Matter of: Intown Properties, Inc. File: B-249036.3 Date: January 15, 1993

Matter of: Intown Properties, Inc. File: B-249036.3 Date: January 15, 1993

PROCUREMENT Competitive Negotiation Offers Competitive ranges Exclusion Administrative discretion PROCUREMENT Competitive Negotiation Offers Evaluation errors Evaluation criteria Application Contention that agency improperly evaluated protester's proposal and excluded protester from competitive range is denied where the record shows that the agency evaluation was reasonable and in accordance with stated evaluation criteria, and where the decision to exclude protester from the competitive range was based on protester's technical ranking of 8th out of the 11 offerors--several places behind the 4th ranked offeror, which was expressly found technically unacceptable. PROCUREMENT Bid Protests GAO procedures Interested parties Protester is not an interested party to challenge an agency's decision to make award based on initial proposals to the lowest-priced offeror in the competitive range where the agency has reasonably evaluated protester's proposal and concluded, as a result, that the protester has no chance of award, because the remedy if the protester succeeded would be to hold discussions and seek revised proposals from competitive range offerors, not the protester.

Attorneys

DECISION Intown Properties, Inc. protests the exclusion of its proposal from the competitive range under request for proposals (RFP) No. 002-92- 118N, issued by the Department of Housing and Urban Development (HUD) for real estate management services for public housing in portions of southwest Tulsa, Oklahoma, and in rural counties south and east of Tulsa, extending to the borders of Texas and Arkansas. Intown argues that the evaluation of its proposal was unreasonable and arbitrary, and that the decision to exclude its proposal from the competitive range without further discussions was improper. Intown also argues that HUD acted improperly in awarding the contract to Jason Properties without discussions because Jason was not the lowest-priced offeror.

We deny the protest.

BACKGROUND

On April 15, 1992, HUD issued the RFP for management and related services for HUD-owned or operated single-family properties located in southeastern Oklahoma. Section M of the RFP advised potential offerors that award would be made to the responsible offeror whose offer is most advantageous to the government. The RFP further advised that "[t]he combined relative merit of the technical evaluation factors will be more significant than cost or price," and reserved the right to award a contract on the basis of initial offers, without holding discussions.

In addition, the RFP listed five technical evaluation factors and their relative weights for determining the technical merit of each proposal.

These factors--set forth in greater detail in the RFP, but paraphrased here--and their corresponding weights are as follows:

1. Management plan 25 points

2. Demonstrated successful experience: 35 points (a) managing similar single family properties; (b) managing similar performance areas; and (c) developing listings of needed repairs

3. Demonstrated successful experience 25 points managing housing repairs

4. Staff and Facility 25 points

5. Demonstrated successful experience 25 points managing a rental program for single family rental properties

TOTAL 135 points

On June 4, HUD received 11 proposals in response to the solicitation. The proposals were turned over to a Source Evaluation Board (SEB), which rated the proposals on each of the five technical criteria. On August 24, the SEB presented the results of the evaluation to the contracting officer. In the memorandum explaining the evaluation results, the SEB recommended that the contract be awarded to Jason Properties--the offeror with the highest technical score--without discussions and without requesting a best and final offer (BAFO) from any of the offerors.

After receiving the recommendation from the SEB, the contracting officer decided that it would be appropriate to establish a competitive range. In a memorandum to the file, dated August 26, the contracting officer decided that the three highest-rated offerors should be included in the competitive range, and that award should be made to Jason Properties as the highest-rated offeror in the competitive range with the lowest price. The results of the evaluation and the competitive range determination are as follows:

Offeror Score Price per Property

Jason Properties 135 $ 1,052 Company A 94 2,324 Company B 89 1,500 Company C 84 699 Company D 80 866 Company E 76 10,000 Company F 68 2,537 Intown Properties 67 968 Company G 59 1,215 Company H NR 855 Company I NR 395

After reaching the decision to award to Jason, the contracting officer, by letter dated August 27, notified Intown that its proposal had been excluded from the competitive range and would not be considered further. In addition, the letter advised Intown that Jason was the apparent successful offeror. On August 31, HUD awarded the contract to Jason, and on September 14, Intown filed its protest with our Office.

DISCUSSION

Intown argues that HUD acted improperly in excluding Intown's proposal from the competitive range, especially since Intown has extensive experience in managing real estate for HUD. In support of its argument, Intown challenges the SEB's conclusions with respect to each of the five technical evaluation criteria. In addition, Intown argues that HUD's award to Jason was improper because HUD properly could award a contract without discussions only to the lowest-priced offeror.

