BNUMBER: B-270793; B-270793.2
DATE: April 24, 1996
TITLE: Vinnell Corporation
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DOCUMENT FOR PUBLIC RELEASE
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:Vinnell Corporation
File: B-270793; B-270793.2
Date:April 24, 1996
Marcus B. Slater, Esq., Jennifer J. Zeien, Esq., and Lisa G.
Henneberry, Fort & Schlefer, for the protester.
Thomas J. Madden, Esq., John J. Pavlick, Jr., Esq., Jerome S. Gabig,
Esq., and Carla D. Craft., Esq., Venable, Baetjer, Howard and
Civiletti, for Serv-Air, Inc., the intervenor.
Clarence D. Long III, Esq., and Scott W. Singer, Esq., Department of
the Air Force, for the agency.
John L. Formica, Esq., Office of the General Counsel, GAO,
participated in the preparation of the decision.
DIGEST
1. Agency's assessment of an offeror's proposal as entailing
"moderate" proposal risk under a single evaluation factor does not
mandate an upward adjustment of the offeror's proposed costs where the
record reflects that the agency reasonably considered the aspect of
the offeror's proposal which it assessed as entailing "moderate" risk
and determined that no cost adjustment was warranted.
2. New and independent grounds of protest concerning specific aspects
of the agency's cost realism analysis and proposal risk assessment are
untimely where the protester knew, or should have known, of these
protest bases upon its receipt of the agency report, but first raised
these bases of protest in a supplemental protest and in its comments
on the agency report filed more than 14 days after the protester's
receipt of the agency report.
DECISION
Vinnell Corporation protests the award of a contract to Serv-Air, Inc.
under request for proposals (RFP) No. F04689-95-R-0015, issued by the
Department of the Air Force, for military housing maintenance and
civil engineering services.
We deny the protests in part and dismiss them in part.
The RFP, issued on May 5, 1995, provided for the award of a
cost-plus-award-fee contract, with certain fixed-price elements, for a
base period of 1 year with four 1-year options. The successful
contractor will provide military housing maintenance and repair
services for 806 dwellings, and all labor (including professional
engineering and architectural services), equipment, materials, and
supplies to support other facilities, and the equipment installed on
those facilities, at the Onizuka Air Station and certain other Air
Force facilities in Sunnyvale, Pleasanton, and Mountain View,
California.
The RFP requested that each offeror submit a management/technical and
a cost proposal, and provided detailed instructions for their
preparation. The solicitation stated that award would be made to the
responsible offeror whose offer, conforming to the solicitation,
represented the best value to the government; that the evaluation
areas to be considered were, in descending order of importance,
management, technical, and cost; and that cost was significantly less
important than management and technical. The solicitation listed the
following management and technical evaluation criteria and factors:
A. Management Criterion
Factor 1: Key Personnel
Factor 2: Program Management
B. Technical Criterion
Factor 1: Operations and Maintenance
Factor 2: Environmental
Factor 3: Military Family Housing
Factor 4: Scenario
Factor 5: Resource Management
Factor 6: Engineering and Planning
The solicitation informed offerors that factors 1 and 2 within the
management criterion were equal in importance, and that, under the
technical criterion, factors 1, 2, and 3 were equal in importance,
with factors 4 and 5 being less important than factors 1, 2, or 3, and
factor 6 being the least important. The RFP advised offerors that
their proposals would be evaluated for proposal risk, which would
involve the assessment of whether the proposed methods of
accomplishing the requirements of the contract were, for example,
risky, standard, or practical. Offerors were also informed that their
proposals would be evaluated for performance risk, which would involve
the assessment of the agency's confidence in each offeror's ability to
successfully perform as proposed based upon, among other things, the
offeror's work record and experience. The solicitation informed
offerors that their cost proposals would be evaluated for realism,
completeness, and reasonableness.
The agency received five proposals, including Vinnell's (the incumbent
contractor) and Serv-Air's, by the RFP's closing date of July 7, 1995.
In accordance with the applicable source selection plan, the
management/technical proposals were evaluated for performance and
proposal risk,[1] as well as under a color/adjectival rating
scheme,[2] for each of the listed management and technical evaluation
factors. The proposals of Vinnell, Serv-Air, and another offeror were
included in the competitive range. Written and oral discussions were
conducted, during which offerors were permitted to, among other
things, comment on any concerns raised by the Defense Contract Audit
Agency (DCAA) regarding the offerors' proposed direct and indirect
cost rates. Best and final offers (BAFO) were requested, received,
and evaluated.
