TITLE:  The Jones/Hill Joint Venture, B-286194.4; B-286194.5; B-286194.6, December 5, 2001
BNUMBER:  B-286194.4; B-286194.5; B-286194.6
DATE:  December 5, 2001
**********************************************************************
Decision

Matter of: The Jones/Hill Joint Venture

File: B-286194.4; B-286194.5; B-286194.6

Date: December 5, 2001

William A. Roberts III, Esq., Phillip H. Harrington, Esq., William S. Lieth,
Esq., and Janet L. Eichers, Esq., Wiley, Rein & Fielding, for the protester.

Marvin D. Norman, Esq., Vicki E. O'Keefe, Esq., and Robert E. Little, Jr.,
Esq., Department of the Navy, for the agency.

Louis A. Chiarella, Esq., John L. Formica, Esq., and James A. Spangenberg,
Esq., Office of the General Counsel, GAO, participated in the preparation of
the decision.

DIGEST

1. A conflict of interest existed in an Office of Management and Budget
Circular A-76 commercial activities study where a Navy employee and a
private-sector consultant wrote and edited the performance work statement
and then prepared the management plan for in-house performance.

2. The Navy Independent Review Official's certification (pursuant to Office
of Management and Budget Circular A-76) that the government is able to
perform the requirements set forth in the performance work statement with
the resources provided in the in-house management plan, and that all costs
in the in-house cost estimate were fully justified, cannot be found
reasonable where it is unsupported by either the contemporaneous
documentation or the arguments, explanations, or testimony in the record.

3. Agency's in-house management plan submitted under an Office of Management
and Budget Circular A-76 commercial activities study was misevaluated, where
the in-house management plan was based on the use of personnel that were not
part of the "most efficient organization" to accomplish certain requirements
in the performance work statement, and the record does not show that the
costs of these personnel were included in the in-house cost estimate.

4. Agency's determination, pursuant to Office of Management and Budget
Circular A-76, that the management plan for in-house performance offered a
comparable level of performance and performance quality to the selected
private-sector proposal, was unreasonable, insofar as it did not account for
several strengths identified during the "best value" competition in the
selected private-sector proposal.

DECISION

The Jones/Hill Joint Venture protests the Department of the Navy's
determination, pursuant to Office of Management and Budget (OMB) Circular
A-76, that it would be more economical to perform base operations and
support services in-house at the Naval Air Station, Lemoore (NASL),
California, rather than contract for these services with Jones/Hill under
request for proposals (RFP) No. N62474-98-R-2069.

We sustain the protest.

BACKGROUND

The Navy issued the RFP on May 5, 1999, as part of a Circular A-76
commercial activities study, to determine whether it would be more
economical to perform base operations support and real property maintenance
and operations services for the NASL in-house, using government employees,
or under contract with a private-sector firm. [1] The solicitation provided
that a "best value" offer would be selected in accordance with the terms of
the RFP, and compared to the government's in-house management plan in
accordance with the terms of Circular A-76 to determine if contractor or
in-house performance of the services was more economical. RFP sect. A.

The RFP requested fixed-price proposals, and provided for a two-step
evaluation of the proposals with past performance, corporate capabilities
and past commitment to small business the factors considered in the first
step, and management and technical approach and small business commitment
the factors considered in the second step. To determine which proposal
represented the best value, the combined ratings of the proposals from the
two steps were considered approximately equal in importance to price. RFP
at M-2.

Each offeror's proposal was to include the firm's statement of requirements
(SOR), prepared in accordance with a workbook provided by the agency as part
of the solicitation package. [2] The solicitation specified that each
offeror's SOR was to include, among other things, "the contract
sub-requirements their firm[] shall perform to achieve the required
mandatory requirement and the stated outcome" provided in the RFP, as well
as the performance metrics "by which successful accomplishment of every
mandatory and proposed contract requirement and sub-requirement can be
measured to determine that it has been successfully met." Each offeror's SOR
was also to include the applicable units of work, quantities and frequencies
for performance of the units of work, and quality performance standards that
the contractor proposed to meet (such as "[r]espond within 30 minutes"). The
RFP noted here that the selected best value proposal's SOR "will be reviewed
and used in adjusting the Government's [in-house] Technical Performance Plan
to ensure it offers the same level of performance and performance quality
which is equivalent to the best value commercial proposal." RFP at L-17-18.

Meanwhile, certain Navy personnel were tasked with the development of the
in-house management plan. The agency contracted with E.L. Hamm, Inc. to
assist these personnel (hereinafter, the most efficient organization (MEO)
team) in the development of the in-house management plan, including the
development of the in-house plan's cost estimate and transition plan.

The in-house management plan was subsequently forwarded to the IRO for
certification. To assist the IRO in reviewing and certifying the in-house
plan, the Navy contracted with Management Analysis, Inc. (MAI), which
performed the analysis on which the IRO based his judgment. The IRO, in this
case a member of the Naval Audit Service, certified that the management plan
reasonably established the government's ability to perform the PWS with the
resources provided.

The agency received proposals from six offerors, including Jones/Hill, by
the RFP's closing date. After discussions were conducted with the three
offerors included in the competitive range, the agency assigned and
supported ratings under each factor and sub-factor, including the 13
outcomes, with explanations identifying each proposal's specific strengths,
weaknesses, and deficiencies. AR, Oct. 5, 2000, Tab 4, Value Assessment Team
(VAT) Report for Technical Proposals (Apr. 12, 2000), at 16-20. Based on a
comparison of Jones/Hill's proposal with the two others, the agency
determined that Jones/Hill's proposal, with a final proposed price of
$127,676,656, represented the best value to the government. Id.

After the selection of Jones/Hill's proposal, the in-house plan and
Jones/Hill's proposal were provided to a quality comparison panel (QCP) to
ensure that the management plan and Jones/Hill proposal offered the same
level of performance and performance quality. AR, Oct. 5, 2000, at 3-4.
After some clarifications and changes to the in-house management plan, the
QCP then determined that the adjusted in-house plan and Jones/Hill proposal
provided for the same level of performance and performance quality. The
QCP's determination was subsequently reviewed and approved by the source
selection authority (SSA). AR, Oct. 5, 2000, Tab 5, SSA Decision Document.

The revised in-house management plan was next forwarded to the IRO, who
re-certified that the in-house plan satisfied the PWS requirements. AR, Oct.
5, 2000, at 4; Tab 7, Commercial Activity Cost Comparison Review of NASL
Base Operating Services. The agency then conducted the cost comparison by
first adding the "minimum conversion differential and costs of conversion"
to Jones/Hill's proposed price, for an adjusted total cost to contract for
services of $149,266,341. Because the revised in-house plan's costs totaled
$137,614,706 (a difference of $11,651,635), the agency determined to perform
the requirements in-house. AR, Oct. 5, 2000, at 4-5.

