BNUMBER:  B-277270 
DATE:  September 23, 1997
TITLE: Environmental Affairs Management, Inc., B-277270, September
23, 1997
**********************************************************************

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:Environmental Affairs Management, Inc.

File:     B-277270

Date:September 23, 1997

Kent R. Minshall, Jr., Esq., for the protester.
James J. McCullough, Esq., James S. Kennell, Esq., and Douglas R. M. 
King, Esq., Fried, Frank, Harris, Shriver & Jacobson, for Science 
Applications International Corporation, an intervenor.
Richard N. Wolf, Esq., and Laura Henry, Esq., National Aeronautics and 
Space Administration, for the agency.
Peter Iannicelli, Esq., and Michael R. Golden, Esq., Office of the 
General Counsel, GAO, participated in the preparation of the decision.

DIGEST

1.  Protest alleging that agency officials provided the awardee inside 
information that gave it a competitive advantage and that evaluators 
were biased in favor of the awardee is denied where the protester has 
provided no detail to substantiate its allegations and there is 
nothing in the record to support them.

2.  Protest alleging that agency improperly made an upward adjustment 
to the protester's proposed costs to reflect the agency's estimate of 
the amount of a reasonable award fee, without first discussing the 
matter with the protester is denied where:  (1) the RFP was for a 
cost-plus-award-fee contract and clearly indicated that offers should 
include an award fee, but the protester's offer did not do so; (2) the 
agency considered the award fee a key element for ensuring excellent 
performance; (3) the RFP cautioned that the agency intended to award 
the contract on the basis of initial proposals without discussions; 
(4) the protester has indicated that it intended to propose an award 
fee if the subject had been raised during discussions; and (5) the 
agency reasonably estimated the protester's award fee based upon the 
median percentage for award fees contained in other proposals. 

3.  Award of a contract to the offeror of the higher technically 
rated, higher-cost proposal was permissible where the agency 
reasonably determined that the superior technical merit of the 
awardee's proposal was worth its higher cost.

DECISION

Environmental Affairs Management, Inc. (EAM) protests the National 
Aeronautics  and Space Administration's (NASA) award of a 
cost-plus-award-fee contract to Science Applications International 
Corporation (SAIC) pursuant to request for proposals (RFP) No. 
3-046562.  EAM alleges that SAIC had access to inside information, 
that NASA's evaluation of EAM's proposal was unreasonable, that NASA 
incorrectly made an upward adjustment to EAM's price without first 
having discussed the matter with EAM, and that NASA should have 
selected EAM on the basis of its lowest-cost, technically acceptable 
proposal.[1]  We deny the protest.

Issued on December 9, 1996, the RFP solicited proposals for providing 
general and technical support services to the Office of Environmental 
Programs of NASA Lewis Research Center for a base period of 1 year and 
included options for 4 additional years.  The RFP required that 
initial proposals be submitted by February 7, 1997, and cautioned that 
the agency intended to make award on the basis of initial proposals 
without discussions.  The RFP stated that proposals would be evaluated 
on three factors:  mission suitability, relevant experience and past 
performance, and cost.  The RFP indicated that the mission suitability 
and cost factors were equal in importance and that each was considered 
more important than the relevant experience and past performance 
factor.  Only the mission suitability factor and its several 
subfactors were to be given point scores in the technical evaluation.  
Cost was to be evaluated for realism and to determine the probable 
cost to the government.  The relevant experience and past performance 
factor was to be adjectivally rated.  The RFP stated that proposals 
would be evaluated to determine which represented the best value to 
the government and cautioned that the contract might be awarded to an 
offeror whose proposal was higher priced if that proposal was 
considered to be sufficiently more advantageous to justify the higher 
proposed price.  

