TITLE: Yang Enterprises, Inc.; Santa Barbara Applied Research, Inc., B-294605.4; B-294605.5; B-294605.6, April 1, 2005
BNUMBER: B-294605.4; B-294605.5; B-294605.6
DATE: April 1, 2005
**********************************************************************
Decision
Matter of: Yang Enterprises, Inc.; Santa Barbara Applied Research, Inc.
File: B-294605.4; B-294605.5; B-294605.6
Date: April 1, 2005
Walter A. I. Wilson, Esq., and Lawrence M. Prosen, Esq., Bell, Boyd &
Lloyd PLLC, for Yang Enterprises, Inc.; and Irene M. Guimera, Esq., and
Joseph E. Guimera, Esq., Guimera & Guimera, for Santa Barbara Applied
Research, Inc., the protesters.
Brian Koji, Esq., Allen, Norton & Blue, PA, for Call Henry, Inc., an
intervenor.
Maj. Rebecca R. Vernon, and Capt. Samuel T. Casazza, Department of the Air
Force, for the agency.
Jonathan L. Kang, Esq., and Michael R. Golden, Esq., Office of the General
Counsel, GAO, participated in the preparation of the decision.
DIGEST
1. Protest challenging evaluation of awardee's technical proposal and
past performance is denied where record shows that agency's evaluation was
reasonable. 2. Protest alleging agency failed to engage in meaningful
discussions is denied where offerors were given meaningful opportunities
to address agency concerns during discussions. 3. Protest challenging
selection of low cost proposal is denied because, even where cost is the
least important factor for award, an agency may award to an offeror with a
lower-cost, lower-rated proposal if it reasonably determines that the cost
premium involved in awarding to an offeror with a higher-rated proposal is
too great.
DECISION
Yang Enterprises, Inc. (YEI) and Santa Barbara Applied Research, Inc.
(SBAR) protest the award of a contract to Call Henry, Inc. (CHI) under
request for proposals (RFP) No. F04684-02-R-0024, issued by the Department
of the Air Force for the launch operations support contract (LOSC) at
Vandenberg Air Force Base (AFB), California. The protesters argue that
the agency improperly evaluated the awardee's technical proposal and past
performance, failed to conduct a reasonable cost realism analysis of the
awardee's cost proposal, failed to conduct meaningful discussions with
offerors, and conducted an improper cost/technical trade-off in making the
source selection.
We deny the protests.
BACKGROUND
The RFP was issued on August 27, 2003 and anticipated the award of a
cost-reimbursement contract (with cost-plus-award-fee line items) for a
1-year base period, with six 1-year option periods. The RFP sought
proposals to provide management and support, maintenance and repair,
operations support and minor facility alterations for launch and test
range systems at Vandenberg AFB. RFP, Statement of Work (SOW), at 1.
The RFP stated that "[t]he Government will select the best overall offer,
based upon an integrated assessment of Past Performance, Proposal Risk,
Mission Capability, and Price/Cost." RFP S M.1.1. The mission capability
factor had three subfactors: (1) operation & maintenance (O&M), repair &
launch/power plant support;
(2) contractor computerized management system (CCMS); (3) reliability
centered maintenance (RCM); and (4) phase-in plan. RFP S M.2.2. The
relative weights of the evaluation factors were as follows:
Factor 1 (Past Performance) and Factor 2 (Proposal Risk) are equal and
each is significantly more important than Factor 3 (Mission Capability
(Technical & Management)) which is, in turn significantly more important
that Factor 4 (Cost/Price). Within the Mission Capability (Technical &
Management) factor, the subfactors are of equal importance. All
evaluation factors other than cost or price, when combined, are
significantly more important that cost or price.
Id.
The agency received 9 proposals in response to the RFP, and established a
competitive range of the 7 most highly-rated proposals. After an initial
round of discussions, the agency issued a revised RFP that reflected
decreased funding for the program and advised offerors of reductions for
certain contract requirements. RFP amend. 5. The agency requested that
offerors submit final revised proposals detailing any changes resulting
from the decreased funding and requirements.
