DOCUMENT FOR PUBLIC RELEASE
The decision issued on the date below was subject to a GAO Protective Order. This redacted version has been approved for public release.
Matter of: Guam Shipyard
File: B-311321; B-311321.2
Date: June 9, 2008
J. Taylor, Esq., William J. Spriggs, Esq., Katherine A. Allen, Esq., and Rachel
W. McGuane, Esq., Spriggs & Hollingsworth, for the protester.
Robert E. Korroch, Esq., Francis E. Purcell, Jr., Esq., and Khaliah Wrenn,
Esq., Williams Mullen, for Gulf Copper Ship Repair, Inc., the intervenor.
Mansfield, Esq., and Bruce Potocki, Esq., Department of the Navy, for the
K. McAuliffe, Esq., and Christine S. Melody, Esq., Office of the General
Counsel, GAO, participated in the preparation of the decision.
Protest of agency’s evaluation and
award decision is denied where record shows they were reasonable and consistent
with the terms of the solicitation and applicable procurement rules.
Guam Shipyard protests the
evaluation of proposals and the award of a contract to Gulf Copper Ship Repair,
Inc. under request for proposals (RFP) No. N55236-08-R-0006, issued by the Department of the Navy, Southwest
Center, for alterations to sanitary
spaces (low maintenance, sensor-operated washroom facilities) on Barge YRBM-25
in Guam. The
protester challenges the reasonableness of the agency’s evaluation of proposals
and determination to make the award to Gulf Copper, which received a higher
past performance rating and offered a higher price than the protester.
We deny the protest.
The RFP, set aside for small businesses, anticipated the
award of a fixed-price contract to the firm that submitted the technically
acceptable proposal deemed to offer the best value to the agency considering
two evaluation factors approximately equal in importance, price reasonableness
and performance risk. RFP at 45, 48. The performance risk factor was comprised of
two subfactors also of approximately equal importance, past performance
(including technical quality, schedule, and management) and price realism. Id. The RFP advised that the evaluation of past
performance would be subjective and based mainly on performance evaluations
available in the agency’s automated Past Performance Information Retrieval
System (PPIRS), information obtained from the offeror’s past performance
references, and information available in local files. Id. Each offeror was to submit past performance
reference information for relevant contracts (ongoing or completed within the
last 3 years) that the firm wanted to be considered. The RFP advised that the agency might not
contact all of the references, and emphasized that the offeror was to ensure
that references could be readily contacted, would be cooperative, and would
provide performance information for evaluation.
Id. at 44.
For the price realism subfactor of the performance risk
evaluation factor, offerors were advised that their proposed prices would be
compared to the other prices proposed and the independent government estimate
(IGE), that low prices could increase the firm’s overall performance risk, and
that a “contract price is realistic if it is high enough to preclude the
[c]ontractor from enduring a significant financial loss in performing the
requirements of the contract.” Id.
at 49. The RFP noted that
unrealistically low prices increase an agency’s risk of performance, since, in
an effort to cut losses, a contractor may “cut corners” on quality, deliver
late, or default, often requiring additional agency involvement as well as
reprocurements which consequently may increase the agency’s cost of
performance. The source selection was to
be based on the difference in performance risk and price between proposals; if
one offeror’s proposal presented lower performance risk but a higher price,
then the agency was to decide whether the difference in performance risk was
worth the difference in price, and if so, then the higher-priced offer was to
be deemed the best value for award. Id.
Four proposals were received by the scheduled closing
time. Discussions were conducted and
revised proposals were submitted and evaluated.
The protester’s revised proposal was the lowest-priced offer received,
it was found to be reasonably priced, and its technical proposal was found
acceptable. Its performance risk,
however, was rated as very high overall.
Under the price realism subfactor, the protester’s proposed price of
$969,334.03 was considered unrealistically low (and evaluated as being
approximately 23 percent below the IGE).
Under the past performance subfactor, the firm’s proposal was evaluated
as marginal based on an unfavorable Contract Performance Assessment Report
(CPAR) in the agency’s automated PPIRS regarding the firm’s recent performance
of similar work for the agency. The CPAR was the only performance report
available in the PPIRS, and the only past performance information considered by
the evaluators for the firm since the contract reference Guam had provided for
two other contracts failed to respond to the agency’s email request for past
Gulf Copper was found to have proposed a reasonable and
realistic price of $1,374,537.50 (which was evaluated as only 2 percent above
the IGE). Its proposal, which was rated
satisfactory under the past performance subfactor based on its ratings of very good from two references and
a rating of satisfactory from the third reference, was rated moderate overall
for performance risk. Finding that the
$405,200.47 price premium associated with an award on the basis of Gulf
Copper’s higher-rated past performance and lower performance risk was
warranted, the contracting officer determined that Gulf Copper’s proposal
presented the best value to the government and made award to that firm. This protest followed.
Guam protests the agency’s
evaluation of its past performance as marginal, contending that it has received
accolades for performance of similar work in the past. The protester contends that if the agency had
received information regarding its past performance from the reference Guam
identified in its proposal, the information would have been favorable; in this
regard, the protester questions the adequacy of the agency’s attempt to contact
the reference by email, since the agency has not demonstrated that the email
message was in fact received by the reference.
