TITLE: BAE Systems Technical Services, Inc., B-293070, January 28, 2004
BNUMBER: B-293070
DATE: January 28, 2004
**********************************************************************
BAE Systems Technical Services, Inc., B-293070, January 28, 2004
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: BAE Systems Technical Services, Inc.
File: B-293070
Date: January 28, 2004
Kenneth M. Bruntel, Esq., Amy E. Laderberg, Esq., and Heather N. Hormel,
Esq., Crowell & Moring, for the protester.
Philip Adams, Esq., and Kevin A. Storey, Esq., Department of the Navy, for
the agency.
Glenn G. Wolcott, Esq., and Michael R. Golden, Esq., Office of the General
Counsel, GAO, participated in the preparation of the decision.
DIGEST
In competition conducted pursuant to Office of Management and Budget
Circular A‑76, where in-house cost estimate (IHCE) for performance
by the government*s most efficient organization (MEO) fails to include
costs for various performance work statement (PWS) requirements, and the
additional costs required for the MEO to meet all PWS requirements are
greater than the marginal difference between the protester*s evaluated
cost and the IHCE, General Accounting Office recommends that agency award
a contract to the protester based on its lower-cost proposal.
DECISION
BAE Systems Technical Services, Inc. protests the Department of the Navy*s
decision, pursuant to Office of Management and Budget (OMB) Circular A-76,
that it would be more economical to perform retail supply operations for
the Fleet Industrial Supply Center (FISC) at Jacksonville, Florida,
in-house, rather than to contract for these services with BAE under
request for proposals (RFP) No. N68836‑03-R-0001. BAE challenges the
agency*s decision on the basis that, in its cost comparison determination,
the agency failed to consider all of the costs that will be required for
in-house performance of the competed requirements. Among other things, BAE
protests that the cost estimate for in-house performance fails to reflect
the costs associated with the solicitation*s minimum staffing requirements
for the FISC facilities at Mayport and Key West, Florida.
We sustain the protest.
BACKGROUND
In July 2000, the agency announced that it would perform an A-76
commercial activities study regarding 192 positions associated with the
FISC retail supply operations for the southeastern United States.[2]
Pursuant to the study, the agency issued the RFP in March 2003, seeking
private-sector proposals for a base contract period and four 1-year option
periods.[3]
The solicitation incorporated a Performance Work Statement (PWS) that
identified all activities the service provider (SP) will be required to
perform--regardless of whether the SP is a private-sector contractor or
the government*s MEO--and identified various locations where performance
must take place, including: Mayport, Key West, and Jacksonville, Florida;
Corpus Christi, Kingsville, and Ingleside, Texas; and Charleston, South
Carolina. Functions to be performed include warehouse operations,
material delivery, customer service, inventory management and program
management. The PWS also provided technical exhibits containing
historical workload data, by functional area, for each of the various
locations; however, the PWS expressly cautioned that this functional
workload data was provided only to assist in proposal preparation and
*shall not be a limiting factor on the SP*s obligation to perform all
services described in this PWS to the required level of effort.* Agency
Report, Tab 3, PWS, at 6.
The PWS listed the normal operating hours at the various facilities,
including those at Mayport and Key West, and stated:
The SP shall provide the full range of services during the hours
indicated.[[4]] This requirement shall not be satisfied by the use of
recording devices, pagers or other remote methods unless otherwise
specified in C-5[[5]]. . . . Normal hours of operation represent the
minimum standard for system and customer support.
Agency Report, Tab 3, PWS S: C.1.10.1, at 10.
In short, the PWS required that the SP provide on-site staff at the
Mayport and Key West facilities for a minimum of 2,250 and 2,125 hours per
year, respectively,[6] and expressly precluded *remote methods* of
performance.
On or before the July 16 closing date, the agency received proposals from
two private-sector offerors, including BAE;[7] these proposals were
subsequently evaluated and discussions were conducted with each offeror.
With regard to staffing the Mayport facility, BAE*s initial proposal
provided a full time, on-site supply technician for the base contract
period, but proposed to eliminate that position in the option periods. By
letter dated August 8, 2003, the agency opened discussions with BAE,
stating:
The following deficiencies were identified . . .
Proposal eliminates supply technician position at Mayport in Year 2 and
on, but does not explain how the workload will be accomplished.
