TITLE: B-296490.3; B-296490.4; B-296490.5, Johnson Controls Security Systems, LLC, March 23, 2007
BNUMBER: B-296490.3; B-296490.4; B-296490.5
DATE: March 23, 2007
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B-296490.3; B-296490.4; B-296490.5, Johnson Controls Security Systems, LLC, March 23, 2007

   DOCUMENT FOR PUBLIC RELEASE
   The decision issued on the date below was subject to a GAO Protective
   Order. This redacted version has been approved for public release.

   Decision

   Matter of: Johnson Controls Security Systems, LLC

   File: B-296490.3; B-296490.4; B-296490.5

   Date: March 23, 2007

   David R. Johnson, Esq., Vinson & Elkins LLP, for the protester.

   Kevin P. Connelly, Esq., and Amanda B. Weiner, Esq., Seyfarth Shaw, LLP,
   for Quanta Systems Corporation, the intervenor.

   Marvin Kent Gibbs, Esq., Bureau of Engraving and Printing, for the agency.

   Scott H. Riback, Esq., and John M. Melody, Esq., Office of the General
   Counsel, GAO, participated in the preparation of the decision.

   DIGEST

   1. Protest that agency improperly failed to consider awardee's past
   performance as incumbent contractor on solicited requirement is sustained
   where solicitation called for evaluation of past performance, and agency
   had actual knowledge of awardee's performance.

   2. Agency's finding that awardee's staffing offered advantages as compared
   to protester's staffing was unreasonable where there is no indication in
   record that agency considered fact that protester proposed to staff
   contract [deleted], which would appear to diminish the significance of
   awardee's identified advantages.

   DECISION

   Johnson Controls Security Systems, LLC, (JC) protests the award of a
   contract to Quanta Systems Corporation under request for proposals (RFP)
   No. BEP-04-0022, issued by the Department of the Treasury, Bureau of
   Engraving and Printing (BEP), for the operation, monitoring, and repair of
   the security systems at BEP's currency production facility in Washington,
   D.C. JC alleges that the agency misevaluated proposals and made an
   unreasonable source selection decision.

   We sustain the protest.

   The RFP, originally issued in September 2004, contemplated the award of a
   fixed-price contract for a base year, with four 1-year options. The
   solicitation calls for the contractor to provide sufficient staff to
   perform the required services 24 hours a day, 365 days a year. All
   contractor personnel having access to BEP's security systems or
   documentation are required to complete a background investigation and
   qualify for, and maintain, a high-risk security clearance, and also are
   required to obtain certifications to perform security system maintenance,
   installation and engineering tasks.

   For evaluation and award purposes, the solicitation contemplated a
   two-step process. Under phase I, written proposals were to be evaluated on
   a pass/fail basis using three equally weighted criteria--demonstrated
   corporate experience, experience of proposed staff, and past performance.
   Offerors with passing proposals included were in the competitive range and
   required to make oral presentations for purposes of the phase II
   evaluation, under which the proposals were evaluated using three
   additional criteria--management and technical approach, management plan,
   and transition plan. Overall technical merit was more important than
   price.

   The agency made award to Quanta in March 2005. That award decision was
   protested by JC, first with the agency, and subsequently with our Office.
   On August 29, 2005, we issued a decision sustaining JC's protest, finding
   that the agency had relied on a material misrepresentation in Quanta's
   proposal in making its award decision, and also finding that the award
   decision had failed to take into account certain "very compelling"
   advantages associated with JC's proposal arising from the fact that JC had
   been the incumbent contractor for the requirement. Johnson Controls Sec.
   Sys., B-296490, B-296490.2, Aug. 29, 2005, 2007 CPD para. __.[1] We
   recommended that the agency reopen the acquisition and either conduct new
   oral presentations and obtain revised proposals, or simply obtain revised
   proposals, evaluate those proposals and make a new source selection
   decision. Id. at 11-12. (Quanta continued to perform the contract pending
   implementation of the agency's corrective action.)

