Innovative Solutions & Support, Inc

B-405658; B-405658.2, Innovative Solutions & Support, Inc, December 9, 2011

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.

Decision

Matter of: Innovative Solutions & Support, Inc

File: B-405658; B-405658.2

Date: December 9, 2011

DIGEST

1. Protest of agency evaluation of awardee’s technical proposal is denied where the record shows that the agency evaluated the technical proposal in accordance with the stated evaluation factors.

2. Protest that agency conducted inadequate discussions with protester regarding low labor hours is denied where agency informed protester that its proposal was incomplete in this regard, and agency was unable to meaningfully evaluate the proposed labor hours until receiving protester’s final revised proposal.

3. Protest of agency evaluation of awardee’s price proposal is denied for lack of prejudice where the protester does not establish that, but for the allegedly improper aspect of the agency’s evaluation, protester would have had a reasonable chance of receiving the award.

Innovative Solutions & Support, Inc. (ISS), of Exton, Pennsylvania, protests the award of a contract to Rockwell Collins, Inc. (RC), of Cedar Rapids, Iowa, by the Department of Homeland Security, United States Coast Guard, under request for

proposals (RFP) No. HSCG38-11-R-H00002, for Electronic Flight Display Systems (EFDS) for Coast Guard HC-130H aircraft.

We deny the protest.

BACKGROUND

The Coast Guard’s HC-130H aircraft are undergoing a major avionics upgrade known as the “Avionics 1 Upgrade” (A1U) project. The A1U project began in 2008, and involves two principle avionics subsystems: the “Flight Management System” (FMS) and the EFDS. Protest at 11; Intervenor Comments at 6. The protester, ISS, and the intervenor, RC, each played a substantial role in the project from its early stages. Initially, ISS and RC were subcontractors on the A1U effort, with ISS tasked to design and develop the EFDS upgrades, and RC tasked to design and develop the FMS upgrades. Protest at 12; Intervenor Comments at 6. In 2009, the Coast Guard awarded ISS a prime contract to continue development of the EFDS upgrades. Id. In May 2010, the Coast Guard awarded RC a prime contract to continue development of the FMS upgrades. Intervenor Comments at 7. In June 2010, the Coast Guard awarded ISS a sole-source contract for the implementation of the EFDS upgrade project, however, following a protest by another potential offeror, the Coast Guard terminated the award to ISS in order to conduct a full and open competition for the EFDS requirement. Contracting Officer’s Statement at 1. To accomplish the desired full and open competition, the Coast Guard issued this RFP on April 14, 2011.

The RFP anticipated a best-value acquisition for commercial off the shelf (COTS) EFDS hardware and engineering services to implement the EFDS upgrades designed by ISS under the A1U project. The RFP consisted of nine fixed-price contract line item numbers (CLIN) for the two-year base period, plus three one-year option periods. CLINs 0001 through 0007 were for various stages of non-recurring engineering (NRE) work during the base period while CLIN 0009 was for three EFDS hardware “ship sets;” one for the Coast Guard’s system integration lab (SIL) and two for prototype aircraft. CLIN 0008 was reserved for not-separately-priced travel expenses. Each of the three option years provided for the production of six additional EFDS hardware ship sets and a number of hours of engineering and support.

The RFP set forth four evaluation factors: COTS display fit, management plan, technical, and price. RFP at 68. The COTS display fit factor was evaluated on a pass/fail basis, while the management plan and technical factors were evaluated on a competitive basis, and were weighted equally, although both of these factors were more important than price. Id. The management plan factor had four subfactors: production/integration capability, past experience, past performance, and small disadvantaged business participation. Id. Within the production/integration capability subfactor, the RFP required offerors to provide a work breakdown

structure (WBS) that included “labor classifications and hours” for the CLIN 0001-0006 NRE efforts. Id. The technical factor had two subfactors: functionality and quality. Id. at 69.

