BNUMBER: B-278108
DATE: December 22, 1997
TITLE: Resource Management International, Inc., B-278108, December
22, 1997
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DOCUMENT FOR PUBLIC RELEASE
The decision issued on the date below was subject to a GAO Protective
Order. This redacted version has been approved for public release.
Matter of:Resource Management International, Inc.
File: B-278108
Date:December 22, 1997
Catherine E. Pollack, Esq., James J. McCullough, Esq., Joel R.
Feidelman, Esq., and
Douglas R.M. King, Esq., Fried, Frank, Harris, Shriver & Jacobson, for
the protester.
David R. Johnson, Esq., and James C. Dougherty, Esq., Gibson, Dunn &
Crutcher, for Hagler Bailly Services, Inc., an intervenor.
Gary M. Winter, Esq., United States Agency for International
Development, for the agency.
Peter A. Iannicelli, Esq., and Michael R. Golden, Esq., Office of the
General Counsel, GAO, participated in the preparation of the decision.
DIGEST
Protest alleging that the agency improperly awarded a contract to the
awardee on the basis of its lower cost, lower technically rated
proposal where the RFP emphasized that technical factors were
significantly more important than cost is denied where the contracting
officer reasonably determined that the protester's and the awardee's
proposals were essentially technically equal and that the slight
technical advantage represented by the protester's proposal did not
merit the expenditure of roughly $[deleted] in additional funds that
it would cost to have the protester perform the work.
DECISION
Resource Management International, Inc. (RMI) protests the United
States Agency for International Development's (USAID) award of a
contract for providing technical assistance to the Government of the
Philippines to Hagler Bailly Services, Inc. (HBS) pursuant to request
for proposals (RFP) No. 492-97-323. The protester contends that, in
deciding to award the contract to HBS on the basis of its lower priced
proposal, the contracting officer placed undue emphasis on cost and
ignored the RFP's stated evaluation criteria, which emphasized
technical superiority and quality of proposed personnel.
We deny the protest.
Issued on March 19, 1997, the RFP solicited proposals for providing
technical assistance to the Government of the Philippines concerning
mitigation of greenhouse gases. Among other things, the contractor
will provide technical and training assistance to: (1) several
government agencies involved in energy planning, policy development,
regulation and program implementation; (2) private utilities involved
in developing cleaner fuel generation facilities or improving the
efficiency of existing generation, transmission and distribution
systems; and (3) industrial and commercial sectors related to using
energy more efficiently. The RFP contemplated award of a 40-month,
level-of-effort contract, and stated that the contractor would be paid
on a cost-plus-fixed-fee basis.
The RFP stated that the contract would be awarded to the offeror whose
proposal offered the best value to the government after consideration
of both technical factors and cost. The RFP stated that technical
proposals would be evaluated and point-scored by a technical
evaluation committee (TEC) and listed the evaluation criteria and the
maximum number of evaluation points available for each as follows:
(1) team organizations, qualifications and experience (50 points); (2)
past performance and commitment to deliver quality people (35 points);
and (3) partnering for best use of resources (5 points). The RFP also
stated that cost would be given a point score and provided a formula
whereby the lowest-cost proposal would receive the maximum of 10
points, while other proposals would receive fewer points based upon
comparison of their proposed costs with the lowest proposed cost. The
RFP cautioned that the government would not be obligated to award the
contract to either the offeror proposing the lowest cost or the
offeror whose proposal garnered the highest evaluation score. The RFP
also advised that "[t]he formula set forth above will be used by the
Contracting Officer as a guide in determining which proposals will be
most advantageous to the Government."
Six offers were received by the May 7, 1997, closing date. After
evaluation of technical and cost proposals, four offers were
determined to be in the competitive range, and written and oral
discussions were held with each competitive-range offeror. Offerors
were allowed to clarify and/or revise proposals and submitted best and
final offers (BAFO). The TEC members individually reviewed technical
BAFOs and then met as a group to discuss their findings and to reach a
consensus. Based solely upon its evaluation of technical proposals,
the TEC recommended that RMI be awarded the contract. The contracting
officer assigned each BAFO cost points according to the formula set
out in the RFP.
