BNUMBER: B-277805.2
DATE: January 20, 1998
TITLE: SCIENTECH, Inc., B-277805.2, January 20, 1998
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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:SCIENTECH, Inc.
File: B-277805.2
Date:January 20, 1998
Joseph P. Hornyak, Esq., Sonnenschein, Nath & Rosenthal, for the
protester.
Scott Van Lente, Esq., and Gena E. Cadieux, Esq., Department of
Energy, 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
Agency's exclusion of the protester's proposal from the competitive
range was unreasonable where: (1) the protester's proposal was
considered technically acceptable overall and on each evaluation
factor, and it had no perceived deficiencies; (2) the past
performance/customer satisfaction evaluation did not consider the fact
that the protester and its proposed subcontractor were incumbent
contractors, performing the same or very similar work for the same
contracting activity and the protester had received excellent
performance ratings; and (3) the agency did not consider price or cost
in determining the competitive range.
DECISION
SCIENTECH, Inc., protests the Department of Energy's (DOE) decision to
exclude it from the competitive range established under request for
proposals (RFP) No. DE-RP07-97ID13485 for advisory and assistance
support services in support of DOE's Idaho Operations Office (DOE-ID).
The protester contends that DOE's evaluation of proposals was
unreasonable and that its proposal was improperly excluded from the
competitive range.
We sustain the protest because DOE, in making its competitive range
determination, unreasonably failed to consider cost or price as well
as significant relevant past performance information that was
highlighted in SCIENTECH's proposal.
Issued on March 31, 1997, the RFP contemplated award of three to five
indefinite delivery, indefinite quantity, cost reimbursement contracts
to replace several expiring advisory and assistance support services
contracts.[1] Each contract would be for a period of 5 years, would
include cost-plus-fixed-fee and cost-plus-incentive-fee pricing
provisions, and would have a ceiling price of $25 million. The work
would be performed in response to task orders issued by the
contracting officer. The RFP required offers for services in two
general areas--engineering/technical services and
management/professional services. The RFP required offers to include
ceiling rates for the proposed fees as well as ceilings for burdened
labor rates for a large number of labor categories that might be used
in performing the work.
Under the RFP's evaluation scheme, contracts were to be awarded to
those offerors whose proposals were determined to be most advantageous
after evaluation of proposals on performance approach and cost/rate
criteria. The performance approach criteria and their relative
weights (in percentage terms) were: management approach (55 percent),
past performance/experience (25 percent); and subcontracting approach
(20 percent). The RFP stated that performance approach criteria would
be given point scores and assigned adjectival ratings but the
cost/rate criterion would not be point scored or adjectivally rated;
instead, cost/rate proposals were to be evaluated for reasonableness
and appropriateness of proposed rates. The RFP also stated that the
performance approach criteria were considered significantly more
important than the cost/rate criterion, but provided that, if the
proposed rates of a higher-scored proposal were higher than other
proposals being considered for award, the government would determine
if the advantages of the higher-scored proposal were worth the
additional rate costs.
Twenty proposals were received by the May 28, 1997, due date for
receipt of initial proposals. The source evaluation panel (SEP)
evaluated initial proposals; overall technical scores ranged from a
low of just [deleted] percent to a high of [deleted] percent. The SEP
determined that 17 of the 20 initial proposals were acceptable.
SCIENTECH's proposal was rated as acceptable overall, as well as on
each of the three technical evaluation criteria, and was ranked
[deleted] with an overall score of [deleted] percent.[2] The SEP was
briefed by the DOE financial advisor, who evaluated cost/rate
proposals for reasonableness, but did not compare or rank the
offerors' proposed prices or labor rates. The SEP decided that there
was a "natural, logical scoring break" between the seventh [deleted]
and eighth [deleted] highest-rated offers and that offers rated at
less than [deleted] did not have a reasonable chance for selection.
Accordingly, the SEP, with the concurrence of the source selection
official, included only the seven top-rated proposals in the
competitive range and excluded SCIENTECH's lower-rated proposal. By
letter of August 11, the contracting officer notified SCIENTECH of
this determination.
