TITLE:  TDF Corporation, B-288392; B-288392.2, October 23, 2001
BNUMBER:  B-288392; B-288392.2
DATE:  October 23, 2001
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TDF Corporation, B-288392; B-288392.2, October 23, 2001

Decision

Matter of: TDF Corporation

File: B-288392; B-288392.2

Date: October 23, 2001

George Shreves for the protester.

Jeffrey I. Kessler, Esq., U.S. Army Materiel Command, Samuel J. Walker,
Esq., and Bernadine F. McGuire, Esq., U.S. Army Operations Support Command,
for the agency.

Glenn G. Wolcott, Esq., and Michael R. Golden, Esq., Office of the General
Counsel, GAO, participated in the preparation of the decision.

DIGEST

1. Where agency's evaluation record provides extensive analysis regarding
protester's proposed staffing, and protester, after having been provided
with the entire evaluation record, does not challenge the accuracy of the
agency's calculations, agency reasonably evaluated protester's proposal as
unacceptable on the basis of inadequate staffing.

2. Agency properly eliminated protester's proposal from consideration on the
basis of its inadequate proposed staffing where solicitation specifically
directed offerors to address the staffing of the various contract
requirements, advised offerors that their proposed staffing approach would
be a subject for evaluation, stated that a proposal which failed to provide
a proposed approach that would successfully meet the contract requirements
would be rated as "unacceptable," and provided that any such proposal would
be eliminated from the competition.

3. GAO will not sustain protest on the basis of a potential conflict of
interest, where protester fails to identify any meaningful flaw or
inaccuracy in the agency's evaluation of its proposal and GAO's review of
the evaluation record demonstrates that protester was not prejudiced by the
potential conflict of interest.

DECISION

TDF Corporation protests the Department of the Army's determination that
TDF's proposal to perform information technology (IT) base operation support
services for Rock Island Arsenal (RIA) failed to meet the solicitation
requirements. TDF protests that the agency evaluation failed to properly
apply the stated evaluation factors and that members of the agency
evaluation team had a conflict of interest.

We deny the protest.

BACKGROUND

On August 25, 2000, pursuant to the provisions of Office of Management and
Budget (OMB) Circular No. A-76, the agency issued solicitation No.
DAAA09-00-R-5047 in order to select a private contractor to compete with the
agency's most efficient organization (MEO) under the A-76 cost comparison
process. [1]

Thereafter, TDF engaged in various communications with the agency, including
an agency-level protest challenging various aspects of the solicitation. The
agency responded to TDF's various concerns, including the protest, by
issuing several solicitation amendments. As finally amended, the
solicitation provided for selection of a private sector proposal based on
the following evaluation factors: management approach, technical, small
business use, past performance, financial capability and cost/price. [2]
Offerors were advised that proposals would be evaluated on an
"acceptable/unacceptable" basis with regard to the management approach,
technical, and small business evaluation factors, [3] and that any proposal
rated as "unacceptable" under any factor would be disqualified from the
competition. RFP sect. M.1.2. Finally, the solicitation provided that past
performance would be rated adjectivally, that cost/price and past
performance were approximately equal in importance, and that the agency
would perform a trade-off between cost/price and past performance with
regard to proposals that were rated acceptable under the other evaluation
factors.

TDF's proposal, which it submitted by the March 23, 2001 closing date, was
the only one submitted by a private sector offeror. Thereafter, as required
by the solicitation, TDF provided an oral presentation to the agency. [4]
The agency then performed a preliminary evaluation of TDF's proposal and
concluded that it contained numerous deficiencies. By letter dated April 24,
the contracting officer advised TDF of the results of its evaluation
stating:

The Source Selection Board for this acquisition has completed their initial
review of offers received and the results of that review indicate that your
proposal, as submitted, contains serious inadequacies that need to be
addressed. At this time, the government has decided to include your proposal
in the competitive range of this competition. However, be advised that
unless basic defects are resolved, your proposal may be removed from the
competitive range and further consideration in this competition.

