BNUMBER:  B-271302; B-271302.2
DATE:  July 3, 1996
TITLE:  Allied Technology Group, Inc.

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Matter of:Allied Technology Group, Inc.

File:     B-271302; B-271302.2

Date:July 3, 1996

Donald G. Featherstun, Esq., Mitchell H. Segal, Esq., Seyfarth, Shaw, 
Fairweather & Geraldson, for the protester.
James J. Regan, Esq., Paul Shnitzer, Esq., and Bennett J. Matelson, 
Esq.,  Crowell & Moring, and Paul K. Milmed, Esq., White & Case, for 
Weiss Associates, the intervenors.
Gena E. Cadieux, Esq., and Patrick M. Burke, Esq., Department of 
Energy, 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.  Technical evaluation of proposals for environmental restoration 
and related services is unobjectionable where it is reasonably based 
and consistent with the evaluation criteria and protester's 
identification of alleged evaluation flaws lacks any support in the 
record.

2.  Where solicitation provides specified level of effort and skill 
mix, agency's cost evaluation consisting primarily of analysis of 
direct labor rates is reasonable.  Exclusion of certain subcontractor 
costs from agency's most probable cost analysis is reasonable where 
costs were insubstantial and solicitation did not call for these costs 
to be included in calculating proposal cost.

DECISION

Allied Technology Group, Inc. (ATG) protests the award of a contract 
to Weiss Associates under request for proposals (RFP) No. 
DE-RP03-95SF20686, issued by the Department of Energy for 
environmental restoration, decontamination and decommissioning, and 
waste management activities at the Laboratory for Energy Related 
Health Research (LEHR) and other selected sites in California.  ATG 
contends that Energy's evaluation of the proposals was flawed, its 
cost evaluation was inadequate, and that the source selection official 
(SSO) failed to exercise his independent judgment.

We deny the protests.

The RFP, issued as a small business set-aside, contemplated the award 
of cost-plus-incentive-fee contract for a 2-year base period with 
three 1-year options.  The successful contractor will be responsible 
for planning, managing, executing, reporting, and integrating various 
activities in Energy's Environmental Restoration and Waste Management 
Program at LEHR.  LEHR is a Comprehensive Environmental Response, 
Compensation, and Liability Act (CERCLA) (42 U.S.C.  sec.  9601 et seq. 
(1994)) (Superfund) site.  Contract activities include, but are not 
limited to, characterization and remediation of the site; application 
of innovative remediation technologies; decontamination and 
decommissioning of structures and facilities; managing hazardous, 
radioactive, and mixed wastes; waste disposal; and Resource 
Conservation and Recovery Act (42 U.S.C.  sec.  6901 et seq. (1994)) (RCRA) 
permitting activities.  The majority of work will be performed at LEHR 
with additional work, as directed, at other California sites. 

Proposals were evaluated on the basis of four technical criteria:  (1) 
technical requirements and technical approach; (2) capabilities of the 
offeror; (3) organization and management; and (4) other requirements.  
Criteria 1 and 3 were of equal weight with criterion 2 twice as 
important as 1 or 3, and criterion 4 half as important as 
1 or 3.  Final ratings were expressed in adjectival terms:  poor, 
inadequate, adequate, and strong.  Cost was not rated or scored, but 
was evaluated on the basis of reasonableness and realism, probable 
cost, and reasonableness of professional employee compensation.  Award 
was to be made to the offeror whose proposal was most advantageous to 
the government, with technical considerations being of greater 
importance than cost.  The RFP provided for award on the basis of 
initial proposals and thus, offerors were advised to include their 
best terms from a cost and technical standpoint.  

