BNUMBER: B-275592; B-275592.2
DATE: March 6, 1997
TITLE: USATREX International, Inc., B-275592; B-275592.2, March 6,
1997
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DOCUMENT FOR PUBLIC RELEASE
The decision issued on the date below was subject to a GAO Protective
Order. This redacted version has been approved for public release.
Matter of:USATREX International, Inc.
File: B-275592; B-275592.2
Date:March 6, 1997
Richard J. Webber, Esq., and Alison J. Micheli, Esq., Arent, Fox,
Kintner, Plotkin & Kahn, for the protester.
Terrence O'Donnell, Esq., Ari S. Zymelman, Esq., and Jonathan L.
Marcus, Esq., Williams & Connolly, for Century Technologies, Inc., an
intervenor.
Dennis J. Gallagher, Esq., Department of State, for the agency.
Scott H. Riback, Esq., and John M. Melody, Esq., Office of the General
Counsel, GAO, participated in the preparation of the decision.
DIGEST
1. Agency's failure to consider proposed subcontractors' experience
under a past performance/relevant experience criterion is denied where
circumstances warranted limiting such consideration to the past
performance/experience of the offeror only.
2. Protest against conduct of improper post-best and final offer
discussions is denied where, although such discussions occurred, the
record conclusively shows that they were not prejudicial to the
protester.
3. Allegation that awardee engaged in prohibited "bait and switch"
tactic is denied where there is no showing that the offeror did not
intend to provide those employees offered in its proposal, and
personnel substitutions are adequately explained by the record and
permissible under the contract.
DECISION
USATREX International, Inc. protests the award of a contract to
Century Technologies, Inc. (Centech) under request for proposals (RFP)
No. S-DTSPO-96-R-3007, issued by the Department of State (DOS) for
technical support services in connection with the agency's
telecommunications program to link offices and embassies worldwide.
USATREX maintains that the agency misevaluated proposals and
improperly engaged in discussions with Centech after the submission of
best and final offers (BAFO), and that Centech engaged in an improper
"bait and switch" of personnel.
We deny the protest.
BACKGROUND
The solicitation contemplated the award of a fixed-price, indefinite
delivery, indefinite quantity contract against which delivery orders
could be placed; the acquisition was conducted as a competitive set
aside under section 8(a) of the Small Business Act, 15 U.S.C. sec. 637(a)
(1994).[1] Offerors were required to submit prices based on fixed,
fully burdened hourly rates for 69 discrete classes of employees.
Offerors also were to submit detailed technical proposals that
included information relating to the firm's management approach and
its performance on ongoing or prior contracts, a package of 86 resumes
for employees proposed to perform the contract, along with letters of
commitment, and a detailed response to a sample task outlined in the
RFP.
The RFP advised offerors that the agency intended to make award to the
firm whose proposal represented the best overall value to the
government considering various technical evaluation criteria and
price; offerors were specifically advised that the agency would assign
numeric point scores to both the technical and price proposals, and
that award would be made to the firm whose proposal received the
highest overall numeric score based on a 100-point scale. The
technical evaluation criteria were worth up to 70 points and price 30
points. There were three technical evaluation criteria:
qualifications and experience of proposed staff (35 possible points);
past performance/relevant experience on similar projects (25 points);
and management approach (including the sample task) (10 points).
Price points were to be assigned based on the relationship among the
competing offerors' prices, with the lowest-priced proposal receiving
the maximum of 30 points, and the remaining proposals receiving
proportionally fewer points.
The agency received three timely initial proposals, all of which were
evaluated as technically acceptable. The agency concluded that it was
unnecessary to engage in technical discussions with the offerors and,
accordingly, simply provided the firms an opportunity to submit
revised pricing in their BAFOs. After receiving and evaluating the
BAFOs, the agency scored the proposals as follows:
CENTECH USATREX OFFEROR "C"
Qualif./Exp. of Proposed Staff 32.35 33.58 32.19
Past Perf./ Relevant Exp. 21.67 15 21.67
Management Approach 5 5 10
Cost/Price 30 25.72 21.05
Total Points 89.02 79.30 84.91
On the basis of these evaluation results, DOS made award to Centech as
the firm whose proposal offered the greatest overall value to the
government.
