• LinkedIn
  • Google +
  • Twitter
  • Facebook

+1-571-223-6845

Bid Protest Weekly
  • Home
  • Bid Protest Ed Center
    • WHAT is a bid protest?
    • WHO can file a bid protest
    • DO I need an Attorney?
    • WHY Should you file a bid protest?
    • WHEN Must you file a bid protest?
    • WHERE can you file a bid protest?
    • READING the RFP
  • Blog
  • Topics
  • About Us
  • Contact Us

PWC Logistics Services Company, B-400660, January 6, 2009

  • By GCPC GovCon Legal Team
  • January 6, 2009
  • Customary Commercial PracticeEvaluation Criteria

Link:GAO Opinion

Agency: Defense Logistics Agency

Disposition: Protest sustained.

__________________________________________________________________________________________________________________

GAO Digest:

  1. Agency properly issued waiver in accordance with Federal AcquisitionRegulation § 12.302(c), for commercial item solicitation requirements that may be inconsistent with customary commercial practice, where agency reasonably found that requirements subject to waiver were legitimate agency needs.
  2. Solicitation is defective for failure to adequately identify bases for proposal evaluation, as required by Competition in Contracting Act of 1984, 10 U.S.C. 2305(a), where the solicitation divides requirement for food distribution into two geographic zones, with estimated value of one nearly five times that of the other, expresses intent to award each zone to different offeror, but fails to state factors that will be applied to determine which zone will be awarded to offeror whose proposal is found most advantageous for both zones.

General Counsel P.C. Highlight:

PWC generally asserts that several of the RFP provisions are inconsistent with commercial practice, and therefore improper: (1) FOB Origin/Point of Manufacture pricing; (2) providing for DSCP to negotiate prices directly with food manufacturers under the mandatory MPA program; (3) the discount passthrough requirement; (4) the requirement that the prime vendor furnish invoices, quotes, and other documentation of manufacturers’ and growers’ prices; and (5) the requirement that the prime vendor use DTS for shipment overseas. PWC claims that these provisions, considered together, transform the requested services into something other than commercial food distribution services and thus are impermissible. GAO states that it will review challenges to waivers under this provision for reasonableness. GAO finds that PWC has provided no basis for questioning the reasonableness of the waiver here.

The record includes both documentation of DSCP’s market research into commercial practices and the waiver itself, signed by the supervisor (DSCP Integrated Supply Team (IST) Supervisor) of the contracting officer listed in the RFP. The waiver represents that the agency has determined that the use of other than commercial clauses was necessary to protect the government’s interest in avoiding fraud and otherwise ensuring fair pricing. In this regard, the waiver cites a number of problems that have arisen under DSCP’s subsistence prime vendor contracts, under which the government is obligated to pay the actual cost of the food (plus a distribution price), including: the government has found that industry rebates, discounts, allowances or similar economic incentives are often hidden from the government in private agreements between manufacturers and distributors; there are no standard definitions of many pricing terms; and the price paid by the prime vendor may be layered with excessive fees imposed by numerous dealers/ distributors/consolidators.

Further, it appears that the cited problems may have resulted in significant overcharges to the government. In this regard, the record shows that the U.S. Attorney’s Office for the Northern District of Georgia has opened a civil fraud investigation into PWC’s actions in connection with its incumbent prime vendor contracts to purchase food to support operations in Iraq, Kuwait, and Jordan, investigating whether PWC overcharged the government hundreds of millions of dollars. The record indicates that one focus of the investigation is PWC’s retention of certain rebates and discounts from its suppliers (including possibly excessive claimed prompt payment discounts), while another focus is on whether PWC is using other companies, such as distributors and consolidators, to inflate the product prices charged to the government. In addition, the record indicates that the investigation into whether the charges to the government for food were proper has been hampered by a failure by PWC to furnish requested invoices from manufacturers, growers and suppliers. Against this background, the waiver addendum explains that such pricing provisions as FOB Origin/Point of Manufacturer pricing, requirements and restrictions regarding rebates and discounts, and documentation requirements are necessary to avoid excessive passthrough charges at multiple points along the supply chain and to ensure pricing transparency and integrity.

