Grumman Data Systems Corp. v. Dalton, 95-1214

• Citation: 88 F.3d 990
• Decision Date: 28 June 1996
• Docket Number: No. 95-1214,95-1214
• Parties: 40 Cont.Cas.Fed. (CCH) P 76,944 GRUMMAN DATA SYSTEMS CORPORATION, Appellant, v. John H. DALTON, Secretary of the Navy, Appellee, and Intergraph Corporation, Intervenor.
• Court: United States Courts of Appeals. United States Court of Appeals for the Federal Circuit

Page 990

88 F.3d 990

40 Cont.Cas.Fed. (CCH) P 76,944

GRUMMAN DATA SYSTEMS CORPORATION, Appellant, v. John H. DALTON, Secretary of the Navy, Appellee, and Intergraph Corporation, Intervenor.

No. 95-1214.

United States Court of Appeals, Federal Circuit.

June 28, 1996.

William W. Thompson, Jr., Thompson & Waldron, Alexandria, Virginia, argued for appellant. With him on the brief were Michael A. Branca, and John H. Tracy.

Arnold M. Auerhan, Attorney, Commercial Litigation Branch, Civil Division, Department of Justice, Washington, D.C., argued for appellee. With him on the brief were Frank W. Hunger, Assistant Attorney General, David M. Cohen, Director, and Kirk T. Manhardt, Assistant Director. Of counsel were Thomas L. Frankfurt and Lis B. Young, Office of Counsel, Naval Information Systems Management Center, Department of the Navy, Washington, D.C.

Rand L. Allen, Wiley, Rein, & Fielding, Washington, D.C., for intervenor. With him on the brief was Christine E. Connelly.

Before RICH, RADER and SCHALL, Circuit Judges.

SCHALL, Circuit Judge.

Grumman Data Systems Corporation ("Grumman") appeals from the October 27, 1994 decision of the General Services Administration Board of Contract Appeals ("Board") in Grumman Data Systems Corp.

                v. Department of the Navy. 1  In that decision, the Board denied Grumman's protest of the award of an automatic data processing equipment supply contract to Intergraph Corporation ("Intergraph") by the Department of the Navy (the "agency").   We affirm
                

BACKGROUND

At issue in this case is a best value procurement authorized by 48 C.F.R. § 15.605(c) (1994) ("[I]n certain acquisitions the Government may select the source whose proposal offers the greatest value to the Government in terms of performance and other factors.") On July 15, 1991, the agency issued Request for Proposals No. N66032-91-R-0006 (the "Solicitation"). The Solicitation sought proposals for supplying computer-aided design, manufacturing, and engineering technology to the agency. The Solicitation provided that a supply contract would be awarded to the "Offeror [that] provides the greatest value, price and other factors considered." The Solicitation further provided that the agency would "balance the technical differences with the proposed overall cost to determine the best value to the [agency]." The Solicitation set forth a variety of requirements, including four-thousand (4000) "minimum mandatory requirements" ("MMRs"), and provided that an offeror's failure to meet the MMRs would eliminate the offeror from further consideration.

The Solicitation called for a Source Selection Evaluation Board (the "SSEB"), a Source Selection Advisory Council (the "SSAC"), and a Source Selection Authority (the "SSA"). The SSEB and SSAC were to consider the proposals submitted in response to the Solicitation and were to make recommendations to the SSA. The SSA was to serve as the ultimate decision-maker, deciding which offeror would receive the contract.

Grumman, Intergraph, and two other companies submitted proposals in response to the Solicitation. The SSEB evaluated each of the proposals for technical merit and price. In evaluating the technical merit of the proposals, the SSEB conducted a five-day test of each offeror's equipment. The test, known as an Operational Capability Benchmark Demonstration ("OCBD"), examined approximately one-fourth of the 4000 MMRs for each offeror's equipment. In addition to conducting the OCBD, the SSEB analyzed the offerors' written technical proposals by comparing the proposals with the requirements of the Specification; it also assessed the offerors' management proposals. Through its evaluation of the technical merit of the proposals, the SSEB concluded that all four offerors met the MMRs. Based upon its evaluation, the SSEB assigned an overall technical merit score to each offeror. In the SSEB's report to the SSAC, Intergraph received the highest overall technical merit score, while Grumman received the third-highest overall technical merit score. The SSEB's report also provided the results of its price evaluation. The SSEB found that Intergraph offered the lowest price, and that Grumman offered the second-lowest price. In sum, the SSEB concluded that, of the four proposals, Intergraph's proposal offered the highest technical merit rating and the lowest price.