TECHNICAL EVALUATION
Past Performance/Relevant Experience
USATREX contends that the agency's evaluation of past
performance/relevant experience was improper and inconsistent with the
requirements of the RFP. The record shows that all of the offerors
submitted information in the form of "extracts" relating to numerous
prior contracts performed either by the offeror or one of its
subcontractors. (For example, USATREX submitted information relating
to 11 contracts; it was the prime contractor on 4, and its proposed
subcontractors had been the prime contractors on the others.) USATREX
maintains that the agency improperly failed to score all of the
extracts, instead selecting only a limited number to evaluate,
notwithstanding that the RFP provided that "each extract will be
assigned a rating." USATREX maintains that, had the agency done this,
it would have received a better past performance rating because it
would have received evaluation credit for prior contracts performed by
its subcontractors.
Where a solicitation requires an evaluation of offerors' past
performance, the agency has discretion to determine the scope of the
offerors' performance history to be considered, provided all proposals
are evaluated on the same basis and the evaluation is consistent with
the terms of the RFP. Wind Gap Knitwear, Inc., B-261045, June
20, 1995, 95-2 CPD para. 124; see also Federal Envtl. Servs., Inc.,
B-250135.4, May 24, 1993, 93-1 CPD para. 398. Moreover, where the record
shows that the agency in fact considered all information included in
the proposals, the mere fact that the evaluators did not assign a
discrete score to each proposal element does not provide a basis for
sustaining a protest, provided all proposals were evaluated in the
same manner and agency's actions were not prejudicial. See Wilcox
Elec., Inc., B-270097, Jan. 11, 1996, 96-1 CPD para. 82.
The past performance evaluation was reasonable. First, while the RFP
stated that each extract would be rated, it did not state that this
rating would be in the form of a formal numeric score. The agency
explains that each evaluator separately reviewed all of the prior
contract extracts submitted by the offerors and then selected those
contracts which, in the evaluator's judgment, were most relevant for
purposes of arriving at the numeric scores. (These same prior
contracts were also used by the evaluators for purposes of
independently inquiring--through contacting the appropriate
contracting officials--about the offeror's performance during the
prior or ongoing contract.) Thus, the agency's ratings here simply
were in the form of subjective relevance determinations; contract
extracts were rated either "relevant" or "not relevant" for purposes
of the past performance/relevant experience evaluation. This
satisfied the requirement of the solicitation that each extract be
assigned a rating.
Further, the agency's determination of relevance among the extracts
was unobjectionable. The extracts were selected based primarily on
two considerations: (1) whether the offeror had performed as a prime
contractor; and (2) whether the prior contract was of a scope and
magnitude similar to the requirements of this solicitation. This was
reasonable in light of the terms of the RFP, which limited competition
to firms qualifying under section 8(a) of the Small Business Act and
included the limitation on subcontracting clause at FAR sec. 52.219-14.
While agencies may, in the absence of a solicitation provision to the
contrary, consider the prior relevant experience and performance of
subcontractors, FMC Corp., B-252941, July 29, 1993, 93-2 CPD para. 71, in
appropriate circumstances they need not do so. Jim Welch Co., Inc.,
B-233925.2, July 12, 1989, 89-2 CPD para. 34. In this regard, where the
solicitation contemplates award of a service contract to a firm
qualifying under section 8(a) of the Small Business Act, and includes
the provision at FAR sec. 52.219-14, the agency may properly limit its
consideration to the offeror's prime contractor experience.
Innovative Technology Sys., Inc., supra. Accordingly, we see no basis
to object to the agency's evaluation approach.
We also have no basis to object to the substance of the evaluation.
The agency's evaluators assigned USATREX an acceptable (albeit
relatively lower) score under this criterion as compared to the other
two firms because USATREX did not have as much prior experience acting
as a prime contractor on requirements that were similar in scope and
complexity. USATREX does not challenge this conclusion, but insists
only that it would have received a more favorable rating if all of the
experience of both it and its subcontractors had been reviewed.
Again, however, we find that the agency's focus on information
relating to similar contracts where the offeror was the prime
contractor was reasonable. Innovative Technology Sys., Inc., supra.
Management Approach
USATREX contends that the agency improperly evaluated Centech's
management proposal. According to the protester, the agency
improperly assigned Centech's management proposal a score of 5 points,
despite the fact that its response to the sample task requirement was
viewed as unacceptable by the evaluators. USATREX maintains that the
RFP required the agency to assign Centech's management proposal a
score of 1 point, which was the score mandated for management
proposals deemed technically unacceptable.
