TITLE: B-299260.4, Swales Aerospace--Costs, April 30, 2007
BNUMBER: B-299260.4
DATE: April 30, 2007
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B-299260.4, Swales Aerospace--Costs, April 30, 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: Swales Aerospace--Costs

   File: B-299260.4

   Date: April 30, 2007

   James J. McCullough, Esq., Steven A. Alerding, Esq., and Deneen J.
   Melander, Esq., Fried, Frank, Harris, Shriver & Jacobson LLP, for the
   protester.

   Vincent A. Salgado, Esq., National Aeronautics & Space Administration, 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

   Protester's request that our Office recommend that it be reimbursed the
   reasonable costs of filing and pursuing protests is denied, where the
   agency did not unduly delay taking corrective action in the face of
   clearly meritorious protests.

   DECISION

   Swales Aerospace requests that we recommend that it be reimbursed the
   reasonable costs of filing and pursuing its protests challenging the award
   of a contract to SGT, Inc. under request for proposals (RFP) No.
   NNG05096383R, issued by the National Aeronautics & Space Administration
   (NASA) for mechanical systems engineering services to support NASA's
   Goddard Space Flight Center.

   We deny the request.

   The RFP, issued as a small business set-aside, provided for the award of a
   cost-plus-award-fee, indefinite-delivery/indefinite-quantity contract with
   a maximum ordering value of $400 million over a 5-year ordering period
   commencing on the effective date of contract award. RFP at Bates Nos. 43,
   46-48, 90. Award was to be made on a best-value basis, considering mission
   suitability,[1] cost/price, and past performance. The cost/price factor,
   which included a cost realism component, was stated to be "significantly
   less important than the combined importance of" the mission suitability
   and past performance factors, and was individually less important than the
   mission suitability factor and more important than the past performance
   factor. Id. at Bates No. 159. The RFP included a "Limitations on
   Subcontracting" clause, which required that "[a]t least 50 percent of the
   cost of contract performance incurred for personnel shall be expended for
   employees of the concern." Id. at Bates No. 93.

   Swales and SGT were the only proposals submitted in response to the RFP.
   After initial evaluations, the source evaluation board (SEB) conducted
   discussions and sought and evaluated final proposal revisions. The source
   selection authority (SSA) adopted the findings of the SEB and selected SGT
   for award. The SSA noted that both Swales' and SGT's proposals were rated
   "very good" under the mission suitability factor (although Swales'
   proposal received a "slightly higher numerical score"), "excellent" under
   the past performance factor,[2] and that Swales' proposal had a
   "significantly higher proposed and probable cost compared to SGT." Agency
   Report, Vol. XXII, Tab 22, SSA Decision, at Bates No. 7798, 7800, 7803-04.
   While considering that Swales' proposal received a "slightly higher
   Mission Suitability point score," the SSA stated that he "did not note
   substantial differentiation in the overall technical value between the
   technical approaches that were offered by Swales and SGT." Id. at Bates
   No. 7804. The SSA found SGT's proposal to be the "most advantageous" to
   the government, concluding that the "significantly lower probable cost
   offered by SGT far outweighs the slight Mission Suitability advantage
   proposed by Swales." Id. at Bates No. 7805.

   On December 12, 2006, after receiving notice of award, Swales protested to
   our Office. Swales asserted that SGT's proposal should have been found
   technically unacceptable because the offeror failed to comply with the
   limitations on subcontracting clause, that the agency misevaluated SGT's
   proposal under two of the mission suitability subfactors and past
   performance factor, and that the agency's source selection decision was
   based on a flawed evaluation and cost-technical tradeoff.

   On December 15, Swales supplemented its protest, asserting that the agency
   misevaluated Swales' and SGT's proposals under the cost/price factor. With
   regard to its own proposal, Swales' asserted that the agency
   "double-counted" certain costs, used incorrect other direct cost rates,
   and used "grossly unrealistic" hours in computing the cost/price for
   several labor categories. First Supplemental Protest at 5, 7. With regard
   to SGT's proposal, Swales asserted that the agency failed to conduct a
   proper cost realism analysis of SGT's other direct costs, failed to
   consider additional costs to performance resulting from the "dispersion"
   of SGT's team, and failed to consider costs associated with computing
   infrastructure for SGT's team. Id. at 12.

   Our Office requested that the agency respond on January 22, 2007 to these
   two protests.

   On January 8, Swales again supplemented its protest, complaining that the
   agency failed to address "numerous patent discrepancies" between SGT's
   technical and cost/price proposals relating to the division of work among
   SGT and its teammates. Second Supplemental Protest at 2. Our Office
   requested that the agency respond to this protest on January 29.

   On January 12, in accordance with GAO's schedule notices, the agency
   submitted its report on the first two protests. The agency provided
   detailed responses to each protest allegation, supported by 23 4-inch
   binders of documentation, including a detailed SEB report and SSA
   decision.

