B-238610.2, Jul 20, 1990, 90-2 CPD ***

B-238610.2, Jul 20, 1990, 90-2 CPD ***

PROCUREMENT - Competitive Negotiation - Discussion reopening - Propriety - Best/final offers - Competitive ranges DIGEST: 1. Agency properly determined that correction of omission of required manning levels from offeror's proposal as a result of ambiguous manning specifications in the solicitation requires reopening discussions with all offerors in the competitive range, since allowing correction effectively gives offeror an opportunity to make its proposal acceptable. PROCUREMENT - Competitive Negotiation - Discussion reopening - Auction prohibition 2. Despite disclosure by agency of competitors' prices, agency's decision to reopen discussions and request best and final offers after amending solicitation clarifying ambiguous manning requirement is not objectionable. Risk of possible auction is secondary to the need to preserve the integrity of the competitive procurement system.

Attorneys

FCC.O&M, Inc.:

FCC.O&M, Inc. a small business, protests the Department of the Air Force's decision to amend request for proposals (RFP) No. F38610-89 R0012, and request best and final offers (BAFO). FCC.O&M argues that by reopening discussions and requesting BAFOs, after improperly disclosing the competitors' prices, the Air Force has created an impermissible auction in contravention of Federal Acquisition Regulation (FAR) Sec. 15.610(d)(3).

We deny the protest.

BACKGROUND

The RFP was issued on May 31, 1989, as a total small business set aside, for transient and enroute aircraft support services at Charleston Air Force Base (AFB), South Carolina. The RFP contemplated awarding a firm, fixed-price contract for a 1-year base period with up to three 1-year options, and required offerors to submit separate technical and price proposals. Award was to be made to the low, technically acceptable offeror.

Six offerors, including FCC.O&M and the incumbent contractor, Sterling Services Inc., submitted offers by August 18, the extended date for receipt of initial proposals. Following discussions, the Air Force issued amendment No. 3 to the RFP on November 20, which included a manning chart establishing a mandatory work schedule consisting of a 7-day work week, with three 8-hour shifts each day: midnight to 8 a.m. (grave shift); 8 a.m. to 4 p.m. (day shift); and 4 p.m. to midnight (swing shift). Amendment No. 3 also established a minimum manning requirement for the four labor categories required during each shift. /1/ The chart contained the words "ONE SERVICER OVERLAP" immediately above the hours of 11 a.m. to 7 p.m. on Fridays and Saturdays. Offerors were required to submit a separate chart with their technical proposals indicating the minimum number of personnel they intended to have on duty for each of the labor categories on each shift during a normal week. The Air Force issued amendment No. 4 on November 28, requesting BAFOs by December 12.

On December 19, the contracting officer determined that although FCC.O&M had submitted the low offer, FCC.O&M was nonresponsible because it offered manning levels below the minimum requirements of the RFP. The contracting officer referred the nonresponsibility determination to the Small Business Administration (SBA) for consideration under the SBA's certificate of competency (COC) proceedings. On February 7, 1990, the SBA issued a COC to FCC.O&M. On February 13, Sterling filed a protest in our Office alleging that FCC.O&M did not offer the minimum manning required under the RFP. /2/

In the course of preparing the administrative report to our Office on Sterling's protest, the Air Force determined that the manning specified in the RFP for Friday and Saturday coverage was ambiguous because the "ONE SERVICER OVERLAP" requirement during the hours of 11 a.m. to 7 p.m. was subject to two reasonable interpretations. According to the Air Force, the chart could be interpreted to require a total of seven service workers over two 8-hour (day and swing) shifts including the "ONE SERVICER OVERLAP," as FCC.O&M proposed. On the other hand, the Air Force interpreted the chart to require a total of eight servicers over the two shifts including the overlap servicer, as Sterling proposed. Since the Air Force actually required a total of eight servicers during the two shifts, and it determined that the Friday and Saturday "ONE SERVICER OVERLAP" requirement was subject to different reasonable interpretations, /3/ the Air Force decided to clarify its requirement by amending the RFP.

On March 12, the Air Force issued amendment No. 5 to the RFP, specifying that the "ONE SERVICER OVERLAP" from 11 a.m. to 7 p.m. on Fridays and Saturdays required an additional servicer to support the four servicers scheduled during the day shift and the three servicers scheduled during the swing shift on those 2 days, for a total of eight servicers. Amendment No. 5 also requested revised technical and price proposals by March 29.

