TITLE:  General Atomics, B-287348; B-287348.2, June 11, 2001
BNUMBER:  B-287348; B-287348.2
DATE:  June 11, 2001
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General Atomics, B-287348; B-287348.2, June 11, 2001

Decision

Matter of: General Atomics

File: B-287348; B-287348.2

Date: June 11, 2001

Nancy O. Dix, Esq., and Matthew C. Bernstein, Esq., Gray Cary, for the
protester.

Richard B. Oliver, Esq., McKenna & Cuneo, for Engineering & Software System
Solutions, an intervenor.

John M. Hewins, Esq., and Thedlus L. Thompson, Esq., General Services
Administration, for the agency.

David A. Ashen, Esq., and John M. Melody, Esq., Office of the General
Counsel, GAO, participated in the preparation of the decision.

DIGEST

Protest of evaluation of protester's proposal as equal, rather than
superior, to awardee's for past performance is denied where (1) protester's
proposal was reasonably downgraded for failure to include past performance
information required by solicitation amendment, and (2) since awardee was a
new company, agency could reasonably consider awardee's key personnel's
experience in evaluating awardee's past performance.

DECISION

General Atomics (GA) protests the General Services Administration's (GSA)
issuance of a task order to Engineering & Software System Solutions (ES3)
under request for proposals (RFP) No. 01RT0447, for upgrades and
enhancements to the Spare Parts Production and Reprocurement Support system
(SPARES) at Hill Air Force Base (Hill AFB), Utah. GA challenges the
evaluation of past performance and cost.

We deny the protest.

BACKGROUND

SPARES provides an integrated computer-based information management system
that supports the acquisition of military aircraft replacement parts through
digitizing of data which currently exists in paper format, implementing a
computer-managed workflow environment, and improving access to technical
data, from both legacy and new data bases. See GA Technical Proposal at E-1;
. The contract for the original
SPARES prototype was awarded to GA in 1990; in 1997, another contract was
awarded to GA for further enhancements to the system (SPARES II). In
June 2000, GSA issued a request for quotations (RFQ) for additional
enhancements to SPARES (SPARES III); however, the task order subsequently
issued to ES3 under its Federal Supply Schedule (FSS) Multiple Award
Schedule contract was canceled in August 2000 when it was determined (after
a protest by GA) that inclusion of hardware under the RFQ was beyond the
scope of the FSS schedule that had been used. (Two subsequent RFPs for the
same requirement also were canceled, the second after a protest from GA.)
The current RFP, for SPARES III, was issued on January 12, 2001 to five FSS,
Schedule 70, Information Technology (IT) Services, contract holders, and
also was posted on GSA's IT Solutions Shop Internet web site.

The RFP contemplated issuance of a time-and-materials (level-of-effort) task
order for a base year, with 2 option years, for the application of existing,
proven information system technology for weapon system support and part
reprocurement through the integrated management of the part technical data
and activities which review, modify, and manage the technical data. The RFP
included a detailed statement of work (SOW) describing: (1) tasks to be
accomplished, including upgrades to the SPARES repository system and new
repository applications, evaluation of alternatives to the current SPARES
work flow, upgrading the work flow and implementation of specified new work
flow applications, implementation of database improvements, integration of
SPARES into the agency's new D203 procurement system software, and system
maintenance and support; (2) the required approach to software development,
upgrade and modification; and (3) the overall required knowledge and skills
of contractor personnel.

The RFP specified the estimated number of hours for total contract
performance as "within a range of 47,000 and 51,000 hours per year" (but did
not list specific technical labor categories), and estimated the cost as
"within the range of $4,650,000 to $4,950,000 per year" (not including the
cost of software upgrades/maintenance and travel). RFP at 2. As amended
(through amendment No. 02), the solicitation generally requested offerors to
"[s]ubmit proposals in accordance with your GSA FSS IT Schedule"; it also
specifically requested submission of "a technical proposal detailing your
approach to this [SOW], identification of specific skills for each task to
be accomplished in the SOW and a cost proposal that identifies the skill
levels proposed, as contained in the Offeror's GSA [FSS]." Id. at 1.
Offerors were further instructed--in amendment No. 03, dated January 31 but
reportedly posted on the IT Solutions Shop web site on January 30--to submit
certain past performance information. RFP amend. No. 03. The solicitation
provided that award was to be made "in accordance with ‘Best Value'
criteria ([Federal Acquisition Regulation (FAR) subpart 8.4])," and
specifically listed as evaluation criteria technical (to be evaluated on a
go/no-go basis), past performance, and proposed cost. RFP at 1.