The final ranking of offers, based upon technical and cost scores
combined, was:
Offeror Proposed CostCost Score Technical ScoreTotal Score
RMI [deleted] [deleted] [deleted] [deleted]
HBS [deleted] [deleted][1][deleted] [deleted]
Offeror C [deleted] [deleted] [deleted] [deleted]
Offeror D [deleted] [deleted] [deleted] [deleted]
As explained in detail below, the contracting officer performed a best
value analysis, reviewing the major cost elements of RMI's and HBS'
proposals, and comparing both offerors' proposed costs to the agency's
in-house cost estimate. Notwithstanding the TEC's recommendation that
the contract be awarded to RMI, and acknowledging that cost was worth
only 10 points out of the 100 points available under the RFP's
evaluation scheme, the contracting officer determined that the
proposals of RMI and HBS "could be considered technically equal" and
awarded the contract to HBS. After a debriefing, RMI filed this
protest.
The protester contends that the award to HBS was contrary to the RFP's
stated basis for evaluation and award. Specifically, RMI contends
that the contracting officer improperly awarded the contract to the
firm that submitted the lower cost, technically acceptable offer,
instead of giving more weight to the technical factors as required by
the RFP's evaluation scheme. Citing Tulane Univ., B-259912, Apr. 21,
1995, 95-1 CPD para. 210, as support, RMI argues that because the RFP's
evaluation formula required the award of evaluation points for both
technical merit and cost, the contracting officer should not have
performed any further analysis and was required to award the contract
to RMI because its proposal had received the greatest number of
technical and cost points combined.
The protester misconstrues our Tulane University decision. In that
case, at 4, we held that, since the RFP included a cost/technical
tradeoff formula for determining the best value to the government that
accounted for both technical factors and cost, the agency properly
could award the contract to the offeror whose proposal had obtained
the highest combined technical/cost score without performing any
additional cost/technical tradeoff analysis to justify its selection.
However, we did not hold, as the protester argues, that source
selection officials are required to mechanically award contracts to
the offeror whose proposal receives the highest number of points in
any case where the solicitation's evaluation formula accords points
for both cost and technical factors. We also did not hold that the
inclusion of such an evaluation formula in the solicitation prohibits
the source selection official from examining the evaluation materials
and the evaluation panel's recommendation or from performing any
additional cost/technical tradeoff analysis before selecting the
winning offer. Furthermore, this RFP specifically advised that AID
was not obligated to award to the offeror proposing the lowest cost or
the offeror who obtained the highest evaluation score. The RFP also
stated that the formula would be used as a guide for the contracting
officer. Thus, in contrast to the RFP at issue in the Tulane
University decision, this RFP clearly notified offerors that the award
would not be based solely on the formula.
Source selection officials are vested with a very broad degree of
discretion to determine the manner and extent to which they will make
use of evaluation results, and they are not bound by the
recommendations made by evaluation panels or other advisory groups.
Grey Adver., Inc., 55 Comp. Gen. 1111, 1120 (1976), 76-1 CPD para. 325 at
11; PRC, Inc., B-274698.2, B-274698.3, Jan. 23, 1997, 97-1 CPD para. 115
at 7. In a negotiated procurement with a best value evaluation plan,
point scores are useful as guides but do not mandate automatic
selection of a particular proposal. PRC, Inc., supra, at 12. Whether
a given point spread between two competing proposals indicates a
significant superiority of one proposal over another depends upon the
facts and circumstances of each procurement and is primarily a matter
within the discretion of the procuring agency. Grey Adver., Inc., 55
Comp. Gen. 1111, 1118-1119, (1976) 76-1 CPD para. 325 at 9-10. The
question of whether a difference in point scores is significant is for
determination on the basis of both what that difference might mean in
terms of performance and what it would cost the government to take
advantage of it. Id. Where selection officials reasonably regard
proposals as being essentially equal technically, cost can become the
determining factor in making award notwithstanding that the evaluation
criteria assigned cost less importance than technical factors. The
Parks Co., B-249473, Nov. 17, 1992, 92-2 CPD para. 354 at 4. Moreover, an
agency may properly award to a lower rated, lower cost offeror, even
if cost is the least important evaluation factor, if it reasonably
determines that award to the higher cost offeror is not justified
given the level of technical competence available at the lower cost.
