In an advisory opinion prepared at the request of the Court of Federal Claims, GAO finds that it would have sustained in part a protest challenging the agency’s price reasonableness evaluation. The solicitation required the agency to evaluate the reasonableness of fixed-price CLINs separate from cost-reimbursement CLIN’s. GAO found that the agency improperly integrated the evaluation of the fixed-price and the cost CLINs in a manner inconsistent with the solicitation. The protester also challenged the agency’s cost realism, technical, past performance, and small business participation evaluations. But GAO found that outside of price reasonableness, none of the other arguments stated a valid protest basis.
The Army issued an RFP under the Logistics Civil Augmentation Program (LOGCAP) for logistical support services at various military installations around the globe. The RFP contemplated the award of multiple IDIQ contracts. In addition to the IDIQ awards, the RFP contemplated the simultaneous issuance of task orders for each of the military’s geographic commands—e.g., Northern Command (NORTHCOM), Central Command (CENTCOM), Pacific Command (PACOM), etc.—as well as Afghanistan.
Six offerors, including Fluor Intercontinental, Kellogg Brown and Root Services, Inc.(KBR), and Vectus Systems Corp. responded to the solicitation. The Army awarded the contract for the European Command (EUCOM) and Afghanistan regions to KBR. It awarded the PACOM and CENTCOM contracts to Vectrus. Finally, the Army awarded the African Command (AFRICOM) contract to Fluor.
Fluor filed a protest with GAO challenging the EUCOM, PACOM, CENTCOM and Afghanistan contracts. Another disappointed bidder filed protests challenging the LOGCAP awards with the Court of Federal Claims (COFC). In accordance with its bid protest regulations that prohibit GAO from deciding protests pending before a court, GAO dismissed Fluor’s LGOCAP-related protests. Fluor then refiled its protests with the COFC. The COFC, however, requested that GAO issue an advisory opinion on Fluor’s protests.
In its protest, Fluor argued that the Army had erred in assessing price reasonableness of KBR’s proposal. Each task order had two price components. First, they had a fixed-price “setting the theater” component, which required the contractor to fulfill some initial preparatory tasks. Second the RFP had a large cost reimbursable portion, which contained no guaranteed minimums. Although the RFP had two components, the Army did not separately evaluate each component. Instead, the Army only evaluated the reasonableness of cost-reimbursement component, and then, relying on the non-price evaluation ratings, determined that KBR’s fixed prices were reasonable. Fluor argued that this integrated evaluation of the reasonableness of the fixed-price and cost-reimbursable CLINs was improper.
GAO agreed with Fluor. The terms of the RFP could only reasonably support one interpretation—namely, that the Army was required to separately evaluated the fixed-price and cost-reimbursable CLINs. Both CLIN types had to be separately found reasonable for an offeror to be eligible for award.
What’s more, GAO continued, it was not apparent that the Army’s integrated analysis was reasonable. The FAR prescribes a variety of price evaluation techniques. While it allows the agency to consider non-price factors, it did not appear that the Army had considered non-price factors in conjunction with the methods prescribed by the FAR. More problematically, it was unreasonable for the Army to consider the non-price factors in evaluating the reasonableness of the fixed-price, “setting the theater” component because the Army did not receive any technical proposals for the setting-the-theater CLINs. In the absence of any proposal or other description as to what the government would have received for KBR’s proposed fixed-price CLINs, the Army could not have assessed the value offered by KBR when assessing the price reasonableness of those fixed-price CLINs.
The Army argued that even assuming that it had waived the RFP requirement to separately evaluate the fixed-price and cost components for reasonableness, Fluor had not indicated how it would have changed its proposal and thus had not demonstrated how it was prejudiced by the error. But GAO found that had the Army adequately evaluated prices for reasonableness and ultimately found KBR’s proposed fixed prices unreasonable, KBR would have been ineligible for award. Fluor would have then had a reasonably possibility of receiving award. Fluor had been prejudiced.
In addition to the price reasonableness argument, Fluor raised numerous challenges to other portions of the agency’s evaluation. GAO, however, found these other arguments less compelling.
