigation and therefore lead to an organizational
conflict of interest.
The Federal Acquisition Regulation, 48 C.F.R. Sec. 9.504 (1986),
States that an organizational conflict of interest may exist when the
nature of the work to be performed may, without some restriction on
future activities, impair the contractor's objectivity in performing the
contract work. As noted above, there was no restriction on proposing
consultants under the RFP. Also, the only difference in the
"Publications" clauses is the time limitation. We do not believe that
the "Publications" clause, which merely gives the contracting officer
power to stop publication of the data collected, is the powerful vehicle
portrayed by NFPA to Stop conflict of interest. It will be the
responsibility of FEMA during administration of the contract, including
its review of the submitted reports, to be alert to any potential
conflicts. Moreover, Tri-Data recognized this issue in its proposal,
wherein it stated:
"Our working assumption is that it is USFA/FEMA's prerogative
to release information as it sees fit during and after each
investigation. Where there is life lost and large property loss,
liability suits are almost sure to follow nowadays. The project
team is sensitive to the need not to obstruct criminal or civil
proceedings or to cause damage to anyone's reputation through
premature release of information. It is also necessary to protect
individuals' fights to privacy. Unless otherwise instructed by
USFA/FEMA, our project team and in-house staff will be instructed
to release information only to USFA/FEMA."
Accordingly, the protest is denied in part and dismissed in part.
Harry R. Van Cleve
General Counsel
Matter of: Hammitt Corporation
File: B-224220
Date: February 10, 1987
DIGEST
Bid that failed to include bid bond is nonresponsive, notwithstanding
agency's evaluation of bid as below $25,000 threshold for bonding
requirement, because agency's evaluation was in error and threshold was
exceeded.
DECISION
Hammitt Corporation protests the award of a contract for support of
approximately 200 self-contained gas fired infrared heaters being
installed in 11 animal/bird barns at the New York Animal Import Center,
including the installation of underground gas lines, and for propane
fuel, under U.S. Department of Agriculture (USDA) invitation for bids
(IFB) APHIS-6-0061. According to Hammitt, USDA ignored a bid bond
requirement in selecting Porco Gas Services, whose bid failed to include
such a bond and was therefore nonresponsive. We sustain the protest.
Where an IFB requires a bid bond, the requirement is material and
failure to furnish, by the time of bid opening, a bond conforming to the
solicitation renders the bid nonresponsive. Nova Group, Inc., B-220626,
Jan. 23, 1986, 86-1 CPD P 80.
USDA defends its award to Porco by arguing that, although a bid bond
was required by the solicitation, it was not required by law, because
the Porco bid was under $25,000. The agency also states that the
protester's evaluated bid price of $42,900 for installation was
unreasonably high when compared to Porco's bid of $6,509.82 for the same
work, or to the government estimate of $8,200.
We agree with Hammitt that USDA's defense is without merit. The IFB,
in material part, provides that:
"If a contract exceeds $25,000 each bidder must submit a bid
guarantee in the amount of 20 percent of the total bid price, but
in no event shall the penal sum exceed $3 million."
Porco's bid was not below $25,000 if evaluated in accordance with the
IFB. The IFB provided for award based on the aggregate price for two
line items: line item 1, which included installation of the underground
propane gas system, and line item 2, which included the propane tanks,
appurtenances, and gas supply for 1 year. The IFB provided that the
total price for item 2 was to be calculated by extending the unit price
per gallon by an estimated consumption of 65,000 gallons per year for
the 11 buildings to be served. USDA disregarded the IFB evaluation
scheme by computing fuel cost on the basis of the expected initial
delivery only, rather than on the basis of its stated f irst year
requirement. Properly extended, Porco's first year price for gas (at
$0.59 per gallon, which includes the cost of furnishing and installing
the tanks) comes to more than $38,000. 1/
Agencies are required to make award in accordance with the evaluation
scheme set out in the IFB. Summerville Ambulance, Inc., B-217049, July
1, 1985, 85-2 CPD P 4. So evaluated, Porco's bid (which came to
$44,859.82 for both line items) exceeded $25,000. Thus under the
solicitation's terms a bid bond was required. Since there was no bond,
the bid was nonresponsive and should have been rejected. Nova Group,
Inc., B-220626, supra. Further, the fact that USDA viewed Hammitt's bid
for installation of the underground gas pipe as unreasonably high, 2/
while perhaps justification for its rejection and the resolicitation of
the requirement, is not relevant in determining the responsiveness of
Porco's bid.
The protest is sustained.
The record shows that award was made after September 26, 1986, the
date on which USDA was notified of the protest by our Office. The
documentation executed to justify the award refers only to a need for
the supplies being procured, and thus, does not conform to the
Competition in Contracting Act of 1984 (CICA), 31 U.S.C. Sec.
3553(c)(2)(A) (Supp. III 1985), which permits award in the face of the
protest only upon a written finding by the head of the procuring
activity that urgent and compelling circumstances which significantly
affect interests of the United States will not permit waiting for our
decision. Further, it does not appear that USSA complied with 31 U.S.C.
Sec. 3553(c) (2)(B), which requires that our Office be notified of such
findings before award is made.
We recognize that the gas lines have been installed. In the
circumstances, we recommend that USDA terminate the contract improperly
awarded to Porco, and reprocure its remaining fuel requirements. In
view of the fact that performance has been partially completed, Hammitt
is awarded its bid preparation costs and the cost of pursuing its
protest. Bid Protest Regulations, 4 C.F.R. Sec. 21.6(d) (1986).
Additionally, USDA should take action to ensure full compliance with the
CICA award suspension provisions in future cases.
Comptroller General
of the United States
FOOTNOTES
1/ USDA based its evaluation on 85 percent of 500 gal. per building,
which is the amount it apparently expected to be furnished initially.
We are aware of nothing in the IFB that indicates that bids would be
evaluated other than on the basis of the entire 65,000 gal. requirement.
2/ Hammitt's total bid, including fuel, comes to $42,900 plus $0.60
per gal. times 65,000 gal., or $81,900.
Matter of: White Machine Company
File: B-224219
Date: January 23, 1987
DIGEST
When a contracting agency issues a purchase order to other than the
low-priced offeror under a mandatory, multiple-award Federal Supply
Schedule contract, the purchase must be fully justified. When the
procuring activity reasonably determines that maintenance economy and
availability will offset a slightly higher price, the purchase is
legally supportable.
DECISION
White Machine Company protests a purchase by the National Guard
Bureau, United States Property and Fiscal Officer, North Dakota, from
Kardex Systems, Inc., under a mandatory Federal Supply Schedule (FSS)
contract. White contends that the activity ordered five filing systems
featuring vertical carousels at a higher price than its own FSS contract
price, in violation of the applicable procurement regulations.
We deny the protest.
On September 15, 1986, the activity was authorized to procure a
vertical filing system that was available from either White or Kardex
under their FSS contracts. After orally requesting quotes that included
transportation and maintenance, the agency determined that the Kardex
price was $49,094.30 on an f.o.b. destination basis and included
installation. The protester's price was $46,233.09 on an f.o.b. origin
basis; the activity estimated that freight charges for the protester's
system would be $3,230, with an estimated $600 additional for
installation, for a total of $50,063.09. White, however, then offered
to furnish freight and installation at a cost of $1,585.35. Thus,
White's total price was $47,818.44, or $1,275.86 less than Kardex's. 1/
The agency further determined that neither Kardex's nor White's
Schedule contract provided for the repair and maintenance of equipment
ordered except for White's service for customers within 500 miles of
certain cities. However, since the North Dakota user is not located
within these service regions, and since the filing system is an
electrically operated rotational system, the contracting officer states
that he had to consider the economy and availability of maintenance.
The contracting officer determined that the cost of a single maintenance
call by White would offset the difference in the two firms' prices.
This determination was based on information provided in the protester's
Schedule contract, as well as the estimate of 2 days time and travel
expenses from any of the protester's service facility locations, and was
in sharp contrast to a finding that Kardex provided service through a
Bismark, North Dakota, retailer.
Purchases from the FSS are governed by the Federal Property
Management Regulations (FPMR), which provide that purchases of more than
$500 per line item made from a multiple-award schedule shall be made at
the lowest delivered price available under the schedule unless the
agency fully justifies the purchase of a higher-priced item. 41 C.F.R.
Sec. 101-26.408-2 (1986); see also Federal Acquisition Regulation, 48
C.F.R. Sec. 8.405-1(a) (1986).
In this case, we cannot conclude that the activity's decision to
purchase from Kardex was not reasonably based. The activity determined
that the cost to the government for a single maintenance call on the
protester's equipment would more than make up for the difference in the
purchase price between Kardex and White. This determination was based
on information gleaned from the FSS contracts, plus the government's
estimate of expenses including travel time from White's facility in New
Jersey, per diem, and hourly rates in connection with service calls.
The activity further determined that Kardex's service personnel, located
in the same city, would be able to respond more quickly and more
economically to maintenance requests as they arose. While White now
argues that service after expiration of warranties is available through
a national network of dealers, the record indicates that the activity
attempted to confirm this by calling a toll-free number, but was told
that White was still in the process of negotiating a contract for such
service.
We have recognized not only that FPMR, 41 C.F.R. Sec.
101-26.408-3(b) (6) (iii), provides that greater maintenance
availability should result in long run savings that offset any
difference in purchase prices, but also that it is reasonable to assume
that a supplier's apparent ability to provide quicker response to
maintenance problems as they arise will enhance the government's
productivity and performance. Since the agency reasonably articulates
its justification for purchasing from other than the low-priced FSS
supplier, in part on the grounds of greater maintenance economy and
availability, the purchase from Kardex is legally supportable. See
National Micrographics Systems, Inc., et al., B-220582 et al., Jan. 9,
1986, 86-1 CPD P 22, aff'd sub nom Canon U.S.A. Inc.--Request for
Reconsideration, B-220582.3, Mar. 21, 1986, 86-1 CPD P 281.
The protest is denied.
Harry R. Van Cleve
General Counsel
FOOTNOTE
1/ The agency compared prices as follows:
White: $46,233.09 Kardex: $49,094.30
+ 1,585.35 - 47,818.44
$47,818.44 $ 1,275.86
File: B-224215.3
Date: November 10, 1988
Matter of: Porterhouse Cleaning and Maintenance Service Company, Inc.
DIGEST
1. Protest of the contracting agency's exercise of an option in an
incumbent contractor's contract is dismissed where the protester fails
to set forth a detailed statement of the legal and factual grounds of
the protest as required by General Accounting office Bid Protest
Regulations.
2. Protest relating to performance of a contract involves matters of
contract administration which the General Accounting Office will not
review pursuant to its bid protest function.
DECISION
Porterhouse Cleaning and Maintenance Service Company, Inc., protests
the Air Force's exercise of an option to extend contract No.
F65501-88-C-0017, with Military Management Services, Inc., for mess
attendant services at Elmendorf Air Force Base, Alaska. Porterhouse
also protests the Air Force's actions in administering its firm's prior
mess attendant services contract at Elmendorf.
We dismiss the protest.
Porterhouse was awarded a mess attendant services contract, effective
January 1, 1987, for a base year with two 1-year options. After
conclusion of the base year, the Air Force decided not to exercise the
option to extend Porterhouse's contract for another year; instead, the
Air Force awarded a contract to Military Management in January 1988.
According to Porterhouse, the agency has now exercised a 1-year option
under Military Management's contract, effective October 1, 1988.
Porterhouse protests the Air Force's action.
Our Office generally will not question an agency's exercise of an
option contained in an existing contract unless the protester shows that
the agency failed to follow applicable regulations or that the agency's
determination to exercise the option, rather than conduct a new
procurement, was unreasonable. Syncor Industries Corp., B-224023.3,
Oct. 15, 1987, 87-2 CPD Par. 360. Specifically, under Federal
Acquisition Regulation (FAR) Sec. 17.207(c), the contracting officer may
exercise options only after determining that funds are available; the
requirement covered by the option fulfills an existing government need;
the exercise of the option is the most advantageous method of fulfilling
the government's need, price and other factors considered; and the
option was synopsized in accordance with the FAR. Here, while
Porterhouse challenges the exercise of the option in Military
Management's contract, it does not allege that applicable regulations
were not followed or submit any evidence showing that the exercise of
the option was unreasonable. Since Porterhouse has failed to set forth
a detailed statement of the legal and factual grounds for its protest as
required by our Bid Protest Regulations, 4 C.F.R. Sec. 21.1(c)(4)
(1988), we will not consider the firm's protest of the exercise of the
contract option. See 4 C.F.R. Sec. 21.1(f).
Porterhouse also raises certain matters pertaining to the
administration of its 1987 mess attendant services contract at
Elmendorf. Specifically, Porterhouse protests the fact that its firm
was required to pay a higher wage rate per hour than was specified in
the solicitation; that the Air Force failed to timely provide
procedural information at the outset of contract performance; and that
Military Management was provided with information on the collective
bargaining agreement between Porcerhouse and its employees. These
concerns involve matters of contract administration which our Office
will not review pursuant to our bid protest function. 4 C.F.R. Sec.
21.3(m)(1).
The protest is dismissed.
Robert M. Strong, Associate General Counsel
Matter of: Coopers & Lybrand
File: B-224213.2
Date: August 6, 1987
DIGEST
1. Protester may recover its proposal preparation costs where the
contracting agency wrongfully excluded it from the competition and no
other remedy is available because the procurement was canceled after
available funding lapsed during the pendency of the protest.
2. Protester may recover the costs it incurred in filing and pursuing
its protest where the agency unreasonably excluded the protester from
competition.
DECISION
Coopers & Lybrand has submitted a claim for reimbursement of its
preparation costs and the costs of filing and pursuing its protest which
we sustained in Coopers & Lybrand, B-224213, Jan. 30, 1987, 66 Comp.
Gen. , 87-1 CPD P 100. The protest involved request for proposals
(RFP) No. EMW-86R-2389, issued by the Federal Emergency Management
Agency (FEMA) for services relating to the evaluation of industrial
preparedness for national defense. We held that although FEMA adhered
to the stated evaluation criteria and properly determined the
protester's proposal to be technically inferior to the only other
proposal submitted, it unreasonably determined the protester's proposal
to be technically unacceptable without giving the protester an
opportunity to cure the deficiencies through reasonable discussions. We
therefore recommended that FEMA conduct discussions with both offerors.
FEMA subsequently informed our Office and the protester, by letter of
April 1, 1987, that the procurement would be canceled because it had
been approved for fiscal year 1986 funding and adequate fiscal year 1987
funds were not available.
A protester may recover proposal preparation costs where it has been
unreasonably excluded from the competition and no other remedy is
appropriate. 4 C.F.R. Sec. 21.6(d) (2) and (e) (1987). To qualify
under this standard, the protester must have had a substantial chance of
obtaining the award but for the agency's improper action. Motorola,
Inc., B-222181, July 11, 1986, 86-2 CPD P 59, aff'd, Department of the
Air Force, B-222181.2, Nov. 10, 1986, 86-2 CPD P 542.
Our prior decision establishes that Coopers & Lybrand was
unreasonably excluded from the competitive range for discussions, and no
other remedy is available since the procurement has been canceled
because available funding lapsed while the protest was pending. See
Consolidated Bell, Inc., B-220425.2, Aug. 18, 1986, 86-2 CPD P 192.
Regarding the protester's chance of obtaining the award, a proposal in
the competitive range, by definition, has a reasonable chance for award.
Federal Acquisition Regulation, 48 C.F.R. Sec. 15.609(a) (1986). We
therefore believe fairness requires a finding that Coopers and Lybrand's
chance for award was sufficient to support recovery of its proposal
preparation costs. Falcon Systems, Inc., B-2136611, June 22, 1984, 84-1
CPD P 658.
Regarding the recovery of the costs of filing and pursuing a protest,
our regulations provide for the recovery of such costs, including
attorney's fees, where the contracting agency unreasonably excludes the
protester from the procurement except where our Office recommends that
the contract be awarded to the protester and the firm receives the
award. 4 C.F.R. Sec. 21.6(d) (1) and (e). Since we found that FEMA
unreasonably rejected Coopers & Lybrand's proposal without discussions,
thus excluding the firm from competition, Coopers & Lybrand is entitled
to recover its protest costs, including reasonable attorney's fees. See
HCA Government Services, Inc., B-224434, Nov. 25, 1986, 86-2 CPD P 611.
Accordingly, FEMA should reimburse Coopers & Lybrand's proposal
preparation costs as well as the costs of filing and pursuing the
protest, including reasonable attorney's fees. The firm should submit
its claim directly to FEMA.
Comptroller General
of the United States
Matter of: Tapex American Corp.--Reconsideration
File: B-224206.2
Date: June 24, 1987
DIGEST
Prior decision sustaining protest of partial cancellation of a
solicitation is reversed to deny the protest because the agency has
provided information from two firms that competed under a prior
procurement which indicates that reinstatement of the canceled portion
of the solicitation and awards thereunder would prejudice other bidders
or other potential bidders.
DECISION
The General Services Administration (GSA) requests reconsideration of
our decision in Tapex American Corp., B-224206, Jan. 16, 1987, 87-1
C.P.D. P 63, in which we sustained Tapex's protest against the partial
cancellation of invitation for bids (IFB) No. 2F-EAX-A4362-S, issued by
GSA for Federal Supply Schedule requirements for steel strapping, seals,
and nonmetallic strapping. We held that the solicitation should be
reinstated and contracts awarded to Tapex and Plastic Monofil Co., Ltd.
(PMC), for the items on which each was the low bidder, since such awards
would meet the government's needs and would not prejudice any other
firms.
GSA, in requesting reconsideration, disputes our finding regarding
prejudice, and points out that award to PMC would have to be on terms
that vary from those in the IFB. For the reasons set forth below, we
reverse our prior decision and we deny Tapex's protest.
The IFB included 12 line items of nonwoven, nonmetallic strapping, 9
of which were set aside for small business concerns. Tapex was low on
five line items and PMC was low on seven. GSA found PMC nonresponsible
after discovering that the firm intended to furnish woven strapping.
Subsequently, however, GSA realized that it inadvertently had specified
only nonwoven, nonmetallic strapping, when woven nonmetallic strapping
would be just as acceptable; the agency speculated that the erroneous
requirement for nonwoven strapping may have been the reason two
companies that bid on nonmetallic strapping under the prior solicitation
did not bid under this one. GSA consequently decided to cancel the
nonmetallic strapping part of the IFB.
Tapex, which intended to furnish nonwoven strapping, argued that
GSA's mistaken requirement that the strapping be only nonwoven was not a
sufficient reason for cancellation since the requirement could be
waived. Tapex asserted that PMC is the only small business manufacturer
that makes woven strapping, so that any other small business
manufacturer or supplier that failed to bid must have done so for
reasons other than the requirement for nonwoven strapping. We agreed,
concluding that, contrary to GSA's speculation, awards under the IFB
would not prejudice other bidders or potential bidders. We also found
that the record indicated GSA received the same degree of competition,
including price competition, under the canceled IFB that it would have
received had the requirement for a nonwoven item not been used. We thus
recommended reinstatement of the IFB and award to Tapex, as well as
award to PMC, since the record clearly indicated that both woven and
nonwoven strapping met the government's actual needs.
GSA argues that our prior decision is erroneous with respect to our
finding that awards to Tapex and PMC would not prejudice other potential
bidders. GSA asserts that the two bidders on the prior IFB for
nonmetallic strapping--the firms the agency had speculated might have
bid under the instant solicitation but for the nonwoven
specification--in fact offered woven strapping previously, and claims
that award under an IFB improperly requiring only nonwoven strapping
therefore would prejudice them.
After GSA filed this request for reconsideration, we asked the agency
to explain the basis for its assertion that the two companies that bid
under the prior solicitation offered woven strapping. GSA then
contacted the two firms. According to GSA, one of the firms, a dealer,
stated that it has been dealing almost exclusively in woven strappings
for the last several years and that it was bidding a woven strapping in
response to the prior solicitation. The other firm, a manufacturer,
refused to verify that it was offering woven strapping under the prior
solicitation but did tell GSA that it only recently had begun
manufacturing woven strapping in substantial quantities.
We think the statement made to GSA by the strapping dealer that it
has been dealing almost exclusively with woven strapping for the last
several years supports GSA's assertion that the company bid to supply
woven strapping in the prior procurement, and did not bid here because
of the requirement for nonwoven strapping. The manufacturing firm's
response to GSA is somewhat equivocal, but the company's assertion that
it now manufactures substantial quantities of woven strapping suggests
that the firm may well not have competed in the instant procurement
because of the nonwoven strapping specification.
On reconsideration, we are persuaded that in view of the IFB's
failure to state that woven strapping would be acceptable, awards to
Tapex and PMC would prejudice other bidders or other potential bidders;
at the least, GSA's view in that respect certainly is not unreasonable.
Where that is the case, the integrity of the competitive bidding system
precludes an agency from awarding a contract on terms that are at
variance with the specifications under which the competition was
conducted. See W.H. Smith Hardware Co., B-219987.2, Jan. 21, 1986, 86-1
C.P.D. P 62.
Accordingly, our prior decision is reversed, and Tapex's protest of
the partial cancellation of the IFB is denied. We therefore withdraw
our recommendation that GSA reinstate the canceled portion of the IFB
and award contracts to Tapex and PMC.
Comptroller General
of the United States
Matter of: Tapex American Corporation
File: B-224206
Date: January 16, 1987
DIGEST
1. Where a protest has been filed initially with the contracting
agency, subsequent protest to General Accounting Office is timely if
filed within 10 working days of actual or constructive knowledge of
initial adverse agency action.
2. While contracting agency has broad discretion to cancel an
invitation for bids, there must be a compelling reason to do so after
bid opening because of potential adverse impact on the competitive
bidding system of cancellation after exposure of bid prices. Mere fact
that the agency mistakenly placed a restrictive specification in
solicitation does not justify cancellation if award would meet the
government's actual needs and there is no showing of prejudice to other
bidders.
DECISION
Tapex American Corporation (Tapex), a small business manufacturer of
nonmetallic strapping (used to secure packages and to reinforce bundles
and containers), protests the partial cancellation after opening of
invitation for bids (IFB) No. 2FC-EAX-A4362-S, issued by the General
Services Administration (GSA). The IFB is to meet Federal Supply
Schedule requirements for steel strapping, seals, and nonmetallic
strapping. We sustain the protest.
The IFB covered 18 items of steel strapping, 14 items of seals, and 2
items of nonmetallic strapping (which are the subject of the protest).
Each item of nonmetallic strapping was divided into 6 geographic zones,
for a total of 12 line items in the solicitation's bid schedule. The
IFB set aside 9 of these 12 line items for the exclusive participation
of small business concerns.
At bid opening, GSA received bids from four companies, including
Tapex, on the line items for nonmetallic strapping. The other bids were
from two other small businesses, including Plastic Monofil Co. Ltd.
(PMC), and a large business (on the unrestricted items) offering PMC's
product. Tapex was the low bidder on five line items, with PMC low on
the other seven. Shortly after opening, Tapex advised GSA in writing
that PMC manufactured woven nonmetallic strapping and could not comply
with the IFB requirement for nonwoven strapping. This was confirmed by
GSA during a preaward survey of PMC. GSA then referred the matter to
the Small Business Administration (SBA) under the certificate of
competency (COC) procedures, and because PMC took no action to pursue
the COC, the SBA declined to issue one. GSA then found PMC to be
nonresponsible.
PMC protested the determination of nonresponsibility to GSA, arguing
that the agency had made the IFB's specifications unduly restrictive
since the prior procurement for nonmetallic strapping did not prohibit a
woven product. GSA then conducted an investigation which revealed that
a mistake had been made in requiring the strapping to be nonwoven.
Consequently, the agency decided that competition had been unduly
restricted and canceled the nonmetallic strapping portion of the IFB.
Tapex protests that awards to Tapex and PMC for the items on which
each is low bidder would be proper.
As a preliminary matter, GSA argues that Tapex's protest is untimely
under our Bid Protest Regulations, 4 C.F.R. Sec. 21.2(a) (2) (1986),
because it was filed more than 10 working days after Tapex was orally
notified of the mistake in requiring nonwoven strapping and GSA's
decision to cancel the solicitation. However, the record shows that
Tapex filed a protest with GSA immediately after being orally notified
of GSA's decision, and that GSA did not respond to the protest prior to
Tapex's filing a protest with our Office. Under our Bid Protest
Regulations, 4 C.F.R. Sec. 21.2(a)(3), we will consider a protest to
our Office filed within 10 working days of adverse agency action on a
protest initially filed in a timely manner with the contracting agency.
Since GSA did not act upon Tapex's protest, we view the company's
protest with our Office as timely.
Turning to the merits, GSA states that in the past it has procured
nonmetallic strapping under a federal specification that required a
nonwoven item. In recent years, however, it has been procuring the
strapping under a commercial item description (CID) that does not
specify a nonwoven item, and has found the results acceptable.
According to GSA, the investigation it undertook in response to Tapex's
complaint about PMC's bid disclosed that the contracting office
inadvertently included in the IFB the previously used federal
specification. GSA noted that in response to the CID the agency
normally receives competitive bids from at least two responsive,
responsible firms; GSA discounted the two small businesses other than
Tapex as competitors for purposes of the amount of competition received,
PMC because the firm was nonresponsible, and the other because its
prices were so high. The agency also specuiated that use of the federal
specification may have been the reason two companies that bid on
nonmetallic strapping under the prior solicitation did not bid under
this one. GSA concluded the specification for nonmetallic strapping
therefore was unduly restrictive and that cancellation of the
nonmetallic strapping portion of the IFB was appropriate.
Tapex argues that cancellation is not appropriate because award under
the IFB to Tapex for nonwoven metallic strapping would meet the
government's needs and would not prejudice any other firms. In this
last regard, Tapex asserts that PMC is the only small business
manufacturer that makes woven strapping, so that any other small
business manufacturer or supplier that failed to bid must have done so
for reasons other than the requirement for nonwoven strapping. Tapex
further argues that because PMC bid against Tapex notwithstanding the
federal specification, there was adequate competition in any case.
Although a contracting agency has broad discretion to cancel an
invitation, there must be a compelling reason to do so after bid
opening, because of the potential adverse impact on the competitive
bidding system of cancellation after bid prices have been exposed. See
Federal Acquisition Regulation, 48 C.F.R. Sec. 14.404-1(a)(1) (1985).
The fact that a solicitation is defective in some way does not justify
cancellation after bid opening if award under the IFB would meet the
government's actual needs and there is no showing of prejudice to other
bidders. Pacific Coast Utilities Service, Inc., B-220394, Feb. 11,
1986, 86-1 C.P.D. P 150.
We think reinstatement of the IFB and award to Tapex, as well as
award to PMC, would be appropriate. It is clear from the record that
both woven and nonwoven strapping meet the government's actual needs.
Also, we do not believe such awards would prejudice other bidders or
other potential bidders. Initially, we do not think it reasonable for
GSA, in looking at the impact of its error, to discount PMC's bid in
terms of the degree of competition actually generated and prices
received vis a vis the competition and prices there would have been had
the CID been used, since the fact is that PMC did bid notwithstanding
the federal specification. Moreover, GSA does not dispute Tapex's
assertion that PMC is the only small business manufacturer that makes
woven strapping. As to GSA's concern with the two companies that bid on
the prior procurement, the agency makes no argument that they did not
bid on the instant IFB because nonwoven strapping was being required.
Indeed, Tapex asserts that one of the companies is a manufacturer of
nonwoven strapping like Tapex is, and that the other company is simply a
dealer that could obtain strapping from any manufacturing source it
chose. Thus, it appears that both of these companies could have bid on
the IFB as issued. Finally, GSA did receive a large business bid of
PMC's woven product on the unrestricted items, and there is nothing in
the record to show that the fourth firm that did bid would have offered
different products or lower prices had the requirement for nonwoven
strapping not been included. See General Electrodynamics Corp.,
B-221347.2; B-221347.3, May 13, 1986, 86-1 C.P.D. P 454.
In sum, we think GSA received the same degree of competition under
the canceled invitation that it would have received had the CID been
used, and awards to Tapex and PMC clearly would meet the government's
needs at reasonable prices. In this respect, we recognize that PMC was
denied a COC which, in normal circumstances would make the firm
ineligible for an award. The record is clear, however, that the only
reason GSA found PMC nonresponsible, and referred the matter to the SBA,
was that the firm could not supply nonwoven strapping consistent with
the federal specification. Because we do not think the specification
restriction precludes award to PMC, we also do not think the COC denial
based on the restriction should.
In view of our conclusion that award under the nonmetallic strapping
portion of the IFB would be proper, Tapex's protest is sustained. The
record indicates that GSA has taken no procurement action after
canceling the solicitation, although the agency intends to issue another
solicitation using the CID. In these circumstances, we see no practical
impediment to reinstating the canceled portion of the IFB and awarding
contracts to Tapex and PMC on those line items for which each is the low
bidder, if they are otherwise found responsive and responsible.
Therefore, by separate letter to GSA, we are recommending such
reinstatement and awards.
Comptroller General
of the United States
Matter of: Education Development Center, Inc.
File: B-224205
Date: January 30, 1987
DIGEST
1. In a request for best and final offers, an agency properly may
omit advice that more than one firm remains in the competitive range and
that the technical ranking is sufficiently close that the offerors' cost
proposals may become the determinative selection factor, since this
information relates to the offerors' relative standing and not the
merits of their proposals.
2. The General Accounting Office denies a protest that an agency
failed to discuss areas in which the offeror might have overestimated
costs where there is no evidence that the agency considered any cost
items to have been unreasonably high.
DECISION
Education Development Center, Inc. (EDC) protests the awardof a
contract to RCA International Service Corporation under request for
proposals (RFP) No. 86-007, issued by the Agency for International
Development's (AID) Mission to Belize. EDC contends that during
discussions, AID misled the firm into raising its proposed costs, which
became the determinative factor in selection of RCA.
We deny the protest.
AID issued the RFP on February 25, 1986, seeking offers to help
develop an independent management training institute in Belize, and to
strengthen local governmental agencies to enable them to conduct
training necessary to promote private development, especially
enterprises related to tourism and export. The agency received 15
proposals by the April 25 closing date. The agency determined that five
offerors were in the competitive range; these included EDC and RCA,
which the technical evaluation committee ranked second and third,
respectively.
By letters to the offerors on June 12, the contacting officer pointed
out weaknesses in the technical and cost proposals and requested best
and final offers. After AID interviewed each offeror's proposed staff
in Belize, it evaluated the best and final offers. The agency found
that EDC and RCA were very close technically, with EDC's proposal
scoring slightly higher than RCA's. RCA's proposed costs on the other
hand, were approximately 6 percent less than EDC's. The remaining three
offerors scored much lower technically, and their proposed costs were
much more than those of EDC and RCA. AID decided that only EDC and RCA
had a reasonahle chance for an award, and, in a second competitive range
determination, excluded the other offerors from further consideration.
On July 29, the contracting officer provided additional questions and
comments about the firms' proposed costs, primarily addressing areas in
which the firms might have underestimated, and requested second best and
final offers. Both firms increased their cost estimates. RCA's final
proposal was approximately 16 percent less than the protester's. AID
concluded that the two proposals were virtually equal technically, and
it awarded a contract to RCA based upon its lower costs. EDC protested
this decision to our Office. AID found that urgent and compelling
circumstances significantly affecting the interests of the United States
would not permit delay pending our decision, and it declined to suspend
performance of RCA's contract.
EDC's protest centers upon the contracting officer's July 29 letter
requesting second best and final offers. This stated that EDC's costs
appeared to he underestimated in four areas: salaries for the necessary
number of secretaries; travel and transportation (per diem rates,
travel for three advisors, shipment of household effects, vacation,
consultant travel, per diem for advisors in Belize, home leave travel
costs, and shipment of an automobile); gas for vehicle operation in
Belize; and costs relating to coordination with subcontractors. The
protester argues that AID did not point out areas where costs may have
been overestimated and, in effect, led EDC to believe that "additional
expenditures would not he held against EDC and would be in the best
interest of the project." The firm believes that it should have been
warned that costs would be the determinative selection factor, or at
least that other offers were being considered, in which case it would
have sought ways to maintain or lower its costs while responding to
AID's concerns.
The Competition in Contracting Act of 1984, 41 U.S.C. Sec. 253b(d)
(2) (Supp. III 1985), requires that written or oral discussions be held
with all responsible sources whose proposals are within the competitive
range. Such discussions must be meaningful, and, in order for
discussions to be meaningful, agencies must point out weaknesses,
excesses, or deficiencies in proposals unless doing so would result
either in disclosure of one offeror's approach to another or in
technical leveling. Price Waterhouse, 65 Comp. Gen. 205 (1986), 86-1
CPD P 54, aff'd on reconsideration, B-220049.2, Apr. 7, 1986, 86-1 CPD P
333. Once discussions are opened with an offeror, the agency must point
out all deficiencies in that offeror's proposal and not merely selected
ones.
The Federal Acquisition Regulation (FAR) prohibits agencies from
disclosing the number or identity of offerors after receipt of
proposals, 48 C.F.R. Sec. 15.413-1 (1986), and AID properly did not
disclose to EDC that another offeror remained in the competitive range.
Further, the advice to which EDC believes it was entitled--that the
technical scores were so close that costs were likely to become the
determinative selection factor--does not relate to the merits of EDC's
proposal, but to the relative ranking of offerors. The agency was not
required to provide such advice to EDC during discussions, since it does
not involve weaknesses, deficiencies, or similar aspects of the firm's
proposal. See FAR, 48 C.F.R. Sec. 15.610(c). Offerors, in fact, should
know that whenever both technical and cost factors are involved,
technical ratings may be sufficiently close so that the cost factor
hecomes more significant or even controlling in the the award election.
See, e.g., Bunker Ramo Corp., 56 Comp. Gen. 712 (1977), 77-1 CPD P 427.
Finally, AID was not required to point out aspects of EDC's cost
proposal that it did not consider to be unreasonably high. Agencies may
inform an offeror that its cost is considered to be too high or
unrealistic, FAR, 48 C.F.R. Sec. 15.610(d) (3)(ii), and we have held
that an agency did not engage in meaningful discussions where it failed
to apprise an offeror that its estimated costs were considered
unreasonahly high. Price Waterhouse, supra. In this case, however, the
record contains no evidence that AID believed that EDC's proposal
included costs that were unreasonably high, and the protester has not
suggested any areas in which AID should have found unreasonably high
cost estimates. Rather, AID was concerned that both offerors in the
competitive range may have underestimated certain costs, and it properly
informed the offerors of this fact.
We deny the protest.
Harry R. Van Cleve
General Counsel
Matter of: Automated Power Systems, Inc.
File: B-224203
Date: February 4, 1987
DIGEST
1. Protest alleging that product offered by bidder was not properly
listed on the Qualified Products List need not have been filed before
the agency notification of the award to that bidder since the grounds
for protest do not arise until the protester has learned of the agency
action or intended action adverse or inimical to the protester's
position.
2. Whether a product should have been kept on the Qualified Products
List (QPL) without being retested is a matter for the determination of
the agency responsible for the QPL, and the General Accounting Office
will not question the agency's judgment unless it is shown not to have a
reasonable basis.
3. Allegation that awardee intends to furnish a nonqualified
component in its qualified product will not be considered where bidder
was not required to identify manufacturers of the components of the
product in its bid and bid did not take any exceptions to the
specifications. Allegation involves the bidder's affirmative
responsibility which generally is not for consideration by the General
Accounting Office.
4. Bidder certifying itself under the Walsh-Healey Act as a
manufacturer is permitted to subcontract for the manufacturing effort;
therefore, the fact that a subcontractor will actually perform the work
does not mean that the certification was false.
DECISION
Automated Power Systems, Inc. (APS), protests the award of a contract
to C-R Control Systems, Inc. (C-R), for CG-181 solid state flashers
under United States Coast Guard (USCG) invitation for bids (IFB) No.
DTCG36-86-B-00067. Bidders were required to offer only flashers that
had been listed on the Qualified Products List (QPL) of flashers that
had been previously tested and approved by the agency. Only APS and C-R
had qualified flashers for listing on that QPL. APS basically contends
that changes by C-R in its manufacturing locations and in the source of
the germanium transistors used in its flashers were not properly
reviewed by the USCG, and that C-R's CG-181 flasher should not have been
listed on the QPL. Therefore, APS contends that the award was
improperly made, and requests that the contract be terminated and the
procurement be resolicited.
We deny the protest.
The protester alleges that the flashers originally tested and
approved for the QPL were manufactured in Orlando, Florida, and that the
1986 QPL listing showed C-R's manufacturing location to be Altamonte,
Florida, but that C-R's bid stated the manufacturing location to be the
plant of Electronic Assembly Corporation (EAC) in Neenha, Wisconsin.
APS maintains that, in view of the introduction by C-R of entirely new
production facilities, new personnel, and new assembly equipment, the
flashers should be retested.
Second, APS states that the C-R's previously-approved flashers used
germanium transistors manufactured by Lansdale Transistor Company
(Lansdale), and that Lansdale had since sold its germanium transistor
business to Germanium Power Devices Corporation (Germanium). APS
complains that the USCG failed to conduct testing or make an
investigation of the Germanium transistor. Finally, APS alleges that
C-R falsely certified in its bid that it is the manufacturer of the
flashers and suggests that C-R may be acting as a broker for the actual
manufacturer, EAC.
Initially, the contracting agency argues that the protest is untimely
since APS should have known the bases of its protest at the time of bid
opening when APS reviewed C-R's bid. A protest must be filed within 10
working days after the bases for protest are known or should have been
known, whichever is earlier, 4 C.F.R. Sec. 21.2(a) (2) (1986), and APS's
protest was filed more than 10 working days after bid opening.
We conclude that the APS protest to our Office was timely. There is
no basis for protest until the protester has actual or constructive
notice of agency action or intended action which is inconsistent with
the protester's interest. R.R. Gregory Corp., B-217251, Apr. 19, 1985,
85-1 CPD P 449; Harnischfeger Corp., B-224371, Sept. 12, 1986, 86-2 CPD
P 296. APS had no knowledge that the agency considered C-R's bid to
satisfy the qualified products requirement until it learned of the award
to C-R, and its protest was filed within 10 working days after learning
of the award. We therefore will consider the protest's merits.
Whether to require retesting for the purposes of QPL listing is a
discretionary matter, see Federal Acquisition Regulation (FAR), 48
C.F.R. Sec. 9.207(b) (1986), and we will not object to the agency's
exercise of discretion absent a showing that it lacked a reasonable
basis. See McIntyre Eng'g Co., B-190136, Aug. 29, 1978, 78-2 CPD P 148.
In this regard, the standard "Qualified Products--End Items" clause,
FAR, 48 C.F.R. Sec. 52.209-1 (e) (1985) (required to be included in
solicitations for qualified products, FAR, 48 C.F.R. Sec. 9.206-2(a)
(1986), and included in the IFB), refers only to reevaluation of the
qualification upon any change in location or ownership of the
manufacturing plant. It does not explicitly require retesting.
We note the protester cites FAR, 48 C.F.R. Sec. 9.207(h), as
requiring new testing and qualification if there are manufacturing
changes; however, the cited provision was deleted in 1985. See Federal
Acquisition Circular 84-11, Aug. 30, 1985. Furthermore, the superseded
provision did not require new testing; it merely stated that
manufacturing changes requiring new testing and qualification might
merit removal of a product from the QPL.
With respect to the required reevaluation, the record shows that in
August 1985, C-R requested reevaluation of its listing because it was
subcontracting the assembly of the flashers to EAC in Neenha. The USCG
conducted the reevaluation and noted that the material components of the
previously-tested flashers had been assembled by EAC, and that C-R's own
production and test equipment were used by EAC. Also, a USCG quality
assurance representative, as the result of a production inspection of
another product produced by EAC for C-R, found that EAC was fully
capable of building flashers for C-R. Based on these factors, USCG
retained C-R's flasher on the QPL without requiring retesting. We view
these factors as providing a reasonable basis for USCG's determination.
Regarding the source of the germanium transistors, nothing in the IFB
required bidders to identify the components of the qualified product,
and C-R offered without exception to supply the flasher listed on the
QPL. Whether C-R is capable of obtaining components necessary for its
flashers goes to the question of a bidder's responsibiiity. McIntyre
Eng'g Co., supra. We do not review a contracting officer's affirmative
responsibility determination except under circumstances not presented
here. Trail Blazer Servs., B-220724, Feb. 12, 1986, 86-1 CPD P 275.
Finally, we believe that the questions raised by APS about C-R's
certification that it is a manufacturer have no merit. C-R certified
that it is a manufacturer for the purpose of the Walsh-Healey Public
Contracts Act, 41 U.S.C. Secs. 35-45 (1982), which limits eligibility
for public supply contracts to regular dealers or manufacturers. A
bidder so certifying itself as a manufacturer nonetheless is permitted
under the Walsh-Healey Act to subcontract part or all of the
manufacturing effort. See Stellar Indus., Inc.--Request for
Reconsideration, 64 Comp. Gen. 748 (1985), 85-2 CPD P 127. Thus, the
fact that EAC is assembling the flashers does not mean that C-R's
certification was false.
Accordingly, the protest is denied.
Harry R. Van Cleve
General Counsel
Matter Of: Genisco Technology Corporation
File: B-224201.2
Date: February 18, 1987
DIGEST
Protester is not entitled to the costs of filing and pursuing a
protest, including attorney's fees, where it will have an opportunity to
compete under the new solicitation that more accurately reflects the
contracting activity's needs than the one canceled during the pendency
of the protest.
DECISION
Genisco Technology Corporation seeks the recovery of the costs of
filing and pursuing a protest against the award of a contract to
Fairchild Weston Systems, Inc. under request for proposals (RFP) No.
DAAB07-86-R-G227, issued by the U. S. Army Communications and
Electronics Command. Genisco withdrew this protest after it was
rendered academic when the agency terminated the protested contract for
the convenience of the government, stating that it intended to revise
the specifications and then resolicit. We therefore closed the file
without action on 20, November 1986.
BACKGROUND
The subject solicitation, issued on May 30, 1986, was the first
competitive procurement for a magnetic tape cartridge having the
capability to record digital information at the density of 888 bits per
inch on 9 tracks. Under this acquisition, the Army sought 13,218 of
these magnetic tape cartridges and related items with a first article
test requirement. The solicitation identified this item by reference to
the part number and national stock number of a cartridge manufactured by
Genisco and also referenced the drawing number of the cartridge case.
The RFP also set forth 6 technical evaluation factors and 12 subfactors
and required offerors to submit all information necessary to enable the
contracting activity to properly evaluate proposals. Offerors were
advised that technical acceptability would depend on an acceptable
rating in each factor and subfactor. The solicitation further provided
that award would be made to the responsible offeror submitting the
lowest priced technically acceptable proposal and that the government
reserved the right to award without discussions.
The Army received proposals from three firms: Graham Magnetic,
Fairchild, and Genisco. Of the two proposals at issue, Fairchild's total
price was $6,736,489.06; and Genisco's was for $4,138,941 for one
cartridge and $6,974,029 for the cartridge identified in the
solicitation. The agency found Genisco's proposals technically
unacceptable and made award to Fairchild, without discussions, on
September 16.
Genisco's September 24 protest to our Office followed. Genisco
argued that both cartridges complied with the terms of the RFP and that
rejection of its lower-priced product as unacceptable was therefore
improper. In support of this position, Genisco stated that the
particular drawing referenced in the RFP includes a specification that
in turn references both of its cartridges.
After the protest record had been fully developed and a bid protest
conference held, the Army decided to terminate the protested contract
for convenience of the government, revise the specifications, and
resolicit. Upon being apprised of the agency's position, Genisco agreed
to withdraw its protest, reserving its claim for the cost of filing and
pursuing it, including attorney's fees.
GENISCO'S CLAIM
Genisco recognizes that our decisions interpreting the Competition in
Contracting Act of 1984 (CICA), 31 U.S.C. Sec. 3554(c)(1) (Supp. III
1985), and our Bid Protest Regulations, 4 C.F.R. Sec. 21.6(d) (1986),
provide that the Comptroller General's authority to award the costs of
pursuing a protest is predicated upon a determination by this Office
that a solicitation, proposed award, or an award does not comply with a
statute or regulation. Sabreliner Corp., B-221857, Apr. 29, 1986, 86-1
CPD P 414; Monarch Painting Corp., B-220666.3, Apr. 23, 1986, 86-1 CPD
P 396. Since its protest was rendered academic by the agency's actions,
Genisco realizes that its claim would be disallowed under these
decisions. Nevertheless, Genisco argues that in view of the "procedural
obstacle course" it was forced to traverse because of the Army's faiiure
to acknowledge and correct the solicitation deficiencies promptly, and
in view of the purpose of CICA to establish a strong enforcement
mechanism providing vendors wrongfully excluded from competition with
equitable relief, 1/ we should find Genisco entitled to costs in this
case.
We cannot make such a finding here because we would not view Genisco
as entitled to its protest costs even if we had made the necessary
determination and sustained the protest. While Bid Protest Regulations
provide for the award of protest costs where the protester was
unreasonably excluded from a procurement, unless we recommend award to
the protester and the protester actually receives the award, 4 C.F.R.
Sec.21.6(e), there are certain situations in which, although we sustain
the protest, we do not view the protester as having been unreasonably
excluded from the procurement. These situations generally involve
circumstances where the protester's proposal will be reconsidered,
Bendix Field Engineering Corp., B-219406, Oct. 31, 1985, 85-2 CPD P 496
(source selection decision to be reconsidered), and where an award
reflecting the agency's actual needs could not properly be made under
the existing solicitation and the protester will have an opportunity to
compete under a revised solicitation. The Hamilton Tool Co.,
B-218260.4, Aug. 6, 1985, 85-2 CPD P 132; Federal Properties of R.I.,
Inc., B-218192.2, May 7, 1985, 85-1 CPD P 508.
In Federal Properties, the agency rejected a proposal, even though it
met all specification requirements, because of certain concerns that it
could validly have but that were not identified in the solicitation. We
recommend that the agency revise the solicitation to include all
relevant evaluation criteria and permit the submission of revised
proposals by all offerors. We denied protest costs, however, stating
that
"where... the procurement problem basically concerns the
agency's use of a deficient description of what it wants, and the
protester is given an opportunity to compete for the award under a
corrected solicitation, the recovery of . . . costs . . . is
generally inappropriate."
We think that holding is applicable here. It appears, from the
protester's submissions and the Army's decision to terminate the
contract it awarded and hold a recompetition under revised
specifications, that the Genisco cartridges may have been consistent
with the specifications but that the Army believes the specifications
were deficient and in need of revision before an award properly may be
made. Since Genisco will have an opportunity to compete under the
revised specifications, it is not entitled to protest costs. See
Environmental Tectonics Corp., B-224104.2, Nov. 17, 1986, 86-2 CPD P
567.
Genisco's claim for the costs of pursuing its protest is denied.
Harry R. Van Cleve
General Counsel
FOOTNOTE
Cong., 2d Sess. 1435 (1985). Comptroller General
Matter of: Rosser, White, Hobbs, Davidson, McClellan, Kelly,
Inc.--Request for Reconsideration
File: B-224199.2
Date: March 20, 1987
DIGEST
Original decision is affirmed where protester in request for
reconsideration fails to show error of fact or law in prior holding that
there was no evidence of improper influence on contract award decision
due to participation in technical evaluation of contracting agency
officials with alleged conflict of interest.
DECISION
Rosser, White, Hobbs, Davidson, McClellan, Kelly, Inc. (Rosser
White) requests reconsideration of our decision Rosser, White, Hobbs,
Davidson, McClellan, Kelly, Inc., B-224199, Dec. 24, 1986, 66 Comp. Gen.
, 86-2 CPD P 714, denying Rosser White's protest of the award of a
contract to the American Corrections Association (ACA) under request for
proposals (RFP) No. N00600-86-R-4465 issued by the Navy for a Brig
Program Study. We found that the Navy properly excluded Rosser White's
proposal from the competitive range because its price was unreasonably
high, and that there was no evidence that the procurement was improperly
influenced in favo of ACA due to the participation of three Navy
officials with an alleged conflict of interest. In its request for
reconsideration, Rosser White challenges our conclusion regarding the
conflict of interest issue, arguing that we applied an incorrect
standard of review. We affirm our original decision.
ACA, the awardee, is a nonprofit professional organization for those
in the corrections field. In its protest, Rosser White argued that
three Navy officials who are members of ACA participated in the
technical evaluation under the RFP; according to Rosser White, their
membership gave rise to a conflict of interest under Department of
Defense Directive 5500.7, which, standing alone, made award to ACA
improper.
In addressing Rosser White's contention in our original decision, we
explained our standard of review as follows:
"In considering conflict of interest allegations in the context
of a bid protest, our role is not to determine whether a violation
of the applicable conflict of interest statutes or regulations
occurred; rather, our review focuses on whether the individuals
involved in the alleged conflict of interest exerted improper
influence in the procurement on behalf of the awardee. See
Sterling Medical Associates, B-213650, Jan. 9, 1984, 84-1 CPD P
60. Thus, even assuming that the Navy officials' ACA membership
constitutes a conflict of interest within the meaning of DOD
Directive 5500.7, as Rosser White maintains, the award to ACA will
not be disturbed unless there is a showing that the officials
improperly influenced the procurement in favor of ACA."
In its reconsideration request, Rosser White argues that this
standard is inconsistent with our prior cases, such as Trail Blazer
Services, B-220725, Feb. 12, 1986, 86-1 CPD P 275, and Sterling Medical
Associates, B-213650, Jan. 9, 1984, 84-1 CPD P 60, which, according to
Rosser White, recognize that either a conflict of interest in the
abstract or a showing of actual bias is sufficient to overturn a
contract award. Neither of the cases Rosser White cites supports its
contention. On the contrary, in Trail Blazer Services and Sterling
Medical Associates, we examined only whether the award decision had been
improperly influenced by individuals with alleged conflict of interest.
This approach is consistent with our bid protest function to decide
whether a procurement has been conducted improperly; it is not our
role, as Rosser White suggests, to decide whether the conflict of
interest statutes or regulations have been violated in the abstract.
Rosser White argues that our standard of review imposes an
unreasonable burden of proof on the protester since, without an
admission of wrongdoing from the contracting agency, it is virtually
impossible to show bias. We do not agree that the burden of proof is
unreasonable or that an admission of bias is required; rather, as we
did here, we look at the circumstances of the procurement and the
involvement of the agency personnel with the alleged conflict of
interest to determine if the award decision was improperly influenced.
As explained in detail in our original decision, in this case there was
not the slightest indication of improper influence in the selection of
ACA.
Since Rosser White has failed to show any error of law or fact in our
original decision, that decision is affirmed.
Harry R. Van Cleve
General Counsel
Matter of: Professional Window and Housecleaning, Inc.
File: B-224187
Date: January 23, 1987
DIGEST
1. Protest that IFB requirement for bid, performance and payment
bonds is unduly restrictive is without merit since it is within the
agency's discretion whether to require bonding in a solicitation and
General Accounting Office will not upset such a determination made
reasonably and in good faith.
2. Agency's requirement for uninterrupted performance of custodial
services is itself a reasonable basis for imposing bonding requirements
in solicitation.
3. Protest that agency failed to respond to protest of bonding
requirements sufficiently in advance of bid opening to permit protester
to formulate its bid is denied where alleged delay does not prejudice
protester where bonding requirement is proper and protester concedes it
cannot secure required bonds.
DECISION
Professional Window and Housecleaning, Inc. (Professional), protests
the bonding requirements of invitation for bids (IFB) No.
DAKF15-86-B-0100 issued by the Department of the Army. The solicitation
was for custodial ana general housekeeping services at Fort Sheridan,
Illinois. The protester argues that the contracting officer's decision
to require bid, performance and payment bonds was arbitrary and
unreasonable and unduly restricted competition by shall businesses. In
addition, the protester submits that the contracting officer failed to
adequately and timely respond to two protests filed with the agency by
the protester prior to bid opening. According to the protester, this
failure on the part of the contracting officer resulted in the
protester's ultimately being unable to submit a bid in a timely fashion.
We deny the protest.
The solicitation was issued on June 17, 1986, and, as amended, set
the bid opening date as September 9. It required each bidder to submit
a bid bond in the amount of 20 percent of the first year bid price, and
also required the low bidder to submit a payment bond and a performance
bond in an amount equal to 50 percent of the first year bid price if the
contract price was $1,000,000 or less, or 40 percent of the first year
bid price if the contract price was between $1,000,000 and $5,000,000.
These requirements were imposed pursuant to a memorandum dated June
2, in which the contracting officer stated that the bonding requirements
were necessary to protect the government's interest in the overall
health, safety and morale of the personnel at Fort Sheridan and to
protect the government against financial loss in the event of contractor
default. According to the memorandum, Fort Sheridan had a history of
contractors underbidding these services with the result that in an
attempt to recover the financial loss:
"contractors... have reduced their workforce, decreased
supplies/equipment and ultimately the remaining workers were
either cut on hours of work or were paid less than minimum wages
in violation of the wage determination received from the
Department of Labor."
As a result of the unsatisfactory performance or non-performance of
these services, the contracting officer stated, the government had to
buy its own supplies and workers' productivity suffered because they had
to perform general custodial services in their work areas.
By letter dated August 22, Professional filed an agency-level protest
in which it contended that the bonding requirements were not in accord
with the Federal Acquisition Regulation (FAR), 48 C.F.R. Subpart 28.1
(1986); that they unduly restricted competition; and that they
effectively excluded the protester as a bidder because it was unable to
secure the required bid bond. The protester requested in its August 22
letter that the bonding requirements be removed from the solicitation
and concluded with the "expectation" that the contracting officer give
"prompt attention to a reply to this letter, within (10) ten working
days...." By letter dated September 3, the agency denied the protest,
finding that the bonding requirements were proper on the grounds that
performance by the contractor was thereby insured and that the
government could sustain irreparable injury if the contractor failed to
perform.
On September 8, Professional hand-carried a second protest to the
agency requesting that the time for bid opening be extended on the
grounds that the protester had not as of that date received a written
reply to its original agency protest. In a telephone conversation the
afternoon of the same day, confirmed by letter dated September 9, the
contracting officer denied the second protest. Bids were opened as
scheduled on September 9, and the protest was file in our Office on
September 22.