Under the management plan, technical, and price factors, the proposals were to be evaluated using a color/adjectival rating system consisting of four possible ratings:

blue/outstanding, green/acceptable, yellow/marginally satisfactory, and red/unacceptable. See Agency Report (AR), Tab 8, PEG Report, at 10. Consistent with the RFP’s evaluation criteria, which indicated that the agency would assess “risk” under each subfactor, the agency rated offerors using three possible risk ratings: high risk, moderate risk, and low risk. Id. The RFP cautioned that award would not be made on the basis of lowest price, but on the proposal that offers the best value for the price proposed. RFP at 68. For the purpose of determining best-value, the RFP established that the management plan and technical factors, each, were “more significant than price.” Id.

Three proposals were received by the RFP’s May 16, 2011 closing date. Two evaluation teams--a technical evaluation team (TET) and a price evaluation team (PET)--conducted initial evaluations of the proposals. Based on the initial evaluation results, the agency decided to conduct discussions with the offerors that submitted the two highest-rated proposals: ISS and RC. The third offeror was eliminated from the competitive range.

The Coast Guard issued discussion letters to ISS and RC on June 23. Both offerors submitted final revised proposals on June 29. The TET and PET then produced final reports on the two proposals. A proposal evaluation group (PEG) prepared a final consolidated report recommending award to RC on July 26. A source selection evaluation board and the source selection authority reviewed the PEG report and concurred with its recommendation. The agency then made award to RC on August 4. ISS received a debriefing from the Coast Guard on August 23, and this protest was filed on September 2.

ANALYSIS

In this decision we address the principal arguments made by the protester concerning the alleged impropriety of the award to RC.[1] Specifically, we consider ISS’s claims that RC’s proposed EFDS hardware failed to meet the volumetric requirements of the RFP’s statement of work (SOW) and System/Subsystem Specification (SSS), that ISS received inadequate discussions concerning its proposed labor hours, and that the Coast Guard’s consideration of RC’s proposal of alleged FMS hardware as a part of its EFDS solution was improper, or utilized unstated evaluation criteria.

Volumetric Requirements

ISS first alleges that RC’s proposal should have been found unacceptable under the pass/fail COTS display fit factor, for failure to meet the EFDS volumetric requirements set forth in the RFP. As relevant here, the EFDS consists of several hardware components, including four flight displays and an “advisory, caution, and warning system” (ACAWS) panel. Concerning the evaluation criteria, the COTS display fit factor required the agency to assess whether the proposed flight displays met the “volumetric requirements (placement and location) identified in the SSS.” RFP at 68. The SSS, in turn, specified that the flight displays shall have “at a minimum,” “a 6.0 inch x 8.0 inch active display area,” that “[p]lacement of the displays SHALL be no more than one-half (1/2) inch away from the positions indicated in Appendix B,” and that “the overall dimensions of the display cannot interfere with aircraft structure or yolk movement, per NAVAIR HMI design layout included in Appendix B.” SSS at 7. The SSS also stated that “[t]he ACAWS SHALL be . . . situated as depicted in NAVAIR HMI layout and shown in Appendix B.” Id. at 15. Appendix B to the SSS contained a drawing of the EFDS, prepared by ISS under the development contract, indicating the dimensions and locations of the EFDS and other cockpit components.

ISS contends that RC failed to adhere to these requirements of the RFP and SSS by offering allegedly oversize flight displays that were wider than allowed. Specifically, ISS alleges that, in accordance with Appendix B to the SSS, the flight displays were required to be 6.98 inches wide, but that according to information on the RC website, RC’s flight displays are 7.53 inches wide. ISS argues that because RC’s flight displays did not adhere to the dimensional requirement set forth in Appendix B, RC’s proposal should have been rejected. Further, ISS argues that due to the oversize nature of RC’s flight displays, RC must have altered the positions of the flight displays and other EFDS components, such as the ACAWS panel, which should also have rendered RC’s proposal unacceptable.

