EER Systems, Inc., B-290971.3, B-290971.6, October 23, 2002 * REDACTED DECISION

EER Systems, Inc., B-290971.3, B-290971.6, October 23, 2002 * REDACTED DECISION

DIGEST

Attorneys

DECISION

EER Systems, Inc. protests the award of a contract to Veridian Engineering, Inc., under request for proposals (RFP) No. N68936-01-R-0079, issued by the Department of the Navy, Naval Air Warfare Center Weapons Division (NAWCWD), to obtain scientific, technical, administrative, and research, development, test, and evaluation services. EER argues that the Navy improperly evaluated technical and cost proposals and conducted an improper cost/technical tradeoff analysis and source selection decision.

We deny the protests.

The solicitation was issued on January 10, 2002, to acquire the services and materials necessary to support the analysis, design, development, test, integration, deployment and operations of information technology systems and services that sustain the research, development, test and evaluation, and business/administrative functions in support of the Naval Air Warfare Center Weapons Division. RFP Sec. C.1.0.1. The effort, known as the STARS contract, combines work remaining under several existing contracts.

The RFP contemplated the award of a cost-plus-award-fee, indefinite-delivery/indefinite-quantity (ID/IQ) contract over a 5-year period to be performed principally at sites located in China Lake and Point Mugu, California. RFP Statement of Work (SOW) Para. 1.1.1. The level of effort to perform the contract was estimated at 2,740,080 hours of direct labor, including authorized subcontract labor, with an option for as many as 155,100 additional labor hours. RFP Sec. B, at 4-5. A chart in section B of the RFP estimated the composition of the total hours by labor category and classification; for proposal and evaluation purposes, offerors were required to use the number of hours per labor category, per year, set forth in this chart. RFP Secs. B, at 5; L, at 74. The agency reserved the right to award the contract on the basis of initial offers, without conducting discussions, and cautioned offerors that their initial offers should contain their best terms. RFP Sec. M, at 83.

Award was to be made to the offeror whose proposal offered the greatest value to the government considering the following evaluation factors: management and technical, past performance, and cost/price. Id. Of the three basic evaluation areas, the management factor, technical factor, and past performance factor were of equal importance and, when combined, were significantly more important than cost/price. A summary rating was to be determined; that is, both the management and technical approach and processes (oral presentation) factors and their subfactors were to be evaluated based on the synergism of the data presented and given one qualitative rating and one proposal risk rating for the combined factors. Id. at 84.

A cost/price analysis was to be conducted on cost proposals to ensure the proposed pricing was realistic, fair, and reasonable. Proposed costs were also to be evaluated for realism to determine if the costs proposed were realistic for the work to be performed; reflected a clear understanding of the solicitation requirements; and were consistent with approaches in the offeror's management/technical proposal. Id. at 86. Pertinent cost information was to be used to arrive at the government determination of realistic costs; if proposed costs were considered to be unrealistic, they might be adjusted upward or downward to reflect more realistic costs. Id.

The Navy received proposals from four offerors by the February 12, 2002 closing date, including those from Veridian and EER. /1/ Each offeror made its oral presentation, and management and technical proposals were evaluated by the management/technical evaluation team (M/TET); past performance proposals were evaluated by the past performance evaluation team (PPET); and cost proposals were evaluated by the cost evaluation team (CET). Each team provided final summary reports to the contracting officer and briefed the competitive award panel (CAP). After this meeting, the M/TET drafted a tradeoff analysis report for the CAP, and the CAP drafted its report showing the following final evaluation results:

. Veridian EER

Management/Technical Highly Satisfactory . Satisfactory Moderate Risk

Past Performance Risk Very Low Very Low

Proposed Cost $163,429,753 $[DELETED] Evaluated Cost $[DELETED] $[DELETED]

The CAP report included a detailed "best value" analysis of each proposal and recommended award, without conducting discussions, to Veridian. After reviewing the reports of each team and the CAP, as well as the business clearance memorandum, the source selection authority (SSA) concurred with the CAP's conclusion that Veridian's proposal exceeded the minimum requirements and contained enhancing features in a manner that would "most" benefit the government. Source Selection Decision Document (SSDD) at 2. She found that Veridian's management proposal contained numerous strengths in all areas evaluated, and its technical presentation provided a straightforward coherent process in which all of the pieces were organized and integrated ensuring successful execution of the program through well-defined life cycle "tailoring." Veridian was the only offeror receiving a management/technical rating of highly satisfactory and, based on its past experience, there was essentially no doubt that Veridian would successfully perform the required efforts in an exemplary manner.

