BNUMBER: B-280834; B-280834.2
DATE: November 25, 1998
TITLE: Lear Siegler Services, Inc., B-280834; B-280834.2, November
25, 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:Lear Siegler Services, Inc.
File: B-280834; B-280834.2
Date:November 25, 1998
Harvey G. Sherzer, Esq., Lee P. Curtis, Esq., Allen Cannon, III, Esq.,
and Douglas S. Manya, Esq., Howrey & Simon, for the protester.
Cyrus E. Phillips, IV, Esq., William H. Butterfield, Esq., and
Christopher H. Jensen, Esq., Kilcullen, Wilson and Kilcullen, for
Sikorsky Support Services, Inc., an intervenor.
Ellen Washington, Esq., and J. Cole Cartledge, Esq., Naval Air Systems
Command, Department of the Navy, 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 inconsistencies in the ratings
definitions found in the source selection plan resulted in an
unreasonable evaluation is denied where the record shows that the
evaluators performed a reasonable assessment of proposals in
accordance with the solicitation's evaluation plan.
2. Allegation that agency held inadequate discussions because it did
not advise the protester that its price was considered high is denied
where the record shows that the protester's initial price was, in
fact, within the middle range of prices, and even as revised, was not
so much higher than the prices of other offerors to require advising
the protester of this fact.
3. Protest that agency's evaluation of past performance failed to
consider the relevance of an offeror's experience is denied where the
record shows that the agency evaluators considered the awardee's lack
of relevant experience and reflected it in the assigned rating.
Although the record is less clear about whether the agency considered
the relevance of the protester's experience (protester was the
incumbent for these services for the previous 10 years), the agency
reasonably rated the protester's experience as satisfactory, given the
protester's problems in performing these services during the
predecessor contract.
4. Contention that agency performed a flawed price analysis by
failing to consider whether the awardee planned to provide the fringe
benefits required under the applicable collective bargaining
agreements and wage determinations, thus permitting the awardee a
competitive advantage, is denied where the record does not indicate
that the awardee will not comply with the required compensation
levels, and where the agency's price analysis was otherwise
reasonable.
5. Protester's contention that agency failed to perform an
appropriate price/technical tradeoff between its proposal and the
proposal of the awardee is denied where the record shows that the
protester was not prejudiced by any failure in this regard because the
protester was not next in line for award. Instead, a tradeoff was
made between the awardee's lower-rated, lower-priced proposal, and
another offeror's proposal that was rated higher, but priced lower,
than the protester's proposal.
DECISION
Lear Siegler Services, Inc. (LSI) protests the award of a contract to
Sikorsky Support Services, Inc., by the Department of the Navy
pursuant to request for proposals (RFP) No. N00019-97-R-0030, issued
for maintenance of fixed- and rotary-wing aircraft at Naval Air
Stations in Meridian, Mississippi; Pensacola, Florida; and Corpus
Christi, Texas. LSI argues that the Navy's method of evaluating
proposals was irrational; that the agency failed to hold meaningful
discussions; that the agency's assessment of past performance and its
price analysis were unreasonable; and that the selection decision was
flawed for the reasons above, and improper on its face.
We deny the protest.
BACKGROUND
The RFP, issued December 24, 1997, sought maintenance services for
approximately 139 T-2C and TA-4J aircraft (together with approximately
5 HH-1N and UH-3H helicopters) used by the Chief of Naval Air Training
to train undergraduate student pilots in intermediate and advanced
"Strike" fighter skills. Hearing Transcript (Tr.) at 83-84. The RFP
anticipated award of a fixed-price requirements contract for a 1-year
base period, followed by four 1-year options, to the offeror whose
proposal represented the best value to government.
As amended, the RFP identified three evaluation factors, in descending
order of importance: technical, management, and price. Under the
technical and management evaluation factors were the following
subfactors (technical subfactors listed in descending order of
importance; management subfactors equal in weight):
Technical
-- Maintenance and logistics support approach
-- Engineering support and services
-- Quality assurance program
-- Safety and environmental
Management
-- Management approach
-- Experience/past performance/systemic improvement
RFP, amend. 0005, sec. M-2, para. 1. Under the price evaluation factor,
the RFP advised offerors that the agency would perform a price
analysis, including calculating an evaluated price using a weighted
average method, as well as a best estimated quantity (BEQ) price. Id.
at para. 2. The RFP further advised that the agency would assess risk
under each evaluation factor and subfactor. Id. at para. 1.
