B-237182, Oct 31, 1989, 89-2 CPD ***

B-237182: Oct 31, 1989

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Where letter from agency signed by the contracting officer is furnished to all offerors in the competitive range. The essential requirements for an RFP amendment are met and the information therein is therefore binding on all offerors. Where offeror fails to furnish in its best and final offer (BAFO) pricing information which was expressly requested and necessary to meet government requirements. Protest against the failure to submit cost and pricing data is denied where the record shows that adequate price competition was obtained. Price analysis was conducted. While PHH's protest was pending in our Office. Are those raised in PHH's protest. Which was issued on January 24. Several amendments were issued prior to submission of initial offers.

B-237182, Oct 31, 1989, 89-2 CPD ***

PROCUREMENT - Competitive Negotiation - Requests for proposals - Amendments - Criteria DIGEST: 1. Where letter from agency signed by the contracting officer is furnished to all offerors in the competitive range, the essential requirements for an RFP amendment are met and the information therein is therefore binding on all offerors. PROCUREMENT - Competitive Negotiation - Best/final offers - Price data - Omission - Effects 2. Where offeror fails to furnish in its best and final offer (BAFO) pricing information which was expressly requested and necessary to meet government requirements, contracting activity properly rejected the BAFO. PROCUREMENT - Competitive Negotiation - Offers - Cost realism - Evaluation - Administrative discretion 3. Protest against the failure to submit cost and pricing data is denied where the record shows that adequate price competition was obtained, and price analysis was conducted.

PHH Homequity Corporation:

PHH Homequity Corporation protests the award of a contract to Associates Relocation Management Company, Inc. under request for proposals (RFP) No. 100-323-9, issued by the Federal Bureau of Prisons for relocation services for its employees. PHH contends that the contracting agency improperly rejected its best and final offer (BAFO) as unacceptable for not complying with a material pricing requirement. The protester essentially alleges that the Bureau failed to inform PHH of the particular requirement at any time during the course of the procurement.

We deny the protest.

While PHH's protest was pending in our Office, the protester filed a motion for injunctive relief in the United States District Court for the District of Connecticut under Civil Action No. B-89-562 (JAC). The bases for the suit, which PHH has brought against the Bureau and Associates, are those raised in PHH's protest. This decision responds to a court request for an expedited advisory opinion from our Office on PHH's protest.

The RFP, which was issued on January 24, 1989, contemplated the award of a firm, fixed-price requirements contract to provide certain relocation services for a 1-year period. Several amendments were issued prior to submission of initial offers. The solicitation, as amended, contained a detailed description of the services to be performed. Specifically, these services relate to the sale of homes of relocating Bureau employees, rental management services and marketing assistance. The RFP sought technical and cost proposals and provided at section M.3.E. that:

"cost proposals must be a firm fixed fee and expressed as a percentage of the offer amount in the format provided (Attachment 2) for one year. The cost proposal will be evaluated by applying the individual pricing method to 100 Bureau of Prisons employee homes recently processed under the contract. The cost proposals will then be ranked according to the total overall cost to the Bureau of Prisons of the representative sampling."

The offerors were provided a matrix in the referenced format (Attachment 2) which listed the geographic location by city and state and the appraised value of the 100 homes represented. Offerors were required to complete the matrix by inserting in the columns next to each listing a regular sale rate i.e., the fee if an employee accepts the contractor's guaranteed market value offer, an amended sale rate i.e., the fee if a reasonable outside offer is accepted by the employee and the sale is assigned to the contractor, and a fee for marketing assistance.

The RFP, as originally issued, permitted offerors to provide different fees expressed as a percentage for the same type of service depending on geographic location. The solicitation, however, provided that "the maximum fee payable to the Contractor by the Government for any one transaction of either regular or amended value type shall be based on a maximum appraised value of $200,000 times the billing rate."

PHH and Associates submitted initial offers. Both firms proposed different rates depending on location. PHH also calculated an average percentage based upon the rates proposed for the 100 locations listed on the matrix. Associates provided totals which the agency used to calculate an average percentage.

As a result of the initial evaluation, PHH and Associates were included in the competitive range. During the evaluation of proposals, however, the Bureau apparently realized that the information given on the 100 representative homes might not encompass all of the possible homes in locations nationwide that would be subject to the contract's provisions. Accordingly, on July 25, the contracting officer sent essentially identical letters identical except for the individual contractor's average rates which have been deleted below instructing both offerors as follows:

"Our desire in the solicitation was to receive a flat rate fee for services specified. Your proposal shows an average rate of (%) for regular sales, (%) for amended sales, and ($) for marketing assistance. Please clarify your proposal to indicate flat rate fees for regular and amended sales. Final price evaluation will be accomplished by using these percentages as a multiplier against the listing of previous home sales provided."

This letter also requested a best and final offer (BAF0) from each firm to be submitted by August 8.

In response to the contracting officer's request, Associates submitted a BAFO containing one flat fixed rate, expressed as a percentage applicable to any home located nationwide, for all regular sales and another flat fixed rate for all amended sales nationwide.

In the cover letter to its BAFO, PHH explained that it offered two pricing alternatives. The first of these alternatives provided different rates depending on location. In its second alternative, PHH stated that it proposed a "flat fixed fee" providing "the same up-front fee for every property" with an appraisal value under $200,000. However, PHH's BAFO expressly excludes from this fee all homes appraised in excess of $200,000, and instead offers that such homes would be subject to a higher fixed rate which would be multiplied against the actual appraised value of the home. PHH was notified by the contracting officer in August that the protester appeared to be the prospective awardee, but that such determination was subject to required legal and other supervisory reviews.

