HSFLGL-15-R-00023_A000007.pdf

(x)

HSFLGL-15-R-00023

x x

1 copies of the amendment; (b) By acknowledging receipt of this amendment on each copy of the offer submitted ; or (c) By separate letter or telegram which includes a reference to the solicitation and amendment numbers. FAILURE OF YOUR ACKNOWLEDGEMENT TO BE RECEIVED AT

THE PLACE DESIGNATED FOR THE RECEIPT OF OFFERS PRIOR TO THE HOUR AND DATE SPECIFIED MAY RESULT IN REJECTION OF YOUR OFFER. If by virtue of this amendment you desire to change an offer already submitted , such change may be made by telegram or letter, provided each telegram or letter makes reference to the solicitation and this amendment, and is received prior to the opening hour and date specified.

x

GLYNCO GA 31524

ATTN: RENEE HICKSON

FLETC GL

PRO BLDG 93

1131 CHAPEL CROSSING RD

FEDERAL LAW ENFORCEMENT TRNG CTR

DEPARTMENT OF HOMELAND SECURITY

GLYNCO GA 31524

FLETC GL

BLDG: 93 ATTN: RENEE HICKSON

1131 CHAPEL CROSSING RD

FEDERAL LAW ENFORCEMENT TRNG CTR

DEPARTMENT OF HOMELAND SECURITY

12/11/2015000007

13. THIS ITEM ONLY APPLIES TO MODIFICATION OF CONTRACTS/ORDERS. IT MODIFIES THE CONTRACT/ORDER NO. AS DESCRIBED IN ITEM 14.

12. ACCOUNTING AND APPROPRIATION DATA (If required) is not extended.is extended, Items 8 and 15, and returning

Offers must acknowledge receipt of this amendment prior to the hour and date specified in the solicitation or as amended , by one of the following methods: (a) By completing

The above numbered solicitation is amended as set forth in Item 14. The hour and date specified for receipt of Offers

11. THIS ITEM ONLY APPLIES TO AMENDMENTS OF SOLICITATIONS

FACILITY CODE CODE

10B. DATED (SEE ITEM 13)

10A. MODIFICATION OF CONTRACT/ORDER NO.

9B. DATED (SEE ITEM 11)

9A. AMENDMENT OF SOLICITATION NO.

CODE

8. NAME AND ADDRESS OF CONTRACTOR (No., street, county, State and ZIP Code)

7. ADMINISTERED BY (If other than Item 6)CODE 6. ISSUED BY

PAGE OF PAGES

4. REQUISITION/PURCHASE REQ. NO.3. EFFECTIVE DATE2. AMENDMENT/MODIFICATION NO. 5. PROJECT NO. (If applicable)

1. CONTRACT ID CODE

AMENDMENT OF SOLICITATION/MODIFICATION OF CONTRACT

09/25/2015

CHECK ONE A. THIS CHANGE ORDER IS ISSUED PURSUANT TO: (Specify authority) THE CHANGES SET FORTH IN ITEM 14 ARE MADE IN THE CONTRACT

B. THE ABOVE NUMBERED CONTRACT/ORDER IS MODIFIED TO REFLECT THE ADMINISTRATIVE CHANGES (such as changes in paying office, C. THIS SUPPLEMENTAL AGREEMENT IS ENTERED INTO PURSUANT TO AUTHORITY OF:

D. OTHER (Specify type of modification and authority) appropriation date, etc.) SET FORTH IN ITEM 14, PURSUANT TO THE AUTHORITY OF FAR 43.103(b).

E. IMPORTANT: Contractor is not, is required to sign this document and return __________________ copies to the issuing office.

ORDER NO. IN ITEM 10A.

14. DESCRIPTION OF AMENDMENT/MODIFICATION (Organized by UCF section headings, including solicitation/contract subject matter where feasible.)

SOLICITATION HSFLGL-15-R-00023, ENTERPRISE SECURITY SERVICES, FEDERAL LAW ENFORCEMENT

TRAINING CENTERS, GLYNCO, GA

The purpose of this amendment is to provide all interested parties a copy of Protest Number

B-412540 in accordance with FAR Part 33.104.

