BNUMBER: B-275518.2
DATE: May 21, 1997
TITLE: Tecom, Inc., B-275518.2, May 21, 1997
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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:Tecom, Inc.
File: B-275518.2
Date:May 21, 1997
Theodore M. Bailey, Esq., for the protester.
William F. Savarino, Esq., Cohen & White, for Baker-Serco Joint
Venture, an intervenor.
John E. Lariccia, Esq., Deborah Muldoon, Esq., and Nike Nihiser, Esq.,
Department of the Air Force, for the agency.
Linda C. Glass, Esq., and Paul I. Lieberman, Esq., Office of the
General Counsel, GAO, participated in the preparation of the decision.
DIGEST
1. Agency's price realism evaluation for award of a firm, fixed-price
contract is unobjectionable where it is based on cost and price
information submitted by the offerors which reasonably supports the
conclusion that proposed prices were reasonable.
2. Protest challenging the evaluation of technical proposals is
denied where evaluation record shows that evaluation was reasonable
and consistent with the solicitation's evaluation criteria.
DECISION
Tecom, Inc. protests the award of a contract to Baker-Serco Joint
Venture under request for proposals (RFP) No. F33601-96-R-9009, issued
by the Department of the Air Force for vehicle operations and
maintenance services at Wright-Patterson Air Force Base. Tecom
asserts that the Air Force did not perform a sufficient price realism
analysis as required by the RFP, misevaluated the technical proposals,
and improperly awarded the contract to Baker-Serco on the basis of its
lower price when the solicitation emphasized that technical factors
were more important than price.
We deny the protest.
The RFP, issued on July 10, 1996, contemplated the award of a firm,
fixed-price service contract with award fee for the operation and
maintenance functions of the vehicle fleet for a base contract period
with four 1-year options. The services include all personnel,
equipment, tools materials, supervision and other items, and services
necessary to manage and perform vehicle maintenance, vehicle
operations and analysis at Wright-Patterson.
The RFP stated that award would be made to the responsible offeror who
demonstrates that the offeror possesses the management, financial, and
technical capabilities necessary to fill the requirements of the
contract and whose proposal is determined to be the most advantageous
to the government. The RFP also stated that the offeror whose
proposal had the highest degree of credibility and whose performance
could best meet the government's requirements at an affordable cost
would be selected for award. The RFP cautioned offerors that
acquisition cost would be a substantial factor in the source selection
decision.
The solicitation listed the following four criteria, each of which was
of equal importance:
(1) Management
Factor 1.1 - Management On Site
Factor 1.2 - Corporate Level Support
Factor 1.3 - Administrative Support
(2) Production
Factor 2.1 - Operations Plan
Factor 2.2 - Maintenance Plan
Factor 2.3 - Supply Management
(3) Quality
Factor 3.1 - Personnel
Factor 3.2 - Quality Procedures
(4) Cost/Price
The factors within each area were also equal in importance. The RFP
also provided that proposals would be evaluated for proposal risk,
which would involve an assessment of the risks associated with the
offeror's proposed approach to accomplish the requirements.
Similarly, proposals were to be evaluated for performance risk, which
would involve the assessment of the probability of the offeror
successfully accomplishing the proposed effort based on the offeror's
demonstrated relevant present and past performance. Prices were to be
evaluated for reasonableness, completeness, and realism. The
solicitation stated that proposals would be evaluated on the basis of
a "comparison with information such as DCAA [Defense Contract Audit
Agency], historical, wage determination, current commercial/market,
and/or GSA prices."
The agency received 10 proposals, including Tecom's (the incumbent
contractor) and Baker-Serco's, by the August 21, 1996, closing date.
The technical proposals were evaluated for performance and proposal
risk[1], as well as under a color/adjectival rating scheme[2], for
each of the evaluation factors. Five proposals, including Tecom's and
Baker-Serco's were included in the competitive range. One proposal
was subsequently withdrawn. Written discussions were conducted after
which best and final offers (BAFO) were requested, received, and
evaluated. The BAFOs of Baker-Serco and Tecom were rated as follows:
Baker-Serco Tecom
Color* Proposal
Risk* Perform
Risk** Color* Proposal
Risk* Perform
Risk**
Management Area Low Low
1.1 Management On SiteBlueLow Blue Low
1.2 Corporate Level SupportGreenLowGreenLow
1.2 Administrative SupportGreenLowGreenLow
Production Area Low Low
2.1 Operations PlanGreen Low Blue Low
2.2 Supply ManagementGreenModerate Green Low
2.3 Supply ManagementGreenLow Green Low
Quality Area Low Low
3.1 Personnel Green Low Green Low
3.2 Quality ProceduresGreenLow Green Low
Cost $26,306,233 $31,015,061*Color
Rating and Proposal Risk were assessed at the factor level.
