TITLE: Northrop Grumman Technical Services, Inc., B-286012; B-286012.2, November 1, 2000
BNUMBER: B-286012; B-286012.2
DATE: November 1, 2000
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Northrop Grumman Technical Services, Inc., B-286012; B-286012.2, November 1,
2000
Decision
Matter of: Northrop Grumman Technical Services, Inc.
File: B-286012; B-286012.2
Date: November 1, 2000
Thomas C. Wheeler, Esq., Richard P. Rector, Esq., and Sheila C. Stark, Esq.,
Piper Marbury Rudnick & Wolfe, for the protester.
Carl J. Peckinpaugh, Esq., and Cheralyn S. Cameron, Esq., DynCorp Technical
Services, Inc., an intervenor.
Gregory H. Petkoff, Esq., Sharon A. Jenks, Esq., John D. Inazu, Esq., and
Monica Ceruti, Esq., Department of the Air Force, for the agency.
Ralph O. White, Esq., and Christine S. Melody, Esq., Office of the General
Counsel, GAO, participated in the preparation of the decision.
DIGEST
1. Protester's assertion that an agency failed to distinguish between
offerors by assigning identical color and risk ratings under the mission
capability and risk evaluation factors is denied where the record shows that
the ratings assigned were reasonable, and where the selection official was
apprised of the distinctions between the proposals and made his selection
accordingly.
2. Contention by incumbent contractor that the awardee should have been
assessed a risk of workforce disruption because it does not have a
collective bargaining agreement with the incumbent workforce is denied
where: (1) the agency reasonably concluded that this approach would provide
an unfair advantage to the incumbent; (2) the awardee met its legal
obligations under the Service Contract Act to match the wage and fringe
benefits paid to incumbent employees under the agreement; and (3) the agency
reasonably concluded, based on its review of the awardee's proposed
approach, that the approach did not present a risk of disruption.
DECISION
Northrop Grumman Technical Services, Inc. (NG) protests the award of a
contract to DynCorp Technical Services, Inc. by the Department of the Air
Force pursuant to request for proposals (RFP) No. F41689-99-R-0028, issued
to procure aircraft maintenance and base operating support services at Vance
Air Force Base (AFB), Oklahoma. NG argues that the Air Force unreasonably
selected DynCorp for award after: (1) failing to distinguish between
proposals by giving all three competitive range offerors the same ratings;
(2) ignoring the risks associated with DynCorp's lack of a collective
bargaining agreement with the Vance AFB employees; and (3) failing to either
upwardly adjust DynCorp's price or assess a risk against the company for its
lack of escalation of healthcare costs over the life of the contract.
We deny the protest.
BACKGROUND
Vance AFB has used a single contractor to perform aircraft maintenance and
base operating services (BOS) since 1961. Contracting Officer's (CO)
Statement at 2. In the area of aircraft maintenance, the contractor
provides, among other things, ground support, scheduled and unscheduled
maintenance and repair, and management support of all assigned T-1, T-37 and
T-38 aircraft. In the area of BOS, the contractor provides operating
services, including: operations and maintenance; fire protection; custodial,
engineering, and environmental services; management and maintenance of space
and housing; information technology support; transportation; lodging; and
aviation operations support. Memorandum of Law at 2. NG has held the
contract to perform these services since 1972.
The RFP here was issued on October 21, 1999, and anticipated award of a
fixed-price, incentive-fee contract for one base year, followed by up to six
1-year options, to the offeror whose proposal was deemed most advantageous
to the government. RFP sect.sect. B, M-902. To determine the most advantageous
proposal, the RFP identified four evaluation factors: past performance,
mission capability, proposal risk and price/cost. RFP sect. M-903. Of these
factors, past performance, mission capability, and proposal risk were equal
in importance, and combined, were significantly more important than
price/cost. Id.
