TITLE: B-299981; B-299981.3, Navarro Research and Engineering, Inc., September 28, 2007
BNUMBER: B-299981; B-299981.3
DATE: September 28, 2007
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B-299981; B-299981.3, Navarro Research and Engineering, Inc., 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: Navarro Research and Engineering, Inc.

   File: B-299981; B-299981.3

   Date: September 28, 2007

   Brian W. Craver, Esq., Person & Craver, LLP, for the protester.

   Joseph P. Hornyak, Esq., and Allison V. Feierabend, Esq., Holland &
   Knight, LLP, for The S.M. Stoller Corporation, an intervenor.

   Charmaine A. Howson, Esq., and Patricia D. Graham, Esq., Department of
   Energy, for the agency.

   Mary G. Curcio, Esq., and John M. Melody, Esq., Office of the General
   Counsel, GAO, participated in the preparation of the decision.

   DIGEST

   1. Where solicitation contemplated award of fixed-price contract, price
   realism analysis was reasonable where agency compared proposed prices to
   government estimate and other proposed prices, and ensured that prices
   reflected specified labor categories and hours specified by RFP.

   2. Protest that awardee's proposal unreasonably received evaluation credit
   for exceeding solicitation requirements is denied; where solicitation
   provides for award on best value basis, agency reasonably may assess as a
   proposal advantage degree to which proposal exceeds minimum solicitation
   requirements.

   3. Protest that awardee received improper competitive advantage due to
   status as incumbent contractor is denied; agency is not required to
   discount competitive advantage gained by virtue of performance as
   incumbent contractor.

   DECISION

   Navarro Research and Engineering, Inc. protests the award of a contract to
   The S.M. Stoller Co. under request for proposals (RFP) No.
   DE-RP01-06LM00060, issued by the Department of Energy (DOE) for support
   services. Navarro complains that the agency improperly evaluated offerors'
   technical proposals and failed to perform an adequate price realism
   analysis.

   We deny the protest.

   DOE's legacy program is responsible for managing land structures and
   facilities that were associated with nuclear weapons production during the
   cold war and are now closed. The RFP sought support services for this
   program, and provided for award of a contract on a time-and-material
   basis, with provision for a base fee and award fees. The RFP indicated
   that the award would be made on a "best value" basis considering technical
   factors--technical approach, management approach, personnel qualifications
   and staffing, corporate experience, and past performance--and price; the
   technical factors were more important than price. RFP at 88-92. Regarding
   price, the RFP, as amended, included a list of 15 labor categories, with
   multiple experience levels and the estimated number of hours that each
   level could be expected to perform annually. RFP at 381. The RFP also
   specified a dollar amount that each offeror was to include in its proposal
   for other direct costs. RFP at 383. Offerors were to propose a loaded,
   fixed, hourly rate (minus fee) for each labor category, as well as a base
   fee and an award fee. RFP at 78-79. Price was to be evaluated for
   reasonableness, realism, and completeness. RFP at 92.

   The agency received five proposals, including Navarro's and Stoller's. A
   technical evaluation committee (TEC) reviewed and scored the proposals
   under each factor. The combined technical factors were worth 1000 points
   with technical approach worth 400, management approach 250, personnel
   qualifications and staffing 200, corporate experience 100 and past
   performance 50. Agency Report (AR) at 6. Of the five proposals, Stoller's
   was ranked first, with a technical score of 920 (of 1,000 available)
   points--320 (of 400) for technical approach, 250 (of 250) for management
   approach, 200 (of 200) for personnel qualifications and staffing, 100 (of
   100) for corporate experience, and 50 (of 50) for past performance. AR at
   7. Navarro's proposal was ranked fourth technically, with a score of 465
   points--200 for technical approach, 125 for management approach, 40 for
   personnel qualifications and staffing, 50 for corporate experience, and 50
   for past performance. Id. Stoller's proposed price was lowest at
   $167,656,172, and Navarro's was the highest at $213,677,929. AR at 8.
   Based on the technical scores and price combined, the TEC ranked Stoller's
   proposal first overall and Navarro's fourth. Id. The source selection
   authority (SSA) reviewed the technical evaluation report and selected
   Stoller for award. Navarro protests the award decision.

   PRICE REALISM ANALYSIS

   Navarro challenges the adequacy of the agency's price realism analysis. In
   this regard, section M of the RFP stated that proposals "will be evaluated
   to determine if the proposed costs are realistic and consistent with the
   Technical Proposal with regard to the nature, scope, and duration of the
   work to be performed. Inconsistencies between the Cost/Price Proposal and
   other portions of the proposal could raise concerns regarding the
   offeror's understanding of the requirements and ability to perform the
   work for the proposed price." RFP at 92.

