[Protest of Navy Contract Award for Layberth Services]

B-238356.2: Jul 17, 1990

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A firm protested a Navy contract award for layberth services, contending that: (1) the Navy improperly limited reprocurement; (2) the reprocurement constituted an improper auction or request for third final offers; (3) its berth was better than the awardee's; and (4) the awardee failed to disclose its lobbying activities during the procurement. GAO held that: (1) the Navy properly limited competition, rather than making a sole-source award; (2) the Navy's requirements changed significantly; (3) the Navy reasonably determined that the protester's berth did not meet all of the solicitation specifications; and (4) since the awardee's lobbying activities did not concern the current contract, it was not required to disclose them. Accordingly, the protest was denied.

B-238356.2, Jul 17, 1990, 69 Comp.Gen. 604

PROCUREMENT - Contract Management - Contract Administration 1. Agency properly conducted a reprocurement limited to the defaulted awardee and the second low offeror under the prior solicitation, rather than making a sole-source award to the second low offeror, where the agency had an urgent requirement but there was sufficient time to solicit offers from these two known potential sources. PROCUREMENT - Bid Protests - Lobbying 2. Allegation that an offeror's failure to disclose expenditures for lobbying activities allegedly concerning the contract award requires rejection of its proposal is without basis where the alleged lobbying activities concern the awardee's grievance with respect to the government's termination of the prior contract, not the reprocurement award, and do not fall within the scope of the disclosure requirement.

Attorneys

Canaveral Maritime, Inc.:

Canaveral Maritime, Inc. protests the award of a contract to Leadermar, Inc. for layberth services under request for proposals (RFP) No. N00033-90 -R-4005, the reprocurement of a requirement which previously had been awarded to Leadermar under a contract which was terminated for default. Canaveral asserts that the reprocurement is "blatant auctioneering" and a "sham," and actually constitutes "a third best and final offer (BAFO) ... limited to the two offerors ... which submitted the lowest prices under the second BAFO for the original RFP"; that the Navy's conduct of the procurement was biased in favor of Leadermar and against Canaveral; and that Canaveral should have been awarded a sole-source reprocurement contract on the basis of Canaveral's revived and improved BAFO under the predecessor solicitation. Canaveral also contends that the Navy should have found Leadermar ineligible for award under the resolicitation because Leadermar failed to disclose that it had engaged in lobbying activity concerning the procurement.

We deny the protest.

The layberth services in question are for two SL-7 fast sealift ships (FSS) on the east coast of the United States. The layberth consists of a pier and supporting facilities (guards, fencing, alarms, roadways, lighting, communications, and utility services) located in an area of water of navigable depth and sufficient expanse to maneuver the ships for docking. Both the current and the prior RFP provide for technical proposals to be evaluated on a pass/fail basis and for award to the low- priced, technically acceptable offeror. The prior contract was awarded to Leadermar on November 8, 1988. Canaveral filed a number of protests and reconsideration requests concerning that procurement and award, both to our Office and to the Small Business Administration, all of which were dismissed or denied.

Under the prior contract, Leadermar was to construct a layberth facility and to commence providing layberth services on July 22, 1989. However, construction was delayed because Leadermar's landlord was unable to obtain certain dredging permits from the state of Florida, which were required in order to build the proposed facility. In May of 1989 the Navy extended the performance commencement date based on Leadermar's assurance that permit approval was imminent. In late November of 1989, the Navy learned that the state had not approved the requisite permits and that further proceedings would be necessary. After issuing a "show cause" letter notifying Leadermar that the Navy was contemplating terminating Leadermar's contract for default and receiving Leadermar's response, on December 12, 1989, the Navy terminated Leadermar's contract. Leadermar has consistently taken the position that this termination for default was improper; Leadermar's claim in this regard is currently being litigated before the Armed Services Board of Contract Appeals.

