Grønlandsudvalget 2014-15 (1. samling)
GRU Alm.del Bilag 25
Offentligt
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United States Government Accountability Office
Washington, DC 20548
Comptroller General
of the United States
DOCUMENT FOR PUBLIC RELEASE
The decision issued on the date below was subject to
a GAO Protective Order. This redacted version has
been approved for public release.
Decision
Matter of:
File:
Date:
Per Aarsleff A/S; Copenhagen Arctic A/S; Greenland Contractors I/S
B-410782; B-410782.2; B-410782.3
February 18, 2015
Paul A. Debolt, Esq., James Y. Boland, Esq., and Anna E. Pulliam, Esq., Venable
LLP, for Per Aarsleff A/S; Kevin J. Cosgrove, Esq., Hunton & Williams LLP, for
Copenhagen Arctic A/S; and James J. McCullough, Esq., Michael J. Anstett, Esq.,
and Samuel W. Jack, Esq., Fried, Frank, Harris, Shriver & Jacobson LLP, for
Greenland Contractors I/S, the protesters.
Kevin P. Connelly, Esq., Kelly E. Buroker, Esq., Kirsten W. Konar, Esq., Caroline
A. Keller, Esq., and Kyle E. Gilbertson, Esq., Vedder Price, P.C., for Exelis Services
A/S, the intervenor.
Maj. Carlos M. De Dios, and Christine Piper, Esq., Department of the Air Force, for
the agency.
Katherine I. Riback, Esq., and Jonathan L. Kang, Esq., Office of the General
Counsel, GAO, participated in the preparation of the decision.
DIGEST
1. Protests that the agency unreasonably found that the awardee complied with the
solicitation’s eligibility requirement, which limited award to “Danish/Greenlandic
enterprises,” is denied where the agency’s evaluation of the awardee’s proposal
was consistent with the terms of the solicitation. Additionally, any challenges to the
solicitation are untimely because they were not filed prior to the due date for receipt
of proposals.
2. Protest that the agency engaged in misleading discussions with a protester that
led it to increase its price is denied where the protester’s contention is not supported
by the record, and where the protester, in any event, cannot show that it could have
been prejudiced even if the discussions were misleading.
3. Challenge to the evaluation of the awardee’s experience is denied where the
solicitation did not prohibit offerors from relying on the experience of their teaming
partners and subcontractors to satisfy the solicitation requirements.
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4. Protest that the agency failed to evaluate the realism of the awardee’s proposed
price is denied where the solicitation did not expressly require a price realism
evaluation, and where, in any event, the protester raising this challenge cannot
demonstrate that it could have been prejudiced by the agency’s failure to conduct
such an evaluation.
DECISION
Per Aarsleff A/S, of Aabyhoej, Denmark, Copenhagen Arctic A/S, of Copenhagen,
Denmark, and Greenland Contractors I/S, of Copenhagen, Denmark, protest the
award of a contract to Exelis Services A/S, of Hellerup, Denmark, by the
Department of the Air Force, under request for proposals (RFP) No. FA2523-12-R-
0006, to provide operations, maintenance, and support services at Thule Air Base in
Thule, Greenland.
1
The protesters argue that the award to Exelis Services was
unreasonable because, they contend, the awardee is not a Danish or Greenlandic
company, as required by the RFP, and was instead a wholly-owned subsidiary of a
foreign (United States) company. Per Aarsleff also argues that the agency
unreasonably found that Exelis Services met the RFP’s experience requirements,
and that the agency conducted misleading discussions with the protester.
Greenland Contractors also argues that the agency failed to reasonably evaluate
Exelis Services’ proposed price.
We deny the protests.
BACKGROUND
Thule Air Base was created as the result of the 1951 “Defense of Greenland
Agreement” between the United States and the Kingdom of Denmark. Agency
Report (AR), Tab 35
2
, 1951 Defense of Greenland Agreement. The mission of
Thule Air Base is to “provide early warning and attack assessment of ballistic
missile launches, provide space surveillance data and to provide tracking, telemetry
and commanding . . . of earth orbiting satellite vehicles.” Performance Work
Statement (PWS) at 1. Thule Air Base also provides support for arctic research
operations by agencies of the United States, foreign governments, academia, and
private organizations. Per Aarsleff Contracting Officer (CO) Statement at 1-2.
1
Greenland is a self-governing entity within the Kingdom of Denmark. See
Government of Greenland website, available at: http://naalakkersuisut.gl/en/About-
government-of-greenland/About-Greenland/Politics-in-Greenland.
2
The agency report for each protest used a uniform system for identifying
documents; citations to tabs in the agency report refer to the same document
provided to all protesters, unless otherwise noted.
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The United States and the Kingdom of Denmark have a long history of negotiating
the eligibility requirements for contract opportunities at Thule Air Base. See
Greenland Contractors AR at 3. A 1962 Aide Memoire was drafted by the
Department of State in June 1962 to clarify certain provisions of the 1951
agreement that created Thule Air Base. AR, Tab 31, 1962 Aide Memoire, at 1.
This document established the authority of a procuring activity in Copenhagen,
Denmark, for operations and supplies at Thule Air Base. Id. at 4. The purpose of
the procurement activity was to allow Danish concerns to participate more fully, and
on an equal basis, with United States business concerns in the procurement of
goods and services to support Thule. Id. at 4-6, 12-13; see Greenland Contractors
AR at 3.
On January 27, 2009, the Danish Ministry of Foreign Affairs (MFA) sent the United
States Embassy in Denmark an acknowledgment and adoption of a note that the
Embassy had sent to the Danish MFA the previous July. AR, Tab 25, 2009
Diplomatic Note. The diplomatic note contained a proposal to update the
understanding between the United States and the Kingdom of Denmark as to how
the Department of Defense was to conduct procurements in Greenland. Greenland
Contractors AR at 4. The language proposed by the Department of State, and
accepted by the Danish MFA, stated:
In accordance with their respective laws and regulations, either Party
may award contracts to commercial enterprises for goods and
services, including construction projects, in Greenland, and shall
procure directly from Danish/Greenlandic sources. When
procurement from such sources in not feasible, US requirements may
be satisfied by procurement from US or other sources. Either Party
may use its own military or civilian personnel to perform services or
construction projects.
