ML20236C266
| ML20236C266 | |
| Person / Time | |
|---|---|
| Issue date: | 03/18/1985 |
| From: | Norry P NRC OFFICE OF ADMINISTRATION (ADM) |
| To: | Efros S GENERAL ACCOUNTING OFFICE |
| Shared Package | |
| ML20236B994 | List:
|
| References | |
| FOIA-85-675 NUDOCS 8707290391 | |
| Download: ML20236C266 (10) | |
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W MAR 181985 Seymour Efros. Esquire Associate General Counsel Office of the General Counsel United States General Accounting Office Washington, D.C. 20548 Re: B-216110-Tayloe Associates Bid Protest Re:
U.S. Nuclear Regulatory Comission Solicitation No. ASB-84352
Dear Mr. Efros:
The purpose of this letter is to respond to the protester's submission of February 28, 1985.
I.
Burden of Proof Tayloe bears the burden of proving that the contracting officer's determination that the bid of Ace-Federal Reporters, Inc. (Ace) was reasonable lacks a rational oasis. As pointed out in our letter of December 3,1984, the Comptroller General will not question an agency's determination unless it lacks a rational basis or there is a showing of bad faith or fraud. A protester alleging fraud must show by irrefutable proof that'the agency had a malicious specific intent to injure the protester.
IFR, Inc., B-209929. May 17, 1983, 83-1 CPD 524.
j II. NRC's Determination That Ace's Price Was Reasonable Had A Rational Basis.
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NRC's determination that Ace's price was reasonable was based primarily on I
three analyses:
(1) comparison to prices obtained under a' solicitation for reportingservicesintheWashington,D.C.-area (IFBSECY-84-327)adjustedby estimated travel costs (2) comparison to an independent government estimate, and (3) comparison to prior contract prices which had been detemined reason-able. Additional price analysis techniques, as cited in Exhibit 10 to NRC's letter of December 3,1984, were also employed in determining that Ace's prices were reasonable.
A.
NRC's Independent Estimate Was Reasonable.
The NRC revised its initial travel estimate of $6.50 per page to $7.05 because this estimate was mistakenly based on out of date infomation. The.
lower figure was based on bids submitted in late 1979; the higher figure was-based on actual cost and price data experienced on NRC's contract with Tayloe,1/ which imediately preceded the contract being protested. The government is obliged to use the best data available to evaluate i
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Contract No. NRC-17-83-399.
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i i reasor, ableness of price; Tayloe's implication that.because the revision was d
made after bid opening it served as en after-the-fact justification for J
. finding Ace's bid reascnable is completely without foundation. 2/
NRC was justified in using the $5.47 per page rate contained in contract NRC-17-83-399 with Tayloe as the basis for its estimate.
It had determined that price' to be reasonable when it awarded the contract to Tayloe. 3/
'1 Mr. Chilk's memorandum of March 15,1983 (Tayloe's Enclosure II) does not d
characterize this price as unreasonable,'or even "too high," as alleged by Tayloe. The point of Mr. Chilk's memorandum was to urge the staff to carefully evaluate' the wisdom of exercising the option under Tayloe's l
contract.
It is essential to understand that NRC's decision to refrain from exercising Tayloe's option was not based on a determination that either the price in the base year ($5.47/page) or' the option 1-1.1507(c),(d)) year ($5.88/page),4f was unr The regulations (FPR prohibit the contracting officer from exercising an option unless she can detennine that.doing so is the most advantageous method of fulfilling the government's needs. This is a vastly diffemnt standard than a detennination that the option price is unreason-able. NRC has never concluded that either $5.47 per page plus travel or.
$5.88 per page plus travel was unreasonable.
NRC believed, correctly,.
that it could meet its needs mom advantageously by soliciting bids than by exercising its. option under the Tayloe contract. F Tayloe seems to argue that NRC was rec)uf red to exercise its option 'unless' the price was unreason-
-able, and thus NRC's refusal to exercise the option shows' the option' price to be unreasonable. This simply misconstrues the legal standard applicable and the judgments reached in this situation.
