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.