Vinnell's BAFO received a rating of "blue" under the key personnel
factor of management and ratings of "green" under the other management
factor and under each of the technical factors. Vinnell's proposal
was also rated as having "low" proposal and performance risk under
each of the technical and management factors. The agency determined,
based upon its comparison of Vinnell's proposal with the agency's
independent government estimate, and review of Vinnell's proposed
direct and indirect rates, person-years of effort, labor mix, and
other direct rates and costs, that Vinnell's cost proposal was
realistic, complete, and reasonable, and made no adjustments to
Vinnell's proposed cost of $49,295,711.
Serv-Air's proposal received a rating of "green" under each of the
evaluation factors, and was rated as having "moderate" proposal risk
under the program management factor and "low" proposal risk under each
of the other technical and management factors. Serv-Air's proposal
was rated as having "low" performance risk under all factors. The
agency, through the same methods it had used in evaluating Vinnell's
proposal, determined that Serv-Air's cost proposal was realistic,
complete, and reasonable, and made no adjustments to Serv-Air's
proposed cost of $46,361,820.
The cognizant source selection official determined that Serv-Air's
proposal represented the best overall value to the government under
the evaluation criteria and factors set forth in the solicitation, and
award was made to Serv-Air on December 18.
After being informed that Serv-Air had received the award and being
debriefed by the agency, Vinnell filed a protest with our Office,
specifically asserting that the agency improperly "failed to conduct
any cost realism analysis or other cost analyses" of the offerors'
proposals, and that because of this "Serv-Air's management proposal
was improperly evaluated." Specifically, Vinnell pointed out that
Serv-Air's proposal provides for the use of its "Capella" computer
system to automate certain administrative functions and to justify
"fewer personnel than would be required absent utilization of such a
program." Vinnell notes that although the agency evaluated Serv-Air's
proposal as having "moderate" risk under the program management factor
because of its concerns with "Capella" and Serv-Air's attendant
staffing level, it made no adjustment to Serv-Air's proposed costs.
The protester argues that the agency's failure to make any upward cost
adjustment here was unreasonable.
When an agency evaluates a proposal for the award of a cost
reimbursement contract, an offeror's proposed estimated costs are not
dispositive because, regardless of the costs proposed, the government
is bound to pay the contractor its actual and allowable costs.
Federal Acquisition Regulation sec. 15.605(c). Consequently, a cost
realism analysis must be performed by the agency to determine the
extent to which an offeror's proposed costs represents what the
contract should cost, assuming reasonable economy and efficiency.
McDonnell Douglas Corp., B-259694.2; B-259694.3, June 16, 1995, 95-2
CPD para. 51. Because the contracting agency is in the best position to
make this cost realism determination, our review of an agency's
judgment in this area is limited to determining whether the agency's
cost evaluation was reasonably based and not arbitrary. Infotec Dev.,
Inc., B-258198 et al., Dec. 27, 1994, 95-1 para. 52.
First, we note that the agency, in response to Vinnell's initial
argument that the agency failed to perform any cost realism analysis,
described and documented its analysis in its report responsive to the
protest. The only specific aspect of the cost analysis that Vinnell
protested (in its initial protest) involves its contention that
Serv-Air's probable costs should have been increased to account for
the evaluated moderate risk under the program management factor
relating to Serv-Air's use of the Capella computer system.[3]
The record shows that Serv-Air proposed the use of its "Capella"
computer system as part of its management and technical approach.
According to Serv-Air, Capella "'automates' 20 major functional
support areas," such as purchasing, planning and estimating, and job
cost accounting. Essentially, all of the information needed for the
management of the contract by Serv-Air will be maintained on Capella.
For example, as described by Serv-Air, the administrative work, such
as preparing work-orders, planning the work to be accomplished,
checking to see if the required materials are available, establishing
work schedules, managing inventory levels, and estimating and tracking
associated costs, are performed on-line. Serv-Air maintains that
because Capella automates the necessary administrative processes, it
can perform the administrative tasks quicker and more efficiently than
they have been performed historically. Serv-Air adds that because,
for example, the work schedules and inventory levels are continually
accessed and updated by the personnel administering the contract, the
information maintained on Capella remains current, which further
enhances Serv-Air's ability to efficiently schedule and perform the
work required.
The agency found in its evaluation of Serv-Air's management/technical
proposal that, as described by Serv-Air, Capella will provide
"critical information for decision-making and management of the
contract at all levels of [Serv-Air's] organization," and would
"benefit . . . the Government because it should reduce time in
contract management and save cost in manning reductions." However,
the agency confirmed during discussions that Serv-Air had not used,
and was not using, Capella in the performance of any contracts, and
that although Serv-Air's proposed key personnel "have over 230 years
of related experience and proven similar experience," they apparently
did not have experience with Capella or training as to its operation.