The Navy received four initial proposals, including those submitted by
LSI and Sikorsky. To evaluate the technical and management portions
of the proposals, the Navy convened a technical evaluation team (TET);
to review price proposals, the Navy convened a price evaluation team
(PET). At the conclusion of the TET and PET reviews, the teams
presented their findings to a competitive award panel (CAP). The TET
findings, in particular, consisted of a list of evaluated strengths
and weaknesses under each factor and subfactor, for each of the four
proposals. The PET review identified each offeror's evaluated price
and BEQ price, along with any comments regarding the price proposal
and any subjects for discussion or clarification with the offeror.
After presentations by the TET and PET, the CAP recommended to the
source selection authority (SSA) that all four proposals be included
in the competitive range for award, and that the Navy hold discussions
with the offerors. The SSA concurred, and after discussions, offerors
were asked to submit written responses, and any revised prices by June
18, 1998. After review of these submissions, offerors were asked to
submit final revised proposals (FRP) by July 1. Although the call for
FRPs permitted changes, offerors were advised that any changes
required documentation.
Upon receipt of FRPs, the TET and PET revised their evaluations, and,
on July 7, presented the results of their final review to the CAP.
The minutes of this CAP meeting were memorialized in a memorandum
dated July 8, which contains a summary of the overall technical and
management ratings and risk assessments, as well as the proposed
evaluated and BEQ prices. The final overall ratings and prices, as
set forth in the CAP memorandum[1], are shown below:
Technical
rating/risk Mgmt.
rating/risk Overall
rating/risk Evaluated
Price
(millions) BEQ
Price
(millions)
Offeror A S/M HS/L S+/M $172.0 $177.4
LSI S+/L S/L S/L $181.1 $173.3
Offeror B S+/L S+/M S+/L $169.7 $165.1
Sikorsky S/M S/L S/M $149.6 $147.7
CAP Memorandum, July 8, 1998, at 2-4. In reviewing these results, the
CAP "decided there was no competitive advantage for awarding to either
[LSI] or [Offeror A] since both were considerably higher in price than
either [Offeror B] or Sikorsky." Id. at 3.
The CAP memorandum also considered whether to raise the overall risk
rating for Sikorsky from medium to high, but concluded that the medium
risk factor need not be changed, and that the risk of awarding to
Sikorsky versus Offeror B was offset by the $17.4 million in savings
achieved from awarding to Sikorsky.[2] Id. In addition, the CAP
memorandum stated:
Although Sikorsky's proposed price is low and they provide no
risk mitigation plan to cover the potential loss of qualified
personnel, the CAP believed that these concerns could be
rectified with close Government monitoring and by adding a CDRL
[Contract Data Requirements List] for a Government-approved
training program at the time of award.
Id. at 4.
One week later, on July 14, 1998, the SSA concurred in the
recommendations found in the CAP memorandum by marking an "X" on a
cover sheet appended to the memorandum. Although the SSA testified
that some of the members of the CAP discussed the evaluation results
with him, there is no separate memorandum of that discussion, and the
minutes of the CAP meeting were used as the source selection document.
See Tr. at 41-42. The Navy awarded the contract to Sikorsky on August
10, notified LSI of the award the next day, and provided a debriefing
to LSI on August 14. On August 19, LSI filed this protest.
In response to LSI's protest, our Office requested a report from the
Navy by not later than September 18. On September 9, the CAP
reconvened to prepare a new selection decision, which was again
reflected in a memorandum, and again adopted by the SSA. The SSA's
concurrence and the second CAP memorandum are dated September 16.
During the course of the hearing held by our Office, the SSA explained
that the CAP was reconvened in response to the protest and was tasked
to perform a tradeoff between the proposals submitted by LSI and
Sikorsky, because the earlier CAP memorandum had not focused on a
tradeoff with LSI, but with another offeror--i.e., offeror B in the
table above. Tr. at 39-40. In this document, the CAP lists each of
the identified strengths of the LSI proposal, and concludes that none
of these strengths are sufficient to justify selection of LSI's
higher-priced, higher-rated proposal over the lower-priced,
lower-rated proposal submitted by Sikorsky.
ANALYSIS
As stated above, LSI's protest raises three distinct types of
challenges to the Navy's conduct of this procurement: (1) process
challenges, including the evaluation method and the adequacy of
discussions; (2) substantive challenges, including the evaluation
assessments in the areas of past performance and price realism; and
(3) a challenge to the source selection decision. Based on our review
of the record, and a hearing convened in this protest, we disagree
with LSI's challenges to the method of the evaluation, the adequacy of
discussions, and the substantive evaluation assessments, as discussed
in greater detail below. On the other hand, while we agree that the
source selection statement was flawed, we conclude that LSI was not
prejudiced by the agency's actions in this area.
