Imaging Systems Technology, B-289262, February 1, 2002

Imaging Systems Technology, B-289262, February 1, 2002

DIGEST

Attorneys

DECISION

Imaging Systems Technology (IST) protests the Department of the Air Force's cancellation of request for proposals (RFP) No. F34601-01-R-0067, issued to acquire logistics support services for the programmable indicator data processor (PIDP), a worldwide standardized automated radar display, tracking, and flight data processing system. The RFP contemplated a cost comparison to determine whether the government or a contractor could perform the work more cost effectively; the Air Force canceled the RFP based on its determination that the cost of in-house performance would be lower than performance by IST. IST argues that the cost comparison was improper because the agency's in-house cost estimate was understated.

We deny the protest.

The agency conducted this acquisition pursuant to 10 U.S.C. Sec. 2462, which requires defense agencies to acquire goods or services from a private sector concern if such a source can provide the requirement at a cost that is lower than the cost to perform the same requirement in-house. The statute further provides that, in ascertaining whether a private sector source or the government can perform the requirement at a lower cost, the acquiring activity is required to ensure that all costs considered are realistic and fair.

The current protest is the latest in a protracted dispute between the parties regarding the adequacy of the agency's cost comparison in connection with its decision to perform the requirement in-house rather than by contract. IST had performed the requirement under contract prior to 1999. Our Office sustained a protest by IST against cancellation of a follow-on RFP, finding that the agency had failed to conduct a fair and reasonable comparison of the costs of in-house and contract performance. Imaging Sys. Tech., B-283817.3, Dec. 19, 2000, 2001 CPD Para. 2. Among other findings, we held that the cost comparison was flawed because the agency had calculated the cost of in-house performance using a level of effort that was significantly lower than that outlined in the solicitation. Id. at 10.

The current RFP was prepared in the wake of our prior decision, and reflects the agency's revised views regarding its requirements. It contemplates either the award of a contract to the lowest priced, technically acceptable offeror or, if the government cost estimate showed that the requirement could be performed in-house for a lower cost, cancellation of the solicitation. RFP Sec. M-800. There are four primary areas of performance. First, under technical assistance, technical support must be provided to field personnel maintaining PIDP systems in numerous locations worldwide. Technical assistance (in the form of responding to telephonic or e-mail requests for assistance) was required 8 hours a day, 5 days a week, and requests had to be responded to within 1 business day (excluding weekends and holidays). Technical Performance Requirements Specification (TPRS) Sec. 3.2. The RFP advised that, on average, the requirement was for a response to 46 requests for technical assistance per month.

Second, under emergency on-site technical assistance, personnel are required to travel to the PIDP installation to troubleshoot or diagnose and correct a system outage. TPRS Sec. 3.3. The RFP estimated that there would be a need to respond to approximately six emergency on-site assistance requests per year, four within the continental United States and two in other locations. Offerors were required to provide labor rates for whatever skill classifications they intended to use. The agency then would use an average of the proposed rates, and multiply that rate by a specified number of hours to arrive at a price for this element of the requirement. RFP Contract Line Item Nos. (CLIN) 3, 9.

Third, depot-level repair of failed system components requires personnel to repair failed parts from field locations. TPRS Sec. 3.1. As with the emergency on-site technical assistance, offerors were to provide hourly labor rates for the skill levels it intended to use for these CLINs; the rates would be averaged and multiplied by a stated number of hours. CLINs 4, 10.

Fourth, offerors were to have available the capacity to respond to unanticipated "over and above" requirements (for example, the preparation of engineering change proposals) which might arise under the TPRS. This element of the requirement was unpriced, and therefore not a part of the cost comparison; individual task orders would be negotiated at the time requirements (if any) arose. CLINs 6, 12.

In response to the RFP, the agency received two private sector offers; IST's was determined to be the low, technically acceptable offer at a cost of $374,640. Since the government's total cost estimate was $118,570, the Air Force determined that it would cost less to perform the requirement in-house and, accordingly, canceled the solicitation. This protest followed.

The principle reason for the disparity between the two cost proposals is that the protester proposed to perform the work largely with engineers, while the agency proposed performing with a technician. /1/ Agency Report (AR), exh. 6. With regard to the technical assistance work (by far the largest element of the requirement), for example, IST's proposal stated as follows:

IST will provide one exceptionally well qualified PIDP engineer who will be the technical lead on the program and will be responsible for the routine day to day requests for assistance and who will respond to any emergency requests, including overseas site visits. We will also have available a second qualified PIDP engineer, experienced in handling telephone requests for PIDP II assistance and depot repair tasks who will be the back up engineer. This PIDP technical staff is in turn augmented by experienced technicians and senior engineers for design tasks or assistance.

IST Technical Proposal at 6. Noting that the solicitation is for the provision of "full logistics support," IST asserts that the work under the RFP cannot be performed solely by technicians; engineering expertise is needed to solve technical problems, such as the preparation of engineering change proposals (ECPs) which may arise that are beyond the competence of a technician. The protester further notes that the RFP provided numerous spaces under the CLINs calling for labor rates, thereby indicating that more than one skill classification was being called for.

The agency responds that the solicitation's requirements and, in particular, those relating to technical assistance, emergency on-site repair and depot-level repair (that is, those CLINs for which pricing was required), can in fact be accomplished by a technician, as shown by the fact that it has successfully been meeting its requirements for the solicited services using a technician located at Tinker Air Force Base since 1999 when IST's contract expired.

