B-173916, APR 20, 1972

B-173916: Apr 20, 1972

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THE SUBJECT MANNING CHARTS WERE CLEARLY INTENDED AS AN AID IN DETERMINING BIDDER RESPONSIBILITY. IT IS NOTED THAT THE MATTER WILL BE CONSIDERED BY GAO'S LOGISTICS AND COMMUNICATIONS DIVISION IN CONNECTION WITH SUCH AUDIT ACTION AS MAY BE CONSIDERED NECESSARY IN THE CIRCUMSTANCES. CONNER & CUNEO: FURTHER REFERENCE IS MADE TO YOUR PROTEST ON BEHALF OF ABC MANAGEMENT SERVICES. OF THE 18 BIDS WHICH WERE OPENED ON MAY 4. THE LOW AND SECOND-LOW BIDDERS WERE ELIMINATED THROUGH A NEGATIVE PREAWARD SURVEY AND MISTAKE-IN-BID PROCEDURES. YOU CONTEND THAT THE SUCCESSFUL BIDDER FAILED TO HAVE SUFFICIENT DOLLARS IN ITS BID TO PAY FOR THE MINIMUM LABOR COSTS AND PAYROLL TAXES WHICH IT PROMISED IN ITS MANNING CHARTS.

B-173916, APR 20, 1972

BID PROTEST - ALLEGED NONRESPONSIBILITY - BELOW COST BID - CONTRACT MODIFICATIONS DECISION DENYING THE PROTEST OF ABC MANAGEMENT SERVICES, INC., AGAINST AWARD OF A CONTRACT TO INTEGRITY MANAGEMENT INTERNATIONAL, INC., UNDER A SOLICITATION ISSUED BY LOWRY AFB FOR MESS SERVICES. THE SUBJECT MANNING CHARTS WERE CLEARLY INTENDED AS AN AID IN DETERMINING BIDDER RESPONSIBILITY, NOT RESPONSIVENESS. B-162418, NOVEMBER 1, 1967. ALTHOUGH IT APPEARS THAT INTEGRITY'S PROPOSAL MAY PRECLUDE THE REALIZATION OF ITS ANTICIPATED PROFIT, THE SUBMISSION OF AN UNPROFITABLE BID DOES NOT JUSTIFY ITS REJECTION AS NONRESPONSIBLE. B-173088, JULY 27, 1971. ACCORDINGLY, THERE EXISTS NO BASIS TO QUESTION THE AWARD AND THE PROTEST MUST BE DENIED. WITH REGARD TO THE APPROPRIATENESS OF CERTAIN MODIFICATIONS TO THE SUBJECT CONTRACT, IT IS NOTED THAT THE MATTER WILL BE CONSIDERED BY GAO'S LOGISTICS AND COMMUNICATIONS DIVISION IN CONNECTION WITH SUCH AUDIT ACTION AS MAY BE CONSIDERED NECESSARY IN THE CIRCUMSTANCES.

TO SELLERS, CONNER & CUNEO:

FURTHER REFERENCE IS MADE TO YOUR PROTEST ON BEHALF OF ABC MANAGEMENT SERVICES, INC. (ABC), UNDER SOLICITATION NO. F05600-71-B-0499, ISSUED BY THE LOWRY AIR FORCE BASE ON APRIL 20, 1971.

THE INVITATION REQUESTED BIDS FOR MESS ATTENDANT SERVICE IN THE DINING HALLS AT LOWRY FOR THE PERIOD JULY 1, 1971, THROUGH JUNE 30, 1972. OF THE 18 BIDS WHICH WERE OPENED ON MAY 4, 1971, THE LOW AND SECOND-LOW BIDDERS WERE ELIMINATED THROUGH A NEGATIVE PREAWARD SURVEY AND MISTAKE-IN-BID PROCEDURES.

