BNUMBER: B-278896.2; B-278896.3; B-278896.4; B-278896.5
DATE: May 4, 1998
TITLE: Aerospace Design & Fabrication, Inc., B-278896.2; B-278896.3;
B-278896.4; B-278896.5, May 4, 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:Aerospace Design & Fabrication, Inc.
File: B-278896.2; B-278896.3; B-278896.4; B-278896.5
Date:May 4, 1998
Paralee White, Esq., Michael A. Hordell, Esq., and Lisa K. Miller,
Esq., Gadsby & Hannah, for the protester.
James S. Ganther, Esq., Ganther & Fee, for Dynacs Engineering Co.,
Inc., an intervenor.
Vincent A. Salgado, Esq., and Jerald J. Kennemuth, Esq., National
Aeronautics and Space Administration, for the agency.
Ralph O. White, Esq., and Christine S. Melody, Esq., Office of the
General Counsel, GAO, participated in the preparation of the decision.
DIGEST
1. Protester's contention that the awardee misrepresented the
availability of its key personnel is sustained where the record shows
that the awardee had not obtained a commitment from the proposed
individuals as it claimed, and where the misrepresentation, together
with an evaluation error by the agency, resulted in a material
misevaluation of the key personnel section of the awardee's proposal.
2. Agency contention that award fee negotiations on a prior contract
were sufficient opportunity for the protester to comment on adverse
information received from a past performance reference, as required by
Federal Acquisition Regulation sec. 15.610(c)(6) (June 1997), is
rejected, and the protest sustained, where the protester was a
subcontractor on the prior contract, not the prime contractor, and
where the record shows that the subcontractor had no meaningful role,
or opportunity to respond, during the award fee negotiations with the
prime contractor.
3. Solicitation terms are latently ambiguous and result in unequal
competition where the record shows that the offerors reasonably
understood requirements and submitted proposals based on different
assumptions that potentially skewed the agency's assessment under the
relevant experience and past performance evaluation factor.
4. Protester's argument that a cost realism adjustment made to its
proposed costs was improper is denied where the record shows that the
agency had a reasonable basis for the conclusion.
5. General Accounting Office recommends reimbursement of proposal
preparation costs as well as protest costs because unique
circumstances create a situation where reevaluation and
reconsideration of the selection decision cannot return the parties to
their respective positions prior to the agency error.
DECISION
Aerospace Design & Fabrication, Inc. (ADF) protests the decision by
the National Aeronautics and Space Administration (NASA) to make award
to Dynacs Engineering Co., Inc., pursuant to request for proposals
(RFP) No. 3-085970, seeking offers to provide scientific, engineering,
technical, and administrative services for NASA's Lewis Research
Center. ADF argues that award to Dynacs is improper because the
Dynacs proposal included material misrepresentations about its key
personnel; the agency misevaluated proposals; and the agency failed to
disclose during discussions certain weaknesses regarding ADF's past
performance.
We sustain the protest.
BACKGROUND
The contract here is a follow-on to an earlier scientific,
engineering, technical and administrative services contract awarded by
NASA's Lewis Research Center to NYMA, Inc., under the Small Business
Administration's (SBA) section 8(a) set-aside program.[1] The RFP was
issued on September 30, 1997, after NYMA, Inc. was acquired by a large
business earlier in the year, and lost its status as a small
disadvantaged business under SBA regulations. The RFP anticipated a
competitive procurement limited to 8(a) businesses leading to the
award of a hybrid contract containing approximately 10-percent
fixed-price and 90-percent cost-plus-award-fee task orders. RFP Cover
letter, Sept. 30, 1997, Attach. 1 at 1; RFP sec. B.2, L.14; RFP, Attach.
1, Industry Briefing Questions, Oct. 8, 1997 at question 53. The
estimated maximum value of the effort was $45 million for the 27-month
performance period. Initial Contracting Officer's Statement, Jan. 26,
1998, at 1.
Section M.3 of the RFP set forth three evaluation factors of equal
importance: mission suitability; cost; and relevant experience and
past performance. Of these three factors, cost and relevant
experience and past performance were not scored, but were evaluated by
the source evaluation committee (SEC) for review by the source
selection official (SSO). RFP sec. M.2. The mission suitability factor
was evaluated on a 1,000-point scale, with the following allocation of
points among the subfactors (the elements of the subfactors were not
separately scored):
MISSION SUITABILITY Points
Subfactor 1: Understanding the Requirements 200
-- Technical Approach
-- Quality Assurance Plan
Subfactor 2: Management Plan 550
-- Phase-In Plan
-- Personnel Management
-- Business Management
-- Property Management
-- Subcontracting
Subfactor 3: Key Personnel/Company Resources 250
TOTAL 1,000
RFP sec. M.3.
After NASA's receipt and evaluation of 14 proposals in response to the
RFP, the SEC, on December 8, selected 3 of the proposals for inclusion
in the competitive range--ADF, Dynacs, and a third offeror. The
agency then held discussions with the competitive range offerors, and
best and final offers (BAFO) were received on December 12. After
final evaluation by the SEC, the results of the competition were
presented to, and discussed with, the SSO. The final point scores and
adjectival ratings are set forth below[2]:
DYNACS ADF
MISSION SUITABILITY
TOTAL [deleted]
Excellent [deleted]
Very Good
--Understanding the
Requirements [deleted]
[deleted] [deleted]
[deleted]
--Management Plan [deleted]
[deleted] [deleted]
[deleted]
--Key Personnel/
Company Resources [deleted]
[deleted] [deleted]
[deleted]
RELEVANT EXPERIENCE AND PAST PERFORMANCE
Excellent
Very Good
PROBABLE COST [deleted] [deleted]
The table above, showing the final evaluation results, reflects one
change made by the SSO. When the SEC completed its evaluation, it
awarded ADF a rating of good under the relevant experience and past
performance factor. The SSO, however, disagreed with the rating and
raised ADF's score under this factor from good to very good. Source
Selection Statement, Dec. 16, 1997, at 8. Based on the evaluation
results shown above, the SSO selected Dynacs for award because of "its
superior technical proposal, its excellent [r]elevant [e]xperience and
[p]ast [p]erformance, and its lowest probable cost . . . ." Id.
