TITLE: B-298502; B-298502.2; B-298502.3; B-298502.4; B-298502.5, MD Helicopters, Inc.; AgustaWestland, Inc., October 23, 2006
BNUMBER: B-298502; B-298502.2; B-298502.3; B-298502.4; B-298502.5
DATE: October 23, 2006
**********************************************************************************************************************
B-298502; B-298502.2; B-298502.3; B-298502.4; B-298502.5, MD Helicopters, Inc.; AgustaWestland, Inc., October 23, 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: MD Helicopters, Inc.; AgustaWestland, Inc.
File: B-298502; B-298502.2; B-298502.3; B-298502.4; B-298502.5
Date: October 23, 2006
John S. Pachter, Esq., Jonathan D. Shaffer, Esq., Stephanie D. Capps,
Esq., Tamara F. Dunlap, Esq., Mary Pat Gregory, Esq., and Erin R. Karsman,
Esq., Smith Pachter McWhorter PLC, for MD Helicopters, Inc., and Craig A.
Holman, Esq., David S. Black, Esq., and Eric L. Yeo, Esq., Holland &
Knight LLP, for AgustaWestland, Inc., the protesters.
Thomas L. McGovern III, Esq., Michael F. Mason, Esq., Allison D. Pugsley,
Esq., and Brian C.J. Berry, Esq., Hogan & Hartson LLP, for EADS North
America Defense Co., an intervenor.
Brian E. Toland, Esq., Vera Meza, Esq., Roger Cornelius, Esq., and
Lawrence Runnels, Esq., Department of the Army, for the agency.
Sharon L. Larkin, Esq., and James A. Spangenberg, Esq., Office of the
General Counsel, GAO, participated in the preparation of the decision.
DIGEST
1. In a best value negotiated procurement for Light Utility Helicopters,
protest of a lower technically rated, higher-priced offeror is denied,
where the detailed evaluation record evidences that the evaluators
performed a comprehensive and thorough evaluation of each offeror's
proposal and reasonably determined that the protester's proposal was
technically inferior and did not provide the best value to the government.
2. In a best value negotiated procurement for Light Utility Helicopters,
protest of a higher technically rated, higher-priced offeror is denied,
where the source selection authority considered the significant strengths
and weaknesses of each offeror's proposal, and reasonably determined that
the protester's higher technically rated proposal was not worth the
additional $800 million over the awardee's $3.9 billion proposal.
DECISION
MD Helicopters, Inc. (MDHI) and AgustaWestland, Inc. (AWI) protest the
award of a contract to EADS North America Defense Company (EADS), issued
by the Department of the Army under request for proposals No.
W58RGZ05-05-R-0519 for Light Utility Helicopters (LUH).
We deny the protests.
I. BACKGROUND
The Army currently uses a mix of rotary wing aircraft to accomplish
administrative and logistical missions and to support the Army National
Guard. In some instances, these aircraft have reached their serviceable
life; in other instances, the aircraft are much more capable than is
required for the role and thus are more expensive to operate and maintain.
The LUH is intended to replace these helicopters by providing reliable and
sustainable general and administrative support in non-hostile, non-combat
environments at reduced acquisition and operating costs. The missions of
the LUH are primarily light general support (including aerial transport of
personnel, supplies, and maintenance support), General Force Medical
Evacuation (MEDEVAC), reconnaissance, and test and training support. RFP,
Statement of Work (SOW) paras. 1.1, 1.2. To facilitate a "rapid path" to
fielding the LUH, the agency sought a Federal Aviation Administration
(FAA) certified, commercially available aircraft to satisfy the LUH
requirement, and to rely on contractor logistics support (CLS). RFP sect.
A, para. 3.
A. The Solicitation
The RFP contemplated the purchase of an estimated 352 aircraft over a
10-year contract period, with an initial estimate of 16 aircraft to be
purchased during the base year and additional aircraft to be purchased
through subsequent option years.[1] In addition to the aircraft, the RFP
provided for the purchase of hardware and support, such as MEDEVAC B kits,
hoist B kits, CLS, training, contractor field teams, engineering services,
and other supporting hardware and services during the course of the
contract. RFP sect. A, para. 1; sect. B; amend. 11, Pricing Template.
Prices were to be proposed on a fixed-price per unit basis over a
projected 10-year period, with cost-reimbursable items for travel,
material, and transportation.[2] RFP sect. B.
The RFP provided for a "best value" evaluation of FAA certification (which
was evaluated as a "go/no go" criteria) and five other evaluation factors:
price, technical, producibility/management (P/M), logistics, and past
performance. Price was stated to be more important than technical,
technical more important than P/M, and price and technical combined were
significantly more important than P/M, logistics, and past performance.
P/M and logistics were stated to be of equal importance and each was more
important than past performance. RFP sect. M-6, para. 2.0. The
solicitation also provided that risk would be considered in the evaluation
of "each factor, subfactor, and element." Id. para. 1.3.
The RFP advised offerors that, under the technical factor, proposals "will
be evaluated to determine the degree of confidence that the Offeror[']s
proposed aircraft will be operationally effective and suitable for the
LUH[']s intended mission roles." The technical factor contained three
equally rated subfactors: avionics/electronics, aircraft performance, and
physical characteristics. Each of these subfactors contained a number of
"elements," which correlated to various threshold requirements set forth
in the SOW.[3] The aviation/electronics subfactor contained six elements
(listed in descending order of importance): communication/navigation
suite, systems operability, image intensification compatibility,
intercommunications system, electromagnetic vulnerability, and cockpit
voice recorder/flight data recorder (CVR/FDR). The aircraft performance
subfactor contained 10 elements (listed in descending order of
importance): performance, endurance, internal/external load, autorotation,
operational range, handling qualities, cruise airspeed, fuel
compatibility, operational environment, and startup timeline. The physical
characteristics subfactor contained 12 elements (listed in descending
order of importance): cabin size, force protection, survivability, hoist,
wire strike protection, system growth potential, nuclear biological and
chemical contamination survivability, open port and pressure refueling,
human factors engineering, transportability, fire suppression bucket, and
crew equipment stowage. Id. para. 2.3.
The elements identified above in bold type represent the five mandatory
elements identified in the RFP; that is, proposals had to show that the
proposed aircraft would meet these mandatory requirements no later than
the scheduled first delivery of aircraft to be eligible for award. Id. All
other elements were considered to be "tradable." With tradable elements, a
proposal could still be eligible for award if it failed to meet the
minimum threshold requirements for the tradable elements; the agency
considered the relative importance of the tradable elements under the
RFP's evaluation scheme and the risk to the mission of an offeror failing
to meet the requirements in evaluating a proposal's strengths and
weaknesses. GAO Hearing Transcript (Tr.) at 169-71; Contracting Officer's
Statement in Response to MDHI Protest (Aug. 18, 2006) at 22-23. The RFP
also advised that the agency "may more favorably consider proposed
solutions that exceed SOW requirements for all technical elements except
for electromagnetic vulnerability, [CVR/FDR], autorotation, open port and
pressure refuel, and fire suppression bucket"; for these excepted
elements, the RFP stated that the agency would only evaluate whether the
proposed solutions met the SOW requirements. RFP sect. M-6, para. 2.3.
For the P/M factor, the RFP listed two subfactors (in descending order of
importance): producibility/manufacturing (P/Mfg) and management. The P/Mfg
subfactor did not contain elements, but provided for the evaluation of
production rate capacity, which included the evaluation of production rate
capability (including integrated master schedule, facilities/tooling,
process validation, manpower, vendor base, and production certification),
government acceptance, and storage and unit flyaway. This subfactor also
included the evaluation of "risk and realism" of the offeror's proposed
delivery schedule. RFP sect. M-6, para. 2.4.1. The management subfactor of
the P/M factor contained seven elements (listed in descending order of
importance): program management approach, configuration management
approach, quality management approach, system safety approach, performance
specification and configuration list, subcontracting plan/small business
utilization approach, and system engineering approach. Id. para. 2.4.2
The logistics factor of the RFP identified four subfactors: logistics
support approach; reliability, availability, and maintainability (RAM);
training approach; and other logistics support approaches. The logistics
support approach subfactor was stated to be significantly more important
than the next two subfactors--RAM and training approach--which were stated
to be of equal importance and, combined, were more important that the
fourth subfactor, other logistics support approaches. Id. para. 2.5.
The RFP provided that past performance would be evaluated based on the
offerors' and their major subcontractors' performance "as it relates to
the probability of successful accomplishment of the LUH requirement." The
RFP further stated that the agency would evaluate performance during the 3
years preceding the solicitation, considering information obtained from
the proposals, various government databases, customer survey
questionnaires, and other sources. Id. para. 2.6.
The price factor contained two subfactors--total production price and
total O&S price--which were to be added together to derive the overall
total price. Id. para. 2.2.a. The RFP stated that an offeror's proposed
price would not be given an evaluation rating, but would be evaluated for
"its aggregate total price, its reasonableness in relation to the effort
proposed, and any perceived unbalanced pricing." Id. para. 2.2.b.
The RFP required offerors to provide their pricing for applicable items
identified in section B of the solicitation by completing a mandatory
"pricing template." Detailed information about completing the pricing
template was provided in section L of the solicitation. RFP sect. L-23,
para. 2. The template was essentially a series of spreadsheets wherein
offerors would insert their fixed unit prices for the various contract
line item numbers (CLINs) in applicable cells, and the template would
calculate the projected price over the 10-year contract period for the
various pricing components (or over a 20-year period in the case of O&S
and fuel costs). The template specified estimated unit quantities and
flight hours, and included probabilities, weighting factors, and
escalation factors (where applicable) that offerors could not change so
that each offeror would be evaluated on an "equitable basis." Contracting
Officer's Statement in Response to MDHI Protest (Aug. 18, 2006) at 10-12.
The only "variable" was the unit prices that each offeror entered into the
template. Id. at 10.
For O&S costs, which mostly consisted of CLS, the RFP provided two
"scenarios" under which O&S pricing would be computed. For each scenario,
the RFP stated that the government would use the "weighted average price
per year" for each of the CLS CLINs pertaining to that scenario. This
weighted average price was to be computed in each scenario by applying a
probability factor (which was specified in the pricing template) to each
range of hours and rates for that CLIN in the stated year. The weighted
average price for each year was to be multiplied by 50 percent and the
results summed to give the total proposed O&S price.[4] The RFP provided
that CLS and fuel prices would be projected to 20 years by averaging the
offeror's proposed price for years 8, 9, and 10, and applying an
escalation factor of 2.1 percent per year to the average cost. Id. at 11;
RFP sect. M-6, para. 2.2.2.
B. Evaluation
Five offerors responded to the RFP and were invited to make a limited
presentation of their proposals to the agency in advance of the initial
evaluation. After the presentations, the agency conducted an initial
evaluation to determine if proposals met the go/no go criteria for FAA
certification and the five mandatory technical requirements. The agency
eliminated one offeror's proposal from the competitive range.
For the four offerors that remained in the competitive range (including
MDHI, AWI, and EADS), the agency allowed a "source selection performance
demonstration" (SSPD) of each offeror's aircraft. The SSPD, as provided
for in the RFP, was intended to verify whether the demonstrated aircraft
differed from the offeror's proposed aircraft. RFP sect. M-6, para. 1.2.
During the SSPD (which consisted approximately of a 4-hour block of time,
Tr. at 408), the agency tested the aircraft against several of the
performance and configuration requirements set forth in the SOW that
corresponded to technical elements evaluated under the RFP. The SSPD was
intended to verify and finalize the evaluation, but was not given a
separate rating. RFP sect. M-6, para. 1.2. The agency completed its
initial evaluation and held discussions with the four offerors remaining
in the competitive range, which included the issuance of "Errors,
Omissions, and Clarifications," as well as additional written and
face-to-face discussions.[5]
After discussions were completed and the offerors submitted their final
proposal revisions (FPR), the agency conducted its final evaluation. The
evaluation (both initial and final) was conducted using a database system,
whereby each evaluator entered his or her ratings and comments for each
proposal under element, subfactor, and factor headings; these ratings and
comments were "rolled up" into an overall element, subfactor, and factor
rating assessment. Factor, subfactor, and element "leads" were appointed
to ensure that the evaluation was conducted in accordance with the RFP and
to perform the "roll up" of ratings. The factor leads reported the
evaluation results to a source selection evaluation board (SSEB), which
was appointed to review proposals, issue the evaluation report[6], and
provide briefings and consultations to the source selection advisory
council (SSAC)[7] and source selection authority (SSA). Advisors were also
appointed to assist with the evaluation, including representatives of the
FAA to assist with FAA certification issues. The advisors, evaluators,
factor leads, SSEB, and SSAC included members that were experienced
aviators or experts in their field of evaluation; the SSAC also included
two members that were "users" of the aircraft. Tr. at 38, 189-92, 194,
205, 212, 241-42, 276, 283. The SSA did not have aviation experience, but
had "responsibilities that covered all of the Army's programs, including
Army aviation," and testified that he sufficiently understood the LUH
mission and the statement of work as it related to the mission. Tr. at 11,
44.
After reviewing and considering the technical reports and evaluator
comments, the SSEB assigned adjectival and risk ratings to each proposal
under each of the factors, subfactors, and elements identified in the
solicitation. With regard to the technical elements generally, a proposal
was rated "satisfactory" if it met the "threshold" requirement for the
element as stated in the SOW; a proposal received a rating of "good" if it
exceeded the threshold requirement, and a rating of "excellent" if it
exceeded the threshold requirement by a specified "objective" amount. The
objective amounts, which the agency refers to as "stretch goals," Tr. at
199, were not set forth in the RFP, but were defined in the source
selection plan (SSP) (an internal agency document). Agency Hearing Book,
exh. W, SSP, append. B, exh. 1, Merit Rating System for Technical Factor.
These "objectives" represented the amounts in excess of the requirements
that the agency considered would benefit the mission and thus were
deserving of the highest adjectival rating. Tr. at 208, 254-55. According
to the agency, far exceeding the objective for an element was of
diminishing value to the mission and was considered in terms of the
increased cost to the agency associated with exceeding the objective. Tr.
at 121-22, 208, 247, 254-55. A proposal received a rating of "marginal" or
"unsatisfactory" for an element if it did not meet the threshold
requirement.[8] Agency Hearing Book, exh. C, SSA Final Briefing, Slide 8;
exh. W, SSP, append. B, exh. 1, Merit Rating System for Technical Factor.
Risk ratings of "low," "moderate," and "high" also were assigned to
proposals under each of the factors, subfactors, and elements. These
ratings were defined as follows:
Low Risk: Has little potential to cause disruption of schedule, increase
in price, or degradation of performance. Development/integration and FAA
certification of modifications proposed or offered to an existing FAA
certified helicopter model submitted for evaluation in SSPD, would
likely cause no adverse impact to delivery. Normal contractor effort and
normal Government monitoring will probably minimize any difficulties.
Moderate Risk: Can potentially cause some disruption of schedule,
increase in price, or degradation of performance.
Development/integration and FAA certification of modifications proposed
or offered to an existing FAA certified helicopter model submitted for
evaluation in SSPD, would likely cause some adverse impact to delivery.
Special contractor emphasis and close Government monitoring will
probably minimize difficulties.
High Risk: Likely to cause significant disruption of schedule, increase
in price, or degradation of performance. Development/integration and FAA
certification of modifications proposed or offered to an existing FAA
certified helicopter model submitted for evaluation in SSPD, would
likely cause significant adverse impact to delivery. Risk may be
unacceptable even with special contractor emphasis and close Government
monitoring
Agency Hearing Book, exh. W, SSP, at 62-63; id., exh. C, SSA Final
Briefing, Slide 9.
