L.K. Comstock, Inc. and Liebert Federal Systems, Inc.

L.K. Comstock, Inc. and Liebert Federal Systems, Inc. BNUMBER: B-261711.5; B-261711.6 DATE: December 14, 1995 TITLE: L.K. Comstock, Inc. and Liebert Federal Systems, Inc. ********************************************************************** REDACTED DECISION A protected decision was issued on the date below and was subject to a GAO Protective Order. This version has been redacted or approved by the parties involved for public release. Matter of:L.K. Comstock, Inc. and Liebert Federal Systems, Inc. File: B-261711.5; B-261711.6 Date: December 14, 1995 Richard F. Smith, Esq., John S. Pachter, Esq., and Jonathan D. Shaffer, Esq., Smith, Pachter, McWhorter & D'Ambrosio, for L.K. Comstock, Inc., and Brian J. Donovan, Esq., Jones & Donovan, for Liebert Federal Systems, Inc., the protesters. Marc F. Efron, Esq., John E. McCarthy, Jr., Esq., and Lisa A. Price, Esq., Crowell & Moring, for Exide Electronics Corporation, an interested party. Gregory H. Petkoff, Esq., and George Holliday, Esq., Department of the Air Force, for the agency. Susan K. McAuliffe, Esq., and Michael R. Golden, Esq., Office of the General Counsel, GAO, participated in the preparation of the decision. DIGEST Protests that agency's cost evaluation of proposals was unreasonable are sustained where cost analyses used to determine the evaluated low cost offer were based upon unsupported agency quantity estimates and inappropriate evaluation provisions. DECISION L.K. Comstock, Inc. and Liebert Federal Systems, Inc. protest the award of a contract to Exide Electronics Corporation under request for proposals (RFP) No. F04606-94-R-0002, issued by the Department of the Air Force, Sacramento Air Logistics Center, for three-phase 125-1000 kVA Static Uninterruptible Power Supplies (SUPS)/SUPS Systems and SUPS-related services (including support services for installation, ancillary equipment, warranty, start-up, emergency/ preventative maintenance, training, and data) in the United States and overseas. The protesters challenge the agency's evaluation of the proposals and the determination that Exide's proposal offered the lowest cost and best value to the government. We sustain the protests. The RFP, issued on May 18, 1994, contemplated the award of a requirements contract with a 3-year base ordering period and two 1-year options. The majority of the RFP contract line item numbers (CLIN) called for fixed prices, a few items (e.g., travel) were cost reimbursable, and certain site specific requirements (e.g., installation and ancillary equipment) were to be negotiated after award. For these latter items, such as CLIN 24 (installation), and CLIN 25 (ancillary equipment), offerors were to propose pre-priced conversion factors (based upon the offeror's direct and indirect costs, such as support labor hours, rates, factors, overheads, and profit) for application to the direct material, base labor hours, and ancillary equipment required for site specific installations, to be determined and negotiated after award on an individual delivery order basis. In addition to CLIN quantity estimates, the RFP included two sample tasks ("scenarios")--requiring the provision of SUPS equipment and services--for which offerors were to provide technical and cost proposals for evaluation. Each offeror's cost proposals for the sample tasks (including labor, material, and ancillary equipment) were to be averaged and multiplied by the proposed weighted average conversion factors.[1] To determine each offeror's evaluated prices for CLIN 24, regarding installation, and CLIN 25, regarding ancillary equipment, the resulting cost figure was to be multiplied by quantity estimates listed in section M of the RFP; for evaluation of CLIN 24, the RFP provided a quantity of 1,135, and for CLIN 25, ancillary equipment, the RFP provided a quantity of 935. Award was to be made to the offeror that submitted the proposal determined to offer the best value to the government. Section M of the RFP set forth the following evaluation factors for award, listed in descending order of importance: technical, management, and cost. The RFP provided that: "[t]he cost/price proposals [will] not [be] evaluated against standards but all elements of cost and/or price will be evaluated for realism, completeness, and reasonableness. Although adequate price competition is anticipated, cost/price will be a substantial evaluation criterion." The RFP advised offerors that in assessing the realism of each cost proposal, a "cost risk analysis will be performed based upon technical uncertainties as well as uncertainties in the proposed cost estimates." Proposals were received from Exide, Liebert, and Comstock on July 24, 1994, clarification requests and deficiency reports were issued to all offerors, and discussions were held.