BNUMBER:  B-281490 
DATE:  February 16, 1999
TITLE: OMV Medical, Inc., B-281490, February 16, 1999
**********************************************************************

Matter of:OMV Medical, Inc.

File:     B-281490

Date:February 16, 1999

Kenneth A. Martin, Esq., and Jennifer C. Adams, Esq., Martin & 
Rylander, for the protester.
John R. Osing, Jr., Esq., Department of the Navy, for the agency.
Linda S. Lebowitz, Esq., and Michael R. Golden, Esq., Office of the 
General Counsel, GAO, participated in the preparation of the decision.

DIGEST

Agency reasonably eliminated the protester's revised proposal from the 
competitive range after conducting discussions where the protester 
failed to demonstrate past performance in providing registered nurses 
as required by the terms of the amended solicitation and its low price 
indicated the firm could have problems recruiting and retaining 
registered nurses.

DECISION

OMV Medical, Inc. protests the elimination of its revised proposal 
from the competitive range and the award of contracts to Maryland 
Professional Staffing Services, Inc. (MPSS) and American Health 
Research Institute (AHRI) under request for proposals (RFP) No. 
N62645-97-R-0016, issued by the Department of the Navy to provide 
registered nurses (RN) to the National Naval Medical Center (NNMC), 
Bethesda, Maryland.  OMV challenges the agency's determination that 
its revised proposal was not considered among the most highly rated 
and it questions the evaluation of the awardees' proposals.

We deny the protest.

The RFP, issued on April 14, 1998 as a total small business set-aside, 
contemplated the award of a fixed-price, personnel services contract.  
RFP Cover Sheet; RFP  sec.  L.3, at 70.  The contractor was required to 
provide RN services for the following groups of hospital units:  Group 
A--intensive care unit (ICU), post anesthesia care unit (PACU), and 
operating room (OR); Group B--neonatal intensive care unit (NICU) and 
mother and infant care center (MICC); and Group C--medical surgical, 
ambulatory care clinic (ACC), and ambulatory procedure unit (APU).  
The RFP provided that the award would be made to the responsible 
offeror whose proposal offered the best combination of past 
performance and price, RFP  sec.  M.2, at 77, with past performance being 
considered significantly more important than price.  Id.

To evaluate an offeror's past performance, the RFP required offerors 
to "submit a narrative discussion which demonstrates directly related 
or similar experience in providing Registered Nurse services."  RFP  sec.  
M.3.1, at 77.  The RFP defined "directly related or similar 
experience" as "experience in providing registered nurse services of 
similar or same quantity in an emergency medicine, medical surgical, 
or critical care environment."  Id. at 78.  The RFP required, among 
other things, the offeror to provide in its past performance narrative 
a detailed description of work performed, including specific 
information regarding the wards in which the RN services were 
provided, the various shifts provided, and the number of RNs provided.  
The offeror also was required to provide the name and phone number of 
a point of contact where particular contracts were performed.  Id.

The RFP also advised offerors that proposed prices would be evaluated 
for completeness, reasonableness, and realism.  RFP  sec.  M.3.2, at 79-80.  
As relevant to this protest, the RFP stated that an offeror's line 
item prices would be evaluated for realism "to identify unusually low 
cost estimates, understatements of costs, inconsistent pricing 
patterns, potential misunderstandings of the solicitation's 
requirements, and the risk of personnel recruitment and retention 
problems during contract performance."  Id. at 80.  Offerors were 
required to provide unit and extended prices for a specified number of 
line item shifts for RN services in Groups A, B, and/or C, as 
referenced above.  Amendment No. 0001, May 6, 1998,  sec.  B.4, at 3.  As 
amended, the RFP now provided for the possibility of multiple awards 
based on groups of RN services.  Amendment No. 0001,  sec.  M.2, at 77.

Eight firms, including OMV, MPSS, and AHRI, submitted proposals by the 
initial closing time on May 26.  OMV and AHRI submitted proposals for 
Groups A, B, and C, and MPSS submitted a proposal for Groups A and B.  
Technical evaluations were performed by the agency's source selection 
evaluation board (SSEB).  As relevant to this protest, the SSEB 
assigned "marginal" ratings to the technical proposals submitted by 
OMV and MPSS and a "good" rating to AHRI's proposal.[1]  Initial 
Technical Evaluation Report, June 18, 1998, at 6.  These ratings were 
supported by narratives of strengths and weaknesses in each proposal.

