TITLE:  M-Cubed Information Systems, Inc., B-284445; B-284445.2, April 19, 2000
BNUMBER:  B-284445; B-284445.2
DATE:  April 19, 2000
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M-Cubed Information Systems, Inc., B-284445; B-284445.2, April 19, 2000

Decision

Matter of: M-Cubed Information Systems, Inc.

File: B-284445; B-284445.2

Date: April 19, 2000

Kenneth D. Brody, Esq., and Thomas K. David, Esq., David, Brody &
Dondershine, for the protester.

Kenneth J. Ingram, Esq., Whiteford, Taylor & Preston, for STG, Inc., an
intervenor.

Daniel J. Mazella, Esq., and William J. Erle, Esq., Department of the
Treasury, for the agency.

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

DIGEST

1. Agency reasonably determined that the awardee's price was realistic based
on comparison with other offerors' prices and with the prior contract price
for the same services and properly based its award selection on low price
where competing proposals were reasonably determined to be otherwise equal.

2. Contention that agency misevaluated awardee's proposal is denied where
the record shows that the evaluation was reasonable and in accordance with
solicitation's evaluation criteria.

DECISION

M-Cubed Information Systems, Inc. (MC) protests the award of a contract to
STG, Inc. under request for proposals (RFP) No. FHQ99R01280, issued by the
Department of the Treasury, Financial Management Service (FMS). MC
challenges the agency's evaluation of the MC and STG proposals and objects
to the agency's price realism analysis.

We deny the protest.

The RFP was issued on July 1, 1999, as a three-part competitive 8(a)
set-aside denominated as the FMS Enterprise Infrastructure Contract (EIC),
for certain software and hardware, engineering and operational services and
maintenance. Part I of the RFP covers labor support services, part II covers
maintenance services, and part III covers supply acquisition. Offerors could
elect to propose on all of the RFP or on any one or two of the three parts.
RFP part IV, sect. B.IV.1. This protest concerns part II only. Under part II,
the solicitation provided for the award of a single, fixed-price
indefinite-delivery/indefinite-quantity (ID/IQ) contract for various
specified maintenance services for a l-year base period with four l-year
options. RFP part IV, sect. L.IV.17. Under contract line item (CLIN) No. 00025,
offerors were to provide a fixed 1-month price for these maintenance
services for hardware/software components. RFP part II.A. This amount
constitutes the total monthly maintenance cost based on an attached
inventory list denominated as section J.IV.1 of the RFP. Id. The monthly
maintenance price was to be multiplied by 12 (months) to arrive at the
yearly maintenance cost. The RFP further provided that at contract award,
the awardee under the maintenance portion would provide FMS with a detailed
list of maintenance unit prices of all equipment to be maintained, as well
as a complete breakdown of the monthly maintenance charge in CLIN No. 00025.
Id.

Award was to be made to the offeror whose proposal was determined to be most
advantageous to the government. RFP part IV, sect. M.IV.2. The RFP provided for
an integrated assessment to determine "the overall value of the proposals
when judged in the context of program risk; i.e., cost, schedule, and the
technical capability to provide expertise required by the program," id., and
permitted award without discussions. RFP part IV, sect. M.IV.3.3. The RFP
identified past performance, project management, technical approach and
price as evaluation factors, with past performance of slightly greater
importance than project management, which was of significantly greater
importance than technical approach. RFP part IV, sect. M.IV.5. While non-cost
factors were significantly more important than price, the RFP provided that
as proposals became more equal in technical merit price would increase in
importance. RFP part IV, sect. M.IV.2. Under past performance, an offeror was to
be evaluated on its past performance in providing hardware/software/
component maintenance services during the past 3 years, for five projects of
a relevant scope and complexity. RFP part IV, sect. M.IV.5.A. Finally, the RFP
provided that price proposals would not be point scored, but that price
would be evaluated for fairness, reasonableness and appropriateness. RFP
part IV, sect. M.IV.5.D.

The agency received [deleted] proposals by the August 10 closing date. The
technical evaluation team (TET) scoring of the three highest rated proposals
was as follows:

                   MC               STG              [deleted]

 Past              47.5             37.5             [deleted]
 Performance

 Technical         8.5              8.17             [deleted]
 Approach

 Project           31.08            34.5             [deleted]
 Management

 Total Point       87.08            80.17            [deleted]
 Scores

Agency Report, Tab D 1, Technical Evaluation of Part II–Maintenance,
Sept. 8, 1999.

The TET determined that the STG and [deleted] proposals had some risks and
that the MC proposal had minor deficiencies and some definite strengths, and
concluded that the MC offer was significantly better technically than either
the STG or [deleted] proposals. Id.