Adjectival and risk ratings were assessed in this manner for both the
initial and final evaluation, and detailed briefings were provided to the
SSAC and SSA.[9] At the final briefing, the factor leads and SSEB made
presentations to the SSAC and SSA to explain the proposal ratings (both
adjectival and risk) for each offeror's proposal under the various
factors, subfactors, and elements. These individuals highlighted for the
SSA the significant differences between proposals, discussed the value of
aircraft attributes in terms of the LUH mission requirements, and
responded to questions from the SSAC and SSA. Tr. at 17-20, 241, 244. A
comprehensive series of power point slides was provided to the SSA
summarizing the evaluation. As reported to the SSA in these slides, the
final factor and subfactor evaluation ratings, as relevant here, were as
follows:
+-------------------------------------------------------------------------------+
| | MDHI | EADS | AWI |
|----------------------------+----------------+----------------+----------------|
|Price | $4,251,356,442 | $3,880,000,723 | $4,747,162,454 |
| | | | |
| | Moderate Risk | Low Risk | Low Risk |
|----------------------------+----------------+----------------+----------------|
||Total Production Price | [REDACTED] | [REDACTED] | [REDACTED] |
||---------------------------+----------------+----------------+----------------|
||Total O&S Price[10] | [REDACTED] | [REDACTED] | [REDACTED] |
|----------------------------+----------------+----------------+----------------|
|Technical | Marginal/High |Satisfactory/Low| Good/Low |
|----------------------------+----------------+----------------+----------------|
||Avionics/Electronics | Satisfactory | Satisfactory | Satisfactory |
||---------------------------+----------------+----------------+----------------|
||Aircraft Performance | Marginal | Satisfactory | Excellent |
||---------------------------+----------------+----------------+----------------|
||Physical Characteristics | Satisfactory | Satisfactory | Good |
|----------------------------+----------------+----------------+----------------|
|Producibility/Management | Marginal/ High | Good/Low | Good/Low |
|----------------------------+----------------+----------------+----------------|
||Producibility/Manufacturing| Marginal | Good | Good |
||---------------------------+----------------+----------------+----------------|
||Management | Marginal | Satisfactory | Satisfactory |
|----------------------------+----------------+----------------+----------------|
|Logistics |Satisfactory/Low|Satisfactory/Low|Satisfactory/Low|
|----------------------------+----------------+----------------+----------------|
||Logistics Support Approach | Satisfactory | Satisfactory | Satisfactory |
||---------------------------+----------------+----------------+----------------|
||RAM | Marginal | Satisfactory | Good |
||---------------------------+----------------+----------------+----------------|
||Training Approach | Good | Good | Good |
||---------------------------+----------------+----------------+----------------|
||Other Support Approach | Satisfactory | Satisfactory | Satisfactory |
|----------------------------+----------------+----------------+----------------|
|Past Performance | Moderate | Low | Low |
+-------------------------------------------------------------------------------+
Agency Hearing Book, exh. C, SSA Final Briefing, Slides 38, 43, 47-49, 57,
62, 67-68, 75, 80, 85-86, 91; Agency Report (AR), DVD Tab 37, Price
Negotiation Memorandum, at 13. The technical element ratings for each of
the technical subfactors were reported as follows:
+------------------------------------------------------------------------+
| | MDHI | EADS | AWI |
|---------------------------+--------------+--------------+--------------|
|Avionics/Electronics | Satisfactory | Satisfactory | Satisfactory |
|Subfactor | | | |
|---------------------------+--------------+--------------+--------------|
||Communication & Navigation| Good | Satisfactory | Satisfactory |
||Suite* | | | |
||--------------------------+--------------+--------------+--------------|
||Systems Operability | Satisfactory | Satisfactory | Satisfactory |
||--------------------------+--------------+--------------+--------------|
||Image Intensification | Satisfactory | Good | Good |
||Compatibility | | | |
||--------------------------+--------------+--------------+--------------|
||Intercommunications System| Good | Satisfactory | Good |
||--------------------------+--------------+--------------+--------------|
||Electromagnetic | Satisfactory | Satisfactory | Satisfactory |
||Vulnerability | | | |
||--------------------------+--------------+--------------+--------------|
||CVR/FDR |Unsatisfactory|Unsatisfactory| Satisfactory |
|---------------------------+--------------+--------------+--------------|
|Aircraft Performance | Marginal | Satisfactory | Excellent |
|Subfactor | | | |
|---------------------------+--------------+--------------+--------------|
||Performance* | Satisfactory | Excellent** | Excellent |
||--------------------------+--------------+--------------+--------------|
||Endurance |Unsatisfactory| Satisfactory | Excellent |
||--------------------------+--------------+--------------+--------------|
||Internal/External Loads |Unsatisfactory|Unsatisfactory| Good |
||--------------------------+--------------+--------------+--------------|
||Autorotation | Satisfactory | Satisfactory | Satisfactory |
||--------------------------+--------------+--------------+--------------|
||Operational Range | Satisfactory | Excellent** | Excellent |
||--------------------------+--------------+--------------+--------------|
||Handling Qualities | Satisfactory | Satisfactory | Good |
||--------------------------+--------------+--------------+--------------|
||Cruise Airspeed |Unsatisfactory| Good** | Excellent |
||--------------------------+--------------+--------------+--------------|
||Fuel Compatibility | Good | Good | Good |
||--------------------------+--------------+--------------+--------------|
||Operational Environment |Unsatisfactory|Unsatisfactory|Unsatisfactory|
||--------------------------+--------------+--------------+--------------|
||Startup Timeline |Unsatisfactory|Unsatisfactory|Unsatisfactory|
|---------------------------+--------------+--------------+--------------|
|Physical Characteristics | Satisfactory | Satisfactory | Good |
|Subfactor | | | |
|---------------------------+--------------+--------------+--------------|
||Cabin Size* | Satisfactory | Excellent | Excellent |
||--------------------------+--------------+--------------+--------------|
||Force Protection* | Excellent** | Good** | Excellent |
||--------------------------+--------------+--------------+--------------|
||Survivability* | Satisfactory | Good | Good |
||--------------------------+--------------+--------------+--------------|
||Hoist | Satisfactory | Satisfactory | Satisfactory |
||--------------------------+--------------+--------------+--------------|
||Wire Strike Protection | Good | Satisfactory | Satisfactory |
||--------------------------+--------------+--------------+--------------|
||System Growth Potential |Unsatisfactory| Excellent** | Excellent |
||--------------------------+--------------+--------------+--------------|
||Nuclear Biological and | Satisfactory | Satisfactory | Satisfactory |
||Chemical Contamination | | | |
||Survivability | | | |
||--------------------------+--------------+--------------+--------------|
||Open Port and Pressure | Marginal | Marginal | Satisfactory |
||Refueling | | | |
||--------------------------+--------------+--------------+--------------|
||Human Factors Engineering | Good | Satisfactory | Satisfactory |
||--------------------------+--------------+--------------+--------------|
||Transportability | Satisfactory | Satisfactory | Satisfactory |
||--------------------------+--------------+--------------+--------------|
||Fire Suppression Bucket | Satisfactory | Satisfactory | Satisfactory |
||--------------------------+--------------+--------------+--------------|
||Crew Equipment Stowage | Satisfactory | Satisfactory | Good |
+------------------------------------------------------------------------+
Id., Slides 33-35, 53-55, 71-73.
+------------------------------------------------------------------------+
|The elements in the chart with a single asterisk (*) reflect the five |
|mandatory elements; the other listed elements were tradable. The |
|elements in the chart with double asterisks (**) reflect areas where the|
|offeror's performance specification (which was required to be provided |
|with the proposal) identified a lower performance capability than that |
|reflected in the offeror's technical volume. Where the agency could |
|ascertain from the technical volume, configuration list, SSPD, and other|
|evaluation information that the aircraft would meet the higher |
|performance attribute (as stated in the technical volume rather than the|
|performance specification), the agency assigned the higher rating to the|
|offeror's proposal. Contracting Officer's Statement in Response to AWI |
|Protest (Aug. 31, 2006) at 3-4, 6; Tr. at 33, 144-45. The SSEB |
|identified these areas to the SSA in the final evaluation briefing. |
|Agency Hearing Book, exh. C, SSA Final Briefing, Slides 54-55; exh. D, |
|Aircraft Characteristics Chart; Tr. at 286-87. |
+------------------------------------------------------------------------+
The P/M element ratings were reported as follows:
+------------------------------------------------------------------------+
| | MDHI | EADS | AWI |
|-------------------------------+--------------+------------+------------|
|Producibility/Manufacturing | Marginal | Good | Good |
|(P/Mfg) | | | |
|-------------------------------+--------------+------------+------------|
|Management | Marginal |Satisfactory|Satisfactory|
|-------------------------------+--------------+------------+------------|
||Program Management Approach | Satisfactory |Satisfactory|Satisfactory|
||------------------------------+--------------+------------+------------|
||Configuration Management |Unsatisfactory|Satisfactory|Satisfactory|
||Approach | | | |
||------------------------------+--------------+------------+------------|
||Quality Management Approach | Satisfactory |Satisfactory|Satisfactory|
||------------------------------+--------------+------------+------------|
||System Safety Approach | Marginal |Satisfactory| Good |
||------------------------------+--------------+------------+------------|
||Performance Specification & | Marginal |Satisfactory| Marginal |
||Configuration List | | | |
||------------------------------+--------------+------------+------------|
||Subcontracting Plan/Small | Satisfactory |Satisfactory|Satisfactory|
||Business Utilization | | | |
||------------------------------+--------------+------------+------------|
||Systems Engineering Approach | Satisfactory | Good | Good |
+------------------------------------------------------------------------+
Id., Slides 41-42, 60-61,78-79.
In addition to the briefing slides, the SSA was also provided with a
detailed chart (prepared by the SSAC) that identified the SOW's threshold
requirements for each of the technical elements and each offeror's
proposed capability with regard to that element, as a means of comparing
the offeror's proposals to each other and to the SOW requirement. For
example, under the endurance element, the threshold requirement was listed
as "2.8 hours + 30 minute reserve" and the capability of the three
proposals at issue in this protest were identified to be "1.9 [hours] +
30 [minutes]" for MDHI, "2.8 [hours] + 30 [minutes]" for EADS, and "3.64
[hours] + 30 [minutes]" for AWI. Agency Hearing Book, exh. D, Aircraft
Characteristics Chart. Areas where an offeror's proposal did not meet the
capability were identified in red. The SSA was also provided with summary
charts identifying key characteristics, or aircraft attributes, of each
proposal and a list of airframe features. Id. The purpose of the charts
was "to get a look behind the colors of all the different elements of what
the SSA would be seeing." Tr. at 194.
During the final briefing, the SSA "went through this chart meticulously
to find out if there was value in those attributes above and beyond what's
listed on the chart." Tr. at 119; see Tr. at 29. Where the SSA had
questions about an aircraft's capabilities or the value of the attributes
in terms of the mission, he consulted the experts--that is, the "users,"
factor leads, SSEB, and SSAC.[11] Tr. at 18, 27, 181. The factor leads
also raised areas of concern with the SSA. Tr. at 244. At the conclusion
of the briefing, the SSA felt that he had a sufficient understanding of
the offerors' proposals in terms of the LUH mission profile, and that he
possessed adequate information to make an informed best-value decision.
Tr. at 37-38.
C. Source Selection Decision
Based on the information provided to him and relying on the expertise of
the factor leads, SSEB, SSAC, and aircraft "users," the SSA selected EADS
for award.
With regard to MDHI's proposal, the SSA concurred that the proposed
aircraft deserved only a marginal rating under the technical factor
because it exceeded only two of the five required elements, exceeded
threshold requirements for only four tradable elements, and did not meet
threshold requirements for eight other tradable elements. The SSA also
concurred that MDHI's proposal presented high risk under this factor
because of "five incomplete FAA certifications and inadequate information
to support proposed certification by first delivery," and because the
proposal lacked information regarding radio certification. In addition,
the SSA noted technical risk in MDHI's small cabin size, since it appeared
that medical equipment stowage could interfere with litter loading. AR,
DVD Tab 8, Source Selection Decision Document (SSDD), para. 10.
The SSA concurred with the marginal and high risk rating assessed to
MDHI's proposal under the P/M factor, in part, because MDHI had not
produced significant quantities of its aircraft since 2001, and because
its proposed manufacturing plan and integrated master schedule were
inconsistent and did not support the proposed production schedule. MDHI,
like all the offerors, received a satisfactory and low risk rating under
the logistics factor. Id.
The SSA also concurred with the moderate risk rating assessed to MDHI's
proposal under the past performance factor. In the SSDD, the SSA discussed
MDHI's past problems with financial and cost management that led to
difficulties in meeting delivery schedules and problems with vendors, but
also recognized that Patriarch Partners, LLC had acquired a controlling
interest in MDHI in July 2005, and that this led to financial and
management improvements. [12] The SSA specifically noted recent
improvements with vendor relationships and customer service, but found
that the lack of a strong vendor base provided moderate risk to successful
completion of the LUH requirements. Id.
In sum, the SSA found MDHI's proposal did not present the "best value" to
the government. Id.
With regard to EADS's and AWI's proposals, the SSA noted that both were
"mature, proven manufacturers, offering aircraft currently in production
and providing convincing production planning information supporting their
ability to produce aircraft at the rates desired by the Government." Id.
para. 12. The SSA found little distinction between the proposals under the
P/M factor; both received good ratings.[13] As he noted, both offerors
proposed to transfer production from Europe to the United States and
presented "viable plans for these transfers and evidence of comparable
experience in establishing new production lines" and, thus, both proposals
were rated low risk under the P/M factor. Id.
The SSA found that the primary areas of distinction between AWI's and
EADS's proposals were under the technical factor. Id. para. 15. Under this
factor, the SSA recognized that AWI's proposal was superior to
EADS's--EADS's proposal received a satisfactory rating whereas AWI's
proposal received a good rating; both received a rating of low risk. The
technical superiority of AWI's proposal was primarily due to the fact that
the firm "is offering a larger aircraft that meets or exceeds more of the
attribute thresholds than the aircraft offered by EADS." Id. para. 12. The
SSA noted that both offers exceeded four of the five required elements,
identified the elements in which AWI's proposal was rated superior to
EADS's, and discussed the elements in which EADS's proposal did not meet
the threshold requirements. The SSDD reflected that the SSA "considered
the relative importance of these elements and whether or not the
additional capability that [AWI's] aircraft would provide to the Army and
the Army National Guard (ARNG) [was] worth the additional cost of this
aircraft," and that he determined that "the additional capability of
[AWI's] aircraft was not worth the additional approximately $800 million
in price.[14] Id. para. 13.
In discussing some of the technical elements in the SSDD, specifically the
elements where AWI's proposal was rated superior to EADS's,[15] the SSA
stated that he did "not see [a] significant benefit to the Government in
paying a significantly higher price for an aircraft that exceeds these
attributes over an aircraft that meets them." Id. para. 14. The SSA also
considered the mission impact of three tradable elements where EADS failed
to meet the requirements--CVR/FDR, internal/external load, and open port
and pressure refueling. The SSA noted that the mission impact for failing
to meet the CVR/FDR requirement was low because this was a future
requirement and a "safety investigation issue (post accident)," not a
"mission impact issue." Id. The SSA also found that EADS's failure to meet
the internal/external load and open port and pressure refueling elements
"would not hinder the ability of the EADS aircraft to perform the LUH
mission." Id.
The SSA concluded:
The technical differences between the [AWI and EADS] aircraft provide no
convincing argument that purchasing the [AWI] aircraft at the
significantly higher price would offer significantly greater benefit to
the Army for the intended light utility mission than the lower priced,
but technically satisfactory, aircraft offered by EADS.
Id. para. 15. The SSA selected EADS for award of the contract and these
protests followed.
II. ANALYSIS
Both AWI and MDHI raise numerous challenges to the evaluation conducted
under each of the evaluation factors and to the source selection decision.
MDHI asserts that its proposal was rated too low under each of the
factors, and AWI asserts that EADS's proposal was rated too high or that
AWI's proposal was not rated high enough in comparison to EADS's. AWI
asserts that its and EADS's proposals were rated unequally under the
technical and P/M factors, specifically complaining about the evaluation
of many of the technical factor elements. Both offerors challenge the
agency's assessment of EADS's price. The protesters generally complain
that the agency failed to follow the evaluation criteria, or misevaluated
proposals against those criteria, and that the SSA's source selection
decision was flawed.
In reviewing protests against allegedly improper evaluations and source
selection decisions, 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. Abt Assocs., Inc.,
B-237060.2, Feb. 26, 1990, 90-1 CPD para. 223 at 4. A protester's mere
disagreement with the agency's judgment does not establish that an
evaluation was unreasonable. UNICCO Gov't Servs., Inc., B-277658, Nov. 7,
1997, 97-2 CPD para. 134 at 7.
