TITLE:  Federal Management Systems, Inc., B-293336, February 20, 2004
BNUMBER:  B-293336
DATE:  February 20, 2004
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Federal Management Systems, Inc., B-293336, February 20, 2004

   Decision
    
    
Matter of:   Federal Management Systems, Inc.
    
File:            B-293336
    
Date:              February 20, 2004
    
Keith Calhoun-Senghor, Esq., for the protester.
Michael Colvin, Department of Health and Human Services, for the agency.
Linda S. Lebowitz, Esq., and Michael R. Golden, Esq., Office of the
General Counsel, GAO, participated in the preparation of the decision.
DIGEST
    
Protest is denied where the protester failed to demonstrate that the
agency unreasonably rejected its proposal--the only proposal received from
a private-sector offeror as part of a cost comparison conducted pursuant
to Office of Management and Budget Circular A-76--as technically
unacceptable.
DECISION
    
Federal Management Systems, Inc. (FMSI) protests the rejection of its
proposal as technically unacceptable under request for proposals (RFP) No.
263-03-P(GK)-0059, issued by the National Institutes of Health (NIH),
Department of Health and Human Services, for administrative support
services for grants application management, program, and review support
for NIH facilities in Maryland (Bethesda, Rockville, and Frederick) and in
North Carolina (Research Triangle Park). The RFP was issued pursuant to
Office of Management and Budget (OMB) Circular A-76 and the Circular*s
Revised Supplemental Handbook (RSH) to determine whether it would be more
economical to perform the required services in-house or to contract for
these services under the referenced RFP. MSI was the only offeror to
submit a proposal in the private-sector portion of this A‑76 cost
comparison. FMSI argues that the agency did not have a reasonable basis to
reject its proposal as technically unacceptable.
    

   We deny the protest.
    
On May 22, 2003, NIH issued the RFP on an unrestricted basis in order to
select a private-sector offeror to compete against the government*s *most
efficient organization* (MEO) under the A-76 cost comparison process.[2] 
More specifically, the RFP stated that the agency would conduct the cost
comparison between the MEO and the private-sector offeror that submitted
the low priced, technically acceptable proposal.  As relevant here, in
determining the technical acceptability of a private-sector offeror*s
proposal, the RFP contained the following four equally weighted technical
evaluation factors:  (1) past performance; (2) understanding of the
requirements/technical approach; (3) understanding of staffing
requirements; and (4) understanding of management requirements.  For each
of these technical evaluation factors, the RFP provided that proposals
could receive one of the following adjectival ratings:  (1) excellent; (2)
good; (3) marginal; and (4) poor.[3]  For each of the four technical
evaluation factors, the RFP specifically stated that a proposal *must
receive a rating of good or excellent to be considered technically
acceptable.*  RFP at 124-26.  The RFP further defined technical
acceptability as follows:
    
Technically acceptable is defined through the performance levels in the
PWS [Performance Work Statement] ([S:] C, and [S:] J attachments).  This
requires meeting all the requirements (services and service levels) and
standards within the workload variances.  Technically acceptable is NOT
meant to imply *marginal,* *partial compliance,* or *what is acceptable on
other contracts.*  NIH has specific and unique extramural programs and
requirements.  Technically acceptable in this case implies a historical
level of performance that effectively achieves the NIH mission in a cost
efficient manner.
Id. at 122.
    
The RFP advised that a private-sector offeror*s initial proposal should
contain the firm*s most favorable terms since the agency could select a
proposal from a private‑sector offeror and proceed to the A-76 cost
comparison without having conducted discussions with the private-sector
offerors.  RFP Cover Letter.
    
Section C of the RFP contained the PWS requirements.  Section C-1 required
that the private-sector offeror or the MEO, depending on the outcome of
the A‑76 cost comparison, provide all management, supervision,
administration, and labor to support the grants management, program, and
review support services identified in this *Performance-based [PWS].*  RFP
S: C-1, General Information, at 1.  The PWS stated that the *major
functional requirements* contained in the PWS describe the supplies and
services the government will purchase and, therefore, are the foundation
of the RFP.  RFP S: C-5, Specific Tasks, at 37.  The PWS further stated
that the *functional area approach . . . express[es] minimum performance
requirements . . . [and] [i]t is neither reflective nor indicative of any
existing or required organizational arrangement.  Minimum requirements are
set forth in brief performance requirement statements, supplemented by
corresponding standards of performance . . . [which] are measures of
quality and timeliness.*  Id.  The PWS encouraged the submission of
proposals that would achieve savings through *innovative process
improvement[s] and resource management.*  RFP S: C,
Description/Specification, PWS Cover Page.
    