We find no merit to this allegation. Initially, we point out that the
evaluators identified deficiencies in both firms' responses to the
sample task. Centech's response was deemed "incomplete," while
USATREX's response to a portion of the sample task was found not to
meet the delivery schedule requirements outlined in the solicitation
(offerors were required to detail how they would accomplish staffing a
24-hour per-day "network management center" within 30 days after the
issuance of a delivery order, and USATREX's response showed that it
would accomplish the task within 90 days). By USATREX's logic, its
proposal also should have received a management approach score of only
1 point because its response varied from the requirements of the RFP
sample task.[2]
More fundamentally, the record shows that the agency viewed both the
USATREX and Centech management proposals technically acceptable
overall, albeit with some minor deficiencies. USATREX's proposed
management approach was viewed by the agency as generally "weak"
because it failed to address all of the areas requested by the RFP.
Centech, on the other hand, was found to have proposed a strong
substantive management plan, but to have submitted an incomplete
response to the sample task. The agency therefore assigned both
proposals a score of only 5 points, which reflected the unanimous
judgment of all three evaluators that, despite the minor weaknesses
identified, both proposals were technically acceptable. Of
significance, in our view, is a series of memoranda exchanged between
the contracting officer and the chairman of the evaluation team after
the evaluators prepared their final report. During this exchange, the
contracting officer asked the evaluators whether any of the weaknesses
identified in any proposal rendered the proposal technically
unacceptable; the memorandum cites numerous examples on which the
contracting officer sought clarification, including the evaluators'
comment that the Centech sample task response was incomplete. In
response, the chairman of the evaluation team noted that the examples
identified in the contracting officer's memorandum (such as Centech's
response to the sample task) were deemed by the evaluation team to be
acceptable and would not impact the ability of the offerors to perform
under the contract. He continues by stating:
"Factor . . . C [the management approach evaluation criterion]
had minor deficiencies, but none were deemed significant enough
to warrant clarification or discussion with the offerors. The
team panels met and held discussions [in response to the
contracting officer's memorandum requesting clarification of the
technical evaluation results] . . . to validate the scores of
each team member to ensure all areas of the evaluation were
properly addressed."
We conclude that the evaluation of Centech's proposal in the
management area was reasonable.
PRICE EVALUATION
USATREX challenges the agency's evaluation of Centech's price proposal
on several grounds. These arguments are without merit.
Unbalanced Offer
USATREX alleges that Centech's prices are improperly unbalanced, and
that the proposal therefore could not be accepted for award, because
Centech proposed [DELETED]; according to USATREX, the rates offered by
Centech for its entry-level employees [DELETED].
The concept of unbalancing has only limited application in the context
of a negotiated procurement where the government's primary objective
is not with obtaining a contract at the lowest overall cost. Human
Resource Sys., Inc.; Health Staffers, Inc., B-262254.3 et al., Dec.
21, 1995, 96-1 CPD para. 35. While award here ultimately was made to the
low offeror, the RFP provided that technical factors were more than
twice as important as price, and thus allowed for award to other than
the low offeror. In addition, there is no indication that cost was
the determinative consideration in DOS' award decision. Since
technical considerations were more important than cost or price, and
since ultimately price was not the determinative consideration for
award purposes, the concept of unbalancing is not applicable. Id. In
any case, an offer can be rejected as materially unbalanced only where
it is found to be mathematically unbalanced; this requires a showing
that certain line items are priced significantly lower than the cost
of those items, and that other line item prices are significantly
overstated. Federal Acquisition Regulation (FAR) sec. 15.814 (FAC
90-37). As USATREX has alleged only that the prices for certain line
items are [DELETED], and there is no evidence of overstated prices,
the offer is not mathematically unbalanced and therefore could not be
rejected as materially unbalanced. Ogden Gov't Servs., B-253350,
Sept. 14, 1993, 93-2 CPD para. 161.[3]
Price Reasonableness
Regarding price reasonableness, the purpose of a price reasonableness
review is to determine whether the prices offered are higher--as
opposed to lower--than warranted. McDonnell Douglas Corp.,
B-259694.2; B-259694.3, June 16, 1995, 95-2 CPD para. 51. Since USATREX
asserts that Centech's prices are too low, not too high, (and since
Centech's price in fact is lower than USATREX's), there is no reason
to question Centech's prices on the basis of price reasonableness. To
the extent that agencies may wish to review the offerors' pricing to
ensure that it is not too low within the context of a fixed-price
contract setting, they do so through the application of cost realism
evaluation methods, but only for limited purposes, such as assessing
an offeror's understanding of the RFP's technical requirements. PHP
Healthcare Corp.; Sisters of Charity of the Incarnate Word, B-251799
et al., May 4, 1993, 93-1 CPD para. 366. However, the RFP here did not
provide for a realism analysis.[4]
Professional Employee Compensation
USATREX argues that Centech's [DELETED] entry-level position prices
render its professional employee compensation inadequate. However,
the record shows that the agency sought and obtained information from
Centech relating to its compensation and employee
advancement/promotion plan; Centech's response, as well as other
proposal information, led the agency to conclude that its professional
employee compensation plan was adequate. The agency ultimately
concluded that, to the extent Centech's compensation for certain
categories was [DELETED], this was due in large part to the firm's
superior experience in controlling costs in contracts of this
magnitude and complexity. USATREX has submitted no evidence--for
example, information relating to its understanding of the prevailing
wages for entry-level employees in the field--that brings into
question the reasonableness of the agency's conclusion regarding the
adequacy of Centech's professional employee compensation levels. We
therefore have no reason to question the agency's conclusions in this
area. See RGI, Inc., B-243387, July 23, 1991, 91-2 CPD para. 86.
