BNUMBER:  B-270092; B-270092.2
DATE:  February 8, 1996
TITLE:  Nova Research Company

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Matter of:Nova Research Company

File:     B-270092; B-270092.2

Date:     February 8, 1996

Thomas L. McGovern III, Esq., and Timothy L. Schroer, Esq., Hogan & 
Hartson L.L.P., for the protester.
Douglas L. Patin, Esq., Spriggs & Hollingsworth, for The CDM Group, 
Inc., an intervenor.
Mike Colvin, Department of Health and Human Services, for the agency.
Christine F. Davis, Esq., and Guy R. Pietrovito, Esq., Office of the 
General Counsel, GAO, participated in the preparation of the decision.

DIGEST

Agency did not conduct misleading discussions, where the protester 
unreasonably interpreted agency's remarks in a manner that was 
inconsistent with the solicitation requirements and reflected a 
fundamental misunderstanding of those requirements.

DECISION

Nova Research Co. protests the rejection of its proposal and the award 
of a contract to The CDM Group, Inc., under request for proposals 
(RFP) No. CSAT-95-0013, issued by the Department of Health and Human 
Services (HHS), Center for Substance Abuse Treatment (CSAT), for the 
development of substance abuse treatment protocols.  Nova contends, 
among other things, that CSAT misled it during discussions, causing 
Nova to introduce a material deficiency into its otherwise acceptable 
proposal.

We deny the protest.

The RFP contemplated the award of a 4-year, cost reimbursement 
contract.  The primary purpose of the contract is the development of 
Treatment Improvement Protocols (TIP), which are clinical and 
management guidelines for the treatment of substance abuse.  The TIP 
guidelines are developed with the assistance of clinical, 
administrative, and research experts assembled by the contractor.  The 
TIPs are ultimately used by various state agencies to improve their 
substance abuse treatment services.  Individual TIPs under the 
predecessor contract ranged in length from 75 to 275 pages and covered 
topics such as "Pregnant Substance-Abusing Women" and "State Methadone 
Treatment Guidelines."  

The statement of work (SOW) divided the contract effort into 18 tasks.  
Task Nos. 3 through 9 related to the primary contract objective of 
developing the TIPs.  The contractor begins the TIP process by 
assembling an Advisory Committee of experts, who generate TIP topics.  
The RFP provided that the CSAT Government Project Officer (GPO) would 
approve approximately four TIP topics per year.  For each of the four 
approved topics, the contractor writes a brief prospectus of the 
proposed TIP and then convenes a Resource Panel composed of federal 
agency representatives, who critique the prospectus and nominate 
experts for the consensus panel.

Under Task No. 7, the contractor convenes a consensus panel, composed 
of roughly 15 experts who meet for up to 5 days, "[f]or each of the 
approximately four (4) TIP topics per year."  The consensus panel 
develops the TIP guidelines and drafts chapters or sections for use in 
the TIP document.  Under Task No. 8, the contractor must "[p]roduce 
TIP for publication by the Government Printing Office."  The RFP 
forecast that publication of the TIP would take at least 5 months 
after the consensus panel adjourned, considering the time needed to 
complete the writing and editorial work to produce a draft TIP 
document, to circulate the draft document among "field reviewers" and 
Panel members for review and revision, to gain content-clearance from 
CSAT, and to prepare a camera-ready copy for publication.  After the 
TIP is published, Task No. 9 contains a requirement for evaluating its 
usefulness.

The RFP established a best value evaluation scheme, in which technical 
quality was of "paramount" importance.  The RFP established five 
technical evaluation criteria and corresponding point-scores, as 
follows:  (1) Understanding the Problem -- 25 points; (2) Technical 
Approach -- 25 points; (3) Management Plan -- 20 points; (4) Key 
Personnel -- 25 points; and (5) Facilities -- 5 points.

The agency received six initial proposals by the May 15 receipt date, 
including Nova's and CDM's.  Nova's low-cost proposal ($3.74 million) 
received the fourth-best technical score (87 points), while CDM's next 
low-cost proposal ($3.99 million) received the second best technical 
score (92.8 points).  CSAT included Nova's, CDM's, and three other 
proposals in the competitive range.

