BNUMBER:  B-275321; B-275321.2
DATE:  February 7, 1997
TITLE:  Ares Corporation

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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:Ares Corporation

File:     B-275321; B-275321.2

Date:February 7, 1997

William H. Butterfield, Esq., Christopher H. Jensen, Esq., and Cyrus 
E. Phillips IV, Esq., Kilcullen, Wilson & Kilcullen, for the 
protester.
Alan Dickson, Esq., and Shlomo D. Katz, Esq., Epstein, Becker & Green, 
for Sparta, Inc., the intervenor. 
James T. Tate, Jr., Esq., Ballistic Missile Defense Organization, 
Department of Defense, for the agency.
John L. Formica, Esq., and James A. Spangenberg, Esq., Office of the 
General Counsel, GAO, participated in the preparation of the decision.

DIGEST

1.  Agency reasonably determined that an upward adjustment in the 
awardee's proposed costs was not warranted where the agency found that 
the awardee's uncompensated overtime rates were reasonable and that 
its proposed labor escalation rates were adequately justified. 

2.  Adjectival rating for the awardee's proposal which was equal to 
the protester's rating under the personnel evaluation criterion was 
not unreasonable, even though the agency identified a number of 
weaknesses in the relevant section of the awardee's proposal and did 
not identify any weaknesses in the relevant section of the protester's 
proposal, because the weaknesses were identified with regard to only a 
small percentage of the awardee's proposed personnel and were 
reasonably accounted for in the agency's risk assessment of this 
criterion.

3.  The selection of a lower-rated, lower-cost offer for award over a 
higher-rated, higher-cost offer in a best value procurement in which 
technical merit was stated to be more important than evaluated cost 
was not improper where the agency reasonably concluded that the 
higher-rated offer was only slightly better than the lower-rated offer 
with regard to overall technical merit and that the slight advantage 
in technical merit was not outweighed by the lower-rated offer's lower 
evaluated cost. 

DECISION

Ares Corporation protests the award of a contract to Sparta, 
Incorporated under request for proposals (RFP) No. HQ0006-96-R-0007, 
issued by the Ballistic Missile Defense Organization (BMDO), 
Department of Defense, for scientific, engineering, and technical 
assistance (SETA) services to assist BMDO's theater missile defense 
(TMD) staff.  

We deny the protest.

The RFP, a total set-aside for small business concerns, provided for 
the award of a cost-plus-award-fee contract for a base period of 2 
years with three 1-year options.  The RFP stated that award would be 
made to the offeror submitting the proposal representing the best 
overall value to the government, cost and other factors considered.  
The RFP specified that technical merit was more important than cost, 
and that the determination as to which proposal represented the best 
overall value to the government would "focus on the significant 
differences or discriminating factors between proposals and the value 
impact of those differences."  The technical evaluation criteria were 
listed in descending order of importance as follows:

        1.Personnel
        2.Understanding and Approach[1]
          a. TMD Systems Acquisition
          b. TMD Joint and Combined Operations
          c. TMD Battle Management/Command, Control, and 
             Communications Integration
          d. TMD Modeling and Simulation
          e. TMD Studies and Analysis
        3.Corporate Experience
        4.Past Performance
        5.Management

Proposals were to be evaluated under a color rating scheme as blue, 
green, yellow, or red, and for risk to assess "the [o]fferor's ability 
to perform successfully in light of the [g]overnment's evaluation of 
the [o]fferor's proposal" for each of the evaluation criteria (except 
past performance, which was to be evaluated with a color rating and 
for performance risk).[2]  The RFP stated that cost proposals would 
not be separately evaluated under the color rating scheme, but would 
be evaluated for reasonableness, realism, and completeness.

The RFP provided detailed instructions for the preparation of 
proposals, and requested that offerors submit separate business, 
technical and cost proposals.  The  RFP specified an estimated level 
of effort of 300,000 hours (approximately 160 man-years) for the 
2-year base period of the contact and 150,000 hours for each of the 
three 1-year option periods.  The RFP required, among other things, 
that offerors identify any proposed uncompensated overtime in their 
technical and cost proposals.[3]

The agency received proposals from Ares, the incumbent contractor, and 
Sparta.  The technical proposals were evaluated by a source selection 
evaluation team (SSET), and both proposals were included in the 
competitive range.  Written and oral discussions were held, and best 
and final offers (BAFO) received and evaluated.  

