TITLE: B-298840.2, Global Analytic Information Technology Services, Inc., February 6, 2007
BNUMBER: B-298840.2
DATE: February 6, 2007
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B-298840.2, Global Analytic Information Technology Services, Inc., February 6, 2007
DOCUMENT FOR PUBLIC RELEASE
The decision issued on the date below was subject to a GAO Protective
Order. This redacted version has been approved for public release.
Decision
Matter of: Global Analytic Information Technology Services, Inc.
File: B-298840.2
Date: February 6, 2007
William T. Welch, Esq., Barton, Baker, McMahon & Tolle, LLP, for the
protester.
James H. Roberts, III, Esq., and Carrol H. Kinsey, Jr., Esq., Van Skoyoc
Kelly, PLLC, for Information Technology Experts, Inc., an intervenor.
Elin M. Dugan, Esq., Department of Agriculture, for the agency.
Scott H. Riback, Esq., Office of the General Counsel, GAO, participated in
the preparation of the decision.
DIGEST
1. Agency improperly downgraded protester's proposal for failing to
include information showing methods for achieving cost or time savings,
where such a consideration was not a stated basis for evaluation.
2. Protest that agency improperly engaged in discussions solely with
awardee is sustained where awardee was permitted to submit required price
escalation rate after conclusion of its oral presentation, notwithstanding
agency's specific instructions that such pricing information be furnished
at outset of oral presentation.
DECISION
Global Analytic Information Technology Services, Inc. (GAITS), the
incumbent contractor, protests the award of a contract to Information
Technology Experts, Inc. (ITE) under request for proposals (RFP) No.
AG-3142-S-06-0039, issued by the Department of Agriculture for end-user
information technology support services. GAITS asserts that the agency
applied an undisclosed factor in evaluating its proposal and improperly
engaged in discussions with only the awardee.
We sustain the protest.
The RFP contemplated the award of an indefinite-delivery,
indefinite-quantity contract to perform information technology support
services for a base year, with four 1-year options. Offerors were advised
that the agency would make award to the firm submitting the proposal
deemed to be the "best value" to the government, considering price and
non-price evaluation factors. Agency Report (AR) at BATES 345.[1] The
evaluation factors, listed in descending order of importance, were past
performance, methodology, and price. Offerors were to provide pricing in
the form of "bare rates" (unburdened hourly labor rates), as well as
"overhead rates" (expressed as a percentage of the bare rates) and "capped
rates" (burdened rates that could not be exceeded during applicable
periods of performance) for various labor categories. Id. at 344. The RFP
further provided that the offerors' price structure would be evaluated for
completeness, realism, and reasonableness. Id. at 345. Initial proposals
were to include pricing information for the base year only. Id. at 344.
The RFP provided that initial proposals would be evaluated to establish a
competitive range. Offerors whose proposals were in the competitive range
would be invited to make oral presentations. The RFP advised that the oral
presentations would not constitute discussions, but offerors were advised
in the agency's letters inviting them to make oral presentations that
certain additional information was required to be provided at the oral
presentations--including option-year pricing--and that this information
had to be submitted in writing at the start of each firm's presentation.
AR at 241-43. Thus, as relevant here, the RFP provided a common cut-off
time--the start of oral presentations--for the submission of option year
pricing.
The agency received and evaluated numerous initial proposals. Based on the
initial evaluation, it established a competitive range of 10 proposals,
including the protester's and awardee's; both proposals received overall
adjectival ratings of exceptional.[2] The agency then afforded the
competitive range firms an opportunity to make oral presentations;
thereafter, the agency evaluated the presentations and arrived at
composite adjectival ratings that considered both the initial proposals
and the oral presentations.
