BNUMBER:  B-281323 
DATE:  January 25, 1999
TITLE: Gemini Industries, Inc., B-281323, January 25, 1999
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DOCUMENT FOR PUBLIC RELEASE
The decision issued on the date below was subject to a GAO Protective 
Order.  This redacted version has been approved for public release.
Matter of:Gemini Industries, Inc.

File:     B-281323

Date:January 25, 1999

Victoria R. Bondoc for the protester. 
Mark H. Alexander, Esq., Defense Commissary Agency, for the agency. 
Mary G. Curcio, Esq., David A. Ashen, Esq., and John M. Melody, Esq., 
Office of the General Counsel, GAO, participated in the preparation of 
the decision.

DIGEST
 
Protest that evaluation of proposals received in response to 
solicitation for Office of Management and Budget Circular No. A-76 
cost comparison against undisclosed government staffing estimate was 
inconsistent with objective of obtaining performance at the lowest 
cost is denied; government has the right to obtain the services it 
requires to meet its needs and, in order to do so, may evaluate 
proposals against an undisclosed reasonable estimate of appropriate 
staffing, where the RFP notifies offerors that staffing is an area of 
evaluation and evaluation takes into account unique features of 
offeror's proposal. 

DECISION

Gemini Industries, Inc. protests the rejection of its proposal as 
technically unacceptable under request for proposals (RFP) No. 
DECA01-98-R-0007, issued by the Defense Commissary Agency (DCA) for 
receiving/storage/holding area, shelf stocking, and custodial services 
for the commissary at Fort Drum, New York.  Gemini argues that the 
evaluation method used by DCA was improper, and that the agency 
evaluated its proposal against unstated criteria.  

We deny the protest.

The RFP was issued as part of a cost comparison under Office of 
Management and Budget (OMB) Circular No. A-76, to determine whether it 
would be more economical to accomplish the work in-house using 
government employees, or by contract.  The RFP provided, at section 
M.2, that proposals would be evaluated for price and price realism, 
and against the following nonprice related factors:  (1) past 
performance; (2) adequate staffing and staff-hours for the shelf 
stocking function; (3) adequate staffing and staff-hours for the 
custodial function including, as applicable, the meat market 
processing, preparation and wrapping area, the 
receiving/storage/holding areas, the backup freeze/chill storage 
areas, dairy display cases, produce processing/storage areas and 
display cases; (4) adequate staffing and staff-hours for the 
receiving/storage/holding function; and (5) adequate project manager 
supervisory staff-hours for all services.

The solicitation included a performance work statement (PWS) which 
detailed the work to be performed.  Offerors were required to include 
in their technical proposal "a brief description and discussion" of 
their "[c]omprehension of work requirements," which was to "include, 
as a minimum, a 'demonstration' of understanding of the scope of work 
required for each area of operation contained in the [PWS]."  RFP  sec.  
L.20(b)(2).[1]  In addition, offerors were required to provide a "mix 
of disciplines proposed under each" of several listed PWS work 
functions "to indicate adequate staffing and manhours," and to propose 
project manager/supervisory hours, allocated to each PWS work 
function.  RFP  sec.  L.20(b)(2)(A).  Likewise, offerors were required to 
propose a unit price for each category of services.  RFP  sec.  B.  The RFP 
provided for the lowest-priced, technically acceptable offer to be 
selected for comparison with the government's cost estimate for 
in-house performance.  RFP  sec.  M.4(b).

[Deleted] offerors responded to the solicitation.  The agency 
evaluated the proposed  staffing and staff-hours against a government 
standard that had been developed for the Fort Drum commissary.  
Contracting Officer's Statement at 1.  Gemini's proposal was rejected 
as technically unacceptable, in part, because the evaluators found it 
did not include sufficient personnel to perform many of the required 
tasks.  Contracting Officer's Statement at 2.  Specifically, Gemini 
proposed approximately [deleted] percent fewer hours than the 
government estimate for receiving/holding/ storage area services; 
approximately [deleted] percent fewer hours for the day shelf stocking 
services; approximately [deleted] to [deleted] percent fewer hours for 
the night custodial services; approximately [deleted] percent fewer 
hours for the day custodial services; approximately [deleted] percent 
fewer hours for the meat department custodial services; and 
approximately [deleted] percent fewer hours for the nonworking 
supervisory functions.  (In total, Gemini's proposal was evaluated as 
offering 30,296 hours, [deleted] to [deleted] percent lower than the 
government estimate of [deleted] to [deleted] hours.[2])  Contracting 
Officer's Statement at 2-3.  In addition, the evaluators found that 
Gemini's proposal did not include an adequate discussion of Gemini's 
methodology for performing the contract; the evaluators determined 
that Gemini had failed to demonstrate a clear understanding of the 
tasks required under the PWS.  Contracting Officer's Statement at 2. 

