TITLE:  Cortez, Inc., B-292178; B-292178.2; B-292178.3, July 17, 2003
BNUMBER:  B-292178; B-292178.2; B-292178.3
DATE:  July 17, 2003
**********************************************************************
Cortez, Inc., B-292178; B-292178.2; B-292178.3, July 17, 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:   Cortez, Inc.
    
File:            B-292178; B-292178.2; B-292178.3
    
Date:              July 17, 2003
    
Kenneth M. Bruntel, Esq., Daniel R. Forman, Esq., Amy E. Laderberg, Esq.,
and Michael Abelow, Esq., Crowell & Moring, for the protester.
Mark D. Colley, Esq., David S. Black, Esq., Stuart W. Turner, Esq.,
Caitlin K. Cloonan, Esq., and Michele M. Brown, Esq., Holland & Knight,
for EG&G Technical Services, Inc., an intervenor.
Sumara M. Thompson-King, Esq., and Jerry L. Seemann, Esq., National
Aeronautics & Space Administration, for the agency.
David A. Ashen, Esq., and John M. Melody, Esq., Office of the General
Counsel, GAO, participated in the preparation of the decision.
DIGEST
    
1.  Protest challenging conduct of price realism evaluation and agency
determination that awardee*s pricing was realistic is denied where
protester does not show that awardee*s pricing was likely to result in
significant performance risk and agency reasonably found that nothing in
awardee*s pricing called into question its understanding of the
performance requirements set forth in the solicitation.
    
2.  Protest that agency unreasonably found awardee*s past
performance/experience superior to the protester*s (the incumbent
contractor), is denied where, although both firms were reported to have
strong performance on a number of contracts, and protester was given
evaluation credit for experience on the incumbent contract, agency
determined, and protester conceded during discussions, that protester had
encountered problems in performing the incumbent contract. 
DECISION
    
Cortez, Inc. protests the National Aeronautics & Space Administration*s
(NASA) issuance of an order to EG&G Technical Services, Inc., under
request for quotations (RFQ) No. 8-1-1-A4-00155, for logistics services at
NASA*s George C. Marshall Space Flight Center (MSFC) in Alabama. The order
was issued to EG&G under the General Services Administration*s LOGWORLD
Federal Supply Schedule. Cortez challenges numerous aspects of the
technical and price evaluation.
    

   We deny the protest.
    
The RFQ contemplated issuance of an order for a base period of 3 years,
with 2 option years and 5 award term periods, to furnish, primarily on a
fixed‑price basis, a wide range of logistics services, including
environmental services, mail services, equipment maintenance and repair
services, motor pool services, property services, move services, disposal
services, and food services.  (The solicited effort included lump sum,
indefinite-delivery/indefinite-quantity (ID/IQ), pre-priced, and time and
materials requirements.)  Award was to be made to the offeror whose
quotation offered the best combination of price and qualitative merit
(including past performance).  The *best value* quotation was to be
determined based on three evaluation factors:  (1) mission suitability,
including subfactors for management approach (worth 375 of 1,000 possible
mission suitability evaluation points), technical approach (475 points),
safety, health and environmental (100 points), and small disadvantaged
business participation (50 points); (2) cost/price; and (3) past
performance.  The RFQ provided that mission suitability, cost/price and
past performance were essentially equal in importance, and that
qualitative merit, including past performance, was significantly more
important than price.
    
Initial quotations were received from three firms, including Cortez (the
incumbent logistics services contractor at MSFC), EG&G, and a third firm
(not relevant here).  After discussions with Cortez and EG&G, NASA
requested final quotation revisions (FQR).  Based on its evaluation of the
FQRs, NASA determined that EG&G*s quotation had a decisive advantage over
Cortez*s, such that it offered the best value.  Specifically, under the
mission suitability factor, EG&G*s quotation received an evaluation score
of 893 points, with 7 significant strengths, 32 other strengths, no
significant weaknesses, and 2 other weaknesses, while Cortez*s quotation
received a score of only 630 points, with 1 significant strength, 14 other
strengths, 2 significant weaknesses, and 21 other weaknesses.  Further,
EG&G received a past performance rating of very good while Cortez*s past
performance was rated as only good.  Finally, EG&G proposed a price of
$[DELETED] million, while Cortez proposed a price of $[DELETED] million. 
Upon learning of the resulting issuance of an order to EG&G, Cortez filed
this protest with our Office.
    