FMSI, an incumbent contractor, was the only private-sector offeror to
submit a proposal.  Seven evaluators rated FMSI*s technical proposal, as
well as FMSI*s responses to more than 100 proposal clarification questions
posed by the agency to FMSI prior to the final evaluation of its
proposal.  For the past performance evaluation factor, each of the
evaluators assigned a good rating to FMSI*s proposal; however, for the
other three technical evaluation factors, the evaluators generally
assigned ratings no higher than poor to FMSI*s proposal.  (For the
understanding of the requirements/technical approach evaluation factor,
two of the seven evaluators assigned marginal ratings to FMSI*s proposal,
while the other five evaluators each assigned poor ratings; for each of
the other two technical evaluation factors, each of the evaluators
assigned poor ratings to FMSI*s proposal.)  These adjectival ratings were
supported by contemporaneous evaluation narratives which showed that
FMSI*s proposal was deficient in three areas--technical, staffing, and
management.  The agency concluded that these deficiencies permeated the
entire FMSI proposal and were too substantial to be susceptible to
correction.
    
The record shows that the agency had a significant concern with FMSI*s
proposed staffing approach.  In this regard, the agency commented that
FMSI*s proposed staffing levels were *incongruent with past performance
and would, in some cases[,] result in FMSI supplying fewer staff to
perform than under its current NIH contracts.*  SSEB Report at 56.[4]  The
agency believed that the staffing levels proposed by FMSI were
unrealistically low in terms of FMSI being able to adequately perform the
PWS requirements.  Id. at 50.  The agency noted that FMSI failed to
address in its proposal any process improvements (other than a few minor
improvements based on changes already ongoing at the NIH), efficiencies,
consolidations, or reorganizations that would explain how the firm*s
proposed staffing approach would be *viable.*  Id. at 50, 56.  The agency
stated that while not all of the NIH institutes and centers were
understaffed by FMSI, the agency nevertheless believed that FMSI*s
proposal presented an unacceptable level of risk in terms of all NIH
facilities being able to accomplish their workloads with the staffing
levels proposed by FMSI.  Id. at 57.
    
Because FMSI*s proposal was determined to be deficient, i.e., FMSI*s
proposal did not receive good or excellent ratings for each of the
technical evaluation factors, the agency rejected FMSI*s proposal as
technically unacceptable.  As a result, there was no technically
acceptable proposal from the private sector to compare to the MEO. 
Accordingly, the agency canceled the RFP.[5]
    
FMSI filed this protest on November 24, 2003.  FMSI challenges the
reasonableness of the agency*s evaluation of its proposal, arguing that it
fully addressed in its proposal all of the PWS requirements.  FMSI
contends that in rejecting its proposal as technically unacceptable, the
agency used criteria that were not included in, or required by, the PWS. 
FMSI does not articulate what these unstated criteria were, other than
speculating that *NIH . . . appears to have wanted a specific number of
personnel organized and managed in a particular manner.*  Protest at 19.
    
In its administrative report filed with our Office and with FMSI on
December 19, the agency explains that the PWS requirements, as stated
above, were performance‑based, meaning that the government did not
tell offerors how to perform the PWS requirements, but rather expected
each offeror to explain in its proposal its technical approach for
satisfying these requirements.  It is clear from the RFP language, as
quoted above, that the PWS requirements were stated in terms of functional
or performance requirements, which permitted an offeror, like FMSI, the
option to choose and propose its own unique approach to fulfilling the
technical, staffing, and management requirements of the PWS.  Where, as
here, the PWS allows for alternative approaches to meeting performance
requirements, the manner in which offerors are to fulfill the requirements
need not be specified in the PWS and do not constitute unstated criteria. 
See, e.g., Cerner Corp., B-293093, B-293093.2, Feb. 2, 2004, 2004 CDP P:
___ at 8; Canadian Commercial Corp./Canadian Marconi Co., B-250699.4, Mar.
5, 1993, 93-1 CPD P: 251 at 7.
    
