BNUMBER: B-281350; B-281350.2
DATE: January 27, 1999
TITLE: Saratoga Medical Center, Inc., B-281350; B-281350.2, January
27, 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:Saratoga Medical Center, Inc.
File: B-281350; B-281350.2
Date:January 27, 1999
Norman J. Philion, Esq., Peter A. Greene, Esq., Edward V. Hickey III,
Esq., and Danielle E. Berry, Esq., Thompson Hine & Flory, for the
protester.
Gary S. Pitchlynn, Esq., Pitchlynn, Morse, Ritter & Morse, for Choctaw
Management/Services Enterprise, an intervenor.
Clarence D. Long III, Esq., and Captain David A. Whiteford, Department
of the Air Force, for the agency.
Linda C. Glass, Esq., and Paul I. Lieberman, Esq., Office of the
General Counsel, GAO, participated in the preparation of the decision.
DIGEST
1. Agency reasonably evaluated awardee's proposal as posing a low
performance risk based upon favorable reference information received
concerning performance under relevant contracts.
2. Allegation that agency misevaluated awardee's proposal with
respect to past performance is denied where the record shows that the
evaluation was reasonable and in accordance with the applicable stated
evaluation factors.
3. Determination to select lowest-priced, technically acceptable
proposal for award of contract, and determination that the awardee's
prices were realistic are unobjectionable where both determinations
were made in a manner consistent with the evaluation criteria, and the
awardee's professional compensation plan and base salaries (which were
higher than the protester's) reasonably were deemed adequate to
recruit and retain employees.
DECISION
Saratoga Medical Center, Inc. protests the award of a contract to
Choctaw Management/Services Enterprise under request for proposals
(RFP) No. F41622-98-R-0014, a competitive small disadvantaged business
set-aside, issued by the Department of the Air Force to acquire
clinical social services under the Family Advocacy Program (FAP) for
Air Force personnel and their families at various locations in Europe,
the Azores and Turkey. Saratoga principally asserts that the agency
misevaluated Choctaw's past performance as warranting a low
performance risk rating and also questions the agency's determination
that the awardee's proposed price is realistic.
We deny the protests.
The RFP, issued on May 6, 1998, called for offerors to provide Family
Advocacy Clinical Directors, Family Advocacy Treatment Managers,
Family Advocacy Outreach Managers, Family Advocacy Nurse Specialists,
and Family Advocacy Program Assistants, as needed, specifying
estimated quantities and locations for military bases in Europe, the
Azores and Turkey. RFP sec. B. The RFP contemplated the award of a
fixed-price, indefinite-quantity contract for a base year with four
1-year ordering period options and stated that the agency would employ
performance/price tradeoff techniques to make a best value award
decision. RFP sec. M.4.a. The RFP went on to state that, if the
technically acceptable offeror submitting the proposal with the lowest
evaluated price received a low performance risk rating and was found
responsible, that proposal would represent the "best value." RFP sec.
M.4.b.4. The RFP provided that award could be made to other than the
offeror that submitted the low-priced, technically acceptable proposal
if that offeror was "judged to have a moderate, high or not applicable
performance risk rating." RFP sec. M.4.b.5. Concerning past
performance, the RFP stated that a performance risk assessment would
be conducted and required offerors to submit information on relevant
contracts performed within the last 3 years which demonstrate their
ability to perform the proposed effort.[1] RFP sec. L.901, Vol. IIIa.
The RFP further provided for an evaluation of the price proposals for
realism. RFP sec. M.2.
On June 8, 1998, the agency received six proposals. Between June 11
and 15, offerors gave oral presentations of their technical proposals.
The proposal of one offeror did not address the minimum technical
requirements and was rejected. All other proposals were determined to
be technically acceptable. Clarification requests were issued to the
offerors that had submitted acceptable proposals and they were
instructed to address the clarification requests along with amendment
No. 0005, issued August 12, which added a contract line item for the
travel lodging allowance and for overseas employee taxes. Final
proposal revisions were received on August 21. The final evaluation
of offers was as follows:
OFFEROR TECHNICAL PRICE PERFORMANCE RISK
Choctaw Acceptable [deleted] Low
A Acceptable [deleted] Low
Saratoga Acceptable [deleted] Low
B Acceptable [deleted] Low
C Acceptable [deleted] Low
Contracting Officer's Statement of Facts at 2.
