B-299981.2; B-299981.4, Legacy Management Solutions, LLC, October 10, 2007
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: Legacy Management Solutions, LLC
Kevin
P. Mullen, Esq., and David E. Fletcher, Esq., Cooley Godward Kronish, LLP, for
the protester.
Joseph
P. Hornyak, Esq., and Allison V. Feierabend, Esq., Holland & Knight, for
The S.M. Stoller Company, an intervenor.
H.
Jack Shearer, Esq., and Young H. Cho, Esq., Department of Energy, for the
agency.
Mary
G. Curcio, Esq., and John M. Melody, Esq., Office of the General Counsel, GAO,
participated in the preparation of the decision.
DIGEST
1. Where solicitation contemplated award of fixed-price contract, agency’s comparing proposed prices to government estimate and other proposed prices and ensuring that prices reflected labor categories and hours specified in solicitation constituted reasonable price realism analysis.
2. Protest of alleged unbalanced pricing among
awardee’s proposed labor rates is denied where agency evaluated challenged rates
as reasonable and realistic; record shows that rates were within range of all
offerors’ proposed rates, so that there was no basis to find them significantly
overstated or understated, and thus no basis to find them unbalanced.
DECISION
Legacy Management Solutions, LLC protests the award of a contract to The
S.M. Stoller
DOE’s legacy
program is responsible for managing land structures and facilities that were
associated with nuclear weapons production during the cold war and are now
closed. The RFP sought support services
for this program, and provided for award of a contract on a time-and-material
basis, with provision for a base fee and award fees. The RFP indicated that the award would be
made on a “best value” basis considering technical factors--technical approach,
management approach, personnel qualifications and staffing, corporate
experience, and past performance--and price; the technical factors were more
important than price. RFP at 88-92. Regarding price, the RFP, as amended,
included a list of 15 labor categories, with multiple experience levels and the
estimated number of hours that each level could be expected to perform
annually. RFP at 381. The RFP also specified a dollar amount that
each offeror was to include in its proposal for other direct costs. RFP at 383.
Offerors were to propose a loaded, fixed, hourly rate (minus fee) for
each labor category, as well as a base fee and an award fee. RFP at 78-79.
Price was to be evaluated for reasonableness, realism, and
completeness. RFP at 92.
The agency received
five proposals, including Legacy’s and Stoller’s. A technical evaluation committee (TEC)
reviewed and scored the proposals under each factor. Stoller’s proposal was ranked first, with a
technical score of 920 (of 1,000 available) points--320 (of 400) for technical
approach, 250 (of 250) for management approach, 200 (of 200) for personnel
qualifications and staffing, 100 (of 100) for corporate experience, and 50 (of
50) for past performance. AR at 7. Legacy’s proposal was ranked second, with a
score of 615 points--200 for technical approach, 125 for management approach, 160
for personnel qualifications and staffing, 80 for corporate experience, and 50
for past performance.
PRICE REALISM
ANALYSIS
Legacy challenges
the reasonableness of the agency’s price realism analysis. In this regard, section M of the RFP stated
that proposals would be evaluated for realism, reasonableness and completeness
in order to establish a probable cost.
The RFP further specified regarding price realism that proposals
will be evaluated to determine if the proposed costs are realistic and consistent with the Technical Proposal with regard to the nature, scope, and duration of the work to be performed. Inconsistencies between the Cost/Price Proposal and other portions of the proposal could raise concerns regarding the offeror’s understanding of the requirements and ability to perform the work for the proposed price.
RFP at 92.
Where a fixed-price contract--including a fixed-rate
contract such as the one here--is to be awarded, a solicitation may provide for
a price realism analysis for such purposes as measuring an offeror’s
understanding of the solicitation requirements and assessing the risk inherent
in an offeror’s proposal. Star
Mountain, Inc., B‑285883,
DOE’s realism analysis consisted of comparing the proposed rates for the
specified labor categories to both the government estimate and the other
proposed prices, and the use of statistical analysis techniques to analyze the
information. Technical Evaluation Report
(TER) at 37-46, and attach. 4. As a
result of its analysis, the agency concluded that all offerors’ total prices
were realistic, including Stoller’s, which was approximately 11.6 percent lower
than the government estimate. AR
at 40. In this regard, the agency
found that, while some of Stoller’s and other offerors’ labor rates were lower
than the government estimate and that some were higher, overall, all offerors’
proposed rates were consistent with the government estimate. AR at 40. In addition, DOE verified that each offeror’s
prices reflected the estimated number of labor hours for each labor category
specified in the RFP.[1]
Legacy complains
that DOE’s analysis was inadequate because the agency did not determine whether
offerors’ proposed hours were consistent with the nature, scope, and duration of
the efforts described in their technical proposals, or perform a reasonable probable
cost analysis, as required by the RFP. We
find nothing objectionable in the agency’s evaluation methodology. As
noted above, the solicitation, as amended, included the labor categories, the levels
within the labor categories, and the exact number of hours for each level that
offerors were required to use to prepare their proposals. RFP at 381. Since offerors thus were not responsible for
proposing their own required hours, it obviously would have served no
purpose--the RFP language aside--for the agency to separately consider whether
Stoller’s hours were sufficient. The
agency’s failure to conduct this analysis thus does not render the evaluation
unreasonable.[2]
Similarly, since the number of hours and
other direct costs were specified in the RFP, once the agency determined that
the proposed rates were realistic, its calculating probable cost by multiplying
the proposed rates by the estimated hours, and totaling the results, was
reasonable.
