HSG-Holzmann Technischer Services GmbH; HSG-GeBe

HSG-Holzmann Technischer Services GmbH; HSG-GeBe BNUMBER: B-274992.2; B-274993.2 DATE: February 26, 1997 TITLE: HSG-Holzmann Technischer Services GmbH; HSG-GeBe ********************************************************************** Matter of:HSG-Holzmann Technischer Services GmbH; HSG-GeBe File: B-274992.2; B-274993.2 Date:February 26, 1997 John S. Pachter, Esq., and Jonathan Shaffer, Esq., Smith, Pachter, McWhorter & D'Ambrosio P.L.C.; and Otto K. Weixler, for the protester. Reed L. von Maur, Esq., and J. Casey Fos, Esq., von Maur & Partners, and Kevin P. Mullen, Esq., Piper & Marbury, for Pacific Architects and Engineers GmbH Planning and Construction, an intervenor. Nancy van Noortwijk-Sommer, Esq., Department of the Army, for the agency. Mary G. Curcio, Esq., and John M. Melody, Esq., Office of the General Counsel, GAO, participated in the preparation of the decision. DIGEST 1. Price realism analysis of awardee's proposal for fixed-price contract was reasonable where agency compared proposal to government estimate and other price proposals; although certain proposed labor rates were low, there was no reason to question awardee's understanding of the requirements or to assume increased performance risk, given agency's awareness of labor surplus due to current state of German construction industry. 2. Agency was not required to downgrade awardee's proposal for lack of extensive experience performing contracts in fully operational hospitals, where solicitation did not require such experience and awardee was found to have required experience based on performance of maintenance contract at a contingency hospital, as well as numerous base maintenance contracts that the agency determined involved work similar to the current requirement. DECISION HSG-Holzmann Technischer Services GmbH protests the award of a contract to Pacific Architects and Engineers GmbH Planning and Construction (PAE) for total maintenance and minor construction at the U.S. Army Hospital in Heidelberg, Germany, and its outlying clinics, under request for proposals (RFP) No. DACA90-96-R-0075, issued by the Army Corps of Engineers. HSG-GeBe, a joint venture of HSG-Holzmann Technischer Services GmbH and GeBe Gebaude-und Betriebstechnik GmbH, protests the award of a contract to PAE under RFP No. DACA90-96-R-0076, for total maintenance and minor construction at the Landstuhl Hospital at Landstuhl, Germany, and its outlying clinics, also issued by the Corps.[1] We deny the protests. BACKGROUND Both solicitations were comprised of a number of line items for which offerors were to submit prices. Line items AA (management), AB (preventative maintenance-hospital), and AC (preventative maintenance-clinics and repair and new work) called for fixed prices. Line items AF through CM called for offerors to provide fixed hourly rates for different types of workers (e.g., plumbers and electricians) to perform demand maintenance, minor construction and emergency work; when the services are required, the Corps will negotiate a work order with the contractor based on the proposed labor rates. The solicitations set forth four equally weighted evaluation factors: management; technical; past performance/experience; and price, and provided that the contract would be awarded on the basis of the proposal representing the best value to the government. The agency received and evaluated three proposals under each RFP. While in each case the protester's score out of 450 under the nonprice factors was higher than PAE's (393 versus 387 for Heidelberg, and 417 versus 365 for Landstuhl), PAE's proposed prices under both solicitations were low (DM 6,461,908.50 versus DM 7,230,194.42 for Heidelberg, and DM 11,149,323 versus DM 13,620,118.38 for Landstuhl). The agency determined in both cases that the protesters' higher technical scores were not worth the higher prices and awarded the contracts to PAE. PRICE EVALUATION The protesters argue that the agency did not properly evaluate PAE's proposal for price realism and failed to downgrade the proposal based on unrealistically low labor rates under line items AF through CM. The protesters assert that these low rates should have resulted in a finding of increased performance risk and a lack of understanding of the requirements. Where, as here, the award of a fixed-price contract is contemplated, a proposal's "cost realism" is not ordinarily considered, since a fixed-price contract places the risk and responsibility for contract costs and resulting profit or loss on the contractor.[2] PHP Healthcare Corp.; Sisters of Charity of the Incarnate Word, B-251799 et al., May 4, 1993, 93-1 CPD para. 366.