The final proposals submitted by offerors A and C were subsequently
rejected. On September 15, award was made to Choctaw on the basis
that it submitted the lowest priced technically acceptable proposal
with a low performance risk, and these protests followed.
Saratoga's first complaint is that the agency unreasonably assigned
Choctaw a low past performance risk rating despite Choctaw's being a
new company with only 6 months of experience in providing services
comparable to those being sought here. Saratoga also maintains that
the information the agency relied on was contradictory and questions
the relevance of the awardee's references.
We review an agency's evaluation of proposals to ensure that it is
fair, reasonable, and consistent with the evaluation criteria stated
in the solicitation. Wind Gap Knitwear, Inc., B-261045, June 20,
1995, 95-2 CPD para. 124 at 3. Where a solicitation requires the
evaluation of offerors' past performance, an agency has discretion to
determine the scope of the offerors' performance histories to be
considered, provided all proposals are evaluated on the same basis and
consistent with the solicitation requirements. Federal Envtl. Servs.,
Inc., B-250135.4, May 24, 1993, 93-1 CPD para. 398 at 12.
Here, Choctaw's proposal was assigned a low performance risk rating
based on its performance on two contracts that the agency concluded
were relevant, including a current Air Force Family Advocacy Program
contract. The references contacted for Choctaw responded to the
agency's questionnaire and provided information which the agency found
sufficient to conclude that Choctaw was capable of performing this
requirement. Both references unequivocally stated that given what was
known about Choctaw's ability to execute what it promised in its
proposal, they definitely would award to Choctaw again if given the
choice. Agency Report, Tab 8. Saratoga was assigned a low
performance risk rating based on its performance on three relevant
contracts, including a current Air Force Family Advocacy Program
contract. [Deleted].
Notwithstanding Saratoga's assertions to the contrary, we see nothing
unreasonable in the Air Force's manner of assessing the past
performance history of the offerors, nor do we see any reason to
question the agency's conclusion, based on that investigation, that
both offerors presented a low risk of nonperformance. While Saratoga
challenges the agency's past performance evaluation because the agency
did not contact every reference listed by Choctaw, there is no
requirement that an agency contact all of an offeror's references,
Dragon Servs., Inc., B-255354, Feb. 25, 1994, 94-1 CPD para. 151 at 8, nor
is there any requirement that an agency contact the same number of
references for each offeror. IGIT, Inc., B-275299.2, June 23, 1997,
97-2 CPD para. 7 at 6.
While Saratoga believes that its references were more relevant than
Choctaw's, and better demonstrated its ability to perform, the RFP
stated that the purpose of performing the past performance risk
assessment was to identify and review relevant present and past
performance and then to make an overall risk assessment of an
offeror's ability to perform the requirement. RFP sec. M.3.c. The RFP
did not place any premium on the possession of a greater number of the
kinds of references that Choctaw points to, and the record provides a
basis for the evaluators reasonably to conclude that both offerors'
past performance records warranted the conclusion that each
demonstrated an ability to successfully perform the requirement.
Saratoga next argues that the agency conducted an improper
performance/price tradeoff by changing the basis for award from best
value to one based on low price. In this regard, Saratoga also
essentially contends that the agency's failure to properly evaluate
the realism of Choctaw's proposed prices resulted in a flawed source
selection decision.
With respect to Saratoga's argument that the agency changed the basis
for award from best value to one based on low price, the RFP, as
outlined above, stated that the agency would make a "best value
award," which the RFP went on to specify meant selection of the
offeror submitting the lowest-priced, technically acceptable proposal
if it also received a low performance risk rating. The RFP provided
for a performance/price tradeoff only if the offeror submitting the
lowest-priced, technically acceptable proposal was judged to have a
moderate, high or inapplicable performance risk rating. Here, the
lowest-priced, technically acceptable proposal also received a low
performance risk rating and in accordance with the RFP represented the
best value to the government. Accordingly, the award to Choctaw was
consistent with the RFP award criteria.
