QMX Support Services, Inc.
B-408959: Jan 6, 2014
- Full Report:
QMX Support Services, Inc., of Alexandria, Virginia, protests the award of a contract to TechFlow, Inc., of San Diego, California, under request for proposals (RFP) No. N66001-13-R-0101, issued by the Department of the Navy, Space and Naval Warfare Systems Center Pacific, for information technology and software engineering support services. QMX alleges that the awardee does not intend to use its proposed key personnel and has therefore engaged in an improper bait and switch of its key personnel. The protester also argues that the agency's evaluation of the awardee's cost proposal was unreasonable.
We deny the protest.
DOCUMENT FOR PUBLIC RELEASE
The decision issued on the date below was subject to a GAO Protective Order. This redacted version has been approved for public release.
Matter of: QMX Support Services, Inc
Date: January 6, 2014
1. Protest that awardee engaged in an impermissible bait and switch of its key personnel is denied where there is no evidence that the awardee made a material misrepresentation in its proposal with respect to its key personnel.
2. Protest challenging agencys cost evaluation of awardees proposal on basis that the awardees total cost was substantially lower than agencys cost estimate and other offerors total costs is denied where the agencys cost evaluation was based on a comprehensive review of the awardees specific cost elements and the protester has not demonstrated that the agencys evaluation in this regard was unreasonable.
QMX Support Services, Inc., of Alexandria, Virginia, protests the award of a contract to TechFlow, Inc., of San Diego, California, under request for proposals (RFP) No. N66001-13-R-0101, issued by the Department of the Navy, Space and Naval Warfare Systems Center Pacific, for information technology and software engineering support services. QMX alleges that the awardee does not intend to use its proposed key personnel and has therefore engaged in an improper bait and switch of its key personnel. The protester also argues that the agencys evaluation of the awardees cost proposal was unreasonable.
We deny the protest.
The RFP, issued on April 25, 2013, as a small business set-aside, contemplated the award of a single cost-plus-fixed-fee, indefinite-delivery/indefinite-quantity contract with a 3-year ordering period. RFP at 2, 23, 38 and 90. The RFP established a 4-step best-value selection process. Under step one, the agency was to evaluate proposals for acceptability considering the offerors agreement to comply with the terms of the RFP and their past performance. Id. at 90-91. Second, the RFP established that the agency would hold oral presentations with the acceptable offerors and evaluate their responses to sample tasks. Id. at 91, Attach. 6 at 1. Third, the agency would evaluate offerors cost proposals for reasonableness and realism. Id. at 92. In the final step, the agency was to conduct a cost/technical trade-off analysis and select the best-value offeror for award. Id.
As it relates to the protest, for the purpose of evaluating cost, the RFP provided offerors with estimated labor hours for 13 required labor categories. Four of the 13 labor categories, for example, Applications Developer III, included hours for both key and non-key personnel. Id. 83-84. Using this information, offerors were to provide detailed cost information, to include labor rates, fringe benefits, overhead rates, subcontracted labor rates, direct and indirect costs, general and administrative expense rates, and the fixed fee. Id. at 80-81. In this regard, the RFP instructed offerors to submit a cost matrix for all labor categories and hours. Although the RFP required actual rates for key personnel, average or composite rates were acceptable for unidentified non-key personnel. Id. at 82.
The RFP also required offerors to include a list of names of all key personnel (prime and subcontractor) and required that key personnel participate in the oral presentations under step two of the contemplated evaluation process. Id. at 83, 91. More specifically, the oral presentation instructions provided that all members of this presentation team must be proposed technically as key personnel, and dedicated at a minimum of 940 hours per year in the cost proposal for their labor category. RFP, Attach. 6 at 2.
The agency received five proposals by the RFPs May 29 closing date. TechFlows proposal, which the agency evaluated as acceptable under step one, had a total evaluated cost of $14,426,078 and received a rating of good for its oral presentation. QMXs proposal, which also received an acceptable rating under step one, had a total evaluated cost of $19,920,869, and received a rating of outstanding for its oral presentation. Agency Report (AR) at 7. With regard to the agencys cost evaluation, the record reflects that the agency examined the cost elements of each proposal and conducted a statistical analysis of proposed labor rates by comparing them to the averages of the labor rates proposed for each labor category. AR, Tab 13, Business Clearance Memorandum, at 16-18. Since TechFlows rates were within two standard deviations of the average of the rates proposed, the agency considered them realistic. Id. Additionally, the record reflects that the agency obtained and considered audit information from the Defense Contract Management Agency (DCMA) in finding TechFlows proposed costs realistic. Id. at 19-23.
