TITLE:  KIRA Inc., B-287573.4; B-287573.5, August 29, 2001
BNUMBER:  B-287573.4; B-287573.5
DATE:  August 29, 2001
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KIRA Inc., B-287573.4; B-287573.5, August 29, 2001

Decision

Matter of: KIRA Inc.

File: B-287573.4; B-287573.5

Date: August 29, 2001

Alan M. Grayson, Esq., and James A. McMillan, Esq., Grayson & Kubli, for the
protester.

David J. Taylor, Esq., Tighe, Patton, Armstrong, Teasdale, for Environmental
Management, Inc., an intervenor.

Sharon A. Jenks, Esq., Department of the Air Force, for the agency.

Scott H. Riback, Esq., and David A. Ashen, Esq., Office of the General
Counsel, GAO, participated in the preparation of the decision.

DIGEST

1. Protest that award was improper because awardee's proposal evidenced an
intent to violate solicitation's limitation on subcontracting clause is
denied where awardee's proposal instead indicated that it would comply with
the subcontracting limitation.

2. Protest that relative weights assigned the evaluation factors in the
evaluation and resulting source selection decision were inconsistent with
those set forth in the RFP is denied where record shows that award was
consistent with evaluation scheme set forth in solicitation; fact that key
discriminators among proposals were not the most heavily weighted factor is
unobjectionable.

DECISION

KIRA, Inc. protests the Department of the Air Force's award of a contract to
Environmental Management, Inc. (EMI), under request for proposals (RFP)
No. F24604-01-R-0001, for consolidated facilities maintenance services at
Malmstrom Air Force Base. KIRA argues that EMI's proposal indicated an
intention to deviate from the terms of the RFP's limitation on
subcontracting clause. KIRA further argues that the relative weights
assigned the evaluation factors in the award decision were inconsistent with
those set forth in the RFP.

We deny the protest. [1]

The RFP, a small business set-aside, requested proposals to perform numerous
facilities-related services, including facilities and grounds maintenance,
custodial services, refuse and recycling removal services and simplified
acquisition for base engineering requirements (SABER). Offerors were advised
that the agency would make award to the firm submitting the proposal deemed
to offer the best overall value, considering both cost and non-cost factors.
For evaluation purposes, the RFP provided that proposals would be rated
either blue (exceptional), green (acceptable), yellow (marginal) or red
(unacceptable), and also would be rated either low, moderate or high
proposal risk, under five subfactors included within a mission capability
factor (listed in descending order of importance): program management, SABER
sample project technical evaluation, quality, increased coverage and cost
visibility. The proposals also were to be evaluated for past performance
(equal in weight to mission capability), under which factor they would be
assigned adjectival/confidence ratings of exceptional/high confidence, very
good/significant confidence, satisfactory/confidence, neutral/unknown
confidence, marginal/little confidence, or unsatisfactory/no confidence.
Cost was to be evaluated for reasonableness and realism. Mission capability,
past performance and proposal risk, together, were significantly more
important than cost.

After receiving and evaluating initial proposals, engaging in discussions
and obtaining final proposal revisions, the agency assigned identical
adjectival and past performance ratings to the proposals submitted by KIRA
and EMI. Specifically, both proposals received green/low risk ratings for
the program management, SABER sample project and cost visibility subfactors,
and blue/low risk ratings under the quality and increased coverage
subfactors of the mission capability criterion. Both proposals also received
very good/significant confidence past performance ratings, and both firms'
proposed costs--EMI's was $41.3 million and KIRA's $44.3 million--were found
to be reasonable and realistic. In addition to the adjectival ratings, the
agency evaluators and source selection official prepared narrative materials
in which they further distinguished among the competing proposals. As is
relevant here, those narrative materials show that EMI's was found to be the
best proposal under the quality and increased coverage subfactors.
Specifically, under the quality subfactor, the agency found that EMI offered
enhanced service levels and also provided the best justification of its
approach to achieving the proposed service levels. Under the increased
coverage subfactor, the agency found that EMI provided more coverage at a
lower overall cost than KIRA. Source Selection Decision (SSD) at 7. Finally,
under the SABER sample project technical evaluation subfactor, the SSD
stated that the proposal of EMI was "as strong or stronger" than the
proposal of KIRA. Id. at 3. The agency concluded that EMI's lower cost,
coupled with the identified technical strengths, made its proposal the best
value; the agency therefore made award to EMI.