On December 22, in an effort to limit its liability for liquidated damages and reprocurement costs, Leadermar presented the Navy with a technical proposal for an alternate layberth site and requested that the Navy rescind the termination for default. After evaluation, the Navy determined that Leadermar's proposed alternate site was potentially acceptable. The Navy was also aware that Canaveral, proposing to construct a site with a 35-month lead time, had been unilaterally extending on a monthly basis its second low BAFO under the prior solicitation (including an offer to match Leadermar's BAFO price). After considering and rejecting as unduly restrictive the option of making a sole-source award to Canaveral, and also rejecting the option of rescinding the termination for default based on Leadermar's proposed alternate site, the Navy conducted an informal market survey and concluded that Leadermar and Canaveral were the only contractors which could satisfy the government's needs within the available time.

On January 8, 1990, after executing a justification and approval authorizing other than full and open competition on the basis of unusual and compelling urgency, the Navy issued the current reprocurement solicitation to Leadermar and Canaveral with a January 22 closing date, as amended. The new RFP contained a revised performance period from May 10, 1990, through May 9, 1995, versus the performance period of July 22, 1989, through July 21, 1994, under the prior solicitation. The new RFP also permitted the use of an interim layberth facility which was not required to satisfy all of the permanent layberth specifications, to be used until the permanent layberth facility became available. The RFP also added requirements for a plan of action and milestones, for identifying critical dates for completion of key milestones, and for providing progress reports. In addition, the RFP contained a revised price evaluation formula, designed to address an alleged deficiency which Canaveral had raised in one of its earlier protests.

On January 12, the Navy issued an amendment which reduced a 24-hour per day, 7-day per week access requirement to the layberth facility to permit restriction "in those circumstances (when) the acts of the U.S. Government may preclude access for limited periods of time." On January 19, Canaveral filed the first of its two protests concerning this reprocurement with our Office. /1/ On January 26, the Navy issued a determination and finding to permit award notwithstanding the protest on the basis of urgency. After evaluation of both offers, on February 2 the Navy awarded a contract to Leadermar as the low technically acceptable offeror.

The crux of Canaveral's protest is that the agency's decision to conduct a limited reprocurement competition was improper because Canaveral was entitled to a sole-source award based on its repeatedly revived, improved BAFO under the prior RFP. We disagree. While there are circumstances in which an agency properly may elect to award a reprocurement contract to the second low offeror under the original solicitation, in particular where there is a short time span between the original competition and the default, and the requirement is so urgent that there is insufficient time after the default to conduct a new procurement, DCX, Inc., B-232692, Jan. 23, 1989, 89-1 CPD Para. 55, there is no legal requirement that the agency do so. Federal Acquisition Regulation (FAR) Sec. 49.402-6 authorizes contracting officers, in accordance with the default clause (FAR Sec. 52.249-8), to use any terms and acquisition method deemed appropriate for the repurchase, provided that the repurchase is made at as reasonable a price as practicable, and competition to the maximum extent practicable is obtained. Aerosonic Corp., 68 Comp.Gen. 179 (1989), 89-1 CPD Para. 45. In view of the FAR goals of maximizing competition and repurchasing at the lowest practicable price, we generally view satisfying reprocurement needs through competition, rather than a sole source award, as appropriate. See TSCO, Inc., 65 Comp.Gen. 347 (1986), 86-1 CPD Para. 198; Master Security, Inc., B-235711 supra; United States Pollution Control, Inc., B-225372, Jan. 29, 1987, 87-1 CPD Para. 96.

We are of that view here, not only because this reprocurement action occurred approximately 14 months after the initial contract award, but also in light of the fundamental differences in the contract requirements. For example, the new solicitation allows for the use of a temporary layberth site which does not satisfy all requirements of the vessel (power supply, cargo handling, etc.), until the permanent location is ready; requires offerors to provide a plan of action and milestones, as well as identifying critical dates for completion of key milestones; requires the submittal of bi-monthly progress reports; and revises the method of price evaluation. Given these changed requirements, along with the passage of time, we find nothing improper with the contracting officer's determination to seek limited competition rather than make a sole-source award.

