TITLE:  Lockheed Martin Information Systems, B-292836; B-292836.2; B-292836.3; B-292836.4, December 18, 2003
BNUMBER:  B-292836; B-292836.2; B-292836.3; B-292836.4
DATE:  December 18, 2003
**********************************************************************
Lockheed Martin Information Systems, B-292836; B-292836.2; B-292836.3;
B-292836.4, December 18, 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:   Lockheed Martin Information Systems
    
File:            B-292836; B-292836.2; B-292836.3; B-292836.4
    
Date:              December 18, 2003
    
Thomas C. Papson, Esq., Richard B. Oliver, Esq., John A. Burkholder, Esq.,
Jason N. Workmaster, Esq., and Stephen M. Lastelic, Esq., McKenna Long &
Aldridge, for the protester.
Rand L. Allen, Esq., Philip J. Davis, Esq., Timothy W. Staley, Esq.,
Jonathan  L. Kang, Esq., Jesse L. Rudy, Esq., and William J. Grimaldi,
Esq., Wiley Rein & Fielding, for Electronic Data Systems Corporation, an
intervenor.
Peter F. Pontzer, Esq., and Angela T. Puri, Esq., Department of Housing
and Urban Development; and Joseph C. Port, Jr., Esq., Mark P. Guerrera,
Esq., Richard L. Larach, Esq., and Kevin M. Henry, Esq., Sidley, Austin,
Brown & Wood, for the agency.
Scott H. Riback, Esq., and John M. Melody, Esq., Office of the General
Counsel, GAO, participated in the preparation of the decision.
DIGEST
    
1. Protest that agency misevaluated proposals is sustained where record
does not support agency's conclusion that the awardee's proposal was
superior to the protester's with respect to a number of the discriminators
used by the agency in arriving at its source selection decision.
    
2.  Agency unreasonably determined that awardee met solicitation's
requirement for small business subcontracting where record shows that it
miscalculated the percentage of the awardee's subcontracting dollars
relative to the overall value of the contract, and failed to account for
the possibility that at least one of the awardee's small business
contracts may have been improperly inflated in terms of its value.
DECISION
    
Lockheed Martin Information Systems (LMIS) protests the award of a
contract to Electronic Data Systems Corporation (EDS) under request for
proposals (RFP) No. R-OPC-21970, issued by the Department of Housing and
Urban Development (HUD) to acquire information technology services.LMIS
asserts that the agency misevaluated proposals and made an irrational
source selection decision.
    

   We sustain the protest.
    
BACKGROUND
    
HUD issued the RFP to acquire a wide range of information technology (IT)
services to support all of the agency's requirements for information
processing, telecommunications and other related needs for a base period
of up to 1 year, plus nine 1-year options.  The RFP contemplated a single
award for what is referred to as the HUD Information Technology Solution
(HITS) contract, which is a follow-on contract for the HUD Integrated
Information Processing Service (HIIPS) contract.  (LMIS is the incumbent
for the HIIPS contract.)  The solicitation contemplated the award of a
hybrid contract that included both fixed-price and cost-reimbursement
contract line item numbers (CLINs).  Specifically, CLIN 1 (transition in)
is to be performed on a cost-plus-fixed-fee basis, CLINs 2 through 10
(performance of the requirement for up to 9 years) are to be performed on
a fixed price basis, CLIN 11 (transition out) is to be performed on a
cost-plus-award-fee basis, and CLIN 12 is an indefinite-delivery,
indefinite-quantity (ID/IQ) CLIN to be performed on a cost-reimbursement,
no-fee basis.  The RFP also included CLIN 13, which did not contemplate
any actual work but included dollar figures representing financial
incentives that could be earned by the contractor through enhanced
performance.
    
The requirement--essentially all of HUD's information processing,
telecommunications and related needs on a nationwide, agency-wide
basis--was organized around 24 core functions reflecting the agency's
various service needs.  For example, the first core function was
*hardware* and included the provision, management, storage, maintenance,
upgrade, backup and operation of all computer hardware, including
mainframe computers, servers, printers and peripheral devices.  Another
core function related to the provision of all of the agency's desktop
computing requirements, another to notebook computing requirements, and so
on.  The RFP also included seven non-core functions that related primarily
to providing advice and assistance, training and emergency supplies or
services not otherwise contemplated under one or another of the core
functions. 
    