Jones/Hill filed an administrative appeal. The agency's administrative
appeal authority ratified the determination to perform the requirements
in-house, making only a minimal increase in the costs associated with
in-house performance to a total of $137,921,286. Id. at 5; Tab 8, Memorandum
from the Commander in Chief, U.S. Pacific Fleet to the Chief of Naval
Operations, NASL Final Decision Summary Report; Tab 9, Decision of
Administrative Appeal Authority on NASL Cost Comparison Decision.

Jones/Hill then filed a protest with our Office on September 1, 2000,
challenging the adequacy of the agency's comparison of the performance
reflected in the in-house management plan with the performance reflected in
Jones/Hill's proposal, and the reasonableness of the agency's determination
that the revised management plan and Jones/Hill's proposal offered a
comparable level of performance and performance quality. Jones/Hill also
contended during the course of the protest that the agency had improperly
failed to inform the offerors of certain changes to the agency's
requirements, as well as of the existence and terms of an interservice
support agreement (ISSA) between the Navy and the General Services
Administration (GSA), and a memorandum of agreement (MOA) between NASL and
GSA that, according to the protester, adversely affected its competitive
position overall and specifically with regard to its provision of
transportation services and the related costs.

During the course of that protest, alternative dispute resolution (ADR)
procedures were used by our Office on November 16, 2000, in which we advised
that the agency faced significant litigation risk with respect to a number
of the issues raised. The agency subsequently took partial corrective
action, and our Office dismissed the protest on November 22, 2000.

With regard to the partial corrective action, the agency specifically stated
that the QCP would examine various strengths in Jones/Hill's proposal that
had been identified but not considered, and would have the in-house plan
adjusted as necessary to account for those strengths "that predict a higher
quality performance (as opposed to 'strengths' such as a well-written
proposal)." Agency's Post-ADR Comments at 10. The agency stated that the
in-house management plan would be adjusted as necessary, and added that
"[i]n any event, the QCP will prepare a detailed written justification on
its conclusion." Id. at 11.

In response to the protester's contention that the agency had improperly
failed to inform the offerors of certain changes to the agency's
requirements during the conduct of the procurement, the agency conceded that
"it should have amended the solicitation," but stated that it would not take
any corrective action to address this shortcoming because "the protester has
not suffered any prejudice thereby." Id. The agency also declined to take
any action in response to Jones/Hill's protest of the propriety of the
agency's determination to inform only the MEO team, and not the private
sector offerors, of the ISSA between the Navy and GSA and the MOA between
NASL and GSA, arguing that its actions in this respect were reasonable. [3]
Id. at 6-10.

On August 15, 2001, the Navy informed Jones/Hill that it had completed the
"tasks" associated with the corrective action it had committed to, and that
as a result, "the level of effort included in the [in-house plan] was raised
by 14.92 [full-time equivalents]," and the in-house plan had been
re-certified by the IRO. Protest, Aug. 27, 2001, Tab 3, Agency letter to
Jones/Hill (Aug. 15, 2001). The letter concluded by informing Jones/Hill
that notwithstanding the revised management plan staffing, "a cost
comparison . . . revealed that the cost of in-house performance was lower
than the commercial acquisition and, therefore, the services will remain
in-house." The cost comparison provided an adjusted total cost for
performance by Jones/Hill of $149,567,344, and an adjusted total cost for
in-house performance of $140,815,852 (a difference of $8,751,492). Protest,
Sept. 6, 2001, Tab 2, Cost Comparison of In-House vs. Contract or ISSA
Performance (Aug. 13, 2001). During the course of this protest, the agency
has conceded various errors, so that the adjusted costs associated with
in-house as opposed to contractor performance differ, for the purposes of
this protest, by approximately $6 million. [4] Tr. at 23-26.

PROTEST

Jones/Hill protests that the way in which the agency used a private-sector
consultant and a Navy employee in certain aspects of the Circular A-76 study
at NASL resulted in a conflict of interest. The protester also contends that
the agency unreasonably determined that the government could perform the
work required with the number of personnel proposed in the in-house plan.
The protester further contends that the in-house management plan provided
for the performance of certain tasks by individuals who were not part of the
MEO. Jones/Hill also argues that the agency's determination that the
in-house management plan and Jones/Hill's proposal offered the same level of
performance and performance quality was unreasonable. Jones/Hill finally
argues that the agency improperly failed to inform the offerors of the
existence and terms of the ISSA between the Navy and GSA, and the MOA
between NASL and GSA, that, according to the protester, adversely affected
its competitive position overall and specifically with regard to the
provision of transportation services and related costs. [5]

ANALYSIS

Conflict of Interest

Jones/Hill argues that this procurement is fatally flawed by conflicts of
interest. As discussed below, we find that because a Navy employee and a
Hamm consultant wrote the PWS and then wrote the management plan, a conflict
of interest was created. To best explain this issue, some relevant
background follows.

As one of the first steps in the process, the Navy organized a commercial
activities (CA) team to plan for the conduct of the study. Tr. at 156. The
CA team was comprised of Navy personnel, who were assisted by Hamm
consultants. Tr. at 204, 260, 335-36. Certain members of the CA team
subsequently became members of the PWS team, which had responsibility for
the development of the PWS. Tr. at 203, 261-62. After the development of the
PWS, an MEO team was formed, which had responsibility for the development of
the in-house management plan. Tr. at 158, 174, 246, 264, 269. The record
reflects that the PWS team was comprised in part of individuals who had
served on the CA team, and that the MEO team was comprised primarily of
individuals who had served on the CA Team. [6]

The MEO team leader and second CA team leader testified that a "firewall"
was maintained between the Navy personnel serving on the PWS team and the
Navy personnel serving on the MEO team. Tr. at 205, 210, 213, 268. They
explained that the firewall was necessary in order to avoid a conflict of
interest that, in the view of the second CA team leader, could "compromis[e]
the study." Tr. at 213, 281. The second CA team leader explained in this
regard that "intimate knowledge of the PWS would allow you to provide a
better MEO." Tr. at 229. The MEO team leader added that such a firewall was
necessary in order to avoid the "appearance that the PWS was written in such
a way to favor the government management, management strategy." Tr. at 271.

Nevertheless, the Navy admits that the first CA team leader, while not
listed as a member of the PWS team, participated substantially in the
drafting and development of the PWS, and then became the MEO team leader.
AR, Nov. 20, 2001, at 12; Tr. at 224, 259, 270-71, 276, 278, 296-97, 305,
311; List of NASL A-76 Teams. With regard to the extent of the MEO team
leader's role in the development of the PWS, the MEO team leader testified
that he "wrote th[e] PWS" (at other times, the MEO team leader testified
that he participated in the development of the PWS until it was 80 to
90 percent drafted). Tr. at 276, 278, 311.

