B-244612.2, Nov 29, 1991

B-244612.2: Nov 29, 1991

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DIGEST: Protest that agency should not have rejected low quotation for urgently needed boiler repair services and awarded contract based on higher quotation is denied where protester's low quotation took exception to deadline for completion of work. There was no need to allow the protester to compete based on those provisions which did not make it easier to meet the deadline but rather only increased the financial risk to the contractor. The justification explains that the boiler repair services were urgently needed so that the boiler would be available by August 15. This was later extended to June 11. The boiler was required to be repaired by August 1. The Navy informed the firm that its quotation was accepted.

B-244612.2, Nov 29, 1991

DIGEST: Protest that agency should not have rejected low quotation for urgently needed boiler repair services and awarded contract based on higher quotation is denied where protester's low quotation took exception to deadline for completion of work. Although after rejecting protester's quotation as unacceptable the agency added provisions to the contract-- permitting a reduction of the contract price and providing for liquidated damages-- there was no need to allow the protester to compete based on those provisions which did not make it easier to meet the deadline but rather only increased the financial risk to the contractor.

Attorneys

Great Atlantic Boiler Services, Inc.:

Great Atlantic Boiler Services, Inc. protests the award of a contract to Shriver (Red) Boiler Repair Service under request for quotations (RFQ) No. N00612-91-Q-0261, issued by the Navy for repair of a mobile boiler used by the Charleston Naval Shipyard to support docked Navy submarines.

We deny the protest.

The Navy reports that the boiler needed to be repaired in a timely manner in order to avoid work stoppages that would cause delays in the departures of Navy submarines SSBN 671 and SSBN 626. As a result of the urgent need for the boiler repair, the contracting agency prepared a justification for using other than full and open competitive procedures due to an unusual and compelling urgency as required by the Competition in Contracting Act of 1984 (CICA) 10 U.S.C. Sec. 2304(c)(2) (1988). The justification explains that the boiler repair services were urgently needed so that the boiler would be available by August 15, 1991, in order to meet the overhaul schedules of SSBN 671 and SSBN 626. According to the justification, since funding for the repair became available in April 1991 and since the contractor needed 10 weeks lead time to obtain materials and 1 month to complete the repairs, time did not permit the requirement to be issued under full and open competitive procedures.

On May 23, the Navy issued the RFQ to three firms. It initially required the submission of quotations by May 30; this was later extended to June 11. Under the solicitation, the boiler was required to be repaired by August 1.

Two firms submitted quotations, Great Atlantic, at $256,831, and Shriver, at $548,318.85. Due to its low price, the Navy decided to award the contract to Great Atlantic. By letter of June 14, the Navy informed the firm that its quotation was accepted. Subsequently, Great Atlantic informed the Navy that the firm's quotation included the following qualification:

"DUE TO LEAD TIME REQUIRED BY ENVIRONMENTAL PROTECTION AGENCY FOR ASBESTOS REMOVAL AND TUBE DELIVERY FROM MANUFACTURER, WE WOULD REQUIRE 120 DAYS TO COMPLETE JOB."

The Navy calculated that 120 days for performance of the contract would result in completion on October 22, more than 80 days after the August 1 completion date required by the solicitation. According to the Navy's contract negotiator, on June 14, she informed Great Atlantic that if the firm could not complete the contract by August 1, the notice of award would be rescinded and, in reply, Great Atlantic stated that neither it nor any other firm could complete the contract by that date. On June 18, the contracting officer rescinded the award notice due to Great Atlantic's inability to complete the contract by August 1.

By letter of that same date, the Navy informed Shriver that a contract would be awarded to the firm based on its quotation of $548,318.85 subject to the following conditions:

"(1) In the event that the award price is found by DCAA (Defense Contract Audit Agency) to be deficient, the contractor agrees to a downward adjustment as may be negotiated.

(2) A reduction of $2,500 per day will be deducted from the contract award price for each day the delivery is not met."

Shriver accepted the contract with the additional terms.

On June 19, Shriver asked the Navy for a letter stating that it would be detrimental to the Navy if repair of the boiler could not be completed by August 1. The purpose of that letter was to assist Shriver in obtaining an asbestos removal permit from the South Carolina Department of Health and Environmental Control in 1 to 2 days instead of the 2 weeks that would normally be required. The Navy sent to Shriver a letter that stated:

"Requested that you obtain your Asbestos Removal Permit in the shortest time frame possible to expedite the retubing of the #1 Mobile Boiler. The boiler must be completed by 1 August 1991."

After the protest was filed, the Navy, pursuant to 31 U.S.C. Sec. 3553(d)(1), instructed Shriver to stop performance of the contract pending a decision on the protest. On July 11, the Navy executed a determination required by 31 U.S.C. Sec. 3553(d)(2)(ii) to allow performance of the contract notwithstanding the protest due to urgent and compelling circumstances. The Navy reports that the contract was completed on August 16. According to the agency, even allowing 12 days delay due to the temporary stay in performance, Shriver completed the contract 4 days late and, as a result, the contract price was reduced $10,000 in accordance with the liquidated damages provision.