AFTER RECEIVING A FAVORABLE PREAWARD SURVEY REPORT ON THE THIRD-LOW BIDDER, INTEGRITY MANAGEMENT INTERNATIONAL, INC. (INTEGRITY), FROM DCAS, OAKLAND, THE CONTRACTING OFFICER AWARDED THE CONTRACT TO THAT FIRM ON JUNE 30, 1971, AS THE LOW, RESPONSIVE AND RESPONSIBLE BIDDER.

YOU CONTEND THAT THE SUCCESSFUL BIDDER FAILED TO HAVE SUFFICIENT DOLLARS IN ITS BID TO PAY FOR THE MINIMUM LABOR COSTS AND PAYROLL TAXES WHICH IT PROMISED IN ITS MANNING CHARTS. ACCORDINGLY, YOU SUBMIT THAT INTEGRITY SHOULD HAVE BEEN FOUND NONRESPONSIVE INITIALLY AND CERTAINLY NONRESPONSIBLE.

PARAGRAPH 31 OF SECTION C OF THE IFB PROVIDED:

"31. MANNING CHARTS

EACH OFFEROR SHALL SUBMIT WITH HIS PROPOSAL, A MANNING CHART IN THE FORMAT OF ATTACHMENT 3 TO SECTION F, SHOWING THE ESTIMATED NUMBER OF PERSONNEL REQUIRED IN EACH SPACE EACH HALF HOUR OF A REPRESENTATIVE WEEKDAY AND WEEKEND DAY TO SATISFACTORILY PERFORM THE CONTRACT SERVICES. NOTHING IN THIS SECTION, OR ELSEWHERE IN THIS CONTRACT, SHALL BE CONSTRUED AS LIMITING THE CONTRACTOR'S RESPONSIBILITY FOR PROVIDING SUFFICIENT PERSONNEL TO ACCOMPLISH ALL OF THE REQUIREMENTS SET FORTH HEREIN."

IN A SIMILAR VEIN PARAGRAPH 7 OF SECTION J STATED:

"7. STAFFING LEVELS (NUMBER OF EMPLOYEES)

THE STAFFING LEVELS ENTERED ON THE MANNING CHARTS (ATTACHMENT 3 TO SECTION F) SHALL BECOME AN INTEGRAL PART OF THE CONTRACT, AND THE CONTRACTING OFFICER WILL REQUIRE THAT THIS STAFFING LEVEL BE FULFILLED. THE CONTRACTOR MAY BE REQUIRED TO MAKE MONETARY ADJUSTMENTS FOR ANY MANHOURS LESS THAN THOSE SPECIFIED, SHOULD THE CONTRACTING OFFICER DETERMINE THAT A LESS THAN SATISFACTORY LEVEL IS CAUSED BY PERSONNEL STAFFING BELOW THAT SET FORTH IN ATTACHMENT 3 TO SECTION F, MANNING CHARTS. NOTWITHSTANDING THE FOREGOING, THE CONTRACTOR IS RESPONSIBLE IN ANY EVENT FOR SUPPLYING SUFFICIENT PERSONNEL TO PERFORM THE CONTRACT SATISFACTORILY."

FURTHER, PARAGRAPH 7 OF SECTION F RECOGNIZED THE POSSIBLE NEED FOR MANNING ADJUSTMENTS UP THROUGH THE PERIOD OF PREAWARD SURVEY. THAT PARAGRAPH PROVIDED IN PERTINENT PART:

"7. WORK FORCE ***

(A) A MINIMUM BASIC WORK FORCE WILL BE REQUIRED AND WILL BE AGREED UPON BY THE CONTRACTOR AND THE CONTRACTING OFFICER TO MAN EACH FOOD SERVICE FACILITY REGARDLESS OF THE NUMBER OF MEALS SERVED OF WORKLOAD INVOLVED ***. ACCEPTANCE BY THE GOVERNMENT DURING THE PRE-AWARD SURVEY OF THE PROPOSED MANNING AND WORK SCHEDULE ENTERED ON THE MANNING CHARTS SHALL FULFILL THE REQUIREMENT OF PARA. 3.3 OF MIL SPEC MIL-F 98828 (USAF)."