. . . . .

To begin the discussion process, a summary of these inadequacies is included
as Enclosure 1. Your response to these basic deficiencies and weaknesses is
essential for evaluation of your proposal to proceed. . . .

. . . [O]ver-arching concerns of your proposal have been given. It does not
address every instance of weakness or deficiency and is not all-inclusive.
We recommend your response be based on a thorough review of your proposal
against the RFP guidance and PWS requirements.

Agency Report, Tab 9, Letter from Contracting Officer to TDF (Apr. 24,
2001).

The agency's enclosure to the April 24 letter outlined various deficiencies
in TDF's proposal, among other things, stating:

Our review has resulted in serious concerns relative to your company's clear
understanding of what is required to successfully accomplish an operation
the size, scope and complexity of the PWS. Adherence to RFP Section L and
consideration of Section M appear to be lacking. . . . Several critical
functional areas lack sufficient information for evaluation. . . .

Also, adequate explanation was lacking for the areas of: staffing relative
to identified workload, staffing distribution across shifts to accomplish
24-hour coverage, work hours or staffing for the 90-day transition period
discussed in the Management proposal paragraph 2.1.2.8 and, staffing
relative to the help desk.

. . . . .

As a result of your oral presentation we understand that you intend to use a
matrixed workforce approach in supporting the PWS. However, your proposal
did not address how you plan to manage this "fluid" workforce. What are your
plans for overall management of workflow, training people who are shifted to
different areas to accomplish work, completing the work those people would
otherwise be performing, and clearly delineating supervisory lines of
responsibility, authority and inter-communication?

. . . . .

It is difficult to establish a clear association between the work
requirements by PWS paragraph number and each position in each work unit,
including the work years required for each function. Your proposal lists
functional responsibilities (e.g., PWS sections 5.3.9.3.3.2, 5.3.4.3.4,
5.4.2.3.2) and multiple organizations. A clear crosswalk

between your Staffing Matrix (starting page 87) and your Outline of all
Paragraphs of the PWS (starting page 95) would assist our under-standing of
the proposal.

Agency Report, Tab 9, Enclosure 1, at 1-3.

On April 26, the agency conducted a meeting with TDF personnel to discuss
the multiple proposal deficiencies. On May 11 and May 24, TDF submitted
revisions and additions to its proposal. After reviewing TDF's supplemental
submissions, the agency again evaluated TDF's proposal and again found it to
be unacceptable in several areas. Among other things, the agency concluded
that TDF's proposal failed to propose appropriate staffing levels to perform
various contract requirements. The agency also concluded that TDF's
technical approach merely restated various PWS requirements and failed to
reflect an adequate understanding and/or experience regarding particular
contract requirements, including operation and maintenance of the e-mail
system, software maintenance, backup and recovery of the local area
network (LAN), and telecommunications. In light of the multiple proposal
deficiencies in TDF's proposed management and technical approach, the agency
states that it could not make any final determination regarding the
reasonableness of TDF's proposed cost/price.

On June 20, the agency's source selection evaluation board (SSEB) briefed
the source source selection authority (SSA) regarding TDF's proposal. Based
on the SSEB's input, the SSA determined that TDF's proposal would not be
further considered. By letter dated June 27, the contracting officer
notified TDF of this determination. This protest followed.

DISCUSSION

TDF protests that it was unreasonable for the agency to exclude its proposal
from consideration, complaining that the agency failed to properly apply the
stated evaluation factors and relied on factors not disclosed in the
solicitation. We have reviewed the entire record and find no merit in TDF's
allegations.

As noted above, the agency found various aspects of TDF's proposal to be
unacceptable, including its proposed staffing levels. With regard to TDF's
staffing, the agency's final evaluation report stated:

Neither the written or oral presentation provides a clear description of
what level of effort is intended below macro level PWS requirements. The
staffing matrix [that TDF] provided does not allow for detailed analysis of
specific PWS workload. . . . [T]he [technical and management evaluation]
team spent considerable time attempting to determine which positions in the
organization would perform specific portions of the PWS.