Twelve offerors, including ATG and Weiss, submitted proposals by the 
November 30, 1995, closing date for receipt of proposals.  A technical 
evaluation committee (TEC) evaluated the proposals and numerically 
scored them.  The TEC scored Weiss's proposal at 88.38 points out of a 
possible 100 and scored ATG's proposal at 78.28 points.  The contract 
evaluation board (CEB) then conducted an independent evaluation of the 
proposals, taking into consideration the TEC's evaluations.  The CEB 
also evaluated each cost proposal to determine the probable costs to 
the government as well as the reasonableness and realism of the 
proposed costs.  The CEB took no exceptions to the proposed costs of 
the offerors.  The CEB rated Weiss's proposal "strong," meaning the 
proposal fully addressed the requirements of the technical evaluation 
criteria, with major strengths and only a few possible minor 
weaknesses.  The CEB rated ATG's and five other proposals as 
"adequate," meaning the proposals addressed the requirements of the 
technical evaluation criteria, with strengths identified being judged 
to exceed the impact of weaknesses.  

The CEB briefed the SSO on its findings.  Based on his review of the 
CEB's findings, discussions with the CEB members, and his independent 
judgment, the SSO determined that Weiss's proposal was most 
advantageous to the government.  His determination was based in part 
on Weiss's proposal being ranked the most technically superior at the 
lowest overall cost to the government (more than $2 million lower than 
ATG's proposal).  The agency awarded Weiss a letter contract on 
February 21, 1996.  After receiving a debriefing, ATG filed a protest 
with our Office.  ATG subsequently amended its protest based on 
information provided in agency documents.  

THE TECHNICAL EVALUATION

ATG contends that DOE misevaluated both its and Weiss's technical 
proposals.  According to ATG, a proper evaluation would have resulted 
in its proposal being rated higher than Weiss's.[1]  Where an 
evaluation is challenged, we will examine the evaluation to ensure 
that it was reasonable and consistent with the evaluation criteria and 
applicable statutes and regulations, since the relative merit of 
competing proposals is primarily a matter of administrative 
discretion.  Information Sys. & Networks Corp., 69 Comp. Gen. 284 
(1990), 90-1 CPD  para.  203.

With regard to the evaluation of its own proposal, ATG contends that 
the agency erred in its evaluation under each of the four technical 
criteria and identifies 
12 matters with which it disagrees with the agency assessments.  We 
have examined each allegation and find no basis for objecting to the 
agency's evaluation.[2]

For example, under the first criterion, technical requirement and 
technical approach, the agency evaluated ATG's understanding of the 
waste management statement of work and pertinent environmental laws, 
regulations, guidelines, and issues.  The evaluators found that ATG's 
experience in RCRA permitting and document preparation was not 
adequately demonstrated in the proposal.  ATG identifies a table in 
its proposal where RCRA permitting is mentioned some nine times.  It 
also has submitted statements from its president and a consultant to 
further establish its experience in this area.  We have reviewed these 
items and agree with the agency's evaluation.  The proposal references 
offer only sketchy information and fail to demonstrate experience in 
preparing RCRA permits in any meaningful way.  While ATG's statements 
assert that experience in reviewing RCRA permits is sufficient, the 
agency maintains that there is a difference between preparing permits 
and simply reviewing them.  We believe this represents a reasonable 
distinction; the ability to review a matter does not necessarily mean 
that the reviewer has appropriate experience in preparing the 
underlying document.  In any event, an offeror must demonstrate 
affirmatively the merits of its proposal and runs the risk of 
rejection if it fails to do so.  InterAmerica Research Assocs., Inc., 
B-253698.2, Nov. 19, 1993, 93-2 CPD  para.  288.  Here, ATG simply failed to 
include adequate information in its proposal.

The second criterion, capabilities of the offeror, included an 
evaluation of ATG's corporate experience and past performance in 
related work.  The evaluators identified a number of weaknesses 
including an identified inconsistency between references to the depth 
of ATG's CERCLA experience.  In this regard, the evaluators noted that 
some of ATG's descriptions of its responsibilities on a prior project 
appeared more extensive than other references to the same project.  
This led the evaluators to discount the protester's experience.  For 
example, the evaluators noted that the proposal described ATG's work 
on the project as including recommending and implementing accelerated 
removal action and spoke in terms of the project's completion ahead of 
schedule.  However, other references to the project, including the 
project manager's resume, described ATG's responsibility as 
preparation of plans, and indicated that it was currently preparing 
work plans for removal at one of the sites.  The more detailed 
explanation also referred to work being accomplished in 6 weeks.  In 
view of this relatively short performance period, differing 
descriptions of the work performed, and the apparent failure to 
implement all the plans, the evaluators concluded that the work 
described in the proposal represented a project of lesser scope than 
otherwise indicated.  While the protester maintains that its proposal 
consistently demonstrated a successfully completed project, we believe 
the evaluators reasonably found the references to be inconsistent and, 
at best, ambiguous.  Thus, they reasonably identified this as a 
weakness in the proposal.[3]  