AR, Tab 25, 2009 Diplomatic Note, at 1.
On April 11, 2013, officials from the Air Force and the Department of State entered
into discussions with Danish MFA officials to discuss the criteria that would be used
to verify the status of a Danish or Greenlandic company in preparation for the Thule
Air Base solicitation. Greenland Contractors CO Statement at 5; see AR, Tab 5,
Danish Company Criteria Correspondence; Tab 6, Danish MFA Correspondence.
The parties concluded that Denmark could not be the country certifying that offerors
were eligible Danish or Greenlandic sources, because doing so would trigger
obligations under European Union procurement law. AR, Tab 5, Danish Company
Criteria Correspondence, at 13-14. Additionally, allowing Greenland to determine
the eligibility of each source was considered to create a conflict of interest because
the incumbent contractor, Greenland Contractors, is partially owned by the
government of Greenland. Id. at 18.
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To resolve this matter, the Department of State suggested a “simple, transparent
checklist” that the Air Force could use to verify eligibility. Id. at 13. On November 4,
a Department of State official emailed a description of the general requirements for
conducting business in Denmark to the CO responsible for the Thule Air Base
procurement. Id. at 15. On December 9, the Danish Secretary for Foreign Policy
sent a letter to the United States Embassy in Denmark memorializing the
agreement between the United States and Kingdom of Denmark concerning the
eligibility requirements for the Thule Air Base contract. This letter acknowledged
that the Danish MFA would “no longer issue clearances for companies eligible to
participate in the procurement,” and instead gave the United States the
responsibility to “assess whether a company qualifies as Danish or Greenlandic
based on predefined criteria.” AR, Tab 6, Danish MFA Correspondence, at 1. The
letter stated that a company interested in participating in the procurement must
produce a corporate certificate and, in this regard, the offeror “SHALL NOT BE
REGISTERED AS A SUBSIDIARY OF [A] FOREIGN COMPANY.” Id. at 1-2
(emphasis in original). The letter also required potential offerors to produce a
signed letter from an officer of a bank within Denmark verifying that the company
conducts business with that institution. Id.
The Request for Proposals
The RFP was issued on April 9, 2014,
3
and provided for the award of a fixed-price
contract with economic price adjustment and cost reimbursement line items, for a
1-year base period and six 1-year options. RFP at 101, 111.
4
The solicitation
sought to acquire non-personal base operations and maintenance services at Thule
Air Base, which requires providing support in the following areas: supply/fuel,
airfield/airport, transportation/seaport, civil engineering, environmental
management, health services, food services, temporary lodging, recreation
services, community services, and non-sensitive communication services. PWS
at 1. Award was to be made to the responsible firm that submitted the
lowest-priced, technically acceptable proposal that met all of the eligibility
requirements set forth in the solicitation. RFP at 111.
With regard to technical acceptability, the RFP advised that the agency would
evaluate proposals under seven non-price, technical subfactors: (1) program
management; (2) infrastructure operation and maintenance plan; (3) logistics plan;
(4) vehicle/equipment replacement plan; (5) resource utilization plan; (6) downward
pricing; and (7) experience. Id. at 111-112. The solicitation stated that an
3
A draft RFP was issued on December 5, 2013, which also included the provisions
discussed herein concerning the eligibility of firms to compete.
4
Citations to the RFP are to the conformed copy provided by the Air Force.
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unacceptable rating under any one of these subfactors would result in the proposal
being rated technically unacceptable. Id. at 112. The agency was to evaluate price
using one or more of the price analysis techniques outlined in Federal Acquisition
Regulation (FAR) § 15.404-1(b) to determine whether the proposed prices were
reasonable, complete and balanced. Id. at 115. The solicitation included the
following notice:
Offerors are advised to clearly show justification for unique practices
that significantly lower pricing. An assessment that the proposal is not
reasonable or affordable will result in the offer being unacceptable for
award.
RFP at 115.
With regard to the eligibility of firms to participate in the procurement, the RFP
stated the following:
L-3. OFFEROR ELIGIBILITY
Participation in this acquisition is limited to Danish/Greenlandic
enterprises. Enterprises must possess a corporation certificate
(Selskabscertifikat m. oblat) verifying the company is registered as a
business in the Kingdom of Denmark (Det Central
Virksomhedsregister (CVR); Det Grønlandske Erhervsregister (GER);
Skráseting Føroya (Skrás. Nr.)). NOTE: THE REGISTERED OFFICE
OF THE ENTERPRISE SHALL BE IN THE KINGDOM OF DENMARK
AND SHALL NOT BE REGISTERED AS A SUBSIDIARY OF
FOREIGN COMPANY. Enterprises must produce a signed letter from
an officer of a bank within the Kingdom of Denmark verifying the
company conducts business with that institution. NOTE:
ELECTRONIC FUNDS TRANSFER OF INVOICE PAYMENTS WILL
ONLY BE MADE TO A BANK IN THE KINGDOM OF DENMARK.
RFP at 102-03.
Similarly, the RFP’s instructions required offerors’ proposals to address the
following:
L-6. INFORMATION TO OFFERORS (ITO) AND INSTRUCTIONS
FOR PROPOSAL PREPARATION INSTRUCTIONS (IPP)
*
*
*
*
*
b.
Contract Documents.
As part of the proposal submission, include
the following:
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*
*
*
*
*
2) Corporation certificate (Selskabscertifikat m. oblat) verifying that
your company is registered as a business in the Kingdom of Denmark.
(Det Central Virksomhedsregister (CVR); Det Grønlandske
Erhervsregister (GER); Skráseting Føroya (Skrás. Nr.))
NOTE: THE REGISTERED OFFICE OF THE ENTERPRISE SHALL
BE IN THE KINGDOM OF DENMARK AND SHALL NOT BE
REGISTERED AS A SUBSIDIARY OF FOREIGN COMPANY.
3) Signed letter from an officer of a bank within the Kingdom of
Denmark verifying that your company conducts business with that
institution.
NOTE: ELECTRONIC FUNDS TRANSFER OF INVOICE
PAYMENTS WILL ONLY BE MADE TO A BANK IN THE KINGDOM
OF DENMARK.
Id. at 109.
The solicitation required that offerors provide a staffing plan in accordance with the
agreements between the United States and the Kingdom of Denmark. RFP at 107.
