TITLE:  University Research Company, LLC, B-294358.6; B-294358.7, April 20, 2005
BNUMBER:  B-294358.6; B-294358.7
DATE:  April 20, 2005
**********************************************************************
   Decision

   Matter of:   University Research Company, LLC

   File:            B-294358.6; B-294358.7

   Date:           April 20, 2005

   John S. Pachter, Esq., Jonathan D. Shaffer, Esq., Edmund M. Amorosi, Esq.,
SophiaA R. Zetterlund, Esq., and Erin R. Karsman, Esq., Smith Pachter
McWhorter & Allen, and Joseph J. Petrillo, Esq., and Karen D. Powell,
Esq., Petrillo & Powell, for the protester.

   Devon E. Hewitt, Esq., John E. Jensen, Esq., Daniel S. Herzfeld, Esq., and
Orest J. Jowyk, Esq., Pillsbury Winthrop Shaw Pittman, for IQ Solutions,
Inc., an intervenor.

   Mogy E. Omatete, Esq., and Douglas Kornreich, Esq., Department of Health
and Human Services, for the agency.

   Ralph O. White, Esq., and Christine S. Melody, Esq., Office of the General
Counsel, GAO, participated in the preparation of the decision.

   DIGEST

   1.  Protest challenging selection official's treatment of concerns raised
by agency project officers, under provisions of the Department of Health
and Human Services (HHS) Acquisition Regulation which anticipate that
selection officials will receive input from agency project officers in
addition to the input received from a traditional evaluation panel, is
denied where the selection official's award decision document acknowledges
receipt of the project officers' views (which recommended award to the
protester), makes reasonable changes in the selection analysis in response
to those concerns, and, in some cases, makes no change because the
selection official reasonably decides to adopt the views of the evaluation
panel on matters more appropriate for evaluator review.

   2.  The principle that selection officials are not bound by the
recommendations or evaluation judgments of lower-level evaluators applies
equally to evaluation input received from project officers in procurements
conducted under HHS procedures; HHS selection officials are no more bound
by the views of agency project officers than they are by the views of
agency evaluators.

   3.  Protester's contention that agency past performance evaluation was
unreasonable because the agency did not distinguish between degrees of
relevance in evaluating each offeror's past performance is denied where
the evaluation was reasonable, and consistent with the stated evaluation
criteria; there is no per se requirement that an agency weight differently
the experience ratings given each offeror based on an assessment of the
relative relevance of the offeror's prior contracts, and there is no
requirement that incumbents be given extra credit for their incumbent
experience.

   4.  Challenge to agency's review of cost realism is denied where the
record shows that the agency had a reasonable basis for the adjustments it
made.

   DECISION

   University Research Company, LLC (URC) protests a decision by the
Substance Abuse and Mental Health Services Administration (SAMHSA),
Department of Health and Human Services (HHS), to reselect IQ Solutions,
Inc., for the award of a contract pursuant to request for proposals (RFP)
No. 277-04-6091, issued for the operation of the SAMHSA Health Information
Network.  URC argues that the technical evaluation, the assessment of past
performance, and the cost realism review were unreasonable.  URC also
challenges the adequacy of the selection official's decision not to adopt
certain assessments of these proposals made by HHS project officers.

   We deny the protest.

   BACKGROUND

   Our Office sustained an earlier protest by URC challenging the initial
selection of IQ to perform this work.  University Research Co., LLC,
B-294358 et al., Oct. 28, 2004, 2004 CPD PA 217.  The contract here
realigns SAMHSA's health information dissemination efforts, which were
previously performed under multiple contracts.  Specifically, this
solicitation includes the operation of the National Clearinghouse for
Alcohol and Drug Information (NCADI), the National Mental Health
Information Clearinghouse (NMHIC), and certain support services for the
SAMHSA Office of the Administrator.

   As indicated in our earlier decision, the RFP was issued on December 19,
2003, was set aside for small businesses, and anticipated the award of a
cost-plus-award-fee contract for a base period of 1 year followed by four
1-year options.  RFP at 1, 56.  Section M of the RFP advised that
"[a]lthough technical factors are of paramount consideration in the award
of the contract, past performance and cost/price are also important to the
overall contract award decision."  RFP at 70.  The RFP also identified
four technical evaluation criteria (totaling 100 points) and advised that
past performance would be worth 36A points.  RFP at 70-73.  The four
technical evaluation criteria and the weight assigned to each were: 
(1)A understanding the project, 15 points; (2)A technical approach, 35
points; (3) key personnel, 35A points; and (4)A management plan and
facilities, 15 points.

   The Initial Selection Decision and Earlier Protest

   HHS received proposals from six offerors by the February 6, 2004 closing
date.  After an initial review, the agency established a competitive range
for award, which included the proposals submitted by three of the
offerors:  IQ, URC, and a third company.  After holding discussions,
receiving revised proposals, and reevaluating the proposals, the results
of the agency's review were as follows:

   +------------------------------------------------------------------------+
|A                 |IQ Solutions     |URC              |Offeror A        |
|------------------+-----------------+-----------------+-----------------|
|Technical         |93.3 points      |88.7 points      |83.8 points      |
|------------------+-----------------+-----------------+-----------------|
|Past              |                 |                 |                 |
|                  |31.2 points      |29.8 points      |28.9 points      |
|Performance       |                 |                 |                 |
|------------------+-----------------+-----------------+-----------------|
|Total             |                 |                 |                 |
|                  |$57.9 million    |$65.2 million    |$77.9 million    |
|Evaluated Cost    |                 |                 |                 |
+------------------------------------------------------------------------+

   Source Selection Determination, Dec. 22, 2004, at 4.[1] 

   The selection official in place at the time reviewed this information and
concluded that the proposal submitted by IQ offered the best value to the
government.  In addition to basing her decision on the results of the
evaluation panel's review, her award determination reflected that she had
received a memorandum from SAMHSA project officers also recommending award
to IQ.  Agency Report (AR), Tab 21, at 3.  As a result, the contract was
awarded to IQ on July 9, 2004. 

   The initial selection decision was followed by a protest to our Office by
URC.  During the course of that protest, the agency did not initially
produce the memorandum from the SAMHSA project officers that was described
in the award determination.  Instead, the document was produced late in
the course of our protest process in answer to one of several supplemental
document requests submitted by the protester.  Upon review, the
memorandum--contrary to the representation in the selection official's
written determination--recommended award to URC, not to IQ.  AR, Tab 72. 
In a hearing convened to explore this apparent discrepancy, the selection
official testified that she misstated the project officers' recommendation
in her award determination document, and that she knew the statement was
incorrect when she wrote it.  Hearing Transcript (Tr.) at 49-50, 53-57,
125. 

   We sustained URC's protest and held that the agency selection official
acted improperly in not accurately reflecting the project officers' views
in her award determination document, and in not stating a basis for either
accepting or rejecting those views.  Our holding was based, in part, on
the fact that HHS has supplemented the Federal Acquisition Regulation
(FAR) with a process for agency project officers to provide input to
selection decisions.  See HHS Acquisition Regulation, 48 C.F.R. Part 315
(2004).  To remedy the situation, we recommended that the agency make a
new selection decision, correct the misstatements in the original
determination document, and state a sufficient basis for the decision to
either accept or reject the views of the project officers, or the views of
the technical evaluation panel.  Our decision also recommended that HHS
use a different selection official to prepare the new selection decision.

   The Revised Selection Decision

   HHS implemented the recommendations in our decision, and on December 22,
2004, a new selection official prepared a revised Source Selection
Determination.  AR, TabA 75.  Although the new selection document
continues to recommend award to IQ, there are several areas where it
modifies and supplements the previous analysis.  These are explained
below.

   In the area of past performance, the selection official noted an error in
the previous evaluation that more than double-counted a very favorable
past performance score given URC by one of the companies now identified as
a URC subcontractor.  Source Selection Determination, Dec. 22, 2004, at
6-7.  In the selection official's analysis, correction of this error would
have lowered one portion of URC's average past performance score by 0.75
points.  The selection official viewed this matter as a minor discrepancy
and continued to use the slightly higher erroneous score for URC.  Id. 

   In the area of the technical evaluation, the selection official observed
that one evaluator gave a notably lower score to URC under each evaluation
criterion than the scores given by the other five evaluators.  Id. at 11. 
The selection official explained that "[t]his discrepancy was not
addressed in any documentation made available, so it [is] unknown whether
the contracting officer attempted to negotiate or document this
discrepancy."  Id.  To remedy the situation, the selection official
elected to eliminate the lowest technical score given to both URC and IQ. 
(These scores were not, however, given by the same evaluator.) 