The agency initially selected CHI for award on August 20, 2004. YEI and
SBAR each filed protests with our Office. The agency notified our Office
on September 29, 2004 that it was taking corrective action in response to
the protests, and we accordingly dismissed both protests.
The agency's corrective action sought additional and updated past
performance references for offerors, and reexamined offerors' evaluation
ratings in a revised proposal analysis report (PAR). Contracting
Officer's (CO's) Statement at 4, PP 8-9. The agency additionally sought
past performance references and information for CHI that SBAR alleged in
its protest had not been considered. Agency Report (AR),
Tab 47, Revised Past Performance Report, at 1. The agency did not receive
any new past performance references for offerors other than CHI. Id.
After reviewing the new CHI past performance information, the agency did
not change CHI's past performance evaluation rating. Id. Following the
corrective action, the agency's evaluations of CHI, SBR and YEI offerors
were as follows:[1]
+------------------------------------------------------------------------+
|A | CHI | SBAR | YEI |
|---------------------+----------------+----------------+----------------|
|Past Performance | Significant |High Confidence |High Confidence |
| | Confidence | | |
|---------------------+--------------------------------------------------|
|Mission Capability[2]|A |
|---------------------+--------------------------------------------------|
|Subfactor 1 - O&M |Blue / Low Risk |Blue / Low Risk |Blue / Low Risk |
|---------------------+----------------+----------------+----------------|
|Subfactor 2 - CCMS |Blue / Low Risk |Blue / Low Risk |Blue / Low Risk |
|---------------------+----------------+----------------+----------------|
|Subfactor 3 - RCM |Green / Low Risk|Green / Low Risk|Green / Low Risk|
|---------------------+----------------+----------------+----------------|
|Subfactor 4 - |Green / Low Risk|Green / Low Risk|Green / Low Risk|
|Phase-in | | | |
|---------------------+----------------+----------------+----------------|
|Proposed Cost | $53,840,996 | [DELETED] | [DELETED] |
|---------------------+----------------+----------------+----------------|
|Most Probable Cost | $53,840,996 | [DELETED] | [DELETED] |
+------------------------------------------------------------------------+
AR, Tab 44, Revised PAR, at 175-76.
The revised PAR was incorporated into a revised briefing to the source
selection authority (SSA). AR, Tab 46, Revised SSA Briefing. The SSA
considered CHI, SBAR and a fourth offeror, TekStar, to have submitted "the
most competitive proposals." AR, Tab 45, Revised Source Selection
Decision (SSD), at 1. The final tradeoff decision compared CHI's proposal
to these two other offerors' proposals, and did not explicitly compare
CHI's and YEI's proposals. Id. at 6-7. The agency selected CHI for award
on December 9, concluding that although CHI's past performance rating was
lower than that of SBAR and the other offeror, CHI's proposal offered many
advantages and the other offerors' proposals were not sufficiently
superior technically to warrant paying the additional cost premium. Id.
at 7. Following their respective debriefings, YEI and SBAR filed these
protests.
DISCUSSION
Evaluation of CHI's Mission Capability, CCMS Subfactor
The protesters argue that the agency improperly evaluated CHI's mission
capability score as "blue/excellent, low risk" under the CCMS subfactor.
The protesters primarily argue that the agency unreasonably evaluated past
performance information regarding CHI's contract for facilities operation
and maintenance at the Los Angeles AFB that pertains to CHI's CCMS. In
reviewing a procuring agency's evaluation of an offeror's technical
proposal, our role is limited to ensuring that the evaluation was
reasonable and consistent with the terms of the solicitation and
applicable statutes and regulations. Urban-Meridian Joint Venture,
B-287168,
B-287168.2, May 7, 2001, 2001 CPD P 91 at 2. Our Office will not question
an agency's evaluation judgments absent evidence that those judgments were
unreasonable or contrary to the stated evaluation criteria. Kay &
Assocs., Inc., B-291269, Dec. 11, 2002, 2003 CPD P 12 at 4.
