Protest challenging the agency’s technical evaluation is sustained, where the agency assigned strengths to the awardee’s proposal for aspects that merely met the solicitation requirements and did not acknowledge the benefits of the protester’s proposal. The protester’s challenge to the best value source selection decision is also sustained, where the agency misevaluated proposals under the most important technical factor and where its tradeoff analysis did not include a meaningful comparison of the proposals.
Dynaxys LLC protested the Department of Housing and Urban Development’s award of a contract for multi-family mortgage loan servicing to KeyBank National Association, challenging the agency’s evaluation and best value tradeoff.
First, Dynaxys challenged the agency’s technical evaluation of its and KeyBank’s proposals under the RFP’s most important non-price factor, technical approach. Specifically, Dynaxys challenged the assessment of two strengths to KeyBank’s proposal for the transition-in task, arguing that the approaches proposed by KeyBank merely met, but did not exceed, the solicitation’s requirements. As a result of the error, Dynaxys argued the agency incorrectly concluded the proposals were essentially equal under the technical approach factor.
Under the transition-in task, offerors were required to provide a web-based servicing system that could generate different levels of report, such as the fund level, cohort level, project level, field office level, and national level. The task also required the contractor to provide a web-based servicing system able to service all HUD-Held notes and provide property disposition portfolio and accounting services.
In its evaluation, HUD assessed two minor strengths to KeyBank’s proposal concerning this task. First, the TEP concluded that KeyBank’s proposed web-based system had multiple fields of loan servicing and accounting data that would allow HUD to tailor reporting based on any field such as cohort, fund type, and project type. Second, the agency concluded that KeyBank’s method clearly outlined a logical methodology to transition-in the notes servicing portfolio in only 90 days with no disruption in service.
Dynaxys argued that the agency’s assessment of these two minor strengths was unreasonable because the approaches proposed by KeyBank merely met, but did not exceed, the solicitation’s requirements. In response, HUD asserted that the protester’s argument simply reflects disagreement with the agency’s evaluation. Alternatively, the agency argued that, even if the protester’s argument is valid, Dynaxys cannot show competitive prejudice. HUD argued that KeyBank’s rating was not adjusted upward as a result of these minor strengths, and therefore, Dynaxys’ rating also would not have been elevated to ‘Excellent/Very Low Risk’ had it received similar minor strengths.
GAO disagreed, finding the PWS specified that both attributes for which the agency assigned strengths were actually minimum requirements. GAO also found the protester was competitively prejudiced. First, GAO noted HUD acknowledged that Dynaxys’ proposed approach would provide the agency with the same benefits as the minor strengths assessed to KeyBank’s proposal for the transition-in task. Further, the TEP assessed two minor strengths to Dynaxys’ proposal under the technical approach factor under a different task, while no other strengths were assessed to KeyBank under the technical approach factor.
Accordingly, GAO found the record clearly reflects that the TEP concluded that Dynaxys’ proposed technical approach exceeded the PWS requirements in ways not matched by KeyBank’s proposed approach. However, GAO found nothing in the record showing the agency properly credited Dynaxys’ proposal with these strengths in conducting its best-value tradeoff analysis. The fact that the agency failed to take into account the benefits of Dynaxys’ proposed approach is sufficient to establish a reasonable possibility of prejudice, regardless of whether Dynaxys should have received a higher rating under the technical approach factor.
Next, Dynaxys protested the agency’s best-value tradeoff determination, arguing that it was based on an unreasonable technical evaluation, and that the SSA failed to consider the substantive differences between the two proposals. The protester also maintained that the SSA failed to explain why Dynaxys’ technically superior approach did not merit the higher price.
In the tradeoff decision, the agency found the offerors’ proposals essentially equal under the most important factor, technical approach. Under the second and third most important factors—management plan and quality control plan—both offerors were rated good. Under the final three factors, Dynaxys’ proposal was rated excellent under the key personnel, past performance, and socioeconomic participation factors, while KeyBank received ratings of good, neutral, and marginal. Overall, while the agency found Dynaxys’ proposal to be higher rated overall, it concluded that the proposal was not worth the price premium.
However, GAO found the decision not supported by the record, citing the errors in the agency’s evaluation. While the agency considered the offerors’ proposals essentially equal under the most important technical factor, the improper strengths assigned to KeyBank’s approach, the failure to assign strengths to the protester’s proposal for similar aspects, and the lack of evidence the agency considered the actual benefits of Dynaxys’ proposal rendered that evaluation unreasonable.
Further, GAO found no meaningful comparison of the proposals. Specifically, with regard to the most important factor, technical approach, other than a brief recitation of each offeror’s strengths, the record contained no substantive comparison or analysis of the offerors’ proposals. Instead, the SSA summarily found that the proposals were essentially equal under this factor. Similarly, although the SSA briefly listed the strengths assessed to Dynaxys’ proposal under the key personnel, past performance, and socioeconomic factors, the SSA did not provide any substantive analysis for the determination that the strengths did not outweigh the price premium. Considering the significant qualitative differences between the two proposals, GAO concluded that such a general statement fell far short of the requirement to justify cost/technical tradeoff decisions.
Next, Dynaxys challenged the agency’s price reasonableness assessment, alleging that HUD failed to follow the evaluation scheme in the RFP. The protester noted that the solicitation included a mandatory provision that offerors provide data other than certified cost or pricing data, and specified that this data would be evaluated as part of the agency’s price reasonableness determination. In response, the agency argued that the requirement was permissive.
GAO agreed with Dynaxys, but found the protester was not prejudiced by the error. KeyBank’s price proposal did not include any data other than certified cost or pricing data, and therefore, the agency’s price evaluation did not include consideration of this information. While the agency argued the solicitation was permissive, GAO disagreed. Although the RFP used the words “may” and “can,” the plain language of the solicitation, when read as a whole, clearly required that offerors provide data other than certified cost or pricing data, and specified that this information would be evaluated by the agency as part of its price reasonableness determination.
However, GAO found no prejudice to the protester arising from HUD’s waiver of this requirement for KeyBank. The protester did not assert it would have done anything differently had it known the agency would waive this requirement, but argued that KeyBank’s failure to provide the information made it ineligible for award. However, while KeyBank failed to provide the required information, the agency asserted that the data it did submit was sufficient to determine that its proposed price was fair and reasonable.
Dynaxys LLC is represented by Jonathan J. Frankel, Craig LaChance, Karla J. Letsche, and Zachary H. Schroeder of Frankel PLLC, and by Patricia H. Wittie. The government is represented by Julie Cannatti, Blythe I. Rodgers, and Dean A. Roy, Department of Housing and Urban Development. GAO attorneys Heather Weiner and Jennifer D. Westfall-McGrail participated in the preparation of the decision.