DISCUSSIONS
USATREX argues that the agency engaged in improper post-BAFO
discussions with Centech. The protester's allegation centers around
an exchange of correspondence between the agency and Centech after the
submission of BAFOs, during which the subject of Centech's cost
proposal was addressed. In essence, the agency was concerned that
Centech had proposed [DELETED], and also that the firm might have
trouble [DELETED]; the agency requested that Centech provide
verification of [DELETED]. In response to the agency's inquiry,
Centech submitted a three-page letter explaining--apparently to the
satisfaction of the agency--its [DELETED]. USATREX argues that this
exchange constituted improper post-BAFO discussions and contends that
it should also have been afforded an opportunity to engage in
substantive discussions with the agency. In this latter regard,
USATREX specifically maintains that it should have been afforded
discussions with respect to its management proposal which received a
score of only 5 points out of a possible 10 and was considered "weak"
by the agency's evaluators.
The record clearly shows that the information furnished by Centech in
response to the agency's inquiry was central to the agency's award
decision. The agency report includes a document entitled
"deliberations" in which the contracting officer discusses the
relative merits of the proposals; this document clearly relies on the
information furnished by Centech to explain and ameliorate the
concerns previously advanced by the agency evaluators regarding the
terms of Centech's cost proposal. Since the information provided by
Centech clearly affected the agency's evaluation conclusions regarding
the acceptability of the Centech cost proposal, the exchange
constituted discussions. Federal Acquisition Regulation (FAR) sec.
15.601 (discussions occur where communications between the government
and the offeror involve information essential for determining the
acceptability of a proposal, or where the offeror is provided an
opportunity to revise or modify its proposal).
Despite the above conclusion, we nonetheless have no basis to sustain
USATREX's protest on this ground. Even where, as here, an agency
engages in improper post-BAFO discussions with an offeror, we will not
object to its actions where the record shows that they were not
prejudicial. EastCo Bldg. Servs., Inc., B-275334; B-275334.2, Feb.
10, 1997, 97-1 CPD para. 83. For the reasons discussed below, we conclude
that USATREX was not prejudiced by the agency's actions.
The RFP provided for award to the firm whose proposal received the
highest combined cost and technical score, and the agency not only
made award on this basis, but has argued strenuously in its
submissions to our Office that this was the required basis for award.
USATREX's pleadings in this case state unequivocally that the agency's
failure to engage in discussions caused it competitive harm solely
because it was not afforded an opportunity to improve its management
proposal, which had received only 5 out of a possible 10 points.
Thus, even assuming that the protester could have improved its
management score in response to discussions in this area, this would
only add an additional 5 points to USATREX's cumulative score which,
under the terms of the RFP, would not place the firm in line for
award. We therefore conclude that the agency's improper post-BAFO
discussions with Centech did not competitively prejudice USATREX.[5]
BAIT AND SWITCH
USATREX maintains that Centech engaged in an impermissible "bait and
switch" tactic, whereby the firm offered numerous personnel in its
proposal that it never intended to provide in performing the contract.
(As noted earlier, offerors were required to submit resumes for 86
required employees.) Centech has substituted a large number of
employees for those it originally proposed, and USATREX argues that
this level of substitution evidences Centech's intent at the time it
submitted its proposal to furnish employees other than those
proposed.[6]
To establish an improper "bait and switch," a protester must show that
the firm in question either knowingly or negligently made a
misrepresentation regarding employees that it does not expect to
furnish during contract performance, that the misrepresentation was
relied upon by the agency in the evaluation, and that this had a
material impact on the evaluation results. Intermetrics, Inc.,
B-259254.2,
Apr. 3, 1995, 95-1 CPD para. 215; CBIS Fed., Inc., B-245844.2, Mar. 27,
1992, 92-1
CPD para. 308.