GAITS included only base year prices in its initial proposal, as the RFP
instructed, and then included a pricing sheet covering all contract years
in its oral presentation materials. In contrast, ITE included base year
pricing in its initial proposal and a representation that its option year
prices would be established by applying an annual escalation rate of
[deleted] percent to its direct labor rates. ITE did not include a
spreadsheet or other information regarding its option year pricing at any
time before or during its oral presentation, and was queried by the agency
during the presentation regarding the absence of a pricing spreadsheet. In
response, ITE sent the agency an e-mail message following its oral
presentation that included as an attachment a spreadsheet of its proposed
pricing for the option years. That spreadsheet, and the accompanying
e-mail, reflected that ITE had used a [deleted] percent escalation rate to
calculate its option year prices, not the [deleted] percent rate included
in its initial proposal.
The agency rated ITE's presentation as exceptional and GAITS's
presentation as very good, and assigned composite ratings to the proposals
of exceptional for ITE and very good+ for GAITS. The evaluated prices were
calculated in two ways. First, the agency multiplied the capped hourly
price for each of several selected labor categories by 1,880 hours per
year for the duration of the contract. AR at 12-17. This resulted in a
finding that ITE's evaluated price was $[deleted]and that GAITS's
evaluated price was $[deleted]. The agency also calculated total estimated
contract prices by multiplying the government's estimated annual hours for
various labor categories by the firms' proposed burdened rates; using this
method, the agency found that ITE's total evaluated price was $[deleted]
and that GAITS's total evaluated price was $[deleted]. Id. On the basis of
these evaluation results, the agency made award to ITE as having submitted
the proposal that represented the best value to the government.
UNDISCLOSED EVALUATION FACTOR
GAITS asserts that the agency improperly applied an undisclosed evaluation
factor in evaluating its oral presentation, namely, the degree to which
its presentation reflected methods that it would use to achieve cost or
time savings during performance, and that this led to its proposal being
rated very good+, rather than exceptional. (The agency's evaluation
materials repeatedly identified GAITS's proposal as weak in this area. AR
at 36, 39, 46, 49, 51.)
The agency defends its evaluation, asserting that, while the RFP did not
expressly provide for consideration of the degree to which an offeror's
presentation reflected methods that would achieve cost or time savings
during performance, it was implicit--since GAITS was the incumbent
contractor--that the agency would evaluate its proposal in light of such
considerations. Specifically, the contracting officer states:
GAITS, as an incumbent contractor, was in an excellent position to be
able to suggest ways of improving the current performance under the
existing contract. However, the GAITS proposal did not describe any such
manner or detail of cost or time saving improvements that could be
achieved via innovative practices. This was deemed a significant
weakness by the [technical evaluation board] which, in addition to the
weaknesses raised [in GAITS's initial, but subsequently withdrawn,
protest] was a factor in GAITS receiving a lower rating from
"Exceptional."
Contracting Officer's Statement, Oct. 16, 2006, at ii. The agency
concludes that only incumbents (apparently there were additional
incumbents besides GAITS) were in a unique position to propose innovations
specific to improving the existing contract, and that it would have been
unfair to non-incumbents for the agency to require such proposals from
them. Agency Report, Nov. 14, 2006, at 6.
Agencies are required to evaluate proposals based solely on the factors
identified in the solicitation, and must adequately document the bases for
their evaluation conclusions. Intercon Assocs., Inc., B-298282,
B-298282.2, Aug. 10, 2006, 2006 CPD para. 121 at 5. While agencies
properly may apply evaluation considerations that are not expressly
outlined in the RFP, where those considerations are reasonably and
logically encompassed within the stated evaluation criteria, Independence
Constr., Inc., B-292052, May 19, 2003, 2003 CPD para. 105 at 4, there must
be a clear nexus between the stated criteria and the unstated
consideration.
The RFP here included a firm's proposed methodology as one of the
evaluation factors, and we generally might view a factor considering
proposed methodology as broad enough to encompass proposals' proposed
methods for achieving cost or time savings.[3] However, even if this is
the case, nothing in the solicitation's description of the methodology
factor, or elsewhere in the solicitation, advised offerors--GAITS in
particular--that the agency would evaluate the degree to which the
incumbent contractor's proposal reflected methods for achieving cost or
time savings over its historical performance of the requirement. That is,
nothing indicated that an incumbent-specific factor would be applied. The
required nexus between the stated evaluation factor and the unstated
consideration, therefore, was absent and, as a result, GAITS was not on
notice that it was the agency's intent to evaluate savings in this manner.