PRICE REALISM AND COMPENSATION
    
Cortez asserts that the agency failed to adequately evaluate the realism
of EG&G*s prices and the adequacy of its compensation plan.  In this
regard, the RFQ provided that *proposed cost/prices will be evaluated for
reasonableness and realism.*  RFQ, S: M, at 83.  The RFQ also specifically
provided under the mission suitability factor that *cost realism, or the
lack thereof, will be used in evaluating the Mission Suitability
Subfactors as an indicator of the Quoter*s understanding of the
requirement.*  RFQ, S: M, at 78.  Vendors were required to
    
provide a narrative . . . that identifies each indirect component with its
associated value for Lump Sum, fully burden[ed] labor rates, and Prepriced
work . . . . The indirect components associated with Lump Sum, fully
burden[ed] labor rates, Prepriced work and the material handling
coefficient factors components will be used in the evaluation for
reasonableness and realism of proposed prices and price components.
RFQ, S: L, at 69.  In addition, vendors were required to furnish in the
mission suitability volume of their quotation a total compensation plan
setting forth salaries/wages, fringe benefits and other types of leave
programs for all labor categories, and to demonstrate that their
compensation plan was *reasonable and . . . compliant with the Federal
labor standards (i.e., Service Contact Act . . . Fair Labor Standards Act,
etc.).*  RFQ, S: L, at 63.  All subcontractors were required to furnish
the same information.  RFQ, S: L, at 64. 
    
Where, as here, an RFP contemplates the award of a fixed-price contract,
the agency is not required to conduct a realism analysis; this is because
a fixed‑price (as opposed to a cost-type) contract places the risk
and responsibility for loss on the contractor.  WorldTravelService,
B-284155.3, Mar. 26, 2001, 2001 CPD P: 68 at 3; PHP Healthcare Corp.,
B-251933, May 13, 1993, 93-1 CPD P: 381 at 5.  However, an agency may, as
the agency did here, provide for the use of a price realism analysis for
the limited purpose of measuring offerors* understanding of the
requirements or to assess the risk inherent in an offeror*s proposal.  PHP
Healthcare Corp., supra.  The nature and extent of price realism analysis
ultimately are matters within the sound exercise of the agency*s
discretion, and our review of such an evaluation is limited to determining
whether it was reasonable and consistent with the solicitation*s
evaluation criteria.  Rodgers Travel, Inc., B-291785, Mar. 12, 2003, 2003
CPD P: 60 at 4; Star Mountain, Inc., B-285883, Oct. 25, 2000, 2000 CPD
P: 189 at 2.  Based on our review, we find that Cortez*s challenge to
NASA*s evaluation of price realism and employee compensation furnishes no
basis for questioning the award.   
    
Labor Rates
    
Cortez generally asserts that NASA failed to evaluate the realism of
either EG&G*s loaded labor rates or of the components that made up those
rates.  However, the record--including testimony given at a hearing held
by our Office--indicates that NASA in fact evaluated EG&G*s labor rates
and its indirect price components, and we find nothing unreasonable in the
evaluation. 
    
EG&G*s initial quotation, as required by the RFQ, included job
description/ qualifications forms for each labor category, setting forth: 
the contractor job title; comparable Service Contract Act (SCA) labor
category; an indication as to whether the category position is an exempt
position under the SCA; an indication as to whether the category is
covered by a collective bargaining agreement (CBA); the wages/salary and
hourly fringe benefits for the category; a description of the duties for
the category; and the qualifications for the category.  EG&G explained in
its initial quotation that its rates for non-exempt employees were based
on the SCA wage rate determination for those not covered by a CBA and on
the applicable CBA for those so covered, and that its rates for exempt
employees were developed using information from specified national
compensation surveys.  EG&G Initial Quotation, Price Proposal, at II-5. 
    
