BNUMBER:  B-277978; B-277978.2 
DATE:  December 16, 1997
TITLE: BE, Inc.; PAI Corporation, B-277978; B-277978.2, December 16,
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:BE, Inc.; PAI Corporation

File:     B-277978; B-277978.2

Date:December 16, 1997

George Townes for BE, Inc., and Kurt M. Rylander, Esq., and Kenneth 
Martin, Esq., Martin & Rylander, Esq., for PAI Corporation, the 
protesters.
Marcia G. Madsen, Esq., David F. Dowd, Esq., Stephanie P. Gilson, 
Esq., and Lisanne E. Sanborn, Esq., Miller & Chevalier, for Systematic 
Management Services, Inc., an intervenor.
Gena Cadieux, Esq., Department of Energy, for the agency.
David Ashen, Esq., and John M. Melody, Esq., Office of the General 
Counsel, GAO, participated in the preparation of the decision.

DIGEST

1.  Protest that agency unreasonably determined that awardee's 
proposed labor rates were realistic is denied where agency 
determination was supported by (1) a comparison of the awardee's rates 
to those of the other offerors and to wage survey information 
furnished by offerors, and (2) the fact that all of the awardee's 
proposed key employees were currently employed and proposal included 
evidence of ability to retain staff.

2.  Protest that questions posed by agency at oral presentations 
constituted discussions such that the agency was required to advise 
offerors of weaknesses in their offers and request best and final 
offers is without merit where the information solicited was not 
substantial, but merely clarified information already presented in 
proposal; information was not necessary to find proposal acceptable; 
and no proposal revision opportunity was provided.

DECISION

BE, Inc. (BEI) and PAI Corporation protest the Department of Energy's 
(DOE) award of a contract to Systematic Management Services, Inc. 
(SMS), under request for proposals No. DE-RP04-97AL76614, for 
technical support services.  BEI and PAI challenge DOE's cost/price 
evaluation and cost/technical tradeoff decision; PAI challenges DOE's 
determination not to request best and final offers (BAFO). 

The solicitation contemplated award of an indefinite 
delivery/indefinite quantity task order contract, for a base year with 
4 option years, to a small business to furnish technical support 
services in support of DOE's nuclear weapons activities.  Offerors 
were required to submit ceiling labor rates for 38 categories--6 key 
and 32 other--of personnel, each with its own specified minimum 
educational and experience qualifications.  Although the solicitation 
required offerors to submit written cost/price proposals, resumes for 
key personnel, employment letters of intent for key personnel and 
written past performance information, it required offerors to make 
oral presentations in lieu of written technical/management proposals.  
Offerors were cautioned to be "fully responsive" in their written 
proposals and oral presentations since "DOE intends to make a 
selection and award a contract based on the initial written proposal 
and the oral presentation."  (DOE elsewhere in the solicitation 
reserved the right to conduct written or oral discussions with 
offerors.)

Award was to be made to the responsible offeror whose proposal was 
"most advantageous (best value)" under the following three criteria 
(listed in descending order of importance):  (1) technical/management; 
(2) past performance; and (3) cost/price.  Cost/price was to be 
evaluated for reasonableness, realism, and completeness.  The 
solicitation provided that "Technical/Management and Past Performance 
are of greater importance than Cost/Price.  Cost/Price may become 
increasingly more important, or even the determining factor, when two 
or more competing offerors are considered to be substantially equal."

Ten proposals--including BEI's, PAI's, and SMS'--were received by the 
closing time.  Following oral presentations to the agency, DOE 
determined that SMS' offer was most advantageous.  SMS' evaluation 
score (89.2 of 100 possible points/very good) under the 
technical/management and past performance factors was slightly higher 
than PAI's (88.9/very good), and SMS' cost/price ($[DELETED]) was 
[DELETED] lower than PAI's ($[DELETED]).  Although BEI's proposal 
received a higher score and adjectival rating (93.8/excellent) under 
the technical/management and past performance factors than SMS', its 
cost/price ($[DELETED]) was [DELETED] higher, and DOE determined that 
the higher rating of BEI's proposal did not warrant its approximately 
[DELETED] percent higher cost/price.  Upon learning of the resulting 
award to SMS, BEI, and PAI filed these protests with our Office.

