BNUMBER:  B-278516.2 
DATE:  March 19, 1998
TITLE: Veda Incorporated, B-278516.2, March 19, 1998
**********************************************************************

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:Veda Incorporated

File:     B-278516.2

Date:March 19, 1998

Jerald S. Howe, Jr., Esq., Patrick O'Donnell, Esq., and John J. Duffy, 
Esq., Steptoe & Johnson, for the protester.
Jacob B. Pompan, Esq., Gerald H. Werfel, Esq., and John J. O'Brien, 
Esq., Pompan, Murray, Ruffner & Werfel, for Resource Consultants, 
Inc., an intervenor.
Theresa Chesnut, Esq., and Leonard Anthony, Department of the Navy, 
for the agency.
Guy R. Pietrovito, Esq., and James A. Spangenberg, Esq., Office of the 
General Counsel, GAO, participated in the preparation of the decision.

DIGEST

1.  Agency reasonably selected the awardee's lower-rated, lower-cost 
proposal over the protester's proposal, where the solicitation 
permitted award based on a cost/technical tradeoff and the source 
selection official, in weighing the respective merits of the two 
firms' proposals, reasonably determined that the proposals were close 
in technical merit, that the protester's technical scoring advantage 
reflected the protester's advantages as the incumbent contractor, and 
that the awardee offered a substantially lower evaluated cost, even 
considering the additional "learning curve" costs to the government 
associated with the awardee's technical weaknesses.

2.  Protest that the awardee materially misrepresented the 
availability of 1 of its 45 proposed key personnel, who left after the 
proposal was submitted, is denied, where the agency was aware of the 
individual's unavailability and the offer of this individual had 
minimal impact on the agency's evaluation of proposals and source 
selection.

3.  Protest allegation that the awardee engaged in "bait-and-switch" 
practices by proposing personnel that the awardee did not intend to 
use in contract performance is denied, where no substitution of 
personnel has been offered and the awardee's unrebutted explanation of 
its advertisement for qualified personnel in the area in which the 
contract is to be performed is that the awardee wished to identify a 
pool of talent for future use but that the awardee intended to use the 
personnel  proposed.

DECISION

Veda Incorporated protests the award of a contract to Resource 
Consultants, Inc. (RCI) under request for proposals (RFP) No. 
N00244-97-R-5030, issued by the Fleet and Industrial Supply Center, 
Department of the Navy, for support services at the North Island Naval 
Aviation Depot (NADEP), San Diego, California.  Veda challenges the 
Navy's cost realism and source selection decision, and asserts that 
RCI made material misrepresentations in its proposal concerning its 
proposed personnel.

We deny the protest.

The RFP provided for the award, without discussions, of an 
indefinite-delivery, indefinite-quantity, cost-plus-fixed-fee contract 
for engineering, scientific, technical, logistical, and management 
support services for a base period with 4 option years.  The RFP 
statement of work (SOW) described the specific services that could be 
ordered under the contract to support aircraft and aircraft systems.  
The RFP estimated an annual level-of-effort of 186,450 staff-hours; 
labor categories and estimated staff-hours per labor category were 
provided for the performance of the contract.[1]  RFP  sec.  B, C at 3-4, 
7-8.  Some of the labor categories were identified as key personnel 
labor categories.

The RFP provided for award on the basis of a cost/technical tradeoff 
and informed offerors that the technical evaluation factors combined 
were significantly more important than cost.  The following technical 
evaluation factors and subfactors were identified:

          1.  Technical approach
             a.  Stress and fatigue analysis
             b.  Readiness analysis
             c.  Operational flight program software (OFPS)
             d.  Integrated maintenance concept plan (IMCP)
             e.  Reliability and maintainability of wiring
          2.  Personnel qualifications[2]
          3.  Past performance
          4.  Management capability and corporate experience[3]

The technical approach factor was stated to be approximately one and a 
half times more important than personnel qualifications, two times 
more important than past performance, and two and a half times more 
important than management capability/corporate experience.  RFP  sec.  M at 
64-65.

Detailed instructions were provided for the preparation of technical 
and cost proposals.  RFP  sec.  L at 52-63.  Among other things, offerors 
were informed that resumes must be provided for all key personnel.  
Resumes were required to indicate relevant experience and to state 
that the proposed individual was either a current employee or a 
contingent hire; a letter of intent was required to be submitted for 
contingent hires.  RFP  sec.  L at 57-58.  In this regard, the RFP 
contained a "Substitution or Addition of Personnel" clause wherein the 
contractor agreed to assign to the contract those individuals whose 
resumes were submitted in the proposal and that no substitution of 
personnel would be made during the first 90 days of contract 
performance, except where substitution is necessitated by the 
individual's sudden illness, death, or termination of employment.  RFP  sec.  
H at 19.

