BNUMBER: B-274768; B-274768.2; B-274768.3
DATE: January 2, 1997
TITLE: Cubic Applications, 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:Cubic Applications, Inc.
File: B-274768; B-274768.2; B-274768.3
Date:January 2, 1997
James J. McCullough, Esq., Joel R. Feidelman, Esq., Deneen J.
Melander, Esq., James S. Kennell, Esq., and Nancy R. Wagner, Esq.,
Fried, Frank, Harris, Shriver & Jacobson, for the protester.
Michael A. Gordon, Esq., and Fran Baskin, Esq., Holmes, Schwartz &
Gordon, for Logicon RDA, an intervenor.
Nicholas P. Retson, Esq., Thomas J. Duffy, Esq., and Dana B. Current,
Esq., Department of the Army, for the agency.
Peter A. Iannicelli, Esq., and Michael R. Golden, Esq., Office of the
General Counsel, GAO, participated in the preparation of the decision.
DIGEST
Contracting agency properly awarded a contract for simulation support
services to the offeror of the higher technically rated, higher
evaluated cost proposal where: (1) the request for proposals stated
that technical, management, and past performance factors were
significantly more important than cost; (2) the agency reasonably
evaluated proposals, resulting in the awardee's proposal being rated
as equal to or better than the protester's proposal on each and every
evaluation factor; and (3) the source selection authority determined
that the overall technical superiority of the awardee's proposal
justified the additional probable costs over the life of the contract.
DECISION
Cubic Applications, Inc. protests the award of a contract for battle
simulation support services to Logicon RDA by the Department of the
Army pursuant to request for proposals (RFP) No. DAJA22-95-R-0083.
Cubic alleges that the evaluation of proposals and award decision were
improper.[1] We deny the protest.
Issued on October 24, 1995, by the Army's Wiesbaden Regional
Contracting Center (WRCC), the RFP requested proposals for technical
support services for computer-driven battle simulation exercises to be
conducted at various battle simulation centers in the United States
Army Europe (USAREUR) and at other locations as directed by the
contracting officer. The RFP described the services that would be
required as including, among other things, system configuration
management, site system administration, and operation and assistance
in computer-driven simulation exercises conducted to determine
potential outcomes for various warfighting scenarios. The RFP
contemplated award of a 1-year requirements contract with options for
3 additional years; required services would be performed upon issuance
of delivery orders and payment would be made on a cost-plus-award-fee
basis.
The RFP stated that the contract would be awarded to the offeror whose
proposal represented the greatest value to the government after
evaluation of proposals on three non-cost factors--technical,
management, and past performance--and cost. The RFP stated that the
technical factor was more important than the management factor and
that the management factor was more important than the past
performance factor. The RFP stated that technical, management, and
past performance factors combined would be considered significantly
more important than cost (defined in the RFP as at least two times the
value of cost). The RFP indicated that cost would be evaluated for
realism and reasonableness and that the agency would adjust costs to
determine the most probable cost of each offer.
Only Logicon and Cubic, the incumbent contractor, submitted
proposals.[2] After initial proposals were evaluated and written and
oral discussions were held with each offeror, best and final offers
(BAFO) were requested. The source selection evaluation board (SSEB)
evaluated BAFOs on technical and management factors, and the
contracting officer evaluated proposals on past performance.
Logicon's proposal received a total score of [deleted] out of a
possible 1,000 points on the non cost factors while Cubic's received a
total of [deleted] points. Logicon's proposed total cost of
approximately [deleted] was adjusted upward to [deleted], and Cubic's
proposed total cost of approximately [deleted] was adjusted upward to
approximately [deleted].[3] Based upon the technical superiority of
the Logicon proposal, the source selection advisory council (SSAC)
recommended that the contract be awarded to Logicon even though its
evaluated cost was higher than Cubic's. The source selection
authority (SSA) agreed and the contract was awarded to Logicon on
September 16. After a debriefing conference, Cubic filed its initial
protest in our Office.[4]
Basically, Cubic contends that the agency's evaluation of proposals
and decision to award the contract to Logicon were erroneous and
unsupported by the record and, therefore, the award decision should be
overturned.
