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.