TITLE: Labat-Anderson, Inc., B-287081; B-287081.2; B-287081.3, April 16, 2001
BNUMBER: B-287081; B-287081.2; B-287081.3
DATE: April 16, 2001
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Labat-Anderson, Inc., B-287081; B-287081.2; B-287081.3, April 16, 2001
Decision
Matter of: Labat-Anderson, Inc.
File: B-287081; B-287081.2; B-287081.3
Date: April 16, 2001
Thomas L. McGovern, III, Esq., Michael J. Vernick, Esq., Agnes P. Dover,
Esq., and Janet P. Holt, Esq., Hogan & Hartson, for the protester.
Rand L. Allen, Esq., Kevin J. Maynard, Esq., Scott M. McCaleb, Esq., and
Janet L. Eichers, Esq., Wiley, Rein & Fielding, and Peter M. Kilcullen,
Esq., Bell, Boyd & Lloyd, for JHM Research and Development, Inc., an
intervenor.
Michael K. Cameron, Esq., Immigration and Naturalization Service, for the
agency.
Tania Calhoun, Esq., and Christine S. Melody, Esq., Office of the General
Counsel, GAO, participated in the preparation of the decision.
DIGEST
Protest that contracting agency improperly eliminated proposal from
consideration for award because it failed to comply with solicitation
requirement to clearly explain the rationale for including hard-coded
entries in electronic version of its priced estimating model is denied where
the record shows the agency reasonably found the protester's explanation for
these entries insufficient, and where the solicitation specifically provided
that this failure could result in the elimination of a proposal from
consideration.
DECISION
Labat-Anderson, Inc. protests the award of a blanket purchase agreement
(BPA) to JHM Research and Development, Inc. under request for quotations
(RFQ)
No. HQ-0-Q-0044, issued by the Immigration and Naturalization Service (INS)
to obtain service center operations support services for its direct mail and
records management program. Labat contends that INS improperly evaluated its
price proposal and eliminated its proposal from consideration based upon the
results of that evaluation; improperly evaluated its technical proposal;
failed to conduct meaningful discussions with the firm; and performed a
flawed best value analysis leading to the selection of JHM's proposal for
award.
We deny the protests.
BACKGROUND
Under INS's direct mail and records management program, aliens seeking
benefits under immigration and nationality laws are required to mail their
applications and petitions to one of four service centers located across the
United States. RFQ Statement of Work (SOW) para. 2. The services required to
support the program include the following task areas: mailroom operations;
file assembly; data collection, capture, and scanning; document preparation;
fee collection and processing; fileroom operations; word processing; quality
control; project management; business process reengineering; and other
records management functions. SOW para. 3. INS currently processes approximately
5 million applications and petitions annually. Id.
Pursuant to this RFQ, issued June 26, 2000, INS planned to award a single
BPA to a contractor holding a Federal Supply Schedule (FSS) contract under
the General Services Administration's Document Management Services and
Products Schedule, Special Item Number (SIN) 51-504, "Records Management
Services," and other applicable SINs. INS estimated that the volume of
purchases through this agreement would be $344 million over 60 months. RFQ para.
2.3. The initial task order was to be issued on a fixed-price basis, and
follow-on task orders were to be issued on fixed-price or time-and-materials
bases. RFQ para. 1.1.
Offerors were required to submit separate technical and price proposals for
evaluation by a technical evaluation committee (TEC) and a business
evaluation committee (BEC), respectively. Proposals were to clearly
demonstrate the offeror's understanding of the overall and specific
requirements of the proposed BPA, and any proposal in which material
information requested was not furnished or where indirect or incomplete
answers or information were provided might be considered unacceptable. RFQ para.
3.4. Offerors were required to submit both hard and electronic copies of
their proposals. RFP para. 3.4.9.
Award was to be made to the offeror whose proposal represented the best
value to the government based on three evaluation factors: technical
approach, past performance, and price. The technical approach and past
performance factors were equally weighted, and the two combined were
significantly more important than price. RFQ para. 3.3. Of the two equally
important technical approach subfactors, estimating model and management,
only the former is at issue here.
Offerors were required to submit an estimating model that stated the
underlying assumptions and constraints of their method for accomplishing the
work under orders issued against the BPA, state the statistical basis for
their estimates, and explain how they derived their technical approach from
the analysis of the SOW and multiple years of workload data supplied by INS.
Offerors were required to explain, illustrate, and explicate their model
showing how the workload associated with each of the many forms processed
under the program built to a model for the technical approach to operating
each service center and the direct mail program as a whole; failure to do so
was to be taken as a lack of understanding of the technical requirement and
a deficient technical approach. RFQ para. 3.6.1.1. The RFQ listed specific
criteria under which INS planned to evaluate this estimating model to assess
the contractor's ability to provide the required services. RFQ para. 4.2.1.