Agency Report, Tab 20, at 1.
Subsequently, the agency conducted oral discussions with BAE, during which
BAE was advised that its proposal to eliminate staffing at Mayport *didn*t
comply* with the PWS requirements. Hearing Transcript (Tr.) (Dec. 10,
2003) at 69.[8] At the GAO hearing, BAE*s vice president for
administration and finance testified that, during oral discussions, BAE
personnel explained to the agency that BAE *wanted to consolidate Jax
[Jacksonville] Central with Mayport because of the--small amount of work
that was being done at Mayport.* Tr. (Dec. 10, 2003) at 73. This witness
further testified that the agency advised BAE during discussions that its
proposed approach to performing the Mayport requirements was not
acceptable and that, based on these discussions, BAE concluded: *We had
to go back and add staffing. We had to cover these operating hours
[called] out in the solicitation. We had to man and be ready at all times
for anybody to walk in the door during these nine hours of [the] day.*
Tr. (Dec. 10, 2003) at 73-74.
Following discussions, the agency sought revised proposals from both
private-sector offerors. Based on the directions provided during
discussions, and consistent with the PWS*s stated requirements, BAE
increased its proposed staffing for the Mayport facility to reflect 2,250
annual hours to be performed on-site at that facility.[9] Thereafter, the
agency evaluated BAE*s proposal as technically acceptable;[10] BAE*s
proposal offered a lower cost than that of the other private-sector
offeror and was selected for comparison to the government*s IHCE.
On August 15, the agency conducted the cost comparison between BAE*s
evaluated cost and the MEO*s IHCE. After adding a required *conversion
differential* to BAE*s proposal,[11] the cost associated with BAE*s
proposal for comparison purposes was $18,907,297; the MEO*s IHCE was
$18,655,789--a difference of $251,508. Agency Report, Tab 26(2), at 11.
On August 20, the agency announced that it intended to retain performance
of the PWS requirements in-house.
Thereafter, BAE was given an opportunity to review the MEO documents.
This review revealed that the MEO did not include any on-site staff at the
Mayport facility, and included costs for only 446 annual hours (to be
performed by Jacksonville personnel) to perform the functional
requirements directly related to the Mayport facility.[12] Agency Report,
Tab 11 (3040), at 13. BAE*s review also revealed that the IHCE only
included costs for 1,421 hours to staff the Key West facility.
On September 12, BAE filed an appeal with the Navy*s administrative appeal
authority (AAA), identifying 17 specific areas of the MEO*s IHCE that BAE
believed were inconsistent with the PWS requirements and/or reflected
costs that were erroneously calculated. Agency Report, Tab 24. BAE*s
appeal specifically included assertions that the MEO failed to comply with
the PWS staffing requirements for the Mayport and Key West
facilities.[13]
The agency defended against BAE*s appeal, generally arguing that the MEO
was fully compliant with all the PWS requirements.[14] Agency Report, Tab
26 (10). By decision dated October 10, 2003, the AAA denied or dismissed
14 of BAE*s 17 bases for appeal.[15] Agency Report, Tab 25. With regard
to three appeal issues, the AAA increased the IHCE costs, or decreased
BAE*s evaluated costs, by a combined total of $63,787, thereby decreasing
the margin between the IHCE and BAE*s evaluated cost from $251,508 to
$187,721. Agency Report at 10; Tab 25 at 13. Following the AAA*s
adjustments, BAE*s evaluated cost, including the 10-percent conversion
differential, was $18,895,894; the total IHCE was $18,708,173. Agency
Report, Tab 25, at 3. On October 20, BAE filed this protest with our
Office, essentially repeating the arguments previously made in its appeal
to the AAA.
DISCUSSION
Upon receipt of BAE*s protest, and in anticipation of having to submit a
report to our Office, the contracting officer sent a letter to the MEO
Manager stating:
While reviewing the protest, I noted two elements of the protest [that]
raise some concerns as to whether the Technical Evaluation Board, and
myself as the Source Selection Authority, evaluated the MEO offer as
meeting the requirements of the performance work statement . . . [quoting
the following from section headings in BAE*s protest]
A. The In-House Entity*s Staffing for the Mayport and Key West Sites
Fails to Comply with the PWS Requirements.