The CCMS is a computer program that enables the contractor to manage cost
accounting and orders for services and equipment. Offerors were required
to "[d]emonstrate[] an effective approach for an integrated work and
financial management CCMS database system that generates comprehensive . .
. reports, correctly captures work data, accurately inputs data . . .
and is accessible for Government inquiry to no later than 2 months after
basic contract start date." RFP
S M, P 3.0(c)(1). The CCMS evaluation subfactor stated that the agency
would review each proposal to determine "how the proposal supports the
threshold performance requirements of the [SOW]." RFP S M.3.c. Thus, the
CCMS evaluation criterion focuses on the offeror's CCMS as proposed, and
does not explicitly state that the agency will review past performance in
the evaluation. Neither YEI nor SBAR challenges the strengths in CHI's
CCMS cited by the agency, and thus the protesters provide no basis to
challenge the agency's evaluation of CHI's CCMS as proposed.
To the extent protesters argue that information regarding CHI's past
performance information casts doubt on the proposal risk element of the
CCMS subfactor evaluation, it is clear that the agency considered CHI's
past performance and did not consider it to cast doubt on the quality of
CHI's CCMS. The protesters base their argument on information discussed
during a June 4, 2004 conversation between an agency contracting
representative and the contracting officer for CHI's Los Angeles AFB
contract. This conversation addressed several issues regarding CHI's
performance of that contract, including one statement regarding CHI's
CCMS: "I asked him about CHI's CCMS, which is their own developed
product, Capella? He said that there are still some problems with the
Comm Group and firewall and what can and can't be done and developing
*work arounds' in the mean time." AR, Tab 29, Summary of CHI Reference
Call (June 4, 2004).
The agency contends that the statements in the June 4 discussion do not
clearly indicate problems with CHI's CCMS itself, nor do they indicate
problems with CHI's performance that raised concerns about CHI's risk
assessment as it relates to CCMS. Rather, the agency argues, the
statements relate to difficulties in integrating the CCMS with the
existing Los Angeles AFB computer system and firewall, a process which the
agency characterizes as a normal effort required in implementing a new
system. With regard to CHI's past performance evaluation, the agency
acknowledges it received a negative comment regarding CHI's performance
regarding its CCMS. AR, Tab 44, Revised PAR, at 60. The agency noted,
however, that the Los Angeles AFB assessing official wrote that the issue
had been addressed: "*Contractor has encountered some problems in keeping
database current. They have taken corrective action to resolve and
appears to have been effective.'" Id.
We agree with the agency that the June 4 statement does not identify a
problem with the CCMS itself. Furthermore, we conclude that the only past
performance comment addressing the CCMS, regarding database currency,
appears to have been resolved. We conclude that the agency's
determination that CHI's proposal warranted a "blue/excellent, low risk"
rating was reasonable.
Evaluation of CHI's Past Performance
The protesters next argue that the agency failed to consider new
information it received regarding CHI's past performance or unreasonably
concluded that the new information did not warrant adjustment to CHI's
past performance rating. The evaluation of past performance, including
the agency's determination of the relevance and scope of an offeror's
performance history to be considered, is a matter of agency discretion,
which we will not find improper unless unreasonable, inconsistent with the
solicitation criteria, or undocumented. Family Entm't Servs., Inc.,
d/b/a/ IMC, B-291997.4, June 10, 2004, 2004 CPD P 128 at 5.
As explained above, as part of its corrective action, the agency sought
new past performance references for CHI and received a new contractor
performance appraisal report (CPAR) for a CHI contract with NASA at the
Glenn Research Center, and a new questionnaire response regarding the CHI
contract at the Los Angeles AFB. CO Statement at 13-14, P 6.b. The
agency also conducted a teleconference with the Los Angeles AFB
contracting officer, as discussed above. Id. at 14. The agency concluded
that the new information did not warrant revision of CHI's past
performance rating. AR, Tab 44, Revised PAR, at 10.
