BNUMBER:  B-278673 
DATE:  February 27, 1998
TITLE: Battelle Memorial Institute, B-278673, February 27, 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:Battelle Memorial Institute

File:     B-278673

Date:February 27, 1998

Alexander J. Brittin, Esq., Patrick K. O'Keefe, Esq., Francis E. 
Purcell, Jr., Esq., and Arleigh V. Closser, Esq., McKenna & Cuneo, and 
Kathy A. Olson, Esq., Battelle Memorial Institute., for the protester.
James J. Regan, Esq., Frederick W. Claybrook, Jr., Esq., Paul 
Shnitzer, Esq., and John E. McCarthy, Jr., Esq., Crowell & Moring, and 
Stuart I. Young, Esq., for DynPort LLC, an intervenor.
Col. Nicholas P. Retson, JA, Maj. Michael J. O'Farrell, JA, Jay B. 
Winchester, Esq., Ltc. James M. Miller, JA, Maj. Jonathan C. Guden, 
JA, Cpt. John C. Lavorato, JA, Elizabeth A. Arwine, Esq., and Kenneth 
J. Allen, Esq., Department of the Army, for the agency.
Glenn G. Wolcott, Esq., Paul E. Jordan, Esq., and Paul Lieberman, 
Esq., Office of the General Counsel, GAO, participated in the 
preparation of the decision.

DIGEST

1.  Where a potential contractor proposes to meet a solicitation's 
requirements by offering performance by a government facility, and 
personnel employed by that facility are involved in evaluating the 
competing offerors' proposals, it is incumbent on the contracting 
officer to consider whether similar situations involving contractor 
organizations would require avoidance, neutralization or mitigation.

2.  Contracting officer reasonably determined that government entity's 
minimal, potential involvement in contract performance did not create 
a significant conflict of interest requiring avoidance, neutralization 
or mitigation.  

3.  Where protester's offer proposed a more established technical 
approach than awardee's offer, agency's technical evaluation resulting 
in same technical risk for both proposals is unobjectionable where 
evaluation was reasonable and in accordance with stated evaluation 
criteria.  Under stated evaluation scheme, technical approach was less 
important than management of total contract effort, and agency had 
unilateral authority to select technical approach during contract 
performance. 

4.  Since the prime contractor is ultimately responsible for 
successful performance of contract effort, past performance evaluation 
reasonably credited offeror who performed as prime contractor with 
relevant experience even though subcontractor on past contract was 
responsible for majority of technical work.

5.  Where source selection authority reasonably determines that 
competing proposals are essentially equal in technical merit with 
little difference in risk, award to offeror presenting more 
advantageous management proposal and lower evaluated most probable 
cost is unobjectionable. 

DECISION

Battelle Memorial Institute protests the award of a contract to 
DynPort LLC for development, licensure, and production of biological 
defense vaccines under request for proposals (RFP) No. 
DAMD17-95-R-5020, issued by the Department of the Army, Joint Program 
Office for Biological Defense.  Battelle challenges the propriety of 
the technical and cost evaluations, based in part on an allegation of 
an organizational conflict of interest.  Battelle asserts that the 
conflict arises from DynPort's proposal to use testing facilities 
located at the U.S. Army Medical Research Institute of Infectious 
Diseases (USAMRIID), an Army installation which employs two members of 
the source selection evaluation board (SSEB).  

We deny the protest.

BACKGROUND

The Department of Defense (DOD) has an active medical biological 
defense (BD) research program focused on the development of vaccines 
and other medical products to protect U.S. forces from biological 
warfare agents.  This program is overseen by the Joint Vaccine 
Acquisition Program (JVAP) Project Management Office,[1] and USAMRIID 
is the entity directly responsible for developing candidate vaccines 
and other medical products.  Most of the products developed by 
USAMRIID are maintained as investigational new drugs (IND), and have 
not been licensed for use by the Food and Drug Administration (FDA).  
Absent FDA approval, there are limitations on the manner in which the 
products may be used.  Based on industry input and an economic study, 
DOD developed an acquisition strategy for a prime systems contractor 
approach, and issued an RFP on August 9, 1996.[2]  The stated purpose 
of the RFP was "to establish a prime systems contractor who will use 
information and materials from the existing DOD program to create and 
execute an integrated approach leading to FDA licensure and long term 
production/stockpiling of each vaccine."  RFP,  sec.  C.1.  The RFP 
contemplated award of a cost-plus-award-fee contract, with two cost 
reimbursable contract line item numbers (CLINs), with a maximum 
performance period of 10 years.  

The RFP provided for a base effort to obtain FDA licensure for 3 BD 
vaccine products (tularemia, vaccinia, and Q-fever), options for 15 
additional vaccines, and production options for all vaccines including 
storage, testing, and disposition.[3]  Licensure options were to be 
exercised following affirmative DOD "Milestone I" decisions for each 
product,[4] and production options were to be exercised after 
successful FDA product and establishment licensing to initiate 
production. 

Rather than setting forth a statement of work (SOW), the RFP provided 
a statement of objectives (SOO) and required that offerors propose 
their own SOWs and tailor CLIN structures which would allow them to 
best execute their proposed programs.  The SOO identified five overall 
objectives:  (1) complete development and testing of vaccines for FDA 
licensure for the DOD-required product indication; (2) manufacture 
licensed vaccines in sufficient quantities to establish an initial 
stockpile; (3) maintain, test, and store vaccines in compliance with 
FDA and DOD requirements; (4) distribute or dispose of vaccines as 
required; and (5) conduct special studies in support of JVAP 
requirements.  The SOO also identified a number of specific objectives 
including:  establishment of a joint government/contractor integrated 
product team (IPT) for cost-effective risk reduction; reduction of 
program costs and risks through reliance on industry standards, 
pursuit of innovative manufacturing methods and process improvements, 
cost-effective use, maintenance, and sustainment of industrial 
facilities and capabilities, and application of performance-based 
incentives; provision of full life-cycle management and JVAP 
integration; maintain current DOD stockpile of BD vaccines; establish 
and maintain a program/product specific information management 
capability; and performance of special studies.

Proposals were to be evaluated on the basis of five factors, listed in 
descending order of importance:  (1) quality of program integration 
and program management; (2) development, licensure, production, 
storage, and testing of BD vaccines; (3) past performance with program 
integration and in developing and manufacturing vaccines for human 
use; (4) availability of laboratory, animal use, production, and 
storage facilities meeting FDA and other government regulatory 
requirements and industry standards; and (5) cost.[5]  Non-cost 
factors were scored using a color/adjectival rating system;[6] cost 
was evaluated for realism, reasonableness, completeness, and most 
probable cost (MPC).  Section M also provided for evaluation of 
proposal risk addressing the offerors' proposed approach to 
accomplishing the SOO, and performance risk addressing the offerors' 
ability to successfully complete relevant technical and management 
efforts on time and within cost.[7]   

Award was to be made to the offeror whose proposal demonstrated 
technical, management, and financial capabilities for risk reduction 
activities necessary to meet the objectives defined in the SOO and 
which represented the best value to the government.  

Four proposals, including Battelle's and DynPort's, were received by 
the December 9, 1996, closing date.  The agency conducted an initial 
evaluation of the proposals using separate teams for each of the 
evaluation factors which, together, comprised the SSEB.  The SSEB 
determined that all four proposals were in the competitive range and 
sent a series of deficiency reports and items for clarification to 
each offeror.  After reviewing the offerors' written responses, the 
SSEB conducted oral discussions, and obtained best and final offers 
(BAFO) from each offeror.  