The Challenge to the Evaluation Method
LSI argues that the ratings definitions used by the evaluators to rate
proposals under all of the factors and subfactors, as well as the
method of preparing consensus summaries of the evaluation results,
improperly culminated in all of the proposals receiving the same
satisfactory rating under almost every factor and subfactor. With
respect to the issue of ratings definitions, LSI explains that the
definitions in the source selection plan require reliance on
information about the offeror's past performance that was generally
not available to the technical evaluators. While LSI is correct about
the problem with the ratings definitions, we do not agree that this
problem resulted in an unreasonable evaluation of proposals.
The Navy's source selection plan contained the following standard for
a rating of outstanding:
Proposal significantly meets or exceeds the requirements of the
solicitation and contains at least one exceptional enhancing
feature which benefits the Government. Offeror demonstrates past
performance that consistently exceeds expectations. Any weakness
is minor.
Source Selection Plan, Jan. 13, 1998, at 8 (emphasis added).
Similarly, each of the other definitions required a conclusion about
the offeror's past performance: the rating of "satisfactory" required
a conclusion that past performance "generally meets expectations."
Id. at 8-9. LSI contends that since the technical evaluators
generally did not review the past performance portion of the proposal,
they lacked information upon which to base the conclusions requested
by the ratings definition.
Preliminarily, we note that to the extent LSI argues that the Navy
failed to follow the source selection plan, its argument ignores the
distinction between an evaluation scheme included in the RFP, and a
source selection plan provided to evaluators as a guideline. As
between these two documents, it is the RFP--and the evaluation scheme
set forth therein--that forms the compact between the agency and the
offerors about how proposals will be evaluated. Loral Aeronutronic,
B-259857.2, B-259858.2, July 5, 1995, 95-2 CPD para. 213 at 9. Source
selection plans are internal agency instructions and do not give
rights to outside parties. Id. at 9-10.
Even though our Office will not sustain a protest based on deviations
from the source selection plan, we were concerned about how this
anomaly in the ratings plan affected the evaluation. During the
hearing in this protest, one of the technical evaluators testified
about the evaluation process and confirmed that he did not review the
past performance volume, or any other unrelated proposal volume,
unless specifically referenced there by the portion of the technical
proposal he was reviewing. Tr. at 255, 260-61. Nonetheless, he
explained that while he recognized the "three-legged" nature of the
ratings definitions--i.e., each rating sought an assessment of
requirements, enhancing features, and past performance--he was able to
evaluate proposals using the selection plan's definitions, and did not
feel unable to award ratings of outstanding or highly satisfactory
because of a lack of information. Tr. at 252-54, 270-71. In
addition, he noted that despite the ratings definition, there were
still ratings of highly satisfactory or outstanding awarded to
portions of some proposals. Tr. at 271. The evaluator explained he
was comfortable making the assessment called for by the ratings
definition because there was other past performance information
mentioned within each portion of the proposal. Tr. at 255.
While the testimony here confirms LSI's contention that the technical
evaluators generally did not review the past performance volumes in
the proposals, the record establishes that the evaluators nonetheless
made assessments across the range of definitions (including awarding
ratings of highly satisfactory and outstanding (Tr. at 271)), despite
the apparent problem with the ratings definitions. In addition, LSI
has not shown--nor has it argued--that any of its ratings under the
technical evaluation criteria were unreasonable. Thus, we conclude
that this problem with the ratings definition did not translate to an
unreasonable evaluation of the proposals vis-�-vis the evaluation
criteria.
Secondly, LSI argues that in preparing summary materials for
higher-level review, the evaluators leveled the differences between
proposals by awarding ratings of satisfactory regardless of the
numbers of strengths and weaknesses identified. LSI contends that it
was unreasonable for its proposal to receive an overall rating of
satisfactory/low risk, while Sikorsky's proposal received a rating of
satisfactory/moderate risk, given the fact that the evaluators
identified 18 strengths and only 2 weaknesses in LSI's proposal, while
identifying 8 strengths and 10 weaknesses in Sikorsky's proposal. In
addition, LSI points out that 4 of Sikorsky's 8 strengths were related
to helicopter maintenance, while only 5 of the 144 aircraft covered by
this procurement are helicopters. Tr. at 83-84.
