ARC Relocation, LLC

Decision

Matter of:  ARC Relocation, LLC

File:  B-416035.2; B-416035.3

Date:  November 22, 2019

DIGEST

1.  Protest that the agency applied an unstated evaluation criterion in assessing a significant strength to the awardee’s quotation is denied where the agency assessed the significant strength based on an aspect of the awardee’s quotation that was reasonably encompassed by the solicitation’s evaluation criteria.

2.  Protest that the agency’s technical evaluation was unequal is denied where the record shows that the agency assessed strengths to the awardee and not to the protester as a result of differences in the vendors’ quotations.

3.  Protest that the agency unreasonably evaluated the protester’s quotation in failing to assess a significant strength for its incumbent experience is denied where the agency’s evaluation was reasonable and consistent with the solicitation’s evaluation criteria.

4.  Protest that the agency failed to hold meaningful discussions because it did not advise the protester that its technical strengths were not worth its price premium is denied where the record demonstrates that the agency meaningfully discussed the protester’s technical weaknesses and the protester’s price was found to be fair and reasonable. 

5.  Protest alleging that the agency’s selection decision improperly assigned unequal weight to the five technical capability subfactors is denied where the record reflects that the agency assigned equal weight to the subfactors. 

ARC Relocation, LLC, a small business of Fairfax, Virginia, protests the establishment of a blanket purchase agreement (BPA) with Reliance Relocation Services, Inc., of Chicago, Illinois, under request for quotation (RFQ) No. 70B05C18Q00000021, issued by the Department of Homeland Security, U.S. Customs and Border Protection (CBP), for CBP’s employee relocation services.  The protester challenges the evaluation of its and the awardee’s quotations and the agency’s selection decision.

We deny the protest.

BACKGROUND

The RFQ was issued on January 19, 2018, to four small business concerns that hold General Services Administration (GSA) Federal Supply Schedule (FSS) contracts, under the FSS procedures of Federal Acquisition Regulation (FAR) subpart 8.4.  Agency Report (AR), Tab 3.0, RFQ, at 1; Memorandum of Law (MOL) at 1.  The RFQ sought quotations to provide employee relocation services, including home sales, entitlement counseling, property management, and move management services.  AR, Tab 3.1, RFQ, attach. 1, Statement of Work, at 1.  The RFQ anticipated the establishment of a fixed-price BPA under the vendor’s GSA FSS contract with a 5-year performance period consisting of a 12-month base period and four 1-year options.  RFQ at 3.

The RFQ advised that a BPA would be established with the vendor offering the best value considering the following three factors (in descending order of importance): (1) technical capability, (2) past performance, and (3) price.  Id. at 22.  When combined, the technical capability and past performance factors were considered more important than price.  Id.  The technical capability factor consisted of five equally-weighted subfactors:  (a) home sale services, (b) move management services, (c) financial capability and financial resources, (d) property management and internal key controls, and (e) reporting and online capabilities and security.  Id. 

The agency received timely quotations from four vendors and rejected two of those vendors as non-compliant and non‑responsive.  Contracting Officer’s Statement at 2-3.  After evaluating the two remaining quotations, the agency established a competitive range consisting of ARC and Reliance and conducted discussions.  Id. at 3.  The agency received and evaluated final revised quotations from ARC and Reliance as follows:

	ARC	RELIANCE
TECHNICAL CAPABILITY	GOOD	GOOD
Home Sale Services	Superior	Superior
Move Management Services	Good	Good
Financial Capability and Financial Resources	Good	Superior
Property Management and Internal Key Controls	Good	Good
Reporting & Online Capabilities and Security	Superior	Good
PAST PERFORMANCE	SATISFACTORY CONFIDENCE	SATISFACTORY CONFIDENCE
PRICE	$6,477,450	$5,576,737

AR, Tab 52, Source Selection Decision (SSD), at 8.  The agency used the ratings of superior, good, satisfactory, marginal, and unsatisfactory in its evaluation under the technical capability factor and its five subfactors.  AR, Tab 50, Final Technical Evaluation Report, at 5.  As relevant here, the agency defined the rating of superior as a quotation that “demonstrates [an] excellent understanding of [the] requirements and [an] approach that significantly exceeds performance or capability standards,” and the rating of good as a quotation that “demonstrates [a] good understanding of requirements and [an] approach that exceeds performance or capability standards.”  Id.

