TITLE:  Cygnus Corporation, Inc., B-292649.3; B-292649.4, December 30, 2003
BNUMBER:  B-292649.3; B-292649.4
DATE:  December 30, 2003
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   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.        
                                                                              
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   Decision

   A 

   A 

   Matter of:   Cygnus Corporation, Inc.

   A 

   File:            B-292649.3; B-292649.4

   A 

   Date:              December 30, 2003

   A 

   Hilary S. Cairnie, Esq., and Melissa M. Nichols, Esq., Vorys, Sater,
Seymour & Pease, for the protester.

   Harvey G. Sherzer, Esq., Scott Arnold, Esq., Tara M. Newmyer, Esq., and
Justin A. Chiarodo, Esq., Dickstein, Shapiro, Morin & Oshinsky, for The
Hill Group, an intervenor.

   Michael Colvin, Department of Health & Human Services, 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

   A 

   Discussions with protester were not meaningful, and protest therefore is
sustained, where agency (1) failed to advise protester of significant
weaknesses in its proposal, and (2) conducted misleading discussions
concerning other weaknesses or deficiencies by advising protester prior to
submission of final proposal revisions that agreement had been achieved as
to all technical and cost issues raised during negotiations when in fact
the agency's concerns had not been resolved.

   DECISION

   A 

   Cygnus Corporation protests the Department of Health and Human Services,
National Institute of Health's (NIH), award of a contract to The Hill
Group (THG), under request for proposals (RFP) No. RFP-NIH-NIDDK-02-02,
for support services for the National Institute of Diabetes and Digestive
and Kidney Diseases (NIDDK). Cygnus challenges the evaluation of proposals
and asserts that the agency failed to conduct meaningful discussions.

   We sustain the protest.

   A 

   The RFP, issued February 21, 2002, contemplated award of a
cost-reimbursement contract, with a period of 7 years, for support of
NIDDK-sponsored scientific meetings, conferences and workshops, meetings
of NIDDK strategic planning groups, and meetings of  interagency
coordinating committees coordinated and managed by NIDDK.  In particular,
the contractor will be required to furnish pre-meeting support, travel
support, administrative and on-site support, post-meeting support,
documentation, communication services, and technical writing services.  In
addition, the contractor will be required to maintain the National
Minority Research Investigator Communication Network and provide website
development support with respect to NIDDK's site on the World Wide Web.

   A 

   Award was to be made to the responsible contractor whose offer was
determined to provide the best overall value to the government.  The best
value proposal was to be determined based on cost and the technical
evaluation factors, including past performance and the following scored
technical evaluation criteria and subcriteria:  (1)A personnel
capabilities, including subcriteria for project manager (worth 20 of
100A possible overall technical evaluation points), computer/database
specialist (13A points), conference manager (12 points), graphics designer
(10A points), and writer/editor (10A points); and (2)A organizational
capability, including subcriteria for understanding the scope of work (15
points), organizational experience and capability (10 points), and
facilities and equipment (10 points).  The RFP provided that past
performance was not to be scored, but indicated that past performance
would be "highly influential" in determining the relative merits of the
proposals.  Overall, the technical proposal was to receive "paramount
consideration" in the selection of the contractor, and all evaluation
factors other than cost were, when combined, significantly more important
than cost.  RFP S M.

   A 

   Initial proposals were received from eight offerors, including THG and
Cygnus.  THG's initial proposal, with a proposed cost of $[DELETED],
received a technical score of 88A and was found to be acceptable. 
Cygnus's initial proposal, with a proposed cost of $[DELETED], received a
technical score of 85 and also was found to be acceptable.  The proposals
of THG, Cygnus and two other offerors were considered to be "relatively
technically equal" and were included in the competitive range.  Source
Selection Decision (SSD) at 2-3, 28.

   A 

   NIH opened technical and cost discussions with offerors in the competitive
range by letters dated October 9, 2002.  Based upon offerors' responses to
the October 9 letters, NIH, on December 2 and January 28, 2003, requested
additional cost information.  The NIH contracting officer, project officer
and contract specialist conducted site visits from February 10 to February
13 in which they met offerors' key personnel and toured offerors'
facilities.  After then conducting oral discussions with offerors, NIH, by
letters dated March 26 and March 27, requested final proposal revisions
(FPR) to be submitted by April 3.  Subsequently, on AprilA 30, as a result
of a delay in the expected award date, NIH afforded offerors an
opportunity to submit a second FPR.

