BNUMBER: B-281773; B-281773.4
DATE: April 1, 1999
TITLE: SGT, Inc., B-281773; B-281773.4, April 1, 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:SGT, Inc.
File:B-281773; B-281773.4
Date:April 1, 1999
Arthur I. Leaderman, Esq., Jonathan D. Shaffer, Esq., and Claire E.
Kresse, Esq., Smith, Pachter, McWhorter & D'Ambrosio, for the
protester.
J. Patrick McMahon, Esq., McMahon, David & Brody, and Myrna E.
Friedman, Esq., for QSS, Inc., an intervenor.
Vincent A. Salgado, Esq., and Gregory LaRosa, Esq., National
Aeronautics & Space Administration, for the agency.
David A. Ashen, Esq., and John M. Melody, Esq., Office of the General
Counsel, GAO, participated in the preparation of the decision.
David A. Ashen, Esq., and John M. Melody, Esq., Office of the General
Counsel, GAO, participated in the preparation of the decision.
DIGEST
Protest against agency's evaluation of awardee's response to
representative task order (RTO) is denied where agency reasonably
concluded that solicitation did not require offerors to propose a
technical solution, design a device or select a specific [DELETED]
material technology, and that awardee's proposal of a methodology for
performing the RTOs therefore was consistent with the solicitation;
the agency reasonably accounted for protester's more detailed proposal
of a higher cost, more capable [DELETED] material technology by
crediting the proposal with significant strengths for its additional
detail and demonstration of a thorough understanding of the
technology, and by normalizing foundry costs in the probable cost
figures presented to the source selection authority.
DECISION
SGT, Inc. protests the National Aeronautics & Space Administration's
award of a contract to QSS Group, Inc. under request for proposals
(RFP) No. 5-58392/237, issued as a competitive section 8(a) set-aside
for multidisciplinary engineering development services (MEDS) for the
Goddard Space Flight Center (GSFC) in Greenbelt, Maryland. The
protesters challenge the evaluation under the technical, cost and past
performance factors.
We deny the protest.
The solicitation, issued on July 17, 1998, provided for award of a
5-year indefinite-quantity, indefinite-delivery
cost-plus-incentive-fee contract to
provide engineering services to [Electrical Systems Center],
[Information Systems Center], systems engineering, and related
organizations, as required, for the study, design, development,
fabrication, integration, testing, verification, and operations
of space flight and ground system hardware and software,
including development and verification of new technologies to
enable future science missions.
RFP Attachment A, Statement of Work (SOW), at 2. The SOW specifically
provided for issuance of task assignments to perform services with
respect to
components, subsystems, systems, science instruments, and
spacecraft, including attached shuttle payloads, free-flying
spacecraft, aircraft and balloon payloads, and Space Station
payloads as well as ground support equipment, simulators,
non-flight models, and prototypes; candidate, feasibility, and
systems definition studies; project management; systems
engineering; analysis; preliminary design; detailed design;
fabrication; assembly; integration; test and verification; test
instrumentation; data systems management; launch and post-launch
operations; research and technology unique to system development;
parts and materials; documentation; maintenance; sustaining
engineering; configuration management; performance assurance;
systems safety; and contamination control.
Id. Award was to be made on a best value basis to the offeror whose
proposal was most beneficial to the government under three evaluation
factors: (1) mission suitability (1,000 evaluation points available),
with subfactors for understanding the requirement (400 points),
personnel (150 points), and management plan/corporate resources (450
points); (2) past performance; and (3) cost. RFP sec. M.5.2, at 115.
Cost was significantly less important than both the combined
importance of mission suitability and past performance, and mission
suitability alone, but was more important than past performance alone.
Id. sec. M.4.3, at 111.
The evaluation under both the mission suitability and cost factors was
based to some extent on an evaluation of offerors' responses to
representative task orders (RTO) set forth in the solicitation.
Specifically, the solicitation listed offerors' responses to the RTOs
as one of two elements under the understanding the requirement
subfactor of the mission suitability factor. Id. sec. M.5.1, at 112. In
addition, the RFP indicated that the cost evaluation would be based on
offerors' responses to the RTOs, as follows:
M.6 Cost/Price Evaluation Factor
The proposed cost/price for the representative task orders will
be assessed to determine reasonableness and cost realism. The
evaluation will be conducted in accordance with [Federal
Acquisition Regulation (FAR)] 15.305(a)(1) and [National
Aeronautics & Space Administration FAR Supplement]
1815.305(a)(1)(B) and (C).
