BNUMBER: B-281388; B-281388.2; B-281388.3
DATE: February 3, 1999
TITLE: OMV Medical, Inc.; Saratoga Medical Center, Inc., B-281388; B
-281388.2; B-281388.3, February 3, 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:OMV Medical, Inc.; Saratoga Medical Center, Inc.
File: B-281388; B-281388.2; B-281388.3
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.
Jonathan M. Bailey, Esq., for Professional Performance Development
Group, Inc., 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. 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 compared
favorably with other offerors and with the current average annual
salary standard.
2. Agency did not relax solicitation's adequate compensation
requirements and did not misleadingly cause offeror to maintain
(rather than lower) its proposed professional compensation, where the
agency was consistent in the concerns it raised with offerors about
professional compensation, and made award to an offeror whose
professional compensation compared favorably with the current average
salary standard and the Bureau of Labor Statistics Occupational
Outlook Handbook, and was actually higher than the protester's.
3. Firms which offered the third and fourth lowest prices of six
technically equal proposals are not interested parties to protest that
the contracting agency improperly evaluated the awardee's proposal
since, as provided by the solicitation, price properly was the
determinative factor for award and the protesters 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 Professional Performance Development Group, Inc.
(PPDG) under request for proposals (RFP) No. F41622-98-R-0017, 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 in the Continental United States (CONUS), Eastern region.
Both protesters principally assert that the agency failed to adhere to
the RFP's announced evaluation standard, relaxed the RFP's adequate
compensation requirements, failed to meaningfully evaluate price
realism and misled them into failing to reduce their proposed
professional compensation. The protesters also contend that the Air
Force engaged in prejudicially unequal discussions with certain
offerors.
We deny the protests.
BACKGROUND
The RFP, issued July 7, 1998, called for offerors to provide 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 the CONUS Eastern region. RFP sec. B. The RFP contemplated
award of a fixed-price, indefinite-quantity contract for a base year
with four 1-year 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 RFP 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. II.b 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. Six
firms whose proposals had been determined technically acceptable for
the FAP acquisition for either the European or the CONUS Western
regions were exempted from making oral technical presentations for
this procurement. RFP sec. L.901, Vol.I and Amendment No. 0001. 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 OMV and
PPDG made technical presentations on August 18. On August 25, five
offerors, including Saratoga, were advised that their proposed base
salaries for some of the labor categories were unrealistically low.
PPDG was specifically advised that its salaries for the treatment
manager and outreach manager categories for the CONUS Eastern region
were at least [deleted] below the current average annual salaries, and
that for program assistants its salaries were approximately [deleted]
below the current range. Agency Report, Tab 5a. Saratoga was advised
that its proposed salaries for the treatment manager for the CONUS
Eastern region were at least [deleted] below the current average
annual salaries. Agency Report, Tab 5b. The contracting officer
concluded that proposal revisions were needed from these five offerors
to ensure their complete understanding of the requirements. Agency
Report, Tab 8. After receipt and evaluation of the five revised
proposals, all seven offerors 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
A Acceptable [deleted] Low
PPDG Acceptable [deleted] Low
B Acceptable [deleted] Low
OMV Acceptable [deleted] Low
Saratoga Acceptable [deleted] Low
C Acceptable [deleted] Low
D Acceptable [deleted] Low
Agency Report, Tab 2.
With respect to Offeror A, which 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 PPDG on the basis that it had submitted the lowest
priced technically acceptable proposal with a low performance risk,
and these protests followed.
OMV's PROTEST
OMV's first complaint is that the agency improperly 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 PPDG was
consistent with the RFP award criteria.
Next OMV contends that the agency materially misled it by cautioning
it against lowering professional 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.
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. Here, the record establishes that OMV was
not "misled" since the agency reasonably evaluated the 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 Eastern region was developed. Agency
Report, Tab 7. 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 Eastern region were used to establish the minimum salary
requirements for purposes of proposal evaluation. Id. After
receiving initial proposals, the agency in its evaluation found
deficiencies in the proposed compensation rates for five of the seven
proposals received. These five offerors were advised that their
proposed compensation was considered inadequate to obtain and keep
suitably qualified professional employees. After receipt of final
proposal revisions, the evaluation team analyzed compensation levels
per position and on an overall basis. The final total annual salaries
proposed by the awardee and the protesters were as follows:
POSITION PPDG 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.
