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Saturday, January 24, 2015

Protest of Navy's BOSS contract on Guam upheld

Matter of: CFS-KBR Marianas Support Services, LLC; Fluor Federal Solutions LLC,: B-410486; B-410486.2; B-410486.3, January 2, 2015 (The redacted version was approved for public release. The version below is my own, unofficial version.)

1. Protest challenging agency’s cost realism evaluation of proposals is sustained where record shows that agency’s evaluation was based on the mechanical application of a government estimate that did not take into consideration each offeror’s unique technical approach, and therefore was not consistent with the terms of the solicitation and applicable procurement statutes and regulations.

2. Protest alleging that agency engaged in misleading discussions is sustained where record shows that agency’s discussions questions were based on the results of its underlying, irrational, evaluation of proposals.
CFS-KBR Marianas Support Services, LLC, of Baton Rouge, Louisiana, and Fluor Federal Solutions, LLC, of Greenville, South Carolina, protest the award of a contact to DZSP 21 LLC, of Hagatna, Guam, under request for proposals (RFP) issued by the Department of the Navy for base operations support services for the Joint Region Marianas on the island of Guam.

The RFP contemplates the award of a cost reimbursement-type contract. The RFP advised offerors that the agency would make award on a best-value basis, considering cost and several non-cost evaluation factors. For cost evaluation purposes, the RFP advised offerors that the agency would evaluate proposals for completeness, reasonableness, balance, and realism, and that all five non-cost factors, when combined, were approximately equal in importance to cost.

After performing an initial evaluation, the agency established a competitive range comprised of six concerns and engaged in discussions with those offerors. After conducting discussions, the agency solicited and obtained final proposal revisions (FPRs), which the agency evaluated. On the basis of that evaluation, the agency assigned the protesters and awardee the following technical ratings and evaluated costs:

On the basis of these evaluation results, the agency made award to DZSP, finding that its proposal offered the best value to the government.

After being advised of the agency’s selection decision and requesting and receiving debriefings, CFS and Fluor filed protests in our Office. CFS maintains that the agency misevaluated proposals and failed to engage in meaningful discussions; Fluor maintains that the agency misevaluated proposals and engaged in misleading discussions. We sustain Fluor’s protest and dismiss CFS’s protest as academic.

Fluor essentially argues that, because the agency’s initial evaluation was irrational, it led the agency to engage in misleading discussions with the protester which led, in turn, to Fluor adding unnecessary personnel to its proposal and, ultimately, to proposing a cost that made it uncompetitive. Secondarily, Fluor maintains that the agency’s cost realism evaluation after the agency engaged in discussions also was unreasonable.

Fluor asserts that, in its initial evaluation of proposals, the agency never performed a meaningful cost realism evaluation in connection with the offerors’ proposed staffing. According to Fluor, the agency mechanically applied a government estimate in evaluating the sufficiency of the offerors’ proposed staffing. Fluor argues that the agency’s actions were improper because any meaningful cost realism evaluation is required to take into consideration the offerors’ respective technical approaches to accomplishing the requirements.  [Remember, this is a best value evaluation for a cost-reimbursement contract, and cost alone does not determine who gets the award.]

When an agency evaluates proposals for the award of a cost-reimbursement contract, an offeror’s proposed estimated cost of contract performance is not considered controlling since, regardless of the costs proposed by the offeror, the government is bound to pay the contractor its actual and allowable costs. As a consequence, a cost realism analysis must be performed by the agency to determine the extent to which an offeror’s proposed costs represent what the contract costs are likely to be under the offeror’s unique technical approach, assuming reasonable economy and efficiency.   In addition to these broad considerations, while an agency can utilize a reasonably derived estimate of labor hours based on the government’s experience as an objective standard to measure the realism of proposed costs, an agency may not mechanically apply its own estimates for labor hours or costs--effectively normalizing cost elements of an offeror’s proposal to government estimates--without considering the offeror’s unique technical approach.

The record here shows that, in evaluating the offerors’ initial proposals, the agency mechanically applied a government estimate to evaluate the sufficiency of the offerors’ proposed staffing. In particular, the record shows that the agency evaluated all proposals against an undisclosed government estimate of the number of full time equivalent staff (FTE) that the agency considered sufficient to perform the requirements. In each instance where a proposal offered less FTEs than the agency had identified as necessary for any given part of the contract ("annex"), the agency evaluators described the offeror’s proposed staffing as unrealistic and insufficient to perform in the annex identified.

In performing this evaluation, the agency concluded that Fluor’s proposed staffing was insufficient.  The record thus shows that the agency’s initial evaluation was based on a mechanical application of the government estimate to the proposals that did not consider the offerors’ varying technical approaches. In the absence of a cogent explanation for the Navy’s actions, such a mechanical application of the government estimate in the evaluation of proposals is unreasonable. We therefore sustain this aspect of Fluor’s protest.

