Matter of: Construction Technology Laboratories, Inc. File: B-281836 Date: April 12, 1999 * Redacted Decision

Matter of: Construction Technology Laboratories, Inc. File: B-281836 Date: April 12, 1999 * Redacted Decision

DIGEST

Attorneys

DECISION

Construction Technology Laboratories, Inc. (CTL) protests the award of a contract to Professional Services Industry, Inc. (PSI) pursuant to request for proposals (RFP) No. DTFH61-98-R-00087, issued by the Federal Highway Administration (FHWA) for engineering and technical services to support research activities at FHWA's Turner-Fairbank Highway Research Center in McLean, Virginia. CTL, the incumbent here, argues that the agency improperly evaluated PSI's proposal by crediting PSI with the strengths of the incumbent personnel, rather than evaluating PSI's proposal solely on the strengths of the personnel offered. CTL also argues that there were additional errors in the technical evaluation, that the agency performed an improper cost realism analysis, and that the cost/technical tradeoff was unreasonable.

We deny the protest.

BACKGROUND

The Turner-Fairbank Highway Research Center performs analytical studies, laboratory testing, and field testing of highway structures, as well as modeling and materials sampling. The Center also produces research reports and academic papers. The RFP was issued on August 27, 1998, to provide engineering and technical services in support of the Center's Structures Laboratory. The RFP anticipated award of an indefinite-quantity, cost-plus-award-fee contract for a 2-year base period followed by three 1-year option periods, to the offeror whose proposal presented the overall best value to the government. RFP Sec. M, at 62.

The RFP identified four evaluation factors, in descending order of importance: technical, cost, past performance, and small business/minority business/minority institution participation. Id. at 65. The RFP further explained that the three non-cost factors were significantly more important than cost. Id. Under the most important evaluation factor, technical, the RFP identified six subfactors, in descending order of importance. These subfactors, paraphrased, include: (1) key personnel qualifications and experience; (2) program manager's experience; (3) experience managing large-scale highway structural research and laboratory service efforts; (4) knowledge and experience in four areas related to highway bridge structures; (5) expert consultant pool; and (6) resources. Id. at 62-64.

The RFP, at section L, set forth specific educational and experience requirements for the program manager, and for the other key personnel, which included a research engineer, two research assistants, two expert technicians, and two research technicians. Id. at 50-53. As set forth below, although the RFP called for offerors to submit a letter of commitment from each individual proposed for a key position, it also permitted an alternate approach:

Staffing proposals shall clearly identify each of the individuals proposed for all Key Personnel positions identified below. For each Key Personnel position, the offeror's proposal must contain a letter of commitment from the individual proposed demonstrating that this individual is capable of meeting the full-time, on-site requirement for that position. In lieu of a commitment letter, offerors must provide a detailed discussion of the proposed compensation package and a detailed transition plan for meeting the Key Personnel staffing requirements on or before the effective date of the contract. In all cases, resume's [sic] and biographical summaries must be provided for the individual proposed for each Key Personnel position demonstrating that the individual proposed meets the qualifications and requirements described herein. The Staffing proposal must clearly demonstrate that all individuals proposed meet the following minimum qualifications and requirements . . . .

Id. at 50-51. In addition to proposing personnel, offerors were to address the technical requirements of the solicitation through a technical "dissertation." Id. at 50.

The agency received two proposals in response to the RFP, CTL's and PSI's. As the incumbent, CTL offered to provide the experienced key personnel currently performing the contract. PSI proposed to retain in-place each of the incumbent's key personnel, but also provided a slate of alternate key personnel in case the incumbent key personnel declined employment with PSI. PSI Initial Proposal, Vol. I at 1-2, 6-8.

After an initial evaluation, which noted that PSI's program manager and several of its alternate key personnel did not appear to meet experience requirements, the agency held discussions with both offerors. During discussions, the agency expressly advised PSI of each of its identified concerns about the qualifications of PSI's proposed alternate personnel, and PSI's final revised proposal addressed each of these questions. With respect to each of its key personnel, however, PSI reminded the agency that its preference was to retain the services of the incumbent individual if possible. PSI Addendum to Technical Proposal, Response to Questions 1-3, at 1-4.