The evaluation of proposals is a matter within the agency’s discretion. IPlus, Inc., B-298020, B-298020.2, June 5, 2006, 2006 CPD ¶ 90 at 7, 13. In reviewing a protest against an agency’s evaluation of proposals, our Office will not reevaluate proposals but will, instead, examine the record to determine whether the agency’s judgment was reasonable and consistent with applicable procurement statutes and regulations. Shumaker Trucking & Excavating Contractors, Inc., B-290732, Sept. 25, 2002, 2002 CPD ¶ 169 at 3. A protester’s mere disagreement with the agency’s judgment does not establish that the evaluation was unreasonable. VT Griffin Servs., Inc., B-299869.2, Nov. 10, 2008, 2008 CPD ¶ 219 at 4. Here, we conclude that the agency’s evaluation was reasonable.

In this case, the protester errs in its contention that the drawing of the EFDS in Appendix B of the SSS established firm requirements of the RFP. Contrary to that assertion, no section of the SSS requires offerors’ proposed EFDS solutions to exactly match all aspects of the layout and dimensions shown in Appendix B. Rather, certain sections of the SSS incorporate certain aspects of the Appendix B drawing by reference, such as the requirement that “[p]lacement of the [EFDS] displays SHALL be no more than one-half (1/2) inch away from the positions indicated in Appendix B.” SSS at 7.

Concerning ISS’s allegation that RC’s flight displays were oversize, or too wide, our review of the SSS reveals no firm maximum dimension requirement for the EFDS flight displays, and no indication that the SSS required the flight displays to exactly match all dimensions of flight displays drawn in Appendix B to the SSS. Instead, the SSS simply required that the flight displays have “at a minimum,” “a 6.0 inch x 8.0 inch active display area,” and that “the overall dimensions of the display cannot interfere with aircraft structure or yolk movement, per NAVAIR HMI design layout included in Appendix B.” Id.

Turning our review to RC’s proposal, we first conclude that RC represented that it met the flight display fit requirements. In this regard, as an element of the technical proposal the RFP required offerors to complete a “compliance matrix” indicating compliance with over 80 requirements of the SOW and SSS and the pages of the proposal on which compliance was demonstrated. See RFP at 67. The record indicates that RC represented in its compliance matrix that its proposal met the SSS requirements concerning COTS display fit. RC Proposal, at 65. Further, the record reflects that RC addressed compliance with the COTS display fit requirements in its technical proposal. RC’s proposal devoted three pages to the COTS display fit factor. It began by providing the volumetric specifications of its proposed displays, indicating that its displays had a slightly larger than “6.0 inch x 8.0 inch active display area,” in compliance with the SSS. RC proposal, at 7. Concerning overall display size, the RC proposal included [DELETED]. Id. at 7-8.

With regard to ISS’s assertion that, given the oversize nature of RC’s displays, RC could not have met the position requirements of the SSS, we again find that ISS errs in contending that the positions of the flight displays indicated in Appendix B were requirements of the SSS. To the contrary, as explained above, the SSS merely required the flight displays to be “no more than one-half (1/2) inch away from the positions indicated in Appendix B.” SSS at 7. Consistent with this requirement, RC’s proposal indicated that “movement of displays is 0.50-inches or less.” RC Proposal, at 8. The proposal also provided a table and an instrument panel layout schematic indicating that the display positions were altered by less than one-half inch from any dimension measured in Appendix B to the SSS. Id. at 8-9. Further, concerning the ACAWS panel, RC’s proposal stated that “[t]he standby indicator and ACAWS remain in the locations proscribed [sic] in the SSS.” Id. at 9.

