Matter of: McDonnell Douglas Corporation File: B-259694.2; B-259694.3 Date: June 16, 1995 REDACTED VERSION[*]

Matter of: McDonnell Douglas Corporation File: B-259694.2; B-259694.3 Date: June 16, 1995 REDACTED VERSION[*]

Admission of in-house counsel to a General Accounting Office (GAO) protective order is denied, where GAO, in balancing the need to protect the confidentiality of sensitive material with the party's need to have access to the information to pursue its protest, finds that there was an unacceptable risk of inadvertent disclosure because the in-house counsel advises his company's competitive strategists and there was no showing that the in-house counsel needed access to the information to help the party pursue its protest at GAO. Agency properly performed a price analysis, rather than a cost realism analysis, in reviewing proposals submitted in response to a solicitation for the production and maintenance of missiles, where the solicitation provided for the award of a fixed-price contract, stated that offers would be evaluated for price reasonableness, and did not require the submission of cost or technical proposals. Protest that "ground rules," included in the awardee's price proposal for the production of missiles, took exception to the solicitation requirements is denied where the awardee's price proposal read as a whole clearly committed that firm to produce the missiles at its offered price. Agency was not required to conduct discussions with an offeror aimed at lowering the offeror's proposed price where the price had been determined to be reasonable. Protest challenging the agency's evaluation of technical proposals submitted in response to a solicitation for improvements to a missile system is denied where the protest evidences the protester's mere disagreement with the results of the evaluation and there is no basis on which to find that the evaluation was unreasonable. Protest that the agency in evaluating a proposal submitted in response to a solicitation providing for the award of a cost reimbursement contract did not consider the probable cost associated with the schedule risk of the awardee's understaffed proposal is denied where the agency, in determining the awardee's probable costs of performance, properly accounted for the awardee's evaluated insufficient labor hours by upwardly adjusting the awardee's proposed costs to ensure that sufficient labor hours were priced and where the agency evaluated the awardee's offer as marginal with high risk under the solicitation's management evaluation factor. The agency properly considered the awardee's [DELETED] in the performance of a cost reimbursement contract, where the awardee is contractually obligated to [DELETED] and the agency reasonably determined that the awardee's probable costs of performance will [DELETED].

Attorneys

DECISION

McDonnell Douglas Corporation (MDC) protests the award of two contracts to Hughes Missile Systems Company (HMSC) under request for proposals (RFP) No. N00019-93-R-0047, issued by the Naval Air Systems Command (NAVAIR), Department of the Navy, for the production of Tomahawk missiles and improvements to the Tomahawk missile system. The protester challenges various agency actions with regard to this procurement, including the agency's evaluation of its and HMSC's proposals, and the selection of HMSC for the award of the contracts.

We deny the protest. [1]

BACKGROUND

The RFP, issued on February 8, 1994, provided for the award of a firm, fixed-price contract for the production of Tomahawk missiles in accordance with the current Block III missile system configuration [2], and a cost- plus-incentive-fee contract for improvements to the Tomahawk missile system. Under the fixed-price Block III contract, awarded under Part A of the RFP, the contractor will manufacture, test and deliver Tomahawk Block III missiles as ordered by the agency during fiscal years 1994-1998, and provide depot maintenance, preflight/postflight maintenance, and other support for the missile system consistent with the RFP's statement of work (SOW). The cost reimbursement contract for improvements to the Tomahawk missile system, awarded under Part B of the solicitation and referred to as the Tomahawk Baseline Improvement Program (TBIP), requires the performance of an engineering and manufacturing development (EMD) program to design, develop, fabricate, assemble, integrate, qualify, and test improvements to the Tomahawk missile system to create the next generation, or Block IV, Tomahawk missile system.

The RFP stated that the award of both contracts would be made to the single responsible offeror whose offer, conforming to the RFP, represented the best overall value to the government, cost and other factors considered. The competition was limited to MDC and HMSC, the only qualified producers of Tomahawk missiles. [3] The RFP listed the following evaluation criteria, and their respective elements and subelements, in descending order of importance, with the TBIP EMD cost criterion being identified as "significantly more important" than the TBIP Management criterion:

A. Block III Price

B. TBIP Technical

1. Technical Approach a. Circular error of probability b. Inertial navigation system/global positioning system (INS/GPS) c. Missile communications data link d. Attainment of objective requirements

2. System Engineering Approach a. System analysis b. Process technique

C. TBIP EMD Cost

D. TBIP Management

1. Programs and Schedule

2. Management Approach

3. Relevant Experience and Past Performance

The RFP also provided that the risks associated with the offerors' proposed TBIP technical and management approaches would be evaluated to assess the approaches' potential impact on the performance, schedule, and cost of accomplishing the TBIP requirements and objectives as set forth in the solicitation.

Detailed instructions were provided for the preparation of the offerors' proposals. Among other things, offerors were required to divide their proposals into the following nine volumes: (1) Executive Summary; (2) TBIP Technical; (3) TBIP Management; (4) TBIP EMD Cost; (5) Block III Production Price; (6) Streamlining; (7) Other Information and Terms, Conditions, Exceptions; (8) Classified; and (9) Cross Reference Matrix. The RFP detailed what information was to be included in each of the volumes submitted. For example, the RFP required that the TBIP technical volume include 10 separate books, such as "Book F -Payload Subsystem," and provided an outline for each book for the offerors to follow in the preparation of that book.

The agency received proposals from MDC and HMSC by the RFP's closing time of April 7, 1994. The proposals were forwarded to the cognizant Block III price, TBIP technical, TBIP management, and TBIP cost evaluation teams for evaluation. Both HMSC's and MDC's initial proposals were rated by the TBIP technical evaluation team as "unacceptable" with "marginal" risk, and by the TBIP management evaluation team as "satisfactory" with "high" risk. [4] HMSC's and MDC's Block III price proposals and TBIP costs proposals were also evaluated respectively by the Block III price evaluation team and the TBIP cost evaluation team. HMSC and MDC offered the following prices and costs:

Block III price TBIP cost

HMSC [DELETED] $225 million MDC [DELETED] $387 million

Written and oral discussions were conducted with both offerors. [5] At the conclusion of oral discussions, draft model contracts and additional evaluation notices were forwarded to the offerors for comment. Upon receipt of comments, discussions were concluded, and best and final offers (BAFO) requested and received.

HMSC proposed a price for the Block III contract of [DELETED], which the agency concluded was reasonable after performing a price analysis. [6] HMSC's TBIP technical proposal was evaluated as "satisfactory" with "medium" risk, and its TBIP management proposal as "marginal" with "high" risk. The agency evaluated the cost of HMSC's performance of the TBIP contract at $351 million, for a total of [DELETED] for both contracts.

MDC proposed a price for the Block III contract of [DELETED], which the agency also found to be reasonable. MDC's TBIP technical proposal was evaluated as "satisfactory" with "medium" risk, and its TBIP management proposal as "satisfactory" with "low" risk, at an evaluated cost for the TBIP of $395 million, for a total of [DELETED] for both contracts.

