Protest challenging the agency’s upward adjustment to the cost of certain labor categories is denied, where the rates were equal to the rates the protester charged the agency under the incumbent contract, but the agency was reasonably concerned that the protester’s problems with recruitment and retention would carry forward onto the new contract. GAO also rejected the protester’s assertion that its proposal warranted strengths, finding that the protester generally disagreed with the agency’s judgment.
Arctic Slope Mission Services LLC protested the Air Force’s award of a contract for advisory and assistance support services to Odyssey Systems Consulting Group Ltd., challenging the agency’s cost realism analysis, technical evaluation, and best-value decision.
First, the protester objected to the upward adjustments made to five of its thirteen labor rates, arguing that a proper evaluation would have rendered its price lower than the awardee’s.
As part of its cost realism analysis, the agency established what it believed to be an acceptable range of rates for the various labor categories offerors were to utilize in performance of the contract. The agency used the negotiated award rates for the previous cost-reimbursement contracts as the upper bound of the range, established the lower bound by evaluating fully burdened rates that are on contract for similar efforts in the area, and selected a midpoint of the surveyed rates and the independent government cost estimate. The agency explained that it selected a midpoint rate, rather than a rate at the lower end of its survey, because of concerns about performance risks related to recruitment and retention if the labor rates were too low.
After establishing its acceptable labor rate range, the agency compared each offerors’ proposed rates to the rate range and made upward adjustments to rates that were below the lower bound to alleviate risk of recruitment and retention performance problems. None of the proposed rates were adjusted downward. The agency then adjusted the labor rates in accordance with each offerors’ proposed escalation factor for all future contract years to establish the most probable cost for each offeror.
The agency upwardly adjusted five of the protester’s thirteen proposed labor categories. While the protester proposed the same rates it charged the government on the incumbent contract, the agency found they were below the lower bound of its acceptable labor rate range and thereby raised concerns about the protester’s ability to recruit and retain qualified personnel.
The protester argued that it was unreasonable for the agency to upwardly adjust the exact rates it was already paying under the incumbent contract. However, GAO had no basis to object to the adjustment. In establishing the lower range of rates, the agency considered recruitment and retention “very important”; took into consideration the wage premium paid to employees with required security clearances, especially considering the need for retention; and chose a midpoint rate from its market survey to reduce the risk of hired employees leaving this contract for more lucrative positions. Further, the RFP put offerors on notice that the agency considered recruitment and retention important where the entirety of the performance incentive fee plan was based on recruitment and retention.
GAO also noted the agency was aware that the protester had problems with recruitment and retention on the incumbent contract, and was therefore reasonably concerned that offering rates equivalent to the incumbent rates would lead to the same outcome. Accordingly, GAO denied the protest on these grounds.
Next, Arctic Slope challenged the technical evaluation, arguing that its proposal should have been rated more favorably under the human resource management factor. The agency assigned the protester’s proposal a technical rating of green/acceptable and a technical risk of low under the human resource management factor, but the protester argued that it warranted a higher rating. GAO reviewed a sample of the areas the protester asserted were worthy of strengths, but found no basis to sustain the protest.
For example, the protester argued that its proven track record of maintaining a workforce possessing the required security clearances and established security screening and submission process warranted a strength. The protester noted that its “time to fill” for personnel requiring a secret or higher clearance has averaged 43 days over the past three years of its incumbent performance, and was 33 days in the last year of its incumbent performance.
While the agency found the proposal contained positive attributes, it concluded that none rose to the level of strengths as defined in the solicitation. GAO found this reasonable. The RFP defined a strength as an aspect of an offeror’s proposal that exceeded the solicitation’s specified requirements in an advantageous way. Recruitment and retention of employees with the necessary security clearances was the central requirement of the solicitation, and the agency reasonably concluded that the protester’s proposal offered a strategy to meet, but not exceed, this requirement. GAO similarly rejected the protester’s other claims to various strengths in its proposal and denied the protest in its entirety.
Arctic Slope Missions Services LLC is represented by Damien C. Specht, R. Locke Bell, and Rachael K. Plymale of Morrison & Foerster LLP. Odyssey Systems Consulting Group Ltd. is represented by David S. Cohen, John J. O’Brien, Daniel J. Strouse, and Laurel A. Hockey of Cordatis Law LLP. The government is represented by Kyle E. Gilbertson and Alexis J. Bernstein, Department of the Air Force. GAO attorneys Heather Self and Edward Goldstein participated in the preparation of the decision.