Seven offers were received and, because one offeror withdrew its 
proposal, six offers were evaluated and ranked by the source 
evaluation committee (SEC).  SAIC's proposal received the highest 
technical score with a total of [deleted] (out of 1,000 possible 
points) for an overall technical rating of "[deleted}" while EAM's 
proposal received the third-highest technical score with a total of 
[deleted] points for an overall technical rating of "[deleted]."  
SAIC's proposed costs plus fee for the potential 5-year life of the 
contract were approximately $[deleted] million; this amount was 
accepted by the agency's price analyst as the most probable cost of 
having SAIC perform the work.[2]  EAM's proposed costs were roughly 
$[deleted] million.  However, because EAM's proposal did not include 
any award fee in its proposed costs,[3] the agency made an upward 
adjustment to EAM's proposed costs of approximately $[deleted] 
million, representing [deleted]-percent award fee, and concluded that 
EAM's most probable cost was approximately $[deleted] million.  No 
discussions were held.  After a briefing by the SEC, the source 
selection authority (SSA) selected SAIC for contract award because 
SAIC's significantly higher technical score outweighed its slightly 
higher probable cost.  The contract was awarded to SAIC on May 29.  
EAM was debriefed on June 2 and filed this protest shortly thereafter.

The protester contends that it was at a competitive disadvantage 
because SAIC, which was already performing work under a contract with 
NASA, had access to inside information concerning current and future 
projects and key personnel within the Office of Environmental 
Programs, while EAM did not.  The protester also contends that NASA 
personnel may have told SAIC that certain RFP specifications would not 
have to be met.  Moreover, EAM asserts that unnamed evaluators may 
have been biased in favor of SAIC because they were familiar with 
SAIC's work for NASA and, therefore, such evaluators should not have 
been allowed to participate in the evaluation process. 

The agency reports that SAIC was not the incumbent contractor 
providing general and technical support services to the Office of 
Environmental Programs.  Instead, SAIC had a significantly smaller 
contract to perform architect and engineering services for the Lewis 
Research Center.[4]  According to NASA, SAIC did not maintain an 
on-site workforce and did not have access to any proprietary or 
confidential information under that contract.  While SAIC may have 
gained a general familiarity with the Lewis Research Center and its 
programs as a result of its contract, the agency reports that it made 
a good faith effort to ensure that all competitors understood the 
present requirements, including, among other things:  (1) potential 
offerors were allowed a site visit; (2) the RFP included references 
and access to applicable standards and manuals; and (3) offerors' 
questions were answered in several RFP amendments. 

EAM has provided no evidence nor any detailed statement of facts to 
support its allegations, and there is no evidence in the record 
indicating either that inside information was given to SAIC or that 
the evaluators were biased in favor of SAIC.  Where, as here, a 
protester contends that contracting officials provided the awardee 
inside information and were motivated by bias that caused them to 
favor one competitor over another, there must be convincing evidence 
to support the contentions and not mere speculation by the protester.  
See Group Techs. Corp.; Electrospace Sys., Inc., B-250699 et al., Feb. 
17, 1993, 93-1 CPD  para.  150 at 11; see also Controls Eng'g Maintenance 
Corp., B-247833.2, Sept. 25, 1992, 92-2 CPD  para.  204 at 2-3.  Since the 
record here is devoid of such evidence, EAM's allegations are mere 
speculation and do not provide adequate bases for protest.  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 
2-3. 

The protester also alleges that the evaluators improperly failed to 
consider EAM's proposed use of [deleted] as a subcontractor, EAM's 
"unique and innovative" approaches and concepts, its resources, its 
proposed key personnel, or its contribution to the agency's 
environmental mission.  The protester does not specify which 
approaches and concepts in its proposal NASA failed to consider, or 
the basis for that allegation.  Similarly, EAM fails to explain what 
information in its proposal concerning [deleted] role NASA failed to 
evaluate.

