BNUMBER:  B-258322.5; B-258322.6
DATE:  March 9, 1995
TITLE:  TRESP Associates, Inc.; Advanced Data Concepts, Inc.

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REDACTED DECISION
A protected decision was issued on the date below and was subject to a 
GAO Protective Order.  This version has been redacted or approved by 
the parties involved for public release.

Matter of:TRESP Associates, Inc.; Advanced Data Concepts, Inc.

File:     B-258322.5; B-258322.6

Date:     March 9, 1995

Mary Beth Bosco, Esq., Timothy B. Mills, Esq., and Christy L. 
Gherlein, Esq., Patton Boggs, L.L.P., for TRESP Associates, Inc.; and 
Cyrus E. Phillips IV, Esq., Keck, Mahin & Cate, for Advanced Data 
Concepts, Inc., the protesters.
Joel R. Feidelman, Esq., Deneen J. Melander, Esq., and Brian "D" 
Henretty, Esq., Fried, Frank, Harris, Shriver & Jacobson, for M.H. 
Chew & Associates, Inc., an interested party.
Ronald E. Cone, Esq., and Richard S. Blakely, Esq., Department of 
Energy, for the agency.
Sylvia Schatz, Esq., David A. Ashen, Esq., and John M. Melody, Esq., 
Office of the General Counsel, GAO, participated in the preparation of 
the decision. 

DIGEST

1.  Evaluation of protester's proposal was unreasonable where agency 
identified weaknesses during discussions, protester addressed the 
weaknesses, and record indicates that many of the weaknesses were 
thereby eliminated, but proposal rating was not increased at all and 
record does not explain why increase was not warranted.

2.  Cost/technical tradeoff was unreasonable where agency selected 
higher-cost proposal for award over lower-cost, similarly rated 
proposal based primarily on awardee's ability to respond more quickly 
on short notice, and the fact that awardee's initial proposal 
contained fewer weaknesses, purportedly indicating better 
understanding of requirement, and selection is not supported by the 
record.  Finding that awardee had the ability to respond more quickly 
was based largely on source selection official's general recollection 
of the two firms' prior performance, which is not documented in either 
the contemporaneous or protest records; and record contains no 
explanation, and it is not apparent, why the types of weaknesses 
identified bear on understanding and, in any case, awardee's initial 
proposal was evaluated similarly to protester's.

DECISION

TRESP Associates, Inc. and Advanced Data Concepts, Inc. (ADC) protest 
the Department of Energy's (DOE) award of a contract to M.H. Chew & 
Associates, Inc. (CAI), under request for proposals (RFP) No. 
DE-RP03-93SF19686, for technical and management services.  TRESP 
primarily challenges the evaluation of its proposal as improper, and 
ADC primarily argues that the cost/technical tradeoff was improper.

We sustain the protests.

The RFP, issued on May 14, 1993, as a small business set-aside, 
contemplated the award of a 5-year--2 base years plus 3 option 
years--cost-plus-fixed-fee contract to support DOE programs in San 
Francisco, California, by furnishing technical and management services 
in several areas (e.g., technical studies, environment, safety, health 
and facility oversight, and safeguards and security technical 
services).  The solicitation included an estimate of the agency's 
total requirement--including 68,100 (approximately 33 persons) direct 
productive man-hours for the first year and 79,100 man-hours 
(approximately 38 persons) for the second year--and an estimate of the 
total man-hours for each of the 27 required key and non-key labor 
categories.  Offerors were required to propose certain key and non-key 
personnel with "L" or "Q" security clearances, and to show that they 
could obtain a DOE-approved classified facility.

Award was to be made to the responsible offeror whose offer conformed 
to the RFP and was most advantageous to the government under three 
broad criteria:  (1) technical, which was more important than (2) 
business/management, which was more important than (3) cost.  There 
were four technical evaluation factors (in descending order of 
importance):  (1) qualification of proposed personnel and personnel 
management, including subfactors for technical experience and 
offeror's approach to staffing the required work; (2) technical 
experience and past performance; (3) technical approach; and (4) task 
management.  There were five business/management factors, all of equal 
importance:  (1) business/management organization; (2) 
business/management experience on similar contracts; (3) cost 
management; (4) subcontracting and subcontract management; and (5) 
labor management relations.

