TITLE:  Gonzales Consulting Services, Inc., B-291642.2, July 16, 2003
BNUMBER:  B-291642.2
DATE:  July 16, 2003
**********************************************************************
Gonzales Consulting Services, Inc., B-291642.2, July 16, 2003

   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:   Gonzales Consulting Services, Inc.
    
File:            B-291642.2
    
Date:              July 16, 2003
    
John S. Stewart, Esq., Stewart Sokol & Gray, for the protester.
Pamela J. Mazza, Esq., Philip M. Dearborn, Esq., and Jacquelyn S. Stewart,
Esq., Piliero, Mazza & Pargament, for NSR Information, Inc., an
intervenor.
Gena E. Cadieux, Esq., Beth A. Kelly, Esq., Department of Energy, and
Ernest E. Estes, Esq., Department of Energy, Bonneville Power
Administration, 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
    
Where solicitation advised offerors that agency would make a *best buy*
determination based on consideration of, among other things, total cost to
the agency and offerors' prior experience and past performance, agency
reasonably concluded that protester's cost advantage of approximately 2
percent was outweighed by awardee's experience and highly regarded past
performance of the precise requirements being competed under this
solicitation.
DECISION
    
Gonzales Consulting Services, Inc. (GCS) protests the Bonneville Power
Administration's (BPA) award of a contract to NSR Information, Inc. (NSRI)
pursuant to request for offers (RFO) No. 03127 to provide various support
services GCS protests that the agency's source selection decision was
unreasonable and that the agency was biased against GCS.
    

   We deny the protest.
    
BACKGROUND
    
BPA issued RFO No. 03127 on August 23, 2002, seeking proposals to provide
administrative, technical and professional support services at various
locations throughout the BPA servicing area.[2]  The services to be
performed under this solicitation combine the requirements currently being
performed under three separate BPA contracts; NSRI is the incumbent
contractor under two of those contracts. 
    
The solicitation contemplated award of a cost-plus-fixed-fee contract for
a 3-year base period and two 3-year option periods, and required that
offerors submit separate cost and technical proposals.  With regard to
cost proposals, the solicitation provided offerors with the *estimated
gross wages* that had historically been paid for the various types of
labor required to perform the services sought, and required offerors to
propose direct labor costs and indirect/burden rates for each contract
period.[3]  Agency Report, Tab 1, RFO, at 100002, 100009.  More
specifically, the RFP provided:
    
[An offeror's] Cost Proposal must include a breakdown of the rates to be
used in the performance of the contract (i.e. Fringe Benefits, Overheads,
G&A [General & Administrative], etc.).  This breakdown must include the
individual rates to be used and must show how these rates are applied in
the calculation of the proposed costs. 
Agency Report, Tab 1, RFO, at 100005a.
    
With regard to contract award, offerors were advised that the agency would
make a *best buy* determination based on both cost and non-cost factors. 
Specifically, the solicitation stated: 
    
Best buy will be determined by comparing such attributes of interests as
total cost to BPA, technical and management features, relative quality and
adaptability of services, the offeror's financial responsibility, skill,
experience, record of integrity in dealing, the time of performance
offered, past performance (including safety record), and whether the
offeror has complied with the specifications or demonstrated capability to
perform the statement of work.
Agency Report, Tab 1, RFO, at 100010. 
    
Prior to submitting its initial proposal on September 20, 2002, GCS sought
the agency's responses to certain questions, including an inquiry as to
whether site managers' salaries were included in the *estimated gross
wages* disclosed in the RFO.[4]  The contracting officer mistakenly
understood GCS's question to refer to only the overall project manager,
and, based on this misunderstanding, incorrectly advised GCS that the
costs associated with site managers were not part of the *estimated gross
wages* as shown in the RFO.[5] 
    
Nine offerors, including GCS and NSRI, submitted proposals which the
agency subsequently reviewed and evaluated.  On October 18, NSRI's
proposal was selected for award and GCS was subsequently advised of that
source selection decision.  Thereafter, GCS filed an agency-level protest
based, primarily, on GCS's reliance on the incorrect information it had
been given regarding non-inclusion of site managers' salaries in the RFO's
*estimated gross wages.*   
    
By decision dated January 2, 2003, the head of the contracting activity
(HCA) sustained GCS's protest.  Agency Report, Tab 3, at 100090-100106. 
In that decision the HCA directed that the agency re-open discussions with
the three highest rated offerors, including NSRI and GCS, correct the
misinformation GCS had previously received, request proposal revisions,
reevaluate proposals, and make a new source selection decision.  Id. 
    
