TITLE:  DevTech Systems, Inc., B-284879; B-284879.2, June 16, 2000
BNUMBER:  B-284879; B-284879.2
DATE:  June 16, 2000
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DevTech Systems, Inc., B-284879; B-284879.2, June 16, 2000

Decision

Matter of: DevTech Systems, Inc.

File: B-284879; B-284879.2

Date: June 16, 2000

Alex D. Tomaszczuk, Esq., and Dennis E. Pryba, II, Esq., Shaw Pittman, for
the protester.

Thomas K. David, Esq., David, Brody & Dondershine, for Creative Associates
International, Inc., the intervenor.

John K. Scales, Esq., Agency for International Development, for the agency.

John L. Formica, Esq., and Guy R. Pietrovito, Esq., Office of the General
Counsel, GAO, participated in the preparation of the decision.

DIGEST

1. Agency's discussions with the protester were meaningful and not
misleading where the agency advised the protester of areas of agency concern
with the protester's proposal, and the agency's evaluated concerns were
reasonable and not the product of an agency miscalculation as asserted by
the protester.

2. Protest that the agency improperly awarded a contract to the awardee on
the basis of its lower-priced, lower technically rated proposal where the
solicitation emphasized that technical merit was more important than price
is denied where the agency reasonably determined that, despite the
protester's proposal's 6 percent higher technical score, the proposals were
equal with regard to technical merit.

DECISION

DevTech Systems, Inc. protests the award of a contract to Creative
Associates International, Inc. (CAI) under request for proposals (RFP) No.
M/OP-99-912, issued by the Agency for International Development (AID), for
professional and technical services to support the agency in a number of
education-related activities. DevTech contends that the agency failed to
evaluate proposals in accordance with the evaluation criteria set forth in
the solicitation, conducted misleading discussions, and acted unreasonably
in selecting CAI's proposal for award.

We deny the protest.

The RFP was issued to acquire technical and professional services in support
of the agency's stated objective for "Improved and Expanded Basic Education,
especially for Girls, Women and Other Underserved Populations." RFP at 2.
The contractor will collaborate with AID and host national entities to
"carry out restorative and additive educational work in crisis countries."
RFP at 12. Such activities may include the "conduct [of] rapid policy
appraisals, the expeditious development of plans to meet basic education
requirements, the effective involvement of parents and other local citizens
in reviving and revitalizing community schools, the design and testing of
educational materials that promote peaceful negotiation and the amelioration
of differences, and to provide quality education for refugee or other
transient, temporary situations." Id. In addition to supporting educational
activities at nearly all levels, the contractor will also monitor and
evaluate the results of the activities performed, and disseminate to the
education research and development community "lessons learned" that "have
direct implications for improved policy, basic education and work in crisis
and non-presence countries." RFP at 17.

The RFP provided for the award of an indefinite-quantity contract for a base
period of three years with two 1-year options, using both time-and-materials
and fixed-price arrangements. [1] Id. at 2. The solicitation stated that
award would be made to the offeror submitting the proposal determined to
represent the best value to the agency based upon seven evaluation criteria
that were listed in descending order of importance. [2] RFP at 113-14. The
RFP added that in determining which proposal represented the best value to
the government, technical merit would be considered "significantly more
important than cost or price." RFP at 114.

The RFP included detailed instructions for the preparation of proposals. The
solicitation requested that offerors submit separate price/business and
technical proposals. With regard to the price/business proposals, the
solicitation included 21 contract line items number (CLIN) to be completed
by each offeror, 17 of which identified a functional labor category. RFP at
3-5. Each functional labor category CLIN was broken down into three
sub-CLINs identifying that category by level (senior, mid, and junior). [3]
Offerors were required to enter for each sub-CLIN a maximum fully burdened
fixed hourly rate for years 1-3, and years 4-5, of the proposed contract.
For example, CLIN 0012 appeared in the RFP as follows:

CLIN Functional Labor Category Maximum Fixed Hourly Rate

Years 1-3 Years 3-5

012 Education Policy Specialist

012-A Senior Level ________ ________

012-B Mid Level ________ ________

012-C Junior Level ________ ________

RFP at 4.

