BNUMBER:  B-271920
DATE:  August 9, 1996
TITLE:  Computer Products, Inc.

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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:Computer Products, Inc.

File:     B-271920

Date:August 9, 1996

Pamela J. Mazza, Esq., Antonio R. Franco, Esq., Andrew P. Hallowell, 
Esq., and Philip M. Dearborn III, Esq., Piliero, Mazza & Pargament, 
for the protester.
Lori S. Chofnas, Esq., Department of the Navy, for the agency.
Jacqueline Maeder, Esq., and Paul Lieberman, Esq., Office of the 
General Counsel, GAO, participated in the preparation of the decision.

DIGEST

1.  Substitution of 3 of 13 proposed key personnel after award is not 
improper where the offeror provided resumes, authorizations, and firm 
letters of commitment for its proposed individuals, 3 of whom 
subsequently became unavailable, and nothing in the record suggests 
that the names were submitted other than in good faith.

2.  Cost realism analysis of the awardee's proposal was reasonable 
where agency considered the realism of the awardee's proposed direct 
and indirect labor costs, overhead rates, general and administrative 
costs, materials and travel costs, and subcontractor costs and the 
protester has not pointed to any specific costs that it contends are 
unrealistic.  

3.  Protest that awardee is ineligible for award because firm did not 
meet eligibility requirement is denied where protester has not 
demonstrated any plausible indication that it was prejudiced by 
imprecise wording in solicitation.  

DECISION

Computer Products, Inc. protests the award of a contract to Digital 
Control Systems, Inc. under request for proposals (RFP) No. 
N00140-95-R-2205, issued by the Department of the Navy as a 
competitive section 8(a) set-aside for automated data processing and 
information management support services in support of the Metrology 
System for Uniform Recall and Reporting (MEASURE) Program for the 
Naval Aviation Depot Operations Center (NADOC), Patuxent River, 
Maryland. Computer Products alleges that the awardee engaged in "bait 
and switch" tactics by proposing key personnel it did not intend to 
provide, and that the agency performed an improper cost realism 
analysis.  Computer Products also contends that Digital's proposal 
should have been rejected as unacceptable because Digital is not 
serviced by the Small Business Administration's (SBA) Washington 
district office as required by the solicitation.  

We deny the protest.

The solicitation, issued June 30, 1995, contemplated the award of a 
cost-plus-fixed-fee contract for a base year with three 1-year options 
and required offerors to submit both a technical and cost proposal.  
The RFP specified that offers were being solicited only from small 
business concerns expressly certified by SBA for participation in 
SBA's 8(a) program which, among other things, have an approved 
business plan on file with and are serviced by "SBA Washington."  The 
RFP stated that award would be made to the offeror whose proposal 
represented the combination of technical merit and cost most favorable 
to the government.  The RFP advised that cost proposals would be 
evaluated for realism.  

In their technical proposals, offerors were to submit detailed resumes 
of 13 key personnel under 6 labor categories.[1]  Offerors were 
required to propose key personnel that the offeror reasonably 
expected, as of the date of the proposal, would be available for 
contract performance.  In this regard, the solicitation set forth 
several requirements aimed at ensuring that the personnel proposed 
would be those performing the contract and limiting personnel 
substitutions.  For example, the resumes were to indicate whether 
proposed personnel were currently employed by the offeror; for 
personnel not currently employed by the offeror, the resumes were to 
include signed statements that the individual authorized the use of 
the resume.  Offerors submitting best and final offers (BAFO) were 
also to certify that each individual proposed was contacted after the 
date of the request for BAFOs and confirmed that he or she was 
available for contract performance.  Failure to provide the 
certification would make the BAFO unacceptable.  The RFP also provided 
that, during the first 90 days of contract performance, the offeror 
could make no personnel substitutions unless such substitutions were 
necessitated by an individual's sudden illness, death, or termination 
of employment.  

Six offerors submitted proposals by the September 8 closing date.  The 
proposals were evaluated by a technical evaluation committee and three 
proposals, including those submitted by Computer Products and Digital, 
were determined to be in the competitive range.  The three competitive 
range offerors were advised of the deficiencies in their proposals and 
asked to submit revised technical proposals.  All three revised 
technical proposals were rated as acceptable on each subfactor with 
the exception that Digital's proposal was rated by the contracting 
officer as being "in the high end of the acceptable range" on the 
personnel experience subfactor.[2]  Offerors were also advised of 
areas in their cost proposals considered to be understated and were 
requested to submit BAFOs.  Each offeror submitted revised cost 
proposals but made no additional changes to its technical proposal.

Based on its cost realism analysis, the agency made no adjustments to 
Computer Products's proposed costs of [deleted]; Digital's proposed 
costs of [deleted] were adjusted upward [deleted] in the areas of 
[deleted] for a total of [deleted].  When the proposed fees were added 
to the proposed costs, Computer Products's total costs were [deleted]; 
Digital's total costs were $5,622,148.90.  Based on Digital's slightly 
higher technical rating and its low evaluated cost, the agency 
determined that Digital's proposal represented the best value to the 
government and awarded the contract to Digital on April 24.  By letter 
dated April 30, Digital requested approval to substitute three of its 
proposed personnel.  Resumes for the proposed replacement personnel 
were submitted and the substitutions were approved by the contracting 
officer.  This protest followed.

