B-243051, Jun 28, 1991, 91-1 CPD 615

B-243051: Jun 28, 1991

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PROCUREMENT - Competitive Negotiation - Offers - Competitive ranges - Exclusion - Evaluation errors PROCUREMENT - Competitive Negotiation - Offers - Evaluation errors - Evaluation criteria - Application DIGEST: Protest is sustained where the General Accounting Office is unable to determine from the record that the agency's evaluation of protester's proposal and its exclusion of the protester from the competitive range were reasonable as the record includes only technical point scores and lacks contemporaneous evaluation documentation. Argues that its proposal was improperly evaluated and it was unreasonably excluded from the competitive range. The RFP also listed 15 specific items which an offeror was to address concerning the technical content of its proposal and its qualifications.

B-243051, Jun 28, 1991, 91-1 CPD 615

PROCUREMENT - Competitive Negotiation - Offers - Competitive ranges - Exclusion - Evaluation errors PROCUREMENT - Competitive Negotiation - Offers - Evaluation errors - Evaluation criteria - Application DIGEST: Protest is sustained where the General Accounting Office is unable to determine from the record that the agency's evaluation of protester's proposal and its exclusion of the protester from the competitive range were reasonable as the record includes only technical point scores and lacks contemporaneous evaluation documentation, including narratives listing the strengths, weaknesses, and risks of protester's proposal, which would support the technical scores received by the protester.

Attorneys

SM Property Management:

SM Property Management protests the exclusion of its proposal from the competitive range under request for proposals (RFP) No. 525-90 118N, issued by the United States Department of Housing and Urban Development (HUD) for area management broker services for HUD properties in the Tulsa, Oklahoma area. SM, one of the HUD contractors for these services in Oklahoma, argues that its proposal was improperly evaluated and it was unreasonably excluded from the competitive range.

We sustain the protest.

The RFP, issued on November 5, 1990, contemplated the award of an indefinite quantity, fixed-price contract for the performance of management and related services as outlined in the statement of work (e.g., property inspections, oversight of minor repairs, maintenance services, employment of subcontractors, payment of bills, and collection of rents). The RFP required each offeror to discuss its objectives in fulfilling the RFP's requirements, to describe the principal tasks or services to be performed, to outline its plans for management and coordination with HUD regarding status of performance, to describe its organization and staffing plan, to list prior and current relevant experience, to explain conflicting or multiple uses of its resources, and to provide cost or pricing data. The RFP also listed 15 specific items which an offeror was to address concerning the technical content of its proposal and its qualifications.

The RFP contained the following four evaluation factors and the maximum point values for each factor:

1. Demonstrated relevant experience in the management of single family, multifamily, and condominium properties (25);

2. Demonstrated ability to perform all of the services required by this solicitation (75);

3. Demonstrated ability to deal with the existing inventory of properties and to effectively manage turnover (10); and

4. Evidence that the proposed employees and equipment will enhance performance of the services required by this solicitation (10).

The RFP stated that an offeror's proposed price, although secondary to the technical and management factors, would be considered in determining the most advantageous proposal to HUD and that the award would be made on the basis of the most advantageous offer. The RFP provided that the award could be made to other than the lowest-priced offeror if a higher priced offeror was rated significantly higher in the technical and management areas.

Seven firms, including SM and Lancaster Company, the incumbent contractor, submitted initial technical proposals by the closing date of December 11. On December 18, prior to the initial evaluation of proposals, the agency, believing SM made a mistake in its price proposal, sent a letter to SM requesting verification of its price. SM responded on December 19, by increasing its price. The agency then evaluated the initial proposals. The three members of the agency's technical evaluation panel (TEP) individually scored each offeror's proposal for each technical evaluation factor. The individual evaluators' scores for each evaluation factor were averaged and then the average ratings for each evaluation factor were totaled to determine an overall consensus score. None of the offerors' initial proposals was rejected as technically unacceptable. letter dated January 10, 1991, the agency conducted written discussions with all offerors. In the letter sent to SM, the agency reiterated the four evaluation factors (experience, ability to provide service, ability to handle inventory and turnover, and office location) and placed an "x" by each of these factors to indicate that SM's proposal contained weaknesses in each of those areas and that the agency required additional information. The letter also stated that specific comments of the evaluators were that the proposal did not have enough information and did not show time frames and specifics. The agency did not raise any concerns with SM's price as part of these discussions. By letter dated January 17, SM provided additional information for each evaluation factor to the agency.