Legacy also objects to the price realism analysis on the
ground that it was based on an unreasonable government estimate. In this regard, following receipt of
proposals, DOE revised the estimate to correct errors and to take into account
inapplicable and likely inaccurate assumptions.
Among other things, DOE reduced the overhead rate from 100 percent to 50
percent because the lower rate was more consistent with contracts, such as this
one, that will be performed on government property, and also reduced the profit
rate to reflect the rates actually proposed.
AR at 52. Legacy argues that, instead of a 50 percent overhead rate, the estimate
should have incorporated a [DELETED] percent overhead rate, which allegedly is the rate Stoller applied
under its incumbent legacy contract.
According to Legacy, had the higher rate been included in the estimate, the
comparison with the estimate would have shown that Stoller’s price was unrealistically
low.
We find no basis
to question the government estimate.
Legacy has not shown that the basis for the agency’s decision to include
the lower overhead rate in the estimate was unreasonable. Specifically, Legacy has not shown that the
agency incorrectly determined that, Stoller’s overhead rate notwithstanding,
the lower rate is consistent with the rate typically experienced under
contracts performed on government property.
Thus, Legacy’s argument that the agency should have used the higher rate
constitutes no more than disagreement with DOE’s approach, which is
insufficient to demonstrate that the agency’s approach was unreasonable. See UNICCO Gov’t Servs., Inc.,
B-277658,
UNBALANCED PRICING
Legacy argues that
Stoller’s labor rates are unbalanced between the experience levels in certain
labor categories, and that its proposal should have been rejected on this basis. Specifically, Legacy points out that, for the
administrative specialist position, Stoller proposed a rate of [DELETED] for level 4, [DELETED] percent higher than the [DELETED] rate it proposed for level 3; similarly, for
the records management specialist position, Stoller proposed a rate for level 4
more than [DELETED] percent
higher than the rate for level 3; and, for the beneficial reuse specialist position,
Stoller’s rate for level 3 was [DELETED] percent higher than its rate for level 2. According to Legacy, the differences in
experience requirements between the levels--for example, a level 3
administrative specialist must have at least 8 years of experience, while a
level 4 must have at least 12 years--are not sufficient to explain the extreme differences
in the proposed rates.[3]
Unbalanced pricing exists where the prices of one or more
contract line items are significantly overstated, despite an acceptable total
evaluated price (typically achieved through underpricing of one or more other
line items). Ken Leahy Constr., Inc.,
B-290186,
Legacy has not established that Stoller’s labor rates for the more experienced personnel were overstated, and our review does not indicate that this is the case. In reviewing the labor rates, the agency found that Stoller’s rates were both reasonable (that is, not too high), and in line with the other offerors’ rates. In this latter regard, Stoller’s rate of [DELETED] for the level 4 administrative specialist position was within the $30.38 to $38.56 range of rates among all offerors; its [DELETED] rate for the level 4 records management specialist position was within the $48.17 to $66.07 range of rates; and its [DELETED] rate for the level 3 beneficial reuse specialist position was within the $42.50 to $116.73 range among all offerors. Since there thus is no basis for us to find that Stoller proposed overstated rates for higher-level personnel, there is no basis for us to find unbalanced pricing.[4]
EVALUATION OF
STOLLER’S TECHNICAL PROPOSAL
Under the
personnel qualification and staffing factor, offerors were required, among
other things, “to demonstrate [their] ability to recruit, retain, and provide
highly skilled qualified personnel . . . over wide spread geographic locations,
and under widely fluctuating workloads,” RFP at 75, to “. . . discuss their plan for providing
the non-key personnel required for this contract. . . ,” id. at 76, and to
“. . . include . . . for each non-key labor category, (1) the number of
personnel . . . currently employed by the offeror; (2) the number . . . to be
provided from the current employees of a proposed subcontractor . . . ; and (3)
the number . . . to be provided from new hires including incumbent staff.”
In its proposal,
Stoller, the incumbent contractor, proposed to provide non-key personnel by
restructuring its current staff; it would fill approximately [DELETED] percent of its requirements with new staff
who either would be in new positions at new localities or would replace staff
currently paid more than their duties demand.[5]
The agency found that Stoller adequately
addressed the solicitation requirement to recruit, retain and provide qualified
personnel to ensure successful performance.
AR at 31, 32.