Under the past performance evaluation factor there were no subfactors. The
RFP advised that an offeror's past performance would receive one of the
following six ratings: (1) exceptional/high confidence; (2) very
good/significant confidence; (3) satisfactory/confidence; (4)
neutral/unknown confidence; (5) marginal/little confidence; and (6)
unsatisfactory/no confidence. Id.
Under the mission capability factor, there were five subfactors, listed in
descending order of importance: (1) performance management; (2) workforce;
(3) technical capability; (4) mobilization and changeover; and (5) small
business programs participation. The RFP advised that each subfactor would
be assessed a separate rating for both aircraft maintenance and BOS (except
for the least important subfactor, small business programs participation,
which was to receive only one overall rating), that aircraft maintenance and
BOS would be equal in importance, and that these ratings would not be
"rolled up" to the factor level. Id. In addition, the RFP advised that each
subfactor would be assigned a separate risk rating. Under mission
capability, the RFP anticipated color ratings of blue/exceptional,
green/acceptable, yellow/marginal, and red/unacceptable; under risk, the RFP
anticipated ratings of high, moderate, and low risk.
Under the factor of price/cost, the RFP advised that prices would not be
rated, but would instead be reviewed for realism and reasonableness. In
addition, the RFP identified a weighted formula for determining an offeror's
evaluated price which included the price for the base period and all option
years, as well as weighted samples of each proposal's offered incentive for
costs that exceed, or do not reach, the proposed target price. Id.
After receiving four proposals in response to the RFP, holding three rounds
of discussions, and eliminating one offeror from the competitive range, the
agency held a fourth round of discussions before completing the final
evaluation and preparing a briefing for the source selection authority
(SSA). CO's Statement at 4. The results of the final evaluation, as
presented to the SSA, are set forth below:
EVALUATION DYNCORP NORTHROP OFFEROR A
FACTORS GRUMMAN
PAST PERFORMANCE Exceptional Exceptional Very Good
MISSION
CAPABILITY/RISK
Performance Blue/Low Blue/Low Blue/Low
Mgmt/Risk Blue/Low Blue/Low Blue/Low
-- Aircraft
Maint.
-- BOS
Workforce/Risk Green/Low Green/Low Green/Low
-- Aircraft Blue/Low Blue/Low Blue/Low
Maint.
-- BOS
Technical Blue/Low Blue/Low Blue/Low
Capability/Risk Blue/Low Blue/Low Blue/Low
-- Aircraft
Maint.
-- BOS
Mobilization Blue/Low Blue/Low Blue/Low
Changeover/Risk Blue/Low Blue/Low Blue/Low
-- Aircraft
Maint.
-- BOS
Small Business Blue/Low Blue/Low Blue/Low
Participation
TOTAL EVALUATED $303,021,554 $303,367,347 $320,923,700
PRICE
Source Selection Evaluation Technical (SSET) Team Report, at 90, 93.
In making his selection decision, the SSA first eliminated Offeror A from
further consideration because of its lower past performance rating and
higher evaluated price. Source Selection Decision at 1. As between NG and
DynCorp, the SSA noted the exceptional/high confidence past performance
ratings given both offerors, but concluded that he placed "greater value" on
the customer ratings and comments submitted for DynCorp. Id. at 2. With
respect to the equal color and proposal risk ratings assessed under the
mission capability subfactors, the SSA again decided that DynCorp's proposal
offered the greater value. Specifically, the SSA stated:
[NG] provided an advantage in the host base contingency support area in
aircraft maintenance and a slight advantage in the base operating support
workforce area. However, I determined the skill mix balance of DynCorp's
aircraft maintenance workforce composition is more advantageous in that they
propose a greater number of mechanics and workers compared to the number of
specialists proposed by [NG]. In addition, over the life of the contract,
DynCorp offers [deleted] more man-years priced than [NG]. I also consider
DynCorp's flat, tailored work teams to be slightly superior to [NG's]
staffing approach.
Id. In addition, the SSA noted DynCorp's slightly lower overall total
evaluated price, and noted that the company proposed a general and
administrative (G&A) rate capped at [deleted] percent. Based on these
conclusions, the SSA selected DynCorp for award. This protest followed.
