TITLE: B-298880.3, B-298880.4, MASAI Technologies Corporation, September 10, 2007
BNUMBER: B-298880.3, B-298880.4
DATE: September 10, 2007
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B-298880.3, B-298880.4, MASAI Technologies Corporation, September 10, 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: MASAI Technologies Corporation

   File: B-298880.3, B-298880.4

   Date: September 10, 2007

   Janine S. Benton, Esq., and Kathy C. Potter, Esq., Benton & Potter PC, for
   the protester.

   Kenneth D. Brody, Esq., and Thomas K. David, Esq., David Brody &
   Dondershine, LLP, for Denysys Corp., an intervenor.

   Maj. ChristinaLynn E. McCoy, Department of the Army, for the agency.

   Glenn G. Wolcott, Esq., and Ralph O. White, Esq., Office of the General
   Counsel, GAO, participated in the preparation of the decision.

   DIGEST

   1. Agency reasonably determined that protester's proposal failed to comply
   with solicitation requirements regarding personnel qualifications,
   properly evaluating protester's proposal as [deleted] under that
   evaluation factor.

   2. Agency's review of protester's and awardee's prior activities to assess
   whether potential conflicts of interest existed reasonably supports
   agency's conclusion that awardee did not have an unfair competitive
   advantage.

   DECISION

   MASAI Technologies Corporation (MTC) protests the Department of the Army's
   award of a contract to Denysys Corporation pursuant to request for
   quotations (RFQ) No. W81XWH-06-T-02857[1] to provide computer and
   technical support for the Army's new medical logistics information system,
   known as the "Theater Wide Enterprise Logistics System" (TEWLS). MTC
   protests that the agency improperly evaluated its proposal and failed to
   adequately consider an alleged conflict of interest.

   We deny the protest.

   BACKGROUND

   The solicitation was originally issued in August 2006, and contemplated
   award of a contract for a 1-year base period and two 1-year option periods
   to provide commercial services for "sustainment support" of TEWLS.[2] More
   specifically, the solicitation's performance work statement (PWS) provides
   that the contractor will "analyze functional business process
   requirements" and "provide strategic-level consultation and product
   improvement modifications" in performing this contract. Agency Report
   (AR), Tab 3, RFQ at 13. The solicitation provided that award would be made
   on the basis of the proposal considered most advantageous to the
   government, and established the following evaluation factors, listed in
   descending order of importance: personnel qualifications, technical
   approach, past experience, and price.[3] RFQ at 23-25. Offerors were
   advised that, "[i]n order to be considered for award, the proposal must
   achieve at least a satisfactory rating in all non-cost factors." RFQ at
   25.

   With regard to the required qualifications of proposed personnel, the
   solicitation provided, among other things: "At a minimum, all contractor
   employees must possess approved National Agency Check with Inquiries
   (NACI) and be a US citizen to gain access to U.S. Government computer
   systems." RFQ at 12. The solicitation further stated:

     Proposed personnel must be immediately available no more than two
     business days from contract award. . . . Personnel cannot be substituted
     or replaced without the written agreement of the Contracting Officer.

   RFQ at 23.

   Finally, the solicitation stated that the agency intended to award a
   contract without discussions, RFQ at 21, and provided that "[a]ny offer,
   modification, revision, or withdrawal of an offer received at the
   Government office designated in the solicitation after the exact time
   specified for receipt of offers is `late' and will not be considered."[4]
   RFQ at 20.

   Initial proposals were submitted by MTC and Denysys on August 24;[5] in
   September, MTC filed its first protest, alleging that an organizational
   conflict of interest (OCI) existed with regard to BearingPoint, Inc.
   (BPI), a Denysys subcontractor. More specifically, MTC maintained that BPI
   had an unfair competitive advantage due to its prior performance of other
   Army contracts.[6] In response, the agency stated that it would amend the
   solicitation to require all offerors to provide representations regarding
   potential OCIs, and that the agency would thereafter make a determination
   regarding whether OCIs existed and, if so, whether they could be avoided,
   neutralized or mitigated. We dismissed MTC's protest based on the agency's
   pending actions.

   The agency subsequently amended the solicitation and, thereafter, MTC and
   Denysys each submitted a certification stating there were no OCIs created
   by its participation in the procurement. After reviewing the submissions,
   the agency performed an analysis of BPI's activities in connection with
   its prior contracts. Based on the agency's review and analysis, the
   contracting officer determined that no OCIs existed. AR, Tab 6.
   Thereafter, a contract was awarded to Denysys and MTC was notified of the
   award on February 9, 2007.