Upon conclusion of the final technical evaluation and a cost realism review, the agency's overall technical rating and the total estimated cost for these two proposals was:

Technical Score Total Est. Cost

CTL 86 [deleted]

PSI 72 $13,484,682

Price Negotiation Memorandum and Source Selection Statement, Dec. 17, 1998, at 1.

Within the overall technical score, the agency viewed the two offerors as essentially equal under the most important technical subfactor, key personnel, "both having proposed identical staffing from the incumbent contract." Id. at 15. Under the second and third most important technical subfactors, program manager and experience managing large-scale highway structural research contracts, CTL's proposal was rated more highly than PSI's proposal. After a detailed consideration of each proposal's relative strengths and weaknesses, the Source Selection Official accepted the evaluation panel's recommendation that PSI's lower proposed costs and sound proposal represented the best value to the government. Id. at 17; Final Report of Technical Proposal Evaluation Committee and Recommendation for Award (hereinafter, the Final Evaluation Report), Dec. 16, 1998, at 7. This protest followed.

DISCUSSION

Evaluation of Key Personnel

CTL argues that the agency improperly credited PSI with the experience of the incumbent key employees even though the incumbent employees were not the employees identified by PSI in its proposal. In addition, CTL argues that the agency's evaluation of the employees named in PSI's proposal was unreasonable.

The record in this case shows that PSI contacted each of the incumbent's five key personnel, received commitment letters from two of them, and appropriately refrained from identifying the others in its proposal. /1/ On the other hand, PSI repeatedly states in its proposal that it will attempt to hire all of the incumbent's key personnel, and provides evidence (including its plan to meet or exceed the employee's current compensation) of how it will accomplish this goal. As stated above, the agency evaluation of PSI's proposal considered both its offer to hire the incumbent key personnel, and its alternate personnel, in concluding that the proposals were essentially equal in this area.

In CTL's view, the agency could not properly allow PSI to propose employees with whom it had no relationship, and could not properly evaluate PSI based on employees whose resumes or biographical summaries were not identified in PSI's proposal. For the reasons set forth below, we disagree.

The RFP, as quoted above, was clear and unambiguous in allowing an offeror to propose personnel from whom the offeror had no commitment. In lieu of a commitment, the RFP required only that the offeror explain how it intended to meet the key personnel requirements by the beginning of contract performance. To the extent that CTL argues that agencies should not accept proposals to provide key personnel without a commitment from those personnel, CTL is raising an issue that was apparent on the face of the solicitation, and had to be raised prior to the initial closing date set for receipt of proposals. 4 C.F.R. Sec. 21.2(a)(1) (1998).

To the extent CTL is arguing that PSI did not, in fact, propose the incumbent key personnel, we again disagree. Throughout its initial and final revised proposals, PSI reiterates its intent to provide as many of the incumbent key personnel as it is able to hire. In addition, PSI's stated intent to provide the incumbent key personnel was not an idle claim, but was buttressed by a compensation plan designed to meet or exceed the compensation currently received by the incumbent key employees. In our view, the agency reasonably concluded from this proposal that it would receive either the incumbent employees or the proposed alternates. See Intermetrics, Inc., B-259254.2, Apr. 3, 1995, 95-1 CPD Para. 215 at 14-15.

Since we conclude that the agency reasonably assumed it would receive either the incumbent employees or the alternates, we turn to whether it was reasonable for the agency to credit PSI with the strengths of the incumbent key personnel, rather than the proposed alternates. Our review of prior challenges to evaluations of key personnel suggests that the more common approach to assessing a proposal which offers to hire as many incumbents as possible is to evaluate the strengths of the personnel whose resumes are provided by the offeror, rather than the strengths of the incumbent personnel pool. See, e.g., Ebon Research Sys., B-261403.2, Sept. 28, 1995, 95-2 CPD Para. 152 at 5; Engineering Design Group, Inc., B-253066.3, Nov. 8, 1993, 93-2 CPD Para. 307 at 6-7. The difference here, in our view, is the solicitation language that permits an offeror to propose key employees from whom it has no commitment, provided the offeror makes a showing that it will be able to hire those individuals. Once the agency concluded that PSI had made a sufficient showing that it was likely to succeed in hiring these individuals, we know of no reason why the agency could not proceed with considering them in the evaluation.

