Kola Nut Travel, Inc.
Highlights
Kola Nut Travel, Inc. protests the Department of the Army's award of contracts to Alamo Travel Group and Wingate Travel, Inc. for travel management services under request for proposals (RFP) No. W91-QUZ-04-R-0003. Kola Nut maintains that the agency failed to properly evaluate its technical proposal and that the awardees' proposals reflect improper contingent fee agreements.
B-296090.4, Kola Nut Travel, Inc., August 25, 2005
DOCUMENT FOR PUBLIC RELEASE
The decision issued on the date below was subject to a GAO Protective Order. This redacted version has been approved for public release.
Decision
Matter of: Kola Nut Travel, Inc.
Bryant S. Banes, Esq., for the protester.
Josephine L. Ursini, Esq., for Alamo Travel Group and Wingate Travel, Inc., intervenors.
Lt. Col. Frank A. March, Department of the Army, for the agency.
Glenn G. Wolcott, Esq., and Michael R. Golden, Esq., Office of the General Counsel, GAO, participated in the preparation of the decision.
DIGEST
1. Agency's contemporaneous evaluation record reasonably supports the agency's evaluation of protester's technical proposal as merely acceptable.
2. Where awardees' consultant will earn a fee based on profits earned during the awardees' performance of the contract, and there is no evidence of improper influence on government officials regarding the contract award decisions--rather, the record reflects that award was made on the basis of the awardees' significantly lower prices and higher rated technical proposals--the agreement between the awardees and the consultant does not violate the statutory and regulatory limitations on contingent fees.
DECISION
Kola Nut Travel, Inc. protests the Department of the Army's award of contracts to Alamo Travel Group and Wingate Travel, Inc. for travel management services under request for proposals (RFP) No. W91-QUZ-04-R-0003. Kola Nut maintains that the agency failed to properly evaluate its technical proposal and that the awardees' proposals reflect improper contingent fee agreements.
BACKGROUND
The Army published the solicitation at issue here in February 2004, seeking proposals to provide travel management and related services for Department of Defense (DOD) travelers whose duty stations are within several specified travel areas.[1] The solicitation contemplated separate contract awards for each of the specified travel areas; accordingly, the agency performed separate evaluations and source selection decisions with regard to each area. All travel areas were set aside for small businesses, and offerors were permitted to submit proposals for any or all areas. Kola Nut's protest challenges the agency's contract awards to
The solicitation advised offerors that proposals would be evaluated on the basis of the following factors, listed in descending order of importance: technical,[2] price,[3] and performance risk.[4] With regard to proposed price, the solicitation recognized that travel service contractors may receive airline commissions, as well as utilization fees from global distribution system (GDS) providers.[5] Kola Nut acknowledges that each offeror's proposed price is significantly affected by the level of commissions or utilization fees that the offeror is able to negotiate with the airlines and GDS providers.[6] Kola Nut Submission (
On or before the specified closing dates, proposals were submitted for the travel areas at issue by several offerors including
The agency evaluated the proposals under each of the stated evaluation factors with the following results:
Travel Area 67
| Kola Nut | |
Technical | Good | Acceptable |
Performance Risk | Very Low | Very Low |
Price | $1,239,578 | $1,815,401 |
Agency Report, Tab 59, at 2, 4.
Travel Area 72
Wingate | Kola Nut | |
Technical | Good | Acceptable |
Performance Risk | Very Low | Very Low |
Price | $1,108,573 | $2,149,632 |
Agency Report, Tab 62, at 2-4.
Travel Area 82
Wingate | Kola Nut | |
Technical | Good | Acceptable |
Performance Risk | Very Low | Very Low |
Price | $380,821 | $1,494,530[9] |
Agency Report, Tab 63, at 2-3.
Based on the significantly lower prices offered by Alamo and Wingate, along with their equal or higher ratings under non-price factors, the agency selected the proposals submitted by Alamo and Wingate for contract awards. Kola Nut's protest followed.
DISCUSSION
Kola Nut first complains, similar to its complaints in previous protests, that the agency's evaluation of proposals was improper and not in accordance with procurement regulations. Kola Nut Protest (
As discussed above, the solicitation at issue here related to travel from non-MEPS locations. While travel under the simultaneously-issued MEPS solicitation would frequently entail travelers departing from the same origin and arriving at the same destination via shared transportation, such uniformity was not anticipated for travelers coming from non-MEPS locations. Accordingly, as noted above, the non-MEPS solicitation specifically advised offerors that proposals would be assessed with regard to the offerors' reliance on a central location for servicing unique needs of multiple customers, RFP at 161; the MEPS solicitation did not have a similar provision.