The SSEB's evaluation of BAFOs resulted in Battelle's and DynPort's 
proposals [deleted] being rated [deleted] under the management, past 
performance, and technical evaluation factors.  Battelle's proposal 
was evaluated as [deleted] in overall performance risk, while 
DynPort's was rated [deleted].  Battelle's proposal risk was rated as 
[deleted] and DynPort's was rated as [deleted].  Battelle's total 
evaluated MPC was [deleted]; DynPort's was [deleted], approximately 
[deleted].  Upon completing its evaluation of cost and non-cost 
factors, the SSEB recommended award to Dynport based on the SSEB's 
balancing of Battelle's [deleted] and [deleted] against DynPort's 
[deleted] and [deleted].  The SSEB presented its findings and 
recommendations to the source selection advisory council (SSAC).  The 
SSAC disagreed with the SSEB's award recommendation, and recommended 
to the source selection authority (SSA) that the contract be awarded 
to Battelle.  The SSA requested a legal review of the evaluation prior 
to making his award determination. 

In its legal review of the evaluation, the agency determined that the 
technical evaluators had [deleted] the proposals of Battelle, DynPort, 
and another offeror for the same [deleted] under different evaluation 
criteria, that is, the evaluators had "double counted" [deleted].  
Specifically, the evaluators had assigned [deleted] to Battelle's and 
DynPort's proposals based on [deleted] under the first management 
subfactor (plans for interfacing with the government and integrating 
subcontractors for optimizing performance of contract requirements) 
and to both proposals under the "facilities" technical subfactor.  The 
evaluators also assigned [deleted] to DynPort's proposal under another 
management subfactor (structure of the program management office).  
Concluding that such double counting was improper, the SSEB corrected 
the evaluation by eliminating the [deleted] from the management 
subfactor(s).  Since the facilities issue was the only DynPort 
[deleted] under the first management subfactor, its elimination 
resulted in a change from a [deleted] performance risk rating to a 
[deleted] rating.  Its elimination from the other subfactor resulted 
in a change from [deleted] risk to [deleted].  These changes in the 
management risk rating resulted in an improvement in DynPort's overall 
performance risk rating from [deleted] to [deleted].  Since Battelle's 
proposal was assigned other [deleted] under the first management 
subfactor, its management performance risk rating remained [deleted] 
and there was no change to Battelle's overall performance risk rating 
of [deleted].

Following the agency's correction of the evaluation, both proposals 
were rated as [deleted] with [deleted] performance risk.  Based on 
this corrected evaluation, the SSAC recommended award to DynPort.  
After being briefed on the changes, the SSA weighed the significant 
attributes of Battelle's and DynPort's proposals, their performance 
ratings, risk ratings, and relative MPCs, and determined to make award 
to DynPort.  Following notice of the award and receipt of a 
debriefing, Battelle filed this protest.

CONFLICT OF INTEREST

Battelle first contends that the agency's award to DynPort violates 
the conflict of interest provisions contained in Federal Acquisition 
Regulation (FAR) subpart 9.5.  Battelle maintains that, under 
DynPort's proposal, any aerosol challenge studies required under the 
contract will be performed by USAMRIID, and points out that two of the 
SSEB members were USAMRIID employees.[8]  Battelle contends that due 
to USAMRIID's proposed involvement in DynPort's contract performance, 
the USAMRIID employees were unable or potentially unable to render 
objective, impartial advice in the source selection process. 

The agency first responds that the conflict of interest provisions in 
FAR subpart 9.5 are inapplicable to government organizations, 
including USAMRIID.  The agency maintains that, because FAR subpart 
9.5 generally refers to "companies" or "contractors" rather than 
"agencies," the regulations may not, as a matter of law, be applied to 
government agencies, institutions, or their employees.  

We agree that FAR subpart 9.5, by its terms, does not apply to 
government agencies or employees.  However, in setting out the 
standards of conduct that apply to government business, FAR  sec.  3.101-1 
states:

     Transactions relating to the expenditure of public funds require 
     the highest degree of public trust and an impeccable standard of 
     conduct.  The general rule is to avoid strictly any conflict of 
     interest or even the appearance of a conflict of interest in 
     Government-contractor relationships.

The standards contained in FAR subpart 3.1 are explicitly applicable 
to the actions of government personnel.  Id.[9]

FAR subpart 3.1 does not provide specific guidance regarding 
situations in which government employees may, because of relationships 
with particular government organizations, be unable or potentially 
unable to render impartial advice to the government.[10]  In contrast, 
FAR subpart 9.5 addresses analogous situations involving contractor 
organizations.[11]  Accordingly, we believe that in determining 
whether an agency has reasonably met its obligations to avoid 
conflicts under FAR  sec.  3.101-1, FAR subpart 9.5 is instructive in that 
it establishes whether similar situations involving contractor 
organizations would require avoidance, neutralization or 
mitigation.[12]  

FAR  sec.  9.505-3 generally prohibits a contractor from evaluating its own 
products or services, or those of a competitor, without proper 
safeguards to ensure objectivity to protect the government's 
interests.

FAR  sec.  9.504 provides direction to contracting officers, stating:  

     (a) Using the general rules, procedures, and examples in this 
     subpart, contracting officers shall analyze planned acquisitions 
     in order to--

        (1) Identify and evaluate potential organizational conflicts 
        of interest as early in the acquisition process as possible; 
        and

        (2)  Avoid, neutralize, or mitigate significant potential 
        conflicts before contract award.[13] 

Accordingly, where a potential contractor proposes to meet a 
solicitation's requirements by offering performance by a government 
facility, and personnel employed by that facility are involved in 
evaluating the competing offerors' proposals, it is incumbent on the 
contracting officer, in complying with the requirements of FAR  sec.  
3.101, to consider whether similar situations involving contractor 
organizations would require avoidance, neutralization or mitigation 
and, if so, to take appropriate remedial action.

The agency next maintains that, in any case, it reasonably determined 
that the particular facts here did not create a significant conflict 
which required avoidance, neutralization or mitigation.  Based on the 
record, including hearing testimony,[14] we find the agency's 
conclusion to be reasonable. 

Prior to submission of initial proposals, the agency issued various 
solicitation amendments containing responses to offerors' questions.  
RFP amendment No. 2 contained the following: 

     Question:  Will the contractor have access to existing government     
     facilities?  If so, which ones.

     Answer:  There is nothing to preclude the contractor from 
     approaching Government agencies for use of existing facilities.  
     However, no Government facilities are being provided as part of 
     this procurement.  Your proposals should clearly state the 
     coordination approval if Government facilities are being 
     proposed.

Thereafter, a representative of Frederick Research Corporation (FRC), 
one of DynPort's proposed subcontractors, contacted the Commander of 
USAMRIID and asked whether that facility could be used to perform 
aerosol challenge studies if DynPort were awarded the JVAP 
contract.[15]  Hearing Transcript (Tr.) at 174.  The USAMRIID 
Commander told FRC that USAMRIID would be willing to assist DynPort, 
on a reimbursable basis,[16] but that there would likely be space 
limitations on USAMRIID's ability to hold animals before or after the 
actual exposure.  Tr. at 180, 243, 246.  By letter to FRC dated 
November 21, 1996, the USAMRIID Commander confirmed this conversation, 
stating:

     In principle, our response to [FRC's] request is that USAMRIID 
     could      provide [animal testing] on a reimbursable basis. . .  
     Attached is a cost      estimate prepared by my staff that should 
     give you a general idea of our costs.  

The cost estimate attached to the letter indicated a cost of $24,600 
per test.[17] 

FRC also contacted Dugway Proving Grounds, another government facility 
with aerosol testing capabilities, and received similar assurances 
that Dugway would be willing to participate in DynPort's performance 
of the JVAP contract.  At the hearing, the FRC representative 
testified to his understanding that Dugway had just completed 
construction of a new animal testing facility which was "essentially 
empty," and that they "were looking to bring other work[] into the 
facilities."  
Tr. at 358-59.