Legacy argues that
Stoller’s personnel plan should have been assigned a weakness under each
technical factor. Among other things,
Legacy believes the evaluators should have considered the negative effect
Stoller’s approach could have on the morale and effectiveness of the remaining
incumbent workforce, the unlikelihood of a smooth transition to the new contract,
and the probable decline in the overall quality of performance associated with
the [DELETED] of personnel who
were responsible for Stoller’s favorable past performance rating. Supplemental Protest at 3.
In reviewing a
protest challenging an agency’s proposal evaluation, our role is limited to
ensuring that the evaluation was reasonable and consistent with the terms of
the solicitation, and applicable statutes and regulations. Phillips Med. Sys. N. Am. Co., B‑293945.2,
The evaluation here was unobjectionable. Offerors’ staffing plans were submitted in response to the requirements under the personnel qualifications and staffing factor, as discussed above, and the evaluation scheme provided for evaluating the staffing plans under that factor. Thus, while the protester asserts that Stoller’s staffing plan should have been evaluated as a weakness under all factors, doing so would have been inconsistent with the terms of the solicitation. With respect to the evaluation under the personnel qualifications and staffing factor, offerors were not required to provide a plan that was based on using 100 percent of the incumbent employees; they were only required to submit a plan that demonstrated that they would be capable of staffing the contract. DOE found that Stoller’s plan demonstrated its ability to staff the contract, TEC Report at 31, and Legacy has not demonstrated otherwise. Accordingly, we have no basis to question this aspect of the evaluation.
PREJUDICE
Legacy protests the
evaluation of its own proposal under the technical and management approach
factors on several grounds. However, we
will not sustain a protest unless the protester demonstrates a
reasonable possibility that it was prejudiced by the agency’s actions, 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,
In evaluating the
technical proposals, the TEC assigned a base score of 0 to 10 for each
factor; a proposal was assigned 10 points if, among other things, it was
evaluated with significant strengths and no weaknesses, and 8 points if, among
other things, it was evaluated with one or more strengths and no significant
weaknesses. AR at 6. The TEC then applied multipliers to the base
scores, reflecting the different relative weights of the factors--40 for
technical approach, 25 for management approach, 20 for personnel qualifications
and staffing, 10 for corporate experience, and 5 for past performance--to
arrive at the weighted scores discussed above. Legacy’s total weighted score of 615 included
scores of 125 for management approach and 200 for technical approach, the
factors in question. Stoller’s proposal was
selected for award based on its evaluated strengths, as reflected in its total
weighted score of 920 points.
Applying the
agency’s methodology, it is clear that Legacy’s proposal would not be in line
for award even if we found merit to its evaluation challenges. Under the management factor, Legacy’s
proposal received a base score of 5 points based on the TEC’s assessment of one
strength and one weakness; this base score was multiplied by 25 for a
weighted score of 125 points. Legacy
challenges the assignment of the one weakness; if we agreed with Legacy, its
proposal would merit, at most, a base score of 8 points, since it was evaluated
as having no significant strengths under the factor. AR at 6.
This would increase Legacy’s score under the management approach factor
by 75 points, to 200 points (8 multiplied by 25). Under the technical approach factor, Legacy’s
proposal received a base score of 5 points based on, among other things,
two significant strengths and three significant weaknesses; this base
score was multiplied by 40, resulting in a weighted score of 200 for the factor. Legacy has challenged each of the significant
weaknesses; if we found all of Legacy’s arguments meritorious, Legacy’s base
score would increase to the maximum of 10 points, and its weighted score
for the factor would increase by 200 points, to the maximum of 400 points. Based on these two changes, the record shows
that Legacy’s total score would increase by a total of 275 points, from
615 to 890. Since this would leave Legacy’s
proposal with a lower rating than Stoller’s, and Stoller’s lower price would
remain unchanged, there is no basis in the record for concluding that Legacy’s
proposal would be selected for award over Stoller’s, even with the higher score
that could result if we found its challenges meritorious. It follows that Legacy was not competitively prejudiced
by the alleged errors in the evaluation of its technical proposal, and we therefore
need not consider them.
The protest is
denied.
Gary L. Kepplinger
General Counsel
[1]DOE notes that a substantial part of the difference in Stoller’s and Legacy’s proposed prices was due to [DELETED]. AR at 40.
[2]We
recently resolved this precise issue in deciding a protest by another
unsuccessful offeror under this procurement.
See Navarro Research and Eng’g, Inc., B‑299981, B‑299981.3,
[3]Legacy also argues that DOE did not consider the only obvious explanation for the extreme variation in rates from one level to another within the same labor category-- that Stoller violated the RFP by including profit in its labor rates. Legacy has not supplied any evidence to support this argument. Accordingly, we find that it is based on speculation and will not consider it.
[4]We note that, in any case, the concept of unbalanced
pricing has only limited application in the context of a procurement where the
government’s primary objective is the best value, not the lowest price. USATREX Int’l, Inc., B-275592, B‑275592.2,
[5] Stoller addressed DOE’s need for possible short-term or specialized staffing by proposing to supply [DELETED], but indicated it would consider whether [DELETED] to meet these needs. Stoller Proposal at 89. Legacy’s argument also applies to this aspect of Stoller’s proposal.