BNUMBER: B-280133; B-280133.2
DATE: September 3, 1998
TITLE: Electronic Data Systems Corporation, B-280133; B-280133.2,
September 3, 1998
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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:Electronic Data Systems Corporation
File:B-280133; B-280133.2
Date:September 3, 1998
David S. Cohen, Esq., Andrew B. Katz, Esq., John J. O'Brien, Esq.,
Alex D. Kond�, Esq., and Laurel Ann Hockey, Esq., Cohen Mohr LLP, for
the protester.
John W. Chierichella, Esq., Catherine E. Pollack, Esq., Fried, Frank,
Harris, Shriver & Jacobson, for BDM International, Inc., an
intervenor.
Maj. Jonathan C. Guden, Department of the Army, for the agency.
David A. Ashen, Esq., and John M. Melody, Esq., Office of the General
Counsel, GAO, participated in the preparation of the decision.
DIGEST
Protest that agency significantly understated the savings associated
with the identified discriminators in its technical proposal,
including time savings for travelers and authorizing officials
resulting from proposed accelerated deployment of new official travel
system, is denied where: (1) solicitation assigned only limited
weight to deployment in the technical evaluation; and (2) agency
reasonably focused on budgetary savings generated by a reduction in
staffing rather than more intangible, incidental time savings and
quality of life enhancements for travelers and authorizing officials.
DECISION
Electronic Data Systems Corporation (EDS) protests the Department of
the Army's award of a contract to BDM International, Inc., under
request for proposals (RFP) No. DAMT01-97-R-1003, for a new official
travel system and travel management services. EDS primarily
challenges the best value determination.
We deny the protest.
The solicitation contemplated award of a fixed-price requirements
contract for a base period of 5 years, with three 1-year options, for:
(1) a new travel management software system, designated the Common
User Interface (CUI), to be deployed to Department of Defense (DOD)
users worldwide; (2) operation and maintenance of the CUI; and (3)
travel management services with respect to official travel performed
by travelers assigned to organizations in Defense Travel Region (DTR)
6 (comprised of the states of North Dakota, South Dakota, Nebraska,
Minnesota, Iowa, Missouri, Wisconsin, Illinois, Michigan, Kentucky,
and Indiana, and other designated areas). The CUI is an automated
software system that will facilitate travel management by allowing DOD
travelers to use their personal computers to handle functions that
were previously performed on paper and in multiple steps, ensuring
compliance with DOD travel policies, performing financial and
accounting functions (such as "should cost" estimates, financial
settlement computation, and electronic fund transfers), and
maintaining travel data.
The solicitation provided for award to be made to the "responsible
Offeror whose offer represents the best overall value to the
Government" under the following four criteria (listed in descending
order of importance): (1) written proposal, comprised of factors for
performance work statement (PWS) (with subfactors for CUI
architecture, CUI functionality, CUI support and travel management
services), past performance/prior experience/financial history, and
subcontracting plan; (2) demonstration; (3) price/fees, including
cost/price and point-of-sale discount (including discount for official
air travel services and rebate of a percentage of the commissions
received on all non-air travel services); and (4) oral presentation.
RFP sec. M.7, Basis for Contract Award and Relative Importance of
Evaluation Areas (Official). The solicitation stated that price/fees
were "significantly less important than the combined evaluation of the
written proposal, demonstration, and oral presentation." Id.
Two proposals, from BDM and EDS, were received by the closing time.
Both were included in the competitive range. Following discussions
with the offerors, the Army requested best and final offers (BAFO).
