[B-288573] Crown Contract Services, B-288573, October 31, 2001
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TITLE: Crown Contract Services, B-288573, October 31, 2001
BNUMBER: B-288573
DATE: October 31, 2001
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Decision
Matter of: Crown Contract Services
File: B-288573
Date: October 31, 2001
Jesse W. Rigby, Esq., Clark, Partington, Hart, Larry, Bond & Stackhouse, for
the protester.
Maj. Leslie A. Nepper, Department of the Army, for the agency.
Paul I. Lieberman, Esq., and Michael R. Golden, Esq., Office of the General
Counsel, GAO, participated in the preparation of the decision.
DIGEST
Solicitation quantity estimates for hospital linen and laundry services are
unobjectionable where based on the best available information, consisting of
accurate recent historical data reasonably updated by application of the
average annual volume increase, and adjusted to reflect the anticipated
increase that will result from facility usage by a known group of newly
eligible patients.
DECISION
Crown Contract Services protests the terms of request for proposals (RFP)
No. DADA08-01-T-0258, issued by the Department of the Army for linen and
laundry services for the Moncrief Army Community Hospital at Fort Jackson,
South Carolina, alleging that the RFP quantity estimates are defective
because they overstate the agency's actual needs.
We deny the protest.
The RFP, issued on July 13, 2001, contemplates a requirements contract for
linen and laundry services at Moncrief Hospital for a base year with four
option years, and provides total yearly quantity estimates in ascending
order, ranging from 536,000 pounds for the base year to 544,000 pounds for
the final option year, with a 2,000 pound increase each year. [1] Crown
currently provides laundry services for all of Fort Jackson, including
Moncrief Hospital. The agency recently determined that Moncrief Hospital
would better meet its needs if the facility discontinued the practice of
owning and managing its own linens. As a result, the agency plans to
terminate the Moncrief Hospital portion of Crown's contract, and has issued
the instant RFP soliciting proposals to supply the hospital linens as well
as to launder them.
On August 7, 2001, prior to the closing date, Crown protested to the agency
that the RFP estimates appeared to be overstated based on comparison with
the actual workload at Moncrief over the past year, and objecting that there
was no provision to reimburse the contractor for loss of the furnished linen
due to acts of government personnel. Agency Report (AR), Tab H, Agency-Level
Protest, at 1. The agency denied Crown's protest on August 10, whereupon
Crown filed this protest with our Office, raising the same issues. [2]
As a general rule, a procuring agency must give sufficient detail in a
solicitation to enable offerors to compete intelligently and on a relatively
equal basis. Lederle-Praxis Biologicals Div., American Cyanamid Corp.,
B-257104 et al., Aug. 22, 1994, 94-2 CPD para. 205 at 5. Under a solicitation
for an indefinite quantity of goods or services, estimates permit an agency
to compare proposals on an equal basis and ascertain which offeror submitted
the lowest overall cost, and provide offerors with the information needed to
price their goods or services intelligently. West Coast Copy, Inc., Pacific
Photocopy and Research Servs., B-254044, B-254044.2, Nov. 16, 1993, 93-2 CPD
para. 283 at 7. Where estimates are provided in a solicitation, there is no
requirement that they be absolutely correct; rather they must be based on
the best information available and present a reasonably accurate
representation of the agency's anticipated actual needs. Service
Technicians, Inc., B-249329.2, Nov. 12, 1992, 92-2 CPD para. 342 at 2.
Here, the agency report states that the workload estimate is based on recent
historical data (which was provided in the RFP), updated by factoring in the
average annual volume increase of approximately 3 percent, plus an upward
adjustment to reflect the impact of an additional 700 elderly beneficiaries
who become eligible to use the Moncrief facilities on October 1, 2001, under
the new "Tricare Plus" program. AR at 1-2.
Crown had initially protested that the estimates were excessive simply on
the basis that the estimated quantities exceed current usage, pointing to
the actual workload of 445,639 pounds of linen for fiscal year 2000, the
most recent complete year total. Protest at 3. Upon learning from the agency
report that the increase also reflected the anticipated additional patient
load of 700 newly eligible Tricare Plus beneficiaries, Crown objected that
it had not been provided with this information until after its protest was
filed with our Office, and suggested that this justification may have been
created in an effort to substantiate the agency estimate. Alternatively,
Crown objected that the agency did not use reasonable care in calculating
the precise impact of the increased user population. Protester's Comments at
1-3.
In our view, the protester has done no more than disagree with estimates
that reflect the reasoned judgment of agency personnel who considered the
best available information in projecting the anticipated requirements. While
the agency may not have advised Crown about the estimated impact of the
anticipated new Tricare Plus program beneficiaries when Crown first
questioned the agency about the estimates, the record makes clear that the
activity had taken extensive measures to implement the program at Moncrief
on October 1. AR, Tab I(1), Tricare Plus Moncrief Army Community Hospital
Implementation Plan. Crown does not dispute that the program is actually
being implemented, or that the result is an increase to the user population
for Moncrief hospital of approximately 700 newly eligible beneficiaries.
This anticipated increase in users accurately reflects the agency's
projected actual needs, and thus provides a reasonable basis to upwardly
adjust the historical usage quantities.