Date for receipt of proposals is hereby suspended pending resolution of the protest.

16A. NAME AND TITLE OF CONTRACTING OFFICER (Type or print)15A. NAME AND TITLE OF SIGNER (Type or print)

15C. DATE SIGNED 16B. UNITED STATES OF AMERICA 15B. CONTRACTOR/OFFEROR 16C. DATE SIGNED

(Signature of person authorized to sign) (Signature of Contracting Officer)

Renee Hickson

STANDARD FORM 30 (REV. 10-83)

Prescribed by GSA

FAR (48 CFR) 53.243

NSN 7540-01-152-8070

Previous edition unusable

Except as provided herein, all terms and conditions of the document referenced in Item 9 A or 10A, as heretofore changed, remains unchanged and in full force and effect .

LAW OFFICES

COOPER MORRISON & MILLER, LLC

1515 MARKET STREET, SUITE 1200

PHILADELPHIA, PA 19102

TEL: 215.829.9500 FAX: 215.569.0216

December 11, 2015

BY ELECTRONIC MAIL TO: Protests@gao.gov

General Counsel Government Accountability Office 441 G Street, NW.

Washington, DC 20548 Attn: Procurement Law Control Group

Re: Protest of Hana Industries, Inc.

Solicitation No. HSFLGL-15-R-00023 Enterprise Security Services for Department of Homeland Security

(DHS) Federal Law Enforcement Training Centers (FLETC) located in Glynco, GA; Artesia, NM; Charleston, SC; and Cheltenham, MD

Dear Sir/Madam:

Pursuant to 4 C.F.R. § 21.1, Hana Industries, Inc., by its undersigned counsel, submits the following protest.

1. THE PROTESTOR & SUMMARY OF ISSUES

Hana Industries, Inc. (hereinafter “Hana” or “Protestor”) protests Solicitation No.

HSFLGL-15-R-00023 for Enterprise Security Services for Department of Homeland

Security (DHS) Federal Law Enforcement Training Centers (FLETC), as amended

(collectively, the “Solicitation”), issued by DHS. As set forth below, Hana respectfully questions whether the Solicitation unduly restricts competition due to its requiring a 20% performance bond, allowing for only a 60-day transition at maximum, and providing inadequate or ambiguous instructions for post-manning. As these have the effect of favoring the incumbent contractor and excluding smaller 8(a) companies from the competition, Hana further questions whether DHS can meet its burden of establishing that such provisions are reasonably necessary to meet its legitimate needs. Accordingly, Hana is prejudiced by the terms of the Solicitation and this protest should be sustained.

Hana Industries, Inc. is an SBA-certified 8(a) Small Disadvantaged Business, which is headquartered at 841 Bishop Street, Suite 1160, Honolulu, Hawaii, 96813 and its telephone

Page 2 Protest of Hana Industries, Inc.

December 11, 2015 Solicitation No. HSFLGL-15-R-00023 number is (808) 522-7278 and its fax number is (808) 522-7282. For purposes of this protest, its electronic mail address is tcooper@hanaindustries.com.

2. THE CONTRACTING AGENCY

The contracting agency is the Department of Homeland Security (DHS). The

Contracting Officer is Ms. Renee Hickson, Department of Homeland Security, Federal Law

Enforcement Training Centers, Procurement Division, Building 93, 1131 Chapel Crossing

Road, Glynco, GA 31524-2000. Her phone number is (912) 267-2628 and her e-mail address is Renee.Hickson@fletc.dhs.gov. A separate copy of this protest is being forwarded to the

Agency by regular mail and e-mail to those addresses.

3. THE PROTEST IS TIMELY

The deadline for receipt of initial proposals is December 15, 2015 at 3:00 p.m. EDT, and it has not been changed or extended by any of the amendments to the Solicitation.

Accordingly, this protest is timely filed under 4 C.F.R. § 21.2(a)(1) insofar as it alleges improprieties in the amended Solicitation and is being filed before that date.