After reviewing the initial TET report, the contracting officer had concerns
about the documentation provided by the TET. Agency Report, Tab D 2,
Memorandum to File, Sept. 27, 1999. One concern was that the TET in its
initial submission created its own scoring under the past performance
factor. The contracting officer believed that the past performance score
should be calculated by utilizing the actual scores provided by the past
performance references. The contracting officer believed that the TET's
purpose in reviewing the past performance factor was to look at the risks
involved based on past performance data provided and to provide a detailed
narrative on the perceived risks. According to the contracting officer the
TET should not have scored past performance. As a result, the technical
evaluation plan (TEP) was revised to eliminate the past performance matrix
sheet. Id.

In response to the contracting officer's instructions, the TET submitted
final evaluation results which did not rescore the past performance surveys
as it had done previously, instead providing a narrative discussion of the
strengths and weaknesses of the proposals with respect to past performance.
The contract specialist calculated the past performance factor scores for
the offerors using the survey responses. The TET in its final report stated
that the [deleted] proposal had four moderate risks, the STG proposal had
two high risks and one strength, and the MC proposal displayed one strength
and two benefits. Agency Report, Tab D 3, Technical Evaluation of Part
II--Maintenance, Sept. 25, 1999. The final scoring of the top three
proposals was as follows:

                   MC               STG              [deleted]

 Past              48.5             45.2             [deleted]
 Performance

 Technical         8.5              8.0              [deleted]
 Approach

 Project           31.0             34.5             [deleted]
 Management

 Total Point       88.0             87.7             [deleted]
 Scores

Agency Report, Tab D 7, Price Negotiation Memorandum, at 4-5.

The total prices proposed by these three offerors were:

 STG        $5,058,401.28

 [deleted]  [deleted]

 MC         $6,416,318.00

Agency Report, Tab D 6, Price Analysis--Part II, at 1.

The contracting officer reviewed the TET's evaluation of each offeror and
determined that these three proposals were technically acceptable. Agency
Report, Tab F, Award Determination. The contracting officer concluded that
MC and STG were technically equal, taking into account the closeness of
their point scores and considering the supporting narrative assessment that
neither had any deficiencies but only weaknesses in the technical approach
and project management factors. The contracting officer also concluded that,
while [deleted] score was slightly lower than MC's or STG's, it should be
considered equal to MC and STG. Having determined that MC, STG and [deleted]
were technically equal, the contracting officer selected STG for award of
the maintenance services contract based on its low price.

On September 30, pre-award notices were issued to the unsuccessful offerors.
At the September 30 contract signing meeting, the STG representative asked
the agency representative why the applicable contract ceiling amount was
$14.8 million and was advised that this was an ID/IQ contract under which
FMS can order emergency repair services under the second, unpriced line
item, on an as-needed basis, and that this ceiling was the FMS's preliminary
estimate for the entire maintenance services portion of the statement of
work. Agency Report, Tab L 2, Memorandum to File, Oct. 4, 1999. Also, at
this meeting, STG's representative questioned what its firm would be
maintaining and was advised that section J.IV.1 of the contract was what
offerors were required to use in pricing out their offers for line item one
of the contract. Id. At the end of the meeting, the contract was signed by
STG. Later, the

contract specialist realized that STG had failed to submit its complete
pricing breakdown in support of the section J.IV.1 attachment and left a
voicemail message telling STG it needed to submit this documentation.

On October 1, STG supplied its pricing breakdown and advised the agency that
there was a mistake in its price proposal. Specifically, STG stated that it
had not priced all of the maintenance requirements under the RFP and that
its price did not reflect the work specified for all of the required six
parts of the section J attachment to the RFP. On October 7, FMS requested
STG to certify its claim, and to specify whether reformation or rescission
of the contract was desired. Agency Report, Tab L, 5. On October 19, STG
certified its claim and sought reformation of the contact price to
$8,505,081.15, which exceeded the prices of the next two technically
acceptable low offerors. On October 26, the agency denied STG's claim and
informed STG that the contract could not be reformed to correct STG's
unilateral mistake discovered after award and that STG could either perform
at the contract price or seek rescission of the contract. Agency Report, Tab
L 10, Contracting Officer's Decision, Mistake in Bid Claim. By letter dated
November 2, STG informed FMS that it had decided, after discussions with its
suppliers, to perform at the original contract amount. Agency Report, Tab L
11, Letter from STG to Contracting Officer (Nov. 2, 1999). On January 7,
2000, MC was provided a debriefing and MC filed this protest on January 12.

MC essentially challenges the agency's evaluation of the proposals and the
award decision.

