TITLE: B-298694; B-298694.2; B-298694.3, Kellogg Brown & Root Services, Inc., November 16, 2006
BNUMBER: B-298694; B-298694.2; B-298694.3
DATE: November 16, 2006
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B-298694; B-298694.2; B-298694.3, Kellogg Brown & Root Services, Inc., November 16, 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: Kellogg Brown & Root Services, Inc.
File: B-298694; B-298694.2; B-298694.3
Date: November 16, 2006
James J. McCullough, Esq., Steven A. Alerding, Esq., and Deneen J.
Melander, Esq., Fried, Frank, Harris, Shriver & Jacobson LLP, for the
protester.
Richard L. Moorhouse, Esq., David T. Hickey, Esq., and Dorn C. McGrath
III, Esq., Greenberg Traurig LLP, for Atlantic Contingency Constructors,
LLC; William A. Roberts III, Esq., and Richard B. O'Keeffe Jr., Esq.,
Wiley Rein & Fielding LLP, for Fluor International, Inc.; and J. Alex
Ward, Esq., Edward Jackson, Esq., and Kristen G. Schulz, Esq., Jenner &
Block LLP, for URS-IAP, LLC, the intervenors.
Richard Welsh, Esq., Naval Facilities Engineering Command, 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. Agency did not perform a reasonable cost realism evaluation when it
deleted a certain element of cost from awardee's proposed indirect costs
because other offerors accounted for this element as a direct cost; this
evaluation did not result in a reasonable assessment of the probable cost
of performing the contract associated with the awardee's proposal, given
that the adjustment was inconsistent with Cost Accounting Standards 401
and 402 and the firm's cost accounting practices, to which the firm was
obligated to adhere in performing the contract.
2. Protest of evaluation of protester's proposed contingency plan is
sustained where the protester provided detailed arguments why the
evaluation was unreasonable, which were consistent with the record, and
the agency did not explain why the evaluation was reasonable in light of
those arguments.
DECISION
Kellogg Brown & Root Services, Inc. (KBR) protests the award by the
Department of the Navy of three global contingency construction contracts
under request for proposals (RFP) No. N62470-06-R-6002 to Atlantic
Contingency Constructors, LLC (ACC), Fluor International, Inc. (Fluor),
and URS-IAP, LLC (URS). KBR contends that the agency misevaluated
proposals under technical and cost factors.
We sustain the protest.
BACKGROUND
This acquisition is for construction and related engineering services in
response to global natural disasters, humanitarian assistance, conflict,
or projects with similar characteristics. Agency Report (AR), Tab 23,
Source Selection Board (SSB) Report, at 3. The RFP contemplated award of
up to three cost-plus-award-fee, indefinite-delivery/indefinite-quantity
(ID/IQ) contracts for a base year with four 1-year options. Award was to
be made without discussions unless discussions were otherwise determined
to be necessary. Id. at 68.
The solicitation provided for award on a "best value" basis, considering
corporate experience, past performance, contingency plan, management
approach, small business utilization, and cost. The non-cost factors were
of equal importance and together were more important than the cost factor.
The past performance factor consisted of two subfactors listed in
descending order of importance--past performance and safety. The
management approach factor consisted of two equally rated
subfactors--organization, home office support, and key personnel; and
accounting and management systems and procedures. The small business
utilization factor consisted of two equally rated subfactors--past
performance in small business utilization, and participation of small
business concerns for this program. Id.
For the cost factor, offerors were required to submit a completed "cost
model." This cost model, which was provided with the RFP, consisted of a
spreadsheet for each year of the contract. In the cost model, offerors did
not propose estimated direct costs, but instead the agency used fixed
"plug" numbers for all of the direct costs (including "other direct
costs") to be incurred under the contract. The total direct costs in the
cost model were $186 million per year and $930 million for the 5-year
contract period. For each contract year, offerors were to insert in the
spreadsheet their rates, allocation bases, and totals for the indirect
cost items of labor overhead, fringes, overhead, general and
administrative (G&A), cost of facilities capital, and proposed award fee.
The results for each yearly spreadsheet, including the plug numbers for
direct costs, were summed to develop a total overall cost for each
proposal. The cost model required offerors to "apply indirect rates in
accordance with their established accounting system."[1] Offerors were
also required to submit with their cost proposal the "[r]ate structure,
allocation base, and other supporting rationale" for their proposed
indirect costs. RFP amend. 3, Cost Model. The cost proposal instructions
in the RFP required the offerors to provide specific support for the
proposed indirect costs and stated:
The proposal must completely identify all indirect costs that are known,
including a list of labor categories that are charged as indirect costs.