The RFP listed the costs that were to be included by the offerors in
calculating their burdened rates, and requested that offerors submit
"specific information supporting components of the proposed burdened hourly
rates," including "a detailed narrative explaining the components of [the]
hourly rates offered." RFP at 110.

The RFP requested that technical proposals be organized to correspond to the
evaluation criteria set forth in the solicitation. RFP amend. 1, sect. L.9. The
solicitation's proposal preparation instructions noted that the "[p]rovision
of qualified personnel is a critical element of the Contract," and stated
accordingly that "the offeror should include a detailed plan for how it will
acquire personnel." RFP at 107. The RFP added that this section of the
offeror's proposal "must include an analysis of the expertise immediately
available through the on-board staff of the offeror, individuals associated
via retainers, as well as expertise on call or accessible through a
database/roster of individual professional networks and consultants." Id.
The RFP also added that because "many requests for services will require
quick responses, the offeror must outline what steps will be taken to close
existing gaps, and to overcome factors which limit the availability of
individuals, such as academic schedules and prior commitments." Id. The
solicitation requested that proposals include "an illustrative roster of
employees and/or consultants" for each of the 17 labor categories by levels
(senior, mid, and junior). Id.

The agency received four proposals, including DevTech's and CAI's, in
response to the solicitation. The offerors' technical proposals were
evaluated by the agency's technical evaluation committee (TEC), with
DevTech's proposal receiving a score of 2,460 out of 3,000 points, and CAI's
proposal 2,240 points. [4] Agency Report, Tab 5, Report of the TEC, Aug. 6,
1999.

The offerors' price/business proposals were evaluated in accordance with the
instructions set forth in the RFP, which provided, in essence, that the
agency would calculate an average hourly burdened rate (comprised of the
rates for the 17 labor categories) for the three skill levels (senior, mid,
junior) set forth in the RFP, and would then apply a utilization factor for
each level (senior at 50, mid at 30, junior at 15, CLINs 018-020, at 5) to
determine a single evaluated hourly rate for each offeror. Using this
approach, the agency calculated an average hourly burdened rate of [DELETED]
for DevTech and [DELETED] for CAI. [5] Agency Report, Tab 6, Competitive
Range Determination, at 3.

The proposals of DevTech and CAI were included in the competitive range, Id.
at 4, and written discussions were conducted. Agency Report, Tabs 7 and 8,
Letters from Agency to DevTech and CAI, (Aug. 13, 1999). The offerors each
submitted questions to the agency regarding the discussion questions posed,
and after receiving the agency's responses, submitted their final proposals.
Agency Report, Tabs 10 and 12, Letters from DevTech (Aug. 19, 1999) and CAI
(Aug. 20, 1999). The TEC evaluated the responses of the offerors, and after
determining that DevTech had improved its proposal in a number of areas,
added 125 points to DevTech's score, for a total of 2,585. [6] Agency
Report, Tab 16, TEC Report, Oct. 29, 1999, at 2-3. The TEC found that CAI's
proposal had also improved as the result of its submission, and added 200
points to CAI's score, for a total of 2,440 points. Id. at 1-2. The TEC
concluded that it "truly feels that these two offerors are, for all intents
and purposes, dead even," despite the 145 point (or approximately 6-percent)
difference in technical scores between the proposals. Id. at 8. With regard
to price, the agency calculated average hourly burdened rates based upon the
offerors' revised proposals as [DELETED] for DevTech and [DELETED] for CAI.
Agency Report, Tab 24, Memorandum of Negotiation, at 10. The agency, based
upon the conclusion that the proposals were essentially equal with regard to
technical merit, awarded the contract to CAI because of its proposal's lower
evaluated price.