KIRA asserts that EMI's proposal indicates an intent to violate the RFP's
limitation on subcontracting clause, Federal Acquisition Regulation (FAR) sect.
52.219-14, which requires that at least 50 percent of the cost of contract
performance incurred for personnel be expended for employees of the prime
contractor. In support of its position, KIRA notes that the agency's
performance confidence rationale for EMI describes the distribution of work
between EMI and its proposed subcontractors as follows:

[Washington Group International (WGI)] intends to perform SABER (47% of the
contract based dollar amount), EMI intends to perform grounds maintenance,
and custodial (16% of the contract based dollar amount), WGI and EMI intend
to jointly perform facility maintenance (30% of the contract based dollar
amount), and Montana Waste Systems (MWS) intends to perform refuse and
recycling (7% of the contract based dollar amount).

EMI and WGI Performance Confidence Rationale at 1. KIRA maintains that this
shows that the agency expressly determined that EMI would perform only 16
percent of the requirement itself and would perform an additional 30 percent
of the requirement with its subcontractor WGI, with the remainder of the
requirement (approximately 54 percent) being performed by EMI
subcontractors. KIRA argues in the alternative that, if EMI's proposal is
compliant with the limitation on subcontracting clause, then the agency's
evaluation conclusions in the performance confidence rationale are
unreasonable because they are based on a different division of work between
EMI and its subcontractors than that outlined in EMI's proposal.

We find KIRA's protest in this regard to be without merit. As a general
rule, an agency's judgment as to whether a small business offeror will
comply with the subcontracting limitation is a matter of responsibility, and
the contractor's actual compliance with the provision is a matter of
contract administration. Orincon Corp., B-276704, July 18, 1997, 97-2 CPD para.
26 at 4. However, where a proposal, on its face, should lead an agency to
the conclusion that an offeror could not and would not comply with the
subcontracting limitation, we have considered this to be a matter of the
proposal's technical acceptability; a proposal that fails to conform to a
material term or condition of the solicitation such as the subcontracting
limitation is unacceptable and may not form the basis for an award. Coffman
Specialties, Inc., B-284546, B-284546.2, May 10, 2000, 2000 CPD para. 77 at 5.

Here, the record shows that the percentages attributed to each of the
contract elements in the performance confidence rationale were not based on
information in the offerors' proposals. Rather, according to the agency, the
percentages reflected the historical dollar value of the contract elements,
which previously were the subject of several separate contracts that were
consolidated under the current RFP. That is, the percentages set forth in
the performance confidence rationale reflect the portion of the current
estimated total requirement represented by each of the various elements
based on the historical dollar value of that prior work. The agency's
explanation in this regard is supported by the fact that the same percentage
values used for EMI's performance confidence determination were used in the
agency's past performance/risk evaluation for all of the technical
proposals, including KIRA's. Agency Report, July 23, 2001, at 1-2. [2]

In addition, the agency has submitted a detailed analysis of the EMI cost
proposal which shows that under EMI's proposal, more than 50 percent of the
cost of contract performance incurred for personnel would be incurred with
respect to EMI's own employees (as opposed to the employees of its
subcontractors). [3] Further, KIRA has made no attempt to challenge the
agency's analysis in this regard, despite having been furnished the relevant
portions of the EMI cost proposal. Under these circumstances, we find that
KIRA has failed to show that there was anything in EMI's proposal from which
the agency reasonably should have concluded that EMI would not comply with
the limitation on subcontracting clause.

