BNUMBER:  B-281387; B-281387.2; B-281387.3; B-281387.4 
DATE:  February 3, 1999
TITLE: OMV Medical, Inc.; Saratoga Medical Center, Inc., B-281387; B
-281387.2; B-281387.3; B-281387.4, February 3, 1999
**********************************************************************

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:OMV Medical, Inc.; Saratoga Medical Center, Inc.

File:     B-281387; B-281387.2; B-281387.3; B-281387.4

Date:February 3, 1999

Craig A. Holman, Esq., and Frank K. Peterson, Esq., Holland & Knight, 
for 
OMV Medical, Inc., and Norman J., Philion, Esq., Peter A. Greene, 
Esq., Edward V. 
Hickey, III, Esq., and Danielle E. Berry, Esq., Thompson, Hine & 
Flory, for Saratoga Medical Center, Inc., the protesters.
Gary S. Pitchlynn, Esq., Pitchlynn, Morse, Ritter & Morse, for Choctaw 
Management/Services Enterprises, an intervenor.
Clarence D. Long III, Esq., and Capt. 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.

4.  Firm which submitted the third lowest priced proposal of six 
technically equal proposals is not an interested party to protest that 
the contracting agency improperly evaluated the awardee's proposal 
since, as provided by the solicitation, price properly was the 
determinative award factor, and the protester would not be in line for 
award if the allegation were sustained.

DECISION

OMV Medical, Inc. and Saratoga Medical Center, Inc. protest the award 
of a contract to Choctaw Management/Services Enterprises under request 
for proposals (RFP) No. F41622-98-R-0015, 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 the Continental United States (CONUS), Western region.  
Both protesters principally assert that the agency misevaluated 
Choctaw's past performance as warranting a low performance risk rating 
and also question the agency's determination that the awardee's 
proposed price is realistic.  In addition, the protesters assert that 
the Air Force improperly made award on the basis of low price instead 
of on a best value basis, and OMV maintains that it was misled by the 
agency from lowering its professional compensation.

We deny the protests.    

BACKGROUND

The RFP, issued on July 7, 1998, called for offerors to provide 
qualified clinical social workers, United States licensed registered 
nurses, and family advocacy program staff personnel, as needed, 
specifying estimated quantities and locations for military bases in 
the CONUS Western region.  RFP  sec.  B, C.1.  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 lowest 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 solicitation further provided for an 
evaluation of the price proposals for realism.  RFP  sec.  M.2. 

The solicitation required offerors to submit a total compensation plan 
setting forth base salaries and fringe benefits proposed for the 
professional employees.  
RFP  sec.  L.901, Vol. IIb,  sec.  6.  Offerors were cautioned that the 
government was concerned with the quality and stability of the 
workforce and that professional compensation that was unrealistically 
low or not in reasonable relationship with the various job categories 
might impair the contractor's ability to attract and retain competent 
professional service employees, and could be viewed as evidence of 
failure to comprehend the complexity of the requirements.  RFP  sec.  
L-95.c. 

The RFP also provided for offerors to demonstrate through oral 
presentations how they planned to meet the stated RFP requirements, 
and to show that the offeror had the necessary understanding, 
expertise, personnel and experience to successfully accomplish the 
work required in the statement of work.  RFP  sec.  L.901, Vol. I.  Five 
firms whose proposals had been determined technically acceptable for a 
companion FAP acquisition for the European regions were exempted from 
making oral technical presentations for this procurement.  RFP  sec.  
L.901, Vol. I.b., c.  They were required, however, to submit 
documentation regarding the qualifications of their proposed program 
managers.  

On August 7, 1998, the agency received seven proposals, and two of the 
seven offerors made technical presentations on August 18.  On August 
25, three offerors were advised of deficiencies in employee 
compensation and were requested to submit revised proposals.  After 
receipt and evaluation of the revised proposals, all seven proposals 
were included in the competitive range.  All offerors were given the 
opportunity to submit final proposal revisions by September 8.  The 
final evaluation of offers was as follows:

OFFEROR             TECHNICAL        PRICE   PERFORMANCE RISK

Choctaw             Acceptable      [deleted]     Low
OMV                 Acceptable      [deleted]     Low 
Saratoga            Acceptable      [deleted]     Low
   A                Acceptable      [deleted]     Low
   B                Acceptable      [deleted]     Low
   C                Acceptable      [deleted]     Low
   D                Acceptable      [deleted]     Low

Agency Report, Tab 2.

