B-244653.2, Dec 23, 1991

B-244653.2: Dec 23, 1991

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Protest that agency improperly failed to exercise a contract option is dismissed since it involves a matter of contract administration not for consideration under our Bid Protest Regulations. 2. Allegation that solicitation is defective for failing to notify potential offerors of liability for employee health care benefits which are required by local law is denied where solicitation informs offerors of their general liability for all taxes and employee benefit requirements imposed by foreign government. Solicitation provisions are not ambiguous where. Protest is sustained where agency fails to include a preference in solicitation for qualified domestic firms in accordance with 22 U.S.C.A.

B-244653.2, Dec 23, 1991

DIGEST: 1. Protest that agency improperly failed to exercise a contract option is dismissed since it involves a matter of contract administration not for consideration under our Bid Protest Regulations. 2. Allegation that solicitation is defective for failing to notify potential offerors of liability for employee health care benefits which are required by local law is denied where solicitation informs offerors of their general liability for all taxes and employee benefit requirements imposed by foreign government; agency need not structure a solicitation to eliminate all risks for a contractor. 3. Solicitation provisions are not ambiguous where, read as a whole, solicitation clearly requires contractor to provide all vehicles it deems necessary to complete performance and to include all associated costs in the monthly rate bid for standard services. 4. Protest is sustained where agency fails to include a preference in solicitation for qualified domestic firms in accordance with 22 U.S.C.A. Sec. 4864 (West Supp. 1991).

Attorneys

U.S. Defense Systems, Inc.:

U.S. Defense Systems, Inc. (USDS) protests the terms of invitation for bids (IFB) No. S-508-FA-825-A, issued by the Department of State (DOS) for guard services for the United States Embassy in Kinshasa, Zaire. USDS protests DOS' decision not to exercise an option under an existing contract and challenges certain provisions of the solicitation.

We dismiss the protest in part, deny it in part, and sustain it in part.

On September 1, 1988, the Embassy awarded a guard services contract to Potomac Services Corporation. /1/ The contract provided for a base performance period to begin October 1, and included four 1-year options. In 1989, funding cuts of 20 percent were issued against all local guard contracts which necessitated adjustment of the contract. On July 31, 1991, the Embassy notified USDS that it would not exercise the option to extend the predecessor contract for another year. On August 2, the Embassy issued the subject solicitation. On August 15, USDS protested the issuance of the solicitation, arguing that the agency improperly failed to exercise USDS' option and that the terms of the solicitation failed to satisfy the agency's minimum needs, failed to inform offerors of potential liabilities for employee benefits, and were otherwise ambiguous. In its comments responding to the agency's report, USDS also challenged the failure of the solicitation to provide an evaluation preference for domestic firms under 22 U.S.C.A. Sec. 4864 (West Supp. 1991).

As an initial matter, we dismiss USDS' protest that the agency improperly issued a new solicitation rather than exercising an option under the predecessor contract. Contract options are exercised solely at the discretion of the government, and a contractor cannot compel an agency to exercise an option in its contract. California Shorthand Reporting, B-236680, Dec. 22, 1989, 89-2 CPD.Para. 584. Those who bid on contracts containing option provisions assume the risk that the agency may not exercise the option. Arlington Public Schools, B-228518, Jan. 11, 1988, 88-1 CPD.Para. 16.

USDS protests that the solicitation was unduly vague for failing to inform potential offerors of their liability under Zairian law to pay health care benefits for all local employees. In this regard, section H of the solicitation contained a provision entitled "Employee Salary Benefits" which stated:

"The Government shall fund and pay only those employee benefits included in the fixed prices or hourly rates, which the Contractor incurs while performing this contract. The Government, its agents, and employees shall not be part of any legal action or obligation regarding these benefits which may subsequently arise. Where local law requires that bonuses, specific minimum wage levels, premium pay for holidays, payments for social security, pensions, sick or health benefits, child care or any other benefit, the Contractor is responsible for payment of such costs in the fixed prices or hourly rates incorporated in the contract. ..."

USDS maintains that under Zairian law employees and their families are entitled to medical care at the expense of the employer and asserts that more than 33 percent of its past contract costs were expended for this purpose. USDS argues that the agency's failure to specifically notify potential offerors of this financial liability "amounts to the withholding of material facts necessary to bid."

While a contracting agency must give sufficiently detailed information in a solicitation to enable bidders to compete intelligently and on a relatively equal basis, there is no requirement that the solicitation be so detailed as to eliminate all performance uncertainties and risks. KCA Corp., B-236260, Nov. 27, 1989, 89-2 CPD. Para. 498. Risk is inherent in fixed-price contracts and the fact that the bidder, in computing its bid, must consider a variety of potential liabilities which may affect its anticipated costs does not itself render a solicitation defective. Westpac Serco, B-239203, July 23, 1990, 90-2 CPD. Para. 64. To the extent that a bidder is unsure of its anticipated costs in a fixed-price contract, it is the bidder's responsibility to investigate and project these costs and to allow for that risk in computing its bid. Id.

Here, we find that the solicitation reasonably put potential bidders on notice that they should investigate all potential financial liabilities with respect to all local laws and customs. Specifically, the solicitation put offerors on notice regarding their potential liability for employee benefits under local law and was sufficient to permit prospective bidders to compete intelligently and on a common basis. KCA Corp., supra.

