TITLE:   Matter of: Basic Contracting Services, Inc.
BNUMBER: B-284649
DATE:  May 18, 2000
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United States General Accounting Office Washington, DC 20548

Comptroller General of the United States

Decision Matter of: Basic Contracting Services, Inc.

File: B- 284649

Date: May 18, 2000 Mary G. Wilson, Esq., Aungier & Wilson, for the
protester. Keith L. Baker, Esq., Barton, Baker, McMahon, & Tolle, for JWK
International Corporation, an intervenor. Maj. Cynthia M. Mabry and LTC Karl
M. Ellcessor, III, U. S. Army Materiel Command, for the agency. Jacqueline
Maeder, Esq., and Paul I. Lieberman, Esq., Office of the General Counsel,
GAO, participated in the preparation of the decision.

DIGEST

1. Agency evaluation of technical proposals is unobjectionable where the
record establishes that evaluation was reasonable and consistent with the
stated evaluation factors; protester's mere disagreement with the agency's
conclusions does not render the evaluation unreasonable.

2. Discussions were meaningful where they explicitly apprised the protester
of the area of its proposal that required revision.

3. Protest that agency failed to perform proper cost/ technical tradeoff is
denied where source selection official considered all relevant proposal
evaluation material and cost in making his award determination and
reasonably determined that the evaluated technical superiority of the
highest technically- rated proposal warranted payment of the associated cost
premium.

DECISION

Basic Contracting Services, Inc. protests the award of a contract to JWK
International Corporation under request for proposals (RFP) No. DAAD07- 99-
R- 0126, issued by the U. S. Army Materiel Command (AMC) as a small business
set- aside for base operations support services for the White Sands Missile
Range, New Mexico. Basic challenges the agency's evaluation of its technical
proposal, the conduct of discussions, and the source selection decision.

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.

Page 2 B- 284649 We deny the protest.

BACKGROUND The RFP, issued June 18, 1999, provides for the award of a cost-
plus- award- fee contract for a 3- year base period with two 2- year
options. RFP Executive Summary at 1. The solicitation, which combines
services currently being performed for AMC under 22 separate support service
contracts, calls for the successful offeror to provide operational,
maintenance, repair and other support services for facilities, systems,
equipment and personnel at the base. RFP attach. 1, Purchase Description, at
1.

Section M. 1 of the RFP provides for award “on a best value
basis” to the offeror whose management, technical, past performance
and probable cost “represent the best buy to the Government.”
The RFP identifies the following evaluation factors and subfactors:

1. Management a. Organization b. Personnel Management c. Start- up Plan d.
Assignment Process e. Quality Control

2. Technical a. Environmental/ Protection and Conservation b. Documentation
Services c. Engineering and Technical Services d. Custodial e. Refuse f.
Grounds and Irrigation Maintenance g. Facility Maintenance h. Equipment
Repair i. Maintain Inventory

3. Past Performance 4. Cost RFP sect. M. 3. The factors are listed in descending
order of importance; the various subfactors listed under each factor are
equal in value. Each subfactor is broken into two or

Page 3 B- 284649 more subparts or “definers” with each being of
equal value. Id. Management and

technical factors were to be scored on the basis of adjectival ratings of
“exceptional,” “very good,”
“acceptable,” “marginal,” or
“unacceptable.” RFP sect. M. 2. The RFP also distinguished between
proposal risk and performance risk and stated that the agency would assess
both types of risks. RFP sect. M. 4. Performance risk, defined as risks
associated with an offeror's likelihood of success in performing the
solicitation requirements as indicated by that offeror's record of past
performance, would be assessed by the Performance Risk Assessment Group and
assigned a specific narrative rating under the past performance factor. RFP
sect. M. 4. a. 2. Proposal risk, defined as risks associated with an offeror's
proposed approach in meeting the requirements, would be assessed by the
evaluators and integrated into the evaluation of the various subfactors
under the management/ technical and cost factors. RFP sect. M. 4. a. 1. Offerors
were also advised that a cost realism analysis would be performed to ensure
that proposed costs are realistic, reflect a clear understanding of the work
to be performed, and are consistent with the technical proposal. RFP sect. M. 6.

