TITLE:  Systems Research Group, Inc., B-291855, March 21, 2003
BNUMBER:  B-291855
DATE:  March 21, 2003
**********************************************************************
Systems Research Group, Inc., B-291855, March 21, 2003

   Decision
    
    
Matter of:   Systems Research Group, Inc.
    
File:            B-291855
    
Date:              March 21, 2003
    
Fredrick V. Garcia for the protester.
Capt. Ronald D. Sullivan, LTC Thomas L. Hong, and Capt. Dan DiPaola,
Department of the Army, for the agency.
Tania Calhoun, Esq., and Christine S. Melody, Esq., Office of the General
Counsel, GAO, participated in the preparation of the decision.
DIGEST
    
Protest that, in connection with the private-sector competition component
of an Office of Management and Budget Circular A-76 commercial activities
study, contracting agency unreasonably evaluated the protester's proposal
as technically unacceptable is denied where the record shows that the
agency's evaluation was reasonable and consistent with the solicitation's
stated evaluation criteria.
DECISION
    
Systems Research Group, Inc. (SRG) protests the Department of the Army's
determination that its proposal to perform selected requirements at the
Army's Directorate of Information Management at Fort Jackson, South
Carolina, was technically unacceptable.  SRG's proposal responded to
request for proposals (RFP) No. DABT60-01-R-3024, which the Army issued in
connection with an Office of Management and Budget (OMB) Circular A-76
commercial activities study. 
    
We deny the protest.
    
The Army issued this solicitation on January 16, 2002 to select a
commercial offeror to compete against the government's in-house *most
efficient organization* (MEO) pursuant to the procedures of the OMB
Circular A-76 cost comparison process.[1]  The solicitation, which
included requirements for information management/information technology
services, administrative services, and video-teleconferencing services,
anticipated the award of a cost-plus-fixed-fee contract for the 90-day
phase-in period, and a cost-plus-award-fee contract for the base and
option years. 
    
The Army planned to select the technically acceptable offer with the
lowest most probable cost, determined by a cost realism analysis, to
compare with the MEO.  RFP S: M, at 71.  A source selection evaluation
board (SSEB) was to evaluate proposals against four factors--technical,
management, past performance/past experience, and cost--in order to make
its selection decision.  Id.  The successful offeror's proposal must have
received an overall rating of technically acceptable considering all
evaluation factors other than cost; the RFP stated that the technical
factor was more important than the management and past performance/past
experience factors.  Id. at 72. 
    
SRG's protest is limited to the agency's evaluation of its proposal under
the technical factor, which was comprised of five subfactors:  phase-in
plan, staffing plan, technical approach, work scheduling, and quality
control.  The RFP stated that the staffing plan and technical approach
subfactors were the most important subfactors, and that all other
subfactors were of relatively equal importance.  Id.  The overall rating
was to be unacceptable if the proposal was rated unacceptable under either
of these two subfactors.  Id.
    
Four of the seven offers submitted were included in the competitive
range.  The contracting officer forwarded written discussion questions to
each competitive range offeror, including SRG, and the SSEB evaluated
offerors' proposal revisions.  The proposals submitted by Communications
Technologies, Inc. (COMTek) and another firm were found to be technically
acceptable, with COMTek offering the lowest MPC of $14,295,056.[2]  The
proposals submitted by SRG and the fourth offeror were found to be
technically unacceptable and, as a result, the agency did not further
analyze SRG's proposed cost of $7,994,824.
    
The SSEB found SRG's proposal technically unacceptable based upon its
unacceptable ratings under the technical and management factors.[3]  These
ratings were based, in turn, upon SRG's final ratings of unacceptable
under four of the five technical subfactors, and under one of the three
management subfactors.  The SSEB's final evaluation report indicates that
the SSEB believed SRG's responses to its discussion questions were
*mixed,* that some of the firm's answers were incomplete or did not fully
address the question, and that, as discussed below, SRG failed to provide
a *complete, legible* work breakdown structure (WBS).  Final SSEB
Evaluation Report at 2.  Based upon the SSEB's findings, the contracting
officer recommended the selection of COMTek's offer for comparison with
the MEO, and the source selection authority concurred on November 4.  SRG
was notified of this decision by letter dated November 13, the same day
the Army determined that the cost comparison between COMTek's offer and
the MEO resulted in a tentative decision that performance be accomplished
in-house.  SRG subsequently filed this post-debriefing protest challenging
the reasonableness of the Army's evaluation of its proposal under the
phase-in, staffing plan, and technical approach subfactors.
    