These protests followed.
EVALUATION OF KEY PERSONNEL
ADF argues that Dynacs misrepresented the level of commitment from
three of its proposed key managers, leading the agency to improperly
award Dynacs more credit in the key personnel portion of the
evaluation than the proposal merited. In addition, ADF claims that
the effect of these misrepresentations rippled through other mission
suitability assessments, causing Dynacs's score under this factor to
be improperly inflated. ADF also argues that Dynacs crafted the key
personnel section of its proposal in an effort to wrongly gain credit
for a manager it was not offering in its proposal. As a result, ADF
argues that the evaluation should be overturned, and Dynacs should be
barred from any subsequent competition for these services.
Dynacs and NASA reply that the Dynacs proposal did not misrepresent
the availability of either the three key managers, or the manager that
was not offered. In addition, both point out that each of the three
key managers whose commitment ADF questions eventually agreed to come
to work for Dynacs after award. Thus, the agency and intervenor argue
that there was no "bait and switch" of key personnel for this
contract, and there was no prejudice resulting from any alleged
misrepresentation of the level of commitment of the three key
managers.
In our review of protests involving service contracts where the most
qualified personnel are often those currently performing the services,
we are mindful of the difficulty faced by a nonincumbent contractor in
securing a qualified workforce sufficient to win the competition.
ManTech Advanced Sys. Int'l, Inc., B-255719.2, May 11, 1994, 94-1 CPD para.
326 at 5; CBIS Fed. Inc., B-245844.2, Mar. 27, 1992, 92-1 CPD para. 308 at
5. Nevertheless, an offeror's misrepresentation concerning personnel
that materially influences an agency's consideration of its proposal
generally provides a basis for proposal rejection or reevaluation of
the award decision based on the faulty proposal. ManTech Advanced
Sys. Int'l, Inc., supra, at 5, 13 (misrepresentation of personnel
commitments, reevaluation recommended); CBIS Fed. Inc., supra, at 6-7,
17 (misrepresentation of personnel availability, reevaluation
recommended); Ultra Tech. Corp., B-230309.6, Jan. 18, 1989, 89-1 CPD para.
42 at 5 (misrepresentation of availability of key person and use of
name in proposal without permission, termination recommended absent
other agency findings); Informatics, Inc., B-188566, Jan. 20, 1978,
78-1 CPD para. 53 at 13 (misrepresentation of results of a survey of the
availability of incumbent's personnel, exclusion recommended).
For the reasons set forth below, we find that Dynacs misrepresented
the nature of the commitment it received from three of the four
incumbent personnel it proposed. We also find that Dynacs included in
its proposal one of the incumbent's key personnel despite his specific
request that it not do so. Further, we conclude that these actions,
together with the related evaluation errors by the agency, resulted in
a material misevaluation of the key personnel portion of Dynacs's
proposal.
The RFP for this procurement did not specify the number of key
personnel an offeror should propose, but instead left the matter to
the offeror's discretion. RFP sec. M.3 at M-4; RFP, Attach. 1, Industry
Briefing Questions at questions 6-7. Offerors were required to
include in their proposals "the responsibilities, qualifications,
availability, level of involvement and number of key personnel," RFP sec.
L.27 at L-20, and were advised that this information would be
evaluated. RFP sec. M.3 at M-4. There was no requirement in the RFP for
offerors to provide written commitments for key personnel.
In its proposal, Dynacs identified five key personnel, consisting of a
project manager, and four area managers--one each for Aeronautics,
Aerospace Technology, Aeropropulsion Systems, and Space Experiments.
Dynacs Proposal, Vol. I at 23-27. Each of the four proposed area
managers was an incumbent employee (working for NYMA, Inc.) on the
predecessor contract. Id. at 24. For three of these proposed area
managers, Dynacs represented--using identical wording in each
case--that "Dynacs has received [Dr. A's] [Dr. B's] [Dr. C's]
commitment to become a member of the Dynacs team upon contract award."
Id. at 25-26.
After ADF cast doubt upon the nature of the commitments that were made
to Dynacs, our Office convened a hearing to receive testimony from
representatives of Dynacs, and from each of the three key individuals
mentioned above as to the nature of the commitments in question.
During the hearing, two of Dynacs's representatives testified that
prior to submitting the proposal they contacted each of the three
individuals by telephone and eventually met face-to-face with all
three. Hearing Transcript (Tr.) at 23-24, 26, 31, 110-11, 113. For
each individual, one of the Dynacs representatives testified that he
asked--using similar words in each instance--"if we [Dynacs] were
fortunate enough to win the contract, would he [Dr. A], in fact, come
to work for Dynacs . . . ." Tr. at 114.[3] However, in each case,
the Dynacs witness testified that there was no exchange of information
about salary, benefits, or the precise position which might be
offered, other than inquiring whether the individual might like to
continue performing his current job. Tr. at 110, 112, 116-17, 119,
133.
The Dynacs witness who conducted the face-to-face meetings initially
testified that none of these three individuals were asked if their
names could be used in the proposal, and none gave permission for
their names to be used. Tr. at 118-19. The same witness then
conceded that one of the individuals--Dr. A--expressly denied Dynacs's
request to provide information for use in the proposal, and refused to
grant permission to Dynacs to identify him in its proposal. Tr. at
119; see also Tr. at 70. Dr. A himself testified and confirmed that
he met with the Dynacs representative (Tr. at 157), and told Dynacs
that he was exclusively committed to another offeror, and that Dynacs
could not use his name, or his resume, in its proposal. Tr. at 158.
