Akal Security, Inc.

B-261996 Nov 16, 1995 Jump To VIEW DECISION RELATED PAGES GAO CONTACTS Highlights An award to an offeror submitting an unreasonably low or below-cost offer on a fixed-price contract is not legally objectionable. Where a protester would not have been awarded contract under either a best value or a low cost. Akal protests that the agency's source selection decision was inconsistent with the stated evaluation scheme. Which were evaluated by a technical evaluation board (TEB) and a price evaluation board (PEB). After the TEB and PEB evaluations were reviewed by a source selection board (SSB). 15 proposals were included in the competitive range. One was rated exceptional. Two were rated acceptable. Were rated unacceptable but capable of being made acceptable. [1] In February 1995. View Decision Matter of: Akal Security, Inc. File: B-261996 Date: November 16, 1995 An award to an offeror submitting an unreasonably low or below-cost offer on a fixed-price contract is not legally objectionable. Where a protester would not have been awarded contract under either a best value or a low cost, technically acceptable evaluation scheme in a negotiated procurement, the protester has not been prejudiced by the agency's unannounced change to its evaluation scheme. Attorneys DECISION Akal Security, Inc. protests the award of a contract to Nation Wide Security, Inc. under request for proposals (RFP) No. N62472-93-R-3613, issued by the Department of the Navy for security guard services at the Naval Undersea Warfare Center Division and Detachments in Newport, Rhode Island; New London, Connecticut; and Dresden, New York. Akal protests that the agency's source selection decision was inconsistent with the stated evaluation scheme. We deny the protest. The RFP, issued on September 21, 1994, contemplated award of a firm, fixed-price contract (a portion of which included indefinite quantity work) for 1 year with 4 option years. The RFP designated technical subfactors and corresponding criteria with their relative weights, and stated that award would be made on a best value basis with price and technical factors being of equal weight. The Navy received 19 proposals, which were evaluated by a technical evaluation board (TEB) and a price evaluation board (PEB). After the TEB and PEB evaluations were reviewed by a source selection board (SSB), 15 proposals were included in the competitive range; of these 15 proposals, one was rated exceptional, two were rated acceptable, and the remainder, including the proposals of Akal and Nation Wide, were rated unacceptable but capable of being made acceptable. [1] In February 1995, the Navy conducted written discussions with the competitive range offerors, and requested revised proposals which were evaluated by the TEB and PEB. Although some of the revised proposals corrected some of the initial proposal deficiencies, the ratings remained the same. After a second round of written discussions, the TEB determined that three of the previously unacceptable proposals, including Akal's and Nation Wide's, were acceptable; the rest of the previously unacceptable competitive range proposals remained unacceptable but capable of being made acceptable. A third round of written discussions and revised technical proposals followed, but the technical ratings did not change. By letter of May 7, the Navy requested best and final offers (BAFO). The BAFOs rated at least acceptable were as follows: Offeror Rating Price A Exceptional $12,438,375 B Acceptable ++ 11,400,566 C Acceptable + 12,840,427 Akal Acceptable 10,965,926 Nation Wide Acceptable 9,778,036 D Acceptable 11,145,095 As requested in the RFP, offerors broke their prices into the following components: labor rate, equipment and material, training, burdened hourly rate, and "other" (costs for management, supervision, quality assurance, overhead, and profit). The PEB found that Nation Wide's price might be unreasonably low compared to the other BAFO prices and the government estimate. [2] Nearly all of Nation Wide's price advantage was attributed to its extremely low costs and a reduced profit margin in the "other" category. The PEB determined that Nation Wide may not be able to effectively provide management, supervision, and quality control, and still be able to cover its overhead and realize a reasonable profit under its stated cost breakdown. The PEB thus considered Nation Wide's price to be unreasonably low, and recommended that award be made to Akal, which had submitted the next lowest priced, technically acceptable BAFO. The source selection authority (SSA) reviewed the PEB report and was concerned that the PEB, in concluding that Nation Wide's price may be unreasonably low, placed undue weight on the historical contract prices for this requirement without realizing why those prices may have been higher than what now could reasonably be expected.