Matter of: Comarco, Inc. File: B-249697.2 Date: January 26, 1993

B-249697.2: Jan 26, 1993

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PROCUREMENT Competitive Negotiation Offers Evaluation Personnel Adequacy Protest that procuring agency's evaluation of awardee's ability to hire and retain personnel is unreasonable because the awardee's proposed wage rates are below the government baseline is denied where procuring agency determined that: (1) the awardee's proposed compensation rates were reasonable for the area in which the contract would be performed. PROCUREMENT Competitive Negotiation Offers Evaluation Cost controls Protest that procuring agency's evaluation of protester's and awardee's proposals respecting cost and schedule control was unreasonable and evidenced unequal treatment is denied where the awardee's proposal showed that the awardee had an integrated cost and schedule control system in place and experience using it and the protester's proposal failed to demonstrate that it was proposing an integrated cost and schedule control system or that it had experience using one.

Matter of: Comarco, Inc. File: B-249697.2 Date: January 26, 1993

PROCUREMENT Competitive Negotiation Offers Evaluation Personnel Adequacy Protest that procuring agency's evaluation of awardee's ability to hire and retain personnel is unreasonable because the awardee's proposed wage rates are below the government baseline is denied where procuring agency determined that: (1) the awardee's proposed compensation rates were reasonable for the area in which the contract would be performed; (2) the awardee could pay certain key personnel more if necessary; and (3) the awardee demonstrated in its proposal that it had a good recruitment program. PROCUREMENT Competitive Negotiation Offers Evaluation Cost controls Protest that procuring agency's evaluation of protester's and awardee's proposals respecting cost and schedule control was unreasonable and evidenced unequal treatment is denied where the awardee's proposal showed that the awardee had an integrated cost and schedule control system in place and experience using it and the protester's proposal failed to demonstrate that it was proposing an integrated cost and schedule control system or that it had experience using one. PROCUREMENT Competitive Negotiation Offers Evaluation Personnel Cost evaluation Protest that procuring agency's evaluation of protester's and awardee's proposals respecting cost and schedule control was unreasonable and evidenced unequal treatment is denied where the awardee's proposal showed that the awardee had an integrated cost and schedule control system in place and experience using it and the protester's proposal failed to demonstrate that it was proposing an integrated cost and schedule control system or that it had experience using one. PROCUREMENT Competitive Negotiation Offers Evaluation errors Non- prejudicial allegation Protest that agency improperly evaluated award fee schedules proposed by the awardee and the protester is denied where the record demonstrates that even if the protester is correct, the protester was not prejudiced because the award decision would be the same even if protester's suggested evaluation is used.

Attorneys

DECISION Comarco, Inc. protests the award of a contract to ARC Professional Services Group, Inc. under Department of the Army request for proposals (RFP) No. DABT63-91-R-0003, issued for scientific and engineering services to support research and development at the United States Army Electronic Proving Ground (EPG) at Fort Huachuca, Arizona. Comarco asserts that the Army's evaluation of the proposals of Comarco and ARC was unreasonable and, as a result, the agency reached an erroneous award decision.

We deny the protest.

The RFP, issued on May 9, 1991, contemplated the award of a cost-plus- award-fee contract. The RFP provided that proposals would be evaluated against the following four areas: technical, management, cost realism, and past performance. Each area was followed by a number of factors and subfactors. The proposals were first to be evaluated by a source selection evaluation board (SSEB) which was comprised of a committee for each evaluation area. In the technical and management areas, each individual evaluator was required to assign each factor and subfactor a color rating and a risk assessment. Each committee was then to assign a numerical consensus score to each area and factor. For cost realism, each factor was to be evaluated for advantages, disadvantages, and risks. For past performance, the evaluation board was required to assign each proposal a performance risk assessment. The RFP provided that technical considerations and management considerations were equal, and that cost realism and past performance were equal and were worth approximately one half as much as the technical and management areas.

Cost (adjusted during the evaluation to a "most probable cost") was to be evaluated but not rated and in the award decision was significantly less important than the other evaluation areas. Finally, the solicitation provided that the contract would be awarded on the basis of the best overall value to the government.

