BNUMBER: B-276634
DATE: July 7, 1997
TITLE: Epoch Engineering, Inc., B-276634, July 7, 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:Epoch Engineering, Inc.
File: B-276634
Date:July 7, 1997
Michael W. Kauffman, Esq., Shulman, Rogers, Gandal, Pordy & Ecker,
P.A., for the protester.
Devon E. Hewitt, Esq., and Matthew A. Anzaldi, Esq., Shaw, Pittman,
Potts & Trowbridge, for Applied Measurement Systems, Inc., an
intervenor.
Chris Hagberg, Esq., and Stephen H. S. Tryon, Esq., Department of the
Navy, for the agency.
Peter A. Iannicelli, Esq., and Michael R. Golden, Esq., Office of the
General Counsel, GAO, participated in the preparation of the decision.
DIGEST
The contracting agency reasonably determined that the awardee's
conflict of interest mitigation plan adequately avoided or mitigated
potential conflicts that might arise if one of the awardee's proposed
subcontractors were tasked to do work under particular delivery orders
to be issued under an indefinite delivery/ indefinite quantity
contract for engineering and technical support services where: (1) the
awardee's proposed conflict mitigation plan included a number of
safeguards designed to detect potential conflicts and to assign work
under those task orders to the prime and/or another subcontractor; and
(2) the awardee has proposed more than enough qualified professional
personnel who are not employed by the subcontractor with potential
conflicts so that the awardee can successfully avoid conflicts and
still perform the full scope of work contemplated by the solicitation.
DECISION
Epoch Engineering, Inc. protests the Naval Surface Warfare Center's
award of an indefinite delivery/indefinite quantity,
cost-plus-fixed-fee contract for engineering and technical support
services to Applied Measurement Systems, Inc. (AMSI) pursuant to
request for proposals (RFP) No. N00167-95-R-0128. Epoch contends that
AMSI is ineligible for award under the express provisions of the RFP
because one of AMSI's proposed subcontractors has an unavoidable
organizational conflict of interest. Epoch also contends that the
Navy unreasonably failed to consider the effect of AMSI's proposed
organizational conflict of interest mitigation plan in its
technical/management evaluation of AMSI's proposal.[1]
We deny the protest.
Issued on January 24, 1996, the RFP solicited offers to provide
engineering and technical support services for submarine and surface
ship acoustical trials for a period of 5 years. The RFP called for
the contractor to perform various tasks in response to individual
delivery orders issued by the Navy over the course of the contract.
The RFP's statement of work (SOW) listed 11 different categories in
which work would be performed as follows: (1) submarine and surface
ship noise source localization and analysis; (2) submarine silencing
effectiveness; (3) transient noise studies; (4) own ship radiated
noise monitoring; (5) data analysis and studies in support of the
Submarine Maintenance Monitoring Support Office and the Shore
Intermediate Maintenance Activity; (6) submarine silencing development
and design studies; (7) submarine detection and detectability studies;
(8) acoustic measurement and data acquisition system development; (9)
database management system development and maintenance; (10) low
frequency submarine target strength studies and analysis; and (11)
acoustic trial direction support.
The RFP indicated that the contract would be awarded to the offeror
whose offer was determined to be most advantageous to the government
after evaluation of technical/management factors and cost. The RFP
stated that the technical/ management factors were more important than
cost. The technical/management factors were listed, in descending
order of importance, as follows: personnel; corporate experience;
technical understanding; management plan; and facilities.
The RFP included an organizational conflict of interest clause which
stated, in pertinent part:
"This clause provides examples of certain organizational
conflicts of interest which are prescribed by Federal Acquisition
Regulation Subpart 9.5. The two underlying principles which this
clause seeks to avoid are preventing the existence of conflicting
roles that might bias a contractor's judgement and preventing
unfair competitive advantage. The following subsections
prescribe certain limitations on contracting as the means of
avoiding, neutralizing, or mitigating organizational conflicts of
interest.
. . . . .
(d) The Contracting Officer has determined that, in performance
of this contract, the contractor will be required to provide
technical evaluation of various contractor's offers and products.