In summary, the record indicates that DSCP, faced with possible overcharges to the government under PWC’s current contract, has adopted a series of pricing provisions intended to safeguard the government from excessive charges and to ensure pricing transparency and integrity. In addition, DSCP is implementing the mandatory MPA program, under which DSCP negotiates prices directly with food manufacturers, and the use of which was likewise approved in the waiver addendum, in an attempt to maximize the leverage of DSCP’s purchasing power and obtain fair and reasonable product pricing. PWC has not shown, nor does the record otherwise indicate, that the agency’s objectives with these provisions could be accomplished by the use of commercial clauses. Under these circumstances, the waiver is unobjectionable.

PWC asserts that the solicitation does not adequately describe the basis for award. The solicitation divided the requirement into two zones–Zone 1 with an estimated total value of $7.85 billion and Zone 2 with an estimated value of $1.58 billion–with the stated intent to award each zone to a different contractor. Specifically, the RFP provided as follows:

The Government intends to make two awards, one per zone. The intent is to have two different contractors, one for each of the separate zones. In order to ensure that two sources are available and to ensure the continuous availability of reliable sources of supplies, the Government reserves the right to exclude, under the authority of FAR 6.202, the awardee under one of these zones from being eligible for award under the other zone. However, [the] Government reserves the right to make one award for both zones, as necessary to support both zones if it is in the government’s best interest.

PWC asserts that the solicitation improperly fails to set forth the basis for determining which zone an offeror will be awarded in the event that its proposal is found to be most advantageous for both zones. GAO states that the Competition in Contracting Act of 1984 (CICA) requires that solicitations “at a minimum” include “a statement of–(i) all significant factors and significant subfactors which the head of the agency reasonably expects to consider . . . ; [and] (ii) the relative importance assigned to each of those factors and subfactors . . . .” Here, the solicitation generally provides that the agency will “award a contract resulting from this solicitation to the responsible offeror whose offer conforming to the solicitation will be most advantageous to the Government, price and other factors considered”; lists the six technical and two price evaluation factors that will be considered in determining the “most advantageous” proposal; and lists the considerations–to “ensure that two sources are available and to ensure the continuous availability of reliable sources of supplies”–warranting excluding the offeror selected for award for one zone from award for the other zone. As noted by the protester, however, the solicitation is silent as to the basis for determining which zone an offeror will be awarded where its proposal is found to be most advantageous for both zones. GAO finds this omission is especially significant here, since the estimated value of one zone is nearly five times greater than the value of the other. In GAO’s view, this failure to advise offerors of the factors the agency will apply is inconsistent with the requirement in CICA that agencies identify the bases upon which offerors’ proposals will be evaluated. Accordingly, GAO sustains the protest on this ground.

Share

Related Posts

Matter of: PAE National Security Solutions, LLC

July 22, 2021

Matter of: Transworld Systems, Inc; Account Control Technology, Inc.

February 21, 2018

Matter of: Fluor Federal Solutions, LLC

November 30, 2017

Matter of: AT&T Corporation

November 20, 2017

Comments are closed

Search Bid Protest Weekly

Need help with a bid protest?