The SSET evaluated Ares's proposal under the personnel and corporate 
experience evaluation criteria as "green" with "low" risk, and under 
the past performance and management evaluation criteria as "blue" with 
"low" risk.  Under the subcriteria of the understanding and approach 
criterion, Ares's proposal was rated as "blue" with "low" risk under 
one subcriterion, "green" with "low" risk under three subcriteria, and 
"green" with "moderate" risk under the remaining subcriterion.[4]  The 
agency determined that Ares's cost proposal was reasonable, realistic, 
and complete, and made no adjustments to Ares's proposed cost of 
$54,125,855.

The SSET evaluated Sparta's proposal under the personnel evaluation 
criterion as "green" with "moderate" risk, and under the corporate 
experience, past performance and management evaluation criteria as 
"green" with "low" risk.  Under the understanding and approach 
subcriteria, Sparta's proposal was also rated "blue" with "low" risk 
under one subcriterion, "green" with "low" risk under three 
subcriteria, and "green" with "moderate" risk under the remaining 
subcriterion.  The agency also determined that Sparta's cost proposal 
was reasonable, realistic, and complete, and made no adjustments to 
Sparta's proposed cost of $51,589,242.

The source selection authority (SSA), while recognizing that Ares's 
proposal "received a slightly higher technical evaluation with a 
slightly lower risk assessment," determined that "the technical 
differences [between Ares's and Sparta's proposals] did not warrant 
paying the cost premium" associated with Ares's proposal.  The SSA 
thus directed that the contract be awarded to Sparta as the offeror 
submitting the proposal representing the best overall value to the 
government.  After requesting and receiving a debriefing, Ares filed 
these protests.  The agency has determined that it is in the 
government's best interest to continue performance of Sparta's 
contract, notwithstanding the protests.

Ares protests that the agency's evaluation of Sparta's cost proposal 
was unreasonable.  Specifically, the protester argues that the agency 
should have made some upward adjustments to Sparta's proposed costs 
for evaluation purposes because Sparta's proposal was based, in part, 
upon an annual labor escalation rate of only 1 percent,[5] and 
uncompensated overtime to be worked by the employees of Sparta and 
certain of its subcontractors.  The protester contends that, under a 
proper cost evaluation, that portion of Sparta's proposal which was 
based upon a 1-percent labor escalation rate should have been upwardly 
adjusted to the 3-percent labor escalation rate proposed by Ares, thus 
"normalizing" the offerors' escalation rates,[6] and the labor hours 
attributable to Sparta's proposed uncompensated overtime should have 
been considered on a compensated basis and Sparta's proposed costs 
adjusted accordingly.  Ares concludes that if these adjustments had 
been made during the cost evaluation, Sparta's proposal would have had 
a higher probable cost than Ares's.

When an agency evaluates a proposal for the award of a cost 
reimbursement contract, an offeror's proposed estimated costs are not 
dispositive 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.  
McDonnell Douglas Corp., B-259694.2; B-259694.3, June 16, 1995, 95-2 
CPD  para.  51.  Because the contracting agency is in the best position to 
make this cost realism determination, we review the agency's judgment 
in this area simply to see that the agency's cost evaluation was 
reasonably based and not arbitrary.  Infotec Dev. Inc., B-258198 et 
al., Dec. 27, 1994, 95-1 CPD  para.  52.

The agency found in reviewing Sparta's initial proposal that both 
Sparta and its primary subcontractor, Science Applications 
International Corporation (SAIC), proposed annual labor escalation 
rates of 1 percent.  The only support for the realism of the 1-percent 
escalation rate was the statement in Sparta's initial proposal that 
the Defense Contract Audit Agency (DCAA) had reviewed Sparta's 
historical labor escalation rates and had "approved [Sparta's] use of 
1% escalation per year through 1999."

Because the agency was aware that DCAA had forecasted, through 2001, 
annual escalation rates for technical and professional workers 
averaging 3.3 percent, Sparta (and SAIC) were asked during discussions 
to "[d]iscuss the realism of the proposed [1-percent] annual labor 
escalation rate and its impact on the ability to retain staff 
members."  Both Sparta and SAIC responded in Sparta's BAFO that their 
1-percent rates were based upon a number of factors.  The firms stated 
that they have been able to retain employees through various incentive 
programs and total compensation plans which reduce the importance of 
labor escalation rates to their employees.  The firms explained that 
they are employee-owned, and that, for example, their employees share 
in the firms' growth and profits through a profit-sharing plan.  
Sparta added that the compensation plan for its employees includes a 
stock option plan through which its employees can accumulate stock in 
the firm based upon employee performance.  The firms stated that their 
historic retention rates have been above the industry average, with 
SAIC providing specific data in support of this assertion.  

