Statistica, Inc. v. Christopher

• Decision Date: 19 December 1996
• Docket Number: No. 96-1148,96-1148
• Citation: 102 F.3d 1577
• Parties: 41 Cont.Cas.Fed. (CCH) P 77,026 STATISTICA, INC., Appellant, v. Warren G. CHRISTOPHER, Secretary of State, Appellee, and The Orkand Corporation, Intervenor.
• Court: U.S. Court of Appeals — Federal Circuit

Page 1577

102 F.3d 1577

41 Cont.Cas.Fed. (CCH) P 77,026

STATISTICA, INC., Appellant, v. Warren G. CHRISTOPHER, Secretary of State, Appellee and The Orkand Corporation, Intervenor.

No. 96-1148.

United States Court of Appeals Federal Circuit.

Dec. 19, 1996.

Timothy Sullivan, Adduci, Mastriani & Schaumberg, L.L.P., of Washington, D.C., argued for appellant. With him on the brief were Katherine S. Nucci and Martin R. Fischer.

Franklin E. White, Jr., Attorney, Commercial Litigation Branch, Civil Division, Department of Justice, of Washington, D.C., argued for appellee. With him on the brief were Frank W. Hunger, Assistant Attorney General, David M. Cohen, Director, and Joseph A. Kijewski, Assistant Director.

Devon E. Hewitt, Shaw Pittman Potts & Trowbridge, of McLean, Virginia, argued for intervenor. With her on the brief was Alex D. Tomaszczuk.

Before MAYER, PLAGER, and LOURIE, Circuit Judges.

MAYER, Circuit Judge.

Statistica, Inc. appeals the decision of the General Services Administration Board of Contract Appeals in Statistica, Inc. v. Department of State, GSBCA No. 13426-P, 96-1 BCA p 28,141, 1996 WL 38727 (1995), denying its protest challenging the Department of State's award to The Orkand Corporation of a contract for technical services to support the modernization of automated consular services systems. Because Statistica has not established any error in the board's decision, we affirm.

Background

On January 20, 1995, the Department of State ("State Department" or "agency") issued Request for Proposals S-OPRAQ-95- R-0501 ("RFP" or "solicitation") for technical services to support the modernization of key automated consular services systems operated by the Bureau of Consular Affairs. The procurement focused primarily on installation and maintenance of, and training for, the consular automated systems at embassies and consulates abroad. The RFP contemplated the award of an indefinite delivery/indefinite quantity, time-and-materials contract for a base year and four option years. The technical merit of proposals was more important than price, and the award was to go to the "responsible Offeror whose offer, conforming to the requirements of the solicitation, is evaluated as being the most advantageous to the Government." However, to the extent the agency considered offers to be technically equal, price was to become the "determining factor" for awarding the contract.

The solicitation set forth ten contract line item numbers (CLINs) for ten personnel positions or categories. It contained an estimated number of hours for each CLIN and required offerors to propose an hourly rate for each. The RFP contained four additional CLINs not here relevant. Among the many Federal Acquisition Regulation (FAR) clauses incorporated by reference in the solicitation was the provision entitled "Service Contract Act of 1965, as Amended," 48 C.F.R. § 52.222-41. However, the RFP did not contain or reference the FAR provision found at 48 C.F.R. § 52.222-46, entitled "Evaluation of Compensation for Professional Employees." That clause is required to be inserted in RFPs for contracts expected to exceed $500,000 when the service to be provided "will require meaningful numbers of professional employees." 48 C.F.R. § 22.1103. Because the contracting officer had decided that the contract would not involve meaningful numbers of professional employees, he did not include the clause. Finally, Section J of the RFP contained the Wage Determination issued by the Department of Labor, which established minimum hourly wage rates and fringe benefits for this service contract.

Four firms submitted offers in response to the RFP. The agency evaluated the four initial proposals but included only Statistica and Orkand in the competitive range, thereby eliminating the other two firms from further negotiations. In reviewing their respective cost proposals, the contracting officer became concerned with the base labor rates offered by each firm. Some of the rates were less than the wages specified in the Wage Determination for the personnel category the contracting officer thought corresponded to the pertinent CLIN. He was concerned further with the disparate mark-up of these rates for overhead.

