TITLE: B-296699, BAE Technical Services, Inc., October 5, 2005
BNUMBER: B-296699
DATE: October 5, 2005
*******************************************************
B-296699, BAE Technical Services, Inc., October 5, 2005

   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: BAE Technical Services, Inc.

   File: B-296699

   Date: October 5, 2005

   Kenneth M. Bruntel, Esq., Elizabeth W. Newsom, Esq., Amy E. Laderberg,
   Esq., J. Catherine Kunz, Esq., Edward R. Murray, Esq., and Jenny Kim,
   Esq., Crowell & Moring, for the protester.

   Douglas L. Patin, Esq., Robert J. Symon, Esq., and Christyne K. Brennan,
   Esq., Bradley, Arant, Rose & White, for InDyne, Inc., an intervenor.

   Michael O'Farrell, Esq., and Isaac Nehus, Esq., Department of the Air
   Force, for the agency.

   David A. Ashen, Esq., and John M. Melody, Esq., Office of the General
   Counsel, GAO, participated in the preparation of the decision.

   DIGEST

   Protest is sustained where, under solicitation requiring that offerors
   substantiate proposed initiatives to reduce staffing, agency applied a
   more exacting standard in evaluating adequacy of substantiation for
   protester's proposed initiatives than it did in evaluating awardee's
   substantiation.

   DECISION

   BAE Technical Services, Inc. protests the Department of the Air Force's
   award of a contract to InDyne, Inc., under request for proposals (RFP) No.
   FA9200-05-R-0001, for operation and maintenance of the Eglin Test and
   Training Complex (ETTC) at Eglin Air Force Base, Florida. BAE challenges
   the evaluation of proposals.

   We sustain the protest.

   BACKGROUND

   The RFP contemplated the award of a cost-plus-award-fee contract for a
   base period of 4 years, with three 2-year option periods, to provide:
   engineering and technical services in support of research and development,
   test and evaluation, and training missions, including planning,
   provisioning, execution, analysis, and reporting; operation and
   maintenance of the ETTC test and training areas and technical facilities,
   including radars, range data systems, telemetry systems, frequency control
   and analysis equipment, an electro-optical evaluation complex, a video
   facility, photo-optical instrumentation and tracking equipment, facilities
   to stimulate smart weapons or instrumentation so as to collect data, a
   climatic laboratory, a simulated test environment for munitions, and
   explosive test facilities; engineering support for range system design,
   modification, and configuration; and certain specialized technical support
   services, including managing and conducting range unexploded ordinance and
   residue removal and support of munitions operations.

   Award was to be made on a "best value" basis to the offeror whose proposal
   was determined to be most advantageous to the government based on
   consideration of four evaluation factors: (1) mission capability,
   including subfactors for program management, capability to provide
   sufficient agility and efficient range resource scheduling to respond to
   the full range of potential workload, technical excellence, financial
   management, ability to seamlessly transition resources and personnel onto
   the contract and ensure full continuity of test and mission support, and
   potential to create and ameliorate organizational conflicts of interest;
   (2) past performance; (3) proposal risk evaluated at the mission
   capability subfactor level; and (4) cost/price. Mission capability and
   past performance were of equal importance and each was more important than
   proposal risk; mission capability, past performance and proposal risk,
   when combined, were significantly more important than cost/price.

   Of particular importance to the evaluation, the solicitation provided for
   evaluation--under the program management subfactor of the mission
   capability evaluation factor--of whether the proposal identified
   "innovation and efficiency initiatives to be implemented during the life
   of the contract that would produce reasonable qualitative improvements,
   cost reductions, or cost avoidance, particularly during the first
   three years of the contract performance, resulting in benefit to the
   Government." RFP sect. M.2.2.1.2. The solicitation provided that the
   evaluation in this regard would include consideration of whether the
   initiatives "are well defined and include fully substantiated
   justifications, trade-offs, investment requirements, expected returns,
   risk management, and time-phased implementation plans." RFP
   sect. M.2.2.1.2(a).