Nova, along with other offerors, proposed a constant level of effort 
over the 4 contract years.  In its pre-negotiation memorandum, the 
agency questioned the validity of this approach because the new 
contractor would not assume any unfinished TIPs from the prior 
contractor and "there will unlikely be documents completed for 
publication in the first twelve months" of the new contract.  On 
August 9, the GPO and contract specialist held oral discussions with 
Nova and raised the concern noted in the pre-negotiation memorandum.  
Nova's contemporaneous notes attribute the following remarks to the 
GPO:  "Not inheriting any work from past contractor and no TIPs in 
Year 1."  Nova's discussion notes also reflect that it was informed 
that its editorial and writing staff was "not needed as much in Year 
1."  The agency has no contemporaneous notes of the oral discussions 
with Nova or any other offeror.

Nova submitted its best and final offer (BAFO) on August 18.  Nova's 
BAFO reflected an assumption that "there will be no TIPs produced in 
Year 1 and, therefore, no Consensus Panel Meetings held in Year 1."  
Based upon this assumption, Nova eliminated the four consensus panel 
meetings in the first contract year.  Nova's initial proposal, which 
introduced the consensus panels in the first year, offered 16 
consensus panels over the life of the contract; Nova's BAFO, which 
introduced the consensus panels in the second year, offered twelve 
consensus panels over the life of the contract.  Nova's BAFO also 
reduced or eliminated various contractor support services associated 
with the consensus panels in the first year, resulting in a 37-percent 
reduction in its first-year direct labor costs.  Overall, NOVA's BAFO 
cost was $2.99 million, which was 20 percent less than its initial 
proposal cost and 23 percent less than CDM's next low BAFO cost of 
$3.9 million.

On September 12, CSAT found Nova's BAFO technically unacceptable 
because the deletion of the consensus panels in the first contract 
year constituted "a material deviation from . . . Task 7 of the 
solicitation."  In the agency's view, the deletion of this "important 
task integral to this project" rendered Nova's technical proposal 
unacceptable and its costs unrealistically low.  The agency decided it 
was not required to reopen discussions to allow Nova to correct the 
deficiency introduced into its BAFO.  In particular, the agency found 
that the GPO's advice during oral discussions was not misleading, but 
was misinterpreted by Nova as unreasonable.  CSAT denied telling Nova 
that "no TIPs would be produced or that no TIPs topics would be 
introduced" to the consensus panels in the first year, as Nova 
mistakenly assumed in its BAFO.  The agency maintained that it alerted 
Nova to the improbability that any TIPs would be "published" during 
the first year.  CSAT noted that other offerors had received the same 
advice as Nova, but only Nova misinterpreted the advice.

Nova protests that it would not have eliminated the first year 
consensus panels absent CSAT's assertedly misleading discussions.  
Nova claims, relying upon its contemporaneous notes, that the GPO said 
there would be "no TIPs in Year 1" and argues that it reasonably 
interpreted this remark to mean that "there will be no TIPs produced 
in Year 1 and, therefore, no consensus panel Meetings held in Year 1."  
Nova denies it was informed by the GPO that there would be no TIPs 
"published" in the first year, although Nova contends that even this 
advice might have misled a reasonable offeror to delete the consensus 
panels.

We find that, whether the GPO advised the protester that there will be 
"no TIPs in Year 1" or "no TIPs published in Year 1," Nova could not 
reasonably interpret this advice to mean that it could eliminate the 
consensus panels in the first year.  In our view, the protester's 
interpretation of the GPO's remarks reflects a fundamental 
misunderstanding of the solicitation requirements. 

Task No. 7 of the SOW expressly stated, "[f]or each of approximately 
four (4) TIP topics per year, contractor will convene a [Consensus] 
panel."  Nova argues, however, that the GPO's remark that there would 
be no TIPs in the first year logically means that there would be no 
consensus panels in the first year, since, in Nova's view, the 
consensus panels "actually will write the draft TIP" and "are convened 
only in the very latest stages of producing a TIP."  This misstates 
the TIP process and the role of the consensus panels within it.  The 
RFP delivery schedule estimates that the consensus panels would be 
convened during the final quarter of the first year and that 
publication of the TIP would take at least 5 months after a consensus 
panel adjourns.  During this time, pursuant to Task No. 8 of the SOW, 
the contractor's staff "produce[s] a draft copy of the TIP," 
circulates it among field reviewers and Panel members for review and 
revision, gains content-clearance from CSAT, and prepares a 
camera-ready copy.  The RFP delivery schedule estimates that the 
contractor would publish the TIPs during the first quarter of the 
second year.  However, to remain on schedule, the contractor must 
convene the consensus panels in the first year.  The protester's 
stated belief that the consensus panels are convened in the very 
latest stage of producing a TIP is belied not only by the SOW and the 
RFP delivery schedule, but also by Nova's initial proposal, which 
provides that Nova will spend two months after a consensus panel 
adjourns developing a draft TIP document.