The third criterion, organization and management, encompassed the 
adequacy of the proposed organization to provide clear lines of 
communication and responsibilities, and ensure efficient coordination 
of tasks with the offeror's organization and its subcontractors.  
Under this criterion (and criterion 2), the evaluators identified 
weaknesses in ATG's reliance on a particular subcontractor.  The 
principal of this subcontractor was proposed as the 
project/environmental engineer.  Based on ATG's organizational chart, 
all seven technical specialties of work under the contract reported to 
the project/environmental engineer.  The evaluators viewed this aspect 
of the proposal as presenting too great a reliance on the 
subcontractor.  ATG argues that its proposal identified more than 90 
percent of the staffing to be provided by ATG and subcontractors other 
than this one.  However, the agency correctly points out that this 
proposed key engineer was identified as responsible for technical 
coordination of all task orders (TO); cost, scheduling, and quality 
performance of TOs; and adequate TO staffing with qualified personnel.  
Notwithstanding ATG's arguments, we believe its proposal indicates a 
significant role for this key engineer.  Since this engineer works for 
a subcontractor, the evaluators reasonably could be concerned that ATG 
would be relying too heavily on this subcontractor for performance of 
the majority of contract work.[4] 

An additional weakness noted was that ATG's proposal did not identify 
a lead employee for the waste management program, one of seven 
technical specialties.  ATG argues that it had named itself as the 
lead for this specialty and that it was not required to identify key 
personnel for these positions.  The agency explains that waste 
management is an important aspect of contract performance and that the 
key engineer, in charge of all TOs, had no apparent waste management 
experience outside the LEHR site.  Since waste management activities 
will extend to other sites, the agency was concerned with ATG's 
failure to identify a specific lead for this work.  Even though there 
was no requirement to name a specific lead, we believe the agency's 
evaluation identified a legitimate concern.  While ATG argues that 
this represented an unstated evaluation criterion, we believe that it 
was fairly included in the stated criterion.  See Avogadro Energy 
Sys., B-244106, Sept. 9, 1991, 91-2 CPD  para.  229.

ATG also contends that the agency's evaluation of Weiss's proposal was 
flawed because it did not consider as a weakness Weiss's lack of 
certain field worker personnel, a number of whom will be required for 
contract performance.[5]  At the time of its proposal, Weiss advised 
the agency that it would need to hire more than 20 field workers to 
perform the contract.  ATG argues that these workers are the personnel 
who actually handle hazardous, mixed, and radioactive wastes involved 
in this contract and so must possess a high degree of skill, 
experience, knowledge, and training.  ATG infers that Weiss will have 
difficulty in hiring so many qualified workers.

The agency explains that the RFP did not require that all personnel be 
in an offeror's employ at the time of proposal.  In its view, the real 
inquiry in its evaluation is whether the offeror has the ability to 
have on hand the correct number of these relatively low level 
employees.  The agency maintains that hiring workers at this level 
will not represent a problem.  In this regard, ATG does not assert 
that Weiss is incapable of hiring these new employees, only that the 
agency should have downgraded Weiss's proposed staffing because of the 
large number of new hires in this area.  Under these circumstances we 
find nothing objectionable in the agency's determination that the need 
to hire these workers did not represent a weakness in Weiss's 
proposal.  Moreover, in this regard, in essence the agency has made an 
affirmative determination of Weiss's responsibility to perform this 
contract.  This is a matter which our Office does not review, absent 
circumstances not present here.  Bid Protest Regulations, 4 C.F.R.  sec.  
21.5(c) (1996).  