We find nothing improper in the costing of the agency's in-house cost estimate; rather, it appears that the protester misread or ignored the requirements as stated in the RFP and, as a result, proposed higher-cost staffing than was necessary to perform the work. In this regard, the TPRS called only for "technical assistance," TPRS Secs. 3.2, 3.3; it made no reference to engineering assistance. Moreover, the RFP included a skill level description that stated as follows:

The contractor personnel performing work under the terms of the . . . contract shall have been trained in the electronics technology typical of those associated with the PIDP system hardware and software, to the level of Craftsman . . . . Related civilian occupations . . . are (a) Data Processing Equipment Repairman . . . (b) Electronics Mechanic . . . (c) Electronics Repair, Commercial and Industrial Equipment . . . and (d) Electronics Systems Maintainer . . . . TPRS Sec. 4.8.

The TPRS contrasted sharply with the prior version of the agency's requirement (referred to as the work description document (WDD)), which did not include the quoted skill level description, and consistently called for "engineering technical assistance" and "engineering analysis." WDD Secs. 3.4, 3.7 and 3.8. There thus was nothing on the face of the TPRS expressly stating that engineering services were being solicited, and the skill level description and other changes from the prior WDD suggested that engineering services were not required.

The testimony at the hearing that our Office conducted in connection with the protest further tends to show that the solicited work could be performed by a technician. The Air Force offered extensive testimony from its lead technician to show that he is capable of accomplishing the technical assistance and depot-level repair functions; he testified, for example, that in the approximately 14 months he has been performing the function, there have been no instances where a technical problem was beyond his competence. Hearing Transcript (Tr.) at 32, 33, 37-38. The protester's own representatives did not show otherwise; they testified that the routine functions called for under the RFP could be handled by a technician, and conceded that the technician being used by the agency has additional PIDP-specific training that would enable him to perform better than a more generally trained technician. Tr. at 48-50.

The agency does not deny that engineering services may be required at some point during performance of the requirement. However, the agency states that such services, if ever required, would be covered, not by the priced CLINs, but by the RFP's "over and above" CLIN, which, as discussed, was not part of the cost comparison because it was not priced by offerors (or the government). Tr. at 34-35. This approach appears to be consistent with the agency's approach under prior PIDP contracts of which the protester was fully aware. In this regard, the protester states that:

Over the life of [the PIDP] program, from 1992 to 1999 there were 121 Engineering Task Orders generated by the Air Force . . . Program Office. There were also at least four ECPs in the latter years. These Task Orders and ECPs were over and above the Depot Repairs and Telephone Technical Assistance Tasks.

IST Post-Hearing Comments at 12 (emphasis supplied).

We conclude that the TPRS did not contemplate performance of engineering services within the priced CLINs (as indicated by the skill level description provision of the RFP), and that the record shows that the services described in the TPRS can be performed by a technician. /2/ It follows that the disparity between the protester's and the agency's costs resulted largely, not from the agency's failure to propose staff qualified to perform the work, but from the protester's proposing overqualified, high-priced staff in disregard of the terms of the RFP. We note in this regard that the protester's representatives testified that at least part of the reason IST proposed using engineers was the fact that the firm's PIDP system expertise resided with its engineers as opposed to its technicians. Tr. at 49. To the extent that engineering expertise may be required, it will be a minor element of the overall cost of performance, and one that neither party was required to price under the terms of the RFP, and thus was not part of the cost comparison. /3/

IST also argues that the agency's cost estimate improperly was based on the use of part-time personnel, omitted several minor cost elements (for example, the cost of preparing purchase requests and invoices, or the cost of maintaining configuration control over drawings where a change has been made), and was based on certain level-of-effort information not disclosed to the protester. Given our conclusions above, even if the protester were correct regarding these elements, the result of the cost comparison would not change. Since the agency's cost advantage is due primarily to the disparity in hourly rates for staffing, even if we found that IST's arguments warranted adjustments to its and the agency's costs to ensure that they were based on an identical level of effort, the agency's cost necessarily would remain substantially lower. We conclude that IST was not prejudiced by these additional alleged deficiencies; we therefore need not consider them. See EastCo Bldg. Servs., Inc., B-275334, B-275334.2, Feb. 10, 1997, 97-1 CPD Para. 83 at 7.

The protest is denied.

Anthony H. Gamboa General Counsel

1. For CLINs 1 and 7 (the technical assistance element of the requirement) IST used a loaded hourly rate of [deleted] for engineer services. For CLINs 3, 4, 9 and 10, IST's cost was calculated based on an hourly rate of [deleted], which was an average of three different hourly rates it proposed based on the skill level of the employee. The government cost proposal used a technician services hourly rate of $29.48 for the base year and $30.63 for the option year.

2. As noted, in our prior decision we recommended that the Air Force review its requirements and revise its statement of work to reflect its actual requirements. Imaging Sys. Tech., supra, at 10. It appears this is precisely what the Air Force did.

3. To the extent IST's protest arguments can be seen as an assertion that certain engineering work should have been included in the cost comparison, its protest is untimely. The protester knew or should have known from the changes in the current, as compared to the prior, statement of work (as well as the agency's ordinary course of dealing under prior contracts) that engineering services were not covered by the priced CLINs, and thus not part of the cost comparison; if the protester believed this was improper, it was required to protest on this ground prior to the deadline for submitting proposals. 4 C.F.R. Sec. 21.2(a)(1) (2001).