With respect to Saratoga's argument that the agency did not perform a
proper price realism analysis, where, as here, the award of a
fixed-price contract is contemplated, a proposal's price realism is
not ordinarily considered, since a fixed-price contract places the
risk and responsibility for contract costs and resulting profit or
loss on the contractor. HSG-SKE, B-274769, B-274769.3, Jan. 6, 1997,
97-1 CPD para. 20 at 5. However, since the risk of poor performance when
a contractor is forced to provide services at little or no profit is a
legitimate concern in evaluating proposals, an agency in its
discretion may, as here, provide for a price realism analysis in the
solicitation of fixed-price proposals. Volmar Constr., Inc.,
B-272188.2, Sept. 18, 1996, 96-2 CPD para. 119 at 5. The Federal
Acquisition Regulation (FAR) provides a number of price analysis
techniques that may be used to determine whether prices are reasonable
and realistic, including a comparison of the prices received with each
other, FAR sec. 15.404-1(b)(2)(i); with previous contract prices for the
same or similar services; FAR sec. 15.404-1(b)(2)(ii); and with an
independent government cost estimate, FAR sec. 15.404-1(b)(2)(v). The
depth of an agency's price analysis is a matter within the sound
exercise of the agency's discretion. Ameriko-OMSERV, B-252879.5, Dec.
5, 1994, 94-2 CPD para. 219 at 4; Ogden Gov't Servs., B-253794.2, Dec. 27,
1993, 93-2 CPD para. 339 at 7.
Here, the RFP stated that price proposals would be evaluated for
realism, reasonableness and completeness, and provided that the
evaluators would consider the reasonableness of the proposed price
versus proposed staffing. RFP sec. M.2. The RFP further stated that
there should be a clear and concise correlation between the offeror's
ability to meet the requirements and the offeror's technical
information to support a positive determination as to the realism,
reasonableness, and completeness of the offeror's price. Id. For the
price realism analysis, the RFP stated that evaluators would assess
the compatibility of the proposed price with the proposal scope and
efforts, the list of estimating ground rules and assumptions, and the
schedule duration. To determine reasonableness, evaluators were to
determine that (1) the offeror's estimates are based on factual,
verifiable data and the estimating methodology employed is sound under
current market conditions, (2) the estimated costs are most likely to
be incurred by the offeror in the performance of the contract, and (3)
the estimated total cost and profit are reasonable to the seller and
reasonable to the buyer. For an offer to be determined complete, the
RFP stated that the offeror must provide all the data necessary to
support the offer. Id.
The record in this case shows that to assess realism, the offerors'
prices were compared against the RFP requirements to ensure that all
areas of the acquisition were reflected in the proposal. Agency
Report, Tab 10a. For completeness, each proposal was compared against
the RFP to ensure compliance and the proposals were also compared
against the requirements in the RFP to verify that all areas were
addressed. For reasonableness, offerors' assumptions, proposed profit
rates, contract summary information, and explanations of plans to
handle foreign taxes were evaluated.[2]
Choctaw initially provided a primary proposal that included an
allowance for foreign taxes and an alternate proposal that assumed the
labor categories in question would receive exemption from taxes. A
clarification request (CR) was issued which required Choctaw to submit
a single proposal conforming to amendment No. 0005. Choctaw also made
certain assumptions the evaluators determined had to be resolved
before price realism could be determined. Choctaw, in its revised
proposal, addressed the CRs pertaining to its assumptions that the Air
Force would continue to provide the same level of support to the
Program Management Office as provided in the current contract by
withdrawing the assumption and including the costs for housing the
office and providing support to conduct all required business in the
Program Management Contract Line Item or Overhead at no further cost
to the government. The evaluators concluded that Choctaw's revised
proposal adequately addressed the evaluators' concerns and adequately
addressed amendment No. 0005. In its revised proposal, Choctaw's
employee compensation remained the same as the original proposal,
overhead was reduced from 11 percent to 10 percent and the profit rate
was reduced from 7.5 percent to 7 percent due to an expanded business
base. The evaluators concluded that Choctaw's employee compensation
plan and base salaries were adequate to recruit and retain employees
and therefore met the price realism criteria. A comparison of the
proposed professional compensation of Saratoga and Choctaw showed that
the Choctaw's professional compensation and total compensation were
actually higher than Saratoga's.
