BNUMBER:  B-271002; B-271002.2; B-271002.3
DATE:  June 3, 1996
TITLE:  ManTech Environmental Technology, Inc.

**********************************************************************

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:ManTech Environmental Technology, Inc.

File:     B-271002; B-271002.2; B-271002.3

Date:June 3, 1996

Mark D. Colley, Esq., Laura E. Gasser, Esq., Steven D. Gordon, Esq., 
Craig A. Holman, Esq., and David P. Metzger, Esq., Holland & Knight, 
for the protester.
Matthew S. Perlman, Esq., William W. Goodrich, Jr., Esq., and Alison 
J. Micheli, Esq., Arent Fox Kintner Plotkin & Kahn, for Dynamac 
Corporation, an intervenor.
Thomas A. Darner, Esq., Environmental Protection Agency, for the 
agency. 
Paul E. Jordan, Esq., and Paul Lieberman, Esq., Office of the General 
Counsel, GAO, participated in the preparation of the decision., 

DIGEST

1.  Under solicitation which does not require identification of most 
proposed personnel until after contract award, where offer included 
self-styled "staffing plan" in which personnel do not match those 
identified in cost proposal, protest alleging material 
misrepresentation is denied where there is no evidence that offeror 
did so intending to mislead the agency and the agency did not credit 
the staffing plan in performing its technical evaluation.

2.  Agency's acceptance of awardee's proposed uncompensated overtime 
rates is unobjectionable, and does not constitute a relaxation of the 
specifications where solicitation does not prohibit uncompensated 
overtime, agency properly evaluates it, and agency ensures that 
contract provides for receipt of its value. 

3.  In procurement for services under level-of-effort, cost 
reimbursement solicitation where awardee proposes to hire as many 
employees of long-term incumbent as possible, but includes a cost 
proposal under which more than half of the listed positions are "new 
hires" at substantially lower "entry level" salary rates, protest of 
cost evaluation is sustained where agency simply accepted proposed 
rates without  taking any reasonable steps to verify new hire rates or 
otherwise to adjust rates to reflect most probable cost. 

DECISION

ManTech Environmental Technology, Inc. protests the award of a 
contract to Dynamac Corporation under request for proposals (RFP) No. 
C500182T1, issued by the Environmental Protection Agency (EPA) for 
technical support services.  ManTech raises a number of evaluation 
issues, primarily contending that the EPA failed to properly evaluate 
the realism of Dynamac's proposed costs.

We sustain the protest.[1]   

BACKGROUND

The RFP sought proposals to provide on-site technical support services 
at the EPA's environmental research laboratory in Corvallis, Oregon.  
According to the RFP, this  is a sophisticated, multi-disciplinary 
research laboratory that performs state-of-the-art research in a 
variety of environmental areas.  The successful offeror must furnish 
the necessary materials, supplies, and services of qualified 
scientists and laboratory technicians to perform support on a work 
assignment basis.  The RFP contemplated the award of a 
cost-plus-award-fee contract for a base period with four option 
periods.  Award was to be made to the responsible offeror whose 
proposal was most advantageous to the government.  

The RFP called for technical proposals to be comprised of a number of 
elements including technical approach, technical management, and 
resumes and publication samples for the three key personnel.  The RFP 
did not call for offerors to identify personnel to fill non-key 
positions, but did detail the necessary qualifications for four 
professional levels (P-1, P-2, P-3, and P-4) and three technician 
levels (T-1 through T-3).  For example, a P-4 professional was 
required to have a typical title of project leader or chief engineer, 
a Ph.D degree or equivalent, and 10 or more years of experience.  A 
T-3 technician was expected to have 6 or more years of experience.  
The RFP identified 10 categories of professionals at the P-3 and P-4 
levels with additional qualifications.  An attachment to the RFP 
identified 54 categories of personnel along with the estimated level 
of effort in terms of work years (defined as 2,080 hours per year).  
Proposals were evaluated on the basis of cost and four technical 
factors:  demonstrated corporate experience (150 points); demonstrated 
qualifications of key personnel (200 points); quality of proposed 
program management plan (450 points); and adequacy of quality 
assurance plan (200) points. 

