TITLE: B-296946.6, University of Dayton Research Institute, June 15, 2006
BNUMBER: B-296946.6
DATE: June 15, 2006
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B-296946.6, University of Dayton Research Institute, June 15, 2006
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: University of Dayton Research Institute
File: B-296946.6
Date: June 15, 2006
Daniel A. Bellman, Esq., and William R. Wernet, Esq., for the protester.
Lt. Col. Sharon K. Sughru, and Brett J. Swanson, Esq., Department of the
Air Force, for the agency.
Glenn G. Wolcott, Esq., and Michael R. Golden, Esq., Office of the General
Counsel, GAO, participated in the preparation of the decision.
DIGEST
Agency's communications with awardees following submission of initial
proposals, during which awardees made multiple changes to the evaluated
rates on which the agency's source selection decision was based,
constituted discussions and required that the agency establish a
competitive range and conduct discussions with all competitive range
offerors.
DECISION
University of Dayton Research Institute (UDRI) protests various actions of
the Department of the Air Force taken in connection with request for
proposals (RFP) No. FA8222-04-R-1000 to provide design, engineering and
technical support services. Among other things, UDRI protests that the
agency failed to conduct meaningful discussions.
We sustain the protest.
BACKGROUND
The Air Force issued RFP No. FA8222-04-R-1000 in October 2004, seeking
proposals to "provide design and engineering/technical support services
for the Department of Defense weapon systems, components, and support
equipment."[1] Agency Report I,[2] Tab 8, Performance Work Specification
(PWS), at 7. The solicitation contemplated multiple awards of
indefinite-delivery, indefinite-quantity contracts,[3] with 5-year
ordering periods and 7-year performance periods and an aggregate ceiling
value of $1.9 billion. The solicitation also provided that the source
selection decision would be made on a "best value" basis, and established
the following evaluation factors: mission capability,[4] past performance,
proposal risk, and cost/price.[5] RFP at 92-94. The solicitation stated
that, although cost/price was less important than the other evaluation
factors, "[consideration of] cost/price will contribute substantially to
the selection decision."[6] Id. at 94.
With regard to mission capability, the solicitation identified 43
particular capabilities for which offerors were required to discuss
acceptable technical approaches.[7] More specifically, the RFP stated that
each offeror's proposal was required to demonstrate the offeror's
capability in "at least one sub-element for each systems/applications
grouping (A through I) for each functional category (1 through 5)." RFP at
81.
With regard to evaluation of cost/price, the solicitation stated, "A TEP
[total evaluated price] will be developed and used as a tool to evaluate
rates and burden factors, as a consideration to select the awardees in the
best value decision-making process for the basic contract." RFP at 97. In
establishing a total evaluated price, offerors were directed to complete
various rate tables, identifying both prime and subcontractor labor rates
for various labor categories, by contract type (that is,
cost-reimbursement, time-and-materials, or fixed-price), and by location
of performance (that is, contractor site or government site). Regarding
evaluation of cost/price, the solicitation provided that the "evaluated"
rate tables would form the basis for the agency's cost/price evaluation
and source selection decision, stating:
The total composite price for all years for each prime contractor table
will be summed and entered into the appropriate cell on the Total
Evaluated Price worksheet. . . . The total composite price for all years
for each subcontracting table will be summed and entered into the
appropriate cell on the Total Evaluated Price worksheet. . . .
Eventually, everything will feed into the worksheet tab named "Total
Evaluated Price." This value will be used for evaluation/selection
purposes only and is not to be construed as a minimum or maximum
awardable amount. Minor formula adjustments and clerical errors may be
added/corrected in the TEP by the government for situations that may
occur during the evaluation process that are necessary to reflect an
accurate TEP. These will not require a proposal revision.
RFP at 88-89.
Under the heading "Instructions for Proposal Preparation," the RFP advised
offerors, among other things, that "compliance with these instructions is
mandatory," and similarly provided that, "[i]n order for a proposal to
result in an awardable contract, it must . . . conform to all required
terms and conditions." RFP at 75, 92-93.
