BNUMBER:  B-278352 
DATE:  December 15, 1997
TITLE: For Your Information, Inc., B-278352, December 15, 1997
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Matter of:For Your Information, Inc.

File:     B-278352

Date:December 15, 1997

Edward V. Gregorowicz, Jr., Esq., and Frederick P. Hink, Esq., for the 
protester.
James K. Kearney, Esq., Scott D. Chaplin, Esq., and Theodore W. 
Atkinson, Esq., Reed Smith Shaw & McClay, for RGII Technologies, Inc., 
an intervenor.
Kimberly A. Kegowicz, Esq., U.S. Coast Guard, for the agency.
Henry J. Gorczycki, Esq., and Guy R. Pietrovito, Esq., Office of the 
General Counsel, GAO, participated in the preparation of the decision.

DIGEST

In a negotiated procurement for services, a proposal that offers 
personnel that do not satisfy the solicitation's personnel 
qualification requirements is unacceptable and may not properly form 
the basis for award.

DECISION

For Your Information, Inc. (FYI) protests the award of a contract to 
RGII Technologies, Inc. under request for proposals (RFP) No. 
DTCG23-97-R-HRM001, issued by the U.S. Coast Guard for information 
technology support services.  FYI contends that RGII's proposal did 
not satisfy the RFP's personnel qualification requirements and was 
unacceptable.

We sustain the protest.

The RFP provided for the award of an indefinite delivery/indefinite 
quantity contract with fixed-price, hourly labor rates on a best value 
basis.  Offerors were informed that the procurement would be conducted 
as a two-phased competition, restricted to small business concerns 
certified under the Small Business Administration's section 8(a) 
program.  Phase I was stated to be less important than phase II.  
Under phase I, the agency would evaluate "mini-proposals" and past 
performance, and advise offerors of their chances of receiving award.  
Under phase II, proposals would be evaluated under the following 
factors, listed in descending order of importance:  oral 
presentation/slides,[1] personnel data forms (PDF), and cost/price.  
The phase II technical evaluation factors together were stated to be 
significantly more important than cost/price.

The RFP identified 10 labor categories, all designated as key 
personnel positions.  Minimum personnel qualification requirements for 
personnel proposed in each labor category were listed in the statement 
of work.  Section M of the RFP informed offerors that "[t]he quality 
and quantity of all proposed personnel must meet the stated minimum 
qualification in Section C."

Offerors were required to submit PDFs for 50 percent of the personnel 
proposed for each labor category.  For each PDF, offerors were to 
include the individual's qualifications, education, and employment 
history to demonstrate compliance with the qualification requirements.
 
Phase I proposals were received from 51 firms; only those firms whose 
proposals were evaluated to be blue/superior in phase I were asked to 
continue, although all firms were permitted to do so.[2]  RGII and 
FYI, the incumbent contractor, were not asked to continue because 
their proposals were evaluated to be green/satisfactory.  Phase II 
proposals were received from 5 firms, including RGII and FYI.  RGII's 
and FYI's proposals (and all but one of the remaining proposals) were 
evaluated by the technical evaluation team (TET) to be 
green/satisfactory overall.  The other proposal was rated 
yellow/marginal overall.  The TET assessed all phase II proposals as 
red/unsatisfactory under the PDF factor.  Discussions were conducted 
with all offerors on cost/price and PDFs, and best and final offers 
(BAFO) requested.

All offerors submitted BAFOs, all of which the TET found to be 
green/satisfactory overall.  Only FYI's BAFO, however, was found to 
satisfy the stated personnel qualification requirements.  RGII's BAFO 
was assessed to be yellow/marginal under the PDF factor because 
personnel identified under 5 of the 10 labor categories did not 
satisfy the qualification requirements.  All of the BAFOs were 
determined to have reasonable and realistic prices.  RGII's BAFO was 
the lowest priced, and FYI's BAFO was the third lowest priced.  The 
TET recommended award either to the offeror proposing the highest 
price or to FYI.[3]  

The source selection official (SSO), noting that all proposals were 
rated green overall, requested that the TET justify its recommendation 
for making award on a basis other than lowest price.  The TET informed 
the SSO of its concern with RGII's low-priced proposal and that it 
doubted RGII's ability to obtain qualified personnel, particularly 
because RGII failed to propose qualified personnel even after 
discussions.

The SSO then requested that the TET and contracting officer verify 
RGII's past performance.  The contracting officer informed the SSO 
that RGII's past performance was superior.  The SSO determined that 
RGII's offer was the best value to the government, finding:

     The risk associated with PDFs is minimized since the Coast Guard 
     must approve all PDFs prior to employees coming on board.  The 
     cost differential between FYI and RGII did not justify [an award 
     to FYI].

Specifically, the SSO concluded that RGII's failure to propose 
qualified employees "will be dealt with under the applicable clauses 
as a contract administration issue" and that any risk arising from 
these proposal deficiencies were mitigated by RGII's strong past 
performance references.  Award was made to RGII, and this protest 
followed.  Based upon the written determination of the head of the 
contracting activity that proceeding with performance was in the best 
interests of the government, contract performance has not been stayed.

FYI contends that award to RGII was improper, because RGII's proposal 
is technically unacceptable.  We agree, as explained below.  FYI also 
challenges a number of other aspects of the procurement, including the 
SSO's determination the BAFOs were technically equivalent,[4] the 
conduct of discussions with FYI, the cost/price evaluation, and RGII's 
substitution of personnel after award of the contract.  We need not 
resolve these other protest challenges, because our decision and 
recommendation render the remaining protest issues academic.

In a negotiated procurement, a proposal that fails to conform to the 
material terms and conditions of the solicitation should be considered 
unacceptable and may not form the basis for an award.  National 
Medical Staffing, Inc.; PRS Consultants, Inc., 69 Comp. Gen. 500, 502 
(1990), 90-1 CPD  para.  530 at 3.

