Link: GAO Decision
Protestor: KPMG LLP
Agency: Central Intelligence Agency
Disposition: Protest Sustained.
- Agency conducted misleading discussions where it advised protester during discussions that it should provide resumes for all proposed personnel for the lifespan of the contract, but now asserts that the RFP did not require such submission of resumes.
- Agency failed to conduct an adequate cost realism analysis of proposals for costplus-fixed-fee level-of-effort contract where the record is devoid of any meaningful analysis by agency evaluators of their basis for accepting as realistic the awardee’s cost proposal, and record showed that, beginning a year into performance, the firm’s cost savings depended on replacement of staff whose resumes were relied upon for the awardee’s higher technical ratings.
General Counsel PC:
KPMG LLP protested the award to Deloitte & Touche LLP of a contract for accounting and financial services. The RFP indicated that the agency would award a cost-reimbursement level-of-effort contract, stating that the required level of effort was fourteen FTEs. Offerors were required to provide resumes for their proposed Project Manager and all full time staff, as well as specific information for each individual proposed employee for security purposes. KPMG and Deloitte each submitted proposals offering diminishing resources over the life of the contract; in written discussions, each firm was informed about agency concerns regarding their staffing plans. In its final proposal revision (FPR), KPMG increased its staffing to the required fourteen FTEs. Deloitte stated that it could not provide resumes for specific individuals; rather, it would provide representative resumes for each labor category.
In evaluating the FPRs, agency evaluators removed the weaknesses assigned to the initial proposals for each firm, and assigned several strengths to both FPRs. A cost evaluation team (CET) was assigned to assess the realism of both offerors’ proposed costs, but concluded that a most probable cost could not be determined for either firm. Notes from an auditor about Deloitte’s proposal were included with the final CET report, expressing concerns that Deloitte failed to include subcontractor pricing and did not provide an exact date when it would transition in less experienced personnel, although it had proposed decreasing costs on the basis of that transition. In making its best value decision, the selection authority observed that Deloitte had received several slightly higher evaluation ratings than KPMG, and had important strengths in the most heavily weighted Personnel Qualifications and Skills subfactor. Although the cost factor was less important, Deloitte also offered a significant cost savings compared to KPMG.
The GAO focused on two arguments made by KPMG that it determined had merit and were prejudicial to KPMG. The GAO first found that the agency had engaged in misleading discussions when it permitted Deloitte to provide a single “representative resume” for each labor category while KPMG was required to provide resumes for each of its FTEs. Although the agency argued that the RFP only required resumes for personnel proposed for the initial performance period, the GAO found this only highlighted that the agency’s discussions with KPMG were misleading. The GAO then agreed with KPMG that the agency failed to conduct a reasonable cost realism analysis. It noted that the record reflected no meaningful agency consideration of when Deloitte’s proposed “transition” to less experienced personnel, and the associated cost reductions, would occur; evaluators merely concluded that Deloitte’s staffing approach “posed no issue.”
Offerors bear the burden of submitting adequately written proposals, which comply with all requirements in the RFP. In cost-reimbursement contracts, if an offeror proposes an approach that involves a transition to a different staffing plan over the life of the contract, the offeror must ensure that they provide a clear timeline for that transition, or the agency will not be able to perform a proper cost realism analysis.