Contracts involving (a) technical evaluations of contractor's
offers or products or (b) consulting services shall not be
awarded to a contractor that would advise the Government
concerning its own products or activities or those of a
competitor without proper safeguards. Therefore, Contractors or
Subcontractors that have detail design and/or construction
contracts with the Government which are directly involved with
producing current nuclear attack submarines, surface combatants
and/or advanced naval vehicles which may be subject to technical
evaluation under this contract, shall not be eligible for award
of this contract, as such contractors have an unavoidable
conflict of interest."
The Navy clarified its position regarding organizational conflicts of
interest by issuing amendment 0001 to the RFP which stated:
"This amendment is being issued in response to an offeror's
question concerning the Organizational Conflict of Interest
Clause (OCI). The Government does not intend to delete the OCI
Clause from the subject solicitation. Those offerors who feel
performance of work under the contract may cause a conflict of
interest, of the kind contemplated by the clause, should address
the issue in their proposal and should include their plan to
mitigate the conflict of interest. The Government will then
evaluate the mitigation plan and may grant a waiver to the clause
if the mitigation plan is determined to be acceptable."
In addition, in response to offerors' further questions concerning the
conflict of interest provisions, the Navy issued amendment 0002 to the
RFP which stated in pertinent part:
"Question: What criteria will be used to evaluate the
acceptability of [organizational conflict of interest] mitigation
plans? Answer: The Government will evaluate an offeror's plan
to mitigate a potential organizational conflict of interest on
the basis of the following criteria: Does the proposed plan
mitigate the potential conflict of interest such that the full
scope of work contemplated by this solicitation can be performed
by the offeror?"
Only AMSI and Epoch submitted proposals. After initial proposals were
evaluated, discussions were held with both offerors. Both offerors
submitted best and final offers (BAFO) by the February 28, 1997,
closing date. Evaluation of BAFOs resulted in AMSI's BAFO receiving a
total score of [deleted] technical/management points (approximately
[deleted] percent of the total points available) and Epoch's BAFO
receiving a total score of [deleted] technical/management points
(approximately [deleted] percent of the total points available).
AMSI's total proposed BAFO price was [deleted], and Epoch's total
proposed BAFO price was [deleted]. The contracting officer determined
that AMSI's BAFO represented the best value to the government, because
[deleted] AMSI's total proposed price represented a savings of roughly
[deleted]. Therefore, the Navy awarded the contract to AMSI on March
24. After a debriefing conference, Epoch filed this protest in our
Office.
Epoch contends that AMSI is ineligible for award because one of AMSI's
proposed subcontractors, [deleted], has an unavoidable conflict of
interest because it is a shipbuilder.[2] Epoch believes that
[deleted] might be called upon, in its capacity as a subcontractor to
AMSI, to evaluate nuclear attack submarines, surface combatants, or
advanced naval vehicles that it, or one of its competitors, has built
for the Navy in the past or will build for the Navy over the 5-year
period of AMSI's engineering and technical support services contract.
Epoch argues that because nearly all of the RFP's requirements are
linked to the quality of construction or design of nuclear attack
submarines, surface combatants, or advanced naval vehicles, [deleted]
objectivity may be impaired when providing engineering and technical
support services relating to locating the source of, analyzing, and
reporting on noise detected during acoustic trials.[3] Thus, Epoch
argues that the Navy's finding that AMSI's organizational conflict of
interest mitigation plan was acceptable lacked a rational basis.
Epoch also contends that the Navy should have considered AMSI's
proposed conflict mitigation plan and downgraded AMSI's proposal on
the personnel and corporate experience factors because the mitigation
plan prevents AMSI from using [deleted] for work on delivery orders
for which [deleted] has a conflict.
A contracting officer is required to avoid, neutralize, or mitigate a
significant potential organizational conflict of interest on the part
of a prospective contractor before award. Federal Acquisition
Regulation (FAR) sec. 9.504(a)(2), 9.505; D.K. Shifflet & Assocs., Ltd.,
B-234251, May 2, 1989, 89-1 CPD para. 419 at 4-5. Because conflicts may
arise in factual situations not expressly described in the relevant
FAR sections, the regulation advises contracting officers to examine
each situation individually and to exercise "common sense, good
judgment, and sound discretion" in assessing whether a significant
potential conflict exists and in developing appropriate ways to
resolve it. FAR sec. 9-505; SC&A, Inc., B-270160.2, Apr. 10, 1996, 96-1
CPD para. 197 at 9. The responsibility for determining whether an actual
or apparent conflict of interest will arise if a particular firm is
awarded a contract, and to what extent the firm should be excluded
from the competition, rests with the contracting agency; we will not
overturn the agency's judgment in this regard unless it is shown to be
unreasonable. D.K. Shifflet & Assocs., Ltd., supra, at 5; SC&A, Inc.,
supra, at 9.