As mentioned previously, the Navy also contracted with Hamm to assist it
during a number of the steps in the process, considering Hamm an "active
partner" in the process. Tr. at 202. Specifically, Hamm provided "technical
support" for the planning of the Circular A-76 study, the development of the
PWS and the management plan (including the in-house cost estimate and
transition plan), the MEO team's responses to the IRO during the
certification process, and the responses to the evaluation board during the
board's analysis of whether the in-house management plan and Jones/Hill's
proposal offered the same level of performance and performance quality.
Contract/Purchase Order No. N00140-98-D-1474, Delivery Order No. 5000;
Tr. at 174, 177, 201-02, 225-26, 246-48.

A representative of Hamm testified, for example, that he "was the editor of
the PWS and . . . the management plan." [7] Tr. at 337. The second CA team
leader characterized Hamm's role as that of a "co-producer" and "active
coparticipant in the preparation of the PWS," and as a "full participant" in
the development of the in-house management plan. Tr. at 245-46. Thus, it is
clear from the record that the Hamm consultant substantially participated in
the preparation of the PWS (which was a deliverable under its contract), and
then the in-house plan, without any firewall. [8] AR, Nov. 20, 2001, at 2.

Jones/Hill argues that the MEO team leader's roles as the CA team leader,
writer of the PWS, and MEO team leader, and the Hamm consultant's role as
the writer/editor of both the PWS and in-house management plan, constituted
a conflict of interest which violated the applicable standards of conduct.
In this regard, Jones/Hill contends that the MEO team possessed an unfair
competitive advantage because of its special knowledge of NASL's
requirements for base operations and support services, which arose from the
consultant's and MEO team leader's participation in the writing and editing
of the PWS.

In setting out the standards of conduct that apply to government business,
Federal Acquisition Regulation (FAR) sect. 3.101-1 states:

Government business shall be conducted in a manner above reproach and,
except as authorized by statute or regulation, with complete impartiality
and with preferential treatment for none. Transactions relating to the
expenditure of public funds require the highest degree of public trust and
an impeccable standard of conduct. The general rule is to avoid strictly any
conflict of interest or even the appearance of a conflict of interest in
Government-contractor relationships.

FAR subpart 3.1 does not provide specific guidance regarding situations in
which government employees, because of their job positions or relationships
with particular government organizations, may have a conflict of interest.
However, as we have noted in prior decisions, FAR subpart 9.5 addresses
analogous situations involving contractor organizations. See DZS/Baker LLC;
Morrison Knudsen Corp., B-281224 et al., Jan. 12, 1999, 99-1 CPD para. 19 at 4;
Battelle Memorial Inst., B-278673, Feb. 27, 1998, 98-1 CPD para. 107 at 6-7.
Accordingly, although FAR subpart 9.5, by its terms, does not apply to
government agencies or employees, it is instructive in determining whether
an agency has reasonably met its obligation to avoid conflicts under FAR sect.
3.101-1, in that FAR subpart 9.5 establishes whether similar situations
involving contractor organizations would require avoidance, neutralization
or mitigation in Circular A-76 studies. DZS/Baker LLC; Morrison Knudsen
Corp., supra (agency's use of employees, whose positions were the subject of
a Circular A-76 study and thus subject to being contracted out, to evaluate
the private-sector proposals created a conflict of interest).

FAR sect. 9.501(d) provides that a conflict of interest exists when, "because of
other activities or relationships with other persons, a person is unable or
potentially unable to render impartial assistance or advice to the
Government, or the person's objectivity in performing the contract work is
or might be otherwise impaired." The situations in which organizational
conflicts of interest arise, as addressed in FAR subpart 9.5 and the
decisions of our Office, can be broadly categorized into three groups.

The first group consists of situations in which a firm has access to
nonpublic information as part of its performance of a government contract
and where that information may provide the firm an unfair competitive
advantage in a later competition for a government contract. FAR sect. 9.505-4.
In these "unequal access to information" cases, the concern is limited to
the risk of the firm gaining an unfair competitive advantage; there is no
issue of possible bias. Aetna Gov't Health Plans, Inc.; Foundation Health
Fed. Servs., Inc., B-254397.15 et al., July 27, 1995, 95-2 CPD para. 129 at 12.

The second group consists of situations in which a firm, as part of its
performance of a government contract, has in some sense set the ground rules
for the competition for another government contract by, for example, writing
the statement of work or the specifications. In these "biased ground rules"
cases, the primary concern is that the firm could skew the competition,
whether intentionally or not, in favor of itself. FAR sect.sect. 9.505-1, 9.505-2.
These situations may also involve a concern that the firm, by virtue of its
special knowledge of the agency's future requirements, would have an unfair
advantage in the competition for those requirements. Aetna Gov't Health
Plans, Inc.; Found. Health Fed. Servs., Inc., supra, at 13.

The third group comprises cases where a firm's work under one government
contract could entail its evaluating itself or a related entity, either
through an assessment of performance under another contract or an evaluation
of proposals. FAR sect. 9.505-3. In these "impaired objectivity" cases, the
concern is that the firm's ability to render impartial advice to the
government could appear to be undermined by the relationship with the entity
whose work product is being evaluated. Id.; Aetna Gov't Health Plans, Inc.;
Found. Health Fed. Servs., Inc., supra, at 13.

The facts here are clear. There is no dispute that the Hamm consultant and
MEO team leader wrote and edited the PWS, and then wrote and edited the
in-house management plan. AR, Nov. 20, 2001, at 12; Tr. at 276, 278, 337.
Accordingly, the record is consistent with the circumstances attendant to
both "unequal access to information" and "biased ground rules" conflicts of
interest. [9] See FAR sect. 9.505-2 (generally prohibiting a contractor from
competing on a solicitation on which it prepared the statement of work).

The agency asserts that none of the conflict of interest rules set forth in
subpart 9.5 of the FAR should be applied to Circular A-76 studies. AR, Nov.
20, 2001, at 4-6, 10-13. However, as noted above, given the use of the
competitive system in Circular A-76 studies and the MEO team's status as
essentially a competitor in the study, we believe that the provisions of
subpart 9.5 serve as useful guidance in determining whether the type of
conflict of interest prohibited under subpart 3.1 of the FAR exists, and we
have specifically found the "impaired objectivity" type conflict of interest
set forth at FAR sect. 9.505-3 applicable to Circular A-76 studies. DZS/Baker
LLC; Morrison Knudsen Corp., supra. We see no reason why the provisions of
subpart 9.5 of the FAR regarding "unequal access to information" and "biased
ground rules" conflicts of interest (e.g., FAR sect. 9.505-2) should not also
serve as guidance in determining whether an agency has reasonably met its
obligation to avoid conflicts of interest under FAR sect. 3.101-1. In this
regard, the plain language of FAR sect. 3.101-1 makes it clear that procurement
officials are required to act "in a manner above reproach" and consistent
with "an impeccable standard of conduct," so as "to avoid strictly any
conflict of interest or even the appearance of a conflict of interest."
B-281224.8, Nov. 18, 1999 (Letter to Director of Office of Government
Ethics), at 2. An actual or apparent conflict of interest on the part of an
agency official or a contractor employee, who drafted the PWS and then
drafted the agency response to the PWS, would taint more than the individual
source selection; it could undermine the integrity of the Circular A-76
process. See id.