The PEG evaluation report determined that RC met the COTS display fit requirements of the RFP. Given that ISS’s allegations in this area are based on its mistaken understanding of the import of the EFDS drawing in Appendix B of the SSS, and given RC’s representation of compliance, and demonstration of compliance with the COTS display fits requirements in its technical proposal, we see no basis to question to PEG’s conclusion that RC’s proposal passed the COTS display fit evaluation factor.[2]

Discussions

ISS next alleges that the agency conducted inadequate discussions regarding ISS’s NRE labor hours, resulting in ISS’s proposal being downgraded under the management approach factor. Specifically, ISS asserts that the Coast Guard did not provide it with meaningful discussions where the Coast Guard was concerned that ISS’s proposed NRE labor hours were too low, because the Coast Guard did not explicitly express this concern to ISS. In response, the Coast Guard asserts that ISS submitted an incomplete initial proposal that did not allow the TET or PET to fully evaluate ISS’s NRE labor hours prior to discussions. The Coast Guard argues that because it was unable to fully evaluate ISS’s labor hours prior to discussions, it would have been premature to express a nascent concern that the proposed hours were too low. We agree with the agency.

Discussions, when conducted, must address deficiencies and significant weaknesses identified in proposals, however, the precise content of discussions is largely a matter of the contracting officer’s judgment. See FAR § 15.306(d)(3); American States Utils. Servs., Inc., B-291307.3, June 30, 2004, 2004 CPD ¶ 150 at 6. When an agency engages in discussions with an offeror, the discussions must be “meaningful,” that is, sufficiently detailed so as to lead an offeror into the areas of its proposal requiring amplification or revision. Hanford Envtl. Health Found., B-292858.2, B-292858.5, Apr. 7, 2004, 2004 CPD ¶ 164 at 8.

The TET had several concerns regarding ISS’s initial proposal under the production/integration capability subfactor of the management plan factor. First, the TET was concerned about ISS’s acknowledgment that its EFDS design was a modification of ISS COTS equipment and that software modification would also be required. The TET was also concerned that “it was not clear how much modification [would be] required in order to achieve the requirements.” Agency Report, Tab 5, Initial TET Report at 4. In addition, the TET was concerned that ISS’s proposal included “many incomplete and inaccurate statements.” Id. Finally, the TET was concerned that ISS had failed to provide a complete WBS.

As stated above, the RFP required offerors, under the production/integration capability subfactor, to provide a WBS that included “labor classifications and hours” for the CLIN 0001-0006 NRE efforts. However, during its evaluation of initial proposals, the TET discovered that ISS had failed to provide a complete WBS as required by the RFP, a fact that our review of the record confirms. In its initial evaluation report, the TET therefore stated of ISS’s proposal that:

The WBS is missing key information regarding labor classification and hours required. Without this critical information, the government could not fully understand [ISS’s] ability to support the requirements called for in the SSS and SOW . . . ISS did not satisfy the requirement to provide labor classifications and hours within their WBS. Lacking this data, the TET was unable to confirm that [ISS] clearly understood the level of effort (LOE) that they would have to provide.

Id. at 4-5. On the basis of these conclusions, the TET assigned ISS a yellow/marginally satisfactory rating for the production/integration capability subfactor.

The Coast Guard issued ISS three discussion questions concerning the production/integration capability subfactor. The first question asked about the extent of modification required for ISS’s EFDS hardware and software to meet the RFP requirements. The second question referenced the “incomplete and unclear”

statements in ISS’s proposal, and inquired as to how ISS would guarantee the quality of data in the future. Finally, the third question asked, “[w]hat are the WBS hours and labor classifications allocated to support CLINs 0001 through 0006?” AR, Tab 6, Discussion Questions, at 2.

In response to these discussion questions, ISS explained the required equipment modifications, offered assurances about the quality of its data, and provided additional WBS information. On review of these responses, the TET concluded that the software and hardware modifications proposed by ISS appeared to be significant, and that based on the updated WBS, the hours provided by ISS “seemed to be on the low side.” AR, Tab 5, Final TET Report, at 3. The TET also noted that, although ISS’s response corrected the inaccuracies identified in its initial proposal, the response itself contained two further errors. As a result, the TET determined that its initial yellow/marginally satisfactory assessment of ISS’s proposal under the production/integration capability subfactor should remain unchanged.