The agency also requested DCAA to verify certain information provided 
in Sparta's proposal, in response to which DCAA stated that the 
proposed labor and escalation rates were acceptable.[7]  Hearing 
Transcript (Tr.) at 21-22.  Based upon the information included in 
Sparta's proposal and received from DCAA, the agency concluded that 
the one-percent labor escalation rate proposed by Sparta and SAIC was 
reasonable. 
 
On this record, we do not agree that the agency should have normalized 
the labor escalation rates.  While we agree with the protester that 
the normalization of escalation rates is proper where the actual rate 
is not expected to vary by offeror, Defense Group Inc., 73 Comp. Gen. 
324 (1994), 94-2 CPD  para.  118, this is not the case here.  As discussed 
above, the agency considered the various aspects of Sparta's and 
SAIC's compensation plans, including the provisions for profit sharing 
and the awarding of stock options, and the firms' explanations as to 
why these provisions supported their proposed 1-percent escalation 
rate, as well as DCAA's views, which supported the firms' position as 
to the reasonableness of the proposed rate, and determined that the 
firms' proposed labor escalation rates of one percent should not be 
upwardly adjusted.  Since the record evidences that the escalation 
rates may vary among the offerors, the agency properly did not 
normalize these rates.[8] 

Ares argues that the agency, during its evaluation of Sparta's cost 
proposal, "ignored" the RFP's provisions that "were there to penalize 
excessive uncompensated overtime," and that Ares's proposed cost 
should have been upwardly adjusted for this reason.  

The "Identification of Uncompensated Overtime" clause, Defense Federal 
Acquisition Regulation Supplement  sec.  252.237-7019, included in the RFP, 
defines uncompensated overtime, and defines and provides an example 
for the calculation of an offeror's "uncompensated overtime rate" as 
follows:

     "'[u]ncompensated overtime rate' is the rate which results from 
     multiplying the hourly rate for a 40 hour work week by 40, and 
     then dividing by the proposed hours per week.  For example, 45 
     hours proposed on a 40 hour work week basis at $20.00 would be 
     converted to an uncompensated overtime rate of $17.78 per hour.  
     ($20 x 40) divided by 45 = $17.78."

The clause requires that offerors identify "any hours against which an 
uncompensated overtime rate is applied," and cautions that 
"[p]roposals which include unrealistically low labor rates, or which 
do not otherwise demonstrate cost realism, will be considered in a 
risk assessment and evaluated for award in accordance with that 
assessment."  The RFP also included a "Cost Format D, Uncompensated 
Overtime," which was required to be completed by offerors proposing 
uncompensated overtime.

As noted, Sparta's proposal was premised on a 45-hour work week for 
employees of Sparta and some of its subcontractors.[9]  Although 
Sparta did not include a completed cost format D in its proposal, it 
did provide, in a table of its own design, all of the information 
required for completion of cost format D; that is, Sparta's proposal 
included a table which identified the relevant labor categories and 
hourly rates for each of these categories calculated on the basis of 
40-hour and 45-hour weeks.[10]  For example, this table provided that 
Sparta's Program Manager would be required to work a 45-hour week, and 
that the hourly labor rate for the Program Manager would be $[DELETED] 
if calculated on the basis of a 40-hour week and $[DELETED] if 
calculated on the basis of a 45-hour week.[11]  Based upon its review 
of Sparta's uncompensated overtime rates, the agency found, consistent 
with the views expressed by DCAA with regard to Sparta's uncompensated 
overtime rates, that the rates were reasonable and realistic.

