BNUMBER:  B-261996
DATE:  November 16, 1995
TITLE:  Akal Security, Inc.

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Matter of:Akal Security, Inc.

File:     B-261996

Date:     November 16, 1995

Daya S. Khalsa for the protester.
Cynthia S. Guill, Esq., and Kenneth M. Homick, Esq., Department of the 
Navy, for the agency.
Henry J. Gorczycki, Esq., and James A. Spangenberg, Esq., Office of 
the General Counsel, GAO, participated in the preparation of the 
decision.

DIGEST

1.  An award to an offeror submitting an unreasonably low or 
below-cost offer on a fixed-price contract is not legally 
objectionable.

2.  Where a protester would not have been awarded contract under 
either a best value or a low cost, technically acceptable evaluation 
scheme in a negotiated procurement, the protester has not been 
prejudiced by the agency's unannounced change to its evaluation 
scheme.

DECISION

Akal Security, Inc. protests the award of a contract to Nation Wide 
Security, Inc. under request for proposals (RFP) No. N62472-93-R-3613, 
issued by the Department of the Navy for security guard services at 
the Naval Undersea Warfare Center Division and Detachments in Newport, 
Rhode Island; New London, Connecticut; and Dresden, New York.  Akal 
protests that the agency's source selection decision was inconsistent 
with the stated evaluation scheme.

We deny the protest.

The RFP, issued on September 21, 1994, contemplated award of a firm, 
fixed-price contract (a portion of which included indefinite quantity 
work) for 1 year with 4 option years.  The RFP designated technical 
subfactors and corresponding criteria with their relative weights, and 
stated that award would be made on a best value basis with price and 
technical factors being of equal weight.    

The Navy received 19 proposals, which were evaluated by a technical 
evaluation board (TEB) and a price evaluation board (PEB).  After the 
TEB and PEB evaluations were reviewed by a source selection board 
(SSB), 15 proposals were included in the competitive range; of these 
15 proposals, one was rated exceptional, two were rated acceptable, 
and the remainder, including the proposals of Akal and Nation Wide, 
were rated unacceptable but capable of being made acceptable.[1]

In February 1995, the Navy conducted written discussions with the 
competitive range offerors, and requested revised proposals which were 
evaluated by the TEB and PEB.  Although some of the revised proposals 
corrected some of the initial proposal deficiencies, the ratings 
remained the same.  After a second round of written discussions, the 
TEB determined that three of the previously unacceptable proposals, 
including Akal's and Nation Wide's, were acceptable; the rest of the 
previously unacceptable competitive range proposals remained 
unacceptable but capable of being made acceptable.  A third round of 
written discussions and revised technical proposals followed, but the 
technical ratings did not change.  By letter of May 7, the Navy 
requested best and final offers (BAFO).  The BAFOs rated at least 
acceptable were as follows:

  Offeror             Rating              Price

  A                   Exceptional         $12,438,375

  B                   Acceptable ++        11,400,566

  C                   Acceptable +         12,840,427

  Akal                Acceptable           10,965,926

  Nation Wide         Acceptable            9,778,036

  D                   Acceptable           11,145,095
As requested in the RFP, offerors broke their prices into the 
following components:  labor rate, equipment and material, training, 
burdened hourly rate, and "other" (costs for management, supervision, 
quality assurance, overhead, and profit).  The PEB found that Nation 
Wide's price might be unreasonably low compared to the other BAFO 
prices and the government estimate.[2]  Nearly all of Nation Wide's 
price advantage was attributed to its extremely low costs and a 
reduced profit margin in the "other" category.  The PEB determined 
that Nation Wide may not be able to effectively provide management, 
supervision, and quality control, and still be able to cover its 
overhead and realize a reasonable profit under its stated cost 
breakdown.  The PEB thus considered Nation Wide's price to be 
unreasonably low, and recommended that award be made to Akal, which 
had submitted the next lowest priced, technically acceptable BAFO.