On March 19, FCC.O&M received a copy of the Air Force's letter informing our Office that amendment No. 5 had been issued correcting the apparent ambiguity in the manning requirement, thereby rendering Sterling's protest moot. /4/ A copy of the letter was also sent to Sterling. Attached to each of the letters was a copy of the contracting officer's "Statement of Facts and Findings" relevant to Sterling's protest. Paragraph 6 of the contracting officer's statement identified FCC.O&M as the apparent successful offeror and disclosed the total price FCC.O&M offered for the base period and the 3 option years ($2,418,6-72); paragraph 7 identified Sterling as the second low offeror and disclosed its total price ($2,601,2 -46). FCC.O&M filed its protest in our Office on March 27.

ANALYSIS

The protester initially agrees that the manning requirement was ambiguous and that, if prices had not been disclosed, reopening discussions would be appropriate. The protester alleges, however, that by reopening discussions and requesting BAFOs after improperly disclosing prices, the Air Force is creating an impermissible auction in violation of FAR Sec. 15.610(d)(3). In essence FCC.O&M argues that prevention of an auction takes precedence over the requirement to reopen discussions based on the clarified manning requirement.

Alternatively, FCC.O&M asserts that while it did not price the 16 hours of manning per week that the Air Force requires, its price for the omitted hours can be calculated exactly, using only the RFP and FCC.O&M's proposal as submitted. Based on these calculations, FCC.O&M argues that the effect of amendment No. 5 is to increase its price by less than $50,000, which is less than 25 percent of the price difference between FCC.O&M's and Sterling's prices. Thus, according to FCC.O&M, the omission is analogous to a minor irregularity in its proposal, which the Air Force should adjust to reflect the additional 16 hours per week, and award the contract to FCC.O&M at the modified price without further discussions.

In its comments on the conference on the protest, FCC.O&M analogizes its position to cases where adjustments to prices were allowed to correct a bid mistake; /5/ to compensate a contractor for work performed but omitted from its bid due to ambiguous specifications; /6/ or to compensate a subcontractor for additional costs incurred as a result of a government order. /7/

The Air Force states that award could not be made to FCC.O&M without further discussions since its proposal was technically unacceptable as it did not meet the minimum manning required under the RFP. The Air Force further states that the change made by amendment No. 5 is material since it affects the offerors' understanding of the manning requirement, which is critical to pricing and to the successful performance of the contract. The Air Force concludes that under these circumstances, FAR Sec. 15.606- (a) requires that discussions be reopened with all offerors.

Discussions occur when an offeror is given an opportunity to revise its initial offer or to provide information essential for determining the acceptability of its offer. FAR Sec. 15.601; Thermal Reduction Co., B-236724, Dec. 7, 1989, 89-2 CPD Para. 527. Here, it is undisputed that FCC.O&M submitted a proposal that failed to provide the minimum manning required to perform the contract, and that any communication solely with FCC.O&M would be for the purpose of giving the protester the opportunity to make its proposal acceptable. See Federal Data Corp., 69 Comp.Gen. 150 (1990), 90-1 CPD Para. 104. Thus, in our view, giving FCC.O&M an opportunity to correct the omission in its proposal would constitute discussions.

We are not persuaded by the protester's argument that the omission in its proposal is analogous to a minor irregularity or mistake which can be corrected by mere clarification rather than reopening discussions. support of its position, FCC.O&M provided the computerized spreadsheet it submitted with its BAFO, revised to reflect the addition of the 16 hours FCC.O&M omitted from its proposal and an explanation of the required mathematical calculations. According to the protester, all that is necessary to price the omitted 16 hours is to add the equivalent of 0.4 of a work year /8/ to the number of servicer hours FCC.O&M proposed during the swing shift in its BAFO; holiday and vacation time; and "FICA, FUTA, SUTA, and W/C ... business tax, insurance, and markup overhead plus profit" at a combined percentage rate, to arrive at an approximate hourly rate, then multiply that approximate figure times the number of weeks in the contract approximately 195. According to the protester, all elements of the calculations are ascertainable from the spreadsheet submitted with its BAFO; where the figure does not appear on the spreadsheet (e.g., markup percentage), FCC.O M states, it is "easily calculated from the figures on the sheet."

