TITLE:  The Futures Group International, B-281274.2, March 3, 1999
BNUMBER:  B-281274.2
DATE:  March 3, 1999
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The Futures Group International, B-281274.2, March 3, 1999

Decision

Matter of: The Futures Group International

File: B-281274.2

Date: March 3, 1999

John S. Pachter, Esq., Jonathan D. Shaffer, Esq., Richard F. Smith, Esq.,
and Christina M. Belanger, Esq., Smith, Pachter, McWhorter & D'Ambrosio, for
the protester.

Joseph C. Port, Jr., Esq., and Howard Stanislawski, Esq., Sidley & Austin,
for Deloitte Touche Tohmatsu, an intervenor.

Karen Doswell, Esq., and A. Lindsey Crawford, Esq., United States Agency for
International Development, for the agency.

Charles W. Morrow, Esq., and James A. Spangenberg, Esq., Office of the
General Counsel, GAO, participated in the preparation of the decision.

DIGEST

1. Cost realism analysis that accepted as realistic the awardee's proposed
indirect rates that were significantly below its most recent indirect rate
cost submission is not reasonably supported.

2. Agency reasonably determined that the awardee's proposed research
director met the solicitation's minimum qualifications for this key
personnel.

3. Past performance evaluation is reasonable, notwithstanding a lack of
contemporaneous documentation, where the technical evaluators reasonably
explained during the course of the protest why the awardee's past
performance was rated as outstanding.

DECISION

The Futures Group International protests the award of a contract to Deloitte
Touche Tohmatsu under request for proposals (RFP) No. M\OP-98-918, issued by
the United States Agency for International Development (USAID), to implement
a project intended to increase access to family planning and other
reproductive health products and services obtained through the commercial
and private sectors in developing countries. Futures contends that the
evaluation of Deloitte's proposal was unreasonable.

We sustain the protest.

The RFP implements USAID's latest strategy for encouraging family planning
services in developing countries. It is designed to build commercial markets
for family planning and other health products and services in low and
middle-income populations in developing countries through social marketing
and partnerships with the private and commercial sectors. Under the RFP,
USAID also seeks to expand the funding possibilities for market building
activities through exploring and employing a broad range of public, private
and commercial financing mechanisms through the SUMMA Foundation. [1] RFP sect.sect.
C.1, C.2. The RFP contemplates fulfilling these requirements under a
cost-plus-award-fee contract for a 5-year period. RFP sect.sect. B.2, B.4.

The RFP contemplated a best-value award considering technical, past
performance, and cost realism. The technical evaluation factors, listed in
descending order of importance, were technical approach, key personnel, and
management plan. RFP

sect. M.1(a). The past performance factor was said to be equal in importance to
all technical factors combined. RFP sect. M.4(a). The RFP also stated that the
combination of all evaluation factors other than cost were significantly
more important than cost. RFP sect. M.2(d). The RFP provided for the evaluation
of cost on the basis of realism, and contemplated that proposed costs may be
adjusted based on the results of the cost realism evaluation, resulting in
the adjusted cost being used in the evaluation of cost. RFP sect. M.3.

Futures and Deloitte submitted proposals by the closing date of July 15,
1998. A technical evaluation panel (TEP) evaluated the proposals, and
assigned Futures' proposal a rating of outstanding and Deloitte's proposal a
rating of better. Agency Exhibit No. 3, Technical Evaluation Memorandum at
5. USAID also states that it performed a cost evaluation of the proposals,
which analyzed and compared the individual cost elements of the proposals.
USAID Report, Nov. 12, 1998, at 17-19.

The agency then conducted discussions with the offerors by letter dated
August 11, and received best and final offers (BAFO) by September 8. The
final evaluation rated both Futures' and Deloitte's proposals as outstanding
under all of the technical and past performance factors, although Futures'
proposal was considered slightly superior overall. Agency Exhibit No. 2,
Negotiation Memorandum at 7; see Agency Exhibit No. 8, Supplemental
Technical Evaluation, Sept. 11, 1998, at 1, attachment.