   Three proposals were received in response to the solicitation, including
   those of BAE (the incumbent contractor), InDyne, and a third offeror;
   BAE's and InDyne's proposals were included in the competitive range. After
   conducting several rounds of discussions with the two offerors, the Air
   Force requested final proposal revisions (FPR). The agency evaluated the
   FPRs as follows:

   +------------------------------------------------------------------------+
   |                       |BAE                       |InDyne               |
   |-----------------------+--------------------------+---------------------|
   |Mission Capability     |                          |                     |
   |-----------------------+--------------------------+---------------------|
   | |Program Management   |Marginal/Moderate Risk[1] |Exceptional/Low Risk |
   |-+---------------------+--------------------------+---------------------|
   | |Agility              |Acceptable/Moderate Risk  |Acceptable/Low Risk  |
   |-+---------------------+--------------------------+---------------------|
   | |Technical Excellence |Acceptable/Low Risk       |Acceptable/Low Risk  |
   |-+---------------------+--------------------------+---------------------|
   | |Financial Management |Acceptable/Low Risk       |Acceptable/Low Risk  |
   |-+---------------------+--------------------------+---------------------|
   | |Transition           |Acceptable/Low Risk       |Acceptable/Low Risk  |
   |-+---------------------+--------------------------+---------------------|
   | |OCI                  |Acceptable/Moderate Risk  |Exceptional/Low Risk |
   |-----------------------+--------------------------+---------------------|
   |Past Performance       |High Confidence           |High Confidence      |
   |-----------------------+--------------------------+---------------------|
   |Probable Cost          |$[DELETED] million        |$[DELETED] million   |
   +------------------------------------------------------------------------+

   The source selection authority (SSA) then determined that InDyne's
   proposal represented the best value to the government. Although the
   evaluated most probable cost of InDyne's proposal was somewhat lower than
   that of BAE's, the SSA stated in her source selection decision (SSD) that
   cost was not a discriminator because "the cost difference between the
   offerors is insignificant given the uncertainties in estimating the cost
   of a 10-year effort." SSD at 8. Likewise, the SSA stated that neither past
   performance nor the technical excellence, financial management and
   transition subfactors under the mission capability evaluation factor were
   discriminators.

   The SSA based her source selection on InDyne's evaluated advantages under
   the program management, agility and OCI subfactors under the mission
   capability factor. As indicated above, BAE's proposal was rated
   marginal/moderate risk under the program management subfactor, while
   InDyne's was rated exceptional/low risk. In this regard, although both
   offerors proposed initiatives to reduce the number of full time equivalent
   (FTE) personnel, the SSD noted that BAE had proposed a moderately higher
   number of reductions, and that the substantiation for BAE's proposed
   reductions was based on "an immature and unvalidated Activity Based Cost
   (ABC) model," and on a pilot efficiency effort with respect to ETTC's
   Multi Spectral Test and Training Environment (MSTTE)--which includes
   threat simulating radar systems, threat simulators and signal sources, and
   threat hybrid systems--that also was "unvalidated." SSD at 3. In contrast,
   according to the SSD, while InDyne's proposed FTE reductions were only
   moderately lower than BAE's, InDyne's reductions were "primarily
   substantiated based on InDyne's previous experience," and "[w]here the
   reductions are based on industry figures, InDyne makes very modest
   assumptions on the anticipated effectiveness of the processes." Id. In
   addition, InDyne's proposal was assessed a strength with respect to its
   quality assurance program on the basis that it proposed ISO 9001
   compliance, while BAE's proposal was evaluated as offering only a
   selective incorporation of ISO 9001 standards, with the specific standards
   to be incorporated yet to be specified by BAE. Further, the SSD indicated
   that, while both InDyne and BAE had proposed management information
   systems, InDyne's proposed Program Information Management System (PIMS)
   warranted a strength on the basis that [DELETED]. The SSA concluded that,
   given the above evaluated strengths in InDyne's proposal and the fact that
   BAE's proposal was rated marginal/moderate risk on the basis of its
   unsubstantiated FTE reductions, InDyne had a "significantly stronger
   proposal" with respect to the program management subfactor, and this
   subfactor "contributed significantly to my decision." Id. at 4.

