Cascade General, Inc., B-283872, January 18, 2000

B-283872 Jan 18, 2000 Jump To VIEW DECISION DOWNLOADS RELATED PAGES GAO CONTACTS Highlights A firm protested two Navy contract awards for the dismantling and disposal of ex-Naval vessels, contending that the Navy did not reasonably or consistently evaluate proposals. GAO held that the Navy: (1) evaluated the proposals in accordance with the solicitation's evaluation criteria; and (2) reasonably determined that the awardees' prices were not unrealistically low. Accordingly, the protest was denied. View Decision Matter of: Cascade General, Inc. File: B-283872 Date: January 18, 2000 DIGEST Attorneys DECISION Cascade General, Inc. protests contract awards to Ship Dismantling and Recycling Joint Venture (SDR) and International Shipbreaking Limited (ISL), under request for proposals (RFP) No. N00024-98-R-2219, issued by the Department of the Navy to dismantle and dispose of ex-Naval vessels. Cascade contends that the Navy did not reasonably or consistently evaluate proposals. We deny the protest. BACKGROUND The Ship Disposal Project (SDP) This procurement, known as SDP, for the first time would pay a contractor to dismantle ex-Naval vessels, thereby allowing the agency to administer and oversee performance. Agency Report (AR) at 3-4. Previously, the Navy had sold scrapping rights for its ex-Naval vessels to the highest bidder. This method was deemed ineffective because the Navy was unable to ensure that only the most technically qualified scrapping contractors would obtain the scrapping rights. The Navy then tried the approach of awarding the rights on a best value, rather than a highest bid, basis. However, even with this and other changes, the selling of ships for scrapping had proven problematic in two respects. First, it was not reducing the growing backlog of ships awaiting scrapping; scrappers were unwilling to bid on the ships because the price of scrap metal on the open market had fallen precipitously, while environmental and safety regulations had increased. Second, ship scrapping, which is an inherently dangerous and dirty process, had been criticized in the media for its environmental, health and safety problems. AR at 3-4. The SDP--under which contractors would be paid for scrapping ex-Naval vessels and the Navy would oversee performance--was intended to resolve these issues. AR at 4. The RFP On January 28, 1999, the Navy issued the RFP here, which contemplated the award of up to two indefinite-delivery/indefinite-quantity contracts for each of two lots (east and west coasts). Contract line items (CLINs) 0001 through 0008 of the west coast lot designated dismantlement of particular classes of vessels, such as destroyers, frigates and cruisers. A task order for CLIN 0001, which required dismantlement of a frigate-class ship, would be placed on a cost-plus-incentive-fee (CPIF) basis at the time of contract award. /1/ Task orders under the other CLINs, if issued, would be placed on either a CPIF basis, a fixed-price-incentive (successive targets) basis, or a fixed-price basis, depending on a risk assessment at the time of issuance of the task orders. AR, encl. 1, at 7. The RFP stated that the proposals offering the best value to the government would be selected for award, considering cost and technical factors. AR, encl. 1, at 127. The RFP contained the following technical evaluation factors (and subfactors): /2/ (1) program and engineering management (operational plan, ship dismantling capability and approach, approach to cost control, and schedule); (2) environmental and hazardous waste and worker safety management and capability (environmental management plan and safety and health management plan); and (3) past performance. The technical factors, when combined, were significantly more important than the cost/price factor. Id. at 126-27. The cost/price factor would be evaluated on the basis of whether the costs in an offeror's proposal were realistic for the work to be performed, reflected a clear understanding of the requirements, and were consistent with the various elements of the offeror's technical proposal; the RFP stated that the government may reject unrealistically low proposals regardless of technical merit. AR, encl. 1, at 127. In order to arrive at a total evaluated cost, the agency would evaluate offerors' proposed cost for CLIN 0001 and then, using offerors' estimated mix of hours for dismantling each ship and projected labor rates, overhead/burden rates and other costs, adjusted for realism, also would calculate a total projected cost for all CLINs based on the expected number of ships (tonnage) to be scrapped during the period of performance. Id. at 127-28. Proposal Evaluation On March 30, six proposals were received for the west coast lot. The technical evaluation review panel (TERP) conducted its initial evaluation from April 5 until May 7.