In our view, the agency, in reviewing Sparta's proposed uncompensated 
overtime, acted in accordance with the RFP and did not "ignore" the 
provisions of the RFP relevant to the consideration of an offeror's 
proposal of uncompensated overtime.  Contrary to the protester's view, 
there is simply no provision in the RFP that requires the agency to 
"penalize" an offeror merely because that offeror proposes to perform 
the contract, in part, through the use of uncompensated overtime; 
rather, the RFP informs offerors that proposed unrealistically low 
uncompensated overtime rates or uncompensated time not otherwise shown 
to be cost realistic would be taken into account in the evaluation of 
proposals and ultimate award selection.  Here, Ares does not contend, 
and the record does not demonstrate, that Sparta's uncompensated 
overtime rates are unrealistic.  Moreover, the agency reasonably found 
that Sparta's use of uncompensated overtime was not a significant 
technical concern and was acceptable.[12]  Under the circumstances, 
there is no basis on which to find this aspect of the agency's 
evaluation unreasonable.  General Research Corp., supra.  

Ares protests that the agency's evaluation of Sparta's proposal under 
the personnel evaluation criterion was unreasonable.  Specifically, 
Ares contends that its and Sparta's proposals should not have received 
the same rating of "green" under this evaluation criterion in light of 
the perceived superiority of Ares's proposed personnel, as evidenced 
by the evaluation documents, as well as Sparta's proposed use of 
uncompensated overtime.[13]

The evaluation of technical proposals is a matter within the 
discretion of the contracting agency because the agency is responsible 
for defining its needs and the best method of accommodating them.  
Metrica, Inc., B-270086; B-270086.2, Feb. 8, 1996, 96-1 CPD  para.  135.  In 
reviewing an agency's evaluation, we will not reevaluate proposals, 
but instead will examine the agency's evaluation to ensure that it was 
reasonable and consistent with the solicitation's stated evaluation 
criteria.  Decision Sys. Technologies, Inc.; NCI Information Sys., 
Inc., B-251786 et al., Sept. 7, 1994, 94-2 CPD  para.  167.  A protester's 
mere disagreement with the agency does not render the evaluation 
unreasonable.  McDonnell Douglas Corp., supra.

As mentioned previously, Ares's proposal was rated as "green" with 
"low" risk and Sparta's proposal as "green" with "moderate" risk under 
the personnel evaluation criterion.  The agency found that Ares's 
proposal contained an "[e]xcellent skill mix," and that the personnel 
proposed by Ares had "[s]ignificant [j]oint military experience" and 
"solid background[s]."  The evaluators did not note any weaknesses in 
Ares's proposal under the personnel criterion.

In contrast, the SSET, while finding that Sparta's personnel had 
"[s]olid . . . background[s]" in a number of relevant areas, noted a 
number of weaknesses with regard to 8 of the 15 professional level 
staff proposed to assist BMDO's Joint Force Directorate (JFD).[14]  
For example, the agency found that three of the individuals' 
backgrounds were in strategic space rather than tactical air defense 
as desired, that three other individuals' backgrounds were with single 
service organizations rather than "purple" organizations like 
BMDO,[15] and that two individuals were primarily logistics experts 
whose expertise was not needed for this task; two of these eight 
individuals were proposed on a part-time basis only.  The SSET 
concluded that because weaknesses were identified with regard to only 
6 full-time and 2 part-time personnel out of Sparta's 70 proposed 
professional personnel and could be overcome through the agency's 
monitoring of the contract and the movement of Sparta personnel within 
the various BMDO directorates, the proposal warranted a rating of 
"green" with "moderate" risk under the personnel evaluation criterion.  
Tr. at 262, 324.  

Based on our review of the record, we cannot conclude that the agency 
acted unreasonably in evaluating Sparta's proposal as "green" with 
"moderate" risk.  Although the evaluation record, as discussed above, 
does evidence that the SSET identified a number of weaknesses in 
certain of Sparta's proposed personnel, there is no indication that 
because of these weaknesses Sparta's proposal had "[f]ail[ed] to meet 
[the] evaluation standards" under the personnel criterion such that 
its proposal should have been rated as "yellow."  That is, the 
evaluation record evidences that although weaknesses were identified 
with regard to 8 of Sparta's 
70 proposed professional personnel, these weaknesses were not viewed 
as serious deficiencies, and in fact, were considered relatively minor 
in light of the overall quality of Sparta's total personnel team.  The 
SSET believed that by monitoring Sparta's performance should it be 
awarded the contract, the personnel weaknesses regarding this one 
directorate could be overcome, and that Sparta's proposal therefore 
merited a "green" rating, albeit with "moderate" risk, under the 
personnel criterion. Under the circumstances, we do not find this 
aspect of the evaluation unreasonable.  