Based on our review of the extensive record provided in this case,[16] we
find that the agency's evaluation and source selection decision were
reasonable. Although we have considered all of the protesters' numerous
arguments, we discuss only some significant or representative examples
below.
A. Technical Factor
1. AWI's Protest Grounds
AWI asserts that the agency overrated EADS's proposal under eight
technical elements (performance, endurance, operational range, cruise
airspeed, cabin size, systems growth potential, force protection, and
human factor engineering),[17] and treated AWI's and EADS's proposals
unequally under four elements (performance, operational range, cabin size,
and system growth potential) where the proposals both received excellent
ratings, even though AWI assertedly offered superior capability.[18] AWI's
Comments (Sept. 6, 2006) at 48-65; AWI's Post-Hearing Comments at 38-46.
AWI complains that the ratings assessed do not give proper "credit" to its
"vastly superior technical solution."[19] AWI's Comments (Aug. 31, 2006)
at 24.
With regard to the protester's challenges to the evaluation ratings in
general, it is well established that ratings, be they numerical,
adjectival or color, are merely guides for intelligent decision-making in
the procurement process. Where the evaluation and source selection
decision reasonably address the underlying bases for the ratings,
including advantages and disadvantages associated with the specific
content of competing proposals, in a manner that is fair and equitable and
consistent with the terms of the solicitation, the protester's
disagreement over the actual adjectival or color ratings is essentially
inconsequential, in that it does not affect the reasonableness of the
judgments made in the source selection decision. Cherry Road Techs.;
Electronic Data Sys. Corp., B-296915 et al., Oct. 24, 2005, 2005 CPD
para. 197 at 12-13.
As indicated above, the Army provided a voluminous and detailed record of
its evaluation and source selection decision. As illustrated through the
examples discussed below, this extensive analysis shows that the agency
evaluated the relative merits of each aspect of the proposals, including
essentially all of the examples cited by AWI, and assessed ratings in a
fair and equitable manner, consistent with both the RFP and the rating
definitions set forth in the SSP.[20] That is, consistent with section
M-6, para. 2.3, the record confirms that the agency evaluated the
technical attributes and capabilities of each offeror's aircraft in terms
of whether the aircraft was "suitable for the LUH[']s intended mission
roles." In applying the adjectival rating definitions, the agency
similarly considered not only whether threshold requirements were met, but
also the extent to which capability above the SOW's stated threshold
requirements would provide value to the LUH mission. The record shows that
when an offeror's proposal reached the objective, or "stretch goal," the
agency gave the proposal the highest possible rating.
The RFP did not require that proposals be given favorable consideration
for each and every element exceeded, or suggest that the value to the
agency of exceeding a requirement was limitless. In fact, the RFP
identified five elements where proposals would not be given any favorable
credit for exceeding the requirement and, as to the other elements, the
RFP stated only that the agency "may" (not shall) more favorably consider
proposed solutions that exceed the SOW. RFP sect. M-6, para. 2.3. This
permissive language recognizes that each element was to be considered in
terms of its suitability for the LUH mission. Id.
AWI's arguments essentially are that its aircraft can fly farther, faster,
and can carry more people and more weight than EADS's aircraft; that this
extra capability is "essential to mission success"; and that its proposal
should have been recognized more favorably as a result. See, e.g., AWI's
Comments (Sept. 6, 2006) at 65. During the hearing, as each of the
elements was discussed, the witnesses repeatedly explained that the agency
gave AWI's proposal "credit" for its superior capability, but found that
this capability (which the agency acknowledged exceeded the "stretch
goals" for several technical elements and was superior to the capability
offered by EADS for several elements) did not justify paying an additional
$800 million because it did not provide significant additional value to
the mission. As the agency witnesses explained in detail, larger
efforts--such as the Hurricane Katrina response--would be accomplished by
larger, heavier, faster aircraft such as the Blackhawk or Chinook. While
the LUH could play a role in Katrina-type responses by providing a
smaller, cheaper aircraft to provide "light general support" to near-range
areas during disaster recovery missions (see SOW para. 1.2.), the agency
did not intend that longer or larger rescue missions be performed by the
LUH; rather, these longer, larger missions would continue to be performed
by larger, more expensive aircraft with the suitable capabilities. Tr. at
31-32, 44-48, 201-03, 208, 246; Contracting Officer's Statement in
Response to AWI Protest (Sept. 6, 2006) at 13. The intended goal of the
RFP was to replace only the larger aircraft that are currently performing
smaller missions because these larger aircraft have too much capability
for the smaller missions and are thus more expensive to operate. SOW para.
1.2; Tr. at 114.
In sum, although AWI complains that it was not given "enough" credit for
its superior capability, we find that the agency appropriately recognized
and gave "credit" to the proposal in accordance with the RFP, and that
these capabilities were appropriately taken into consideration in the
best-value analysis. Based on the agency's reasonable discussion and
assessment of relative advantages and disadvantages associated with the
specific content of proposals, we find that AWI's disagreements with the
actual ratings to be inconsequential, given that they do not affect the
reasonableness of the judgments made in the source selection decision. See
Cherry Road Techs.; Electronic Data Sys. Corp., supra, at 12. We discuss
several examples below.
a. Performance
With regard to the evaluation of the performance element, under which both
AWI's and EADS's proposals were rated excellent, AWI asserts that
proposals were rated unfairly and unequally and that EADS's proposal was
overrated. The SOW threshold requirement for performance provided that
The LUH shall be able to hover out of ground effect (HOGE) under sea
level standard day conditions (0' PA, 59DEGF) environment while in the
MEDEVAC mission configuration with an internal mission load [of 1,304
pounds] . . .
SOW, annex A, para. A.2.2.1. The rating definitions for this element, as
set forth in the SSP, provided that a proposal would receive a
"satisfactory" rating for meeting this requirement, a "good" rating if the
aircraft could HOGE with a load of greater than 1,484 pounds at the stated
conditions, and an "excellent" rating if the aircraft could HOGE with a
load of greater than 1,664 pounds at the stated conditions.[21] Agency
Hearing Book, exh. W, SSP, at 44. EADS exceeded the threshold by 477
pounds (the aircraft could load 1,781 pounds) and AWI exceeded the
threshold by 1,511 pounds (the aircraft could load 2,815 pounds). Agency
Hearing Book, exh. D, Aircraft Characteristics. Both proposals received
excellent ratings for exceeding the objective.
In considering the value of AWI's superior proposal, the SSAC
representative explained that capability above the "stretch goal" here
"was not that important . . . [i]n terms of the LUH mission" because
heavier load missions were not within the typical LUH mission profile and
would be handled by other aircraft available to the Army. Tr. at 200-01.
Thus, he concluded that the additional load that AWI's aircraft could
carry was not worth the significantly higher price. Tr. at 113-16, 200,
234-35. The SSA was made aware of this difference in aircraft
characteristics and concurred with the assessment of value. Agency Hearing
Book, exh. D, Aircraft Characteristics; Tr. at 111-16. Based on our
review, we find these conclusions to be fair and reasonable.
b. Operational Range
AWI also asserts that proposals were rated unfairly and unequally and that
EADS's proposal was overrated under the operational range element, under
which both proposals received excellent ratings. The SOW threshold for
this element provided that the "LUH should have an operational range of a
minimum of 217 Nautical Miles." SOW, annex A, para. A.2.2.5. The rating
definitions provided that a proposal would receive a "satisfactory" rating
if the aircraft's range capability was "217 through [less than] 239
nautical miles," a "good" rating if the range capability was "239 through
[less than] 261 nautical miles," and an "excellent" rating if the range
capability was "more than 261 nautical miles." Agency Hearing Book, exh.
W, SSP, at 46. EADS's aircraft was evaluated as achieving a range of 303
nautical miles whereas AWI's aircraft was evaluated as achieving a range
of 460 nautical miles. Agency Hearing Book, exh. D, Aircraft
Characteristics. Since both proposals exceeded the threshold by the
"objective" or "stretch goal" amounts, both reasonably received an
excellent rating.
In considering the value of AWI's superior proposal, the SSAC
representative explained that LUH missions are typically point-to-point
missions that occur at close range, and that the LUH would not be expected
to fly at long ranges. Since distances above the 261 nautical mile
objective were not likely to be traveled in LUH missions, the additional
distance that the AWI helicopter could travel (199 additional nautical
miles) was not seen as having significant value to the agency. Tr. at
202-03, 263-65. Here too, the SSA was aware of the differences between the
aircraft and concurred with the evaluators' assessment of the value of
AWI's superiority under this element. Agency Hearing Book, exh. D,
Aircraft Characteristics; Tr. at 117, 123. Based on our review, we find
the agency's conclusions reasonable and fair.
c. Cabin Size
AWI also asserts that the proposals were rated unfairly and unequally and
that EADS's proposal was overrated under the cabin size element, under
which both proposals were rated excellent. The cabin size requirement is
defined in two operational scenarios: standard mission configuration and
MEDEVAC. Under the standard mission configuration, the threshold
requirement was for the aircraft to hold six passenger seats and restraint
systems. SOW, annex. A, paras. A.1.1, A.2.3.1.2. The threshold requirement
for the MEDEVAC requirement was for the aircraft to have sufficient space
to accommodate two NATO standard litters. Id. para. A.2.3.1.1. The rating
definitions provided that a proposal would receive a "satisfactory" rating
if it met the threshold requirements, and a "good" rating if it met the
requirements and "either accommodates an additional NATO standard litter
(total of three) or seats seven when not in the MEDEVAC configuration." A
proposal would receive a rating of "excellent," if it met the requirements
and "either accommodates two or more additional NATO standard litters
(total of four or more) or seats eight or more when not in the MEDEVAC
configuration." Agency Hearing Book, exh. W, SSP, at 49.
EADS's cabin could accommodate 9 seats or two litters; AWI's cabin could
accommodate 12 seats or two litters. Agency Hearing Book, exh. D, Aircraft
Characteristics. Both EADS's and AWI's proposals were reasonably given an
excellent rating for exceeding the objective.
Here, again, the agency recognized the differences in cabin size, but
determined that the extra size available in AWI's aircraft did not provide
a significant value to the agency to justify award at the higher price. As
the SSAC representative explained, the LUH mission requirements were to
carry two MEDEVAC patients, a medical attendant, and the aircraft
crew--this would be four to six persons. Offering 9 seats (like EADS) or
12 seats (like AWI) was still far in excess of what the Army expected
would be necessary to perform LUH missions. Tr. at 214-15. The LUH mission
was not to perform large scale rescue operations, where a larger cabin
size might be important. Tr. at 215. Considering the LUH mission, the
evaluators determined that the extra capacity offered by the AWI aircraft
provided little value to the agency. Tr. at 214-15; Contracting Officer's
Statement in Response to AWI Protest (Sept. 6, 2006) at 6-7. We find this
conclusion, and the ratings assigned, to be fair and reasonable.
d. Endurance
AWI asserts that EADS's proposal, which was rated satisfactory, was
overrated under the endurance element. The SOW provided that
The LUH should have an endurance capability of at least 2.8 hours of
operation (plus 30-minutes of fuel reserve) without refueling or the use
of auxiliary fuel. This attribute must be attainable in the standard
mission configuration . . . The endurance scenario is described as: (a)
Two minutes of engine warm-up at Maximum Continuous Power (MCP); (b)
Flight of 2.8 hours consisting of (i) a takeoff at sea level and climb
to 4,000 feet, (ii) cruise for best endurance power setting/speed, and
(iii) a descent to landing.
SOW, annex. A, para. A.2.2.2. The rating definitions for endurance
provided that a proposal would receive a "satisfactory" rating for meeting
this requirement, a "good" rating for having an endurance capability of
"more than 3.5 [hours] through [less than] 3.8 hours" in the stated
operational conditions, and an "excellent" rating for having an endurance
capability of "[greater than or equal to] 3.8 hours." Agency Hearing Book,
exh. W, SSP, at 44-45. EADS's aircraft was found to have "2.8 [hours] +
30 [minutes]" of endurance capability and was rated satisfactory, while
AWI's aircraft was found to have "3.64 [hours] + 30 [minutes]" of
endurance capability and was rated excellent.[22] Agency Hearing Book,
exh. D, Aircraft Characteristics.
As the record shows, AWI's proposal received a higher rating than did
EADS's under this element in recognition of the superior capability of
AWI's aircraft. In terms of value to the agency, the SSA noted that
from a mission standpoint and talking to some pilots, nobody barely uses
the 2.8 [hours] . . . So 2.8 [hours] is really overkill when it comes to
actually conducting the mission. So 3.6 [hours] would be something that
we would probably never get to or never have to use or take advantage
of.
Tr. at 69; see Tr. at 217-19. Given the RFP's description of the LUH
mission to provide "light general support" and other services (SOW para.
1.2) that, according to the agency, will not likely require a flight time
of longer than 2.8 hours, we find no error in the agency's determination
that the additional value offered by AWI's aircraft was not significant.
AWI asserts, however, that EADS's aircraft does not meet the tradable
endurance threshold requirement and should not have been rated
satisfactory. In the initial evaluation, the SSEB gave EADS's proposal a
"marginal" rating under this element because EADS's aircraft was found to
be 7.5 minutes short of meeting the endurance requirement. In this regard,
the SSEB noted that when sufficient fuel was loaded into the aircraft for
EADS to both perform the pre-flight warm-up and to fly 2.8 hours (plus 30
minutes of fuel reserve), the total weight of EADS aircraft exceeded its
"maximum takeoff weight" (MTOW).[23] Because an aircraft is not permitted
to fly when its weight exceeds its MTOW, the SSEB concluded that EADS
would have to reduce its fuel weight, meaning that with less fuel the
aircraft could not fly as long. AWI Hearing Book, exh. 11, SSEB Initial
Report, EADS's Endurance Element Rollup, at 17.
This issue was raised with EADS during discussions. AR, DVD Tab 29.1,
EADS's EOC No. 38. In response, EADS made a few small equipment changes to
its aircraft that slightly reduced its MTOW, and quoted in its FPR a
statement from the FAA that
Under the conditions you describe (aircraft will not be lift-off until
the total mass is equal to/less than the certified maximum take-off
mass), it would be permissible to perform engine start-up and
system/preflight checks at a higher mass. I concur with your assessment
of the [Federal Aviation Regulation Part] 29 requirements for maximum
weight, as it applies to [EADS's proposed aircraft].
EADS's Comments in Response to AWI Protest (Aug. 31, 2006), exh. 4, EADS
FPR, Technical Volume, at III-50. Based in part on this FAA statement, the
agency agreed that EADS could load its aircraft with fuel in excess of its
MTOW to perform its on-the-ground warm-up, so long as this excess fuel was
burned off before takeoff.[24] When considered in this manner, the fuel
available at takeoff was sufficient to meet the endurance requirement and
EADS's proposal rating was changed to satisfactory. Id., exh. 6, SSEB
Final Report, EADS Technical Evaluator Comments, at 12; AWI Hearing Book,
exh. 15, SSEB Final Report, EADS Endurance Element Rollup, at 17.
AWI complains that the agency "waived" a requirement of the solicitation
by allowing EADS to burn off warm-up fuel on the ground prior to take off
in order to satisfy the endurance element. It argues that the plain
meaning of the "endurance scenario" in the SOW is that the MTOW must be
calculated to include both the 2.8 flight hours (plus 30 minutes of fuel
reserve) and 2 minutes of engine warm-up at MCP. (MCP is the maximum power
an aircraft can achieve.) According to AWI, if warm-up is performed at
MCP, the aircraft will necessarily become airborne, so the weight of the
warm-up fuel must be included in computing the MTOW that will be used in
determining whether the aircraft meets the endurance requirement.
Declaration of AWI's Expert (Aug. 31, 2006) paras. 9-10.
The agency explains that warm-up is never conducted at MCP; to do so may
result in an aircraft becoming airborne before the aviator could conduct
the necessary on-the-ground pre-flight checks, which would be unsafe.
Declaration of Performance Subfactor Lead (Sept. 15, 2006) para. 3.