Our conclusion that subpart 9.5 of the FAR should be referenced in
determining whether an agency reasonably met its obligation to avoid
"unequal access to information" and "biased ground rules" conflicts of
interest in the context of a Circular A-76 study is consistent with the RSH,
which states that Circular A-76 is designed in part to "provide a level
playing field between public and private offerors to a competition." We fail
to see how there can be "a level playing field between public and private
offerors" where one competitor--here, the MEO team--receives a competitive
advantage by having written and edited the PWS, thus providing it with
greater access to competitively useful information and creating the
possibility of a competition with biased ground rules. See FAR sect. 9.505-2;
RSH, Introduction. We note that Hamm's role in writing and editing the PWS
meant that it was prohibited by FAR subpart 9.5 from submitting a
private-sector proposal as part of the competition at issue here, FAR sect.
9.505-2(b)(1), and we believe that protecting the integrity of the process
mandates similarly preventing individuals, whether contractor or government
employees, who wrote the PWS from writing the "proposal" (that is, the
management plan and cost estimate) of the in-house team.

We note that our conclusion here, with regard to the Hamm consultant, is
consistent with Department of Defense (DOD) Interim Guidance issued Feb. 29,
2000, which augments DOD Instruction 4100.33, Commercial Activities Program
Procedures, Sept. 9, 1985 (Paragraphs E.3.b. and E.3.f.), and provides that

where private sector consultants are assisting DOD Components in preparing
both a PWS and Management Plan for a specific A-76 cost comparison,
sufficient measures shall be taken to avoid potential conflicts of interest
in accordance with FAR Part 9 or the appearance of such conflicts. These
measures shall include, at a minimum, sufficient 'firewalls' within the
private sector consultant to prevent the same individuals from both
developing the PWS and assisting in the preparation of the MEO.

The agency specifically asserts that no conflict of interest exists with
regard to Hamm's role because, in the agency's view, Hamm lacks incentive,
being an independent contractor, to bias the PWS or to obtain a competitive
advantage in drafting the in-house management plan. [10] We disagree.

As confirmed by the second CA team leader, we would think that Hamm had the
incentive to be successful in its work by positioning itself to draft the
most competitive management plan possible, and then by drafting such an
in-house plan. Tr. at 229. While it is true that Hamm would not be paid more
if the in-house team prevails in this Circular A-76 study, its potential for
future work assisting in-house teams would presumably be enhanced if it
could help its "client" prevail. [11] As the second CA team leader
explained, with regard to Hamm's participation in drafting both the PWS and
in-house management plan, "there could be construed a conflict of interest
between the production of the PWS and possibly crafting it in a manner which
would make it advantageous to the MEO so that the MEO could construct a more
favorable bid." [12] Tr. at 228.

In sum, we find that because the MEO team leader and the Hamm consultant
wrote and edited the PWS, and then wrote and edited the in-house management
plan, a conflict of interest arose which called for the agency to take
appropriate action. [13] See Basile, Bauman, Prost & Assoc., Inc., supra;
GIC Agricultural Group, supra.

The agency next contends that even if the roles of the MEO team leader and
Hamm consultant created an apparent conflict of interest, the protest is
nevertheless without merit because the conflicts of interest clearly had no
impact. For example, the agency argues that "potential bias [in a
solicitation] . . . is tested in the crucible of competition
[and] . . . [o]fferors can determine in a trice whether the PWS is unduly
slanted toward a particular solution," and that "[a]dmitting that one's
actions might lead to a perception of a 'conflict of interest' does not mean
anything immoral, unethical, irregular or illegal actually--or even could
have--happened." AR, Nov. 20, 2001, at 9, 13. The agency also argues, in a
more specific vein, that the Hamm consultant's and the MEO team leader's
participation in the drafting of the PWS and the in-house management plan
was unobjectionable because the RFP and the PWS were "outcome based," and
thus could not (either intentionally or unintentionally) be "tailored to any
specific approach." AR, Nov. 20, 2001, at 2.

These contentions evidence a misunderstanding of the conflict of interest
rules. A key purpose of the applicable conflict of interest provisions and
those to which we turn for guidance is to avoid even the appearance of
impropriety in government procurements. FAR sect. 3.101-1; see FAR subpart 9.5;
Aetna Gov't Health Plans, Inc.; Found. Health Fed. Servs., Inc., supra, at
18. Where, as here, the facts establishing the existence of a conflict are
present, and a conflict thus exists, the harm from that conflict, unless it
is avoided or adequately mitigated, is presumed to occur. See Basile,
Bauman, Prost & Assoc., Inc., supra, at 4; Aetna Gov't Health Plans, Inc.;
Found. Health Fed. Servs., Inc., supra; GIC Agric. Group, supra, at 8-9,
n.4; see Holmes and Narver Servs., Inc./Morrison-Knudson Servs., Inc. a
joint venture; Pan Am World Servs., Inc., B-235906, B-235906.2, Oct. 26,
1989, 89-2 CPD para. 379 at 7, aff'd, Brown Assocs. Mgmt. Servs., Inc.--Recon.,
B-235906.3, Mar. 16, 1990, 90-1 CPD para. 299 (where former agency employee who
had access to source selection information left the agency and went to work
for a contractor and prepared the contractor's proposal, the likelihood of
an unfair competitive advantage warrants corrective action to protect the
integrity of the process, despite the good faith behavior of all parties).
That is, a protester is not required in these circumstances to establish
bias in the PWS or point to the results of a specific unfair competitive
advantage in order to establish a conflict of interest. Aetna Gov't Health
Plans, Inc.; Found. Health Fed. Servs., Inc., supra, at 18-19. Moreover,
where the integrity of the procurement system is at issue because a conflict
of interest has been established, the honesty and good faith of the
individual actors cannot render behavior permissible where it would
otherwise be improper. Id. at 19.

In our view, the appearance of impropriety resulting from the conflicts of
interest here has tainted the integrity of the process, and we therefore
sustain Jones/Hill's challenge to this aspect of the agency's determination
that it would be more economical to perform the base operations and support
services at NASL in-house, rather than contract for the services.

IRO's Certification of the Government's Ability to Perform the PWS

Jones/Hill argues that the government cannot satisfy the minimum
requirements of the PWS with the resources set forth in the in-house
management plan. [14] Specifically, the protester contends that the MEO is
understaffed with regard to the ground electronics, fire fighting school,
and water plant functions.

