BNUMBER: B-259546; B-259546.2
DATE: April 3, 1995
TITLE: Diverse Technologies Corporation
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DOCUMENT FOR PUBLIC RELEASE
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:Diverse Technologies Corporation
File: B-259546; B-259546.2
Date:April 3, 1995
William L. Walsh, Jr., Esq., J. Scott Hommer III, Esq., and Wm. Craig
Dubishar, Esq., Venable, Baetjer and Howard, for the protester.
Paralee White, Esq., Cohen & White, for Planned Systems International,
Inc., an interested party.
Victoria H. Kauffman, Esq., Department of the Navy, for the agency.
David A. Ashen, Esq., and John M. Melody, Esq., Office of the General
Counsel, GAO, participated in the preparation of the decision.
DIGEST
1. Protest that agency did not perform an adequate cost realism and
risk assessment with respect to awardee's proposal of uncompensated
overtime is denied where, although the Defense Contract Audit Agency
had no data on awardee and therefore was unable to verify its proposed
uncompensated overtime, awardee furnished (1) information which showed
that it had a total time accounting system that was capable of
adequately tracking and reporting uncompensated overtime, and (2)
historical data which the agency concluded demonstrated that
uncompensated overtime [DELETED].
2. Protest that agency was required to evaluate past performance and
experience as a part of the technical evaluation is denied where
solicitation did not state that an offeror's past performance and
experience would be an evaluation factor.
DECISION
Diverse Technologies Corporation (DTC) protests the Department of the
Navy's award of a contract to Planned Systems International, Inc.
(PSI), under request for proposals (RFP) No. N00600-94-R-1920, for
automatic data processing (ADP) support services for the Naval Air
Warfare Center Aircraft Division, Naval Air Station Patuxent River,
Maryland. DTC challenges the agency's evaluation of PSI's price and
technical proposals.
We deny the protest.
BACKGROUND
The solicitation contemplated award of a 5-year--a base year with 4
option years--indefinite quantity, time-and-materials contract for ADP
support services. The solicitation provided for award to be made to
the responsible offeror submitting the lowest priced, technically
acceptable proposal. The solicitation generally required the
submission of a specific, detailed and complete technical proposal
which clearly demonstrated that the offeror possessed a thorough
knowledge and understanding of the solicitation requirements and had
valid and practical solutions for technical problems. The
solicitation specifically required the technical proposal to include
resumes for all key personnel showing their compliance with specified
education and experience requirements, a detailed management and
staffing plan, a response to a sample task order, and a detailed
commencement plan clearly demonstrating that the offeror could
commence full contract performance within 1 week after award.
The solicitation required offerors to furnish fixed unit prices for
each of the six specified labor categories; it provided that an
overall evaluated price would be calculated by adding: (1) the
proposed rate for each labor category times the estimated number of
required labor hours for that category (as specified in the
solicitation), and (2) the other direct costs specified in the
solicitation (increased by any general and administrative (G&A) and
material handling costs specified by the offeror). The solicitation
cautioned offerors that their proposed prices would be subject to a
risk assessment. According to the RFP, the risk assessment would
consider:
"the degree to which there is a concern that the cost/price
proposal is too low and not consistent with the technical
proposal, and that the Offeror cannot provide quality
services/personnel over the life of the contract at the prices
proposed. Unrealistically low pricing which leads to such a
concern may result in an unacceptable technical
determination."
In addition, the solicitation provided that:
"[p]roposals which include unrealistically low labor rates, or
which do not otherwise demonstrate cost realism, will be
considered in a risk assessment and evaluated for award in
accordance with that assessment."
The Navy received 16 proposals, 3 of which--including DTC's and
PSI's--were found to be technically acceptable as is. However, the
agency determined that discussions were necessary because of
unresolved cost issues concerning the uncompensated overtime included
in PSI's low technically acceptable offer. (The agency also found
that unresolved cost issues remained with respect to DTC's offer.) As
a result, six offers--including PSI's and DTC's--were included in the
competitive range for discussion purposes. At the conclusion of
discussions, and after two rounds of revised proposals, the agency
requested best and final offers (BAFO) from the three offerors--PSI,
DTC and a third firm--remaining in the competitive range. Based upon
its submission of the lowest-priced acceptable offer, PSI was selected
for award. Upon learning of the resulting award, DTC filed this
protest with our Office.