Thereafter, initial proposals were submitted.  DynPort's and 
Battelle's proposals differed markedly regarding the amount of 
[deleted] testing that would be required.  DynPort's proposal 
indicated that it would perform two tests based on [deleted] for each 
vaccine, and that other tests could be performed using alternative 
methods of exposure.  In contrast, Battelle's proposal was based on 
the assumption that virtually all testing would involve aerosol 
exposure, anticipating over 1,700 aerosol exposures over the contract 
period.[18]    

In its initial proposal, DynPort indicated that tests requiring 
aerosol exposure would be performed at USAMRIID or Dugway Proving 
Ground, stating:

     For preclinical and clinical testing, DynPort will provide the 
     expertise of Porton International, which has extensive knowledge 
     of such work on botulinum neurotoxins and toxoids.  The study 
     work will be performed by FRC and PAREXEL; the essential animal 
     studies on efficacy that will permit immune correlates and 
     surrogate markers to be identified for human studies will include 
     aerosol challenge that will be performed at DPG-LSD [Dugway 
     Proving Ground-Life Science Division] or USAMRIID.

During oral discussions with the agency, FRC's representative provided 
clarifying information regarding its intentions, stating:

     FRC:  Let me tell you a little bit about the background and 
     history as to why we included Dugway and USAMRIID in our 
     proposal.  At FRC we have a BSL 3 facility and have experience 
     with a number of agents at our BSL 3 levels over the past six 
     years.  We are confident that anything that we can perceive today 
     that we would need to do in terms of challenge studies, can be 
     done in our facility.  But we are also aware that there[] may be 
     the possibility that for some reason our facility is not 
     available, or that new requirements may come up in the future.  
     And in order to reduce the risk, and diversify our capabilities, 
     I asked the question would it not be possible and a safe approach 
     to see if the Army facilities could be used in the eventuality 
     that some factor, parameter is introduced in the future that 
     would make our facility unavailable whether its time, whether 
     it's engineering      constraints or whatever.  So it was with 
     that thought that I approached Dugway and USAMRIID . . . . 

                    .    .    .    .    .

     Agency:  It would be useful to know what agents you could use out 
     there [at FRC's facility] for aerosol testing, in particular, I 
     don't believe I saw that in the advice of what we have on the 
     JVAP.

     FRC:  We don't have current equipment for aerosol capabilities. . 
     . . We certainly can bring in equipment to isolate it and so on, 
     to be able to do nose only type of experiments, so that can be 
     brought into the facility.  We have not done that.  That is one 
     of the considerations that led us to approach USAMRIID and Dugway 
     for their capabilities to support us.  We do not know at this 
     stage, what the FDA would require in terms of surrogate models 
     for challenge studies that it would require aerosol exposure. 

Following discussions, DynPort submitted its BAFO which contained an 
appendix to its integrated management plan (IMP).  The appendix to the 
IMP contained technical summaries for each of the required vaccines; 
these summaries were described as "provid[ing] an enhanced discussion 
of our rationale and technical justification for the manufacture, 
product testing, clinical testing, licensed vaccine production, and 
post-production maintenance of the vaccines."  Within the technical 
summaries, DynPort's BAFO repeatedly states:  "testing will be 
performed at FRC," with no reference to either USAMRIID or Dugway.  

Nonetheless, the 4-page "Overview" to the appendix stated:

     DynPort will use the test and exposure facilities at either 
     USAMRIID  or DPG [Dugway Proving Ground] to perform efficacy 
     studies on vaccine products whenever the FDA requires efficacy 
     data from a surrogate animal model. . . .  Animals exposed to 
     biological agents for challenge studies performed at USAMRIID can 
     be housed either at USAMRIID or in the FRC BSL-3 facility.  
     DynPort ensures that the use of the exposure facility at USAMRIID 
     will never be limited by lack of animal holding space.  

Nothing in the "Overview" to the appendix indicated that Dugway or 
USAMRIID were being proposed as backup facilities.[19]  

Consistent with the explanation given by FRC's representative during 
discussions, the agency interpreted DynPort's BAFO as proposing that 
FRC would be primarily responsible for meeting any testing 
requirements at its own facility, with USAMRIID or Dugway to be used 
on an as-needed basis.  Further, in the event USAMRIID were used, the 
agency understood that the scope of its performance would likely be 
limited to the actual exposure portion of the testing procedure due to 
the limited availability of animal holding space at USAMRIID.  

At the hearing, the contracting officer testified that, during the 
procurement, she considered whether DynPort's proposed use of USAMRIID 
created a conflict of interest because two of the SSEB evaluators were 
employed by USAMRIID.  The contracting officer testified that, after 
considering the magnitude of USAMRIID's involvement, the contingent 
nature of that involvement, and the relationship between USAMRIID and 
Dynport, she determined that the situation did not create a conflict 
of interest which required further action.  Tr. at 503-535.
  
A contracting officer is required to identify and evaluate potential 
conflicts as early in the procurement process as possible, and to 
avoid, neutralize or mitigate significant conflicts.  FAR  sec.  9.504(a); 
Aetna Gov't Health Plans, Inc.; Foundation Health Fed. Servs., Inc., 
B-254397 et al., July 27, 1995, 95-2 CPD  para.  129 at 12; D.K. Shifflet & 
Assocs., Ltd., B-234251, May 2, 1989, 89-1 CPD  para.  419 at 4-5.  
Contracting officers must examine each situation individually on the 
basis of its particular facts and the nature of the proposed contract.  
FAR  sec.  9-505; SC&A, Inc., B-270160.2,
Apr. 10, 1996, 96-1 CPD  para.  197 at 9.[20] The responsibility for 
determining whether a conflict exists rests with the contracting 
agency, and we will not overturn the agency's judgment in this regard 
unless it is shown to be unreasonable.  See Aetna Gov't Health Plans, 
Inc., et al., supra.   

Based on the limited scope and the contingent nature of USAMRIID's 
proposed involvement, the contracting officer's determination that the 
circumstances here did not create a significant conflict requiring 
further action was reasonable. 

First, USAMRIID's proposed involvement is clearly limited to the 
contract's requirements related to aerosol challenge studies.  
DynPort's proposal contemplates [deleted] studies for each of the 18 
vaccines required under the solicitation.  Multiplying these [deleted] 
tests by USAMRIID's cost estimate of $24,600 per test leads to the 
conclusion that USAMRIID may have anticipated receiving a total of 
$885,600 in reimbursement over the 10-year period of contract 
performance.  That is, even if USAMRIID anticipated performing all of 
the aerosol challenge studies proposed by DynPort for the entire 
contract period, USAMRIID's total reimbursement would represent less 
than [deleted] percent of the DynPort's total evaluated cost, and less 
than 2.5 percent of USAMRIID's annual funding.[21]  

Battelle argues that significantly more aerosol challenge studies will 
be required than that reflected in DynPort's proposal, pointing out 
that Battelle's proposal contemplates over [deleted].  However, 
Battelle's higher level of aerosol exposures is based on the 
assumption that the FDA will require virtually all challenge studies 
to be performed on the basis of aerosol exposures.  As noted above, 
DynPort disagrees with Battelle's assumption in this regard, 
representing that the FDA has recently permitted licensing of vaccines 
for agents normally contracted through the air without requiring 
aerosol challenge studies.  Tr. at 265-267.  Battelle acknowledges 
that the FDA requirements regarding aerosol challenge studies is 
"unknown."  On this record, we cannot conclude that the level of 
aerosol exposures set forth in DynPort's proposal is unreasonable, nor 
do we view as unreasonable the contracting officer's consideration of 
the scope of aerosol testing in DynPort's proposal, (rather than the 
scope in Battelle's) as the basis for projecting USAMRIID's potential 
involvement in DynPort's contract performance.   