Even assuming that the protester's calculations are correct, we do not agree that omission of the 16 hours per week from FCC.O&M's proposal can be corrected through a request for clarification, without reopening discussions. As distinguished from discussions, a request for clarification is merely an inquiry to an offeror for the purpose of eliminating minor irregularities, informalities, or apparent clerical mistakes in its proposal. See FAR Sec. 15.607; Corporate Am. Research Assocs., Inc., B-228579, Feb. 17, 1988, 88-1 CPD Para. 160. Clarification does not give the offeror the opportunity to revise or modify its proposal, except to the extent that correction of apparent clerical mistakes results in a revision. FAR Sec. 15.601. Here, correction of FCC.O&M's proposal would result in price revisions unrelated to any clerical error, and is necessary to determine the acceptability of FCC.O&M's proposal. The fact that, according to FCC.O&M's calculations, the price impact is relatively small is not dispositive, given the agency's conclusion that the additional manning is essential to successful performance of the contract.

Since any adjustment to FCC.O&M's proposal to include the additional manning would constitute discussions with FCC.O&M, the Air Force must also conduct discussions with the other offerors in the competitive range and allow them to revise their proposals if they so choose. See 10 U.S.C. Sec. 2305-(b)(4) (1988); Motorola, Inc., B-225822, 66 Comp.Gen. 519, June 17, 1987, 87-1 CPD Para. 604. This rule applies even where, as here, discussions are reopened after an initial selection is made, including where the post-selection negotiations do not directly affect the offerors' relative standing, because all offerors are entitled to equal treatment and an opportunity to revise their proposals. PRC Information Sciences Co., 56 Comp.Gen. 768 (1977), 77-2 CPD Para. 11. Thus, we have no objection to the Air Force's decision to amend the RFP and allow all offerors in the competitive range an equal opportunity to submit revised proposals conforming to the clarified manning requirement. /9/

Relying primarily on American Elec. Laboratories, Inc., 65 Comp.Gen. 62 (1985), 85-2 CPD Para. 545, FCC.O&M contends that reopening discussions is improper because it will result in an impermissible auction. In the case FCC.O&M cites, the protester sought to correct a mistake in its price proposal before award had been made to another offeror, but after discussions had been completed and the proposed contract price announced; correcting the mistake would have required reopening discussions. Because the offerors' prices had been revealed, we concluded that, instead of reopening discussions, it was preferable to allow the proposed award to proceed without giving the protester an opportunity to correct its alleged mistake.

In American Elec. Laboratories, Inc., it was clear that the proposed award would meet the government's needs; here, in contrast, without correction of the omission from FCC.O&M's proposal-- which may only be done through reopening discussions-- award of a contract to FCC.O&M would not meet the government's needs. In these circumstances, we think that preserving the integrity of the competitive system through reopening discussions clearly takes precedence over the risk of an auction due to disclosure of the offerors' prices. See Contact Int'l Corp., B-237122.2, May 17, 1990, 90-1 CPD Para. 481. Further, we think that the Air Force's clarification of its manning requirement, which will require price revisions, and the shortened performance period, will serve to lessen any effect of the prior disclosure of total prices in this case.

FCC.O&M also argues that by improperly releasing its total price to Sterling, the Air Force gave that firm a competitive advantage because Sterling can now reconstruct FCC.O&M's manning levels and determine its pricing methodology. According to the Air Force, the information in the contracting officer's statement provides no insight into the cost elements, pricing strategies or the manning levels of the competing proposals. In fact, the Air Force argues, the offers were based on different interpretations of the government's requirements and with clarification of the manning requirement, total prices can be expected to change. We have reviewed FCC.O&M's submissions and the information contained in Sterling's February 13, 1990, protest, and conclude that nothing in the record indicates that the disclosure of Sterling's and FCC.O&M's total prices revealed the competitors' manning levels, staffing strategies, or pricing methodology. /10/ The protest is denied. /1/ For example, during the day shift on Fridays, the chart required the following personnel to be on duty: one program manager, one shift leader, one worker, and four servicers; during the swing shift on Fridays, the chart required two shift leader/workers, and three servicers. During the day shift on Saturdays, the chart required one shift leader, one worker, and four servicers; during the swing shift on Saturdays, the chart required two shift leader/workers and three servicers.