The proposal must also provide a list [of] the types of costs that are
charged as Other Direct Costs. These costs are needed so the Government
can conduct an equitable cost evaluation.
RFP at 66. These instructions were the subject of a question and answer
included in Amendment No. 3 to the RFP, which read as follows:
Q11 -- Please explain the requirement to identify labor categories that
are charged as indirect costs. Should the Offeror provide a
representative sample or a detailed list of every labor category that
charges to overhead pools?
A11 -- The information helps us to identify significant cost areas where
an adjustment between direct and indirect may be necessary to make the
prices more comparable. All labor categories should be included.
Eight proposals were submitted in response to the RFP. A technical
evaluation board (TEB) evaluated the technical proposals under the
non-cost factors, and assigned adjectival ratings to proposals under each
of the factors and subfactors. As relevant here, the TET ranked the
proposals of the awardees and the protester as follows: Fluor--second,
URS--third, ACC--fourth, and KBR--[REDACTED]. AR, Tab 21, TEB Report, app.
A.
The cost evaluation board (CEB) evaluated proposals under the cost factor.
Based on the CEB's cost analysis and various audits by the Defense
Contract Audit Agency (DCAA), a variety of probable cost adjustments were
made to the offerors' proposed indirect costs.
For example, with regard to KBR's cost proposal, "DCAA noted differences
between the contractor's proposed indirect rates and the contractor's
current forward pricing rate recommendations and/or DCAA audited rates,"
which indicated to DCAA that KBR's proposed indirect rates were
overstated. AR, Tab 22, CEB Report, at 22. The CEB adopted DCAA's
recommendations regarding the estimated overstatement of KBR's indirect
rates and lowered KBR's evaluated cost by [REDACTED]. Id. at 24.
The CEB also determined that, based on its review, there were two areas in
which one or more of the offerors differed in their accounting charging
practices--program management office (PMO) and fringe benefit costs.
However, the CEB was not able to confirm that it had completely identified
all areas where accounting treatments by the various offerors of certain
costs differed. Id. at 9. The CEB noted that while ACC and another
offeror[2] (not an awardee or KBR) treat PMO costs as indirect costs in
accordance with their established cost accounting practices, all other
offerors treated these costs as direct costs. "[T]o be consistent with the
direct treatment of PMO costs by the majority of the offerors," the CEB
"reclassified" the PMO costs from indirect costs and removed them from the
G&A rate cost pool, which reduced ACC's evaluated cost by $19,122,930.[3]
Id. at 17.
With regard to total evaluated cost, the CEB ranked the awardees and
protester as follows: ACC--first (lowest), KBR---[REDACTED], Fluor--third,
and URS--fifth. AR, Tab 22, CEB Report, at 32.
The TEB and CEB reported their results to the SSB, which adopted the
findings of both boards. The relevant ratings for the four proposals at
issue in this protest were reported as follows:
+------------------------------------------------------------------------+
| | KBR | ACC | URS | Fluor |
|----------------+----------+--------------+--------------+--------------|
|Technical |[REDACTED]| Good | Good | Excellent |
|----------------+----------+--------------+--------------+--------------|
||Corporate |[REDACTED]| [REDACTED] | [REDACTED] | [REDACTED] |
||Experience | | | | |
||---------------+----------+--------------+--------------+--------------|
||Past |[REDACTED]| [REDACTED] | [REDACTED] | [REDACTED] |
||Performance | | | | |
||---------------+----------+--------------+--------------+--------------|
|| |Past |[REDACTED]| [REDACTED] | [REDACTED] | [REDACTED] |
|| |Performance| | | | |
|| |-----------+----------+--------------+--------------+--------------|
|| |Safety |[REDACTED]| [REDACTED] | [REDACTED] | [REDACTED] |
||---------------+----------+--------------+--------------+--------------|