. . . . .
Both the proposed cost and the probable cost will be presented to
the Source Selection Authority.
RFP sec. M.6, at 116. The solicitation further provided that "[a]s the
representative task orders . . . are for a cost reimbursement type
effort, the Mission Suitability score will be adjusted based on the
degree of cost realism." RFP sec. M.5.3, at 115.[1]
NASA received five proposals. QSS's and SGT's were evaluated as
follows:
MISSION SUITABILITY
Initial/(Cost) Adjusted
Score COST
Adjusted Proposed[2]
/Probable PAST PERFORMANCE
QSS 885.5/885.5--Very Good$[DELETED] Very Good
SGT 756.8/756.8--Very Good$[DELETED] Very Good
The source selection authority (SSA) determined that QSS's proposal,
which received the highest score under the mission suitability factor,
had "significantly higher technical merit." Agency Report, Tab 22,
Source Selection Statement, at 9. In addition, the SSA noted that
there were no significant past performance discriminators between the
proposals. Since QSS's probable cost was significantly lower than
that of SGT, the next highest-ranked proposal under the mission
suitability factor, the SSA concluded that QSS's proposal offered the
best value to the government. Id. Upon learning of the resulting
award to QSS, and after being debriefed by NASA, SGT filed this
protest against the award.[3]
SGT challenges the evaluation on several grounds. We find that the
evaluation was reasonable. We discuss some of the primary issues
below.
RTO EVALUATION
SGT generally argues that the evaluation of QSS's response to the RTOs
failed to account for QSS's failure to comply with an alleged
solicitation requirement to select an appropriate technology to
accomplish the RTO SOWs.
The seven RTOs set forth in the solicitation were for various phases
in the design, development, production and testing of a spacecraft
mission that will accommodate three earth-viewing instruments and
place them in a 700-kilometer, near-polar, high noon, sun-synchronous,
circular orbit. The focus of SGT's protest in this regard concerns
RTOs 3 and 4. RTO 3 provided:
The Contractor shall perform a study of the appropriate types of
technology to use for an engineering model, field-programmable
gate array/application specific integrated circuit (FPGA/ASIC)
device meeting the specification of this Statement of Work (SOW).
The study shall include the rationale behind each type of
technology, as well as a power versus speed analysis, risk
assessment, implementation approach, and design schedule
assessment for each type of technology identified. The device
design schedule shall be eight (8) months.
The Contractor shall select one FPGA/ASIC approach that best
meets the requirements of this SOW and develop a detailed
implementation plan.
RFP Enclosure A, Representative Task Orders, RTO 3. RTO 4 stated
that "[b]ased on the study and implementation plan delivered under
Representative Task Order 3, the StudySat program has proceeded with,
and completed, the recommended FPGA/ASIC design." RTO 4 provided that
"[t]he Contractor shall deliver" 25 FPGA/ASIC engineering model
devices. Id. RTO 4.
In its response to RTO 3, QSS selected an integrated circuit
technology, [DELETED], explained the rationale for its selection, and
proposed an approach and methodology for completing the implementation
plan. In contrast, SGT, which [DELETED] proposed [DELETED] device,
went further and also specified a material technology to be used in
its [DELETED] device. In this regard, the record indicates that there
are a number of [DELETED] technologies, including [DELETED], some of
which--such as [DELETED]--an agency technical adviser has testified
(at a hearing our Office conducted with respect to this protest) would
be unable to meet the speed and power requirements of the RTO SOWs.
Agency Hearing Comments, Mar. 8, 1999, at 4; Hearing Transcript (Tr.)
at 21-22, 60-62, 65, 85-86.[4] SGT proposed to use a [DELETED]
technology in its [DELETED] integrated circuit devices; although the
foundry costs of [DELETED]. Tr. at 31-32, 62, 92.