Following discussions, the three members of the TEP individually reevaluated all revised technical proposals for each evaluation factor using the same scoring methodology as previously described. A final overall consensus score was determined. Lancaster received the highest technical score of 119.7 of 120 points. SM received a significantly lower technical score of 71 of 120 points. After reviewing the technical scores of all seven offerors, the contracting officer, who served as the source selection authority, determined a point score cutoff of 100 for the competitive range. Lancaster and the next highest technically scored offeror (which received 102 of 120 points) were included within this narrowed competitive range. The agency sent rejection letters to the other five offerors, including SM, on February 6. Each of the two firms in the competitive range, which submitted significantly higher prices than SM, the overall low-priced offeror for this contract, submitted a best and final offer (BAFO). On February 13, the agency awarded the contract to Lancaster, the higher technically scored, higher-priced offeror. February 22, SM filed this protest challenging its exclusion from the competitive range.

The evaluation of proposals and the determination of what proposals are in the competitive range are largely matters of agency judgment and discretion. PRC Computer Center, Inc., 55 Comp.Gen. 60 (1975), 75-2 CPD Para. 35. That discretion is not unfettered, however, as competitive range determinations and proposal evaluations must be consistent with law and regulation and have a reasonable basis in the record. See, e.g., Howard Finley Corp., 66 Comp.Gen. 545 (1987), 87-2 CPD Para. 4. HUD's actions here do not meet that standard.

First, HUD's narrowing of the competitive range on the basis of just the technical point scores was improper. The law and implementing regulations require that a contracting officer consider cost or price in determining which proposals are in the competitive range. 41 U.S.C. Sec. 253b(d)(2) (1988); Federal Acquisition Regulation (FAR) Sec. 15.609. Accordingly, although a point rating system is an acceptable method for use in determining which proposals are in the competitive range, Potomac Research, Inc., B-182823, Apr. 29, 1975, 75-1 CPD Para. 265, an agency's use of point scores to eliminate proposals from the competitive range without any consideration of cost or price generally is improper unless the proposals have been found to be technically unacceptable. Bay Tankers, Inc., 69 Comp.Gen. 403 (1990), 90-1 CPD Para. 389. Here, the record contains no indication that the five firms eliminated from the competitive range on the basis of their point scores were found to be technically unacceptable or that cost was taken into account before the competitive range decision was made. /1/

Second, we find that SM's technical evaluation is not supported by the record. The record shows that the three TEP members individually scored each offeror's proposal for each technical evaluation factor. These individual scores were averaged and the average scores for each evaluation factor were totaled to determine a final overall consensus score. received the following average scores for each technical evaluation factor: 19 of 25 points for experience, 38 of 75 points for ability to perform services, 9 of 10 points for ability to handle inventory and turnover, and 5 of 10 points for office location. SM's final overall consensus score was 71 of 120 points, 29 points less than the 100 point cutoff for the competitive range.

While point scores are useful as guides to decisionmaking, they generally are not controlling because they often reflect the disparate subjective judgments of evaluators. See Bunker Ramo Corp., 56 Comp.Gen. 712 (1977), 77-1 CPD Para. 427, recon. denied, B-187645, Aug. 17, 1977, 77-2 CPD Para. 124. For this reason, FAR Sec. 15.612(d) (2) requires that the agency's evaluation of proposals be adequately supported by documentation showing the relative differences among proposals and their strengths, weaknesses, and risks in terms of the evaluation factors. See American President Lines, Ltd., B-236834.3, July 20, 1990, 90-2 CPD Para. 53; Universal Shipping Co., Inc., B-223905.2, Apr. 20, 1987, 87-1 CPD Para. 424, recon. denied, B-223905.3; B-223905.4, Aug. 4, 1987, 87-2 CPD Para. 125. In this case, other than providing raw technical scores, the agency has provided no contemporaneous evaluation documentation, including narratives listing the strengths, weaknesses, and risks of SM's proposal, from either the TEP or the contracting officer which would support the technical scores received by SM. /2/ For this reason, we are unable to determine whether the agency's evaluation of SM's proposal was reasonable. Additionally, as discussed below, the record suggests that the evaluation was arbitrary.

SM received 76 percent of the available points for experience and 90 percent of the available points for ability to handle inventory and turnover (the ability to manage and sell the housing inventory), but it received only 51 percent of the available points for ability to perform services. In our view, strong scores in experience for largely identical, previously performed management-type services and in ability to handle inventory and turnover would reasonably indicate that SM should have the ability to perform this contract. There is no explanation for SM's low score for the factor of ability to perform services. Further, the record reflects extremely divergent scores among the individual TEP members for this factor, which was worth a maximum of 75 points, the largest point total for any factor. TEP member "A" scored SM at 40 points, "B" scored SM at zero points, and "C" scored SM at 75 points, for an average score for this evaluation factor of 38 of 75 points (or 51 percent of the available points). Again, there is no written narrative by the individual TEP members explaining and supporting their individual judgments concerning SM's proposal.

