BNUMBER:  B-262181
DATE:  October 27, 1995
TITLE:  Northrop Worldwide Aircraft Services, Inc.

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Matter of:Northrop Worldwide Aircraft Services, Inc.

File:     B-262181

Date:     October 27, 1995

J. William Eshelman, Esq., and Michael C. Poliner, Esq., Feith and 
Zell, and Paul C. Burkholder, Esq., Northrop Grumman Corporation, for 
the protester.
R. Timothy Hanlon, Esq., Devon E. Hewitt, Esq., and Mark L. Whitaker, 
Esq., Shaw, Pittman, Potts & Trowbridge, for Loral Training and 
Technical Services, an interested party.
Douglas M. Whitehead, Esq., and Gregory H. Petkoff, Esq., Department 
of the Air Force, for the agency.
Tania L. Calhoun, Esq., and Christine S. Melody, Esq., Office of the 
General Counsel, GAO, participated in the preparation of the decision.

DIGEST

While contracting agency improperly failed to conduct meaningful 
discussions with the protester when it rated its acceptable technical 
proposal as having a high proposal risk for several weaknesses related 
to manning, but did not inform it of  the agency's concerns regarding 
those weaknesses, there is no reasonable possibility that the 
protester was prejudiced by this impropriety because discussions could 
have improved only the technical rating of the protester's proposal to 
the level of the awardee's, but would not have affected its inferior 
current and past performance rating, which was pivotal in the award 
decision.

DECISION

Northrop Worldwide Aircraft Services, Inc. protests the award of a 
contract to Loral Training and Technical Services under request for 
proposals (RFP) No. F26600-94-R-0172, issued by the Department of the 
Air Force for the operation and maintenance of electronic threats and 
targets on the U.S. Air Force Weapons and Tactics Center Range Complex 
(WTCRC) at Nellis Air Force Base, Nevada.  Northrop argues that the 
Air Force improperly failed to conduct meaningful discussions with the 
firm.

We deny the protest.

The solicitation, issued December 17, 1994, anticipated award of a 
cost-plus-award-fee contract under which the successful offeror would 
provide all of the management and labor to operate and maintain the 
range systems and equipment located on the WTCRC and other locations.  
These services will ensure successful simulation of combat scenarios 
for aircrew training, evaluation of aircrews' responses to electronic 
threats, and transmission of electronic data for video debriefings.  
The contract will be performed over 1 base year and up to 4 option 
years.

Offerors were advised that proposals would be evaluated pursuant to 
Air Force streamlined source selection procedures, and that award 
would be made to the offeror whose proposal was most advantageous to 
the government.  Proposals would be evaluated under three categories, 
in descending order of importance:  technical merit, current and past 
performance, and cost.

The technical merit factor consisted of five subfactors, in descending 
order of importance:  operations, maintenance, management, logistics, 
and technical innovation.  The operations subfactor, at issue here, 
contained seven areas for review, among them:  uprange operations, Red 
Forces, Blackjack, training and standardization-evaluation, and 
aircraft instrumentation subsystem (AIS) pod shop operation.[1]  The 
technical merit factor and its components would be evaluated using 
both color/adjectival ratings and proposal risk ratings.  The 
color/adjectival ratings--blue/exceptional, green/acceptable, 
yellow/marginal, or red/unacceptable--would represent the evaluators' 
views as to an offeror's understanding of and compliance with the 
requirements, as well as the soundness of its approach.  The proposal 
risk ratings--high, moderate, or low--would represent the risks 
associated with each proposal.  Offerors' current and past performance 
proposals would be evaluated using the color/adjectival ratings 
described above, as well as performance risk ratings of high, 
moderate, low, or not applicable.  Cost proposals would be evaluated 
for realism and reasonableness.  

The Air Force received five proposals by the February 17, 1995 closing 
date, including those from Northrop and Loral, the incumbent 
contractor.  During the evaluation of these proposals, the technical 
evaluation team (TET) sent Northrop a clarification request for the 
zip codes of government personnel cited in its current and past 
performance proposal.  Three days later, the TET realized that 
offerors were confused as to the range operating hours listed in the 
RFP, and decided to clarify these hours by issuing an amendment.  The 
TET submitted its initial technical evaluation report on March 14, and 
issued amendment No. 0004 the following day to clarify the range 
operating hours.