The RFP also provided for a cost realism evaluation to verify the 
offeror's understanding of the contract requirements, to assess the 
degree to which the cost proposal reflects the approach offered and/or 
risk that the offeror will provide the services for the proposed 
costs, and to assess the degree to which the cost proposal accurately 
represents the work effort reflected in the technical proposal.  RFP  sec.  
M at 66.  Offerors were required to provide a detailed breakdown of 
proposed costs, including labor rates, labor escalation rates, 
indirect costs, and personnel relocation costs; in computing their 
proposed labor costs, offerors were directed to use the RFP's 
estimated labor hours.  RFP  sec.  L at 60-61.  The RFP also warned that 
relocation costs that were not identified in the cost proposal would 
be disallowed during contract performance.  RFP  sec.  L at 62.

Proposals were received from Veda[4] and RCI on April 30, 1997.  The 
technical proposals were evaluated by a four-member technical 
evaluation board (TEB), which scored proposals numerically and 
adjectivally; the chair of the TEB did not evaluate technical 
proposals, but advised and managed the evaluators in their review of 
proposals.  Hearing Transcript (Tr.) at 13-14.[5]  Each evaluator 
individually scored each proposal under the RFP evaluation factors and 
subfactors; the TEB then met with the board chair to discuss the 
evaluation findings.[6]  Tr. at 19-20.  From this meeting, the TEB 
chair drafted a technical evaluation report on August 4 to reflect the 
views of the TEB evaluators; all the evaluators reviewed this draft 
report and approved it.  Tr. at 42-43.  Veda's and RCI's proposals 
were evaluated as follows:

                     Veda                 RCI

Technical Approach
(40 points maximum)  
                     39.3/Outstanding     
                                          34.7/Good

Personnel Qualifications
(25 pts.)            
                     20.8/Good            
                                          20.7/Good

Past Performance
(20 pts.)            
                     19.3/Outstanding     
                                          18.4/Outstanding

Mgmt. Cap./Corp. Exp.
(15 pts.)            
                     14.7/Outstanding     
                                          13.6/Outstanding

TOTAL                94.1/Outstanding     87.4/Good
Despite the difference in point scores and adjectival ratings, the 
report stated that there was no "appreciable risk" regarding 
performance or schedule requirements in either Veda's or RCI's 
technical proposal, and that the TEB found no material, quantifiable 
difference between the firms' proposals.  Tr. at 25.  The TEB 
recommended that the contracting officer make award on the basis of 
low evaluated cost.  Tr. at 26.

The TEB report was submitted to a senior contract negotiator, who 
served as the contracting officer's representative for this 
procurement, for her review.  Tr. at 423, 511-12.  She rejected the 
report as inadequate because it did not support the report 
conclusions, identify evaluated proposal strengths and weaknesses 
under each evaluation factor, or provide a separate list of weaknesses 
in case discussions were determined necessary.  Tr. at 44, 380-81, 
518.  The contract specialist directed the TEB chair to rewrite the 
report to address these concerns.[7]

The TEB members reconvened on August 18 to discuss their evaluation of 
Veda and RCI, and to identify the firms' strengths, weaknesses, and 
risks under each evaluation factor.  The TEB had available at this 
meeting the technical proposals and evaluators' individual evaluation 
worksheets, the source selection plan, and RFP sections L and M.  Tr. 
at 49.  Each evaluator, in turn, described under each factor what he 
or she perceived to be the strengths, weaknesses, and risks for each 
offeror's proposal; the TEB chair recorded these accounts in 
handwritten notes of the meeting.[8]  Tr. at 252.  The TEB did not 
review or otherwise approve the TEB chair's handwritten notes of the 
August 18 meeting.  Tr. at 181.

The TEB chair prepared a revised TEB report based upon the August 18 
meeting. The point scoring and adjectival ratings of RCI's and Veda's 
proposal for each technical evaluation factor were the same as the 
earlier report.  The revised TEB report also stated the same 
conclusion and recommendation--that award should be made to the 
offeror proposing the lower evaluated cost because the two firms' 
proposals were essentially technically equal--but added a section 
describing strengths and weaknesses in RCI's and Veda's proposals 
under each evaluation subfactor.  The report identified more strengths 
for Veda and more weaknesses for RCI under the technical approach 
factor.  Although the report indicated that some of RCI's weaknesses 
under the technical approach subfactors were low, moderate, or 
moderate to high risks, the TEB chair informed the contract negotiator 
that the evaluators had found that these subfactor risks were not 
significant.  Tr. at 493, 501.

The contract negotiator again rejected the evaluation report because 
the report provided extraneous information, did not support the report 
conclusions, discussed risk at the subfactor level rather than factor 
level, and failed to include a separate list of evaluated weaknesses 
as had been requested.  Tr. at 382-83.  Two members of the TEB, and 
not the TEB chair, were tasked with rewriting the TEB report to 
address the contract specialist's concerns with the evaluation report.  