   In the area of cost realism with respect to IQ, the selection official
made three types of adjustments to IQ's proposed costs.   First, in
response to concerns expressed by the project officers regarding the
number of labor hours proposed for speechwriters, the agency added the
cost of two full-time speechwriters to IQ's proposal.  Id. at 7-8. 
Second, the agency identified four elements of other direct costs
applicable to all offerors that it thought should be normalized.  Id. at
8.  For two of these cost elements--postage/shipping costs and the cost of
special initiative projects--the RFP advised offerors of the amount they
should use in preparing their proposals.  RFP, attach. 1 (Statement of
Work (SOW)), at 25, 28.  For the other two cost elements--telephone/fax
costs and the costs of reproduction--the agency adopted URC's proposed
costs of telephone/fax costs as its "plug number" (see Source Selection
Determination, Dec. 22, 2004, at 8-9), and used its own estimate for the
cost of reproduction.  AR at 15-16.  The third type of adjustment--similar
to the normalization of estimated costs--was a normalization of the
estimated savings to be recovered through user fees.  Source Selection
Determination, Dec. 22, 2004, atA 8-9.  In this area, HHS normalized the
estimated savings by using the highest proposed savings number, resulting
in a downward adjustment to all of the proposals but one.  In total, IQ's
proposed costs were adjusted upward by approximately [deleted].[2]       

   In the area of cost realism with respect to URC, the selection official's
adjustments were limited to the use of normalized costs for the four
elements of other direct costs identified above (in the description of the
adjustments made to IQ's proposal), and the use of a normalized number for
the amount recovered through user fees (also discussed above).  No other
adjustments were made.  In total, URC's proposed costs were adjusted
upwards by approximately [deleted].[3]

   Finally, the selection official set out a two-page summary of the views of
the project officers, as derived from their June 28, 2004 memorandum--the
memorandum which had been mischaracterized as supporting award to URC in
the previous award determination, and which led to our decision sustaining
the earlier protest.  Id.A atA 12-13.  After outlining the views of the
project officers, the selection official stated her views on their
concerns, and stated what actions had, or had not, been taken in
response.  For example (and as described above), the source selection
official explained that the cost of two additional speechwriters was added
to IQ's proposal in answer to the concern of the project managers that IQ
had not sufficiently addressed this issue after it was raised during
discussions.  Id. at 12. 

   At the conclusion of the determination document, the selection official
set out a summary of the final technical and past performance scores of
both offerors (as modified during the reevaluation), and the total
proposed and evaluated costs.  This summary is reflected below.

   +------------------------------------------------------------------------+
|A                      |IQ Solutions          |URC                      |
|-----------------------+----------------------+-------------------------|
|Final                  |                      |                         |
|                       |94.4 points           |92.8 points              |
|Technical Score        |                      |                         |
|-----------------------+----------------------+-------------------------|
|Final Past             |                      |                         |
|                       |33.12 points          |32.33 points             |
|Performance            |                      |                         |
|-----------------------+----------------------+-------------------------|
|Total                  |                      |                         |
|                       |[deleted]             |[deleted]                |
|Proposed Costs         |                      |                         |
|-----------------------+----------------------+-------------------------|
|Total                  |                      |                         |
|                       |$61.130 million       |$67.274 million          |
|Evaluated Costs        |                      |                         |
+------------------------------------------------------------------------+

   Source Selection Determination, Dec. 22, 2004, at 14.  The selection
official reasoned that "[a]lthough technical considerations were paramount
in this acquisition, since the technical scores were almost equal with IQ
slightly higher," IQ's lower evaluated costs made award to IQ the best
value to the government.  Id.

   Notice of IQ's reselection for award was provided to URC on December 28,
and a written debriefing was provided on January 11, 2005.  This protest
followed on January 14.

   DISCUSSION

   URC's protest issues fall into two categories mirroring the HHS selection
process used in this procurement.  As our prior decision explained, and as
discussed further below, the HHS selection process here envisions that the
selection official will receive input from two discrete sources:  an
evaluation panel (like the panels seen in any other complex federal
government procurement); and the agency's project officers (i.e., the
agency personnel with direct management responsibility for providing these
services).  After receiving input from both of these sources--which
reached divergent conclusions about these proposals--the selection
official largely adopted the views of the evaluation panel and awarded to
IQ.

   URC raises several issues related to the conclusions reached by the
evaluation panel, and the actions taken by the selection official in
response to those conclusions.  These arguments assert that the agency's
technical evaluation, its evaluation of past performance, and its cost
realism review, are all unreasonable. 

   A significant portion of URC's protest, however, is drawn from the
assessments reached by the agency's project officers which were
memorialized in a memorandum to the selection official.  In instances
where the project officers' views were not adopted by the selection
official, URC argues that the agency has acted unreasonably. 
Specifically, URC contends that the selection official fails to state a
sufficient basis (or in some cases, URC asserts, any basis) for not
adopting the views of the project officers.  Since these issues are
closely related to the situation we considered in the earlier protest, and
are related to the HHS-unique selection process used here, we will
consider these issues first.  

   Arguments Based on the Assessments of the Project Officers

   URC contends that in several areas the agency's replacement selection
official has not provided a sufficient basis for her decision to reject
the conclusions of the project officers.  These include that the selection
official:  (1) wrongly concludes that adding the cost of two speechwriters
to IQ's proposal addresses the project officers' concerns about IQ's
staffing (Protester's Comments atA 2, 22-23); (2)A wrongly concludes that
an emphasis on training addresses the project officers' concerns about IQ
personnel lacking experience in mental health and substance abuse
(id.A atA 2-3); (3) fails to refute the project officers' assertion that
the IQ staff is inferior (id. atA 4); and (4) fails to answer the project
officers' concern that IQ does not have sufficient experience to manage a
project of this magnitude (id. at 18-19).[4]

   Part 315 of the HHS Acquisition Regulation (HHSAR), 48 C.F.R. Chap. 3,
anticipates that contracting officers (CO) will receive input from agency
project officers, in addition to the input received from a technical
evaluation panel.  See generally 48A C.F.R. SA 315.305(a).[5] 
Specifically, the HHSAR advises that COs "should request" project officers
to review proposed labor hours, labor mix, use of consultants, travel, and
other components of cost or price.  48 C.F.R. SA 315.305(a)(1).  In
addition, COs "may require" the assistance of project officers to assist
in the past performance review.  48 C.F.R. SA 315.305(a)(2).  Input from
the project officers on technical evaluation matters was not envisioned
for this procurement.[6]  

   The project officers from NCADI and NMHIC, the two clearinghouses to be
operated under this contract, reviewed these proposals and, shortly before
the initial award, prepared a five-page memorandum for the selection
official setting out their views.  This memorandum raised detailed
concerns about IQ's staffing proposal and questioned whether IQ's proposed
costs were realistic.  The memorandum ultimately concluded that URC's
proposal offered the best value to the government and recommended award to
URC.  AR, Tab 72. 

   As described above, the new selection decision document--prepared
subsequent to our decision sustaining URC's earlier protest, and prepared
by a new selection official--sets forth the modifications being made to
the previous analysis as a result of the project officers' concerns.  In
addition, in awarding to IQ, the selection official rejects the project
officers' recommendation that award be made to URC.  Source Selection
Determination, Dec. 22, 2004, at 12-14. 

   We note first the significant distinction between the situation here, and
the situation we found during the earlier protest.  We sustained URC's
earlier protest because the previous selection official misrepresented the
recommendation of the project officers in her written selection
determination.  While we found no express requirement in the HHSAR for
selection officials to document their reasons for rejecting input received
from project officers, we concluded that the agency's formal
acknowledgment that such input might be provided (via its supplement to
the FAR), together with the fact that detailed input was in fact received,
triggered the requirements of FAR S 15.308 to document--and document
accurately--source selection decisions.  University Research Co., LLC,
supra, at 9-10.

   Here, in contrast, the selection official accurately acknowledged receipt
of the project officers' views, and at several junctures in the written
decision document referenced changes in the analyses that were made in
response to concerns stated by the project officers.  Source Selection
Determination, Dec. 22, 2004, at 7, 9, 10.  In addition, at the conclusion
of the document's summary of the evaluation results, the selection
official sets forth two pages of detailed explanation of her views about
the conclusions in the project officers' June 28 memorandum, and
identifies additional changes to the evaluation which, in her view,
address all of the project officers' concerns.  Id. at 12-13.  Given the
selection official's acknowledgment of the project officers' views, and
given her detailed explanation of how she addressed those views, we are
now in a position to undertake a review of the reasonableness of her
judgments about those views--a position we could not reach in the earlier
protest.