The protesters argue that the agency unreasonably ignored issues raised in
the agency's June 4 conversation with the Los Angeles AFB contracting
officer. The June 4 conversation cites certain "growing pains" associated
with CHI's shift from a "*reactive maintenance program' to a
*preventative/predictive maintenance program,'" and that "[t]he Gov't is
working the *kinks' out as they go along and mak[ing] changes where
necessary." AR, Tab 29, Summary of CHI Reference Call (June 4, 2004).
The PAR filed by the Los Angeles AFB for CHI's contract notes that "[t]he
Emergency Services, i.e. Readiness Program has been less than stellar."
AR, Tab 30, CHI CPAR for Los Angeles AFB contract. The agency was also
advised that CHI's performance on the Los Angeles AFB contract resulted in
a reduction of its award fee from [DELETED]to [DELETED]. CO Statement at
14-15, P 6.g; AR, Tab 46, Revised SSA Briefing, at 4. The agency further
was advised that the cause for the reduction was "[u]nsatisfactory
performance in 1) training readiness (for chemical warfare), and 2)
keeping of records and programs up to date with respect to Disaster
Control Group documentation." AR, Tab 44, Revised PAR, at 63.
With regard to the issues raised in the June 4 call concerning the Los
Angeles AFB contract, the agency responds that it viewed the comments
regarding "kinks" and other issues as indicative of issues that are "not
uncommon during contract performance," but in any case were not a
sufficient basis for reducing CHI's past performance rating. CO Statement
at 13-15, PP 6.b, 6.h. The agency further notes that CHI was still rated
"Very Good" overall for its performance of the Los Angeles AFB contract.
AR, Tab 44, Revised PAR, at 62. With regard to the reduction in the award
fee, the agency concluded that the issues cited by the Los Angeles AFB in
reducing the fee "are not directly related to LOSC" contract
requirements. AR,
Tab 46, Revised SSA Briefing, at 4. Furthermore, the agency noted that a
reduction from [DELETED] to [DELETED] of the eligible award fees meant
that CHI still received a "Very Good" rating for performance, as this
rating covered award fees ranging from 51% to 75%. CO Statement at 14-15,
P 6.g; AR, Tab 31, CHI Award Fee Matrix for Los Angeles AFB Contract, at
1. In the end, the agency found no basis to change CHI's past performance
rating. CO Statement at 15, P 6.h. We find that the agency's
determination here was reasonable.
SBAR additionally challenges the agency's evaluation of CHI's past
performance rating for the NASA Glenn Research Center Institution
Facilities Operation, Repair and Maintenance contract. The agency
credited CHI with "a phase-in plan that resulted in a seamless
transition." AR, Tab 44, Revised PAR, at 54. SBAR argues that the
"seamless transition" comment is inconsistent with a comment by the CPAR
assessing official that "Phase-in issues existed but contractor
successfully addressed identified problems." AR, Tab 44, Revised PAR, at
61. The agency responds that the comment, rather than raising a concern,
indicated corrective action had been successful. The agency observes that
the RFP specifically contemplates consideration of such efforts in the
evaluation of offerors' past performance: "Where relevant performance
record indicates performance problems, the Government will consider the
number and severity of the problems and the appropriateness and
effectiveness of any corrective actions taken (not just planned or
promised)." RFP
S M.3.a.1. Finally, the agency notes that this was one comment among
many, and that, overall, the contract received "excellent" marks for all
areas. AR, Tab 44, Revised PAR, at 61.
We do not believe that the two statements regarding CHI's phase-in are
necessarily in direct conflict, or at least do not create an inconsistency
that challenges the reasonableness of the agency's determination. In this
connection, the agency's description of CHI's performance states that the
contractor "successfully addressed" the problems and the agency considered
this to have mitigated the concern. Accordingly, we find no basis to
challenge the reasonableness of the agency's evaluation here.
We conclude that the agency clearly considered the issues discussed above
regarding CHI's past performance. The record shows that the agency
evaluated all of this information and reasonably concluded that there was
no basis to change CHI's past performance evaluation. In particular, the
SSA briefing noted the new data for the NASA and Los Angeles AFB
contracts, including the performance problems at Los Angeles AFB and
reduction in award fees. AR, Tab 46, Revised SSA Briefing, at 4.
