TITLE: B-309752; B-309752.2; B-309752.3; B-309752.4; B-309752.5; B-309752.6; B-309752.7, Contingency Management Group, LLC; IAP Worldwide Services, Inc., October 5, 2007
BNUMBER: B-309752; B-309752.2; B-309752.3; B-309752.4; B-309752.5; B-309752.6; B-309752.7
DATE: October 5, 2007
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B-309752; B-309752.2; B-309752.3; B-309752.4; B-309752.5; B-309752.6; B-309752.7, Contingency Management Group, LLC; IAP Worldwide Services, Inc., October 5, 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: Contingency Management Group, LLC; IAP Worldwide Services, Inc.
File: B-309752; B-309752.2; B-309752.3; B-309752.4; B-309752.5;
B-309752.6; B-309752.7
Date: October 5, 2007
Lee P. Curtis, Esq., Suzette W. Derrevere, Esq., Allan Cannon, III, Esq.,
Troy E. Hughes, Esq., Alexander S. Joves, Esq., and Eric A. Aaserud, Esq.,
Perkins Coie LLP, for Contingency Management Group, LLC; and J. Alex Ward,
Esq., Edward Jackson, Esq., Jessica Tillipman, Esq., Joshua Rafsky, Esq.,
Bradley A. Areheart, Esq., Jammey L. Kligis, and Kathy C. Weinberg, Esq.,
Jenner & Block, for IAP Worldwide Services, Inc., the protesters.
Karen L. Manos, Esq., Michael K. Murphy, Esq., Christyne K. Brennan, Esq.,
Joshua P. Chadwick, Esq., and Dace A. Caldwell, Esq., Gibson, Dunn &
Crutcher, LLP, for Kellogg, Brown & Root Services, Inc.; Richard B.
O'Keefe, Jr., Esq., Jon W. Burd, Esq., Daniel P. Graham, Esq., Philip J.
Davis, Esq., and John R. Praire, Esq., Wiley Rein LLP, and Kevin P.
Connelly, Esq., Joseph John Dyer, Esq., Jon B. Crocker, Esq., Grace
Bateman, Esq., and Amanda B. Weiner, Esq., Seyfarth Shaw LLP, for Fluor
Intercontinental, Inc.; David P. Metzger, Esq., Kara L. Daniels, Esq.,
Caitlin K. Cloonan, Esq., Stuart W. Turner, Esq., Dominique Castro, Esq.,
and Jill R. Newell, Esq., Arnold & Porter, for DynCorp International, the
intervenors.
Bradley J. Olson, Esq., Maj. Duc Nguyen, Daniel Pantzer, Esq., and Vera
Meza, Esq., Department of the Army, for the agency.
John L. Formica, Esq., Sharon L. Larkin, Esq., and James A. Spangenberg,
Esq., Office of the General Counsel, GAO, participated in the preparation
of the decision.
DIGEST
1. Agency's favorable evaluation of an awardee's proposal, submitted in
response to a solicitation for logistics support on a global basis, was
unreasonable and evidenced unequal treatment, where the proposal stated
that it was predicated upon assumptions that expressly differed from the
assumptions set forth in the solicitation's scenario on which proposals
were to be based, and there is nothing in the contemporaneous evaluation
record indicating that the agency considered, or was even aware of, the
proposal's stated assumptions.
2. Agency's favorable evaluation of an awardee's proposal was unreasonable
and evidenced unequal treatment, where the agency misunderstood an aspect
of the proposed technical approach, and the agency had criticized and
assessed a weakness in evaluating another offeror's proposal because it
included a similar technical approach.
3. Agency's evaluation of an awardee's business systems under a management
evaluation factor as "outstanding" is of concern, where the agency's
evaluation does not adequately account for negative comments by the
Defense Contract Audit Agency that were provided to the procuring agency
as part of the proposal evaluation.
4. Agency's evaluation of proposals under the technical factor that
considered the percentages set forth in the offerors' proposals of host
country nationals, third country nationals, and U.S. citizens/expatriates
proposed to perform the work was unreasonable, where the record provides
unsupported, or inconsistent and alternative, explanations regarding what
percentages should be considered acceptable or as weaknesses or strengths.
DECISION
Contingency Management Group, LLC (CMG), and IAP Worldwide Services, Inc.,
protest the award of contracts to Kellogg, Brown & Root Services, Inc.
(KBRSI), Fluor Intercontinental, Inc., and DynCorp International under
request for proposals (RFP) No. W52P1J-06-R-0049, issued by the Army
Sustainment Command, Department of the Army, for logistics support on a
global basis. The protesters argue that the agency's evaluation of
proposals was unreasonable.
We sustain the protests.
BACKGROUND
This acquisition is for Logistics Civil Augmentation Program (LOGCAP)
Combat Support and Combat Service Support (CS/CSS) augmentation on a
global basis.[1] The solicitation provided that the LOGCAP services will
be made available to the Army as well as "other military services,
coalition and/or multinational forces, and other
governmental/non-governmental agencies." RFP at 14-17.
The solicitation provided for the award of up to three
indefinite-delivery/indefinite- quantity (ID/IQ) contracts for a base
period of 1 year with nine 1-year options. RFP at 2, 79. The RFP noted
that "[t]he minimum requirement for each of the Global LOGCAP IV contracts
is for a core program office," and that "[t]he maximum permitted on each
LOGCAP IV performance contract is $5 billion per year."[2] RFP at 2. The
solicitation provided that multiple task orders (TO) will "be issued
during the performance period" of the contracts, and that the agency's
"intent is to compete future LOGCAP task orders between the awardees." RFP
at 4; AR, Tab 22, Source Selection Decision Document (SSDD), at 1. The
solicitation further advised offerors that the "LOGCAP IV contractors will
be required to submit a proposal for every Task Order RFQ [request for
quotations] the Government sends them," and that the awarded ID/IQ
contracts would "utilize Firm Fixed Price, Fixed Price Incentive, Cost
Plus Award Fee, Cost Plus Fixed Fee, Cost Plus Incentive Fee, Cost Plus No
Fee, or Time and Materials Task Orders." RFP at 2; amend. 2, at 2.
The solicitation included detailed proposal preparation instructions, and
requested, among other things, that proposals include management, past
performance, technical, and cost/price volumes. RFP at 86. The RFP
requested that the management volume consist of sections addressing the
offeror's approach, capabilities and experience, the offeror's business
systems, and the offeror's approach to using small businesses in the
performance of the contract. RFP at 89-91.
The RFP advised that the offeror's technical proposal was to respond to an
attached scenario. RFP at 94. The scenario, which "reminded [offerors]
that [it] was fictional and not related in any way to any current or
proposed military or diplomatic real world situation," required "the
offeror to provide construction and 22 CSS functions, including supply,
transportation, life support, and maintenance support to US Forces in a
contingency combat environment in the nation of Sierra Leone." AR at 2;
Tab 4, Initial Scenario, at 1. The scenario provided certain "background"
regarding Sierra Leone and the "situation" for purposes of establishing
the scenario, including information relating to the hypothetical
diplomatic and economic situation in Sierra Leone. For example, the
assumptions stated in the scenario included that the "Sierra Leone
president has reported ties with international terrorist organizations,"
"Sierra Leone is an extremely poor African nation with tremendous
inequality in income distribution," and there was "long term conflict
between the Government of Sierra Leone" and a "liberation movement." AR,
Tab 4, Initial Scenario, at 1-2. The scenario also provided information
regarding the security situation in Sierra Leone, weather, and Sierra
Leone's infrastructure (such as "road network considered passable for all
vehicular traffic throughout the region," and "basecamp site prep[aration]
in all locations may require extensive jungle clearing"). Id. at 2. The
scenario continued by outlining the "Initial Support Concept," which
included certain assumed "facts," such as "[a]ll facets of Sierra Leone's
infrastructure are severely damaged due to prolonged insurgency and gang
related conflict," "Sierra Leone is a declared combat zone," and the
"United Nations has requested United States peacekeeping assistance
through [the] U.S. Ambassador." Id.
The scenario also provided a detailed "scope of work," which required the
establishment and operation of an aerial port of debarkation and a forward
operating base (FOB) supporting a total population of 600 people, and
detailed the "support required" (such as "[p]rovide retail fuel support at
all bases for U.S. forces and U.S. inter-agency use" and "[l]atrines,
showers, and wash stands will be required"). AR at 2; Tab 4, Initial
Scenario, at 3-33. In addition, the scenario provided a schedule timeline
(such as "NTP [notice to proceed]+72 hours Contractor Advance Team on
ground at [aerial port of debarkation]," and "NTP+30 days begin mission
support at FOB1"). AR, Tab 4, Initial Scenario, at 5.