The offerors' proposed compensation was compared between offerors and
was also compared to the Air Force's current average annual salary
standard for each labor category and to the Occupational Outlook
Handbook. Moreover, PPDG's salary for every professional category is
higher than those of both OMV and Saratoga, and the total salary
compensation for all three offerors is approximately equal, which by
itself strongly suggests that OMV's objection in this regard is
factually misplaced.[2] Further, as the record shows, the agency did
not relax the professional compensation requirement and reasonably
evaluated the offerors' proposed professional compensation for all
offerors in a reasonable and consistent manner.
OMV also contends that the agency arbitrarily neutralized past
performance as an evaluation discriminator by according all offerors
"low risk" performance ratings regardless of experience, which was
allegedly prejudicial to OMV as the incumbent.
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, the main purpose of the
past performance evaluation was for the agency to identify and review
relevant present and past performance in order to make an overall risk
assessment of the offeror's ability to perform the requirement. RFP sec.
M.3.c. In order to do so, the agency sent questionnaires to a minimum
of two references provided by each offeror. Based on the responses
received, the agency concluded that all offerors were capable of
performing and, thus, all received a low performance risk rating.
Although OMV challenges the relevance of the references submitted by
some offerors, we find nothing unreasonable in the Air Force's
approach to investigating the past performance history of the offerors
and, based on that investigation, in concluding that all offerors
presented a low risk of nonperformance.
Next, OMV objects that the Air Force failed to meaningfully evaluate
the offerors' price proposals for realism, reasonableness, and
completeness as required by the RFP.
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 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) (FAC 97-02); 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 8. 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. Id. For reasonableness, offerors' assumptions, proposed
profit rates, and contract summary information were evaluated. Id.
Proposed prices were reviewed by the price analyst and where it was
determined that proposed compensation was unrealistic, discussions
were held with those offerors. After evaluation of all final proposal
submissions, the agency concluded that all offerors' proposed wages
were in line with existing contracts and the 1998-99 Bureau of Labor
Statistics Occupational Outlook Handbook. In sum, the agency
performed a detailed price evaluation consistent with the RFP plan, as
a result of which the agency concluded that PPDG's prices were
reasonable.
OMV's main objection to the price realism analysis concerns the
awardee's alleged failure to proposed professional compensation at the
minimum acceptable level. However, as previously noted, the agency
reasonably concluded otherwise, and PPDG's professional compensation
is actually higher than OMV's. In sum, there is no merit to OMV's
allegation that the agency failed to properly evaluate the proposal
for price realism or failed to properly evaluate PPDG's employee
compensation plan.
Next, OMV contends that the agency conducted prejudicially unequal
discussions and engaged in improper auction techniques by providing
PPDG and several other offerors with specific knowledge and direction
regarding minimum acceptable salary levels in key labor categories.
As noted above, discussions were held with five of the seven offerors
because these offerors initially proposed base salaries for some of
the labor categories that were considered to be unrealistically low.
Agency Report, Tab 8. The contracting officer determined that
clarifications with these offerors were necessary to ensure the
offerors' complete understanding of the requirements. During
discussions with these offerors, the Air Force provided specific
guidance for labor categories it had determined were not realistically
priced. These offerors were provided the opportunity to revise their
proposals and the evaluation of the revised proposals resulted in
their inclusion in the competitive range.
The statutory and regulatory requirement for discussions with all
competitive range offerors, 10 U.S.C.A. sec. 2305(b)(4)(A)(i) (West 1998)
and FAR sec. 15.306(d)(1), means that such discussions must be
meaningful, equitable, and not misleading. I.T.S. Corp., B-280431,
Sept. 29, 1998, 98-2 CPD para. 89 at 6. FAR sec. 15.306(e)(1) prohibits
government personnel from engaging in conduct that favors one offeror
over another. The Air Force's decision here to conduct discussions
regarding compensation with those offerors that were evaluated as
offering unrealistically low labor rates was not unreasonable. The
agency also provided those offerors specific guidance concerning the
compensation of certain labor categories, in particular, regarding
the extent to which the agency believed their proposed employee
compensation was inadequate relative to the current average salaries
for certain labor categories, while offerors whose proposed
compensation rates were considered realistic were not provided this
information. Even if it was inappropriate for the agency to provide
only some of the offerors with such specific details about their
proposed compensation, OMV was not prejudiced by these discussions
because the awardee, in its final revised proposal, proposed
professional compensation levels that were higher than the current
average salary standard and were higher than the protester's levels
for all three professional categories. Further, while the awardee was
also apprised of the agency's current average salary standard for the
program assistant position, the awardee simply elected not to increase
its proposed salary for this position. Although the awardee's total
price is lower than OMV's, its proposed professional compensation is
higher than OMV's.