He also testified that when the Dynacs representative asked if he
would "consider working for them if they won," he agreed that he
"would consider it." Id. Finally, Dr. A testified that he did not
know he had been offered as a key person in Dynacs's proposal until
after the contract had been awarded, when--as a representative of the
outgoing contractor--he was participating in a meeting to plan the
transfer of the contract to the new awardee. Tr. at 161-62.
Drs. B and C also testified that they had not committed to work for
Dynacs and that neither was aware he had been named as a key manager
in Dynacs's proposal. Tr. at 288, 299-300. Dr. B testified that
after award to Dynacs he was concerned about keeping his job and
supporting his family, and had no idea whether he would be hired by
the new awardee. Tr. at 305-07. On the other hand, both Drs. B and C
testified that it was their purpose in meeting with Dynacs to be
included in the proposal, and both hoped they had been included. Tr.
at 288, 312. Unlike Dr. B, Dr. C testified that it was his
understanding that he would be named in the Dynacs proposal, even
though he did not consider himself committed to Dynacs in the event it
prevailed in the competition. Tr. at 285, 288.
As a starting point in our analysis, the record in this case,
including the testimony received at the hearing, clearly refutes
Dynacs's claim of a commitment between the company and Drs. A, B, and
C.
With respect to Dr. A, the record not only shows that Dynacs
misrepresented that it had received a commitment from this individual,
but Dynacs's own witness admitted that Dr. A expressly refused to
provide permission for the company to include him in its proposal, and
refused to provide background information that could be used for that
purpose. Tr. at 119. At best, after Dr. A refused to respond to
several entreaties, he agreed to "consider" working for Dynacs in the
event it prevailed in the competition. Tr. at 158. In short, there
is no way to reconcile the proposal's claim[4] that "Dynacs has
received [Dr. A's] commitment to become a member of the Dynacs team
upon contract award" with the testimony received from both Dr. A (Tr.
at 158) and Dynacs's own witness (Tr. at 114).
Even with respect to Drs. B and C, the record does not support
Dynacs's claim of a commitment. As set forth above, both testified
that they had not provided a commitment to Dynacs, and neither was
aware of having been identified in the proposal. Tr. at 288, 299-300.
Although Drs. B and C both explained that they "hoped" they had been
named in the proposal (Tr. at 288, 312), the clear import of the
testimony received by our Office was that neither of these
individuals, nor Dr. A, knew whether they would have a job after
learning of Dynacs's selection for award. In fact, the record shows
that Dr. A first learned of his "commitment" while participating in a
meeting--as a representative of the outgoing contractor--to plan the
smooth transfer of services to the new awardee. Tr. at 161-62.
Finally, even Dynacs's description of its efforts here undercuts its
claim of commitments. Dynacs's own witness testified that there was
no agreement with any of these three incumbent personnel regarding
salary, benefits, or the precise job involved in this commitment. Tr.
at 110, 112, 116-17, 119, and 133. In similar circumstances, we have
upheld an agency determination that an agreement to work for an
offeror if it prevails in the competition--assuming successful salary
and benefit negotiations--is no more than a promise to negotiate for
employment, and not a binding commitment. Scientific Management
Assocs., Inc., B-238913, July 12, 1990, 90-2 CPD para. 27 at 7.
Accordingly, we find that the totality of the evidence convincingly
shows that Dynacs's misrepresented the level of commitment for three
of the five key personnel in its proposal.[5] See ManTech Advanced
Sys. Int'l, Inc., supra, at 10; Ultra Tech. Corp., supra, at 4-5.
Our analysis of the misrepresentation here turns next to an assessment
of the effect on the evaluation. Despite NASA's assertion that
Dynacs's claimed commitments did not change the outcome of this
competition, the record does not support this contention. As
explained below, there was very little basis to distinguish between
these two offerors under the mission suitability evaluation factor,
other than the rating under the key personnel/company resources
subfactor. In addition, an evaluation error by the agency improperly
magnified the effect of Dynacs's claimed commitments. Finally,
Dynacs's misrepresentation of its commitments had a ripple effect in
the evaluation that pushed the ultimate assessment of its proposal
even farther afield. As a result, we conclude that the agency's
reliance on, and inflation of, the misrepresentations in Dynacs's
proposal led to a misevaluation of the relative merits of the two
proposals.
First, both Dynacs and ADF received [deleted] ratings under the first
two subfactors within the mission suitability evaluation factor. The
scores were [deleted] under the first subfactor, and [deleted] points
apart under the second subfactor [deleted]. All of the remaining
difference between their mission suitability scores is accounted for
by the [deleted] point difference under key personnel/company
resources subfactor. While Dynacs also received credit for a strong
project manager, there is no doubt that the mission suitability scores
of these two offerors would have been much closer if Dynacs had not
received a strength for its highly qualified key personnel, and the
proposals may have received the same adjectival rating.
Next, we note that an evaluation error by the agency magnified the
effect of Dynacs's claimed commitments by giving even greater credit
to Dynacs's proposal in this area than was appropriate. Evaluation
worksheets developed to assess Dynacs's proposal include the notation,
"Very Good Key personnel Quals. (signed commitments from 3 incumbent
mgrs. & 2 others." Worksheets, Agency Report Tab 23 at 3. This
notation in the evaluation worksheets eventually found its way into
the Source Selection Statement. Specifically, in reviewing the merits
of Dynacs's proposal under the key personnel and company resources
subfactor, the SSO states:
Dynacs proposed an outstanding Project Manager with extensive
technical and business management experience on similar
contracts. Dynacs also proposed a team of highly qualified key
personnel. Signed commitments were obtained from all key
personnel proposed. Numerous other contracts currently performed
by Dynacs provide a broad base of technical and personnel
resources to support the SETAR II contract.
Source Selection Statement, Dec. 16, 1997, at 5 (emphasis added).
This is the entirety of the SSO's consideration of this evaluation
subfactor for Dynacs.
