BNUMBER: B-271079.3; B-271079.4; B-271079.5; B-271079.7
DATE: July 15, 1996
TITLE: ICF Kaiser Engineers, Inc.
**********************************************************************
Matter of:ICF Kaiser Engineers, Inc.
File: B-271079.3; B-271079.4; B-271079.5; B-271079.7
Date:July 15, 1996
Kenneth B. Weckstein, Esq., and Jose Otero, Esq., Epstein, Becker &
Green, P.C., for the protester.
Joseph J. Petrillo, Esq., and Karen D. Powell, Esq., Petrillo and
Associates, for Lockheed Environmental Systems & Technologies Company,
an intervenor.
L. Carol Roberson, Esq., and Karen J. Carroll, Esq., Environmental
Protection Agency, for the agency.
Mary G. Curcio, Esq., David A. Ashen, Esq., and John M. Melody, Esq.,
Office of the General Counsel, GAO, participated in the preparation of
the decision.
DIGEST
Protest against award to offeror whose proposal received a lower
technical score than protester's is denied where, although
solicitation stated that technical considerations were more important
than cost, the agency reasonably determined that the greater technical
merit of the protester's proposal was not worth its significantly
higher cost.
DECISION
ICF Kaiser Engineers, Inc. protests the Environmental Protection
Agency's (EPA) award of a contract to Lockheed Environmental Systems &
Technologies Company, under request for proposals (RFP) No. D500055R1,
for Environmental Service Assistance Team (ESAT) support services for
various EPA programs. Kaiser challenges the technical and cost
evaluation.
We deny the protest.
The solicitation contemplated the award of cost-plus-award-fee or
cost-plus-fixed-fee, level-of-effort contracts to furnish ESAT support
services for four separate geographical areas--this protest concerns
the Western Zone--for a 1-year base period with four 1-year options.
The statement of work required the contractor to: establish ESAT work
teams to collect and analyze chemical and biological test samples,
review test data to assess quality and completeness, and provide
logistical and administrative support to field, analytical and quality
assurance activities.
The solicitation provided for award to be made to the responsible
offeror whose conforming proposal was most advantageous to the
government. The RFP listed the following technical evaluation
factors, which were to be point scored:
I. Management
A. Management Plan
1. Contract Start Up and Mobilization Plan (100 of
1,000 available total points)
2. Management Structure (100)
B. Management Information System (100)
II. Personnel
A. ESAT Team Manager and Zone Manager (100)
B. ESAT Key Team Personnel (200)
III. Corporate Experience (100)
IV. Technical
A. Quality Assurance Program Plan (100)
B. Hazardous Samples and Data Review (100)
V. Sample Situation Scenarios (100)
The solicitation further provided that the government would consider
"other factors, as listed below in descending order of importance,
secondary to both technical quality and cost or price": (1) status as
a small business concern which is also a labor surplus area concern;
(2) status as a small business concern; (3) status as a labor surplus
area concern; and (4) "[r]ecord of past performance." The RFP stated
that while technical quality was more important than cost in the award
decision, "as proposals became more equal in their technical merit,
the evaluated cost or price becomes more important," and "as the
technical merit and the evaluated cost or price becomes essentially
equal, other factors may become a determining factor."
Two proposals for the Western Zone, from Kaiser and Lockheed, were
received. Both were included in the competitive range; three rounds
of discussions and best and final offers (BAFO) followed. Although
Kaiser's BAFO received the highest technical score (922 points), 103
points higher than Lockheed's (819 points), the evaluated cost of
Kaiser's BAFO ($78,255,207) was determined to be at least $12,800,273
more than Lockheed's ($65,454,934). (While EPA considered Lockheed's
proposed costs to be realistic, it considered Kaiser's proposed
indirect rates to be unsupported and as a result believed that there
was a risk that Kaiser's costs could be even higher.) After reviewing
the technical evaluation panel (TEP) report and performing an analysis
of the proposals under each major evaluation factor, the source
evaluation board (SEB) concluded that Kaiser's proposal did "not offer
technical superiority that was worth its much higher costs"; the SEB
therefore recommended that award be made to Lockheed based on its much
lower evaluated cost. The source selection official (SSO), after
reviewing the TEP and the SEB reports, as well as other relevant
documents, agreed with the recommendation and selected Lockheed for
award.
Kaiser argues that, given Lockheed's lower technical score, EPA could
not reasonably determine that there was only a slight difference in
the technical merit of the two proposals and that, as a result, the
award decision was improperly based on Lockheed's lower cost.[1]
There is no dispute that Kaiser's proposal was technically superior to
Lockheed's. The issue here is whether the technical superiority of
Kaiser's proposal was worth its substantially higher cost. In
concluding that it was not, the SEB noted that while Kaiser's proposal
offered "a few more superior features" than Lockheed's, Kaiser's
proposal possessed "only a slight technical advantage" and there was
"not a substantial difference in the quality of the technical
proposals"; it considered both proposals to be "superior overall,"
offering "superior technical capabilities [with] no significant
weaknesses identified in either proposal that would present a risk to
successful contract performance." According to the SEB, "[s]election
of either of the offerors would permit an effective and efficient
working plan to be quickly implemented and full productivity to be
quickly achieved and maintained."