NASA viewed RTO 3 as requiring only development of a trade study to
determine whether FPGA or ASIC would best meet the SOW requirements
and an implementation plan. The agency did not intend to require
offerors to design the device or select a specific material
technology; according to the agency, the RTO called only for an
approach, not a solution. Agency Hearing Comments, Mar. 8, 1999, at
4. Accordingly, the agency determined that both QSS and SGT had
proposed acceptable approaches to RTO 3. QSS's proposal was credited
with a strength on account of its detail, approach, identification of
risks and mitigation, insight into development, and knowledge of
currently available technologies. Agency Report, Tab 16f, SEB [Source
Evaluation Board] Initial Report, at 19. SGT's proposal was credited
with a significant strength under RTO 3 (as well as under RTO 4) on
account of its "thorough understanding of the technology," as well as
its excellent, detailed approach. Id. at 53-54. NASA's evaluation of
SGT's proposal under RTO 3 "recognized that their specification of
[DELETED] was additional detail and represented . . . a further
understanding of the technical solution that we were looking for, the
requirements to meet the statement of work; and we basically felt that
it was a superior--or was rated higher as a[--]technical proposal."
Tr. at 26-27.
SGT argues that QSS's failure to identify a specific technical
solution and material technology--e.g., [DELETED]--for RTOs 3 and 4
was contrary to provisions of the RFP. Specifically, SGT notes that
RFP section L.19, Cost/Price Proposal Instructions (Competitive),
required offerors to "propose all costs and fees" for the RTOs;
"prepare a cost estimate by element of cost with corresponding
narrative to explain the basis of estimate for each element" of cost;
and use the bases of estimate "to give the Government insight into the
thought processes and methodologies used by the offeror in estimating
the quantities of labor hours, other direct costs, etc. required for
successful performance on the representative task orders." RFP sec.
L.19.1.1(a) and .2, at 102. According to the protester, an offeror
would not satisfy the requirement for an explanation of its costs, and
NASA could not arrive at a probable cost estimate for the RTO efforts,
unless the offeror made clear which [DELETED] technology it would use.
The premise of SGT's argument is flawed. The requirements regarding
full costing of the RTO efforts must be read in light of the detail
required in the RTO responses, not the other way around. That said,
we find that the solicitation instructions and evaluation criteria
with respect to the technical response to the RTOs clearly support the
agency's interpretation that only an approach to performing the RTOs,
and not a technical solution, was required. Specifically, RFP section
L, Instructions to Offerors, stated that in preparing technical
responses to the RTOs,
[t]he offeror shall provide a narrative to implement and staff
these tasks. The response must be specific, detailed, and
complete enough to demonstrate your understanding of the
technical objectives and problems in meeting the task
requirements, including resource estimates, schedule, risk
identification and mitigation. At a minimum, each response to
the representative tasks must address the following:
What elements of your organization are involved and when?
How will these tasks be managed, including configuration,
subcontracting, schedule, and cost control?
With which organizations (both civil servant and Contractor),
involved in each task, would you interface and how would this
be done?
What types of key personnel and skills are needed; when; and
how much manpower will be needed?
What specific facilities and equipment are required?
What is the flow of activities from start to completion?
What are the elements of cost (unpriced)?
Any assumptions made in preparing a response to those problems
must be clearly stated.
NOTE: THE OFFEROR IS NOT TO PERFORM ANY ACTUAL DESIGN WORK IN
RESPONSE TO THE RFP.
RFP sec. L.18.1, at 94-95. This instruction not only specifically
cautions the offeror against performing design work in responding to
the RFPs, but also describes the required elements of the desired
response in terms of an approach (e.g., address elements of
organization that will be involved and how the tasks will be managed),
not a solution. Similarly, the evaluation scheme under the
understanding the requirement subfactor of the mission suitability
factor focused on the offeror's demonstrated knowledge of the problem
and approach to solving it:
The offeror will be evaluated on the basis of how well it
demonstrates understanding of the technical objectives and
problems in meeting the task requirements, including:
1. Realism of the estimated expertise and proper staffing
needed to accomplish the objectives as well as resource
estimates and facility utilization;
2. Completeness and accuracy in the identification of
critical issues, including risk identification and mitigation;
3. Thoroughness of discussion of how the problem would be
solved, including technical approach and schedule.
RFP sec. M.5.1, at 112. This emphasis on approaches to solving the RTO
problems also was consistent with an agency statement, released prior
to issuance of the solicitation in response to potential offerors'
questions concerning the draft solicitation, that "the offeror is not
to perform any actual design work in response to the RFP. The
representative tasks are designed to show the offeror's approach to
implementing, managing and staffing the tasked effort." Agency
Report, Tab 6d, Frequently Asked Questions, July 9, 1998, at 2.