Finally, we note that CTL correctly complains that PSI did not provide the resumes or biographical summaries of the incumbent personnel upon which it was evaluated, and which were required by the RFP's staffing language. We will not conclude, however, that the agency acted unreasonably by considering these personnel under the evaluation scheme, given that the agency was well aware of the identity and qualifications of the incumbent key personnel. See Wackenhut Servs., Inc., B-187299, Mar. 22, 1977, 77-1 CPD Para. 198 at 3-4.

Our conclusion that it was reasonable for the agency to consider PSI's offer to hire the incumbent key personnel in evaluating PSI does not fully resolve CTL's challenge to the evaluation of PSI in this area. CTL correctly points out that there are new key personnel positions included in this solicitation for which there are no incumbents, and also argues that PSI's proposed alternate key personnel do not independently meet the experience requirements of the RFP.

As stated above, the personnel to be evaluated under the key personnel subfactor included a research engineer, two research assistants, two expert technicians, and two research technicians. RFP Sec. L, at 50-53. The first two categories of personnel, research engineer and research assistant, present no further issue for our review. For the single research engineer position, PSI stated its intent to hire the incumbent research engineer, and identified a backup individual. Since we conclude that PSI could reasonably propose the incumbent research engineer, and since there is no dispute that the incumbent individual meets the RFP's experience requirements, we need not reach the issue of whether the alternate research engineer met those requirements. For the two research assistant positions, PSI provided letters of commitment for both of the incumbent research assistants, thus leaving no issue of unmet requirements.

For the two remaining categories, expert technicians and research technicians, a more detailed review is needed. For the expert technician positions, the record shows that PSI contacted the incumbent expert technician (there was only one under CTL's existing contract), but was asked not to include his name in PSI's proposal. Affidavit of Dr. Mohammad S. Khan, Mar. 8, 1999, at 3. PSI honored the request, left the name out of its proposal, identified alternative expert technicians, and reiterated its intent to attempt to hire the incumbent individual should PSI receive the contract award. Consistent with the approach outlined above, we find reasonable the agency's conclusion that PSI may rely upon the experience of the current incumbent expert technician to meet the requirements for one of the two positions.

For the second expert technician position, the initial evaluation concluded that neither of PSI's alternate proposed technicians met the RFP's requirement for 5 years experience in structural testing. Initial Report of Technical Proposal Evaluation Committee, Oct. 30, 1998, at 3. After discussions, PSI explained that one of the proposed alternate technicians, Mr. Clifton Troy, would be its preferred partner for the incumbent technician, and provided a detailed explanation of his structural testing experience since 1994. PSI Final Revised Proposal at 1-2. On the strength of this explanation the agency concluded that "Mr. Troy's experience [is] not ideal, but it meets the minimum requirements of the RFP." Final Evaluation Report, supra, at 3. CTL argues that this conclusion was unreasonable because the response does not establish that Mr. Troy has amassed 5 years of experience in structural testing, as opposed to occasional experiences over the last 5 years.

We find reasonable the agency's ultimate conclusion that Mr. Troy meets the experience requirement for structural testing. As stated above, Mr. Troy has been employed by PSI since 1994, and the company claims that he had gained extensive experience in laboratory and field testing during that 5-year period. In responding to the agency's questions, PSI provided detailed examples of the kind of structural testing Mr. Troy has performed. While we recognize that PSI's proposal does not establish that Mr. Troy has done nothing but structural testing during the last 5 years, we think the protester's argument in this regard overstates the RFP's requirement. We think the record here is sufficient for the agency to reasonably conclude that Mr. Troy's experience is sufficient to meet the RFP requirements.

For the last category of key personnel, the research technicians, our review is similar to our review of the expert technicians. As above, PSI contacted the incumbent research technician, was asked not to use his name, and did not do so, even though it stated its intent to hire the incumbent research technician if possible. As above, we conclude that the agency reasonably credited PSI with having met the requirement for one of the two positions with the incumbent. With respect to whether either of PSI's two alternate research technicians /2/ met the RFP's experience requirements, the agency initially concluded that neither had the required experience working in a structural testing laboratory. After discussions, PSI provided additional information, and the agency concluded that the reply was sufficient to show that the alternate research technicians were not ideal, but were minimally qualified. As above, CTL argues that this conclusion was unreasonable.