Computer Products alleges that Digital engaged in improper "bait and 
switch" tactics by proposing key personnel it did not intend to 
provide during contract performance.  Specifically, Computer Products 
alleges that, after award, it learned that representatives of Digital 
"had approached all the key personnel [the protester] had proposed and 
offered them positions on the contract.  However, of the 13 key 
employees offered positions, 9 were offered significant pay cuts."  
Based on this information, and the RFP's prohibition against personnel 
substitutions within the first 90 days after contract award, the 
protester argues that Digital never intended to use the key personnel 
it proposed in its proposal.

Offeror "bait-and-switch" practices, whereby an offeror proposes the 
use of personnel that it does not expect to use during contract 
performance, have an adverse effect on the integrity of the 
competitive procurement system and generally provide a basis for 
proposal rejection.  Unisys Corp., B-242897, June 18, 1991, 91-1 CPD  para.  
577.  This does not mean that an offeror must use the personnel it 
proposed or risk losing the contract for which it is competing in 
every case; the substitution of personnel after award is not 
objectionable unless the offeror intentionally misrepresented the 
availability of personnel or was aware prior to submission of BAFOs of 
the unavailability of personnel.  Robocom Sys., Inc., B-244974, Dec. 
4, 1991, 91-2 CPD  para.  513; Unisys Corp., supra. 

Here, as noted above, the RFP required the submission of resumes for 
current employees, signed resumes for contingent hires, and 
confirmation in the BAFO that each proposed individual was available 
for contract performance.  Digital provided signed and dated resumes 
and certifications for all 13 key personnel it proposed.  
Additionally, Digital provided letters of authorization for its 
current employees and letters of commitment for its contingent hires.  
Finally, in its BAFO, Digital certified that, subsequent to the date 
of the letter requesting BAFOs, it had contacted each individual 
proposed and that each individual had confirmed that he or she was 
available for contract performance.  

The record shows that Digital requested the three substitutions 
because in two instances the employees had accepted employment with 
other firms and in the third instance the employee was unable to 
relocate as planned.  Digital's April 30 substitution request 
indicated that although Digital was "still negotiating" with one 
employee who had accepted other employment, the employee had 
relocated, while a second employee had recently accepted another 
position that the employee considered more favorable to his needs and 
goals, and a third employee was unable to relocate at that time 
because of pressing family requirements.  In its comments on the 
agency report, Computer Products did not respond to this information 
and explanation.  Based on this record, therefore, we have no basis to 
conclude that the awardee misrepresented its intent to hire certain 
individuals or the availability of those individuals or otherwise 
engaged in improper "bait-and-switch" tactics.  

Computer Products next contends that the agency failed to conduct a 
reasonable cost realism analysis of Digital's proposal, alleging that 
Digital's "overall evaluated price is unreasonably low compared with 
industry standards" and with the protester's overall cost.  Computer 
Products also argues that the awardee's labor rates are too low to 
attract and maintain quality personnel.

When agencies evaluate proposals for the award of a cost reimbursement 
contract, an offeror's proposed estimated costs are not controlling 
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) (FAC 90-31).  Consequently, a cost 
realism analysis must be performed by the agency to determine the 
extent to which an offeror's proposed costs represent what the 
contract should cost, assuming reasonable economy and efficiency.  
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 of an agency's exercise of judgment 
in this area is limited to determining whether the agency's cost 
evaluation was reasonably based and not arbitrary.  General Research 
Corp., 70 Comp. Gen. 279 (1991), 91-1 CPD  para.  183, aff'd, American 
Management Sys., Inc.; Department of the Army--Recon., 70 Comp. Gen. 
510 (1991), 91-1 CPD  para.  492; Grey Advertising, Inc., 55 Comp. Gen. 1111 
(1976), 76-1 CPD  para.  325.

Here, the record demonstrates that the Navy performed an extensive 
analysis of the different cost elements for each proposal.  As part of 
its cost analysis, the Navy asked the Defense Contract Audit Agency 
(DCAA) to verify each offeror's cost elements and generally considered 
the results of DCAA's audit in its report.  Specifically, the 
contracting officer reviewed each offeror's proposed direct and 
indirect labor rates, overhead rates, materials and travel cost, and 
G&A costs.  As to overall costs, the record shows that Digital's 
overall costs are only [deleted] percent lower than the protester's 
costs and only [deleted] percent lower than the protester's proposed 
cost-plus-fixed-fee.  As to labor rates, the agency considered the 
realism of the individual rates that the awardee and its two 
subcontractors, Seacor and Semcor, proposed.  [Deleted].  