On March 17, the agency notified all five offerors that their 
proposals had been included in the competitive range, and listed 
deficiency reports and clarification requests to which responses were 
required.[2]  Northrop's letter of notification stated that the Air 
Force had no deficiency reports or clarification requests for the 
firm.  The offerors submitted their revisions in response to amendment 
No. 0004, as well as their responses to the deficiency reports and 
clarification requests.  Among other things, Northrop added two 
technicians in one area and deleted one technician in another, in 
specific response to the amendment.  The Air Force reevaluated the 
proposals in light of these responses.  Best and final offers (BAFO) 
were requested and submitted by all five offerors, with the following 
evaluation results from Loral and Northrop:

                     Loral                Northrop

Technical Merit      Green/Low            Green/High

Operations             Blue/Low             Green/High

Maintenance            Green/Low            Green/Moderate

Management             Green/Low            Blue/Low

Logistics              Green/Low            Green/Low

Technical Innovation   Blue/Low             Blue/Low

Current/Past Performance  Blue/Low          Green/Moderate

Evaluated Cost       $85.8 million        $69.7 million 
The source selection authority (SSA) determined that Loral's proposal 
offered the best value to the government through its combined balance 
of technical merit, exceptional performance history, and cost.  While 
Northrop[3] offered the lowest cost
with an acceptable technical approach, its "aggressive manning 
posture" presented a risk to schedule, cost, and performance, 
especially in the two most important technical areas of operations and 
maintenance.  Further, while Northrop had an acceptable performance 
history, it posed a moderate risk to schedule, cost and management.  
The SSA stated that, given its aggressive manning, Northrop might 
require significant, serious intervention in terms of money and 
management oversight and that, even with this undesirable 
intervention, there was still a likelihood that it would have problems 
meeting the requirement.  The SSA concluded that Northrop's cost, 
$16.1 million less than Loral's, was not worth the high proposal risk 
and moderate performance risk,[4] as he was not confident that 
Northrop's proposal would support the mission without significant 
disruption to mission performance, schedule, and cost.

The contract was awarded to Loral on June 30, and Northrop filed this 
protest on July 27, after its debriefing.  Because the protest was not 
filed within 10 calendar days of award, Loral has proceeded with 
performance of the contract.  See 4 C.F.R.  21.4(b) (1995).

The sole issue here is whether, as Northrop argues, the Air Force 
improperly failed to discuss with the firm the concerns over its 
"aggressive manning posture" which led to its high risk technical 
merit rating. 

In negotiated procurements, contracting officers generally are 
required to conduct discussions with all offerors whose proposals are 
within the competitive range,  Federal Acquisition Regulation (FAR)  
15.610, and the competitive range must include all proposals that have 
a reasonable chance of being selected for award.  FAR  15.609(a); 
National Sys. Management Corp., 70 Comp. Gen. 443 (1991), 91-1 CPD  
408.  In general, agencies must lead offerors into areas of their 
proposals which require amplification or correction, Son's Quality 
Food Co., B-244528.2, Nov. 4, 1991, 91-2 CPD  424, and discussions 
should be as specific as practicable considerations will permit.  Data 
Preparation, Inc., B-233569, Mar. 24, 1989, 89-1 CPD  300.  Although 
discussions need not be all-encompassing, they cannot be meaningful if 
an offeror is not advised, in some way, of the weaknesses, excesses, 
or deficiencies in its proposal that must be addressed in order for 
the offeror to be in line for award.  See Mikalix & Co., 70 Comp. Gen. 
545 (1991), 91-1 CPD  527; Price Waterhouse, 65 Comp. Gen. 205 
(1986), 86-1 CPD  54, aff'd, B-220049.2, Apr. 7, 1986, 86-1 CPD  
333; Management HealthCare Prods. and Servs., B-251503.2, Dec. 15, 
1993, 93-2 CPD  320.

