BNUMBER:  B-261714.2
DATE:  December 22, 1995
TITLE:  Logicon RDA

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

Matter of:Logicon RDA

File:     B-261714.2

Date:     December 22, 1995

Michael A. Gordon, Esq., and Fran Baskin, Esq., Holmes, Schwartz & 
Gordon, for the protester.
Lane L. McVey, Esq., McKenna & Cuneo, for Cubic Applications, Inc., an 
interested party.
Col. Nicholas P. Retson, and Thomas J. Duffy, Esq., Department of the 
Army, for the agency.
Sylvia Schatz, Esq., and David A. Ashen, Esq., Office of the General 
Counsel, GAO, participated in the preparation of the decision.

DIGEST

1.  Protest against agency refusal to accept cost reductions proposed 
in best and final offer is denied where (1) first proposed reduction 
was based on receipt of  reimbursement from a government training 
program that information available to the agency indicated that 
funding would not necessarily be available for the program in the 
future, and (2) second proposed reduction was based on an unspecified 
reduction in the level of effort which was not supported in the 
protester's proposal.

2.  Agency was not required to reopen discussions to permit offeror to 
justify an  unsupported cost reduction introduced for the first time 
in the offeror's best and final offer (BAFO); the decision to reopen 
discussions and request a new round of BAFOs is largely left to the 
discretion of the contracting officer, and where an offeror modifies 
its proposal by introducing material ambiguities or defects in its 
BAFO, it runs the risk that the agency will not reopen discussions. 

3.  Agency's decision not to check one of many past performance 
references listed in awardee's proposal was not improper where 
information available to the agency, including checks with four of 
listed references, furnished no reason to believe that firm's 
representations of its experience were inaccurate; procurement 
officials generally are not required to check all references listed in 
an offeror's proposal.

DECISION

Logicon RDA (LRDA) protests the Department of the Army's award of a 
contract to Cubic Applications, Inc. (CAI), under request for 
proposals (RFP) No. DAKF57-94-RT-0036, for battle simulation services 
in support of the Army I Corps, Army Reserve, and Army National Guard 
exercises.  LRDA, the incumbent on the current I Corps contract, 
primarily challenges the evaluation of technical and cost proposals.

We deny the protest.

The RFP contemplated award of a cost-plus-award-fee contract to 
support Army computer battle simulation exercises for a base year, 
with 4 option years, to the offeror submitting the best overall 
proposal.  The solicitation provided for proposals to be evaluated on 
the basis of quality (more important) and cost.  The quality factor 
consisted of four subfactors:  (1) technical, which was almost twice 
as important as (2) related experience, which was significantly more 
important than (3) management plan, which was twice as important as 
(4) quality control.  Within the technical subfactor, the RFP listed 
two elements:  qualifications of personnel (more important) and 
personnel availability.  
 
The Army received proposals from LRDA and CAI by the closing time, 
both of which were included in the competitive range.  Following 
written and oral discussions, the agency requested best and final 
offers (BAFO).  The BAFOs were evaluated as follows:

                            CAI                LRDA

QUALITY                                 

   Technical        Satisfactory plus
                    (399 of 500 available evaluation 
                                        points)Satisfactory
                                        (398)

   Related                     ExperienceExcellent
                    (249 of 275)        Excellent
                                        (249)

   Management       Excellent
                    (129 of 150)        Excellent
                                        (122)

   Quality Control  Excellent
                    (64 of 75)          Excellent
                                        (62)

 TOTAL QUALITY      Excellent
                    (838 of 1000)       Excellent
                                        (831)

PROPOSED COST       $5,334,541          $5,444,339

EVALUATED COST      $5,440,775          $5,960,728
Although CAI's quality proposal received a slightly higher score than 
LRDA's, the proposals were considered essentially technically equal, 
and award therefore was made to CAI based on its lower evaluated cost.  
LRDA thereupon filed this protest.  
COST EVALUATION

LRDA's Proposal

LRDA challenges the Army's evaluation of the most probable cost of its 
proposal on the basis that the agency improperly disallowed several 
cost reductions it proposed in its BAFO.

Specifically, LRDA argues that the Army improperly disallowed its 
proposed $120,000 BAFO cost reduction which was based on receiving 
reimbursement--$10,000 per employee for two or three employees per 
year for 5 years--under the Department of Veterans Affairs's (VA) 
Service Members Occupational Conversion and Training (SMOCTA) program, 
for hiring and training unemployed former military service members. 