The two evaluators reviewed the source selection plan, the RFP's SOW 
and sections L and M, the previous TEB report, and the evaluators' 
individual work sheets.[9]  Tr. at 257-258.  In rewriting the report, 
the two evaluators again agreed that the two proposals were 
technically equal.  The difference in technical point scoring, the 
evaluators concluded, was attributable to Veda's specific experience 
as an incumbent contractor at the North Island NADEP; RCI had, 
however, "a lot of experience on other programs and other Navy depots 
and Air Force facilities."  Tr. at 253.  The two evaluators also 
concluded that RCI could not, nor could any other non-incumbent 
contractor, be expected to be as familiar with the processes and 
aircraft at North Island NADEP as Veda would be, and that the RFP did 
not require specific experience with, and knowledge of, the North 
Island NADEP.  Tr. at 254, 260-61.  Although the weaknesses identified 
in the prior TEB report for RCI's proposal under the technical 
approach subfactors were recorded in the final TEB report, risk was 
only reported on a factor (rather than subfactor) basis, as requested 
by the contract negotiator.  The evaluators concluded that both RCI's 
and Veda's proposals were low risk under the technical approach 
factor.

A final TEB report was issued, which evaluated the two proposals as 
follows:[10]

                     Veda                 RCI

Technical Approach
(40 points maximum)  
                     39.50/Outstanding    
                                          34.80/Good

Personnel Qualifications
(25 pts.)            
                     20.88/Good           
                                          20.75/Good

Past Performance
(20 pts.)            
                     19.30/Outstanding    
                                          18.50/Outstanding

Mgmt. Cap./Corp. Exp.
(15 pts.)            
                     14.78/Outstanding    
                                          13.61/Outstanding

TOTAL                94.46/Outstanding    87.66/Good
As stated in the earlier reports, both offerors were found to 
demonstrate an in-depth understanding of the SOW and ability to 
perform the contract work, provided strong personnel qualifications 
and experience, had outstanding past performance, and had sound 
management capability and corporate experience.  

Regarding RCI's personnel qualifications, the TEB noted that Dr. Dan 
Hill, 1 of the 45 individuals for which RCI provided a resume and 1 of 
the 3 part-time individuals RCI proposed to fill the project manager 
position, left the employment of RCI's subcontractor after the 
submission of proposals.  Based upon the advice of the TEB chair and 
contract negotiator, the TEB evaluated RCI's proposal as if Dr. Hill 
continued to be employed by the RCI team.  Tr. at 74-76, 266.

The final TEB report stated:

     In [c]onclusion, the TEB's evaluation finds nearly no technical 
     differences between the competing proposals.  The differences in 
     the proposals are insufficient to be reasonably considered 
     material and are not economically quantifiable. . . .  Neither 
     proposal contains or otherwise reflects appreciable risk to 
     solicitation performance and schedule requirements.  
     Consequently, the TEB recommends to the Source Selection 
     Authority that the selection of the apparent winner be made 
     without discussions based on the economic best value to the 
     government.[11]

Veda's and RCI's proposals were also evaluated for cost realism, and 
upward adjustments were made in each of the firms' proposed costs.  In 
performing the cost realism evaluation, the contract negotiator 
reviewed the firms' proposals and obtained rate verification and other 
cost information from the Defense Contract Audit Agency (DCAA).  Tr. 
at 391, 401.  Among other things, the Navy upwardly adjusted [DELETED] 
and RCI's [DELETED], which the agency obtained from DCAA.[12]  Tr. at 
401.  

The agency chose, however, not to include a number of other 
adjustments in its cost evaluation.  Specifically, despite the RFP 
requirement to price [DELETED]; the agency, although unsure of the 
impact in Veda's total probable [DELETED] costs, estimated that Veda's 
probable cost would be approximately [DELETED] to [DELETED] higher.  
Also, RCI offered a contractual cap on its proposed overhead, which 
the agency calculated would reduce RCI's evaluated probable costs by 
$1.7 million; the agency, however, did not account for this 
contractual cap in its cost realism analysis because, in its view, RCI 
had not provided sufficient information to demonstrate that it could 
absorb this amount over the life of the contract.

Veda's and RCI's proposed and evaluated probable costs, as documented 
in the Navy's BCM, were as follows:

                     Veda                 RCI

Proposed CPFF        [DELETED]            $37,946,520

Evaluated CPFF       $45,841,896          $43,611,476
The contracting officer, who served as the source selection official, 
was presented with the final TEB report and the agency's cost realism 
evaluation information.  In addition, on September 19, he met with the 
two evaluators who were responsible for rewriting the TEB report and 
the contract negotiator to discuss their evaluation findings.[13]  Tr. 
at 264-65, 440, 521-22, 536, 601.  At this meeting the contracting 
officer was informed by the evaluators that the weaknesses identified 
for RCI under the technical approach factor were minor and were 
attributable to the fact that RCI did not have specific experience at 
the North Island NADEP.  Tr. at 521.  The contracting officer also 
testified that he was kept apprised by the contract negotiator of the 
evaluation progress and problems during the acquisition and had seen 
the earlier TEB reports.  Tr. at 517, 578, 611; see also Tr. at 384.

The contracting officer accepted the TEB report's conclusion that 
Veda's and RCI's proposals were essentially technically equal and that 
Veda's slight technical point advantage reflected Veda's specific 
experience at the North Island NADEP.  The contracting officer also 
accepted the evaluators' determination that RCI had significant 
experience at other NADEPs and at Air Force facilities, which was 
easily transitionable to the work at the North Island NADEP.  Tr. at 
528, 595-96.  In the contracting officer's judgment, Veda's higher 
point score did not reflect real technical superiority.

