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U.S. Dismisses $117M Shipyard Bid Suit

Tuesday, December 10, 2013

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The U.S. Court of Federal Claims has thrown out a lawsuit by a Virginia shipyard protesting the Navy's rejection of its $117 million ship maintenance bid—the highest, by far, of eight proposals submitted.

In a ruling unsealed Nov. 27, Judge Francis M. Allegra ruled that the Navy had given adequate consideration to—and explanation for—its decision to reject Lyon Shipyard Inc.'s bid.

In July, the Government Accountability Office also denied Lyon's protest.

6 Bids, 5 Awards

The Navy's June 2011 solicitation was for repairs, upgrades, and other boatyard services for noncommissioned Navy boats.

Lyon Shipyard
Lyon Shipyard Inc.

Although rating Lyon Shipyard as very good, the Navy said that no circumstances justified its paying "considerably more" for the company's services.

The work was divided into two lots, with multiple indefinite delivery/indefinite quantity (ID/IQ) contracts to five awardees, who would then compete for firm, fixed-price task orders.

The bids were evaluated on a variety of factors, including past performance, price and technical expertise. The Navy's Independent Government Estimate (IGE) priced the contract at $101,780,712.59.

Two bidders withdrew, and the final six bids were:

  • East Coast Repair & Fabrication ($80,269,356.44);
  • Alliance Technical Services ($89,074,484.86);
  • Davis Boat Works ($89,061,384.24);
  • Colonna's Shipyard ($103,384,711.08);
  • Marine Hydraulics International ($107,005,537.34); and
  • Lyon Shipyard ($117,217.915.40).

All of the bidders received a "very good" technical and past performance rating, except Alliance Technical, which received "satisfactory" ratings.

Most of the bidders, including Lyon, were incumbents on the previous boatyard support contract.

'Difficult to Justify'

The Navy informed Lyon and Marine Hydraulics that their bids were "considerably higher" than the government estimate and "would be more difficult to justify as reasonable."

The Navy said it would continue to consider the bids but requested that Lyon "carefully review [its] pricing" and noted that "98%" of the boats would be located in Norfolk, where Lyon is located.

Navy bids

The Navy told Lyon that its price was "considerably higher" than other bidders and urged it to review the proposal, but the agency did not revisit the price during later discussions, and Lyon made no adjustment.

In June 2012, court documents show, Lyon responded in part:

"Lyon Shipyard's price proposal was constructed utilizing over twenty (20) years of past experience repairing these very same small boats, including the last ten (10) years as an incumbent small boat IDIQ contractor. We are very familiar [sic] all of the vessels and their systems that are included in Lot II of this solicitation."

The response said Lyon had taken all of the Navy's points into account and added: "Should we deem it necessary to make any changes to our pricing, we will do so when requested for final offers."

No Justification for Price Differential

On March 1, 2013, the Source Selection Authority made awards to the other five bidders and rejected Lyon, concluding there "were no circumstances present which justified paying the price differential" to Lyon.

Lyon then protested to the GAO, alleging that the Navy misled Lyon during discussions and improperly evaluated its proposal.

Lyon Shipyard Paint Shop
Lyon Shipyard Inc.

Lyon Shipyard's NAVSEA-certified paint shop touts "a full spectrum of high-quality marine painting and preservation services." The company has received contracts similar to the one it lost this time around.

In its dispute, Lyon accused the Navy of making an "apples to oranges" comparison between the IGE and Lyon's bid—an assertion the judge rejected. The company also claimed that the Navy owed it a better explanation for its rejection and that it should have reopened discussions over the price.

'Discuss Every Weakness'

The judge disputed that as well, saying: "Contrary to plaintiff’s claim, there is no rule–either explicit or deriving from the notion that discussions must be 'meaningful'–that required the Navy to discuss every weakness appearing in Lyon’s pricing proposal."

In fact, the court noted: "As a seasoned government contractor and a ten-year incumbent of two prior similar contracts, Lyon should not have presumed that it did not need to modiy its final price because the Navy failed to raise any concerns about its high price in the second or third rounds of discussions."


Tagged categories: Government contracts; Lawsuits; Maintenance coating work; Maintenance programs; Marine Coatings; Rehabilitation/Repair; Shipyards; U.S. Navy

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