After discussions were held with the competitive range offerors and
best and final offers (BAFO) received and evaluated, by letter of
September 26, 1997, DOE notified SCIENTECH that it had awarded four
contracts pursuant to the RFP.[3] Shortly thereafter, on October 7,
DOE debriefed SCIENTECH. This protest was filed within 5 days of the
debriefing.
Basically, the protester contends that DOE's evaluation of its
proposal was unreasonable, and, therefore, the competitive range
determination, which was based upon that evaluation, was flawed. The
protester contends that DOE's evaluation of SCIENTECH's and its
proposed subcontractors' past performance and experience was
unreasonable because DOE selected for evaluation only 4 of the 10
references that SCIENTECH included in its proposal. In this regard,
SCIENTECH asserts that DOE unreasonably failed to consider SCIENTECH's
performance as an incumbent contractor for DOE-ID for the exact same
work that is being procured here and instead selected contracts that
were smaller and less relevant to the present requirement than its
incumbent contract. SCIENTECH also asserts that DOE unreasonably
selected for evaluation a reference for only one of SCIENTECH's
proposed subcontractors--a firm that had relatively little experience
working for DOE-ID--and did not evaluate any of the references
submitted for SCIENTECH's other proposed subcontractors, all of which
have extensive relevant experience with DOE-ID. The protester also
asserts that DOE failed to consider the relative proposed prices of
the offers in making its competitive range determination. In this
connection, SCIENTECH contends that, if DOE had considered relative
proposed prices, then DOE could not reasonably have eliminated
SCIENTECH's proposal, which included labor rates that were
substantially lower than those of some of the competitive range
offers, from the competitive range.
Our examination of an agency's decision to exclude a proposal from the
competitive range begins with the agency's evaluation of proposals.
Techniarts Eng'g, B-271509, July 1, 1996, 96-2 CPD para. 1 at 3. In
reviewing an agency's technical evaluation, we will not reevaluate the
proposals but will examine the record of the agency's evaluation to
ensure that it was reasonable and in accord with stated evaluation
criteria, and not in violation of procurement laws and regulations.
Id. The competitive range consists of all proposals that have a
reasonable chance of being selected for award. See Federal
Acquisition Regulation (FAR) sec. 15.609(a) (June 1997).
The past performance/experience criterion was worth 25 percent of the
total evaluation. Within past performance/experience, the RFP listed
two subcriteria: relevant past performance (worth [deleted]
evaluation points or [deleted] percent) and customer satisfaction
(worth [deleted] evaluation points or [deleted] percent). For
evaluation purposes, the RFP allowed offerors to submit no more than
10 references for the offeror and its subcontractors and to include
specified information concerning current contracts and contracts
completed in the last 3 years.[4] In evaluating proposals on the
relevant past performance subcriterion, DOE reports that it evaluated
all references contained in the proposal. However, in evaluating
proposals on the customer satisfaction subcriterion, DOE sent
questionnaires to some, but not all, of the references. In most
cases, DOE evaluated responses (i.e., completed questionnaires) from
cognizant contracting personnel concerning three previous contracts
performed by the offeror and just one response concerning a previous
contract performed by a proposed teaming subcontractor.
Examination of SCIENTECH's proposal shows that SCIENTECH's incumbent
DOE-ID contract was the focal point of the past performance/experience
section of SCIENTECH's technical proposal. The proposal highlighted
the incumbent contract in several ways. For example, whenever the
proposal listed previous projects, the incumbent contract was listed
first. SCIENTECH's proposal also included one entire page that
consisted of a table dedicated exclusively to showing that the work
performed by SCIENTECH under its incumbent DOE-ID contract encompassed
the work required under the present RFP's statement of work. Most
importantly, when SCIENTECH described its previous experience, the
description of the incumbent contract was by far the most
comprehensive, taking up a full 15 pages of the proposal, and the
description began with the following statement:
This project is the key project that demonstrates SCIENTECH's
capabilities and experience for DOE's Idaho Operations Office.
