TITLE: B-299820; B-299820.3, PWC Logistics Services, Inc., August 14, 2007
BNUMBER: B-299820; B-299820.3
DATE: August 14, 2007
*******************************************************************
B-299820; B-299820.3, PWC Logistics Services, Inc., August 14, 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: PWC Logistics Services, Inc.

   File: B-299820; B-299820.3

   Date: August 14, 2007

   Michael R. Charness, Esq., Robert J. Rothwell, Esq., Suzanne D. Reifman,
   Esq., and Alexander O. Levine, Esq., Vinson & Elkins, LLP, for PWC
   Logistics Services, Inc.

   Thomas P. Barletta, Esq., Daniel C. Sauls, Esq., Paul R. Hurst, Esq., and
   Ana Holmes Voss, Esq., Steptoe & Johnson, LLP, for Science Applications
   International Corporation, an intervenor.

   Benjamin G. Perkins, Esq., Robert E. Sebold, Esq., and Ed Murray, Esq.,
   Defense Logistics Agency, 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 applied unstated environmental risk management plan
   factor in its evaluation of management proposals is denied where record
   shows that agency provided all offerors identical information during
   discussions that effectively amended the evaluation criteria of the
   solicitation.

   2. Protest that agency failed to provide protester discussions relating to
   the adequacy of its environmental risk management plan is denied where
   record shows (1) agency only assigned protester's proposal a minor
   weakness in the area--and therefore was not required to discuss the
   matter--and (2) agency, in fact, afforded protester discussions relating
   to this aspect of its proposal.

   3. Protest relating to reasonableness of the agency's evaluation of
   protester's and awardee's proposals in the area of environmental risk
   management plan is denied where record supports agency's conclusions that
   there were qualitative distinctions between the proposals in this area.

   4. Protest relating to the agency's finding that awardee's proposal
   offered superior past performance is denied where record shows that agency
   had a reasonable basis for finding the awardee's past performance more
   relevant than that of other offerors', and the protester's assertions
   relating to awardee's past performance are based on factually incorrect
   assumptions.

   5. Protest relating to the reasonableness of agency's price evaluation is
   denied where record shows that agency's evaluation was reasonable and
   consistent with the terms of the solicitation.

   DECISION

   PWC Logistics Services, Inc. protests the award of a contract to Science
   Applications International Corporation (SAIC) under request for proposals
   (RFP) No. SPM4A2-06-R-0001, issued by the Defense Logistics Agency (DLA)
   for the supply, storage and distribution of chemicals, packaged petroleum,
   oil and lubricating products for military activities. PWC maintains that
   the agency improperly applied an unstated evaluation criterion,
   misevaluated proposals, and failed to engage in meaningful discussions.[1]

   We deny the protest.

   BACKGROUND

   DLA is responsible for the wholesale management of the Department of
   Defense's requirements for packaged petroleum products, oil, and
   lubricating products (referred to as POLs) under federal supply class
   (FSC) 9150, and chemical products under FSCs 6810, 6820, 6840 and 6850. To
   meet those requirements, the agency historically has maintained various
   field activities that were responsible for comprehensive inventory
   management (acquisition, storage, distribution and disposal) of the items.
   In 2005, the Base Realignment and Closure Commission recommended that DLA
   privatize the wholesale supply, storage and distribution of POLs. Pursuant
   to that recommendation, the agency engaged in market research, based on
   which it determined, among other things, to expand the current acquisition
   to include chemical products. In all, the RFP contemplates privatizing
   some 4,648 FSC items.

   The RFP contemplates the award of an indefinite-delivery,
   indefinite-quantity contract for a base period of 5 years, with a 5-year
   option period, to provide comprehensive supply chain management for the
   described POLs and chemicals. Award was to be made on a "best value" basis
   considering four equally weighted considerations: technical proposal,
   management proposal, past performance, and price. The non-price
   considerations combined were significantly more important than price. RFP
   sect. M, at 1. There were numerous subfactors under the non-price factors.
   The technical proposal factor was comprised of four equally weighted
   subfactors: forecasting, purchasing, inventory management, and
   distribution. Id. at 2. The management proposal factor included three
   subfactors: risk management (most important), organization, and transition
   (equal in importance). Id. at 2-3. The past performance factor included
   three subfactors (in descending order of importance): substantially
   similar past performance, corporate experience (to be evaluated only where
   an offeror received a neutral rating under the substantially similar past
   performance subfactor), and past compliance with subcontracting goals. Id.
   at 3-4.[2] Under all non-price evaluation areas, the agency assigned
   adjectival ratings of highly acceptable (HA), acceptable (A), minimally
   acceptable (MA), deficient (D), or neutral (N) (for past performance
   only). Source Selection Plan at 6. Proposals also were assigned risk
   ratings of either high (H), moderate (M), or low (L) under each evaluation
   area. Id. at 6-7.