EVALUATION OF WEISS'S COSTS

ATG observes that the RFP required the agency to evaluate the 
reasonableness and realism of proposed costs and to determine the most 
probable cost for each offeror.  ATG contends that the agency's cost 
analysis was nonexistent or flawed, specifically contending that in 
evaluating Weiss's most probable costs, the agency improperly failed 
to consider $1.5 million attributable to Weiss's subcontractors.

The purpose of a cost realism analysis under a level-of-effort, 
cost-type contract is to determine the extent to which the offeror's 
proposed labor rates are realistic and reasonable.  ERC Envtl. and 
Energy Servs. Co., Inc., B-241549, Feb. 12, 1991, 91-1 CPD  para.  155.  In 
this regard, an agency is not required to conduct an in-depth cost 
analysis or to verify each and every item in conducting its cost 
realism analysis.  Rather, the evaluation of competing cost proposals 
requires the exercise of informed judgment by the contracting agency 
involved, since it is in the best position to assess the realism of 
cost and technical approaches and must bear the difficulties or 
additional expenses resulting from a defective cost analysis.   An 
agency may rely on information contained in offerors' cost proposals 
in performing a cost evaluation without seeking additional independent 
verification of each item of proposed costs, since the extent to which 
proposed costs will be examined is generally a matter for the agency 
to determine.  See Grey Advertising, Inc., 
55 Comp. Gen. 1111 (1976), 76-1 CPD  para.  325; Radian, Inc., B-256313.2; 
B-256313.4, June 27, 1994, 94-2 CPD  para.  104.  Since the cost realism 
analysis is a judgment function on the part of the contracting agency, 
our review is limited to a determination of whether an agency's cost 
evaluation was reasonably based and not arbitrary.  General Research 
Corp., 70 Comp. Gen. 279 (1991), 91-1 CPD  para.  183; The Warner/Osborn/G&T 
Joint Venture, B-256641.2, Aug. 23, 1994, 94-2 CPD  para.  76.

Here, the CEB reviewed the cost proposals to determine the probable 
costs to the government and the reasonableness and realism of those 
costs.  The CEB also evaluated the proposals to ensure that they 
reflected a clear understanding of the work to be performed and to 
verify whether the proposed compensation structure could support 
obtaining and keeping suitably qualified personnel.  To this end the 
CEB evaluated the offers to ensure that the professional compensation 
was not unrealistically low, unreasonable in relationship to the 
various job categories, or reflective of an offeror's failure to 
comprehend the complexity of the contract requirements.  Based on this 
review, the CEB took no exceptions to the costs proposed by Weiss and 
ATG.  According to statements submitted by the agency, the members of 
the CEB had substantial experience with similar contracts, having 
estimated costs both from the contractor's and the government's 
perspective.  Since the agency specified the level of effort and the 
skill mix necessary to perform the contract in the RFP, the offerors 
proposed costs on the same basis.  In view of the evaluators' 
comparison of personnel labor rates, subcontractor costs, overhead 
rates, and general and administrative (G&A) rates, to determine 
whether they were reasonable or understated, we find that the agency 
evaluators performed an adequate cost evaluation.

The only issue identified by ATG with respect to Weiss's costs 
concerns the agency's evaluation of certain subcontractor costs.  In 
its cost proposal, Weiss identified five subcontractors, two for which 
costs were proposed and three for which costs were not.  Weiss 
estimated that the cost for these three subcontractors would be 
"significantly less than $100,000."  The cost evaluators noted this 
and estimated the maximum potential impact as $1.5 million ($300,000 
per year for 5 years).  ATG contends that the agency should have added 
this amount to Weiss's proposal in calculating the most probable cost.  
We find this contention without merit. 