As to the proposed direct labor rates of its subcontractors, the Navy 
found, with only one exception, that Semcor's direct labor rates for 
the base contract period were realistic, based on DCAA recommended 
rates.  One proposed rate was adjusted [deleted] based upon the 
current salary of the individual proposed.  Since Semcor did not 
[deleted], the contracting officer upwardly adjusted the unadjusted 
rates by the [deleted] DCAA recommended adjustment.  

Similarly, the direct labor rates proposed by Seacor were determined 
realistic [deleted].   Seacor [deleted] did not escalate non-exempt 
labor.  Therefore, the contracting officer upwardly adjusted the SCA 
non-exempt categories by the DCAA recommended escalation rate for the 
option periods.  

In our view, the agency's analysis here was adequate to ensure that 
Digital's proposed cost was realistic.  Indeed, Computer Products does 
not point to anything specific in the labor costs as evidence of the 
unreasonableness of the agency's cost realism analysis.  Similarly, as 
noted above, while Computer Products complains that Digital's overall 
costs are unrealistically low, it has not indicated or explained what 
aspect of Digital's proposed cost is unrealistic.  Despite access to 
the entire cost proposal under a protective order issued by our 
Office, the protester has not identified any specific component of 
Digital's labor rate, overhead rate, G&A, or other costs that it 
contends are unrealistically low.  We conclude that the agency 
reasonably determined that Digital's evaluated costs were realistic.  

Finally, Computer Products argues that Digital's proposal should have 
been rejected because Digital is not serviced by the SBA Washington 
office.  As noted above, Digital is serviced by the SBA Philadelphia 
office.

The agency concedes that the language in the solicitation was 
incorrect and should have stated that competition was limited to firms 
serviced by district offices within SBA Region III.  Indeed, 
documentation from the SBA to the Navy confirms that the SBA intended 
to limit competition to 8(a) firms serviced by the SBA Region III 
district offices, which are located in King of Prussia, Pennsylvania, 
and that the  SBA provided a source list to the Navy listing eligible 
firms.  The Navy states that the RFP was sent to all the 8(a) firms 
listed on the SBA's source list.  Because Digital is listed on the SBA 
source list, the Navy argues that Digital is eligible for contract 
award and that, even if the RFP's eligibility requirement was 
imprecisely worded, Computer Products was not prejudiced.

The protester asserts that it was prejudiced because had it known that 
the field of competitors would include firms in the Philadelphia 
region, it would have offered a much lower price to increase its 
chance of award and would have enhanced its technical approach to make 
its technical proposal more competitive.  Computer Products also 
argues that it "may have teamed with [Digital] or a number of other 
firms" had it known that firms serviced by other than the Washington 
office were eligible for award.  In fact, the protester states that, 
early in the competition, Digital approached the protester concerning 
a teaming effort but that Computer Products rejected the offer because 
the protester believed that Digital was not eligible for award.  

Although the agency admits, and we agree, that the wording of the 
eligibility requirement was incorrect, we will not sustain Computer 
Products's protest on this basis since we do not find that Computer 
Products has established any plausible possibility that it was 
prejudiced by the agency's actions.  See McDonald-Bradley,  B-270126, 
Feb. 8, 1996, 96-1 CPD  para.  54.  In attempting to demonstrate that it was 
prejudiced, Computer Products argues that it would have lowered its 
price and/or improved its technical proposal had it known that its 
competition would include firms other than those serviced by the SBA 
Washington office.  However, an offeror in any competition should 
provide the government with its best price and its best technical 
offer regardless of its anticipated competition and should not be 
"gaming" its cost or technical proposal based on which firms it 
anticipates will compete.  In the circumstances at hand involving a 
technical misdesignation in describing the field of eligible 
competitors an offeror's speculation that the price it offered may 
have been affected is insufficient to show prejudice; rather, we 
require specific information showing adverse impact.  Cf. Karl Bros., 
Inc., B-270603, Mar. 29, 1996, 96-1 CPD  para.  179. 
 
Computer Products's assertion that it "may have" teamed with the 
awardee or with another firm also fails to establish any prejudice.  
Although Computer Products's president states that it considered joint 
venturing with another firm and that Digital had approached the 
protester concerning joint venturing, the protester provides no 
additional information to support the likelihood of Computer 
Products's joint venturing with any other offeror and no specific 
information on how such an arrangement would have enabled it to 
improve its proposal.  Further, nothing in the RFP prohibited the 
protester from teaming with other firms, not serviced by the SBA 
Washington office, so long as the protester was the primary offeror.  
On this record, there is simply no showing that competitive prejudice, 
an essential element of a viable protest, exists with respect to 
Computer Products. 

The protest is denied.

Comptroller General
of the United States

1. Specifically, the RFP required that each offeror submit one resume 
for the program manager position, two resumes for operations site 
manager, two resumes for programmer IV, two resumes for analyst IV, 
two resumes for analyst III, and four resumes for senior data analyst.

2. The technical evaluation committee assigned a rating of highly 
acceptable to Digital on the personnel experience subfactor.  The 
contracting officer disagreed with this rating, revising it to a 
rating in the high end of the acceptable range.