Eight proposals were received, including those of Basic and JWK, by the July
26 closing date and, as called for by the solicitation, each offeror
provided an oral presentation on its management and technical approach. The
proposals were reviewed individually by each of the six members of the
proposal evaluation board (PEB). Each PEB member prepared individual lists
of strengths and weaknesses and assigned ratings for each management and
technical factor for each proposal. The evaluators then reached a consensus
rating and ranking for each proposal, and the cost analyst performed a
preliminary cost review. The four most highly rated proposals, including
those submitted by Basic and JWK, were included in the competitive range. As
relevant here, Basic's initial technical proposal was rated “very
good” and its management proposal was rated “exceptional.”
Agency Report, Tab 20, Initial Evaluation for Basic's Management/ Technical
Proposal, at 33. Basic's initial proposal was rated
“exceptional” on the personnel management subfactor. Id. The
agency held written and telephonic discussions with the four competitive
range offerors. In Basic's written discussions, AMC grouped its concerns
under the headings “Technical Discussion Issues” and “Cost
Discussion Issues,” listing 9 technical concerns and 11 cost concerns.
Agency Report, Tab 22, Competitive Range Letter, attach.– Discussion
Issues at 1- 3. On November 12, AMC requested that final proposal revisions
be submitted by November 16. The PEB assessments resulted in the following
ratings for the protester's and awardee's revised proposals:

Page 4 B- 284649

Basic JWK

Management Organization Exceptional Exceptional Personnel Management
Marginal Exceptional Start- Up Plan Exceptional Exceptional Assignment
Process Very Good Exceptional Quality Control Exceptional Exceptional
Technical

Environ./ Protect & Conserve Exceptional Exceptional Documentation Services
Acceptable Exceptional Engineering/ Technical Exceptional Exceptional
Custodial Exceptional Exceptional Refuse Very Good Exceptional Grounds
Exceptional Exceptional Facilities Very Good Exceptional Equipment Repair
Acceptable Very Good Maintain Inventory Acceptable Exceptional Management
Overall Very Good Exceptional Technical Overall Very Good Exceptional

Agency Report, Tab 26, PEB Final Evaluation Recommendations, Sub- Tab K, at
1. Basic's revised proposal was downgraded from “exceptional” to
“marginal” under personnel management and upgraded from
“very good” to “exceptional” under environmental/
protection and conservation and custodial. Basic's responses to the
discussion issues did not result in the raising or lowering of any of the
other subfactor ratings. Id. at 2. As a result, Basic's overall management
rating was downgraded from “exceptional” to “very
good,” while its overall “very good” technical rating was
unchanged. Both Basic and JWK were rated low risk under past performance.
Basic proposed a total cost of [deleted], while JWK proposed a total cost of
[deleted]. Agency Report, Tab 25, Final Cost Analysis for Basic, at 11;
Agency Report, Tab 17, Final Cost Analysis for JWK, at 8. As a result of the
agency's cost realism adjustments, the agency estimated Basic's cost to be
[deleted] and JWK's cost to be $31,507,644. Agency Report, Tab 1,
Contracting Officer's Statement, at 10.

Based on the evaluation and cost analysis, the PEB recommended award to JWK.
Agency Report, Tab 26, PEB Final Evaluation Recommendations, at 44. The
source selection official adopted the evaluation determinations of the PEB,
performed an integrated assessment and comparison of the strengths,
weaknesses, and risks of the proposals and awarded the contract to JWK on
February 4, 2000. Agency Report, Tab 27, Source Selection Decision Document,
at 30. AMC notified Basic that it had not been selected for award and, after
a February 9 debriefing, Basic filed this protest with our Office.

Page 5 B- 284649 IMPROPER EVALUATION

Basic first challenges the agency's evaluation of Basic's proposal under the
personnel management subfactor, which was one of five subfactors under the
management evaluation factor and included two definers: the extent of
understanding for workforce adjustment and the effectiveness in maintaining
a motivated, skilled and dependable workforce and in providing employee
compensation and benefits. RFP sect. M. 3.

With respect to employee compensation and benefits, the RFP at section L
included by reference the “Evaluation of Compensation for Professional
Employees” clause set forth at Federal Acquisition Regulation (FAR) sect.
52.222- 46. RFP sect. L. 4. This clause explains that compensation, including
salaries and fringe benefits, is sometimes inappropriately lowered in the
recompetition of service contracts and, therefore, requires that offerors
submit a “total compensation plan,” setting forth salaries and
fringe benefits proposed for professional employees who will work under the
contract. The clause states that “The Government will evaluate the
plan to assure that it reflects a sound management approach and
understanding of the contract requirements,” FAR sect. 52.222- 46( a), and
that “[ p] rofessional compensation that is unrealistically low or not
in reasonable relationship to the various job categories . . . may be viewed
as evidence of failure to comprehend the complexity of the contract
requirements.” FAR sect. 52.222- 46( c). The clause also provides that
failure to comply with this provision may constitute sufficient cause for
rejection of the proposal. FAR sect. 52.222- 46( d).

