TITLE: B-297276.2; B-297276.3; B-297276.4, Information Ventures, Inc., March 1, 2006
BNUMBER: B-297276.2; B-297276.3; B-297276.4
DATE: March 1, 2006
*****************************************************************************
B-297276.2; B-297276.3; B-297276.4, Information Ventures, Inc., March 1, 2006
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: Information Ventures, Inc.
File: B-297276.2; B-297276.3; B-297276.4
Date: March 1, 2006
John S. Pachter, Esq., Jonathan D. Shaffer, Esq., Erin R. Karsman, Esq.,
David S. Stern, Esq., and Tamara F. Dunlap, Esq., Smith Pachter McWhorter
& Allen PLC, for the protester.
Stuart Turner, Esq., and Joseph P. Hornyak, Esq., Holland & Knight LLP,
for BRI Consulting Group, an intervenor.
Stuart C. Briles, Esq., Department of Health and Human Services, for the
agency.
Jonathan L. Kang, Esq., and Michael R. Golden, Esq., Office of the General
Counsel, GAO, participated in the preparation of the decision.
DIGEST
Protest is sustained where agency failed to reconcile contradictory cost
and technical evaluations regarding offerors' proposed staffing levels and
unreasonably normalized offerors' proposed labor hours under its cost
realism analysis.
DECISION
Information Ventures, Inc. (IVI) protests the award of a contract to BRI
Consulting Group under request for proposals (RFP) 2005-N-01874, issued by
the Department of Health and Human Services, Centers for Disease Control
and Prevention (CDC) for assistance and technical support for the agency's
National Center for Chronic Disease Control and Prevention, Division of
Cancer Prevention and Control (DCPC). The protester challenges the
reasonableness of the agency's evaluation of offerors' cost and technical
proposals.
We sustain the protest.
BACKGROUND
The agency sought proposals to assist the agency with information
development and dissemination activities regarding a broad scope of
priority cancer efforts. The statement of work required offerors to
propose personnel, materials, supplies, equipment and technical support to
achieve various assistance and technical support tasks, including response
and tracking for government and public information inquiries, website
design, content development and maintenance, web site promotion, exhibit
design, maintenance and update of information knowledge bases and exhibit
inventory, training, events and meeting planning, development of
educational materials, publication development and promotion, and
development of special reports. RFP at 6-14. The RFP anticipated the award
of a cost-plus-fixed fee contract with a base performance period of 1
year, and four 1-year option periods. Id. at 3.
The RFP advised offerors that proposals would be evaluated on the basis of
technical strength, past performance, and cost, and stated that technical
strength and cost would be of "approximately equal value" in the agency's
award determination.[1] RFP at 51-52. The technical strength evaluation
factor had four subfactors: methodologies and management approach (30
points), technical approach and understanding the requirement (30 points),
qualifications of individuals (30 points), and understanding the purpose
and objective (10 points). Id. at 51.
The agency received and evaluated six proposals, and determined that only
IVI's and BRI's proposals were the most highly rated, with scores of 98
and 99, respectively, and should be included in the competitive range.
Contracting Officer's Statement at 3. The agency engaged in discussions
with each of those two offerors and requested final proposal revisions
(FPRs). The agency then conducted a cost realism analysis of IVI's and
BRI's FPRs. AR, Tab 8, Cost Realism Analyses. The results of the agency's
technical and past performance evaluations, and cost realism adjustments
were as follows:
+------------------------------------------------------------------------+
| | BRI | IVI |
|--------------------------------------+----------------+----------------|
|Initial Base Year Proposed Costs | [deleted]| [deleted]|
|--------------------------------------+----------------+----------------|
|FPR Base Year Proposed Costs | [deleted]| [deleted]|
|--------------------------------------+----------------+----------------|
|FPR Base Year Evaluated Costs | $749,412| [deleted]|
|--------------------------------------+----------------+----------------|
|FPR Total Evaluated Costs | $3,978,729| [deleted]|
|--------------------------------------+----------------+----------------|
|Technical Score | 99 | 98 |
|--------------------------------------+----------------+----------------|
|Past Performance | 100 | 100 |
+------------------------------------------------------------------------+
AR, Tab 10, Summary of Negotiations, at 2, 6-7.