Further, we do not find unreasonable the contracting officer's 
conclusion that DynPort was unlikely to rely on USAMRIID to perform 
aerosol exposures throughout the contract period.  During discussions, 
FRC's representative stated that FRC could install the equipment 
necessary to perform aerosol testing at its own facility if the FDA 
required significant aerosol exposures to occur.  The record also 
indicates that Battelle, itself, contemplated limited testing 
requirements during the first several months of contract performance, 
providing further support for the agency's conclusion that any 
potential USAMRIID involvement in contract performance would be 
limited.[22]  In addition, throughout its proposal, DynPort's 
references to assistance from USAMRIID are virtually always coupled 
with similar references to assistance from Dugway Proving Grounds.  
The record suggests that, if FRC's facility were unavailable for 
aerosol exposures, DynPort may have been more inclined to use Dugway 
rather than USAMRIID due to Dugway's greater availability of 
facilities.  Tr. at 352, 356, 358-359, 568, 631.   

Finally, the record does not establish that performance of aerosol 
testing at USAMRIID was seen by USAMRIID as providing a significant 
benefit for USAMRIID.  The record is clear that, when first approached 
by FRC, the USAMRIID Commander advised FRC that USAMRIID's ability to 
participate in performance of the JVAP contract would be limited.  
Specifically, the limited availability of animal holding space at 
USAMRIID led the USAMRIID Commander to suggest that, even if 
USAMRIID's participation were sought, FRC should contemplate using 
USAMRIID's facility only for the actual aerosol exposure portion of 
the testing.  This contradicts Battelle's thesis that USAMRIID desired 
significant involvement in performing the JVAP contract, and that such 
involvement was viewed as a benefit to USAMRIID that potentially 
influenced the USAMRIID employees' evaluation of proposals.[23]  

As noted above, the contracting officer testified that she considered 
whether DynPort's proposed use of USAMRIID facilities created a 
significant conflict of interest, concluding that it did not, based 
on, among other things, the limited amount and contingent nature of 
USAMRIID's involvement.  The record supports the reasonableness of 
that conclusion.  Accordingly, this portion of Battelle's protest is 
denied.[24]     

EVALUATION OF PROPOSALS

Battelle next argues that the agency failed to follow the evaluation 
criteria in its evaluation of the proposals.[25]  In this regard, it 
is not the function of our Office to evaluate proposals de novo.  
Rather, we will examine an agency's evaluation only to ensure that it 
was reasonable and consistent with the stated evaluation criteria and 
applicable statutes and regulations, since determining the relative 
merit of competing proposals is primarily a matter within the 
contracting agency's discretion.  Information Sys. & Networks Corp., 
69 Comp. Gen. 284, 285 (1990), 90-1 CPD  para.  203 at 3; Advanced Tech. and 
Research Corp., B-257451.2, Dec. 9, 1994, 94-2 CPD  para.  230 at 3.  The 
protester's mere disagreement with the agency's judgment does not 
establish that an evaluation was unreasonable.  Medland Controls, 
Inc., B-255204, B-255204.3, Feb. 17, 1994, 94-1 CPD  para.  260 at 3.

EVALUATION OF DYNPORT'S RISK

Battelle first challenges the agency's evaluation of the risk 
associated with DynPort's proposed technical approach to development 
and production of the fifteen option vaccines.  As a preliminary 
matter, we note that there are two types of risk involved in the 
evaluation:  "proposal risk" addressing the offerors' proposed 
approach to accomplishing the SOO, and "performance risk" addressing 
the offerors' ability to successfully complete relevant technical and 
management efforts on time and within cost.  While the agency 
evaluated [deleted] proposals as [deleted] in overall performance 
risk, the agency evaluated DynPort's proposal risk as [deleted] and 
Battelle's proposal risk as [deleted].  Battelle's specific challenges 
to the risk assessment all concern the evaluation of performance 
risk.[26]  

Battelle's challenge to the performance risk assessments is based 
primarily upon the technical approach proposed by each offeror.  In 
this regard, DynPort proposed to use a [deleted] approach for 
production of the toxin type vaccines, while Battelle proposed using 
[deleted].[27]  In Battelle's view, since its [deleted] its proposal 
should have been evaluated as [deleted] performance risk, while 
DynPort's approach should have been evaluated as [deleted] risk, 
instead of the [deleted] risk which [deleted] proposals received.  
Based on our review of the record, we see no basis to conclude that 
the agency's performance risk evaluation was unreasonable.

For example, Battelle observes that its proposal was rated a [deleted] 
risk under the first management subfactor regarding plans for 
optimizing performance of the contract requirements, while DynPort's 
was rated a [deleted] risk, despite the agency's recognition that the 
[deleted] method was a [deleted] technical approach.  As the agency 
points out, this management subfactor is not concerned with the 
technical approach.  Rather, it is concerned with the life-cycle 
management of the program.  Thus, the assessment was of an offeror's 
ability to programmatically integrate and manage vaccine products, 
including program management performance, program schedules, 
integration of FDA requirements, managing subcontractors, and managing 
cost.  Evaluation of this management subfactor was independent of the 
technology proposed for production of a specific vaccine.  

Under this subfactor, the evaluators found DynPort had demonstrated an 
understanding of DOD requirements and had effectively integrated FDA 
requirements with the DOD Milestone process.  DynPort also had 
proposed to shorten the vaccine development, licensure, and production 
cycle by up to 3 years through an emphasis on interaction with FDA 
immediately after contract award to obtain advice on the processes and 
protocols for each vaccine product. [28]  The evaluators identified no 
disadvantages with DynPort's proposal and rated the proposal [deleted] 
risk for this subfactor.  With regard to Battelle's proposal, the 
evaluators found [deleted] in its clear understanding of interfaces 
among the subcontractors, JVAP program office, and the FDA, and in the 
experience of Battelle's various subcontractors.  [deleted] the 
evaluators found [deleted] in Battelle's [deleted] and in Battelle's 
[deleted] with the DOD Milestone process.  For example, the evaluators 
noted that Battelle had proposed to [deleted] while such lots normally 
are produced [deleted].  It was for these reasons that the evaluators 
assigned a [deleted] risk rating to Battelle's proposal for this 
subfactor.  Since this is a cost-plus-award-fee contract, the agency 
reasonably concluded that [deleted] represented a [deleted] to 
successful performance.  Likewise, Battelle's decision to propose a 
schedule which calls for [deleted] was reasonably perceived as 
presenting [deleted].  

The agency correctly observes that performance risk associated with 
the proposed technology is properly evaluated under the technical 
factor, specifically, the "soundness of approach to include 
optimization of production" subfactor where [deleted] proposals were 
evaluated as [deleted] risk.  Battelle also challenges this rating, 
arguing that it was unreasonable to evaluate its proven [deleted] 
approach as [deleted] as DynPort's [deleted] approach.  While the risk 
rating is [deleted] for both proposals, the record makes plain that 
the ratings were assigned based on reasoned evaluations of both 
proposals.  

In this regard, the evaluators observed that Battelle, while taking 
the [deleted] for vaccine production, also had taken some [deleted].  
Production of vaccines using the [deleted] approach [deleted] which 
are, according to the agency, "more lethal than nerve agent."  Since 
production was proposed [deleted], there was an [deleted], all 
combining to represent [deleted].  With regard to DynPort, the 
evaluators observed that by taking innovative and low cost approaches, 
DynPort had incurred risk which would impact on cost and schedule.  
Among other issues, the evaluators noted that using [deleted] for 
producing the botulinum and SEB vaccines (9 of the 15 option vaccines) 
represented a [deleted] risk, despite some advantages in safety and 
yields.  Contrary to Battelle's contentions of inconsistency, the 
evaluators assigned risk based on legitimate, though different, 
considerations for each approach.  Battelle's disagreement does not 
make the evaluation unreasonable.  Medland Controls, Inc., supra.[29] 

Notwithstanding Battelle's contentions, the proposed technical 
approach does not represent the sole evaluation factor and 
consequently may not be perceived as driving the entire risk 
assessment.  In this regard, the technical approach is evaluated under 
one of five subfactors under one of the two technical factors.  The 
relevant technical factor was valued at only 25 percent of the 
non-cost factor evaluation, while management, a factor under which the 
approach is not germane, makes up 40 percent of the evaluation.  Thus, 
technical approach, while important to performance of the contract, 
constitutes a relatively small percentage of the total evaluation.  