Furthermore, the fact that the agency gave CHI less than the highest
evaluation rating for past performance reflects the agency's judgment that
there were in fact qualitative differences between the awardee's and
protesters' past performance proposals. To the extent that the protesters
argue that the agency should have given CHI a lower past performance score
based on the concerns identified in CHI's past performance evaluation, we
view this, in light of our discussion above, as no more than disagreement
with the agency's reasonable judgment, which does not provide a basis to
challenge the reasonableness of the agency's evaluation.
Evaluation of CHI's Cost Realism
SBAR argues that the agency's cost realism analysis was inadequate.
SBAR's argument, however, is based solely on the fact that CHI's MPC, as
determined by the agency, was approximately $5 million less than the
independent government estimate (IGE). The agency responds that SBAR
merely points to an overall magnitude of difference between CHI's MPC and
the IGE, rather than argue that specific elements of the cost realism
analysis were defective. The mere fact that an offeror's proposed costs
are lower than the IGE does not render that offeror's costs unreasonable
or unrealistic. SCI Sys., Inc., B-257985, B-257985.2, Dec. 19, 1994, 94-2
CPD P 248 at 4-5. Because SBAR does not identify any element of CHI's
cost proposal that was allegedly unrealistic, we find no basis to
challenge the reasonableness of the agency's conclusion. See Pueblo
Envtl. Solution, LLC,
B-291487, B-291487.2, Dec. 16, 2002, 2003 CPD P 14 at 12-13.
Discussions with YEI and SBAR
Amendment no. 5 to the RFP reduced several contract requirements including
equipment, labor hours, and reimbursable items, and requested that
offerors submit revised proposals addressing these changes. The
protesters argue that the agency misled them into either increasing or not
reducing their proposed costs, the area which they argue became the
determinative factor in the source selection decision, by stating that the
cost reductions would jeopardize their proposal risk ratings.[3]
SBAR specifically argues that the agency misled it into not making
staffing cuts during discussions regarding SBAR's response to RFP
amendment no. 5. In particular, SBAR argues that the source selection
evaluation team (SSET) chair cautioned SBAR against eliminating [DELETED]
full-time equivalent (FTE) positions, which induced SBAR to retain these
positions and forego cost savings of up to [DELETED]. The agency
contends, however, that SBAR's response to RFP amendment no. 5 proposed
staff reductions that were unrelated to the changed requirements in that
amendment. SBAR's initial response to RFP amendment no. 5 proposed to
eliminate [DELETED] FTE positions. AR, Tab 26-5, SBAR Response to RFP
amend. 5 (May 10, 2004). During telephonic discussions with SBAR, the
agency expressed its concern that certain of these reductions cast doubt
on SBAR's ability to meet the SOW requirements and asked SBAR to address
these concerns. AR, Tab 26-6, Agency Memorandum re SBAR Response to
amend. 5 (May 21, 2004). For example, SBAR proposed to reduce a number of
FTE positions based on reduced pressure vessel requirements for Space
Launch Centers 3 & 4. AR, Tab 26-5, SBAR Response to RFP amend. 5 (May
10, 2004). The agency agreed that reduction to [DELETED] specialist FTE
position reasonably reflected the reduced pressure vessel requirements,
but questioned the reduction of additional FTE positions. AR,
Tab 26-6, Agency Memorandum re SBAR Response to amend. 5 (May 21,
2004).[4] The record shows that SBAR subsequently determined that certain
of these reductions were not related to the reductions in scope in RFP
amendment no. 5, and omitted the reductions from its final proposal
revision. Id.; First Declaration of President of SBAR P 2 ("The
reductions described in the May 10 letter were in response to Amendment 5,
but were also intended to streamline SBAR's staffing overall.")