   Where a fixed-price contract--including a fixed-rate contract such as this
   one--is to be awarded, an agency may provide for the use of a price
   realism analysis in a solicitation for such purposes as measuring an
   offeror's understanding of the solicitation's requirements and for
   assessing the risk inherent in an offeror's proposal. Star Mountain, Inc.,
   B-285883, Oct. 25, 2000, 2000 CPD para.189 at 4. The Federal Acquisition
   Regulation (FAR) identifies a number of price analysis techniques that may
   be used to determine whether prices are reasonable and realistic,
   including comparison of the prices received with each other and with the
   independent government estimate, and analysis of pricing information
   provided by the offeror. FAR sect. 14.404-1(b)(2). The nature and extent
   of a realism analysis ultimately are matters within the agency's
   discretion, unless the agency commits itself to a particular methodology
   in the solicitation. Id.
    
   DOE's realism analysis consisted of comparing the proposed rates for the
   specified labor categories to both the government estimate and the other
   proposed prices, and the use of statistical analysis techniques to analyze
   the information. Technical Evaluation Report (TER) at 37-46 and attach. 4.
   As a result of its analysis, the agency concluded that all offerors' total
   prices were realistic, including Stoller's, which was approximately 11.6
   percent lower than the government estimate. AR at 25, 28. In this regard,
   the agency found that some of Stoller's and other offerors' labor rates
   were lower than the government estimate and that some were higher, but
   concluded that, overall, all offerors' proposed rates were consistent with
   the estimate. AR at 25. In addition, DOE verified that each offeror's
   prices reflected the estimated number of labor hours for each labor
   category specified in the RFP.[1] We find nothing objectionable in the
   agency's evaluation methodology.

   Navarro complains that the realism analysis was flawed because it was
   based on a government estimate that was not prepared until after the
   proposals were received. However, there is nothing per se improper in an
   agency's reliance on a government estimate revised after offers are
   received where it determines that the original estimate is erroneous.
   McCarthy Mfg. Co., B-186550, Feb. 17, 1977, 77-1 CPD para. 116 at 3-4. DOE
   explains that it reduced the government estimate after proposals were
   received to correct errors and to account for inapplicable and likely
   inaccurate assumptions. For example, among other things, DOE reduced the
   overhead rate assumption from 100 percent to 50 percent because the lower
   rate was consistent with similar contracts performed on government
   property. The agency also reduced the profit rate to correspond to the
   rates offerors actually proposed. AR at 29-30. Navarro does not challenge
   any specific changes made by the agency, and does not assert--and we find
   no reason to conclude--that the estimate itself is unreasonable.
   Accordingly, we find no basis for questioning the agency's use of the
   revised estimate.

   Navarro also complains that DOE's analysis was inadequate because the
   agency did not determine whether offerors' proposed hours were consistent
   with the nature, scope, and duration of the efforts described in their
   technical proposals, as required by the RFP. As noted above, however, the
   solicitation, as amended, included the labor categories and the exact
   number of hours for each labor category that offerors were required to use
   to prepare their proposals. RFP at 381. Since offerors thus were not
   responsible for proposing their own required hours, it obviously would
   have served no purpose--the RFP language aside--for the agency to
   separately consider whether Stoller's--or any other offeror's--hours were
   sufficient. The agency's failure to conduct this analysis thus does not
   render the evaluation unreasonable.

   EVALUATION OF STOLLER'S TECHNICAL PROPOSAL

   Noting that Stoller's proposal was given evaluation credit for exceeding
   the solicitation requirements, Navarro maintains that this was improper,
   since Stoller's proposal was able to exceed the requirements only because
   Stoller had access to information gained through its performance as the
   incumbent contractor.

   This argument is without merit. First, there is no requirement that an
   agency equalize or discount an advantage gained through incumbency,
   provided that it did not result from preferential treatment or other
   unfair action by the government; neither is alleged here. Amtec Corp.,
   B-261847, Sept. 28, 1995, 95-2 CPD para.164 at n.5. Similarly, where, as
   here, a solicitation provides for award on a best value basis, an agency
   reasonably may assess as an evaluated advantage the extent to which a
   proposal exceeds the minimum requirements of the solicitation. See
   American Material Handling, Inc., B-297536, Jan. 30, 2006, 2006 CPD para.
   28 at 4.[2] We conclude that the evaluation of Stoller's proposal was
   unobjectionable.