AMSI proposed a contracting team consisting of itself and two
subcontractors, [deleted].[4] AMSI's proposed conflict of interest
mitigation plan stated that AMSI itself had no known conflicts since
it had no detailed design and/or construction contracts involving the
production of nuclear attack submarines, surface combatants, or
advanced naval vehicles that might be evaluated under the contract.
While AMSI's conflict mitigation plan acknowledged the possibility
that a proposed subcontractor might have a conflict related to an
individual delivery order, the plan stated that the work on that
delivery order would be performed by AMSI and/or the other
subcontractor on the team.
The contracting officer states that she was favorably impressed with
the detailed plan AMSI proposed for reviewing delivery order SOWs in
order to mitigate potential conflicts that might arise. The
contracting officer also states that she reviewed AMSI's staffing plan
in conjunction with the conflict mitigation plan and was convinced
that AMSI had a sufficient number of qualified personnel who were
employed by either AMSI or [deleted] to enable the AMSI team to
perform all of the work required under any particular delivery order
on which [deleted] might have a conflict without using any [deleted]
employees. The contracting officer also indicates her opinion that
the AMSI mitigation plan would adequately avoid having work performed
by employees of a firm that had a conflict was supported by the fact
that the Navy evaluators, although aware of the issue, had not raised
any concerns about AMSI's approach to mitigating conflicts during
their technical/ management or cost evaluations.[5] Accordingly, the
contracting officer states that she considered the AMSI conflict
mitigation plan to have met the agency's standard, as set forth in
amendment 0002, for acceptability--i.e., the plan would mitigate any
conflicts so as to allow the offeror to perform the full scope of work
required under the contract.
AMSI's detailed conflict mitigation plan included several features
designed to protect the Navy from conflicts that might arise under
specific delivery orders. Under the plan, AMSI and each of its
subcontractors [deleted].
Both the contracting officer and the chairman of the technical
evaluation board report that they believed that AMSI's conflict
mitigation plan would work because AMSI would [deleted].
In our opinion, the Navy reasonably determined that AMSI's proposed
conflict of interest mitigation plan was adequate. The plan, as
described above, included a number of built-in safeguards to avoid
assigning work to a firm with a conflict of interest, including
[deleted].[6]
Additionally, in view of the large number of proposed key and non-key
personnel that are not employed by [deleted], we think that the Navy
reasonably concluded that AMSI could successfully avoid conflicts by
assigning work to the corporate member(s) of the AMSI team that did
not have a conflict. In this regard, we note, as did the Navy, that
for the 43 required positions, [deleted]. Thus, AMSI could cover
approximately [deleted] of the required positions using only its own
or [deleted] employees. In view of the fact that AMSI's proposed
conflict of interest mitigation plan contained [deleted] safeguards
[deleted] to detect and mitigate conflicts if they occur, and because
AMSI proposed more than enough qualified personnel and, therefore, was
not dependent upon [deleted] to do work in any professional labor
category, we conclude that the Navy reasonably determined that AMSI's
mitigation plan was acceptable. See Research Analysis and
Maintenance, Inc., B-272261; B-272261.2, Sept. 18, 1996, 96-2 CPD para.
131 at 12; D.K. Shifflet & Assocs., Ltd., supra, at 5.