The three uncosted subcontractors were identified as examples of 
specialty contractors which Weiss intended to use on a limited basis.  
Elsewhere in the cost proposal, Weiss identified these specialty 
contractors for potential use for "emergent response" requests.  Under 
the terms of the RFP, offerors were expected to provide support for 
emergent response activities, meaning "unanticipated or non-routine" 
activities.  The agency anticipated that these activities would be 
subject to a funding limit of $250,000 per event.  The agency advised 
offerors that this dollar limit was not to be considered part of the 
offerors' costs.  Since the proposals were evaluated on the basis of 
the specified labor mix and level of effort, and the agency determined 
that Weiss had fully costed its proposal on that basis, the agency did 
not include the potential subcontractor cost in its evaluation of the 
most probable cost.  Further, the SSO was aware of the unpriced 
subcontractors when he made his source selection.  The CEB advised the 
SSO of its assessment that such subcontractors were currently 
unnecessary and if used, would not cost nearly the $1.5 million 
estimate.  Under these circumstances, we believe the agency reasonably 
declined to include the costs in its determining Weiss's most probable 
cost. 

Moreover, ATG was not prejudiced by the omission of these 
subcontractor costs in the cost realism assessment.  We believe that, 
reasonably construed, Weiss's proposal estimates the collective effort 
of these subcontractors as less than $100,000 per year, not $100,000 
per subcontractor.  Accordingly, less than $500,000 would be added to 
Weiss's proposal.  Since ATG's proposal was more than $2 million 
higher than Weiss's, the selection decision would not change.[6] 

ATG further asserts that the agency improperly ignored cost 
information which allegedly established that Weiss proposed to violate 
the small business set-aside limitations on subcontracting clause.  
See FAR  sec.  52.219-14.  This clause provides that at least 50 percent of 
the cost of contract performance incurred for personnel must be 
expended for employees of the prime contractor.  Based on its analysis 
of Weiss's proposed costs, ATG contends that Weiss's subcontractor 
labor costs are greater than those attributable to Weiss's own 
employees.  Both Weiss and the agency note that Weiss explicitly 
stated that it would perform a minimum of 
51 percent of the work.  They also argue that ATG's analysis is flawed 
because it includes the subcontractors' G&A costs which are included 
in the subcontractors' total proposed costs, and it includes the fee 
to be paid to the subcontractors.  To compensate, Weiss argues that 
its G&A expenses should be included in its labor costs and the fee 
excluded from the subcontractors' costs.  

The Small Business Administration (SBA), which has jurisdiction over 
size appeals, has ruled that in determining whether the 50-percent 
requirement has been met, the gross contract amount for the 
subcontractor is not to be considered.  Rather, only labor-related 
costs, direct or indirect, are to be considered.  See Size Appeal of 
Health Sys. Research, Inc., No. 3398 (Jan. 8, 1991).  Based on our 
review of the record, we conclude that the agency reasonably accepted 
Weiss's representation that at least 50 percent of the contract's 
personnel costs will be expended for Weiss employees.  When the 
non-labor cost of the subcontractor fee is deducted, even without 
accounting for the G&A expenses, Weiss's personnel costs exceed the 
subcontractors' costs by more than $100,000.[7] 

SOURCE SELECTION OFFICIAL'S DETERMINATION

ATG contends that the SSO failed to exercise independent judgment in 
selecting Weiss.  As "evidence" ATG notes that the SSO used the same 
findings as made by the CEB and that his source selection statement 
bears the same date as the CEB's report.  

In a negotiated procurement, agency selection officials have broad 
discretion in determining the manner and extent to which they will 
make use of the technical and cost evaluation results in making their 
determinations.  General Servs. Eng'g, Inc., B-245458, Jan. 9, 1992, 
92-1 CPD  para.  44.  A source selection official's judgment must be 
documented in sufficient detail to show it is not arbitrary.  KMS 
Fusion, Inc., B-242529, May 8, 1991, 91-1 CPD  para.  447. 

The record here contains detailed technical evaluations all of which 
support the technical scores given each proposal.  The SSO states that 
his selection was based on his review of the CEB's findings and 
discussions with the CEB, as well as the exercise of his independent 
judgment.  He concluded that the CEB's evaluation was thorough, fair, 
and consistent with the evaluation criteria in the RFP.  Based on 
this, the SSO concluded that Weiss's proposal was clearly superior.  
He considered that some offerors had proposed lower prices, but 
concluded that their low technical ratings meant that none had any 
real possibility of improving its proposal score to a point where it 
would have a reasonable chance of award.  Overall, he found that 
Weiss's superior technical proposal and low proposed cost represented 
the most advantageous proposal to the government.  While the protester 
argues that this is insufficient, it has identified nothing in the 
record which would call into question the reasonableness or 
independent nature of the SSO's decision.  The record provides no 
basis for concluding that the source selection was flawed; the mere 
fact that the SSO adopted language and findings made by the CEB does 
not indicate that he failed to exercise his independent judgment.