Prior to making his source selection, the contracting officer 
requested that an analysis of the cost impact of making award to RCI 
be performed to assess "how much would it cost RCI to get up to 
speed."  Tr. at 551-52.  The contracting officer's representative on 
the prior contract was tasked with performing this evaluation because 
of his familiarity with the contract technical requirements.[14]  Tr. 
at 552.  The contracting officer's representative was provided with 
the final TEB report and requested to address the areas of weakness 
identified in RCI's technical proposal.  Tr. at 418.  The contracting 
officer's representative testified:

     I went through my files.  I looked at the work that was currently 
     in progress.  I tried to recall problems we had had in start-ups, 
     and some of the lessons learned, and some of the learning curves, 
     and applied, more or less, a value judgment of what I thought it 
     would take the new contractor [RCI] to be up to speed with the 
     other one.

                    .     .     .     .     .

     I looked at the difficulty and the things that were unique to our 
     requirements at NADEP North Island, that RCI had not been 
     actively involved in, even though they were capable, but these 
     were somewhat unique.  And I tried to reconstruct the things that 
     we'd done and I just put a value judgment on it, as best I could.  
     I went though my notes and process reviews and everything I had 
     to work from.

Tr. at 190-91.

The contracting officer's representative concluded that the additional 
effort necessary to bring RCI "up to speed" would be "a minimum of 
[DELETED] of government effort at a cost of [DELETED] and [DELETED] of 
contractor effort at a cost of [DELETED]."  This assessment reflected 
the contracting officer's representative's judgment as to the cost 
impact associated with the technical approach weaknesses evaluated in 
RCI's technical proposal.  Tr. at 194-95, 220, 227; see also Tr. at 
468-70 (contract negotiator's testimony that the cost impact analysis 
assessed the dollar impact of weaknesses and risks in RCI's technical 
proposal).

In making his source selection decision, the contracting officer 
relied upon the final TEB report (and its conclusion that the 
proposals were essentially technically equal), his discussions with 
the evaluators and the contract negotiator, the cost evaluation (which 
found that RCI's proposed evaluated cost was approximately $2.2 
million lower than Veda's), and the contracting officer's 
representative's statement of the cost impact of making award to RCI.  
Tr. at 526-27.  Based upon this information, the contracting officer 
determined that RCI's proposal represented the best value to the 
government.  Award was made to RCI.  Although the agency chose not to 
credit RCI for its offered overhead rate cap in the agency's cost 
realism evaluation, the Navy accepted RCI's cost cap offer and 
included the cap in the contract awarded to RCI.

Veda complains that the agency's determination that Veda's and RCI's 
proposals were technically equivalent was unreasonable and resulted in 
a defective source selection decision.  Veda contends that the agency 
ignored Veda's evaluated proposal strengths and RCI's evaluated 
proposal weaknesses in finding that Veda's proposal did not offer real 
technical superiority.  This resulted, Veda argues, in the agency's 
failure to conduct an appropriate cost/technical tradeoff that weighed 
Veda's superior technical proposal against RCI's lower evaluated cost 
proposal.

In considering protests of an agency's evaluation of proposals, we 
examine the record to determine whether the agency's judgment was 
rational and consistent with stated evaluation criteria and applicable 
statutes and regulations.  Abt Assocs., Inc., B-237060.2, Feb. 26, 
1990, 90-1 CPD  para.  223 at 4.  Such judgments are by their nature often 
subjective; nevertheless, the exercise of these judgments in the 
evaluation of proposals must be reasonable and must bear a rational 
relationship to the announced criteria upon which competing offers are 
to be selected.  Southwestern Marine, Inc.; American Sys. Eng'g Corp., 
B-265865.3, B-265865.4, Jan. 23, 1996, 96-1 CPD  para.  56 at 10.

Here, the agency's evaluation of proposals was reasonable and 
consistent with the stated evaluation criteria.  As indicated by the 
agency's point and adjectival scoring, Veda's and RCI's proposals were 
found to be extremely close in technical merit.  The hearing testimony 
detailed why the TEB evaluators concluded that Veda's strengths and 
RCI's weaknesses under the technical approach factors were determined 
to be ultimately not significant.  

For example, under the stress and fatigue analysis subfactor, the TEB 
report noted that Veda's proposal demonstrated expert knowledge with 
few weaknesses, while RCI's proposal demonstrated good knowledge but 
had not "demonstrate[d] knowledge of the difference between U.S. Navy 
and Air Force structural integrity design criteria/operational 
philosophy."  The TEB evaluator, an aerospace engineer whose specialty 
was aircraft structures, testified that, although there is a 
difference between Navy and Air Force maintenance philosophies,[15] 
the same technical expertise is required to perform work on Navy and 
Air Force aircraft, that this expertise is easily transferrable, and 
that the qualifications of the engineers proposed both by RCI and Veda 
were considered outstanding.  Tr. at 338-40.  The Navy found, 
notwithstanding Veda's more specific experience, that both Veda and 
RCI would fully and equally perform the required stress and fatigue 
analysis on Navy aircraft at the North Island NADEP.

