American States Utilities Services, Inc., B-291307.3, June 30, 2004

B-291307.3 Jun 30, 2004 Jump To VIEW DECISION DOWNLOADS RELATED PAGES GAO CONTACTS Highlights American States Utilities Services, Inc. (ASUS) protests the Department of the Navy's award of a contract to U.S. Filter Operation Systems, Inc. (USFOS), under request for proposals (RFP) No. N62470-00-R-3602, for utilities privatization. ASUS asserts that its proposal was unfairly evaluated against unstated criteria, and that the discussions held with the firm were inadequate and misleading. We deny the protest. View Decision B-291307.3, American States Utilities Services, Inc., June 30, 2004 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. Matter of: American States Utilities Services, Inc. File: B-291307.3 Date: June 30, 2004 Stephen M. Sorett, Esq., and John A. Burkholder, Esq., McKenna Long & Aldridge, for the protester. Kenneth A. Martin, Esq., Martin & Associates, for U.S. Filter Operation Systems, Inc. Robert E. Little, Jr., Esq., Department of the Navy, for the agency. Sharon L. Larkin, Esq., and David A. Ashen, Esq., Office of the General Counsel, GAO, participated in the preparation of the decision. DIGEST 1. Protest that agency evaluated protester's proposal, under request for proposals for utilities privatization, against undisclosed criteria for pricing structure, operations and maintenance savings, and subcontractor experience is denied, where evaluation was consistent with the solicitation's evaluation criteria and agency's conclusions are reasonably supported by the record. 2. Protest that agency held inadequate and misleading discussions with protester concerning subcontractor capability is denied, where agency informed protester of its concerns during discussions and protester's response did not alleviate those concerns; agency did not mislead protester by failing to reiterate the concerns that were not alleviated after reviewing protester's response to the initial discussions. DECISION American States Utilities Services, Inc. (ASUS) protests the Department of the Navy's award of a contract to U.S. Filter Operation Systems, Inc. (USFOS), under request for proposals (RFP) No. N62470-00-R-3602, for utilities privatization. ASUS asserts that its proposal was unfairly evaluated against unstated criteria, and that the discussions held with the firm were inadequate and misleading. We deny the protest. BACKGROUND The Navy seeks to privatize 58 different utility systems for wastewater and potable water collection, distribution and treatment located throughout Virginia, West Virginia, and North Carolina. As set forth in the RFP, the agency's objective for privatizing these systems is to –transfer ownership responsibility and risks to a highly qualified private party, utilize private capital for System investments, and secure and maintain high quality, reliable service that is more economical.— RFP 5.2.1; see RFP 1, 3. The authority to convey these utility systems is provided by 10 U.S.C. 2688 (2000), which authorizes agencies to privatize, or convey, a utility system so long as it is in the long-term economic interest of the government. The RFP was a performance-based solicitation with the stated intent of providing offerors with the –maximum flexibility in developing privatization solutions.— RFP 5.1. Offerors were encouraged to –utilize their creativity, skills, and expertise in proposing an offer that is most advantageous— to the agency, RFP 3, 7; thus, according to the solicitation, –the majority of terms and conditions for privatization have been left to the development— of the offerors. RFP 5.1. Under the solicitation, award was to be made to the offeror whose proposal represented the best value to the government based on two evaluation factors: (1) technical, including equally weighted subfactors for service requirements, experience/past performance, financial capability, and support for small businesses; and (2) economic/price, including equally weighted subfactors for economic/price and long term cost. In addition, the RFP provided for a risk assessment to be performed with respect to each pricing element of a proposal. The RFP stated that the technical and economic/price subfactors were equally important. Both ASUS and USFOS submitted proposals in response to the RFP that were found to be in the competitive range. The Navy then held several comprehensive rounds of discussions with the offerors concerning the economics, weaknesses and deficiencies in their proposals, the goals and objectives of utilities privatization, the Navy's preferences regarding pricing structure, and the requirements for asset conveyance. The agency also conducted site visits and interviews with existing customers and employees of the offerors to further evaluate the firms' operating, maintenance, and administration practices.