   EVALUATION OF NAVARRO'S TECHNICAL PROPOSAL

   Under the personnel qualifications and staffing factor, offerors were
   required to, among other things, ". . . demonstrate [their] ability to
   provide appropriate staffing resources over wide spread geographic
   locations, and under widely fluctuating workloads." RFP at 75. The RFP
   informed offerors that they would be evaluated on, their "demonstrated
   ability to recruit, retain and provide qualified key and non-key personnel
   to ensure sufficient staffing is available throughout contract
   performance, including, but not limited to, its ability to provide all
   necessary personnel at the time of contract award. . .", and ". . . for
   demonstrated ability to provide non-key staff at the necessary skill
   levels, whether by new hire or retention of current or incumbent staff."
   RFP at 90.

   The TEC assigned Navarro's proposal a significant weakness under the
   staffing and personnel qualifications factor on the basis that Navarro did
   not demonstrate the ability to select key and non-key personnel at the
   necessary skill level without government involvement. Navarro challenges
   this conclusion, asserting that it proposed a specific plan for staffing
   the contract; to the extent its proposal provided DOE with the [DELETED],
   it actually exceeded the requirements of the solicitation. [3]

   In reviewing a protest challenging an agency's proposal evaluation, our
   role is limited to ensuring that the evaluation was reasonable and
   consistent with the terms of the solicitation and applicable statutes and
   regulations. Phillips Med. Sys. of N. Am., B-293945.2, June 17, 2004, 2004
   CPD para. 129 at 2. Here, DOE reasonably read Navarro's proposal as
   providing a staffing plan that was based on [DELETED] in staffing
   decisions. For example, while the proposal explains that Navarro is
   bringing an outstanding team of key personnel with proven leadership and
   organization skills and outstanding technical credentials, Proposal at 79,
   it also states that, "... because we understand the importance of the
   incumbent personnel, [DELETED] . . .," id. at 80, and that,
   "[DELETED]"..., id. Similarly, with respect to non-key personnel, the
   proposal provides that, "Our Staffing Plan begins with our proven ability
   and commitment to [DELETED]" Id. We think these statements reasonably
   indicated that [DELETED], and that the agency thus reasonably read them in
   this manner. Since there was nothing in the RFP that envisioned such
   [DELETED], the TEC reasonably assigned Navarro's proposal a weakness on
   this ground.

   PREJUDICE

   Navarro challenges many of the evaluated weaknesses the agency assigned
   its proposal under the remaining technical factors.

   Our Office will not sustain a protest unless the protester demonstrates a
   reasonable possibility that it was prejudiced by the agency's actions,
   that is, unless the protester demonstrates that, but for the agency's
   actions, it would have had a substantial chance of receiving the award.
   McDonald-Bradley, B-270126, Feb. 8, 1996, 96-1 CPD para. 54 at 3; see
   Statistica Inc. v. Christopher, 102 F.3d 1577, 1581 (Fed. Cir. 1996).

   In selecting Stoller's as the best value proposal the SSA relied on the
   point scores and the strengths in Stoller's proposal. Source Selection
   Statement at 3, 4. As discussed above, we find no basis to question DOE's
   evaluation of Stoller's proposal--and its score of 920 points--or the
   evaluation of Navarro's proposal under the personnel staffing and
   qualifications factor. Even if Navarro's proposal received the maximum
   number of points under the other technical factors (which, in fact, is not
   possible, since Navarro does not challenge one significant weakness under
   the technical approach factor and, under the scoring plan, a proposal with
   a significant weakness could not receive the maximum score, AR at 6-7),
   its score would increase only to 840 points (40 points under the personnel
   qualifications factor and the maximum score for every other factor). Given
   that Stoller also enjoyed a $46 million price advantage, Navarro has not
   demonstrated a reasonable possibility that its proposal would be selected
   for award even if we found merit to its additional evaluation challenges.
   Navarro thus was not competitively prejudiced by any of these errors, and
   we therefore need not consider them.[4]

   The protest is denied.

   Gary L. Kepplinger
   General Counsel

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

   [1] The agency notes that a substantial part of the difference in
   Stoller's and [DELETED] proposed prices was due to [DELETED]. AR at 28.

   [2] In any case, despite having access to Stoller's proposal, as well as
   the agency's evaluation of that proposal, Navarro does not identify any
   specific areas where Stoller received evaluation credit for exceeding the
   solicitation requirements.

   [3]The TEC assigned Navarro's proposal two significant weaknesses under
   the personnel qualifications and staffing factor. Navarro does not
   challenge the second weakness.

   [4] In a supplemental protest filed on August 3, 2007, Navarro argues
   that, "The relationship between Stoller, a small business, and its large
   business subcontractors is violative of the Small Business Administration
   (SBA) rules, and renders Stoller ineligible for award." Supplemental
   Protest at 4. However, matters such as this relating to an offeror's
   eligibility for award as a small business are for consideration by SBA,
   not our Office. 4 C.F.R. sect. 21.5(b)(1) (2007).