Offerors were instructed that their technical proposals were to include
technical execution plans (TEP) in response to the scenario that included
a "sound and realistic approach" as to how the offeror would meet the
scenario's requirements. Specifically, each offeror's TEP was to include a
description of the methodology proposed to execute the requirements, and a
scenario staffing and mobilization plan that included the necessary labor
hours broken out by labor category as well as by whether the individuals
proposed were U.S. citizens/expatriates (ExPat), host country nationals
(HCN), or third country nationals (TCN). RFP at 94-95. The TEP was also to
detail the sources and origins of materials, equipment, and supplies, as
well as the transportation delivery routes, air and sea ports, fuel
sources, and staging locations to be used. Additionally, the TEP was to
address command and control, communications, and deployment site control
processes, and was to include a property/equipment control plan and a
quality control approach, as well as a "schedule for meeting the critical
scenario timeline under this solicitation." RFP at 95. The technical
proposal was also to include the offeror's unpriced basis of estimate,
further detailing, among other things, the equipment, materials and
supplies required by the offeror's approach. Id.
The RFP further informed offerors that during the course of the
procurement they would receive through amendment to the solicitation a
technical change to the scenario that was to be addressed in generally the
same way as described for the initially issued scenario. RFP at 94. When
issued, the change to the technical scenario provided for the
establishment and operation of a sea port of debarkation and five
additional FOBs, as well other construction activities and 69 CSS
functions supporting a total of 11,500 people at eight locations. AR, Tab
22, SSDD, at 2; Tab 26, Changed Scenario, at 3.
The RFP requested that the cost/price proposal volume consist of a section
proposing a fixed price for the maintenance and staffing of "a program
office for the base plus all evaluated option years," and a section
consisting of a cost-plus-award-fee proposal for the Sierra Leone
technical scenario. RFP at 96. Specifically, offerors were informed that
they were to submit a cost proposal for the initial scenario, and that
they would also be required to submit a cost proposal responding to the
changed scenario that clearly delineated all costs associated with the
scenario changes. The solicitation provided for the submission of detailed
cost proposals in specified formats that included, for example, a "Grand
Summary for all applicable proposal CLINs [contract line items] (including
Technical Scenario) by cost element and by performance year," and direct
labor costs, material costs, equipment costs, and subcontract costs "by
year . . . , by CLIN, by WBS [work breakdown structure]," and by location
(and by labor category for labor costs). RFP at 97-98. Offerors were also
instructed to detail their proposed subcontract costs and other direct
costs, by year, by CLIN, by WBS, and by location, as well as their
indirect rates. RFP at 97-98.
Offerors were requested to submit a priced basis of estimate with their
cost proposals, and were informed, through amendment to the RFP, that "to
support the Government evaluation process, the offeror's basis of estimate
should be augmented as necessary to present a comprehensive explanation of
the proposed labor, equipment, material, and other direct costs for the
revised scenario." RFP, amend. 12, at 2. The agency added here that "[t]he
purpose of the [basis of estimate] is to provide a thorough explanation of
the resources being brought to bear for the performance of the sample
task; and the basis and methodology for determining the types, amounts,
and costs of these resources."[3] Id.
Offerors were informed that the agency would award contracts to the
offerors submitting proposals determined to provide the best value to the
government, considering the evaluation factors of management, past
performance, technical (scenario), and cost/price. The solicitation
advised offerors that in determining which proposals represented the best
value to the government, the evaluation results under the management
factor would be considered moderately more important than the evaluation
results under either of the equally important past performance and
technical factors, and that the evaluation results under the past
performance and technical factors individually would be considered
moderately more important than cost/price. RFP at 99-102. Offerors'
responses to the management factor would be considered under the following
three subfactors listed in descending order of importance: capability,
approach, experience; business systems; and small business participation.
RFP at 99. The RFP also noted that the offerors' responses to the initial
scenario would be considered under the feasibility and completeness of
scenario approach subfactor, and that the offerors' responses to the
changed scenario would be considered under the ability to handle
requirements changes to the scenario subfactor, both subfactors to the
technical evaluation factor.[4] RFP at 100.
With regard to the cost/price factor, the solicitation stated that a "cost
realism analysis" would be performed "to determine if the costs in an
offeror[']s proposal are realistic for the work to be performed," and that
"[c]ost realism will also be used as the basis for the development of Most
Probable Cost adjustments (MPCs)." RFP at 102. Further, offerors were
advised that the "total evaluated price will be determined by adding the
prices for all Firm Fixed Price CLINs (including option years), and the
Most Probable Costs for the Cost Reimbursable CLINs." RFP at 102.
The Army received proposals from six offerors, including Fluor, KBRSI,
DynCorp, IAP, and CMG. The proposals were evaluated, and all proposals
were included in the competitive range. AR, Tab 8, SSEB Report, at 7.
Written and oral discussions were held, and ultimately final proposal
revisions were received and evaluated. The SSEB reviewed the offerors'
submissions "to determine if they adequately addressed each issue," and
where "additional information was required, follow-up inquiries were
prepared and sent through the contracting officer to the respective
offeror on an iterative basis until the SSEB obtained all data necessary
to complete the evaluations." Id. The agency subsequently removed the
proposal of one offeror from the competitive range, and again requested
and evaluated final proposal
revisions. AR, Tab 22, SSDD, at 5. The final evaluation results were as
follows: [5]
+--------------------------------------------------------------------------+
| | CMG | IAP | FLUOR | KBR | DYNCORP |
|--------------+-----------+-----------+-----------+-----------+-----------|
|Management |Outstanding|Outstanding|Outstanding|Outstanding|Outstanding|
|--------------+-----------+-----------+-----------+-----------+-----------|
||Capability, |Outstanding|Outstanding|Outstanding|Outstanding|Outstanding|
||Approach, | | | | | |
||Experience | | | | | |
||-------------+-----------+-----------+-----------+-----------+-----------|
||Business | Good |Outstanding|Outstanding|Outstanding|Outstanding|
||Systems | | | | | |
||-------------+-----------+-----------+-----------+-----------+-----------|
||Small |Outstanding|Outstanding|Outstanding|Outstanding|Outstanding|
||Business | | | | | |
||Participation| | | | | |
|--------------+-----------+-----------+-----------+-----------+-----------|
|Technical |Outstanding|Acceptable | Good | Good |Outstanding|
|--------------+-----------+-----------+-----------+-----------+-----------|
||Feasibility &|Outstanding|Acceptable | Good | Good |Outstanding|
||Completeness | | | | | |
||of Scenario | | | | | |
||Change | | | | | |
||-------------+-----------+-----------+-----------+-----------+-----------|
||Ability to |Outstanding|Acceptable | Good | Good |Outstanding|
||Handle | | | | | |
||Requirements | | | | | |
||Changes to | | | | | |
||the Scenario | | | | | |
|--------------+-----------+-----------+-----------+-----------+-----------|
|Past Perf. | Low Risk | Low Risk | Low Risk | Low Risk | Low Risk |
|--------------+-----------+-----------+-----------+-----------+-----------|
|Cost/Price | $335.8M | $237.4M | $152.8M | $155.2M | $275M |
|--------------+-----------+-----------+-----------+-----------+-----------|
||PMO | $14.9M | $11.7M | $4.1M | $10.3M | $15.6M |
||-------------+-----------+-----------+-----------+-----------+-----------|
||Scenario | $320.9M | $225.7M | $148.7M | $144.9M | $259.4M |
+--------------------------------------------------------------------------+
Id. at 6.
The Source Selection Authority (SSA) determined that the proposals
submitted by Fluor, KBRSI, and DynCorp represented the best value to the
government, and contracts were awarded to those firms. AR, Tab 22, SSDD,
at 21. IAP and CMG requested and received debriefings, and these protests
followed.
The protests (considered together) argue that the agency failed to conduct
meaningful discussions, and challenge the agency's evaluation of KBRSI's
and CMG's proposals under the business systems subfactor to the management
evaluation factor, the agency's evaluation of all of the proposals (to
some extent) under the technical and cost/price factors, as well as the
agency's ultimate source selection. As explained below, while not
addressing all of the sundry issues raised by the protesters, we find that
the agency's evaluation of proposals was flawed in four respects, and
sustain the protests on these bases.
EVALUATION OF FLUOR'S TECHNICAL PROPOSAL
First, CMG argues that the agency's evaluation of Fluor's technical
proposal was unreasonable because the agency improperly allowed Fluor to
base its TEP on "assumptions [that] clearly deviate from the ground rules
established by the Scenario." CMG's Supp. Comments (Sept. 3, 2007) at 11;
see CMG's Comments (Aug. 23, 2007) at 4-6; CMG Supp. Protest (Aug. 17,
2007) at 10-12.