Given that the agency reasonably credited PSI with proposing the incumbent for one of the two research technicial positions, our review of the record here need focus only on whether one of PSI's alternate research technicians could reasonably be found to meet the experience requirement for this position. In this regard, we note that while the position of research technician is the lowest level of the required key personnel--as evidenced by the fact that the proposed individuals needed only a minimum of a 2-year technical degree and no specified period of experience--the RFP identified several specific requirements for the technicians. In addition to the educational requirement, the RFP called for:

Experience . . . in instrumentation used for structural testing . . . . demonstrated experience performing structural testing in a laboratory environment, including erection of steel, casting concrete, installing strain gauges and instrumentation, and operation of data acquisition equipment. IBM PC compatible computer skills are also required for this position, including spreadsheet, data analysis, CAD, and maintaining data base software. Experience in welding, concrete laboratory testing practice, mechanical property tests of metallic materials, non-destructive evaluation, and surveying are required for at least one of the RT position.

RFP Sec. L, at 52 (emphasis added).

One of the alternates proposed by PSI for the research technician position is Mr. Sinara Ly. In its response to the discussion question regarding the extent of his experience working in a structural testing laboratory, PSI explained that Mr. Ly's background is related to civil, construction, and structural materials testing. PSI Final Revised Proposal at 4. Also, despite the 2-year degree requirement, Mr. Ly has a bachelor's degree in civil engineering, and a master's degree in structural engineering. In addition to his experience in construction inspection, Mr. Ly is certified as a concrete tester by the Washington Area Council of Engineering Laboratories.

The protester is correct in its assertion that none of the information provided by PSI definitively answers the question regarding Mr. Ly's experience performing structural testing in a laboratory environment. Even if Mr. Ly lacks experience performing structural testing in a laboratory environment, however, we fail to see how this lapse is anything more than de minimis, arising as it does in one of several technical areas applicable to only one of the seven key personnel positions, and given that Mr. Ly meets the numerous other requirements in the RFP for this position. Further, as the record shows, PSI received a lower point score (24.25 points of 30 available points) for the category of key personnel than did CTL (25.75 points of 30 available points). While the 30 total points available under the key personnel subfactor are not separately allocated among personnel categories, it is reasonable to assume that the difference in scores here reflects, in part, the relatively minor shortcoming of one of PSI's seven proposed key personnel.

Evaluation of Program Manager

CTL also argues that the agency improperly concluded that PSI's proposed program manager met the experience requirements of the RFP. Specifically, CTL contends that PSI's program manager did not have "5 years demonstrated successful experience managing structural testing facilities," as required by the solicitation. RFP Sec. L, at 51.

The initial evaluation of PSI's proposal noted that its program manager appeared to lack experience managing structural testing facilities. In response to the discussion question pointing out this perceived weakness, PSI's Final Revised Proposal (at pages 4-5) explained that the program manager has as much as 16 years of structural experience, with a significant background in structural testing, and many years of management experience. Based on this response, the agency concluded the program manager meets the RFP's experience requirement. Final Evaluation Report, supra. In the protester's view, however, the response does not clearly demonstrate that the program manager has at least 5 years experience managing structural testing facilities.

We agree with the protester that there is some ambiguity remaining about whether PSI's program manager has demonstrated that he has the required experience in this category. On the other hand, we think this is an area where the agency could reasonably conclude that the requirement has been minimally met. In this regard, PSI's response provides significant evidence of experience in precisely the areas covered by the RFP, even though it does not definitively answer whether the necessary time period managing such effort--as opposed to participating in it--was met. In addition, the source selection document notes that the individual proposed has significant experience managing laboratory facilities; he is currently serving as the manager of PSI's Investigative Structural Testing and Evaluation Division, where he is responsible for managing the testing of all types of structural elements, systems, and materials, and has managed a number of laboratory facilities, including the agency's own Non-Destructive Evaluation Testing Laboratory, also located at the Turner-Fairbank Highway Research Center. Source Selection Statement, supra, at 9, 16. Based on this information, we cannot say that it was unreasonable for the agency to conclude that the program manager "marginally meet[s] the RFP with respect to experience managing a structural testing facility," Final Evaluation Report, supra, at 3 (emphasis added). In addition, as we noted above regarding the evaluation of Mr. Ly, the agency recognized that PSI's program manager is less experienced than CTL's program manager and reflected the relative difference in merit in the point scores allotted to the two offerors under the program manager subfactor under the technical evaluation factor. /3/ Id. Under these circumstances, we conclude that the evaluation was reasonable.