Turning to some of the specifics of the evaluation, the SEB found
that, while Kaiser's approach to mobilization offered more superior
features, any advantage offered would dissipate within 60 days after
award. The SEB also found that, while Kaiser's proposal demonstrated
a "slightly greater depth" of experience in managing similar-sized and
related-subject contracts, the learning curve for either offeror was
likely to be "very short," inasmuch as both had sufficient "embedded"
corporate experience to be able to overcome contract start-up problems
quickly and manage the contract. Likewise, while the SEB recognized
that Kaiser's proposed team managers had more direct bench and
relevant managerial experience and that its key team personnel had a
"slightly greater depth of relevant experience," it found that this
did not translate into a significant advantage. This is because
Lockheed's proposed managers exceeded the solicitation requirements
and were entitled to a rating of 4--on a scale of 1 to 5--and its
other proposed key personnel met or exceeded the solicitation
requirements, were well qualified to handle the required level and
complexity of tasks, and likewise were rated 4 on a scale of 1 to 5.
In addition, the SEB found neither proposal to be superior under the
management information system or quality assurance/hazardous samples
subfactors.
While the agency believed that Lockheed's proposal contained
weaknesses relative to Kaiser's proposal--for example with respect to
the offerors' approach to management structure--it is clear that
neither the TEP nor the SEB considered the relative weaknesses to be
significant; according to the TEP, the "weaknesses are not felt likely
to adversely affect the successful operation of the contract."
At the same time, the agency evaluated Lockheed's proposal as superior
to Kaiser's in several respects. For example, the SEB found that both
Lockheed's proposed zone and deputy zone managers had more direct
bench and relevant managerial experience with contracts of similar
scope, size, and complexity than Kaiser's zone manager. In addition,
the SEB found Lockheed's approach to two of the four sample scenarios
to be technically superior to Kaiser's, specifically criticized
Kaiser's proposed approach to one sample problem as characterized by
"throwing [level-of-effort] hours" at the problem and its approach to
another as one which "lacks significant insight," and concluded that,
overall, Lockheed's solutions to the sample problems were more
relevant and efficient.
Thus, although Kaiser submitted a stronger technical proposal, the
record indicates that Lockheed submitted a proposal that was superior
to Kaiser's in some areas and overall was not viewed as substantially
weaker. The record also establishes that EPA fully considered those
relative strengths in Kaiser's proposal, but also measured those
strengths against Kaiser's substantially higher cost. Nothing in the
record establishes that EPA could not reasonably conclude that the
advantages of Kaiser's proposal did not translate into technical
superiority sufficient to warrant incurring Kaiser's significantly
higher cost. See Blue Cross Blue Shield of Texas, Inc., B-261316.4,
Nov. 9, 1995, 95-2 CPD para. 248; Northern Virginia Serv. Corp.,
B-258036.2; B-258036.3, Jan. 23, 1995, 95-1 CPD para. 36. Accordingly, we
find no basis to object to the technical evaluation or the ensuing
source selection.
Kaiser also argues, however, that EPA did not have a reasonable basis
to conclude that Lockheed's proposal was less costly than Kaiser's
because Lockheed's proposal was based on noncompliance with several
solicitation requirements. We find that even after accounting for any
advantage Lockheed gained from noncompliance with the solicitation
requirements, the cost of Lockheed's proposal remained sufficiently
lower than Kaiser's so that the award decision would have remained the
same.
Kaiser argues that Lockheed's proposal was based on noncompliance with
the solicitation provisions regarding the estimated level of effort.
As noted by Kaiser, the solicitation required offerors to prepare
their proposals based on a specified level of effort; Lockheed's
approach departed from this requirement and resulted in a total level
of effort (1,906,331 manhours) lower than the number of manhours
specified in the solicitation (2,027,300 manhours).[2] However,
although the SEB did not revise the evaluated cost of performance
under Lockheed's proposal ($65,454,934 based on the lower level of
effort), it did specifically consider that raising Lockheed's level of
effort would increase the cost of Lockheed's proposal (by up to
$4,158,866) when determining that Lockheed's proposal represented the
best value to the government.[3]
Kaiser argues that Lockheed's evaluated cost advantage also resulted
from noncompliance with the solicitation requirement regarding the
substitution of key personnel. The solicitation generally prohibited
offerors from substituting key personnel for 365 days after award.