As relevant for this discussion, under the financial capability and resources subfactor, the agency identified two strengths[1] in ARC’s quotation and rated it good, while identifying two significant strengths and one strength in Reliance’s quotation and rating it superior.  Id. at 12, 21.  Under the property management subfactor, the agency identified six strengths in each of the two vendors’ quotations and rated both quotations as good.  Id. at 13-14, 22‑23.

The source selection authority reviewed the technical evaluation team’s final consensus report and “concur[red] with it in all respects.”  AR, Tab 52, SSD, at 17.  The source selection authority then prepared a comparative analysis of quotations under each factor and subfactor, and conducted a tradeoff analysis to support its conclusion that Reliance’s quotation represented the best value to the government.  Id. at 8, 17-19.

The agency notified ARC of its selection decision on August 16, 2019, and this protest followed.

DISCUSSION

ARC alleges that the agency:  (1) imposed unstated evaluation criteria and treated the protester’s and the awardee’s quotations disparately under the financial capability and resources subfactor; (2) unreasonably evaluated the protester’s technical quotation under the property management subfactor by failing to assign a significant strength for the protester’s incumbent experience; (3) failed to conduct meaningful discussions; and (4) made an unreasonable selection decision by deviating from the stated weighting scheme for the five subfactors under the technical capability factor and conducting a flawed best-value tradeoff.[2]  The agency contends that its evaluation was reasonable and consistent with the solicitation.  For the reasons discussed below, we deny all of ARC’s protest grounds.

Financial Capability and Resources

ARC argues that the agency used undisclosed evaluation criteria and treated the vendors unequally in its evaluation of the financial capability and resources subfactor.  Protester Comments at 8-11.  Specifically, ARC contends that the agency:  (1) unreasonably considered the audited aspect of the awardee’s financial statements when the solicitation did not specify audited financial statements as a criterion in the evaluation; and (2) treated the vendors unequally when evaluating their debt‑to‑income ratios.[3]  Id. 

Unstated Evaluation Criteria

ARC contends that the agency applied an unstated evaluation criterion to the awardee’s financial capability and resources subfactor when it assessed a significant strength to Reliance’s quotation for submitting audited financial statements.  Protester Comments at 8-9.  ARC argues that the solicitation did not require audited financial statements and, by giving credit to the awardee for the audited aspect of its financial statements, the agency discredited the reliability of ARC’s unaudited financial statements.  Id.  The agency responds that audited financial statements support the reliability of the required submission of financial statements and, therefore, are reasonably related to the stated evaluation criteria under the subfactor of financial capability and resources.  Supp. MOL at 8-9.  The protester responds that the agency failed to show a clear nexus between the audited aspect of the financial statements and the stated evaluation criteria.  Protester Supp. Comments at 9-12.

Under the financial capability and resources subfactor, the RFQ required vendors to provide evidence of financial capability and resources to accomplish the services listed for the estimated volume provided in the RFQ.  RFQ at 21; see AR, Tab 3.4, RFQ, attach. 4, at 1-3.  On February 7, 2018, in response to vendor questions, the agency added the requirement for submission of financial statements as follows:

Vendors must submit 3 years of financial statements (Balance Statements, Income Statements, Statements of Cash Flow).  Two oldest years may contain just the statements only.  The most current year must contain complete annual report including notes.

AR, Tab 5, Response to Vendor Questions, at 1.  Vendors were further advised that their “financial capability and resources will be evaluated for [their] ability to accomplish the Statement of Work at the estimated volume.”  RFQ at 23. 