Four offerors submitted proposals by the February 15 closing time, three of
which--including GA's and ES3's--were found technically acceptable and were
rated acceptable for past performance. ES3's proposal was evaluated as
offering the lowest cost to the government based on its proposal of
[DELETED] labor hours at an average blended hourly rate of $[DELETED], for a
total evaluated cost of $8,833,515 (including an assumed common cost of
$750,000 for other direct costs and travel). GA's proposal was evaluated as
offering the highest cost to the government based on its proposal of
[DELETED] labor hours at an average rate of $[DELETED], for a total
evaluated cost of $[DELETED]. (The third proposal was second low, based on
[DELETED] labor hours at an average rate of $[DELETED], for a total of
$[DELETED].) Given its determination that the three proposals were equal
with respect to the technical and past performance criteria, GSA concluded
that ES3's low cost made its proposal the best value. Upon learning of the
resulting award to ES3, GA filed this protest with our Office.

PAST PERFORMANCE

GA disputes the determination that its past performance was equal, rather
than superior, to ES3's. According to the protester, the evaluation failed
to account for its performance as the contractor for SPARES and SPARES II
and the fact that ES3 had only recently been organized (in February 2000).

As noted above, amendment No. 03 required offerors to submit certain past
performance information. This included the following: "a brief summary of
their experience in performing similar work, to include the name of the
project, point of contact (project manager, contracting officer), and
telephone and facsimile number. In addition, include the name of your FSS
contracting officer and telephone/facsimile number." In its proposal, ES3
furnished the name and contact information of its FSS IT Schedule
contracting officer. In addition, although ES3 was founded only in
February 2000, it listed six contracts, including: (1) an approximately
$[DELETED] contract to develop computer software to model the effects of
large structural deformations from blasts, strikes and explosions; (2) an
approximately $[DELETED] contract to develop purchasing support software;
(3) and (4) two contracts, totaling $[DELETED], for educational testing
software; (5) a $[DELETED] contract for web page development; and (6) 8 days
of performance under the previously awarded, but terminated (because the
delivery order exceeded the scope of the contract) SPARES III order. GSA did
not contact any of ES3's references, other than its FSS IT Schedule
contracting officer, prior to award. It rated ES3 acceptable for past
performance based on that contracting officer's statement that he was
unaware of any negative past performance on the part of ES3, and his
affirmative response to the question "Have they performed in a satisfactory
manner, as far as you know?" Agency Report (AR), Tab 19, Documentation of
Past Performance; Contracting Officer's Supplemental Statement (COSS), Apr.
30, 2001, at 3-8.

As for GA, its proposal discussed various aspects of the work GA performed
under its SPARES and SPARES II contract efforts, referenced in staff resumes
other projects the staff had worked on, and generally indicated that GA had
"performed approximately 1,000 Government contracts." GA Technical Proposal
at E-2. However, GA's proposal did not include a past performance section or
describe and list the contact information required by amendment No. 03 for
any additional contracts it considered relevant, and also did not include
the required specific contact information for its prior SPARES performance
or the name of its FSS IT Schedule contracting officer. The contracting
officer reports that, due to the absence of this information, he was unable
to verify GA's performance under its FSS IT Schedule contract or the firm's
performance on SPARES prior to the time (July 2000) GSA assumed
responsibility for the SPARES II contract. (The SPARES and SPARES II
contract effort previously had been administered by personnel at Hill AFB.)
He nevertheless rated GA's past performance acceptable based on both the
fact that GA had performed under the SPARES contracts for 8 years and his
personal knowledge of GA's recent performance on the SPARES II contract. In
this regard, the contracting officer states that GSA became responsible for
GA's SPARES II contract effort in July 2000, and that he was aware of GA's
SPARES II performance for the period September 1, 2000 through January 15,
2001. According to the contracting officer, during that period he discussed
GA's performance with technical personnel at Hill AFB, and he was aware
that, with the exception of a staffing problem during the Christmas season,
remedied through the reassignment and hiring of additional staff, GA had
been performing satisfactorily. At the same time, however, the contracting
officer reports that he was unaware of any superior or outstanding
performance on the part of GA which would merit a rating beyond acceptable.
AR, Tab 19, Documentation of Past Performance; COSS, Apr. 30, 2001, at 5-7.

