The Futures Group International, B-281274.5; B-281274.6; B-281274.7, March 10, 2000

The Futures Group International, B-281274.5; B-281274.6; B-281274.7, March 10, 2000 TITLE: The Futures Group International, B-281274.5; B-281274.6; B-281274.7, March 10, 2000 BNUMBER: B-281274.5; B-281274.6; B-281274.7 DATE: March 10, 2000 ********************************************************************** The Futures Group International, B-281274.5; B-281274.6; B-281274.7, March 10, 2000 Decision Matter of: The Futures Group International File: B-281274.5; B-281274.6; B-281274.7 Date: March 10, 2000 John S. Pachter, Esq., and Jonathan D. Shaffer, Esq., Smith, Pachter, McWhorter & D'Ambrosio, for the protester. Joseph C. Port, Jr., Esq., and Howard Stanislawski, Esq., Sidley & Austin, for Deloitte Touche Tohmatsu, an intervenor. A. Lindsey Crawford, Esq., and H. David Kotz, Esq., Agency for International Development, for the agency. Charles W. Morrow, Esq., and James A. Spangenberg, Esq., Office of the General Counsel, GAO, participated in the preparation of the decision. DIGEST 1. In response to a decision sustaining a protest and finding that the agency had failed to conduct a reasonable cost realism analysis of the awardee's proposed costs, the agency's corrective action--determining that the awardee's probable costs were the lowest and confirming award to that firm--was unreasonable, where the agency was advised by the Defense Contract Audit Agency that the awardee's proposed uncapped indirect rates were understated by an amount that would have affected the outcome of the competition and there was an apparent change in the magnitude of the contract work from that envisioned by the awardee's proposal. 2. Agency unreasonably discounted Defense Contract Audit Agency audit finding, based on the awardee's actual contract performance, that the awardee's proposed uncapped indirect rates were considerably understated for the first 2 years of the 5-year contract and found that the awardee's proposed rates should be judged only on the basis of the awardee's knowledge when it submitted its proposal; a cost realism analysis, even on reevaluation, should consider all information reasonably available as of the time of the evaluation. DECISION The Futures Group International protests the award of a contract to Deloitte Touche Tohmatsu under request for proposals (RFP) No. M/OP-98-918, issued by the United States Agency for International Development (USAID), to implement a project intended to increase access to family planning and other reproductive health products and services obtained through the commercial and private sectors in developing countries. We previously sustained Futures' protest of the award to Deloitte because USAID improperly evaluated the realism of Deloitte's proposed indirect rates. The Futures Group Int'l, B-281274.2, Mar. 3, 1999, 2000 CPD para. . This protest concerns the corrective action USAID undertook in response to our decision that culminated in USAID again selecting Deloitte for award. We sustain the protest. ORIGINAL COMPETITION The RFP, which contemplated the award of a cost-plus-award-fee contract for a 5-year period, set forth a best-value award evaluation scheme, considering technical, past performance, and cost realism. RFP sect.sect. B.2, B.4, M.1(a). The RFP stated that the combination of all evaluation factors, other than cost, were significantly more important than cost. RFP sect. M.2(d). For cost realism, the RFP contemplated adjusting proposed costs based on the results of the cost realism evaluation and considering the adjusted costs for evaluation purposes. RFP sect. M.3. Futures and Deloitte submitted proposals by July 15, 1998. USAID evaluated the proposals, conducted discussions, and evaluated best and final offers (BAFO) (received September 8). Futures' and Deloitte's proposals were both rated outstanding under the non-cost factors. Initial Protest Agency Report, exh. No. 2, Negotiation Memorandum, at 7; see id., exh. No. 8, Supplemental Technical Evaluation, Sept. 11, 1998, at 1, attach. USAID also determined Deloitte's $87,904,406 proposed BAFO cost and Futures' $94,290,894 proposed BAFO cost were reasonable and realistic, and made no probable cost adjustments. Id., exh. No. 2, Negotiation Memorandum, at 7, 16; Hearing Transcript (Tr.) at 29, 38, 70-71. [1] USAID made award to Deloitte on September 28, after determining that Deloitte's significantly lower cost proposal represented the best value. Initial Protest Agency Report, exh. No. 2, Negotiation Memorandum, at 7. Futures protested USAID's evaluation, including the cost realism evaluation, arguing that USAID unreasonably accepted Deloitte's proposed overhead and general and administrative (G&A) rates, notwithstanding that they were at levels significantly below Deloitte's historic rates. On October 21, USAID authorized performance of the Deloitte contract, notwithstanding the protest, as being in the government's best interest. Memorandum for the Head of the Contracting Activity, Oct.