Comptroller General

United States Government Accountability Office

Washington, DC 20548 

of the United States

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: Y&K Maintenance, Inc. 

File: B-405310.2 

Date: October 17, 2011 

Michael H. Ferring, Esq., Ferring & DeLue LLP, for the protester. 

Maj. Christine C. Fontenelle, Department of the Army, for the agency. 

Pedro E. Briones, Esq., and Guy R. Pietrovito, Esq., Office of the General Counsel, 

GAO, participated in the preparation of the decision. 

DIGEST 

1. Protest that solicitation was improper because the experience requirements for 

the prime contractor and for key personnel are inconsistent is denied where the 

solicitation reflected the agency’s judgment that prime contractors with more general 

experience could meet the agency’s needs provided certain key personnel had more 

specific experience. 

2. Protest that the solicitation’s evaluation scheme improperly assigns an 

acceptable past performance rating to offerors with no record of relevant past 

performance in violation of Federal Acquisition Regulation § 15.305(a)(2)(iv) is 

denied where award will be made on a lowest-price, technically acceptable basis 

such that assigning an acceptable past performance rating to offerors without 

relevant past performance will be, effectively, no different than assigning a neutral 

rating to that offeror’s past performance. 

3. A solicitation for a fixed-price contract does not place undue risk upon the 

contractor where the solicitation warned offerors that after two years of contract 

performance the agency may terminate certain contract line items (CLINs) or 

subCLINs. 

DECISION 

Y&K Maintenance, Inc. (Y&K), of Seoul, Korea, protests the terms of request for 

proposals (RFP) No. W91QVN-11-R-0135, issued by the Department of the Army, 

for operation and maintenance (O&M) of Medical Command-Korea (MEDDAC-K) 

facilities in the Republic of Korea. 
We deny the protest. 

BACKGROUND 

The RFP, issued under the commercial acquisition procedures of Federal 

Acquisition Regulation (FAR) Part 12 as a set aside for local sources,1 provides for 

the award of a fixed-priced contract for O&M services and related functions at Army 

medical facilities located throughout the Republic of Korea for a 1-month phase-in 

period, a base year, and 4 option years.2

 

As relevant here, Department of Defense (DOD) hospitals and medical facilities 

including facilities like MEDDAC-K that are located overseas, must be accredited 

by the Joint Commission (TJC).3 See DOD Instr. No. 6025.13, Feb. 17, 2011, Med. 

Quality Assurance & Clinical Quality Mgmt. in the Mil. Health Sys., at 1, 6. TJC is 

an independent organization that accredits United States hospitals and health care 

organizations (HCO) consistent with United States laws, regulations, and medical 

practices. See Agency Report (AR) at 14; www.jointcommission.org; see also

University of Kansas Med. Ctr., B-278400, Jan. 26, 1998, 98-1 CPD ¶ 120 at 1, n.1. 

A detailed performance work statement (PWS) was provided that requires the 

contractor to, among other things, meet TJC standards and to ensure that all 

MEDDAC-K medical facilities maintain TJC accreditation at all times. See RFP, 

PWS, at 8-9, 26; see also RFP amend. 1, at 2-4. In this regard, the contractor will 

also be required to provide monthly reports detailing on-going compliance with TJC’s 

Comprehensive Accreditation Manual for Hospitals. See PWS, attach. 2, Technical 

Exhibit 1-006, “TJC Reporting Requirements.” 

 

The RFP states that award will be made on a lowest-priced, technically acceptable 

basis considering the following evaluation factors: management, experience, 

technical, past performance, and price; offerors are required to submit separate 

proposals under each factor. See RFP at 77, 89-92. Under the experience factor 

the RFP identifies two subfactors: prime contractor experience and key personnel. 

 

1

 The RFP states that “invited contractor status” under the Status of Forces 

Agreement (SOFA) between the United States of America and the Republic of Korea 

will not be granted to non-local offerors and that offerors must have or obtain the 

requisite Korean business licenses, as well as comply with, among other things, 

Korean labor, tax, and immigration laws and regulations. See RFP at 3; RFP 

amend. 1, at 6. 

2

 The RFP incorporated by reference the standard FAR clause 52.212-4, “Contract 

Terms and Conditions--Commercial Items.” 

3

 TJC was previously known as the Joint Commission on Accreditation of Healthcare 

Organizations (JCAHO). 

Page 2 B-405310.2 
See id. at 89-91. Under the technical factor the RFP identifies two subfactors: 

mission capability and transition of operations (phase-in and phase-out plan). Id.

