BNUMBER:  B-279920 
DATE:  August 6, 1998
TITLE: Development Alternatives, Inc., B-279920, August 6, 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:Development Alternatives, Inc.

File:     B-279920

Date:August 6, 1998

Thomas K. David, Esq., and Kenneth D. Brody, Esq., McMahon, David & 
Brody, for the protester.
Andrew Irwin, Esq., Brian A. Darst, Esq., and  William A. Roberts III, 
Esq., Howrey & Simon, for Barents Group, LLC, an intervenor.
Rumu Sarkar, Esq., and Gary Winter, Esq., U.S. Agency for 
International Development, for the agency.
Tania Calhoun, Esq., and Christine S. Melody, Esq., Office of the 
General Counsel, GAO, participated in the preparation of the decision.

DIGEST

1.  Protest that one of the contracting agency's evaluators improperly 
"infused" the evaluation of technical proposals with his own 
preferences, rather than the stated evaluation criteria, is denied 
where the record, when read as a whole, shows that the evaluation was 
reasonable and consistent with the stated evaluation criteria.

2.  Protest that contracting agency improperly failed to discuss a 
weakness found in the protester's initial proposal is denied where 
there is no evidence that it was considered a significant weakness and 
its existence did not prevent the protester from having a reasonable 
chance for award.  Related allegation that questions asked during an 
oral interview constituted discussions is denied where the record 
shows that the questions were merely requests for additional 
clarifying detail concerning information already presented in the 
proposals as revised by written best and final offers. 

DECISION

Development Alternatives, Inc. (DAI) protests the award of a contract 
to Barents Group, LLC, under request for proposals (RFP) No. 
168-98-01, issued by the U.S. Agency for International Development 
(USAID) for technical and advisory services associated with a program 
to provide lending and business consulting services in support of 
post-war reconstruction efforts in Bosnia-Herzegovina.  DAI contends 
that USAID's evaluation of technical proposals was unreasonable, that 
its conduct of discussions was improper, and that its selection of 
Barents was not rationally justified.

We deny the protest.

BACKGROUND

The war in Bosnia-Herzegovina caused extensive damage to the country's 
physical infrastructure which, in turn, substantially reduced 
industrial production and employment levels.  In 1995, the United 
States made a commitment to provide a significant portion of the 
external financing needed to meet Bosnia-Herzegovina's need for 
reconstruction inputs and working capital.  USAID's Business 
Development Program has become an integral part of the fulfillment of 
that commitment.
RFP  sec.  C.I.A.-B.       

The business finance component of the program was intended to provide, 
over a
3-year period, up to $250 million in direct balance of payments 
support to the government of Bosnia-Herzegovina.  While the initial 
phase of the program was characterized as an emerging lending program 
dedicated to employment generation, the program was also expected to 
gradually begin lending through banks in early 1998.  The primary 
implementing organization of the credit component of the lending 
program is the business finance team, staffed by a group of U.S. 
bankers and trained Bosnian staff; DAI is the incumbent contractor 
providing these services.  The contract contemplated by this 
solicitation will replace the group now serving in this capacity and 
will see the project through to completion of USAID management of the 
activity, which is expected to occur early in the year 2000.  RFP  sec.  
C.I.C.-D.    
The new contract team will take over the lending function of the 
program and implement it for approximately the first year of the 
contract, drawing down most of the available lending funds.  During 
the second year the team will lend the remaining available funds as 
prudently as possible through banks, but its principal objective will 
be to carry out a successful transition exercise with Bosnian 
government and private sector counterparts such that management of the 
program can be turned over to local institutions and authorities upon 
conclusion of the contract.  RFP  sec.  C.I.D., C.II. 

The solicitation, issued November 25, 1997, anticipated the award of a 
cost-plus-award-fee contract to provide these services over 2 years.  
RFP  sec.  B.2, F.3.  Award was to be made to the offeror whose proposal 
was most advantageous to the government, considering technical and 
cost factors.  RFP  sec.  M.2(b).  The RFP set forth three technical 
factors and their respective weights, as follows:  experience (30 
percent); personnel nominated for the field team (35 percent); and 
technical approach (35 percent).  Technical considerations were to 
slightly outweigh cost considerations in making the final selection.  
RFP  sec.  M.1.