Seven proposals were received by the closing date.  Three--TRESP's, 
CAI's, and ADC's--were included in the competitive range.  Following 
site visits and oral and written discussions with the offerors, the 
agency requested best and final offers (BAFO).  Based upon its 
evaluation of the BAFOs, the source evaluation board (SEB) concluded 
that only the responses of ADC and CAI warranted increases to their 
original scores.  The evaluation scores (received/available) were as 
follows:[1]

TECHNICAL           ADC       CAI       TRESP    
Personnel Qualifications
  Experience        16/22.5   14        15
  Staffing          18/22.5   17        15
Technical Experience31/35     28        25
Technical Approach  19/25     20        16
Task Management     9/15      12        10
SUBTOTAL            95/120    90        82
BUSINESS/MANAGEMENT
Organization        15/20     16        16          
Experience16/201516         
Cost Management     14/20     17        12          
Subcontracting      14/20     15        13          
Labor Mgmt. Relations13/20    15        15
SUBTOTAL            72/100    77        70

TOTAL               167/220   167       152

PROPOSED COST       $21,262,193$23,380,018$23,771,519
EVALUATED COST      $20,669,538$21,917,802$23,600,000[2]

In its report to the source selection official (SSO), the SEB 
summarized its evaluation of BAFOs without recommending any firm for 
award.

The SSO conducted a cost/technical tradeoff based on his own knowledge 
and experience, the SEB report, the most probable cost analysis, and 
information presented to the SSO by the SEB chairman.  In comparing 
ADC's and CAI's BAFOs, the SSO determined that although both BAFOs 
received almost the same technical ratings, the technical strengths of 
CAI's BAFO outweighed its evaluated cost premium ($1,248,264).  CAI's 
BAFO also was found more advantageous than TRESP's on the basis of its 
higher scores under the technical and business/management factors and 
its lower probable cost.

TRESP's PROTEST

TRESP challenges DOE's evaluation of its BAFO on the basis that the 
agency improperly failed to recognize the improvements in its BAFO.  
Specifically, the protester notes that although the final SEB report 
stated that all of the 12 "weaknesses" that it found in, and 
"observations" that it made with respect to, TRESP's initial technical 
and business/management proposals were "adequately addressed in the 
BAFO" or "remedied," TRESP's final evaluation score was not increased 
under any factor or subfactor.

In reviewing protests against allegedly improper evaluations, our 
Office will examine the record to determine whether the agency's 
determination was reasonable and consistent with the evaluation 
criteria listed in the solicitation.  Amtec Corp., B-240647, Dec. 12, 
1990, 90-2 CPD  482, recon. denied, Dept. of the Army--Recon., 
B-240647.2, Feb. 26, 1991, 91-1 CPD  211.  Implicit in the foregoing 
is that the agency must document its judgments in sufficient detail to 
show that they are not arbitrary.  U.S. Defense Sys., Inc., B-245563, 
Jan. 17, 1992, 92-1 CPD  89; Beckman Instruments, Inc., B-246195.3, 
Apr. 14, 1992, 92-1 CPD  365.  In this regard, Federal Acquisition 
Regulation (FAR)  15.608 requires the contracting agency to prepare 
specific documentation showing the basis for evaluation, an analysis 
of the technically acceptable proposals, including an assessment of 
each offeror's ability to accomplish the technical requirement, and a 
summary of findings.  DOE did not meet this standard here.

The record shows that TRESP submitted a BAFO which responded to the 
concerns raised by the agency during discussions and which led the SEB 
to state in its final report that the concerns had been "adequately 
addressed in the BAFO" (or, with respect to one area, had been 
"remedied").  Further, the agency concedes in the agency report that 
the SEB members in fact believed that most of the weaknesses 
identified in TRESP's initial proposal had been corrected.  In this 
regard, the agency has submitted declarations from four of five SEB 
members stating that, except for the evaluated weakness of TRESP's 
proposed non-key Health Physicist and Environmental Engineer, "most of 
the weaknesses I identified in TRESP's initial proposal were 
corrected," or simply "the weaknesses I identified in TRESP's initial 
proposal were corrected."