The Army received eight proposals in response to the RFP, which were evaluated by each of the committees that comprised the SSEB. Based upon the SSEB's preliminary evaluation report, the contracting officer included all eight proposals in the competitive range. Subsequently, two rounds of discussions were held and two best and final offers (BAFO) were requested and received from each offeror. After reviewing the second BAFOs, the SSEB prepared a final report which included a summary of the proposals, a summary of the board's findings, and a narrative discussion of each proposal's advantages and disadvantages. The report was submitted to a source selection advisory counsel (SSAC) to determine which proposal represented the best value to the government. The SSAC concluded that ARC and Comarco submitted the two best proposals. The SSAC further found that ARC and Comarco were essentially equal in the technical and cost realism areas and that in the past-performance area Comarco had a slight advantage. In the management area, however, the SSAC considered that ARC received 10 more points than did Comarco, which represented a scoring advantage in 8 of the 11 management factors. The SSAC found that this difference in the management scores was the primary discriminator between the two proposals and represented a significant difference between the value provided by each of the offerors. The SSAC additionally considered that the most probable cost of the proposal submitted by ARC, $48.51 million was 9 percent less than the most probable cost of the proposal submitted by Comarco, $52.95 million. Based on this assessment, the SSAC recommended that the Source Selection Authority (SSA) select ARC for award. The SSA concurred and on July 29, 1992, the contract was awarded to ARC.

This protest followed.

Comarco first argues that the Army improperly evaluated ARC's proposal respecting ARC's ability to recruit and retain personnel, a subfactor of the management factor, Personnel, which was defined as the degree to which the proposer demonstrates knowledge and ability to hire and retain appropriate technical, managerial, and support personnel. Comarco points out that throughout the evaluation of ARC's proposal, the Army recognized that ARC proposed low wage rates and that there was risk to the government inherent in such a compensation package yet concluded that ARC could exercise the management flexibility necessary to retain the key individuals required to maintain momentum on certain key projects.

Comarco asserts that this conclusion is wholly unsupported by the record and that absent such support, the conclusion is unreasonable. In this regard, Comarco points out that the evaluators stated that ARC and its subcontractors proposed wages and benefits that fell below the government evaluation baseline for 28 positions in 20 labor categories.

Our review of the record shows that during the initial evaluation, the SSEB considered that while ARC's proposed labor rates for the area in which the contract was to be performed were reasonable, they were lower than the government baseline and presented a risk concerning ARC's ability to hire and retain personnel. As a result, during discussions, the Army asked ARC questions respecting both the process the firm used to derive its labor rates as well as how ARC proposed to retain its personnel. In response, ARC explained that it based its labor rates on the current salaries of its employees in most instances. ARC also pointed out that its employees in the Fort Huachuca area were more highly compensated than its employees assigned to ARC's two east coast locations and therefore it would be able to hire and retain personnel in the Fort Huachuca area at its proposed rates. In addition, ARC explained that its approach to staffing the contract involved the transfer of certain current employees, recruitment of staff from the incumbent contractor and recruitment of qualified candidates in the Fort Huachuca area.

The SSEB considered that ARC's use of its own employees and recruitment of incumbent staff might reduce the potential problem of hiring new employees but the Board remained concerned that there still might be a problem in retaining employees who found other positions at higher pay. The SSEB cited this as both a disadvantage and a risk in ARC's proposal.

The SSAC, however, concluded that while ARC's low compensation plan did present some risk, the risk was reduced because a cost reimbursement contract was involved and ARC thus had the flexibility necessary to retain key personnel by raising their salaries if necessary. The Army notes that because ARC's most probable cost is $4.44 million below Comarco's, ARC would be able to raise its compensation rates and still retain a comfortable advantage in its most probable cost.

The evaluation of technical proposals is primarily the responsibility of the contracting agency since it is responsible for defining its needs and the best method of accommodating them and must bear the consequences of a defective evaluation. Therefore we will not engage in an independent evaluation of technical proposals but will examine the agency's evaluation to ensure that it was reasonable and consistent with the stated evaluation criteria. Anamet Laboratories, Inc., B-241002, Jan. 14, 1991, 91-1 CPD Para. 31.

We believe that while Comarco disagrees with the Army's position, the agency reasonably concluded that ARC would be able to hire and retain personnel despite its low compensation package. As noted above, the SSEB specifically found that ARC's proposed wages were reasonable for the area in which the contract is to be performed. Given the significant cost advantage ARC has over Comarco, it was reasonable for the Army to conclude that if ARC had to pay key personnel additional compensation, with the concomitant increase in costs to the government, there would be no meaningful change in the cost standings of the two offerors. Further, the Army also considered a number of other benefits which ARC offered that would contribute to its ability to hire and retain personnel, such as training and a good educational assistance package. We see no basis to question the Army's overall judgment of ARC's ability to hire and retain personnel. See RGI, Inc., B-243387, July 23, 1991, 91-2 CPD Para. 86.