Canaveral's allegation that this reprocurement constituted an "illegal auction" is without foundation, as it is based on the false premise that Canaveral's prices were disclosed under its first protest. In fact, the only prices which were disclosed under that protest were Leadermar's, and Canaveral will not be heard to complain that it was somehow prejudiced by the disclosure of its competitor's prices. Further, any reprocurement involving competition after a termination for default is likely to entail an "auction" element, but there is nothing objectionable about that in view of the FAR requirement to obtain competition and the lowest practicable price. See TSCO, Inc., 65 Comp.Gen. 347, supra.

Canaveral's assertion that the reprocurement is merely a third round of BAFOs simply is contradicted by the record, which shows that an award already had been made under the prior solicitation, and it was only after approximately 14 months, subsequent to the awardee's contract being terminated for default, that the reprocurement solicitation in question was issued, covering a significantly different time period with changed requirements.

Canaveral's allegation that the agency was biased against it and towards Leadermar is unsupported by the record. The primary alleged indicia of bias are the "degraded" temporary layberth requirements, and the assertion that amendment No. 2, which permitted limited disruption of access, favored Leadermar's proposed site. Both specifications reflect the Navy's determination of how to accommodate its minimum needs. Because contracting officials are most familiar with the conditions under which it will use goods and services being solicited, they are in the best position to determine the agency's actual needs, and we will not question such a determination unless it is unreasonable so that the specification unduly restricts competition. New York Wire Co., B-235821, Sept. 19, 1989, 89-2 CPD Para. 246.

The interim facility requirements permitted the same reduction in required services for both offerors. The Navy states that the solicitations were drafted to satisfy all of its needs for a relatively short-term facility by calling for the capabilities usually found in commercial ports-of-call, world-wide, and requiring adequate safety requirements. Thus the interim facility specifications reasonably reduced those Navy requirements which were primarily significant for a long-term facility in order to achieve the Navy's goal of obtaining competition and minimizing expense for a temporary, short-term site.

Canaveral asserts that its temporary layberth facility is better equipped than Leadermar's, and at a bid protest conference asserted that its interim facility actually satisfied the permanent layberth specifications under the RFP. However, it is clear from both the agency report and conference comments and from Canaveral's conference comments that Canaveral's proposed interim facility does not fully satisfy all of the permanent layberth requirements. More important, even if Canaveral's interim facility came closer to satisfying the permanent layberth specifications than did Leadermar's facility, the Navy was still entitled to use relaxed specifications that it reasonably concluded would satisfy its minimum needs, in order to obtain competition. We find that the Navy's determination to relax the temporary layberth facility requirements does not establish bias.

The Navy states that amendment No. 2 was issued as the result of a call from Canaveral's counsel to the Navy, alleging shortcomings in the site that Canaveral believed Leadermar would propose, which was viewed by the Navy as an inappropriate attempt to force the elimination of Leadermar from the competition. In particular, Canaveral argued that the proximity of Leadermar's proposed layberth site to a future layberth site for Maritime Prepositioning Ships (MPS) would restrict Canaveral's ability to provide conforming (24-hour per day, 7-day per week) site service access during periods when MPS were off-loading ammunition. The Navy had been unaware of this possibility when it drafted the reprocurement RFP.

The Navy investigated and determined that the alleged MPS facility was not yet approved and was unlikely to be approved because of funding limitations, and that if the facility was approved the Navy could exert control over scheduling and execution of munitions offloading of MPS, synchronizing schedules of the two layberths to assure that they would not interfere with each other. Thereupon, the Navy determined that it could permit minimal access interruption, if necessary, without adversely affecting the FSS layberth facilities, in order to maximize competition. Without more, this determination cannot be said to reflect bias.