In its evaluation of the awardee’s quotation under this subfactor, the agency found two areas of significant strength--net income and credit line.[4]  AR, Tab 50, Final Technical Evaluation Report, at 21.  For the significant strength assessed for the awardee’s net income, the agency noted that the “highly substantial amounts” of income over [DELETED], supported by audited financial statements that evidence independent review under the highest accounting standards, “showed very strong financial capabilities that substantively decrease the likelihood of interruptions of relocation services.”  Id. at 20‑21.  As relevant here, the agency did not assess a separate significant strength for the audited aspect of the awardee’s financial statements.  Rather, the agency found that the reliability of audited financial statements, “coupled with” the awardee’s substantial net income, “significantly increase[d] the likelihood that the [vendor] has the financial viability to fulfill a financial commitment requirement.”  Id. at 21.

While agencies are not permitted to use unstated evaluation factors in evaluating quotations, an agency properly may take into account specific matters that are logically encompassed by, or related to, the stated evaluation criteria, even when they are not expressly identified as evaluation criteria.  Camber Corp., B-413505, Nov. 10, 2016, 2016 CPD ¶ 350 at 5.  Additionally, in evaluating quotations in accordance with the stated evaluation factors, agencies may properly consider the degree to which quotations exceed the solicitation requirements.  USGC Inc., B-400184.2 et al., Dec. 24, 2008, 2009 CPD ¶ 9 at 6-7.

Here, we find nothing objectionable about the agency’s assessment of a significant strength to Reliance for its net income of [DELETED], supported by audited financial statements.  The RFQ required vendors to provide evidence of financial capability and resources, and further required the submission of financial statements as such evidence.  RFQ at 21; AR, Tab 5, Response to Vendor Questions, at 1.  As a result, it was reasonable for the agency to consider the reliability of audited financial statements as an added benefit, as this was logically encompassed within the evaluation criteria and clearly related to the stated evaluation criteria that required evidence of vendors’ financial capability and resources. 

Moreover, we find nothing in this record to support the protester’s assertion that the agency’s consideration of the audited aspect of financial statements put a negative inference of unreliability on the protester’s unaudited financial statements.  The record shows that the agency did not assess whether the protester’s financial statements were audited or negatively assess their reliability.  See AR, Tab 50, Final Technical Evaluation Report, at 12.  Rather, the agency assessed a strength for ARC’s net income based on the unaudited financial statements submitted in its final revised quotation[5] as “reflect[ing] solid financial capability to support [the] requirements.”  Id. 

Based on this record, we find that the agency reasonably assessed a significant strength to Reliance’s quotation under the financial capability and resources subfactor for its substantial net income that was supported by audited financial statements.

Unequal Treatment

Next, ARC argues that the agency treated the vendors unequally by assessing a strength to Reliance’s quotation based on its low debt-to-income ratio, but not assessing a similar strength to the protester’s quotation for what it contends was a lower debt‑to‑income ratio for two of the three years considered.  Comments at 10-11. 

The agency assessed Reliance’s quotation a strength for its debt-to-income ratio, as follows:

[Reliance’s] low debt-to-income ratio ([DELETED] for 2015, [DELETED] for 2016 and [DELETED] for 2017-[Reliance] Financial Statements) is beneficial for [CBP]. The relatively low debt-income decreases the likelihood of financial risks that may adversely impact the Offeror’s ability to accomplish the relocation services for the Agency, specifically pertaining to requirements that require financial outlays from the contractor.  In light of the financial expenditures that would be required on a sustainable basis from the contractor to support the relocation requirements, a low debt-to-income ratio increases the greater likelihood of successful contract performance.

AR, Tab 50, Final Technical Evaluation Report, at 21. 

The protester contends that its quotation showed debt-to-income ratios that were lower than the awardee’s for the first two years--[DELETED] for 2015 and [DELETED] for 2016--and that the agency unreasonably failed to assess a similar strength to ARC’s quotation.  Comments at 10.  The agency responds that it reasonably did not assess the same strength to the protester’s debt-to-income ratio because, while the protester’s quotation showed slightly lower ratios for the first two years, it also showed a significant increase to [DELETED] for the most recent year of 2017.  Supp. MOL at 11.  