Saratoga objects to the price realism analysis arguing that it did not
follow the RFP stated evaluation plan and objects to the fact that the
base salary comparison was allegedly made after contract award.
However, as explained above, the agency performed a detailed price
evaluation consistent with the RFP plan, as a result of which the
agency concluded that Choctaw's prices were reasonable. Based on the
record before us, we have no basis to object to the reasonableness of
this determination. As noted above, in a fixed-price solicitation the
extent of a price realism analysis is left to the discretion of the
agency. In response to Saratoga's allegation that the base salary
comparisons were made after award, the Air Force reports that the
November 4, 1998 memorandum (Agency Report, Tab 9a) was prepared to
explain how the standards for minimum salaries were determined, but
that the spreadsheet was prepared concurrently with the evaluation of
proposals. Contracting Officer Statement of Facts in Response to
Protester's Comments. The record shows that Choctaw's proposed
compensation was consistent with prior contracts. Moreover, the
record also shows that Choctaw's professional compensation plan is
actually higher than Saratoga's. In sum, there is no merit to
Saratoga's allegation that the agency failed to properly evaluate
Choctaw's employee compensation plan.
Saratoga also argues that Choctaw's proposal contains assumptions and
qualifications that are inconsistent with the solicitation.
Specifically, Saratoga states that Choctaw in its proposal assumed
that: (1) the agency would not object to relocation of the Program
Management Office to another country in order to obtain more
beneficial tax treatment for Choctaw; (2) the agency would continue
providing office space and utilities, telephone access, and incidental
support to Choctaw employees managing the program; (3) the incumbent
contractor would have the responsibility of recruiting for vacant
positions between the date of contract award and the beginning of
performance by the awardee; (4) pending hires would be identified to
Choctaw for final hiring determinations; (5) the incumbent contractor
would cooperate with Choctaw in providing certain information
allegedly known only to the incumbent; (6) the successful offeror
would not be required to provide replacement staffing; and (7) certain
preferences would be afforded in the credentialing process. Saratoga
also contends that Choctaw further qualified its response to the RFP
by offering a reduced price proposal, conditioned upon the elimination
of Choctaw's liability for taxes in Germany, as well as Choctaw's
right to request equitable adjustments from the agency to cover the
costs of establishing an office in Europe and any tax liabilities
incurred by Choctaw employees that were not foreseen at the time it
submitted its proposal.
In fact, the only assumptions Choctaw made in its initial proposal
that were not consistent with the RFP and that affected its proposed
price related to the tax issue and the continued government support of
the Program Management Office. These concerns were brought to
Choctaw's attention and, in its revised proposal, Choctaw adequately
responded to the tax issue and withdrew its assumptions concerning the
government's level of support to the Program Management Office,
stating that the costs for housing the office and providing support to
conduct all required business were included and itemized in the
Program Management contract line item or would be provided from
overhead at no further cost to the government. The record shows that
the other assumptions were either required by the existing contract or
simply restated what was required under this solicitation and did not
affect the price, quantity, quality or delivery of the services. For
example, the requirement that the incumbent contractor provide
credential files on privileged employee to the new contractor and
provide proof in writing of the primary source of verification of
employee credentials appears in the solicitation at RFP sec. C.1.8.6.
Similarly, the solicitation contains a requirement that the contractor
shall ensure sufficient staffing for full coverage throughout the term
of the contract. RFP sec. C.1.6. In short, Choctaw's final proposal did
not contain any material qualifications and Saratoga's allegations in
this regard are factually misplaced.
The protests are denied.
Comptroller General
of the United States
1. Section M of the RFP stated that the purpose of the past
performance evaluation was to identify and review relevant present and
past performance and provided that past and present performance
information would be obtained through the use of simplified
questionnaires or telephone interviews and using data independently
obtained from other government and commercial sources. RFP sec. M.3.
2. The agency reports that award would have been made on initial
proposals had it not been for a change in the Status of Force
Agreement which involved a tax issue for certain labor categories
whose incomes may be subject to taxation by German tax authorities.
Consequently, an amendment was issued that added a cost reimbursable
line item for the taxes, and revised proposals were requested.