Comarco next argues that the Army's evaluation of the ARC and Comarco management proposals under the management factor pertaining to cost and schedule control was unreasonable and evidences unequal treatment of Comarco. Comarco asserts that the Army downgraded its proposal under two subfactors because Comarco failed to demonstrate an integrated cost and schedule control system or experience with such a system, but the Army did not downgrade ARC's proposal for the same deficiencies. Comarco also asserts that the evaluation of the two proposals under this factor was unreasonable.

The relevant factor provides:

"Cost and Schedule Control: The degree to which the proposer demonstrates knowledge and ability to establish and use an effective integrated and automated cost and schedule control system on this contract.

(1) Subfactor 1--Proposed integrated and automated cost and schedule control system.

(2) Subfactor 2--Proposed approach to monitoring and controlling cost and schedules.

(3) Subfactor 3--Prior corporate experience relating to the above subfactors."

The SSEB rated Comarco's proposal under this factor as marginal approaching acceptable because it found that Comarco's proposal did not demonstrate an integrated cost and schedule control system or experience with such a system. The Army states that Comarco did provide some details of its cost and schedule control system, but failed to show that the proposed system was truly integrated. Rather, asserts the Army, Comarco described its system as one which used various stand-alone software packages which were not designed to interact. The Army also found that Comarco's description of the proposed system was vague and failed to detail:

(1) how the independent components were to be integrated;

(2) what inherent risks existed in its approach and how the firm planned to manage them; and

(3) its prior corporate experience with truly integrated cost and schedule control systems.

The Army asked Comarco four specific discussion questions to clarify its concerns, and concluded that Comarco's response was not adequate. In contrast, the Army found that ARC proposed the use of a single, commercially available, fully-integrated software package which it had used successfully on similar support contracts. In its proposal, ARC addressed its experience with cost and schedule controls and specifically cited three distinct programs which used the system proposed.

Accordingly, the Army asserts that its evaluations of the proposals of ARC and Comarco for this factor were reasonable and that it treated both offerors equally.

Comarco asserts that it provided a complete and thorough discussion of its cost and schedule control system, which was specifically designed for use at the United States Army Electronic Proving Ground under Comarco's incumbent contract. Comarco argues that it also explained how its proposed system was being further improved to better meet the requirements of the current solicitation by the integration of two commercial software packages, TIMELINE AND TIMESHEET, into its current system. Comarco asserts that it has employed an integrated cost and schedule control system during its 5-year experience at Fort Huachuca and that the Army improperly concluded otherwise based on a software package that Comarco did not intend to use.

Finally, Comarco complains that ARC's proposal was not downgraded for the experience factor even though ARC lacked experience in employing an integrated cost and schedule control system. Comarco asserts that ARC's proposal focused on cost and schedule control systems in its previous Department of Defense contracts but that these systems were not integrated.

We find no basis in the record to conclude that the Army's evaluation of Comarco's proposal for the overall factor of cost and schedule control was unreasonable. In its proposal, Comarco offered to use a system which it identified as its Management Information and Performance Tracking System (MIPTS). Comarco stated that this system was being used successfully on its current contract with the Army. Comarco, however, did not describe or otherwise refer to MIPTS as an integrated system.

Further, the protester stated it was going to integrate two commercially available software packages, TIMELINE and TIMESHEET, into the system, in concert with the Army's plan to use TIMELINE-based products for cost and schedule control. However, Comarco did not explain how the independent components were to be integrated for purposes of the current solicitation. In addition, in the section of its proposal describing its prior experience, Comarco showed that it uses a tailored version of the MIPTS for cost and schedule control on all its major contracts. Nowhere in its proposal did Comarco show that it had experience using an actual integrated cost and schedule control system. Based on this information in the proposal, it was reasonable for the Army to conclude that Comarco did not demonstrate that it was offering an integrated system or that it had experience using such a system. We find that the Army's evaluation of Comarco's proposal under this factor was reasonable.