PRICE EVALUATION
Uncompensated Overtime
DTC first argues that because of solicitation provisions concerning
working hours and place of performance, it was improper for the
agency, in calculating the evaluated labor rates, to consider PSI's
proposal of an average of [DELETED] hours of uncompensated overtime
per week for its own staff, for a total workweek of [DELETED] hours,
and [DELETED] hours of uncompensated overtime for the staff of one of
its subcontractors ([DELETED]), for a total workweek of [DELETED]
hours. Specifically, DTC notes that the solicitation provided in the
statement of work (SOW) that "[t]he normal working hours on-site at
the Naval Air Warfare Center Aircraft Division," which was listed in
the solicitation as the place of performance, "are 0730-1600 . . .
with a quitting time eight and one-half hours after the start time."
In effect, DTC argues, the solicitation provisions concerning place of
performance and working hours at the place of performance precluded
the agency from taking advantage of the proposed uncompensated
overtime.
DTC's argument is specious; the solicitation on its face clearly
permitted the offer of, and specifically contemplated consideration
of, uncompensated overtime. First, the solicitation included the
standard Defense Federal Acquisition Regulation Supplement (DFARS)
clause, entitled "Identification of Uncompensated Overtime," which
provides for calculation of an "uncompensated overtime rate," taking
into account hours worked in excess of 40 hours per week. DFARS sec.
252.237-7019. Second, in a question and answer incorporated into the
solicitation by amendment, the agency responded with a simple, clear
"[y]es" to an offeror's question, in view of the above SOW provision
concerning quitting time, as to whether "the Government will allow
Contractor employees to work an extended work week or uncompensated
overtime on-site."
DTC next argues that the price evaluation was improper because PSI
allegedly did not take into account holidays, vacations, and sick
leave in calculating its labor rates. In this regard, DTC notes that
the above DFARS clause on calculating an uncompensated overtime labor
rate requires that "[c]ompensated personal absences, such as holidays,
vacations, and sick leave, shall be included in the normal work week
for purposes of computing uncompensated overtime hours." According to
the protester, the agency therefore should have reduced the proposed
amount of uncompensated overtime considered in calculating PSI's
uncompensated labor rate to take into account the hours not worked
because of holidays, vacations, and sick leave. In addition, DTC
notes that in its evaluation of initial proposals, the agency
determined that discussions with PSI were necessary because its
proposed uncompensated overtime could not be verified by the Defense
Contract Audit Agency (DCAA) and PSI had not furnished supporting
historical data. The agency specifically expressed concern that PSI's
proposed uncompensated overtime "may affect the quality of
services/personnel over the life of the contract." DTC generally
questions the Navy's subsequent determination to consider PSI's
proposal acceptable in this regard, arguing that the agency did not
perform an adequate cost realism and risk assessment with respect to
PSI's proposal of uncompensated overtime.
DTC's argument is without merit. DTC furnishes no support for its
allegation that PSI's proposed rates and hours did not reflect
holidays, vacations, and sick leave, and PSI's proposal specifically
stated that its proposed labor rates included "fringe benefits" such
as holidays, annual leave and sick leave. Further, although the DCAA
had no data on PSI and therefore was unable to verify PSI's proposed
uncompensated overtime, PSI did furnish in its revised proposals
information on its current and proposed total time accounting systems.