The evaluation of technical proposals, including the evaluation of past
performance, is primarily the responsibility of the contracting agency since
the agency is responsible for defining its needs and the best method of
accommodating them, and it must bear the burden of any difficulties
resulting from a defective evaluation. Federal Envtl. Servs., Inc.,
B-260289, B-260490, May 24, 1995, 95-1 CPD para. 261 at 3. In reviewing protests
challenging an agency's evaluation of proposals, we will not substitute our
judgment for that of the agency regarding the merits of proposals; rather,
we will examine the agency's evaluation to ensure that it was reasonable and
consistent with the solicitation's evaluation criteria, and with procurement
statutes and regulations. Id. A protester's mere disagreement with the
agency's evaluation does not render it unreasonable. CORVAC, Inc., B-244766,
Nov. 13, 1991, 91-2 CPD para. 454 at 5.

The protester's primary challenge to the proposal evaluation is based on the
contention that the contracting officer misapplied the solicitation's past
performance evaluation criteria when she eliminated the TET's responsibility
for numerically scoring past performance and instead used the scoring
provided by the references on the past performance surveys. [1] The
protester contends that this scoring methodology did not take into account
the TET's main concern that STG failed to provide relevant past performance
references. [2]

We find the agency's past performance evaluation unobjectionable. Under this
evaluation factor, as noted above, offerors were to be evaluated on their
past performance in providing hardware/software/component maintenance
services during the past 3 years, for projects of relevant scope and
complexity. RFP part IV, sect. M.IV.5.A. The RFP defined relevant scope and
complexity as including projects similar or identical to those
hardware/software/component maintenance services required in the RFP. In
this regard, individual references provided by the offeror for five projects
were to complete and submit past performance survey forms which included a
review of the offeror's demonstrated success in meeting/providing/
promoting; (a) quality of product/service; (b) timeliness of performance;
(c) key personnel; (d) business relations; (e) price control; and, (f) any
other significant performance measures or standards. The RFP stated that the
survey scores would aid in determining the points awarded for this factor.
RFP part IV, sect. M.IV.5.A.

As called for by the RFP, STG submitted five references. The three
references considered most relevant by the agency involved system
maintenance for the Department of State IBM mainframe, nationwide
maintenance services to the Internal Revenue Service (IRS) for a variety of
products including servers, desktop computers, laser printers, dot matrix
printers, and monitors and maintenance support for all IBM-related equipment
at FMS and its regional operating centers. The references rated STG on
factors related to quality of service, timeliness of performance, key
personnel, business relations and price control. [3] Compiling the
references' scoring resulted in an overall score of 42.5 for STG, which the
TET had initially reduced to 37.5 because the references appeared to rate
technical staff, rather than maintenance staff, and were therefore viewed as
less relevant. As explained above, the contracting officer determined that
it was improper for the TET to rescore under the past performance factor,
but rather the TET's purpose in reviewing the past performance factor was to
look at the risks involved with the past performance data provided and to
provide a detailed narrative on the perceived risks. Implementing this
directive from the contracting officer, the actual scores provided by the
past performance references were used and the TET provided narrative
assessments of the past performance factor for each offeror. With respect to
STG, the consensus TET report found under the quality of product/service
subfactor that one of STG's references was not an adequate reference for the
types of service FMS needed and that another reference did not indicate the
type of server maintained by STG. The TET considered these as weaknesses,
but did not conclude that a risk arose as a result. Under timeliness of
performance, the TET noted that one STG reference did not rate STG on
maintenance but the TET also did not consider this a risk. For price
control, the TET noted that one reference did not rate this factor; however,
the TET also did not consider this to be a risk. With respect to key
personnel and business relations, there were no weaknesses noted by the TET.

The protester argues that by not allowing the TET to numerically score past
performance, the agency violated the evaluation criteria. We do not agree.
The RFP past performance evaluation criteria provided simply that the survey
scores would aid in determining the points awarded for this factor. The RFP
did not state how the survey scores would be used and did not provide that
the TET would independently score the past performance factor. We do not
find it objectionable for the contracting officer to conclude that it was
inappropriate for the TET to score the past performance factor, since under
the past performance survey, references rated offerors on particular
factors, such as compliance with quality requirements for products,
technical excellence, accuracy of reports, meeting interim and final
milestones, responsiveness to technical direction, qualification of
personnel assigned to the contract, teaming relationships, prompt
notification of problems, responsiveness, modifications and the ability to
understand the importance of operational efficiency. These are all factors
for which the references were in a unique position to assess the
effectiveness of the offerors. Accordingly, we do not view as unreasonable
the contracting officer's assessment that it was unfair for the TET to
evaluate offerors on their abilities to meet these performance standards.
Contrary to the protester's argument, the TET did document its position on
the relevance of the offerors' references and did specifically consider the
risk of performance for STG based on the relevance of its references. As
explained, above, the TET considered the relevance of STG's references in
its evaluation and in certain areas considered that the lack of relevance
constituted weaknesses in STG's proposal, but not risks, all of which was
ultimately taken into consideration by the contracting officer. The
contracting officer concluded that STG's references were sufficiently
relevant that it was proper to consider them, and we do not view the
contracting officer's determination in this regard as unreasonable. In
short, the final past performance evaluation was unobjectionable.

