Matter of: Waste Management Environmental Services, Inc. File: B-252553 Date: July 12, 1993

B-252553: Jul 12, 1993

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Cancellation of the solicitation is not improper. PROCUREMENT Specifications Minimum needs standards Competitive restrictions Design specifications Justification Protest alleging that solicitation requirement for soil washing using a water-only system is unduly restrictive of competition is denied where there has been no showing that competition for the requirement is restricted in any way and where the procuring entity has shown that the alleged restriction is necessary to meet its needs. The Morrison-Knudsen contract was terminated and the RFP canceled.[3] Westinghouse stated at that time that the cancellation was based upon its "investigation of all the facts and circumstances surrounding this procurement.".

Matter of: Waste Management Environmental Services, Inc. File: B-252553 Date: July 12, 1993

PROCUREMENT Competitive Negotiation Requests for quotations Cancellation Justification Minimum needs standards Where solicitation issued by procuring entity on behalf of the Department of Energy contemplated the award of a contract which would allow the successful offeror to use non-hazardous chemicals to demonstrate its ability to remove metals, radioactivity, and organic contaminants from soil particles, and procuring entity later determines that its needs could best be met through entering into a contract requiring the contractor to demonstrate its ability to "wash" the soil using a water-only system, cancellation of the solicitation is not improper. PROCUREMENT Specifications Minimum needs standards Competitive restrictions Design specifications Justification Protest alleging that solicitation requirement for soil washing using a water-only system is unduly restrictive of competition is denied where there has been no showing that competition for the requirement is restricted in any way and where the procuring entity has shown that the alleged restriction is necessary to meet its needs.

Attorneys

DECISION Waste Management Environmental Services, Inc., protests the cancellation of request for proposals (RFP) No. W-254322-LW (254322) issued by Westinghouse Hanford Company, a management and operations (M&O) contractor, on behalf of the Department of Energy. The protester also challenges as unduly restrictive certain terms of RFP No. W-322846-LW (322846), subsequently issued by Westinghouse.[1]

We deny the protest.[2]

BACKGROUND

Westinghouse issued RFP No. 254322 on March 31, 1992 seeking proposals to provide services and equipment "to demonstrate the ability to use wet physical separations processes to remove metals, radioactivity, and organic contaminants from soil particles . . . to acceptable cleanup or release levels. . . ." The RFP contained two phases of soil processing at the designated Hanford site. The first phase consisted of a "treatability test" to demonstrate the ability to process up to 300 cubic yards of soil. The second phase, included in the RFP as an option, contemplated the remediation of up to 1 million cubic yards of soil. The RFP provided that non-hazardous chemical additives may be used as needed to optimize system performance to meet cleanup criteria, and it permitted the award of two contracts based upon the "lowest evaluated probable cost" for both phases.

Westinghouse received seven offers, including one from Waste Management. On December 1, 1992, Westinghouse awarded a contract to Morrison-Knudsen Corporation, intending also to award a contract to Waste Management. Shortly after the award to Morrison-Knudsen, two offerors filed protests with our Office challenging the award and the proposed award to Waste Management. Each of the protests alleged that the RFP did not allow the use of non-hazardous chemicals and, according to the protesters, Morrison- Knudsen and Waste Management each improperly proposed using chemicals as part of its soil washing process.

In January 1993, the Morrison-Knudsen contract was terminated and the RFP canceled.[3] Westinghouse stated at that time that the cancellation was based upon its "investigation of all the facts and circumstances surrounding this procurement." Westinghouse believed that the RFP allowed for the use of non-hazardous chemicals, but was concerned that the two protesting offerors had not correctly understood the RFP and that competition had been adversely affected thereby. Westinghouse concluded that cancellation and issuance of a new RFP was in the government's best interest. Waste Management then filed a protest arguing that there was no reasonable basis to cancel RFP No. 254322.

On February 1, Westinghouse issued RFP No. 322846. The RFP requested proposals only for conducting the treatability test of up to 300 tons of contaminated soils--the optional production run contained in the previous RFP was deleted. In addition, the new RFP did not permit the use of chemicals--it permitted water-based physical separation soil washing processes only. The protester objects to that restriction.

DISCUSSION

Cancellation of RFP No. 254322

Waste Management argues that Westinghouse has not put forth a reasonable basis to cancel the RFP. Waste Management also states that one of the protesters against the award and proposed award under the RFP is a wholly owned subsidiary of Westinghouse Electric Corporation and "as such is part of the Westinghouse family of companies which includes the procuring entity," Westinghouse Hanford Company. It asserts that in view of the potential for a conflict of interest, we should evaluate the cancellation decision with a substantial degree of scrutiny. Waste Management requests that we recommend that Westinghouse proceed with the award of the contract to it based on the earlier proposal.

It is not clear from the record that Westinghouse's initial reason for cancellation--rectifying misunderstanding of specification requirements and obtaining enhanced competition--was a valid one. First, Westinghouse believes that the specifications were not ambiguous or misleading. Second, although the first RFP was canceled because two offerors supposedly were misled and thereby did not submit proposals on the basis of using chemicals for soil washing, an approach that Westinghouse considers to be less expensive for a contractor, the follow-on RFP does not seek competition on the basis of use of chemicals--instead, it prohibits chemical use.