SCIENTECH will build on its experience and successful performance
of this project to provide a seamless continuation of superior
quality, cost-effective support and services to DOE-ID.
[Emphasis added.]
Thus, it should have been clear to DOE that SCIENTECH was relying
heavily on its work as an incumbent DOE-ID contractor as the primary
source to be used in the evaluation of its past performance.
DOE has provided no detailed explanation for its failure to solicit
and evaluate a customer satisfaction questionnaire regarding
SCIENTECH's incumbent contract. In its report on the protest, DOE
offered only a general explanation stating that some references
provided by offerors created a potential for unreliable evaluation of
past performance and some were older contracts or were less relevant.
DOE also argued that there is no requirement that all references
listed in a proposal be checked by the agency.
While there is no legal requirement that all past performance
references be included in a valid review of past performance, some
information is simply too close at hand to require offerors to
shoulder the inequities that spring from an agency's failure to obtain
and consider the information. International Bus. Sys., Inc.,
B-275554, Mar. 3, 1997, 97-1 CPD para. 114 at 5-6. In our opinion, the
agency's failure to evaluate SCIENTECH's work as incumbent in the
current case was patently unfair to the protester. Not only did
SCIENTECH emphasize the importance of its experience as incumbent in
its proposal, but our review of the statements of work for the
incumbent contract and the current RFP confirms that the work required
under the new contract is strikingly similar to the work required
under the old contract. Apparently, DOE also believed that
SCIENTECH's incumbent contract and the current RFP contained very
similar statements of work, because the RFP specifically listed
SCIENTECH's incumbent DOE-ID contract as "a representative sample of
the broad scope of work included in the incumbent contracts."
Additionally, the record shows that SCIENTECH's incumbent contract and
the new contracts are indefinite quantity contracts, the incumbent
contract has incurred roughly $15 million in work so far while the new
contracts are capped at $25 million, and SCIENTECH is still performing
work under the incumbent contract. It is difficult to imagine a prior
contract experience that is more relevant to the current procurement
in terms of the same contracting activity, similarity of the scope of
work, similarity of contract size and type, and recent performance.
Id. at 4-6. Accordingly, we think it was unreasonable for DOE not to
evaluate SCIENTECH's incumbent contract when evaluating the customer
satisfaction subcriterion.
SCIENTECH also contends that DOE unreasonably selected for customer
satisfaction evaluation the only subcontractor listed in SCIENTECH's
proposal that had relatively little experience with DOE-ID instead of
one of its other proposed subcontractors, all of which have had
extensive experience with DOE-ID. Since DOE's report contained only a
general statement about how some references were considered more
relevant than others and did not specifically respond to the protest
allegation, we do not know how or why the SEP selected the one
subcontractor reference for evaluation. We note, however, that one of
SCIENTECH's proposed subcontractors, Halliburton NUS Corporation, was
an incumbent contractor performing this same work under its
contract--valued at roughly $7 million--with DOE-ID. Notwithstanding
the fact that SCIENTECH's proposal listed this subcontractor as one of
its references and that the RFP also listed this contractor's
incumbent contract as a representative sample of the scope of work
performed by the incumbent contractors, the SEP chose not to evaluate
this subcontractor reference. Because this reference was an incumbent
contractor providing technical and management support services to
DOE-ID under a contract that was considerably more than RFP's $2
million threshold for purposes of inclusion in the evaluation, we
think that DOE also should have evaluated the clearly relevant
contract. Id.
SCIENTECH states that it has consistently received "excellent" ratings
from DOE-ID contracting personnel for its work under the incumbent
contract and has submitted a contractor performance report showing an
excellent overall rating for the 1-year period ending on April 30,
1997. DOE has not refuted SCIENTECH's statement or provided any
evidence to the contrary. Therefore, we think it likely that
SCIENTECH would have received very good or even excellent ratings from
cognizant contracting personnel if a customer satisfaction
questionnaire were solicited and evaluated.