   Proposed prices were to be evaluated for realism, fairness and
   reasonableness. RFP sect. M, at 4. For pricing purposes, the RFP
   distinguished between material prices (unit prices for the various items
   being purchased) and fees for contract performance.

   The agency received four proposals, including PWC's and SAIC's. The agency
   evaluated the proposals and included three of the four in the competitive
   range. AR exh. 6. The agency then engaged in numerous rounds of
   discussions that led, ultimately, to the submission of final proposal
   revisions on March 8, 2007. AR at 14. The agency's source selection
   advisory group (SSAG) evaluated the FPRs and arrived at the following
   evaluation results:

   +------------------------------------------------------------------------+
   |                                |       SAIC        |        PWC        |
   |--------------------------------+-------------------+-------------------|
   |Overall Proposal Rating         |Highly    |Low Risk|Highly    |Low Risk|
   |                                |Acceptable|        |Acceptable|        |
   |--------------------------------+----------+--------+----------+--------|
   |Overall Technical Rating        |Highly    |Low Risk|Highly    |Low Risk|
   |                                |Acceptable|        |Acceptable|        |
   |--------------------------------+----------+--------+----------+--------|
   |                     Forecasting|Highly    |        |Highly    |        |
   |                                |Acceptable|        |Acceptable|        |
   |--------------------------------+----------+--------+----------+--------|
   |                      Purchasing|Highly    |        |Highly    |        |
   |                                |Acceptable|        |Acceptable|        |
   |--------------------------------+----------+--------+----------+--------|
   |            Inventory Management|Highly    |        |Highly    |        |
   |                                |Acceptable|        |Acceptable|        |
   |--------------------------------+----------+--------+----------+--------|
   |                    Distribution|Highly    |        |Highly    |        |
   |                                |Acceptable|        |Acceptable|        |
   |--------------------------------+----------+--------+----------+--------|
   |Overall Management Rating       |Acceptable|Low Risk|Highly    |Low Risk|
   |                                |          |        |Acceptable|        |
   |--------------------------------+----------+--------+----------+--------|
   |                    Organization|Highly    |        |Highly    |        |
   |                                |Acceptable|        |Acceptable|        |
   |--------------------------------+----------+--------+----------+--------|
   |                 Transition Plan|Highly    |        |Highly    |        |
   |                                |Acceptable|        |Acceptable|        |
   |--------------------------------+----------+--------+----------+--------|
   |                 Risk Management|Acceptable|        |Highly    |        |
   |                                |          |        |Acceptable|        |
   |--------------------------------+----------+--------+----------+--------|
   |Overall Past Performance Rating |Highly    |Low Risk|Highly    |Low Risk|
   |                                |Acceptable|        |Acceptable|        |
   |--------------------------------+----------+--------+----------+--------|
   |      Substantially Similar Past|Highly    |        |Highly    |        |
   |                     Performance|Acceptable|        |Acceptable|        |
   |--------------------------------+----------+--------+----------+--------|
   |  Compliance with Subcontracting|Highly    |        |Acceptable|        |
   |                           Goals|Acceptable|        |          |        |
   |--------------------------------+-------------------+-------------------|
   |Price, Best Case Scenario       |$2.355 Billion     |$2.346 Billion     |
   |--------------------------------+-------------------+-------------------|
   |Price, Worst Case Scenario      |$5.652 Billion     |$5.667 Billion     |
   +------------------------------------------------------------------------+

   AR exh. 17 at 2.

   The SSA used these evaluation results in making his award decision, but
   also made independent findings regarding the relative merits of the
   proposals in several specific areas. First, regarding the acceptable
   rating for SAIC's management proposal, the SSA concluded that, because of
   several features that he viewed as strengths, the proposal was "just shy"
   of receiving a highly acceptable rating. AR exh. 17 at 5. Regarding the
   highly acceptable rating assigned to PWC's management proposal, the SSA
   identified one feature as a weakness; he concluded that this weakness
   significantly detracted from the highly acceptable rating assigned by the
   SSAG, but did not warrant downgrading the rating to acceptable. Id. at 11.
   The SSA concluded that, notwithstanding their different adjectival
   ratings, the two offerors' management proposals were essentially equal.
   Id. at 13. In a similar vein, the SSA found that, while PWC's and SAIC's
   past performance proposals received the same highly acceptable rating,
   SAIC's past performance was better overall as compared to PWC's. Id. at
   13-14.

