Link: GAO Opinion
Agency: Department of the Navy
Disposition: Protest denied.
General Counsel P.C. Highlight:
GAO denied the protest of Science Applications International Corporation, Inc. (SAIC) regarding the issuance of a task order to SRA International, Inc., under a request for proposals (RFP), issued by the Department of the Navy, Military Sealift Command, for information technology services to support afloat operations.
The RFP contemplated the award of a cost-plus fixed-fee task order for a base year and two option years. Offerors were informed that technical, past performance, and socioeconomic considerations would be considered following probable cost. The RFP informed offerors that the Navy would assess the realism of proposed costs and determine probable cost for each offer. Offerors were to propose labor rates for a number of labor categories using the level of effort identified in the RFP. Offerors were also instructed to include documentation establishing the accuracy of the proposed labor rates, including most recent payroll run for current employees, signed letters of intent indicating an agreed-upon salary, current prior fiscal year forward pricing rate agreements or forward pricing rate recommendations if proposing unnamed existing personnel, labor category average, or a comprehensive description of the methodology used to establish the proposed direct labor rate. Finally, the agency informed offerors that if proposed costs appeared unrealistic, the agency would “infer either a lack of understanding of the requirements, increased risk of performance, or lack of credibility on the part of the Offeror.”
SAIC argued against the agency’s cost realism evaluation of its proposal. SAIC argued that the agency mechanically adjusted its direct labor rates to match the incumbent’s rates, and improperly adjusted labor rates of its proposed subcontractors. GAO concluded that the record supported the reasonableness of the agency’s cost adjustments given the lack of documentation provided to support SAIC’s assertion that it was proposing actual costs. The RFP required that offerors document the accuracy of their proposed direct labor rates and identified acceptable forms of documentary support, but SAIC did not identify where in its proposal it provided any documentation to support its proposed labor rates, nor did it explain why certain overseas positions should be considered comparable to positions within the United States and its territories that are subject to Service Contract Act wage determinations. GAO concluded that the agency reasonably adjusted the rates to those currently used under the incumbent contract.
SAIC also argued that the Navy unreasonably applied labor rates from Salary.com to SAIC’s subcontractor costs rather than applying the labor rates from the incumbent contract. However, GAO stateed that the agency’s explanation as to why it applied the different labor rates to SAIC’s proposal was reasonable. SAIC’s and its subcontractor’s proposed rates were not supported by the proposals. GAO concluded that in the absence of support, the agency reasonably applied third-party median wage rates for the location.