However, it is clear from the record that the government's needs, as now perceived, could not be satisfied by the original RFP. Originally, Westinghouse believed that for some soil washing chemical use might be necessary, and it provided for such use in the original RFP for that reason. Westinghouse later determined, during the investigation which resulted from the protests of award under the previous RFP, that the required clean-up levels could be achieved with a water-only process. Specifically, the Westinghouse engineer responsible for preparing the statement of work states that after the issuance of RFP No. 254322 and before the issuance of RFP No. 322846, Westinghouse conducted additional research concerning the nature and composition of the soils within the Hanford site to be treated. He concluded, based on this research, that the use of chemicals was unnecessary to achieve the required clean-up levels. He also concluded that prohibiting "unnecessary chemical augmentation" would have the benefit of "significantly reducing or eliminating any secondary waste generated by application of chemicals to contaminated soils." Such secondary wastes, according to the engineer, would "complicate waste disposal and effluent treatment, add to processing costs, and make soil washing less attractive as remedial measure to the environmental regulators."

Moreover, Westinghouse has now determined that the production run, the former option item, is too conditional and speculative to make the subject of a procurement at this time. As Westinghouse reports:

"The production run . . . was omitted . . . because it is not required by the Treatability Test Plan, it is unknown at this time if the environmental regulators will agree that soil washing processes are acceptable to remediate the [Hanford site] soils, and the exact quantity of such a production run is unknown. . . ."

Waste Management does not rebut Westinghouse's explanations and rationales for the revised procurement approach. It argues only that the new restriction against the use of chemicals prevents Westinghouse "from reaping the benefit of the least expensive and most innovative and effective solution" and that Westinghouse simply did not have to exercise the option for the production run if it believed it was inappropriate to contract for that effort.

These arguments do not negate the fact that the government's needs have substantially changed. Regardless of whether chemical use is a less expensive and more effective method of soil washing, the change to a water -only requirement is a significant one that obviously has an impact on the competition and particularly on proposed costs. As for the production run, while it is true that the option did not have to be exercised, the first RFP provided for evaluation of proposals on the basis of the treatability test and the production run option. Evaluation on the basis of an option that is not expected to be exercised can produce a skewed result and is improper. See Associated Healthcare Sys., Inc., 65 Comp.Gen. 823 (1986), 86-2 CPD Para. 246.

Since Westinghouse has determined that chemical use is not necessary and otherwise should be precluded (the validity of which we discuss below) and that the production run of up to 1 million cubic yards is inappropriate for purchase at this time, award under the original RFP would be inconsistent with the government's needs. The fact that this was determined after the actual cancellation of the RFP is not significant--a cancellation may be justified on a subsequently enunciated basis if that basis would have supported the action had it been stated initially. Alden Electronics, Inc.--Recon., B-224160.2; B-224161.2, Mar. 12, 1987, 87-1 CPD Para. 277.[4] Accordingly, on this record we find an adequate basis for the cancellation.

Requirements of RFP No. 322846

Waste Management contends that there is no reasonable basis for the restrictions placed on the use of non-toxic, non-hazardous chemical additives in the treatment of soil in the follow-on RFP. It contends that the needs of the government for soil washing are more than adequately satisfied through the use of a process allowing chemical additives, and that by placing a severe limitation on the methodology that an offeror can employ in the soil treatment process, Westinghouse is essentially limiting the level and degree of competition among the offerors. It thus concludes that the RFP is unduly restrictive of competition.

We point out initially that there is nothing in the record to suggest that the terms of RFP No. 322846 have served to restrict competition. Rather, Westinghouse states that it has received the same level of competition that was previously received under RFP No. 254322 and the record shows that an affiliate of Waste Management submitted a proposal in response to the new RFP.

The record does not establish that the restriction contained in the specifications is unnecessary. The primary emphasis of this procurement is the testing of soil washing processes in order to satisfy not only Westinghouse and the Department of Energy, but also the Environmental Protection Agency and the Washington State Department of Ecology, the environmental regulators concerned with treating the contaminated soil at the Hanford site. As stated by Westinghouse, "the treatability test of a water-based physical separation soil washing process is required by the environmental regulators" and that "[b]ased upon the results of the treatability test, the scope and manner in which the [site] will be remediated will be assessed and determined by the environmental regulators and the Department of Energy." In addition, Westinghouse points to several benefits of excluding chemical additives from the soil washing process, including the reduction or elimination of secondary wastes, resulting in reduced waste disposal and effluent treatment requirements, as well as the increased control of processing costs.

Under these circumstances, we see no reason why Westinghouse may not enter into a contract to ascertain the effectiveness of a water-only soil washing system. As stated, Westinghouse points to several benefits of excluding chemical additives from the soil washing process, and the protester has not shown the agency's position in this regard to be unreasonable.[5] In light of these benefits and since this contract is only a preliminary one which will be used to gather information and guide in the determination of the best method of addressing the significantly larger remediation needs at the Hanford site, there is no basis for finding the prohibition on chemical use to be unduly restrictive.

The protest is denied.

1. Westinghouse is subject to our bid protest jurisdiction as an M&O contractor that effectively awards subcontracts "by or for" the government. 4 C.F.R. Sec. 21.3(m) (1993); United Tel. Co. of the Northwest, B-246977, Apr. 20, 1992, 92-1 CPD Para. 374. Such contractors are not directly bound by federal procurement law, but must conduct procurements according to the terms of their contracts with the agency and their own agency-approved procedures.

2. Waste Management's protest against the cancellation was initially docketed as B-249946.5 by our Office. The firm's subsequent protest against the terms of RFP No. 322846 was docketed as B-252553. By letter dated April 20, 1993, we consolidated the two protests; this decision addresses the issues raised in both.

3. On January 21, as a result of this action, we dismissed the protests challenging the award and proposed award as academic.

4. We also find no basis in the record before us to support Waste Management's allegation that the cancellation may have been improperly motivated.

5. The protester concedes that adding chemicals to its treatment process generates secondary waste at the conclusion of its operations. While the protester asserts that this secondary waste is "benign," it fails to address the agency's concerns about "any secondary waste generated by application of such chemicals to contaminated soils."