TITLE:  EAI Corporation, B-283541, December 6, 1999
BNUMBER:  B-283541
DATE:  December 6, 1999
**********************************************************************
EAI Corporation, B-283541, December 6, 1999

Decision

Matter of: EAI Corporation

File: B-283541

Date: December 6, 1999

William B. Barton, Jr., Esq., and William T. Welch, Esq., Barton & Tolle,
for the protester.

Richard P. Castiglia, Jr., Esq., McKenna & Cuneo, for Batelle Memorial
Institute, an intervenor.

Maj. Robert W. Clark, Department of the Army, for the agency.

Robert C. Arsenoff, Esq., and Paul I. Lieberman, Esq., Office of the General
Counsel, GAO, participated in the preparation of the decision.

DIGEST

1. Protest alleging that awardee's proposed pricing was not subjected to an
adequate price analysis is denied where record reflects that the analysis
was reasonable and in accordance with stated price evaluation methodology
set forth in the solicitation.

2. Protest alleging that one area of protester's proposal was misevaluated
is denied where record reflects that protester merely disagrees with the
agency evaluators.

DECISION

EAI Corporation protests the award of a contract to Battelle Memorial
Institute under request for proposals (RFP) No. DABT60-99-R-0011, issued by
the Department of the Army for the provision of support services to various
organizations located at Fort Leonard Wood, Missouri. EAI alleges that the
Army failed to perform a proper price realism analysis with respect to
Battelle's proposal and otherwise failed to properly evaluate its technical
proposal with respect to proposed support for one of the organizations
covered by the RFP.

We deny the protest.

The RFP was issued on June 9, 1999 and closed on July 9. It contemplated the
award of a fixed-price, indefinite-quantity contract for a base year with 4
option years against which task orders would be issued following
negotiations between the agency and the contractor to provide a variety of
services to the U.S. Army Chemical, Military Police and Engineer Schools,
Battle Lab, the Test and Evaluation Coordination Office (TECO), the Smoke
Proponency Office and the Joint Service Integration Group (JSIG). RFP
sect.C.3.a.

Award was to be made to the offeror whose proposal represented the best
value to the government considering four evaluation factors: (1) technical
(most important);

(2) managerial (second most important); (3) past performance (equal to
managerial); and (4) price. With respect to technical, the RFP instructed
offerors, inter alia, to demonstrate their "capability to respond to task
orders within a broad scope of work covering all aspects of: Doctrine and
Training Development, Training and Training Development, Force
Modernization/Acquisition, Battle Lab and General Test and Evaluation
Support and support to the [JSIG]." RFP sect. L.19.1B.2.a.

Offerors were required to submit fixed prices in the form of burdened labor
rates for a variety of labor positions. Price proposals, which were not
scored, were to be: (1) analyzed for errors, mistakes and omissions; (2)
evaluated for unbalanced offers; (3) analyzed to ensure burdened prices were
included; (4) evaluated by comparing proposed prices to the government
estimate for the base period and option years; (5) analyzed to ensure that
the pricing reflects the technical and management proposal; and (6) compared
to other proposals. RFP sect. M.5d.

EAI and Battelle submitted proposals. With respect to the technical
proposals, the discriminating factors in the evaluation were Battelle's
excellent ratings for understanding of contract background and purpose of
contract; EAI's proposal was rated good in both these areas. With respect to
management proposals, the discriminating factors in the evaluation were
Battelle's excellent rating for organization and management plan; EAI's
proposal was rated good in this area. Four weaknesses were noted in EAI's
proposal: (1) the offeror failed to address support for the Battle Lab; (2)
the offeror failed to adequately address TECO support; (3) the offeror
failed to adequately describe the organizational structure of its
subcontractors; and (4) the offeror failed to adequately describe its own
organizational structure. Battelle's proposal had no weaknesses in these
areas and, as a result, was rated higher than EAI's under the technical and
management factors. There were no differences in past performance ratings.
Overall, the evaluators rated Battelle's proposal as "Exceptional" because
it fully met the government's requirements in a way that provided
exceptionally low risk, exceptional probability of success, exceptional
foresight or exceptional quality. EAI's proposal was rated as "Good" because
it possessed high quality in most respects with a good probability of
success and generally exceeded minimum requirements although improvement was
possible. Contracting Officer's Statement at para. 3.

The prices submitted by both offerors were determined to be fair and
reasonable following an evaluation using each of the six price analysis
techniques specified in the RFP. Battelle's price was $9,027,648.36, which
was [deleted} percent less than the government estimate of $[deleted]; EAI's
price of $[deleted] was [deleted] percent higher. Battelle was awarded the
contract on the basis of its higher technical and management ratings and its
lower price.

