TITLE: B-309803, Integrated Concepts & Research Corporation, October 15, 2007
BNUMBER: B-309803
DATE: October 15, 2007
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B-309803, Integrated Concepts & Research Corporation, October 15, 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: Integrated Concepts & Research Corporation
File: B-309803
Date: October 15, 2007
Antonio R. Franco, Esq., Jonathan T. Williams, Esq., Isaias Alba IV, Esq.,
and Gunjan R. Talati, Esq., PilieroMazza PLLC, for the protester.
David P. Metzger, Esq., Kristen E. Ittig, Esq., Caitlin K. Cloonan, Esq.,
and Jill R. Newell, Esq., Arnold & Porter, LLP, for Concurrent
Technologies Corporation, an intervenor.
Michael J. O'Farrell Jr., Esq., Department of the Air Force, for the
agency.
Paula A. Williams, Esq., and Ralph O. White, Esq., Office of the General
Counsel, GAO, participated in the preparation of the decision.
DIGEST
1. Agency was not required to advise protester during discussions that its
total proposed cost was not competitive since the protester's evaluated
cost was not so high as to be unreasonable or unacceptable for award.
2. Protest that award was tainted by organizational conflicts of interest
is denied where the record does not support allegations that the awardee
participated in the drafting of the statement of work or had access to
non-public information that would have provided a competitive advantage.
DECISION
Integrated Concepts & Research Corporation (ICRC) protests the award of a
contract to Concurrent Technologies Corporation (CTC) under request for
proposals (RFP) No. FA8519-06-R-72815, issued by the Department of the Air
Force to perform various tasks, including those related to research and
development for the Air Force's Advanced Power Technology Office (APTO).
ICRC primarily challenges the adequacy of the agency's discussions with
the firm and the agency's failure to properly consider a potential
organizational conflict of interest (OCI) arising from the award to CTC.
We deny the protest.
The APTO is responsible for managing demonstration projects that will
integrate advanced power technologies such as hybrid drive systems, fuel
cells, alternative fuel formations, integration of solar power,
biomass-to-energy systems, advanced battery storage devices, and
hydrogen-powered systems into many different types of end items for Air
Force missions. The agency plans to use the contract here to help improve
weapon system logistical and sustainment support, weapon system
capabilities, fuel efficiency, and to reduce harmful emissions and the
agency's dependency on foreign energy sources. RFP amend. 1, Performance
Work Statement (PWS) at 3.
The RFP contemplated the award of a single cost-plus-fixed-fee
indefinite-delivery/ indefinite-quantity (ID/IQ) contract, for a base
period of 1-year and four 1-year option periods, for research,
development, test, evaluation, and sustainment support services for the
APTO. RFP at 35, 49. The contract was to contain a "price" ceiling of
$65 million. RFP at 34. The solicitation advised that award would be made
using a "Technically Acceptable--Risk/Performance/Price Tradeoff"
procedure.[1] That is, the RFP provided that proposals would first be
evaluated for technical acceptability, and then subjected to a tradeoff
between proposal risk, past performance and cost. In the tradeoff,
proposal risk and past performance were of equal importance and, when
combined, were significantly more important than cost. RFP at 55.
Under the technical acceptability factor, the RFP stated that the
offeror's proposed solution to a sample task included in the
RFP--involving the integration of a fuel cell into a hypothetical ground
vehicle--would be evaluated "to determine if the offeror provides a sound,
compliant approach that meets the requirements of this solicitation" and
demonstrates understanding of the requirements. Id.
With regard to cost, offerors were required to propose costs for each of
the contract line item numbers (CLIN) listed in the solicitation's
schedule for the base and each option period.[2] RFP at 3-27. The
solicitation also stated that the offeror's cost proposal would be
evaluated for realism, reasonableness and balance. A total evaluated cost
would be calculated based on the sum of the cost for the sample task (CLIN
0001),[3] CLIN 0002-data, and CLIN 0003-labor rates for two labor
categories which would be multiplied by the estimated hours provided in
the solicitation. RFP amend. 6, at 5-6. The solicitation also set forth a
related schedule which essentially captured separate cost elements for
both CLINs 0002 and 0003, which offerors were required to complete. Id.
The agency received initial proposals from CTC, ICRC, and a third offeror
by the March 2, 2007 closing time.[4] The Air Force determined that
discussions were necessary and submitted to each offeror "Evaluation
Notices" (EN) concerning multiple issues identified under the technical,
past performance, and cost factors. Agency Report (AR) exh. 12, CTC EN and
EN Responses; AR exh. 13, ICRC EN and EN Responses. As relevant here,
during discussions with ICRC, the agency stated:
Your approach proposes [DELETED] hours to accomplish the task. Based on
the Government's analysis of your approach and the review of the
associated cost, the hours proposed for the Sample Task appear to be
high. Review the requirement and confirm the number of hours need[ed] to
accomplish the Sample Task stated in your approach.