More specifically, the SSEB assigned a "marginal" rating to OMV's 
proposal because OMV appeared to have limited experience in providing 
inpatient or outpatient RN services of similar quantity in an 
emergency medicine, medical surgical, or critical care environment as 
described in the RFP.  While OMV stated that it had experience in 
providing outpatient/wellness RN services and critical care and 
emergency medicine RN services of similar quantity, the agency was 
unable to confirm or verify this information with OMV's listed 
references.  The SSEB determined that OMV had extensive experience in 
providing therapists and physicians and in providing a large number of 
RNs in the area of occupational health services and in providing a 
substantial number of personnel (the number of RNs was not specified) 
in the area of family advocacy services.  The agency, however, was 
unable to confirm OMV's performance information for these services.  
While the SSEB confirmed that OMV had an excellent record of 
performance in furnishing a small number of RNs to provide mental 
health nursing services at the NNMC and had an excellent record of 
performance in providing a small number of medical surgical and 
critical care RNs at a local hospital, the agency was unable to 
confirm performance information for OMV in providing RN services at 
other local hospitals.  The SSEB concluded that due to the lack of 
verifiable references for OMV for quantities of RNs similar to those 
required by the RFP, OMV demonstrated a low probability of 
successfully performing the RFP requirements.  Initial Technical 
Evaluation Report at 18-19.

As relevant here, price proposals were evaluated for realism by 
basically comparing an offeror's proposed direct labor rates to the 
direct labor rates paid under the three most recent contracts at the 
NNMC.  (One contract was awarded on a sole-source basis for ICU and 
PACU services; one contract was awarded competitively for NICU and 
MICC services; and the last contract was awarded on a sole-source 
basis for medical surgical and ACC services, with options for OR and 
APU services.)  Initial Price Evaluation Report, undated, at 2-3.  
Neither OMV, MPSS, nor AHRI was determined to have submitted complete, 
reasonable, or realistic price proposals.  OMV's price was lower than 
the prices submitted by MPSS and AHRI.  Id. at 4-6, 9-10.

The agency included the proposals of all eight firms in the 
competitive range and conducted written discussions with each 
competitive range offeror.  With each discussion letter the agency 
enclosed a copy of amendment No. 0003 to the RFP, issued on August 14, 
which changed the requirement for the submission of past performance 
information.  Specifically, offerors were now required to "submit a 
narrative discussion which demonstrates directly related or similar 
experience in providing each of the specific categories of Registered 
Nurse services required in this solicitation."  Amendment No. 0003,  sec.  
M.3.1, at 78.  This amendment defined "directly related or similar 
experience" in terms of "experience in providing registered nurse 
services of similar or same quantity in an ICU, PACU, NICU, MICC, 
medical/surgical unit, ambulatory care clinic, OR, and ambulatory 
procedure unit."  Id.

In the discussion letter to OMV, the agency requested that the firm 
provide the names of individuals at local hospitals familiar with OMV 
and who could confirm OMV's past performance information; that the 
firm specify whether nurses supplied to military hospitals were RNs; 
that the firm specify the number of RNs provided in performing family 
advocacy services; and that the firm provide references who could 
verify that OMV has provided numbers of RNs similar to those required 
by the RFP.  OMV was further reminded that the requirement for the 
submission of past performance information changed in amendment No. 
0003 and the firm was told to refer to that amendment.  In addition, 
the agency noted the single reason why OMV's price proposal was 
considered incomplete (a mistake in a line item shift quantity); 
explained that OMV's price was considered unreasonable because prices 
exceeded the government's estimate; and explained that its proposed 
direct labor rates appeared low, i.e., unrealistic, when compared to 
the government's estimate.  OMV Discussion Letter, Aug. 14, 1998.