Deloitte's proposed BAFO cost was $87,904,406 and Futures' proposed BAFO
cost was $94,290,894. USAID determined that the proposed costs were
reasonable and realistic and made no probable cost adjustments. Agency
Exhibit No. 2, Negotiation Memorandum at 7, 16; Hearing Transcript (Tr.) at
29, 38, 70-71. [2] USAID determined that Deloitte's proposal represented the
best value because it received the same outstanding rating as Futures'
proposal with a significantly lower cost. Agency Exhibit No. 2, Negotiation
Memorandum at 7. Award was made to Deloitte on September 28. This protest
followed. [3]

Futures protests the propriety of USAID's cost realism evaluation of
Deloitte's proposal, arguing, among other things, that it was unreasonable
for the agency to accept Deloitte's proposed overhead and general and
administrative (G&A) rates because they were at levels significantly below
Deloitte's 1997 rates.

When an agency evaluates proposals for the award of a cost-reimbursement
contract, an offeror's proposed estimated cost of contract performance
should not be considered controlling since, regardless of the costs proposed
by an offeror, the government is bound to pay the contractor its actual and
allowable costs. Consequently, the agency must perform a cost realism
analysis to determine the realism of the offeror's proposed costs and to
determine what the costs are likely to be under the offeror's technical
approach, assuming reasonable economy and efficiency. Federal Acquisition
Regulation (FAR) sect. 15.404-1(d)(1), (2); Tidewater Constr. Corp., B-278360,
Jan. 20, 1998, 98-1 CPD para. 103 at 4. Proposed costs should be adjusted when
appropriate based on the results of the cost realism analysis. FAR sect.
15.404-1(d)(2)(ii). Our review of an agency's cost realism evaluation is
limited to determining whether the cost analysis is reasonably based.
Tidewater Constr. Corp., supra.

Deloitte's cost proposal contained a [DELETED] overhead rate and a [DELETED]
G&A rate. [4] Agency Response No. 2, Deloitte Cost Proposal sect. B.5. Because
Deloitte did not have a negotiated indirect cost rate agreement on file with
the agency, [5] the agency contacted USAID's Overhead, Close Out, and
Special Cost Division of the Contract Audit Management Branch of the Office
of Procurement (OCC). [6] Agency Exhibit No. 24, Declaration of [DELETED],
Dec. 11, 1998, at 2. OCC advised that Deloitte had made an incurred cost
submission in 1997 that showed an overhead rate of [DELETED] and a G&A rate
of [DELETED]. Id; Agency Exhibit No. 21, e-mail from [DELETED], Sept. 23,
1998; Tr. at 31-32. According to the protester's calculations, if the higher
historic rates are applied to Deloitte's proposed costs instead of
Deloitte's proposed rates, it would cause Deloitte's evaluated costs to be
increased by more than $14 million such that Deloitte's evaluated costs
would be significantly higher than Futures' proposed costs. Protester's
Comments, Jan. 22, 1999.

The contemporaneous evaluation record evidences that although USAID was
aware of and concerned about the discrepancy between Deloitte's proposed
indirect rates and recent historic indirect rates, it did not resolve this
discrepancy. Deloitte's proposal does not explain or justify why its
indirect rates were substantially less than those reflected in its 1997
indirect cost submission. See Agency Exhibit No. 12 and Response No. 2,
Deloitte Proposal and Proposal Revisions; see Tr. at 60-61. The only record
of the advice provided by OCC to the contracting office on this matter
states:

The new award of approximately $18 M per year should reduce [overhead] OH &
G&A rates. They have proposed substantially lower OH rate of [DELETED] and a
G&A rate of [DELETED] on your award. Our disagreement with respect to the
indirect cost base of allocation will not reduce the '97 submission below
the proposed rate of [DELETED]. [7]