The RSH sets forth the role and responsibility of the IRO. In this regard,
the IRO first reviews the management plan and supporting documentation in
order to reasonably ensure the government's ability to perform the PWS
within the staffing and material resources provided in the in-house plan.
RSH, part I, ch. 3, para. I.3.a. Thereafter, the IRO reviews the in-house cost
estimate to ensure it completely and accurately reflects the costs of the
in-house management plan and fully complies with the procedures and
requirements set forth in the RSH. Id. para. I.3.b. Here, the IRO certified and
re-certified that the in-house management plan satisfied the PWS
requirements; there is no evidence that any other agency reviewing official
performed any similar evaluation.

In performing his review of the management plan, the IRO relied upon the
work of MAI--a private sector contractor--to support its efforts. [15] In
those instances where MAI identified deficiencies or discrepancies in the
in-house plan, it recorded and communicated these discrepancies to the MEO
team by means of action item tracking forms. [16] Tr. at 419. Although MAI
recorded those instances where it found deficiencies in the in-house
management plan, it failed to document its examination of the in-house plan
in any other regards, including those instances where it believed that the
in-house plan could satisfy the PWS requirements. Tr. at 420-21, 433. More
specifically, MAI did not retain (and may not have created) any documents
regarding its review of the in-house management plan's staffing of the
ground electronics, fire fighting school, or water plant functions. Tr. at
426, 495, 510. As illustrated below, this lack of documentation, even when
considered with the protest record as a whole, precludes our conclusion that
the agency had a reasonable basis for its determination that the government
could in fact satisfy the requirements of the PWS with the resources set
forth in the in-house management plan.

First, Jones/Hill challenges the adequacy of the management plan's proposed
staffing to accomplish the ground electronics work required, given that
under the management plan "the staffing of the Ground Electronics Division
decreased from 27 military personnel and 7 civilians (or 34 personnel in
all) to . . . 6.36 FTEs." Protest, Sept. 6, 2001, at 7. At the hearing held
at our Office, the MAI representative who reviewed the in-house management
plan stated that he examined the proposed staffing for the ground
electronics function. However, while the MAI representative was able to
generally explain why the management plan's deletion of certain military
positions from the ground electronics function was reasonable, [17] he could
not recall or offer any explanation as to how he determined that the
in-house plan's proposed 6.36 FTEs would satisfy the minimum requirements of
the PWS. [18] Tr. at 426, 429-31, 437-38.

With regard to the fire fighting school, while the MAI representative was
aware of the decrease in the in-house management plan's staffing from the
historic seven FTE level to a single FTE (who will have duties in addition
to those at the fire fighting school), the MAI representative again could
not recall how he had calculated the number of hours required nor how the
in-house management plan was staffed to perform the PWS requirements in this
area. [19] Tr. at 458-60, 482, 484. There is no other documentation or
explanation of how the agency determined that the in-house plan can satisfy
the PWS requirements for the fire fighting school function with the one FTE
proposed.

Lastly, while the MAI representative recalled reviewing the management
plan's proposed staffing of the water plant and his ultimate conclusion that
the staffing was reasonable, he could not recall determining whether, as
argued by Jones/Hill, the in-house management plan was deficient in that it
required that the Water Plant Work Leader both to perform the required
supervisory responsibilities and to stand watch alongside other utility
operators. [20] Tr. at 506, 509.

In reviewing an agency's evaluation of whether the in-house management plan
establishes the ability to perform the PWS within the resources provided by
the plan, we will not reevaluate the in-house management plan, but instead
will examine the agency's evaluation to ensure that it was reasonable and
consistent with applicable procedures. See Rice Servs., Ltd., B-284997, June
29, 2000, 2000 CPD para. 113 at 8. An agency's evaluation of proposals, as well
as the in-house management plan submitted as part of an Circular A-76 cost
comparison, should be documented in sufficient detail to allow for the
meaningful review of the merits of a protest, as is dictated by the
fundamental principle of government accountability. Id. at 8 n.14; Aberdeen
Technical Servs., B-283727.2, Feb. 22, 2000, 2000 CPD para. 46 at 4 n.1; NWT,
Inc.; PharmChem Labs., Inc., B-280988, B-280988.2, Dec. 17, 1998, 98-2 CPD para.
158 at 5 n.3. An agency that fails to adequately document an evaluation,
including the evaluation of whether the government can perform the PWS with
the resources provided in the management plan, bears the risk that its
determinations will be considered unsupported. Acepex Mgmt. Corp., B-283080
et al., Oct. 4, 1999, 99-2 CPD para. 77 at 5; Matrix Int'l Logistics, Inc.,
B-272388.2, Dec. 9, 1996, 97-2 CPD para. 89 at 5.

Here, as discussed above, the agency has not documented, or otherwise
provided, an adequate explanation for the determination that the management
plan could satisfy the PWS for these three functions with the staffing
proposed. [21] Accordingly, we find that there is no reasonable basis for
the conclusion that the government could reasonably "perform the PWS within
the resources provided by the MEO" as required by the RSH. RSH, part I, ch.
3, para.para. E, I.

In-House Management Plan's Use of Non-MEO Personnel

Jones/Hill also contends that, with regard to both the public works and the
maintenance and repair service functions, the management plan did not
include the costs of non-MEO personnel performing some of the work required
by the PWS.

The RSH requires that the management plan include all labor and costs
associated with the performance of the tasks required, and the agency is
required to ensure, during its review of the management plan, that those
costs are completely and properly accounted for. RSH, part I, ch. 3, para. I;
part II, ch. 2; The Jones/Hill Joint Venture--Costs, supra, at 13. Failure
to capture accurately and completely the cost of support from outside the
MEO obfuscates the true cost of in-house performance and renders the
resulting cost comparison inaccurate and unfair. See The Jones/Hill Joint
Venture--Costs, supra, at 13.

Here, as acknowledged by the agency, the in-house management plan, as part
of its plan to accomplish the public works function, proposed to use the
NASL Public Works Duty Officer (who was not part of the MEO) to take
emergency calls from 4 p.m. to 7 a.m. [22] The agency concedes that the
in-house cost estimate did not include a cost for this service, but asserts
that the cost to provide it is nominal. [23] AR, Oct. 9, 2001, at 10.

