United States Government Accountability Office

Washington, DC 20548

Comptroller General

of the United States

 

Decision

Matter of: NANA Services, LLC

File: B-401951.5; B-401951.6

Date: September 27, 2012

Jonathan T. Williams, Esq., Patrick T. Rothwell, Esq., and Alexander O. Levine, 

Esq., PilieroMazza PLLC, for the protester.

Steven K. Forjohn, Esq., and Ralph L. Littlefield, Esq., United States Marine Corps, 

for the agency.

Jennifer D. Westfall-McGrail, Esq., and Edward Goldstein, Esq., Office of the 

General Counsel, GAO, participated in the preparation of the decision.

DIGEST

1. In a procurement conducted pursuant to the Randolph-Sheppard Act, 20 U.S.C. 

§ 107d-3(e) (2006), the source selection authority (SSA) reasonably determined 

that the price offered by a state licensing agency (SLA) was fair and reasonable 

based on comparison to government estimate and price offered by another offeror 

in the competitive range.

2. SSA reasonably included SLA’s proposal in the competitive range where he 

disagreed with findings of the technical evaluation board pertaining to deficiencies 

and weaknesses in the SLA’s proposed approach and furnished a detailed 

explanation as to the basis for his disagreement.

DECISION

NANA Services, LLC, of Anchorage, Alaska, protests the award of a contract to the 

Hawaii Department of Human Services, DBA Ho’opono Rehabilitation Center for the 

Blind, of Honolulu, Hawaii, a state licensing agency (SLA) for the blind, under 

request for proposals (RFP) No. M00318-09-R-0002, issued by the United States 

Marine Corps (USMC) for food services at Marine Corps Base Hawaii, Kaneohe 

Bay, Hawaii. The protester argues that the agency unreasonably determined that 

the SLA’s price was fair and reasonable and that its technical proposal was 

acceptable. 

We deny the protest.

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.
Page 2 B-401951.5, B-401951.6 

BACKGROUND

The RFP, issued on September 2, 2009, provided for award of a 5-year (one base 

plus four option years) contract to the offeror whose proposal represented the best 

value to the government. The solicitation provided for the evaluation of proposals 

under past performance, technical, and price factors, with the past performance and 

technical factors, when combined, of approximately equal weight to price. The 

technical factor was comprised of the following four equally-weighted subfactors: 

quality control plan, management plan, food service operations plan, and 

staffing/transition plan. 

The RFP also advised offerors that the Randolph-Sheppard Act (RSA), 20 U.S.C. 

§ 107d-3(e) (2006), applied to the acquisition. RFP at 94. The cited statutory 

section provides as follows:

The Secretary [of Education], through the Commissioner [of the 

Rehabilitation Services Administration], shall prescribe regulations to 

establish a priority for the operation of cafeterias on Federal property 

by blind licensees when he determines, on an individual basis and 

after consultation with the head of the appropriate installation, that 

such operation can be provided at a reasonable cost with food of a 

high quality comparable to that currently provided to employees, 

whether by contract or otherwise.

20 U.S.C. § 107d-3(e). 

Regarding the application of the RSA, the solicitation included the following 

additional guidance:

In accordance with the revised rules of the Department of Education 

(34 CFR 395.33 – Vending Facility Program for the Blind on Federal 

Property, Sec 395.33) and the rules of the Department of Defense 

(32 CFR 260 – Vending Facility Program for the Blind on Federal 

Property, Sec 260.3(g)), in addition to the other source selection 

factors set out in Section M of this solicitation, the contracting officer 

shall consider and afford the SLA “priority” for award of the contract to 

the SLA for operation of a military dining facility upon receipt of final 

proposal revisions (or upon initial proposals if award is made without 

discussions), if the SLA has submitted a proposal that:

1) demonstrates the SLA can provide such operation at a fair 

and reasonable price, with food of a high quality comparable to 

that available from other providers of cafeteria services and 

comparable to the quality and price of food currently provided 

to military service members, and
Page 3 B-401951.5, B-401951.6 

2) is among the highly ranked final proposal revisions (after 

discussions with all Offerors) with a reasonable chance of being 

selected for award using the best value method (as determined 

by the contracting officer after applying its source selection 

criteria contained in the solicitation), over all performance 

periods required by the solicitation. . . .

Id. at 100.

The agency received proposals in September 2009, established a competitive 

range, and held discussions. On March 3, 2010, the USMC notified the protester 

that it had selected the SLA for award. NANA protested to our Office. The agency 

subsequently notified our Office that it intended to take corrective action in response 

to the protest, to include a reevaluation of proposals. On May 24, 2010, we 

dismissed the protest as academic. NANA Servs., LLC, B-401951.2, May 24, 2010.