Since OCC does not have more current information i.e. '98 [year to date
(YTD)] actuals, we recommend that you use the FY '97 incurred cost
submission since that is the most current available. Since the proposed
provisional rates for the OH & G&A rates are lower than the rates included
in the incurred cost submission, we recommend that you use ceiling rates for
the OH and G&A rates. [8]

Agency Exhibit No. 21, e-mail from [DELETED], Sept. 23, 1998. In documenting
the cost evaluation supporting the award selection, USAID reported:

OCC does not have more current information i.e. 1998 YTD actuals, OCC
recommends to use FY 1997 incurred cost submission since that is the most
current available data. Since the provisional rates for the O/H & G&A rates
are lower than the rates included in the incurred cost submission, it is
recommended that ceiling rates be used for the O/H and G&A rates. Since the
home office O/H rate is proposed at [DELETED] which is below the 1997
submission of [DELETED], [Contract Information Bulletin] CIB 92-17 [9]
requires that a ceiling provision be incorporated into the award. The O/H
base allocation is direct labor and fringe benefits.

Since the G&A rate is proposed at [DELETED] which is below the 1997
submission of [DELETED], CIB 92-17 requires that a ceiling provision be
incorporated into the award. The G&A base of allocation is total direct cost
including applicable fringe and overhead costs.

Agency Exhibit No. 2, Negotiation Memorandum at 9. In awarding the contract,
USAID included caps on Deloitte's overhead and G&A rates; however, these
caps were at the [DELETED] rates contained in Deloitte's 1997 indirect rate
submission, not the [DELETED] rates proposed. [10] USAID Supplemental
Report, Dec. 23, 1998, attachment, Deloitte Contract sect. B.6.

We think that the contemporaneous record, which contains only an
undocumented, conclusory statement that obtaining the revenues from this
contract should lower Deloitte's indirect rates, evidences that USAID had no
reasonable basis to find Deloitte's proposed rates realistic. In this
regard, Deloitte's cost proposal does not support its proposed indirect
rates or justify rates substantially lower than its historic rates, nor does
it claim that the firm's proposed rates were lower because they were based
on the receipt of this contract. Agency Exhibit No. 24, [DELETED]
Declaration, Dec. 11, 1998, at 2-3; Tr. at 30-61, 109-10. Moreover, the OCC
representative stated only that receiving this contract "should" lower the
indirect rates from those shown in the 1997 incurred cost submission, with
no comment or estimate as to how much they would be lowered. Agency Exhibit
No. 21, e-mail from [DELETED], Sept. 23, 1998. While it may be that a
determination of the effect of the change that this contract would have on
Deloitte's actual indirect rates could have been estimated based upon an
analysis of the 1997 incurred cost submission, no such analysis has been
provided during the course of this protest.

See Tr. at 109-10, 116, 181-82.

What remains in the contemporaneous record is OCC's advice to the
contracting office that the much higher historical rates contained in
Deloitte's 1997 incurred cost submission should be used, since there was not
sufficient information to determine Deloitte's significantly reduced
proposed rates realistic, but if these latter rates were accepted they were
required by agency guidance to be capped. Agency Exhibit No. 21, e-mail from
[DELETED], Sept. 23, 1998. Despite this advice, USAID did not explain in its
cost analysis why Deloitte's higher historic indirect rates were not a
better indicator than Deloitte's proposed rates of what that firm's actual
indirect rates would be under the contract.

In its report on the protest, USAID stated that it found the significantly
lower overhead and G&A rates proposed by Deloitte were realistic because

[O]CC, on the basis of its own understanding and review of historical
Deloitte data, as well as its understanding that Deloitte's proposed
indirect rates reflected anticipated increased contract revenues derived
principally from [this] contract, concluded that Deloitte's proposed
indirect cost rates were realistic even though they were considerably
[lower] than . . . its 1997 indirect rates . . . .

USAID Supplemental Report, Dec. 14, 1998, at 11; see Agency exhibit No. 24,
[DELETED] Declaration, Dec. 11, 1998, at 3.