The SSA also stated that she had considered the cost differences between Veridian and the other offerors, and went on to address their relative merits. The SSA stated that EER's management/technical rating was satisfactory with a moderate risk rating. In both the management and technical areas, EER provided an adequate proposal, which demonstrated some strengths, but also had some significant weaknesses. The fragmented approach presented for the sample task would require special contractor emphasis to ensure that schedule, cost and performance were achieved. While the proposal was satisfactory, there were no enhancing features proposed that would benefit the government. In addition, the cost realism evaluation revealed that the cost proposal [DELETED]. Award without discussions would not be possible for this contractor without significant performance risk. SSDD at 2.

EER argues that the Navy improperly evaluated technical and cost proposals and conducted an improper cost/technical tradeoff analysis and source selection decision. For the reasons below, we deny the protests.

EVALUATION OF MANAGEMENT/TECHNICAL PROPOSALS

EER argues that the Navy performed a flawed evaluation of management/technical proposals by assigning it a significant weakness for failing to provide written agreements of commitment for its proposed key personnel; by improperly downgrading EER for weaknesses in its proposal without making similar reductions in Veridian's ratings; and by improperly failing to give EER credit for enhancing features offered in its proposal while overstating the benefit of Veridian's strengths.

An agency's method for evaluating the relative merits of competing proposals is a matter within the agency's discretion, since the agency is responsible for defining its needs and the best method or accommodating them. NLX Corp., B-288785, B-288785.2, Dec. 7, 2001, 2001 CPD Para. 198 at 4. Where an evaluation is challenged, our Office will not reevaluate proposals but instead will examine the record to determine whether the agency's judgment was reasonable and consistent with stated evaluation criteria and applicable statutes and regulations. Lear Siegler Servs., Inc., B-280834, B-280834.2, Nov. 25, 1998, 98-2 CPD Para. 136 at 7. The fact that the protester disagrees with the agency does not render the evaluation unreasonable. /2/ ESCO, Inc., B-225565, Apr. 29, 1987, 87-1 CPD Para. 450 at 7.

EER's Management Proposal

The management factor was comprised of seven subfactors. The M/TET concluded that, in some areas, EER's proposal was more than sufficient, while in other areas it provided only what was satisfactory or expected or had weaknesses. M/TET Report at 20. The only identified weakness in EER's management proposal was a significant weakness under the key personnel plan subfactor.

The evaluation of offerors' proposed key personnel plans was to consider, among other things, "the probability of a long-term commitment of the [proposed] Key Personnel performing the functional descriptions . . . ." RFP Sec. L, at 68. For each of the key personnel proposed, the offeror was required to provide signed resumes; "[i]ncluded with the resume, will be a written agreement from the potential employee to work for the offeror effective at contract award." Id.

EER's proposal stated that each of its proposed key personnel was "personally committed to the success of NAWCWD." EER Management Proposal at 30. EER also provided signed resumes from each of its proposed key personnel, all of whom are current EER employees. Id. at R-1 to R-8. None of the resumes were accompanied by or incorporated any "written agreement from the potential employee to work for the offeror effective at contract award" as required by the RFP. The M/TET found that EER's failure to include such written agreements was a significant weakness. M/TET Report at 22.

EER argues that the solicitation did not require written commitments from current employees, but only required a written agreement from "the potential employee" to work for the offeror effective at contract award. EER argues that it interpreted the word "potential" as a reference to "new" employees, i.e., those proposed key personnel not already employed by EER. We do not agree.

To be reasonable, an interpretation of a solicitation provision must be consistent with the solicitation when read as a whole and in a reasonable manner. Fox Dev. Corp., B-287118.2, 2001 CPD Para. 140 at 2. Where a dispute exists as to the actual meaning of a solicitation requirement, we will resolve the dispute by reading the solicitation as a whole and in a manner that gives effect to all provisions of the solicitation. Novavax, Inc., B-286167, B-286167.2, Dec. 4, 2000, 2000 CPD Para. 202 at 7.

The RFP's reference to "potential" employee must be read in the context of the paragraph in which it appears:

For each of the Key Personnel proposed, the offeror must provide signed resumes (one page each) showing relevant experience, the
current hourly and annual salary and the number of hours (direct and
indirect) to be provided. The work history of each offeror's key
personnel shall contain experience directly related to the functions
to be assigned. Included with the resume, will be a written agreement
from the potential employee to work for the offeror effective at
contract award.

RFP Sec. L, at 68.

When this paragraph is read in its entirety, it is clear that, for
each key personnel proposed, the offeror must provide a signed resume
and that, for each resume, the offeror must include the requisite
written agreement from the potential employee. In the context of this
paragraph, "potential employee" is synonymous with "key personnel."
All proposed key personnel identified in all offerors' proposals are
merely potential employees under the STARS contract, /3/ and the
requirement, as written, cannot be reasonably read to exempt current
employees from the requirement to submit this written agreement. /4/
See Delta Food Serv., B-245804.2, Feb. 11, 1992, 92-1 CPD Para. 172 at
3.

