Kaneohe General Services, Inc., B-293097.2, February 2, 2004

B-293097.2 Feb 02, 2004 Jump To VIEW DECISION RELATED PAGES GAO CONTACTS Highlights DIGEST Protest that agency improperly induced offeror to increase its price during discussions is denied where record shows discussions were proper and that protester increased its price in an exercise of its own business judgment. The agency unfairly misled it into believing its prices were unreasonably low. The two equally weighted factors for award were price and technical (which included two equally weighted subfactors. Eight proposals were received in response to the RFP. Two rounds of discussions were conducted and final proposal revisions were received from five firms. KN's proposal's technical evaluation ratings were higher overall than those assigned to the Kaneohe proposal. Kaneohe contends that the agency misled it into believing that some of its line item prices were unreasonably low and unfairly induced it to increase its overall price during discussions to an amount only slightly higher than that proposed by the awardee. View Decision Kaneohe General Services, Inc., B-293097.2, February 2, 2004 * REDACTED DECISION DIGEST Attorneys DECISION Kaneohe General Services, Inc. protests the propriety of discussions held with the firm under request for proposals (RFP) No. N62742-02-R-2211, issued as a competitive section 8(a) set-aside by the Department of the Navy, Naval Facilities Engineering Command, for grounds and tree maintenance services at Pearl Harbor, Hawaii. The protester contends that by releasing government estimate information during discussions, and noting that some of Kaneohe's line item prices differed from the agency's estimates, the agency unfairly misled it into believing its prices were unreasonably low, and thus improperly induced the firm to increase its overall price beyond the price of the contract ultimately awarded to KN Lawn Service, Inc. under the RFP. We deny the protest. The RFP called for award of a fixed-price contract with an indefinite-quantity item for a base year and 4 option year periods. The two equally weighted factors for award were price and technical (which included two equally weighted subfactors, past performance/experience and execution). Eight proposals were received in response to the RFP. Two rounds of discussions were conducted and final proposal revisions were received from five firms. Kaneohe submitted the second lowest priced proposal, at $11,988,000 (including option periods). KN submitted the lowest priced proposal, at $10,395,686.75. KN's proposal's technical evaluation ratings were higher overall than those assigned to the Kaneohe proposal. Determining that KN submitted the proposal that offered the best value to the government, the agency awarded a contract under the RFP to KN on October 17, 2003. This protest followed. Kaneohe contends that the agency misled it into believing that some of its line item prices were unreasonably low and unfairly induced it to increase its overall price during discussions to an amount only slightly higher than that proposed by the awardee. The protester alleges that if it had not been induced to increase its price, its proposal, at its initial price, would have been found to offer the best value to the agency. Specifically, Kaneohe contends that it was improper for the agency during the first round of discussions to inform the protester that several of its line item prices were noticeably higher or lower than the government's estimates for those items. In response to the first discussion letter of September 12, Kaneohe increased its price for the work by more than $[deleted] a year for the 5 years of performance contemplated under the RFP. The protester further argues that the agency's release of the government's estimates during the second round of discussions with the firm, by letter of October 1, confirmed for Kaneohe that it had properly increased its price during the first round of discussions, since it appeared to Kaneohe that the agency would evaluate prices for award by comparison to the agency's estimates. Kaneohe did not revise its pricing during the second round of discussions. The agency contends that it conducted discussions with all offerors on an equal basis, as all offerors were notified during the first round of discussions about line item prices which were noticeably different from the agency's estimates (that is, prices which varied from the government estimates by approximately 20 percent or more), and all offerors received the agency's estimates during the second round of discussions. In this regard, the agency reports that it released its estimates pursuant to Federal Acquisition Regulation Sec. 15.306(e)(3), which generally provides that an agency may, in its discretion, release prices it has identified as reasonable for an anticipated acquisition.