Nor has KIRA shown that the agency's past performance/risk evaluation with
respect to EMI's proposal was unreasonable. In this regard, the agency found
that EMI had performed only one prior contract that was similar in magnitude
and complexity to the contemplated contract effort here, and had received
only a satisfactory rating of its performance under that contract. On the
basis of EMI's experience and ratings alone, the agency found that there was
"some doubt," representing a "slight increas[e]" in doubt, that EMI could
successfully perform the contract. EMI and WGI Performance Confidence
Rationale at 1-2. However, the agency further determined that WGI's
extensive experience and above average ratings, "coupled with the magnitude
of their participation in this proposal," reduced the overall doubt as to
successful performance. Id. at 2.

Although, as noted above, the percentage of the contemplated overall
contract effort attributed to WGI for purposes of the past performance/risk
evaluation was based on the historical dollar value of the various contract
elements and not on EMI's actual proposal here, and this appears to have
understated the proportion of the proposed overall effort that EMI itself
would perform, this does not mean that the agency's past performance/risk
evaluation was unreasonable. While the percentage of WGI's participation in
the contract effort as reflected in EMI's proposal may be somewhat less than
that assumed for purposes of the past performance/risk evaluation, it is
clear that EMI proposed that WGI would perform a major portion of the
contemplated effort. Thus, it was not unreasonable for the agency to take
into account WGI's superior, relevant past performance when assessing the
EMI team's overall likelihood of successful contract performance and
assigning an overall past performance/risk rating. Federal Acquisition
Regulation sect. 15.305(a)(2)(iii); NAHB Research Ctr., Inc., B-278876.2, May 4,
1998, 98-1 CPD para. 150 at 4; Fluor Daniel, Inc., B-262051, B-262051.2, Nov.
21, 1995, 95-2 CPD para. 241 at 12. We therefore deny KIRA's protest of the
evaluation in this area.

KIRA further argues that the relative weights assigned the evaluation
factors in the evaluation and resulting award decision were inconsistent
with those set forth in the RFP. In this connection, the RFP stated that the
subfactors under the mission capability evaluation criterion were listed in
descending order of importance. According to KIRA, the agency instead
improperly assigned equal weight to the subfactors, and in so doing,
improperly found EMI's proposal technically superior to KIRA's. As support
for its assertion, KIRA notes that its proposal was rated superior under the
first and fifth subfactors, while the EMI proposal was rated superior under
the third and fourth subfactors; according to KIRA, if the agency had
properly weighted the subfactors in descending order of importance, its
proposal would have been deemed superior based upon its superior rating
under the first (most important) subfactor. As further support for its
assertion, KIRA notes that the source selection authority (SSA) stated
during the pendency of the protest that the subfactors under the mission
capability criterion were considered "roughly equal." SSA Statement, June
22, 2001, at 1.

We find no basis to object to the agency's source selection decision. Source
selection officials have broad discretion in determining the manner and
extent to which they will make use of the technical and cost evaluation
results, and their judgments are governed only by the tests of rationality
and consistency with the stated evaluation criteria. Chemical
Demilitarization Assocs., B-277700, Nov. 13, 1997, 98-1 CPD para. 171 at 6.

KIRA has not shown that the source selection decision was inconsistent with
the stated evaluation criteria or otherwise unreasonable. As noted, the
agency's source selection decision reflects its conclusion that EMI's
proposal was superior under the quality subfactor of the mission capability
criterion, based on EMI's offer of (and justification for ability to
provide) enhanced service levels exceeding those offered by KIRA, and
superior under the increased coverage subfactor, based on its offer of
significantly greater coverage--including approximately [deleted] percent
more custodial coverage and approximately [deleted] percent more grounds
maintenance coverage--than offered by KIRA. SSD at 4. While KIRA is correct
that the quality and increased coverage subfactors were listed in the RFP as
less important than the program management subfactor (under which KIRA's
proposal was deemed more advantageous), the mere fact that an agency's
source selection decision turns on an evaluation consideration that is
designated as less important is unobjectionable since there is no
requirement that the key award discriminator be the most heavily weighted
factor. Research for Better Schools, Inc., B-270774.3, June 17, 1996, 96-2
CPD para. 41 at 8. Furthermore, KIRA's argument fails to account for the fact
that EMI's proposal offered significant cost savings (approximately $3
million) relative to KIRA's proposal.