   In response to our recommendation, the agency reissued the solicitation
   and called for new proposals. Three firms submitted proposals, including
   JC and Quanta. The agency conducted a new phase I evaluation and
   determined that all three proposals merited a "pass" rating. The agency
   included all three proposals in the competitive range, conducted oral
   presentations, and solicited and received final proposal revisions (FPR).
   The agency then evaluated the FPRs using the phase II evaluation criteria
   and arrived at the following evaluation results:

+------------------------------------------------------------------------------+
|         Offeror          |     Technical Score     |          Price          |
|--------------------------+-------------------------+-------------------------|
|          Quanta          |    100 (out of 100)     |       $25,420,321       |
|--------------------------+-------------------------+-------------------------|
|            JC            |           99            |       $23,892,245       |
|--------------------------+-------------------------+-------------------------|
|        Offeror A         |           96            |       $25,223,021       |
+------------------------------------------------------------------------------+

   Post Negotiation Memorandum at 8.[2] Notwithstanding the closeness of JC's
   and Quanta's point scores and JC's lower price, the agency again
   determined, through a price/technical tradeoff, that Quanta's proposal
   represented the best value, and therefore left its contract in place.
   Following a debriefing, JC filed this protest.

   JC asserts that the agency misevaluated proposals in a number of areas. In
   reviewing protests concerning an agency's evaluation of proposals, our
   Office does not reevaluate proposals; rather, we will examine the
   evaluation to ensure that it was reasonable and consistent with the
   solicitation's evaluation criteria, as well as applicable statutes and
   regulations. Pickering Firm Inc., B-277396, Oct. 9, 1997, 97-2 CPD
   para. 99 at 4. We have considered all of the parties' arguments and, for
   the reasons discussed below, find that the evaluation here was
   unreasonable.

   PAST PERFORMANCE

   JC asserts that the agency unreasonably evaluated Quanta's past
   performance. According to the protester, Quanta has had ongoing problems
   in performing its current contract with BEP--including a dispute over the
   classification of employees for Department of Labor wage/hour purposes,
   staffing inadequacies, and high employee turnover rates--and the agency
   ignored these problems in the evaluation. JC maintains that this was
   unreasonable, since Quanta's performance of the existing requirement is
   arguably the most relevant indicator of the firm's future performance.

   The agency maintains that it reasonably excluded the information from the
   evaluation because, to the extent that Quanta experienced performance
   problems, they occurred at the beginning stages of the contract, and
   because the problems stemmed in part from internal issues at BEP that were
   not caused by Quanta. Agency Report (AR), exh. C, at 2-3, exh. D, at 1-2.
   The agency notes that, in order to equalize the competition, it also did
   not consider JC's prior performance at BEP. Id. The agency further asserts
   that, in any event, past performance was only evaluated on a pass/fail
   basis in order for it to make a competitive range determination; according
   to the agency, none of Quanta's alleged performance difficulties would
   have resulted in its receiving a failing rating for past performance.

   We find that the agency unreasonably omitted Quanta's past performance
   information from the evaluation. The RFP specifically provided that the
   past performance evaluation would be based on consideration of "all
   relevant facts and circumstances." RFP at 124. Quanta's performance of the
   BEP contract for the same requirement being solicited clearly constituted
   "relevant facts and circumstances"; indeed, we agree with the protester
   that Quanta's performance as the incumbent for this requirement may be the
   most relevant information available.

   The agency's suggestion that it reasonably omitted the past performance
   information from its evaluation because of the nature of the information
   is not persuasive. First, regarding BEP's assertion that the performance
   problems arose only during start up of Quanta's contract, the record shows
   that, in fact, Quanta experienced performance problems from the start of
   the contract in July 2005 through the reopening of the acquisition and
   source selection; the latest performance concern is reflected in an e-mail
   dated September 14, 2006, just days before the offerors' submission of
   FPRs. Agency Core Documents (ACD), vol. 3, exh. 7. Similarly, while BEP
   attributes Quanta's performance problems, to some extent, to internal BEP
   problems, one of the concerns under Quanta's contract was a persistent
   problem with adequate staffing of the contract. Since staffing generally
   would be the responsibility of the contractor, there is no reason to
   believe--and the agency has not established in the record--that any
   internal BEP problems were the cause of Quanta's staffing problems.