The agency concluded here that Serv-Air's proposed management
approach, which relied heavily on the successful implementation of
Capella, could "potentially cause some disruption of schedule,
increase in cost, or degradation of performance" because, among other
things, Serv-Air's proposed time savings and manning reductions may
not be realized. The agency thus assessed Serv-Air's proposal as
having "moderate" proposal risk under the program management factor.
As mentioned previously, the agency did not make any upward
adjustments to Serv-Air's proposed costs because of this risk
assessment.
The protester contends that since the agency assessed Serv-Air's
management proposal as having "moderate" risk because of its concerns
with Capella, the agency was also required to adjust Serv-Air's
proposed costs upwards. In support of this contention, the protester
points to a statement appearing in the source selection advisory
council (SSAC) report that should problems occur with Capella,
"work-arounds may include using standard methods and/or hiring
additional staff," and to a statement made by the source selection
authority (SSA) in his source selection decision that the risk
associated with Serv-Air's management approach associated with its
proposed use of Capella "is minimized by the availability of existing
management systems and/or additional personnel." The protester
concludes that because the agency recognized that Serv-Air's Capella
system entailed "moderate" risk, and that a possible remedy should the
system not work as planned would be to add personnel, the agency acted
unreasonably in not adjusting Serv-Air's proposed costs upwards to
account for the costs associated with adding these personnel.
We find nothing unreasonable with the agency's determination not to
upwardly adjust Serv-Air's proposed costs because of the agency's
concerns with Serv-Air's use of Capella. The agency considered the
administrative efficiencies offered by Capella and their impact on the
labor hours required for successful performance of the contract, and
weighed these considerations against Serv-Air's lack of experience
with the system. Although the agency concluded that there was
"moderate" risk associated with Serv-Air's use of Capella, there is
nothing in the record indicating that the agency believed, or should
have believed, that it was more likely than not that Serv-Air would
not perform at its proposed costs. In this regard, a government cost
realism determination is no more than an informed judgment of what
costs should be reasonably incurred by acceptance of a particular
proposal. See CACI, Inc.--Fed., 64 Comp. Gen. 71 (1984), 84-2 CPD para.
542.
The fact that there is some risk associated with an aspect of a
proposal does not mean that an agency cannot regard the costs of
performance, as proposed, as realistic, inasmuch as risk is simply a
reflection of the degree to which what is proposed may or may not
happen. Specifically, a proposal that is assessed as having moderate
risk is one that, according to the agency's source selection plan,
"[c]an potentially cause some disruption of schedule, increase in
cost, or degradation of performance. However, special contractor
emphasis and close government monitoring will probably be able to
overcome difficulties." That being so, we see no reason why an agency
should be required, in performing a cost realism analysis, to adjust
costs to reflect what may not happen in circumstances where the agency
believes that what is proposed is most likely to happen.
Vinnell argues in a supplemental protest, filed with our Office on
February 9, that the agency unreasonably evaluated Serv-Air's
proposal under the technical factors as having "low" rather than
"moderate" proposal risk, basically contending that since Capella was
a prominent aspect of Serv-Air's technical approach, the evaluated
risks associated with its use should have also been considered in
evaluating proposal risk under the technical factors. In this
protest, Vinnell also argues that the agency improperly failed to
account for the effect of Serv-Air's acquisition by the Raytheon
Company during the pendency of this procurement in its evaluation of
various aspects of Serv-Air's proposal. In its comments on the agency
report, filed with our Office on February 12, the protester again
raises these two supplemental arguments, and also asserts that the
agency's cost realism analysis is flawed because the agency failed to
upwardly adjust Serv-Air's proposed costs to account for what Vinnell
characterizes as the agency's acknowledgment of "a significant
shortfall in Serv-Air's manning, independent of its evaluation of
Capella."
Our Bid Protest Regulations require that protests not based upon
solicitation improprieties be filed not later than 14 calendar days
after the basis of protest is known, or should have been known,
whichever is earlier. Bid Protest Regulations, 4 C.F.R. sec. 21.2(a)(2)
(1996). The protest bases set forth in Vinnell's supplemental protest
and comments are based upon information contained in the agency report
on the protest, which was received by Vinnell on January 26; Vinnell's
supplemental protest and comments on the agency report were filed,
respectively, 15 and 18 days after Vinnell's receipt of the agency
report. Thus, we consider these supplemental protest grounds untimely
filed.
Vinnell nevertheless contends that the arguments raised in its
supplemental protests and comments on the agency report are
"inextricably intertwined" or "embodied" in its initial protest to our
Office. The timeliness of specific bases of protest raised after the
filing of a timely protest depends upon the relationship the
later-raised bases bear to the initial protest. GE Gov't Servs.,
B-235101, Aug. 11, 1989, 89-2 CPD para. 128. Where the later raised bases
present new and independent grounds for protest, they must
independently satisfy our timeliness requirements; conversely, where
the later raised bases merely provide additional support for an
earlier, timely raised protest basis, we will consider the
later-raised arguments. Id.