In addition, DynPort has not proposed to develop and produce all of 
the vaccines using a [deleted] approach.  DynPort proposed to develop 
and produce the 3 base effort vaccines and 3 of the 15 option vaccines 
using [deleted] approaches.  DynPort's proposal also details its 
team's ability to produce the toxin vaccines by the [deleted] approach 
in a segment which is the same length as that devoted to its 
discussion of the [deleted] approach.  Battelle also proposed to use 
[deleted] technology to develop and produce the ricin and improved 
plague vaccines.  Moreover, during negotiations, Battelle inquired 
about whether the agency would require the use of [deleted] technology 
in the production of botulinum vaccines.  In advising Battelle that 
the [deleted] approach would not be required, the contracting officer 
specifically advised Battelle that the government had not yet 
evaluated which method would be used to produce these vaccines; that 
the selection of the method would come through an evaluation of 
technical and program elements; and that after the Milestone I 
decision, the government reserved the right to renegotiate the cost of 
the option based on the production method chosen.[30]  Thus, it is not 
clear that the agency will even allow DynPort to use the [deleted] 
approach.  If it does select that approach, it will be because the 
agency's own developmental organization has determined that the 
approach will produce a viable vaccine.  In any event, since the 
agency chooses the developmental approach, anticipated risk is 
relevant to, but not dispositive of, future success.

EVALUATION OF BATTELLE'S TECHNICAL PROPOSAL

Battelle also contends that the agency erred in evaluating its 
proposal with regard to an alleged schedule delay and Battelle's 
[deleted].  Based on our review of the record, we believe the 
evaluations are reasonable. 

The evaluated schedule delay is attributable to Battelle's proposal to 
[deleted] at the facility of one of its subcontractors.  Battelle's 
original model contract did not mention the need to [deleted].  While 
a plan to replace [deleted] has an impact on good lab practices (GLP) 
and current good manufacturing practices (cGMP), when the agency sent 
Battelle a clarification request (CR) on the subject of GLP and cGMP 
compliance, Battelle indicated that its subcontractor was fully 
compliant.  At the same time, Battelle's initial cost proposal 
mentioned the plan to [deleted].  A separate CR was issued by the cost 
team regarding the costs for the replacement and Battelle replied that 
it intended to replace one handler per year for 7 years.  Amendment 
No. 0006, requesting BAFOs, also requested offerors to provide a 
detailed description of all facilities and equipment that are 
available, must be built, or procured to meet the contract 
requirements and to indicate possible impacts on cost, schedule, and 
performance.  In its BAFO model contract, Battelle advised that its 
subcontractor would upgrade the [deleted] in order to comply with 
cGMP.

When the SSEB technical and cost teams met during the final 
evaluation, they compared Battelle's responses and the technical team 
added a [deleted] regarding the intended replacement.  However, the 
technical team believed it would be more efficient and advantageous 
for the government to complete the entire replacement prior to 
beginning contract performance.  Since Battelle intended to use this 
subcontractor for development of the three base effort vaccines, the 
evaluators determined that contract performance would be delayed for 
the 6 months they estimated for the complete replacement.  

Battelle argues that since it proposed replacement of the [deleted] in 
a manner which would not impact the schedule, it was improper for the 
agency to evaluate its proposal on a different basis.  However, 
Battelle assumed the risk that changes in its final offer might raise 
questions about its ability to meet the requirements of the 
solicitation and, thus, result in downgrading of its proposal.  Cubic 
Field Servs., Inc., B-252526, June 2, 1993, 93-1 CPD  para.  419 at 7; 
Comarco, Inc., B-225504, B-225504.2, Mar. 18, 1987, 87-1 CPD  para.  305 at 
5.  The agency's evaluation, based on its own view of the best 
approach, was not unreasonable under the circumstances of this 
procurement.  

Battelle had proposed this subcontractor to perform development and 
production of the base effort vaccines and the [deleted] in question 
were in the production facilities.  Thus, any major replacement, even 
on a staggered basis, could have a significant impact on contract 
performance.  Since the [deleted] are an important aspect of the GLP 
and cGMP required by FDA for licensure of the vaccines, the agency had 
a valid interest in ensuring that nothing interfered with that 
licensure.  Further, since the agency was to pay for the replacement 
of the air handlers, it was reasonable for the agency to consider 
whether a one-time replacement would be more advantageous than a 
staggered replacement.  In any event, this represented one of several 
evaluated disadvantages under one subfactor of the least important 
technical factor.  While it was considered in the evaluation, when 
briefed to the SSAC and SSA, the SSEB advised them that it was less of 
a facilities problem than one associated with DynPort's proposal 
because the schedule impacts were quantifiable. 

With regard to the [deleted] matter, Battelle's original model 
contract suggested use of a memorandum of understanding (MOU) to set 
forth the roles, responsibilities, interactions, and commitments 
between the contractor and the government.  Among other things, the 
MOU would address who is responsible for "unsuccessful outcomes" when 
the government directs a particular decision which overrides the 
contractor's decision.  The agency sent Battelle a CR seeking 
clarification as to the value of such an MOU and discussed it during 
oral negotiations.  During these negotiations, Battelle explained its 
concern regarding how [deleted] would be applied if a government 
decision, overriding a contractor decision, was unsuccessful.  The 
agency observed that it had an [deleted] "which is subjective to a 
great degree, which says . . . we agree or disagree with how well you 
did that, but it's the government who makes the final decision on what 
you do, it's you who make the final decision on how you do it."  For 
these reasons the agency was "not sure how a MOU fits in."  
Subsequently, the agency issued amendment No. 0005 which contained a 
revised [deleted] and requested offerors to incorporate any effects of 
the revised plan.  In its proposal revision, Battelle expressed its 
belief that achieving an "excellent rating" in one schedule area and 
four performance areas was unrealistic and/or unattainable.  As 
support for its position, Battelle objected to the criterion 
specifying no issuance of FDA Forms 482 and 483 since "FDA always 
issues Form 482s and frequently issues a Form 483" in a given 
situation.  In amendment No. 0006, which closed discussions and 
requested BAFOs, the agency modified the [deleted] to eliminate "no 
Form 482s" from the criteria.  In its BAFO model contract, Battelle 
for the first time advised the agency that attempting to achieve the 
[deleted].  The SSEB interpreted this language as an indication that 
to comply with the [deleted], additional [deleted] and [deleted] would 
have to be added to that already proposed.  In assessing a [deleted] 
to Battelle's proposal under the first management subfactor, the SSEB 
noted that Battelle had used the [deleted], but concluded that the 
BAFO indicated a [deleted] to accept the [deleted].

Battelle argues that it never [deleted] or [deleted] to [deleted].  
Rather, its earlier suggestion of an MOU and its criticism of the plan 
were simply aspects of its understanding of the "partnering" between 
contractor and agency which was envisioned by this contract.  In our 
view, the evaluators reasonably concluded that the BAFO language 
regarding increased activities with attendant schedule extensions in 
order to provide "excellent" contract performance, was indicative of 
Battelle's [deleted] to accept the provisions of the [deleted].  The 
plan is very clear as to the criteria to be used in [deleted] 
determinations and as to the government's unilateral discretion to 
decide the [deleted] using those criteria.  In response to [deleted], 
the agency revised the plan.  The agency's failure to revise other 
aspects of the plan should have apprised Battelle that no additional 
changes would be made.  By incorporating [deleted] for the first time 
in its BAFO, Battelle assumed the risk that its statements [deleted] 
to the evaluators and result in [deleted] of its proposal.  Cubic 
Field Servs., Inc., supra.[31] 

PAST PERFORMANCE EVALUATION

In evaluating past performance, the SSEB determined that both 
Battelle's and DynPort's proposal should be rated "green" with 
"moderate" risk.  Battelle challenges this evaluation arguing that 
DynPort's rating should have been less favorable.  In this regard, 
Battelle argues that the agency improperly gave DynPort credit for two 
contracts performed by its team member, Porton International.  At the 
time these contracts were performed, Porton was teamed with [deleted] 
a firm which teamed with Battelle for this JVAP procurement.  While 
Porton had claimed responsibility for developing and producing 
botulinum toxoids under both of these contracts, Battelle explains 
that [deleted] did all the development and production work while 
Porton was simply the marketing and distributing agency for [deleted] 
products and services.  

