TITLE:  R&D Maintenance Services, Inc., B-292342, August 22, 2003
BNUMBER:  B-292342
DATE:  August 22, 2003
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R&D Maintenance Services, Inc., B-292342, August 22, 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:   R&D Maintenance Services, Inc.
    
File:            B-292342
    
Date:              August 22, 2003
    
Alan M. Grayson, Esq., Brian T. Scher, Esq., and James A. McMillan, Esq.,
Grayson, Kubli & Hoffman, for the protester. 
James R. Thornton, Jr., Esq., and Connie Ledford Baran, Esq., Department
of the Army, Corps of Engineers, for the agency. 
Kenneth L. Kilgour, Paul I. Lieberman, Esq., and Michael R. Golden, Esq.,
Office of the General Counsel, GAO, participated in the preparation of the
decision.
DIGEST
    
1.  Allegation that technical evaluation was improper is denied where the
record establishes that the evaluation was reasonable and consistent with
the solicitation criteria.
    
2.  Agency is not required to address offeror*s relatively high proposed
cost during discussions where the cost is not considered unreasonable or
unacceptable for award.
    
3.  Protest that awardee engaged in *bait and switch* is denied where
there is no allegation that specific key personnel were proposed and
evaluated but not provided; in the circumstances here, the allegation that
the awardee may subcontract certain work which it proposed to perform
itself does not provide a valid basis for a *bait and switch* allegation.
DECISION
    
R&D Maintenance Services, Inc. (R&D) protests the award of a cost-plus
contract to Ferguson-Williams, Inc. (FW) under request for proposals (RFP)
No. DACW21-02-R-0005, issued by the United States Army Corps of Engineers
for certain power plant and dam maintenance and construction work. R&D
initially protested that the Corps failed to evaluate proposals in
accordance with the RFP criteria and failed to conduct meaningful
discussions. In response to the agency report, R&D added allegations that
the awardee engaged in prohibited *bait and switch* practices and that the
agency*s evaluation was unreasonable.
    

   We deny the protest.
    
While this was a *best value* procurement under which the technical
factors were set forth as significantly more important than cost, because
the R&D and FW proposals received identical technical and past performance
evaluations and were determined to be technically equal, cost became the
determining factor.  Accordingly, FW*s proposal was selected for award
based on its final proposed cost of $20,206,787 versus R&D*s final
proposed cost of $[deleted]. The protester*s principal contention is that
the Corps failed to conduct meaningful discussions because it knew that
R&D*s initial proposed cost of $[deleted] exceeded the government estimate
of $20,927,373 by more than [deleted] percent but failed to bring this to
R&D*s attention during discussions.  To support this contention, R&D cites
Biospherics, Inc., B‑278278, Jan. 14, 1998, 98-1 CPD P: 161, in
which the protester was encouraged to reduce its price during discussions
and, after Biospherics did so, its price in its best and final offer was
evaluated as so *unrealistically low [as to] evidence a lack of
understanding. . . .*  Id. at 4.  In Biospherics, not only had the agency
failed to inform the protester that its pricing was already viewed as
unrealistically low, but the agency had advised the protester that its
pricing was rather high and encouraged the firm to review its proposal for
additional savings.  Under those circumstances, we found that the agency
had conducted inadequate and misleading discussions.  Obviously, the facts
at hand bear no meaningful similarity to the situation in Biospherics.
    
While an agency is required to inform a protester that its costs are so
low as to evidence a lack of understanding, an agency is not required to
afford offerors
all-encompassing discussions, or to discuss every aspect of a proposal
that receives less than the maximum score.  Nor is an agency required to
advise an offeror of a minor weakness that is not considered significant,
even where the weakness subsequently becomes a determinate factor in
choosing between two closely ranked proposals.  Northrop Grumman Info.
Tech., Inc., B-290080 et al., June 10, 2002, 2002 CPD P: 136 at 6.  An
agency may, but is not required to, address cost variances during
discussion.  Hydraulics Int*l, Inc., B-284684, B-284684.2, May 24, 2000,
2000 CPD P: 149 at 17.  In particular, if an offeror*s proposed cost is
not so high as to be unreasonable and unacceptable for contract award, the
agency may reasonably conduct meaningful discussions without advising the
higher-cost offeror that its proposed cost is not competitive. 
MarLaw-Arco MFPD Mgmt., B-291875, Apr. 23, 2003, 2003 CPD P: 85 at 6. 
Simply stated, because the agency concluded that R&D*s proposed cost was
not unreasonable or unacceptable in light of its technical proposal, the
agency was not under any obligation to address the protester*s proposed
cost during discussions.
    