The scenario ground rule in question here stated that "NTP is the start
date of the period of performance," and that "[t]he period of performance
will commence on 1 March 2007." AR, Tab 26, Changed Scenario, at 3. In
addition, the agency provided the following question and agency answer to
the offerors:
203. What date should the offerors use as the task order award date for
the Sierra Leone contingency? We know NTP for the task order is March 1,
2007. We would like to know the time between notice of task order award
and task order NTP.
Award date and NTP are the same.
Final RFP Questions and Answers.
However, Fluor's TEP included the following as one of its stated
"Assumptions":
The Fluor Team's Technical Execution Plan (TEP) assumptions are:
Post Award and Pre-NTP Period. The period between TO award (including
event scenario change requirements) and NTP includes incremental funding
and is sufficient to accommodate ocean transport of equipment and
material required to meet operational timelines.
Fluor TEP, Scenario Approach, at 4. Fluor's stated assumption that there
will be a period of time between TO award and NTP is again reflected in a
flow-chart, entitled "Construction Process, Staffing, and Schedule,"
included in Fluor's TEP, which depicts as a step in the chart "TO award
with incremental funding," followed by a step identifying a number of
tasks, such as "[p]rocure material" and "[d]eploy equipment," which in
turn is followed by the "NTP for mobilizing" step. Fluor TEP, Scenario
Approach, at 33-34.
CMG argues that the Army's apparent acceptance of this assumption
"enable[d] Fluor--and Fluor alone--to develop both its technical and cost
proposals based on an entirely different ground rule than all other
offerors."[6] CMG's Supp. Protest (Aug. 17, 2007) at 18. The protester
contends that this assumption provided Fluor with, for example, "the time
and money to have three . . . freight ships [DELETED]" prior to the NTP,
thus allowing Fluor to accomplish the requirements of the scenario by
"send[ing] everything by ocean transport" at a considerable savings in
freight costs. CMG's Comments (Aug. 23, 2007) at 34-35. In this regard,
CMG points out that Fluor's proposed freight costs were $40 million lower
than those proposed by CMG, and lower than those proposed by any offeror
other than IAP.[7]
In response, the Army does not point to anything in the contemporaneous
record (nor are we aware of anything) evidencing that it was even aware
that Fluor's TEP included the assumption regarding a period of time
between TO award and NTP during which incremental funding would be
available, nor does the Army's response to the protests explicitly
acknowledge the Fluor assumptions. Rather, the Army explains that, in its
view, because Fluor's TEP proposed the use of a regional equipment
supplier, in addition to shipping certain materials and supplies from its
proposed base of operations in [DELETED], "Fluor's proposal was built so
that if the TO award and NTP were issued simultaneously, Fluor would meet
all scenario milestones." Contracting Officer's Supp. Statement at 10. The
Army also correctly points out that Fluor's cost proposal stated as a
general assumption that TO award and NTP would occur on March 1, 2007.
Id.; Fluor Proposal, Cost Volume, at 5. With regard to CMG's argument that
Fluor's pre-NTP "incremental funding" assumption provided that Fluor would
be compensated for its actions in the time period between TO award and
NTP, the agency states only that "[o]ther than Fluor's reference to
incremental funding, the Agency can find no support for . . . CMG's
concern," but that "[i]n either event, the Agency would not compensate
Fluor for services prior to NTP issuance."[8] Contracting Officer's Supp.
Statement at 11.
The evaluation of proposals is a matter within the discretion of the
contracting agency, and in reviewing protests against allegedly improper
evaluations, it is not our role to reevaluate proposals. Rather, our
Office examines the record to determine whether the agency's judgment was
reasonable, in accord with the evaluation factors set forth in the RFP,
and whether the agency treated offerors equally in its evaluation of their
respective proposals and did not disparately evaluate proposals with
respect to the same requirements. Hanford Env't. Health Found.,
B-292858.2, B-292858.5, Apr. 7, 2004, 2004 CPD para. 164 at 4; Rockwell
Elec. Commerce Corp., B-286201 et al., Dec. 14, 2000, 2001 CPD para. 65 at
5.
As stated above, the contemporaneous record does not evidence any
consideration, or even awareness, by the Army of the stated "assumptions"
in Fluor's TEP that there would be a period between TO award and NTP
during which it would receive incremental funding and could perform
various tasks, such as procuring material and deploying equipment. See
Fluor TEP, Scenario Approach, at 3, 33-34. The fact that the agency may
have been unaware of the assumptions on which Fluor's TEP stated it was
predicated does not change the fact that Fluor's assumptions were not
consistent with the terms of the scenario that the other offerors, as well
as the agency, treated as mandatory. It is a fundamental principle of
federal procurement that a contracting agency must treat offerors equally,
and the agency's acceptance of Fluor's proposal stating that it was
predicated on the above-mentioned assumptions was improper and unfair to
the other offerors.[9] See Farmland National Beef, B-286607; B-286607.2,
Jan. 24, 2001, 2001 CPD para. 31 at 8 (a proposal that fails to conform to
one or more of a solicitation's material terms is technically unacceptable
and cannot form the basis for an award); Loral Terracom; Marconi Italiana,
B-224908; B-224908.2, Feb. 18, 1987, 87-1 CPD para. 182 at 9 (agency's
acceptance of a proposal based upon a methodology different than that set
forth in the solicitation was improper where the agency did not inform all
offerors that the agency's requirements were not as rigid as indicated in
the solicitation).
Moreover, we cannot find the agency's evaluation of Fluor's TEP under the
technical evaluation subfactors reasonable, given that it was based upon a
misreading of Fluor's proposal with regard to the stated "assumptions."
The record does not show that this is an instance where an agency noted
that a proposal was taking exception to a solicitation requirement in some
respect, but ultimately determined that the proposed approach would meet
the agency's needs. Rather, the contemporaneous record, as well as the
agency's arguments during the course of these protests, evidence that the
Army simply misread or altogether overlooked the stated "assumptions" in
Fluor's proposal regarding the period of time and availability of funding
for tasks to be performed between TO award and NTP.[10]
EVALUATION OF KBRSI'S TECHNICAL PROPOSAL
The protesters argue that the agency's evaluation of KBRSI's TEP under the
technical evaluation factor and its subfactors was unreasonable and
evidenced unequal treatment vis-`a-vis the agency's evaluation of IAP's
TEP.
This contention is based upon KBRSI's TEP's use of [DELETED] as KBRSI's
source for leasing heavy equipment.[11] KBRSI TEP at 35. KBRSI's revised
TEP, in addressing the changed scenario, stated that KBRSI's "analysis
demonstrates that leasing all heavy equipment and vehicles through
[DELETED] in Sierra Leone provides the best value for this exercise
scenario," and identified [DELETED] as an "in-country vendor" that could
"immediately provide" KBRSI with the heavy equipment required. KBRSI TEP
at CS-94. KBRSI's TEP explained that KBRSI would "maximize the use of
[its] local and regional partners to leverage existing lease/use
agreements . . . to take advantage of equipment presently available in
country," and that the use of "rental equipment that was available
locally . . . eliminates the need to ocean freight the heavy equipment."
KBRSI TEP at CS-94; KBRSI Cost/Price Proposal at 792.
The SSEB found, in evaluating KBRSI's proposal as "good" under both
technical evaluation subfactors, and "good" overall under the technical
factor, that KBRSI's TEP "provided a feasible approach with adequate
detail that demonstrates a thorough understanding of the requirements and
risks associated with the scenario." AR, Tab 8, SSEB Report, at 46. The
SSEB specifically found that one of the "strengths" of KBRSI's TEP was
that it "shows that the Offeror has the ability to procure local and
regional resources that will enable them to meet the requirements." Id. at
382, 386.
Both protesters argue that the agency's conclusions regarding KBRSI's
proposed use of [DELETED] as its source of supply for heavy equipment were
unreasonable, given the protesters' views that there is nothing in the
record, including KBRSI's proposal, that evidences that [DELETED] "has or
can provide the type of heavy equipment necessary for this mission, in
Sierra Leone or anywhere else." IAP Supp. Protest (Aug. 17, 2007) at 11;
see CMG Supp. Protest (Aug. 17, 2007) at 6-7. In this regard, IAP asserts,
for example, that "[DELETED] entire inventory of equipment was [DELETED],"
which IAP argues "is inconsistent with KBR[SI]'s purported plan to lease
[DELETED] in equipment from [DELETED]." IAP Supp. Protest (Aug. 17, 2007)
at 11. The protesters also note that neither KBRSI's proposal, nor the
information furnished by [DELETED] during the course of the procurement,
identified "the origin, the logistics, the transportation, and the timing"
of the arrival of the heavy equipment necessary to accomplish the
scenario. CMG's Supp. Comments (Sept. 3, 2007) at 39.
