Link: GAO Opinion
Agency: Department of the Army
Disposition: Protest denied.
Keywords: Past Performance
General Counsel P.C. Highlight: An agency’s past performance evaluation may be based on a reasonable perception of a contractor’s prior performance, regardless of whether that contractor, or another offeror, disputes the agency’s interpretation of the underlying facts, the significance of those facts, or the significance of corrective actions.
USIS Worldwide, Inc. (USIS) protests the Department of the Army’s award of a contract to DynCorp International LLC (DI) pursuant to a request for proposals (RFP) to provide support for the Afghanistan Ministry of Interior (MOI) and the Afghan National Police (ANP) in building, developing, and sustaining an effective law enforcement organization
The agency issued a solicitation seeking proposals for a cost-plus-fixed-fee contract to provide mentoring, training, and logistics support for the MOI/ANP. The solicitation states that the goal of this contract is to train and mentor the Afghan government to “manage all aspects of its police training within two years of contract award.” The solicitation directed offerors to “hire Host Nation (HN) personnel and [s]ubcontractors to the maximum extent possible,” but in addressing the solicitation requirements to provide necessary and qualified personnel, the solicitation also advised offerors that there would be no nationality restrictions.
The solicitation established various contract line item numbers, dividing the contract performance requirements into three basic cost areas: program management; mentoring/training services; and logistics support services. Offerors were required to submit their proposed labor rates on spreadsheets provided with the solicitation. With regard to the evaluation of proposals, the solicitation established four evaluation factors, including technical, experience, past performance, and cost. Based on the best value to the government, a contract was awarded to DI on December 20.
USIS asserts that DI’s proposal should have been evaluated as unacceptable under the technical evaluation factor, complains that it was unreasonable for DI’s and USIS’s proposals to be evaluated as equal under the past performance factor, and challenges various aspects of the agency’s cost evaluation.
USIS first challenges the agency’s evaluation of DI’s proposal under the technical evaluation factor, asserting that DI’s proposal should have been rated as unacceptable because “[DI] has proposed to utilize TCNs [third country nationals] and HCNs [host country nationals] to perform approximately 78% of the effort.” GAO states that in reviewing an agency’s evaluation, it will not reevaluate technical proposals; rather, 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. The solicitation expressly advised offerors, that there would be no nationality restrictions in connection with the requirement to provide appropriately qualified personnel. Offerors were specifically advised to hire HCNs “to the maximum extent possible.” The agency notes that USIS’s allegations factually inaccurate regarding the percentage of TCN and HCN labor proposed by DI. Based on GAO’s review, it finds that USIS’s allegations challenging the technical acceptability of DI’s proposal are without merit.
Next, USIS challenges the agency’s evaluation of USIS’s and DI’s proposals under the past performance factor, asserting that the agency could not have rationally found the two proposals to present equal performance risk. GAO states that an agency’s evaluation of past performance, which includes its consideration of the relevance, scope, and significance of an offeror’s performance history, as well as consideration of actions taken to resolve prior problems, is a matter of agency discretion which it will not disturb unless the agency’s assessments are unreasonable, inconsistent with the solicitation criteria, or undocumented. Further, an agency’s past performance evaluation may be based on a reasonable perception of a contractor’s prior performance, regardless of whether that contractor, or another offeror, disputes the agency’s interpretation of the underlying facts, the significance of those facts, or the significance of corrective actions. GAO will not substitute its judgment for that of the agency, and a protester’s mere disagreement with such judgment does not provide a basis to sustain a protest.
GAO has reviewed the substantial record of information the agency considered in evaluating DI’s and USIS’s proposals under the past performance factor and finds no basis to question the reasonableness of the agency’s determination that the proposals were equal with regard to performance risk where the record shows that the agency initially evaluated both DI’s and USIS’s proposals as representing moderate risk, based on various issues related to their, or their proposed subcontractors’ performance of prior contracts. The agency recognized both positive and negative prior aspects of each offeror’s prior performance record; it took into consideration the relevance, scope, and significance of both offerors’ prior performance histories, including consideration of each offeror’s corrective or remedial actions in response to prior problems; and it contemporaneously documented its evaluation.
USIS asserts that the agency’s cost evaluation was flawed because it employed a “mechanistic” statistical analysis; failed to consider all proposed labor; and failed to consider the offerors’ respective fringe benefits. GAO states that when an agency evaluates a proposal for the award of a cost-reimbursement contract, an offeror’s proposed costs are not considered controlling because, regardless of the costs proposed, the government is bound to pay all actual, allowable costs. Consequently, an agency must perform a cost realism analysis to evaluate the extent to which an offeror’s proposed costs are realistic for the work to be performed. However, an agency is not required to verify each and every item in assessing cost realism; rather, the agency must perform a reasonable evaluation, which may, and should, include the informed judgments of the contracting agency. Similarly, an agency’s cost realism analysis need not (and realistically cannot) achieve scientific certainty; rather, the analysis must provide a reasonable measure of confidence that the proposed costs are reasonable and realistic.
Here, the agency performed, and documented, a comprehensive cost evaluation of the offerors’ proposals. More specifically, the record shows that, following submission of initial proposals, the agency evaluated each cost proposal, identifying multiple cost IFNs for both DI and USIS, which were presented to them during discussions. Following the offerors’ submission of revised proposals, the agency again evaluated the cost proposals, again identifying various aspects of each offeror’s cost proposal that needed to be, and were, addressed during a second round of discussions. Finally, following submission of FRPs, the agency conducted its final evaluation of cost proposals. The record shows that, in performing its cost evaluation of the various proposal submissions, the agency considered the proposed costs of each proposal, broken down by CLIN.
GAO finds that the agency’s comparison of each offeror’s proposed rates to the average of the rates proposed by all six competitive range offerors, along with its requirement that offerors further justify rates that were lower than one standard deviation below that average, as a reasonable tool in performing a cost analysis.
The agency considered information regarding the rates charged by the offerors under other, similar contracts. The agency also considered the information provided by the offerors regarding the status of the labor market, including USIS’s own observations regarding the commoditization of certain labor categories. The agency’s evaluation specifically considered the status of the Afghanistan labor market in the context of the current unemployment rate and average per capita income. Finally, USIS has not persuasively shown that any of DI’s proposed rates are unrealistic. GAO finds no merit in USIS’s assertion that the portion of the agency’s cost realism evaluation that employed statistical analysis was “mechanistic and irrational.”
Finally, USIS complains that the agency’s cost evaluation failed to properly reflect consideration of DI’s and USIS’s respective fringe benefits. To the contrary, the agency’s evaluation record demonstrates that it gave a significant amount of consideration to the differing fringe benefits proposed by DI and USIS. Among other things, the agency’s evaluation considered the difference in the offerors’ fringe benefits with regard to applicable taxes, bonuses, and application of post and hazard differentials to base hours. Ultimately, the agency concluded that the differences were not sufficiently significant to warrant cost realism adjustments. While USIS disagrees with the agency’s judgment, such disagreement provides no basis for sustaining the protest. The protest is denied.