SGT correctly notes that, in view of the significant differences in
foundry costs among the various [DELETED] material technologies, not
requiring offerors to select a material technology could prevent the
agency from forming a reasoned conclusion as to probable cost of an
offeror's approach to RTO 4 (which called for production of 25
FPGA/ASIC engineering model devices). This, in turn, could preclude
an apples-to-apples comparison among the offerors, working to the
disadvantage of SGT, which specified a compliant, but more costly,
materials technology.
However, the agency evaluated this potential for disparate treatment
by essentially normalizing offerors' foundry costs, thus substantially
lowering the protester's probable cost. In this regard, our Office
has recognized that when an agency is performing a cost realism
analysis, it may be appropriate to normalize certain costs in order to
achieve a greater degree of cost realism. Cost normalization involves
the measurement of offerors against the same baseline where there is
no logical basis for the differences in approach or where there is
insufficient information with the proposals, leading to the
establishment of a common "should have bid" estimates by the agency.
The purpose of such an analysis is to segregate cost factors which are
"company unique"--depending on variables resulting from dissimilar
company policies--from those which are generally applicable to all
offerors and therefore subject to normalization. The Research Found.
of State Univ. of New York, B-274269, Dec. 2, 1996, 96-2 CPD para. 207 at
5.
The record indicates that, although the formal briefing package
presented to the SSA and the source selection statement refer to
probable cost figures that include foundry costs under RTO 4, Agency
Report, Tab 16d, Initial Evaluation Presentation to SSA, at 91-92;
Agency Report, Tab 22, Source Selection Statement, at 6-7, the cost
evaluation report included an alternate probable cost comparison which
deleted foundry costs. When proposed foundry costs were deleted, the
agency's analysis indicated that the probable cost of QSS's proposal
(exclusive of fee) was $[DELETED] (reduced from $[DELETED]), while the
probable cost of SGT's proposal (exclusive of fee) was $[DELETED]
(reduced from $[DELETED]). Agency Report, Tab 16g, Initial Cost
Evaluation Findings, Enclosure 3; Tr. at 88. NASA found that SGT's
probable cost remained significantly higher than QSS's even after
backing out the foundry costs, in part, because SGT, unlike QSS,
[DELETED], Agency Report, Tab 13b, SGT Cost/Price Proposal, sec. 1.a.2;
Agency Report, Tab 12b, QSS Cost/Price Proposal, at 2, and SGT
proposed significantly higher skill levels than assumed in the
government estimate or proposed by QSS. Tr. at 139-43.[5] The record
further indicates that the alternate cost comparison (i.e., with the
normalized foundry costs) was presented to, and discussed with, the
SSA, and that the SSA concluded that QSS's higher-rated proposal still
offered the best value to the government, notwithstanding the
reduction in QSS's cost advantage relative to SGT. Tr. at 145-51,
213-18; Agency Hearing Comments, Mar. 8, 1999, Declaration of SSA, at
2.[6] We conclude that NASA reasonably evaluated QSS's and SGT's
responses to the RTOs.
PAST PERFORMANCE
SGT argues that assigning SGT and QSS the same very good ratings under
the past performance factor in effect improperly offset SGT's greater
experience with respect to aerospace engineering/flight hardware
against the past performance experience of QSS's proposed
subcontractors, Orbital Sciences Corporation and Raytheon STX
Corporation. SGT believes that it deserved an evaluation advantage
over QSS because QSS itself lacked equivalent experience in this area.
The RFP required offerors to furnish specified past performance
information concerning no more than five contracts or subcontracts
valued in excess of $3,000,000 and active or awarded in the last 3
years, for the offeror and "subcontractors [proposed] to occupy a
major role." RFP sec. L.20.1, at 103-04. The RFP provided that the
evaluation of past performance would take into account technical
performance ("the offeror's compliance with technical requirements and
performance standards"), schedule performance ("how well the offeror
has met completion dates"), and cost performance ("cost increases and
cost savings"). RFP sec. M.7, at 117-18. The RFP included a past
performance questionnaire which offerors were to forward to their
references; this questionnaire requested information on the extent of
the contractor's experience with respect to 42 work elements and the
quality of its technical, schedule, business and cost performance.
RFP Exhibit A, Past Performance Questionnaire.