The record establishes that the agency's past performance evaluation 
was reasonable and in accordance with the stated evaluation criteria.  
Advanced Tech. and Research Corp., supra.  DynPort's past performance 
information showed successful performance by itself and other team 
members on eight contracts involving AIDS, influenza, botulinum, and 
plague vaccines.  The agency specifically noted that one of DynPort's 
subcontractors had successfully licensed a vaccine from clinical 
trials in only 14 months.  Other than its assertions regarding 
Porton's contribution, Battelle has produced nothing to indicate that 
the agency's rating of [deleted] with [deleted] risk was an 
unreasonable evaluation.  

With regard to its claims regarding Porton's work on two of the 
contracts, Battelle is essentially arguing that the only entity that 
may properly list a prior contract for purposes of a past performance 
evaluation is the concern which actually performed the work relevant 
to that covered in the solicitation.  We disagree.  The general rule 
is that a prime contractor under a government contract is responsible 
for the performance of its subcontractors.  Neal R. Gross & Co., Inc., 
B-275066, Jan. 17, 1997, 97-1 CPD  para.  30 at 4.  Further, subcontractors 
and joint venturers perform various portions of contracts and, 
accordingly, may obtain experience useful in predicting success in 
future contract performance.  George A. and Peter A. Palivos, 
B-245878.2, B-245878.3, Mar. 16, 1992, 92-1 CPD  para.  286 at 10 
(experience of a proposed subcontractor may be considered in 
determining whether an offeror meets a past performance requirement in 
a solicitation); see also Commercial Bldg. Serv., Inc., B-237865.2, 
B-237865.3, May 16, 1990, 90-1 CPD  para.  473 at 6.  Where an offeror was 
involved as a subcontractor or joint venturer in performing work under 
a prior contract similar to work to be included under the instant 
contract, such experience may properly be considered in assessing that 
offeror's past performance.  Phillips Nat'l, Inc., B-253875, Nov. 1, 
1993, 93-2 CPD  para.  252 at 6.  Porton, as prime contractor, was 
responsible for managing the performance of the two contracts at issue 
and the solicitation here calls for a significant management effort in 
directing the work of a number of subcontractors.  On this record, 
there is no basis to question the agency's consideration of Porton's 
prior performance in the evaluation of the DynPort team's 
qualifications to perform the JVAP contract. 

THE COST EVALUATION

Battelle alleges that the agency failed to perform a proper cost 
realism evaluation because it failed to accurately measure the costs 
to be incurred under its proposal as compared with DynPort's.  In this 
regard, when an agency evaluates proposals for the award of a cost 
reimbursement contact, an offeror's proposed estimated costs are not 
dispositive, because regardless of the costs proposed, the government 
is bound to pay the contractor its actual and allowable costs.  FAR  sec.  
15.605(c) (June 1997).  Consequently, a cost realism analysis must be 
performed by the agency to determine the extent to which an offeror's 
proposed costs represent what the contract should cost, assuming 
reasonable economy and efficiency.  CACI, Inc.,-- Fed., 64 Comp. Gen. 
71, 75 (1984), 84-2 CPD  para.  542 at 5.  When properly documented, our 
review of an agency's exercise of judgment in this area is limited to 
determining whether the agency's cost evaluation was reasonably based 
and not arbitrary.  Litton Sys., Inc., Amecon Div., B-275807.2, Apr. 
16, 1997, 97-1 CPD  para.  170 at 5. 

We have reviewed the agency's cost evaluation and its methodology and 
find nothing objectionable.  The agency performed a detailed and 
comprehensive evaluation of the proposed costs, in conjunction with 
the proposed approaches of the offerors to arrive at an MPC and total 
evaluated MPC.  In this regard, the cost team familiarized itself with 
the structure and organization of each proposal; identified the 
respective roles of the prime and subcontractors; compared the 
offeror's BAFO with its CLIN structure; analyzed the cost work 
breakdown structure (CWBS); involved the Defense Contract Audit Agency 
to evaluate proposed rates for overhead, award fees, and escalation 
rates; compared each offeror's integrated master schedule with the 
CWBS; evaluated all CLINS; and performed analyses of the offerors' 
manufacturing data, clinical trials, surrogate efficacy models, animal 
costs, labor, and FDA licensure fee.  The evaluators used the 
independent government cost estimate in those instances where the BAFO 
costs were determined to be insufficient or excessive.  These analyses 
were combined to arrive at the MPC for each offer.  The evaluators 
then involved the technical and management teams to evaluate the 
uncertainty of each CLIN based on knowledge, experience, and current 
data available for each technology proposed.  They then calculated the 
total evaluated MPC by multiplying an uncertainty percentage times the 
total cost of each CLIN in the MPC and adding this to the cost of the 
CLIN.  

Battelle identified several instances of cost adjustments to DynPort's 
proposal which it believed were too small.  We have examined these and 
find none has merit.  For example, Battelle notes that the evaluators 
only adjusted [deleted] DynPort's costs for equipment/structural 
modifications by [deleted] while its own costs in this area were 
adjusted [deleted] by [deleted].  Relying on a [deleted] that 
DynPort's facilities may not be operational at the start of contract 
performance, Battelle concludes that [deleted] is too small an 
adjustment.  However, Battelle offers no specific analysis for its 
conclusions.  Thus, its criticism amounts to mere disagreement with 
the evaluation which alone does not render an evaluation unreasonable.  
Medland Controls, Inc., supra.  Moreover, as observed by the agency, 
cost differences and adjustments to each proposal are not directly 
comparable due to the offerors' responsibility to propose their own 
SOWs in accordance with their unique approaches and CLIN structures.  
In this particular instance, the adjustment to DynPort's costs was not 
made to account for a lack of facility readiness, but rather was to 
account for equipment proposed on DynPort's equipment list for which 
no cost was listed in the proposal. 

Battelle also questioned the uncertainty evaluation noting that its 
MPC was [deleted] adjusted by approximately [deleted] while DynPort's 
costs were [deleted] adjusted by approximately [deleted].  Battelle's 
basis for objecting to the amount [deleted] to DynPort's costs is its 
belief that the agency failed to properly take into account the risk 
associated with DynPort's proposed [deleted] approach.  Battelle's 
arguments are unpersuasive.  The agency's uncertainty evaluation well 
accounted for the difference in approaches.  In this regard, of 14 
areas adjusted for uncertainty, DynPort's costs were [deleted] 
adjusted [deleted] than Battelle's in 9 areas.  In seven of these 
nine, DynPort's costs were [deleted] adjusted by at least [deleted] 
the percentage that was applied to Battelle's costs.  For example, 
DynPort's proposal received a [deleted] uncertainty percentage for its 
proposed botulinum [deleted] approach, while Battelle's proposal 
received only a [deleted] adjustment.[32]  

THE AWARD DETERMINATION

Finally, Battelle argues that cost improperly became the dominant 
factor in the award determination, even though it was the least 
important evaluation factor.  It also generally challenges the award 
determination based on the alleged flaws in the technical and cost 
evaluations.  Agency officials have broad discretion in determining 
the manner and extent to which they will make use of technical and 
cost evaluation results.  Cost/technical tradeoffs may be made; the 
extent to which one may be sacrificed for the other is governed by the 
test of rationality and consistency with the established evaluation 
factors.  General Servs. Eng'g, Inc., B-245458, Jan. 9, 1992, 92-1 CPD  para.  
44 at 9.