Our Office will question an agency's evaluation of proposals only if 
the evaluation lacks a reasonable basis or is inconsistent with the 
RFP's stated evaluation criteria, DAE Corp., Ltd., B-257185, Sept. 6, 
1994, 94-2 CPD  para.  95 at 4, and our review of the evaluation record here 
reveals no basis to find that the evaluation was unreasonable or 
inconsistent with the RFP's criteria.[5]  The agency reports that all 
aspects of EAM's proposal were evaluated and considered by the SEC, 
and the record shows that the proposal received an overall "[deleted]" 
rating.  The SEC chairman states that the SEC considered EAM's 
proposed use of [deleted] as a subcontractor, but the SEC did not 
share EAM's high regard for [deleted]; the SEC found nothing 
exceptional (or detrimental) in the proposed use of [deleted] and, 
therefore, determined it to be not a strength (or a weakness) of EAM's 
proposal.  The SEC chairman also states that there was nothing unique 
or innovative about EAM's approaches and concepts and that EAM did not 
identify any apparent contribution to NASA's mission in EAM's 
proposal.  While the SEC recognized that [deleted] was a member of 
EAM's proposed team, the chairman states that the role of [deleted] 
was "[deleted]" because EAM's proposal did not explain how its team 
members would fit into the work effort.  Regarding key personnel, the 
record reflects that the SEC criticized EAM's proposal for failing to 
provide a [deleted].  Moreover, the SEC determined that EAM's proposed 
[deleted] qualifications were acceptable but unremarkable and, 
therefore, [deleted] was considered neither a strength nor a weakness 
of the proposal.  Because EAM's protest made only a very general 
allegation that the evaluation did not consider these aspects of its 
proposal, without any detailed statement in support of the allegation, 
it appears that EAM merely disagrees with the agency's evaluation.  
However, EAM's mere disagreement with the agency over its technical 
evaluation does not establish that the evaluation was unreasonable.  
Id. 

The protester also contends that its total proposed costs, which did 
not include any award fee, were about [deleted] percent less[6] than 
SAIC's proposed costs plus fee, but NASA improperly added 
[deleted]-percent award fee, or approximately $[deleted] million, to 
EAM's proposed costs, significantly reducing EAM's cost advantage.  
EAM states that, if NASA had discussed the fact that EAM's proposal 
did not include an amount representing the potential award fee, "EAM's 
plan . . . was to add no greater than [deleted]% to our overall cost."  
Thus, EAM asserts that, because NASA did not hold discussions with EAM 
on this matter, NASA overestimated the award fee that EAM planned to 
add to its original proposed costs. 

Where a cost reimbursement contract is to be awarded, the offerors' 
estimated costs of contract performance should not be considered as 
controlling since the estimates may not provide valid indications of 
the final actual costs which the government is required to pay.  MKA, 
B-257431.3, Oct. 4, 1994, 94-2 CPD  para.  152 at 6.  The agency's 
evaluation of estimated costs should determine the extent to which 
offerors' estimates represent what the contract should cost, assuming 
reasonable economy and efficiency.  Id.  Our review is limited to 
considering whether the agency's cost realism determination was 
reasonable.  Id.

It should have been clear to EAM from a reading of the RFP both that 
its proposal was expected to include an award fee in the breakdown of 
its proposed costs and that NASA did not intend to hold discussions 
with any of the offerors.  The RFP stated that NASA was changing the 
type of contract for this work from the previous cost-plus-fixed-fee 
contract to a cost-plus-award-fee contract in order to allow NASA to 
"incentivize the results of the effort."  In this regard, the Federal 
Acquisition Regulation (FAR) explains that a cost-plus-award-fee 
contract includes an award amount that the contractor may earn in 
whole or in part, depending upon the government's assessment of the 
contractor's performance, and that is sufficient to provide motivation 
for excellent performance.  FAR  sec.  16.305 and 16.405-2(a).  The RFP's 
proposal preparation instructions, which listed the basic cost 
elements that were to be included in the cost proposals for each year 
of the contract, specifically stated that a fee was to be included.