After the evaluation was complete, the source selection authority (SSA) reviewed the merits of each proposal, conducted a trade-off analysis, and made a best value award decision. Id. at 43. The SSA concluded that the strengths presented by the QMX proposal did not outweigh its approximately 38-percent cost premium in light of the strengths presented by the low-risk, significantly lower-cost TechFlow proposal. Id. Accordingly, the SSA selected TechFlows proposal for award and the agency notified QMX of the intended award on September 11. After receiving a debriefing, QMX filed this protest.
QMX alleges that the awardee does not intend to utilize its proposed key personnel during contract performance and, thus, has engaged in an improper bait and switch. In this regard, QMX focuses on the fact that the awardee has offered employment to several of its incumbent personnel. QMX also argues that the agencys evaluation of the awardees cost proposal was flawed because the agency failed to account for the fact that the awardees total cost is substantially lower than the agencys cost estimate and the total costs of the other offerors. For the reasons discussed below, the protest is without merit.
Bait and Switch
An offeror may not propose to use specific personnel that it does not expect to use during contract performance, as doing so would have an adverse effect on the integrity of the competitive procurement system and generally provides a basis for proposal rejection. AdapTech Gen. Scientific, LLC, B-293867, June 4, 2004, 2004 CPD ¶ 126 at 5. To establish an improper bait-and-switch scheme, however, a protester must show a firm either knowingly or negligently represented that it would rely on specific personnel that it did not reasonably expect to furnish during contract performance, that the misrepresentation was relied on by the agency, and that the misrepresentation had a material effect on the evaluation results. Data Mgmt. Servs. JV, B-299702, B-299702.2, July 24, 2007, 2007 CPD ¶ 139 at 10.
Here, we find that QMX has not shown that TechFlow engaged in a bait and switch. QMX has not furnished any evidence of the first prong of the test for a bait and switch. The record reflects that TechFlow identified [deleted] named key personnel in its proposal and QMX has not presented any evidence that any of these individuals will not be furnished during contract performance. AR, Tab 32, TechFlow Proposal at III-A-1. To the contrary, in response to the protest, the awardee has affirmed that all of its proposed key personnel are available to perform and have been included as key personnel in performance of its contract. Intervenors Comments at 3.
In support of its protest, QMX relies solely on adverse inferences it has drawn from communications between the agency and TechFlow regarding the availability of incumbent personnel that TechFlow might use in performance of the contract. In this regard, the record reflects that TechFlow advised the agency of its interest in extending employment offers to incumbent personnel. AR at 13-15, 17-18. Such communications regarding the hiring of incumbent personnel do not demonstrate, in and of themselves, TechFlows intention to utilize incumbent personnel in lieu of the key personnel identified in its proposal. Our Office has recognized that a firms recruiting efforts to augment its personnel resources do not in themselves present persuasive evidence of misrepresentation to constitute an improper bait and switch. See Data Mgmt. Servs. JV, supra. Rather, we have noted that it is not unusual or inherently improper for an awardee to recruit and hire personnel previously employed by an incumbent contractor. See Lifecare Mgmt. Partners, B-297078, B-297078.2, Nov. 21, 2005, 2006 CPD ¶ 8 at 6. Thus, we conclude that the protester has failed to sufficiently support its contention of an alleged bait and switch by the awardee.
When, as here, an agency evaluates a proposal for the award of a cost-reimbursement contract, an offerors 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. American Tech. Servs., Inc., B-407168, B-407168.2, Nov. 21, 2012, 2012 CPD ¶ 344 at 5; DPK Consulting, B-404042, B-404042.2, Dec. 29, 2010, 2011 CPD ¶ 12 at 11; Federal Acquisition Regulation (FAR) § 15.404-1(d). Consequently, the agency must perform a cost realism analysis to determine the extent to which an offerors proposed costs are realistic for the work to be performed. An agencys cost realism analysis need not achieve scientific certainty; rather, the methodology employed must be reasonably adequate and provide some measure of confidence that the proposed costs are reasonable and realistic in view of other cost information reasonably available to the agency at the time of its evaluation. See SGT, Inc., B-294722.4, July 28, 2005, 2005 CPD ¶ 151 at 7.
