BNUMBER: B-270012.2
DATE: March 19, 1996
TITLE: Ogden Support Services, Inc.
**********************************************************************
DECISION FOR PUBLIC RELEASE
A protected decision was issued on the date below and was subject to a
GAO Protective Order. This version has been redacted or approved by
the parties involved for public release.
Matter of:Ogden Support Services, Inc.
File: B-270012.2
Date:March 19, 1996
Ronald K. Henry, Esq., and Mark A. Riordan, Esq., Kaye, Scholer,
Fierman, Hays & Handler, for the protester.
Dennis J. Riley, Esq., and Joseph G. Billings, Esq., Riley & Artabane,
P.C., for American Systems Corporation, the intervenor.
Diane Florkowski, Esq., Central Intelligence Agency, for the agency.
Charles W. Morrow, Esq., and Guy R. Pietrovito, Esq., Office of the
General Counsel, GAO, participated in the preparation of the decision.
DIGEST
Agency's technical evaluation, and source selection based upon that
evaluation, was not found reasonable because the agency evaluated the
protester's and awardee's proposals nearly identically under the
solicitation's past performance evaluation factor without the record
containing sufficient information and analysis to establish equality.
DECISION
Ogden Support Services, Inc. protests the award of a contract to
American Systems Corporation (ASC) under request for proposals (RFP)
No. 95-W001, issued by the Central Intelligence Agency (CIA), Office
of Information Technology, for mail and courier support services.
Ogden challenges the agency's evaluation of technical and cost
proposals, conduct of discussions, and source selection decision.
We sustain the protest.
The RFP provided for the award of a cost-plus-award-fee,
level-of-effort (LOE) contract for mail and courier support services
for a base period of June 1, 1995, to September 30, 1995, with 2
priced option years and 2 unpriced option years. The RFP's statement
of work (SOW) informed offerors that the required total level of
effort was 22 full-time persons per year and that contractors would
provide personnel to work a standard 40-hour workweek, consisting of 5
consecutive duty days and 8-hour shifts. Offerors were also informed
that contractor personnel would not normally be required to work
overtime, weekends, or federal holidays, but that the government
reserved the right to order additional hours to meet its requirements.
The RFP also set forth a minimum transition schedule that required the
contractor to provide six persons, including one task leader, within
30 calendar days of award, with another six persons (including one
other task leader) being provided every 6 weeks until the contractor
had provided 22 persons by September 30. Offerors were permitted to
offer a quicker transition, or "ramp-up," schedule.
All 22 personnel were identified by the RFP as key personnel, for
which offerors were required to provide resumes. The SOW required
that all personnel, prior to starting work, have received "top
secret/industrial security staff approval" clearances. Personnel were
also required to have a high school diploma or general equivalency
degree (GED) certificate.[1] The SOW also provided that all personnel
would be trained in the agency's distribution requirements and that
this training should not exceed four to six weeks. The transition
period was provided to allow offerors the opportunity to obtain
personnel meeting these contract requirements.
The RFP provided for award to the offeror whose proposal represented
the best value to the government, cost/price and other factors
considered. The following technical evaluation factors and subfactors
were identified:
1. Personnel
a. Qualifications
b. Availability/Clearances
2. Project Management and Control
a. Staffing Plan
b. Management Plan
c. Training, Safety, and Certifications
3. Past Performance
The personnel factor was stated to be more important than the project
management/control factor, and both the personnel and project
management/control factors were stated to be significantly more
important than past performance. The RFP provided that cost would not
be weighted, but would be evaluated on the basis of "cost realism and
actual cost."[2] Offerors were informed that cost realism would be
evaluated on the basis of the LOE stated in the SOW.
Detailed proposal preparation instructions were provided for each
evaluation factor and subfactor. Regarding the past performance
factor, offerors were requested to identify "at least three similar
[g]overnment and industry contracts received in the past three years
or currently in negotiation [with] performance of work similar to the
effort described in this RFP." The RFP also defined "similar
experience" to be providing support to "similar type mail and courier
efforts and/or administrative support service type efforts."