With respect to Offeror A, which had submitted the lowest priced 
qualifying proposal, the Small Business Administration advised the 
agency that the firm was not eligible for award of a small 
disadvantaged business set-aside.  Accordingly, on October 15, the 
award was made to Choctaw on the basis that it had submitted the 
lowest priced technically acceptable proposal with a low performance 
risk, and these protests followed.

SARATOGA'S PROTEST

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 10b.  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, and contract summary information were evaluated.[2]

Choctaw's prices were reviewed by the price analyst and found to be 
complete.  Choctaw's proposed wages were in line with existing 
contracts and the 1998-99 Bureau of Labor Statistics Occupational 
Outlook Handbook.  On that basis, they were determined to be 
realistic.  Likewise, Saratoga's proposed wages were found to be in 
line with existing contracts and the 1998-99 Occupational Outlook 
Handbook and were also determined to be realistic.  

Saratoga objects to the price realism analysis arguing that it did not 
follow the RFP's 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 9) 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's Statement of Facts in Response to 
Protesters Comments.  The record also shows that Choctaw's proposed 
compensation was consistent with prior contracts.  Moreover, the 
record 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 
professional compensation.

Next Saratoga contends that the agency improperly held discussions 
with some but not all competitive range offerors.  As disclosed in the 
agency report, discussions were held with offerors A, B, and D because 
these offerors proposed base salaries for some of the labor categories 
that were determined to be unrealistically low.  Agency Report, Tab 
10b.  The contracting officer determined that clarifications with 
these three offerors were necessary to ensure the offerors' complete 
understanding of the requirements.  Discussions were held with these 
offerors and they submitted revised proposals on August 28.  All three 
revised proposals were determined to be realistic and these proposals 
were included in the competitive range.  Subsequently, all competitive 
range offerors were given the opportunity to submit a final revised 
proposal.  This issue is untimely because it was first raised by 
Saratoga more than 10 days after it first learned of this basis of 
protest through its receipt of the agency report.  4 C.F.R.  sec.  
21.2(a)(2).  In any event, Saratoga could not have been prejudiced by 
these allegedly improper discussions, since the agency did not hold 
such discussions with the awardee. 

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 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; (2) pending hires would 
be identified to Choctaw for final hiring determinations; (3) the 
incumbent contractor would cooperate with Choctaw in providing certain 
information allegedly known only to the incumbent; (4) the successful 
offeror would not be required to provide replacement staffing; and (5) 
certain preferences would be afforded in the credentialing process.  
The record shows that these 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 employees 
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.[3]  
In short, Choctaw's final proposal did not contain any material 
qualifications and Saratoga's allegations in this regard are factually 
misplaced.  

OMV'S PROTEST

OMV first contends that the agency materially misled it by cautioning 
it against lowering compensation from levels under predecessor 
contracts for essentially the same professional work and then failing 
to meaningfully evaluate all offerors' proposed professional 
compensation plans, and that the agency relaxed the RFP's adequate 
compensation requirements.

The record establishes that the agency reasonably evaluated offerors' 
proposed compensation plans and did not relax the RFP's adequate 
compensation requirement.  As noted above, the RFP warned all offerors 
about the government's need for a high-quality, stable workforce and 
that proposed professional compensation that was unrealistically low 
or not in reasonable relationship with the various job categories 
might impair the contractor's ability to attract and retain competent 
professional service employees, and could be viewed as evidence of 
failure to comprehend the complexity of the requirements.  RFP  sec.  
L-95.c.  To ensure that an adequate compensation plan was offered, a 
salary standard for the CONUS Western region was developed.  Agency 
Report, Tab 9.  In this regard, the agency requested from current 
contractors the average annual salaries paid to current employees by 
position.  Id.  The lowest average salaries paid by position for the 
CONUS Western region were used to establish the minimum salary 
requirements for purposes of proposal evaluation.  Id.  In evaluating 
proposals, the agency compared the offerors' proposed base salaries 
with the minimum salary standard and with the Occupational Outlook 
Handbook.  The final total annual salaries proposed by the awardee and 
the protesters were as follows:

POSITION                 CHOCTAW        SARATOGA    OMV

Treatment Manager        [deleted]      [deleted] [deleted]
Outreach Manager         [deleted]      [deleted] [deleted]
Nurse                    [deleted]      [deleted] [deleted]
Assistant                [deleted]      [deleted] [deleted]
Total Annual Compensation[deleted]      [deleted] [deleted] 

Agency Report, Tab 2.  

That the total annual compensation for all three offerors is 
approximately equal, with Choctaw offering the highest overall total, 
by itself strongly suggests that OMV's objection in this regard is 
factually misplaced.  Further, the record shows that the agency did 
not relax its professional compensation requirement and evaluated 
proposed professional compensation for all offerors in a reasonable 
and consistent manner.    

OMV also challenges the agency's decision to award to Choctaw on the 
basis that by doing so the Air Force misevaluated Choctaw's past 
performance, misevaluated Choctaw's employee retention/backup plan and 
employee recruitment plan, and neutralized past performance as a 
discriminator.[4]  These objections are not for consideration on the 
merits..

Under the bid protest provisions of the Competition in Contracting Act 
of 1984, 31 U.S.C.  sec.  3551-3556 (1994), only an "interested party" may 
protest a federal procurement.  That is, a protester must be an actual 
or prospective supplier whose direct economic interest would be 
affected by the award of a contract or the failure to award a 
contract.  4 C.F.R.  sec.  21.0(a).  Here, the record shows that all 
offerors were found technically acceptable with a low performance risk 
rating and that the protester submitted the third highest priced 
proposal.  If the protester is correct that Choctaw should not have 
been awarded the contract, Saratoga, not OMV, would be next in line 
for award.  Thus, OMV is not an interested party to protest the award 
to Choctaw.  Watkins Sec. Agency, Inc., B-248309, Aug. 14, 1992, 92-2 
CPD  para.  108 at 4.  Although OMV maintains that an appropriate remedy for 
each of its protest grounds involves a reopening of competition and 
therefore it is an interested party, in fact, these protest issues 
concern only the propriety of the evaluation and selection of Choctaw 
as the awardee. It was only in its comments on the agency report, 
filed December 11, that OMV questioned the agency's rating of Saratoga 
as a low performance risk.  However, this objection is untimely 
because these comments were filed more than 10 days after OMV's 
receipt of the agency report.  4 C.F.R.  sec.  21.2(a)(2).

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, since this RFP was issued after the FAP 
RFP for the European Office and with the exception of OMV and offeror 
D, all offerors submitted proposals in response to the earlier RFP, 
many of the issues and cost elements were corrected in response to the 
European RFP and only limited clarifications were necessary.

3. Saratoga also contends that the Air Force improperly relied upon 
the proposals Saratoga had submitted in response to the CONUS Eastern 
region RFP and the European RFP to determine its acceptability under 
the CONUS Western region RFP.  We first note that the West CONUS RFP 
specifically provided that those offerors found acceptable under the 
European RFP did not need to make an oral presentation and only needed 
to provide information outlining the program manager qualifications 
and experience.  Consequently, Saratoga was well aware that its 
previous submitted proposals would help form the basis for its 
evaluation under the instant solicitation.  Further, we do not see how 
Saratoga could have been prejudiced in this regard since Saratoga's 
proposal was found to be acceptable with a low performance risk rating 
under all three procurements.

4. OMV also asserts that the awardee's proposal contained assumptions 
and qualifications inconsistent with the RFP, and that the agency 
conducted unequal discussions, failed to evaluate offerors' price 
proposal for realism, and abandoned the RFP's announced basis for 
award.  These issues were addressed above in our disposition of 
Saratoga's protest.