An agency's method for evaluating the relative merits of competing
proposals is a matter within the agency's discretion, since the agency
is responsible for defining its needs, and the best method for
accommodating them. Advanced Tech. and Research Corp., B-257451.2,
Dec. 9, 1994, 94-2 CPD para. 230 at 3. Where an evaluation is challenged
we will examine 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. Our chief concern is not the numbers of
strengths or weaknesses, point scores, or specific ratings, but
whether the evaluation communicates the principal strengths and
weaknesses to the SSA and whether the record supports the evaluators'
conclusions. Innovative Logistics Techniques, Inc., B-275786.2, Apr.
2, 1997, 97-1 CPD para. 144 at 9.
Here, the Navy agrees, and the record confirms, that the agency's
evaluators identified more strengths and fewer weaknesses for LSI than
Sikorsky. The Navy explains, however, that LSI's proposal's
strengths, either alone or collectively, did not raise the proposal to
the level of highly satisfactory or outstanding in the eyes of its
evaluators. Thus, the Navy argues that its evaluation was reasonable,
and that there was no methodology of leveling, as LSI urges.
Our review of the record shows nothing unreasonable in the Navy's
approach to assigning overall adjectival ratings to each proposal
based on the proposal's assessed strengths and weaknesses. See id.
Nor do we see anything unreasonable about the adjectival ratings
assigned to LSI's proposal. In this regard, we find persuasive the
testimony of the evaluator who explained that the large number of
satisfactory ratings was, in fact, the consensus view of the
evaluators about the merits of the proposals reviewed. Tr. at 271.
As stated above, we note that LSI does not claim that its individual
ratings were unreasonable, only that the relative strengths and
weaknesses of its proposal were lost in the process. Accordingly, we
deny LSI's challenge to the underlying process of assigning ratings.
Adequacy of Discussions
LSI also argues that discussions were inadequate because the Navy did
not advise the company that its price was significantly higher than
Sikorsky's, or that its price proposal contained two identified
weaknesses.
Our Office reviews the adequacy of agency 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 3. For the
reasons set forth below, we conclude that, under the circumstances
here, the Navy was not required to advise LSI that its price was
higher than Sikorsky's, or about the two weaknesses identified in
LSI's price proposal.
The record shows that at the conclusion of initial evaluations, one
offeror's price was significantly above, and one's significantly
below, the spread of prices. (A table summarizing the pricing[3] at
the time of initial, revised, and final revised proposals is set forth
below.)
PROPOSAL PRICES
(in millions of dollars)
Initial
Evaluated
Price Revised
Evaluated
Price Final
Evaluated
Price Final
BEQ Price
Offeror A $200.8 $178.2 $172.0 $177.4
LSI $170.0 $184.4 $181.1 $173.3
Offeror B $163.3 $169.7 $169.7 $165.1
Sikorsky $137.9 $150.3 $149.6 $147.7
PET Briefing for CAP, July 7, 1998, at second and nineteenth
unnumbered pages. As a result, the Navy opted to advise Sikorsky that
its initial price was considered low, and Offeror A that its initial
price was considered high. CAP Minutes, May 18, 1998, at 5-6.
Offerors were asked to respond to the discussion questions and revise
their proposals as needed, by June 18. In this revised submission,
LSI's evaluated price increased significantly and, at $184.4 million,
was the highest-priced revised proposal. One week later, without
further discussion questions for any offeror, the Navy advised that
discussions were concluded and called for FRPs by July 1. In
addition, the Navy counseled that further changes to proposals were
not expected, and that any changes must be documented.
While LSI contends it was unreasonable for the Navy not to advise it
that its price was considered high--given the Navy's willingness to
advise Offeror A and Sikorsky that their prices were considered high
and low, respectively--there is nothing about LSI's pricing posture at
the time the Navy evaluated initial proposals that triggered a
requirement for the Navy to advise the company that its price was
considered high. As shown above, LSI's price was more than $30
million lower than Offeror A's price, and was in line with the price
submitted by Offeror B.