The protesters, and IAP in particular, argue that the agency's evaluation
of KBRSI's TEP here "is particularly striking," given the fact the IAP's
TEP "received a weakness for proposing to acquire equipment from real
Sierra Leone suppliers who have actual equipment." IAP Supp. Protest (Aug.
17, 2007) at 12; see CMG Supp. Protest (Aug. 17, 2007) at 7. In this
regard, the record reflects that IAP's TEP proposed to obtain the heavy
equipment necessary to perform the requirements of the scenario from
vendors in Sierra Leone. IAP TEP at 93-95. The SSEB evaluated this aspect
of IAP's TEP as one of the three "weaknesses" assigned in rating IAP's
proposal as only "acceptable" overall under the technical factor (as
compared to KBRSI's "good" rating), commenting that IAP's
[a]pproach relies predominantly on obtaining equipment in Sierra Leone,
with a back-up plan relying on its partner in Spain to coordinate
procurements from regional and European sources. However, given the
depleted state of the Sierra Leone economy, the Offeror will most
probably need to implement its back-up plan, resulting in schedule
delays and increased costs.
AR, Tab 8, SSEB Report, at 38. In reaching this conclusion, the SSEB noted
that "Sierra Leone does not have [the] resources needed to perform the
tasks required in the PWS." Id. at 352. The SSEB further commented that
"Sierra Leone is almost entirely dependent on imports for machinery and
equipment, and that most of the local contractors do not have their own
equipment." Id. at 353.
With regard to the protesters' contention that [DELETED] is not capable of
acting as KBRSI's heavy equipment supplier because [DELETED] does not
currently have equipment or an equipment acquisition/leasing business in
Sierra Leone, the agency concedes, without citation to anything in the
contemporaneous record, that this "was of concern to the Agency when we
were evaluating this particular issue." Contracting Officer's Supp.
Statement at 25. The agency asserts, however, that [DELETED] is capable of
providing the heavy equipment required for the performance of the scenario
based upon the Army's understanding of [DELETED] website, which according
to the agency "identifies capabilities such as construction of new
facilities" and the "renovation of existing, but outdated structures," and
the fact that [DELETE] "carries a current contract with GSA."[12] Id.
The agency further responds that its evaluation was reasonable and did not
evidence unequal treatment because "the bid tab documents give no
indication that equipment being leased from [DELETED] was being acquired
in-country." Contracting Officer's Supp. Statement at 6. Rather, as
characterized by the agency, KBRSI's proposal (which includes supporting
documents provided by [DELETED]) "indicate[s] merely that [DELETED]
committed to having the equipment and vehicles needed by KBR[SI] to
perform the requirements of the scenario." Id. In support of its position
that the equipment to be acquired by [DELETED] and then leased to KBRSI
was not "being acquired in-country," the agency points out that KBRSI's
TEP included a paragraph explaining certain Sierra Leone economic and
geographic conditions, and stating that "[t]hese circumstances mean that
the majority of the materials and equipment needed to support this large
force must be procured elsewhere and transported to Sierra Leone."
Contracting Officer's Supp. Statement at 7; KBRSI TEP at CS-4. The agency
asserts that this statement demonstrated KBRSI's recognition of "the
limited availability of equipment and supplies in-country." Contracting
Officer's Supp. Statement at 6.
We need not reach the broader issue of the reasonableness of the agency's
assessment of [DELETED] as KBRSI's supplier of heavy equipment because
there is a more specific, and more problematic, flaw in the agency's
evaluation of this aspect of KBRSI's TEP. This resulted in an evaluation
that both failed to reflect the content of KBRSI's proposal and caused the
disparate treatment of IAP's and KBRSI's proposals. The agency understood,
and has continued to contend during the protest process, that KBRSI had
proposed that [DELETED] would acquire the heavy equipment for lease to
KBRSI from outside Sierra Leone. The agency, however, is simply wrong on
this point.
As stated above, KBRSI's TEP describes [DELETED] as an "in-country vendor"
who could "immediately provide" KBRSI with the heavy equipment required,
and added that the use of "rental equipment that was available
locally . . . eliminates the need to ocean freight the heavy equipment."
KBRSI TEP at CS-94; KBRSI Cost/Price Volume at 792. The fact that
[DELETED] planned to obtain the equipment from a source within Sierra
Leone is confirmed by a written statement from KBRSI's counsel during the
course of this protest that "[i]t is KBR[SI]'s position, as stated in
KBR[SI]'s proposal, that the equipment IS available locally." KBRSI's
Counsel E-mail (Aug. 28, 2007). Again, since the agency's evaluation and
rating of KBRSI's proposal under the technical evaluation factor as "good"
overall was at least, in part, predicated on the agency's apparent
misunderstanding of this aspect of KBRSI's TEP, we cannot find it to be
reasonable.[13]
Additionally, it is a fundamental principle of government procurement that
the contracting agency must treat all offerors equally, and in so doing
must evaluate proposals evenhandedly against common requirements.
CRAssociates, Inc., B-282075.2; B-282075.3, Mar. 15, 2000, 2000 CPD para.
63 at 5. The Army, which viewed IAP's proposed approach of obtaining the
heavy equipment needed to perform the scenario requirements from within
Sierra Leone as a "weakness" (which was one of the factors that led to
IAP's proposal being rated as only "acceptable" overall under the
technical factor), did not adhere to the standard of "equal treatment" in
rating KBRSI's proposal differently, even though it proposed a similar
approach of acquiring the equipment from in-country sources.[14]
EVALUATION OF KBRSI'S MANAGEMENT PROPOSAL
The protesters argue that the agency's evaluation of KBRSI's proposal as
"outstanding" under the business systems subfactor and "outstanding"
overall under the management evaluation factor was unreasonable.
Specifically, the protesters argue that this aspect of the agency's
evaluation did not adequately consider the results of an audit requested
by the Army and performed by the Defense Contract Audit Agency (DCAA) as
part of the evaluation process.
The RFP required, in connection with the business systems subfactor to the
management evaluation factor, that proposals were, among other things, to
"identify the Accounting, Estimating, Billing, Purchasing, Property,
Supply Chain Management System, Earned Value Management Systems or any
other business systems" that the offeror proposed to "use to support
LOGCAP, and how they will use these systems to track costs, subcontracts,
equipment, personnel, and changes in requirements." The solicitation added
here that "[t]he offeror must identify whether the systems to be used on
LOGCAP have been approved or determined compliant by DCAA or DCMA [Defense
Contract Management Agency], or are in the process of becoming
approved/compliant." RFP at 90.
The solicitation informed offerors that in evaluating proposals under the
business systems subfactor to the management evaluation factor, the agency
would consider how well the proposed business systems would be "able to
provide effective contract oversight and tracking of costs, subcontracts,
equipment, personnel, and changes in requirements in a contingency
environment," as well as "how well the proposed systems will provide
complete, reliable, timely, consistent and transparent data to permit
effective Government oversight and management." The solicitation,
consistent with the terms of the RFP's proposal preparation instructions,
also provided that the agency would consider here whether the offerors'
proposed business systems were "Government approved or compliant, or in
the process of becoming approved/compliant." RFP at 100.
The record reflects that in addition to considering KBRSI's
representations in its management proposal, the Army requested as part of
its evaluation process that DCAA perform an audit of KBRSI's proposal that
took into account both the costs proposed as well as the "contractor's
internal controls." DCAA LOGCAP IV/KBRSI Audit (Apr. 20, 2007) at 2. With
regard to its assessment of KBRSI's "internal controls," the DCAA reviewed
KBRSI's business systems, including its accounting system, budgeting and
planning system, estimating system, purchasing system, and billing system,
and issued a report in April 2007. Id. at 34-39. Although this report does
not take issue with KBRSI's budgeting and planning system, it does express
a number of concerns with regard to the remainder of KBRSI's business
systems.
Specifically, DCAA notes that, in a previous DCAA audit report dated
November 1, 2006, it had reported KBRSI's accounting system as "inadequate
in part." Id. at 34. The April 2007 report reflects that DCAA had
determined in the prior report that KBRSI did not "[h]ave an adequate
system of monitoring and managing its accounting system process to ensure
the system is operating as designed and operating effectively in
accordance with Government requirements and management's intent." DCAA
adds that KBRSI's accounting system did not have "adequate written
policies" for "identifying and excluding unallowable costs," "ensuring the
Cost Accounting Standards Board . . . Disclosure Statements reflect their
cost accounting practices," and "identifying the criterion when cost
transfers between final cost objectives are justified." Id. The DCAA
report notes that KBRSI has been transitioning to a new accounting system,
and that it has "substantially completed the process of implementing" the
new system. Id. at 35.
