B-221363.2, MAY 28, 1986, 86-1 CPD 491

B-221363.2: May 28, 1986

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CONTRACTING AGENCY PROPERLY MAY MAKE AWARD TO OFFEROR SUBMITTING HIGHER COST PROPOSAL WHERE COST IS OF LESS IMPORTANCE THAN TECHNICAL FACTORS AND WERE THE SUPERIORITY OF THE HIGHER COST PROPOSAL IS REASONABLY CONSIDERED BY THE AGENCY TO BE WORTH THE POSSIBLE PRICE PREMIUM. AGENCY IS NOT REQUIRED TO EQUALIZE COMPETITIVE ADVANTAGE WHICH MAY ARISE FROM A COMPETITOR'S INCUMBENCY UNLESS IT RESULTS FROM PREFERENTIAL OR UNFAIR GOVERNMENT ACTION. THE SERVICES ARE IN CONNECTION WITH THE DOE ALCOHOL FUEL LOAN GUARANTEE PROGRAM. WOLF ALLEGES THAT IT SHOULD HAVE BEEN AWARDED THE CONTRACT BECAUSE IT PROPOSED A SIGNIFICANTLY LOWER PRICE AND THE AWARDEE'S TECHNICAL SUPERIORITY WAS BASED ONLY ON "VERY FINE LINE DISTINCTIONS.".

B-221363.2, MAY 28, 1986, 86-1 CPD 491

CONTRACTS - NEGOTIATION - AWARDS - TO OTHER THAN LOW OFFEROR DIGEST: 1. CONTRACTING AGENCY PROPERLY MAY MAKE AWARD TO OFFEROR SUBMITTING HIGHER COST PROPOSAL WHERE COST IS OF LESS IMPORTANCE THAN TECHNICAL FACTORS AND WERE THE SUPERIORITY OF THE HIGHER COST PROPOSAL IS REASONABLY CONSIDERED BY THE AGENCY TO BE WORTH THE POSSIBLE PRICE PREMIUM. CONTRACTS - NEGOTIATION - COMPETITION - EQUALITY OF COMPETITION - INCUMBENT CONTRACTOR'S ADVANTAGE 2. AGENCY IS NOT REQUIRED TO EQUALIZE COMPETITIVE ADVANTAGE WHICH MAY ARISE FROM A COMPETITOR'S INCUMBENCY UNLESS IT RESULTS FROM PREFERENTIAL OR UNFAIR GOVERNMENT ACTION.

WOLF, BLOCK, SCHORR & SOLIS-COHEN:

WOLF, BLOCK, SCHORR & SOLIS-COHEN (WOLF) PROTESTS THE AWARD OF A CONTRACT FOR LEGAL SUPPORT SERVICES TO SCHIFF, HARDIN & WAITE (SCHIFF), UNDER REQUEST FOR PROPOSALS (RFP) NO. DE-RP01-85G30529 ISSUED BY THE DEPARTMENT OF ENERGY (DOE). THE SERVICES ARE IN CONNECTION WITH THE DOE ALCOHOL FUEL LOAN GUARANTEE PROGRAM. WOLF ALLEGES THAT IT SHOULD HAVE BEEN AWARDED THE CONTRACT BECAUSE IT PROPOSED A SIGNIFICANTLY LOWER PRICE AND THE AWARDEE'S TECHNICAL SUPERIORITY WAS BASED ONLY ON "VERY FINE LINE DISTINCTIONS."

WE DENY THE PROTEST.

THE RFP CALLED FOR AWARD OF A TIME-AND-MATERIALS CONTRACT. AS OUTLINED IN THE FEDERAL ACQUISITION REGULATION (FAR), 48 C.F.R. SEC. 16.601 (1984), THIS IS ESSENTIALLY A COST-REIMBURSEMENT CONTRACT, WHERE THE LABOR PROVIDED IS AT A FIXED HOURLY RATE WHICH INCLUDES OVERHEAD AND PROFIT. THE CONTRACT AT ISSUE IS A LEVEL OF EFFORT CONTRACT WITH A CEILING ON HOURS, WITH COST BEING ESTIMATED AT THIS CEILING LEVEL.

THE RFP EVALUATION CRITERIA PROVIDED THAT "THE TECHNICAL PROPOSAL IS OF FAR GREATER IMPORTANCE THAN THE PRICE PROPOSAL." EVALUATED TOTAL PRICE TO THE GOVERNMENT COULD ONLY BE THE DECIDING SELECTION FACTOR IF TWO OR MORE PROPOSALS WERE WITHIN THE COMPETITIVE RANGE AND IT WAS NOT DETERMINED THAT THE HIGHEST RATED TECHNICAL PROPOSAL WAS WORTH THE PRICE DIFFERENTIAL. FOR PRICE EVALUATION PURPOSES, THE BASE YEAR PRICE AND 2-OPTION YEAR PRICES WERE TO BE TOTALED USING THE CEILING LEVELS. COST WAS NOT SEPARATELY SCORED.