The Air Force noted several weaknesses in Northrop's initial proposal 
concerning the most important technical merit subfactor, operations:  
"lack of sufficient manning for most [operations] areas"; "Red Forces 
distribution of manning"; and "lack of independence between training 
and [standardization-evaluation]."  The TET rated Northrop's proposal 
acceptable under this subfactor and stated that it had an adequate 
approach to accomplishing the required tasks and showed a good 
understanding of the requirements, but its "manpower may make it 
difficult to meet [the] minimum requirements."  Under several areas 
for consideration within this subfactor, the TET stated that Northrop 
proposed inadequate manpower to perform the tasks.  Finally, the TET 
stated that  Northrop's proposal received a high risk assessment 
"based on manning in several areas."  The Air Force also noted 
weaknesses concerning the maintenance subfactor.  However, the TET 
rated Northrop's proposal acceptable under this subfactor and stated 
that the firm had an excellent understanding of the maintenance 
requirements and an excellent method of performing maintenance on 
range equipment; Northrop's proposal received a low proposal risk 
assessment.  The proposal was rated green/moderate under the technical 
merit evaluation factor.

The TET reevaluated Northrop's proposal in light of the revisions the 
firm submitted in response to amendment No. 0004.  The Air Force 
narrowed the first weakness, stating that Northrop's proposal had a 
"lack of sufficient manning for threat operations and Blackjack," and 
repeated the remaining weaknesses from the initial evaluation.  The 
TET rated Northrop's proposal acceptable under the operations 
subfactor and stated that it had an adequate approach to accomplishing 
the required tasks "except for threats," and repeated its belief that 
the firm showed a good understanding of the requirements but its 
"manpower may make it difficult to meet [the] minimum requirements."  
Northrop's proposal received a high risk assessment "based on manning 
(Blackjack) and skill mix/manning for threats."  After this 
reevaluation, the proposal was rated green/high under the technical 
merit evaluation factor. 

In its BAFO, Northrop reduced its maintenance personnel, with the firm 
citing its desire to offer more efficiency without compromising its 
approach for the best value.

In its final proposal analysis report, the TET stated that while 
Northrop had an acceptable understanding of the operations 
requirements, low staffing and extensive cross-utilization jeopardized 
accomplishing all tasks and garnered its proposal a high proposal risk 
assessment.  The proposal was rated green/high overall, with moderate 
or high proposal risk ratings under five of the seven areas for 
review.[5]  In contrast to its favorable pre-BAFO assessment of 
Northrop's proposal as to maintenance, the TET now stated that the 
firm understood the requirements but, as a result of extensive 
cross-utilization of people and minimum staffing for almost all tasks, 
its approach presented a moderate proposal risk.  Northrop's proposal 
was downgraded from green/low to green/moderate, with moderate 
proposal risk for three of the seven evaluation areas.   The Air Force 
concluded that Northrop did not correctly analyze the magnitude of the 
maintenance requirement.

Finally, the briefing provided to the SSA listed the following 
weaknesses in Northrop's technical proposal:  minimum staffing in most 
areas; maintenance delayed during surges; and lack of separation of 
the training and standardization-evaluation function.

In our view, the Air Force failed to conduct meaningful discussions 
with Northrop because the only contact between the Air Force and 
Northrop regarding the proposal concerned zip codes, and did not point 
out or even hint at the perceived weaknesses in Northrop's proposal 
concerning its "aggressive manning posture."  These weaknesses caused 
the proposal to receive a high technical risk rating and denied 
Northrop any meaningful opportunity to improve its proposal.  Northrop 
contends that if it had been aware of the agency's concern, it would 
have refrained from reducing maintenance staff in its BAFO and would 
have added staff overall, with the reasonable possibility that its 
ratings under both operations and maintenance would have improved.   