   We begin our analysis by recognizing that there is nothing per se improper
about the selection official's decision not to adopt the recommendation of
the project officers here.  Selection officials, including officials at an
intermediate level, are not bound by the recommendations or evaluation
judgments of lower level evaluators, even though the working level
evaluators may well have technical expertise in the matters under their
review.  PRC, Inc., B-274698.2, B-274698.3, Jan. 23, 1997, 97-1 CPD P115
at 12; Loral Aeronutronic, B-259857.2, B-259858.2, July 5, 1995, 95-2 CPD
PA 213 at 8.  The judgments of selection officials are governed not by the
views of those who advise them, but by the tests of rationality and
consistency with the stated evaluation criteria.[7]  Id.   

   Turning to URC's specific contentions, we think the record supports a
conclusion that the selection official acted reasonably here.  To
illustrate, we set forth below a pair of examples of the selection
official's stated rationale for not adopting the recommendation of the
project officers.  

   The project officers' memorandum enumerates six areas where, in their
view, IQ's proposed staff "do not provide a substantial advantage to the
Government to carry out the activities of SAMHSA's Health Information
Network."  AR, Tab 72, at 2.  The first five enumerated paragraphs
identify by name senior IQ personnel that the project officers think lack
experience; the sixth paragraph indicates that IQ failed to increase its
speechwriting staff, despite being told it needed to do so.  Id. at 2-3. 
Specifically, with respect to the speechwriters, the memorandum stated:

   Despite the Government's request to increase the speechwriting staff, IQ
Solutions chose not to change its offer.  Based on past and present
experience with this task, program staff regards this staffing response as
unresponsive to our request.  This is also an indication that the offeror
may not fully grasp the complexity inherent in this task.

   Id. at 3. 

   In response to these concerns, the selection official directed that the
cost of two speechwriters be added to IQ's proposal.  Source Selection
Determination, Dec. 22, 2004, at 7-8, 12.  In answer to the concerns
raised about the specifically-named IQ personnel, the selection official
reviewed the requirements of the RFP and reached a conclusion that the
project officers were holding several of them to higher standards than
were imposed by the solicitation.  Id. at 12.  In addition, the selection
official pointed out that the evaluation team reviewed both offerors'
proposed personnel against the key personnel criteria in the RFP and
awarded essentially equal scores.  URC contends that neither of these
responses addressed the real concerns of the project officers, and that
they are therefore unreasonable. 

   With respect to the speechwriters, we set out the quote above to tie this
dispute more closely to the precise comments made by the project officers
on this subject.  The closest URC comes to a direct challenge to the
selection official's response to this concern is its general argument that
cost realism adjustments do not address the project officers' objection
that IQ's proposal is technically inferior, and their concern that IQ's
proposal does not give confidence that it can successfully execute this
program.  Protester's Comments, Feb. 28, 2005, at 2. 

   The paragraph quoted above clearly expresses a concern that IQ had not
increased its speechwriting staff.  In response, the selection official
made that increase.  The second sentence notes that IQ's failure to make
the increase was unresponsive; the third sentence extrapolates from IQ's
failure to respond that IQ may not grasp the complexity of the
procurement.  In our view, the selection official reasonably addressed the
concern stated, then based her judgments about IQ's grasp of this project
on the generally good ratings it received from the evaluation panel--the
entity whose job it was to make judgments about whether the proposal
captured the requirements for this work set out in the RFP. 

   With respect to the senior IQ personnel that the project officers
identified as lacking in experience, AR, Tab 72, at 2-3, the selection
official expressed concerns that the project officers appeared to be
judging IQ's proposed personnel against requirements not found in the
RFP.  In addition, and as indicated above, the selection official noted
that the experience of key personnel had been reviewed and assessed by the
evaluation panel, and that the proposals of both URC and IQ had received
fairly high, and essentially equal ratings in this area.  In our view,
there was nothing unreasonable in the selection official's decision to
look to the evaluators' assessment in this area as the more reliable
indicator of whether the personnel proposed by URC and IQ had sufficient
backgrounds to meet the requirements of the solicitation.[8] 

   Moreover, the HHS regulations lend support to the selection official's
judgment about which of the two panels to look to for an informed
assessment about the qualifications of proposed personnel.  Specifically,
our review of the regulations leads us to conclude that they do not
anticipate that project officers will undertake the job of reviewing the
backgrounds of proposed key personnel.[9]

   Finally, we recognize that URC apparently views the project officers'
memorandum in this record as an attempt by agency managers most familiar
with the requirements of this effort to ensure that this evaluation fairly
assessed the capabilities of these two offerors to perform this work.  On
the other hand, this memorandum's unusual timing,[10] its unusual
scope,[11] its unusual level of detail,[12] and the unusually high level
of the agency officials involved in ensuring its consideration,[13] lend
support to other views.  Specifically, evidence in this record supports a
view that this memorandum represents an effort by agency officials
resistant to installing a new contractor in the place of a long-time
incumbent, with a good performance history.  Tr. at 20-21, 23-27, 29,
34-37, 59-60, 100, 101.[14]  Looking at the context of this procurement
and the facts in the record, we conclude that the selection official dealt
reasonably with the recommendations of the HHS project officers.

   Challenge to the Technical Evaluation

   We turn next to URC's only challenge to the results of the technical
evaluation not based on the assessments of the project officers. 

   In URC's earlier protest, it argued that one of the evaluators scored both
URC and IQ in a manner that was irrational, and urged that the scores
given by this evaluator be discarded.  After the current protest was
filed, but prior to submission of the report, the agency provided the
parties and our Office with the new source selection determination.  As
explained in the selection document, the selection official elected not to
defend the very low score given URC by the evaluator in question; the
selection official recognized that the score was significantly out of line
with the other scores given, and that there was no available explanation
for the several instances of the score being crossed out and lowered.  In
response, the selection official decided to eliminate the lowest score
given to URC, and the lowest score given to IQ.  Source Selection
Determination, Dec. 22, 2004, at 11. 

   In a supplemental protest filed within 10 days of the agency's
distribution of the new source selection determination, URC argued that
the selection official's remedy solved only half of the problem.  In URC's
view it was unreasonable not to also remove this evaluator's near-perfect
score for IQ, rather than to also remove the lowest score given IQ, as was
done here.  In its protest, URC urged that the selection official's
actions were especially irrational since IQ's lowest score was given by a
different evaluator, was not significantly out of line with other scores
IQ received, and there was no suggestion in the record that anything was
wrong with that score. 

   As a preliminary matter, we reach no conclusion here about whether or not
the evaluator in question scored URC and IQ irrationally.  That said, the
agency's decision to remedy the issue--rather than defend it--leaves us no
choice other than to review the steps taken to be sure that the remedy was
a rational response to the issue raised.  Our review leads us to conclude
it was not.

   In our view, the selection official's action addressed URC's challenge to
the very low score given by this evaluator to URC, but does not address
the corresponding challenge to this evaluator's award of a very high score
(99 out of 100 possible points) to IQ.  In addition, we find no support in
the record for removing IQ's lowest score in that the score was given by a
different evaluator, and there has been no suggestion that this score was
unreasonable.  Instead, given that URC's challenge, in essence, raises a
question about the impartiality of this evaluator, and given that the
agency chose not to respond substantively to this issue, we know of no
reason to have removed only one of this evaluator's scores. 

   The record here shows that the total scores given by each evaluator to URC
and IQ, before the selection official made the partial remedy described
above, were as follows:

   +------------------------------------------------------------------------+
|A         |Eval. 1  |Eval. 2  |Eval. 3  |Eval. 4   |Eval. 5  |Eval. 6   |
|----------+---------+---------+---------+----------+---------+----------|
|URC       |94       |95       |68       |92        |97       |86        |
|----------+---------+---------+---------+----------+---------+----------|
|IQ        |88       |94       |99       |96        |88       |95        |
+------------------------------------------------------------------------+

   Id.  These scores resulted in an average score for URC of 88.7, and an
average score for IQ of 93.3.  Removing Evaluator No. 3's scores for both
URC and IQ (and restoring IQ's lowest score) results in average scores of
92.8 for URC, and 92.2 for IQ.[15]  At the conclusion of this decision we
will set forth each of the adjustments to the evaluation scores resulting
from our review, and consider whether the record supports a conclusion
that the protester was prejudiced by errors identified in this record. 