AR exh. 13, ICRC EN No. CP-01. ICRC responded to the agency's concern
regarding its proposed cost by reducing its overall proposed labor hours
from [DELETED] to [DELETED]. Id. Final proposal revisions (FPR) were
subsequently requested, received, and evaluated. The agency determined
that all three proposals were technically acceptable and that the proposed
costs for each were realistic, reasonable, and balanced, given the
technical approach for addressing the sample task. AR exh. 16, Source
Selection Decision, at 2-4, 7. The final overall ratings and evaluated
costs are set forth below:
+----------------------------------------------------------------+
| | CTC | ICRC |
|-----------------------+---------------------+------------------|
|Proposal Risk | Low[5] | Low |
|-----------------------+---------------------+------------------|
|Past Performance | High Confidence[6] | High Confidence |
|-----------------------+---------------------+------------------|
|Total Proposed Cost | $319,776 | $979,264[7] |
|-----------------------+---------------------+------------------|
|Total Evaluated Cost | $316,973 | $1,186,127[8] |
+----------------------------------------------------------------+
AR exh. 5, Technical Evaluation Report, at 5-13; AR exh. 6, Price
Competition Memorandum, at 5-8; AR exh. 7, Assessment of Past Performance,
at 3-17.
The contracting officer, as source selection authority, reviewed the
evaluation findings and selected CTC for award after concluding that CTC's
lower-cost proposal represented the best value to the government. AR exh.
16, Source Selection Decision, at 8. After receiving a debriefing, ICRC
filed this protest.
DISCUSSION
In its protest, ICRC principally argues that the Air Force failed to
engage in meaningful discussions because, in the protester's view, the
agency should have advised the company that its proposed costs were too
high. Although the protester acknowledges that the agency's discussion
question advised that the number of hours proposed for the sample task
appeared high, it argues that this question failed to give the company a
meaningful understanding of the wide disparity between its proposed costs
and those of CTC. Protest at 14-15; Protester's Comments at 6-8. In
addition, ICRC contends that the disparity in costs was so great it had no
reasonable possibility of award, so that the agency should have viewed its
costs as a deficiency and raised the matter more clearly during
discussions. Protester's Comments at 4.
It is a fundamental precept of negotiated procurements that discussions,
when held, must be meaningful; that is, discussions may not mislead
offerors and must identify deficiencies and significant weaknesses in each
offeror's proposal that could reasonably be addressed in a manner to
materially enhance the offeror's potential for receiving award. Federal
Acquisition Regulation (FAR) sect. 15.306(d); Lockheed Martin Corp.,
B-293679 et al., May 27, 2004, 2004 CPD para. 115 at 7. Based on our
review of the record, and for the reasons set forth below, we find that
the agency's discussions with the protester were meaningful.
To the extent that ICRC argues that the agency was required to consider
its proposed costs unacceptable, and thus a proposal deficiency, we note
first that the contemporaneous evaluation record indicates that the agency
did not consider the matter to be a proposal deficiency. Instead, the
evaluators reached a different conclusion. Specifically, the agency
conducted a detailed assessment of whether the number of hours identified
was reasonably related to ICRC's approach to the sample task. This
assessment led the agency to conclude that the proposed solution to the
sample task was an acceptable one, but one that involved a high number of
labor hours. As a result, the agency advised ICRC during discussions that
the number of labor hours proposed appeared high. Upon receipt of this
information, ICRC reduced its overall proposed labor hours, thereby
altering its proposed costs.
Our review of the record here has revealed nothing to lead us to conclude
that the agency's assessment was unreasonable. In fact, the cost realism
analysis here fulfilled its purpose--i.e., it examined whether the costs
proposed by ICRC's technical approach were consistent with the firm's
likely actual cost of performance. While the protester claims that its own
proposed costs were per se unreasonable, given the lower costs proposed by
the awardee, it has not shown that the cost realism analysis produced an
inaccurate measure of the likely cost of implementing the company's
proposed technical solution. Moreover, the record shows that the
contracting officer specifically noted in his source selection decision
that the significant variance in evaluated costs was directly attributable
to the significant differences in the technical approaches adopted by the
competing offerors.