As another example, under the IMCP subfactor, the TEB report noted 
that Veda's proposal demonstrated detailed knowledge and understanding 
of the methods and procedures used in the IMCP processes for Navy 
aircraft and systems, and had few weaknesses.  RCI's proposal was 
found to demonstrate a good overall understanding of IMCP maintenance 
planning, principles, and concepts; although RCI discussed its "good 
experience" at the Jacksonville NADEP, which the TEB found was 
transferrable to the IMCP work required at the North Island NADEP, RCI 
"presented no demonstrated knowledge of IMC[P] work at the [North 
Island NADEP]."[16]  The TEB evaluator testified that at the time of 
the TEB's August 18 meeting with the TEB chair, the evaluator had 
concerns with RCI's lack of specific knowledge of the North Island 
NADEP's IMCP processes.  Specifically, IMCP, which was a new Navy 
program, was being performed on E2 (Hawkeye) aircraft at the North 
Island NADEP, and the evaluator believed that "it would be a bad idea 
to just switch out people . . . in the middle of this program."  Tr. 
at 299.  By the time he and the other evaluator were preparing the 
final TEB report, he learned that the IMCP program on the E2 aircraft 
at the North Island NADEP was complete.  This meant that either 
offeror would begin a new IMCP process on a different aircraft at the 
North Island NADEP, and therefore any risk associated with not having 
specific knowledge of IMCP at the North Island NADEP "went away."  Tr. 
at 297-301.

Ultimately, the TEB concluded that weaknesses identified in RCI's 
proposal under the technical approach subfactors were overstated.  Tr. 
at 272.  Although Veda suggests that the TEB's report was rewritten to 
favor RCI by "softening" the risks identified in RCI's proposal, this 
is not supported by the record.  The TEB report consistently stated 
from the first draft version that the firms' technical proposals were 
viewed as essentially equal in technical merit and low risk.  The 
risks evaluated in RCI's proposal under the technical approach factor, 
which risks Veda's protest highlights, were identified in the second 
draft version of the TEB's report; this report, however, also 
concluded that the firms' proposals were technically equal and low 
risk.  In addition, the testimony of the TEB chair, TEB evaluator, 
contract negotiator, and the contracting officer (which testimony was 
consistent and credible) shows that the TEB report was not redrafted 
to favor one firm over the other or to lessen the impact of identified 
weaknesses in RCI's proposal.  Rather, the testimony established that 
revisions to the report were requested to satisfy specific concerns of 
the contract negotiator that the report identify evaluated strengths 
and weaknesses of the firms under each of the evaluation factors, to 
support the TEB's ultimate evaluation conclusion, and to state a list 
of separate proposal weaknesses for each offeror; these changes did 
not involve a reevaluation of the firms' proposals or a modification 
to the evaluators' assessment of the overall technical merit of the 
proposals.  Tr. at 44-48, 56, 83-84, 248-50, 380-83, 447-52, 463, 
466-67, 493, 515-18, 584.  The record simply does not support Veda's 
assertion that the report was edited to favor RCI.

In sum, although Veda has specific experience at, and knowledge of, 
the North Island NADEP, which was acquired as an incumbent contractor 
and which translated into a slightly higher point score, it is 
undisputed that RCI has extensive experience at other NADEPs and 
transferrable experience from Air Force facilities.  In addition, both 
firms were found to have proposed good personnel with strong 
qualifications, to possess outstanding past performance records, and 
to offer outstanding management approaches and corporate experience 
under the remaining evaluation factors that in the aggregate were 60 
percent of the overall technical score.

Veda disputes, however, that the two firms' proposals were essentially 
technically equal, arguing that the TEB report documented that Veda 
had more technical proposal strengths and fewer weaknesses than RCI's 
technical proposal.  Based upon this record, we need not decide 
whether the firms' proposals were exactly technically equal.  We agree 
with the agency that Veda's higher technical rating primarily 
reflected its incumbent advantage; we also agree with Veda that this 
advantage offered some benefit to the agency in terms of Veda's 
immediate ability to perform the contract work.  Although the agency 
reasonably discounted Veda's higher rating and evaluated strengths for 
technical approach as arising primarily from Veda's incumbency,[17] 
see Clement Int'l Corp., B-255304.2, Apr. 5, 1994, 94-1 CPD  para.  228 at 6 
(agency reasonably discounted incumbent's specific experience in 
determining that the incumbent and the awardee were technically 
equivalent), the agency recognized that RCI "would still have to learn 
the nuances over at [the North Island] NADEP."  Tr. at 262.  The 
agency quantified the benefit of making award to Veda instead of RCI 
by assessing [DELETED] in costs of bringing RCI "up to speed," that 
is, the agency accounted for the additional costs associated with 
RCI's learning curve associated with the weaknesses noted in RCI's 
proposal to consider the fact that RCI will not immediately work at 
the same level as would Veda because of these weaknesses.[18]  Tr. at 
614-615.  By considering this information and noting that it did not 
offset RCI's proposal's cost advantage, the contracting officer 
essentially performed a cost/technical tradeoff analysis in 
determining that RCI's much lower evaluated cost proposal was the best 
value to the government, notwithstanding Veda's higher technical 
rating.