   Challenges to the Evaluation of Past Performance

   URC raises two past performance challenges that require consideration
here.[16]  These are that the agency: (1) used a flawed method to average
past performance scores, and as a result, distorted the results; and (2)
failed to distinguish between degrees of relevance within each offeror's
past performance information.  

   In reviewing URC's challenges to the adequacy of the past performance
evaluation, we note first that an agency's past performance evaluation is
a matter within its discretion, and we will not substitute our judgment
for reasonably based past performance ratings.  However, we will question
such conclusions where they are not reasonably based, or are inconsistent
with the terms of the solicitation or applicable statutes and
regulations.  Continental RPVs, B-292768.2, B-292768.3, Dec.A 11, 2003,
2004 CPD PA 56 at 9.  The critical question here is whether the evaluation
was conducted fairly, reasonably, and in accordance with the stated
evaluation terms, and whether it is based upon relevant information
sufficient to make a reasonable determination of the offeror's overall
past performance rating, including relevant information close at hand or
known by the contracting personnel awarding the contract.  OSI Collection
Servs., Inc., B-286597, B-286597.2, Jan. 17, 2001, 2001 CPD PA 18 at 6;
International Bus. Sys., Inc., B-275554, Mar. 3, 1997, 97-1 CPD PA 114
atA 5. 

   With respect to URC's first contention that the agency made averaging
errors in its spreadsheet, and as a result, distorted the past performance
scores, our decision can be brief.  We reviewed URC's arguments on this
issue and indicated very early during the course of this protest that we
agreed. 

   To that end, our Office distributed a worksheet that corrected the
averaging errors--the specifics of which need not be recounted here--and
then convened a conference call to air any remaining dispute about either
the argument itself, or the amount of the recalculation.  There was none. 
In short, correction of these errors resulted in a past performance score
for URC of 33.12 (down from 33.23, as previously calculated), and a past
performance score for IQ of 32.16 (down from 33.12, as previously
calculated).  As with the adjustments to the technical scores, discussed
above, we will consider the effect of these scoring changes at the
conclusion of this decision.

   With respect to URC's second contention, a more detailed discussion is
required.   URC argues that the agency failed to distinguish between
degrees of relevance in evaluating each offeror's past performance. 
Specifically, URC contends that the agency unreasonably gave less weight
to URC's prior performance as an incumbent for a portion of this work than
it did to its other less relevant experience, and less weight than it gave
to IQ's prior performance as an incumbent for a portion of this work. 

   HHS answers that the solicitation asked offerors to limit their
submissions of past performance information to information that was
"similar in nature to the solicitation work scope."  RFP at 62.  Thus, in
the agency's view, the universe of past performance information under
review was already limited to similar work.  In addition, HHS points out
that URC has not argued that the agency considered work that was not
relevant, but instead argues that the agency should have given more weight
to contracts that, in URC's view, are more relevant.  In this regard, HHS
argues that it was not required to give more weight to URC's performance
as an incumbent for some of these services, and even if it were, the work
is not as similar in scope to the current work as URC contends.  HHS
points out that IQ also  provided portions of these services in the past,
that both URC and IQ provided the services as subcontractors, not prime
contractors, and that both provided the work under smaller value contracts
than here.  Thus, HHS contends, in essence, that even if there were a
general requirement to give greater weight to more relevant experience,
the record here does not show that the experience warrants the greater
weighting that URC advocates.

   In an attempt to provide an overview of all that follows, we think it is
useful to state clearly what URC is not arguing in this protest.  URC is
not arguing that the agency considered performance that was not relevant
for either it or IQ.  URC is not arguing that the agency wrongly concluded
that both offerors had relevant experience.  And URC is not arguing that
the agency failed to distinguish between its relevant experience and
IQ's.  Rather, URC contends that HHS erred as a matter of law when it did
not weight differently--within its assessment of URC's collective
experience, and again within its assessment of IQ's collective
experience--the experience ratings given each company. 

   Put more starkly, URC argues that its high performance score received
while serving as an incumbent subcontractor for a portion of the work now
covered by this solicitation was improperly diluted when it was averaged
with its other less relevant performance scores and those of its
subcontractors.  Moreover, URC argues that the agency erred as a matter of
law by similarly diluting IQ's slightly lower performance score also
received while serving as an incumbent subcontractor for a portion of this
work, so that the agency evaluation no longer captures the difference in
their performance scores for this more relevant experience.  

   We disagree.  We recognize that an agency might reasonably--and perhaps
even routinely--weight differently the experience ratings given a single
company.  We likewise recognize the possibility that there could be a
factual situation where an agency's failure to distinguish between degrees
of relevance within a single offeror's past performance history could
result in an unreasonable evaluation result.  Nonetheless, in a situation
where both offerors have admittedly relevant performance experience, we
know of no per se requirement that an agency weight differently the
experience ratings given each offeror based on an assessment of the
relative relevance of the offeror's prior contracts.  As explained below,
we see no such requirement in the applicable regulations or our case law. 
Moreover, if there were such a general requirement, based on this record,
we are not convinced that URC was prejudiced by the agency's failure to
perform such an analysis.  Our reasons for these conclusions are set forth
below. 

   Before turning to a discussion of what was required by the solicitation
and the regulations, and a discussion of our cases, we set forth below
additional information about the solicitation and about the agency's
review of past performance. 

   The past performance review in this procurement was undertaken prior to
the initial selection decision, and was subjected to several challenges
during the earlier protest.  Our decision sustaining the earlier protest
did not reach those challenges because the selection decision was
unresolved at that point, and because other actions of the agency had
impeded our review within the timeframes set for resolution of a bid
protest.  University Research Co., LLC, supra, at 9-10.  As a result of
these circumstances, the most comprehensive explanation of the past
performance review was provided by the previous selection official during
the earlier protest, in a declaration dated September 15, 2004.  During
the instant protest, additional detailed information was provided by the
new selection official in a Supplemental CO's Statement, dated February
17, 2005.

   The previous selection official explained that the past performance review
was based on evaluations received, in the main, from the sources
identified by the offerors in their proposals.  In this regard, section L
of the RFP requested that offerors provide

   A list of the last 5 contracts completed during the past THREE years and
ALL CONTRACTS currently in process that are similar in nature to the
solicitation work scope.

   RFP at 62 (emphasis in original).  Section L also advised that "[e]ach
offeror will be evaluated on its performance under existing and prior
contracts for similar products or services," and that the agency "will
focus on information that demonstrates quality of performance relative to
the size and complexity of the acquisition under consideration."  Id. 

   The evaluation section of the solicitation, section M, advised that the
agency would allocate 36 points to past performance, compared to the 100
points allocated to the technical criteria.  Id. at 73.  The evaluation
section also advised that the agency "will consider the offeror's
effectiveness in quality [of] product or services; timeliness [of]
performance; cost control, business practices; customer (end user)
satisfaction; and key personnel past performance."  Id.  Section M of the
RFP was silent on the subject of whether and/or how an offeror's past
performance information would be evaluated for relevance.

   The previous selection official advised that in some cases the past
performance assessment was obtained via an evaluation form that was
provided in the RFP and sent to the references, see RFP attach. 13; in
other cases the assessment was retrieved directly from the National
Institutes of Health (NIH) database.  Declaration, Sept. 15, 2004, atA 1. 
Since the RFP's evaluation forms resulted in a possible score of 20
points, while the NIH database resulted in a possible score of 24 points,
scores from both sources were multiplied by a fixed factor (1.8 for the
evaluation forms, 1.4 for the NIH database scores), to translate the
scores to the 36-point scale used for the current evaluation scheme.  Id. 

   With respect to URC, whose proposal contains two major subcontractors, SHS
and Macro, the selection official explained that she received past
performance information for all three entities.  For URC, she received
nine evaluation forms from references, and retrieved five evaluations from
the NIH database.  For SHS, she received one evaluation form from a
reference, and retrieved two evaluations from the NIH database.  For
Macro, she received no forms from references, but was able to retrieve
seven evaluations from the NIH database, five of them for SAMHSA
contracts.  She stated the following about URC's (and its subcontractors')
24 past performance evaluations before adding them up, averaging them, and
assigning the resulting score to URC:

   All evaluations received were considered.  All evaluations indicated a
high level of competency, reliability and customer satisfaction.  Nothing
in the past performance evaluations raises doubts as to this Offeror['s]
ability to perform the work specified in this acquisition and no issues
regarding past performance were discussed during negotiations.

   Id. at 3.

