TITLE: B-299310.2, Chenega Federal Systems, LLC, September 28, 2007
BNUMBER: B-299310.2
DATE: September 28, 2007
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B-299310.2, Chenega Federal Systems, LLC, September 28, 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: Chenega Federal Systems, LLC

   File: B-299310.2

   Date: September 28, 2007

   William K. Walker, Esq., Walker Reausaw, for the protester.

   Maj. Geraldine Chanel, Department of the Army, for the agency.

   Scott H. Riback, Esq., and John M. Melody, Esq., Office of the General
   Counsel, GAO, participated in the preparation of the decision.

   DIGEST

   1. Protest that agency conducted misleading cost discussions is denied
   where record shows that agency provided protester with detailed
   information during discussions relating to evaluation of its cost
   proposal, and protester's response to that information shows that it
   independently analyzed the information and formed its own business
   judgments regarding how to respond to the agency's information.

   2. Protest that awardee had an impermissible organizational conflict of
   interest (OCI) is denied where protester previously raised the same
   assertion, agency conducted a detailed investigation and concluded that no
   OCI existed, and protester offers no evidence in support of its position;
   protester's mere suspicion of an OCI in light of agency's detailed
   investigation, without more, is inadequate to establish that OCI exists.

   DECISION

   Chenega Federal Systems, LLC protests the award of a contract to Calnet,
   Inc. under request for proposals (RFP) No. W911W4-05-R-0012, issued by the
   Department of the Army for translation and interpretation services in
   Guantanamo Bay, Cuba (GTMO). Chenega asserts that the agency engaged in
   misleading discussions and failed to identify an organizational conflict
   of interest (OCI) on the part of Calnet.[1]

   We deny the protest.

   The RFP contemplated the award of an
   indefinite-delivery/indefinite-quantity, cost-plus-award-fee contract for
   a base period of 3 months, with 19 3-month option periods (for a total
   performance period of 5 years) to provide, on an as-needed basis,
   translation and interpretation services at GTMO. Offerors were advised
   that the agency intended to make award to the firm submitting the proposal
   deemed to offer the "best value" to the government, considering three
   factors: management, past performance (deemed less important than
   management), and cost (deemed less important than past performance). RFP
   at 122-23. For cost evaluation purposes, the RFP advised that the agency
   would evaluate the proposals for reasonableness and perform a cost realism
   evaluation to determine the most probable cost for performance of a task
   order included in the RFP. RFP at 121.

   The agency received four proposals, and included all in the competitive
   range. Thereafter, the agency engaged in discussions with the offerors and
   solicited and obtained final proposal revisions (FPR). The agency
   evaluated the FPRs and assigned the following ratings:

   +------------------------------------------------------------------------+
   |           |        Management        | Past Performance |Evaluated Cost|
   |-----------+--------------------------+------------------+--------------|
   |Calnet Inc.|    Adequate/Moderate     |Excellent/Very Low|$49.4 million |
   |           |    Risk-Good/Low Risk    |       Risk       |              |
   |-----------+--------------------------+------------------+--------------|
   |  Chenega  |      Good/Low Risk       |Excellent/Very Low|$62.1 million |
   |  Federal  |                          |       Risk       |              |
   |  Systems  |                          |                  |              |
   |-----------+--------------------------+------------------+--------------|
   | Offeror A |  Adequate/Moderate Risk  |Excellent/Very Low|$73.1 million |
   |           |                          |       Risk       |              |
   |-----------+--------------------------+------------------+--------------|
   | Offeror B |         Good/Low         |Excellent/Very Low|$68.0 million |
   |           | Risk-Excellent/Very Low  |       Risk       |              |
   |           |           Risk           |                  |              |
   +------------------------------------------------------------------------+

   AR, exh. 57, at 4. The agency advised Chenega by letter dated December 15,
   2006, that Calnet had been selected for award. AR, exh. 52. After
   receiving a debriefing, Chenega filed a protest in our Office alleging,
   among other things, that Calnet had an impermissible OCI. By letter dated
   January 23, 2007, the agency advised our Office that it intended to set
   aside the award to Calnet, investigate Chenega's OCI allegation, and make
   a new source selection decision. AR, exh. 55. Based on this proposed
   action, we dismissed Chenega's protest as academic (B-299310, Jan. 31,
   2007). After reviewing the matter, the agency executed a revised source
   selection decision, finding that there were no impermissible OCIs and
   affirming its earlier decision to make award to Calnet. AR, exh. 57. After
   being advised of the agency's decision, Chenega filed this protest.