The competitive range offerors submitted revised proposals which 
responded to the discussion questions by the closing time on September 
1.  In its revised technical proposal, OMV provided the name of one 
reference at a local hospital.  OMV was unable to locate the 
individual who served as the point of contact during performance under 
another local hospital contract and, therefore, deleted this hospital 
as a reference.  OMV stated that it provides a "cadre" of highly 
qualified registered nurses at military hospitals, and in responding 
to the past performance requirements of amendment No. 0003, OMV 
submitted information for two family advocacy service contracts (total 
of 20 RNs), an occupational health services contract (47 full- and 
part-time RNs) for which it provided a reference, and two local 
hospital contracts (unspecified number of RNs for emergency room, 
critical care, medical surgical, and ambulatory surgery units on an 
as-needed basis).  OMV also revised its price proposal.

The SSEB evaluated revised technical proposals and assigned an 
"excellent" rating to AHRI for Groups A and C, and an "excellent" 
rating to MPSS for Group B.[2]  The SSEB assigned a "marginal" rating 
to OMV for Groups A, B, and C.  Again, these ratings were supported by 
narratives of proposal strengths and weaknesses.  Supplemental 
Technical Evaluation Report, Sept. 14, 1998, at 6-8.

The SSEB assigned a "marginal" rating to OMV's revised technical 
proposal considering the past performance requirements described in 
amendment No. 0003.[3]  With respect to the requirements for ICU, 
PACU, and OR RNs (Group A), OMV stated it provided 21 RNs and 7 
licensed practical nurses to work in critical care and shock trauma 
areas at three local hospitals.  However, OMV failed to specify the 
critical care units in which these RNs were provided and the agency 
was unable to confirm or verify OMV's performance.  With respect to 
the requirements for NICU and MICC RNs (Group B), the SSEB determined 
that OMV failed to demonstrate any experience in providing NICU RNs, 
and while OMV stated that it provided five labor and delivery nurses 
at two military hospitals, OMV failed to provide sufficient 
information for purposes of verification.  Finally, with respect to 
the requirements for medical surgical, ACC, and APU RNs (Group C), the 
SSEB recognized that OMV demonstrated RN experience in the 
occupational health services area which was similar in scope and 
magnitude to the ACC RN requirement.  However, the agency was unable 
to verify OMV's performance.  Although OMV stated that it provided RNs 
on an as-needed basis in the emergency room, ambulatory surgery, and 
medical surgical units at two local hospitals, OMV failed to specify 
the number of RNs provided at these hospitals and the agency was 
generally unable to confirm the performance information provided by 
OMV.  The SSEB reiterated that for the references reached, 
satisfactory performance by OMV was reported.  Supplemental Technical 
Evaluation Report at 29-32.

In its revised price proposal, OMV introduced mathematical errors 
which resulted in the agency determining its price proposal was 
incomplete; the agency further determined its price was reasonable, 
but not realistic, suggesting that OMV may not have understood the RFP 
requirements and may have problems recruiting and retaining RNs.  The 
MPSS revised price proposal was determined incomplete, but reasonable 
and realistic.  AHRI's revised price proposal was determined complete, 
but unreasonable and unrealistic.  Supplemental Price Evaluation 
Report, Oct. 8, 1998, at 5-6, 11-13.

On October 15, the source selection advisory council (SSAC) determined 
to narrow the competitive range.  The SSAC determined that OMV's 
revised proposal, and the revised proposals of four other offerors, 
were not among the most highly rated proposals, and that additional 
technical and price discussions would not improve these proposals.  
The SSAC concluded that the past performance of the three firms whose 
revised proposals would remain in the competitive range--MPSS, AHRI, 
and The Arora Group, Inc. (which submitted a proposal for Groups A, B, 
and C)--was superior to that of the offerors whose revised proposals 
would be eliminated from the competitive range.  In accordance with 
Federal Acquisition Regulation (FAR)  sec.  15.306(d)(4) (FAC 97-02), the 
SSAC recommended that OMV's revised proposal, as well as the other 
four proposals, be removed from the competitive range.  Minutes of 
SSAC, Oct. 15, 1998.  The contracting officer, serving as the source 
selection authority (SSA), approved the SSAC's recommendation.  SSA 
Approval Memorandum, Oct. 15, 1998.