Evaluation of an offeror's past performance is a matter within the
discretion of the contracting agency, and we will not substitute our
judgment for reasonably based past performance ratings. Green Valley
Transp., Inc., B-285283, Aug. 9, 2000, 2000 CPD para. 133 at 4.

The past performance evaluation here was reasonable. Again, although GA
referred in its proposal to its performance of the SPARES and SPARES II
contract efforts and other contracts, it is undisputed that GA did not
include the specific contact information required by amendment No. 03 with
respect to performance on the SPARES contracts prior to GSA's assumption of
responsibility for SPARES II in July 2000 or with respect to performing any
other contracts for work similar to that contemplated here. In this regard,
where an offeror chooses not to provide the detailed past performance
information required for a more favorable evaluation, its proposal
reasonably may be downgraded because of it. See Infrared Techs. Corp.,
B-282912, Sept. 2, 1999, 99-2 CPD para. 41 at 5.

GA asserts that it was unaware of amendment No. 03 and the requirement
imposed by that amendment to furnish past performance information. In this
regard, GSA reports that electronic solicitations and amendments such as
used here are posted on GSA's IT Solutions Shop Internet web site; potential
offerors registering for copies of the solicitation, as did GA, are
automatically notified by e-mail when an amendment or additional information
regarding a procurement is posted on the web site. According to GSA,
amendment No. 03 was properly posted on the web site, as shown by GSA's
records and the fact that the two other acceptable offerors referenced the
amendment in their proposals. COSS, Apr. 30, 2001, at 2. GA maintains that
it never received an e-mail announcing the amendment, and did not find the
amendment when it checked the GSA web site after the date of the amendment.

While there is no definitive evidence of the protester's receipt of the
amendment, we find the agency's position that the amendment was available to
GA persuasive in light of the fact that the two other successful offerors
referenced it in their proposals; it is not apparent how else these offerors
would have learned of the amendment if not from the web site. Moreover, even
if GA was unaware that amendment No. 03 requested past performance
information, since the RFP provided that past performance would be
evaluated, we do not think it was unreasonable for the agency to expect
offerors to provide the contact information necessary to verify their past
performance. In any case, GA has not shown that, had it been aware of the
amendment, it would have furnished additional information establishing that
it was entitled to a higher past performance rating. In this regard, GA's
view that it was entitled to a higher rating is based on its 8-year status
as the SPARES and SPARES II contractor. As noted above, however, the
contracting officer reports that the information known to him concerning
GA's performance after GSA assumed responsibility for the SPARES II contract
in July 2000 indicated generally satisfactory performance, but not superior
or outstanding performance such as would merit a rating beyond acceptable.
COSS, Apr. 30, 2001, at 5-7. GA has furnished no information showing that
its performance on the SPARES and SPARES II contracts in fact was superior
or outstanding.

GA's argument also fails to account for the information furnished in ES3's
proposal. In this regard, although ES3 was a relatively new company, as
noted during the contemporaneous technical evaluation, ES3's proposed staff
included individuals who had worked on the SPARES project since 1990, and
whose experience in information technology services was directly relevant to
the contemplated SPARES III effort. Id. at 8; AR, Tab 17, Technical
Evaluation of Proposals for Client Order 01RT0447. For example, ES3 proposed
as currently employed key personnel who would provide project management:
(1) the prior contractor's program manager for SPARES from its inception in
1990 to May 2000 ([DELETED]) and (2) the prior contractor's program manager
for SPARES from May to July 2000 (who also had worked on the SPARES program
as a lead technical coordinator beginning in 1991). ES3 also proposed as
lead software developer a current employee who had served as lead software
developer for the SPARES II contract, and proposed as its system manager a
current employee who had served as the senior SPARES system administrator
for GA. (ES3 also proposed other staff and subcontractors with experience
performing on the SPARES contracts.) In addition, ES3's chief financial
officer ([DELETED]) was the GA contract administrator for the SPARES
contracts for 4 years (1996-2000). ES3 Technical Proposal at 104-118; ES3
Comments, Apr. 30, 2001, at 3, Declaration of ES3 [DELETED], and Declaration
of ES3 Chief Financial Officer. An agency properly may consider the
experience of supervisory personnel in evaluating the experience of a new
business. See Technical Resources, Inc., B-253506, Sept. 15, 1993, 93-2 CPD
para. 176 at 5; see also FAR sect. 15.305(a)(2)(iii) (past performance evaluation
should take into account information regarding key personnel who have
relevant experience when such information is relevant to the acquisition).
[1] We conclude that there is no basis to object to the agency's
determination not to rate GA as superior with respect to past performance.