Moreover, notwithstanding that GAITS was the incumbent contractor, the
agency could not properly evaluate only its proposal under this criterion.
Doing so amounted to disparate treatment of proposals, and was
inconsistent with the overriding requirement that agencies evaluate
proposals on a common basis. See Ashe Facility Servs., Inc., B-292218.3,
B-292218.4, Mar. 31, 2004, 2004 CPD para. 80 at 13.
LATE PROPOSAL REVISION
GAITS maintains that the agency's acceptance of ITE's option year prices
after the conclusion of ITE's oral presentation constituted discussions.
GAITS maintains that this was improper because it was not afforded the
same opportunity to engage in discussions. The agency asserts that its
actions did not amount to discussions because it did not solicit ITE's
price reduction during the firm's oral presentation, but merely pointed
out that its presentation materials did not include the required pricing
spreadsheet.
Where agency personnel comment on, or raise substantive questions or
concerns about, an offeror's proposal in the course of an oral
presentation, and either simultaneously or subsequently afford the offeror
an opportunity to make revisions in light of the agency's comments or
concerns, discussions have occurred. TDS, Inc., B-292674, Nov. 12, 2003,
2003 CPD para. 204 at 6. As we have long held, the acid test for whether
discussions have occurred is whether the agency has afforded an offeror an
opportunity to revise or modify its proposal. Id.
Here, during the oral exchange between ITE and the agency, the agency
remarked on the absence of a pricing spreadsheet from ITE's oral
presentation materials; the agency wanted offerors to perform their own
calculations in this regard. Contracting Officer's (CO) Statement, Nov.
14, 2006, at 1. ITE's e-mail to the agency stated that the pricing sheet
was being submitted in response to the agency's request. AR at 238.
However, ITE did not merely confirm its option year pricing from its
initial proposal. Rather, it reduced the escalation rate it initially
proposed, and since the option year pricing was evaluated for award
purposes, this constituted a material change in its proposal. Providing an
offeror an opportunity to make a material change in its proposal
constitutes discussions. Moreover, it is clear from the record that ITE's
revised pricing was tendered after the point in time when it was required
to be submitted, see Lockheed Martin Simulation, Training & Support,
B-292836.8 et al., Nov. 24, 2004, 2005 CPD para. 27 at 8, and that this
resulted in the agency improperly engaging in discussions with only one
offeror after the deadline for submitting proposals. Id.; TDS, Inc.,
supra.
The agency maintains that all firms--including the protester--were free to
propose pricing changes during their oral presentations; thus, the fact
that ITE reduced its pricing in its post-oral presentation e-mail was not
improper because all offerors were treated equally. This argument is
without merit. There is nothing in the record indicating that GAITS (or
other offerors) was advised that pricing or other material aspects of its
proposal could be revised after the conclusion of its oral presentation.
Rather, the agency's letter to GAITS inviting it to make an oral
presentation simply requested a pricing sheet that presented the firm's
prices for all contract years, and GAITS complied with those specific
instructions. AR at 150. Thus, we do not agree that all offerors were
provided the same opportunity to submit revised proposals after the
conclusion of oral presentations.
Finally, the agency asserts that, in any case, ITE's subsequent submission
of its reduced option year escalation rate amounted to a late modification
of an otherwise successful proposal--which was permissible under the
solicitation--because the agency already had determined that it would make
award to ITE prior to evaluating the pricing in its e-mail. This argument
is unsupported by the record. An otherwise successful proposal is one that
would result in the award of a contract to the offeror regardless of the
late modification; this generally means that the government may accept a
favorable late modification only from the offeror already in line for
award. Omega Sys., Inc., B-298767, Nov. 6, 2006, 2006 CPD para. 170 at 2.
