alexskopje | Shutterstock

Protest objecting to the agency’s evaluation of proposals is denied. The protester objected to several weaknesses assigned to its proposal due to a corporate transaction involving a proposed subcontractor. The agency found that it was unclear whether the transaction would impact performance. The protester argued that the agency should have known that the transaction would only result in a name change and not impact performance. But GAO noted that the protester did not notify the agency of the transaction or provide any information about the potential impact on performance. Given the lack of information it was reasonable for the agency to assume the transaction could potentially affect performance.

The Navy issued a solicitation under the SeaPort-e IDIQ contract seeking engineering, program management and logistics support services. Four offerors submitted proposals. The Navy selected Morgan Business Consulting for award. Disappointed offerors filed protests. The Navy took corrective action to reevaluate proposals.

After the reevaluation, the Navy selected Syncron, LLC for award, finding that it had the highest-rated, lowest-priced proposal. Morgan protested.

Morgan objected to weaknesses assigned to its proposal based on the Navy’s consideration of the potential impact of a subcontractor’s corporate transaction. During the evaluation, the Navy learned that one of Morgan’s subcontractors had sold the entity that would be performing the task order. The Navy could not conclude that the sale would have no impact on performance. Morgan, however, argued that both a press release and a notification provided to the Navy in another procurement had put the agency on notice that the corporate transaction would only result in a name change. Thus, it was unreasonable for the Navy to find that the transaction could potentially impact performance.

GAO noted that an agency’s lack of knowledge of a corporate transaction is generally not unreasonable, and an agency generally has no affirmative obligation to discover such information. Here, Morgan offered no information about the corporate transaction, nor any explanation about the impact that the transaction would have on its proposal. Without that information the agency was left wondering whether the subcontractor or a different team member would be performing the work. These concerns resulted in five weaknesses assessed to Morgan’s proposal.

To be sure, the transaction had been announced in a press release, but GAO found that the release only announced that the subcontractor had entered an agreement with another company and provided general information about the transaction. It did not indicate whether the acquired company would still be available for this task order. Moreover, while the subcontractor may have provided notice of the transaction to another contracting officer in an unrelated procurement, this did not impute knowledge of the notification to the contracting officer for this procurement. The Navy did not err in assigning weaknesses related to this transaction.

Morgan argued that the Navy improperly adjusted its escalation rates. The Navy had found that Morgan’s escalation rates were not sufficiently substantiated. Thus, the agency upwardly adjusted each rate that fell below a comparative baseline. Morgan argued that its rates were justified by (1) its prediction that senior personnel would be replaced by cheaper junior employees, and (2) the firm’s “real-world experience” in high cost of living markets. GAO found that Morgan’s arguments amounted to disagreement with the agency’s evaluation conclusions.

Morgan also contended that the Navy erred in upwardly adjusting its indirect rates. The Navy had provided a declaration from one its evaluators stating that Morgan’s indirect rates were lower than its historical rates and that the information provided in support of these low rates was vague. Morgan contended that GAO should disregard the declaration as a post hoc rationalization. But GAO found that the declaration was consistent with the contemporaneous record. As a result, it found the Navy’s decision to adjust Morgan’s indirect rates unobjectionable.

Morgan contended that based on its alternative computation of the percentage of costs that Synchron had allocated to it subcontractor, Synchron did not intend to comply with the solicitation’s limitation on subcontracting clause. But the fact that Morgan’s argument was based on complicated computations indicated that it was not clear from the face of Synchron’s proposal that the company did not intend to comply with the subcontracting limitations. Given that compliance with subcontracting limitations is generally a matter of responsibility, GAO could not find that Synchron had clearly taken exception to the limitations on subcontracting.

Morgan alleged that the Navy disparately evaluated proposals when it assessed a strength to Synchron for including Lean Six Sigma processes and program management professionals but did not assess a strength to Morgan for proposing identical features. But GAO found that that Synchron’s and Morgan’s proposals were not identical in this respect. Synchron’s proposal offered a detailed approach to maintain schedule and quality of deliverables, and it provided details about quality control procedures and the roles of key personnel. Morgan did not offer a detailed approach.

Morgan contended that the Navy waived some of the qualifications for key personnel  solely to cure unacceptable deficiencies in Synchron’s proposal. GAO, however, found that during the evaluation, the Navy had found several requirements for key personnel to be overstated. Nothing about this indicated disparate treatment.

Lastly, Morgan complained that the Navy unequally evaluated labor escalation rates by applying two years of escalation to Morgan’s proposal but only one year to Synchron. GAO determined that this evaluation was reasonable given the way in which each company calculated their fiscal years. The way Morgan calculated its fiscal year, the labor rates would increase twice for the base year. Synchron made no representations about its fiscal year. There was nothing objectionably improper about the Navy assuming that its rates would only increase once during the base year.

Morgan is represented by Todd R. Overman, Sylvia Yi, and Roee Talmor of Bass Berry & Sims, PLC. The intervenor, Synchron is represented by Stuart W. Turner and Eric Valle of Arnold & Porter Kaye Scholer, LLP. The agency is represented by Cara R. Little and Kelsey Harrer of the Navy. GAO attorneys Young H. Cho and Peter H. Tran participated in the preparation of the decision.