On or before the November 8, 2005 closing date, proposals were submitted
by 28 offerors, including UDRI. The proposals were subsequently evaluated
against the various evaluation factors.[8]
In evaluating UDRI's proposal, the agency concluded that although UDRI's
proposal successfully demonstrated ability to perform [deleted], Agency
Report I, Tab 5, at 339; accordingly, UDRI's proposal was rated as
[deleted] under the technical capability subfactor of the mission
capability evaluation factor.[9] UDRI's proposal offered a total evaluated
price of $[deleted] million. Agency Report I, Tab 4, at 17.
In evaluating the offerors' cost/price proposals, the agency found that "a
number of proposals had failed to follow the instructions provided by the
government [in the solicitation]." Agency Response to GAO Request for
Information, May 16, 2006, at 2.[10] Specifically, in populating the
"evaluated" rate tables, which formed the basis for each offeror's total
evaluated price, the agency found that several offerors had provided
various rates for evaluation purposes that were inconsistent with the
"official" rate tables.[11] The agency determined that the offerors'
failure to follow the RFP instructions, resulting in inconsistency between
their "evaluated" rate tables and their "official" rate tables, "would not
allow the government to validate the final TEP value." Agency Response to
GAO Request for Information, May 16, 2006, at 2.[12] Accordingly, the
agency concluded that the evaluated rate tables "needed to be corrected"
to enable the government to "ensure price reasonableness of the submitted
data." Agency Comments, Sept. 13, 2005, at 2.
Because of the conflicting data within the rate tables of several
offerors, the agency sent "Evaluation Notices" to those offerors,
requesting "clarifications" regarding their cost/price. For example, with
regard to one offeror (subsequently selected as an awardee) the agency's
"Evaluation Notice" stated:
Section L [of the RFP] provides the following instruction for completion
of Evaluated Sub Rates Tables, "The offeror shall enter in each cell,
the average of all DESP II subcontractor rates for the applicable
contract type, labor category, calendar year, and location
(Government-site or contractor-site). This value is referred to as the
Average Subcontractor Rate." It has been determined that contrary to
these instructions contained in Section L and Attachment 6 of the RFP,
the Offeror did not use the simple average technique as required (but
calculated and applied a weighted average which could allow a contractor
to skew the Total Evaluated Price relative to the other offerors).
Request you refer to Attachment 6 instructions and make the needed
changes to the proposal to arrive at the correct Total Evaluated Price
and submit two corrected hardcopies and two corrected electronic copies
of Attachment 6.
Agency Report II, Tab 16, [deleted] Evaluation Notice, at 1.
Similarly, with regard to another offeror (also subsequently selected as
an awardee) the agency sent an "Evaluation Notice" stating:
The rates entered in the Evaluated Prime Rates Tables are inflated from
the rates proposed in the Offical Prime Rates Tables. Request you
correct the Evaluated Prime Rates Tables to exclude profit/fee and other
non-labor related factors in the evaluated rates so that the Evaluated
Rates Tables reconciles with the Official Prime Rates Tables.
Agency Report II, Tab 14, [deleted] Evaluation Notice, at 1-2.
With regard to yet a third offeror (also subsequently selected as an
awardee) the agency sent an "Evaluation Notice" stating:
There is a difference between the printed and electronic versions of the
proposal for the subcontractor rates. [The offeror's] electronic version
of Attachment 6 . . . does not represent a copy of the printed version
of this attachment . . . . The discrepancy between the printed copy and
electronic copy of Attachment 6 . . . is most obvious in the Total
Evaluated Price tab of the printed proposal and the accompanying Excel
spreadsheet. However, discrepancies between the printed and electronic
copies have also been found in the Evaluated Subcontracting Rates
Tables. Request you submit two copies of the electronic version . . .
that is a copy of the printed version.
Agency Report I, Additional Documents, [deleted] Evaluation Notice, at 1.
In June 2005, the agency's source selection authority selected 10
proposals for award, characterizing the selections as having been made
"without discussions."[13] Agency Report I, Tab 4, Source Selection
Decision, at 29. UDRI's proposal was not selected for award. Thereafter,
UDRI filed an initial protest with our Office.[14]
DISCUSSION
UDRI protests, among other things, that the agency conducted discussions
with various offerors regarding their failure to comply with the RFP
instructions concerning their total evaluated price--yet declined to
similarly conduct discussions with UDRI regarding the limited areas of its
proposal in which the agency concluded UDRI's proposal did not adequately
demonstrate certain technical capabilities. That is, UDRI maintains that
the agency improperly declined to conduct meaningful discussions with
UDRI, notwithstanding its discussions with other offerors. We agree.