The agency determined, based in large part on HMSC's "substantially lower [f]irm [f]ixed production price" for the Block III contract, that HMSC's proposal represented the best overall value to the government, and on September 16, awarded the contracts to HMSC.

On September 30, MDC filed an agency-level protest challenging NAVAIR's conduct of the procurement, evaluation of proposals, and selection of HMSC for the awards. On December 8, the agency denied MDC's protest. MDC protested to our Office on December 15, challenging, as it did in its agency-level protest, NAVAIR's conduct of the procurement, evaluation of proposals, and selection of HMSC for award of the contracts. [7]

DENIAL OF ADMISSION TO PROTECTIVE ORDER

Pursuant to our Bid Protest Regulations, 4 C.F.R. Sec. 21.3(d) (1995), our Office issued a protective order, which allowed the limited release of documents that are privileged or the release of which would result in a competitive advantage--such as the offerors' proposals and the agency's evaluation documentation--to counsel and consultants for MDC and HMSC who were admitted to the protective order. [8] While admitting a number of attorneys to the protective order on MDC's behalf, we denied an MDC in- house counsel admission to the protective order.

In considering the propriety of granting or denying an applicant admission to a protective order, we review each application in order to determine whether the applicant is involved in competitive decision-making or there is otherwise an unacceptable risk of inadvertent disclosure of protected information should the applicant be granted access to protected material. Applicants are neither automatically admitted because they are outside counsel nor automatically denied access because they are in-house counsel. Consistent with the holding in U.S. Steel Corp. v. United States, 730 F.2d 1465 (Fed. Cir. 1984), our Office has no per se rule in this regard. Instead, in reviewing each application for access to protected material, we consider and balance a variety of factors, including the nature and sensitivity of the material to be protected, the attorney's need for the confidential information sought in order to adequately prepare the party's case, and whether there is opposition to an applicant expressing legitimate concerns that the attorney's admission would pose an unacceptable risk of inadvertent disclosure. See Magnavox Elec. Sys. Co., B-258037; B-258037.2, Dec. 8. 1994, 94-2 CPD Para. 227; Akzo N.V. v. United States Int'l Trade Comm'n, 808 F.2d 1471, 1484 (Fed. Cir. 1986), cert. denied, 482 U.S. 909 (1987); cf. Matsushita Elec. Indus. Co., Ltd. v. United States, 929 F.2d 1577 (Fed. Cir. 1991); U.S. Steel Corp. v. United States, supra.

Although we had no doubts concerning the integrity and veracity of the MDC in-house counsel seeking admission to the protective order (e.g., there was no suggestion that the in-house counsel would intentionally violate the protective order), the record showed that the in-house counsel advised his company's competitive strategists, such that there was an unacceptable risk of inadvertent disclosure of protected information should he be granted access to protected material. For example, the in-house counsel stated that he advised competitive strategists for this procurement on a number of solicitation provisions, including the provisions in the solicitation which sought the offerors' creative approaches and strategies for the streamlining of the acquisition. We determined that if the in- house counsel were given access to HMSC's proprietary information and the agency's source selection sensitive information, he would need to be continuously aware of, and to mentally compartmentalize, the potentially relevant information that would be nondisclosable to his MDC colleagues whenever asked for advice. Magnavox Elec. Sys. Co., supra. Although the MDC in-house counsel argued that he only provided "legal advice," an attorney can be involved in competitive decision-making where the attorney advises marketing, technical or contracting personnel on procurements. See, e.g., Colonial Storage Co.; Paxton Van Lines, Inc., B-253501.5; et al., Oct. 19, 1993, 93-2 CPD Para. 234; Dataproducts New England, Inc.; Allied Signal, Inc.; and ITT Corp., B-246149.3; et al., Feb. 26, 1992, 92-1 CPD Para. 231.

Further, the record did not demonstrate that the in-house counsel's access to protected material was required to allow MDC to pursue its protest. In response to our inquiry during a telephone conference as to why the in- house counsel needed access to protected material, the in-house counsel stated generally that he would manage MDC's outside counsel and otherwise "contribute" in an unspecified manner during the protest. This alone did not indicate that the in-house counsel's access to protected material was necessary for MDC to pursue its protest, given the admission of MDC's outside counsel to the protective order.

In sum, because of the legitimate concerns raised by HMSC and NAVAIR that the admission of MDC's in-house counsel to the protective order would pose an unacceptable risk of inadvertent disclosure of protected information, as well as the lack of any specific showing of need on the part of the in- house counsel for access to the protected material, [9] we denied his admission to the protective order.

BLOCK III PRICE PROPOSAL EVALUATION

MDC protests that HMSC's Block III price was unreasonably low such that HMSC's proposal should have been rejected. MDC points out that HMSC proposed a fiscal year 1994 price per Tomahawk missile of [DELETED], which is [DELETED] percent less than the average fiscal year 1993 price per missile of $1,073,507. [10] MDC argues that the agency failed to adequately evaluate the "cost realism" of HMSC's Block III price.

Before awarding a fixed-price contract, an agency is required to determine that the price offered is fair and reasonable. FAR Sec. 15.805-1; Family Realty, B-247772, July 6, 1992, 92-2 CPD Para. 6. An agency's concern in making a price reasonableness determination focuses primarily on whether the offered prices are higher than warranted, and the results of the analysis may be used in negotiating reasonable prices. Ebonex, Inc., B-213023, May 2, 1984, 84-1 CPD Para. 495. The fact that a firm's offer may not include any profit or may be an attempted buy-in does not render the firm ineligible for award. Family Realty, supra. This is so because below-cost pricing is not prohibited and the government cannot withhold an award from a responsible offeror merely because its low offer is or may be below cost. Norden Sys., Inc., B-227106.9, Aug. 11, 1988, 88-2 CPD Para. 131. Nor can an agency in evaluating an offeror's firm, fixed-price proposal make upward price adjustments for cost elements that agency contracting officials think may be priced to low. PHP Healthcare Corp.; Sisters of Charity of the Incarnate Word, B-251799; et al., May 4, 1993, 93-1 CPD Para. 366. Thus, "cost realism" ordinarily is not considered in the evaluation of fixed-price proposals, because a fixed-price contract places the risk and responsibility for loss upon the contractor. [11] Family Realty, supra; see Culver Health Corp., B-242902, June 10, 1991, 91-1 CPD Para. 556.