E. The IHCE fails to include Full-Time Site Managers at FISC Jacksonville
NADEP [Naval Aviation Depot] and Ingleside.
Letter from Contracting Officer to MEO Manager (Nov. 5, 2003).[16]
On November 17, the MEO manager responded to the contracting officer*s
letter. Notwithstanding the agency*s earlier position, in defending
against the appeal, that the MEO was fully compliant, the MEO manager
stated:
The requirements of the PWS, as set forth in C1.10.1, were not fully met
in the MEO*s staffing . . . . [W]e agree with the Protester that the PWS
calls for a site presence [at Mayport] during the normal operating hours.
Agency Report, Tab 29, at 2.
Subsequently, in responding to our Office, the contracting officer
similarly acknowledged that the MEO *was non-compliant with the PWS
requirements, in that it had proposed to perform the Mayport effort
remotely (i.e. at FISC Jacksonville Central).* Agency Report at 10.
In short, after the contracting officer purported to have performed an
objective assessment of the MEO and, thereafter, represented to the
agency*s internal AAA that the MEO complied with the PWS requirements,
once a protest was filed with our Office, the agency immediately
acknowledged the obvious--that is, that the MEO was *non-compliant.*[17]
Notwithstanding the preceding facts, in responding to BAE*s protest, the
agency asserts that, after completing the cost comparison and the
administrative appeal process, the MEO team can now rearrange its proposed
staffing in a manner that--the agency maintains--will comply with the PWS
requirements. Specifically, the agency argues that the MEO should, now,
be permitted to reshuffle its personnel by increasing the Mayport staffing
to the PWS-required level and, simultaneously, decreasing the staffing
level at the Jacksonville facility by an offsetting amount. Agency Report
at 10; Agency Post-Hearing Brief, Dec. 22, 2003, at 4-7. On the basis of
this proposed *corrective action,* the agency requests that we deny BAE*s
protest.
BAE responds that, for multiple reasons, the agency*s post-protest
revisions should not be permitted, among other things characterizing the
agency*s actions as a *shell game.* Protester*s Post-Hearing Comments at
14. We agree that the agency*s post-appeal, post-protest attempts to
revise the MEO*s approach to meeting the PWS requirements do not provide a
basis for denying BAE*s protest; further, even if we were to consider the
agency*s proposed MEO modifications, the agency*s attempts to modify its
proposed staffing fail to support the agency*s decision to continue
performance of the competed requirements in-house.
As the agency points out, in reviewing bid protests challenging an
agency*s cost comparison, our Office has previously considered revisions
to an MEO that are made at some point after the MEO and the private sector
proposals have been submitted. See, e.g., Symvionics, Inc.,
B‑281199.2, Mar. 4, 1999, 99‑1 CPD P: 48; BAE Sys.,
B‑287189, B-287189.2, May 14, 2001, 2001 CPD P: 86. However, these
cases address situations where the agency made cost adjustments to the MEO
during the course of initially reviewing the MEO for compliance with the
PWS, or during the course of the administrative appeal. Such adjustments
are anticipated and authorized by the A-76 Revised Supplemental Handbook.
Additionally, in performing our Office*s bid protest function, we have
considered whether the addition of costs, improperly omitted from an IHCE,
would alter an agency*s cost comparison decision, thereby providing a
basis for our determination regarding prejudice to the protester.
Trajen, Inc., B- 284310, B-284310.2, March 28, 2000, 2000 CPD P: 61. We
have never considered an agency*s post-protest MEO revisions which
contemplate addition of improperly omitted costs, along with offsetting
deletions of costs which the agency, in the process of defending against
the protest, for the first time asserts are not required.