NASA first reviewed the wages/salary and fringe benefits indicated on the
job description/qualifications forms for conformance to SCA wage rate
determinations or a CBA.  For purposes of establishing an evaluation
benchmark, NASA then calculated a loaded rate for each labor category
using the applicable SCA and CBA rates and indirect price components
(e.g., general and administrative (G&A), overhead/fringe, and profit)
specified in the quotation; NASA compared the benchmark rates to EG&G*s
proposed rates to ensure that they were sufficient to cover the costs
associated with the SCA and CBA requirements.  Hearing Transcript (Tr.) at
68, 150-51. 
    
In its FQR, EG&G reduced its overall evaluated price from $[DELETED]
million to $[DELETED] million based on several changes, including:  (1) an
approximately $[DELETED] million reduction resulting from mistakenly
including flight hardware in its effort; (2) correction of a $[DELETED]
million arithmetical error in its initial quotation; and (3) reduction in
staff from [DELETED] to [DELETED] employees (still [DELETED] more than
Cortez*s [DELETED] employees), for a savings of approximately $[DELETED]
million.  In addition, EG&G proposed a reduction in profit from [DELETED]
to [DELETED] percent, and a reduction in the combined overhead/fringe rate
from an evaluated composite rate of [DELETED] percent to [DELETED]
percent, based on *changes to our benefit plans, benefit costs, and
overhead rates.*  Tr. at 140-43; EG&G FQR, Price Proposal, at II-1 to
II-2.  EG&G*s FQR specified reduced loaded labor rates *to reflect our
reduced pricing structure.*  EG&G FQR, Price Proposal, at II-2.  Although
EG&G did not furnish new job description/qualifications forms in its FQR,
and did not otherwise restate the base wages/salary of its proposed labor
categories, it reaffirmed in its FQR that its rates for non-exempt
employees were generally based on the applicable SCA wage rate
determination or CBA and that its rates for exempt employees were
developed using compensation surveys.  EG&G FQR, Price Proposal, at II-7.
    
In its evaluation of EG&G*s FQR, NASA compared EG&G*s FQR loaded labor
rates to its initial quotation rates and to the benchmark rates NASA had
developed for the initial evaluation.  NASA determined that,
notwithstanding the reduction in loaded labor rates, EG&G had not reduced
its base labor rates, Tr. at 176, and EG&G*s rates remained sufficient to
cover the costs associated with the SCA and CBA requirements.  Tr. at
133-36, 159-60.  In addition, the agency ensured that all proposed labor
was included in the quoted price, by calculating the total cost of the
proposed labor in EG&G*s mission suitability volume (using EG&G*s proposed
staffing plan, its schedule of loaded labor rates, and schedule of
productive hours), and comparing the result to the estimates in EG&G*s
price volume.  Tr. at 133-36; NASA Comments, July 3, 2003, at 5.  Further,
NASA considered whether, and determined that, EG&G had proposed a skill
mix and staffing level adequate to support the logistic services at MSFC. 
NASA Contracting Officer*s Statement (COS) at 20-21; Legal Memorandum at
10-11.  Thus, NASA*s methodology in evaluating EG&G*s price encompassed,
not only a review of the loaded labor rate changes in the FQR, but also a
more general consideration of the sufficiency of the revised rates.
    
As part of its evaluation of the indirect components of EG&G*s quoted
price, NASA sought input from the Defense Contract Audit Agency (DCAA). 
DCAA advised that the verified fiscal year 2003 G&A rate from EG&G*s
forward pricing rate submission dated December 2, 2002, was [DELETED]
percent.  Although EG&G had indicated that its initial quotation was based
on an initial G&A rate of only [DELETED] percent, NASA did not view this
lower rate as a matter of concern.  Rather, the agency viewed the
reduction as simply the result of an EG&G business decision to make its
price more competitive, an approach the agency did not find unusual in the
context of a fixed price competitive award.  Tr. at 32-33, 64, 125-26. 
(Further, the agency appears to have taken into account the fact that
winning a contract would increase the relevant EG&G division*s G&A base
and thus reduce its G&A rate.  NASA Comments, July 3, 2003, at 4.) 
Indeed, the RFQ here specifically instructed vendors to submit their *most
competitive firm‑fixed price quote,* and provided that *[d]ue to the
value of this GSA order, a price reduction to the negotiated GSA Contract
rates is requested.*  RFQ, S: L, at 69.  (Cortez stated in its FQR that it
had reduced its G&A rate from [DELETED] percent to [DELETED] percent. 
Cortez FQR, Price Proposal, at 2.) 
    