As noted above, the RFP set forth, as part of the cost proposal instructions, the labor categories and labor amounts that offerors were to use when preparing their proposals. Offerors were instructed to submit their direct labor rates, indirect rates and fee. RFP at 80-81. The RFP established that, as part of the cost evaluation factor, the agency would assess the reasonableness and realism of each offerors proposal. Id. at 92. In challenging the agencys evaluation, QMX does not dispute that TechFlow used the labor categories and labor hours established by the RFP, nor does QMX challenge the Navys evaluation of TechFlows (and its subcontractors) direct and indirect rates or specifically contend that TechFlows rates are too low. Rather, the protester simply posits that the awardees costs are not realistic because TechFlows total price is significantly lower than both the agencys cost estimate and the average of the other offerors prices.
Based on our review of the record, we have no basis to find the Navys cost realism evaluation of TechFlows proposal unreasonable. The record shows that the agency conducted a comprehensive, well-documented cost realism evaluation which analyzed each cost element of the awardees cost proposal, including direct and indirect rates and proposed fee, and found the costs to be realistic. For example, as noted above, in evaluating the awardees labor rates, the agency used a standard deviation analysis to assess proposed rates based on average labor rates. The protester has not challenged the agencys analysis of rates, and we have no basis to question the agencys evaluation methodology in this regard. See First Info. Tech. Servs., Inc., B-405602, Dec. 1, 2011, 2011 CPD ¶ 261 at 8 n.7 (finding that agency reasonably used a standard deviation analysis as a tool to analyze offerors labor rates). The record also reflects that the agency considered audit information provided by DCMA in a report to the agency. In this report, DCMA compared Techflows proposed labor rates to actual payroll and relevant market data. The DCMA did not take exception to TechFlows proposed rates. The report also noted that TechFlows escalation rate was reasonable, and presented historical indirect rate information, which was consistent with the indirect rates set forth in TechFlows proposal. AR, Tab 19, DCMA Rate Verification for TechFlow. Again, the protester has not challenged the agencys comprehensive evaluation of the awardees cost information in this regard. The protesters failure to object to the specific cost information and analysis conducted by the agency is fatal to its protest since, as set forth above, an agencys cost evaluation is properly based on an offerors actual and allowable costs.
Moreover, the protesters reliance on agency total cost estimates and total costs for other offerors is fundamentally misplaced. A cost realism evaluation is properly focused on the discrete cost elements of an offeror, which comprise the offerors total cost, precisely the focus of the agencys evaluation of TechFlows cost proposal. See FAR § 15.404-1(d)(1) (establishing that [c]ost realism analysis is the process of independently reviewing and evaluating specific elements of each offerors proposed cost estimate to determine whether the estimated proposed cost elements are realistic for the work to be performed); see also, ABSG Consulting, Inc., B-407956, B-407956.2, Apr. 18, 2013, 2013 CPD ¶ 111 at 9 (mere fact that an offerors labor rates do not mirror those in a government estimate does not mean that the rates are unrealistic, or mandate their adjustment to government estimate levels); Wyle Laboratories, Inc., B-407784, Feb. 19, 2013, 2013 CPD ¶ 63 at 6 (rejecting contention that awardees proposed costs were unrealistic simply because they were lower than those of the government estimate and the protester). Since the record reflects that the agency properly engaged in a detailed evaluation of the awardees cost elements, and the protester has not challenged the agencys evaluation in this regard, we find no basis to sustain the protesters challenge of the agencys cost realism evaluation.
The protest is denied.
Susan A. Poling
 In its comments on the agencys report addressing the protest issues raised, the protester did not reply to the agencys responses to several of its initial protest contentions--including that the awardee was improperly evaluated under the oral presentation terms of the RFP, that the agency failed to properly evaluate the protesters cost proposal, and that the agency failed to promote full and open competition--we therefore consider the arguments abandoned. See The Big Picture Co., Inc., B-220859.2, Mar. 4, 1986, 86-1 CPD ¶ 218 at 5.
 To the extent the protester contends TechFlows total price is unreasonable because it is substantially lower than the agencys estimate and other offerors proposals, we note that the purpose of a price reasonableness review is to determine whether prices offered are too high, as opposed to too low. See Sterling Servs., Inc., B-291625, B-291626, Jan. 14, 2003, 2003 CPD ¶ 26 at 3.
 The record reflects that the DCMA did in fact take exception to higher indirect rates proposed for one of the awardees subcontractors. Since this higher rate appeared to overstate, as opposed to understate, the awardees costs, the matter was not of concern to the agency. AR, Tab 13, Business Clearance Memorandum, at 21.
 The protester also argues that the agency misevaluated the awardees true costs given the bait and switch of the awardees key personnel. As discussed above, however, the protester has failed to support its bait-and-switch allegation. Accordingly, this derivative argument is without merit.