   With respect to IQ, whose proposed subcontractors were not considered
major, the selection official explained that she received five evaluation
forms from references, and retrieved one evaluation from the NIH
database.  She stated the following about IQ's six past performance
evaluations before totaling them, averaging them and assigning the score
for IQ, as she did for URC:

   All evaluations received and all those found in the NIH [database] were
used.  None of [IQ's] subcontractors were considered major, and therefore,
[their] past performance was not evaluated.  All evaluations indicated a
high level of competency, reliability and customer satisfaction.  Nothing
in the past performance evaluations raises doubts as to this Offeror['s]
ability to perform the work specified in this acquisition and no issues
regarding past performance were discussed during negotiations.

   Id. at 3.

   The RFP here, like most solicitations, provided information about the
agency's intended past performance review in two places--section L, titled
"Instructions, Conditions, and Notices to Offerors"; and section M, titled
"Evaluation Factors for Award."  RFP at 52, 70.  As indicated above,
section M advised that the agency "will consider the offeror's
effectiveness in quality [of] product or services; timeliness [of]
performance; cost control, business practices; customer (end user)
satisfaction; and key personnel past performance."  Id. at 73.  There is
nothing in section M addressing whether and/or how an offeror's past
performance information would be evaluated for relevance; such language is
found only in section L.

   While the language in section L of this solicitation may have caused the
protester to anticipate that the agency would distinguish between degrees
of relevance in evaluating past performance, we agree with the agency that
there is nothing in the RFP that requires it to do so.  Simply put,
information provided in section L of an RFP is not the same as evaluation
criteria in section M; rather than establishing minimum evaluation
standards, section L generally provides guidance to assist offerors in
preparing and organizing their proposals.  All Phase Envt'l, Inc.,
B-292919.2 et al., Feb. 4, 2004, 2004 CPD PA 62 at 4.  In addition,
information required by section L does not have to correspond to the
evaluation criteria in section M.  Cascade Gen'l, Inc., B-283872, Jan. 18,
2000, 2000 CPD PA 14 at 10.  Thus, we see nothing in the requirement that
offerors provide information about contracts "that are similar in nature
to the solicitation work scope," RFP at 62, or in the other section L
provisions quoted above, that dictates that the agency must weight
differently--within its assessment of each offeror's collective
experience--the ratings given each company.[17]

   URC also contends that the evaluation here violated a requirement in FAR
SA 15.305(a)(2)(ii) that selection officials must determine the relevance
of similar past performance information.  Again, we disagree. 

   FAR SA 15.305(a)(2)(ii) provides that solicitations must state how past
performance will be evaluated, provide offerors an opportunity to identify
contracts for efforts similar to the agency's requirement, and authorize
offerors to provide information about performance problems encountered on
the identified contracts (as well as how the problems were corrected). 
The provision then states that this information must be considered, along
with information obtained from any other sources, and provides that "[t]he
source selection authority shall determine the relevance of similar past
performance information."  Id. 

   Our review of the evaluation scheme shows that the solicitation requested
certain information from offerors, and also advised that the agency would
look to other sources about an offeror's past performance.  RFP at 62.  In
addition, the evaluation sheets completed by the identified references,
and the information stored in the NIH database, rated the offeror's past
performance using the criteria identified in section M of the RFP. 
Compare RFP at 73 (past performance evaluation criteria) with RFP, attach.
13 (contractor rating form); see also Declaration, Sept. 15, 2004, atA 1;
CO's Supp. Statement, Feb. 17, 2005, at 4.  Upon receipt of this
information, it was reviewed by the selection authority, who made certain
judgments about whether it should be used.  See, e.g., CO's Supp.
Statement, supra (where CO explained the change made in one case to the
score given to URC by one respondent).  In addition, the selection
authority indicated whether all of the completed evaluations received were
used (in each case they were) see Declaration, supra, at 2-4, and
indicated that the evaluations evidenced a high level of competency,
reliability and customer satisfaction, and raised no doubts about the
ability of the offerors to perform the work here.  Id. 

   With respect to the requirements of FAR SA 15.305(a)(2)(ii), we think HHS
met its regulatory obligations, albeit implicitly.  The solicitation
stated how past performance would be evaluated, and provided each of the
other opportunities identified in the provision.  In addition, the
information received was clearly considered in making past performance
assessments.  Implicit in the selection authority's acceptance and use of
this data was her determination that this data was relevant.[18]  We also
know of no obligation that this determination be documented beyond the
documentation required to support the reasonableness of the selection
authority's assessments.  Moreover, we do not think that the language of
the regulation supports the expansive interpretation urged by URC, which
would require the selection authority's determination that data is
relevant to also include distinguishing between degrees of relative
relevance. 

   We also see no support in our prior decisions for URC's contention that
selection authorities must distinguish between degrees of relevance within
an offeror's past performance score.

   As an initial matter, we think there is very little difference between
URC's position here, and the position of protesters who complain that they
were not given extra credit in an evaluation for their status as the
incumbent.  See Weber Cafeteria Servs., Inc., B-290085.2, June 17, 2002,
2002 CPD PA 99 at 5; Modern Techs. Corp., et al., B-278695 et al., Mar. 4,
1998, 98-1 CPD PA 81 at 7; Cubic Applications, Inc., B-274768A etA al.,
Jan. 2, 1997, 97-1 CPD PA 98 at 6.  In each of the cases cited above we
found reasonable evaluations that did not provide such credit.  Here, in a
slight wrinkle, URC would have both its and IQ's most relevant experience
given greater weight so that URC might reap the benefit of its higher
score while serving as an incumbent subcontractor*i.e., so the evaluation
will capture the fact that URC received a past performance score of 36 on
its incumbent subcontract involving a portion of the work here, while IQ
received a score of 30.6 for its performance of a similarly relevant
subcontract.  See URC's Comments, Feb. 28, 2005, at 14-16.  We know of no
per se requirement that greater weight be given to those past performance
scores that represent an offeror's incumbency.

   The other cases raised by URC involve solicitations that provided specific
direction in the evaluation scheme about the past performance
evaluation--such as, for example, indicating that the agency would look at
information involving the same or similar experience, or experience of
similar size, scope, or complexity as the solicited effort.  Where the
solicitation includes such provisions, we review the agency's adherence to
the solicitation's stated evaluation scheme just as we would any other
area of the evaluation.  See, e.g., Continental RPVs, B-292768.2,
B-292768.3, Dec. 11, 2003, 2004 CPD PA 56 at 9-12 (RFP required "same or
similar" experience); Si-Nor, Inc., B-292748.2 et al., Jan. 7, 2004, 2004
CPD PA 10 at 15-18 (RFP required experience of "similar size, scope, and
complexity").  Here, since we find there was no such requirement set forth
in the solicitation's evaluation scheme, these decisions do not support
the protester's contentions.

   Similarly, our decision in Beneco Enters., Inc., B-283512, Dec. 3, 1999,
2000 CPD PA 175, does not reach the conclusions urged here, despite the
protester's arguments to the contrary.  In Beneco, an agency gave a past
performance rating of "excellent," and subsequently gave the award, to an
offeror who had never served as a prime contractor on a job order contract
(the type of contract contemplated under the solicitation at issue), and
whose experience was largely as a subcontractor on small orders.  The
protester, however, received a rating of "good" based on its slightly
lower ratings earned over an extensive performance history of serving as
the prime contractor on job order contracts valued between $1 million and
$40 million.  While the solicitation language quoted in the decision
appears to be identical to the sectionA L language used in this
solicitation, we think the decision's conclusion that the evaluation
unreasonably failed to consider the similarity of the protester's past
performance information is different by several orders of magnitude from
the decision here.

   Here, for example, both URC and IQ have experience performing portions of
the work to be included in the instant consolidated contract.  Thus, this
is not a situation where an agency failed to distinguish between offerors
with vastly different experience.  In addition, the protester here seeks a
significant expansion in the basic principle that an agency must be
mindful of the relative differences in the experience levels of offerors. 
URC seeks a review that will distinguish between its own more relevant
higher-rated experience, and its less relevant less highly-rated
experience, and weight them differently.  Nothing in our prior decisions
leads us to conclude that such an approach was required.

   As a final matter, we note that even if there were a requirement to
consider the relative relevance of an offeror's past performance, it is
not clear that doing so would have resulted in URC's selection.  The
agency points out that it does not share URC's views about the heightened
relevance of URC's work as an incumbent subcontractor, suggesting that
even if it had made such a review, the agency might not have reached the
conclusion URC contends was likely.  Specifically, HHS points out that URC
was a subcontractor, not the prime contractor for that work; that the
value of that subcontract (less than $10 million) was significantly less
than the approximate $67A million evaluated value of the instant contract,
as performed by URC; and that the agency envisions that the work will be
different than the work URC performed.  Agency Report, Feb. 15, 2005, at
23-24; Source Selection Determination, Dec. 22, 2004, at 14.  In our view,
these considerations appear reasonable and suggest that the relative
weighting advocated by URC would not have had a material effect on the
source selection decision in any event. 