USAID received proposals from three firms, including DAI and Barents, 
by the extended closing date of February 13, 1998.  Based upon a 
three-member technical evaluation committee's (TEC) evaluation of 
these initial proposals, the contracting officer established a 
competitive range of two proposals, those of DAI and Barents.  By 
letters dated March 9, both offerors were given discussion questions 
and asked to submit written BAFOs by March 20.  In addition, both 
offerors were told that, in conjunction with the technical BAFO, they 
would be required to make an oral presentation followed by a brief, 
fact-finding interview process.  The oral presentation/interview was 
to be treated as an "integral part" of the BAFO and scored as such.  
The letter, at 2, continued, "The interview process will be limited to 
questions concerning information requested in the RFP or in this 
letter, and/or previous experience of the individuals attending.  No 
discussions or any other form of negotiations will take place."

Both firms submitted written BAFOs and gave their oral 
presentations/interviews several days later.  At the beginning of each 
oral interview, each firm was given a list of questions and asked to 
answer them.  All three TEC members and the contracting officer, who 
acted as the source selection official (SSO) for this procurement, 
were present.  In accordance with the BAFO request letters, the TEC 
evaluated the oral presentations/interviews as if they were part of 
the written BAFOs.  Barents's proposal was assigned 282 of the 300 
points available for its technical proposal and its costs were 
evaluated at $17,627,584.  DAI was assigned 257 points and its costs 
were evaluated at $[DELETED].

By memorandum dated March 30, the chairman of the TEC submitted the 
final evaluation results to the SSO.  The memorandum, at 1, provided 
the scoring totals as well as a breakdown which showed that two 
evaluators favored Barents and one favored DAI, but that Barents was 
"a clear winner on points."  The TEC chairman stated that he was 
sending the individual evaluators' narrative comments by separate 
cover, and that the comments "[spoke] for themselves."  As he 
summarized, "the committee was split with the majority going with the 
Barents Group.  I believe the issue on which the evaluation turned had 
to do with concern over institutional capacity of the offerors to 
carry out sufficiently sound and prudent lending and portfolio 
management functions over the life of the contract so as to adequately 
protect project resources."  March 30 Memorandum at 1-2.

In his source selection memorandum[1] the SSO provided a chronological 
account of the procurement and concluded, at 3, that:

     After overseeing the entire evaluation process, it is my opinion 
     that the [DELETED] difference in estimated cost is so negligible 
     as to be likely to be ephemeral by the contract's completion, 
     while the technical experts clearly had more confidence in 
     Barents to complete this project.  Two of the three selected 
     Barents and the scores of the lone DAI selector were very close.  
     I believe that the narrative of the TEC reflects the belief that 
     Barents is more likely to guarantee a successful transition of 
     the technical skills involved.  As can be seen from the above 
     rankings, the difference in technical scores is . . . 9%, while 
     the cost difference is about . . .  [DELETED].  Since the RFP 
     called for technical scoring to outweigh costs, . . . and since 
     the technical difference is considerably greater than the cost 
     difference, award of the contract will be to [Barents].

DAI received its debriefing and filed the instant protest.  Barents's 
performance of its contract has been suspended pending resolution of 
the protest, and an option to DAI's contract has been exercised 
allowing the firm to perform during this period. 

ANALYSIS

Evaluation of Technical Proposals 

DAI alleges that one evaluator "infused" the evaluation process with 
his own preferences, which DAI terms undisclosed evaluation criteria, 
improperly resulting in lower ratings for its proposal and higher 
ratings for Barents's proposal.

The evaluation of technical proposals is a matter within the 
contracting agency's discretion since the agency is responsible for 
defining its needs and the best method of accommodating them.  Loral 
Sys. Co., B-270755, Apr. 17, 1996, 
96-1 CPD  para.  241 at 5.  In reviewing an agency's technical evaluation, 
we will not reevaluate the proposals, but will examine the record of 
the evaluation to ensure that it was reasonable and in accordance with 
the stated evaluation criteria.  Id.   Technical evaluators have 
considerable latitude in assigning ratings which reflect their 
subjective judgments of a proposal's relative merits.  I.S. Grupe, 
Inc., B-278839, Mar. 20, 1998, 98-1 CPD  para.  86 at 5.  Evaluators may 
have different judgments as to a proposal's merits, and one 
evaluator's scoring is not unreasonable merely because it is based on 
judgments different from those of other evaluators.  Arsenault 
Acquisition Corp.; East Mulberry, LLC, B-276959, B-276959.2, Aug. 12, 
1997,
97-2 CPD  para.  74 at 4.  Our review shows that DAI's allegations spring 
from a selective reading of the evaluation record which, when read as 
a whole, confirms that the evaluation was reasonable and consistent 
with the RFP's stated criteria.   