||Contingency |[REDACTED]| [REDACTED] | [REDACTED] | [REDACTED] |
||Response Plan | | | | |
||---------------+----------+--------------+--------------+--------------|
||Management |[REDACTED]| [REDACTED] | [REDACTED] | [REDACTED] |
||Approach | | | | |
||---------------+----------+--------------+--------------+--------------|
|||Organization, |[REDACTED]| [REDACTED] | [REDACTED] | [REDACTED] |
|||Home Office | | | | |
|||Support, and | | | | |
|||Key Personnel | | | | |
|||--------------+----------+--------------+--------------+--------------|
|||Accounting and|[REDACTED]| [REDACTED] | [REDACTED] | [REDACTED] |
|||Management | | | | |
|||Systems and | | | | |
|||Procedures | | | | |
||---------------+----------+--------------+--------------+--------------|
||Small Business |[REDACTED]| [REDACTED] | [REDACTED] | [REDACTED] |
||Utilization | | | | |
||---------------+----------+--------------+--------------+--------------|
|||Past |[REDACTED]| [REDACTED] | [REDACTED] | [REDACTED] |
|||Performance in| | | | |
|||Small Business| | | | |
|||Utilization | | | | |
|||--------------+----------+--------------+--------------+--------------|
|||Participation |[REDACTED]| [REDACTED] | [REDACTED] | [REDACTED] |
|||of Small | | | | |
|||Business | | | | |
|||Concerns for | | | | |
|||this Program | | | | |
|----------------+----------+--------------+--------------+--------------|
|Evaluated Cost |[REDACTED]|$1,033,644,690|$1,060,231,026|$1,045,099,517|
|----------------+----------+--------------+--------------+--------------|
+------------------------------------------------------------------------+
AR, Tab 23, SSB Report, at 7-8; Tab 21, TEB Report, app. A.
The SSB performed a comparative analysis of proposals based on each factor
and subfactor, and assessed overall rankings to the relevant proposals as
follows: Fluor--first, URS--second, and ACC--third. The SSB did not
specifically compare KBR's proposal to ACC's, since ACC's proposal was
rated higher technically and was determined to be of lower cost, but did
compare KBR's proposal to URS's and Fluor's. The SSB noted KBR's
"excellent" corporate experience relative to Fluor and URS, but noted that
KBR's past performance was inferior, primarily due to "significant
weaknesses" noted in the performance of [REDACTED] where KBR received
[REDACTED] ratings. AR, Tab 23, SSB Report, at 17, 29. KBR's contingency
plan was found to be less "comprehensive," "much more general," and
"relied on [KBR's] previous experience to demonstrate the plan to respond
to contingency requirements rather than providing a detailed contingency
response plan." Id. at 18, 29-30. KBR's proposal was also rated inferior
to Fluor's and URS's under the management factor because, according to the
agency, the proposal provided less detail in certain areas, [REDACTED] of
KBR's accounting and management systems were found by DCAA to be
[REDACTED] and DCAA found [REDACTED] associated with KBR's CAS disclosure
statements. Id. at 19, 30. Under the small business utilization factor,
the SSB found "no advantage" to Fluor's proposal over KBR's, but found
that URS's proposal was superior to KBR's due to advantages under the past
performance in utilizing the small business program subfactor. Id. at 20,
31. The SSB determined that the technical superiority of Fluor's and URS's
proposals were worth the additional evaluated cost as compared to KBR's
proposal. Id.
The source selection authority adopted the findings of the SSB, and made
award to Fluor, URS, and ACC. These protests followed.
COST EVALUATION
KBR protests the cost evaluation of ACC's proposal, contending that the
agency was not permitted to "reclassify" ACC's PMO costs because this
would be inconsistent with ACC's established cost accounting practices.
KBR notes that if this adjustment had not been made, KBR's evaluated cost
would have been lower than ACC's. KBR also protests that it was
unreasonable for the agency to make the particular adjustment to ACC's
costs, where it is apparent that there were other instances where the
offerors treated costs differently for accounting purposes that were not
accounted for in the cost evaluation.
