Link: GAO Opinion
Agency: National Aeronautics and Space Administration
Disposition: Protest sustained in part, denied in part.
- Post-closing time protest that awardee has an impermissible organizational conflict of interest (OCI) is untimely where (1) solicitation was issued on an unrestricted basis, (2) protester was aware of the underlying facts giving rise to the potential OCI (and knew awardee was participating in the procurement), and (3) in response to protester’s inquiry, agency specifically informed protester that it did not believe awardee had an impermissible OCI.
- Protest that awardee gained an unfair competitive advantage through its retention of a former agency official as a consultant will not be reviewed where the protester did not timely report the underlying alleged procurement integrity provision violation to the contracting agency within 14 days after the protester first discovered the possible violation, as required by GAO’s Bid Protest Regulations.
- Contracting agency engaged in meaningful discussions where the agency advised protester of specific weaknesses regarding its technical proposal; agency was not required to also afford the protester an opportunity to cure proposal defects first introduced either in response to discussions or in a post-discussion proposal revision.
- Protest challenging the evaluation of offerors’ technical proposals is denied where the record establishes that the agency’s evaluation was reasonable and consistent with the evaluation criteria.
- Protest challenging the agency’s cost realism evaluation of awardee’s proposed staffing levels is denied where the record demonstrates that the agency’s conclusions were reasonable.
- Protest challenging the evaluation of offerors’ past performance is sustained where the record establishes that the agency’s evaluation was not reasonable or consistent with the stated evaluation criteria.
General Counsel P.C. Highlight:
Honeywell first protests that ITT had an impermissible organizational conflict of interest (OCI) based on unequal access to information. GAO states that as a general rule, a protester is not required to protest that another firm has an impermissible OCI until after that firm has been selected for award. A different rule applies, however, where a solicitation is issued on an unrestricted basis, the protester is aware of the facts giving rise to the potential OCI, and the protester has been advised by the agency that it considers the potential offeror eligible for award. In such cases, the protester cannot wait until an award has been made to file its protest of an impermissible OCI, but instead must protest before the closing time for receipt of proposals.
Here, Honeywell’s concerns that specific ITT employees were not abiding by the PIEAs and were improperly using its proprietary information on behalf of ITT in the SCNS procurement arose prior to the RFP closing date. Further, it is clear that Honeywell also knew that ITT was participating in the procurement and that the agency did not consider ITT to have an OCI that precluded it from receiving the award. Under these circumstances, Honeywell’s protest is untimely because it was not filed prior to the closing date for receipt of proposals.
Honeywell protests that ITT gained an unfair competitive advantage through the retention of a former NASA official as a consultant on the SCNS procurement, in violation of the statutory procurement integrity provisions. The protester alleges that ITT retained R.S.; a former NASA deputy associate administrator whose supervisory position involved overseeing the developmental and operational elements of the SCNS SOW. Honeywell argues that because R.S.’s work for ITT violated applicable procurement integrity standards, the awardee gained an unfair competitive advantage in the preparation of its proposal. Honeywell contends that the procurement integrity and conflict of interest issues involving R.S. so tainted the SCNS procurement that ITT should be disqualified from the competition. Both GAO’s Bid Protest Regulations and the statutory procurement integrity provisions require–as a condition precedent to our considering the matter–that a protester have reported the alleged violation to the contracting agency within 14 days after first becoming aware of the information or facts giving rise to the alleged violation. The 14-day reporting requirement affords the agency responsible for the procurement an opportunity to investigate alleged improper action during the conduct of an acquisition and, in appropriate circumstances, to take remedial action before completing the tainted procurement.
It is clear from the record that Honeywell knew as of December 17, 2007; both that R.S. was assisting ITT in the SCNS procurement and of R.S.’s previous role at NASA. Specifically, at a NASA holiday party on December 17, 2007, R.S. informed Honeywell vice president W.F. that he was assisting ITT with its proposal for the SCNS procurement. The two individuals had known each other for many years, and W.F. was very familiar with R.S.’s prior role at NASA. Because the firm failed to report the perceived procurement integrity violation regarding R.S. to the contracting agency within 14 days of this date, GAO concludes that Honeywell’s protest is untimely.