In the initial evaluation of Basic's cost proposal, the cost analyst found
that Basic's compensation plan was “outlined” but not explained
in any detail and, as presented, appeared “weak.” Agency Report,
Tab 21, Initial Basic Cost Analysis, at 2. As a result, in its written
discussions with Basic, AMC requested, under the “Cost Discussions
Issues,” additional information concerning Basic's compensation plan.
Agency Report, Tab 22, Competitive Range Letter, attach.– Discussion
Issues, at 2.

In response, Basic provided a one- page explanation of its compensation plan
in its final proposal. Agency Report, Tab 23, Basic's Responses to
Discussions Questions, Volume 1, at 1- 2. Specifically, Basic listed its
proposed salaries for its five professional staff and noted that these
salaries would conform to the market value for such professionals in the
relevant geographic area. Id. at 1. The protester provided a comparison of
its proposed rates with data from, among other sources, the Bureau of Labor
Statistics and the General Services Administration and noted that it would
“continually monitor our professional compensation structure to ensure
that we remain in line with the local labor market conditions.” Id.
The protester also stated that it would “institute a policy of
providing an incentive program for our key personnel.” Id. Basic noted
that the program was “designed to motivate these key employees to
achieve superior performance. This is accomplished by providing monetary
awards as a function of Award Fee scores.” Id.

Page 6 B- 284649 The protester stated that participants would be selected in
advance and, after criteria

were agreed upon and if objectives were met, payments would be made
semiannually. Additionally, Basic stated that it would provide a wide range
of fringe benefits to retain employees, which it amplified only by listing
comprehensive medical insurance, retirement, disability insurance, life
insurance, employee assistance plan, paid vacations and sick leave. Id. at
2. Basic provided no discussion of any of these benefits except to note that
employees would earn 2 weeks of vacation per year after 1 year of service; 3
weeks per year after 5 years of service; and 4 weeks per year after 15
years. Id.

The cost analyst found Basic's response “wholly deficient”
because nothing in the response presented a well thought- out compensation
plan, as required by FAR sect. 52.222- 46. Agency Report, Tab 25, Final Cost
Analysis for Basic, at 2. While AMC found Basic's proposed hourly rates
“adequately justified by market analysis,” Basic's
“information about indirect compensation” was determined to be
inadequate. Id. Specifically, rather than presenting a plan, AMC concluded
that Basic had “incubating thoughts about what a plan might look like
in the future.” Id. The agency believed that Basic's response was
“devoid of persuasive substance” in that Basic did not explain
how the compensation plan would work or present enough detail for the agency
to determine “the attractiveness and/ or adequacy of its fringe
benefits package . . . .” Id. The agency also noted that Basic did not
explain its incentive policy. Id.

Based on this assessment, the PEB downgraded Basic's proposal under the
personnel management subfactor of the management factor, noting that the
cost proposal did not have a complete benefits plan to support the general
outline presented in the oral presentation. Agency Report, Tab 26, PEB Final
Recommendations, at 12. The evaluators determined that Basic did not provide
a total compensation plan for professional employees or provide a policy or
details concerning its incentives policy. Id. The PEB found that the
management and technical presentation did not match the cost proposal and it
downgraded Basic's personnel management rating from
“exceptional” to “marginal” to reflect this
disconnect. Id. The source selection official (SSO) agreed with the rating
and, in his selection decision, stated that the lack of detail in Basic's
compensation plan did not allow the agency to determine if the compensation
plan would help attract and retain a stable and quality workforce. Agency
Report, Tab 27, Source Selection Decision Document, at 15. The SSO noted
that Basic's failure to adequately respond to this request for further
information concerning its compensation plan points to Basic's
“overall inattention to detail, lack of coordination, and absence of
understanding regarding the standard of performance that are critical to
success under this contract.” Id.

Basic argues that its “marginal” rating on personnel management
was arbitrary and unreasonable. Protester's Comments at 2. The protester
contends that its professional compensation rates were reasonable and that
its plan “matches

Page 7 B- 284649 favorably with the awardee's from a cost standpoint.”
Id. at 8. Basic contends that

the agency points to nothing specific that was missing from its plan and
argues that it is “not a mindreader about whatever detail of the plan
the cost analyst seemingly wanted to see.” Id. Basic argues that the
agency is “nitpicking on a cost reimbursement contract about how much
verbiage should have been included in the cost proposal regarding fringe
benefits to be provided to five of 65 employees . . . .” Protester's
Supplemental Comments at 3.

