B-243718.2, Dec 3, 1991, 71 Comp.Gen. 97

B-243718.2, Dec 3, 1991, 71 Comp.Gen. 97

PROCUREMENT - Bid Protests - Moot allegation - GAO review 1. Dismissal of protest as academic is affirmed where the corrective action promised by the procuring agency in response to the protest-- to amend the solicitation and reopen the competition-- is the precise relief that the General Accounting Office would have recommended, notwithstanding that the protester requested as relief the award of the contract, where the solicitation's award criteria are prejudicially ambiguous and the record shows that the protester is not otherwise entitled to award. PROCUREMENT - Bid Protests - GAO procedures - Preparation costs PROCUREMENT - Competitive Negotiation - Offers - Preparation costs 2. Protester is entitled to the award of its costs of filing and pursuing the protest, notwithstanding the agency's promise on the agency report due date of corrective action in response to the protest and the dismissal of the protest as academic, where the agency has, without explanation, taken nearly 5 months to perform the promised corrective action while allowing continued performance of an admitted improperly awarded contract.

Commercial Energies, Inc.-- Reconsideration and Declaration of Entitlement to Costs:

Commercial Energies, Inc. requests reconsideration of the dismissal of its protest of the award of a contract to Unigas Energy, Inc. under request for proposals (RFP) No. 578-43-91, issued by the Department of Veterans Affairs (VA), for the supply of natural gas to the VA medical center in Hines, Illinois. Commercial Energies requests that we sustain its protest, recommend award to it, and find that it is entitled to be reimbursed for its protest costs.

We affirm the dismissal of the protest as academic but find that the protester is entitled to the costs of filing and pursuing the protest, including attorneys' fees.

The RFP contemplated the award of a fixed-price contract with economic price adjustment for a base and 2 option years for the interruptible supply and delivery of natural gas. Delivery of the natural gas was required to be to the city gate at the interconnections of the respective pipelines of the Natural Gas Pipeline Company of America and the Northern Illinois Gas Company (NI-GAS). /1/ The RFP did not contain technical criteria for the comparative evaluation of proposals or solicit the submission of technical proposals and, thus, contemplated award to the low-priced, technically acceptable offeror. See Trados GmbH-- Recon., B-237919.3, Jan. 12, 1990, 90-1 CPD Para. 53.

The RFP stated estimated quantities (in therms) of natural gas and provided that the contractor would be required to furnish the government with all required natural gas supplies up to a stated maximum daily quantity. Offerors were requested to provide their service or markup charge per therm and a delivered city gate price per therm for the total quantity of the base year requirement, but were not required to submit offers for the option year requirements. Section B of the RFP provided that evaluation of offers would be based only on the offered markup; section B also indicated that city gate prices would be determined by reference to the applicable monthly Natural Gas Intelligence Price Index, and that the offerors' delivered city gate prices should be the indexed price plus applicable transportation and pipeline charges. /2/ Section M of the RFP, however, provided that.

"For evaluation purposes, the total estimated contract cost will be calculated by multiplying the estimated volumes by the sum of the offeror's city gate unit price per therm and NI-Gas's transportation cost, as adjusted for known, measurable, and (certain) changes, and totaling the results." /3/

VA received 13 offers, including those of Commercial Energies and Unigas. The agency, in evaluating proposals, evaluated only the offered markup prices. The agency conducted discussions only with Unigas concerning the firm's markup prices, and only Unigas submitted a best and final offer. Unigas was determined to be the low offeror on the basis of its markup price for the base year and was awarded a contract on April 11.

Commercial Energies protested, on April 19, within 10 calendar days of award, that VA had failed to evaluate proposals in accordance with the RFP requirements and that it was entitled to award as the low priced offeror.

On May 28, the agency report due date, VA informed us that the RFP evaluation and award criteria were deficient and that discussions improperly had been conducted only with the awardee. VA stated that it would amend the solicitation and reopen negotiations with the competitive range offerors, and, if an offeror other than Unigas was selected for award, terminate Unigas's contract for the convenience of the government. On May 31, we dismissed the protest as academic because of the agency's promise of corrective action in response to the protest. VA had previously authorized continued performance of the contract, and despite its recognition of the deficiencies in this procurement has allowed performance to continue pending the promised corrective action.

On reconsideration, Commercial Energies argues that since the relief it requested-- termination of Unigas's contract and award to Commercial Energies-- was not granted, its protest was not academic. /4/ We disagree because Commercial Energies was not entitled to award under any reading of the RFP evaluation criteria.

First, while Commercial Energies claims that its evaluated price would have been the lowest if option year pricing had been evaluated, the RFP neither required the submission of option prices nor provided for the evaluation of option prices. Thus, award could not properly be made to Commercial Energies under the evaluation approach argued for by the protester.

Second, the RFP was otherwise ambiguous as to the basis for evaluation such that one cannot determine which offeror would have been entitled to award. While Commercial Energies argues that the agency should have evaluated the offerors' city gate prices, asserting that it would have been in line for award if these prices had been evaluated, the RFP was ambiguous in regard to the basis for award. In one place, the RFP stated that offers would be evaluated based upon the offered markup prices and stated in another place that the basis for evaluation would be the delivered city gate prices. The record shows that, depending upon what interpretation is given to the RFP, different firms would be the offeror with the lowest evaluated price. /5/

Since it is unclear what the intended basis for award was or which firm offered the lowest price, we have no basis to find that either Commercial Energies or Unigas was entitled to award. Award should not be made under an RFP that is, as here, prejudicially ambiguous. See General Projection Sys., 70 Comp.Gen. 345 (1991), 91-1 CPD Para. 308. Had we originally decided this case on the merits, we would have recommended that the offerors be given the opportunity to compete for the agency's requirements under an amended, unambiguous solicitation-- the precise corrective action promised by the agency. Commercial Energies's protest was properly dismissed at that time as academic, based upon the agency's promises of corrective action. See Central Fed. Servs. Corp.-- Recon., B-242367.2, Feb. 14, 1991, 91-1 CPD Para. 175.