The April 2007 DCAA report also states that it had found KBRSI's
estimating system "inadequate in part" in a previous report, and in
response to that previous report KBRSI had undertaken certain "corrective
actions" that resulted in improvements to KBRSI's budgeting system, but
the system nevertheless required "additional corrective actions . . . in
certain areas." Id. at 36. The DCAA report details the "two primary
actions that need to be completed" by KBRSI, and concludes that while
KBRSI has implemented some corrective actions, DCAA "will continue to
assess control risk based on the disclosed deficiencies" in KBRSI's
estimating system until DCAA has tested KBRSI's "corrective actions and
determined the actions to be effective." Id. at 36-37.
DCAA's April 2007 report also notes problems with KBRSI's purchasing
system. DCAA noted that a DCMA review team had issued a report in October
2005 that included seven recommendations concerning KBRSI's purchasing
system, and that "KBRSI in coordination with DCMA" had "set up" a plan "to
identify causes, analyze solutions, and implement changes to clear the
seven [DCMA] recommendations." Id. at 37. The DCAA report also notes that
it issued, in June 2006, a report identifying "significant deficiencies"
regarding KBRSI's purchasing system, with that report recommending
"disapproval" of four "portions of KBRSI's purchasing system." Id.
at 37-39. The April 2007 report describes in detail each of the four
deficient portions of KBRSI's purchasing system and details DCAA's
continuing view that certain problems remain. Id. at 38.
With regard to KBRSI's billing system, the April 2007 DCAA report
concludes that DCAA continues to consider KBRSI's billing system
"inadequate in part as a result of . . . two primary reasons" identified
by DCAA in a December 2006 DCAA audit report, which, in DCAA's view,
remain uncorrected. Id. at 39.
The SSEB report states that in evaluating KBRSI's proposal as
"outstanding" under the business systems subfactor, the agency found that
KBRSI's "accounting, estimating, billing, purchasing, property . . . are
approved by the government," based on its review of the "DCAA audit
reports and DCMA determination letters for [KBRSI's business] systems."
AR, Tab 8, SSEB Report, at 240. The SSEB report adds here that "any issues
identified by DCAA/DCMA/ACO [Administrative Contracting Officer] were
considered to determine the current status of the issue and assessment of
risk on the system."[15] Id.
With regard to KBRSI's accounting system, the SSEB refers to DCAA's
November 2006 audit report that identified six issues with KBRSI's
accounting system, and notes that KBRSI and government representatives
have established an "Accounting System Issues Council" that "will monitor
[KBRSI's] corrective action plan to address the [accounting system] issues
identified in the DCAA audit report." AR, Tab 8, SSEB Report, at 240-41.
As to whether KBRSI's accounting system is considered "approved," the SSEB
notes that the cognizant DCMA ACO "has not changed the overall system
determination of approved" that was issued in July 1997. Id. at 241.
The SSEB found with regard to KBRSI's estimating system that the "ACO
[had] determined the system is Acceptable with Corrective Action on Dec.
27, 2004," and that the issues identified by DCAA with KBRSI's estimating
system had been resolved with the exception of one issue that "continues
to be worked between the government and offeror." AR, Tab 8, SSEB Report,
at 241. With regard to KBRSI's purchasing system, the SSEB notes without
explanation that while it had been found by DCAA to be "[i]nadequate in
part" in a June 2006 audit report, it had subsequently been "[a]pproved"
by DCMA in October 2006. Id. The SSEB is similarly brief with regard to
KBRSI's billing system, noting only that while it had been determined
"[i]nadequate in part" by DCAA in December 2006, it had subsequently been
found "[a]dequate" by DCMA in April 2007. Id.
In its report in response to the protester's contentions as to the
propriety of the agency's rating of KBRSI's proposal as "outstanding"
under the business systems subfactor in light of the concerns expressed by
DCAA, the agency contends that it "considered all of the findings and
recommendations cited in DCAA audits." Contracting Officer's Supp.
Statement at 31.
Specifically, with regard to the DCAA concerns regarding KBRSI's
purchasing system, the agency states that the cognizant ACO found that
certain of KBRSI's corrective actions were "satisfactory," "adequate," and
"acceptable." Id. at 31-32.
With regard to KBRSI's estimating system, the Army argues that while the
cognizant DCMA ACO "concurred" with certain of the DCAA findings as
expressed in a June 2006 DCAA audit report, the DCMA ACO had also reviewed
KBRSI's corrective action plan and found it to be "adequate" and
"acceptable." Id. at 32. In a memorandum prepared by the DCMA ACO dated
April 20, 2006 referenced by the Army, the ACO states that while "[t]here
are some remaining issues and a few new issues" with KBRSI's estimating
system, there is "nothing of sufficient significance to place the system
in jeopardy," but concludes that he "advised KBR[SI] and DCAA that [he]
would not remove the `with Corrective Action' stipulation on the system
determination until all the various changes are fully incorporated."
Agency Supp. Submission (Sept. 11, 2007), exh. 1, DCMA ACO Memorandum
(Apr. 20, 2006).
With regard to the DCAA's expressed concerns regarding KBRSI's accounting
system, the agency explains, without providing any supporting
documentation, that it "relied on more current system information than the
summary information" included in the DCAA audit report. Contracting
Officer's Supp. Statement at 34. The agency also notes that because the
DCMA ACO has not withdrawn his determination of April 1997 that KBRSI's
accounting system was "adequate," its evaluation of this aspect of KBRSI's
proposal was reasonable. Id.
The agency makes a similar argument regarding its evaluation of KBRSI's
billing system, pointing to an April 2007 letter from the cognizant DCMA
ACO to KBRSI wherein the DCMA ACO states that he has determined KBRSI's
billing system to be "adequate."[16] Id. at 33; Agency Supp. Report, Tab
7.2, ACO Letter to KBR (Apr. 6, 2007).
In sum, the agency concludes that KBRSI's proposal provided a "feasible
approach with extensive detail in the cost, property, security, and
quality areas that demonstrates a thorough understanding of the mission
essential requirements of the RFP," as well as "adequate detail and
understanding in the supply chain management and subcontract management
area." Contracting Officer's Supp. Statement at 35-36; AR, Tab 30,
Briefing Charts to the SSA, at 56.
Based on our review, while we recognize that the agency considered the
DCAA audit report to some extent during its evaluation of KBRSI's
proposal, we have concern that the record does not support the agency's
rating of KBRSI's proposal as "outstanding" under the business systems
subfactor. Even though the agency has supported its "outstanding" rating
for this subfactor with numerous significant strengths, AR, Tab 8, SSEB
Report, at 43-44, it is difficult to reconcile that rating with DCAA's
expressed concerns regarding KBRSI's accounting, estimating, purchasing,
and billing business systems. In this regard, as noted above, the business
systems were to be evaluated as to "how well it is able to provide
effective contract oversight and tracking of costs, subcontracts,
equipment, personnel, and changes in requirements in a contingency
environment," and "how well the proposed systems will provide complete,
reliable, timely, consistent and transparent data to permit effective
Government oversight and management," to which matters the DCAA concerns
are very pertinent. See RFP at 100.
While the agency has pointed out that DCAA's role in the government
approval process and evaluation process of this procurement is advisory,
that fact alone does not provide an adequate explanation as to why KBRSI's
proposal merited an "outstanding" rating, given DCAA's expressed
concerns.[17] Moreover, we find unreasonable the agency's explanation
that, despite DCAA's expressed concerns regarding KBRSI's accounting
system, the simple fact that the ACO has not withdrawn its 1997 approval
of the accounting system supports an "outstanding" rating under the
business systems subfactor. The same conclusion can be drawn with regard
to the deficiencies found by DCAA with regard to KBRSI's billing system,
where the agency explains only that KBRSI's billing system was found
"adequate" by DCMA in April 2007. Similarly, in addressing DCAA's
continuing view that KBRSI's purchasing system has "significant
deficiencies," the agency points out that the DCMA ACO "continue[d] the
approved status" of KBRSI's purchasing system in October 2006. Agency
Supp. Report, Tab 7.6, DCMA Letter to KBRSI (Oct. 3, 2006), at 1.
In sum, although the record indicates that the Army considered or was at
least aware of DCAA's concerns regarding KBRSI's business systems, it
appears that DCAA had ongoing concerns with KBRSI's business systems that
had not been completely addressed by the time of the evaluation here. The
Army does not explain why these concerns did not remain a factor in the
evaluation or why the DCMA ACO's "approv[al]" (either previous or
subsequent) of the business systems in question addressed DCAA's concerns
regarding the merits of the business systems proposed. We also have
concerns about the apparent inconsistency between the numerous instances
in which the record characterizes KBRSI's business systems as "adequate"
and the agency's ultimate evaluation of KBRSI's proposal under the
business systems subfactor as "outstanding."