Professional argues first that the bonding requirements were
unnecessary and that their inclusion in the solicitation was arbitrary
and unreasonable on the part of the contracting officer. The protester
maintains that the decision of the contracting officer to impose the
performance bond requirement violated FAR, 48 C.F.R. Sec. 28.103-2,
because none of the situations identified therein as ones where a
performance bond may be appropriate is present in this procurement. The
protester also argues that the bonding requirements should have been
deleted from the IFB because there was no Departmental approval of them
as required by Department of the Army Aquisition Letter 86-20, dated
June 20, 1986. Additionally, the protester argues that, even assuming
that the contracting officer exercised his disretion properly under FAR,
48 C.F.R. Sec. 28.103, he failed to properly document his rationale for
the bonding requirements as the protester asserts is required by our
holding in Steamco Janitorial Services, Inc., B-188330, Aug. 2, 1977,
77-2 C.P.D. P 69. As a result, the protester argues that the bonding
requirements of this solicitation have served to unduly restrict
competition by small businesses and have prevented the protester from
submitting a bid because it was unable to secure the required bid bond.
The agency responds that the contracting officer could reasonably
decide here to require the bid, performance and payment bonds. The
agency states that the general language of FAR, 48 C.F.R. Sec.
28.103-2(a), permits a performance bond requirement even when one of the
four enumerated circumstances is not present, so long as there exists
the possibility that the government will suffer irreparable injury if
the contractor defaults. In addition, the agency states, it was not
required to obtain Departmental approval of the bond requirements
pursuant to Aquisition Letter 86-20 since the letter was issued
subsequent to the time when the solicitation was issued and does not
require the amendment of solicitations already underway. The agency
also states that the contracting officer's memorandum of June 2, and his
denial of Professional's protest dated September 3, sufficiently
document the rationale for the bonding requirements in this
solicitation. Finally, the agency argues that small business
competition was not restricted by the bonding requirements because
despite the requirements, 11 small business bids with bonds were
received in response to the solicitation.
Performance and payment bond requirements, although they may result
in a restriction of competition, are a necessary and proper means of
securing to the government fulfillment of a contractor's obligations
under his contract. D. J. Findley, Inc., B-221096, Feb. 3, 1986, 86-1
C.P.D. P 121. Although as a general rule, in the case of
nonconstruction contracts, agencies are admonished against the use of
bonding requirements, see FAR, 48 C.F.R. Sec. 28.103-1(a), the use of
bonding requirements is permissible where the bonds are needed to
protect the government's interest, whether or not the agency's rationale
therefor comes within the four articulated reasons for a performance
bond in the FAR, 48 C.F.R. Sec. 28.103-2(a). See Renaissance Exchange,
Inc., B-216049, Nov. 14, 1984, 84-2 C.P.D. P 534. In reviewing a
challenge to the imposition of a bonding requirement we look to see if
the requirement is reasonable and imposed in good faith; the protester
bears the burden of establishing unreasonableness or bad faith. See D.
J. Findley, Inc., B-221096, supra; Galaxy Custodial Services, et al.,
64 Comp. Gen. 593 (1985), 85-1 C.P.D P 658. Moreover, we have
previously held that a finding on the part of the agency that continuous
operations are absolutely necessary is itself a sufficient basis for
requiring a performance bond. Galaxy Custodial Services, et al., 64
Comp Gen. 593 (1985).
In its September 3 reply to Professional's first agency protest, the
agency stated:
"Custodial services for other post locations require cleaning
in areas containing sophisticated computer and telecommunications
equipment.... The result of nonperformance or unacceptable
performance in these locations would endanger the Government's
mission by contributing to computer "down-time," causing loss of
stored information or the loss of total communications
capabilities."
In addition, the agency states that there has been a history of
unsatisfactory results after award of contracts for custodial services
at the installation. The agency states that contractors have in the
past bid so low that the awardee does not possess the financial
capability to perform the contract. The agency reports that these
circumstances have resulted in a cost to the government in terms of
purchasing its own supplies and in utilizing government personnel to
cover deficiencies in contractor performance.
The protester responds that the requirements of the solicitation
dealing with the computer area comprise but a small part of the
contract's total dollar value which does not justify a bonding
requirement. Additionally, the protester asserts that in all previous
contracts between itself and the agency, it has performed in a wholly
satisfactory manner.
In our view, although, as the protester points out, the
communications area may be a small portion of the area to be cleaned,
the protester has not established that the agency's concern for the
area's cleanliness does not justify the bonding requirement. Moreover,
although protester may well have performed its contracts with the Army
in a satisfactory manner, this does not address the agency's concern for
the unsatisfactory past performance of other contractors nor can the
protester insure unequivocally that performance under the currently
contemplated contract will be satisfactory. Accordingly, we are of the
opinion that the protester has not established that the finding of the
contracting officer quoted above was unreasonable or made in bad faith.
Having found that a performance bond is reasonably required in the
instant case, we also note that a payment bond is proper where a
performance bond "is required and a payment bond is in the government's
interest." D. J. Findley, Inc., B-221096, supra; FAR, 48 C.F.R. Sec.
28.103-3(a). A bid bond may be required where performance and payment
bonds are required. FAR, 48 C.F.R. Sec. 28.101(a).
We find without merit the protester's allegation that the bonding
requirement should have been omitted from the solicitation after the
June 20 Aquisition Letter was issued. Acquisition Letter 86-20 states "
a n Army contracting officer desiring to require a performance bond in a
CA Commercial Activity or service support solicitation... shall
request approval, in advance of release of the solicitation...." This
language clearly indicates that the new directive was prospective in
nature. Since the subject solicitation was released before the
directive was issued, the solicitation did not need to conform to the
requirements of the directive, and it did not have to be amended since
the directive was silent with respect to procurements already underway.
With respect to Professional's allegation that the contracting
officer failed to properly document his rational for the bonding
requirements we note that, contrary to protester's assertion, our
decision in Steamco Janitorial Services, Inc., B-188330, supra, did not
require that a contracting officer fully document his or her rationale
for imposing bonding requirements, but recognized the existence of such
a requirement in the former Armed Services Procurement Regulation (ASPR)
Sec. 10-104.2(a) (1976 ed.), which does not apply to the present
solicitation.
Finally, with respect to Professional's argument that the bonding
requirements have served to unduly restrict competition from small
businesses, as noted above, we have held that although a bond
requirement, in some circumstances, may result in a restriction of
competition, it nevertheless can be a necessary and proper means of
securing to the government the fulfillment of the contractor's
obligations under the contract in appropriate situations. D. J. Findley
Inc., B-221096, supra. Moreover, we are of the opinion that the
submission of 11 bids, with bonds, from small businesses is strongly
indicative of adequate competition.
Professional's second ground of protest is that the contracting
officer failed to adequately and timely respond to its two agency
protests. Specifically, Professional argues that the contracting
officer should have replied more expeditiously to its first protest of
August 22 and that the relief requested in its second protest (i.e., an
extension of the time for bid opening) was unreasonably denied. The
protester argues that the effect of the contracting officer's action was
to deny it an opportunity to bid.
The agency, on the other hand, argues that the contracting officer
was required only to respond to the protests prior to award of the
contract, and was not required to extend the time for bid opening. 1/
We note that under FAR, 48 C.F.R. Sec. 33.103(a), a contracting
officer is only required to respond to protests to the agency prior to
contract award. In any event, we fail to see how Professional was
prejudiced by the agency's responses to its protests. The agency's
opening of bids without responding to the agency-level protest meant
that the Army was not deleting the bonding requirements and was not
extending bid opening, thereby effectively denying the protest. This
action on the part of the Army therefore constituted adverse agency
action on the protest and under our Bid Protest Regulations, 4 C.F.R.
Sec. 21.0(e) (1986), Professional then had 10 working days to protest to
us, which it did. Professional concedes it could not obtain the bonds
required by the IFB, and therefore, it could not submit a responsive
bid. If we were to recommend resolicitation without the bond
requirement, on the other hand, Professional would have the opportunity
to bid. Of course, since we have found the bond requirement proper,
Professional ultimately was not prejudiced by the agency's alleged delay
in responding to its second protest.
The protest is denied.
Harry R. Van Cleve
General Counsel
FOOTNOTE
1/ The agency points out that it did, in fact, decide the first
protest within the 10 working days which the protester had requested.
File: B-224185.3
Date: August 25, 1989
Matter of: Aydin Corporation--Reconsideration
DIGEST
General Accounting Office decision concerning a different procurement
issued 2 years after a previous protest decision was denied does not
provide basis to reconsider the 2-year old decision since new decision
does not operate retroactively.
DECISION
Aydin Corporation requests further reconsideration of our decision in
Aydin Corp., B-224185, Nov. 28, 1986, 86-1 CPD Par. 625, aff'd,
B-224185.2, Feb. 10, 1987, 87-1 CPD Par. 141.
We deny the request for reconsideration.
Aydin's original protest was based on the rejection of its proposal as
technically unacceptable under Department of the Air Force request for
proposals (RFP) No. F64608-86-R-0001, for the acquisition and
installation of an "off-the-shelf" digital microwave system for the
Republic of the Philippines. Aydin's proposal was found to be
technically unacceptable under the Equipment Performance Specification
(EPS-85-002) of the RFP that required "the bidder (to) offer radio and
digital multiplex equipment that (had) been operated successfully as a
full(y) integrated system carrying real (not simulated or test) traffic
in either military or commercial applications." (Emphasis added.) In
September 1986, the contracting officer rejected Aydin's proposal
because Aydin had not offered equipment that had operated successfully
as a fully integrated system prior to award of that contract as required
by the RFP. Aydin then protested to our Office.
In our original decision, we found that the contracting officer acted
reasonably in rejecting Aydin's proposal because Aydin, by its own
admission, did not propose a system that had operated successfully as an
integrated system carrying real traffic. We interpreted the RFP's
specification as requiring offered equipment to have been in prior
operational use, and we rejected Aydin's contention that compliance with
this requirement at some future time of delivery was acceptable. We
affirmed our decision upon reconsideration.
Aydin now seeks reconsideration of our prior ruling based on the
decision in a recent case. Aydin asserts that our decision in Space
Vector Corp., B-234071, May 4, 1989, 89-1 CPD Par. 426, is
"irreconcilable" with our decision on its protest and provides it with a
basis for reconsideration and for an award of costs.
In Space Vector, a firm protested the award of a contract under an Air
Force solicitation. The RFP in that case solicited offers on a
cost-plus-fixed-fee basis to design, fabricate, test, and assemble a
single stage rocket vehicle system. The protester alleged that the
awardee's proposal under the solicitation was technically unacceptable
because it did not propose to use a "flight proven" boost control
subsystem as allegedly required by the RFP.
We denied the protest on the grounds that the specifications merely
stated that "the contractor shall provide" a rocket vehicle system that
uses a flight proven boost control subsystem. (Emphasis added.) Because
the RFP never stated that the boost control subsystem was a precondition
to award, our Office held that the boost control subsystem only had to
be flight proven by the time of delivery to the Air Force.
We do not think that Aydin has stated a valid basis for
reconsideration. Our decisions seek to resolve protests against the
award or proposed award of a contract by federal agencies in an
expeditious manner to minimize any disruption to the procurement system.
We do not think that it would be consistent with this purpose to
reconsider a decision based on another decision issued more than 2 years
later, even if the decisions appear inconsistent, since our decisions
generally are not retroactive but are of prospective effect only. We
therefore will not reopen matters decided years before at the request of
the losing party involved in a protest in the past.
We note, for Aydin's information, that the decisions in Space Vector
and Aydin are reconcilable. In Aydin, the RFP stated that offerors must
offer systems that were already in use and carrying live traffic
(essentially "off-the-shelf" equipment). On the other hand, in Space
Vector, the RFP did not solicit existing equipment but required the
successful contractor to design, fabricate, test, and assemble a new
rocket system. Further, the RFP in Space Vector never mentioned that
the boost control subsystem had to be flight proven at the time of
award, and such a requirement was not a condition of award. Rather, the
subsystem had to be flight proven only by the time of delivery.
The request for reconsideration is denied.
James F. Hinchman, General Counsel
Matter of: Aydin Corporation--Reconsideration
File: B-224185.2
Date: February 10, 1987
DIGEST
1. Solicitation specification requirement that microwave radio
equipment to be furnished have been operated successfully as a fully
integrated system carrying real traffic in either military or commercial
applications is not a "qualification requirement" under the Defense
Procurement Reform Act of 1984, 10 U.S.C. Sec. 2319 (Supp. III 1985)
because the specification requirement does not constitute a systemized
requirement for testing or other quality assurance demonstration that
must be completed by offerors before award of a contract.
2. Protest based upon alleged improprieties in a solicitation
(allegedly unduly restrictive terms) which are apparent prior to the
closing date for receipt of initial proposals must be filed prior to the
closing date for receipt of initial proposals.
DECISION
Aydin Corporation, Aydin Systems Division requests reconsideration of
our decision in Aydin Corporation, B-224185, Nov. 28, 1986, 86-2 CPD P ,
denying in part and dismissing in part a protest of the rejection of its
proposal as technically unacceptable under request for proposals (RFP)
No. F64608-86-R-0001, issued by the Department of the Air Force, Pacific
Information Systems Division, Hickam Air Force Base, Hawaii, for the
acquisition and installation of a digital microwave radio system for the
Republic of the Philippines.
We affirm our prior decision.
Briefly, Section M-1 of the RFP advised offerors that "evaluation
will consist of a detailed technical review of each part of the proposal
pertaining to each section" of Equipment Performance Specification
EPS-85-002, which formed a part of the RFP. That specification
provided, in part, as follows:
"Performance Acceptability. In order to be acceptable under
this specification, the bidder must offer radio and digital
multiplex equipment that has been operated successfully as a full
integrated system carrying real (not simulated or test) traffic in
either military or commercial applications. Equipment operated in
a laboratory environment... or that was operated in order to
further its design development or to validate or test its
performance characteristics is not acceptable."
Four proposals were received by the closing date, June 27, 1986.
After evaluation of initial proposals, the contracting officer, by
letter dated July 28, 1986, specifically asked Aydin whether its offered
equipment had been sold and "is carrying live traffic today?" By letter
dated August 13, 1986, Aydin responded that its offered system had been
sold to several customers, including the government of Taiwan
(installation scheduled for completion on October 31, 1986), Vandenberg
AFB (a contract signed on June 30, 1986), and the Norwegian government
(delivery scheduled for July 1987). On September 10, 1986, the
contracting officer thereupon rejected Aydin's proposal as unacceptable
because he found that Aydin "did not propose equipment that had operated
successfully as a fully integrated system as required" by EPS-85-002.
Aydin then filed its protest with our Office.
In its protest, Aydin argued that the Air Force's interpretation
requiring equipment in prior operational use, if correct, would
constitute a "qualification requirement" under the Defense Procurement
Reform Act of 1984 (Act), 10 U.S.C. Sec. 2319 (Supp. III 1985), and
would be illegal because the procedural requirements of the Act have not
been complied with. In our decision, we noted that the Act generally
provides procedures for establishing qualification requirements by
contracting agencies for contract awards, such as a quaiified products
list, qualified manufacturers list, or qualified bidders list. We also
noted that the Act defines "qualification requirement" as a "requirement
for testing or other quality assurance demonstration that must be
completed by an offeror before award of a contract." In this case, since
we found that the RFP simply contained a specification requirement that
firms offer equipment, any equipment, that had been in operational use
and that met the specifications, we held that the Act did not apply
under the circumstances.
Aydin continues to insist that the RFP specification requirement "is
another label for exactly the same limitation on eligibility for award
that is embraced in the Act's concept of a qualification
requirement," althougn Aydin concedes that the RFP requirement does not
involve actual testing of equipment or any other formal quality
assurance demonstration. According to Aydin, the RFP required both that
the equipment have been previously operated successfully and that the
equipment comply strictly with detailed specifications. Thus, Aydin
concludes that the RFP's "successfully operated" requirement as applied
by the Air Force was exactly the type of eligibility requirement covered
by the Act, which generally was intended to encourage competition. We
disagree.
Strictly speaking, we think that any specification in any
solicitation is a qualification requirement for an offeror that cannot
meet that requirement. However, we also think that the "qualification
requirement" as defined in the Act was not intended to apply to any
individual specification of any one solicitation. Under the Act, the
head of an agency, before establishing a qualification requirement,
must, among other things, prepare a written justification, specify in
writing and make available to a potential offeror all requirements which
the offeror must satisfy, specify an estimate of the costs of testing,
and ensure that an offeror is provided a prompt opportunity to
demonstrate its ability to meet the standards for qualification. 10
U.S.C. Sec. 2319(b). Further, within 7 years after the establishment of
a qualification requirement or within 7 years following an agency's
enforcement of a qualified products list, qualified manufacturers list
or qualified bidders list, any such qualification requirement must be
examined ana revalidated. 10 U.S.C. Sec. 2319(e). We therefore think
that the Act only applies where the agency establishes a systematized
quality assurance demonstration requirement on a continuing basis as an
eligibility for award, such as a qualified products list, qualified
manufacturers list, or qualified bidders list. See, generally, H.R.
Conf. Rep. No. 98-1080, 98th Cong., 2d Sess. 179 (1984). Here, there
was no such prequalification requirement since the RFP permitted award
to any offeror that offered any equipment that met all specifications,
including the prior use requirement. We therefore affirm our prior
holding that the Act is inapplicable to the situation here.
Next, Aydin, in its protest to our Office, also argued that if the
Air Force's interpretation of the RFP specification is correct
(requiring prior operational use of equipment), then the RFP
specification is unduly restrictive of competition. However, since we
found that the RFP, in unmistakable terms, clearly advised offerors of
this prior use requirement, Aydin knew or should have known of this
requirement upon receipt of the solicitation yet did not complain about
its provisions until its proposal was rejected. We therefore found this
protest ground to be untimely under our Bid Protest Regulations, 4
C.F.R. Sec. 21.2(a) (1) (1986). Aydin now argues that the Air Force's
specification requirement was ambiguous and therefore the protester was
reasonably unaware of the Air Force's interpretation prior to the
rejection of its proposal. In support of its position,
Aydin argues that the RFP requirement does not make clear whether the
prior use of the equipment had to have occurred prior to the
specifiction date, prior to the RFP issuance date, prior to receipt of
offers, or prior to some other date. We reject this argument. As
stated in our prior decision, the solicitation specified that " i n
order to be acceptable under the specification," the equipment had to
be in prior operational use. Further, the RFP clearly advised offerors
that compliance with this specification would be evaluated and that all
offerors had to meet all mandatory requirements. We therefore think
that it is abundantly clear that Aydin's proposed compliance with this
requirement at some future time of delivery months after award simply
would not meet this requirement. Accordingly, we reaffirm our finding
that Aydin knew or should have known that it would be unable to meet
this requirement and that therefore the RFP was allegedly restrictive as
applied to Aydin, upon receipt of the solicitation. Since Aydin failed
to protest these allegedly restrictive terms prior to the closing date
for receipt of initial proposals, this protest ground is untimely. 4
C.F.R. Sec. 21.2(a) (1).
We affirm our prior decision.
Harry R. Van Cleve
General Counsel
Matter of: Hoboken Shipyards, Inc.
File: B-224184.2
Date: January 20, 1987
DIGEST
1. Protest alleging improprieties in a solicitation issued under the
Pub. L. No. 99-190 test program for overhaul of Navy vessels falls
within the definition of a protest in the Competition in Contracting
Act, and therefore is appropriate for consideration by General
Accounting Office.
2. Protest that agency evaluation of public shipyard's estimated cost
of performance as low is unreasonable is denied where agency conducted
an analysis, which record does not show was wrong, to ensure that the
public shipyard's cost estimate was reasonable and contained cost
elements comparable to private shipyard costs and, based on that
analysis, public shipyard's estimated cost of performance remained
lower.
DECISION
Hoboken Shipyards, Inc. (HSI), protests the Department of the Navy's
determination to assign the overhaul of the USS Clifton Sprague to the
Philadelphia Naval Shipyard (PNSY). The assignment was made after a
competition between PNSY and various private shipyards under request for
proposals (RFP) No. N62678-86-R-0089. The private versus public
shipyard competition is a test program authorized by Congress under
Title II of the Department of Defense Appropriations Act for fiscal year
1986, Pub. L. No. 99-190. HSI contends that the assignment to PNSY is
improper because the Navy failed to evaluate properly the realism of the
costs proposed by PNSY a required by the legislation.
We deny the protest.
BACKGROUND
The RFP was issued on July 3, 1986, to PNSY and four private
shipyards. Offerors were required to submit firm, fixed prices for the
overhaul work, and a man-day rate to perform 3,215 man-days of labor for
other work that the Navy was certain would develop. The RFP indicated
that each offeror's evaluated price would be the offered price for the
overhaul work plus the amount added by the additional requirements.
Also, the RFP indicated that the Navy would consider in the evaluation
the foreseeable cost of moving the vessel from its homeport in
Philadelphia to the offeror's site. Award would be made to the
responsive, responsible offeror whose total offer was most advantageous
to the government, price and other factors considered.
The Navy received three proposals by the RFP's closing date of August
7. Discussions were held with all offerors on August 14, and best and
final offers (BAFOs) were required by August 20. A second round of
discussions was initiated on September 4, and revised BAFOs then were
submitted. The final proposed prices of PNSY and HSI were as follows:
PNSYHSI
Basic Price $4,452,413 $5,431,355
Additional Requirements 622,167 756,168
Foreseeable Costs - 38,500
Total $5,074,580 $6,226,023
Under Pub. L. No. 99-190, the Secretary of the Navy is required to
certify prior to the award of any contract that "the successful bid
includes comparable estimates of all direct and indirect costs for both
public and private shipyards." The Navy performed a reasonableness/cost
realism evaluation of PNSY's estimated cost of performance 1/ and both
PNSY's and HSI's evaluated prices were adjusted to arrive at comparable
estimates. As a result of the evaluation, PNSY's estimated cost of
performance remained low, and after certification by the Secretary of
the Navy as to the price comparability of the proposals, PNSY was
selected as the successful offeror. HSI protested the selection on
September 19 and, after determining that urgent and compelling
circumstances significantly affecting the interests of the United States
were present, the Navy authorized performance on September 26
notwithstanding HSI's protest.
JURISDICTION
The Navy argues that our Office lacks jurisdiction to consider this
protest since the assignment of a ship overhaul project to a public
shipyard is a matter of executive discretion not subject to our review.
The Navy also contends that consideration of this protest is not within
the scope of authority granted our Office under the Competition in
Contracting Act of 1984 (CICA), 31 U.S.C. Sec. 3551(1) (Supp. III 1985).
Although both these jurisdictional arguments were expressly considered
and rejected in our decision in Newport News Shipbuilding and Dry Dock
Co., B-221888, July 2, 1986, 86-2 CPD P 23, the Navy alleges that the
decision was in error and that the protest should be summarily
dismissed.
As we indicated in the cited decision, where the procurement system
is utilized by an agency to determine whether work should be performed
in-house or by a private contractor, we will review the procurement to
determine whether the agency complied with applicable laws and
regulations. Such an exercise of jurisdiction is clearly consistent
with past practices, see, e.g., Joule Maintenance Corp., B-208684, Sept.
16, 1983, 83-2 CPD P 333, and we find nothing in CICA which restricts
our authority to consider protests under such circumstances. Contract
Services Co. Inc., 65 Comp. Gen. 41 (1985), 85-2 CPD P 472. The Navy
has presented no additional arguments to support its position and, in
accordance with our prior decision, we will consider the merits of the
allegations raised by HSI.
COST COMPARABILITY DETERMINATION
HSI argues that the $1 million difference hetween its proposal and
that of PNSY raises serious questions as to whether PNSY's estimate is
realistic. HSI has not heen provided a detailed breakdown of PNSY's
cost estimate or of the Navy's cost analysis, but notes that it was
advised during discussions that HSI's labor estimate was significantly
less than the government's estimate. PNSY's labor estimate was not
criticized by the Navy and, consequently, HSI argues that PNSY's labor
estimate must have been higher than HSI's. PNSY's evaluated price,
however, still was suhstantially less than HSI's so that, HSI contends,
PNSY must have significantly underestimated material costs, overhead or
some other cost element. HSI argues that given the cost differential,
the Navy must not have evaluated the reasonableness of PNSY's estimate
properly.
The Navy asserts that it did evaluate PNSY's prooosed price to ensure
that all costs expected to be incurred due to the ship overhaul were
included. PNSY's proposed labor hours and material costs were compared
to the government's estimate, and PNSY's direct labor and overhead rates
were evaluated to ensure that all expected costs were included. The
Navy indicates that various aspects of PNSY's labor and overhead rates
were questioned and, on the basis of PNSY's BAFO and response to the
Navy's inquiries, the Navy concluded that PNSY would recover all of the
costs associated with the overhaul.
The Navy indicates that in addition to ascertaining whether PNSY
reasonably could be expected to perform at its proposed price, a
comparability evaluation was conducted to ensure that comparable cost
elements were contained in both proposals. Based on this analysis, the
costs of additional military personnel, facility depreciation, workmen's
compensation, unemployment compensation and the administrative project
office function were added to PNSY's estimated price, while certain
administrative costs were identified and added to HSI's price. Overall,
the Navy found that HSI had subcontracted a portion of its labor effort
and that HSI's combined material and subcontract costs substantially
exceeded the costs proposed by PNSY in this area. While there were
differences in the remaining cost categories, the Navy states that
PNSY's costs were found realistic. PNSY was selected for the work
because its estimate remained low after the comparability analysis.
In Newport News Shipbuilding and Dry Dock Co., B-221888, supra, we
recognized that in contrast to the private shipyard which absorbs any
cost overruns from its own corporate funds, the government will bear the
additional costs incurred because of an unrealisticly low estimate
submitted by a public shipyard. As a consequence, we recommended that a
cost realism analysis be conducted so that the comparability
certification required by statute is based on a reasoned judgment of the
actual cost to the government. Such an analysis, however, is in essence
an informed business judgment on the part of the contracting agency.
Marine Design Technologies, Inc., B-221897, May 29, 1986, 86-1 CPD P
502. The procuring agency's judgment as to the methods used in
estimating costs and the conclusions reached in evaluating proposed
costs are given great weight by our Office, since the agency is in the
best position to determine whether the proposed costs are realistic.
Institute for Advanced Safety Studies, B-221330, Apr. 16, 1986, 86-1 CPD
P 372. Consequently, we will disturb an agency's cost realism
determination only if we find it to be unreasonable.
In our view, the analysis performed by the Navy here provides a
reasonable basis for its conclusion that award to PNSY is in the best
interests of the government based on its estimated lower cost. As
indicated above, the record shows that the Navy reviewed all aspects of
PNSY's cost estimate. Both PNSY's and HSI's man-day estimates were
below the government's estimate, although PNSY's estimate was
significantly greater than that offered by HSI. HSI's assertion that
because PNSY's man-day estimate is substantially higher than the
protester's PNSY's other estimated costs must be unreasonably low does
not take into account the fact that the reason HSI's man-day estimate is
lower is that the firm planned to subcontract a portion of the work. In
addition, PNSY's material estimate was not substantially below the
government's estimated cost for materials for this contract. While
PNSY's proposed overhead cost and lahor rate were below that offered by
HSI, the Navy analyzed these two aspects of PNSY's proposal and adjusted
the cost estimates upwards in these areas to reflect the amounts the
Navy believed would reasonably be expected. The Navy concluded that
after taking into account all of the incremental direct and indirect
costs associated with this contract, PNSY would perform at a lower
price. Based on the record provided our Office, we cannot conclude that
this determination is unreasonable.
Finally, we note that HSI complains the Navy has improperly refused
to provide HSI with the records that support the Navy's analysis of
PNSY's cost estimate. The Navy argues that because the same shipyards
may be involved in several allocation decisions over the year,
disclosure of the cost information to the private sector will impair all
future competitions involving that public shipyard. We point out that
the authority to determine what documents should be released to a
protester is vested in the contracting agency, not our Office. See 31
U.S.C. Sec. 3553(f); Newport News Shipbuilding and Dry Dock Co.,
B-221888, supra. Consistent with our practice, however, we have
reviewed and base our decision on the entire record, not merely those
portions that have been provided to the protester. S&O Corp., B-219420,
Oct. 28, 1985, 85-2 CPD P 471.
The protest is denied.
Harry R. Van Cleve
General Counsel
FOOTNOTE
1/ PNSY's offer is more closely analogous to a cost reimbursement
type offer rather than the fixed price offer submitted by HSI, since the
government is not legally obligated to pay HSI more than the offered
price while the government will pay for any cost overruns by PNSY from
public funds.
Matter of: First Federal Data Services Company
File: B-224183.2
Date: February 18, 1987
DIGEST
1. Second low bidder under canceled solicitation is not an
"interested party" under General Accounting Office Bid Protest
Regulations to protest the cancellation because assuming that the
protest were sustained, the firm would not be in line for award.
2. Bid which inaccurately represented that bidder possessed an
interim top secret facility clearance is not subject to rejection as
"nonresponsive" since bidder's possession of a security clearance, or
its ability to obtain one in a timely fashion, involves the bidder's
responsibility.
DECISION
First Federal Data Services Company protests the cancellation after
bid opening of invitation for bids (IFB) No. MDA903-87B-0008, issued by
the Department of the Army, Defense Supply Service-Washington for the
pick-up, delivery, and storage of magnetic computer tapes.
We dismiss the protest.
Bids were solicited in August 1986, and were opened on September 8,
1986. Two bids were considered to be timely submitted and opened, that
of DataBase Co., Inc. and First Federal. 1/
The IFB, in the statement of work at clause 8 and in clause K-17
("security clearance"), required that all of the selected contractor's
employees engaged in the performance of work pursuant to an award under
the solicitation have a current top secret (military) security
clearance. In addition, the above-stated clauses and clause L-5
("security requirements") required that the selected contractor be able
to demonstrate that it has a "current facilities clearance, a current
"interim" facilities clearance, or can obtain one of these" before 20
days after bid opening. Finally, under clause K-17 of the IFB, bidders
had to represent that they will not assign employees for classified work
under the contract unless and until they have been granted the necessary
(top secret) security clearance and to indicate the level of their
facility's security clearance as either "interim clearance" or "final
clearance."
By letter dated September 15, 1986, First Federal complained to the
Army that although the low bidder, DataBase, stated (in its bid and
orally at bid opening) that it had a top secret interim facility
clearance, it in fact did not have an interim top secret facility
clearance at bid opening. First Federal thereby argued that due to the
alleged "false representation" by DataBase concerning its security
clearance, DataBase's bid should have been rejected and award made to
First Federal as the low responsive, responsible bidder.
By amendment 0002 to the IFB the Army canceled the solicitation.
According to the contracting officer, the IFB was canceled because on
September 26, the contract specialist for the IFB spoke with a senior
industrial security specialist at the Defense Investigative Service
(DIS) and was told at that time that a final facilities clearance was
mandatory to store the tapes covered under the IFB, and therefore an
interim facilities clearance was not acceptable. The contracting
officer then decided that cancellation of the IFB was necessary because
the contracting officer determined that the low bidder, DataBase, could
receive an interim facility clearance as minimally required by the IFB,
but DataBase could still not perform the contract work without a final
security clearance. In other words, cancellation was considered
necessary because the IFB as stated did not reflect the government's
needs.
First Federal argues that the DIS industrial security specialist
never told the contract specialist for this IFB that a final top secret
facilities clearance was required.
Moreover, First Federal contends that the guidelines established by
the Department of Defense (DOD) for safeguarding classified information
(DOD 5220.22-R), indicate that the IFB's security clearance requirements
were adequate, i.e., an interim top secret facilities clearance is
acceptable for the storage of the contract tapes.
The Army contends that First Federal is not an "interested party"
under our Bid Protest Regulations to protest the cancellation of the IFB
because First Federal was not the low bidder and therefore would not
have been eligible for the award if the IFB was not canceled. The Army
states that on October 8, 1986, it determined that DataBase was the low
responsive, responsible (eligible) bidder under the IFB, that DataBase
could have received the necessary security clearance within the required
timeframe, and "the apparent misrepresentation of its facilities
security clearance was not intentional, but rather a misunderstanding
and/or error."
To be eligible to pursue a protest, a party must be "interested"
within the meaning of our Bid Protest Regulations, 4 C.F.R. Secs.
21.0(a) and 21.1(a) (1986). Generally, an interested party is defined
as an actual or prospective bidder or offeror whose direct economic
interest would be affected by the award of a contract or by the failure
to award a contract. 4 C.F.R. Sec. 21.0(a); Wespercorp, Inc., 65 Comp.
Gen. 309 (1986), 86-1 C.P.D. P 167. Where, for various reasons, a
protester would not be in line for an award even if this Office were to
resolve the protest in its favor, the firm generally lacks standing as
an interested party to have the matters in issue considered on the
merits. See, e.g., Comsel Corp., et al., B-221170.3 et al., Jan. 31,
1986, 86-1 C.P.D. P 115; Multinational Business Services, Inc.,
B-221362, Jan. 9, 1986, 86-1 C.P.D. P 25.
For the reasons stated below, we agree that First Federal is not an
interested party to protest the cancellation of the IFB because First
Federal would not be in line for award if the IFB were reinstated.
Although First Federal argues that the Army was required to reject
DataBase's bid because DataBase "misrepresented" that it had an interim
top secret facilities clearance, thereby making First Federal the low
bidder under the reinstated IFB, we see no legal merit to First
Federal's position.
First, DataBase, in its comments on the protest, states that it was
not its intent to misrepresent its facility clearance, but simply
believed that the secret facility security clearance it had when it
submitted its bid was the equivalent to the interim top secret
clearances required by the IFB; further, as indicated above, the Army
found that DataBase did not intentionally misrepresent its facility
clearance, and there is no evidence of record that suggests the
contrary.
Second, having the necessary security clearances or the ability to
obtain them in a timely fashion involves bidder responsibility, and not
bid responsiveness; therefore, since responsibility is determined at
the time of award rather than bid opening, an error in a firm's bid
documents pertaining to the bidder's security clearance may not itself
cause rejection of the bid if information provided before the award
indicates that the firm has or can obtain the required security
clearance and the firm otherwise is capable of performance. See WEMS,
Inc.--Request for Reconsideration, B-222553.2, July 30, 1986, 86-2
C.P.D. P 127; B-161211, July 11, 1987. The record here shows that the
contracting officer was notified by DIS that DataBase could in fact
receive an interim top secret facility clearance within 20 days with
agency sponsorship, and that the contracting officer therefore
determined that DataBase would be a responsible bidder under the
criteria set forth in the IFB. First Federal has not provided any
evidence to show that DataBase would not have been able to obtain the
necessary security clearances in a timely manner and, in fact, concede
that DataBase "could have been the winner" had DataBase "executed the
bid documents honestly and correctly."
In these circumstances, we find no reason to question the Army's
October 9 determination that DataBase was the low responsive,
responsible bidder under the canceled IFB. See WEMS, Inc.--Request for
Reconsideration, B-222553.2, supra. Therefore, since it would not be in
line for award should the IFB be reinstated, First Federal is not an
interested party to protest the cancellation. Falcon Management, Inc.,
B-222200.2, May 9, 1986, 86-1 C.P.D. P 448.
The protest is dismissed.
Ronald Berger
Deputy Associate
General Counsel
FOOTNOTE
1/ A bid submitted by the Data Vault Corporation was rejected by the
Army as late. Data Vault protested to our Office on September 19, 1986,
the rejection of its bid arguing that the bid was timely delivered in
accordance with the IFB. However, on September 30, Data Vault's protest
(B-224183.1) was dismissed as academic because the Army had notified us
that the IFB had been canceled.
Matter of: Informatics General Corporation
File: B-224182
Date: February 2, 1987
DIGEST
1. The awardee's prior problems in performing its incumbent contract
were not grounds to downgrade its technical proposal for comparative
evaluation purposes where the agency reasonably determined that the
firm's ultimate resolution of these problems demonstrated its capability
with regard to the current effort.
2. The fact that the successful offeror, with knowledge prior to
award that a proposed key employee had accepted other ehmployment, did
not take steps to withdraw her qualifications statehment and substitute
a similarly qualified individual for the position provides no basis to
sustain the protest where the evidence of record does not convincingly
established that the misrepresentation was intentional.
3. Since an agency's cost realism evaluation necessarily involves the
exercise of informed judgment as to what costs may be incurred by
accepting a proposal to perform a costtype contract, GAO will not
disturb the results of that evaluation unless shown to be unreasonable.
DECISION
Informatics General Corporation (Informatics) protests the award of a
contract to Library Systems and Services, Inc. (LSSI) under request for
proposals (RFP) No. DE-RP0186-MA21059, issued by the Department of
Energy (DOE). The procurement is for the acquisition of services in
support of the operation of DOE's technicai library (Energy Library).
Informatics principally complains that DOE improperly determined LSSI to
be the successful offeror as a result of the agency's failure to assess
meaningfully certain factors directly relevant to the technical merit of
LSSI's submitted proposal. In addition, Informatics asserts that LSSI
made a material misrepresentation in its offer concerning the
availability of a proposed key employee. Informatics also questions the
results of the agency's cost realism evaluation.
We deny the protest.
BACKGROUND
The RFP solicited offers to furnish support services for the
operation of the Energy Library at its Forrestal and Germantown branch
sites. The services being acquired include reference and research,
cataloguing, public service functions, acquisitions and journal
subscriptions, translation, and, significant to this case, data
processing services. It is necessary that the contractor he experienced
in data processing services because the Energy Library is extensively
automated. The requisite data processing elements comprise the
operation of an acquisitions reporting and control system, hardware and
software analysis, systems evaluation, and machine-to-machine
communications.
The RFP was issued on December 26, 1985, and contemplated the award
of a level-of-effort, cost-plus-award-fee contract for a 36-month base
period with a 12-month optional period of performance. Offerors were
required to submit separate technical and cost proposals. The
solicitation provided that the technical proposals were "of
substantially greater importance" than the cost proposals. However,
offerors were also advised that:
"... if, after evaluation of the Technical and Cost proposals,
two or more competing overall proposals are within the competitive
range, evaluated probable cost to the Government may be the
deciding factor for selection, depending on whether the most
acceptable overall proposal (excluding cost consideration) is
determined to be worth the cost differential, if any."
The RFP set forth the various criteria under which the technical
proposals would he evaluated. These factors were assigned a total value
of 1000 points for evaluation purposes.
Although the RFP did not inform offerors of the precise point values
of the various criteria, it did provide that the evaluation factors were
listed in descending order of importance, with Criterion 1, Technical
Understanding and Approach being approximately three times as important
as Criterion 2, Project Structure, which was approximately twice as
important as Criterion 3, Corporate Resources, and Criterion 4, Related
Corporate Experience which were equal.
The extended closing date for receipt of initial proposals was
February 7, 1986. The agency's proposal evaluation board evaluated the
four proposals received and determined that only the proposals submitted
by Informatics and LSSI were within the competitive range. Informatics
was the incumbent contractor for the operation of the Energy Library,
whereas LSSI was the incumbent contractor maintaining the MINI-MARC/
OSTS library materials information systems, which are proprietary to
LSSI. (MINI-MARC is a cataloguing resource system and OSTS is an
on-line serials tracking system.)
Both firms received high technical scores for their initial
proposals, with Informatics' proposal receiving a slightly higher score
than LSSI's on the 1000-point scale. Although LSSI enjoyed a very small
point advantage under Criterion 1, the most important, Informatics'
proposal received a perfect score for Criterion 3 and Criterion 4, and a
near-perfect score for Criterion 2. With regard to the initial cost
proposals, Informatics' offered cost was somewhat lower than LSSI's.
On April 11, DOE requested that both firms respond to various
questions generated by the initial evaluation as to perceived weaknesses
in their proposals and to submit revised proposals by April 28. Upon
reevaluation, DOE upgraded both firms' technical ratings. Both firms
improved their scores for Criterion 1, but Informatics'score under that
criterion now became marginally higher than LSSI's. In addition,
Informatics' proposal now received a perfect score for Criterion 2, and
its perfect scores for Criterion 3 and 4 remained unchanged. Overall,
Informatics'scoring advantage over LSSI increased slightly. The
evaluators then reported these scores to the source selection official
for the procurement on May 7.
DOE determined that the responses from the firms in their revised
proposals raised additional questions regarding proposed costs.
Accordingly, the firms were asked to respond to a set of cost questions
and to submit revised proposals by May 22. Discussions were then
conducted with the firms in August, and the firms were requested to
submit best and final offers (BAFOs) in the form of executed contracts
by August 25.
The evaluation board chairman then presented the evaluators, findings
to the selection official, advising that the technical scores reported
on May 7 remained unchanged following review of the August 25 BAFOs.
The consensus of the evaluators was that both Informatics and LSSI had
submitted outstanding technical proposals, with no reported areas of
remaining weakness.
The evaluation board chairman advised the source selection official
that either firm "is fully capable of carrying out the library services
function," and, accordingly, that "the determining factor for selection
should be price only."
In this regard, the agency had conducted a cost realism analysis, and
had upwardly adjusted both firms' BAFO costs to reflect the most
probable cost to the government if either firm were awarded the
contract. LSSI's evaluated probable cost was determined to be
approximately $200,000 lower than Informatics'.
The source selection official concurred with the evaluation board
that both firms were essentially equal technically, and he concluded
that LSSI should be awarded the contract as the lower probable cost
offeror. The firm was awarded the contract on September 11 and
Informatics then protested the award to this Office. Although the
protest was filed within 10 calendar days of the award, DOE determined
that contract performance should not be suspended pending our resolution
of the protest because performance is in the government's best interest.
See 31 U.S.C. Secs. 3553(d)(1) and (d)(2)(A)(i) (Supp. III 1985); 4
C.F.R. Sec. 21.4(b)(1) (1986).
PROTEST POSITION
Informatics asserts that the award to LSSI was improper on several
grounds. The firm urges that DOE, in its evaluation, failed to assess
meaningfully LSSI's past performance of its contract to maintain the
MINI-MARC/OSTS systems. Informatics asserts that the firm's performance
had been very deficient, as evidenced by the fact that LSSI was
threatened with a termination for default unless it took immediate steps
to rectify the problems DOE was encountering with the systems.
Accordingly, Informatics contends that LSSI's proposal should have been
significantly downgraded under those evaluation criteria directly
relevant to its ability and experience to provide comprehensive library
data processing services.
Informatics also alieges that LSSI made a material misrepresentation
in its offer by continuing to propose as a key employee an individual
that LSSI knew was no longer available to work for LSSI if it obtained
the contract. Informatics contends that although this is a sufficient
ground in itself to compel termination of LSSI's contract, the firm
urges in the alternative that, in any event, the evaluation results were
skewed to its disadvantage because LSSI's proposal was rated highly
under the evaluation subcriteria relevant to proposed key personnel
experience even though a designated individual was no longer available
to fill a critical position.
Informatics also contends that the agency's cost realism evaluation
is subject to question principally because LSSI's evident technical
weaknesses should have directly impacted upon the probable cost of
accepting LSSI's proposal. In this regard, Informatics asserts that
LSSI's lack of demonstrated capability in data processing services
indicates that the firm will be required to increase the number of
man-hours dedicated to the effort in order to perform the contract
successfully. Informatics also urges that the indirect cost rates
originally proposed by LSSI were improperly reduced as the result of the
agency's cost realism evaluation.
ANALYSIS
Improper Technical Evaluation
It is not our function under our bid protest jurisdiction to conduct
technical evaluations as to the merits of submitted proposals. Health
Management Assoc. of America, Inc., B-220295, Jan. 10, 1986, 86-1 CPD P
26. Although the burden clearly rests with the protester to show,
beyond mere disagreement, that the agency's technical evaluation was
unreasonable, Magnavox Advanced Products and Systems Co., B-215426, Feb.
6, 1985, 85-1 CPD P 146; A.B. Dick Co., B-207194.2, Nov. 29, 1982, 82-2
CPD P 478, we will review the record to determine whether the chosen
method for evaluating proposals provides a rational basis for source
selection and whether the actual evaluation has been conducted
consistent with the criteria set forth in the solicitation. System
Development Corp., B-219400, Sept. 30, 1985, 85-2 CPD P 356.
It is well-settled that where selection officials reasonably consider
competing proposals as essentially equal in terms of technical merit,
cost may become the determinative factor in making award even though the
evaluation criteria assigned cost less importance than technical
considerations. Assoc. for the Education of the Deaf, Inc., B-220868,
Mar. 5, 1986, 86-1 CPD P 220. In the present matter, the selection
official's conclusion that the slight scoring advantage in Informatics'
favor did not represent any meaningful superiority in the merit of its
technical proposal, and that cost, therefore, should be the
determinative factor for selection purposes, was proper. See, e.g.,
Lockheed Corp., B-199741.2, July 31, 1981, 81-2 CPD P 71 (where we held
that proposals with a 15 percent technical scoring differential between
them reasonably were found to be essentially equal).
As noted above, Informatics contends that LSSI has been performing
its maintenance services contract with DOE poorly and that, as a result,
LSSI's proposal should have been downgraded significantly in the areas
relevant to data processing capability. Specifically, agency documents
submitted by Informatics indicate that in January 1986, the Energy
Library's Director of Reference and Information Management, the same
individual who served as the chairman of the proposal evaluation board
for this procurement, reported to the contracting officer for LSSI's
contract various recurring problems with the MINI-MARC and OSTS systems.
The DOE contracting officer then followed-up with a letter of February
28, 1986, to LSSI, which stated that unless the problems were cured
within 10 days, the contract might be terminated for default. Although
DOE did not terminate LSSI's contract, Informatics argues that the
record nonetheless demonstrates that LSSI's competence is doubtful, and,
therefore, that the DOE evaluators had no reasonable basis to rate LSSI
highly for its capability in data processing.
Our review of the record, however, does not lead us to the conclusion
reached by Informatics. The record shows that the MINI-MARC and OSTS
systems were developed by LSSI and were furnished by LSSI to DOE. On
November 2, 1982, DOE awarded LSSI a maintenance services contract for
these systems. Starting in late 1984, DOE amended LSSI's contract to
provide for the reconfiguration of both MINI-MARC and OSTS from systems
consisting of mini-computers run on floppy discs to systems utilizing
micro-computers and laser discs. While the record shows that LSSI did
encounter problems during 1985 and in early 1986 with the reconf
iguration effort, it appears from the record that these problems were
largely resolved by March 1986.
Thus, we find as reasonable DOE's assessment that LSSI's performance
under its maintenance services contract did not reflect adversely on
LSSI's capability to perform the contemplated operations contract. We
have no reason to doubt DOE's statement that the problems encountered by
LSSI under its prior contract were not unusual, given the
reconfiguration task at hand. Secondly, it appears that LSSI
successfully overcame the problems and completed the effort. Finally,
as DOE points out, the degree of data processing skills needed to
operate the DOE library is much less than that needed to reconfigure
data processing systems. In fact, DOE asserts that "LSSI's successful
reconfiguration of these rather antiquated systems enhanced, rather than
detracted from, DOE's confidence in LSSI's technical capabilities."
While we cannot conclude that LSSI's performance under its maintenance
services contract was wholly satisfactory, in view of the problems
encounted, we also cannot conclude that the DOE evaluators should have
downgraded LSSI's technical proposal in the areas relevant to data
processing capability or regarded LSSI's proposal as weak in those
areas. This being the case, we do not find fault with the technical
evaluation results.
Material Misrepresentation in LSSI's Proposal
Informatics alleges that LSSI continued to include in its proposal
the qualifications of a proposed key employee--a branch library
supervisor--that LSSI knew was no longer committed to work for the firm.
if awarded the contract. In its initial offer, LSSI had proposed a
certain individual for the position of branch library supervisor ahout
whom DOE expressed reservation in part because the individual was not a
United States citizen. Accordingly, LSSI substituted another individual
(hereinafter "S") to fill that position.
The record shows that "S" was offered the position on April 23,
contingent upon DOE's approval and LSSI's being awarded the contract.
On April 24, "S" advised LSSI in writing that she accepted the offer
with the contingency. On April 28, LSSI submitted its revised proposal
including "S"s qualifications for the position. It is undisputed that
LSSI continued to propose "S" for the branch supervisor position up
through the time of contract award. The other facts of the matter are
in sharp dispute between the parties.
Informatics, pursuant to an affidavit from "S", asserts that "S"
informed LSSI on April 25, prior to the submission of LSSI's revised
proposal on April 28 that, immediately subsequent to accepting LSSI's
offer, she had accepted another offer from a firm with which she had
interviewed earlier because the offer was not contingent as was LSSI's
offer. (The other firm in fact was Informatics.) "S" avers in her
affidavit that she expressly informed LSSI at that time that she would
not work for LSSI even if the firm were awarded the DOE library services
contract.
LSSI, in accordance with the affidavits of its own personnel, claims
that it did not learn from "S" that she had taken a position with
another firm until after the submission of its second revised proposal
on May 22, and, more to the point, that "S" never directly advised LSSI
that she no longer would be open to consider LSSI's prior offer, but
rather that she clearly conveyed a contrary impression.
We have held that an agency's evaluation of an offeror's key
personnel, even though some are changed after award, is not
objectionable when the offeror provided firm letters of commitment, and
the names were submitted in good faith with the consent of the
respective individuals (that is, the offeror was not proposing personnel
it had no intention of providing). Development Alternatives, Inc.,
B-217010, Feb. 12, 1985, 85-1 CPD P 188. Conversely, where it is
established that an offeror made intentional misrepresentations that
materially influenced the agency's consideration of its proposal, the
proposal should be disqualified, Informatics, Inc., 57 Comp. Gen. 217
(1978), 78-1 CPD P 53, or the contract canceled if the award has already
been made. New England Telephone and Telegraph Co., 59 Comp. Gen. 746
(1980), 80-2 CPD P 225.
In view of the LSSI affidavits, DOE has concluded that its further
review of the facts surrounding Informatics' allegation is not necessary
or appropriate. The agency believes that unless affirmative evidence of
misrepresentation is offered by Informatics, we should reject the
allegation that LSSI materially misrepresented "S"s availability.
We agree with DOE. Although "S" has also stated by affidavit that
she expressly informed LSSI that she was no longer available, the fact
remains that "S" is presently an employee of the protester. Therefore,
we have no basis to put more weight on "S"s statement than on the LSSI
employees' affidavits as being the accurate version of the facts. The
most we can say is that when LSSI learned of "S"s employment with
another firm, it might have been prudent for LSSI to have withdrawn her
qualifications statement and have substituted a key employee with a
greater assurance of availability. We cannot conclude, however, that
LSSI's failure to do so constituted an intentional misrepresentation.
Propriety of Probable Cost Evaluation
Informatics also questions the results of the agency's cost realism
evaluation. The firm alleges that DOE should have recognized that
LSSI's technical weaknesses would directly impact upon the probable cost
of accepting the firm's offer. Informatics argues that LSSI, because of
its lack of data processing capability, will be required to increase the
number of man-hours dedicated to the work in order to perform
successfully. Informatics also asserts that DOE improperly reduced the
indirect cost rates originally proposed by LSSI as a result of its cost
evaluation. Given the fact that LSSI is a relatively new firm with
little prior cost experience, Informatics urges that the cost realism
analysis properly should have resulted in an upward adjustment in LSSI's
rates, a defect compounded by the agency's unjustified reduction in
those indirect rates.
When, as here, a cost-reimbursement contract is contemplated, the
contracting agency must analyze each offeror's proposed costs in terms
of their cost realism, since regardless of the costs proposed, the
government is bound to pay the contractor its actual and allowable
costs. Advanced Technology Systems, Inc., 64 Comp. Gen. 344 (1985),
85-1 CPD P 315. Hence, because the offerors' estimated costs of
contract performance should not be controlling, the agency is required
to conduct a cost realism evaluation before awarding a cost-type
contract. FAR, 48 C.F.R. Sec. 15.605(d) (1985); see also Norfolk Ship
Systems, Inc., B-219404, Sept. 19, 1985, 85-2 CPD P 309. However, since
an evaluation of this nature necessarily involves the exercise of
informed judgment as to what costs actually will be incurred by
accepting a particular proposal, the agency clearly is in the best
position to make this cost realism determination, and, in consequence,
we will not disturb that determination unless it is shown to be
unreasonable. Marine Design Technologies, Inc., B-221897, May 29, 1986,
86-1 CPD P 502; Polaris, Inc., B-220066, Dec. 16, 1985, 85-2 CPD P 669.
Under this standard, we have reviewed the results of DOE's cost
realism evaluation, and we cannot conclude that the results reached were
unreasonable. To the extent Informatics urges that LSSI's lack of data
processing capability directly impacts upon the probable cost of
accepting the firm's offer, it is well recognized that the impact of
technical deficiencies upon the probable cost of performance is
speculative and difficult to estimate. Therefore, perceived technical
deficiencies do not necessarily represent quantifiable cost factors, but
rather factors more germane to the technical evaluation findings and
commensurate rating of the technical proposals. See SETAC, Inc., 62
Comp. Gen. 577, 589 (1983), 83-2 CPD P 121 at 16. Since the agency did
evaluate the proposals with regard to their relative technical merits,
but found no weaknesses remaining at the conclusion of discussions to
affect prospective contract performance, Informatics' argument on this
point is essentially misdirected with regard to the propriety of the
agency's probable cost evaluation.
Although Informatics also disputes DOE's analysis of the indirect
cost rates proposed by the firms, our review of the cost evaluation
documentation has revealed nothing to indicate either that LSSI's rates
were unreasonably adjusted downward or that Informatics' were
unreasonably adjusted upward as a result of the cost realism analysis.
See CACI, Inc.--Federal, 64 Comp. Gen. 71 (1984), 84-2 CPD P 542. In
sum, DOE determined that LSSI's indirect rates were too high because the
firm had failed to consider the cost impact of the contract upon those
rates as projected for the following fiscal years. However, in
contrast, Informatics' proposed indirect rates were deemed to be
understated since they in fact were significantly lower than the rates
the firm had experienced recently as the incumbent.