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y Revision of an erroneous initial estinate after bid opening has been expressly sanctioned. Mar-Mac Precision Corp., B-214604, August 13, 1984, 84-2 CPD 164 y
Ironically, Tayloe seems to argue that it was successful in negotiating' I
an unreasonable price in its contract with NRC.
y Tayloe insists upon misrepresenting its option year price as $5.47 per page (p. 6 of Tayloe's letter) when in fact it was $5.88. The con-tracting officer's judgment not to exercise the option was based on the reasonable belief that she could obtain a price better than $5.88 plus travel costs in the open market.
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When either sctual travel costs ($2.91/pago) or estimated travel costs
$2.58/page) are added to Tayloe's option price ($5.88/page), the result
$8.79/page and $8.46/page, respectively).. exceeds Ace's price of 8.00/page.
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. 4 NRC did use a figure ($5.47 per page) which it considered to be substan-
' tial.6/,in computing'its estimate, but this was fully justified. NRC was.
already paying this price under its existing contract with Tayloe. More importantly, NRC's requirements are extremely complex and demanding;'they involve tight deadlines,. short-notification periods, highly. technical, multi-party.adversarial proceedings throughout the country. = The complexity of NRC's needs was recognized by the Comptroller General in a previous protest by Tayloe.. B-206070.3 April 22,,1983, 83-1 CPD 431.. NRC had-terminate:f one contractor for default before. this solicitation. 7/ and has since had.to so terminate a second. 8/ Many fims decline to bi~d on NRC's requirements because of this complexTty and many apparent. low bids 11ater prove to be untenable. NRC'was therefore merely facing reality when it chose to use-a figure it knew was substantial when it completed its' estimate; to'do
-less would have been irresponsible.
NRC's estimate of a reasonable contract price was rationally based and supported its finding that Ace's bid was reasonable. This determination should be upheld.
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NRC's Use Of Prices Under IFB SECY-84-327 Was Rational.
B.
NRC.used,the bids it received under IFB SECY-84-327'for service in the Washington, D.C. area ("in town" service), adjusted by estimated travel costs as an alternative method to check the reasonableness of Ace's bid. Tayloe-alleges that NRC did not do this in a rational way.
1.
NRC's Travel Cost Adjustment Was Reasonable.
NRC used two separate estimates of travel costs,'one based upon the actual travel costs it paid Tayloe under the previous contract, and one based on an independent evaluation of likely travel to be perfonned under the' present solicitation. NRC recognizes that it is dealing with estimates, not exact quantifications, but it used the-best availab1( data', and that is all that is required. Deteri f ne Corp., B-208986, April-21,1983, 83-1 CPD 427.
It is especially ironic for Tayloe to argue that travel costs it presented to NRC as reasonable, allocable, and allowable under its contract-are not useful even as estimates for the follow-on contract. The close agreement (11%)-
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But not "too high" or unreasonable as alleged by Tayloe.
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This resulted in ' protracted litigation still pending in the Claims Court.
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NRC's contract with Free State Reporting Service under IFB SECY-84-327.
The termination was converted to a no cost cancellation to avoid further litigation.
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between'NRC's independent estimate ($2.58/page) and the actual cost-experience with Tayloe ($2.91/page) belies Tayloe's position.
Tayloe attempts to impeach NRC's travel estimate by observing that subcontracting can reduce travel' costs and that Ace plans to subcontract y
extensively. Use'of subcontractors can reduce costs. 9/ The question is will use of subcontractors reduce overall' costs?
The contracting officer examined this question in detail and concluded that it is impossible to determine whether the use of subcontractors has any J
effect on overall per page prices. -(See bottom of p. 7 to top of p. 9 Exhibit 10). Cost data submitted on another procurem.ent by an offeror which proposed to subcontract even more extensively.than Ace shows that prices can range between $6.00 and $12.00 per page for short turn around copy (one or-twodaydelivery). To this must be added the overhead and profit of the-prime contractor. jl0. Uncertainties'regarding the skill and availability of subcontractors tends to drive up the price (by way of profit'and contin-gency factors) when a contractor expects to use a significant number of subcontractors. See Exhibit 10, pp. 8-9.