   Both BAE's and InDyne's proposals were rated acceptable under the agility
   subfactor. Both were evaluated as offering "very good approaches to
   maintaining the agility and flexibility of the workforce as well as very
   good organizations to respond to the full range of potential workload,"
   and both "clearly demonstrated sound methodologies to effectively and
   efficiently coordinate and schedule all resources and airspace in order to
   produce daily mission schedules that optimize range resources
   utilization." Id. However, BAE's proposal was rated moderate risk for
   agility on the basis that its proposed cumulative FTE reductions "can
   potentially adversely impact the agility and flexibility of the workforce
   causing disruption of schedule, degradation of performance, or increased
   cost." Id. In contrast, InDyne's proposal was rated low risk for agility
   on the basis that its proposed FTE reductions "are clearly substantiated,
   they occur at a slightly slower pace, and they propose fewer reductions in
   areas likely to affect agility." Id. at 4-5.

   Finally, while BAE's proposal was rated acceptable/moderate risk under the
   OCI subfactor, Indyne's proposal was rated exceptional/low risk. BAE's
   moderate risk rating resulted from the agency's concern that there was a
   potential for an OCI to occur as a result of BAE employees at ETTC being
   required to test the products of other BAE divisions or of BAE
   competitors. In contrast, InDyne's proposal was assessed strengths on the
   bases that (1) InDyne does not have current manufacturing activities and
   does not provide services support to any products that may be tested at
   ETTC, and (2) InDyne proposed that [DELETED]. The SSA stated that InDyne's
   proposal was significantly stronger under the OCI subfactor and that its
   advantage in this regard contributed significantly to her overall
   determination that InDyne's proposal represented the best value. Id. at 7.
   Upon learning of the resulting award to InDyne, BAE filed this protest
   with our Office.

   FTE REDUCTIONS

   BAE asserts that the Air Force applied a more exacting standard in
   evaluating the substantiation for BAE's proposed FTE reductions than it
   did in evaluating the substantiation for InDyne's proposed reductions.
   According to the protester, the Air Force uncritically accepted InDyne's
   general references to experience, without requiring any showing as to the
   nature of the claimed experience and why the experience was relevant in
   light of the proposed initiatives and circumstances at ETTC, and without
   requiring any showing as to the extent to which InDyne's prior efforts had
   in fact produced FTE reductions or other quantifiable efficiencies. In
   contrast, asserts BAE, the agency rejected BAE's proposed reductions even
   though they were supported by a detailed, methodical approach to improving
   efficiency; according to the protester, the agency failed to evaluate the
   specific details of each initiative, and evaluated as unsubstantiated
   initiatives that were similar to InDyne's and at least as well
   substantiated.

   In reviewing protests against allegedly improper evaluations, it is not
   our role to reevaluate proposals. Rather, our Office examines the record
   to determine whether the agency's judgment was reasonable and in accord
   with the RFP criteria and applicable procurement statutes and regulations.
   See Rolf Jensen & Assocs., Inc., B-289475.2, B-289475.3, July 1, 2002,
   2002 CPD para. 110 at 5. Further, it is fundamental that the contracting
   agency must treat all offerors equally, which includes providing a common
   basis for the preparation and the submission of proposals and not
   disparately evaluating offerors with respect to the same requirements. See
   Lockheed Martin Info. Sys., B-292836 et al., Dec. 18, 2003, 2003 CPD para.
   230 at 11-12; Rockwell Electronic Commerce Corp., B-286201 et al., Dec.
   14, 2000, 2001 CPD para. 65 at 5. We agree with the protester that the
   evaluation was unreasonable.

   The solicitation generally provided for evaluation of whether an offeror's
   proposed innovation and efficiency initiatives would produce qualitative
   improvements, cost reductions, or cost avoidance, resulting in benefits to
   the government, and specifically stated that the evaluation would include
   consideration of whether the initiatives "are well defined and include
   fully substantiated justifications, trade-offs, investment requirements,
   expected returns, risk management, and time-phased implementation plans."
   RFP sect. M.2.2.1.2. In this regard, offerors were required to

     [p]rovide substantiation that the proposed approach(s) will yield the
     desired results. The substantiation may be based on relevant past
     experience implementing the same or similar initiatives being proposed
     or an analysis with sufficient detail to assess the credibility of the
     proposed approach(s).