The evaluation of technical proposals is a matter within the contracting
agency's discretion since the agency is responsible for defining its needs
and the best method of accommodating them. Loral Sys. Co., B- 270755, Apr.
17, 1996, 96- 1 CPD para. 241 at 5. In reviewing an agency's technical
evaluation, we will not reevaluate the proposal, but will examine the record
of the evaluation to ensure that it was reasonable and in accordance with
stated evaluation criteria, and not in violation of procurement laws and
regulations. Id. A protester's disagreement with the agency's judgment,
standing alone, is not sufficient to establish that the agency acted
unreasonably. Ionsep Corp., Inc., B- 255122, Feb. 10, 1994, 94- 1 CPD para. 97
at 3.

Here, the record does not provide any basis to conclude that the agency
improperly evaluated Basic's proposal concerning personnel management.
Basic's primary argument that its proposed direct labor rates were
reasonable does not address the agency's concerns regarding Basic's
compensation plan. AMC never expressed any concern about Basic's labor
rates. On the contrary, AMC's evaluation specifically states that the
protester's hourly rates were “justified by market analysis . . .
.” Agency Report, Tab 25, Final Cost Analysis for Basic, at 2. Rather,
AMC was concerned about the lack of information and detail Basic provided
about its other compensation. As noted above, in its revised proposal, Basic
merely listed the generic benefits that it would provide, without providing
any meaningful information about these benefits. Similarly, Basic stated
that it would provide an incentive program but gave no information about the
program other than to say that participants would be selected in advance,
and payments would be made semiannually.

Basic's argument that it was “not a mindreader” and therefore
could not know what details AMC wanted is disingenuous. Basic, an
experienced government contractor, may be expected to have a reasonable idea
of the information required here. For example, JWK's discussion of its
compensation plan, which consisted of approximately 12 pages, included
specific information on fringe benefits, incentives and special awards, in
addition to wage and salary administration information. Supplemental Agency
Report, Attachment 1, at 1- 13. While many of the generic benefits were the
same as those proposed by Basic, such as health, life and disability
insurance, paid vacation, and sick leave, JWK provided an explanation and
details for each benefit. For example, JWK described its health care plan,
providing employer/ employee costs and listing services (for example,
physician office visits, allergy shots, prescriptions, physical exams, and
emergency room treatment)

Page 8 B- 284649 covered by the health plan, as well as required employee
co- payments for the

different types of service. Id. at 5- 6, 8. JWK also outlined its basic life
insurance coverage, noting the amount of coverage available and the party
responsible for premium payments. Id. at 6. JWK described its disability
insurance, listing both short- and long- term disability programs, benefit
periods and payments. Id. Under its discussion of incentives and special
awards, JWK listed criteria for awards, the four levels of awards offered by
the company, and the award amount associated with each level. Id. at 11- 12.

In contrast, Basic provided only the category of benefits to be provided,
with no details to explain the benefit. Contrary to the protester's position
that this constitutes mere “verbiage,” we do not believe that
AMC was “nitpicking” because it desired some rudimentary
information about Basic's proposed compensation plan. Based on this record,
we conclude that the agency reasonably determined that Basic's compensation
plan was not explained and lacked sufficient detail to allow agency
personnel to determine if the compensation plan was adequate to attract and
retain professional employees, as required by the solicitation. Accordingly,
we see no basis to question the evaluation of Basic's proposal with respect
to personnel management.

MISLEADING DISCUSSIONS Basic next argues that the discussions were
misleading, too general, and not designed to point out even the main
concerns of the evaluators. Protester's Comments at 12; Protester's
Supplemental Comments at 6. Basic's primary focus in this regard is its
contention that discussions regarding its professional employees'
compensation plan were “totally misleading” because the
contracting officer did not suggest that there was any problem with the
compensation plan that would affect the evaluation of Basic's management
proposal. Protester's Comments at 12. The protester argues that because the
contracting officer expressed the discussion issue under the heading of a
concern with the cost proposal, the protester responded by providing more
information to support its costs. Id. Additionally, Basic states that the
agency never mentioned in discussions that it wanted additional information
regarding its incentive plan, yet Basic was downgraded for not providing
more data about that plan. Basic alleges that if discussions had been
meaningful, the personnel management rating would not have been downgraded
and its overall management rating would have remained
“exceptional.” Id. at 13.