Although the agency generally maintains, and these declarations 
further state, that the "clarifications and improvements were not 
significant enough . . . to change [the] scoring for TRESP's BAFO," 
there is nothing in the record that explains the specific reasons 
underlying the determination not to increase TRESP's BAFO score under 
any factor or subfactor.[3]  While TRESP may not have been entitled to 
an increase in points under each of the factors and subfactors where 
the SEB noted that its concerns were adequately addressed, we can find 
no reasonable basis from our review of the record for concluding that 
TRESP was entitled to no additional points under any evaluation 
subfactor or criteria as a result of the changes it made in its BAFO 
in response to the concerns raised by the agency during discussions.

For example, under the technical experience and past performance 
factor of the technical criterion, where TRESP received 25 of 35 
points, and the business management experience on similar contracts 
factor of the business/management criterion, where TRESP received 16 
of 20 points, the agency was concerned that TRESP's initial proposal 
failed to show that TRESP, as opposed to its proposed subcontractors, 
had prior experience in performing contracts as wide and diverse in 
scope and of a similar level of effort--approximately 33-38 persons 
during the base period--as contemplated under the current statement of 
work.  To alleviate the concern raised during discussions in this 
regard, TRESP submitted in its BAFO a detailed description of numerous 
tasks and services performed by TRESP itself under current and prior 
government contracts, including contracts involving levels of effort 
of up to 25, 27, and 80 employees.  The record shows that the SEB not 
only was satisfied that TRESP's response alleviated its concerns but, 
indeed, considered TRESP's experience a strength.  In this regard, the 
SEB's final report noted that TRESP's BAFO "adequately addressed" its 
concerns and described as a strength TRESP's "good" and "similar" 
contract experience with DOE.  Nevertheless, TRESP's BAFO scores did 
not increase.  DOE does not explain, nor is it otherwise evident from 
the record, why an increase in TRESP's scores was not warranted by the 
more detailed description in its BAFO of its experience.

As another example, under the cost management factor of the 
business/management criterion, where TRESP received only 12 of 20 
points, the SEB determined that TRESP's initial proposal did not 
demonstrate an ability to track and control costs and achieve cost 
targets.  In response to the agency's request during discussions that 
TRESP provide examples of a proven ability to track and control costs 
with its proposed automated accounting system, TRESP described in 
detail its system for tracking and analyzing costs.  Although the SEB 
report stated that this concern was "adequately addressed" in TRESP's 
BAFO, there was no increase in TRESP's BAFO score under this factor.  
Again, DOE does not specifically explain, and it is not evident, why 
an increase in TRESP's score was not warranted.

As a further example, under the subcontracting and subcontract 
management factor of the business/management criterion, where TRESP 
received 13 of 20 points, the SEB determined that TRESP's initial 
proposal had not clearly defined how it would, nor demonstrated the 
ability to, manage subcontractor performance through contract 
completion.  In response to the agency's request during discussions to 
explain how it would manage subcontractor performance, TRESP explained 
in its BAFO that it would monitor subcontractor performance in three 
different ways:  (1) by analyzing milestones accomplished against the 
subcontractor task plan; (2) by comparing forecasted expenditures with 
the costs incurred; and (3) by making frequent quality control checks 
throughout subcontractor task performance to discover potential 
problems, and then redirecting resources from noncritical tasks, 
revising the subcontractor task plan or expected milestones, and 
developing and implementing a recovery plan.  In addition, TRESP 
explained that subcontractor management would be facilitated by 
co-locating subcontractor personnel with TRESP personnel at DOE or 
TRESP sites.  Again, although the SEB report stated that this concern 
was "adequately addressed" in TRESP's BAFO, there was no increase in 
TRESP's BAFO score under this factor.  And again, nothing in the 
record shows why TRESP's score was not increased.

Given the evaluators' own statements that TRESP's BAFO resolved the 
deficiencies raised during discussions, our own review which supports 
these statements, and the absence of documentation showing otherwise, 
it appears that TRESP's BAFO was not properly evaluated; although the 
SEB found that TRESP had largely remedied the initial proposal 
weaknesses, TRESP's score was not increased at all.  At minimum, the 
evaluation record is inadequate to establish that the TRESP's BAFO was 
properly scored.  As it also is not possible to determine the precise 
impact of any evaluation improprieties on TRESP's score, we can only 
conclude that a proper evaluation could result in TRESP's score 
increasing sufficiently to displace both CAI and ADC.  We therefore 
sustain the protest on this basis.