The experience factor was defined as "[c]orporate experience in 
financial and lending systems development in the developing world.  
The more similar to conditions in Bosnia and Herzegovina, the better."  
RFP  sec.  M.1.  In the initial evaluation, the evaluator whose actions the 
protester challenges assigned DAI's proposal 26 of the 30 available 
points for this criterion.  He stated that DAI "clearly has a very 
good range of relevant corporate experience as indicated in the 
proposal and attested to in the reference checks."  He further stated 
that a lending operation such as the one contemplated would benefit 
from the support of an international commercial bank to supplement the 
prime contractor's capabilities and that DAI had benefited from the 
support of such a bank in its prior contract.  Here, however, DAI 
proposed to use a "much smaller bank" which had "no lending operations 
overseas other than a small retail branch" in a U.S. embassy and which 
had "never set up or supported lending operations in a challenging 
market overseas."  As a result, the evaluator believed that the bank's 
ability to "significantly supplement" DAI's own capabilities was more 
limited than might appear.[2]  Evaluator's Initial Proposal Evaluation 
Narrative at 2.

DAI's allegation that this evaluator improperly failed to credit the 
firm for its lending systems development in Bosnia since 1996 is 
without merit; implicit in his comment regarding DAI's "very good 
range" of relevant experience is the firm's experience in Bosnia.  
DAI's principal complaint--that the evaluator adopted an unstated 
evaluation criterion concerning the size of the bank utilized--fails 
to read the comments in context.  The evaluator was clearly concerned 
not with the size of the bank per se, but with the quality of its 
experience, an area unquestionably within his purview to evaluate.  
Finally, DAI's contention that the evaluator erroneously concluded 
that its bank had never set up or supported a lending operation in a 
challenging market overseas is primarily supported by references to 
page numbers in its proposal, but our review of the contents of these 
pages affords us no basis to conclude that the evaluator's comment is 
inaccurate.[3] 

The personnel factor was defined as "[a]pplicability of skills; 
previous experience."  RFP  sec.  M.1.  The evaluator in question assigned 
DAI's proposal 26 of 35 points for this criterion, and a second 
evaluator assigned the proposal 32 points.  Both were concerned about 
staff turnover and the general amount of experience of DAI's 
personnel, as well as the abilities of specific personnel.  As to the 
first concern, the evaluator in question noted that the "average 
amount of professional experience for the proposed field team is about 
17 years which is good, but 7 years less than [DAI] provided at the 
outset of the program in May 1996."  As a result, he had some concern 
about DAI's ability to attract and retain experienced bankers.  
Evaluator's Initial Proposal Evaluation Narrative at 2-3.  

DAI's complaint that the evaluators improperly showed a strong bias 
for personnel with many years of experience and were less interested 
in the applicability of that experience to the conditions in Bosnia is 
without basis.  First, both evaluators made specific comments 
regarding the applicable experience of DAI's personnel, albeit in less 
expansive terms than DAI apparently finds optimal.  Second, the 
evaluators' consideration of the length of experience possessed by 
DAI's personnel is reasonably encompassed by the broad definition of 
this evaluation criterion and is supported by a detailed rationale.  
Finally, DAI's assertion that the evaluator in question focused on the 
length of DAI's experience--17 years--without talking about the 
applicability of that experience misses the point of the evaluator's 
comment.  As is evident from the quoted portion above, the evaluator 
downgraded the proposal not because the personnel had insufficient 
years of experience per se, but because the proposed team has less 
experience than the team DAI provided 2 years ago, which was 
reasonably viewed as reflecting a significant risk of turnover.   
 
The technical approach factor is defined as follows:  "Innovation is 
encouraged to seek improved quality and efficiency in lending, 
training and system and institutional development.  Offerors should 
provide a clear sequencing of events and a clear management 
command-and-control structure, to include all subcontractors 
identified."  RFP  sec.  M.1.  In the final evaluation, the evaluator in 
question assigned DAI's proposal 25 of 35 points for this criterion, 
and a second evaluator assigned the firm's proposal 29 points.  Both 
evaluators were concerned about DAI's plan to transition management of 
the program to the local authorities.  Specifically, both believed 
that DAI's proposal to rapidly reduce the number of expatriate lending 
officers, while turning their responsibilities over to relatively 
inexperienced Bosnian staff, was overly risky.  