The FAR requires that contracting officers discuss with each offeror being
considered for award “significant weaknesses, deficiencies, and other
aspects of its proposal . . . that could, in the opinion of the contracting
officer, be altered or explained to enhance materially the proposal's
potential for award.” FAR sect. 15.306( d)( 3). The statutory and
regulatory requirement for discussions with all competitive range offerors
(10 U. S. C. sect. 2305( b)( 4)( A)( i) (1994); FAR sect. 15.306( d)( 1))

Page 9 B- 284649 means that such discussions must be meaningful, equitable,
and not misleading.

Du and Assocs., Inc., B- 280283.3, Dec. 22, 1998, 98- 2 CPD para. 156 at 7. For
discussions to be meaningful, they must lead offerors into the areas of
their proposals requiring amplification or revision; the agency is not
required to “spoon- feed” an offeror as to each and every item
that could be revised so as to improve its proposal, however. Du and
Assocs., Inc., supra, at 7- 8; Applied Cos., B- 279811, July 24, 1998, 98- 2
CPD para. 52 at 8. Here, as explained below, the record establishes that AMC
conducted legally sufficient discussions with Basic. 1

In its November 3 competitive range/ discussion letter to Basic, AMC noted
20 concerns it had relating to Basic's management/ technical and cost
proposals. Item 2 under the cost proposal issues stated that:

[Basic's] Compensation Plan summary at page II- 20 of its cost volume does
not enable professional employee compensation evaluation as envisioned by
FAR 52.222- 46- Evaluation of Compensation for Professional Employees (Feb
1993). Please furnish more details.

Agency Report, Tab 22, Competitive Range Letter, attach.– Discussion
Issues, at 2. We think this comment should have apprised a reasonably
diligent offeror to examine the compensation plan that it was proposing to
determine if it did in fact satisfy the RFP's requirements regarding
compensation. Basic's argument that the comment led it only to issues of
cost, because it was included as a “cost issue” is an
unreasonably narrow interpretation of the question. The comment refers the
protester to FAR sect. 52.222- 46, which explicitly calls for a
“total” compensation plan, and the question specifically
requests “more details.” Thus, the protester was apprised that
the agency was concerned about the need for more details and information on
Basic's “total” plan, and not merely on its costs. The
protester's failure to adequately respond to the comment, rather than the
agency's failure to lead the offeror into the area of its proposal requiring
amplification, resulted in the protester's proposal being downgraded.

Moreover, Basic's argument that, in view of these discussions, it was
unreasonable for the agency to assess any problem in the cost proposal as
affecting the evaluation of the management/ technical proposal is without
merit. As noted above, the RFP specified that proposal risk would be
assessed and integrated into subfactors under the merit and cost factors.
RFP sect. M. 4. a. 1. After discussions, the PEB specifically found that Basic
had not supported its oral presentation concerning its

1 Basic makes other allegations of unreasonable discussions concerning, for
example, documentation services and equipment repair. While we will not
discuss all of Basic's allegations, we have reviewed them all, and, the
record supports the agency's position that discussions were meaningful in
each instance.

Page 10 B- 284649 compensation plan and that there was a
“disconnect” between the

management/ technical and cost proposals. Agency Report, Tab 26, PEB Final
Recommendations, at 12. This disconnect was viewed as a failure to
comprehend the complexity of the contract requirements and a risk to
contract performance. Agency Report, Tab 27, Source Selection Decision
Document, at 15. The perceived risk was factored into the personnel
management subfactor as permitted by the evaluation scheme. In sum, the
agency's discussions with Basic were unobjectionable.

IMPROPER USE OF COST PROPOSAL The evaluation of Basic's proposal disclosed
several inconsistencies between the resources and performance promised in
Basic's management/ technical proposal and the costs proposed to support the
promised performance. For instance, in addition to the already- discussed
disconnect arising from the lack of a complete, detailed compensation plan,
the SSO noted that Basic's equipment costs were low, and that only the
“bare essentials have been proposed.” Agency Report, Tab 27,
Source Selection Decision Document, at 13. The SSO stated that these
resources did not seem to be adequate to meet the performance objectives in
Basic's oral presentation. Id. Under the documentation services subfactor,
the agency downgraded Basic's management/ technical proposal because,
although Basic understood the requirement for the on- line technical
library, Basic did not propose appropriate costs for the equipment. Agency
Report, Tab 26, PEB Final Recommendations, at 17. Finally, the agency noted
that Basic proposed to supply only three computers and that this did not
support Basic's promise to supply a computerized inventory database and that
Basic failed to escalate costs under the refuse subfactor to account for
inflation. Id. at 17- 18. Again, the agency found that all these flaws
demonstrated a lack of attention to detail and created doubt about Basic's
ability “to get the job done.” Id. at 17. Indeed, the SSO stated
that while Basic promised very good performance in its oral presentation:

its cost documentation revealed a strong potential that the contractor would
have trouble living up to its promises. This dramatic lack of compatibility
between technical and cost reflects a fundamental weakness in [Basic's]
organizational/ managerial framework, and creates doubt of their ability to
execute the diverse challenges associated with a services contract that
supports . . .[ the] center.