   Based on these and other non-price evaluation findings, the SSA concluded
   that SAIC's proposal was the strongest overall in the non-price areas. AR
   exh. 17 at 14. The SSA went on to consider price, and concluded that,
   based on all considerations, award to SAIC represented the best value to
   the government. The agency therefore made award to SAIC. Following a
   debriefing, PWC filed this protest.

   UNSTATED EVALUATION FACTOR

   PWC asserts that the agency improperly applied an unstated consideration
   when evaluating proposals. According to the protester, the agency
   considered environmental risk management under the management factor, even
   though such a consideration was never mentioned in the solicitation. PWC
   directs our attention to RFP section L-2.3.3 (instructions to offerors),
   which describes the information to be included in proposals regarding
   offerors' risk management plans. That section enumerates eight risks to be
   addressed, but does not include environmental risk management. PWC also
   notes that section M-3.3 of the solicitation's evaluation factors provides
   only that proposals should include a comprehensive risk management plan
   resolving every conceivable risk; according to the protester, this general
   requirement was inadequate to put offerors on notice that the agency would
   give significant consideration to the offerors' environmental risk
   management plans.

   This argument is without merit. Agencies are required to advise offerors
   of the basis for evaluation and then to evaluate proposals consistent with
   that stated basis. STEM Int'l, Inc., B-295471, Jan. 24, 2005, 2005 CPD
   para. 19 at 3. Here, the RFP advised offerors that, in evaluating
   management proposals, the agency would consider the degree to which the
   proposals included a comprehensive risk management plan resolving every
   conceivable risk. RFP sect. M-3.3, Major Subfactor M3: Risk Management.
   Further, the agency provided all offerors with identical discussion
   materials relating to the solicitation's environmental requirements.
   Specifically, the agency advised all firms by e-mail dated November 30,
   2006 that it was forwarding an attachment that contained additional
   environmental requirements that had to be addressed. AR exhs. 10A at 22;
   10B at 25. The attachment provided as follows:

     The final proposal revisions will be evaluated in accordance with
     Section M. Please note that included under paragraphs 2.4 [the RFP's
     technical evaluation subfactor for distribution] and 3.3 [the RFP's
     management subfactor for risk management], the government will address
     the offerors' capability to execute this contract's environmental
     requirements and the offerors' proposed management of environmental
     issues.

   AR exhs. 10A at 26; 10B at 26. Thus, not only did the RFP highlight the
   need for offerors to address risk management generally, but the agency
   specifically advised offerors that it would consider the firms'
   environmental risk management plans under the risk management subfactor of
   the management factor. The evaluation in this area therefore was
   unobjectionable.[3]

   ADEQUACY OF DISCUSSIONS

   PWC asserts that the agency failed to engage in meaningful discussions
   with it in connection with its environmental risk management proposal.
   According to the protester, the agency identified its environmental risk
   proposal as a significant weakness in its management proposal, and
   ultimately used this as a discriminator in its source selection decision.
   PWC also notes that it was criticized during an environmental preaward
   survey, and that the agency's representative improperly failed to advise
   the firm of his concerns at that time. PWC maintains that the agency could
   not properly have downgraded its proposal in this area without advising it
   of this weakness during discussions.

   While agencies are required to engage in meaningful discussions--that is,
   point out significant weaknesses and deficiencies that, unless corrected,
   would prevent an offeror from having a reasonable chance of receiving
   award--agencies are not required to afford offerors all-encompassing
   discussions, or to point out every aspect of a proposal that offers a
   relatively less desirable approach. Volmer Constr., Inc., B-270364,
   B-270364.2, Mar. 4, 1996, 96-1 CPD para. 139 at 4. Further, where a
   weakness in a proposal ultimately becomes a discriminator for source
   selection purposes among closely ranked proposals, but the weakness is
   minor in nature and did not render the proposal unacceptable, the agency's
   failure to have raised the matter in discussions is unobjectionable. Id.
   at 4-5.