THE TECHNICAL EVALUATION CRITERIA AND THEIR RELATIVE WEIGHTS WERE (1) PERSONNEL EXPERIENCE 55 POINTS (2) PROJECT TEAM AND APPROACH, 35 POINTS AND (3) PROJECT SCHEDULE, 10 POINTS. A TECHNICAL EVALUATION COMMITTEE EVALUATED SEVEN INITIAL TECHNICAL PROPOSALS AND DETERMINED THAT FIVE, INCLUDING WOLF'S AND SCHIFF'S, WERE IN THE COMPETITIVE RANGE. BEST AND FINAL OFFERS WERE RECEIVED ON NOVEMBER 29, 1985. THE COMMITTEE RATED SCHIFF'S TOTAL PROPOSAL HIGHEST TECHNICALLY, AND WOLF'S LOW COST PROPOSAL WAS RATED THIRD TECHNICALLY. SCHIFF'S TOTAL TECHNICAL POINT SCORE WAS 84.33 OUT OF A POSSIBLE TOTAL OF 95, VERSUS WOLF'S TECHNICAL SCORE OF 78.33. UNDER PERSONNEL EXPERIENCE, SCHIFF'S AVERAGE SCORE WAS 50.6 COMPARED TO WOLF'S AVERAGE SCORE OF 42.6-- A 19 PERCENT DIFFERENTIAL.

THE ESTIMATED COST OF THE SCHIFF PROPOSAL WAS $691,800 VERSUS $569,200 FOR THE WOLF PROPOSAL. THE CONTRACTING OFFICER DETERMINED THAT THE COST DIFFERENCE WAS OUTWEIGHED BY THE TECHNICAL SUPERIORITY OF THE SCHIFF PROPOSAL AND SELECTED SCHIFF FOR AWARD.

WHERE A SOLICITATION FOR A NEGOTIATED PROCUREMENT ADVISES OFFERORS THAT TECHNICAL CONSIDERATIONS ARE MORE IMPORTANT THAN COST, THE CONTRACTING AGENCY PROPERLY MAY CONCLUDE THAT IT IS MORE ADVANTAGEOUS TO THE GOVERNMENT TO AWARD THE CONTRACT TO AN OFFEROR WITH A SUPERIOR TECHNICAL PROPOSAL, EVEN THOUGH ITS PRICE IS HIGHER THAN THAT OF OTHER TECHNICALLY ACCEPTABLE PROPOSALS, IF THE LOWER PRICES ARE OFFSET BY THE ADVANTAGES OF THE TECHNICALLY SUPERIOR PROPOSAL. BARBER-NICHOLS ENGINEERING CO., B-216846, MAR. 25, 1985, 85-1 CPD PARA. 343. CONSEQUENTLY, AN OFFEROR IS NOT AUTOMATICALLY ENTITLED TO AWARD MERELY BECAUSE IT OFFERED THE LOWEST PRICE. HENDERSON AERIAL SURVEYS, INC., B-215175, FEB. 6, 1985, 85-1 CPD PARA. 145. THE GOVERNMENT IS NOT OBLIGATED TO MAKE AWARD TO THE LOW COST OFFEROR IN A NEGOTIATED PROCUREMENT, UNLESS THE SOLICITATION SPECIFIES THAT COST WILL BE THE DETERMINATIVE FACTOR. RATHER, AN AGENCY MAY CONCLUDE, CONSISTENT WITH THE EVALUATION CRITERIA, THAT AN AWARD TO A HIGHER-PRICED PROPOSAL IS WARRANTED WHERE ITS ADVANTAGES OUTWEIGH THE COST SAVINGS OFFERED BY A LOWER-PRICED TECHNICALLY ACCEPTABLE OFFER. ANALYTICS, INC., B-220431, MAR. 13, 1986, 86-1 CPD PARA. ***.

HERE, WE FIND REASONABLE THE DOE DECISION THAT SCHIFF'S PROPOSAL'S TECHNICAL SUPERIORITY OUTWEIGHED THE COST SAVINGS IN AWARDING TO WOLF. THE SOLICITATION MADE CLEAR THAT TECHNICAL CONSIDERATIONS WERE OF PARAMOUNT IMPORTANCE IN THE AWARD SELECTION.