The RFP stated that personnel working at Thule Air Base must be Danish,
Greenlandic, or American citizens, and must adhere to Danish/Greenlandic labor
law. Id. As certification of this requirement, offerors were required to provide a
“statement of assurance that Danish/Greenlandic labor law will be followed and
applied to personnel who are proposed to work at Thule [Air Base].” Id.
The solicitation also included the following relevant provisions in the PWS
concerning:
H-6. STATUTORY RESTRICTIONS ON FOREIGN ACQUISITIONS
The requirements at PWS 3.1.16 to maximize and document contract
related purchases and subcontracts for Danish and Greenlandic
sources required by the 1962 International Agreement (Aide Memoire)
between the US and Denmark take precedence in the performance of
this contract.
RFP at 77.
3.1.16 Maximize and document contract-related purchases and
subcontracts from Danish and Greenlandic sources.
Required by the 1962 Agreement (Aide Memoire) between the
Government of the US and the Government of the Kingdom of
Denmark. Document and justify any exceptions.
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PWS at 10.
Of relevance to this protest, and as discussed in detail below, the Air Force
received questions from offerors in response to the draft RFP regarding the
requirement to be a “Danish/Greenlandic enterprise[],” and provided
responses on December 10, 2014, and January 22, 2014. RFP at 116-17,
Questions & Answers (Q&As).
Evaluation of Proposals and Award
The Air Force received four proposals in response to the RFP by the initial closing
date of May 9, 2014: Per Aarsleff, Copenhagen Arctic, Greenland Contractors, and
Exelis Services. All offerors were included in the competitive range, and the agency
issued evaluation notices (ENs) to each offeror and conducted oral discussions.
The agency evaluated the EN responses and held a second round of discussions.
5
Each offeror received a letter that its proposal remained in the competitive range
and that it was currently rated as technically acceptable. The agency then
requested final proposal revisions (FPRs).
The Air Force concluded that all offerors’ proposals were technically acceptable,
and that all offerors were eligible to receive award as Danish or Greenlandic
enterprises. AR, Source Selection Decision, at 2-3. Exelis Services proposed the
lowest evaluated price of $363,925,645, Per Aarsleff proposed the second-lowest
evaluated price of $[DELETED], Copenhagen Arctic proposed the third-lowest
evaluated price of $[DELETED], and Greenland Contractors proposed the
fourth-lowest evaluated price of $[DELETED]. Id. at 4. After evaluating the FPRs,
the Air Force selected Exelis Services for award based on its lowest-priced,
technically acceptable proposal. Id. at 5. The agency advised the other three
offerors of its award decision, and these protests to our Office followed.
DISCUSSION
Per Aarsleff, Copenhagen Arctic and Greenland Contractors each argue that the
award to Exelis Services was unreasonable and did not meet the RFP requirements
because the awardee is not a Danish or Greenlandic company, but is rather a
subsidiary of a foreign (United States) company. Per Aarsleff Protest at 9;
5
During this time the Air Force contacted the Danish Foreign Ministry to obtain
assistance in determining if these offerors “can be considered Danish Firms and not
a subsidiary of a foreign firm.” AR, Tab 6, Ministry of Foreign Affairs
Correspondence at 4. The Danish Foreign Ministry replied that it was “not able to
assist in the assessment of the companies in question.” Id.
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Copenhagen Arctic Protest at 4; Greenland Contractors Protest at 10. Additionally,
Per Aarsleff argues that Exelis Services cannot demonstrate the minimum
experience required by the RFP, and contends that the agency conducted
misleading discussions that caused the protester to increase its proposed price.
Per Aarsleff Protest at 16, 19. Greenland Contractors also argues that the agency
failed to reasonably evaluate Exelis Services’ proposed price. Greenland
Contractors Protest at 18. For the reasons discussed below, we find no basis to
sustain the protests.
6
Danish/Greenlandic Enterprise Requirement
The protesters each argue that Exelis Services was not eligible for award because it
was not a “Danish/Greenlandic enterprise[],” as required by the RFP. As discussed
above, the RFP stated that “THE REGISTERED OFFICE OF THE ENTERPRISE
SHALL BE IN THE KINGDOM OF DENMARK AND SHALL NOT BE REGISTERED
AS A SUBSIDIARY OF FOREIGN COMPANY.” RFP at 102.
7
The protesters
argue that the agency’s interpretation of the solicitation improperly focused on the
issue of registration, rather than the ownership of the offeror. The protesters
contend that Exelis Services was incorporated in Denmark only shortly before
proposal submission and is a wholly-owned subsidiary of Exelis Systems
Corporation, a United States based company. For these reasons, the protesters
argue that Exelis Services should have been excluded from the competition. We
have reviewed the record and conclude that the Air Force evaluated Exelis
Services’ proposal in a manner that was consistent with the terms of the solicitation.
We also conclude that the protesters’ arguments essentially challenge alleged
defects in the solicitation that were apparent prior to the time for submission of
proposals, and are therefore untimely.
The evaluation of an offeror’s proposal is a matter within the agency’s discretion.
National Gov’t Servs., Inc., B-401063.2 et al., Jan. 30, 2012, 2012 CPD ¶ 59 at 5. A
protester’s disagreement with the agency’s judgment does not establish that the
evaluation was unreasonable. VT Griffin Servs., Inc., B-299869.2, Nov. 10, 2008,
2008 CPD ¶ 219 at 4. In reviewing a protest against an agency’s evaluation of
6
The protesters raise other collateral arguments. While our decision does not
specifically address every argument, we have considered all of the protesters’
assertions and find that none provides a basis for sustaining the protests.
The parties appear to take differing views as to whether the prohibition on
registration “AS A SUBSIDIARY OF FOREIGN COMPANY” applies to the
enterprise, or the registered office of the enterprise. For the reasons discussed
below, we need not resolve this matter, as under either interpretation, the Air
Force’s evaluation of Exelis Services’ proposal was reasonable.
7
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proposals, our Office will not reevaluate the proposals, but will instead examine the
record to determine whether the agency’s judgments are reasonable and consistent
with the solicitation’s evaluation factors and applicable statutes and regulations.
