B-291307.5; B-298017, Veolia Water North America Operating Services, LLC, May 19, 2006

B-291307.5; B-298017, Veolia Water North America Operating Services, LLC, May 19, 2006 TITLE: B-291307.5; B-298017, Veolia Water North America Operating Services, LLC, May 19, 2006 BNUMBER: B-291307.5; B-298017 DATE: May 19, 2006 ************************************************************************************** B-291307.5; B-298017, Veolia Water North America Operating Services, LLC, May 19, 2006 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: Veolia Water North America Operating Services, LLC File: B-291307.5; B-298017 Date: May 19, 2006 Kenneth A. Martin, Esq., for the protester. Robert E. Little, Jr., Esq., Department of the Navy, for the agency. Guy R. Pietrovito, Esq., and James A. Spangenberg, Esq., Office of the General Counsel, GAO, participated in the preparation of the decision. DIGEST 1. In negotiated procurements for privatization of utility system assets, protester has not shown that the agency erred in determining that 10 U.S.C. sect. 2688(f)(2) prohibited the conveyance of utility assets under a proposed scheme in which the protester would contract to operate and maintain the utility system assets and would not retain title in the assets, but would simultaneously transfer title in the assets to an unrelated third party which the agency was required to acknowledge as the primary obligor for the purchase price of the assets. 2. Protest requesting GAO's recommendation based upon a promissory estoppel theory of detrimental reliance by the protester upon alleged actions of the agency that are not grounded upon an asserted statutory or regulatory violation will not be considered because the Competition in Contracting Act of 1984 only authorizes GAO to decide bid protests concerning alleged violations of a procurement statute or regulation. DECISION Veolia Water North America Operating Services, LLC protests the conduct of negotiations by the Naval Facilities Engineering Command (NAVFAC), Department of the Navy, under request for proposals (RFP) No. N62470-00-R-3602, issued by NAVFAC's Atlantic Division to competitively select parties for the privatization (including the transfer of title to private parties) of potable water and wastewater collection utility systems in North Carolina, Virginia, and West Virginia (collectively known as "Utility Privatization Area C")[1] and under RFP No. N62467-00-R-1802, issued by NAVFAC's Southern Division to conduct a competition for the privatization of potable water and wastewater collection utility systems in Mississippi, Louisiana, Texas and Florida (collectively known as "Utility Privatization Area E").[2] Veolia complains that NAVFAC rejected, after significant time and expense by Veolia, a third-party ownership of the utilities approach (explained below), which was suggested by NAVFAC and upon which basis Veolia's proposals were selected after the competition for exclusive negotiation with the agency.[3] Veolia contends that NAVFAC improperly rejected Veolia's proposals based upon an erroneous determination that Veolia's proposed contract structure to acquire the utility assets violated the statute governing the conveyance of those assets. We deny the protests. BACKGROUND The RFPs, issued October 29, 1999 and March 17, 2000, offered for sale potable water and wastewater collection utility systems at a number of facilities. Specifically, offerors were informed that [t]he purpose of this solicitation is to select an Offeror(s) for the purpose of privatizing utility systems specified herein. Privatization is the conveyance of the utility system ownership to a private entity who will be responsible for the operation, maintenance and capitalization of the infrastructure for the foreseeable future and for the provision of safe and reliable utility services to the Department of the Navy in exchange for reasonable compensation. RFP No. 3602, at 2; RFP No. 1802, at 2. Service standards and requirements were identified to ensure that the Navy's operational requirements for potable water and wastewater collection would be satisfied. See RFP No. 3602, at 15; RFP No. 1802, at 13-15. Each solicitation noted that authority for utility privatization was provided by 10 U.S.C. sect. 2688 and that statute, among other things, imposed certain economic tests that must be met in order for such a transaction to be consummated. In addition, offerors were cautioned that all privatization actions must be approved by the Secretary of the Navy and that there was no guarantee that a privatization agreement would be executed. RFP No. 3602, at 4; RFP No. 1802, at 4.