The agency developed the RFP using performance-based contracting methods. 
In light of this approach, the RFP did not include substantive
specifications or a statement of work.  Instead, the RFP included a
statement of objectives (SOO), outlined in general terms the various core
and non-core functions, and presented information relating to HUD's
current computing environment.  Offerors were required to include in their
proposals three primary items--performance work statements (PWS) (one for
each CLIN), which were intended to embody the contractual terms governing
the rights and obligations of the parties; one or more service level
agreements (SLA), which were to include both minimum and higher standards
of performance, as measured by various performance metrics (essentially,
empirical standards against which a firm's performance could be measured);
and a contract work breakdown structure (CWBS), a detailed description of
the labor, materials, products and services that would be provided in
connection with each firm's proposed solution to meeting the agency's
requirements.  (Other information had to be submitted--such as a quality
assurance surveillance plan and past performance information--but the PWS,
SLAs and CWBS were the documents that would outline the central
substantive elements of the firm's so-called HITS solution.)
    
The RFP advised firms that the agency intended to make award to the firm
submitting the proposal found to offer the *best value* to the government,
considering both price/cost and several non-price/cost considerations. 
The first and most important evaluation factor, capability, was further
divided into the following subfactors (in descending order of
importance):  technical/management solution, performance metrics,
transition approach, and small business strategy.  The second evaluation
factor was past performance.  The RFP provided that the agency would
assign adjectival ratings for these factors and subfactors of either
exceptional, good, satisfactory, marginal or poor, or neutral for past
performance.  These two factors combined were significantly more important
than the third factor, price/cost.  Finally, the RFP advised that the
agency would assign each of the non-price/cost considerations a risk
rating of either high, medium or low. 
    
The agency received several proposals in response to the solicitation and,
after evaluation and clarification of the offers, established a
competitive range comprised of EDS and LMIS.  Agency Report (AR), exh.
13.  HUD then engaged in several rounds of discussions with those two
offerors and solicited final proposal revisions (FPR).  At the conclusion
of discussions, and after evaluation of the FPRs, the agency assigned the
following adjectival ratings to the proposals:
    

   +------------------------------------------------------------------------+
|                             |LMIS               |EDS                   |
|-----------------------------+-------------------+----------------------|
|Overall Tech. Rating/Risk    |[deleted]          |[deleted]             |
|-----------------------------+-------------------+----------------------|
|Capability Factor/Risk       |[deleted]          |[deleted]             |
|-----------------------------+-------------------+----------------------|
|Tech./Mgmt. Subfactor/Risk   |[deleted]          |[deleted]             |
|-----------------------------+-------------------+----------------------|
|Perf. Metrics Subfactor/Risk |[deleted]          |[deleted]             |
|-----------------------------+-------------------+----------------------|
|Transition Subfactor/Risk    |[deleted]          |[deleted]             |
|-----------------------------+-------------------+----------------------|
|Small Business Subfactor/Risk|[deleted]          |[deleted]             |
|-----------------------------+-------------------+----------------------|
|Past Perf./ Factor/Risk      |[deleted]          |[deleted]             |
|-----------------------------+-------------------+----------------------|
|Evaluated Price              |[deleted]          |$860,600,242          |
+------------------------------------------------------------------------+

    
AR, exh. 30, Final Evaluation and Tradeoff Analysis Consensus Report, at
12.  The agency evaluators identified eight specific discriminators in
preparing their
best-value tradeoff analysis recommendation; they concluded that these
discriminators favored award to EDS over LMIS, notwithstanding the
approximately [deleted] cost premium associated with EDS's offer.  Id. at
v-vi, 35-36.  The source selection official (SSO) identified seven
specific discriminators that supported award to EDS.  AR, exh. 32.  (The
SSO identified two separate discriminators relating to software; these two
discriminators were presented as two elements of a single discriminator
identified by the agency's evaluators.  In addition, two of the
discriminators identified by the evaluators were not specifically
referenced in the SSO's decision document.)
    