   RFP sect. L.1.2.3.1.2.

   InDyne proposed five initiatives that it indicated would result in a total
   reduction of [DELETED] FTEs (from day one staffing of 737 FTEs) over the
   life of the contract, and generally cited experience as the substantiation
   for these initiatives. However, InDyne's proposal did not cite to any
   specific level of staffing reductions or quantifiable efficiencies it had
   obtained from the prior efforts or otherwise clearly explain the specific
   circumstances of the prior efforts and how they supported its specific
   projected level of staffing reductions.

   InDyne proposed to reduce staffing by [DELETED] FTEs (out of the total
   [DELETED] FTE reduction) by [DELETED]. When the agency asked how the FTE
   reductions were calculated, InDyne responded that the reductions were

     based on our experience designing the [DELETED] solution for similar
     contracts and industry data. For example, data compiled by [DELETED]
     from a broad range of industry studies indicates that implementation of
     [DELETED] typically result in a 15-20 percent increase in [DELETED]
     productivity and a 30-40 percent reduction in [DELETED]. Our experience
     is consistent with the [DELETED] data.

   Air Force Evaluation Notice (EN) IND-MC-S1-011 and InDyne Response. When
   the agency then noted during discussions that "it is not clear that your
   proposal is actually based on your relevant past experience," InDyne
   responded by citing five contracts under which it claimed to have
   successfully implemented "[DELETED]" so as to reduce data input time and
   improve efficiencies and performance. EN IND-MC-S1-AMD1-011A and InDyne
   Response. However, InDyne did not cite to any specific level of staffing
   reductions or quantifiable efficiencies it had obtained using [DELETED] on
   these five contracts, and did not otherwise clearly explain the specific
   circumstances of the prior efforts and how they supported its specific
   projected level of staffing reductions.

   InDyne proposed to reduce staffing by [DELETED] FTEs with its Performance
   Optimization Program, under which it would use the [DELETED] continuous
   process improvement methodology to eliminate unproductive activities and
   streamline systems. When asked by the Air Force how the FTE reductions
   were determined, InDyne responded that "[o]ur projected FTE reductions are
   based on industry best practice data and the typical savings realized by
   organizations implementing these methodologies." EN IND-MC-S1-012 and
   InDyne Response; see InDyne Initial Mission Capability Proposal at mcv-24.
   When the agency then asked "[i]s your substantiation based on your
   relevant past experience," InDyne responded that "InDyne has carried the
   pursuit of continuous improvement as a core tenet from our original
   founding," and "we have always successfully employed continuous
   improvement on our contracts." EN IND-MC-S1-AMD-012A and InDyne Response.
   However, while InDyne claimed to have "studied" [DELETED], it did not
   assert that it had previously implemented that methodology. Nor did InDyne
   describe and quantify any reductions or efficiencies it had obtained under
   specific prior contracts when employing continuous improvement. Finally,
   InDyne did not describe any specific projects it would undertake using
   [DELETED] in order to obtain reductions or efficiencies at ETTC, and did
   not explain how any results it previously achieved substantiated the
   predicted level of FTE reductions at ETTC.

