TITLE: All Star-Cabaco Enterprise, Joint Venture
BNUMBER: B-290133; B-290133.2
DATE: June 25, 2002
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All Star-Cabaco Enterprise, Joint Venture, B-290133; B-290133.2, June 25,
2002
DOCUMENT FOR PUBLIC RELEASE
The decision issued on the date below was subject to a GAO Protective
Order. This redacted version has been approved for public release.
Decision
Matter of: All Star-Cabaco Enterprise, Joint Venture
File: B-290133; B-290133.2
Date: June 25, 2002
David B. Dempsey, Esq., and Dorothy C. Slovak, Esq., Holland & Knight, for
the protester.
Clare A. Kersten, Esq., and Richard G. Welsh, Esq., Naval Facilities
Engineering Command, for the agency.
Linda C. Glass, Esq., and Michael R. Golden, Esq., Office of the General
Counsel, GAO, participated in the preparation of the decision.
DIGEST
1. Protest challenging agency evaluation is denied where the overall
evaluation reasonably reflected the awardee's proposal's technical
superiority, notwithstanding minor errors.
2. Selection of technically superior, higher-priced proposal is
unobjectionable where the solicitation provided that technical
considerations were more important than price and the agency reasonably
concluded that technical superiority of the awardee's proposal warranted
payment of the associated price premium.
DECISION
All Star-Cabaco Enterprise, Joint Venture (ACE) protests the award of a
contract to Brown & Root Services Corporation (BRS) under request for
proposals (RFP)
No. N68711-00-R-9201, issued by the Naval Facilities Engineering Command,
Department of the Navy, to provide base operating support services to
include operations, repair and maintenance of the Naval Air Facility (NAF)
El Centro, California and other commands. ACE asserts that the agency
improperly evaluated the offerors' technical capabilities and failed to
follow the "best value" scheme set forth in the RFP.
We deny the protest.
The solicitation, issued on November 28, 2000, contemplated the award of a
combination fixed-price/indefinite-quantity contract consisting of an
8-month base period with four 12-month option periods. The requirement is
divided into 18 separate fixed-priced " annexes" and separately priced
indefinite-delivery/ indefinite-quantity (ID/IQ) line items. For example,
Annex 17 is for ground support equipment and Annex 18 is for housing
maintenance. Offerors were required to submit a lump sum fixed-price for
the fixed-price work, such as utilities distribution and transportation.
For ID/IQ items, such as plumber, mechanic and carpenter services, the
solicitation provided estimated hours, and offerors were instructed to
provide a total estimated price and a ceiling price.
The solicitation provided that proposals would be evaluated based on
technical capability, past performance, subcontracting efforts, and price.
The first three factors were of equal importance and when combined were
significantly more important than price. The solicitation further provided
that the importance of price would increase if competitive range offerors
were considered essentially equal in terms of technical capability, or if a
price was so high that it diminished the value of technical superiority to
the government. The technical capability evaluation factor consisted of the
following equal subfactors: method of operation, staffing, experience,
transition plan, and quality control. The solicitation stated that,
notwithstanding the relative importance of subfactors, the influence of the
subfactors would depend in large measure upon the nature and variation in
the differences among proposals received.
The RFP provided that past performance would be evaluated utilizing
information from the U.S. Army Corps of Engineers' Contractor Appraisal
Support System database, the Department of the Navy's Contractor Performance
Assessment Reporting System (CPARS), other customers known to the
government, consumer protection organizations, and others who may have
useful relevant information. RFP, Factor 2--Past Performance. Offerors
were also required to forward past performance questionnaires to identified
referenced customers/clients.
With respect to the subcontracting effort evaluation factor, the
solicitation provided that "firms identifying the greatest amount of small
business subcontracting support beyond the stated recommended goals in all
the listed small business categories
(SB [small business], SDB [small disadvantage business], WOSB [women-owned
small business], HUB Zone [historically underutilized business]) shall be
rated to the
highest." RFP � M. B, FACTOR 3- Subcontracting Efforts. The solicitation
identified the following recommended subcontracting goals compared to the
total contract value as follows:
Small Business: 25%
Woman-owned Small Business: 5%
Small Disadvantage Business: 5%
HUB Zone: 1.5%
Price proposals were to be evaluated for reasonableness and realism. Price
proposals were also to be evaluated for the degree of risk assumed by the
offerors in their proposal structure. Offerors were cautioned that
unrealistically low (or high) proposed prices might be grounds for
eliminating a proposal from the competition, either on the basis that the
offeror did not understand the requirement, or because it submitted an
unrealistic proposal.