When an agency evaluates proposals for the award of a cost-reimbursement
contract, an offeror's proposed estimated cost of contract performance is
not considered controlling since, regardless of the costs proposed by an
offeror, the government is bound to pay the contractor its actual and
allowable costs. Metro Mach. Corp., B-297879.2, May 3, 2006, 2006 CPD
para. 80 at 9. As a result, a cost realism analysis is required to
determine the extent to which an offeror's proposed costs represent the
offeror's likely costs in performing the contract under the offeror's
technical approach, assuming reasonable economy and efficiency. Federal
Acquisition Regulation (FAR) sections 15.305(a)(1), 15.404-1(d)(1), (2);
The Futures Group Int'l, B-281274.2, Mar. 3, 1999, 2000 CPD para. 147 at
3. A cost realism analysis involves independently reviewing and evaluating
specific elements of each offeror's cost estimate to determine whether the
estimated proposed cost elements are realistic for the work to be
performed, reflect a clear understanding of the requirements, and
are consistent with the methods of performance and materials described in
the offeror's proposal. FAR sect. 15.404-1(d)(1); Advanced Commc'n Sys.,
Inc., B-283650 et al., Dec. 16, 1999, 2000 CPD para. 3 at 5. Based on the
results of the cost realism analysis, an offeror's proposed costs should
be adjusted when appropriate. FAR sect. 15.404-1(d)(2)(ii). The evaluation
of competing cost proposals requires the exercise of informed judgment by
the contracting agency; we review an agency's judgment in this area only
to see that the agency's cost realism evaluation was reasonably based and
not arbitrary. Metro Mach. Corp., supra.
The agency contends that it conducted a proper cost realism analysis of
the cost proposals. It acknowledges that ACC was "required by its approved
cost accounting systems" to include PMO costs as indirect costs, but
asserts that since all but one other offeror proposed these costs as
direct costs, the reclassification was necessary so that the agency could
be "consistent in its evaluation." Supplemental Agency Report (SAR) at 3.
The agency's cost realism analysis of ACC's proposal was not reasonable.
As the agency admits, ACC's cost accounting practices specifically require
that ACC include PMO costs as indirect costs. In fact, ACC's cost
proposal, including a G&A rate that included PMO costs, was consistent
with the RFP's cost model instructions requiring offerors to "apply
indirect rates in accordance with their established accounting system."
RFP amend. 3, attach. 2, Cost Model.
CAS 401--which is applicable to ACC--requires a contractor's practices in
estimating costs for a proposal to be consistent with cost accounting
practices used by the contractor in accumulating and reporting costs.
48 C.F.R. sect. 9904.401-20 (2005). This requirement is imposed because
"[c]onsistency in the application of cost accounting practices is
necessary to enhance the likelihood that comparable transactions are
treated alike," so that, among other things, there is "financial control
over costs during contract performance." Id. More significantly, CAS
402--also applicable to ACC--states:
All costs incurred for the same purpose, in like circumstances, are
either direct costs only or indirect costs only with respect to final
cost objectives. No final cost objective shall have allocated to it as
an indirect cost any cost, if other costs incurred for the same purpose,
in like circumstances, have been included as a direct cost of that or
any other final cost objective. Further, no final cost objective shall
have allocated to it as a direct cost any cost, if other costs incurred
for the same purpose, in like circumstances, have been included in any
indirect cost pool to be allocated to that or any other final cost
objective.
48 C.F.R. sect. 9904.402-40. Because of these requirements, ACC was and
will be required to account for its costs in a manner consistent with its
established accounting practices during the course of this contract
performance. General Research Corp., B-241569, Feb. 19, 1991, 91-1 CPD
para. 183 at 9; CACI, Inc.--Fed., B-216516, 84-2 CPD para. 542 at 10-13.
Consequently, in determining ACC's evaluated probable cost for performing
this contract, the agency could not reclassify costs that ACC treats as
indirect costs in its accounting system as direct costs. See General
Research Corp., supra; CACI, Inc.--Fed., supra.
The agency argues that this adjustment was necessary in order to allow for
a more "equitable" comparison of the cost proposals. In effect, the agency
here has selectively "normalized" the cost elements included in the
offerors' indirect cost pools. Normalization is a technique sometimes used
within the cost evaluation/adjustment process that involves measuring
offerors against the same cost standard or baseline where there are no
logical differences in approach or in situations where insufficient
information is provided in the proposals. General Research Corp., supra.
Such a normalization process was improper here because ACC's proposal
necessarily accounted for PMO costs as part of its indirect costs, which
were required to be accounted for in a like manner under this contract.[4]
Therefore, the agency's "normalization" of PMO costs among the offerors
with different accounting systems necessarily resulted in an unreasonable
estimate of the offerors' proposed costs for performing this contract.