DECISION
NG's predominant claim in this protest [1] is that the Air Force evaluators
failed to capture any of the meaningful distinctions between offerors by
assigning all three competitive range proposals identical color and risk
ratings for each of the 18 categories under the mission capability and risk
evaluation factors. In pursuing its claim, NG generally does not argue that
the specific color and risk ratings assigned in any particular instance are
unreasonable, but that the agency failed to note the distinction between the
offerors, or that it was unreasonable to give both offerors the same rating.
In this regard, NG argues that the resulting evaluation "left the SSA
without any clear indication of which proposal was superior and caused him
to search on his own for some basis to select one of the proposals for
contract award." Id. at 2.
In its comments filing, NG cites 11 separate instances where it contends
there was a basis to draw a distinction between its proposal, and other
proposals in the competitive range. Our standard in reviewing such
evaluation challenges is to examine the record to determine whether the
agency's judgments were reasonable and consistent with stated evaluation
criteria and applicable statutes and regulations. ESCO, Inc., B-225565, Apr.
29, 1987, 87-1 CPD para. 450 at 7. Here, we have considered the proposals, the
evaluation materials, each of NG's 11 specific arguments, the Air Force's
response to those arguments, and NG's reply. As a result of our review, we
find no basis for concluding that the evaluation here unreasonably blurred
the distinctions between proposals, or was not in accordance with the stated
evaluation criteria.
For example, one of the 11 instances involves an assessed strength in NG's
proposal in the area of host base contingency support. Despite its strength
in this area, NG complains that the SSA was given no basis to distinguish
between competing proposals on this issue, and that it was unreasonable to
assign the same color/risk rating to both offerors under the mission
capability/risk subfactor related to this area. A close look at the record
shows otherwise.
As a preliminary matter, we note that in 8 of the 11 instances--including
this one--where NG argues that the strengths in its proposal were obscured
by the assignment of identical color and risk ratings, the cited strength
was expressly included in the Source Selection Briefing for the SSA's
consideration. Moreover, in this case, the SSA specifically noted NG's
strength in the area of host base contingency support, as indicated in the
above quote from the Source Selection Decision. Source Selection Decision
at 2. Given that these distinctions were expressly noted for the SSA, and in
this case, noted by the SSA in making his selection decision, we fail to see
how NG can contend that the distinctions were obscured, or otherwise lost in
the evaluation process.
Our review of this example also leads us to conclude that NG's strength in
the area of host base contingency support was reasonably integrated into the
overall evaluation. As explained above, the third subfactor under the
mission capability and risk evaluation factors was technical capability.
Under this subfactor, the RFP identified five areas of consideration; the
fifth area identified was whether the proposal indicated "[a] clear
understanding for supporting host base contingency plans." RFP sect. M-903 at
6.b(3)(e). In the area of host base contingency plans, under the aircraft
maintenance portion of the evaluation, DynCorp received a rating of "+"
(indicating a "more than satisfactory" rating), while NG received a rating
of "+++" (indicating an "exceptional" rating). Source Selection Briefing at
84.
Despite this difference in ratings, both offerors received overall ratings
of exceptional under the aircraft maintenance portion of the technical
capability subfactor. The briefing presenter explained to the SSA that NG
was given an exceptional rating for the subfactor because it received
exceptional ratings under all five of the areas of consideration. Id. at 83.
The presenter explained that DynCorp was given an exceptional rating for the
subfactor because it received exceptional ratings under four of the five
areas of consideration, and a rating of "more than satisfactory" under the
fifth area for consideration, host base contingency support. Id.
Presented with these facts, NG offers no argument for why it was
unreasonable for DynCorp to receive an exceptional rating when it was
assessed as exceptional under four of the five areas of consideration for
this subfactor. Nor is NG correct when it argues that the distinction was
obscured by the method of the evaluation. Under these circumstances, we see
nothing unreasonable about the decision to give both NG and DynCorp ratings
of exceptional, and we disagree that the SSA was not made aware of this
relatively de minimis distinction between the two offerors in this area.