Even accepting the protester's recollection of discussions, the 
statement--"no TIPs in Year 1"--does not address or affect the 
consensus panel requirements contained in Task No. 7, requiring the 
contractor to convene a consensus panel for each of approximately four 
TIP topics per year.  On the contrary, the GPO's alleged 
statement--"no TIPs in Year 1"--rationally relates to the requirements 
contained in Task No. 8, which requires the contractor to "produce 
[the] TIP for publication."  Had the protester properly understood the 
RFP requirements, it could not have interpreted the GPO's remarks in 
the manner which it did.[1]  

We also do not agree with Nova that the RFP, by stating "approximately 
four" consensus panels would be convened per year, authorized the 
contractor to propose no consensus panels in a given year.  Although 
the RFP contemplates that the contractor might convene more or less 
than four annual consensus panels depending upon the agency's needs 
and the contractor's performance, a proposal like Nova's, which 
eliminates the work necessary to meet anticipated annual requirements, 
is patently inconsistent with the RFP requirements.  We note that the 
RFP's estimated requirements are for 16 consensus panels and thus 16 
TIPs over the life of the contract.  Nova's BAFO, by eliminating the 
first-year consensus panels, provides for only 12 TIPs over the life 
of the contract.

Discussions, when they are conducted, must be meaningful and must not 
prejudicially mislead offerors.  See Federal Acquisition Regulation  sec.  
15.610(c); Aydin Vector Div., B-243430, July 22, 1991,  91-2 CPD  para.  79.  
In this case, we find that the oral discussions were not misleading, 
but that the protester's interpretation of the agency's remarks 
stemmed from its own misunderstanding of the solicitation 
requirements.  See Peckham Vocational Indus., Inc., B-257100, Aug. 26, 
1994, 94-2 CPD  para.  81; 12th & L Sts. Ltd. Partnership, B-247941.3, Oct. 
9, 1992, 92-2 CPD  para.  233.

Nova's elimination of the first year consensus panels, which was a 
significant RFP requirement, provided a proper basis for deeming 
Nova's BAFO technically unacceptable.[2]  See Armament Eng'g Co., 
B-230204, May 27, 1988, 88-1 CPD  para.  505.  Because Nova introduced the 
deficiency into its BAFO, the agency was not obligated to reopen 
discussions to allow Nova to cure it.  See id.; ABB Power Co. T & D, 
Inc., B-246249, Feb. 6, 1992, 92-1 CPD  para.  157.  Although the protester 
argues that the agency should have reopened discussions when it 
realized that Nova's understanding of the consensus panel requirements 
differed from the other offerors', there is no evidence that CSAT 
treated offerors unequally during discussions.  Rather, the record 
shows that Nova uniquely misinterpreted the agency's advice.

The protester raises numerous other challenges to the agency's 
evaluation and selection decision.  Because we find that Nova's 
proposal was properly rejected as technically unacceptable, there is 
no need for our Office to resolve these remaining issues.  See PRI, 
Inc., B-210714, Mar. 26, 1984,  84-1 CPD  para.  345.

The protest is denied.

Comptroller General
of the United States

1. Nova claims that it asked the GPO during the oral discussions to 
elaborate what she meant by the statement--"no TIPs in Year 1"--but 
the GPO declined to do so.  Although we find that Nova should not 
reasonably have been misled by the GPO's statement, we think the 
agency should have explained its statement in response to Nova's 
requested clarification.  Although discussions need not be 
all-encompassing to be meaningful, they should be as specific as 
practical considerations will permit.  SRS Technologies, B-254425.2, 
Sept. 14, 1994, 94-2 CPD  para.  125; Son's Quality Food Co., B-244528.2, 
Nov. 4, 1991, 91-2 CDP  para.  424.

2. Nova claims that, instead of finding its proposal technically 
unacceptable, the agency should have added back the costs of the first 
year consensus panels in evaluating Nova's probable cost.  This 
argument is without merit.  Nova did not propose to convene the first 
year consensus panels, and the government could not obligate it to do 
so simply by making probable cost adjustments to its proposal.  See 
Crown Logistics Servs., B-253740, Oct. 19, 1993, 93-2 CPD  para.  228.