The protester contends that the agency engaged in improper discussions, as a
result of which the protester was misled into raising its price. Protest at
11-12. Specifically, the protester points out that the agency initially
calculated DevTech's average hourly burdened rate as [DELETED], rather than
[DELETED]. The protester contends that because of this, the agency posed
written discussion questions to DevTech which DevTech "reasonably
interpreted . . . as an indication that it needed to raise its prices in
order to satisfy [the agency's] concern that [DevTech's] prices were
unrealistic." Protest at 12. The protester asserts that the agency's concern
was the result of the agency's "computational error," pointed out above, and
argues that "discussions predicated on a significant computational error by
[the agency] cannot be meaningful." Id. The protester claims that had it
"known of the error in [the agency's] computation of its original price,
that error could easily have been corrected." Id.

In negotiated procurements where discussions are held with offerors, the
discussions must be meaningful. This means that sufficient information must
be furnished to offerors in the competitive range as to the areas in which
their proposals are believed to be weak so that offerors have a reasonable
opportunity to address those areas of weakness that could have a competitive
impact. The government does not satisfy its obligation in this regard by
misleading an offeror or conducting prejudicially unequal discussions.
Techniarts Science & Tech. Corp.,
B-280521.2, B-280521.4, Oct. 15, 1998, 98-2 CPD para. 97 at 5.

The agency explains that it calculated an average hourly burdened labor rate
only to aid in its determination as to which proposals should be included in
the competitive range. The agency asserts that because DevTech's proposal
was included in the competitive range, DevTech could not have been
prejudiced by the agency's initial miscalculation. Supplemental Agency
Report at 1. The agency points to the record of its written discussions with
DevTech in support of its position that its initial miscalculation of
DevTech's average hourly burdened labor rate had no impact on its
discussions with DevTech. Agency Report at 5, 8-9; Supplemental Agency
Report at 1-4.

We agree with the agency. Consistent with the agency's explanation, the
record does not evidence that the average hourly burdened labor rates
calculated by the agency played any role in the conduct of discussions. That
is, there is no mention in any of the discussion letters provided to DevTech
of DevTech's proposed average hourly labor rates as calculated by the
agency. Rather, the record demonstrates that the information provided by
DevTech in its proposal was reviewed in detail by the agency, and that the
discussion questions posed were based on specific aspects of DevTech's cost
proposal that concerned the agency.

For example, in its discussion questions to DevTech, the agency pointed out
that DevTech had not provided "specific information supporting components of
the proposed burdened hourly rates" as required by the RFP (at 110), and
requested that DevTech do so. Agency Report, Tab 7, Letter from Agency to
DevTech at 2 (Aug. 13, 1999). The agency also pointed out that DevTech's
proposed [DELETED] fee, and [DELETED] escalation rate, appeared high. Id. at
3-4. With regard to the offerors' labor rates, the agency stated in its
discussion letters to both DevTech and CAI that because "quick responses" to
the agency's needs will be required during contract performance, the
offerors' "burdened hourly rate proposed should NOT be based on the
illustrative roster of employees and/or consultants but on the market value
for each labor category." Id. at 3; Agency Report, Tab 8, Letter from Agency
to CAI at 4 (Aug. 13, 1999).

During a subsequent round of discussions, the agency pointed out a number of
other areas of concern with DevTech's proposal. Specifically, the agency
stated that there appeared [DELETED], and requested that DevTech explain the
variances. Agency Report, Tab 17, Letter from Agency to DevTech at 2 (Dec.
3, 1999). The agency also questioned why under some CLINs, DevTech had
proposed [DELETED], and informed DevTech that based upon "an informal labor
market survey," the agency had "determined that [DELETED]." Id. at 2-3.

In sum, the record simply does not support the protester's assertion that
the agency's initial miscalculation of DevTech's average hourly burdened
rate resulted in the agency asking questions of DevTech that misled DevTech
into raising its prices or that, for that matter, were misleading at all.
Rather, the record evidences that the discussion questions reflected the
agency's concerns with specific aspects of DevTech's cost proposal that
required explanation.

