Link: GAO Opinion
Agency: Department of the Army
Disposition: Protest denied.
Keywords: Labor Rate Pricing; Deficient Price Proposal
General Counsel P.C. Highlight: It is an offeror’s responsibility to submit a well-written proposal, which clearly demonstrates compliance with the solicitation.
Mission1st Group, Inc. (M1), a small business, protests the elimination of its proposal from consideration for award under a request for proposals (RFP), issued by the Department of the Army, for information technology services.
The RFP was issued as a total set-aside for small business, to establish a multiple award indefinite-delivery/indefinite-quantity (ID/IQ) contract for a range of services and solutions necessary to implement the agency’s enterprise infrastructure and infostructure goals. According to the RFP, the awards would be made to offerors with proposals determined to be the most beneficial, considering three evaluation factors: mission support, performance risk, and price.
The mission support factor consisted of three subfactors: corporate capability, management approach, and quality control programs. Pursuant to the RFP, under the management approach subfactor, offerors were to identify performance metrics for each objective identified in the SOO using “Table 1 – Performance Metrics.” Table 1 contained a space for each objective, and spaces for corresponding sets of performance metrics consisting of “Measures and Metrics; Acceptable Level of Quality (ALQ); and the contract level Incentives (non-monetary)/Disincentives.” In each case, the objectives were pre?printed within the table. Additionally, for three of the objectives, the RFP set forth government-specified measures, metrics, and ALQ, also pre-printed within the table.
Under the price evaluation factor, the RFP required offerors to complete a “master labor rate table” as well as a “price model spreadsheet.” To complete the price model spreadsheet, offerors were instructed to select the highest-proposed fully-loaded labor rate for each category from the master labor rate table, whether subcontractor or prime, and enter that rate into the price model. The RFP further stated that each offeror “shall provide fully loaded labor rates for the price model categories and provide personnel for the proposed rates that meet the requirements of each labor category. . . .”
After the agency chose another offeror M1 learned that its proposal had received a red/unacceptable rating under the management approach subfactor, which resulted in a red/unacceptable rating for the entire mission support evaluation factor. M1 also learned that the agency considered its price proposal to be deficient. More specifically, the agency determined that M1 had improperly modified objective 1.c of Table 1 by omitting the phrase “small business.” The agency determined that this omission materially altered the objective, and therefore failed to conform to a material term of the RFP. With regard to M1’s price proposal, the agency concluded that it was unable to calculate M1’s evaluated price because M1 had neglected to propose rates for certain labor categories required by the RFP.
M1 protests that the agency’s assessment of a deficiency under the mission support subfactor was improper because, in its view, its inadvertent omission of two words from objective 1.c of Table 1 did not constitute a material omission from its proposal. M1 additionally contends that the agency’s assessment of a deficiency under the price evaluation was improper because M1 did, in fact, propose rates for all labor categories required by the RFP. M1 claims that the agency misinterpreted its proposal, and argues that its proposal offered certain labor categories at no cost. GAO states that clearly stated RFP requirements are considered material to the needs of the government, and a proposal that fails to conform to material terms is unacceptable and may not form the basis for award. It is a fundamental principle in a negotiated procurement that a proposal that fails to conform to a material solicitation requirement is unacceptable. Here, GAO concludes that the objectives set forth in Table 1 were material requirements of the RFP, and that the agency reasonably determined that M1 improperly modified an objective in a manner that did not conform to the terms of the RFP. Under a performance-based contracting arrangement, such as here, performance metrics are more than mere proposal evaluation tools. Rather, the metrics become the standards used to assess the contractor during performance, and to determine the application of contractor-proposed performance incentives and disincentives. Indeed, the objectives, measures, metrics, ALQ, and incentives/disincentives serve to establish the performance levels that are required to meet the needs of the agency, as specified in the SOO, and are critical aspects of the resulting performance-based contract. In this case, the agency pre?printed Table 1 – Performance Metrics with statements of its objectives, and repeatedly cautioned offerors that these objectives were not to be revised. Such clearly stated RFP terms, which establish the obligations of the parties during performance, are undoubtedly material to the needs of the government; failure to conform to these terms rendered this proposal unacceptable.
Here, the objective, “[i]ncrease use of small business subcontractors and teaming partners to bring expert talent and ingenuity to the varied work under ITS-SB,” was clearly focused on increasing the use of small business subcontractors and teaming partners, rather than subcontractors and teaming partners generally. In contrast, the modified objective proposed by M1, “[i]ncrease use of subcontractors and teaming partners to bring expert talent and ingenuity to the varied work under ITS-SB,” makes no reference to small business, and thus entirely fails to reflect the import of the agency’s objective. This failure to reflect the agency’s objective is even more clear when one considers M1’s proposed measure, metric and ALQ for objective 1.c. As its measure for objective 1.c, M1 proposed an “[i]ncrease in the amount of work shared with M1 partners.” As its metric, M1 proposed “total M1 direct labor performed by subcontractors compared to the total direct labor.” GAO’s review of M1’s proposal leads to the conclusion that none of these performance metrics conform to the agency’s objective of increasing the use of small businesses.
With regard to the price evaluation, M1 contends that the agency misinterpreted its proposal when it determined that M1 had neglected to provide rates for certain required labor categories. M1 argues that, in fact, it exercised its business judgment when it offered certain labor categories at no cost to the government–a rate of “$0.00”–where M1 considered it unlikely that the labor category would be heavily utilized. M1 states that this approach to the price proposal was not prohibited by the RFP, and has been upheld in prior decisions by GAO. Based on a review of the record, as explained below, GAO finds that the agency reasonably concluded that M1 failed to offer certain required labor categories.
On the first page of its price proposal, M1 states, “Mission1st Group, Inc. has exercised best management practices, business judgment and corporate experience in electing to decline to provide pricing rates for certain proposed labor categories (e.g. Associate Program Manager).” According to M1, this language was not intended to indicate that M1 was declining to offer certain required labor categories, but that M1 was declining to price those labor categories and was offering those labor categories at no cost. This contention, however, is not supported by the price model and master labor rate table submitted with M1’s proposal.
The price model and master labor rate table both identified specific labor categories, and for each category there were corresponding entry blanks where offerors were required to identify the team members offering to provide that category and a labor rate. For certain labor categories on the master rate table, M1 entered the name of its proposed team members followed by a single dash mark in the blank provided for the corresponding labor rate. These entries support M1’s contention that it was offering the labor category at no cost. For other labor categories on the master rate table, M1 entered “N/A” rather than the name of a team member, followed by a single dash for the labor rate. This latter practice continued in the price model. In fact, for 10 of the 77 required labor categories in the price model, M1 entered “N/A” rather than the name of a team member offering the labor category, and “$0.00” as the labor rate.
M1’s failure to specify the name of a team member and a labor rate, together with its statement that it was declining “to provide pricing rates for certain proposed labor categories,” provided the agency with a reasonable basis to conclude that M1 failed to offer certain required labor categories, that its price proposal was therefore deficient, and its proposal unacceptable. It is an offeror’s responsibility to submit a well-written proposal, which clearly demonstrates compliance with the solicitation. The protest is denied.