Where, as here, a negotiated procurement provides for award after 
cost/technical tradeoff, point scores and adjectival ratings are 
guides to assist contracting agencies in evaluating proposals; they do 
not mandate automatic selection of a particular proposal.  Grey 
Advertising, Inc., 55 Comp. Gen. 1111, 1118-1121 (1976), 76-1 CPD  para.  
325 at 9-12.  In deciding between competing proposals, cost/technical 
tradeoffs may be made, the propriety of which turns not on the 
difference in technical scores or ratings per se, but on whether the 
source selection official's judgment concerning the significance of 
the difference was reasonable and adequately justified in light of the 
RFP evaluation scheme.  Southwestern Marine, Inc.; American Sys. Eng'g 
Corp., supra, at 17; DynCorp, B-245289.3, July 30, 1992, 93-1 CPD  para.  69 
at 8.  Even where a source selection official does not specifically 
discuss the cost/technical tradeoff in the source selection decision, 
we will not object if the tradeoff is otherwise reasonable based upon 
the record before us.  PRC, Inc., B-274698.2, B-274698.3, Jan. 23, 
1997, 97-1 CPD  para.  115 at 12-13.

It is true that the Navy believes, as documented in the source 
selection documentation, that award to RCI was on the basis that the 
two firms' proposals were essentially equal and that RCI offered a 
lower evaluated cost.  As noted above, however, the contemporaneous 
record reflects that the contracting officer in making his selection 
decision considered the quantified technical difference between Veda's 
and RCI's proposals.  See also Tr. at 526, 566-67.  That is, the 
contracting officer recognized that the firms' technical proposals 
were very close in technical merit--that Veda's higher rating 
reflected its specific experience as the incumbent contractor and that 
RCI had very good, transferrable experience.  The contracting officer 
was also informed of the considerable evaluated difference in the 
firms' probable costs of performance, which the agency calculated 
would be approximately $2.2 million.  Even considering the agency's 
assessment of the $1.5 million of costs associated with RCI's lack of 
specific experience at the North Island NADEP, the contracting officer 
found that RCI's costs to perform the contract would still be much 
lower than Veda's.

Veda does not dispute the agency's calculation of the costs required 
to "bring RCI up to speed."  Instead, Veda challenges the agency's 
cost realism evaluation of its proposal, arguing that the agency 
unreasonably adjusted its proposed [DELETED] upward, which resulted in 
an additional [DELETED] being added to Veda's evaluated costs.  Veda 
argues that overstating its evaluated costs by [DELETED] inflated 
RCI's cost advantage, which undermines the reasonableness of the award 
selection.  

RCI responds that its cost advantage is actually much greater than 
that considered by the contracting officer because the agency erred 
when it did not give RCI credit for its offered overhead cost cap 
(which, as noted above, was included in the contract awarded to RCI) 
in the agency's cost realism calculation of RCI's probable costs.  RCI 
states, as documented in the Navy's BCM, that RCI's overhead cost cap 
would reduce RCI's evaluated probable costs of performance by $1.7 
million, increasing RCI's evaluated cost advantage over Veda's 
evaluated costs to nearly $4 million.[19]  Veda replies that the 
agency properly did not consider RCI's offered cost cap because of the 
possible risks to RCI's performance under the contract.

We agree with RCI that the Navy should have credited RCI with its 
proposed overhead expenses cap in the agency's cost realism evaluation 
of RCI's proposed costs.  An offeror that proposes a cost cap or 
ceiling has shifted the risk of overruns from the government, such 
that upward adjustments to capped costs are improper, unless the caps 
are ineffective or can be circumvented.  Advanced Sciences, Inc., 
B-259569.3, July 3, 1995, 95-2 CPD  para.  52 at 12; BNF Techs., Inc.,  
B-254953.3, Mar. 14, 1994, 94-1 CPD  para.  274 at 5.  

RCI in its cost proposal provided as follows:

     RCI hereby agrees to accept a cap on total Overhead expenses 
     under the proposed contract at [DELETED] percent of the 
     applicable base (direct labor plus fringe benefits).  Any 
     Overhead expenses allocable to this contract that exceed 
     [DELETED] percent of the applicable base will be absorbed by RCI 
     at no cost to the Navy.

RCI's proposal, including this promise, were incorporated into the 
contract awarded to the RCI.  We find that the above offer of an 
overhead cost cap was unequivocal and, when accepted by the agency in 
its award of the contract, was effective and binding.  Accordingly, 
RCI's overhead cost cap should not have been ignored by the Navy in 
its cost realism evaluation of costs.  