In spite of the lack of contemporaneous evaluation narratives, the contracting officer in the agency report states that SM received a lower technical score because of alleged marginal performance by SM on a prior area management broker services contract. Rather than showing that SM's performance had been marginal, the evidence before us supports a conclusion that SM's performance was satisfactory. Under S- M's prior contract, the agency exercised an option for 2 years beyond the base year. SM has submitted a letter dated November 6, 1990, from a manager at HUD's Tulsa office, the same HUD office which is handling the current acquisition, thanking SM for the good job done over the previous 4 years and stating that "SM's service to HUD has been excellent and its input over the past 4 years has been immeasurable." The letter explained that the expiration of SM's prior contract was due to a reduction in the number of HUD properties and in no way reflected upon SM's prior performance. These statements contradict the contracting officer's statement that SM's performance under its prior contract was marginal. The record also contains annual evaluation documents of SM's performance under its prior contract which show satisfactory performance. The contracting officer, in fact, noted in one document that the annual reviews show "largely satisfactory performance." /3/

The contracting officer also suggests SM's low technical score reflects a lack of understanding of the contract requirements. The contracting officer asserts that there is a pattern of SM's submitting a low price in order to receive a contract award, and then seeking price increases through contract modifications. It is unclear how this was a consideration in the TEP evaluation, since the TEP was not given price information and again there is no documentation explaining the point scores awarded or where SM's proposal showed any lack of understanding of the work. In any event, the record shows that SM's prior contract was awarded with a monthly fee of $70 per property. By the end of SM's 4-year period of contract performance, its contract had been modified so that SM received a monthly fee of $155 per property. The record also shows that a significant portion of this increase ($65 per property per month) was due to the agency's inclusion of additional tasks under SM's contract and only a $20 per property per month increase actually was initiated by SM. Because the substantial portion of the total contract price increase under SM's prior contract was due to agency actions, the record does not support the agency's suggestion that SM engages in a pattern of underpricing, followed by post-award requests for price increases through contract modifications. If the agency was concerned that SM's price was unrealistically low and that SM would have been unable to perform at the price it offered, the agency should have conducted discussions with SM concerning this issue. For discussions to be meaningful, contracting agencies must advise offerors in the competitive range of deficiencies in their proposals and afford them the opportunity to correct the deficiencies by submitting revised proposals. FAR Sec. 15.610; Signal Corp., B-241849 et al., Feb. 26, 1991, 91-1 CPD Para. 218. Prior to the initial evaluation of proposals and prior to discussions, the agency asked SM to verify its price as it believed SM had made a mistake in its price proposal. During discussions, however, the agency never stated its concern with SM's price or offered SM the opportunity to explain why it believed it could perform at the price it offered. SM argues that its lower price is based on a drastic reduction in its travel costs for this contract and the use of previously purchased equipment which requires no new capital expenditure. Other than the general reiteration of the technical evaluation factors in the discussion letter, the agency never informed SM of specific deficiencies, if any, in its technical and price proposal.

We sustain the protest. By letter of today to the Secretary of HUD, we are recommending that the agency reopen discussions with all firms, including SM, that properly belong in the competitive range, conduct meaningful discussions with those offerors, and after submission of new BAFOs, evaluate BAFOs in accordance with the RFP's evaluation criteria, and properly document the evaluation with contemporaneous narrative explanations of the strengths, weaknesses, and risks concerning each offeror's proposal. After doing so, if Lancaster is no longer considered the most advantageous offeror, the agency should terminate Lancaster's contract for the convenience of the government and award the contract to the most advantageous offeror. We find that SM is entitled to recover its costs of filing and pursuing the protest. The firm should submit its claim for such costs directly to the agency. 4 C.F.R. Sec. 21.6(d)(1) (1991).

The protest is sustained.

/1/ Of the five firms eliminated from the competitive range, SM and two others offered prices below those contained in the two competitive range offers, and were, thus, possibly prejudiced by the agency's action.

/2/ In response to our request for narratives describing the strengths, weaknesses, and risks of each offeror's proposal, the agency stated that no narratives had been prepared by the TEP to support the technical ratings.

/3/ The contracting officer also states other reasons for SM's low technical score-- peer and public complaints, local investigations, a congressional inquiry, a lawsuit, and a temporary 30-day suspension by the agency from selling property. The temporary suspension is documented in the record, but the event appears to have been a single isolated incident related to an SM agent showing a property before it was listed. None of the other alleged performance problems is documented in the record and, in any event, there is no indication what information the TEP considered in evaluating past performance.