TITLE:  Abt Associates, B-294130.2, October 12, 2004
BNUMBER:  B-294130.2
DATE:  October 12, 2004
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   Decision

   Matter of:   Abt Associates

   File:            B-294130.2

   Date:              October 12, 2004

   Robert Sonenthal, Esq., Sonenthal and Overall, for the protester.

   Kenneth A. Martin, Esq., Martin & Associates, for TCG International, LLC,
an intervenor.

   Diane A. Perone, Esq. and John B. Alumbaugh, Esq., Agency for
International Development, for the agency.

   Mary G. Curcio, Esq., and John M. Melody, Esq., Office of the General
Counsel, GAO, participated in the preparation of the decision.

   DIGEST

   Protest that agency did not perform proper cost realism analysis of
awardee*s proposal is denied where agency reviewed proposed costs and
determined that they were achievable, and protester does not allege that
awardee*s proposed costs were inconsistent with its technical proposal. 

   DECISION

   Abt Associates protests the award of a contract to TCG International, LLC
under request for proposals (RFP) No. 386-04-001, issued by the Agency for
International Development (AID) to procure technical assistance to India
for Phase III of the Financial Institutions Reform and Expansion (Debt
Market) (FIRE-D III) program.  Abt alleges that AID made the award to TCG
based on an improper cost realism analysis of TCG*s proposal.

   We deny the protest.

   The solicitation, which contemplated the award of a cost-reimbursement
contract, provided for a *best value* award based on an evaluation of
technical, past performance and cost factors.  With respect to cost, the
solicitation provided that the contracting officer would perform an
analysis of whether offerors proposed a realistic cost for successful
completion of the effort and production of the outputs in the RFP.  After
multiple rounds of discussions, TCG*s and Abt*s proposals were rated
technically equal, with 83 and 83.25 (out of 100 possible) points,
respectively. 
Thus, since TCG*s final proposed cost was $10,923,041, versus Abt*s
$12,413,082, the agency selected TCG*s lower cost proposal for award. 

   Abt asserts that AID unreasonably determined that TCG*s final cost
proposal--reducing TCG*s initial proposal cost of $12,954.979 to
$10,923,041--was realistic.  More specifically, Abt maintains that AID
improperly accepted TCG*s cost reductions for travel ($245,348), per diem
($504,885) and field office ($465,023), because those reductions were not
accompanied by supporting information.  In this regard, TCG reduced its
travel costs by reducing the proposed number of international and domestic
trips and extending the duration of each trip.  TCG reduced its per diem
costs based on its projection that 60 percent of those costs would be
incurred in smaller, less expensive cities, and based on a negotiated
discount with the hotels where its staff would stay.  TCG reduced its
field office costs by proposing to rely on temporary offices located with
consultants and partner institutions, rather than by establishing its own
separate field offices.  Abt argues that the agency should not have
accepted the proposed cost reductions for travel and field offices because
TCG did not explain or justify the decision to reduce the number of trips
and extend their duration, and did not offer support to demonstrate that
the proposed field office arrangements would be available.  Abt asserts
that AID should not have accepted the proposed reductions in per diem
costs because TCG did not offer any support for its claim that 60 percent
of those costs would be incurred in smaller, less expensive cities, or for
the hotel discounts.  According to Abt, the solicitation requires at least
50 percent of FIRE-D III activity to take place in larger cities, and that
it is unlikely that TCG was able to negotiate hotel discounts.

   Where an agency evaluates proposals for the award of a cost-reimbursement
contract, an offeror*s proposed costs are not considered controlling,
since the costs are only estimates, and thus may not provide valid
indications of the final actual costs that the government will be
required, within certain limits, to pay.  ViaSat, Inc., B-291152,
B-291152.2, Nov. 26, 2002, 2002 CPD P 211 at 11.  Accordingly, a cost
realism analysis must be performed when a cost-reimbursement contract is
contemplated.  Federal Acquisition Regulation S 15.404-1(d)(2).  A cost
realism analysis is the process of independently reviewing and evaluating
specific elements of each offeror*s proposed cost estimate to determine
whether the proposed cost elements are realistic for the work to be
performed, reflect a clear understanding of the requirements, and are
consistent with the unique methods of performance and materials described
in the offeror*s technical proposal.  Id.

   Here, in performing the cost realism analysis of TCG*s proposal, AID
conducted a detailed, comprehensive evaluation of the proposed costs based
on TCG*s approach to the contract.  Specifically, AID verified the cost of
domestic and international travel by comparing the proposed fares to
available fares.  AID determined the realism of the per diem rates by
checking those rates against the Federal Travel Regulations and by
comparing them to other offerors* proposed rates.  Finally, AID verified
rents with the Housing Office in India by comparing them to both the
market rates published in the Times of India and to the rates in AID*s
Overseas Real Property inventory.  AID concluded that the costs proposed
by TCG were achievable and realistic based on the proposal submitted.  We
find that the agency*s methodology and conclusions were reasonable.  The
agency did what a realism analysis calls for; it examined whether the
costs proposed to perform the various elements of TCG*s technical proposal
are consistent with the firm*s likely actual cost of performance.  While
Abt claims TCG provided no supporting information for its cost reductions,
it has not shown that the resources on which the agency relied were not an
accurate measure of the likely cost of performance.  Since Abt has not
shown that the agency*s realism determination was otherwise unreasonable,
there is no basis to challenge the agency*s conclusion that TCG*s proposed
costs were realistic.[1] 

   The protest is denied.

   Anthony H. Gamboa

   General Counsel

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   [1] Abt*s protest against the cost realism analysis was submitted on July
19, 2004, in comments responding to a report that AID submitted to our
Office on July 9. 
(That report responded to an earlier Abt protest (B-294130) that we
dismissed on AugustA 11.)  On August 13, AID requested that our Office
dismiss Abt*s July 19 protest against the cost realism analysis for
failure to state a basis of protest. 
In responding to that request on August 25, Abt for the first time argued
that the technical evaluation did not take into account the changes that
led to TCG*s reduced costs.  Since this argument was not raised within 10
days after Abt*s receipt of the July 9 agency report, it is untimely and
will not be considered.  4 C.F.R. SA 21.2(a)(2)A (2004).