The agency determined that the offerors' proposals were technically equal,
and therefore awarded the contract to BRI on September 14, 2005, based on
that offeror's lower evaluated cost. Contracting Officer's Statement at 5.
Following award, IVI filed a protest with our Office alleging that the
agency's evaluation of proposals and source selection decision were
flawed. The agency stated that it would take corrective action by
reevaluating proposals, and requested that our Office dismiss the protest;
we did so on October 12, 2005. The agency subsequently issued contract
modification 00001, directing BRI to suspend its performance under the
contract.
The agency conducted new evaluations of IVI's and BRI's technical
proposals and past performance records, but no changes were made to the
offerors' scores. AR, Tab 10, Source Selection Decision (SSD), at 2-3.[2]
In its reevaluation of technical proposals, the agency confirmed that both
IVI's and BRI's technical proposals were "technically superior," in part
due to the technical evaluation panel's (TEP) conclusion that both
offerors proposals "contained more than adequate staff to accomplish
tasks." In this regard, the technical evaluation criteria included
examination of the adequacy of proposed labor hours to perform the
work.[3] AR, Tab 6, TEP Consensus Technical Evaluation, at 1-2.
As part of the corrective action, the agency also requested that the CDC
Acquisition Assistance Oversight and Evaluation Branch (OEB) conduct a
cost analysis of the offerors' proposals. AR, Tab 9, OEB Reports. The OEB
report concluded that "both offerors had the financial capability to
perform the contemplated contract; and that both offerors' proposals were
acceptable as a basis to negotiate a fair and reasonable contract price."
Contracting Officer's Statement at 6. The OEB recommended that the agency
address several concerns regarding the offerors' proposed costs, but no
changes were ultimately made to the offerors' evaluated costs. AR, Tab 10,
SSD at 3-4. The agency did not perform another cost realism analysis of
offerors' cost proposals as part of the corrective action, and the results
of the unchanged cost realism analysis were incorporated in the SSD. Id.
In sum, the agency's reevaluation of IVI's and BRI's proposals did not
result in any changes to their evaluated costs or technical and past
performance ratings.
The agency made a new source selection determination, again concluding
that the contract should be awarded to BRI based on the offerors'
technically equal proposals and BRI's lower evaluated cost. Id. at 4. The
agency subsequently issued contract modification 00002, directing BRI to
resume performance. Following its debriefing, IVI filed this protest.
DISCUSSION
Technical Evaluation
IVI contends that the evaluation of IVI's and BRI's technical proposals
was flawed because the agency failed to reconcile the offerors' high
technical scores with the agency's determination that the offerors had
proposed insufficient hours for staffing.
Offerors were advised that the agency would evaluate proposed staffing
hours as part of the technical evaluation of offerors' understanding of
the work. The first two subfactors under the technical evaluation factor
stated:
1. Methodologies and Management Approach
The criterion will be evaluated on the soundness of the Offeror's approach
for managing the work, the proposed staff time, labor hours, and capacity
for internal administrative processing support of the contract
requirements.
2. Technical Approach and Understanding of the Requirements
Provide a narrative summary of your understanding of the required
services, which are outlined in the Statement of Work. Provide an
organizational chart of the overall management schedule. The Government
will evaluate the Offeror's qualifications to effectively develop,
communicat[e], and disseminate cancer prevention and control information.
The plan for accomplishing work will demonstrate an understanding of the
required services.
RFP sections L.4, L.5.
The TEP consensus evaluation rated both offerors as "technically
superior." AR, Tab 6, TEP Consensus Technical Evaluation, at 1-2. The
agency's consensus evaluation concluded that both offerors' high ratings
were warranted, in part, by their proposed staffing:
Upon re-evaluation, two contractors were determined to be technically
superior, Information Ventures, Inc. and BRI Consulting Group. Both
contractors were rated technically superior because they provided
technical proposals that contained more than adequate staff to accomplish
tasks; included detailed descriptions of how they proposed to accomplish
work in accordance with specified labor hours; demonstrated having a
comprehensive and complete understanding of all project requirements and
tasks assigned; provided a detailed plan that outlined the process and
time that would be required to accomplish tasks . . .
Id. at 1-2.