As for overhead, EG&G proposed several combined fringe/overhead rates that
were evaluated as totaling approximately [DELETED] percent‑‑or
[DELETED] percent when all benefits are added‑‑in its FQR. 
Final Findings Presentation to the Source Selection Authority at 39; Tr.
at 30-35.  The [DELETED] percent rate represented a reduction from its
initial quotation rate of [DELETED] percent, and from DCAA*s reported
forward pricing submission overhead rate of [DELETED] percent.[1] 
However, NASA apparently viewed the reduction from EG&G*s forward pricing
rates as reflecting the fact that the contract was to be primarily
performed using government-furnished facilities.  Consistent with this
view, both Cortez and the third vendor proposed no overhead.  (Cortez did
propose fringe, but not as a percentage rate.)  NASA found no basis to
question these rates, and ultimately concluded that EG&G could perform at
its quoted price.  Tr. at 45-47, 111, 203-04.  Again, we find nothing
unreasonable in the agency*s conclusions.
    
Cortez asserts that, given that EG&G reduced its loaded labor rates in its
FQR, but did not submit revised job description/qualifications forms,
there was no basis for NASA to evaluate its labor rates as adequate.  We
disagree.  As noted above, although EG&G*s FQR did not include new job
description/qualifications forms and did not expressly restate the base
wages/salary for each proposed labor category, the FQR did reaffirm that
EG&G*s rates for non‑exempt employees were based on the applicable
SCA wage rate determination or CBA (and that its rates for exempt
employees were developed using information compensation surveys).  EG&G
FQR, Price Proposal, at II-7.  In light of this reaffirmation and the fact
that the FQR loaded labor rates remained sufficiently high to cover the
cost of the base wages/salary and fringe benefits shown on the job
description/qualifications forms, we think the agency could reasonably
conclude that EG&G was proposing to reduce the indirect components of the
loaded rates, not the base wages/salary and fringe benefits shown on the
job description/qualifications forms furnished with its initial
quotation.  Tr. at 176-77.[1]  We note that Cortez itself concedes that it
*has no reason to believe that EG&G will not pay its employees the
minimums required by law . . . .*  Cortez Comments, July 3, 2003, at 6
n.2.
    
Nor has Cortez shown that EG&G will be unable to obtain its proposed staff
at the proposed wages/salary and fringe benefits.  The SCA/CBA rates on
which EG&G*s non-exempt labor rates were based have either been shown in
area surveys (by the Department of Labor or otherwise) to be those
prevailing in the locality for such employees, or are those negotiated
with the represented unions.  See 29 C.F.R. S:S: 4.3, 4.51, 4.52  (2003);
Tr. at 223.  As such, there is no basis for concluding that the rates will
not be sufficient to attract staff.  Indeed, Cortez likewise based its
base wages/salary and fringe benefits for non-exempt staff on the
applicable SCA/CBA rates.  In this regard, it appears from NASA*s detailed
evaluation of Cortez*s initial quotation labor rates that Cortez proposed
to pay in the initial contract year no more than the
SCA/CBA‑required base wages/salary for approximately [DELETED]
percent of the covered, identified FTEs, and no more than [DELETED]
percent above the SCA/CBA‑required base wages/salary for
approximately [DELETED] percent of the covered, identified FTEs.  Although
this amounted to slightly higher base wages/salary than those proposed by
EG&G, Cortez has not shown that the difference would materially and
adversely affect EG&G*s ability to obtain staff.  On the contrary, the
record indicates that EG&G has generally been able to staff service
contracts at the SCA/CBA rates.  Tr. at 326-29.[2]
    