Under one criterion, offerors were required to show how using the INS
estimates of forecasted demand and their own allocation and employment of
labor assets using available data would result in an appropriately-sized
workforce. Under another criterion, offerors were required to explain their
methods and rationale for allocating labor among the functional areas (such
as filing, mailroom operations, and data entry), given the forecasted
demand. Id. INS's "estimates of forecasted demand" were based upon the 1999
historical workload data. Amendment No. 1 at Question and Answer (Q&A) Nos.
22, 29; RFQ Pricing Tables; RFQ attach. 9, reports C, D.
Offerors were required to submit price proposals that included three
sections relevant to this protest. First, offerors were to provide an
explanation of pricing that described all assumptions made and constraints
affecting price, as well as the offeror's price proposal methodology.
Second, offerors were to complete electronic pricing tables in accordance
with specific instructions. These pricing tables, which were to serve as the
mechanism by which INS ordered services under the BPA, were built upon INS's
estimates of forecasted demand. Third, offerors were to provide a priced
version of the estimating model developed in their technical proposals. The
models submitted for both the technical and price proposals were required to
be the same except that the model submitted for the technical proposal could
not contain any labor rates or prices. Offerors were required to
"electronically link" the priced estimating model to the pricing tables in a
manner that would allow INS to see how their proposed price was determined.
RFQ para. 3.6.3.3.
Price was to be evaluated for price reasonableness and cost realism, as well
as total evaluated price. INS was to conduct its price analysis using one or
more of the techniques specified in Federal Acquisition Regulation (FAR) sect.
15.404-1(b), and its cost realism analysis in accordance with FAR sect.
15.404-1(d). INS might also reject any proposal that was unreasonable or
materially unbalanced as to prices for basic and follow-on year quantities.
The RFQ defined an unbalanced proposal as one that incorporated prices
significantly less than cost for some items and/or prices that are
significantly overstated for other items. RFQ para. 4.2.3.
INS received proposals from four offerors by the August 7 closing date,
including those from JHM and Labat, the incumbent. One offeror was removed
from consideration for reasons not relevant here, and the BEC and TEC
conducted clarifications and completed their evaluations of initial
proposals on August 29. The source selection advisory council (SSAC)
completed its review of the BEC and TEC reports and concluded that
discussions were necessary. INS established a competitive range comprised of
the three remaining proposals and proceeded with discussions. Offerors
submitted final proposal revisions (FPR) on October 3. The BEC and TEC
evaluated FPRs and eliminated the third offeror's proposal from the
competitive range for reasons not relevant here. On October 19, the SSAC
concluded that additional information would be needed from Labat and JHM
before an award recommendation could be made.
On October 26, INS issued further clarifications and instructions to JHM and
Labat along with amendment No. 6, and asked for FPRs by November 2. As
discussed below, amendment No. 6 added language to RFQ para. 4.2.3. requiring
the electronic version of the priced estimating model to contain all
formulae and links between spreadsheets so the BEC could analyze the
electronic version of the model to determine how prices were derived. If the
electronic model contained "hard-coded" entries--those which lacked formulae
or links to another spreadsheet--the offeror was required to clearly explain
the rationale for their inclusion. If an offeror failed to do so, the BEC
would find the proposal non-compliant with the RFQ instructions and would
recommend that it be eliminated from further consideration.
The BEC found Labat's FPR deficient because it failed to provide a rationale
for several hard-coded entries in its priced estimating model as required,
and it was unable to determine that Labat's total evaluated price was
reasonable and realistic. The BEC recommended that Labat's proposal be
eliminated from further consideration as a result, and that award be made to
JHM, whose proposal was found to be reasonable and realistic. The TEC found
Labat's technical approach deficient with respect to the estimating model
subfactor because its proposal did not meet the RFQ's minimum requirements
as a result of its use of incorrect workload quantities in several task
areas and as a result of various ambiguities and omissions.
The BEC and TEC provided the SSAC with the following evaluation results:
JHM Labat
Technical Acceptable Marginal
Approach
* Estimating (Acceptable) (Marginal)
Model
* Management (Good) (Good)
Past Performance Good Good
Price $325,995,032 $317,347,959
The SSAC unanimously accepted these findings. Based on the BEC's conclusion
that Labat failed to explain hard-coded entries in its priced estimating
model, the SSAC recommended that Labat's proposal be excluded from the
competition.
The SSAC nonetheless considered whether JHM's proposal should be selected
despite the fact that its price was 2.8 percent higher than Labat's, and
conducted a best value analysis. To do so, the SSAC combined the equally
important technical and past performance ratings of each offeror and arrived
at an overall rating of "Good" for JHM's proposal and "Marginal" for Labat's
proposal. The SSAC also conducted an impact analysis in which it examined
the significant differences, or discriminators, between the offerors based
on a comparative analysis of their strengths, weaknesses, and risks. The
SSAC characterized these discriminators as either features or risks, and
determined that JHM's proposal presented seven features, with no risks, and
Labat's proposal presented seven features and two risks, as noted above. The
SSAC found that the proposals' features were similar and that the
differences were attributable to Labat's incumbency.