The agency's conclusion that the offerors' proposals "contained more than
adequate staff to accomplish tasks," however, is directly at odds with the
agency's cost realism analysis. The agency's cost realism analysis, which
was also conducted by the TEP, concluded that neither offeror proposed
sufficient hours to perform the work:
Upon review of the revised cost proposals, it was determined that Program
Directors hours had been lowered to unrealistic expectations by both
compan[ies]. In addition, BRI had lowered hours in the areas [of]
[deleted] that in the opinion of the technical reviewers, needed to be
upwardly adjusted.
AR, Tab 8, Cost Realism Analysis, at 1.
The agency's cost realism increases for IVI and BRI proposed hours were as
follows:
IVI
+------------------------------------------------------------------------+
| | | Agency | | Percentage |
| Position |Proposed Hours|Estimate|Difference| Difference |
|----------------+--------------+--------+----------+--------------------|
|Project Director| [deleted] | 800 |[deleted] | [deleted] |
|----------------+--------------+--------+----------+--------------------|
| TOTAL | [deleted] | 800 |[deleted] | [deleted] |
+------------------------------------------------------------------------+
BRI
+------------------------------------------------------------------------+
| | | Agency | | Percentage |
| Position |Proposed Hours|Estimate |Difference| Difference |
|----------------+--------------+---------+----------+-------------------|
|Project Director| [deleted] | 800 |[deleted] | [deleted] |
|----------------+--------------+---------+----------+-------------------|
| [deleted] | [deleted] |[deleted]|[deleted] | [deleted] |
|----------------+--------------+---------+----------+-------------------|
| [deleted] | [deleted] |[deleted]|[deleted] | [deleted] |
|----------------+--------------+---------+----------+-------------------|
| [deleted] | [deleted] |[deleted]|[deleted] | [deleted] |
|----------------+--------------+---------+----------+-------------------|
| TOTAL | [deleted] |[deleted]|[deleted] | [deleted] |
+------------------------------------------------------------------------+
Id.
As discussed above, the agency did not perform a new cost realism analysis
during corrective action. However, the agency requested that the OEB
conduct a cost analysis of offerors' proposals. The OEB's report did not
address the realism of the proposed hours. See AR, Tab 9, OEB Reports.
Following corrective action, the SSD reiterated the agency's contradictory
conclusions, i.e. that the offerors had proposed more than adequate hours
to perform the work, yet also insufficient hours to perform the work:
Both contractors provided technical proposals that contained more than
adequate staff to accomplish the tasks; . . . they demonstrated their
abilities relative to their comprehensive and complete understanding of
all project requirements and tasks; they provided a detailed plan that
outlined the process and time that would be required to accomplish the
required tasks . . . .
AR, Tab 10, SSD at 2.
After review of the FPRs, it was determined that the reduced labor hours
as proposed by both contractors for the Project Director (PD) position
were unrealistic. . . . In addition, it was determined that the reduced
hours proposed by BRI in its FPR for the positions of 1) [deleted], 2)
[deleted], 3) [deleted], were unrealistically low.
Id. at 4.
We conclude that the agency's evaluation of offerors' proposals was
unreasonable because of the contradiction between the cost evaluation and
technical evaluation. See Honeywell Tech. Solutions, Inc.; Wyle Labs.,
Inc., B-292354, B-292388, Sept. 2, 2003, 2005 CPD para. 107 at 7-8
(evaluation was unreasonable where agency found that awardee was rated as
"appropriate" under technical evaluation, yet also concluded that awardee
had proposed insufficient staffing under cost realism analysis). The
agency argues that the technical evaluations were reasonable because the
evaluators relied upon numerous strengths in concluding that each offeror
warranted high technical scores. The technical evaluation and source
selection decision, however, conclude that each offeror was "technically
superior," in part because of each offerors' "more than adequate" proposed
staff. The SSD makes no attempt to reconcile the clearly opposing views of
the technical evaluation and the cost evaluation. We conclude that the
agency's evaluation that both offerors' proposals were "technically
superior," with near-perfect technical scores, is unsupported in light of
the patent contradiction in the record, as discussed above.