Additionally, SCIENTECH's initial proposal received an overall
acceptable rating of [deleted] percent while the lowest-rated
competitive range proposal received an acceptable rating of [deleted]
percent. If SCIENTECH's proposal were to receive a perfect score on
customer satisfaction, SCIENTECH's overall rating would increase to
[deleted] percent, just [deleted] percent less than the lowest-rated
competitive range proposal, and would be ranked {deleted] out of 20
proposals, instead of [deleted] as originally ranked. SCIENTECH's
proposal did not have to displace the seventh ranked offer in the
evaluation ranking in order to be included in the competitive range;
instead, the competitive range, which was established based on a break
or gap in scores, could have been determined to include SCIENTECH's
proposal, whose score, as adjusted, would have fallen within what had
been a gap. In view of the fact that SCIENTECH's proposal was rated
as acceptable on every evaluation factor, and because the record shows
that SCIENTECH's proposal had no deficiencies and received the same
overall "acceptable" rating as the proposals that were included in the
competitive range, we have no reason to believe that the SEP would not
have included SCIENTECH's [deleted]-ranked proposal in the competitive
range. This is especially so since the RFP contemplated that as many
as five contracts would be awarded.
The likelihood that SCIENTECH would have been included in the
competitive range is strengthened by the fact that the SEP failed to
consider the offers' relative costs when making the competitive range
determination.[5] While a technically acceptable proposal may be
eliminated where it does not have a reasonable chance for award,
Techniarts Eng'g, supra, at 3-4, FAR sec. 15.609(a) requires that the
competitive range be determined on the basis of cost or price as well
as other factors that were stated in the solicitation and that, when
there is doubt as to whether a proposal has a reasonable chance of
being selected for award, the proposal should be included in the
competitive range. Cost or price must be considered as a factor; it
is improper to exclude an offeror from the competitive range solely on
the basis of technical considerations, unless the proposal is
technically unacceptable. S&M Property Management, B-243051, June 28,
1991, 91-1 CPD para. 615 at 4; HCA Gov't Servs., Inc., B-224434, Nov. 25,
1986, 86-2 CPD para. 611 at 3-4.
The failure to consider cost in competitive range and award decisions
is improper. Agencies must consider cost to the government in
evaluating competing proposals. 41 U.S.C. sec. 253a(b)(1) (1994).
Agencies have considerable discretion in determining the appropriate
method for taking cost into account; they do not have discretion,
however, not to consider cost at all, as happened here. Health Servs.
Int'l, Inc.; Apex Envtl., Inc., B-247433, B-247433.2, June 5, 1992,
92-1 CPD para. 493 at 4.
The record shows that cost/rate proposals were evaluated for
reasonableness, but no comparison of the offers' costs was made as
part of the competitive range determination. This was apparently
because the SEP was unable to develop most probable cost estimates for
the competing proposals, since, as the SEP noted, the RFP did not
include what the SEP referred to as "artificial methods" such as
sample tasks or estimates of the quantities of labor hours to be
ordered under each labor category.
While we understand that it is somewhat artificial to use hypothetical
sample tasks in a solicitation for an indefinite delivery, indefinite
quantity contract, where the actual work will be competed through task
orders, sample tasks permit the government to assess the probable cost
of competing offerors in light of both the offerors' differing
technical approaches and their labor rates and fees. As an
alternative, an agency may simply multiply offerors' proposed labor
rates by estimated quantities of labor hours for each labor category
(such estimates may be based, for example, on the agency's recent
experience); that method, while simpler, does not take into account
differences in offerors' technical approaches. See id.
DOE argues that SCIENTECH suffered no competitive prejudice from the
agency's failure to consider cost in the competitive range
determination. In support of this argument, DOE points to a summary
document, created in response to the protest, which compares
SCIENTECH's labor rates and fee ceiling to the labor rates and fee
ceiling of the seven competitive range proposals. DOE contends that
this comparison shows that SCIENTECH's proposed labor rates and fee
ceiling are at best comparable to those contained in the competitive
range offers and that in many cases the competitive range offers'
labor rates and fee ceilings are lower than SCIENTECH's. In light of
this, and since SCIENTECH's overall technical rating was lower than
those of the competitive range offers, the agency contends that
SCIENTECH's proposal would not have been included in the competitive
range even if cost had been considered.