According to the performance subfactor lead, the warm-up scenario,
specifically the reference to 2 minutes at MCP, is merely an "analytical
tool" that provides a "standardized method for analysis/planning purposes
to estimate how much fuel would be burned during the normal time that the
aircraft spends on the ground, prior to takeoff, while the pilots execute
all of the preflight checks." Id. The subfactor lead notes that nothing in
the RFP even speaks to, much less prohibits, warm-up fuel being burned off
before takeoff. Id. para. 5.
We agree with the agency's interpretation of the solicitation and the
application of warm-up fuel to the evaluation of EADS's endurance
capability. The plain language of the SOW, in our view, is only that the
offeror's LUH must have an "endurance capability of at least 2.8 hours
(plus 30-minutes of fuel reserve)." This capability requirement does not
prohibit warm-up fuel, as mentioned in the endurance scenario, from being
burned off on the ground prior to takeoff. To conclude otherwise would be
to require an aircraft to perform its warm-up while in the air, which
would be at odds with the normal practice of pilots performing pre-flight
checks on the ground before liftoff. The more reasonable interpretation of
the SOW, in our view, is that the endurance scenario is a guide for
estimating how much fuel will be burned off during warm-up and, while the
aircraft must have the capacity to hold this extra fuel, it may be burned
off prior to takeoff in order to not exceed the MTOW at lift-off.
The agency witnesses and an aviation expert have explained that it is
common practice to use a "standard metric" to estimate warm-up fuel, and
that most aircraft load extra fuel into their aircraft to burn off during
warm-up. Tr. at 225, 300; Declaration of Performance Subfactor Lead (Sept.
15, 2006), paras. 3, 5. Indeed, as noted by EADS, AWI's flight manual
recognizes the propriety of filling the fuel tank beyond the MTOW in
recognition that the excess fuel will be burned prior to takeoff. See
EADS's Comments in Response to AWI Protest (Aug. 31, 2006) at 21; exh. 16,
AWI Rotorcraft Flight Manual, at 1-2. Furthermore, the FAA statement to
EADS appears to concur that this is an acceptable practice. Based on this
record, we find that the agency reasonably concluded that EADS's aircraft
met the endurance requirement.[25]
e. Performance Specification
AWI (and MDHI) complain that EADS's proposal was rated too high under the
performance, operational range, cruise airspeed, force protection, and
system growth potential elements. Under these elements, EADS's technical
proposal described capabilities that exceeded the SOW requirements,
although the proposal's performance specification only represented that
EADS's aircraft would meet the SOW requirements for these elements. The
agency evaluated the proposal using the higher capabilities offered in the
technical volume, rather than the lower capabilities offered in the
performance specification. The protesters contend that EADS's proposal
should have been given the lower ratings associated with the performance
specification.
The RFP required, among other things, that offerors include in their
proposals a "performance specification" and a "configuration list," which
together were to be evaluated as an element under the management subfactor
of the P/M factor. Section L of the solicitation provided that the
performance specification "shall be based on the attributes delineated in
Annex A [of the SOW] and shall replace Annex A upon contract award." RFP
sect. L-23, para. 2.5.2.5; see id. sect. C-1 (performance specification
and configuration list "will be incorporated into the contract as one of
the pertinent attachments"). Although EADS's performance specification
recited the Annex A requirements for the elements in question, the firm's
technical volume, configuration list, and the performance of its aircraft
during the SSPD all demonstrated to the agency that the offered aircraft
exceeded these attributes. Contracting Officer's Statement in Response to
AWI Protest (Aug. 31, 2006) at 3-4, 6. Since the entirety of the proposal
was incorporated into the contract (not just the performance
specification),[26] the agency concluded that EADS would be bound to the
higher performance offered in its proposal and therefore evaluated the
proposal using the higher attributes. Tr. at 147-48.
The crux of AWI's argument is that because the performance specification
takes precedence over the other areas of the proposal, it therefore should
have been controlling in the evaluation. We disagree. The order of
precedence clause included in the RFP provided that
In the event of a conflict between the Statement of Work (SOW) and the
contractor[']s proposed approach (having been incorporated as a part of
the contract), performance of the requirement(s) in the SOW shall have
ultimate priority. However, the contractor is not relieved of fulfilling
its obligation and adhering to the incorporated approach unless such
adherence would result in the failure to accomplish a requirement of the
SOW. . .
RFP sect. H-4 (emphasis added). Thus, since the contract incorporates
EADS's proposal, we think that EADS has agreed to be bound to perform at
the higher levels promised in the proposal, even though its performance
specification recited the lower levels stated in the SOW.
AWI also argues that the disparity between the performance specification
and technical proposal poses performance risk. In this regard, the agency
recognized that there could be some contract risk if EADS were to assert
that it was only bound by the performance specification, but found this
risk to be low. Since the technical proposal had been incorporated into
the contract, and since EADS's FAA certification was based on the higher
capabilities described in the proposal and not the lower performing
capabilities outlined in the performance specification, the agency
believed that the risk of EADS providing a lower performing aircraft was
low. Contracting Officer's Statement in Response to AWI Protest (Aug. 31,
2006) at 6-8. The SSA was briefed on the disparities between the proposal
and performance specification, as well as the accompanying proposal risk,
and concurred with the evaluators' conclusions. Agency Hearing Book, exh.
C, SSA Final Briefing Slides 54, 55; exh. D, Aircraft Characteristics
Chart; Tr. at 165-67, 286-87. Based on our review, we find no error in the
agency's evaluation.
f. Technical Risk
AWI also asserts that EADS's aircraft poses technical risk that was not
reflected in the agency's low risk rating. It asserts that EADS's aircraft
failed to meet the internal/external load requirement and other "important
attributes" (discussed below) that will cause "degraded performance," that
the EADS's aircraft is "old" and is based on 35-year old legacy
technology, and that the aircraft has recently crashed twice. AWI Protest
(July 24, 2006) at 69-70.
As noted by AWI, EADS failed to meet the threshold requirements for
internal/external load, CVR/FDR, operational environment, and startup
timeline.[27] All four of these elements were "tradable" elements, meaning
that a proposal could still be considered for award if rated
unsatisfactory under the elements. We note that CVR/FDR, operational
environment, and startup timeline were the least important elements under
two of the technical subfactors, which was consistent with the agency's
view of the relative lack of importance of these elements in terms of the
mission. For example, the SSA viewed CVR/FDR (which is what laymen refer
to as the "black box" or recorder) as a "future requirement" with no
mission impact; its purpose is only to record data for post-accident
investigations. Tr. at 78; AR, DVD Tab 8, SSDD, para. 14.
With regard to the internal/external load element, where AWI received a
good rating in contrast to EADS's unacceptable rating, the SOW required
that the proposed aircraft have the capability to HOGE "in a high/hot
(4,000' pressure altitude/95DEG Fahrenheit) environment" with an internal
mission load of 1,250 pounds and an external mission load of 2,200 pounds.
SOW, annex. A, paras. A.2.2.3.1, A.2.2.3.2. The agency notes that all
offerors' aircraft, with the exception of AWI's significantly larger
aircraft, failed this attribute.[28] The SSA determined (after consulting
with the "users") that EADS's failure to meet the internal/external load
requirement had only a "low" mission impact on the agency. Tr. at 78-82,
177. As the SSA discussed in his SSDD:
Lesser or greater internal/external load capabilities have relatively
little impact on any of the[] core missions, e.g. either [AWI's or
EADS's] aircraft is fully capable of meeting MEDEVAC mission
requirements (2 litter patients and crew members), and lifting and
hoisting of injured/rescued personnel is well within the capability of
either aircraft. General support missions will make tradeoffs between
fuel and cargo, so the mission impact of not meeting the
internal/external load attribute is low.
AR, DVD Tab 8, SSDD, para. 14. While the additional capability of AWI's
aircraft under this element was recognized by the SSA as a "desirable
attribute," the SSA determined that the fact that EADS "does not meet
[this] tradable attribute[] would not hinder the ability of the EADS
aircraft to perform the LUH mission." Id. Moreover, it was found that the
extra weight and distance that AWI's aircraft could travel did not provide
significant value to the agency in terms of the mission intended for LUH
aircraft. Contracting Officer's Statement in Response to AWI Protest (Aug.
18, 2006) at 46-47; Tr. at 213-14.
In sum, we find no error in the agency's evaluation of technical risk
based on EADS's unsatisfactory ratings for these tradable elements, or in
the evaluation of AWI's superiority under these elements, given that the
impact to the mission was reasonably determined to be low.
We also find no merit to AWI's argument that the age of EADS's aircraft
poses increased risk to performance. As explained by the intervenor, the
aircraft offered by EADS (the EC/UH-145) is the marketing name for the BK
117 C2,
which is the latest in the line of the BK 117 aircraft. Although the
history of the BK 117 dates back 27 years, the aircraft has evolved and
modernized to meet current regulations and incorporate the latest
technologies. The UH-145 has been available in the US commercial market
for only 3 years. EADS delivered [the] first UH-145 in France in 2002.
While the UH-145 has its roots in the BK 117, its front end comprises
new avionics and composites, as well as new blades. . . [T]he UH-145 is
a modern aircraft, with a state-of-the-art hingeless main rotor system,
lightweight and crashworthy composite airframe, advanced avionics and a
low-workload integrated cockpit.
EADS's Comments in Response to AWI Protest (Aug. 31, 2006) at 26-27. AWI
has not provided any probative evidence showing that EADS's aircraft is
"old" or based on legacy technology that poses a risk to aircraft
performance as claimed.[29]
With regard to EADS's aircraft crash history, AWI cites to a media report
that the EADS helicopter crashed on two occasions in the Pyrenees in
France. This information did not come to the agency's attention until June
21, 2006, after receipt of FPRs. The government conducted an
investigation, and an internal review was performed by the LUH project
manager. Shortly after the article was published, an announcement was made
by French aviation officials withdrawing plans to impose restrictions,
because the crashes were found to have been caused by the "extreme
conditions involved in alpine search and rescue" and not due to problems
with the EADS aircraft. Declaration of LUH Project Manager (Aug. 18, 2006)
para. 2. As part of its investigation, the agency queried the FAA
regarding these incidents and found that the FAA was not aware of any
restrictions or limitations currently or previously placed on this
aircraft. Id.; Contracting Officer's Statement in Response to AWI Protest
(Aug. 18, 2006) at 54. In light of the agency's thorough investigation,
and the findings that the crashes were due to weather conditions and not
aircraft malfunction, we find no basis to challenge the agency's
conclusion that the EADS's aircraft presented low technical risk.
2. MDHI's Protest Grounds
MDHI primarily challenges the evaluation of its own proposal under the
technical factor, where MDHI received a marginal and high risk rating,
contending that the rating does not accurately reflect the merits of
MDHI's proposal. It asserts that the assessment of "deficiencies" under
tradable requirements deviates from the RFP evaluation scheme, because it
rendered MDHI's proposal ineligible for award and treated non-mandatory
elements as "mission essential mandatory requirements." MDHI's Comments
(Aug. 31, 2006) at 17-18. Seemingly inconsistent with that argument, MDHI
also contends that the rating assessments do not take into account
"mission criticality" of any of the failed attributes. MDHI's Comments
(Sept. 6, 2006) at 2. MDHI also complains that its proposal deficiencies
were considered more significant than the same deficiencies in EADS's
proposal, thus demonstrating unequal treatment.
With regard to MDHI's general complaint about the use of the term
"deficiency," the record shows that the agency explained to offerors how
proposals would be evaluated and how the agency would use the term
"deficiency" in the evaluation. As offerors were advised, deficiencies
would be assessed for failing to meet a requirement, but a deficiency
under a "mandatory" requirement would preclude award, whereas a deficiency
under a "tradable" requirement would not. AR (Aug. 20, 2006), exh. L, MDHI
Discussion Slides, at 9. As indicated above, under the tradable elements,
a deficiency, or "[f]ailure to meet a threshold requirement[,] . . . was
captured in the adjectival rating for that element, considered in the
subfactor rollup, and ultimately considered in the best value decision."
Contracting Officer's Statement in Response to MDHI Protest (Aug. 31,
2006) at 6. The use of the term "deficiency" was applied in the same
manner to all offeror's proposals, as were the rating definitions set
forth in the SSP.[30]
Consistent with these definitions, MDHI's technical proposal received a
satisfactory or better rating under each of the five mandatory
requirements; seven unsatisfactory ratings under the tradable technical
elements of CVR/FDR, endurance, internal/external load, cruise airspeed,
operational environment, startup timeline, and system growth potential;
and a marginal rating for the open port and pressure refueling tradable
element. In contrast, EADS's and AWI's proposals received fewer
unsatisfactory ratings, and higher ratings under many of the elements,
including a number of excellent ratings. Therefore, the overall technical
rating of MDHI's proposal was significantly inferior to the ratings of
both EADS's and AWI's proposals. The record shows that the SSA properly
took into account the significance of these ratings in terms of their
impact on the suitability of MDHI's aircraft for the LUH mission, and
reasonably considered this information in concluding that MDHI's
technically inferior proposal with a price that was $400 million higher
than EADS's price did not offer the best value to the government. AR, DVD
Tab 8, SSDD, para. 4.
Although MDHI challenges the assessment of specific deficiencies,
weaknesses, and ratings under several of the technical elements, we have
reviewed the record and find that the agency properly evaluated MDHI's
proposal in accordance with the RFP in a fair and reasonable manner.
Contrary to MDHI's complaints, the record is replete with evidence that
the agency took into account "mission criticality" or utility when
assessing evaluation ratings. We also find no merit to MDHI's contention
that the agency was too harsh in its criticisms of MDHI's proposal, or
that there was unequal treatment, in the evaluation of various elements of
the technical factor. We discuss a few representative examples of MDHI's
challenges to the evaluation below.
a. Internal/External Load
MDHI contends that its proposal was misevaluated under the
internal/external load element. As indicated above, the SOW required that
the proposed aircraft have the capability to HOGE with an internal mission
load of 1,250 pounds and an external mission load of 2,200 pounds. SOW,
annex. A, paras. A.2.2.3.1, A.2.2.3.2. MDHI's proposed aircraft had an
internal and external load of 942 pounds,[31] and EADS's aircraft had an
internal and external load of 1,107 pounds. Agency Hearing Book, exh. D,
Aircraft Characteristics Chart. Thus, both MDHI's and EADS's proposals
were rated unsatisfactory for the internal/external load element. However,
MDHI's proposal received a marginal rating for the performance subfactor
(under which internal/external load was evaluated), while EADS's proposal
received a satisfactory rating. Agency Hearing Book, exh. C, SSA Final
Briefing, Slides 34, 54.
MDHI complains that the agency gave too much weight to the
internal/external load failure in evaluating MDHI's proposal in contrast
to EADS's proposal, considering that the agency found the failure not to
be mission critical for EADS. However, as the record shows, MDHI's lower
performance subfactor rating (and overall technical factor rating) was not
due to a difference in treatment of the proposals under the
internal/external load element. Rather, MDHI's lower rating was due to the
fact that MDHI's proposal also received four additional unsatisfactory
ratings (two more than EADS), and was rated inferior to EADS's proposal
under four of the ten elements that were evaluated under this subfactor.
While it is true that mission suitability was expressly discussed in the
SSDD as to why EADS's unacceptable rating for this tradable element was
not critical, AR, DVD Tab 8, SSDD, para. 14, this discussion only
addressed EADS's proposal because EADS was in line for award and MDHI's
significantly inferior and higher-priced proposal was not.
b. Open Port and Pressure Refueling
MDHI complains that its proposal was unfairly evaluated under the open
port and pressure refueling element. The SOW required that "[t]he LUH
should be capable of being refueled using standard commercial pressure
systems" and that the "LUH should also be capable of being refueled using
open port refuel systems." SOW, annex. A, para. A.2.3.8. The SSP provided
that a proposal would receive a "marginal" rating if the aircraft could be
refueled by either commercial pressure systems or open port refuel
systems. Agency Hearing exh. W, SSP, at 52. Neither MDHI's nor EADS's
aircraft could be refueled using an open port system, so both proposals
were rated "marginal" for this element.