We note that the agency's probable cost adjustments reflected the
opinions and conclusions of the Defense Contract Audit Agency (DCAA)
which was requested by DOE to furnish audit reports on the cost
proposals. Although it is true, as Informatics points out, that DCAA
audit reports are not binding upon the agency, see Booz, Allen &
Hamilton, B-213665, Sept. 24, 1984, 84-2 CPD P 329, at the same time it
is also true that nothing precludes that agency, as here, from
reasonably concurring with DCAA's findings for cost analysis purposes.
See, e.g., Norfolk Ship Systems, Inc., B-219404, supra.
The protest is denied.
Comptroller General
of the United States
Matter of: Leland Limited, Inc.--Reconsideration
File: B-224175.2
Date: February 17, 1987
DIGEST
1. Prior decision is affirmed on reconsideration where the request
for reconsideration does not establish that the decision was based on
errors of fact or law.
2. Recommendation that contract be terminated is withdrawn on
reconsideration where agency continued performance because it was
notified of the protest more than 10 days after award, and agency now
establishes that termination is not in the government's interest.
Protester, however, is entitled to bid preparation and protest costs.
DECISION
The Defense Logistics Agency (DLA) requests that we reconsider our
decision Leland Limited, Inc., B-224175, Dec. 24, 1986, 86-2 C.P.D. P ,
in which we sustained a protest by Leland Limited, Inc., of the contract
award to Sparklet Devices, Inc., under DLA invitation for bids (IFB) No.
DLA700-86-B-0077. We held that DLA improperly had evaluated bids under
the solicitation, which was for carbon dioxide cylinders used to inflate
pneumatic flight vests, and we recommended that Sparklet's contract be
terminated and a contract under the IFB be awarded to Leland. DLA
argues that our decision on the merits of the protest is wrong and that,
in any case, it is not in the government's interest to terminate
Sparklet's contract at this time.
We affirm the decision, but we withdraw our recommendation.
The solicitation incorporated by reference the provisions at
Department of Defense (DOD) Federal Acquisition Regulation (FAR)
Supplement, 48 C.F.R. Sec. 252.225-7001 and -7006 (1985), which
implement the Buy American and Trade Agreements Acts. The Buy American
Act, 41 U.S.C. Secs. 10a-10c (1982), and its regulations, provide a
preference for domestic items in government procurement by requiring the
application of a percentage factor to the offer of a foreign end
product. Under the Trade Agreements Act of 1979, 19 U.S.C. Secs.
25012582 (1982), and its implementing regulations, the provisions of the
Buy American Act do not apply to eligible products originating in
designated countries in certain situations. According to the procedure
for evaluating offers in part 25 of the FAR, the Buy American Act
differential is not applied where the eligible offer is $149,000 or
more.
Leland bid $130,311 to supply cylinders from Japan, which qualify as
designated-country end products under the Trade Agreements Act. Because
Leland's total bid price did not exceed the Trade Agreements Act
threshold of $149,000, DLA concluded it had to apply the Buy American
Act differential of 50 percent, after deducting duty, to Leland's price.
Sparklet, the only other responsible bidder, bid $160,189 to supply a
domestic end product. Sparklet was found to be the lowest responsive,
responsible bidder, and was awarded a contract.
We sustained Leland's protest because we agreed that its bid was
evaluated incorrectly. We noted that the FAR provision at 48 C.F.R.
Sec. 25.402(a) implements the intention of the Trade Agreements Act of
1979 to forego the Buy American Act preference for domestic products
where a specified group of foreign countries is involved by providing
that "agencies shall evaluate offers at or over the dollar threshold...
without regard to the restrictions of the Buy American Act...." We
recognized that DLA's evaluation of bids was consistent with a literal
reading of the FAR, but we stated our view that it is unreasonable to
assume that pursuant to the regulation an agency must evaluate any bid
below the $149,000 threshold by applying the full Buy American Act
differential of 50 percent. The result of DLA's method of bid
evaluation was that not only would a bid like Leland's be evaluated
higher than a domestic end product bid of $160,189, but it would be
evaluated higher than a bid based on cylinders of Japanese origin at
$149,000, since DLA would not apply a differential to such a bid. It
was our position that if an eligible foreign-item bid of $149,000 would
win a competition against a domestic bid of $160,189, it only made sense
that an eligible foreign-item bid of $130,311 also would win. We
concluded:
"Thus, the proper reading of the regulation, in terms of its
background and purpose, is that while bids below the threshold are
subject to a differential, the differential is applied, in
evaluating them against domestic-item bids, only up to the
threshold. That is, to achieve a reasonable result under the FAR,
a bidder offering an eligible product at a bid price below the
specified threshold should be evaluated, against a domestic bid,
with the Buy American Act differential added, but the total
evaluated bid may not exceed the dollar threshold."
We therefore sustained the protest and recommended termination of
Sparklet's contract and award to Leland. We also recommended to the FAR
Secretariat that FAR, 48 C.F.R. Sec. 25.402(a), be clarified consistent
with the way we think it should be read.
DLA complains that its actions violated no law or regulation since,
as even our Office recognized, the bid evaluation was consistent with a
literal reading of the FAR. The agency argues that the contracting
officer could not impose his own or another interpretation on an
unamhiguous regulation and, therefore, acted properly in evaluating
Leland's bid.
We understand DLA's concern and we recognize the difficult position a
contracting officer might be in when faced with a situation like
Leland's. Nevertheless, we think regulations must be read reasonably,
and we do not agree that a Literal reading that leads to an evidently
unintended and clearly anomalous result should be relied on to support
that result, especially where another apparent reading leads to a proper
result. In requesting reconsideration, DLA does not refute our analysis
of the FAR, and we see no reason to retreat from a reasonable reading of
the regulation in favor of an unreasonable, albeit literal, one. We
therefore affirm our prior decision in that respect.
DLA further argues that even if we were to affirm our decision, it is
not in the government's interest to terminate Sparklet's contract.
Because Leland filed its protest more than 10 calendar days after the
award, DLA did not suspend performance pending our decision on the
matter. See The Competition in Contracting Act of 1984, 31 U.S.C. Sec.
3553(d)(1) (Supp. III 1985). The agency states that it informally has
verified a claim by Sparklet that the firm has incurred direct costs of
$60,000 with indirect costs doubling that amount, so that the government
would incur substantial costs upon termination. DLA further states that
the present supply condition for the items establishes that more units
are urgently needed, and that terminating Sparklet's contract, which
required delivery in 240 days (or no later than April 22, 1987), and
affording Leland a comparable amount of time to complete delivery would
have a clear detrimental effect on DLA's supply position and mission.
In determining the appropriate corrective action on an improperly
awarded contract when the agency is not required to suspend performance,
we consider all the circumstances surrounding the procurement, such as
the seriousness of the procurement deficiency, the degree of prejudice
to other interested parties or to the integrity of the competitive
procurement system, the good faith of the parties, the extent of
performance, the cost to the government, the urgency of the procurement,
and the impact of the recommendation on the contracting agency's
mission. 4 C.F.R. Sec. 21.6(b) (1986).
On reconsideration, we do not believe that termination of Sparklet's
contract is in the hest interest of the government. In similar
situations, we have found that the advanced stage of the procurement and
high termination costs--we have no basis to question DLA's determination
of such probable costs here--support a finding that termination is not
feasible. See NI Industries, Inc.--Reconsideration, B-218019.2, Aug. 8,
1985, 85-2 C.P.D. P 145. Therefore, we withdraw our previous
recommendation.
We find, however, that the protester is entitled to protest and bid
preparation costs. The reasonable costs of filing and pursuing a
protest, including attorneys' fees, may be recovered where the agency
has unreasonably excluded the protester from the procurement, except
where our Office recommends that the contract be awarded to the
protester and the protester receives the award. 4 C.F.R. Sec. 21.6 (e).
Additionally, the recovery of costs for bid preparation may be allowed
where the protester was unreasonably excluded from the competition and
no other practicable remedy is available. Id.; Consolidated
Construction, Inc., B-219107.2, Nov. 7, 1985, 85-2 C.P.D. P 529. Our
previous finding, which we affirm, is that DLA's bid evaluation method
improperly precluded Leland from receiving the award. Therefore, the
firm is entitled to recover its protest and bid preparation costs in
these circumstances. The Department of the Navy et al.--Request for
Reconsideration, B-220327.2 et al., Apr. 23, 1986, 86-1 C.P.D P 395.
Our prior decision is affirmed, and our recommendation is withdrawn.
Leland should submit a claim to DLA to be reimbursed for the firm's
protest and bid preparation costs. 4 C.F.R. Sec. 21.6(f).
Comptroller General
of the United States
Matter of: Buchanan Construction Company--Request for
Reconsideration
File: B-224171.3
Date: March 19, 1987
DIGEST
Reconsideration request that merely reiterates prior arguments is
denied.
DECISION
Buchanan Construction Company requests reconsideration of our
decision, Buchanan Construction Co., B-224171.2, Feb. 12, 1987, 87-1 CPD
P , in which we denied Buchanan's protest of the award of a contract to
another firm under invitation for bids (IFB) No. DAHA40-86-B-0007,
issued by the Property and Fiscal Officer for Tennessee for construction
of a medical training and dining facility for the Tennessee National
Guard. We deny the reconsideration request.
In our original decision, we held that Buchanan was not entitled to
award because funding was available for the base bid items only and
Buchanan was not the low bidder on these items. The bid schedule had
asked for a "Total Amount for Base Bid" (items 1-5) and "Total All Bids"
(the base bid items plus five additive items). Buchanan's total base
bid was higher than the awardee's base bid. Buchanan had written on its
bid envelope "Cut Total All Bids $41,000." The protester argued that the
entire $41,000 reduction should be taken from its base bid, which would
make it the low bidder on those items. We concluded that it was unclear
from the instruction that the entire reduction was to be taken from the
base bid items. Since in our view there was no rational basis upon
which to allocate the reduction between the base and additive items, we
held that Buchanan's bid should be evaluated without the reduction.
In its request for reconsideration, Buchanan essentially reiterates
the arguments that it made in its original protest. We did not find
those arguments persuasive then and we do not find them persuasive now.
Since Buchanan has not presented anything indicating that our decision
contains errors of law or provided any information not previously
considered, we deny the request for reconsideration. Bid Protest
Regulations, 4 C.F.R. Sec. 21.12(a) (1986).
Harry R. Van Cleve
General Counsel
Matter of: Buchanan Construction Company
File: B-224171.2
Date: February 12, 1987
DIGEST
Where bidder modified its bid by including an instruction to "cut
total all bids $41,000" without clearly stating whether entire $41,000
reduction was to be taken from the base bid, from additive line items,
or apportioned between base and additive line items, modification must
be disregarded in determining whether bid is low.
DECISION
Buchanan Construction Co. protests the proposed award of a contract
to Alexander & Shankle under invitation for bids (IFB) No.
DAHA40-86-B-0007, issued by the United States Property and Fiscal
Officer for Tennessee for construction of a medical training and dining
facility for the Tennessee National Guard at Metro Airport in Nashville,
Tennessee. Buchanan contends that it is entitled to award because it
submitted the low responsive bid. We deny the protest.
The IFB asked for bids on five base and five additive line items for
a total of ten items. Bidders were advised that award would be based on
the lowest aggregate price for the base items plus those additive items
(in the order of priority listed in the schedule) that would permit the
government to order the most work within available funds. Three bids
were received and opened on September 9, 1986. The funds available
would only cover the bids for the base items.
Although Buchanan contends that it submitted the low bid, we agree
with the agency that it is not. The bid schedule provided for a "Total
Amount for Base Bid" (items 1-5) and for "Total All Bids" (items 1-5
plus the additive items 6a-6e). On its bid schedule, Buchanan entered a
total base bid of $1,921,124, which was higher than Alexander and
Shankle's base bid of $1,898,900. The envelope in which Buchanan's bid
was submitted contained the instruction, "Cut Total All Bids $41,000."
The protester argues that it intended that the entire $41,000 be
subtracted from its base bid, thus making it the low bidder. We do not
think that intent is evident from the bid. Buchanan's bid as submitted
indicates that the protester intended to allocate a portion of the
reduction to other items as well. The instruction on the bid envelope
refers to a specific schedule item, "TOTAL ALL BIDS," where bidders are
to total all their line item bids (both base and additive). Thus, it is
not reasonable to assume from the bid documents that the $41,000 was to
be cut only from the first five line item prices which make up the base
bid. If that were the case, the envelope should have directed the
$41,000 price reduction to the place on the schedule denominated "Total
Amount For Base Bid" where the total price for the five base bid line
items was to be inserted. The protester's statements after bid opening
as to what it intended are not relevant as the bidder's intent must be
determined from the bid at opening, and its post-bid opening statements
as to its actual intent cannot be considered. Edcar Industries, Inc.,
B-213330, Nov. 4, 1983, 83-2 CPD P 528. Thus, Buchanan's bid on the
base items must be evaluated as submitted without the alleged $41,000
reduction because there is no rational basis upon which to allocate that
reduction between the base and additive line items. Ed A. Wilson, Inc.,
B-188260, et al., Aug. 2, 1977, 77-2 CPD P 68. On that basis Buchanan
is not the low bidder on the items to be awarded.
Since the protester is not the low bidder we need not consider the
agency's argument that the bid is also for other reasons not responsive.
The protest is denied.
Harry R. Van Cleve
General Counsel
Matter of: Alden Electronics, Inc.--Reconsideration
File: B-224160.2; B-224161.2
Date: March 12, 1987
DIGEST
1. Prior decision upholding an agency's post-bid opening cancellation
of an invitation for bids in part on the ground that the protester was
not materially harmed by the action since it was the apparent low bidder
under the resolicitation is affirmed upon reconsideration where, even
though events subsequent to the decision now reveal that the protester
was in fact prejudiced, the agency's original decision to cancel
nevertheless remains justified upon reexamination of the record.
2. Where the post-bid opening cancellation of an invitation for bids
was consistent with governing legal requirements, an impermissible
auction has not been created upon resolicitation, and the fact that
lower bids may have been submitted under the successor invitation
generally has no bearing upon the propriety of the original
cancellation.
3. An agency properly may justify a cancellation on a subsequently
enunciated basis if that basis would have supported the action had it
been raised initially.
DECISION
Alden Electronics, Inc. requests reconsideration of our decision in
Alden Electronics, Inc., B-224160 et al., Nov. 13, 1986, 87-1 CPD P , in
which we denied Alden's protest against the post-bid opening
cancellation of Federal Aviation Administration (FAA) invitation for
bids No. DTFA1186-B-00053 (IFB -00053), under which Alden was the low
evaluated bidder, and the addition of the deleted items--weather
graphics display systems--to invitation for bids No. DTFA0786-B-00094
(IFB -00094), another FAA procurement for such systems.
We denied the protest in part because Alden was the apparent low
bidder under the successor invitation and, therefore, the firm had made
no credible showing that it was prejudiced by the earlier cancellation.
(We did note, however, that the bids under IFB -00094 had yet to be
evaluated to determine life cycle cost present value, an analysis which
ultimately would determine the firm entitled to the award.)
We denied the Protest as well because, by regulation, an invitation
for bids may be canceled after bid opening if such action clearly is in
the public's interest. Federal Acquisition Regulation (FAR), 48 C.F.R.
Sec. 14.404-1 (c)(9) (1986). In this regard, we were not persuaded by
Alden's argument that the agency's only real reason for canceling IFB
-00053 was the expectation of more favorable prices if the systems
originally sought under that invitation as one firm requirement plus two
options on either a purchase or lease basis were resolicited as three
immediate buys on a purchase-only basis, which was not a legally
sufficient ground to justify the cancellation. Accordingly, we rejected
Alden's corollary assertion that the cancellation had ultimately
resulted in an improper auction situation among the bidders under IFB
-00094.
Alden now requests reconsideration of our prior decision on the
ground that events subsequent to the decision now obviate our conclusion
that Alden was not materially harmed by the agency's cancellation of IFB
-00053. In this regard, Alden advises this Office that, in fact, it was
not the low evaluated bidder under IFB -00094 after its submitted bid
had been analyzed to determine life cycle cost present value. As a
result, the contract was awarded to another firm.
In addition, Alden urges that we factually erred in our prior
decision by determining that the firm's average per system price under
IFB -00094 was higher than its average per system price under IFB
-00053. We believed that this circumstance effectively refuted the
firm's contention that the cancellation had led to a prohibited auction
situation since evidence was lacking that Alden had been forced to lower
its system prices significantly in order to remain competitive.
Alden now urges that its average per system price under IFB -00094
was higher than under IFB -00053 because the two additional weather
graphics systems (one firm buy plus one option) being acquired under IFB
-00094 had several more work stations than those systems originally
sought under IFB -00053 and, therefore, were more expensive to the
extent of raising the firm's average per system price above that for IFB
-00053. The firm insists that a reexamination of its bid prices will
show that it was compelled to participate in an improper auction due to
the agency's unjustified post-bid opening cancellation of the earlier
invitation.
Accordingly, Alden requests reconsideration on the principal ground
that it was prejudiced by the cancellation, and the firm reasserts its
original challenge to the propriety of that action.
We affirm our prior decision.
Our decision did not wholly turn upon the firm's failure to establish
that it was materially harmed by the cancellation, an action which, as
indicated in our decision, we found no compelling reason to question.
Rather, since it was obvious that the fundamental underpinning of any
viable protest--a showing of prejudice--was lacking due to Alden's
status as the bidder apparently in line for award under IFB -00094, we
saw no need to set forth a specific legal analysis of the agency's
cancellation decision. Hence, although Alden now makes a showing of
prejudice to the extent that, as the firm emphasizes, it ultimately
"lost" the successor procurement, this changed circumstance does not
necessarily affect our original view that the cancellation itself was
proper.
The FAA contracting activity initially advanced several reasons to
justify the cancellation after bid opening, the most significant of
which was the new availability of funds to purchase all three systems
sought under IFB -00053 instead of awarding a contract, as originally
contemplated absent such funding, for the purchase or lease of one
system plus options to purchase or lease the remaining two systems. The
activity decided that the immediate acquisition of all three systems on
a purchase-only basis would prove to be more economical, and,
accordingly, canceled IFB -00053 and added those three items to the two
systems being acquired by another FAA contracting activity under IFB
-00094.
We continue to reject Alden's argument that the contracting activity
had no reason to expect that lower prices would result from a
resolicitation of the three systems as firm buys except through the
creation of an improper auction situation among the bidders. In this
regard, Alden contends that because all bidders bid the same price for
the two optional systems under IFB -00053 as well as for the one firm
requirement under that invitation, and because the invitation appeared
to indicate that the options would likely be exercised by the
government, the activity could not legitimately believe that the bidders
had provided other than their best competitive prices.
However, the fact that the bids as submitted under IFB -00053 were
all level-priced does not establish that the activity knew or should
have known that better prices could be obtained only through an auction.
The activity not only determined that resoliciting all three systems as
immediate buys would produce more advantageous bid prices than
soliciting one firm requirement with two options, but also that
acquiring the systems on a purchase-only basis, without the lease option
provided under IFB -00053, would prove to be a more feasible procurement
approach by eliminating the potential for confusion in the preparation
of bids caused by the complexity of the leasing provisions in the IFB.
Hence, we remain of the opinion that the decision to cancel was
consistent with the FAR, 48 C.F.R. Sec. 14.404-1 (c)(9), supra,
providing for the post-bid opening cancellation of an invitation if
circumstances dictate that such an action is clearly in the public's
interest. See Exquisito Services, Inc., B-222200.3, July 17, 1986, 65
Comp. Gen. , 86-2 CPD P 78.
The thrust of Alden's protest has been the allegation that the
ultimate result of the cancellation was the creation of a prohibited
auction situation. However, it is well settled that an impermissible
auction has not been created upon resolicitation where the original
post-bid opening cancellation of an invitation was in accordance with
governing legal requirements. Emerson Electric Co., B-221827.2, June 4,
1986, 86-1 CPD P 521; Arlandria Construction Co., Inc., B-195044 et
al., Apr. 21, 1980, 80-1 CPD P 276. Moreover, to the extent Alden
argues that the significantly lower bid prices obtained under IFB -00094
than under IFB -00053 1/ demonstrate the actual existence of an auction,
it has also been our view that the results of a resolicitation generally
have no bearing upon the propriety of the original cancellation. Brink
Construction Co., B-219413 et al., July 11, 1985, 85-2 CPD P 43;
Warfield & Sanford, Inc., B-206784, June 23, 1982, 82-1 CPD P 620.
Because of the potential harm to the integrity of the sealed bidding
system, contracting agencies, in exercising their broad discretion to
cancel solicitations, must have cogent and compelling reasons to do so
when bids have already been opened. Engineering Research Inc., 56 Comp.
Gen. 364 (1977), 77-1 CPD P 106; Magnolia Inn, B-216607, Mar. 1, 1985,
85-1 CPD P 257. At the same time, however, the determination as to
whether such reasons exist is an administrative one that will not be
disturbed by this Office unless the protester can convincingly show that
the agency's decision was arbitrary, capricious, or not supported by
substantial evidence. Id. at 3; McGregor Printing Corp., B-207084 et
al., Sept. 20, 1982, 82-2 CPD P 240. In our view, Alden has not met its
burden to demonstrate that the contracting activity acted unreasonably
in primarily determining that the cancellation of IFB -00053 and the
addition of those three items to IFB -00094 as firm requirements rather
than as one buy plus two options would result in better prices
consistent with the public's interest.
With regard to Alden's assertion that the contracting activity
advanced reasons other than anticipated savings to justify the
cancellation, such as changed technical requirements, only after the
fact, it is well settled that an agency properly may determine to cancel
a solicitation after bid opening no matter when the information
precipitating cancellation first surfaces. International Trade
Overseas, Inc., B-221824, Apr. 1, 1986, 86-1 CPD P 310; Chrysler Corp.,
B-206943, Sept. 24, 1982, 82-2 CPD P 271. In other words, an agency may
justify a cancellation on a subsequently enunciated basis if that basis
would have supported the action had it been raised initially. Auchter
Industries, B-220929.2 et al., Jan. 24, 1986, 86-1 CPD P 86. Thus, to
the extent that the contracting activity's other grounds for the
cancellation may have been advanced later, that in itself is not
improper, nor has Alden convincingly argued that those other grounds
lack any reasonable degree of validity. See International Trade
Overseas, Inc., B-221824, supra.
In this regard, we note that IFB -00094 as issued contained certain
specifications for the systems which were not present in IFB -00053, and
which the FAA ultimately deemed necessary to meet its minimum needs.
Those changed operational requirements, including the ability of the
systems to display such apparently safety-related graphic information as
current winds aloft and maximum windshear, do not, in our view,
constitute only minor specification differences that would not justify
the cancellation. We cannot legally object to the FAA's consolidation
of two procurements under a single solicitation for the same total
number of items which more properly describes its acquisition needs.
See the FAR, 48 C.F.R. Secs. 14.404-1(c)(1) and (2).
Accordingly, Alden has not shown in its request for reconsideration
that our prior decision contains errors of fact or of law to warrant its
reversal or modification. See Dept. of Labor--Reconsideration,
B-214564.2, Jan. 3, 1985, 85-1 CPD P 13.
Our prior decision is affirmed.
Harry R. Van Cleve
General Counsel
FOOTNOTE
1/ Because of Alden's present assertion that the two additional
systems sought under IFB -00094 were more expensive due to their greater
number of work stations--a fact neither made known nor apparent to us at
the time of our decision--we have reexamined the firm's average per
system price under that invitation absent any consideration of its
prices for those two additional systems. We find that Alden's average
per system price of approximately $101,000 under IFB -00094 for the
three original systems is only slightly less than its average per system
price of some $103,000 for the same three systems under IFB -00053.
Matter of: Supreme Automation Corporation; Clay Bernard Systems
International
File: B-224158; B-224158.2
Date: January 23, 1987
DIGEST
1. Where a proposal for an automated weapons parts storage and
retrieval system fails to demonstrate how it will meet solicitation
requirements, but instead merely repeats those requirements and makes a
blanket offer of compliance, the General Accounting Office has no basis
to question agency's exclusion of it from the competitive range.
2. Agency is not obligated to notify an offeror of deficiencies
remaining in its proposal after it has had two opportunities to respond
to the agency's questions. The agency need not conduct further
discussions once it determines that the proposal has no reasonable
chance of being selected for award.
3. Protester alleging bias toward a particular type of equipment has
the burden of proof, and where an offeror other than the awardee
proposes different equipment and still receives a high technical score,
the General Accounting Office regards the protester's allegation that
its low score was due to bias as mere speculation.
4. When responsibility-type factors such as experience are included
as technical evaluation factors in a request for proposals, as they
properly may be, the General Accounting Office will review the agency's
evaluation in the same manner as it does any other evaluation, i.e., to
determine whether it was reasonable and complied with applicable
statutes and regulations.
5. There is no requirement for a cost realism analysis before the
award of a competitive, fixed-price contract, and there is no legal
basis to challenge a below-cost award to a contractor determined
responsible.
DECISION
Supreme Automation Corporation and Clay Bernard Systems International
protest the award of a contract to Applied Retrieval Technology under
request for proposals (RFP) No. N00197-86-R-0023. The solicitation,
issued by the Naval Ordnance Station, Louisville, Kentucky, is for an
automated weapons parts storage and retrieval system. Supreme protests
its exclusion from the competitive range, arguing that it met the RFP
requirements but was rejected because of the Navy's bias toward
Hewlett-Packard equipment. Both Supreme and Clay Bernard challenge the
sufficiency of the awardee's experience. Clay Bernard also alleges that
the awardee's price is unrealistic and that the agency conducted
inadequate discussions.
We deny the protests.
BACKGROUND
The RFP, issued June 3, 1986, and subsequently amended four times,
contemplated a fixed-price contract for the development, design,
installation, and testing of the automated storage and retrieval system
for approximately 25,000 parts. As originally issued, it required a
controller 1/ consisting of a computer, peripherals, and system
software; it did not specify a brand name for the controller, but
instead required that it be capable of interfacing with existing
HewlettPackard equipment. Amendment No. 2 changed the specification to
require a Hewlett-Packard computer, peripherals, and software. After
Clay Bernard objected to this limitation, the agency, in Amendment No.
4, rescinded the requirement for Hewlett-Packard equipment and
reinstated the requirement for a controller capable of interfacing with
it.
The RFP required three modes of operation: automatic, semiautomatic,
and manual. In the automatic mode, at issue here, parts are stored and
retrieved by part and assembly numbers. (Assembly numbers are assigned
to complete items, while part numbers are assigned to individual
components of an assembly or subassembly.) The solicitation listed
evaluation criteria, in descending order of importance, as (1) price,
(2) compliance with system description, (3) experience, (4) capability,
including both personnel and facilities, and (5) proposal clarity and
adequacy.
The Navy received five proposals by the July 21 closing date, and,
after initial technical evaluation, determined that those of both
protesters and the awardee were in the competitive range. Evaluators
considered Applied Retrieval's and Clay Bernard's proposals acceptable,
and Supreme's susceptible to being made acceptable. The agency notified
each of these firms of deficiencies by letters dated by August 14; its
notice to Supreme related to tasks to be performed during operation in
the automatic mode and to interface capabilities. After a second
technical evaluation, the agency determined that Supreme's proposal
still did not meet the minimum requirements in these areas and
eliminated it from the competitive range. On August 27, the agency
requested best and final offers from Applied Retrieval and Clay Bernard.
Supreme protested to the agency, maintaining that its elimination was
inconsistent with the letter notifying it of deficiencies in which the
agency had stated that its proposal was within the competitive range.
After reconsideration, the agency agreed to reopen discussions and
requested Supreme to supply additional, specific details covering its
proposed system.
Supreme submitted additional material, but after the third
evaluation, the Navy determined that the proposal was not technically
acceptable. The agency notified the firm that the basis for its
exclusion was failure to describe the capabilities required in
connection with operation in the automatic mode, specifically the
storage and retrieval of parts by assembly number.
After receipt of best and final offers on September 15, the agency
rated Applied Retrieval's and Clay Bernard's technical proposals
essentially equal; however, Applied Retrieval's price was approximately
$300,000 less than than of Clay Bernard. In light of the importance of
price in the evaluation scheme, the agency concluded that Applied
Retrieval's proposal was the most advantageous to the government, and it
awarded a $688,490 contract to that firm on September 25. 2/ The
protesters have not been debriefed or had access to detailed evaluation
findings, but we have reviewed them in camera.
SUPREME'S PROTEST: COMPETITIVE RANGE
In challenging its elimination from the competitive range, Supreme
argues that if the agency needed further information, it should have
requested it. Supreme alleges that the real reason for the rejection of
its proposal was a bias on the part of Navy users for a Hewlett-Packard
controller and the fact that Supreme did not offer such a controller.
In reviewing protests concerning competitive range determinations,
our function is not to reevaluate proposals and make our own
determinations about their merits. Logistic Services International,
Inc., B-218570, Aug. 15, 1985, 85-2 CPD P 173. We will not question a
competitive range decision unless a protester shows that it is arbitrary
or violates the procurement statutes and regulations. Further, the fact
that an agency initially included a proposal in the competitive range
does not preclude it from later excluding the proposal from
consideration if it no longer has a reasonable chance of being selected
for award. Space Communications Co., B-223326.2 et al., Oct.2, 1986, 65
Comp. Gen. 86-2 CPD P 377.
Here, we find the Navy's exclusion reasonable as well as consistent
with the RFP. Our review of Supreme's proposal shows that it consisted
primarily of a repetition of specific RFP requirements for operation in
the automatic mode and a blanket offer of compliance. The protester's
written responses to the Navy's requests for further explanation did not
address how the proposed system would comply with RFP requirements. For
example, in response to the agency's initial request for information,
Supreme submitted two operations manuals. We concur with the agency's
finding that neither manual describes the storage and retrieval of parts
by assembly number.
In response to the agency's September 4 request for a thorough
clarification of all capabilities covered by purchase description,
paragraph 4.2.2.1 (a description of various tasks that will be required
during operation in the automatic mode), the protester provided a
written narrative that was primarily a repetition of the RFP. An
example is the protester's response to paragraph 4.2.2.1.1.H, which
deals with "Contents" and requires that the controller
"Display a report on the CRT cathode ray tube which shall
include the following information about the specified bin: each
part number stored in the bin, the quantity of each, the location
of each part within the bin, the size of the container or tote in
which each part resides, and an indication of container fullness
based on the number and size of totes in the container."
The protester, in its letter of September 8, responded as follows:
"The bin contents task will display a report on the work
station CRT for all part numbers currently stored in a bin. This
report will include the following: Part number, description, tote
size, bin zone location, current quantity, and percentage of
fullness."
The protester's failure to indicate how its proposed system would
achieve the results required was despite a statement under the
evaluation criteria for "compliance with system description" that
offerors must provide sufficient technical information to enable the
agency to determine the extent to which they net the requirements set
forth in the statement of work.
As evidence that its proposed system had the capabilities required by
the RFP, the protester refers to portions of its original proposal which
stated that:
" t he remainder of the paragraph describing operation of the
automatic mode is acknowledged and no further explanation is
considered necessary, since the precise performance required of
the controller is set forth. . . In the automatic mode, all of
the tasks specified will be furnished."
In connection with the manner in which its proposed software would
permit storage and retrieval by assembly numbers, the protester now
argues that
"the various scenarios for dealing with assembly numbers from
the operator's point of view are very clearly set forth in the
solicitation... and... we will meet each and every one of the
required tasks...."
The solicitation, however, specifically stated that "will comply"
statements or a reiteration of the requirements would be rated
unsatisfactory. Further, under the criterion for "proposal adequacy,"
the Navy requested innovative ideas. A blanket offer to meet mandatory
requirements will not substitute for a detailed description of how a
firm plans to do so. XYZTEK Corp., B-214704, Aug. 21, 1984, 84-2 CPD P
204. Certainly it does not demonstrate innovation.
The protester appears to argue that because the system being procured
is comprised of off-the-shelf components, detailed statements of
capabilities are unnecessary. We do not agree. Although the RFP, as
amended, describes the system as comprised of proven off-the-shelf
hardware and software, it states that "some modifications will be
necessary . . . for the successful implementation of a new system in
a complex environment...."
Supreme further complains that after it responded to questions, the
Navy did not notify it of deficiencies that prevented it from receiving
a higher technical score. 3/ The agency, however, had twice requested
amplification in the area of operation in the automatic mode. An agency
is not obligated to notify an offeror of deficiencies remaining after an
initial opportunity to respond to questions.
Tidewater Health Evaluation Center, Inc., B-223635.3, Nov. 17, 1986,
86-2 CPD P 563. Rather, an offeror is required to affirmatively
demonstrate the merits of its proposal, and it runs the risk of
rejection for failure to do so. RCA Service Co., et al., B-218191 et
al., May 22, 1985, 85-1 CPD P 585.
We conclude that the Navy was not required to ask further questions
or to help Supreme along through a series of negotiations, so as to
improve its technical rating until it equaled that of other offerors.
See Technical Services Corp., B-216408.2, June 5, 1985, 85-1 CPD P 640.
Moreover, our review of the awardee's proposal establishes that it
described in detail how it would store and retrieve parts by assembly
number. In response to section 4.2.2.1, for example, the awardee
described the configuration of its equipment and its operating software,
and it stated precisely how each task listed in the subparagraphs
relating to operation in the automatic mode would be performed. We
therefore deny Supreme's protest concerning exclusion of its proposal
from the competitive range.
SUPREME'S PROTEST: BIAS
As for Supreme's allegation of bias on the part of Navy users in
favor of Hewlett-Packard equipment, the protester has the burden of
affirmatively proving its case, and we will not attribute unfair or
prejudicial motives to procurement officials on the basis of inference
or supposition. Ted L. Biddy & Assocs., Inc., B-209297 et al., Apr. 22,
1983, 83-1 CPD P 441. Here, the record shows that Clay Bernard, which
did not offer Hewlett-Packard equipment, was not only included in the
competitive range but also rated technically equal to the awardee. We
therefore view the allegation of bias as purely speculative, and we deny
the protest on this basis.
THE AWARDEE'S EXPERIENCE AND CAPABILITY
Both Clay Bernard and Supreme allege that Applied Retrieval lacks
experience in materiel retrieval systems of the size and complexity
required by the RFP. The protesters have couched their objections in
terms of Applied Retrieval's responsibility, alleging that the
contracting officer improperiy relied on a year-old preaward survey.
Clay Bernard also refers to a Navy memorandum dated August 4 summarizing
evaluation of initial proposals that indicated that the awardee's
experience with complex automated systems was deficient.
In our opinion, the protesters are questioning the Navy's evaluation
of Applied Retrieval's experience and capability, both of which, as
indicated above, were technical evaluation factors. When
responsibility-type factors are included in a technical evaluation, as
they properly may be, we do not consider them to be, as Clay Bernard
supposes, definitive responsibility criteria. As with any other
evaluation factor, the question for our Office becomes, whether the
agency's evaluation was reasonable and complied with applicable statutes
and regulations. See, e.g., Sage Diagnostics, B-222427, July 21, 1986,
86-2 CPD P 85.
Here, under the experience factor, the amended RFP required offerors
to demonstrate their prior experience in the design, production, and
testing of automated storage and retrieval systems, as well as their
specific experience relating to the latest system they had installed.
The record shows that in its letter of August 14, i.e., after the date
of the memorandum, the Navy requested Applied Retrieval to provide
further information on its company history and experience, descriptions
of its more complex efforts of the type covered by the RFP, and any
additional corporate references; the agency also asked for further
information on the use of subcontractors and details on Applied
Retrieval's facilities. After the firm supplied additional information,
the Navy reevaluated its proposal, awarding it a score of 12.6 out of a
possible 15 points for experience and 4.4 out of a possible 5 points for
capability. One evaluator specifically stated that the firm's responses
indicated that it had installed systems comparable to or even more
complex than the Navy's proposed system.
In view of this, and based on our in camera review of the awardee's
proposal and responses to discussion questions, we find the agency's
evaluation of Applied Retrieval's experience and capability reasonable,
and not in violation of any statute or regulation.
CLAY BERNARD'S PROTEST: AWARDEE'S PRICE
Concerning Clay Bernard's protest that the awardee's price is
unrealistic, since this competitive solicitation resulted in a
fixed-price contract, there was no requirement that the agency conduct a
cost realism study. Corporate Health Examiners, Inc., B-220399.2, June
16, 1986, 86-1 CPD P 552. To-the extent Clay Bernard is contending that
Applied Retrieval cannot furnish the system at the price offered, there
is no legal basis to object to a below-cost award if the offeror is
otherwise responsible. Clausing Machine Tools, B-216113, May 13, 1985,
85-1 CPD P 533. Since the contracting officer found Applied Retrieval
to be a responsible offeror, we deny the protest on this basis.
CLAY BERNARD'S PROTEST: MEANINGFUL DISCUSSIONS
Finally, at a conference at our Office on October 29, Clay Bernard
for the first time objected to the sufficiency of discussions.
According to the protester, these were not meaningful because the agency
failed to detail for offerors the deficiencies found in their respective
proposals; rather, the protester contends, the Navy's letters of August
14 to different offerors were nearly identical. While this basis of
protest is arguably untimely, it is in any event without merit.
Contrary to the protester's assertion, the letters of August 14, which
are included in the record, were not identical, but instead specified
separate deficiencies under each evaluation criterion for each offeror.
The protests are denied.
Harry R. Van Cleve
General Counsel
FOOTNOTES
1/ A controller is a device that directs the operation of other
components of a device or system. See Webster's New world Dictionary of
Computer Terms (1983); Federal Computer Corp., B-223932, Dec. 10, 1986,
86-2 CPD P .
2/ Supreme protested to our Office on September 16, 1986. On
September 24, the agency made the required determination under the
Competition in Contracting Act of 1984 (CICA), 31 U.S.C. Sec. 3553(d)(1)
(Supp. III 1985), to award notwithstanding the protest. On September
29, Clay Bernard protested to our Office. On October 16, the agency
made the required determination to proceed with performance
notwithstanding the protests under CICA, 31 U.S.C. Sec. 3553(d)(2).
3/ After the second evaluation, Supreme received a technical score
equal to only 34.5 percent of possible points. After the final
evaluation, Supreme remained low with 47.9 percent of possible points.
Both Clay Bernard and Applied Retrieval received final technical scores
in the 80 percent range.
Matter of: A. J. Fowler Corporation
File: B-224156.3
Date: March 2, 1987
DIGEST
Protest of agency's decision whether to exercise an option is
dismissed as a matter of contract administration not within the General
Accounting Office's bid protest function.
DECISION
A. J. Fowler Corporation protests any exercise of an option by the
Department of the Army under its contract No. DABT0186-D-1024 with
Bentley Grassing Co., Inc. for grounds maintenance at Ft. Rucker,
Alabama. Fowler argues that the options should not be exercised because
the option prices it offered were lower than Bentley's.
We dismiss the protest because the decision whether to exercise an
option is a matter of contract administration not within the scope of
our Office's bid protest function.
This protest has its origins in a prior protest by Fowler which we
considered and denied earlier this year. A. J. Fowler Corp., B-224156,
Jan. 8, 1987, 87-1 C.P.D. P . As we explained in that decision, after
two successive contracts for mowing services had been terminated for
default, the contracting officer solicited oral quotations from the four
remaining bidders to the original solicitation, including Fowler. In
our January 8 decision, we denied Fowler's protest of the contracting
officer's decision to reprocure these services through a competition
among these four bidders, instead of making award to Fowler as the next
low bidder under the original solicitation.
At the time of the reprocurement, 7 months remained in the 1986
mowing season. According to the contracting officer's statement filed
with our Office in conjuction with Fowler's earlier protest and provided
to it as part of the agency report:
"Negotiations were conducted on the same terms, conditions and
specifications of the initial solicitation with new quantities
specified for the remaining base period. This solicitation
included evaluation procedures pursuant to which a ward was
based on the lowest evaluated offer for both the basic seven month
period and two option years. Paragraph M3 of the solicitation
clearly states that option years would be evaluated. Final offers
received were:
a. Bentley Grassing Co., Inc. $1,910,933.25
b. A. J. Fowler Corp. $2,046,373.08
... Mr. Fowler gave his final offer on the repurchase
negotiation as $697,965.94, wherein he wanted the same price for
the seven months remaining as he bid for the initial 12 months
requirement. His option prices remained unchanged. Total
evaluated amount of A. J. Fowler Corp. was $2,046,373.08 which was
$135,439.83 more than the evaluated total of Bentley Grassing Co.,
Inc."
This statement by the contracting officer was supported by price
negotiation memoranda, also part of the record in the prior protest,
which shows the prices given above were broken down as follows:
Base 1st Option 2d Option
Bidder Period Year Year Total
Fowler $697,965.94 $674.203.57 $674,203.57 $2,046,373.08
Bentley $292,633.61 $809,149.82 $809,149.82 $1,910,933.25
Fowler alleged that the contracting officer did not solicit an oral
quotation from it for the defaulted services. We found this allegation
to be unsupported by the record which, we concluded:
"... indicates that Fowler, as well as the other remaining
bidders to the original solicitation, were treated equally in that
they were given an opportunity to submit quotations for the
remaining work and that the procuring activity repurchased the
mowing services on the basis of the lowest evaluated offer."
Since Fowler did not request reconsideration of our January 8
decision, showing that it contained errors of law or fact, we think it
appropriate to rely on that decision and the record on which it is based
in our consideration of Fowler's current protest.
As can be seen from the above tabulation, if only the base period is
considered, Bentley is low by $405,332.33. If only the two option years
are considered, Fowler is low by $134,946.25 per year or a total of
$269,892.50. When the prices for the base period plus both option years
are evaluated, however, Bentley is low by $135,439.83, and it was on
that basis that it was awarded the contract. The record in this case,
which we have quoted above, indicates that Fowler lost this competition
essentially because it insisted on being paid the same amount for the
remaining 7 months in the base period as it had initially bid for the
entire 12-month period.
In the current protest, Fowler objects to any exercise of the options
in Bentley's contract on the basis that Fowler's option year prices were
lower. This ignores the facts, established in our earlier decision,
that Fowler participated in, and lost, a competition in which quotations
for both the base and option periods were evaluated on which basis
Bentley's quotation was the lowest. Fowler cannot now re-visit this
competition by ignoring that portion of its price quotation on which it
was high, by a considerable amount, and focusing exclusively on that
portion of its quotation which was lower than its competitor's. The
current protest is no more than an objection to the agency's decision to
exercise an option, which is a matter of contract administration not
within the scope of our Office's bid protest function. See G & L Oxygen
and Medical Supply Services-- Request for Reconsideration, B-221631.2,
Jan. 30, 1986, 86-1 C.P.D. P 123.
The protest is therefore dismissed.
Robert M. Strong
Deputy Associate General Counsel
Matter of: Diversified Contract Services, Inc.
File: B-224152.2
Date: July 27, 1987
DIGEST
1. While agency may make an award to lowest priced, technically
acceptable offeror on basis of initial offers, the protester was not
entitled to award as it was neither low nor technically acceptable.
2. Protest contending that the agency improperly required protester
to increase its proposal price by indicating that unless the manning
level was increased, its technical proposal would not be acceptable is
denied, where the record shows that the agency properly pointed out in
discussions that the proposal in several instances failed to provide for
full time coverage of food facilities as required by the solicitation,
and the protester raised its price to cover cost of increased manning to
meet agency's objections to proposal.
3. Protester's request that the General Accounting Office (GAO)
conduct an independent investigation of all proposals submitted in
response to the request for proposals to insure that all were treated
fairly is rejected since the protester has the burden of affirmatively
proving its case and GAO will not conduct investigations to establish
the validity of a protester's speculations.
DECISION
Diversified Contract Services, Inc., protests the Department of the
Air Force's award of a firm-fixed-price contract to Willa Brokenbough
Parties, the incumbent contractor, under solicitation No.
F04699-86-R-0176 for food services at McClellan Air Force Base.
Diversified essentially contends that the Air Force improperly required
Diversified to increase its price in its best and final offer so that
Diversified's final price was no longer lower than the awardee's price.
We deny the protest in part and dismiss it in part.
The solicitation was issued on July 30, 1986, with a closing date of
November 25, 1986, for receipt of initial offers. The RFP provided that
award would be made to the offeror who submitted an acceptable proposal
with the lowest evaluated price. Eight proposals were received and a
technical team, which had no access to the price data, evaluated
proposals. After evaluation, discussions were held. The Air Force sent
Diversified a letter dated February 25, 1987, stating that its technical
proposal was found to be susceptible to being made acceptable, but which
listed 11 points on which the Air Force needed clarification and also
included blank manning charts that the Air Force asked Diversified to
complete to show full-time coverage of the food facilities. The record
indicates that the Air Force evaluators believed Diversified's offer did
not comply with certain technical requirements including service 24
hours a day, 7 days a week, contract supervision, and for two cashier
lines. Diversified's response to this letter was not sufficient to make
Diversified's offer acceptable. By letter of March 31 the Air Force
informed Diversified that its technical proposal was still not in
compliance with the RFP's requirements and that it was being given one
final opportunity to "correct/ strengthen" its proposal in six areas
primarily relating to manning. The closing date for best and final
offers was April 14. Diversified submitted a revised technical proposal
which was determined to be acceptable. Diversified, however, in its
best and final offer increased its price so that it was not the low
acceptable offeror. Award was made to the incumbent contractor, Willa
Brokenbough, on May 14, 1987. Diversified's protest was filed with our
Office on May 21.
Diversified contends that the Air Force required it to increase its
price by indicating during written discussions that unless its manning
level was increased, its technical proposal would not be acceptable.
Diversified also claims that its initial offer was technically
acceptable and that Diversified should have been awarded the contract
based on its initial proposal. Finally, Diversified argues that while
it was told to increase its manning and, in effect, its cost, Willa
Brokenbough was awarded the contract with less actual manning than
Diversified.
The Air Force denies that its evaluation of offers was unreasonable
or that the award was improper. It specifically denies that Diversified
was ever asked to increase its price or its manning level and points out
that in evaluating offers, the placement of manpower in the proper mix
at critical times was more important than total manpower.
We find Diversified's contention that its initial proposal was
technically acceptable and that the Air Force improperly refused to
award it a contract on the basis of its initial offer without merit.
The record indicates that Diversified's initial offer was not low or
technically acceptable. 1/ The record shows that the technical
evaluation team found that Diversified's proposal was susceptible of
being made acceptable. Diversified's initial offer, for example, did
not meet the requirements for 24 hour, 7 days a week coverage, for
supervision, or for two cashier lines. In this regard, by letter dated
February 25, the Air Force asked for additional information and
clarification to determine if Diversified's proposal could be made
acceptable. After Diversified's response, the Air Force found that the
proposal required further clarification as to manning. Further, the
evaluators found that Diversified's initial proposal did not
satisfactorily demonstrate Diversified's understanding of the Air
Force's requirements as presented in the RFP performance work statement
and asked that Diversified complete manning charts showing 24 hour
coverage, 365 days per year. To the extent Diversified disagrees with
the Air Forces technical evaluation, we note that a protester's mere
disagreement does not render the evaluation unreasonable. Martin
Advertising Agency, Inc., B-225347, Mar. 13, 1987, 87-1 CPD P 285.
Thus, the record shows Diversified initial offer was not acceptable
without discussions.
Diversified also asserts that it was required to increase its manning
levels during discussions and thus its price. We find no evidence in
the record that the Air Force required Diversified to increase either
its price or its proposed hours of service in its technical proposal.
The record in fact indicates that the technical evaluation team had no
access to the price data of the offerors. The Federal Acquisition
Regulation (FAR), 48 C.F.R. Sec. 15.610(c) (1986), required that the Air
Force bring whatever deficiencies it perceived in the technical proposal
to the attention of Diversified. See Flight Systems, Inc., B-225463,
Feb. 24, 1987, 87-1 CPD P 210. The Air Force did this in two letters
requesting clarification of its offer and remedying of deficiencies.
The Air Force did not ask that manning be increased. In its letter of
February 25, the Air Force sought specific information concerning
proposed manning levels not clearly stated in its initial offer. On
March 31, after evaluation of information supplied by Diversified in
response to the earlier letter, the Air Force again advised Diversified
that its offer still was "lacking in certain key aspects." The Air Force
pointed out that its manning charts omitted a contract supervisor and
first cook, second baker for certain hours, and did not offer two
cashiers for breakfast meals as required under the RFP, and contained
certain other omissions and/or inconsistencies. Since the manning
deficiencies found were based on the RFP requirements which Diversified
was required to comply with, if Diversified needed to increase its
staffing, it was because it had failed to consider these requirements in
its initial price.
Accordingly, we find that to the extent that, as a result of the
discussions, Diversified increased manning to submit an acceptable
proposal, and thus its price, there was no impropriety by the agency.
As noted above, Diversified's initial offer was not acceptable and it
was not low. Therefore, it could not be awarded the contract based on
its initial offer.
Diversified also argues that the awardee may have submitted a lower
price because it proposed less actual staff hours than Diversified. The
record indicates that the Willa Brokenbough's offer was evaluated as
technically acceptable on the basis of its initial offer and that its
total hours did not change in its best and final offer, although the
awardee reduced its price. The awardee's offer was based on fewer hours
than the protester offered. The Air Force points out, however, that in
determining technical acceptability, its concern was to assure that the
offer met all requirements for food services under the RFP, but it did
not specify or require any particular number of hours to meet the
requirements. Here, the awardee showed it could perform adequately at a
slightly lower staff hours total. Our review of the record does not
show that the agency's evaluation of Diversified's or Brokenbough's
offer was unreasonable.
Finally, Diversified requests that an independent investigation of
all the proposals of the eight offerors be conducted to determine if all
were treated fairly. To the extent that Diversified is suggesting that
the investigation should be performed by our Office, we point out that
it is the protester that has the burden of affirmatively proving its
case and that we will not conduct an investigation to establish the
validity of the protester's speculations. Para Scientific Co.,
B-225302, Mar. 25, 1987, 87-1 CPD P 340.
The protest is denied in part and dismissed in part.
Harry R. Van Cleve
General Counsel
FOOTNOTE
1/ We note that two other offerors in the competitive range submitted
lower priced initial offers.
Matter of: Theodore E. Dorman - Temporary Duty Travel Overseas
File: B-224131
Date: July 8, 1987
DIGEST
1. Employee who traveled during working hours on Friday to report for
temporary duty overseas the following Tuesday, the day after a Monday
holiday, may not be paid per diem and may be assessed annual leave for
Friday, where the agency determines that Friday departure was not
warranted and Saturday was the constructive day of travel.
2. When return travel from temporary duty overseas is interrupted by
annual leave, employee may not claim as a recoupment day under Volume 2
of the Joint Travel Regulations, para. C1058-3, the day immediately
following a constructive travel day. The employee did not actually
cross four time zones on the constructive travel day, and the agency was
correct in charging annual leave for the next day. The fact that the
employee may have been given erroneous advice does not create a right to
restoration of annual leave where it was properly charged.
DECISION
ISSUES
The issues in this decision are whether an employee is entitled to
receive per diem and traveltime for travel overseas on the Friday of a
3-day, Monday-holiday weekend and whether the employee may use a
"recoupment day" when his return travel is delayed by his use of annual
leave at the overseas temporary duty post. We hold that the employee is
not entitled to per diem and may be charged annual leave where he left
on Friday for travel overseas on a 3-day, Monday-holiday weekend. We
also hold that the employee is not entitled to a constructive recoupment
day when his return travel from overseas is delayed by his use of annual
leave.
BACKGROUND
Mr. Peter H. Tovar, Chief, Accounting and Finance Division, Office
of the Comptroller, Defense Logisitics Agency (DLA), has requested our
decision concerning the claim of Mr. Theodore E. Dorman for additional
per diem allowance and restoration of annual leave charged for travel in
connection with temporary duty (TDY) overseas. This request has been
assigned control number 86-16 by the Per Diem, Travel and Transportation
Allowance Committee, which forwarded it for our decision.
Mr. Dorman, an employee of the Defense Reutilization and Marketing
Service (DRMS), DLA, traveled from Kalamazoo, Michigan, to Weisbaden,
West Germany, for temporary duty. He departed Kalamazoo at 12:45 p.m.
on Friday, October 11, 1985, by commercial airline, and he arrived in
Weisbaden, West Germany, at 11:15 a.m. on Saturday, October 12, 1985.
Monday, October 14, was a holiday, so Mr. Dorman did not report for duty
until Tuesday, October 15.
Mr. Dorman completed his temporary duty in West Germany on Wednesday,
October 30, and he took annual leave in West Germany following his
temporary duty starting on Thursday, October 31. He then departed West
Germany on Friday, November 8, the last day he was on annual leave, and
he arrived in Kalamazoo, Michigan, at 9:30 p.m. on Friday, November 8.
He returned to duty in Battle Creek, Michigan, on Tuesday, November 12.
Mr. Dorman submitted a voucher claiming per diem and traveltime for
Friday, October 11, and showing only 5 days of annual leave taken
between October 31 and November 8. He believes that his recoupment day
for his return travel, under the provisions of the Joint Travel
Regulations, 2 JTR para. C1058-3, should have been granted on November
1, the first day after constructively completing his TDY return travel.
The Accounting and Finance Officer, DRMS, determined that it was not
prudent for Mr. Dorman to depart for West Germany on Friday, October 11,
since it was well known in advance that Monday, October 14, was a
holiday. Further, the agency determined that there was no reason for
departure to West Germany any sooner than Saturday, October 12, 1985.
Since Mr. Dorman's travel request was dated August 5, 1985, and since he
was heavily involved in planning the trip and making his own travel
arrangements, the agency determined that he had ample time to make sure
he could get a flight scheduled for Saturday, October 12. In view of
these reasons, the agency constructed Mr. Dorman's departure to be on
Saturday, October 12, reduced his per diem accordingly, and assessed him
8 hours of annual leave for Friday, October 11.