The protest is denied.

Comptroller General
of the United States

1. In a related argument, ATG contends that the agency erred by 
numerically scoring the proposals despite the RFP's announcement that 
proposals would be adjectivally scored.  While the proposals were 
numerically rated by the TEC, each score had a corresponding 
adjectival definition.  For example, a score of 9-10 represented a 
proposal which fully addressed the requirements, with major strengths 
and only a few minor weaknesses.  The CEB, using these numerical 
scores, then identified strengths and weaknesses, and assigned 
adjectival ratings to each proposal ranging from "poor" to "strong."  
Thus, the technical proposals were rated adjectivally.

2. In a number of instances, ATG argues that the deficiencies in its 
proposal could easily be resolved through discussions.  However, since 
the RFP provided for award on the basis of initial proposals without 
discussions and advised offerors to include their best terms from a 
price and technical standpoint, ATG was not entitled to discussions. 

3. The agency acknowledges that one of its evaluators erroneously 
included an incorrect statement concerning one of ATG's subcontractors 
as one of the weaknesses under this criterion.  However, the agency 
has submitted statements from the evaluators on the TEC and CEB that 
its members either were aware of the error and gave it no weight or 
found the weakness to be so insignificant as to have no effect on 
their evaluation.  The SSO also states that he did not focus on this 
weakness in making his source selection.  Accordingly, ATG was not 
prejudiced by this error. 

4. Weiss proposed the same individual for the position of project 
engineer.  However, it did not propose to use him in the same manner 
as that reflected in ATG's proposal.  Thus, we find no inconsistency 
in the agency's determination not to downgrade Weiss's proposal on its 
use of this individual.

5. ATG identified other flaws in the evaluation of Weiss's proposal 
based on alleged contradictory findings.  The agency fully explained 
the rationale for the evaluation statements identified by ATG and 
ATG's comments provided no meaningful response on these matters.  Our 
own review of the challenged evaluation statements discloses no 
inconsistency.  We view these allegations as abandoned by the 
protester.  Reach All, Inc., B-229772, Mar. 15, 1988, 88-1 CPD  para.  267. 

6. We note that the cost difference between ATG and Weiss would 
actually be greater than the $2 million difference in proposed costs.  
The agency believed that ATG's proposed costs were underestimated and, 
as permitted by the RFP, ATG proposed no set fee, unlike Weiss.  Once 
a fee was negotiated, ATG's cost would inevitably increase, making the 
cost difference even greater.

7. ATG argues that the cost of Weiss's other subcontractors must also 
be considered.  While ATG contends that this cost is $1.5 million, we 
have found that the figure is at most $500,000 (see cost evaluation 
discussion, supra).  While the addition of $500,000 would cause the 
subcontractors' costs to slightly exceed the 50-percent level, our 
conclusion on this issue is not changed.  First, this amount was not 
reflected in Weiss's cost proposal; costs associated with the other 
subcontractors was "to be determined."  Thus, it is not clear what 
impact, if any, these subcontractors would have on the cost proposal.  
Second, Weiss proposed a G&A rate in excess of 25 percent on its own 
labor costs.  Applying even a significantly lower rate (e.g., 6 
percent) to subcontractors costs reduces their labor costs below the 
50-percent level.  In any event, resolution of such issues is properly 
for the SBA and not our Office.  In general, we do not consider these 
matters since they concern an affirmative determination of 
responsibility.  4 C.F.R.  sec.  21.5(c); see Corvac, Inc., B-254757, Jan. 
11, 1994, 94-1 CPD  para.  14; Jasper Painting Serv., Inc., B-251092, Mar. 
4, 1993, 93-1 CPD  para.  204.