   The discussions here were unobjectionable. The record shows that each
   evaluator individually rated PWC's risk management proposal either highly
   acceptable or acceptable, AR exh. 15A, at BATES 407, 417, 432, 449, 471,
   and that the SSAG rated it--as well as its management proposal
   overall--highly acceptable. AR exh. 16A, at BATES 85, 88. The record also
   includes an environmental preaward survey recommending "no award" to PWC,
   primarily based on a conclusion that, while PWC's environmental
   subcontractor had experience in handling waste management at Department of
   Energy (DOE) facilities (where the primary work relates to the handling
   and disposition of nuclear waste), it had little experience handling
   hazardous materials in the context of a supply chain-type requirement such
   as the one here. AR exh. 11A, at BATES 17-18. The survey also observed
   that PWC was only now trying to get systems and procedures in place for
   the management of hazardous materials. Id. at 18.[4] Against this
   backdrop, the SSA reached the following conclusion:

     PWC proposes to use a subcontractor, Cornerstone/Weskem Services (CWS),
     to manage environmental, safety and health (ES&H) risks. The proposal
     suggests that CWS will establish ES&H processes at each PWC distribution
     site only after contract award. PWC identified CWS's facility in Oak
     Ridge, Tennessee, as an appropriate site to visit for the pre-award
     survey. The survey resulted in a `no award' recommendation, because CWS
     has no existing experience managing hazardous materials like those
     involved in this effort; its experience at Oak Ridge relates to nuclear
     materials, which are not governed by the same regulatory bodies. While
     this is not sufficient to downgrade PWC's overall Management rating to
     the `Acceptable' level, it significantly detracts from the `Highly
     Acceptable' rating PWC's management proposal earned.

   AR exh. 17 at 11. The SSA ultimately concluded that PWC's and SAIC's
   management proposals were essentially equal. Id. at 13.

   The record thus shows that, despite the criticisms relating to PWC's
   environmental risk management proposal and the results of the
   environmental preaward survey, the firm's management proposal ultimately
   was viewed by the SSAG and the SSA as highly acceptable (albeit, ranked at
   the low end of the highly acceptable spectrum), and as essentially equal
   to the awardee's. In these circumstances, the agency was under no
   obligation to have discussions with PWC relating to its environmental risk
   management proposal.

   In any event, the agency did, in fact, ask PWC several questions relating
   to its environmental management proposal that adequately led PWC into, and
   thus provided PWC an opportunity to improve, this area of its proposal. On
   November 30, 2006, after evaluating PWC's initial proposal, the agency
   presented discussion questions relating to several areas, including four
   questions relating to PWC's environmental management proposal, which asked
   PWC to: (1) identify its (and its subcontractor's) management personnel
   responsible for compliance with environmental rules and regulations
   identified in the SOW, including restrictions on storage and
   transportation of hazardous materials, occupational safety and health
   requirements and hazardous materials release response, AR exh. 10A, at
   BATES 26; (2) describe its team, at the prime and subcontractor level,
   that would be responsible for managing these requirements, id.; (3)
   identify and explain any notice of any major environmental non-compliance
   incident within the last 10 years, id.; and (4) respond to several
   environmental scenarios. Id. at BATES 26-27. On February 14, 2007, PWC was
   asked a follow-up discussion question relating to the roles and
   responsibilities of its environmental health and safety subcontractor,
   CWS. Id. at BATES 62.

   ENVIRONMENTAL RISK MANAGEMENT EVALUATION

   PWC asserts that the evaluation of its and SAIC's proposals in the area of
   environmental risk management was unreasonable. According to the
   protester, the agency unreasonably downgraded its proposal for offering
   CWS, a newly-created entity, to manage its environmental risk effort, and
   for proposing to establish environmental safety and health ES&H procedures
   only after award. The protester maintains that CWS existed prior to the
   source selection decision and that it had ES&H procedures at its disposal
   prior to award that it was prepared to use. PWC further maintains that the
   agency unfairly downgraded its proposal on the basis that its
   environmental risk management experience was primarily only in handling
   nuclear materials when, in fact, it also has ample experience in handling
   other hazardous materials. The protester also asserts that the agency
   unreasonably failed to take cognizance of the fact that SAIC proposed to
   provide environmental risk management through the use of a team comprised
   of [deleted] that would only enter into subcontracts after award of the
   prime contract, and that it would be more difficult to integrate these
   [deleted] team members than it would be to integrate the functions of CWS.

   In reviewing protests challenging proposal evaluations and source
   selection decisions, it is not our role to reevaluate proposals; rather,
   we will examine the record to determine whether the agency's judgment was
   reasonable and in accord with the stated evaluation criteria and
   applicable procurement laws and regulations. See Abt Assocs., Inc.,
   B-237060.2, Feb. 26, 1990, 90-1 CPD para. 223 at 4. We find that the
   evaluation here was unobjectionable.