Again, MDHI asserts that the agency was willing to tradeoff this
requirement only for EADS and not MDHI, thus treating the requirement as
mission critical only for MDHI's aircraft. MDHI's Comments (Sept. 8, 2006)
at 7. However, the record does not support MDHI's contention. In fact,
both proposals received a "satisfactory" rating under the physical
characteristics subfactor (under which this element was evaluated) based
upon a reasonable roll-up of the ratings of all of the elements, and there
is no evidence that the agency considered the mission criticality of these
offerors' failures to meet this requirement differently. Although here,
too, mission criticality was discussed in the SSDD with regard to EADS's
unacceptable rating for this tradable element,[32] but was not discussed
with regard MDHI's unacceptable rating, AR, DVD Tab 8, SSDD, para. 14,
this discussion only addressed EADS's proposal because EADS was in line
for award and MDHI's significantly inferior and higher-priced proposal was
not.
c. CVR/FDR
MDHI contends that its proposal was misevaluated under the CVR/FDR
element. The SOW required that "[t]he LUH should have a digital [CVR] and
digital [FDR] that satisfies the requirement of Title 14 CFR Part 27 . . .
and/or Part 29 . . . ." SOW, annex A, para. A.2.1.6. Both MDHI's and
EADS's proposals were rated unsatisfactory under the CVR/FDR element
because neither offeror included with its aircraft a compliant CVR/FDR.
MDHI argues that its proposal was superior to EADS's proposal under this
element because MDHI's aircraft assertedly provided some limited data
recording capability and EADS's aircraft did not. However, the agency
advised MDHI during discussions that this approach did not meet the SOW
requirements and MDHI elected not to make any changes in its FPR. AR (Aug.
20, 2006), exh. N, MDHI Discussions Recap, at 6. In contrast, as MDHI
admits, EADS offered to provide a CVR/FDR that met the requirements of the
SOW as a separately priced option to the contract. MDHI's Comments (Aug.
31, 2006) at 18. Thus, while neither firm met the requirement of this
element as part of its base contract, EADS at least provided an option
that met the requirement. However, the agency reasonably rated both
proposals unsatisfactory for not meeting the requirement as part of the
base contract.
MDHI again complains that the agency found EADS's failure to provide a
CVR/FDR to have a low mission impact, but did not make a similar finding
with regard to MDHI. Contrary to MDHI's argument, the record does not show
that MDHI's failure under this element was a significant reason why it
received an overall marginal technical rating. Both MDHI's and EADS's
proposals received acceptable ratings under the avionics/electronics
subfactor despite the unacceptable rating under the CVR/FDR element, and
while the SSDD discussed mission criticality only in connection with
EADS's proposal for this element, AR, DVD Tab 6, SSDD, para. 14, this
discussion occurred because EADS, and not MDHI, was in line for award.
d. Technical Risk
MDHI challenges the agency's rating of MDHI's proposal as "high" risk
under the technical factor. It complains that the agency's risk assessment
is "based on wholly insubstantial or trivial grounds" and that the agency
failed to consider MDHI's risk mitigation strategies. MDHI Protest (July
14, 2006) at 15.
As the agency explains, MDHI's risk rating was due to a number of issues,
none of which singularly drove the high risk rating, but all of which,
when combined, posed a significant risk to performance. Contracting
Officer's Statement in Response to MDHI Protest (Aug. 18, 2006) at 29-32;
Contracting Officer's Statement in Response to MDHI Protest (Aug. 31,
2006) at 6. For example, the agency found, among other things, that MDHI's
aircraft lacked five FAA certifications,[33] its radios were not
certified, the antenna configuration was not specified, there existed
image intensification compatibility issues, and there were concerns
whether the aircraft cabin size was sufficient to stow both medical
equipment and the patient litter. Agency Hearing Book, exh. C, SSA Final
Briefing, Slide 36; Contracting Officer's Statement in Response to MDHI
Protest (Aug. 18, 2006) at 29-32. MDHI disagrees with the agency's
assessment that any or all of these issues posed technical risk. For
example, MDHI asserts that its proposal was unfairly "downgraded" for
lacking FAA certifications, while EADS's proposal was not similarly
criticized. However, the record shows meaningful differences between the
two proposals in this respect. Whereas MDHI lacked five FAA
certifications, EADS lacked only two, and EADS had provided the agency
with detailed plans and schedules for these certifications that
demonstrated to the agency that EADS would be able to obtain the
certifications by the first aircraft delivery date, as was required by the
RFP. See MDHI's Comments (Sept. 8, 2006), exh. 5, SSEB Final Report, EADS
Technical Factor Rollup, at 2. In contrast, the agency, in consultation
with the FAA advisor on the SSEB, concluded that the larger number of
certification issues pending for MDHI's aircraft posed a risk that MDHI
would be unable to obtain all of the certifications by first delivery.
Contracting Officer's Statement in Response to MDHI Protest (Aug. 18,
2006) at 30. Although MDHI now claims it is "on the verge of
certification" and that "all that was required was submittal to the FAA,"
MDHI Protest (July 14, 2006) at 16, the FAA certification issue was raised
with MDHI during discussions and MDHI did not respond in a way that
alleviated the agency's concern. See Contracting Officer's Statement in
Response to MDHI Protest (Aug. 18, 2006) at 30-31. Based on this record,
we find that the agency's concern of increased risk because of the lack of
five FAA certifications was reasonable and did not represent unfair or
unequal evaluation.
MDHI also challenges the agency's assessment of risk with regard to the
image intensification compatibility element, contending that it adequately
mitigated the risk in its FPR. The SOW for the image intensification
compatibility element required that "[t]he LUH aircraft, cabin, and
cockpit lighting and displays/consoles should be Class A compatible with
image intensification devices and systems (Night Vision Goggles)." SOW,
annex. A, para. A.2.1.3. During the SSPD, the agency identified several
issues of compatibility and raised these with MDHI during discussions.
Although the agency reports that MDHI responded in its FPR that it could
"apply fixes and deliver a [Night Vision Goggle] compatible aircraft for
production," the agency found that MDHI did not provide sufficient
information to demonstrate that the firm could achieve the required
compatibility by first production. AR (Aug. 31, 2006), exh. F, SSEB Final
Report, MDHI Avionics/Electronics Subfactor Rollup, at 2. Therefore, after
considering MDHI's FPR response, the agency determined that "it is likely
that some impact to program schedule will occur" to resolve the
compatibility issues.[34] Id.; exh. G, MDHI Image Intensification
Capability Element Rollup, at 1. Based on our review of the record, we
find the agency's judgment reasonable.
In sum, the record shows that the agency reasonably evaluated the myriad
of issues that collectively resulted in MDHI's "high" risk rating.
Although MDHI disagrees with this assessment, it has not shown it to be
unreasonable.
B. P/M Factor
Under the P/M factor, the agency rated AWI's and EADS's proposals as good
with low risk, and MDHI's proposal as marginal with high risk. The
protesters complain that their proposals were rated too low and that
EADS's proposal was rated too high.[35]
As noted above, the RFP provided that P/M would be evaluated under two
subfactors. The P/Mfg subfactor was to be evaluated for the "extent to
which the proposed approach demonstrates an adequate and reasonable
methodology for achieving the production rate capacity." RFP sect. M-6,
para. 2.4.1. Elements within the management subfactor were to be evaluated
on the basis of "thoroughness, completeness, and adequacy." RFP sect. M-6,
paras. 2.4.2.1-2.4.2.4.
Based on his review, the SSA found AWI's and EADS's proposals to be
"fairly comparable" under the P/M subfactor. Tr. at 130. Both proposals
offered a number of strengths that provided similar benefits to the
agency. For example, both were found to be "mature, proven
manufacturer(s)," to have had similar production rates, and to have
currently manufactured aircraft overseas. Both proposed to transfer
production to a United States facility--AWI to an established facility in
Texas and EADS to a facility in Mississippi. Agency Hearing Book, exh. C,
SSA Final Briefing, Slides 59, 77. The agency found that both transfers
provided some, albeit low, risk to the agency. Id., Slides 62, 80;
Contracting Officer's Statement (Aug. 18, 2006) at 20, 55. There were some
differences in noted strengths and risks, including slight differences in
the risk associated with transferring facilities. In total, however, the
SSA determined these differences to be "a wash." Tr. at 137-38; see Tr. at
282, 289.
With regard to MDHI's proposal, the agency was concerned that MDHI would
only be able to meet the government's minimum quantities, that its
production plan and integrated master schedule were inconsistent and did
not support the proposal's proposed schedule, and that its performance
specification and configuration list were incomplete. The agency noted
that MDHI had not had significant production flow since 2001 and that it
had only produced on average two aircraft per year from 2003 to 2005. The
agency also found risks and weaknesses associated with MDHI's vendor base,
manpower and assembly line issues, and incomplete and inconsistent
production plan. Agency Hearing Book, exh. C, SSA Final Briefing, Slides
39-40. The SSA recognized many of these risks and weaknesses in his source
selection decision. AR, DVD Tab 8, SSDD, para. 10.
Although the protesters complain that the evaluation was unreasonable,
based on our review of the record, we find that the agency performed a
thorough and fair evaluation of proposals under the P/M factor, and drew
reasonable conclusions about the offerors' approaches. We discuss a few of
the protesters' specific challenges below.
1. AWI's Protest Grounds
AWI asserts that its proposal was not given enough credit for numerous
asserted strengths under the P/Mfg and the manufacturing subfactors of the
P/M factor. AWI Protest (July 24, 2006) at 36-43. The record shows that
many of the strengths that AWI contends were ignored were in fact
expressly recognized in the evaluation. For example, the final briefing to
the SSA specifically notes as strengths AWI's established Texas facility,
its available manpower, and the firm's integrated master schedule
management approach, all of which AWI complains were ignored or not
sufficiently credited. Agency Hearing Book, exh. C, SSA Final Briefing,
Slides 76-77. With regard to other asserted strengths, the agency
responded with reasonable explanations as to why those features either
contributed to the proposal's low risk rating, or why the features did not
provide sufficient benefits to justify a higher adjectival rating. See,
e.g., Contracting Officer's Statement in Response to AWI Protest (Aug. 18,
2006) at 19-28.
For example, with regard to the configuration management approach element
of the management subfactor (for which AWI's proposal was rated
"satisfactory"), AWI asserts that its proposal deserved an "excellent"
rating because it included a [REDACTED] to review change requests. As the
agency points out, however, this was only one consideration within the
element. Other considerations included the evaluation of MEDEVAC kits,
hoist kits, painting and marking, and unique identification. Since AWI
only met the requirements for these and the other areas considered under
the element, and did not exceed them, we find reasonable the agency's view
that the proposal deserved a rating of satisfactory and not excellent. Id.
at 25-26.
AWI also complains that EADS's facility transfer is far more risky than
AWI's, and that EADS's proposal should have been penalized for weaknesses
and risk associated with its facilities, manpower, and vendor base. AWI
Protest (July 24, 2006) at 70-74. AWI contends that, unlike AWI, which has
an established facility and experienced personnel already located in
Texas, EADS must construct its facility in Mississippi, hire personnel,
and obtain United States vendors, so that the transfer of operations poses
greater risk.
However, as the agency explains, EADS proposed to accomplish the transfer
with a 3-phase plan that included establishing a "duplicate" production
line, so that if EADS ran into any problems with the transfer, it could
still continue with 100 percent of the production from its German
facilities. EADS also provided a detailed plan and schedule for
transferring the facility and increasing manpower. Contracting Officer's
Statement in Response to AWI Protest (Aug. 18, 2006) at 58-59. In
addition, EADS's proposal identified numerous successful production
transfers similar to the one proposed for the LUH, which the agency found
also helped to minimize the risk. AWI's Comments (Aug. 31, 2006), exh. 19,
SSEB Final Report, EADS P/M Factor Rollup, at 1. EADS also proposed to
establish United States vendors as "second sources . . . to augment
EADS'[s] current vendor base." Contracting Officer's Statement in Response
to AWI Protest (Aug. 18, 2006) at 56. Thus, while the agency recognized
EADS's facility transfer posed some risk under the P/M factor, it
reasonably concluded the risk to be low.
In comparison, AWI also proposed to transfer facilities. Although its
Texas facility was already established (and was credited as a strength),
the proposal presented similar risks to EADS's in the transfer of the
production line to the facility. In this regard, the agency noted that AWI
still had to increase manpower, add new United States vendors, and
construct a new storage and flyaway hangar for the aircraft. Id. at 22. It
also had to duplicate the "tooling and processes" of its Italian facility
at the Texas facility. AR, DVD Tab 25.4, SSEB Final Report, AWI P/M Factor
Rollup, at 1. Like EADS, the agency noted that AWI had facilities that
could remain as back-up sources for the LUH aircraft. Id. The agency found
that both firms relied on overseas vendors, but unlike EADS, AWI did not
offer to include qualifying United States vendors as second sources;
without backup sources, AWI's proposal could, in the long term,
potentially cause greater risk than EADS's in this regard. Contracting
Officer's Statement in Response to AWI Protest (Sept. 6, 2006) at 8;
EADS's Comments in Response to AWI Protest (Aug. 31, 2006) at 31-32. All
issues considered, however, the agency reasonably determined that the risk
associated with facility transfer was not a significant discriminator
between these two proposals. Tr. at 137-39, 282.
AWI complains that several other strengths associated with its proposal,
or risks and weaknesses associated with EADS's proposal, were ignored by
the agency in the evaluation of the P/M factor, which led to an unequal
evaluation of EADS's and AWI's proposals. These asserted discriminators
include parts obsolescence, "Class I" changes, changes in vendors
resulting from facility transfers, conflicts between EADS's performance
specification and its technical proposal, and AWI's asserted strengths for
purchase orders and a "unique modular design." AWI's Comments (Sept. 6,
2006) at 66-68. AWI asserts that the evaluation was flawed because these
issues were not brought to the SSA's attention. While it is true that each
and every proposal feature (or asserted strength) was not discussed with
the SSA, the record shows that the agency highlighted the most significant
proposal features and discriminators to enable the SSA to make a reasoned,
informed decision. As illustrated by the following examples, we find the
evaluation of these issues to be reasonable.
As discussed above, the evaluation of the offerors' facility transfers,
vendor changes, and EADS's performance specification were conducted
reasonably and fairly, and the results were accurately reported to the
SSA. See Agency Hearing Book, exh. C, SSA Final Briefing, Slides 59, 77;
exh. D, Aircraft Characteristics. The fact that AWI stated in its proposal
that it had already issued purchase orders to buy components for 120
aircraft was reasonably characterized by the SSA as a "so-what?" (meaning
that this was not a significant discriminator to the agency). Tr. at 140.
In this regard, the agency found that AWI's proposal did not indicate what
parts were purchased, Contracting Officer's Statement in Response to AWI's
Protest (Aug. 18, 2006) at 21, and AWI has not shown that this resulted in
a significant benefit to the agency. AWI's modular design was considered
and balanced against other weaknesses and risks in AWI's proposal. See
Contracting Officer's Statement in Response to AWI Protest (Sept. 6, 2006)
at 13-14.
With regard to parts obsolescence and "Class 1" changes, AWI's complaint
is that EADS's proposal reflects "vagueness" in who will be responsible
for the costs of training and costs associated with certain types of
changes, and that EADS proposes to resolve these issues through equitable
adjustments during the performance of the contract. AWI's Comments (Aug.
31, 2006) at 36. In its evaluation of EADS's proposal, the agency
identified this as a risk to performance, but determined that the risk was
low. Id., exh. 11, SSEB Final Report, EADS P/M Factor Rollup, at 1. AWI
complains that its proposal should have been rated superior to EADS's
proposal because it did not contain similar risks. The record does not
support AWI's arguments. EADS's equitable adjustment clause states:
If a design change, supplier change, or an alternative change in
technology [occurs], the US Army and EADS-NA Defense may jointly
evaluate opportunities for equitably sharing cost and schedule impact.
EADS's Comments in Response to AWI Protest (Sept. 9, 2006), exh. 5, EADS
FPR, P/M Approach, at IV-118d. Whether an equitable adjustment is
permitted is left to the discretion of the contracting officer. Id.; Tr.
at 278. Under EADS's approach, equitable adjustments may occur with "Class
I" changes, but "Class II changes not directed by the Government will not
be considered as basis of equitable adjustment." AR, DVD Tab 33.4, EADS
FPR, P/M Approach, at IV-113. Given the contracting officer's discretion
whether to agree to an equitable adjustment, we have no basis to question
the agency's evaluation of EADS's approach as low risk. Moreover, AWI
similarly proposed that it would propose an "Engineering Change Proposal"
to equitably share the costs with the government if there were any changes
to the initial hardware configuration over the aircraft's life cycle.