The SSAC concluded that JHM's overall rating of "Good" meant that it
presented a technically superior proposal at a negligible difference in
price. The SSAC stated that even if it had rated JHM's proposal as
"Acceptable" overall, the negligible difference in price would still have
resulted in its being a technically superior proposal. While it contained
fewer technical features than did Labat's proposal, it presented no major
risks as compared with the two major risks in Labat's proposal. The SSAC
recommended award to JHM. The SSA concurred and award was made to JHM on
January 3, 2001.
Labat filed these protests after its debriefing. Labat contends that INS
improperly evaluated its price proposal and eliminated its proposal from
consideration based upon its failure to comply with RFQ para. 4.2.3; improperly
evaluated its technical proposal; failed to conduct meaningful discussions
with the firm; and performed a flawed best value analysis leading to the
selection of JHM's proposal for award.
DISCUSSION
As a preliminary matter, the RFQ stated that INS intended to issue a BPA
against the vendor's GSA FSS contract. Accordingly, the provisions of FAR
Subpart 8.4 apply here. Those provisions anticipate that agencies will
review vendors' federal supply schedules and place an order directly with
the schedule contractor that can provide the supplies or services that
represent the best value and meet the government's needs. FAR sect. 8.404(b)(2);
Digital Sys. Group, Inc., B-286931, B-286931.2, Mar. 7, 2001, 2001 CPD para. __
at 6. Where, as here, the agency intends to use the vendors' responses as
the basis of a detailed technical evaluation and price/technical tradeoff,
it may elect, as INS did here, to use an approach that is like a competition
in a negotiated procurement. Where an agency takes such an approach, and a
protest is filed, we will review the agency's actions to ensure that the
evaluation was reasonable and consistent with the terms of the solicitation.
[1] COMARK Fed. Sys.,
B-278343, B-278343.2, Jan. 20, 1998, 98-1 CPD para. 34 at 4-5. This RFQ
specifically stated that the source evaluation was to be conducted and
selection made in accordance with the guidelines set forth in the FAR, and
set forth specific procedures for the evaluation of proposals. Accordingly,
while the provisions of FAR Part 15, which govern contracting by
negotiation, do not directly apply, Computer Prods., Inc., B-284702, May 24,
2000, 2000 CPD para. 95 at 4, we analyze Labat's contentions by the standards
applied to negotiated procurements. Digital Sys. Group, Inc., supra.
The estimating model is at the center of these protests. In addition to
serving as a tool to help INS assess an offeror's ability to provide the
required services, the model was to serve as a management tool during
performance. As Labat acknowledged in its proposal, "[DELETED]." Labat
Technical Proposal at 43. INS also intended to use the model as a pricing
tool. If GSA modified the contractor's schedule rates, INS planned to use
the offeror's proposed discounts to adjust the rates in the model and
calculate the adjusted pricing in the pricing tables. Amendment No. 1 at Q&A
No. 36.
The principal issue for our review is whether INS improperly eliminated
Labat's proposal from consideration for award based on its finding that it
did not comply with the requirements of RFQ para. 4.2.3 by failing to provide a
clear rationale for hard-coded entries in its priced estimating model.
Along with a narrative explanation of its pricing methodology, the RFQ
required each offeror to submit a set of interrelated items in its price
proposal. The first item was a completed set of pricing tables. The pricing
tables, which were to serve as the mechanism by which INS ordered services,
were given to offerors in the form of electronic spreadsheets in Microsoft
Excel format. INS inserted its estimates of forecasted demand in the tables
and offerors were to complete the tables by inserting their pricing
information. The second item was a priced version of the estimating model
developed for the technical proposal. The electronic version of the model
was to include spreadsheets in Microsoft Excel format. Offerors were
required to "electronically link" their priced estimating models to the
pricing tables in a manner that would allow INS to see how they determined
their proposed prices. RFQ para. 3.6.3.3.
The primary document used to store and manipulate data in Excel is a
worksheet, which consists of cells organized into columns and rows. A
worksheet is always part of a workbook, and several worksheets can appear in
one workbook. Julia Kelly, Using Microsoft Excel 97 at 570 (3rd ed. 1998).
An "electronic link" is a data connection between a dependent worksheet (the
worksheet that uses the data) and a source worksheet (the worksheet in which
the original data resides). The dependent worksheet is updated whenever the
data changes in the source worksheet. Id.
at 565. Since the electronic versions of the pricing tables and priced
estimating models were in Excel format, "electronically linking" the pricing
tables to the priced estimating model would enable INS to trace each
proposed price in the pricing tables to the price components found in the
priced estimating model.
Amendment No. 6 added the following language to RFQ para. 4.2.3:
[Offerors] are reminded that the electronic version of the estimating model
must contain all formulae and links between spreadsheets. The BEC will
analyze the electronic version of the estimating model to determine how the
prices were derived. If a particular row or column within a spreadsheet or a
particular spreadsheet within a workbook contains hard coded entries (i.e.,
lacks formulae or links to another spreadsheet), the Offeror must clearly
explain the rationale for the inclusion of such hard coded entries. If an
Offeror fails to provide an electronic version of the proposal that contains
all of the formulae and links between the spreadsheets and tables presented
in its proposal, or provides an estimating model that contains hard coded
entries without any rationale for or explanation of the hard coded entries,
the BEC will determine the Offeror's proposal to be non-compliant with the
[RFQ] instructions and recommend to the Contracting Officer that the
Offeror's proposal be eliminated from further consideration in the
evaluation.