We believe that the agency reasonably was concerned that SBAR's proposed
staffing reductions went beyond those justified by RFP amendment no. 5,
and that the questions posed to SBAR during discussions were required to
ensure that SBAR's low risk rating was still warranted. The agency
reasonably sought assurances that changes in SBAR's proposed staffing
costs would still allow SBAR to perform its technical solution as
proposed. Although the agency provided SBAR the opportunity to explain
how it would be able to meet the SOW requirements with the reduced FTE
positions, SBAR did not provide a convincing rationale during the
telephonic discussions, and in its final response, SBAR chose to forego
reduction of the [DELETED] FTE positions. AR, Tab 26-5, SBAR Final
Response to RFP amend. 5 (May 17, 2004). On this record, we conclude that
discussions in this area were meaningful and not misleading.
SBAR additionally argues that the agency failed to provide discussions
regarding two cost issues cited in the SSD: "SBAR had a high number of
man-years to provide robust [DELETED] approach and no manning reduction
for known reduced requirements in the out [option] years." AR, Tab 45,
Revised SSD, at 4. With regard to SBAR's staffing for [DELETED], the
agency determined that SBAR's technical approach to meeting the SOW
requirements necessitated such staffing. The agency advised SBAR in
evaluation notices (ENs) that its staffing was "significantly high" in
certain areas. AR, Tab 26-3, SBAR Discussions, EN SBAR-T-0003-1. SBAR
responded that its staffing appeared high due to the approach it took to
[DELETED] requirements. Id. The agency determined that this explanation
of SBAR's technical and staffing approach was sufficient to explain the
need for the higher staffing. Id.
The SSD noted that the differences between CHI and SBAR's final proposed
staffing hours stemmed from their different technical approaches: "The
man-year delta is attributed to the offeror's proposed technical
approach. Call Henry proposed numerous strengths that provide manning
efficiencies. SBAR had manning efficiencies for their strengths and a
high number of [DELETED] man-years to support their robust [DELETED]
program." AR, Tab 45, Revised SSD, at 4. Thus, although the agency was
no longer concerned that SBAR's proposed staffing overall was so high as
to warrant further discussions, it was in no way precluded from
determining that SBAR's staffing was still high due to the specific
technical approach and staffing proposed by SBAR in meeting the [DELETED]
requirements.
With regard to staffing in the out/option years, the SSD noted that
although CHI had proposed savings by identifying reduced performance
requirements and staffing needs in the RFP during those years, neither
SBAR nor TekStar had proposed such reductions. AR, Tab 45, Revised SSD,
at 4. The agency viewed these reductions proposed by CHI as innovations,
rather than requirements under the RFP: "Call Henry's proposed cost is
lower than SBAR and [another offeror] due to Call Henry's additional
strengths identified in [its mission capability proposal] and recognition
of reduced work requirements in the option years." Id. Reducing staffing
during the out/option years was not a requirement under the RFP and the
agency's evaluation was not based on a determination that SBAR missed or
failed to respond to a cost issue. Instead, the agency noted CHI's
strength in identifying the savings and proposing lower costs as compared
to SBAR and TekStar's proposals which did not offer corresponding
savings.[5]
Although agencies are required to advise offerors through discussions of
significant weaknesses or deficiencies in their proposals, agencies need
not inform an offeror that its costs are not as competitive as those of
another offeror. SOS Interpreting, Ltd., B-287477.2, May 16, 2001, 2001
CPD P 84 at 3. Accordingly, if an offeror's costs are not so high as to
be unreasonable and unacceptable for contract award, the agency may
conduct meaningful discussions without raising the issue of the offeror's
costs. Mechanical Equip. Co., Inc.; Highland Eng'g, Inc.; Etnyre Int'l,
Ltd.; Kara Aerospace, Inc., B-292789.2 et al., Dec. 15, 2003, 2004 CPD P
192 at 18. Furthermore, SBAR does not provide any support for its
assertion that it was misled into not reducing its staffing for the
out/option years. Based on the record, we find that the agency conducted
meaningful discussions with SBAR with regard to the [DELETED] and reduced
requirements in the out years.