In conducting procurements, agencies may not generally engage in conduct that amounts to unfair or disparate treatment of competing vendors.  Arc Aspicio, LLC et al., B-412612 et al., Apr. 11, 2016, 2016 CPD ¶ 117 at 13.  Where a protester alleges unequal treatment in a technical evaluation, it must show that the differences in ratings did not stem from differences between the vendors’ quotations.  See Camber Corp., supra.

Based on our review of the record, we do not find that the agency treated ARC unequally.  We note that the agency, in its comparative analysis of the vendors’ quotations, specifically discussed ARC’s slightly lower debt-to-income ratio for years 2015 and 2016 as “not a significant difference” and found Reliance’s ratio for 2017, “lower than ARC’s ([DELETED] versus [DELETED]),” as a difference significant enough to “result[] in a strength and benefit[] the agency.”  AR, Tab 52, SSD, at 13.  The record therefore reflects that the difference in the agency’s assignment of a strength to Reliance’s debt‑to-income ratio, but not to ARC’s, was the result of differences in the vendors’ quotations.

Property Management and Internal Controls

ARC contends that the agency unreasonably evaluated its quotation under the property management and internal controls subfactor because its success as the incumbent in this area should have been assessed as a significant strength, rather than a strength.[6]  Protest at 12; Protester Comments at 5-7.  Particularly, ARC quotes a number of remarks from its past performance questionnaires for its incumbent contract to argue that it was unreasonable for the agency to assign just a strength, and not a significant strength, for such “proven and successful performance on the incumbent [contract].”  Protester Comments at 7.  The agency responds that it properly considered ARC’s incumbent experience, finding that it demonstrated a good understanding of the requirements with an approach that exceeded standards and reasonably assessed a strength.  MOL at 13-14.

Where, as here, an agency issues an RFQ to FSS vendors under FAR subpart 8.4 and conducts a competition for the issuance of an order or establishment of a BPA, we will review the record to ensure that the agency’s evaluation was reasonable and consistent with the terms of the solicitation and applicable procurement laws and regulations.  Digital Solutions, Inc., B-402067, Jan. 12, 2010, 2010 CPD ¶ 26 at 3-4; DEI Consulting, B‑401258, July 13, 2009, 2009 CPD ¶ 151 at 2.  In reviewing a protest challenging an agency’s technical evaluation, our Office will not reevaluate the quotations; rather, we will examine the record to determine whether the agency’s evaluation conclusions were reasonable and consistent with the terms of the solicitation and applicable procurement laws and regulations.  OPTIMUS Corp., B-400777, Jan. 26, 2009, 2009 CPD ¶ 33 at 4.  A protester’s disagreement with the agency’s judgment, without more, does not establish that an evaluation was unreasonable.  DEI Consulting, supra. 

The record here shows that the agency’s evaluation of the protester’s quotation under the property management and internal controls subfactor was reasonable.  Under this subfactor, the RFQ required vendors to demonstrate their capability for providing property management services on a nationwide basis, including Puerto Rico and all U.S. territories and possessions.  RFQ at 21.  The RFQ further instructed vendors to list two key internal controls “in ensuring successful fulfilment of the Relocation services requirements.”  Id.  The RFQ advised vendors that the agency would evaluate their “capability for providing effective Property Management Services on a nationwide basis as well as to Puerto Rico and all US territories and possessions” under this subfactor and that the two key internal controls will be evaluated “in terms of the value they provide to CBP regarding successful fulfillment of the contract.”  Id. at 23. 

Under the section of its quotation addressing this subfactor, ARC described its experience as the incumbent contractor by stating that it “has provided property management services to CBP for the past 5 contract years in every US State and Territory (to include Puerto Rico)” and that it “currently has hundreds of properties under management for CBP.”  AR, Tab 43, ARC Final Revised Technical Quotation, at 18.  ARC also stated that it “has not had any significant issues reported by any transferees.  ARC has received a 100% satisfaction score from CBP transferees.”  Id.