There is no question here that the personnel qualification 
requirements are material terms of the solicitation.  As indicated 
above, the RFP informed offerors that all proposed personnel must meet 
the stated minimum qualifications.  Throughout the evaluation of 
proposals, the TET recognized the importance of the personnel 
qualification requirements in ensuring a staff capable of performing 
the contract requirements.  Moreover, the TET recounted that in its 
prior contract experience the retention of qualified personnel was 
necessary for satisfactory performance and the amount of labor costs 
incurred by a contractor was directly related to the level of 
personnel qualifications.  In this regard, the costs incurred in 
performing a services contract, such as here, are almost entirely 
personnel costs, and it can be expected that hiring and retaining 
qualified personnel is more costly than hiring and retaining less 
qualified personnel.

There is also no question that RGII's proposal did not satisfy the 
qualification requirements in 5 of the 10 labor categories.  Indeed, 
the SSO recognized RGII's failure to meet these requirements, although 
he apparently believed that RGII's failure to propose minimally 
qualified personnel could be "dealt with" during the agency's issuance 
of task orders and administration of the contract.  However, RFP 
sections H.9(c) and I.12, the provisions upon which he presumably 
relied in this regard, cover substitution of individuals different 
from those identified in the proposal.  As to the persons named in the 
proposal, RFP section H.9(a) provides that "[t]he contractor agrees to 
assign to the contract those persons whose [PDFs] were submitted with 
the proposal."  Thus, whatever post-award approval rights the 
substitution clauses may provide the agency as to individuals 
different from those named in the proposal, the agency's only 
opportunity to approve (or disapprove) the individuals named in the 
proposal was during the evaluation process.  Accordingly, by making 
award to RGII, the agency accepted the individuals proposed, and this 
acceptance was not subject to further review under the substitution 
clauses.

Since the individuals proposed in RGII's proposal did not satisfy the 
qualification requirements, acceptance of its proposal meant that the 
agency waived the personnel qualification requirements for RGII, which 
resulted in an unfair and unequal evaluation.  See Martin Marietta 
Corp., 69 Comp. Gen. 214, 219, 90-1 CPD  para.  132 at 7.  It is a 
fundamental principle of federal procurement that offerors be treated 
equally; that is, offerors must be provided with a common basis for 
the preparation of proposals, and award based upon the requirements 
stated in the solicitation, unless the offerors are notified of 
changes in (or relaxation of) the agency's stated requirements.  
Meridian Management Corp.; Consolidated Eng'g Servs., Inc., B-271557 
et al., July 29, 1996, 96-2 CPD  para.  64 at 5.  Here, the agency's action 
prejudiced the protester because FYI was not notified of the waiver, 
and it proposed personnel that fully met the qualification 
requirements.

In sum, we find that award to RGII on the basis of its unacceptable 
proposal was improper.

We recommend that, if otherwise appropriate, the Coast Guard terminate 
the award to RGII and make award to FYI, since it appears to be the 
only offeror that submitted a technically acceptable proposal.[5]  As 
the head of the contracting activity determined to continue 
performance in the best interests of the United States, our 
recommendation is made "without regard to any cost or disruption from 
terminating, recompeting, or reawarding the contract."  31 U.S.C.  sec.  
3554(b)(2) (1994).  We also recommend that the protester be reimbursed 
the reasonable costs of filing and pursuing its protest, including 
attorneys' fees.  4 C.F.R.  sec.  21.8(d)(1) (1997).  The protester should 
submit its certified claim, detailing the time expended and costs 
incurred, directly to the contracting agency within 60 days of 
receiving this decision.  4 C.F.R.  sec.  21.8(f)(1).

The protest is sustained.

Comptroller General
of the United States

1. A number of evaluation subcriteria were identified under the oral 
presentation factor.

2. The RFP stated a color/adjectival evaluation scheme: blue/superior, 
green/satisfactory, yellow/marginal, and red/unsatisfactory.  
Green/satisfactory was defined by the RFP as meeting all minimum 
requirements and having no deficiencies; yellow/marginal was defined 
as failing to meet all minimum requirements and having one or more 
correctable deficiencies.

3. The record is unclear as to why the TET recommended selection of 
the highest-priced proposal.

4. Although we do not consider the merits of the alleged unreasonable 
determination that proposals are technically equal, we note that the 
record on this determination provides little explanation beyond 
stating that the proposals received the same adjectival rating and 
were thus technically equal.  We have long held that evaluation scores 
and adjectival ratings are only guides for use by source selection 
officials in comparing the merits of competing proposals; any 
selection decision must rest upon a rational basis for the decision 
and be adequately documented to permit a reasoned review of that 
basis.  Grey Advertising, Inc., 55 Comp. Gen. 1111, 1118 (1976), 76-1 
CPD  para.  325 at 9; Matrix Int'l Logistics, Inc., B-272388.2, Dec. 9, 
1996, 97-2 CPD  para.  89 at 9-10.  

5. We note that FYI's proposal also had evaluated deficiencies under 
other factors not addressed here.  The record is unclear as to whether 
any of these deficiencies would render FYI's proposal unacceptable, 
and the agency has made no assertion to that effect.  The agency 
should review FYI's evaluated deficiencies to determine whether FYI's 
proposal satisfies all the material terms and conditions of the RFP 
and is technically acceptable.  In addition, as alleged by FYI, it 
appears that the protester was not informed of these deficiencies 
during discussions.  Therefore, if FYI's proposal is determined to be 
technically unacceptable, we recommend that the Coast Guard reopen 
discussions, request a new round of BAFOs, make a new source selection 
decision, and terminate the existing contract, if an offeror other 
than RGII is selected.