. . . . .

a. There are work hours allocated to PWS requirements that appear to be too
low for accomplishment of the required work . . . . [5]

. . . . .

b. . . . A comparison of [TDF's] Staffing Matrix . . . and the PWS cross
reference submitted by [TDF] revealed inconsistencies in the offer[or]'s
proposal regarding assignment of requirements and allocated work years.

In all sections identified in the Staffing Matrix, there are work years
allocated to a labor category, but there are no PWS requirements assigned
for those positions . . . . [6]

. . . . .

Conversely, and of even more concern -- there were instances in the
offeror's proposal indicating assignment of PWS requirements to a labor
category, but there were no work years allocated in the Staffing Matrix to
execute the requirement . . . . [7]

Agency Report, Tab 20, Evaluation Report, 2-6.

Regarding TDF's proposed staffing, the report concludes: "[TDF's] proposal
does not clearly demonstrate how the staffing levels will adequately perform
the PWS workload. As a result, risk of failure is assessed as unacceptable."
Id.

Ultimately, TDF received the complete evaluation report [8] and, thereafter,
TDF submitted its final comments to our Office. Nothing in TDF's comments in
any way refutes the factual accuracy of the agency's evaluation regarding
TDF's proposed staffing. Indeed, rather than challenge the accuracy of the
agency's staffing analysis, TDF asserts that it was not adequately advised
that its proposal would be evaluated on the basis of its proposed staffing,
complaining that "the solicitation did not state in Section M that the
government would evaluate whether the contract staffing levels were
appropriate for contract requirements." TDF's Final Comments, Oct. 11, 2001,
attach 3, at 4. The record is to the contrary.

With regard to staffing, RFP sect. M explicitly advised offerors that both key
personnel and non-key personnel would be evaluated, stating under the
heading "Management Approach Criteria" as follows:

All topics discussed as part of the oral presentation in [RFP] paragraph
L.5.1(1)a5, Key Personnel, and a7, Staffing, and accompanying synopsis and
forms are subject to evaluation. This factor includes the qualifications and
experience of key personnel . . . and the offeror's approach to filling
non-key positions.

Agency Report, Tab 3, RFP sect. M.2.1(b).

The referenced portion of RFP sect. L above, which is incorporated into RFP sect.
M.2.1(b), more specifically advised TDF that, in preparing its proposal, it
must:

Discuss the minimum qualifications for your non-key positions. Discuss how
qualifications are determined before someone is hired. Discuss the numbers
of people in each of the boxes of the organizational chart. Discuss how
people are shared across the organization.

Agency Report, Tab 3, RFP sect. L.5.1(1)a7. [9]

In addition, as noted above, the agency advised TDF during discussions that
its proposal was deficient regarding its proposed staffing, specifically
advising TDF that it was difficult to correlate TDF's proposed staffing with
the PWS requirements, and that TDF's proposal inadequately explained how it
proposed to accomplish 24-hour coverage, how it proposed to staff for the
90-transition period, and how it proposed to staff the help desk.

It is a fundamental requirement that offerors be advised of the bases on
which their proposals will be evaluated. Federal Acquisition Regulation
(FAR) sect.sect. 15.304(d), 15.305(a); Techsys Corp., B-278904.3, Apr. 13, 1998,
98-2 CPD para. 64 at 9. However, here, it is difficult to imagine how the agency
could have more explicitly notified TDF that the protester must propose
staffing adequate to perform the contract requirements, that the agency
viewed a failure to do so as indicative of a lack of knowledge and
understanding of the contract requirements, and that TDF's proposal would be
eliminated from consideration if it failed to properly address the staffing
requirements. TDF's protest that the agency's evaluation of staffing was
somehow inconsistent with the RFP evaluation factors, and that the agency
therefore unreasonably evaluated its proposal as unacceptable, is without
merit. [10]