As this language suggests, "hard-coded" entries are numbers or values that
are manually keyed into an electronic spreadsheet, as opposed to derived
from links to other cells in the electronic spreadsheet or based on a
formula using data from other cells. Supplemental Protest, Feb. 5, 2001, at
2.
Simultaneous with the issuance of amendment No. 6, INS advised Labat that
its pricing tables and their values could not be derived from its priced
estimating model because links and formulae either had been hard-entered,
were missing, or were obviously uncorrected and/or incorrect in their final
form. As an example, INS stated that the administrative overhead allocation
percentages for fixed-price tasks were traceable only to hard-entered
numbers that were not linked by formulae in such a manner as to be derived
from the backup data provided.
In its FPR, Labat stated that it had resubmitted the entire estimating model
and any links or formulae had been inserted. In evaluating Labat's FPR, the
BEC found that the firm did not provide sufficient rationale or support for
the hard-coded entries it used to determine its proposed administrative
overhead, as required by RFQ para. 4.2.3. The BEC's concerns were broken down
into four categories. The BEC stated that while, on the surface, Labat's
proposed prices appeared to be reasonable and consistent with those in the
independent government cost estimate, the firm's failure to explain its
hard-coded entries prevented the BEC from determining that the proposal was
reasonable and realistic. Referring to INS's plans to use the model as a
pricing tool, the BEC concluded that Labat's model was not capable of
generating a fair and reasonable price. Final BEC Report at 10.
Labat does not dispute that its priced estimating model contained these
hard-coded entries, but contends that it provided a sufficient rationale for
their inclusion. Labat alternatively contends that even if the rationale it
provided was insufficient, the omissions are immaterial and the BEC should
have been able to determine that its proposed price was reasonable
notwithstanding the inclusion of these hard-coded entries.
Again, the RFQ stated that price proposals were to be evaluated for price
reasonableness and cost realism, as well as total evaluated price. The
analysis of a proposal for price reasonableness involves the evaluation of a
proposed price without evaluating its separate cost elements and proposed
profit. FAR sect. 15.404-1(b)(1). Here, the BEC used an array of permitted price
analysis techniques, including an analysis of offerors' pricing information,
since the offerors' use of alternative work methods made a mere comparison
of their pricing with each other or with the government estimate
insufficient to determine price reasonableness. While the solicitation uses
the term "cost realism," a cost realism analysis is not used where a
solicitation contemplates the award of a fixed-price contract. We assume
that the agency meant a "price realism" analysis, which may be used in a
solicitation for the award of a fixed-price contract to assess the risk in
an offeror's approach. In this regard, the RFQ advised that the BEC planned
to assess the price of doing business with each offeror and that "cost
realism" was to be used as an aid in determining the offeror's understanding
of the solicitation's requirements. Proposals that were unrealistic in terms
of technical commitment were to be deemed to show an inherent lack of
technical competency or failure to comprehend the complexity and risk of the
BPA requirements, which might be grounds for rejection of the proposal. RFQ
para. 4.2.3.
Where, as here, a BPA contemplating fixed-price task orders is to be
awarded, the "realism" of offerors' proposed prices is not ordinarily
considered, since a fixed-price contracting vehicle places the risk and
responsibility for contract costs and ensuing profit or loss on the
contractor. See Human Resources Sys., Inc.; Health Staffers, Inc.,
B-262254.3, et al., Dec. 21, 1995, 96-1 CPD para. 35 at 5. However, an agency
may, at its discretion, provide for the use of a price realism analysis in a
solicitation for the award of a fixed-price contracting vehicle to assess
the risk in an offeror's approach. See Hydraulics Int'l, Inc., B-284684,
B-284684.2, May 24, 2000, 2000 CPD para. 149 at 14. The nature and extent of an
agency's price realism analysis are matters within the agency's discretion,
Cardinal Scientific, Inc., B-270309, Feb. 12, 1996, 96-1 CPD para. 70 at 4, and
our review of an agency's price evaluation is limited to determining whether
it was reasonable, consistent with the solicitation's evaluation criteria,
and compliant with the FAR. Hydraulics, Int'l, Inc., supra.
Our review of the record shows that INS reasonably concluded that Labat
failed to "clearly explain the rationale" for its hard-coded entries as
required by the solicitation, and that INS reasonably concluded that this
failure prevented it from determining whether Labat's price proposal was
reasonable and realistic.