   With respect to the establishment of CWS, the protester is correct that it
   was established on February 23, 2007, prior to the award to SAIC.
   Protester's Comments, July 9, 2007, exh, 1. However, the record shows
   that, in reaching its conclusion relating to the establishment of the new
   entity, the agency relied on PWC's own proposal materials submitted prior
   to that date; PWC's initial proposal was submitted in September 2006, and
   its answers to the agency's discussion questions were submitted in
   November 2006, and on February 22, 2007. AR exhs. 5A, 10A. None of these
   materials showed the existence of CWS as an entity at that point in time.
   Simply stated, there was nothing unreasonable in the agency's conclusion
   that PWC was proposing a newly-formed entity to perform its environmental
   risk management functions.

   The record also supports the agency's conclusion that CWS apparently did
   not have existing ES&H policies and procedures in place, and that they
   would be establishing these policies and procedures after award. For
   example, in responding to the agency's discussion question asking PWC to
   provide a detailed description of its organizational team responsible for
   managing compliance with environmental rules and regulations, PWC stated:

     [deleted]

   AR exh. 10A, Discussion Responses, Dec. 18, 2006, at 13-14; see also, AR
   exh. 10A, Discussion Responses, Feb. 22, 2007, at 6-11 (wherein PWC
   describes the responsibilities of its ES&H personnel as including, among
   other things, developing and implementing ES&H policies); AR exh. 5A, at
   III.3.2-16 (PWC proposed to implement a comprehensive HAZMAT/HAZWASTE
   plan).[5] PWC has not shown that its proposal elsewhere included
   information showing that it had pre-existing ES&H policies and procedures
   that it offered to use in performance of the contract and, based upon the
   materials presented, the agency reasonably concluded that PWC did not have
   an ES&H program in place.

   In addition, the record shows that the agency reasonably concluded that
   CWS (predominantly Weskem Services) had experience principally in handling
   nuclear materials as opposed to managing chemicals and petroleum products
   in the context of a supply chain management contract. This conclusion was
   based primarily on the results of the environmental preaward survey
   conducted at DOE's facility at Oak Ridge, Tennessee, where Weskem Services
   performs hazardous waste disposition services. A slide presentation
   (included in the record) that was provided to the agency during the
   preaward survey describes Weskem's key capabilities and experience at
   various DOE facilities as the [deleted]. E.g., AR, exh. 11B, at BATES 62.
   While the protester is correct that the described activities are not
   exclusively associated with handling nuclear materials (as opposed to
   other hazardous materials), we think the description sufficiently
   emphasizes nuclear materials to support the agency's conclusion that this
   was the predominant area of CWS's experience. Moreover, none of the cited
   experience involves handling these materials in the context of a supply
   chain management requirement, as contemplated under the RFP. These
   considerations, together with CWS's apparent lack of pre-existing policies
   and procedures to manage the type of environmental risks presented by the
   subject requirement, led the agency to find that CWS's experience lay
   primarily in other hazardous materials related work. We find that the
   agency's conclusions were reasonable.

   Finally, with respect to PWC's allegation that the agency failed to
   recognize that SAIC would need to integrate its team of contractors,
   nothing in the record shows that SAIC was dependent upon any of its
   teaming partners to develop and implement its ES&H policies and
   procedures, as was the case with the protester. Rather, the record shows
   that SAIC had pre-established, well-developed ES&H policies and procedures
   that it intended to use upon award. AR exh. 10B, at BATES 167-176. The
   fact that SAIC was partnering with other concerns was not relevant to the
   agency's conclusion that SAIC proposed the best environmental risk
   management proposal; in contrast, as concluded above, the agency was
   legitimately concerned that PWC's approach would require a
   newly-established entity to develop and implement an environmental risk
   management plan that did not exist. In sum, there was no basis for the
   agency to downgrade SAIC's proposal in this area simply because the firm
   was teaming with several contractors.

   PAST PERFORMANCE EVALUATION

   PWC maintains that the agency unreasonably determined that SAIC's past
   performance was more relevant than its own. In this regard, PWC's protest
   focuses on SAIC's six regional maintenance repair and overhaul (MRO) prime
   vendor contracts given as past performance examples. According to the
   protester, the agency erroneously concluded that these contracts were
   substantially similar to the current requirement. In this respect, the
   protester maintains that SAIC's MRO contracts do not have a critical
   element required under the current contract, namely, a requirement to
   handle vendor managed inventory (VMI). According to the protester, VMI
   contracts are unique in that they require the contractor to invest in
   inventory by purchasing goods in advance and selling them as orders are
   received. Protester's Comments, July 9, 2007, at 20. The protester
   maintains that the risks associated with this type of contract are
   markedly different from those under other kinds of supply contracts.