Nevertheless, Veda complains that acceptance of RCI's overhead cap 
will pose a serious technical risk that the agency did not evaluate.  
An agency may consider the performance risk arising from an offeror's 
proposed cost cap.  Cubic Field Servs., Inc., B-247780, June 17, 1992, 
92-1 CPD  para.  525 at 5.  The RFP here provided that the agency as a part 
of its cost realism evaluation would assess any risk that the offeror 
will be able to provide the services for the cost proposed.  RFP  sec.  M 
at 66.  Although RCI did not provide specific information in its 
proposal supporting the firm's ability to absorb the offered cost cap, 
the contract negotiator obtained information from DCAA indicating that 
RCI could in fact successfully absorb the cap on its overhead 
expenses.  Tr. at 406-07, 409.  The contract negotiator and 
contracting officer testified that they considered the risk arising 
from RCI's offered overhead cap and found that the risk to RCI's 
successfully performing the contract was minimal, given the size and 
financial strength of RCI.  Tr. at 408-12, 496-97, 547-50, 570.  While 
Veda disagrees with this assessment, it has not shown it to be 
unreasonable.[20]

In sum, the record shows that if the Navy had properly considered 
RCI's cost cap in its cost evaluation, RCI's evaluated cost advantage 
would have been substantially greater than that which the contracting 
officer found justified award to RCI as offering the greatest value to 
the government.  Given this, we need not determine whether Veda's 
[DELETED] was properly accounted for in the Navy's evaluation because, 
even accepting Veda's [DELETED] calculation of the cost impact of the 
Navy's alleged error in determining its probable cost, this adjustment 
could not reasonably affect the agency's selection decision.

Veda also protests that RCI improperly failed to inform the Navy that 
Dr. Hill would not be available as one of its project managers as RCI 
had proposed.  The Navy and RCI respond that Dr. Hill did not leave 
the employ of RCI's subcontractor until after the submission of 
proposals and that, because award was made without discussions, RCI 
had no opportunity to change its proposed personnel.  The Navy notes 
that, in any event, it knew during the evaluation of technical 
proposals that Dr. Hill had changed employers and may not be available 
to be assigned to tasks under the contract.  The Navy also says that 
Dr. Hill, as only 1 of 45 key personnel proposed by RCI, was not 
significant in the agency's evaluation of RCI's proposal under the 
personnel qualifications factor.

Veda acknowledges that Dr. Hill changed employers after the closing 
date for submission of proposal, but argues that RCI should 
nevertheless have informed the Navy of Dr. Hill's unavailability to 
perform under the contract.  In this regard, Veda argues that it is 
immaterial whether RCI had an opportunity to revise its proposal, that 
RCI had an obligation to inform the Navy of Dr. Hill's unavailability, 
and that RCI's failure to do so constituted a proposal 
misrepresentation.  Veda also argues that, in any event, RCI had an 
opportunity to so inform the Navy when RCI and Veda extended their 
offers in response to the agency's request. 

Generally, an offeror's misrepresentation concerning personnel that 
materially influences an agency's consideration of its proposal 
provides a basis for proposal rejection or termination of a contract 
issued based upon the proposal.  ManTech Advanced Sys. Int'l, Inc., 
B-255719.2, May 11, 1994, 94-1 CPD  para.  326 at 5.  A misrepresentation is 
material where an agency has relied upon the misrepresentation and 
that misrepresentation likely had a significant impact upon the 
evaluation.  Id. 

We conclude from the record here that RCI did not make any material 
misrepresentations concerning its proposed personnel.  Regarding Dr. 
Hill's resume, there simply was no material reliance upon a proposal 
misrepresentation.  The record establishes that the TEB and 
contracting officer were specifically aware of Dr. Hill's change in 
employment during this procurement and thus were not misled.  Tr. at 
60-61, 265-66, 543.  In addition, the presence or absence of Dr. Hill 
had little impact upon the agency's evaluation of RCI's proposal under 
the personnel qualifications factor.  Dr. Hill was only 1 of 45 key 
personnel proposed by RCI, and was proposed to work [DELETED] as 1 of 
3 individuals filling the project manager position.  The Navy 
reasonably found that Dr. Hill's absence would have "little or no 
impact to the overall evaluation of the technical competence contained 
in the offeror's proposal."[21]  Tr. at 61.

Veda also protests that RCI engaged in "bait and switch" practices by 
misrepresenting its intent to use the personnel proposed for this 
contract.  In this regard, Veda asserts that RCI has advertised for 
qualified aviation support personnel in the San Diego area and 
approached a number of incumbent personnel about performing under this 
contract.  

In response, RCI has provided sworn declarations supporting its 
intention to use the personnel it proposed.  Although RCI admits that 
it has advertised for persons who could perform tasks under the 
contract and has met with some Veda employees, RCI states that this 
was for the purpose of determining what pool of talent was available 
in the San Diego area for the performance of contract tasks.  RCI 
maintains that it proposed qualified individuals whom it intends to 
use in the performance of the contract and denies that it engaged in 
"bait-and-switch" actions.  In this regard, RCI notes that no Veda 
employees have been offered employment by RCI and that RCI has not 
attempted to make any substitutions of personnel.