With respect to the specific calculations of the estimated workload
increase, the agency explains that to calculate the base year estimate, it
first applied a 3.5 percent per year average fiscal year increase to the
actual fiscal year 2000 workload of 442,707 pounds. This resulted in a
starting number of 474,237 pounds for fiscal year 2002. To this number, the
agency added an increase of 13 percent to reflect the impact of the 700 new
Tricare Plus patients who would be enrolled on October 1, 2001. This
resulted in a total of 535,890, which provided the basis for the RFP's
rounded base year estimate of 536,000 pounds. Agency Supplemental Report,
Tab K, Statement by Chief, Environmental Services, at 1-2. The agency
explains that in arriving at this 13 percent adjustment it took into account
the fact that the 700 new patients would be over age 65, and that the agency
anticipated that they would on average need substantially more care than
current patients, the vast majority of which are under age 40. Id. at 1. The
agency further explains that its calculation was based on an estimate of 5.8
treatments per year, per patient for the Tricare Plus enrollees, and on its
historical experience that Moncrief uses about 27 pounds of linen per day,
per inpatient. Id. at 2. Finally, the agency explains that it lowered the
annual increase adjustment after the base year from 3.5 percent to 2,000
pounds per year to reflect anticipated efficiencies to be gained from the
contract and an attempt to minimize increases to reduce future costs. Id.
Crown protests that these calculations are inaccurate, objecting that the
agency did not distinguish between variations in daily inpatient and
outpatient linen usage, and asserting that "common sense" tells us that 5.8
inpatient days for each of the 700 new potential patients would be
"ludicrous." Protester's Supplemental Comments at 2. Crown contends that the
absence of more precise documentation "or explanation for the absence of
data, as to the number of inpatient days anticipated, and the amount of
linen used for outpatient treatments, conclusively demonstrates the Agency's
lack of attention to detail, lack of reasonableness, lack of good faith, and
yes, negligence in preparation of the estimate." Id. As noted above, while
an estimate must be based on the best information available it need not be
absolutely correct. Here, the agency relied on its actual experience to
estimate overall daily per patient linen usage, and reasonably anticipated
relatively high hospital usage from a substantially older eligible
population than it currently serves. The result was a relatively modest 13
percent increase used by the agency as an estimate of the impact of the new
patients, to which was coupled reduced annual increases for the option
years.
Crown's own calculations include a scenario which Crown categorizes as
"highly unlikely," but which actually applies substantially lower average
pounds per patient, per day of linen usage than Moncrief has historically
experienced, which results in an increase of 75,950 pounds of laundry per
year attributable to the 700 new Tricare Plus patients. Protester's
Comments, Smythe Statement, at 2. While Crown asserts that this increase is
far short of the projected increase under the RFP (Protester's Comments at
2), in relevant fact, it is greater than the 13 percent increase
(approximately 62,000 pounds) that the agency attributed as the impact of
the Tricare Plus patients. In these circumstances, Crown's objection that
the agency has not provided a precise and exact calculation does not provide
a basis to conclude that the agency's estimates are unreasonably high.
Crown also protests that the solicitation does not provide for contractor
reimbursement for loss or damage to contractor furnished linens caused by
the actions of government personnel. In this regard the solicitation
schedule provides that "price per pound shall include all cost, including
[loss] of items." RFP at 2. This provision advises prospective contractors
that they would be responsible for linen loss, and that all such losses
should be taken into consideration in calculating prices. It is within the
agency's discretion to impose the maximum risk of such loss on the
contractor in order to limit the burdens on the government. KCA Corp.,
B-236260, Nov. 27, 1989, 89-2 CPD para. 498 at 3; Tracor Jitco, Inc., B-220139,
Dec. 24, 1985, 85-2 CPD para. 710 at 4-5. Crown has not provided any basis to
conclude that it is unreasonable for the agency to require offerors to
exercise their business judgment
to estimate loss or damage to furnished linen while it is in the care of
government personnel, and to factor this into their prices under the RFP.
[3]
The protest is denied.
Anthony H. Gamboa
General Counsel
Notes
1. Under the initial RFP these numbers had been transposed erroneously,
listing the base year estimate as 544,000 pounds, and listing the estimated
quantities in descending order. This was corrected by amendment No. 2, which
relisted the same quantities in ascending order, as indicated above.
2. The closing date has been postponed pending resolution of this protest.
3. In its comments, Crown shifted this argument to an assertion that the
solicitation did not unambiguously provide that the contractor was
responsible for linen loss attributable to agency personnel. Protester's
Comments at 3. In this regard, Crown pointed to two other allegedly
inconsistent standard clauses contained in the RFP addressing loss. However,
neither clause conflicts with the provision assigning risk of loss of the
contractor-provided linens to the contractor. The first clause referenced,
Federal Acquisition Regulation sect. 52.212-4(j) (RFP at 57), addresses when th
e
risk of loss shifts for supplies that are purchased by the government. This
clause has no applicability to contractor-furnished linen, which remains the
contractor's property and is not purchased by the government. The other
clause, Defense Federal Acquisition Regulation Supplement sect. 252.237-7015
(RFP at 65), pertains to government furnished articles, and thus likewise
has no applicability to contractor-owned linens. In short, the RFP makes
clear that the contractor is responsible for all linen loss.