Protest challenging the agency’s evaluation of proposals is sustained, where the agency improperly credited the awardee for its use of cost-plus-fixed-fee surge support personnel when the solicitation specifically provided the agency would evaluate the offerors’ ability to meet the requirement using only fixed-price support, and where the agency credited the awardee for strengths related to its transition plan, but failed to assign similar strengths to the protester. GAO also found the agency’s cost realism evaluation inadequate, because it failed to analyze the sufficiency of the offerors’ proposed labor categories and labor hours to complete the work.

GAO also expressed its dissatisfaction with the agency’s cooperation with the protester’s and GAO’s document requests.

Conley & Associates Inc. protested the Army’s award of a contract for C4ISR equipment support services to Valkyrie Enterprises Inc., arguing that the agency departed from the RFP’s evaluation criteria, unequally evaluated the technical proposals, and failed to conduct an adequate cost realism evaluation.

First, Conley argued the agency improperly considered Valkyrie’s non-core contractor field services representatives and field service network under evaluation criteria limited to “core” CFSR support. According to Conley, this error resulted in the improper assignment of a strength to Valkyrie’s proposal for an individual that Valkyrie never proposed as a “core” CFSR. Conley argued it was prejudiced, because the source selection authority concluded that this “backbench” CRSR offset one of Conley’s strengths.

GAO agreed. The RFP specified that the agency would evaluate an offeror’s demonstrated ability to respond to a minimum of five incident reports at the same time at multiple locations worldwide, utilizing fixed-price core CFSR support, without reliance on service providers who are not part of this contract. However, the agency considered elements of Valkyrie’s non-core CFSR support when evaluating this element. The agency concluded that Valkyrie reduced risk by proposing backup/surge CFSRs, even though the solicitation provided that only core support would be considered for this area. The awardee itself acknowledged that it did not include this support as fixed-price core support, but provided for the additional hours under the non-core cost-plus-fixed-fee CLIN.

The agency argued that Valkyrie’s strength was warranted because its “non-core” CFSR approach of utilizing internal assets rather than subcontractors added additional flexibility, but GAO found the agency essentially double counted a strength for Valkyrie’s internal non-core CFSRs and maritime support network. Valkyrie already received this strength under the evaluation criteria concerning the offeror’s approach to utilize and coordinate the use of non-core CFSRs. GAO also agreed that Conley was prejudiced, as the SSA expressly identified this aspect of Valkyrie’s proposal in the tradeoff decision as an offset to one of Conley’s strengths.

Next, Conley argued the agency assigned Valkyrie strengths for low risk aspects of its transition plan, without assigning similar strengths to Conley’s proposal despite the agency’s conclusions that Conley’s approach essentially eliminated transition risk. Under this factor, the agency found that Valkyrie possessed a lease agreement for an appropriate facility and that this was a low risk approach for the transition plan. Additionally, the agency noted that Valkyrie proposed two contingency primary storage facilities—one of which was Conley’s incumbent facility—should a problem arise in retaining their proposed primary storage facility.

Conley argued this strength was unreasonable because Valkyrie’s proposal lacked details concerning compliance of the contingency facilities with the PWS requirements, and should have been evaluated as a risk that Valkyrie lacked commitment to its proposed primary facility. Alternatively, Conley argued that if the strength was justified, the evaluation was unequal because it did not receive a similar strength for proposing its existing, incumbent, fully-operational primary storage facility, which according to the agency’s own evaluation meant that transition risk is essentially eliminated. Conley also argued the agency failed to evaluate its proposal for transition risk, denying Conley the opportunity to achieve other strengths.

GAO agreed. While there is no general requirement that incoming and incumbent offerors receive the same evaluation regarding the transition from one contract to another, GAO noted that when an agency recognizes the low risk of a non-incumbent offeror’s transition approach, the agency will often recognize a strength in the incumbent contractor’s ability to obtain the same result. In this case, the agency concluded that Valkyrie’s proposed use of Conley’s primary storage facility presented less transition risk, but did not assign Conley’s proposal a strength similar to the strength assigned to Valkyrie’s proposal. In addition, the agency apparently failed to consider Conley’s presumably low transition risk under the program management factor, while it did assign Valkyrie a strength in this area. GAO found the evaluation was unequal and sustained these grounds of protest.

Next, Conley alleged the agency failed to consider information indicating that at least one of Valkyrie’s proposed “core” CFSRs was no longer available. Conley asserted that Valkyrie’s “start of work brief” listed one “core” CFSR as “Candidate Identified” and “TBD.” However, GAO found that this core CSFR was available at the time of the evaluation and award decision, and therefore Conley’s allegation was factually incorrect.

However, GAO noted the Army repeatedly failed to promptly and fully respond to documents requests concerning this area of the protest. Specifically, despite Conley’s requests for all documents, including post-award exchanges, the agency did not provide all responsive documents for nearly 60 days. Instead, in response GAO’s instructions to reexamine its records, the agency asserted that there were no additional responsive documents. Finally, in response to GAO’s third request, the agency located 12 additional responsive documents, which included Valkyrie’s start of work brief. This document, an email attachment, appeared to show that one of the “core” CFSRs in Valkyrie’s proposal was not part of Valkyrie’s plan for performance, and had been replaced by the entries “Candidate Identified,” and “TBD.”

GAO admonished the agency for its failure to diligently examine its records for responsive documents and asked the Army to provide a sworn affidavit from the contracting officer describing the agency’s efforts to identify all responsive documents and certifying that document production was complete. Although GAO remained concerned about the agency’s failure to timely provide responsive documents, it concluded that the record in this area was sufficiently complete to support its denial of these protest grounds. Valkyrie submitted affidavits explaining that its proposed core CFSRs were available and that the contradictory information was submitted in error.

Finally, Conley argued that the agency’s cost realism analysis failed to assess the offerors’ proposed CPFF labor hours and reimbursable materials costs, and instead limited its review to the realism of proposed labor rates. In response, the agency conceded that its cost realism analysis was limited to assessing the offerors’ proposed labor rates using a standard deviation methodology, but argued that its analysis was reasonable since an agency is not required to conduct an in-depth cost analysis, or to verify each and every item in assessing cost realism.

GAO acknowledged that an agency is not required to conduct an in-depth cost analysis, or to verify each and every item in assessing cost realism. However, GAO also explained that when a solicitation requires offerors to propose their own labor hours and labor mix in response to the agency’s requirements or a sample task, the agency’s failure to analyze whether the labor hours and labor mix are realistic to successfully perform the requirements renders the cost realism analysis unreasonable.

In this case, the RFP required the offerors to review 38 selected C4ISR incident reports to be used as a basis to extrapolate costs for 1,000 incident reports for the “core” CFSRs and 71 incident reports for “non-core” CFSRs. The offerors were to identify the costs of responding to the incident reports based on their approach. With respect to “time on site,” offerors were to estimate the necessary labor hours based on the selected incident reports and their expertise with the relevant C4ISR systems.

Because the RFP instructed offerors to propose their own unique labor hours, labor/skills mix, and materials costs in response to the selected incident reports, a cost realism analysis that failed to analyze these unique factors is inadequate. GAO concluded that an analysis limited to proposed labor rates was not reasonable.

Conley & Associates Inc. is represented by Scott F. Lane and Katherine S. Nucci of Thompson Coburn LLP. Valkyrie Enterprises LLC is represented by J. Bradley Reaves and Beth V. McMahon of ReavesColey, PLLC. The government is represented by Wade L. Brown, Peter S. Kozlowski, and Kimberly Maltby, Department of the Army. GAO attorneys Eric M. Ransom and Edward Goldstein participated in the preparation of the decision.