Second Declaration of EADS's Cost Expert, exh. 21, AWI FPR, P/M Approach,
at 5. Our review of the record shows little difference between the two
proposal approaches in this regard.
In sum, AWI has not shown that its and EADS's proposals were unreasonably
evaluated under the P/M factor.
2. MDHI's Protest Grounds
MDHI challenges the numerous weaknesses identified in the evaluation
relating to both its adjectival and risk rating under the P/M factor. It
asserts that some are addressed in its proposal or were mitigated by the
infusion of capital and takeover by Patriarch; that others were only a
"mere formality" or "de minimus"; and that the P/M factor evaluation
record is inaccurate, inconsistent, and incomplete.[36] MDHI's Comments
(Aug. 31, 2006) at 21-22; MDHI's Comments (Sept. 6, 2006) at 5-7.
The agency has responded to each of the challenged areas, reasonably
explaining why MDHI's proposal was assessed weaknesses or posed risks to
performance under the P/M factor. Many of these explanations were not
rebutted by the protester, and we find the unrebutted record sufficient to
demonstrate the reasonableness of the agency's conclusions. MDHI's
arguments with regard to the remaining issues reflect only its
disagreement with the agency, and, based on our review, we find the
agency's evaluation of this factor unobjectionable.
For example, our review of the record shows that the agency reasonably
found weaknesses and risk associated with MDHI's production rate capacity,
which caused the agency to question whether the firm could provide more
than the minimum government quantities. The agency found that MDHI's
asserted production rate capacity was not supported by other areas of the
firm's proposal, such as its discussions of facilities and tooling,
process validation, manpower, and the firm's vendor base. The integrated
master schedule was found to be only "minimally supported" and inaccurate.
The agency was further concerned about MDHI's "low production rate
history," and the firm's lack of experience in managing a program of the
magnitude and complexity of the LUH. The agency reasonably determined
that, if MDHI were to receive award, it would have to engage in a
"significant ramp-up" and increase its manpower 150 percent above its
current level. The agency also noted that MDHI was still in the process of
bringing back vendors who had not been paid under MDHI's prior management,
but had no plans to qualify "second sources" as back-up to these "single
source" vendors to ensure against an interruption in the parts supply. The
agency also found that MDHI's proposal talked about manufacturing parts
"in-house," but provided no plan or time-frame to accomplish this, and the
firm did not discuss the associated risks and potential impacts to parts
availability. All of these issues reasonably and substantially contributed
to MDHI's marginal and high risk rating under the P/M factor. AR, DVD Tab
16.4, SSEB Final Report, MDHI P/M Factor Rollup, at 1-2; see Contracting
Officer's Statement in Response to MDHI Protest (Aug. 18, 2006) at 32-40.
MDHI asserts that it addressed many of these issues in its FPR and in a
March 31, 2006 letter in response to discussions, but the agency
reasonably found that the firm did not adequately respond to the agency's
concerns. For example, while MDHI argues that new management addressed the
vendor payment issues, the agency found that the vendor base was still in
the process of being re-established, and since the vendors were all single
sources, schedule delays could occur if there were problems with any of
the vendors. AR DVD Tab 16.4, SSEB Final Report, MDHI P/M Factor Rollup,
at 2. Thus, the agency considered MDHI's response, but reasonably found
that there were still issues that presented risk. AR, DVD Tab 8, SSDD,
para. 10.
MDHI also complains that some criticisms involving missing proposal
information amount to "mere formality" and elevate "form over substance."
MDHI's Comments (Aug. 31, 2006) at 22. For example, it contends that the
agency unreasonably assessed weaknesses for MDHI's failure to identify
sole sources with unique production processes, and for MDHI's failure to
show that its performance specification met the requirements of the SOW.
We find that not only was this information required by the RFP, but also
the failure to provide this information could reasonably be found to
result in risk to performance. Parts with unique production sources could
result in schedule delays if production problems occur with the source;
knowing which vendors have unique production sources allows the agency to
identify which parts are flight critical and which would pose a "much more
serious problem" if the source "were to go out of business or stop
production of that item." Contracting Officer's Statement in Response to
MDHI Protest (Sept. 6, 2006) at 11; Contracting Officer's Statement in
Response to MDHI Protest (Aug. 18, 2006) at 35. Although MDHI generally
asserted in its proposal that it "will meet all system attributes of the
SOW Annex A," AR, DVD Tab 15.4, MDHI FPR, P/M Approach, at 97, this
general statement could reasonably leave doubt in the agency's mind
whether MDHI would in fact meet the requirements, especially given all of
the other informational deficiencies and inconsistencies in MDHI's
proposal.[37] Contracting Officer's Statement in Response to MDHI Protest
(Aug. 18, 2006) at 37; AR, DVD Tab 16.4, SSEB Final Report, MDHI P/M
Factor Rollup, at 1; Agency Hearing Book, exh. C, SSA Final Briefing,
Slides 39-40.
MDHI also complains that there are "inherent inconsistencies" in the
evaluation. MDHI's Comments (Sept. 6, 2006) at 6. For example, with regard
to the evaluation of obsolescence, the agency found that
MDHI outlined an adequate obsolescence plan. However, since their
aircraft was designed in 1994, they state that they do not anticipate
any obsolescence issues for the LUH program. There is a risk that MDHI
is not giving obsolescence the requisite level of attention.
AR, DVD Tab 16.4, SSEB Final Report, MDHI P/M Factor Rollup, at 2. MDHI
complains that the high risk rating is inconsistent with the finding that
the plan was "adequate" and is also inconsistent with the low risk rating
given to EADS, especially given the "age" of EADS's aircraft and the
weaknesses the agency found with regard EADS's proposed obsolescence
mitigation approach.[38] We think that the agency's concern was reasonable
that MDHI's proposal may have posed a greater risk than the problems found
in EADS's proposal. Based on this record, the agency reasonably could find
that MDHI's failure to give the requisite level of attention to
obsolescence carries far more risk than the problems found in EADS's
proposal. In any case, as noted above, obsolescence mitigation was just
one of many areas of concern that led to MDHI's high risk rating for this
factor. MDHI's proposal included a number of other risks that were not
present in EADS's proposal and which reasonably contributed to the
"aggregate" risk rating of high. Contracting Officer's Statement in
Response to MDHI Protest (Aug. 31, 2006) at 12. Based on our review, we
find no inconsistency in this evaluation.
In sum, we find no error in the agency's evaluation of proposals under the
P/M factor. [39]
C. Past Performance Factor
MDHI contends that the agency inconsistently and unfairly evaluated MDHI's
and EADS's proposals under the past performance factor. The past
performance evaluation was performed by the performance risk assessment
group (PRAG) in accordance with the requirements of the RFP. As noted
above, the RFP stated that the past performance of each offeror and its
major subcontractors would be evaluated during the 3 years preceding the
solicitation for schedule, quality of performance, business relations and
customer satisfaction, and financial/cost management. RFP sect. M-6,
paras. 2.6.2 , 2.6.4.
With regard to EADS, the PRAG noted that the firm had proposed its UH-145
aircraft, which had been in production for the commercial market as the BK
117 since 2001, and that EADS had produced approximately 83 aircraft in 5
years. The PRAG considered 33 relevant contracts and 36 customer responses
for EADS's major subcontractors. While the PRAG noted that EADS did not
cite any relevant contracts or provide customer surveys for EADS's work as
a prime contractor (all of the past performance was from EADS's proposed
subcontractors), it did not find this problematic since EADS was proposed
to perform only 1 percent of the work, and that work was in "program
management and contract management oversight." The PRAG found that the
"vast amount of experience in producing, training, sustaining and
maintaining helicopters to perform the remaining 99% of the LUH
requirement" was to be performed by EADS's subcontractors. AR, DVD Tab.
34.5, SSEB Final Report, EADS Performance Risk Assessment, at 16.
EADS's performance history revealed mostly "very positive" comments and
many "exceptional" ratings. One negative comment revealed a concern about
translation errors in training manuals, but EADS's plan to correct this
error, in the minds of the PRAG, "mitigated" this concern. The PRAG
considered the risks associated with EADS's proposed transfer of its
facilities from Germany to Mississippi, and found that the risk was low,
in part because EADS had successfully transferred production from one
country to another "multiple times." Id. at 16-17. The PRAG also
considered data received from the Defense Contract Audit Agency (DCAA),
which demonstrated that EADS was "capable of producing a quality product,
meeting the negotiated schedules and doing both within the negotiated
cost." Id. at 17.
Based on its evaluation, the PRAG found no weaknesses and two strengths in
the experience of EADS's subcontractor team and in the firm's "solid
financial position and capability to perform the LUH requirement." Id. The
PRAG rated EADS's proposal as "low" risk under the past performance
factor.
MDHI complains the EADS's proposal was undeserving of a low risk rating.
MDHI argues that the facility transfer, the training manual translation
errors, and a concern about parts availability that EADS's addressed
during discussions, pose higher risk than was noted by the PRAG or
reported to the SSA. However, as noted above, the agency fully considered
these issues, including EADS's discussion responses, and, in our view,
reasonably determined that the risk to EADS's performance was low.
MDHI nevertheless asserts that the lack of past performance information
from EADS itself should have resulted in a "neutral" rating at best, or a
"moderate" or "high" rating, given that EADS is performing only 1 percent
of the work. Again, we find that this issue was fully considered, and that
the agency reasonably concluded that since EADS's subcontractors were
performing essentially all of the aircraft production, manufacturing, and
training work, their past performance was most relevant and demonstrated
that the EADS team would successfully perform this contract.
With regard to MDHI, the PRAG noted that the firm had proposed its MD
Explorer aircraft, which had been in the commercial marketplace since
1995. MDHI had produced approximately 100 aircraft in the past 11 years.
The PRAG considered 15 relevant contracts and 30 customer surveys received
for MDHI and its major subcontractors. The PRAG's research revealed a
history of numerous financial and performance problems prior to MDHI's
acquisition by Patriarch. The PRAG also noted improvement that occurred
after the takeover, but found that not all of the problems had been
resolved:
The majority and controlling interest of MDHI was acquired by Patriarch
. . . in July 2005. Prior to this acquisition, MDHI was on the verge of
bankruptcy, delinquent on all debt and delinquent on a very high
percentage of spare parts and service orders, both Government and
commercial. Additionally, they had lost most of their vendor base, had
numerous vacant top level management positions and had lost significant
market share and customer acceptance. All of this was due to lack of
financial capital and ineffective management by previous ownership.
Since being acquired by Patriarch, MDHI has shown much improvement from
July 2005 to the present in their management team, financial capability,
supply chain/vendor base, aircraft production, and spare parts supply.
They are still in the process, however, of rebuilding their supply chain
for production and spare parts supply. While they show an upward trend
in meeting delivery schedules for spare parts support, they are
currently still missing deliveries on spare parts orders. This company
is basically operating as a new startup company with the exception of
having an established product fleet of 3,500 aircraft to support and
maintain.
AR, DVD Tab 16.5, SSEB Final Report, MDHI Performance Risk Assessment, at
9.
The PRAG found two strengths in MDHI's past performance, relating to a
"robust quality inspection program" and the "informative and very well
organized" past performance proposal. The PRAG did not find any
weaknesses, but noted several "concerns" that contributed to the moderate
risk rating. These concerns related to credit terms with MDHI's major
suppliers, that delivery schedules were still delinquent on some vendor
contracts, and that MDHI was still "basically operating as a `new
start-up' company trying to reestablish their supply chain and reignite
their production line." Id. at 12. Concluding that a low risk rating was
inappropriate because "more time is needed to completely recover from the
repercussions of financial distress this company has experienced over the
past three years," id. at 13, the PRAG rated MDHI's proposal "moderate"
risk under the past performance factor.
MDHI asserts that the PRAG's evaluation of its proposal improperly
emphasized MDHI's performance problems prior to the Patriarch acquisition,
and did not adequately take into account MDHI's discussion responses,
which explained how the Patriarch takeover addressed these issues.
However, the RFP specifically provided that performance history for the 3
years preceding the solicitation would be evaluated, and the pre-Patriarch
performance occurred within that 3-year timeframe. The evaluation shows
that the agency fully considered the improvement to MDHI's performance
since Patriarch took over the management of MDHI and provided financial
support. However, the agency also noted that some vendor issues remained.
Although MDHI complains that the characterization of its company as a "new
start-up" company is unfair, given that MDHI is, in many ways, starting
over with new management and with rebuilding relationships with its
vendors, we find this assessment on balance to be reasonable.
In sum, based on our review of the record, we find that the agency's
evaluation of past performance was reasonable.[40]
D. Price Factor
Both AWI and MDHI protest the evaluation of EADS's price. They complain
that the record does not explain the "drastic" reduction in EADS's
proposed price from initial to final proposal, and that EADS's final
price, especially its proposed CLS price, is "unbalanced" because it is
unreasonably low. They assert that the agency failed to perform a proper
"reasonableness" or "realism" analysis, or a proper risk assessment of
EADS's price. MDHI also challenges the evaluation of its own price
proposal.
The agency correctly explains that, with the exception of a small
component of the effort that was cost-reimbursable, the vast majority of
the work (including CLS) was fixed-price and, as such, a realism analysis
was not required in the absence of a solicitation provision requiring such
an analysis. See Mantech Sec. Tech. Corp., B-297133.3, Apr, 24, 2006, 2006
CPD para. 77 at 9. Furthermore, the purpose of a "reasonableness" analysis
is to ensure that prices are not unreasonably high, as opposed to
unreasonably low, Cherry Road Techs.; Electronic Data Sys. Corp., supra,
at 18, and the protesters complain only that EADS's price is too low.
The 132-page Price Negotiation Memorandum (and additional eight
attachments to that document), the 39-page price analysis report, the SSEB
price factor summary reports, and supporting documents show that the
agency conducted a detailed, thorough analysis of each offeror's proposed
price, including the overall price and the price for each of the following
components: production, CLS, training, cost-reimbursable items, fuel, and
other services. The agency fully analyzed each firm's pricing template and
discussed the basis for each firm's proposed price, noting strengths and
weaknesses and risks of the pricing approach. The agency noted changes
from initial to final pricing, and discussed such things as proposed
inflation factors and economic price adjustment (EPA) clauses, where made
applicable by the offeror's proposal. The findings of the price evaluation
team were reported to the SSA during the SSA's final briefing. We find
this analysis to sufficiently support the agency's conclusion that EADS's
FPR price was fair and reasonable.
The offerors' initial and final prices were as follows:
+----------------------------------------------------------------------------+
| |Initial |Final Total |Initial CLS|Final CLS |Initial |Final |
| |Total | | | |Production|Production|
| | | |(PY1-PY-20)|(PY1-PY-20)| | |
|----+----------+--------------+-----------+-----------+----------+----------|
|EADS|[REDACTED]|$3,880,000,723|[REDACTED] |[REDACTED] |[REDACTED]|[REDACTED]|
|----+----------+--------------+-----------+-----------+----------+----------|
|AWI |[REDACTED]|$4,747,162,454|[REDACTED] |[REDACTED] |[REDACTED]|[REDACTED]|
|----+----------+--------------+-----------+-----------+----------+----------|
|MDHI|[REDACTED]|$4,251,356,442|[REDACTED] |[REDACTED] |[REDACTED]|[REDACTED]|
+----------------------------------------------------------------------------+
AR, DVD Tab 37, Price Negotiation Memorandum, at 12-13; AWI's Comments
(Sept. 6, 2006) at 39, 41. As can be noted from this table, all offerors
made adjustments to their FPR pricing.
MDHI increased its price after discussions in response to the agency's
concern about MDHI's profitability. During discussions, MDHI admitted that
its initial pricing was too low because it was based on "old prices" and a
"flawed bid strategy." AR (Aug. 20, 2006), exh. G, Letter from MDHI to
Army dated March 31, 2006, at 13.
AWI reduced its overall, CLS, and production prices; but its overall price
remained higher than EADS. AWI's higher overall price was caused by
[REDACTED].