With regard to cost, offerors were required to submit cost or pricing 
data in support of the proposed cost, a current financial statement, 
including a balance sheet, and other cost-related information.  As to 
direct labor, offerors were required to attach support schedules 
indicating the types or categories of labor together with labor hours 
for each category indicating the rate of compensation either by 
category or by individual.  If individual rates were proposed, 
offerors were required to furnish employee names for each position so 
proposed.  All offerors were required to use the same identified labor 
categories and level of effort, indicating how many of the 2,080 hours 
per year were charged as direct hours (productive working hours) and 
how many were charged as indirect (paid absences such as holidays, 
vacation, and sick leave).  The number of any necessary new hires also 
was required to be included. 

Cost was to be evaluated in accordance with Part 31 of the Federal 
Acquisition Regulation (FAR), "Contract Cost Principles and 
Procedures."  Cost also was to be evaluated for realism as it relates 
to the offeror's demonstration that the proposed cost provides an 
adequate reflection of its understanding of the RFP's requirements.  
In this regard, section L of the RFP discussed in detail the 
evaluation of compensation for professional employees.  The RFP noted 
that recompetition of service contracts sometimes resulted in the 
lowering of compensation for professional employees which could be 
detrimental in obtaining the quality of professional service necessary 
for contract performance.  Thus, offerors were required to submit a 
total compensation plan setting forth salaries and fringe benefits.  
The RFP explained that the government would consider the compensation 
proposed in terms of its impact upon recruiting, retention, and 
realism.  It suggested that supporting information would include data, 
such as recognized national and regional compensation surveys and 
studies of professional, public, and private organizations used in 
establishing the total compensation structure.  Offerors were warned 
that compensation that was unrealistically low "may be viewed as 
evidence of failure to comprehend the complexity of the contract 
requirements" or a lack of sound management judgment.

ManTech, Dynamac, and two other offerors submitted proposals by the 
August 8, 1995, closing date for receipt of proposals.  A technical 
evaluation panel (TEP) reviewed the initial proposals and, based on 
this evaluation, the source selection official (SSO) determined that 
the proposals of ManTech, Dynamac, and a third offeror should be 
included in the competitive range.  The agency conducted discussions 
with these three offerors and reevaluated the proposals on the basis 
of the offerors' responses.  Under the final evaluation, ManTech's 
technical proposal was scored at [deleted] points and Dynamac's 
proposal at [deleted] points, out of a possible 1,000 points.  

The TEP then reviewed the cost proposals and the EPA had the Defense 
Contracting Audit Agency (DCAA) review the proposals.  The agency also 
had a cost advisory report prepared by its own cost evaluators.   The 
agency conducted cost discussions with the offerors and requested best 
and final offers (BAFO).  After evaluation of the BAFOs, the source 
evaluation board met to discuss the award decision.  The board 
considered the relative merits of the ManTech and Dynamac proposals 
and concluded that the technical differences in the proposals were 
minor, while the negotiated costs were significant.  The board 
recommended award to Dynamac.  

The SSO agreed with the board and selected Dynamac for award.  The SSO 
specifically found that the primary technical difference between the 
proposals was [deleted].  In view of the significant cost difference 
[deleted], the SSO concluded that it would not be in the government's 
best interest to pay that cost premium in order to acquire ManTech's 
technical expertise.  On January 26, 1996, EPA awarded the contract to 
Dynamac and ManTech filed its initial protest.  On January 31, the 
agency determined to continue performance notwithstanding the protest 
on the basis that to do so was in the best interest of the government.  
ManTech subsequently amended its protest twice based on later obtained 
information.

EVALUATION OF DYNAMAC'S PROPOSAL

ManTech alleges that the evaluation of Dynamac's technical and cost 
proposals was flawed because of alleged misrepresentations contained 
in Dynamac's proposal.  In particular, ManTech points to Dynamac's 
inclusion of a "staffing plan" in its technical proposal which listed 
personnel different from those listed in Dynamac's BAFO cost 
proposal.[2]  For example, the staffing plan identifies highly 
qualified, named personnel for 44 of the 54 RFP labor categories, 
while the cost proposal identifies named personnel for only 24 of the 
54 categories.  Of these 24, only 15 names are the same as those 
identified in the technical proposal, and not all of them are proposed 
for the same category in both proposals.  The balance of the 
categories in the cost proposal are listed as "new hires" with direct 
labor rates generally lower than those for the Dynamac personnel 
listed in both proposals.  From this, ManTech alleges that Dynamac 
proposed the higher qualified personnel in its technical proposal in 
order to obtain a higher technical score and then used less qualified 
and lower paid personnel in its cost proposal to obtain a more 
favorable cost evaluation.[3]