HCN EVALUATION
The protesters argue that the solicitation was fundamentally flawed, in
that it either was misleading or lacked necessary information regarding
the use and mix of HCNs, TCNs, or ExPats in the performance of the
scenario requirements.
As set forth previously, each offeror's TEP was to include, among other
things, a scenario staffing and mobilization plan that included the
necessary labor hours broken out by labor category as well as by whether
the individuals proposed were HCNs, TCNs, or ExPats. RFP at 94-95. The
offerors' proposed percentages of HCNs, TCNs, and ExPats were as follows:
+------------------------------------------------------------------------+
| | IAP | CMG | Fluor | KBR | DynCorp |
|------------+----------+----------+------------+----------+-------------|
|HCN | 82% | 47% | 57% | 62% | 21% |
|------------+----------+----------+------------+----------+-------------|
|TCN | 0% | 32% | 36% | 31% | 64% |
|------------+----------+----------+------------+----------+-------------|
|ExPat | 18% | 21% | 7% | 7% | 15% |
+------------------------------------------------------------------------+
AR, Tab 8, SSEB Report, at 291, 295, 312, 315, 327, 332, 348, 355, 382,
386.
The record reflects that the agency evaluated the HCN, TCN, and ExPat
percentages proposed, and noted as a "strength" of CMG's TEP that "[t]he
Offeror has a good staffing plan for mitigating lockouts or force
protection events by having less than 50% HCN staff." Id. at 291, 295. The
agency evaluated DynCorp's TEP as having a "significant strength" on the
basis that DynCorp proposed "a high percentage of EXPAT and TCN labor,
providing a highly skilled/flexible workforce, mitigating risk associated
with lockouts and increased force protection, appreciably increasing the
probability of successful performance." Id. at 312, 315.
In contrast, the agency found that IAP's TEP posed a "significant
weakness" because of its proposed "workforce that is 82% HCN overall and
91% of all drivers in transportation," and commented, among other things,
that "[t]his approach, under requirements of the scenario, leads to an
appreciably increased risk to execution of the PWS requirements which were
not sufficiently reduced by the Offeror's risk mitigation plan." Id. at
348. Similarly, the agency found with regard to Fluor's TEP that
"[a]lthough the rationale for HCN/TCN/EXPAT ratio was provided, a
substantial percentage of the workforce remains comprised of HCN labor [57
percent], which increases the force protection burden and risk to
performance during lockouts and force protection events"; this aspect of
Fluor's TEP was assigned a "weakness" by the SSEB.[18] Id. at 327, 332.
The agency made a similar finding with regard to KBRSI's TEP, and assessed
this aspect of KBRSI's TEP as a "weakness" because "[a] majority of
workforce is HCN [62 percent] which increases the force protection burden
and risk to performance."[19] Id. at 382, 386.
IAP argues throughout its protests that the offerors were essentially
required by the scenario to maximize the use of HCNs in their technical
proposal, given the scenario's statement that "[t]he contractor shall make
full use of host nation . . . labor." AR, Tab 4, Initial Scenario, at 11;
Tab 26, Changed Scenario, at 10; IAP Protest (July 13, 2007) at 1, 7-8,
17-25; IAP Protest (Aug. 6, 2007) at 2-4; IAP Protest (Aug. 17, 2007) at
8. IAP contends that because of the agency's position regarding the use of
HCNs articulated in the RFP, its proposal should have received a favorable
rating, given its relatively high percentage of HCNs proposed. In the
alternative, IAP argues that given the agency's position as reflected in
the evaluation documents, the "[s]olicitation suffered from a latent
ambiguity regarding the Army's true views on the use of local labor." IAP
Comments (Aug. 17, 2007) at 12.
CMG, on the other hand, which proposed a relatively low percentage of HCNs
to TCNs and ExPats that was evaluated as a "strength" by the agency,
argues that because of the "divergent assumptions" made by the offerors
with regard to the appropriate percentages of HCNs, TCNs, and ExPats, and
the fact that the this mix was a "major cost driver" in the offerors'
proposals, the agency should have either "baseline[d]" the HCN, TCN, ExPat
ratio by amendment to the solicitation, or made "reasonable MPC
adjustments" depending upon the agency's view of the percentages proposed.
AR, Tab 8, SSEB Report, at 17-18; CMG Comments (Aug. 23, 2007) at 7; CMG
Protest (Aug. 17, 2007) at 12.
In short, both protesters, in addition to challenging the propriety of
this aspect of the agency's evaluation, argue to some extent that the
solicitation should have included more specific information regarding a
appropriate percentages of HCNs, TCNs, and ExPats in light of their
importance to the agency as reflected in the evaluation documents, and the
impact of the percentages on the offerors' evaluated costs.[20]
We do not agree with the protesters that the RFP was flawed or otherwise
suffered from a latent ambiguity, and find much of the agency's evaluation
here, including the general underlying agency proposition that too high a
percentage of HCNs poses certain risks, to be unobjectionable. In this
regard, the solicitation should be read and interpreted as a whole, and
therefore, the solicitation's statement regarding the use of HCNs must be
read together with the remainder of the solicitation that set forth the
requirements of the scenario and the conditions under which those
requirements will be performed. See Brown & Root, Inc., and Perini Corp.,
a joint venture, B-270505.2; B-270505.3, Sept. 12, 1996, 96-2 CPD para.
143 at 8.
In our view, and as found by the agency, IAP's position places undue
importance on the use of HCNs at the risk of successful performance. This
is apparent from IAP's TEP, where IAP identifies the possibility that,
even with IAP's mitigation plan, if during the performance of the scenario
"Base Command directs camp lock down and removal or scale back of HCN
workforce," there would be "[s]ubstantial risk with significant doubt that
[IAP] can be successful" in performing the scenario's requirements, given
its relatively high proposed ratio of HCNs to TCNs and ExPats. IAP TEP at
6. Although the scenario encouraged the use of HCNs, it cannot reasonably
be read to require or otherwise mandate the use of HCNs at a level that
may jeopardize or put at risk the successful performance of the scenario's
requirements.
Nor do we agree with the protesters that the solicitation was flawed
because it did not provide sufficient information regarding what proposed
percentages of HCNs, TCNs, and ExPats the agency may evaluate as, for
example, a "weakness" or a "strength." The agency argues that the
provision of more information regarding the ratios of HCNs to TCNs and
ExPats "would have eliminated the Agency's ability to evaluate the
offeror's expertise, judgment, and understanding of how to provide
critical CS/CSS services in a third world combat environment." AR at 23.
The agency explains that "[t]he ability of the contractor to understand
such an environment, identify and balance performance risks, and then
formulate a feasible approach for providing services, is at the very heart
of the LOGCAP program," and that "[t]o have dictated a certain level of
local resourcing . . . would have greatly reduced the Agency's ability to
assess an offeror's understanding in performing these critical
requirements." Id.
In this regard, the record reflects that each of the offerors proposed
differing percentages of HCNs, TCNs, and ExPats to fill the various
positions dictated by their own unique approaches (as well as differing
levels of effort), and made differing judgments as to the benefits and
risks associated with their proposed percentages. In addition to the
information set forth in the solicitation, including the scenario, the
record reflects that the agency raised during discussions with KBRSI,
Fluor, and IAP the agency's belief that the relatively high percentages of
HCNs proposed posed certain risks that had not been, in the agency's view,
adequately addressed in the respective offerors' proposals. AR, Tab 8,
SSEB Report, at 340, 371, 395. We agree with the agency that the RFP, as
well as the conduct of the agency during discussions, provided sufficient
information to allow for offerors to compete intelligently and on an equal
basis while providing sufficient latitude to allow for offerors to make
their own judgments regarding HCNs, TCNs, and ExPats based upon the
offerors' expertise and approach to accomplishing the scenario's
objectives and requirements. See American Contract Servs., Inc.,
B-256196.2, B-256196.3, June 2, 1994, 94-1 CPD para. 342 at 4-5.
As to the merits of the agency's evaluation of the percentages of HCNs,
TCNs, and ExPats proposed by the offerors, we find much of the agency's
evaluation here to be reasonably based (except as discussed below). In
this regard, the record reflects that the agency had "concerns in using an
HCN labor force under the conditions set out in the scenarios," commenting
with regard to the ratio of HCNs proposed by IAP that "HCN access to the
facilities will be limited during elevated threat conditions, adversely
affecting the Offeror's ability to meet the contractual requirements in
support of the warfighter." Contracting Officer's Statement at 44; AR, Tab
8, SSEB Report, at 348. The agency's concern with the use of too high a
percentage of HCNs to perform the scenario requirements is also reflected
in the agency's discussions with KBRSI, Fluor, and IAP, regarding their
relatively high proposed percentages of HCNs, as well as in the agency's
evaluation of proposals, where the relatively high proposed percentages of
HCNs, as set forth in the proposals of KBRSI, Fluor, and IAP, were
considered a "weakness" or "significant weakness," and the relatively low
percentages of HCNs proposed by CMG and DynCorp were considered a
"strength" or "significant strength." The agency states in this regard
that "[a]ll experienced contractors are very aware of the security
concerns with using HCN labor." AR at 20. As such, we see no basis to
question the reasonableness of the agency's general proposition, evident
throughout the record, that too high a percentage of HCNs poses certain
risks that can adversely affect security as well as the performance of the
scenario's requirements. We also note here that the agency's evaluation of
the percentages of HCNs proposed was consistent with the RFP's technical
evaluation factors.
