Protest of Navy Contract Award

B-200332: Feb 9, 1982

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A firm protested the award of a cost-plus-award-fee contract for engineering services under a request for proposals (RFP) issued by the Navy. The contract provided for a base period of 1 year's services and the possibility of up to 2 optional years of services. The protester alleged that: (1) the awardee's proposal was improperly evaluated with respect to cost-realism analysis; and (2) the awardee misled the Navy regarding the employees who would perform the contract, because it planned to substitute lesser qualified personnel after the contract had been awarded. The RFP contained a detailed listing of the Navy's estimates of direct labor hours required by the engineering specialty and provided that the personnel qualifications factor would be evaluated by the Navy's rating. Cost was to be evaluated on the basis of reasonableness and realism. Both offerors were rated as nearly equal on their technical approach. However, at the end of final negotiations, the protester's proposed costs and fee were about 10 percent more than the awardee's. The Navy considered both these costs and fees to be reasonable and valid. It is the GAO position that the determination of the realism of proposed costs for a cost-plus-fixed-fee contract is within the discretion of the procuring agency and subject to objection only if it has no rational basis. The record showed that the evaluation was consistent with a reasonable interpretation of the evaluation criteria and the RFP statement of work. GAO could find no basis to question the Navy's cost-realism analysis of the awardee's proposal. Since the RFP considered personnel substitutions during performance of the contract, it was apparent that some substitutions of previously named personnel were contemplated for any successful offeror. GAO held that the mere fact that substitutions of personnel have taken place under the contract is not evidence in itself that the awardee misstated its personnel plans during negotiations. The protester furnished no other evidence of a misstatement, and GAO rejected that allegation as speculative. Accordingly, the protest was denied.

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