B-295529.4, Johnson Controls World Services, Inc.--Costs, August 19, 2005
Decision
Matter of: Johnson Controls World Services, Inc.--Costs
David
R. Johnson, Esq., Amanda J. Kastello, Esq., and Amy R. Napier, Esq., Vinson
& Elkins, for the protester.
Maj.
Gregg A. Engler, Department of the Army, for the agency.
Ralph O. White, Esq., and Christine S. Melody, Esq., Office of the General Counsel, GAO, participated in the preparation of the decision.
DIGEST
Protester’s request for a recommendation that it be reimbursed the costs of filing and pursuing its protest is granted where: (1) the issues raised in the initial protest filing clearly identified deficiencies in the agency’s decision that it was more economical to provide base operations support services at Walter Reed Medical Center, in Washington, D.C., than to contract for those services; (2) the agency admits that it did not investigate the protester’s detailed allegations; and (3) the agency withheld relevant protest documents until more than 70 days after the initial protest filing, when GAO convened a hearing. Under these circumstances, the record shows that the agency unduly delayed taking corrective action in the face of a clearly meritorious protest, thereby causing the protester to expend unnecessary time and resources to make further use of the protest process in order to obtain relief.
DECISION
Johnson Controls World Services, Inc. (JCWS) requests that we recommend that it be reimbursed the costs of filing and pursuing its protests of the Department of the Army’s decision, made pursuant to Office of Management and Budget (OMB) Circular A-76, that it would be more economical to provide base operations support services in-house at the Walter Reed Medical Center in Washington, D.C., than to contract for those services under solicitation No. DADA10-03-R-0001.
We agree, and recommend that JCWS be reimbursed the reasonable costs of filing and pursuing its initial and supplemental protests, including those incurred in pursuing this request.
BACKGROUND
The facts regarding this procurement are largely set forth in our decision dismissing JCWS’s protests, Johnson Controls World Servs., Inc., B-295529.2, B‑295529.3, June 27, 2005, 2005 CPD para. 124; however, some of those facts, and others which are directly relevant to this decision, are set forth below.
After the Army announced its intent to conduct an A-76
cost comparison study for Walter Reed, and after it issued a solicitation in
2003 to potential private-sector offerors, the agency submitted its plan for
performing these services in-house to the agency’s Independent Review Official
(IRO), in this case, the Army Audit Agency.[1] An agency’s proposal for performing services
in-house in an A-76 cost comparison study is called the Most Efficient
Organization (MEO). IRO review is required
to ensure that the MEO’s plan for performance will comply with the
solicitation’s performance work statement.
Supplemental Handbook at 12. In
the event changes to the MEO are needed to meet the requirements of the
performance work statement, those changes must be made before the IRO can
certify that the MEO “reasonably establish[es] the Government’s ability to
perform the [performance work statement] within the resources provided by the
MEO.”
After certification of the MEO, and after the receipt of proposals from private-sector offerors, the agency issued an amendment to the solicitation--amendment 16, issued July 23, 2004--that made numerous changes to the performance work statement. In September 2004, the MEO was reopened so that changes could be made to reflect the changes in work incorporated by amendment 16. In the last days of September, shortly before the cost comparison was conducted, the MEO was again certified by the IRO. Tr. at 44-49, 51-54. On September 29, the date of the cost comparison, the MEO was compared to the offer submitted by JCWS, and the Army determined that in-house performance of these services would be less expensive than having them performed by contract awarded to JCWS. Tr. at 54.
After an administrative appeal, and after an earlier
protest to our Office was rendered academic by agency corrective action, Johnson
Controls World Servs., Inc., B-295529,
After receipt of an agency report, and the protester’s comments, our Office held a hearing in this matter on June 8-9. The hearing included witnesses from the Army Audit Agency, which, as indicated above, was serving as the Army’s IRO. After the hearing, by letter dated June 15, the Army advised our Office that the IRO was withdrawing its certification of the MEO package submitted in this cost comparison study. As a result, the Army asked that the protest (there was no supplemental protest on June 15) be dismissed as academic.[2] On June 27, our Office agreed that the IRO’s withdrawal of its certification of the MEO rendered the protests academic, and the protests were dismissed. One day later, JCWS filed this request for reimbursement of its protest costs.