Our Office will only question an agency's evaluation of proposals if
it lacks a reasonable basis or is inconsistent with the stated
evaluation criteria for award. DAE Corp., Ltd., B-257185, Sept. 6,
1994, 94-2 CPD para. 95. A protester's mere disagreement with the agency
over its technical evaluation does not establish that the evaluation
was unreasonable. Id. Here, based on our review of the evaluation
record (including each evaluator's handwritten notes, consensus
reports, and the source selection document), we conclude that the
evaluation and the award decision which relied upon the evaluators'
recommendation, were reasonable and consistent with the RFP's
criteria.
The protester's broadest challenge to the evaluation concerns the fact
that the agency made "massive" upward adjustments, amounting to more
than a [deleted] increase, to Logicon's proposed costs as part of the
cost realism analysis. Cubic points out that, in spite of its
drastically underestimated costs, Logicon's proposal received a total
of [deleted] out of a possible 800 points on the technical and
management factors. Cubic contends that it is impossible to reconcile
Logicon's extremely high technical/management scores with the radical
cost adjustments that were made to proposed costs, and that the Army
should have downgraded Logicon's proposal for the risk inherent in
such an unrealistically low-cost proposal.
The agency reports that the SSEB evaluated only the technical and
management proposals and was not provided with any cost-related
information. Thus, as the SSEB was unaware of the magnitude of the
adjustments made to Logicon's proposed costs, the SSEB evaluated any
risks associated with Logicon's approach solely on the information
contained in the technical and management proposals. However, the
contracting officer contends that the vast majority of the cost
adjustments were not related to Logicon's technical or management
approach and, therefore, had little or no impact on any risk
associated with Logicon's performing the work.
Our review of the record in light of Cubic's contention reveals
nothing that would indicate that the evaluation of Logicon's proposal
was unreasonable. Even though the Army added more than [deleted] to
Logicon's proposed costs in the cost analysis, the record does not
support Cubic's contention that Logicon's outstanding ratings were not
warranted or that the agency should have downgraded the proposal
because it represented unusually high risk.
The bulk of the adjustments [deleted] made to Logicon's cost proposal
represent logistics support costs that might be incurred by any
contractor simply because the work will be performed in Europe.
Basically, logistics costs are the costs of supporting employees
living overseas, including, among other things: home leave, living
quarters allowance, cost of living allowance, and dependent
schooling.[5] The Army believed that Cubic's logistics costs
estimate, which was much greater than Logicon's, was the more
realistic estimate. Because logistics support costs will be incurred
regardless of whether Logicon or Cubic performs the work, the Army
normalized logistics costs by increasing Logicon's costs up to
[deleted]. Similarly, the Army assumed that, as the incumbent
contractor, Cubic's cost estimates were more accurate than Logicon's
for several other items that would be incurred regardless of which
firm performed the work. The Army normalized these cost items by
increasing Logicon's estimates up to Cubic's as follows:
communications and supplies [deleted], travel [deleted], and
demobilization [deleted]. Thus, more than [deleted] of the upward
cost adjustments made to Logicon's cost proposal were for
normalization of expenses that would be incurred regardless of which
firm was awarded the contract.
In our opinion, the Army reasonably did not downgrade Logicon's
outstanding technical/management ratings because of the cost
adjustments. None of the adjustments was made because the Army
believed that Logicon's technical/ management approaches were
deficient or because the Army believed that there was greater risk
that Logicon would not perform well. Logicon had proposed a number of
cost-saving measures and pared its staff well below the government's
estimate to make a leaner, more efficient organization; the SSEB had
evaluated Logicon's cost-saving measures and its staffing and was more
than satisfied that Logicon's proposal represented a superior approach
in all areas of the evaluation. Nonetheless, the cost evaluators made
the above cost adjustments (and an additional increase of slightly
more than [deleted] to increase Logicon's staffing to Cubic's
level)[6] in order to normalize the costs of both offerors to
represent the highest costs that would be incurred under a worst case
scenario.
The protester alleges the agency rated Logicon's proposal too high in
the technical evaluation of the simulation knowledge and experience
subfactor. Cubic alleges that Logicon's proposal should not have
received a [deleted] percent (i.e., [deleted]) rating on this
subfactor because Logicon has little familiarity and experience with
some of the simulation programs (e.g., Joint Tactical Simulation
(JTS)) that will be used under the contract.
