Skip to Highlights
Highlights

Firms were on notice that between 2.75 and 3.0 man- years was the agency's projected need to meet performance requirements on an annual basis. The protester initially offered a firm-fixed price but stated that its offer was premised upon the assumption that demand under the contract would not exceed a 3 percent "penetration rate" /1/ and that "more hours" could constitute overload. The agency's evaluation team became concerned with this statement since they were aware that under an existing contract for the services. The penetration rate at the Pentagon was in fact 3.7 percent. /2/ Consequently. Then we will need to be able to provide additional counseling hours. If such an increase occurred and the need for hours of counseling were greater than the 2.66 full-time counselor equivalent we have budgeted.

View Decision

B-238654.2, Aug 9. 1990, 90-2 CPD

PROCUREMENT - Competitive Negotiation - Fixed-price contracts - Offers - Acceptance criteria DIGEST: Where request for proposals requires offerors to propose on a firm fixed- price basis, protester's proposal, which did not contain an unequivocal offer to perform contract at firm-fixed-price could not properly be accepted for award.

Attorneys

BEMW, Inc.:

BEMW, Inc. protests the award of a contract to Behavioral/Factors, Inc. (BFI) under request for proposals (RFP) No. MDA903-90-R-0016 issued by the Department of the Army on behalf of the office of the Assistant Secretary of Defense, Health Affairs, for the acquisition of counselling and referral services for Pentagon employees suffering from substance abuse or mental health problems. BEMW argues that the Army erred in a number of ways in its evaluation of the firm's proposal.

We deny the protest.

The RFP called for the submission of firm-fixed-price offers to perform counselling and referral services to approximately 14,400 employees. While the RFP contemplated performance of these services for all those who might need the service, the RFP expressed the agency's projected demand for services in terms of "professional man years," required to perform this task. The RFP, which contemplated performance of a 6-month base period, four 1-year options and one 6 month option, provided that 1.5 man- years would be required for performance of the 6-month requirements and 2.75 man-years would be required for performance of the 1-year requirements. Thus, firms were on notice that between 2.75 and 3.0 man- years was the agency's projected need to meet performance requirements on an annual basis.

In response to the RFP, the protester initially offered a firm-fixed price but stated that its offer was premised upon the assumption that demand under the contract would not exceed a 3 percent "penetration rate" /1/ and that "more hours" could constitute overload.

In evaluating BEMW's proposal, the agency's evaluation team became concerned with this statement since they were aware that under an existing contract for the services, the penetration rate at the Pentagon was in fact 3.7 percent. /2/ Consequently, the agency asked BEMW during discussions to explain the statement in its proposal that "more hours can constitute overload" and to indicate what the impact of more hours would be.

In response to the Army's discussion question BEMW's best and final offer (BAFO) provided:

"The statement, 'More hours can constitute overload,' simply means that if the penetration rate increases significantly, then we will need to be able to provide additional counseling hours. Naturally, if such an increase occurred and the need for hours of counseling were greater than the 2.66 full-time counselor equivalent we have budgeted, a contract modification would be negotiated."

In its evaluation of BAFOs, the Army identified areas of continuing concern in BEMW's proposal concluding that seven deficiencies had not been resolved by discussions. Specifically, the agency believed that BEMW qualified its firm-fixed price offer. Award of the contract was made to BFI as the technically superior offeror. The Army argues that the failure to submit a firm-fixed price offer rendered the BEMW offer unacceptable.

We conclude that BEMW's offer contained a material deviation from the RFP's firm-fixed price requirement and, consequently, the firm's offer properly was rejected. In a negotiated procurement, a proposal which fails to conform to one or more material terms or conditions of the RFP should be considered technically unacceptable and cannot form the basis for an award. Cajar Defense Support Co., B-237522, Feb. 23, 1990, 90-1 CPD Para. 213. Where a solicitation calls for fixed prices and the proposal does not offer fixed prices, the proposal cannot be accepted for award since the requirement for fixed prices is a material term or condition of the RFP. Id.

Here, the protester clearly took exception to the RFP's requirement for a firm-fixed-price offer since it indicated both in its initial offer and BAFO that a demand for services requiring a level of effort beyond the 2.66 man-years which the firm had budgeted in its proposal would require the negotiation of a contract modification. By so doing, the firm failed to commit itself unequivocally to providing all services at the firm-fixed -price it had offered. In addition, we think that the agency provided BEMW an opportunity to cure this material defect in its offer during discussions when it specifically queried the firm regarding the "penetration rate" statement in its initial offer. Under these circumstances, we conclude that the agency could not have accepted BEMW's offer as submitted.

Since BEMW's proposal properly was determined unacceptable on the foregoing basis, we need not consider the remaining allegations raised by BEMW concerning alleged improprieties in the Army's evaluation of the firm's proposal.

The protest is denied.

/1/ Penetration rate refers to the percentage of all Pentagon employees who might use the service. Thus, BEMW's offer contemplated that 432 individuals or 3 percent of the overall pentagon population would require the services contemplated under the RFP.

/2/ The agency's actual current penetration rate was not specifically stated in the RFP.

GAO Contacts