Under the circumstances presented here, we conclude that it would not be
appropriate to permit the agency*s post-appeal, post protest modifications
to the MEO*s performance approach. Here, the Navy seeks to materially
revise the MEO, after the cost comparison with BAE has been completed, in
a manner that appears designed to maintain a purported cost advantage that
the record shows was based on the MEO*s failure to cost all of the PWS
requirements. We view the integrity of the A-76 process as precluding
such material revisions to the proposed performance approach at this stage
of the process.[18] This is particularly true where, as here, the agency
has declined to comply with the PWS requirements--despite having been
presented, through the appeal process, with the precise aspects of its
proposed approach that it now acknowledges are noncompliant. More
specifically, the record shows that the contracting officer, the MEO
manager, the IRO, and the AAA all failed to properly perform their
required functions. We view these combined, multiple failures as damaging
the integrity of the A-76 process, and allowing revisions to the MEO now
would only compound that damage. Moreover, the failure of the various
government officials to properly perform their respective roles has unduly
prolonged the A-76 process, thereby improperly extending the agency*s
in‑house performance.[19]
In any event, even if we were to consider the agency*s post-appeal,
post-protest rearrangement of the MEO staffing, the revisions proposed by
the agency in response to BAE*s protest fail to provide a basis for
denying the protest or for retaining performance in-house.
Specifically, with regard to the Mayport facility, we reject the agency*s
assertion that it can comply with the PWS*s substantially higher Mayport
staffing requirements by shifting personnel to Mayport from
Jacksonville--with no increase to its overall cost. The agency maintains
that the Jacksonville personnel it intends to reassign will perform all of
the tasks they would have performed at Jacksonville--while stationed at
the Mayport facility.[20] As discussed above, the PWS prohibited *remote
methods* of performance. Agency Report, Tab 3, PWS S: C.1.10.1, at 10.
Here, the agency*s post-appeal, post-protest proposal to reshuffle
personnel contemplates remote performance of the Jacksonville requirements
which the PWS precludes.[21] As discussed previously, during discussions
the agency advised BAE that similar remote performance was not
permissible. Accordingly, we conclude that, in order to comply with the
PWS requirements regarding the Mayport facility, the costs associated with
1,804 additional annual staff hours must be added to the IHCE; [22] the
record shows that the costs associated with these additional hours, which
augment the total cost for in-house performance, must be, at least,
$193,970.[23]
Additionally, it is clear that the MEO*s proposed staffing of the Key West
facility fails to properly reflect all required costs. As noted above,
the PWS required a minimum of 2,150 annual hours to staff that facility;
yet the MEO*s IHCE reflected costs for only .8 FTE, that is, 1,421 annual
hours.[24] At the GAO hearing, the MEO manager testified that, with
regard to periods when the MEO staffer was unavailable to meet the
operating hours requirements at Key West (2,125 annual hours), the
government intended for the PWS requirements to be performed by government
employees from another Navy organization located at Key West with which
the MEO has a *partnership*; the costs of these Navy employees were not
reflected in the MEO*s IHCE. Tr. (Dec. 9, 2003) at 108-17. The MEO
manager asserted that, because the PWS requirements were being performed
by non-MEO personnel, there was *no cost to us [the MEO].* Tr. (Dec. 9,
2003) at 111.
The A-76 process requires that an MEO*s IHCE reflect all costs associated
with performance of the PWS requirements. OMB Circular A-76 Revised
Supplemental Handbook, part I, ch. 3, P: I; part II, ch. 2; see also The
Jones/Hill Joint Venture--Costs, B‑286194.3, March 27, 2001, 2001
CPD P: 62, at 13. Failure to include the costs associated with
performance by government employees outside the MEO obfuscates the true
cost of in‑house performance and renders the resulting cost
comparison inaccurate and unfair. The Jones/Hill Joint Venture, B-
286194.4 et al., Dec. 5, 2001, 2001 CPD P: 194 at 18‑19; Imaging
Sys. Tech., B-283817.3, Dec. 19, 2000, 2001 CPD P: 2 at 9.
Accordingly, the IHCE must be augmented by the costs associated with
performance of PWS requirements at Key West by non-MEO personnel for, at
least, 349 annual hours;[25] the additional cost associated with these 349
hours is, at least, $39,455.[26] Overall, at least $233,425 ($193,970 +
$39,455) must be added to the IHCE to reflect the cost of in-house
performance of the PWS requirements.[27] Accordingly, the costs for
in-house performance should be increased to, at least, $18,941,598,[28]
which exceeds the $18,895, 894 evaluated costs associated with BAE*s
proposal (including the 10-percent conversion differential).
The protest is sustained.
RECOMMENDATION
As discussed above, when the costs associated with meeting all of the PWS
requirements are properly added to the IHCE, it is clear that the expected
cost of performance by BAE, even after the conversion differential is
applied, will be lower than the expected cost of performance by the MEO.