It should also be noted that i
contractors have motives to subcontract other than to save costs, such as to accomodate schedule demands and staffing levels and to comply with legal requirements such as P.L.95-507 which requires large businesses to develop a subcontracting plan. The contracting officer's determination that'no informed adjustment to the overall per page' rate due to subcontracting could be made was reasonable, based on the data before her.11 Her detennination of the actual travel cost factor was also rationally bas /ed, as shown above.
2.
IFB SECY-84-327 Prices Can Be Used.
NRC used six bids received under the IFB to develop a scale, which, with travel costs added as discussed above, would help evaluate the' reasonableness' i
of Ace's bid..Tayloe basically argues that its own bid was unreasonable, as was'that of Bossard, and that both thould thus have been excluded from the NRC's figures. Tayloe tries to bolster this argument by referring to several NRC letters which deal with the question of whether the present procurement should have been set aside for small businesses. Tayloe extracts several 9/-
It may not always eliminate such costs.
Due to the complexity of NRC's requirement, some contractors send their own ' team to work with subcontractors who do not have significant NRC experience.
10/ A mere 25% overhead and 10% profit on the $6.00 rate would exceed Ace's' bid.
lif Tayloe asserts that overall costs would be reduced by use of subcontractors but provides no data or estimates to quantify this alleged savings.
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quotations from context which it believes: reflect a judgment by NRC that both'.
Tayloe's and Bossard's bids were unreasonable.
It is important to bear in mind that the decision to set aside a procurement for small businesses is based on the question of whether the contracting officer reasonably expects that offers will be obtained from a sufficient number of responsible small business concerns so that award will be made at'a reasonable price.
(FPR1-1.706-5(a)(2)). This was the issue being addressed by Messrs. Dircks and Halman in the letters in question, not the' issue of-whether any particular per page rate was or was not unreasonable.
It is obvious from the overall context of their remarks that both men were, in 9
fact, addressing the overall bids of Tayloe and Bossard and'the likelihood-that a total small business set aside would produce adequate competition.
-They clearly were not deciding that any particular per page rate was unreasonable.
Mr. Dircks' memo states that Tayloe was performing satisfactorily but that 1
-the option ~1n its contract would not be exercised because the contracting -
officer determined that better prices were available in the market. As-explained above, this has nothing to do with whether Tayloe's basic.or option price was reasonable. Mr. Dircks' memo then states that Tayloe's bid on the i
in-town requirement was the sixth highest bid, and more than ' double the first low bidder. _ Tayloe says that this equates to a determination that the
$5.47/page rate for daily copy used by the NRC in evaluating Ace's bid was unreasonable. This is patently not so for several reasons.
l Mr. Dircks was clearly referring only to Tayloe's total bid 'of $341,400 on the in-town requirement.
(SeeAttachment'Ib Tayloe's rate of _$5.45/page for daily copy is not even double the ' low bid of $2.88 offered by SKS. but i
Tayloe's overall bid is more than double the overall bid of-SKS ($166,677).
l Furthermore, NRC had already determined Tayloe's rate of $5.47 to be reasonable when it awarded a contract (NRC-17-83-399) to Tayloe at' that price.
Mr. Halman likewise was. referring to the overall bids of Tayloe and Bossard 12/ when he termed them "not competitive." This clearly does'not translate into a judgment by Mr. Halman that either the $5.45 or $6.00 rates were themselves unreasonable.
It should be noted that the overall bids contain many more factors than the per page rates used by the NRC source evaluation panel in perfoming its price analysis.
12/ It must further be noted that Bossard and Tayloe combined resources to perform contract NRC-17-83-399 and might not therefore satisfy the i
requirement that there be a reasonable expectation that bids will be i
obtained from a sufficient number of responsible concerns to meet the criteria for a total small business set aside.
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- The statements by Mr. Dircks and Mr. Halman therefore cannot be read as impeaching the numbers used by the panel and the contracting officer, nor even as a finding that either Tayloe's or Bossard's bids were unreasonable.