Brican Inc., B-402602, June 17, 2010, 2010 CPD ¶ 141 at 4; Shumaker Trucking
& Excavating Contractors, Inc., B-290732, Sept. 25, 2002, 2002 CPD ¶ 169 at 3.
Where, as here, a protester and agency disagree over the meaning of solicitation
language, we will resolve the matter by reading the solicitation as a whole and in a
manner that gives effect to all of its provisions; to be reasonable, and therefore
valid, an interpretation must be consistent with the solicitation when read as a whole
and in a reasonable manner. Alluviam LLC, B-297280, Dec. 15, 2005, 2005 CPD
¶ 223 at 2.
As discussed above, the RFP section stated that “[p]articipation in this acquisition is
limited to Danish/Greenlandic enterprises.” RFP at 102. This section of the RFP
set forth three criteria for eligibility as a Danish/Greenlandic enterprise:
(1) ”Enterprises must possess a corporation certificate (Selskabscertifikat m. oblat)
verifying the company is registered as a business in the Kingdom of Denmark (Det
Central Virksomhedsregister (CVR),” (2) “THE REGISTERED OFFICE OF THE
ENTERPRISE SHALL BE IN THE KINGDOM OF DENMARK AND SHALL NOT BE
REGISTERED AS A SUBSIDIARY OF FOREIGN COMPANY,” and (3) “Enterprises
must produce a signed letter from an officer of a bank within the Kingdom of
Denmark verifying the company conducts business with that institution.” Id.
at 102-03; see also RFP at 109.
As also discussed above, the Air Force evaluated each offeror and concluded that
each met the Danish/Greenlandic enterprise requirement. AR, Source Selection
Decision, at 2-3. Specifically, the agency states that “[t]he Danish Business
Register (CVR) was checked to verify that all Offerors were registered as a
business in the Kingdom of Denmark,” and further states that “[t]here was no
information indicating that any Offeror, including Exelis Services A/S, had offices
registered as subsidiaries of a foreign company.” Greenland Contractors CO
Statement at 10; see also id. at 12-13; Copenhagen Arctic CO Statement at 10,
12-13; Per Aarsleff CO Statement at 10, 13-14.
The protesters do not challenge the eligibility of Exelis Services to participate in the
competition based on the requirement to have a corporate certificate or the
requirement to produce a letter from a bank. The protesters, however, argue that
the Air Force’s evaluation of offerors’ eligibility as Danish/Greenlandic enterprises
was unreasonably limited to the RFP’s prohibition against a firm being “registered
as a subsidiary of foreign company.” RFP at 102. In this regard, the protesters
argue that the treaty obligations between the United States and the Kingdom of
Denmark required the awardee to be a Danish or Greenlandic firm, and that the Air
Force was therefore required to look beyond the issue of “registration” and to
investigate the actual ownership of each offeror. The protesters argue that an
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investigation into Exelis Services’ corporate parentage would have disclosed
non-Danish or Greenlandic ownership.
While the parties agree that the United States and the Kingdom of Denmark have a
long history of treaty obligations concerning the Thule Air Base, our Office’s focus
here is on the terms of the solicitation.
8
Here, we find that the RFP clearly stated
that participation in the competition and award of the contract would be limited to
“Danish/Greenlandic enterprises.” RFP at 102. The RFP also, however, identified
the three above-referenced criteria the Air Force would evaluate to determine
whether a firm was an eligible enterprise.
9
Id. at 102-03. The RFP did not state
that the specific terms of any treaties or other obligations between the United States
and the Kingdom of Denmark would be utilized for purposes of determining the
eligibility of a firm to compete.
10
If the protesters believed that terms specific to treaties or other obligations should
have been referenced in or incorporated into the RFP, they were required to
challenge this matter prior to the time for receipt of proposals. Our Bid Protest
Regulations contain strict rules for the timely submission of protests. These
timeliness rules reflect the dual requirements of providing parties a fair opportunity
8
As discussed herein, our decision as to whether Exelis met the eligibility
requirements under the RFP is limited to the terms of the RFP. In this regard, we
conclude that the RFP set forth the ground rules under which the Air Force would
assess whether a firm met the eligibility requirements that exist under the treaty
obligations between the United States and the Kingdom of Denmark. Our decision
therefore does not address whether award to Exelis Services met those treaty
obligations, separate and apart from the terms of the RFP.
9
As discussed above, the agreements between the countries appear to designate
the United States as the party responsible for establishing eligibility criteria for the
RFP. See AR, Tab 6, Denmark MFA Correspondence, at 1. We need not address
this issue in detail, however, as our decision here turns on the provisions of the
RFP.
The protesters argue that RFP section H.6 incorporated the terms of the 1962
Aide Memoire, and therefore required a broader interpretation of eligibility. See
RFP at 77; see also PWS at 10. As discussed below, however, the solicitation
incorporated the Aide Memoire only as to labor and purchasing requirements during
contract performance, and did not specifically incorporate the terms of the Aide
Memoire, or any other agreements between the United States and the Kingdom of
Denmark regarding the eligibility requirements. See id. Instead, RFP sections L-3
and L-6 set forth the eligibility criteria established by the Air Force, and thus
informed offerors as to how the agency would evaluate whether an offeror was a
Danish/Greenlandic enterprise. See RFP at 102-103, 109.
10
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to present their cases, and resolving protests expeditiously without unduly
disrupting or delaying the procurement process. Peacock, Myers & Adams,
B-279327, Mar. 24, 1998, 98-1 CPD ¶ 94 at 3-4; Professional Rehab. Consultants,
Inc., B-275871, Feb. 28, 1997, 97-1 CPD ¶ 94 at 2. Under these rules, a protest
based on alleged improprieties in a solicitation that are apparent prior to the closing
time for receipt of proposals must be filed before that time. Bid Protest Regulations,
4 C.F.R. § 21.2(a)(1) (2014). Where alleged improprieties do not exist in the initial
solicitation, but subsequently occur (e.g., via an amendment to the solicitation or
based on agency clarifications of the terms of the solicitation), they generally must
be protested not later than the next closing time for receipt of proposals. Id.; see
Armorworks Enters., LLC, B-400394, B-400394.2, Sept. 23, 2008, 2008 CPD ¶ 176
at 5.
