Agency Unreasonably Discounted Benefits of Protester’s Higher-Rated Proposal; GAO B-417026, OGSystems LLC

Protest challenging the evaluation of the awardee’s technical proposal is sustained, where the agency concluded that the protester’s final revised proposal addressed the risks identified with its staffing and technical approach, but did not document the basis for this determination. GAO also found the protester did not specifically address some of the areas the agency identified as risks. GAO also sustained the protester’s challenge to the best value tradeoff decision, finding that the agency discounted the benefits of the protester’s higher-rated proposal and failed to adequately explain why it concluded that the awardee’s lower-rated proposal would be able to provide the same level of benefits over time. However, GAO denied grounds arguing the awardee took exception to the requirement to propose a fixed price and that the awardee engaged in an improper staffing bait and switch, finding neither allegation supported by the record.

OGSystems LLC protested the National Geospatial-Intelligence Agency’s award of a support services task order to Higgins, Hermansen, Banikas LLC arguing that the agency unreasonably evaluated the awardee’s technical proposal, the awardee took exception to the requirement to propose a fixed price, the awardee engaged in an improper bait and switch scheme regarding its proposed personnel, and the award decision was unreasonable.

First, OGS argued the agency provided no basis for finding that the awardee’s final revised proposal resolved multiple risks identified in its initial proposal. The protester also challenged the reasonableness of the evaluation of the awardee’s proposal in two specific areas.

During the initial evaluation, NGA assigned HHB’s technical proposal six major risks and two minor risks. After discussions and the evaluation of revised proposals, the agency concluded that it had described certain tasks inadequately and that it should revise the PWS. While OGS did not make the same assumptions as HHB, the agency attributed this to OGS’s superior knowledge as the incumbent. The agency accepted final proposed revisions. However, the evaluation record did not contain any examination of the risks assigned to the awardee’s proposal or how they were resolved in the final revised proposal.

NGA acknowledged that the record did not explain how it concluded that HHB had addressed its concerns, but argued that it had considered all the risks to have been resolved. For example, the awardee increased the number of hours and full-time equivalent personnel in its FPR, and the agency concluded that its revised technical approach was in line with historical staffing levels. The agency also explained took a broader view of the terms “risk” and “benefit” in the later evaluation, resulting in higher ratings for both offerors’ proposals.

GAO found that neither the agency’s evaluation record nor response to the protest reasonably explained how it concluded that HHB had addressed the risks identified in its initial proposal. For example, the agency did not explain which risks, or which aspects of the risks, were resolved by revisions to HHB’s proposal and which were resolved based on the revised understanding of the solicitation. Further, the agency did not explain either its initial or revised definitions of risk or benefit, and therefore GAO had no basis to conclude that either were reasonable.

Similarly, GAO agreed that NGA did not adequately explain how it determined that HHB had resolved risks related to its organization plan and teams. The agency explained that the awardee’s revised proposal included a revised organizational chart and further detail about how it would manage work requirements. However, the protester noted that the revised organizational chart failed to address PWS requirements the agency added to the solicitation specifically to address its concern that HHB did not understand the scope of the requirements.

The agency acknowledged that the awardee’s revised org chart did not address the extra tasks, but argued that other parts of the revised proposal did. However, the protester pointed out that the benefit assigned to the proposal in this area specifically addressed its “detailed organization chart with specific PWS tasks aligned to specific labor categories.” Further, the awardee’s staffing matrix did not state that certain employees would perform these tasks, so the protester questioned how the agency could have found the awardee addressed these requirements elsewhere in its proposal. GAO agreed that the agency did not demonstrate its basis for concluding that the awardee had addressed this risk. GAO sustained the protest to the technical evaluation on these grounds.

Next, OGS argued that HHB’s proposal improperly took exception to the solicitation’s requirement to propose a fixed price. OGS asserted that HHB’s proposal contained pricing assumptions that suggested the awardee would seek to negotiate prices after award.

In response, NGA explained that the pricing assumptions were merely a suggestion that HHB’s invoices may vary month-to-month until the [fixed-price] amount is reached. The agency noted that one item specifically could result in different monthly invoice amounts, but would not affect the overall ceiling price. In fact, the proposal stated that invoices could be reduced if full staffing was not in place, as often happens on a contract requiring services. GAO agreed that HHB’s pricing assumptions are reasonably understood to anticipate invoicing based on even monthly payments of a fixed-price, but will be subject to decrement in the event the awardee does not provide full staffing. GAO found nothing in the proposal taking exception to the requirement for a fixed price and denied these grounds of protest.

Next, OGS argued that HHB proposed individuals that it did not intend to provide during performance of the task order, resulting in an improper bait and switch. OGS submitted declarations from three employees who stated they were approached about working for two of HHB’s subcontractors, should HHB win the award. According to the protester, this showed that HHB was attempting to hire incumbent staff who had not been proposed for the requirement.

The agency argued this allegation did not meet the standard for an improper bait and switch. GAO agreed. While the employees attested that they were approached by HHB’s proposed subcontractors, they did not claim to know HHB’s knowledge or intentions. GAO found no evidence HHB knew or should have known that personnel identified in its proposal were not available or that the awardee did not intend to provide these individuals during performance of the task order. Accordingly, GAO dismissed these grounds of protest.

Finally, OGS challenged the best value tradeoff and award decision, arguing that the tradeoff was based on the agency’s flawed evaluation. GAO agreed, noting it had already found the evaluation unreasonable. GAO also agreed that the award decision did not reasonably explain why the agency selected HHB’s lower-technically rated, lower-priced proposal for award.

HHB’s proposed was rated “minor benefit” while OSG’s was rated “major benefit.” Further, the SSA recognized that OGS’s proposal offered higher-rated benefits. Nonetheless, the SSA wrote that both proposals had major benefits. The SSA concluded that OSG’s benefits generally resulted from its incumbency, and that HHS had the foundational knowledge needed to overcome a learning curve. The SSA wrote that the added value OSG would provide in the early stages of the contract was not worth the price premium.

OGS complained that the SSA did not explain why the benefits of its proposal were limited to the early stages of the contract, especially given the major benefits assessed by evaluators., while HHB’s benefits would extend through the life of the contract. In response, the SSA said she perceived that HHB’s benefit to the government would increase as its staff gained experience and eventually rise to the same level as OSG.

GAO found this unreasonable. GAO noted that the agency discounted the evaluated advantages identified in OGS’s proposal based on the assumption that the awardee would be able to provide similar performance, at some point after “the early stages” of performance. GAO found the agency failed to explain why it believed it was appropriate to discount the benefits in the awardee’s proposal, nor why the SSA believed the awardee’s performance would rise to the same level of benefit. The SSA did not cite any specific aspect of the awardee’s proposal that would ensure the same level of benefit as compared to the protester’s proposal, aside from general references to aspects of its proposal. Absent meaningful consideration, GAO found no basis to conclude the SSA’s decision was reasonable.

OGSystems LLC is represented by Cameron Hamrick, C. Peter Dungan, Jason A. Blindauer, and Christopher S. Denny of Miles & Stockbridge P.C. Higgins, Hermansen, Banikas, LLC is represented by Peter B. Ford, Julia Di Vito, Timothy F. Valley, and Meghan F. Leemon of Piliero Mazza PLLC. The government is represented by Kenneth W. Sachs, National Geospatial-Intelligence Agency. Jonathan L. Kang and Laura Eyester participated in the preparation of the decision.