Fluor further argues that the mechanical application of the government’s estimate discussed above led the agency to pose misleading discussion questions to the firm regarding the sufficiency of its proposed staffing. The protester maintains that it initially proposed staffing that it considered sufficient to perform the contract in light of its proposed technical approach. Fluor argues that, when it attempted to respond to the agency’s concerns during the discussions that were based on the agency’s mechanical application of the government estimate, it effectively priced itself out of the competition.

It is a fundamental principle of negotiated procurements that discussions, when conducted, must be meaningful; that is, discussions must identify deficiencies and significant weaknesses in an offeror’s proposal that could reasonably be addressed so as to materially enhance the offeror’s potential for receiving award.  Here, the record shows that the agency asked each offeror a specific question that identified precisely the number of FTEs by which the agency considered the proposal deficient.  An agency may not mislead an offeror through the framing of a discussion question into responding in a manner that does not address the agency’s actual concerns, or otherwise misinform the offeror concerning a problem with its proposal.

The agency subsequently issued a clarification to these questions, stating that it was not the intent of the agency to dictate the number of FTEs proposed, but to verify that the offeror had a methodology to accomplish the work with the number of FTEs proposed.  Nonetheless, the agency did not retract its original discussion questions.

The record shows that Fluor revised its proposal to precisely the number of FTEs identified by the agency as lacking in its initial proposal.   Ultimately, Fluor’s high evaluated cost led the agency not to select it for award, even though its proposal had been ranked first from a non-cost standpoint.  Because the record shows that Fluor’s revised staffing was raised in direct response to the agency’s discussion question, we conclude that the firm was misled to its competitive prejudice.

As a final matter, Fluor maintains that the agency essentially abandoned the original staffing estimates that it used to evaluate the offerors’ initial proposals, thereby demonstrating the arbitrary nature of the original evaluation. Fluor maintains that the agency’s final evaluation confirms that its initial evaluation bore no relationship to the offerors’ unique technical approaches, and also demonstrates that the agency’s evaluation of revised proposals failed to meaningfully evaluate the offerors’ proposals for realism purposes.

Notwithstanding the fact that the other two firms also offered additional staffing in response to the agency’s initial evaluation and discussion questions, the evaluators nonetheless assigned DZSP an outstanding rating for its proposed staffing and resources, and assigned the CFS proposal a good rating for its proposed staffing and resources (both proposals originally had been rated unacceptable under this evaluation factor).

The agency’s technical evaluators articulated no reasoned analysis for why, despite the fact that these firms did not propose the staffing initially identified by the agency as inadequate, the firms nonetheless merited these better ratings.  For reasons unexplained in the record, the agency did not evaluate the realism of the offerors’ proposed staffing where it exceeded the government estimate.  The agency’s unexplained and inconsistent application of the government estimate further highlights the underlying irrationality of its evaluation.

In effect, the agency’s evaluators appear to have abandoned the initial government estimates, as well as their evaluation findings based upon those estimates. In addition, since the evaluators did not explain why they considered the offerors’ revised staffing adequate in light of their respective technical approaches, we have no basis to find the agency’s reevaluation of proposals reasonable.
In this connection, agencies are required to adequately document their evaluation results in order to facilitate our examination of the record; where, due to a lack of documentation, we are unable to understand the agency’s evaluation conclusions, we will sustain a protest challenging the agency’s evaluation.
We have carefully considered all of CFS’s allegations and find no basis to sustain the firm’s protest. We find no merit to its allegations concerning the agency’s evaluation of technical proposals, and we also find no merit to its allegation concerning the agency’s alleged failure to engage in meaningful discussions with CFS. In addition, while CFS arguably may be correct concerning the agency’s evaluation of cost proposals, we are not persuaded that CFS was prejudiced by the agency’s evaluation in that area, and therefore find no merit to that aspect of its protest.

In light of our discussion above, we sustain Fluor’s protest. We recommend that the agency reevaluate proposals in a manner consistent with our discussion above.  After performing its reevaluation, we further recommend that the agency afford the competitive range offerors meaningful discussions based on its reevaluation of proposals.

After engaging in discussions, we recommend that the agency solicit, obtain, and evaluate revised proposals and make a new source selection decision based on that reevaluation.  Notwithstanding our conclusions regarding the merits of CFS’s protest, we point out that the firm will, in fact, benefit from our recommended corrective action because it will be afforded an opportunity to participate in any reopened competition.

Finally, we recommend that the agency reimburse Fluor the reasonable costs of filing and pursuing its protest, including reasonable attorneys’ fees. The protester’s certified claim for costs, detailing the time expanded and costs incurred, must be submitted to the agency within 60 days after receipt of this decision.


Anonymous said...

It is obvious that the Naval Base has a comfortable relationship with DZSP 21, which is what every entity of business desires. When you have a contract of this magnitude, you want to work with people, resources and work ethic that you can trust. No offense to Fluor, but it looks like they dont desire any other organization for the task. I think they should leave the award as is.

John Thos. Brown said...

I think, on an educational blawg such as this, that anonymous comments are generally out of line. I reserve the right to reject any comment, and will have to see where this anonymous commenting goes. So far, since there are no comments to speak of anyway, I will let this go.