An offeror's misrepresentation concerning personnel that materially 
influences an agency's consideration of its proposal generally 
provides a basis for proposal rejection or termination of a contract 
award based upon the proposal.  See CBIS Fed. Inc., 71 Comp. Gen. 319 
(1992), 92-1 CPD  para.  308 (misrepresentation of personnel availability).  
A misrepresentation is material where an agency has relied upon the 
misrepresentation and that misrepresentation likely had a significant 
impact on the evaluation.  Harris Corp.; PRC Inc., B-247440.5; 
B-247440.6, Aug. 13, 1992, 92-2 CPD  para.  171. 

Here, the RFP required the identification of personnel in the cost 
proposal only where an offeror proposed individual (instead of 
categorical) labor rates apart from the three key personnel.  The RFP 
contains no requirement for identification or evaluation of specific 
personnel in the technical proposal.  All other (non-key) personnel 
were to be proposed after award of the contract.  Dynamac identified 
its key personnel in both its technical and cost proposals and the 
agency evaluated their qualifications and based Dynamac's evaluation 
score only on the key personnel.  While the evaluators reviewed the 
"staffing plan" included in the technical proposal, they did not give 
Dynamac any identifiable credit for the qualifications of the listed 
personnel.  Some evaluators noted favorably Dynamac's intent to hire 
incumbent employees, but there is nothing in the record which suggests 
that they raised Dynamac's score based on the staffing plan.  On the 
contrary, in response to the protest, the chairman of the TEP explains 
that Dynamac's proposal would have received the same score absent the 
staffing plan.  Dynamac explains that the staffing plan was only 
intended to show the expertise of members of its current personnel 
pool, who could be made available for use on the contract for times of 
peak workloads, temporary assignments, or special projects.[4]  Under 
these circumstances, we find no material misrepresentation by 
Dynamac.[5]

UNCOMPENSATED OVERTIME

ManTech also raises several issues concerning Dynamac's use of 
uncompensated overtime (UOT).[6]  In ManTech's view, the use of UOT 
was not allowed by the solicitation and thus the agency's acceptance 
of it represented an improper relaxation of the specifications.  
ManTech further argues that even if UOT could be proposed, the agency 
did not properly evaluate Dynamac's proposed UOT; ManTech also asserts 
that Dynamac deliberately attempted to double count the effect of the 
UOT.  We find no merit in any of these allegations. 

In order to establish a projected hourly labor rate, an offeror must 
divide the employee's projected salary by the expected number of hours 
to be worked.  The usual method is to divide the employee's annual 
salary by 2,080 hours (40 hours per week x 52 weeks).  If an offeror 
proposes more than 2,080 as the denominator, then the excess is UOT.  
The use of UOT reduces the employee's hourly rate which, in a 
competitive environment, could provide the offeror with a competitive 
cost advantage.

Here, the RFP advised offerors that the level of effort was to be 
proposed in workyears.  While the RFP stated that a workyear was 
"considered" to be 2,080 hours, less any non-productive hours, it did 
not set this as the only acceptable workyear.  The RFP specifically 
contemplated the proposal of "non-standard" workyears based upon 
"different base work weeks."  The RFP did not prohibit the use of UOT 
and we are unaware of any law or regulation prohibiting the use of 
UOT.  Thus, the agency's consideration of the UOT in Dynamac's 
proposal did not represent an improper relaxation of the 
specifications for one offeror.  See General Research Corp., 70 Comp. 
Gen. 279 (1991), 91-1 CPD  para.  183, aff'd American Management Sys. Inc.; 
Dep't of the Army--Recon., 70 Comp. Gen. 510  (1991), 91-1 CPD  para.  492.  