The CIA received proposals from Ogden, the incumbent contractor, and
ASC, by the closing date for receipt of proposals. ASC proposed
approximately [DELETED] more man-hours than did Ogden, consisting of
approximately [DELETED] more for the 4-month base period and
approximately [DELETED] more for each option year. The difference in
the offerors' proposed hours for the option years was because Ogden's
man-year consists of [DELETED] direct-productive hours, while ASC's
man-year consists of [DELETED] direct-productive hours.
Both proposals were determined to be in the competitive range, and
technical and cost discussions were conducted with each offeror.
Regarding Ogden's cost proposal, the CIA was concerned with the
protester's [DELETED] which was much [DELETED] and that Ogden's
[DELETED] was not consistent with Ogden's approved Cost Accounting
Standards (CAS) disclosure statement.[3] Hearing Transcript (Tr.) at
15, 73-74. The CIA asked Ogden when it intended to submit its
proposed disclosure statement amendment or modification to the
cognizant contracting officer, to explain its [DELETED]. Ogden
replied by providing the CIA with its proposed CAS disclosure
statement revisions; Ogden, however, did not indicate when it intended
to submit its proposed accounting system revisions to the cognizant
contracting officer. Ogden also informed the CIA that [DELETED].
The agency's technical management evaluation team (TMET) evaluated
Ogden's and ASC's technical proposals as follows in the final
evaluation:
Ogden ASC
Personnel(50 pts) 48.68 47.52
Project Management/Control (40 pts)38.0239.34
Past Performance (10 pts) 10 9.6
TOTAL 96.70 96.46
Both firms' proposals were evaluated as containing a number of
strengths and only two weaknesses. One of the weaknesses of ASC's
proposal was that of ASC's seven identified contract references, only
two "demonstrated favorable performance on mail and courier/similar
type service contracts."
Ogden's proposed total cost plus fee was slightly less than ASC's.
The firms' proposed costs were evaluated by the agency's cost
evaluation team (CET) with the support of the contract audit division
(CAD). The CET determined that ASC had proposed more labor hours than
had Ogden for the base period, as well as for the two priced option
years, and that, although Ogden had submitted a lower total "price"
(calculated by the CET as total proposed costs plus award fee), ASC's
contract price per hour was lower than Ogden's because ASC proposed
more man-hours. Specifically, the CET concluded that "ASC's proposal
. . . represents a marginal cost savings over Ogden's when comparing
the total dollars to hours ratio." The CET noted that, while Ogden
had proposed [DELETED] Ogden's proposed accounting system revision
were not accepted, Ogden's costs would be higher than proposed.
The technical and cost evaluations were provided to the source
evaluation board (SEB). The SEB found that both offerors' proposals
were in the "very good range," demonstrated an overall competence, and
that major strengths significantly outnumbered the identified
weaknesses. Regarding the firms' proposed costs, the SEB noted that
ASC had proposed more hours than had Ogden and that ASC's "proposed
hourly rate is lower than Ogden's proposed hourly rate." The SEB also
expressed concern with Ogden's [DELETED] noting that Ogden had not
submitted disclosure statement revisions to the cognizant contracting
officer responsible for negotiating [DELETED]. The SEB concluded that
"[g]iven the contract shall be a [LOE] contract, ASC's proposal
provides savings to the [g]overnment based upon the total hours and
costs proposed." Consequently, the SEB recommended award to ASC as
the firm whose proposal offered the best value to the government.
The source selection authority (SSA) concurred with the SEB's
recommendation of award to ASC. The SSA found that ASC's and Ogden's
proposals were technically equal based solely upon the closeness of
the technical point scores. In this regard, the record shows that the
SSA did not review the proposals or evaluation documentation
underlying the SEB's recommendations. Indeed, the SSA erroneously
stated that ASC's proposal was rated higher than Ogden's under the
past performance factor and that ASC had proposed a more accelerated
transition schedule. The SSA concluded that ASC's offer represented
the best value to the government because ASC had offered approximately
[DELETED] more man-hours than had Ogden at a lower hourly rate.
Specifically, the SSA stated:
"As the [g]overnment is procuring manpower on a LOE basis the
average price per hour is a significant issue. The proposed
average price per labor hour is derived by dividing the total
proposed price for each contractor by their total proposed labor
hours. ASC's proposed price per labor hour of [DELETED] is lower
than Ogden's proposed price of [DELETED] per hour."
Award was made to ASC, and this protest followed. Performance has
been stayed pending our decision in this matter.