We believe that this aspect of the evaluation was reasonable. The RFP
stated that proposals would be evaluated on the "offeror's experience
in simulation training and for knowledge and understanding of the
simulation models as reflected in the response to the Sample Task
Orders." The RFP did not specify that an offeror had to have
experience with the exact software programs that would be used for
simulation exercises under the contract. The record shows that
Logicon has extensive simulation experience with simulation models
that are related and configured similarly to the models that will be
used under the contract. For example, the Army reports that Logicon
has extensive experience with the JANUS model, which the RFP
specifically stated is configured the same as the JTS model, and that
Logicon also has extensive experience with the Joint Conflict Model,
the predecessor to JTS. The SSEB was fully satisfied with Logicon's
responses to the RFP's sample task orders, stating that Logicon's
responses indicated "an extensive and up-to-date knowledge of the
simulation models uses in Theater." Thus, since Logicon has extensive
simulation experience with programs that are similar to those that
will be used in performing the contract and its responses to the RFP's
sample task orders amply demonstrated that experience to the SSEB, we
see no reason to question the agency's evaluation under this
subfactor.
The protester complains that the contracting officer's evaluation of
past performance was unreasonable because the contracting officer
ignored information contained in a contractor performance report
criticizing Logicon's performance under a battle simulation support
services contract with Fort Lewis. The protester also contends that
the contracting officer could not justify giving Cubic and Logicon
identical ratings (both firms received [deleted] out of 200 possible
points) in view of the fact that Cubic is the incumbent contractor and
received no negative comments in the contractor performance reports
used by the contracting officer to evaluate past performance.
We think this aspect of the evaluation was also reasonable. The Army
is very familiar with the quality of each firm's work and simulation
support capabilities because Cubic is the incumbent contractor and
Logicon had done the same work for the Army for the 4 preceding years.
Additionally, the contracting officer obtained and reviewed a number
of contractor performance reports regarding each firm's work under
prior contracts with the government. Even though the contractor
performance reports included some negative comments about each
offeror, for the most part, the reports were overwhelmingly positive
regarding each firm's past performance. Regarding Logicon's
performance on the Fort Lewis contract, the Fort Lewis contracting
officer specifically crossed out the negative comments he had
originally made (apparently, Logicon had rebutted the negative
information) and the remainder of that contracting officer's remarks
were generally positive. For example, the Fort Lewis contracting
officer stated that while customer satisfaction varied, it generally
ranged from good to excellent; he also stated that the timeliness of
Logicon's reports was excellent overall. After considering all of the
information in the reports, the contracting officer reasonably
concluded that both offerors were excellent, but that neither deserved
a perfect score, and that there was no qualitative distinction between
the offerors on this factor.
The protester also contends that the SSEB unreasonably downgraded
Cubic's proposal when evaluating under the qualifications and training
of proposed personnel subfactor because the SSEB expressed concern
that Cubic's proposed contract security officer (CSO) might perform
duties as a [deleted] in addition to his CSO duties. Cubic asserts
that there is nothing in its proposal that can be reasonably
interpreted as suggesting that its CSO is anything other than a
dedicated, full-time CSO. Cubic also alleges that the evaluation was
unfair because Logicon's proposal was not downgraded on this same
subfactor even though its proposal specifically indicated that its CSO
[deleted].
After evaluating initial proposals, the SSEB expressed concern that
Cubic's CSO was not fully qualified for that position and that she
would be called upon to perform other duties as well. Both issues
were the subject of discussions. The latter concern was raised with
Cubic during written discussions when the Army stated: "While the CSO
may have other, non-security duties, any other duty assigned the CSO
may not degrade his performance as CSO."
In its BAFO, instead of responding to the Army's expressed concern
about Cubic's CSO performing non-security functions in addition to CSO
duties, Cubic simply substituted another person that it believed was
better qualified. While this may have resolved the qualifications
matter, the substitution did not resolve the concern that the proposed
CSO would perform both security and non-security functions that could
degrade his performance as CSO. In fact, the resume of the new
proposed CSO showed that he currently is the [deleted]. Since this
new CSO had the [deleted] SSEB was concerned that Cubic would use him
for additional help [deleted]. Because Cubic was clearly advised of
the SSEB's concern that its proposed CSO might be called upon to do
non-security duties to the detriment of the CSO function, and because
Cubic's BAFO and its substitution of a new CSO did not address the
SSEB's concern, the SSEB reasonably downgraded Cubic's proposal on
this subfactor.
