BNUMBER: B-265865.3; B-265865.4
DATE: January 23, 1996
TITLE: Southwest Marine, Inc.; American Systems Engineering
Corporation
**********************************************************************
REDACTED DECISION
A protected decision was issued on the date below and was subject to a
GAO Protective Order. This version has been redacted or approved by
the parties involved for public release.
Matter of:Southwest Marine, Inc.; American Systems Engineering
Corporation
File: B-265865.3; B-265865.4
Date: January 23, 1996
Peter B. Jones, Esq., and Toni L. Degasperin, Esq., Jones & Donovan,
for Southwest Marine, Inc.; and James J. McCullough, Esq., Joel R.
Feidelman, Esq., Anne B. Perry, Esq., D. Anthony Trambley, Esq.,
Lawrence E. Ruggiero, Esq., Fried, Frank, Harris, Shriver & Jacobson,
and Grant L. Clark, Esq., Science Applications International
Corporation, for American Systems Engineering Corporation, the
protesters.
William W. Goodrich, Jr. Esq., Richard J. Webber, Esq., Tenley A.
Carp, Esq., and Alison J. Micheli, Esq., Arent Fox, and Charles P.
Mead, Jr., Esq., VSE Corporation, for BAV, the interested party.
Michael J. Cunningham, Jr., Esq., and David H. Turner, Esq.,
Department of the Navy, for the agency.
Guy R. Pietrovito, Esq., and James A. Spangenberg, Esq., Office of the
General Counsel, GAO, participated in the preparation of the decision.
DIGEST
1. The destruction of individual evaluators' workpapers and scoring
sheets by the procuring agency in a negotiated procurement, although
improper, did not make the record inadequate for review by the General
Accounting Office (GAO) where the remainder of the record, including
the parties' arguments, explanations, and hearing testimony,
sufficiently explained the agency's evaluation and source selection
decision to allow the parties to present their arguments concerning
the reasonableness of the agency's actions and for GAO to review the
procurement.
2 In a negotiated, best value procurement in which technical merit
was stated to be significantly more important than cost/price, award
was properly made to the higher-rated, higher-cost offeror where the
agency reasonably evaluated the awardee's proposal as being
significantly technically superior to that of the other offerors
consistent with the stated evaluation criteria and the source
selection official reasonably determined that technical merit of the
awardee's proposal outweighed the cost advantages offered by the
protesters' lower-rated, lower-cost proposals.
3. Award may properly be made on the basis of initial proposals
without conducting discussions where the solicitation incorporated
Federal Acquisition Regulation sec. 52.215-16, Alternate III, which
informed offerors that the agency intended to make award on the basis
of initial proposals, and the contracting officer reasonably
determined that discussions were not necessary to select the offer
that represented the best value to the government, given the technical
superiority of the awardee's proposal and the contracting officer's
reasonable determination that no other offeror could improve its
proposal to the level of the awardee's.
DECISION
Southwest Marine, Inc. (SWM) and American Systems Engineering
Corporation (AMSEC) protest the award of a contract to BAV, a
newly-formed joint venture of VSE Corporation and Booz, Allen &
Hamilton, Inc., under request for proposals (RFP) No.
N00140-95-R-F021, issued by the Department of the Navy, for
engineering, technical, and logistics support services for various
classes of decommissioned Navy ships to be sold or otherwise
transferred to foreign governments. SWM and AMSEC protest the Navy's
technical evaluation, cost/technical tradeoff analysis, and failure to
conduct discussions.
We deny the protests.
The United States is selling, leasing, or otherwise transferring
decommissioned Navy ships to foreign governments under the Foreign
Military Sales (FMS) program; these ships are from various classes of
ships, such as FF-1052 and FFG-7 frigates and DDG-2 cruisers, that
will no longer be within the Navy's active inventory. The purpose of
this procurement is to provide a single contract under which foreign
recipients of the Navy's decommissioned ships can order a broad range
of reactivation, overhaul, maintenance, training, and life-cycle
support services for the ships and their systems.
A cost-plus-award-fee, indefinite delivery, indefinite quantity
contract for 1 base year with 9 option years is contemplated by the
RFP. The RFP estimated a total labor effort of approximately $24M[1]
man-hours. The RFP's statement of work (SOW) detailed the services
that could be ordered under the contract, including ship reactivation
and overhaul, maintenance and maintenance planning, design,
configuration management, field engineering, spare parts management
and procurement, and training. Among other things, the offeror (or an
offered subcontractor) was required to have a current master ship
repair agreement (MSRA) and a valid Naval Sea Systems Command (NAVSEA)
master ordinance repair qualification.
Instructions for the preparation of proposals were provided, detailing
the information required to allow for the evaluation of the technical
and cost proposals. The RFP provided that award would be made on a
best value basis and stated that technical merit was "significantly
more important than" price in the overall evaluation of proposals.
The following technical evaluation factors and subfactors were stated:
1. Technical Approach
a. Sample tasks
b. Understanding and approach
c. Specific technical capability
d. Unique ideas and capabilities
2. Corporate Past Experience
3. Personnel Qualifications
4. Management Plan/Approach
5. Facilities
Offerors were informed that the technical evaluation factors were
listed in descending order of importance, and that within the
technical approach factor the subfactors were listed in descending
order of importance. In addressing the
technical approach evaluation factor, offerors were instructed to
demonstrate their capability to perform and their understanding of the
SOW requirements. Under the sample tasks subfactor, the RFP
identified 12 sample tasks that offerors were to address, and informed
offerors that their sample task responses should demonstrate their
"understanding of the needs, programs, and objectives contained in the
SOW" and their "understanding of FMS procedural and administrative
requirements and soundness of approach to the specific aspects of the
Sample Tasks." Offerors were also informed that they (or their
subcontractors) should demonstrate prior experience "in efforts of
similar complexity and difficulty, and in fields applicable to the
services requested in the SOW," and that "particular emphasis should
be placed on both recent (past three to five years) or current
on-going efforts and on [Department of Defense], particularly Navy and
FMS efforts."