ACE, BRS and four other offerors submitted proposals by the closing time.
The technical evaluation team (TET) reviewed the proposals for technical
capability and the price evaluation board (PEB) reviewed price proposals.
The source selection board (SSB) evaluated past performance and
subcontracting efforts. After the initial proposal evaluation, all offerors
were rated marginal for technical capabilities and past performance. The
agency decided to include all six offerors in the competitive range and held
discussions with all six.
Prior to receipt of revised proposals, two offerors requested that they no
longer be considered for award. Revised proposals were received on
September 10, 2001, and following review of revised proposals, the agency
concluded that no further discussions were necessary. The four remaining
offerors were asked to submit final revised proposals (FRP) by December 3,
2001. The TEB, SSB, and PEB reviewed the relevant sections of the proposals
and reported on their findings. The TEB rated ACE and BRS "highly
acceptable" overall under Factor 1, Technical Capability. After reviewing
the strengths and weaknesses of the FRP's, the TEB determined that BRS
merited the highest ranking of the four proposals, on the basis of the
relative value of the strengths of its proposal under certain subfactors, as
well as the fact that BRS had no identified weaknesses in its proposal. In
support of its conclusion that BRS's proposal should be ranked first, the
TEB noted the BRS proposal's "exceptional" rating for the transition plan
subfactor and its "highly acceptable" rating for the method of operation
subfactor. The SSB, in its evaluation of past performance, also concluded
that BRS should be ranked first and ACE ranked second. ACE was ranked lower
than BRS overall primarily based on the significant weight of BRS's
strengths and the fact that ACE's proposal had a minor weakness concerning
the proposed staffing level for Annex 18, housing maintenance.
ACE's final proposed price was $43,793,108.01; BRS's was $48,240,7123.12.
The PEB evaluated the price proposals and determined that ACE's proposed
price was unrealistically low and presented a high risk of understatement of
costs. The PEB found that ACE's proposal contained potential cost overruns
in both the fixed- price and ID/IQ portions of the contract that would not
be covered by its proposed profit margin of [DELETED] percent. The PEB also
had concerns with respect to ACE's reported general and administrative (G&A)
rate being capped at [DELETED] percent and attempted to verify the rate with
the Defense Contract Audit Agency (DCAA). The PEB also found that ACE had
proposed unrealistically low prices for several ID/IQ items. The PEB found
that ACE had failed to apply any escalation to material costs for option
years, and with respect to several annexes, ACE did not account for
subcontractors' profits and did not apply its own profit to the proposed
subcontractor costs. The PEB concluded that ACE's proposed costs had not
been adequately supported, were unrealistically low, and could not be
considered to be fair under certain market conditions. Revised Price
Evaluation Board Report at 18. As a result, the PEB found the performance
risk presented by ACE's price proposal to be high. Id.
With respect to BRS's price proposal, the PEB found that the fixed prices
were fully supported, but the PEB did identify potential cost
understatements in some ID/IQ items. Notwithstanding the PEB's
determination that pricing of certain ID/IQ portions in BRS's proposal was
unreasonably low, the PEB found that BRS's proposed profit was adequate to
cover the potential underpricing. Revised Price Evaluation Board Report at
26. Accordingly, the PEB identified a moderate risk of understatement of
costs with respect to BRS. Id.
After reviewing the final TEB and PEB reports, the SSB agreed with the
findings of both boards. Although ACE provided the lowest overall price and
was rated "highly acceptable" overall for the technical factors, the SSB
concluded that the proposal submitted by BRS offered the best value to the
government. The SSB found that the combined significance of BRS's proposal
strengths compared to ACE's proposal was worth the 9 percent price premium.