The record shows that, during discussions conducted in connection with the proposals submitted in response to the non-MEPS solicitation (the solicitation at issue here), the agency specifically sought information from Kola Nut regarding its approach to servicing the unique travel requirements contemplated under that solicitation and that Kola Nut's response was inadequate. Specifically, the agency's contemporaneous documentation supporting its evaluation of Kola Nut's proposal under the technical evaluation factor states:
Offeror's entire discussion illustrates Offeror still interprets this subfactor to apply to travelers (individual or groups) departing the same origin and arriving at the same destination via shared transportation (e.g., the same flight or same train). Offeror appears not to understand that this subfactor actually pertains to having capability to service multiple travelers many of whom may have differing travel needs from a central location (e.g., a singular staffed office or a central call center). Multiple travelers departing same origin/arriving same destination via shared transportation likely would be a purely random event and be the exception rather than the rule.
Agency Report, Tab 58, Final Technical Report, at 4.
In pursuing this protest, Kola Nut has not explained why the agency's concerns regarding the unique requirements of the non-MEPS solicitation were invalid or unreasonable. Indeed, it appears that Kola Nut's assertion that the agency's evaluations under the two solicitations were inconsistent reflects an ongoing failure by Kola Nut to discern the differing requirements under the two solicitations. On this record, we find no basis to question the agency's evaluation of Kola Nut's technical proposal as merely acceptable.
Next, Kola Nut maintains that the contracting agency's evaluation of price and performance risk [of the awardees' proposals] did not appropriately consider the price and performance risk associated with many offerors' assumptions regarding incentives. Kola Nut Protest Submission (
Section 2306(b) of title 10, United States Code, places certain limitations on obtaining contracts under contingent fee arrangements. However, the purpose of this limitation, as implemented by Federal Acquisition Regulation (FAR) subpart 3.4, is to prevent the attempted or actual exercise of improper influence by third parties over the federal procurement system. Puma Industrial Consulting v. Daal Assocs., Inc., 808 F.2d 89 (2d Cir. 1987); Quinn v. Gulf & Western Corp., 644 F.2d 89 (2d Cir. 1981); E&R, Inc.--Claim for Costs, B'255868.2, May 30, 1996, 96-1 CPD para. 264 at 3-4; Howard Johnson Lodge--Recon., B'244302.2, Mar. 24, 1992, 92-1 CPD para. 305. We have held that the prohibition applies only to situations where an agent agrees to solicit or obtain a contract from a procuring agency. Bertsch Constr., B'253526,
Here, Kola Nut acknowledges that the consultant's fee agreement is calculated as a portion of the profit resulting from the awardees' performance of the contract--not in exchange for the awardees' receipt of contract awards. Kola Nut Protest Submission (
Next, Kola Nut asserts that [t]here is a latent agency bias against small businesses and that the solicitation at issue here created a system which encourages a conglomerate led by [the awardees' consultant] to negotiate special rates and contingent agreements, thus destroying any small business identity. Kola Nut Protest (
Finally, in a supplemental protest filed with our Office on June 22, Kola Nut, for the first time, asserts that the discussions the agency conducted with Kola Nut were less than meaningful in that Kola Nut was not specifically advised that its proposal was priced substantially higher than that of the awardees. Kola Nut Protest Submission (
As Kola Nut has, itself, expressly acknowledged, an offeror's proposed price is significantly affected by the level of airline commissions and GDS utilization fees it is able to negotiate. The record is undisputed that the commissions and utilization fees
negotiated by the awardees were significantly greater than those that Kola Nut was able to negotiate. In one of its first submissions to our Office, Kola Nut stated as follows:
[The awardees' association with Chisik and their ability to negotiate higher GDS utilization fees] enables agencies such as
Kola Nut Protest Submission (
Although agencies are required to advise offerors that their prices are unreasonably high, the record, as discussed above, shows that such was not the case here. Rather, the record is clear that the agency believed Kola Nut's proposed prices were reasonable--given the lower level of commissions and utilization fees Kola Nut had been able to negotiate. Accordingly, the agency had no obligation to advise Kola Nut that, as compared to other competitors, its price was too high. See Hydraulics Int'l, Inc., B-284684, B-284684.2, May 24,
2000, 2000 CPD para.149 at 17; MarLaw-Arco MFPD Mgmt.,
The protest is denied.[12]
Anthony H. Gamboa
General Counsel
[1] The solicitation related to travel from locations other than military entrance processing stations (MEPS), that is, from non-MEPS locations. At the same time, the agency issued another solicitation, W91-QUZ-04-R-0007, which related to travel from MEPS locations; awards under both of these solicitations have been the subject of previous Kola Nut protests. See Kola Nut Travel, Inc., B-296090,
[2] With regard to the technical evaluation factor, the solicitation provided that the agency would consider the following: understanding the requirements; feasibility of approach; and completeness. RFP at 161. Since the solicitation at issue here contemplated travel service from dispersed, non-MEPS locations, the solicitation advised that evaluation would include an assessment of the offeror's proposed approach to servicing unique needs of multiple customers from a central location.