Communications between a procuring agency and an offeror that permit the
offeror to materially modify its proposal generally constitute
discussions. FAR sect. 15.306(d); Lockheed Martin Simulation, Training &
Support, B-292836.8 et al., Nov. 24, 2004, 2005 CPD para. 27;
4^th Dimension Software, Inc.; Computer Assocs. Int'l, Inc., B-251936,
B-251936.2, May 13, 1993, 93-1 CPD para. 420. Where an agency obtains
information from an offeror that makes a previously unacceptable proposal
acceptable for award, such information generally constitutes a material
change to the proposal. Aquasis Servs., Inc., B-240841.3, July 26, 1991,
91-2 CPD para. 94; J. A. Jones/IBC Joint Venture; Black Constr. Co.,
B-285627, B-285627.2, Sept. 18, 2000, 2000 CPD para. 161. Further,
communications that permit an offeror to correct a mistake constitute
discussions unless the mistake is minor and both the existence of the
mistake and what was actually intended are clearly apparent from the face
of the proposal. Matrix Int'l Logistics, Inc., B-272388, B-272388.2, Dec.
9, 1996, 97-2 CPD para. 89; Stacor Corp., B-231095, July 5, 1988, 88-2 CPD
para. 9. When an agency conducts discussions with one offeror, it must
conduct discussions with all competitive range offerors, and provide all
those offerors an opportunity to submit revised proposals. KPMG Peat
Marwick, LLP, B-259479, May 9, 1995, 95-2 CPD para. 13; Paramax Sys.
Corp., B-253098.4, B-253098.5, Oct. 27, 1993, 93-2 CPD para. 282.
Here, as discussed above, the solicitation specifically provided that each
offeror's total evaluated price, derived from the "evaluated" rate tables,
would be relied upon for purposes of the evaluation and source selection
determinations. RFP at 88-89. Consistent with this clear solicitation
provision, in defending against UDRI's protest, the agency expressly
acknowledged that the rates contained in the evaluated rate tables were
necessary "to ensure price reasonableness," and that the agency "could not
allow a source selection decision to be made" on the basis of the rates
initially submitted in those tables. Agency Comments, Sept. 13, 2005, at
2.
The record clearly establishes that in responding to the agency's
evaluation notices requesting "clarifications" of their proposals, several
offerors made changes to dozens of rates that had been initially submitted
in their "evaluated" rate tables. Agency Report II, Tabs 14, 15, 16;
Agency Response to GAO Document Production Request, May 18, 2006. The
multiple changes to the evaluated rates included both increases and
decreases, and the overall effect of the changes was to alter the total
evaluated price of several offerors by millions of dollars. For example,
one awardee's total evaluated price decreased by more than $6 million,
while another awardee's total evaluated price increased by more than $6
million. Agency Response to GAO Document Production Request, May 18, 2006,
attach. 1, at 9, 20; attach. 2, at 7, 17.
As noted above, communications that permit an offeror to correct a
proposal mistake constitute discussions unless the mistake is minor and
both the existence of the mistake and what was actually intended are
clearly apparent from the face of the proposal. Here, the flaws in the
awardees' proposals were not minor; as noted, "correction" of the
evaluated rate tables resulted in significant increases and decreases in
the evaluated cost/price of the ultimate awardees. Further, while the
internal inconsistency of the offerors' proposals reasonably put the
agency on notice regarding the existence of errors (which, by the agency's
own admission, rendered the proposals unacceptable for award), it is clear
the agency could not determine, from the face of the proposals, what the
various offerors' intent was with regard to each of the multiple rate
changes effected in response to the agency's evaluation notices. Further,
as the agency states, identification of the particular rates proposed was
necessary for the agency to ensure price reasonableness,[15] and to make
source selection decisions. Because these altered rates were evaluated by
the agency and relied upon for the source selection decision, the
communications between the agency and offerors clearly constituted
discussions. Accordingly, the agency was obligated to conduct meaningful
discussions with all competitive range offerors.