As indicated, there is no contemporaneous documentation that confirms that
OCC provided any such advice. At the hearing, the pertinent OCC official
testified that he did not make any recommendations to the contract
specialist regarding the cost realism of Deloitte's rates, nor did he
otherwise assist the contract specialist with the cost evaluation. Tr. at
171-72, 181, 188, 190-92. The contract specialist at the hearing confirmed
that the determination that the overhead and G&A rates were reasonable was
made without the assistance of OCC. Tr. at 31. Thus, the record does not
support the justification advanced in USAID's agency report for finding
Deloitte's proposed indirect rates realistic.

At the hearing, the contract specialist testified that he determined
Deloitte's overhead and G&A rates to be realistic and reasonable, though
significantly lower than that reflected in the incurred cost submission,
because he found that Deloitte proposed to form a Washington, D.C. office
solely devoted to the contract and because he believed that the additional
revenues from this and other contracts would result in lower Deloitte
indirect rates. [11] Tr. at 30. In their post-hearing comments, both USAID
and Deloitte argue that it was reasonable for the contract specialist to
determine the proposed [DELETED] overhead rate realistic because Deloitte
intended on forming a Washington office and Deloitte's 1997 incurred cost
submission reflects an overhead rate of [DELETED] for this suboffice. [12]
USAID Post-Hearing Comments, Feb. 9, 1999, at 12; Deloitte's Post-Hearing
Comments, Feb. 9, 1999, at 16-18; see Agency Exhibit No. 22, Deloitte 1997
Overhead Expenses Table, Mar. 31, 1998, at 1 (1997 incurred cost
submission). USAID also again contends that the agency reasonably concluded
that Deloitte might experience increased revenues resulting from the
contract, which would reduce Deloitte's G&A. USAID Post-Hearing Comments,
Feb. 9, 1999, at 12-13.

The record does not support USAID's last-advanced rationale for determining
Deloitte's indirect rates realistic. Save the testimony of the contract
specialist and the representations of Deloitte's at the hearing, the record
does not contain any evidence that the agency found Deloitte's overhead rate
reasonable because Deloitte's Washington office was considered a suboffice
with separate indirect rates for accounting purposes. While USAID and
Deloitte maintain that a review of the 1997 incurred cost submission leads
to this conclusion, the contract specialist testified that he did not
actually review the details contained in this submission and is not familiar
with the elements of Deloitte's indirect rates. Tr. at 62, 116-17. Of even
greater significance is the fact that neither Deloitte's technical nor its
cost proposal attributes the proposed overhead rate to the treatment of the
Washington office as a suboffice. [13] See Agency Exhibit No. 12 and
Response No. 2, Deloitte Technical Proposal at 3.4.1 and Cost Proposal sect. B.5
and para. 5.a. Moreover, as discussed above, the record does not reasonably
support a finding that Deloitte would achieve its low proposed rates by
virtue of the revenues from this contract.

Because the record does not reasonably support the agency's acceptance of
the realism of Deloitte's significantly lower proposed indirect rates, [14]
we conclude that the evaluation lacked a reasonable basis, and we sustain
the protest for this reason. [15] See Hughes STX Corp., B-278466, Feb. 2,
1998, 98-1 CPD para. 52 at 7-9.

Next, Futures protests that Deloitte's research director did not meet the
minimum experience requirements set forth in the RFP for that position.

In considering protests of an agency's evaluation of proposals, we examine
the record to determine whether the agency's judgment was rational and
consistent with stated evaluation criteria. Abt Assocs. Inc., B-237060.2,
Feb. 26, 1990, 90-1 CPD para. 223 at 4. Based on our review, we conclude that
USAID reasonably evaluated Deloitte's proposal under the key personnel
factor.