We further conclude that IVI was prejudiced by this flawed evaluation. See
McDonald Bradley, B-270126, Feb. 8, 1996, 96-1 CPD para. 54 at 3;
Statistica, Inc. v. Christopher, 102 F.3d 1577, 1581 (Fed. Cir. 1996). The
agency and intervenor each note that the agency determined that both IVI's
and BRI's proposals were "technically superior" under the technical
strength evaluation factor, and thus a finding that the evaluations were
unreasonable would affect both offerors. The record does not clearly show,
however, the potential effect of a reevaluation of the offerors' technical
proposals that takes into account the cost realism adjustments. In this
regard, the agency concluded that IVI's proposal required cost realism
adjustments for one position, whereas BRI required adjustments for four
positions. Overall, IVI was found to have required a cost realism
adjustment of [deleted] hours, whereas BRI was found to require an
adjustment of [deleted] hours. On this record, we cannot determine what
the impact of a proper technical evaluation would have been on the ratings
of each offeror. We conclude, therefore, that IVI was prejudiced by the
flawed evaluation and sustain the protest on this basis.
Cost Realism Analysis
IVI next argues that the agency conducted an improper cost realism
analysis concerning the project director position. IVI contends that the
agency improperly normalized the proposed hours for both offerors by
comparing each offeror's proposed hours to an agency estimate of required
hours and adjusting the offerors' costs by increasing hours to that
estimate, without taking into account each offeror's technical approach.
IVI also contends that the cost realism adjustments were unreasonable
because the agency misled it during discussions.
When an agency evaluates proposals for the award of a cost-reimbursement
contract, an offeror's proposed costs are not considered controlling
because, regardless of the costs proposed, the government is bound to pay
the contractor its actual and allowable costs. Federal Acquisition
Regulation (FAR) sections 15.305(a)(1); 15.404-1(d). Consequently, an
agency must perform a cost realism analysis to determine the extent to
which an offeror's proposed costs represent what the contract should cost,
assuming reasonable economy and efficiency. FAR sect. 15.404-1(d)(2);
Hanford Envtl. Health Found., B-292858.2, B-292858.5, Apr. 7, 2004, 2004
CPD para. 164 at 8-9. An agency's cost realism analysis requires the
exercise of informed judgment, and we review an agency's judgment in this
area only to see that the cost realism analysis was reasonably based and
not arbitrary. Hanford Envtl. Health Found., supra. The analysis need not
achieve scientific certainty; rather, the methodology employed must be
reasonably adequate and provide some measure of confidence that the
agency's conclusions about the most probable costs under an offeror's
proposal are reasonable and realistic in view of other cost information
reasonably available to the agency as of the time of its evaluation. See
Metro Mach. Corp., B-295744; B-295744.2, Apr. 21, 2005, 2005 CPD para. 112
at 10-11.
The initial RFP identified a requirement for a project director position,
but did not list suggested or minimum proposed hours. RFP at I.3. The RFP
also did not identify specific duties or responsibilities for the project
director; rather, as the agency explained, offerors were responsible for
proposing their own approaches to the contract requirements. RFP amend. 4
at 1. An amendment to the RFP, however, subsequently stated that "the
suggested level of effort" for the project director position "is about
25-30 hours per month." Id. at 25.
During discussions, IVI and BRI received written questions from the
agency, and the agency held telephone conferences with each offeror. In
its initial written discussions, the agency asked IVI to "[e]xplain the
specified hours listed for the project manager/director." AR, Tab 12, Aug.
17, 2005, Letter from Agency to IVI, at 1. After the telephone conference,
the agency requested that IVI's FPR "[f]urther clarify the specified hours
and duties as listed for the project manager vs the project director."
Id., Aug. 19, 2005, Letter from Agency to IVI, at 1. Although neither of
the written discussions questions specifically directed IVI to reduce its
proposed hours for the project director position, IVI contends that the
agency indicated during an August 19, 2005 telephone conversation that the
agency anticipated a reduced role for the project director:
[deleted]
Decl. of IVI Technical Representative para. 5.
IVI believed that its discussions with the agency clearly indicated that
IVI should reduce its proposed hours for the project director position.
Id. para. 6. IVI's FPR reduced its proposed project director hours and
explained that the position would have the following duties:
He will regularly review project progress, monitor expenditures, and
provide guidance for problem solving and developing solutions for DCPC
information development and dissemination, and will provide back-up should
the PM be away from the office. He will participate in weekly project
meetings and in project meetings and in project meetings in Atlanta and
conference calls with DCPC personnel, as needed.
IVI FPR at 3.