The agency conducted another round of discussions, by telephone, with 
MPSS, AHRI, and Arora.  These discussions focused on price issues only 
as no past performance issues remained to be resolved with these 
offerors.  Following discussions, final price proposal revisions were 
submitted by the closing time on October 23.

The SSAC recommended that Groups A and C be awarded to AHRI and that 
Group B be awarded to MPSS.  SSAC Report, Oct. 28, 1998, at 3-5.  The 
SSA concurred with the SSAC's recommendation, E-mail from SSA, Oct. 
28, 1998, and accordingly, on October 30, the agency awarded contracts 
to AHRI and MPSS as the firms whose proposals offered the best 
combination of past performance and price.

OMV challenges the evaluation of its past performance and price which 
resulted in the agency's elimination of its revised proposal from the 
competitive range as not being among the most highly rated proposals.

In reviewing competitive range determinations, our Office will not 
independently reevaluate proposals; rather, we will examine the record 
to ensure that the evaluation was reasonable and in accordance with 
the solicitation's evaluation criteria.  SDS Petroleum Prods., Inc., 
B-280430, Sept. 1, 1998, 98-2 CPD  para.  59 at 4.

In evaluating an offeror's past performance, the agency, in accordance 
with amendment No. 0003, focused on whether an offeror demonstrated 
"experience in providing registered nurse services of similar or same 
quantity in an ICU, PACU, NICU, MICC, medical/surgical unit, 
ambulatory care clinic, OR, and ambulatory procedure unit."  In 
evaluating OMV's past performance, the record shows that the SSEB 
considered all the information furnished by OMV in its initial and 
revised proposals and in its response to the discussion questions.  
While OMV stated it had experience in providing RNs in the areas of 
occupational health services, family advocacy services, critical care, 
emergency room, and medical surgical, the SSEB concluded that but for 
OMV's experience in providing occupational health RNs, which 
corresponded to the RFP's ACC requirement, none of the areas for which 
OMV provided RNs corresponded to any of the specific substantive and 
quantitative RN requirements in amendment No. 0003.

For example, OMV's two family advocacy services contracts involved 
providing counseling and medical services to military personnel 
identified as being at high risk for domestic abuse.  OMV did not 
demonstrate that its experience in providing 20 family advocacy RNs 
corresponded to any of the specific RFP requirements.  As another 
example, OMV stated that it has provided critical care RNs at local 
hospitals; however, OMV failed to specify the particular critical care 
hospital units for which these RNs were provided, e.g., ICU, PACU, OR.  
In addition, OMV omitted information regarding the number of RNs 
furnished under these contracts--OMV simply stated RNs were provided 
on an as-needed basis for a range of shifts per month in emergency 
room, medical surgical, and ambulatory surgery units.

We believe the agency could reasonably conclude that OMV failed to 
demonstrate that its experience in providing RNs corresponded to any 
of the RN requirements specified in amendment No. 0003 and the agency 
could reasonably assign a "marginal" rating to OMV's revised technical 
proposal because there was a low probability that OMV could 
successfully perform the contract.

OMV, which does not dispute that the agency had difficulty reaching 
some of its listed references, also asserts that the agency should 
have had discussions with the firm regarding the agency's inability to 
confirm or verify past performance information with these references.  
We point out, however, that following the SSEB's evaluation of OMV's 
initial proposal, OMV was specifically asked during discussions, prior 
to the submission of its revised proposal, to provide the names of 
individuals at local hospitals familiar with OMV who could confirm 
OMV's past performance information and to provide references who could 
verify that OMV had provided numbers of RNs similar to those required 
by the RFP.  In other words, the agency, during discussions, placed 
OMV on notice that it was having difficulty confirming or verifying 
OMV's past performance information as contained in its initial 
proposal.  In responding to the discussion questions and in its 
revised proposal, the record shows that OMV failed to provide the 
necessary references.  Because agencies are not required to notify 
offerors of deficiencies remaining in their proposals or to conduct 
successive rounds of discussions until omissions are corrected, ITT 
Fed. Servs. Corp., B-250096, Jan. 5, 1993, 93-1 CPD  para.  6 at 6, the 
agency was not required to afford OMV another opportunity to address 
the issue of references.