With respect to the key personnel experience subfactor, the RFP requires offerors to 

propose certain key personnel with varying levels of experience working at TJC 

accredited hospitals, and states that the agency will evaluate the proposed 

personnel’s actual level of TJC experience. See RFP, amend. 1, at 5. Specifically, 

the RFP requires offerors to propose (and the PWS requires the contractor to 

provide), as key personnel, a project manager, alternate project manager, quality 

control manager, and area manager/foreman, each with varying minimum amounts 

of continuous years of TJC experience within the last 10 years from the issuance 

date of the RFP. RFP amend. 1, at 5; PWS at 23-24. 

In contrast, with respect to the prime contractor experience subfactor, the RFP 

requires that offerors have relevant experience performing O&M services as a prime 

contractor in a hospital/healthcare facility, irrespective of the facility’s accreditation.4 

See RFP at 81. The RFP states that the agency will evaluate the degree to which 

the offeror has previously encountered the same kind of work, uncertainties, 

challenges, and risks that it is likely to encounter under the contract. See id. at 90. 

With respect to the past performance evaluation factor, the RFP states that the 

agency will evaluate, on an acceptable/unacceptable basis, an offeror’s past 

performance of relevant contracts that are similar in size, scope, and complexity to 

the required effort.5 See RFP at 91. As pertinent here, the RFP also states that, 

where an offeror does not have a record of relevant past performance, or for whom 

past performance information is unavailable, or too sparse to rate, the agency will 

consider the offeror to have unknown past performance and assign a rating of 

acceptable. See id.

 

4

 The RFP defines relevant experience as experience in hospital/healthcare facilities 

that provide the same or similar services based on the size, scope, bed count, 

square footage, complexity, contract type, and facility description, as described in 

the PWS, and instructs offerors to provide specified documentation that the 

company has a minimum of 6 years of experience in that regard within the last 10 

years from the issuance date of the RFP. RFP at 89-90; see also RFP amend. 1, 

at 4. 

5

 The RFP defines relevant contracts as contracts for the same or similar services 

based on size, scope, complexity, and facility description and, in this regard, 

requires offerors to provide specified documentation regarding contracts performed 

for at least 6 continuous years within the last 10 years from the issuance date of the 

RFP. See RFP at 83-84, 92. 

Page 3 B-405310.2 
With respect to the price evaluation factor, the RFP instructs offerors to propose 

fixed prices for each contract line item (CLIN) and subCLIN for each year and 

overall.6

 Id. at 86. The RFP states that the agency will evaluate an offeror’s price 

proposal by adding the total price for all option years to the total price for the basic 

requirement. Id. at 85, 93. The RFP also states that the agency will evaluate 

offerors’ proposed prices for realism and reasonableness. Id. at 92-93. 

The RFP requires offerors to provide details--by CLIN, subCLIN, ELIN, and 

geographic areas of responsibility, as well as for all 5 years--regarding direct costs, 

subcontracts, materials, overhead, profit, and general and administrative (G&A) 

expenses, among other costs. See id. at 84-88; attach. 5, Sample Price Support 

Spreadsheet. In this regard, the RFP warns offerors that the agency intends to 

in-source certain functional areas (and their associated CLINS/subCLINS) during 

contract performance, and that price proposals should be structured such that 

termination for convenience of any one functional area would not affect the pricing of 

the remaining contract functions.7 See id. at 86. 

DISCUSSION 

Y&K challenges a number of the solicitation’s requirements under the experience, 

past performance, and price factors. 

Experience Subfactors 

First, the protester complains that requirements under the two experience subfactors 

are inconsistent, given that proposed key personnel are required to have experience 

at TJC accredited facilities, while the prime contractor can rely on experience at 

unaccredited facilities. See Protest at 3-4; Comments at 2-5. The protester also 

contends that the explicit solicitation statement that prime contractors need not show 

experience at TJC accredited facilities is inconsistent with a number of PWS 

 

6

 The RFP includes six CLINs, which in turn are comprised of various subCLINS or 

exhibit line items (ELIN). 

7

 The PWS categorizes the required O&M services under 10 functional work areas: 

work classification and management; quality control; buildings and structures 

maintenance; fire protection and prevention; utility systems; heating and steam 

systems; water and sewage collection systems; heating, ventilation, and air 

conditioning systems; emergency power and electrical systems; and general 

equipment repair and commercial kitchen systems. PWS at 12. The RFP states 

that any in-sourcing of these functional areas would not occur until 2 years from 

contract award, pending availability of funds and contract price. See id. at 12; RFP 

at 86. 