The RFP provided for the evaluation of proposed costs on the basis of
cost realism plus proposed award fee. In this regard, offerors were
required to provide a complete and detailed cost breakdown to support
their proposals. Subcontracts in excess of $500,000 were required to
be supported by cost and price information prepared and signed by the
subcontractor, and all subcontracts regardless of dollar value were
required to be adequately documented to allow a cost realism and
reasonableness evaluation.
The RFP incorporated Federal Acquisition Regulation (FAR) sec. 52.215-16,
Alternate III, which states that the government intends to make award
without conducting discussions and encourages offerors to submit their
best offers in their initial proposals. This clause also reserves the
agency's right to conduct discussions if necessary.
The Navy received proposals from eight offerors, including BAV, AMSEC,
and SWM. The technical proposals were evaluated by a nine member
technical evaluation committee (TEC), which used an adjectival rating
scheme to evaluate proposals under each technical evaluation factor
and subfactor.[2] Each proposal was in turn evaluated by all the
evaluators, with the order of review determined by random selection.
Hearing Transcript (Tr.) at 506-508.[3] Each evaluator, after
reviewing a proposal, prepared narrative comments and assigned an
adjectival rating under each evaluation factor and subfactor. Tr. at
35-36. The evaluators then met in committee to discuss their initial
written reviews of the proposal; the individual evaluators made
adjustments, if any, to their own comments and adjectival ratings as a
result of their committee discussions. Tr. at 44-45, 60-61, 415-417,
510. After the individual adjustments were made, the evaluators'
comments and ratings were collated into a single evaluation document
for each proposal. This document was subject to further discussions
in committee; narrative comments and ratings were amended, changed or
deleted based upon the evaluators' evolving consensus view.[4] Tr. at
240-245, 287-288.
Ultimately, as a result of this iterative process, under which each
proposal was subject to at least three reviews, Tr. at 532, the TEC
arrived at a single consensus view for each proposal. A final
evaluation report was prepared that documented the TEC's consensus
evaluation ratings for each proposal; this document provided an
adjectival rating and narrative comments for each evaluation factor
and subfactor. The report, however, did not document any weaknesses
or "drawbacks" in SWM's or AMSEC's proposals that resulted in the
protesters' proposals being evaluated as weaker than BAV's. Tr. at
872.
After the TEC accepted the final report, the underlying evaluators'
notes, comments, and ratings, and the TEC's preliminary consensus
documents were destroyed. Tr. at 833, 840-841. Subsequent to the
protests, the Navy discovered four computer diskettes containing some
individual evaluator notes and ratings and some of the TEC's
preliminary consensus reports for SWM and AMSEC. Tr. at 841-842.
These documents were provided to counsel for the parties under the
protective order.
BAV's proposal received the highest rating from the TEC, while AMSEC's
and SWM's proposals were evaluated as being technically equivalent and
second highest rated. The TEC assigned the following adjectival
ratings to the parties' proposals in its report:[5]
BAV AMSEC SWM
1. Technical Approach HA A A
a. Sample tasks HA A A
` b. Understanding HA A A
c. Technical capabilityHA A A
d. Unique ideas HA HA A
2. Corporate past experienceHA A A
3. Personnel qualificationA A A
4. Management plan HA HA A
5. Facilities HA HA HA
OVERALL RATING HA A A
BAV's proposal's overall highly acceptable technical rating reflected
the evaluators' judgment that BAV had demonstrated a superior level of
knowledge, experience, and proven capabilities for all the SOW and RFP
requirements. For example, under the sample tasks subfactor, BAV
provided comprehensive responses that not only provided a workable
solution to each task, but demonstrated understanding of the
interrelationship of all the SOW elements and the unique FMS
environment under which the contract services will be rendered.
E.g., Tr. at 70-71. BAV's proposal also demonstrated a number of
unique and outstanding approaches to the SOW requirements, such as,
for example, BAV's proposed use of [deleted] to address the problems
of material/parts management and locating parts for systems that are
no longer in the Navy's inventory, Tr. at 72-75, and its comprehensive
training program for [deleted]. Tr. at 71, 74-76. Under the
technical approach subfactor, BAV's proposal was judged to provide
"a comprehensive description of how to meet the requirements of
the statement of work in an FMS environment and how the
interrelationships worked between the different parts of that
statement of work. Each of these [SOW elements] is not a stand
alone item. [BAV] demonstrated a thorough understanding of what
the requirements were, how to implement plans and programs in
those areas that were tailored to the FMS environment, not just
telling us how the U.S. Navy does it, and gave a detailed,
thorough and it was a very straightforward treatment." Tr. at
110.
As another example, under the corporate past performance factor, BAV's
proposed contract team was judged to offer a breadth of experience
that addressed all elements of the SOW and a substantial amount of
direct FMS experience. Tr. at 127-128. This experience was
demonstrated and documented by a large number of contract citations.
Tr. at 128. Overall, in the evaluators' view, BAV's highly acceptable
proposal was vastly superior to that of any of the other acceptable
proposals, including SWM's and AMSEC's. Tr. at 109, 146.
In contrast to BAV's overall highly acceptable rating, the evaluators
determined that SWM's and AMSEC's proposals evidenced an overall
acceptable approach, understanding, capability, and experience to
satisfy the contract requirements. Each of the protesters' proposals
was assessed as having some strengths, but neither protester provided,
in the evaluators' judgment, as strong or comprehensive a proposal as
BAV's. In particular, the Navy found that SWM's and AMSEC's proposals
did not evidence the same level of understanding of the
interrelationship of the various SOW elements and of the unique
requirements presented by performing these services in an FMS
environment. In addition, neither protester's experience was judged
to be as complete or strong as BAV's.