Based upon its evaluation of BAFOs, the source selection evaluation
board (SSEB) rated the proposals as follows:
BDM EDS
WRITTEN PROPOSAL
PWS (Overall) Good Good
CUI Architecture Good Good
CUI Functionality Good Good
CUI Support Good Good
Travel Management Good Excellent
Performance/Experience/Financial (Overall)GoodGood
Past Performance Excellent Good
Prior Experience Good Good
Financial History Satisfactory Satisfactory
Subcontracting[1] Good Good
DEMONSTRATION Good Good
PRICE/FEES
Cost/Price $263.7 million$[DELETED]
Less Discount (original/corrected)[2]$[DELETED]$[DELETED]
Net Cost (original/corrected) $[DELETED] $[DELETED]
ORAL PRESENTATION Satisfactory Good
In addition, as part of its evaluation of BAFOs, the source selection
advisory council (SSAC) established a working group to identify and
quantify discriminators between the proposals. The evaluators
identified 37 discriminators, of which 28 were advantages offered by
EDS's proposal and 9 were advantages offered by BDM's. Ten of the 37
discriminators were evaluated as having a determinable value; 6 of
these were evaluated as offering direct dollar cost savings and 4 were
evaluated as offering opportunity cost savings generated from a
reduction in required time and effort on the part of DOD personnel.
The direct cost discriminators totalled $107.58 million for EDS's
proposal and $180,000 for BDM's; the opportunity cost discriminators
totalled $130.46 million for EDS's proposal and $5.6 million for
BDM's.
The SSAC found that while EDS's proposal had an advantage with respect
to its written proposal--based on EDS's advantage with respect to the
PWS, compared to BDM's slight advantage with respect to
performance/experience/financial--and oral presentation, BDM's
proposal had an advantage with respect to price/fees. (Neither
proposal had an advantage with respect to the demonstration.) The
SSAC concluded that "the value-added benefits that EDS proposed were
not compensatory to the higher price/fees proposed by EDS," which were
[DELETED] BDM's. SSAC Memorandum for the Source Selection Authority.
Likewise, the source selection authority (SSA) concluded that the
"slightly more advantageous PWS and Oral Presentation" rating of EDS's
proposal did not offset the "significantly more advantageous
Price/Fees" of BDM's proposal. Source Selection Decision Statement,
Defense Travel Region Six, Official Travel Services, at 4.[3] In this
regard, as part of his "best value judgment," the SSA specifically
determined that the increased value for EDS's software associated with
the identified discriminators "is an optimistic value and that the
opportunity [cost] savings in particular are speculative and will not
materially [a]ffect DOD's bottom line costs." Id. For example, the
SSA noted that opportunity cost savings of 205 staff years ($61.458
million) were attributed to EDS's proposal based on the calculation
that the greater ease-of-use of EDS's CUI screens would save 4 minutes
per travel record transaction. The SSA concluded that "given that
making travel arrangements is a small part of most DOD employees'
tasks, I cannot conclude that the DOD will eliminate, save or reduce
any of the 205 positions based upon the use of one CUI versus
another." Id. The SSA determined that in view of the advantage held
by BDM's proposal in the performance/experience/financial,
subcontracting and price/fees areas, BDM's proposal was the best value
overall. Upon learning of the resulting award to BDM, EDS filed this
protest.
QUANTIFICATION OF DISCRIMINATORS
EDS argues that the agency significantly understated the savings
associated with the identified discriminators and, as a result, the
advantages offered by EDS's proposal were not adequately considered in
the source selection decision. EDS primarily challenges the agency's
calculation of the savings associated with EDS's proposal of an
accelerated schedule for CUI deployment. In this regard, section
F.5.2 of the RFP listed performance locations within DTR 6 and set
forth a date for each location by which full contract performance was
to commence; overall, full contract performance within DTR 6 was to
commence within 2 years of award. In addition, section F.5.3 listed
performance commencement dates for a small number--approximately
214--of the many locations outside DTR 6. Although the agency
expected that complete worldwide deployment of the CUI would take
place within the contract's 5-year base period, Contracting Officer's
Statement, July 10, 1998, at 11, the RFP did not establish a detailed
schedule for deployment of the CUI to all DOD sites worldwide.
While BDM's proposal was evaluated as offering DTR 6 deployment in
accord with the 2-year solicitation schedule, its "[a]ggressive
worldwide deployment schedule" of 38 months was rated a strength.