The RFP stated with regard to the key personnel factor:

Evaluation will be based on the extent to which personnel resumes submitted
by the offeror clearly as a minimum meet, or exceed, the education and
experience required by the labor category qualifications in Section C. To be
considered, all key personnel must have letters of commitment in the
proposal, and be available full-time unless exempted . . . and otherwise
comply with the requirements in Section L for Key Personnel.

RFP sect. M.1(a)(II).

Sections C.4.2(g) and L.8(c)(2) of the RFP contained very specific minimum
qualifications for the four key personnel, including the research director.
The RFP required resumes be submitted for these positions showing their
compliance with the minimum qualification requirements or how these
requirements were exceeded. RFP sect.sect. L.8(c)(2), M.1(a)(II). With regard to the
research director, the RFP stated that:

The Research Director shall have an earned PhD in the social sciences with
demonstrated experience in designing and implementing project monitoring and
evaluation programs and research activities in donor-funded programs in the
developing world . . . [and] meet the following qualifications:

--Five years experience as Senior Research Manager for a complex,
donor-funded development contract or program in the developing world;

--five years of direct experience in data collection and analysis;

--familiarity with USAID Re-engineering Principles and requirements for
program monitoring, evaluation and reporting;

--demonstrated competence in managing professional and technical staff.

RFP sect. L.8(c)(2)c.(2).

Futures asserts that the research director proposed by Deloitte was formerly
employed by Futures from 1993 to 1997 and was a graduate student prior to
that time. Futures further advises that this individual was initially
employed as a senior research specialist and was later promoted to senior
research scientist, and that at no time did this individual serve as a
senior research manager, nor did his duties involve any material management
responsibilities. Finally, Futures states that this individual's duties did
not involve data collection and analysis, design of monitoring or
evaluation, or management of a professional and technical staff, as required
by the RFP. See Protester's Comments, Nov. 23, 1998, Exhibit No. 3,
Declaration of [DELETED], Nov. 20, 1998, at 2-3.

At the hearing, USAID officials responded that Deloitte's research director
exceeded the minimum qualifications, even though he has never held the title
of senior research manager. USAID officials testified that, in their view,
experience as a senior research manager encompassed any relevant experience
in managing research activities or projects that were performed at a senior
level, and need not necessarily include the supervision of other personnel.
Tr. at 282, 288-89, 369-70. These officials testified that the agency was
primarily interested in whether an individual had experience managing
research activities, such as the methodologies, studies, surveys, and
questionnaires, as opposed to managing individuals. Id. Thus, USAID asserts
that it properly evaluated Deloitte's research director because his resume
shows that he possessed extensive experience managing relevant research
activities, and that he satisfied the other RFP qualifications. Tr. at
274-77, 370-78.

Given the absence of a specific definition of the term senior research
manager in the RFP, we conclude that the way in which USAID interpreted the
term for purposes of its evaluation is reasonable. In this regard, USAID
inserted the term in the RFP without intending to apply a mechanical
definition, but with the intention of trying to ensure that it obtained an
individual with appropriate technical skills. See Tr. at 282. Under this
interpretation, Deloitte's research manager's resume, reflecting significant
experience in managing relevant research projects (many of them USAID
projects), could reasonably be interpreted as meeting the minimum RFP
requirements. Agency Exhibit No. 10, Deloitte Revised Technical Proposal,
Resume of [DELETED]; see
Tr. at 370-78.

Finally, Futures protests that USAID failed to properly evaluate Deloitte's
past performance. Futures contends that the outstanding rating assigned
Deloitte's past performance was unjustified in light of a recent USAID
report that evaluated the Promoting Financial Investment and Transfers
(PROFIT) project, for which Deloitte was the prime contractor. Agency
Exhibit No. 18, Population Technical Assistance Project (POPTECH) Report No.
96-070-044, Nov. 1996, Evaluation of PROFIT Project. Futures asserts that
the USAID report did not favorably evaluate Deloitte's performance under
PROFIT in the areas of cost and personnel. This report contained such
comments as "[f]rom a USAID contract management perspective . . .
[Deloitte's] costs appear[ed] high for such a low output of subprojects,"
"developing and implementing opportunities in the commercial sector have not
been easy," and "[s]ome PROFIT subprojects thus appear to have experienced
problems that might have been anticipated and addressed by an integrated
team made up of people with more local culture or country knowledge or more
experience in designing and managing development projects." Id. at viii, 64.
Thus, Futures argues that USAID could not have reasonably found Deloitte's
past performance to be outstanding on the PROFIT project. Futures also
questions the propriety of the past performance evaluation because of the
minimal contemporaneous documentation.