   Cost Realism Evaluation

   URC raises several distinct challenges to the adjustments made (or, in
some cases, not made) to the proposed costs identified in its and IQ's
proposals.  Specifically, URC contends that HHS improperly normalized
reproduction and shipping costs, failed to make needed upward adjustments
in IQ's warehouse and call center costs, and improperly adjusted URC's
costs related to special initiative projects.  We set forth below our
views on each of these challenges to the agency's review of cost realism. 

   Where an agency evaluates proposals for the award of a cost-reimbursement
contract, an offeror's proposed estimated costs of performance are not
dispositive, since, regardless of the costs proposed, the government is
required to pay the contractor its actual and allowable costs.  Jacobs
COGEMA, LLC, B-290125.2, B-290125.3, Dec. 18, 2002, 2003 CPD PA 16 at 26;
CWIS, LLC, B-287521, July 2, 2001, 2001 CPD P 119 at 3.  Accordingly, a
cost realism analysis must be performed when a cost-reimbursement contract
is contemplated in order to determine the probable cost of performance for
each offeror.  FAR S 15.404-1(d)(2).  A cost realism analysis is the
process of independently reviewing and evaluating 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 methods of
performance and materials described in the offeror's technical proposal. 
FAR S 15.404-1(d)(1).  Our review is limited to determining whether an
agency's cost realism analysis was reasonably based and not arbitrary.  NV
Servs., B-284119.2, Feb. 25, 2000, 2000 CPD P 64 at 7. 

   With respect to HHS's decision to normalize reproduction and shipping
costs, URC argues, in both cases, that HHS failed to consider unique
features about its approach that would achieve savings for the agency.  In
addition, URC argues it was especially unreasonable to normalize IQ's
reproduction costs given information in IQ's final proposal revision (FPR)
that leads URC to argue that IQ's costs for reproduction may exceed by
approximately $10.7 million HHS's estimate of costs.

   The RFP here advised offerors to anticipate copying approximately 1.6
million single sheets per month during the first year, with copying to
increase approximately 15-20A percent for each year thereafter.  RFP,
attach. 1 (SOW), at 29.  In addition, the provision advised offerors to
anticipate that 60 percent of copying would be black and white, and 40
percent would be color copying.  Id.  Although URC argues that its
all-Xerox solution was better than IQ's all-Canon solution, HHS responds
that it did not accept that there would be significant differences between
offerors on copy costs.  In addition, HHS noted that there was ambiguous
information in the proposals on copy costs.  In particular, HHS expressed
concern that IQ lowered its overall proposed copying costs in its FPR
while appearing to significantly increase its estimated cost per page of
copying.  AR, at 16.  Given the questions raised by these matters, and the
agency's continuing view that there should not be a significant difference
in these costs, HHS elected to replace the offerors' proposed costs with a
government estimate for those costs, thus normalizing them.

   Our Office has recognized that when an agency is performing a cost realism
analysis, it may be appropriate to normalize certain costs in order to
achieve a greater degree of cost realism.  Cost normalization involves the
measurement of offerors against the same baseline where there is no
logical basis for the differences in approach or where there is
insufficient information in the proposals.  The purpose of such an
analysis is to segregate cost factors which are "company
unique"--depending on variables resulting from dissimilar company
policies--from those which are generally applicable to all offerors and
therefore subject to normalization.  SGT, Inc., B-281773, B-281773.4, Apr.
1, 1999, 99-1 CPD PA 77 at 7; The Research Found. of State  Univ. of New
York, B-274269, Dec. 2, 1996, 96-2 CPD PA 207 at 5.

   Despite URC's claims that its approach to copying is unique, we see
nothing unreasonable in the agency's view that there should not be
significant differences between offerors in the cost of making copies.  We
also think the agency acted reasonably in deciding to normalize these
costs based, in part, on concerns about the cost anomaly in IQ's FPR,
rather than attempting to choose between conflicting information about
copying costs within the same proposal. 

   HHS made a similar normalization adjustment to each offeror's proposed
shipping costs.  On this issue, the RFP advised offerors to assume
shipping costs of $1.8A toA $2A million per year, RFP, SOW at 29, which
translates to a 5-year cost of $9A toA $10 million.  URC instead proposed
costs of [deleted] over the life of the contract, and argued that it had
developed special relationships as a major shipper with both the U.S.
Postal Service and UPS, and was able to pass on to HHS the savings
resulting from those relationships. 

   In response, HHS added back to URC's proposed costs an additional
[deleted] for shipping, along with the associated increase in overhead
costs.  HHS posited that any contractor doing all of the shipping required
by this contract would develop a similar relationship with the Postal
Service and other delivery companies.  We see nothing unreasonable about
the agency's view on this matter, and we see no basis to conclude that
adjusting URC's proposed costs back to the level recommended in the RFP
was improper. 

   With respect to URC's contention that the agency should have made an
upward adjustment to IQ's proposal for warehouse costs, URC appears to be
right, and IQ essentially concedes this point.  See IQ's Comments, Feb.
28, 2005, at 32.  However, our review indicates that there may also have
been a need for a similar upward adjustment to URC's proposed warehouse
costs, suggesting that the relative change to URC's and IQ's proposed
costs may be less than URC suggests.  Our reasoning is set forth below.

   The RFP here required that offerors propose a warehouse providing at least
2.7A million cubic feet of storage.  RFP, SOW at 28.  All parties agree
that a warehouse totaling 90,000 square feet of floor space with a
standard 30-foot high ceiling would meet this requirement (90,000 x 30 =
2,700,000).  IQ offered a 90,000 square foot warehouse in its technical
proposal, but computed the lease cost to the government in its cost
proposal using 60,000 square feet.  See AR, Tab 35, p. I-10.  Since HHS
did not catch the error, URC suggests, and IQ concedes, that IQ's proposal
should be adjusted upwards by the cost per square foot of the remaining
30,000 square feet, which comes to [deleted] in increased rental over 5
years, plus [deleted] in increased overhead.  The total amount of the
upward adjustment is [deleted].

   On the other hand, IQ points out that URC also may have failed to propose
sufficient costs for warehouse space.  IQ's Comments, Feb. 28, 2005, at
11, 35.  In this regard, IQ points to URC's offer of a [deleted] square
foot facility with a [deleted]-foot high ceiling (which yields a total
storage capacity of [deleted] cubic feet), that would be used for storage
and shipment in connection with this contract and other contracts as
well.  On this point, URC's proposal advises as follows:

   In all, NCADI, NMHIC, and [deleted] other information services contracts
use the warehouse and its distribution center to store and ship
publications and other materials in response to requests for information
from the general public, health providers, Federal agencies, educational
institutions, and private organizations.

   AR, Tab 62, at 141 (emphasis added).  On this basis, IQ argues that URC
has not offered, or priced, the requisite amount of warehouse space. 
Although IQ raised this matter in its comments filing, URC did not answer
this assertion in any way in its own subsequent supplemental comments
filing.

   In a warehouse with [deleted]-foot ceilings, [deleted] cubic feet of
storage space--the amount by which URC's proposed warehouse exceeds the
RFP-required amount of 2.7A million cubic feet--translates to [deleted] 
square feet of floor space available for the [deleted] other information
services contracts cited in URC's proposal.  Given that URC has not
addressed in any way how it will meet the storage and shipment
requirements of those [deleted] other contracts in this relatively small
space, it appears that an upward adjustment to URC's proposed costs in
this area may be warranted.

   In sum, our review of proposed warehouse costs leads us to conclude that
URC has clearly shown there should be an upward adjustment to IQ's
proposed costs in the amount of [deleted].  As with the changes in the
technical and past performance scores, discussed above, we will set forth
each of these adjustments at the end of this decision in order to consider
whether the record supports a conclusion that URC has been prejudiced. 
With respect to the question of whether URC's proposed costs also should
have been adjusted upwards, and if so, by what amount, we think URC's
failure to address this matter supports IQ's contention that some
adjustment should be made to URC's costs as well, although we are unable
to quantify the amount of any such adjustment without URC's input about
how much space it uses to perform the other six contracts. 