It is not the function of this Office to evaluate technical proposals de
novo; rather, in reviewing a protest against an allegedly improper
evaluation, we will examine the record only to determine whether the
agency's judgment was reasonable and consistent with the stated evaluation
factors.  J&E Assocs., Inc., B-278187, Jan. 5, 1998, 98-1 CPD P: 42 at
2-3.  The protester's disagreement with the agency does not render the
evaluation unreasonable.  ESCO, Inc., B-225565, Apr. 29, 1987, 87-1 CPD
P: 450 at 7.  Our review of the record shows that the agency reasonably
evaluated SRG's proposal as technically unacceptable. 
    
Each offeror was required to include a section concerning its technical
approach, including a staffing plan, in the technical volume of its
proposal.  This information was to be evaluated under the staffing plan
and technical approach subfactors.  The staffing plan was required to
clearly depict the total number of productive staff hours and associated
full-time equivalents for each proposed labor category, and to clearly
explain and depict all cross-utilization of the labor force.  RFP S: L, at
65.  Offerors were required to address task requirements to the third
level of the WBS/PWS, and to clearly and fully demonstrate a thorough
understanding of the requirements to accomplish the effort.  Id.       
    
In evaluating proposals under the staffing plan subfactor, the agency was
required to answer the question, *Does the offeror provide a clear and
easily understood staffing plan that provides sufficient detail to
determine that the offeror can provide a sufficiently skilled and adequate
work force (including any cross-utilization of personnel proposed) to
perform all the requirements, including workload surges and after duty
hours requirements?*  RFP S: M, at 72.  In evaluating proposals under the
technical approach subfactor, the agency was required to answer the
questions, *Does the offeror provide an adequate description of each
functional area including the identification of major work processes,
process interfaces, and the outputs of these processes?* and *Does the
offeror's technical approach ensure efficient, quality, and timely
performance?*  Id.
    
The SSEB's final evaluation report shows that the Army found three major
unacceptable areas in SRG's proposal under the staffing plan subfactor. 
First, the SSEB found that SRG did not provide a WBS and that, as a
result, the SSEB could not determine whether all of the workload could be
accomplished by the staff proposed by SRG.  Final SSEB Evaluation Report
at 2.  Second, the SSEB was concerned with the size and distribution of
full-time equivalents within SRG's organization, and found that the number
of staff proposed was *very lean*; according to the SSEB, *with the small
amount of information provided,* it appeared that some functions were
overstaffed and other functions were understaffed.  Id.  Third, the SSEB
found that SRG did not provide a cross-utilization plan.  Id.  The SSEB's
final evaluation report shows that SRG's proposal was found unacceptable
under the technical approach subfactor because SRG did not provide a WBS
and, as a result, the SSEB could not determine if the firm had an
acceptable technical approach.  Id.
    
SRG argues that it did include a WBS in its technical proposal[4] and
alleges that the SSEB failed to read this information.  The section of the
proposal to which SRG refers goes through each major paragraph and
subparagraph of the PWS to describe how the firm will meet the
requirements.  At the end of the discussion of each major paragraph, a
table lists each subparagraph, a corresponding performance standard, a
corresponding position title for the individual proposed to perform the
task, and a corresponding number of task hours.  See, e.g., SRG Proposal
at III-57, III-58. 
    
While the SSEB's final evaluation report states in several places that SRG
submitted *no WBS,* the summary of the SSEB's findings in that same
document clarifies that the SSEB's view in fact was that SRG did not
submit a *complete* WBS.  Final SSEB Evaluation Report at 2; see also
Pre-Negotiation Objective Memorandum at 4.  As the agency explains, it is
more accurate to say that the SSEB did not believe that the WBS SRG
submitted contained complete information, and *the absence of skill level
information rendered any WBS information contained in SRG's proposal
meaningless.*  SSEB Chair's Mar. 7, 2003 Memorandum at 1.  Specifically,
the Army explains that a WBS permits an offeror to demonstrate its ability
to comply with the requirements and perform the individual tasks set forth
in the PWS.  To successfully make this demonstration, a WBS must break
tasks down to the appropriate level and identify the labor category
performing each task, the skill level of that labor category, and the
amount of time it will take to perform each task.  If any one of these
pieces of information is missing, the offeror has failed to demonstrate
its ability to comply with the requirements.  Here, the SSEB found SRG's
WBS to be incomplete because, while it listed its labor categories by way
of its unique position titles, it did not describe the skill level of the
labor categories proposed to perform the tasks.  As a result, the SSEB
could not conclude that SRG's proposed labor categories had the requisite
skills.        
    