We see nothing improper in the agency’s conduct of discussions, or assignment of a yellow/marginally satisfactory rating in this case. Where ISS’s initial proposal failed to provide required WBS information, it was appropriate for the agency to direct ISS to the error in its proposal. Although the agency was aware of the total number of hours initially proposed by ISS, for the agency to have expressed a concern that ISS’s proposed NRE hours appeared low based on its incomplete proposal would not have been appropriate, since more complete information may have revealed a novel approach or some other justification for ISS’s proposed NRE hours. In this regard, it is an offeror’s responsibility to submit an adequately written proposal that establishes its capability and the merits of its proposed technical approach in accordance with the evaluation terms of the solicitation. See Verizon Fed., Inc., B-293527, Mar. 26, 2004, 2004 CPD ¶ 186 at 4.

In this case, the revised WBS and explanation of the required COTS modifications provided by ISS in response to discussions were required in order for the agency to confirm its concern that ISS’s proposed hours seemed low. Where proposal defects become apparent either in a response to discussions or in a post-discussion proposal revision, an agency has no duty to reopen discussions or conduct additional rounds of discussions. Honeywell Tech. Solutions, Inc., B-400771, B-400771.2, Jan. 27, 2009, 2009 CPD ¶ 49 at 10. Moreover, ISS’s seemingly low NRE labor hours were not the sole cause of ISS’s yellow/marginally satisfactory rating. The record reflects that the agency was also concerned about the extent of the modifications required of ISS’s COTS hardware, and the persistence of errors in ISS’s proposal. AR, Tab 5, Final TET Report, at 2-3.

FMS Equipment

Third, ISS raises several objections to RC’s proposal of a specific hardware item, RC’s PSM-8600A, that ISS asserts is an element of the FMS upgrade project, not the EFDS upgrade project. ISS asserts that the PSM-8600A equipment does not meet the EFDS requirements, that RC was improperly allowed to add this item to its proposal, and that the agency improperly evaluated RC’s proposal of the item by considering potential financial benefits under the FMS project.

Our review of the record leads us to conclude that ISS’s first two allegations regarding RC’s proposal of the PSM-8600A are unfounded. The PSM-8600A is a multi-purpose unit consisting of an ethernet switch (which could be utilized under the FMS update), and a processor with storage capacity (which RC proposes to use to [DELETED], a requirement of the EFDS update). ISS initially claims that the PSM-8600A is unacceptable because RC proposes to integrate the hardware using an ethernet connection, rather than an allegedly required “ARINC 429 protocol.” In support of this claim, ISS asserts that the ARINC 429 protocol requirement “is set forth at the drawing at Appendix A to the SSS.” ISS Final Comments, at 3. However, as our Office explained above, no section of the SOW or SSS in this RFP incorporates all aspects of the appended drawings as SSS requirements. Rather, elements of the appending drawings are incorporated where stated in the SSS. On our review, no section of the SOW or SSS requires the use of the ARINC 429 protocol, or otherwise requires the use of communications protocols shown in the appended drawings.

ISS also asserts that the agency improperly allowed RC to make a major change to its proposal--the addition of the PSM-8600A equipment--following discussions, which no other offeror was permitted to do. ISS claims that this was improper because the agency’s inquiries were “characterized discussion questions, not negotiations.” ISS Supplemental Protest, at 5. We think ISS’s argument relies on a fundamental misunderstanding of the FAR provisions applicable to exchanges with offerors. FAR Part 15 states that “[w]hen negotiations are conducted in a competitive acquisition, they take place after establishment of the competitive range and are called discussions.” FAR § 15.306(d). Further, “at the conclusion of discussions, each offeror still in the competitive range shall be given an opportunity to submit a final proposal revision.” FAR § 15.307(b). In this case, the discussion letters advised the offerors that they were permitted to revise any section of their proposals. See AR, Tab 6, ISS Discussion Letter, at 1. Accordingly, ISS’s claim in this area is unfounded.