IN ADDITION, THE CONTRACTING OFFICER FOUND THAT THE DIFFERENTIAL IN THE COST PROPOSAL MAY BE OVERSTATED BASED ON SCHIFF'S EXPERIENCE. SCHIFF HAD NEGOTIATED AND CLOSED THE GREAT PLAINS COAL GASIFICATION PROJECT AND THE AGRIFUELS REFINING CORPORATION ALCOHOL FUEL LOAN GUARANTEE AND HAD SERVED AS SPECIAL COUNSEL ON TWO OTHER ALCOHOL FUEL LOAN GUARANTEE PROJECTS. ALL 12 OF THE ATTORNEYS PROPOSED AS KEY PERSONNEL BY SCHIFF HAD WORKED ON THESE PROJECTS. WOLF DID NOT POSSESS THIS EXPERIENCE. THE EVALUATION COMMITTEE DETERMINED THAT IT WOULD REQUIRE 3 TO 6 MONTHS FOR A FIRM WITH NO DOE ALCOHOL FUEL LOAN GUARANTEE EXPERIENCE TO MASTER THE STATUTORY AND REGULATORY REQUIREMENTS APPLICABLE TO THESE TRANSACTIONS. SINCE THE ESTIMATED TOTAL COST WAS BASED ON CEILING HOURS, THE CONTRACTING OFFICER CONSIDERED THAT SCHIFF'S GREATER EXPERIENCE IN THE AREA OF THE DOE ALCOHOL FUEL LOAN GUARANTEE PROGRAM WOULD RESULT IN A SHORTER STARTUP TIME FOR KEY PERSONNEL. THE CONTRACTING OFFICER DETERMINED THAT THE EQUALIZED CEILING HOURLY CALCULATION DID NOT TAKE INTO ACCOUNT TIME SAVINGS WHICH WERE LIKELY IN VIEW OF THE SPECIFIC EXPERIENCE AND EXPERTISE OF SCHIFF'S PERSONNEL. THUS, THE ACTUAL COST TO THE GOVERNMENT UNDER SCHIFF'S PROPOSAL COULD BE LESS THAN ITS EVALUATED COST. ALSO, THE COMMITTEE CONCLUDED THAT THE OTHER OFFERORS WOULD HAVE DIFFICULTY IN REVIEWING AND ANALYZING THE $157 MILLION ALCOHOL FUEL LOAN GUARANTEE APPLICATIONS WHICH REQUIRED CLOSING WITHIN THE FIRST 6 MONTHS AFTER THE CONTRACT AWARD.

IN ADDITION, THE WOLF PROPOSAL WAS DOWNGRADED FOR LIMITED ABILITY TO PROVIDE SERVICES ON A "QUICK TURN-AROUND BASIS," BECAUSE OF THEIR LACK OF A WASHINGTON OFFICE. SCHIFF, CONVERSELY, WAS SCORED FAVORABLY IN THIS REGARD BECAUSE OF THEIR WASHINGTON OFFICE. WHILE WOLF ASSERTS THAT THERE WAS NO SPECIFIC RFP REQUIREMENT FOR A WASHINGTON OFFICE, UNDER PROJECT TEAM AND APPROACH THE RFP DID INCLUDE A QUICK TURN-AROUND CAPABILITY. THE EVALUATION COMMITTEE REASONABLY CORRELATED THIS REQUIREMENT WITH HAVING A WASHINGTON OFFICE, TO PROVIDE CLERICAL AND COMMUNICATIONS ASSISTANCE AND WORK OFFICES OUTSIDE OF THE NEGOTIATING ROOM FOR DOCUMENT HANDLING DURING THE LOAN GUARANTEE NEGOTIATION AND CLOSING PROCESS.

IN ITS COMMENTS ON THE AGENCY REPORT, WOLF DOES NOT TAKE ANY SPECIFIC EXCEPTION TO THE EVALUATION, BUT MERELY ASSERTS THAT THE PROCUREMENT WAS UNFAIR BECAUSE IT IS CLEAR THAT "THE ONLY OFFEROR THAT COULD HAVE REALISTICALLY BEEN AWARDED THE CONTRACT WAS THE INCUMBENT CONTRACTOR."

TO THE EXTENT THAT WOLF IS OBJECTING TO THE EXPERIENCE AND QUICK TURN- AROUND REQUIREMENTS WHICH WERE CONTAINED IN THE RFP, THESE ISSUES ARE UNTIMELY RAISED SINCE THEY RELATE TO ALLEGED SOLICITATION IMPROPRIETIES WHICH UNDER OUR BID PROTEST REGULATIONS MUST BE PROTESTED PRIOR TO THE CLOSING DATE FOR SUBMISSION OF THE INITIAL PROPOSALS. 4 C.F.R. SEC. 21.2(A)(1) (1985). TO THE EXTENT THAT WOLF IS OBJECTING TO THE ADVANTAGE OBTAINED BY SCHIFF DUE TO ITS INCUMBENCY, WE HAVE HELD THAT AN AGENCY IS NOT REQUIRED TO EQUALIZE COMPETITION WITH RESPECT TO COMPETITIVE ADVANTAGES RESULTING FROM A COMPETITOR'S INCUMBENCY SO LONG AS THESE ADVANTAGES DO NOT RESULT FROM PREFERENTIAL OR UNFAIR GOVERNMENT ACTION. MERIDIAN JUNIOR COLLEGE, B-221358, MAR. 17, 1986, 86-1 CPD PARA. ***. HERE, THERE IS NO EVIDENCE OR ALLEGATION OF SUCH PREFERENTIAL OR UNFAIR ACTION.

WE DENY THE PROTEST.