Next, TDF protests that the agency's elimination of its proposal was
improper due to an alleged conflict of interest on the part of two members
of the nine-member evaluation team who held positions in the function under
study. The agency responds that the positions held by the two evaluators at
issue had previously been designated as "government in nature" and,
therefore, these positions were not subject to being contracted out. [11]

We have held that, in conducting an A-76 procurement, the appointment of an
evaluation panel where a large majority of evaluators hold positions in the
function under study which are subject to being contracted out creates a
conflict of interest that is inconsistent with the standards mandated by the
FAR. DZS/Baker LLC; Morrison Knudsen Corp. B-281224 et al., Jan. 12, 1999,
99-1 CPD para. 19 at 7 (14 of 16 evaluators held positions that were subject to
being contracted out). We have, however, also held that the appointment of
evaluators who hold positions in the function under study is not necessarily
improper if the positions are not directly affected, that is, are not in
jeopardy of being contracted out. IT Facility Servs.-Joint Venture,
B-285841, Oct. 17, 2000, 2000 CPD para. 177 at 12. Finally, even where a
potential conflict of interest exists, we will not sustain a protest where
the record demonstrates that there was no prejudice to the protester. See
Battelle Memorial Inst., B-278673, Feb. 27, 1998, 98-1 CPD para. 107 at 6.

Here, our review of the agency's extensive evaluation record, including a
review of the evaluators' individual worksheets, establishes that the
agency's evaluation would not have been any different if the two evaluators
at issue had not participated. As discussed above, the record amply supports
the conclusion that TDF's proposal was unacceptable. Further, TDF was
provided the entire evaluation record, relative to TDF's proposal, for its
review. As discussed above, TDF did not identify any meaningful flaw or
inaccuracy in the agency's calculations and analysis, and TDF's
comments--which primarily focus on the assertion that TDF was not properly
advised of the applicable evaluation factors--along with our own review of
the evaluation record, support our conclusion that TDF was not prejudiced
here by any potential conflict of interest that may have existed.
Accordingly, on the basis of the specific facts presented here, we decline
to sustain the protest.

The protest is denied. [12]

Anthony H. Gamboa

General Counsel

Notes

1. The procedures for determining whether the government should perform an
activity in-house, or have the activity performed by a contractor are set
forth in OMB Circular No. A-76, and the Circular No. A-76 Revised
Supplemental Handbook (March 1996) (the "Supplemental Handbook"). The
process set out in OMB Circular No. A-76 and the Supplemental Handbook
broadly encompasses three steps. First, after the performance work statement
(PWS) has been drafted, there is a competition among private-sector
offerors, which is conducted much as any competed federal procurement is
conducted. Second, if that competition is conducted on a basis other than
selection of the low-cost-technically-acceptable proposal, the government's
MEO, which has been prepared based on the PWS, is compared with the winning
private-sector offer to assess whether or not the same level of performance
and performance quality will be achieved-and if it will not, to make all
changes necessary to meet the performance standards in the winning
private-sector proposal. Supplemental Handbook, part I, ch. 3, sect.sect. H.3.d, e.
Finally, once the playing field is thus leveled, there is a cost comparison
between the private-sector offer and the MEO. Id. This protest concerns step
one.

2. The solicitation identified various subfactors under each factor. For
example, under the management approach factor, the solicitation listed the
following: organizational structure; key personnel; management experience;
and business strategies. Under the technical evaluation factor, the
solicitation listed the following: system administration; customer service;
customized software development and maintenance; e-mail services; and
telecommunications. With identification of each subfactor, the solicitation
provided a detailed description of the particular matters the agency would
review.

3. Section M of the RFP defined an "acceptable" rating as applicable to a
proposal that: "demonstrates a clear understanding of requirements [and the]
[e]vidence provided indicates that the stated approach will be successful
and that solicitation requirements will be met." RFP sect. M.2.3. Conversely,
the RFP defined an "unacceptable" proposal as one that "fail[s] to meet one
or more of the criteria defined in the Acceptable rating above." Id.