The BEC's first concern was associated with Labat's proposed "administrative
overhead" weighted labor rates. [2] Taking advantage of the flexibility
afforded by the RFQ, Labat chose to price all labor hours for breaks,
computer reports, Freedom of Information Act request responses, quality
control, reports and statistics, system downtime, and training meetings in
its administrative overhead pool. For each service center, for each year of
the contract, Labat included a worksheet in its model that calculated an
administrative overhead weighted labor rate. One component of the rate was
Labat's allocation, by percentage, of the total number of administrative
overhead hours among the various indirect labor functions. For example, 10
percent of the hours might be allocated to breaks, 15 percent to file
maintenance, 20 percent to quality control, and so on. All of these
allocation percentages were hard-coded entries. The resulting rate was used
elsewhere in the model to arrive at total prices for various task areas. The
explanation provided for these hard-coded entries is in the form of a note
that states, "[t]hese values are programmed into the model based on
management knowledge of each site." See, e.g., Final Price Proposal Priced
Evaluation Model, Base Year California Service Center, at 1, 3.
The BEC determined that this was not a clear explanation of Labat's
rationale for including these hard-coded entries. The BEC's analysis showed
that Labat's allocations of administrative overhead were inconsistent with
the historical workload data, often by substantial margins. There was no
explanation for these discrepancies, or for related discrepancies in the
fileroom task area between the historic ratios of administrative overhead to
direct labor and Labat's ratios. Final BEC Report, Tab D, at 5-13. In
addition to undermining the reasonableness of the rate, these unexplained
discrepancies raised questions regarding Labat's understanding of and
approach to administrative overhead and its components. Consistent with its
charge to evaluate proposals for realism, the BEC assessed not only Labat's
allocations but its approach to allocating administrative overhead among the
various components since several were work activities required by the SOW.
Based upon the discrepancies identified above, and in the absence of any
explanation for the discrepancies save the reference to "management
knowledge," the BEC concluded that the firm proposed to significantly reduce
the level of services for some components and increase the level of services
for others. BEC Chair Statement at 8. The BEC also concluded that it could
not use Labat's model as a post-award tool for determining price adjustments
as envisioned. Final BEC Report at 10.
In light of the RFQ's requirements, the BEC reasonably concluded that Labat
provided an insufficient explanation of these hard-coded entries. In
addition to the general admonition that indirect or incomplete answers or
information might be considered unacceptable, the RFQ specifically required
the priced estimating model to contain a "clear explanation" of the
rationale for the inclusion of hard-coded entries. RFQ para. 4.2.3. This
requirement must be read in the overall context of this paragraph, which
informs offerors that the BEC planned to use the information in the price
proposal to validate the model, evaluate for reasonableness and realism, and
determine how prices were derived. Under the circumstances, Labat should
have known that its mere reliance on "management knowledge" to explain these
allocations would be insufficient. Labat's disagreement notwithstanding, a
comparison of the historic allocations with those proposed by Labat
reasonably raised the concern that Labat was proposing to change the level
of support for certain components, and there was no explanation for the
discrepancies to allay this concern.
In a related finding apart from this deficiency, the BEC concluded that
Labat's proposal contained unbalanced pricing in the administrative overhead
pool because it significantly understated hours for legally-required breaks
and proposed significantly higher hours than historical for other items, and
unbalanced pricing for the fileroom task area because the total
administrative overhead pool proposed was not sufficient to cover
legally-required breaks and other items. Whether or not these breaks were
"legally required," the record confirms that the unexplained discrepancies
in Labat's proposal reasonably raised this concern. Labat's argument that
BEC should have combined the hours it allocated for system downtime along
with those allocated for breaks is unpersuasive and unsupported by its
proposal. [3]
The BEC's second concern was associated with Labat's allocation of
administrative overhead to various task areas. For each service center,
Labat provided a worksheet in which it allocated the percentage of total
administrative overhead hours across various task areas. These allocation
percentages were hard-coded entries with the same note of explanation
referenced above, which the BEC found to be insufficient. Since the entries
were carried out to more than 10 decimal places, the BEC also thought that
Labat used formulae to calculate these allocation percentages but did not
include or had deleted them. The underlying data shows that the allocations
were different for each service center and varied widely across some task
areas.
Labat contends that it was "entitled" to hard-code values for the allocation
of administrative overhead among the task areas on the basis of its
management judgment. We do not read INS's evaluation documents or pleadings
to suggest otherwise but, under the RFQ's terms, offerors who chose to
manifest their management judgment as hard-coded entries were required to
clearly explain the rationale for such entries in a manner sufficient to
allow the BEC to evaluate proposals for reasonableness and realism. Labat
failed to meet this requirement. Labat also objects to the BEC's assumption
that it omitted or deleted underlying formulae used to arrive at these
allocations. Labat asserts that the allocations were "ballpark estimates"
entered into the spreadsheets as round numbers, and that subsequent minor
modifications to the spreadsheets caused the round percentages to stretch
out to 10 decimal places. We do not dispute Labat's account, which was not
included in its proposal, but believe the BEC's assumption was reasonable
given the presence of these unexplained figures.