SSAC Memorandum for the Source Selection Authority, Attached
Evaluation of BDM Performance Work Statement, CUI Support, CUI
Deployment to DOD Users. EDS's proposal of complete DTR-6 deployment
within 12 months and worldwide deployment within 24 months also
received a strength for an "[a]ggressive deployment schedule." SSAC
Memorandum for the Source Selection Authority, Attached Evaluation of
EDS Performance Work Statement, CUI Support, CUI Deployment to DOD
Users. In addition, EDS's proposed accelerated deployment schedule
was identified as a discriminator between the proposals which was
likely to result in direct--rather than opportunity cost--savings of
$38.05 million. In calculating this level of savings, the agency
assumed that (1) direct monetary savings would only occur in
connection with administrative personnel, not travelers and
authorizing officials; (2) yearly savings from use of EDS's CUI would
total $76.1 million (the savings at contract year 8--i.e., after full
deployment and transition); and (3) the government would be able to
take advantage of only 6 months of EDS's proposed acceleration. The
Army credited EDS with only 6 months of acceleration because of
limitations imposed by the time the Army would require to transition
from the current commercial travel contracts in effect for the various
sites, train government personnel in use of the system and draw down
the government's excess travel management capacity, and because of the
risk that EDS would be unable to deploy as proposed. Declaration of
SSEB Chief of Cost Team, July 27, 1998, at 2-3; SSAC Memorandum for
the Source Selection Authority, Attached DTS Value Analysis.
EDS challenges the Army's determination that DOD would save only $38.5
million as a result of EDS's proposed accelerated deployment schedule.
EDS asserts in this regard that the agency's determination that DOD
could take advantage of only 6 months of acceleration was inconsistent
with provisions of the RFP that, in EDS's view, suggested that a
24-month deployment schedule would be feasible. Further, the
evaluation allegedly ignored the single most important component of
the protester's claimed additional savings--cost savings related to
the time saved by travelers and authorizing officials under the new
travel management system were not considered in the agency
calculation. EDS Comments, July 17, 1998, at 36; EDS Comments, Aug.
5, 1998, at 12. According to EDS, the agency acted unreasonably in
limiting its calculation of savings to those that will accrue to
administrative personnel; EDS asserts that travel reengineering
studies generally have included travelers' and authorizing officials'
time savings when calculating the total possible savings. In this
regard, EDS notes that in a 1997 study prepared for DOD's travel
reengineering officials, approximately $312 million of the
approximately $402 million overall yearly savings attributed to the
new travel system when fully implemented were associated with time
savings accruing to travelers and authorizing officials. Initial
Economic Analysis, DOD Travel Reengineering Project, Sept. 10, 1997,
at 6-1; EDS Comments, July 17, 1998, at 42-43.
We find that EDS has not shown that its proposal was entitled to
significantly greater credit in the cost/technical tradeoff for its
proposed accelerated CUI deployment. In this regard, an agency may
not give weight or consideration to a factor in the best value
determination that is disproportionate to the weight assigned to that
factor under the RFP's technical and price/cost evaluation scheme.
Here, the record shows that EDS's proposal in fact did receive a
strength for an aggressive deployment schedule under the CUI
Deployment to DOD Users evaluation element. That element, however,
was only one of seven evaluation elements set forth in the RFP under
the CUI Support subfactor, which itself was only one of four
subfactors under the PWS factor, which, in turn, was only one of three
factors under the Written Proposal criterion, and that criterion was
only one of four evaluation criteria.[4] Attributing a value
exceeding $200 million to accelerated CUI deployment would, in our
view, have meant giving that element weight grossly disproportionate
to its weight in the RFP evaluation scheme.
Moreover, we conclude that in deciding whether to pay a significantly
higher price (approximately $[DELETED]), the Army reasonably
discounted the cost impact of additional time savings and quality of
life enhancements for travelers and authorizing officials resulting
from EDS's accelerated deployment and easier-to-use CUI screens. We
think the SSA reasonably determined that since travel administration
is not the primary duty of travelers and authorizing officials, any
increased time that travelers and authorizing officials will be able
to devote to their primary duties under EDS's approach will not in
fact result in any cost savings through personnel reductions.
Declaration of Chief of Cost Team, July 27, 1998, at 12-13.