Cortez asserts that NASA improperly failed to evaluate the realism of
EG&G*s rates for the exempt labor categories, and instead unreasonably
focused on EG&G*s approach to compensating non-exempt positions.  This
specific argument, focusing on the realism of the rates for the exempt
labor categories, is untimely, since it was not raised until more than 10
days after Cortez received a copy of EG&G*s quotation and the
contemporaneous evaluation record.  4 C.F.R. S: 21.2(a) (2003).[3] 
    
Understanding/Performance Risk
    
In support of its assertion that NASA failed to perform an adequate price
realism evaluation, Cortez argues that EG&G*s G&A rate, reflecting a
[DELETED] percent reduction from its forward pricing
rate‑‑from [DELETED] percent to the initial G&A rate of
[DELETED] percent indicated in its quotation‑‑was
unrealistic.  Cortez also questions whether EG&G*s FQR reduction in its
combined indirect/fringe rate was justified.  In addition, Cortez finds no
provision in EG&G*s price proposal for the cost of the required general
liability insurance (estimated by Cortez as amounting to [DELETED] percent
to [DELETED] percent) or for the application to labor of GSA*s 1-percent
Industrial Funding Fee.  Cortez concludes that, given that EG&G*s proposed
profit was only [DELETED] percent, EG&G will be performing the contract at
a loss, and its prices thus cannot be viewed as realistic.
    
We find Cortez*s arguments unpersuasive.  As an initial matter, Cortez
ignores both the general purpose of a price realism analysis in the
context of a fixed-price contract--to assess offerors* understanding of
the requirements or to assess the risk inherent in their quotations--and
the specific requirements of the RFQ here.  The RFQ did not provide for,
nor is there any other basis for requiring, a detailed examination of all
significant cost elements, and did not generally require vendors to
explain the basis for and extent of each of the indirect components or
otherwise to submit detailed cost and pricing data.  Rather, it required
only that vendors *provide a narrative . . . that identifies each indirect
component with its associated value for Lump Sum, fully burden[ed] labor
rates, and Prepriced work.*  RFQ, S: L, at 69.  (We note that Cortez
itself furnished no explanation as to how it intended to reduce its G&A
from the prior rates.  Cortez FQR, Price Volume, at 2; Cortez Initial
Quotation, Price, at 6.)  Likewise, as noted by the agency, there was no
requirement for vendors to explain where in their cost structure were
located the costs associated with required general liability insurance. 
EG&G agreed in its quotation to furnish the required general liability
insurance, and the agency reasonably assumed that it was included in
EG&G*s G&A pool.  Tr. at 48‑49, 67, 269; NASA Comments, July 3,
2003, at 4..  (Testimony from an EG&G vice president for contracts and
pricing confirmed that the cost for general liability insurance was in
fact included in its G&A.  Tr. at 304.)
    
We conclude that Cortez has not shown that NASA was unreasonable in
concluding from EG&G*s quotation that EG&G could perform the contract for
the quoted price.  Neither has Cortez shown that EG&G*s pricing was likely
to result in significant performance risk.  In this regard, we note that
EG&G received generally favorable past performance ratings, including an
outstanding quality control/assurance performance rating, with respect to
its current $20 million per year center operations support services
contract at MSFC, a fixed-price contract for which it assumed a
[DELETED] percent G&A rate.  Tr. at 324.  Finally, the agency reasonably
found that nothing in EG&G*s pricing calls into question its understanding
of the MSFC logistics services requirement.  The fact that EG&G reduced
its pricing in order to be more competitive does not show any lack of
understanding of what will be required to satisfy the MSFC logistic
services requirement--in fact, the record indicates that EG&G proposed
more staff than Cortez.  We conclude that the price realism evaluation was
reasonable.
    