Similarly we do not find that the Army's evaluation of ARC's proposal under this factor was unreasonable or that there is any evidence that the Army treated the firms differently. We disagree with Comarco that ARC's proposal did not demonstrate that ARC was proposing to use an integrated cost and schedule control system. In its management proposal, ARC stated that it would use PRIMAVERA, the cost and schedule control system that it used successfully on similar support contracts. ARC described PRIMAVERA as an integrated combination of automated tools and established procedures. ARC also referred in its management proposal to its past performance volume to show its experience with cost and schedule control systems. While ARC did refer to these systems as cost and schedule control systems rather than as integrated systems, a review of ARC's past performance volume indicates that in performing the contracts discussed in that volume, ARC used PRIMAVERA, which ARC had already established as an integrated system. Accordingly, we have no basis to conclude that the Army should have downgraded ARC for failing to demonstrate that it would use an integrated cost and schedule control system and that it had experience with such systems. Since we find the evaluations of the proposals of Comarco and ARC were reasonable we also find that the Army treated the two offerors equally.

Finally, Comarco argues that in evaluating the offerors' proposed award fee structures, the Army failed to follow the RFP evaluation criteria and failed to treat Comarco and ARC equally. The RFP required offerors to submit in their cost proposals a proposed award fee structure, relating the award fee to the performance rating they received. The award fee structure was to show what percentage of the available award fee pool the offeror proposed to receive for performance ratings of 76 through 100.

The performance rating scores were broken down so that scores between 76 and 85 were considered good, scores between 86 and 95 were considered excellent and scores between 96 and 100 were considered superior. The RFP provided for evaluation of the proposed fee structure under one of the three listed factors under the cost realism area, which provided as follows:

"Factor 3--Performance/Incentive: The degree to which performance/incentive features proposed by the offeror indicate the offeror's confidence in their ability to perform at a consistently high level. An award fee structure in which the contractor assumes greater risk will be weighed more favorably than a structure that allows the contractor to assume less risk."

Both Comarco and ARC received an overall rating of Low- for the cost realism area. For Performance/Incentive, Comarco received a score of Low- and ARC received a score of Low+. Comarco argues that ARC, under its proposed award fee schedule, proposed considerably higher award fees than Comarco for lower levels of performance. Thus, for example, for a performance rating of 81 ARC proposed an award fee of 5 percent while Comarco proposed a fee of only 0.5 percent. Comarco further asserts that ARC assumes more risk than Comarco for performance only in the range of extremely proficient levels of performance. Comarco therefore concludes that it should have received a score higher than or equal to the score received by ARC for this element and thus it should have been awarded a higher overall cost realism score than ARC.

The Army responds that the award fee structures proposed by both ARC and Comarco were good up to a performance rating of 90. The Army explains that at that point, however, Comarco began a straight line schedule so that a score of 90 earned 90 percent of the available award fee while ARC, with a score of 90, earned only 77.5 percent of the available fee.

Thus, the Army found that ARC's proposed award fee structure was superior because it provided incentive to perform in the 90-96 rating range. The Army points out that, in any case, the overall cost realism area was only worth one-half the value of the management and technical areas, and that the performance incentive factor was only one of three cost realism factors. The Army thus argues that even if Comarco were rated equal to or higher than ARC for cost realism, the award decision would not have changed because ARC and Comarco were rated equal in the technical area, ARC was rated significantly higher in the management area, and ARC's most probable cost was significantly lower than Comarco's. Thus, the Army reasons that even if there was a slight error in the evaluation, Comarco was not prejudiced.

We agree with the Army that even if Comarco's proposed award fee structure had been evaluated as equal or higher than ARC's, the award decision would not have changed. Both Comarco and ARC received Low- ratings for the cost realism evaluation area. The area was comprised of three factors: (1) Cost Realism, (2) Realism of Technical and Nontechnical Wages/ Benefits, and (3) Performance/Incentive. Comarco received scores of L-, L and L- for the three respective factors with an overall rating of L- for cost realism. ARC received scores of M+, L- and L+ for the three factors and also received an overall evaluation of L-for cost realism. Assuming that Comarco is correct in its assessment and that for the performance/incentive factor it should have received an L+ rating and ARC an L+ or L- rating, at best the overall cost realism scores would change to L for Comarco and L- for ARC. Comarco's rating for cost realism would be slightly higher than ARC's. However, Comarco and ARC would still be equal for the technical area and ARC would still have a significant advantage over Comarco in the management area, the only area, the SSAC found distinguished the two. Given that the management area was worth twice the cost realism area and that ARC's probable cost was significantly lower than Comarco's, we find that any error in the evaluation of the incentive fee would not have changed the award result. See Quality Sys., Inc., B-235344; B-235344.2, Aug. 31, 1989, 89-2 CPD Para. 197.

The protest is denied.