Labat's assertion that JHM also relied upon its management judgment to
allocate indirect labor is misplaced. The record shows that JHM's reliance
on its experience and judgment was supplemented by an analysis and review of
the historical trends for all elements of indirect labor at all service
centers. More important, JHM advised that it used the RFQ-provided data for
[DELETED] to develop its prices, and the BEC did not identify any
inconsistencies between that easily-identified set of data and JHM's pricing
or approach. In contrast, Labat advised that it used the RFQ-provided data
from a much longer span of time, but that it had made certain unexplained
adjustments to that data. Since these adjustments were unexplained, the set
of data used by Labat could not be easily identified, which prevented the
BEC from understanding Labat's methodology. As a result, INS did not
evaluate the proposals on a disparate basis as Labat contends, but properly
evaluated them based upon their different approaches to meeting the
requirements. [4] See Engineered Air Sys., Inc.; Hunter Mfg. Co., B-283011
et al., Sept. 21, 1999, 99-2 CPD para. 63 at 6-7.
The BEC's third concern was associated with Labat's allocation of data entry
hours and data entry overhead between the data entry and fee collections
task areas. The RFQ's historical data did not differentiate hours between
fee processing and data entry task areas except for one function. The RFQ,
however, required that the hours that had been included in data entry be
divided between two new pricing categories, "fee collection and processing"
and "document preparation." Labat's model included a worksheet for each
service center in which it allocated both data entry hours and data entry
overhead between these two task areas. These allocations were hard-coded
entries, and differed from service center to service center. In addition to
providing the same note of explanation as discussed above, Labat's proposal
included a figure that set forth its method for allocating the fee
processing hours for the California service center. Labat also explained
that its service center managers developed estimates of per form labor hours
for fee collection and then extracted those hours from the data collection
task area, and that it performed a time-based study that analyzed
fee-bearing forms to determine the time it takes to process the fee.
The BEC found that Labat did not clearly explain its rationale for the
inclusion of these hard-coded entries. The BEC acknowledged that the figure
referenced above provided the firm's method for allocating fee processing
hours for the California service center, but noted that this data was not
provided for any of the other three service centers. This, and the fact that
Labat's allocations were carried out to multiple decimal places, raised the
question whether Labat used an unstated methodology for making these
allocations at the other service centers.
Labat asserts that its explanation above regarding the actions taken by its
service center managers was sufficient to explain its hard-coded entries. As
INS points out, however, Labat did not provide any information regarding the
basis for the estimates it developed, or its time-based study, and the BEC
could not validate the allocations or determine their realism. As for
Labat's claim that it clearly meant for the data in the figure for the
California service center to apply to all of the service centers, its
proposal does not evidence this intention. The fact that the figure
specifically referenced one service center and not just "service centers"
undermines the claim.
The BEC's fourth concern was associated with Labat's overall failure to
clearly explain its rationale for adjustments made to the historical data
provided with the RFQ. The BEC understood that Labat used the RFQ-provided
data for a multiple-year period of time as the basis for its model, but the
firm stated that it entered this data, along with its assumptions and
constraints, into the model, and that, "[a]fter consideration was given to
efficiencies, facility, and many other planning scenarios for an efficient
work process, the model was developed." Final Business Proposal
at 8. The BEC concluded that Labat did not provide or identify how the
assumptions, constraints, efficiencies, facility, and many other planning
scenarios affected or changed the RFQ-provided historical data. We have
reviewed the proposal citations provided by Labat in support of its argument
that sufficient explanation was provided, but cannot find any further
insight into Labat's adjustments to the historical data. This failure
permeates the BEC's findings with respect to this deficiency, and Labat has
given us no basis to find the BEC's conclusion unreasonable.
In sum, Labat has not shown that INS unreasonably found that its proposal
failed to comply with the requirements of RFQ para. 4.2.3, or that INS
unreasonably found that it was unable to validate the model or ascertain
that its pricing was reasonable and realistic. Labat has also not persuaded
us that this deficiency as a whole was immaterial. The firm's arguments that
shifts in its allocation percentages would have little effect on its rates,
and that its allocations have not been shown to be unreasonable, do not
address the fact that the BEC was concerned with both the reasonableness of
Labat's pricing and its own inability to ascertain that Labat's
understanding of and approach to administrative overhead and its components
were realistic. In this regard, since what the TEC referred to as the
"indirect requirements," such as those associated with administrative and
support tasks, historically amount to about one-third of the total labor
hours, see Final TEC Report at 64, Labat's failures here, when taken as a
whole, have the potential to significantly affect pricing and performance.
Under the express terms of the RFQ, the BEC had the discretion to recommend
that Labat's proposal be eliminated from consideration for award under these
circumstances. Labat has given us no reason to question the BEC's exercise
of that discretion, and no reason to question the SSA's acceptance of that
recommendation.
