BNUMBER:  B-280719 
DATE:  November 12, 1998
TITLE: Dual, Incorporated, B-280719, November 12, 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:Dual, Incorporated

File:     B-280719

Date:November 12, 1998

Kevin M. Kordziel, Esq., and Laura K. Kennedy, Esq., Jenner & Block, 
for the protester.
Diana G. Richard, Esq., and David R. Johnson, Esq., Gibson, Dunn & 
Crutcher, for INTELX Corporation, an intervenor.
Walter Batson, Jr., for Camber Corporation, an intervenor.
John E. Lariccia, Esq., Maj. Steven Shoulberg, and Greg Petkoff, Esq., 
Department of the Air Force, for the agency.
Peter A. Iannicelli, Esq., and Michael R. Golden, Esq., Office of the 
General Counsel, GAO, participated in the preparation of the decision.

DIGEST

Protest that Air Force evaluation and award decision were improper 
because they were based upon awardee's representation in its proposal 
that it owned the division and employed the employees that would 
perform the contract is sustained, where the record shows that the 
awardee signed an agreement to sell the division and transfer the 
employees just days after the agency completed its evaluation and 2 
weeks before the contract was awarded.

DECISION

Dual, Incorporated, a small business concern, protests the award of a 
contract to Camber Corporation by the Department of the Air Force 
pursuant to request for proposals (RFP) No. F33657-98-R-0008.  The 
protester contends that Camber, one of two small business awardees, 
misrepresented that it would perform the contract work at its 
Albuquerque, New Mexico, division when, in fact, Camber was 
negotiating the sale of that division to another firm while the 
procurement was being conducted.  Dual also contends that the agency's 
evaluation of Dual's proposal and performance risk was unreasonable; 
the agency improperly rated Dual's proposal as unsatisfactory based 
upon financial condition without first obtaining a responsibility 
determination from the Small Business Administration (SBA), and the 
agency's best value determination was tainted by evaluation errors.  
Protest Letter, Aug. 3, 1998, at 1.  

We sustain the protest.

Issued on January 23, 1998, the RFP provided for award of several 
indefinite- delivery indefinite-quantity (IDIQ) contracts (as many as 
two contracts to small businesses under a partial set-aside and two or 
more contracts under full and open competition) to meet the training 
systems needs of the Air Force, Department of Defense customers, and 
foreign military sales.  RFP  sec.  L-2:1.0, M-2:1.1.2.  The scope of the 
contracts might include design, development, testing, production, 
modification, upgrade, delivery, and sustainment of training systems.  
RFP  sec.  L-2:1.0b.  The RFP provided that all contracts would be 
identical and would require the contractors to provide a broad range 
of training systems products, supplies and services specified in task 
or delivery orders issued by the agency.[1]  RFP Executive Summary  para.  
5.  The RFP provided that each IDIQ contract would guarantee a minimum 
of $75,000 of work over a 5-year ordering period and an 8-year period 
of performance.  RFP  sec.  H030.

The RFP stated that the Air Force intended to award the contracts 
without discussions on the basis of a best value competitive source 
selection to the responsible offerors whose proposals conformed to the 
RFP requirements and who demonstrated the management, financial, 
technical, and facility capabilities necessary to fulfill the contract 
requirements.  RFP  sec.  M-2:1.0.  The RFP listed, in descending order of 
importance, the following evaluation factors:  capabilities 
assessment, management, cost, and general considerations.  RFP  sec.  
M-2:2.0.  Within each evaluation factor, the RFP listed and described 
in detail the related subfactors.  Non-cost evaluation subfactors 
combined were significantly more important than cost.  See generally, 
RFP  sec.  M-2.  The RFP stated that each subfactor under the capabilities 
assessment and management factors would be given a color/adjectival 
rating and a proposal risk rating.  RFP  sec.  M-2:6.0.  The 
color/adjectival rating would depict how well the proposal met the 
evaluation standards and solicitation requirements, while the proposal 
risk rating would represent the risks that were identified in a 
proposed approach to accomplishing the RFP requirements.  RFP  sec.  
M-2:6.1.1.  The RFP stated that each evaluation factor, except general 
considerations, would also receive a performance risk assessment 
representing the agency's confidence in the offeror's ability to 
successfully perform the work based upon the offeror's past and 
present work record.  RFP  sec.  M-2:6.1.2.  The general consideration 
factor would include a pre-award survey to determine the offeror's 
ability to meet the requirements and a determination of compliance 
with RFP terms and conditions, but would not be color/adjectivally 
rated or assessed for proposal or performance risk.  RFP  sec.  M-2:5.0, 
M-2:6.1.4.              