Accordingly, we recommend that the agency award a contract to BAE under
the RFP. We also recommend that BAE be reimbursed the reasonable costs of
filing and pursing the protest, including reasonable attorneys* fees. Bid
Protest Regulations, 4 C.F.R. S: 21.8(d)(1)(2003). BAE*s certified claim
for costs, detailing the time expended and costs incurred, must be
submitted to the agency within 60 days of receiving this decision.
Anthony H. Gamboa
General Counsel
------------------------
[1] The procedures applicable here for determining whether the government
should perform an activity in-house, or have the activity performed by a
contractor, are set forth in OMB Circular A-76, and that Circular*s
Revised Supplemental Handbook (RSH) (March 1996), which have been made
applicable to the Department of Defense and its military departments and
agencies. 32 C.F.R. S: 169a.15(d)(2003). Although the Circular and RSH
were revised in May 2003, those revisions were not applicable to this
competition.
[2] The number of positions was subsequently reduced to 148.
[3] Private sector offerors were advised that the agency intended to
select the lowest‑cost technically acceptable proposal to compete
against the government*s most efficient organization (MEO).
[4] The operating hours for the Mayport facility were listed as 7:00 a.m.
through 4:00 p.m., Monday through Friday; that is, 9 hours per day. The
operating hours for the Key West facility were listed as 7:30 a.m. through
4:00 p.m., Monday through Friday; that is, 8 1/2 hours per day. Agency
Report, Tab 3, PWS S: C.1.10.1, at 10.
[5] Section C-5 of the PWS does not provide any exception to the
prohibition regarding remote methods of performance at the Mayport or Key
West facilities.
[6] As calculated by the protester, and not challenged by the agency, the
minimum total operating hours per year for the Mayport and Key West
facilities are as follows: 5 (days per week) x 52 (weeks per year) = 260
(days per year) - 10 (federal holidays) = 250 (days per year) x 9 or 8
1/2 (hours per day for Mayport or Key West, respectively) = 2,250 and
2,125 (hours per year).
[7] Prior to this time, the government submitted its management plan for
its most efficient organization (MEO), Agency Report, Tab 11 (3030); its
technical performance plan (TPP), Agency Report, Tab 11 (3040); and its
in-house cost estimate (IHCE), Agency Report, Tab 11 (3080).
[8] In resolving this protest, GAO conducted a two-day hearing, during
which testimony was provided by six witnesses: the agency*s contract
specialist, contracting officer, MEO manager, administrative appeal
authority, and independent review officer, and the protester*s vice
president for administration and finance.
[9] BAE*s final revised proposal also included the costs for 2,125 staff
hours to be performed on-site at the Key West facility.
[10] The agency summarized BAE*s final proposal as follows: *BAE*s price
proposal clearly outlined the direct labor and burden rates, by sites and
supported the Section B prices. The proposed manpower, 71 FTE[,] was
consistent with the proposed labor categories, rates and hours found in
the price element summary. Their manning approach, involving cross
training, cross-utilization and combining multiple functions, was found
adequate to support this requirement.* Agency Report at 9.
[11] Under the A-76 cost comparison procedures, a 10-percent conversion
differential is added to the private sector*s proposed personnel costs in
order to *ensure that the Government will not convert for marginal
estimated savings.* OMB Circular A-76, Revised Supplemental Handbook,
Part II, Ch. 4, P:A(1).
[12] The historical workload data for the Mayport facility indicate that,
in addition to the operating hours requirement, there have historically
been approximately 446 annual hours required to prepare invoices and
respond to customer inquiries. Agency Report, Tab 11 (51-60), at 19. As
noted above, however, the solicitation specifically directed that the
historical workload data *shall not be a limiting factor on the SP*s
obligation to perform . . . to the required level of effort.* Agency
Report, Tab 3, at 6.
[13] BAE*s appeal stated that *the PWS requires a total of . . . 2,250
hours . . . for the Mayport site,* noting that the MEO did not provide any
on-site Mayport staffing and the IHCE only reflected costs for 446 hours
relating to the Mayport facility*s requirements. Agency Report, Tab 24,
at 2-3. Similarly, BAE*s appeal stated that *the PWS requires a total of
. . . 2,125 hours . . . for the Key West site,* noting that the MEO*s IHCE
reflected costs for only 1,421 hours. Agency Report, Tab 24, at 3.