Where, as here, an agency evaluates proposals for award of a cost 
reimbursement contract, an offeror's proposed estimated costs are not 
dispositive because, regardless of the costs proposed, the government 
generally is bound to pay the contractor its actual and allowable 
costs.  Federal Acquisition Regulation (FAR)  15.605(d).  
Consequently, a cost realism analysis must be performed by the agency 
to determine the extent to which an offeror's proposed costs represent 
what the contract should cost.  Logicon RDA, B-252031.4, Sept. 20, 
1993, 93-2 CPD  179.  Because the contracting agency is in the best 
position to make the cost realism determination, our review in this 
area is limited to determining whether the cost evaluation was 
reasonable.   AmerInd, Inc., B-248324, Aug. 6, 1992, 92-2 CPD  85.

We find no basis to question the cost evaluation.  The record shows 
that the Army disallowed LRDA's proposed SMOCTA-based personnel cost 
reduction on the basis that, among other considerations:  (1) while 
LRDA's BAFO stated the firm "will hire several veterans under this 
program per year," thus indicating that it had not already hired such 
veterans for this contract effort, the agency was concerned that 
eligible veterans may not be available when LRDA needed to fill an 
employment vacancy; and (2) the Army had been advised by the VA that 
funding would not necessarily be available for the program in the 
future.  Although LRDA claims that the funding risk was not 
substantially greater than the risk for any other government program, 
the record indicates that at the time the Army was conducting its 
evaluation, participation in the program was scheduled to be closed to 
new applicants substantially before the end of the potential contract 
term.  Given the substantial uncertainties associated with recruiting 
SMOCTA-eligible veterans meeting the specifications' qualification 
requirements, the application deadline, and continued funding of the 
program for the period of the contemplated contract, the agency could 
reasonably conclude that LRDA's ability to benefit from the SMOCTA 
program was too uncertain to warrant acceptance of a cost reduction 
based on participation in the program.  

LRDA also challenges the Army's determination to disallow its proposed 
$375,000 "management" cost reduction which was based on having its 
employees divide their time between this contract and other contracts 
at the installation.  The agency rejected this approach on the ground 
that these other contracts might not be funded and that LRDA did not 
establish that it would be able to perform with the man-hours 
remaining after the reduction.  LRDA argues that disallowance was 
inconsistent with the agency's determination to allow a similar 
$37,977 cost reduction for time to be spent by LRDA's proposed site 
manager working on other contracts.

We see no inconsistency.   LRDA's BAFO provided a clear basis for the 
$37,977 cost reduction by citing proposed manger's experience for the 
most recent year (April 1994 through March 1995) under the incumbent 
contract, when he charged 14.7 percent of the time worked (321 hours 
of 2,183 total hours) to other contracts.  In contrast, LRDA's 
proposal only generally referred to experience under other contracts 
to justify a substantially more significant $375,000 cost reduction 
for work to be performed by other personnel on other contracts; LRDA 
neither specified the estimated number of hours they would work on the 
other contracts, referring only to a saving of $75,000 per year, nor 
explained how this contract could be performed with the remaining 
available labor hours.[1]  The Army, in the absence of any specific 
explanation of the proposed reduction, calculated the amount of the 
reduction to be 3,527 man-hours, or two full-time equivalents (FTE), 
per year.  The agency determined that LRDA, which had originally 
proposed 25 personnel, could not successfully perform the contract and 
provide the required level of support with only 23 FTEs, three fewer 
than the government estimate of  26 FTEs.  LRDA has not shown this 
determination to be unreasonable.  

LRDA argues that in the event the Army had concerns regarding its 
personnel cost adjustments, it should have obtained post-BAFO 
clarifications from the firm to resolve the matter.  It is clear from 
the record, however, that only by revising its proposal to set forth a 
detailed approach for performing the solicitation requirements with 
substantially fewer labor hours than the Army believed necessary could 
LRDA establish a basis for the significant reduction in labor hours 
proposed in its BAFO.  Given the substantive nature of the matter, any 
such dialogue would have constituted discussions rather than 
clarifications and would therefore have required the agency to solicit 
a new round of BAFOs from both offerors.  FAR  15.601, 15.607, and 
15.611; see SWD Assocs., B-226956.2, Sept. 16, 1987, 87-2 CPD  256.  
The decision to reopen discussions and request a new round of BAFOs is 
largely within the discretion of the contracting officer.  Mine Safety 
Appliances Co., B-242379.5, Aug. 6, 1992, 92-2 CPD  76.  Where, as 
here, an offeror modifies its proposal by introducing material 
ambiguities or defects in its BAFO, it runs the risk that the agency 
will exercise its discretion not to reopen discussions.  IDB Int'l, 
B-257086, July 15, 1994, 94-2 CPD  27; State Technical Inst. at 
Memphis, B-250195.2; B-250195.3, Jan. 15, 1993, 93-1 CPD  47.  We see 
nothing improper with the agency's decision not to conduct further 
discussions after BAFOs were received.