In sum, regarding the evaluation of OMV's past performance, the agency 
had three interrelated concerns--that OMV's experience in providing 
RNs was not similar to the substantive RN requirements of the amended 
RFP; that to the extent OMV had furnished appropriately experienced 
RNs, OMV did not demonstrate that it provided these RNs in similar 
quantities to those required by the amended RFP; and that OMV failed 
to provide references who could verify the firm's past performance 
information.[4]  Any one of these concerns, we believe, provides a 
reasonable basis for the agency's "marginal" rating assigned to OMV's 
past performance.

In addition, OMV objects to the agency's conclusion that its 
low-priced proposal was unrealistic based on a comparison of its 
proposed direct labor rates to the direct labor rates paid under the 
most recent contracts for RN services at the NNMC.  OMV disagrees with 
the agency's conclusion that its low direct labor rates might result 
in recruitment and retention problems.[5]

The manner in which a price realism analysis is conducted is a matter 
subject to a contracting agency's sound discretion which we will not 
disturb unless it lacks a reasonable basis.  Telford Aviation, Inc., 
B-275896, Apr. 16, 1997, 97-1 CPD  para.  142 at 6.  Compensation rates 
properly may be considered as part of a realism analysis.  Id.

Here, the RFP stated that in evaluating the realism of an offeror's 
proposed prices, prices would be evaluated for "unusually low cost 
estimates, understatements of costs, inconsistent pricing patterns, 
potential misunderstandings of the solicitation's requirements, and 
the risk of personnel recruitment and retention problems during 
contract performance."  Other than objecting to what it characterizes 
as a mechanical comparison of its direct labor rates to an undisclosed 
government estimate based on direct labor rates paid under three 
recent contracts,[6] OMV has offered no meaningful challenge to the 
agency's conclusion that its proposed price was too low and presented 
a risk in terms of recruitment and retention of RNs for this contract.  
OMV does not explain why the direct labor rates paid under the other 
recent contracts was not a reasonable basis to determine price realism 
for this contract.  Accordingly, we have no basis to object to the 
agency's conclusion that OMV's proposed price was unrealistically low.

On this record, considering that OMV failed to demonstrate past 
performance in providing RNs as required by the terms of the amended 
RFP and that the agency was concerned with OMV's ability to recruit 
and retain RNs in light of its low proposed direct labor rates, we 
believe the agency reasonably determined to remove OMV's revised 
proposal from the competitive range as not being among the most highly 
rated proposals, and therefore not having a realistic prospect for 
award.  FAR  sec.  15.306(c)(1); SDS Petroleum Prods., Inc., supra, at 5.  
Contrary to OMV's position, the agency was not required to keep the 
firm's revised proposal in the competitive range, to conduct 
additional past performance and price discussions with the firm, and 
to request another revised proposal since to do so, where the agency 
had concluded that OMV had no realistic chance for award, would have 
benefited neither OMV nor the agency.  FAR  sec.  15.306(d)(4); SDS 
Petroleum Prods., Inc., supra, at 6.

Finally, OMV challenges the agency's evaluation of the past 
performance of the two awardees.  OMV disputes the agency's assignment 
of an "excellent" rating to MPSS, arguing that the firm should have 
been downgraded for past performance in light of a contract that was 
terminated at the NNMC because of staffing shortages.  OMV also 
objects to the SSEB's assignment of an "excellent" rating to AHRI 
based on the attribution of the past performance of AHRI's 
subcontractor to AHRI.

Under our Bid Protest Regulations, a party is not interested to 
maintain a protest if it would not be in line for award if the protest 
were sustained.  4 C.F.R.  sec.  21.0(a) (1998).  Here, where the agency 
reasonably excluded OMV's revised proposal from the competitive range, 
and where, in addition to the proposals of MPSS and AHRI, the proposal 
of another offeror--Arora--remained in the competitive range, OMV, 
which did not challenge the evaluation of Arora's proposal, is not an 
interested party to challenge the evaluation of the awardees' 
proposals because, even if its protest against the evaluation of the 
awardees' proposals were sustained, Arora, not OMV, would be in line 
for award.  Magnum Prods., Inc.; Amida Indus., Inc., B-277917 et al., 
Dec. 8, 1997, 97-2 CPD  para.  160 at 6 n.3.[7]

The protest is denied.