Eleven offers were evaluated by the source selection evaluation team.
Seven of the offers were submitted by small business concerns and were 
evaluated for the small business partial set-aside portion of the 
procurement, and two of those were considered unacceptable.  The 
agency conducted its evaluations during May and June, the source 
selection evaluation team briefed the source selection authority (SSA) 
on its findings and recommendations, and SSA made his selection 
decision on June 25.  The SSA determined that the offers of INTELX 
Corporation and Camber offered the best value for the small business 
partial set-aside award and that the offers of McDonnell Douglas 
Corporation, Lockheed Martin Corporation Information Systems, and 
Raytheon Training Incorporated represented the best value for the full 
and open competition awards.  Air Force Legal Report at 3; Source 
Selection Decision Memorandum at 11.  On June 28, Camber entered into 
an agreement to sell its Flight Simulation Division (with a proposed 
closing date of July 1) and to transfer the employees of that division 
to the acquiring company, and to lease back a one-third interest in 
the assets of its former Flight Simulation Division.  Asset Purchase 
Agreement, June 28, 1998, at 1-3, 5, 23; Lease Agreement, June 28, 
1998, at 1.  On July 15, 1998, contracts were awarded to all five 
firms.[2]  Air Force Legal Report at 1.  After a debriefing, Dual 
filed this protest.

The protester asserts that Camber's proposal misrepresented that 
Camber would perform contract work at Camber's Flight Simulation 
Division, in Albuquerque, New Mexico, but Camber was negotiating to 
sell that division to another company before the Air Force even 
completed its evaluation and awarded Camber a contract.  Protest 
Letter at 4-5.  The protester asserts that Camber did not notify the 
Air Force of the impending sale at any time before the evaluations 
were completed, the selection made, and the contract awarded.  Id.  
The protester contends that Camber did not intend to use its Flight 
Simulation Division to perform the contract as it represented in its 
proposal and that the Air Force relied upon the representation as its 
basis for evaluation and selection of Camber.  Id.  Dual contends that 
Camber's proposing that its Flight Simulation Division would be the 
main operating location for performing contract work was a material 
misrepresentation that included the wholesale substitution of 
facilities, equipment, numerous personnel, and experience associated 
with the Flight Simulation Division.[3]  Id. at 5; Protester's 
Comments at 5-7. 

We have sustained protests where the awardee failed to disclose 
material changes in personnel availability which occurred after 
proposals were submitted, but before award.  See, e.g., Mantech Field 
Eng'g Corp., B-245886.4, Mar. 27, 1992, 92-1 CPD  para.  309 at 5; CBIS Fed. 
Inc., B-245844.2, Mar. 27, 1992, 92-1 CPD  para.  308 at 5-6.  Here, the 
record shows that Camber agreed to sell the division which it stated 
would perform significant TSA work and to transfer the employees of 
that division to the acquiring company.  Camber did not notify the Air 
Force of the sale agreement.[4]

The importance of the Flight Simulation Division's employees to 
Camber's capability to perform is obvious from a review of Camber's 
proposal.  Statements showing Camber's reliance on the Flight 
Simulation Division and its employees permeate Camber's proposal.  