   On February 20, MTC filed a second protest, asserting that the selection
   of Denysys had not been made in accordance with the solicitation's stated
   evaluation factors, and again maintaining that the agency had failed to
   properly consider OCIs. The agency again responded to MTC's protest,
   stating that it would further amend the solicitation to clarify certain
   contract requirements, conduct a new source selection, and further address
   the specific OCI allegations raised by MTC; we again dismissed the protest
   pending the agency's actions.

   On March 20, proposals were again submitted by MTC and Denysys. After
   reviewing the proposals, the agency's source selection evaluation board
   (SSEB) asked the contracting officer to seek clarification from both firms
   regarding their compliance with the solicitation requirement that all
   proposed personnel be U.S. citizens with NACI security clearances. AR, Tab
   14. By e-mails to MTC and Denysys dated March 23, the contracting officer
   asked each firm to: "Please confirm that all proposed employees are U.S.
   citizens and have an NACI." AR, Tabs 15, 16.

   Denysys responded, stating: "All employees we propose by Denysys and our
   subs are U.S. citizens and have recent valid NACI." AR, Tab 17. In
   contrast, MTC responded to the contracting officer's request by suggesting
   that the solicitation did not, in fact, require all personnel to be U.S.
   citizens or to hold NACI clearances, asserting that "this security
   guideline of `U.S. citizens' has a documented history of being `relaxed'
   on Ft. Detrick." AR, Tab 18. Nonetheless, MTC's response further stated
   that it was "declar[ing] staff member substitutions . . . to some of the
   proposed MTC personnel originally proposed." Id. In this regard, MTC
   advised the agency that four of the eight initially proposed individuals
   were being "replaced" by four other individuals. More specifically, MTC's
   response contained two personnel lists. Above the first list, which
   included all of the initially-proposed personnel, MTC's response stated:
   "MTC Aug 2006 proposed contract personnel." Above the second list, which
   omitted the four "replaced" individuals and included four new individuals,
   each of which were described as a "substitute," MTC's response stated:
   "MTC proposed U.S. citizen personnel with substitutions as of March 2007."
   Id.

   The contracting officer/source selection authority (SSA)[7] concluded that
   these substitutions were "late" revisions or modifications not permitted
   by the solicitation, and did not consider MTC's revised proposal; for
   purposes of the source selection decision, the SSA evaluated only the
   initially-proposed personnel. In evaluating MTC's proposal, the SSA
   concluded that MTC's initially-proposed personnel failed to comply with
   the solicitation's requirement that all proposed personnel be U.S.
   citizens with NACI clearances, and rated MTC's proposal "Unsatisfactory"
   with regard to personnel qualifications.[8] The SSA documented his
   assessment in the source selection decision memorandum, stating:

     Paragraph 1.4 of the solicitation's Performance Work Statement (PWS)
     mandates all contractor employees be United States citizens in order to
     gain access to U.S. Government computer systems. Without access to these
     systems, contract performance cannot be achieved. Four personnel
     proposed by MTC are green card holders, but clearly are not U.S.
     citizens. Thus, MTC failed compliance.

   AR, Tab 24 at 1.

   Denysys was subsequently selected for award. This protest followed.

   DISCUSSION

   MTC first protests that the agency was required to accept and evaluate the
   personnel revisions MTC submitted in response to the agency's March 23,
   2007, clarification request.[9] In asserting that the agency was obligated
   to consider those revisions, MTC refers to the Army's "Key Personnel"
   clause (USAMRAA 52.042-4033), which was incorporated by reference into the
   solicitation, contending that this clause authorized an offeror's
   substitution of personnel after proposals had been submitted and prior to
   contract award.