Agency Report, Tab 27, Source Selection Decision Document, at 12. Basic
argues that this evaluation is unreasonable and deviates from the PEP and
the RFP evaluation scheme because AMC improperly considered inconsistencies
between the management/ technical and cost proposals in evaluating the
management/ technical proposal. Protester's Comments at 15. Basic suggests
that

Page 11 B- 284649 the agency is limited to making cost realism adjustments
when it discovers a

problem concerning costs in the cost proposal. To support this position,
Basic points to language in the RFP at sections M. 9 and M. 10 that states
that the contracting officer will make cost realism adjustments to the
contractor's cost proposal to mitigate unfair competitive advantage
resulting from, among other things, unrealistic costs and inconsistency with
the various elements of the offeror's technical proposal. Id. at 14. Basic
argues that such a cost realism adjustment is the only “remedy for
inconsistencies between the estimated costs and the various elements of the
offeror's technical proposal.” Id. at 15. Basic argues that, absent
the improper use of the cost proposal, its rating on the technical
subfactors would have been elevated after discussions. Protester's
Additional Comments, April 24, at 2.

An agency has wide discretion in how it will structure its evaluation and
our Office will not question an agency's evaluation so long as it is
reasonable and follows the stated evaluation criteria. 2 Roy F. Weston,
Inc., B- 274945 et al., Jan. 15, 1997, 97- 1 CPD para. 92 at 9. Here, the record
does not substantiate the protester's assertion that the agency failed to
follow the evaluation scheme outlined in the RFP and improperly used Basic's
cost proposal to downgrade its management/ technical proposal.

Specifically, as noted above, the RFP provided that “unsupported
promises to comply with the contractual requirements will not be
sufficient,” and proposals should not simply “parrot back”
the requirements but provide convincing evidence to support promised
performance. RFP sect. M. 8. Additionally, the RFP stated that any
“inconsistency, whether real or apparent, between promised performance
and price should be explained. Unexplained inconsistencies resulting from
the [o] fferor's lack of understanding of the nature and scope of the work
required may be grounds for rejection of the proposal.” RFP sect. M. 9.
Finally, as noted above, the RFP at section M. 4 advised offerors that AMC
would assess the relative risks associated with each offeror and each
proposal and that the evaluators' assessment of proposal risk would be
integrated into the rating of each specific evaluation subfactor under the
merit and cost factors. RFP sect. M. 4. a. 1. Thus, the RFP put offerors on
notice that proposals had to support performance promises, that risk would
be evaluated and integrated into both the management/ technical and cost
evaluations, and that the agency intended to use the cost proposal to
ascertain if the offerors understood the work required under the contract.

2 Basic's argument that AMC's failure to follow the PEP is a fatal flaw in
the evaluation is without merit. Performance evaluation 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 the PEP, to which an agency is required to adhere in
evaluating proposals and in making the source selection. Id.

Page 12 B- 284649 We see no basis to conclude that the agency improperly
evaluated Basic's proposal

or deviated from the evaluation scheme set forth in the RFP. The record
shows that AMC reasonably found that Basic's proposal was unrealistic
because the promised performance outlined in the management/ technical
proposal was not supported by the cost proposal. The agency determined that
these inconsistencies created performance risks, which, as provided for in
section M. 4 of the RFP, the agency integrated into its evaluation of the
merit subfactors. Additionally, contrary to Basic's position, these
weaknesses were not derived solely from the cost proposal but were derived
from the failure of the cost proposal to support the performance promised in
the management/ technical proposal. As noted above, the RFP specifically
advised offerors that proposals had to support performance promises and that
the agency would use cost proposals to determine if offerors understood the
work required. Moreover, an agency is not prohibited from making cost
realism adjustments and downgrading a technical proposal where, as here, the
proposal did not demonstrate the protester's ability to perform the agency's
requirements based upon inconsistencies between the promised performance and
the proposed cost. Joint Threat Servs., B- 278168, B- 278168.2, Jan. 5,
1998, 98- 1 CPD para. 18 at 10. In cost reimbursement contracts, as here, a cost
realism analysis is performed to determine the extent to which an offeror's
proposed costs represent what the contract should cost. Such adjustments do
not by themselves adjust for increased risks to satisfactory contract
performance stemming from proposal deficiencies.