Camber's proposal stated that the firm did not have a centralized 
quality assurance activity, but explained that it had a full-time 
quality assurance person assigned to its Flight Simulation Division.  
Also, Camber's proposal stated that, in addition to quality assurance 
duties, the full-time quality assurance person functioned as the 
corporate quality assurance advisor and would provide advisory 
assistance to the program manager for the TSA contract.  Camber 
Proposal, Vol. I, at 10, Vol. II, at 130.  In its capabilities 
assessment proposal, Camber's Flight Simulation Division quality 
assurance person described in some detail the division's quality 
assurance/corrective action procedures and the Flight Simulation 
Division's quality assurance procedures manual, and indicated that the 
Flight Simulation Division group would monitor subcontractors' quality 
assurance activities.  Camber Proposal, Vol. II, at 130-138.

Its proposal also highlighted the high level of quality, experience 
and skills of its in-house staff, many of whom were working at the 
Flight Simulation Division.  Camber listed the software development 
staffers by name, indicated the total number of years of experience 
for each, indicated the percent of each staffer's experience acquired 
while working for Camber's Flight and Sensor Simulation Divisions, and 
briefly described the type of experience that each staffer had 
acquired.  Notably, at least seven of the named staff members were 
working in the Flight Simulation Division.  Camber Proposal, Vol. II, 
at 73-74.  Camber also pointed out the experience levels and critical 
skills possessed by a number of its Flight and Sensor Simulation 
Divisions' employees; the employees were listed by position within 
those divisions rather than by name.  Camber Proposal, Vol. II, at 
127-128.  Camber pointed out that its retention rate for employees in 
manufacturing is 88 percent and stated that it had no reason to 
believe that the retention rate and quality of its personnel would 
change.  Camber Proposal, Vol. II, at 128-129.  In addition, large 
segments of the Camber proposal were written by Flight Simulation 
Division employees.

It is clear that Camber encouraged the agency to give close scrutiny 
to the Flight Simulation Division's quality assurance person and 
procedures, the experience levels and skills of the employees of that 
division, as well as the high retention rate for employees of the 
division.  Although Camber agreed to the sale of the division and 
transfer of its employees on June 28, Camber did not inform the agency 
of the sale.  Even after Camber received notice of the proposed award, 
it still did not advise the agency of the sale agreement, 
notwithstanding that the contract was not actually awarded for another 
2 weeks.  

The record shows that the evaluators relied on Camber's 
representations in conducting the evaluation.  For example, in the 
general considerations evaluation, the Defense Contract Management 
Command (DCMC) performed a pre-award survey on several different 
aspects of Camber's capability to perform the contract successfully.  
In performing its pre-award survey, DCMC examined the resumes and 
credentials of certain Camber employees that DCMC considered to be key 
personnel for the contract if awarded to Camber; notably, several of 
the key personnel worked at the Flight Simulation Division.  Pre-award 
Survey Report (Camber) at 10-11, 21-37.  The agency's field evaluation 
team visited Camber's main operating location, the Flight Simulation 
Division, and confirmed the representations Camber had made in its 
proposal and discussed capability matters with employees of that 
division.  Among other things, the evaluators commented favorably upon 
the critical/special skills of the Flight Simulation Division's 
manufacturing personnel and the extremely high retention rate for 
employees of that division.  The evaluators also noted that Camber's 
quality assurance program relied upon one individual in the Flight 
Simulation Division.  Summary Evaluation Worksheet (Camber), 
Capabilities Assessment Factor, Hardware Mfg. and Quality Subfactor, 
at 2-4.  

Since Camber's representations regarding the Flight Simulation 
Division and employees permeated Camber's entire proposal and the 
agency relied upon those representations in its evaluation, it is 
clear that, had the firm disclosed the sale of its main operating 
location, the award decision might have been different.  The 
evaluators never evaluated Camber's actual employees and other 
capabilities as they existed at the time of award.  Camber's failure 
to disclose to the Air Force the status of its main operating location 
and of the employees of that division had a material effect on 
significant aspects of the evaluations.  See Aerospace Design & 
Fabrication, Inc., B-278896.2 et al., May 4, 1998, 98-1 CPD 139 at 10.  