LMIS challenges virtually every aspect of the agency's evaluation and
source selection decision.  In reviewing protests of an agency's
evaluation and source selection decision, our Office will not reevaluate
proposals; rather, we review the record to determine whether the
evaluation and source selection decision are reasonable and consistent
with the solicitation's evaluation criteria, and applicable procurement
laws and regulations.  M&S Farms, Inc., B-290599, Sept. 5, 2002, 2002 CPD
P: 174 at 6.  Further, where an agency has made a source selection
decision in favor of a higher-priced proposal that has been ranked
technically superior to a lower-priced offer, the award decision must be
supported by a rational explanation demonstrating that the higher-rated
proposal is in fact superior, and explaining why the technical superiority
of the higher-priced proposal warrants the additional cost, Federal
Acquisition Regulation (FAR) S:15.308; where neither the source selection
decision nor the evaluation record supports the agency's conclusions, we
will sustain a protest challenging the agency's award decision.  See TRW,
Inc., B-260788.2, Aug. 2, 1995, 96-1 CPD P: 11 at 3-4.
    
We have carefully reviewed each of LMIS's assertions and agree with the
protester that the evaluation contains errors that draw the source
selection decision into question.  Specifically, we find that, of the
eight discriminators identified by the agency's evaluators as favoring
EDS, four are based on unsupported conclusions regarding the relative
merits of the proposals; of the seven discriminators identified by the
SSO, three are unsupported.  We also find that there appears to be at
least one area where the EDS proposal failed to meet a material
solicitation requirement.  We note, moreover, that the record reflects,
overall, disparate treatment of the two firms, with the agency tending in
general to apply a stricter standard in its evaluation of the LMIS
proposal as compared to the EDS proposal. 
    
REMOTE ACCESS
    
LMIS maintains that the agency's conclusion relating to the comparative
value of the two offerors' approaches to meeting the RFP's requirement for
remote access was unreasonable. [1]  According to the protester, its
proposal offers a remote access capability superior to that offered by
EDS.  Core function No. 5 related to the provision, maintenance and
upgrade of a robust telecommunications infrastructure for the agency. 
Access for remote users (that is, users that are working from a location
other than a HUD facility) was an element of the services to be provided
as part of the telecommunications infrastructure.  The evaluators and the
SSO described the EDS proposal as more valuable to the agency because the
EDS proposal provided [deleted] access for the agency's remote users for
its fixed price, whereas the LMIS solution was limited to only [deleted]
users.   
    
The evaluators specifically found:
    
EDS proposes [deleted] e-mail remote access support, while LMC [LMIS] is
limiting support to [deleted] users.  EDS'[s] proposal is more valuable to
HUD because it allows [deleted] HUD employees to work effectively while
telecommuting without increasing HUD's costs. . . . LMC's proposal would
require additional funding outside the firm fixed price contract, take
more administrative time and expense to implement, and may not achieve
HUD's mission. . . .  Requesting support for additional teleworkers
through LMC would result in additional costs to HUD. 
AR, exh. 30, at v-vi; see also id. at 36, AR, exh. 32, at 3. 
    
The premise underlying the evaluators' and SSO's conclusions--that EDS
proposed to support more users than LMIS--is not borne out by the record. 
At the outset, we point out a distinction between what are referred to in
the record as [deleted] versus [deleted] of remote access.  The concept of
[deleted].  This is in contrast to the concept of [deleted].  The LMIS
proposal is premised on the concept of [deleted], whereas the EDS proposal
is premised on the concept of [deleted].
    
Contrary to the agency's conclusion that EDS offered [deleted] remote
access, the record shows that the EDS proposal specifically [deleted]. 
AR, exh. 53, vol. 1, at C-60.  Within the population of [deleted]. 
Despite these assumptions, the EDS proposal specifically provides as
follows:  [deleted].  AR, exh. 53, at H-31.  We conclude that, not only
did EDS not offer the [deleted] remote access relied upon by the agency in
making award to EDS, it offered less than [deleted] percent of the
[deleted].  Neither the agency nor EDS has presented a meaningful response
to the evidence leading to our conclusion.  The only substantive response
is presented by EDS in its final submission to our Office, where the firm
alleges for the first time--without any supporting evidence--that the
[deleted] user-hour figure in the EDS proposal is a typographical error. 
EDS Supplemental Comments, Nov. 21, 2003,
at 22, n.7. 
    
The record also shows--again, contrary to the agency's findings--that LMIS
may in fact have offered a remote access solution superior to that offered
by EDS.  In this regard, LMIS proposed [deleted].  AR, exh. 27, vol. 1, at
28.  The remote access capability was to be [deleted].  AR, exh. 8, at
44.  LMIS's proposal specifically provides for the [deleted].  AR, exh.
27, vol. 2, CWBS, at 162.  LMIS explains that this provides access for
[deleted][2] [deleted], and that its proposed solution [deleted] remote
access service.  The record further shows that current average usage of
the remote access dial-up capability is [deleted].  AR, exh. 8, at 44. 
The record thus shows that the LMIS proposal, [deleted], at a minimum,
meets the agency's current needs, [deleted].  In sum, we find the agency's
reliance on this discriminator unreasonable.
    