   InDyne proposed to reduce staffing by [DELETED] FTEs through use of
   [DELETED]. InDyne's substantiation for its claimed FTE reductions
   indicated that it had "developed [DELETED] for [the National Aeronautics
   and Space Administration's (NASA)] Glenn Research Center" and "[DELETED]"
   in use at Randolph Air Force Base. InDyne Initial Mission Capability
   Proposal at mcv-28. InDyne did not, however, describe and quantify any
   specific reductions or efficiencies it had obtained under these prior
   contracts, nor did it clearly explain why this prior experience was
   relevant to the circumstances at ETTC or why the results previously
   achieved substantiated the predicted level of FTE reductions at ETTC.[2]
   Likewise, while InDyne proposed to reduce staffing by [DELETED], InDyne
   cited as substantiation for this claimed reduction a NASA contract under
   which the "[p]rojected cost savings/avoidance of [DELETED] costs" from
   implementing [DELETED] were "projected to be $[DELETED] over a 5-year
   period." In other words, InDyne did not claim to have already realized any
   reductions or savings from the NASA effort, nor is it clear that its
   experience involved a reduction in the number of [DELETED]. InDyne Initial
   Mission Capability Proposal at mcv-27. Finally, while InDyne proposed to
   reduce staffing by [DELETED] FTEs through use of its [DELETED], and
   claimed to have successfully implemented the system at Vandenberg Air
   Force Base, Kennedy Space Center, and Johnson Space Center, it did not
   cite to any specific level of staffing reductions it had achieved under
   the other contracts from the prior implementations of the system. Id. at
   mcv-21; EN IND-MC-S1-010 and InDyne Response.

   Notwithstanding the absence of any citation to actual staffing reductions
   (or even quantifiable efficiencies leading to cost savings), the Air Force
   found all of InDyne's proposed initiatives to be substantiated. As the
   chairman of the source selection evaluation team testified at the hearing
   our Office conducted in this matter, while InDyne had to satisfy the
   evaluators that its experience was relevant, "we didn't get hung up on the
   numbers"; according to the chairman, the evaluators "were not requiring
   that [the offeror] start with that past experience and then do an analysis
   to show us how he came up with this [reduced FTE] number." Tr. at 524-25,
   465. Instead, in finding InDyne's proposed initiatives to be
   substantiated, even though there was no explanation in InDyne's proposal
   as to how it calculated the assumed reductions or how any results
   previously achieved substantiated the predicted level of FTE reductions at
   ETTC, the evaluators focused on such general considerations as the fact
   that the claimed FTE reductions were a "very conservative comparison to
   industry data" (for InDyne's [DELETED] initiative), "modest" relative to
   industry standards (for InDyne's [DELETED] continuous improvement
   initiative), "a pretty small number" (for InDyne's Program Information
   Management System), or otherwise were realistic for such an initiative.
   Tr. at 542, 556-60; see Proposal Analysis Report (PAR) at 108.

   Turning to BAE's proposal, BAE used a business process reengineering
   program, the Activity Based Costing (ABC) modeling methodology, in
   developing its proposed FTE reduction and efficiency initiatives, and this
   methodology thus served as the primary substantiation for the proposed
   initiatives. In this regard, the initiatives that remained in BAE's FPR
   included a continuous improvement initiative, accounting for [DELETED] of
   the proposed [DELETED] FTE reductions (from first day staffing of
   747.5 FTEs) over the life of the contract; an initiative to [DELETED] to
   achieve a reduction of [DELETED] FTEs; an initiative to [DELETED], for a
   projected reduction of [DELETED] FTEs; and a [DELETED] initiative using
   [DELETED], to achieve a [DELETED] FTE reduction.

   BAE explained in its proposal that it used the ABC model to estimate the
   effectiveness of the efficiencies associated with those of its initiatives
   having the potential for FTE reductions. Specifically, explained BAE, the
   major activities performed by BAE at each ETTC site or location by each
   BAE labor category were defined through meetings with BAE experts, and the
   percentage of the time spent by each labor category on each activity at
   each site was estimated. BAE then developed a list of the major
   inefficiencies under the contract, and determined the percentage of the
   time spent by each labor category on each activity at each site which was
   wasted as a result of such inefficiencies. BAE next developed a list of
   innovations or initiatives having the potential for reducing the
   inefficiencies. According to its proposal, BAE then developed FTE
   reduction schedules by year, taking into account initiative learning
   curves by gradually introducing the reductions, and spreading the
   reductions by year so as to minimize risk and adverse impact on mission
   performance, schedule, cost and workforce agility and flexibility. BAE
   also undertook a pilot project to demonstrate its site-based, continuous
   improvement initiative at a representative ETTC site (the MSTTE site).