In our view, each of the later-raised arguments raised in Vinnell's
supplemental protest and comments on the agency report constitute new
and independent bases of protest, rather than additional supporting
material for its earlier protest contentions. Specifically, Vinnell's
later-raised argument concerning the reasonableness of the agency's
"low" proposal risk assessment of Serv-Air's proposal under the
technical factors provides no support for, and is distinct from, its
argument that Serv-Air's proposed costs should have been adjusted
upwards because its proposal received a "moderate" proposal risk
rating under the program management factor of management. That is,
the later-raised argument challenges the agency's evaluation of
proposal risk, whereas the initial argument involves a challenge to
the propriety of a distinct aspect of the agency's cost evaluation; a
challenge to an agency's evaluation of proposal risk under a specific
evaluation factor is distinct from, and provides no support for, an
assertion that the agency's evaluation of cost proposals was flawed.
Similarly, the protester's specific arguments that the agency
unreasonably failed to consider in the cost and technical evaluation
the effect of Serv-Air's acquisition by Raytheon is not "inextricably
intertwined" with Vinnell's initial assertion that the agency "failed
to conduct any cost realism analysis or other cost analysis" of the
offerors' proposals. Additionally, Serv-Air's argument, in its
comments on the agency report, that the agency cost realism analysis
is flawed because it failed to account for a "significant shortfall in
Serv-Air's manning . . . independent of Capella" is, by its very
terms, independent of the protester's initial protest against the
failure to upwardly adjust Serv-Air's costs because of Capella.
Vinnell argues, in the alternative, that its later-raised protest
bases are timely because they are based upon documents received from
the agency on January 31 in response to Vinnell's complaints that the
agency report as issued failed to include a number of documents
specifically requested by Vinnell in its initial protest.
Although the documents received by Vinnell on January 31 provide
additional support for Vinnell's supplemental protest bases, it is
clear from our review of the record that Vinnell knew or should have
known of each of its supplemental protest bases upon its receipt of
the agency report on January 26. This report consisted of 12
notebooks of documents, including, among other things, the source
selection evaluation board (SSEB) report, the SSAC report, and DCAA
and Defense Logistics Agency (DLA) reports. The SSEB and SSAC reports
provide summaries of Serv-Air's proposal, and a factor-by-factor
evaluation summary that sets forth the ratings of the proposal. These
reports describe in some detail Serv-Air's proposed
management/technical approach and the agency's evaluation of the
proposals under each of the evaluation criteria and factors.
Specifically, the narrative descriptions in the SSEB and SSAC reports
contain considerable information regarding Serv-Air's Capella system
and the agency's views as to its merits; it is clear from the
narratives that Capella was integral to Serv-Air's entire proposal,
and that the agency determined that it entailed a "low" proposal risk
with regard to the technical factors. As such, Vinnell should have
known from these documents alone of its protest basis regarding the
agency's determination that under the technical factors Serv-Air's
proposal posed "low" rather than "moderate" proposal risk. Similarly,
because the DLA, DCAA, SSEB and SSEC reports discuss Serv-Air's
acquisition by Raytheon, and there is no mention in the SSEB and SSAC
reports of the impact of that acquisition on Serv-Air's proposed costs
or technical ratings, it should have been readily apparent to Vinnell
that the agency had not accounted for the effect of the acquisition on
the merits of and risks associated with Serv-Air's
management/technical approach and proposed costs in its evaluation of
Serv-Air's proposal. Finally, Vinnell's protest basis concerning the
agency's acknowledgment of "a significant shortfall in Serv-Air's
manning, independent of Capella," is based upon the deficiency reports
and clarification requests issued by the agency and Serv-Air's
responses, all of which were included in the agency's report.
In sum, Vinnell's supplemental protests were untimely filed more than
14 days after the bases of protest were known or should have been
known, and will not be considered.
The protest is denied in part and dismissed in part.
Comptroller General
of the United States
1. The evaluation ratings for proposal risk and performance risk were
high, moderate, and low.
2. The color/adjectival ratings were blue/exceptional,
green/acceptable, yellow/marginal, and red/unacceptable.
3. Vinnell also argued in its initial protest that the agency
improperly evaluated its management/technical proposal, acted
improperly by permitting offerors to amend their initial proposals in
response to discussions, and evaluated proposals under an unstated
evaluation factor. The agency in its report submitted in response to
this protest addressed in detail each of these arguments. Vinnell
subsequently informed our Office that it was not pursuing these
protest grounds.