COST/PRICE EVALUATION

GA challenges the agency's cost/price evaluation. In this regard, each of
the offerors proposed a different mix and total number of labor hours. While
ES3's total labor hours ([DELETED]) were within the RFP estimate (141,000 to
153,000 hours), and the third acceptable offeror's hours ([DELETED]) were
only slightly below the estimate, GA's hours ([DELETED]) were substantially
in excess of the estimate. GSA accepted each offeror's proposed price, based
upon their particular proposed total labor hours and labor mix, for purposes
of the source selection decision, AR, Tab 20, Best Value Evaluation Report
for GSA Project No. 01RT0447, recognizing that it would have been improper
not to "recognize the unique approach which includes specific skills for
each task to be accomplished and the total number of labor hours required to
accomplish the Statement of Work as envisioned by each offeror and as
required by the RFP." Agency Comments, May 3, 2001, at 5.

GA asserts that GSA should not have accepted ES3's proposed labor rates
because, according to the protester, those rates were lower than ES3's FSS
schedule rates, and were below cost. GA further asserts that, instead of
basing its evaluation on each offeror's proposed labor mix and number of
hours, the agency should have "[multiplied] each offeror's proposed fixed
hourly labor rates for all labor categories by the agency's estimate of the
required hours necessary to perform the contract." GA Comments, Apr. 30,
2001, at 2. According to GA, using 141,000 total hours (the low end of the
solicitation estimate), this calculation yields a total evaluated cost (not
including $750,000 in assumed other direct costs and travel costs specified
by the solicitation) of $[DELETED] for GA and $[DELETED] for ES3. Id. at 3.

GA's arguments do not provide a basis for questioning the evaluation or
award. GA has pointed to no applicable procurement statute or regulation
that requires the agency to reject a firm's rates because they were below
the firm's FSS rates or even below cost. Further, where, as here, a
solicitation provides for the award of a time-and-materials contract with
fixed-price burdened labor rates, there is no requirement that the agency
assess the cost realism of the proposed rates in the absence of a
solicitation provision requiring such analysis. See Enmax Corp., B-281965,
May 12, 1999, 99-1 CPD para. 102 at 9; Research Analysis and Maintenance, Inc.,
B-272261, B-272261.2, Sept. 18, 1996, 96-2 CPD para. 131 at 10; SYS, B-258700,
Jan. 31, 1995, 95-1 CPD para. 57 at 5. Here, the solicitation did not provide
for evaluating the realism of the proposed labor rates to ensure that they
were not below the cost of furnishing qualified staff, and GSA thus was not
required to undertake such an analysis. As for GA's argument that the agency
should have used a normalized number of hours for all firms, the argument is
without merit for two reasons. First, it ignores the potential for differing
numbers of hours based on the firms' different technical approaches. Second,
even if a normalized number of hours were used, ES3's proposal would remain
low, because GA's proposed labor rates were significantly higher than ES3's.
This being the case, since the agency determined that the proposals were
technically equal, ES3 would remain in line for the award. [2]

The protest is denied.

Anthony H. Gamboa

General Counsel

Notes

1. Further, although GSA did not contact the references listed by ES3 in its
proposal prior to award, the record indicates that, had the agency done so,
it would have received a favorable evaluation of ES3's performance. In this
regard, when the agency contacted the representatives after award, the four
references from whom it obtained an evaluation furnished very favorable
responses. For example, with respect to the ES3's largest contract, for
software modeling of structural deformations, the reference reported that
they were "extremely happy" with ES3's performance, and that the firm had
been "very responsive," providing "tremendous support" and performing "on
time and on budget." COSS, Apr. 30, 2001, at 4, attach. D. With respect to
the second largest contract, for developing purchasing support software, the
reference reported that ES3 was a "good company" that had performed
"excellent work," and had been "on time" and "within budget." Id.

2. GA asserts that ES3's contract lacked a ceiling price, as required where,
as here, a time-and-materials contract is to be awarded. See FAR sect.
16.601(c). The RFP specifically provided, however, that "[t]he Government
will not be obligated to reimburse the contractor in excess of the amount
allotted to the contract," and that "[a]dditional allotments of funds will
become available only by modifications to this task order." RFP, SOW sect. 4.31.
We agree with the agency that this language, together with the fact that the
delivery order issued to ES3 specified a base year price that corresponded
to ES3's evaluated price, effectively established a ceiling price.