General Research Corp., supra, at 5-6, 9. Moreover, the agency has never
explained why deleting PMO costs from proposed indirect costs will result
in a more equitable comparison of proposals. There is no evidence in the
record that the shifting of costs from indirect to direct can result in a
number that represents the probable costs of a particular proposal in
performing the contract, because there is no indication that the cost
model's plug number represents the direct cost approach that will be taken
by each contractor.[5]
The agency asserts that because an RFP amendment advised offerors, in
response to an offeror's question, that a "standing PMO" would not be
funded, offerors were on notice that PMO costs were "within the scope of
direct costs fixed by the Navy." Agency Brief (Oct. 20, 2006) at 2; see
RFP amend. 3, attach. 1, Q&A 44. The agency posits that its cost
evaluation adjustment to account for ACC's different treatment of PMO
costs was therefore appropriate in order to allow for an "equitable"
comparison of the proposals. This argument is meritless for a variety of
reasons. First, the statement that the agency would not fund a "standing
PMO" does not suggest that PMO costs were included as direct costs; if
anything, it suggests the opposite. Also, as noted above, the agency does
not explain how this statement would allow ACC to vary from its
established accounting practices with regard to PMO costs. Finally, there
is no evidence that any PMO costs were included in the "plug" numbers for
direct costs.
The agency argues that KBR was not prejudiced because it was also the
beneficiary of a downward cost adjustment in its indirect costs. However,
as noted above, the adjustment to KBR's probable costs was to properly
account for an apparent overstatement in several of its indirect rates,
which is an entirely different proposition than reclassifying costs that
had been properly included in indirect cost pools to direct costs.
Finally, as noted by the protester, several of ACC's indirect cost rates
are significantly less than those proposed by the other offerors, which
KBR suggests evidences that costs which other offerors charged as indirect
costs may be charged as direct costs by ACC. KBR contends that given the
multiple accounting variances amongst the offerors, the agency's "singling
out" of ACC's PMO costs to adjust from indirect costs to direct costs was
unreasonable and represented unequal treatment. The agency has offered no
substantive response to this KBR contention, which, based on this record,
appears to have merit.
In sum, the agency's adjustment to ACC's proposal was unreasonable and
prejudiced KBR because it resulted in ACC being evaluated as having a
lower cost than KBR, such that no cost/technical tradeoff was performed.
CONTINGENCY PLAN EVALUATION
KBR also contends that the agency misevaluated its proposal and the
proposals of URS and ACC under many of the technical factors. In reviewing
such protests, our Office does not reevaluate proposals, but instead
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.
Under the contingency plan factor (which was equal in weight to the other
non-cost factors), the RFP stated that the evaluation would "consider[]
the effectiveness of the offeror's contingency response plan to perform
work for this contract," and advised offerors that the government was
seeking "approaches that maximize quality, result in optimal use of
resources, are cost effective, and are highly responsive to the interests
of the Navy and its customers." RFP at 61. Offerors were instructed to
provide the following information in their proposals:
1. Address plan to minimize response time between the award of a task
order and the mobilization to the site. Include a discussion on
coordination of subcontractor for quick response.
2. Address plan to obtain materials, equipment, and workforce globally,
including areas with limited/constrained resources.
3. Address plan to provide design and engineering services, including
incidental support services
4. Address plan to control and monitor costs for both the prime and
subcontractors. Specifically describe cost control measures that will be
employed to monitor subcontractor costs in a contingency environment.
Id.
KBR asserts with regard to the contingency plan factor that the agency
overlooked a number of strengths, and assessed a number of weaknesses that
were unreasonable. The agency responded in cursory fashion that KBR's
proposal was "more general" and provided "limited details," and contended
that the protester's arguments reflect only "mere disagreement" with the
agency. AR at 17; SAR at 9.
Our review of the record shows more than "mere disagreement." In its
protest filing, KBR provided citations to its proposal showing where in
KBR's proposal the firm addressed each of the areas identified in the RFP
for this factor, and showing where it addressed items the agency stated
were weaknesses. KBR also made detailed arguments why its proposal was
deserving of strengths or significant strengths, including pointing out
where other offerors received similar strengths. See, e.g., KBR's Protest
at 14-23. The agency has failed to respond to these specific allegations.
Moreover, the TEB report contains only one short statement that "KBR's
only support for their [contingency] response plan was to reference past
projects and provided a general overview of their plans for contingency
response," and identified the following unelaborated weakness in KBR's
proposal under the contingency plan factor:
Very limited detail provided on existing resources and how these
resources will be coordinated. Contractor mainly used past contracts to
show responses. Very limited detail provided for subcontractor
agreements, pre-positioned materials, equipment or people.