The Air Force's assertion that it was not required to conduct 
discussions with Northrop because the firm's proposal was technically 
acceptable is without merit.  Agencies are required to discuss 
weaknesses in an offeror's proposal where the weaknesses have a 
significant adverse impact on the proposal's technical rating, 
although discussions need not address every area in which a proposal 
received less than a perfect score, and the need for meaningful 
discussions may be constrained to avoid technical leveling,[6] 
technical transfusion, and an auction.  Management HealthCare Prods. 
and Servs., supra; American Dev. Corp., B-251876.4, July 12, 1993, 
93-2 CPD  49; Department of the Navy--Recon., 72 Comp. Gen. 221 
(1993), 93-1 CPD  422.  Agencies must conduct meaningful discussions 
with all offerors whose proposals are in the competitive range, 
whether their proposals are acceptable, outstanding or only 
susceptible of being made acceptable.  Eldyne, Inc., B-250158 et al., 
Jan. 14, 1993, 93-1 CPD  430, aff'd, Department of the Navy--Recon., 
supra.

The record clearly shows that the weaknesses identified in Northrop's 
proposal associated with its "aggressive manning posture" caused its 
proposal to receive a high risk technical proposal rating, and that 
this rating was a significant factor in the SSA's decision not to 
award the contract to Northrop.  However, both the Air Force and Loral 
contend that the agency was not obligated to raise these weaknesses 
during discussions because they were inherent in the firm's approach 
and would have required significant revision to resolve the agency's 
concerns; they were not so simple that more staffing could be added as 
a cure.

While an agency is not required to point out weaknesses derived from 
an inherent aspect of an offeror's approach which would require 
substantial revision to resolve the agency's concern, see Tracor 
Flight Sys., Inc., B-245132, Dec. 17, 1991, 91-2 CPD  549, we see no 
basis to conclude that only a substantial change in approach would 
have alleviated the agency's concerns here.  On the contrary, while 
Northrop proposed a staffing plan designed to be "responsive, flexible 
and cost-effective," and emphasized cross-utilization of staff, the 
record shows that a relatively limited proposal change--the addition 
of staff--could have alleviated the agency's concerns.  The individual 
evaluator sheets show that Northrop's proposal to cross-utilize its 
staff was seen as a strength, with the weakness being its insufficient 
manpower.  In our view, this indicates that a significant portion of 
the risk of Northrop's cross-utilization plan was that it proposed 
insufficient manpower.  Further, the TET's final summary of Northrop's 
proposal specifically links these range operations and maintenance 
risks to "low staffing in those areas," and one of the weaknesses 
relayed to the SSA was "minimum staffing in most areas."  Hence, we 
see no reason why Northrop could not have resolved the agency's 
concerns--at least to some degree--by proposing additional staff, just 
as it alleviated some of them when it proposed additional personnel in 
its revised proposal, and just as it raised new concerns when it 
reduced personnel in its BAFO. 

Both the Air Force and Loral argue that the conduct of discussions 
would not have changed the outcome of the award decision here.  The 
Air Force asserts that even if it had discussed these weaknesses with 
Northrop and the technical proposal risk assessment had improved, the 
discussions would not have altered the fact that its proposal was 
rated green/moderate under the current and past performance evaluation 
factor.[7]  According to the Air Force, since Loral's proposal was 
rated green/low under the technical merit evaluation factor, and 
blue/low under the current and past performance evaluation factor, it 
still would have been superior to Northrop's and would have been 
selected for award.

Where improper discussions were held, we will resolve any doubts 
concerning the prejudicial effect of the agency's actions in favor of 
the protester; a reasonable possibility of prejudice is a sufficient 
basis for sustaining the protest.  National Medical Staffing, Inc., 
B-259402; B-259402.2, Mar. 24, 1995, 95-1 CPD  163.  Here, however, 
there is no reasonable possibility that Northrop was prejudiced by the 
agency's impropriety.

First, there is no evidence that discussions might have enabled 
Northrop to improve its proposal's technical merit rating from green 
to blue.  The TET's negative comments as to operations and maintenance 
are specifically linked to proposal risk, not to the considerations 
reflected in the color rating (the offeror's understanding of and 
compliance with requirements, as well as the soundness of its 
approach).  Thus, even if Northrop had been apprised of the Air 
Force's concerns with its "aggressive manning posture," and improved 
its proposal's risk rating as a result, the maximum rating its 
proposal would have received had it alleviated these concerns is 
green/low, the same as Loral's.