However, while an agency properly may evaluate technical proposals for
adequacy against an undisclosed estimate of appropriate staffing where the
RFP notifies offerors that staffing is an area of evaluation and the
estimate is reasonable, see Doss Aviation, Inc.; Dominion Aviation, Inc.,
B-275419 et al., Feb. 20, 1997, 97-1 CPD para. 117 at 5, we find that the
agency's evaluation was not reasonable insofar as the agency, in both the
contemporaneous documentation as well as in arguments made during these
protests, provides unsupported, or inconsistent and alternative,
explanations, regarding what percentages of HCNs, TCNs, and ExPats should
be considered as acceptable or as "strengths" or "weaknesses."[21]
Most notable is the agency's explanation during the course of these
protests of the basis for the 46 percent HCNs that was reflected in the
agency's independent government cost estimate (IGCE):
As stated in [a previous] response, . . . there is no documentation to
support this figure. It was generated by the IGCE generator based on the
skill mix required to execute the performance work statement. The IGCE
generator did not take security considerations into account because of
the generic nature of this tool. HCNs were assigned to accomplish low
skill tasks. The technical evaluators, during the course of the
evaluation considered the security implications associated with ratio of
HCN labor hour, and determined that, all factors considered, this ratio
was acceptable.
Contracting Officer's Supp. Statement, at 39. Although this explanation
provides that the technical evaluators considered a staff comprised of 46
percent HCNs to be "acceptable," there is no explanation in the record for
the agency's conclusion here. Additionally, we note that the same
evaluators found that CMG's TEP's proposed percentage of 47 percent HCNs
constituted a "strength," commenting that "[t]he Offeror has a good
staffing plan for mitigating lockouts or force protection events by having
less than 50 percent HCN staff."[22] AR, Tab 8, SSEB Report, at 291, 295.
Moreover, the agency also repeatedly refers to Amendment 15 to the
solicitation that informed offerors that they "should assume conditions
similar to those currently existing in Iraq for the purpose of
assessing . . . the ratio of [HCNs] represented in its proposed
workforce." RFP amend. 15, at 3; see AR at 13, 20; Contracting Officer's
Statement at 42. The agency notes that "[a]t the time Amendment 15 was
issued, the overall HCN workforce in Iraq was 28%," and that "at the time
Amendment 15 was issued the HCN labor ratio in Iraq on the LOGCAP contract
was approximately 8%." Contracting Officer's Statement at 42, 44; see AR
at 20, 28; Tab 4.5.1, Contractor Census. The agency, referring to the
28-percent figure for overall HCN workforce in Iraq, clarifies that
"[t]his census number was unknown to the evaluators at the time of the
evaluation" (and presumably, the offerors),[23] but states that
"[n]onetheless, these census numbers reflect the realistic security
concerns and performance risks involved with the use of HCN labor."[24] AR
at 21.
Another document that was available to the agency and offerors (and which
was referenced in the RFP, IAP's TEP, and the SSEB in its evaluation of
IAP's proposal) is the LOGCAP "Worldwide Management and Staffing [Plan]
(WMSP)." AR, Tab 23. As pointed out by IAP, the WMSP states that "[t]he
Contractor will use a preponderance of locally and/or regionally available
labor," and describes a number of "distinct advantages" associated with
the "[e]mployment of HCNs." Id. at 15. Additionally, and most relevant
here, the WMSP provides as a "typical labor breakout" the following
percentages: ExPats (10%-15%), TCNs (5%-30%), and HCNs (65%-85%). Id.
Although the SSEB's explanation, in its evaluation of IAP's TEP and
determination that its proposed 82-percent HCN workforce represented a
"weakness," that "the highest use of HCNs contemplated in the WMSP in any
type of contingency operation is 85%," and that while "[t]he Government
would expect a relatively high use of HCNs . . . for humanitarian relief
type missions in non-combat environments, but not for the combat
environment that is provided in the Solicitation's scenario," seems
reasonable, the SSEB does not explain or provide any further insight
regarding the WMSP, which shows a percentage of 65-percent HCNs as the
lowest part of the range in the typical labor breakout for LOGCAP task
orders. AR, Tab 8, SSEB Report, at 350.
In short, the agency has failed to adequately explain what percentage or
range of percentages of HCNs to TCNs and ExPats constituted a "weakness"
or "strength," or simply evidenced technical acceptability. The agency's
arguments here can be read as supporting percentages of HCNs for
performance of this scenario ranging from 8 to 10 percent, to 28 percent,
to 46 percent to 50 percent and above. This lack of a reasonable
explanation, considered in conjunction with the agency's apparently
alternative arguments, undermines the reasonableness of the agency's
evaluation here, notwithstanding our view that the agency's determinations
in evaluating proposals that an offeror could propose too high a
percentage of HCNs were reasonably based. See Doss Aviation, Inc.;
Dominion Aviation, Inc., supra, at 5.
Additionally, though the solicitation stated that "[t]he contractor shall
make full use of host nation . . . labor," which we believe clearly
encouraged offerors to maximize the use of HCNs in their technical
proposals, there is nothing in the evaluation record or the agency's
arguments here that indicates that this statement was considered in
evaluating the offerors' TEPs. See AR, Tab 4, Initial Scenario, at 11; Tab
26, Changed Scenario, at 6. While, as indicated, we find reasonable the
agency's view that an offeror could propose too high a percentage of HCNs,
we also believe that an offeror under the terms of the RFP here could also
have proposed too few HCNs, given the RFP's statement that offerors were
to "make full use" of HCNs.[25]
We sustain the protests. Because resolving the concerns discussed above
requires reopening discussions, we recommend that the Army do so, request
and review revised proposals, evaluate those submissions consistent with
the terms of the solicitation, and make a new source selection. In the
event a proposal or proposals other than KBRSI's, Fluor's, and DynCorp's
are found to represent the best value to the government, one or more of
the contracts previously awarded should be terminated and a contract be
awarded to the successful offeror or offerors in accordance with the terms
of the RFP. We also recommend that the agency reimburse IAP and CMG the
costs of filing and pursuing their protests, including reasonable
attorneys' fees. Bid Protest Regulations, 4 C.F.R. sect. 21.8(d)(1)
(2007). IAP's and CMG's certified claims for the costs, detailing the time
expended and costs incurred, must be submitted directly to the Army within
60 days of receiving this decision. 4 C.F.R. sect. 21.8(f)(1).
The protests are sustained.
Gary L. Kepplinger
General Counsel
------------------------
[1] CS/CSS is defined by the agency as "[t]he essential capabilities,
functions, activities, and tasks necessary to sustain all elements of
operating forces in theater at all levels of war." Agency Report (AR) at 1
n.1. CS services are specifically defined by the RFP as including, but not
limited to, the base camp services of food service, billeting, clothing
exchange, waste management, facilities and construction management, morale
and recreation, fire protection and fire fighting, sanitation, and
security. CSS services are defined by the RFP as including, among other
things, supply operations (requisition, storage, issue, accountability,
and material management) for water, clothing and administrative supplies,
petroleum, construction materials, ammunition, and medical supplies, as
well as maintenance operations of tactical and non-tactical vehicles and
equipment, and port/ocean terminal operations. RFP 16-17.
[2] As the agency explains, "This is the fourth in a series of LOGCAP
contracts awarded by the Army since the 1990s and is commonly referred
to . . . as LOGCAP IV." Contacting Officer's Statement at 3.
[3] The record reflects that the offerors' basis of estimates played a
critical role in the evaluation process. In this regard, the agency
explains that during the course of the acquisition it decided to "conduct
a detailed analysis to ensure consistency between the resources proposed
in the basis of estimate and the approach expressed in the technical
execution plan." AR, Tab 1.1.2, Source Selection Evaluation Board (SSEB)
Post Protest Statement, at 3. To facilitate this, the agency requested
that the offerors restructure their proposals to include "mapping and
resource allocation summary documents . . . designed to provide the
technical evaluation team the means to connect proposed resources (labor,
equipment, and material) in the basis of estimate, to the proposed
approach articulated in each offeror's TEP, to the PWS [performance work
statement] requirements at the subparagraph level." Id. The agency also
requested that the offerors submit "a set of consolidated resource
listings in an excel file," and reports that these "consolidated [basis of
estimate] resource listings provided the technical evaluation team with an
efficient, reliable mechanism for tracing the offeror's approach, . . .