4. THE PROTESTOR IS AN INTERESTED PARTY

Hana is an interested party as defined in 4 CFR § 21.0(a)(1) because it is a prospective bidder on the procurement, and its direct economic interest would be affected by the award of this contract to another bidder, or the failure to award this contract to Hana, because of the undue restriction on competition from the complained-of portions of the Solicitation.

5. THE FACTUAL AND LEGAL BASES FOR THE PROTEST

The Department of Homeland Security (DHS) issued Solicitation No. HSFLGL-15-

R-00023 on September 25, 2015 for the purpose of seeking a contractor to provide security services for its Federal Law Enforcement Training Centers (FLETC) located in Glynco, GA;

Artesia, NM; Charleston, SC; and Cheltenham, MD (collectively with its five subsequent

Amendments, the “Solicitation”). The Solicitation calls for an award to the responsible offeror whose offer conforming to the solicitation will be most advantageous to the government, price and other factors (Management and Technical Approach, Past

Performance) considered.

Hana is protesting three provisions of the Solicitation as being unduly restrictive of competition and improperly favoring the incumbent. First, it protests the entirety of the clause requiring a 20% performance bond, entitled “52.228-16 Performance and Payment

Page 3 Protest of Hana Industries, Inc.

Bonds - Other Than Construction. (NOV 2006) - Alternate I (JUL 2000)”, found on page 65 of the original Solicitation. Second, it protests Performance Work Statement (PWS) 1.15.2 regarding phase-in, found on page 101 of the original Solicitation, to the extent that the

Government only “has allocated a maximum of 60 calendar days for startup, commencing from contract award date to full-performance start date.” Lastly, Hana protests PWS 1.6 regarding staffing, found on pages 85 to 87 of the original Solicitation, as being inadequate and ambiguous so as to prevent non-incumbent bidders from being able to fairly estimate an optimal staffing arrangement.

The first way in which the Solicitation restricts competition is through its inclusion of

52.228-16, which requires offerors to furnish a performance bond in an amount equal to 20 percent of the original contract price. Amendment 3 further clarifies (in Q2/A2) that a new performance bond will be required for each individual Option Year. Given that the original contract price will be over $100 million, even the agency’s own historical estimate1 of the expenditure at 1.2% to 2% yields a minimum cost of approximately $240,000 to $400,000 per year, which could easily exceed $2 or $3 million over the life of the contract. Given that this contract is set-aside as a competitive 8(a), requiring a bond in such large amounts will have an outsized effect on all but the largest 8(a) businesses (which, we note, includes the incumbent), necessarily reducing competition and working against the very purpose of the

8(a) Business Development Program.

The Competition in Contracting Act of 1984 requires that solicitations generally permit “full and open competition” and contain restrictive provisions “only to the extent necessary to satisfy the needs of the agency.” 10 U.S.C. § 2305(a)(1)(B). DHS, as the procuring agency, therefore has the responsibility of establishing that the specification or requirement is reasonably necessary to meet the Agency’s needs. See, e.g. Matter of W.P. Tax

& Accounting Group, B-411806, B-411807 (October 7, 2015) at p. 3; Matter of Government and Military Certification Systems, Inc., B-411261 (June 26, 2015) at p. 7. Moreover, the

Agency’s justification for a restrictive solicitation provision must be rational and be able to withstand logical scrutiny. Id.; see also Matter of Total Health Resources, B-403209 (Oct. 4, 2010) (solicitation was unduly restrictive where agency failed to demonstrate it was reasonably necessary to ignore experience of offeror’s subcontractors).

The Protestor’s experience in obtaining the necessary bond suggests that, as an initial matter, the Agency may be underestimating the cost of its required performance bond, 1 This historical estimate is provided by the Agency in Amendment 2 at Q14/A14 and in Amendment 3 at Q1/A1, though as noted herein, Hana’s experience does not correlate well with the Agency’s estimate.