DOD's Economic Analysis, cited by EDS, is not inconsistent with this
conclusion. That study recognized that "[i]n practice, Traveler[s']
and [Authorizing Officials'] primary mission performance should
improve because less time is consumed in travel process activities,"
and that the calculated savings under the agency's program analysis
and evaluation model are "extremely high" because the model treats
time savings on the part of travelers and authorizing officials as
tangible savings. Economic Analysis at 4-7. However, the Economic
Analysis recognized the distinction between direct, tangible monetary
savings from staffing reductions and opportunity cost savings, finding
that:
the savings in the Traveler and Mission areas are reductions of
the lost mission time spent by Travelers and [Authorizing
Officials] conducting travel processes. Although measurable,
these savings are not tangible in that reductions to DOD
Travelers or [Authorizing Officials] are not feasible results of
an improved travel system.
Id.
In summary, deployment considerations were only assigned limited
weight under the solicitation, and in determining the extent of the
credit to be given in this regard, the agency reasonably focused on
savings generated by a reduction in staffing rather than more
intangible, incidental time savings and quality of life enhancements
for travelers and authorizing officials. We find nothing in EDS's
arguments that would lead us to conclude that any additional savings
that could reasonably be expected to result from EDS's discriminators
would have altered the technical evaluation and offset BDM's
significant price advantage in the cost/technical tradeoff.[5]
DISCUSSIONS
EDS argues that the Army failed to conduct meaningful discussions and,
indeed, misled it during the discussions that were held regarding its
proposal, by questioning EDS concerning its ability to meet the
accelerated deployment schedule, but failing to advise EDS that the
agency viewed its proposed accelerated deployment as not achievable
and of no value to the government.[6] EDS asserts that it proposed a
significantly more costly approach in order to accelerate deployment.
(According to EDS, "its entire bidding strategy [DELETED] were all
driven by the need to meet the accelerated two year schedule." EDS
Comments, July 27, 1998, at 30.)
EDS's argument is based on an incorrect premise--that the Army did not
consider EDS's proposed accelerated deployment to be of value.
Although the Army did not believe that it could take advantage of all
of the proposed acceleration, it credited EDS's proposal with 6 months
of acceleration and assigned the proposal a technical strength on this
account. Further, EDS had no reasonable basis for assuming that it
would receive additional credit; the solicitation did not require
consideration of savings from accelerated deployment in the evaluation
of price/fees, and only assigned deployment considerations a limited
weight in the technical evaluation.[7]
BDM'S PRICE
EDS argues that the source selection decision was flawed because the
SSA was unaware of, and thus failed to take into account, the concern
expressed by the evaluators, that BDM's proposal included the cost for
as few as [DELETED] staff years per year--based on a calculation of
one staff year for every $114,000 in price--for CUI operations and
maintenance (O&M); approximately 300 staff years were assumed in the
government's most probable cost (GMPC) estimate, and the evaluators
concluded that the cost of additional required staff could total as
much as $[DELETED] over the life of the contract.[8] BDM Consensus
Evaluation Worksheet (Official) (BAFO) at 3-4; BDM Individual
Evaluation Worksheet, Best and Final Offer (BAFO) Official, E. G.
Dickens Jr.; Declaration of SSEB Chief of Cost Team, July 27, 1998, at
14-16.
The record indicates that the SSAC determined that the issue was not
significant, and thus that the SSA need not be briefed on it, because
BDM had reaffirmed the sufficiency of its staffing during discussions,
its overall price was within (albeit at the lower end of) the cost
range in the agency's GMPC,[9] and the solicitation provided for award
of a fixed-price contract under which the contractor would be
responsible for any additional costs of performing the statement of
work. SSAC Chairman Memorandum, July 2, 1998, at 3-4; Contracting
Officer's Statement, July 10, 1998, at 49-50; Declaration of SSEB
Chief of Cost Team, July 27, 1998, at 14-16. Reflecting this latter
fact, the solicitation neither established minimum staffing levels nor
required the submission of proposed staffing levels or of detailed
cost and pricing data in support of an offeror's proposed approach.
Although the solicitation did generally provide that "[e]xcessively
high or low cost/price may be deemed to indicate a lack of
understanding of the requirements of this solicitation," RFP sec.