PARAGRAPH 3.3 OF THE REFERENCED SPECIFICATION STATED:

"3.3 PERSONNEL REQUIREMENTS

"IT WILL BE THE RESPONSIBILITY OF THE CONTRACTOR TO PROVIDE ADEQUATE PERSONNEL AT THE ESTABLISHED TIMES) AND DINING HALLS) AS MAY BE REQUIRED TO SATISFACTORILY PERFORM THE SERVICES REQUIRED BY THE CONTRACT."

IN ITS REPORT TO OUR OFFICE THE DEPARTMENT OF THE AIR FORCE OBSERVED THAT THE ROLE THE MANNING CHARTS WERE TO PLAY WAS:

" *** THE PRIMARY PURPOSE OF THESE MANNING CHARTS WAS TO INSURE THAT BIDDERS DID NOT PROPOSE TO UTILIZE INSUFFICIENT MANHOURS TO PROPERLY PERFORM THE VARIOUS TASKS REQUIRED FOR CONTRACT PERFORMANCE. IN THIS PARTICULAR CASE, THE REVERSE WAS TRUE. INTEGRITY PROPOSED TO UTILIZE MORE MANHOURS THAN APPEARED NECESSARY *** . THIS CLAUSE (PARAGRAPH 31 QUOTED ABOVE) PLACES THE CONTRACTOR ON NOTICE THAT REGARDLESS OF THE MANNING PROPOSED BY HIM, NOTHING WAS TO BE CONSTRUED AS LIMITING HIS RESPONSIBILITY FOR OVERALL SATISFACTORY PERFORMANCE."

IT IS THEREFORE CLEAR THAT THE AIR FORCE TREATED THE MANNING CHARTS AS AN AID IN DETERMINING RESPONSIBILITY, NOT RESPONSIVENESS, OF THE BIDDER. THIS IS FURTHER REFLECTED IN THE CONTRACTING OFFICER'S SUPPLEMENTAL REPORT WHICH STATED:

" *** THE PRIMARY PURPOSE OF THESE CHARTS WAS TO ASSIST GOVERNMENT PERSONNEL IN DETERMINING CONTRACTOR RESPONSIBILITY PRIOR TO AWARD.

"THERE IS NOTHING IN THE CONTRACT PROVISIONS PROHIBITING DECREASED MANNING, ONCE THE WORK FORCE BECAME PROFICIENT WHICH WOULD ALLOW FOR A MORE ECONOMICAL OPERATION, THEREBY AFFORDING A GREATER RETURN TO THE CONTRACTOR. UNDER A CONTRACT OF THIS TYPE, THE MAIN CONCERN OF THE GOVERNMENT IS TO OBTAIN A SATISFACTORY SERVICE. IF THE CONTRACTOR CAN PROVIDE THIS SERVICE WITH FEWER MANHOURS, CERTAINLY THERE WOULD BE NO INSISTENCE THAT MORE PERSONNEL BE UTILIZED SIMPLY BECAUSE OF A MANNING CRITERIA USED IN DETERMINING CONTRACTOR RESPONSIBILITY PRIOR TO AWARD."

THIS TREATMENT OF MANNING CHARTS AS A FACTOR IN DETERMINING THE RESPONSIBILITY OF A PROSPECTIVE CONTRACTOR IS CONSISTENT WITH OUR VIEWS ON THE SUBJECT. SEE B-162418, NOVEMBER 1, 1967.