   URC also argues that an upward adjustment should be made to IQ's proposed
costs for the operation of a call center.  In this regard, URC argued
during the earlier protest that IQ proposed only [deleted] full-time
equivalents (FTE) as its personnel cost for operating the call center.  In
response, HHS pointed out that URC was misreading IQ's proposal because
there were another [deleted] FTEs for the call center who were subcontract
employees, plus another [deleted] FTEs in management, for a total of
approximately [deleted] FTEs for this task.  AR at 18.  In its comments,
URC concedes the oversight, see URC Comments, Feb. 28, 2005, at 32 n.25,
but argues that IQ will need an additional [deleted] FTEs to cover nights
and weekends, and provide vacations and sick days. 

   HHS disagrees.  In its report in answer to the current protest, the agency
points out that the RFP does not require that the call center be staffed
24 hours per day, 7 days per week, as URC seems to suggest.  See AR at 19;
RFP, SOW at 13.  In addition, HHS points out that IQ has proposed changing
the ways the contractor handles incoming calls, including increased use of
voice recognition technology.  AR at 18.  Thus, the agency's calculations
show that URC has proposed sufficient staff to cover the operation of the
call center.  Finally, HHS replies that URC itself proposed [deleted] FTEs
for the operation of the call center, provides citations to URC's proposal
to support its claim, and contends that if adjustments to IQ's proposal
are needed, they are needed for URC's proposal as well.  AR at 19. 

   In our view, URC's disagreement with the agency's conclusions does not
establish that the agency acted unreasonably in not upwardly adjusting
IQ's proposed costs for the operation of the call center.  In addition, we
note that URC again, as with the warehouse issue, simply provides no
answer to the agency's contention about its own proposed staffing for the
call center.

   URC's final challenge to the cost realism review is that the agency
wrongly added costs to URC's proposal in the area of special initiative
projects, thus double-counting some costs, and applied an improper
overhead rate to the amount of the adjustment.  In this regard, it appears
URC is wrong about the adjustment being improper, but right about its
challenge to the applicable overhead rate.

   The RFP here instructs offerors to assume they will incur other direct
costs for special initiative projects of $1.5 million per year, or $7.5
million for the life of the contract.  RFP, SOW at 25.  As URC explains,
its FPR did not follow these instructions, and included some [deleted]
hours of direct labor associated with this project; in addition, its FPR
did not use the RFP recommendation of $7.5 million in other direct costs,
but included only [deleted] million in other direct costs for these
projects.  URC Comments, Feb. 28, 2005, at 33-34.  HHS explains that it
evaluated the direct labor costs as related to subcontract management and
coordination, and not as part of the $7.5 million in other direct costs it
told offerors to assume for this effort.  Supp. AR at 6.  Therefore, HHS
made an upward adjustment to URC's other direct costs of [deleted] to
achieve the $7.5 million level identified in the RFP. 

   URC does not challenge the upward adjustment of [deleted] in other direct
costs, but argues that the agency should have deducted the labor costs and
corresponding overhead that were associated with this work in its
proposal, which total [deleted] plus overhead charges.  In addition, URC
argues that HHS wrongly applied to the [deleted] adjustment the general
and administrative (G&A) rate of SHS, URC's proposed subcontractor, rather
than URC's rate.

   We see nothing unreasonable about HHS's conclusion that the direct labor
costs in URC's proposal were, in fact, for direct labor associated with
managing this anticipated subcontract, and were not a portion of the
indirect costs offerors were advised to plan for in the RFP.  In addition,
given that the amount of direct labor costs were not the same as the
amount missing from URC's proposed other direct costs--i.e., [deleted]
versus [deleted]--we are at a loss as to how URC can claim that HHS erred
in not recognizing that they were part of the missing amount.  Finally, we
note that URC's introduction of this ambiguity in its FPR deprived the
agency of an opportunity to raise questions about the matter, thus leading
us to conclude that URC, not HHS, bears the risk that its actions might be
misunderstood.

   With respect to the appropriate G&A rate, however, it appears URC is right
in its assertion that HHS applied the wrong rate.  Although HHS correctly
points out that URC's proposal stated that SHS would be incurring all
other direct costs for the team, URC points out that there was another
provision specifically advising that URC would be the prime contractor for
any subcontract for the special initiatives project.  If HHS had used
URC's G&A rate, rather than SHS's, this adjustment would have been
approximately [deleted] lower.  As with other adjustments identified
throughout this decision, we will consider the impact of this matter
below.

   Prejudice

   Our Office will not sustain a protest unless the protester demonstrates a
reasonable possibility of prejudice, that is, unless the protester
demonstrates that, but for the agency's actions, it would have had a
substantial chance of receiving the award.  McDonald Bradley, B-270126,
Feb. 8, 1996, 96-1 CPD PA 54 at 3; see Statistica, Inc. v. Christopher,
103 F.3d 1577, 1581 (Fed. Cir. 1996). 

   During the course of the discussion above, we have identified four
separate errors in this evaluation.  Specifically, we have concluded
that:  (1) IQ's technical score should be lowered from 94.4 to 92.2 to
remove both of the scores given by one evaluator from both URC's and IQ's
composite technical ratings; (2) IQ's past performance score should be
lowered from 33.12 to 32.16, and URC's score should be lowered from 33.23
to 33.12, to correct averaging errors in the agency's past performance
review; (3)A IQ's evaluated costs should be adjusted upwards by [deleted],
to capture the cost of 30,000 additional square feet of warehouse space;
and (4) URC's evaluated costs should be lowered by [deleted], to reflect
the application of URC's lower G&A rate, rather than SHS's higher rate, to
an otherwise appropriate adjustment to URC's other direct costs.

   Entering these changes into the final evaluation results displayed in the
selection decision, the corrected final scores and evaluated costs are as
follows:

   +------------------------------------------------------------------------+
|A                     |IQ Solutions        |URC                         |
|----------------------+--------------------+----------------------------|
|Final                 |                    |                            |
|                      |92.2 points         |92.8 points                 |
|Technical Score       |                    |                            |
|----------------------+--------------------+----------------------------|
|Final Past            |                    |                            |
|                      |32.16 points        |33.12 points                |
|Performance           |                    |                            |
|----------------------+--------------------+----------------------------|
|Total                 |                    |                            |
|                      |[deleted]           |[deleted]                   |
|Proposed Costs        |                    |                            |
|----------------------+--------------------+----------------------------|
|Total                 |                    |                            |
|                      |$62.118 million     |$67.198 million             |
|Evaluated Costs       |                    |                            |
+------------------------------------------------------------------------+

   In considering the significance of these changes in the evaluations
results, we think it is appropriate to keep in mind the conclusions of the
selection official, who, at the end of her 14 pages of review, stated as
follows:

   Although technical considerations were paramount in this acquisition,
since the technical scores were almost equal with IQ slightly higher, IQ
is 10.05% lower in cost or $6,144,200 (using cost realism), and it is
recommended that the award be made to IQ as the best value to the
government.

   Source Selection Determination, Dec. 22, 2004, at 14.

   The question before us is whether the errors that have been identified in
the evaluation lead to the conclusion that, but for those errors, there
was a substantial chance the selection official would have awarded to
URC.  Correcting the errors leaves URC with a 0.6 point advantage in
technical merit, a 0.96 point advantage in past performance, and evaluated
costs approximately $5.1 million higher than IQ's evaluated costs. 

   Our Office has long recognized that point scores and adjectival ratings
are only guides to assist source selection officials in evaluating
proposals; they do not mandate automatic selection of any particular
proposal.  Jacobs COGEMA, LLP, supra, at 31; PRC, Inc., B-274698.2,
B-274698.3, Jan. 23, 1997, 97-1 CPD P 115 at 12; Grey Adver., Inc.,
B-184825, May 14, 1976, 76-1 CPD P 325 at 9.  Despite the slight advantage
for URC now shown by these point scores, we view the change in the
offerors' technical and past performance scores as de minimis.  Looking
past these slight scoring changes, we have seen nothing during our
extensive review of the record in this protest, as well as the record
developed during the previous protest, or our consideration of the
challenges raised, that, in our view, is sufficiently significant to
support the conclusion that, but for the errors here identified, there
would have been a substantial chance the selection official would have
altered her judgment that these proposals are essentially equal under the
technical and past performance evaluation criteria.  Further, we note that
there are other areas, all of which were discussed above, where additional
adjustments could be made to these scores and costs that might reverse the
results again, or narrow this already small gap even more.[19]   

   While we recognize that the change in the evaluated cost differential here
cannot be termed de minimis (unlike the change in the technical and past
performance scores), the selection official concluded that these proposals
were essentially equal in merit.  Since, as stated above, we have seen
nothing in this record that would lead us to conclude that the selection
official would change her view that these proposals are essentially equal,
we likewise see no reasonable basis to assume that the selection official
would conclude that paying an additional $5.1 million was warranted for
the services of an offeror whose proposal is essentially equal in merit to
the proposal of

   a lower-cost offeror.  Under these circumstances, we cannot conclude that
URC has shown that, but for the agency's actions, it would have had a
substantial chance of receiving the award.  McDonald Bradley, supra.