Gemini asserts that the objective of OMB Circular No. A-76 is to 
obtain the performance of services at the lowest cost.  According to 
Gemini, determining acceptability by setting a minimum number of hours 
for each service category is inconsistent with this goal because it 
precludes offerors such as Gemini from offering innovative approaches 
to contract performance.  Gemini argues that, if offerors must provide 
a minimum number of hours, the government will always win the 
competition because the lowest-cost proposals, that is, those offering 
the fewest number of hours, will always be rejected as technically 
unacceptable.[3]

This argument is without merit.  While the objective of an A-76 cost 
comparison study generally is for the government to obtain services at 
the lowest cost, it is inherent in this objective that the government 
also has the right to obtain the services it requires to meet its 
needs.  The determination of the government's minimum needs and the 
best method of meeting them is primarily the responsibility of the 
procuring agency.  See Mid-South Dredging Co., B-256219, B-256219.2,      
May 25, 1994, 94-1 CPD  para.  324 at 5.  To ensure that its need for 
adequate staffing will be met, it is proper for an agency to evaluate 
technical or price proposals against an undisclosed reasonable 
estimate of the appropriate staffing needed to perform the 
solicitation requirements where the RFP notifies offerors that 
staffing is an area of evaluation.  Doss Aviation, Inc.; Dominion 
Aviation, Inc., B-275419 et al., Feb. 20, 1997, 97-1 CPD  para.  117 at 5-6.  
However, it is inappropriate to determine the acceptability of 
proposals simply by the mechanical application of an undisclosed 
estimate, KCA Corp., B-255115, Feb. 9, 1994, 94-1 CPD  para.  94 at 6-7; 
rather, an agency must also take into consideration whether an 
offeror's proposed work force is particularly skilled and efficient, 
or whether, because of a unique approach, a firm could satisfactorily 
perform with staffing different from the agency estimate.  Doss 
Aviation, Inc.; Dominion Aviation, Inc., supra, at 5-6.

Here, DCA determined that Gemini not only offered insufficient 
staff-hours to perform a number of the required tasks, but also did 
not adequately explain in its proposal the methodology it planned to 
use to perform the contract.  Contracting Officer's Statement at 2; 
Individual Evaluation Sheets for Gemini's Proposal.  In other words, 
the agency did not mechanically apply minimum staffing levels, but 
looked beyond the mere numbers of personnel proposed and evaluated the 
way in which the services actually would be performed.  While Gemini 
complains that the government's approach precludes offerors from 
offering innovative approaches, Gemini has not cited any innovative 
approaches discussed in its proposal to demonstrate that it could 
satisfy the PWS requirements with the number of personnel it 
offered.[4]  

Gemini argues that evaluating its proposal for performance methodology 
was improper because the solicitation did not provide for evaluation 
of methodology.  This argument is without merit.  While agencies must 
identify all major evaluation factors, they are not required to 
identify all areas of each factor which may be taken into account, 
provided that the unidentified areas are reasonably related to or 
encompassed by the stated criteria.  Federal Acquisition Regulation  sec.  
15.304(d); JoaQuin Mfg. Corp., B-275185, Jan. 29, 1997, 97-1 CPD  para.  48 
at 2.  Here, as indicated above, four of the five nonprice evaluation 
factors set forth in the solicitation concerned adequate staffing and 
staff-hours for various categories of work, RFP  sec.  M.2, and offerors 
were required to demonstrate their understanding of the scope of work.  
RFP  sec.  L20(b)(2).  We think the methodology an offeror intended to use 
to perform has a clear relationship to consideration of whether the 
staffing it proposed was sufficient to perform the contract.  It 
follows that DCA's consideration of methodology in evaluating Gemini's 
proposal was proper.  

The protest is denied.

Comptroller General
of the United States

1. The technical proposal was limited to 25 pages.  RFP  sec.  L.20(a)(2).

2. As noted by the contracting officer, the productivity calculation 
sheet in Gemini's technical proposal included 628 fewer hours (30,296 
hours) than the number set forth in Gemini's cost proposal (30,924 
hours).  Although Gemini suggests that this difference resulted from a 
flaw in the productivity calculation sheet rather than an error in its 
completion of the form, there is no basis for concluding that the 
difference, which related to grounds maintenance, materially affected 
the evaluation. 

3. Gemini argues that the evaluation should have been based on a 
comparison of offerors' total proposed hours to the government's total 
estimated hours, rather than on a comparison of the hours for each 
service.  However, since the solicitation specifically indicated that 
the agency would evaluate proposed staff-hours for each service, 
Gemini's argument, first raised in its comments on the agency protest 
report, amounts to a protest of the solicitation terms, which is 
untimely because it was not filed prior to the closing time.  See 4 
C.F.R.  sec.  21.1(a)(1) (1998).

4. Gemini argues that DCA's use of an undisclosed staffing estimate 
was improper because government personnel who prepared the in-house 
offer "may have knowledge of the standards applied to other 
commissaries," and therefore will know what numbers are necessary to 
win the competition.  Gemini Comments, Nov. 19, 1998, Attachment 2, at 
2.  However, knowledge that an incumbent gains in performing a 
contract does not create an unfair competitive advantage for the 
incumbent, PRC, Inc.--Recon., B-274698.4, July 10, 1997, 97-2 CPD  para.  10 
at 2; thus, where an agency uses an undisclosed estimate to evaluate 
proposals, an incumbent that has some knowledge of the agency's 
requirements by virtue of performance on that contract, does not have 
an unfair competitive advantage.  International Resources Corp., 
B-251001.2, Mar. 22, 1993, 93-1 CPD  para.  253 at 3.  Since the agency is 
essentially in the position of an incumbent contractor here, a 
government advantage resulting from government personnel becoming 
familiar with the services while performing them is not an unfair 
advantage.  Cf. Saxon Corp., B-236194, B-236194.2, Nov. 15, 1989, 89-2 
CPD  para.  462 at 3-4 (government is not required to disclose historical 
information in an A-76 procurement when such disclosure will 
compromise its competitive position).