Here, the cognizant contracting officer, in performing the price analysis, engaged in written and oral discussions with HMSC personnel in order to determine the reasonableness of HMSC's proposed Block III price. [12] During discussions, HMSC explained that its cost assumptions and resultant price reductions for the production and the maintenance of the Block III Tomahawk missile were made possible in large part by [DELETED], [13] and that it had focused its cost reduction efforts on the three major cost areas of materials, labor, and overhead. [14]

With regard to materials, HMSC explained that, among other things, it had [DELETED] for the Block III contract [DELETED]. HMSC added that it would be able to keep material costs down by using the [DELETED]. HMSC further explained that its suppliers for the Block III contract would be able to [DELETED]. As an example of its success in reducing its material costs for producing Tomahawk missiles, HMSC stated that its supplier for the Block III Tomahawk [DELETED].

HMSC also explained that it had reduced its overhead costs through the consolidation and collocation of all of HMSC's missile programs in its facility in Tucson, Arizona. HMSC pointed out that because of this collocation it had been able to [DELETED], and that by collocating its TBIP development team with HMSC's Tomahawk production team, it had [DELETED]. HMSC added that through various management techniques, and its consolidation of its missile programs in its Tucson plant, it had already reduced the number of labor hours required for the assembly of the Tomahawk missile from over [DELETED] hours to [DELETED] hours.

Based upon the information presented by HMSC during discussions, and the agency's belief that the "winner take all" nature of the competition would in itself result in a reduction in prices [15], the cognizant contracting officer concluded that HMSC's proposed Block III prices were fair and reasonable.

The contracting officer briefed the source selection advisory council (SSAC) as to his determination concerning the reasonableness of HMSC's Block III price, which in turn briefed the SSA. The SSA agreed that HMSC's Block III price was reasonable. When questioned by HMSC's counsel during the hearing, the SSA explained that he was not concerned with HMSC's Block III price because:

"They had built about 2,000 Tomahawk missiles. They had relocated a plant and qualified production in a new facility over the preceding two years very, very expeditiously, had met what I considered then an aggressive schedule to do it and did it with flying colors. They had built 300 [Tomahawk missiles] of this particular configuration, a Block III missile in that production line with high quality, and I felt that they knew their product, I felt that they knew their work force and I thought they had good processes and procedures in place to be able to stand behind their proposals." Tr. at 470.

In our view, the record reflects that the agency conducted a detailed and thoughtful analysis of HMSC's proposed Block III price, and found it reasonable.

Nevertheless, MDC maintains that based on section L-19 of the RFP, the agency was required to perform a cost realism analysis of the offerors' proposed firm, fixed-Block III prices in addition to performing its price analysis. [16] Section L-19, which the solicitation identified as pertaining to both Part A and Part B of the RFP, states:

L-19 REALISM OF COST PROPOSALS

"(a) An offeror's proposal is presumed to represent his best effort to respond to the solicitation. Any inconsistency, whether real or apparent, between promised performance and cost should be explained in the proposal. For example, if the intended use of new and innovative production techniques is the basis for the abnormally low estimate, the nature of these techniques and their impact on cost should be explained; or if corporate policy has been made to absorb a portion of the estimated cost, that should be stated in the proposal. Should such a corporate decision be made, the offeror must submit a Section H provision which requires the offeror to absorb that portion of costs reflected in its cost proposal.

"(b) Any significant inconsistency if unexplained, raises a fundamental issue of the offeror's understanding of the nature and scope of the work required and his financial ability to perform the contract, and may be grounds for rejection of the proposal. The burden of proof as to cost credibility rests with the offeror."

Section M provided that the offerors' Block III prices would be evaluated for reasonableness, and that the offerors' proposed TBIP costs would be evaluated for realism as well as reasonableness. While it is true that section L-19 was identified as being applicable to both the fixed-price and the cost reimbursement portions of the RFP, we find from the express language of the provision, as well as reading the provision within the context of the solicitation as a whole, that the RFP did not provide for a cost realism analysis of offerors' Block III price proposals. See ARINC Research Corp., B-248338, Aug. 19, 1992, 92-2 CPD Para. 172.

As noted, section L-19, which is titled "Realism of Cost Proposals," expressly provides that offerors should explain "real or apparent" inconsistencies between their "promised performance and cost," and that a failure to explain such inconsistencies would be assessed in the agency's evaluation of proposals. However, the RFP did not require that offerors submit cost proposals, detailed cost data, or technical or management proposals for the Block III contract, but only that offerors submit price proposals. Therefore, by considering the title of section L-19, or the contents of the clause, it should have been apparent to MDC that section L-19 could not reasonably apply to the Block III portion of the RFP because there were no cost, technical, or management proposals on which to perform such an analysis, and that the RFP's identification of section L-19 as being applicable to Part A of the RFP clearly was an error. E. Huttenbauer & Son, Inc., B-257778; B-257779, Nov. 8, 1994, 94-2 CPD Para. 206.

Further, the RFP provided at section L-26, "Volume V - Block III Production Price," that "[t]hat the offeror shall propose prices which are sufficient for the government to establish the reasonableness and completeness of the offeror's proposed prices," and at section M-4 that "[p]roposed Block III prices will be evaluated for reasonableness." Thus, to the extent that section L-19, without consideration of its title or contents, can reasonably be considered as requiring that a cost realism analysis be performed on each offerors' Block III price proposal, this is inconsistent with the RFP read as a whole in that sections L-26 and M-4 of the RFP require only that the offerors' proposed Block III prices be reviewed for reasonableness. [17]

In sum, the only reasonable reading of the RFP is that a price analysis of the offeror's Block III prices would be performed in order to determine that the proposed prices were fair and reasonable. [18]

MDC protests that the agency could not properly make award to HMSC because HMSC's Block III price proposal did not cover the Tomahawk missile system Block III product baseline, as required by the solicitation. In support of this contention, the protester points to Volume VII of HMSC's proposal, which included the following language under the heading "Ground Rules and Assumptions - Block III Production:"

"(5) [DELETED]."

MDC argues that the above language provides that HMSC's Block III price was not based on the Block III product baseline [DELETED]. MDC references section L-26 of the RFP which states that "[t]he offeror shall be deemed nonresponsive if proposals are submitted which do not reflect the current product baseline," and contends that, because of this, NAVAIR was required by the RFP to reject HMSC's proposal as "nonresponsive." [19]

The protester's argument is predicated solely on the language of Ground Rule 5, which, contrary to the protester's characterization, plainly states that [DELETED]. As such, it is apparent that HMSC's proposal "reflects the current product baseline" as required by the RFP and that HMSC's proposal is therefore "responsive" to the RFP in that it commits HMSC to perform the Block III contract in accordance with the RFP's SOW at the price proposed.

MDC's argument as to the "responsiveness" of HMSC's Block III price also ignores HMSC's specific statement in its proposal, at Ground Rule 4, that "[HMSC's] Block III production offer is proposed to the current product baseline as provided in the RFP," as well as HMSC's certification in its proposal that its "Block III production offer is submitted in response to the requirements delineated in Part A of the RFP, and contains no exceptions, deviations or waivers."

MDC also protests that HMSC's proposal should have been rejected by the agency because "HMSC's proposal took exception to the mandatory FAR Changes clause included in the RFP." [20] MDC asserts that the claimed exception arises from the following statement in HMSC's Ground Rule 5:

"[DELETED]."