Even if we assume arguendo that the statements quoted by Tayloe reflect on the reasonableness of the figures used by the panel, they could only impeach the.$6.00 rate of Bossard, since the $5.47 rate of Tayloe had 'aiready been detemined reasonable under the existing Tayloe-NRC contract. As shown above, this rate plus the-travel costs of either $2.91/page or $2.58/page
($8.38 and $8.05 respectively) support the reasonableness of Ace's prices. _1,3/
III. Tayloe's Bid Was Unreasonably Low.
1 Tayloe complains that its bid.($5.10/page) was not used to evaluate the reasonableness of Ace's bid.
NRC-recognizes that a nonresponsive bid may l
be used for purposes of determining the reasonableness of other bids unless the cause of the nonresponsiveness affected the bid price. MIL-STD Corp.,
B-212038, January 24,1984, 84-1 CpD 112. NRC did evaluate Tayloe's bid and found it to be unreasonably low. NRC also submits'that Tayloe's lack of a i
bid guarantee may have enabled it to bid substantially lower than a fully responsive bidder could.
If.either of NRC's travel cost estimates ($2.91/page or $2.58/page) is subtracted from Tayloe's bid of $5.10/page the result ($2.19/page or ~
$2.52/page) is clearly untenable. This is well below both the bid of SKS, who was detemined non-responsible, and that of Free State, who was defaulted for poor performance. Tayloe claims that it could have cut its travel costs
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1_3/ If Bossard's bid were removed from NRC's average figure, NRC suggests 3
that Free State's bid should also be removed, since that fim was terminated for default for poor perfomance, thus placing the viability of its bid in question.
The resulting figures if this is done are as follows:
. Low Average High l
In Town 3.75 4.56 5.45 Travel Adjustments 2.91 or 2.58 2.91 or 2.58 2.91 or 2.58 6.66 or 6.33 7.47 or 7.14 8.36 or 8.03 l
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.7-t by nearly two-thirds by use of subcontractors.14/ This simply does not accord with fact as. understood by NRC and'explaTned above.
It further deffes logic that Tayloe could properly perfonn a contract for out of town service at $5.10/page when it had bid $5.45 for in town service and had just com-pleted a contract at.$5.47 plus travel at actual costs. J5/
NRC also submits that the absence of a bid guarantee may also have a significant effect on Tayloe's bid price.
The actual cost of a bid guarantee is small and would not, in itself, affect a bid in this case. Many bonding companies even provide a bid guarantee at 'no cost when they also are asked to provide a performance bond for a contractor.
But bonding companies place significant standards on the applicant..for a performance bond. in terms of responsibility factors such as management structure, accounting systems, etc.
Thus, a contractor may incur substantial expense to qualify for a performance-bond, which would be reflected directly or indirectly in its bids. NRC-suggests that Tayloe's lack of a bid guarantee may have resulted from an inability to qualify for a performance bond.16/. If so, the lack of the bid guarantee could have enabled.Tayloe to bid suFs'tantially -lower than a fully 1
responsive contractor who was able to obtain both a bid guarantee.and a performance bond.
It is therefore likely that comparison of Tayloe's bid to Ace's bid would not be valid due to the fonner's failure to obtain the ' '
required bid guarantee. IJ7f J4/ Tayloe represents an arbitrary figure of $1.02/page as its travel costs.
a Tayloe letter at page 8.
This number is concocted by subtracting an average of selected bids under SECY-84-327 from Tayloe's $5.10 bid.
Note that Tayloe does not represent this $1.02 figure as.its true esti-0-
mated travel cost per page nor is it supported with any actual cost data 1
or independent estimates. Tayloe's claim of such large savings also does not ring true because it could not have known that NRC would allow increased use of subcontractors until after.it submitted its bid; Tayloe learned this fact from NRC's response to its recent FOIA request.
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~~/ NRC did not use the interim contract price of $5.03/page because it was a very short time requirement which NRC felt Tayloe had to win in order i
to stay in business.
,16/ Which was also required in this procurement.
17/ NRC did not give Ace any " credit".for obtaining a bid guarantee in evaluating Ace's bid. That bid was evaluated solely on the basis of price and cost analysis techniques as shown in NRC's report; no factor was ever applied to recognize the fact that Ace provided a bid guarantee. The passage quoted by Tayloe (at p. '5 of its Lletter) from the NRC panel report was merely an awkward gramatical construction and does not reflect what the panel actually did as shown by the balance of its report, i
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I l IV. ' Tayloe Has Not Shown Bad Faith.