We also find the agency's method of evaluating Dynamac's UOT 
unobjectionable.  Dynamac proposed 44 hours per week for many of its 
personnel with 4 hours representing a 10-percent level of UOT.  In 
proposing its direct rates, Dynamac reduced them by a factor of 10 
percent to represent the lower effective labor rates.  In evaluating 
Dynamac's direct labor proposal, the agency used a standard 2,080-hour 
workyear without increasing it by 10 percent.  ManTech argues that 
Dynamac will be reimbursed on the basis of workyears, and since 
Dynamac's workyear is longer, the government will not get the benefit 
of the lower labor costs suggested by the effective rates.[7]

ManTech's argument is based on a faulty premise.  While the agency has 
estimated the level of effort in workyears, the RFP indicates that the 
agency will be billed on the basis of hours worked and not workyears; 
under the terms of the RFP and the awarded contract, when the agency 
issues a work assignment, it estimates the number of hours required 
and the contractor submits a proposal of the number of hours it needs 
to perform.  Thus, the record reflects that the government will have 
control over the number of hours worked and will be billed on the 
basis of these hours, and accordingly will be in a position to realize 
the advantage of Dynamac's lower effective labor rates.

EVALUATION OF DYNAMAC'S COSTS

When an agency evaluates proposals for the award of a cost 
reimbursement contract, an offeror's proposed estimated costs of 
contract performance and proposed fees are not considered controlling 
since an offeror's estimated costs may not provide valid indications 
of final actual costs that the government is required, within certain 
limits, to pay.  See FAR  sec.  15.605(c); General Research Corp., supra.  
The purpose of a cost realism analysis under a level-of-effort, cost 
reimbursement- type contract is to determine the extent to which an 
offeror's labor rates are realistic and reasonable.  Sociometrics, 
Inc., B-261367.2; B-261367.3, Nov. 1, 1995, 95-2 CPD  para.  201.  While an 
agency is not required to conduct an in-depth cost analysis or to 
verify each and every item in conducting a cost realism analysis, it 
must perform sufficient analysis to determine the extent to which an 
offeror's proposed costs represent what the contract should cost, 
assuming reasonable economy and efficiency.  See CACI, Inc.-Fed., 64 
Comp. Gen. 71 (1984), 84-2 CPD  para.  542.  Because the contracting agency 
is in the best position to make this cost realism determination, our 
review is limited to determining whether the agency's cost realism 
analysis is reasonably based and not arbitrary.  Grey Advertising, 
Inc., 
55 Comp. Gen. 1111 (1976), 76-1 CPD  para.  325.

ManTech contends that the agency's cost evaluation was deficient 
because the agency failed to conduct any meaningful cost realism 
analysis of Dynamac's significantly lower proposed costs.  For 
example, Dynamac's overall proposed costs are significantly lower than 
the independent government cost estimate ([deleted]) and the costs 
proposed by the other offerors ([deleted] percent lower than ManTech's 
proposal).  Further, although the technical proposal reflects 
Dynamac's intent to hire "as many of the incumbent staff as possible," 
the direct labor rates proposed for "new hires" are lower than those 
paid incumbent ManTech personnel and lower than current Dynamac 
personnel in comparable positions.

In support of the reasonableness of its cost realism analysis, the EPA 
relies upon its cost advisory report, DCAA audit results, pre/post 
negotiation memorandum, and source selection decision.  The three EPA 
generated documents all rely on the written and oral results of the 
DCAA audit which purportedly found Dynamac's direct labor rates to be 
realistic.  However, the audit and cost advisory report were 
qualified, and information on which they were based was incorrect.

Where, as here, the agency sets the level of effort and identifies the 
specific categories of personnel necessary to perform, the primary 
inquiry in a cost realism analysis should be the realism of direct 
labor rates.  Sociometrics, Inc., supra.  Determining that the rates 
are realistic depends upon a finding that personnel, at the proposed 
rates, meet the requirements of the RFP, i.e., that qualified 
personnel can be employed and retained at those rates.  Here, the cost 
evaluators stated that their review was based on "adequate cost and 
pricing data" consisting of a verbal audit report from DCAA, 
contractor information, and other information contained in agency 
files.  With regard to direct rates, the report states that the 
"proposed labor rates are actual 1995 rates for a specific individual 
in each category."  Based upon conversations with the cognizant DCAA 
office, the cost evaluators concluded that the labor rates were 
acceptable for government pricing purposes.  The pre/post negotiation 
memorandum and source selection decision include determinations of 
cost realism based upon the DCAA audit and its verification of direct 
rates.  