ORACLE DATABASE SOFTWARE
    
Core function No. 3 required offerors to provide database management
services, and one of HUD's database management tools is Oracle software. 
Both the agency's evaluators and the SSO relied on a perceived advantage
in favor of the EDS proposal in connection with the support of Oracle
database applications users.  The SSD states:
    
EDS's proposal includes the support for [deleted] users of Oracle database
applications.  LMC's support is limited to [deleted] users.  EDS's
proposal is more valuable to HUD because it supports HUD's potential
development and operational use of the Oracle software as documented in
the future state Enterprise Architecture.  LMC's limitation in this area
would either require HUD to divert funding from other projects to procure
additional Oracle licenses, or would limit HUD's ability to develop or
operate applications that use Oracle software.  The forced alternatives
within the LMC proposal could adversely affect HUD's ability to meet its
mission.
AR, exh. 32, at 3; see also AR, exh. 30, at v, 36.
    
LMIS maintains that [deleted] of Oracle software licenses, and that this
feature therefore was not a legitimate basis to distinguish between the
proposals.  The agency now concedes that [deleted], Supp. AR at 6, but
maintains (and supports its position through the submission of an
affidavit) that the discriminator remains valid because LMIS limited its
support of Oracle users [deleted].  Supplemental AR, Nov. 3, 2003, at 5-7,
attach 2. 
    
We find the agency's position unpersuasive.  First, the EDS proposal makes
[deleted] in the relevant section; EDS's proposal is couched solely in
terms of the [deleted], and there simply is no reference to [deleted]
users of Oracle--or any other--software.  AR, exh. 53, at C-45-46
(discussing the [deleted]).  Accordingly, it is unclear what language the
agency was relying on in arriving at its conclusion. 
    
Second, the agency has not presented any explanation--either in the
affidavit furnished, or elsewhere in the record--of what the supposed
Oracle database user support services might actually be, or what costs
might be associated with the provision of those services.  In this
connection we note that *user support* is embodied in other aspects of the
RFP, for example, the help desk function.  There is no requirement under
the database management services core function to provide user support. 
(This suggests an explanation for why the EDS proposal contains [deleted]
in this portion of its proposal.)  Under these circumstances, the agency's
assertion--that it was not concerned solely with the need to obtain
additional licenses, but also with the provision of user support for the
Oracle database users--was not a legitimate basis upon which to
distinguish between the proposals. 
    
SINGLE SIGN-ON ACCESS
    
Core function No. 18 required offerors to provide various services
relating to system security, including an appropriate method for
controlling access to the HUD computer system.  Both firms offered to
control access [deleted].  The agency evaluators distinguished between the
two proposals on the basis of the level of support being offered by the
two firms in this area.  (As noted, the SSD included seven specific
discriminators, two of which were summarized as a single discriminator by
the agency evaluators, while the evaluators presented eight discriminators
as the basis for their recommendation.  The single sign-on access
discriminator is one of the two discriminators relied on by the
evaluators, but not specifically referenced in the SSD.)  The evaluators
found:
    
EDS proposes single sign-on access for [deleted] users, while LMC is
providing single sign-on access for up to [deleted] users.  EDS'[s]
proposal is more valuable to HUD because it provides [deleted].  HUD is
better able to meet its mission within a [deleted].  LMC's proposal would
require additional funding and increased administrative time and expense
to achieve the same benefits included under the EDS proposal.
AR, exh. 30, at vi; see also id. at 36.  LMIS maintains that there was no
basis to distinguish between the two proposals because [deleted].  The
agency maintains that the LMIS proposal was specifically limited to
providing the [deleted], whereas the EDS proposal contained [deleted]. 
The agency concludes, therefore, that this was an appropriate basis to
discriminate between the two proposals.
    
