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.