   MTC's assertion that the "Key Personnel" clause authorized--and
   required--the agency to accept and evaluate MTC's post-closing-date
   revision to its proposal is not supported by the terms of the clause. That
   clause states: "during the contract performance period substitution of Key
   Personnel shall not be permitted unless such substitution is necessitated
   by sudden illness, death, or termination of employment."[10] AR, Tab 32,
   at 8 (underlining added). Clearly, this solicitation provision applies to
   post-award substitutions, that is, substitutions "during the contract
   performance period"--not to post-closing-date, pre-award substitutions.
   Here, the solicitation expressly prohibited the agency's consideration of
   a late modification or revision to a proposal, further stating: "Personnel
   cannot be substituted or replaced without the written agreement of the
   Contracting Officer."[11] RFQ at 23. MTC's protest that the agency was
   required to accept and evaluate its revised proposal is without merit.[12]

   MTC next protests that the agency applied unstated evaluation factors in
   determining that its proposal was unacceptable. More specifically, MTC
   asserts that the solicitation did not, in fact, require all personnel to
   be U.S. citizens or hold NACI clearances prior to award. Protest at 9. We
   disagree.

   As noted above, the solicitation expressly provided that, "[a]t a minimum,
   all contractor employees must possess approved National Agency Check with
   Inquiries (NACI) and be a US citizen to gain access to U.S. Government
   computer systems," RFQ at 12, and further stated that "[p]roposed
   personnel must be immediately available no more than two business days
   from contract award." RFQ at 23.

   In pursuing this protest, MTC asserts that its substitution of personnel
   resulted from its discovery (just 8 days after submitting its final
   proposal) that four of the eight personnel it had offered were
   "unavailable." Protest at 11. More specifically, MTC maintains that the
   newly-discovered "unavailability" of the four personnel--not their failure
   to comply with the solicitation requirements regarding U.S. citizenship
   and security clearances--led to MTC's attempted substitutions.
   Accordingly, MTC asserts it was unreasonable for the agency to conclude
   that the four "replaced" personnel were not U.S. citizens with NACI
   clearances.[13]

   Based on the record discussed above, we think the SSA reasonably concluded
   that MTC's proposed personnel failed to comply with the solicitation
   requirement that personnel be U.S. citizens with NACI security clearances
   and be immediately available. In any event, in light of MTC's clear notice
   to the agency that it was no longer offering four of the eight
   initially-identified personnel, the proposal was clearly unacceptable for
   failing to propose personnel that complied with all of the solicitation
   requirements.[14] On this record, we do not question the agency's
   determination that MTC's proposal was properly rated [deleted] with regard
   to MTC's proposed personnel.

   MTC also challenges various other aspects of the agency's evaluation,
   including its evaluation of past performance and price. Since, as
   discussed above, the agency reasonably concluded that MTC's proposal was
   [deleted] with regard to personnel qualifications and, as noted above, the
   solicitation required that "to be considered for award, the proposal must
   achieve at least a satisfactory rating in all non-cost factors," RFQ at
   25, MTC's complaints regarding the agency's evaluation under other
   evaluation factors need not be considered.

   Finally, MTC protests that the agency should have disqualified Denysys
   from the competition based on MTC's assertions that Denysys' proposed
   subcontractors have OCIs due to their performance of other Army contracts.
   MTC argues that, by virtue of this performance of other contracts, Denysys
   had unequal access to information that gave it an unfair competitive
   advantage. We disagree.

   FAR subpart 9.5 sets forth the regulatory guidance governing OCIs. Such
   conflicts arise where:

     because of other activities or relationships with other persons, a
     person is unable or potentially unable to render impartial assistance or
     advice to the government, or the person's objectivity in performing the
     contract work is or might be otherwise impaired, or a person has an
     unfair competitive advantage.

   FAR sect. 2.101.

   MTC maintains that any time an offeror, through performance of another
   government contract, gains knowledge or information that is not generally
   available to other offerors, that offeror has an OCI and must be excluded
   from the competition. In our view, MTC overstates the requirements of the
   FAR in this area.

   It is well-settled that an offeror may possess unique information,
   advantages and capabilities due to its prior experience under a government
   contract--either as in incumbent contractor or otherwise; further, the
   government is not necessarily required to equalize competition to
   compensate for such an advantage, unless there is evidence of preferential
   treatment or other improper action. See FAR sect. 9.505-2(a)(3);
   Crux Computer Corp., B-234143, May 3, 1989, 89-1 CPD para. 422 at 5. The
   existence of an advantage, in and of itself, does not constitute
   preferential treatment by the agency, nor is such a normally-occurring
   advantage necessarily unfair. Crofton Diving Corp., B-289271, Jan. 30,
   2002, 2002 CPD para. 32 at 6-7; Government Bus. Servs. Group, B-287052 et
   al., Mar. 27, 2001, 2001 CPD para. 58 at 10.

