Link: GAO Opinion
Agency: Department of the Navy
Disposition: Fluor’s protest sustained; CFS’s protest dismissed.
Keywords: Meaningful Cost Realism Evaluation; Misleading Discussions
General Counsel P.C. Highlight:
An agency may not mechanically apply its own estimates for labor or costs without considering the offeror’s unique technical approach. When an agency has discussions with an offeror, those discussions must be meaningful and not misleading. An agency must articulate the rationale behind its decisions.
CFS-KBR Marianas Support Services, LLC (“CFS”) and Fluor Federal Solutions, LLC (“Fluor”) protest the award of a contract to DZSP 21 LLC (“DZSP”) under an RFP issued by the Department of the Navy (“Agency”) for base operations support services.
The Agency announced that it would make the award of the RFP on a best-value basis, considering cost and several non-cost evaluation factors. The Agency reviewed eight initial proposals received, engaged in discussions with the offerors, and evaluated the final proposal revisions received. The Agency made the award to DZSP.
Fluor and CFS both filed protests.
Fluor contended that the Agency’s initial evaluation was irrational, and that this led the Agency to conduct misleading discussions with Fluor which resulted in Fluor adding additional unnecessary personnel to its proposal and submitting a cost estimate that was noncompetitive.
First, Fluor’s argued that the Agency never performed a meaningful cost realism evaluation in connection with the offerors’ proposed staffing. The GAO stated that when performing a cost realism analysis, an agency may not mechanically apply its own estimates for labor or costs without considering the offeror’s unique technical approach. Nonetheless, the Agency mechanically applied a government estimate to evaluate the sufficiency of the offerors’ proposed staffing and evaluated all proposals against an undisclosed government estimate of the number of full time equivalent (“FTE”) staff that the Agency deemed sufficient. Based on this estimate, the Agency determined that Fluor, CFS, and DZSP had proposed staffing which was insufficient, and thus, concluded that each of the offerors’ proposed staffing was unrealistic. The Agency failed to provide a cogent explanation for its use of this mechanical application of the government’s estimate. For these reasons, the GAO sustained this aspect of Fluor’s protest.
Second, Fluor contended that the mechanical application of the government’s estimate led the Agency to pose misleading discussion questions to Fluor regarding the sufficiency of its proposed staffing. The GAO stated that when an agency has discussions with an offeror, those discussions must be meaningful and not misleading. Here, the Agency asked each offeror a question that identified the precise number of FTEs by which the Agency considered the proposal deficient. Based upon this question, Fluor revised its proposed staffing by the number of FTEs identified by the Agency, resulting in a cost estimate which was not competitive. Although Fluor’s proposal ranked highest when considering its non-cost factors, it was not selected. Because Fluor’s increased staffing and increased cost was in direct response to the Agency’s discussion question, the GAO concluded that Fluor was misled. The GAO sustained this aspect of Fluor’s protest.
Third, Fluor contended that the Agency essentially abandoned the original staffing estimates that it used to evaluate the initial proposals, demonstrating the arbitrary nature of the original evaluation. Here, all three offerors submitted proposals which the Agency deemed unreasonable. Fluor then revised its proposal by increasing staffing consistent with the precise number identified by the Agency and the Agency gave Fluor an outstanding rating under the staffing and resources factor. However, while both CFS and DZFS added additional staff, each added less than the number identified by the Agency. Nonetheless, DZFS received an outstanding rating and CFS received a good rating. The Agency did not articulate a reason why these offerors received better ratings even though their proposals did not increase their staffing consistent with the identified level. Thus, the GAO concluded that the Agency in effect abandoned its initial evaluation. In the absence of the necessary support for the Agency’s decision, GAO was unable to understand the Agency’s decision, and, therefore, sustained Fluor’s protest.
CFS challenged aspects of the Agency’s evaluation of the technical proposals and alleged that the Agency failed to engage in meaningful discussions. The GAO found no merit in these allegations and found that unlike Fluor, CFS was not misled to its competitive prejudice by the agency’s discussions. CFS’s protest was therefore denied.
The GAO recommended that the Agency reevaluate the proposals and afford the competitive range offerors meaningful discussions based upon its reevaluation of the proposals. Based upon that reevaluation, the GAO further recommended that the Agency solicit new proposals and make a new source selection decision. The GAO also recommended that the Agency reimburse Fluor for its reasonable cost of filing and pursuing the protest, including reasonable attorneys’ fees.