The source selection authority (SSA) reviewed the PEB report and was 
concerned that the PEB, in concluding that Nation Wide's price may be 
unreasonably low, placed undue weight on the historical contract 
prices for this requirement without realizing why those prices  may 
have been higher than what now could reasonably be expected.  In this 
regard, the prior solicitations were restricted to section 8(a) small 
disadvantaged business contractors, whereas this RFP was not.  
Moreover, one of those contracts was terminated for default, and the 
current incumbent contractor, receiving award on a sole source basis 
to replace the defaulted contractor, had to mobilize under an 
expedited time frame of 48 hours, while 2 months are available for 
mobilization under the current RFP.  Because of this concern, the SSA 
requested the PEB to reconvene and review whether Nation Wide could 
perform acceptably at its proposed price considering all of its costs, 
notwithstanding its proposed costs under the "other" category, and 
requested that the PEB review the government estimate.  The SSA also 
instructed the SSB to consider whether Akal's BAFO would be the best 
value to the government considering that its price was more than $1 
million higher than Nation Wide's BAFO.

The PEB telephoned Nation Wide for a price verification.  Nation Wide 
stated that the price submitted was its intended price.  It stated 
that it submitted this proposal with the intent of being extremely 
competitive, and that it had intentionally reduced its profit margin 
and excluded general overhead costs from its BAFO.  Nation Wide stated 
that it did not intend for this contract to be a "money maker" for the 
firm.  The PEB also determined that the preparation of the government 
estimate and its prior price unreasonableness determination were 
unduly influenced by the prior procurement history in that it had 
failed to consider that the higher costs and the difficulties 
encountered under the prior 8(a) contracts were unique to those 
contracts.  Moreover, the PEB reviewed its prior price analysis and 
determined that, except for the "other" category, Nation Wide's costs 
were comparable to the costs of the other technically acceptable 
offerors.  Based on this review, the PEB determined that Nation Wide's 
proposed price was reasonable.  

Considering that Nation Wide's BAFO price--now deemed reasonable--was 
more than $1 million lower than Akal's similarly rated BAFO, the SEB 
recommended award to Nation Wide.  The SSA concurred in this 
recommendation and the Navy awarded the contract to Nation Wide on 
June 30.  This protest followed.

During the course of this protest, the Navy stated that the 
documentation supporting the source selection decision was incomplete.  
The SSA stated that  since she requested the PEB and the SSB to 
reconsider their initial findings in mid-June, she accepted the 
incomplete written documentation supplemented by oral reports from the 
PEB, TEB, and SSB in order to meet a June 30 projected award date.[3]  
The SSA subsequently required the boards to submit amended written 
reports documenting the oral information upon which the source 
selection decision was based.  

The protest record contains the written documentation as of the time 
of the award, the amended reports, and the SSA's explanatory 
statement.  The amended reports specifically stated that the TEB 
determined that the BAFOs submitted by Nation Wide and Akal were 
"technically equivalent."  In her accompanying statement, the SSA 
states that the contract was awarded to Nation Wide as the "low, 
technically acceptable offeror."  The record contains no evidence that 
the Navy considered any of the higher rated, higher priced BAFOs in 
making its source selection decision.

Akal first alleges that the award to Nation Wide was improper because 
Nation Wide's price is unreasonably low, specifically, that Nation 
Wide's price does not provide for payment of wages in compliance with 
the Service Contract Act wage rate determination incorporated in the 
RFP.  However, an offer for a fixed-price contract submitted at a 
price that appears lower than the cost of wage rates applicable 
pursuant to the Service Contract Act is nonetheless acceptable where 
the offer does not take exception to, or otherwise evidence an intent 
by the offeror to violate, the requirements of the Service Contract 
Act.  Advanced Management, Inc., B-258942, Feb. 23, 1995, 95-1 CPD 
114.  Our review of Nation Wide's BAFO shows that, not only did 
Nation Wide not take exception to the wage rate requirement, it 
specifically stated in its BAFO that it would comply with the 
applicable Service Contract Act wage rates.[4]  

Akal also alleges that the technical evaluation was unreasonable for 
failing to consider the effect of Nation Wide's low price on the 
technical quality of its BAFO.[5]  However, where, as here, the stated 
technical evaluation criteria do not provide for consideration of 
price in the technical evaluation, a protester's claim that an offered 
price is so low as to render a proposal technically unacceptable is 
not a valid basis for protest.  See SAIC Computer Sys., B-258431.2, 
Mar. 13, 1995, 95-1 CPD  156.