/2/ Subsequently, on February 26, the contracting officer determined that the issue raised by the insufficient manning levels offered by FCC.O&M was a matter of technical acceptability which should have been resolved through discussions, rather than a matter of responsibility.

/3/ The total number of servicers proposed by the six offerors for the Friday and Saturday day and swing shifts ranged from six to nine servicers.

/4/ Based on the reopening of negotiations, Sterling withdrew its protest on March 27, 1990.

/5/ FCC.O&M cites Selland Constr., Inc., B-201701.2, May 19, 1981, 81-1 CPD Para. 383, where we allowed a correction to a low bid where the pricing pattern and documents submitted with the bid established the existence of a mistake and the bid actually intended.

/6/ WPC Enterprises, Inc. v. United States, 323 F.2d 874 Ct. Cl. 1963.

/7/ Folk Construction Co., Inc., v. United States, 2 Cl. Ct. 681 (1983) where the court applied the rule of contra proferentem to strictly construe an ambiguous contract erm against the government as the drafter of the document.

/8/ According to the protester, a work year represents 40 hours per week for 1 year. Thus, 16 hours equals 16/40, or 4/10 (0.4) work years.

/9/ In fact, by amending the RFP and requesting BAFOs, the Air Force, as the author of the defect in the manning specification, is clarifying the RFP to avoid precisely the situations in WPC Enterprises and Folk Construction, supra, cited by the protester i.e., binding the successful offeror to performing under ambiguous specifications.

/10/ In its protest, Sterling alleged that FCC.O&M offered "5,636.8 hours less that the production hours required by the solicitation." Sterling allegedly based its figure on its estimate that FCC.O&M proposed only 7 hours per person per shift rather than the required 8 hours per person per shift. A review of the record indicates, however, that Sterling's estimate is inaccurate as compared with the Air Force's estimate of FCC.O&M's omitted labor hours.

The protest is denied.

/1/ For example, during the day shift on Fridays, the chart required the following personnel to be on duty: one program manager, one shift leader, one worker, and four servicers; during the swing shift on Fridays, the chart required two shift leader/workers, and three servicers. During the day shift on Saturdays, the chart required one shift leader, one worker, and four servicers; during the swing shift on Saturdays, the chart required two shift leader/workers and three servicers.

/2/ Subsequently, on February 26, the contracting officer determined that the issue raised by the insufficient manning levels offered by FCC.O&M was a matter of technical acceptability which should have been resolved through discussions, rather than a matter of responsibility.

/3/ The total number of servicers proposed by the six offerors for the Friday and Saturday day and swing shifts ranged from six to nine servicers.

/4/ Based on the reopening of negotiations, Sterling withdrew its protest on March 27, 1990.

/5/ FCC.O&M cites Selland Constr., Inc., B-201701.2, May 19, 1981, 81-1 CPD Para. 383, where we allowed a correction to a low bid where the pricing pattern and documents submitted with the bid established the existence of a mistake and the bid actually intended.

/6/ WPC Enterprises, Inc. v. United States, 323 F.2d 874 Ct. Cl. 1963.

/7/ Folk Construction Co., Inc., v. United States, 2 Cl. Ct. 681 (1983) where the court applied the rule of contra proferentem to strictly construe an ambiguous contract erm against the government as the drafter of the document.

/8/ According to the protester, a work year represents 40 hours per week for 1 year. Thus, 16 hours equals 16/40, or 4/10 (0.4) work years.

/9/ In fact, by amending the RFP and requesting BAFOs, the Air Force, as the author of the defect in the manning specification, is clarifying the RFP to avoid precisely the situations in WPC Enterprises and Folk Construction, supra, cited by the protester i.e., binding the successful offeror to performing under ambiguous specifications.

/10/ In its protest, Sterling alleged that FCC.O&M offered "5,636.8 hours less that the production hours required by the solicitation." Sterling allegedly based its figure on its estimate that FCC.O&M proposed only 7 hours per person per shift rather than the required 8 hours per person per shift. A review of the record indicates, however, that Sterling's estimate is inaccurate as compared with the Air Force's estimate of FCC.O&M's omitted labor hours.