The protester argues that the agency's determination that CAI's proposal
represented the "best value" to the government "was flawed and
unreasonable," given the mathematical errors made by the TEC in reporting
the offerors' overall technical scores. Specifically, DevTech argues that,
properly calculated, its "final score was 2,585, and [CAI's] final score was
2,440." Protester's Comments at 9. The protester states that, based upon
these "corrections," its technical score "was nearly 6% higher than [CAI's]
final score," and its "proposed price is approximately . . . 6% higher than
[CAI's]," and therefore it should have received the award, given the RFP's
statement that technical merit was more important than price. Id. at 9-10.

Source selection officials are vested with broad discretion to determine the
manner and extent to which they will make use of evaluation results.
Resource Management Int'l, Inc., B-278108, Dec. 22, 1997, 98-1 CPD para. 29 at
4. Although point scores are useful as guides, they do not mandate automatic
selection of a particular proposal. PRC, Inc., B-274698.2, B-274698.3, Jan.
23, 1997, 97-1 CPD para. 115 at 12. Whether a given point spread between two
competing proposals indicates a significant superiority of one proposal over
another depends on the facts and circumstances of each procurement and is
primarily a matter within the discretion of the procuring agency. Resource
Management Int'l, Inc., supra, at 4. 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. Id.; 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. Resource Management Int'l, Inc.,
supra, at 4.

The TEC reports include detailed narratives setting forth the TEC's views as
to the strengths and weaknesses of CAI's and DevTech's initial and revised
proposals. As mentioned previously, despite the 145-point (or approximately
6-percent) difference in technical scores between the proposals, the TEC
stated that "after concerted review, analysis, and scoring . . . [it] truly
feels that these two offerors are, for all intents and purposes, dead even."
Agency Report, Tab 16, TEC Report, Oct. 29, 1999, at 8. The memorandum
prepared by the agency also includes narrative statements setting forth the
evaluated technical strengths and weaknesses of both offerors' proposals,
and based upon this narrative explanation the contracting officer determined
that the proposals "are considered technically equal" and that award should
be made to CAI on the basis of its lower price. Agency Report, Tab 24,
Memorandum of Negotiations, at 6-7, 10. In this regard, the agency estimates
the price difference between the two proposals to be $2.1 million over the
contract's potential 5-year life. Supplemental Agency Report at 4.

Based on our review of the record, we find no basis to object to the
agency's determination that the DevTech's proposal's 6 percent higher rating
did not represent any meaningful superiority with regard to the technical
merit of DevTech's proposal, and that CAI's proposal represented the best
value based upon its lower overall price. See Harrison Sys. Ltd., B-212675,
May 25, 1984, 84-1 CPD para. 572 at 5;
Grey Adver., Inc., B-184825, May 14, 1976, 76-1 CPD para. 325 at 10-13
(proposals with, respectively, 14.4- and 15.8-percent scoring differentials
reasonably found to be essentially equal technically for sources selection
purposes). The record evidences that the proposals of CAI and DevTech
received relatively close scores under each of the evaluation factors, with
each proposal outscoring the other under certain factors. See Agency Report,
Tab 5, TEC Report, Aug. 6, 1999, at 2-13. The point scores are supported by
evaluation documentation, which provides thoughtful and detailed
explanations of the relative strengths and weaknesses in the offerors'
proposals. The protester, despite having access under our protective order
to both proposals and all evaluation documentation, including the individual
evaluator worksheets, the TEC reports, and the memorandum of negotiations,
does not challenge these narrative evaluations or substantively respond to
the agency's position that the proposals of DevTech and CAI were reasonably
determined to be technically equal. Rather, the protester continues to point
to the relatively slight difference in overall scores received, and argue in
general terms that because of its slightly higher technical score, it should
have been awarded the contract. Under these circumstances, DevTech's
challenge constitutes, at best, mere disagreement with the evaluation
results and source selection decision, and does not provide a basis for
finding the agency's actions in this regard unreasonable. Global Assoc.,
Ltd., B-275534, Mar. 3, 1997, 97-1 CPD para. 129 at 9.