However, EPA's cost evaluators qualified their recommendations by 
stating that they did not assess whether the personnel, at the rates 
proposed, met the RFP requirements.[8]  The report also was prepared 
without the benefit of the cost evaluators being apprised that the TEP 
had concerns about the low Dynamac rates.  In this regard, the TEP had 
noted that the rate proposed for a P-3 (second highest) level 
ecologist "seems very low" and that all the new hires were listed at 
low rates suggestive of entry level positions.  The TEP was concerned 
that "quality people cannot be hired at these rates" and observed that 
only a few existing employees worked at the rates suggested for new 
hires.

Further, notwithstanding the agency's reliance on DCAA, there is no 
evidence that the cost evaluators considered DCAA's qualification of 
its general recommendation that the proposal was acceptable as a basis 
for negotiation of a fair and reasonable price.  These qualifications 
included DCAA's need for technical assistance in mapping the proposed 
labor rates to the RFP and evaluating Dynamac's weighted labor 
rates.[9]  DCAA had requested assistance from the agency in 
determining whether the personnel, at the rates proposed, were 
appropriate for the positions identified in the RFP.  While the agency 
did not provide any assistance, Dynamac advised DCAA that its proposal 
manager had reviewed the RFP and had selected qualified individuals to 
propose.  DCAA verified that the labor rates for named individuals 
represented actual Dynamac 1995 labor rates.  

While this DCAA assessment provides a reasonable basis for accepting 
labor rates for named individuals, EPA accepted DCAA's limited 
statement as verification of all direct rates.  Since Dynamac had 
provided verifiable personnel rates for less than half of the 54 labor 
categories listed in its cost proposal, it was unreasonable for the 
agency to rely on this aspect of the audit to support a finding of 
cost realism for all direct rates.  Further, there is no indication 
that the agency attempted to assess the realism of the new hire rates.  
The EPA explains that it had received oral information from DCAA 
indicating that DCAA had verified the new hire rates as well.  
However, during the protest, the agency learned that the DCAA auditor 
had confused this audit with another Dynamac audit she was conducting 
at about the same time.  She did not verify the new hire rates 
proposed for the EPA contract, believing that it was unnecessary 
because the other audit had verified the proposed rates.  There is 
nothing in the record to indicate whether the rates or any other 
aspects of the verified audit were in any way similar to this contract 
audit.  Thus, there is no way to gauge the reasonableness of the 
auditor's conclusion in this regard.

While agencies may ordinarily rely on the advice of DCAA when 
performing a cost realism analysis, see NKF Eng'g, Inc.; Stanley 
Assocs., B-232143; B-232143.2, Nov. 21, 1988, 88-2 CPD  para.  497, this 
does not mean that contracting officials are thereby insulated from 
responsibility for error.  See PAI, Inc., 67 Comp. Gen. 516 (1988), 
88-2 CPD  para.  36.  A contracting officer's determination based on 
incorrect information is not rendered reasonable because the incorrect 
information was supplied by another organization such as the DCAA.  
American Management Sys., Inc.; Dep't of the Army--Recon., supra. 

Apart from relying on the DCAA audit information, written and oral, 
EPA apparently conducted no other cost realism analysis of Dynamac's 
direct labor rates.  For example, the agency did not conduct any 
independent review of the reasonableness of the proposed rates, 
question any of the rates in discussions, or seek substantiation of 
the rates through market surveys or historical cost data from similar 
contracts.  See Sociometrics, Inc., supra; The Warner/Osborn/G&T Joint 
Venture, B-256641.2, Aug. 23, 1994, 94-2 CPD  para.  76.  Further, the 
record does not include any of the "other" information on which the 
evaluators said they relied and, at the time of the agency's cost 
review, Dynamac had not submitted any information, such as labor 
market surveys, to support its proposed new hire rates.[10]  Contrary 
to what the evaluators accepted from DCAA, not all of the proposed 
labor rates represented 1995 Dynamac rates and most of the new hire 
rates were lower than those proposed for comparable personnel 
currently employed by Dynamac.  In this regard, more than half of the 
30 new hires proposed were at the P-3 level--requiring 6-12 years of 
experience, with a masters degree or equivalent--at a labor rate of 
less than [deleted] per hour.  While the agency maintains that the 
fringe benefits proposed by Dynamac are competitive, there is no 
evidence that any meaningful tradeoff analysis was made to determine 
whether the benefits package offset the low new hire rates.  Under 
these circumstances, placing complete reliance on the DCAA's report 
was unfounded and unreasonable and does not constitute a meaningful 
cost realism analysis.[11] 