The contemporaneous record includes no information showing either that the
agency calculated ITE's extended pricing based on its initial proposal
submission, or that such a calculation was used to make a source selection
decision; rather, the record shows that the agency's deliberations and
source selection decision were based solely on ITE's revised pricing after
oral presentations and a further evaluation based on the oral
presentations. AR at 10-17. The contracting officer's unsupported
statement, made in the heat of litigation, that ITE's proposal already had
been determined to be the best value prior to ITE's reducing its
escalation rate, is not sufficient by itself to establish that the best
value determination, in fact, had been made. In any case, since as
discussed above, the agency's source selection relied on an erroneous
technical evaluation, there would be no basis for our Office to find that
the agency had already made a rational source selection based on ITE's
earlier, higher, escalation rate.
PREJUDICE
For the reasons outlined above, we find that the the agency's downgrading
of GAITS's proposal for failing to offer methods that would achieve time
or cost savings over its historical performance amounted to the improper
application of an unstated evaluation criterion. We also find that this
error in the agency's evaluation was prejudicial to GAITS because it
apparently led to its proposal receiving an overall rating of very good+
rather than exceptional (its initial proposal was rated exceptional, and
the agency's identification of this weakness apparently led to GAITS's
oral presentation being rated very good rather than exceptional); a
correct evaluation of the GAITS proposal could have resulted in the firm
being considered to have submitted the proposal deemed technically
superior overall. In this latter respect, the record shows that, as
between the two proposals receiving exceptional ratings, the agency
distinguished between them, finding that the awardee's proposal was the
"better" of the two exceptionally-rated proposals. AR, at 10-11. We cannot
say whether or not, in the absence of the agency's evaluation error, the
GAITS proposal would have been found to be the "best" among the
exceptionally-rated proposals. Nonetheless, there is a reasonable
possibility that the agency's evaluation error resulted in GAITS being
deprived of the award, especially in view of the RFP's emphasis on
technical merit over price, coupled with the relative closeness of GAITS's
and ITS's evaluated prices. McDonald-Bradley, B-270126, Feb. 8, 1996, 96-1
CPD para. 54 at 3; Statistica, Inc. v. Christopher, 102 F.3d 1577, 1581
(Fed. Cir. 1996). Additionally, we conclude that the agency engaged in
improper discussions with ITE, but not the other offerors, and that this
also was prejudicial to GAITS. It is possible that GAITS would have
reduced its pricing had it been given an opportunity to do so, just as ITE
was given.
RECOMMENDATION
We recommend that, to the extent the agency desires to evaluate proposed
methods for achieving cost or time savings, it amend the RFP to reflect
such considerations and then solicit and evaluate revised proposals in an
equitable manner. In any case, we recommend that the agency afford all
competitive range offerors an opportunity to engage in discussions and to
submit revised proposals; the agency should then perform a new evaluation
consistent with the terms of the RFP. Should the agency determine that a
proposal other than ITE's represents the best value, we recommend that it
terminate ITE's contract for the convenience of the government and make
award to the successful offeror, if otherwise proper. Finally, we
recommend that the agency reimburse GAITS's costs of filing and pursuing
its protest, including reasonable attorneys' fees. Bid Protest
Regulations, 4 C.F.R. sect. 21.8(d)(1) (2006). GAITS's certified cost
claim, detailing the time expended and costs incurred must be submitted to
the agency within 60 days of receiving our decision. 4 C.F.R.
sect. 21.8(f)(1).
The protest is sustained.
Gary L. Kepplinger
General Counsel
------------------------
[1] The agency report uses a BATES numbering system beginning with exhibit
C. All of our cites to the agency report reflect this BATES numbering
system.
[2] Both the proposals and oral presentations could be assigned consensus
adjectival ratings of exceptional, very good, satisfactory, marginal, or
unsatisfactory.
[3] We note that the agency does not appear to have downgraded GAITS's
proposal under the methodology factor; the evaluation documents identify
GAITS's failure to propose cost or time savings as a weakness under the
oral presentation evaluation, not under the methodology factor evaluation.
AR at 36, 39, 46, 49, 51.