ADC's PROTEST

ADC's protest turns on the same essential issue as TRESP's--whether 
the record supports the SSO's cost/tradeoff decision.  The SSO 
selected CAI for award based primarily on three factors:  (1) CAI's 
superior past performance; (2) CAI's superior depth of staffing; and 
(3) CAI's submission of a superior initial proposal.  ADC maintains 
that the tradeoff--resulting in selection of CAI's BAFO, which 
received the same evaluation score as ADC's but was evaluated as 
$1,248,264 (or 6 percent) higher in cost--was not adequately supported 
by the record.  We agree.      

Past Performance

The SSO's determination that CAI's past performance was superior to 
ADC's was based on his personal knowledge and belief that ADC's 
proposed subcontractor (PAI) had failed to timely accomplish several 
task assignments under a current DOE Oakland contract (and thus could 
not be relied upon to timely support the contemplated contract effort 
here).  Such personal knowledge of course may be considered in an 
evaluation.  See NDI Eng'g Co., B-245796, Jan. 27, 1992, 92-1 CPD  
113.  However, reliance on personal knowledge of the offerors does not 
eliminate the fundamental requirement that evaluation judgments be 
documented in sufficient detail to show that they are not arbitrary.  
U.S. Defense Sys., Inc., supra.  DOE did not meet this standard in its 
cost/technical tradeoff decision.  

The record contains no factual information supporting the SSO's 
conclusion that CAI's prior experience was superior to ADC's.  
Specifically, the SSO does not cite--and the record does not 
reference--any specific CAI contracts, or examples of CAI's 
performance that was deemed superior, or any similar details of ADC's 
or PAI's performance that would support a conclusion that their 
performance was inferior to CAI's.  Rather, the SSO merely references 
his "years of personal experience dealing with CAI and their proposed 
subcontractors and ADC and their proposed subcontractors," and states 
that CAI has demonstrated superior performance in the areas of 
environment, safety and health, and management support, while ADC's 
performance in the area of safety and security "in my opinion was not 
superior."  These conclusionary statements, without some specific 
explanation, are an inadequate basis for the SSO's evaluation of CAI 
and ADC, since it is not possible to determine whether the SSO's 
judgment was reasonable.  In fact, regarding PAI, the only detailed 
information in the record is inconsistent with the SSO's conclusion; 
ADC has furnished three letters from DOE to PAI commending PAI for its 
performance on prior DOE contracts.  Indeed, one of the letters from 
DOE commends PAI for its "quick turnaround on request changes" on the 
DOE Oakland contract, stating that PAI's "efforts were instrumental in 
completing this [facility representative training and certificate] 
plan on time to allow me to submit it to management."

In light of the FAR  15.608 requirement for adequately documented 
source selection decisions, we do not think the SSO's nonspecific, 
undetailed references provided a reasonable basis for distinguishing 
between two similarly evaluated proposals in a cost/technical 
tradeoff.

Depth of Staffing

The SSO states that "the most important factor that caused me to 
choose CAI over ADC was the breadth and depth of immediately available 
support staff.  This capability to expeditiously respond, and the 
depth of varied and experienced talent was very persuasive to my 
decision."  However, while CAI did have 400 individuals within 100 
miles of the Livermore area and 750 "Q" cleared personnel nationwide, 
ADC's proposal showed 277 "Q" or "L" cleared personnel.  Given that 
the required staffing under the contract was only 33-38 individuals, 
and that the contractor would be obligated to provide no more than 110 
percent of the estimated level of effort, we do not think there was a 
reasonable basis for assigning great significance to CAI's larger 
staff in the tradeoff decision.  While redundancy in staffing may be a 
legitimate consideration for a requirement such as the one here, it is 
not reasonable to evaluate a proposal as superior to another where the 
larger staff will not benefit the government.  Both CAI and ADC have 
what appears to be significant redundancy for the level of effort 
required here.  CAI's staff certainly is much larger than ADC's, but 
the record does not explain why CAI's large number of additional 
personnel was considered beneficial in any significant way.  DOE does 
not assert, for example, that such a large number of employees (in 
relation to the required staffing) has been necessary in the past to 
properly perform similar requirements.