After legal review of PHH's BAFO, however, the Bureau found that PHH had not modified its cost proposal as required in the Bureau's July 25 request. The Bureau reports that it found PHH's first alternate in its BAFO deficient because it still offered different rates dependent upon the geographic locations provided without indicating a flat percentage rate to be applied to all other locations nationwide. PHH, in its BAFO, also offered an alternative, as stated above, consisting of a separate flat fixed fee for properties with appraisal values under $200,000 and a higher flat fixed fee for properties with appraisal values more than $200,000, which the agency considered inconsistent with the RFP terms. The contracting officer, in the presence of the Bureau's chief of procurement, contacted PHH by telephone September 1 seeking clarification of the protester's offer. During that conversation, the contracting officer states that she explained to PHH that one flat fixed fee was required for each of the types of sales available rather than average rates as proposed by PHH in its BAFO. PHH's representative denies that a single rate was requested during this telephone conversation. Later on September 1, PHH sent by telefacsimile a written confirmation of its previously submitted BAFO.

The Bureau thereafter concluded that PHH's matrix pricing did not meet the agency's needs. Based upon its determination that PHH failed to cure what it considered to be a material pricing deficiency, the Bureau rejected PHH's BAFO. An award of a contract under the RFP was made to Associates on September 20. This protest followed. The Bureau has advised our Office that in accordance with its determination of the best interests of the government, it has directed Associates to continue performance of the contract despite the pending protest.

The protester argues it was never informed of the single flat rate fee requirement and that the solicitation should have been formally amended to advise all offerors of this requirement. We are not persuaded by these arguments.

After determining that multiple rate pricing did not meet the Bureau's needs, the contracting officer, by letter of July 25, notified both offerors that the average rates submitted were not desired by the Bureau and that "a flat rate fee" for services specified was requested. Initially, we note that 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), Sec. 15.606 (FAC 84-16), whether or not issued as a formal numbered amendment. The information in the letter was therefore binding on all offerors. See General Electrodynamics Corp., B-221347.2, B-221347.3, May 13, 1986, 86-1 CPD Para. 454.

We think the July 25 letter sufficiently advised offerors of the agency's revised pricing requirements. The letter indicated that an "average rate" was not desired and that offerors should indicate "flat rate fees for regular and amended sales." The record shows that the protester initially submitted an offer based on different flat rates for the numerous locations listed in the RFP. The Bureau, in its July 25 letter, specifically advised the firm that its "proposal shows an average rate of a stated percentage for regular (and amended) sales." The letter further stated that this pricing methodology was not desired and that instead the proposal should indicate flat fees for regular and amended sales. We fail to see how the protester could reasonably have interpreted this letter as again permitting different flat rate fees for numerous locations which would have been a request for and essentially a repetition of its initial offer. We think such an interpretation was unreasonable. Accordingly, since a reasonable offeror should not have been misled by this letter, we deny this protest ground.

PHH's first alternate offer of different rates for different locations did not comply with the amended RFP requirement for a single flat rate for all locations. As indicated above, PHH's first alternate does not offer rates for geographic locations not listed in the sample matrix. Further, PHH's second alternate which offers a different "flat fixed fee" for homes valued under and in excess of $200,000 failed to conform to the RFP's requirement that "the maximum fee payable ... shall be based on a maximum appraised value of $200,000 times the billing rate."

The record therefore clearly indicates that PHH simply failed to follow the contracting officer's instructions for a flat fixed fee with respect to either of its alternate offers. Without a single flat rate, the Bureau reports that it could not determine that the proposed price rates would in fact be applicable to any particular home that may be subject to the contract if such location and appraised value was not included in the list of 100 representative homes. The record supports this view. Thus, we find that the Bureau reasonably determined PHH's proposal did not meet its needs, and we find no reason to question the propriety of the agency's rejection of the protester's proposal. See e. g., Systems & Processes Engineering Corp., B-232100, Nov. 15, 1988, 88-2 CPD Para. 478.

In its comments to the agency report, PHH raises two new protest issues. First, the protester asserts that the Bureau violated the requirement to obtain certified cost and pricing data as required by FAR Sec. 15.804-2 (FAC 84-35). However, cost and pricing data is generally not required when the contracting officer determines that prices submitted are based on "adequate price competition." FAR Sec. 15.804-3(a)(1). Adequate price competition exists if two or more responsible offerors submit offers meeting the government's express requirements. FAR Sec. 15.804-3(b)(ii). Here, the Bureau obtained two initial offers that met the RFP requirements. While PHH's BAFO rates did not meet the government's express requirements, the rates did provide some basis of comparison. Moreover, the agency also conducted a price analysis which demonstrated that the awardee's price was fair and reasonable in comparison with current or recent prices for the same or substantially same items. See FAR Sec. 15.804-3(b)(3). Thus, we have no basis to question the reasonableness of the agency's waiver of the requirement of cost and pricing data.

Second, the protester argues that the agency's actions resulted in a sole -source award to Associates. The record shows that this procurement was conducted on a competitive basis, and the offers were submitted in the competitive atmosphere of full and open competition. Here, after BAFOs, one of the two offerors was rejected. However, the award to the remaining competitor resulting from full and open competition is not a sole-source award.

The protest is denied.