Nor does the statement made by the SSA during the course of the protest that
the subfactors under the mission capability criterion were considered
"roughly equal," SSA Statement, June 22, 2001, at 1, furnish a basis for
questioning the source selection. In this regard, the SSA subsequently
explained the agency's understanding of the relative weight of the mission
capability subfactors as follows:

When the grading system was identified, and throughout the evaluation
process, the relative weight between subfactors was always seen as being
fairly small. Because the subfactors were considered to be clustered closely
together, no effort was made to specify the extent to which one factor
outweighed another. If there had been significant differences in the
subjective weights, those differences would have been clearly stated in
Section M [of the RFP], as they were for the four major factors (mission
capability, past performance, proposal risk, and cost) in section M-3(a).

SSA Statement, July 24, 2001, at 2. This explanation reflects an
understanding that there were differences, albeit relatively small, between
the weight of the subfactors. Although this understanding was not well
expressed by the phrase "roughly equivalent" as used in the SSA's
post-protest statement, we have no basis to question that proposals in fact
were evaluated consistent with this understanding, and we do not view this
understanding to be inconsistent with the evaluation scheme set forth in the
RFP. [4]

In these circumstances, we find no basis to question the Air Force's
determination that EMI's offer of enhanced quality and greater coverage at a
lower cost warranted award to that firm.

We deny the protest.

Anthony H. Gamboa

General Counsel

Notes

1. This is our second decision in connection with this acquisition. KIRA
previously raised other protest bases which we denied in KIRA, Inc.,
B-287573 et al., July 23, 2001, 2001 CPD para. ___.

2. In this regard, we note that accepting the percentages set forth in the
performance confidence rationale for KIRA would lead to the conclusion that
KIRA also was noncompliant with the limitation on subcontracting clause
since, according to those percentages, KIRA will perform only 30 percent of
the total requirement.

3. The agency's calculations, supported by relevant portions of EMI's cost
proposal, show that, for grounds maintenance, custodial services, facilities
maintenance, and refuse and recycling services, EMI will expend [deleted]
for personnel costs during the phase-in and basic period of contract
performance, whereas its subcontractors will expend [deleted] during the
same period. Agency Report, July 23, 2001, at 2, and Contracting Officer's
Affidavit at 1-6. Further, the agency's calculation that more than
50 percent of the cost of contract performance incurred for personnel would
be incurred with respect to EMI's own employees is consistent with the
finding of the Small Business Administration (SBA), in connection with
denying a size standard protest, that of the 63 employees allocated for
contract performance here, 45 would be EMI employees (and also that 5 of the
7 managers assigned to perform the contract would be EMI managers). SBA Size
Determination, No. 6-2001-039, Apr. 18, 2001, at 4.

4. In any case, our Office will not sustain a protest unless the protester
demonstrates a reasonable possibility that it was prejudiced by the agency's
actions, that is, unless the protester demonstrates that, but for the
agency's actions, it would have had a substantial chance of receiving the
award. McDonald-Bradley, B-270126, Feb. 8, 1996, 96-1 CPD para. 54 at 3; see
Statistica, Inc. v. Christopher, 102 F. 3d 1577, 1581 (Fed. Cir. 1996). In
this regard, KIRA has not demonstrated that it would have materially altered
its proposal if it had been advised that the subfactors under the mission
capability criterion were weighted differently. Cf. Foundation Health
Federal Servs., Inc.; Humana Military Healthcare Servs., Inc., B-278189.3,
B-278189.4, Feb. 4, 1998, 98-2 CPD para. 51 at 14-15.