AR, Tab 21, TEB Report, at 74-75.
Our review of the record does not show that KBR's contingency plan is more
limited or general than the awardees' plans. Although URS proposed a plan
that was approximately twice as long as the other offerors', KBR, Fluor,
and ACC all provided contingency plans of similar length. From our review,
it is not apparent that the level of detail in any of the plans is
significantly different. Notwithstanding KBR's specific protest
contentions, the agency has failed to provide any specific examples of
where the plans are dissimilar, and none are apparent from the record. All
offerors appear to have addressed the requirements of the RFP and all
offerors cited past projects as examples to demonstrate how their plan
would successfully be implemented. Although KBR perhaps cited a few more
examples than the other offerors, the agency has not explained why this is
a weakness and not a strength, given that the examples appear to
demonstrate that the proposed contingency plan has been implemented
successfully. Given that the record does not, on its face, support the
agency's ratings, and the agency has otherwise failed to explain the
difference in ratings, we sustain the protest on this ground.
OTHER TECHNICAL EVALUATION CONTENTIONS
KBR also asserts that the agency misevaluated its proposal under the past
performance, management approach, and small business utilization factors;
and that the agency misevaluated URS's and ACC's proposals under the
corporate experience, past performance, and management approach factors.
Based on our review of the record, we find the protester's allegations to
be without merit with the exception of the following protest grounds, to
which the agency has not adequately responded: (1) for various task
orders, the agency failed to consider favorable past performance that was
in its possession, and considered only unfavorable performance without
considering (or explaining the inconsistencies with) more favorable
performance reports; (2) KBR's proposal was entitled to numerous strengths
and was undeserving of weaknesses under the organization, home office
support, and key personnel subfactor of the management approach factor;
(3) KBR's proposal was entitled to a higher rating under the small
business utilization factor; and (4) the agency misevaluated URS under the
corporate experience factor by considering the performance of
subcontractors when, according to KBR, it is "unlikely" that the
subcontractors will perform the work. It is unclear from the record, and
the agency's cursory response to the allegations, whether the agency's
evaluation is reasonable under these factors. Although we do not sustain
the protest on these grounds, given our recommendation below, the agency
should consider the protester's arguments identified above in performing
its reevaluation.
We recommend that the agency reevaluate proposals under the technical and
cost factors, conduct discussions if determined necessary, and make a new
source selection decision.[6] If based on this new evaluation, the agency
determines that one or more of the awardees are no longer in line for
award, the agency should terminate the awardees' contracts and make awards
consistent with the new selection decision. We also recommend that KBR be
reimbursed the costs of filing and pursuing its protest, including
reasonable attorney's fees. 4 C.F.R. sect. 21.6(d) (2006). In accordance
with section 21.8(f)(1) of our Bid Protest Regulations, KBR must file its
certified claim for costs, detailing the time expended and costs incurred,
directly with the agency within 60 days of receipt of this decision.
The protest is sustained.
Gary L. Kepplinger
General Counsel
------------------------
[1] The RFP stated that the offeror's proposed indirect rates would serve
as maximum ceiling rates during the life of the contract. RFP at 66.
[2] This other offeror accounted for fringe benefits differently from the
other offerors.
[3] Because direct costs were pre-determined plug numbers in the cost
model, no adjustments were made to ACC's or any other offeror's direct
costs.
[4] Offerors are entitled to establish their own accounting systems
consistent with applicable CAS requirements. See CACI, Inc.--Fed., supra,
at 12.
[5] The agency asserts that KBR's challenge to the cost evaluation is an
untimely challenge to an alleged solicitation defect, given that a
solicitation amendment informed offerers that complete indirect and other
direct cost information was required because "[t]he information helps us
to identify significant cost areas where an adjustment between direct and
indirect may be necessary to make the prices more comparable." Agency
Brief (Oct. 20, 2006) at 2; see RFP amend. 3, attach. 1, Q&A 11. This
advice could not be reasonably construed as providing for a cost
evaluation that was inconsistent with CAS and did not compute the actual
probable costs of an offeror's proposal as required by FAR sect.
15.305(a)(1) and sect. 15.404-1(d)(1), (2).
[6] The agency may want to review its cost model to ensure that it
accurately reflects probable costs and is not inconsistent with CAS.