In another of NG's 11 areas where it claims the strengths in its proposal
were obscured--the area of skill mix under the aircraft maintenance portion
of the workforce subfactor--the SSA expressly rejected the distinction
perceived by the evaluators as part of his selection decision. [2] As above,
the SSA's conclusion that he viewed the skill mix area differently than the
evaluators demonstrates that this distinction between the proposals was
neither obscured, nor lost, by the agency's evaluation approach.
For the record, we will also address the three instances where NG argues
that the strengths in its proposal were unfairly obscured by the evaluation,
and where it is less clear (than in the other 8 instances described above)
that the strength was expressly presented to the SSA. One of these instances
is the issue of NG's collective bargaining agreement with the employees of
Vance AFB, which is the subject of the next portion of this decision. The
remaining two instances are immaterial to the propriety of the selection
decision here. First, NG argues that the evaluation was unreasonable because
NG and Offeror A got the same color/risk rating under the small business
program participation subfactor despite a distinction between the two
proposals in this area. Second, NG notes that DynCorp received more initial
deficiency notices than NG, which, NG claims, shows that its proposal was
the stronger of the two throughout the procurement process.
In our view, NG's contention about a blurred distinction between it and a
third offeror provides no basis for our Office to conclude that the
selection of DynCorp over NG was unreasonable. See BioClean Med. Sys., Inc.,
B-239906, Aug. 17, 1990, 90-2 CPD para. 142 at 7 n.2. We also consider
irrelevant NG's argument that the proposals are not as equal as they might
appear because NG's proposal was initially found to be stronger than
DynCorp's. This argument fails to address changes made to DynCorp's proposal
in response to discussions with the agency, and provides no basis to
conclude that NG's proposal was stronger than DynCorp's at the conclusion of
negotiations.
The second major area of NG's protest is that the Air Force should have
assessed a performance risk against DynCorp because it does not have a
collective bargaining agreement (CBA) with the incumbent workforce. NG's
five arguments related to this issue fall into two categories: one of the
arguments is general to any non-incumbent offeror, while four of the
arguments are specific to acceptance of DynCorp's proposal. In our view,
none of these five contentions has merit.
The RFP, at clause B-11, advised potential offerors that any contract
resulting from this solicitation was subject to the requirements of the
Service Contract Act, and that there was a CBA in place between the
incumbent contractor and a union representing much of the incumbent
workforce. Under the Service Contract Act, successor contractors generally
are required to pay at least the wages and fringe benefits set forth in the
CBA. See 41 U.S.C. sect. 353(c) (1994); The Fred B. DeBra Co., B-250395.2, Dec.
3, 1992, 93-1 CPD para. 52 at 2-3. To implement the Act, the RFP incorporated
the CBA. RFP sect. J. There is no dispute that DynCorp proposed wage and fringe
benefits in accordance with the CBA.
In its general argument, NG contends that since its CBA with the incumbent
workforce includes a no-strike clause, any other offeror's proposal should
have been assessed as posing a greater risk of workforce disruption than
NG's proposal. As indicated above, this is also 1 of the 11 areas where NG
argues its proposal offered a benefit to the government that was obscured,
or lost, during the course of the evaluation.
While there is no disputing that an incumbent that has negotiated a
no-strike clause with its union workforce probably presents less risk of
workforce disruption than a new contractor--especially after 28 years of
incumbency--we think there are several reasons why it was proper for the
agency not to consider a change of contractors, without more, as a
performance risk. First, the protections of the Service Contract Act itself
reduce the risk of disruption by requiring successor contractors to match
the wage and fringe benefits paid under an existing CBA. Second, assessment
of a risk of disruption for any offeror but the incumbent places an obstacle
in the path of full and open competition that, at a minimum, should require
a showing of necessity. Finally, we fail to see how an incumbent is harmed
by the Air Force approach here, other than being forced to compete on a more
level field. Since the purpose of our bid protest function is to ensure that
agencies obtain full and open competition to the maximum extent practicable,
we will generally favor otherwise proper actions--like this one--which are
taken to increase competition. See Hughes Missile Sys. Co., B-257627.2, Dec.