   This argument is without merit. The protester is incorrect regarding both
   what constitutes VMI supply chain management services, and the services
   performed by SAIC under its MRO contracts. The RFP does not describe VMI
   as vendor-purchased-and-managed inventory. According to the RFP, "Vendor
   Managed Inventory (VMI) refers to DLA owned material stored at or managed
   through a vendor location based on contractual arrangements (see Section
   3.1.4)." RFP sect. C, at 9. Section 3.1.4 of the SOW in turn describes how
   and when DLA-owned inventory will be transferred from government depots to
   the contractor's facilities to be sold as VMI. RFP sect. C, at 10-11.

   As for SAIC's MRO contracts, the record shows that they are essentially
   identical to the current requirement in that they require precisely what
   the protester maintains are VMI services, as well as VMI services as
   described in the RFP. SAIC's proposal describes these contracts as:

     Supply chain management, purchasing and distribution of facilities
     maintenance products (plumbing, electrical, heating/ventilating/air
     conditioning, tools, paints, containers, prefabricated structures,
     lumber, hardware and assorted industrial materials) for more than
     [deleted] ordering activities at federal installations in five
     geographic regions CONUS [continental United States] and one OCONUS
     [outside the continental United States] . . . .

   SAIC Proposal, vol. 4, at 1-1. That same description goes on to state:

     SAIC is performing CMS [chemical management services] for chemicals,
     POLs, aerosols, paints, epoxies, cleaners and sealants, including NSNs
     [national stock numbers] covered under the Chemicals/POLs contract (e.g.
     acetone, methyl ethyl ketone and solid film aerosol lubricant). We
     established chemical/HAZMAT storefront operations at [deleted], and
     transitioned chemical/HAZMAT management functions from the government to
     SAIC, which included the physical transfer of government-owned inventory
     to SAIC. We use SAIC's [deleted] system to perform forecasting,
     purchasing, inventory management, and distribution of chemicals/POLs to
     points-of-use (POU) lockers strategically located at production areas.
     [deleted] ensures adequate inventory levels are maintained to prevent
     stockouts. SAIC also inputs receipts into the [deleted], providing
     information to end-user's environment and safety departments for local,
     state, federal, EPA reporting, shelf-life management, reporting on
     government inventory levels and value, and compliance with depot
     environment and safety regulations.

   Id. Thus, contrary to the protester's assertion, SAIC's MRO contracts
   include not only those services the protester incorrectly maintains are
   VMI services under the current solicitation, but also VMI services as
   defined under the RFP. Given that the protester has not advanced any
   evidence to show that SAIC's MRO contracts do not encompass essentially
   the same services as those called for under the RFP, we conclude that the
   agency reasonably found that SAIC's past performance--more specifically,
   its MRO contracts--was more relevant than PWC's.

   PRICE EVALUATION

   PWC objects to the agency's price analysis, specifically, its calculation
   of the offerors' material prices, maintaining that it provided an
   irrational basis for the award decision. The agency calculated the
   offerors' material prices by first establishing estimated total material
   prices without adjusting those prices to account for potential price
   increases due to application of the RFP's economic price adjustment (EPA)
   clauses. Those calculations showed that PWC's total evaluated price,
   including fees (unadjusted) was $1,717,367,601.59, while SAIC's was
   $1,730,958,436.84. [6] AR exh. 13 at 16. The agency then calculated prices
   using what it referred to as "best case" and "worst case" EPA scenarios.
   In calculating the best case scenarios, the agency applied an increase to
   the prices equal to the average historical increase in prices over the
   last 10 years for the commodities in question; for chemical prices, the
   agency applied an annual price increase of 3.5 percent, and for POLs 12.3
   percent. Id. For the worst case scenarios, the agency applied a price
   increase equal to the highest annual increase in prices over the last 10
   years;[7] for chemicals, 10 percent, and for POLs, 38 percent. Id. The
   agency then calculated the prices using four combinations of these
   scenarios; best case chemicals/best case POLs (BCC/BCP), worst case
   chemicals/ best case POLs (WCC/BCP), best case chemicals/worst case POLs
   (BCC/WCP), and worst case chemicals/worst case POLs (WCC/WCP). Id. Finally
   the agency took an average of these calculations to arrive at a fifth
   price scenario. Id. The agency's calculations showed the following:

   +------------------------------------------------------------------------+
   |                        |         SAIC          |          PWC          |
   |------------------------+-----------------------+-----------------------|
   |                        |         Price         |         Price         |
   |------------------------+-----------------------+-----------------------|
   |        BCC/BCP         |        $2.355B        |        $2.346B        |
   |------------------------+-----------------------+-----------------------|
   |        WCC/BCP         |        $2.601B        |        $2.600B        |
   |------------------------+-----------------------+-----------------------|
   |        BCC/WCP         |        $5.404B        |        $5.414B        |
   |------------------------+-----------------------+-----------------------|
   |        WCC/WCP         |        $5.652B        |        $5.667B        |
   |------------------------+-----------------------+-----------------------|
   |        Average         |        $4.003B        |        4.007B         |
   +------------------------------------------------------------------------+

   Id. The agency found from these calculations that SAIC had the lowest
   evaluated price in three of the five scenarios (WCC/WCP, BCC/WCP and
   average), while PWC had the lowest evaluated price in two (BCC/BCP and
   WCC/BCP). The SSA concluded that, because SAIC had a price advantage in
   three of the five scenarios, it had a "razor thin" price advantage over
   PWC. AR exh. 17 at 16.

   PWC asserts that its evaluated price was lower than SAIC's when calculated
   without adjustment for the EPA scenarios, and that the agency ignored its
   pricing advantage by employing the EPA scenarios. The protester also
   asserts that the agency unreasonably determined that the BCC/BCP scenario
   was the least likely to occur, and actually should have concluded that it
   was the most likely because it took into consideration price changes over
   a 10-year period. PWC argues additionally that the agency's worst case EPA
   scenarios were unrealistic, because they employed the highest historical
   rate of price increase for each of 10 years, a scenario that the protester
   maintains is not likely to occur. Finally, PWC asserts that the agency's
   conclusion that SAIC had a razor thin price advantage was irrational
   because it was based on consideration of the fifth, averaged, calculation;
   the protester maintains that, in fact, it was a dead heat between the two
   offerors, with each having lower evaluated prices in two of the four
   scenarios that were not averaged.

   We have no basis to object to the price evaluation. First, the RFP
   specifically advised offerors that the evaluation would be based on these
   calculations, stating as follows:

   Material Prices. Material prices will be evaluated by multiplying proposed
   price times average demand quantities (ADQ) times 10 to arrive at an
   estimated material contract value unadjusted by EPA. The SSA will be
   provided with various EPA scenarios to more fully appreciate the effect
   that EPA adjustments will have on material prices and the relative
   difference between offers.

   RFP sect. M, at 4. In other words, the agency's actions were entirely
   consistent with the terms of the solicitation. It follows that, had the
   agency evaluated prices as PWC suggests--unadjusted for EPA scenarios--it
   would have failed to evaluate proposals in accordance with the RFP.

   Second, while the protester speculates that the BCC/BCP scenario is the
   most likely because it is based on 10 years of historical data, there was
   no reason for the agency to conclude that any particular scenario was
   necessarily more or less likely to occur during performance than any other
   scenario; as a practical matter, the agency will only know after contract
   performance which of the various EPA scenarios most closely reflects the
   actual performance of these pricing indexes over the next 10 years.[8] In
   any case, as noted, the RFP expressly indicated that the agency would
   calculate various EPA scenarios in order to more fully appreciate the
   effects EPA adjustments would have on material prices, and the agency's
   use here of various EPA scenarios enabled it to consider the potential
   cost to the government of differing rates of cost increase. This was both
   consistent with the terms of the solicitation, as well as reasonable in
   light of the fact that the government will bear the financial liability of
   price increases over time.

   Third, as for the protester's assertion that the agency's worst case
   scenarios are unrealistic, the agency notes, correctly, that it is liable
   for price increases of up to 40 percent per year for chemicals and up to
   150 percent per year for POLs. RFP sect. B, at 6. The agency's
   calculations of the worst case scenarios used annual increases of
   10 percent for chemicals and 38 percent for POLs, figures well within the
   government's potential liability under the contract. We conclude that the
   agency reasonably calculated its worst case scenarios in a manner that
   would reflect some (but not all) of its potential liability in its effort
   to estimate the most probable cost to the government in light of possible
   price increases that are fully supported by historical examples.[9]