The protester also contends that the agency failed to evaluate proposals in
accordance with the evaluation factors set forth in the RFP. Protester's
Comments at 10. In this regard, the protester notes that the agency, when it
requested final revised proposals, also requested that the offerors submit,
as a completely separate document, a 15-page technical proposal and a cost
proposal in response to what was identified as "Task Order 1" in attachment
No. 9 to the RFP. RFP attach. 9; Agency Report, Tabs 7 and 8, Letters from
Agency to DevTech at 5 (Aug. 13, 1999) and CAI

at 5 (Aug. 13, 1999). The protester points out that, according to the
record, the TEC evaluated the offerors' responses to Task Order No. 1 under
four evaluation factors that were not set forth in the RFP.

In response, the agency explains that the offerors' responses to Task Order
1 were "evaluated briefly to facilitate a quick start of the contract," and
were not considered by the agency in determining who should receive award
under the RFP. Supplemental Agency Report at 5-6.

We find from our review of the record that the agency did not consider the
offerors' submissions in response to Task Order 1 or the agency's evaluation
of those submissions in determining which proposal offered the best value to
the government. Most importantly, the final negotiation memorandum, which
describes the procurement, includes narrative explanations of the agency's
evaluation of the offerors' proposals, and serves as the agency's source
selection statement, simply does not mention the agency's evaluation of the
offerors' submissions in response to Task Order 1. Rather, as indicated
previously, it discusses in some detail the relative merits of the offerors'
revised proposals as evaluated under the criteria set forth in the RFP, and
the agency's rationale for selecting CAI's proposal for award. Given that
the record supports the agency's claim that it did not consider the
submissions of offerors in response to Task Order 1, or the agency's
evaluation thereof, in determining which proposal represented the best value
to the government, we fail to see how the protester was prejudiced by the
agency's actions here. IGIT, Inc.,
B-275299.2, June 23, 1997, 97-2 CPD para. 7 at 6-8; ICF Kaiser Eng'rs, Inc.,
B-271079 et al., July 15, 1996, 96-2 CPD para. 15 at 6 n.6.

The protest is denied.

Comptroller General

of the United States

Notes

1. The RFP specified that the agency would determine for each task order
issued under the contract the type of arrangement (i.e., time-and-materials
or fixed-price) to be used. Id. at 2.

2. The evaluation criteria included, for example, "[k]nowledge and
understanding of the overall activity and its objectives as specified in the
SOW [statement of work]," and "past performance." RFP at 114-15.

3. For each of the three levels identified, the RFP specified a combination
of academic degree and years of experience required. For example, to be
considered "senior level," an individual would have either a Ph.D./Ed.D.
with 6 years relevant experience, a M.A./M.S. with 8 years relevant
experience, or a B.A./B.S. with 10 years experience. RFP at 5.

4. As explained in more detail later in the decision, the agency made a
number of mathematical errors in calculating the offerors' technical scores
and evaluated prices. For example, the TEC report of August 6, 1999, which
includes a factor-by-factor narrative analysis of the TEC's determinations
regarding the evaluated technical merits of the offerors' proposals, as well
as an individual score for each proposal under each factor, erroneously
reported DevTech's total score as 2,380 points (rather than 2,460).

5. As pointed out by the protester and conceded by the agency, DevTech's
average hourly burdened rate should have been approximately [DELETED] (the
agency now calculates DevTech's initial average rate as [DELETED], and the
protester calculates it as [DELETED]).

6. Again, the TEC report reflects that in determining DevTech's proposal's
total technical score, the TEC added the 125 points in increased score
resulting from DevTech's proposal revisions to DevTech's initial score of
2,380 (as calculated by the TEC), and thus erroneously determined that
DevTech's final score equaled 2,530. As indicated above, DevTech's final
score actually totals 2,585 points (2,460+125=2,585).