Honeywell protests that the agency failed to conduct meaningful discussions by failing to raise the one technical weakness it found in Honeywell’s FPR. GAO states that although discussions must address deficiencies and significant weaknesses identified in proposals, the precise content of discussions is largely a matter of the contracting officer’s judgment. When an agency engages in discussions with an offeror, the discussions must be “meaningful,” that is, sufficiently detailed so as to lead an offeror into the areas of its proposal requiring amplification or revision. Where proposal defects are first introduced either in a response to discussions or in a post-discussion proposal revision, an agency has no duty to reopen discussions or conduct additional rounds of discussions.
GAO concludes that NASA’s discussions with Honeywell were meaningful. The discussions expressly informed Honeywell of the specific weaknesses that the SEB had identified in the offeror’s initial proposal. Further, the record clearly reflects that the specific significant weakness which Honeywell claims that NASA failed to mention in discussions was first introduced in Honeywell’s post-discussions FPR and was not part of its initial proposal. As a result, NASA had no obligation to conduct additional rounds of discussions in order to permit the offeror to address this matter.
Honeywell also protests the agency’s evaluation of offerors’ proposals under the mission suitability factor. GAO states that in reviewing an agency’s evaluation, GAO will not reevaluate technical proposals; instead, it will examine the agency’s evaluation to ensure that it was reasonable and consistent with the solicitation’s stated evaluation criteria and procurement statutes and regulations. An offeror’s mere disagreement with the agency’s evaluation is not sufficient to render the evaluation unreasonable. GAO’s review of the record shows the agency’s evaluation here to be unobjectionable.
Based on the record, GAO concludes that NASA had a reasonable basis on which to conclude that Honeywell’s revised proposal demonstrated an inadequate understanding of systems engineering processes. It is clear that the SEB’s conclusion that Honeywell lacked an adequate understanding of systems engineering process was reasonably based not only on technical flaws in Honeywell’s TIP, but also on the offeror’s decision to propose design solutions without adequate appreciation of the trade studies, analysis, requirements analysis, and requirements identification functions.
Honeywell protests that NASA failed to perform a reasonable cost realism evaluation of ITT’s proposal. Specifically, the protester argues that the agency failed to reasonably evaluate the cost realism of ITT’s staffing levels for the SCNS core requirements, which were dramatically lower than the amounts proposed by incumbent Honeywell. GAO states that when an agency evaluates proposals for the award of a cost-reimbursement contract (or the cost-reimbursement portion of a 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. Consequently, 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. A cost realism analysis is the process of independently reviewing and evaluating specific elements of each offeror’s cost estimate to determine whether the estimated proposed cost elements are realistic for the work to be performed, reflect a clear understanding of the requirements, and are consistent with the unique methods of performance and materials described in the offeror’s proposal. An offeror’s proposed costs should be adjusted when appropriate based on the results of the cost realism analysis. GAO’s review of an agency’s cost realism evaluation is limited to determining whether the cost analysis is reasonably based and not arbitrary, and adequately documented.
