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.