Consistent with the HCA's direction, by letters dated January 22, 2003,
the agency reopened discussions with NSRI, GCS and a third offeror. 
Agency Report, Tab 4.    The letter to GCS specifically advised that the
*estimated gross wages* published in the RFO did include the salaries of
seven site managers, but not the salary of the project manager, and
requested that GCS submit proposal revisions by January 31.  Agency
Report, Tab 4, at 100119-20.  GCS responded by letter dated January 31,
making various changes to both its cost and technical proposal.  Agency
Report, Tab 6, at 100201-13.  Among other things, GCS revised various
portions of its aggregate indirect rate, that is, its CICRM, including a
reduction in its fringe benefit rate.  Agency Report, Tab 6, at 100211,
100226. 
    
The agency, thereafter, conducted face-to-face discussions with each
offeror.  The contracting officer states that during the meeting with GCS,
the agency sought explanations from GCS regarding the various changes to
its proposed costs, and that GCS did not provide satisfactory responses. 
Specifically, the contracting officer states, *When questioned about these
[cost] changes, [GCS] stated that they believed they could recover costs
with the lower rates, but . . . did not offer any additional support for
their conclusions.*  Agency Report, Tab 2, Decision Award Document, at
100088 (italics in original).
    
During the face-to-face meetings with the offerors, the agency also
advised each offeror that there was a *significant likelihood* that the
staffing level of employees used under the contract would be reduced from
the existing level of 165,[6] and asked at what point each offeror would
seek to amend its CICRM.  Agency Report, Tab 2, at 100085.  By letter
dated February 27, GCS responded to this question, stating:
    
You have asked us to address the impact of potential staff reductions on
our proposed Composite Indirect Cost Rate Multiplier (CICRM).
In our Revised Pricing Proposal dated January 31, 2003, we proposed a
CICRM (exclusive of Fixed Fee) of [deleted].  We are prepared to accept
this provided staff levels are not reduced below [deleted] from the
current level of 165 . . . .  As staffing is reduced below [deleted], we
would ask for incremental increases in the CICRM as follows:
Staffing level              CICRM
    
[deleted]                     [deleted]
[deleted]                     [deleted]
[deleted]                     [deleted]
[deleted]                     [deleted]
[deleted]                     [deleted]
[deleted]                     [deleted]
    
Agency Report, Tab 11, at 100343.
             
In contrast, NSRI responded to the agency's question regarding reduced
staffing by stating that in no event would it seek changes to its CICRM
prior to [deleted] (that is, for approximately [deleted]), and that it
would do so then only if the employee base had decreased by at least
[deleted] percent.  Agency Report, Tab 11, at 10034.  In short, GCS stated
that it would seek an increase in its CICRM if the number of employees
decreased from 165 to [deleted]--a decrease of [deleted]; NSRI stated it
would not seek any increase for [deleted] and, then, only if the number of
total employees had decreased by [deleted] percent. 
    
Following the face-to-face discussions, the agency requested that the
Defense Contract Audit Agency (DCAA) audit each offeror's proposed billing
rates.  Agency Report, Tabs 12, 13.  The DCAA audit report regarding
NSRI's proposed rates stated:  *We found no basis to question NSRI's
proposed provisional billing rates.*  Agency Report, Tab 12, at 100347. 
In contrast, the DCAA either took exception to or questioned several of
the rates proposed by GCS.  For example, the DCAA report concluded that
GCS's method of calculating its fringe benefit rate differed from fiscal
year (FY) 2002 to FY 2003, and that *[t]his practice is noncompliant with
FAR 31.202.*  Agency Report, Tab 13, at 100358.  With regard to GCS's
proposed overhead rate, the DCAA report stated:  *[GCS] understated the
recorded or estimated overhead rates,* further stating, *We determined
[GCS] proposed overhead costs are a significant reduction from FY 2002
amounts.*  Agency Report, Tab 13, at 100359.  Finally, with regard to
GCS's proposed G&A rate, the DCAA report stated, *[GCS] significantly
estimated rates lower than recorded for FY 2002,* elaborating that
although GCS's *cost and pricing data calculated a G&A rate for FY 2003 at
[deleted] percent,* GCS had proposed a [deleted] percent G&A rate for all
contract periods.  Agency Report, Tab 13, at 10060.
    