   Chenega maintains that the agency engaged in misleading discussions.
   Specifically, the protester asserts that, during discussions, the agency
   advised it that its proposed costs were approximately $10 million lower
   than the government's estimate of the firm's most probable cost. The
   protester contends that this information led it to dramatically increase
   its proposed cost to avoid receiving a high risk rating for its management
   proposal. Chenega maintains that this was misleading because, as the
   incumbent for this requirement, it had a proven management structure that
   could not reasonably be viewed as high risk.

   In negotiated procurements, any discussions must be meaningful, that is,
   firms must be provided a reasonable opportunity to address the agency's
   concerns with their proposals. In conducting discussions, agencies may
   not, inadvertently or otherwise, prejudicially mislead offerors into
   revising their proposals in a manner that does not address the agency's
   concerns. First Preston Housing Initiatives, LP, B-293105.2, Oct. 15,
   2004, 2004 CPD para. 221 at 3. In the context of discussions relating to
   cost or price, agencies may not coerce or mislead an offeror during
   discussions into raising its price. Id. at 5.

   Here, there is no basis for finding that Chenega was misled. First, the
   information the agency provided was in accordance with the RFP scheme. The
   RFP advised that, in evaluating costs, the agency would prepare a most
   probable cost estimate reflecting its assessment of the cost of performing
   the requirement using each offeror's proposed technical approach; the
   agency would adjust each offeror's proposed costs to ensure that they
   realistically reflected the actual cost of performance, consistent with
   its technical approach. RFP at 121. This is precisely what the agency did.
   It prepared a detailed most probable cost estimate for Chenega that it
   determined was consistent with the firm's technical approach and, during
   discussions, provided Chenega the detailed calculations and information
   relating to its proposed staffing. AR, exhs. 12, 27.[2] This information
   showed that the agency had determined that Chenega's proposal understated
   its management staffing by [deleted] hours, and that the estimated cost
   for these additional hours was $[deleted].[3] Id. Significantly, these
   calculations merely noted the areas where Chenega's proposal was found to
   have a shortfall in staff hours proposed, with no indication of the impact
   these shortfalls could have on the technical evaluation.

   Further, there is no indication that the information the agency provided
   was somehow invalid, such that it would be misleading to Chenega and
   should not have been provided. While Chenega's argument suggests that the
   agency should have known that its proposed hours must be sufficient in
   light of the firm's incumbency, it does not argue that the agency's
   calculations are inconsistent with its technical approach in any specific
   way, or that the agency's calculations are otherwise inaccurate.

   The record also shows that Chenega did not blindly rely upon the agency's
   information in increasing its staffing hours. Rather, Chenega's revised
   cost proposal, AR, exh. 13A, shows that, in some areas, Chenega proposed
   additional hours where the government did not identify a shortfall, and in
   others proposed hours in excess of the identified shortfall. For example,
   in the area of senior management staff, Chenega initially proposed
   [deleted] hours, and the agency made no adjustment to the firm's proposed
   cost or staffing in this area. AR, exh. 12, at 15. Nonetheless, in its
   revised proposal, Chenega added [deleted] hours for senior management
   staff. AR, exh. 13A, at 3, attach. 2. Similarly, while the agency
   identified a [deleted] hour shortfall in Chenega's proposed personnel
   staff, AR, exh. 12, at 15, its revised proposal added [deleted] staff
   hours for personnel staff, or [deleted] more hours than the shortfall
   identified by the agency.[4] AR, exh. 13A, attach. 2.