   The protest is denied.

   Anthony H. Gamboa

   General Counsel

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

   [1] Unless otherwise indicated, citations in this decision to the Source
Selection Determination are to the determination associated with the most
recent selection decision--i.e., the determination prepared subsequent to
our October 24, 2004 decision sustaining URC's earlier protest of this
award.   

   [2] See Source Selection Determination, Dec. 22, 2004, at 14 (showing IQ's
proposed costs as [deleted], and its evaluated costs as $61.130 million).

   [3] See Source Selection Determination, Dec. 22, 2004, at 14 (showing
URC's proposed costs as [deleted], and its evaluated costs as $67.274
million).

   [4] In a few other areas, URC raises general challenges to assessments of
the evaluation panel on the ground that the panel did not consider issues
raised by the project officers.  To the extent that URC is suggesting that
the technical evaluation is per se flawed because it does not identify the
same issues as the project officers did, we deny the protest.  We do not
look to parallel panels to judge the adequacy of a technical evaluation. 
Rather, we review whether evaluation panels reach conclusions consistent
with stated solicitation requirements and applicable statutes and
regulations.  ESCO, Inc., B-225565, Apr. 29, 1987, 87-1 CPD PA 450 at 7. 
To the extent URC is suggesting that the evaluation panel had to review
the project officers' concerns and make judgments about them, see, e.g.,
Protester Comments, Feb. 28, 2005, at 4, we know of no such requirement,
nor has URC shown us where one might be found.

   [5] The HHSAR sections referenced in this discussion refer to the agency
project officer as a singular entity.  Since this procurement involves the
consolidated operation of two clearinghouses, NCADI and NMHIC, there is
more than one project officer, hence we will use the plural in this
decision.

   [6] The HHSAR anticipates a possible role for project officers on some
technical evaluation panels (48 C.F.R. SA 315.305(a)(3)(ii)), but these
regulations do not apply to project officers at SAMHSA.  48 C.F.R.
SA 315.305(a)(3)(ii)(F).  During the hearing in the previous protest, the
selection official testified that, as a practical matter, SAMHSA project
officers do not participate on technical evaluation panels. 
Tr.A atA 5-11.

   [7] For the record, in terms of a selection official's discretion to reach
a different conclusion from the recommendations of those who advise them,
we view the recommendations of HHS project officers in the same way that
we view the conclusions of evaluation panels.  Put simply, both entities
advise selection officials, they do not bind them.  In addition, our prior
decisions recognize that evaluators sometimes possess greater technical
expertise than the selection officials they inform, just as the HHS
project officers here may well be more familiar with the operation of the
agency programs they manage than the agency's selection official. 
Moreover, the record here and the applicable regulations indicate that HHS
project officers perform a more limited review than the broader review
undertaken by evaluators.  Compare AR, Tabs 42 and 57 (project officers
technical questionnaire) with AR, Tabs 37, 44, 52 and 59 (initial and
final individual evaluation scoresheets for both IQ and URC); see
generally 48 C.F.R. Subpart 315.3.  Accordingly, we conclude that HHS
selection officials are no more bound by the views of agency project
officers than they are by the views of agency evaluators.

   [8] For the record, URC also argues that the selection official's analysis
is unreasonable in its treatment of the project officers' concerns about
IQ's senior personnel because the selection official expresses uncertainty
about how many of the enumerated IQ personnel can properly be considered
"key personnel."  We do not agree.  As the selection official notes, the
personnel proposed by IQ were assessed by the evaluation panel against the
requirements of the RFP.  If the evaluation panel's conclusions about the
relative merit of IQ's personnel (or about whether those personnel met the
standards in the RFP) strayed from the solicitation's stated requirements,
URC could have challenged those conclusions.  URC did not raise any such
challenge, and we will not use the vehicle of the selection official's
review of project officer concerns to adjudicate the key personnel
requirements of this procurement.

   [9] See 48 C.F.R. SSA 315.305(a)(1) (COs "should request" project officers
to analyze proposed labor hours, labor mix, hours of consultants, logic of
proposed subcontracting, travel costs, etc.);A 315.305(a)(2) (COs "may
require" assistance with the past performance review; and
315.305(a)(3)(ii)(F)(1) (exempting SAMHSA from the HHSAR's anticipated
involvement of project officers in some elements of technical evaluation);
see also Tr. at 5-11 (project officers do not participate in technical
evaluations at SAMHSA and NIH).

   [10] The document was provided 1 day prior to award rather than after the
initial evaluation, as anticipated by the HHSAR process.  See 48 C.F.R.
SA 315.305(a)(1).

   [11] The document addresses issues not normally reviewed by HHS project
officers, as discussed above.

   [12] See Tr. at 46, 135 (selection official explains that project officer
input is often based on e-mail notes of three sentences).

   [13] See Tr. at 45 (selection official explains she does not often receive
project officer input signed by directors of the centers involved).

   [14] We acknowledge that many of these transcript citations are to
comments by the previous selection official who ultimately misrepresented
the thrust of the project officers' memorandum in her source selection
determination.  That said, we find credible her descriptions of the
discussions she held with the project officers in the final hours before
the award.  We also note that the events she described were largely
corroborated by two other witnesses.

   [15] These scores were calculated as follows (there is no change in URC's
total score as the selection official already performed this part of the
calculation): 

   For URC:  94 + 95 + 92 + 97 + 86 = 464/5 = 92.8.

   For IQ:  88 + 94 + 96 + 88 + 95 = 461/5 = 92.2.

   [16] With respect to URC's contention that HHS failed to consider negative
information about IQ's performance that was too close at hand to ignore,
we think URC has failed to make a sufficient factual showing that such
information exists, or that such information--if it could be
developed--falls within the time period set in the RFP for reviewing past
performance information.  Specifically, URC contends that its
subcontractor, SHS, took over a contract on which IQ had performed poorly,
and that the agency's review of SHS's performance was included in the
performance assessment, but IQ's earlier poor performance of the same work
was not.  The RFP here included time limits on the information that would
be considered relevant*i.e., "the last 5 contracts completed during the
past THREE years and ALL CONTRACTS currently in process . . . ."  RFP at
62 (emphasis in original).  Given that URC acknowledges that SHS has
already completed performance of this work (after taking it over from IQ),
it appears IQ's performance of this work might fall outside the three-year
time limit on past performance set in the RFP.  URC could have helped with
this matter by providing more information about when SHS began
performance, but did not.  In addition, the identity of this contract
remains undetermined.  If the information about this contract, at this
juncture and on this record, remains unknown, it is hard to see how the
information was so close at hand that the agency erred in not considering
it. 

   [17] For the record, we see little point in an expanded discussion of
URC's apparent view that the section L instruction to provide information
about contracts "that are similar in nature to the solicitation work
scope," RFP at 62, was limited to all contracts in progress, and did not
apply to the requested "list of the last 5 contracts completed during the
past THREE years."  Id.  Based on this interpretation, URC argues that the
clause anticipated the collection of both relevant and not relevant
information, and anticipated that the agency would have to make a
determination about how to treat the disparate information received.  To
the extent that this clause is ambiguous, it was patently ambiguous. 
Thus, for URC to argue that only its interpretation of this clause can
prevail, URC was required to raise its interpretation prior to the closing
date submitting proposals here; its argument is untimely at this
juncture.  U.S. Facilities, Inc., B-293029, B-293029.2, Jan. 16, 2004,
2004 CPD PA 17 atA 10; 4 C.F.R. SA 21.2(a)(1) (2005). 

   [18] In this regard, as stated above, URC does not dispute the relevance
of any of the former contracts considered for it or IQ. 

   [19] For example, as discussed above, the selection official here noted an
error in the previous evaluation wherein HHS double-counted a very
favorable past performance score given URC; she stated that correcting the
error would have lowered one portion of URC's past performance score by
0.75, but opted not to make the correction because she considered the
matter a minor discrepancy.  Source Selection Determination, Dec. 22,
2004, at 6-7.  As also discussed above, when questions were raised about
whether an upward adjustment should have been made to URC's proposed
warehouse costs, as was made to IQ's warehouse costs, URC remained
silent.  Likewise, URC offered no response when HHS suggested that it
offered fewer FTEs to operate the call center than IQ offered, and that if
an adjustment was needed for one, it was needed for both.