Page 4 B-405310.2 
requirements.8

 Comments at 2-3. The protester points out that the RFP defines 

relevant prime contractor experience as including work of the same complexity as 

that described within the PWS. See id. The protester notes in this regard that the 

PWS requires performance of the contract in accordance with TJC standards and 

requires personnel with experience at TJC accredited facilities. Y&K argues that the 

reference to the PWS under the prime contractor experience subfactor establishes 

that the prime contractor must have experience at TJC accredited facilities. Id. at 3. 

The agency asserts that its experience requirements under the prime contractor and 

key personnel subfactors are consistent. The agency contends that its needs will be 

met by allowing prime contractors with experience at relevant facilities (even those 

without TJC accreditation) to compete, even though the key personnel identified 

must have specific experience at TJC accredited facilities. See Agency Report (AR) 

at 7-10. 

A contracting agency has the discretion to determine its needs and the best method 

to accommodate them. JRS Mgmt., B-402650.2, June 25, 2010, 2010 CPD ¶ 147 

at 3. However, those needs must be specified in a manner designed to achieve full 

and open competition. Exec Plaza, LLC, B-400107, B-400107.2, Aug. 1, 2008, 2008 

CPD ¶ 143 at 5. A protester’s mere disagreement with the agency’s judgment 

concerning the agency’s needs and how to accommodate them does not show that 

the agency’s judgment is unreasonable. Id. The fact that a requirement may be 

burdensome or even impossible for a particular firm to meet does not make it 

objectionable if the requirement properly reflects the agency’s needs. Eisenhower 

Real Estate Holdings, LLC, B-402807, July 27, 2010, 2010 CPD ¶ 172 at 3. 

Here, we see nothing improper about the agency’s decision to establish different 

requirements for the prime contractor and key personnel subfactors under the 

experience evaluation factor. The PWS requires the contractor to provide certain 

personnel with experience at TJC accredited facilities and to perform the contract 

work in accordance with TJC standards. In our view, the agency reasonably 

 

8

 Y&K also contends that not requiring the prime contractor to have experience at 

TJC accredited facilities is inconsistent with the agency’s published answer to an 

offeror’s question. Comments at 3, citing RFP amend. 1, at 3 (Question and Answer 

No. 6). Specifically, the agency was asked whether, in order to meet the 

requirements under the key personnel experience subfactor, key personnel 

experience at a JCI accredited hospital would be accepted as qualifying experience. 

See RFP amend. 1 at 3. The agency answered that “[f]or this requirement, [JCI] 

experience is not to be considered as equivalent to experience at a facility with [TJC] 

certification.” Id. Contrary to Y&K’s assertion, however, this answer only indicates 

that the agency required more specific experience for key personnel. 

Page 5 B-405310.2 
concluded that it could address these requirements with key personnel, while not 

requiring that the contractor itself have TJC experience.9

Although the protester argues that the solicitation should be limited to contractors 

with experience at TJC accredited facilities, this disagreement with the agency’s 

judgment does not demonstrate that the agency acted unreasonably. See J&J 

Maint., Inc., B-214209, Nov. 2, 1984, 84-2 CPD ¶ 488 at 3. Furthermore, we 

generally will not consider contentions that specifications should be made more 

restrictive since our role in reviewing bid protests is to ensure that the statutory 

requirements for full and open competition are met, not to protect any interest a 

protester may have in more restrictive specifications. Simplix, B-274388, Dec. 6, 

1996, 96-2 CPD ¶ 216 at 5-6. 

Past Performance Factor 

Y&K next complains that the RFP unreasonably provides for assigning an 

acceptable past performance rating to an offeror having no relevant record of past 

performance in violation of FAR § 15.305(a)(2)(iv), which provides that under such 

circumstances an offeror may not be evaluated favorably or unfavorably. See

Protest at 3; Comments at 1-2. In this respect, the protester contends that assigning 

an acceptable past performance rating to an offeror with no record of relevant past 

performance would have a significantly favorable impact on that offeror’s overall 

evaluation rating. See Comments at 1. 

The agency disagrees that its solicitation’s rating scheme violates FAR 

§ 15.305(a)(2)(iv). In this regard, the agency notes that its rating scheme is 

consistent with the Department of Defense’s (DOD) source selection procedures. 