Page 4 Protest of Hana Industries, Inc.

particularly as to smaller companies within the 8(a) program. While the Agency’s historical estimate suggests an already-significant cost of 1.2% to 2%, the Protestor’s understanding is that 3% would be a more accurate estimate as to the contemporary cost of such a bond, not even including other conditions that would have a negative impact upon Hana and its ownership. Under this estimate, a company such as Hana could be subject to a potential expenditure of nearly $5 million over the life of the contract.

It is also notable that this issue has already been brought to the Agency’s attention

(again, in Amendment 2 at Q14/A14 and in Amendment 3 at Q1/A1), but no justification of the need for this bond has been provided. In a related query (Amendment 3 at Q16/A16), the Agency simply notes that “the previous contract was competed and five offers were received and complied with the 20% bonding requirement.” However, that is not justification for the inclusion of the restriction, nor does it provide a rationale, logical or otherwise. In any event, it will not be enough for the Agency to show that some larger 8(a) companies can handle this financial burden; instead, the Agency must show that there is sufficient reason for the financial burden to exist at all. It is contrary to the very purpose of the 8(a) Business Development Program to unduly restrict competition based on a company’s size, as is occurring here.

A related problem with the performance bond requirement also arises from the

Agency’s response to Q16 in Amendment 3: “If the contractor performs well, there will be consideration to remove the bonding requirement.” Even putting aside that the incumbent is a relatively large 8(a) business and can more easily manage this restrictive bonding requirement, the incumbent could further benefit from a reliance that its prior years of work experience on this same contract would lead the government to remove the bonding requirement after award, in a much quicker timeframe or with much higher likelihood than a non-incumbent contractor could expect. Therefore, the incumbent could potentially not include the full cost of the bond in their proposal, whereas non-incumbents such as Hana would not have that same ability.

The second way in which the Solicitation restricts competition is through its providing only a 60-day maximum period for transition, as set forth in Performance Work

Statement (PWS) 1.15.2. This phase-in period commences from the contract award date to a full-performance start date. However, a period of 60 calendar days is an insufficient amount of time for any non-incumbent taking on a contract of this size, with performance locations in four states over multiple regions of the country (Georgia, Maryland, New Mexico, and

South Carolina). The incumbent is not affected by this, already having infrastructure, employees, and key personnel in place, but any non-incumbent offerors such as the

Page 5 Protest of Hana Industries, Inc.

Protestor are disadvantaged and competition for the contract is thereby limited. The Agency, therefore, must also establish that this specification is reasonably necessary to meet its needs.

For example, PWS 1.7 requires that the résumés of key personnel (including at least a

Project Manager, four Site Managers, and as many Shift Supervisors as would be needed to cover all services at four sites) shall be submitted to the Agency no later than thirty (30) calendar days after contract award. Moreover, any potential awardee would also have to be prepared to obtain state security licenses, guard firearm licenses, and conduct any and all necessary training (including for new hires) within the transition period. As the work sites are located in different states (and are somewhat geographically disparate), each subject to a completely different set of rules governing licensing, this would involve a significant amount of effort that literally may not be achievable within the time period allowed. In the

Protestor’s experience, the only way this transition period would work is if 100% of the incumbent contractor’s workforce could be brought on for the awardee, with the further assumption that said workforce was 100% fully trained to the new contract’s requirements.2

The requirement of a 60-day transition therefore unduly restricts competition and further handicaps any non-incumbent offeror.

The final way in which the Solicitation restricts competition, and how it is otherwise inadequate, is with respect to the post-manning instructions at PWS 1.6 (even as supplemented by Technical Exhibits) which are ambiguous and lack sufficient information for any non-incumbent offeror to compete intelligently. As a general rule, solicitations must contain sufficient information to allow offerors to compete intelligently and on an equal basis. Matter of Harmonia Holdings, LLC, B-407186.2, B-407186.3 (March 5, 2013) at p. 4;

Matter of Tennier Industries, Inc., B-299624 (July 12, 2007) at p. 2. And while a solicitation need not be drafted so as to eliminate all risk or performance uncertainties, there is simply not enough information for any non-incumbent bidder to be able to fairly estimate an optimal staffing arrangement; this restricts competition and makes it very difficult for the

Agency to get an advantageous offer.