EAI alleges that the Army's price analysis of Battelle's proposal "violated"
Federal Acquisition Regulation (FAR) sect. 15.404-1(b)(2) principally because it
did not compare the awardee's proposed prices to previously proposed prices
and previous government contract prices for the same and similar items.
Specifically, EAI alleges that Battelle offered prices in response to the
RFP which were 30 to 50 percent lower than the prices on Battelle's
information technology (IT) schedule contract with the General Services
Administration (GSA). EAI also alleges that a proper comparison to the
government's independent "should cost" estimate would reveal that its own
prices were "in line" with the estimate while Battelle's prices were
"significantly lower" than that estimate. Also, EAI contends that a more
thorough price analysis would have resulted in a finding that Battelle
submitted unreasonably low prices for two labor categories that were
estimated as being required to perform 57.25 percent of the total labor
hours under the contract in an effort to gain the award. EAI contends that
this pricing strategy "almost certainly indicates that Battelle intended to
buy into the contract or to somehow game the tasks in a way that will shift
work away from its loss-leading labor categories." Protester's Comments at
7.

At the outset, we note that the record reflects that the agency did in fact
perform the price analysis using all six of the factors listed in the
solicitation for that purpose. [1] With respect to the alleged violation of
FAR sect. 15.404-1(b)(2), EAI is mistaken in suggesting that the regulation
requires the agency to consider Battelle's schedule contract prices. The
regulation merely provides an illustrative list of price analysis techniques
which an agency may use; the depth of an agency's price analysis is a matter
within the sound exercise of the agency's discretion. OMV Med., Inc.;
Saratoga Med. Ctr., Inc., B-281387 et al., Feb. 3, 1999, 99-1 CPD para. 52 at
5-6. Further, with respect to the IT schedule, there is nothing in the
record to support EAI's assertions that the labor positions covered by that
contract are comparable to the positions covered by the RFP. [2]

Also, we find without merit EAI's suggestion that Battelle's pricing was out
of line with the government estimate. As stated above, EAI's price varied by
almost the same percentage as Battelle's from the government estimate,
albeit in the opposite direction: the protester's price was higher than the
estimate while Battelle's was lower. In any event, the deviation of
Battelle's pricing from the government estimate is relatively small and
unsurprising given the fact that government estimates are subject to margins
of error themselves and, thus, we have no basis for finding that, simply
because Battelle's prices were slightly lower than the government estimate,
the agency should have concluded that they were unrealistic. See Hughes
Georgia, Inc., B-272526, Oct. 21, 1996, 96-2 CPD para. 151 at 7.

With respect to the allegation that Battelle "gamed" its offer to obtain the
award with the intention of offering low prices for labor categories that
are generally used frequently in order to win award, while staffing the work
during performance with higher-priced labor categories, the terms of the
contract preclude that possibility. Before issuing a task order, the
contracting officer issues a Contractor Performance Assignment, to which the
contractor replies by preparing a task order execution plan which must
identify estimated labor costs and categories. RFP sect.sect. H.5.2.1, H.5.2.2. The
government evaluates the plan, which may be accepted without change or may
be the subject of further discussions/negotiations. RFP sect. H.5.2.3. Should
the agency and the contractor fail to reach an agreement, the task will be
cancelled. RFP sect. H.6. Thus, the government can ensure that the labor mix to
be used on a given task order meets its requirements and the contractor does
not have the control over how the task order will be performed, as suggested
by EAI. In sum, the protester's objections to the agency's price analysis
are without merit.

With respect to the evaluation of its technical proposal, EAI alleges that,
in finding that its proposal failed to adequately address support for TECO,
the agency placed undue emphasis on the support of an office which was
scheduled to close 90 days into contract performance. We review allegedly
defective evaluations only to determine whether they were reasonable and
consistent with the stated evaluation criteria. The mere fact that a
protester disagrees with an evaluation does not render the evaluation
unreasonable. Mirada Assocs., B-245974, Jan. 30, 1992, 92-1 CPD para. 142 at 2.

The RFP instructed offerors to address their ability to perform general test
and evaluation support. RFP sect. L.19.1B.2.a. While the record reflects that
TECO will soon close, its test and evaluation functions will be transferred
to other offices to be serviced by the contractor, and EAI does not assert
it adequately addressed those functions. Thus, beyond EAI's mere
disagreement with the evaluators' emphasis on demonstrating an ability to
support the functions, there is no basis to conclude that the evaluation was
unreasonable. Moreover, there is no indication of prejudicial over-emphasis
in the agency's evaluation of the protester's ability to provide TECO
support. The finding to which EAI objects is simply one of four weaknesses
found in its proposal. In contrast, Battelle's proposal was found to have no
weaknesses.

Thus, even without the weakness complained of, the record does not support a
conclusion that EAI's proposal would have been rated as high as Battelle's.

The protest is denied.

Comptroller General
of the United States

Notes

1. EAI originally disputed this fact as a result of its understanding of the
debriefing it received. The agency report rebutted the protester's account
and EAI did not further address the matter in its comments.

2. In its comments EAI concedes that the schedule labor categories do not
precisely match the labor categories of the RFP. Protester's Comments at 5
n.3.