Following completion of discussions and receipt of all proposal revisions,
the agency again evaluated the proposals, considering the various cost and
non-cost issues identified in the RFO.  The total costs proposed by GCS
and NSRI were very close.  Specifically, NSRI's proposed cost was
$78,982,345, Agency Report, Tab 5, at 100198; GCS's proposed cost was
[deleted].  Agency Report, Tab 6, at 100211-13.  In evaluating the
proposals, the agency considered the relative proximity of GCS's and
NSRI's proposed costs, noting that GCS's cost proposal was approximately
[deleted] percent lower than NSRI's, but also identifying certain risks
that GCS's proposal presented.  Specifically, the agency considered the
inconsistency in GCS's indirect rates as  identified by DCAA, and the fact
that GCS had expressly qualified its initial commitment to hold its CICRM
constant, stating:  *We are prepared to accept [our  initially proposed
CICRM rate] provided staff levels are not reduced below [deleted].*   
Agency Report, Tab 11, at 100343 (emphasis added).  In contrast, the
agency considered NSRI's *proven track record,* its ability to *control
costs and work with BPA collaborately,* its success in *provid[ing] a very
high level of service,* and its more advantageous commitment to maintain
its CICRM.  Agency Report, Tab 2, at 100087, 100089. 
    
On March 17, the contracting officer, acting as the source selection
authority, concluded that NSRI's experience in successfully performing the
requirements being competed and the high quality of its past performance,
along with the risks associated with GCS's proposal, outweighed the
benefit offered from GCS's slightly lower proposed costs, and selected
NSRI's proposal for award, stating:
    
It is my opinion that the selection of NSRI poses the least amount of risk
to BPA and the difference in price between GCS and NSRI is not especially
significant, and if staff reductions are necessary, NSRI's costs will be
lower than GCS'[s].
In our best judgment, NSRI's proposal offers BPA the best overall value in
that it provides a stabilization of costs with minimal disruption to
current operations and will require the least amount of government
oversight.  There is no question of their overhead and fringe benefits
rates, because they have been audited and accepted by DCAA, based on
actual costs.  The DCAA audit found that there were discrepancies between
GCS'[s] proposed and actual costs.  This discrepancy is understandable in
that the audit is based on historic costs and many new costs would arise
if GCS were to perform this work.  However, as a major cost-reimbursable
contract, the miscalculation of these costs could have significant
negative implications for BPA and/or GCS.  BPA is not i[n] the position to
accept these risks at this time. 
It is my opinion that the selection of NSRI to continue our support
services contract presents the least risk to BPA at this time and is the
*best buy* for BPA based upon the criteria set for this competition.  NSRI
has performed very satisfactorily over the years and has demonstrated, not
only a willingness, but also an ability to understand BPA's business and
work with us collaboratively to provide a very high level of service. 
NSRI has repeatedly demonstrated their willingness to partner with BPA, as
shown by their recent decision to freeze salaries at their current level
indefinitely, while BPA attempts to recover its financial health.  They
have also [deleted] rates even though the number of employees has
[deleted]. 
Agency Report, Tab 2, Decision Award Document, at 100089. 
    
Thereafter, the agency advised GCS of its source selection decision.  This
protest followed. 
    
DISCUSSION
    
GCS protests that the agency's source selection decision was unreasonable
and that the agency was improperly biased against GCS in favor of the
incumbent, NSRI.  As discussed below, based on our review of the record,
we find no basis to question the reasonableness of the agency's source
selection decision, nor does the agency's reliance on NSRI's successful
experience and highly regarded past performance constitute improper bias.
    
In reviewing a protest challenging an agency's evaluation of competing
proposals, our Office will not reevaluate the proposals but, rather, will
examine the record to ensure that the agency's evaluation was reasonable
and consistent with the stated evaluation criteria.  Abt Assocs., Inc.,
B‑237060.2, Feb. 26, 1990, 90-1 CPD P: 223 at 3‑4.  A
protester's mere disagreement with the agency's evaluation determination
does not provide a basis for sustaining the protest.  Brunswick Def.,
B-255764, Mar. 30, 1994, 94-1 CPD P: 225 at 9.
    