Citing the RFP's statement that the agency was to evaluate this
information to ascertain the probability of a long-term commitment of
the key personnel proposed, EER asserts that the fact the evaluators
found several of its proposed key personnel had long records of
employment with EER and/or longstanding ties to the China Lake area
was sufficient to constitute that commitment. In this case, however,
the solicitation contained a requirement to demonstrate that the
proposed key personnel expressed a commitment to the offeror's
performance of the STARS contract. Although EER's proposal may
indicate that its key personnel have long-term commitments to EER, to
the support of other NAWCWD contracts, and/or to the China Lake area,
the RFP required an expression of commitment to EER's potential
performance of the STARS contract, which is not present in EER's
proposal. As a result, we cannot find the agency's evaluation
unreasonable.

Evaluation of Technical Proposals

EER argues that the Navy improperly downgraded EER's proposal in
certain areas and that, in several of these areas, the Navy did not
similarly downgrade Veridian's proposal even though the offerors had
similar responses.

The "technical approach and processes (oral presentation)" factor was
comprised of eight subfactors. The agency planned to evaluate
offerors' responses to a sample task scenario with a combination of
slides and an oral presentation. Each offeror's oral presentation was
to include a response to the sample task and address the offeror's
knowledge, understanding and capability to perform the scope of the
requirements in section 3 of the SOW, as well as explain the processes
and resources they would use to meet the requirements. RFP Sec. L, at
71.

The M/TET report states that EER provided an adequate presentation of
the sample task and demonstrated the technical knowledge and expertise
to do the work. EER demonstrated strengths in its operational concept
and scheduling process and showed some weaknesses and/or risk in its
program management plan life cycle, life cycle tailoring, budget
process, organizational structure and product integrity. The M/TET
found that EER's approach to the sample task was fragmented in that
there was no linkage between requirements, work breakdown structure,
organization, schedule, and budget, and that the firm's fragmented
approach would require special contractor emphasis to overcome
potential disruption of schedule, increase in cost and degradation of
performance. M/TET Report at 20. EER challenges various aspects of
the M/TET's findings.

First, the M/TET found that EER's proposed operational concept was
appropriate and well-presented for the task; its software approach was
well-developed; and it demonstrated an understanding of the technical
issues and requirements and the complexity of the problem and
associated risks. The M/TET considered these to be strengths, but
found that EER failed to address maintainability in the design, which
was seen as a weakness. /5/ M/TET Report at 25.

EER argues that the Navy treated offerors disparately because it did
not downgrade Veridian's proposal for failing to address
maintainability. In support of its argument, EER cites the worksheets
of two evaluators who quote Veridian as stating that "O&M" is not
included in its approach to the sample task. However, Veridian's
proposal indicates that the "O&M" referred to is "operations and
maintenance," not "operability and maintainability." Veridian
Technical Proposal at II-2, II-3. During its oral presentation,
Veridian discussed the fact that [DELETED] the sample task is a
development task. As the Navy explains, operations and maintenance
occurs after deployment of a system, while operability and
maintainability are required during development of a system. These
distinctions were clarified during the consensus evaluation process to
the satisfaction of the individual evaluators cited by EER. Where, as
here, an agency uses a consensus evaluation approach, the consensus
evaluation is controlling, and the fact that there may be
inconsistencies among the individual evaluators' initial findings is
irrelevant in assessing the reasonableness of the overall evaluation.
SWR, Inc., B-286229, B-286229.2, Dec. 5, 2000, 2000 CPD Para. 196 at 6
n.5. Discussions among evaluators leading up to consensus ratings
generally operate to correct mistakes or misperceptions that may have
occurred in the individual evaluations. Brisk Waterproofing Co.,
Inc., B-276247, May 27, 1997, 97-1 CPD Para. 195 at 2 n.1. Our review
of the record affords us no basis to find that the offerors were
treated disparately here.

Second, under the program management subfactor, the MTET found that
EER used an appropriate life cycle in which it included appropriate
reviews, but stated that the products were not identified for the
reviews. The M/TET also found that EER did not address configuration
management, a basic requirement on any complex task such as this, and
that this introduced an element of risk. M/TET Report at 25.

EER argues that it repeatedly addressed configuration management in
its written proposal and oral presentation, citing various slides and
accompanying narrative remarks. While this information contains
numerous references to configuration management, it does not show that
the firm "addressed" configuration management as required by the RFP.
In this regard, the oral presentation was required to "address" the
offeror's knowledge, understanding and capability to perform the scope
of the requirements in section 3 of the SOW, and to explain the
processes and resources they will use to meet the requirements. RFP
Sec. L, at 71. The Navy argues that EER did not explain the
processes and resources it would use to meet the Navy's configuration
management requirements, and EER has given us no reason to find this
conclusion unreasonable.

