In re Consolidated Services, Inc., B-276111.4
| Decision Date | 29 December 1997 |
| Docket Number | B-276111.4 |
| Court | Comptroller General of the United States |
| Parties | Matter of: Consolidated Services, Inc. |
DIGEST
Attorneys
Consolidated Services, Inc. (CSI) protests the award of a contract to American Service Contractors (ASC) under Department of the Army request for proposals (RFP) No. DABT10-95-R--0010, for dining facility operations at Fort Benning, Georgia and two other locations. The award followed a reevaluation undertaken by the Army in response to an earlier protest by CSI against the award to ASC (B-276111.2, which we dismissed as academic by decision dated August 4, 1997). Based on the reevaluation the agency affirmed its original decision and made award to ASC on September 5. CSI challenges the adequacy of the price evaluation. We deny the protest.
The RFP contemplated the award of a fixed-price, indefinite quantity award fee type contract for a base year, with 4 option years. It sought unit and extended prices for estimated days of food service or number of feedings, by building or field area, for a total of more than 250 line items. The RFP listed various technical evaluation factors, including comprehension of the RFP requirements, which included the subfactor staffing/methodology, and provided that award would be made to the offeror whose proposal was technically acceptable and whose aggregate price for all items (base and option years) was low.
Offerors were to submit separate technical and cost proposals. Cost and pricing data were not required, but offerors were to "submit information other than cost and pricing data to help establish price reasonableness or price realism." This information--including price breakdowns for each performance period showing cost elements such as direct and indirect labor rates/salaries, fringe benefits, overhead and total cost per position--was to be submitted on standard form (SF) 1448, "Proposal Cover Sheet (Cost and Pricing Data Not Required)." The RFP required that cost proposals "present a clear audit trail to all elements of cost" and that "all cost elements [be] fully explained and justified." The RFP further advised as follows:
Cost realism will be used as an aid to determine the offeror's comprehension of the requirements of the RFP as well as to assess the validity of the offeror's approach. Proposals will be evaluated to assess the degree to which proposed price accurately reflect[s] proposed performance. A price which is found to be either unreasonably high or unrealistically low in relation to the proposed work will result in the overall proposal being considered unacceptable and further evaluation will be discontinued.
The agency reevaluated the five proposals at issue and confirmed their technical acceptability. In its price evaluation, the agency used the average total price of the five low proposals--[deleted]--as a baseline for comparison purposes.[1]ASC's total price of [deleted] was [deleted] percent under the average price, while CSI's price of [deleted] was [deleted] percent above the average. The difference in the two prices was [deleted] or [deleted] percent. The remaining three offers [deleted] and [deleted] ranged from [deleted] percent under to [deleted] percent above the average price. In light of the competition received--12 proposals, 8 of which were technically acceptable--the agency concluded that the price differences among the proposals and the average price "supported cost realism, " and that a detailed analysis of the individual cost elements was not necessary. Nonetheless, the agency reports it did proceed to use a "[c]ost analysis... to compare various individual cost elements (productive man-hours, wage rates including benefits, profit and [general and administrative])." While the agency noted a few areas of "pricing fluctuations, " it considered them to be "based on the unique composition of an offeror's organization and how the offeror propose[d] to accomplish the work, " and concluded that "none of the prices were found to be either unreasonably high or unrealistically low to the degree where the overall proposal was considered unacceptable and further evaluation was discontinued."[2]
CSI argues that the Army improperly failed to perform a detailed line item cost analysis of offered pricing, which it maintains was required by the RFP.[3]According to the protester, a proper cost analysis would have revealed that ASC's proposed prices for certain line items were unrealistically low, indicating inadequate staffing and/or inadequate fringe benefit rates to support the estimated work load, and therefore demonstrating a lack of comprehension of the requirements.
Specifically CSI alleges that ASC's line item pricing was understated in [deleted] for a total of [deleted] (including options) and at least four dining facility attendant line items (which facilities the protester alleges [deleted] for a total of [deleted]. CSI reaches its conclusion by comparing ASC's line item prices with the IGE, the protester's own prices, and the prices of the three other offerors submitting total prices lower than CSI's. The protester specifically contends that in the area of the greatest alleged underpricing--[deleted]--ASC's productive hours indicates that the firm did not base its unit prices on the estimated requirements.[4]Additionally, CSI contends that ASC's proposed fringe benefit rate was understated because it was based on an erroneous assumption of an average of [deleted] annual vacation days per employee rather than [deleted] days, which the protester contends is more realistic (given that the work force likely will consist largely of the incumbent's employees, and the existence of a collective bargaining agreement (CBA)).[5]The protester maintains that [deleted] should have been added to ASC's proposal in order to arrive at the most probable cost for the vacation rate.[6]According to CSI, the alleged total underpricing of ASC's offer amounts to [deleted].[7]
Cost realism refers to the likely cost of performance, and ordinarily is not a factor in the evaluation of proposals where a fixed-price contract is to be awarded, since the government's liability is fixed and the risk of cost escalation is borne by the contractor. PHP Healthcare Corp.; Sisters of Charity of the Incarnate Word, B-251799 et al., May 4, 1993, 93-1 CPD Para. 366 at 5. However, since the risk of poor performance when a contractor is forced to provide services at little or no profit or with an underestimated work force is a legitimate concern even where a fixed- price contract is to be awarded, an agency in its discretion may, as it did here, provide for a realism analysis as part of the evaluation. Id.
Based on our review of the record here, we conclude that the protest is without merit. While the RFP called for detailed cost information, it did not specify that a detailed cost analysis would be performed, or that the cost/price evaluation would be the sole or primary means of assessing offeror understanding or, in the final analysis, technical acceptability. Rather, the stated purpose of the "cost realism" analysis was solely to aid in determining offerors' "comprehension of the requirements" and "the degree to which proposed price reflect[s] proposed performance."[8]In light of the language of the RFP and the fixed-price nature of the contract, we see no basis to find that the agency was required to perform an in-depth cost analysis here.
The record shows that the agency evaluated cost/price in accordance with this stated purpose. The agency initially determined, in the technical evaluation, that ASC's proposal was technically acceptable under all elements including the subfactor staffing/methodology, under the comprehension of the...
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