Moreover, the SSB believed that ACE's pricing did not support its offer to
the extent that there was considerable risk of not meeting contract
requirements for both the fixed price and the ID/IQ portion of work.
Post-Negotiation Business Memorandum at 23. The Source Selection Authority
(SSA) accepted the board's recommendation and award was made to BRS on
March 4, 2002. Following a debriefing, ACE filed this protest with our
Office.
The protester initially argued that the agency failed to evaluate properly
the offerors' technical capabilities and failed to follow the announced
best-value evaluation scheme.[1] In a supplemental protest, the protester
raised additional allegations that the agency misevaluated the proposals of
ACE and BRS. For example, the protester contends that the agency erred in
assigning the same ratings to the offerors for past performance and failed
to follow the stated evaluation criteria in its evaluation of the offerors'
subcontracting efforts.
Our Office will question an agency's evaluation of proposals only if it
lacks a reasonable basis or is inconsistent with applicable statutes or
regulations or with the stated evaluation criteria. Cobra Techs., Inc.,
B-280475 et al., Oct. 6, 1998, 98-2 CPD � 98 at 3; DAE Corp., Ltd.,
B-257185, Sept. 6, 1994, 94-2 CPD � 95 at 4.
ACE contends that the agency inconsistently evaluated the relative value of
the strengths of the ACE and BRS technical proposals. For example, ACE
points out that it proposed the use of the MAXIMO data collecting system at
contract inception, while BRS offered to use MAXIMO within four months of
contract commencement; ACE contends that the SSB report provided to the SSA
makes no mention of ACE's plan to use MAXIMO immediately. ACE contends
that, in contrast, BRS's proposed use of MAXIMO within four months after
contract award was considered a major factor that improperly turned the
evaluation of technical capability in BRS's favor. ACE argues that if the
specifics of ACE's proposal to use MAXIMO had been made available to the
SSA, ACE would have been rated technically superior and thus its proposal
would have been considered the best value.
Contrary to the protester's contention, both the TEB and the SSB recognized
ACE's proposed use of MAXIMO at contract inception as a major strength.
Source Selection Board Report, July 23, 2001, at 5 and Technical Evaluation
Board Report, Dec. 2001, at 11. The record shows that the agency evaluated
ACE's proposed use of MAXIMO at contract inception under the method of
operation subfactor. On the other hand, BRS was given a strength for
proposing to implement MAXIMO within 4 months of contract award under the
transition plan subfactor. ACE appears to be arguing that the outcome of
the evaluation may have changed had both offerors been evaluated for their
respective use of MAXIMO under both method of operation and transition
plan. Our review of the record leads us to conclude that the use of MAXIMO
could reasonably be evaluated under either subfactor, and the choices the
agency made in this regard appear to have had no impact on the outcome. As
previously stated, the record clearly shows that both offerors' proposals
were evaluated as having a significant strength for proposing the use of
MAXIMO, and we do not find unreasonable the agency's determination that the
proposed use of MAXIMO, by both offerors, was of equal value to the
agency.[2]
The protester argues that the agency erroneously assigned the same "highly
acceptable" past performance rating to both offerors despite the superiority
of ACE's past performance record. ACE's position is based on the fact that
it received two "exceptional" and two "very good" ratings under the CPARS
(contractor performance assessment rating system), while BRS received three
"very good" and one "satisfactory" rating. As explained above, CPARS was
only one part of the past performance evaluation. The solicitation stated
that past performance information would be gathered from several sources,
such as references, customers known to the government and consumer
protection organizations. In fact, the agency received six responses to the
past performance questionnaire, of which five rated BRS "outstanding" and
one "satisfactory." Revised Source Selection Board Report at 5. Likewise,
the agency received six responses for ACE, of which five rated ACE
"outstanding" and one "satisfactory." Id. at 8. After a review of both
offerors full past performance record, the agency concluded that both
offerors overall past performance had been good and that both had a high
probability of success and posed negligible risk. On the basis of ACE's and
BRS's overall past performance record, we do not find unreasonable the
agency's rating both offerors "highly acceptable," nor does the record
require rating ACE past performance as "exceptional."