YEI argues that the agency failed to engage in meaningful discussions
regarding its material and equipment costs.[6] YEI first contends that
the agency refused to allow YEI to reduce its proposed material costs of
[DELETED] per FTE position, and that the agency instead pressured YEI into
increasing those costs to [DELETED] per FTE position. The agency responds
that YEI initially proposed [DELETED] per FTE position in material costs,
and that during discussions the agency requested that YEI provide
additional detail to support this figure. Second Declaration of Agency
SSET Chair P 4. YEI's response to the agency's EN stated that the
[DELETED] figure was cited "in error" based on "actual cost experience on
similar contracts at both Cape Canaveral Air Force Station and Kennedy
Space Station." AR, Tab 22-11, YEI Discussions, EN Yang-C-0004. YEI then
proposed a revised cost of [DELETED] per FTE position. Id. In subsequent
rounds of discussions, the agency questioned certain elements of YEI's
costs as [DELETED]. AR, Tab 22-11, YEI Discussions, EN Yang-C-0004-1.
YEI's response to the agency's request to justify its costs affirmed that
YEI believed that the [DELETED] per FTE position in material costs was
appropriate. Id. In sum, the record does not support YEI's argument that
the agency required or compelled YEI to increase its material costs. We
conclude that the agency's discussions with regard to these costs were
meaningful and not misleading.
YEI next contends that the agency improperly compelled it to propose
[DELETED] for equipment rental costs, which was [DELETED] more than what
YEI believed was needed for the effort. Third Affidavit of YEI President
at P 11. With regard to the equipment rental costs, RFP amendment no. 5
advised offerors that some previously identified government-furnished
equipment would no longer be provided because of the reduction in funding
for the program. AR, Tab 38, RFP amend. 5. The agency argues that YEI
initially failed to propose costs to lease required equipment. First
Declaration of SSET Chair P 12. YEI acknowledges that its response to RFP
amendment no. 5 "initially proposed a [DELETED] amount for this item," and
that after discussions with the agency, YEI conceded that rental costs for
equipment would be required. Third Affidavit of YEI President P 11.
Although YEI contends that the agency pressured it into proposing more
costs than it believed necessary, the agency disputes YEI's account: "As
documented in the ENs and discussion minutes, I was not repeatedly told
that Yang does not need *[DELETED] worth of equipment for this
procurement,' nor told that [DELETED] was Yang's proposed equipment
cost." Second Declaration of SSET Chair P 5. The record shows that YEI
failed to propose costs for equipment rental and was advised of this fact
by the agency, and that YEI ultimately proposed [DELETED] in costs. The
record does not support YEI's account that the agency specified or
required a particular equipment cost amount, or that the agency improperly
required or compelled YEI to increase its equipment costs. We conclude
that the agency's discussions with regard to these costs were meaningful
and not misleading.
Best Value Determination
Finally, YEI and SBAR argue that the RFP award criteria precluded
selecting CHI because there was no reasonable way for the SSA to select a
lower-cost offeror whose past performance score was lower than other
offerors. For example, YEI argues: "Past performance was most
important. Cost/price was least important. At the end of the day, if a
contractor had a better overall scoring (excluding cost/price), the stated
evaluation criteria rating mechanism required the contractor be awarded
the contract." Comments of YEI at 7. See also Supplemental Comments of
YEI at 4 ("[T]he stated evaluation criteria . . . precluded the SSA from
making the award decision that he did.")
The protesters' arguments are fundamentally incorrect regarding the
discretion afforded to source selection officials in making cost/technical
tradeoffs. Although the difference between the CHI and the protesters'
adjectival scores occurs in past performance, one of the two the most
heavily-weighted evaluation factors, this does not preclude award to the
lower technically-rated offeror. Even where cost is the least important
evaluation factor, an agency may properly select a lower-cost, lower-rated
proposal if it reasonably decides that the cost premium involved in
selecting a higher-rated, higher-cost proposal is not justified. Specific
Sys., Ltd., B-292087.3, Feb. 20, 2004, 2004 CPD P 119 at 5; SelRico
Servs., Inc., B-286664.4, et al., June 22, 2001, 2002 CPD P 6 at 3.