BEI PROTEST

BEI, the incumbent contractor, generally argues that its proposal was 
"far superior, technically" to SMS'.  In addition, BEI specifically 
challenges the evaluation of SMS' proposed professional compensation.  
In this regard, although a protective order was issued by our Office 
to protect proposal and detailed evaluation information that might 
afford a competitive advantage in the event our decision led to a 
reopening of negotiations or a recompetition, BEI did not retain 
counsel and, as a result, did not avail itself of the opportunity 
available under our Regulations to have counsel obtain detailed 
information concerning SMS' proposal, including SMS' professional 
compensation plan, and its evaluation.  4 C.F.R.  sec.  21.4(c) (1997).  
Instead, BEI infers from the fact that SMS' overall cost/price was 
substantially lower than its own that SMS "cannot obtain 
'substantially equal' technical talent to that of" BEI.[1]

The solicitation incorporated by reference the standard "Evaluation of 
Compensation for Professional Employees" clause, Federal Acquisition 
Regulation  sec.  52.222-46, which provides in part that the agency will 
evaluate proposed compensation plans to assure that they reflect "a 
sound management approach and understanding of the contract 
requirements"; assess "the offeror's ability to provide uninterrupted 
high-quality work"; and consider proposed compensation "in terms of 
its impact upon recruiting and retention, its realism, and its 
consistency with a total plan for compensation."  DOE determined that 
SMS' proposed compensation plan reflected a clear understanding of the 
work to be performed and concluded that SMS had the capability to hire 
and retain suitably qualified personnel.

DOE's determination was reasonable.  DOE reports that, as part of its 
evaluation of SMS' compensation plan, it compared SMS' unloaded labor 
rates as set forth in its proposal to those of the other offerors, and 
concluded that this comparison demonstrated that SMS' direct labor 
rates were reasonable and realistic.  In this regard, the record 
indicates that SMS' overall weighted, average base labor rate 
[DELETED].[2]  In addition, the agency determined that SMS' fringe 
benefits were comparable to those of the other offerors, and also 
reviewed the wage survey information furnished by offerors.  Regarding 
these surveys, one offeror, for example, reported the composite 
results of 11 wage surveys it had consulted; the record indicates that 
SMS' base labor rates [DELETED], the IGCE rates were based on BEI's 
rates under the prior contract, and BEI itself recognized in its 
proposal that "the staff currently provided to [DOE] exceeds minimum 
requirements."  (While SMS' proposal was rated very good under the 
evaluation subfactor for qualifications and experience of proposed 
personnel, BEI's proposal was rated excellent in this regard.)  
[DELETED]  VSE Corp., B-247610.2, Aug. 6, 1992, 92-2 CPD  para.  81 at 6-7.       
SMS' proposal also included evidence of its ability to retain staff; 
[DELETED] and the proposal stated that the firm had retained between 
[DELETED] percent and [DELETED] percent of its staff in the period 
1992-1996 (with [DELETED] percent retained in 1996).  Furthermore, 
although the Defense Contract Audit Agency reported that it did not 
possess current rate information for SMS, SMS' proposal indicated that 
its labor rates [DELETED], thus suggesting that SMS would be able to 
continue to retain a high proportion of its staff.  We conclude that 
the agency reasonably determined that the awardee's proposed labor 
rates were realistic.

As for BEI's challenge to the source selection decision itself, we 
note that source selection officials in a negotiated procurement have 
broad discretion in determining the manner and extent to which they 
will make use of the technical and cost evaluation results; 
cost/technical tradeoffs may be made, and the extent to which one may 
be sacrificed for the other is governed by the test of rationality and 
consistency with the established evaluation factors.  Family Realty, 
B-247772, July 6, 1992, 92-2 CPD  para.  6 at 7-8.  Even where cost or price 
is the least important evaluation factor, an agency may make award to 
an offeror with a lower-cost, lower-scored proposal if it determines 
that the cost premium involved in awarding to a higher-rated, 
higher-priced offeror is not justified.  Southern Research, B-266360, 
Feb. 12, 1996, 96-1 CPD  para.  65 at 3; Dayton T. Brown, Inc., B-229664, 
Mar. 30, 1988, 88-1 CPD  para.  321 at 4-5.  

The tradeoff here was reasonable.  As discussed, the agency recognized 
that BEI's proposal was more advantageous than SMS' under the 
technical/management and past performance factors and assigned it an 
excellent rating.  However, SMS' proposal was rated as very good under 
the technical/management and past performance factors, receiving the 
same score as BEI's under the technical/management approach subfactor 
of the technical/management factor and the quality/timeliness and 
customer satisfaction subfactors of the past performance factor, and a 
higher score under the cost control subfactor of the past performance 
factor, and had a significantly lower cost/price.  Given the evaluated 
quality of SMS' proposal, there is no basis to object to DOE's 
determination that the superiority of BEI's proposal simply was not 
worth a [DELETED] percent higher proposed cost/price.

PAI PROTEST

PAI primarily challenges DOE's conduct of the oral presentations.  
According to the protester, DOE posed questions that exceeded the 
scope of the oral presentations as set forth in the solicitation, 
elicited answers that "impacted the scoring of" the proposals, and 
constituted discussions, not clarifications, such that DOE was 
required to advise offerors of weaknesses in their offers and request 
BAFOs.