Third, the M/TET found that EER's proposed life cycle tailoring was
appropriate, but the firm failed to provide justification or rationale
for its schedule and documentation compression, which was a weakness.
M/TET Report at 25.

EER argues that the Navy treated proposals disparately, citing the
M/TET's finding, under the schedule subfactor, that Veridian's
schedule was aggressive and appeared unrealistic but attributing that
to the lack of detail provided in the sample task and not to
Veridian's ability to use adequate tools to provide an accurate
schedule. M/TET Report at 18. EER argues that it was irrational to
downgrade EER for failing to provide justification for its schedule
when the agency did not downgrade Veridian's proposal for similar
problems but, instead, found that Veridian's proposed schedule had a
strength overall. EER overlooks the remainder of the M/TET's
evaluation, where it concluded that "Veridian used the right
processes, followed them and demonstrated a good overall understanding
that would allow them to properly schedule complex problems." Id.
The focus of the evaluation under the schedule subfactor was not on
the schedule provided but on whether the offeror used the right
scheduling process, see RFP Sec. M, at 85, and there is no basis to
conclude that the Navy should have downgraded Veridian's proposal
here.

Finally, under the budget subfactor, the M/TET found that EER's plan
budget was consistent with and appropriate for the schedule. EER's
proposal had certain identified strengths, but the M/TET found that
the firm did a product work breakdown structure but did not carry the
sample through the entire work breakdown structure, raising concerns
about whether there would be clear manager accountability regarding
the various products. The M/TET concluded that this posed some risk.
M/TET Report at 25.

EER argues that it stated in its oral presentation that it would only
address a snapshot of its work breakdown structure to illustrate how
it would apply the sample task, but that this snapshot provided a very
detailed explanation of its work breakdown structure which the Navy
failed to consider. In support of its position, EER cites various
slides and accompanying narrative in its oral presentation. Our
review of this information shows that it does discuss EER's work
breakdown structure, but EER has not demonstrated that it addresses
the Navy's concern that EER's proposal made it difficult to track
products to manager accountability. As a result, we cannot find the
Navy's evaluation unreasonable.

Enhancing Features

EER argues that the Navy improperly failed to consider its proposal of
various features as "enhancing features" but gave Veridian's proposal
credit for comparable "enhancing features." /6/

In considering proposals on a subfactor-by-subfactor basis, the Navy
found proposals contained strengths or weaknesses that were viewed as
simple "pluses" or "minuses" to the requirement. In considering both
the management and technical factors together with their subfactors
"based on the synergism of the data presented" to assign one
qualitative rating, RFP Sec. M, at 84, the Navy considered whether a
certain set of individual strengths might be recognized as something
more than the sum of those individual strengths, "if those strengths
complement one another in such a way as to create a different or
'whole' benefit to the government." Agency Report at 20. Conversely,
the Navy also considered that, whereas a particular isolated weakness
or risk might not have a particular effect with relation to an overall
rating or risk assessment, a number of weaknesses might combine in
such a way as to diminish the merit of an approach or of a proposal,
or a disorganized or fragmented approach might result in an overall
increase in performance risk.

The Navy states that, although EER's proposal contained strengths in
some areas, they were viewed by the evaluators as a simple "plus" to
the requirement that, when examined on a synergistic level, did not
combine in such a way as to produce something that the individual
strengths were incapable of producing. /7/

Given their inherently subjective nature, agency evaluators' judgments
about the qualitative differences which result in finding a certain
feature a "strength" versus an "enhancing feature" are not subject to
rational legal objection unless a clear showing of unreasonableness is
made. See CAS, Inc., B-260934.2, B-260934.3, Sept. 12, 1995, 95-2 CPD
Para. 239 at 6. As demonstrated by the following examples, EER has
not made that showing.

EER's management proposal stated that it would [DELETED]. EER
Management Proposal at 3. EER argues that the Navy should have
considered this [DELETED] to be an enhancing feature. The Navy argues
that, given the expectation that the quality of the products and
services delivered under the STARS contract should be high, the value
of such a [DELETED] is limited. EER's arguments to the contrary are
not a clear showing that the Navy's view is unreasonable but, rather,
a disagreement over the value of this feature.

EER next argues that it proposed a [DELETED]. EER argues that this
[DELETED] should have been considered an enhancing feature. The Navy
argues that the value of this promise is limited. The Navy states
that the [DELETED] is qualified by the proviso that requirements
remain stable, which may be a subjective determination subject to
disagreement. In addition, the Navy expects that most of the work
will be ordered and delivered under level-of-effort task orders that
require the contractor to provide a specified level of support, and
states that an offeror's promise [DELETED] is of limited value.
Notwithstanding the Navy's view that this feature was not an enhancing
feature of EER's proposal, the Navy credited this and another feature
as a strength under the cost and quality control plan subfactor. EER
has not demonstrated that the agency's evaluation was unreasonable.

