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-�-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.