4. Section L.5.1 of the solicitation provided a detailed outline of the
issues to be addressed during the oral presentation.

5. The evaluation report then listed various examples of PWS requirements
for which TDF's proposed staffing was insufficient. For example, PWS
paragraphs 5.2.1 through 5.2.1.4 require providing support for the Rock
Island Arsenal LAN, and contemplated 2,546 LAN work orders and 788 trouble
tickets. These tasks have historically averaged approximately 1 hour each;
yet TDF's proposed staffing level contemplated approximately 17 minutes per
task. Similarly, the report noted that PWS paragraphs 5.2.2.7 through
5.2.2.9 require that telephone operator services be provided 24 hours a day,
7 days a week; yet TDF's proposal presents no plan for staffing the operator
function as required. With regard to PWS paragraphs 5.3.2.3, which requires
various LAN backup and recovery services, the report notes that TDF has
allocated approximately 3 hours annually for each server, and that this
effort is intended to include daily, weekly, and monthly backup, monitoring
the backup jobs, and resolving operations problems. Finally, PWS paragraphs
5.3.3 through 5.3.3.2.5, requires operation of a help desk; the historic
workload for this function includes 30,000 phone requests, 520 walk-in
requests, and 5,200 e-mail requests. The report notes that TDF's allocated
level of staffing would result in applying approximately 8 minutes per
request and concluded that this was an insufficient amount of staffing time
for this activity.

6. The evaluation report then lists multiple examples, including: PWS
paragraphs 5.1.4 through 5.1.4.3, Technology Research; PWS paragraphs 5.1.7
through 5.1.9, Computer Security; PWS paragraphs 5.2.1 through 5.2.1.4,
Telecomunications Local Area Network Services; and PWS paragraphs 5.2.2
through 5.2.2.1.2.2, Telecommunications Switched Services. With
identification of each PWS paragraph, the agency document describes certain
associated concerns.

7. The evaluation report followed this statement with specific examples of
PWS requirements for which no time was allocated, including: the requirement
in PWS paragraph 5 to assist in planning, organizing, and directing site
information architecture; the requirements of PWS paragraph 1.3.1,
concerning establishment of a quality control plan; the requirements of PWS
paragraph 1.8.1, concerning contract data requirements; and the requirements
of PWS paragraph 5.1.3, concerning maintenance of an automated database work
order system.

8. Following GAO's review of the initial agency report responding to the
protest, GAO's requested that the agency provide TDF personnel with the
entire evaluation record; the agency complied with GAO's request.

9. Section L of the RFP also directed TDF to prepare a staffing matrix which
addressed each labor category proposed, and to provide a cross-refernce
between its organizational chart and the various activities required by the
PWS. RFP sect. L.5.1(1)a8.

10. As noted above, the solicitation specifically advised offerors that a
rating of unacceptable under any one of the evaluation factors would result
in rejection of the proposal. Accordingly, TDF's deficient staffing provided
ample basis to exclude its proposal from consideration, and we need not
address the various other areas in which TDF's proposal was considered
unacceptable. We note in passing that the proposal was evaluated as
unacceptable under the technical evaluation factor with regard to e-mail
services, software development/maintenance, system administration, and
customer service.

11. In reviewing this protest, we requested that the agency provide our
Office with the documentation supporting its "government in nature"
designation. The record shows that the two positions at issue were part of a
routine assessment the agency performed in connection with its statutory
obligations under the Commercial Activities program, and that there were
several other positions, not at issue here, that were similarly designated
as "government in nature" during that process.

12. TDF raises various other issues. For example, it complains that the
agency "prematurely" established the competitive range, improperly "blended"
two types of evaluations, "improperly denied TDF's access to an expedited
protest process," and "demonstrated bias against private sector offer[or]s
on all A-76 cost comparison studies." TDF Final Comments, Oct. 11, 2001. We
have reviewed each of these allegations and find no merit in them.