After implementing its corrective action, the USMC notified the protester that it had 

again selected the SLA for award, and on September 20, 2010, NANA filed a 

second protest with our Office. In late November 2010, after the cognizant GAO 

attorney conducted an outcome prediction alternative dispute resolution telephone 

conference, the agency notified our Office that it would take further corrective action 

in response to the protest. Specifically, the agency advised us that it would reopen 

discussions with the competitive range offerors, evaluate the new proposal 

submissions, and make a new source selection decision. We subsequently 

dismissed the protest as academic. NANA Servs., LLC, B-401951.3, Dec. 2, 2010.

The USMC implemented the corrective action over the course of the next year and 

a half. During this time, the agency issued several amendments to the RFP and 

conducted multiple rounds of discussions. In early December 2011, the agency 

requested final proposal revisions. 

On June 8, 2012, the USMC notified NANA that it had once again selected the SLA 

for award. The protester timely requested a debriefing, which the agency furnished 

on June 19. During the debriefing, the agency advised the protester that while the 

protester’s and the awardee’s proposals had received the same overall rating (of 

good) under the non-price factors, and the protester’s total price was lower than the 

SLA’s ($11,221,762 vs. $14,348,594), resulting in NANA’s proposal being the 

highest ranked, the agency had selected the SLA for award based on application of 

the Randolph-Sheppard Act priority. On June 25, NANA protested to our Office.
Page 4 B-401951.5, B-401951.6 

DISCUSSION

First, the protester argues that the agency unreasonably determined the SLA’s price 

to be fair and reasonable.1

 

1 NANA also argued that the USMC violated Department of Education (DoEd) 

regulations implementing the RSA by failing to consult with DoEd regarding the 

reasonableness of the SLA’s price. In this connection, 34 C.F.R. § 395.33 (2012) 

provides as follows:

 According to the protester, the reasonableness of the 

SLA’s price should have been determined based on a comparison to NANA’s 

significantly lower price. 

(a) Priority in the operation of cafeterias by blind vendors on Federal 

property shall be afforded when the Secretary [of the Rehabilitation 

Services Administration] determines, on an individual basis, and after 

consultation with the appropriate property managing department, 

agency, or instrumentality, that such operation can be provided at 

reasonable cost, with food of a high quality comparable to that 

currently provided employees, whether by contract or otherwise. Such 

operation shall be expected to provide maximum employment 

opportunities to blind vendors to the greatest extent possible.

(b) In order to establish the ability of blind vendors to operate a 

cafeteria in such a manner as to provide food service at comparable 

cost and of comparable high quality as that available from other 

providers of cafeteria services, the appropriate State licensing agency 

shall be invited to respond to solicitations for offers when a cafeteria 

contract is contemplated by the appropriate property managing 

department, agency, or instrumentality. . . . If the proposal received 

from the State licensing agency is judged to be within a competitive 

range and has been ranked among those proposals which have a 

reasonable chance of being selected for final award, the property 

managing department, agency, or instrumentality shall consult with the 

Secretary as required under paragraph (a) of this section. 

By letter of September 16, the USMC advised our Office that it would be taking 

corrective action with regard to this issue by consulting with DoEd. The agency 

further represented that after receipt of DoEd’s determination, it would take “any 

other corrective action deemed necessary resulting from subject consultation.” 

USMC Letter to GAO, Sept. 13, 2012, at 1. Because the agency is taking 

appropriate corrective action to address the alleged impropriety, we dismiss this 

issue as academic.

 
Page 5 B-401951.5, B-401951.6 

In this regard, NANA cites language from a 2006 report issued jointly by the 

Department of Defense, the Department of Education, and the Committee for 

Purchase From People Who Are Blind or Severely Disabled.2

 The 2006 Joint 

Report provides that contracting officers should afford an SLA priority under the 

RSA for dining facility contracts when the SLA has demonstrated that it can provide 

such operation at a “fair and reasonable price,” and when the SLA’s final proposal 

revision (or initial proposal if award is made without discussions) is among the 

highly ranked final proposal revisions with a reasonable chance of being selected 

for award. The Joint Report goes on to define “fair and reasonable price” to mean 

that the SLA’s “final proposal revision does not exceed the offer that represents the 

best value (as determined by the contracting officer after applying its source 

selection criteria contained in the solicitation) by more than five percent of that offer, 

or one million dollars, whichever is less, over all performance periods required by 

the solicitation.” Joint Report at 5. 