It is important to note that the RFP required the agency to perform two, separate evaluations regarding offerors’ proposed staffing levels. First, under the mission suitability factor, the agency was required to determine if the proposed staffing plan was adequate and demonstrated an understanding of the SCNS requirements. Second, under the cost evaluation factor, the solicitation required the agency to evaluate the cost realism of each offeror’s proposal. GAO concludes that NASA’s evaluation of ITT’s proposed staffing–from both a technical and a cost standpoint–was reasonable. First, the record reflects that NASA was fully aware of ITT’s revised staffing levels for the SCNS core requirements–[DELETED] FTEs and [DELETED] labor hours. The record also reflects the agency reasonably evaluated ITT’s proposed staffing levels against the SCNS work requirements and determined the staffing sufficient to perform the work. Importantly, all staffing weaknesses originally identified by the SEB–both as to program management and specific SN requirements–were addressed by ITT in its revised proposal. For example, ITT’s program management staffing increased from [DELETED] FTEs to [DELETED] FTEs; by comparison, the agency evaluators had believed that [DELETED] FTEs would be required here. Similarly, the agency reasonably found ITT’s revised staffing levels for the SN requirements to be adequate. Having determined that ITT’s staffing levels were adequate from a technical standpoint, the agency then determined the staffing levels and associated costs were also realistic as part of its cost realism evaluation. The protester’s principal argument–that ITT’s staffing levels were “dramatically” lower than its own–reflects a misunderstanding of what is required as part of a cost realism evaluation. There is no general requirement that an agency’s cost realism evaluation “normalize” the staffing levels that the offerors propose to each other or to government estimates, and the fact that one offeror proposes higher staffing levels than another offeror does not by itself indicate that the costs as proposed are not realistic. Rather, the cost realism evaluation is to ensure that each offeror’s proposed costs, including staffing levels, are realistic for the work to be performed, consistent with the methods of performance described in the offeror’s technical proposal.
Finally, Honeywell protests the agency’s evaluation of the offerors’ past performance. Among its numerous challenges, Honeywell argues that the relevance and quality of the contracts performed by ITT itself do not justify the evaluation rating NASA assigned. GAO states that where a solicitation requires the evaluation of offerors’ past performance, GAO will examine an agency’s evaluation to ensure that it was reasonable and consistent with the solicitation’s evaluation criteria. The critical question is whether the evaluation was conducted fairly, reasonably, and in accordance with the solicitation’s evaluation scheme. The agency’s past performance evaluation of ITT here does not meet this standard.
As a preliminary matter, GAO does not find that the agency here was precluded from considering ITT’s MSP contract for past performance evaluation purposes simply because its value was below the $50 million figure referenced in section L of the RFP. While the RFP instructed offerors to submit past performance information on relevant contracts of at least $50 million, it also expressly permitted them to submit additional information if they considered it necessary to establish a record of relevant past performance. Once having decided to consider ITT’s MSP contract, however, the agency clearly was required to evaluate the relevance of that contract consistent with the evaluation criteria in the RFP, i.e., the degree of similarity in size, content and complexity between an offeror’s past performance information and the RFP requirements. There is nothing in the contemporaneous record to suggest that NASA engaged in any such analysis concerning the relative size of ITT’s MSP contract and the size of the RFP requirements. Rather, the SEB report indicates the evaluators’ determination that ITT’s MSP contract was “very relevant” was based entirely on the type of services involved in that contract. The extremely low dollar value (and staffing level) of the MSP contract relative to those of the SCNS requirements clearly raise a question as to the degree to which the MSP contract reasonably may be regarded as similar in size to the RFP requirements, such that it properly could be considered in evaluating ITT’s past performance. The record lacks explanation as to why the SEB found the MSP contract to be “very relevant” notwithstanding its extremely small size relative to the RFP requirements. GAO fails to see, and the record fails to reflect, how NASA determined that a contract similar as to size but not as to content (i.e., ITT’s JSC contract) was only “somewhat relevant,” while, by contrast, a contract similar as to content but not as to size (i.e., ITT’s MSP contract) was “very relevant.”
GAO recognizes that the agency’s evaluation of ITT’s past performance also included nine other contracts for its major subcontractors, many of which the SEB found to be “highly relevant” and having excellent performance. The record reflects, however, that ITT (prime) had only two contract references: the JSC contract which NASA found of such limited relevance that it admittedly did not consider it in the evaluation of the offeror’s performance; and the MSP contract which, as detailed above, was significantly smaller in size than the RFP requirements. In this regard, ITT (prime) was to perform all the program management requirements, a large majority of the systems engineering requirements, and [DELETED] percent of the total SCNS contract. As a result, based on the current record, the agency’s conclusion that ITT had “highly relevant” past performance lacks a reasonable basis, given that it is based in material part on consideration of the MSP contract. The protest is sustained on this matter.