International Outsourcing Services, LLC v. United States

69 Fed. Cl. 40, 2005 U.S. Claims LEXIS 357, 2005 WL 3320094
CourtUnited States Court of Federal Claims
DecidedOctober 25, 2005
DocketNo. 05-768C
StatusPublished
Cited by40 cases

This text of 69 Fed. Cl. 40 (International Outsourcing Services, LLC v. United States) is published on Counsel Stack Legal Research, covering United States Court of Federal Claims primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

Bluebook
International Outsourcing Services, LLC v. United States, 69 Fed. Cl. 40, 2005 U.S. Claims LEXIS 357, 2005 WL 3320094 (uscfc 2005).

Opinion

OPINION

ALLEGRA, Judge.

In this post-award bid protest action, the plaintiff, International Outsourcing Services LLP (“IOS”), was declared ineligible for the award of a contract by the Defense Commissary Agency (DeCA) essentially because it failed fully to respond to repeated requests for pricing information. The contract instead was awarded to the defendant-interve-nor herein, NCH Marketing Services (NCH). On the parties’ cross-motions for judgment on the administrative record, this court finds that the United States, acting through DeCA, was well within its rights in eliminating plaintiff from the competitive range based upon the latter’s failure to put the agency in the position to evaluate its proposal properly.

I. FACTS

On April 23, 2004, DeCA issued Solicitation No. HDEC08-04-R-0019 (the Solicitation) to secure coupon processing and redemption services in relation to its worldwide commissary facilities. The Solicitation called for the award of a fixed-price contract for a one-year base period, with four one-year options. It initially estimated that 200 million coupons would be processed annually, with the contractor to be paid a fixed fee for every thousand coupons processed. Additionally, the contractor would receive “reimbursements for payments received from manufacturers for postage and special shipping and handling fees invoiced by the contractor.”

Under the terms of the Solicitation, proposals were to be evaluated “[ujsing a tradeoff process,” with the award to be made to “the responsible offeror whose offer conforming to the solicitation will be the most advantageous and provide the best value to the Government” under the evaluation factors included in the Solicitation. The Solicitation noted that “[t]he process permits tradeoffs among cost or price and non-cost factors and allows the Government to accept other than the lowest priced proposal or other than the highest technically rated offeror.” Proposal were to be evaluated based on two basic factors: (i) performance capability, including subfactors of technical capability (operations and quality control), personnel (staffing and qualifications), and past performance (similarity of experience, timeliness of performance, and business relations); and (ii) price. The performance capability factor was to be approximately equal in importance to the price factor. In a segment entitled “Price and Price Realism,” the Solicitation mandated that—

[proposals will be evaluated to determine whether offered prices are realistic in relation to the work to be performed; reflect a clear understanding of the requirements, and are consistent with other portions of the offeror’s proposal. The PRICE factor will not be scored. Price will be evaluated by adding the total price of all line items, base year plus four one year options.

The phrase “price realism” was not further defined in the Solicitation.

DeCA received two proposals in response to the Solicitation — one from IOS and the other from the incumbent contractor, NCH. IOS offered a processing fee of [ ] per thousand coupons in the base year, with [] per thousand for the first option year, and [ ] per [42]*42thousand for the second, third, and fourth option years. By comparison, NCH offered a price of [] per thousand coupons during the base year, which increased to [] per thousand coupons by the final option year.

On July 14, 2005, the DeCA contracting officer responded to IOS’ proposal in a letter. She advised IOS that “discussions, clarifications, and/or corrections [were] required,” as its proposal did “not demonstrate that [it] had a clear understanding of the requirements.” By way of explanation, the letter stated:

Based on historical data, your proposal price seems extremely low and therefore, reasonableness of your price could not be determined. Prices are evaluated to determine whether they are realistic in relation to the work to be performed, reflect a clear understanding of the requirements, and are consistent with other portions of the offeror’s proposal. Your prices do not seem to be realistic for the work to be performed or reflect a clear understanding of the work to be performed.

As to this perceived deficiency, the letter instructed IOS to “explain and provide backup documentation as to how you arrived at the price and how you can successfully perform in accordance with the Statement of Work (SOW) at that price.”

On July 23, 2004, IOS responded to the contracting officer’s request. In explaining its proposal price, IOS noted that it had previously processed DeCA coupons for a short period of time and stated that “[t]his past experience with the DeCA account is why we are very confident in our pricing, our ability to meet the requirements in the Statement of Work, and our expertise to implement and execute the plan.” It further indicated that its “bid was based on the incremental cost of processing DeCA coupons,” an approach IOS assertedly had employed because the plant at which it intended to process DeCA coupons “has excess installed capacity that will be more than adequate to process the estimated DeCA volume.” An accompanying chart revealed estimated incremental costs of [] and estimated fees of [ ], of which [ ] was to derive from processing an estimated 200 million coupons at [] per thousand, and [] was to derived from the special handling of 20 million coupons at [ ] per thousand. The response further noted that IOS proposed to use “the same plant that processed DeCA coupons from 1995-2000,” and that “[m]any of the same management and direct labor personnel still are employed.”2

Recognizing, as the contracting officer had asserted, that its revenue projections were heavily based upon the receipt of a high volume of special handling fees, IOS also described in its response why it felt its reliance on those fees was reasonable:

Special handling fees have become common as a way to recover some of the increases associated with ... hard to handle coupons. Based on our experience with other accounts, the average amount of special handling fees that will be paid by manufacturers is []/1000. The billing of special handling fees will be only on coupons not scanned. For calculation purposes, we estimate that 10% of DeCA coupons will not be scanned and therefore will have special handling added to these invoices.

Attempting further to assuage DeCA’s concerns in this regard, IOS additionally indicated that “our bid price is actually higher on this bid than it was on the previous UCCH bid from 2000 considering all the bid components,” and that its current bid “is consistent with other retailers we process of similar volume and program requirements.”3

DeCA was not satisfied with this response because, inter alia, the reference only to incremental costs, in its view, still prevented it from determining whether there was adequate assurance that the contract would be [43]*43profitable to plaintiff. Accordingly, the contracting officer requested additional information from IOS. Her letter, dated September 8, 2004, stated that “after reviewing [IOS’] proposal revision, ... DeCA is still concerned with [IOS’] ability to successfully perform at the unit prices proposed, based on historical prices [DeCA] has experienced in the last 10 years.” This letter raised a number of issues, among them:

— It appears IOS is ...

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Bluebook (online)
69 Fed. Cl. 40, 2005 U.S. Claims LEXIS 357, 2005 WL 3320094, Counsel Stack Legal Research, https://law.counselstack.com/opinion/international-outsourcing-services-llc-v-united-states-uscfc-2005.