The protesters argue that the Air Force could not have reasonably relied on the
“registered as a foreign subsidiary” provision of the RFP because, they contend,
there was no way for a firm to register in the CVR as a subsidiary of a foreign
company. The protesters provide numerous legal opinions and declarations from
Danish legal authorities in support of this view of Danish law and the CVR. See,
e.g., Per Aarsleff Comments (Dec. 22, 2014), Exh. A, Decl. of Christian Th. Kjølbye
(Danish Attorney). The Air Force does not specifically dispute the protesters’
contentions in this regard. Thus, the protesters contend, the RFP, despite its plain
language, cannot be interpreted as stating that an offeror will be considered eligible
as long as it is “NOT BE REGISTERED AS A SUBSIDIARY OF FOREIGN
COMPANY.” RFP at 102. The protesters therefore argue that the assessment as
to whether an offeror is a “Danish/Greenlandic enterprise” within the meaning of the
RFP should turn on whether the prime contractor had Danish or Greenlandic
ownership or control. Per Aarsleff Protest at 10.
We conclude that the RFP was clear on its face as to the issue of registration in the
CVR. Specifically, we agree with the Air Force and Exelis Services that the RFP’s
eligibility analysis addressed whether the offeror was registered as a subsidiary of a
foreign company. Apart from the RFP’s language concerning registration, there are
no other criteria in the RFP that explain how the agency would evaluate whether a
firm was a Danish or Greenlandic enterprise. Although the parties seek to add the
issue of ownership or control to the RFP, nothing in the solicitation provides for
consideration of these criteria.
Even if there was some doubt as to the meaning of this RFP provision at the time
the draft solicitation was issued in December 2013, the Air Force provided two
Q&As that removed all doubt as to how the agency interpreted the provision. As
discussed above, the Air Force was asked the following question from an offeror:
“What do you mean by ‘not be registered’?” RFP at 116. The agency responded
on Dec. 10, 2013:
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In the searchable part of the CVR [Danish Business Register] there is
an information point called ‘type of company/virksomhedsform’ that
has ‘subsidiary of foreign company’ as a possibility, so there is a way
to see if the company is fully registered as Danish or acting as a
foreign subsidiary in Denmark.
RFP at 116. This response clearly advised offerors that the Air Force believed that
there was within the CVR a place for a firm to indicate that a firm was a subsidiary
of a foreign firm. Id.
Similarly, the Air Force was asked the following question from an offeror: “Please
provide further clarification as to what a ‘Danish Enterprise’ is as will be interpreted
by the US Air Force?” The agency responded on January 22, 2014:
To be eligible for award, an offeror must present: 1. Corporation
certificate (Selskabscertifikat m. oblat) verifying that your company is
registered as a business in the Kingdom of Denmark. (Det Central
Virksomhedsregister (CVR); Det Grønlandske Erhervsregister (GER);
Skráseting Føroya (Skrás. Nr.)) NOTE: THE REGISTERED OFFICE
OF THE ENTERPRISE SHALL BE IN THE KINGDOM OF DENMARK
AND SHALL NOT BE REGISTERED AS A SUBSIDIARY OF
FOREIGN COMPANY. 2. Signed letter from an officer of a bank
within the Kingdom of Denmark verifying that your company conducts
business with that institution. NOTE: ELECTRONIC FUNDS
TRANSFER OF INVOICE PAYMENTS WILL ONLY BE MADE TO A
BANK IN THE KINGDOM OF DENMARK.
Id. at 117. This response essentially repeats the language from section L of the
RFP. Id. at 102-03.
We think that these Q&As clearly advised offerors that the agency intended to
evaluate whether an offeror was registered in the CVR as a subsidiary of a foreign
company.
11
To the extent the protesters argue that the answers above provide
11
Even if the solicitation was ambiguous as to the registration requirement, we
conclude that such an ambiguity would not provide a basis to sustain the protest.
An ambiguity exists if a solicitation term is susceptible to more than one reasonable
interpretation that is consistent with the solicitation, when read as a whole.
Poly-Pacific Techs., Inc., B-293925.3, May 16, 2005, 2005 CPD ¶ 100 at 3. A
patent ambiguity exists where the solicitation contains an obvious, gross, or glaring
error, while a latent ambiguity is more subtle. Where a patent ambiguity in a
solicitation is not challenged prior to the submission of bids, we will dismiss as
untimely any subsequent challenge to the meaning of the solicitation term. 4 C.F.R.
§ 21.2(a)(1); Simont S.p.A., B-400481, Oct. 1, 2008, 2008 CPD ¶ 179 at 4. Here,
(continued...)
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incorrect information, because the CVR does not allow for such a registration, we
conclude that the protesters’ arguments are challenges to the terms of the
solicitation and are therefore untimely. In this regard, the Q&As were issued prior to
the May 9, 2014, due date for receipt of initial proposals. See 4 C.F.R. § 21.2(a)(1).
In sum, we conclude that the Air Force reasonably evaluated Exelis Services’
proposal, and reasonably found that Exelis Services was eligible for award under
the terms of the solicitation. We therefore find no basis to sustain the protest.
Exelis Services’ Experience
Next, Per Aarsleff argues that Exelis does not meet the RFP’s experience
requirements because of the way in which the awardee was structured and how it
proposed to perform the PWS requirements. Per Aarsleff Protest at 16. We find no
merit to this argument.
The experience technical evaluation subfactor instructed offerors to “submit a single
summary of the offeror’s (and teammates) relevant experience” performed within
the previous 5 years, that reflected the following:
The summary should show recent experience in a remote
environment performing operations of power production and
distribution, heating ventilation and air conditioning (HVAC), or water
treatment and distribution. Operations shall demonstrate performance
in a remote environment and challenges faced and overcome in that
environment. Experience may be demonstrated either as a prime
contractor or team effort; and either through a single prior contract or
by a combination of prior contracts. Recent experience information
shall consist of activities performed within the previous 5 years from
the issue date of this solicitation.
1) Provide documentation of previous work that demonstrates a
comprehensive understanding of tasks required to perform civil
engineering operations of power production and distribution, heating
ventilation and air conditioning (HVAC) or water treatment and
distribution in a remote environment.
(...continued)
given the specificity of the Q&As, we conclude that even if the solicitation contained
an ambiguity regarding eligibility, such an ambiguity would have been patent, rather
than latent.