Ogden challenges the technical evaluation and conclusion that the
firms' offers were essentially equal. Specifically, Ogden complains
that ASC received an "excellent" technical rating (with a score nearly
identical to Ogden's perfect score) for past performance, even though
the awardee's proposal does not sufficiently demonstrate mail/courier
service or similar experience, as required by the RFP, and the TMET
assessed ASC's lack of three references for mail/courier or similar
support services contract to be a proposal weakness.
In reviewing a protest challenging an agency's technical evaluation,
we examine the record to ensure that the agency's evaluation was
reasonable and consistent with the stated evaluation criteria. Abt
Assocs. Inc., B-237060.2, Feb. 26, 1990, 90-1 CPD para. 223. Here, there
is insufficient information and analysis in the record to establish a
reasonable basis for the past performance score ASC received vis-a-vis
Ogden's past performance score.
As noted above, the TMET in its final technical evaluation noted two
weaknesses in ASC's proposal, one of which concerned ASC's past
performance. Specifically, the TMET found a weakness that only two of
ASC's contract references "demonstrated favorable performance on mail
and courier/similar type service contracts." Although the RFP
requested a demonstration of mail/courier or similar service
experience on at least three contracts, the TMET gave ASC's proposal a
nearly perfect score under this evaluation factor.[4] The CIA points
out that all five of ASC's contract references who responded to the
agency's inquiry (out of seven references provided) gave favorable
recommendations. It contends that ASC's proposal identified four
contract references for either mail or courier service or for similar
administrative type efforts. However, the agency has not identified
which of the seven contract references in ASC's proposal led the
agency to this conclusion. ASC's contract descriptions, which are
sketchy because of their classified status, indicate that only two
contracts included any meaningful mail or courier service as part of
the overall contract requirements, and none of these contracts were
exclusively for such services. It may be that the work performed by
ASC under the contracts cited in its proposal, either individually or
cumulatively, constituted sufficient evidence of the firm's past
performance to warrant ASC's rating. Without additional information
and analysis in the record, however, we cannot conclude that this is
the case.
Ogden's proposal received a perfect past performance score based upon
its showing of specific experience in performing the contract
requirements that are the subject of this RFP and its identification
of two other contracts with substantial mail or courier service
requirements, and the TMET assessed Ogden's demonstrated experience to
be a proposal strength. This evaluated strength in Ogden's proposal,
however, translated into only a [DELETED] score advantage under the
past performance factor because of the high point score given ASC.
Since the record is insufficient to support the agency's past
performance evaluation, it is insufficient to support the close scores
of Ogden's and ASC's proposals under this evaluation factor. See J.M.
Cashman, Inc., B-233773, Apr. 14, 1989, 89-1 CPD para. 380. Thus, it is
not clear that the SSA had a reasonable basis to determine that
Ogden's and ASC's proposals were technically equal overall.
The record shows that the SSA relied upon the SEB's report in
determining that the firms' proposals were essentially equal; the SEB
report only details the point scores received by the firms under each
of the evaluation factors and does not provide the basis for the
scores. There is no indication in the record, nor assertion from the
agency, that the SSA reviewed, or was familiar with, the TMET's
evaluation findings and assessment of proposal strengths and
weaknesses.
Indeed, in making the award selection, the SSA misapprehended several
facts. For example, the SSA erroneously states in his selection
decision that ASC's proposal was rated higher than Ogden's under the
past performance factor. Also, the SSA erroneously stated both in his
selection decision and during the hearing that ASC's proposal of more
man-hours was due to ASC proposing a more accelerated transition
schedule, which the SSA apparently regarded as a proposal strength,
Tr. at 86-87, 90; Ogden, as the TMET correctly found, proposed a more
accelerated transition schedule than did ASC. Finally, the SSA
apparently believed that the ASC's offer of more man-hours to perform
the contract would be beneficial. However, the LOE called for by the
RFP does not vary with the offeror for the basic contract work; it is
the same 22 person LOE for the full years of performance, regardless
of which company performs the contract. Thus, ASC's estimates of more
hours for performance for the full years does not mean that ASC was
actually offering anything more than Ogden offered for the basic
contract work. In this regard, the agency's contracting officer
testified during the hearing that ASC was not going to do anything
differently from Ogden under the contract; "it will be the same work."