   When the agency questioned the extent of the proposed FTE reductions,
   which initially amounted to [DELETED] FTEs, BAE responded by eliminating
   or reducing some of its initiatives, and claiming fewer than the potential
   number of FTE reductions indicated by its modeling. BAE explained that it
   had applied an agility factor and eliminated potential FTE reductions to
   ensure sufficient staffing in mission-critical labor categories, taken
   less than 50 percent of the calculated idle time for particular labor
   categories, and had fenced off mission critical positions from the model
   to reduce the number of FTEs available for reduction. As a result of the
   changes, BAE lowered the number of proposed FTE reductions for which it
   was seeking credit from [DELETED] to [DELETED]. BAE Final Mission
   Capability Proposal at 17-18b, 46-46e; BAE Cost Proposal App. D;
   EN BAE-MC-S1-001 and BAE Response; EN BAE-MC-S1-004 and BAE Response;
   EN BAE-MC-S1-0014 and BAE Response; EN BAE-PR-S2-AMD-001A and BAE
   Response; EN BAE-PR-S3-AMD-006 and BAE Response.

   The contemporaneous evaluation record indicates that the Air Force,
   focusing in particular on the MSTTE pilot project, had a number of
   concerns as to the ABC modeling methodology that led it to find BAE's
   proposed initiatives to be unsubstantiated. For example, the record
   indicates that agency evaluators expressed concern as to the reliability
   of estimates by supervisors concerning small amounts of time spent by a
   labor category performing particular activities at a specific site; this
   led them to question the resulting calculated potential incremental time
   savings. PAR at 74-75. While the agency's concerns in this regard appear
   reasonable, at least in part, other concerns appear unsupported or
   overstated.[3] However, whatever the merit of the agency's concerns, we
   think the record shows that, overall, the agency's concerns reflect the
   application of a significantly more stringent standard of review to BAE's
   initiatives.

   For example, the greatest predicted reduction in FTEs for both offerors
   was based on proposed continuous improvement initiatives in which future,
   not yet specified, efficiency projects were expected to yield the FTE
   reductions. In this regard, the agency questioned BAE's references to
   "Solution TBD," which apparently referred to solutions to be determined in
   the future. BAE explained during discussions that these entries simply
   indicated BAE's intent to implement in the future as part of its
   continuous improvement initiative unspecified solutions to inefficiencies
   at ETTC. Tr. at 418-20; BAE Response to EN BAE-MC-S1-AMD1-014A. BAE's
   approach of determining in the future the specific efficiency efforts to
   be undertaken as part of BAE's continuous improvement initiative appears
   to be no different than InDyne's approach of determining in the future the
   specific efficiency efforts to be undertaken as part of its proposed
   [DELETED] continuous improvement initiative.

   Likewise, both offerors proposed [DELETED] initiatives. However, while
   InDyne proposed an [DELETED] FTE reduction in staffing based on [DELETED],
   BAE, the incumbent contractor and familiar with the experience with and
   inherent limitations with respect to [DELETED] at ETTC, proposed only a
   [DELETED] FTE reduction based on [DELETED]. See BAE Mission Capability
   Proposal at 41-41; Tr. at 984-86. Notwithstanding the fact that BAE
   proposed a much more modest FTE reduction based upon a more comprehensive
   initiative, the agency found BAE's [DELETED] initiative to be
   unsubstantiated and InDyne's to be substantiated.