**Performance Risk was assessed at the area level.
The agency determined that both offerors' prices were realistic,
reasonable, and complete. This determination was based on an
evaluation of whether proposed prices were compatible with the scope
and effort of the RFP, an examination of the acceptability of the
offeror's methodologies used in developing the proposed costs, and the
offeror's responsiveness in providing cost/price data for all RFP
requirements and assessing the traceability of the proposed costs. As
a result of this assessment, the evaluators did note that
Baker-Serco's minimum manning, when combined with its proposed
[deleted] percent profit, could potentially result in increased labor
costs or performance deficiencies.
The source selection official determined that Baker-Serco represented
the best overall value to the government under the evaluation criteria
and factors set forth in the solicitation, and award was made to
Baker-Serco on January 31, 1997. After being informed that
Baker-Serco had received the award and being debriefed by the agency,
Tecom protested to our Office.
Tecom first argues that the agency failed to follow the stated
evaluation criteria by making price more important than the other
factors. Tecom points out that the RFP clearly provided that price
was to be only one of the four factors that were to have equal weight
in the source selection decision and that the RFP further provided
that the three factors other than price were collectively more
important than price. Tecom maintains that because of budget
constraints, the agency deviated from its stated evaluation emphasis
of technical over price, and instead focused only on whether
Baker-Serco's proposal was acceptable, rather than on whether Tecom's
proposal was superior.
Where an evaluation is challenged, we will examine the evaluation to
ensure that it was reasonable and consistent with the evaluation
criteria and applicable statutes and regulations, since the relative
merit of competing proposals is primarily a matter of administrative
discretion. Cardinal Scientific Inc., B-270309, 96-1 CPD para. 70 at 3.
While section M of the RFP provided that the evaluation factors and
considerations other than price, when combined are more important than
price, it also cautioned offerors that price would be a substantial
factor in the source selection decision. Here, the record shows that
in selecting Baker-Serco for award, the source selection official
recognized Baker-Serco's moderate risk rating which resulted from its
minimum manning numbers and, after examining and carefully considering
Tecom's superior rating, concluded that based on his experience in the
area, knowledge of the requirement and the fact that all areas of
evaluation were of equal importance, the additional benefits of
Tecom's proposal simply did not justify the higher associated cost.
This determination is neither unreasonable nor inconsistent with the
stated evaluation criteria.
Tecom next argues that the agency did not perform a proper price
realism analysis. Tecom maintains that since the agency did not
prepare an estimate and because fleet maintenance on the scale being
procured is not a common item on the market or subject to price lists,
the only yardsticks by which to determine the reasonableness of the
proposed prices are the other offers received, previous prices, or an
analysis of the work required. Tecom argues that the agency has not
explained how Baker-Serco can adequately perform the work with
[deleted] percent fewer personnel and [deleted] percent less manhours
per year than Tecom proposed. Tecom contends that comparing
Baker-Serco's proposed price to the rejected offers shows that
Baker-Serco's price was not realistic and that Baker-Serco's price was
also out of line with the prices submitted by the other BAFO
participants. Lastly, Tecom maintains that Baker-Serco's past
performance in which insufficient staffing was noted as a problem
should have alerted the agency that Baker-Serco's price was
unrealistic.
Generally, cost realism (a measurement of the likely cost of
performance in a cost reimbursement contract) is not a factor in the
evaluation of proposals when a
fixed-price contract is to be awarded, since the government's
liability is fixed, and the risk of cost escalation is borne by the
contractor. PHP Healthcare Corp.; Sisters of Charity of the Incarnate
Word, B-251799 et al., May 4, 1993, 93-1 CPD para. 366 at 5. However,
since the risk of poor performance when a contractor is forced to
provide services at little or no profit is a legitimate concern in
evaluating proposals, an agency in its discretion may, as it did here,
provide for a price realism analysis in the solicitation of
fixed-price proposals. Id. The depth of an agency's price realism
analysis is a matter within the sound exercise of the agency's
discretion. See Family Realty, B-247772, July 6, 1992, 92-2 CPD para. 6
at 4.
Here, the agency evaluated the price proposals for realism by
determining whether prices were compatible with the scope and effort
outlined under the solicitation. This included an evaluation of the
extent to which each offeror's proposed prices indicated a clear
understanding of the requirements of the program. Offerors' proposals
were examined for reasonableness by determining if adequate price
competition existed and by assessing the acceptability of the
offeror's methodologies used in developing the proposed costs. This
included an evaluation of the extent to which each offeror's proposed
prices indicated a clear understanding of and sound approach to
satisfying solicitation requirements. Each proposal was further
evaluated to determine whether proposed prices were supported by
factual and verifiable data and whether estimates were supported by
valid and suitable assumptions and estimating techniques. Proposals
were examined for completeness by assessing the responsiveness of the
offeror in providing cost/price data for all RFP requirements and
assessing the traceability of the proposed costs. All offerors'
adjustments at BAFO were considered supported and determined
reasonable, realistic, and complete. While the technical evaluation
team concluded that Baker-Serco could accomplish the maintenance
effort with its proposed manning, it recognized that the proposed
manning reflected some risk in the cost proposal and could cause some
disruption or degradation of performance which resulted in
Baker-Serco's receiving a moderate risk rating for performance. Tecom
repeatedly argues that Baker-Serco's price was significantly less than
the price for the previous contract. The agency points out, however,
that the requirements of this solicitation were significantly reduced
from the previous contract that Tecom's proposed price for the current
requirement was also substantially lower than Tecom's price for the
previous contract.