The protest is sustained.
RECOMMENDATION
We recommend that the agency establish a competitive range on the basis of
the initial proposals submitted, conduct meaningful discussions with all
competitive range offerors, request revised proposals, evaluate those
submissions consistent with the provisions of the solicitation, and make
new source selection determinations regarding the proposals offering the
best overall value to the government. We also recommend that the agency
reimburse UDRI for its costs of filing and pursuing its protest, including
reasonable attorneys' fees. Bid Protest Regulations, 4 C.F.R. sect.
21.8(d)(1) (2006). UDRI's certified claim for costs, detailing the time
expended and costs incurred, must be submitted directly to the agency
within 60 days of receiving this decision. 4 C.F.R. sect. 21.8(f)(1).
Anthony H. Gamboa
General Counsel
------------------------
[1] This procurement is the second conducted under the Air Force's Design
and Engineering Support Program (DESP); the procurement is frequently
referred to as "DESP II." UDRI held a contract under the first DESP
procurement.
[2] In July 2005, UDRI filed its initial protest challenging the agency's
actions in this procurement. In August 2005, the agency submitted a report
in response to that protest; in this decision we refer to the August 2005
report as "Agency Report I." Thereafter, the agency took "corrective
action" to address certain issues raised in UDRI's July 2005 protest. In
February 2006 the agency "reaffirm[ed]" its initial source selection
decision, triggering another protest filed by UDRI in March 2006. The
agency responded to UDRI's March 2006 protest with a second agency report,
referenced in this decision as "Agency Report II."
[3] The solicitation stated that the agency intended to award
"approximately fourteen contracts." RFP at 93.
[4] Under mission capability, the solicitation identified the following
four subfactors, listed in descending order of importance: technical
capability, program management, organization, staff and subcontractor
management, and participation of small/disadvantaged/minority businesses.
RFP at 93.
[5] The solicitation stated that, in issuing individual task orders under
the contracts, the agency would select one of various cost/price
arrangements; the alternative cost/price arrangements included
cost-reimbursement task orders, time-and-materials task orders, and
fixed-price task orders. RFP at 12. The agency's estimates indicate that
approximately 60 percent of the total contract effort will be performed on
a cost-reimbursement basis, approximately 20 percent will be performed on
a time-and-materials basis, and approximately 20 percent will be performed
on a fixed-price basis. Agency Report I, Tab 5, at 14.
[6] The solicitation provided, under the heading "Evaluation Factors,"
that each offeror's cost/price would be evaluated to determine if it was
"unrealistically high or low." RFP at 94.
[7] The PWS contained a matrix of required capabilities. The matrix listed
five functional categories across the horizontal axis--(1) technical
documentation/courseware development; (2) systems design engineering,
development; (3) software/firmware; (4) maintenance repair, operational
support; and (5) environmental, health & safety--and nine
systems/applications along the vertical axis--(A) aircraft/air vehicle
systems; (B) ground equipment/ground transportation;
(C) munitions/missiles; (D) gas generating, dispensing & handling systems;
(E) applicable to multiple applications; (F) industrial engineering &
infrastructure; (G) ground systems; (H) environmental research; and (I)
space systems. Agency Report, Tab 8, PWS attachs. 4, 5. The 45
intersections between the numbered functional categories and the lettered
systems/applications represented mandatory capabilities, with the
exception of two intersections (identified as "D.3" and "I.4"), which the
solicitation specifically stated were not mandatory. Agency Report I, Tab
8, PWS attach. 5.
[8] Regarding proposal evaluation under the mission capability factor, the
agency employed a color/adjectival rating system under which the agency
assigned ratings of "Blue/Exceptional," "Green/Acceptable,"
"Yellow/Marginal," and "Red/Unacceptable." RFP at 94; Contracting
Officer's Statement at 4. In this regard, a "Blue/Exceptional" rating
reflected a proposal that "[e]xceeds specified minimum . . . capability
requirements"; a "Green/Acceptable" rating reflected a proposal that
"[m]eets specified minimum . . . capability requirements"; a
"Yellow/Marginal" rating reflected a proposal that "[d]oes not clearly
meet some specified minimum . . . capability . . . but any proposal
inadequacies are correctable"; and a "Red/Unacceptable" rating reflected a
proposal that "[f]ails to meet specified minimum performance or capability
requirements." RFP at 94; Air Force Federal Acquisition Regulation
Supplement sect. 5315.305, Table 5315-3.