[14] Specifically, with regard to staffing the Mayport facility, the
agency argued that: *[T]he MEO team combined the [v]oucher [p]ayment
functions at Mayport and at FISC Jacksonville. Thus Mayport no longer
requires staffing.* Agency Report, Tab 26(10), at 1. That is, the agency
expressly acknowledged that the MEO proposed to address the Mayport
requirements in a manner virtually identical to that contemplated by BAE*s
initial proposal--an approach the agency advised BAE during discussions
constituted a proposal deficiency. Similarly, in defending against BAE*s
appeal regarding the Key West facility, the agency argued that the IHCE
need only reflect the functional workload requirements that had
historically been performed at Key West, effectively acknowledging that
the IHCE did not cover the costs associated with staffing to the PWS*s
required operating hours. Id.
[15] With regard to the MEO*s staffing at Mayport, the AAA denied BAE*s
appeal on the following basis: *I have reviewed the PWS operating policy
and functional requirements for the Mayport location. The MEO included
staffing requirements based on the Technical Exhibits (TEs) identifying
historical and projected workload.* Agency Report, Tab 25, at 3. While
thus reaching a conclusion on the merits, the AAA also stated: *I have
determined that the issue . . . is not within the scope of review provided
by the A-76 administrative appeal procedures.* Id. With regard to Key
West staffing, the AAA decision similarly denied the appeal on essentially
the same basis, first stating that the MEO had staffed to the historical
functional workload, then maintaining that the issue *is not within the
scope of review.* Id at 3-4. Nothing in the AAA decision addresses the
PWS requirement that *[t]he SP shall provide the full range of services
during the [normal operating hours],* nor the prohibition on *remote
methods* to satisfy the requirements, nor the PWS provision that the
historical workload data *shall not be a limiting factor on the SP*s
obligation to perform all services.* See Agency Report, Tab 3, PWS, at 6,
10.
[16] Since these identical issues were raised in BAE*s appeal to the
agency*s internal AAA, it is not clear why that appeal did not similarly
*raise some concerns* with the contracting officer.
[17] In addition to the inconsistent positions taken by the agency,
discussed above, our review of the record reveals that the agency failed
to properly perform the independent review function mandated by the A-76
procedures. Specifically, pursuant to the required procedures, an
independent review officer (IRO) must be appointed, prior to the cost
comparison, to *ensure that the data contained in the [MEO*s] Management
Plan reasonably establish the Government*s ability to perform the PWS
within the resources provided by the MEO.* OMB Circular A-76 Revised
Supplemental Handbook, Part I, Ch. 3 P: I. At the GAO hearing, the IRO
testified that his review of the PWS was limited to the provisions of only
one PWS section--that is, section C5; specifically, the following colloquy
occurred:
GAO: Is your review limited to the provisions of [PWS section] C5?
IRO: Of C5, yes. . . . [W]e used to do 100 percent review of all [the]
solicitation, C1 through the whole thing.
* * * * *
GAO: It*s your view [that] in performing the . . . independent review
function that you don*t look at [PWS] Section[s] C1 through C4?
IRO: Well . . . not that long ago, we were told to stay out of that
part . . . .
GAO: And what was the authority that you cited for that approach?
IRO: There was a study . . . where a Three Star got upset that we were
ripping up their whole solicitation . . . and then N124 [described by the
witness as the *Navy Policy Office*] came out and said [that] . . . what
we were doing was outside the scope of our work.
Tr. (Dec. 10, 2003) at 10-12.
The PWS is comprised of five sections, labeled C-1 through C-5. Clearly,
the entire PWS is applicable to the private-sector offerors, as well as to
the MEO. While it may be true that PWS section C-5 contains the majority
of the performance requirements, it is equally clear that the requirements
are not limited to that section. Here, for example, the requirement that
*[t]he SP shall provide the full range of services during the [normal
operating] hours* was contained in PWS section C-1. Similarly, section
C-1 contained subsections titled *Transition Periods,* *Quality Control,*
Personnel Requirements,* *Meetings and Briefings,* and *Operating
Policy,*--all of which contained material performance requirements. Since
the entire PWS is clearly applicable to private-sector proposals, as well
as to the MEO, there can be no rational basis for excluding consideration
of any portion of the PWS when performing the IRO function.