Finally, ISS protests that the agency erred in its price evaluation when it considered potential cost savings under the FMS update project as an advantage of RC’s proposal of the PSM-8600A for the EFDS contract. ISS argues that cost savings on the FMS was not an element of the price evaluation set forth in the RFP. To the extent such consideration was in error, we conclude that ISS was not prejudiced by the agency’s consideration of FMS savings in its evaluation of RC’s price proposal.

The record demonstrates that, following the initial evaluation, RC’s proposal was considered superior to ISS’s proposal under both the management plan and technical factors, and under all but two subfactors, past performance and functionality, which were rated equally. AR, Tab 5, Initial TET Report, at 2, 7. RC’s proposal had a total evaluated price of [DELETED], and its price proposal was rated green/acceptable with low risk. AR, Tab 5, Initial PET Report, at 2-3. ISS’s proposal had a lower overall price of [DELETED], however, its price proposal was rated yellow/marginally satisfactory with moderate risk. Id.

After discussions and final evaluations, RC’s proposal had a technical advantage over ISS under every factor and subfactor except past performance, under which the two proposals remained equally rated. AR, Tab 8, PEG Report, at 18. Concerning price proposals, ISS’s price remained the same, and based on its discussion responses, its price proposal rating was upgraded to green/acceptable, although it remained moderate risk. Id. at 24-26. Due to the inclusion of the PSM-8600A equipment, RC’s price increased by [DELETED] percent, to $6,810,395. Id. However, based on the value offered by the proposal, RC’s price proposal rating was upgraded to blue/outstanding, and remained low risk. To explain the upgrade of RC’s price proposal, the agency stated that:

The Rockwell Collins proposal is outstanding in all respects with no deficiencies or weaknesses. Based on a Technical Evaluation Team question, Rockwell Collins moved a component that they had incorrectly assumed would be provided on FMS side and added it to the EFDS ship set hardware list. This component (the PSM-8600A, an Ethernet switch with processing power and storage capability) was offered at [DELETED] and there were no changes to the non-recurring engineering efforts due to this addition. This change also simplifies FMS component procurement and will reduce FMS production cost.

Id.at 26 (emphasis added). The agency also noted that the “minor increase in [RC’s] EFDS price will be offset by a decrease in equipment costs required on the FMS contract (if Rockwell Collins is awarded the EFDS contract).” Id. at 24 (emphasis added).

Prejudice is an element of every viable protest, Lithos Restoration, Ltd., B-247003.2, Apr. 22, 1992, 92-1 CPD ¶ 379 at 5, and we will not sustain a protest unless the protester demonstrates a reasonable possibility of prejudice, that is, unless the protester demonstrates that, but for the agency’s actions, it would have had a substantial chance of receiving the award. McDonald-Bradley, B-270126, Feb. 8, 1996, 96-1 CPD ¶ 54 at 3. Here, although ISS’s final total evaluated price was approximately [DELETED] percent less than RC’s price, RC was higher rated under the management plan and technical evaluation factors, each of which was more important than price. Moreover, completely discounting the agency’s consideration of the PSM-8600A’s value, RC’s initial price proposal was rated green/acceptable[3]--equal to ISS’s final price proposal rating--and was rated “low risk” in comparison

to the “moderate risk” rating assigned to ISS final proposal. In light of RC’s superior ratings under the technical evaluation factors, and its higher-rated price proposal,

even prior to its inclusion of the PSM-8600A equipment, we have no basis to conclude that, but for the agency’s consideration of potential savings under the FMS contract, ISS would have had a substantial chance of receiving the award.

The protest is denied.[4]

Lynn H. Gibson
General Counsel