The agency's summary document, which is limited to comparing labor
rates and fees, is not helpful, since it fails to take into account
the different quantities of the various labor categories that the
agency expects to use. See Temps & Co., 65 Comp. Gen. 640, 642
(1986), 86-1 CPD para. 535 at 4. Moreover, the agency's labor rate/fee
ceiling summary supports our conclusion that SCIENTECH did in fact
suffer prejudice from the agency's failure to take cost or price into
account in the competitive range determination. Specifically, DOE's
summary shows that the competitive range offers' proposed fee ceilings
ranged from [deleted] percent, while SCIENTECH proposed a sliding fee
scale ranging from [deleted] percent depending on the complexity of
the work. Thus, it appears that SCIENTECH's fee ceiling was low
relative to the range of fee ceilings in the competitive range offers.
Furthermore, while DOE points out that SCIENTECH's average labor rates
are not the lowest for any particular labor category, the agency's
summary reveals that, SCIENTECH's labor rates are lower than the
[deleted]-ranked competitive range proposal's rates in the great
majority of labor categories (19 of the 24 categories represented).
While these comparisons cannot substitute for an adequate cost
analysis, they undercut the agency's contention that the lack of such
an analysis did not prejudice the protester.
For the reasons set forth above, we sustain the protest. Since DOE
has suspended performance under the contracts, we recommend that DOE
include SCIENTECH's proposal in the competitive range, hold
discussions with SCIENTECH concerning the various weaknesses perceived
by the SEP in SCIENTECH's proposal, and solicit a BAFO from SCIENTECH.
After SCIENTECH's BAFO is evaluated, DOE should make a new source
selection decision consistent with this decision.[6] Because we are
sustaining the protest, it is not necessary for us to address
SCIENTECH's protest grounds concerning the SEP's downgrading of
SCIENTECH's proposal, as those issues can be addressed by the agency
during discussions. We also recommend that SCIENTECH be reimbursed
its costs of filing and pursuing the protest, including reasonable
attorneys' fees. Bid Protest Regulations, 4 C.F.R. sec. 21.8(d)(1)
(1997). SCIENTECH should submit its certified claim for costs,
detailing the time expended and costs incurred, directly to the
contracting agency within 60 days after receipt of this decision. 4
C.F.R. sec. 21.8(f)(1).
Comptroller General
of the United States
1. The agency reports that the procurement was conducted to replace
five expiring incumbent contracts. The RFP, however, listed seven
incumbent contracts, including a contract between DOE and SCIENTECH
(contract No. DE-AM07-92ID13143).
2. In accord with the agency's source selection plan, ratings in the
[deleted] percent range were considered satisfactory.
3. Contracts were awarded to Ecology & Environmental, Inc.; Global
Technologies, Inc.; Los Alamos Technical Associates, Inc.; and
Systematic Management Services, Inc. Performance under all four
contracts has been stayed pending our resolution of this protest.
4. As used in this RFP, a reference actually included a brief
description of the contractor's or its proposed teaming
subcontractor's prior contract (including, among other things, the
dollar value, the type of work performed, and performance
difficulties), as well as points of contact to whom DOE could send
customer satisfaction questionnaires.
5. We note that most of the other perceived weaknesses in the
protester's proposal were informational in nature and could have
easily been remedied through discussions. This applies to the
weaknesses upon which the protest was based, namely, that: [deleted].
We thus find unreasonable the agency's conclusions that the weaknesses
the SEP perceived in SCIENTECH's proposal were so extensive that the
proposal would have to be rewritten or that discussions about those
weaknesses would necessarily lead to technical leveling.
6. Instead of including the protester's proposal in the competitive
range and soliciting a BAFO from that firm, the agency may decide, in
the alternative, to amend the RFP to add an explanation of the cost
evaluation and then to solicit revised proposals from all offerors.
However, since no offeror has contested the lack of such an
explanation in the solicitation, the agency may elect to proceed with
its cost analysis based on its internal calculations of the estimated
quantities of labor hours to be ordered.