PRC, Inc., supra, at 12. The record shows that the contracting
officer's decision to award the contract to HBS was both reasonable
and consistent with the RFP's evaluation scheme.[2]
RMI's BAFO received a technical score of [deleted] points while HBS'
received [deleted] points--a difference of [deleted] technical points
in RMI's favor (see page 3 above). RMI's proposed price (i.e.,
proposed costs plus fee) was $[deleted] while HBS' proposed price was
only $[deleted]. Thus, it would cost USAID approximately $[deleted]
more to have RMI, instead of HBS, perform the work. The record shows
that the contracting officer was aware of the technical and cost
differences and she knew that the TEC preferred RMI's BAFO and
recommended award to RMI. Tr. at 19. However, based upon her review
of the BAFO scoring, the contracting officer believed that HBS'
proposal was "running very close behind" RMI's and, based upon her
review of the earlier evaluation record, the contracting officer
believed that RMI's and HBS' proposals were basically "nip-and-tuck
technically" throughout the procurement. Tr. at 19 and 30. The
contracting officer testified that, in accord with the RFP's express
provisions, she viewed the evaluation scores as mere "guides" for her
use in determining which proposal was most advantageous to the
government, and the TEC's recommendation as just that--a
recommendation to be considered in making the selection decision. Tr.
at 26 and 84. She also testified that, in making her best value
determination, she gathered as much information as she could, reviewed
relevant Comptroller General decisions, consulted with a legal
adviser, indirectly communicated with the TEC (through the TEC
chairman and a contract specialist), and "wrestled over this problem
of lower price, lower technical score, for close to a week." Tr. at
16-17, 24-29.
After reviewing the evaluation materials, including the TEC's
recommendation, the contracting officer considered a number of factors
before deciding that the proposals of RMI and HBS "could be considered
technically equal" and that RMI's proposal's slight technical
advantage "did not appear to merit paying the cost premium."[3] Tr.
at 31. Among other things, the contracting officer carefully examined
RMI's [deleted]-point technical advantage over HBS and made the
following observations:
1. The contracting officer noted that RMI's overall technical
advantage was due exclusively to its higher rating on the most
important evaluation factor ("team organizations, qualifications and
experience"), but that HBS' proposal received slightly higher ratings
than RMI's on the second and third most important evaluation factors
("past performance and commitment to deliver quality people" and
"partnering for best use of resources"). Tr. at 44-45 and 56-58.
2. The contracting officer testified that she was aware from her
review of the evaluation record and discussions with her staff that
RMI's key personnel (i.e., the proposed chief of party and deputy
chief of party) had done a better job during oral discussions than had
HBS' key personnel.[4] Tr. at 23 and 45. In this connection, the
contracting officer testified that she considered the fact that HBS
had changed some of its proposed key personnel during the course of
the procurement and, therefore, since HBS' key personnel had not been
associated with the proposal from the outset "maybe they weren't able
to shine as much as somebody who might have been connected with the
proposal from day one." Tr. at 23.
3. The contracting officer testified that RMI's proposed deputy
chief of party had worked with at least one and possibly other TEC
members previously. While she did not discount the higher ratings
RMI's proposal received in the evaluation of its key personnel's
qualifications and experience, she did consider the fact that the
evaluators might have scored RMI's proposal a little higher because
they knew, or had worked with, RMI's deputy chief of party before.