The SSEB had similar concerns about Logicon's proposed CSO; the
evaluators thought that Logicon's proposal was vague as to where the
CSO would be located and that the proposal showed that the CSO would
be assigned additional duties as [deleted]. After discussions,
Logicon's BAFO addressed the SSEB's concerns by showing that its CSO
would be located in Germany, by specifically delineating the security
duties for which the CSO would be responsible, and by indicating that
the [deleted]. In addition, the Army reports that the [deleted]
functions to be performed by Logicon's CSO are compatible with the CSO
functions because they do not take much time to perform and do not
have the urgency of exercise-related duties; thus, the [deleted]
functions can be put on the "back burner" until it is convenient for
the CSO to perform them. In view of the fact that both offerors were
put on notice of the evaluators' concerns about their respective CSOs,
and because Logicon carefully addressed the SSEB's concerns regarding
security duties and coverage while Cubic did not, we cannot see that
the evaluation was unreasonable or unfair.
The protester next argues that the decision to award the contract to
Logicon was flawed because the SSAC ignored the SSEB's determination
that Logicon's proposal contained a substantial disadvantage in that
Logicon proposed to support the Army's tactical simulation (TACSIM)
exercises with [deleted]. Cubic contends that the SSAC essentially
rewrote Logicon's proposal so that TACSIM exercises would be performed
with staff [deleted].
Again, we believe that the evaluation of this aspect of Logicon's
proposal was reasonable. The record shows that the SSEB did, in fact,
downgrade Logicon's proposal in its evaluation of the staffing
subfactor. The SSEB stated that it did not believe that a [deleted]
workforce was the most timely or cost-effective option for
TACSIM exercise support and downgraded its rating of Logicon's
proposal to [deleted] percent because of the perceived
disadvantage.[7]
Even though there is no mention of this issue in the SSAC report, the
chairman of the SSAC submitted a declaration to our Office in which he
stated that the SSAC was fully aware of Logicon's approach to TACSIM
support and the SSEB's view that it represented a substantial
disadvantage. He further stated that the SSAC considered Logicon's
[deleted] approach and discussed it among themselves at some length.
Ultimately, the SSAC concluded that this aspect of Logicon's proposal
was not a substantial disadvantage because Logicon could decide to
[deleted] or USAREUR could insist on Logicon's using [deleted] if
Logicon's [deleted] approach did not work well. The record also shows
that the Army also increased Logicon's evaluated costs to include the
cost of using [deleted] for this function and that Logicon's technical
rating was downgraded even though Logicon's [deleted] approach fully
satisfied the TACSIM support requirement. Thus, as the record shows,
the [deleted] approach was considered a disadvantage, but one that
could easily be corrected during contract performance, if necessary.
We have no basis to conclude that this view was unreasonable.
The protester contends that its proposal was unreasonably downgraded
under the staffing subfactor primarily because the SSEB erroneously
concluded that Cubic's proposal did not include sufficient staff hours
to allow 24-hour a day coverage for the Corps Battle Simulation (CBS)
sample task order. Cubic asserts that its proposal was unfairly
criticized because it proposed to use two 12-hour shifts, rather than
two 13-hour shifts, as purportedly was needed to ensure overlap during
the change over between shifts. Cubic states that its proposed
12-hour shifts do not include time off for employees to eat lunch or
take other breaks during the workday, and asserts that the actual
length of a 12-hour shift is longer than 12 hours when lunch and other
breaks are included. Therefore, Cubic argues that the two 12-hour
shifts will, in fact, overlap and the agency's criticism of its
proposal was unfair.
It is an offeror's obligation to prepare an adequately written
proposal which can be evaluated in accord with the RFP's evaluation
scheme. Miltope Corp.; Aydin Corp., B-258554.4 et al., June 6, 1995,
95-1 CPD para. 285. Cubic's proposal did not explain what was included in
its 12-hour shift or how Cubic intended to handle the transition
period between shifts so as to provide continuous coverage. In the
absence of any explanation in the proposal regarding how Cubic
proposed to handle shift changes, we think the SSEB reasonably
concluded that there would be no overlap between shifts.