Finally, EER argues that its extensive [DELETED] for its SB/SDB
teammates should have been viewed as an enhancing feature. The Navy
points out that the plan was recognized as a component of processes
that "would reasonably result in cost reductions, cost avoidance, or
qualitative improvements, resulting in benefit to the Government as it
pertains to [SB/SDB] participation." M/TET Report at 23. EER's
disagreement that the plan should have been given more favorable
recognition does not cast doubt on the reasonableness of the agency's
evaluation.

EVALUATION OF COST PROPOSALS

EER argues that the Navy's evaluation of cost proposals was flawed.
EER contends that the Navy unreasonably relied on a Defense Contract
Audit Agency (DCAA) report provided in connection with its cost
proposal; unreasonably concluded that its proposed indirect rate
ceiling constituted a risk; improperly failed to adjust Veridian's
labor rates or assign them a cost risk; and improperly failed to
correct an error in EER's cost proposal.

Where an agency evaluates proposals for the award of a
cost-reimbursement contract, an offeror's proposed estimated cost of
contract performance should not be considered controlling, since the
offeror's estimated costs may not provide valid indications of the
final actual costs that the government is required, within certain
limits, to pay. Advanced Communication Sys., Inc., B-283650 et al.,
Dec. 16, 1999, 99-2 CPD Para. 3 at 5. Accordingly, a cost realism
analysis must be performed when a cost-reimbursement contract is
contemplated in order to determine the probable cost of performance
for each offeror. FAR Sec. 15.404-1(d)(2). A cost realism analysis
is the process of independently reviewing and evaluating elements of
each offeror's proposed cost estimate to determine whether the
proposed cost elements are realistic for the work to be performed,
reflect a clear understanding of the requirements, and are consistent
with the methods of performance and materials described in the
offeror's technical proposal. FAR Sec. 15.404-1(d)(1). Because the
agency is in the best position to make this cost realism
determination, our review is limited to determining whether its cost
evaluation was reasonably based and not arbitrary. NV Servs.,
B-284119.2, Feb. 25, 2000, 2000 CPD Para. 64 at 7.

DCAA Audit Report

In conducting the cost realism evaluation of EER's proposal, the cost
analyst obtained an April 5, 2002 memorandum from the DCAA concerning
EER's proposed labor rates. The memorandum cited concerns with
various aspects of EER's proposed costs and stated that the DCAA did
not believe EER's proposed direct labor rates would be an acceptable
basis for negotiation of a fair and reasonable price. The memorandum
concluded with a section entitled "Other Matters" which, citing a 1997
DCAA audit report, stated that EER's [DELETED] for various reasons.

The cost realism analysis report shows that the Navy's cost analyst
did not heed the DCAA's advice with respect to EER's proposed rates,
finding that the DCAA did not consider the solicitation's terms and
did not express an opinion on many matters. The Navy's cost analyst
therefore accepted the rates proposed by EER with one exception not
related to the DCAA memorandum; that is, EER's proposed costs were not
adjusted in response to the DCAA's concerns. At the conclusion of the
report, the cost analyst included a section entitled "Additional
Proposal Concerns" in which he stated that the DCAA had advised that
it would be submitting a negative final report based on its belief
that EER's proposal would not provide an acceptable basis for
negotiation of a fair and reasonable price. EER Cost Realism Analysis
Report at 12. The report went on to restate the DCAA's findings,
based on the 1997 audit report, that EER's [DELETED], and concluded by
stating that the Navy had received the DCAA's updated audit report
dated May 6 stating that the concerns noted above remained valid. /8/
Id. at 13. As a result, the analyst questioned the [DELETED] and
recommended that the DCAA be asked to perform an immediate [DELETED]
if EER should receive the award. Id.

EER argues that the DCAA report is erroneous, and that the Navy's
reliance on the report was improper. EER primarily asserts that the
issues raised concerning its [DELETED] were addressed and resolved,
and that it has repeatedly asked the DCAA for a new review, which has
not occurred. EER also alleges that the information from the DCAA
report formed the basis of EER's moderate performance risk rating.

We have no basis to fault the cost analyst's treatment of this matter.
As noted above, no adjustments were made to EER's proposed costs as a
result of the DCAA memorandum or its final report. The analyst did
not find that EER's [DELETED] was a risk but simply remarked upon the
DCAA's comments and noted that this topic should be a matter for
discussion if EER were selected as the awardee. While EER asserts
that the DCAA report is clearly erroneous, the record before our
Office does not show that all of the issues concerning EER's [DELETED]
have been resolved. The evidence provided by EER does show that, in
1997, EER advised the DCAA that it would develop and implement the
necessary policies and procedures in response to some of the DCAA's
concerns but, as to one concern, EER stated that it would continue to
use its then-existing practice. The record also shows that EER
provided the DCAA with copies of its revised policies and procedures
for [DELETED] several times between 1997 and 2000, stating that it had
taken action to correct the deficiencies, but the record before us
does not indicate that a review by the DCAA has taken place. Given
the uncertainty surrounding this issue, it was reasonable for the cost
analyst to flag it as an area for discussion if EER were selected for
award. /9/ As discussed below, the record shows that the source
selection decision did not turn on the DCAA report and that EER was
not prejudiced even if the agency improperly considered that report.