Tr. at 23, 66-67.
4. The contracting officer noted that the TEC was not completely
satisfied with RMI's proposed personnel. In particular, the TEC
criticized RMI's choice for the [deleted] and stated that it would
have welcomed a different candidate; the TEC also recommended a
performance review of this candidate after a year (if RMI were
selected) and that he be replaced if his performance were found to be
less than satisfactory. Tr. at 24.
5. The contracting officer also examined the qualifications of
HBS' proposed personnel and determined that their qualifications were
also quite high. Tr. at 78.
The contracting officer also reviewed the roughly $[deleted]
difference between RMI's and HBS' proposed costs (see page 3 above)
and observed that the bulk of the cost differential was due to the
fact that RMI proposed to have [deleted]. The contracting officer
noted that this resulted in approximately $[deleted] of indirect
costs, for such items as general and administrative expenses,
additional indirect costs, and additional fees, being included in
RMI's total price. The contracting officer determined that such
indirect costs would not directly benefit the Government of the
Philippines in terms of a greater level of effort. Tr. at 21 and 38.
Based upon the above analysis, the contracting officer determined that
RMI's proposal's slightly higher technical rating did not merit the
expenditure of approximately $[deleted] in additional funds. The
contracting officer also noted that this was a level-of-effort
contract in which the government was basically purchasing "bodies and
person-months" of work and that both offerors were offering basically
the same thing (Tr. at 20), the RFP did not seek and the proposals did
not include any unique or innovative approaches to performing the
work, and the TEC unanimously agreed throughout the procurement that
HBS could provide the skills needed under the contract. Finally, even
though there was no requirement that she do so, the contracting
officer, using the TEC chairman and a contract specialist as
intermediaries, contacted the TEC members and informed them that it
would cost roughly $[deleted] more to award the contract to RMI as the
TEC had recommended and gave them each an opportunity to provide any
justification, in addition to the ratings and preferences stated in
the evaluation documents, for paying that cost premium.[5] Tr. at
24-27. The record shows that the TEC members, apparently because they
viewed their role as limited to the technical evaluation, did not
provide any such justification.
In view of the very thorough deliberative process described above, we
think that the contracting officer reasonably determined that HBS'
proposal was the most advantageous to the government. Accordingly,
even though the RFP emphasized the importance of technical factors
over cost, the award to HBS on the basis of its lower cost proposal
was reasonable and supported by the record.
The protest is denied.
Comptroller General
of the United States
1. Our calculations show that this figure should actually be
[deleted]; however, the difference is de
minimis and had no effect on the outcome of
the competition or our resolution of the
protest.
2. The record included the protester's and the intervenor's legal
briefs; the agency report and legal briefs; the evaluation documents;
the TEC's consensus memorandum summarizing its evaluation of each
offer and recommending award to RMI; declarations from the TEC
chairman, each TEC member, and a contract specialist; and the
contracting officer's memorandum of negotiation which, among other
things, provided the rationale for the selection of HBS. We also
convened a hearing on November 14, 1997, during which the contracting
officer testified concerning her decision to award the contract to HBS
notwithstanding the TEC's recommendation to award to RMI; transcript
(Tr.) citations refer to the transcript of that hearing.
3. The protester focuses on the apparent inconsistency between the
contracting officer's reference to the proposals being essentially
technically equal and her recognition of the cost/technical tradeoff
required for the source selection. In our view, there is no real
inconsistency here. The contracting officer concluded (based on the
analysis summarized below) that, while the protester's proposal was
rated higher, the difference between the two proposals was slight and
did not justify paying the cost premium associated with RMI's
proposal.
4. Each offeror's proposed chief of party and deputy chief of party
were interviewed by the TEC during oral discussions. HBS replaced its
originally proposed chief of party just days before the interview.
5. Before this the TEC was not aware of proposed costs or of the
magnitude of the cost differential. Tr. at 25