Koam Eng'g Sys. v. United States

• Decision Date: 30 November 2022
• Docket Number: 22-816C
• Parties: KOAM ENGINEERING SYSTEMS, INC., Protestor, v. UNITED STATES, Defendant, v. MCKEAN DEFENSE GROUP, LLC, Defendant-Intervenor.
• Court: U.S. Claims Court

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KOAM ENGINEERING SYSTEMS, INC., Protestor, v. UNITED STATES, Defendant, v. MCKEAN DEFENSE GROUP, LLC, Defendant-Intervenor.

No. 22-816C

United States Court of Federal Claims

November 30, 2022

NOT TO BE PUBLISHED

Redacted Version Issued for Publication: February 10, 2023 ^[1]

Richard Rector, DLA Piper, LLP, Washington, DC for protestor. With him were Tom Daley and Leslie Edelstein, DLA Piper, LLP Washington, DC.

Kara M. Westercamp, Trial Attorney, Commercial Litigation Branch Civil Division, United States Department of Justice, Washington, DC, for defendant. With her were William Grimaldi, Assistant Director, Commercial Litigation Branch; Patricia M. McCarthy, Director, Commercial Litigation Branch, and Brian M. Boynton, Principal Deputy Attorney General, Civil Division. Tracey Ferguson, Trial Attorney, Associate Counsel Commercial Litigation Branch, Naval Information Warfare Center Pacific, of counsel.

Rebecca Pearson, Venable LLP, Washington, DC; for intervenor. With her were J. Scott Hommer, III, Lindsay M. Reed, and Allison M. Siegel, Venable LLP, Washington, DC.

OPINION

MARIAN BLANK HORN, JUDGE

In the above-captioned, post-award bid protest, protestor KOAM Engineering Systems, Inc. (KOAM) challenges the decision by the United States Department of the Navy to award a contract to defendant-intervenor, McKean Defendant Group, LLC (McKean).^[2] Protestor KOAM alleges that the Navy failed to "meet its obligation to strictly avoid even the appearance of a conflict of interest," and that the Navy's cost realism evaluation of McKean's proposal was arbitrary and capricious. The parties have briefed cross-motions for judgment on the Administrative Record.

F I N D I N G S O F F A C T

On January 27, 2021, the Navy issued request for proposals No N66001-21-R-0041 (the RFP) for engineering support services for the Navy's Network Integration Engineering Facility (NIEF). KOAM was the incumbent contractor for the Navy on the prior contracts. The RFP explained that "Naval Information Warfare Center - Pacific (NIWC Pacific) is responsible for basic research, end-to-end system design, prototype development, systems engineering, integration, production, software loading, Pre-Installation Testing and Checkout (PITCO), deployment, and life cycle support of Command, Control, Communications, Computer, Intelligence, Surveillance, and Reconnaissance (C4ISR) systems." The RFP contemplated an indefinite-delivery, indefinite-quantity (IDIQ) single award contract with cost-plus-fixed-fee pricing arrangement over a potential five year performance period, with one base year and four one-year option periods. The RFP provided:

(a) The contract resulting from this solicitation will be awarded to the responsible offeror whose offer conforming to the solicitation, is determined to provide the "best value" to the Government. Such offer may not necessarily be the proposal offering the lowest cost or receiving the highest technical rating.

(b) Proposals will be rated using a four-step methodology. Step One is an evaluation of Acceptability of the Offer. Step Two is an evaluation of Capability (including Technical Approach, Past Performance, and Small Business Participation). Step Three is an evaluation of the proposed cost. Step Four is a cost/technical (non-cost evaluation factors) trade-off analysis in order to determine the best value source selection decision.

(c) Source Selection Factors.

Non-Cost Evaluation Factors

Factor I - Technical Approach

Factor II - Past Performance

Factor III - Small Business Participation

Relative Importance of the Evaluation Factors

(d) The non-cost evaluation factors, when combined, are significantly more important than cost. However, the degree of importance of cost will increase with the degree of the equality of proposals in terms of the non-cost evaluation factors.

(e) Technical Approach is more important than Past Performance and Small Business Participation. Past Performance is more important than Small Business Participation.

