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.