After reviewing the SSEB's report and receiving a briefing from the SSEB, the SSAC--although it was not required by the Solicitation to do so--commissioned an Impact Analysis Working Group ("IAWG") to compare technical differences among the proposals. The IAWG identified sixteen areas of technical differences (called "discriminators"), and divided the sixteen areas into two categories: quantifiable and non-quantifiable. The IAWG identified and analyzed four quantifiable discriminators. The IAWG based its analysis on tasks that were likely to be commonly undertaken by the equipment's users, and on how much time generally was spent on those tasks. Using this information, and federal government pay-rates, the IAWG estimated the cost to the agency to use each offeror's proposal, and then assigned a value to the government for each proposal. The IAWG reported that, over the period of the contract, the agency would save $97 million if it selected Grumman's proposal instead of Intergraph's proposal.

After reviewing the IAWG's report, the SSAC stated that it was "not convinced that there was a reasoned argument for the IAWG quantification." The SSAC explained that "the area of non-quantified discriminators needs to be also considered." The SSAC directed the IAWG to provide a supplemental analysis.

After conducting further studies, the IAWG reported to the SSAC that Grumman was the "overall best solution in the mechanical area ... [,] followed very closely by [Intergraph]." The IAWG also reported that the agency would save between $98 million and $242 million over the period of the contract if it selected Grumman's proposal instead of Intergraph's proposal. The IAWG explained that the great range of its savings estimate was due to variations given to "certain underlying assumptions."

The SSAC examined the SSEB report and the IAWG report, and rejected the IAWG's quantified value determinations. The SSAC stated that it "did not feel that the quantified value determinations of the IAWG were sufficiently compelling that value would materialize." The SSAC gave four reasons for that conclusion. The first reason that the SSAC gave was that, in the IAWG exercise, only one operator completed the model exercise for each offeror's equipment. The SSAC explained that it would "have more confidence in the results if several operators had completed the model exercise, or if it were feasible to obtain [o]fferor input regarding the model exercise." The SSAC's second reason was that the software version used for part of the IAWG's analysis was different from that used in the OCBD. The third reason given by the SSAC was that the task performed for the IAWG "process study" was "relatively simple, and a more comprehensive exercise would more fairly differentiate the offerors." Fourth, the SSAC explained, the IAWG's quantification process study for two of the discriminators "exercised" an application that represented just one-third of the total workload identified in the Solicitation.

Finally, in conducting a price/technical trade-off analysis, the SSAC reviewed both Grumman's and Intergraph's proposals. After doing so, the SSAC concluded that "both Intergraph and Grumman's technical proposals offered potential benefits and values." However, "lacking a high confidence of realizing such value," the SSAC determined that "the Intergraph proposal, with its [much] lower price, offered the overall best value, cost and other factors considered, to the government." Consequently, the SSAC recommended that the SSA award Intergraph the contract.

The SSA studied the recommendation of the SSAC, as well as the SSEB's and the IAWG's analyses. Having done so, he explained that he had "considered the quantification process study conducted by the IAWG and the resultant quantified value determinations." The SSA stated: "[M]y confidence level in the reliability of the IAWG's process study is such ... that I am not reasonably convinced that the projected dollar savings associated with the quantified value determinations would materialize or that the quantified value determinations are indicative of the differences in technical value of the proposals." The SSA gave two reasons for this conclusion: (1) the IAWG's quantification process study was "not sufficiently comprehensive," in that only one software application was analyzed and only one simple task was performed for each offeror's equipment; and (2) because the number of keystrokes was the basis for the entire quantification process study, the study was suspect because several variable factors could affect the keystrokes assessed for each offeror.

The SSA stated that all four offerors

submitted technically acceptable proposals. Both Intergraph ... and Grumman ..., based upon their overall Technical Merit evaluation and scores, and the impact analysis associated with the non-quantified discriminators, offered quality solutions using different technologies. I have looked at the technical merits of both Intergraph's and Grumman's proposals and have concluded both offer benefits. In weighing the benefits in each proposal, I am unable to conclude that the benefits from Grumman's proposal are offset by the price premium.

Based upon this reasoning, the SSA authorized award of the contract to Intergraph.

In its protest before the Board, in which Intergraph intervened, Grumman alleged, inter alia, (1) that the SSA's selection of Intergraph's proposal as the "best value" was unreasonable and irrational in that it discounted the recommendations of the IAWG; and (2) that Intergraph failed to meet some of the MMRs of the...