Link: GAO Opinion
Agency: Department of the Army
Disposition: Protests denied.
- Protest of agency evaluation of system maturity of offerors’ proposed joint light tactical vehicle configurations is denied; agency reasonably determined that awardees had previously constructed and tested demonstrators or prototypes that were sufficiently representative of proposed configurations such that risk awardees would be unable to meet demanding performance schedule was materially reduced.
- Agency reasonably determined that incorporated joint venture awardee satisfied requirement for Cost Accounting Standards disclosure statement where proposal included disclosure statements originally submitted by, and concerning cost accounting systems of, joint venture members/subcontractors; proposal indicated that all costs to be billed under contract would be incurred and accounted for by joint venture members/subcontractors, with no allowance for any costs to be incurred and accounted for at joint venture level; and proposal delineated overall share in cost of performance and specific roles to be filled by each joint venture member/subcontractor.
General Counsel P.C. Highlight:
NG’s and Textron’s protests focus in significant measure on the evaluation under the integrated system maturity (ISM) subfactor. The ISM subfactor included four equally-weighted elements–the JLTV-A, JLTV-B, and JLTV-C configurations, and program management. The RFP provided that for each of the three configuration elements, the government would assess the probability/risk that the configuration would achieve program requirements within 27 months based on four considerations: system design maturity, system reliability maturity, system maintainability maturity, and system command, control, communications, computers and intelligence (C4I) maturity. NG and Textron assert that BAE and GTV improperly received credit in the ISM maturity evaluation for having built a demonstrator, since the agency did not consider whether the demonstrators were comparable to the offerors’ proposed JLTV approaches.
As an initial matter, GAO agrees with the agency that nothing in the solicitation required a showing that an offeror’s demonstrator was identical to its ultimate proposed design in order to receive some credit in the maturity evaluation for the demonstrator. In this regard, the RFP provided only that “[t]he primary purpose of the substantiating data submitted for the integrated system maturity subfactor is to document and verify the achievement and credibility of the offeror’s proposed maturity level,” with the maturity self-assessment in turn to “be based upon the proposal configurations characterized in the offeror’s System Description.” Agency witnesses at the hearing GAO conducted in this matter testified that the agency undertook the ISM maturity evaluation with the view that the demonstrator “doesn’t necessarily have to be the 100 percent solution that you are going to deliver to the Army, but it has to be representative.” GAO finds that the agency’s focus on whether a demonstrator was representative of, rather than identical to, an offeror’s ultimate proposed design, and on whether it appeared that the offeror had refined its design based on lessons learned from the demonstrator, was both consistent with the terms of the solicitation and reasonable.
NG asserts that AMC improperly assigned proposals evaluation credit for demonstrating achievement of all or part of a higher maturity level, when all lower maturity levels had not been achieved. The protester notes, in this regard, that attachment 24 provided, with respect to the system design maturity levels, that “[t]he below levels are cumulative; any level achieved must include achievement of all lower levels (except for Level 3 . . . ),” and with respect to the maintainability, reliability and C4I maturity levels, that “[t]he below levels are cumulative; any level achieved must include achievement of all lower levels.”
The RFP and discussions language cited by the agency appears to support its view that offerors were on notice that all maturity characteristics would be considered, regardless of the level achieved. In any case, however, GAO need not resolve this dispute, since the record indicates that NG’s proposal was based on the agency’s interpretation of the RFP. Specifically, in the maturity self-assessment in its FPR, NG claimed credit for having partially completed system design maturity level 5, even though its own self-assessment indicated that it had only partially completed maturity level 4. Having submitted a proposal on the understanding that partial credit was available for a maturity level notwithstanding the failure to complete lower maturity levels, NG cannot now assert that this approach was inconsistent with the terms of the solicitation. The integrity of the protest process does not permit a protester to espouse one interpretation or position during the procurement, and then argue during a protest that the interpretation or position is unreasonable or otherwise improper.
NG and Textron assert that the risk with respect to the evaluated performance of the offerors’ proposed designs as reported to the SSA and SSAC was misleading. In this regard, the RFP generally provided that the evaluation would take into account “the relative strengths/weaknesses and risks of each proposal.” The RFP further generally provided for consideration of proposal risk, stating as follows: “Proposal Risk is assessed by the SSEB [Source Selection Evaluation Board] and is integrated into the assessment of the Technical, Logistics Commonality, and Cost Factors and the Small Business Participation subfactor.” Regarding the performance subfactor of the technical evaluation factor, under which the transportability, mobility, force protection, and payload characteristics of the proposed JLTV configurations were to be evaluated, the solicitation provided that: a. where the PD [Product Description] requirements in Attachment 26 identifies objectives, the Government will assess the extent to which the Offeror’s proposed performance levels satisfy the PD objective performance, and b. the proposal risk probability that, for the PD requirements in Attachment 26, the Offeror will achieve (1) PD threshold performance levels, and (2) any offeror proposed performance above PD threshold levels up to objective performance levels.
The protesters assert that several of the risk ratings in the evaluation findings regarding mobility as set forth in the briefing slides presented to the SSA and SSAC were misleading. In this regard, the briefing slides included 12 evaluation categories based on various PD requirements (e.g., forward speed, acceleration dash speed, speed on grade, etc.) with respect to mobility, 1 of the 4 elements of the performance subfactor of the technical evaluation factor, resulting in a total of 36 ratings (12 categories x 3 JLTV configurations). As noted by the protesters, the agency assigned the risk rating associated with each category/JLTV rating based on the risk that the configuration would achieve the proposed performance, rather than the risk that the configuration would achieve either the threshold or objective performance levels, with the result that in several instances the risk ratings appear anomalous.