The SSO's conclusion regarding the superiority of CAI's available 
staffing was based in part on his "concern about ADC's ability to 
provide timely support staff."  This concern stemmed from (1) his 
personal knowledge of PAI's performance on the DOE Oakland contract, 
and (2) the SSO's opinion that while ADC's BAFO provided as an example 
of expeditious performance the fact that it pulled together a  35 
member "Q" cleared team in 2 weeks, CAI could have assembled a similar 
team in a much shorter period of time.  As stated previously, the 
SSO's personal knowledge of PAI's past performance consists entirely 
of conclusionary statements.  His opinion is also questionable because 
CAI's proposal does not reference similar accomplishments (and the SSO 
did not state that he was aware of any), and the SEB actually cited 
this mobilization example as a strength in ADC's evaluation because it 
shows a "demonstrated ability to respond to short notice/high volume 
task assignments."  The SSO properly may reject the SEB's evaluation 
conclusions where he disagrees with them, see Wyle Labs., Inc.; 
Latacoere Int'l, Inc., 69 Comp. Gen. 648 (1990), 90-2 CPD  107, but 
his different judgment must be reasonable.  Id. The SSO's conclusion 
regarding CAI's capability, and his essential disagreement with the 
SEB that ADC actually was strong in this area, are unsupported by any 
references to CAI's proposal or specific information regarding the 
firms' past performance.

Superior Initial Proposal

The SSO stated in the source selection statement, under the technical 
experience of proposed personnel subfactor, that:

     "CAI's proposed personnel are characterized as exceeding minimum 
     requirements with no weaknesses identified.  This 
     characterization is based upon CAI's initial offering as opposed 
     to ADC's initial offering which resulted in a number of 
     weaknesses related to the qualifications of proposed personnel.  
     This ability to understand and anticipate the needs of [DOE] and 
     respond timely is crucial to meeting the future responsibilities 
     of this office.  ADC's weaknesses were resolved during the BAFOs, 
     but demonstrate an initial lack of understanding of the personnel 
     requirements."

Likewise, in responding to ADC's protest, the SSO explained that his 
determination that CAI's proposal was superior to ADC's, even though 
ADC received five more points under the technical factor, was based in 
part upon the fact that in several performance areas ADC had proposed 
personnel who were not qualified, and that this needed to be discussed 
and resolved during discussions.  According to the SSO, if "ADC truly 
understood the needs of this Operations Office, this should not have 
been necessary."  The SSO noted that, in contrast, CAI had "submitted 
a superior original proposal which demonstrated a better understanding 
of the needs of this Operations Office." 

In judging an offeror's understanding of the contract requirements, an 
agency properly may take into consideration a lack of understanding 
demonstrated in the initial proposal, even where it subsequently is 
remedied in the BAFO.  See Communications Int'l Inc., B-246076, Feb. 
18, 1992, 92-1 CPD  194.  However, the record here does not support 
the SSO's conclusion that ADC's initial understanding was inferior to 
CAI's.  First, CAI's initial proposal received only 14 of 22.5 
available points under the technical experience of proposed personnel 
subfactor, while ADC's proposal received 15 points.  In fact, CAI's 
BAFO still received only 14 points under this subfactor, while ADC's 
received 16 points.  

Second, contrary to the SSO's statement, CAI's initial proposal did 
have a cited weakness with respect to the technical experience of the 
proposed personnel.[4]  The SSO's conclusion that ADC's initial 
proposal reflected a weaker understanding than CAI's is inconsistent 
with the SEB's scoring of ADC's initial proposal as slightly superior 
to CAI's in this area.  Again, although the SSO may disagree with the 
SEB, Wyle Labs., Inc.; Latacoere Int'l, Inc., supra, the reasons for 
his disagreement must be set forth in the record.  The record does not 
indicate why the SSO came to different conclusions regarding the two 
initial proposals.

We conclude that the cost/technical tradeoff is not supported in the 
record.  As a result, there is no basis for concluding that DOE 
reasonably determined that CAI's proposal provided technical 
advantages which offset ADC's $1.2 million cost advantage.