   There also is reason to believe that consideration of Quanta's performance
   as the incumbent could have had a broader effect on the agency's technical
   evaluation. In this regard, one of the reasons cited in support of the
   award to Quanta was the fact that all of its proposed personnel already
   had security clearances. However, the record includes a memorandum dated
   June 23, 2006--almost 1 year after Quanta began performance, and some 7
   months after the firm tendered its current proposal--describing persistent
   shortfalls in Quanta's available staff for contract performance.
   Specifically, the memorandum notes that, of the [deleted] staff positions
   called for under Quanta's contract, [deleted] remained unfilled, and only
   [deleted] security clearance packages had been submitted to fill these
   slots. While we cannot determine from the record before us the precise
   posture of Quanta's available staff at this time, the agency's evaluation
   conclusion appears, at a minimum, to be inconsistent with the June 23
   memorandum.

   Further, many of the concerns with Quanta's performance noted in the
   record relate to the adequacy of the training of Quanta's personnel
   performing work in the agency's central police operations center (CPOC).
   [3] ACD, vol. 3, exh. 7. However, the agency cited the fact that the
   awardee's (in contrast to the other offerors') proposed personnel were
   already trained to perform in CPOC as support for its award decision; the
   noted concerns, if considered, could have affected the agency's
   determination that Quanta had an advantage in this area.

   We conclude that the agency's failure to consider Quanta's past
   performance under its current BEP contract was inconsistent with the RFP,
   and unreasonable given the relevance of the information to performance of
   this requirement. While we recognize that past performance was to be rated
   on a pass/fail basis, the record contains evidence of problems with
   Quanta's performance of the current contract that the agency failed to
   consider in its evaluation. The agency's actions appear prejudicial to JC,
   since the problems cited appear to undermine the basis for the agency's
   award decision. We therefore sustain the protest on this ground.

   REASONABLENESS OF EVALUATION CONCLUSIONS

   We also find that, in addition to the concerns relating to the adequacy of
   Quanta's staffing and its staff's training (concerns which, as discussed,
   appear to undermine the basis for the agency's source selection decision),
   the agency's conclusions regarding Quanta's incumbency advantages--which
   the agency termed "very compelling"--were unreasonable in light of JC's
   proposal.

   The record shows that the agency placed a heavy emphasis on the fact that
   Quanta's personnel all had the required high-risk security clearances;
   this reduced performance risk as compared to other offerors because any
   other offeror would need to obtain high-risk security clearances for its
   personnel, which would take a significant amount of time. The record
   shows, however, that [deleted] of JC's [deleted] proposed personnel were
   [deleted], and that they had provided JC with letters of intent to accept
   employment with the firm should it win the contract. Johnson Control Final
   Proposal Revision at 10-48. There is no indication that the agency
   considered this fact in justifying award to Quanta at a higher price.
   Further, according to the agency, the time involved in obtaining high-risk
   security clearances for JC's remaining proposed personnel would be about 5
   to 8 weeks. AR, exh. E. As JC notes, Quanta's proposal contemplates a
   transition period of 4 to 8 weeks to the new contractor. Quanta Oral
   Presentation at 19. Thus, Quanta would have its personnel on site during
   the period of time necessary for JC's remaining personnel to obtain
   high-risk security clearances. Again, there is no indication that the
   agency considered the extent to which this information mitigated Quanta's
   technical advantage in this area.[4]

   The agency also cited as a discriminator the fact that all of Quanta's
   personnel had the required training to work in the agency's CPOC area.[5]
   However, the record shows that all [deleted] of JC's proposed employees
   that might work in the CPOC area were [deleted], and that, of these
   individuals, [deleted] had submitted letters of intent to work for JC. JC
   Final Proposal Revision at 3-48. Thus, the [deleted] of JC's proposed
   personnel had the same training as Quanta's, and these individuals had
   specifically committed to work for JC. It is not apparent from the record
   that the agency considered this fact in identifying Quanta's technical
   advantages.[6]

   Finally, the agency's source selection decision cited as a benefit the
   fact that Quanta's proposed personnel had knowledge of the "intimate
   details and vulnerabilities of the BEP security systems." Post Negotiation
   Memorandum at 11. Again, however, there is no indication that the agency
   considered the extent to which this advantage was reduced by JC's proposal
   of [deleted] of its staffing. We therefore sustain the protest on this
   ground.