Call us at: 703-556-0411 Or fill out this form:

Categories

  • 8(a) Sole Source Awards
  • Acknowledging Amendments
  • Adequately Written Proposal
  • Adverse Agency Action
  • Adverse Impact Analysis
  • Agency Tender
  • Alternate or Previously-Approved Product
  • Ambiguity in Solicitation
  • Attorney's Fees
  • Bad Faith in Evaluation
  • Below-Cost Offer
  • Best Value
  • Beyond the Scope
  • Bias
  • Bid and Proposal Costs
  • Bid Bond
  • Bid Compliance
  • Bid Protest Decisions
  • Bid Protest Jurisdiction
  • Bid Protests
  • Bidding Best Practices
  • Blanket Purchase Agreement
  • Blanket Purchase Order
  • Blog Articles
  • Bona Fide Needs Rule
  • Brand Name or Equal
  • Broad Agency Announcement
  • Brooks Act
  • Bundling or Consolidation
  • Buy American Act
  • Cancellation of a Solicitation
  • Capability of Contractor
  • CCR Registration
  • Certificate of Competency (COC)
  • Certification Requirements
  • Changes Clause
  • Clarifications
  • Clear and Convincing Evidence
  • Clearly Meritorious Protest
  • Clerical Error
  • Commercial Item Acquisition
  • Competitive Range
  • Compliance
  • Conflict of Interest
  • Construction Design-Build
  • Construction Services
  • Contract Administration
  • Contract Modifications
  • Contracting Preference
  • Contractor Responsibility
  • Corporate Capability
  • Corrective Action
  • Cost Accounting System
  • Cost Evaluation
  • Cost Realism
  • Cost Reimbursement Contract
  • Cost-Technical Trade-Off
  • Customary Commercial Practice
  • CVE
  • DCAA Audit
  • Debriefing
  • Default Termination
  • Deficient Price Proposal
  • Delivery Order jurisdiction
  • Delivery Schedule
  • Designated Employee Agent
  • Disclosure of Price
  • Disclosure of Source Selection-Sensitive Information
  • Discussions
  • Disqualification
  • Documentation of Evaluation
  • Domestic Production Requirement
  • Education Center Articles
  • Electronic Filing
  • Evaluation Criteria
  • Evaluations
  • Events
  • Executive Order Compliance
  • Experience of Contractor
  • Experience Requirement
  • Fair Market Price
  • FASA
  • FedBizOpps
  • Federal Prison Industries (FPI)
  • Filing Deadlines
  • Final Evaluation
  • Final Proposal Revisions
  • Financial Responsibility
  • Fixed Price Contract
  • Former Government Employees
  • FSS Contract
  • GAO Bid Protest Review
  • GAO Jurisdiction
  • GAO Standard of Review
  • Government Contracts
  • Government Office Closings
  • Government Surplus Material
  • GSA Lease
  • HUBZone
  • ID/IQ
  • In-Sourcing
  • Incentive Fee
  • Inclement Weather Delay
  • Incomplete Proposal
  • Incorporation by Reference
  • Incumbent Capture
  • Incumbent Status
  • Independent Government Estimate (IGE)
  • Individual Environmental Report
  • Industrial Mobilization
  • Innovations
  • Interested Party
  • Invitation for Bid
  • Invited Contractor
  • Javits-Wagner-O'Day Act
  • Joint Venture
  • Key Personnel
  • Labor Hours
  • Labor Rate Pricing
  • Late Proposals
  • Late Submissions
  • Level of Effort
  • Licensing Requirements
  • Limitation on Subcontracting
  • Liquidated Damages
  • Lost Proposal
  • Lowest Price Technically Acceptable
  • Mail-Box Rule
  • Management Planning
  • Market Research
  • MAS Contracts
  • Material Misrepresentation
  • Material Solicitation Amendment
  • Material Solicitation Terms
  • Meaningful Discussions
  • Micro-Purchase Threshold
  • Minimum Requirements
  • Misleading Discussions
  • Mistake
  • Mitigation Strategy
  • Multiple Awards
  • NAICS Code
  • National Security
  • Negotiation
  • News
  • Non-Procurement Instruments