While the inclusion of the reference to "signed commitments" in the
final selection decision document strongly suggests that the agency
erroneously evaluated the proposal in this area, the Chairman of the
SEC testified at the hearing that the notation was simply an
administrative error. Tr. at 197. Specifically, he testified that
the notation about signed commitments was listed on the worksheets for
both ADF and Dynacs, but was correct only for ADF; he also testified
that the worksheet error in Dynacs's evaluation was inadvertently
carried forward to the final source decision document, but did not
reflect the views of the SEC or the SSO. Tr. at 197-99.
The testimony of the SEC Chairman conflicts with the contemporaneous
evaluation evidence found in both the worksheets and in the final
selection document. We consider the entire record in attempting to
resolve such conflicts, including later explanations and arguments,
but we accord greater weight to contemporaneous evaluation and source
selection materials than to explanations prepared in response to
protest contentions. Cygnus Corp., B-275181, Jan. 29, 1997, 97-1 CPD para.
63 at 8; DynCorp, B-245289, B-245289.2, Dec. 23, 1991, 91-2 CPD para. 575
at 7 n.13. While we consider the testimony of the SEC Chairman to be
entirely credible, we have no contemporaneous evidence that the SSO,
or the evaluators, believed this written finding to be in error. Nor
did the agency, at any time prior to the hearing, advise that this
conclusion was in error, despite the submission of an initial and two
supplemental agency reports. Given that the Source Selection
Statement is the foundation of any agency award decision, and should
not have been signed by the SSO if it did not accurately reflect his
considerations, we cannot justify disregarding the statements in it,
as well as those in the written evaluation materials, that NASA
evaluators--and more importantly, the SSO--concluded Dynacs had
offered written commitments for its key personnel, and that NASA
valued those commitments, where the only evidence in conflict with the
contemporaneous materials is the testimony of one individual made
during the course of the protest. Instead, we must accord greater
weight to the contemporaneous documents that were prepared to reflect
the considered judgment of the agency. See Boeing Sikorsky Aircraft
Support, B-277263.2, B-277263.3, Sept. 29, 1997, 97-2 CPD para. 91 at 15.
Finally, as stated above, we conclude that these misrepresentations in
Dynacs's proposal had a ripple effect in the evaluation as well. For
example, the record here shows that after contract award Dynacs was
surprised to learn the magnitude of the incumbent employees' salaries
and concluded that it had significantly underestimated their salaries
in its proposal. Tr. at 249. Thus, Dynacs found it necessary to
explore a cost increase with NASA immediately after award. Tr. at
103-04, 249. If the proposal had accurately reflected the salaries of
these personnel, or acknowledged that the incumbent employees might be
asked to take significant pay cuts, the proposal might not have been
viewed as having [deleted] for its total compensation package or its
thorough personnel management practices.[6] See Final Evaluation
Report, Dec. 5, 1997, at 20.
Before ending this analysis, we address NASA's and the intervenor's
contentions that there was no prejudice here because each of the three
key managers eventually accepted employment with Dynacs, such that no
"bait and switch" occurred. As NASA correctly points out, our Office
will not sustain a protest unless the protester demonstrates a
reasonable possibility of prejudice, that is, unless the protester
demonstrates that, but for the agency's actions, it would have had a
substantial chance of receiving the award. McDonald-Bradley,
B-270126, Feb. 8, 1996, 96-1 CPD para. 54 at 3; see Statistica, Inc. v.
Christopher, 102 F.3d 1577, 1581 (Fed. Cir. 1996).
While the ultimate conclusion here that ADF might have had a
substantial chance of receiving the award depends upon the resolution
of other protest issues in ADF's favor, as discussed in greater detail
below, the eventual decision of these key individuals to accept
employment with Dynacs is not dispositive of the question of
prejudice.[7] ManTech Advanced Sys. Int'l, Inc., supra, at 12-13;
see Informatics, Inc., supra, at 13 ("it is also inappropriate to take
note of [the awardee's] post-selection efforts in regard to
recruitment of [the incumbent's] employees").
Here, the prejudice occurred when Dynacs received evaluation credit
for nonexistent commitments from key employees, and in one case, for
naming a key employee who had expressly denied Dynacs permission to
use his name in its proposal. Thus, Dynacs was placed on the same
footing as ADF, which did, in fact, accurately represent in its
proposal that it had signed commitments from its proposed key
personnel.
RELEVANT EXPERIENCE AND PAST PERFORMANCE
ADF raises several arguments related to NASA's evaluation under the
relevant experience and past performance factor. Specifically, ADF
contends that both proposals were evaluated unreasonably in this area;
that the agency failed to advise ADF during discussions of unfavorable
past performance information ADF had not previously been given an
opportunity to rebut, in violation of Federal Acquisition Regulation
(FAR) sec. 15.610(c)(6) (June 1997); and, that the solicitation contained
a latent ambiguity with respect to the submission of past performance
information that caused ADF to receive a lower rating than was
received by Dynacs. As set forth below, we deny ADF's challenges to
the specific evaluation assessments made by NASA, but we sustain its
contentions that it was misled by a latent ambiguity in the RFP
regarding the submission of past performance information, and that the
agency was required to discuss certain of ADF's unfavorable past
performance reviews during negotiations.
In describing the expected structure of proposal submissions for this
procurement, the RFP anticipated a three-volume submission with page
limits on two of the three volumes. RFP sec. L.26(a). The third volume
of each proposal was to address the offeror's relevant experience and
past performance, and was not to exceed five pages. Id. In addition,
offerors were required to identify two references, on forms supplied
within the solicitation, for each prime and subcontractor
participating in the proposal. RFP sec. L.31. This provision also
explained that the completed reference forms would not be counted
against the five-page limit for this portion of the proposal.
ADF's proposal identified itself as the prime contractor, and NYMA,
Inc. (the incumbent) and a second company as subcontractors. ADF
Proposal Vol. III at 1. As required by the RFP, ADF included two
references for itself, and two references for each of its two
subcontractors. ADF's two references both involved contracts where it
had been the subcontractor--one reference was NYMA (ADF's
subcontractor here) for the SETAR I effort; the other reference was
[deleted]. ADF then used its five-page discussion to expand on the
information related to its two references, and those of its two
subcontractors. Id. at 1-5. In contrast, Dynacs did not propose to
use subcontractors for the SETAR II effort. Thus, its proposal
included the two references required by the RFP, while its five-page
discussion was used to expand on those two references and on Dynacs's
experience with six other related contracts. Dynacs Proposal Vol. III
at 1-5.