CONCERNING YOUR CONTENTION THAT INTEGRITY'S BID WAS LESS THAN THAT REQUIRED TO PAY MINIMUM WAGES SPECIFIED BY THE DEPARTMENT OF LABOR, PLUS PAYROLL TAXES AND HEALTH AND WELFARE BENEFITS, THE PROCUREMENT ACTIVITY REPORTS:

"INITIALLY, THE NUMBER OF MANHOURS INDICATED ON THE MANNING CHARTS SUBMITTED BY INTEGRITY MANAGEMENT WITH ITS BID AMOUNTED TO 494,364. USING THE BASIC MINIMUM WAGE OF $2.22 PER HOUR CONTAINED IN THE SOLICITATION, THIS NUMBER OF HOURS DID NOT CONFORM TO THE TOTAL BID OF $740,000. ON 15 JUNE 1971, WHEN BIDDER WAS BEING CONSIDERED FOR AWARD, THIS DISCREPANCY WAS CALLED TO HIS ATTENTION WITH A REQUEST FOR PRICE VERIFICATION *** .

"BY LETTER DATED 18 JUNE 1971, INTEGRITY VERIFIED ITS PRICE AND INCLUDED NUMEROUS STATISTICS TO SUPPORT ITS BID *** MINIMUM MANNING REQUIREMENTS WOULD BE ONE OF THE ITEMS FOR THE PREAWARD SURVEY TEAM TO DECIDE UPON DURING THE COURSE OF SUCH SURVEY.

" *** DURING THE COURSE OF THIS PRE-AWARD SURVEY, THE TEAM WAS FURNISHED A COPY OF LETTER BY CONTRACTOR DATED 25 JUNE 1971 REGARDING MINIMUM MANHOURS FOR CONTRACT PERFORMANCE *** . ORIGINAL COPY OF THIS SAME LETTER HAD PREVIOUSLY BEEN SENT TO THE CONTRACTING OFFICER. MINIMUM MANNING WAS ESTABLISHED AS 276,120 AND WAS ACCEPTABLE TO THE SURVEY TEAM, THE CONTRACTING OFFICER AND THE FOOD SERVICE OFFICER. *** .

"A RESUME OF MANNING IS AS FOLLOWS:

A. 276,120 MANHOURS $2.22 PER HOUR (MINIMUM WAGE) $612,986.40. THIS LEAVES $127,390 FOR SUPERVISION AND OVERHEAD AND PROFIT FROM TOTAL BID OF $740,376.56.

"BASED ON THE INFORMATION AVAILABLE TO THE CONTRACTING OFFICER, THE FINDINGS CONTAINED IN THE PRE-AWARD SURVEY AND THE REVISED MANNING CRITERIA SUBMITTED BY BIDDER, A DETERMINATION WAS MADE THAT INTEGRITY MANAGEMENT INTERNATIONAL, INC. WAS A RESPONSIVE AND RESPONSIBLE CONTRACTOR."

YOU CONTEND, HOWEVER, THAT USE OF $2.22 PER HOUR IS MISLEADING BECAUSE THERE MUST BE ADDED TO THIS BASIC WAGE RATE THE FOLLOWING: $.08 PER HOUR FOR HEALTH AND WELFARE; $.06 PER HOUR FOR HOLIDAY PAY, AND $.22 PER HOUR FOR TAXES AND INSURANCE, FOR A TOTAL OF $2.58 PER HOUR. IF THE PROPOSED 276,120 HOURS ARE MULTIPLIED BY THIS FIGURE, THE MINIMUM COST, BEFORE SUPERVISION, OVERHEAD AND PROFIT IS $712,389. YOU THEREFORE STATE THAT WHEN THIS FIGURE IS COMPARED TO THE DISCOUNTED PRICE OF $726,309, INTEGRITY HAD ONLY APPROXIMATELY $14,000 FOR OVERHEAD AND PROFIT, WHILE THE MINIMUM CONTRACT REQUIREMENT FOR SUPERVISION AT THE MINIMUM WAGE WOULD COST THE CONTRACTOR IN EXCESS OF $50,000. IT IS THEREFORE URGED THAT THE INESCAPABLE CONCLUSION IS THAT EVEN AFTER THE 45 PERCENT REDUCTION IN THE HOURS INITIALLY OFFERED IN THE MANNING CHART, INTEGRITY STILL DOES NOT HAVE SUFFICIENT DOLLARS IN ITS BID TO COVER THE HOURS PROVIDED IN ITS MANNING CHART.