For example, the agency evaluated the proposal risks represented by 
each proposal in its evaluation of each subfactor of the capabilities 
assessment and management evaluation factors and performance risks 
represented by each offeror in its evaluation of the capabilities 
assessment and management evaluation factors.  It is likely that the 
representation affected the proposal and performance risk ratings 
assigned on specific facets of the proposal--such as the quality 
assurance program and procedures, critical skill levels and experience 
of employees, and the high retention rate of Flight Simulation 
Division employees--since the evaluators did not know that Camber's 
main operating division and its employees were being sold/transferred 
before Camber was awarded the contract.  Even though Camber informed 
the Air Force (after it was awarded the contract) that it has other 
resources to perform the TSA work, including a lease of some of the 
Albuquerque manufacturing facility, the fact is that the agency 
evaluated Camber's proposal and performance risks on the basis of the 
Flight Simulation Division and its employees, not on the basis of 
personnel from other divisions or subcontractors doing the work.

Since the agency's evaluation of Camber's proposal was based upon 
Camber's representation that it would perform much of the TSA contract 
with its own employees, when, in fact, that will not be the case, the 
evaluation is flawed.  Therefore, the SSA's best value determination 
and selection of Camber as the second awardee under the partial small 
business set-aside, which was based entirely upon the results of the 
flawed evaluation, is also suspect.

In these circumstances, Camber had an obligation to advise the agency 
of the sale, at the very latest on June 28, when it agreed to the sale 
and lease back of facilities.  See Professional Safety Consultants 
Co., Inc., B-247331, Apr. 29, 1992, 92-1 CPD  para.  404 at 4.  See also 
Mantech Field Eng'g Corp., supra.  Because Camber did not do so, the 
agency's evaluation and its selection of Camber were based upon 
representations concerning Camber's personnel that were no longer 
true.  The award was based on Camber's proposal representations, and 
to allow such an award to stand in spite of the fact that Camber had 
not disclosed to the agency that it would not perform the contract as 
proposed would call into the question the integrity of the 
competition.  See AAA Eng'g & Drafting, Inc., B-250323, Jan. 26, 1993, 
93-1 CPD  para.  287 at 6.  Accordingly, we are sustaining the protest on 
this ground.  

The protester next contends that the evaluations of Dual's proposal 
and performance risks were unreasonable.  Our Office will only 
question an agency's evaluation of proposals if it lacks a reasonable 
basis or is inconsistent with the stated evaluation criteria for 
award.  DAE Corp., Ltd., B-257185, Sept. 6, 1994, 94-2 CPD  para.  95 at 4.  
A protester's mere disagreement with the agency over its technical 
evaluation does not establish that the evaluation was unreasonable.  
Id.; Cubic Applications, Inc., B-274768 et al., Jan. 2, 1997, 97-1 CPD  para.  
98 at 3.  Here, after reviewing the record in light of the protester's 
arguments, we have no basis to question the agency's evaluation of 
Dual's proposal.

The protester asserts that the Air Force's performance risk assessment 
disregarded Dual's high performance ratings on previous contracts for 
simulators, trainers and programs used for [deleted] aircraft and 
instead based its ratings exclusively on perceived negative aspects of 
Dual's performance on contracts for a simulator used with the 
[deleted] program and a trainer used with the [deleted] aircraft.  
Protest Letter at 5-6.  However, the record does not support the 
assertion.  Dual's proposal included prior performance information for 
one of Dual's proposed subcontractors, [deleted], for contract 
performance on the [deleted] aircraft program, and the Air Force 
obtained additional prior performance information for the same 
proposed subcontractor on the [deleted] program.  Contracting Officer 
Statement at 6; Dual Proposal, VolumeV, at 41.  The record clearly 
shows that, not only did the evaluators consider the subcontractor's 
prior performance on the [deleted] and [deleted] programs in 
conjunction with Dual's performance on the [deleted] and [deleted] 
programs, but the evaluators specifically noted the subcontractor's 
high technical performance and outstanding assistance to the 
government and considered the subcontractor's previous work on the 
[deleted] programs to be a strength of the Dual team.  Proposal 
Analysis Report at 121-122.  We therefore deny this protest ground.     