The in-house management plan also provided for the use of non-MEO personnel
to perform required maintenance and repair services. See RFP sect. C.5.10. The
agency acknowledges that reliance, but claims that the costs for the non-MEO
personnel were included in the cost comparison. AR, Oct. 9, 2001, at 10-11.
The VAT, which as part of the agency's corrective action compared the
in-house management plan to Jones/Hill's proposal, noted the in-house plan's
planned use of non-management plan personnel to accomplish the maintenance
and repair services, but stated that "the VAT believe[d] that these services
are separately costed in the Government's [in-house cost estimate]." NASL
Corrective Action Report (July 10, 2001) at 22. However, at the hearing held
by our Office, the VAT Team Leader testified that the VAT made no effort to
determine if the management plan's proposed use of non-MEO personnel to
accomplish maintenance and repair services was, in fact, separately costed
in the in-house cost estimate, and added that he was unaware of any agency
efforts in this regard. [24] Tr. at 533. Although the agency continues to
assert that the in-house cost estimate includes the costs of these non-MEO
personnel, it has not pointed to any documentation or testimony that
supports this assertion.

Leveling the Strengths that the Agency Identified in Jones/Hill's Proposal

Jones/Hill also contends that the in-house management plan does not provide
a level of performance that is comparable to that offered by Jones/Hill's
proposal, even after the corrective action taken in response to its prior
protest. Specifically, the protester alleges that not all of the strengths
found in its proposal were properly accounted for in the management plan.
Our review indicates that the agency reasonably leveled all strengths found
in Jones/Hill's proposal, except for the ones discussed below in the
customer interface and the family service center areas.

The RSH provides that where, as here, a best value approach is taken in
evaluating private-sector proposals, the agency must compare the in-house
management plan to the successful private-sector proposal to determine
"whether or not the same level of performance and performance quality will
be achieved," and, if not, to make "all changes necessary to meet the
performance standards accepted" in the private sector proposal. RSH, part 1,
ch. 3, para.para. H.3.d, e. This "leveling of the playing field" is necessary
because a best value solicitation invites the submission of proposals that
exceed the RFP requirements, together with the higher prices that often
accompany a technically superior approach. Failure to ensure that the
in-house management plan offers the same level of performance as the "best
value" private-sector proposal selected to be compared with the in-house
plan can lead to an unfair situation where the very technical superiority
that led to the private-sector proposal's selection would cause it to lose
the public/private cost comparison. The Jones/Hill Joint Venture--Costs,
supra, at 10.

The starting point for this analysis is the agency's own evaluation, during
the private-sector competition, of the proposal that is ultimately selected
for comparison with the in-house plan. If an agency identifies strengths in
that proposal, or if it identifies areas in which that proposal exceeds the
RFP requirements, the agency should consider those strengths in comparing
that proposal with the in-house management plan. RSH, part I, ch. 3, para.para.
H.3.d, e; BAE Sys., B-287189, B-287189.2, May 14, 2001, 2001 CPD para. 86 at 27.
An agency's determination during the leveling process that certain
previously identified strengths are not important or of no value must have a
reasonable basis. BAE Sys., supra, at 27.

Under the customer interface outcome, offerors were encouraged to provide
effective methods to receive inquiries, questions, or complaints in support
of the requirements and desires of NASL customers. RFP sect. C.5.5. During the
evaluation of proposals, the VAT identified as a strength Jones/Hill's
proposed [DELETED] in connection with service trouble calls. AR, Oct. 9,
2001, Tab 10, Final Value Assessment Report (Apr. 12, 2000), at 17. The VAT,
when comparing this strength to the in-house management plan, determined
that no leveling was required because "[t]he fact that [DELETED] does not
add value or improve the service once the phone is answered." NASL
Corrective Action Report (July 10, 2001) at 10. However, at the hearing, the
VAT evaluator conceded that Jones/Hill's service call intake feature was
indeed a strength (what she termed a "little" one) that had not been
leveled. Tr. at 557-59.

The family service center function required offerors to provide various
on-base programs and services in support of NASL service members and their
families. RFP sect. C.5.6. The VAT identified the [DELETED] as a strength in
Jones/Hill's proposal. AR, Oct. 9, 2001, Final Value Assessment Report (Apr.
12, 2000), at 18. The VAT, when comparing this strength to the in-house
management plan, determined that the "[family service center's] hours of
operation are traditional office hours [and] therefore a [DELETED] is a
'nice to have' but not an enhancement of the actual program." NASL
Corrective Action Report (July 10, 2001) at 12. However, when asked to
explain this comment at the hearing held at our Office, the pertinent VAT
evaluator conceded that while [DELETED] was not a requirement, it was in
fact a strength. Tr. at 594-97.

Accordingly, the agency's actions with regard to these two outcomes were
inconsistent with the requirement that the agency ensure that the in-house
management plan reflects "all changes necessary to meet the performance
standards accepted" in the private sector proposal. RSH, part 1, ch. 3, para.para.
H.3.d, e.

RECOMMENDATION

In light of the conflict of interest that arose because the MEO team leader
and the Hamm consultant wrote and edited the PWS and then wrote and edited
the in-house management plan, we recommend that the agency issue a new
PWS/RFP, drafted by individuals who will not subsequently be tasked with
drafting the in-house management plan. [25] After issuing the new PWS/RFP, a
new management plan should be prepared and certified with supporting
documentation. Based on the new PWS, new proposals should be solicited from
private-sector offerors, one private-sector proposal selected, and a new
leveling process (if needed) and cost comparison conducted. [26] We
recommend that the agency implement these measures as expeditiously as
possible, so that a new cost comparison could be conducted within 1 year or
as soon as practicable thereafter. In the meantime, in view of the
substantial attendant savings, the in-house management plan should be
implemented to the extent practicable. [27] Because we recommend that a new
PWS be drafted, we also recommend that the Navy reimburse Jones/Hill for its
proposal preparation costs. See COBRO Corp., B-287578.2, Oct. 15, 2001,
2001 CPD para. ___ at 9. Finally, we recommend that the protester be reimbursed
the reasonable costs of filing and pursuing its protest, including
reasonable attorneys' fees. 4 C.F.R. sect. 21.8(d)(1) (2001). The protester's
certified claim for costs, detailing the time spent and costs incurred, must
be submitted to the agency within 60 days of receiving this decision. 4
C.F.R. sect. 21.8(f)(1).

The protest is sustained.

Anthony H. Gamboa

General Counsel

Notes

1. The procedures for determining whether the government should perform an
activity in-house or by a contractor are set forth in Circular A-76 and the
Revised Supplemental Handbook (RSH) to it, which have been made expressly
applicable to the Department of Defense (DOD) and its military departments.
See 32 C.F.R. sect. 169a.15(d) (2001). The process set out in the Circular and
the RSH broadly encompasses the following steps in conducting the
public/private competition. First, after the performance work statement
(PWS) has been drafted, agency officials develop an in-house management plan
describing how the government can most efficiently perform the work required
by the PWS. The agency's Independent Review Officer (IRO) then ensures that
the in-house plan has been prepared based on the PWS, and that the in-house
plan reasonably establishes the government's ability to perform the PWS with
the resources provided. RSH, part I, ch. 3, para.para. E.3., I. Second, there is a
competition among private-sector offerors, which is conducted much as any
competed federal procurement is conducted. Third, if that competition is
done on the basis of a comparative evaluation (that is, a cost/technical
tradeoff is contemplated), the government's in-house management plan is
compared with the winning private-sector offer to assess whether or not they
are based on a comparable level of performance and performance quality--and
if not, to make all changes necessary to make the level of the in-house plan
comparable to that of the private-sector proposal. Id. para.para. H.3.d, e. Finally,
once the playing field is leveled, there is a cost comparison between the
private-sector offer and the in-house plan. Id. para.para. H, J.