However, while the protesters are correct that basing the risk rating in the briefing slides on the difference between the proposed and evaluated speeds could, in the absence of further information, potentially mislead the SSA as to the relative speeds of the proposed JLTVs, it is clear that the briefing slides in fact reasonably set forth the evaluated relative performance of the proposed JLTV configurations for consideration by the SSA and SSAC. Again, the slides not only included a risk rating based on the likelihood that each JLTV configuration would meet the proposed level of performance, an evaluation approach provided for under the solicitation, but also included both the evaluated level of performance of each JLTV configuration and the associated strengths and weaknesses. Thus, it was apparent from the briefing slides that NG’s proposed JLTV-A configuration was evaluated as likely to achieve a higher forward speed ([REDACTED] mph) than BAE’s ([REDACTED] mph). GAO concludes that the evaluation record was sufficient to put the SSA and SSAC on notice of the relative merits (including regarding mobility) of the proposed designs.
The protesters assert that the overall evaluation ratings were mechanical in that the adjectival and risk ratings were inextricably and improperly linked. In this regard, the protesters note that the agency’s source selection plan defines five adjectival evaluation ratings for the ISM and performance subfactors of the technical evaluation factor, and lists a risk rating for each adjectival rating as follows: excellent/very low risk, good/low risk, adequate/moderate risk, marginal/high risk, and poor/very high risk. As noted by the protesters, in each case, the overall adjectival rating and risk ratings assigned an offeror’s proposal for the 4 ISM subfactor elements (JLTV-A, JLTV-B, JLTV-C and program management) and 4 performance subfactor elements (transportability, mobility, force protection and payload) correlated to the above adjectival/risk rating pairings. However, while the protesters assert that the above facts demonstrate that the agency’s adjectival and risk evaluation ratings were mechanically, and therefore improperly, linked, they have made no showing that the overall ratings at the element level did not in fact reasonably reflect the relative strengths and weaknesses of the offerors’ proposals such that the linking resulted in competitive prejudice.
The protesters assert that GTV’s proposal was unacceptable for failure to comply with the solicitation’s cost accounting standards (CAS) and small business participation requirements. GAO states that section 422 of title 42 of the United States Code directs the CAS Board to promulgate regulations, which shall be incorporated into the Federal Acquisition Regulation (FAR) and shall “require contractors and subcontractors as a condition of contracting with the United States to–(A) disclose in writing their cost accounting practices, including methods of distinguishing direct costs from indirect costs and the basis used for allocating indirect costs.” In this regard, the solicitation incorporated FAR clause 52.230-1, CAS Notices and Certifications, which provides as follows: Any offeror submitting a proposal which, if accepted, will result in a contract subject to the requirements of 48 CFR Chapter 99 must, as a condition of contracting, submit a Disclosure Statement as required by 48 CFR 9903.202. When required, the Disclosure Statement must be submitted as a part of the offeror’s proposal under this solicitation unless the offeror has already submitted a Disclosure Statement disclosing the practices used in connection with the pricing of this proposal.
In turn, 48 C.F.R. sect. 9903.202-1(b)(1) provides that “[a]ny business unit that is selected to receive a CAS-covered contract or subcontract of $50 million or more shall submit a Disclosure Statement before award.” Here, the negotiated contract with GTV is a CAS-covered contract, and because the contract was in excess of $50 million, GTV “as a condition of contracting,” was required to submit a CAS disclosure statement.
GTV, a limited liability joint venture incorporated in the state of Delaware, is comprised of two large business joint venture members–AM General and General Dynamics Land Systems (GDLS). GTV’s proposal indicated that 100% of the contract costs would be accounted for by subcontracts with the two joint venture members, apportioned between them equally. GTV indicated in its proposal that a CAS disclosure statement had previously been submitted, and specifically cited in this regard disclosure statements submitted by AM General and GDLS.
The protesters assert that, because the CAS disclosure statements GTV relied on to meet the solicitation requirements had been submitted by and concerned the cost accounting systems of GTV’s joint venture members–that is, its subcontractors for this contract–and did not address the cost accounting system of GTV itself, the prime contractor, GTV failed to meet the CAS disclosure requirement and thus was ineligible for award. This argument is unpersuasive. In order to assist in consideration of this matter, GAO requested an advisory opinion from the Defense Contract Audit Agency (DCAA), which is responsible for performing contract audits for the Department of Defense (DOD), and for providing accounting and financial advisory services regarding contracts and subcontracts to all DOD components responsible for procurement and contract administration. In responding to this request, DCAA referred to the DCAA Contract Audit Manual, DCAAM sections 7640.1, 7-1810.2, which provides audit guidance.
Applying this guidance, DCAA advised that submission of a CAS disclosure statement by the GTV joint venture itself may not be required; since all of the joint venture’s costs were proposed to be incurred and accounted for by the two joint venture members (which had already submitted their respective CAS disclosure statements) it would not serve a useful purpose in the examination of the joint venture’s cost proposal or in ensuring the joint venture’s compliance with the CAS Board’s rules. GAO finds DCAA’s position persuasive. GTV’s proposal in fact incorporated CAS disclosure statements applicable to the contemplated contract effort. While these disclosure statements had originally been submitted by, and concerned the cost accounting systems of, GTV’s joint venture members/subcontractors, GTV’s proposal indicated that all costs to be billed under the contemplated contract would be incurred and accounted for by GTV’s joint venture members/subcontractors, with no allowance for any costs to be incurred and accounted for at the GTV level. Furthermore, GTV’s proposal delineated the overall share in the cost of performance and the specific roles to be filled by each joint venture member/subcontractor. In these circumstances, we think AMC could reasonably determine that GTV’s proposal satisfied the CAS disclosure requirements. The protests are denied.