Concurrent with the TEC's evaluation of proposals, the SSA
independently reviewed the technical proposals, Tr. at 955, 1117-1118,
had a number of conversations with the TEC chair regarding the process
of the TEC's initial evaluation and its initial findings, and reviewed
an early draft of the TEC's evaluation report. Tr. at 955, 957.
After the TEC's final evaluation report was provided to the SSA, he
spent a week comparing and validating the evaluation findings against
his own review of the technical proposals. Tr. at 958. While the SSA
found some "minor" points on which he disagreed with the evaluation
findings, he agreed with the assigned adjectival ratings and that
BAV's proposal was "clearly and vastly superior [to that] of the other
offerors"; the SSA "adopted" the evaluation findings as his own. Tr.
at 958-961, 967, 969, 974.
A cost evaluation was also performed to assess the realism and
reasonableness of the offerors' cost proposals. AMSEC's, SWM's, and
BAV's total proposed cost-plus-award-fees were evaluated as follows:
Proposed Evaluated
AMSEC $853,124,360 $853,124,360
SWM $945,007,862 $945,007,862
BAV $1,060,156,697 $1,079,770,912
The SSA requested that the TEC chair perform a cost/technical tradeoff
analysis of the offers and "advise the [SSA] whether award to the
technically superior offeror warrants the higher costs." The TEC
chair was provided with cost evaluation information and met with the
SSA to discuss the cost/technical tradeoff evaluation. Tr. at 764.
After receiving input from the TEC members, the TEC chair provided the
SSA with a written cost/technical tradeoff analysis that concluded
that the evaluated superiority of BAV's proposal outweighed AMSEC's or
SWM's substantial cost advantages. The TEC chair's cost/technical
tradeoff identified a number of advantages in BAV's proposal that the
TEC chair believed evidenced technical superiority which outweighed
the cost advantages offered by the protesters' proposals. Generally,
these advantages were (1) BAV's offer of more comprehensive and
intensive training that would allow for "a faster and more
comprehensive level of self-sufficiency for the FMS customer"; (2)
BAV's superior understanding of the interrelationship of the SOW
elements; awareness of the roles of and coordination required for the
contractor, the agency, and the FMS customer; and systematic approach
to accomplishing the SOW services--all of which would result in
efficient level of effort usage, elimination of rework, and reduction
of government oversight; (3) BAV's offer of "proven preventative
solutions to anticipated problem areas" that would result in
substantial cost avoidance to the FMS customer; and (4) BAV's proposed
material support system that would manage the government's spare parts
inventory, which had an approximate value of $400M. Tr. at 800-801.
The TEC chair's cost/technical tradeoff analysis was provided to the
agency's source selection advisory council (SSAC), which also received
copies of the proposals, the TEC's evaluation report, and the cost
evaluation. Tr. at 988-989. The SSA was present for the SSAC's
review and discussion of the proposals and evaluation. The SSAC's
discussion of the value of BAV's technically superior proposal focused
on the need to provide high quality services to FMS customers;
specifically, the SSAC "elaborate[d] on a credibility gap that . . .
existed between NAVSEA and their [FMS] customers," stressed the
importance of training FMS users to attain self-sufficiency, and the
need to manage the spare parts inventory and support the "FMS-unique
items." Tr. at 990-991. The SSAC concurred with the TEC's
cost/technical tradeoff analysis and also recommended award to BAV.
On the basis of the TEC's evaluations, the TEC chair's cost/technical
tradeoff analysis, the SSAC's recommendation, as well as his own
review, the SSA selected BAV's proposal for award. In the written
source selection decision, the SSA noted that:
"The inherent quality of the BAV proposal will result in less
rework on the part of the contractor, and less required
Government oversight. The technical superiority of the BAV
proposal is not overcome by the simple expenditure of additional
hours on behalf of any lower cost/technically inferior offerors.
Given the higher quantity and quality of contract deliverables,
and given the inherent quality of the BAV proposal, unmatched by
any other offer, which will result in less required rework and
less required Government oversight, the SSA has determined the
benefits provided by the BAV proposal outweigh the differences
between the BAV cost realistic position and the cost realistic
positions of the other offerors . . . ."
In the SSA's judgment, BAV would present FMS customers with a level of
support that would generate the highest level of assurance in the
Navy's capability and commitment, which would enhance the
marketability of decommissioned Navy ships and increase the volume of
work that FMS customers would choose to order under the contract.[6]
The SSA also testified that there was a "real value" in the sale of
government spare parts through this support services contract. Tr. at
1126-1127.
The SSA also decided that there was no need to conduct discussions
before making award. Specifically, the SSA noted that the SOW invited
creative and innovative approaches, but that only BAV had "maximized
this opportunity by providing the most creative and innovative
technical approach." In the SSA's view, discussions in this area
would not be appropriate. The SSA also noted that there were no
deficiencies or significant weaknesses in any of the acceptable
proposals that required discussions and was convinced that the other
offerors could not improve their proposals to the level of BAV's. Tr.
at 1127. Finally, the SSA noted that offerors were cautioned by the
RFP that the government intended to make award on the basis of initial
proposals and that therefore offerors should have presented their best
offer in their initial proposals.
Award was made to BAV, and these protests followed.
SWM and AMSEC first protest the Navy's evaluation of technical
proposals. Specifically, SWM argues that the Navy gave undue weight
to the experience of BAV's proposed team in evaluating BAV's proposal
under the sample tasks and specific technical capability subfactors;
SWM contends that since the RFP provided for the evaluation of
corporate past experience under a separate evaluation factor, the Navy
should not have considered BAV's experience under any other factor or
subfactor. SWM also disagrees with the adjectival ratings assigned by
the TEC for its proposal; SWM contends that since the TEC in its final
report identified some areas in which SWM's proposal exceeded the RFP
requirements, under the procurement's source selection plan, its
proposal should have been rated highly acceptable. AMSEC argues that
the Navy evaluated its and BAV's proposals unequally, finding that
strengths in BAV's proposal merited a highly acceptable rating while
similar strengths in AMSEC's proposal merited only an acceptable
rating. Also, AMSEC argues that the Navy misevaluated its corporate
past experience, which the protester believes should have been
assessed as highly acceptable. Both protesters argue that because the
Navy destroyed the evaluators' and TEC's workpapers and comments,
which formed the basis for the final evaluation report, the agency did
not adequately document its evaluation and source selection such that
we can judge the rationality of the agency's actions.