In evaluating the proposals under this factor, NASA awarded ADF
[deleted]. Each [deleted] included an indication about which of the
three companies--ADF, NYMA, or the third company--possessed the
[deleted].
Final Evaluation Report, Dec. 5, 1997, at 22. As a result, the SEC
awarded ADF an overall score of good under the relevant experience and
past performance evaluation factor. Id. As explained above, the SSO
disagreed with the SEC's conclusion, and in his selection decision he
raised the score to very good. Source Selection Statement, supra, at
8. In contrast, Dynacs received an overall score of excellent based
on the SEC's assessment that the proposal contained [deleted] and
[deleted].
During the course of this protest, NASA expanded on its basis for the
evaluation. First, it explained that it reasonably took note of ADF's
lack of prime contract experience, and concluded that NYMA's
experience as a prime contractor could not be used to fill that need
for ADF. Initial Contracting Officer's Statement, Jan. 26, 1998, at
3-4. The agency also explained that it tempered NYMA's very favorable
reviews of ADF's past performance because of NYMA's obvious economic
interest in ADF's prevailing in the competition. Contracting
Officer's First Supp. Statement, Feb. 23, 1998, at 5-6. In addition,
it explained that it was reasonably concerned about [deleted]. In the
[deleted] response to the request for past performance information,
the company indicated that ADF [deleted]. Id. at 6. In NASA's view,
there was no need to advise ADF of its concerns about [deleted] during
discussions because this issue had been aired during award fee
negotiations with [deleted], the prime contractor. Initial
Contracting Officer's Statement, supra, at 4.
With respect to ADF's contentions that the evaluation conclusions
reached about the past performance proposals were unreasonable, our
review consists of examining the record to determine whether the
agency's judgment was reasonable and consistent with stated evaluation
criteria and applicable statutes and regulations. ESCO, Inc.,
B-225565, Apr. 29, 1987, 87-1 CPD para. 450 at 7. We have reviewed each
of ADF's claims and find that the agency's conclusions were
appropriate and reasonable, based on the information before it. Since
most of ADF's contentions involved its own less than favorable
evaluation, we set forth two examples below.
First, despite ADF's contentions to the contrary, we see nothing
unreasonable about NASA's concern that ADF lacked experience
performing a contract of this magnitude as the prime contractor.
Among other things, NASA expects a significant downsizing of the SETAR
II effort halfway through performance of this contract (Tr. at 194),
and predicted that the attendant management challenges would best be
met by an offeror with past experience as a prime contractor, rather
than as a subcontractor. Initial Contracting Officer's Statement,
supra, at 4.
As a second example, we also see nothing unreasonable about the
agency's decision to temper the favorable past performance reviews
given ADF by NYMA. As the record shows, NYMA has a direct economic
stake in a favorable outcome for ADF. In addition, this tempering of
NYMA's review of ADF should not have been a complete surprise to the
company. Our review of the reference form included within the RFP
reveals that the form asks the company supplying the past performance
information if a corporate or business relationship exists between the
supplier of the information and the company being evaluated, and if
so, to explain the relationship. RFP sec. J, Attach. F at 1. Simply
put, this inquiry provides an appropriate safeguard against an abuse
of the past performance reporting system, and we think the agency
evaluators made reasonable use of the information it generated in this
situation.
With respect to whether the agency's evaluation of relevant experience
and past performance was compromised by a latent ambiguity in the RFP,
and by its decision not to disclose certain unfavorable past
performance information to ADF during discussions, we reach a
different conclusion. As set forth below, we conclude that ADF's
reasonable interpretation of the RFP caused its past performance
proposal to be evaluated more unfavorably than Dynacs's proposal, and
we conclude that the agency's award fee discussions with a prime
contractor on an earlier contract were not sufficient to provide
notice to ADF--the subcontractor in that procurement--of NASA's
concerns.
An ambiguity exists where two or more reasonable interpretations of
the terms or specifications of the solicitation are possible.
Moreover, a party's particular interpretation need not be the most
reasonable to support a finding of ambiguity; rather, a party need
only show that its reading of the solicitation provisions is
reasonable and susceptible of the understanding that it reached.
Sciaky, Inc., B-261787.2, Nov. 8, 1995, 95-2 CPD para. 269 at 4.
The evidence in the record shows that potential offerors were
concerned about the relationship between the reference forms to be
supplied with an offeror's proposal, and the five-page narrative,
prior to the submission of proposals. RFP, Attach. 1, Industry
Briefing Questions, Oct. 8, 1997, questions 8, 35, and 40. In
response to question number 8 during this briefing, NASA answered in
the affirmative when a potential offeror asked if the narrative
information should augment the information provided on the forms. As
described above, ADF used its five-page narrative to provide greater
detail about the underlying contracts with its two references, and
greater detail about the two references for each of its two
subcontractors; Dynacs, on the other hand, used its narrative to
expand on its two references, and then provided information about six
other prior contracts it considered relevant to the SETAR II effort.
Both ADF and Dynacs argue that their narratives were used to "augment"
their references.
ADF argues that because it was limited to providing information about
its two references, and because it concluded that its most important
references would be those where it had worked as a subcontractor on
the previous SETAR I effort [deleted], it did not have an opportunity
to provide past performance information on other contracts that would
have shown its experience as a prime contractor. Conversely, ADF
argues that Dynacs's interpretation permitted it to unfairly submit
past performance information about eight different prior contracts,
and to demonstrate a broader range of experience to NASA's evaluators.
NASA responds that ADF's interpretation of the solicitation was
unreasonable on the basis that the common understanding of the meaning
of the word "augment" is to increase. Thus, NASA contends that the
only meaning offerors could reasonably take from the RFP was that they
could provide information about additional contracts in their past
performance narratives.