Evaluation of Intown's Proposal

In reviewing an agency decision to exclude an offeror from the competitive range, we look first to the agency's evaluation of proposals to determine whether the evaluation had a reasonable basis. MGM Land Co.; Tony Western, B-241169; B-241169.2, Jan. 17, 1991, 91-1 CPD Para. 50. Although the evaluation of proposals is primarily within the discretion of the procuring agency, not our Office, evaluations in negotiated procurements must be in accordance with the terms of the RFP.

Environmental Techs. Group, Inc., B-235623, Aug. 31, 1989, 89-2 CPD Para. 202. To determine whether an evaluation was proper, we examine the record to determine whether the agency's judgment was reasonable and consistent with the stated evaluation criteria and applicable statutes and regulations. ESCO, Inc., 66 Comp.Gen. 404 (1987), 87-1 CPD Para. 450.

As stated above, Intown challenges the SEB's conclusions with respect to each of the five technical criteria listed in the RFP. Our review of the record shows that Intown's complaints generally do not accurately characterize the findings of the evaluators, and that the evaluation of Intown's proposal--and the resulting decision to exclude Intown from the competitive range--were reasonable. To illustrate our conclusion, we will discuss in detail Intown's arguments on one of the five technical evaluation criteria.

Under the technical criterion called "management plan" (worth 25 of the 135 available points) Intown received a consensus score of 9.66 points.

In its comments on the SEB's evaluation under this criterion, Intown complains that the evaluators mischaracterize this section of the proposal as containing a page and a half of narrative. Intown points out that the section at issue, in actuality, contains two full pages of narrative followed by four pages of exhibits. Intown also complains that the SEB unreasonably downgraded it for including in its proposal management forms used by HUD in other areas of the country, and for Intown's ongoing performance of other HUD contracts. Finally, Intown complains that the SEB unreasonably concluded that Intown's suggestion of opening satellite offices was a "risk."

Our review of the evaluation materials, as well as Intown's and Jason's proposals, leads us to agree with the SEB's conclusion that Intown's discussion of its management plan in its proposal--at two full pages, as Intown claims--is general and conclusory. Rather than stating what it will do to ensure adequate performance of the Tulsa contract, Intown states that it has established satellite offices on several occasions in several different cities, and provides a list of the general steps involved in opening such an office. Intown's general promises about setting up a real estate management office contrast sharply with the specific and detailed discussions found in the proposal of the awardee.

Likewise, the four pages of exhibits Intown claims should be viewed by the SEB as bolstering its management plan score are merely completed checklists of inspections of other real estate management offices. As Intown claims, these four single-page inspection reports suggest that Intown has been successful, on other HUD contracts, at organizing and operating a real estate management office; however, these documents contribute nothing to the evaluation panel's understanding of how Intown intends to perform the instant contract.

With respect to Intown's prior experience, the evaluators did not downgrade Intown for having such experience, as Intown claims. Rather, the evaluators state that Intown "relies [too] heavily on the fact that [it] currently is performing the same duties in other locations and does not define how [it] intends to perform them in Tulsa." In our view, this is a fair and accurate criticism of the Intown proposal.

Finally, the SEB expresses a concern about the risk involved in Intown's plan to open satellite offices to assist in managing properties in remote areas. Although Intown argues that its idea of operating satellite offices should be seen as a positive feature of its proposal, the proposal provides no details about where such offices would be opened, who would staff them, and what the relationship of the satellite office would be to the main management office. Instead Intown offers only a general statement --hardly even a promise--that it would open such offices. Specifically, the proposal states:

"Because of the wide geographical dispersion of the properties, we are prepared to establish one or two small satellite bases outside of the Tulsa area to improve response to the requirements. The location will [be] determined when the inventory has been reviewed."

Given the general language of Intown's proposal, and the fact that it does not clearly explain how these satellite offices will be related to the parent company, or who will staff them, we find nothing improper about the SEB's conclusion that this aspect of Intown's proposal was an area of performance risk.

In short, we find nothing arbitrary, improper, or unreasonable about the SEB's findings that Intown's proposal--in the management plan area--was vague, lacking in specific details, and relied too heavily on copies of forms utilized in other locations. Our review of the evaluation documents of the other technical evaluation factors shows that the significant downgrading by the evaluators was reasonable. As a result we find that the agency's evaluation of Intown's proposal was reasonable.