During the development of this protest, Canaveral raised, piecemeal, various ancillary issues and allegations concerning the Navy's conduct of this procurement. In each instance, Canaveral has asserted that an apparently reasonable action or determination evidences bias because the Navy did not avail itself of an alleged opportunity to sole-source the award to Canaveral or to eliminate Leadermar from the competition. This "evidence" of bias is premised on Canaveral's speculation that otherwise appropriate actions or determinations here must have been undertaken because of improper or suspect motives. Such speculative allegations do not constitute credible evidence of bias. See Institute of Modern Procedures, Inc., B-236964, Jan. 23, 1990, 90-1 CPD Para. 93; Protective Group, Inc./Protective Materials Co., Div., B-236975, Jan. 11, 1990, 90-1 CPD Para. 45; Corbin Superior Composites, Inc., B-236777.2, Jan. 2, 1990, 90-1 CPD Para. 2. Finally, Canaveral argues that Leadermar engaged in lobbying activities with respect to this procurement, which it failed to disclose as required under the applicable RFP lobbying activity disclosure certification, and that Leadermar's BAFO therefore should have been rejected. The certification in question requires offerors to certify that they have not used and will not use appropriated funds for the prohibited lobbying purposes of influencing or attempting to influence an officer or employee of an agency, a member of Congress, an officer or employee of Congress, or an employee of a member of Congress in connection with the award or the extension, continuation, renewal, amendment, or modification of any contract, and to disclose whether other than appropriated funds have been used for such purposes in connection with the contract being awarded. This clause is intended to carry out the lobbying restrictions of 31 U.S.C. Sec. 1352 (the Byrd Amendment) /2/which generally requires recipients of federal contracts and subcontracts of more than $100,000 to certify that they have not used appropriated funds for lobbying the government as aforementioned in connection with any contract, and to disclose any lobbying in connection with the specific contract being awarded which was financed with other than appropriated funds.

The RFP essentially reiterates the provisions of the statute, requiring offerors to make the requisite certification and to disclose any lobbying that an offeror conducted concerning this contract, using other than appropriated funds. The RFP provides that the certification is a prerequisite to award of the contract and sets forth a statutory civil penalty for failure to certify.

Both Canaveral and Leadermar executed the certification stating that they had not engaged in any lobbying activity covered by the clause.

The lobbying activity by Leadermar that the protester argues should have been disclosed is evidenced by two letters to the Navy from a congressman. The first letter, dated December 27, 1989, encloses a letter to the congressman from Leadermar's president which urges the Navy to rescind the termination for default based on Leadermar's proposed alternate site. The congressman's cover letter urges the Navy to give Leadermar's request reasonable consideration. The second letter to the Navy from the congressman is dated January 4, 1990, and encloses a letter to the congressman from Leadermar's counsel which asserts that the termination for default determination was unfair. The congressman's cover letter again requests that the Navy give the enclosed letter fair consideration.

In our view, neither letter indicates that Leadermar engaged in the kind of lobbying activity which is required to be disclosed under the RFP certification which implements the Byrd Amendment. The certification requires that an offeror disclose the expenditure of other than appropriated funds for lobbying activities with respect to this particular contract only. Here, both letters were written prior to the issuance of the solicitation at issue and both concern Leadermar's efforts to obtain rescission of the termination for default of a different, prior contract. Thus, since Leadermar's efforts to obtain congressional intercession were not directed at the award of the current contract, the activity was not required to be disclosed under the Byrd Amendment certification clause in this RFP.

The protest is denied.

/1/ We have merged the two protests filed by Canaveral and are addressing both in this decision.

/2/ Section 319 of Pub.Law 101-121, the Department of the Interior and Related Agencies Appropriations Act for Fiscal Year 1990, amended title 31 of the United States Code by adding section 1352, entitled "Limitation on use of appropriated funds to influence certain federal contracting and financial transactions." The section took effect with respect to any contracts entered into after December 23, 1989.