M.7.3(a), BDM's overall price was not viewed as excessively low--it
was within the cost range in the agency's GMPC. Furthermore, the fact
that BDM's technical proposal received the same final overall rating
as did EDS's under the Written Proposal evaluation criterion, a rating
EDS has not shown to be unreasonable, indicates that the Army viewed
BDM's overall understanding of the solicitation favorably. In these
circumstances, and in view of BDM's significant price advantage and
favorable technical evaluation, this argument provides no basis for
disturbing the award.
The protest is denied.
Comptroller General
of the United States
1. SSAC Memorandum for the Source Selection Authority, Attached
Area/Factor/Subfactor/Element [Evaluation].
2. Contracting Officer's Statement, July 10, 1998, at 30-31.
3. In addition to the advantages of BDM's proposal as identified by
the SSAC, the SSA concluded that BDM's proposal also was more
advantageous with respect to subcontracting, due primarily to BDM's
past performance in this regard.
4. EDS suggests that consideration of its accelerated deployment
schedule also would have been appropriate under other evaluation
factors, including: (1) Logistics Support, another evaluation element
under the CUI Support subfactor; (2) CUI Implementation, also an
evaluation element under the CUI Support subfactor; (3) CUI Deployment
to Travel Management Service Contractors, another evaluation element
under that subfactor; and (4) CUI Functionality, a subfactor under the
PWS factor. RFP sec. L.8.1.1.1. However, even considering these
evaluation areas, the solicitation assigned deployment considerations
only limited weight in the evaluation.
5. EDS argues that BDM's proposal should be rejected as unacceptable
because its proposed delivery schedule is noncompliant with both the
required performance schedule for the DTR 6 sites (RFP sec. F.5.2) and
that for the (approximately 214) sites outside DTR 6 for which
performance dates were specified (RFP sec. F.5.3). However, EDS's
protests in this regard were first filed more than 6 weeks after its
counsel received a copy of BDM's proposal (under the protective order
issued in this case) and thus are untimely. 4 C.F.R. sec. 21.2(a)(2)
(1998); EDS Comments, July 27, 1998, at 20-24; EDS Comments, Aug. 5,
1998, at 28-36. In any case, as maintained by the Army and BDM, this
aspect of EDS's protest is based on a misreading of BDM's proposal.
6. The Army advised EDS during discussions that its proposal "did not
provide convincing evidence that the offeror can deploy the CUI
globally in the time frame proposed," and "did not provide convincing
evidence that the offeror can implement the CUI in the time frame
proposed." EDS Discussion Items, Nos. 27, 28.
7. Although arguably inconsistent with the agency's determination that
EDS's accelerated deployment was of value to the government, we note
that, during discussions, EDS was specifically advised in writing that
the agency characterized EDS's proposal to accelerate deployment to be
an approach that only: "Meets Requirement; Not Considered
Enhancement." Evaluation of EDS [Defense Travel System] Proposal
Enhancements, at 1. This notice further supports the conclusion that
EDS had no reasonable basis for assuming that it would receive
additional credit for its accelerated deployment. Further, the Army
specifically cautioned EDS during discussions that its "price for CUI
Operations and Maintenance (O&M) is too high." EDS Discussion Items,
No. 44.
8. In a further evaluation of BDM's proposal undertaken after EDS
filed its protest, the agency determined that the cost team had failed
to include subcontractor costs in its calculations of staffing; the
agency determined that consideration of subcontractor inputs could add
as many as [DELETED] additional staff, for a total possible O&M
staffing (based on $114,000 per staff year) of [DELETED]. Declaration
of SSEB Chief of Cost Team, Aug. 5, 1998, at 11-12. In contrast,
EDS's proposal was evaluated as assuming [DELETED] staff years and as
including the cost of [DELETED] staff years at the
government-calculated rate of $114,000 per staff year. Declaration of
SSEB Chief of Cost Team, July 27, 1998, at 15.
9. The agency cost evaluators noted that "[w]e would expect BDM's
proposal cost to be nearer the lower end of the GMPC estimate because
the lower end estimate is based on a solution that uses the Travel
Manager software, which is the software BDM is using in their
solution." BDM Consensus Evaluation Worksheet (Official) (BAFO) at 2.