After being briefed on the original evaluation and those changes 
associated with the reevaluation, the SSA weighed the significant 
attributes of Battelle's and DynPort's proposals, their performance 
ratings, risk ratings, and relative MPCs.  In directing award to 
DynPort, the SSA stated:

     This decision is based on a "Best Value" analysis that shows 
     little difference in the risk associated with DynPort's and 
     Battelle's proposals, and emphasizes program integration/program 
     management while giving latitude to pursue innovative 
     technologies relying primarily on commercial sector performers.  
     There is a higher degree of confidence in DynPort's program 
     management structure and in their ability to develop a close, 
     cooperative partnership with the Government JVAP Program 
     Management Office.  In addition, DynPort's cost is less.

Based on the SSA's rationale, it is plain that cost was not the sole 
determinative factor.  Rather, the decision was based on an integrated 
assessment of the relative technical/management merit, past 
performance, and evaluated cost of the two proposals.  As discussed 
above, there was nothing unreasonable or objectionable in the agency's 
evaluation.  Thus, there is no basis for questioning the award 
determination due to alleged evaluation flaws.  To the extent that 
cost may be considered to have become "determinative," where, as here, 
the selection authority reasonably concludes that the offers are 
essentially equal technically, cost may become determinative 
notwithstanding its being of lesser importance in the evaluation 
scheme.  Cygnus Corp., B-275957, B-275957.2, Apr. 23, 1997, 97-1 CPD  para.  
202 at 11; Ogilvy, Adams & Rinehart, B-246172.2, Apr. 1, 1992, 92-1 
CPD  para.  332, at 5.  Accordingly, the determination to award to DynPort 
is unobjectionable.

The protest is denied.

Comptroller General
of the United States

1. While all three military services (Army, Air Force, and Navy) 
participate in the program, the Army serves as the lead agency for the 
program.

2. The DOD had earlier considered creation of a government-owned 
contractor-operated facility and a contractor-owned 
contractor-operated facility to produce the vaccines, but rejected 
this approach for economic and other reasons.  

3. The option vaccines included seven botulinum monovalents, a 
botulinum polyvalent, ricin, staphylococcal enterotoxin B (SEB), 
venezuelan equine encephalitis (VEE), combined VEE, eastern and 
western equine encephalitis (VEE/EEE/WEE), brucellosis multivalent, 
and improved plague and anthrax.  

4. Prior to the "Milestone I" decision, USAMRIID performs basic and 
applied research and concept exploration in the development and 
nonclinical study of candidate vaccines.  At "Milestone I," the agency 
determines the basic technological approach to be used in vaccine 
production, and the candidate vaccine is considered ready to move into 
an advanced development phase. 

5. Each management and technical factor was divided into the following 
subfactors: M-1 (plans for interfacing with the government and 
integrating subcontractors for optimizing contract requirements); M-2 
(plans for identification, avoidance, and mitigation of technical 
risk); M-3 (experience and responsibilities of committed, key, program 
management personnel; M-4 (program office structure); M-5 (approach 
for integrating data management across different requirements and 
groups); M-6 (plan for conduct of special studies; T-2.1 (soundness of 
approach to include optimization of production); T-2.2 (understanding 
of regulatory issues associated with contract requirements); T-2.3 
(understanding of different technical issues associated with contract 
requirements); T-2.4 (application of product/process improvements to 
reduce product life-cycle cost); T-2.5 (plan for maintenance of 
current BD vaccines); T-1.1 (facilities:  types, space, capacity, 
availability, licensed/approved); 
T-1.2 (equipment:  types, function, availability).

6. Blue/outstanding; green/satisfactory; yellow/marginal; and 
red/unacceptable.

7. Risks were rated as low, moderate, or high.  

8. One of the SSEB members employed by USAMRIID, an active duty 
officer who serves as chief of USAMRIID's Virology Division, was on 
the SSEB technical team.  The other, a civilian employee in USAMRIID's 
Product Development and Regulatory Affairs Office, was on the SSEB 
past performance team.  Aerosol testing performed at USAMRIID is done 
by its Toxinology Division. 

9. See also 5 C.F.R.  sec.  2635.101 (1997), titled "Basic Obligation of 
Public Service," which provides that government employees must 
endeavor to avoid actions which create the appearance of, among other 
things, conflicts of interest.

10. When cost comparisons are performed under Office of Management and 
Budget (OMB) Circular A-76, the Revised Supplemental Handbook, 
provides the following guidance:

            As required by the FAR, the Government should establish a 
            Source Selection Authority, including assurances that 
            there are no potential conflicts of interest in the 
            membership of the Authority.

11. See FAR  sec.  9.501(d) which provides that a conflict of interest 
exists when, "because of other activities or relationships with other 
persons, a person is unable or potentially unable to render impartial 
assistance or advice to the Government, or the person's objectivity in 
performing the contract work is or might be otherwise impaired."   

12. Our reliance on FAR subpart 9.5 for guidance in applying the 
general requirements of FAR subpart 3.1 is consistent with FAR subpart 
3.6 which directs:

            The contracting officer shall comply with the requirements 
            and guidance in [FAR] [s]ubpart 9.5 before awarding a 
            contract to an organization owned or substantially owned 
            or controlled by Government employees.

13. FAR  sec.  9.505 further provides that:  

            Each individual contracting situation should be examined 
            on the basis of its particular facts and the nature of the 
            proposed contract.  The exercise of common sense, good 
            judgment, and sound discretion is required in both the 
            decision on whether a significant potential conflict 
            exists and, if it does, the development of an appropriate 
            means for resolving it. 

14. Following submission of the agency's report, this Office notified 
the parties that a hearing would be conducted, advising the parties 
that one of the purposes for conducting the hearing would be to 
"obtain information regarding the magnitude or significance of 
USAMRIID's potential involvement in the actual performance of the 
contract."

15. When a subject is exposed to a particular toxin or other agent, it 
is referred to as being "challenged."  Challenging a subject by 
aerosol exposure involves creating a "cloud" of the agent, within a 
chamber, which the subject breathes.  Because of the potential danger 
associated with aerosol exposure, special equipment and facilities are 
required.

16. The USAMRIID Commander also advised FRC that its "offer of 
participation is non-exclusive, and we are obligated to respond to 
similar requests by other respondents to the RFP."  

17. The cost estimate carries a date of "July 29, 1996."  At the 
hearing, the USAMRIID commander explained that this estimate had been 
prepared earlier in response to a request from another government 
agency unrelated to the JVAP procurement.  Tr. at 184.

18. The parties agree that the contractor will have to perform 
whatever level of aerosol exposures the FDA requires.  In its 
post-hearing comments, Battelle states:  "There is no dispute that the 
specific amount of aerosol challenge studies that the FDA will 
ultimately require is unknown."  DynPort asserts that, in recent 
years, FDA has permitted licensing of vaccines for agents normally 
contracted through the air without requiring aerosol challenge studies 
to be conducted.  Tr. at 265-267.   

19. The "Overview" did state:  "where information provided in the 
initial IMP submission . . . conflicts with that provided in this 
Appendix, the technical approach summaries contained in the Appendix 
take precedence."  

20. The FAR provides that, "[i]n fulfilling their responsibilities for 
identifying and resolving potential conflicts, contracting officers 
should avoid creating unnecessary delays, burdensome information 
requirements, and excessive documentation," and the contracting 
officer's judgment regarding existence of a conflict "need be formally 
documented only when a substantive issue concerning potential 
organizational conflict of interest exists."  FAR  sec.  9.504(d). 

21. At the hearing the USAMRIID Commander testified that total funding 
for USAMRIID in fiscal year 1997 was $38 million.  Tr. at 191.   