The solicitation put offerors on notice of the importance of submitting
information about the skill levels of proposed labor categories.  Section
M of the RFP stated that proposals would be evaluated to ascertain whether
an offeror could provide a *sufficiently skilled and adequate workforce*
(under the staffing plan subfactor) and whether an offeror's technical
approach ensured *efficient, quality, and timely performance* (under the
technical approach subfactor).  RFP S: M, at 72.  Moreover, during
discussions, SRG was put on notice of the agency's difficulty in
ascertaining the skill levels of its proposed positions, and of a way to
easily satisfy the agency's requirements.  The firm was asked to provide
Department of Labor (DOL) occupations and grade levels for all of the
proposed non-exempt positions[5] and advised that *[t]he requirement of
the solicitation in Section L is you may either use all DOL Labor
categories for your proposal or provide a cross-walk between your labor
categories and the DOL Labor Categories.*  Discussion Questions Letter
encl. No. 1.
    
SRG's response did not comply with these instructions.  First, the firm
stated, without any substantive support, that all of its proposed
positions were exempt from the SCA.  Second, instead of giving the SSEB
what was required--position titles that corresponded with the wage
determination's labor categories or a crosswalk between those labor
categories and its own--SRG chose to provide a crosswalk between its
proposed labor categories and an entirely different set of labor
categories taken from the federal government's general schedule wage
system.  SRG Proposal Revisions Question 14.  Since the SSEB believed that
most of the labor categories required by the contract were subject to the
SCA, and were set forth in the wage determination,[6] it was using DOL
guidance associated with the wage determination's labor categories to
evaluate the skill levels of proposed labor categories.  Since SRG did not
provide the requested crosswalk to these categories, did not provide any
narrative explanation of the skill levels of its proposed labor
categories, did not include any information in its proposal to permit the
agency to compare the skill levels of its labor categories with those in
the wage determination, and did not provide any rationale to support its
view that all of its employees were exempt from the SCA, the SSEB could
not ascertain the skill levels of SRG's proposed labor categories.  Given
the importance of this information as described in the RFP's evaluation
criteria for the staffing plan and technical approach subfactors, we
cannot conclude that the SSEB unreasonably found SRG's proposal
unacceptable under either subfactor.[7] 
    
The RFP also required each offeror to include a section on its phase-in
plan in the technical volume of its proposal.  This information was to be
evaluated under the phase-in plan subfactor against two questions:  *Does
the Phase-In Plan demonstrate a thorough and clear plan for phase-in with
a high probability for success?* and *Does the offeror present an adequate
plan for recruiting and retaining the required staffing level, to include
key personnel, necessary to provide complete contractual support from
phase-in through expiration of the contract?*  RFP S: M, at 72.
    
The agency's conclusion that SRG's proposal was unacceptable under this
subfactor focused on three major areas, two of which concerned the fact
that *Six Sigma,* a quality improvement methodology, was an *integral*
part of the firm's way of doing business.  SRG Proposal at III-2.  First,
the SSEB found that SRG's phase-in plan did not adequately describe how
the development and accreditation of the firm's Six Sigma software could
occur by the contract start date.  Second, the SSEB was concerned that,
while Six Sigma was the framework for SRG's contract performance, the
firm's proposal did not emphasize employee training in Six Sigma prior to
the contract start date.  Third, the SSEB found that the proposed pay
levels for most positions in SRG's proposal were so low that they would
prevent SRG from hiring qualified personnel, especially the government
employees who were currently paid considerably more and had the skills
necessary for a smooth transition.  
    
Citing the first criticism, SRG argues that there is no reason that the
subject of the development and accreditation of its Six Sigma software
should be discussed in the phase-in plan because Six Sigma is a quality
assurance process.  SRG asserts that *[a]nyone familiar with software
development would understand that the proposed phase-in period simply does
not allow sufficient time for any meaningful software development.*  SRG
Protest at 4.  SRG states that it provided ample information regarding its
Six Sigma methodology in the quality control portion of its proposal, and
alleges that the SSEB did not read this information when evaluating its
proposal. 
    