FMSI also contends that, in evaluating its proposal, the agency held it to
a higher standard than it held the MEO/management plan.  For example, FMSI
argues that it devoted a greater number of pages in its proposal to
addressing the PWS requirements than did the MEO/management plan. 
However, in making this argument, based on page counts, FMSI does not
point to any PWS requirement that the MEO/management plan fails to
satisfy.  In addition, FMSI states that it *takes no issue with NIH*s
finding that its own [i.e., the government*s] cursory . . . Management
Plan meets the technical requirements of the PWS.  If NIH*s . . .
[management plan] is the definition of [*]technically acceptable[*] for
purposes of this [RFP], FMSI has no quarrel with that fact.  FMSI only
wants that same standard applied to its detailed, comprehensive proposal,
as applied to NIH*s superficial technical effort.*  Protester*s Comments
at 9.  Accordingly, FMSI has not provided any basis to show that the
MEO/management plan was somehow substantively noncompliant with the PWS
requirements or otherwise received more favorable treatment than did
FMSI*s proposal.  Rather, the record shows that the agency reasonably
evaluated the substantive contents of FMSI*s proposal in accordance with
the terms of the RFP. 
In its administrative report, as supported by the contemporaneous
evaluation record, the agency provides examples of the numerous
deficiencies in FMSI*s proposal that led the agency to conclude that FMSI
failed to demonstrate its understanding of the technical, staffing, and
management requirements of the PWS, thus rendering FMSI*s proposal
technically unacceptable.
    
One of these examples involves the National Cancer Institute*s (NCI)
Cancer Research Development Center (CRDC) in Frederick, Maryland, which
was listed in the RFP as a performance site.  RFP S: C-1, General
Information, at 11.  (FMSI was not performing any work as an incumbent
contractor at the CRDC in Frederick.)  In evaluating FMSI*s proposal, the
agency was concerned that FMSI had not adequately addressed how it would
perform the PWS requirements at the CRDC in Frederick.  The agency brought
this matter to the attention of FMSI in the clarification questions issued
to the firm prior to the agency*s final evaluation of its proposal.  In
one question, referring to a page in FMSI*s proposal containing the firm*s
organizational chart, the agency asked FMSI how it proposed to service the
CRDC in Frederick.  FMSI referenced its organizational chart and
responded, without elaboration, that it was aware of the NCI*s programs at
the Frederick site and that it planned to staff this location with nine
grants program assistants and one supervisory grants program assistant as
shown in the organizational chart.    Protester*s Response to
Clarification Question at 4.  The agency viewed this response as
*unacceptable as it does not adequately explain how the Frederick offices
would be serviced or justify staffing numbers to support the volume of
workload.*  Final Technical Evaluation Report at 36-37.  In another
question, the agency referred to FMSI*s transition plan, pointing out that
the firm*s transition plan for the CRDC in Frederick could not be located;
the agency asked FMSI to address this matter.  Again, without elaboration,
FMSI responded that its transition plan for the CRDC in Frederick was
incorporated into its transition plan for the other NIH Maryland sites,
which were located approximately 36 miles away in Bethesda at the NIH main
campus and that it intended to meet with the NCI program officials located
in Frederick to achieve a smooth and efficient transition.  Protester*s
Response to Clarification Question at 38.  The agency stated that
*[n]either the proposal nor the response acceptably describes the
transition plan for the Frederick facilities nor has the proposal
acceptably defined the positions involved to service this site.*  Final
Technical Evaluation Report at 47.
    
This discussion of the CRDC in Frederick illustrates the agency*s
concerns, as set forth above, with FMSI*s failure to provide within the
four corners of its proposal, or in its responses to the agency*s numerous
clarification questions, a complete discussion of its technical, staffing,
and management approaches in order to demonstrate its understanding of the
PWS requirements.[6]  While FMSI filed comments on the agency*s
administrative report on January 5, 2004,[7] FMSI did not rebut the
detailed positions articulated by the agency in that report, as supported
by the contemporaneous evaluation record.  On this record, where FMSI
essentially does no more than express its disagreement with the outcome of
the agency*s evaluation, we conclude that there is no basis for our Office
to question the reasonableness of the agency*s rejection of FMSI*s
proposal as technically unacceptable.[8]
    
In addition, in its January 5 comments, FMSI raised five new grounds of
protest involving procedural and technical aspects of the agency*s conduct
of this A-76 cost comparison.  For example, FMSI questioned whether any of
the agency evaluators should have been disqualified due to alleged
conflicts of interest.
    