In addition, we are not convinced by this record that even if the Navy
had held a second round of discussions after receiving responses to
its first round--and it did not--that there was a requirement to
advise LSI that its revised price was too high. At the time of
revised proposals, each offeror other than Offeror A (whose initial
price had significantly exceeded the others) increased its price
significantly. While LSI's price became highest, the table above
shows that LSI's revised price was not dramatically above either
Offeror A or Offeror B's price. Under these circumstances, we will
not conclude that the Navy was required to advise LSI that its price
was considered high.[4]
The second prong of LSI's complaint about the adequacy of discussions
regarding its price involves two weaknesses identified by the Navy in
the price proposal. First, LSI argues that it should have been
advised that the Navy identified high pricing in the low quantity
areas of the proposal as a weakness, causing the evaluated price to be
high. PET Briefing to CAP, July 7, 1998, at twelfth unnumbered page.
Our review of the evaluation materials prepared in response to LSI's
initial proposal leads us to reject this argument completely. The
PET's assessment of LSI's initial proposal notes that "[b]and pricing
and [m]anning are balanced compared to [the] BEQ." This assessment is
supported by the fact that LSI's initial evaluated and BEQ prices are
relatively close, $169.96 million and $163.21 million, respectively.
Initial PET Briefing, May 18, 1998 at ninth unnumbered page. Thus,
this problem was first present in LSI's FRP, and LSI, not the Navy,
bears the risk for negative changes made in its final proposal
submission. Mine Safety Appliances Co., B-242379.5, Aug. 6, 1992,
92-2 CPD para. 76 at 7. In addition, we note that the selection decision
in this procurement was based on BEQ prices, not evaluated prices,
suggesting that this weakness may have had no impact on the selection
decision.
Also, LSI argues that the Navy was required to advise the company that
it considered the price proposal weak because the "[p]roportion of
flight hour pricing with relation to fixed maintenance is lower than
that experienced on past and present maintenance contracts." PET
Briefing to CAP, July 7, 1998, at twelfth unnumbered page.
The record here shows that the Navy identified this issue in LSI's
initial proposal, but did not label it a weakness and did not raise
the matter during discussions. Initial PET Briefing, May 18, 1998 at
ninth and tenth unnumbered pages. In the final evaluation, the Navy
noted that the ratio remained unchanged and labeled this a weakness,
as quoted above. PET Briefing to CAP, July 7, 1998, at eleventh and
twelfth unnumbered pages. LSI claims that if it had been directed to
this imbalance in its pricing structure, it would have reviewed the
Navy's concerns and lowered its price. Protester's Comments, Sept.
28, 1998, at 41.
In our view, the comments of the evaluators regarding the ratio of
flight hour pricing to fixed maintenance costs do not translate to the
kind of weakness about which LSI had to be advised during discussions,
despite the decision of the pricing team to highlight this issue for
the CAP. As stated above, at the conclusion of the initial
evaluation, LSI's price was not out of line with the competition, and,
in fact, was in the middle of the offered prices. Given the moderate
nature of the total price, the fact that the evaluators observed a
difference in the proposed versus experienced relationship between
these two elements of the price does not mean that LSI should have
been advised to consider changing the balance it had struck in
building its price proposal. In short, even if we assume that LSI
would have lowered its price had it been advised of the Navy's views,
we do not find in these facts that the Navy was required to advise LSI
of this issue during discussions.[5]
Past Performance
LSI argues that the Navy's past performance review was unreasonable
because the agency made no judgment about whether an offeror's past
performance was relevant to the effort here, and as a result, assigned
the same past performance score to Sikorsky's proposal as it did to
LSI's. Since Sikorsky's experience is largely with rotary-wing
aircraft--a very small portion of the total aircraft to be maintained
under this contract--while LSI has performed these services for the
previous 10 years, LSI argues that there is no basis for a finding
that the offerors were equal in this area. For the reasons set forth
below, we conclude that the evaluation in this area is reasonable.
As stated above, the experience/past performance/systemic improvement
evaluation subfactor was one of two equally-weighted subfactors under
the management factor in the RFP. The RFP requested offerors to
provide information directly applicable to the tasks here, including
information on previous similar programs in the same plant, division
or cost center where the offeror intends to provide these services.
RFP, amend. 0005, sec. L-13(b)3.2.2. In addition, offerors were
specifically advised that the relevancy of their recent experience
would be evaluated. RFP, amend. 0005, sec. M.2, para. 2. At the
conclusion of the Navy's review of FRPs, both LSI and Sikorsky
received ratings of satisfactory/low risk under this subfactor.