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2) Provide previous activities performed in a remote environment. A
remote environment is defined as an environment with personnel and
cargo logistical challenges, limited external resources, or an
environment, which requires self-sustainability capabilities.
RFP at 108. The RFP also instructed offerors to “[p]rovide complete information as
to the arrangement and relationship and copies of any teaming or joint venture
agreements.” Id. at 110.
The Air Force evaluated the “single summary of the offeror’s (and teammates)
relevant experience” required by the RFP during its evaluation. AR, Tab 38, Exelis
Evaluation, at 241-242. The agency concluded that Exelis Services provided an
acceptable summary of experience that met the solicitation requirements. Id.
The protester notes that Exelis Services’ proposal stated that the offeror teamed
with its direct parent company, Exelis Systems Corporation, as a subcontractor, to
perform the work under the contract. AR, Tab 37, Exelis Proposal, Vol. I,
Subfactor 1, at 1; id., Exelis Proposal, Vol. 2, Factor 2, at 1. In fact, the protester
contends that 100 percent of the work will be performed by Exelis Systems. See
Per Aarsleff Comments (Dec. 22, 2014) at 37-38. For the experience subfactor, the
awardee’s proposal cited experience relating to Exelis Systems, and did not cite any
experience for Exelis Services. AR, Tab 37, Exelis Proposal, Vol. I, Subfactor 7,
at 2-3, 7. The protester argues that although the RFP allowed team members to
contribute to the prime offeror’s satisfaction of the minimum experience
requirement, the RFP did not allow the prime offeror to rely entirely on its
subcontractors to demonstrate experience because “implicit in the minimum
experience criteria was a requirement that the prime contractor have at least some
experience . . . related to the work that it will perform.” Per Aarsleff Comments
(Dec. 22, 2014) at 38.
We find no basis to question the reasonableness of the agency’s evaluation of the
Exelis Services’ experience. An agency may consider the experience or past
performance of an offeror’s parent or affiliated company, provided the RFP does not
prohibit such consideration. See, e.g., Perini/Jones, Joint Venture, B-285906,
Nov. 1, 2000, 2002 CPD ¶ 68 at 4; Hot Shot Express, Inc., B-290482, Aug. 2, 2002,
2002 CPD ¶ 139 at 3. Here, even if Exelis Services intends to subcontract all of the
work under this contract, Per Aarsleff fails to identify anything in the RFP that would
require the agency to reject Exelis Services’ proposal as unacceptable under the
experience subfactor based on the awardee’s approach. See Computer Sci. Corp.,
B-409386.2; B-409386.3, Jan. 8, 2015, 2015 CPD ¶ 34 at 5 (holding that an
offeror’s proposed approach of subcontracting 96.2 percent of the work did not
require the agency to assess risks to the proposal where the solicitation did not bar
this approach). As discussed above, the experience subfactor stated that
“[e]xperience may be demonstrated either as a prime contractor or team effort,” but
did not set forth a minimum level of experience for the prime contractor. RFP
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at 108. In this regard, the solicitation did not specify that the prime contractor had to
demonstrate experience as a prime contractor, or experience working as part of a
team effort.
12
Because the RFP did not prohibit an offeror from relying solely on the
experience of its proposed teaming members, we find no basis to sustain the
protest.
Misleading Discussions
Next, Per Aarsleff argues that the Air Force engaged in misleading discussions with
the protester. In this regard, Per Aarsleff argues that the agency misunderstood its
proposed labor approach, which caused the agency to direct the protester to
unnecessarily increase its price during discussions. The protester also argues that
the agency failed to advise Per Aarsleff where it might reduce staff, and therefore
improve its chances for award. Per Aarsleff Protest at 18-20. We find no merit to
these arguments.
When an agency engages in discussions with an offeror the discussions must be
meaningful, that is, sufficiently detailed so as to lead an offeror into the areas of its
proposal requiring amplification or revision. Hanford Envtl. Health Found.,
B-292858.2, B-292858.5, Apr. 7, 2004, 2004 CPD ¶ 164 at 8. Although discussions
must address deficiencies and significant weaknesses identified in proposals, the
precise content of discussions is largely a matter of the contracting officer’s
judgment. FAR § 15.306(d)(3); American States Utilities Servs., Inc., B-291307.3,
June 30, 2004, 2004 CPD ¶ 150 at 5. An agency may not mislead an offeror
through the framing of a discussion question into responding in a manner that does
not address the agency’s actual concerns, or otherwise misinform the offeror
concerning a problem with its proposal. Metro Mach. Corp., B-281872 et al.,
Apr. 22, 1999, 99-1 CPD ¶ 101 at 6. There is no requirement, however, that an
agency inform an offeror during discussions that its price may be too high, where
the offeror’s price is not considered excessive or unreasonable. Uniband, Inc.,
B-289305, Feb. 8, 2002, 2002 CPD ¶ 51 at 11.
The Air Force initially found that Per Aarsleff’s proposal was unacceptable under the
program management subfactor, and issued 44 ENs to the firm regarding its staffing
Even if the solicitation was ambiguous as to the experience requirement, we
conclude that such an ambiguity was patent, rather than latent, and therefore must
have been challenged prior to the time for receipt of proposals. See 4 C.F.R.
§ 21.2(a)(1); Poly-Pacific Techs., Inc., supra. Thus, any challenge to the
interpretation of the experience requirement is now untimely. Id.
12
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plan.
13
AR, Tab 8, Initial Evaluation Briefing, at 24; Per Aarsleff CO Statement
at 18-19. In these ENs, the agency referenced the specific labor category where
the protester’s staffing or qualifications appeared to be insufficient to fulfill a
particular PWS requirement. AR, Tab 9, Per Aarsleff Staffing Plan ENs (Round 1).
Each EN gave the protester the option to either “provide your company’s
methodology to fulfill this requirement with proposed staffing and qualifications or
update your staffing plan.” Id.
First, to the extent Per Aarsleff argues that the Air Force conducted misleading
discussions because it failed to advise the protester that its proposed price was too
high for any particular area, we disagree. As discussed above, agencies are not
required to advise an offeror that its prices are higher than other offerors, as long as
the prices are not unreasonably high or otherwise unacceptable. See Uniband, Inc.,
supra. Here, none of the protester’s proposed prices were found to be
unreasonably high or unacceptable.