We do not address these new grounds of protest because they were not
timely raised within 10 days (by December 29) after FMSI received the
agency*s administrative report.  Bid Protest Regulations, 4 C.F.R. S:
21.2(a)(2) (2003).  In this respect, FMSI filed its comments 17 days after
it received the agency*s administrative report.  While FMSI requested, and
our Office granted, an extension of time for filing comments on this
report, the comment extension did not toll or otherwise waive the time for
filing new grounds for protest.  ATA Def. Indus., Inc., B-282511.8,
May 18, 2000, 2000 CPD P: 81 at 4.  Since the nature of the allegations
raised for the first time in FMSI*s comments are materially different than
the issues raised in its protest concerning the technical acceptability of
its proposal and since these allegations were not timely raised after FMSI
received the agency*s administrative report, we will not address them
here.[9]
       
Finally, in light of our conclusion that FMSI*s proposal was reasonably
rejected as technically unacceptable, there is no basis in this record to
support FMSI*s contention that it is entitled to recover its proposal
preparation costs.
    
The protest is denied.
    
Anthony H. Gamboa
General Counsel
    

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

   [1] The NIH consists of 20 institutes and 7 centers.  FMSI currently
provides, or has provided, some of the services required under this RFP at
five NIH facilities, all of which are located in Bethesda at the NIH main
campus.  Source Selection Evaluation Board (SSEB) Report at 6.
[2] 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 the Circular*s RSH
(March 1996).  Although the Circular and the RSH were revised on May 29,
2003, those revisions were not applicable to this competition as this RFP
was issued 1 week before the May 2003 revisions were issued.
[3] For past performance, proposals also could receive a neutral rating.
[4] As part of the debriefing, NIH provided FMSI with a copy of the
MEO/management plan.  The record shows, and FMSI does not dispute, that
FMSI*s proposed staffing, in terms of full-time equivalent personnel, was
at least 20 percent less than the MEO*s proposed staffing.  Protest at
18-19. 
[5] The agency advised that it would implement the MEO.  Contracting
Officer*s Statement at 3.
[6] We point out that the MEO/management plan specifically incorporated
all performance sites contained in the RFP, including the CRDC in
Frederick. 
Protest, exh. 19, MEO Management Plan, at 9.
[7] The original due date for the filing of NIH*s administrative report
was December 26, 2003, thus making comments due 10 calendar days later on
January 5, 2004.  However, the NIH advised GAO and FMSI that it would be
filing its report on December 19, thereby making comments due 10 calendar
days later on December 29.  By letter dated December 18, and received by
our Office on December 19, FMSI requested that GAO grant it an extension
of time for filing comments until January 5, the original comment due
date.  By written notice dated December 19, and sent to both the NIH and
FMSI, GAO granted FMSI*s request for an extension of time to file comments
until January 5.
[8] In its comments on the agency*s administrative report, FMSI points to
general statements in its proposal that it would service all performance
sites contained in the RFP and would perform all of the PWS requirements. 
However, such blanket statements of compliance, without supporting details
and explanations as required by the RFP, fail to demonstrate FMSI*s
understanding of the agency*s technical, staffing, and management
requirements as described in the PWS.  See, e.g., Wahkontah Servs., Inc.,
B-292768, Nov. 18, 2003, 2003 CPD P: 214 at 5.
[9] As discussed above, FMSI presented no basis for our Office to question
the reasonableness of the agency*s rejection of FMSI*s proposal--the only
proposal received from a private-sector offeror--as technically
unacceptable.  Other than speculation, FMSI has provided no basis for our
Office to conclude that the agency rejected FMSI*s proposal in order to
avoid the A-76 cost comparison, which could have resulted in the
private-sector offeror prevailing over the MEO.  Cf. Consolidated Eng*g
Servs., Inc., B-291345, B-291345.2, Dec. 23, 2002, 2002 CPD
P: 220.