While the protester recognizes that the policy embodied in the Joint Report is not a 

binding regulation, citing our decision in Moore’s Cafeteria Servs. d/b/a MCS Mgmt., 

B-299539, June 5, 2007, 2007 CPD ¶ 99, it argues that the policy represents the 

considered judgment of the agencies tasked with implementing the RSA and should 

be afforded considerable weight. NANA further argues that when the SLA’s price is 

evaluated in light of the “fair and reasonable price” definition provided for in the Joint 

Report, it is clearly not reasonable.

In response, the agency, also citing our decision in Moore’s Cafeteria, argues that 

adherence to the guidance set out in the Joint Report is not mandatory because it 

has not been implemented through the issuance of regulations, and that the source 

selection authority (SSA) appropriately determined the SLA’s price fair and 

reasonable after comparing it with the government estimate ($14,865,581) and with 

the price offered by the third offeror in the competitive range ($16,439,143). We 

agree with the agency with regard to both arguments. 

As we noted in our decision in Moore’s Cafeteria, until regulations implementing the 

policy set forth in the Joint Report are issued, which has not yet occurred, we view 

the policy as the equivalent of internal agency guidance, which does not establish 

legal rights and responsibilities such that actions taken contrary to it are subject to 

objection. Id. at 4. Moreover, the Federal Acquisition Regulation (FAR) recognizes 

both comparison with the government estimate and comparison with other offerors’ 

prices--the methods used by the agency here to establish the reasonableness of the 

 

2 The report was issued in response to section 848 of the National Defense 

Authorization Act for Fiscal Year 2006, Pub. L. No. 109-63, which instructed the 

three entities to issue a joint statement of policy concerning application of the RSA 

and the Javits-Wagner-O’Day Act to contracts for the operation and management of 

military dining facilities.
Page 6 B-401951.5, B-401951.6 

SLA’s price--as permissible techniques for determining price reasonableness. FAR 

§§ 15.404-1(b)(2) (i) and (v); U.S. Dynamics Corp., B-298889, Dec. 19, 2006, 2007 

CPD ¶ 21 at 4. Thus, we deny this ground of protest.

Next, NANA argues that the SLA’s proposal should have been excluded from the 

competitive range because the technical evaluation board (TEB) evaluated it as 

unsatisfactory overall based on two deficiencies and multiple weaknesses. As 

discussed below, the record shows that the SSA disagreed with the TEB’s 

conclusions, furnished a detailed analysis as to the basis for his disagreement, and 

reassigned the proposal ratings of good under each of the technical evaluation 

subfactors. Because we have no basis to conclude that the SSA’s findings were 

unreasonable, we deny this ground of protest as well.

The TEB assigned the SLA’s final proposal a rating of unsatisfactory under the 

management plan and staffing/transition plan subfactors, a rating of marginal under 

quality control plan subfactor, and a rating of good under the food service 

operations subfactor. The evaluators identified two weaknesses and a deficiency 

under each of the first two subfactors. As will be discussed in greater detail below, 

the deficiency under the management plan subfactor pertained to the SLA’s 

approach to providing coverage for the project manager position, while the 

deficiency under the staffing/transition plan subfactor pertained to the SLA’s 

proposed staffing schedule. 

The SSA disagreed with virtually all of the TEB’s findings pertaining to the SLA 

proposal. Based on his review, he re-rated the SLA’s proposal as good under each 

of the technical evaluation subfactors and assigned it an overall rating of good 

under the non-price factors.3

 The SSA concluded that while NANA’s proposal, 

which received the same overall rating as the SLA’s under the non-price factors and 

which was lower in price than the SLA’s, represented the best value to the 

government, the SLA proposal demonstrated both that the SLA could provide 

operation of the dining facility at a fair and reasonable price, and that the SLA 

proposal was among the highly ranked proposal revisions after discussions with a 

reasonable chance of being selected for award using the best value method. 

Accordingly, the SSA concluded that he was required to apply the RSA priority and 

select the SLA for award. Source Selection Decision (SSD), May 24, 2012, at 17, 

Agency Report (AR), Tab 113.

The protester and the agency agree that an SSA has the discretion to overturn the 

findings of a TEB when he documents a reasonable basis for his conclusions. In 

this connection, we have previously recognized that in making a source selection 

decision, an SSA has broad discretion in determining the manner and extent to 

 

3 Under the past performance factor, the evaluator assigned the SLA proposal a 

rating of very good, with which the SSA concurred.
Page 7 B-401951.5, B-401951.6 

which technical and cost evaluation results are used, is permitted to make an 

independent evaluation of offerors’ proposals, and may disagree with or expand 

upon the findings of lower-level evaluators provided the basis for the evaluation is 

reasonable and documented in the contemporaneous record. CapRock Gov’t 

Solutions, Inc.; ARTEL, Inc.; Segovia, Inc., B-402490 et seq., May 11, 2010, 2010 

CPD ¶ 124 at 12. The protester argues, however, that the SSA lacked a 

reasonable basis for his findings.