Based on this information, the agency assessed a strength for ARC’s “successful management of hundreds of property management services for the past 5 contract years in US States and territories,” one of six strengths identified in the evaluation of ARC’s quotation under the property management subfactor.  AR, Tab 50, Final Technical Evaluation Report, at 13.  The agency noted this aspect of ARC’s quotation “as a strong capability and a Strength that can be leveraged for the property management requirements, and, therefore has good value for Agency.”  Id. 

On this record, we find that the agency reasonably evaluated this aspect of the protester’s quotation.[7]  The protester’s argument that the agency should have assigned it a significant strength instead of a strength simply represents disagreement with the agency’s reasonable judgment, which, without more, does not form a basis to sustain the protest.  See Solution One Indus., Inc., B-417441 et al., July 9, 2019, 2019 CPD ¶ 252 at 7. 

Conduct of Discussions

The protester also alleges that the agency failed to conduct meaningful discussions when it did not discuss ARC’s high price premium.  Supp. Protest at 3-5.  The agency responds that it was not required, during discussions, to ask vendors to justify their price premium.  MOL at 20‑21.  The protester contends that the agency should have discussed its price because:  (1) the agency found its price to be so high as to be unacceptable, and (2) the agency’s determination that ARC’s technical benefits are not worth the 15 percent price premium constituted a substantial weakness.  Protester Comments at 11-13.  Specifically, the protester argues that the agency, during discussions, should have directed ARC to “demonstrate[] any number of strengths or benefits that warrant the Government paying a 15% price premium” in order to lead ARC into the areas of the agency’s concern.  Id. at 11 (quoting AR, Tab 57, Brief Explanation of Award, at 13). 

Where, as here, a competition is conducted among FSS vendors pursuant to FAR part 8, there is no requirement for agencies to conduct discussions in accordance with FAR § 15.306.  See FAR § 8.404(a).  However, exchanges that do occur with vendors in FAR part 8 procurements, like all other aspects of such procurements, must be fair and equitable.  USGC Inc., supra, at 3.  For discussions to be meaningful, they must lead a vendor to areas of the agency’s concern.  See Lockheed Martin Corp., B‑293679 et al., May 27, 2004, 2004 CPD ¶ 115 at 7.  If a vendor’s price is not so high as to be unreasonable and unacceptable for award, the agency may reasonably conduct meaningful discussions without advising the higher-priced vendor that its prices are not competitive.  See DeTekion Sec. Sys., Inc., B‑298235, B‑298235.2, July 31, 2006, 2006 CPD ¶ 130 at 15.

Here, we find nothing improper about the agency’s discussions with ARC.  The record shows that the agency identified several weaknesses and problem areas in ARC’s initial quotation.  AR, Tab 27, Initial Technical Evaluations Report, at 7-15.  During discussions, the agency raised these weaknesses and problem areas with ARC.  See AR, Tab 30, ARC Discussions.  The agency also gave ARC an opportunity to submit a final revised quotation, with a reminder to “keep in mind that this is a competitive procurement environment” in considering its final revised price quotation.  AR, Tab 29, ARC Discussion Notice, at 1.  ARC did not revise its price, but submitted a revised technical quotation that addressed all of the weaknesses in its initial quotation, resulting in a final technical evaluation with no weaknesses or deficiencies noted.  AR, Tab 51, Price Analysis, at 1; AR, Tab 50, Final Technical Evaluation Report, at 8-15. 

We see nothing in the record, and the protester has not pointed to anything, to suggest that the agency had any concerns with ARC’s final technical quotation such that the agency should have raised the issue through further exchanges with vendors.  On the contrary, as discussed above, the record shows that the agency noted several strengths in ARC’s technical quotation and rated it good overall, the same rating assigned to Reliance’s technical quotation.  On this record, we find no basis to conclude that the agency’s discussions with ARC were other than fair and equitable. 

To the extent ARC contends that the agency found ARC’s price to be unacceptably high, there is nothing in the record to support this contention.  Rather, the record shows that the agency specifically determined that ARC’s price quotation was fair and reasonable.  AR, Tab 51, Price Analysis, at 2.  Therefore, the agency was not required to raise in discussions ARC’s higher price compared to Reliance’s price.  See DeTekion Sec. Sys., Inc., supra.