See Memorandum from the Under Secretary of Defense, Acquisition, Technology 

and Logistics, Department of Defense Source Selection Procedures, Mar. 4, 2011, 

App. A at A-2 (offeror without past performance record shall be determined to have 

unknown past performance and considered acceptable). 

FAR § 15.305(a)(2)(iv) provides: 

 

In the case of an offeror without a record of relevant past 

performance or for whom information on past performance is not 

available, the offeror may not be evaluated favorably or unfavorably 

on past performance. 

 

9

 Indeed, the protester does not challenge the agency’s determination that an offeror 

could adequately perform all the PWS requirements by hiring experienced key 

personnel directly, or through a subcontractor, joint venture, or other teaming 

arrangement. 

Page 6 B-405310.2 
This provision embodies the principle that an offeror neither be punished nor 

rewarded for the lack of relevant past performance. Thus, we have found, 

consistent with this provision, that an evaluation scheme that penalizes an offeror for 

neutral past performance ratings is improper. Colson Servs. Corp., B-310971, et al., 

Mar. 21, 2008, 2008 CPD ¶ 85 at 12. 

Likewise, an offeror should not have its competitive position improved because of a 

lack of relevant past performance. In the context of this procurement, where award 

will be made on a lowest-price, technically acceptable basis, assigning an 

acceptable past performance rating to offerors without relevant past performance will 

be, effectively, no different than assigning a neutral rating to that offeror’s past 

performance. Accordingly, we see no basis to object to the RFP’s stated 

methodology for evaluating past performance. 

Price Evaluation 

Finally Y&K complains that the RFP’s warning that certain CLINs or subCLINs may 

be terminated for the convenience of the government places undue risk upon the 

contractor. Protest at 4. Y&K also complains that the solicitation improperly 

requires offerors to provide detailed cost information, including their indirect costs, 

for each CLIN or subCLIN, because offerors cannot predict their indirect costs for 

each CLIN since “indirect costs do not relate to specific work items.” Comments 

at 3. 

We disagree that the RFP places undue risk upon the contractor. Under a 

fixed-price contract, as contemplated here, the risks associated with performance 

and cost escalation are borne by the contractor. See Harris Corp., B-274566, 

B-274566.2, Nov. 27, 1996; 96-2 CPD ¶ 205 at 5; Cardinal Scientific, Inc., 

B-270309, Feb. 12, 1996, 96-1 CPD ¶ 70 at 4. Here, the RFP advises that after two 

years the agency may in-source certain functional areas, and therefore those CLINs 

or subCLINs may be subject to termination for convenience. Because of the unique 

requirement that the government act in the interest of the society it serves, it retains 

a special power to terminate its contract obligations when such action serves the 

public interest. Southwest Lab. Of Oklahoma, Inc., B-251778, May 5, 1993, 93-1 

CPD ¶ 368 at 3, citing United Steam-Engine Co., 91 U.S. 321 (1876); Torncello v. 

United States, 681 F.2d 756 (Cl.Ct. 1982). In this regard, the RFP incorporates the 

standard FAR “Contract Terms and Conditions--Commercial Items” clause, which 

reserves the government’s right to terminate the contract, or any part thereof, for the 

convenience of the government and describes the contractor’s rights under such 

circumstances. See FAR clause 52-212-4(l). 

We also disagree that the offeror’s calculation of direct and indirect costs assignable 

to each CLIN or subCLIN requires a prediction as to whether the CLIN or subCLIN 

may be terminated. Rather, the RFP here requests that offerors propose fixed 

prices for a number of functional areas (each of which was included as a CLIN or 

Page 7 B-405310.2 
Page 8 B-405310.2 

subCLIN) and, in this respect, requires offerors to provide detailed cost information, 

such as their direct and indirect costs for CLINs, subCLINS, and ELINS, to allow the 

agency to perform a price realism analysis. An agency may provide for the use of a 

price realism analysis in a solicitation for the award of a fixed-price contract for the 

limited purpose of measuring an offeror’s understanding of the requirements or to 

avoid the risk of poor performance from a contractor who is forced to provide 

services at little or no profit. Citywide Managing Servs. of Port Washington, Inc., 

B-281287.12, B-281287.13, Nov. 15, 2000, 2001 CPD ¶ 6 at 4-5. The depth of an 

agency’s price realism analysis is a matter within the sound exercise of the agency’s 

discretion. AMEC Earth & Envtl., Inc., B-404959.2, July 12, 2011, 2011 CPD ¶ 168 

at 8. 

The protest is denied. 

Lynn H. Gibson 

General Counsel