CAI's Proposal

CAI proposed the same number (26) of personnel in its initial proposal 
as assumed in the independent government estimate (IGE), but proposed 
hours for several employees who were less than full-time, which 
resulted in a total number of man-hours (232,080 man-hours over 5 
years) less than the number (270,400 man-hours) on which the 
government estimate was based.  In evaluating CAI's initial proposal, 
the Army noted that, although CAI had proposed the same number of 
employees as the IGE assumed, it appeared that the proposal contained 
"unusually low productive (paid) hours," resulting in proposed costs 
($5,589,278) 9 percent below the IGE ($6,132,512); consequently, the 
agency increased CAI's proposed cost by $644,455, to a most probable 
cost of $6,233,734.  However, when the Army questioned CAI during 
discussions about employees not working full-time on this contract, 
CAI responded that it planned to employ all personnel full-time, but 
that they would not work full-time on this contract as the required 
work was cyclical.  Instead, according to CAI, many of the proposed 
employees would be utilized temporarily on its other government 
contracts in the area (and their labor costs thus would be charged to 
these other contracts) when not utilized under this contract.  CAI 
pointed out that it had proposed overtime for employees to accommodate 
work load during exercises (that is, during periods of peak demand for 
support services).  CAI stated that it had reevaluated the hours 
proposed and believed they "adequately covered the requirements of the 
contract."  Upon reevaluation, the Army determined that CAI could 
perform the contract requirements with its stated level of effort and, 
as a result, adjusted CAI's proposed BAFO costs upward by only 
$107,000.  

LRDA maintains that the agency should have adjusted CAI's BAFO costs 
upward by the initial $644,455 adjustment.   

LRDA argues that it will actually take CAI more effort to perform the 
contract requirements than the level of effort proposed in its BAFO, 
but it has not demonstrated why CAI's proposed level of effort was 
insufficient to meet the contract requirements.  In this regard, we 
note that CAI's BAFO man-hours  (232,080 over 5 years) were only 
slightly below LRDA's (235,300, or 1.37 percent according to the 
agency) prior to LRDA's "management" reductions, and after allowance 
of the reduction for the site manager (approximately 233,945, or 0.8 
percent).  Further, CAI explained in greater detail than LRDA how it 
would staff the contemplated contract so as to assure that the 
required support services would be furnished.  In this regard, as 
discussed, CAI proposed that its personnel would work on other 
contracts only during the off-peak periods in the work load cycle and 
that during exercises the personnel would work overtime hours to 
accomplish the required work.  The agency reviewed CAI's proposed 
staffing and found CAI's explanation convincing, in part because its 
proposal of 26 personnel, one more than LRDA proposed, afforded it an 
additional measure of flexibility in scheduling.  Our review of the 
record affords no basis to question the agency's assessment of the 
adequacy of CAI's proposed approach to meeting the specification 
requirements or  its decision not to upwardly adjust CAI's proposal by 
the initial $644,455 amount.   

QUALITY

Related Experience

The record shows that in response to the RFP requirement that offerors 
list their corporate history, CAI listed in its BAFO 11 current or 
recent contracts performed within the past 7 years, including the 
United States Army, Europe (USAREUR) contract; the Army contacted four 
of the listed references to assess the firm's performance on current 
cost-type contracts for battle simulation support at Forts Hood, 
Carson and Riley, and in Korea.  The responses received from these 
references indicated that CAI had an exceptional performance record; 
that CAI's costs, with the exception of an occasional "government 
induced" cost overrun, were either on target or an underrun; and that 
its performance was on schedule or early.  For example, contracting 
officials familiar with CAI's Korean battle simulation support 
contract stated that the firm's performance "has been exceptional" and 
that CAI has "been instrumental in establishing the Korea battle 
simulation center as a leader in the conduct of joint and combined, 
operational level computer-assisted exercises."  Similarly, 
contracting officials familiar with CAI's Fort Hood contract stated 
that the firm "has been very responsive and sensitive to the 
government's needs," and "has been very easy to work with in all 
situations."  Based on the above references, CAI received a rating of 
"excellent" rating under the related experience subfactor.