Furthermore, regardless of whether Cubic could provide adequate
coverage of the CBS sample task order using 12-hour shifts, we think
the evaluators reasonably downgraded the proposal on the staffing
subfactor for several other more important reasons. For example, in
its BAFO, Cubic reduced [deleted]. In this connection, Cubic's BAFO
reduced the [deleted]. While these cuts no doubt were made in
response to the agency's statement (during discussions) that [deleted]
the fact is that Cubic's BAFO did not explain how Cubic would achieve
the reductions without impacting its contract obligations. Also,
Cubic's BAFO projected [deleted]. The SSEB believed that a more
realistic workload would be 1,840 hours per year (allowing time for
federal holidays, vacation, etc.). The protester asserts that it is
not at all unusual for its managers, exercise planners, and technical
support to work [deleted]; in fact, Cubic asserts that more than one
of these employees worked [deleted]. The Army responds that having
essential personnel projected to work so many hours reduces Cubic's
ability to react to unforeseen and additional work requirements that
might arise during the contract period. Under these circumstances, we
see no reason why the Army could not reasonably downgrade Cubic's
proposal under the staffing subfactor. Cubic's mere disagreement with
the Army on this point does not establish that the evaluation was
unreasonable. DAE Corp., Ltd, supra.
In view of the fact that the RFP stated that award was to be made on
the basis of "greatest value" and that technical/management/past
performance factors were at least twice as important as cost, the
SSA's decision to award the contract to Logicon was both reasonable
and proper. On the technical and management evaluation factors alone,
Logicon received a total of [deleted] out of a possible 800 points for
a [deleted] rating, while Cubic received a total of [deleted]. In
fact, Logicon's proposal was rated better than Cubic's proposal on
every evaluation factor/subfactor, except for the contract experience
subfactor of the management factor where the offers were rated as
equal. On the past performance factor, the firms were rated equal
([deleted] out of 200 possible points). The SSA determined that
Logicon's proposal was the best value to the government, stating:
"The overall technical superiority justifies the additional
probable costs of approximately [deleted] over the 4-year life of
the contract. These costs may not be incurred due to Logicon's
significant technical and management efficiencies."
Given Logicon's consistently superior evaluation scores, which
resulted in a [deleted] rating versus a [deleted] rating for Cubic on
the technical and management factors, the SSA could reasonably decide
that Logicon's slightly higher evaluated cost proposal represented the
greatest value to the government.
The protest is denied.
Comptroller General
of the United States
1. In its several submissions to this Office, Cubic raised a host of
arguments and myriad examples to support its allegation that the
evaluation and award decision were unreasonable and unfair; the Army
responded to each argument, justifying its actions during each phase
of the procurement; the awardee responded as well. We have reviewed
the entire record, including all evaluation and award decision
documents and find no basis for sustaining the protest. However, we
will discuss only the most significant arguments in this decision.
2. Logicon was USAREUR's original simulation support contractor,
having performed the services from 1988 to 1992. Since then, Cubic
has been performing the support services for the Army.
3. The contracting officer and the WRCC financial services branch,
with assistance from the Defense Contract Audit Agency, conducted a
cost realism analysis of each offer and made upward adjustments to
proposed costs to compute most probable costs. All figures in this
decision have been rounded off.
4. Cubic subsequently filed two additional protests; all three
protests are resolved in this decision.
5. The amount of logistics support a contractor must provide will be
significantly influenced by the number of a contractors' employees
that are granted technical expert (TE) status by the German
Government. TE status allows an employee to use United States
Government facilities, such as commissaries and post exchanges, and
entitles the employee to an exemption from German income taxes. In
the past, the German Government routinely granted TE status to
contractor employees. Recently, however, the agency reports that
there are indications that the German Government will be more
stringent in examining TE certifications and that TE status will no
longer be routinely granted. Thus, at this time, it is difficult to
predict what portion of the workforce will be granted TE status and
the amount of logistics costs that will be incurred. The Army's cost
adjustments assume a worst case scenario in which no employees are
granted TE status and, therefore, the logistics costs are at their
maximum.
6. The record shows that the SSEB specifically considered but rejected
the notion of normalizing both offerors' staffing.
7. Under the agency's source selection plan, a rating of [deleted]
percent indicates that the offer fully satisfies the requirement but
with one or more substantial disadvantages.