USDS next protests that the solicitation contains conflicting provisions with respect to the requirement for vehicles to perform the contract. USDS notes that while section H advised offerors they would be required to supply any vehicles necessary to perform the contract, the clause titled "Vehicles" in section B was "reserved." USDS states that, based on its experience, vehicles are necessary to perform the contract's guard inspection requirements and complains that the solicitation improperly failed to provide an amortization schedule for charging such vehicles to the contract. In short, USDS argues that the solicitation is so ambiguous with respect to the requirement for vehicles that it must be canceled.

Where a dispute exists as to the meaning of solicitation provisions, our Office will resolve the matter by reading the solicitation as a whole and in a manner that gives effect to all of its provisions. Martin Contracting, B-241229.2, Feb. 6, 1991, 91-1 CPD. Para. 121. Applying this standard here, we find no defect in the solicitation provisions regarding the need for vehicles.

Section B "reserves" the section on vehicles because section B is the bidding schedule. Clearly, the agency did not want offerors to bid a separate price for vehicles; rather, the agency intended for offerors to include the costs of vehicles in the monthly rate for standard services, just as it expected offerors to do with regard to, for example, guard uniforms. Consistent with this, section H stated: "The contractor shall provide all vehicles necessary for the performance of this contract. ..." This provision places on the contractor the responsibility for determining what vehicles are necessary to perform the contract. It is up to the contractor to determine whether vehicles are required and, if so, the type and number necessary, and how the costs will be recovered. Given the language in this solicitation, we find no ambiguity regarding the requirement for vehicles.

USDS next protests that the solicitation fails to meet the government's minimum needs. Specifically, USDS maintains that the solicitation's reduced level of effort, in comparison to prior contracts, is "patently dangerous" given the "anarchic conditions now existing in Zaire" and is contrary to "Congressional intent" regarding embassy protection.

The agency acknowledges that subsequent to the issuance of this solicitation, civil unrest in Zaire has led to evacuation of much of the Embassy staff. The agency also states that while this has led to a postponement of the bid opening date, the requirements stated in the solicitation reflect the considered opinion of agency officials regarding the needs and competing priorities of the agency, and notes that if DOS subsequently determines that its needs have changed, it will amend the solicitation. In this regard, the relief requested by USDS of directing the agency to increase its stated requirements is beyond the scope of our bid protest function because it concerns DOS' policy judgment with respect to balancing its needs and allocating its available financial resources. See Travenol Laboratories, Inc., B-215739; B-216961, Jan. 27, 1985, 85-1 CPD. Para. 114.

In its comments on the agency report, USDS asserted that this solicitation did not provide a preference for domestic firms as required by 22 U.S.C.A. Sec. 4864 (West Supp. 1991). This statute provides that for guard services contracts exceeding $250,000 entered into after February 16, 1990, DOS is required to give preference to United States offerors that are price competitive with foreign offerors and are otherwise qualified to perform. /2/ Although DOS responded to the USDS comments, it did not respond to this issue. Nonetheless, the agency has set forth its position in this regard in other cases that we have recently considered, such as U.S. Defense Systems, Inc., B-245006.2, Dec. 13, 1991, 91-2 CPD. Para. ***, and Wackenhut Int'l, Inc., B-241594, Feb. 14, 1991, 91-1 CPD. Para. 172.

The DOS position is that the domestic preference requirements of 22 U.S.C.A. Sec. 4864 (West Supp. 1991) are met through synopsis of the procurement in the Commerce Business Daily (CBD) and allocation of greater weight to technical (rather than cost) factors in evaluating proposals, arguing that these measures favor the "generally superior technical expertise" of domestic firms. See Wackenhut Int'l, Inc., supra. In Wackenhut, we questioned whether synopsis in the CBD and allocation of greater weight to technical factors met the domestic preference requirement of 22 U.S.C.A. Sec. 4864 (West Supp. 1991) since that law contains a requirement for CBD publication separate from the preference requirement and the emphasis of technical evaluation factors over cost merely creates a preference for technically superior firms-- regardless of whether such firms are foreign or domestic. /3/ Id. In U.S. Defense Systems, Inc., supra, DOS responded to the concerns we expressed in Wackenhut, stating that it was considering adoption of a 6 percent price preference for United States companies to be included in solicitations for guard services abroad.

For the reasons discussed in Wackenhut, we believe the measures relied on by DOS to comply with the domestic preference requirements of 22 U.S.C.A Sec. 4864 (West Supp. 1991) are insufficient. That is, synopsis of the procurement in the CBD and allocation of greater weight to technical factors in evaluating proposals do not, in fact, provide preferences for domestic firms. Accordingly, we sustain the protest for failure to comply with the requirements of 22 U.S.C.A. Sec. 4864 (West Supp. 1991) and recommend that DOS amend the solicitation to include an appropriate preference for domestic firms as required by law. USDS is also entitled to recover its costs of filing and pursuing its bid protest, including reasonable attorneys' fees. 4 C.F.R. Sec. 21.6(d).

The protest is dismissed in part, denied in part, and sustained in part.

/1/ The record indicates that Potomac Services Corporation is a subsidiary of USDS.

/2/ The solicitation originally established the date of bid opening prior to the date on which USDS raised this issue. However, DOS has advised us that the bid opening date was extended and that offers had not been submitted at the time this issue was raised. Accordingly, the matter is timely under our Bid Protest Regulations. 4 C.F.R. Sec. 21.2(a)(1) (1991), as amended by 56 Fed.Reg. 3759 (1991).

/3/ In Wackenhut Int'l, Inc., supra, we did not sustain the protest because the issue of compliance with Pub.L. No. 101-246 was not timely raised.