At the hearing, the chairman and a member of the TEP testified that each
member reviewed the past performance of Deloitte and the subcontractors
listed in Deloitte's proposal, and that the TEP met to discuss their
evaluation of this performance. Tr. at 238-39, 320, 348-50. Several members
of the TEP had specific knowledge of Deloitte's and its subcontractor's past
performance under the PROFIT project, the SUMMA Foundation, and other
contracts, and viewed Deloitte's past performance on these projects as
outstanding. Tr. at 349-50. In this regard, the TEP members found, although
the PROFIT project was "experimental," which led to some of the reported
problems, that "Deloitte's management of [the PROFIT] project was
impeccable, [that] the project itself was generally considered to be a
success," and that the evaluators familiar with PROFIT were "particularly
pleased with the work" of Deloitte's proposed project manager. Agency
Exhibit No. 26, Declaration of [DELETED], Dec. 14, 1998, at 3; see Tr. at
351-59. The chairman of the TEP testified that the PROFIT report was not
consulted in the past performance evaluation because the document was a
technical evaluation of the PROFIT project itself, as opposed to an
evaluation of Deloitte's past performance. See Tr. at 415-16.

Given the evaluators' specific knowledge of Deloitte's performance under
PROFIT, the fact that the PROFIT report was not consulted does not undermine
the evaluation. As we have previously observed, it is not necessarily
required that an agency check all past performance references or all
information in its possession regarding a contractor. Rather, what is
critical is whether the evaluation is conducted fairly, reasonably and in
accordance with the stated evaluation criteria, and whether it is based upon
relevant information sufficient to make a reasonable determination of the
offeror's overall past performance rating, including relevant information
close at hand or known by the contracting personnel awarding the contract.
See U.S. Tech. Corp., B-278584, Feb. 17, 1998, 98-1 CPD para. 78 at 6.

While USAID should have adequately documented its past performance
evaluation, USAID has shown that it reasonably evaluated Deloitte's past
performance, based on the evaluators' specific knowledge of Deloitte's and
its subcontractor's past performance under prior contracts, including
PROFIT, and its detailed post-protest explanations of why Deloitte's and its
subcontractor's past performance was regarded as outstanding. Although
Futures points to the statements in the PROFIT report as being inconsistent
with this rating, the agency asserts that Futures has attached more
significance to the PROFIT report than was intended, inasmuch as the report
never had as its main focus the evaluation of Deloitte's performance, and
notes that the report contains many positive statements regarding Deloitte's
contract performance. See Tr. at 351-58, 416. In view of the agency's
explanation as to why it considers Deloitte's past performance outstanding
in the face of the PROFIT report, we are not persuaded that this report is
inconsistent with the agency's rating or that consideration of the report
would have changed the rating. See Tr. at 351-58 (testimony as to why PROFIT
report did not adversely affect Deloitte's past performance rating).

The protest of the cost evaluation is sustained.

We recommend that consistent with this decision the agency perform a proper
cost evaluation, including a cost realism analysis, reopen discussions if
necessary, and make a new best value determination. [16] We also recommend
that Futures be reimbursed the cost of filing and pursuing its protest,
including reasonable attorneys' fee. 4 C.F.R. sect. 21.8(d)(1) (1998). The
protester should submit its certified claim for such costs, detailing the
time expended and the costs incurred, directly to the contracting agency
within 60 days of receiving this decision.