Although Lockheed's proposal included resumes and letters of intent
for its proposed key personnel, it indicated that, if awarded the
contract, Lockheed planned to hire qualified staff of the incumbent
contractor (Kaiser) to fill key non-managerial positions. (Kaiser had
required its employees to agree not to permit another offeror to
submit their names for this procurement, which prevented Lockheed from
proposing these individuals in the first place.) During discussions
with Lockheed, EPA agreed to exclude from the 365-day no-substitution
rule certain non-managerial positions in order that Lockheed could
pursue incumbent personnel for these positions. Kaiser was not
advised of this revision to the key personnel clause. (After award,
Lockheed did request permission to substitute incumbent staff for 21
of 22 non-managerial positions specified in the revised key
personnel--"Additional Key Personnel"--clause.) Kaiser claims that it
could have lowered its proposed cost substantially had it been
permitted to replace its higher cost incumbent personnel with lower
cost personnel after award.[4]
While the change in the no-substitution clause technically was
inconsistent with the language of the solicitation, the change had no
effect on the competition. The change served the limited purpose of
permitting Lockheed to replace certain proposed employees with
incumbent personnel, which would give the agency the benefit of these
technically superior personnel (Kaiser's incumbent staff was rated
higher than Lockheed's proposed staff) if Lockheed were selected for
award. Since Kaiser's proposal already was based on its own incumbent
personnel, it was not in a position to benefit from the change in the
clause, even if it had been advised of the change. Specifically, the
change in the no-substitution clause would not have permitted Kaiser
to propose the replacement of its higher cost incumbent personnel with
unidentified lower cost personnel after award;[5] again, the change
was intended only to enable Lockheed to add certain of Kaiser's
higher-rated incumbent personnel to its staff if it received the
award.[6]
We conclude that the record supports EPA's determination that
Lockheed's proposed cost was substantially lower than Kaiser's--the
cost of Kaiser's proposal remained at least $8,641,407 higher than
Lockheed's when evaluated on a comparable basis.[7]
The protest is denied.
Comptroller General
of the United States
1. Kaiser also argues that the SSO did not adequately document his
decision in his one-paragraph source selection document. The source
selection document, however, clearly indicates that the SSO based the
award decision on information set forth in the SEB and TEP reports,
the competitive range determination and the negotiation memorandum.
The SSO's reliance on these documents and incorporation of them into
his decision document provides adequate documentation for the award
decision. See generally TRW, Inc., B-260788.2, Aug. 2, 1995, 96-1 CPD para.
11.
2. Kaiser also argues that EPA's consideration of Lockheed's proposal
to combine the Western Zone office with the Eastern Zone office (the
contract for which had been recently awarded to Lockheed) was
inconsistent with the solicitation requirement to submit "complete
separate proposals for each acquisition," the solicitation statement
that "combined proposals will not be considered," and the estimated
level of effort offerors were to use in preparing their proposals.
Nothing in those provisions, however, precluded an offeror from taking
advantage of the award of a contract for another zone by proposing a
cost-saving consolidation of zone offices. To the extent that
Lockheed proposed fewer manhours for the Western Zone office than
specified in the solicitation, this has already been accounted for in
Kaiser's calculation of the advantage Lockheed gained from proposing
an overall level of effort lower than specified in the solicitation
(as discussed above).
3. The SEB, noting that both firms generally were proposing to provide
the same number and mix of full time personnel to staff the ESAT
teams, also concluded that the lesser number of productive hours
proposed by Lockheed would not impact performance.
4. In its submission dated July 12, 1996, Kaiser for the first time
argues that had it been advised of the change in the 365-day
no-substitution rule, it would have compensated for the loss of the
competitive advantage it had obtained from requiring its employees to
agree not to permit another offeror to submit their names for this
procurement by proposing to cap its costs in other areas. Since
Kaiser did not raise this argument until more than 6 weeks after it
filed its protest against the relaxation of the no-substitution rule,
this argument is untimely. 4 C.F.R. sec. 21.2(a)(2) (1996).
5. Moreover, had Kaiser proposed to replace its incumbent personnel
with unidentified individuals of unknown qualifications and
experience, Kaiser's high technical score in this area would have been
at risk. There is no reason to assume that Kaiser would have been
willing to accept this risk; had Kaiser been inclined to replace the
incumbent personnel for cost savings, it could have simply proposed to
do so in its proposal.
6. Kaiser also argues that EPA improperly failed to consider past
performance in the award decision. Even if Kaiser is correct--and it
is unclear that the agency acted improperly--Kaiser was not prejudiced
by EPA's approach to the evaluation in this regard since the
solicitation accorded past importance only minimal weight in the
overall evaluation scheme.
7. Moreover, as noted by the SEB, the actual cost of Kaiser's proposal
could be even higher than the cost used for evaluation purposes.
Noting that Kaiser had changed its cost accounting practices and rate
structure over the past 3 years and was planning major organizational
changes that would result in cost-accounting changes, an agency
auditor had recommended that indirect rate ceilings be established.
Kaiser, however, proposed what the agency considered to be floating
rate ceilings that afforded "only minimal protection" to the
government. (EPA found that, in contrast, Lockheed had proposed firm
limits on its indirect rates.) Since the auditor also found the
back-up submitted by Kaiser in support of its proposed preliminary
indirect rates to be "minimal," he was unable to determine the
reasonableness of the proposed indirect rates. As a result, while EPA
generally used the proposed rates for the evaluation, the agency
determined that there was a risk that Kaiser's cost to perform could
exceed the cost used for evaluation purposes.