21, 1994, 94-2 CPD para. 256 at 16.
NG next sets out four areas where it argues that DynCorp's proposed approach
will increase the risk of workforce disruption. Specifically, NG argues that
DynCorp's plans to award performance bonuses and its reduced reliance on
middle management, which could result in union employees supervising other
union employees, both violate the terms of the current CBA. In addition, NG
contends that DynCorp may elect not to honor the accumulated sick leave, or
the seniority status, of incumbent union employees.
As an initial matter, we note that the regulations implementing the Service
Contract Act provide that "[t]he obligation of the successor contractor is
limited to the wage and fringe benefit requirements of the predecessor's
[CBA] and does not extend to other items such as seniority, grievance
procedures, work rules, overtime, etc." 29 C.F.R. sect. 4.163(a) (2000). Thus,
it appears that none of the issues raised by NG involve an obligation of
DynCorp under the Service Contract Act. On the other hand, we agree with
NG's underlying assertion that selection of a contractor that will engage in
harsh labor practices, even if generally compliant with the requirements of
the Service Contract Act, could increase the risk of workforce disruption
for the agency. When such practices are clearly shown, we will sustain a
protest that the agency has failed to properly consider the risks associated
with its selection decision. See Management Servs. Inc., B-184606, Feb. 5,
1976, 76-1 CPD para. 74 at 8-16.
Here, however, NG has not shown that DynCorp's practices will lead to
disruption and the record does not support a conclusion that the agency
erred in its assessment of the DynCorp proposal. First, the Air Force points
out that the solicitation did not require offerors to provide details
concerning their union negotiation strategies. Nonetheless, the agency's
review of DynCorp's proposal satisfied the evaluators that DynCorp has
experience in dealing with unions and has experience assuming a contract
where the previous contractor had a CBA with a union. CO's Statement at 21.
In addition, during the course of this protest, DynCorp cited several
examples of its experience in assuming contracts covered by CBAs. DynCorp's
Comments at 4-5. In short, there was nothing in DynCorp's proposal, or
elsewhere in this record, to support a conclusion that DynCorp would fail to
deal reasonably with the incumbent workforce.
Second, we note that NG's arguments regarding DynCorp's approach are
speculative. Despite having access to DynCorp's proposal under the coverage
of a protective order issued by our Office, NG has proffered no statement by
DynCorp, nor any other evidence, to support its claim that the company might
strip employees of their seniority and/or their accrued sick leave. Under
these circumstances, without more, we think the Air Force's evaluation of
DynCorp's proposal was reasonable.
The third and final area of contention in NG's protest is that the Air Force
failed to properly assess DynCorp's lack of escalation in the cost of health
and welfare (H&W) benefits for exempt employees, and lower H&W benefits for
wage determination employees, neither of which is covered by the CBA. In
this area, NG argues that the agency should have made an upward adjustment
to DynCorp's evaluated costs, or alternatively assessed a risk against the
proposal. We disagree on both counts.
With respect to the alleged need for a cost adjustment, we note first that
the RFP here anticipates award of a fixed-price, incentive-type contract.
Simply put, there were no adjustments to proposed prices as are required in
the evaluation of cost-reimbursement contracts. While NG points out that the
RFP anticipates calculation of an "evaluated" price, we note that the RFP
clearly explains what that evaluation entails--i.e., application of a
formula to assess the benefits of an offeror's incentives by including a
sample of the price generated above and below the target price. RFP sect. M-903.
This limited formula for generating an evaluated price did not convert this
fixed-price contract to a cost-type contract, and the calculation of
evaluated prices other than as anticipated by the solicitation would have
been improper.