In its proposal, QSS stated that it "projected a [DELETED] percent
share for QSS, anticipating that as much as [DELETED] percent could be
performed by specialty subcontractors, while still permitting QSS to
perform at least 50 percent of the contract"; QSS proposed to
subcontract [DELETED] percent of the work to Orbital and [DELETED]
percent to Raytheon. Agency Report, Tab 12a, QSS Technical Proposal,
at 78-79; Agency Report, Tab 12b, QSS Cost/Price Proposal, at 7. (SGT
notes that QSS proposed to furnish only [DELETED] percent of the
proposed staffing for the RTOs, with the remainder to be furnished by
its subcontractors. SGT Hearing Comments, Mar. 8, 1999, at 27.) QSS
listed and described in detail three primary contracts each for
itself, Orbital and Raytheon. Two of the three QSS contracts were
with GSFC; a past performance questionnaire was returned for one of
these two contracts. QSS's self description of the contracts and the
returned questionnaire indicated that QSS's experience under these
contracts was primarily in the areas of project management,
information technology and information technology-related systems
engineering, although the contract for which no questionnaire was
returned appeared to include fabrication, assembly and testing
services as well. Agency Report, Tab 12c, QSS Business Management
Proposal, at 9, 12-18; Agency Report, Tab 34a, Past Performance
Questionnaires. The third QSS contract, valued by QSS at only $3
million, was described as involving science and software support for
the National Oceanographic and Atmospheric Administration (NOAA),
including support of its satellite based microwave climate system and
other satellite systems, as well as project management and systems
engineering. Agency Report, Tab 12c, QSS Business Management
Proposal, at 9, 19-21; Agency Report, Tab 34a, Past Performance
Questionnaires. In the work element matrix of 42 work elements in the
two returned past performance questionnaires, QSS was described as
possessing significant experience in 9 of the 42 work elements and
moderate experience in an additional 11 work elements. However, QSS's
proposed subcontractors, Orbital and Raytheon, were described in
returned questionnaires as possessing moderate or significant
experience in 39 of 42 work elements, and minimal experience in the
remaining three areas. Agency Report, Tab 34a, Past Performance
Questionnaires.
SGT proposed to provide [DELETED] percent of the services purchased by
labor hour. Agency Report, Tab 13a, SGT Technical Proposal, at C-16.
In the three past performance questionnaires returned for SGT itself,
SGT was described as possessing significant experience in 9 of 42 work
elements listed in the questionnaires and moderate experience in an
additional 19 work elements. Agency Report, Tab 34b, Past Performance
Questionnaires. Among the areas in which SGT was described as
possessing significant or moderate experience, but QSS was not, were
electrical/electronics, radiation effects and analysis, and components
design, and solid state device research and development. Id. SGT's
proposed subcontractors were described in returned questionnaires as
possessing moderate or significant experience in all 42 work elements.
Id.
SGT argues that QSS's relative lack of experience with respect to
aerospace engineering/flight hardware is especially significant
because this procurement was set aside for small businesses, and thus
at least 50 percent of the cost of contract performance incurred for
personnel was required to be expended by the prime contractor, Federal
Acquisition Regulation, sec. 52.219-14, Limitation on Subcontracting,
incorporated into the solicitation at RFP sec. I.7, at 52. SGT argues
that, given the limitations on subcontracting, QSS will be forced to
perform work in the area of aerospace engineering/flight hardware, for
which it lacks experience. SGT concludes that QSS should not have
received the same very good rating for past performance that SGT did.
NASA maintains that "[t]he technical relevancy of QSS's past
performance was equal or superior to that of SGT." Agency Hearing
Comments, Mar. 8, 1999, at 16. We find no basis for questioning this
conclusion.
The record supports SGT's position that the proposals and returned
past performance questionnaires indicated that SGT possessed
experience in engineering areas, such as electrical/electronics,
radiation effects and analysis, and components design, and solid state
device research and development, and that QSS lacked similar
experience. Further, we agree with the protester that experience in
such engineering areas could be an advantage both on account of the
limitations on subcontracting imposed on the contractor and because
such experience could prove useful in managing the subcontracted
performance in these areas. See Technology and Management Servs.,
Inc., B-240351, B-240351.2, Nov. 7, 1990, 90-2 CPD para. 375 at 3-4
(agency reasonably determined that given the complexities of contract
performance, it was necessary for the contractor itself to possess
relevant corporate experience since a lack of experience would
necessarily impair its ability to oversee and manage tasks and perform
them if a subcontractor were unavailable.)