As discussed above, IVI and BRI each reduced the number of hours proposed
for the project director position after discussions with the agency. The
initial and revised proposed hours for the offerors, together with the
agency's subsequent cost realism increases, were as follows:
+------------------------------------------------------------------------+
| | Initial | FPR |Agency Estimate| Difference |
| | Proposed Hours | Proposed Hours | | |
|------+-----------------+-----------------+---------------+-------------|
| IVI | [deleted] | [deleted] | 800 | [deleted] |
|------+-----------------+-----------------+---------------+-------------|
| BRI | [deleted] | [deleted] | 800 | [deleted] |
+------------------------------------------------------------------------+
AR, Tab 8, Cost Realism Summary, at 1.
The TEP determined that the additional hours should be added to each
offeror's proposal "in order to efficiently and realistically perform the
duties listed in the contract scope of work." AR, Tab 8, BRI Cost Realism
Analysis, at 2; id., IVI Cost Realism Analysis, at 1. The TEP stated that
the "amount of additional hours was determined based on two factors: 1)
average number of hours that were required to fulfill the existing
contract and 2) average number of hours that would be required to fulfill
new duties that were outlined in the proposed contract." Id. The agency
further stated that it relied on "programmatic expertise, historical
knowledge, and familiarity with the proposed work" in conducting the cost
realism analysis for the offerors' proposals. AR, Tab 10, SSD, at 4. The
agency explains that the cost realism level of 800 hours per year
represented "the minimum level of effort that would be required to manage
the tasks and effectively perform the tasks required in the contract by
the Project Director." Decl. of Agency Project Officer para. 8. The agency
based its 800-hour estimate on its assumption that the project director
position required 10 major tasks, each requiring approximately 1.6 hours
per week, meaning approximately 66 hours per month or 800 hours per year.
Supplemental Memorandum of Law; Decl. of Agency Project Officer para. 6.
IVI contends that the agency increased both offerors' proposed hours to
the same level based solely on the government estimate, and that this was
improper normalization. Normalization involves the adjustment of offers to
the same standard or baseline where there is no logical basis for a
difference in approach or where there is insufficient information provided
with the proposals, leading to the establishment of common "should have
bid" estimates by the agency. See The Research Found. of State Univ. of
New York, B-274269, Dec. 2, 1996, 96-2 CPD para. 207 at 5. Normalization
is not proper, however, where varying costs between competing proposals
result from different technical approaches that are permitted by the RFP.
See Dynalectron Corp.; Lockheed Elecs. Co., Inc., B-181738, Jan. 15, 1975,
75-1 CPD para. 17, at 18-21. While a reasonably derived estimate of labor
hours based on the government's experience can provide an objective
standard against which the realism of proposed costs may be measured, an
agency may not mechanically apply its own estimate to determine evaluated
costs. The Jonathan Corp.; Metro Mach. Corp., B-251698.3; B-251698.4, May
17, 1993, 93-2 CPD para. 174 at 10-11.
The agency's rationales and analyses cited above clearly demonstrate that
the agency increased each offeror's proposed hours to the agency's
estimate of the required hours, without any consideration of the hours
that would be required under each offeror's technical approach. An
adjustment of offerors' proposed hours to the government estimate is not
reasonable where, as here, the government estimate is based on assumptions
not disclosed by the agency and where offerors were free to propose
different approaches. The Jonathan Corp.; Metro Mach. Corp., supra.
The agency argues that it used its independent judgment to develop its
estimate of the hours likely required for the position. Supplemental
Memorandum of Law at 7-8.
Here, however, the agency merely estimated a number of hours, determined
that the offerors proposed fewer than that number, then calculated the
difference between the proposed hours and the agency's estimate. The
agency made no effort to determine whether either offeror's technical
approach would allow performance with fewer than 800 hours, or require
more than 800 hours. We therefore believe that this cost evaluation
resulted in an improper normalization.
Importantly, the agency's determination that 800 hours was the minimum
required for performance is at odds with information disclosed in the RFP.
As discussed above, the RFP advised offerors that the project director
position would require an estimated 25-30 hours per month of effort. RFP
amend. 4 at 25. The agency's cost realism increases, however assumed a
minimum of 66 hours per month.