With regard to Sparta's proposed use of uncompensated overtime in the 
performance of the contract, the record demonstrates that the SSET 
considered the various impacts that this may have on Sparta's 
performance should it receive the award.  For example, one member of 
the SSET noted that the use of uncompensated overtime in the 
performance of the contract reduces the number of actual contractor 
staff available to support BMDO.  The record reflects that this 
concern was reasonably considered by the SSET and SSA, and determined 
not to be of any significance and thus not a weakness in Sparta's 
proposal.  Tr. at 247, 350.  

Ares also protests the selection of Sparta as the offeror submitting 
the proposal representing the best value to the government.  Ares 
contends that its proposal "was the clear winner" of the technical 
evaluation, being highest rated under three of the five evaluation 
criteria and having more identified strengths, and that its proposal's 
technical superiority more than offset the cost difference of 
approximately 4-percent, inasmuch as the RFP stated that technical 
merit would be considered more important than cost in making the award 
selection.

Notwithstanding a solicitation's emphasis on technical merit, an 
agency may properly award a contract to a lower-cost, lower 
technically scored offeror if it decides that the cost premium 
involved in awarding to a higher-rated, higher-cost offeror is not 
justified given the acceptable level of technical competence available 
at the lower cost.  Dayton T. Brown, Inc., B-229664, Mar. 30, 1988, 
88-1 CPD  para.  321.  The determining element is not the difference in 
technical merit, per se, but the contracting agency's judgment 
concerning the significance of that difference.  Id.  In this regard, 
evaluation scores are merely guides for the SSA, who must use his or 
her judgment to determine what the technical difference between 
competing proposals might mean to contract performance, and who must 
consider what it would cost to take advantage of it.  Grey 
Advertising, Inc, 55 Comp. Gen. 1111 (1976), 76-1 CPD  para.  325.  In 
making such determinations, the SSA has broad discretion, and the 
extent to which technical merit may be sacrificed for cost, or vice 
versa, is limited only by the requirement that the trade-off decision 
be reasonable in light of the established evaluation and source 
selection criteria.  Blue Cross Blue Shield of Texas, Inc., 
B-261316.4, Nov. 9, 1995, 95-2 CPD  para.  248.     

As indicated previously, the ratings of Ares's and Sparta's BAFOs 
differed with regard to the personnel evaluation criterion, under 
which Ares's proposal was evaluated as "green" with "low" risk, and 
Sparta's as "green" with "moderate" risk.  The ratings of the 
proposals also differed under the lowest-weighted past performance and 
management evaluation criteria, with Ares's proposal being rated as 
"blue" with "low" risk and Sparta's rated as "green" with "low" 
risk.[16]  The SSET reported the results of the evaluation to the 
cognizant contracting officer (CO) for review and, in accordance with 
the SSP, the performance of an advisory cost/technical tradeoff in 
preparation for making an award recommendation to the SSA.

The CO reviewed the evaluation results with the chairman of the SSET, 
focusing, as required by the SSP and the RFP, "on the significant 
differences or discriminating factors between the proposals and the 
value impact of those differences."  The CO, although recognizing that 
the SSET had evaluated Ares's proposal as superior to Sparta's under 
the personnel, past performance, and management evaluation criteria, 
was unable to identify any discriminators between the proposals that 
warranted the payment of a cost premium for Ares's proposal.  The CO 
and chairman of the SSET thus reconvened the SSET and requested that 
the SSET identify specific strengths in Ares's proposal that would 
justify paying a cost premium for Ares's higher-rated technical 
proposal.  The SSET was unable to identify any such strengths, and the 
CO thus concluded that while Ares's proposal was superior to Sparta's 
to some extent, there were no discriminators between the proposals 
that warranted the payment of a price premium for Ares's technical 
superiority.

The CO and chairman of the SSET thus drafted a recommendation that the 
contract be awarded to Sparta as the offeror submitting the proposal 
"deemed to represent the best value to the [g]overnment."  The CO and 
chairman of the SSET briefed the SSA on the findings of the SSET, and 
the basis for their recommendation for award.  The detailed briefing 
included a presentation of charts depicting, among other things, the 
color and risk ratings, and strengths and weaknesses, of each 
offeror's proposal under each of the evaluation criteria and 
subcriteria, as identified by the SSET.  The SSA was also briefed as 
to the results of the agency's cost evaluation, including the agency's 
analysis of Sparta's proposed use of uncompensated overtime in the 
performance of the contract, and the agency's acceptance of Sparta's 
1-percent labor escalation rate for evaluation purposes. 