Nevertheless, we find that the protester is entitled to the award of its costs of filing and pursuing its protest under section 21.6(e) of our revised Bid Protest Regulations, 56 Fed. Reg. 3759 (1991) (to be codified at 4 C.F.R. Sec. 21.6(e)).

Generally, where we determine that a solicitation, proposed award or award does not comply with statute or regulation, we would find a meritorious protester to be entitled to its reasonable costs of filing and pursuing the protest; this is to relieve parties with valid claims of the burden of vindicating the public interests which Congress seeks to promote. Hydro Research Science, Inc.-- Claim for Costs, 68 Comp.Gen. 506 (1989), 89-1 CPD Para. 572. When an agency takes corrective action prior to our rendering a decision, we dismiss the protest as academic since the corrective action, in effect, resolves the protest. In such cases, under our Regulations prior to their recent amendment, we declined to find protesters entitled to the award of protest costs. See Teknion, Inc.-- Claim for Protest Costs, 67 Comp.Gen. 607 (1988), 88-2 CPD Para. 213. would award the protester its costs rather than dismiss the protest as academic, however, where the agency admitted error but could not provide the protester with the remedy that it was entitled to receive. See Hydro Research Science, Inc.-- Recon., B-228501.2, Apr. 29, 1988, 88-1 CPD Para. 418. Our current regulations provide that we may, in appropriate circumstances, declare a protester to be entitled to recover the reasonable costs of filing and pursuing its protest, including attorneys' fees, even where the procuring agency decides to take corrective action and this results in our dismissing the protest as academic.

Here, we find, and the agency admits, that procurement laws and regulations were violated in the award of a contract to Unigas. /6/ While the agency, on May 28, stated its intent to take corrective action-- to amend the solicitation and reopen negotiations-- it was not until October 17 that a resolicitation of this requirement, as a sealed bid procurement, was synopsized in the Commerce Business Daily, with a scheduled bid opening of November 26. The agency has offered no explanation for its delay in performing the promised corrective action, but has allowed continued performance of the improperly awarded contract. /7/

In our view, 5 months to issue a solicitation for the required gas supplies in performance of the agency's promised corrective action is not reasonable, particularly where the agency has offered no explanation for the delay. A protest is not resolved, where, as here, an agency does not timely implement the promised corrective action that caused us to dismiss a meritorious protest. A mere promise of corrective action, without reasonably prompt implementation, particularly in situations where a contract has been improperly awarded and the contractor is allowed to continue to perform the contract, has the obvious effect of circumventing the goal of the bid protest system established by 31 U.S.C. Sec. 3551 et seq. (1988)-- that is, the economic and expeditious resolution of bid protests. See 1 U.S.C. Sec. 3554. Accordingly, we find that Commercial Energies is entitled to its protest costs under section 21.6(e).

We declare Commercial Energies to be entitled to the costs of filing and pursuing the protest, including reasonable attorneys' fees. /8/ Commercial Energies should submit its certified claim for its costs directly to the agency within 60 working days of receipt of this decision.

/1/ The "city gate" is the connection between the interstate pipeline and local distributing companies.

/2/ The offer of city gate pricing based upon a common indexed price would be consistent with the use of a fixed-price contract with economic price adjustment, which contemplates the upward or downward revision of contract prices upon a stated contingency, i.e., changes in a specified index. See Federal Acquisition Regulation (FAR) Sec. 16.203-1(c). The RFP, while contemplating the award of a fixed-price contract with economic price adjustment, did not specify upon what contingency the contract price would be revised.

/3/ This appears to contemplate that city gate prices would not be based upon an index, such as the Natural Gas Intelligence Gas Price Index.

/4/ Commercial Energies also argues that it would be prejudiced by the agency's promised corrective action-- to reopen the competition for its requirements-- because its pricing and technical approach had been disclosed. The record does not indicate, and the agency denies, that Commercial Energies's pricing strategy or proposal have been disclosed. /5/ We will not disclose the offerors' respective pricing strategies since this requirement is to be recompeted. The record is unclear whether Unigas and Commercial Energies priced the delivery of gas to the city gate on the same basis.

/6/ Specifically, the record shows that the RFP, in violation of FAR Sec. 15.605(e), did not clearly state the basis upon which award would be made and that the agency, in violation of FAR Sec. 15.610(b), did not conduct meaningful discussions with the protester or other offerors in the competitive range. Absent the agency's promise of corrective action, we would have sustained Commercial Energies's protest and declared the protester to be entitled to its protest costs. 4 C.F.R. Sec. 21.6(d) (1991).

/7/ Unigas has been allowed to perform the improperly awarded contract, pursuant to VA's "best interest of the government" determination, made while the protest, filed within 10 calendar days of the award, was pending here. The agency did not notify our Office that it was allowing Unigas to proceed with performance; this violated the Competition in Contracting Act of 1984, which requires an agency to give advance notice to our Office of such authorizations. See 31 U.S.C. Sec. 3553(d)(2) (1988).

/8/ The award of protest costs to Commercial Energies does not include the protester's costs of filing and pursuing the request for reconsideration, which primarily sought the award of the contract. Kellam Scott, Esq., for the protester. Mark Chalpin, Esq., Department of Veterans Affairs, for the agency. Guy R. Pietrovito, Esq., and James A. Spangenberg, Esq., Office of the General Counsel, GAO, participated in the preparation of the decision.