To support a finding.of bad faith, a protester must show by irrefutable proof that an agency had a specific malicious-intent to injure the protester..
IFR, Inc., B-209929, May 17,1983, 83-1 CPD 524. Tayloe has not carried this 5urden.
. Tayfoe first complains that'NRC was reluctant to totally set aside'its' l
various. reporting service contracts for small business. ' Given the complexity of NRC's needs, its adverse experiences with 'various small businesses,l and the fact that none except Tayloe bid on the present procurement, this was 1
clearly well justified. Further rationale for this decision is found in the various-documents submitted by Tayloe.
Whatever.the merits of NRC's
-l decisions regarding the issue of small business set aside, those decisions" cannot evidence a ' specific malicious intent to injure Tayloe because it was'
.i able to bid on unrestricted procurement and in fact did so.
Tayloe next complains that NRC issued a two month interim procurement rather than extend the existing contract with Tayloe'.- Tayloe had previously pro-t tested NRC's decision to extend its contract with'an' incumbent rather than-issue an interim procurement. 'B-206070.3, April 22, 1983, 83-1 CPD 431.
Tayloe's position seems to be that it is illegal to extend an incumbent's contract unless the incumbent is Tayloe, in which case'it:is illegal not to extend, rather than solicit on an interim basis. Tayloe's complaint becomes ludicrous when we realize.that Tayloe won the' interim contract.
1 Tayloe also complains that NRC reprocured its defaulted Free State requirement from Ace. NRC's urgent needs-dictated this course of action, review of which is beyond the scope of the present protest.
NRC also i
observes that reprocurement following default terminations are not' subject to
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the full scope of requirements imposed on normal procurement.
See,e.g.,
FAR 49.402-6.
j Tayloe next accuses NRC's Director of Contracts Mr. Halman, of deceit.
Mr. Halman necessarily had to be circumspect in his statements during the
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time NRC was negotiating its contract with Tayloe because there were no~ other offerors. Tayloe and its counsel are experienced ist government contracting.
1 and fully appreciate the delicacy of this situation. Mr. Halman's statements i
were not untrue, just, of necessity, ambiguous. GA0 was, in fact, orally--
advised that Tayloe was the only firm in the competitive range. 18/ It was for this reason, in fact, that NRC declined to attend a GAO conflifence on Tayloe's protest B-206070.3, so that Tayloe would not surmise that there were
-18/ NRC did not, however, make any substantive ex parte contact with GA0.
NRC merely advised GA0 of the fact here notiid.-
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no other interested parties or otherwise gather facts which would reveal its-favorable position.
NRC's legitimate concern for the integrity of the competitive process cannot be distorted into a specific intent to injure Tayloe or deceive GAO by even the most extreme stretch of the' imagination. -
Finally, Tayloe attempts to impeach NRC's credibility by alleging that the delays encountered in awarding its contract with the NRC were the result of incompetent.e rather than the complexity of.the procurement. The numerous protests and FOIA requests which beset the NRC as well as the obvious 1
complexity of the procurement in' question are a matter'of public record and i
are fully documented in our report and GAO's decision in B.206070.3, j
April 22, 1983. The NRC was successful, however, in meeting the March 15, 1983 deadline it had set for award of the contract with Tayloe. This was' the :
only concern being; expressed by Mr. Rowe'. The delays occasioned by the numerous protests and FOIA requests which this procurement encountered are too obvious to be gainsaid; Mr. Rowe's memo is a symptom of these diffi-a culties, not an alternative explanation for them.
For the reasons stated above and also set forth in its report of December 3, 1984. NRC respectfully requests that Tayloe's protest be denied.
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Orisinal Signed by Patriefa NotTy Patricia G. Norry, Director Office of Administration - Abstre.ct of bids for IFB SECY.84-327 cc: Mr. R. Henry Q C q l$, W 1
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DATE :3/18/85
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