We see nothing objectionable about the price analysis performed by the
agency. Under a fixed-price solicitation, even when the agency
provides that it will perform a price realism analysis the depth of a
price analysis is a matter within the sound exercise of the agency's
discretion. Family Realty, supra. While the protester disagrees with
the agency's conclusions, there is nothing in the record to indicate
that the price analysis or conclusion about Baker-Serco's ability were
erroneous. As noted above, the RFP provided for a price realism
analysis and listed several comparisons that could be made in
performing that analysis. The record shows that while the agency did
not perform the comparisons proposed by Tecom, it did perform a
detailed price analysis consistent with the RFP criteria and concluded
that Baker-Serco's proposed price demonstrated a clear understanding
of and sound approach to satisfying the requirement. Although the
protester questions the quality of the price analysis, the protester's
allegations establish, at best, the agency's cognizance that
[deleted], but that this low price did not reflect a defective
technical approach or lack of understanding on Baker-Serco's part.
Tecom also argues that the agency's evaluation of proposals was
flawed. Specifically, Tecom maintains that the only blue rating that
Baker-Serco's received in the management area was unreasonable since
the only identified strength was irrelevant to the stated criteria,
and the agency's evaluation ignored a significant weakness which went
to the heart of that factor. Tecom further maintains that even though
no change had been made to Baker-Serco's initial proposal for
staffing, the agency changed Baker-Serco's maintenance and operations
color ratings from yellow to green and lowered Baker-Serco's
operations plan risk from moderate to low. Tecom also contends that
the agency's evaluation of its proposal was unreasonable and maintains
that it should have received a blue rating in the supply management
factor. All in all, it is Tecom's position that had the agency
properly evaluated proposals, the technical difference between the
proposals would have been even more significant and thus would have
affected the best value determination.
Evaluating the relative merits of competing proposals is a matter
within the discretion of the contracting agency since the agency is
responsible for defining its needs and the best method of
accommodating them, and it must bear the burden resulting from a
defective evaluation. Advanced Tech. and Research Corp.,
B-257451.2, Dec. 9, 1994, 94-2 CPD para. 230 at 3; Marine Animal Prods.
Int'l, Inc.,
B-247150.2, July 13, 1992, 92-2 CPD para. 16 at 5. Consequently, 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 factors. MAR, Inc., B-246889, Apr.
14, 1992, 92-1 CPD para. 367 at 4. An offeror's mere disagreement with
the agency does not render the evaluation unreasonable. Medland
Controls, Inc., B-255204; B-255204.3, Feb. 17, 1994, 94-1 CPD para. 260 at
3. Our review of the record provides no basis for objecting to the
agency's evaluation.
The record shows that the agency evaluators considered Baker-Serco's
proposal to provide double manning support during the phase-in period
to be a strength because it was an indication of Baker-Serco's
management authority to commit corporate resources to the program,
which was a stated evaluation factor. With respect to Baker-Serco's
green rating in the maintenance and operations plan factors, the
record shows that Baker-Serco made significant changes to its proposed
staffing from its initial proposal to its BAFO which justified its
improved rating. With respect to Tecom's allegation that it should
have received a blue rating instead of green in the supply management
factor, the record shows that the evaluators concluded that Tecom's
procedures for handling hazardous materials and waste were a strength
but the requirement standards were not exceeded in a way which would
provided an increased benefit to the agency. Moreover, as explained
above, the SSA recognized Tecom's technical superiority but determined
that it was not worth the additional cost. The record establishes
that the agency's evaluations are unobjectionable and Tecom's
contentions to the contrary merely reflect disagreement with the
agency's evaluation which does not render the evaluation unreasonable.
Litton Sys., Inc., B-237596.3, Aug. 8, 1990, 90-2 CPD para. 115 at 8.[3]
The protest is denied.
Comptroller General
of the United States
1. The possible evaluation ratings for proposal risk and performance
risk were high, moderate, and low.
2. The color/adjectival ratings were blue/exceptional,
green/acceptable, yellow/marginal, and red/unacceptable.
3. Tecom also argued in its initial protest that Baker-Serco's
proposal should be rejected because it does not intend to use key
management personnel it proposed. The agency in its report addressed
in detail this argument. In its comments filed on that report, Tecom
did not rebut the agency's position on this matter. Therefore, we
view this issue as abandoned. Marquette Elecs., Inc., B-262016.2;
B-262016.3, Feb. 15, 1996, 96-1 CPD para. 98 at 5.