DISCUSSION
JCWS asks for reimbursement of its protest costs on the grounds that the Army unduly delayed taking corrective action in the face of the company’s clearly meritorious protest. The Army argues against reimbursement of protest costs because, in its view, the corrective action taken was not in response to the protest. Instead, the Army contends that its corrective action was taken in response to new evidence about apparent problems in the certification process that first came to light during the hearing. In addition, the Army argues that its response to this new evidence was prompt, not unduly delayed, and that the initial protest was not clearly meritorious.
Where a procuring agency takes
corrective action in response to a protest, our Office may recommend that the
agency reimburse the protester its protest costs where, based on the
circumstances of the case, we determine that the agency unduly delayed taking
corrective action in the face of a clearly meritorious protest, thereby causing
the protester to expend unnecessary time and resources to make further use of
the protest process in order to obtain relief.
Georgia Power Co.;
The initial protest filed by JCWS argued that the MEO did not contain sufficient staffing levels to meet the requirements of the performance work statement. In this regard, JCWS compared the staffing levels of its own proposal with some of the lower staffing levels identified in the MEO and argued that the MEO had used significantly lower cycle times for required tasks to build its staffing estimates. As a result, the protest argued that the IRO failed to ensure that the MEO contained sufficient staffing to accomplish the required tasks. In furtherance of this allegation, the protest requested that the agency provide copies of
[r]eports, memoranda, or decision documents reflecting or summarizing the IRO’s findings on any aspect of the evaluation of the MEO, including, but not limited to, any documents reflecting the IRO’s instructions and requests for information concerning the evaluators’ recommendations or the bases thereof.
Initial Protest,
The agency report in response to the JCWS protest was filed
on
One day after receipt of the agency report, the protester filed a supplemental request for documents, pursuant to 4 C.F.R. sect. 21.3(g), which renewed the request for many of the items identified in the initial request. After filings opposing the requests were received from the Army, our Office convened a conference call on May 10 to resolve the document dispute. During this call, our Office concluded that the Army was required to provide to the protester the documents related to the IRO’s review of the MEO, as requested in the initial protest.[3] The Army provided additional documents related to the IRO’s review on May 20. These documents gave the first glimpse into a debate between the Army Audit Agency (acting as IRO) and the MEO regarding the MEO’s low staffing levels. Even these documents, however, were limited to exchanges prior to the first certification of the MEO in April 2004; these documents did not reflect exchanges between the Army Audit Agency and MEO prior to the recertification of the MEO dated September 28.[4]
Given the inadequacies of the record in this case, our
Office convened a two-day hearing on June 8-9.
On the first day, the parties and our Office had a roundtable discussion
of the details of each of the protester’s allegations; on the second day, analysts
from the Army Audit Agency, and a representative of the contractor that
prepared the MEO for the Army, testified about the exchanges that occurred during
the IRO review process. Late in the evening
on June 8--after the roundtable discussion, but before the receipt of
testimony--the Army provided to JCWS and our Office an analysis of certain of
the protester’s specific challenges that acknowledged that certain of the
challenges were accurate. For example,
the analysis acknowledged that the protester was correct in its assertions that
the MEO failed to include certain work that was added by amendment 16, and
proposed insufficient staffing levels for trimming and edging the grounds of
the Walter Reed campus. Army Audit
Agency Analysis,
As part of this review of the protester’s challenges--in fact, as part of the review of the trimming and edging example cited above--another problem with the MEO was noted. Specifically, the analysis advised:
Under NO circumstances should the original certified MEO proposal (frequency and cycle time) be altered once the private sector proposals are opened except for the situations allowed by policy such as OMB directive. BUT, this is exactly what took place and the IRO did not detect the unauthorized changes when the MEO proposal was certified in September 2004.
On June 9, the Army Audit Agency analyst who prepared the analysis
quoted above testified that when recertification by an IRO is necessary due to
changes in the workload (as were made by amendment 16 here), the MEO is allowed
to change only those parts of its submission related to changes in the
amendment; this witness (and others), as well as the underlying documents
provided immediately before the hearing, refer to this policy as the “No Tamper
Rule.”
The Army’s opposition to JCWS’s request for protest costs
is based on its view that the apparent violations of the “No Tamper Rule” found
in the MEO by the Army Audit Agency analyst are “new evidence” not related to
the protest issues here, and that the agency acted promptly once it learned of
this new evidence. Specifically, the
Army contends there was “no nexus” between JCWS’s protest issues and the
concerns of the IRO about the “No Tamper Rule.”