As with any evaluation factor, when a protester challenges an
evaluation of its past performance and experience, we will examine the
record to determine whether the agency's judgment was reasonable and
consistent with the stated evaluation criteria and with applicable
statutes and regulations. IGIT, Inc., B-275299.2, June 23, 1997, 97-2
CPD para. 7 at 5; ESCO, Inc., B-225565, Apr. 29, 1987, 87-1 CPD para. 450 at
7. In addition, as LSI contends, a proposal reflecting more relevant
successful past experience should generally be rated higher than a
proposal reflecting clearly less relevant past performance. Israel
Aircraft Indus., Ltd; MATA Helicopters Div., B-274389 et al., Dec. 6,
1996, 97-1 CPD para. 41 at 9; Ogden Support Servs., Inc., B-270012.4, Oct.
3, 1996, 96-2 CPD para. 137 at 3.
Here, there can be little doubt that LSI's experience in performing
the same effort for the previous 10 years is more relevant than the
past performance offered for review by Sikorsky. There is no dispute
in the record that each of the three Sikorsky contracts evaluated by
the Navy involves maintenance of helicopters or helicopter components,
while the maintenance effort here is comprised of 139 fixed-wing
aircraft and only 5 helicopters.
On the other hand, LSI's contention that the Navy failed to consider
the relevance of its and Sikorsky's past performance and experience is
not supported by the record. While LSI is correct that no mention of
the relevance of an offeror's experience is made in the summary
evaluation documents, our review of the individual evaluation sheets
shows otherwise. With respect to Sikorsky, the evaluation sheets show
at least three instances--and possibly four[6]--where evaluators
assessing the experience/past performance subfactor specifically note
that Sikorsky's experience is largely with helicopters and not with
fixed-wing aircraft. Having clearly considered that Sikorsky's
experience is different from the effort covered by this procurement,
the evaluators then rated Sikorsky's experience as satisfactory under
this subfactor.[7] This is a judgment well within the discretion of
the evaluators, and one that our Office will not second-guess. See
generally U.S. Tech. Corp., B-278584, Feb. 17, 1998, 98-1 CPD para. 78 at
7-8.
With respect to LSI's rating of satisfactory, the Navy's assessment
also withstands scrutiny. Although there is no doubt that LSI's
experience is more relevant than Sikorsky's, its performance of these
services over the previous 10 years cannot be termed successful,
without qualification. As explained by the Navy in its initial and
supplemental agency reports, and as reflected extensively throughout
the evaluation materials, LSI's previous maintenance of the T-2C
aircraft was considered so problematic that in 1997 the entire fleet
was grounded, and the Navy threatened not to exercise the final option
year of the contract. Agency Report, Sept. 18, 1998, at 14;
Supplemental Agency Report, Oct. 12, 1998, at 7. The record also
shows that this issue was raised with LSI during discussions, and
while its response was considered adequate to address the concerns,
the Navy concluded that a rating of satisfactory/low risk was the
highest rating warranted under the circumstances. Id. At no point
during the course of this protest, despite the filing of comments,
supplemental comments, and a post-hearing brief, did LSI challenge the
facts about its past performance offered by the Navy as justification
for LSI's satisfactory rating.
In summary, while we see no place in the record that makes a finding
about the greater relevance of LSI's experience vis-�-vis the other
offerors, we see nothing unreasonable about an evaluation assessment
of LSI's past performance that turns on the problems LSI experienced
in performing this very contract. Simply put, it is hard to imagine
information more relevant than LSI's problems performing these same
services for the same Navy installation. IGIT, Inc., supra, at 6.
Price Analysis
LSI argues that the Navy failed to perform an adequate price realism
analysis to permit the agency to fully understand the risks associated
with Sikorsky's significantly lower price. We disagree.
As LSI correctly argues, the RFP requested that offerors confirm in
their proposals that their prices are in accordance with the
applicable wage determination or collective bargaining agreement.
RFP, amend. 0005, sec. L-13(b)4.0. In addition, offerors were advised
that the agency would perform a price realism evaluation that would
include a review of personnel compensation rates. RFP, amend. 0005, sec.
M-2, para. 2.C. In LSI's view, this analysis should have addressed
not only whether the direct labor rates were in accordance with the
applicable wage determination or collective bargaining agreement, but
whether the fringe rates applied to the direct rates would provide the
requisite total compensation package.
As a general rule, price realism is not considered in the evaluation
of proposals for the award of a fixed-price contract, because these
contracts place the risk of loss upon the contractor. The Arora
Group, Inc., B-277674, Nov. 10, 1997, 98-1 CPD para. 64 at 4. However,
agencies may elect to provide for the use of a price realism analysis
in a solicitation for the award of a fixed-price contract for the
purpose of measuring an offeror's understanding of the solicitation's
requirements or to assess the risk inherent in an offeror's proposal.