(f) Evaluation of an offeror's proposal shall be based on the information presented in the proposal and information available to the contracting office from sources deemed appropriate. Sources typically considered include Defense Contract Audit Agency, Defense Contract Management Administration offices, other contracts with same firms for similar items or services, known commercial sources such as Data Resources, Inc., Standard and Poor, etc. If the proposed contract requires the delivery of data, the quality of organization and writing reflected in the proposal will be considered an indication of the quality of organization and writing which would be prevalent in the proposed deliverable data. Subjective judgment on the part of the Government evaluators is implicit in the entire process.

(capitalization and emphasis in original).

For Step One, the RFP explained, "[t]he Government will determine the acceptability of each offer on a pass or fail basis," and for Step Two, the RFP indicated "the Government will evaluate the capability of each offeror on the basis of its: (I) Technical Approach, (II) Past Performance, and (III) Small Business Participation." For "Factor I - Technical Approach," the RFP explained that

Considering the identified strengths and weaknesses, the SSEB [Source Selection Evaluation Board] will then assign an overall factor rating for technical approach. The factor rating is based on the collective effectiveness of the offeror's technical approach in meeting the Government's requirements in the SOW [Statement of Work] across all submitted responses. Risk will not be evaluated as a separate factor, but will be evaluated as one aspect inherent in the evaluation of the Technical Approach. Technical Approach will receive one of the following combined technical/risk ratings: Outstanding, Good, Acceptable, Marginal, or Unacceptable.

(alterations added). For "Factor II - Past Performance," the RFP indicated:

The past performance evaluation is an assessment of the offeror's probability of meeting the solicitation requirements. The past performance evaluation considers the offeror's demonstrated recent and relevant record of performance in supplying products and services that meet the contract's requirements. In accordance with FAR 15.305(a)(2), the currency and relevance of the information, source of the information, context of the data, and general trends in contractor's performance shall be considered. These are combined to establish one performance confidence assessment rating for each offeror.

For "Factor III - Small Business Participation," the RFP provided:

The Government will evaluate the total percentage of small business participation. The inclusion of each subcontractor in the cost proposal shall serve as evidence that the prime contractor and subcontractor have entered into a business agreement; no further evidence of a business agreement is required. Only the portion of small business participation that is both listed in the matrix and substantiated by the cost proposal will be considered in the evaluation.

For Step Three, Cost, the RFP stated:

The Government will evaluate the estimated cost and proposed fee of each offer for realism and reasonableness in accordance with FAR Subpart 15.4 and as described below. The purpose of this evaluation will be (a) to verify the offeror's understanding of the requirements; (b) to assess the degree to which the cost/price proposal reflects the approaches and/or risk assessments made in the proposal as well as the risk that the offeror will provide the supplies or services for the offered prices/cost; and (c) assess the degree to which the cost reflected in the cost/price proposal accurately represents the work effort included in the proposal. Proposed costs may be adjusted, for purposes of evaluation, based upon the results of the cost realism evaluation. In a competitive environment, an offeror is incentivized to propose the lowest possible price; therefore, downward cost realist adjustments generally will not be made. When a cost realism analysis is performed, the resulting realistic cost estimate will be used in the evaluation. Cost realism analysis may be limited to those offerors whose proposals represent the most likely candidate(s) for award, based on the Government's technical evaluation and the offeror(s) proposed costs. In addition to easily identifiable cost adjustments, unrealistic cost proposals may result in a re-evaluation and concurrent rescoring of technical proposals. Such re-evaluation based on cost or realistic cost analysis could negatively impact the technical rating and ranking of the proposal. Depending on the number of offerors and the number and dollar amount of proposed subcontractors, the Government may choose to limit the extent of the cost realism analysis of offerors' proposed subcontractor costs. In such instance, the Government will establish a threshold whereby individual subcontractor cost proposals that do not meet the threshold will not undergo a cost realism analysis. The threshold established by the Government may consist of a percentage of the prime contractor's proposed costs, or a dollar amount, or a combination thereof. All offers with separately priced line items will be analyzed to determine if the prices are unbalanced. Offers may be rejected if the Contracting Officer determines the lack of balance poses an unacceptable risk to the Government.

Finally, for Step Four, the "Trade-Off Process," the RFP explained:

The contract resulting from this RFP will be awarded to the responsible offeror whose offer, conforming to the RFP, is determined to provide the best value to the Government, which may not necessarily be the proposal offering the lowest cost nor

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