Cost Realism Evaluation

CTL argues that the agency's cost realism review was inadequate because there is no evidence in the record that the agency understood the reasons for the difference in the two offerors' respective fringe benefits and overhead costs. As a result, CTL contends that the agency failed to understand that CTL's higher overhead translated to greater benefits for its employees, and that those greater benefits may not have been offset by the higher salaries PSI was offering CTL's incumbent employees.

Federal Acquisition Regulation Sec. 15.305(a)(1) requires:

When contracting on a cost-reimbursement basis, evaluations shall include a cost realism analysis to determine what the Government should realistically expect to pay for the proposed effort, the offeror's understanding of the work, and the offeror's ability to perform the contract.

The cost realism analysis included in the record here shows that the agency considered in detail each of the cost elements of the CTL and PSI proposals. Cost Evaluation Materials, Agency Report, Tab F. In each case, the analysis compared the proposed cost elements to costs applicable to other contracts between the agency and these two offerors. In addition, since CTL's indirect rates had not been audited by the agency since 1992, the agency requested a indirect rate review by an outside accounting firm, and used the review to further analyze CTL's proposed rates. In short, our review of the cost realism analysis reveals nothing about the review that could be termed improper or unreasonable.

In our view, CTL's complaint is not with the review of cost realism, but with the evaluation assessment that PSI's proposed higher salaries for CTL's incumbent key employees would be sufficient to permit PSI to hire those employees. According to CTL, PSI is hiring its incumbent employees at approximately 20 percent more in direct salary than those employees would have been paid if CTL had won the contract. CTL's Comments on the Agency Report, Mar. 1, 1999, at 28. While CTL apparently believes that the difference between its and PSI's overhead rates shows that these employees must be receiving fewer fringe benefits, this fact, even if true, does not invalidate either the cost realism review or the evaluation assessment that PSI would be able to retain the incumbent employees. We find that the agency reasonably concluded that PSI's higher salaries would allow it to retain the incumbent personnel, and PSI's ability to do so since contract award supports this conclusion.

Cost/Technical Tradeoff

CTL argues that the cost/technical tradeoff by which the agency selected PSI's lower-rated, lower-cost proposal, over the higher-rated, higher-cost proposal of CTL, was improper. Specifically, CTL claims that the tradeoff decision was based on wrongly assuming that the proposals were equal under the key personnel subfactor; minimizing the difference between the offerors' proposed project managers; and ignoring CTL's superiority under the fourth most important technical subfactor.

Our review of cost/technical tradeoff decisions is limited to a determination of whether the tradeoff is reasonable and consistent with the solicitation's evaluation criteria. Loral Aeronutronic, B-259857.2, B-259858.2, July 5, 1995, 95-2 CPD Para. 213 at 16. For the reasons set forth below, we conclude that the tradeoff decision was proper.

As stated above, although CTL received an overall score of 86, compared to PSI's score of 72, the source selection official concluded that the two offerors were essentially equal under the key personnel subfactor, the most important of the technical subfactors, because both "proposed identical staffing from the incumbent contract." Source Selection Statement, supra, at 15. CTL argues that this conclusion is erroneous given the difference between the two offers under the key personnel subfactor.

In our view, the agency's conclusion that the proposals were essentially equal under the key personnel subfactor is supported by the point scores awarded to the two offerors, and the reliance by both on the same pool of incumbent key personnel. First, as noted above, at the conclusion of the final evaluation CTL was awarded a point score of 25.75 points (out of 30 available), while PSI was awarded 24.25 points. These point scores reflected the considered judgment of the agency evaluators with respect to the pool of seven key personnel proposed by CTL and PSI. Given that our review of each of the evaluation conclusions led us to uphold the individual assessments underlying these scores, we conclude that the overall assessment that these two offerors are essentially equal is also reasonable.