The language of the RFQ and at least one discussion item were sufficient to
put Labat on notice of the requirements at issue here. Since the deficiency
first arose in Labat's FPR, the agency was not required to reopen
discussions or to allow it further opportunity to revise its proposal. See
Earle Palmer Brown Cos., Inc., B-243544,
B-243544.2, Aug. 7, 1991, 91-2 CPD para. 134 at 11. If Labat believed that
amendment
No. 6 made a radical change to the requirements to which it had insufficient
time to respond, a protest raising that issue, to be timely, had to be filed
not later than the closing date for receipt of FPRs. 4 C.F.R. sect. 21.2(a)(1)
(2000); Intermagnetics Gen. Corp., B-255741.2, B-255741.3, May 10, 1994,
94-1 CPD para. 302 at 6.
While we conclude that INS reasonably eliminated Labat's proposal from
consideration, our review of the issues raised by the technical evaluation,
discussed briefly below, shows that there is no basis to conclude that INS's
evaluation of Labat's technical proposal was unreasonable and, hence, no
basis to conclude that the source selection decision would have been
affected had Labat's proposal been retained.
The TEC found that Labat's FPR introduced a new deficiency associated with
the firm's failure to provide an estimating model that described the
discrete labor in each major process for each form type and task area.
Specifically, Labat's FPR failed to propose labor hours per form for two
form types at one service center; failed to use the INS-provided workload
estimates for the mailroom task area; failed to use the RFQ quantities for
certain service center combinations; and failed to use the RFQ quantities
for fee-bearing forms by service center at any service center. The TEC rated
Labat's proposal marginal for the estimating model subfactor and marginal
for the technical approach factor overall. [5]
In its January 10 written debriefing, INS advised Labat of extremely
detailed reasons for each of the four areas underpinning this deficiency.
Despite its knowledge of these specific criticisms, Labat's January 12
protest essentially consisted of a disagreement with the agency's
conclusions regarding the technical evaluation and general objections, and
Labat's January 22 protest specifically challenged only two of these areas.
Given the extensive detail available to Labat at the time it filed its
protests, its broad allegations as to all but two areas were insufficiently
specific to constitute a valid basis of protest. Global Eng'g & Constr.
Joint Venture,
B-275999.4, B-275999.5, Oct. 6, 1997, 97-2 CPD para. 125 at 4; Cornet, Inc.;
Datacomm Management Servs., Inc., B-270330, B-270330.2, Feb. 28, 1996, 96-1
CPD para. 189 at 4. An offeror who receives specific information in its
debriefing but ignores it when drafting its initial protest does so at its
peril. Global Eng'g & Constr. Joint Venture, supra, at 4 n.2. Labat's
specific challenges to these criticisms, raised for the first time in its
comments, are untimely. Under our Bid Protest Regulations, protests based on
other than solicitation improprieties must be filed no later than 10 days
after the protester knew or should have known their bases. 4 C.F.R. sect.
21.2(a)(2). These regulations do not contemplate the piecemeal presentation
or development of protest issues; where a protester raises a broad ground of
protest in its initial submissions but fails to provide detail within its
knowledge until later, so that a further response from the agency would be
needed for a fair review of the matter, these late issues will not be
considered. Litton Sys., Inc., Data Sys. Div.,
B-262099, Oct. 11, 1995, 95-2 CPD para. 215 at 2-3.
Given their similarities, our discussion of the two areas of concern that
were protested in a timely fashion will focus on the mailroom task area as
an example.
Again, the RFQ listed several criteria under which the TEC was required to
evaluate each offeror's technical approach as explicated in the estimating
model. Under one criterion, offerors were required to "provide a model that
describes the discrete labor in each major process, e.g. mailroom, for each
form type and task area. The INS provides the estimated volume of forms for
evaluation purposes only."
RFQ para. 4.2.1. Under another criterion, offerors were required to explain
their methods and rationale for allocating labor among the functional areas,
such as mailroom operations, given the forecasted demand. Id. As noted
above, INS's estimated volumes were defined as the quantities entered into
the RFQ's pricing tables; these estimates of forecasted demand were based on
1999 data.
Labat's technical proposal did not use the estimates of forecasted demand
for the mailroom task area. When the TEC compared the estimates of
forecasted demand with Labat's estimates, it found that Labat understated
the quantity of mail--and, hence, the necessary labor hours--in the mailroom
task area at every service center. The aggregate error was more than 7
million pieces of mail in the base year, or
25 percent of the 30 million pieces specified in the RFQ workload estimate.
This resulted in a substantial staffing understatement.
Labat has argued that the lower volume of mail projected by its model was
the result of its decision to transfer certain tasks, [DELETED], from the
mailroom task area to the [DELETED] task area. [DELETED]; the volume of mail
was not understated but just moved to another task area.
The TEC Chair states that the TEC realized Labat proposed to move some of
the [DELETED] effort that was historically accounted for in the mailroom to
the [DELETED], but that its proposal did not explain the methodology it used
to do so in such a way that the TEC could ascertain the basis for the
difference in mail volume. More generally, the TEC understood that Labat
based its projections on multiple years of workload data to which it had
made certain adjustments, but the proposal did not contain an explanation of
these adjustments that would enable the TEC to assess whether Labat's
estimates of mail volume would allow for sufficient staffing. Since it was
the TEC's responsibility to evaluate whether the offeror had allocated
sufficient staff to meet the estimates of forecasted demand as defined in
the RFQ, and since Labat's approach was based upon differing and unexplained
understated estimates, the TEC was forced to calculate on its own the impact
of this understatement on the offer by using Labat's underlying information
against the RFQ quantities with the resulting staffing shortfall. The TEC
could not, as Labat asserts, simply subtract the 1999 quantity for [DELETED]
from the mail volume because Labat did not base its projections on the 1999
data. Under the circumstances, we cannot find the TEC's evaluation improper.
