TITLE:  KIRA Inc., B-287573; B-287573.2; B-287573.3, July 23, 2001
BNUMBER:  B-287573; B-287573.2; B-287573.3
DATE:  July 23, 2001
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KIRA Inc., B-287573; B-287573.2; B-287573.3, July 23, 2001

Decision

Matter of: KIRA Inc.

File: B-287573; B-287573.2; B-287573.3

Date: July 23, 2001

J. Patrick McMahon, Esq., William T. Welch, Esq., Barton, Baker, McMahon &
Tolle, 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 John M. Melody, Esq., Office of the General
Counsel, GAO, participated in the preparation of the decision.

DIGEST

1. Protest that agency improperly failed to downgrade awardee's technical
proposal because of the possibility that one of its subcontractors might
file for bankruptcy is denied where solicitation does not provide for the
evaluation of proposals based on financial stability.

2. Protest that agency did not engage in meaningful discussions with
protester is denied where record shows that all significant deficiencies
were brought to protester's attention and firm was afforded an opportunity
to address those concerns.

DECISION

KIRA, Inc. protests the award of a contract to Environmental Management,
Inc. (EMI) under request for proposals (RFP) No. F24604-01-R-0001, issued by
the Department of the Air Force for consolidated facilities maintenance
services at Malmstrom Air Force Base. KIRA argues that the agency
misevaluated EMI's and its proposal, and failed to conduct adequate
discussions with the firm.

We deny the protest.

The RFP sought proposals to perform numerous requirements, 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: 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. Agency Report (AR) Exh. 10 at 7. 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 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
to achieve those increased service levels. Id. at 3-4. Under the increased
coverage subfactor, the agency found that EMI provided more coverage at a
lower overall cost than KIRA. Id. at 4-5. The agency concluded that EMI's
lower cost, coupled with its proposed enhanced service levels and increased
coverage, made its proposal the best value; the agency thus made award to
EMI. AR Exh. 10 at 7.

KIRA argues that EMI's proposal evaluation is flawed because the agency
failed to take into consideration that one of EMI's significant
subcontractors, Washington Group International, Inc. (WGI), was facing the
possibility of bankruptcy. (WGI was to perform the SABER portion of the
requirement and, together with EMI, the facilities maintenance function.)

We deny this aspect of the protest. The financial stability of an offeror or
one of its subcontractors (and thus its ability to successfully perform a
requirement) generally is a matter of responsibility, Federal Acquisition
Regulation sect. 9.104-1, although an RFP may provide for the evaluation of such
a traditional responsibility factor within the context of its technical
evaluation. See Dual, Inc., B-280719, Nov. 12, 1998, 98-2 CPD para. 133 at 8.
Here, although the record suggests that the agency may have considered WGI's
financial posture during its technical review of the proposals (the agency
asked EMI a question relating to WGI's financial status during discussions),
none of the technical evaluation factors included in the RFP identified
financial stability of offerors or their subcontractors as an area
encompassed by the technical evaluation. [1] The financial stability of WGI
therefore was relevant only for purposes of determining whether EMI was a
responsible prospective contractor. KIRA does not allege that the agency
improperly found EMI to be responsible and, in any event, our Office, with
certain exceptions not relevant here, does not consider such allegations.
[2] 4 C.F.R. sect. 21.5(c) (2001).

KIRA alleges that the evaluation improperly failed to account for the
superiority of its program manager compared to EMI's. According to the
protester, the differences in the quality of the two proposed individuals
was not reflected in the agency's assignment of past performance ratings,
and was not taken into account by either the source selection evaluation
team or the source selection official.

This allegation is without merit. The RFP did not contemplate a separate
evaluation of past performance for proposed personnel. Rather, the RFP
clearly advised offerors that the proposed team's past would be evaluated,
and that an integrated assessment and rating based on all past performance
surveys would be developed by the agency. RFP at 44. This is precisely what
the agency did, and there is nothing in the record to indicate that KIRA's
project manager's alleged superiority was not properly factored into the
firms' resulting adjectival ratings. In this regard, while the agency noted
that EMI's proposed project manager performed on a contract for which EMI
received an overall [deleted] rating, Supplemental Documents, May 25, 2001,
Exh. S5 at 1, and that KIRA's project manager performed on a contract for
which KIRA received an [deleted] rating, AR Exh. 7 at 1, those two surveys
were not the sole basis for the past performance evaluation. The record
shows that numerous other past performance surveys were evaluated for each
firm, and that the proposed program managers did not work on these other
contracts. KIRA does not challenge the evaluation conclusions with respect
to these contracts. We conclude that the evaluation in this area was
reasonable.