The protester also contends that the agency's performance risk 
assessment did not consider the most recent contractor performance 
assessment report (CPAR) on its [deleted]-related contract and the 
fact that delays and other performance difficulties Dual experienced 
on the [deleted]-related contract were caused by the Air Force's 
failure to provide adequate specifications and the Air force's failure 
to disclose vital information to Dual, which resulted in Dual's filing 
a $[deleted] claim for an equitable adjustment under that contract.  
Protest letter at 5.  Regarding the [deleted] contract, the record 
shows that the evaluators reviewed the two most recent CPARs (for the 
periods ending in September 1995 and September 1996) that were 
contained in the Air Force's database.  Contracting Officer Statement 
at 7; Dual Past and Present Performance Data at 44.  However, because 
the CPAR for the period ending in September 1997 had not yet been 
approved, it was not included in the Air Force database and was not 
considered by the evaluators.  Contracting Officer Statement at 7.  
Regarding Dual's claim for an equitable adjustment under its [deleted] 
contract, the evaluators had no details concerning the monetary claim 
or Dual's assertion that performance delays and other performance 
problems were caused by the Air Force.  Moreover. the claim has not 
yet been adjudicated.  Id.; Air Force Legal Report at 12.  Because the 
CPAR for 1997 was neither approved nor entered into the agency's 
database until after the assessment was completed and the contracts 
awarded, and because the claim for an equitable adjustment merely 
represents Dual's bald assertion that the performance problems Dual 
encountered were the Air Force's fault, we think that the agency 
performance risk assessment, which considered a host of other 
information (including performance information on a total of 17 
contracts performed by Dual and its proposed subcontractors) 
reasonably did not consider this additional information.  
   
The protester further contends that the agency incorrectly rated 
Dual's proposal risk as high under the management evaluation factor 
based upon the agency's determination that Dual's proposed flight test 
for the RFP's AWACS sample task was too short.  Protest Letter at 6.  
Dual's proposal included a total of just 180 days for all phases of 
flight testing; the evaluation team assigned the proposal a high risk 
for the sample task because the Air Force estimated that adequate 
flight testing should take a total of 420 days.  Contracting Officer 
Statement at 6.  Dual contends that it knows how long flight testing 
should take because it has performed similar work under its [deleted] 
contract.  Protest Letter at 6.  However, Dual's mere disagreement 
with the agency's evaluators is not sufficient to establish that the 
agency estimate was wrong or the evaluation unreasonable.  Astro Pak 
Corp., B-256345, June 6, 1994, 94-1 CPD  para.  352 at 4.  We also note 
that, in addition to the short duration of the proposed flight 
testing, the evaluation team considered several other aspects of 
Dual's proposal to be weaknesses that appear to increase the proposal 
risk.  For example, the evaluators noted that Dual's description of 
security processes was incomplete, that Dual's integrated master plan 
was difficult to understand because some integrated master plan events 
were not defined, and Dual's integrated master schedule was missing 
some tasks making it difficult to track scheduling status and how 
certain events would be achieved.  Proposal Analysis Report at 73-74.

Dual also contends that the Air Force improperly rejected its proposal 
based upon a  negative financial report and recommendation made by 
DCMC which conducted a pre-award survey of Dual.  Dual complains that, 
after completing its pre-award survey, DCMC recommended "no award" to 
Dual and that the Air Force made a negative nonresponsibility 
determination on Dual based upon DCMC's recommendation.  The protester 
contends that, since Dual is a small business concern, the agency was 
required to refer the matter to the SBA for a responsibility 
determination.  Protest Letter at 6-7.  This protest argument is 
without merit.  