The agency found that PSI's accounting systems, which record all time
worked, including uncompensated overtime, were capable of adequately
tracking and reporting uncompensated overtime. Further still, PSI
furnished historical data for a number of its employees for the first
8 months of 1994 showing that they worked an average of between
[DELETED] hours of uncompensated overtime per week; the agency
concluded that the historical data demonstrated that uncompensated
overtime [DELETED]. In addition, the agency's analysis of PSI's and
DTC's unburdened labor rates for those labor categories where they
both proposed personnel showed that PSI's unburdened labor rates, even
when adjusted to account for the uncompensated hours to be worked by
its employees, were [DELETED] than DTC's for four of the five labor
categories.[1]
Given the additional information submitted by PSI establishing that
[DELETED] uncompensated overtime [DELETED] which its proposed
accounting system could track and report, and the fact that PSI's
unburdened labor rates were [DELETED] than DTC's (and the third
offeror's) even when adjusted to account for the uncompensated
overtime to be worked, the Navy reasonably concluded that PSI had
adequately resolved the agency's initial concern as to whether it
would enjoy the benefit of the proposed uncompensated overtime without
adverse effect on contract performance.
Indirect Rates
DTC challenges the price evaluation on the basis that the Navy failed
to take into account PSI's allegedly unrealistically low indirect
rates. Although PSI's evaluated price ($17,385,328) was only
approximately 1 percent ($192,016) lower than DTC's ($17,577,344), the
indirect rates on which PSI's proposed labor rates were based were
lower than DTC's (and the third offeror's). Specifically, while DTC
indicated in its proposal a G&A rate of [DELETED] percent and an
overhead rate of [DELETED] percent, the respective rates shown by PSI
were [DELETED] and [DELETED] percent. According to DTC, the agency
should have taken PSI's unrealistically low indirect rates into
account in the risk assessment, and "normalized" the rates by
increasing them to the level of DTC's indirect rates and increasing
PSI's evaluated price accordingly.
As an initial matter, since the RFP called for fixed-labor rates and a
ceiling on any indirect rate to be applied to the other direct costs
specified in the solicitation--and did not provide any mechanism for
an upward adjustment of prices in the event the agency considered an
offered price too low for a particular element--the solicitation
essentially contemplated the award of a fixed-price contract. The
agency therefore could not properly make upward adjustments in the
proposals. See Milcom Sys. Corp., B-255448.2, May 3, 1994, 94-1 CPD para.
339.
The solicitation did provide for a risk assessment with respect to
whether "the cost/price proposal is too low and not consistent with
the technical proposal," such that "the Offeror cannot provide quality
services/personnel over the life of the contract at the prices
proposed." However, since PSI's overall price was approximately 1
percent lower than DTC's, there was no basis for concluding that PSI
would be any less able or have any less incentive, than DTC to
satisfactorily perform over the life of the contract.
TECHNICAL EVALUATION
DTC generally alleges that the Navy's technical evaluation was
superficial and arbitrary. DTC specifically notes that the agency's
narrative evaluation of PSI's proposed commencement plan states only
that "PSI has clearly demonstrated a commencement plan that is sound,
logical and clearly demonstrates that they can assume full contract
performance within one week after contract award." DTC, however, has
pointed to no deficiencies in PSI's proposed commencement plan, and
none are apparent from the record. In these circumstances, we cannot
conclude that the agency acted unreasonably in determining that PSI's
proposal was technically acceptable in this regard. See Analytical
Chemists, Inc., B-256037, Apr. 29, 1994, 94-1 CPD para. 283 (mere
disagreement with agency evaluation does not render the evaluation
unreasonable).
Finally, DTC challenges the technical evaluation on the basis that the
Navy did not evaluate past performance and experience. DTC maintains
that the agency was required by the Office of Federal Procurement
Policy (policy letter 92-5) to consider past performance and
experience in its evaluation. There was, however, no provision in the
solicitation for evaluating past performance and experience as part of
the technical evaluation, and it therefore would have been improper
for the agency to consider it in determining the technical
acceptability of the offers. See QuesTech, Inc., B-255095, Feb. 7,
1994, 94-1 CPD para. 82.
The protest is denied.
Comptroller General
of the United States
1. PSI's unburdened labor rates, after consideration of the
uncompensated hours to be worked, were also evaluated as [DELETED]
than those of the third offeror in the final competitive range in
three of the above five labor categories and were in fact [DELETED]
for an additional category as well.