American Water Services, Inc., B-295376, February 8, 2005

B-295376 Feb 08, 2005 Jump To VIEW DECISION DOWNLOADS RELATED PAGES GAO CONTACTS Highlights American Water Services, Inc. (AWS) protests the award of a contract to Hardin County Water District #1 by the Defense Energy Support Center (DESC) under request for proposals (RFP) No. SP0600-01-R-0121 for the privatization of the wastewater and storm water utility systems at Fort Knox Army Installation in Kentucky. AWS argues that the agency applied unstated criteria in its evaluation of proposals, the agency's price realism analysis was improper, and that Hardin was not eligible for award because it submitted a "qualified" offer. We deny the protest. View Decision B-295376, American Water Services, Inc., February 8, 2005 Decision Matter of: American Water Services, Inc. File: B-295376 Date: February 8, 2005 Sheila C. Stark, Esq., and Thomas C. Wheeler, Esq., DLA Piper Rudnick Gray Cary US LLP, for the protester. Kenneth A. Martin, Esq., Martin & Associates, for Hardin County Water District #1, an intervenor. Danica S. Irvine, Esq., Defense Logistics Agency, for the agency. Edward Goldstein, Esq., and Christine S. Melody, Esq., Office of the General Counsel, GAO, participated in the preparation of the decision. DIGEST 1. Protest alleging agency improperly assumed that regulated offerors presented lower risk than non-regulated offerors in its evaluation of proposals for privatization of wastewater and storm water utility systems is denied where the solicitation provided that proposals would be evaluated based on the degree to which long-term price and service stability were enhanced as a result of regulation by an independent federal, state, or local regulatory authority with jurisdiction over the applicable utility service, and where the record shows that the agency reasonably concluded that regulated utility offeror presented low risk under evaluation subfactor relating to long-term price and service stability. 2. Agency's determination that the awardee's prices for wastewater and storm water utility services were fair and reasonable, that the work could be performed at the prices proposed, and that the awardee's proposal represented low risk for price realism was reasonable where the agency based its conclusion on extensive consideration of the awardee's pricing strategy, the elements of its pricing, and the detailed breakdowns of its price structure, as well as the agency's comparison of the awardee's price with the government's cost estimate and the agency's consideration of the awardee's status as a regulated entity. 3. Offeror's proposal for wastewater and storm water utility services was not rendered unacceptable where it proposed rates that were contingent upon approval by an independent regulatory body after contract award. DECISION American Water Services, Inc. (AWS) protests the award of a contract to Hardin County Water District #1 by the Defense Energy Support Center (DESC) under request for proposals (RFP) No. SP0600-01-R-0121 for the privatization of the wastewater and storm water utility systems at Fort Knox Army Installation in Kentucky. AWS argues that the agency applied unstated criteria in its evaluation of proposals, the agency's price realism analysis was improper, and that Hardin was not eligible for award because it submitted a "qualified" offer. We deny the protest. BACKGROUND DESC issued the subject solicitation on April 9, 2001 for the privatization of the Army's wastewater and storm water systems located on the Fort Knox Army Installation in Kentucky. [1] 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. In this instance, the Army's privatization effort contemplated the sale of the wastewater and storm water infrastructure and the concomitant acquisition from the purchaser of the services associated with the operation, maintenance, repair and upgrade of the systems for a period of 50 years. Purchase of a commodity ( i.e ., water) was expressly not included in the solicitation. RFP C.2.1. In essence, the RFP was a performance-based solicitation. Since the ultimate awardee was to assume ownership of the utility systems, the solicitation did not provide for required capital improvements, upgrades, renewals, or replacements for the wastewater or storm water infrastructure.