We disagree. Our review of the RFP, including the questions and
answers attached to it, the proposals themselves, and the evaluation
materials, leads us to conclude that ADF's interpretation of the RFP's
instructions to offerors was as reasonable as the interpretation
offered by NASA and Dynacs. In fact, not only could an offeror
reasonably conclude that the scope of the narrative was limited to the
contracts identified on the reference forms, but this reading is
consistent with the tone of the other questions raised during the
industry briefing. While we will not set forth their entire text
here, our reading of the related questions 35 and 40, and the agency's
response to them, supports ADF's interpretation of the RFP's
instruction about the relationship between the proposal narrative and
the reference forms.[8]
While we recognize that any prejudice to ADF was ameliorated somewhat
by its ability to provide detail in its narrative regarding the past
experience of its subcontractors, a review of the two proposals leads
us to conclude that if ADF had the opportunity, within the constraints
of the page limitation, to detail a broader portrait of its past
experience--as Dynacs did in its proposal--ADF may have been able to
avoid some of the unfavorable evaluation conclusions NASA raised
regarding its proposal. Compare ADF Proposal, Vol. III at 1-5 with
Dynacs Proposal, Vol. III at 1-5. In addition, this situation was
exacerbated by NASA's reasonable decision to accord less weight to the
favorable review from NYMA because of the ongoing economic
relationship between the two companies. ADF, which reasonably limited
its narrative to detailing two prior contracts--only to have one of
the two references largely, but reasonably, discounted--was then
compared to an offeror who reasonably expounded on eight related
contracts. Under circumstances such as these, we conclude that the
differing reasonable assumptions of these offerors about the RFP's
requirements did not permit competition on an equal basis. Sciaky,
Inc., supra, at 4; Wheeler Bros., Inc.; Defense Logistics
Agency--Recon., B-214081.3, Apr. 4, 1985, 85-1 CPD para. 388 at 6.
Our final consideration in the area of relevant experience and past
performance is whether NASA was required to advise ADF during
discussions of the unfavorable review of its past performance from one
of its references. For the reasons below, we believe this information
should have been discussed during negotiations.
There is no dispute between the parties about the general requirement
found at FAR sec. 15.610(c)(6)--namely, that agencies holding discussions
must permit offerors an opportunity to respond to past performance
information obtained from references on which the offeror has not had
a previous opportunity to comment. See generally American Combustion
Indus., Inc., B-275057.2, Mar. 5, 1997, 97-1 CPD para. 105 at 9-11.
Instead, NASA argues that ADF received its comment opportunity when
the issue in question was raised during the award fee discussions on a
prior contract.
During the course of the hearing held in connection with this protest,
both the SEC Chairman and the contracting officer's technical
representative (COTR) described the award fee sessions held during
both NYMA's and [deleted] prior contracts--the referenced contracts
for which ADF served as a subcontractor. Tr. at 240-43, 256-61. The
testimony was that, as a general matter, a subcontractor does not
attend the award fee evaluation sessions between the agency and the
prime contractor. Tr. at 241. The COTR also explained that NASA does
not become involved in award fee discussions between prime contractors
and subcontractors, and that a subcontractor has no opportunity to ask
NASA to review the outcome of these discussions. Tr. at 259-61. In
addition, the COTR admitted that since NASA does not attend award fee
discussions between prime contractors and their subcontractors, the
agency does not know the nature of the exchange between the two
parties. Tr. at 259-60.
Generally, award fee discussions may be sufficient, in some
circumstances, to meet the requirements of FAR sec. 15.610(c)(6). In
fact, FAR sec. 42.1503(b)--found within FAR Subpart 42.15, which
describes a formal past performance reporting system to be implemented
beginning January 1, 1998, and which was not in place at the time NASA
negotiated this contract--expressly provides that such award or
incentive fee evaluations will suffice to meet the requirement for an
opportunity to comment. Despite this guidance, however, we do not
agree that an agency can satisfy this requirement for an opportunity
to comment when the award fee discussions upon which it relies were
held with a different party--i.e., the prime contractor on the earlier
contract, for whom ADF served as a subcontractor.
We reach this conclusion based on the testimony received in this case
which indicates that award fee discussions with a prime contractor--at
least as conducted by NASA--do not generally afford a subcontractor
any meaningful role in the exchange that is held as part of the award
fee evaluation. In our view, the second-hand transmission of
information from the prime contractor to the subcontractor will not
normally provide the kind of opportunity for exchange and review
anticipated by the requirements of FAR sec. 15.610(c)(6). Accordingly,
we conclude that NASA was required to raise during discussions with
ADF information received from ADF's references on which the firm had
no prior opportunity to comment. This information includes, at a
minimum, the information provided by [deleted] that formed the basis
for the evaluation weakness that ADF might have [deleted].
COST ADJUSTMENT
ADF contends that NASA unreasonably adjusted its proposed costs upward
by $1.99 million, and that the biggest portion of the adjustment was
based on a determination that ADF [deleted]. SEC Final Report, Dec.
15, 1997, at 5. Based on our review of the record, and the testimony
received at the hearing, we conclude that the adjustment challenged by
ADF was reasonable.
The RFP here anticipated award of a hybrid contract expected to
contain approximately 10-percent fixed-price and 90-percent
cost-plus-award-fee task orders. RFP Cover letter, Sept. 30, 1997,
Attach. 1 at 1; RFP sec. B.2, L.14. Although the RFP identified an
average work year of 2,080 hours and a workforce of 315 employees, RFP sec.
L.28 at L.22, offerors were allowed to use whatever number of hours or
employees they thought was appropriate. Offerors were also allowed to
develop their own estimates of the number of productive hours for the
effort, and to provide support for the number of claimed hours.[9]
RFP, Attach. 1, Industry Briefing Questions at question 20.