MDC states that this is inconsistent with the Changes Clause [DELETED].

The RFP, in addition to the standard FAR Changes clause, included a clause at section H-19 entitled "Reliability Engineering Change Proposal (RECP)," which was specifically concerned with the processing of engineering changes proposed by the contractor during contract performance which result in reliability improvements. This clause sets forth in detail the procedures to be followed in processing an RECP proposed by the successful contractor during the performance of the contract. Thus, the RFP contemplates that [DELETED] will be processed under section H-19 and not the Changes clause. [21] As such, in our view HMSC's proposed Ground Rule 5 is not inconsistent with the Changes clause. HMSC's Ground Rule 5, to the extent it would have any impact on the manner in which [DELETED]. As MDC did not timely protest that HMSC's Ground Rule 5 constitutes a variation from the terms imposed by section H-19, this basis of protest will not be considered further. [22]

In any case, it is not clear how MDC was prejudiced by HMSC's Ground Rule 5. Prejudice is an essential element of every viable protest, Lithos Restoration, Ltd., 71 Comp.Gen. 367 (1992), 92-1 CPD Para. 379, and we will not sustain a protest where the record does not establish prejudice, i.e., that the protester would have had a reasonable possibility of receiving the award. Dynamic Isolation Sys., Inc., B-247047, Apr. 28, 1992, 92-1 CPD Para. 399; OAO Corp., B-228599.2, July 13, 1988, 88-2 CPD Para. 42. In this regard, MDC asserts that [DELETED], it would have submitted a Block III price proposal of [DELETED] rather than [DELETED]. Considering that HMSC's Block III price was [DELETED] lower than MDC's, and the total cost of HMSC's performance of the contracts was determined to be [DELETED] lower than MDC's, we fail to see how MDC was prejudiced by this alleged impropriety. See TRI-COR Indus., Inc., B-252366.3, Aug. 25, 1993, 93-2 CPD Para. 137, recon. denied, TRI-COR Indus., Inc.--Recon., B-252366.4, Mar. 8, 1994, 94-1 CPD Para. 185.

MDC argues that the agency failed to conduct meaningful discussions because it "never advised MDC that its prices were too high or even suggested that MDC might consider lowering its prices." This argument is without merit. An agency has no responsibility to inform an offeror during discussions that its price is too high unless the agency has reason to believe that the price is unreasonably high. State Management Servs., Inc.; Madison Servs., Inc., B-255528.6; et al., Jan. 18, 1995, 95-1 CPD Para. 25. As discussed above, the agency conducted a price analysis of MDC's proposed Block III price and determined that it was reasonable--a determination that MDC does not contest. The agency was therefore not required to inform MDC during discussions that its "prices were too high." Indeed, to the extent that MDC is arguing that the agency should have informed MDC during discussions that its price was "too high" relative to that proposed by HMSC, the conduct of such discussions is prohibited. FAR Sec. 15.610(e)(2); Applied Remote Technology, Inc., B-250475, Jan. 22, 1993, 93-1 CPD Para. 58.

TBIP TECHNICAL PROPOSAL EVALUATION

MDC protests that certain aspects of the agency's evaluation of its and HMSC's technical proposals submitted in response to the cost reimbursement portion of the RFP for the TBIP were unreasonable. [23]

The evaluation of technical and management proposals is a matter within the discretion of the contracting agency because the agency is responsible for defining its needs and the best method of accommodating them. Marine Animal Prods. Int'l, Inc., B-247150.2, July 13, 1992, 92-2 CPD Para. 16. In reviewing an agency's evaluation, we will not reevaluate technical or management proposals but instead will examine an agency's evaluation to ensure that it was reasonable and consistent with the solicitation's stated evaluation criteria. Decision Sys. Technologies, Inc.; NCI Information Sys., Inc., B-257186; et al., Sept. 7, 1994, 94-2 CPD Para. 167. An offeror's mere disagreement with the agency does not render the evaluation unreasonable. Medland Controls, Inc., B-255204; B-255204.3; Feb. 17, 1994, 94-1 CPD Para. 260. Based on our review of the record, and as discussed in the examples set forth below, we believe that the agency's evaluation of MDC's and HMSC's TBIP technical proposals was reasonable and consistent with the RFP's stated evaluation criteria.

MDC challenges the agency's assessment of the risk associated with HMSC's proposal under the INS/GPS evaluation subelement to the TBIP Technical Approach element. [24] Specifically, MDC argues that HMSC's proposed INS/GPS should have been evaluated by the agency as technically "excellent" with "high" risk, rather than as technically "excellent" with "medium" risk, based on its view that the modifications to the INS/GPS proposed by HMSC, and necessary for the INS/GPS to achieve the level of performance described by HMSC in its proposal, will be more technically difficult and take more time to perform than as described by HMSC and assessed by the agency. [25] MDC further argues that the incorporation of one attribute of the INS/GPS proposed by HMSC--[DELETED]--is not likely to be accomplished at all. [26]

The record shows that the agency, in evaluating HMSC's proposed INS/GPS, was cognizant of, and fully considered, the technical difficulty and potential impact to the TBIP schedule of each of the modifications proposed by HMSC and identified by MDC in its protest, including the addition of the [DELETED] feature. For example, with regard to the modifications to the INS/GPS necessary for it to withstand the extreme cruise missile shock requirement, the agency reviewed the modifications proposed by HMSC--such as modifying the INS/GPS design to provide [DELETED] [27] [28]--and the summary of the test and analyses performed to validate the design provided by HMSC, and concluded that the modifications were achievable and would produce the desired results. Although MDC asserts that HMSC's proposed approach was insufficient and the agency's evaluation thereof was unreasonable because, in MDC's view, the INS/GPS's circuit boards would also have to be stiffened to allow the INS/GPS to withstand the shock requirement, MDC provides no specific information in support of this assertion and concedes that it is merely an expression of its opinion. Tr. at 516-517.

With regard to [DELETED], which according to the record was the primary reason for the agency's determination that HMSC's INS/GPS posed a "medium risk," the agency recognized that such an approach has never been "very successfully done with GPS." Tr. at 337. The agency concluded after reviewing the specific technical approach proposed by HMSC that "because of [HMSC's] unique design" [DELETED] was "an attainable goal." Tr. at 340. While MDC maintains that the agency unreasonably determined that HMSC's proposed [DELETED] approach constituted "medium" risk, the protester concedes in one instance that in its view there is actually "moderate risk to whether [its] going to work or not," Tr. at 542-543, and acknowledges in another instance that its assertions are based upon a "wild guess" that there is "probably a 50/50 chance" of HMSC's successfully accomplishing [DELETED]. Tr. at 542-543.