Regarding Mr. Dorman's claim of a constructive recoupment day, the
Accounting and Finance Officer determined that a traveler is not
entitled to a recoupment day until he has physically crossed four or
more time zones, under the provisions of 2 JTR para. C1058-3. It is his
opinion that, since a recoupment day is intended to physically restore
an individual so that he can better perform his duties, it should not be
granted constructively. Since Mr. Dorman actually returned home on
Friday, November 8, his recoupment day was Saturday, November 9, not
November 1 when he was still in West Germany. Hence, the agency charged
Mr. Dorman 6 days annual leave for the period November 1 through
November 8.
Mr. Dorman disputes the agency's determinations concerning per diem
and annual leave for Friday, October 11, arguing mitigating
circumstances. In his claim submissions, he indicates that when he was
notified of the October 14th holiday, of which he was unaware until
several days before the trip, he attempted to reschedule the flight for
October 12 or 13, but was unable to do so for the three people involved
(himself and two coworkers). The next available flight was on Monday,
October 14, to arrive in West Germany on Tuesday, October 15. With
Wednesday, October 16, as a recoupment day, Mr. Dorman claims this would
have lost 2 working days for three people, in addition to requiring
other people in Europe to rearrange their schedules. Mr. Dorman further
points out that reservations, meetings, and appointments were already in
place, and he did not believe there was sufficient time to adjust those
arrangements. He decided it was prudent to leave on Friday rather than
waiting until Monday.
Mr. Dorman also disputes the agency's determination that he is not
entitled to a constructive recoupment day following a constructive
travel day. Mr. Dorman states that his original plan was to return on
Thursday, November 7, in which event Friday, November 8, would have been
a recoupment day. However, when he consulted Ms. Rhonda Madden, Chief
of the DRMS Travel Section, she told him that since his travel would be
computed constructively due to his annual leave, Thursday, October 31,
would be constructed as his travel day and Friday, November 1, would be
considered a recoupment day. Mr. Dorman interpreted this to mean that
if he returned on Thursday, November 7, he would be expected to report
for duty on Friday, November 8. Based on this information he changed
his return date to Friday, November 8.
OPINION
Section 5702 of title 5, United States Code, provides that under
regulations prescribed by the General Services Administration, an
employee may be reimbursed for the necessary expenses of official
travel. The regulations adopted by the General Services Administration
are contained in the Federal Travel Regulations, incorp. by ref., 41
C.F.R. Sec. 101-7.003 (1985). Further directives issued through the
Department of Defense which apply to civilian employees of the military
are contained in Volume 2 of the Joint Travel Regulations. These latter
regulations provide generally that an employee is expected to exercise
the same care in incurring expenses that a prudent person would exercise
if traveling on personal business. Joint Travel Regulations, Vol. 2,
para. C1058-1 (Change No. 228, October 1, 1984).
Early Departure
Regarding the scheduling of temporary duty travel, 2 JTR para.
C1058-2c states:
"Whenever possible, travel will be scheduled so that employees
may travel during their regular hours of duty and not on their own
time. However, no more than 1 3/4 days of per diem may be paid in
connection with such travel (56 Comp. Gen. 847)."
In Two-day Per Diem Rule, 56 Comp. Gen. 847 (1977), we provided
further explanation of our prior decisions concerning this so-called
"2-day per diem" rule. While recognizing that, insofar as permitted by
work requirements, arrival or departure may be delayed to permit an
employee to travel during his regular duty hours, we nevertheless
concluded that it was not reasonable to pay per diem expenses for 2 days
or more for the purpose of facilitating an employee's travel during
regular duty hours.
In our decision, Kenneth D. Thomas, 55 Comp. Gen. 590 (1975), we
considered the travel circumstances of a Department of Interior employee
who reported to his duty station 3 days in advance of his scheduled
assignment, traveling during regular working hours on Friday to report
for duty on the subsequent Tuesday following a Monday holiday. In
denying his claim for 3 days' per diem for the intervening 3-day
weekend, we cited the rule that payment of additional per diem costs for
2 days or more to permit an employee to travel during regular duty hours
for personal convenience is considered unreasonable. 55 Comp. Gen. 590,
cited above.
In considering whether an employee may be paid additional per diem in
connection with his early departure, the per diem costs associated with
Friday departure should be compared with the per diem payable based on
the constructive day's departure. See, 56 Comp. Gen. 847, 850, cited
above. In this case according to his voucher, Mr. Dorman left on
Friday, October 11, at 12:45 p.m. for Germany and was allowed 70 percent
of the applicable per diem for Friday and 3 days' per diem for Saturday,
Sunday and Monday (the holiday). If Saturday is considered a recoupment
day allowed by the agency under 2 JTR para. C1058-3 (see further
discussion of this provision below), travel on Friday resulted in nearly
3 days of per diem. If we assume that Mr. Dorman would have departed at
the same time on Saturday, which DRMS considered his constructive travel
day, this would have resulted in less than 2 days of per diem (with
Sunday being Mr. Dorman's recoupment day). Given this analysis, the
agency was correct in disallowing Mr. Dorman's claim for additional per
diem for his Friday departure.
Nevertheless, Mr. Dorman argues that his per diem should be allowed
and his leave restored since he made what he considers to be a good
faith effort to reschedule the trip to depart on Saturday or Sunday when
he learned of the Monday holiday, but was unable to do so. Moreover, he
asserts that his decision to depart on Friday was based on his belief
that a Monday departure would seriously interfere with the scheduling of
the work he was to do on temporary duty.
In Krom and Bosch, 63 Comp. Gen. 268 (1984), we held that under
certain circumstances, where an employee's traveltime is extended for
the calculated pecuniary advantage of the government rather than for the
employee's personal convenience, the "2-day per diem" rule of 56 Comp.
Gen. 847 (1977) and 55 Comp. Gen. 590 (1975) limiting per diem does not
apply. However, the facts of that case differ significantly from Mr.
Dorman's circumstances. Both Mr. Krom and Mr. Bosch were nonexempt
employees under the overtime provisions of the Fair Labor Standards Act
(FLSA), 29 U.S.C. Sec. 201, and were ordered by their supervisors to
travel as they did and stay over weekends on per diem. These orders
were based upon management decisions that it would be more cost
effective to pay the employees per diem for the weekend than to pay
FLSA-required overtime for working on the weekend. In addition, it was
administratively determined to be advantageous to the government for Mr.
Krom to leave on Friday, instead of waiting until the following week, to
expedite the work of a drilling crew. Thus, Mr. Krom and Mr. Bosch had
specific prior authorization to travel as they did. 63 Comp. Gen. 268,
cited above.
In this case, Mr. Dorman had no such specific authorization to depart
early. In fact, in its report on the claim, the agency stated that Mr.
Dorman did not need to depart early for West Germany. Further, Mr.
Dorman's supervisor was questioned, and he stated that he knew of no
reason for Mr. Dorman's early departure.
In light of the fact that Mr. Dorman began planning this trip in
August and was heavily involved in its scheduling, we agree with the
agency that he had ample time to take into consideration the annual
October holiday. His decision to leave on Friday, October 11, was a
personal choice, for which he may not be allowed per diem and for which
he may be assessed annual leave, due to his absence from regularly
scheduled work.
Constructive Recoupment Day
Concerning Mr. Dorman's claim for a constructive recoupment day for
his return travel from overseas TDY, we note that the effects of time
zone dislocation are recognized in the Federal Travel Regulations, para.
1-7.5e (Supp. 1, September 28, 1981), as follows:
"e. Time changes during air travel. When an individual travels
direct between duty points which are separated by several time
zones and at least one of the duty points is outside the
conterminous United States, per diem entitlement is not
interrupted by reason of a rest period allowed the individual en
route or at destination under appropriate agency rules."
Further, 2 JTR para. C1058-3a provides for excusal from duty for
recuperation as well as per diem as follows:
"a. Temporary Duty Travel. When an employee performs temporary
duty travel by air over a direct route, he may schedule his
departure to arrive at the temporary duty station 24 hours prior
to the beginning of a work status without interruption of
entitlement to per diem. This authority will apply only when:
"1. the permanent and temporary duty station are separated by
four or more time zones,
"2. at least one of the duty points is outside the continental
United States,
"3. the itinerary does not involve any scheduled stopovers or
planned delays in excess of 8 hours en route.
"The time zones in which the point of origin and destination
are located will not be included in the four time zones separating
the points of travel. Authority for excusal from duty upon return
to the permanent duty station will be administratively determined
in accordance with the regulations of the service concerned."
(Emphasis added.)
The agency, in DLSC/DRMS Supplement 1 to the Defense Logistics Agency
Regulation (DLAR) 5000. 1 (May 12, 1982), refers to this practice of
granting a recoupment day as follows:
"5. The Transportation Office is responsible for the following:
"a. Arranging the time of departure from the Permanent Duty
Station (PDS) to ensure the traveler arrives at the destination
airport no later than 1700 and returns to PDS airport by 2200,
whenever practicable. Overseas travelers, crossing more than four
time zones, are exempt from those times as a recuperative period
is normally authorized." (Emphasis added.)
However, no further guidance is available in either DLAR 5000.1 or
DLSC/DRMS Supplement 1 which would clarify the circumstances under which
administrative leave for a recoupment day on a return trip would be
authorized. As noted earlier, the Accounting and Finance Officer, DRMS,
determined that, since a recoupment day is intended to physically
restore an individual so that he can better perform his duties, it
should not be granted in a case such as this where the day would follow
a constructive travel day on which the employee did not actually travel
and hence did not cross four time zones.
Since the granting of a recoupment day is within the administrative
discretion of the agency, we see no reason to disagree with the
Accounting and Finance Officer's determination that it should only be
granted on days following actual travel. Although this requirement is
not specifically stated in either the Federal Travel Regulations or the
Joint Travel Regulations, both provisions quoted above provide for
recoupment following direct travel crossing four time zones with minimal
interruptions, from which travel the employee would have to recover.
The Government's concern in granting this leave is the health and
welfare of the traveling employee. In Mr. Dorman's case, since he did
not fly on October 31, he would have no reason to recuperate on November
1. Moreover, we do not believe Mr. Dorman should be entitled to
something constructively which he would not actually have been granted.
Since he actually returned from Germany on a Friday, his recoupment day
would have been Saturday, so granting administrative leave would not
have been necessary.
Although Mr. Dorman may have been misinformed by the Chief of the
Travel Section concerning the approval of a constructive recoupment day,
it is a well-established rule that, in the absence of specific statutory
authority, the United States is not liable for the erroneous acts of its
officers, agents or employees, even though committed in thes performance
of their official duties. The erroneous advice or authorization does
not, in itself, create a right to the restoration of annual leave where
the administrative leave claimed is not provided by law. See, Riva
Fralick, et al., 64 Comp. Gen. 472 (1985).
Accordingly, Mr. Dorman may not be paid per diem or have 8 hours of
annual leave restored for October 11, his early departure on Friday, and
he may not have 8 hours of annual leave restored for a constructive
recoupment day on Friday, November 1.
Comptroller General
of the United States
Matter of: The Big Picture Co.
File: B-224112.2
Date: March 2, 1987
DIGEST
Protest against an agency's cancellation of a request for proposal
(RFP) is denied where the agency reasonably determines that the RFP does
not accurately reflect its minimum needs.
DECISION
The Big Picture Company (BPC), protests the decision of the
Headquarters Forces Command, United States Army, to cancel request for
proposals (RFP) No. DAKF19-86-R-0001, which was issued as part of a cost
comparison in accord with Office of Management and Budget Circular A-76.
The RFP requested proposals for the operations and maintenance function
of audiovisual training support at Fort Riley, Kansas.
We deny the protest.
The RFP required offerors to submit fixed-price proposals on the
basis of providing all trained personnel, labor, tools, maintenance,
equipment, repair parts, materials, supplies and services, except those
to be furnished by the Army, and to provide the audiovisual and training
support products, records, information and services at the Fort Riley
Training and Audiovisual Support Center. Audiovisual and training
support services were to include: administrative services; still
photography; graphic art; audiovisual training aids and devices;
audiovisual and training support instruction; audiovisual and training
support design service; audiovisual production; display services;
computer generated audiovisual products and services; training devices
and audiovisual equipment. Offerors were also required to submit
management, technical, and cost proposals which would be evaluated under
management, technical, and cost evaluation standards.
BPC and three other offerors submitted proposals under the RFP. Two
proposals were determined to be unacceptable; thereafter, negotiations
were conducted with two other offerors determined to be technically
acceptable. On receipt of final offers, BPC was determined to have
offered the lowest price of $4,788,877 for purpose of comparison with
the Army's cost for doing the work with its own employees. This
comparison showed the government's cost of doing the work was about
$70,000 less than BPC's price. Thereafter, the details of the Army's
cost estimate were released for review and possible appeal within the
Army by the offerors. It was at this point that the Army discovered
that its RFP estimate for the "most efficient organization (MEO)," which
was the basis for the Army's cost estimate, was based on certain facts
unknown to the RFP's drafters who were denied access to the MEO under
Army regulations.
For example, the RFP, as amended, contained an estimated quantity of
4,604 training aids requiring more than one hour to fabricate instead of
the 974 aids actually required. Further, unlike the MEO, the RFP
omitted the listing of a film processor and omitted discussion of the
relocation of various services which were proposed to reduce the
workload and the number of employees. The Army states that the other
competitive offeror, ASK Associates, whose price was higher than BPC's,
developed its proposed price by using the erroneous work units statement
contained in the RFP. The Army further states that BPC used a staffing
estimate comparable to that found in the undisclosed MEO.
BPC and ASK appealed the accuracy of the Army cost estimate to an
Army Appeals Board because of the above error and for other reasons.
The Army Appeals Board subsequently decided that the "RFP and actual
requirements do not match" in the above training aids area and in other
areas and concluded that the Army employee cost estimate was invalid.
Because of this conclusion, the Board ordered the cancellation of the
RFP. Acting under this order, the Army has proposed to recompete the
services under a new RFP which would also include television services.
The Army states that these new television services are an "integral
part" of the old requirement but could not have been contracted for
under theoriginal RFP because approval to contract for the services was
received after the Appeal Board's decision.
BPC argues that the decision to cancel the RFP was erroneous because
the Army could have renewed negotiations only with BPC and ASK to remedy
the RFP deficiencies without issuing a new RFP. Further, BPC insists
that the television services should be contracted for separately since
the Army has allegedly not provided documentary evidence to show that it
has received the required approval to contract for these services.
Finally, BPC generally argues that the Army misled all offerors in order
to preserve the work for its own employees.
Generally, our Office does not review agency decisions to perform,
rather than to contract for, certain services because we regard the
decision as a matter of executive branch policy. Midland Maintenance
Inc., B-202977.2, Feb. 22, 1982, 82-1 C.P.D. P 150. However, we review
decisions when the services are competed for the purpose of ascertaining
the cost of contracting, and it is alleged that the resulting comparison
with the agency's cost of performing the work is faulty or misleading.
West Coast Fire Service, Inc., B-211484, Dec. 13, 1983, 83-2 C.P.D. P
673. In addition, we review protests concerning the cancellation of
solicitations issued for A-76 cost comparison purposes, since the
competitive procurement system is involved. D-K Associates, Inc., 62
Comp. Gen. 129 (1983), 83-1 C.P.D. P 55. We apply the general rules
regarding cancellation in evaluating the propriety of the contracting
officer's decision. Id.
The contracting officer is endowed with broad powers to decide
whether to cancel a solicitation, Baucom Janitorial Services, Inc.,
B-210216, May 31, 1983, 83-1 C.P.D. P 584, and need only establish a
reasonable (as distinguished from compelling) basis for the
cancellation. Allied Repair Service, Inc., 62 Comp. Gen. 100 (1982),
82-2 C.P.D. P 541. Moreover, the decision to cancel is closely linked
to an agency's discretionary authority to determine its minimum needs
and the best method of accommodating its needs. The protester bears the
burden of showing that the cancellation is unreasonable. Surgical
Instrument Company of America, B-211368, Nov. 18, 1983, 83-2 C.P.D. P
583.
Apart from the deficiencies in the RFP stemming from faulty
understanding of the MEO, the Army has clearly shown that its needs
would now best be served by adding television services to the aggregate
of services to be contracted for. Although BPC argues that the Army has
failed to show that it has received the required approval to do this
additional contracting, we consider the Army's official statement that
it has received approval to be sufficient evidence in itself of the
Army's authority to contract for these new services. See Freedom N.Y.,
Inc., B-219676, Dec. 6, 1985, 85-2 C.P.D. P 635. Given the expansion
of the Army's contracting requirements, the Army had a reasonable basis
to cancel the RFP and resolicit its requirements. See Dynalectron
Corp., B-216201, May 10, 1985, 85-1 C.P.D. P 525.
Finally, we see no evidence in the record to support BPC's contention
that the Army has manipulated the contracting process in order to
preserve the work for its own employees.
Protest denied.
Harry R. Van Cleve
General Counsel
Matter of: Lillie C. Alexander - Claim for Overtime Pay
File: B-224094
Date: February 27, 1987
DIGEST
A FLSA exempt civilian nurse claims entitlement to overtime for
periods of time during which she allegedly performed pre-shift duties,
attended mandatory meetings and worked through lunch. Her claim may not
be allowed since there was no showing the overtime was actually
performed or that if it was, it was ordered, approved, or induced by an
official with authority to do so. The employee's claim for working
through lunch may not be allowed since she worked an 8-hour shift which
had no provision for a duty-free lunch.
DECISION
This decision is in response to the appeal of Ms. Lillie C.
Alexander, from our Claims Group's determination of June 24, 1986
(Z-2854036), disallowing her claim for overtime. From July 1, 1973 to
October 18, 1980, 1/ Ms. Alexander was a nurse at the United States Air
Force Hospital, Mather Air Force Base, California. She contends that
during this time she was required to report to duty 15 minutes prior to
the start of her shift, that she was required to work without a lunch
break, and that she was required to attend mandatory meetings outside of
her regular working hours. Ms. Alexander claims entitlement to overtime
for all of these periods of time. For the reasons outlined below, we
uphold our Claims Group's denial of her claim.
FACTS
Ms. Alexander states that she, along with the rest of the nurses on
staff at Mather AFB Hospital, was required to report to duty 15 minutes
prior to the start of her duty in order to receive a report of patients
from the outgoing nurses and to perform a narcotics count. Ms.
Alexander also states that she worked without lunch breaks and attended
mandatory meetings but gives no indication of the frequency of these
incidents, or the amount of time involved. She did submit leave and
earnings statements as well as time and attendance records, but these
records contain no indication of hours worked in excess of her 8-hour
shift.
In its administrative report on this claim, Mather AFB informed us
that Ms. Alexander was an exempt employee under the Fair Labor Standards
Act (FLSA) (29 U.S.C. Sec. 201-219). Mather AFB reported that
management was not aware Ms. Alexander was required to report to duty
early, that there was no record of any complaint from her, and that the
hospital had no records to substantiate her claim. Mather AFB pointed
out that with regard to lunch periods, Ms. Alexander's type of tour was
governed by Air Force Regulation 40-610 para. 7 (AFR), which provides in
pertinent part that:
"Where more than one 8-hour shift is in operation during a
24-hour period and an overlapping of shifts to permit time off for
lunch is not feasible, an on-the-job lunch period of 20 minutes or
less may be authorized and included in the regular scheduled tour
of duty. Workers must spend their on-the-job lunch period at or
near their work stations. Under these conditions, the time
covered by the 20 minute on-the-job lunch period is compensable."
The Mather AFB concluded that no overtime would be payable for lunch
periods because Ms. Alexander worked an 8-hour per day shift.
Our Claims Group denied Ms. Alexander's claim on the grounds that she
had failed to show, as required by the overtime provisions of 5 U.S.C.
Sec. 5542(a) (1982), that she had performed overtime which had been
ordered or approved by an official who had specific authority to do so.
Our Claims Group reasoned that since officials at Mather AFB had no
knowledge of the problem, there could have been no order, approval or
inducement of overtime work. Ms. Alexander responded to our Claims
Group's settlement by contending that officials had to know the nurses
were performing overtime because there were three non-overlapping shifts
at the hospital and nurses would have to work beyond those shifts in
order to complete their reports. She also claims that complaints
concerning this situation were made in 1975 or 1976 by the civilian
nursing staff, through the union representative.
DECISION
Federal employees are paid overtime under the provisions of 5 U.S.C.
Sec. 5542 (1982) or the FLSA, and those employees covered by both
statutes are entitled to compensation under whichever provision provides
them with the greatest benefit. Section 5542 of Title 5 provides that:
"(a) * * * hours of work officially ordered or
approved in excess of 40 hours in an administrative workweek or *
* * in excess of 8 hours in a day, performed by an employee are
overtime work and shall be paid for * * *."
Only overtime which is ordered or approved in writing or
affirmatively induced by an official with authority to order or approve
overtime is compensable under this section. See Matter of Civilian
Nurses, 61 Comp. Gen. 174 (1981), and cases cited therein. On the other
hand, employees covered by the FLSA are entitled to overtime
compensation for hours of work in excess of 40 hours a week for all work
which management "suffers or permits" to be performed. See 5 C.F.R.
Sec. 551.103(a)(3) (1986).
Ms. Alexander apparently believes that she is entitled to overtime
which is suffered or permitted. As we have pointed out, however, the
Mather AFB informed us that Ms. Alexander is not covered by the FLSA.
we have no reason to question this determination. Section 213(a) (1) of
Title 29, United States Code, provides that persons employed in a
professional capacity are exempted from the overtime provisions of the
FLSA. Any question concerning the proper FLSA status of Ms. Alexander's
position should be directed to the Office of Personnel Management, which
has the authority to make final determinations as to whether Federal
employees are covered by the Act. 5 C.F.R. Sec. 551.201 (1986).
The information submitted by Ms. Alexander is not sufficient to show
either that she actually performed overtime or that there was overtime
which was officially ordered or approved under the requirements of Air
Force regulations.
As to the requirement that overtime must be properly ordered or
approved, paragraph 3a of AFR 40-552, issued September 15, 1971,
provides:
"a. Authorization Requirement. Overtime work must be ordered
by the appropriate supervisor and approved in writing by the
official designated to authorize overtime payment. Since overtime
approval constitutes authority for the expenditure of funds and
certification that overtime funds are available, approval must be
obtained before the work is performed except in an emergency when
it must be made a matter of record no later than the following
workday. Work performed by an employee outside his regularly
scheduled tour of duty without official authorization or approval
cannot be made the basis for overtime pay."
Commencing with our decision in 53 Comp. Gen. 489 (1974), and in
subsequent decisions, we have followed the principles of law set forth
in Baylor v. United States, 198 Ct. Cl. 331 (1972), regarding the
determination of whether overtime was properly ordered or approved. In
Baylor the court explained that under the applicable case law, whether
work had been officially authorized or approved was a matter of "legal
line drawing." Although work that is required by an official regulation
is clearly authorized or approved, a tacit expectation that work be
performed is insufficient. Where there is more than a tacit
expectation, and where employees have been induced by appropriate
supervisors to perform additional duties, overtime has been held to have
been authorized and approved. In this regard, our Office has long held
that mere knowledge that overtime work is being performed by an employee
is not sufficient to support payment of overtime compensation. See Jim
L. Hudson, B-182180, January 6, 1982, and cases cited therein. As a
result, even if Ms. Alexander's supervisors knew she was reporting early
to work, that, in and of itself, would not entitle her to overtime
compensation.
Furthermore, even if Ms. Alexander was able to show that she was
ordered or induced to perform overtime her claim would not be allowable
unless she could show, with some specificity, the actual number of hours
worked. An individual who asserts a claim with our Office has the
burden of furnishing substantial evidence to clearly establish liability
on the part of the Government and the claimant's right to receive
payment. See 4 C.F.R. Sec. 31.7 (1986). With regard to claims for
overtime, we require sufficient evidence upon which a reasonable
estimate of the actual number of hours worked could be based. Time and
attendance reports, personal daily diaries, and certificates of former
supervisors showing the amount of overtime worked by the claimant or a
statement as to the standard workweek, including overtime performed by
the claimant or other similarly situated employees, are examples of
supporting evidence which might be sufficient. The records which Ms.
Alexander submitted show no evidence of her early reporting or
attendance at meetings. Her statement that she performed overtime,
standing alone, would not be sufficient to support payment.
With regard to Ms. Alexander's claim for overtime for the periods
when she worked through lunch, we note again that she apparently worked
an 8-hour shift. As we have pointed out earlier, 5 U.S.C. Sec. 5542(a)
authorizes overtime compensation only for work actually performed in
excess of 8 hours on any one workday. There was no provision for a
duty-free lunch period outside of Ms. Alexander's regular tour of duty.
For the reasons outlined above, we hereby affirm our Claims Group's
denial of Ms. Alexander's claim for overtime pay.
Comptroller General
of the United States
FOOTNOTE
1/ Ms. Alexander's claim was received in this Office on December 29,
1983. Thus, we are precluded by the 6-year Barring Act, 31 U.S.C. Sec.
3702 (1982), from considering any portion of her claim prior to December
29, 1977.
Matter of: Thomas R. Stover
File: B-224092
Date: March 23, 1987
DIGEST
The employee's wife, who resided at the new duty station and was not
involved in the employee's change of station, traveled to the old duty
station for the purpose of driving the employee's car to the new duty
station since the employee was driving a rental truck to transport his
household goods. There is no entitlement to mileage and per diem for
his wife's travel since her residence was at the new duty station and
she was not officially relocating or performing permanent
change-of-station travel, and thus was not a person entitled to travel
at Government expense. Also, mileage may not be paid as a cost of
transporting the automobile because there is no statute specifically
authorizing transportation of the automobile within the continental
United States at Government expense.
DECISION
This decision is in response to a request for an opinion on whether
an employee may be paid mileage and reimbursed expenses for the
transportation of his privately owned automobile incident to a change of
duty station. The automobile was driven by the employee's wife who was
not relocating in connection with the change of station. 1/ The employee
is not entitled to the claimed mileage and expenses.
Mr. Thomas R. Stover transferred from San Francisco, California, to
Kansas City, Missouri, in February 1986. He was authorized to move
under the commuted rate system and he rented a truck to transport his
household goods, which he drove from San Francisco to Kansas City. His
wife, who resided in Kansas City, traveled to San Francisco and then
drove his automobile from San Francisco to Kansas City. Although Mr.
Stover had been authorized mileage for use of his privately owned
automobile as well as per diem to travel from San Francisco to Kansas
City, he received only per diem since he drove the rented truck instead.
The Department of Labor denied the claim for per diem and mileage for
Mr. Stover's wife, because the privately owned automobile was not used
in authorized relocation travel from San Francisco to the new duty
station in Kansas City. She was not officially involved in that
relocation, since she had never accompanied Mr. Stover in his earlier
transfer to San Francisco but had maintained a residence in Kansas City.
The Department of Labor considered her travel expense to Kansas City to
be the cost of transporting the automobile, an expense which could not
be reimbursed under statute or regulation.
DISCUSSION
Mr. Stover's automobile was not used for permanent change-of-station
travel for himself or for a dependent who was entitled to travel at
Government expense. In connection with a transfer, the use of a
privately owned vehicle is deemed advantageous to the Government so as
to justify mileage reimbursement only " w hen an employee with or
without an immediate family * * * uses a privatelyowned automobile for
permanent change of station travel." See Federal Travel Regulations,
para. 2-2.3 (Supp. 1, September 28, 1981), incorp. by ref., 41 C.F.R.
Sec. 101-7.003 (1985). We have held that an employee traveling with his
family to the new duty station in a rented truck, transporting his
household goods and towing his privately owned automobile, is not
entitled to mileage for the towed automobile. Eldon E. Strine,
B-183974, November 14, 1975. One of the reasons for the disallowance of
the claim in that case was failure to satisfy the requirement in FTR
para. 2-3.3 that the vehicle be actually used "for permanent change of
station travel." Mr. Stover was the only individual authorized to travel
and, regardless of what alternative arrangements he might have made, the
automobile was not used for his travel. There is no basis to pay
mileage and per diem for his wife, since she did not accompany him when
he was transferred to San Francisco and, therefore, he is not entitled
to Government payment of her transportation costs when he was
transferred back to Kansas City. As a result there is no basis for
paying mileage with respect to the transportation of the vehicle because
it was not used to transport anyone who was entitled to transportation
at Government expense.
It is important to note that for the purposes of this case, the
relocation involves only one individual, the employee. He moved his
household goods under the commuted rate system. Since he opted to drive
the rental truck himself, his transportation to his new station was
accomplished by this means. Whether he hired an individual to drive his
car or secured this service free of charge has no bearing on his
entitlement since as a matter of fact he did not operate or ride in his
privately owned vehicle to his new station. We have repeatedly held
that when the privately owned vehicle is not actually used for the
transportation of the employee or his dependents (his wife, although a
dependent, was not entitled to payment of transportation costs from San
Francisco to Kansas City), reimbursement on a mileage basis is not
authorized. See Matter of Huai Su, B-215701, December 3, 1984; Matter
of Gary E. Pike, B-209727, July 12, 1983; B-176224, July 27, 1972; and
B-172235, August 10, 1971.
Further, payment of the mileage as an expense to transport the
automobile is not permissible. Section 5727(a) of title 5, United
States Code, provides that an authorization in a statute or regulation
to transport the personal effects of an employee at Government expense
is not, unless specifically authorized by statute, an authorization to
transport an automobile. We are unaware of any statute specifically
authorizing the shipment of Mr. Stover's automobile at Government
expense between San Francisco and Kansas City.
Comptroller General
of the United States
FOOTNOTE
1/ The Assistant Secretary for Administration and Management,
Department of Labor, requested our decision.
Matter of: A.R.E. Manufacturing Company, Inc.
File: B-224086.4
Date: April 15, 1987
DIGEST
1. Protester's technicai proposal under step one of two-step sealed
bid solicitation properly was rejected as technically unacceptable
where, after the opportunity to submit clarifications, the contracting
agency reasonably determined the proposal required a major rewrite to
demonstrate its ability to meet the solicitation's stated requirements.
2. To support aliegations of agency bias in evaiuating technical
proposals, the record must contain not only "hard facts" showing bias
but evidence of unequal treatment unfairly affecting the protester's
competitive position.
DECISION
A.R.E. Manufacturing Company, Inc. protests the rejection of its
proposal as clarified under request for technical proposals (RFTP) No.
N00104-86-R-ZU62, issued by the Navy under step one of a two-step seaied
bidding procurement for shipboard self-contained air conditioners. The
Navy initially rejected A.R.E.'s proposal without requesting
clarifications or conducting discussions, and A.R.E. protested the
rejection to this Office. We sustained the protest in A.R.E.
Manufacturing Co. Inc., B-224086, Oct. 6, 1986, 86-2 CPD P 395, because
the proposal's deficiencies cited by the Navy did not indicate that the
proposal was technically unacceptable as opposed to being merely
inferior or capable of being made acceptable. We therefore recommended
that the Navy reevaluate A.R.E.'s proposal after requesting
clarifications. The Navy followed our recommendation and issued 39
questions requesting clarification of the A.R.E. proposal. The agency
determined that A.R.E.'s responses showed that its initial proposal
could not have been made acceptable except by a major engineering effort
signficantly affecting many aspects of the proposal. Accordingly, the
Navy rejected the proposal as technically unacceptable. A.R.E. now
alleges that the Navy was biased against A.R.E. and intended not to make
award to A.R.E. in any event.
We deny the protest.
The protester does not specifically dispute the technical grounds
upon which the Navy based its decision to reject the clarified A.R.E.
proposal. The protester's position is that the agency is biased against
it. This is in part based on Message No. R-032016Z, October 1986, from
the Commander Naval Sea Systems Command advising procuring activities of
safety and quality problems with air conditioners previously supplied by
A.R.E. and another manufacturer. The message includes a request that
contracts for parts and equipment not be awarded to either A.R.E. or the
other manufacturer pending resolution of the problems, which are
currently under investigation. It is not disputed that the Navy
engineer who initiated the message is responsible for reviewing
compliance with air conditioner contracts and also served as an
evaluator of A.R.E.'s proposal.
In initially rejecting A.R.E.'s proposal, the Navy essentially
determined that the proposal included certain unacceptable design
characteristics and omitted required supporting data to such an extent
that it could not be shown to meet the RFTP's requirements except
through major revisions reflecting a significant engineering effort.
The Navy's report on A.R.E.'s prior protest, however, did not document
or explain in detail the effect of the individual deficsiencies on the
overall system, and it therefore was not apparent from the record
whether A.R.E.'s proposal needed only minor design changes and readily
available supporting data to be made acceptable.
Now that A.R.E. has been permitted to clarify its proposal, the
agency has concluded that the clarifications submitted by A.R.E.
contained numerous major design changes and included insufficient data
to fully evaluate the design's compliance with stated performance
characteristics. For example, A.R.E.'s clarifications indicated that to
correct an apparently minor deviation from the specification's
requirement for a minimum condenser head depth, 1/ A.R.E. proposed to
add four extra condenser tubes to maintain rated capacity. The
clarification stated that these extra tubes compensate for the reduced
length from tube sheet to tuhe sheet. In the absence of data showing
this to be the case, however, it is also, according to the agency,
possible that the design change will effect the heat-transfer
characteristics of the condenser, requiring further changes to other
components of the system. As a further example, A.R.E.'s supporting
data for its condenser contained in its original proposal indicated that
the condenser tubes did not meet the RFTP requirement for .049 inch
minimum wall thickness. In orders to correct this defect A.R.E. now
indicates that it will add condenser tubes, decrease condenser tube
length and will alter the sea water flow rate, the effective surface
area and the tube velocities. In short, the revision will necessitate a
major redesign of the condenser, one of the system's three major
components.
The evaluation of a technical proposal received in response to an
RFTP involves the considered judgment of the contracting agency, and our
review is limited to the question of whether the evaluation was
reasonable. ICSD Corp., B-222542, July 23, 1986, 86-2 CPD P 97. A
proposal properly is rejected where the agency reasonably determines
that additional changes and material to make the proposal acceptable
would constitute a major revision. Id. In view of the fact that the
protester has not supplied any information specifically refuting the
Navy's specific technical conclusions in each area, we have no basis
upon which to object to the Navy's evaluation of A.R.E.'s technical
proposal as clarified.
Further, we do not agree with the protester that the Navy's message
concerning problems with existing A.R.E. equipment shows that the
evaluation was necessarily biased. Where, as here, a protester alleges
bias in the agency's evaluation it bears a heavy burden since we will
not attribute unfair or prejudicial motives to procurement officials on
the basis of inference or supposition. A&A Realty, Inc., B-222139, June
20, 1986, 86-1 CPD P 575. A protester must produce "hard facts" showing
bias, and it must further be shown that the bias was translated into
action which unfairly affected the protester's competitive position; we
will not find an evaluation to be biased or arbitrary if the record
indicates a reasonable basis for it. Id. There is nothing in the
record to indicate that the evaluators' conclusions regarding the A.R.E.
proposal here were in any way influenced by the cited message. In fact,
we have concluded that the record shows that the evaluation was
reasonable.
A.R.E. also alleges that the Navy subjected A.R.E.'s proposal to
greater scrutiny than other proposals, but does not detail a single
instance of the alleged unequal treatment. Absent detailed instances of
alleged unequal treatment, we regard the protester's allegation as mere
speculation. See Sage Diagnostics B-222427 July 21, 1986, 86-2 CPD P
85.
The protest is denied.
Harry R. Van Cleve
General Counsel
FOOTNOTE
1/ The RFTP specified that the head depth must not be less than
one-half the inside diameter of the head measured parallel to the tube
sheets which hold the condenser tubes. The purpose of this requirement
was to minimize sea water turbulence in the condenser which erodes tube
sheets and tube ends.
Matter of: David A. Seel - Claim for Reduced Per Diem Allowance
File: B-224074
Date: June 1, 1987
DIGEST
An FBI employee whose permanent duty station is in Philadelphia,
Pennsylvania, was assigned temporary duty at the FBI Academy, Quantico,
Virginia, to work on a highly sensitive investigation. While there, he
was provided certain services such as lodging, meals end laundry
privileges at Government cost. Since it is the responsibility of the
Government agency involved to determine, in the first instance, the
amount of reduced per diem allowance, if any, due the employee under
these circumstances, we remand this claim to the agency for that
determination.
DECISION
This decision is in response to a request from Mr. William E.
Burrows, Jr., Authorized Certifying Officer, Federal Bureau of
Investigation (FBI), United States Department of Justice (DOJ), as to
whether Mr. David A. Seel, an FBI employee, may be paid a reduced per
diem allowance for a period of temporary duty during an FBI Special
Assignment at the FBI Academy, Quantico, Virginia. For the following
reasons, we remand this claim to the FBI to determine the amount of
reduced per diem allowance, if any, that may be paid to Mr. Seel.
BACKGROUND
The record shows that Mr. Seel, an FBI employee whose permanent duty
station was in Philadelphia, Pennsylvania, was assigned to temporary
duty at the FBI Academy, Quantico, Virginia, along with several other
employees. The reason why the temporary duty was being conducted at
this site was to maintain the integrity of a highly sensitive criminal
investigation. Although it was originally anticipated that this special
assignment would take approximately 30 days, it lasted 75 days, during
the period of October 1984 through January 1985, in Mr. Seel's case.
While staying at the FBI Academy, Mr. Seel was provided such services as
lodging, meals, end laundry privileges at Government expense.
On his voucher dated December 5, 1985, Mr. Seel claimed a reduced per
diem allowance of $431.25 (75 days at $5.75 per day). The FBI denied Mr.
Seel's claim on the basis of paragraph 1-7.3e(4) of the agency's travel
regulations, DOJ Travel Regulations Order No. 2200.11 (May 15, 1984).
Mr. Seel contends that this paragraph is not applicable to his claim and
that he is entitled to a reduced per diem allowance under Federal Travel
Regulations (FTR), para. 1-7.3d (Supp. 5, May 20, 1983) and 1-7.6f
(Supp. 1, September 28, 1981), incorp. by ref., 41 C.F.R. 101-7.003
(1985), which were applicable at the time of the events in this case.
OPINION
Paragraph 1-7.3e(4) of DOJ Travel Regulations Order No. 2200.11 (May
15, 1984) provides that:
"(4) Per diem allowance for attendees at "live-in" programs.
For any "live-in" program in which lodging and meals are paid for
through program tuition, a per diem allowance of $4.00 shall be
authorized to cover miscellaneous subsistence expenses of the
attendee. However, no per diem shall be authorized for employees
attending programs conducted at the FBI Academy located in
Quantico, Va."
By the terms of this regulation, no per diem is authorized for
employees attending any "live-in" program in which lodging and meals are
paid for through program tuition" conducted at the FBI Academy.
However, Mr. Seel was not attending such a program; he was on temporary
duty for a special assignment which happened to be headquartered at the
FBI Academy for security reasons. Thus, paragraph 1-7.3e(4) of DOJ
Travel Regulations Order No. 2200.11 is clearly not applicable to the
circumstances of Mr. Seel's case.
The appropriate provision of the FTR which was in effect at the time
of the events in this case was FTR para. 1-7.6f (Supp. 1, September 28,
1981), which provides:
"f. Deductions for meals and/or lodging furnished. Where meals
and/or lodging are furnished without charge or at a nominal cost
by a Federal Government agency or at a temporary duty station, an
appropriate deduction shall be made from the authorized per diem
rate."
Under this provision of the FTR, Mr. Seel, who was on temporary duty
at the FBI Academy where certain services were provided, may be entitled
to a reduced per diem allowance. However, under this provision of the
FTR, the agency involved has the responsibility for determining, in the
first instance, the amount of the reduced per diem allowance, if any,
which the employee on temporary duty may be paid. See Jack C. Smith, et
al., 63 Comp. Gen. 594 (1984).
Our decisions have held that per diem need not be paid where an
employee on temporary duty incurs no additional living expenses or where
lodgings and meals are provided. Smith, cited above; Barbara J.
Protts, B-195658, March 19, 1980; and B-180111, March 20, 1974. Where
the employee incurs little or no additional costs by reason of the
temporary duty assignment, we have held it is the responsibility of the
agency to authorize only such per diem allowances as are justified by
the circumstances. See Smith, cited above, and decisions cited.
In this case, the FBI has not yet made such a determination, and
thus, we remand this claim to the agency so that the appropriate FBI
official may make that determination. We note that Mr. Seel contends
that the appropriate per diem rate should be $5.75 on the basis of a
regulation in the Internal Revenue Service (IRS) Travel Handbook
concerning similar circumstances at the Federal Law Enforcement Training
Center in Glynco, Georgia. That IRS regulation would not be controlling
here, and the decision in this case is within the discretion of the
appropriate FBI official.
Finally, the FBI may wish to consider promulgating a travel
regulation concerning the amount it will allow other employees in Mr.
Seel's circumstances in the future.
Comptroller General
of the United States
File: B-224073
Date: March 17, 1987 (released April 18, 1988)
DIGEST
1. In response to the MSPB's request for an advisory opinion, the MSPB
is informed that where a backpay claimant actually held a moonlighting
job prior to the unlawful job action and retained that job during the
backpay period, only moonlighting earnings in excess of those earned
prior to the unlawful job action need be deducted from backpay.
2. In response to the MSPB's request for an advisory opinion, the MSPB
is informed that earnings from moonlighting or overtime during the
backpay period must be offset to the extent the moonlighting or overtime
could not have been worked simultaneously with the desired job.
3. In response to the MSPB's request for an advisory opinion, the MSPB
is informed that, although there is earlier Comptroller General
precedent to the contrary, more recent court cases and NLRB decisions
provide that earnings from moonlighting during the backpay period need
not be offset from the backpay award to the extent it is established
that the backpay claimant could have worked the moonlighting job
simultaneously with the desired job.
4. In response to the MSPB's request for an advisory opinion, the MSPB
is informed that, although there is earlier Comptroller General
precedent to the contrary, more recent court cases and NLRB decisions
hold that overtime earned during the backpay period in excess of that
which would have been earned in the desired job should not be offset
from backpay.
Mr. Robert E. Taylor
Clerk of the Board
U.S. Merit Systems Protection Board
Washington, D.C. 20419
Dear Mr. Taylor:
This is in response to your request of August 18, 1986, for an advisory
opinion on legal issues involving backpay in the case of Phelps v.
Department of Labor, MSPB Docket No. DEO35182C0200. 1/
Although your request for an advisory opinion arises in the context of
Mr. Phelps' petition for reconsideration, you ask five general questions
which appear to have overall application:
(1) "Is an agency required to offset overtime earnings from the
back pay award under (the from other employment in all cases;
(2) "If not, what is the standard for determining whether such overtime
earnings must be offset against the back pay award. Compare FPM Supp.
990-2, Book 550 subch. 8, subpara. S8-7d with Bing v. Roadway Express,
Inc., 485 F.2d 441, 454 (5th Cir. 1973);
(3) "Is the standard the same where the Board finds that the agency
committed discrimination in violation of title VII of the Civil Rights
Act of 1964, as amended, or other prohibited discrimination. See 62
Comp. Gen. 343 (April 22, 1983);
(4) "Is an agency required to offset overtime earnings from the backpay
amount where the overtime hours worked exceed the hours that the
employee would have worked in the federal position. See DeFries v.
Haarhues, 488 F. Supp. 1037 (1980); and
(5) "Is the agency required to offset earnings derived from
'moonlighting', where the employee obtains such employment after the
loss of his federal position. Compare Bing v. Roadway Express, 485 F.2d
at 454, with Payne v. Panama Canal Co., 428 F. Supp. 997, 1001-02 (D.C.
Canal Zone 1977), rev'd on other grounds, 607 F.2d 155 (1979)."
Our research shows that the courts, the Comptroller General, and other
administrative bodies all rely on the same general principle in
determining what earnings are to be deducted or offset from backpay
awards. Whatever the forum or the specific statutory language involved,
it has been consistently held that offset is required only with respect
to those earnings which take the place of earnings of the position from
which the employee was unlawfully suspended or discharged, on to which
the employee was refused a promotion. The regulations implementing the
Back Pay Act, 5 U.S.C. Sec. 5596, so provide. 2/ The Comptroller
General has so interpreted the Back Pay Act and its predecessors. 3/ And
the courts have adopted this principle in cases arising under the Back
Pay Act and its predecessors, suits for military pay, cases arising
under Title VII of the Civil Rights Act of 1964, as amended, and the Age
Discrimination in Employment Act. 4/ While all of these forums have
endorsed the same principle, application of it has varied in different
forums in different factual situations.
1. Moonlighting job held before and after unlawful job action.
Relying upon the general principle stated above, the Comptroller
General has held that if a backpay claimant held a second job, i.e., a
moonlighting job, prior to the unlawful job action, and continued that
job during the backpay period, only earnings in excess of those earned
prior to the unlawful job action need be deducted since only those
excess earnings are in lieu of earnings from the desired job. 5/ The
courts have followed the same rule in both EEO cases and cases arising
under the Back Pay Act. 6/
2. Moonlighting or overtime which could not have been worked
simultaneously with the desired job.
When the moonlighting or overtime could not have been worked
simultaneously with the desired job, however, offset is required since
those earnings are in lieu of earnings from the desired job.
The leading case in this regard is Bing v. Roadway Express, Inc., 485
F.2d 441, 454 (5th Cir. 1973). In Bing, black employees who had been
discriminatorily denied transfers from city driver jobs to the more
desirable road driver jobs were awarded backpay. A dispute arose over
the amount actually due Bing. Unlike the other class members, Bing,
while working as a city driver; had also worked a substantial number of
hours at various moonlighting jobs. The government argued that these
moonlighting earnings should not be offset from backpay because to do so
would penalize Bing for being energetic and working more hours than
would be required to mitigate his damages. The court found, however,
that in the more desirable position of road driver, Bing would have been
required to work 60 to 100 hours per week. Thus, if Bing had been a road
driver he could not have earned the moonlighting earnings. 7/ Therefore,
the moonlighting earnings were viewed as a substitute for the desired
job and were offset from backpay.
The rule in Bing has been widely relied upon. 8/ We are aware of no
court cases or Comptroller General decisions which are inconsistent with
Bing insofar as it holds that overtime earnings and earnings from a
moonlighting job should be offset from backpay where the overtime or
moonlighting job could not have been held simultaneously with the
desired job.
3. Moonlighting job which could have been held simultaneously with the
desired job.
The court in Bing also held that if the employee could have held the
moonlighting job and the desired job simultaneously, and there is reason
to believe he would do so, then the moonlighting earnings should not be
offset from backpay since these earnings were not in lieu of earnings
from the desired job. This "could have worked" portion of the Bing rule
has also been relied upon by the courts. 9/
It is worth noting that, although the rule in Bing provides that
moonlighting earnings should not be offset when the employee could have
earned these extra earnings simultaneously with the desired job and
there is reason to believe he would have done so, none of the cases
cited above discuss the provision in Bing that there must be a reason to
believe the employee would have worked the extra hours while holding the
desired job. Instead, the courts focus on whether the employee could
have worked the extra hours. The emphasis in these cases is on whether
the hours worked are compatible with the hours of the desired job, not
on whether it is reasonable to assume the employee would have worked
both jobs simultaneously. 10/
We are aware of only two Comptroller General cases which deal with a
backpay claimant who could have worked the moonlighting job
simultaneously with the desired job, but did not actually work it prior
to the unlawful job action. The decision in 34 Comp. Gen. 384 (1955)
appears to be in accord with the "could have" portion of the rule in
Bing. In that case no offset was required if $35 earned for publication
of a magazine article because the employee stated that he would have
normally prepared this article during off-duty hours even if the
unwarranted or unjustified personnel action had not occurred.
However, a later decision, B-150550, January 28, 1963, does not appear
to be consistent with the "could have" portion of the Bing rule. In that
case, the employee alleged that he had planned to work as a bus driver
during off-duty hours prior to his suspension, had actually received
training as a bus driver, and had been put on the driver's "extra list"
prior to his suspension. Nonetheless, the Comptroller General held that
all earnings as a bus driver must be offset because the employee had not
actually started work as a bus driver prior to the unlawful personnel
action.
The discussion of the rules governing offsets from backpay in 53 Comp.
Gen. 824, 827 (1974), and 55 Comp. Gen. 48, 51 (1975) also appear to
reject the "could have worked" standard of Bing. Both cases reiterate
the rule that all outside earnings must be offset except to the extent
the employee actually worked the moonlighting job prior to separation.
We also note that subparagraph S8-7c of the Federal Personnel Manual
Supplement 990-2, Book 550, subchapter 8 (550-64.01 Inst. 73, April 20,
1984) provides that:
"* * * the only earnings from other employment that may not be
deducted from backpay are earnings from outside employment the
employee already had before the unjustified suspension or
separation." (Emphasis in the original.)
In view of the above, it appears that Comptroller General precedent and
the FPM Supplement are in conflict with the "could have worked" standard
expressed in Bing and its progeny. The Comptroller General and the FPM
appear to require that the moonlighting job was actually worked
simultaneously with the federal job if offset is to be avoided.
However, the Comptroller General has not had the opportunity to consider
this issue recently; and it is not clear if the same result would be
reached today, particularly in light of growing judicial precedent to
the contrary. 11/ The most recent and most consistent court cases are
the decisions holding that earnings from moonlighting need not be offset
to the extent that the backpay claimant could have worked that job
simultaneously with the desired job.
4. Overtime earnings from an interim job which are in excess of
overtime earnings which would have been earned in the federal job.
The rule in Bing has also been applied to overtime earnings which are
in excess of those earned in the desired job. 12/ In DeFries v.
Haarhues, 488 F. Supp. 1037, 1043 (C.D. Ill. 1980), a postal clerk who
was discriminatorily denied a promotion to supervisor worked 341 hours
of overtime as a postal clerk during the backpay period. Had she been
promoted, she would have worked 101 overtime hours as a supervisor
during the backpay period. The court cited Bing and held that the 101
hours should be offset from backpay, but the remaining 240 hours should
not be offset. The court explained at page 1044, that:
"* * * The plaintiff should not be punished for additional
earnings if she could earn them while holding the desired position
and if there is reason to believe she would do so. * * * Thus, the
failure to subtract such earnings from a backpay award does not
constitute a windfall to the plaintiff. To the contrary, in cases
such as this, where the plaintiff worked overtime hours in excess
of those which would have been required in the desired position
under the same employer, to deduct those earnings from her backpay
award would be to punish the plaintiff for her initiative and to
doubly benefit the employer who discriminated against her by
allowing the employer both to benefit from her overtime efforts
and to subtract such earnings from the backpay award."
Similarly, in Horton v. Board of Education, supra, the court recognized
that earnings from teaching in the evening should not be offset from
backpay if they could have been earned while the plaintiff was a school
principal because "at a time when other principals in the system are
presumably at home enjoying their leisure, (the discriminatee) is
teaching a night class in the country's trade system. 13/
Bing and most of its progeny arose under the backpay provision of Title
VII of the Civil Rights Act as amended, 42 U.S.C. Sec. 2000e-5g. 14/
That provision was specifically modeled by Congress after the backpay
provision in the National Labor Relations Act, 29 U.S.C. Sec. 160(c)
(1982). Albermarle v. Moody, 422 U.S. 405, 419-420 (1975). It is not
suprising, therefore, that consistent with DeFries, it has also been the
practice of the National Labor Relations Board to refuse to offset
excess moonlighting or overtime earnings. 15/
The National Labor Relations Board uses the same rational used by the
court in DeFries. In United Aircraft, the Board explained that
offsetting "excess" overtime or moonlighting earnings would create the
anomaly whereby an assiduous and diligent backpay claimant would be
penalized for toiling a long day while the shirker would be rewarded.
It is also noted that earnings from such extra effort should operate to
the advantage of the backpay claimant, not the employer required to make
him whole for a discriminatory discharge. Moreover, retaining earnings
from excess overtime does not make the claimant more than "whole."
Rather, the additional income is the result of the claimant's extra
effort. 16/
We also note that in Payne v. Panama Canal Company, 428 F. Supp. 997,
1001 (D.C. Canal Zone 1977), rev'd on other grounds, 607 F.2d 155
(1979), a case arising under the Back Pay Act, the court held that in
calculating the amounts to be deducted as "any amount earned through
other employment," only such sums as the plaintiff may have earned
during a regular 40-hour week should be offset and that earnings from
moonlighting "in order to survive" should not be offset. The court
offers no explanation for this ruling and it is not clear what overtime
or moonlighting Payne worked before or after his unlawful discharge.
However, the use of the phrase "to survive" suggests that the court was
using an equitable rationale similar to that used by the NLRB and the
courts. We are aware of no other court cases arising under the Back Pay
Act which specifically deal with the question of offset of excess
overtime earnings.
In cases issued prior to DeFries and Payne, the Comptroller General has
required offset of all overtime earnings. 17/ The Comptroller General
has also applied this total offset rule in a case arising under Title
VII of the Civil Rights Act of 1964, as amended, where the agency argued
that it would be inequitable to do so given the fact that the employee
worked overtime hours at the interim job which were considerably in
excess of the overtime worked in his federal job. 55 Comp. Gen. 48
(1975). The rationale is the same as that used to require offset of all
excess moonlighting earnings. That is, the Back Pay Act provides for
offset of "any amounts earned through other employment." The same result
was reached in a Title VII case because in federal section EEO cases
backpay is computed pursuant to the regulations which implement the Back
Pay Act. 18/
In view of the above, it appears that Comptroller General precedent
relating to offset of excess overtime earnings conflicts with more
recent precedent in other forums. Again, however, it is not clear if the
same result would be reached today, particularly in light of contrary
precedent in other forums. For example, in a more recent case, Ladorn
Creighton, 62 Comp. Gen. 343 (1983), the Comptroller General stressed
the make whole purposes of Title VII and held that an employee who was
denied a promotion for discriminatory reasons may retain a cash
incentive award, rather than having it offset from his backpay award.
While this decision does not involve overtime or moonlighting earnings,
it does reflect greater flexibility in determining what must be offset.
CONCLUSION
We conclude that Comptroller General and judicial precedent are in
agreement that:
(1) Where a backpay claimant actually held a second job, i.e., a
moonlighting job, prior to the unlawful job action and retained
that job during the backpay period, only earnings in excess of
those earned prior to the unlawful job action need be deducted,
and
(2) Earnings from moonlighting or overtime during the backpay period
must be offset to the extent the moonlighting or overtime could not have
been worked simultaneously with the desired job.
