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.