   The agency's rejection of BAE's proposed initiatives resulted from its
   overarching concern that the ABC model did not constitute reliable
   substantiation, that is, apparently, that the ABC model did not adequately
   support the conclusion that the projected FTE reductions from the proposed
   initiatives would actually be achieved.[4] On its face, there is nothing
   unreasonable in this conclusion. However, it simply is not possible to
   reconcile this conclusion with regard to BAE's proposal, which at least
   attempted to present a detailed analytical underpinning for the projected
   FTE reductions, with the agency's acceptance of the substantiation for
   InDyne's proposed initiatives, which, as outlined above, relied upon
   general references to prior implementation of the initiatives--including
   references such as "we have always successfully employed continuous
   improvement on our contracts," InDyne Response to EN IND-MC-S1-AMD-012A,
   see PAR at 108--and references to apparently not yet implemented prior
   initiatives (InDyne's [DELETED]), with no showing as to any specific level
   of staffing reductions or quantifiable efficiencies it had obtained from
   the prior efforts. It appears to us that, while the agency viewed BAE's
   proposal with reasonable skepticism, it abandoned this skepticism in
   evaluating InDyne's proposal. This constituted application of different
   evaluation standards--one stricter than the other--to the two proposals,
   and was unreasonable. See Lockheed Martin Info. Sys., supra, at 11-12
   (improper for agency to apply a more exacting standard in reviewing one
   proposal than it does in reviewing other proposals).

   AGILITY

   BAE also challenges the evaluation under the agility subfactor. As noted
   above, BAE's proposal was rated moderate risk for agility on the basis
   that its proposed cumulative FTE reductions could potentially adversely
   impact the agility and flexibility of the workforce, causing disruption of
   schedule and degradation of performance, or increased cost. SSD at 4. In
   contrast, InDyne's proposal was rated low risk for agility on the basis
   that its proposed FTE reductions "are clearly substantiated, they occur at
   a slightly slower pace, and they propose fewer reductions in areas likely
   to affect agility." Id. at 4-5. BAE asserts that there was no basis for
   rating InDyne's proposal more favorably under the agility factor. We
   agree.

   First, as discussed above, the agency's determination that InDyne's FTE
   reductions were substantiated but BAE's were not was unreasonable.
   Further, the record does not support the agency's determination that BAE's
   staffing profile presented a greater risk to agility, that is, the ability
   to respond to changes in workload, than did InDyne's. The chairman of the
   source selection evaluation team testified that "fewer of the [FTE]
   reductions that InDyne was taking were in areas that would be critical to
   a surge type requirement." Tr. at 485-86. The chairman subsequently
   explained as follows:

     I don't know that we identified any categories as specific concerns but
     there are--you know, when you look at what I would call the technical
     workforce, field engineers, electronic technicians, those people you'll
     need to go out and execute a quick mission or additional workload.

     There are more of that type reductions being taken in BAE's proposal
     than in InDyne's. Not a substantial amount more, but more.

   Tr. at 490. When BAE then noted in its hearing comments that it in fact
   had proposed fewer total reductions in the identified categories
   ([DELETED] field engineers and [DELETED] electronics technicians) than
   InDyne ([DELETED] electronic technicians), and that InDyne, unlike BAE,
   also had proposed a reduction of [DELETED] engineering technicians, the
   Air Force filed a response setting forth a new calculation. Specifically,
   the agency now identified 11 labor categories as having a high impact on
   agility and 4 categories (including maintenance trades helper) as having a
   medium impact on agility. By the agency's calculation, [DELETED] of BAE's
   FTE reductions ([DELETED] high impact and [DELETED] medium impact) fell in
   these categories, while only [DELETED] of InDyne's ([DELETED] high impact)
   were in these categories. Not only is the credibility of the agency's
   analysis diminished by the late date on which it was first presented but,
   as noted by BAE, the analysis fails to take into account the fact that,
   even if BAE proposed greater reductions in FTEs affecting agility, BAE's
   staff, as proposed, still would include more FTEs affecting agility than
   would InDyne's at both the outset and the conclusion of the contract.
   Specifically, it appears that BAE's proposed staff includes approximately
   [DELETED] high impact and [DELETED] medium impact FTEs at the beginning of
   the contract (versus [DELETED] high impact and [DELETED] medium impact
   FTEs for InDyne), and approximately [DELETED] high impact and
   [DELETED] medium impact FTEs (versus [DELETED] high impact and [DELETED]
   medium impact FTEs) at the end of the contract. BAE Final Cost Proposal,
   attach. L5, schedule 22; InDyne Final Cost Proposal, attach. L5.[5]

   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. Parmatic Filter Corp.,
   B-285288.3, B-285288.4, Mar. 30, 2001, 2001 CPD para. 71 at 11; see
   Statistica, Inc. v. Christopher, 102 F.3d 1577, 1581 (Fed. Cir. 1996).
   Here, as discussed, we conclude that the agency's evaluation of proposals
   under the program management and agility subfactors of the mission
   capability evaluation factor was unreasonable. Since different evaluation
   conclusions in these areas could affect the offerors' relative technical
   ratings and, in turn, bring into question the basis for the source
   selection decision, the evaluation errors resulted in competitive
   prejudice to BAE. We sustain the protest on this basis.