Robert P. Murphy

General Counsel

Notes

1. The SUMMA Foundation was created in 1992 to conduct and administer
investments of grant funds for family planning in developing countries.

2. A hearing was conducted to examine the basis for the agency's cost, key
personnel, and past performance evaluations.

3. On October 21, the agency determined that it was in the government's best
interests to proceed with contract performance.

4. Deloitte did not offer to cap its proposed rates.

5. Futures' indirect rates were on file and its proposal contained the same
rates.

6. OCC is the USAID office responsible for negotiating forward pricing
provisional rates, provisional indirect cost rates, and final indirect cost
rates in contracts with the agency. Tr. at 159.

7. The OCC had found that there were some discrepancies in Deloitte's
proposed methods of allocating costs to its indirect cost pools.

8. The OCC also noted that Deloitte's accounting system had never been
reviewed and that no pre-award audit was performed on Deloitte. The OCC
official testified that there are risks associated with awarding a cost
reimbursement contract without a pre-award audit to a contractor who has
never had an accounting system review, and that pre-award audits should be
performed in a cost reimbursement contract of this magnitude. Tr. at 179-81.

9. CIB 92-17 is USAID internal agency guidance.

10. The contract specialist testified at the hearing that capping the rates
at the higher historical rates, rather than the proposed rates, was an
error. Tr. at 42-43.

11. USAID had not previously mentioned a Deloitte Washington, D.C. suboffice
as a reason for Deloitte's low proposed indirect rates.

12. At the hearing, Deloitte for the first time represented that the
[DELETED] overhead rate reflected a blended rate comprised of Deloitte's
suboffice overhead rate of [DELETED] and non-suboffice rate of [DELETED] and
that Deloitte was proposing to separately cost overhead at the suboffice
rate, as evidenced by the establishment of a Washington office under the
contract. See Tr. at 112-14, 176. As indicated, this was not mentioned or
described in Deloitte's proposal.

13. Although Deloitte now describes the Washington office as its suboffice
for accounting purposes, its technical proposal did not refer to the office
as such and its cost proposal attributed the indirect rate to the home
office, which is the category denoted on the 1997 overhead expense sheet
accounting for the [DELETED] historical overhead rate. Thus, we fail to see
how the contract specialist could reasonably have determined that [DELETED]
was the correct historical rate to apply for evaluation purposes, even if he
had reviewed Deloitte's 1997 submission (without seeking further explanation
from Deloitte).

14. On February 2, 1999, after the hearing, the agency advised our Office
that the contract had been modified to incorporate ceiling rates to reflect
those overhead and G&A rates contained in Deloitte's cost proposal. USAID
Supplemental Report, Feb. 2, 1999, at 3. Since this had no bearing on the
agency's cost evaluation, it does not change the outcome of our decision.

15. Futures also protests that the cost evaluation was unreasonable because
the agency did not perform an adequate probable cost analysis by
independently determining what the costs would be under each offeror's
technical approach, as is required for a cost realism analysis. FAR sect.
15.404-1(d). Although the agency claims that the evaluation considered the
realism of offerors' costs from the standpoint of their individual technical
approaches and that no probable cost adjustments were necessary, USAID
Report, Dec. 14, 1998, at 9 n.4; Tr. at 28, 115, 148, the contemporaneous
documentation suggests that the elements of costs contained in each
offeror's proposal were merely compared to each other without necessarily
considering the offerors' individual technical approaches. See Agency
Exhibit Nos. 15 and 15A, Spreadsheets; Agency Exhibit No. 2, Negotiation
Memorandum, at 7-10. While we do not conclude from the limited documentation
of record that cost adjustments should have been made to the offerors'
costs, the agency should consider all aspects of the offerors' cost
proposals in the cost realism analysis recommended in this decision.

16. Since we recommend that the agency perform a new best value
determination, we need not address the protester's objection to the agency's
original best value decision.