Akal alleges that the agency's source selection decision was not based 
on the best value evaluation scheme stated in the RFP.  We agree.  
Although the RFP stated that technical factors were equal to price, 
the Navy did not consider the higher rated, higher priced BAFOs in its 
selection decision, but rather awarded the contract on the basis of 
the lowest priced, technically acceptable BAFO and did not inform 
offerors of this changed evaluation scheme.  While source selection 
officials in negotiated procurements have broad discretion in 
determining the manner and extent to which they will make use of the 
technical and cost evaluation results, see Grey Advertising, Inc. 55 
Comp. Gen. 1111 (1976), 76-1 CPD  325, they do not have the 
discretion to announce in the solicitation that they will use one 
evaluation plan and then follow another without informing all offerors 
of any significant changes in the evaluation scheme.  DynCorp, 71 
Comp. Gen. 129 (1991), 91-2 CPD  575; Colonial Storage Co.; Paxton 
Van Lines, Inc., B-253501.5 et al., Oct. 19, 1993, 93-2 CPD  234, 
aff'd, Colonial Storage Co.--Recon., B-253501.8, May 31, 1994, 94-1 
CPD  335.  

Nevertheless, Akal was not prejudiced by the agency's actions.  In 
this regard, prejudice is an element of a viable protest, and we will 
not sustain a protest where no reasonable possibility of prejudice is 
evident from the record.  Lithos Restoration, Ltd., 71 Comp. Gen. 367 
(1992), 92-1 CPD  379; Colonial Storage Co.; Paxton Van Lines, Inc., 
supra.  Akal's price is more than $1 million higher than Nation Wide's 
and its BAFO was rated technically equal to Nation Wide's, an 
evaluation result which Akal has not successfully challenged.[6]  
Moreover, Akal has not alleged that it could or would have 
significantly lowered its price had the Navy informed it of the change 
in the evaluation scheme.[7]  Accordingly, since Akal would not 
therefore be entitled to award under either evaluation approach, Akal 
was not prejudiced by the Navy's actions here.  See Colonial Storage 
Co.; Paxton Van Lines, Inc., supra.  See id.

Akal finally alleges that, due to the incomplete pre-protest 
evaluation and source selection reports and the agency's post-protest 
amending of these reports, the SSA must have directed award and then 
had the various boards fabricate the amended reports to support the 
SSA's decision.  The record does not support this allegation.  
Although documentation developed after award may warrant less weight 
than other evidence in the record, we do consider such information 
together with the entire record, where, as here, the protester has had 
an opportunity to comment on the documentation.  See Computer One, 
Inc., B-249352.2, Feb. 23,1993, 93-1 CPD  252.  The protester has 
presented no evidence which contradicts the post-protest documents, 
and these documents themselves do not contradict the pre-award record 
or otherwise suggest improper agency motives in their preparation.  
Rather, the amended evaluation board reports and the post-protest 
statement of the SSA further clarify the pre-award documents.  For 
example, the amended TEB report stated that Akal's and Nation Wide's 
BAFOs were determined to be technically equal, which is entirely 
consistent with the pre-award TEB reports.  Similarly, although the 
pre-award PEB report does not document its revised determination that 
Nation Wide's price was reasonable, the record confirms that the 
initial determination was revised and documents the reasons advanced 
for this revised determination. 

The protest is denied.

Comptroller General
of the United States

1. The Navy's source selection plan stated that technical proposals 
would be rated using the following adjectival scale:

            Exceptional--proposal exceeds requirements in a way that 
            is beneficial to the government.