We also conclude that, although there is Comptroller General precedent
to the contrary, more recent and more consistent court cases and NLRB
decisions provide that:
(1) Earnings from moonlighting during the backpay period need not
be deducted to the extent it is established that the backpay
claimant could have worked the moonlighting job simultaneously
with the desired job; and
(2) Overtime earned during the backpay period in excess of that which
would have been earned in the desired job should not be offset.
Sincerely yours,
Harry R. Van Cleve, General Counsel
FOOTNOTES
1/ The initial decision on enforcement dated May 2, 1985, signed by the
regional director of the Denver Regional Office, MSPB, found that the
$513 in overtime earned by Mr. Phelps while working at an interim job in
the private sector was properly offset from his backpay award. The
appellant has requested the Board to reconsider the initial decision.
2/ 5 C.F.R. Sec. 550.805(e)(Z) (1986). See also, Federal Personnel
Manual Supplement 990-2, Book 550, Subchapter S8-7C(1) (Inst. 73, April
20, 1984).
3/ 32 Comp. Gen. 408 (1953) (1948 provision for backpay to preference
eligibles); 53 Comp. Gen. 824 (1974) (backpay under 5 U.S.C. Sec.
5996).
4/ Jackson v. U.S., 121 Ct. Cl. 405 (1952) (1948 backpay provision);
Olsen v. Arrington, 621 F.2d 363 (10th Cir., 1980) (backpay under 5 U.
S.C. Sec. 5996); Silver v. U.S., 551 F.2d 295, 297, 213 Ct. Cl. 388
(1977) (military pay); Rodriquez v. Taylor, 569 F.2d 1231, 1243 (3rd
Cir. 1977) (Age Discrimination in Employment Act); and Bing v. Roadway
Express, 485 F.2d 441, 454 (5th Cir. 1973) (backpay under Title VII).
5/ 32 Comp. Gen. 408 (1953); B-178143, July 9, 1973; and 53 Comp.
Gen. 824 (1974).
6/ Jackson v. U.S., supra, at note 4; Jaffe v. U.S., 124 Ct. Cl. 755
(1953); Buck v. Ed. New York City, 27 FEP 461 (E.D.N.Y. 1975);
Laugesen v. Anaconda Company, 510 F.2d 307, 317-318 (6th Cir. 1975);
Somers v. Aldine Independent School Dist., 464 F. Supp. 900 (S.D. Texas
1979), aff'd mem. 620 F.2d 298 (5th Cir. 1980); and Olsen v.
Arrington, supra, at note 4.
7/ The court does not state the exact number of hours Bing worked on
the moonlighting jobs. It does state, however, that, although his total
hours were less than the 60 to 100 hours required of road drivers, they
were substantial.
8/ J. D. Thornton v. East Texas Motor Freight, 497 F.2d 416, 422 (6th
Cir. 1974) (city drivers v. road drivers as in Bing); Whatley v.
Skaggs Companies, Inc., 707 F.2d 1129, 1139-1140 (10th Cir. 1983)
(although not required, plaintiff worked long hours as a lobby manager
prior to his discriminatory discharge. Responsibilities of management
position caused long hours and plaintiff would have been unable to
moonlight. Therefore, moonlighting earnings during the back-pay period
were offset.).
9/ Shaffield v. Northrup Worldwide Aircraft Services, Inc., 373 F.
Supp. 937; 944-945 (M.D. Ala. 1974) (helicopter mechanic was discharged
after employer failed to make a reasonable accommodation to his
religious beliefs. Court remanded for a finding as to whether any of his
moonlighting jobs could have been held simultaneously with his job as a
helicopter mechanic); and Behlar v. Smith, 719 F.2d 950, 954 (8th Cir.
1983) (income received by female professors for summer work and
"overload" work during the school year was not offset from backpay
because they could have done this work even if they had received the
promotions they were denied for discriminatory reasons). Accord, Horton
v. Board of Education, 449 F.2d 793, 795 (5th Cir. 1971) (black
principal discriminatorily demoted and worked as night instructor at a
trade school during the backpay period. The court remanded for a finding
as to whether plaintiff could have taught at night in the trade school
while employed as a principal. If so, these earnings should not be
offset.); Butta v. Anne Arundel County, 473 F. Supp. 83, 89 (D. Md.
1979) (white man who was discriminatorily denied the position of
executive secretary of the Human Relations Commission could have taught
part-time in the evenings even if he had been appointed Executive
Secretary. Therefore, these part-time earnings were not offset from
backpay.).
10/ But see Smith v. Concordia Parish School, 387 F. Supp. 887, 891 (W.
D. La. 1975), where the court also noted that there were no school
system regulations which would have precluded the discriminatorily
discharged school principal from working the extra job had he continued
in his position as principal.
11/ See also the discussion of NLRB precedent, infra, relating to both
overtime and moonlighting.
12/ As discussed above in section 2, overtime earnings at an interim
job which are not in excess of overtime earnings which would have been
earned in the desired job should be offset from gross backpay because in
these circumstances interim overtime earnings are in lieu of overtime
earned in the desired job.
13/ Horton, footnote 9, supra, at 795. It is not clear how the courts
will reconcile the rule as stated in Bing with the equitable rationale
expressed in DeFries in a case where a rule against outside employment,
rather than incompatible hours, would have precluded working overtime or
moonlighting simultaneously with the desired job. See Smith, footnote
10, supra.
14/ DeFries arose under the Age Discimination in Employment Act. See
Rodriquez, supra, at note 4 for an explanation as to why setoffs are
required under the Act.
15/ United Aircraft Corporation, 204 NLRB 1068, 1073 (1973);
Southeastern Envelope Company, 246 NLRB 423, Note 10 at 424 (1979); and
Master Transmission Rebuilders, 269 NLRB 93 at 94 (1984).
16/ But see, East Texas Steel Castings Company, Inc., 116 NLRB 1336,
1358 (1956, enforced 255 F.2d 284 (5th Cir. 1958), where the ALJ refused
to prorate the offset where claimant worked 7 days a week at the interim
job, but only 6 days a week at the desired job.
17/ B-95927, January 12, 1951 (earnings from night work and Saturday
work offset); B-131281, May 22, 1957 (earnings from overtime offset);
B-138267, March 31, 1959 (earnings from work on Saturday and Sunday
offset); B-159401, June 20, 1966 (overtime, night differentials and
earnings from work on Saturday; Sunday or holidays offset); B-148637,
January 29, 1968 (Comptroller General rejects regulations proposed by
the Civil Service Commission providing that only amounts earned during
the time period corresponding to the employee's government position be
offset); and B-173552, October 4, 1972 (second shift earnings offset).
18/ In 55 Comp. Gen. 48, the EEO regulation relied upon was published
at 5 C.F.R. Sec. 713.271 (1975). Current regulations also provide that
backpay in equal employment cases be computed in accordance with 5 C.F.
R. Sec. 550.804. See 29 C.F.R. Sec. 1613.271 (a) and (b) (1985).
Compare, 62 Comp. Gen. 343 (1983).
File: B-224064.4
Date: February 8, 1988
Matter of: Federal Contracting Corporation--Reconsideration
DIGEST
1. Where protester is in receipt of information which gives rise to
basis of protest, it has 10 days to file a protest and protest filed
after that date is untimely.
2. Where protester waited 2 years after contract award before filing
a protest with the General Accounting Office (GAO), the protester did
not diligently pursue the matter and its protest to GAO is untimely.
DECISION
Federal Contracting Corporation (FCC) requests reconsideration of our
decision dismissing its protest of the cancellation of request for
proposals (RFP) No. DTCG29-86-R-03515 issued by the United States Coast
Guard (USCG).
Although the protester characterizes its submission as a request for
reconsideration, we find that the protester is actually alleging new
protest grounds, which we dismiss because the issues are either untimely
or not for review by our Office.
FCC's original protest, filed on August 19, 1986, alleged that the
agency improperly conducted a comparison between the costs of in-house
and contractor performance of work associated with maintaining aids to
navigation buoys at the Mobile, Alabama, USCG base. The protester
alleged that the government cost figures improperly had been adjusted
after the opening of contractor proposals. Our Office did not however
address the merits of the protest, but dismissed the protest under our
Bid Protest Regulations, 4 C.F.R. Sec. 21.1(d) (1987), upon discovering
that the protester had failed to furnish a copy of its protest to the
individual or location designated by the contracting agency in the
solicitation for receipt of protests within 1 day of filing with our
Office. Federal Contracting Corp., B-224064, Oct. 10, 1986, 66 Comp.
Gen. , 86-2 CPD P 420. We concluded that the protester's failure to
provide the contracting officer with a copy of its protest caused the
agency to miss the statutory deadline for filing its report with our
Office, and such failures frustrate our efforts to consider
expeditiously all objections to agency procurement actions. We affirmed
our dismissal in Federal Contracting Corp.--Request for Reconsideration,
B-224064.2, Nov. 3, 1986, 86-2 CPD P 512.
The protester now proffers an undated letter containing a government
cost somewhat higher than that used in the initial cost comparison and a
should cost determination form showing that the government estimate was
prepared and approved prior to receipt of best and final offers. The
contractor notes that the same signature appears on both documents,
showing that a government representative who participated in preparing
the government's bid also reviewed the contractors' offers prior to
receipt of best and final offers. The protester argues this shows the
agency improperly revised its estimate of the work after examining the
private contractor offers. Our file contains a letter from the
protester dated October 1, 1986, showing that contractor had both the
initial and revised cost comparison. The protester is clearly untimely
in raising this issue as our Bid Protest Regulations require that
protests must be filed not later than 10 working days after the basis
for the protest is known or should have been known. 4 C.F.R. Sec.
21.2(a)(2); Joseph H. Carter, B-227094.2, Nov. 9, 1987, 87-2 CPD P 463.
The protester also charges that the in-house estimate was unfairly
prepared on a lump-sum basis whereas private offerors had to offer unit
prices on an indefinite quantity, which substantially raised the
offerors' risk and costs. While it is not clear when the protester
first became aware of this basis for protest, we see no reason why the
allegation could not have been raised earlier than 21 months after
contract award (March 1986). Inasmuch as the protester has failed to
pursue this matter diligently, we dismiss its protest as untimely.
Nationwide HealthSearch, B-228148, Nov. 24, 1987, 87-2 CPD P 512.
The protester also advises that it has been unable to obtain records
to confirm that the agency is operating the buoy maintenance function in
accordance with the statement of work used in the RFP. Our review of an
agency's decision to perform services in-house is limited to
circumstances where the agency has issued a solicitation for cost
comparison and there is an allegation that the resulting cost comparison
is faulty or misleading. Etc. Technical & Professional Services, Inc.,
B-227554, July 2, 1987, 87-2 CPD P 12. The agency's current staffing is
simply irrelevant to the issue of whether a cost comparison performed 2
years ago was faulty. Nor for that matter has the protester offered any
evidence that the agency is not performing as indicated by the cost
comparison.
Accordingly, the protest is dismissed.
Robert M. Strong
Deputy Associate
General Counsel
Matter of: Lewis R. Miller -- Reimbursable Interagency Detail --
Relocation Expenses
File: B-224055
Date: May 21, 1987
DIGEST
An employee was detailed from his agency position in Washington,
D.C., to a position with a commission in Flagstaff, Arizona. Relocation
expenses were authorized for his travel to Arizona in 1982 and for his
return travel in early 1984 after the detail was terminated. Although
the agency's auditors question the payment of relocation expenses in
this situation, we conclude that such payment was proper. Based on the
issuance of the orders directing the assignment, the duration of the
assignment, end the nature of the duties to be performed, it appears
clear that this assignment was a permanent rather then temporary duty
assignment.
DECISION
This decision is in response to a request from James Bagwell,
Financial Officer for the Navajo and Hopi Indian Relocation Commission.
It concerns the entitlement of Mr. Lewis R. Miller to be reimbursed
certain relocation expenses incident to duty performed by him with the
Commission during the period September 19, 1982, to January 7, 1984. We
conclude that he is so entitled, for the following reasons.
BACKGROUND
Mr. Miller was an employee of the Office of Youth Programs,
Department of the Interior (the Office), stationed in Washington, D.C.,
who was recruited by the Commission to become the Assistant Director of
Management Operations in Flagstaff, Arizona, under a reimbursable detail
arrangement. As part of that recruitment effort, the Commission offered
to pay not only his travel and transportation to and from Flagstaff, but
all relocation expenses as well. Mr. Miller was required to execute a
1-year service agreement in connection with payment of relocation
expenses.
Under the terms of the detail agreement, the Office and the
Commission agreed that Mr. Miller would remain on the employment rolls
of the Office during the entire period of the detail and then return to
his position at the Office at its conclusion. Further, the Office
agreed to maintain Mr. Miller's official time and attendance record end
to continue to pay his salary directly, subject to reimbursement by the
Commission on a quarterly basis. The Commission agreed to be directly
responsible for all other expenses incurred by Mr. Miller incident to
the detail. In this regard, the Commission authorized Mr. Miller
relocation expenses to Flagstaff by travel authorization dated August 6,
1982.
In October 1983, the Commission advised the Office that Mr. Miller's
detail would be terminated in January 1984, since the Commission needed
to reduce staffing levels and since Mr. Miller's duties could be
absorbed by other staff or contract personnel. By Travel Authorization
dated December 7, 1983, Mr. Miller was transferred from Flagstaff to
College Park, Maryland, and he was authorized travel and moving expenses
in connection with his return reassignment from the reimbursable detail.
In connection with this transfer, Mr. Miller sold his residence in
Flagstaff and was reimbursed $5,129 by the Commission for expenses
incident to the sale. Subsequently, auditors for the Office of the
Inspector General, Department of the Interior, questioned these payments
by the Commission and requested that the Commission recover the payments
on the basis that Mr. Miller's detail to the Commission in Flagstaff was
a temporary duty assignment which would not permit the payment of
relocation expenses.
RULING
Under the laws governing the entitlement of Federal employees to be
reimbursed for expenses of travel, transportation and subsistence,
chapter 57 of title 5, United States Code, and the implementing
regulations, chapter 2 of the Federal Travel Regulations, FPMR 101-7
(September 1981) (FTR), an employee may not be reimbursed relocation
expenses incident to a temporary duty assignment away from his permanent
duty station or place of abode from which he commutes daily to his duty
station. Relocation expenses may be reimbursed only when the employee
is transferred on a change of official station for permanent duty.
Conversely, under paragraphs 1-7.6a and 1-8.1a of the FTR, an employee
may not be paid per diem or actual subsistence expenses while at his
permanent duty station or his place of abode from which he commutes
daily to his duty station. His entitlement to be reimbursed such
expenses is only for periods during which he is on official business
away from his permanent station and his place of abode from which he
commutes to his duty station.
We have held that the question as to whether an assignment to a
particular location is to be considered a temporary duty assignment or a
permanent duty assignment is a question of fact to be determined from
the orders directing the assignment, the duration of the assignment and
the nature of the duties to be performed under those orders. See
Bertram C. Drouin, 64 Comp. Gen. 205 (1985); Peter J. Dispenzirie, 62
Comp. Gen. 560 (1983); and Peck and Snow, B-198887, September 21, 1981.
Further, the agency designation of an employee's permanent duty station
as being at a particular location is not necessarily determinative.
Frederick C. Welch, 62 Comp. Gen. 80 (1982).
In the present case, we note that the travel orders authorized
relocation expenses consistent with a permanent duty assignment.
Further, we note that although the detail agreement between the Office
end the Commission was for a 1-year period, the Commission anticipated
that Mr. Miller's detail would continue until the statutory authority
for the Commission expired in 1986. Finally, it appears that the nature
of Mr. Miller's duties, serving on a staff position with the Commission,
were those associated with a permenent duty assignment and not a
temporary duty assignment. See Drouin end Dispenzirie, cited above.
Therefore, we conclude that Mr. Miller's service with the Commission
was a permanent duty assignment and that relocation expenses were
properly authorized end payable.
Acting Comptroller General
of the United States
Matter of: Philip E. Trickett--Use of Personal Discount Coupon for
Official Travel
File: B-224054
Date: March 17, 1987
DIGEST
An employee, who traveled on official business, claims reimbursement
for $50 discount coupon he used in purchasing airline ticket. The
discount coupon was earned by the employee in connection with his
personal, long-distance telephone calls. We hold that the employee may
be reimbursed only for the actual and necessarily incurred travel
expenses and not for any gratuitous payments made in the course of
official travel. Personally obtained coupons should be used for
personal purposes only and not for official travel. Therefore, employee
may not be reimbursed for the discount coupon.
DECISION
This decision is in response to a claim submitted by Mr. Philip E.
Trickett, an employee of the Department of the Air Force, for
reimbursement of the value of a personallyobtained discount coupon he
used in connection with official travel. For the reasons set forth
below, we hold that Mr. Trickett may not be reimbursed for the amount he
alleges to be the value of the discount coupon.
Mr. Trickett was authorized to travel from his permanent duty station
at Wright-Patterson Air Force Base, Ohio, to the Naval Air Station in
Lemoore, California, for temporary duty in November 1985. He states
that after making his airline reservations through the Scheduled Airline
Ticket Office (SATO), he chose to purchase his round-trip ticket at the
airport ticket counter using his personal credit card. He further
states that the cost of the ticket ($522) was the same whether he or the
Government purchased the ticket.
When Mr. Trickett purchased the round-trip airline ticket, he also
used an American Telephone and Telegraph (AT&T) Travel Certificate which
he had earned through personal long-distance telephone calls over AT&T
long-distance lines.
By using this certificate he received a $50 credit towards the
purchase of the airline ticket. The Air Force later reimbursed Mr.
Trickett only for his actual cost of travel ($472) and denied his claim
for the additional $50 representing the reduction in the cost of the
ticket through the use of the discount coupon. The agency report states
that these saving certificates cannot be redeemed for cash but may be
used only to reduce the price of a product or service obtained by the
individual. The agency report recommends denial of the claim on the
basis that reimbursing the traveler for the value of the certificate
would convert the certificate into cash.
Mr. Trickett argues that the certificate was worth $50 to him, that
he earned the certificate through personal, longdistance telephone calls
made at his expense, and that the Government should not claim all of the
benefits through his use of his personal certificate. In an employee
suggestion he submitted to the Air Force, Mr. Trickett recommends that
employees receive 80 percent of the savings achieved by use of these
certificates which would act as an incentive to employees to use the
certificates and would benefit the Government by reducing the cost of
travel.
OPINION
Neither the statutes nor the applicable regulations governing the
travel of Federal employees specifically provide for the reimbursement
to employees of the value of certificates such as those used by Mr.
Trickett. See 5 U.S.C. Sec. 5706 (1982) and paragraph 1-2.1 of the
Federal Travel Regulations, FPMR 101-7 (Supp. 5, June 19, 1983), incorp.
by ref., 41 C.F.R. Sec. 101-7.003 (1985), which authorize the
reimbursement of only the actual and necessary travel expenses incurred
by an employee. In an analogous situation we considered the claim of an
employee who traveled on official business using a free airline ticket
issued to her husband through his membership in an airline frequent
flyer program. We held in Martha C. Biernaski, 65 Comp. Gen. 171
(1985), that the employee could not be reimbursed the constructive cost
of the ticket in the absence of any legal obligation on her part to pay
for this free ticket.
Although we recognize that it is possible to place a "value" on a
travel certificate, bonus coupon, or similar instrument obtained through
an employee's independent, personal actions, we do not believe that it
is in the Government's interest to become involved in the use of such
instruments. To allow reimbursement to an employee who has used
personally obtained discount coupons compounds the problems of control
and accountability. In our view, the best way to simplify these matters
is to deny reimbursement to an employee for the use of personally
obtained discount coupons and to charge the employee for the value of
the use of discount coupons obtained during Government travel. Simply
put, Government coupons should be used for Government purposes only and
personal coupons should be used for personal purposes only, to insure
the greatest degree of accountability and control.
Therefore, we conclude that Mr. Trickett may be reimbursed only for
his actual costs incurred in his airline flight, namely $472.
Comptroller General
of the United States
Matter of: Frank J. Delano - Improper Lump-sum Leave Payment -
Waiver Consideration
File: B-224052
Date: May 11, 1987
DIGEST
An employee, a Personnel Management Specialist, resigned his
competitive status position with his agency end accepted an excepted
position in another agency without a break in service. He prepared his
own SF-52, Request for Personnel Action, noting that lump-sum payment
for annual leave was not to be made. Due to an error by the agency's
personnel office, he received the lump-sum payment for his annual leave,
and he seeks waiver of this erroneous overpayment. The employee's
resignation end subsequent reemployment without a separation for one or
more workdays does not authorize lump-sum payment of annual leave under
5 Sec. 5551 (a) (1982). The overpayment may not be waived under 5
U.S.C. Sec. 5584, since the employee was not without fault in the
matter.
DECISION
This decision is in response to a request from an Authorized
Certifying Officer, National Park Service, Department of the Interior.
It concerns the claim of Mr. Frank J. Delano for waiver of his
indebtedness to the United States, which arose from an improper payment
of lump-sum annual leave. We conclude that repayment is required and
waiver is inappropriate, for the following reasons.
BACKGROUND
Mr. Deleno was employed as a Personnel Management Specialist by the
National Park Service, Grand Canyon National Park. Effective Saturday,
June 8, 1985, he resigned from that position, and he was employed by the
Navajo and Hopi Indian Relocation Commission, Flagstaff, Arizona,
effective Monday, June 10, 1985. Although transfers between Federal
agencies are normally accomplished without requiring the employee to
officially resign from the old agency, Mr. Delano resigned because, as
he states in his letter, his new position was in the Excepted Service
and he had to relinquish his competitive status in order to accomplish
his transfer. Mr. Delano prepared his own SF-52, Request for Personnel
Action, on which he specifically requested that lump-sum leave not be
paid.
Notwithstanding that specific request, the Regional Personnel Office
for the National Park Service improperly authorized lump-sum leave
payment of his annual leave in the amount of $3,310.23, which
represented 231 hours of annual leave. The agency later billed Mr.
Delano for the full amount of the lump-sum leave payment, end he seeks
waiver of that overpayment. He asserts simply that the error was wholly
that of the National Perk Service, not his, and that collection is not
in the best interests of the United States. He argues that since the
time of his lump-sum payment, his salary has significantly increased end
that any subsequent lump-sum payment by the Government would result in
higher costs to the Government. In addition, he argues that restoration
of 231 hours of annual leave would result in a forfeiture of leave in
excess of the 240-hour ceiling at the end of the leave year.
RULING
Section 5551 of title 5, United States Code (1982), provides that an
employee is entitled to a lump-sum payment for all of his accumulated
end currently accrued annual leave remaining to his credit upon
separation from Federal service. However, if that individual is
reemeloyed by a Federal agency under the same leave system before the
end of the projected period covered by the lump-sum payment, the
employee is required to refund to the employing agency an amount equal
to the pay covering the period between the date of reemployment and the
end of the lump-sum period. 5 U.S.C. Sec. 6306(e) (1982). The leave
represented by the refund shall be recredited to the employee's account.
5 U.S.C. Sec. 6306(b) (1982).
We have been informed that the Navajo and Hopi Indian Relocation
Commission has the same leave system as the National Park Service.
Furthermore, it appears that Mr. Delano's actions did not result in a
separation from Government service for one or more workdays but rather
was intended to be a resignation from one agency end reemployment in
another agency the following workday. Therefore, a lump-sum leave
payment is not permitted under those circumstances. Willie W. Louie, 59
Comp. Gen. 335 (1980).
With regard to the issue of waiver under the provisions of 5 U.S.C.
Sec. 5584, the Comptroller General may waive recovery of debts arising
out of erroneous payments of pay end allowances to Federal employees.
However, waiver is precluded if in the opinion of the Comptroller
General:
" * * * there exists, in connection with the claim, an
indication of * * * fault, * * * on the part of the employee * *
*." 5 U.S.C. Sec. 5584(b)(1).
Mr. Deleno asserts that payment was made due to administrative error
end that he did not contribute to that error. That is not the basis
upon which waiver determinations are predicated. The word "fault" as
used in 5 U.S.C. Sec. 5584 has been interpreted as including something
more than a proven overt act or omission by an employee. Fault is
considered to exist if, in the light of all the facts end circumstances,
it is determined that an employee exercising reasonable diligence should
have known that an error was made and taken action to have it corrected.
The standard employed by this Office is to determine whether a
reasonable person should have been aware that he was receiving a payment
to which he was not entitled. George R. Beecherl, B-192485, November
17, 1978.
In the present case, Mr. Delano, a Personnel Management Specialist,
prepared his own personnel request forms and specifically stated on the
form "DO NOT PAY LUMP SUM." Clearly, he knew that he was not entitled to
a lump-sum payment for annual leave at that time. When he thereafter
received the payment, he should have known that an error had been made
and should have brought the matter to the attention of the proper
authorities end sought correction of the error. It is our view,
therefore, that Mr. Delano was not without fault and that it would not
be against equity and good conscience nor contrary to the best interest
of the United States to require him to repay the amount.
With regard to the restoration of the 231 hours of annual leave end
possible forfeiture of annual leave, we have ruled that forfeiture due
to the failure to recredit leave at the time of appointment constitutes
forfeiture as a result of administrative error under 5 U.S.C. Sec.
6304(d) (1) (A) (1982). Louie, cited above. Such forfeited annual
leave would be restored to the employee for use not later than the end
of the leave year ending 2 years after the date the annual leave is
restored to the employee. 5 C.F.R. Sec. 630.306 (1986).
Comptroller General
of the United States
Matter of: Dan Wendling
File: B-224048
Date: April 24, 1987
DIGEST
Employee completed his temporary duty in Oklahoma City at 6 p.m. on
Friday but remained at his temporary duty point until Sunday when he
returned by air to his permanent duty station in Memphis. He was not
required to travel during unreasonable hours and reimbursement of his
air travel expense is based on the constructive cost of the next
available flight on Saturday with the extra expense of the flight made
on Sunday for the employee's convenience to be borne by him.
DECISION
A decision is requested whether an employee may be paid the extra
cost of air travel based on constructive cost comparison which was
deducted from the reimbursement of his travel expenses when he
interrupted his travel by not returning to his permanent duty station on
the next available flight after completion of temporary duty. 1/ We
conclude that the employee may not be paid since when an employee for
his convenience interrupts travel by a direct route, the employee shall
pay the additional expense.
Mr. Dan Wendling, an employee of the Defense Logistics Agency
assigned to the Defense Industrial Plant Equipment Center, Memphis,
Tennessee, performed temporary duty at Tinker Air Force Base, Oklahoma.
Since he completed his temporary duty at 6 p.m. on Friday, May 2, 1986,
he was unable to take his scheduled return flight on Friday. He
remained at his temporary duty point until Sunday, May 4, 1986, when he
returned to his permanent duty station, and the reimbursement of his
expenses was based on a constructive cost comparison.
Since he was not required to travel during unreasonable hours (12
p.m. on Friday until 6 a.m. on Saturday), the cost comparison was based
on the next available flight after 6 a.m. on Saturday, May 3, 1986.
The airfare for that flight was $101. However, the airfare on the
flight that Mr. Wendling actually used on Sunday was $203, which was
$102 more than it would have been had he taken the Saturday flight.
This amount was deducted from the reimbursement of Mr. Wendling's travel
expenses.
Mr. Wendling has submitted a voucher claiming payment for the
additional cost of air travel deducted from his travel reimbursement.
He contends that after completing his assignment at 6 p.m. on Friday he
was unable to take his flight as scheduled and there were no other
flights available that night. Realizing that he would have to travel on
his own time, he decided to delay his departure until Sunday. However,
the ticket cost $102 more than it would have had he traveled on the next
available Saturday flight. The only reason it cost $102 more was
because he delayed his return travel until Sunday as a matter of
personal preference.
Regulations governing travel of Federal employees are contained in
Chapter 1 of the Federal Travel Regulations, FPMR 101-7 (September 1981)
incorp. by ref., 41 C.F.R. Sec. 101-7.003 (1986) (FTR). Paragraph
1-2.5b thereof concerning interrupted travel provides:
"b. Indirect-route or interrupted travel. When a person for
his/her own convenience travels by an indirect route or interrupts
travel by direct route, the extra expense shall be borne by
him/her. Reimbursement for expenses shall be based only on such
charges as would have been incurred by a usually traveled route.*
* *"
Mr. Wendling was required to begin his return travel to his permanent
duty station after completion of his temporary duty using the first
flight scheduled at a reasonable hour on Saturday. His delay in
returning until Sunday, for his own convenience, amounted to an
interruption of his official travel. Therefore, reimbursement for his
expenses was based on such charges as would have been incurred had he
traveled on Saturday. Thus, his reimbursement for airfare on his return
travel was limited to $101, the constructive cost of the direct route
flights available on Saturday.
Accordingly, the claim for payment for the additional cost of the air
travel deducted from Mr. Wendling's travel reimbursement is denied.
Comptroller General
of the United States
FOOTNOTE
1/ Ms. Patricia N. Shipp, Accounting and Finance Officer, Defense
Depot, Memphis, Tennessee, submitted the request for a decision and it
has been assigned control number 86-15 by the Per Diem, Travel and
Transportation Allowance Committee.
Matter of: International Household Goods Forwarders Supplemental
Claims - Statute of Limitations
File: B-224046
Date: September 25, 1987
DIGEST
Forwarders'supplemental bills for single factor ocean rate
adjustments were received in the General Services Administration (GSA)
more than 3 years after delivery and original payment dates. They are
not barred from consideration and payment by the GSA where, under the
Military Traffic Management Command's (MTMC) rate adjustment procedures,
forwarders' claims do not accrue until MTMC approves forwarders'
requests for adjustment, and under GSA's regulations claims are
"received" when received either by GSA or by the agency out of whose
activities the claims arose. The forwarders' claims were received in
GSA within 3 years of the dates on which MTMC approved the rate
adjustments, and MTMC received the requests for rate adjustments within
3 years of the original payment dates.
DECISION
A certifying officer of the General Services Administration (GSA) 1/
requests an advance decision to resolve doubts concerning the question
of whether the agency is barred by 31 U.S.C. Sec. 3726 (1982), a statute
of limitations, from settling certain claims for ocean rate adjustments
received from international household goods forwarders. We conclude
that the claims are not barred since they were received within 3 years
of the dates on which they accrued.
BACKGROUND
Supplemental bills have been submitted by certain household goods
forwarders more than 3 years after delivery and original payment to the
forwarders for International Through Government Bill of Lading (ITGBL)
movement of several household goods shipments. The claims are based on
adjustments approved by the Military Traffic Management Command (MTMC)
for increases in underlying ocean transportation rates. The increases
occurred subsequent to the forwarders'submission of single factor rates
intended for application during MTMC's 6-month acquisition periods,
known as "volumes," on ITGBL household goods shipments. The claims were
received well within 3 years of the adjustment approval dates but more
than 3 years after the original bills had been paid.
Under 31 U.S.C. Sec. 3726(a), the forwarders' initial bills were paid
upon presentation prior to audit by GSA. Subsequent claims for
additional amounts are subject to the limitation period prescribed by
the statute. There are four potential events that can trigger running
of the 3-year limitation period for receiving claims in GSA. These are
prescribed in section 3726(a) which provides in part:
" * * * A claim under this section shall be allowed only if it
is received by the Administrator of General Services not later
than 3 years (excluding time of war) after the later of the
following dates:
"(1) accrual of the claim;
"(2) payment for the transportation is made;
"(3) refund for an overpayment for the transportation is made;
or
"(4) a deduction under subsection (b) of this section is made."
In this case no deduction or refund occurred and there is no
disagreement that the supplemental bills in dispute were received in GSA
more than 3 years after payment of the original bills.
MTMC nevertheless urges payment of the claims on the theory that,
under section 3726(a) (1), the claims accrued when MTMC approved the
forwarders' requests for adjustments under the agency's ocean rate
adjustment program.
Under MTMC's ocean rate adjustment program 2/ forwarders submitted
single factor rates based on underlying ocean rates in effect on a
particular date, known as a "pegged quotation date," prior to a
prospective contract period, or "volume." Where qualifying increases in
ocean transportation rates occurred after the rates were submitted,
forwarders were required to furnish specified information to MTMC with
their requests for adjustment within 60 days of the Volume's expiration
date. MTMC reserved the right to approve or disapprove the requests
depending on wnether they satisfied administrative criteria. If
approved, adjustments were retroactively authorized by publication of a
new item in the forwarders' applicable tender covering the period during
which they were liable for payment of the increased ocean rates. MTMC
states that the approval procedure required substantial time to
complete.
GSA's report contains an illustration of how the question of
untimeliness arose. A forwarder picked up a shipment on September 29,
1982, which was within the 6-month period of Volume 44, April 1,
1982-September 30, 1982. The goods were placed on board the ocean
vessel on November 8, 1982, which was after Volume 44 expired and after
the ocean carrier's rate increased on November 1, 1982. The forwarder's
agent requested MTMC to approve an adjustment on November 29, 1982, but
MTMC denied the request on December 8, 1982. MTMC disapproved the
adjustment request for the reason that adjustments for Volume 44 did not
apply to shipments picked up before the end of the Volume and loaded on
a vessel subsequent to the end of the Volume based on increased costs
instituted after the Volume had closed. The forwarders again sought
adjustments which also were rejected.
The forwarders took no further action to dispute MTMC's position
until August 3, 1984, when a complaint (No. 399-84C) was filed in the
United States Claims Court. The complaint was filed by the Household
Goods Forwarders Association of America, Inc., on behalf of itself and
five member carriers seeking payment of specific dollar amounts based on
increases in underlying ocean transportation rates which became
effective after the pegged quotation date and which applied to Volume 44
shipments.
In early 1985, however, the plaintiffs requested that the action be
dismissed, presumably because the government had agreed to approve the
requests for adjustment. The suit was dismissed with prejudice, and on
April 5, 1985, and June 5, 1985, MTMC formally approved requested
adjustments for application to various traffic channels. The forwarders
then published tender supplements increasing the single factor rates
retroactively to the dates covering the relevant shipments.
Supplemental bills, which were based on the approved tender supplements,
were not filed in GSA until 1986, more than 3 years after payment for
the transportation, which had occurred in 1982, and more than 3 years
after delivery. Clearly, however, the bills were received in GSA within
3 years of the date of MTMC's approval, which occurred in April and June
1985.
OPINION
There are two alternative legal bases supporting our conclusion that
the GSA is not barred from considering the claims: (1) they accrued
within 3 years of receipt oy GSA, and (2) they were received by GSA's
designee within 3 years of payment.
We are persuaded by MTMC's contention that the forwarders' claims did
not accrue until their requests for rate adjustments were approved by
MTMC, which occurred on April 5 and June 5, 1985. Since the claims,
based on the approved adjustments, were received in 1986, they clearly
were received within 3 years of accrual. The legal premise for adopting
this view is tne general rule that a claim does not accrue until the
claimant has the right to demand payment. See Nager Electric Co., Inc.,
v. United States, 368 F.2d 847 (Ct. Cl. 1966) and Fattore, v. United
States, 312 F.2d 797 (Ct. Cl. 1963). And the right to demand payment
does not arise until all events have occurred which fix the liability of
the United States. Fattore v. United States, supra; B-208856, November
4, 1982.
Here, the parties agreed to the application of a very detailed
adjustment procedure under which MTMC reserved the right to determine
whether to approve adjustments and authorize payments. The procedures
required forwarders to submit formal requests for MTMC consideration and
approval of rate adjustments. Required with the requests was
substantial information, including -- in addition to basic data, lists
of alternate ocean carriers, schedules and rates--a showing that the
requested adjustments represented a change in costs to the forwarders of
not less than 2.5 percent; that the underlying rate increases became
public knowledge after the pegged quotation date, and that no "viable
underlying service" at the former rate level remained. Also required
with requests were proposed rate tender items as they should appear in
the tender, and copies of all relevant tariff pages of viable carriers
showing increases or decreases since the pegged quotation date. Under
these procedures all events necessary to fix liability of the United
States did not occur until MTMC approved the adjustments. Upon approval
and formal publication of tender supplements the forwarders had a right
to demand payment. Only then did the claims accrue for purposes of
starting the running of the 3-year limitation period in 31 U.S.C. Sec.
3726(a).
Alternatively, even if the claims accrued upon delivery or payment of
the original bills, GSA's regulations provide a reasonable basis for
concluding that the claims were timely filed. Under 41 C.F.R. Sec.
101-41.602(b) a claim is "received" within the meaning of 31 U.S.C. Sec.
3726(a), when it is received by GSA or GSA's designee, that is, the
agency out of whose activities the claim arose, within 3 years of the
date of payment, among the other specified dates. Under 41 C.F.R. Sec.
101-41.604-2(b)(4) agencies are expressly authorized to pay claims for
single-factor ocean rate adjustments. Here, for example, the forwarders
requests for adjustments can reasonably be viewed as claims and demands
for payment which were received by MTMC, GSA's designee, in 1982, the
same year in which the original payments were made.
Accordingly, since the forwarders'supplemental bills were received
either by GSA or its designee within 3 years, GSA is not barred by 31
U.S.C. Sec. 3726(a) from considering the claims for payment.
Comptroller General
of the United States
FOOTNOTES
1/ Michael D. Hipple, Director, Transportation Audit Division, GSA.
2/ The ocean rate adjustment program was part of MTMC's ITGBL
procurement system in the early 1980's, but has since been discontinued.
B-224033
January 30, 1987
DIGEST
This responds to a request from the Chairman, House Committee on Post
Office and Civil Service, for an opinion on, "The legality of detailing
Schedule C employees * * * to the White House or any agency, other than
the one to which the individual was appointed." We conclude that there
are no specific prohibitions against detailing a Schedule C employee to
the White House or any agency other than the one to which the employee
was appointed. Under appropriations law, Federal employees, including
Schedule C employees, may not be detailed away from their agencies on a
nonreimbursed basis, except in the limited circumstances where the
detail involves matters similar or related to matters ordinarily handled
by the loaning agency that will aid the loaning agency in accomplishing
a purpose for which its appropriations are provided. Also,
nonreimbursed details are permissible for brief periods when necessary
services cannot be obtained, as a practical matter, by other means and
the numbers of persons and cost involved are minimal. However, there is
statutory authority to detail Federal employees, including Schedule C
employees, to five specific White House offices on a nonreimbursed basis
under certain circumstances.
The Honorable William D. Ford
Chairman, Committee on Post
Office and Civil Service
House of Representatives
Dear Mr. Chairman:
This responds, in part, to your letter dated May 21, 1986, which
asked us to review the issues raised in a letter of the same date from
the Honorable Patricia Schroeder, Chairwoman, Subcommittee on Civil
Service, and the Honorable Gary L. Ackerman, Chairman, Subcommittee on
Human Resources. One of those issues was:
"The legality of detailing Schedule C employees, that is, those
employees in positions of a confidential or policy-determining
character, to the White House or any agency, other than the one to
which the individual was appointed."
As a result of staff discussions, it was agreed that we would provide
our opinion on this issue separate from our response to the remainder of
the issues raised. We conclude below that there are no specific
prohibitions against detailing Schedule C employees to the White House
or any agency other than the one to which the individual was appointed.
Generally, these details should be made on a reimbursable basis, but
there is a statutory exception to this rule with regard to details to
certain White House offices. This is also discussed below.
SCHEDULE C EMPLOYEES
By definition, Schedule C employees hold positions which are
policy-determining or which involve a close and confidential working
relationship with the head of an agency or other key appointed
officials. See 5 C.F.R. Sec. 213.3301 (1986). These positions are
dependent upon incumbency; once a Schedule C position has become
vacant, the agency must request Office of Personnel Management (OPM)
approval to reestablish the position before the position can be filled.
Federal Personnel Manual (FPM), ch. 213, Sec. 3-lb. Generally, prior
approval must be requested for changes in such a position's duties,
grade, organizational location, or reporting relationships. FPM, ch.
213, Sec. 3-5a.
DETAILS
A detail is "the temporary assignment of an employee to a different
position for a specified period, with the employee returning to his
regular duties at the end of the detail." See Department of Health and
Human Services Detail of Office of Community Services Employees, 64
Comp. Gen. 370, 376 (1985) (hereafter cited HHS Detail). A position is
not filled by a detail, as the employee continues to be the incumbent of
the position from which detailed. FPM, ch. 300, Sec. 8-1.
Generally, details of Schedule C employees are not different from
details of other Federal employees. However, Civil Service Rule VI does
prohibit the assignment of Schedule C employees to the work of a
position in the competitive service without prior approval of OPM. 5
C.F.R. Sec. 6.5 (1986). As noted above, a position at the White House
or any agency is not filled by the detail of a Schedule C employee to
it; the Schedule C employee continues to be the incumbent of the
Schedule C position from which detailed. It follows that the Schedule C
position does not become vacant or terminate when its incumbent is
detailed to another position.
GENERAL APPROPRIATIONS LAW FOR DETAILS
Appropriations must be spent only for thy purposes for which
appropriated. 31 U.S.C. Sec. 1301(a) (1982). The complement to this
requirement is the rule of law prohibiting the unlawful augmentation of
agency appropriations. See HHS Detail, at 377. Thus, under principles
of appropriations law, Federal employees, including Schedule C
employees, may not be detailed away from their agencies to any other
agency or the White House on a nonreimbursed basis, except in the
limited circumstances where the details involve matters similar or
related to matters ordinarily handled by the loaning agencies that will
aid the loaning agencies in accomplishing a purpose for which their
appropriations are provided. Also, such details are permissible for
brief periods when necessary services cannot be obtained, as a practical
matter, by other means and the numbers of persons and cost involved are
minimal. See HHS Detail, at 380-381. However, an agency may not spend
money on salaries of employees detailed to another agency to perform
work essentially unrelated to the loaning agency's functions, and the
appropriations of the receiving agency are unlawfully augmented by the
amount the loaning agency pays for the salaries of the loaned employees.
See HHS Detail, at 379-380.
Special attention is drawn to our HHS Detail conclusions in FPM
Letter No. 300-31, August 27, 1985. That letter also concluded that,
"All other interagency details must be on a reimbursable basis unless
the agency has a specific statutory authority to make nonreimbursable
details." Whether particular details must be reimbursed is to be
determined on the basis of case-by-case analysis.
STATUTORY AUTHORITY FOR WHITE HOUSE DETAILS
There is, however, a statutory exception to those principies of
appropriations law for certain White House details. As we held in HHS
Detail, at 380, section 112 of title 3, United States Code (1982),
provides statutory authority to detail Federal employees, including
Schedule C employees, to five specific White House offices on a
nonreimbursed basis under certain circumstances for up to 180 calendar
days in a fiscal year. Those offices are: the White House Office, the
Executive Residence at the White House, the Office of the Vice
President, the Domestic Policy Staff, and the Office of Administration.
Any such details extending beyond 180 calendar days must then be
converted to reimbursed details for the additional time.
SUMMARY
In summary, there are no specific prohibitions against detailing a
Schedule C employee to the White House or any agency other than the one
to which the employee was appointed. Under appropriations law, Federal
employees, including Schedule C employees, may not be detailed away from
their agencies on a nonreimbursed basis except in the limited
circumstances where the detail involves matters similar to matters
ordinarily handled by the loaning agency or where services cannot be
obtained by other means and the numbers of persons and costs involved
are minimal. However, there is statutory authority to detail Federal
employees, including Schedule C employees, to five specific White House
offices on a nonreimbursed basis under certain circumstances.
For your ease of reference, we have enclosed copies of the materials
discussed above. We are providing copies of this letter and its
enclosures directly to Chairwoman Schroeder and Chairman Ackerman. In
accord with our usual policy, unless you publicly announce its contents
earlier, we plan no further distribution of this letter until 30 days
from its date.
Sincerely yours,
Comptroller General
of the United States
Enclosures
cc: The Honorable Patricia Schroeder
Chairwoman, Subcommittee on
Civil Service
House of Representatives
(With enclosures)
The Honorable Gary L. Ackerman
Chairman, Subcommittee on Human
Resources
House of Representatives
(With enclosures)
Matter of: Ramer Products Ltd.--Reconsideration
File: B-224027.7
Date: September 28, 1987
DIGEST
1. The General Accounting Office will not consider a protest that
fails to set forth a detailed statement of the legal and factual grounds
of protest, and does not include copies of relevant documents.
2. Protest based upon alleged improprieties in a solicitation--vague
and ambiguous specifications and evaluation criteria--that are apparent
prior to the closing date for receipt of initial proposals is untimely
where not filed prior to that date; a protest included in the initial
proposal is not a timely pre-opening protest, since there is no
requirement that the agency open or read proposals on or before the
closing date.
3. Patent infringement allegations are not encompassed within the
General Accounting Office's bid protest function.
DECISION
Ramer Products Ltd. requests reconsideration of our dismissal of its
August 29, 1987, protest against award of a contract under request for
proposals No. DAKF31-86-R-0138, issued by the Department of the Army for
ski bindings. We affirm the dismissal.
This procurement, begun in 1986, was the subject of a previous
protest by Ramer. In East Norco Joint Venture, et al., B-224022, et
al., Jan. 5, 1987, 87-1 CPD P 6, aff'd Department of the Army, et al.,
B-224022.2, et al., Apr. 9, 1987, 87-1 CPD P 389, we sustained Ramer's
protest against the rejection of its proposal as technically
unacceptable; we found that the agency had acted improperly by
requesting samples from the proposed awardee while evaluating Ramer on
the basis of previously-purchased ski bindings that its proposals
indicated had been specifically modified in critical areas. Pursuant to
our recommendation, the Army requested samples from Ramer and, after
negotiations, requested best and final offers (BAFOs).
Ramer raised several allegations in its August 29 protest, but we
dismissed the protest because Ramer failed to comply with the
requirement in our Bid Protest Regulations, 4 C.F.R. Sec. 21.1(c) (4)
(1987), that protests set forth a detailed statement of the legal and
factual grounds of protest, including copies of relevant documents. As
part of its protest, Ramer alleged that the solicitation included vague
and ambiguous specifications and evaluation criteria, and we thus also
dismissed these allegations because they were based upon alleged
improprieties in the solicitation that were apparent prior to the
closing date for receipt of proposals, but were not protested prior to
the closing date, as also required by our Regulations. 4 C.F.R. Sec.
21.2(a) (1).
Ramer first provides details in support of its August 29 allegations
in its request for reconsideration, and claims that it could not provide
"adequate specific justifications" in its protest because it had not yet
received a debriefing from the agency. We find, however, that this
information does not provide any basis for reconsidering the matter.
Regarding its allegation of vague and ambiguous specifications and
evaluation criteria, Ramer states that in its initial proposal it
questioned some of the improprieties in the solicitation. Ramer seems
to argue that this satisfied any requirement for a timely, detailed
protest. Protest allegations raised in a proposal, however, do not
constitute a timely preopening protest to the agency, since there is no
requirement that an agency open or read proposals on or before the
closing date. East Norco Joint Venture, et al., supra.
Ramer also alleged in the August 29 protest that award was not based
on valid technical considerations. This argument also appears untimely.
Although Ramer states it could not furnish details on this and other
issues until after its September 1 debriefing, documents submitted by
Ramer indicate that it was advised during negotiations of the technical
deficiencies and weaknesses subsequently cited in the written
debriefing. Ramer responded to this deficiency notice received during
negotiations by protesting to the contracting officer, disputing the
evaluation and requesting more specific information needed before the
firm could provide a BAFO. The Army proceeded with receipt of BAFOs
without addressing Ramer's concerns; this constituted adverse agency
action on the agency level protest, and since the details of this
allegation were first provided to our Office with Ramer's
reconsideration request, more than 10 working days after the adverse
agency action, the allegation is untimely. 4 C.F.R. Sec. 21.2(a)(3).
Ramer alleged in its protest that award was not made to the lowest
qualifying bidder, since its offer was low and it believes the agency
nevr properly found its offer technically unacceptable. As we already
have found Ramer's challenge of the evaluation to be untimely, there is
no reason for questioning the award to the next low acceptable offeror
on this basis.
Ramer claimed in its protest that the awardee would infringe Ramer's
patents. Patent infringement allegations are not encompassed within our
bid protest function, and we thus will not consider this allegation.
Malzahn Co., B-225813, June 5, 1987, 87-1 CPD P 574.
The dismissal is affirmed.
Harry R. Van Cleve
General Counsel
Matter of: Main Electric Ltd.
File: B-224026.2
Date: April 10, 1987
DIGEST
Decision denying protest of bid rejection because of the protester's
failure to separately price an item added to the bid schedule by
amendment is affirmed where the protester has not shown the decision to
be based on any error of fact or law.
DECISION
Main Electric Ltd. requests reconsideration of our decision, Main
Electric Ltd., B-224026, March 3, 1986, 86-2 CPD P 511, denying its
protest that the Department of the Army improperly rejected its low bid
under invitation for bids (IFB) No. DAAC89-86-B-0124. We upheld the
Army's determination that the bid was nonresponsive for failing to price
an item added by amendment to the original bid schedule or to otherwise
indicate in its bid that the total price in the original bid schedule
included a price for the added item. The request for reconsideration
repeats the protester's original contention that its bid must be
construed to include the added item at the total price listed in the bid
schedule because Main Electric acknowledged the amendment. In addition,
the protester contends that our decision ignored the fact that the
contracting officer failed to declare the bid nonresponsive at bid
opening and twice requested verification of Main Electric's price, which
according to the protester, estopped the agency from rejecting the bid.
Main Electric also contends that since the awardee failed to include a
price for the additional items in the amended bid schedule, its bid
should also be rejected.
We affirm our prior decision.
As explained in our prior decision, the mere acknowledgment of an
amendment adding items to a bid schedule is not sufficient in itself to
constitute a bid for the additional items.
The bid must include a separate price for the added item or some
clear indication that the additional item is included in the total
price. John Mondrick Plumbing & Heating, Inc., B-201675.3, July 31,
1981, 81-2 CPD P 73. We note, that the amendment, which added a
requirement for 12 switches to the original requirement for replacement
of electrical power poles, included a bid schedule form which contained
spaces specifically designated for unit and extended prices for the
switches. Consequently, we fail to understand how a bidder reasonably
could have assumed that merely acknowledging the amendment would
constitute an unequivocal offer to provide the switches at the total
price contained in the original schedule, which referred only to the
replacement of the poles.
Main Electric argues that our decision incorrectly added $30,000--the
government's estimate of the total price for the switches--to its bid
price which was approximately $13,000 lower than the awardee's. We did
not alter Main Electric's bid, we merely examined the materiality of the
failure to provide a specific price for the switches in the bid in light
of the potential prejudice to other bidders to determine whether the
defect was de minimus and could be waived as a minor informality. See
FAR, 48 C.F.R. Sec. 14.405 (1986). In view of the government's estimate
that the switches were valued at $30,000 we concluded that the failure
to include them in the bid could not be waived as de minimus. The
protester has not shown that our conclusion was wrong.
Further, the fact that the contracting officer did not declare Main
Electric's bid nonresponsive at bid opening and twice requested a price
verification did not, as Main Electric argues, constitute waiver of the
bid's defect or estop the government from rejecting the bid. See Dean's
Security Professionals, B-224429, July 31, 1986, 86-2 CPD P 132.
Finally, regarding the awardee's bid, while it is true that the
awardee did not complete the amendment's pricing schedule, the awardee
inserted unit and extended prices for the switches in the original bid
schedule and clearly included those prices in its total price. Thus,
the awardee's bid unequivocally offered to perform the full scope of
work, including providing the switches, at a definite price and was
responsive.
The prior decision is affirmed.
Harry R. Van Cleve
General Counsel
Matter of: Syncor Industries Corporation
File: B-224023.3
Date: October 15, 1987
DIGEST
1. Contention that a contracting officer is required to test the
market by contacting other sources prior to exercising an option to
extend the term of an existing contract is without merit because the
regulations permit the determination to exercise an option to be based
on a finding that the market has been stable since the award of the
initial contract.
2. A firm that did not participate in a procurement despite having an
opportunity to do so is not an interested party for purposes of
protesting after award alleged improprieties in connection with that
procurement.
3. Contract modification requiring the government to pay for
alterations to awardee's facility necessary for contract performance is
not a cardinal change where it does not substantially change the purpose
and nature of the original contract.
DECISION
Syncor Industries Corporation protests the exercise by the Naval
Supply Center, Norfolk, Virginia, of an option to extend the term of
contract No. N00189-86-D-0408 with the Jonathan Corporation. We deny
the protest in part and dismiss it in part.
The contract with Jonathan, awarded on August 22, 1986, is for the
repair, overhaul, and modification of electronic and electrical warfare
equipment, and for technical support in connection with the installation
of related support systems.
The Navy awarded Jonathan a 1-year, indefinite quantity, indefinite
delivery, time-and-materials contract containing two, 1-year renewal
options under request for proposals (RFP) No. N00189-85-R-0378. The
agency reports that it synopsized that requirement in the Commerce
Business Daily (CBD) and distributed copies of the RFP to 56 firms on
the agency's mailing list. (Syncor was not on the list and did not
respond to the CBD notice.) The agency received two offers--from
Jonathan and from the incumbent, Superior Engineering and Electronics
Co., Inc.--which the agency determined to be essentially equal
technically. The award to Jonathan was based on its 3-year proposed
costs of $36,912,159, almost $5 million lower than Superior's costs. 1/
On July 7, 1987, the contracting officer made a determination under
the Federal Acquisition Regulation (FAR), 48 C.F.R. Sec. 17.207 (1986),
that exercise of the first renewal option would be the most advantageous
method of fulfilling the government's need for the required services
following the expiration of the base year of the contract with Jonathan.
The contracting officer cited the complex nature of the services as
well as the considerable length of time required to award the initial
contract. The contracting officer noted that Jonathan's option prices
had been determined to be fair and reasonable when evaluated in
connection with the initial award and that market conditions had not
changed significantly since then.