EADS similarly reduced its overall, CLS, and production prices, although
the largest reduction occurred under CLS. EADS explained that the
significant reduction in its CLS pricing was primarily due to
clarifications and changes in the RFP regarding the evaluation of CLS
pricing,[41] as well as staffing and other changes to its proposal.[42]
Declaration of EADS's Cost Expert (Sept. 5, 2006), paras. 10-18. The
agency found that EADS had adequately explained and supported this price
reduction, and that EADS's final CLS pricing, which was in line with the
other offerors and higher than AWI's, was reasonable. Contracting
Officer's Statement in Response to AWI Protest (Aug. 31, 2006) at 26.
The protesters argue that EADS did not sufficiently explain its CLS price
reduction, and that the "drastic" drop in CLS price should have triggered
the agency to request additional explanation for the price reduction, or
led the agency to conclude that EADS's proposal presented performance or
schedule risk. However, based on EADS's documentation of its CLS approach
and pricing methodologies, which we conclude the agency reasonably found
adequate, the agency had no reason to further question EADS's regarding
its CLS pricing. Id. at 25. Given that EADS's CLS pricing was in line with
the other offerors and was higher than AWI's, we have no reason to
conclude that EADS's CLS pricing is unreasonably low, unbalanced, or poses
a risk to performance. Similarly, we find that the record sufficiently
explains the basis for EADS's price reductions in areas of its proposal
other than CLS, and that the agency's evaluation of those areas was
reasonable as well.
1. AWI's Remaining Price Protest Grounds
AWI raises a number of other challenges to EADS's low risk assessment
under the price factor. AWI Protest (Aug. 14, 2006) at 38-43. Although we
discuss only a few of the issues below, we have reviewed all of AWI's
arguments and find them to be without merit.[43]
For example, AWI asserts that the equitable adjustments that EADS proposed
in response to "Class I" changes and replacing obsolete parts adds risk to
schedule and performance because they are not permitted by the RFP. In
this regard, AWI argues that the RFP required that pricing for CLS support
"shall be inclusive of all effort necessary to ensure continued support in
the event of parts obsolescence." RFP sect. H-2, para. 2(i). However, as
discussed above, EADS's proposal for sharing costs was left to the
discretion of the contracting officer whether to accept or reject, and
therefore did not violate the RFP. We note that AWI's proposal, too,
contained proposals for cost sharing similar to EADS and did not violate
the RFP. In any event, the record shows that the agency considered the
risk of EADS's obsolescence approach in the price analysis and reasonably
found the risk to be low. As the agency explains, this type of cost
sharing approach is "not uncommon" and, given that the LUH parts are used
also on other EADS's aircraft, "the commercial market will likely incur
part of the non-recurring expense associated with finding/developing a
replacement part." AR, DVD Tab 37, Price Negotiation Memorandum, at 81.
Also contributing to the low risk rating was the fact that the EADS
aircraft is a "relatively new product line and changes in core
technologies or suppliers [are] not anticipated within this 10 year
contract." AR, DVD Tab 34.1, SSEB Final Report, EADS Price Factor Summary,
at 5. AWI disagrees with this analysis, but has not shown it to be
unreasonable.
AWI also contends that EADS's approach of amortizing [REDACTED] of its
non-recurring costs relating to its facility transfer and certain
non-recurring CLS-related costs over 352 aircraft (the maximum quantity
under the contract) poses "significant financial risk to EADS, which will
translate into schedule and performance risk" if the agency fails to
purchase the maximum number of aircraft. AWI Protest (Aug. 14, 2006)
at 40-41. However, given that EADS is a very large, financially sound
company, we fail to see how amortizing this relatively small amount over a
$3.9 billion contract poses "significant financial risk" as alleged.
In sum, based on our review of the record, we find no basis to sustain any
of the protest grounds raised by AWI regarding the evaluation of the price
factor.
2. MDHI's Remaining Price Protest Grounds
MDHI also protests the evaluation of its proposal under the price factor.
It asserts that it was misled during discussions to believe that its
financial models would be accepted "in lieu of" the pricing template; that
the agency either misinterpreted or failed to evaluate the financial
models submitted with MDHI's FPR; and that the pricing template "double
counted" escalation and certain probabilities, thus overstating MDHI's
price by approximately $800 million. Declaration of MDHI's Acting Chief
Executive Officer (Sept. 8, 2006) para. 2; MDHI's Comments (Aug. 31, 2006)
at 8-10.
MDHI's contention that it was misled was based on its face-to-face
discussions with the agency regarding its price. In these discussions,
there was "extensive discussion on the methodology that MDHI had used in
pricing both the aircraft and the CLS," and the agency "expressed concern
that there were many unknowns involved in MDHI's priced offer."
Contracting Officer's Statement in Response to MDHI Protest (Aug. 18,
2006) at 8. During these discussions, MDHI provided "example financial
models" (which MDHI asserts were "newly designed") to illustrate how it
developed its pricing. Declaration of MDHI's Chief Executive Officer (Aug.
30, 2006), paras. 8, 9. At the conclusion of these discussions, the agency
encouraged MDHI to provide supporting information (including the financial
models) with its FPR to explain its pricing. Contracting Officer's
Statement in Response to MDHI Protest (Aug. 18, 2006) at 9. MDHI included
with its FPR actual financial models along with the pricing template and
section B pricing required by the RFP. The summary sheet for the pricing
template was missing from the FPR, so the agency requested, and MDHI
provided, the summary sheet after the closing date for receipt of FPRs.
Id. at 13.
The record does not support MDHI's contention that it was misled during
discussions to believe that its financial models would be accepted "in
lieu of" the pricing template. Such oral advice clearly would be
inconsistent with the RFP requirement that offerors must submit their
prices in the pricing template included in the RFP. RFP sect. L-23, para.
2.3.1(c); sect. A, Narrative at 8. In fact, although the agency admits it
"encouraged" the protester to submit its financial models to "substantiate
its proposed prices," the agency denies telling MDHI that these models
would be accepted "in lieu" of the pricing template required by the RFP.
Contracting Officer's Statement in Response to MDHI Protest (Aug. 18,
2006) at 14.
The conclusion that MDHI was not misled is supported by the fact that
nothing in MDHI's FPR states, or even suggests, that the firm's financial
models were to be substituted for the pricing templates; in numerous
passages, MDHI makes clear that the pricing template included the firm's
proposed prices for evaluation. For example, MDHI's FPR states:
* All requested information is included in the Pricing Template
(Attachment 4) and in Section B (Attachment 5). AR, DVD Tab 15.1,
MDHI, Business and Pricing Volume, sect. 2.3.1.c.
* All prices, quantity ranges, associated prices within the confine
of that range and maximum quantity limitations are identified in
the Pricing Template. Id. sect. 2.3.1.g.
* Aircraft pricing is presented in the Pricing Template (Attachment
4). . . . In the spirit of transparency, MDHI has attached its
bottom up pricing model (Attachment 3, Unit Cost Build). Id. sect.
2.3.2.b
* The Pricing Template delineates the composite prices per flying
hour [and] pricing for [CLS], Over and Above Depot Maintenance,
Contractor Field Teams and Procedural Trainer Support. Id. sect.
2.3.2.d.
* The Pricing Template contains a forecast for pricing potential
years eleven though twenty utilizing the RFP's model. Id. sect.
2.3.3.a.
See also Contracting Officer's Statement in Response to MDHI Protest (Aug.
18, 2006) at 14-15.
With regard to MDHI's claim that the pricing template inflated its price,
MDHI contends that because its unit prices for CLS already included
escalation and the agency's stated probabilities, the pricing template
"double counted" these costs when the template used the unit prices to
calculate price. However, we note that it was MDHI's sole responsibility
to insert the appropriate unit prices into the template. It was evident
from the template where probabilities and escalation would be applied,[44]
and if those elements needed to be removed from the unit prices, then it
was MDHI's duty, not the agency's, to remove them before MDHI inserted the
unit prices into the template.[45] In fact, in its initial protest, MDHI
admits that the unit prices that it inserted in the pricing template were
incorrect because of an error of MDHI, not the agency:
Under severe time constraints, persons who had not built the models
pulled highlighted Target Prices without recognition that high hours for
each of the three ranges were locked into the Pricing Template with the
probabilities to also be calculated in the Pricing Template. As such,
not the Target Prices, but the Best Prices would have to be taken to
represent the high end hours and/or weighted average probabilities
removed from the CLS Pricing Model.
MDHI's Protest (July 14, 2006) at 7. In other words, according to MDHI,
its own employee(s) failed to recognize that the firm's unit prices also
contained the probabilities and escalation and inserted the wrong prices
in the pricing template for CLS pricing.
We do not agree with MDHI that the agency should have known that the CLS
unit prices in the template were in error. The financial models are very
complex and even with MDHI's explanation during this protest (through
declarations and attachments and illustrations), it is not entirely clear
how the agency should have been able to identify the asserted errors. As
MDHI now explains, the agency would have had to engage in a series of
calculations to "extrapolate" what MDHI intended to be its CLS unit
prices. Declaration of MDHI's Acting Chief Executive Officer (Aug. 30,
2006), paras. 11, 17, exh. 1. However, no clear instructions for this
exercise were provided to the agency with MDHI's FPR, and nothing in the
FPR put the agency on notice that such a difficult analysis needed to be
done.[46] In fact, nothing in the FPR identified to the agency that MDHI
was offering rates different from those placed by MDHI in the appropriate
fields in the pricing template. Contracting Officer's Statement in
Response to MDHI Protest (Aug. 18, 2006) at 15. As EADS's cost expert
convincingly explains, MDHI's unit prices and escalation can all be linked
(without any apparent inconsistencies) from MDHI's financial models, to
the pricing template, and to MDHI's section B through manual entries of
MDHI, and thus the computations complained of appear to be the result of
MDHI's actions and not the result of any error in the pricing template or
action of the agency. See Declaration of EADS's Cost Expert (Aug. 31,
2006).
MDHI also asserts that the agency unfairly assessed risk under the price
factor relating to its CLS pricing. As the agency explains, it found risk
because "MDHI proposed a constant, flat rate for CLS for all Program
Years" and the rates did not fluctuate as flight hours increased. AR, DVD
Tab 16.1, SSEB Final Report, MDHI Price Factor Summary, at 5. The agency
expected to see variations in CLS rates from year to year, "most likely
higher rates in the early years and a downward trend as fixed costs were
spread over larger numbers of flying hours and the offeror became more
efficient in providing CLS support." Contracting Officer's Statement in
Response to MDHI Protest (Aug. 18, 2006) at 19. MDHI's "flat rate"
approach suggested to the evaluators that the firm may not be accounting
for all of the RFP requirements, which could potentially result in "upward
price risk." AR, DVD Tab 16.1, SSEB Price Factor Evaluation Report (June
2006) at 14-15. The agency found that, based on the firm's financial
models, MDHI's utilization of this "flat rate" approach would mean that
MDHI would not make a profit on CLS until the sixth program year and would
have to obtain financing to sustain CLS until that time. AR, DVD Tab 37,
Price Negotiation Memorandum, at 47. Although MDHI asserts that its
financial models fully support its flat rate approach, MDHI has not shown
that its approach is without risk.[47]
MDHI similarly challenges the agency's finding of price risk associated
with the firm's proposed EPA clause. The evaluation documents state that
MDHI's clause was missing a "Labor or composite Labor/Material index," and
that the clause contained "floor and ceiling limitations of 2% (up or
down)" that were "significantly" lower than the firm's initial proposal
(which included a 5-percent limitation). AR, DVD Tab 16.1, SSEB Final
Report, MDHI Price Factor Summary, at 5. This lower ceiling, the agency
concluded, "will result in an increased likelihood [that] the EPA clause
will be exercised, increasing the price the Government will pay." AR,
DVD Tab 37, Price Negotiation Memorandum, at 47. Although MDHI contends
that the "missing" labor index information is contained in its FPR and
financial models, this argument has no bearing on the agency's primary
concern, which was MDHI's "significantly" lower limitation. Therefore,
while MDHI may be correct that its proposal contained the required labor
index information, it does not appear that this was a significant driver
in the assessment of risk under this factor.[48]
E. "Best Value" Determination
AWI complains that the SSA failed to perform, or adequately document, his
cost-technical tradeoff analysis of AWI's higher technically rated
proposal against EADS's lower-priced proposal. More specifically, AWI
complains that the SSDD is only seven pages long and fails to discuss most
of the technical elements where AWI's proposal was superior to EADS's. AWI
contends that the SSA either was not aware of, or did not adequately
consider, the technical advantages of AWI's proposal and whether they were
worth the additional $800 million in cost.[49]
An SSA may select a lower-priced, lower technically rated proposal if he
or she decides that the price premium involved in selecting the
higher-rated, higher-priced offer is not justified given the acceptable
level of technical competence available at the lower cost. The determining
element is not the difference in technical merit, per se, but the
contracting agency's judgment concerning the significance of the
difference. In making this determination, the SSA has broad discretion,
and the extent to which technical merit may be sacrificed for cost, or
vice versa, is limited only by the requirement that the tradeoff decision
be reasonable in light of the established evaluation and source selection
criteria. CVB Co., B-278478.4, Sept. 21, 1998, 98-2 CPD para. 109 at 8.
As detailed above, the record shows that the SSA was provided with a
comprehensive briefing of the offerors' proposals, which highlighted for
the SSA significant strengths, weaknesses, and discriminators in each
proposal. Agency Hearing Book, exhs. C-F, SSA Final Briefing Materials;
Tr. at 17, 56. During the briefing, the SSA "probed" behind the briefing
materials and asked questions of the expert evaluators and "users." Tr. at
18-21, 29. In reviewing the materials, the SSA did not just "put blinders
on," but instead "went through [the briefing chart] meticulously to find
out if there was value in those attributes above and beyond what's listed
on that chart." Tr. at 119. From this briefing, the SSA fully understood
the relative differences in capability between the EADS and AWI proposals
in terms of the mission and did not "trivialize" AWI's proposal strengths,
as asserted by AWI. Tr. at 37-38, 227. In fact, given the detailed,
voluminous record in this case and the complexities in this procurement,
the SSA reasonably relied on the expertise of the factor leads, LUH
"users," SSEB, and SSAC to advise him of the value of exceeding, or
failing to meet, attributes relative to the mission.[50] Although it is
true that the SSA did not separately quantify the value for each element,
Tr. at 68, 180-81, this was not required and does not mean that the SSA
failed to perform any analysis of value as AWI appears to argue. See FAR
sect. 15.308 (SSA's "documentation need not quantify the tradeoffs that
led to the decision").
Contrary to AWI's arguments, the SSA considered essentially all of the
areas where AWI's aircraft capability exceeded EADS's, including those
elements where both offers received the same rating.[51] He considered the
offerors' proposed capabilities under the technical elements
"individually" and then "cumulatively" to determine whether AWI's
technical superiority in the "totality" was worth the additional cost. Tr.
at 67, 117, 122-23. Although the SSA did not discuss each and every
element in the SSDD as AWI would have liked, the record shows that the
relative differences between the proposals under each of these elements
were thoroughly documented in a well-reasoned and rational SSEB report,
and a detailed summary of these findings was briefed to the SSA and
considered in his decision. Agency Hearing Book, exhs. C-F, SSA Final
Briefing Materials; Tr. at 17-21, 204. The SSDD highlighted the key
discriminators among offerors' proposals, albeit not all of the elements
that AWI would have liked the SSA to agree were discriminators, and
illustrates a well-reasoned and sufficiently detailed selection decision
that clearly credits AWI's strengths and technical superiority, but
explains why its proposal was not worth $800 million over EADS's highly
rated $3.9 billion proposal.
Based on our review of the record, and considering that price was the most
important factor in the evaluation, we find that the SSA's decision to
select the lower technically rated, lower-priced proposal for award was
reasonable.
The protests are denied.
Gary L. Kepplinger
General Counsel
------------------------
[1] The RFP provided for a base year with ten 1-year options. The first
option period coincided with the base year. RFP sect. B; amend. 11,
Pricing Template.
[2] Operations and support (O&S) (including CLS) and fuel prices were
provided by offerors for a 10-year period, but, according to the
solicitation, were projected out to a 20-year period through a fixed
escalation factor that the agency applied to all offers. Agency Report
(AR), DVD Tab 37, Price Negotiation Memorandum, at 12-13; RFP sect. L-23,
para. 2.3.3; sect. M-6, para. 2.2.2; amend. 11, Pricing Template.