Additionally, IVI argues that discussions with the agency were misleading
because they led IVI to reduce its proposed hours for the project director
position. The agency argues that it did not direct IVI or BRI to reduce
their proposed hours during discussions. Contracting Officer's Statement
at 19. The agency does not, however, specifically challenge or rebut the
protester's assertion that the agency described the project director
position during discussions as being "more limited" than in the
predecessor contract. The inference that the agency led IVI to believe
that its proposed project director hours should be reduced is bolstered by
the fact that both offerors dramatically lowered their proposed hours for
the project director position in their FPRs, suggesting that both offerors
were told that the project director's role would be "more limited."
Because, however, we conclude that agency's cost realism increases were
flawed on the basis of its cost assumptions and evaluation methodology, we
need not resolve whether the discussions were in fact misleading. Rather,
because the agency evaluated offerors based on assumptions that are
inconsistent with the RFP, we believe that it is appropriate for the
agency to conduct further discussions.
Finally, we conclude that IVI was prejudiced by the agency's improper
evaluation of offerors' proposed hours for the project director position.
The agency correctly notes that even if IVI's proposed costs were accepted
and BRI's project director hours were increased to 800 hours, BRI's
proposed costs, overall, would still be lower than IVI's (although the
cost differential would be smaller). However, because, as discussed above,
we conclude that the technical evaluation was flawed and a reevaluation
could result in a technical differential between the offerors, a smaller
cost differential between IVI and BRI could affect the award decision.
While, as discussed above, the SSD stated that IVI's technical proposal
provided "more than adequate hours for the project director position," the
agency also contends that, regardless of the hours used in the agency's
cost realism analysis, IVI did not propose sufficient hours to perform the
tasks it outlined in its proposal. The agency argues that the [deleted]
hours proposed by IVI were lower than the 300 to 360 hours identified in
RFP amendment 4, and that the hours proposed could not have covered the
work described in IVI's proposal. Rather than increasing IVI's costs to a
realistic level to perform the work proposed by IVI, however, the agency
increased IVI's proposed hours to the agency's 800-hour estimate for that
position. The agency's criticism of the level of effort required thus
appears to flow from its assumptions that the project director would be
required to perform 10 major tasks, each of which would require a minimum
of 1.6 hours per week, rather than an analysis of IVI's proposed approach
to the work.[4] See Supplemental Memorandum of Law at 2-3. Assuming even
that the government reasonably determined that IVI's proposed hours were
insufficient to perform its technical approach, the agency was required to
determine a realistic level of performance based on IVI's approach to the
work, rather than substituting the agency's assumptions for the
performance requirements. Furthermore, for BRI, there was no discussion
whatsoever of that offeror's technical approach, or the basis for
increasing its proposal to 800 hours. On this record, we conclude that IVI
was prejudiced by the improper evaluation and sustain the protest on this
basis.
Evaluation of Indirect Rates
In addition to the issues discussed above, we also have concerns regarding
the agency's evaluation of offerors' proposed indirect rates for general
and administrative (G&A) and overhead costs.
IVI proposed a combined provisional indirect cost rate of [deleted]%,
which included both its general and administrative (G&A) and labor
overhead rates, and a combined ceiling rate of [deleted]%. IVI Cost
Proposal, attach. H. During discussions, the agency asked IVI to agree
that the [deleted]% indirect rate would be a firm ceiling for the contract
base and option years. AR, Tab 12, Aug. 17, 2005, Letter from Agency to
IVI, at 1; id., Aug. 19, 2005, Letter from Agency to IVI, at 1. IVI
confirmed that the [deleted]% rate would be a ceiling. IVI FPR at 3. BRI
[deleted].
For the initial award, the agency evaluated IVI's proposed costs based on
a combined ceiling rate of [deleted]%. AR, Tab 8, IVI Cost Realism
Analysis, attach. A. BRI's FPR proposed costs were evaluated on the basis
of its G&A rate of [deleted]% and its overhead rate of [deleted]%. AR, Tab
8, BRI Cost Realism Analysis, attach. A. [Deleted] the contract awarded to
BRI included a "provisional ceiling rate" for G&A of [deleted]%;
[deleted].[5] AR, Tab 5, Contract, at 19 sect. G.5. The agency
characterizes this G&A rate as a "protective ceiling" that insulates the
government against cost increases. Supplemental Memorandum of Law at 14,
n.13. It is not clear from the record what discussions, if any, led to the
incorporation of the ceiling rates for G&A in BRI's contract.