   We note that the evaluation also may have been skewed by the evaluation
   standard applied by the agency. In this regard, JC asserts that the
   agency, in its source selection, improperly assigned relative weights to
   technical merit and price that were different from the weighting set forth
   in the RFP, and that this may have exaggerated any technical advantage
   held by Quanta.[7]

   The record appears to support this assertion. While the RFP provided that
   technical considerations were "more important" than price, the source
   selection decision document, which justified award based on Quanta's
   technical superiority notwithstanding its higher price, applied a
   different standard--that "overall technical merit will be considered
   significantly more important than price." Post Negotiation Memorandum at
   8. The agency's overstating the importance of technical merit indicates
   that the agency gave greater weight to technical merit versus price than
   provided for in the RFP. An agency may not announce one basis for its
   source selection in the solicitation and then make award on a different
   basis. Beneco Enters., Inc., B-283154, Oct. 13, 1999, 2000 CPD para. 69 at
   7. While there is no evidence indicating the impact of the agency's
   weighting technical merit "significantly more important" rather than
   merely "more important," since the evaluation scores were essentially
   equal, application of the incorrect standard may have exaggerated the
   relative importance of Quanta's identified technical superiority
   sufficiently to affect the agency's tradeoff analysis.

   RECOMMENDATION

   We recommend that the agency reevaluate proposals and make a new source
   selection decision in a manner consistent with the terms of the RFP and
   the above discussion. Should the agency determine that a proposal other
   than Quanta's represents the best value to the government, we further
   recommend that the agency terminate Quanta's contract and make award to
   the other concern, if otherwise proper. We also recommend that the agency
   reimburse JC's costs of filing and pursuing its protest, including
   reasonable attorneys' fees. Bid Protest Regulations, 4 C.F.R. sect.
   21.8(d)(1). JC's certified cost claim, detailing the time spent and costs
   incurred, must be submitted to the agency within 60 days of receiving our
   decision. 4 C.F.R. sect. 21.8(f)(1).

   The protest is sustained.

   Gary L. Kepplinger
   General Counsel

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

   [1] Although our decision was issued in protected form in 2005, a final
   redacted version has not been prepared, pending completion of the
   recompetition. A final redacted version will be forwarded for publication
   once this competition has been completed.

   [2] The post-negotiation memorandum submitted by the agency in its report
   is undated, but the contracting officer, in her statement of facts,
   represents that it was prepared on November 28, 2006.

   [3] The record reflects that the most persistent and recent concern voiced
   by the agency regarding Quanta's personnel is the lack of National Crime
   Information Center (NCIC) and Washington Area Law Enforcement System
   (WALES) training to work in the CPOC area.

   [4] The record shows that several of JC's letters of commitment bore dates
   corresponding to the time when it tendered its proposal in November 2005
   rather than at the time it submitted its FPR in September 2006, and that
   an additional small number of the letters were undated. These
   considerations led the agency evaluators to deduct 1 point from JC's
   technical score, which reduced JC's score from 100 to 99. ACD, vol. 3, JC
   Final Evaluation, at 1-2. However, the source selection decision contains
   no mention of these considerations, or any analysis of the fact that JC
   had offered a substantial number of personnel with the required security
   clearances.

   [5] As noted, the agency requires all personnel working in the CPOC area
   to have NCIC and WALES training.

   [6] Moreover, as discussed above with regard to the agency's failure to
   consider Quanta's performance as the incumbent, it is not clear that all
   of Quanta's proposed personnel had the required training.

   [7] The agency asserts that this aspect of JC's protest is untimely
   because the firm knew at the time of its debriefing both the score
   assigned to its proposal and the fact that its price was lower than
   Quanta's, and could have asked the agency to reveal Quanta's proposal
   score at that time. According to the agency, this information would have
   permitted JC to raise this allegation at that time. We disagree. Merely
   knowing Quanta's score would not have enabled JC to raise this argument
   because the argument is based on information contained in the source
   selection document, namely, the standard applied by the source selection
   official in making the price/technical tradeoff. JC raised its argument
   within 10 days after being provided a copy of the agency's source
   selection document, which revealed the actual basis for the agency's
   source selection decision. The assertion therefore is timely. 4 C.F.R.
   sect. 21.2(a)(2) (2006).