Great Atlantic argues that the Navy improperly awarded the contract to Shriver based on terms different than those announced in the solicitation without giving it an opportunity to compete under the new provisions. The new terms which Great Atlantic refers to include the two provisions in the contract allowing a downward adjustment in the contract price and providing for liquidated damages. The protester also argues that the Navy improperly amended the solicitation by assisting Shriver in obtaining an asbestos removal permit on an expedited basis. Great Atlantic also maintains that the Navy was required to hold discussions with it because the award to Shriver did not result in the lowest overall cost to the government.

We think that the Navy properly rejected Great Atlantic's quotation and awarded a contract to Shriver that included the disputed provisions. First, Great Atlantic's quotation was unacceptable. In the face of the explicit statement in Great Atlantic's quotation that it could not meet the RFQ's August 1 deadline and considering the firm's subsequent oral representation to the same effect, and given the urgency of the requirement, we think the Navy reasonably rejected Great Atlantic's quotation. See Southeastern Chiller Servs., Inc., B-243158, June 24, 1991, 91-1 CPD Para. 598.

In addition, under these circumstances where Great Atlantic's quotation explicitly took exception to the August 1 deadline and the firm orally reiterated that it could not meet that deadline, the Navy was not required to hold discussions with Great Atlantic regarding its quotation or otherwise delay the award based on the possibility that Great Atlantic would later agree to meet the deadline. As we indicated earlier, under CICA an agency may use other than competitive procedures and limit the number of sources solicited, where, as here, the agency's needs are urgent. 10 U.S.C. Sec. 2304(c)(2). Underlying this policy is the simple fact that the government often needs to procure items quickly to meet its compelling military needs in the interest of national defense. In our view, it follows that an agency which can award a contract based on less than full and open competitive procedures under the urgency exception can also dispense with discussions under this exception by awarding a contract to the firm that submitted the most advantageous initial proposal or, as in this case, that submitted the only acceptable quotation. Raytheon Co., 70 Comp.Gen. 74 (1990), 90-2 CPD Para. 384; recon. denied Raytheon Co.-- Recon., B-240333.2, Mar. 28, 1991, 91-1 CPD Para. 334. /1/

In any event, no useful purpose would have been served by holding discussions with Great Atlantic and giving the firm an opportunity to submit a quotation based on the payment provisions included in Shriver's contract. Those provisions-- which allowed a downward adjustment in the contract price and liquidated damages-- did not waive the August 1 deadline and would not have made it easier for Great Atlantic or any other offeror to meet that deadline. Although the protester argues that these provisions drastically altered the "financial risk of the contract," we do not see how a contract with Great Atlantic based on those provisions could have resulted in a reduced risk for the firm. /2/ On the contrary, the two provisions increased the financial risk to Shriver and would have done the same to Great Atlantic. Under the circumstances, we do not see how Great Atlantic was prejudiced by not being permitted to compete for the contract including these provisions.

Great Atlantic also argues that the solicitation "implicitly" included a requirement for a 10-day notification period prior to authorizing asbestos removal and the Navy's letter to Shriver to assist the firm in expediting the environmental permit process waived that requirement. The solicitation included no requirement for a 10-day notification period prior to asbestos removal. Under the circumstances, by providing assistance to allow Shriver to expedite the permit process, the Navy did not modify or waive any provision of the solicitation as the protester argues. Although writing the letter for Shriver may have assisted the firm in performing the contract, the Navy's actions were not inconsistent with any solicitation provision.

The protest is denied.

/1/ The protester argues that Federal Acquisition Regulation (FAR) Sec. 15.610 required the Navy to hold discussions because the award to Shriver did not result in the lowest overall cost to the government. However, that FAR provision was amended, effective August 22, 1991. See Federal Acquisition Circular No. 90-7, Aug. 22, 1991. Under the currently applicable FAR Sec. 15.610, for the Department of Defense, the Coast Guard and the National Aeronautics and Space Administration award may be made without discussions to other than the lowest cost offeror provided the intent to award without discussions is stated in the solicitation and the contracting officer determines that discussions are not necessary. Here, the solicitation reserved to the agency the right to award without discussions; under the circumstances, the award to other than the lowest cost offeror without discussions is no longer prohibited by FAR Sec. 15.610.

/2/ Great Atlantic argues that the provision allowing a price reduction could have encouraged an offeror like it to increase its price in order to afford a larger crew and more overtime in order to meet the August 1 deadline. First, we do not understand how a clause which provides for a "downward adjustment" in price would encourage a price increase. Nevertheless, contrary to this current position that the deadline could be met with a larger crew and overtime, in Great Atlantic's quotation and in its subsequent conversation with the Navy's contract negotiator (and, in fact, in its initial protest to this office), Great Atlantic stated that it could not meet the August 1 deadline because of the time needed for an environmental permit and for tube delivery. Under the circumstances, we think that the Navy reasonably concluded that no useful purpose would be served by discussions with Great Atlantic regarding the only deficiency in its proposal-- its failure to indicate that it could meet the required delivery date.