LRDA argues that the Army's evaluation of CAI's BAFO under the related 
experience subfactor of the quality factor was unreasonable because 
the agency intentionally avoided contacting a reference listed in 
CAI's BAFO for work it was performing on a similar simulation services 
contract with the USAREUR from 1993 to the present, as the Army 
allegedly knew it would have shown the poor performance of CAI on that 
contract.  LRDA argues that, had the agency checked this reference, it 
would have been told that CAI had performed in an untimely manner and 
incurred cost overruns of $8 million (more than its proposed cost of 
$20.7 million) while performing fewer than half of the exercises 
required under the contract.  LRDA concludes that CAI's BAFO should 
have received a rating lower than excellent under the related 
experience subfactor, and that LRDA, not CAI, would have received the 
award had CAI's score been so reduced.

LRDA's argument is without merit.  Procurement officials are not 
required to check all references listed in an offeror's proposal.  
Advanced Envtl. Technology Corp., B-259252, Mar. 20, 1995, 95-1 CPD  
149; Geographic Resource Solutions, B-260402, June 19, 1995, 95-1 CPD  
278.  An agency may accept a firm's representations of its experience 
unless there is reason to believe that the representations are 
inaccurate.  See Geographic Resource Solutions, supra; cf. G. Marine 
Diesel; Phillyship, B-232619; 232619.2, Jan. 27, 1989, 89-1 CPD  90 
(protest sustained where the agency was familiar with, but did not 
consider, the awardee's prior contract performance).  

In any event, the Army maintains, and the record indicates, that even 
if it had contacted the reference at USAREUR, the reference would have 
indicated that CAI's performance on the contract was good.  In this 
regard, the Army has submitted documentation from USAREUR showing that 
CAI received an average award fee score of 95 points (which entitled 
it to an award fee of 75 percent).  Although CAI's award fee score was 
somewhat lower than LRDA's score under its prior USAREUR contract, for 
which it received an average award fee score of      97 points 
(entitling it to an award fee of 84.5 percent), the contracting 
officer for CAI's USAREUR contract stated that "[t]here is no 
significant difference between the quality of performance by either 
contractor, and I would consider each to be a very good performer."  
Further, according to the USAREUR contracting officer, CAI did not 
have cost overruns on the contract arising from an inability to 
perform the requirements of the originally contemplated contract at 
its offered price.  Rather, reports the contracting officer, the 
contract cost increased because USAREUR's needs changed and more work 
was ordered.  Specifically, the contracting officer explains that with 
the fall of communism in Eastern Europe, the nature of the training 
undertaken by USAREUR has changed significantly as the German 
government has placed new constraints on USAREUR to minimize maneuver 
damage, thereby forcing it to abandon physical tank maneuvers in favor 
of the computer simulations supported by this contract.  As a result, 
according to the contracting officer, CAI supported a larger number of 
more elaborate simulation exercises than originally anticipated at the 
time of CAI's award.  (The contracting officer contrasts the 
additional demands placed upon CAI with the work under LRDA's prior 
contract, which consisted largely of smaller unit, shorter duration 
exercises.)  The contracting officer concludes that, despite the 
unexpected increase and modification in work load, CAI had "done a 
good job of controlling costs."  Thus, while the total number of 
exercises supported by CAI may have been fewer than anticipated at the 
time of contract award, as alleged by LRDA, the record indicates that 
CAI was required to perform a larger number of more elaborate 
simulation exercises, thus driving up the cost of contract 
performance.  

We conclude that the record supports the reasonableness of the Army's 
determination that LRDA's and CAI's overall related experience were 
essentially equal.

Personnel Qualifications
 
LRDA challenges the evaluation of the qualifications of a number of 
the personnel proposed by the offerors.  For example, LRDA questions 
why CAI's proposed site manager received a higher score than LRDA's, 
even though LRDA's proposed site manager received excellent ratings 
under the current contract.  