Source selection officials in negotiated procurements have broad
discretion in determining the manner and extent to which they will make
use of the technical and cost evaluation results; cost/technical tradeoffs
may be made, and the extent to which one may be sacrificed for the other
is governed only by the test of rationality and consistency with the
solicitation's evaluation criteria. Atteloir, Inc., B-290601, B-290602,
Aug. 12, 2002, 2002 CPD P 160 at 5.
Here, the SSA identified specific strengths and advantages of CHI's
proposal, such as: "exceeding the minimum requirements by offering
stocked mobile service units, NACE III certified corrosion engineer,
wireless PDAs with bar code scanners, and a CCMS system with illustrated
parts breakdown drop down menu; automatic warranty pop-up information and
automatic work status email to customers." AR, Tab 45, Revised SSD, at
6-7. The SSA further found that the adjectival scores overstated somewhat
the differences between the offerors' past performance ratings, and that
he considered CHI's past performance proposal to demonstrate "robust
significant confidence." Id. at 2. The SSA additionally noted that CHI's
"recent [CPAR] showed an improvement to excellent in the quality of their
performance at Glenn Research Center, which is a similar and complex
contract that exhibited a vast majority of Launch Operation Support
Contract (LOSC) statement of work magnitude," and that CHI's "past
performance was consistently relevant in all four [mission capability]
subfactors with proven and demonstrated [CCMS] and [RCM] at other
locations showing an upward quality of performance trend based on their
latest . . . (CPAR) rating." Id. at 1, 6. The SSA concluded that award
to CHI was warranted because "[t]he combination of Call Henry's lower
price ($5.2m less) and additional further enhancements, substantial
innovations, or efficiencies outweighs SBAR's higher past performance
rating." AR, Tab 45, Revised SSD, at 7.
Although the protesters argue that the agency placed too much weight on
CHI's lower cost, we find that the SSA reasonably concluded that the
higher costs of the protesters' proposals were not offset by their higher
technical ratings under the past performance evaluation factor. In sum,
we find no basis to challenge the source selection decision.[7]
The protests are denied.
Anthony H. Gamboa
General Counsel
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[1] Ratings for each evaluation factor were as follows, in decreasing
values: past performance--high confidence/exceptional, significant
confidence/very good, confidence/satisfactory, unknown confidence/neutral,
little confidence/marginal, and no confidence/unsatisfactory; mission
capability--blue/excellent, green/acceptable, yellow/marginal, and
red/unacceptable; and proposal risk--low, medium and high. AR, Legal
Memorandum, at 4-5.
[2] The proposal risk factor was evaluated based on each of the mission
capability subfactors.
[3] Prior to RFP amendment no. 5, the agency had initially evaluated SBAR
and YEI's proposals as having "Low Risk." AR, Tab 51, Initial SSA
Briefing, at 47.
[4] In addition to these staffing issues, the record shows that the agency
reasonably raised similar concerns with regard to other costs that SBAR
sought to reduce beyond the scope of the work reductions in RFP amendment
no. 5. AR, Tab 26-6, Agency Memorandum re SBAR Response to RFP amend. 5
(May 21, 2004).
[5] This comparative evaluation of the offerors is also reflected in the
PAR, where the agency compares those offerors whose technical approaches
allowed for a reduction in staffing. AR, Tab 44, Revised PAR, at 185.
[6] YEI additionally alleges that the agency discouraged it from reducing
[DELETED] FTE positions. Third Affidavit of YEI President P 9. The
agency responds, and YEI does not dispute, that YEI in fact made this
reduction. Second Declaration of SSET Chair P 3 (citing Yang Final
Proposal Revision, AR, Tab 27-5, as showing reduction of hours totaling
approximately [DELETED] FTE positions).
[7] The protesters make several additional allegations that we do not
address here, such as challenges to the sufficiency of the agency's
corrective action. We have reviewed all of the protesters' additional
grounds and do not find any merit to them.