Tr. at 60.
Based on this record, it is unclear whether the SSA would have
considered the difference in the two firms' evaluated past performance
a meaningful discriminator, such that Ogden's proposal would have been
considered technically superior, or whether Ogden's and ASC's
proposals would still have been considered technically equal; we
sustain the protest on this basis. If the two proposals are
reasonably found technically equal, then ASC's lower cost would result
in that firm's selection. If Ogden's proposal is reasonably
determined technically superior to ASC's lower cost proposal, the
agency would have to perform a cost/technical tradeoff analysis to
determine which offer represents the best value to the government.
Ogden also argues that the CIA irrationally determined which proposal
offered the most favorable cost terms by comparing the ratios of the
offerors' total proposed price (calculated as the sum of the estimated
costs and award fee) to their proposed total man-hours, and deriving a
contract price labor rate, which it then used in making the award
selection. As indicated, the LOE for the basic contract work
requiring 22 persons working the same number of hours should have been
identical; however, the offerors' cost proposals were based upon
differing man-hour estimates, even for the option years that should
involve the same number of hours, because of the firms' differing
man-years.
The effect of the agency's contract price labor rate calculation was
to normalize the labor hours among the offerors for the entire
contract period, such that even though Ogden's proposed total cost is
lower than ASC's, ASC's cost per hour would be low because of its
greater number of proposed hours. The problem with this calculation
here is that the bulk of difference between the proposed hours was
during the transition, phase-in period, which contemplated the
possibility of differing technical approaches and hours, and that, by
including these hours in calculating the contract price per hour,
ASC's cost advantage is exaggerated, presuming these phase-in hours
constituted ASC's technical approach.[5] Moreover, the award
selection did not consider the offerors' probable costs, but only
proposed costs, even though the CIA questioned (we think reasonably)
Ogden's [DELETED] because it was not persuaded by Ogden's [DELETED]
the agency's concern with [DELETED] was not mitigated due to Ogden's
[DELETED].
We recommend that the CIA reevaluate the firms' technical proposals,
and determine and document whether they are technically equal. If the
proposals are reasonably found technically equal, there is no basis to
disturb the award.[6] If Ogden is found to be technically superior,
the agency should conduct discussions with the firms if necessary;
complete a probable cost analysis of the cost proposals; conduct a
cost/technical tradeoff analysis consistent with this decision; and
make a new source selection. If the CIA determines that award should
more appropriately be made to Ogden, the CIA should terminate ASC's
contract and make award to Ogden. We also recommend that the
protester be reimbursed its costs of filing and pursuing its protest,
including reasonable attorneys' fees. Bid Protest Regulations, sec.
21.8(d)(1), 60 Fed. Reg. 40,737, 40,743 (Aug. 10, 1995) (to be
codified at 4 C.F.R. sec. 21.8). The protester should submit its
certified claim for costs to the contracting agency within 90 days of
receiving this decision. Bid Protest Regulations, sec. 21.8(f)(1).
The protest is sustained.
Comptroller General
of the United States
1. The high school diploma or GED certificate requirement is a new
contract requirement. [DELETED]
2. The RFP did not identify the relative weight assigned to the cost
factor. Where a solicitation fails to explicitly state the relative
weight of cost in the evaluation scheme, it must be presumed that cost
and technical considerations will be accorded equal weight and
importance in the evaluation. Meridian Corp., B-246330.3, July 19,
1993, 93-2 CPD para. 29.
3. Ogden, as a CAS covered contractor, is required to file a
disclosure statement, describing its cost accounting practices and
procedures, with the cognizant administrative contracting officer and
contract auditor. See 48 C.F.R. Subpart 9903.202-1 (1994).
4. The agency's source selection plan guidance to evaluators provided
that an "excellent" score, such as provided to ASC's proposal under
this factor, should only be given where "[t]here are all strong points
and no weaknesses or deficiencies identified."
5. As indicated, the SSA erroneously believed that these additional
hours reflected ASC's more accelerated transition schedule, even
though Ogden's proposed schedule is more accelerated. From our
review, we cannot ascertain what these additional hours in ASC's
proposal represent.
6. Ogden also protests a number of other aspects of the agency's
technical evaluation and the agency's conduct of discussions. We have
reviewed these other allegations and find them to be without merit.
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