Source Selection Decision

Next, the protester challenges the agency’s source selection decision, arguing that the agency deviated from the weighting scheme identified in the solicitation for the five subfactors under the technical capability factor and conducted an unreasonable best‑value tradeoff decision. 

Weight of Subfactors under Technical Capability Factor

ARC argues that the selection decision improperly gave more weight to the financial capability and resources subfactor than to the other subfactors in a way that prejudiced the protester when the solicitation required the five subfactors under the technical capability factor to be weighted equally.  Protester Comments at 3-4; see RFQ at 22.  Specifically, the protester contends that the agency erroneously concluded that the vendors’ quotations were technically equal under the technical capability factor because it ignored ARC’s advantage in two subfactors as compared to Reliance’s advantage in just one subfactor.  Id.  The agency responds that the source selection authority properly looked beyond the adjectival ratings or number of strengths, and reasonably decided that the awardee’s significant advantage under the financial capability and resources subfactor was technically equal to the protester’s “slight advantage” under two of the other subfactors.  Supp. MOL at 2-6. 

Here, we find that nothing in the record that demonstrates that the agency considered one subfactor more important than the others under the technical capability factor.  Rather, the record shows that the agency properly considered the vendors’ quotations under each equally-weighted subfactor, noting as follows:

In reviewing the sub-factors which were of equal weight, both ARC and [Reliance] had the same rating in three (3) sub-factors.  In the two (2) remaining sub-factors, ARC received a better rating than [Reliance] in one, and vice versa for the other.  Overall, the offerors had equal adjectival ratings for the sub-factors.

AR, Tab 52, SSD, at 17-18.  Then, the agency looked beyond the ratings and compared the relative merits of each quotation, noting that:  (1) ARC had a “slight advantage” under the home sales subfactor due to its rate of facilitating open market homes sales transactions, even though both ARC and Reliance were rated as good; (2) Reliance had a “substantial comparative advantage” over ARC under the financial capability subfactor due to its financial capabilities and resources where Reliance received a superior rating over ARC’s good rating; and (3) ARC was rated superior over Reliance’s good rating for proposing “relatively higher number [of] mechanisms for securing [personally identifiable information]” under the reporting and online capability and security subfactor.  Id. at 18.  Based on this comparative analysis, the agency determined that, “[a]lthough ARC had a slight advantage in [the home sale services subfactor] and was superior in [the reporting and online capabilities and security subfactor], the Government views the enhanced benefits associated with [Reliance’s] financial capability (Subfactor C) as essentially equal to ARC’s advantages in terms of benefit to the government.”  Id.

On this record, we find the agency’s evaluation to be reasonable and consistent with the stated evaluation scheme.  The protester mistakenly bases its allegation on the premise that identifying some quotation feature or element as a discriminator necessarily shows that the agency has changed the relative weighting of the evaluation factors.  The fact that an agency’s source selection decision turns on an evaluation consideration that is designated as equally--or even less--important is unobjectionable since there is no requirement that the key award discriminator also be the most heavily weighted evaluation consideration.  See SGT, Inc., B-405736, B-405736.2, Dec. 27, 2011, 2012 CPD ¶ 149 at 10.  We therefore deny this aspect of the protest.

Best-Value Tradeoff

Lastly, ARC challenges the agency’s best-value tradeoff decision.  Protest at 15.  The protester argues that the alleged evaluation flaws, discussed above, resulted in an unreasonable source selection decision.  Id.; Protester Comments at 14.  As described above, the record does not support ARC’s challenges to the agency’s evaluation.  Accordingly, we find no merit to ARC’s challenges to the agency’s selection decision that are based on those alleged errors.  Dewberry Crawford Group; Partner 4 Recovery, B‑415940.10, B‑415940.13, July 2, 2018, 2018 CPD ¶ 297 at 22 n.14.

The protest is denied.

Thomas H. Armstrong
General Counsel

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