The agency and Dynamac argue that ManTech was not prejudiced because, 
at most, a more detailed cost realism analysis would have resulted in 
an upward adjustment of Dynamac's costs only by approximately 
[deleted] million.  The agency's SSO and contracting officer both 
assert that if the difference in cost between Dynamac and ManTech was 
approximately [deleted] million, the technical advantage attributable 
to ManTech's proposal would not be worth the cost premium.  ManTech 
argues that with a proper cost realism analysis, using realistic new 
hire rates, Dynamac's costs would rise by more than [deleted] million, 
making the cost difference only [deleted] million.  We have reviewed 
all three cost adjustments made by the parties and find that none 
provides an adequate substitute for the proper realism analysis the 
agency should have performed initially.  

The analyses are all based on the direct labor rates of the personnel 
identified on the staffing plan included in Dynamac's technical 
proposal.  However, Dynamac states that the staffing plan was not 
intended as representative of the personnel it intended to provide for 
contract performance, and the agency essentially concurs in this 
position.  Accordingly, the recalculations are all based on a false 
premise, and, in any event, make certain assumptions which do not 
necessarily result in an accurate substitute.  The only thing that is 
apparent is that Dynamac's realistic costs are higher than those it 
proposed, but it is not clear how much higher they should be.  

Accordingly, we sustain the protest on this basis.  We recommend that 
the agency conduct a reasonable and complete cost realism analysis of 
Dynamac's direct and indirect costs.  If necessary, the agency should 
conduct additional discussions to resolve any possible ambiguity 
concerning the purpose of Dynamac's "staffing plan."  If the agency 
determines that Dynamac's proposal no longer represents the best 
value, it should make the award to another offeror.  We also recommend 
that the protester be reimbursed its costs of filing and pursuing the 
protest, including reasonable attorneys' fees.  Bid Protest 
Regulations, 4 C.F.R.  sec.  21.8(d)(1).  The protester should submit its 
detailed and certified claim for its costs directly to the agency 
within 90 days after receipt of this decision.  Bid Protest 
Regulations, 4 C.F.R.  sec.  21.8(f)(1). 

The protest is sustained.

Comptroller General
of the United States

1. We have considered all the issues raised by ManTech and found only 
one to have merit.  Of the remaining issues, our decision discusses 
those which the protester's submissions emphasized.

2. ManTech also alleged misrepresentations associated with Dynamac's 
explication of  its financial status.  ManTech points to the omission 
of qualifying footnotes from Dynamac's financial statement and a 
misrepresentation as to a Dynamac Cost Accounting Standards Board 
disclosure statement concerning a proposed change to Dynamac's 
indirect rate structure.  Information submitted by Dynamac and the EPA 
make clear that the omitted footnotes were of no import to the 
substance of the financial statement and the proposed indirect rate 
structure has been approved by Dynamac's administrative contracting 
officer.  Accordingly, these allegations are without substance.  

3. In a related argument, ManTech contends that Dynamac proposed a 
project administrator, but omitted any proposed cost for the position.  
Dynamac and the agency explain that the position's functions are 
administrative and are not full time.  The cost of the position was 
included under the secretary to the program manager, the job category 
title identified in the RFP.  The responsibilities of the project 
administrator and secretary are being fulfilled by an administrative 
assistant to the program manager.  Accordingly, this allegation 
provides no basis to find that Dynamac engaged in any 
misrepresentation.

4. A close reading of Dynamac's technical proposal tends to support 
this explanation.  For example, the exhibit containing the plan is 
described as representing an estimate of the distribution of tasks 
based on the RFP requirements.  However, other language in the 
proposal, denomination of the listing as a "staffing plan" and 
reference to "proposed Dynamac staff," does create ambiguity as to the 
purpose of the "plan."  This is especially so when considered in 
conjunction with the apparently inconsistent list of personnel in the 
BAFO cost proposal.  Since we sustain the protest because of flaws in 
the cost realism evaluation, and further discussions may be held, the 
agency may wish to resolve any possible ambiguity in this regard 
through those discussions. 