However, we cannot agree that SGT's advantage in this regard was so
significant that it was unreasonable not to assign a higher relative
overall past performance rating. As an initial matter, we note that,
although QSS projected performing [DELETED] percent of the contract
effort, it did not commit to meeting that goal, but instead
acknowledged that as much as another [DELETED] percent could be
performed by subcontractors, presumably with more engineering
experience than QSS. Agency Report, Tab 12c, QSS Business Management
Proposal, at 78-79. Thus, QSS, like SGT, would only be required to
perform 50 percent of the contract effort. Further, there is no basis
for concluding that more than 50 percent of the work under the
contract will be in the area of aerospace engineering/flight hardware.
The solicitation did not include an estimate of the percentage of the
overall effort aerospace engineering/flight hardware was expected to
represent. In addition, not only does the SOW cover a broad range of
work beyond aerospace engineering/flight hardware, but NASA expects
that the scope of the expected contract effort in fact will extend
beyond aerospace engineering/flight hardware to include work such as
management, quality assurance, ground systems hardware, software
engineering and information systems, and systems engineering; indeed,
according to the agency, a very large portion of the work in the first
6 months of performance is expected to be software engineering and
systems engineering. Agency Hearing Comments, Mar. 8, 1999, at 16-17;
Agency Comments, Mar. 12, 1999, at 13-14; Tr. at 254-57, 268, 270-71.
The record also supports the agency's position that QSS's experience
and performance may be superior to SGT's in certain respects. For
example, the magnitude of the three contract efforts QSS selected to
describe in its proposal was generally significantly larger than the
corresponding numbers for SGT's three contracts: QSS reported
contract efforts of [DELETED] employees/$53 million, [DELETED]
employees/$8.9 million, and [DELETED] employees/$3 million, Agency
Report, Tab 12c, QSS Business Management Proposal, at 12-21, while SGT
reported contract efforts of only [DELETED] employees/$3.8 million,
[DELETED] employees/$5.1 million (the reference returning the past
performance questionnaire reported only $2 million, but this may have
been for only part of the overall contract effort), and [DELETED]
employees/$3 million. Agency Report, Tab 13c, SGT Business Management
Proposal, at 7-13; Agency Report, Tab 34b, Past Performance
Questionnaires. The larger size of QSS's contract efforts, in
conjunction with the ratings (2 very good and 1 good) received on its
$53 million contract effort for managing subcontract and team efforts,
Agency Report, Tab 34a, Past Performance Questionnaires, support the
agency's finding that QSS demonstrated experience managing and
performing large prime contracts, Agency Report, Tab 16f, SEB Initial
Report, at 24, and that, notwithstanding any differences in the areas
of past performance, QSS's past performance indicated that it would be
at least as capable as SGT to manage the contemplated $250 million
contract effort.[7] Although SGT suggests that the agency's emphasis
on demonstrated ability to manage a contract effort was inconsistent
with the stated evaluation approach (RFP sec. M.7, at 117, specifically
refers to technical, schedule and cost performance), we note that the
past performance questionnaire included with the RFP requested ratings
for management of subcontractor efforts. RFP Exhibit A, Past
Performance Questionnaire. In any case, we view demonstrated ability
to manage a contract effort as inherent in the evaluation of past
performance.
Further support for the agency's position that QSS's experience and
performance may be superior to SGT's in certain respects is found in
the SEB's determination that the cost performance of SGT's team was
only good to very good, with performance varying from excellent to
good, and fair on certain highly relevant contracts. Agency Report,
Tab 16f, SEB Initial Report, at 57-58. In contrast, the SEB rated
QSS's cost performance as very good. Id. at 24. We conclude that the
past performance evaluation was reasonable.[8]
As noted above, SGT's proposal received a significantly lower score
than QSS's under the mission suitability factor, the most important
factor; its probable cost, the second most important factor, was at
least [DELETED] percent higher than QSS's even after normalizing
foundry costs; and NASA reasonably determined that SGT was not
entitled to a superior past performance rating. We conclude that
there is no basis to object to the selection of QSS over SGT.
The protest is denied.
Comptroller General
of the United States
1. The solicitation stated that in the event the probable cost for a
proposal was from plus or minus 6 to 10 percent, that is, that the
probable cost was between 6 to 10 percent higher or lower than the
proposed cost, the mission suitability score for the proposal would be
reduced by 50 points; from 11 to 15 percent, the reduction would be
100 points; from 16 to 20 percent, the reduction would be 150 points;
from 21 to 30 percent, the reduction would be 200 points; and if more
than 30 percent, the reduction would be 300 points. RFP sec. M.5.3, at
115-16.