PAST PERFORMANCE
    
Cortez challenges the evaluation under the past performance factor, under
which EG&G was rated very good, and Cortez only good.  Cortez maintains
that it should have received a higher rating than EG&G in this area. 
EG&G*s very good rating was based on:  (1) a significant strength for
significant experience and excellent performance with respect to *Firm
Fixed Price, Indefinite Delivery Indefinite [Quantity] and Time and
Materials* contracts; (2) a significant strength for a world‑class
safety record, including 2.6 million accident‑free labor hours at
MSFC; (3) a significant strength for selecting the Alabama Industries for
the Blind (AIB) to run the retail store at MSFC, when coupled with EG&G*s
own experience in operating a retail store; and (4) strengths for
outstanding past performance with respect to quality control/assurance at
MSFC, EG&G*s generally strong past performance questionnaires from
customers, strong references and experience in general for subcontractors,
the fixed price (including ID/IQ) experience and strong performance of
subcontractors/team members, a demonstrated ability to address technical
problems in work at the Department of Energy*s National Energy Technology
Laboratory, and experience with reliability centered maintenance, an area
viewed by the agency as important to more effective operations.  Final
Findings Presentation to the Source Selection Authority, at 45.   
    
As for Cortez, although it received a strength for strong experience as
the incumbent prime contractor/joint venture partner under the current
cost‑reimbursement contract for this requirement, NASA expressed
some concern that it lacked (significant) experience with
*[Firm-Fixed-Price]/IDIQ* contracts.  Final Findings Presentation to the
Source Selection Authority, at 44.  Further, NASA assigned Cortez a
weakness based on the fact that government monitors on the incumbent
contract had observed inaccurate and untimely cost reporting, an inability
to recognize and resolve problems, high project management personnel
turnover, and ineffective management decisions affecting operational
efficiency.  Indeed, contracting officials at MSFC reported that they
would not use this contractor for another contract, citing, among other
concerns, little or no innovation and lack of follow-through on problem
resolution.  Cortez Past Performance Documentation, at 29; Strengths and
Weakness Caucus Summary Report, Cortez, at 118-19.  Cortez*s failure to
furnish the required data with respect to its lost time incident rate was
also evaluated as a weakness.  See RFQ, S: L, at 58.  However, Cortez
received strengths for its generally strong past performance
questionnaires from customers, the participation of [DELETED] as its
retail store operator, and its innovative approach to addressing contract
challenges at Goddard Space Flight Center (GSFC).  Final Findings
Presentation to the Source Selection Authority, at 44.
    
Cortez raises several arguments, questioning, for example, NASA*s relying
on the mostly good ratings for the firm*s incumbent contract at MSFC,
rather than on the reports for other contracts, including one at GSFC,
which included excellent and excellent plus ratings.  However, there is
nothing unreasonable in an agency*s placing particular emphasis upon a
firm*s performance as the incumbent contractor; such performance
reasonably may be viewed as a more accurate indication of likely future
performance than performance on other contracts.  See D.M. Potts Corp.,
B‑247403, B-247403.2, Aug. 3, 1992, 92-2 CPD P: 65 at 4; Inlingua
Schools of Languages, B-229784, Apr. 5, 1988, 88-1 CPD P: 340 at 5 (prior
performance on incumbent contract for the same services was the most
relevant).  In any case, EG&G also received high performance ratings on a
number of contracts.  For example, EG&G*s performance was rated as
excellent plus/excellent for the center operations support contract at
MSFC, excellent plus/excellent for a support services contract at the
Department of Energy*s National Energy Technology Laboratory, exceptional
for a contract for operation and maintenance of the Air Force Radar Cross
Section Test Facility, and either excellent or excellent/good for a very
large classified logistics services contract.  EG&G Past Performance
Documentation. [4]  Unlike Cortez, however, EG&G had not been found
deficient in performance of the incumbent contract.
    