   The responsibility for determining whether an OCI exists, and to what
   extent the firm should be excluded from the competition, rests with the
   contracting agency, SRS Techs., B-258170.3, Feb. 21, 1995, 95-1 CPD para.
   95 at 8-9, and the FAR directs contracting officers to examine each
   situation individually and exercise "common sense, good judgment, and
   sound discretion" in determining whether significant conflicts exist. FAR
   sect. 9.505. The FAR and this Office's decisions mandate that, in meeting
   its obligation to identify OCIs, an agency must give thorough
   consideration to the interests and activities of an offeror that might
   create OCIs. See, e.g., Alion Sci., & Tech. Corp., B-297342, Jan. 9, 2006,
   2006 CPD para. 1 at 8-13; Science Applications Int'l Corp., B-293601 et
   al., May 3, 2004, 2004 CPD para. 96 at 4-8. Where an agency has, in fact,
   given thorough, documented consideration to an offeror's activities and
   their potential to create OCIs, we will not substitute our judgment for
   the agency's conclusions drawn from such a comprehensive review, provided
   the conclusions are otherwise rational and reasonable. See, e.g., Business
   Consulting Assocs., B-299758.2, Aug. 1, 2007, 2007 CPD para. 134 at 9-10;
   Overlook Sys. Techs., Inc., B-298099.4, B-298099.5, Nov. 28, 2006, 2006
   CPD para. 185 at 10-18; Alion Sci. & Tech. Corp., B-297022.4, B-297022.5,
   Sept. 26, 2006, 2006 CPD para. 146 at 5-8.

   Here, as documented extensively in the agency record, the agency gave
   thorough and comprehensive consideration to the prior activities of
   Denysys and its subcontractors, as well as MTC and its subcontractors, in
   order to assess whether those activities created OCIs. Specifically, the
   contracting officer performed an analysis of the work that would be
   required under the solicitation at issue--that is, operational sustainment
   of the TEWLS system. AR, Tab 6, 26. The contracting officer then turned to
   documenting an extensive review regarding the activities previously
   performed by Denysys and its subcontractors, and MTC and its
   subcontractors, under prior contracts. Id. In this regard, the contracting
   officer noted that the TEWLS system is comprised of software owned by SAP
   AG and that, in performing its prior contracts, neither Denysys nor its
   proposed subcontractors have been materially involved in development or
   customizing the TEWLS system, since that function is performed by SAP
   itself; that Denysys and its subcontractors have not had a role in
   developing the requirements for the solicitation at issue; that neither
   Denysys nor its subcontractors have had access to any underlying software
   code configuration for TEWLS; that neither Denysys nor its subcontractors
   provided technical direction for TEWLS; and that neither Denysys or its
   subcontractors have been involved in any discussions where contract
   sensitive information has been discussed. AR, Tabs 6, 26.

   Additionally, the contracting officer found that MTC has had more access
   to TEWLS-related information, pursuant to MTC's prior contract for
   sustainment of the URL project,[15] than Denysys and its subcontractors.
   AR, Tab 26. Based on the agency's review of the offerors' prior
   activities, the contracting officer concluded that Denysys did not have an
   unfair competitive advantage in this procurement.

   We have reviewed the entire record, including documentation of the
   contracting officer's review and analysis of the offerors' prior
   activities, and conclude that the agency's review was thorough and
   comprehensive; in this regard, MTC has not identified any material flaw in
   the agency's review. Further, we find no basis to question the agency's
   conclusions drawn from its review. Finally, we view MTC's protest to be
   based on an interpretation of the law which would, in effect, exclude
   virtually any government contractor (including MTC in this procurement)
   from competing for procurements that in any way relate to the contractor's
   prior contract performance. FAR subpart 9.5 does not establish such a
   sweeping exclusionary rule.

   The protest is denied.

   Gary L. Kepplinger
   General Counsel

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

   [1] Although the solicitation is identified on its cover page as an RFQ,
   the term "proposal," as opposed to "quotation," appears repeatedly
   throughout the solicitation and the procurement record. As discussed
   below, the solicitation contemplated an evaluation and source selection
   scheme similar to those used in negotiated procurements; accordingly
   whether the vendors' submissions are referred to as proposals or
   quotations has no effect on the issues raised. See, e.g., LexisNexis,
   B-299381, Apr. 17, 2007, 2007 CPD para. 73 at n.1; GC Servs., Ltd. P'ship,
   B-298102, B-298102.3, June 14, 2006, 2006 CPD para. 96 at n.1. For the
   sake of consistency, we refer to the firms' submissions as proposals
   throughout this decision, notwithstanding the fact that they are more
   properly identified as quotations.