2. The adjusted proposed cost number reflects the adjustment of the
proposed costs to account for a common start
date for the RTOs and the application of the
proposed incentive fee to the RTOs.
3. Science & Engineering Services, Inc. and Mentor Technologies, Inc
also filed protests against the award. We will address those protests
in a subsequent decision.
4. NASA and SGT disagree as to whether [DELETED], as well as
[DELETED], would meet the performance requirements in the RTO SOWs.
NASA maintains that [DELETED] can meet the SOW requirements; the
agency believes that [DELETED] can as well, but concedes that
[DELETED] more study and analysis would be necessary to determine its
suitability. Tr. at 60, 67-68; Agency Comments, Mar. 12, 1999, at
6-7, and Declaration of GSFC Associate Head of Microelectronics and
Signal Processing Branch at 1-2. In contrast, SGT claims that, while
[DELETED], it would be disqualified by [DELETED], and that while
[DELETED], it [DELETED], such that it could not be considered
available for current use. SGT Hearing Comments, Mar. 8, 1999,
Appendix on Bipolar and SiGe Processes, at 1-3.
5. SGT's proposed/probable number of hours ([DELETED] hours) for RTO 4
were significantly lower than either QSS's ([DELETED] hours) or the
in-house estimate's (3,196 hours), and the probable cost of SGT's
effort (exclusive of fee) after backing out foundry costs ($[DELETED])
still was significantly higher than QSS's ($[DELETED]). Agency
Report, Tab 16g, Initial Cost Evaluation Findings, Level 2 Cost Charts
and Enclosure 3, RTO #4 Analysis. This further supports the
conclusion that the probable cost of SGT's proposal was higher for
reasons beyond those associated with its proposal of a [DELETED]
material technology.
6. SGT argues that NASA failed to account for general and
administrative loading on foundry-related other direct costs when it
backed out the foundry costs. However, the potential impact of this
alleged deficiency is only $[DELETED], an amount that was clearly
insignificant in the context of the overall evaluation. SGT Hearing
Comments, Mar. 8, 1999, at 13 n. 4 and Tab B. SGT also argues that
NASA improperly failed to adjust cost proposals to account for the
fact that QSS improperly proposed approximately [DELETED] percent of
its RTO staffing on-site, thus taking advantage of lower overhead and
fee rates, while SGT proposed all higher-cost off-site RTO staffing.
However, this argument is untimely. The basis for the argument was
apparent from the copy of QSS's proposal and relevant evaluation
documentation SGT received on January 13, 1999, but SGT raised the
argument in its comments of February 3, more than 10 days later. 4
C.F.R. sec. 21.2(a)(2) (1998). In any case, we agree with NASA that use
of on-site facilities with respect to the RTOs was authorized in the
general background to the RTOs, where it was stated that "[t]he
spacecraft will be developed, integrated, and tested in-house at the
GSFC." RFP Enclosure A, Representative Task Orders, at 1.
7. QSS also received three very good ratings for managing
subcontractor and team efforts on its $3 million NOAA contract,
although the reference indicated that QSS did not have much experience
managing subcontractors on that contract, while SGT received "not
applicable" ratings for managing subcontractor and team efforts on two
of its three contracts and very good ratings in this regard on a
third, described by SGT as having a value of $5.1 million. Agency
Report, Tabs 34a and 34b, Past Performance Questionnaires.
8. SGT also argues that NASA acted improperly in making award on the
basis of initial proposals without conducting discussions. However,
there generally is no obligation that a contracting agency conduct
discussions where, as here, the RFP specifically instructs offerors of
the agency's intent to award a contract on the basis of initial
proposals. Pacifica Servs., Inc., B-280921, Dec. 7, 1998, 98-2 CPD para.
137 at 8; Robotic Sys. Tech., B-278195.2, Jan. 7, 1998, 98-1 CPD para. 20
at 11. While the contracting officer's discretion in deciding not to
hold discussions is not unfettered, it is quite broad and has been
expanded in recent years. Id. Our Office will review the exercise of
such discretion to ensure that it was reasonably based on the
particular circumstances of the procurement. Id. Here, the agency
received five technically acceptable proposals, one of which (QSS's)
received a significantly higher technical score than SGT's and offered
a significantly lower cost. In these circumstances, we conclude that
the agency had a basis to make a reasonable source selection decision
without conducting discussions.