NANA argues, for example, that the SSA unreasonably determined that the SLA’s 

proposed approach to providing coverage for the project manager position did not 

constitute a deficiency. In this connection, the solicitation required that a lead 

worker cover for the project manager during required hours of operation when the 

project manager is off-duty.4 The SLA proposed to accomplish this by having one 

of its production chiefs act for the project manager on the weekends and between 

4:00 and 5:45 p.m. on weekdays.5

 During the periods when the production chief 

was acting for the project manager, the SLA in turn proposed to increase the 

number of cooks by one. In response to a discussion question requesting further 

explanation of the above approach, the SLA furnished the following explanation of 

coverage:

I. Project Manager – Present 40+ hours per week. The Production 

Chief would have the authority of the Project Manager in the Project 

Manager’s absence.

 

4 More specifically, the RFP provided at § C7.4.2 as follows:

The Contractor shall provide an on-site Project Manager to be 

responsible for performance of the work. The Project Manger shall be 

on-site at least 70% of the operational time. Operational time is the 

time period beginning when the first contractor employee begins the 

day’s work and concluding when the last contract employee ends the 

day’s work. In the absence of the Project Manager during the 

minimum 70% operational time period, a lead worker shall be placed 

in charge and shall have supervision as his primary function during the 

times he is in charge.

RFP, amend. No. 0006, at 38.

5 The SLA explained in its proposal that because its weekday operational time 

would be 15.75 hours per day on weekdays, compliance with the 70% requirement 

meant that it needed to have someone acting as project manager 10.75 hours per 

weekday. It proposed to cover the 10.75 hours by having its project manager work 

a 9-hour shift (7:00 a.m. - 4:00 p.m.), and having a production chief stand in for the 

project manager from 4:00 to 5:45 p.m. Revised SLA Proposal, June 1, 2011, at 1, 

AR, Tab 75.
Page 8 B-401951.5, B-401951.6 

II. Production Chief – Would only have to assume the responsibilities 

of the Project Manager some few hours during the weekdays and for 

weekend coverage. The Project Manager would still be available for 

contact and could be at the location within a short period of time if his 

presence is necessary. Knowing that the Production Chief’s 

managerial jobs should not be assumed with a CBA [collective 

bargaining agreement] position (Cook II), the coverage for the 

weekends and offhours does not include managerial responsibilities 

(see Cook II acting as Production Chief job description). We have 

scheduled the Production Chief managerial duties such as food 

purchasing, menu development, pricing, planning, hiring, firing, etc. to 

be accomplished during a normal weekday scheduling. This can be 

successfully accomplished during the week given the presence and 

scheduling of the Project Manager and Production Chief at the same 

times. The non Managerial tasks that are part of the Production 

Chief’s requirements would fall to a qualified Cook II (to be identified).

III. Cook II filling in for Production Chief – in our previous submission 

we increased the hours and times that Cooks were available in order 

to cover for this requirement to fill the duties of the Production Chief 

when they step up to cover for the Project Manager. . . . .

SLA Discussion Letter Response, Aug. 18, 2011, at 2-3, AR, Tab 97.

The evaluators identified this approach as a deficiency, noting that tasks such as 

food purchasing, menu development, and pricing were the responsibility of the 

government, not the contractor. The evaluators further noted that the statement 

that the project manager would be available for contact, if needed, implied that the 

production chief standing in for the project manager was not adequately qualified, 

and that the statement that the managerial responsibilities associated with the 

production chief position would be scheduled for weekdays implied that the 

production chief would not perform any managerial responsibilities, such as 

planning, while standing in for the project manager. The evaluators also found that 

the SLA’s description of the functions to be performed by the production chief did 

not correctly reflect that the principal function of the production chief was to be 

cooking.