KIRA alleges that EMI's technical proposal evaluation is invalid because EMI
does not intend to perform using the personnel and/or subcontractors it
offered in its proposal. KIRA claims in this regard that, after contract
award, EMI asked KIRA's proposed grounds maintenance and custodial
subcontractors if they would be interested in joining the EMI team.

This argument is unsupported in the record. KIRA has offered no evidence to
support its contention that EMI attempted to recruit its subcontractors. In
contrast, both the agency and EMI explain that, while EMI did contact the
subcontractors, it did so only to inquire about purchasing equipment to use
in performing the contract, and as to whether they could recommend incumbent
employees who might be worth interviewing. This explanation is supported by
an affidavit in which EMI's chief executive officer represents that this was
the purpose of their approaching the subcontractors, and that no equipment
was purchased, but that a number of the incumbent employees were hired for
contract performance. EMI Comments, July 9, 2001, Affidavit at 8. EMI's
chief executive officer further represents that the same two subcontractors
it proposed are the only firms currently working on the contract. Id. Given
these uncontroverted representations, we find no merit to this aspect of
KIRA's protest.

KIRA asserts that EMI's proposed increased level of coverage in the grounds
maintenance and custodial services areas cannot be accomplished at the wage
rates required under the RFP. According to the protester, EMI either
proposed wage rates below the wages mandated by the Department of Labor
(DOL) and specified in the RFP, or is currently paying wage rates that are
below those specified.

This assertion is without merit. The record shows that EMI proposed wage
rates that were compliant with the DOL rates specified in the solicitation,
Supplemental Agency Report (SAR), June 15, 2001, Exh. 5, and this fact was
confirmed by the Defense Contract Audit Agency (DCAA), which reviewed the
proposal as part of the agency's cost evaluation. Supplemental Documents,
May 25, 2001, Exh. S3; SAR, June 15, 2001, Exh. 6 at 2. The record also
includes payroll records for EMI for the first month of contract
performance--the agency overrode the stay of performance in connection with
the protest--which confirm that EMI is paying wages consistent with the RFP
rates. SAR, June 15, 2001, Exh. 10. [3]

KIRA contends that the agency failed to conduct adequate discussions. In its
initial letter protesting this aspect of the agency's actions, KIRA stated
that the agency identified during KIRA's debriefing five weaknesses in its
proposal which the protester asserted should have been the subject of
clarifying discussions. KIRA maintained that its proposal rating would have
been materially increased had it been afforded an opportunity to address
these weaknesses. In its comments responding to the agency's report on this
question, KIRA takes issue with only two of the alleged weaknesses--the
proposed salary for the firm's program manager was unreasonably high during
the phase-in period of contract performance compared to his salary during
the remainder of the contract, and its grounds maintenance subcontractor's
past performance was limited in scope.

As a general rule, agencies are required to conduct meaningful discussions
with offerors in the competitive range. Du & Assocs., Inc., B-280283.3, Dec.
22, 1998,

98-2 CPD para. 156 at 7; I.T.S. Corp., B-280431, Sept. 29, 1998, 98-2 CPD para. 89
at 6. For discussions to be meaningful, they must lead offerors into the
areas of their proposals requiring amplification or revision; however,
agencies are not required to "spoon-feed" an offeror as to each and every
item that could be revised to improve its proposal. Du & Assocs., Inc.,
supra, at 7-8; Applied Cos., B-279811, July 24, 1998, 98-2 CPD para. 52 at 8.

The discussions with KIRA were adequate. The record shows that one of the
two weaknesses, the proposed program manager's excessive salary during the
phase-in period, was in fact the subject of discussions. SAR, June 15, 2001,
Exh. 15. The agency directed KIRA's attention to the issue with a discussion
question, and further clarified the matter during an oral clarification
telephone conference. During the telephone conference, the contracting
officer expressly stated:

Again, [the agency] is not telling you to remove those salaries, we're just
saying they appeared excessive in comparing . . . it[']s like [deleted]
salary is [deleted] of the normal month['s] salary and we're asking for an
explanation, basically.