Army Opposition to Protester’s Request for Protest Costs,
While the Army correctly notes that the protester did not allege any violation of the “No Tamper Rule” in its initial protest filing,[5] the protester here has always argued (dating from the agency-level administrative challenge) that the MEO is based on unrealistically low staffing levels to perform this work, and has argued that the unrealistic staffing levels are revealed by reviewing the very low cycle times used to calculate those staffing levels. These very low cycle times, as well as other changes to the MEO, led the Army’s analyst to undertake a review of the MEO shortly before the hearing convened by GAO. Specifically, the analyst testified that he became curious about the low cycle times--especially the very low cycle times for mowing and edging services identified by the protester--because they seemed lower than the cycle times he remembered from reviewing the MEO during the April 2004 certification review. Tr. at 91-95.
The Army’s decision to withdraw its certification of the
MEO was directly related to--and was triggered by--the very issues raised by
the protester. The low cycle times used
to calculate the MEO’s lower staffing levels, and focused on by the protester
in this case from day one, were precisely the evidence used by the Army Audit
Agency analyst to reach his conclusion that the final MEO never received the
scrutiny it should have received from the IRO.
In our view, when the Army’s IRO withdrew its certification of the MEO,
the agency was effectively (albeit not explicitly) conceding that the IRO’s
certification that the MEO could perform the required work was either unreasonable,
or resulted from a failure to meaningfully review the IRO, or both--as JCWS
argued in its initial protest filing.
Initial Protest,
We also think the Army’s response to this protest cannot be considered prompt. For example, rather than conduct a review of the protester’s specific allegations, the Army admits that
[i]n this case, Protester’s substantive protest grounds were never fully investigated on the merits. Given that Protester’s substantive protest grounds principally attacked the MEO’s cycle times and staffing estimates in numerous different [performance work statement] paragraphs, only an extremely detailed investigation into each allegation would reveal whether the protest was a close call or not.
Army Opposition to Protester’s Request for Protest Costs,
As a final matter, we note that the Army also suggests that
the protester may not have been prejudiced by the matters it identified in its
protest. Specifically, the Army argues
that “[g]iven that Protester needed to overcome a $7.5 million difference in
the cost comparison and that the merit of the protested cycle times was not
reached, Protester cannot claim that its protest was clearly meritorious.” Army Opposition to Protester’s Request for
Protest Costs,
The Army’s failure to investigate the substantive grounds
of this protest, its failure to produce documents when required, and its
failure to take prompt corrective action in the face of a clearly meritorious
protest, frustrated the intent of the Competition in Contracting Act of 1984,
31 U.S.C. sections 3551-3556 (2000), amended by the Ronald W. Reagan National
Defense Authorization Act for FY 2005, Pub. L. No. 108-375, Section 326, 118
Stat. 1811 (2004), by impeding the economic and expeditious resolution of this
protest. LB&M Assocs.,
Inc.--Entitlement to Costs, B-256053.4,
The request for a recommendation that the protester be reimbursed the reasonable costs of filing and pursuing its protest is granted.
Anthony H. Gamboa
General Counsel
[1]
As explained in our prior decision, this cost comparison study was performed
under the version of OMB Circular A-76 in effect prior to the substantial
revisions to the Circular dated
[2] On June 16, JCWS supplemented its initial protest to include specific information learned during the hearing. Since this supplemental protest was filed the day after the agency requested dismissal, the dismissal request addressed only the initial protest. The IRO’s decision to revoke its certification of the MEO rendered academic both the initial and supplemental protests.
[3]
As of this date, the only document in the record regarding the IRO’s review of
the MEO was a summary decision document on Army Audit Agency letterhead, dated
[4] Given that the exchanges related to the IRO’s initial certification are ultimately not dispositive here, we will not quote them. They are quoted at length, however, in the Protester’s Comments, filed May 31, at pages 13-16 and 40-41.
[5]
The protester had no way to know of the agency’s internal debate over allowing
the MEO to make changes in its staffing levels beyond the scope of the changes
in amendment 16—i.e., the protester had no way to know that any of the
MEO’s low staffing levels may have been introduced in violation of the “No
Tamper Rule.”
[6]
In fact, there may never be a final cost comparison here. By letter dated August 17, JCWS provided our
Office with an August 8 letter from the Army’s Assistant Secretary for
Installations and Environment advising that “the Army Audit Agency has
determined that they are unable to reconstruct a basis for the MEO’s competitive
position to the extent that it could be certified. Accordingly, the Army will request approval
to cancel the [cost comparison] study.”
Letter from JCWS to GAO,