In an effort to allay these concerns, the contracting officer issued Amendment Three to the solicitation, which added clause "H.14 Correlation of Contract Positions," listing the ten contract labor categories and the Wage Determination classification he thought corresponded to each category. That provision also reflected the contracting officer's opinion that two of the positions were exempt. Amendment Three also replaced the original Wage Determination with a new one, which contained a footnote stating that the classifications do "not apply to employees employed in a bona fide executive, administrative, or professional category as defined and delineated in 29 CFR 541 (See 29 CFR 4.156)." The contracting officer also sent Orkand and Statistica substantively identical deficiency reports explaining that the Service Contract Act requires that employees in nonexempt labor categories (categories that are not bona fide executive, administrative, or professional) be reimbursed at or above the rate contained in the Wage Determination. Because significant percentages of Statistica's and Orkand's proposed labor rates were below the rates in the Wage Determination, each firm was directed to confirm its compliance with the Service Contract Act and to identify any categories it had determined were exempt from the Act.

Both firms confirmed their compliance with the Service Contract Act and the Wage Determination. Statistica believed that some of the eight positions not identified as exempt were, in fact, exempt, including the "Documentation Specialist" position. Orkand also thought that some of these positions were exempt, but not "Documentation Specialist." The contracting officer deemed these responses to be reasonable, so he requested best and final offers (BAFOs) from the two firms. The request was attached to Amendment Four, which revised clause H.14 to substitute "Technical Writer" for "Document Preparation Clerk" as the Wage Determination position that corresponded to "Documentation Specialist." The request also asked Statistica and Orkand each to "provide [its] best and final pricing proposal based on this revised Section H."

Statistica interpreted this instruction and Amendment Four as a rejection of its position on the exemption of the CLIN positions from the requirements of the Service Contract Act. The cost proposal manager testified that Statistica "did not understand what the Government was doing" but felt that the agency had directed it to use at least the Wage Determination figures in pricing its offer. Orkand, in contrast, did not interpret Amendment Four as mandating that offerors price their proposals using the figures in H.14. Rather, it based its BAFO prices not on H.14 but on its position that a specified number of the ten CLIN positions were exempt.

Neither the contracting officer nor any other agency personnel informed Statistica or Orkand whether the agency accepted their exemption arguments or deemed them reasonable. Nor did either firm ask whether its exemption arguments had been accepted by the agency. Indeed, the contracting officer testified that he never intended to reach agreement with the offerors as to which categories were properly exempt, for it was not his decision to make.

Statistica had the higher-priced, technically-superior proposal. More specifically, its price was $7,256,689, or 37%, higher than Orkand's, while its technical score was just 15% higher. The contract specialist drafted a source selection memorandum, in which he concluded that Orkand's offer met the government's needs and that the additional technical merit of Statistica's proposal did not warrant paying the significantly higher price. Thus, he recommended that the agency award the contract to Orkand. The Source Selection Advisory Council (SSAC) members concurred with his conclusion and recommended to the Source Selection Authority (SSA) that the award be made to Orkand. The SSA accepted the SSAC's recommendation and Orkand was awarded the contract on September 22, 1995.

On September 29, 1995, Statistica protested the award to the General Services Administration Board of Contract Appeals (GSBCA). As amended, Statistica's protest contained three counts pertinent to this appeal: (1) Orkand's proposal was technically unacceptable for failing to comply with the mandatory requirement that offerors bid using the correlation matrix in clause H.14 (Count III); (2) the agency conducted misleading discussions with it regarding the mandatory nature of clause H.14 (Count IV); and (3) the agency conducted an unreasonable price analysis of the proposals and erred by failing to include FAR § 52.222-46 in the RFP (Count II). The board denied the protest, holding that the State Department had committed no error. The board also stated that even had Statistica prevailed on Count II, any error would have been harmless based on the SSA's "thoughtful," "well-reasoned," and "convincing testimony" that Statistica's technical superiority would not have justified awarding it the contract even if the price difference had been as small as $4 million. That is the difference Statistica's expert testified would have existed had Statistica priced its offer using base wage rates below those in the Wage Determination and contractor-site overhead instead of home-site overhead. Statistica appeals.

Discussion

This case, one of the last vestiges of the now-repealed Brooks Automatic Data Processing Act, 40 U.S.C. § 759, see Grumman Data Sys. Corp. v. Dalton, 88 F.3d 990, 995 n. 2 (Fed.Cir.1996), presents us with an opportunity to restate the law on the competitive prejudice required to be proven in bid protests. This is a matter of continuing vitality in other forums, beyond the...