In addition, the conclusion that the two proposals were essentially equal in this area was not based solely on point scores; instead, the record shows that for five of the seven key employees, the agency reasonably concluded that the two offerors were offering the same pool of incumbent personnel. For the remaining two positions that did not exist under the previous contract, neither CTL's proposal nor PSI's was found without blemish. As discussed in detail above, PSI's non-incumbent expert technician and research technician were both considered to only marginally meet the RFP's experience requirement. Although CTL's non-incumbent expert technician and research technician were considered to fully meet the RFP's requirements, the evaluators noted that both were temporary placements, and lowered CTL's score in this area to reflect the fact that the qualifications of the permanent staff remained unknown. Final Evaluation Report, supra, at 2. Under these circumstances, we see nothing unreasonable about the source selection conclusion that CTL and PSI are essentially equal under the most important key personnel subfactor.

Under the second most important technical evaluation subfactor, program manager, the agency concluded that CTL's program manager was superior to the program manager proposed by PSI. Id. at 3-4; Source Selection Statement, supra, at 16. Despite this evaluated superiority, the source selection official noted that the program manager is only expected to spend a maximum of 17 percent of his time at the research center, and concluded that the program manager's greater experience, together with CTL's greater experience in the field of structural engineering, was not worth the $[deleted] premium associated with award to CTL. Source Selection Statement, supra, at 16. In our view, given that the source selection official appropriately considered the superiority of CTL's program manager before concluding that the manager was not worth the additional premium associated with award to CTL, this is a matter committed to the discretion of source selection officials that we will not disturb, absent a showing that the decision was irrational or inconsistent with the evaluation criteria. There has been no such showing here.

Finally, CTL argues that the source selection decision overlooked CTL's technical superiority under the fourth most important technical evaluation subfactor, knowledge and experience in four areas related to highway bridge structures. In the agency's final evaluation of the proposals under this subfactor, it noted that CTL had "a higher degree of experience and knowledge of highway bridge structures than PSI" but also explained that both "have significant experience and knowledge in this area and meet the requirements of the RFP." Final Evaluation Report, supra, at 4-5. In addressing this subfactor in its comparison of the two proposals, the source selection statement states that "both offerors were considered acceptable in their demonstrated knowledge and experience in the four areas related to highway bridge research." Id. at 16. According to CTL, this statement improperly overlooks the fact that CTL received 12.5 out of 15 available points for this subfactor, while PSI received only 9 points, and thus shows that the tradeoff decision was improper.

In our view, while the source selection statement's description of both offerors as "acceptable" under this subfactor does not repeat the evaluators' observation that CTL had a "higher degree of experience and knowledge" in this area, it nevertheless reasonably reflects the evaluators' conclusion--that both offerors have "significant experience and knowledge" in the area and both meet the RFP requirements. Since we cannot say that the source selection statement was wrong or erroneous in its description of this portion of the evaluation, we will not overturn the tradeoff decision on this basis.

The protest is denied.

Comptroller General of the United States

1. The RFP's roster of seven key personnel (not counting the program manager), expanded by two the number of personnel designated as key under CTL's existing contract. For purposes of this discussion, key personnel does not include the program manager. Although the program manager position was identified as a key employee, the position was evaluated separately under a subfactor which was less important than the key personnel subfactor. RFP Sec. M at 62.

2. PSI also proposed a third individual as a back-up research technician, but we need not reach the question of this individual's experience, or the propriety of identifying three research technicians for two positions, since we conclude that the incumbent technician and one of PSI's alternate technicians met the RFP's requirements.

3. Under the program manager subfactor, worth a total of 25 points, CTL received a score of 20.75 based on the strength of its incumbent program manager tempered by evaluator concerns that the individual appeared to lack experience managing complex teams including consultants. PSI received a score of 17.5 based on the assessment that its program manager only marginally met the RFP's experience requirements. The narrative attached to these scores shows that the evaluators viewed CTL as the clearly superior offeror under this subfactor. Id. at 3-4.

* 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.