[9] UDRI's proposal was also rated [deleted] under all of the mission
capability subfactors, and received a [deleted] rating under the past
performance evaluation factor. Agency Report I, Tab 4, at 17.
[10] The agency elaborates that "approximately 39% (eleven out of
twenty-eight [offerors]) did indeed have trouble following the
instructions." Agency Response to GAO Request for Information, May 16,
2006, at 5.
[11] The solicitation stated:
[T]here will be two sets of Pricing Tables. One is the set of "official"
tables and the other is the set of "evaluated" tables. The offeror must
propose their own labor rates, burden factors (which shall not include
profit), and NTE profit/fee factors in Official Prime Rates Tables P-1
through P-16. The offeror must propose each DESP II Subcontractor's
rates in Official Sub X Rates Tables SX-1 through SX-6 (note, that "X"
will be replaced with a number assigned to each DESP II Subcontractor).
These official tables will be the tables that will be incorporated into
the resulting contract, if an offeror is selected for award. The offeror
will also complete Evaluated Prime Rates Tables EP-1 through EP-6 with
the appropriate rate from the Official Prime Rates Tables P-1 through
P-6. If there is no Prime Contractor rate for a particular category, the
offeror will enter the Average Subcontractor Rate. If there are no DESP
II Subcontractor rates for a particular cell, the offeror will enter the
prime rate. Every cell in these tables must have a value entered.
RFP at 88.
[12] The agency similarly states that "[t]he evaluation team could not
allow a source selection decision to be made based upon TEPs that they
knew were incorrectly calculated." Agency Comments, Sept. 13, 2005, at 2.
[13] The total evaluated prices for the 10 awardees ranged from $[deleted]
million to $[deleted] million. Agency Report I, Tab 4, Source Selection
Decision, at 17. As noted above, UDRI's total evaluated price was
$[deleted] million.
[14] In October 2005, the agency advised our Office that, with regard to
UDRI's initial protest, the agency would "take corrective action to
reevaluate [UDRI's] proposal." Agency Report II, Tab 5. Accordingly, we
dismissed UDRI's initial protest pending completion of the agency's
actions. University of Dayton Research Inst., B-296946.2, Oct. 19, 2005.
Thereafter, the SSA established a team of evaluators to reevaluate UDRI's
proposal and directed that "[t]he corrective action shall be . . .
completed no later than Thursday, 10 November 2005." Agency Report II, Tab
7. As documented in a briefing dated November 9, the re-evaluation team
initially concluded that UDRI's proposal successfully demonstrated the
[deleted]. Agency Report I, Tab 5; Agency Report II, Tab 8. Thereafter,
the SSA directed that the re-evaluation team be combined with the initial
evaluation team. Agency Report II, Tab 2, Contracting Officer's Statement,
at 2. Following the SSA-directed combination of the two evaluation teams,
the agency [deleted]. Agency Report II, Tab 12. Based on the combined
evaluation teams' final re-evaluation of UDRI's proposal (which was not
completed until February 2006) the SSA "reaffirm[ed]" his initial source
selection decision. Id. Following the SSA's affirmation of the original
award decision, UDRI again filed a protest with this Office.
[15] As noted above, the solicitation provided that each offeror's
cost/price would be evaluated to determine whether it was "unrealistically
high or low." RFP at 94. While the agency acknowledges that it was
necessary for the evaluated rate tables to accurately reflect the
offerors' proposed rates in order for the agency to "ensure price
reasonableness," the record does not clearly establish whether the various
proposed rates were also evaluated to establish cost realism. In light of
the specific solicitation provision quoted above, along with the fact
that, as noted above, the agency anticipates that a majority of the total
contract effort will be performed on a cost-reimbursement basis, a cost
realism assessment was required. See Federal Acquisition Regulation
sect. 15.305(a)(1).