We find the agency's position unreasonable.  First, as LMIS maintains,
[deleted].  AR, exh. 27, at 44; AR, exh. 53, at H-51.  Second, and more to
the point, we find the language in the EDS proposal relied on by the
agency does not support its conclusion.  In the narrative portion of its
proposal, EDS makes [deleted] the single sign-on requirement.  The EDS
proposal states that it will [deleted].*  AR, exh. 53, at C-56.  On the
basis of this language, HUD determined that EDS had specifically offered
single sign-on access for [deleted] users, notwithstanding the specific
provision elsewhere in the EDS proposal of a [deleted].  Again, this was
not a reasonable basis for ultimately finding the EDS proposal superior to
LMIS's.
    
INSTALLATIONS, MOVES, ADDS AND CHANGES
    
Core function Nos. 8 and 9 required offerors to provide desktop and
notebook computers for HUD users.  As part of that general requirement,
offerors were required to provide computer installations, moves, adds and
changes (IMACs).  The record shows that the agency used what it perceived
as a difference in the number of IMACs offered by the two firms as a
source selection discriminator.  The SSD states:
    
EDS proposed [deleted] Installs, Moves, Adds, and Changes (IMACs)
throughout the life of the contract.  This feature is very valuable to
HUD.  LMC's limitation of [deleted] IMACs per year would not satisfy the
anticipated number of IMACs even in the first year of the HITS contract
and would limit HUD employees from receiving upgrades or changes to their
computing capability or changing locations in the future.  This limitation
would force HUD to either spend more money to separately procure the
additional IMACs or work less efficiently.
AR, exh. 32, at 2; see also AR, exh. 30, at vi, 36.
    
LMIS challenges the agency's conclusion on two grounds.  First, LMIS
maintains that the agency improperly used the figure of [deleted] IMACs in
its analysis.  According to LMIS, it actually offered [deleted] IMACs,
[deleted] for desktops and [deleted] for notebooks.  Second, LMIS
maintains that there was no basis for the agency to conclude that EDS was
offering [deleted] IMACs, given the terms of the firm's proposal. 
    
HUD does not respond directly to LMIS's first assertion--that the agency
understated the total number of IMACs LMIS offered by [deleted]--but
instead maintains that, in any event, the [deleted] IMACs offered for
desktops was inadequate to meet HUD's current demand.  HUD further asserts
that, regardless of the number evaluated, whether [deleted] or [deleted],
it nonetheless does not compare to the [deleted] number offered by EDS. 
    
We reach several conclusions.  First, LMIS is correct that the agency's
award decision was based on an understated IMAC number for LMIS; the
record shows that LMIS offered [deleted] total IMACs for desktops, and an
additional [deleted] IMACs for notebooks.  AR, exh. 27, vol. 1, at 30-32. 
Accordingly, the record establishes that, in evaluating the LMIS offer and
making its source selection decision, HUD understated LMIS's offer for
IMACs by [deleted] percent.
    
Second, contrary to HUD's position, there was no reasonable basis for the
agency to conclude that EDS was offering to provide [deleted] IMACs.  The
EDS PWS [deleted] IMACs.  Rather the PWS states only that EDS will
[deleted].*  AR, exh. 53, at C-49.  The agency states that this is the
language it relied on in concluding that EDS was offering [deleted]-
IMACs.  ([deleted].  Id.)  The EDS proposal for [deleted].  Id.  To the
extent that the agency read this language as offering [deleted] IMACs, its
reading was unreasonable, since there is simply [deleted], but rather only
a [deleted]. 
    
The EDS CWBS [deleted], although the agency apparently did not refer to
that information in reaching its conclusion.  With respect to [deleted]
IMACs, the CWBS includes three apparently irreconcilable figures.  It
states:  [deleted].*  EDS CWBS, at 3.3-182.  This text continues with a
[deleted].*  Id.  It would appear that there is no way to reach a firm
conclusion based on the information presented:  EDS either offered
[deleted] and this number constituted [deleted] combined, or it offered
[deleted] IMACs for [deleted], or it offered [deleted] IMACs per month
(for a total of [deleted] IMACs per year).  The language in the EDS CWBS
for [deleted] is similarly ambiguous.  It states:  [deleted].*  EDS CWBS
at 3.3-185.  This is followed by a [deleted].*  Id.  Again, it would
appear that there is no way to reach a firm conclusion based on the
information presented; for the [deleted], EDS appears to be offering
either some portion of the [deleted] IMACs per year, or [deleted] IMACs
per month (for a total of [deleted] IMACs per year).  In sum, when the
CWBS is examined together with the language of the PWS, there is no basis
for the agency to have reached the conclusion that EDS was offering
[deleted] IMACs; indeed, when reading the proposal as a whole, it would
appear that there is no basis for the agency to have reached any firm
conclusion relating to the number of IMACs being offered by EDS.  In view
of the foregoing conclusions, we find the agency's reliance on this
discriminator unreasonable.
    