SRG misunderstands the nature of the Army's concern.  The SSEB reviewed
the quality control section of SRG's proposal and rated it acceptable. 
The SSEB's concern about SRG's Six Sigma methodology was associated with
the question whether, given the firm's reliance on the Six Sigma
methodology to achieve success in this effort, SRG's phase-in plan
demonstrated a *thorough and clear plan for phase-in with a high
probability for success.*  RFP S: M, at 72.  This concern arose upon
review of SRG's responses to several discussion questions.  
    
SRG was asked if it could use Fort Jackson's help desk software for the
data gathering process associated with its quality control plan, and if
its proposal included the cost of any specialized software and necessary
modules.  In its revised proposal, SRG stated that it did plan to use the
government's help desk software for the data gathering process and would
import its information into proprietary SRG-developed Six Sigma tracking
databases.  SRG Proposal Revision Question 6.  SRG explained that the
specialized software used to support the quality assurance and Six Sigma
methodology for the effort was a subset of that used by SRG for all
contracts; that this software would be developed during the contract
transition period; and that the transition costs reflected the programming
time required to capture and integrate the various data collection
subsystems.  SRG Proposal Revision Question 11.  SRG stated that there was
a *close relationship* between the primary data gathering software owned
by the government and the SRG-developed Six Sigma software and that, for
this reason, SRG envisioned that its Six Sigma software would operate on a
government-supplied computer on the Fort Jackson network within the
firewall boundaries.  Id. 
    
Based on these responses, the SSEB found that SRG contemplated a measure
of software development during the transition period that was not
adequately explained in its proposal, and that this inadequate explanation
raised doubts about SRG's probability for success in this effort. 
Specifically, the SSEB was concerned that SRG's proposal to import
information from government-owned software into SRG-developed proprietary
Six Sigma databases on government-furnished equipment raised security
accreditation issues.  Software must be accredited before it can be
installed on a government computer, and SRG's mere assumption that the
software would operate on the government's computer system was
unaccompanied by any detail, assurance, or plan concerning its passage
through the government's accreditation process.  This unsupported
assumption led the SSEB to conclude that there was a *high probability*
that SRG's phase-in plan would not be accomplished.  Final SSEB Report at
2.  The SSEB also concluded that SRG had not addressed the issue of
ownership of the software since, even if SRG's software was accredited by
the start of the contract, once it was installed on a government system,
the software and the data it extracted and processed would become
government property.  Id.  SRG has given us no basis to question the
agency's judgment that these omissions in its proposal compromised its
ability to demonstrate that its phase-in plan had a high probability for
success.
    
We do not agree with SRG that the Army failed to advise the firm during
discussions that there was a risk associated with its Six Sigma
implementation.  When an agency engages in discussions with an offeror,
such discussions must be meaningful.  Shaw Infrastructure, Inc., B-291121,
Nov. 19, 2002, 2002 CPD P: 9 at 7.  For discussions to be meaningful,
contracting officials must advise offerors of deficiencies in their
proposals and afford offerors an opportunity to revise their proposals to
satisfy the government's requirements.  Ryan Assocs., Inc., B-274194 et
al., Nov. 26, 1996, 97-1 CPD P: 2 at 6.  This does not mean that offerors
are entitled to all-encompassing discussions; agencies are only required
to lead offerors into areas of their proposals that require
amplification.  Id.   
    
One of the Army's concerns with SRG's Six Sigma methodology was that,
despite the fact that Six Sigma was the framework for SRG's contract
performance, the firm failed to emphasize how its employees would be
trained in Six Sigma before the commencement of the contract.  During
discussions, SRG was asked why Six Sigma training was to be given to
employees after the start of the contract and whether this approach would
affect contract performance; SRG was also asked when all employees,
including any incumbent government personnel it hired, would be expected
to be fully cognizant of the Six Sigma process.  Both of these questions
adequately highlighted the agency's concern that SRG might not be able to
effectively implement its Six Sigma methodology, which was the cornerstone
of its approach.[8] 
    