ACE contends that, in accordance with RFP � M, Factor 3--Subcontracting
Effort, it should have been rated higher than BRS since it exceeded the RFP
subcontracting goals by a higher percentage than BRS. The record shows that
both offerors exceeded the RFP small business subcontracting goals.
Accepting the calculations provided by ACE, ACE proposed a goal of 29.7
percent and BRS proposed a goal of 27.4 percent. For subcontracting effort,
the RFP stated that "[t]hose firms identifying the greatest amount of small
business subcontracting support beyond the stated recommended goals in all
of the listed small businesses categories (SB, SDB, WOSB, HUB Zone) shall be
rated to the highest." RFP, Factor 3--Subcontracting Efforts. Since both
offerors exceeded the RFP requirement, the agency rated both proposals
"highly acceptable" for subcontracting effort. We have no basis to question
this rating, since the difference between the percentage goals proposed was
relatively insignificant. Although RFP language is not a model of clarity,
it does not require that the firm with the highest goal in excess of the
recommended goal must receive a higher rating than assigned to the firm with
the next-highest goal.
ACE also challenges the agency's evaluation of its proposal in several areas
in which the agency now concedes that its evaluation may have been erroneous
but nonetheless maintains that ACE was not prejudiced. For example, ACE
contends that its proposed use of a performance manager with 13 years of
experience in base operating services (BOS) was unreasonably not evaluated
as a strength. ACE notes that BRS was credited with a significant strength
for its proposal of key personnel with BOS experience, while it was credited
with only a minor strength for its use of a retired Navy Officer with the
requisite experience.
While the record shows that ACE's proposal of a performance manager with BOS
experience was recognized by the TEB when evaluating ACE's staffing
proposal, this fact was not assigned a strength as it was for BRS.[3] The
agency also concedes that ACE should have been credited with a significant
or major strength for its housing maintenance experience and concedes that
its characterization in the SSA decision that "many" of ACE's strengths did
not apply to more than one annex was not accurate since, in fact, only three
of the nine strengths now credited to ACE's proposal apply to only one
annex.
While the record does show ACE's proposal should have been evaluated as
reflecting additional strengths in the above areas, we will not sustain a
protest unless the protester demonstrates a reasonable possibility that it
was prejudiced by the agency's actions. McDonald-Bradley, B-270126, Feb. 8,
1996, 96-1 CPD � 54 at 3. Here, the record establishes that, while the
protester's and awardee's proposals received the identical overall rating of
"highly acceptable," the evaluators reasonably found that the awardee's
approach to satisfying the requirement was technically superior to the
protester's. In reaching that conclusion, we rely in particular on the
contemporaneous narrative, which we view as adding context and depth beyond
that represented in the one or two word ratings.
The record shows that the agency evaluated BRS as technically superior
because it provided under "method of operation" a detailed explanation of
how all RFP requirements would be met and provided for a smooth flow of work
in all aspects of the contract to the extent that "risk of unsuccessful
performance [was] negligible." BRS also demonstrated an established
relationship with local vendors for supplies and services that the agency
felt reduced the chance of material delivery delay. BRS proposed key
personnel currently working under the BOS contract at NAF El Centro with
specific knowledge of what the work entails and established relationships
with key government officials. BRS not only had significant BOS experience,
but considerable non-BOS military support experience and significant housing
maintenance experience. BRS also was rated higher for its transition plan,
including a clearly delineated transition with minimal impact to base
operation and a proposal to accomplish the transition earlier than
required. Moreover, the protester's price was considered to be so
unrealistically low that the agency believed it presented a significant
performance risk. In view of this record, we consider reasonable the
agency's overall evaluation of BRS's proposal as technically superior to
ACE's proposal, notwithstanding the failure to identify as a strength ACE's
housing maintenance experience under the appropriate subfactor and the
overstatement of the number of strengths that applied to only one annex.
These evaluation flaws do not invalidate the agency's conclusion that BRS
submitted the better technical proposal based on the strengths identified
above that are not challenged.
ACE also objects to the price evaluation on the grounds that ACE and BRS
were treated unequally.[4] Specifically, ACE contends that the agency
accepted BRS's exercise of its business judgment relative to BRS's decision
to provide ID/IQ pricing below the RFP estimates but did not extend the same
treatment to ACE. ACE objects to the SSB's determination that there was
"little" risk of unsuccessful contract performance by BRS despite the
"moderate" risk assigned by the PEB.
