Opinion ID: 2640804
Heading Depth: 1
Heading Rank: 3

Heading: recommended decision

Text: These consolidated protest appeals concern a Request for Proposal (RFP) for a real estate lease, issued by the [Division] of General Services (DGS). . . . . E. Remedy The potential remedies in this case appear to be: (1) confirm the lease award to McKinley and award Bachner and Bowers their proposal preparation costs; (2) remand to DGS for rescoring, applying a reasonable Consumer Price Index (CPI) adjustment and omitting Mr. Weed's scores, and award the lease to the highest rated offeror; or (3) cancel the solicitation and issue a new RFP. Alaska Statute 36.30.585(b) provides that in determining an appropriate remedy, the procurement officer must consider: (1) the seriousness of the procurement deficiencies; (2) the degree of prejudice to other interested parties or to the integrity of the procurement system; (3) the good faith of the parties; (4) the extent to which the procurement has been accomplished; (5) costs to the agency and other impacts on the agency of a proposed remedy; and (6) the urgency of the procurement to the welfare of the state. (1) Seriousness of the procurement deficiency. In this case, an evaluator improperly adjusted scores. This is a serious deficiency in the procurement process. Nonetheless, it is not a deficiency requiring cancellation, because the impropriety was limited to one evaluator. Typically, the remedy for such misconduct is to rescore the proposals omitting the scores by the evaluator whose conduct was improper. In addition, the price evaluation did not comply with a reasonable reading of the RFP. This, too, is a serious procurement deficiency. The standard remedy for such a deficiency is to rescore the proposals applying the correct interpretation of the RFP. This factor supports rescoring rather than cancellation. However DGS should have the option of cancellation (because it did not intend to utilize a CPI adjustment) if rescoring is deemed appropriate in light of all the circumstances. (2) Degree of prejudice to McKinley and integrity of the procurement system. Either rescoring or cancellation would result in substantial prejudice to McKinley. Rescoring, under any reasonable CPI adjustment, would result in award to another offeror, and cancellation could also result in award to another. McKinley has incurred substantial construction costs, and award to another party would leave McKinley liable for those costs and would result in the loss of the profits anticipated under the lease. McKinley is not responsible for the deficiencies in the solicitation and is not responsible for the delay in the final administrative decision on the protests. Bachner argues that McKinley is not substantially prejudiced because it can recover any damages incurred as a result of rescoring or cancellation of the solicitation by legal action against the State of Alaska. However, that McKinley may have a legal remedy does not mean that those outcomes are without prejudice to it. It is unlikely that any damages recovered by McKinley would entirely compensate it for its losses: the State may have defenses to any legal claims asserted; [12] damages would not include all costs incurred in pursing a remedy, may not include the indirect impacts of cancellation, and would in any event come only after a significant delay. While the prejudice to McKinley may be reduced by the availability of a legal remedy, it is not eliminated. From the standpoint of prejudice to McKinley, confirmation of the award is preferable. With respect to the integrity of the procurement process, however, cancellation is the preferred remedy. Impropriety on the part of one evaluator is not necessarily in itself ground for cancellation. However, in this case there were apparent defects in the procurement entirely apart from the actual impropriety on the part of one evaluator. These apparent defects included: (1) patent ambiguity with respect to use of the present value analysis; (2) latent ambiguity with respect to CPI adjustments; and (3) the appearance that inappropriate factors were considered by the evaluators (proximity to existing DOT facility and past performance of offerors). Given the nature of the actual and apparent defects, cancellation would be appropriate. Taken together, in light of the substantial risk of prejudice to McKinley, and the harm to the integrity of the procurement process, cancellation should be avoided if another suitable remedy is available. (3) Good faith. Impropriety on the part of one evaluator is not equivalent to bad faith on the part of DGS. Nonetheless, it is sufficient to establish a breach of the implied contract of fair and honest consideration. Clearly, an award of the costs of proposal preparation is appropriate, but this factor does not support cancellation. (4) The extent the procurement has been accomplished. Because procurement was not stayed, the procurement was completed before the protest appeal was filed. No lease has been executed as yet, but McKinley has commenced performance in conformity with its proposal by substantially completing construction of the new building that DGS expressed an intent to lease. Because the procurement has been completed and substantial performance has begun, this factor supports confirmation of the notice of award rather than rescoring or cancellation. (5) Costs to the agency and other agency impacts of the proposed remedy. The potential costs to the agency in the event the solicitation is cancelled or rescored are significant. It is only reasonable to anticipate that if the solicitation is cancelled, the State will be liable for the costs of construction. In addition, there is a substantial risk that the State would be liable for additional damages, such as lost profits. On the other hand, if the award to McKinley is sustained, the State would likely not be liable to either Bachner or Bowers for any damages beyond the limits of AS 36.30.585. Bachner argues that the costs to the State are likely to be equaled or exceeded by cost savings resulting from an award to a lower cost offeror. However, even if the out-of-pocket costs over time are the same, the State would incur a substantial negative impact because the lower cost facility was, according to all evaluators, also a less desirable facility. The effect is that the State would pay a higher cost (Bachner or Bowers' bid price plus damages to McKinley) for a lower rated facility. For this reason, this factor weighs in favor of confirmation of the existing award rather than cancellation or rescoring. (6) Urgency of the procurement. There does not appear to be any urgency in acquiring the space at issue, since the existing landlord has indicated a willingness to extend the lease indefinitely. This factor supports cancellation and resolicitation. (7) Other Factors. . . . . Another circumstance that should be considered in fashioning a remedy is the substantial costs incurred by Bachner and Bowers in pursing their administrative remedy. The failure to provide full and fair compensation to protestors for out-of-pocket costs incurred in a solicitation in which there is actual impropriety could have adverse impacts on the procurement process generally by insulating procurement decisions from administrative review and creating the perception that the procurement process is unfair.