We find no evidence of a "bait-and-switch" here.  It is not unusual in 
government contracts for proposed personnel to change employers and/or 
jobs after the submission of proposals.  We also find nothing unusual 
in RCI's investigation of available talent in the San Diego area.  
Rather than evidencing RCI's intention to mislead the government, we 
find that this simply evidences a prudent business practice that a 
contractor would employ to ensure that it has at all times the 
personnel necessary to perform its contract.[22]  

The protest is denied.

Comptroller General
of the United States

1. The RFP provided that approximately 20 percent of the work would be 
performed on-site.

2. Under the personnel qualifications factor, each of the offeror's 
proposed key personnel were to be evaluated for relevant experience, 
education, and qualifications. 

3. Subfactors were also stated for the management capability/corporate 
experience factor.

4. Veda was a joint venture partner of the incumbent contractor.

5. A hearing was conducted to receive testimony from the TEB chair, 
one of the TEB evaluators, a senior contract negotiator, the 
contracting officer's representative, and the contracting officer, 
regarding the agency's technical and cost evaluations.

6. The TEB did not have access to the firms' cost proposals.  Tr. at 
239.

7. The contracting officer testified that he typically handles about 
50 procurement awards at a time and that he uses contract negotiators 
to keep apprised of these procurements.  Tr. at 512-13.  The record 
shows that the contracting officer was aware of the development and 
rewriting of the TEB report here.

8. Although this meeting and the notes thereof have been variously 
described as a "consensus" meeting and the "consensus" judgment of the 
evaluators, the hearing testimony established that there was not 
agreement on each of the weaknesses and associated risks identified 
for RCI under the technical approach subfactors.  Tr. at 346.  Rather, 
the TEB chair recorded all of the evaluators' individual judgments 
regarding the firms' strengths and weaknesses, which judgments in some 
cases did not represent the "consensus" judgment of the TEB.  Tr. at 
284-85.

9. These evaluators did not have or review the TEB chair's handwritten 
notes of the TEB's August 18 meeting.  Tr. at 251.

10. We note that the point scores for Veda and RCI were slightly 
different in the final TEB report and business clearance memorandum 
(BCM) from those reported in the first two draft TEB reports.  There 
is no explanation in the record as to this slight difference, which is 
not material to our decision.

11. This statement appears in nearly identical form in each of the TEB 
reports.

12.[DELETED]

13. Veda complains that there is no contemporaneous documentation 
recording the September 19 meeting.  Participants at the meeting, 
including one of the two TEB evaluators, the contract negotiator, and 
the contracting officer, testified at the hearing conducted by our 
Office, and we find their testimony credible, particularly since, 
although the witnesses were sequestered during each other's testimony, 
they consistently described the timing and content of this meeting.

14. The contracting officer's representative was not previously 
involved with the evaluation of proposals under the RFP.  Tr. at 188.

15. Because Navy aircraft are flown in the relatively more stressful 
carrier-based environment, the Navy has more stringent requirements 
regarding airframe structures than does the Air Force.  Tr. at 166-67, 
275-77.

16. In the August 18 meeting notes and the prior TEB report, this risk 
was identified to be moderate to high for cost, schedule, and 
performance.

17. Contrary to some of Veda's arguments, the record shows that the 
majority of Veda's proposal strengths vis-ï¿½-vis RCI's proposal 
reflected the specific knowledge and experience Veda acquired as an 
incumbent.

18. The Navy describes these costs as "transition" costs.  Although we 
agree with the Navy that "transition costs" generally cannot be 
considered unless offerors are advised that such costs will be 
evaluated, see Cherokee Elecs. Corp., B-240659, Dec. 10, 1990, 90-2 
CPD  para.  467 at 4, the record here shows that the additional contractor 
costs assessed for RCI in the agency's cost impact statement evaluate 
the estimated costs of performance associated with RCI's evaluated 
proposal weaknesses, rather than actual transition costs.

19. The agency and RCI also argue that Veda failed to propose 
[DELETED], which would result in Veda's probable costs of performance 
being approximately [DELETED] higher.  Veda does not rebut this 
assertion.  Although we need not resolve this issue, we note that 
taking the additional cost of [DELETED] into account would likely 
increase RCI's cost advantage.

20. Veda argues that there is no contemporaneous documentation 
recording this analysis.  Although this is true, this alone does not 
demonstrate that the agency's judgment regarding RCI's ability to 
absorb its offered cost cap was unreasonable.

21. Veda also argues that the Navy erred in evaluating RCI's proposal 
considering Dr. Hill for some of the required project manager hours, 
where the agency knew that Dr. Hill was no longer employed by the RCI 
team.  Based upon our review of the record, we conclude that the 
Navy's consideration of Dr. Hill's resume had a negligible impact on 
the Navy's evaluation of the offers or the selection of RCI's proposal 
for award.

22. Contrary to the protester's allegation, we also do not find that 
[DELETED] establishes RCI's intent not to use the personnel it 
proposed.  RCI correctly notes that the RFP did not require offerors 
to propose [DELETED] costs and allowed offerors to make a business 
determination to absorb these costs.