Determination of Competitive Range

Since we conclude that the evaluation of Intown's proposal was reasonable, we look next at the decision to exclude Intown from the competitive range. In a negotiated procurement, an agency may determine a competitive range for the purpose of selecting those offerors with which the contracting agency will hold oral or written discussions. Federal Acquisition Regulation (FAR) Sec. 15.609; Hummer Assocs., B-236702, Jan. 4, 1990, 90-1 CPD Para. 12. In making this determination, agencies must establish their competitive range "on the basis of cost or price and other factors that were stated in the solicitation and shall include all proposals that have a reasonable chance of being selected for award." FAR Sec. 15.609(a). Our review of such determinations is to ensure that the evaluation as a whole has a reasonable basis and follows applicable statutes and regulations. See Advanced Sys. Tech., Inc.; Eng'g and Prof. Servs., Inc., B-241530; B-241530.2, Feb. 12, 1991, 91-1 CPD Para. 153.

Here, after evaluating Intown's proposal and those of the other offerors, the SEB ranked each of the offerors by technical score and by price. As shown above, Intown's proposal was rated 8th of 11 in technical merit, while its price was 5th low. After completing its review, the SEB prepared a memorandum for the contracting officer in which the SEB recommended award to Jason, the offeror with the highest technical rating and the sixth lowest price.

Upon receipt of the SEB's recommendation, the contracting officer decided to establish a competitive range of offerors in line for award. Given the solicitation's emphasis on technical merit, the contracting officer decided to include the three offerors with the highest technical ratings.

Although the offeror with the fourth highest technical rating--Company C- -had proposed a price significantly lower than the three highest-rated offerors, the contracting officer expressly found Company C's proposal technically unacceptable in excluding it from the competitive range. Intown's proposal, which was ranked significantly lower than the proposal submitted by Company C and which also had a higher price, was likewise excluded from the competitive range.

Although the contracting officer's memorandum establishing the competitive range does not explicitly address Intown's proposal, it is clear that the contracting officer effectively concluded that Intown's proposal was technically unacceptable, given that Company C's higher- rated, lower-priced proposal was found technically unacceptable.

In light of Intown's low technical score and our conclusion that the underlying evaluation on which the score was based was reasonable, we find that it was rational to conclude that Intown's proposal was technically unacceptable. Thus, the contracting officer acted properly in eliminating Intown from the competitive range.

Award Based on Initial Proposals

Intown claims that the agency acted improperly in making award without discussions to other than the lowest-priced offeror. Under the Competition in Contracting Act of 1984 (CICA), 41 U.S.C. Sec. 253b(d)(1)(B) (1988), an agency may make award on the basis of initial proposals where the solicitation advises offerors of that possibility and the competition or prior cost experience demonstrates that acceptance of an initial proposal will result in the lowest overall cost to the government. If, however, acceptance of an initial proposal will not result in the lowest overall cost to the government, the agency may not award a contract based on the initial proposal, but instead must conduct discussions in an attempt to obtain the lowest overall cost or to otherwise determine the proposal most advantageous to the government. Training and Info. Servs., Inc., 66 Comp. Gen. 327 (1987), 87-1 CPD Para. 266; TFA, Inc., B-243875, Sept. 11, 1991, 91-2 CPD Para. 239.

The requirement to hold discussions before making award to other than the lowest-priced offeror applies only to offerors who are technically acceptable; 41 U.S.C. Sec. 253b(d)(1)(B) does not require agencies to hold discussions with lower-priced offerors who are properly eliminated from the competitive range as technically unacceptable. See Mid-Atlantic Indus., Inc., B-245551, Jan. 16, 1992, 92-1 CPD Para. 80, rev'd on other grounds, B-245551.2; B-245551.3, June 11, 1992, 92-1 CPD Para. 507.

Accordingly, we would sustain Intown's protest against award without discussions only if we concluded that Intown--which submitted a lower price than Jason--was improperly eliminated from the competitive range, and that, consequently, the agency could not make award to Jason without holding discussions with Intown. However, since we have found that Intown was properly eliminated from the competitive range, and thus would not be included in any remedial discussions held by the agency if the protest were sustained, we have no basis to conclude that the agency was required to hold discussions with Intown before making award to Jason.

The protest is denied.