            Acceptable--proposal meets minimum requirements.

            Unacceptable/susceptible of being made 
            acceptable--proposal contains deficiencies which are 
            susceptible to correction through reasonable discussions.

            Unacceptable--proposal contains deficiencies which are so 
            major and extensive as to require major revision and 
            should be eliminated from further consideration.

The Navy evaluators also employed plus or minus signs to further 
differentiate the technical ratings.

2. The government estimate was $12,728,122.

3. The agency wanted to make award by June 30 so that the awardee 
would be able to mobilize in time to assume contract responsibilities 
when the current contract expired at the end of August.  

4. In fact, the wage rates which Nation Wide proposed in its BAFO meet 
or exceed all of the requirements of the DOL wage rate determinations 
required pursuant to the Service Contract Act.  Akal also seems to 
allege that Nation Wide's price is insufficient for contract 
performance.  This essentially is a challenge to the agency's 
acceptance of an alleged below cost offer.  There is no prohibition 
against a procuring agency's accepting an unreasonably low or 
below-cost offer on a fixed-price contract.  Id.; Intown Properties, 
Inc., B-256742, July 11, 1994, 94-2 CPD  18.  By awarding a 
fixed-price contract to such an offeror, the contracting agency has 
necessarily determined the offeror to be responsible, a determination 
which our Office will not review absent a showing of possible fraud or 
bad faith or that definitive responsibility criteria in the 
solicitation have been misapplied.  Intown Properties, Inc., supra.; 4 
C.F.R.  21.3(m)(5) (1995).  Akal has made no such showing.

5. In its initial protest letter, Akal alleged that, during 
discussions, the Navy asked it only one "very minor question," and 
asserted that it thus must have submitted a technically superior 
proposal.  In fact, the letter from the agency to Akal, which served 
as written discussions, identified several areas of agency concern 
regarding Akal's technical and price proposals, including three 
technical issues where Akal's proposal was considered technically 
unacceptable.  During this round of discussions, as well as the second 
round, the agency clearly stated that Akal's proposal was 
"unacceptable but capable of being made acceptable."  After the agency 
submitted its report supporting the evaluations, Akal did not 
challenge the agency's evaluation of its proposal.  Thus, to the 
extent Akal may have initially protested the evaluation of its 
proposal, it abandoned this protest basis by not rebutting the agency 
report on this matter in its subsequent protest filings.  See D & M 
General Contracting, Inc., B-259995; B-259995.2, May 8, 1995, 95-1 CPD  
235.

6. Akal alleges that the use of the adjectival rating "acceptable" is 
too broad to allow for evaluating differences in technical 
superiority.  This assertion is contrary to the well established 
principle that adjectival ratings and point scores are only a guide to 
assist contracting agencies in evaluating proposals.  Grey 
Advertising, Inc. supra; Harris Corp.; PRC Inc., B-247440.5; 
B-247440.6, Aug. 13, 1992, 92-2 CPD 171.  An agency may consider the 
relative technical merits of two proposals receiving the same 
adjectival rating and, if otherwise reasonable and consistent with the 
stated evaluation criteria, may properly find that one proposal is 
technically superior to another.  A & W Maint. Servs., Inc., B-255711, 
Mar. 25, 1994, 94-1 CPD  214, aff'd,  A & W Maint. Servs., 
Inc.--Recon, . B-255711.2, Jan. 17, 1995, 95-1 CPD  24.  An agency 
also may reasonably determine that two similarly rated proposals are 
technically equal.  Astro Pak Corp., B-256345, June 6, 1994, 94-1 CPD  
352.  Thus, broad adjectival ratings, as used here, do allow agencies 
to reasonably conduct adequate relative technical evaluations of 
competing proposals.

7. Indeed, Akal alleges that its cost to operate under this contract, 
without overhead and profit, is $10.5 million--still almost $750,000 
higher than Nation Wide's price.