In determining whether a particular evaluation conclusion is rational,
we examine the record to determine whether the judgment was reasonable
and in accord with the evaluation criteria listed in the solicitation.
Abt Assocs., Inc., B-237060.2, Feb. 26, 1990, 90-1 CPD para. 223. Such
judgments are by their nature often subjective; nevertheless, the
exercise of these judgments in the evaluation of proposals must be
reasonable and must bear a rational relationship to the announced
criteria upon which competing offers are to be selected. Bunker Ramo
Corp., 56 Comp. Gen. 712 (1977), 77-1 CPD para. 427; Hydraudyne Sys. and
Eng'g B.V., B-241236; B-241236.2, Jan. 30, 1991, 91-1 CPD para. 88.
Implicit in the foregoing is that these judgments must be documented
in sufficient detail to show that they are not arbitrary. See FAR sec.
4.801(b); 15.608(a)(3); 15.612(d)(2); Wadell Eng'g Corp., 60 Comp.
Gen. 11 (1980), 80-2 CPD para. 269; Benchmark Sec., Inc., B-247655;
B-247655.2, Feb. 4, 1993, 93-1 CPD para. 133. In particular, the agency's
technical evaluation documentation is required to include "[a]n
analysis of the technically acceptable and unacceptable proposals,
including an assessment of each offeror's ability to accomplish the
technical requirements." FAR sec. 15.608(a)(3)(ii). While an agency is
not required to retain every document or worksheet generated during
its evaluation of proposals, the agency's evaluation must be
sufficiently documented to allow review of the merits of a protest.
KMS Fusion, Inc., B--242529, May 8, 1991, 91-1 CPD para. 447. In this
regard, evaluators' notes and workpapers may or may not be necessary
to determine the reasonableness of the agency's evaluation. See id.;
Department of the Army--Recon., B-240647.2, Feb. 26, 1991, 91-1 CPD para.
211. Where an agency fails to document or retain evaluation
materials, it bears the risk that there is inadequate supporting
rationale in the record for the source selection decision and that we
will not conclude that the agency had a reasonable basis for the
decision. Engineering and Computation, Inc., B-261658, Oct. 16, 1995,
95-2 CPD para. 176; American President Lines, Ltd., B-236834.3, July 20,
1990, 90-2 CPD para. 53.
In determining the rationality of an agency's evaluation and award
decision, we do not limit our review to contemporaneous evidence, but
consider all the information provided, including the parties'
arguments, explanations, and hearing testimony. Benchmark Sec., Inc.,
supra; KMS Fusion, Inc., supra; Hydraudyne Sys. and Eng'g B.V., supra.
While we consider the entire record, including the parties' later
explanations and arguments, we accord greater weight to
contemporaneous evaluation and source selection material than to
arguments and documentation prepared in response to protest
contentions. DynCorp, 71 Comp. Gen. 129 (1991), 91-2 CPD para. 575.
Here, the Navy's destruction of the evaluators' notes and workpapers
left a written record that did not meet the requirements of FAR sec.
15.608(a)(3)(ii). The contemporaneous documentation retained by the
Navy--the TEC's final report, the TEC chair's cost/technical tradeoff
document, and source selection decision--did not adequately explain
why BAV's proposal was judged to be technically superior to SWM's and
AMSEC's. Specifically, while the TEC report described BAV's
proposal's strengths and advantages to justify its "highly acceptable"
rating, it did not explain why the protesters' proposals, which
appeared from this document to have similar strengths, were not
essentially technically equivalent. Accordingly, the retained
documentation was not sufficient to support the evaluation results.
Indeed, a hearing was convened at our request, in part, because of
the inadequacy of the evaluation documentation in the record, which
did not fully explain the agency's evaluation, Tr. at 286-287, and the
hearing testimony revealed that a number of identified strengths and
weaknesses for all offerors' proposals were not recorded in the TEC's
final evaluation report. Tr. at 336-338, 397-398.
While the Navy's document destruction was improper, we will not
disrupt an agency's procurement on this basis alone where the protest
record is otherwise adequate for our review. See Hydraudyne Sys. and
Eng'g B.V., supra. SWM and AMSEC assert that the evaluators' notes
and workpapers are necessary here to allow for our review of the
procurement; they correctly note that the evaluators could not recall
in their hearing testimony all the details of the lengthy evaluation
process and that there were some minor inconsistencies in the
evaluators' testimony.[7] This, however, does not establish the
inadequacy of the protest record. The testimony of the agency's
evaluators, TEC chair, and SSA explained the basis of the agency's
evaluation conclusions, and, more specifically, why BAV's proposal was
determined to be technically superior to SWM's and AMSEC's; they
agreed on the major aspects of the evaluation and the evaluated
differences among the parties' proposals. Looking at the record as a
whole, we believe that it adequately explains the agency's actions so
as to allow the parties to present their arguments concerning the
reasonableness of the agency's source selection and to allow our
Office to effectively review the matter. Id.
From our detailed review of this record, we conclude that the agency's
evaluation of technical proposals and its cost/technical tradeoff
decision were reasonable.