Next, to the extent Per Aarsleff argues that the Air Force conducted misleading
discussions because it failed to recognize that the protester’s proposed staffing plan
was acceptable as initially proposed, and did not require additional increases in
staffing, we also disagree. The Air Force states that, with respect to certain ENs
that indicated a low level of proposed staff, Per Aarsleff elected to explain its
methodology for meeting the PWS requirement with its initial proposed staffing; for
these ENs, the agency accepted the response and closed those ENs. See Per
Aarsleff CO Statement at 19; AR, Tab 9, Per Aarsleff Staffing Plan ENs (Round 1),
at 11. In other instances Per Aarsleff elected to increase its proposed labor hours
or staffing in response to the EN; for these ENs, the agency also accepted the
response and closed those ENs. See Per Aarsleff CO Statement at 19; AR, Tab 9,
Per Aarsleff Staffing Plan ENs (Round 1), at 13-14. The CO stated that at no time
during discussions did the agency indicate to Per Aarsleff, or any offeror, that its’
only option was to increase its labor hours in order to obtain acceptable ratings. Id.
at 18. Thus, for all ENs, the protester had the opportunity to demonstrate that its
initially-proposed staffing was adequate, rather than increasing its staffing. On this
record, we find no basis to conclude that the agency misled the protester during
discussions.
In any event we note that Per Aarsleff has not demonstrated any possibility of
prejudice resulting from the agency’s discussions regarding the protester’s
proposed methodology for meeting the PWS requirements. In this regard, our
Office will not sustain a protest unless the protester demonstrates a reasonable
13
Overall, the CO issued 85 ENs to Per Aarsleff; 44 were in regard to the staffing
plan as part of Subfactor 1-Program Management. Per Aarsleff CO Statement
at 19.
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possibility that it was prejudiced by the agency’s actions, that is, unless the
protester demonstrates that, but for the agency’s actions, it would have had a
substantial chance of receiving the award. Armed Forces Hospitality, LLC,
B-298978.2, B-298978.3, Oct. 1, 2009, 2009 CPD ¶ 192 at 9-10;
McDonald-Bradley, B-270126, Feb. 8, 1996, 96-1 CPD ¶ 54 at 3.
Here, we note that Exelis Services’ final evaluated price of $363,925,645 was less
than Per Aarsleff’s initial evaluated price of $[DELETED]. AR, Source Selection
Decision, at 4. Thus, even if the agency’s discussions were misleading, correcting
this alleged mistake--by lowering the protester’s price to its initial level--would not
make the protest’s price lower than Exelis Services’ revised price. Because the
solicitation provided for award to the offeror who submitted the lowest-priced,
technically acceptable proposal, we find that Per Aarsleff cannot demonstrate that it
could have been prejudiced by misleading discussions. See Serco Inc., B-405280,
Oct. 12, 2011, 2011 CPD ¶ 237 at 11-12.
Price Evaluation
Finally, Greenland Contractors argues that the Air Force failed to evaluate whether
Exelis Services’ proposed price was too low, and also argues that the awardee’s
low price demonstrates that the awardee will not comply with Danish and
Greenlandic labor law, as required by the RFP. Greenland Contractors Protest
at 18; Greenland Contractors Comments (Dec. 22, 2014) at 11. For the reasons
discussed below, we find no merit to these arguments, and also conclude, in any
event, that the protester fails to demonstrate that it could have been prejudiced by
the alleged errors in the agency’s evaluation.
As discussed above, the RFP stated that the Air Force would evaluate prices using
one or more of the price analysis techniques outlined in FAR § 15.404-1(b) to
determine whether the proposed prices were reasonable, complete and balanced.
RFP at 115. The solicitation also included the following notice to offerors
concerning price:
Offerors are advised to clearly show justification for unique practices
that significantly lower pricing. An assessment that the proposal is not
reasonable or affordable will result in the offer being unacceptable for
award.
Id.
As a general matter, when awarding a fixed-price contract, an agency is only
required to determine whether the offered prices are fair and reasonable. FAR
§ 15.402(a). An agency’s concern in making a price reasonableness determination
focuses on whether the offered prices are too high, rather than too low. Vital Link,
Inc., B-405123, Aug. 26, 2011, 2011 CPD ¶ 233 at 6. Where there is no evaluation
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factor providing for consideration of price realism, a determination that an offeror’s
price is too low generally concerns the offeror’s responsibility. PAE Gov’t Servs.,
Inc., B-407818, Mar. 5, 2013, 2013 CPD ¶ 91 at 6. While an agency may conduct a
price realism analysis in awarding a fixed-price contract for the limited purposes of
assessing whether an offeror’s low price reflects a lack of technical understanding
of risk, see FAR § 15.404-1(d)(3), offerors must be advised that the agency will
conduct such an analysis. Emergint Techs., Inc., B-407006, Oct. 18, 2012, 2012
CPD ¶ 295 at 5-6. In other words, offerors must be reasonably informed that a
price realism analysis will occur, and, in circumstances where price realism is not
explicitly called for in the RFP, offerors must be reasonably informed that negative
consequences may result. NJVC, LLC, B-410035, B-410035.2, Oct. 15, 2014, 2014
CPD ¶ 307 at 4; see also DynCorp Int’l LLC, B-407762.3, June 7, 2013, 2013 CPD
¶ 160 at 9. Absent a solicitation provision providing for a price realism evaluation,
agencies are neither required nor permitted to conduct a realism evaluation in
awarding a fixed-price contract. Emergint Techs., Inc., supra.
Here, Greenland Contractors acknowledges that the solicitation did not expressly
require a price realism analysis. See Greenland Contractors Comments (Dec. 22,
2014) at 15. The protester also argues, however, that the “Air Force was not free to
ignore” the solicitation provision that “[o]fferors are advised to clearly show
justification for unique practices that significantly lower pricing.” Id., citing RFP
at 115. Greenland Contractors states that, as the incumbent contractor, it
understood the solicitation requirements and costs, and contends that the
awardee’s proposed price was too low to adequately perform the contract.
Greenland Contractors Comments (Dec. 22, 2014) at 14-15.