   A 

   Based upon its evaluation of the FPRs, NIH determined that THG's offer was
technically superior overall.  Specifically, the SSD explained that while,
as a result of negotiations, all offerors were "qualified," THG's proposal
was superior to Cygnus's under several of the technical subcriteria and
with respect to past performance.  SSDA at 28, 31-34.  While NIH generally
credited THG's [DELETED] with extensive experience, the agency assigned a
major weakness to Cygnus's proposal on the basis that its [DELETED], while
possessing [DELETED] experience, possessed only [DELETED].  Likewise,
while NIH noted under the conference manager subcriterion that Cygnus had
proposed a [DELETED], the agency considered it a weakness that Cygnus's
team [DELETED].  In contrast, the agency viewed as advantageous the fact
that THG's proposed team [DELETED].  NIH concluded under the graphic
designer subcriterion that Cygnus's proposed graphics team appeared to be
qualified, but nevertheless assigned the proposal a major weakness on
account of the fact that Cygnus had not furnished the agency with any
samples of the team's graphics work.  In contrast, the agency viewed as
advantageous the fact that THG's proposed graphics team [DELETED]. 

   A 

   As for the proposed writer/editors, the SSD indicates that the agency
assigned a weakness to Cygnus's proposal based on the agency's
determination that while the proposed writer/editors possessed [DELETED]. 
SSD at 12.  In contrast, the SSD indicates that the agency assigned a
strength to THG's proposal on the basis that its proposed writers/editors
had NIDDK and NIH experience.  SSD atA 10-11.  (According to the agency
report, however, the evaluation in this regard "played no significant part
in the selection for award."  Agency Supplemental Report, Nov. 17, 2003,
atA 4.)  NIH also found THG's proposal to be superior under the
understanding the scope of work subcriterion on the basis that while THG
had described a comprehensive approach to performance, Cygnus, although
displaying an understanding of the scope of work, had not presented
[DELETED].  SSD at 30.  In explaining why it also viewed THG's proposal as
superior with respect to organizational experience and capability, NIH
noted that THG not only possessed extensive experience managing NIDDK
conferences, but in addition it had managed a total of approximately
[DELETED]A meetings with a total of [DELETED] participants in 2002.  In
contrast, while the SSD noted that Cygnus had "successfully completed"
numerous projects for NIDDK and had performed "substantial relevant work
related to this contract, including conference management, publications
development, and Web design and maintenance," SSD at 17, the SSD also
indicated some doubt about Cygnus's experience and capability. 
Specifically, the SSD indicated that Cygnus had managed approximately
[DELETED]A meetings with only [DELETED] participants in 2002; according to
the SSD, Cygnus lacked the ability to [DELETED].  SSD atA 30A and attach.
2.  Further, NIH rated THG's past performance as outstanding but Cygnus's
as only good. 

   A 

   Although the cost of THG's proposal ($[DELETED]) was higher than that of
the other proposals in the competitive range, the SSD indicated that
"[a]ll of the offerors' costs were considered reasonable, except for
[DELETED]."  SSD at 28.  NIH concluded that notwithstanding its higher
cost, THG's proposal offered the greatest value to the government on
account of the technical advantages associated with the

   proposal and THG's superior experience.  NIH thereupon made award to THG.

   A 

   DISCUSSIONS

   A 

   Cygnus asserts that NIH failed to advise it during discussions of
perceived weaknesses in its proposal and, where it did raise other matters
during discussions, affirmatively misled it into believing that such other
matters had been satisfactorily resolved during discussions.

   A 

   The Federal Acquisition Regulation (FAR) requires that, where an agency
undertakes discussions with offerors, at a minimum, the contracting
officer shall discuss with each firm being considered for award
"deficiencies, significant weaknesses, and adverse past performance
information to which the offeror has not yet had an opportunity to
respond."  FAR S 15.306(d)(3).  The FAR also encourages contracting
officers to discuss other aspects of the firm's proposal that could, in
the opinion of the contracting officer, be altered or explained to enhance
materially the proposal's potential for award.  Id.  Discussions must be
meaningful, equitable, and not misleading.  ACS Gov't Solutions Group,
Inc., B-282098 et al., June 2, 1999, 99-1 CPD P 106 at 13-14.  Discussions
cannot be meaningful unless they lead a firm into those weaknesses,
excesses or deficiencies in its quote or proposal that must be addressed
in order for it to have a reasonable chance of being selected for contract
award.  TDS, Inc., B-292674, Nov. 12, 2003, 2003 CPD P __ at 6-7.