2. The RFP's set forth, under its technical requirements section, 13
"outcomes," each of which listed a number of "mandatory contract
requirement[s]" and a corresponding "metric" by which contractor performance
would be measured. RFP sect.sect. C.5.1-13; Agency Report (AR), Oct. 5, 2000, at 2;
Hearing Transcript (Tr.) at 191-92 (the PWS served as section C of the RFP).
The agency explains that in an outcome-based solicitation, such as this RFP,
the "contractors design the approach to accomplish the desired outcome by
developing the performance requirements and the levels to which they propose
to perform." The contractor's resultant SOR would become the statement of
work upon award of the contract, and provide "the what, when, where, how and
how often and to what quality level [the contractor] intend[s] to do those
things necessary to accomplish the Government's desired outcomes." AR, Oct.
5, 2000, at 2.

3. We more fully describe the ADR and the agency's proposed corrective
actions in The Jones/Hill Joint Venture-Costs, B-286194.3, Mar. 27, 2001,
2001 CPD para. 62.

4. The Navy conceded the merits of Jones/Hill's arguments that the agency
had failed to inform the offerors of certain changes to the agency's
requirements, and that the agency improperly calculated Jones/Hill's price
by improperly accounting for non-appropriated fund revenues.

5. Jones/Hill withdrew a number of protest contentions during the course of
these protests, such as its contentions that the agency improperly
calculated the costs of contract administration associated with an award to
Jones/Hill and that the in-house management plan did not reasonably account
for materials and supplies.

6. The agency's explanations about the composition of the CA, PWS, and MEO
teams were somewhat inconsistent. At the hearing our Office conducted in
this matter, while an individual who served as the first CA team leader, who
later became the MEO team leader, testified that the PWS team was comprised
of members of the CA team, Tr. at 261, the individual who replaced him and
served as the second CA team leader testified that the PWS team did not
contain any members of the CA team. Tr. at 206. After the hearing, our
Office requested that the Navy provide a list of the individuals that served
on each of the teams, and to add to the confusion, that list provides that
only one individual--the chairperson of the PWS team--also served on the CA
team. As another example of the inconsistencies in the record as to the
composition of the teams, the contracting officer testified that no one on
the MEO team held a position that was under study, Tr. at 167-68, while the
MEO team leader testified that "almost all" of the MEO team members held
positions that were under study. Tr. at 297.

7. The record reflects that Hamm provided a number of employees to assist
the Navy in its CA study at NASL, and that three of these employees worked
on both the PWS and the management plan. Tr. at 340. However, for the sake
of simplicity, we use the term "consultant" in the singular in this decision
to refer specifically to the senior employee of the firm that testified at
the hearing held at our Office.

8. During the same timeframe that the Hamm consultant was developing the PWS
as a contract deliverable, he was helping develop a work sampling plan to
obtain information to identify efficiencies and changes to the existing work
performance, which was used to prepare the in-house management plan.
Tr. at 202, 223-24, 260, 291-92, 335.

9. The responsibility for determining whether an actual or apparent conflict
of interest will arise rests with the contracting agency, and our Office
will not object to an agency's determination except where it is shown to be
unreasonable. American Mgmt. Sys., Inc., B-285645, Sep. 8, 2000, 2000 CPD para.
163 at 3-4. Here, the contracting officer, who was responsible for issuing
the delivery order to Hamm to assist the agency in planning for the study,
and to develop the PWS and in-house management plan, states that she did not
perceive a conflict of interest that had to be mitigated. She explains that
this was so because under the delivery order Hamm would not "participate in
the technical evaluation," and there was, at the time, no guidance
prohibiting private-sector consultants from assisting in both the
development of the PWS and the in-house management plan. AR, Nov. 20, 2001,
encl. 1, Memorandum of Contracting Officer (Nov. 15, 2001).

There is no indication in the record that there was any contemporaneous
consideration of whether the MEO team leader's role in writing both the PWS
and in-house management plan could result in a conflict of interest, with
the exception of the MEO team leader's own testimony at the hearing held at
our Office. In this regard, the MEO team leader testified that the agency
was careful to maintain firewalls between the PWS and MEO teams, with the
exception of himself and the Hamm employees, and that he "knew the
appearance would be not the best" with regard to his serving as the MEO team
leader after having written the PWS. Tr. at 271, 273, 280. The MEO team
leader added that he voiced this concern to the Commanding Officer of NASL,
who decided that the first CA team leader could be the MEO team leader given
the MEO team leader's assurance that he had written the PWS as "an unbiased
document." Tr. at 280. The MEO team leader also testified that he was
initially unaware that he would serve as the MEO team leader, and that he
had "developed the PWS strategy well prior to even knowing that [he] was
going to develop the [in-house] management plan." Tr. at 271.

10. The agency's argument here appears in the context of its explanation
that the DOD Interim Guidance cited above "goes, and easily could have gone,
without saying, since it merely regurgitates A-76." AR, Nov. 20, 2001, at 7.

11. It would similarly have been improper for Hamm to have offered its
services to a private-sector offeror (such as Jones/Hill), as help in
preparing its proposal for this study.

12. While it could be argued that "biased ground rules" conflict may not be
applicable to the MEO team leader, because the record reflects that at the
time he was writing the PWS he did not know he would also be writing the
in-house management plan, an "unequal access to information" conflict still
exists. Moreover, both types of conflict remain applicable to the Hamm
consultant, who knew he would be developing the in-house management plan at
the time he was developing the PWS.

13. We recognize that an agency may conclude that it has no choice, due to
the limited number of people with the requisite knowledge or skills, but to
use the same individuals to prepare both a PWS and an in-house plan. In that
case, we believe that a written determination to proceed notwithstanding the
conflict may be appropriate. Cf. FAR sect. 9.503 (allowing for a waiver of
conflict restrictions). Here, however, there would not have been a
reasonable basis for such a determination with regard to Hamm, because a
firewall could have been established within that firm, with some individuals
working on the PWS and others on the in-house plan. See IT Facility
Servs.--Joint Venture, B-285841, Oct. 17, 2000, 2000 CPD para. 177 at 14. As to
the MEO team leader's involvement, the record shows that another qualified
individual had been recommended and was scheduled to serve as the MEO team
leader, Tr. at 263, 267-68, so that the intended firewall could have been
maintained with regard to the agency personnel as well.