  • Novations
  • Offeror Representations
  • OMB Circular A-76
  • Option Exercise
  • Oral Presentations
  • Organizational Conflict of Interest (OCI)
  • Page Limitations
  • Past Performance
  • Past Performance Information Retrieval System (PPIRS)
  • Performance Based Standards
  • Permits and Responsibilities
  • Personal Conflicts of Interest
  • Post-Award Changes to the Contract
  • Post-Protest Re-Evaluations
  • Practicable Alternative
  • Pre-Award Protest
  • Pre-award vs. Post-award Requirements
  • Pre-Qualification of Offerors
  • Pre-Solicitation Notice
  • Prejudice
  • Price Calculation Error
  • Price Calculation Error
  • Price Evaluation
  • Price of FSS Task Order Quote
  • Price Realism
  • Price Reasonableness
  • Price Reduction
  • Procurement Announcement
  • Procurement Integrity
  • Product Testing
  • Proposal Acceptance Period
  • Proposal Detail
  • Proposal Evaluation
  • Proposal Extension
  • Proposal Standards
  • Proposals
  • Protest Terms of Solicitation
  • Protester Comments
  • Public-Private Competition
  • Randolph-Sheppard Act (RSA)
  • Rate Tenders
  • Re-Certification of Size Status
  • Reconsideration
  • Reevaluation
  • Reevaluation Standards
  • Reimbursement of Protest Costs
  • Rejection of Proposal
  • Relaxation or Waiver of Requirement
  • Relevancy of Past Performance
  • Reliance on the Proposal
  • Remedies
  • Requirements Contract
  • Responsibility
  • Responsiveness
  • Restricted Competition
  • Resumes
  • Revision of Proposal
  • Revision of Proposals
  • Risk
  • Rule of Two
  • SBA Status protest
  • Scope of GAO Review
  • SDVOSB Set-Asides
  • Significant Issue Exception
  • Simplified Acquisition Procedures
  • Site Visit
  • Size Determination
  • Size Protest
  • Small Business Innovation Research (SBIR) Program
  • Small Business Set-Asides
  • Small Business Subcontracting Goals
  • Sole-Source Award
  • Solicitation Amendment
  • Solicitation Requirements
  • Source Approval
  • Source Selection Authority
  • Source Selection Decision
  • Source Selection Plan
  • Sources Sought Notice
  • Staffing Plan
  • State and Local Requirements
  • Status of Forces Agreement (SOFA)
  • Subcontract Protest
  • Subcontractor Experience
  • Suspension and Debarment
  • Taking Exception to RFP Requirements
  • Task Orders
  • Teaming Agreement
  • Technical Acceptability
  • Technical Evaluation
  • Technical Evaluation
  • Termination of Award
  • Terms of the Solicitation
  • Timeliness of Protest
  • Timely Filing
  • Timely Performance
  • Timely Proposal Submission
  • Trade Agreement Act
  • Unbalanced Pricing
  • Unduly Restrictive Terms
  • Unequal Access to Information
  • Unequal Treatment of Offerors
  • Uniform Time Act of 1996
  • Unstated Evaluation Criteria
  • Unusual and Compelling Urgency
  • Use of Appropriated Funds
  • Veterans First
  • VIP Database
  • VOSB Set Asides
  • Wage Determination

Get Help


Talk to an
attorney who
specializes
in bid protests:

+1-571-223-6845
Email

Keep up to date
on bid protest
decisions and
policies:

© 2022 Bid Protest Weekly

  • LinkedIn
  • Google +
  • Twitter
  • Facebook
  • Home
  • Bid Protest Ed Center
  • Blog
  • Topics
  • About Us
  • Contact Us
  • Home
  • Bid Protest Ed Center
    • WHAT is a bid protest?
    • WHO can file a bid protest
    • DO I need an Attorney?
    • WHY Should you file a bid protest?
    • WHEN Must you file a bid protest?
    • WHERE can you file a bid protest?
    • READING the RFP
  • Blog
  • Topics
  • About Us
  • Contact Us
  • LinkedIn
  • Google +
  • Twitter
  • Facebook

+1-571-223-6845