   A 

   NIH's discussions with Cygnus did not comply with the requirement that
discussions be meaningful.  As noted above, in explaining why THG's
proposal was superior to Cygnus's proposal such that, notwithstanding the
significantly lower cost of Cygnus's proposal, THG's proposal represented
the best value to the government, the source selection authority cited a
number of weaknesses in Cygnus's proposal (as well as strengths in THG's
proposal).  NIH, however, failed to raise several of these weaknesses
during the discussions with Cygnus.  Thus, the agency failed to advise
Cygnus that the agency viewed as a major weakness (under the single most
important technical evaluation subcriterion) the evaluated limited
[DELETED]; had assigned a weakness to Cygnus's proposal on the basis that
[DELETED]; and had concluded that Cygnus, although displaying an
understanding of the scope of work, had not presented a [DELETED].  At the
least, in conducting discussions with Cygnus, the agency was required to
discuss the first of these concerns, since the agency indisputably viewed
it as major weakness.

   A 

   Moreover, while NIH did raise other matters of concern during discussions,
the record indicates that the agency misled the protester as to the
results of those discussions, advising Cygnus that it had successfully
addressed the agency's concerns when this in fact does not appear to have
been the case.  In this regard, NIH advised Cygnus during discussions of
its concern that the proposed leader of Cygnus's team of meeting planners
would [DELETED].  Further, NIH viewed Cygnus's failure to furnish samples
of its graphics designers' work to be a major weakness, and the agency
therefore requested that Cygnus submit such samples.  NIH Discussions
Letter to Cygnus, Oct.A 9, 2002.  In response, Cygnus sought to explain
its rationale for the specified level of effort for [DELETED].  In
addition, Cygnus furnished [DELETED].  Cygnus Discussions Response, Oct.
24, 2002.  NIH also requested and received from Cygnus additional
information regarding, and verification of, several elements of Cygnus's
proposed costs, and the agency specifically negotiated [DELETED].  See,
e.g., NIH Discussion Letters to Cygnus, Oct.A 9, 2002, Dec. 2, 2002, and
Jan. 28, 2003.

   A 

   NIH did not find Cygnus's response with respect to the team [DELETED] to
be satisfactory, and, according to the agency, it [DELETED].  Further, as
noted above, the agency considered the costs negotiated with Cygnus to be
[DELETED].  Nevertheless, notwithstanding its continuing concerns with
Cygnus's proposal, the agency advised Cygnus in the March 26 request for
an FPR that as a result of the oral discussions with it, "in which we
negotiated cost issues concerning your proposal," including the [DELETED],
a "total estimated cost of $[DELETED] . . . is considered to be fair and
reasonable."  NIH Request to Cygnus for FPR, Mar. 26, 2003.  NIH further
advised Cygnus on March 27 that "[d]iscussions concerning Cygnus
Corporation's proposal have concluded.A .A . .  It is understood that
these discussions have resulted in agreement of all technical and cost
issues raised during negotiations."  NIH Request to Cygnus for FPR, Mar.
27, 2003.  Likewise, when the agency afforded Cygnus and the other
offerors on AprilA 30 an opportunity to submit a second FPR, it advised
Cygnus in its letter that "discussions held on March 26, 2003, resulted in
agreement of all technical and cost issues raised during negotiations." 
NIH Request to Cygnus for FPR, Apr. 30, 2003. 

   A 

   Further, these written agency statements to Cygnus apparently were merely
a reiteration of the reported position taken by the agency during the
preceding February site visit.  According to the sworn declarations
executed by three Cygnus employees, the NIH representatives conducting the
site visit--who included the NIH contracting officer, project officer and
contract specialist--indicated when questioned by Cygnus that there were
no unresolved concerns with respect to Cygnus's proposal.  In this regard,
according to the declaration of Cygnus's vice president, when Cygnus,
inquiring as to whether [DELETED] it had furnished provided the agency
with the information it was seeking, asked if NIH still had questions as
to the graphics designers' work samples, the NIH team members reportedly
shook their heads in the negative.  Likewise, according to the sworn
declarations of Cygnus's president and Cygnus's comptroller, when asked
whether the agency had any remaining unresolved concerns with Cygnus's
proposal, the agency representatives responded in the negative.  Cygnus
Comments, Nov. 24, 2003, Declarations of Cygnus President, Vice President,
and Comptroller.[1]

   A 

   While NIH was not required to advise Cygnus as to the results of the
discussions, it was improper for the agency to mislead Cygnus in this
regard.  In summary, the record clearly establishes that the agency
conducted inadequate and misleading discussions with Cygnus.

