The protester challenged the agency’s cost realism evaluation. The agency had found the protester’s labor rates for current employees were realistic. The protester had proposed the same rates for new employees. But the agency upwardly adjusted the rates for new employees. The protester argued that if the rates were realistic for current employees, they should’ve been realistic for new employees. GAO found the agency had reasonably determined that while the current rates were supported by payroll records for current employees, they were too low to attract new employees.
American Electronics, Inc., GAO B-421021 et al.
Background
The Navy issued an RFP seeking support of the F-35 fighter aircraft Lightning II Joint Program Office. Nine offerors, including Serco, Inc. and the incumbent, American Electronics, Inc., submitted proposals. The Navy awarded the contract to Serco. American protested.
Analysis
Technical Evaluation
The Navy assessed two weaknesses to American’s technical proposal for the lack of details in approach and methodology. American didn’t really argue that it provided adequate detail. Rather, it claimed the two weaknesses were not in critical areas. GAO found that American had failed to substantiate its claim that these weaknesses were in non-critical areas. American’s argument was essentially disagreement with the agency’s conclusions.
Past Performance
American complained that the agency had unreasonably found the company had a problem with personnel vacancies on a past contract. GAO found this determination was reasonable. One of American’s CPARS documented problems with personnel retention and vacancies.
Cost Realism
American alleged the Navy unreasonably adjusted its labor rates upward. The Navy had found that the rates American had proposed for current employees were realistic. American had proposed the same rates for new employees, but the agency had upwardly adjusted those rates. American argued that if the rates were realistic for current employees than they were also realistic for future employees.
But GAO found the Navy had reasonably adjusted the rates. While the current rates were supported by payroll records, the Navy reasonably determined that those rates were still below market averages and would not attract new employees.
American Electronics is represented by Edward J. Tolchin of Offit Kurman Attorneys at Law. The intervenor, Serco, is represented by Daniel R. Forman, William B. O’Reilly, and Tyler S. Brown of Crowell & Moring LLP. The agency is represented by Tricia A. Nicewicz, Candi R. Alfred, and Alison McGuire of the Navy. GAO attorneys Louis A. Chiarella, Kyle E. Gilbertson, and Peter H. Tran participated in the preparation of the decision.
–Case summary by Craig LaChance, Senior Editor