Finally, we are unpersuaded by SRG's assertion that its responses to these
questions should have mitigated any risk in its phase-in plan.  As the
SSEB noted in its final evaluation report, the firm did not explain how
incumbent--government--employees would receive Six Sigma training by the
contract start date, and did not elaborate on how Six Sigma training would
be accomplished.  Final SSEB Evaluation Report at 2.  SRG has given us no
basis to find the agency's concerns unreasonable, and no basis to question
the agency's conclusion that its proposal was unacceptable under the
phase-in subfactor.[9]
    
In sum, the record shows that SRG's proposal was rated unacceptable under
the overall management factor--a rating which SRG does not challenge--as
well as
under four of the five subfactors which comprised the technical factor. 
SRG does not challenge its rating under one of those four subfactors, and,
as discussed above, the record clearly supports the agency's conclusion
that SRG's proposal was unacceptable under the remaining three factors
(phase-in plan, staffing plan, and technical approach).  Since the RFP
specifically stated that a proposal must be rated unacceptable overall if
it received an unacceptable rating under either the staffing plan or
technical approach subfactors, the agency's conclusion that SRG's proposal
was unacceptable clearly was reasonable and consistent with the terms of
the solicitation.
    
The protest is denied.
    
Anthony H. Gamboa
General Counsel
    
    
    

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

   [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 Circular
A-76 and the Circular's Revised Supplemental Handbook.  This protest
concerns the competition among private-sector firms to be selected for
comparison with the MEO; such a competition is conducted much as any
competitive federal procurement is conducted.
[2] The independent government cost estimate was just over $18 million.
[3] SRG's proposal received an initial rating of marginal under the past
performance/past experience factor.  SRG does not challenge this initial
rating or its final rating of unacceptable under the management factor.
[4] SRG also argues that it provided a more detailed WBS in its cost
proposal.  However, consistent with the RFP's instruction that offerors
not include cost information in the technical or management volumes of
their proposals, RFP S: L, at 63, 64, the Army cautioned SRG in its
written letter transmitting discussion questions to *[b]ear in mind that
the SSEB does not see the cost proposal.*  SRG Discussions Letter at 1. 
The SSEB did not review offerors' cost proposals--the cost realism
analyses were conducted by separate cost analysts--and could not have
considered any information therein.  In any event, the WBS provided in
SRG's cost proposal is also missing the information of concern to the
SSEB.
[5] Because this procurement is for services, it is subject to the Service
Contract Act of 1965 (SCA), 41 U.S.C. S:S: 351-358 (2000).  Pursuant to
this Act and the implementing provisions of the Federal Acquisition
Regulation (FAR), the contracting officer notified DOL of the agency's
intent to award a service contract and of the list of all the classes of
workers the contractor was expected to employ.  Based upon this
information, DOL provided a wage determination that was included as an
attachment to this solicitation.  The RFP required offerors to pay
employees who were not exempt from the SCA at least the minimum hourly
wages as set forth in the applicable wage determination.  RFP S: L, at 63;
FAR S: 52.222-41(c).  Employees may be exempt from the SCA if they are
employed in a bona fide executive, administrative, or professional
capacity, as those terms are defined in 29 C.F.R. Part 541.  FAR S:
22.1001.  The RFP required offerors to identify whether each staffing
position was exempt or non-exempt and the level and title of the labor
category for non-exempt categories.  RFP S: L, at 63.  
[6] The agency has provided extensive analysis in support of its view that
most of the positions required by the contract are non-exempt, and covered
by such wage determination categories as administrative support and
clerical occupations and automated data processing occupations.  SRG has
not rebutted this analysis.
[7] SRG has not rebutted the third basis for the SSEB's finding that its
proposal was unacceptable under the staffing plan subfactor--that the firm
did not provide a cross-utilization plan.
[8] As noted above, the Army's concerns associated with the development
and accreditation of SRG's software first arose upon review of SRG's
proposal revisions.  Since this information was first introduced in the
revised proposal, the agency was not required to reopen discussions to
obtain the firm's further input.  Id. at 7. 
[9] SRG has not rebutted the third basis for the SSEB's finding that its
proposal was unacceptable under the phase-in subfactor--that the proposed
pay levels for most positions in its proposal were so low that they would
prevent the firm from hiring the qualified personnel necessary for a
smooth transition.  In addition, SRG has not challenged its unacceptable
rating under the work scheduling subfactor, which was associated with
deficiencies in its phase-in plan.