SWM argues that the Navy gave inappropriate weight to experience in
the evaluation of BAV's proposal under the sample tasks and specific
technical capability subfactors. The record does not support this
allegation. The RFP provided that an offeror's overall corporate
experience would be evaluated under the corporate past experience
factor, and the evaluation documentation reflects that BAV's overall
experience was assessed under this evaluation factor. The RFP also
instructed offerors to demonstrate their understanding and
capabilities under the technical approach evaluation factor, which
includes the sample tasks and technical capabilities subfactors. The
record shows that BAV's specific understanding, approach, and
capabilities were assessed under these subfactors. For example,
sample task three asked offerors to describe how they would replenish
the repair part inventory for equipment that is obsolete to the Navy
infrastructure. The Navy found that, for this sample task:
"[deleted]."
While SWM complains that the Navy in evaluating BAV's response to this
sample task considered the experience of BAV's team member in
performing a similar task for the United Kingdom, the agency's
evaluation comments demonstrate that the citation to the experience of
BAV's team member was for the purpose of documenting BAV's
capabilities, which is a matter that the RFP provided would be
evaluated under these subfactors.[8]
SWM also complained prior to the hearing that the TEC report
identifies a number of areas in which SWM's proposal exceeded the RFP
requirements, but does not explain why these "excesses" were not
considered sufficiently beneficial to the government to warrant
receiving highly acceptable ratings. Hearing testimony was elicited
from a number of the agency's evaluators explaining why, in their
judgment, the evaluated "excesses" in SWM's proposal did not merit
highly acceptable ratings under the evaluation factors. See, e.g.,
Tr. at 144-161, 550-554, 561-564, 743-752. SWM has not addressed this
testimony or the evaluators' explanations in its post-hearing
comments. Instead, SWM continues to argue that the contemporaneous
TEC report does not adequately explain the agency's evaluation. This,
however, ignores the hearing testimony that a "major difference"
between BAV's overall highly acceptable proposal and SWM's acceptable
proposal was that BAV demonstrated comprehensive understanding of the
SOW requirements and how they related to executing tasks in an FMS
environment, while SWM's proposal merely described the standard Navy
approach to accomplishing the required tasks without demonstrating an
understanding of the "uniqueness of doing things in an FMS
environment" or how things would have to be tailored to satisfy an FMS
customer. Tr. at 144-145. In other words, the Navy found that while
SWM exceeded RFP requirements in various respects (particularly with
regard to shipyard services), it did not in its proposal reflect an
appreciation of the FMS nature of the procurement to the extent that
BAV did. The record supports the Navy's findings, and given SWM's
failure to rebut the agency's explanations in the hearing testimony
regarding its evaluation of SWM's proposal, we conclude that the
ratings of that proposal were reasonable.
AMSEC also challenged the agency's evaluation of its technical
proposal, arguing that strengths identified in BAV's proposal were
also present in AMSEC's and that in particular AMSEC's corporate
experience should have been assessed as highly acceptable. In this
regard, AMSEC points to some of the initial, pre-consensus evaluator
comments concerning AMSEC's proposal, complains that its proposal
initially received a higher rating than was presented in the TEC's
consensus report, and suggests that the TEC report does not reflect
the evaluators' conclusions.
First, regarding the pre-consensus evaluation documents to which AMSEC
draws our attention, the record shows, as noted above, that the
agency's evaluation was an iterative process which began with the
individual evaluators' initial comments on the proposals, continued
through committee discussion which resulted in changes to the
evaluators' individual views, and ended with a consensus panel finding
for each proposal that was documented in the TEC's evaluation
report.[9] E.g.,Tr. at 414-417. Thus, the fact that an evaluator's
preliminary evaluation comments or ratings changed does not indicate,
as AMSEC asserts, that the TEC report does not reflect the agency's
evaluation conclusions. Moreover, the record indicates that all the
offers initially received high evaluation scores prior to the
committee discussions after which individual evaluators adjusted their
ratings. Tr. at 430.
Regarding the evaluation of AMSEC's proposal, we received extensive
hearing testimony concerning the evaluation of AMSEC's proposal under
the technical approach and corporate past experience factors, which
highlighted the evaluated differences between BAV's and AMSEC's
proposals. In general, BAV'S proposal under the sample tasks and
understanding and approaches subfactors was found to provide a much
more comprehensive response to the SOW requirements than AMSEC's, and
to demonstrate BAV's understanding of the interrelationship of all the
SOW elements and the unique aspects of accomplishing the required
services in an FMS environment. Tr. at 70-71, 109-110. Also, a
number of strengths or beneficial excesses were identified in BAV's
proposal that supported its evaluated superiority. For example, BAV
offered an existing material management system and database to address
the problem of managing and acquiring spare parts for equipment that
is no longer supported in the Navy's inventory.[10] Tr. at 71-74. As
another example, BAV offered MSRA contractors on [deleted] to allow
for flexibility in scheduling ship reactivation and repairs. Tr. at
113.
AMSEC does not dispute the Navy's contentions concerning the
comprehensiveness of BAV's proposal or that BAV proposal demonstrated
a better understanding of the interrelationship of SOW elements and of
the FMS environment; in this regard, AMSEC's expert witness/consultant
testified that he found the Navy's evaluation of BAV's and AMSEC's
proposals under the technical approach factor to be generally
reasonable. Tr. at 1183, 1222-1223. Nevertheless, AMSEC complains
that some features of its proposal are equivalent to strengths
identified for BAV, but its proposal was not given the same credit.
Specifically, AMSEC complains that just as BAV received credit for its
material management system and database as a beneficial excess, AMSEC
should have received credit for its proposed material management
system--the [deleted]. The record shows that the Navy considered the
[deleted] system, which AMSEC's proposal stated was currently being
used to [deleted], but concluded that AMSEC's proposal provided
insufficient information to allow the agency to assess this system as
a beneficial excess. Tr. at 83, 173, 331-332, 558-559, 1082. In
contrast, BAV fully explained its proposed material management system;
in addition, the TEC and SSA [deleted]. Tr. at 992-992, 1079-1082.