In its proposal, ADF explained that it was using "a [deleted]. ADF
Proposal, Vol. II, Cost, Oct. 30, 1997, at 6. Section 3.2 of the
proposal identified a total skill mix of [deleted] employees. Id. at
4. The skill mix used by ADF [deleted]. RFP sec. L.28.
During negotiations, NASA asked ADF to explain the assumptions used in
its proposal regarding a standard workyear. In a second question,
NASA also noted ADF's use of a productive workyear of [deleted] hours,
and asked:
Where are the non-productive hours costed (i.e., which cost
category and which cost element within the cost category) and how
many hours are costed in each cost category. BE VERY SPECIFIC!!
NASA Letter to ADF, Dec. 9, 1997, Attach. 1, questions 4-5.
In response, ADF confirmed its use of [deleted] hours for a standard
workyear, as set forth at [deleted], and provided a fact sheet to
detail its deductions from the [deleted] figure to reach the [deleted]
productive hours included in its proposal. In reviewing this list of
reductions, NASA learned that in two instances--[deleted]. SEC Final
Report, Dec. 15, 1997, at 5; Tr. at 219.
During the hearing, the Chairman of the SEC explained that the panel's
cost specialist concluded that ADF could not reasonably [deleted], and
also concluded that it was not reasonable to compare ADF's resulting
lower proposed costs with the proposed costs of the other two
offerors. Tr. at 219-21. Thus, for purposes of the agency's most
probable cost review, NASA [deleted]. Id. ADF argues that this
adjustment was unreasonable.
When an agency evaluates proposals for the award of a
cost-reimbursement contract, 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.,
B-216516, Nov. 19, 1984, 84-2 CPD para. 542 at 5. Contracting officers
are required to document this evaluation, FAR sec. 15.608(a)(1) (June
1997), and, 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.
General Research Corp., B-241569, Feb. 19, 1991, 91-1 CPD para. 183 at 5,
recon. denied, American Management Sys., Inc.; Department of the
Army--Recon., B-241569.2, B-241569.3, May 21, 1991, 91-1 CPD para. 492 at
7-8; Grey Adver., Inc., B-184825, May 14, 1976, 76-1 CPD para. 325 at
27-28.
We conclude that there was nothing unreasonable about NASA's
adjustment to ADF's proposed costs [deleted]. As a point of
comparison, we note that in two other areas--[deleted]--NASA accepted
ADF's explanation [deleted]. For the two categories at issue here,
however, we think NASA's approach was a sensible attempt to ensure
that the proposal reflected all of the probable costs that might be
incurred. [deleted], NASA reasoned that the government would still be
liable for the cost of the time because [deleted]. Thus, NASA decided
that ADF's proposal should reflect a cost for the time in some
category in the proposal--rather than [deleted], as ADF did. Our
review of this logic leads us to conclude that NASA's probable cost
adjustment in this area was reasonable.
ADF's contention that the [deleted] should have been accepted by NASA
is also undercut by the terms of its own proposal. ADF's claim is
premised upon an assumption that the agency had no basis in the record
to support a conclusion that [deleted]. However, NASA's
interpretation that these were [deleted] was clearly understood by
ADF, as shown in its cost proposal at page 6.[10] In addition, ADF's
sparse explanation during the negotiations for its decision to offer
the [deleted] hours as [deleted] cannot reasonably be viewed as
sufficient to override NASA's concern [deleted]. Thus, we conclude
there was nothing unreasonable about the agency's decision to add to
the proposal the probable costs associated with this time.
Finally, ADF argues that its challenge to NASA's probable cost review
should be sustained because the agency did not adequately document its
decision. FAR sec. 15.608(a)(1) requires contracting officers to
document cost evaluations. While we agree that a more complete,
written, contemporaneous record of the cost considerations at issue
here should have been prepared, we cannot agree that there is no
evidence in the record of the judgments that were made. NASA included
in its final source selection materials an explanation of its
adjustments--albeit cryptically brief--and none of the more detailed
explanations offered during the course of this protest conflicted with
those materials. Accordingly, we conclude that NASA met its
requirement to document the decisions it made in sufficient detail to
allow us to judge the rationality of the agency's determinations. PHP
Healthcare Corp., B-251933, May 13, 1993, 93-1 CPD para. 381 at 7.
CONCLUSIONS AND RECOMMENDATION
As explained above, we conclude that Dynacs misrepresented the level
of commitment it received from its key personnel, which, together with
the agency's erroneous conclusion that the proposal offered "signed
commitments," led to a material misevaluation of Dynacs's proposal
under the key personnel subfactor within the mission suitability
evaluation factor. We also conclude that the misevaluation of the key
personnel portion of Dynacs's proposal had a ripple effect in other
areas of the mission suitability evaluation as well. Further, we
conclude that NASA was required to discuss with ADF adverse
information received from its past performance references upon which
ADF had been given no meaningful opportunity to comment. Finally, we
conclude that ADF was misled by a latent defect in the solicitation
instructions regarding the past performance portion of the proposal
that resulted in ADF's receipt of a lower score under the relevant
experience and past performance evaluation factor than it might
otherwise have received.
In attempting to fashion the appropriate remedy here, we begin with
ADF's assertion that Dynacs should be barred from further
participation in this procurement based on its misrepresentation of
the availability of its proposed key personnel, following our holding
in Informatics, Inc., supra. While the preliminary clearance process
Dynacs used here did not rise to the level of a commitment between it
and its proposed key personnel, we do not find the same level of
disregard for the truth that we found in the Informatics case. In
that case, the awardee responded to an agency question during
discussions asking the nature of the commitments received from the
incumbent personnel. The awardee asserted that it had surveyed 60 of
95 incumbent personnel to ascertain their availability, and--in a
detailed written explanation of the results of that survey--claimed
that a substantial percentage of those employees were either committed
or would probably join the company. In fact, our review showed that
59 of the employees had not even been contacted by the awardee during
the period the awardee claimed to have conducted its survey. Dynacs's
misrepresentations, in contrast, were less pervasive in nature, and
were compounded by agency actions during the evaluation. Under these
circumstances, we do not believe it would be appropriate to bar Dynacs
from further participation in this competition.