Cortez also denies that it was responsible for the cost reporting problems
under its current MSFC contract, and claims that those problems have been
corrected.  However, in response to written discussion questions
concerning these problems in performing the contract--for which Cortez had
assumed overall responsibility in a May 2000 contract novation after
having been a major subcontractor to the incumbent small disadvantaged
business prime contractor--Cortez*s chief executive officer
(CEO)/president addressed the matter during Cortez*s oral discussions in
February 2003 as follows:
    
*Government monitors on the incumbent contract have observed inaccurate
and untimely cost reporting, inability to recognize and resolve problems,
high project management personnel turnover, and ineffective management
decisions affecting operational efficiency.  Applicable contract number is
NAS8-97327.*  Those of you who have been here for several years associated
with this contract know that that statement is true and nobody is more
concerned with it than me and has been more concerned with it than me. 
When we took over this contract in April of 2000‑‑when we
purchased this contract‑‑there were deficiencies.  Performance
in this area‑‑some of these areas‑‑did not meet
our standards. . . . We were not doing the job the way we should
have‑‑the way we were contracted to do the job.  So we
initiated changes.  It was not as quick‑‑the turnaround was
not as fast as I would have liked.  But in the last six months, it has
shown good progress and I have been pleased with the turnaround and I am
optimistic and pleased with the staff that we have now have going forward
that this will no longer be an issue.  But, in answer to your point,
guilty.  I take responsibility for it, but I am also pleased that we
didn*t ignore it.  We took proactive action as we attempted to correct it.
COS at 46-47.[5]  Thus, Cortez*s CEO/president conceded Cortez*s
responsibility for performance problems that continued for over 2 years,
with efforts to correct them apparently still underway as late as *the
last six months.*  Id.  Furthermore, the most recent performance report
received by NASA with respect to Cortez*s performance on the incumbent
contract indicated that *Cortez continues to replace key project
management personnel in and out of this contract. This problem has not
helped to resolve some of the issues associated with the cost reporting
issues.*  Cortez Past Performance Documentation, at 29.  Thus, it is not
evident that the changes made by Cortez to correct the performance
problems under its contract were fully successful.  In view of Cortez*s
concession that it was responsible for a continuation of the performance
problems we think the agency reasonably could view this as a significant
weakness in Cortez*s performance, notwithstanding any progress Cortez may
have made in addressing the problems. 
    
Cortez also questions NASA*s consideration of its lack of significant
fixed price experience.  In this regard, however, the previous cost-type
contracting approach to logistics services at MSFC is being replaced with
an fixed price approach, and the RFQ specifically advised vendors of the
agency*s interest in this consideration, specifically requiring them to
discuss their experience in performing fixed price contracts and orders. 
RFQ, S: L, at 58.  Further, in its determination of the degree of
relevance a prior contract has to the contemplated effort, we find nothing
unreasonable in an agency*s considering--in addition to the type of
services being procured--the contract type.
    
As another example, Cortez challenges the fact that it received only a
strength for its selection of [DELETED] to operate the MSFC retail store,
while EG&G received a significant strength for its selection of AIB.  We
find nothing unreasonable in the ratings.  First, AIB received excellent
to excellent plus past performance ratings for its operation of the
Redstone Arsenal retail store.  EG&G Past Performance Documentation, at
103, 106.  Further, while Cortez lacked significant retail store
experience, NASA viewed it as an advantage that both EG&G and its selected
store operator (AIB) had experience operating a retail store.  While EG&G
received only good or fair ratings on its contract for operation of the
retail store at the Fleet Industrial Support Center, Norfolk, we think the
agency still reasonably could view as a relative advantage the fact that
the prime contractor--the entity ultimately responsible to the government
for retail store operations--had experience in that area.  The agency
therefore reasonably found EG&G*s approach in this area more advantageous
than Cortez*s.
    
In summary, while we recognize that the record before the contracting
officials indicated that Cortez, as well as EG&G, had a history of strong
performance on a number of contracts, we find that, given Cortez*s
admitted problems in performing the incumbent contract, there is no basis
for questioning NASA*s determination that EG&G possessed an advantage
under the past performance factor. 
    