SMALL BUSINESS SUBCONTRACTING REQUIREMENT
    
The solicitation required offerors to propose significant levels of small
business subcontracting, and to have the work subcontracted be meaningful,
that is, relate to the primary work to be performed.  RFP, attach. J III,
S: M.3.1.4.  The RFP imposed a mandatory requirement to subcontract at
least 35 percent of the total dollars obligated during each year of
contract performance to small businesses.  Id.  During its debriefing of
LMIS, the agency advised that it had recalculated LMIS's proposed small
business subcontracting goal downward from its proposed [deleted] to
[deleted] percent for CLINs 2 through 10, to [deleted] to [deleted]
percent for those CLINs.  The basis for the agency's revision was that
LMIS had not included the dollar amounts for CLIN 13 (the incentive
amounts potentially available to be earned under the offerors' SLAs) in
its overall calculations of its small business subcontracting percentage,
as required by the RFP.
    
The record shows that the agency actually failed to make these
recalculations for either offeror during its evaluation of proposals.  The
record further shows, however,  that, because EDS had proposed only a
[deleted] percent small business subcontracting objective, and because its
calculations of that [deleted] percent were exclusive of the dollar
amounts included in CLIN 13, a recalculation of its small business
subcontracting percentage showed that, in fact, EDS had proposed only
[deleted] percent.  LMIS asserts that the record thus conclusively shows
that EDS did not meet the 35-percent requirement. 
    
The agency responds that, since it did not recalculate either offeror's
subcontracting percentages during its evaluation, the offerors were
treated equally and LMIS was not prejudiced by the agency's actions.  We
disagree.  As noted, the RFP included a mandatory requirement that
offerors subcontract a minimum of 35 percent of the total dollars expended
during each year of the contract to small businesses, and the agency
concedes that a proper calculation of this percentage requires inclusion
of the CLIN 13 amounts, AR at 36; Supp. AR at 19; the EDS proposal, when
properly calculated with the CLIN 13 amount, did not meet the 35-percent
requirement.  Despite EDS's failure to meet this mandatory requirement,
the agency assigned the firm's proposal a rating of [deleted] under the
small business evaluation subfactor ([deleted]).  Since the RFP provided
that marginal ratings would be assigned where an offeror's proposal did
not clearly meet some specified capability threshold, and poor ratings
would be assigned where a proposal failed to meet a specified capability
threshold, RFP M.3.1.5, [deleted].  It also was improper to assign the
EDS's proposal [deleted], which did meet the requirement, even after the
agency's recalculation.[3]
    
DISPARATE TREATMENT
    
As discussed, the record reflects numerous instances where the agency
either unreasonably reached conclusions relating to the EDS offer in light
of the language included in the proposal (for example, in the areas of
single sign-on access and the provision of Oracle database software), or
apparently failed to thoroughly evaluate the proposals critically, and in
a manner that would have revealed inconsistencies or deficiencies in what
was being offered (for example, in the remote access, IMAC and small
business areas).  We find the agency's conclusions troubling in light of
its evaluation of the LMIS proposal.  For example, one of the
discriminators relied on by the agency to make award to EDS was its
conclusion that the LMIS proposal did not actually provide mainframe and
distributed systems operating system or database software.  AR, exh. 30,
at v, 36; AR, exh. 32, at 2.  The agency reached this finding based on the
wording of the software support core function narrative of the LMIS PWS,
concluding that the proposal was *carefully worded to exclude the actual
provision of software.*  AR, exh. 30, at v.  LMIS vigorously contests the
agency's finding in this regard, maintaining that other sections of its
PWS, as well as the list of products contained in its CWBS made clear that
the firm had in fact offered the software in question.  We observe that,
in reading the two proposals, the record shows that the agency seems to
have applied a double standard.  On the one hand, when reading the EDS
proposal, the agency tended to be expansive, resolving doubt in favor of
EDS (which, as we have found, led it to reach conclusions not warranted by
the actual language of the firm's offer). [4]  On the other hand, when
reading the LMIS proposal, the agency applied a more exacting standard,
requiring an affirmative representation within the four corners of each
section of the PWS before it was prepared to conclude that one or another
requirement was being met.  We need not resolve which standard should have
been applied in the agency's evaluation but, to the extent that HUD
essentially applied a more exacting standard in reviewing one proposal
than it did in reviewing the other proposal, this was improper.  See
DynCorp, Int'l, LLC,  B-289863; B-289863.2, May 13, 2002, 2002 CPD P: 83
at 10.
    