Indirect Rate Ceiling

Offeors were required to base their cost proposals on a specified
number of labor hours. RFP Sec. L at 74. The RFP explained that this
number of hours represented the government's current, best estimate of
requirements, but that the government could not guarantee them. Id.

EER proposed a ceiling on the [DELETED]. EER Cost Proposal at 12.
The Navy's cost analyst found that it was "unlikely" that the required
number of hours would be ordered and that the advantage of the capped
rate would therefore not be obtained. The cost analyst noted EER's
offer to negotiate an indirect [DELETED], and stated that this issue
should be revisited if award was to be made to EER. EER Cost Realism
Report at 12.

Citing a comment made during the debriefing and a notation on a
briefing slide, EER argues that the agency improperly determined that
its [DELETED] was a performance risk. However, a review of the record
shows that it was not considered a risk; the debriefing slide alone
noted it as a "risk," or an item for discussion, only if the agency
had determined to conduct discussions. Because a debriefing is only
an explanation of the selection decision, not the selection decision
itself, our Office is primarily concerned with whether the selection
decision itself was proper and supported by the record. Tulane Univ.,
B-259912, Apr. 21, 1995, 95-1 CPD Para. 210 at 5-6. There is no
evidence in the record that the agency considered EER's [DELETED] to
be a performance risk.

EER argues that the RFP should have been amended if the Navy's
estimate of hours was so wrong that it was unlikely to be met. As the
Navy explains, its estimates, based upon the predecessor contracts,
are the best available estimates, but the Navy recognizes that this
RFP contemplated the award of an ID/IQ contract, which is used when
the government cannot determine or predict the precise quantities of
services it will require during the contract period. FAR
Sec. 16.504(b). We view the analyst's concern as reflecting the
uncertainty associated with the estimate, and the possibility that the
Navy might not order the amounts necessary on an annual basis to
trigger EER's proposed ceiling does not undermine the validity of the
estimate. Howard Johnson, B-260080, May 24, 1995, 95-1 CPD Para. 259
at 3.

Veridian's Labor Rates

Veridian based its labor rates on [DELETED]. In the cost realism
report, the cost analyst stated that the rates derived from [DELETED]
would be used as the basis for determining cost realism on the STARS
contract since they represented the best estimate of the most probable
cost for direct labor in the absence of any information to prove
otherwise. Cost Realism Report for Veridian at 5.

EER argues that the cost analyst had information showing that the
rates derived from [DELETED] were not the best estimate of Veridian's
labor costs because the DCAA determined that Veridian's actual current
rates were higher than those in [DELETED]. EER argues that the Navy
analyst declined to make an adjustment accounting for these
differences because he did not know the impact on Veridian's current
category average labor rates if the firm had to hire new employees to
perform this contract. EER argues that the Navy should have adjusted
Veridian's labor costs upward or recognized an affirmative risk in
those costs.

It was not the Navy analyst who declined to make the adjustment to
Veridian's proposed labor rates, but the DCAA auditor. After
explaining that the DCAA auditor took no exception to Veridian's
proposed labor rates, the Navy's cost analyst stated that the auditor
compared the proposed labor rates to Veridian's equivalent labor rates
using a matrix provided in Veridian's proposal. The Navy's cost
analyst explains that this comparison showed that the total proposed
cost would have been somewhat higher using Veridian's equivalent labor
rates, but that the auditor stated that he did not use this comparison
because he did not know how Veridian's current average labor rates
would be affected by the hiring of new employees to perform the
contract. The auditor also stated that Veridian had not
underestimated the costs of performing this contract. Veridian's Cost
Realism Analysis Report at 5. Considering the DCAA auditor's view
that Veridian had not underestimated the costs of performance, we have
no basis to find the agency's decision not to adjust Veridian's rates
from those it proposed unreasonable.

Failure to Correct an Error in EER's Proposal

EER argues that the Navy unreasonably failed to adjust its cost
downward to correct an error in its proposal. EER states that its
proposal erroneously applied the G&A rate to [DELETED], but the
narrative portion of its proposal explained that G&A is not applied to
[DELETED]. EER asserts that any reasonable evaluation of its cost
proposal should have disclosed the error, and the Navy should have
corrected it as it did with errors in other cost proposals.