[3] Offerors were required to propose fixed transaction fees, point-of-sale fees, and fixed prices for certain required reports. Section M.4.3 of the solicitations further provided, The proposed fees will be evaluated as outlined herein, thereafter stating that the proposed fees and prices will be multiplied by the [estimated quantity provided for each line item] to arrive at the overall total estimated contract value . . . . RFP at 162-63.
[4] With regard to performance risk, the solicitation stated: The Government will conduct a performance risk assessment based on the quality, relevancy, and currency of the Offeror's current and past performance . . . as it relates to the probability of successful accomplishment of the required services. RFP at 162.
[5] A GDS is defined as an [o]n-line, transaction processing system with access to computer-based carrier reservation systems capable of providing lowest cost fare evaluations, reservations, ticketing, related travel, and accessorial services. RFP sect. J, at 5.
[6] The issue of whether such fees and commissions are likely to continue in the travel industry has been a subject of controversy before our Office for several years. See, e.g., CW Gov't Travel, Inc. d/b/a/ Carlson Wagonlit Travel; American Express Travel Related Serv. Co., Inc., B-283408, B-283408.2, Nov. 17, 1999, 99-2 CPD para. 89 (protests asserting that solicitation incorporating commission-based pricing of travel services was contrary to customary commercial practice).
[7] The agency received a total of 12 proposals for travel area 67, 10 proposals for travel area 72, and 9 proposals for travel area 82. Contracting Officer's Statement (
[8] Kola Nut has previously identified Mr. Chisik as the Society of Government Travel Professionals 2003 Person of the Year. Kola Nut Protest Submission (
[9] With regard to travel area 82, Kola Nut submitted an alternate proposal which the agency evaluated as offering a price as much as 10 percent lower than that stated above. Agency Report, Tab 63, at 3. Accordingly, the record indicates that Kola Nut's alternate proposal was evaluated as offering a price of approximately $1,345,077 ($1,494,530 minus $149,453)--still more than three times higher than the price offered by Wingate.
[10] To the extent Kola Nut is arguing that the agency failed to properly consider the alleged risk associated with the consultant fee agreement under the solicitation's performance risk evaluation factor, its arguments are contrary to the specific terms of the solicitation. As noted above, the solicitation expressly advised offerors that proposals would be evaluated under the performance risk factor on the basis of the offerors' current and past performance. RFP at 163-64. Kola Nut has not identified any aspect of the awardees' current or past performance that the agency failed to consider at the time the evaluation was performed.
[11] Kola Nut first raised this issue in a submission to our Office dated June 22, 2005; however, it was notified of the awardees' prices at the time award was made, several months prior to the June 22 submission and, of course, Kola Nut previously knew of all the discussions the agency had conducted with Kola Nut during the procurement. Our Bid Protest Regulations contain strict rules for the timely submission of protests. Under these rules, a protest based on other than alleged improprieties in a solicitation must be filed no later than 10 calendar days after the protester knew, or should have known, of the basis for protest, whichever is earlier. 4 C.F.R. sect. 21.2(a)(2).
[12] In its comments responding to the agency report, Kola Nut, for the first time, argued that the awardees' use of a common consultant to assist in preparation of their proposals in the multiple competitions for the various travel areas constituted improper collusive bidding. The record shows that