The SSA reviewed the decision briefing charts and the draft 
recommendation for award, and, as stated previously, determined that 
although Ares's proposal received a slightly higher technical rating 
than Sparta's proposal, the technical differences between the 
proposals did not warrant paying the cost premium associated with 
Ares's proposal.  In reaching this conclusion, the SSA considered, 
among other things, the evaluated weaknesses in Sparta's proposed 
personnel.  The SSA concluded that although the weaknesses were not 
insignificant, Ares's proposal was still only slightly better than 
Sparta's under the personnel evaluation criterion because the 
identified weaknesses in Sparta' personnel involved a limited number 
of personnel proposed to support only one of the six BMDO 
directorates.[17]  Tr. at 331.  The SSA also considered the relative 
ratings of the proposals under the past performance and management 
evaluation criteria, but despite Ares's proposal's higher ratings 
under these evaluation criteria, found that the overall difference in 
technical merit between the proposals was again slight because the 
past performance and management criteria were the least and second 
least in importance.  Tr. at 343-344; 354.  The SSA thus determined 
that although Ares's proposal "received a slightly higher technical 
evaluation with a slightly lower risk assessment . . . the technical 
differences did not warrant paying the cost premium" associated with 
the proposal, and directed that award be made to Sparta.[18]

In our view, the agency's decision to select Sparta's lower cost, 
lower rated proposal for award was reasonable.  That is, the SSA 
considered the difference in the ratings of the offers under the RFP's 
technical evaluation criterion, and determined that Ares's proposal, 
overall, was only slightly better technically than Sparta's.  In this 
regard, the SSA was fully cognizant of, and carefully considered, the 
nature of Ares's technical superiority under the most heavily weighted 
personnel evaluation criterion and found that, on balance, it only 
resulted in a "slight" technical advantage for Ares, and noted that 
Ares's other higher ratings were under the most lightly weighted 
evaluation criteria and as such did not make Ares's proposal's 
technical superiority more than "slight."  While Ares contends that 
its technical superiority was actually more pronounced than found by 
the SSA, it has not shown the SSA's judgment in this regard was not 
reasonably based.  Thus, the SSA's determination, that this slight 
advantage in overall technical merit was not worth the payment of a 
4-percent cost premium, was well within the bounds of discretion 
accorded agencies in making cost/technical tradeoffs.  Calspan Corp., 
B-255268, Feb. 22, 1994, 94-1 CPD  para.  136.

The protest is denied.[19]

Comptroller General
of the United States

1. The RFP stated that each of the subcriteria listed under the 
understanding and approach evaluation criteria was equal in 
importance.

2. Under the source selection plan (SSP), "[b]lue" was defined as 
"[e]xceeds specified performance or capability in a way beneficial to 
BMDO, and has no significant weaknesses"; "[g]reen" as "[m]eets 
evaluation standards and any weaknesses are readily correctable"; 
"[y]ellow" as "[f]ails to meet evaluation standards; however, any 
significant deficiencies are correctable"; and "[r]ed" as "[f]ails to 
meet a minimum requirement of the RFP and the deficiency is not 
correctable without a major revision of the proposal."  With regard to 
proposal risk, "[h]igh" was defined as "[l]ikely to cause significant, 
serious disruption of schedule, increase in cost, or degradation of 
performance even with special contractor emphasis and close 
[g]overnment monitoring"; "[m]oderate" as "[c]an potentially cause 
some disruption of schedule, increase in cost, or degradation of 
performance; however, special contractor emphasis and close 
[g]overnment monitoring will probably be able to overcome 
difficulties"; and "[l]ow" as "[h]as little potential to cause 
disruption of schedule, increase in cost, or degradation of 
performance; normal contractor effort and [g]overnment performance 
monitoring will probably be able to overcome difficulties."  With 
regard to risk under the past performance evaluation criterion, 
"[h]igh" was defined as "[s]ignificant doubt exists, based on the 
offeror's performance record, that the offeror can satisfactorily 
perform the proposed effort"; "[m]oderate" as "[s]ome doubt exists, 
based on the offeror's performance record, that the offeror can 
satisfactorily perform the proposed effort"; "[l]ow" as "[l]ittle 
doubt exists, based on the offeror's performance record, that the 
offeror can satisfactorily perform the proposed effort"; and "[n]ot 
[a]pplicable" as "[n]o significant performance record is identifiable.  
This is a neutral rating."   