It is the offeror's burden to submit an adequately written cost
proposal for the agency to evaluate, especially where, as here, the
offeror is specifically on notice that the agency intends to make
award based on initial proposals without discussions. Infotec Dev.,
Inc., B-258198 et al., Dec. 27, 1994, 95-1 CPD Para. 52 at 6. In this
case, the RFP advised offerors that proposal volumes must be
internally consistent or they would be considered unrealistic and
might be considered unacceptable. RFP Sec. L, at 66.

EER's numerous spreadsheets of its proposed costs consistently applied
G&A to its [DELETED]. EER now argues that a sentence in the narrative
portion of its proposal should override the methodology shown in its
spreadsheets. That sentence does not state, as EER asserts, that G&A
is not applied to [DELETED]. Instead, the sentence states that "G&A
is applied to [DELETED]," EER Cost Proposal at 11; a sentence on the
prior page of the proposal states that EER "applies its [DELETED]."
Id. at 10. EER has not persuaded us that the narrative portion of its
proposal expressed its intent so clearly as to require the Navy to
override the methodology it actually applied to resolve what EER
concedes is an internal inconsistency. In any event, the RFP provided
that, for evaluation purposes, the evaluated cost of a proposal would
be the higher of either the offeror's proposed cost or the
government's determination of the most probable cost. RFP Sec. M, at
86. As a result, a downward adjustment to EER's proposed costs would
not have affected the source selection decision. /10/

SOURCE SELECTION DECISION

Citing one sentence in the SSDD, EER argues that the DCAA report,
discussed above, reinforced its moderate risk rating and was foremost
in the SSA's mind when she made her source selection decision. The
full paragraph in the SSDD belies this allegation:

[EER's] Management/Technical rating was Satisfactory with a Moderate
risk rating. In both the Management and the Technical areas, EER
provided an adequate proposal, which demonstrated some strengths, but
also had some significant weaknesses. The fragmented approach
presented for the sample task would result in special contractor
emphasis to ensure that schedule, cost and performance was achieved.
While the proposal was satisfactory, there were no enhancing features
proposed that would benefit the government. In addition, the cost
realism evaluation revealed that the cost proposal contained
[DELETED]. Award without discussions would not be possible for this
contractor without significant performance risk.

SSDD at 2.

Although the business clearance memorandum, CAP report, and SSDD all
made reference to the findings of the DCAA report noted above, the
majority of their remarks focused on the results of the
management/technical evaluation, demonstrating that the source
selection decision did not turn on this issue. As the SSA explains,
when she documented her award decision and compared Veridian's offer
to those of the other offerors, "foremost in [her] mind was the
technical superiority and low risk associated with Veridian's approach
and the fact that the non-cost factors were significantly more
important than cost." SSA's Declaration Para. 6. The SSA states
that, to her mind, the discrepancies referenced by the DCAA report
would only become an issue if the government decided to conduct
discussions and, as there was a clearly superior proposal offering the
best value, there was no need to enter into discussions. Id. Para. 8.
Viewing the record as a whole, we are not persuaded that the DCAA
report played a significant role in the decision to make award to
Veridian.

Referring to passages in the SSDD, CAP report, and business clearance
memorandum, as well as the introductory sections of the M/TET report,
EER argues that the cost/technical tradeoff and source selection
decision were based on summary information that distorted the merits
of its proposal by downplaying its strengths and exaggerating its
weaknesses. EER also asserts that Veridian's proposal was selected
only because it had the highest management/technical rating and
because the non-cost factors were more important than cost.

Source selection officials in negotiated procurements have broad
discretion in determining the manner and extent to which they will
make use of technical and cost evaluation results. Mevatec Corp.,
B-260419, May 26, 1995, 95-2 CPD Para. 33 at 3. In exercising that
discretion they are subject only to the tests of rationality and
consistency with the established evaluation criteria. Id. While the
selection official's judgment must be documented in sufficient detail
to show it is not arbitrary, a source selection official's failure to
specifically discuss every detail regarding the relative merit of the
proposals in the selection decision document does not affect the
validity of the decision if the record shows that the agency's award
decision was reasonable. Development Alternatives, Inc., B-279920,
Aug. 6, 1998, 98-2 CPD Para. 54 at 9.

In her source selection decision, the SSA states that her
consideration of which proposal offered the best value included a
review of the proposed and evaluated costs of each offeror as
documented in the CET report, as well as a review of the reports
prepared by the M/TET, PPET, and the CAP, as well as the business
clearance memorandum. Each of these reports contains detailed
information documenting the agency's evaluation of each aspect of each
proposal, including their strengths and weaknesses and relative costs.
The SSA concurred with the CAP report's recommendation for award to
Veridian, and restated a summary of its detailed findings. The SSA
went on to explain that she had considered the cost differences
between Veridian and the other offerors' proposals, and described
comparative differences among the proposals in relatively general
terms. The SSA concluded by saying that the [c]ombination of the
superior technical expertise and sound management approach proposed by
Veridian will provide the government the best value toward meeting
mission requirements with the least amount of risk. Given that
management, technical expertise and past performance were the most
critical factors in this source selection and significantly more
important than cost/price, the additional costs associated with
Veridian's superior proposal are warranted.