The SSA disagreed with these findings in several respects. While acknowledging 

that the SLA proposal did erroneously refer to tasks such as food purchasing, menu 

development, and pricing as within the production chief’s managerial 

responsibilities, the SSA found that the error did not demonstrate a lack of 

understanding of solicitation’s minimum requirements and did not support a finding 

of deficiency. In addition, he found that having the project manager available for 

contact was “simply reach-back capability” and did not “necessarily mean that the 
Page 9 B-401951.5, B-401951.6 

acting Project Manager [was] not qualified.” SSD at 10. He also found that it could 

not reasonably be inferred from the statement that the managerial responsibilities 

associated with the production chief position would be scheduled for weekdays that 

the production chief would not perform any managerial responsibilities while acting 

for the project manager on weekends. With regard to the TEB’s complaint that the 

SLA’s description of the functions to be performed by the production chief was not 

consistent with the position’s principal function of cooking, the SSA noted that he 

reviewed the PWS, and “no where does it state that the main function of the 

Production Chief is to perform cooking.” Id. at 11. While the protester disagrees 

with several of the SSA’s judgments, it has not persuaded our Office that the SSA 

acted unreasonably.

The protester also argues that the SSA unreasonably concluded that the SLA’s 

proposed approach to scheduling was not a deficiency. In this connection, the RFP 

provided as follows with regard to shift changes:

Shift changes shall not interfere with normal operations of the 

messhall, to include serving of food and clean up after meals. Shift 

changes shall not occur during the serving of a meal during 

designated meal periods.

RFP, amend. 0006, at 4. As noted above, the SLA proposed to shift a production 

chief to the position of acting project manager and to bring another cook on-board at 

4:00 p.m. on weekdays, which is the time at which the main dining facility opens. 

The TEB found this approach to be deficiency, noting as follows:

The Offeror’s proposed solution increases Cook I at 1600 to meet the 

[requirement for a minimum of 6 cooks] during the dinner meal hours 

because the Production Chief who is a Cook becomes the Project 

Manager. The Offeror is proposing that at 1600 the Production Chief 

who is a Cook leaves to become the Project Manager. The Cook II is 

leaving at 1600 to become the Production Chief. Cook I arrives to 

maintain the number of minimum Cooks. However, the Offeror’s 

solution provides no pass down/turnover period. An hour prior to the 

opening of the Mess Hall for dinner at 1600 is the busiest time where 

each Cook is responsible [for] his or her own duties. In addition, food 

production is a continuous process where a Cook cannot abruptly 

leave especially during the busiest time. It would be a high risk and 

detrimental to the overall food service operation for two Cooks to 

leave at the peak hour and be replaced by a new Cook. The key 

issue is that Offeror shows an inability to develop an adequate 

schedule to follow the requirements identified in the PWS.

TEB Consensus Report, SLA, at 12.
Page 10 B-401951.5, B-401951.6 

The SSA disagreed with the finding of deficiency, observing that while the RFP 

prohibited shift changes during the serving of a meal, it did not prohibit a shift 

change at the beginning of a meal period; accordingly, the SSA concluded that the 

SLA’s proposal was “not deficient as [it was] in compliance with the [solicitation’s] 

minimum requirements,” and that it did “not indicate [that the SLA was] unable to 

develop an adequate schedule to follow the requirements of the PWS.”6 SSD at 13. 

Again, we think that the SSA’s conclusion was reasonable.7

Finally, in its initial protest, NANA alleged that the SLA’s proposal failed to 

demonstrate that a blind vendor would be involved in operation of the dining

facilities. In this connection, the protester alleged that while the SLA proposal 

identified a blind vendor, it did not discuss his role on the project; indeed, the 

protester asserts, the SLA proposal, on its face, plainly demonstrated that the SLA’s 

teaming partner, Blackstone Consulting, Inc., would provide all of the operation and 

management, with no blind vendor involvement.

In its report, the agency demonstrated that the protester’s assertion that the SLA 

proposal failed to discuss the role to be played by the named blind vendor was 

incorrect. That is, the record showed that the agency had specifically asked the 

SLA to address the issue of the blind vendor’s involvement during discussions, see

Discussion Letter to SLA, Jan. 4, 2011, AR, Tab 6, and that in response, the SLA 

had furnished a description of his primary duties and responsibilities. SLA Revised 

Proposal, Jan. 18, 2011, AR, Tab 10. Accordingly, we dismiss this argument as 

lacking a factual basis.

The protest is denied.

Lynn H. Gibson

General Counsel

 

6 The SSA did not find that the SLA’s approach to scheduling was devoid of risk; 

rather, he found that the level of risk justified a weakness, as opposed to a 

deficiency.

7 The protester also objected to the SSA’s finding that several of the weaknesses 

identified by the TEB were unsubstantiated. While we do not address each 

objection in this decision, we considered all of them in our review of the protest, and 

find that none provides a basis for sustaining the protest. The SSA provided a 

detailed rationale for each instance in which he disagreed with a finding of the TEB, 

and the protester has not demonstrated that any of the findings were unreasonable.