AMSEC has not shown the agency's conclusions regarding AMSEC's failure
to explain the [deleted] system to be unreasonable.
AMSEC complains that the Navy assessed BAV's offer of MSRA contractors
on [deleted] to be a proposal strength but AMSEC did not receive
appropriate credit for its offer of MSRA contractors on [deleted].
The record reflects that the Navy recognized that AMSEC had offered
MSRA contractors on [deleted], but concluded that because AMSEC's
[deleted]. Tr. at 118. AMSEC has also not shown this conclusion to
be unreasonable.
AMSEC also complains that the Navy assessed BAV's proposed training as
a proposal strength, but that AMSEC's proposed equivalent training was
not so assessed. While it is true that some aspects of AMSEC's
proposed training approaches appear similar to that offered by BAV,
the record does not support AMSEC's contention that the training was
equivalent. Rather, the record supports the reasonableness of the
Navy's evaluation that BAV's proposal demonstrated a more
comprehensive overall training program; in this regard, the Navy found
that, unlike the other offers, BAV's proposal did not simply provide
training where requested by the RFP, but demonstrated "a philosophy
that maximized the transfer of knowledge throughout the various tasks
called for in the RFP." In accordance with this approach, BAV
proposed integrated training for [deleted] (where pertinent)
throughout the performance of contract tasks. Also, only BAV proposed
providing [deleted] training.
AMSEC also disputes the agency's assessment of BAV's proposed
"preventative solutions" as a unique proposal strength; AMSEC argues
that its proposal offered the same preventative solutions. We find
from our review of the record that while both firms offered
preventative solutions to potential maintenance problems, BAV's
proposal was clearer and more comprehensive in this area than AMSEC's.
We find reasonable this aspect of the agency's evaluation.
AMSEC also challenges the Navy's evaluation of its corporate past
experience, asserting that its proposal should have received at least
the rating received by BAV's proposal. As noted above, BAV's proposal
was assessed as highly acceptable under the corporate past experience
factor because BAV was found to offer directly relevant experience in
all SOW elements and this experience was supported by a large number
of contract citations [deleted]. AMSEC's corporate past experience
was evaluated as being on the high end of acceptable; the record
indicates that AMSEC's proposal did not receive a higher rating for
this factor because, in the Navy's view, AMSEC did not demonstrate the
level of comprehensive and recent experience that BAV had provided,
Tr. at 351, and the Navy had a number of concerns with the past
experience demonstrated in AMSEC's proposal. These concerns were that
AMSEC proposed an extremely large team of subcontractors to perform
this contract, but that many of AMSEC's proposed subcontractors were
not priced in its cost proposal; the list of AMSEC's "unpriced"
companies included some companies that were identified as significant
to AMSEC's contract performance. Tr. at 129-130. Also, AMSEC did not
provide contract references for a number of its proposed
subcontractors and the contract references that were provided were
viewed as being dated in a number of instances. Tr. at 130-135.
AMSEC disagrees with the Navy's assessment of its corporate past
experience and argues that it was unreasonable for the agency to view
the unpriced companies it proposed as less committed than companies
that were priced in its cost proposal.[11] In this respect, AMSEC
contends that it was not required to price every firm it proposed to
have available to perform task orders under the contract. Here,
contrary to AMSEC's arguments, the Navy did not disregard the unpriced
firms in assessing AMSEC's proposed technical capabilities and
experience, but considered the risk associated with an offer of
unpriced firms--AMSEC's offer of firms that were not priced in its
proposal was only one element the Navy weighed in assessing AMSEC's
experience to be at the high end of the acceptable range. We think
that the agency was reasonably concerned by AMSEC's failure to price
all its proposed team members given AMSEC's failure to explain what
arrangements it had with these firms. Because the RFP required
offerors to provide cost information for all subcontracts regardless
of dollar amount, the agency could reasonably find that these firms
were proposed not as a subcontractors to AMSEC's contract but as
potential suppliers.[12]
AMSEC also disputes the agency's evaluation of the breadth and
currency of AMSEC's identified contract references. In this regard,
AMSEC's expert witness/consultant testified that in his opinion
AMSEC's overall experience should have at least been rated equal to
that of BAV's because AMSEC offered "ship repair oriented shipyards"
with more direct experience in the building or repairing of the
classes of ships to be supported under this contract. Tr. at 1190-92.
The Navy responds, however, that the RFP required more than simply
direct ship repair experience with the specific classes of ships
identified in the RFP[13] and that, in any event, AMSEC failed to
provide contract references for a number of the companies for which it
asserted specific experience and that some of the contract references
given for specific experience with the classes of ships identified in
the RFP were dated (i.e., more than 5 years old and in one case more
than 20 years old). In contrast, the Navy evaluators found that BAV
presented contract references for all its proposed team that were more
recent and showed experience with the same or similar ship systems
presented by the classes of ships to be supported by this contract.
See, e.g., Tr. at 188-207. While AMSEC disagrees with the Navy's
judgment concerning the respective merit of the two firms' past
experience, it has not shown the Navy's judgment to be unreasonable.
AMSEC also argues that the Navy evaluated its and BAV's proposal
disparately in assessing the two firms' past experience because the
SSA stated that he was concerned that two of the large contracts AMSEC
represented as demonstrating experience with large, complex contracts
were actually performed by other corporate subsidiaries of Science
Applications International Corporation, while the Navy accepted as
relevant experience contracts that were performed by the corporate
joint venturers of BAV, even though BAV is a newly organized entity
without any past experience. The SSA, however, testified that these
matters were not significant to the SSA, see Tr. at 964, and we find
that they had little impact on the evaluation of AMSEC's overall
experience.[14]
As for the Navy's cost/technical tradeoff, AMSEC asserts that the
SSA's determination does not demonstrate that the technical merit of
BAV's proposal, vis-a-vis AMSEC's proposal, warrants the payment of a
more than $200M cost premium.[15]
In a negotiated procurement, the government is not required to make
award to the lowest-cost, technically acceptable offeror unless the
RFP specifies that cost will be determinative. General Servs. Eng'g,
Inc., B-245458, Jan. 9, 1992, 92-1 CPD para. 44. Source selection
officials have broad discretion to determine the manner and extent to
which they will make use of the technical and cost evaluation results
in negotiated procurements. Grey Advertising, Inc., 55 Comp. Gen.