   [2] The solicitation provided the following background regarding TEWLS:

     The TEWLS system is the newly developed medical logistics information
     system for the Army Medical Department. The development of TEWLS is a
     combination of several U.S. Army Medical Research and Material Command
     (USMRMC) efforts re-hosting the Theater Army Medical Management
     Information System Medical Supply (TAMMIS MEDSUP) intermediate level
     supply system capabilities into the (U.S. Army Medical Materiel
     Agency's) USAMMA Revolution in Logistics (URL). . . . The initial URL
     information system is the Army's medical logistics modernization and
     transformation initiative that implements ERP [enterprise resource
     planning] solution Commercial off the Shelf (COTS) software from SAP AG.
     . . . TEWLS Release 1 provides data harmonization and synchronization of
     purchasing/materiel data elements inside [various Army units] (i.e.
     medical distribution units, Combat Support Hospitals, and Division
     Medial supply Operations) and linking it with USAMMA's Business
     Intelligence/Business Warehouse (BI/BW) using SAP Master Data Management
     (MDM) and NetWeaver tools.

   Agency Report (AR) Tab 3, RFQ at 8-9.

   [3] With regard to the non-price factors, the agency's source selection
   plan provided for application of an adjectival rating system under which
   proposals were evaluated as "Excellent," "Good," "Satisfactory," "Poor,"
   and "Unsatisfactory." AR, Tab 10, at 2-6.

   [4] With regard to late submissions, the solicitation provided for an
   exception in situations that are not applicable here.

   [5] A third vendor initially submitted a proposal, but subsequently
   withdrew from the competition.

   [6] BPI is providing support for transitioning the TEWLS project from the
   Army Medical Department to the Defense Medical Logistics Standard Support
   program.

   [7] The contracting officer was also the SSA.

   [8] The SSEB had rated MTC's proposal as [deleted] with regard to
   personnel qualifications. Based on his determination that MTC failed to
   propose personnel that met the requirements regarding U.S. citizenship and
   NACI clearances, the SSA changed MTC's rating from [deleted] to [deleted].

   [9] MTC asserts that it was verbally advised that the agency had, in fact,
   "accepted" its revised proposal. The agency explains that it advised MTC
   the revised proposal had been received, but properly made no commitment
   regarding the acceptability of the proposal prior to completing its source
   selection process. In any event, any verbal "acceptance" would not have
   legal significance in this matter.

   [10] Even if this clause authorized proposal revisions, which it does not,
   it does not appear that MTC met any of the requisite conditions for
   personnel substitution.

   [11] There is no dispute that "written agreement of the Contracting
   Officer" was never provided.

   [12] MTC similarly asserts that the solicitation permitted a late
   modification "of an otherwise successful offer, that makes its terms more
   favorable to the Government." RFQ at 20. However, as discussed below, the
   SSA reasonably concluded that MTC's initial proposal was unacceptable;
   accordingly, MTC's proposal was not "an otherwise successful offer."

   [13] In its multiple submissions to this Office, MTC has presented no
   evidence supporting the proposition that the four "replaced" individuals
   are, in fact, U.S. citizens--nor has it made the affirmative
   representation that such is the case. Rather, MTC argues that the
   contracting officer had an obligation to question MTC regarding the basis
   for its substitutions and that, absent such inquiry, MTC has been properly
   silent.

   [14] There can be no reasonable dispute that the four remaining
   initially-proposed personnel did not offer all of the qualifications
   necessary to perform the multiple contract requirements or, in the
   alternative, that MTC's proposal failed to comply with the solicitation
   requirement that the proposal "be definitive enough to provide the
   government a clear understanding of how the Offeror intends to staff this
   task order [with the four remaining personnel] to meet all the
   requirements." RFQ at 23.

   [15] As noted above, the solicitation states that the TEWLS system is
   being developed as a combination of Army projects, specifically including
   the project referred to as "USAMMA Revolution in Logistics (URL)"; that
   the URL information system is the Army's medical logistics modernization
   and transformation initiative that implements COTS software from SAP; and
   that TEWLS will include the "URL legacy system functionality." RFQ at 8-9.