With respect to the alleged need for a risk assessment, the protester has
failed to show how the Air Force evaluation was unreasonable. We note first
that NG's arguments in this area are stated only in broad and general terms
in its comments filing. Protester's Comments at 12-13. At no point in this
limited discussion are we advised which evaluation factor or subfactor
should be assessed this risk. Even if we assume that NG means the risk would
be one of workforce disruption, NG does not advise whether the risk should
be applied to the aircraft maintenance portion of the evaluation, the BOS
portion, or both. [3]
Moreover, our substantive review of the Air Force materials in this area
leads us to conclude that the agency's evaluation was reasonable. In
essence, the CO explains that the agency reviewed DynCorp's proposed H&W
costs for each of the three categories of employees covered by this
contract: those under the CBA; those not covered by the CBA, but covered by
a wage determination; and management employees covered by neither, and
termed "exempt." CO's Statement at 28. As discussed above, the CO explains
that DynCorp was required by the Service Contract Act to match the H&W rate
of CBA employees, and it did so--in fact, it exceeded that rate by a small
amount. Id. For wage determination employees, the CO explains that DynCorp
proposed an H&W rate equal to the minimum required by law, although the CO
concedes that the amount is $.37 lower than NG proposed. Id. For exempt
employees (largely management employees), the CO acknowledges that DynCorp
proposed lower H&W than NG, and that DynCorp did not include escalation of
H&W benefits for exempt employees. Id. On the other hand, the CO points out
that DynCorp is not required to provide its exempt employees with the same
level of H&W benefits as NG. Given that DynCorp met its legal obligations
for CBA and wage determination employees, and given that a lack of
escalation in one category of fringe benefits for management employees does
not create any significant risk of workforce disruption, we see nothing
unreasonable in the Air Force decision not to assess a risk against the
proposal based on its planned H&W expenses.
The protest is denied.
Anthony H. Gamboa
Acting General Counsel
Notes
1. NG raised numerous other challenges in its initial protest, and in two
supplemental protest filings, that it ultimately abandoned. Of particular
importance, NG alleged procurement integrity violations based on its receipt
of an anonymous letter from an individual who claimed to be familiar with
this procurement, and who claimed that there were irregularities in the
evaluation process. The Air Force conducted an internal investigation of the
allegations raised by that letter, and provided a copy of its investigation
report to the parties here, and to our Office, under the terms of a General
Accounting Office protective order. Given the findings of the investigation,
and the failure of the letter's author to come forward, NG expressly
abandoned this area of its protest. Protester's Comments at 1. As a result,
we have not pursued this matter further.
2. Compare Source Selection Decision, July 21, 2000, at 2 ("However, I
determined the skill mix balance of DynCorp's aircraft maintenance workforce
composition is more advantageous in that they propose a greater number of
mechanics and workers compared to the number of specialists proposed by
[NG].") with Source Selection Briefing at 19 ("[NG's] skill mix is
exceptional as they propose to use a highly exceptional number of leads,
senior mechanics and specialists in their overall aircraft maintenance
workforce.") and Source Selection Briefing at 23 ("[DynCorp's] skill mix is
adequate and should provide satisfactory mission support.").
3. To fill in the details, NG directs our Office to a detailed statement
prepared by its consultant and appended to its comments; however, even this
statement fails to state where the risk should be assessed. This approach to
pleading places protesters at risk of failing to clearly explain their
positions. See University of Dayton Research Inst., B-245431, Jan. 2, 1992,
92-1 CPD para. 6 at 5. In addition, the appended point-by-point listing of every
instance in which the consultant agrees or disagrees with the contracting
officer is an ineffective substitute for a prioritized and cogent argument
about why the agency's evaluation was unreasonable and how the result would
be different if it were corrected. See Ann Riley & Assoc., Ltd., B-271741.2,
Aug. 7, 1996, 97-1 CPD para. 120 at 9, recon. den., Ann Riley & Assoc.,
Ltd.-Recon., B-271741.3, Mar. 10, 1997, 97-1 CPD para. 122.