SOURCE SELECTION DECISION Finally, Basic contends that the agency conducted
a flawed best value determination by deciding to pay a premium of almost
[deleted] to award the contract to JWK. Protest at 4- 5. The protester
alleges that the SSO's selection decision is unreasonable essentially
because it is based on an incorrect personnel management rating for Basic,
flawed discussions, and the improper use of the cost proposal. Protester's
Supplemental Comments at 4. The protester argues that the selection decision
represents a superficial analysis of the strengths and weaknesses of the
various proposals because the agency did not quantify “even in a
general way the additional cost that JWK's proposal represents” for
each of the discriminators the agency used in its tradeoff analysis and
improperly put “no actual price tag on any benefit it would derive
from selecting JWK .” Protester's Comments at 9; Protester's
Supplemental Comments at 4.

Source selection officials in negotiated procurements have broad discretion
in determining the manner and extent to which they make use of technical and
cost evaluation results. Grey Adver., Inc., B- 184825, May 14, 1976, 76- 1
CPD para. 325 at 12; Mevatec Corp., B- 260419, May 26, 1995, 95- 2 CPD para. 33 at
3. In exercising that discretion, they are subject only to the tests of
rationality and consistency with the established evaluation criteria. Id. We
will uphold awards to offerors with higher technical ratings and higher
costs so long as the results are consistent with the evaluation criteria and
the contracting agency reasonably determined that the cost

Page 13 B- 284649 premium involved is justified given the technical
superiority of the selected offeror's

proposal. International Consultants, Inc.; International Trade Bridge, Inc.,
B- 278165, B- 278165.2, Jan. 5, 1998, 98- 1 CPD para. 7 at 5- 6.

First, to the extent that the protester's argument is premised on its
assertion that the technical evaluation of its personnel management
subfactor, the evaluation of risks associated with its proposal, and the
discussions were improper, the argument is unfounded. As explained above,
the agency followed the RFP in evaluating Basic's personnel management
subfactor and in integrating risk into the evaluation of the management/
technical proposal, and the record provides no basis to question the
agency's rating. Additionally, as discussed above, the discussions were
legally sufficient.

Next, the record does not support the protester's contention that the
selection decision represents a superficial analysis of the strengths and
weaknesses of the various proposals because the precise technical advantages
were not quantified in determining that JWK's proposal warranted the payment
of a price premium. Specifically, the PEB performed a detailed cost/
technical tradeoff analysis between JWK and each of the other three
competitive- range offerors. The analysis contains a narrative review of
each of the proposals and a 27- page tradeoff analysis in which the PEB
compared each competitive- range proposal with JWK's highest- ranked
management/ technical proposal. Agency Report, Tab 26, PEB Final
Recommendations, at 18- 44. In the paired comparisons, the PEB compared
JWK's adjusted cost with the adjusted cost of each of the other offerors and
compared the number of strengths and weaknesses of each offeror. Under
management, the PEB assessed JWK's proposal with 22 significant strengths,
34 strengths and no weaknesses. In contrast, under management, the PEB
assessed Basic's proposal with 10 significant strengths, 8 strengths, 4
weaknesses and 1 significant weakness. Id. at 26. Under technical, the PEB
assessed JWK's proposal with 28 significant strengths, 41 strengths and 4
weaknesses, and assessed Basic's proposal with 5 significant strengths, 13
strengths, and 4 weaknesses. Id. The PEB also prepared a narrative
comparison between JWK and each of the offerors for each subfactor. The PEB
used the results of the paired comparisons to assess the best mix of cost
and non- cost benefits and to determine whether the strengths of JWK's
higher- rated proposal were worth the price premium. Id. at 19.

The approximately 10- page long narrative comparison between Basic's
proposal, which was ranked third technically, and JWK's proposal compares
the two proposals on each factor and subfactor. Id. at 26- 36. For example,
the PEB noted that JWK had proposed more management personnel than Basic and
that the extra hours and personnel would be beneficial in overseeing the
contract. The PEB stated that Basic's “relative paucity of staff
personnel reflects [the protester's] overall attempt to stretch its
resources, many times in a manner that may unnecessarily undermine its
ability to assure high quality contract performance.” Id. at 28. Under
the equipment subfactor, the PEB noted that Basic's equipment costs were not
even half of JWK's

Page 14 B- 284649 proposed costs, and raised doubt about Basic's ability to
perform the required work.