   A 

   TECHNICAL EVALUATION

   A 

   In addition to NIH's failure to conduct meaningful discussions, our review
of the record confirms that the agency relied in part on erroneous
information concerning the relative merits of the proposals.  For example,
as discussed above, in explaining why it viewed THG's proposal as superior
with respect to organizational experience and capability, NIH noted that
while THG had managed approximately [DELETED]A meetings with a total of
[DELETED]A participants in 2002, and the agency estimated that there would
be 53 annual meetings with a total 5,473 participants under the
contemplated contract, Cygnus had managed approximately
[DELETED]A meetings with only [DELETED] participants in 2002.  SSD at 30
and attach. 2.  As noted by Cygnus, however, the information in its
proposal is not consistent with the agency's conclusion that only
[DELETED] participants attended meetings managed by Cygnus in 2002.  On
the contrary, Cygnus's proposal indicated that Cygnus's work under a
current 5-year, $7.95 million contract with the Agency for Healthcare
Research and Quality includes planning and managing approximately
[DELETED] conferences annually, with the meetings described in its
technical proposal as "[DELETED]," and in its business plan as
"[DELETED]."  Cygnus Technical Proposal at 3-11, Business Plan at 4.  In
addition, Cygnus's proposal referred to recent meetings it had managed
under the Agency for Healthcare Research and Quality contract in which the
reported number of participants exceeded 2,000.  Cygnus Technical Proposal
atA 3-11A to 3-14, 4-9.  Thus, it was clear from Cygnus's proposal that
the number of participants in meetings managed by Cygnus significantly
exceeded that assumed by the agency.[2] 

   A 

   PREJUDICE

   A 

   We conclude that Cygnus was prejudiced by NIH's actions because it is
possible that, when considered in conjunction with the correction of the
errors in the technical evaluation, Cygnus's proposal could have been
improved enough through further discussions to become the best value
offer.  In this regard, where we find an impropriety in the conduct of
discussions, we will resolve any doubts concerning the prejudicial effect
of the agency's actions in favor of the protester; a reasonable
possibility of prejudice is a sufficient basis for sustaining the
protest.  International Resources Grp., B-286663, Jan. 31, 2001, 2001 CPD
P 35 at 6; National Med. Staffing, Inc., B-259402, B-259402.2, Mar. 24,
1995, 95-1 CPD P 163 at 4.  Here, Cygnus has explained how it could have
revised its technical proposal so as to address the agency's concerns. 
For example, Cygnus has explained how it would have proposed [DELETED];
and ensured by several means that samples of the work of its graphics
designers were made available to the agency.  Further, Cygnus had
indicated a willingness to [DELETED] its proposed [DELETED] team leader
would devote to the contract in the event that the agency was not
convinced by Cygnus's staffing rationale in this regard.  In addition,
there is no basis for concluding that had it been advised by the agency
that its proposed costs were "[DELETED]," Cygnus would not have
[DELETED].  Cygnus Comments, Dec. 22, 2003; Cygnus Comments, Nov. 24,
2003, at 46-47, Declarations of Cygnus Vice President and Senior Meeting
Manager; Cygnus Discussion Response, Oct. 24, 2003, at 2. 

   A 

   CONCLUSION

   A 

   We sustain the protest on the basis that NIH's discussions with Cygnus
were misleading and otherwise inadequate, and its evaluation of Cygnus's
proposal was unreasonable.  We recommend that NIH reopen discussions with
offerors in the competitive range, and then request revised proposals.[3] 
In the event that its evaluation of revised proposals results in the
determination that an offer other than THG's represents the best value,
the agency should terminate THG's contract for convenience.  We also
recommend that the agency reimburse Cygnus the reasonable costs of filing
and pursuing the protest, including attorney's fees.  4A C.F.R.
SA 21.8(d)(1) (2003).  Cygnus's certified claim for costs, detailing the
time spent and the costs incurred, must be submitted to the agency within
60 days of receiving this decision.  4 C.F.R. S 21.8(f)(1) (2003).

   A 

   The protest is sustained.

   A 

   Anthony H. Gamboa

   General Counsel

   A 

   A 

   A 

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

   [1] While NIH has submitted declarations from several members of its site
visit team generally stating that the "site visit team never declined to
discuss Cygnus's approach to the project, nor any aspect of their
presentation," see NIH Comments, Dec. 24, 2003, attach. 1, we do not view
this general statement as rebutting the specific declarations of Cygnus's
corporate officers with respect to inquiring as to whether the agency had
unresolved concerns with Cygnus's proposal. 

   A 

   [2] According to Cygnus, in 2002, it in fact managed over [DELETED]
meetings with an estimated total of over [DELETED] participants.  Cygnus
Comments, Nov. 24, 2003, at 36.

   [3] Since the record indicates that the [DELETED] specified in THG's FPR
in fact had left THG's employ prior to submission of the FPR, THG
Comments, Dec. 22, 2003, the reopened discussions with THG should include
establishing who will replace [DELETED] in that position under the
contemplated contract.