Our Office generally will not question an agency's exercise of an
option contained in an existing contract unless the protester shows that
the agency failed to follow applicable regulations or that the
determination to exercise the option, rather than conduct a new
procurement, was unreasonable. Action Mfg. Co., B-221607.3, May 15,
1987, 66 Comp. Gen. , 87-1 CPD P 518. Here, Syncor contends that the
contracting officer violated FAR, 48 C.F.R. Sec. 17.207, by failing to
test the market to identify alternative sources. In this connection,
the protester notes that it, as well as other firms, have expressed
interest in competing for an award for the option year, and that it is
"highly probable" that a new competition would result in lower costs to
the government. Syncor also contends that exercise of the option is
unreasonable for other reasons. In addition, Syncor alleges that a
modification of Jonathan's base contract was improper because it
represented a cardinal change from the terms under which the initial
competition was conducted.
We find no merit to the protester's contention that the agency failed
to comply with FAR, 48 C.F.R. Sec. 17.207. That section provides that a
contracting officer may exercise a contract option only after
determining, among other things, that to do so would be the most
advantageous method of fulfilling the government's need, price and other
factors considered. FAR, 48 C.F.R. Sec. 17.207(c) (3). The contracting
officer must base this determination on one of three specified factors,
one of which does refer to "an examination of the market." FAR, 48
C.F.R. Sec. 17.207(d) (2). There is no requirement, however, that a
contracting officer in all cases contact other firms or "test the market
for alternative sources," as Syncor contends. ISC Defense Systems,
Inc., B-224564, Feb. 17, 1987, 87-1 CPD P 172. As happened here, a
contracting officer may decide that exercise of an option would be
advantageous to the government based on the length of time since the
initial award and the relative stability of the market. FAR, 48 C.F.R.
Sec. 17.207(d)(3); Action Mfg. Co., B-221607.2, supra. In this regard,
the exercise of the option is not an opportunity for unsuccessful
competitors to lower prices initially offered, ISC Defense Systems,
Inc., B-224564, supra, or for other firms to seek an opportunity to
compete merely by suggesting that lower prices may be obtained.
Syncor argues that the agency's exercise of the option was
unreasonable on the basis that it perpetuates improprieties associated
with the initial award. Specifically, Syncor contends that the contract
awarded to Jonathan in 1986 indicated projected 3-year costs of
$36,912,159 even though the 3-year costs as contained in Jonathan's best
and final offer, and as entered on the agency's proposal abstract, were
only $36,438,685. According to Syncor, this means that each of the
delivery orders issued thus far under the contract has been priced
incorrectly, that payments to Jonathan during the option year also will
be excessive, and that the government ultimately will pay some $473,474
more over 3 years than it should. 2/ Syncor also notes that while the
contract provides that it is subject to the Walsh-Healey Public
Contracts Act, 41 U.S.C. Secs. 35-45 (1982), the Department of Labor has
informed the Navy that it is the Service Contract Act of 1965, 41 U.S.C.
Secs. 351-358, that should apply here. The protester adds that use of
the wrong labor statute restricted competition for the base year.
The agency argues that Syncor is not an interested party to raise
these objections because the firm was not an offeror under the
solicitation. The Navy's position is that Syncor's arguments in essence
concern the propriety of the initial award and that under our Bid
Protest Regulations, only an actual offeror with a direct economic
interest is eligible to protest the award of the contract. 4 C.F.R.
Secs. 21.1(a) and 21.0 (a) (1987). We agree. The arguments concerning
the proposal abstract and the Service Contract Act concern the propriety
of the original award to Jonathan. A party that did not participate in
a procurement, despite having an opportunity to do so, does not have
standing to question an agency's conduct of that procurement.
Automation Management Corp., B-224924, Jan. 15, 1987, 87-1 CPD P 61. 3/
With respect to the issue of cardinal change, the Navy reports that,
after award, it modified Jonathan's contract to provide and pay for
alterations to Jonathan's facility necessary to permit proper contract
performance. In our view, the change--which added $339,000 to a
contract with a 3-year estimated value in excess of $39 million--did not
alter the essential nature of the contract as originally awarded and
therefore did not constitute a cardinal change. See Shihadeh Carpets
and Interface Flooring Systems, Inc., B-225489, Mar. 17, 1987, 87-1 CPD
P 295.
Finally, in its comments on the agency's report in response to the
protest, Syncor contends the Navy did not properly exercise the option
because the contract amendment that purported to do so (which Syncor
received for the first time as part of the report) did not indicate a
minimum quantity, which Syncor says is required under FAR, 48 C.F.R.
Sec. 16.504. There is no merit to this position, however, since the
solicitation did provide in clause H44 for a minimum ordering quantity
in the amount of $50,000. This clause, just as all other solicitation
terms and conditions, applies to the option years as well as to the base
year.
The protest is denied in part and dismissed in part.
James F. Hinchman
General Counsel
FOOTNOTES
1/ Superior Engineering contested the award to Jonathan on several
gounds both before this Office and in an action filed in the United
States District Court for the Eastern District of Virginia. We denied
Superior's protest in Superior Engineering and Electronics Co., Inc.,
B-224023, Dec. 22, 1986, 86-2 CPD P 698, and declined to reconsider that
decision because of the pendency of the court action. Superior
Engineering and Electronics Co., Inc.-- Reconsideration, B-224023.2,
Mar. 20, 1987, 87-1 CPD P 318. The district court subsequently denied
all of Superior's claims for relief. Superior Engineering and
Electronics Co., Inc. v. United States, No. 86-860-N (E.D. Va. Aug. 31,
1987).
2/ We reviewed Jonathan's best and final offer in camera, however,
and confirmed that in fact the totals shown there are the same as the
totals indicated on the contract itself.
3/ Most of Syncor's arguments are premised on its belief that the
Navy's exercise of the option to extend the term of Jonathan's contract
constituted an "additional award." An agency's exercise of an option
contained in an existing contract, however, is not the award of a new
contract. Action Mfg. Co., B-221607.2, supra.
Matter of: Superior Engineering and Electronics Co., Inc.
Reconsideration
File: B-224023.2
Date: March 20, 1987
DIGEST
The General Accounting Office (GAO) will not reconsider a prior
decision where the material issues are before a court of competent
jurisdiction and the court has not expressed an interest in a
reconsideration decision by the GAO of the prior decision.
DECISION
Superior Engineering and Electronics Co., Inc. requests
reconsideration of our decision, Superior Engineering and Electronics
Co., Inc., B-224023, Dec. 22, 1986, 86-2 CPD P 698, denying a protest
against the award of a contract to Jonathan Corporation under request
for proposals (RFP) No. N00189-85-R-0378, issued by the Naval Supply
Center, Norfolk, Virginia. This matter is also the subject of a suit
filed by Superior in the United States District Court (Civil Action No.
86-860-N). Superior argues that we should not dismiss its
reconsideration request even though the matter is before a court of
competent jurisdiction because we wrongfully issued our initial decision
without the court's having requested that decision.
For the reasons stated below, we dismiss the request for
reconsideration.
Superior filed its initial protest with our Office on August 28,
1986. The Navy filed an agency report on October 3, 1986 and Superior
filed its comments on the agency report on October 15, 1986.
Approximately 6 weeks later, on November 24, Superior filed suit in the
United States District Court for the Eastern District of Virginia,
seeking injunctive relief. We became aware of the litigation shortly
thereafter.
On three occasions after filing suit, counsel for the protester sent
us letters about the pending protest at our Office, including a letter
dated December 10, 1986, in which counsel for Superior filed "additional
or, alternatively, a supplemental protest to the pending protest." The
letter included additional arguments and documents in support of
Superior's protest. In another letter, also dated December 10, counsel
for the protester complained that we had given a more precise estimate
of when our decision would be issued to Jonathan's counsel who presented
that estimate to the court. Counsel for Jonathan, the interested party,
also called our Office several times after the suit was filed inquiring
as to when our decision would be issued. Further we received a call
from the United States Attorney requesting an immediate decision. Based
on these communications from the parties, we assumed that all parties
were indeed interested in our decision.
Additionally, in his December 10, 1986 letter to our Office, counsel
for the protester included a partial transcript of December 4, 1986
hearing before the court in which counsel for Jonathan stated the
following to the court:
"Mr. Shillito Counsel for Jonathan : . . . We anticipate that
that decision, that GAO decision, will deny Superior's protest,
and we reasonably anticipate that the General Accounting Office
will find, determine and conclude the contracting officer acted in
accordance with the Federal Acquisition Regulations in awarding a
contract in this instance to the Jonathan Corporation.
"The Court: Well, now, suppose they rule or suppose the Court
should find that he did not act arbitrarily and capriciously in
awarding the contract . . . . "
Based on the interest expressed by all parties, together with the
fact that the court was apprised of the pending protest and was
apparently expecting our decision, we proceeded to issue our ruling.
Superior now states that it informed the District Court during the
December 4, 1986 hearing that our Bid Protest Regulations "suggested"
that Superior's protest would be dismissed because of the pending court
action. Superior also contends that the District Court specifically
declined to request a decision from our Office. Under these
circumstances, according to Superior, we should not dismiss its request
for reconsideration unless we withdraw the prior decision.
We now have in our record the full transcripts of the proceedings
before the court. Based on our review of the transcripts, we conclude
that the court was indeed expecting our decision. First, there are many
references to GAO and our expected decision in the transcripts. For
example, the contracting officer testified:
"Well, I would look at hopefully having a GAO decision and the
recommendations from the GAO relating to what actions to take in
the procurement."
Further, counsel for Jonathan had the following exchange with the
court:
"The Court: So then really if it is found finally that the
contracting officer did not act arbitrarily and capriciously that
ends the situation. Is that what you're saying?"
"Mr. Shillito: That is correct, Your Honor. That is correct.
And that decision is for the General Accounting Office."
"The Court: I understand that."
"Mr. Shillito: The General Accounting Office will make the
decision relative to the contracting officer's decision for
purposes of proceeding with award of this contract having made
that urgency determination."
"The Court: Now, would that end the suit, or does the Court
have a right to review that?"
"Mr. Shillito: Your Honor, the Court does indeed have a right
to review the General Accounting Office's decision; however, I
would assume the Court has recognized the unique expertise of the
GAO and will give that a great amount of weight, in fact."
"The Court: Of course it would be entitled to some weight, but
that still doesn't end the litigation, necessarily."
Moreover, the transcript suggests that the court did not specifically
decline to request a decision in the sense that the court did not want
or expect our Office to issue a decision. The portion of the transcript
relied upon by Superior for the proposition that the court did not
request a decision is as follows:
"The Court. . . Secondly, I'm not going to make the request of
GAO. I just don't like to do that. I don't like to do it of any
other judge or any other court, and I'm not going to do it of an
agency. There isn't any question about it our decision would
have some effect on the Court in its decision one way or the
other. I hope I never get to the point that I won't be willing to
at least understand or reason with what an agency that deals in
similar matters all the time has to say, and their reason for it
would be very on point. I think we all agree that their decision
is not going to end my ruling on the motion for an injunction. I
would hope it would. Whatever they decide that's for them to
decide. If it could be done tomorrow and I wouldn't have to rule
on it that would be fine, but I don't think that would excuse me
regardless of what they rule."
We conclude that the court and the parties were expecting our
decision on the protest. Indeed, if the protester did not want a
decision by our Office, it could have withdrawn its protest at any time
but did not do so. Based on the facts above, we conclude that we
properly issued our initial decision.
Thus, since the matter is still before a court of competent
jurisdiction and because there has been no indication from the court
that it is expecting us to reconsider the matter, the request for
reconsideration is dismissed. 4 C.F.R. Sec. 21.3(f)(11) (1986).
Harry R. Van Cleve
General Counsel
Matter of: Mills Manufacturing Corporation--Reconsideration
File: B-224004.2; B-224005.2
Date: April 10, 1987
DIGEST
1. Agency properly procured its needs for parachutes under
requirements type contracts with ordering periods of 2 years and 3
years, respectively, rather than under a multiyear type procurement,
where the agency was uncertain as to how many units it would need over
the contract period. Multiyear contracting format requires that
quantity solicited remain substantially unchanged throughout contract
term.
2. In a solicitation calling for a requirements contract, an agency
need only state a realistic estimate of its requirements for the goods
being procured based on most current information available. Although
agency admits its needs are difficult to predict, precise or certain
statement of quantity is not required since such a requirement would
vitiate the purposes of employing a requirements contract format and
protester has not shown estimate is not realistic.
3. Letters from a contractor's suppliers which indicate that those
suppliers will not make long-range price commitments do not constitute
clear and convincing evidence that the contracting agency acted
unreasonably or arbitrarily in choosing to employ a requirement type
contract to satisfy several years' needs.
DECISION
Mills Manufacturing Corporation requests that we reconsider our
decision in Mills Manufacturing Corp., B-224004, B-224005, Dec. 19,
1986, 86-2 C.P.D. P 679, that the Army Troop Support Command properly
issued two solicitations for requirements contracts for periods of more
than 1 year under Federal Acquisition Regulation (FAR), 48 C.F.R. Sec.
16.503 (1986), for the purchase of personnel and personnel reserve
parachutes. We affirm our decision.
In the two protested solicitations, the Army requested bids upon two
requirements contracts, one of which was to have a 2-year ordering
schedule, the other of which was to have a 3-year ordering schedule.
Mills protested on the grounds that the solicitations were inconsistent
with the requirements for multiyear contracts as described in FAR, 48
C.F.R. Sec. 17.1. We held that the procurements were not subject to
the multiyear requirements of Part 17 of FAR, but rather were issued in
accordance with the provisions of FAR, Part 16 dealing with requirements
contracts.
In its request for reconsideration, Mills' first argument is that,
even assuming that the agency properly issued the solicitations under
FAR, 48 C.F.R. Sec. 16.503, the agency failed to meet the requirements
of that section relating to the contracting officer's duty to state a
reaiistic estimate of the total quantity in the solicitation. Mills
refers to the Army's acknowledgment, in its report to our Office, that
it did not use the multiyear contract format since that would require a
determination that the need for the items remains stable which it could
not make because it is difficult to predict its recurring needs for the
parachutes.
The record indicates that based on user information available to her,
the contracting officer stated a realistic estimate of the total
quantities under the subject solicitations. IFB No. DAAK01-86-B-C356
contained a total estimated quantity of 28,027 personnel reserve
parachutes with a 3-year ordering period, and IFB No. DAAK-01-86-B-C333
contained a total estimated quantity of 9,536 personnel parachutes for a
2-year ordering period. The FAR, 48 C.F.R. Sec. 16.503, only calls for
estimates based on the most current information available. This
provision further advises that the stated quantity is not a
representation to an offeror that the quantity will be required or
ordered or that the conditions affecting requirements will be stable or
normal. The rationale for employing a requirements contract rather than
a fixed quantity contract is that the demand for the goods being
procured cannot be stated with absolute precision. While the agency
admits that its needs may change during the contract period, a
circumstance which may affect the quantities purchased under the
contract, this does not preclude the agency from generating its best
estimate of its needs. The protester has not shown that the agency's
estimates were not made based on the most current information available.
Hero, Inc., 63 Comp. Gen. 117 (1983), 83-2 C.P.D. P 887. We conclude
that the agency met the FAR requirement for a realistic estimate of
quantity.
Mills next argues that our holding in Kings Point Mfg. Co., Inc.,
B-220224, Dec. 17, 1985, 85-2 C.P.D. P 680, mandates that we find the
contracting officer's decision with respect to the selection of the
appropriate contract format was improper. In Kings Point Mfg. Co.,
Inc., B-220224, supra, we held that the contracting agency has the
primary responsibility for determining its minimum needs and the method
of accommodating them, and our Office will not question an agency's
determination concerning the best method of accommodating its minimum
needs absent clear and convincing evidence that those decisions are
arbitrary or unreasonable. The protester argues that letters submitted
by it from its suppliers, in which those suppliers state that they will
not make long-range price commitments, constitute clear and convincing
evidence that the decision of the contracting officer in this case is
arbitrary or clearly unreasonable.
As in Kings Point Mfg. Co., Inc., B-220224, supra, where suppliers'
letters also were submitted by the protester, we are of the opinion that
these letters are not clear and convincing evidence that the contracting
officer's decision was arbitrary or unreasonable. As noted in our first
decision in this protest, the agency carefully outiined its rationale
for the contract format which it chose and, " a mere difference of
opinion between the protester and the agency concerning the agency's
needs is not sufficient to upset an agency's determination." Id.
Moreover, we have recognized that an agency may use multiyear
contracting in connection with requirements contract. See GSA--Multiple
Award Schedule MultiYear Contracting, 63 Comp. Gen. 129 (1983), 84-1
C.P.D. P 46. We therefore think the agency's use of FAR, 48 C.F.R. Sec.
16.503(b) was proper in these circumstances, and we affirm our prior
decision.
Harry R. Van Cleve
General Counsel
Matter of: NI Industries, Inc., Vernon Division-- Request for
Reconsideration
File: B-223990.3
Date: July 28, 1987
DIGEST
1. Arguments which amount to a reiteration of those previously
considered by the General Accounting Office in deciding the initial
protest do not provide a basis for reconsideration.
2. Decisions as to the producers that should be included in the
mobilization base and the restrictions required to meet the needs of
industrial mobilization will be left to the discretion of the military
agencies which must continually reassess current and future weaponry
needs.
DECISION
NI Industries, Inc., Vernon Division (NI), requests reconsideration
of our decision in NI Industries, Inc., Vernon Division, B-223990.2,
June 16, 1987, 87-1 CPD P . In that decision, we denied NI's protest
concerning the proposed award of a sole-source cost-plus-no-fee contract
(project Nos. 5860115B/5870115) by the Army Armament, Munitions and
Chemical Command, Rock Island, Illinois, to the Scranton Army Ammunition
Plant (SAAP), a governmentowned facility operated by Chamberlain
Manufacturing Corporation. The requirement was for the construction of
fabrication facilities for a new projectile, the 155mm XM864. The Army
restricted the procurement to SAAP on the basis of an identified need to
maintain SAAP as a vital mobilization base facility in the event of a
national emergency. NI had alleged that the mobilization base
restriction was unwarranted.
We affirm our prior decision.
Briefly, the Army executed a Justification and Approval (J&A), which
was approved by the Assistant Secretary of the Army on September 30,
1986. The J&A was for fiscal year 1987 contract actions involving SAAP.
The authority cited for such actions was 10 U.S.C. Sec. 2304(c)(3)
(Supp. III 1985) which allows the head of a military agency to use other
than competitive procedures in awarding a contract to a particular
source or sources when such action is necessary to maintain a facility,
producer, manufacturer, or other supplier available for furnishing
property or services in case of a national emergency or to achieve
industrial mobilization. Among the contract actions found to be
required, the J&A specifically listed the present XM864 project (program
No. 0115) as a requirement which would be procured from SAAP under the
authority of the J&A. The reason cited for these proposed actions,
including the XM864 project, was that "use of other than full and open
competition will maintain SAAP in a "warm" condition, and available in
the event of a national emergency." The J&A further stated that SAAP is
a vital component of the mobilization base. The J&A was proper in form
and was approved by the appropriate authorities.
In its agency report, the Army further stated that production of
other projectiles at SAAP would soon cease and that therefore failure to
make this XM864 award would likely result in plant closing and loss of
the work force at SAAP and the critical skill which that work force
possesses.
In its initial protest, NI argued that the proposed solesource award
would deprive the firm, and other companies which had previously
prepared engineering studies for this requirement, of the opportunity to
compete for a requirement that easily can be met by modification of
existing facilities for similar projectiles and would also leave the
firm with seriously underutilized facilities. NI additionally argued
that the statutory authority of military agencies to make noncompetitive
awards under 10 U.S.C. Sec. 2304(c) (3), supra, only extends to
"maintaining" a manufacturer for mobilization purposes while the Army in
this case was "establishing" a mobilization base manufacturer for a new
projectile.
We stated that although it is the established policy of this Office
to scrutinize closely sole-source procurement actions, it is also our
view that decisions as to the producers that should be included in the
mobilization base and restrictions required to meet the needs of
industrial mobilization involve complex judgments which must be left to
the discretion of the military agencies. See Wayne H. Coloney Co.,
Inc., 64 Comp. Gen. 260 (1985), 85-1 CPD P 186. Since we found that the
Army's J&A was proper in form and content, we had no basis to question
the decision to restrict the procurement to SAAP. Further, while the
protester argued that 10 U.S.C. Sec. 2304(c) (3) did not apply here
because the Army in this case was seeking to "establish" a manufacturer
of the XM864, we stated that the fact remains that the J&A authorized
award of the present requirement to maintain SAAP as a vital facility in
producing projectile metal parts and that the statute authorizes
noncompetitive awards not only to maintain a manufacturer but also to
maintain, as here, a facility. We therefore denied the protest.
In its request for reconsideration, NI again argues that the Army's
J&A was flawed. 1/ First, NI argues that the proposed sole-source award
is improper because the "procurement is the first step in the
establishment of a new mobilization base projectile production line
rather than the maintenance of SAAP as a supplier of items it
previously has been producing."
Under our Bid Protest Regulations, a request for reconsideration must
contain a detailed statement of the factual and legal grounds upon which
reversal or modification of a decision is deemed warranted and must
specify any errors of law made in the decision or information not
previously considered. 4 C.F.R. Sec. 21.12(a) (1986). In this regard,
NI's argument is merely a reiteration of an argument previously raised
by NI and considered in the original protest. As indicated above, NI
argued that this procurement is intended to establish a manufacturer of
XM864, and not to "maintain" a manufacturer, and thus 10 U.S.C. Sec.
2304(c) (3), does not provide authorization to restrict competition for
this requirement. We addressed this argument in our decision and
specifically found that while the Army was seeking to "establish" a
manufacturer of the XM864, the J&A authorized award of the present
requirement to maintain SAAP as a vital facility in producing projectile
metal parts. Therefore, this argument provides no basis for further
consideration. BECO Corp.--Reconsideration, B-219350.2, June 20, 1985,
85-1 CPD P 707.
Next, NI argues that the J&A does not demonstrate a basis for
establishing the XM864 facilities at SAAP since the J&A makes no
reference to the establishment of "totally new production facilities"
but merely states that the contract would be awarded for the purposes of
plant operations, layaway, project funding, and maintenance. NI also
asserts that the J&A refers to maintaining SAAP in a "warm" condition
only with respect to SAAP's existing facilities for other projectiles.
Our review of the J&A again confirms our previous conclusion that the
Assistant Secretary of the Army approved, by means of the J&A, various
contract actions involving SAAP for fiscal year 1987. Among the
contract actions listed, the J&A specifically lists program No. 0115
(the XM864 project) as a requirement which would be procured from SAAP
under the authority of the J&A. In our view, this contract action was
specifically authorized by the Assistant Secretary of the Army to
maintain SAAP as a vital facility in producing projectile metal parts.
We disagree that the J&A reference to maintaining SAAP in a "warm"
condition was limited to SAAP's existing facilities for other
projectiles. The J&A language is broader, stating the need to use
noncompetitive procedures to maintain the SAAP facility for use in the
event of a national emergency and as a vital component of the
mobilization base for metal parts. While the J&A notes SAAP's current
critical production of certain projectiles, we do not view this language
as showing any intent to limit the authorization solely to these
projectiles, especially since the XM864 project was specifically listed
in an earlier section of the J&A.
Furthermore, decisions as to the producers that should be included in
the mobilization base and the restrictions required to meet the needs of
industrial mobilization must be left to the discretion of the military
agencies which must continually reassess current and future weaponry
needs. See Martin Electronics, Inc., 65 Comp. Gen. 59 (1985), 85-2 CPD
P 504. NI's evident disagreement with the Army's decision does not
demonstrate that the Army abused its discretion. See Urdan Industries,
Ltd., B-222421, June 17, 1986, 86-1 CPD P 557. We therefore again
conclude that the J&A was proper in form and content, and provided the
appropriate legal authority for award to SAAP as a vital facility.
NI has requested a conference in this matter. We will not conduct a
conference on a reconsideration request, however, unless the matter
cannot otherwise be resolved expeditiously. Global
Assoc.--Reconsideration, B-212820.2, Aug. 21, 1984, 84-2 CPD P 203. We
do not believe a conference is warranted in this case.
Our prior decision is affirmed.
Harry R. Van Cleve
General Counsel
FOOTNOTE
1/ The Army withheld the J&A from the protester during our initial
consideration of the protest. The protester subsequently obtained it
from the Army under the Freedom of Information Act prior to filing its
reconsideration request.
Matter of: NI Industries, Inc., Vernon Division
File: B-223990.2
Date: June 16, 1987
DIGEST
By statute, military agencies need not obtain full and open
competition and may use other than competitive procedures when it is
necessary for industrial mobilization purposes to award the contract to
a particular source or sources. Therefore, since the normal concern of
maximizing competition is secondary to the needs of industrial
mobilization, decisions as to the producers that should be included in
the mobilization base and the restrictions required to meet the needs of
industrial mobilization will be left to the discretion of the military
agencies absent compelling evidence of an abuse of that discretion.
DECISION
NI Industries, Inc., Vernon Division (NI), protests the proposed
award of a sole-source cost-plus-no fee contract (project Nos.
5860115B/5870115) by the Army Armament, Munitions and Chemical Command,
Rock Island, Illinois, to the Scranton Army Ammunition Plant (SAAP), a
governmentowned facility operated by Chamberlain Manufacturing
Corporation. The requirement is for the construction of fabrication
facilities for the 155mm XM864 projectile. The Army restricted the
procurement to SAAP on the basis of an identified need to maintain SAAP
as a vital mobilization base producer in the event of a national
emergency. NI argues that the mobilization base restriction is
unwarranted.
We deny the protest.
Early in 1986, NI, Chamberlain (at its private facility), and
Louisiana Army Ammunition Plant completed engineering studies for the
purpose of evaluating the feasibility and cost of modifying their own
155mm M483 production facilities for use in manufacturing a new
projectile, the 155mm XM864. The engineering studies were awarded to
these three manufacturers because they constituted the mobilization base
for the M483 projectile which is similar to the new XM864 projectile.
SAAP had no M483 facility and therefore was not called to participate in
these cost efficiency studies.
According to NI, where the Army has intended to establish a facility
for a new projectile, it has solicited bids for the facilities contracts
and the awardee would become the first member of the mobilization base
for the new armament. Therefore, NI assumed that all three of the
engineering studies contractors would be given the opportunity to
compete for the subsequent facilities contract, offering either
conversion of similar lines or installation of largely new equipment.
NI subsequently learned that the Army had decided against competitively
awarding the facilities contract for the XM864 but had elected to
negotiate a sole-source contract, without synopsizing the requirement,
with Chamberlain at SAAP. This protest followed.
The record shows that the Army executed a Justification and Approval
(J&A), which was approved by the Assistant Secretary of the Army on
September 30, 1986. The J&A is for fiscal year 1987 contract actions
involving SAAP. The authority cited for such actions was 10 U.S.C. Sec.
2304(c) (3) (Supp. III 1985) which allows the head of a military agency
to use other than competitive procedures in awarding a contract to a
particular source or sources when such action is necessary to maintain a
facility, producer, manufacturer, or other supplier available for
furnishing property or services in case of a national emergency or to
achieve industrial mobilization. Among the contract actions found to be
required, the J&A specifically lists the present XM864 project (program
No. 0115) as a requirement which would be procured from SAAP under the
authority of the J&A. The reason cited for these proposed actions,
including the XM864 project, is that "use of other than full and open
competition will maintain SAAP in a "warm" condition, and available in
the event of a national emergency." The J&A further states that SAAP is
the only government-owned, contractor-operated facility which solely
produces metal parts and is a vital component of the mobilization base.
The J&A is otherwise proper in form and was approved by the proper
authorities.
In its agency report, the Army reiterates that SAAP is the only
government-owned, contractor-operated plant which solely produces
projectile metal parts, including the M106, M107 and M509 projectile
metal parts. The Army further states that production of M106 metal
parts will cease by September 1987 and that production of M107 and M509
metal parts will conclude by May 1989. According to the Army, there are
no known additional requirements for these items and the XM864 is the
only item whose configuration would allow the Army to keep SAAP
available in the event of a national emergency. The Army concludes by
stating that failure to make this XM864 award would likely result in
plant closing and loss of the work force at SAAP and the critical skill
which that work force possesses.
NI protests that the proposed sole-source award would deprive the
firm, and other companies that had prepared engineering studies, of the
opportunity to compete for a requirement that can be easily met by
modification of existing M483 facilities. According to NI, the decision
not to compete the XM864 facilities contract will leave the firm with
seriously underutilized facilities and will ultimately result in higher
costs to the government.
Under the Competition in Contracting Act of 1984 (CICA), military
agencies continue to have authority to conduct procurements in a manner
that enables them to establish or maintain sources of supply for a
particular item in the interest of the national defense, see 10 U.S.C.
Secs. 2304(b)(1) (B) and 2304(c) (3), supra, and the agencies need not
obtain full and open competition where the procurement is conducted for
industrial mobilization purposes and may use other than competitive
procedures where it is necessary to award the contract to a particular
source or sources. Lister Bolt & Chain, Ltd., B-224473, Sept. 15,
1986, 86-2 CPD P 305.
Therefore, although it is the established policy of this Office to
scrutinize closely sole-source procurement actions, see Jervis B. Webb
Co. et al., B-211724, et al., Jan. 14, 1985, 85-1 CPD P 35, it is also
our view that decisions as to the producers that should be included in
the mobilization base and restrictions required to meet the needs of
industrial mobilization involve complex judgments which must be left to
the discretion of the military agencies. Wayne H. Coloney Co., Inc., 84
Comp. Gen. 260 (1985), 85-1 CPD P 186; Urdan Industries, Ltd.,
B-222421, June 17, 1986, 86-1 CPD P 557. This Office will question
those decisions only if the evidence convincingly shows that the agency
has abused its discretion. Martin Electronics, Inc., 65 Comp. Gen. 59
(1985), 85-2 CPD P 504. We limit our standard of review in such cases
because the normal concern of maximizing competition is secondary to the
needs of industrial mobilization. Id.; National Presto Industries,
Inc., B-195679, Dec. 19, 1979, 79-2 CPD P 418.
The record fails to show that the Army abused its discretion here.
While the protester argues that 10 U.S.C. Sec. 2304 (c) (3) does not
apply here because that section authorizes a noncompetitive award to
"maintain" a manufacturer while the Army in this case is seeking to
"establish" a manufacturer of the XM864, the fact remains that the J&A
authorized award of the present requirement to maintain SAAP as a vital
facility in producing projectile metal parts ("maintain SAAP in a
"warm" condition"). Military agencies are responsible for developing an
industrial preparedness program that will ensure the nation's ability to
respond to a military emergency. In implementing this goal, military
agencies must continually reassess current and future weaponry needs.
Therefore, decisions as to the producers that should be included in the
mobilization base and the restrictions required to meet the needs of
industrial mobilization must, as stated above, be left to the discretion
of the military agencies. See Martin Electronics, Inc., 65 Comp. Gen.
59, supra. We therefore believe that the statute, which authorizes
noncompetitive awards not only to maintain a manufacturer but also to
maintain a facility, was not violated here. In addition, the fact that
NI disagrees with the Army's judgment, and argues that the mobilization
base would not be adversely affected if the proposed procurement were
not restricted to SAAP, does not demonstrate that the Army abused its
discretion. See Urdan Industries, Ltd., B-222421, supra.
NI also complains that the Army failed to synopsis the requirement in
the Commerce Business Daily. The short answer is that publication is
not required in the case of industrial mobilization procurements. See
Federal Acquisition Regulation, 48 C.F.R. Sec. 5.202(10) (1986).
Finally, the protester contends that this industrial mobilization
procurement was subject to the provisions of the Arsenal Statute, 10
U.S.C. Sec. 4532 (1982), which requires the Secretary of the Army to
produce supplies in factories owned by the United States, "so far as
those factories or arsenals can make those supplies on an economical
basis." Specifically, the protester maintains that award to SAAP would
not be economical. However, we have specifically held that the Arsenal
Act, supra, does not operate to preclude a proper award for the purposes
of industrial mobilization, regardless of cost. See Etamco Industries,
B-187532, Feb. 25, 1977, 77-1 CPD P 141.
Since we find no merit in the protest, the protester's request for
reimbursement of the costs of filing and pursuing its protest, including
attorney's fees, is denied.
The protest is denied.
Harry R. Van Cleve
General Counsel
Matter of: Check Technology Corporation--Reconsideration
File: B-223987.2
Date: May 14, 1987
DIGEST
Solicitation requirement for an integrated check printing and
document processing system incorporating an automated optical post-print
verification process is not unduly restrictive of competition because
the requirement is reasonably related to the agency's need to produce
errorfree checks.
DECISION
Check Technology Corporation (CTC) requests reconsideration of our
decision, Check Technology Corp., B-223987, Dec. 23, 1986, 86-2 CPD P
704, in which we denied its protest. CTC protested that certain
specifications in request for proposals (RFP) No. DABT60-86-R-0173,
issued by the Department of the Army, Fort Eustis, Virginia, for four
fully integrated check printing and document processing systems and
related services, were unduly restrictive of competition. CTC did not
submit a proposal after CTC requested, and the Army refused to provide,
a written determination that CTC's system would not be rejected as
technically unacceptable under various specifications.
Our prior decision is affirmed.
Generally, the RFP sought proposals for commercially available
equipment that, among other things, would print paper checks; accept
magnetic tape input; print alpha numeric Optical Character Recognition
(OCR) font and Magnetic Ink Character Recognition (MICR) data on the
checks; and validate OCR and MICR printed data against the computer
records used to print the checks. The latter "post-print verification"
process is to employ an optical character reader to compare the dollar
amount, check number, and MICR serial number, transit number and check
symbol number to ensure that the check was printed correctly. Erroneous
checks are to be automatically rejected, with no manual intervention
from creation of the checks through insertion of the checks into
envelopes.
In our prior decision, we found that the equipment CTC seeks to have
the Army allow would use paper sheets rather than roll paper,
necessitating manual insertion of cut sheets of blank checks into the
processing equipment. CTC also sought to have the Army restate its
requirement for four machines in order to permit offers to furnish a
larger number of lower capacity machines than the RFP requested. We
concluded that the Army properly determined that CTC's approach would
result in a loss of productivity and an increased risk of theft of blank
checks, in contrast to the system specified. We held that the Army's
stated need for a fully automated process using continuous roll paper
was justified in view of its production requirement to prepare 1.6
million checks monthly. We noted that the Army, in framing its
requirement, relied on guidance from the Department of the Treasury,
which has regulatory authority concerning the preparation and issuance
of government checks.
Further, we found that the Army was justified in rejecting a related
demand by CTC that the Army drop the requirement for built-in optical
scanning of checks. In this regard, we concluded that CTC had not
provided substantial evidence to rebut the Army's proof that post-print
verification is necessary to control production quality.
In requesting reconsideration, CTC reiterates its basic contention
that the RFP is unduly restrictive of competition and contends that our
decision reflects numerous errors. According to CTC, we misstated the
length of the rolls of paper, which contain 80,000 checks per roll,
indicating instead that each roll is to contain 120,000 checks. CTC
contends that we relied unduly on the Army's concern regarding the
likelihood of theft and asserts that the agency selected roll paper
primarily because of concern for efficiency. CTC further disputes our
finding that the process was to be performed without human intervention,
which CTC says is to some degree always necessary to correct
malfunctions. Concerning CTC's demand that the Army dispense with its
requirement for post-print verification, CTC contends that our prior
decision is in error because we confused verification of optically and
magnetically readable data; optical scanning cannot be used, CTC says,
to verify that magnetically encoded information was correctly printed.
Finally, our prior decision is said to be in error as a matter of law
because, CTC says, we penalized it for failing to submit a proposal and
failed to recognize and treat this matter as a de facto procurement from
a sole-source, requiring close scrutiny of the Army's solicitation
because only one offeror responded to the RFP.
While our reference in our prior decision to the paper stock as
containing 120,000 rather than 80,000 blank checks appears to have been
in error, correction of the discrepancy merely reduces the time for
replacement of a roll from once every 9 to once every 6 hours and does
not alter the conclusions on which our decision was based. Moreover,
CTC has clearly indicated that it will not offer post-print
verification, and we continue to believe, as affirmed below, that the
Army has a legitimate need for that feature.
Concerning post-print verification, CTC argues that its system uses a
more advanced technology than the RFP requires. The system includes a
central memory which drives two print mechanisms, including an ion
deposition printer, that print both the optically and magnetically
readable data on the check. According to CTC, the two print mechanisms
get their data from the same source so the printed numbers will always
be the same, precluding discrepancies. In support of its position, CTC
submitted the following affidavit:
"The architecture of the CTC 2000 printing system hardware and
Series III software is such that an external OCR device is
unnecessary for the above purpose. In the CTC System, input data
is placed in memory. The data block for the OCR and MICR data is
one and the same, not two separate data blocks. The CTC 2000 is
able to convert this single number to OCR through an OCR font
command and to MICR through a separate MICR font command. Until
both the OCR and MICR data is printed, the input data block is
held in memory and cannot be overwritten by new data. Because of
this architecture (retention in memory) there is no need to
compare the output to the original input. In short, the system
architecture is designed to make comparison discrepancies
impossible."
CTC also argues that an optical character reader cannot reconcile
discrepancies between printed checks and magnetically encoded
characters.
Although CTC apparently reads the post-print verification requirement
narrowly as concerning only reconciliation of the visually and
magnetically encoded data, a broader purpose is intended, providing
abundant justification for the agency's specification of an optical
post-print verification. The record shows that the government
(collectively, the Army and Treasury) is concerned with producing high
quality tamper-resistant checks that can be processed with minimum cost
through the Federal Reserve banking system. Post-print optical
verification ensures proper positioning of data on the check, as well as
protection against voids in the printing, ink smears, paper flaws and
similar defects attributable to mechanical or electro-mechanical
failures. Moreover, the record contains substantial evidence linking
the post-print requirement to prior government experience indicating a
need for quality assurance systems of this type. Specifically, Treasury
has documented millions of errors detected in checks printed in the
past, errors the agency attributes to intermittent problems that, unless
caught, would result in the issuance of badly printed checks. Poorly
printed checks, in the quantities involved here, would cause significant
difficulty clearing through the Federal Reserve System, and it is this
problem that post-printing verification seeks to avoid.
We recognize that CTC argues that its equipment is based on
innovative technology which can minimize the frequency with which errors
occur. It is CTC's view that the performance of its equipment is good
enough that the government can dispense with optical post-printing
verification. On the other hand, it is the government's judgment that
postprinting verification is necessary as a safeguard to minimize
printing errors. Our decisions have recognized that agencies may
legitimately base specifications on their actual experience to satisfy
their requirements and may impose restrictions they find to be
reasonably necessary to correct problems they have encountered. Bill
Ward Painting and Decorating, B-200802 et al., Jan. 6, 1981, 81-1 CPD P
7. Since the government's requirement has a substantial and logically
supportable basis, founded in its past experience, and has not been
shown by CTC to be arbitrary, the requirement for post-printing
verification is reasonable.
The Army may insist on limiting competition to firms capable of
meeting its legitimate needs, even if this results in only one bidder.
Gerber Scientific Instrument Co., B-197265, Apr. 8, 1980, 80-1 CPD P
263. Since CTC has not expressed any willingness to offer optical
post-print verification, it is not prejudiced by the Army's refusal to
relax other requirements. Therefore, the remaining issues it raises
need not be decided.
Our prior decision is affirmed.
Harry R. Van Cleve
General Counsel
Matter of: Allied Corporation; Menasco, Inc.--Requests for
Reconsideration
File: B-223970.2; B-223970.4
Date: March 20, 1987
DIGEST
1. Decision sustaining protest on ground that awardee engaged in
discussions with agency and that protester thus also should have heen
included in discussions is affirmed on reconsideration where there is no
showing that General Accounting Office erroneously concluded that
discussions took place.
2. Fact that protester may have difficulty preparing competitive best
and final offer in response to General Accounting Office recommendation
that discussions be reopened is not a sufficient basis for eliminating
competition altogether by instead recommending award to protester.
DECISION
Allied Corporation, Bendix Aircraft Brake & Strut Division (Bendix),
requests reconsideration of our decision in Menasco, Inc., B-223970,
Dec. 22, 1986, 86-2 C.P.D. P 696, in which we sustained Menasco's
protest of the rejection of its offer and the award of a contract to
Bendix under request for proposals (RFP) No. F42600-85-R-0781, issued by
Hill Air Force Base, Utah, for C5 A/B aircraft main landing gear parts.
Menasco, Inc., also requests reconsideration, asking that our
recommendation that the Air Force reopen discussions be withdrawn in
favor of a new recommendation that Bendix's contract be terminated and a
contract be awarded to Menasco.
We affirm the prior decision and recommendation.
Menasco alleged in its protest that it reduced its offer in response
to negotiations initiated by the contractinq officer, who then rejected
the price reduction as a late modification. Menasco contended that the
Air Force improperly awarded the contract to Bendix on the basis of
initial proposals while knowing that Menasco was willing to lower its
price.
We sustained the protest and recommended that the Air Force reopen
discussions because the record indicated that discussions had occurred
between the Air Force and Bendix and that award to Bendix thus was not
made on the basis of initial proposals. Since discussions cannot be
conducted with only one offeror but, rather, must be held with all
offerors in the competitive range, we held that Menasco should have beem
afforded an opportunity to revise its initial proposal.
Bendix Reconsideration
Bendix contends in its reconsideration request that in our decision
we erroneously concluded that Menasco's protest was timely, and we
incorrectly found that Bendix had revised its initial proposal or
otherwise participated in discussions.
In considering the timeliness of Menasco's protest, we noted that the
Air Force and Menasco had differing versions of a June 25, 1986 meeting.
The Air Force contended that Menasco should have protested within 10
days of that meeting because the firm was notified there that late
modifications would not be considered. Menasco, on the other hand,
contended that it received no such notice at the meeting and that it
first learned of the rejection of its revised price as a late
modification when it received the contracting officer's July 1 letter
rejecting the modification. We held that since there was doubt as to
the timeliness of the protest, and we resolve such doubt in favor of the
protester, the protest was timely. Bendix challenges our conclusion,
contending that Menasco failed to provide evidence supporting the
timeliness of the protest, and that there thus was no legitimate doubt
to resolve in Menasco's favor.
Contrary to Bendix's contention, Menasco did support its position
with a statement and an affidavit signed by two Menasco employees who
attended the June 25 meeting. In any case, since the Air Force
submitted no conclusive evidence establishing when Menasco first was on
notice that its modification would not be accepted, even Menasco's
unsupported account of the June 25 meeting would be entitled to the same
weight as the Air Force's for purposes of determining timeliness. We
therefore affirm our timeliness determination.
Bendix's second argument is that its June 11, 1986 telex to the Air
Force concerning the contents of the firm's offer, which we concluded
constituted discussions, merely clarified, in response to the
contracting officer's inquiry, that Bendix intended to charge a price of
$19,395,688 as a rent-free price (based on using facilities under
another government contract) or a rent-paid price (based on using other
facilities). This argument is without merit.
The determinative consideration here is not whether Bendix intended
to offer one price whether award was on a rent-free or rent-paid basis,
but whether its proposal expressed that intent sufficiently that it did
not later have to be established in discussions with the Air Force. If
Bendix intended to charge $19,395,688 as a rent-paid or rent-free price,
as it now maintains, this fact was not clear to the Air Force from
Bendix's initial proposal, as evidenced by the Air Force's request, to
which the telex responded, that Bendix propose a rental charge
(expressed as percentage) if not already included in the price.
As explained in our prior decision, "discussions" encompass any oral
or written communication between the government and an offeror that
involves information essential for determining the acceptability of a
proposal or provides the offeror an opportunity to modify its proposal.
The communications between the Air Force and Bendix met this test since
the contracting officer's determination of whether there was a rental
factor and what it would be was essential for evaluating Bendix's offer.
We accordingly affirm our conclusion that discussions occurred with
Bendix, and that Menasco thus should have been afforded an opportunity
to revise its proposal.
Menasco Reconsideration
Menasco contends that because of the Air Force's failure to stop work
on Bendix's contract as required by the Competition in Contracting Act,
31 U.S.C. Sec. 3553(d) (1) (Supp. III 1985), it has been unable to
obtain competitive quotations from vendors, currently under contract to
Bendix, for purposes of preparing its best and final offer. Menasco
requests that we therefore change our recommendation to direct the Air
Force to terminate Bendix's contract and make award to Menasco.
Under CICA and our Bid Protest Regulations, a contracting agency is
required to suspend contract performance only if a protest is filed with
our Office within 10 calendar days of contract award. See 4 C.F.R. Sec.
21.4(b) (1986). The record indicates that Bendix's contract was awarded
on July 31. Since Menasco's protest was filed with our Office on August
13, 13 calendar days after award, the Air Force was not required to
suspend Bendix's performance. We do not consider Menasco's possible
difficulties in formulating a competitive best and final offer a
sufficient basis for eliminating competition altogether by recommending
award to Menasco. Our prior recommendation is affirmed.
Comptroller General
of the United States
Matter of: Dock Express Contractors, Inc.--Request for
Reconsideration
File: B-223966.2
Date: March 4, 1987
DIGEST
Prior decision holding that a protest against a solicitation
specification initially filed 1 day before the closing date for the
receipt of proposals with the procuring agency was untimely where the
agency received proposals on the scheduled closing date without taking
corrective action and the subsequent protest to our Office was filed
more than 10 working days later is affirmed, since the protester has not
presented a legal basis for us to overrule our decision or to waive our
timelinees rule.
DECISION
Dock Express Contractors, Inc. (DECI), requests that we reconsider
our decision in Dock Express Contractors, Inc., B-223966, Dec. 22, 1986,
86-2 C.P.D. P 695, in which we sustained DECI's protest against the
restriction limiting competition to ocean common carriers as that term
is defined in the Shipping Act of 1984, 46 U.S.C. App. Sec. 1701 et
seq. (Supp. II 1984), in request for proposals No. N00033-86-R2100,
issued by the United States Navy, Military Sealift Command (MSC), for
ocean and intermodal transportation. DECI specifically requests
reconsideration of the part of our decision that held that its protest
was untimely with respect to the first cycle of the contract.
We affirm our prior decision.
The RFP solicited ocean transportation services for less than
shipload lots of containerized and breakbulk cargo for various trade
routes listed in the RFP for a 1-year period divided into two 6-month
cycles. The first cycle extended from October 1, 1986, to March 31,
1987, and the second cycle extended from April 1, 1987, to September 30,
1987. Written offers for the first cycle were required to be submitted
by July 9, 1986. Offers for the second cycle were due on January 7,
1987.
DECI initially protested the specification restricting the RFP to
common carriers to MSC on July 8, 1986, while still submitting a timely
proposal. MSC denied the protest on August 12, 1986, and DECI filed its
protest at our Office on that date. We held that DECI's protest was
untimely with respect to the RFP's first cycle because opening proposals
on the scheduled closing date without taking any corrective action in
response to the protest constituted initial adverse agency action under
our Bid Protest Regulations. Under our Regulations, protests initially
filed with the contracting agency must be filed at GAO within 10 working
days of initial adverse agency action. 4 C.F.R. Sec. 21.2(a) (3)
(1986). Therefore, we only considered DECI's protest for the second
cycle of the RFP.
DECI contends that our decision overlooked its earlier arguments as
to the timeliness of the protest as it related to the first cycle of the
RFP because these arguments were not specifically discussed in the
decision. DECI contends that its protest should have been considered
timely on the basis of these arguments. However, we fully considered
these arguments before reaching our conclusion that the protest was
untimely with respect to the first cycle.
DECI argued that the fact that it submitted its protest at 7:30 p.m.
on July 8 made it unreasonable to conclude that the Navy intended
adverse action by holding the closing date as scheduled on July 9.
However, under our Bid Protest Regulations, whether the Navy intended
adverse action on the protest is irrelevant, since opening proposals
were in fact an adverse action on the protest.
We have consistently held that the fact that the procuring agency
received proposals on the scheduled closing date without taking any
corrective action in response to a protest constitutes initial adverse
agency action under our Bid Protest Regulations promulgated to implement
the Competition in Contracting Act of 1984 (CICA), 31 U.S.C. Secs.
3551-3556 (Supp. III 1985), as well as under our Bid Protest Procedures
that were in effect prior to CICA. See Sunrise Associates-- Request for
Reconsideration, B-219356.2, June 27, 1985, 85-1
C.P.D. P 738; Shaw Aero Development, Inc., B-221980, Apr. 11, 1986,
86-1 C.P.D. P 357; Hartridge Equipment Corporation, B-219982, Sept.
11, 1985, 85-2 C.P.D. P 286.
Further, DECI advised that it relied on CICA and Federal Acquisition
Regulation (FAR), 48 C.F.R. Sec. 33.102(b)(1) (1986), in awaiting the
contracting officer's formal decision on the protest. In this regard,
FAR, 48 C.F.R. Sec. 33.102(b) (1), provides that an interested party
wishing to protest is encouraged to seek resolution within the agency
before filing a protest with the General Accounting Office or General
Services Administration Board of Contract Appeals. DECI argued that the
only reasonable interpretation that could be given to that regulation
was that adverse agency action could not occur until the agency
communicated, and the protester received, notice that it had resolved
the agencylevel protest. DECI indicated that the Navy advised by telex
on July 22, 1986, that the protest was still under consideration,
although its proposal was unacceptable. Therefore, DECI contended that
the closing date did not constitute initial adverse action because the
Navy had not resolved its protest.
It is true that FAR, 48 C.F.R. Sec. 33.102(b) (1), encourages
protesters to initially seek resolution of their protests with agencies.
However, bid protests are serious matters which can adversely impact on
the procurement system unless effective and equitable procedural
standards exist, so that all parties have a fair opportunity to present
their cases, and protests can be resolved in a reasonably speedy manner
without unduly disrupting the government's procurement process. We do
not believe that filing an agency protest on the evening before the
closing date for receipt of proposals gives an agency a reasonable
opportunity to act upon the protest, except by either postponing the
closing date or by accepting proposals. Therefore, if an agency
proceeds with the procurement in these circumstances, without any
corrective action, it clearly constitutes initial adverse agency action.
Moreover, DECI was advised on July 18, during the pendency of its
agency protest, that its proposal would be unacceptable with respect to
the specification that DECI had protested unless it became a common
carrier. Nevertheless, DECI did not file within 10 days of the closing
date for receipt of proposals, despite being aware that its proposal was
unacceptable under the protested specification. Under these
circumstances, DECI's decision to continue to pursue the protest at the
agency and the Navy's subsequent denial of the protest did not alter the
protester's responsibility to conform to the filing requirements of our
regulations. See Leon's Auto Repair, B-215625, July 20, 1984, 84-2
C.P.D. P 74.
DECI also contended that since CICA's requirement for "full and open"
competition in drafting specifications has been largely uninterpreted,
our Office should consider this matter as a significant issue under our
Bid Protest Regulations, even if its protest is untimely. However, we
consider untimely protests under the significant issue exception only
when the matter raised is one of widespread interest to the procurement
community and has not been considered on the merits in previous
decisions. ABC Appliance Repair Services, B-221850, Feb. 28, 1986, 86-1
C.P.D. P 215.
Finally, DECI contended that if its protest is considered untimely,
we should waive our timeliness rule for good cause in view of the FAR,
48 C.F.R. Sec. 33.102(b) (1), statement that protests should be
submitted initially to the agency, which misled the protester. The good
cause exception to the timeliness requirements is limited to
circumstances where some compelling reason beyond the protester's
control prevents the protester from filing a timely protest. ABC
Appliance Repair Service, B-221850, supra. Since we find no ambiguity
in the FAR, 48 C.F.R. Sec. 33.102(b) (1), and our Bid Protest
Regulations, the protester's misinterpretation of this regulation does
not constitute good cause under our Bid Protest Regulations.
Accordingly, we affirm our prior decision.
Comptroller General
of the United States
Matter of: Kime-Plus, Inc.
File: B-223945.2
Date: May 14, 1987
DIGEST
Discrepancy in bid between stated total price for base and option
period services and the correct mathematical total of price for services
may be corrected so as to displace another otherwise, low bidder, where
the asserted correct bid is the only reasonable interpretation
ascertainable from the bid itself. Contracting officer did not lack a
reasonable basis for interpretation since stated total-- based on 12
months of base period services initially established in IFB--was
submitted more than 3 months before contracting agency decreased base
period services to 9 months by IFB amendment which successful bidder
acknowledged and separately priced showing correct reduced base year
prices.
DECISION
Kime-Plus, Inc. protests the proposed award of a contract to
Integrity Management International, Inc. (IMI) under Department of the
Army invitation for bids (IFB) No. DAKF2486-B-0052, which was issued on
June 25, 1986, for mess attendant services at Fort Polk, Louisiana, for
the period of October 1, 1986, through September 30, 1987, with two
additional 6 month option periods which were to be evaluated for award.
Kime-Plus contends that the Army improperly permitted correction of
IMI's bid to displace Kime-Plus' otherwise lower bid.
We deny the protest.
The IFB's initial base period bid schedule consisted of nine pages
(pages 2 thru 10 of 93 total IFB pages) on which there were listed 18
work items. Bidders were directed to insert individual prices for the
several listed sub-items comprising each item, to add all sub-item
prices, and finally, to insert a total price for each of the 18 groups
of sub-items in the price blank which followed the listing of the final
sub-item in each group. Bidders were then instructed to add the total
item prices for all 18 items and to list the computed sum on a price
blank found on page 10 of the bid schedule. Bidders were also
instructed to price services for the required option periods (first
option, October 1, 1987, through March 31, 1988; second option, April
1, 1988, through September 30, 1988) under a pricing structure similar
to the base period pricing structure. Finally, on page 28 of the bid
schedule each bidder was directed to list its total bid for all periods
of performance.
The Army issued four IFB amendments. Amendment No. 0001 dated July
18, 1986, extended bid opening indefinitely. Amendment No. 0002, issued
on July 30, 1986, changed various paragraphs throughout the IFB and
established a bid opening date of August 9, 1986. In response to the
stated August 9 bid opening date, bidders submitted bids by that date.
Nevertheless, the Army decided again to postpone the bid opening on
August 9 by issuing amendment No. 0003 which extended bid opening
indefinitely notwithstanding the Army's receipt of bids.