[basis of estimate], and corresponding resources to the specific
requirements of the PWS." Id. at 4-5.
[4] The RFP advised that these technical evaluation subfactors would be
considered equal in importance. RFP at 100.
[5] The proposals were evaluated under the management and technical
factors as either "Outstanding" (defined as "satisfies all of the
Government's requirements with extensive detail to indicate feasibility of
the approach and shows a thorough understanding of the requirements, with
an overall low degree of risk in meeting the Government's requirements");
"Good" (defined as "satisfies all of the Government's requirements with
adequate detail to indicate feasibility of the approach and shows an
understanding of the requirements, with an overall low to moderate degree
of risk in meeting the Government's requirements"); "Acceptable" (defined
as "satisfies all of the Government's requirements with minimal detail to
indicate feasibility of approach and shows a minimal understanding of the
requirements, with an overall moderate to high degree of risk in meeting
the Government's requirements"); "Susceptible to Being Made Acceptable";
or "Unsatisfactory." AR, Tab 30, Briefing Charts to the SSA, at 6.
[6] As noted by CMG, all of the other offerors based their TEPs on the
scenario ground rule that TO award for the scenario and NTP would occur on
the same date (Mar. 1, 2007).
[7] IAP's proposal's lower cost arose from its proposal to purchase
materials and supplies in Sierra Leone, and as discussed later in this
decision, the agency evaluated this aspect of IAP's proposed approach
unfavorably under the technical evaluation factor and upwardly adjusted
the MPC associated with IAP's proposal to account for this.
[8] Fluor now states that it "had assumed in preparing its initial
proposal that there would be a period of time between TO award and the
NTP," and that while Fluor became aware that the scenario provided "that
these events would occur simultaneously . . . Fluor overlooked correcting
the clause in its TEP on which CMG now focuses." Fluor's Supp. Comments
(Sept. 3, 2007) at 5 n.3.
[9] The fact that Fluor's cost/price proposal states that it is based upon
the assumption that the TO issuance date and NTP date are the same does
not cure the agency's having disregarded the detailed assumption to the
contrary that Fluor placed in its TEP; if anything, it adds the further
problem of an inconsistency between the technical and cost proposals. See
TRW, Inc., B-254045.2, Jan. 10, 1994, 94-1 CPD para. 18 at 4-6, 9-11
(agency's source selection was unreasonable where the awardee's technical
proposal was inconsistent with its cost proposal).
[10] There is at least some evidence in the record that Fluor's technical
approach may have been predicated upon its stated assumption. In this
regard, we note that the contemporaneous record of the evaluation
evidences that the agency was concerned with Fluor's proposed approach,
commenting that "the majority of equipment is still shipped from the U.S.
increasing risk to arriving per schedule," with these concerns pertaining
to Fluor's ability to meet the scenario's required schedule being
reflected as an assessed "weakness" in Fluor's proposal under both
subfactors to the technical evaluation factor. AR, Tab 8, SSEB Report, at
32-33, 340.
[11] [DELETED] is also identified in the section of KBRSI's TEP describing
its overall "technical experience and teaming arrangements" as a
"[c]ritical subcontractor for firefighting and security services." KBRSI
TEP at 3.
[12] The agency does not identify or describe in any manner the "contract
with GSA" that [DELETED] holds. IAP, on the other hand, identifies
[DELETED] GSA contract as a MOBIS, or "Management, Organizational and
Business Improvement Services" contract, under which it offers certain
management-oriented services that appear totally unrelated to the use,
acquisition, sale, or leasing of heavy equipment. IAP Supp. Comments (Sept
3, 2007) at 25-26. KBRSI, in commenting on the agency's position, makes no
mention of [DELETED] GSA contract as support for its position that
[DELETED] is capable of providing the heavy equipment KBRSI would require
for the scenario.
[13] We note that KBRSI, in commenting on this issue, does not explain its
understanding of how [DELETED] would obtain or acquire the heavy equipment
for KBRSI. Instead, KBRSI addresses the issue by explaining what its
proposal did not say. For example, KBRSI points out that its "proposal
does not state that [DELETED] already had the vehicles standing by and
ready to go, nor does it state that [DELETED] was going to obtain all of
vehicles in Sierra Leone." KBRSI Supp. Comments (Sept. 3, 2007) at 7.
KBRSI comments in a similar manner that "the fact that [DELETED] is only a
[DELETED] in no way proves that it cannot acquire and lease equipment in
Sierra Leone." Id. In addition, KBRSI comments at the beginning of one
paragraph that "although [DELETED] never said that it would acquire the
vehicles and equipment in Sierra Leone, there is good reason to believe
that some portion of this equipment would be available in-country even in
the fictionalized Scenario," and concludes the same paragraph by stating
that, nevertheless, "nothing prevents [DELETED] from purchas[ing] this
equipment outside of Sierra Leone and hav[ing] it ready when construction
activities began." Id. at 7-8.
To the extent that KBRSI is arguing that the agency's evaluation of this
aspect of its TEP was reasonable because KBRSI's TEP did not specifically
state either how or from where KBRSI, through [DELETED], would acquire the
heavy equipment needed to perform the requirements of the scenario, we
disagree. Assuming for the sake of argument that KBRSI's proposal was
unclear as to where the heavy equipment KBRSI would obtain through
[DELETED] was located (that is, whether the equipment was in Sierra Leone
or not), it would have been incumbent upon the agency to assure itself,
through discussions if necessary, regarding the details of KBRSI's and
[DELETED] proposed approach to obtaining the heavy equipment, particularly
where, as here, it was a matter of concern to the agency as evidenced by
its evaluation of IAP's proposal. See Mine Safety Appliances Co.;
Interspiro, Inc., B-247919.5; B-247919.6, Sept. 3, 1992, 92-2 CPD para.
150 at 4; recon. denied, National Draeger, Inc.--Recon., B-247919.7, Nov.
6, 1992, 92-2 CPD para. 325.
[14] As noted by IAP, in contrast to KBRSI's use of [DELETED] as the
source of heavy equipment and vehicles, IAP's proposal was based on quotes
for equipment from "real" Sierra Leone vendors.
[15] The record reflects that the cognizant DCMA ACO was a member of the
SSEB and participated in the evaluation of the offerors' proposals under
the business systems evaluation subfactor. See Agency Supp. Submission
(Sept. 11, 2007) at 1.
[16] With regard to KBRSI's billing system, the agency argues that
contrary to the protester's characterizations, DCAA's April 2007 report
"stated that the revised procedures are acceptable." Contracting Officer's
Supp. Statement at 34. As indicated above, this DCAA report found KBRSI
billing system procedures to still be "inadequate." DCAA LOGCAP IV/KBRSI
Audit (Apr. 20, 2007) at 39.
[17] The Army does not specifically take issue with the accuracy of the
observations made in DCAA's April 2007 report.
[18] The agency also found Fluor's "mitigation plan did not substantially
reduce the risk to mission execution." AR, Tab 8, SSEB Report, at 327,
332.
[19] Similarly, the agency also found KBRSI's "mitigation plan did not
substantially reduce the risk to mission execution." AR, Tab 8, SSEB
Report, at 382, 386.
[20] CMG argues that "Fluor and KBR[SI] . . . enjoyed over $50 million in
cost savings" as a result of their "differing staffing assumptions." CMG
Supp. Protest (Aug. 17, 2007) at 24.
[21] The decision in Doss Aviation, Inc.; Dominion Aviation, Inc., supra,
recognizes, however, that it is inappropriate to determine the
acceptability of proposals by the mechanical application of the
undisclosed estimate, where, as in the present case, the RFP encourages
innovative staffing approaches. Id. at 5-6.
[22] There is no explanation of the 50-percent figure in the record.
[23] It appears that the SSEB was aware of the approximate census numbers
(8 percent) regarding the percentage of HCNs working on the LOGCAP
requirements in Iraq, as evidenced by its statement in evaluating IAP's
TEP that at the time of the issuance of Amendment 15, "the workforce
performing the LOGCAP requirements in Iraq was comprised of approximately
10 percent HCNs." AR, Tab 8, SSEB Report, at 350.
[24] That the agency gives weight to this percentage is demonstrated by
the agency's response to IAP's protest that "IAP proposed an HCN ratio
that was a staggering 54% higher (or approximately three times) than the
reality in Iraq." AR at 20.
[25] This could adversely affect the rating of DynCorp's proposal, given
its low HCN percentage.