[18] As the protester points out, a private-sector offeror would not be
permitted to materially modify its proposed approach following the cost
comparison. In this regard, we note that, here, the solicitation
expressly stated: *A cost estimate for Government performance is
considered a proposal for purposes of this solicitation*s Late Submission,
Modifications, and Withdrawal of Proposals or Quotations provision.*
Agency Report, Tab 2, at 37. Thus, it appears that the agency*s proposed
revision is directly contrary to the express provisions of the
solicitation.
[19] As noted above, the process regarding this A-76 competition began in
July 2000, more than 3 1/2 years ago.
[20] At the GAO hearing, various agency personnel asserted that this would
be accomplished primarily by faxing invoices, vouchers and other documents
to the reassigned Mayport personnel.
[21] Even if such remote performance were permitted, it could well result
in a lower level of efficiency, effectively requiring more personnel
resources than the level previously proposed. See Agency*s White Paper on
Consolidation of Voucher Payment, Dec. 10, 2002.
[22] This number is calculated as follows: 2,250 (minimum hours required
on-site at Mayport) - 446 (hours previously proposed by MEO related to
Mayport) = 1,804.
[23] In calculating personnel costs for the IHCE, the government assumed
that a full time equivalent (FTE) staff year provided 1,776 productive
hours. Tr. (Dec. 9, 2003) at 86. Accordingly, in order to provide an
additional 1,804 hours for the Mayport facility, the costs associated with
slightly more than one FTE must be added to the IHCE. The IHCE
establishes that the lowest level of costs associated with any of the
personnel assigned to Jacksonville (where the Mayport requirements were
proposed to be met) are, at least, $38,794 per year. Agency Report, Tab
11 (3080), Personnel Cost Worksheet, at 66. The solicitation contemplated
a 1-year base period and four 1-year option periods; accordingly, total
costs associated with one FTE at the Mayport facility are, at least,
$193,970 (5 x $38,794). Since our calculations here are based on the
lowest possible costs associated with any proposed personnel, and do not
reflect any cost escalation throughout the contract performance periods,
the actual costs associated with meeting the Mayport requirements are
likely to be considerably higher.
[24] As noted above, the agency assumed that 1,776 productive hours are
provided by one FTE. The agency maintains that, although only .8 FTE
(1,421 hours) was charged to the IHCE in connection with the Key West
requirements, the MEO should receive credit for a full FTE (1,776 hours)
because it intends to provide one on-site staff, full time, at the Key
West facility; however, this staff member will devote a portion of his
time (.2 FTE) to performing non-MEO activities. In short, the agency
maintains that this staff member*s time can simultaneously be applied to
meeting the PWS*s operating hours requirement for the Key West facility,
while also being charged to another, non-MEO activity. We need not
resolve this issue since, even accepting the agency*s assertion that a
full FTE (1,776 hours) is properly credited to the MEO, the agency
intended, as explained in the following text, to augment the MEO with
non-MEO resources in order to meet the requirements for 2,125 on-site
annual hours.
[25] This number of hours reflects the difference between 2,125 hours (the
required operating hours for the Key West facility) and 1,776 hours (the
productive hours associated with 1 FTE).
[26] The IHCE reflects an annual cost for the proposed Key West hours of
$32,133; that is, $22.61 per hour. Agency Report, Tab 11(3080), Personnel
Costs Worksheet (Key West), at 78. Accordingly, $22.61 x 349 hours =
$7,891 (per year) x 5 (years of performance) = $39,455.
[27] Our review of the record leads us to conclude that there are, likely,
additional costs that should be added to the IHCE. The above calculations
are all based on assumptions most favorable to the MEO, such as lowest
possible salary levels and number of additional hours required. Further,
the record reflects additional apparent omissions in the IHCE, including
the failure to reflect any costs for a quality control technician that was
proposed by the agency in its technical performance plan. In light of our
decision sustaining the protest and recommending award to BAE, we need not
resolve these and other issues raised by the protester.
[28] This amount is calculated as follows: $18,708,173 (total IHCE, as
adjusted by the AAA) + $233,425 (minimum level of additional costs
discussed above) = $18,941,598.