PHP Healthcare Corp., B-251933, May 13, 1993, 93-1 CPD para. 381 at 5. In
addition, while our Office generally will not consider questions of an
offeror's compliance with wage determinations or collective bargaining
agreements, we will review an allegation that an agency's use or
evaluation of such determinations or agreements has prevented the
protester from competing on an equal basis with the awardee.
Education Serv. District of Washington County, B-198726, B-198792,
Nov. 19, 1980, 80-2 CPD para. 379 at 2.
As stated earlier, the record here shows a large difference in the
final BEQ prices proposed by LSI and Sikorsky--i.e., $173.3 million
and $147.7 million, respectively. The CAP focused on Sikorsky's low
price during the cost/technical tradeoff stating:
the low burden rates and .5% profit proposed by Sikorsky are
unusually low and considered a risk since the first step a
contractor usually takes when in a loss situation is to remove
employees. It was further discussed that although the offeror
had the right to reduce his profit margin to make himself more
competitive in this fixed price environment, this could increase
the performance risk.
CAP Report, July 8, 1998, at 3. LSI argues that the considerations
reflected in the CAP report show that the Navy considered Sikorsky's
low price to be caused by low burden rates and profit, and failed to
understand that Sikorsky was not, in LSI's view, offering the mandated
wage rates.
As a preliminary matter, our review of the pleadings in this area do
not lead us to conclude that LSI has established the factual predicate
of its argument--i.e., that the Sikorsky proposal denies its employees
wages mandated by the solicitation and by law, and that the Navy acted
unreasonably by not addressing the issue in its evaluation. Sikorsky
takes no exception to the RFP's compensation requirements, and
represents in its proposal that it has used the collective bargaining
agreements and wage determinations provided by the agency. Sikorsky
Proposal, Vol. 4 at 46. Thus, we conclude that Sikorsky is legally
bound to pay the wages and fringe benefits required here, and has
obtained no unfair advantage since it will be required to absorb any
costs for which it has failed to account. JVAN, Inc., B-202357, Aug.
28, 1981, 81-2 CPD para. 184 at 4-5.
As Sikorsky convincingly shows, the LSI argument appears to be based
on an "apples versus oranges" comparison of the fringe rates used by
the two offerors. Specifically, Sikorsky provides detailed evidence
showing that when its rates are normalized to cover the same costs
included in LSI's rates there is almost no difference between the two
proposals. Sikorsky's Supplemental Comments, Oct. 5, 1998, at 2.
Despite a detailed filing on this issue subsequent to Sikorsky's
filing, LSI does not rebut this contention. In addition, Sikorsky,
through the use of its expert witness, sets forth a detailed
explanation--again unrebutted--of each of the bases for the difference
between the two prices, none of which are related to compliance with
the applicable wage rates. Sikorsky's Comments, Sept. 28, 1998, at
16-17.
Even assuming LSI is correct in its contentions about the reasons for
the price differential between these two offerors--and it does not
appear that it is--LSI's arguments have more to do with the detailed
kind of analyses seen in a cost realism review, than with a review of
prices in a fixed-price environment. The Navy explains that it
reviewed the distribution of costs across contract line items to
ensure that overall prices were materially balanced when compared to
the BEQ; compared the offered prices to the prices of similar
maintenance contracts; compared the prices to the prices of other
offerors in the competition; and compared the wage rates with those
mandated. In addition, the Navy made a finding of proposal risk
associated with Sikorsky's low price, which is, in fact, one of the
purposes of a price realism review.[8] PHP Healthcare Corp., supra.
Under all of the circumstances here, and given that the nature and
extent of an agency's price realism analysis is a matter within its
discretion, we conclude that the Navy performed a reasonable review of
price realism in this procurement. The Centech Group, Inc., B-278715,
B-278715.2, Mar. 5, 1998, 98-1 CPD para. 108 at 6-7.
Source Selection Decision
LSI argues that the source selection decision, as set forth in the CAP
Memorandum of July 8, failed to perform a proper price/technical
tradeoff between its proposal, and the proposal of Sikorsky. LSI also
argues that the Navy's second price/technical tradeoff prepared in
response to the protest should be given little weight.