SSDD at 2.

For a proper tradeoff, the record must show that the SSA was aware of
the technical advantages of the awardee's proposal, and specifically
determined that those advantages were worth the awardee's higher cost.
4-D Neuroimaging, B-286155.2, B-286155.3, Oct. 10, 2001, 2001 CPD
Para. 183 at 11. There is no requirement that an agency restate each
of an offeror's strengths when comparing proposals, and nothing
unreasonable about the decision to not elevate any of these strengths
to the tradeoff decision. Medical Dev. Int'l, B-281484.2, Mar. 29,
1999, 99-1 CPD Para. 68 at 14. Whether or not the summaries of the
evaluation results for all proposals mirrored the more detailed
findings, the record shows that the SSA reviewed all of the detailed
reports which, when combined, described the technical advantages of
Veridian's proposal, compared the technical advantages and
disadvantages of all proposals, and outlined the cost differences
between proposals. The record also shows that the SSA made a specific
determination that Veridian's technical advantages were worth its
higher cost. While a source selection decision can certainly be more
detailed than that here, a lack of detail does not, alone, affect the
validity of the award decision where, as here, the SSA fully
considered all of the underlying evaluation documentation in
concluding that the awardee's technical advantages warranted its
higher cost, and where there is no basis in the record to question the
reasonableness of that judgment. Digital Sys. Group, Inc., B-286931,
B-286931.2, Mar. 7, 2001, 2001 CPD Para. 50 at 12; see also Arctic
Slope World Servs., Inc., B-284481, B-284481.2, Apr. 27, 2000, 2000
CPD Para. 75 at 15.

The protests are denied.

Anthony H. Gamboa
General Counsel

1. We recently issued a decision denying the protests of another unsuccessful offeror. Science Applications Int'l Corp., B-290971 et al., Oct. 16, 2002, 2002 CPD Para. __.

2. Although we do not here specifically address all of EER's complaints about the evaluation of its management and technical proposals, we have considered all of them and find that they afford no basis to find the Navy's evaluation unreasonable.

3. The RFP included the clause at Federal Acquisition Regulation (FAR) Sec. 5252.237-9501, "Addition or Substitution of Key Personnel (Services)," which requires the contractor to agree to assign only those key personnel whose resumes are submitted and approved.

4. We are not persuaded by EER's argument that its interpretation was reasonable because it was shared by other offerors. Veridian's proposal provided the required written agreements for its current employees, and another offeror provided language sufficient to constitute the requisite agreement for its current employees.

5. The Navy states that the lack of significance attributable to this weakness is reflected by the fact that it is not mentioned in the CAP report or the SSD; beyond the M/TET report, only the strength in EER's operational concept is noted.

6. The highly satisfactory rating was to be given to proposals that exceeded requirements in a way that benefited the government or met requirements and contained enhancing features that benefited the government; any weakness was minor. RFP Sec. M, at 84. Veridian's proposal is referred to as having "enhancing features" in reference to the sample task; the M/TET found that EER's proposal did not offer any "enhancing features."

7. EER argues that the Navy's method of evaluating proposals first at the subfactor level and then at the "synergistic" level was an unauthorized two-tiered evaluation system, and the Navy's application of synergism here constituted an undisclosed evaluation factor. We do not agree. The RFP clearly contemplated the consideration of individual subfactors followed by an evaluation of all factors and subfactors based on the synergism of the data presented. RFP Sec. M at 84. This "synergism of the data presented" is not limited to a consideration of substantive data presented, as advocated by EER, but is sufficiently broad to encompass the agency's consideration of whether a proposal's features, when combined, provided a greater benefit or risk than the sum of the individual features.

8. While not remarked upon by the cost analyst, the DCAA's May 6 report also contained references to [DELETED].

9. As for EER's argument that the DCAA report was the basis for its moderate risk rating, the record shows that the M/TET, as part of the consensus process, independently assigned the moderate risk rating based upon the results of its evaluation of EER's management/technical proposals, unrelated to the DCAA report.

10. The Navy analyst also [DELETED] EER's proposed direct labor rates to reflect those derived from attachment 3. EER argues that, in making these adjustments, the Navy analyst applied the full amount of EER's fringes, overhead, subcontract/material handling, and G&A costs, and argues that the direct labor costs should only have been [DELETED] by labor-related indirect costs. The record shows that the Navy analyst used the same methodology as EER used in its proposal to arrive at these adjustments, and we have no basis to question the agency's cost realism evaluation in this regard.

* 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.