When EAM submitted an initial proposal that did not include any amount 
for the award fee, NASA determined that a key cost element had been 
omitted.  NASA considered the award fee to be a key element because it 
was the methodology chosen by NASA to induce excellent performance.  
Rather than opening discussions with EAM and all other offerors, the 
agency's cost analyst and the contracting officer decided to add 
[deleted]-percent fee to EAM's total costs.  The [deleted]- percent 
figure represented the median percentage of the fees that were 
proposed by the other offerors.  We note that by using the median 
percentage rate to calculate EAM's probable award fee of approximately 
$[deleted] million, NASA still credited EAM with the smallest award 
fee, in actual dollar terms, of any offer.  In view of the RFP's 
express warning that the contract would be awarded without 
discussions, because of the RFP's indication that an award fee was 
anticipated, and because the agency viewed the award fee as essential 
to encourage excellent performance, we see nothing wrong with NASA's 
making the cost adjustment without discussions.

Finally, EAM contends that NASA should have selected EAM on the basis 
of its lowest-cost, technically acceptable proposal.  In the context 
of this procurement, this contention fails to state a valid basis of 
protest.  In a negotiated procurement, a procuring agency has the 
discretion to select a more highly rated technical proposal if doing 
so is reasonable and consistent with the RFP's evaluation scheme.  
Pacific Architects & Eng'rs. Inc., B-257431.7, Dec. 8, 1994, 95-1 CPD  para.  
202 at 11.  Because the RFP here did not require the selection of the 
lowest-cost, technically acceptable proposal, we dismiss EAM's 
allegation on this point for failure to state a valid basis of 
protest.  See Bid Protest Regulations, 4 C.F.R.  sec.  21.5(f).

In any event, we note that the protester has furnished no detailed 
explanation to support its position that its proposal was evaluated 
unreasonably, and our review of the record confirms that NASA 
reasonably found SAIC's proposal technically superior under the 
mission suitability and relevant experience/past performance factors.  
Accordingly, the SSA's decision to award the contract to SAIC on the 
basis of its proposal's superior technical ratings in spite of EAM's 
lower probable cost was reasonable.

The protest is denied.

Comptroller General 
of the United States

1. The protester also contends that NASA should have given EAM 
preference in the procurement and awarded it the contract because EAM 
is a small disadvantaged business.  However, the RFP clearly indicated 
that the procurement was being conducted on the basis of full and open 
competition.  Because the procurement was not set aside for small or 
small disadvantaged businesses and did not provide for any preference 
for small or small disadvantaged businesses in the evaluation of 
proposals, this contention does not provide a valid basis for protest.  
See Baker Support Servs., Inc.; Management Technical Servs., Inc., 
B-256192.3, B-256192.4, Sept. 2, 1994, 95-1 CPD  para.  75 at 3-4; see also 
MagneTek National Elec. Coil, B-249625, Dec. 4, 1992, 92-2 CPD  para.  392 
at 4.

2. All dollar figures have been rounded off in this decision.

3.[deleted]

4. The agency reports that it ordered approximately $[deleted] of work 
in 1997 and $[deleted] in 1996 under its architect-engineering 
services contract with SAIC; in contrast, as noted above, the present 
general and technical services contract is worth approximately 
$[deleted] million per year.

5. The contemporaneous evaluation record consisted only of the SEC's 
consensus report, including technical scores and rankings of the 
proposals along with brief notes concerning the various strengths and 
weaknesses of each proposal, and a source selection statement prepared 
by the SSA explaining why he selected SAIC's proposal for award.  NASA 
reports that the scoresheets and notes prepared by individual 
evaluators were used by the SEC to arrive at a consensus and to 
prepare its report for the SSA, but the individual scoresheets were 
subsequently destroyed.  The contemporaneous documents furnished with 
the report were amplified by NASA in a legal brief, a contracting 
officer's statement, and declarations made by the SSA and the chairman 
of the SEC, all of which were prepared by NASA after EAM filed its 
protest.  We properly examined both the contemporaneous record and the 
post-protest amplifications.  See Southwest Marine, Inc.; American 
Sys. Eng'g Corp., B-265865.3, B-265865.4, Jan. 23, 1996, 96-1 CPD  para.  56 
at 10-11.

6. EAM's total proposed costs were actually approximately [deleted] 
percent less than SAIC's total proposed costs-plus-award-fee.