OMV also contends that had it known the government's minimum
acceptable salary for each position, it could have lowered its
professional compensation and would have been more competitive with
the awardee. However, it is clear from the record that OMV's proposed
higher total price was not due to relatively higher employee
compensation but rather resulted from its higher prices elsewhere in
its proposal. Accordingly, OMV was not prejudiced by the agency's
compensation disclosures to PPDG during discussions. In addition, we
note that the second low priced eligible offeror did not receive the
benefit of such discussions and it, rather than OMV, would be next in
line for award if the protest were sustained in this regard.
SARATOGA'S PROTEST
In its protest, Saratoga challenges the agency's decision to award to
PPDG, alleging that the Air Force: (1) erred in concluding that
PPDG's proposal represented the most advantageous proposal; (2) erred
in concluding that PPDG's price proposal was realistic; and (3) erred
in concluding that PPDG was entitled to a low risk evaluation based on
PPDG's limited past performance.[3] 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. 3551-56 (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) (1998). Here, the record shows that all offerors
were found technically acceptable with a low performance risk rating
and that Saratoga submitted the fourth lowest priced proposal. If the
protester is correct in that PPDG should not have been awarded the
contract, there are two other offerors next in line for award. Thus,
Saratoga is not an interested party to protest the award to PPDG.
Watkins Sec. Agency, Inc., B-248309, Aug. 14, 1992, 92-2 CPD para. 108 at
4. Although Saratoga maintains that an appropriate remedy for each of
its protest grounds involves a reopening of competition, in fact,
these protest issues concern only the propriety of the evaluation and
selection of PPDG as the awardee. Saratoga has not protested the
evaluation of any of the intervening offerors' proposals.
Likewise, to the extent OMV's protest raises specific challenges to
the evaluation of the awardee's proposal, OMV is not an interested
party since OMV submitted the third lowest priced proposal and would
not be next in line for award after PPDG. While in its comments to
the agency report, filed December 11, OMV questioned the agency's
evaluation of the intervening offeror's past performance, these
comments were filed more than 10 days after receipt of the agency
report and this issue is therefore untimely raised. 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. OMV asserts that the program assistant position is a professional
position subject to the requirement of sec. L-95 of the RFP. The agency
maintains that because the program assistant position is primarily
clerical and administrative in nature it is not subject to the
professional compensation clause. Program assistants were required to
have completed a teacher certification program, or to have an
associate degree in education or a related area, and to have knowledge
of word processing systems. RFP sec. C.1.4.4, C.1.4.4.1. We agree with
the agency that the program assistant position at issue is not one
which calls for a professional employee. The Federal Acquisition
Regulation (FAR) provides that the term professional employee
"embraces members of those professions having a recognized status
based upon acquiring professional knowledge through prolonged study
[and that] examples of these professions include accountancy,
actuarial computation, architecture, dentistry, engineering, law,
medicine, nursing, pharmacy, the sciences and teaching." FAR sec.
22.1102. Further, "[to] be a professional employee, a person must not
only be a professional but must be involved essentially in discharging
professional duties." Id. The program assistant position does not
fall within this definition.
3. Saratoga also argues that the agency erred in the evaluation of its
proposal in that the debriefing it received referred to the program
manager it proposed for the European FAP procurement and not for the
CONUS Eastern region procurement. The agency states that Saratoga's
proposal was properly evaluated, and even if the evaluators did
confuse the program managers, we do not see how Saratoga was
prejudiced since its proposed program managers were found acceptable
for both procurements and Saratoga was determined to be acceptable
with a low performance risk rating under all three procurements.
Additionally, Saratoga contends that the debriefing information it
received was incomplete and untimely. A protester's challenge to the
adequacy of a debriefing is a procedural matter concerning agency
actions after award which are unrelated to the validity of the award;
we generally will not review such matters. C-Cubed Corp., B-272525,
Oct. 21, 1996, 96-2 CPD para. 150 at 4 n.3. The purpose of a debriefing is
not to give offerors the opportunity to cure deficiencies for the
instant procurement, but to furnish the basis for the selection
decision and contract award. 10 U.S.C. sec. 2305(b)(5) (1994); Security
Defense Sys. Corp., B-237826, Feb. 26, 1990, 90-1 CPD para. 231 at 4.
Finally, Saratoga argues that the agency erred in its application of
the performance/price tradeoff decision. This issue has been addressed
in our disposition of OMV's protest.