There is no evidence of a prohibited bait and switch here. While
there has been a substitution of employees, there is no basis for
concluding that Centech knowingly or negligently misrepresented its
intent to furnish the employees specified in its proposal. USATREX
would have our Office infer simply from the number of substitutions
that the awardee never intended to furnish the proposed employees.
However, we think the record adequately shows that the substitutions
were not related to a misrepresentation. In this regard, Centech
explains that it identified the proposed employees through a [DELETED]
selection process and confirmed prior to BAFOs that the selected
employees remained available. Centech also explains the reasons for
the substitutions. First, Centech's proposal indicated its intent to
recruit as many of the incumbent staff as possible, and a large
portion of the substitutions were incumbent personnel; there is
nothing improper in such substitutions where the awardee's proposal
advised the agency of its intent. Ebon Research Sys., B-261403.2,
Sept. 28, 1995, 95-2 CPD para. 152. As for the vast majority of the
remaining substitutions, Centech explains--on an employee-by-employee
basis--that the substituted personnel were better or equally
qualified, and more conveniently located for contract performance,
than those proposed, and that these individuals only became available
for performance after award.[7] Given that the solicitation permitted
personnel substitutions with the agency's permission, we see nothing
improper in Centech's furnishing substitute personnel under these
circumstances; the agency advises that the substituted personnel are
at least as qualified as those originally proposed, and USATREX has
not argued otherwise. We therefore have no basis to object to these
substitutions. See CHP Int' l Inc., B-266053.2, Apr. 29, 1996, 96-2
CPD para. 142.
The protest is denied.
Comptroller General
of the United States
1. Section 8(a) of the Small Business Act authorizes the Small
Business Administration to enter into contracts with government
agencies and to arrange for performance through subcontracts with
socially and economically disadvantaged business concerns. Federal
Acquisition Regulation sec. 19.805 and 13 C.F.R. sec. 124.311 (1996) provide
for and govern competitively awarded contracts set aside for firms
qualified under section 8(a). Innovative Technology Sys., Inc.,
B-260074, May 24, 1995, 95-1 CPD para. 258.
2. The scoring also appears reasonable in light of the relative weight
of the two subfactors--management approach and sample task
response--under the management approach criterion. Since the RFP did
not specify the relative weight of these two subfactors, each
subfactor was worth approximately 5 points. The score assigned to the
Centech proposal reflects the evaluators' judgment regarding the
relative inadequacy of the firm's response to the sample task.
3. USATREX also maintains that Centech's pricing violates the RFP's
"Integrity of Unit Prices" clause, FAR sec. 52.215-26. However, that
provision, by its terms, applies only to supply contracts; the RFP
here contemplated award of a contract for technical support services,
not supplies.
4. In any case, the record shows that the agency was well aware that
Centech had offered prices for its entry-level personnel that were
[DELETED] which, as discussed, led the agency to seek further
information from Centech concerning this area. Centech's explanation
was satisfactory to the agency.
5. USATREX also suggests that Centech's [DELETED] improperly inflated
its price score. As discussed above, we find nothing improper with
Centech's pricing. In any case, any scoring advantage related to
Centech's pricing was not prejudicial to USATREX. In an effort to
assess the potential impact that Centech's [DELETED] might have had on
the outcome of the competition, the agency calculated the offerors'
prices exclusive of the [DELETED] and assigned revised numeric price
scores to the proposals. The record shows that, even exclusive of the
[DELETED], USATREX's proposal was still higher priced than Centech's
and that, although USATREX would have received a slightly better price
score if the [DELETED] were eliminated (27.94 price points rather than
the 25.72 points actually assigned), this score was insufficient to
place the firm in line for award--even with the addition of 5 points
under the management plan evaluation criterion discussed above.
(USATREX maintains that its price score should have been 29.25 points;
even with this score, however, USATREX's total score would have been
lower than Centech's.)
6. USATREX also takes issue with the terms of the letters of
commitment provided by Centech, maintaining that because the letters
stated that they did not amount to binding employment contracts,
Centech failed to provide the "unequivocal" letters of commitment
required by the RFP. There is no merit to this contention. The
solicitation did not require binding bilateral employment agreements,
but rather, only letters that clearly showed the intent on the part of
the signator to work for the offeror; the letters submitted by Centech
met this requirement. Laser Power Technologies, Inc., B-233369;
B-233369.2, Mar. 13, 1989, 89-1 CPD para. 267.
7. By way of example, Centech reports, as to one of its "new" hires,
that the individual became available after proposal submission and
that "this person had outstanding qualifications meeting/exceeding
those of the individuals whose resumes were submitted with the
proposal. . . ."