Id., Transcript of Oral Teleconference, at 8. KIRA's representative
responded by stating: "Not a problem, we can deal with this. And we
understand what you're asking for." Id. Notwithstanding this expression of
understanding, however, the program manager's salary was not changed, and no
explanation was offered in KIRA's proposal revision. (KIRA did make changes
in its proposal with respect to other salaries that had been included in its
phase-in costs.) We conclude that the agency adequately advised KIRA of this
weakness.

As for the second weakness--its grounds maintenance subcontractor's limited
experience--the record shows that the agency did not consider this a
material weakness. In particular, the materials presented to the source
selection official expressly provided: "Exceptional past performance [of the
grounds maintenance subcontractor] mitigates limited scope of grounds
experience." SAR, June 15, 2001, Exh. 17, at Slide No. 83. Elsewhere in the
same materials, the evaluators state: "The grounds contractor's previous
exceptional performance mitigates the risk of his ability to perform at this
larger scope." Id. at Slide 93. We conclude that the agency was under no
obligation to discuss this matter with KIRA. DAE Corp., B-259866,
B-259866.2, May 8, 1995, 95-2 CPD para. 12 at 5-6.

The protest is denied.

Anthony H. Gamboa

General Counsel

Notes

1. To the extent that an agency may properly consider an unstated evaluation
criterion, it may only do so where the unstated criterion it is reasonably
related to or encompassed by the stated evaluation criteria. Techsys Corp.,
B-278904.3, Apr. 13, 1998, 98-2 CPD para. 64 at 9. Here, none of the evaluation
criteria could reasonably be viewed as encompassing consideration of a
firm's financial stability. Under the mission capability criterion, none of
the five subfactors dealing with the offerors' proposed technical approach
(program management, SABER sample project, quality, increased coverage or
cost visibility) relate to consideration of the offerors' financial
stability. Under past performance, the agency was to have evaluated a firm's
performance of prior or ongoing contracts; consideration of the prospective
financial posture of an offeror obviously would have been improper under
this criterion. Finally, under the proposal risk criterion, the agency was
to consider the risk inherent in a firm's proposed technical approach (for
example, its proposed staffing mix). Again, consideration of the prospective
financial posture of an offeror or its subcontractors is not reasonably
related to this criterion.

2. KIRA contends that EMI's very good/significant confidence past
performance rating was unreasonable, because it was inconsistent with the
ratings EMI received on its past performance surveys. This argument is
untimely. KIRA was provided the documents on which this argument is based no
later than May 24, 2001, but it did not raise this argument until it filed
its consolidated comments in response to the agency's reports on June 29,
more than 10 days later. Accordingly, we decline to consider this argument.
4 C.F.R. sect. 21.2(a)(2) (2001); RAMCOR Servs. Group, Inc., B-276633.2 et al.,
Mar. 23, 1998, 98-1 CPD para. 121 at 9 n.9.

3. In its comments responding to the agency's reports filed on June 29 and
July 5, KIRA argues for the first time that the cost evaluation–and in
turn its source selection decision--was flawed because the agency did not
consider the increased cost associated with the increased coverage proposed
by EMI. KIRA also alleges for the first time in its comments that the agency
unreasonably concluded that EMI's proposed costs were reasonable and
realistic, because neither the Air Force nor DCAA was able to evaluate EMI's
subcontractors' indirect rates. These arguments are untimely. KIRA was
provided the agency's source selection decision document on May 17, and that
document clearly outlined the source selection authority's conclusion that
one of the distinguishing aspects of the EMI proposal was its offer to
provide increased coverage at the lowest proposed cost. AR Exh. 10 at 3, 6.
Since KIRA did not raise this allegation until June 29, more than 10 days
after May 17, the allegation is untimely. 4 C.F.R. sect. 21.2(a)(2). Similarly,
KIRA was provided with the DCAA materials upon which it bases its allegation
concerning EMI's subcontractors' indirect rates on May 25, Supplemental
Documents, May 25, 2001, Exhs. S3, S4; its allegation in this regard, also
filed on June 29, therefore is untimely as well.