Concerning the allegation that the Navy improperly did not consider
the effects of AMSI's proposed conflict mitigation plan in its
technical/management evaluation, we find nothing improper in the
Navy's failing to downgrade AMSI's proposal when evaluating the
personnel and corporate experience factors. As noted above, the RFP
stated that proposals would be evaluated on personnel, corporate
experience, technical understanding, management plan, and facilities
factors. The RFP included a very detailed discussion about how the
Navy would evaluate each of those factors. Conspicuously absent from
the RFP's discussion is any indication that the technical/management
evaluation would consider the effects, if any, of an offeror's
conflict mitigation plan. Moreover, when the Navy amended the RFP to
clarify its position regarding conflicts of interest, the evaluation
scheme was not altered to include a technical/management evaluation of
proposed conflict mitigation plans. In fact, amendment 0002, quoted
above, expresses the only standard for review of the acceptability of
conflict mitigation plans when it states that the Navy will review
organizational conflict of interest mitigation plans to determine
whether the full scope of work contemplated by this solicitation can
be performed by the offeror. As described in full above, the Navy's
review and acceptance of AMSI's organizational conflict of interest
mitigation plan was fully consistent with that standard. In any
event, it is clear that the contracting officer reviewed the
mitigation plan in the context of AMSI's approach to performing the
work and its proposed staffing, and concluded, reasonably in our view,
that there was no reason to downgrade AMSI's proposal.
The protest is denied.
Comptroller General
of the United States
1. Epoch also alleged in its initial protest letter that the Navy
deviated from the RFP's stated evaluation criteria in evaluating the
technical/management merit of AMSI's proposal. However, Epoch
provided no evidence nor any detailed statement of facts to support
this allegation and, therefore, the unsupported allegation is not an
adequate protest basis. Bid Protest Regulations 4 C.F.R. sec.
21.1(c)(4), 21.5(f) (1997); Science Applications Int'l Corp.,
B-265607, Sept. 1, 1995, 95-2 CPD para. 99 at 2.
2.[deleted].
3. In its initial protest letter (filed on March 31, 1997), Epoch
argued exclusively that [deleted] had an unavoidable conflict of
interest because it might be required to review its own products or
those of its competitors, creating the potential for "impaired
objectivity" on [deleted] part. "Impaired objectivity" is but one of
three broad categories of conflicts. See Aetna Gov't Health Plans,
Inc.; Foundation Health Fed. Servs., Inc., B-254397.15 et al., July
27, 1995, 95-2 CPD para. 129 at 12-13, for a discussion of the following
three conflict types: Type 1: "unequal access to information" cases;
Type 2: "biased ground rules" cases; and Type 3: "impaired
objectivity" cases. In its comments on the agency's report (filed on
May 12), Epoch alleged for the first time, in very general terms, that
[deleted] might also gain an unfair competitive advantage from working
on the present contract. We allowed each party to file an additional
statement after comments were received. In its additional statement
(filed on May 27), Epoch explained that [deleted] might gain an unfair
competitive advantage in future competitions because, in performing
the various tasks, [deleted] would gain access to information not
available to its competitors (a Type 1 conflict). In our view, the
later-raised allegation of an unfair competitive advantage accruing to
[deleted] because of a Type 1 conflict presents a new and independent
protest basis that is separate and distinct from the original basis of
protest alleging a Type 3 conflict and must independently satisfy our
timeliness requirements. Vinnell Corp., B-270793; B-270793.2, Apr.
24, 1996, 96-1 CPD para. 271 at 7. As this later-raised allegation is
based upon the protester's general knowledge of [deleted] and the RFP
requirements, this allegation should have been raised in the initial
protest letter or within 10 days after Epoch's March 26 debriefing
conference, at the latest. 4 C.F.R. sec. 21.2(a)(2).
4.[deleted]. Epoch has not alleged that [deleted] has any potential
conflicts.
5. AMSI's conflict mitigation plan was set forth in full in AMSI's
cost proposal. While the technical/management evaluators did not have
the entire plan before them for consideration, AMSI's
technical/management proposal did state that AMSI realized that
conflicts might be encountered, that AMSI had included a complete
conflict mitigation plan in its cost proposal, that each corporate
member of the AMSI team would have an [deleted], and that AMSI
believed that [deleted] would allow it to perform the required work
without [deleted].
6. In addition to the [deleted] safeguards present in the AMSI
mitigation plan, since performance under the contract is ordered
through the issuance of task orders, the Navy can also exercise care
in controlling the scope of AMSI's and its subcontractors' work
through proper contract administration. This would provide yet
another safeguard to prevent [deleted] from reviewing its own or its
competitors' products under any task order issued by the Navy.
Deloitte & Touche, 69 Comp. Gen. 463, 469 (1990), 90-1 CPD para. 486 at 8.