DAI's allegation that these comments reflect an improper disagreement 
with the RFP's objective of transitioning the program to Bosnian staff 
by the conclusion of the contract is without merit.  The record shows 
that both evaluators judged that DAI proposed to transition the 
program too quickly within the contractual time period.  As the TEC 
memorandum on the evaluation of initial proposals, signed by all three 
TEC members, points out, "[it] is recognized that [the] RFP mandated 
that the project was to be turned over to Bosnian management by the 
end of the contract period.  It is a question of degree.  It is also a 
question of the definition of what this means . . . while maintaining 
portfolio quality."  TEC Memorandum on Initial Proposals at 3.  In 
this regard, the evaluator whose actions the protester challenges 
expressed the concern that it might be wiser to retain more 
expatriates during the contract's 2 years than proposed by DAI and 
wiser to keep their lending expertise fully involved while preparing 
for management of the program by Bosnian institutions.  DAI's 
insistence on viewing this concern as inconsistent with the 
solicitation is unwarranted, and does not provide us a basis to 
conclude that the concern or the resulting evaluation was 
unreasonable.  

Discussions

DAI contends that USAID improperly failed to conduct meaningful 
discussions with the firm because it was not advised that its banking 
subcontractor was of concern to two evaluators.  

The applicable Federal Acquisition Regulation (FAR) provision, FAR  sec.  
15.610(c)(2) (June 1997), requires that a contracting agency "[a]dvise 
the offeror of deficiencies in its proposal so that the offeror is 
given an opportunity to satisfy the Government's requirements."  We 
review the adequacy of discussions to ensure that agencies point out 
weaknesses that, unless corrected, would prevent an offeror from 
having a reasonable chance for award.  Department of the Navy--Recon.,
B-250158.4, May 28, 1993, 93-1 CPD  para.  422 at 4 n.2.  Agencies need not 
discuss every aspect of the proposal that receives less than the 
maximum score or identify relative weaknesses in a proposal that is 
technically acceptable but presents a less desirable approach than 
others.  SeaSpace Corp., B-252476.2, June 14, 1993,
93-1 CPD  para.  462 at 15, recon. denied, B-252476.3, Oct. 27, 1993, 93-2 
CPD  para.  251.

As explained above, in evaluating DAI's initial proposal two 
evaluators believed that the experience of DAI's banking subcontractor 
gave it a more limited ability to significantly supplement DAI's 
capabilities than might appear, and downgraded it by 4 and 5 points, 
respectively.  While this matter was not one of the discussion 
questions listed in DAI's BAFO request letter, there is no evidence 
that the firm's use of this bank was considered a significant 
weakness.  In addition to the fact that relatively few points were 
deducted from its score for this reason, neither the TEC memorandum on 
the evaluation of initial proposals nor the TEC memorandum on the 
evaluation of BAFOs mentions this matter.  Moreover, it is clear that 
the existence of this weakness did not keep DAI from having a 
reasonable chance for award; the firm was very much in the competition 
and was ultimately not selected for other reasons.  Since the 
principal concerns about its proposal were brought to its attention, 
and since this concern did not prevent DAI from having a reasonable 
chance for award, USAID's failure to point it out did not deprive DAI 
of meaningful discussions.  Fluor Daniel, Inc., B-262051, B-262051.2, 
Nov. 21, 1995, 95-2 CPD  para.  241 at 5. 

DAI also alleges that, notwithstanding the agency's intent to the 
contrary, the questions asked during the oral interview constituted 
discussions.  As a result, DAI argues, the agency was required to 
request second BAFOs from the offerors on the competitive range.  FAR  sec.  
15.611(a) (June 1997).

As set forth in FAR  sec.  15.601 (June 1997), discussions "means any oral 
or written communication between the Government and an offeror, (other 
than communications conducted for the purpose of minor clarification) 
whether or not initiated by the Government, that (a) [i]nvolves 
information essential for determining the acceptability of a proposal; 
or (b) [p]rovides the offeror an opportunity to revise or modify its 
proposal."  The acid test of whether discussions have been held is 
whether it can be said that an offeror was provided the opportunity to 
revise or modify its proposal.  BE, Inc.; PAI Corp., B-277978,
B-277978.2, Dec. 16, 1997, 98-1 CPD  para.  80 at 5.  