Fluor contended that the Army failed to evaluate Vectrus’s proposed cost/price for CENTCOM as unrealistically low. Fluor alleged that the Army was required to adjust Vectrus’ price upwards because the program management and emergency dispatch components of its price were too low. But GAO found that Fluor had misinterpreted the program management hours Vectrus had proposed. As to the emergency dispatch component, GAO noted that even if it accepted Fluor’s allegation and adjusted Vectrus’ price, it would have only changed the price by at most $33 million. This would not have impacted Vectrus’ more than $300 million price advantage, so Fluor was had not prejudiced by the alleged error.
Fluor next alleged that the Army botched the technical analysis. The RFP required offerors to demonstrate their experience by (1) populating a capability matrix, essentially a worksheet that on which offerors indicated how many tasks they had performed, and (2) submitting a capability narrative that qualitatively described their experience. Fluor contended that the Army ignored the capabilities matrix and focused too much on the narrative. In doing so, the argument continued, the Army failed to consider qualitative differences between offerors capabilities.
GAO, however, found that the Army performed an integrated assessment of the offerors’ capabilities as required by the RFP. Rather than jettisoning the matrices, the Army used the matrices to validate the experiences described in the narratives.
Additionally, Fluor contended the technical evaluation was flawed because the Army made unsupported and unreasonable revisions to offerors’ adjectival ratings between the interim and final evaluations. This, Fluor claimed, increased KBR’s and Vectrus’s technical ratings while decreasing Fluor’s rating for the Afghanistan contract. GAO found that the Army did not merely rely on the assigned adjectival ratings but rather thoroughly considered the merits of proposal based on evaluation findings. Moreover, the record showed that the Army consistently rated Fluor’s technical proposal as superior to all others. Fluor’s complaints about the ratings did not provide a valid protest ground.
Fluor further complained about past performance, arguing that the Army unreasonably considered its adverse past performance. Fluor had experiences problems with security—involving a suicide bomber at a base—and cost controls on some of its previous contracts. GAO could not conclude that the Army’s consideration of these concerns was unreasonable. The evaluators fully documented their considerations of both the positive and negative past performance information for Fluor and still concluded that on balance, there was a reasonable expectation that Fluor would successfully perform the required effort. Fluor complaints amounted to simple disagreement with the Army’s evaluation conclusions.
Still, Fluor alleged that the Army engaged in disparate treatment with respect to past performance by emphasizing Fluor’s adverse past performance while deemphasizing adverse past performance for KBR and Vectrus. But GAO found that KBR’s and Vectrus’s records were materially stronger than Fluor’s more mixed record.
Fluor also argued that the Army held Fluor to a higher standard under the RFP’s small business participation factor when it did not accept Fluor’s explanations for why it failed to meet its small business goals, but then excused KBR’s past failure to meet goals. Yet GAO determined that differences in small business ratings was the result of material difference between the offerors’ compliance history.
Finally, Fluor objected to the best value tradeoff, arguing that the Army failed to properly credit Fluor for its advantages on the non-cost factors. GAO found that contrary to Fluor’s arguments, the SSA reasonably assessed Fluor’s advantages and simply concluded that it was not enough to erase the performance risk created by Fluor’s past performance.
Fluor is represented by Andrew E. Shipley, Stephen W. Preston, Philip E. Beshara, Souvik Saha, Matthew F. Ferraro, Elizabeth J. D’Aunno, and ChandaL. Brown of Wilmer Cutler Pickering Hale and Dorr LLP as well as James A. Hughes, Hughes Law PLC. Intervenor KBR is represented by Lee P. Curtis, Seth H. Locke, David E. Fletcher, Eric A. Aaserud, Alexander O. Canizares, Julia M. Fox, and Brenna D. Duncan of Perkins Coie LLP. Intervenor Vectrus is represented by Kevin P. Mullen, J. Alex Ward, James A. Tucker, Sandeep N. Nandivada, R. Locke Bell, Lauren J. Horneffer, and Caitlin A. Crujido of Morrison & Foerster LLP. The agency is represented by Jonathan A. Hardage, Alex M. Cahill, and Scott A. Johnson of the Army. GAO attorneys Evan D. Wesser, Scott H. Riback, Tania Calhoun, and Edward Goldstein participated in the preparation of this advisory opinion.