Id. at 29. The evaluators noted that Basic had proposed less than half the
number of vehicles proposed by JWK. Id. at 30. The tradeoff analysis also
noted that Basic's vehicle maintenance costs were unrealistically low, its
compensation plan was vague and incomplete, and Basic's proposal did not
include costs for pagers and radios. Id. at 30- 31. While these costs were
minimal, the PEB stated that the absence of these costs “casts further
doubt on [Basic's] credibility.” Id. at 31. Under the technical
factor, the PEB noted that both offerors presented exceptional environmental
protection/ conservation plans, but that Basic, again, proposed low cost
support for the documentation services subfactor and failed to escalate
costs over the term of the contract under the refuse subfactor. Id. at 32-
33. In conclusion, the PEB stated that JWK's proposal was superior to
Basic's in several ways and noted eight specific areas where the PEB
believed JWK would provide cost savings. 3 Id. at 35. The evaluators noted
that the consistency between management/ technical factors and costs was the
key strength of JWK's proposal while, in contrast, Basic's costs did not
support its management/ technical factors, which degraded its credibility.
Id.

The SSO reviewed the full technical evaluation record (including significant
strengths, strengths, weaknesses, and concerns) cited for each proposal, as
well as the resulting adjectival ratings, past performance ratings and cost
evaluation results. In his selection decision, the SSO specifically adopted
the evaluation determinations detailed in the PEB's recommendations and used
these findings in his own tradeoff analysis. Agency Report, Tab 27, Source
Selection Decision Document, at 1. The SSO recognized the ratings and rank
of each of the competitive- range offerors and the number of strengths and
weaknesses among the proposals. Id. at 2. The SSO noted the marked
differences in the strengths and weaknesses among the proposals on the two
merit factors and, in particular, noted that the “JWK proposal far
exceeds the [Basic] proposal as evidenced by the higher number of
significant strengths and strengths.” Id. at 11. As noted above, the
PEB assessed JWK's proposal as having 50 significant strengths and 75
strengths versus its assessment of Basic's proposal as having 15 significant
strengths and 21 strengths. The SSO viewed these differences as indicative
of JWK's clear overall superiority. The SSO also expressly compared the JWK
proposal with each of the competitve- range proposals and found JWK's
presentation clearly superior. The SSO also recognized that JWK's evaluated
costs were higher than those of the other offerors and were [deleted], or
approximately [deleted] per year, higher than Basic's evaluated costs. Id.
at 20. The SSO considered that Basic's cost proposal did not support its
proposed performance and “had the effect of eroding confidence in
[Basic's] capabilities and its credibility.” Id.

3 For example, the PEB listed JWK's adequate professional compensation plan,
which would allow JWK to keep a quality and stable workforce, a technology
division to assist in the requirement of the on- line technical library and
the digitizing of operation and maintenance manuals, a sophisticated
communications network system, and back- up vendors.

Page 15 B- 284649 at 3. The SSO found that confidence in Basic's ability to
“manage the complexity

and volume of the requirement within the dollar range proposed has become
doubtful.” Id. at 19- 20. The SSO recommended award to JWK based on
its costs, exceptional management/ technical proposal and its past
performance record. The SSO expressly stated that “in terms of
reliability alone, the savings in cost avoidance by the selection of JWK
over [Basic] could easily reach hundreds of thousands of dollars” and
that the award to JWK “is more than worth the [deleted] difference in
price when compared to [Basic's] offer.” Id. at 21.

We see nothing improper in this selection decision. It reflects an
appropriate comparison of the competing proposals and a reasoned
determination to select a higher- cost proposal because of its documented,
substantially greater technical merit. To the extent that Basic argues that
the precise technical advantages were not quantified in determining that
JWK's proposal warranted the payment of a price premium, in performing a
cost/ technical tradeoff there is no requirement that a selection official
dollarize the process by making a precise mathematical calculation that an
additional dollar will be paid only if there is a corresponding discrete
technical advantage. KRA Corp., B- 278904, B- 278904.5, Apr. 2, 1998, 98- 1
CPD para. 147 at 14. Accordingly, we see no basis to object to the award
determination.

The protest is denied. Comptroller General of the United States
*** End of document. ***