Also, during the corrective action, the agency requested that the OEB
evaluate offerors' proposed costs. For BRI, notwithstanding the
unexplained incorporation of the provisional ceiling rate of [deleted]%
into BRI's contract, the OEB determined that:
BRI [deleted]. We recommend that: (a) the contemplated contract
incorporate the proposed rates as provisional rates and include ceilings
of [deleted]% and [deleted]%, respectively, until a rate agreement is
finalized with the National Institutes of Health (NIH) . . .
AR, Tab 9, BRI Cost Evaluation at 2.
Notwithstanding the OEB's apparent concern regarding BRI's proposed
indirect rates, the agency's SSD neither addressed the OEB's
recommendations concerning BRI's indirect rates nor provided any other
basis to conclude that BRI's proposed indirect rates were realistic.
Further, although the contract contained a ceiling for BRI's G&A rate that
was not proposed by BRI in its FPR, the agency states that no discussions
were held with offerors after the receipt of FPRs. Supplemental Memorandum
of Law at 15. Presumably, however, some exchange between the agency and
BRI must have preceded the contract award because the contract includes a
G&A ceiling rate, which was a material change to BRI's proposal. Any such
exchange would appear to have constituted discussions, thereby requiring
discussions with all competitive range offerors. See The Futures Group
Int'l, B-281274.5 et al., Mar. 10, 2000, 2000 CPD para. 148 at 10.[6]
RECOMMENDATION
The performance of the contract is currently suspended. We recommend that
the agency hold discussions with IVI and BRI to address, at a minimum,
cost issues, including information regarding labor estimates and
requirements. The agency should obtain revised proposals, evaluate those
proposals consistent with our decision, and make a new source selection
decision. If, after the new evaluation, the agency determines that IVI's
proposal represents the best value to the government, the agency should
terminate BRI's contract and make an award to IVI.
We further recommend that the agency reimburse the protester the
reasonable costs of pursuing its protest of the issues sustained in this
decision, including reasonable attorneys' fees. The protester's certified
claim for costs, detailing the time expended and the costs incurred on
this issue, must be submitted to the agency within 60 days of receiving
this decision. 4 C.F.R. sect. 21.8(f)(1) (2005).
The protest is sustained.
Anthony H. Gamboa
General Counsel
------------------------
[1] The RFP did not explain how past performance would be weighted in the
award determination; because IVI and BRI each received perfect scores for
past performance, the role or weight of past performance was apparently
not relevant for the source selection decision.
[2] The agency's source selection made after the corrective action is
contained in a document titled "Memorandum for Record -- Information
Ventures Protest," and is referred to herein as the SSD.
[3] The description of IVI's and BRI's proposals as containing "more than
adequate staff" mirrors individual evaluator determinations that both the
capabilities and proposed hours for the offerors' staff were more than
adequate. See, e.g., AR, Tab 6, Technical Evaluation Score Sheets ("Staff
have more than adequate hours to perform the tasks," "Staff hours are more
than adequate to complete the tasks of this contract.")
[4] At least one of the agency's arguments that IVI's proposed hours were
too low to perform appears flawed. The agency contends that IVI's proposal
for [deleted] hours per year would be insufficient to allow the project
director, who will be based in Philadelphia, to attend weekly meetings in
Atlanta. Supplemental Memorandum of Law at 2. IVI's proposal, however,
does not say that the project director will go to Atlanta every week.
Instead, it states that IVI's project director [deleted] IVI FPR at 3, and
not, as the agency states in a misquotation, [deleted]. Contracting
Officer's Statement at 16. It is unclear whether the agency relied upon
this erroneous interpretation of IVI's proposal in making its cost realism
adjustments; however, to the extent that the agency now relies upon this
interpretation to support its evaluation, we find it unreasonable.
[5] It is unclear what a "provisional" ceiling rate means in the
circumstances here. The contract states that "[t]he above rates are
provision ceiling rates only and shall apply from the date of award until
such time as the contract is amended. Any modification to change the above
rates will also state the effective period covered for the new rates."
Contract sect. G.5(b).
[6] The protester also alleges that the OEB identified other costs in
BRI's proposal that lacked support, but were not adequately addressed by
the agency, and that BRI may have been advised of other costs that needed
further support after receipt of FPRs. Because we conclude that the
agency's cost and technical evaluations were flawed and that unequal
discussions occurred in other areas, we need not resolve these issues. We
have reviewed all of the other issues raised by the protester, and find
the balance to lack merit.