   In other instances, Chenega did not add as many hours as the identified
   shortfall. For example, the agency identified a shortfall of [deleted]
   hours for accounting staff, AR, exh. 12, at 15, but Chenega added only
   [deleted] accounting staff hours, AR, exh. 13A, attach. 2, stating as
   follows:

     CFS [Chenega] has estimated the present requirements at [deleted]
     personnel for a total of [deletetd] [staff hours] which is [deleted]
     less than the Government estimate. The addition[al] support required for
     this effort is provided through [deleted].

   AR, exh. 13A, at 3. Similarly, while the agency identified a shortfall of
   [deleted] staff hours for security staff, AR, exh. 12, at 15, Chenega
   added only [deleted] staff hours, AR, exh. 13A, attach. 2, stating that
   its subcontractors would provide the additional security staffing. AR,
   exh. 13A, at 3.

   It is clear from the record, then, that Chenega independently analyzed the
   agency's feedback provided during discussions and proposed staffing that,
   in its business judgment, would be sufficient for it to perform the
   requirement in a manner that was consistent with its proposed technical
   approach. First Preston Housing Initiatives, LP, supra. at 5. These
   actions are inconsistent with Chenega's assertion that it was misled. This
   being the case, and since, moreover, Cenega has not shown that the
   information provided by the agency during discussions--in accordance with
   the scheme set forth in the RFP--was inaccurate, there is no basis to
   conclude that Chenega was misled by the discussions.

   Chenega asserts that the awardee has an impermissible OCI. In this regard,
   Chenega maintains that Calnet hired an individual that had worked as a
   contracting officer's technical representative at GTMO. According to the
   protester, this individual may have had access to invoices Chenega
   submitted under its incumbent contract, and may have provided this
   information to Calnet for use in preparing its cost proposal.

   As noted, in response to Chenega's prior protest, the agency conducted a
   detailed investigation into this matter. The agency concluded that the
   individual in question had performed low-level administrative functions
   such as ensuring that contractor linguists working at GTMO had adequate
   housing and meals, and were appropriately behaved during performance of
   their jobs. AR, exh. 56, at 2. Further, based on interviews with the
   administrative contracting staff at GTMO, the contracting officer
   concluded that there was no possibility that the individual could have had
   access to information (either in the form of contractor invoices or other
   procurement sensitive data) that could have provided Calnet a competitive
   advantage, and that he did not have the necessary technical expertise to
   interpret such information even if it had been available to him. Id.
   Although it has seen both the investigation results, as well as the
   detailed cost information provided by Calnet in its proposal, Chenega has
   provided no evidence showing that, notwithstanding the results of the
   agency's investigation, the individual in question had access to its cost
   information, or provided such information to Calnet. Since there is no
   other basis for us to question the results of the investigation, there is
   no basis for us to find that Calnet had an improper competitive advantage
   during the acquisition.

   The protest is denied.

   Gary L. Kepplinger
   General Counsel

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

   [1] In its initial letter of protest, Chenega also alleged that the agency
   unreasonably evaluated its technical proposal and made unreasonable
   adjustments to its proposed cost. The agency responded to these assertions
   in detail in its report. In its comments on the report, Chenega made no
   mention of these assertions; we therefore deem them abandoned. Citrus
   College; KEI Pearson, Inc., B-293543 et al., Apr. 9, 2004, 2004 CPD para.
   104 at 8 n.4.

   [2] This was consistent with Federal Acquisition Regulation
   sect.15.306(e)(3), which provides that the contracting officer may inform
   an offeror that its price is considered by the Government to be too high,
   or too low, and reveal the results of the analysis supporting that
   conclusion.

   [3] The agency provided Chenega with two spreadsheets, one showing the
   agency's calculation of Chenega's most probable cost, and one detailing
   the hours and staffing categories where the agency determined that
   Chenega's proposed staffing was inconsistent with its technical approach.
   AR, exh. 12, at 14-15.

   [4] The record shows that there were a number of other areas where Chenega
   proposed staffing in excess of the requirements identified by the agency;
   for its administrative staff, Chenega proposed [deleted] extra hours above
   the shortfall in hours identified by the agency, and for its purchasing
   contracts and subcontracts staff, Chenega proposed [deleted] extra hours.