Labat contends that, during discussions, INS "told" it to base its mailroom
estimates on the multiple years of data referenced in its proposal. The
record does not support Labat's contention.
In an October 25 discussions letter sent by the BEC, Labat was advised that
its price for the mailroom task appeared to be unbalanced. The BEC said it
believed that the error resulted from Labat's dividing the total cost for
the mailroom by a greater quantity of pieces than Labat used to generate the
hours. In this regard, while the narrative in Labat's proposal stated that
the firm used the historical data from the period [DELETED] as the basis for
its labor estimates per form and unit pricing, the firm's estimating model
used the 1999 data to develop its unit pricing. The BEC advised, "The
Offeror should have used the number of pieces for the period [DELETED]
specified as the Labat basis of estimate [in its proposal]. The per piece
price should have been calculated first with the appropriately related
number of pieces for the period forming the basis of estimate, then
multiplied by the RFQ quantity for each center for the base and option
periods." Discussions Letter, Oct. 25, 2000, at 1.
This discussions item did not "tell" Labat to use its estimates based upon
[DELETED] workload data to develop its model, but simply acknowledged that
Labat was using that data to arrive at its estimates and cautioned that this
decision created an inconsistency. INS further advised Labat as to how it
could use its estimates and solve the problem by basing its per piece price
on the estimates it had calculated using the [DELETED] data, but then
multiplying the resulting per piece price by the RFQ quantities for purposes
of evaluation. This advice regarding Labat's price proposal, not its
technical proposal, was consistent with the RFQ and should have served to
notify the firm that, if it planned to base its estimates on a different set
of data than that reflected in the RFQ's quantities, it needed to provide a
way for the agency to make connections between the two.
In this regard, we do not read INS's evaluation documents or pleadings to
prohibit Labat's use of this larger set of workload data to arrive at its
estimates. The record shows the agency's willingness to trace the
connections between Labat's estimates and those in the solicitation; Labat's
proposal was not downgraded because it did not use the RFQ's estimates per
se but because it did not provide a sufficient connection between the RFQ's
estimates and its own. Since the RFQ specifically required the TEC to use
the 1999 data for purposes of evaluation and Labat did not provide the
agency with sufficient information to enable it to do so, we cannot find the
TEC's evaluation unreasonable.
Since we cannot conclude that the price or technical evaluations were
unreasonable, we have no basis to question the SSAC's best value analysis
springing from those evaluations. The SSAC's comparative analysis of the
offerors' discriminators showed that JHM's proposal presented seven features
and no risks as opposed to Labat's seven features and two risks, and that
the proposals' features were similar. The SSAC concluded that whether the
overall rating for JHM's technical proposal was "Good" or merely
"Acceptable," it offered the technically superior proposal at a negligible
difference in price, with no major risks. Labat has provided us with no
basis to find this best value analysis, and resulting award decision,
unreasonable. See Keane Fed. Sys., Inc., B-280595, Oct. 23, 1998, 98-2 CPD para.
132 at 15-16.
The protests are denied.
Anthony H. Gamboa
General Counsel
Notes
1. JHM has asked that we reconsider our position that we have jurisdiction
over protests where the solicitation anticipates the issuance of task orders
placed under GSA schedule contracts. Severn Cos., Inc., B-275717, Apr. 28,
1997, 97-1 CPD para. 181 at 2 n.1. In light of JHM's concerns, we have reviewed
our rationale for assuming jurisdiction over such protests, as set forth in
Severn Cos., Inc., and find no basis to change our position.
2. Labat calculated two administrative overhead weighted labor rates,
[DELETED]. Both rates contain hard-coded entries. Our discussion is limited
to the former rate, since Labat acknowledges that it mistakenly failed to
use the latter rate in calculating its prices. This failure was apparently
not noticed by the BEC, but it raises additional questions about Labat's
pricing.
3. The source selection did not turn on this issue, and INS did not reach
the point of performing a risk analysis to determine whether award on the
basis of an apparently unbalanced offer would result in paying unreasonably
high prices or would otherwise present an unacceptable level of risk to the
government. FAR sect. 15.404-1(g)(2).
4. Labat makes a similar argument regarding JHM's allocations of data entry
hours, which we reject for similar reasons.
5. In addition to this deficiency, the TEC noted two new weaknesses in
Labat's FPR, both of which were associated with inconsistencies between the
estimating model and technical approach. While these inconsistencies are, in
fact, present, the SSAC did not view them as major, SSAC Report at 14, and
we will not discuss them further.