The record shows that the agency had numerous specific concerns about ACE's
pricing methodology, some of which were not resolved during discussions.
Among other things, the PEB found that ACE underpriced certain ID/IQ items
without explanation, and that this underpricing was not understood by the
agency even after a thorough investigation. ACE also proposed no escalation
on material for the out years and no profit on major subcontracts.
Moreover, the PEB concluded that ACE's proposed profit would not cover the
understatement of costs. Consequently, the agency determined that ACE's
pricing did not support its technical proposal and that the risk of
unsuccessful performance was high. We note that ACE does not meaningfully
question the agency's underlying findings.
The record provides no basis to conclude that the agency unreasonably
determined that ACE's pricing posed a risk of unsuccessful performance.
Further, the record indicates that it was ACE's failure to properly document
its pricing methodology that generated the different conclusions reached
concerning each offeror's ability to perform at its proposed price. While
the record shows that BRS also understated certain ID/IQ line items, unlike
ACE, BRS reasonably explained its pricing strategy. Further, the PEB
concluded that with respect to the questionable ID/IQ items, BRS's proposed
profits would cover those understated prices, a determination that the PEB
was unable to make with respect to ACE's pricing.
Finally, the protester questions the agency's best value determination and
contends that the SSA failed to document his source selection decision.
Where, as here, the RFP indicates that technical considerations are more
important than price considerations, selection of a technically superior,
higher-priced proposal is proper where the agency reasonably concludes that
the price premium was justified in light of the proposal's technical
superiority. Dynamics Research Corp., B-240809, Dec. 10, 1990, 90-2 CPD �
471 at 2. Further, the source selection decision was properly documented.
In the Business Clearance Memorandum, the SSB made a point-by-point
comparison of ACE and BRS, and as explained above, concluded that BRS was
technically superior and offered the lowest reasonable price. Although
ACE's overall price was lower, its low price raised doubt as to its ability
to perform the requirements. Federal Acquisition Regulation (FAR) � 15.308
requires that source selection decision be documented and that the
documentation include the rationale for any business judgments or tradeoffs
made or relied on. Here, the SSA agreed with the SSB recommendation and,
while he did not prepare a separate source selection decision document, he
endorsed a well-documented source selection decision. FAR �15.308 permits
an SSA to use reports and analysis prepared by others, provided the SSA
exercises independent judgment in making his decision. We see no basis to
question the reasonableness of the award determination.
The protest is denied.
Anthony H. Gamboa
General Counsel
-------------------------
[1] The protester also argues that the TET and TEB failed to follow the
instructions of the source selection plan in evaluating proposals. This
protest issue is without merit. Source selection plans provide internal
agency guidelines and, as such, do not give parties any rights. Centech
Group, Inc., B-278904.4, Apr. 13, 1998, 98-1 CPD � 149
at 7 n.4. It is the evaluation scheme in the RFP, not internal agency
documents, such as source selection plans, to which an agency is required to
adhere in evaluating proposals and in making the source selection.
[2] The agency in its report states that the additional time that ACE
proposed to utilize MAXIMO was not viewed as so valuable as to warrant a
higher adjectival rating, and we have no basis to find that position
unreasonable.
[3] The agency asserts in its report that the individual proposed by ACE was
not considered by the evaluators as an added strength because the individual
evaluators had first-hand knowledge of the individual's work record and
determined that his participation as a key employee on the proposed contract
did not present a strength. However, the record contains no contemporaneous
documentation to support this position.
[4] In its supplemental protest filed with its comments to this Office on
April 29, 2002, ACE raised several specific issues with respect to the price
evaluation, such as the failure of DCAA to perform a proper analysis of
ACE's proposal. The agency responded to these issues and the protester's
supplemental comments failed to address the agency's responses. As a
result, we consider these issues to be abandoned and will not address them.
Datum Timing, Div. Of Datum, Inc., B-254493, Dec. 17, 1993, 93-2 CPD � 328
at 5.