On November 10, 1986, the Army issued amendment No. 0004, which
decreased the base period of performance from 12 to 9 months (from
January through September 1987) and established a bid opening date of
November 21, 1986. Amendment No. 0004 changed pages 2 to 10 of the
original bid schedule by revising only the base period involved, but
this amendment otherwise left intact the schedule's pricing structure,
described above. The Army did not furnish to all bidders another copy
of page 28 (on which bidders were to insert a total price for base and
option requirements) because the Army says it had made no changes to the
page; consequently, the Army states it believed there was no need to
furnish a new page 28 to all bidders.
On November 21, 1986, the contract specialist opened and read the
total bids for all items as shown on page 28 for the 22 bids received.
The contract specialist announced the apparent low bidders as follows:
Aleman Food Service (AFS) $1,416,905.86
Kime-Plus, Inc. $2,575,189.00
Logistical Support, Inc. (LSI) $2,631,487.00
Integrity Management International (IMI) $2,888,840.87
AFS and LSI were allowed to withdraw their bids under mistake-in-bid
claims. Upon examination of Kime-Plus' bid, the Army noted that the
above bid figure should stand as listed. In addition, the Army also
noted that Kime-Plus' bid contained a revised page 28 which contained a
new, lower total bid figure. Kime-Plus' new page 28 was supplied by
Kime-Plus on its own initiative. As noted above, the Army states that
it did not furnish bidders with a new page 28 for the submission of a
total price based on the revised base period involved.
For the November 21 bid opening, IMI submitted the standard form
acknowledging receipt of amendment No. 0004 and the completed 9-month
base year pricing sheets attached to amendment No. 0004. The Army
already possessed the prior bid IMI submitted for the August 9 bid
opening which included the unrevised page 28.
Upon closer examination of IMI's November 21 bid, the Army determined
that the total bid as shown on bid page 28 should actually be evaluated
at $2,504,976.68, a price lower than Kime-Plus' bid, because IMI had not
submitted a new page 28 with its November bid. Specifically, IMI's
total bid--as shown on page 28 of its August 9 submission to the
Army--did not reflect the revised bid schedule prices which IMI had
submitted to the Army on November 21 pursuant to amendment No. 0004.
Also, the Army made other revisions to IMI's bid because the bid
contained other mathematical errors which are not in issue.
Therefore, because IMI's total bid of August 9, as shown on page 28,
did not reflect the company's November 21 submission of a revised bid
schedule for a 9-month performance period the Army "did correct IMI's
mistake . . . to reflect the amended total bid" at the above price.
Kime-Plus essentially argues that IMI's bid should be rejected
because of IMI's failure to show a total price of $2,504,976.68 on page
28 of its bid. Consequently, Kime-Plus insists that IMI's higher total
price of $2,888,840.70 as shown on page 28 of its August bid should
control for purposes of bid evaluation and award or, alternatively, this
bid should be rejected as ambiguous as to the total bid price actually
intended.
In reply, the Army insists that IMI's bid should be considered
responsive since IMI acknowledged receipt of amendment No. 0004,
submitted an amended bid schedule (consisting of pages 2 through 10 of
the IFB) reflecting the revised base period of performance established
by the amendment, and submitted a new price for the revised performance
period on page 10 of the bid. In the Army's view, the only reasonable
interpretation of IMI's bid is that IMI intended the lower total bid
figure as computed by the Army to be the total bid for all the required
periods of service. Accordingly, IMI's bid is not low if the total bid
is computed on the basis of its page 28 price total but is low if
computed on the basis of its revised bid schedule, pages 2 through 10.
Where the bid contains a price discrepancy, and the bid would be low
on the basis of one price but not the other, as is the case with IMI's
bid, correction is not allowed unless the asserted correct bid is the
only reasonable interpretation ascertainable from the bid itself or on
the basis of logic and experience. The bid cannot be corrected if the
discrepancy cannot be resolved without resort to evidence that is
extraneous to the bid and that has been under the control of the bidder.
See Frontier Contracting Co., Inc., B-214260.2, July 11, 1984, 84-2
C.P.D. P 40; Harvey A. Nichols Co., B-214449, June 5, 1984, 84-1
C.P.D. P 597.
We agree with the Army's determination that the only reasonable
interpretation of the protested bid is that the lower total bid figure
computed from using the 9-month prices represents the intended bid. It
is clear that by acknowledging amendment No. 0004 and submitting revised
prices based on the shorter performance period, IMI was obligated to
furnish the services in the shorter time period at the revised prices.
IMI's November 1986 acknowledgment of amendment No. 0004 and the
company's submission of revised prices incident to a shorter performance
period took place after the company's August 1986 submission of its
total bid for a 12month basic period. Consequently, the only reasonable
interpretation of the totality of IMI's bid is that the company intended
its revised November 21, 1986, prices for the base period to be its only
prices for that period and that its August 1986 total bid figure on page
28 should be adjusted, as the Army did, to reflect this bidding intent.
Cf. Camden Ship Repair Co., Inc., B-219445, Sept. 13, 1985, 85-2 C.P.D.
P 288, where we allowed the correction of an obviously mistaken bid
which erroneously included a price for an item deleted by an amendment
that had been acknowledged by the low bidder.
We deny the protest.
Harry R. Van Cleve
General Counsel
Matter of: DataVault Corporation--Request for Reconsideration
File: B-223937.3
Date: January 20, 1987
DIGEST
Decision is affirmed on reconsideration where it is not shown to be
legally or factually erroneous.
DECISION
DataVault Corporation requests reconsideration of our decision in
DataVault Corp., B-223937, B-223937.2, Nov. 20, 1986, 86-2 C.P.D. P 594,
in which we dismissed DataVault's protest under Department of Health and
Human Services (HHS) request for proposals (RFP) No. HCFA-86-037/MDW.
We affirm our decision.
DataVault alleged in its protest that the award to Data Base
Corporation was improper because Data Base's proposed facility for data
tape storage did not meet certain RFP requirements. We found that HHS
in fact had relaxed certain requirements somewhat in accepting Data
Base's proposal--for instance, by applying other than Underwriters
Laboratories, Inc., fire rating standards as provided for in the
RFP--but we dismissed the protest since there was no evidence that
DataVault was prejudiced by the relaxation of the requirements.
DataVault argues on reconsideration that it in fact was prejudiced by
the agency's actions because it would have received the award had Data
Base's proposal been rejected for failure to meet RFP requirements.
DataVault concludes that our decision dismissing its protest therefore
was legally erroneous.
DataVault's argument ignores the import of our decision. The issue on
question was not whether Data Base's proposal should have been rejected
for failure to meet the RFP requirements; HHS's acceptance of Data
Base's proposal evidenced a determination, in essence, that Data Base
satisfied the government's true minimum needs, and that the RFP
overstated those needs. The determinative question, then, as indicated
in our decision, was whether the award to Data Base based on relaxed
requirements was proper in light of HHS's failure also to inform
DataVault that the requirements had been relaxed, in other words,
whether such an award would be unfair, or prejudicial, to DataVault.
The question of prejudice, as explained in our decision, turned on
consideration of whether DataVault would have altered its proposal to
its competitive advantage had it been afforded an opportunity to respond
to the reduced requirements. We define prejudice in this manner--rather
than basing prejudice on the mere failure to receive the award, as
DataVault urges--to insure that a technical procurement deficiency will
not result in an award to a protester that would not have received the
award even absent the deficiency. See Centennial Computer Products,
Inc., B-211645, May 18, 1984, 84-1 C.P.D. P 528; KET, Inc.,--Request
for Reconsideration, B-190983, Jan. 12, 1981, 81-1 C.P.D. P 17.
We found no prejudice to DataVault because the firm's offered
facilities met the original, stricter requirements, and there was no
evidence or reason to believe that DataVault would have offered
different, less expensive facilities, or otherwise lowered its proposed
price, had it been advised of the changed requirements. DataVault's
request for reconsideration likewise contains no evidence or argument in
this regard.
DataVault has not established that our decision was legally or
factually erroneous, and we therefore affirm that decision, including
denial of the claim for costs.
Harry R. Van Cleve
General Counsel
Matter of: Canadian General Electric Company, Ltd.
File: B-223934.2
Date: July 10, 1987
DIGEST
1. Protest based upon information received under Freedom of
Information Act (FOIA) is timely, notwithstanding failure of protester
to seek information under FOIA until 3 months after award, where the
record shows that the protester made a consistent effort to obtain
information regarding its basis of protest.
2. Protest that contracting agency improperly allowed the awardee to
change place of manufacture specified in both steps of a two-step sealed
bidding procurement is denied where the record discloses that the
preaward requested change was not incorporated into the contract.
3. Allegation that awardee fraudulently represented its intention to
furnish an item manufactured entirely in the United States is denied as
the evidence presented by the protester, which consisted of the
awardee's performance of other contracts, does not conclusively
demonstrate that the awardee could not have manufactured the item in the
United States.
4. A showing of bad faith on the part of a contracting officer in
conducting responsibility determination of awardee requires virtually
irrefutable proof of specific and malicious intent to harm the
protester. A showing that the contracting officer may have acted
negligently in reaching this determination is not sufficient to carry
this burden, and our Office's scope of review of affirmative
responsibility determinations does not extend to cases involving
negligence.
DECISION
Canadian General Electric Company, Ltd., protests the award of a
contract to Siemans Energy and Automation, Inc., under request for
technical proposals (RFTP) No. DACW85-88-R-0006 and invitation for bids
(IFB) No. DACW85-86-B-0016, both steps of a two-step sealed bidding
procurement issued by the U.S. Army Corps of Engineers, Alaska District.
The procurement is for the design, manufacture and installation of a
34,500 kva alternating current generator for a hydroelectric power
project at Snettisham, Alaska. Canadian General raises three bases of
protest. First, the Corps improperly allowed Siemans to change the
manufacturing site of a major component during the period between bid
opening and contract award; second, Siemans fraudulently misrepresented
its intended place of manufacture of that component in its step-one
proposal and step-two bid; and third, the contracting officer, when
determining Siemans' responsibility as a vendor, acted in bad faith by
failing to investigate thoroughly compelling evidence clearly indicating
Siemans' manufacturing difficulties which eventually resulted in a
postward change of the manufacturing site for the entire generator.
We deny the protest.
BACKGROUND
Step one, the RFTP, was issued on January 31, 1986, requesting
technical proposals for the generator. Four firms, including Siemans
and Canadian General, submitted technically acceptable proposals. Only
Siemans proposed to furnish a product manufactured entirely in the
United States, specifically at its Bradenton, Florida, facility. The
second-step IFB was issued on June 13, 1986, to the four technically
acceptable offerors. Bids were to be based on the bidder's technical
proposal submitted in response to the RFTP. The IFB provided that for
the purpose of evaluating bids, a sum of $88,000, representing
additional inspection costs to the government, would be added to the net
amount for generators, or major components thereof, manufactured outside
of the United States or Canada; also, the generator prices would be
decreased according to a prescribed formula depending upon the proposed
generator's guaranteed efficiency.
Bids were opened on August 8, 1986. Siemans submitted the low bid of
$1,497,500, (evaluated at $952,995) while Canadian General was second
low at $2,297,281 (evaluated at $1,618,744). Consistent with its
technical proposal, Siemans left the Buy American Act certificate
included in its bid package blank, thereby certifying that the product
it was offering was a domestic end product. It also indicated that all
articles, materials and supplies directly incorporated into the end
product were of domestic origin. All other bidders continued to offer
foreign products.
By letter dated September 12, 1986, Siemans advised the procuring
activity of production difficulties at its Bradenton facility in the
manufacture of stator bar/coils, a component comprising approximately 20
percent of the total cost of the generator. Siemans requested
permission to subcontract the manufacture of this component to one of
its parent company's facilities located in Berlin, West Germany. This
proposed change, Siemans stated, would not result in any increase cost
to the government. Moreover, Siemans stated that this change did not
alter the Buy American Act certification in its bid; however, it would
necessitate a change in the percentage, specified in its bid, of the
cost of all articles, materials and supplies directly incorporated into
the generator from zero to 20 percent.
Subsequently, the procuring activity awarded the contract to Siemans
on September 25, 1986.
TIMELINESS
The Corps Contends that Canadian General's protest should be
dismissed as untimely under our Bid Protest Regulations. Following the
late September award, Siemans, on October 23, 1986, issued a public
announcement regarding the closure of its Florida facility. Canadian
General filed a Freedom of Information Act (FOIA) request seeking
documents regarding this closure on December 22. The Corps responded to
the request on January 5, 1987, by giving the protester a November 24,
1986, letter in which Siemans requested permission to manufacture the
entire generator at one of its foreign plants.
The Corps argues that the protester did not file a FOIA request
promptly reflecting the required diligent pursuant of information. The
Corps maintains that the October 23 public announcement should have put
Siemans on notice that the award may have been affected. The Corps
notes that Canadian General did not file its initial protest with our
Office until March 11, which was followed by a supplemental filing on
March 26.
Canadian General responds that any delays in the filing of its
protest were directly attributable to the Corps' failure to release all
documents relating to the agency's dealing with Siemans. The Corps'
initial response to its FOIA request was cursory and incomplete. Only
upon receipt of additional documents in March from another source and
the Corps did Canadian General have sufficient information to file a
protest with our Office.
The critical fact underlying each of the three bases of Canadian
General's protest is the existence and content of the September 12
letter from Siemans to the Corps regarding production difficulties at
Siemans' Bradenton, Florida, facility. The key date for determining the
timeliness of this protest, therefore, is the date when Canadian General
first became aware of, or should have been aware of this letter. Under
our Bid Protest Regulations, Canadian General had 10 working days from
the earlier of these two dates, in which to file its protest. 4 C.F.R.
Sec. 21.2(a) (2) (1986).
Siemans' October 23 public disclosure did not place Canadian General
on notice of the September 12 letter. While the reasons for Canadian
General's 2-month delay in filing its FOIA request are unclear, the
record does show a consistent effort on Canadian General's part over a
6-month period to ascertain the actual circumstances from the Corps and
several other sources. Because of this, we will not dismiss its protest
for failing to pursue relevant information. As the Corps has not
disputed Canadian General's position that it first received the critical
September 12 letter until March, we find that Canadian General's protest
of March 11 is timely.
MERITS
Canadian General maintains that the September 12 letter seeking
permission to transfer the manufacture of the stator bar/coils to West
Germany, received by the Corps between bid opening and contract award,
constituted an impermissible change in Siemans'step-one proposal and
steptwo bid. In this regard, Canadian General notes that counsel for
the agency admitted during the bid protest conference that the "change"
was an error in judgment. Under the rules governing two-step sealed
bidding, Canadian General argues, each bidder's intended place of
manufacture was locked in upon acceptance of the step-one proposals and
that step-two bids had to be submitted upon that basis. If not, bidders
could improperly be allowed to improve their price positions and such
bids should be rejected as nonresponsive. To allow Siemans to
effectuate this change, Canadian General adds, the procuring activity
would have had to reopen the step-one phase thereby affording each
competitor the opportunity to modify its proposal.
Canadian General also argues that the Corps ignored the consequential
cost impact resulting from Siemans' proposed change in place of
manufacture. Because Siemans was no longer offering a 100 percent
domestic product, a foreign inspection charge of $88,000, a duty of 3
percent, but no more than $45,000, and possibly, a Buy American Act
evaluation differential amounting to $90,000, dependent upon the value
of the component to be manufactured in Germany, should have been imposed
on Siemans' low bid.
The contracting officer's report and conference comments denied that
before award the agency acquiesced in or accepted the "change." Despite
the conflicting statements of the parties, this matter is resolvable by
examining the awarded contract. The contract, as initially executed,
provided that Siemans would furnish a generator manufactured entirely in
the United States. The contract did not include, or refer to the
September 12 letter requesting permission to manufacture a portion of
the generator in West Germany. Further, the record is devoid of any
evidence indicating that the contracting activity consented to Siemans'
September 12 request prior to award. Therefore, we conclude that the
Corps did not allow Siemans to modify its bid, with respect to its
intended place of performance or the domestic nature of the item
offered, during the period between bid opening and contract award. In
view of this, we find no impermissible change in Siemans' proposal or
bid such as to have required the agency to reopen step-one negotiations.
Because of this conclusion, it is unnecessary to discuss Canadian
General's cost impact argument; however, we observe that viewing
Siemans' bid as foreign, adding the appropriate evaluation factor costs
would decrease the evaluated price difference by only approximately 15
percent.
Canadian General next asserts that Siemans fraudulently represented
in both its step-one proposal and step-two bid that it would furnish a
generator manufactured entirely at its Florida facility. Even before
the submission of stepone proposals, and certainly before the submission
of bids, Canadian General maintains Siemans was aware of production
difficulties at its Florida facility; therefore, Siemans knew that it
would be unable to manufacture the generator domestically.
Nevertheless, Canadian General continues, Siemans stated in its
technical proposal that it would supply a domestically manufactured
generator, and further, in its bid, certified for Buy American Act
purposes that it would furnish a domestic end product, and stated that
all articles, materials and supplies directly incorporated into the end
product were of domestic origin. The evidence presented by Canadian
General in support of this allegation essentially consists of references
to Siemans' performance of other contracts, most notably, a contract
executed on February 21, 1986, with the Bureau of Reclamation to upgrade
and repair two generators at the Blue Mesa power plant, and another
awarded during 1985 to refurbish six generators for the Public Utility
District of Grant County, Washington. Throughout 1985 and 1986,
Canadian General states, Siemans experienced extreme difficulties at its
Florida facility during performance of both of these contracts which
culminated in its transferring of part of the work for the Blue Mesa
project to West Germany and its termination of the contract with the
Public Utility District of Grant County.
Canadian General has not conclusively demonstrated that Siemans could
not have utilized the Florida plant to perform the subject contract and
therefore we consider it insufficient to support a finding of fraudulent
conduct. Accordingly, Canadian General has not met its burden of
affirmatively proving its case. See Omnitek Inc., B-214445, July 9,
1984, 84-2 CPD P 27.
Additionally, to the extent that Canadian General is alleging that
Siemans' conduct was criminal in nature-- for example, a violation 18
U.S.C. Sec. 1001, which imposes criminal penalties for knowingly making
false statements to the government--this matter is outside the scope of
our bid protest function and should be referred to the Department of
Justice. See Computer Science, Corp., B-210800, Apr. 17, 1984, 84-1 CPD
P 422.
Lastly, Canadian General asserts that the contracting activity should
have been aware prior to award of Siemans' inability to furnish a
domestically manufactured generator. Therefore, the contracting
officer's determination that Siemans was a responsible vendor, i.e.,
that Siemans, in compliance with its bid, could supply a domestic end
product, was made in bad faith. We find that the record does not
support this conclusion.
Contracting officials are presumed to act in good faith, and in order
to show otherwise, a protester must submit virtually irrefutable proof
that they had a specific and malicious intent to harm the protester.
See J. F. Barton Contracting Co., B-210663, Feb. 22, 1983, 83-1 CPD P
177.
The evidence presented by Canadian General in support of this
allegation consists of the above-mentioned Siemans' performance of other
contracts. By failing to examine this pertinent information, Canadian
General maintains, the contracting officer did not act in good faith.
The Corps responds that prior to award it conducted a pre-award survey
of Siemans. During this investigation, it discovered that Siemans had
in fact experienced production difficulties at its Florida plant during
performance of the Blue Mesa project but that Siemans had overcome these
production problems. The Corps admits that it was unaware of Siemans
performance on the Grant County project.
This evidence falls far short of the high standard of proof required
to show bad faith and, more specifically, an intent on the part of the
contracting officer to harm Canadian General. The worst inference to be
drawn from this evidence is that the contracting officer's determination
of Siemans' responsibility, which was made without first examining all
pertinent data, was negligent. See Aesculap Instruments Corp.,
B-208202, Aug. 23, 1983, 83-2 CPD P 228. We have held, however, that
the scope of our review of affirmative responsibility determinations
does not extend to cases involving negligence. American AMF Inc.,
Athletic Equipment Division--Reconsideration, 59 Comp. Gen. 90 (1979),
79-2 CPD P 344.
The protest is denied.
Harry R. Van Cleve
General Counsel
B-223911
February 24, 1987
Digest
Internal Revenue Service Center Director is not an accountable
officer with regard to funds collected by financial institution under
lockbox arrangement. The arrangement eliminates the traditional role of
IRS Center in collecting and processing taxpayer remittances and
provides for the financial institution to collect remittances directly
from taxpayers and process them.
The Honorable John F.W. Rogers
Assistant Secretary of the Treasury (Management)
Department of the Treasury
Dear Mr. Rogers:
This is in response to your request asking our opinion concerning the
potential accountability of Internal Revenue Service Center Directors
under recently initiated Lockbox Depository Arrangements. Specifically
you ask whether an employee such as a Service Center Director is an
accountable officer with respect to funds handled by a lockbox
depositary. For the reasons stated below, we do not find such an
employee to be an accountable officer under these circumstances.
In an effort to reduce the cost of processing taxpayer remittances
and to make the funds received available to the Government with less
delay, the Internal Revenue Service (IRS) and the Department of the
Treasury under the authority of 31 U.S.C. Sec. 3720 have entered into a
memorandum of understanding for establishing a lockbox arrangement with
First National Bank of Chicago. This arrangement involves certain
estimated tax payment vouchers which under the traditional system are
returned with payments to the Kansas City IRS Center where they are
processed. Similiar lockbox arrangements are to be put in place for
other service centers throughout the country.
Under these arrangements, taxpayers are notified of a post office box
address to which they are to send their tax payments and accompanying
documents. The responsible financial institution acting as the lockbox
depositary collects the mail, opens and separates checks and documents.
The document information from each taxpayer is transmitted to the IRS
and the checks are endorsed and credited to a clearing account. Each
day the financial institution wire transfers that day's gross amount
from the clearing account to a Treasury account. The financial
institution may recover from the Treasury any amount from these checks
which cannot be collected, and is liable for any loss or shortage which
occurs while the remittances are in its possession. To enable the IRS
to ascertain if a financial institution is forwarding to the Government
those amounts remitted by the taxpayers, these lockbox arrangements
provide for the transmission of relevant information from the financial
institution to the IRS.
While there are controls and safeguards in these arrangements to
protect the Government from any loss of funds, there is always a
possibility that a loss of funds could occur. In the event that the
financial institution cannot be found liable and recovery of the funds
by the IRS is not possible, an unrecoverable loss may be incurred.
Since these lockbox arrangements are within the jurisdictions of the
respective Service Center Directors, the concern is that the Director is
potentially liable as an accountable officer for such lost funds.
Under these circumstances we do not find the Service Center Directors
to be accountable officers with respect to funds collected under a
lockbox arrangement. Government employees under such arrangements do
not meet the threshold requirements for being accountable officers. We
have consistently defined an accountable officer as "any Government
officer or employee, civilian or military, who by reason of his
employment is responsible for or has custody of Government funds." 62
Comp. Gen. 476, 479 (1983). We have specifically included in this
definition any officer or employee who receives or collects money for
the Government. 59 Comp. Gen. 113, 114 (1979).
Under the traditional tax collection role of the IRS Center, the
Director is an accountable officer for funds collected and processed by
the Center. See, e.g., B-215501, November 5, 1984. However, under
these lockbox arrangements, the financial institution assumes the
responsibility for collecting and processing taxpayer remittances.
Since the role of the Service Center in collecting and processing these
remittances is eliminated under these arrangements, the Director neither
gained custody or control of the deposits and was not responsible in the
accounting sense for funds collected in this manner. Therefore, we
conclude that the Director is not an accountable officer with regard to
funds collected by a financial institution under a lockbox arrangement.
Sincerely yours,
(Mrs.) Rollee H. Efros
Associate General Counsel
Matter of: Barbara H. Burr
File: B-223907
Date: March 9, 1987
DIGEST
An employee of the Department of Labor was transferred from North
Platte, Nebraska, to St. Louis, Missouri. She was unable to sell her
residence at her old duty station. She defaulted on the mortgage
payments, and the mortgage holder initiated foreclosure proceedings.
She hired an attorney who settled the foreclosure on the residence
through an agreement in which the mortgage holder took title to the
residence and canceled the mortgage in exchange for payment of overdue
interest. The employee claims reimbursement of the attorney fees and
the interest payment on the basis that these were real estate expenses
necessarily incurred on account of her transfer from Nebraska to
Missouri. Her claim is denied, since the attorney fees were litigation
costs for services to settle a court suit and the Federal Travel
Regulations prohibit reimbursement of litigation costs, as well as
interest on loans.
DECISION
In this decision we deny reimbursement of attorney fees as real
estate expenses for the sale of the residence at the old duty station of
Ms. Barbara Burr, an employee of the Department of Labor. 1/ The
attorney fees for settlement of a court suit in foreclosure proceedings
instituted by the mortgage holder were litigation costs, reimbursement
of which is prohibited by the Federal Travel Regulations. Reimbursement
of overdue interest paid under the settlement agreement is also
unauthorized.
BACKGROUND
Ms. Burr was transferred from North Platte, Nebraska, to St. Louis,
Missouri, in April 1982. She and her husband were unable to sell their
residence in North Platte within the prescribed period of 1 year after
the transfer, but received a 1-year extension of the maximum time to
sell for entitlement to reimbursement of real estate expenses.
According to her, she borrowed money to continue the mortgage payments.
In October 1983 she could not borrow additional funds and began
negotiating a sale to the mortgage holder at a purchase price equal to
the loan balance, which was less than the appraised value of the home.
She then discontinued making the monthly mortgage payments. The
mortgage holder terminated negotiations for the purchase, however, and
then initiated foreclosure proceedings before a local court.
Ms. Burr hired an attorney to represent her and her husband in the
foreclosure action filed in court. Among other things, the attorney
appeared in court and negotiated a settlement agreement with the
mortgage holder, who thereafter dismissed the foreclosure proceedings.
Under the settlement agreement the Burrs conveyed the home to the
mortgage holder for the loan balance. In addition they paid to the
mortgage holder overdue interest on the mortgage loan in the amount of
$3,500.
Ms. Burr claims reimbursement of the $3,500 interest payment as a
closing cost for the sale of the home. She estimates that if she had
sold the home on the market through a real estate broker, at least this
amount would have been reimbursed by the Government as a real estate
selling expense. In addition, she claims reimbursement of the attorney
fees of $392 as an expense of conveying the home to the mortgage lender.
CONCLUSIONS
The present case involves foreclosure proceedings filed in a court.
As indicated by the settlement agreement, the attorney fees were paid
for a lawyer's representation in the defense of a lawsuit pending in
court, notwithstanding that the mortgage holder ultimately dismissed the
court action as the result of the settlement. Thus, the attorney fees
the employee paid in connection with that settlement were costs
associated with the judicial process of foreclosure. As such, they are
considered litigation costs which are not reimbursable as real estate
expenses under Federal Travel Regulations (FTR), para. 2-6.2c, incorp.
by ref., 41 C.F.R. Sec. 101-7.003. See 61 Comp. Gen. 112 (1981),
involving a foreclosure sale through a court. 2/
Concerning Ms. Burr's payment of overdue interest in the amount of
$3,500 under the settlement agreement, FTR para. 2-8.2d(2) (b)
expressly prohibits reimbursement of interest on loans as a real estate
expense. Further, reimbursement on a constructive cost basis (the
amount of allowable real estate expenses that might have been incurred
had the home been sold on the market) is not permitted under the law or
regulations. Allan R. Irwin, B-198940, July 29, 1980.
Accordingly, the employee's claim may not be allowed.
Comptroller General
of the United States
FOOTNOTES
1/ The Assistant Secretary for Administration and Management,
Department of Labor, requested our decision.
2/ Where, unlike the present case, there has been no foreclosure
proceeding or other petition filed in a court, we have allowed
reimbursement of attorneys' fees charged for services provided to a
transferred Federal employee in a sales negotiation leading to the
conveyance of the home to the state agency guaranteeing the employee's
mortgage loan in consideration of a nominal payment and release from the
mortgage contract. John C. Bisbee, B-220736, April 10, 1986, 65 Comp.
Gen. .
Matter of: Universal Shipping Company, Inc.
File: B-223905.2
Date: April 20, 1987
DIGEST
1. Under the Competition in Contracting Act of 1984, agencies are not
required to provide to protesters and other interested parties documents
related to a protest that would give one or more parties a competitive
advantage or which the parties are not otherwise authorized by law to
receive. Nevertheless, decisions on bid protests are based on the
entire record and not merely on those portions that have been released
to the protester and other interested parties.
2. Where an initial proposal is not fully in accord with the
requirements of an RFP, the proposal should not be rejected if the
deficiencies are reasonably susceptible to being made acceptable through
negotiations.
3. Where an offeror promises to comply with the requirements of a
solicitation, a contention that the offeror will be unable to comply
with the requirements constitutes an allegation that the offeror is not
responsible. GAO does not review affirmative determinations of
responsibility absent circumstances not applicable here.
4. Once an offeror promises to perform in accordance with a
solicitation's requirements, whether the offeror actually does perform
as contractually required is a matter of contract administration which
is to be monitored by the procuring agency and is not a subject of GAO
review as a part of its bid protest function.
5. The composition of technical evaluation panels is within the
discretion of the contracting agency and GAO will not review the
composition absent a showing of possible fraud, bad faith, or conflict
of interest.
6. Protester's new and independent ground of protest is dismissed
where the later-raised issue does not independently satisfy the rules of
GAO's Bid Protest Regulations.
7. Requirement that agencies generally must conduct "meaningful"
negotiations or discussions with all responsible offerors within a
competitive range was satisfied when the protester was advised in
writing concerning the two major weaknesses in its initial proposal.
When a proposal is acceptable and in the competitive range, an agency is
not under an obligation to discuss every aspect of the proposal that has
received less than the maximum possible score.
8. Agencies are required to document the relative differences among
proposals and their strengths, weaknesses and risks in terms of the
stated evaluation criteria. Where source selection is based upon the
average of the scores given to proposals by three technical evaluators,
the two top ranked proposals are within one percentage point, but the
scores are not adequately supported by written narratives, the source
selection official lacked a sufficient basis to make a reasoned award
decision.
DECISION
Universal Shipping Company, Inc. protests the award of a contract to
Daniel E. Young, Inc. under request for proposals (RFP) No.
AID/MS-86-021 issued by the Agency for International Development (AID),
for international ocean ship booking, chartering and freight forwarding
services in connection with AID's responsibilities for the
administration and shipment of commodities under certain food donation
programs. The solicitation provides that the successful offeror will
receive commissions directly from the ocean carriers with which it
deals. Universal argues that Young's offer was "nonresponsive" to
material solicitation terms and should have been rejected. In addition,
Universal complains about the composition of AID's Technical Evaluation
Committee (TEC) and about the evaluation procedures employed by the TEC.
Finally, Universal contends that AID failed to conduct meaningful
discussions with it, and that the source selection decision was made
without a reasonable basis and was not adequately documented.
We deny the protest in part, dismiss it in part, and sustain it in
part.
BACKGROUND
On July 7, 1986, AID issued the RFP for the services in question for
a 2-year period to begin in January 1987. The RFP requested that
proposals be submitted by August 26, 1986.
By that date, proposals were received from Young, Universal and a
number of other offerors.
On August 5, 1986, Young filed a protest with our Office contending
that the RFP's geographical restriction, that the selected contractor
"perform the booking/charterings function in the Washington metropolitan
area" unduly restricted competition. On November 19, 1986, we denied
Young's protest because AID had shown that the restriction was needed to
satisfy its minimum needs and because Young had submitted a proposal
which satisfied the requirement and had not shown itseif to have been
competitively prejudiced by the restriction. Daniel F. Young, Inc.,
B-223905, Nov. 19, 1986, 86-2 C.P.D. P 586.
In November, all of the firms found to be in the competitive range
were advised of that fact, were notified of weaknesses in their
proposals and were invited to meet with the TEC to discuss their
proposals. The firms in the competitive range then submitted best and
final offers by December 1, 1986. The revised proposals were evaluated
and point scored by the three voting members of the TEC. The three
scores for each offeror's proposal were averaged by the contract
negotiator and award was made to Young on December 11 based upon its
highest evaluated average point score.
Universal filed its protest against the award to Young on December
22, 1986. By letter filed with our Office on January 16, 1987, pursuant
to 4 C.F.R. Sec. 21.4(b) (1986), AID notified our Office that urgent and
compelling circumstances significantly affecting the interests of the
United States would not permit AID to wait for GAO's decision on
Universal's protest before authorizing the commencement of AID's
contract with Young. In addition, AID stated that allowing the
performance of Young's contract was also in the best interest of the
government because Young was taking steps to ensure a smooth transfer of
responsibilities from the incumbent (Universal) to Young and because
much time and effort would be wasted if AID was required to suspend
Young's performance.
On January 22, Universal filed a civil action (No. 87-0156) in the
United States District Court for the District of Columbia seeking
injunctive relief to prevent AID from allowing Young to commence
performance of the contract awarded December 11, 1986. By order dated
February 3, 1987, the court requested that GAO resoive the protest
before it and ordered AID to stay performance of Young's contract until
GAO decided the protest or until AID couid show the court why a stay of
the Young contract would be contrary to the best interests of the United
States.
In Camera Review
Initially, Universal complains that its ability to prove the merits
of its protest is hampered by AID's refusal to permit Universal to have
access to certain source selection and evaluation documents and Young's
technical and business proposals.
AID states that Young's technical and business proposals contain
restrictions against disclosures, as authorized by the Federal
Acquisition Regulation (FAR), 48 C.F.R. Secs. 15.413-1(c) and 52.215-12
(1986), and therefore AID is precluded from disclosing this information.
In addition, AID states that the specific point scores awarded to each
firm, and information pertaining to the relative standing of firms other
than Universal and Young are protected from disclosure to the public
pursuant to the deliberative process privilege of the Freedom of
Information Act, 5 U.S.C. Sec. 552.
Under the Competition in Contracting Act of 1984, 31 U.S.C. Sec.
3553(f) (Supp. III 1985), government agencies are not required to
provide to protesters and other interested parties documents related to
a protested procurement action that would give one or more parties a
competitive advantage or which the parties are not otherwise authorized
by law to receive. Nevertheless, consistent with our practice, we have
reviewed and based our decision on the entire record, not merely those
portions that have been provided to the protester. S&O Corp., B-219420,
Oct. 28, 1985, 85-2 C.P.D. P 471.
"Responsiveness" of Young's Offer
Universal argues that Young's offer is "nonresponsive" to the RFP
requirement (found in paragraphs H.6 and M.2(a) (3)) that the "booking
and chartering functions must be performed in the Washington
metropolitan area." Universal contends that because on August 5, 1986,
Young protested against this geographical restriction, Young has
evidenced that it "was resisting compliance" with the restriction. In
addition, Universal argues that Young's proposal was "nonresponsive",
because Young admits that it was not authorized to conduct business in
Washington, D.C. until September 11, 1986, after its proposal was
submitted.
Young counters Universal's arguments by stating that its proposal was
in strict compliance with the geographical restriction and all other RFP
requirements. Young states that its proposal clearly indicates that the
booking and chartering functions will be performed by itself and its
subcontractor in its Washington, D.C. office. Finally, although Young
admits that it did not obtain a certificate of authority to transact
business in Washington, D.C. until September 11, 1986, Young argues that
under the District of Columbia Business Corporation Act, the failure of
a foreign corporation to obtain a certificate of authority to transact
business in the District of Columbia does not preclude the corporation
from fully conducting business in the District and does not impair the
validity of the corporation's contracts entered into in the District.
AID argues that "the rigid rules of bid responsiveness in formaliy
advertised procurements do not appiy to negotiated procurements" such as
this. Self Powered Lighting, Ltd., 59 Comp. Gen. 298 (1980), 80-1
C.P.D. P 195. AID states that it properly treated the acceptabiiity of
Young's plan to meet the requirements of the RFP's geographical
restriction as a subject for negotiation and discussion. AID states
that whatever deficiencies may have existed in Young's plan were
resolved through negotiation, and under Young's contract Young will be
required to fully comply with the geographical restriction. AID
conciudes that Young's proposal should not have been and could not have
been rejected on the grounds that Young failed to meet the geographical
restriction.
Award to an offeror which does not propose to meet specific RFP
requirements is improper since the basis for an award must be the same,
in its material terms, as that on which the competition is conducted.
McCotter Motors, Inc., B-214081.2, Nov. 19, 1984, 84-2 C.P.D. P 539.
However, if an initial proposal is not fully in accord with the
requirements of an RFP, the proposal should not be rejected at that time
if the deficiencies are reasonably susceptible to being made acceptable
through negotiations. Self-Powered Lighting, Ltd., 59 Comp. Gen. 298,
supra.
Young's initial proposal, at a number of locations, indicates Young's
intention to comply with the requirement that the booking and chartering
functions be performed in Washington, D.C. Young's chartering
subcontractor is based in Washington, D.C., and Young states that it has
established a Washington, D.C. office to perform the booking function.
Young's best and final offer (BAFO) confirms its intent to perform the
booking and chartering functions in Washington, D.C. Although Young
filed a protest against the geographical restriction, in our decision in
the matter we found that, notwithstanding its protest, Young offered to
satisfy the requirement in question and Young stated that it had in fact
established a Washington, D.C. office for that purpose. See Daniel F.
Young, Inc., B-223905, supra.
It is clear from both Young's initial proposal and its BAFO that
Young promised to comply with the geographical restriction and from
AID's evaluation sheets that the TEC evaluated Young's proposed
facilities in Washington and found them to be satisfactory. Where, as
here, an offeror promises to comply with the requirements of a
solicitation, the contention of a protester that the offeror will be
unable to comply with the requirements constitutes an allegation that
the offeror is not responsible. Enidine, Inc., B-222617, June 5, 1986,
86-1 C.P.D. P 528. Specifically, we have held that whether an offeror
has the necessary permits and licenses to conduct business is a matter
of responsibility and an initial proposal should not be rejected
automatically, based on a failure to meet licensing requirements not
specified in the solicitation. Recyc Systems, Inc., B-216772, Aug. 23,
1985, 85-2 C.P.D. P 216.
Here, in making award to Young, AID impliedly indicated that it had
found Young to be a responsible offeror, since before a contracting
officer can make an award he must make an affirmative determination of
responsibility. See FAR, 48 C.F.R. Sec. 9.105-2(a)(1) (1986); The ARO
Corp., B-222486, June 25, 1986, 86-2 C.P.D. P 6. Our Office will not
review a contracting officer's affirmative determination of
responsibility absent circumstances not applicable here. Scipar, Inc.,
B-220645, Feb. 11, 1986, 86-1 C.P.D. P 153.
Moreover, to the extent that Universal is arguing that Young will
actually not perform in accordance with the RFP's geographical
requirement incorporated into the contract awarded to Young, Universal's
contention constitutes a matter of contract administration which is to
be resolved by AID, not by our Office as a part of our bid protest
function. See 4 C.F.R. Sec. 21.3(f) (1) (1986); Motorola
Communications & Electronics, Inc., B-223715, Sept. 19, 1986, 86-2
C.P.D. P 325.
Composition of the Technical Evaluation Committee
Universal argues that the TEC was improperly constituted and that
members of the TEC held discussions with Universal and other offerors in
violation of AID regulations. Universal states that "on numerous
occasions during the course of the procurement one or more members of
the evaluation committee made contact and even held meetings with some
of the offerors in direct violation of the AID acquisition regulations"
(AIDAR). Universal states that on November 7, 1986, it met with the
entire TEC, but Universal did not acquiesce in this "improper meeting"
because it did not realize at that time that it was TEC members with
whom it was meeting.
AID states that the composition of its TEC was in full compliance
with AIDAR Sec. 715.608-70, which provides, in relevant part, that
TEC's:
"shall be composed of a chairman representing the project
office, a representative of the contracting office, and
representatives from other concerned offices as appropriate."
We have held that the composition of technical evaluation panels is
within the discretion of the contracting agency and we will not review
the composition absent a showing of possible fraud, bad faith, or
conflict of interest. Eyring Research Institute, Inc., B-221349, Apr.
23, 1986, 86-1 C.P.D. P 397. None of these is alleged here.
In its comments on the agency report on the protest, filed more than
5 weeks after the protest was filed, Universal raised for the first time
the argument that AID committed "violations of the evaluation process
and AID regulations by having the contract negotiator institute meetings
between offerors and the TEC." Universal's comments contain an affidavit
from its president which states that on at least one occasion he met
with all the members of the TEC to discuss Universal's proposal, and he
believes "that similar discussions were held by the TEC with other
offerors."
AID states that its internai regulations do not prohibit the entire
TEC from meeting with offerors, it only prohibits individual members of
the TEC from having ex parte discussions.
Universal's newly raised protest contention is untimely. Our Bid
Protest Regulations require that a protest be filed within 10 working
days after the basis of the protest is known or should have been known.
4 C.F.R. Sec. 21.2(a) (2) (1986). Where a protester initially files a
timely protest and later supplements it with new and independent grounds
of protest, the later-raised allegations must independently satisfy
these timeliness requirements. Siska Construction Co., Inc., B-218428,
June 11, 1985, 85-1 C.P.D. P 669. Our Regulations do not contemplate
the unwarranted piecemeal development of protest issues. See Little
Susitna Co., 65 Comp. Gen. 651 (1986), 86-1 C.P.D. P 560. Since
Universal met with members of the TEC in November 1986, and was aware of
the identity of the TEC members by the time Universal filed its protest
in December 1986 (because in its protest Universal complained about the
composition of the TEC), this protest basis, founded upon the belief of
Universal's president that the TEC met with other offerors, could have
been raised when Universal filed its protest in December and was
therefore untimely raised, more than 5 weeks later. Therefore, we
dismiss this basis. Little Susitna Co., 65 Comp. Gen. 651, supra.
Meaningful Discussions
Universal argues that at the conference which it had with AID on
November 7, 1986, AID did not conduct "meaningful discussions" with
Universal. Universal states that in a November 11 letter to it from
AID, AID noted two areas perceived as deficiencies or areas needing
clarification even though Universal allegedly addressed these matters at
the conference on November 7, "to the apparent satisfaction of AID."
Universal states that if there were other areas (than the two referenced
in the November 11 letter) which required a response by Universal, they
should have been identified to Universal by AID. Universal argues that
"in this context, with the clear inference from the Agency that no other
areas existed in which USC Universal needed to supply information, the
failure to identify open issues was a failure to conduct meaningful
discussions with USC."
AID argues that it did conduct meaningful discussions with Universal.
AID held a conference with Universal on November 7 to discuss the
weaknesses in Universal's proposal. Further, as Universal admits, AID's
November 11 letter to Universal specifically points out the two
weaknesses which the TEC members found in Universal's proposal. The
letter of November 11 requests a BAFO and states that Universal's BAFO
should address the two areas which were perceived as deficiencies or
needing clarification: (1) names and biographical data of alternate
(backup) personnel for the booking/chartering function; and (2) ability
of Universal's proposed standby overseas network to respond to problems.
The November 11 letter warned that the BAFO must include all revisions
to the original proposal and that Universal should "not rely on
information given during oral discussions to modify your original
proposal."
Agencies generally must conduct written or oral discussions with all
responsible offerors within a competitive range, and this includes
advising offerors of deficiencies in their proposals, so that they have
an opportunity to satisfy the government's requirements. FAR, 48 C.F.R.
Sec. 15.610 (1986). This requirement can be satisfied only when
discussions are "meaningful," which means that negotiations should be as
specific as practical considerations will permit. Tracor Marine Inc.,
B-207285, June 6, 1983, 83-1 C.P.D. P 604.
Agencies are not obligated, however, to afford offerors
all-encompassing negotiations. Training and Management Resources, Inc.,
B-220965, Mar. 12, 1986, 86-1 C.P.D. P 244. The content and extent of
discussions in a given case are matters of judgment primarily for
determination by the agency involved and are not subject to question by
our Office unless they are shown to be clearly without a reasonable
basis. Training and Management Resources, Inc., B-220965, supra.
Information Network Systems, B-208009, Mar. 17, 1983, 83-1 C.P.D. P 272.
Where a proposal is considered to be acceptable and in the competitive
range, the agency is under no obligation to discuss every aspect of the
proposal that has received less than the maximum possible score. Bauer
of America Corp. & Raymond International Builders, Inc., A Joint
Venture, B-219343.3, Oct. 4, 1985, 85-2 C.P.D. P 380.
The record shows that AID did conduct meaningful discussions with
Universal by advising Universal first at the November 7 conference and
then in its November 11 letter that Universal's proposal contained two
weaknesses that should be addressed in the BAFO. Our in camera review
of the technical evaluators' narrative comments concerning Universal's
initial proposal shows that the two weaknesses described in the November
11 letter were the only ones labeled by the evaluators. Therefore,
there was not any requirement for discussions concerning other areas of
Universal's proposal. See Bauer of America Corp. & Raymond
Internationai Builders, Inc., A Joint Venture, B-219343.3, supra.
In addition, we do not agree with Universal's allegation that the
issues raised in the November 11 letter were already resolved by oral
discussions on November 7. The November 11 letter clearly advised
Universal that the two areas of deficiencies needed clarification,
stated that Universal's BAFO must include all revisions to the original
proposal, and warned Universal that it should not rely on information
given during oral discussions to modify its original proposal. In fact,
Universal addressed the two areas of deficiencies in its BAFO. Because
Universal was clearly advised of the deficiencies found in its initial
proposal, we conclude that AID conducted meaningful discussions with
Universal.
Rationale for Award Decision
Universal states that its final concern is that the evaluation
committee failed to adequately support its findings with rationale and
that the source selection decision to award to Young is inadequately
supported by documentation showing the relative weaknesses and strengths
among the proposals, as required by FAR, 48 C.F.R. Sec. 15.612(d)(2)
(1986).
We agree with Universal's concern that the file lacks adequate
documentation showing the relative weaknesses and strengths of proposals
to support the award decision. For example, evaluator "A" gave
Universal 8 points iess than the 100 possible but did not, by way of
narratives, describe the weaknesses found in Universal's proposal. In
addition, evaluator "B" subtracted 5 points from a possible 35 under the
area of program management even though this evaluator, under the
narrative heading "strengths," states that "the program management
section of the proposal was clearly defined," and does not describe any
"weaknesses" in Universal's program management plan.
AID argues that evaluator "A" did not include a narrative with
Universal's final evaluation score sheet because he saw no need to
repeat the comments that he set out in the score sheets when he
evaluated Universal's initial proposal.
We question AID's analysis here. The only weakness listed by
evaluator "A" in scoring Universal's initial proposal is "ocean booking
personnel and system." Universal supplemented its proposal in response
to AID's request for a BAFO by listing the names of alternate (backup)
personnel for the booking/chartering function. Because there are no
narratives by evaluator "A" concerning Universal's final proposal we
question how the source selection official could assess the
reasonableness of the scoring decision, nor can we conclude that the
evaluator found the same weaknesses in the final proposal that were
found in the initial proposal.
The record before us lacks any indication that the source selection
official did anything more than average the scores of the three
evaluators in order to determine which offeror should be awarded the
contract. Because there was only a one-point average difference between
Young's and Universal's proposal, and because there is inadequate
documentation to support the point scores given to the offerors, we
cannot conclude that the source selection decision, apparently based
only upon the point scores, was a reasoned one. In these circumstances,
the source selection decision is inadequately supported by documentation
as required by FAR, 48 C.F.R. Sec. 15.612(d) (2), 1/ and therefore the
record lacks adequate evidence to assure its reasonableness. See Tracor
Jitco, Inc., 54 Comp. Gen. 896 (1975), 75-1 C.P.D. P 253. We sustain
the protest on this basis.
Accordingly, we recommend that the source selection official review
the evaluation records to determine whether the scores given to the
offerors accurately reflect the relative merits of the proposals. In
this regard, we suggest that the source selection official reconcile the
inconsistencies between the point scores and the narrative descriptions
discussed above. In addition, the source selection official should
ascertain why points were deducted from the offers in certain areas.
For example, evaluator "A" downgraded Universal's proposal under all
four of the evaluation areas without explaining why. While we recognize
that the point scores may accurately reflect a reasonable evaluation of
the proposals, it is not possible for the source selection official to
verify this fact without the additional information discussed above.
If AID can document its decision to award to Young, it need not
terminate Young's contract. However, if AID concludes that the award to
Young is not supportable, we recommend that AID terminate Young's
contract and award the contract to the proper party based on the above
recommended review. Tracor Jitco, Inc., 54 Comp. Gen. 896, supra. In
any event, AID should advise us and the interested parties of its
actions.
The protest is denied in part, dismissed in part, and sustained in
part.
Comptroller General
of the United States
FOOTNOTE
1/ Although the FAR applies to acquisitions using appropriated funds
(see FAR, 48 C.F.R. Sec. 2.101), it appears that AID is using the FAR to
conduct this no-cost procurement.
Matter of: Transportation and Travel Expenses of Members as
Witnesses
File: B-223900
Date: December 24, 1986
DIGEST
The Joint Travel Regulations may be amended to provide transportation
and travel expenses for uniformed service members who serve as witnesses
in criminal cases in local courts and civil cases in local, state
government, government of a United States territory or possession or
District of Columbia courts in proceedings directly related to the
uniformed services or to members of the uniformed services, if the
government has a compelling and genuine interest in the matter.
DECISION
This action is in response to a request for an advance decision from
the Per Diem, Travel and Transportation Allowance Committee regarding
transportation and travel expenses of members called to testify as
witnesses in court proceedings. 1/ The question presented is whether
members of the uniformed services may be provided with travel and
transportation allowances for travel incident to duty as a witness in
criminal cases in local courts and civil cases in local, state and
District of Columbia courts in certain proceedings directly related to
the services or members of the uniformed services. It is our view that
such travel may be permitted under the circumstances set forth below.
BACKGROUND
There is no specific statttory authority for payment by the
government of travel expenses for members of the uniformed services who
are called to testify at state or local proceedings. Generally, members
of the uniformed services travel at government expense pursuant to 37
U.S.C. Sec. 404 (1982), which provides that under regulations prescribed
by the Secretaries concerned, a member is entitled to travel and
transportation allowances for travel performed under orders, upon a
permanent change of duty station, or otherwise, or when away from his
designated duty station. Paragraph M3050-1 of Volume 1 of the Joint
Travel Regulations (1 JTR), issued pursuant to that authority, provides
that members are entitled to these allowances only while actually in a
travel status and they shall be deemed to be in a travel status while
performing travel away from their permanent duty station, on public
business, pursuant to competent travel orders.
In construing the term "public business" we have held that it relates
to the activities or functions of the service to which the traveler is
attached, and the travel which is contemplated is that which reasonably
may be considered as having been performed in the accomplishment of the
purposes and requirements of such activities and functions. See 55
Comp. Gen. 1332 (1976). In other words, travel allowances are
authorized for members of the uniformed services for the purpose of
reimbursing them for the expenses incurred in complying with the travel
requirements imposed upon them by the needs of the services over which
they have no control, but not for expenses of travel considered as made
for personal business. See B-202232, July 10, 1981.
In B-202232, supra, the Committee proposed a change to the Joint
Travel Regulations to allow authorization of travel and transportation
expenses for members requested to appear as witnesses for a state
government in a criminal proceeding. This proposal required that a
determination be made that the travel is necessary and in the best
interest of the service, and that the court action is one directly
related to the service or a member and is one in which the service has a
strong interest. We held that a determination that travel is necessary
for transaction of official business is required and such a
determination is a matter within the discretion of the agency concerned.
Thus, in allowing a member to travel at government expense to serve as
a witness in a state criminal prosecution, the service is required to
make a determination based on the facts of each situation that the
travel involved is to be performed because of the needs of the service.
Based upon our decision, the travel regulations were amended to provide
allowances under those circumstances.
The services now propose an extension of the regulations to allow
authority for reimbursement of travel and transportation allowances when
members serve as witnesses in criminal cases in local courts and civil
cases in local, state, United States territory or possession, or
District of Columbia courts in proceedings directly related to the
uniformed services or to members of the uniformed services.
As an example, the services present the situation of a custody
hearing involving the abused child of an Army family in which a member
would have testified had he been provided transportation and travel
allowances. After the hearing, the child was returned to the family
and, shortly thereafter, the child died. It is speculated that the
testimony of the member might have prevented the return of the child to
the family and, presumably, prevented its death.
It is our view that the Joint Travel Regulations may be amended to
allow travel and transportation expenses for such purposes under limited
circumstances. Generally, members may not be provided transportation
and travel expenses to participate in criminal and civilian legal
proceedings unrelated to the service. Additionally, most jurisdictions
have at least some funds and authority to provide for the expenses of
witnesses called to testify on behalf of the state. We recognize,
however, that military members are subject to frequent transfers, often
on short notice, to distant places, and over which they have little
control. We also recognize that there may be circumstances under which
the services find that they have a strong interest in a case, such as
where the service finds it would be in its best interest to be permitted
to facilitate prosecution or defense of its military personnel, or to
protect the safety of its members and their dependents. When these
situations exist and appropriate determinations have been made that the
service has a compelling and genuine interest in the matter, it is our
view that the services should be able to provide transportation and
travel expenses when a member of the uniformed services is called to
testify in Federal, state, or local courts as a necessary witness.
While regulations may be promulgated which allow the services to provide
travel and transportation allowances in such circumstances, the
regulations also should insure that the determination has been made that
the travel involved is in the interest of the government. As we
understand the proposal, however, this would not include travel to
participate in purely private litigation, such as a personal injury case
or personal contract, merely because a military member was involved.
Accordingly, we would not object to an amendment to provide for
transportation and travel allowances for members of the uniformed
services under the circumstances set forth above.
Acting Comptroller General
of the United States
FOOTNOTE
1/ The request was made by Delbert L. Spurlock, Jr., in his capacity
as Chairman, Per Diem, Travel and Transportation Allowance Committee,
Alexandria, Virginia.
Matter of: Emmitt Sheridan - Lump-Sum Leave Payment Terminal
LeaveFile:
B-223876
Date: June 12, 1987
DIGEST
An employee took approved annual leave for all of the next to last
pay period of the leave year and for all workdays except the last
administrative workday of the last pay period of the leave year and then
retired. The lump-sum leave payment he received did not include credit
for 16 hours of annual leave which had accrued for those two pay periods
because the agency deemed it to be the granting of leave on leave in
violation of the terminal leave restriction. The leave credit is
allowed. Terminal leave occurs when leave is taken after the employee
has performed his last day of active duty. Since the employee was
present for and performed duty on the last administrative workday of the
pay period in which he retired, such leave used immediately prior to
that day is not violative of the terminal leave restriction. Aurora D.