3. Uncompensated overtime refers to the overtime hours (hours in 
excess of 8 hours per day/40 hours per week) incurred by salaried 
employees who are exempt from the coverage of the Fair Labor Standards 
Act of 1938, 29 U.S.C.  sec.  201  sec.  201-219 (1994).  Under this Act, 
exempt employees need not be paid for hours in excess of 8 hours per 
day or 40 hours per week.  General Research Corp., 70 Comp. Gen. 279 
(1991), 91-1 CPD  para.  183, Recon.denied, American Management Sys., Inc.; 
Department of the Army--Recon.,70 Comp. Gen. 510 (1991), 91-1 CPD  para.  
492.

4. The agency did not determine an overall rating for either offeror's 
proposal under the understanding and approach criterion.

5. Labor escalation provides for the increase in labor costs due to 
inflation or other usual salary increases over the life of a contract 
and is generally accomplished by the use of a percentage multiplier 
that is applied to proposed direct labor costs.  General Research 
Corp., supra.

6. Normalization is a technique sometimes used within the cost 
adjustment process in an attempt to arrive at a greater degree of cost 
realism.  General Research Corp., supra.  It involves measuring 
offerors against the same cost standard or baseline in circumstances 
where there are no logical differences in approach or in situations 
where insufficient information is provided in proposals.  Id.  

7. A May 22, 1996, DCAA audit report (provided by Sparta) states, 
"[w]e do not take exception to [Sparta's] proposed 1% per year 
escalation."  

8. Ares does not contend that its proposed 3-percent labor escalation 
rate should have been normalized to Sparta's proposed 1-percent rate.

9. While Sparta's proposal did not label the labor hours to be worked 
by employees in excess of 45 hours per week as uncompensated overtime, 
the record shows that the agency evaluated it as such.

10. Thus, contrary to the protester's contention, there is no basis to 
reject Sparta's proposal for its failure to include a completed cost 
format D in its proposal.

11. For the purpose of comparison, Ares's proposed hourly labor rate 
for its program manager was $[DELETED] based upon Ares's standard 
40-hour workweek.

12. The record shows that Sparta's proposed personnel had been 
apprised that their compensation was based on a 45-hour week.

13. Ares also protested that Sparta's proposal failed to provide a 
labor mix for the cognizant programs management and operations office 
which complied with the RFP requirements.  This allegation was 
discussed in detail at the hearing, and, as demonstrated by the 
record, Sparta's proposed labor mix for this office is in fact richer 
than envisioned by the RFP.  Tr. at 49-56.

14. The successful contractor under the RFP will be required, among 
other things, to provide SETA support for six BMDO directorates.

15. Purple organizations, consist of the office of the Secretary of 
Defense, the Joint Staff, and the Defense Agencies as opposed to the 
Departments of the Air Force, Navy, Army, and the Marine Corps.   

16. As indicated, the ratings of Ares's and Sparta's proposals under 
the corporate experience evaluation criterion and the subcriteria to 
the understanding and approach evaluation criterion were the same 
and/or balanced each other out.

17. The SSA believed that the weaknesses, as stated in the SSET 
report, were particularly influenced by one evaluator, and while these 
weaknesses were legitimate, he felt that they were more strongly 
stated than they could have been.  Tr. at 325, 329, 334.

18. Although Ares's proposed and evaluated cost appears to be 
approximately 
$2.5 million higher than Sparta's, and is represented as $2.5 million 
in the source selection statement, the SSA stated that in his view, 
the actual cost difference was approximately $2 million.  This figure 
is reached, the SSA explains, by subtracting the "other direct costs" 
set forth in each offeror's proposal and considering the proposed 
costs on that basis.  Tr. at 379.

19. The protester also argued that the agency conducted misleading 
discussions with it and had allowed Sparta to engage in an improper 
"bait & switch" tactic with regard to certain of Sparta's proposed 
personnel.  In its report on Sparta's protests, the agency responded 
in detail to these arguments.  Because Ares did not respond to the 
agency's position in its comments on the agency report, we consider 
Ares to have abandoned these aspects of its protests.  D & M Gen. 
Contracting, Inc., B-259995; B-259995.2, May 8, 1995, 95-1 CPD  para.  235.