In sum, although MDC has submitted a detailed critique of the agency's evaluation of HMSC's INS/GPS, the critique does not show that the agency's assessment that HMSC's proposed approach posed "medium risk" was unreasonable, but rather evidences MDC's disagreement with the agency's conclusions. [29] MDC's mere disagreement does not provide any basis for our Office to question the propriety of the agency's evaluation. Medland Controls, Inc., supra.

MDC protests that the agency's evaluation of its and HMSC's proposals under the Objectives subelement to the TBIP technical approach element was unreasonable with regard to "ship motion." [30]

The RFP listed as an objective that the missile system "shall not dictate any limitation or requirement for ship motions during launch preparation." The RFP set forth, in addition to the agency's minimum, or threshold, TBIP technical requirements, a list of 11 technical objectives in priority order, and offerors were instructed to identify where their technical proposals exceeded the threshold requirements and met, either partially or fully, the RFP's technical objectives. The "ship motion" objective was fifth in order of priority of the objectives listed in the RFP. The solicitation informed offerors that the achievement of these objectives would be converted to threshold requirements commensurate with each offerors' evaluated ability to partially or fully meet the objectives.

In their initial offers, both MDC and HMSC proposed to partially meet the ship motion objective. MDC proposed that its missile system would not dictate any limitations at latitudes of less than 85 degrees North and South, while HMSC proposed that its missile system would not dictate any limitations at latitudes of less than 80 degrees North and South. [31] In accordance with the terms of the RFP, the agency converted the ship motion objective into a threshold requirement for both offerors at the relative values proposed, that is, 85 degrees North or South for MDC and 80 degrees North or South for HMSC. [32]

MDC argues that the agency's conversion of the partially met ship motion objective into a threshold requirement for the offerors at different values was improper because it resulted in MDC having to meet a more stringent requirement than HMSC. MDC contends that because of this its proposal should have received a higher technical rating than HMSC's under the attainment of objective requirements subelement under the TBIP technical approach factor.

We simply fail to see how MDC was prejudiced by the agency's actions here, given MDC's concession that HMSC's system offers NAVAIR the same level of performance as its own. In this regard, MDC concedes that although HMSC stated in its proposal that its system would not dictate any limitations at latitudes less than 80 degree North or South, HMSC's system is in fact capable of operating within the same parameters as MDC's, that is, without imposing any restrictions at latitudes less than 85 degrees North or 85 degrees South. [33] Tr. at 304-305.

MDC also challenges the agency's evaluation of HMSC's technical approach to the warhead design of a variant to the Tomahawk missile, referred to in the RFP as the Tomahawk Hard Target Penetrator (THTP). [34] Specifically, the protester contends that its proposed approach to the THTP should have received a higher rating than HMSC's because HMSC's proposed approach failed to provide corrosion protection for the warhead's steel case, set forth a fuze design that MDC believes will be less effective than the design it proposed, provided for the use of an explosive that has not been "final type qualified" for use in any weapons system, [35] and provided for the use of an untested device to meet relevant insensitive munitions (IM) requirements. [36] MDC concludes that because, in its view, its proposed approach to the THTP was superior to HMSC's, the agency acted unreasonably in evaluating both offers as "satisfactory" with "medium" risk under the relevant technical evaluation subelement.

MDC's assertions here again reflect its disagreement with the agency's evaluation, and do not show that the agency's conclusions were unreasonable. For example, MDC argues that its proposed fuze design is superior to that of HMSC because it provides for a longer delay time which MDC asserts will be more effective against certain hard targets. However, the agency explains with regard to its evaluation of the competing proposals that MDC did not provide test data to support the claimed superiority of its proposed fuze. The agency also notes, as does the protester, that "[t]here is a lot of uncertainty in hard target penetration." The agency adds that "[a]lthough computer models for producing penetration have improved, only testing of actual size warheads against actual targets will demonstrate the stated performance and validate the computer models." The agency states that in evaluating the offerors competing THTP proposals that it concluded that MDC's proposed fuze design was good, but that because of the lack of test data, it could not conclude that MDC's fuze design was superior to HMSC's proposed use of a fuze that is in production and which appeared to satisfy the THTP requirements.

With regard to the explosives proposed by the offerors, the agency states that although MDC proposed the use of an established explosive and HMSC proposed the use of a more recently developed explosive, neither represented an advantage over the other. Tr. at 142-143. In this regard, the agency explains that various problems have been encountered with the explosive proposed by MDC [37], and that while the explosive proposed by HMSC does not have much "history," a "sister explosive," that is, one of very similar composition, has been used successfully in another weapon system. Tr. at 143. With regard to final type qualification, the agency added that the capability of an explosive to become final type qualified for use on a particular weapon system, and the explosive's performance characteristics, cannot be adequately assessed until the explosive is actually tested in that particular weapon system, in this case, the THTP, which has not yet been produced. Tr. at 143.

As the above discussion indicates, the agency carefully considered the merits of the offerors' competing proposals and the risks posed by their respective approaches to the EMD of the THTP. While the protester clearly disagrees with the agency's evaluation of the merits and risks associated with the offerors' THTP proposals, it has provided no basis for our Office to find unreasonable the agency's considered judgement in this regard and assessment of both proposals as "satisfactory" with "medium" risk. [38]

MDC also protests that HMSC's proposal "failed to comply with the terms of the RFP by shifting certain system engineering management/integrator (SEMI) functions to the government."

The RFP required that the successful offeror provide a SEMI to perform systems engineering management tasks to support the Tomahawk missile system, and provided a detailed SOW for the SEMI. The SEMI will be responsible for, among other things, the maintenance of the Tomahawk's current engineering baseline, the review and analysis of design implementation to assure that the performance required of the missile system is achieved, and the coordination and integration of the existing Block III product baseline configurations and subsystems with the engineering activities associated with the TBIP.

The offerors' proposed approaches to the SEMI requirements were evaluated by the agency under the System Engineering Approach element of the TBIP technical evaluation. With regard to HMSC, its proposed approach to performing the SEMI requirements received an overall technical evaluation rating of "satisfactory" with "low" risk. Specifically, the agency found that, among other things, HMSC had submitted an "excellent" draft systems engineering plan, had demonstrated in its proposal that it was capable of performing all required tasks, had proposed a detailed mission analysis to improve the Tomahawk missile system, and had demonstrated a good understanding of simulation availability and management.

Despite having access under the protective order to, among other things, HMSC's proposal, the evaluation notices forwarded to HMSC by the agency regarding HMSC's proposed approach to the SEMI requirements and HMSC's responses thereto, and the agency's evaluation documentation, the protester, in its comments on the agency report, does not substantively respond to the propriety of the agency's determination that HMSC's proposed SEMI approach was "satisfactory" and represented "low" risk, or identify which SEMI functions HMSC is allegedly transferring to the agency. Rather, MDC continues to assert in general terms, and without reference to any aspect of HMSC's proposal or the agency's evaluation, that HMSC's proposal was deficient because it transfers unspecified SEMI responsibilities to the agency. This provides no basis on which to object to the agency's evaluation. MAR, Inc., B-246889, Apr. 14, 1992, 92-1 CPD Para. 367. [39]

In sum, MDC has not shown that the agency's similar ratings of MDC's and HMSC's proposals under the TBIP Technical factor were unreasonable.