The RFP established the following requirements for the proposed site 
manager:  a bachelor of science (BS) or bachelor of arts (BA) degree 
in mathematics or science; at least 15 years experience as a U.S. Army 
or Air Force officer or equivalent civil service within the Department 
of Defense; experience in operations and training requirements; a 
minimum of 2 years experience with high level computer systems; a 
minimum of 5 years supervisory experience, preferably in the area of 
computer operations or the equivalent technical field; and a 
familiarity with large scale military war games and simulations.  

The Army evaluated CAI's proposed site manager, who received 21 of 25 
available points, as possessing stronger academic qualifications and 
military experience than LRDA's proposed site manager, who received 20 
points.  While LRDA's proposed site manager had earned a BS in 
mathematics, CAI's proposed site manager had earned not only a BA in 
applied mathematics but also a Masters in Business Administration, and 
had graduated from the Army Command and General Staff College.  In 
addition, CAI's proposed site manager had served as deputy director of 
the Army Battle Command Training Program, developed attack plans for 
the Army VII Corps during Operation Desert Storm in the Persian Gulf 
War, and before retiring had supervised training for the Army I Corps.  
In contrast, while LRDA's proposed site manager met the RFP 
requirements, he had earned only a BS in mathematics.  We conclude 
that the Army reasonably determined that, notwithstanding the 
excellent ratings received by LRDA's proposed site manager, the 
superior academic and military credentials of CAI's proposed site 
manager warranted assigning a 1-point advantage to CAI's BAFO in this 
regard.  

As a further example, LRDA challenges the evaluation of the offerors' 
proposed JANUS simulation senior controllers.  The RFP established the 
following requirements for the JANUS simulation senior controller:  a 
BS or BA degree; a diploma from an Armed Forces staff college or 
equivalent military training; experience as a land forces or combat 
arms officer; attainment of a field grade rank; knowledge of Joint and 
Army organizational structures and operations; experience in planning 
and operations; at least 1 year experience in high resolution computer 
simulation war games; and 3 years experience operating military 
simulations in a VAX/VMS or UNIX environment.  Although the Army 
recognized that CAI's proposed JANUS senior controller, who received 8 
of 10 available points, possessed limited experience with operating 
military simulations, and that LRDA's proposed JANUS manager, who 
received 7.5 points, possessed more extensive Janus experience, the 
agency evaluated CAI's proposed JANUS senior controller as possessing 
stronger academic credentials and a stronger overall military 
background.  CAI's proposed JANUS senior controller had earned not 
only a BS in industrial technology but also an MS in systems 
management, and was an Army War College graduate.  In contrast, LRDA's 
proposed JANUS manager had earned only a BA in international affairs 
and graduated from the less advanced Army Command and General Staff 
College.  In addition, the agency notes that, prior to retirement, 
CAI's proposed JANUS senior controller was division chief at the 
Tactical Commanders Development Program at Fort Leavenworth, where he 
developed tactical scenarios and instruction for battalion and brigade 
command designees; supervised field-grade officer 
instructor/controllers, computerized combat simulations and conducted 
post-action analyses; and coordinated contractor personnel for 
simulation support of an executive-level tactical training course.  
Given the strengths of both proposed Janus controllers, we find no 
basis to question the agency's assignment of nearly equal scores to 
both, with the slightly higher score of CAI's proposed controller 
reflecting his superior academic credentials. 

Based on our review of these and LRDA's other challenges to the 
evaluation of proposed personnel, we find no basis to question the 
agency's overall conclusion that the qualifications of the proposed 
personnel were essentially equal.  Further, since the record supports 
the agency's determination that the proposals were technically equal, 
we have no basis to question the reasonableness of the agency's 
determination to make award based on the lower evaluated cost of CAI's 
proposal.

The protest is denied.

Comptroller General
of the United States

1. Although LRDA claims that the Army was familiar with LRDA's 
practice (from other contracts) of having its personnel perform work 
on several contracts, contracting officials deny familiarity with the 
cost data from the other contracts.  In any case, LRDA assumed such 
familiarity at its own risk; agencies are required to evaluate 
proposals based on the content of the proposal, and the evaluation 
ordinarily does not include other information.  See George Mason 
Univ., B-255348, Feb. 24, 1994, 94-1 CPD  147.  In any case, mere 
awareness of LRDA's practice on other contracts for different 
requirements would not establish that LRDA could adequately perform 
the current contract with significantly fewer man-hours than 
originally proposed or considered necessary by the agency.