   RECOMMENDATION

   We recommend that the Air Force reopen discussions with offerors and
   request revised proposals. If the evaluation of revised proposals results
   in a determination that an offer other than InDyne's represents the best
   value to the government, the agency should terminate InDyne's contract for
   convenience. We also recommend that BAE be reimbursed its cost of filing
   and pursuing the protest, including reasonable attorneys' fees. 4 C.F.R.
   sect. 21.8(2)(1) (2005). In accordance with 4 C.F.R. sect. 21.8(f)(1), the
   protester's certified claim for such costs, detailing the time expended
   and costs incurred, must be submitted directly to the agency within
   60 days after receipt of this decision.

   The protest is sustained.

   Anthony H. Gamboa

   General Counsel

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

   [1] The agency used color ratings in which blue equaled exceptional, green
   acceptable, yellow marginal and red unacceptable. Air Force Federal
   Acquisition Supplement Mandatory Procedures MP5315.305 para. 5.5.1 Table
   1.

   [2] Moreover, InDyne stated that its proposed initiative was based on the
   absence of an existing [DELETED] program at ETTC. BAE asserts, however,
   and the agency has not disputed, that there already is a [DELETED] program
   in operation at ETTC.

   [3] For example, the agency was concerned that BAE's lowering the number
   of FTE reductions it was proposing demonstrated the immaturity of the ABC
   model on which BAE's reduction projections were based. PAR at 74. However,
   this concern failed to account for the fact that BAE lowered the number of
   FTE reductions in response to strong agency expressions of concern during
   discussions, such as the agency's warning that "[t]hese proposed
   reductions are extremely optimistic and increase the risk that agility and
   flexibility will not be maintained." EN BAE-PR-S2-AMD-001A. Given the
   agency's expressions of concern, it is not apparent why the fact that BAE
   lowered the number of FTE reductions, by itself, provided a reasonable
   basis for the agency to conclude that the final reduction of
   [DELETED] FTEs was not reasonably obtainable. Indeed, we think the nature
   of BAE's response--applying an agility factor and lowering the number of
   potential FTE reductions to ensure sufficient staffing in mission-critical
   labor categories, taking less than 50 percent of the calculated idle time
   for any particular labor categories, and fencing off mission critical
   positions from the model to lower the number of FTEs available for
   reduction, as well as its overall determination to take fewer than all of
   the potential FTE reductions--indicates not only a reasonable response to
   the agency's concerns with respect to the impact of FTE reductions on
   agility, but also reasonably could be viewed as increasing the likelihood
   that BAE would be able to achieve the lowered level of FTE reductions it
   ultimately proposed to take.

   [4] The chairman of the source selection evaluation team testified in this
   regard that, once the agency determined that the ABC process was not
   mature, it did not consider whether each of the proposed FTE reductions
   was reasonable. For example, when asked whether the agency ever determined
   whether BAE's proposed [DELETED] FTE reduction on account of its mobile
   computing initiative was reasonable, the chairman testified that "I don't
   know that we ever got to that point to make a conclusion about that one
   way or the other after the initial evaluation because, again, the ABC
   encompassed everything . . . ." Tr. at 566-69.

   [5]We also note that, while the agency has cited as a relative advantage
   InDyne's proposal to [DELETED], InDyne Mission Capability Proposal at
   mcv-52, BAE offered an existing on-call backup labor pool, with very
   extensive experience, which had previously been utilized by BAE for the
   ETTC contract. BAE Mission Capability Proposal at 73-73a.