We conclude that the solicitation did not require the Air Force to conduct a price
realism evaluation. In this regard, the RFP did not specifically state that the agency
would evaluate the offerors’ proposed prices to determine whether they were so low
that they reflected a lack of technical understanding, nor did the RFP state that the
agency could reject a proposal for offering unrealistically low prices. See NJVC,
LLC, supra; DynCorp Int’l LLC, supra.
To the extent the price evaluation criterion required offerors to “show justification for
unique practices that significantly lower pricing,” RFP at 115, we do not think that
this statement obligated the agency to evaluate the risk of poor performance
stemming from a low price, in light of the absence of a price realism factor in the
solicitation. In this regard, the requirement to show a justification for significantly
low prices was set out in the first sentence of the solicitation provision. Id. The
second sentence of the provision clearly referred to whether the proposed price was
“reasonable or affordable,” i.e., too high. Id.
As our Office has held, price reasonableness and price realism are distinct
concepts. Logistics 2020, Inc., B-408543; B-408543.3, Nov. 6, 2013, 2013 CPD
¶ 258 at 7. The purpose of a price reasonableness review is to determine whether
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the prices offered are too high, as opposed to too low. See FAR § 15.404-1(b);
Sterling Servs., Inc., B-291625, B-291626, Jan. 14, 2003, 2003 CPD ¶ 26 at 3.
Conversely, a price realism review is to determine whether prices are too low, such
that there may be a risk of poor performance. FAR §15.404-1(d); C.L. Price
& Assocs., Inc., B-403476.2, Jan. 7, 2011, 2011 CPD ¶ 16 at 3. Here, we do not
think that the RFP provision, when reading the two sentences in conjunction,
advised offerors that the agency would evaluate the realism, rather than the
reasonableness, of the offerors’ proposed prices.
14
The Air Force evaluated Exelis Services’ proposed price and found it reasonable.
15
AR, Source Selection Decision, at 3. On this record we find no basis to conclude
that the agency’s evaluation of Exelis Services’ proposed price was unreasonable.
In any event, we also conclude that Greenland Contracting’s arguments concerning
the evaluation of Exelis Services’ proposed price do not demonstrate any possibility
of prejudice to the protester. As discussed above, Exelis Services proposed the
14
Additionally, the price evaluation criteria concerning “significantly lower pricing”
must be read in conjunction with the RFP’s technical evaluation subfactor for
“Downward Pricing.” RFP at 114. This technical evaluation subfactor required
offerors to explain their approaches to “achieve continuous downward pricing”
through technical approach efficiencies, and required offerors to show for option
years 2 through 6 “a reduction from the previous option year amount in total annual
amount proposed.” Id. This subfactor appears to indicate that the agency was
concerned with ensuring that offerors propose reasonable prices, that is, prices that
were not too high. Greenland Contractors does not contend that Exelis Services’
proposal should have been found unacceptable under the downward pricing
technical evaluation subfactor.
In the agency’s initial report responding to the protest, the CO stated that Exelis
Services “clearly show[ed] justification for unique practices that significantly lower
prices” by the fact that it presented a staffing plan “which was unique from” that of
Greenland Contractors. Greenland Contractors CO Statement at 15. In contrast,
the agency’s response to interrogatories from our Office concerning this matter
included a declaration from the administrative CO, who stated that he found the
offerors’ prices reasonable “based on adequate price competition,” and that “none
of the proposals contained ‘significantly lower pricing.’” Agency Response to GAO
Interrogatories, Tab 3, Declaration of Administrative CO (Jan. 26, 2015), at 1-2.
The agency’s statements concerning whether Exelis Services proposed
“significantly lower prices” appear to be in conflict. Nonetheless, we do not find that
the apparent inconsistency in the record provides a basis to sustain the protest in
light of the absence of a solicitation requirement for price realism, and--as
discussed below--the absence of any possibility of prejudice for the protester.
15
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lowest total evaluated price of $363,925,645, Per Aarsleff proposed the
second-lowest evaluated price of $[DELETED], Copenhagen Arctic proposed the
third-lowest evaluated price of $[DELETED], and Greenland Contractors the
proposed fourth-lowest evaluated price of $[DELETED]. AR, Source Selection
Decision at 4.
Greenland Contractors cites several examples in support of its argument that the Air
Force should have found Exelis Services’ proposed price too low. For example
Greenland Contractors argues that Exelis Services price for CLIN 1 of $[DELETED]
was [DELETED] lower than Greenland Contractors’ price for CLIN 1 of
$[DELETED]. AR, Tab 37, Exelis Services Proposals, at 661; Greenland
Contractors Comments (Dec. 22, 2014) at 13. The protester also notes that Exelis
Services’ price of $[DELETED] for the non-labor element of CLIN 1 was [DELETED]
lower than Greenland Contractors’ evaluated price of $[DELETED] for the same
line item. AR Tab 37, Exelis Services Proposal at 661; Greenland Contractors
Comments (Dec. 22, 2014) at 14. However, while the protester cites several areas
where it contends Exelis Services’ prices were too low, it does not cite any similar
specific problems with the other two intervening offerors’ prices. Instead, the
protester merely argues that the agency record “shows similar problems with
respect to the significant lower pricing proposed by the other offerors.” Greenland
Contractors Comments (Dec. 22, 2014) at 14 n.7.
We conclude that Greenland Contractors’ specific arguments concerning the Air
Force’s evaluation of Exelis Services’ proposed prices do not provide a basis to
conclude that the agency’s evaluation of the other two, lower-priced offerors’
proposals was unreasonable. Since Greenland Contractors has not specifically
challenged the evaluation of intervening offerors’ proposed prices, we find that
Greenland Contractors cannot demonstrate that it would have been prejudiced by
the agency’s evaluation of Exelis Services’ proposed price. In this regard, even if
the solicitation required the agency to evaluate pricing in the manner the protester
contends, and the protester’s arguments concerning the awardee had merit, the
intervening offerors, and not Greenland Contractors, would be in line for award.
See, e.g., McDonald Constr. Servs., Inc., B-285980, B-285980.2, Oct. 25, 2000,
2000 CPD ¶ 183 at 11; U.S. Constructors, Inc., B-282776, July 21, 1999, 99-2 CPD
¶ 14 at 5. On this record, we find no basis to sustain the protest.
The protests are denied.
Susan A. Poling
General Counsel
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