BNUMBER:  B-259546; B-259546.2
DATE:  April 3, 1995
TITLE:  Diverse Technologies Corporation

**********************************************************************

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.