An agency may use traditional responsibility factors as technical 
evaluation factors where, as here, a comparative evaluation of those 
areas is to be made.  Dynamic Aviation--Helicopters, B-274122, Nov. 1, 
1996, 96-2 CPD  para.  166 at 3.  A comparative evaluation means that 
competing proposals are rated on a scale relative to each other as 
opposed to a pass/fail basis.  Id.  In a negotiated procurement, SBA 
referral is mandatory only where a traditional responsibility-type 
factor is evaluated on a pass/fail basis and the contracting agency 
determines that a small business's proposal should be rejected for 
failure to pass that factor.  T. Head and Co., Inc., B-275783, Mar. 
27, 1997, 97-1 CPD  para.  169 at 3.  

Here, the RFP specifically stated that successful offerors would have 
to demonstrate financial capability to fulfill the contract 
requirements and that a pre-award survey would be conducted as part of 
the general considerations factor evaluation to determine each 
offeror's ability to meet the RFP requirements.  RFP  sec.  M-2:1.1.1, 
M-2:5.1.  Contrary to the protester's assertion, the Air Force did not 
reject its proposal or make a negative determination of Dual's 
responsibility based upon the DCMC recommendation.  In fact, the 
record shows that Dual's was one of the five proposals submitted by 
small business concerns that were considered acceptable by the SSA.  
Source Selection Decision Memorandum at 2, 5.  The record further 
shows that Dual's proposal was determined not to represent the best 
value--i.e., was considered of lesser value than INTELX's and Camber's 
proposals--after a thorough evaluation of a multitude of factors 
within each of the evaluation factors and a comparison of the relative 
merits, strengths, and weaknesses of proposals.  Id. at 3-6.  As Dual 
was not in line for award, the contracting officer made no 
determination on Dual's responsibility, and referral to the SBA was 
not necessary.

For the reasons set forth above, we sustain the protest.  We therefore 
recommend that, if there is a continuing need for a second award, the 
agency recompete its requirement for such second small business 
contract[5] and, if a firm other than Camber is selected for award, 
terminate Camber's contract and award the second small business 
set-aside contract to the small business firm whose proposal does 
represent the best value.[6]  We also recommend that Dual be 
reimbursed its costs of filing and pursuing the protest, including 
reasonable attorneys' fees.  4 C.F.R.  sec.  21.8(d)(1).  Dual should 
submit its certified claim for costs, detailing the time expended and 
costs incurred, directly to the contracting agency within 60 days 
after receipt of this decision.  4 C.F.R.  sec.  21.8(f)(1).

The protest is sustained.

Comptroller General
of the United States

1. The contracts are referred to as the Training Systems Acquisition 
or TSA contracts.

2. Dual's protest concerns only the contract award to Camber.  Dual 
Supplemental Comments at 2 n.2.  Therefore, our discussion will be 
limited to the evaluations of Dual's and Camber's proposals and the 
selection of Camber for award.

3. The Air Force notified Camber of the protest and provided it a copy 
of the agency's protest report, but Camber has not explained the 
circumstances of the Flight Simulation Division sale. 

4. The Air Force first learned from a disappointed offeror on July 22 
of Camber's sale of the Flight Simulation Division.  Air Force 
Supplemental Legal Report at 3. 

5. Since the information concerning Camber came to light after the 
award, this information cannot be considered in any reevaluation 
without this information being submitted as part of a revised 
proposal.  To permit Camber to submit a revised, materially altered 
proposal without permitting the other losing small business firms to 
revise their proposals would afford Camber an unfair competitive 
advantage.

6. The Air Force indicated that it may have no requirement for a 
second small business set-aside contract and, therefore, even if our 
Office were to sustain the protest and recommend corrective action, 
the Air Force stated that it might not recompete the requirement and 
make a new award decision.  Letter from Air Force Counsel to the 
General Accounting Office Attorney at 1 (October 26, 1998).   If it 
turns out that the Air Force no longer requires a second small 
business contract and therefore chooses not to recompete the 
requirement, we recommend that Dual be reimbursed for its proposal 
preparation costs.  Bid Protest Regulations, 4 C.F.R.  sec.  21.8(d)(2) 
(1998).