   On January 19, before receipt of the agency report responding to the third
   protest, Swales withdrew all three protests based on a letter from the
   agency stating it would be taking corrective action. The agency stated
   that its corrective action would include: (1) rescinding the award to SGT,
   (2) conducting a review of NASA's mission suitability and past performance
   findings, (3) reevaluating cost proposals and performing additional cost
   realism analysis on both proposals, (4) preparing a revised SEB report,
   (5) conducting an additional SEB presentation to the SSA, and (6) issuing
   a new SSA decision. Letter from NASA to Swales' Counsel (Jan. 19, 2007),
   at 1. Based on Swales' withdrawal, our Office closed the file without
   further action.

   Swales requests that our Office recommend that it be reimbursed the
   reasonable costs of filing and pursuing its protests. It asserts that it
   is entitled to costs because the agency delayed taking corrective action
   in the face of its clearly meritorious protests by waiting to take
   corrective action until after submitting its agency report in response to
   the first two protests. The agency responds that it did not take
   corrective action in response to the first two protests, but instead took
   action in response to the third protest, which raised entirely different
   protest issues, and that because it took this action before submitting an
   agency report on the third protest, Swales is not entitled to recover its
   costs. Swales asserts that all of the protests "were closely related and
   intertwined," such that if the agency had "properly investigated" the
   issues in Swales' first and second protests, it would have discovered the
   "numerous patent discrepancies" in SGT's technical and cost proposals,
   which were the subject of the third protest. Request for Reimbursement at
   3.

   Our Office may recommend reimbursement of protest costs if we sustain a
   protest, or where the agency unduly delays taking corrective action in the
   face of a clearly meritorious protest. 4 C.F.R. sect. 21.8(d), (e) (2006).
   This does not mean that costs should be reimbursed in every case where an
   agency decides to take corrective action; rather, we will recommend
   reimbursement only where an agency unduly delayed its decision to take
   corrective action in the face of a clearly meritorious protest. J.F.
   Taylor, Inc.--Costs, B-266039.3, July 5, 1996, 96-2 CPD para. 5 at 3. As a
   prerequisite to our recommending the reimbursement of costs where a
   protest has been settled by corrective action, not only must the protest
   have been meritorious, but it also must have been "clearly"
   meritorious--i.e., not a close question. Overlook Sys. Techs.,
   Inc.--Costs--B-298099.3, Oct. 5, 2006, 2006 CPD para. 184 at 6.

   Here, the agency had submitted its report in response to the first two
   protests, and although we had not yet received the protester's comments on
   this report, we had reviewed the extensive record provided by the agency
   and found no basis to believe that any of the grounds asserted in the
   protests were "clearly" meritorious. While the protester may have been
   able to demonstrate through comments that the evaluation contained errors,
   such errors were not evident to our Office based on our initial review of
   the record before us.[3]

   With regard to the third protest, the agency took corrective action before
   submitting its agency report. So long as an agency takes corrective action
   before the due date for its report, our Office regards such action as
   prompt and will not recommend reimbursement of costs. The Sandi-Sterling
   Consortium--Costs, B-296246.2, Sept. 20, 2005, 2005 CPD para. 173 at 2-3;
   Envirosolve--Costs, B-294420.3, Feb. 17, 2005, 2005 CPD para. 35 at 3. We
   do not agree that the allegations raised in the third protest were
   "closely related and intertwined with" the previous protests, such that
   the agency's investigation of the first two protests should have revealed
   the asserted evaluation flaws. Swales' assertion that SGT's technical and
   cost proposals contained discrepancies was not alluded to in either of the
   first two protests; indeed, our Office required a separate supplemental
   report in response to the third protest in recognition of the entirely
   different nature of the protest allegations.

   In sum, Swales has not met the standard for demonstrating entitlement to
   protest costs as a result of its earlier filed protests.

   The request is denied.

   Gary L. Kepplinger
   General Counsel

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

   [1] The mission suitability factor included four subfactors: understanding
   the requirements of the statement of work, technical approach to
   representative task orders, management plan, and safety and health. RFP at
   Bates No. 163.

   [2] The SSA found that past performance was not a discriminator in the
   source selection. Agency Report, Vol. XXII, Tab 22, SSA Decision, at Bates
   No. 7804.

   [3] Swales asserts that the clearly meritorious nature of the first two
   protests is demonstrated by the scope of NASA's corrective action, which
   encompasses all three evaluation factors. Although the agency's notice of
   corrective action states that it will "conduct a review" of the mission
   suitability and past performance evaluation factors, NASA explains that it
   did so only as a "measure of good faith to induce the protester to
   withdraw its protests" and not because it agrees that any of the
   allegations raised in the first two protests were meritorious. NASA
   Response to Request for Costs at 4. NASA further explains that its promise
   to reevaluate cost proposals and perform an additional cost realism
   analysis was only to address the allegations concerning SGT's proposal
   discrepancies that were raised in the third protest. In any case, as
   concluded above, these other grounds were not "clearly meritorious" and
   the fact that the agency is nevertheless taking corrective action to
   respond to these protest concerns does not make them such.