TBIP COST PROPOSAL EVALUATION

MDC protests that the agency's cost realism analysis of HMSC's TBIP cost proposal was unreasonable in that it did not adequately penalize HMSC for its understated costs.

When agencies evaluate proposals for the award of a cost reimbursement contract, an offeror's proposed estimated costs are not dispositive because, regardless of the costs proposed, the government is bound to pay the contractor its actual and allowable costs. FAR Sec. 15.609(d). Consequently, a cost realism analysis must be performed by the agency to determine the extent to which an offeror's proposed costs represent what the contract should cost, assuming reasonable economy and efficiency. CACI, Inc.--Fed., 64 Comp.Gen. 71 (1984), 84-2 CPD Para. 542. Because the contracting agency is in the best position to make this cost realism determination, our review of an agency's exercise of judgment in this area is limited to determining whether the agency's cost evaluation was reasonably based and not arbitrary. Infotec Dev., Inc., B-258198; et al., Dec. 27, 1994, 95-1 CPD Para. 52.

The RFP stated that proposed TBIP EMD costs "will be evaluated on the offeror's proposal or the [g]overnment's own estimate, whichever is higher." That is, with regard to the offerors' proposed TBIP costs, the RFP informed MDC and HMSC that for evaluation purposes the agency would prepare a TBIP cost estimate for each offeror based upon the particular offeror's proposed approach to performing the TBIP effort and the cost elements presented in the offeror's proposal, and that the agency would use either its own TBIP cost estimates or the offerors' proposed TBIP costs, whichever was higher, in determining which offeror's proposal was most advantageous to the government. The RFP also provided with regard to cost proposals at section L-19, as quoted previously, that "if a corporate policy has been made to absorb a portion of the estimated cost, that should be stated in the proposal."

The agency, in its cost analysis, determined that HMSC's proposed TBIP cost of $226 million was significantly understated, primarily because in the agency's view HMSC had underestimated the labor hours and purchased material costs associated with HMSC's proposed technical approach to the TBIP. With regard to labor hours, the agency found that HMSC had proposed insufficient labor hours for a number of the tasks associated with the TBIP, including, for example, the design of the airframe and integration of the missile's subsystems (such as the INS/GPS) into the missile, the SEMI, and the effort associated with testing and evaluation, and was concerned that HMSC's relatively low labor hours could impact on HMSC's ability to meet its proposed TBIP schedule. As such, NAVAIR calculated HMSC's proposed TBIP costs based upon its estimate that [DELETED] labor hours would be required for the TBIP effort, rather than [DELETED] as proposed by HMSC. The agency also found that HMSC had underestimated its costs for purchased equipment for the TBIP effort, such as the costs associated with the INS/GPS, and upwardly adjusted HMSC's proposed costs here from [DELETED] to [DELETED].

In total, the agency upwardly adjusted HMSC's proposed TBIP costs from $226 million to [DELETED]. The agency then [DELETED], as set forth in its proposal and in accordance with [DELETED]. The agency thus evaluated HMSC's costs for the TBIP at $351 million, which equals HMSC's upwardly adjusted costs pursuant to the agency's cost realism analysis [DELETED]. Further, as mentioned previously, the agency, primarily because of its view that HMSC had proposed insufficient labor hours for the TBIP, evaluated HMSC's proposal under the Management technical evaluation criterion as "marginal" with "high" risk.

MDC contends that the agency should have upwardly adjusted HMSC's proposed TBIP costs by an additional $144 million because of the "schedule slip" which may result from the relatively low labor hours set forth in HMSC's proposal to accomplish the TBIP effort. We disagree. As described above, the agency made a significant upward cost adjustment to HMSC's proposed costs specifically because it did not find HMSC's proposed labor hours to be sufficient and was concerned that HMSC's relatively low labor hours would put the TBIP schedule at risk. That is, the agency adjusted HMSC's proposed costs upwards to ensure that, if need be, sufficient labor could be allocated to the performance of the TBIP such that there would be no risk that the TBIP schedule would be compromised. Under the circumstances, it would have been inappropriate to further upwardly adjust HMSC's TBIP costs to account for the already accounted for schedule slippage risk.

MDC also argues that the agency [DELETED].

As a general rule, the maxim that the government bears the risk of cost overruns in the administration of a cost reimbursement contract is reversed when a contractor agrees to a cap or a ceiling on its reimbursement for a particular category or type of work. Vitro Corp., B-247734.3, Sept. 24, 1992, 92-2 CPD Para. 202. An offeror who proposes a cap or a ceiling has shifted the risk of certain cost overruns away from the government, such that upward adjustments to capped costs are improper, unless the caps are ineffective or can be circumvented. Id.; Halifax Technical Servs. Inc., B-246236.6; et al., Jan. 24, 1994, 94-1 CPD Para. 30. Whether an awardee will be able to perform a contract at rates or with a ceiling below its actual costs falls within an agency's determination of an offeror's responsibility, the affirmative determination of which we will not review absent a showing of possible fraud, bad faith, or misapplication of definitive responsibility criteria. See Robocom Sys., Inc., B-244974, Dec. 4, 1991, 91-2 CPD Para. 513.

Given that HMSC agreed and is legally bound to [DELETED], the agency acted reasonably in considering the [DELETED] in its cost realism analysis of HMSC's proposal. MDC's challenge to the award based upon its argument that the [DELETED] will not be realized if HMSC defaults on the contract essentially constitutes a protest of HMSC's ability to perform. Because this falls within the agency's assessment of responsibility, and there is no evidence of fraud, bad faith, or the misapplication of definitive responsibility criteria, this issue is not for review by our Office. MAR, Inc., supra.

In sum, we have no basis on which to find the agency's cost realism analysis unreasonable, given its reasonable upwards adjustment of HMSC's proposed TBIP costs to account for HMSC's relatively low labor hours and purchased material cost estimates, and the agency's proper consideration of [DELETED].

OTHER ISSUES

MDC protests that the agency erred in its evaluation of HMSC's TBIP technical proposal under the attainment of objective requirements subelement to the TBIP technical approach evaluation criterion with regard to the seventh most important objective (embedded flight test capability), that the government allowed HMSC to obtain an unfair competitive advantage through the accounting treatment of restructuring costs incurred by HMSC as a result of its purchase of the General Dynamics Corporation's missile business in 1992, and that HMSC's proposed Block III delivery schedule for the first year of the contract is inconsistent with the terms of the RFP. We need not consider these issues on the merits because, even accepting the validity of MDC's assertions here and its claims as to the alleged impact on its Block III price and TBIP costs resulting from these alleged improper actions, we find no reasonable possibility of prejudice, in that the total price and evaluated cost advantage of HMSC's proposal would remain in excess of [DELETED]. See TRI-COR Indus., Inc., supra.