1111 (1976), 76-1 CPD para. 325. In deciding between competing proposals,
cost/technical tradeoffs may be made, the propriety of which turns not
on the difference in technical scores or ratings, per se, but on
whether the source selection officials judgment concerning the
significance of that difference was reasonable and adequately
justified in light of the RFP evaluation scheme. DynCorp, B-245289.3,
July 30, 1992, 93-1 CPD para. 69. Award may be made to a higher-rated,
higher-cost offeror where the decision is consistent with the
evaluation criteria and the agency reasonably determines that the
technical superiority of the higher-priced offer outweighs the cost
difference. Sabreliner Corp., B-242023; B-242023.2, Mar. 25, 1991,
91-1 CPD para. 326.
Here, the record supports the SSA's selection of BAV's proposal for
award on the basis of BAV's evaluated technical superiority,
notwithstanding AMSEC's proposal's much lower evaluated cost. The RFP
informed offerors that technical merit was "significantly more
important than" cost/price, and BAV's proposal was reasonably judged
by the agency's evaluators and the SSA to be significantly superior to
that of AMSEC. As noted above, four significant attributes of BAV's
superior proposal were specifically identified by the agency as
outweighing AMSEC's 26-percent evaluated cost advantage: (1) BAV's
proposed training; (2) BAV's superior understanding of the
interrelationship of the SOW elements; awareness of the roles of and
coordination required for the contractor, the agency, and the FMS
customer; and systematic approach to accomplishing the SOW services;
(3) BAV's offer of "proven preventative solutions to anticipated
problem areas"; and (4) BAV's proposed material support system. In
addition, the SSA believed that instilling confidence of the FMS
customer in the Navy's ability to deliver quality ship repair,
maintenance, and life-cycle support services was crucial to enticing
FMS customers to purchase or lease decommissioned Navy ships, each of
which would sell for between $100 to $130M. Tr. at 1000, 1013.
Likewise, the SSA believed that providing a high quality contract,
which would encourage FMS customers to order services, would allow the
government to sell its spare parts inventory at market value; the
failure to sell these parts that are no longer needed by the Navy
would result in the parts being scrapped. Tr. at 1002-03.
AMSEC attacks the Navy's cost/technical tradeoff analysis on a number
of bases, none of which we find demonstrates that the agency's
judgment was unreasonable. AMSEC first asserts that some of the
superior features identified by the agency in BAV's
proposal--specifically, BAV's proposed training, material management
system, preventative solutions, and corporate past experience--are
matched in AMSEC's proposal. These allegations essentially challenge
the agency's technical evaluation, which, as noted above, we found
reasonable in its conclusion that BAV's proposal was far superior to
AMSEC's in this areas.
AMSEC next asserts that the SSA relied upon the TEC's evaluation
report in performing his cost/technical tradeoff and that this report
did not document all the TEC's findings regarding the proposals.
While the TEC report did not document all of the TEC's evaluation
findings, AMSEC's argument ignores the fact that the SSA performed an
independent review of the proposals, which validated the TEC's
adjectival evaluation ratings and, along with the TEC chair's
cost/technical tradeoff recommendation, provided the SSA with the
basis to make his source selection decision.
Finally, AMSEC asserts the SSA failed to provide sufficient weight to
cost in his cost/technical tradeoff analysis. We disagree and find
that the SSA carefully considered the respective costs of the offerors
in assessing which proposal was most advantageous to the government;
in this regard, the SSA properly recognized that technical merit was
stated by the RFP to be significantly more important than cost. While
AMSEC believes that the Navy was required to, but did not, "quantify"
the value of BAV's evaluated superiority to demonstrate that the merit
of BAV's proposal outweighed AMSEC's cost advantage, there is no
requirement that an agency quantify the value of technical superiority
vis-a-vis low cost/price to determine the best value to the
government. Picker Int'l, Inc., B-249699.3, Mar. 30, 1993, 93-1 CPD para.
275. Rather, the relative value to be assigned respectively to
technical merit and cost/price is a matter accorded to the subjective
business judgment of the source selection official, whose judgment we
will question only where that judgment is shown to be unreasonable or
not in accord with the stated evaluation criteria. Id.
In sum, we find that SSA reasonably determined that the superior
technical merit evaluated in BAV's proposal outweighed the substantial
cost advantage offered by AMSEC. In so concluding, the SSA gave
appropriate weight to cost within the evaluation scheme stated by the
RFP.
SWM and AMSEC also protest the agency's determination to make award on
the basis of initial proposals without conducting discussions. The
protesters assert that the conduct of discussions would have allowed
them to improve their technical proposals such that, considering the
firms' much lower costs, the best value outcome in this procurement
could have been different.
Where, as here, an RFP sets forth the provisions of FAR sec. 52.215-16,
Alternate III, advising offerors of the agency's intent to award
without conducting discussions, the agency may properly do so,
provided the contracting officer determines that discussions are
unnecessary. FAR sec. 15.610(a)(4); Infotec Dev., Inc., B-258198 et al.,
Dec. 27, 1994, 95-1 CPD para. 52. The discretion of the contracting
officer to determine whether or not to hold discussions is not
unfettered; we will review the exercise of that discretion to ensure
that it was reasonably based on the particular circumstances of the
procurement, including consideration of the proposals received and the
basis for the selection decision. See Facilities Management Co.,
Inc., B-259731.2, May 23, 1995, 95-1 CPD para. 274; The Jonathan Corp.;
Metro Mach. Corp., B-251698.3; B-251698.4, May 17, 1993, 93-2 CPD para.