22. At the hearing, Battelle presented testimony that it could take 
FRC up to 2 years to install the equipment necessary to perform 
aerosol exposures at its facility.  Tr. at 670.  Since a 10-year 
contract performance period is anticipated and Battelle, itself, 
anticipates limiting testing requirements during the first several 
months of contract performance, even under Battelle's scenario, it 
would appear that FRC could be able to perform more than 80 percent of 
the contract's requirements for aerosol testing requirements at its 
own facility. 

23. At the hearing, the only USAMRIID evaluator involved in the 
evaluation of DynPort's proposal testified that, if DynPort had 
proposed to use USAMRIID in more than a backup capacity, he would have 
viewed that as a negative aspect of DynPort's proposal.  Tr. at 
326-328; 487.  The second USAMRIID evaluator was only involved in 
evaluating the past performance of an offeror other than either 
DynPort or Battelle.

24. Battelle also asserts that a conflict existed by virtue of the 
fact that a third SSEB evaluator was employed by Walter Reed Army 
Institute of Research (WRAIR), and that WRAIR has a cooperative 
research and development agreement with one of DynPort's proposed 
subcontractors.  We have reviewed the record and find the connection 
between this subcontractor and WRAIR to be too attenuated to provide 
any basis to sustain Battelle's protest.  We also note that the record 
clearly shows that, throughout the evaluation process, this SSEB 
evaluator favored awarding the contract to Battelle.

25. Battelle identifies a number of examples of unreasonable 
evaluation ratings and other flaws in the evaluation.  We have 
examined them all and find that none has any merit.  This decision 
will address only the more significant allegations.

26. In its pre-hearing comments to the agency report, Battelle argued 
that the proposal risk assessment did not follow the evaluation 
criteria because there is no evidence that it was performed for each 
factor or that it was factored into the evaluation and scoring.  The 
Proposal Analysis Report explains that proposal risk was evaluated by 
the SSEB in terms of the quality control and consistency of the 
proposal information to determine whether the proposed approach would 
accomplish the SOO.  The SSEB also considered whether the proposal 
information was of sufficient detail and consistency to allow a cross 
walk of data among the various aspects of the proposal.  This approach 
was required in order to determine the confidence level of the data 
used in structuring the total evaluated MPC for each offeror.  It is 
apparent from the record that the evaluation was conducted for all 
aspects of the proposals.  Since Battelle's proposal was assigned the 
[deleted] and DynPort's proposal was assigned the [deleted] the 
absence of individual factor ratings is not prejudicial.  Further, the 
record reflects that the SSAC and the SSA were briefed on these 
proposal risk ratings prior to the award determination.

27. Both methods are designed to produce a vaccine which will trigger 
an immune response in the human body without causing the adverse 
bodily effects the harmful agent generally causes.  

28. Battelle also challenges the evaluators' [deleted] assessment of 
DynPort's ability to shorten this process.  In Battelle's view, the 
FDA will determine when and how a vaccine is approved, and there is no 
possibility of the FDA shortening the period for approval to meet 
DynPort's proposed schedule.  Battelle misses the point of DynPort's 
proposal and the evaluated advantage.  Nothing in the proposal 
indicates that DynPort intended to seek preferential treatment from 
the FDA; rather, the agency believed that DynPort's intention to seek 
early input and advice from the FDA, coupled with the proposal of a 
regulatory affairs manager with previous FDA experience, provided a 
credible basis for compression of the schedule. 

29. Battelle also notes an "inconsistency" in the evaluation of 
DynPort's facilities as [deleted], while evaluating its equipment as 
[deleted].  Again, there is nothing inconsistent in this evaluation.  
The two subfactors address different aspects of this technical factor; 
proposed facilities may be acceptable while at the same time not all 
required equipment is available.  Further, the agency assigned a 
[deleted] risk rating to both subfactors.  

30. In a related argument, Battelle identified a number of instances 
wherein it believed the evaluators were biased towards DynPort's 
proposal, as evidenced by ignoring DynPort deficiencies and 
overemphasizing slight flaws in Battelle's proposal.  As indicated in 
our discussion of the conflict issue above, we found no evidence of 
bias on the part of the evaluators.  In this regard, we have reviewed 
the examples of unequal treatment cited by Battelle and find that none 
have merit.  For example, in the general comments preceding the 
technical evaluation report on Battelle's proposal, the SSEB noted 
that Battelle's exclusive enlistment of some contractors with 
experience in the development of BD vaccines had the effect of 
precluding other offerors from teaming with them and obtaining 
technical information such as the test schedule for the current BD 
vaccine stockpile.  In the general comments concerning DynPort's 
proposal, the SSEB observed that DynPort was prohibited from teaming 
with existing (named) BD vaccine producers.  Battelle argued that the 
agency unfairly criticized it for forming exclusive teaming agreements 
even though that represented normal and good contracting practice.  As 
observed by the agency, the quote regarding DynPort is taken out of 
context.  The entire quote merely indicates the SSEB's satisfaction 
with DynPort's ability to create a satisfactory team notwithstanding 
Battelle's teaming agreements:  "Prohibited from teaming with existing 
BD vaccine producers . . . DynPort brought together a team of vaccine 
producers, capable of meeting the requirements in the RFP."  Here, 
Battelle's exclusive agreements provided it with access to data on 
current developmental BD products which were not available to the 
other offerors.  Since the general comments in question are simply 
statements of fact, not used to convey an advantage or disadvantage to 
any offeror, there is no basis to conclude that the comments were 
objectionable or unreasonable.

31. Battelle also contends that the agency failed to provide it with 
meaningful discussions on the [deleted] and [deleted].  We disagree.  
While contracting agencies must furnish information to offerors in the 
competitive range as to the areas in their proposals which are 
believed to be deficient so that offerors may have an opportunity to 
revise their proposals to satisfy the government's requirements (FAR  sec.  
15.610(c)(2) (June 1997); Pan Am World Servs., Inc. et al., B-231840 
et al., Nov. 7, 1988, 88-2 CPD  para.  446 at 11), an agency need not reopen 
discussions to resolve technical deficiencies first introduced in an 
offeror's BAFO.  Ogden Support Servs., Inc., B-270354.2, Oct. 29, 
1996, 97-1 CPD  para.  135 at 7.  Technical/schedule issues with regard to 
the [deleted] were not apparent until submission of Battelle's BAFO.  
Issues concerning Battelle's views on risk allocation under the 
[deleted] were discussed at length prior to submission of BAFO's.  
However, in its BAFO Battelle for the first time asserted that 
attaining "excellent" ratings in certain areas would require 
[deleted], which was likely [deleted].  At that point, the agency was 
not required to reopen discussions. 

32. In its pre-hearing comments, Battelle for the first time raised 
new examples of flaws it perceived in the agency's cost evaluation.  
Where a protester files supplemental protest grounds, each new ground 
must independently satisfy the timeliness requirement of our Bid 
Protest Regulations, which do not contemplate the piecemeal 
presentation or development of protest issues.  QualMed, Inc., 
B-257184.2, Jan. 27, 1995, 95-1 CPD  para.  94 at 12-13.  This includes the 
identification of "examples" of flaws in the evaluation generally 
alleged in the initial protest.  Id.  Such new issues must be filed 
within 10 calendar days after the protester knew or should have known 
the basis for its protest.  Bid Protest Regulations, 4 C.F.R.  sec.  
21.2(a)(2) (1997).  Here, Battelle did not raise these matters until 
it filed its pre-hearing comments more than 10 days after receipt of 
the agency report.  Accordingly, these matters are untimely and not 
for consideration.  In any event, the new examples are no more 
meritorious than those originally raised by the protester.  For 
example, Battelle notes that it proposed [deleted] for unusually 
hazardous insurance while DynPort proposed none, intending to seek 
indemnification by the government.  As observed by the protester in 
its argument, the agency eliminated the consideration of this 
insurance in all offerors' cost evaluations because of the widely 
different proposals.  Since all offerors were treated the same, there 
is nothing objectionable in the agency's decision.