Rives, B-190374, January 20, 1978, distinguished.
DECISION
This decision is in response to a request from the Chief, Fiscal
Accounting Section, Federal Communications Commission. It concerns the
entitlement of Mr. Emmitt Sheridan to be credited additional annual
leave for lump-sum payment incident to his retirement at the close of
business on January 3, 1986.
BACKGROUND
Mr. Sheridan, a former employee of the Field Operations Bureau,
Federal Communications Commission, was authorized to take annual leave
from December 8, 1985, through January 2, 1986. At the close of the pay
period immediately preceding the approved leave period (December 7,
1985), Mr. Sheridan had an annual leave balance of 360 hours.
We understand that at an earlier time when Mr. Sheridan's immediate
supervisor approved his leave request, the supervisor was aware that Mr.
Sheridan had expressed the intention to retire in the near future.
Apparently, the supervisor was not aware of the exact date of Mr.
Sheridan's projected retirement, nor of the general prohibition against
approving terminal leave immediately prior to retirement.
While Mr. Sheridan was on leave, the administrative staff of the
Field Operations Bureau and the agency's personnel office processing
staff contacted Mr. Sheridan and advised him that in order to avoid the
consequences of a terminal leave situation, he would have to return to
his duty station prior to retirement. As requested, Mr. Sheridan was
present at his duty station and in a duty status for 8 hours on Friday,
January 3, 1986, the last day of the agency's administrative workweek,
and his retirement became effective at the close of business that day.
Following retirement, Mr. Sheridan received a lump-sum payment for
224 hours of unused annual leave. This did not include credit for 8
hours of leave accrual for the pay period ending December 21, 1985, nor
8 hours accrual the pay period ending January 4, 1986. The basis for
withholding those leave credits was the agency view that to do otherwise
would constitute the granting of leave on leave in connection with
retirement (terminal leave) and in the second instance, that he retired
before completing the entire last pay period of the leave year. 1/
In view of the fact that Mr. Sheridan did return to work son the last
day of the agency's administrative work week (Friday, January 3, 1986),
the agency is uncertain whether they properly withheld annual leave
credits, but cite to our decision Aurora D. Rives, B-190374, January 20,
1978, among others, as having application here.
Based on the above, the following questions are asked:
1. Is one workday in an active duty status immediately preceding
separation from Federal Service, and immediately following an extended
period of annual leave sufficient to avoid a terminal leave situation,
or, if not, what guidelines should apply?
2. Is there a difference if management was unaware of the employee's
intention to separate prior to approving the period of annual leave and
the employee's one-day return to duty?
3. In the event that your response to question 1 is "No" would an
employee be entitled to payment for holidays which fall within a period
of terminal leave but would not be included in a lump-sum payment under
current law?
RULING
Generally, terminal leave is annual leave taken at the conclusion of
a period of service and immediately before separation or retirement
without the employee being present at his work station and in a work
status at the end of the workweek or pay period in which he separates or
retires. Our decisions have held that agencies may not grant an
employee terminal leave immediately prior to separation from Federal
service when it is known in advance that the employee is to be
separated, except where the exigencies of the service require such
action. See 54 Comp. Gen. 655, 658 (1975), and 34 Comp. Gen. 61 (1954).
On the other hand, we believe, that annual leave used by an employee
immediately prior to his last day of active duty is not terminal leave.
Therefore, since Mr. Sheridan was present for duty and performed duty on
the last administrative workday of the last pay period in the leave year
(January 3, 1986), such leave as he used immediately prior to that day
is not violative of the terminal leave restrictions, and Mr. Sheridan is
entitled to a lump-sum payment for the additional 16 hours of accrued
leave.
Although the agency cites our decision in Aurora D. Rives, cited
above, the circumstances in Rives were different than the present case.
In Rives, we considered the issue of the terminal leave restriction in a
case where an employee worked all of her final pay period except for the
last 6 hours of the last administrative workday, which apparently was
the amount of annual leave she otherwise accrued at the beginning of her
last pay period. We concluded that since she substantially worked the
entire period, the rule regarding terminal leave would not apply and,
thus, she could accrue annual leave at the beginning of the period and
use it for the last portion of her last day. Thus, our decision in
Rives is distinguishable from the present case where the employee used
annual leave prior to his last day of active duty.
This responds to question 1, and question 3 requires no answer. With
regard to question 2 concerning management's knowledge of his intention
to retire, we respond as follows. Where an employee is separating from
Federal service by his own volition, actual separation cannot occur
before the date all necessary documents required to be executed by the
employee are so executed. While an employee may express the intent to
voluntarily separate at some time in the near future, it cannot be
concluded by management with any assurances that he will so separate at
that time since the employee could always change his mind. However, it
is suggested that where notice of intention to separate is expressed by
the employee to management, the employee should be promptly counseled
regarding his obligations, rights and benefits.
Comptroller General
of the United States
FOOTNOTE
1/ Because of the irregularity of his administratively established
work schedule for the last pay period, Mr. Sheridan's last day of work
was scheduled to be Saturday, January 4, 1986. However, he completed
his scheduled tour of duty through the use of annual leave and by
reporting for duty on Friday, January 3.
B-223857
February 27, 1987
DIGEST
1. In accordance with the Prompt Payment Act, 31 U.S.C. Sec.
3901-3906, the Commodity Credit Corporation (CCC) was required to pay
interest to any contractor who did not receive timely payment for the
meat it delivered to CCC under the red meat purchasing Program the
Department of Agriculture was authorized to carry out by section 104 of
the Food Security Act of 1985. As specified in the contracts, CCC was
obligated to pay interest to contractors under the Prompt Payment Act
when payment was made more than 10 days after delivery, even though CCC
was unable to make payment when due because of the temporary depletion
of its borrowing authority.
2. Once the borrowing authority of the Commodity Credit Corporation
(CCC) was depleted and it had no funds available to pay for the meat it
had ordered under the red meat purchasing program authorized by section
104 of the Food Security Act of 1985, the Antideficiency Act required
CCC to take action to mitigate or minimize the magnitude of a possible
Antideficiency Act violation. To the extent CCC entered into new
contracts with meat suppliers or required and accepted deliveries of
meat on existing contracts during the period in which its borrowing
authority was depleted, CCC violated the Antideficiency Act.
The Honorable Glenn English
Chairman, Subcommittee on Government
Information, Justice, and Agriculture
Committee on Government Operations
House of Representatives
Dear Mr. Chairman:
This is in response to your letter of July 31, 1986, requesting a
legal opinion from our Office as to whether actions taken by the United
States Department of Agriculture (USDA) in implementing section 104 of
the Food Security Act of 1985 (the Act), Pub. L. No. 99-198, 99 Stat.
1354, 1366 (1985) violate the Prompt Payment Act or any other applicable
laws.
Under section 104 of the Act, the Secretary of Agriculture was
authorized to purchase a total of 400 million pounds of red meat to
minimize the adverse effect of the milk production termination program
on beef, pork and lamb producers. USDA implemented the.meat purchasing
program through the Commodity Credit Corporation (CCC), a wholly owned
Government corporation within USDA.
As a result of the depletion of its borrowing authority, CCC was
unable to make payment when due on some of the contract it had entered
into with meat suppliers. In our view, CCC's subsequent refusal to pay
any interest to contractors after funds became available and payment was
made violated the Prompt Payment Act, 31 U.S.C. Sec. 3901-3906. 1/
Moreover, to the extent that CCC entered into any new contracts with
suppliers or required and accepted deliveries on existing contracts
during the period in which its borrowing authority was depleted and no
other funds were available to pay the contractors, we think it also
violated the Antideficiency Act.
BACKGROUND
Section 104 of the Food Security Act of 1985 provides as follows:
"To minimize the adverse effect of the milk production
termination program on beef, pork and lamb producers in the United
States during the 18-month period for which such Program is in
effect under section 201 (d) of the Agricultural Act of 1949 (7
U.S.C. Sec. 1446(d)), in such period--
"(1) the Secretary of Agriculture shalluse funds available for
the purposes of clause (2) of section 32 of the Act * * * (7
U.S.C. Sec. 612c), approved August 14, 1935, including the
contingency funds appropriated under such section 32, and other
funds available to the Secretary under the commodity distribution
and other nutrition programs of the Department of Agriculture and
including funds available through the Commodity Credit
Corporation, to purchase and distribute 200,000,000 pounds of red
meat in addition to those quantities normally purchased and
distributed by the Secretary. Such purchases by the Secretary
shall not reduce purchases of any other agricultural commodities
under section 32.
"(2) the Secretary of Agriculture shalluse funds available
through the Commodity Credit Corporation to purchase 200,000,000
pounds of red meat, in addition to those quantities normally
purchased and distributed by the Secretary, and to make such meat
available--
"(A) to the Secretary of Defense * * *; or
"(B) for export * * *."
As the conference report on this legislation explains, section 104
provides that the Secretary "shall use funds available to purchase 400
million pounds of red meat in addition to the quantities normally
purchased and distribute by the Secretary," with 200 million pounds to
be distributed domestically and the other 200 million pounds to be made
available for military consumption or for export purposes. See H.R.
Rep. No. 447, 99th Cong., 1st Sess., 333 (1982). While funds available
through the CCC were only one of several sources of funds the Secretary
of Agriculture was directed to use to purchase the first 200 million
pounds of red meat specified in section 104 of the Act, the Secretary of
Agriculture apparently determined to purchase the entire 400 million
pounds of meat using CCC funds. 2/
The CCC is a wholly owned Government corporation within USDA that is
"subject to the general supervision and direction of the Secretary of
Agriculture." 15 U.S.C. Sec. 714. Under section 4 of the Commodity
Credit Corporation Charter Act (Charter Act), 15 U.S.C. Sec. 714b(i),
the CCC is authorized to borrow funds, not to exceed a total of $25
billion outstanding at any one time, for the purpose of carrying out its
activities. See also 15 U.S.C. Sec. 713a-4. Section 2 of the Charter
Act, 15 U.S.C. Sec. 713a-11, authorizes an appropriation for each
fiscal year of "an amount sufficient to reimburse the Commodity Credit
Corporation for its net realized losses incurred during such fiscal year
* * *."
As the procuring agency for all of the red meat purchased by USDA
under section 104 of the Act, CCC entered into contracts with meat
suppliers. All of these contracts contained a paragraph stating that
CCC would pay interest in accordance with the provisions of the Prompt
Payment Act if payment was not made when due.
By notice dated June 25, 1986, USDA advised CCC's red meat
contractors that because CCC's borrowing authority had been depleted,
invoices for payment could not be paid until supplemental funding
authority, then pending in Congress, was approved.
In that notice, USDA also advised contractors that they were "obliged
to continue performance on existing contracts" and that CCC would
continue to receive bids and award contracts, notwithstanding the
depletion of its borrowing authority and inability to pay for the meat.
The notice further advised bidders and contractors that the CCC was not
required to Pay interest if any payments were not made on time because
the Prompt Payment Act was "applicable to an agency's administrative
failure to make timely payments on purchases, but does not extend to
situations where an agency's inability to make payment is due to
circumstances beyond the contracting agency's control such as occurred
with respect to depletion of CCC's borrowing authority."
The Urgent Supplemental Appropriation Act, 1986, Pub. L. No. 99-349,
100 Stat. 210, 712, which was approved on July 2, 1986, provided CCC
with $5.3 billion "for capital restoration" (to reimburse it for net
realized losses). Included in this amount were funds intended to allow
the CCC to fulfill its obligations under the meat purchase program. See
H.R. Rep. No. 301, 99th Cong., 2d Sess. 16-17 (1986). As explained in
the letter we received from USDA dated September 10, 1986, the amounts
appropriated "were credited to CCC's account thereby permitting CCC to
again use its borrowing authority to obtain funds to make such
payments." However, in accordance with USDA's position, as set forth in
the June 25 notice to contractors and its letter to our Office, the CCC
refused to pay any interest to contractors, claiming that the Prompt
Payment Act was not applicable.
ISSUES AND ANALYSIS
Prompt Payment Act
The primary issue you ask us to address is whether CCC's refusal to
pay interest to contractors in these circumstances is permissible under
the Prompt Payment Act.
The Prompt Payment Act, 31 U.S.C. Secs. 3901-3906, requires Federal
agencies to pay an interest penalty on the amount owed to contractors
for the acquisition of property or services when the agency fails to
make timely payment. See 62 Comp. Gen. 673 (1983). The contracts
involved here contain a general provision that "interest shall be paid
in accordance with the provisions of the Prompt Payment Act if payment
is made beyond the 10th day (7 days plus 3 days grace period) after the
date of delivery." While USDA's letter to us states that it is
"questionable whether the Prompt Payment Act would have been applicable
to these CCC contracts" if such a provision had not been included
therein, there is no question in our view that the term "agency," as
defined in the Prompt Payment Act, 31 U.S.C. Sec. 3901 (a) (1), includes
the CCC. Moreover, even if the Prompt Payment Act was not otherwise
applicable to the CCC, the contractual provision in question would
require CCC to comply with the terms of that Act.
In its letter to us, USDA maintains that since CCC's delay in making
payment on these contracts when due was not caused by any "fault or
omission of CCC" but resulted from "the depletion of CCC's borrowing
authority and lack of congressional action to restore this authority,"
the provisions of the Prompt Payment Act are not applicable. In support
of its position, USDA cites our decision in Four Square Construction
Company, 84-2 CPD 480, 64 Comp. Gen. 32 (1984), as an example of a
similar situation in which we held that interest did not have to be paid
because the Government agency was not at fault for failing to make
timely payment to a contractor. We disagree with USDA's interpretation
of the Prompt Payment Act as being applicable only to a failure to make
timely payment caused by an agency's own "fault or omission." We also
think that its reliance on our holding in the cited case is misplaced.
In Four Square Construction Company, our Office considered a
situation in which the contracting agency (USDA's Forest Service) issued
a check representing payment in full to the contractor several days
after receiving the invoice. However, for unspecified reasons, the
contractor never received that check. After the contractor advised the
Forest Service that it had not received payment, the Treasury Department
issued a substitute check approximately 3 months later. Our Office
concluded that the contractor was not entitled to interest under the
Prompt Payment Act because under the Act, the date on the original check
is deemed to be the date of payment and therefore the invoice was paid
on time.
In reaching this conclusion, our decision did contain certain
language that USDA relies on to support its position in the instant
case. We said:
"* * * The fact that Four Square did not receive the original
payment was not the fault of the contracting agency. We do not
think the Prompt Payment Act contemplated the payment of interest
where the contractor's delay in receiving Payment was outside the
contracting agency's control."
However, as the complete text of the decision demonstrates, the
reason we held that the contractor was not entitled to interest was
because the Government had paid the contractor within the time limits
prescribed by the Prompt Payment Act. Thus, the quoted language from
that decision is not relevant to the completely different set of facts
involved here.
Further, in 64 Comp. Gen. 835 (1981), we held that under the Prompt
Payment Act an agency was required to pay interest for the period during
which our Office had been considering the certifying officer's request
for an advance decision. Our decision relied heavily on the fact that
the Prompt Payment Act is "written in mandatory terms," as is Circular
A-125, August 19, 1982, which was issued by the Office of Management and
Budget (OMB) to implement the statute. See also 62 Comp. Gen. 673
(1983). Similarly, in the present case, we know of no exceptions that
support USDA's position that compliance with the mandatory requirements
of the Prompt Payment Act is not necessary if it is difficult or
impossible for an agency to comply.
Finally, our decision in 63 Comp. Gen. 517 (1984), is also relevant.
In that case we considered whether the contract payment terms specified
in a public utility's tariff or the somewhat more liberal payment terms
in the Prompt Payment Act were controlling for the purpose of
determining when payment was due. While we recognized in our decision
that it was "extremely difficult" for the Social Security Administration
(SSA) to comply with the tariff payment provisions because of the
processing time required to have the invoices certified, we held that "
b oth the Prompt Payment Act and our cases require that SSA comply with
the contract terms for remittance."
In the instant case, an even stronger argument can be made that CCC
should pay interest since there was no conflict between the contract
(which was drafted by the agency) and the Prompt Payment Act. The
contract specified that interest would be paid in accordance with the
provisions of the Prompt Payment Act if payment was made more than 10
days after delivery. Thus, it is our view that under the provisions of
the Prompt Payment Act, CCC should have paid interest to any contractor
that did not receive timely payment as specified in the contract.
THE ANTIDEFICIENCY ACT
The other issue in this case is whether CCC violated the
Antideficiency Act in the period between June 4 and July 2, 1986, when
it ordered its suppliers with existing contracts to continue to deliver
meat, and may have entered into new contracts to purchase additional
meat 3/ even though its borrowing authority was depleted and all
disbursements of CCC funds were suspended.
The relevant provisions of the Antideficiency Act are as follows:
"An officer or employee of the United States Government * * *
may not--
"(A) make or authorize an expenditureor obligation exceeding an
amount available in an appropriation or fund for the expenditure
or obligation; or
"(B) involve the government in a contract or obligation for
the payment of money before an appropriation is made unless
authorized by law." 31 U.S.C. Sec. 1341(a)(1).
In its letter to us of September 10, 1986, USDA maintains that the
Antideficiency Act's prohibition against incurring obligations and
entering into contracts in excess of--or in advance of--available
appropriations does not apply to the CCC for two reasons. First, it
argues that "CCC's funds are not made available prospectively by annual
appropriations but by the use of its borrowing authority."
While we do not disagree with the CCC's description of the particular
type of budget authority it uses to carry out its functions, the origin
of its budget authority is not relevant in determining the applicability
of the Antideficiency Act. Our Office has held that funds borrowed from
the Treasury by a wholly owned Government corporation are appropriated
funds. See B-192573, December 19, 1979. Therefore, since the funds
borrowed by CCC to finance its operations are appropriated funds, "they
are subject to the statutory controls and restrictions applicable to
appropriated funds." 63 Comp. Gen. 285, 287 (1984). This includes the
restrictions imposed by the Antideficiency Act.
Second, USDA maintains that the Antideficiency Act does not apply to
the CCC because the CCC possesses contract authority. Contract
authority is generally defined as statutory authority some agencies have
that enables them to enter into contracts or other obligations prior to
enactment of the applicable appropriation. See, e.g., 28 Comp. Gen. 163
(1948) and B-164497(3), June 6, 1979.
USDA's letter of September 10, 1986, sets forth the basis for its
contention that CCC has contract authority.
"In accordance with the Agricultural Act of 1949 and other
legislation, CCC is required to make available loans and purchases
to support the prices of agricultural commodities and to carry out
other activities as directed by Congress, whether or not CCC is
able to finance such activities through the use of its borrowing
authority.
"The entering into of contracts for the purchase of red meat
under Section 104 of the 1985 Act was such an activity. * * *
"* * *Based upon Congressional acceptance over many years of
this budgetary mechanism, as evidenced by Congressional
appropriations for net realized losses incurred in CCC's exercise
of this contract authority, it is our position that the entering
into contracts by CCC to carry out its required activities during
the period its borrowing authority was depleted is not contrary to
law."
We agree that the Antideficiency Act does not apply to a situation in
which an agency is exercising statutory contracting authority. The
Antideficiency Act specifically "provides an exception for obligations
which are authorized by law to be made in excess of or in advance of
appropriations." B-196132, October 11, 1974. See also 65 Comp. Gen. 4,
9 (1985) and 61 Comp. Gen. 586 (1982).
Whether or not CCC may possess contracting authority with respect to
some of its activities as it claims, 4/ it is clear in our view that
CCC's purchase of meat under section 104 of the Act does not constitute
a legitimate exercise of contract authority. The specific statutory
language in section 104 directs the Secretary of Agriculture to "use
funds available" from several permissible sources of funding to purchase
400 million pounds of meat. The Secretary chose CCC to fund these
purchases using its borrowing authority, which in turn is subject to a
statutory maximum. It is our understanding that no other sources of
funding identified in the statute were then available to pay for this
meat. Once CCC determined that sufficient funds were not available to
pay for the meat it had ordered because its borrowing authority had been
depleted, until its authority to borrow additional funds was restored,
the Antideficiency Act required CCC to do what it could to mitigate or
minimize the magnitude of a possible Antideficiency Act violation. See
55 Comp. Gen. 768 (1976).
Thus, for existing contracts, CCC should have directed contractors to
suspend further deliveries and, if necessary, could have terminated the
contracts for the convenience of the Government. See Federal
Acquisition Regulation (FAR), 48 C.F.R. Secs. 12.5 and 49 (1986).
Instead, it informed contractors about the funding shortage but insisted
that they continue to make deliveries anyway. Moreover, CCC clearly had
no authority to award new contracts during the period in which its
borrowing authority was depleted and it had no funds that were then
available to pay for the meat it was obligating itself to purchase. See
FAR, 48 C.F.R. Sec. 32.702.
Accordingly, it is our view that once CCC's borrowing authority was
depleted, CCC violated section 1342 of the Antideficiency Act by
directing contractors to continue to deliver meat that it could not pay
for. To the extent that any new contracts for the purchase of
additional meat were awarded during this period when no budgetary
resources were available, the CCC also violated section 1341 of the
Antideficiency Act.
We trust that this information will be helpful to you. In accordance
with the agreement reached with a member of your staff, we will make
this opinion generally available 5 days from today.
Sincerely yours,
Acting Comptroller General
of the United States
Enclosure
FOOTNOTES
1/ Our Office has no authority under 15 U.S.C. Sec. 714b(k) to adjust
or settle claims by or against the CCC since that power has been
reserved conclusively for the CCC, nor can we accept an appeal from a
contractor dissatisfied with the CCC's final settlement.
2/ See letter to our Office dated September 10, 1986, from Rosina
Bullington, Assistant General Counsel, Foreign Agriculture and Commodity
Stabilization Division (copy enclosed). Although we requested USDA to
provide us with data showing "the current status of available funding
for the program," USDA's response did not indicate whether any of the
other sources of funding identified in the statute, including 7 U.S.C.
Sec. 612c, were available to pay for the meat being purchased. However,
as mentioned above, the USDA informed us that the Secretary had
determined that only the CCC borrowing authority would be used to
purchase the entire quantity of meat. Also, we note that the last
sentence of section 104(1) of the Food Security Act appears to restrict
the ability of the Secretary to use funding available under 7 U.S.C.
Sec. 612c to purchase meat under this program. Moreover, CCC is the
only permissible source of funding for the 200,000,000 pound of meat
referred to in section 104(2).
3/ While USDA did not furnish us with any information as to how many
new contracts, if any, CCC entered into during the period in which its
borrowing authority was depleted, USDA's letter to us states
unequivocally that CCC had the legal right to do so.
4/ We have not attempted to resolve the question of whether CCC
possesses contract authority with respect to any of its other statutory
responsibilities since the facts of this case do not require us to do
so.
Matter of: Installation of Government Telephones in the Residences
of Nuclear Regulatory Commission Officials
File: B-223837
Date: January 23, 1987
DIGEST
Installation of Government telephones in the residences of certain
high Nuclear Regulatory Commission (NRC) officials would be proper,
notwithstanding the general prohibition in 31 U.S.C. Sec. 1348(a)(1)
(1982) on the use of appropriated funds for the installation of
telephones in private residences. GAO has recognized the
inapplicability of the prohibition when the telephone service is one of
limited use or it is a service involving numerous safeguards and the
separate service is essential. Here, NRC reasonably has determined that
the telephone service is required to establish immediate communication
with high NRC officials in the event of a nuclear accident. The
telephones to be installed would be capable of dialing only NRC internal
telephone numbers.
DECISION
This decision is in response to a request from Lando W. Zech, Jr.,
Chairman of the Nuclear Regulatory Commission (NRC), for a decision
regarding the propriety of the installation of Government telephones in
the residences of the Chairman, the Executive Assistant to the Chairman,
and the Executive Director for Operations of the NRC. For the reasons
set forth below, we conclude that installation of the telephones in
question in the circumstances described by Chairman Zech would be
proper.
Chairman Zech points out that the telephones would be
necessary in emergency situations:
"It is crucial that top level Agency officials become involved
in the management of nuclear events at the earliest possible
moment. This substantially improves our ability to respond to
U.S. nuclear emergencies and events in foreign countries, such as
the accident at Chernobyl. The importance of reliable
communications is obvious. These often take place outside of
normal business hours.
"I believe it is important to have dedicated telephone lines to
ensure early management communication and control of potentially
dangerous situations. These lines would help us to take
appropriate steps even before situations become so severe as to
justify interruption by the operator of a call to home
telephones."
Chairman Zech further indicates that the telephones in question would
be restricted to dialing only internal NRC telephone numbers. Other
calls would have to be placed through the NRC operator.
The use of appropriated funds to install telephones in private
residences is prohibited by 31 U.S.C Sec. 1348(a) (1) (1982):
"Except as provided in this section, appropriations are not
available to install telephones in private residences or for tolls
or other charges for telephone service from private residences."
This statute is a general prohibition against the use of appropriated
funds to pay any part of the expense of furnishing telephone service in
a private residence, without regard to the practical desirability of the
service. B-218990.2, September 8, 1986, 65 Comp. Gen. . We have
invoked the statutory prohibition even when the employees who would use
the telephone service had no office out of which they could work and
were required to work out of their homes. B-130288, February 27, 1957.
We have held that the prohibition applies even when the volume of
Government business effectively precluded an employee's family from
using his personal telephone. 59 Comp. Gen. 723 (1980).
Nonetheless, although generally the statute has been strictly
applied, there have been instances in which we have determined that the
prohibition was not applicable. Exceptions have been recognized in two
general circumstances. The first general circumstance is when the
telephone is installed in Government-owned quarters serving as a
residence and office simultaneously. See, e.g., 53 Comp. Gen. 723
(1973) (installation of telephone in an Army barracks).
The second general circumstance in which we have recognized the
inapplicability of the statutory prohibition is when the telephone
service is one of limited use or it is a service involving adequate
safeguards and the separate service is essential. See, e.g., 32 Comp.
Gen. 431 (1953) (installation of a special telephone in the residence of
the Pearl Harbor Fire Marshall); B-218990.2, September 8, 1986, 65
Comp. Gen.
(installation of telephone lines in the residences of IRS criminal
investigators using portable computers for confidential data
transmission).
We conclude that the second exception, installation of essential
telephone service of limited use or involving adequate safeguards, is
applicable in the instant case. The circumstances of this case are
substantially similar to those in B-128144, June 29, 1956, which
involved the installation of special telephone lines in the residences
of high Department of Defense officials to ensure immediate
communication in the event of a national emergency. The operation of
that special system was described as follows:
"It is stated that the Command post operator will have direct
control of and will establish all connections in the special
telephone system. In addition, he will inquire as to the
authorization therefor, will log important and unusual
connections, and may make recordings of conversations. Also, it
is reportedthe Air Force Chief of Staff will issue a directive
that the command post switchboard is not a switching facility;
that it is not designed to augment commercial telephone systems;
and that the direct lines between the switchboard and the
residences and quarters are for use only in a national emergency
to conduct such urgent official business.
"The purpose of the system as explained in the Assistant
Secretary's letter appears to be that in the event a national
emergency occurs during off-duty hours, the direct line telephone
system will assure emergency communication to the residences and
quarters of key officials regardless of the obstruction that can
be anticipated by the overloading of the commercial circuits. In
addition, the system will allow immediate telephone conferences
for the swift execution of emergency war plans."
We approved the installation of the special telephone system in that
case on the grounds that the system was necessary to ensure
communication in emergency circumstances, the use of the system was
limited by regulation and by external control, and the officials
involved would continue to maintain their own private telephone service.
See also 32 Comp. Gen. 431 (1953) (installation of a special telephone
in the residence of the Pearl Harbor Fire Marshall); 61 Comp. Gen. 213
(1982) (installation of secure telephone service in the residences of
high level civilian and military leaders).
The reasoning applied in the above mentioned cases applies to the
current situation. Here, NRC reasonably has determined that the ability
to establish immediate communication with high NRC officials would be
essential in the event of a nuclear accident. The telephones to be
installed would be capable of dialing only NRC internal telephone
numbers. Any other calls would have to be placed through the NRC
operator.
Accordingly, we conclude that installation of the telephones in
question in the circumstances described by Chairman Zech, involving
limited emergency telephone service with sufficient safeguards to
prevent abuse, would be proper.
Comptroller General
of the United States
Matter of: Dale M. Anderson - TDY Actual Subsistence Expenses
File: B-223828
Date: June 15, 1987
DIGEST
An employee on temporary duty (TDY) in a high rate geographical area
in which he was authorized up to $75 a day for subsistence, for his own
convenience, traveled by private automobile instead of commercial
airline. He lodged with a family member at no cost and only incurred
meal expenses ranging between $11 and $33 per day. He claims the
maximum actual subsistence reimbursement of $75 per day authorized for
the area. Employees authorized actual subsistence are to be reimbursed
only for costs they actually incur and, therefore, this employee may not
receive $75 per day, but is limited to his actual expenses. This amount
is then combined with the transportation expense computed on a mileage
basis, and is reimbursed to the extent it does not exceed the
constructive cost of the travel by commercial airline plus subsistence
expenses. In this case the constructive subsistence expenses are the
same as the actual subsistence expenses, not the maximum rate of $75 per
day.
DECISION
The Acting Chief, Finance Division, Mountain Administrative Support
Center, U.S. Department of Commerce (Department), Boulder, Colorado,
asks us to decide if an employee who traveled to his temporary duty
(TDY) site in his privately owned vehicle (POV) and lodged there with
relatives has been correctly reimbursed his travel and transportation
expenses.
The question involved concerns the employee's contention that the
maximum actual subsistence rate should be used in computing the
constructive amount to which he is entitled, notwithstanding that he
incurred much less in actual expenses. We agree with the agency that
the employee is to be limited to reimbursement for actual expenses in
this case.
BACKGROUND
Mr. Dale M. Anderson, an employee of the Department of Commerce in
Denver, Colorado, was scheduled to perform temporary duty in Chicago,
Illinois, on March 3, 1986, then travel to Minneapolis, Minnesota, for
additional temporary duty, and then to return to Denver on March 14,
1986. For reasons of personal preference he chose to travel in his POV
by an indirect route. He left from the Denver area on the morning of
March 1, 1986, and traveled by way of Yankton, South Dakota, arriving in
Minneapolis, Minnesota, on March 2, 1986. On the morning of March 3, he
flew from Minneapolis to Chicago for his TDY there, and he flew back to
Minneapolis on the afternoon of March 4. He stayed in Minneapolis until
the morning of March 14, 1986, when he commenced his return travel. He
arrived in the Denver area on March 16.
During his period of TDY in Minneapolis, he lodged with and
apparently ate most of his meals with his relatives. Consequently, the
actual subsistence expenses he incurred were much less than the expenses
he would have incurred had he stayed in commercial lodging and eaten all
his meals in commercial establishments.
Mr. Anderson also rented a car while in Minneapolis, which was
approved by the agency as being in the interest of the Government. 1/
Following the completion of his TDY, Mr. Anderson computed his actual
costs as follows:
a. Mileage 1873 miles X 20.5g $ 383.98
b. Subsistence 3/3 - 3/14 388.72
c. Rental 196.41
d. Taxis 47.00
e. Airfare Minneapolis to Chicago and return (paid by
Government TR) 196.00
f. Per diem for travel time 2.75 days X $49 134.75
g. Miscellaneous 14.50
$1,361.36
Recognizing that his actual costs would have been different had he
not used his POV and not taken an indirect route to his first place of
TDY, Chicago, Mr. Anderson computed his constructive costs, that is, the
costs he would have incurred had he used commercial transportation to
and from his TDY sites. He determined these costs to be:
a. Mileage to and from airport in Denver 60 X 20.5g and parking
$ 13.30
b. Common carrier airfare 325.00
c. Taxis 33.00
d. Subsistence 832.53
e. Miscellaneous 14.50
$1,218.33
He then sought reimbursement of these expenses.
Upon auditing the voucher, the agency made two changes: (1) Mr.
Anderson was allowed an additional $196.41 for the cost of the
automobile rental, and (2) Mr. Anderson's subsistence was reduced from
$832.53 to $336.33. After these two changes were made, the voucher
totaled $918.54. The agency then determined that Mr. Anderson was
entitled to $722.54 since he had used a Government Transportation
Request (TR) for the airfare between Minneapolis and Chicago, and the
$196 cost of this TR was deducted from his entitlement to common carrier
airfare.
Mr. Anderson, however, argues that he is due additional amounts. His
major area of contention concerns the reduction in his subsistence
expenses. There is no question that for the period of his TDY, March
3-14, 1986, Mr. Anderson's actual subsistence expenses totaled $336.33;
he does not dispute this and has itemized the lodging and meal expenses
that add up to this amount. It is Mr. Anderson's contention that
regardless of his actual expenses, he is entitled to $75 per day for
March 3-13, 1986, the maximum rate payable at that time for the areas to
which he traveled. He bases this on his assertion that the $75 rate
represents an amount that an average traveler would incur in expenses
and, therefore, he should receive this amount. He seems to be arguing
that for a trip such as his the traveler's constructive costs should be
based on a fully constructive basis, thus applying the full $75 rate to
each day regardless of other facts which show that the full $75
reimbursement would be inappropriate. He refers to our decision,
B-182500 (55 Comp. Gen. 192 (1975)), as supporting this contention.
ANALYSIS AND CONCLUSION
Under the provisions of the Federal Travel Regulations, FPMR 101-7
(September 1981) (FTR), para. 1-2.2d and 1-4.3, incorp. by ref., 41
C.F.R. Sec. 101-7.003 (1986), an employee who uses a POV as a matter of
personal preference instead of a common carrier may be reimbursed at the
mileage rate plus per diem allowable for the actual travel, but limited
to the total constructive cost of common carrier transportation and per
diem for travel by common carrier. The comparison is between total
actual costs and total constructive costs. 55 Comp. Gen. 192, supra;
Rand E. Glass, B-205694, September 27, 1982. In this regard, the
constructive cost represents the upper limit of reimbursement and the
employee only receives the full constructive cost if the travel cost on
a mileage basis is equal to or in excess of the constructive cost. See
James C. Myers, B-181573, February 27, 1975.
Under the law and implementing regulations in effect at the time Mr.
Anderson traveled, both Minneapolis and Chicago were high rate
geographical areas for which he was authorized reimbursement of actual
expenses of lodging and subsistence not to exceed $75 per day. FTR,
para. 1-8.1. Rules for computation of mileage and mileage rates were
provided in FTR, paras. 1-4.1 and 1-4.2(a).
Applying the constructive computation rule discussed previously to
the facts of this case, we find that Mr. Anderson's potential maximum
reimbursement for his mileage was limited to the commercial airfare from
Denver to Chicago, Chicago to Minneapolis, and Minneapolis to Denver.
The agency verified that the commercial flights that would have allowed
Mr. Anderson to arrive at the proper time for his TDY assignment would
have cost the agency $325. Using the mileage rate at either Mr.
Anderson's claimed actual mileage or at the mileage of a more direct
route, the mileage rate computation would exceed the constructive
airfare.
As to subsistence expenses, the agency determined that had Mr.
Anderson used commercial transportation for his full journey, he would
have incurred the same subsistence expenses he listed as subsistence
actually incurred since he did not include subsistence expenses for the
excess travel time due to his using a POV. He first claimed subsistence
on March 3 when he flew from Minneapolis to Chicago and incurred actual
expenses of over $75 for his stay in Chicago. Had he flown directly to
Chicago from Denver on March 3, he would have incurred the same
expenses. On March 14 when he left Minneapolis in his POV he only
claimed breakfast, the same expense he would have claimed had he flown
back to Denver. 2/
Thus, in computing Mr. Anderson's reimbursement, the agency limited
it to the constructive airfare plus actual subsistence expenses
incurred.
Mr. Anderson argues, however, that notwithstanding his actual
subsistence expenses, he should receive reimbursement at the maximum
rate of $75 per day. In so arguing, he misconstrues the nature of this
entitlement which is to reimburse an employee for additional expenses he
incurs due to official travel. See Jack C. Smith, 63 Comp. Gen. 594,
597-598 (1984). Moreover, a maximum rate is merely the potential amount
that an employee may receive if he incurs necessary and reasonable
expenses up to or in excess of that amount. See Harry G. Bayne, 61
Comp. Gen. 13 (1981). Therefore, in computing the constructive
subsistence expenses, the agency properly limited them in this case to
those actually incurred. Finally, as to 55 Comp. Gen. 192, to which
Mr. Anderson referred, that decision holds, in accordance with FTR,
para. 1-4.3, that in cases where the employee elects to travel by POV
for his personal convenience, the actual total travel costs of
transportation and per diem may be paid in an amount not to exceed the
constructive total costs of transportation and per diem. That decision,
however, does not hold that in computing the constructive travel costs
to an area where reimbursement of actual subsistence expenses is
authorized, the maximum daily amount ($75 in this case) must be used
where other factors show that if the travel had been performed on the
constructive basis a lesser amount would have been paid. See also,
Kelly G. Nobles, B-219121, supra.
In Mr. Anderson's case since the mileage and subsistence expenses
incurred exceeded the total constructive airfare and constructive
subsistence (which was determined to be the same as the actual
subsistence), the agency properly limited his reimbursement to that
constructive amount.
Comptroller General
of the United States
FOOTNOTES
1/ It is not clear why Mr. Anderson used a rental car in Minneapolis,
but the agency approved it and we are assuming, therefore, that it was
used for official business in the Minneapolis area.
2/ Apparently both Mr. Anderson and the agency realized that a
traveler who uses a POV for personal reasons should be placed in annual
leave for the excess travel time and subsistence is not payable to an
employee on leave. See Kelly G. Nobles, B-219121, 65 Comp. Gen.
(1986), and cases cited therein.
B-223827.4
May 12, 1987
DIGEST
General Accounting Office has no objection to a proposal to add to
the Federal Acquisition Regulation (FAR) a new Subpart 32.9 and a clause
at FAR Sec. 52.232-25 to implement Office of Management and Budget
Circular A-125 entitled "Prompt Payment."
Ms. Margaret A. Willis
FAR Secretariat
General Services Administration
Dear Ms. Willis:
This responds to your letter of March 24, 1987, requesting our
comments on a proposal to add to the Federal Acquisition Regulation
(FAR) a new Subpart 32.9 and a clause at FAR Sec. 52.232-25 to implement
Office of Management and Budget Circular A-125, entitled "Prompt
Payment." The proposed changes, which were published in the Federal
Register on March 18, 52 Fed. Reg. 8576 (1987), supersede prior proposed
changes published at 51 Fed. Reg. 25976 (1986). This is Federal
Acquisition Regulation (FAR) case No. 84-30.
We have no objection to the proposed changes.
Sincerely yours,
Harry R. Van Cleve
General Counsel
B-223827.3
February 13, 1987
DIGEST
General Accounting Office approves of changes proposed in Federal
Acquisition Regulation (FAR) case No. 86-64 to FAR Subpart 13.3,
concerning the use of fast payment procedures, and to the fast payment
clause at FAR Sec. 52.213-1.
Ms. Margaret A. Willis
FAR Secretariat
General Services Administration
Dear Ms. Willis:
This responds to your letter of December 24, 1986, requesting our
comments on a proposal to amend Federal Acquisition Regulation (FAR)
Subpart 13.3, which concerns the use of fast payment procedures, and the
fast payment clause at FAR Sec. 52.213-1. This is FAR case No. 86-64.
Under fast payment procedures, an agency will pay a vendor's invoice
based on the vendor's assurance that goods have been shipped, rather
than waiting for the goods to be received and accepted. Among other
things, the proposed chanqes to FAR Subpart 13.3 would implement
portions of Attachment 2 to Office of Management and Budget Circular
A-125, which imposed additional limitations on the use of fast payment
procedures. The proposed chanqe to the fast payment clause would extend
the period within which a contracting officer may instruct a vendor to
replace, repair, or correct lost or defective goods from 90 to 180 days
after title to the goods vests in the government.
The proposed changes should improve controls over fast payment
procedures. We therefore approve of them.
Sincerely yours,
Harry R. Van Cleve
General Counsel
Matter of: James W. Winchester - Reimbursement of Airline Ticket
Purchased With Personal Credit Card
File: B-223815
Date: March 20, 1987
DIGEST
An employee was authorized official round-trip travel from
Washington, D.C., to San Diego, California, in November 1985. His wife
accompanied him on the trip, and their airline tickets were purchased by
the employee's secretary from the agency's Scheduled Airlines Traffic
Office. Although the secretary was instructed by the employee to use
his personal credit card and the Government credit card to purchase the
tickets separately, she inadvertently used the employee's personal
credit card to purchase both tickets. The employee may be reimbursed
the total cost of his airline ticket, notwithstanding the $100 cash
purchase limitation contained in Federal Travel Regulations para.
1-10.2b and 41 C.F.R. Sec. 101-41.203-2 (1985). The purchase of his
ticket by his secretary with his personal credit card occurred through
inadvertence and was contrary to the employee's intent and instructions.
DECISION
This decision is in response to a request by Mr. James W.
Winchester, a former Associate Administrator of the National Oceanic and
Atmospheric Administration (NOAA), United States Department of Commerce,
for reimbursement of the cost of an airline ticket purchased for him by
his secretary with his personal credit card through the Scheduled
Airlines Traffic Office (SATO). For the reasons stated later in this
decision, we conclude that the former employee may be reimbursed for the
full cost of the airline ticket.
BACKGROUND
Mr. Winchester was authorized to perform round-trip official travel
from Washington, D.C., to San Diego, California, in November 1985. He
made airline ticket reservations for both himself and his wife several
weeks in advance of the travel at reduced fares. Prior to travel
departure,
Mr. Winchester gave his secretary a Government credit card and his
personal credit card to purchase the airline tickets from the SATO which
provides travel services for Commerce. He instructed his secretary to
purchase the tickets separately, i.e., purchase his ticket with the
Government credit card and his wife's ticket with his personal credit
card. However, his secretary inadvertently used his personal credit
card to purchase both tickets which each cost $298. Mr. Winchester
claimed reimbursement for the total cost of his ticket, but the agency
allowed Mr. Winchester reimbursement for only $100, based upon the $100
cash purchase limitation contained in the Federal Travel Regulations.
FPMR 101-7 (Supp. 8, May 14, 1984) (FTR), incorp. by ref., 41 C.F.R.
Sec. 101-7.003 (1985), para. 1-10.2b(2), and 41 C.F.R. Sec. 101-41.203-2
(1985). These provisions generally require the use of a Government
Transportation Request (GTR) by an employee in procuring passenger
transportation services which cost in excess of $100 and the observance
of the government contracts for discount airline fares.
Upon review, the General Services Administration (GSA) also denied
reimbursement of the additional $198 because their records indicated
that this was the second time Mr. Winchester had violated 41 C.F.R. Sec.
101-41.203, which requires travelers to follow GSA's airline city-pair
contracts. The GSA report states that in a prior letter to the agency
they stated that Mr. Winchester should be counseled regarding the proper
use of travel procedures. Finally, the GSA report concludes that since
Mr. Winchester did not receive prior approval to deviate from these
procedures, his request for reimbursement of the additional $198 should
be disallowed.
DISCUSSION
Generally, Federal agencies must require employees to use a GTR in
purchasing common carrier transportation which costs in excess of $100.
Under this system, the Government purchases the ticket and no
reimbursement or receipt is required. See FTR para. 1-10.2b(1) (c) and
41 C.F.R. Sec. 101-41.203-2 (1985). However, our Office has allowed
reimbursement for a ticket purchased by an employee with his or her
personal funds which exceeded the $100 limitation provided the employee
submits a receipt, passenger coupon, or other evidence showing that the
amount claimed was actually paid. Joel L. Morrison, 63 Comp. Gen. 592
(1984); John W. Eastham, B-219489, September 8, 1986; and John T.
Davis, B-216633, March 27, 1985.
In the present case, the record discloses that Mr. Winchester gave
his secretary a Government credit card and his personal credit card to
purchase airline tickets, and he instructed her to purchase his ticket
with the Government credit card and to purchase his wife's ticket with
his personal credit card. Through inadvertence, his secretary purchased
both tickets with his personal credit card. Under the circumstances, we
find no intent on the part of Mr. Winchester to circumvent or violate
the previously cited regulations since he specifically instructed his
secretary to purchase his ticket with the Government credit card. Any
negligence resulting from the purchase transaction must be attributed to
Mr. Winchester's secretary and not to him.
Accordingly, since the record contains a valid receipt evidencing
payment by Mr. Winchester of his ticket at a total cost of $298, he may
be reimbursed the sum of $198, representing the additional cost of his
ticket not previously reimbursed.
Comptroller General
of the United States
File: B-223799.2
Date: May 13, 1991
Matter of: Dr. John M. Dyer - Household Goods Excess Weight -
Carrier's Guaranteed Price Pledge - Reconsideration
DIGEST
A Public Health Service commissioned officer requests reconsideration
of a prior decision holding him liable for the costs of shipping
household goods in excess of his weight allowance. The officer
maintains that he should not be held liable for the extra costs because
the moving company offered him a Guaranteed Price Pledge based on the
company's estimate that the weight of his household goods would be
within his prescribed limit. In fact, the guaranteed price equated to
the cost of moving goods weighing substantially more than his weight
allowance and the total net weight of his goods was 4,454 pounds over
his limit. While he may not have understood the basis for the
guaranteed price and the company's agent misinformed him as to the
weight, the law does not permit the government to bear the costs for
shipping excess weight. Upon reconsideration, Dr. John M. Dyer, 67
Comp. Gen. 171 (1988), is affirmed.
DECISION
Dr. John M. Dyer, a Public Health Service commissioned officer requests
reconsideration of our decision, Dr. John M. Dyer, 67 Comp. Gen. 171
(1988), in which we determined that he is liable for the costs of
shipping excess weight of household goods incident to a permanent change
of station transfer in 1985. 1/ The holding in that decision is
affirmed; however, we agree that Dr. Dyer is entitled to a reduction in
the amount of his liability.
BACKGROUND
Dr. Dyer was authorized to have his household goods (within his
prescribed weight allowance) moved by household goods carrier at
government expense under a government bill of lading from Glen Ellyn,
Illinois, to Dallas, Texas. He selected Allied Van Lines to transport
his household goods. An Allied representative prepared a Guaranteed
Price Pledge of $8,532.71 to move an estimated 12,500 pounds, including
1,000 pounds of professional books and papers. 2/ Charges for additional
services (complete unpacking and insurance) brought the price up to
$9,179.87. In fact, however, the price initially quoted by the
representative corresponded to the cost of moving a weight of
approximately 18,000 pounds, which turned out to be reasonably close to
the 21,060 pounds actually moved as ascertained by scale weight
certificates Allied furnished the agency. See John M. Dyer, supra, at
174.
The agency determined that Allied moved 4,454 pounds of excess weight.
That figure represents the difference between Dr. Dyer's weight
allowance and the net weight moved, which is determined by subtracting
from the total weight moved a 10 percent allowance for packing materials
and another 1,000 pounds for Dr. Dyer's professional books and papers.
See Dr. John M. Dyer, supra, at 172, footnote 4. In this case, the
excess weight moved amounted to about 21 percent of the total weight
moved (4,454 pounds divided by 21,060 pounds). In accord with the
applicable regulation, the agency applied this ratio to the amount paid
to Allied and concluded that Dr. Dyer owed the agency $1,913.53 for the
excess weight. Volume 1, Joint Travel Regulations (1 JTR) para.
M8007-2a (Change 392, Oct. 1, 1985).
Dr. Dyer's main contention is that the assurances made by Allied's
representative that his total weight would be within his authorized
weight allowance should preclude the agency from recouping from him any
charges for excess weight. In our initial decision, Dr. John Dyer,
supra, we rejected that argument, noting prior decisions holding
employees liable for excess costs, even where the actual weights were
considerably higher than contractor estimates. Id. at 174, citing
Joseph S. Montalbano, B-197046, Feb. 19, 1980; Robert Y. Ikeda,
B-181631, Oct. 9, 1974; and also Rayburn C. Robinson, Jr., B-215221,
Sept. 5, 1984.
In his request for reconsideration, Dr. Dyer argues that he should not
be bound by Allied's conduct because he followed all applicable agency
guidelines. Further, he questions whether, in fact, he shipped excess
weight or whether, if he did, the government incurred any costs for any
excess weight. Finally, he requests that we direct the agency to
reimburse him for legal costs and interest on all monies withheld from
him, but in light of our decision to affirm our prior ruling, we need
not reach these final points. His other arguments are considered below.
DISCUSSION
Initially there was some confusion by the agency concerning how the
Guaranteed Price Pledge worked and whether the agency actually paid the
carrier to move weight in excess of Dr. Dyer's allowance. As a result,
the agency queried the Per Diem, Travel and Transportation Allowance
Committee concerning Dr. Dyer's shipment. In a memorandum dated May 14,
1986, the Director of the Committee replied that there was no excess
cost to the government since the government did not pay for any excess
weight. However, that memorandum indicates the Committee's
understanding that Allied's Guaranteed Price Pledge was based on the
cost for moving 12,500 pounds. As explained above and in our prior
decision, we now know that the Committee was misinformed as to the basis
for the charges.
These matters subsequently have been clarified. It is clear, as stated
above, that Dr. Dyer's goods actually weighed substantially more than
the 12,500 pounds (plus 1,000 pounds of professional goods) noted on the
carrier's Guaranteed Price Pledge form. It is also clear that the
amount of the guaranteed price stated on the form, upon which the
charges the agency paid were based, related to movement of substantially
more than the estimated amount entered on the form and substantially
more than Dr. Dyer's maximum 13,500 pound allowance (plus 1,000 pounds
of professional goods).
Dr. Dyer disputes whether he shipped any excess weight on the basis
that the agency erred in its computation of his net weight by failing to
deduct a 20 percent allowance for reusable containers, described in the
agency's relocation guide, in addition to the 10 percent packing
allowance deducted. However, the regulation upon which the guidebook is
based authorizes the 20 percent allowance only for shipments in
standardized overseas shipping boxes, such as CONEX transporters. 1 JTR
M8002 (Change 376, June 3, 1984). Dr. Dyer's goods were shipped by
moving van and not in such overseas shipping boxes. Thus, the 20
percent allowance is inapplicable. In short it is clear that Dr. Dyer's
shipment exceeded his weight allowance and that the agency incurred the
additional cost to move the excess weight.
Dr. Dyer also argues that his liability should be reduced by the pro
rata amount of unpacking costs assessed against him. The agency paid
the carrier an extra $268 for unpacking services, and Dr. Dyer contends
that he should not be assessed any of this charge because Allied
included those services in its guaranteed price. After further
reviewing the documents, we agree that unpacking services were
specifically included in the original guaranteed price and there is no
explanation why the agency paid the extra charge. Therefore, since it
appears the agency should not have paid the carrier the extra $268, Dr.
Dyer's liability should be reduced by the pro rata amount of the $268
charge assessed against him.
Further, Dr. Dyer argues that he should be relieved fully from
liability because he followed the agency's relocation guide, which
states that "carriers' representatives can usually be relied upon to
make reasonably accurate estimates of weight." However, he has failed to
show that the relocation guide contains erroneous advice or that he
relied on the guide to his detriment. Nowhere does it state that the
government is bound by such estimates, and indeed, it clearly warns that
the shipper is liable for the costs of moving excess weight. See also 1
JTR para. M8007, which also specifically provides that the member is to
bear all costs arising from shipment of excess weight. Also, Dr. Dyer
received the benefit of the services for which he is being charged. That
is, the extra 4,454 pounds of his goods were moved. Even if Allied had
given him an accurate weight estimate, he would have had to move these
goods or otherwise dispose of them.
In this regard, at our request, the Transportation Audits Office,
General Services Administration, has reviewed the shipping documents and
advised us that, had the rates under the standard tender agreement
between Allied and the federal government been applied to the shipment
instead of the guaranteed price, the cost to move Dr. Dyer's total
weight would have been $9,413.15. This would result in an excess weight
cost of $2,081.04, 3/ which is greater than the $1,913.53 excess cost
assessed Dr. Dyer based on the guaranteed price paid by the agency.
In any event the law is well settled that a uniformed service member or
an employee is liable for the costs of shipping weight exceeding the
applicable allowance. See 49 Comp. Gen. 255 (1969), and Joseph S.
Montalbano, B-197046, supra. In Montalbano, although the employee
claimed that the excess weight for which he was charged resulted from
the carrier's fraud or negligence, we held that, "regardless of the
reasons for the shipment of the excessive weight of household goods, the
law does not permit payment by the government of charges incurred for
shipment of the excess weight." Id. at 2.
Accordingly, except for the reduction for the packing charge, we affirm
our holding that Dr. Dyer is liable for excess shipping costs assessed
by the agency.
Acting Comptroller General of the United States
FOOTNOTES
1/ Dr. Dyer is represented by counsel, Kator, Scott & Heller, whose
submissions on his behalf have been considered in the preparation of
this decision.
2/ Dr. Dyer (pay grade 0-7) was entitled to a maximum basic weight
allowance of 13,500 pounds plus 1,000 pounds for professional books and
papers, so this estimated weight would not have exceeded his allowance.
1 JTR para. M8003.
3/ The $9,413.15 figure includes $132 for excess valuation (insurance),
which Dr. Dyer elected for his shipment which is not payable by the
government. 1 JTR para. M8007-1. To arrive at the final figure used
here, we subtracted the excess valuation cost from the total amount that
was paid to Allied, applied the ratio to that figure, then added the
excess valuation.
Matter of: Kenneth R. Pedde - Relocation Expenses - Tax Service and
Underwriter's Fees
File: B-223797
Date: April 20, 1987
DIGEST
An employee who purchased a residence incident to transfer may not be
reimbursed for underwriter's fee and tax service fee as such payments
are considered finance charges under the Truth in Lending Act and
Regulation Z and are not reimbursable under Federal Travel Regulations,
para. 2-6.2d(2) (e).
DECISION
ISSUE