Comptroller General
of the United States
   
1. As reflected in the agency's source selection plan, a "marginal" 
rating was defined as "[l]ess than satisfactory; offeror has 
documented past performance problems in provisions of Registered Nurse 
services.  Low probability of success due to the number of performance 
problems, their severity, and the offeror's failure to correct them."  
Source Selection Plan, Apr. 9, 1998, at 10.  A "good" rating was 
defined as "[s]atisfactory, offeror has positive experience in 
successfully providing Registered Nurse services.  Good probability of 
success."  Id.

2. An "excellent" rating was defined as "[o]utstanding in essentially 
all respects: represents the best that could be expected of any 
contractor.  Offeror has extensive positive experience in providing 
Registered Nurse services.  Very high probability of success."  Source 
Selection Plan at 10.

3. The SSEB narrative also incorporated comments from the initial 
technical evaluation report.

4. Even if the agency had confirmed and verified OMV's past 
performance information, the record indicates that OMV's experience 
still would not have been considered similar (in substance and in 
quantity) to the requirements of the amended RFP.

5. Contrary to OMV's assertion, the record shows that the agency did 
not ignore statements in its initial and revised technical proposals 
to the effect that the firm basically had a perfect recruitment and 
retention record for all of its contracts.  Again, the requirements of 
these contracts were not shown by OMV to be similar to the RN 
requirements of the amended RFP and much of the information furnished 
by OMV could not be confirmed or verified.

6. Price comparisons are specifically contemplated by FAR  sec.  
15.404-1(b)(2) (examples of price analysis techniques, including 
comparison of previously proposed prices and contract prices with 
current proposed prices for the same or similar end items), and there 
is nothing improper in an agency's comparing proposed prices with an 
undisclosed government estimate.  See, e.g., P.E. Sys., Inc., 
B-249033.2, Dec. 14, 1992, 92-2 CPD  para.  409 at 6.

7. We note that with respect to the evaluation of the past performance 
of MPSS, OMV merely expresses disagreement with the agency's statement 
that the termination of the MPSS contract was for convenience, not 
default, as a result of government cancellations of shifts and 
unplanned shift changes with short notices.  The record shows that the 
agency terminated the MPSS contract pursuant to the clause at FAR  sec.  
52.249-12, captioned "Termination (Personnel Services)," which states 
in relevant part that "[t]he Government may terminate this contract at 
any time upon at least 15 days' written notice by the Contracting 
Officer to the Contractor."  There is nothing in the record suggesting 
that the MPSS contract was terminated for default and, as reflected by 
the evaluation record, the agency reasonably considered the 
circumstances surrounding the staffing shortages and termination.  
With respect to the evaluation of AHRI's past performance, the RFP did 
not prohibit subcontracting, and, in fact, required an offeror to 
include in its past performance narrative information regarding 
subcontractors who will perform major or critical aspects of the RFP 
requirements.  The record shows that the agency recognized that while 
AHRI did not demonstrate RN experience as required by the amended RFP, 
its proposed subcontractor has, for over 20 years, provided RNs in 
accordance with the amended RFP requirements.  References reported 
reliable and excellent performance for AHRI's proposed subcontractor.  
We believe the agency reasonably balanced AHRI's noted weakness and 
its proposed subcontractor's excellent past performance history in 
assigning an "excellent" rating to AHRI for past performance.  See, 
e.g., Hago-Cantu Joint Venture, B-279637.2, July 20, 1998, 98-2 CPD  para.  
99 at 11.  We also note that to the extent OMV questions whether AHRI 
will comply with the RFP's limitation on subcontracting clause, this 
is a matter of contract administration not for review by our Office.  
4 C.F.R.  sec.  21.5(a).  Finally, we point out that in any event, OMV does 
not dispute that both awardees demonstrated, either as a prime 
contractor or through a subcontractor, past performance in accordance 
with the RFP requirements.