   Finally, as to the protester's assertion that the agency unreasonably
   concluded that SAIC had a "razor thin" price advantage, its objection is
   premised upon the assertion that use of the "average" scenario was
   improper. As noted above, however, we find that the agency reasonably
   could have used all of the various EPA scenarios in its analysis of price.
   In any event, the record shows that the SSA appreciated the closeness of
   the two firms' prices, and recognized where PWC was found to have a price
   advantage over SAIC under the BCC/BCP scenario; in that circumstance, he
   made a cost/technical tradeoff, finding that SAIC's technical superiority
   was worth the slight cost premium associated with its proposal. The SSA
   stated:

     In Price, SAIC and PWC are extremely close, with SAIC's and PWC's
     pricing 0.5 percent or less apart under all five escalation scenarios.
     SAIC has a slight edge overall due to its better pricing in three of the
     five scenarios, including the average scenario price. Further, even
     considering that PWC may be as much as 0.4 percent less than SAIC in one
     case (BCC/BCP), SAIC's past performance provides greater assurance of
     successful performance under this contract that is worth more than that
     slight difference in price in that one pricing scenario.

   AR exh. 17 at 17. Since the record thus shows that the SSA selected SAIC
   over PWC where PWC enjoyed a price advantage under the scenario that it
   maintains is the most likely, it follows that his decision would have been
   no different had the firms been found to have arrived at a `dead heat' in
   terms of price, as asserted by the protester.

   The protest is denied.

   Gary L. Kepplinger
   General Counsel

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

   [1] In response to the agency's report, PWC filed a supplemental protest
   asserting that SAIC's proposal failed to conform to two material
   solicitation requirements. Supplemental Protest, July 9, 2007. The agency
   responded to these assertions and, by letter dated July 24, the protester
   withdrew these assertions.

   [2] The agency also identified numerous elements under each of the
   subfactors in rating proposals to arrive at its subfactor ratings. Agency
   Report (AR) exhs. 7, 15.

   [3] PWC suggests that the agency could not properly revise the
   solicitation through discussions rather than through a formal amendment.
   Where, as here, an agency provides identical language or information to
   all offerors during discussions, its actions are tantamount to amending
   the RFP, even though no formal amendment has independently been issued.
   Phenix Research Prods., B-292184.2, Aug. 8, 2003, 2003 CPD para. 151 at 5.

   [4] PWC suggests that the individual that conducted the preaward survey
   was obligated during the survey to convey his reservations to the firm at
   that time in order for the agency to have discharged its obligation to
   engage in discussions. However, since the agency was conducting a preaward
   survey--as opposed to engaging in oral discussions--the individual in
   question was under no such obligation.

   [5] The agency report also contains materials gathered during the PWC
   preaward survey. Those materials include a proposal dated December 20,
   2006 from a software concern, Dolphin Software, Inc., to sell chemical
   management software to the protester. AR exh. 11B, at BATES 67 et seq.

   [6] For purposes of establishing material prices, the RFP distinguished
   between "cost-driver" and "non-cost-driver" items. Offerors were required
   to propose unit prices for the cost driver items, while the government
   established the unit prices for the non-cost-driver items. These unit
   prices then were multiplied by anticipated demand quantities established
   by the agency, and then multiplied again by 10 (the number of years of
   contract performance) to arrive at an estimated material contract value,
   unadjusted by the RFP's EPA clauses. RFP sect. M, at 4.

   [7] For POLs, the agency actually used the second highest, rather than the
   highest annual increase (49.92 percent) during the last 10 years,
   reasoning that, due to volatility, this would be more realistic. AR exh.
   19, at BATES 67.

   [8] In an affidavit submitted with its comments on the agency report, the
   protester's consultant asserts that the agency calculated the "average"
   scenario used in the agency's price evaluation using a weighted average,
   assigning a 10 percent probability to the BCC/BCP scenario, a 20 percent
   probability to the WCC/BCP scenario, a 30 percent probability to the
   WCC/WCP scenario and a 40 percent probability to the BCC/WCP scenario.
   Protester's Comments, July 9, 2007, exh. 2 at 4. The protester's
   consultant is incorrect. The record shows that, in calculating the
   "average" scenario, the agency used a simple mathematic calculation that
   expressed the mean of the four scenarios. AR exhs. 13, at 16; 17 at 16.
   The protester's consultant also states in his affidavit that the agency
   performed its calculations using only 9 years of data instead of 10.
   Protester's Comments, July 9, 2007, attach. 2, at 3. This assertion also
   is not supported by the record, which shows that, in fact, the agency
   consistently used 10 years of data in performing its calculations. E.g.,
   AR exh. 14, at 1-11.

   [9] We point out that the agency did not even use the highest historical
   increase in POL prices in making its calculations. That figure--49.92
   percent--also is within the parameters of the government's liability under
   the EPA clause.