CONFLICT OF INTEREST

TRESP and ADC argue that DOE's award to CAI gives rise to an actual or 
apparent conflict of interest, due to the actions of three DOE 
officials who were involved in the procurement--Messrs. Keheley, 
Warner, and Taylor.  The protesters allege that the three engaged in, 
or were influenced by others', employment discussions with Mr. Chew, 
president and chief executive officer of CAI.

There is no evidence of any impropriety here.  First, the record 
indicates that Mr. Warner was not involved with any aspect of the 
procurement.  Mr. Warner states in his affidavit that he did not 
participate in, discuss, or have any knowledge of the procurement.  
Although Mr. Warner was appointed an ex-officio, nonvoting member of 
the SEB on the basis of his position as a division director affected 
by the solicitation, the record indicates that he did not know that he 
had been designated an ex-officio member of the SEB until he was told 
for the first time on October 26, more than 2 months after contract 
award.  Second, Mr. Keheley's affidavit states that he met with Mr. 
Chew for the first time on August 24, that is, about 3 weeks after his 
August 2 selection of CAI for award and that, in any case, he never 
discussed employment at CAI or received an employment offer.  Further, 
there is nothing to suggest that Mr. Keheley, Mr. Warner's supervisor, 
may have improperly based his source selection on any knowledge or 
belief that Mr. Warner was having employment discussions with Mr. 
Chew.  Finally, with respect to Mr. Taylor, there is no evidence that 
his evaluation may have been improperly influenced by any knowledge or 
belief that Mr. Warner had employment discussions with Mr. Chew.  
Further, although Mr. Warner was Mr. Taylor's usual supervisor, during 
the course of the procurement Mr. Taylor was supervised solely by the 
SEB chairman.[5]  We therefore deny this aspect of the protests.

RECOMMENDATION

We recommend that DOE reevaluate proposals in accordance with this 
decision and fully document the evaluation and the basis for the 
resulting source selection decision.  In the event an offeror other 
than CAI is found to be entitled to award, DOE should terminate CAI's 
contract for the convenience of the government and make award to that 
offeror.  We also find that ADC and TRESP are entitled to 
reimbursement of the reasonable costs of pursuing their protests, 
including attorneys' fees.  4 C.F.R.  21.6(d)(1) (1994).  The 
protesters should submit their certified claims for their protest 
costs directly to the agency within 60 working days after receipt of 
this decision.

The protests are sustained in part and denied in part.

Comptroller General
of the United States

1. The offerors' overall technical and business/management subtotals 
were not the sum of the offerors' individual subfactor and criteria 
scores.  Rather, according to the agency, the subtotals were obtained 
by adding the five individual SEB evaluators' total scores for all of 
the technical and all of the business/management subfactors and 
criteria, and then dividing the resulting sums by five.  The total 
scores for the technical and business/management proposals were added 
together to obtain the offerors' overall total scores.

2. The contracting officer reduced proposed costs based on the 
recommendations of the Defense Contract Audit Agency.

3. Although one of the SEB members stated that he did not change "most 
of my scores for TRESP's BAFO," in fact, the record shows that no SEB 
member changed any score for TRESP's BAFO.

4. While not reflected in the SEB report, we note that the technical 
evaluation committee (first line evaluators) found two additional 
weaknesses under the technical experience of proposed personnel 
subfactor, and the SEB chairman expressed several concerns.  For 
example, he noted that CAI's proposal failed to show that its proposed 
project manager and physical scientist--satisfied the "PC [personal 
computer] software experience requirement," and lacked specifics 
regarding its physical scientist/classification specialist's skills 
with respect to communicating "class[ification] guidance concepts," as 
required in the RFP.  The chairman also expressed concern that CAI's 
proposal:  (1) failed to show that CAI's proposed environmental 
engineer had the required "specific experience re[garding] geologic, 
hydrologic, chemical, and environmental investigations," and 
experience in conducting site appraisals; (2) did not specifically 
demonstrate the "technical/project leadership" skills of CAI's 
proposed general engineer; and (3) did not explain the extent and type 
of experience of CAI's proposed nuclear engineer with respect to 
audits, appraisals, and conducting support facility tour activities.

5. DOE conducted an internal investigation in response to the 
protesters' allegations and found, as we have, that there is no 
evidence of a conflict of interest.