[3] The SOW set forth "threshold" requirements for various attributes and
capabilities of the desired aircraft, including those that were evaluated
as elements under the technical factor.
[4] The 50 percent multiplier was specified in the RFP to eliminate an
overstatement in O&S prices as a result of the overlap in services between
the two scenarios.
[5] During discussions, the agency also updated the pricing template and
revised its CLS pricing evaluation as described above. These updates were
published in amendments 10 and 11 to the RFP. Further discussions were
held to explain the pricing template. Contracting Officer's Statement in
Response to MDHI Protest (Aug. 18, 2006) at 15-16.
[6] The SSEB report was over a thousand pages long and consisted of
factor, subfactor, and element roll-ups, as well as the underlying
evaluator comments. AR, DVD Tabs 16, 25, and 34, SSEB Final Reports for
MDHI, AWI, and EADS.
[7] The SSAC was appointed to perform a comparative analysis of the
evaluation results and to assist the SSA.
[8] Ratings were more specifically defined in the SSP for each of the
elements evaluated, taking into account the specific attributes being
evaluated under that element. Agency Hearing Book, exh. W, SSP, append. B,
exh. 1, Merit Rating System for Technical Factor. The general scheme,
however, is reflected above.
[9] Additional briefings were held with the SSA throughout the procurement
to discuss the source selection plan, the LUH mission requirements, and to
otherwise keep the SSA apprised of the evaluation. Tr. at 249-53.
[10] The prices reflected in the above table for the total O&S price
subfactor include CLS pricing, fuel costs, and cost-reimbursable items of
travel, materials, and transportation. AR, DVD Tab 37, Price Negotiation
Memorandum, at 13.
[11] For example, the SSA asked a number of questions about
internal/external load, systems growth potential, and open port and
pressure refueling (tradable elements where EADS's aircraft was rated less
than satisfactory) to make sure that EADS's aircraft would nevertheless
adequately meet the mission needs of the LUH users; the SSA found no basis
not to select EADS's proposal for award. Tr. at 25, 27, 79, 82, 87.
[12] Patriarch manages the funds that hold majority ownership of MDHI. AR
(Aug. 20, 2006), exh. G, Letter from MDHI to Army (Mar. 31, 2006) at 2,
10.
[13] Both proposals also received the same ratings under the logistics and
past performance factors.
[14] With regard to EADS's and AWI's proposed pricing, the SSA recognized
that AWI offered a lower CLS price (approximately [REDACTED] lower) over
the evaluated 20 years, and that the acquisition price for the aircraft
was approximately [REDACTED] higher, which averaged to be approximately
[REDACTED] more per aircraft. The SSA also recognized that AWI proposed
higher prices for [REDACTED]. AR, DVD Tab 8, SSDD, para. 13.
[15] The SSA identified these elements as intercommunications system,
endurance, handling qualities, crew equipment, cruise airspeed, and force
protection. AR, DVD Tab 8, SSDD, para. 14.
[16] In addition to the detailed, voluminous record provided by the
agency, the parties submitted numerous rounds of briefs discussing the
protest issues. Our Office conducted a hearing, where we took the
testimony of five witnesses, including the SSA and a member of the SSAC,
who was the LUH project manager and an aviation expert and had extensive
knowledge and expertise concerning the areas evaluated in the offerors'
proposals, the LUH mission requirements, and the statement of work. The
protesters and intervenor also employed experts to assist with the
litigation and to present arguments in this protest. We have considered
all of this information in rendering our decision.
[17] AWI initially protested the evaluation of many more of the technical
elements, but either withdrew its protest grounds or failed to rebut the
agency's explanation of the evaluation. AWI also withdrew its protest
ground that EADS's proposal did not meet the minimum requirements for the
required elements of cabin size and force protection. Nevertheless, we
have reviewed the evaluation of all of the elements and find it to be
reasonable.
[18] AWI similarly argues that its and EADS's proposals were treated
unequally in the evaluation of endurance, internal/external load, cruise
speed, and crew equipment. However, AWI's proposal received ratings
superior to EADS's under each of these elements. This demonstrates that
AWI's superiority under these elements was in fact recognized. Our review
of the record shows the evaluation ratings of these elements to be fair
and not unequal.
[19] AWI also asserts that the agency "normalized" or "trivialized" AWI's
technical superiority under nine technical elements (intercommunications
system, endurance, handling qualities, crew equipment stowage, cruise
airspeed, force protection, CVR/FDR, internal/external load, and open port
and pressure refueling). AWI's Post-Hearing Comments at 15-20. However,
the record shows that the proposal superiority of AWI to EADS under these
elements was recognized through the higher adjectival ratings that AWI's
proposal received for each of the elements. Based on our review, we find
no error in the evaluation of these elements, and we find that AWI's
superiority was accounted for in the source selection.
[20] AWI protests that the ratings definitions stated in the SSP
(specifically, the "objectives" or "stretch goals" associated with
excellent ratings for each of the technical factor elements) constituted
unstated criteria and established ceilings upon which AWI was not given
credit for exceeding. AWI's Post-Hearing Comments at 46-48. We first note
that agencies are not required to announce their rating definitions in the
solicitation. D.N. Amer., Inc., B-292557, Sept. 25, 2003, 2003 CPD
para. 188 at 6 n.6. In this case, the "objectives" articulated in the SSP
for each of the evaluation elements under the technical factor bear a
rational relationship to the RFP's announced evaluation criteria that
proposals would be considered for suitability to the LUH mission. See RFP
sect. M-6, para. 2.3. The record shows that the agency reasonably
evaluated proposals consistent with the RFP and without establishing
arbitrary "ceilings" as AWI suggests.
[21] The excellent rating represented the agency's "objective," or
"stretch goal," for this element.
[22] The record does not explain why AWI's proposal received an excellent
rating under this element, given that the aircraft apparently did not meet
the 3.8-hour objective requirement necessary to receive an excellent
rating.
[23] The MTOW is the maximum weight, as certified by the FAA, that an
aircraft can weigh when it lifts off from the ground.
[24] AWI contends that the agency did not have a reasonable basis for
relying on the FAA statement quoted in EADS proposal and that the agency
should have considered the lack of formal FAA "certification" as a risk in
EADS proposal. AWI's Post-Hearing Comments at 35-37. However, AWI has not
demonstrated that FAA certification on this point was required or that the
agency's reliance on the FAA statement, which is consistent with common
aviation practice, was unreasonable. Furthermore, the FAA representatives
on the evaluation teams, who were tasked with identifying FAA
certification issues, did not identify this as an area of concern. Tr. at
475.
[25] AWI also argues that offerors were treated unequally under this
scenario because EADS was allowed to "exclude" warm-up fuel from the
applicable calculations and the other offerors were not. However, as the
agency explains, the warm-up fuel was accounted for in evaluating every
offeror's endurance calculations. Tr. at 442; Declaration of Performance
Subfactor Lead (Sept. 15, 2006) para. 4.
[26] Because the agency incorporated EADS's entire proposal into the
contract, not just the performance specification, thereby binding EADS to
perform in accordance with all aspects of its proposal, AWI's argument
that the technical proposal is only "non-binding" "marketing materials"
and "fluffery" is unpersuasive.
[27] AWI's proposal was similarly rated unsatisfactory under the
operational environment and startup timeline elements.
[28] Although EADS's aircraft has an internal or external load capability
of 1,107 pounds, AWI's aircraft has a capability of 2,442 pounds. AR, DVD
Tab 8, SSDD, para. 14.
[29] For the same reasons, we find no merit to AWI's contentions that the
age of EADS's aircraft also should have resulted in lower adjectival and
higher risk ratings under the P/M and logistics evaluation factors.
[30] MDHI also complains that the use of the term "deficiency" for
evaluating tradable elements violates the Federal Acquisition Regulation
(FAR) because the FAR specifically notes that deficiencies refer to
"material failures," which render a proposal unacceptable and thus
ineligible for award. See FAR sect. 15.001. Clearly, the agency intended a
generic use of the word deficiency here.
[31] Although MDHI asserted that its aircraft could achieve a higher
internal load of 1,019 pounds and a higher external load of 1,419 pounds,
the agency found that this greater load capability could only be achieved
by reducing both the endurance fuel capability and altitude/temperature
conditions specified in the SOW. Contracting Officer's Statement in
Response to MDHI Protest (Aug. 18, 2006) at 24.
[32] The SSA found that EADS's failure under the open port and pressure
refueling element caused "moderate" "mission impact" that ultimately did
not affect the source selection in view of the other factors involved in
the decision. AR, DVD Tab 8, SSDD, para. 14. As he stated in the SSDD,
EADS's failure to meet this tradable attribute "would not hinder the
ability of the EADS aircraft to perform the LUH mission." Id.
[33] The five missing certifications for MDHI's proposal were: "dual pilot
[Instrument Flight Rules], Chelton [Electronic Flight Instrument System],"
"cruise airspeed at 6,500 pounds," "dual pivoting litter lift system,"
"engine inlet barrier filter," and "pressure refuel capability." Agency
Hearing Book, exh. C, SSA Final Briefing, Slide 36.
[34] MDHI also asserts that the risk assessment is inconsistent with the
"satisfactory" rating that MDHI's proposal received under the image
intensification compatibility tradable element. The agency explains that
while MDHI's proposed "fixes" could result in compatibility (and thus the
proposal was rated satisfactory), there was some risk that compatibility
would not be achieved by first delivery. Contracting Officer's Statement
in Response to MDHI Protest (Aug. 31, 2006) at 6-7; Contracting Officer's
Statement in Response to MDHI Protest (Aug. 18, 2006) at 31. We find no
error, or inconsistency, in this reasoning.
[35] AWI initially also protested the evaluation of its and EADS's
proposals under the logistics factor. It abandoned these arguments when it
failed to respond to the agency report, which fully addressed these
issues. Knowledge Connections, Inc., B-297986, May 18, 2006, 2006 CPD
para. 85 at 2 n.2. In any event, we have reviewed the evaluation of this
factor, and find it to be reasonable and in accordance with the RFP.
[36] For example, MDHI complains that the evaluation was "incomplete" in
that some element reports for the P/Mfg subfactor were left blank in the
SSEB report. The agency explains that this is because there were no formal
"elements" identified in the RFP for this subfactor. The blank reports
were a function of the database used to create the SSEB report, and not
the result of an incomplete evaluation. Contracting Officer's Statement in
Response to MDHI Protest (Aug. 31, 2006) at 10.
[37] To the extent that MDHI complains that its performance specification
was evaluated differently than EADS's, we note that EADS addressed each of
the SOW requirements in its performance specification, while MDHI
addressed only those requirements it would not meet.
[38] These weaknesses involved the proposed equitable adjustment for
certain changes and some "vagueness" in the discussion of cost sharing,
discussed previously.
[39] MDHI complains that EADS's proposal was misevaluated under the P/M
factor in other ways. It contends that EADS's proposal presented high risk
because: (1) EADS owns 80 percent of Airbus, a company that has a history
of design problems and cost and schedule overruns; (2) EADS is facing a
"demand of several billion dollars" from another company for the 20
percent of Airbus that EADS does not own; and (3) as a German-French
conglomerate, EADS's management is "complex" in that it combines
duplicative leadership from both its German and French components. MDHI
Protest (July 14, 2006) at 26-27. However, MDHI does not explain how any
of this information will impact the schedule or performance under this
contract, or how the information relates to the RFP's evaluation criteria.
In this regard, the record evidences that Airbus has no role in the
performance of the LUH contract. MDHI also contends that high risk is
associated with EADS's proposal due to the firm's plan to transfer its
facilities from Germany to Mississippi, and because of the two crash
incidents that occurred in France. However, as we discussed above, the
agency thoroughly evaluated these issues and reasonably found them to
present low risk to performance.
[40] MDHI also protests the reasonableness of the agency's responsibility
determination of EADS. It contends that the agency "ignored material
evidence demonstrating EADS'[s] non-responsibility," citing to post-award
media reports that two executives of EADS and Airbus were "ouste[d]" over
allegations of insider trading and that a class action lawsuit has been
filed by EADS's shareholders in the Netherlands alleging claims of insider
trading. MDHI Protest (Aug. 14, 2006) at 21. Our Office does not review
affirmative determinations of responsibility, except where the protest
alleges that definitive responsibility criteria in the RFP have not been
met or identifies evidence "raising serious concerns that, in reaching a
particular responsibility determination, the contracting officer
unreasonably failed to consider available relevant information." Bid
Protest Regulations, 4 C.F.R. sect. 21.5(c) (2006). The contracting
officer states that she had seen a news article reporting allegations of
insider trading prior to award, but did not consider the news media to be
"reliable data" and considered the allegations to be just that,
allegations that had not yet been proven. Contracting Officer's Statement
in Response to MDHI Protest (Aug. 18, 2006) at 42. MDHI has not met its
burden of showing that the contracting officer unreasonably failed to
consider this information.
[41] Amendment 10 informed offerors that two CLS scenarios would be
evaluated, considering 50-percent totals from each scenario.
[42] MDHI asserts that EADS's staffing reductions are offset by other
staffing increases, but the protester has provided no evidence to suggest
that these staffing increases were not also reflected in EADS's pricing.
[43] AWI asserts that EADS's proposal has a provision containing a minimum
guarantee, which AWI argues contradicts section H-6 of the RFP. This
protest ground, raised for the first time in AWI's September 6, 2006
comments, is untimely because it was not raised within 10 days of receipt
of the record that provided the basis for protest. See Bid Protest
Regulations, 4 C.F.R. sect. 21.2(a)(2).
[44] The pricing instructions and the discussions that the agency held
with the offerors explained how escalation and probabilities would be
applied. Contracting Officer's Statement in Response to MDHI Protest (Aug.
18, 2006) at 16.
[45] With regard to escalation, the pricing template did not include
escalation for program years 1 through 10, and MDHI's CLS unit prices for
years 11 through 20 were "deflated to 2006 dollars." Declaration of EADS's
Cost Expert (Aug. 31, 2006), paras. 68-70.
[46] While MDHI asserts that its explanations of the financial models
during discussions should have made it clear to the agency how to
calculate MDHI's price, the models used during discussions (which were
introduced for the first time at that meeting) were only "examples" and
"newly designed" and did not contain the variables that were added into
the models submitted with MDHI's FPR. See Declaration of MDHI's Acting
Chief Executive Officer (Aug. 30, 2006), paras. 8, 9, 15.
[47] MDHI asserts that the agency should have reopened discussions to
raise its concerns about MDHI's flat rate approach and to alert the firm
of the "discrepancies" between the pricing template and its financial
models. MDHI's Comments (Sept. 8, 2006) at 11; MDHI's Comments (Aug. 31,
2006) at 11-12. However, these issues were first introduced by MDHI in its
FPR, and there is no duty to reopen discussions to address these matters.
ITT Fed. Sys. Int'l Corp., B-285176.4, B-285176.5, Jan. 9, 2001, 2001 CPD
para. 45 at 7 n.8.
[48] MDHI does not dispute the assessment of risk due to the floor and
ceiling limitations.
[49] MDHI also protests the source selection decision, based on the
asserted "flaws" in the evaluation of each of the evaluation factors. MDHI
Protest (July 14, 2006) at 29; MDHI's Comments (Aug. 31, 2006) at 24-25.
However, as we have discussed above, we find this evaluation to be
reasonable. Since MDHI's proposal was lower technically rated and higher
priced than EADS's proposal, a cost-technical tradeoff was not required.
Gentex Corp.--W. Operations, B-291793 et al., Mar. 25, 2003, 2003 CPD
para. 66 at 29.
[50] This reliance upon the aviation experts and LUH "users" was
especially reasonable given that the SSA lacked aviation experience. Tr.
at 208-09. It does not evidence that the SSA failed to exercise his own
independent judgment, as AWI alleges. See AWI's Post-Hearing Comments, at
30.
[51] Although AWI complains that the SSA did not perform any tradeoff
under the P/M and logistics factors, AWI's Post-Hearing Comments, at
25-26, the record shows that the SSA reasonably considered there to be
little distinction between the AWI and EADS proposals under these factors.
AR, DVD Tab 8, SSDD, para. 12.