14. The Navy suggests that Jones/Hill's failure to challenge the adequacy of
the in-house management plan as part of the Circular A-76 appeals process
now precludes our subsequent consideration of this issue. Agency
Post-Hearing Comments, Nov. 7, 2001, at 9-12; see Professional Servs.
Unified, Inc., B-257360.2, July 21, 1994, 94-2 CPD para. 39 at 3 (GAO generally
will not consider issues that could have, but were not, raised by the
protester in its administrative appeal). Contrary to the agency's
representation, Jones/Hill did in fact challenge the adequacy of the record
supporting the management plan's proposed staffing as part of its
administrative appeal. Administrative Appeal (July 13, 2000) at 27-36.

15. The IRO primarily provided oversight for the work being performed by
MAI. Tr. at 354, 357. The IRO did not personally review the adequacy of the
management plan's staffing for the ground electronics, fire fighting school,
or water plant functions. Tr. at 403.

16. The one-page action item tracking form documents only where MAI found
that the management plan might not satisfy a PWS requirement and the MEO
team's response to these items.

17. The MAI representative testified that Navy sailors were placed in the
ground electronics division as part of their ship-to-shore duty rotation in
order to stay proficient in their military specialty, and that this rotation
may have resulted in the ground electronics division being overstaffed with
an unspecified number of military personnel. Tr. at 424-25.

18. Although the agency argues that certain tasks associated with the Ground
Electronics Division were excluded from the study, and offers this as an
explanation as to why the management plan proposed less staffing for the
ground electronics work than had historically been provided, the agency has
not provided an explanation as to why the management plan's dramatically
reduced staffing and its approach would satisfy the minimum requirements of
the PWS. Agency Post-Hearing Comments at 10. As indicated, there is no other
documentation or explanation in the record that explains why the IRO or
agency reviewing officials believe the management plan can satisfy this
requirement with the lower level of staffing proposed.

19. The agency argues that the MAI representative's testimony demonstrates
the reasonableness of the IRO's determination that the management plan was
sufficiently staffed to perform the PWS requirements regarding the fire
fighting school. Agency's Post-Hearing Comments at 10-11. The fire fighting
school instruction consists of both classroom and live fire training. RFP
attach. C.5.7-4. The PWS provided four Government-furnished hose team
leaders for live fire training, and required private sector offerors and the
government "to staff the following positions: Field Safety Chief (one
Instructor), F-2000 Control Console Operator (one instructor), and On Scene
Leader (one Instructor)." Id. The MAI representative testified that, in his
view, the PWS did not preclude offerors from proposing one FTE to perform
all instructor positions, and that based upon his previous experience one
individual could perform all three instructor positions simultaneously. Tr.
at 455-56, 478-80. Nevertheless, the MAI representative conceded that he had
no specific recollection as to how the management plan actually proposed to
perform the fire fighting school requirements. Tr. at 482, 484. Indeed, the
MAI representative's testimony that one individual could perform all three
instructor positions is inconsistent with the agency's earlier explanation
that while the management plan proposed one FTE for the fire fighting
school, the instructor requirements would not be performed by one individual
simultaneously, but rather by three individuals within the management plan's
staffing. AR, Oct. 9, 2001, at 8.

20. Although the MAI representative testified generally that it is not
uncommon for supervisors to perform non-supervisory functions, he does not
explain why the arrangement in question here satisfies the PWS requirements
for the water plant function. Tr. at 506.

21. The inability of the MAI analyst to recall and explain how he determined
that the management plan could satisfy the PWS requirements in various
functional areas is understandable; this review occurred almost 2 years ago,
and MAI has performed seven or eight additional reviews in the interim. Tr.
at 430, 439. It is precisely for such reasons that it is important to
maintain a well-documented, contemporaneous

evaluation record. Rice Servs., Ltd., supra; Aberdeen Tech. Servs., supra;
NWT, Inc.; PharmChem Labs., Inc., supra.

22. Taking calls after regular duty hours was necessary in order to meet the
PWS requirement that emergency or critical situations be responded to in no
more than an hour after receiving notice.

23. The agency asserts that the cost to provide this service over the next
5 years totals $6,480, rather than the $442,910.76 estimated by Jones/Hill.

24. The VAT Team Leader testified that he was restricted from seeing the
in-house cost estimate because his job was limited to reviewing the relative
performance of the management plan and the Jones/Hill proposal. Tr. at
533-34.

25. With regard to Jones/Hill's protest that the agency's failure to inform
the offerors of the existence and terms of the ISSA between the Navy and
GSA, and the MOA between NASL and GSA, adversely affected its competitive
position overall, the parties' positions and arguments reflect a
misunderstanding of the requirements governing the use of GSA-leased
vehicles. For example, the RFP and questions and answers provided to the
offerors informed offerors that they should "negotiate with GSA" directly,
and represented the resultant offeror/GSA relationship as that of a prime
contractor/subcontractor. RFP sect. C.5.8.4.2; Question and Answers
(Nov. 15, 1999). However, as explained by GSA, offerors cannot negotiate
with GSA directly, but rather, must contact the contracting officer of the
relevant contracting agency (here, the Navy) in order to determine if the
offeror may obtain GSA vehicles for use in performing a contract. GSA
Memorandum (Oct. 17, 2001) at 3. GSA adds here that contrary to the Navy's
representations to offerors, "GSA does not serve as a subcontractor to
private contractors." Id. Additionally, Jones/Hill assumes that the terms of
the MOA would apply to a private sector offeror such as itself, and that the
MOA establishes that GSA must obtain and pay for repair or maintenance
services from NASL or, alternatively, a private sector contractor. As
explained by GSA, the protester's assumptions in this regard are incorrect.
GSA Memorandum (Nov. 15, 2001) at 3. Given the misunderstandings of both the
Navy and the protester of the requirements governing the availability and
use of GSA-leased vehicles by private sector contractors in the performance
of fixed-price contracts, and the errors in the RFP pointed out above, the
Navy should review this matter to ensure that the new RFP clearly sets forth
the requirements and applicable procedures in this regard.

26. In private competitions where a "biased ground rules" conflict of
interest resulting from a competitor drafting the statement of work or
specifications is found, the ordinary remedy, where the conflict cannot be
mitigated, is the elimination of that competitor from the competition. FAR sect.
9.505-2; see, e.g., Basile, Bauman, Prost & Assoc., Inc., supra, at 4-5.
Where an Circular A-76 study is being conducted, however, the in-house
management plan cannot be eliminated from the cost comparison. See BAE Sys.,
supra, at 23 (government's in-house plan cannot be rejected as unacceptable,
even where it does not satisfy the PWS requirements).

27. There is evidence in the record that indicates that the agency has
already commenced implementing at least some aspects of the management plan.
See Tr. at 319-21.