Agency: Department of the Navy
Disposition: Protest Sustained
Decided: October 16, 2017
Keywords:
Evaluation Criteria, Proposal Evaluation
General Counsel P.C. Highlight:
Agencies are bound not only by the terms and conditions outlined in the RFP, but also federal law. Additionally, an agency’s failure to document the rationale for decisions may result in protests being sustained.
Summary of Facts
Companies currently holding contracts under the Navy’s Seaport – E indefinite-delivery, indefinite- quantity multiple award program were issued an RFP seeking services in connection with operation of a towed array facility. The RFP was offered on a best-value tradeoff basis, of a cost-plus-fixed-fee and cost-reimbursement task order.
According to the RFP, the evaluation of proposals would consider cost and non- cost factors. The non-cost factors included technical capability, past performance, and small business participation. Additionally, a cost realism evaluation was anticipated, with the possibility of additional cost analyses in accordance with Federal Acquisition Regulation (FAR) § 15-404-1.
The agency received several proposals, including proposals from L3 Unidyne, Inc. (L3) and awardee Leidos. After evaluation, only Leidos was deemed to have submitted a technically acceptable proposal. Consequently, the agency issued the task order to Leidos.
Basis for Protest
L3 offers three general categories of protest. First, they object to Leidos’ employment terms and the agency’s failure to consider the consequences of the terms. Second, they argue their proposal was not evaluated in accordance with the terms of the contract. Third, L3 disputes the agency’s treatment of the cost evaluation of Leidos.
Leidos Binding Arbitration Agreements
In their proposal, Leidos submitted letters of intent for proposed key employees. The letters indicated employees would be required to enter into binding arbitration agreements as a condition of their employment. However, federal law prohibits conditional employment based on an agreement to submit to arbitration for certain types of employment claims. This can be waived, but only if the determination is made the waiver is necessary to avoid harm to national security interests. Further, the waiver must be made public no less than 15 business days before the contract is awarded.
L3 Proposal Evaluation
L3 objects to the evaluation of their proposal. For example, L3 argues it was unreasonable for the agency to assign a deficiency to their proposal because one government property manager did not live in the area. This was a minor, non-key employee for a position not identified in the RFP. Further, the employee had been using the same person under the incumbent contract, and prior performance assessments of this system on the predecessor contract was described as “extremely accurate and well maintained.” The agency maintained the evaluation was reasonable.
L3 also argued the agency only evaluated staffing profiles under one task, despite the fact 11 tasks were identified in the RFP. L3 argues this is unreasonable, in light of the RFP’s statement the agency would evaluate the proposed staffing mix to determine how well the overall mix of personnel was suited. The Agency claimed to have evaluated all proposed staffing, however, no record supports that claim.
Cost Evaluation of Leidos
The cost realism evaluation of Leidos proposal did not consider the variances from the RFP’s estimated levels of effort and staffing profile. The agency agrees they did not take these considerations into account. The agency argued staffing was evaluated under the technical evaluation factor and therefore did not need to be considered in evaluation cost realism.
Protest Sustained
Leidos Binding Arbitration Agreements
No evidence in the record establishes the agency gave meaningful consideration to whether Leidos arbitration requirements complied with the statutory limitations on arbitration. In fact, no evidence exists that the agency even had a copy of the arbitration agreement. Consequently, the agency could not possibly have considered whether the agreement complied. As such, the agency’s award was improper.
L3 Proposal Evaluation
Given the totality of circumstances, the agency has not provided information about how the L3 “employee deficiency” amounts to a “material failure” that increases the likelihood of unsuccessful performance to an unacceptable level. Instead, the agency evaluation concluded this without explanation. The GAO found this unreasonable.
The GAO first notes where the claim is undocumented, there is a risk there will be inadequate supporting information. Given the record at hand, where nothing supports the agency’s claim, the protest is sustained on the ground there was not proper evaluation.
Cost Evaluation of Leidos
The GAO notes the technical evaluation and cost realism evaluation must be consistent with each other and withstand logical scrutiny in the context of a cost reimbursement contract.
Recommendation
The GAO recommends first the agency determine whether the Leidos proposal complies with the requirements of arbitration agreements. Second, the agency re-evaluate proposals.
Protest sustained.