MDC also contends that the record of the agency's evaluation of proposals "reflect[s] a pattern of providing [an] unfair competitive advantage to HMSC." We have reviewed the record and find no credible evidence of bias or bad faith on the part of the agency. Prejudicial motives will not be attributed to contracting officials on the basis of unsupported allegations, inference, or supposition. Marine Animal Prods. Int'l, Inc., supra. In our view, as the above discussion demonstrates, the agency's evaluation of the offerors' competing proposals was reasonable and in accordance with the evaluation criteria set forth in the RFP.

In conclusion, based upon our review of the record, we find that the agency acted properly during the course of this procurement, and that its evaluation of the offerors' proposals and the selection of HMSC for the award of the contracts were reasonable. [40] Specifically, the agency weighed HMSC's [DELETED] price advantage under the most important evaluation criterion, Block III price, and the fact that HMSC's proposal was considered equal to MDC's under the second most important evaluation criterion, TBIP technical, as well as the evaluated $44 million cost advantage offered by HMSC under the third most important evaluation criterion, TBIP cost, and determined that the significant price/cost advantage of HMSC's proposal outweighed the advantage of MDC's proposal under the least important evaluation criterion, TBIP management.

The protest is denied.

* The decision issued June 16, 1995, contained proprietary information and was subject to a General Accounting Office protective order. This version of the decision has been redacted. Deletions in text are indicated by "[DELETED]."

1. A hearing was held in this protest pursuant to 4 C.F.R. Sec. 21.5 (1995), at which certain of the issues raised were addressed by the parties. Our conclusions are based on the testimony at the hearing as well as the written submissions of the parties.

2. A block, such as Block III, represents an overall product baseline for the missile system's configuration.

3. The Navy had previously acquired the Tomahawk missile system through dual-source contracts; that is, the agency's requirements were split between the two qualified producers of the Tomahawk. In 1992, the Secretary of the Navy directed the elimination of all dual-source programs, and in 1993, the Assistant Secretary of the Navy for Research, Development and Acquisition directed that the Tomahawk missile system procurement be conducted on a "winner take all" basis. NAVAIR determined, in accordance with these directives, to compete its requirements for the Tomahawk missile system program between the two qualified producers of the missile system to select one source.

4. The agency's source selection plan (SSP) provided that the offerors' TBIP technical and management proposals were to be rated as either "exceptional," which was defined as exceeding the specified requirements and containing enhancing features which benefit the government; "satisfactory," which was defined as meeting the requirements with any deficiencies or weaknesses having only a minor impact; "marginal," which was defined as containing deficiencies or weaknesses relative to the requirements which could have a moderate impact on performance; and "unsatisfactory," which was defined as not acceptable to the government and containing a significant deficiency or significant deficiencies which would have a major impact on performance.

The SSP also provided for the evaluation of the "risk" associated with the offerors' proposed efforts to accomplish the RFP requirements. "Low" risk was defined as having "little or no potential to cause disruption of schedule, increase in cost, or degradation of performance"; "moderate" risk as "potentially" causing "disruption of schedule, increase in cost, or degradation of performance . . . [with] special contractor emphasis and close government monitoring . . . probably be[ing] able to overcome difficulties"; "high" risk as being "likely" to cause "significant serious disruption of schedule, increase in cost, or degradation of performance even with special contractor emphasis and close [g]overnment monitoring."

5. In conducting written discussions, the agency forwarded to the offerors for response approximately 500 evaluation notices setting forth the deficiencies, weaknesses, and/or omissions identified by the evaluation teams in their review of the proposals.

6. A price analysis involves the examination and evaluation of a proposed price without evaluating its separate costs elements and proposed profits. Federal Acquisition Regulation (FAR) Sec. 15.801.

7. We dismissed certain issues raised by MDC in its protest as untimely on January 24, 1995.

8. During this protest, in response to a civil action filed by HMSC in the United States District Court for the District of Columbia, our statutory authority to issue protective orders was confirmed. Hughes Missile Sys. Co. v. Charles Bowsher, et al., Civ. Action No. 95-0245 RMU (D.D.C. Mar. 6, 1995).

9. There was no dispute as to the highly sensitive nature of the material to be protected in this case.

10. For purposes of comparison, MDC's proposed Block III contract price per Tomahawk missile for fiscal year 1994 was [DELETED], or a [DELETED] percent reduction in price from the average fiscal year 1993 price of $1,073,507.

11. The concern with an unreasonably low price generally concerns an offeror's responsibility, i.e., the offeror's ability and capacity to successfully perform at the offered price. ENCORP Int'l, Inc., B-258829, Feb. 21, 1995, 95-1 CPD Para. 100. MDC has not asserted that the agency erred in finding HMSC responsible, nor has MDC argued, nor does the record suggest, that HMSC's proposed Block III price indicates that HMSC does not understand the nature or scope of the Block III contract.

12. The agency assigned one contracting officer to Part A of the RFP who was responsible for the competition for the firm, fixed-price Block III contract, and another contracting officer to Part B of the RFP who was responsible for the competition for the TBIP cost-plus-incentive-fee contract.

13.[DELETED].

14. As indicated previously, the RFP did not require and HMSC did not provide detailed cost or pricing data in support of its Block III price proposal.

15. The source selection authority (SSA) testified that the purpose of conducting the competition on a "winner take all" basis was "to get lower prices," Hearing Transcript (Tr.) at 441, and that he had been informed by certain Navy personnel prior to this competition that the Navy had previously achieved 40 percent cost reductions as a result of "winner take all" competitions. Tr. at 472.

16. A "cost analysis" involves the examination and evaluation of an offeror's separate cost elements and proposed profit. FAR Sec. 15.801.

17. To the extent that MDC is arguing that the RFP was ambiguous as to whether the offerors' Block III prices would be evaluated for price reasonableness or cost realism because of section L-19, its protest is untimely. Under our Bid Protest Regulations, protests of alleged solicitation improprieties--the alleged ambiguity in this case--must be raised prior to the time set for receipt of initial proposals. 4 C.F.R. Sec. 21.2(a)(1); Browning Constr. Co., B-250788, Feb. 11, 1993, 93-1 CPD Para. 126.

18. In any event, despite the protester's contention to the contrary, had the RFP provided for the performance of a cost realism analysis of the offerors' Block III fixed-price proposals, an in-depth cost analysis akin to that which should be performed on a cost reimbursement contract would not have been required, and the agency could not have made an upward adjustment to HMSC's price for cost elements that the agency thought may be priced too low, as MDC suggests. PHP Healthcare Corp.; Sisters of Charity of the Incarnate Word, supra.