MC disputes that the three technically acceptable proposals were essentially
technically equal, arguing that the TET, even after being directed not to
numerically score past performance, still determined that MC was
significantly technically superior to the other offerors. MC contends that
the contracting officer ignored the concerns and risks documented by the
TET, and improperly made award on the basis of initial proposals without
making a cost technical tradeoff.

Source selection officials are vested with a broad degree of discretion to
determine the manner and the extent to which they will make use of
evaluation results, and they are not bound by the recommendations made by
lower-level evaluation panels. Grey Adver., Inc., B-184825, May 14, 1976,
76-1 CPD para. 325 at 11; PRC, Inc., B-274698.2, B-274698.3, Jan. 23, 1997, 97-1
CPD para. 115 at 7. In a negotiated procurement with a best value evaluation
plan, point scores are useful as guides but do not mandate automatic
selection of a particular proposal. PRC, Inc., supra, at 12. Where selection
officials reasonably regard proposals as being essentially equal
technically, cost can become the determining factor in making award
notwithstanding that the evaluation criteria assigned cost less importance
than technical factors. The Parks Co., B-249473, Nov. 17, 1992, 92-2 CPD para.
354 at 4. Moreover, an agency may properly award to a lower rated, lower
cost offeror, even if cost is the least important evaluation factor, if it
reasonably determines that award to the higher cost offeror is not justified
given the level of technical competence available at the lower cost. PRC,
Inc., supra, at 12. Here, the record shows that the contracting officer's
decision to award the contract to STG was both reasonable and consistent
with the RFP's evaluation scheme.

After reviewing the evaluation materials, including the TET's
recommendation, the contracting officer concluded that the evaluation
indicated that MC and STG were technically equal. She noted that the MC and
STG proposals were scored, not including past performance, 39.5 and 42.5,
respectively. Their overall score was 88.00 for MC and 87.70 for STG. The
contracting officer noted that the supporting narrative stated that both
offerors had only weaknesses and no deficiencies in the technical approach
and project management factors. The contracting officer further noted that
MC had one minor weakness in the technical approach factor and two in the
project management factor, while STG had two weaknesses in the technical
approach factor. On this basis, she concluded that the offerors were
technically

equal and awarded to STG because of its lower price. In making the award
determination, the contracting officer specifically concluded that there was
little risk associated with STG's ability to perform the work.

The record shows that the contracting officer specifically evaluated the
TET's enumerated weaknesses with respect to the proposals, and indicated her
agreement or disagreement with the assessments. In the case of the
evaluation of STG, in several instances, the contracting officer considered
the TET's criticisms to be meaningless and not relevant. Agency Report, Tab
D7. For example, under overall management plan, the TET noted a major
strength for STG was that it generally described an effective management
plan, but cited as a weakness the fact that STG's proposal discussed some
irrelevant factors. The contracting officer considered the TET's comments to
be meaningless, since the TET had already recognized that STG had presented
an effective plan. The record shows that the contracting officer evaluated
the TET report and analyzed the weaknesses for each offeror cited by the
TET, along with the numerical rating, and concluded that the proposals were
technically equal. In sum, the record establishes that the contracting
officer reasonably determined that MC's and STG's proposals were technically
equal and properly awarded to STG based on its lowest price.

The protester also contends that the agency did not perform an adequate
assessment of STG's price proposal. The RFP provided that price would be
evaluated for fairness, reasonableness, and appropriateness, without
specifying the manner or degree of analysis to which proposals would be
subjected. Essentially, the protester is arguing that STG's price was so low
that the agency should have had concern about the realism of the proposed
price. We note first that the solicitation did not commit the agency to
analyze price realism (except, perhaps, in the context of evaluation of the
"appropriateness" of proposed prices). Moreover, an allegation that STG
submitted an unrealistically low offer provides no basis for protest because
there is no prohibition against an agency accepting a below-cost offer on a
fixed-price contract. Shel-Ken Properties, Inc.; McSwain and Assocs., Inc.,
B-261443, B-261443.2, Sept. 18, 1995, 95-2 CPD para. 139 at 3. In the context of
fixed-price procurements, the only potential bases of protest related to an
offeror's low price (other than matters related to the offeror's
responsibility) are generally that the low price indicates the offeror's
lack of understanding of the solicitation's requirements or constitutes an
excessive risk. Consolidated Eng'g Servs., Inc., B-279565.5, Mar. 19, 1999,
99-1 CPD para. 76 at 10. Here, however, STG's price was not significantly lower
than the price of other offerors, and we therefore see no legal requirement
for the agency to have had concern in that regard.