PAI's argument is without merit.  As set forth in FAR  sec.  15.601 (June 
1997), discussion "means any oral or written communication between the 
Government and an offeror, (other than communications conducted for 
the purpose of minor clarification) whether or not initiated by the 
Government, that (a) involves information essential for determining 
the acceptability of a proposal; or (b) provides the offeror an 
opportunity to revise or modify its proposal."  The acid test of 
whether discussions have been held is whether it can be said that an 
offeror was provided the opportunity to revise or modify its proposal.  
New Hampshire-Vermont Health Serv., 57 Comp. Gen. 347, 353 (1978), 
78-1 CPD  para.  202 at 9; 51 Comp. Gen. 479, 481 (1972).  

PAI cites questions to SMS related to a contract that was referenced 
in an excerpt from SMS' past performance matrix included in SMS' 
slides for use at the oral presentation--"Please identify the DP 
[Defense Programs] organization you currently support (i.e., due to a 
DOE reorganization, the routing symbol may have changed from DP 
50)"--and that was discussed in more detail in PAI's written 
proposal--"Please clarify the relationship between the assistance to 
the on-site [Defense Nuclear Facilities Safety Board] Staff 
observations and the reported quality of the Pantex Plant [Management 
and Operations] contractor's Recommendation 95-2 presentation (Aug 
1996)."  These questions were in the nature of clarifications--they 
merely sought additional detail concerning past performance 
information already presented in SMS' proposal.  The information was 
not substantial--the first question merely sought the identity of a 
defense programs organization, and the second sought information on 
only one presentation out of the several contract tasks.  The 
information requested in no way can be said to have been necessary to 
establish the acceptability of SMS' proposal.[3]

PAI also cites a question posed by DOE to SMS concerning its proposed 
Performance Assessment Division (PAD) Task Manager:  "Slide 
2.2.4-Please clarify [DELETED] years in DOE Programs . . .' as it 
pertains to the required experience."  However, the record indicates 
that DOE's question did not involve information essential for 
determining the acceptability of SMS' proposal or otherwise afford SMS 
an opportunity to revise its proposal.  As noted by the agency, while 
DOE's question cited a brief entry on a chart in SMS' slides which 
listed its proposed key personnel, SMS' written proposal included a 
detailed 2-page resume for SMS' proposed PAD task manager; according 
to the agency, this detailed resume clearly established the compliance 
of the proposed PAD task manager with the solicitation's minimum 
experience requirements for that position.[4]

PAI argues that DOE erred in taking SMS' low cost/price into account 
in a cost/technical tradeoff and in the ultimate source selection.  
According to the protester, the solicitation provided that cost/price 
would only become the deciding factor if two proposals were 
substantially equal; here, as noted by the protester, BEI's proposal 
received a higher rating than SMS'.[5]  However, PAI is not an 
interested party to argue that BEI, rather than SMS, should have 
received the award.  4 C.F.R.  sec.  21.0(a).

The protests are denied.

Comptroller General
of the United States

1. BEI also questions SMS' self-certification as a small business.  
However, the Small Business Act, 15 U.S.C.  sec.  637(b)(6) (1994), gives 
the Small Business Administration (SBA), not our Office, conclusive 
authority to determine matters of small business size status for 
federal procurements.  Survice Eng'g Co., B-235958, July 20, 1989, 
89-2 CPD  para.  71 at 2.  Thus, we will not review a protester's challenge 
to another company's size status, nor will we review a decision by the 
SBA that a company is, or is not, a small business for purposes of 
federal procurements.  4 C.F.R.  sec.  21.5(b)(1); Antenna Prods. Corp., 
B-227116.2, Mar. 23, 1988, 88-1 CPD  para.  297 at 2.   

2. It was not possible to calculate a composite labor rate for one of 
the offerors because a proposed subcontractor only listed burdened 
rates.  Another proposal was unacceptable.

3. Indeed, we note that the current version of the FAR considers an 
opportunity to address "the relevance of an offeror's past performance 
information" to be in the same category as an opportunity "to resolve 
minor or clerical errors"; both are suitable for undertaking during 
clarifications.  FAR  sec.  15.306(a)(2) (FAC 97-02). 

4. PAI asserts that certain questions it was asked by DOE constituted 
discussions.  However, to the extent that these questions afforded PAI 
an opportunity to improve its score, such questions could not have 
resulted in prejudice to PAI.  These questions thus furnish no basis 
for sustaining the protest.  General Physics Fed. Sys., Inc., 
B-275934, Apr. 21, 1997, 97-1 CPD  para.  171 at 4-6.

5. Although PAI also generally asserts that SMS' cost/price was 
unrealistically low, the agency's evaluation of SMS' personnel costs 
was reasonable, as discussed above, and PAI has not shown how SMS' 
cost/price was otherwise unrealistic.  As we already concluded, the 
mere fact that SMS' offer was [DELETED] below the IGCE does not 
demonstrate that its cost/price was unrealistic.