19. Although the RFP and MDC refer to "responsive" and "nonresponsive" proposals, we note that "responsiveness" is a concept related to sealed bidding, not negotiated procurements. Infotec Dev., Inc., B-258198; et al., Dec. 27, 1994, 95-1 CPD Para. 52.

20. The standard "Changes-Fixed Price" clause, as set forth at FAR Sec. 52.243-1 and included in the RFP, provides, in pertinent part:

"(a) The Contracting Officer may at any time, by written order . . . make changes within the general scope of this contract in any one or more of the following:

"(1) Drawings, designs, or specifications when the supplies to be furnished are to be specifically manufactured for the [g]overnment in accordance with the drawings, designs, or specifications.

. . . . .

"(b) If any such change causes an increase or decrease in the cost of, or the time required for, performance of any part of the work under this contract, whether or not changed by the order, the Contracting Officer shall make an equitable adjustment in the contract price, the delivery schedule, or both, and shall modify the contract."

21. The RFP's Changes Clause and RECP clause are substantially different in a number of ways. For example, for RECPs proposed by the contractor and accepted by the agency, the RECP clause provides for a one-time award (calculated per a formula set forth in the clause that quantifies the value of the reliability improvement to the missile system), and for the payment of the contractor's recurring and nonrecurring costs resulting from the RECP. [DELETED]. Further, in contrast to the Changes clause, the RECP clause states that the agency's decision to accept or reject an RECP, and if accepted, the agency's determination of the RECP's value, are "not subject to the Disputes clause or otherwise subject to litigation under the Contract Disputes Act of 1978 (41 U.S.C. Secs. 601-613)."

22. MDC became aware of HMSC's Ground Rule 5 upon its receipt of the agency's report on January 30. Although MDC protested to our Office 10 working days later--on February 13--that HMSC's offer should have been rejected because [DELETED], it did not contend that [DELETED] until April 3. MDC's protest on this basis is thus untimely. 4 C.F.R. Sec. 21.2(a)(2).

To the extent that MDC is arguing that the RFP was ambiguous or otherwise defective as to the manner in which proposed RECPs would be processed during the performance of the contract because of the RFP's inclusion of both the Changes clause and the RECP clause, that is, whether proposed RECPs would be processed in accordance with the Changes clause or the RECP clause, MDC's protest is untimely. A protest of an alleged solicitation impropriety--the alleged ambiguity created by the inclusion of both the Changes clause and the RECP clause in this case--was required to be filed prior to the time set for receipt of initial proposals. 4 C.F.R Sec. 21.2(a)(1).

23. Because sections of the RFP's TBIP specifications and of the offerors' proposals are classified, they will not be described or specifically referred to in any way in this decision, although they were considered in making this decision.

24. INS/GPS is a navigational system, which integrates an INS and a GPS. The INS consists of hardware and software that uses internal inputs from accelerometers and gyroscopes to keep track of the missile's position, velocity, and orientation, while the GPS uses external inputs from United States government military satellites to determine the missile's position and velocity, and updates the INS during flight to provide for greater missile accuracy.

25. MDC's INS/GPS approach was rated as technically "excellent" with "low" risk.

26.[DELETED].

27.[DELETED].

28.[DELETED].

29. MDC also argues that the agency unreasonably evaluated HMSC's proposed INS/GPS as a nondevelopmental item (NDI). In this regard, the RFP provided a definition of NDI and requested that offerors identify where they proposed the use of NDIs. While the agency has persuasively responded in detail to MDC's argument, the record also shows that MDC's INS/GPS was represented in MDC's proposal, and considered by the agency in its evaluation, as an NDI; however, MDC's technical consultant testified that contrary to MDC's representation in its proposal, MDC's INS/GPS was not an NDI. Tr. at 566. As such, even if we were to conclude that the agency's consideration of HMSC's INS/GPS as an NDI was in error, we fail to see how this prejudiced MDC, inasmuch as the agency apparently made the same alleged error in its evaluation of MDC's proposal.

30."Ship Motion" refers to maneuvers that a ship preparing to launch a Tomahawk missile may have to engage in to allow the missile's INS to "initialize," that is to gather sufficient accurate information about its position, velocity, and orientation.

31. The need for the ship to engage in a special maneuver to allow the missile's INS to initialize within the prescribed timelines increases as the ship approaches either 90 degrees North Latitude (the North Pole), or 90 degrees South Latitude (the South Pole).

32. In total, the agency determined that MDC fully met four and partially met four of the 11 objectives, and that HMSC fully met five and partially met three of the objectives, and evaluated both offerors' technical proposals as "excellent" with "low" risk under the attainment of objective requirements technical evaluation subelement.

33. As to why HMSC proposed to partially meet the objective at the value of 80 degrees North and South latitudes, rather than 85 degrees per its system's capability, HMSC explained and the agency confirmed that 95 percent of the earth's surface between 80 and 85 degrees North latitudes, and 80 and 85 degrees South latitudes is comprised of land and ice, and because these waters thus cannot be navigated by surface ships and the missiles cannot be fired through ice by submarines, the ability of the system to initialize at greater than 80 degrees North or South latitudes without requiring that the ship or submarine engage in certain maneuvers will not provide any meaningful benefit to the agency.

34. The RFP required that offerors describe in their TBIP technical proposals their approaches to satisfying the agency's requirements with regard to two variants to the Tomahawk missile; one of these variants is the THTP, which is to be designed to perforate and inflict damage upon hard targets.

35. A "final type qualified" explosive has passed a series of tests and has been approved for use in a particular weapon system. Tr. at 119.

36. IMs are munitions that satisfy their relevant performance and operational requirements while minimizing the risk that an unplanned hazard, such as high temperature, nearby explosions, or fragments that penetrate the munition, might trigger an inadvertent explosion.

37. For example, although the explosive proposed by MDC is in use in another weapons system, certain IM requirements had to be waived in order for the explosive to be final type qualified for use in that weapons system. Tr. at 140-142.

38. Although MDC's contentions regarding corrosion protection and HMSC's approach to meeting the relevant IM requirements are not specifically addressed here, we have carefully considered the arguments raised and information presented by the protester, as well as the responses of the agency and interested party, and conclude that the protester's positions here also constitute nothing more than the protester's mere disagreement with the results of the agency's evaluation.

39. MDC's protest here appears to be based, in part, upon the agency's determination that the labor hours proposed by HMSC for the TBIP effort were unrealistically low. In this regard, we note that while the agency found HMSC's proposed technical approach to the SEMI "satisfactory" with "low" risk, it rated HMSC's proposal under the TBIP Management evaluation criterion, where in accordance with the RFP the realism of the offerors' staffing plans were evaluated, as "marginal" with "high" risk.

40. MDC has made a number of other related contentions during the course of this protest having to do with the agency's evaluation of proposals and selection of HMSC for award. Although these contentions may not be specifically addressed in this decision, each was carefully considered by our Office and found either to be insignificant in view of our other findings, or invalid based upon the record as a whole.