RECOMMENDATION
    
In view of the foregoing considerations, we sustain LMIS's protest.  We
find that, because of the errors in the agency's source selection decision
discussed above, there is no basis to find that the award determination in
favor of EDS at a cost premium of [deleted] is supported by the record. 
Accordingly, we recommend that the agency reopen the acquisition and
engage in discussions, obtain revised proposals, evaluate those proposals
consistent with our findings (being sure to apply a consistent standard in
evaluating the two proposals) and make a new award determination.  If EDS
is not the successful offeror, the agency should terminate EDS's contract
for the convenience of the government.  We further recommend that LMIS be
reimbursed the costs associated with filing and pursuing its protest,
including reasonable attorneys' fees.  4 C.F.R. S: 21.8(d)(1).  LMIS's
certified claim for costs, detailing the time spent and the costs incurred
must be submitted to the agency within 60 days of receiving of our
decision.  4 C.F.R. S: 21.8(f)(1).
    
The protest is sustained.
    
Anthony H. Gamboa
General Counsel
    
    

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   [1] Both the agency and EDS maintain that this aspect of LMIS's protest is
untimely because the firm was apprised at its debriefing that its offer of
[deleted] remote users was a limitation in the LMIS proposal, and LMIS did
not raise the assertion until after receiving the agency report.  However,
LMIS does not assert simply that the agency's conclusion regarding its
proposal is incorrect.  Rather, LMIS's protest relates to the agency's
comparative findings with respect to its and EDS's proposal in the area of
remote access.  LMIS raised this allegation within 10 days of receiving
agency report materials relating to the comparative evaluation of the two
proposed solutions and detailed information relating to EDS's proposal. 
We therefore find the issue timely.  4 C.F.R. S: 21.2(a)(2) (2003).
[2] The agency finds support for its position in the fact that the LMIS
proposal did not [deleted] in describing access for the [deleted] users. 
LMIS, unlike EDS, did not state that the [deleted], thereby limiting its
proposed solution to only [deleted].  Moreover, since the agency was aware
of what the current hardware configuration for remote access under the
HIIPS contract was, and [deleted], there was no reasonable basis for the
agency to conclude that LMIS did not mean [deleted] when it referred to
the [deleted] users in its proposal.
[3] LMIS also asserts that the EDS proposal shows that the firm inflated
the dollar value of its small business subcontracting through what LMIS
describes as *pass through* arrangements.  LMIS maintains that,
[deleted].  LMIS maintains that this further reduces the percentage of the
total dollar value of the contract that EDS committed to perform through
small business subcontractors, and also is inconsistent with the RFP
requirement that EDS's small business subcontractors perform meaningful
work.  [deleted].  The agreements specifically provide
[deleted] .*  AR, exh. 49, [deleted] Teaming Agreement, Schedule A, at 2;
see also AR, exh. 49, [deleted] Teaming Agreement, Schedule A, at 2.  As
part of its implementation of our recommendation (set out below), the
agency should review these arrangements to ensure that EDS's proposal was
reasonably evaluated with respect to the small business subcontracting
requirement. 
    
[4] There were other instances where the agency appears to have
unreasonably given EDS the benefit of the doubt regarding what was
included within the firm's fixed price.  For example, in evaluating the
EDS's provision of electronic data interchange (EDI) services, the agency
concluded that, while the firm's proposal contained a [deleted] was
reasonable because it [deleted].  AR, exh. 55, at 18.  The record shows,
however, that EDS proposed EDI services [deleted].  Cf. AR, exh. 35, at
C-56-C-57 (referencing a volume of EDI transactions of [deleted] per day
and stating that [deleted]); AR, exh. 24, at J-22 (stating that the
current level of EDI traffic averages 110,000 transactions per day). 
While each of these instances did not necessarily form the basis for one
or another of the agency's source selection discriminators, nonetheless
they contributed to the agency's overall favorable scoring of the EDS
proposal.