174.
Here, the Navy reasonably determined that BAV's proposal contained no
deficiencies and was clearly technically superior to SWM's and
AMSEC's, and that this superiority clearly outweighed SWM's and
AMSEC's cost advantage. Furthermore, the record supports the SSA's
conclusion that while SWM and AMSEC could improve their proposals to
some extent there was no reasonable possibility that either protester
could improve its proposal to the level of BAV's proposal, given BAV's
innovative approach which the SSA properly determined should not be
disclosed to the protesters through discussions. Thus, the agency
reasonably had no doubt as to which offer represented the best value
to the government. Under these circumstances, the Navy could properly
make award to BAV on the basis of initial proposals. Compare
Information Spectrum, Inc., B-256609.3; B-256609.5, Sept. 1, 1994,
94-2 CPD para. 251 (discussions were not necessary where the agency
reasonably could determine which offer represented the best value to
the government) with The Jonathan Corp.; Metro Mach. Corp., supra
(discussions were necessary where the agency could not reasonably
determine which proposal represented the best value to the government,
given the significant discrepancy between the agency's cost realism
estimate and the cost proposals received and the closeness of the
competition); see also TRW, Inc., B-254045.2, Jan. 10, 1994, 94-1 CPD para.
18.
The protests are denied.[16]
Comptroller General
of the United States
1."M" equals a million.
2. During some part of the evaluation process, evaluators also used a
numerical evaluation scheme. This rating scheme was not used in the
TEC's consensus report and was not provided to the source selection
authority (SSA) as a part of the TEC's final evaluation report.
3. A hearing was held in this protest pursuant to 4 C.F.R. sec. 21.5
(1995) to receive testimony from a number of the Navy's evaluators,
the TEC chair, the SSA, and consultant/expert witnesses for AMSEC and
BAV, regarding the evaluation of technical proposals, source selection
decision, and decision to make award on initial proposals without
conducting discussions.
4. Individual evaluators changed their views throughout this process.
The evaluators had different areas of expertise, and evaluators would
change their views after the group discussions where an evaluator
became convinced that initial perceived strengths or weaknesses were
not valid. Tr. at 35-36; 428-430; 489-490.
5."HA" refers to highly acceptable, which the source selection plan
defines as a highly responsive proposal that meets and exceeds the
desired performance and the excess is beneficial to the Navy; "A"
refers to acceptable, which was defined as a responsive proposal that
demonstrates an understanding of, and satisfies, the Navy's
requirements. Proposals could also be evaluated as unacceptable but
capable of being made acceptable and unacceptable but not capable of
correction without a major proposal revision.
6. The SSA testified that the Navy competes with other countries (for
example, England, Germany, and the Netherlands) to sell decommissioned
ships. Tr. at 1126.
7. Given the lengthy and iterative evaluation process that entailed
the review of each proposal in total by each evaluator, the numerous
committee discussions, and the rescoring of proposals by the
evaluators, and given the passage of 6 months since these evaluations
were performed, the evaluators' lack of total recall of all details of
their evolving evaluation of proposals, and the minor inconsistencies
in their testimony, are understandable, particularly since some
individual evaluators' notes and ratings, and the preliminary
consensus reports were destroyed.
8. SWM provides numerous other examples where the agency mentioned
BAV's specific experience in evaluating BAV's proposal under the
sample tasks and specific technical capability subfactors. We find
that in each instance the Navy was properly assessing BAV'S
capabilities as provided for by the RFP.
9. Both protesters challenge the TEC evaluation report as representing
a "coerced" consensus that they imply does not reflect the views of
the individual evaluators. As AMSEC acknowledges, a consensus
approach to evaluating proposals is not unreasonable. Moreover, the
record shows that all the evaluators agreed with the consensus opinion
expressed in the TEC report.
10. Spare parts management and acquisition was seen as one of the more
important and difficult aspects of the contract work. Tr. at 173,
1004. As one evaluator noted "if you don't have parts, you can't fix
things and if you can't fix them, they don't work." Tr. at 84.
11.{Deleted].
12. AMSEC also complains that the Navy's judgment concerning the
unpriced companies in AMSEC's proposal is based upon erroneous
information because two firms that the Navy identified as unpriced
were actually priced in AMSEC's cost proposal. We find that this
error does not vitiate the Navy's reasonable concerns regarding
AMSEC's failure to explain its arrangements with the more than
[deleted] firms that were offered in its technical proposal but not
priced in its cost proposal, especially since some of the unpriced
firms were presented as performing significant roles in AMSEC's
performance.
13. AMSEC and SWM both argue that the RFP indicated that most of the
services to be performed under the contract involved shipyard repair,
and therefore this element of the SOW should have been considered as
more important than other SOW elements in the agency's evaluation of
proposals. As the Navy and BAV point out, however, the RFP did not
state that any element of the SOW was more important than any other;
rather, the RFP required offerors to demonstrate how they would
satisfy all the SOW requirements.
14. There is no citation to these concerns in the TEC report,
cost/technical tradeoff analysis, or source selection decision
documents.
15. SWM did not specifically protest the SSA's cost/technical
tradeoff. In any event, given our decision that the agency reasonably
found that the technical superiority of BAV's proposal outweighed
AMSEC's cost advantage, SWM would have no basis to challenge the
advantageousness of BAV's proposal vis-a-vis SWM's proposal which was
found to be technically equivalent to, but with a higher cost than,
AMSEC's.
16. SWM also protests that BAV has an organizational conflict of
interest because of an ongoing contract VSE has with the Navy's
security assistance program office, PMS-380. However, SWM did not
identify which contract formed the basis for this complaint, and the
record shows that VSE had no ongoing contracts with PMS-380.