THE CONTRACTING OFFICER'S SUPPLEMENTAL REPORT ESTIMATES THE TOTAL HOURLY COST OF PERFORMANCE, INCLUDING OVERHEAD AND PROFIT, AT $2.62 PER HOUR. USING THIS FIGURE THE TOTAL COST OF PERFORMANCE WOULD BE $723,434.40. SINCE WAGES FOR SUPERVISORY PERSONNEL ARE INCLUDED IN INTEGRITY'S BID UNDER THE COST FACTOR ENTITLED "BURDEN", THIS WOULD APPARENTLY LEAVE LESS THAN $3,000 FOR OTHER EXPENSES.

WE THEREFORE AGREE WITH YOUR OBSERVATION THAT THIS ASPECT OF YOUR PROTEST PRESENTS A QUESTION WHICH IS COMPARABLE TO THE QUESTION CONSIDERED IN B- 173436, OCTOBER 12, 1971. IN THAT DECISION WE STATED:

" *** WHILE IT WOULD APPEAR FROM THE RECORD THAT DYNETERIA'S LOW BID MAY BE BELOW THAT REQUIRED TO ENABLE IT TO PAY THE COST OF PERFORMANCE (IF ALL OF THE OFFERED HOURS ARE UTILIZED) AND STILL BE ABLE TO ENJOY A PROFIT, WE ARE UNABLE TO CONCLUDE THAT ITS BID PRICES ARE INSUFFICIENT TO PERMIT IT TO SATISFACTORILY PERFORM THE CONTRACT. IN THIS CONNECTION, WE HAVE HELD THAT THE FACT THAT THE LOW BIDDER OR OFFEROR MIGHT INCUR A LOSS IN PERFORMING THE CONTRACT AT THE PRICE SHOWN IN ITS BID OR OFFER DOES NOT JUSTIFY REJECTING AN OTHERWISE ACCEPTABLE BID. 49 COMP. GEN. 311 (1969); B-173088, JULY 27, 1971."

WE ARE THEREFORE UNABLE TO CONCLUDE THAT INTEGRITY'S MANNING CHARTS WERE IMPROPERLY EVALUATED BY THE CONTRACTING OFFICER IN THE COURSE OF DETERMINING THAT FIRM TO BE A RESPONSIBLE PROSPECTIVE CONTRACTOR. IN VIEW THEREOF, WE CAN FIND NO VALID LEGAL BASIS TO QUESTION THE AWARD TO INTEGRITY, AND YOUR PROTEST IS DENIED.

DURING THE COURSE OF OUR CONSIDERATION OF YOUR PROTEST ON BEHALF OF ABC, YOU INDEPENDENTLY SOUGHT ADVICE FROM THE DEPARTMENT OF THE AIR FORCE CONCERNING CERTAIN MODIFICATIONS WHICH HAD BEEN MADE TO INTEGRITY'S CONTRACT. BY LETTER DATED DECEMBER 13, 1971, THE DEPARTMENT FURNISHED YOUR FIRM THE REQUESTED INFORMATION AND ON JANUARY 18, 1972, YOU FURNISHED THIS OFFICE A DETAILED ANALYSIS OF THE MODIFICATIONS.

YOU STRONGLY URGE THAT WITH THE EXCEPTION OF THE EXTENSION OF THE TIMES DURING WHICH THE MEAL SERVICE LINES WILL BE OPENED:

"THE OVERWHELMING AND INESCAPABLE CONCLUSION IS THAT THE GOVERNMENT IS ADDING WORDS TO THE SPECIFICATIONS WHICH REQUIRE NO MORE THAN THE CONTRACT ALREADY REQUIRES AND NO MORE THAN ANY REASONABLE AND PRUDENT BIDDER WOULD HAVE EXPECTED. THIS IS DONE IN A PATENT ATTEMPT TO SUPPORT ADDITIONAL CONSIDERATION *** .