Whether or not the oral presentation constituted part of the BAFO such 
that a second round of BAFOs was not required, see Labat-Anderson 
Inc., B-246071.4, Oct. 9, 1992, 92-2 CPD  para.  244 at 11 n.4, the record 
shows that the questions asked are in the nature of 
clarifications--they merely request additional detail concerning 
information already presented in DAI's proposal as revised by its 
written BAFO.  BE, Inc.; PAI Corp., supra, at 5-6.  For example, in 
its BAFO, DAI reduced by ten the number of Bosnian lending 
professionals that it would use under the contract.  During the oral 
interview the firm was asked to describe any changes that this 
reduction would require in the way the lending staff was deployed and 
organized.  Other questions included requests for elaboration on the 
reasons for selecting particular personnel and on arguments made and 
positions taken in the BAFO to support a particular approach.  
Contrary to DAI's position, the fact that some of its scores changed 
as a result of the oral interview does not show that it was allowed to 
revise its proposal, but that its explanations of what was already 
proposed became more clear, at times to the firm's detriment and at 
times to its benefit.  

Source Selection Decision  

DAI argues that the SSO failed to articulate a rational basis for his 
selection decision and, instead, deferred to the subjective point 
scores of "deadlocked" evaluators without resolving their "split."

Source selection officials in negotiated procurements have broad 
discretion in determining the manner and extent to which they will 
make use of technical and cost evaluation results.  Mevatec Corp., 
B-260419, May 26, 1995, 95-2 CPD  para.  33 at 3; Grey Adver., Inc., 
B-184825, May 14, 1976, 76-1 CPD  para.  325 at 12.  In exercising that 
discretion they are subject only to the tests of rationality and 
consistency with the established evaluation criteria.  Mevatec Corp., 
supra.  While the selection official's judgment must be documented in 
sufficient detail to show that it is not arbitrary, a source selection 
official's failure to specifically discuss every detail regarding the 
relative merit of the proposals in the selection decision document 
does not affect the validity of the decision if the record shows that 
the agency's award decision was reasonable.  SEAIR Transp. Servs., 
Inc., B-274436, Dec. 12, 1996, 96-2 CPD  para.  224 at 6.    

The source selection decision here is brief but the record supports 
the reasonableness of the award decision.  The record documents the 
evaluation process, including the narrative comments, as well as the 
point scores, and concludes with the SSO's statement that he has 
considered both.  In this regard, the SSO expresses his belief that 
the TEC's narrative--comprised of the narratives of each 
evaluator--reflects the view that Barents was more likely to guarantee 
a successful transition of the technical skills involved.  We do not 
agree with DAI that the SSO was required to resolve the differences 
between the two evaluators who believed that Barents could better 
ensure successful transition and the one evaluator who favored DAI; 
such differences are not uncommon given the subjective nature of such 
judgments.  Since we have concluded that the evaluation was 
reasonable, we have no basis to question the SSO's reliance on the 
fact that the majority of the evaluators had more confidence in 
Barents to complete the project.  See KRA Corp., B-278904, B-278904.5, 
Apr. 2, 1998, 98-1 CPD  para.  147 at 13-14; see also SEAIR Transp. Servs., 
Inc., supra.

The protest is denied.

Comptroller General
of the United States

1. The date on this memorandum is April 27, after award was made, but 
USAID advises that it was written well in advance of award and that 
the date reflects the date on which the memorandum was actually typed 
for the files.  We have no reason to believe otherwise and, in any 
case, the memorandum is entirely consistent with the preaward 
documents.  See Jason Assocs. Corp., B-278689 et al., Mar. 2, 1998, 
98-1 CPD  para.  67 at 6-7.  

2. He deducted an additional 2 points in the final evaluation because, 
among other things, DAI acknowledged, during the oral interview, that 
the bank's correspondent banking relationships in Bosnia were not 
credit relationships.  In the final evaluation, the other two 
evaluators assigned DAI's proposal 27 and 28 points, respectively, for 
this criterion.

3. DAI also contends that a second evaluator never explained how he 
could have given Barents's proposal the full 30 points for this 
evaluation criterion despite the fact that the firm has not performed 
development of a lending system in Bosnia as had DAI.  However, as 
that evaluator acknowledges in his own notes, the criterion does not 
require such specific experience, but only experience which is similar 
to conditions in Bosnia-Herzegovina.  In the absence of any detailed 
objections to the evaluation of Barents's proposal we have no basis to 
conclude that it was unreasonable.