Even considering its incorporation of Technical Exhibits, PWS 1.6 is ambiguous and insufficient with respect to potential staffing solutions. Technical Exhibit 2 (“Mandatory

Manning/Hours of Operation”) provides only the most basic data concerning hours of

2 It should be further noted that the Agency (in Amendment 3 at Q25/A25) declined, without explanation or comment, to “provide a current training roster to identify all training requirement dates of ASOs, Supervisors, Site Program Managers, PST, and Administrative Personnel so that each offeror can appropriately forecast the successful offerors phase-in training burden”.

Page 6 Protest of Hana Industries, Inc.

operation, and while Technical Exhibit 3 (“Historical Data”) and further historical data provided in the amendments mildly supplement that with a comparison of activity at each of the sites, this remains insufficient to allow preparation of a staffing arrangement. For example, as PWS 1.6.2 requires, a staffing arrangement should take into account peak traffic periods, fluctuating student population and arrivals for badge issue and weapons turn-in.

The only offeror with access to such information is the incumbent, and the Agency has released no other information to even provide guidance for non-incumbent offerors on the current staffing/post-manning situation. Such non-incumbent offerors, including the

Protestor, cannot therefore compete intelligently and on an equal basis.

Based on the foregoing, as each of the protested provisions lack any logical basis that could conceivably justify the undue restriction on competition, and they significantly limit the pool of potential offerors while also unfairly privileging the incumbent contractor, the protest should be sustained.

6. REQUEST FOR PROTECTIVE ORDER AND DOCUMENTS

Pursuant to 4 C.F.R. 21.1(d)(1) & (2), Hana requests that:

(1) a Protective Order be issued for this protest; and

(2) the Agency produce all documents required to be produced pursuant to 4

CFR § 21.0, et seq. and specifically, a copy of any and all notes, memorandum, e-mails, or other correspondence generated by the Contracting Officer, the

Contracting Specialist, the program office, or end-user, or any member of the

Agency related to the generation of a solicitation for a competitive procurement, or amendments to that solicitation.

These documents are necessary to allow Hana a reasonable opportunity to establish the grounds for protest set forth herein. Specifically, Hana believes that these documents will enable it to demonstrate the grounds of protest set forth herein and determine if the

Agency’s actions were conducted in conformance with applicable laws and regulations.

7. REQUEST FOR A HEARING

Pursuant to 4 C.F.R. § 21.1(d)(3), and to the extent that there is a dispute of a material fact that would preclude a ruling in favor of Hana on the merits of this protest, a hearing on the merits of this protest is requested in order to resolve such dispute and any witness credibility issues.

Page 7 Protest of Hana Industries, Inc.

8. REQUEST FOR RULING AND RELIEF

Hana respectfully requests that the GAO sustain its protest and recommend that the

Agency:

(1) Amend the Solicitation to remove the clause entitled “52.228-16 Performance and Payment Bonds - Other Than Construction. (NOV 2006) - Alternate I

(JUL 2000)”, or issue a new Solicitation without this protested provision; and allow Hana and other prospective bidders to submit revised proposals in accordance with the new Solicitation requirements.

(2) Amend Performance Work Statement 1.15.2 of the Solicitation, regarding phase-in, to allow a maximum startup period longer than 60 days, or issue a new Solicitation without this protested provision; and allow Hana and other prospective bidders to submit revised proposals in accordance with the new

Solicitation requirements.

(3) Amend Performance Work Statement 1.6 of the Solicitation, and/or release sufficient additional information relating to the current staffing/post-manning situation, in order to resolve any ambiguities and allow all bidders to fairly estimate an optimal staffing arrangement; and allow Hana and other prospective bidders to submit revised proposals in accordance with the new

Solicitation requirements.

(4) Reimburse Hana for all costs incurred in pursuing this protest.

Respectfully submitted, Brad S. Miller, Esq.

COOPER MORRISON & MILLER, LLC

Counsel for Hana Industries, Inc.

1515 Market Street, Suite 1200

Philadelphia, PA 19102

(215) 829-9500

(215) 569-0216 (fax) bmiller@coopermorrison.com