Further, it is well settled that a particular offeror may possess unique
advantages and capabilities due to its prior experience under a government
contract, and the government is not generally required to equalize
competition to compensate for such an advantage.  Crux Computer Corp.,
B-234143, May 3, 1989, 89‑1 CPD P: 422 at 5.  More specifically, our
decisions have long held that such an advantage neither constitutes
preferential treatment nor is otherwise unfair.  See, e.g., B.B Saxon Co.,
Inc., B-190505, June 1, 1978, 78-1 CPD P: 410 at 20. 
    
Where, as here, the solicitation expressly advised offerors that the
agency would consider the offerors' experience and past performance, it
was clearly reasonable for the agency to rely on NSRI's experience in
successfully performing the activities being competed, along with its
highly regarded past performance of those activities with regard to
controlling costs, and conclude that the advantages offered by NSRI's
proposal outweighed any potential advantage reflected in GCS's slightly
lower proposed costs.  This is particularly true when GCS's cost advantage
was based on billing rates that DCAA had questioned,[7] and that GCS had
specifically conditioned on retention of an employee base that did not
decrease by more than [deleted] percent.[8]  The agency's preference for
the incumbent's performance in these circumstances does not constitute an
improper bias.  To the contrary, we find the agency's source selection
decision to be reasonable and supported by the record.   
    
The protest is denied.
    
Anthony H. Gamboa
General Counsel
    
    

   ------------------------

   [1] BPA is a federal entity within the Department of Energy, and was
created by the Bonneville Project Act of 1937 to market hydroelectric
power generated by a series of dams along the Columbia River in Oregon and
Washington.  16 U.S.C. S:S: 832-832m (2000).  Unlike most executive branch
agencies, BPA's contracting activities are not governed by the competition
requirements of the Federal Property and Administrative Services Act of
1949, as amended by the Competition in Contracting Act of 1984; rather,
the Bonneville Project Act provides that BPA's contracting authority is
subject only to the provisions of that statute.  16 U.S.C. S: 832a(f)
(2000); see also International Line Builders, B-227811, Oct. 8, 1987, 87-2
CPD P: 345.  BPA is, similarly, not subject to the Federal Acquisition
Regulation (FAR) but, rather, is governed by BPA's own acquisition
regulations, the Bonneville Purchasing Instructions (BPI), that implement
the procurement authority granted in its organic statute.  Id.   
[2] The BPA servicing area includes the states of Oregon, Washington,
Idaho, the portion of Montana west of the Continental Divide, and small
portions of California, Nevada, Utah, and Wyoming.  Agency Report, Tab 1,
at 100066.
[3] The RFO referred to the combined indirect/burden rates as the
*Composite Indirect Cost Rate Multiplier* or CICRM.  Agency Report, Tab 1,
RFO, at 100005a.
[4] GCS states that it *was aware* there were at least seven site managers
performing under the existing contract.  Protest at 3.     
[5] The BPI does not require that agency responses to individual offerors'
questions be provided to all offerors; accordingly, only GCS received the
incorrect information.
[6] The record indicates that BPA has been undergoing financial
difficulties since 2001, and is under significant, ongoing pressure to
reduce costs.  Agency Report, Tab 15, at 100368-73.
[7] GCS maintains that the agency *neither had the right nor the
obligation* to perform a *subjective and uninformed evaluation* of its
proposed billing rates.  GCS Comments on Agency Report, May 22, 2003, at
12.  Nonetheless, other than arguing generally that all forward billing
rates are projections, and asserting in conclusory form that GCS's
explanation to the agency regarding its proposed rates should have been
considered adequate, GCS offers nothing in the way of a detailed
explanation responding to the specific concerns identified in the DCAA
audit report. 
[8] GCS also asserts that it was improper for the agency's evaluation to
include consideration of GCS's February 27, 2003 statement that it would
retain its initially proposed CICRM *provided staffing levels are not
reduced below [deleted]*; GCS argues that it was only responding to a
*hypothetical question.*  GCS Comments on Agency Report, May 22, 2003, at
13.  GCS's assertion in this regard is without merit.  The GCS statement
was submitted in response to a specific agency question regarding the
impact of staff reductions.  GCS's response was unequivocal in not only
expressly conditioning its initially proposed CICRM on retention of a
staffing level of [deleted] employees, but further stating, *[a]s staffing
is reduced below [deleted], we would ask for incremental increases* and
calculated the increases it *would ask for* to the ten thousandth of a
percentage point.  Agency Report, Tab 11, at 100343.