BNUMBER:  B-270126
DATE:  February 8, 1996
TITLE:  McDonald-Bradley

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Matter of:McDonald-Bradley

File:     B-270126

Date:     February 8, 1996

Keith L. Baker, Esq., and Jeffrey Weinstein, Esq., Eckert, Seamans, 
Cherin & Mellott, for the protester.
Michael D. Zeiders, for Zeiders Enterprises, Inc., and Steven 
Sarfatti, Esq., Schwalb, Donnenfeld, Bray & Silbert, P.C., for 
Technical Assistance and Training Corp., the intervenors.
Herman Narcho, Esq., Department of Labor, for the agency.
Mary G. Curcio, Esq., and John M. Melody, Esq., Office of the General 
Counsel, GAO, participated in the preparation of the decision. 

DIGEST

1.  Contracting agency may award contract to offeror whose proposal 
indicated that its price was based on wage rates below Service 
Contract Act wage determination levels where the proposal does not 
take exception to solicitation requirement that employees be paid in 
accordance with the Act.

2.  Protest that agency misled protester during discussions is denied 
where protester has not demonstrated a reasonable possibility that it 
was prejudiced.

DECISION

McDonald-Bradley protests the award of contracts to Technical 
Assistance and Training Corporation (TATC) and Zeiders Enterprises, 
Inc. under request for proposals (RFP) No. 95-32, issued by the 
Department of Labor (DOL) for management services, curriculum 
development, training, and automated management system development.  
McDonald asserts that the awardees' proposals improperly were based on 
wage rates below those required and that the agency conducted 
misleading discussions.

We deny the protest.

The RFP contemplated the award of a time-and-materials, labor hour 
contract for a base year with three 1-year options.  The RFP listed 
the categories of personnel that would be required under the contract, 
and estimated a minimum and maximum number of hours that each labor 
category would be required to perform.  The price evaluation was to be 
based on the maximum number of hours estimated for each labor 
category.  Offerors were to propose hourly rates for each class of 
employee.  With the exception of certain costs such as travel, which 
were to be reimbursed separately, the proposed hourly rates were to 
include all costs and profit.  Offerors were also required to support 
their labor rates with detailed breakdowns that included indirect and 
direct labor costs and profit.  The solicitation incorporated 
provisions implementing the Service Contract Act of 1965 (SCA), 
requiring the contractor to pay covered employees in accordance with a 
wage determination that was included in the solicitation.  The 
solicitation indicated which classes of employees were covered by the 
SCA, and by which wage determination category they would be covered.  
Up to three contracts were to be awarded to offerors submitting the 
proposals most advantageous to the government, based on cost and 
technical factors.

Seven offerors responded to the solicitation.  After evaluating the 
initial proposals, holding two rounds of discussions, and requesting, 
receiving and evaluating two rounds of best and final offers (BAFO), 
the agency awarded contracts to Zeiders and TATC, the offerors with 
the highest technical scores and the lowest prices.  This protest 
followed.  

McDonald maintains that the awards were improper because Zeiders's and 
TATC's proposals indicated that they intended to pay wages lower than 
the minimums specified in the wage determination for the database 
administrator (DBA) technician and the applications programmer 
analyst.  

This argument is without merit.  A contracting agency properly may 
award a contract to an offeror whose proposal indicates that its price 
is based on hourly rates below the SCA wage rates so long as the 
offeror does not take exception to the terms of the solicitation, such 
that it will be obligated under the contract to pay the applicable SCA 
wage rates to employees.  See PRC/VSE Assocs. Joint Venture, B-240160 
et al., Oct. 30, 1990, 90-2 CPD  para.  348; NKF Eng'g, Inc.; Stanley 
Assocs., B-232143; B-232143.2, Nov. 21, 1988, 88-2 CPD  para.  497.  There 
is nothing in TATC's or Zeiders's proposals that takes exception to 
the SCA requirements.  Zeiders's proposal did state that the two 
employees in question were professional employees that it believed 
were exempt from the SCA, but the agency had specifically advised all 
offerors during discussions to provide such an explanation if proposed 
personnel were believed to be exempt from the SCA.  Thus, Zeiders's 
statement was not an exception to SCA requirements--the statement did 
not indicate that Zeiders would not pay wages as required by the SCA 
if the DOL ultimately disagreed with Zeiders.[1]  Rather, the 
statement was an explanation, as requested by the agency, as to why 
the lower wages for the two employees were not inconsistent with SCA 
requirements.  Thus, the awardees' proposals could not be considered 
unacceptable by virtue of their low labor hour rates.
 
McDonald argues that, at a minimum, the agency misled the firm during 
discussions into believing that its proposed wages had to be 
consistent with SCA wages, and that it was prejudiced because it 
actually raised its rates for the DBA analyst and applications 
programmer analyst categories in response to the discussions.

Even if the agency did mislead McDonald during discussions, our Office 
will not sustain a protest unless the protester demonstrates a 
reasonable possibility that it was prejudiced by the agency's actions, 
that is, unless the protester demonstrates that, but for the agency's 
actions, it would have had a substantial chance of receiving the 
award.  Marwais Steel Co., B-254242.2; B-254242.3, May 3, 1994, 94-1 
CPD  para.  291.   

McDonald has not met this burden.  The difference in cost between 
McDonald's ($3,521,771) and TATC's ($3,053,167) proposals was 
$468,604, and between McDonald's and Zeiders's ($3,340,632) proposals, 
$181,139.  Our calculations show that the difference between 
McDonald's rates for the two labor categories in its initial proposal 
(which were below the SCA rates) and its second BAFO (which were at 
SCA levels) represents only $20,705.  There is no reason to believe, 
and McDonald does not state, that it would have lowered its wages for 
these labor categories further in its BAFO had the discussions not 
been what they were.  Since even with this adjustment to McDonald's 
price TATC's and Zeiders's prices would have remained low by a 
substantial amount, there is no basis for concluding that McDonald may 
have been prejudiced by any misleading discussions.[2]

The protest is denied.

Comptroller General 
of the United States

1. Whether TATC and Zeiders ultimately perform in compliance with the 
SCA is a matter for consideration by the DOL, the agency charged with 
responsibility for enforcing and administering this contract and the 
SCA.  NKF Eng'g, Inc.; Stanley Assocs., supra.

2. McDonald also argues that it was misled during discussions because 
Zeiders, but not McDonald, was told to use 0 percent as the overhead 
rate for its project manager.  McDonald argues that had it been given 
this advice it would have lowered the overhead rate for its project 
manager.  There is no indication, however, that this advice was 
generic, rather than tailored to Zeiders's proposal.  In any case, 
here too the price impact of this reduction would not have changed the 
outcome.