To the extent that MC appears to question STG's ability to perform the
contract at its proposed price, that allegation concerns STG's
responsibility. Our Office will not review the agency's determination that
STG was responsible absent a showing of possible bad faith by government
officials, or the misapplication of definitive

responsibility criteria, neither of which is present here. Bid Protest
Regulations, 4 C.F.R. sect. 21.5(c) (2000); Oshkosh Truck Corp., B-252708.2,
Aug. 24, 1993, 93-2 CPD para. 115 at 6 n.3. In sum, the agency's determination
that STG's proposed price was reasonable is unobjectionable.

The protester next argues that the agency was aware prior to the contract
signing that STG appeared to lack an understanding of the RFP requirements
and also failed to show an understanding of the pricing components of its
own proposal. On this basis, the protester maintains that STG should not
have been allowed to execute the contract and its proposal should have been
rejected by the agency due to a gross mistake in price. Notwithstanding
whatever confusion existed on STG's part and the firm's request for
correction of a mistake (a request denied by the agency), we do not believe
that the agency's actions violated any procurement statute or regulation.

In this regard, the protester surmises that the agency may have engaged in
discussions with STG during the contract signing meeting prior to contract
award. The protester contends that to the extent that STG was given an
opportunity to qualify its proposal during the contract signing meeting, the
agency was obligated to establish a competitive range and request final
proposal revisions from the offerors remaining in the competitive range.

The record simply does not support the protester's claim that discussions
were held with STG during the contract signing meeting. While there appeared
to be some discussion between STG and the agency concerning the requirements
of the contract, STG was not given an opportunity to revise or qualify its
already technically acceptable offer.

Lastly, the protester contends that the agency improperly relaxed a
mandatory solicitation requirement by not requiring STG to provide copies of
its price breakdown at the time of award.

The solicitation required that the awardee provide, at time of contract
award, a detailed list of maintenance unit prices of all equipment to be
maintained, as well as a complete breakdown of the monthly maintenance
charge. RFP part II, sect. B.II.1.A. The agency failed to request this pricing
breakdown at the contract signing meeting. STG did, however, submit this
information the day after contract award. The record shows that this pricing
information was not used by the agency for evaluation purposes; the
evaluation was based instead on the fixed-price monthly maintenance prices.
The agency reports that the detailed list of unit prices is used in
post-award administration of the contract as a basis to negotiate task
orders and any

modifications to the maintenance contract that may occur because of changing
technology. [4] In these circumstances, we fail to see how MC was adversely
affected by the agency's allowing STG to submit its pricing breakdown one
day after award.

The protest is denied.

Comptroller General
of the United States

Notes

1. The protester also argues that the TET determined its proposal to be
significantly better than STG with respect to technical approach and project
management. However, the record does not support this argument. The
consensus TET report score for technical approach for MC was 8.5 and for STG
was 8.0; for project management, the TET score for MC was 31.0 and the STG
score was 34.5. Agency Report, Tab D 3. There was simply no meaningful
distinction between the respective assessments.

2. To the extent the protester argues that the original TEP gave the TET the
responsibility to perform an independent past performance evaluation and
numerically score past performance and that this plan was not adhered to,
the protest is without merit. Source selection plans provide internal agency
guidelines and, as such do not give outside parties any rights. Centech
Group, Inc., B-278904.4, Apr. 13, 1998, 98-1 CPD para. 149 at 7 n.4. It is the
evaluation scheme in the RFP, not internal agency documents, such as source
selection plan, to which an agency is required to adhere in evaluating
proposals and in making the source selection. Id.

3. The scoring for each subfactor was unsatisfactory--0, fair--1, good--2
and excellent--3.

4. The record shows that the actual fixed monthly price is used to determine
the pricing of the task orders. The initial task order issued to STG under
this contract was valued by the agency at $968,000 based on the contract
price and while STG submitted itemized pricing significantly in excess of
this amount, the agency required STG to resubmit its itemized pricing to
reflect the agreed-upon contract price. Agency Report, Tab 60.