The protester also challenges the agency’s reliance on the adverse CPAR
regarding an ongoing Guam contract with the Navy for
similar work. Guam
has not refuted the substance of the performance problems described in that
CPAR, either in its protest or when it had the opportunity to comment on the
CPAR findings before the report became final in the PPIR. Rather, the firm only generally suggests that
the agency’s consideration of the CPAR was improper because Guam
had not realized that the CPAR had been posted on the PPIR even though the
contract is not fully performed yet.
Our Office will examine an agency’s past performance
evaluation only to ensure that it was reasonable and consistent with the stated
evaluation criteria and applicable statutes and regulations, since determining
the relative merit of an offeror’s past performance is primarily a matter
within the contracting agency’s discretion.
See Pacific Ship Repair and Fabrication, Inc., B-279793, July 23, 1998, 98-2 CPD para. 29 at 3‑4. In conducting a past performance evaluation,
an agency has discretion to determine the scope of the offerors’ performance
histories to be considered, provided all proposals are evaluated on the same
basis and consistent with the solicitation requirements. Federal Envtl. Servs., Inc.,
B-250135.4, May 24, 1993,
93-1 CPD para. 398 at 12. An agency is only
required to use reasonable effort to contact an offeror’s references, and is
not required to make multiple attempts to contact a firm’s past performance
references. See OSI Collection
Servs., Inc.; C.B. Accounts, Inc., B‑286597.3 et al., June 12, 2001, 2001 CPD para. 103 at 9.
Here, the agency points out that the past performance
reference listed by the protester failed to respond to the agency’s email
inquiry for relevant survey information.
While Guam suggests that proof of the reference’s
receipt of the email message is necessary to show a reasonable attempt at
contacting the reference, the firm provides no support for its contention. Rather, in light of the RFP’s emphasis on the
importance of the offeror providing reliable contact information (including, as
was used here, email addresses) and ensuring cooperation from its references,
we think the agency’s email inquiry was an adequate effort to contact the
reference; the failure of the reference to respond does not show that the
agency’s effort was inadequate (particularly in view of Guam’s apparent failure
to ensure, or, at a minimum, encourage its reference to cooperate) or that the
past performance evaluation was improper.
As stated above, the agency, consistent with the terms of
the RFP, considered a comprehensive, recent, and relevant CPAR that rated the
firm’s past performance as marginal and showed that Guam
had problems with following procedures, safety issues, accidents, obtaining
material, scheduling, manpower, and management.
Guam had an earlier opportunity to respond to the information reported
in the CPAR and, despite seeking an extension of time to do so, never refuted
the CPAR, which then became a final report in the PPIR and, in accordance with
the terms of the RFP, was properly considered as part of the firm’s past
performance evaluation. The protester
has provided no basis to question the reasonableness of the agency’s findings
that such unfavorable recent performance of similar work suggests that similar
instances of “re-work” or flawed performance could be anticipated under this
contract, and that there is also a greater potential for agency involvement in
monitoring performance, which may increase the ultimate cost of performance for
the agency. Lastly, while Guam generally
suggests that accolades for good past performance have been given to the firm
in the past, as the agency points out, the firm did not include such
information in its proposal, nor was it in the CPAR, and thus, we have no basis
to object to the agency’s failure to credit the firm with such information.
Guam also challenges the agency’s
evaluation of its proposal under the price realism subfactor of the performance
risk factor, and the finding that its price was unrealistically low. The protester only generally asserts that
because it used its currently approved labor rates in formulating its price,
its price must be considered realistic; similarly, Guam
contends that the higher-priced IGE must be flawed because it exceeds Guam’s
labor rates. As the agency points out,
however, Guam’s proposed price was not found to be
unrealistically low based only on its lower labor rates; rather, Guam’s
low price also reflected lower prices for materials than those proposed by the
other offerors and included in the IGE.
Additionally, the protester’s failure to identify any profit added to
the agency’s concerns about whether the firm’s substantially lower-priced
proposal would affect performance of the contract, since, as indicated in the
RFP, financial loss, including a lack of or little profit, may cause a
contractor to “cut corners” in the performance of the required work.
The depth of an agency’s price realism analysis is a
matter within the sound exercise of the agency’s discretion. Comparison of proposed prices with each other
and an IGE are recognized price analysis techniques for a price realism
review. See Quality Elevator
Co., Inc., B-276750, July 23, 1997,
97‑2 CPD para. 28 at 7. Here, the
agency compared the protester’s proposed price to the other offerors’ prices
and concluded that, as the lowest-priced offer, with a price substantially
lower than Gulf Copper’s next low price, there is some degree of performance
risk associated with the protester’s lower price; Guam’s
price also was evaluated as approximately 23 percent lower than the
IGE. Given the reasonableness of the
agency’s concern regarding quality of performance in light of Guam’s
low price, we have no reason to question the determination that the proposed
price is unrealistically low and, consistent with the definition of unrealistic
pricing in the RFP, could result in financial loss for the contractor in
performance of the contract. In light of
the reasonableness of the performance risk assessment here, including the
recent marginal past performance by the firm, we find no basis to
question the agency’s determination that the potential savings offered by Guam’s
very high risk proposal is not worth the increased risk to the government.
The protest is denied.
Gary L. Kepplinger