Second, Northrop misreads the record when it asserts that the current 
and past performance ratings were not "pivotal."  In selecting Loral 
for award, the SSA emphasized the firm's "long and successful 
experience" in operating and maintaining similar contracts, and stated 
that this demonstrated a "proven ability to manage the range with the 
highest probability of operating without a disruption of schedule, 
increase of cost, or degradation of services at an affordable cost."  
The SSA stated that the lower-cost proposals of two offerors, one of 
them Northrop, demonstrated varying degrees of risk associated with 
performance and costs which translated into unacceptable cost 
increases, schedule disruptions, and performance degradation.  
Moreover, the SSA stated that the third lower-cost offeror was unable, 
in similar type contracts, to achieve the highest ratings available.  
Thus, while the SSA could have awarded the contract to a firm whose 
cost was lower than Loral's; whose technical merit proposal rating was 
green/low, equal to Loral's; and whose current and past performance 
proposal rating was green/low, better than Northrop's, he opted for 
Loral's proposal based on its superior past performance rating.  In 
the SSA's discussion of that offeror's proposal, he specifically 
stated that:

     "because current and past performance are a critical element in 
     determining future performance, and because price is the least 
     important factor in determining award, I believe the exceptional 
     past performance of Loral in range operations more than offsets 
     the price difference.  Loral consistently earned superior ratings 
     for exceeding standards in the critical areas of range operations 
     and support on current and past performance."

The SSA's repeated emphasis on the current and past performance 
ratings removes any reasonable possibility of prejudice to Northrop as 
a result of the Air Force's improper failure to conduct meaningful 
discussions with the firm.  We are not persuaded otherwise by the 
protester's argument that the cost difference between its and Loral's 
proposals is evidence of prejudice.  Without question, this cost 
difference would be narrowed by any addition of personnel to 
Northrop's proposal.  Given the SSA's repeated emphasis on current and 
past performance, and his specific acknowledgment of cost as the least 
important evaluation factor, there is no basis in the record to 
conclude that the SSA would have selected Northrop's proposal for 
award over Loral's, notwithstanding the cost difference.    

The protest is denied.  

Comptroller General
of the United States

1. Uprange operations involve operating surface-to-air missile, 
anti-aircraft artillery, and other threat simulator systems; Red 
Forces involves meeting customer requirements for threat simulator 
command and control and live-flying missions requiring ground control 
intercept technician services; Blackjack involves managing dynamic 
inputs to the daily flying schedule without compromising the safety of 
aircraft and ground parties performing missions on the range complex; 
training and standardization-evaluation involves controlling the 
quality of required miscellaneous operations and maintenance services; 
and AIS pod shop operation involves scheduling and managing AIS pods 
and test sets.

2. One offeror, whose proposal is not at issue here, received a 
deficiency report concerning its staffing levels.

3. The SSA found that the highest-rated proposal did not offer 
sufficient technical advantage to justify its additional cost, 
significantly higher than Loral's, and that the two other offerors 
whose costs were lower than Loral's offered proposals with varying 
degrees of risk associated with performance and costs--one was rated 
green/low under both the technical merit and the current and past 
performance evaluation factors, and the other was rated green/high 
under both factors.

4. High proposal risk is defined in the RFP as "[l]ikely to cause 
significant serious disruption of schedule, increase in price, or 
degradation of performance even with special contractor emphasis and 
close government monitoring."  Moderate performance risk is defined as 
"some doubt exists, based on the offeror's performance record, that 
the offeror can perform the proposed effort."

5. Northrop was rated acceptable with a low proposal risk rating under 
the other two areas.

6. Contrary to the Air Force's and Loral's assertions, we see no 
reason why technical leveling should have been an issue here.  
Technical leveling occurs when successive rounds of discussions are 
conducted and the need for further improvement is pointed out in each 
round.  Technical leveling would not have occurred if the Air Force 
had simply pointed out, during the single round of discussions that it 
held with Northrop, the weaknesses at issue here.  FAR  15.610(d); 
Management HealthCare Prods. and Servs., supra.  

7. Northrop's supplemental protest challenging the evaluation of its 
current and past performance was dismissed as untimely.  Northrop 
Worldwide Aircraft Servs., Inc., B-262181.2, Sept. 26, 1995, 
unpublished.  As a result, we will not consider any of the arguments 
raised in this regard.