The protester also contends that the Corps did not evaluate the proposals
in accordance with the RFP evaluation criteria.  In particular, the
protester objects that the Corps improperly *performed an initial
screening to determine which proposals were technically acceptable,* and
*then awarded the contract to the lowest cost offeror.*  Protest at 6. 
The record does not support the allegation that the agency performed any
improper technical screening or evaluation.  At the direction of the
contracting officer, the technical evaluation team simply performed an
initial screening of the proposals in accordance with section M.2(a)(1) of
the RFP for the purpose of determining whether the proposals satisfied the
submission requirements under section L.  This initial screening was to
assess the completeness of the proposal submissions, not to perform an
evaluation to determine relative technical merit.  The record supports the
agency*s explanation that cost was used as the determining factor only
after the final evaluations of technical, past performance, and cost
factors were completed.
    
The protester further argues that the Corps*s evaluation was unreasonable
and unsupported.  Where an evaluation is challenged, our Office will not
reevaluate proposals but instead will examine the record to determine
whether the agency*s judgment was reasonable and consistent with stated
evaluation criteria and applicable statutes and regulations.  Lear Siegler
Servs., Inc., B-280834, B‑280834.2, Nov. 25, 1998, 98-2 CPD P: 136
at 7.  The fact that the protester disagrees 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 this record discloses no basis to
question the agency*s evaluation.
    
The protester*s allegation is based principally on the agency*s
application of an escalation factor to adjust future labor costs for
purposes of a most probable cost assessment.  The agency adopted local
economic forecasts that resulted in a 5-year average annual escalation for
local wages of approximately 4.8 percent annually.  R&D, working from the
Consumer Price Index and the Cost of Labor Changes, proposed escalations
of [deleted] percent for management and non-management wages,
respectively.  [Deleted].  R&D maintains that there is nothing in the
record explaining why the escalation applied by the agency is more
reliable than that of R&D. 
    
An agency*s judgment as to the methods used in developing the government*s
cost estimate and the conclusions reached in evaluating the proposed costs
are entitled to great weight.  Pioneer Contract Servs., Inc., B-197245,
Feb. 19, 1981, 81-1 CPD P: 107, at 35.  Our Office will not second-guess
an agency*s cost evaluation unless it is not supported by a reasonable
basis.  Id.  Here, the agency reasonably applied specifically developed
local escalation rates to labor costs; this evaluation is neither
unreasonable nor unsupported, and the protester*s decision to use other
indexes that are broader and more general in application does not call
into question the agency*s determination.  In any event, the net result of
the agency*s application of its higher escalation rate was to increase
R&D*s most probable cost by $483,000, which is far less than the cost
difference between the proposals.  Thus, the agency*s application of
escalations based on local economic forecasts could not have prejudiced
the protester. 
    
The protester alternatively argues that the agency penalized R&D for not
adopting the Corps*s labor cost forecasts and, therefore, improperly
applied an undisclosed evaluation criterion.  Where, as here, an agency
evaluates proposals for the award of a cost-reimbursement contract, in
which the government bears the risk and responsibility to pay the
contractor its actual allowable costs regardless of the costs proposed by
the offeror, the agency*s analysis must also determine the realism of the
offeror*s proposed costs and what the costs are likely to be under the
offeror*s technical approach, assuming reasonable economy and efficiency. 
Federal Acquisition Regulation S: 15.404-1(d)(1), (2); Pueblo Envtl.
Solution, LLC, B-291487, B-291487.2, Dec. 16, 2002, 2003 CPD P: 14 at 13. 
Here, as noted above, the agency had a rational basis for application of
the escalation factor that it used, and the increased escalation was
applied to R&D*s most probable cost, and did not provide a basis to
downgrade R&D*s technical proposal.  Further, as noted above, R&D*s costs
would remain high even without the agency*s cost adjustment based on
local, economic forecasts.  Thus, the protester*s contention that the
Corps*s action in this regard somehow penalized R&D is without merit.
    
Finally, the protester contends that the awardee engaged in prohibited
*bait and switch* practices by revising after award its technical approach
to performing portions of the contract by electing to pursue performance
of some portions through subcontracting.  R&D claims that FW submitted its
proposal intending to subcontract parts of the contract.  However, to
establish actionable *bait and switch,* a protester must show that a firm
either knowingly or negligently made a misrepresentation regarding
employees that it does not expect to furnish during contract performance,
that the misrepresentation was relied upon by the agency in the
evaluation, and that this had a material impact upon the evaluation
results.  USATREX Int*l, Inc., B-275592, B-275592.2, Mar. 6, 1997, 98-1
CPD P: 99 at 9-10.  R&D does not present any evidence that FW falsely
represented its intent to perform the entire contract with specific
in-house personnel, and there is no evidence that FW has actually
subcontracted, or will subcontract, for any part of the work.  Moreover,
even if FW does ultimately rely on subcontractors more than indicated in
its proposal, R&D has not established that doing so should be viewed as an
improper *bait and switch.*  Thus, there is no basis for R&D*s allegation
of *bait and switch.*  Apache Enters, Inc., B‑278855.2, July 30,
1998, 98-2 CPD P: 53 at 4.
    
The protest is denied.
    
Anthony H. Gamboa
General Counsel