THE AIR FORCE IN REPLY HAS STATED:

"REFERENCE STATEMENTS REGARDING MODIFICATIONS TO CONTRACT. THE ITEMS COVERED BY THE MODIFICATION TO BASIC CONTRACT CONSISTED MAINLY OF EXPANDING THE SERVICE REQUIRED BY THE GOVERNMENT; AND, IN ADDITION, CLARIFIED THE NUMEROUS DEFICIENCIES AND AMBIGUITIES WHICH EXISTED IN THE SPECIFICATIONS.

"THIS TYPE OF CONTRACT REPRESENTS OUR FIRST ENDEAVOR INTO THIS TYPE OF SERVICE. NO EXPERIENCE DATA WAS AVAILABLE. THE SPECIFICATIONS USED IN THIS CONTRACT WERE THE BEST AVAILABLE AT THE TIME. THE INCONSISTENCIES AND AMBIGUITIES CONTAINED IN THESE SPECIFICATIONS COULD NOT BE FORESEEN AND SURFACED ONLY DURING CONTRACT PERFORMANCE. MODIFICATIONS MO2 AND MO3, IN ADDITION TO EXPANDING THE SCOPE OF SERVICE, APPEARED TO BE THE BEST APPROACH IN CLARIFYING THESE SPECIFICATIONS. IN MANY AREAS, A PARTICULAR SERVICE WAS CALLED FOR, BUT THE FREQUENCY WAS OMITTED. IN OTHER CASES, THE METHOD OF HOW A PARTICULAR SERVICE WAS TO BE PERFORMED WAS NOT SPECIFIC. MODIFICATION TO THE CONTRACT WAS AN EFFORT TO ELIMINATE THESE DISCREPANCIES.

"IT IS THE CONTRACTING OFFICER'S OPINION THAT THE TWO MODIFICATIONS MENTIONED IN THE PROTEST REPRESENTED AN INCREASE IN ITS SCOPE AND PROVIDED CHANGES AND/OR CORRECTIONS TO THE BASIC CONTRACT WHICH REQUIRED ADDITIONAL MANPOWER ON THE PART OF THE CONTRACTOR FOR WHICH COMPENSATION WAS REQUIRED. CONTRACT, AS AMENDED, IS PROVIDING A MEANS FOR SATISFACTORY PERFORMANCE WITH NO GUESSWORK AS TO WHO, WHEN, AND HOW THE GIVEN TASKS ARE TO BE PERFORMED. THESE MODIFICATIONS WOULD UNDOUBTEDLY HAVE HAD TO BE PROCESSED REGARDLESS OF WHO WAS THE SUCCESSFUL CONTRACTOR."

THE APPROPRIATENESS OF MODIFICATIONS TO A CONTRACT, AND THE AMOUNTS PAID OR RECEIVED THEREFOR, PERTAINS TO CONTRACT ADMINISTRATION WHICH IS PRIMARILY A FUNCTION AND RESPONSIBILITY OF THE CONTRACTING AGENCY, AND IS NOT ORDINARILY REGARDED AS A MATTER FOR RESOLUTION UNDER OUR BID PROTEST PROCEDURES PURSUANT TO WHICH WE CONSIDER THE PROPRIETY OF THE AWARD, OR PROPOSED AWARD, OF A CONTRACT. ACCORDINGLY, YOUR CONTENTIONS CONCERNING THE MODIFICATIONS TO THE SUBJECT CONTRACT WILL BE CONSIDERED BY OUR LOGISTICS AND COMMUNICATIONS DIVISION IN CONNECTION WITH SUCH AUDIT ACTION AS MAY BE CONSIDERED NECESSARY IN THE CIRCUMSTANCES.