5. ManTech has also alleged that the agency improperly modified the 
level of effort for this contract by transferring personnel and 
assignments formerly performed under the predecessor contract.  
According to ManTech, by transferring highly paid personnel, the 
agency effectively reduced the cost associated with Dynamac's 
proposal.  Had ManTech known of these transfers, it claims that it 
could have reduced its costs as well.  These allegations are without 
merit.  The EPA explains that the personnel transferred were former 
ManTech employees performing tasks which were no longer appropriate 
for this contract.  The level of effort and the skill mix required to 
perform this contract did not change.  We also find no merit in 
ManTech's claim that Dynamac violated the terms of the contract by 
hiring two former ManTech employees as consultants without obtaining 
prior EPA approval.  The clause on which ManTech relies as requiring 
EPA approval was deleted pursuant to a class deviation issued prior to 
contract award.  These personnel changes are merely a matter of 
contract administration which our Office does not review.  4 C.F.R.  sec.  
21.5(a) (1996).  

6. "Uncompensated overtime" refers to the overtime hours (hours in 
excess of 
8 hours per day/40 hours per week) incurred by salaried employees who 
are exempt from coverage of the Fair Labor Standards Act of 1938, 29 
U.S.C.  sec.  201-219 (1994).  Under the Act, exempt employees need not be 
paid for hours in excess of 8 hours per day or 40 hours per week.

7. ManTech also alleges that Dynamac attempted to obtain double credit 
for its UOT.  In its BAFO, Dynamac proposed its effective direct labor 
rates (reduced by the 
10-percent UOT) and on its summary page also identified the number of 
overtime hours which the agency would receive at no cost.  This issue 
is without merit.  As explained by Dynamac, it intended only to 
propose the reduced rate hours and, by mistake, listed additional 
hours at no cost in its proposal cost summary.  It is plain from the 
record that the agency did not evaluate the additional number of hours 
and their inclusion did not affect Dynamac's cost proposal.  While the 
agency intended to award a contract based on the number of hours 
estimated in the RFP, the award documents include the additional 
hours.  The agency states that it will amend the contract to eliminate 
the additional hours in order to reflect the hours evaluated and the 
intended award.  

8. In response to the protest, the agency has submitted a statement 
from the TEP chairman which explains that the panel discussed the 
lower proposed rates, but did not feel that Dynamac would be unable to 
hire qualified new staff at these rates.  However, there is nothing in 
the record to explain how the evaluators came to this conclusion 
notwithstanding their expressed concerns.

9. DCAA's audit was also qualified due to a (then) unapproved change 
to Dynamac's indirect rate structure.  The auditors also noted that 
Dynamac had previously underestimated its indirect cost and questioned 
Dynamac's general and administrative (G&A) rate.  Dynamac had proposed 
a [deleted] percent rate based on the anticipated award of this 
contract.  DCAA noted that, currently, the G&A rate was [deleted] 
percent and thus recommended that EPA negotiate a ceiling on the rate.  
The EPA followed this recommendation and included a [deleted] percent 
ceiling.  However, subsequent to the DCAA recommendation, Dynamac 
proposed a [deleted] percent G&A rate in its BAFO.  In considering the 
realism of Dynamac's costs, the agency did not adjust the cost 
proposal to reflect the potential increase in G&A.

10. During the protest, Dynamac has submitted information indicating 
that it has hired more than 100 personnel at the P-1 through P-4 
levels at rates comparable to what is included in its proposal.  In 
fact, these average salary rates are between [deleted] higher than the 
rates proposed in Dynamac's BAFO.  In addition, in response to the 
protest, the agency found that the proposed new hire rates were 
comparable to the actual rates paid to "some of Dynamac's current 
employees in similar labor categories."  Taken together, we do not 
believe these post hoc approximations alone are sufficient to 
establish the realism of the proposed rates.  This is especially so in 
view of information submitted by the protester on labor rate 
information on former ManTech employees, hired by Dynamac.  Of 53 
incumbent personnel hired by Dynamac, 41 were hired at higher rates 
than the new hire rates in Dynamac's BAFO.  

11. ManTech also contends that the agency should have determined that 
Dynamac's low rates indicated that Dynamac did not understand the 
scope of the contract and should have received a lower score on its 
technical proposal.  However, apart from the low rates, ManTech has 
identified nothing to indicate that Dynamac does not fully understand 
the contract requirements.  The agency states that it has no question 
regarding Dynamac's understanding of the requirements and has 
concluded that Dynamac is capable of employing qualified personnel.  
While its proposal of low rates casts doubt on the realism of those 
rates, it does not necessarily indicate that Dynamac is not qualified 
to perform.  Thus, we find this contention without merit.