We recognize, however, that if a new round of BAFOs is received and
reevaluated Dynacs will continue to benefit from its earlier
misrepresentations. For example, each of the key employees named by
Dynacs has since accepted employment with the company. As a result,
any reevaluation of the proposal would appropriately continue to
reflect a high level of certainty that these individuals will be
available to perform as the proposal promised. In addition, some of
the ripple effects from the claimed availability of these employees
that we noted earlier will remain appropriately credited to the
proposal. Thus, it does not appear that a reevaluation can return the
parties to their positions before the agency's error.
Specifically, if proposals were reevaluated it is unlikely that Dynacs
would, at this juncture, lose any points in the area of mission
suitability. Thus, even if we assume that ADF could recapture nearly
every available lost point in this area, a reevaluation would result
in a tie under the mission suitability factor (with ADF's rating being
raised to excellent, and Dynacs retaining its excellent rating).
Similarly, even assuming that ADF's rating under the relevant
experience and past performance factor was raised from very good to
excellent, the result again would be a tie between the two offerors.
Finally, given that we find nothing unreasonable in the agency's
evaluation of probable costs, Dynacs's probable cost would remain
lower than ADF's by approximately [deleted]. Under these
circumstances, while we find that ADF was prejudiced by the evaluation
errors at the time they were made, we see no basis to conclude that
ADF could prevail in a recompetition. Accordingly, we do not believe
it would be appropriate to recommend a reevaluation or that Dynacs's
contract be terminated. Instead, we recommend that ADF be reimbursed
for the cost of preparing its proposal to participate in this
competition. Continental Maritime of San Diego, Inc., B-249858.2,
B-249858.3, Feb. 11, 1993, 93-1 CPD para. 230 at 8, aff'd, B-249858.4,
Mar. 10, 1993.
We also recommend that the protester be reimbursed the reasonable cost
of filing and pursuing its protest, including attorneys' fees. 4
C.F.R. sec. 21.8(d)(1) (1997). In accordance with 4 C.F.R. sec. 21.8(f)(1),
ADF's certified claim for such costs, detailing the time expended and
the costs incurred, must be submitted directly to the agency within 60
days after receipt of this decision.
The protest is sustained.
Comptroller General
of the United States
1. Thus, the predecessor contract and the current contract have been
referred to, respectively, as SETAR I and SETAR II (for scientific,
engineering, technical, administrative, and related tasks).
2. Since the third competitive range offeror did not participate in
this protest, and since its proposal was generally evaluated less
favorably than the proposals of ADF and Dynacs, we have not included
the evaluation results for the third offeror's proposal in this
decision.
3. The testimony regarding the other two individuals was as follows:
"[w]e basically met with [Dr. B] to determine if he would be willing
to come to work for Dynacs should we be fortunate enough to win the
contract," Tr. at 109; and "[w]e had requested that he [Dr. C] also,
if we were fortunate enough to win the contract, would he, in fact,
come to work for our company," Tr. at 111-12.
4. Dynacs's Proposal, Vol. I at 25.
5. For the record, we deny the protester's allegation related to
Dynacs's fourth key area manager--i.e., that Dynacs crafted its
proposal to attempt to receive credit for an individual it did not
offer, and thus Dynacs misrepresented (and NASA misevaluated) the
availability of this individual. In this instance, the proposal
clearly explained that the individual in question was not available to
perform the contract, and clearly identified the individual Dynacs was
proposing instead. Dynacs Proposal, Vol. I at 26-27. The SSO
apparently recognized that the agency evaluators might still be hoping
that the unavailable individual would materialize, and stated in the
final selection document that he "consider[ed] the potential
nonavailability of a key Microgravity Project Manager in the Dynacs
proposal to be of greater significance than the SEC." Source
Selection Statement, Dec. 16, 1997, at 8. Given this record, we see
no basis to conclude, as ADF argues, that the SSO's recognition of the
manager's potential nonavailability suggests that NASA viewed him as
available--and thus misevaluated the proposal.
6. As a further example, the record shows that at least one of the
three incumbent key employees at issue here accepted a significant
reduction in salary in order to remain employed on the contract. Tr.
at 164-65, 173. Again, if an issue like this had been apparent in the
proposal, the evaluators might have been concerned about the company's
ability to retain incumbent personnel, and Dynacs might not have
received the strong evaluation it obtained.
7. As we have stated in prior cases, we are aware that the reality in
the current government contract market is that incumbent personnel to
a large degree follow the award of contracts. ManTech Advanced Sys.
Int'l, Inc., supra, at 13.
8. Specifically, questions 35 and 40, and the responses thereto,
indicate a concern by an offeror, or offerors, that a competitor using
subcontractors will have a greater opportunity to identify
references--and to expand on them in the narrative
--than will an offeror that does not propose subcontractors. The
underlying premise in this concern is that an offeror that does not
propose subcontractors will not be able to identify other contract
experiences in the narrative, and thus will have less of an
opportunity to demonstrate its past performance. Reading the
solicitation as a whole, we think these questions lend support to
ADF's narrow reading of the RFP's instructions about the narrative
portion of the proposal.
9. There is no definition in the RFP for the term "productive labor
hours." In a conference call with all the parties on April 20, 1998,
NASA representatives explained that productive labor hours were, in
essence, those direct labor hours that remained after the allocation
of all other hours to overhead accounts or to categories where both
the agency and the offeror agreed there would be no direct labor
charge for the time to the government.
10. As quoted above, and despite ADF's assertions to the contrary, we
conclude that page 6 of ADF's cost proposal indicates that [deleted].
To the extent that ADF argues that NASA unreasonably interpreted the
proposal to be based on [deleted], we deny the protest. For the
record, we also note that nothing about NASA's adjustment means that
an offeror cannot fulfill the agency's requirements using [deleted],
as ADF asserts.