MISSION SUITABILITY
    
Cortez challenges numerous aspects of the evaluation under the mission
suitability factor.  As noted above, EG&G*s quotation received a mission
suitability rating of 893 points, with 7 significant strengths, 32 other
strengths, no significant weaknesses, and 2 other weaknesses, while
Cortez*s quotation received a rating of only 630 points, with
1 significant strength, 14 other strengths, 2 significant weaknesses, and
21 other weaknesses.  Although we find that a number of Cortez*s arguments
have merit, the evaluation finding EG&G*s proposal more advantageous
overall under the mission suitability factor still appears to have been
reasonable due to its substantially greater number of significant
strengths and other strengths.  However, even if Cortez*s arguments
resulted in eliminating EG&G*s advantage under the mission suitability
factor, EG&G*s quotation would remain in line for award based on its
advantage under the past performance factor and lower price.  Thus, Cortez
was not prejudiced by any evaluation errors in this area.  See
McDonald-Bradley, B-270126, Feb. 8, 1996, 96-1 CPD P: 54 at 3; Statistica,
Inc. v. Christopher, 102 F.3d 1577, 1581 (Fed. Cir. 1996).
    
The protest is denied.
    
Anthony H. Gamboa
General Counsel
    
    

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

   [1] For example, Cortez has identified 23 EG&G labor categories in which
the FQR loaded rate was more than $1 below the initial quotation rate. 
However, except for one labor category for which the agency concluded that
the initial quotation rate was mistakenly too high, Tr. at 175, 257, cf.
Tr. at 307-08, and several exempt labor categories, the greatest reduction
in loaded rates (from $[DELETED] to $[DELETED]) was for EG&G*s work
control technician/administrative order clerk III, a category covering
only one full-time equivalent (FTE).  (Most reductions were less,
averaging approximately $[DELETED], or [DELETED] percent.)  Even for this
extreme example, EG&G*s loaded FQR rate was sufficient to cover the cost
of the base wages/salary and fringe benefits ($[DELETED]) indicated on the
job description/qualifications forms.
[2] Further, the record indicates that NASA intended that the contract be
subject to annual wage rate determinations notwithstanding the fact that
the appropriated funds used to fund the contract are 2-year funds, that
is, will be available for obligation during a period of 2 years.  NASA
reports that because its policy always has been to provide SCA/CBA labor
rate adjustments on an annual basis, (1) its written notice of the
procurement filed with the Department of Labor did not include the notice
required where a proposed contract for a multi-year period will be subject
to other than annual appropriations, and (2) the RFQ included Federal
Acquisition Regulation Standard Form Clause 52.222-43, which refers to
several circumstances warranting adjustment to the contract price,
including wage rate determinations applicable on the anniversary date of a
multiple year contract.  29 C.F.R. S: 4.4(d) (2003); 48 C.F.R.
S: 1822.1008-270(a); NASA Comments, July 11, 2003; NASA Comments, July14,
2003.  
[3] Noting that the RFQ required the submission of the same compensation
information for subcontractors as was required for the prime contractor,
RFQ, S: L, at 64, Cortez asserts that EG&G failed to submit the required
information with respect to subcontractor staff.  However, it appears from
EG&G*s quotation that its compensation approach was based on a single base
wages/salary and fringe benefits rate (as shown in the job
description/qualifications forms) for any particular labor category,
irrespective of which entity--prime or subcontractor--was furnishing the
labor.  Thus, there was sufficient information for NASA to determine that
EG&G*s overall compensation approach was adequate.
[4] In addition, we note that for one of the contracts on which Cortez
apparently is relying, a support services contract for the Army*s Yuma
Proving Ground for which excellent/excellent plus performance ratings were
received, the prime contractor in fact was a 50/50 joint venture of EG&G
and Cortez.  Cortez Past Performance Documentation, at 19. 
[5] Likewise, in its written slide for use in the oral presentation,
Cortez conceded with respect to the cited incumbent contract performance
issues that *Cortez Management has been aware of each operational and
administrative issue referenced.*  Cortez Discussions for Request for
Quotations, slide 44.  In its FQR, Cortez further stated that *[t]he
primary problem that we have acknowledged is in the accuracy of cost
reporting, which has led to other operational issues. . . .  The problems
encountered by Cortez at MSFC are regrettable but we have addressed each
issue and have taken the necessary steps to ensure your concerns have been
corrected.*  Cortez FQR, at 21.