Finally, the protester has not shown that the discussions were misleading,
or, in any way, inadequate. Where an offeror's proposed cost is high in
comparison to competitors' costs, the agency may, but is not required to,
inform the offeror that its costs are not as competitive as those of its
competitors during discussions. See FAR sections 15.306(d)(3), (e)(3); SOS
Interpreting, Ltd., B-287477.2, May 16, 2001, 2001 CPD para. 84 at 3; see
also Mechanical Equip. Co., Inc.; Highland Eng'g, Inc.; Etnyre Int'l,
Ltd.; Kara Aerospace, Inc., B-292789.2 et al., Dec. 15, 2003, 2004 CPD
para. 192 at 18; MarLaw-Arco MFPD Mgmt., B-291875, Apr. 23, 2003, 2003 CPD
para. 85 at 6. In sum, since ICRC's proposed costs were not evaluated as
either unreasonable or unrealistic, and since the agency was not obligated
to advise the company that its proposed costs were not competitive, we
conclude that the agency's discussions with ICRC were adequate.[9]
Finally, ICRC contends that CTC was ineligible for award because of an OCI
arising from the company's prior or current contractual relationships with
the agency. In the agency report, the Air Force explained that the alleged
facts underpinning the protester's OCI allegations were not as argued.
Specifically, the Air Force explained that CTC is not a subcontractor, as
ICRC alleges, under the agency's current technical, logistical and
sustainment contract. As a result, ICRC expressly withdrew the portion of
its OCI allegations which had no basis in fact. Protester's Comments, at 1
n.1. Instead, ICRC argued in its comments that our Office should
investigate whether work performed by CTC under a task order during 2005
and 2006 might have given CTC unequal access to information about the
instant procurement, or provided CTC an opportunity to assist the agency
in setting the ground rules for this solicitation.
We find that ICRC's contentions furnish no basis upon which to question
the award here since the protester has not shown that CTC enjoyed an
unfair advantage over its competitors in responding to the RFP.
Substantial facts and hard evidence are necessary to establish a conflict;
mere inference or suspicion of an actual or apparent conflict is not
enough. Snell Enters., Inc., B-290113, B-290113.2,
June 10, 2002, 2002 CPD para. 115 at 4. The mere existence of a prior or
current contractual relationship between a contracting agency and a firm,
by itself, does not create an OCI, and any advantage CTC may have enjoyed
due to its prior performance of a similar requirement was not the result
of preference or unfair action by the government. Id. at 8.
The protest is denied.[10]
Gary L. Kepplinger
General Counsel
------------------------
[1] Although this solicitation anticipates the award of a
cost-plus-fixed-fee ID/IQ contract, the solicitation often refers to
prices, and even anticipates calculating a "total evaluated price." RFP
amend. 6 at 5. This decision will refer to costs, despite the language in
the solicitation to the contrary.
[2] The solicitation schedule contained the following CLINs: CLIN 0001-the
sample task (prototype); CLIN 0002-data; CLIN 0003-sustainment and repair;
CLIN 0004-other direct costs; and CLIN-0005 travel. RFP at 3-7.
[3] As clarified by the agency in response to questions from the offerors,
sample task costs should include "all cost[s] required to fulfill the
Sample Task." RFP amend. 5, at question and answer (Q&A) 1.
[4] The third offeror's proposal is not relevant to the resolution of
ICRC's protest. Accordingly, our decision here does not further discuss
that proposal.
[5] Low risk reflected the evaluators' judgment that little doubt exists
concerning the offeror's proposed approach to performing the requirements
of the solicitation. RFP at 56.
[6] An overall confidence rating was utilized by the agency to assess an
offeror's past performance. High confidence reflects the agency's
assessment that there is no doubt that the offeror will successfully
perform the required effort. RFP at 57.
[7] The protester's initial total proposed cost was [DELETED]; it was
reduced to the level shown above, in response to discussions. AR exh. 6 at
2.
[8] The record contains evidence that the difference between ICRC's total
proposed costs of $979,264 in its FPR and the total evaluated costs of
$1,186,127 is due to the cost of the material needed to accomplish the
task. AR exh 6, Price Evaluation Memorandum, at 8.
[9] As a result of the agency's conclusion that the protester's proposed
costs were reasonable, given its technical approach, the situation here is
different from the procurement discussed in Creative Information Tech.,
Inc., B-293073.10,
Mar. 16, 2005, 2005 CPD para. 110, at 6-9, which the protester argues
should lead to a decision sustaining the instant protest. In Creative
Information, the agency concluded that the protester's price was
unreasonably high based on the extraordinary disparity between the
protester's price and the government estimate, as well as the other
offerors' prices--the protester's price was almost 10 times higher than
the awardee's. Nonetheless, during discussions, the agency advised the
protester only that its price appeared "overstated." Here, as explained
above, the protester's proposed costs were analyzed by the agency and
found to be reasonable given the offeror's technical approach. As a
result, we think the agency's discussion advice--that the hours appeared
high--met its obligation to hold adequate and fair discussions.
[10] In its protest, ICRC argued that the procurement was flawed for
various additional reasons, including that the agency improperly evaluated
cost proposals and failed to make multiple awards. ICRC also expressly
withdrew these allegations in its comments.