As explained above, the Navy's first source selection decision
contains almost no mention of LSI, whose proposal is higher-rated and
higher-priced than the awardee's proposal. Instead, after including
LSI in one table showing its factor-level ratings and risk, and
another table showing its evaluated price, the CAP "decided there was
no competitive advantage for awarding to either [LSI] or [Offeror A]
since both were considerably higher in price than either [Offeror B]
or Sikorsky." CAP Memorandum, July 8, 1998 at 3. In addition, as
shown in the table at page 4 of this decision, LSI's overall technical
rating was lower than Offeror B's--LSI received a rating of S/L, while
Offeror B received a rating of S+/L. Thus, the remainder of the
selection decision does not address the relative merits of Offeror B
and Sikorsky, but instead focuses on whether Sikorsky will be able to
perform the services here for its significantly lower price.
Given that we have reviewed each of LSI's challenges to its evaluation
and have concluded that the overall evaluation was reasonable, and
given that there was a higher-rated, lower-priced proposal between the
awardee and LSI, the Navy was not required to perform a
price/technical tradeoff between LSI and Sikorsky.[9] Accordingly, we
do not reach LSI's challenges to the supplemental price/technical
tradeoff decision.
The protest is denied.
Comptroller General
of the United States
1. The CAP report adopts the summary assessments used by the TET to
report its findings. The TET used adjectival ratings of outstanding
(O), highly satisfactory (HS), satisfactory (S), marginal (M), or
unsatisfactory (U). These adjectival ratings were supplemented by a
plus (+) or minus (-) sign as appropriate. Risk was assessed as
either high (H), medium (M), or low (L).
2. The price savings used for the cost/technical tradeoff in the CAP
memorandum, and by the Navy throughout this procurement, is based upon
a comparison of the BEQ prices.
3. The Selection Decision in this procurement was ultimately based on
the BEQ prices submitted by each offeror, rather than the evaluated
prices shown in three of the four columns of this table. This table
shows evaluated prices because the record contains no calculation of a
revised BEQ price for the offerors. Thus, for consistency of
comparison, this discussion is based on the evaluated prices.
4. LSI also argues that during the week between the time it submitted
its revised price and the time the Navy advised offerors that
discussions were concluded, the Navy should have advised LSI that its
price was considered high. We need not reach this issue, since we
conclude that the Navy would not have been required to advise LSI
about this issue, even if the Navy had conducted further discussions.
5. We also cannot fail to observe that among the offerors here,
LSI--the incumbent for the previous 10 years--was uniquely positioned
to make an informed judgment about the appropriate ratio between
flight time and maintenance costs for these services, and was less in
need of coaching during discussions about costs experienced in the
past than any other offeror at the table.
6. Because the individual evaluator's scoresheets are not particularly
well-organized, we cannot rule out the possibility--based on a
similarity in the handwriting--that one of the four worksheets
identified in our review may, in fact, be a summary sheet prepared by
one of the same evaluators who prepared the other three scoresheets.
These scoresheets are found in the Agency Report, Tab 17, at the
twenty-eighth, thirty-first, thirty-seventh, and sixty-fourth
unnumbered pages.
7. With respect to Sikorsky's rating, we disagree with the protester's
assertion that the situation here is like the situation we reviewed in
Ogden Support Servs., Inc., supra. In that case, as here, the RFP
sought evidence of similar experience for evaluation under the past
performance factor. However, our Office sustained Ogden's protest
when the evaluators awarded a rating of excellent in the area of past
performance to both Ogden and the awardee despite the awardee's
significantly dissimilar experience. Id. at 3. Here, the Navy's
rating of satisfactory for Sikorsky appears to reflect a consideration
of the fact that Sikorsky's past performance, while quite good,
involves experience somewhat different (helicopters versus fixed-wing
aircraft) from the solicited effort.
8. LSI also misstates the CAP's concerns. The CAP consideration,
quoted above, does not state that the Navy considers Sikorsky's low
burden and profit rates to be the only reason for its low price.
Rather, it acknowledges that the rates are low and makes a finding of
risk associated with them.
9. Similarly, we deny LSI's contention that the source selection
decision wrongly added a requirement for the government to monitor
Sikorsky's training program, on the basis that LSI was not prejudiced
by this further element of the price/technical tradeoff between
Offeror B and Sikorsky. Our Office will not sustain a protest unless
the protester demonstrates a reasonable possibility of prejudice,
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).
In any event, this issue appears to be one appropriately reserved for
the agency's administration of the contract. See Vitro Corp.,
B-247734.3, Sept. 24, 1992, 92-2 CPD para. 202 at 9.