Aberdeen Technical Services, B-283727.2, February 22, 2000

B-283727.2 Feb 22, 2000 Jump To VIEW DECISION RELATED PAGES GAO CONTACTS Highlights A-76 is sustained. Protest that agency improperly disallowed a price reduction offered by the protester in its final proposal revision is sustained where the solicitation contemplated the award of a fixed-price contract. Any risks associated with performance thus will be borne by the contractor. Agency improperly failed to follow the requirements for comparing a "best value" private-sector offer with the government's Most Efficient Organization/Management Study (MEO) is sustained. ATS's proposal was selected as the "best value" offer for purposes of the cost comparison. 970) was less expensive than the government's estimate ($130. The CO states that all upheld appeal issues were implemented as the board directed. View Decision Matter of: Aberdeen Technical Services File: B-283727.2 Date: February 22, 2000 DIGEST Attorneys DECISION Aberdeen Technical Services (ATS) protests the decision of the Department of the Army, pursuant to Office of Management and Budget (OMB) Circular No. A-76, that it would be more economical to manage and operate base industrial operations in-house at the Aberdeen Proving Ground (APG), Maryland, rather than to contract for these services under request for proposals (RFP) No. DAAD05-98-R-0565. ATS challenges the cost comparison on numerous grounds, arguing that the Army failed to include all of the costs required for in-house performance in its estimate and made improper upward adjustments to ATS's proposal. The protester also contends that the agency improperly failed to follow the requirements contained in the Circular and the Revised Supplemental Handbook (March 1996) for comparing a "best value" private-sector offer with the government's Most Efficient Organization/Management Study (MEO). We sustain the protest. Background The Army issued the RFP on August 4, 1998, as part of a cost comparison pursuant to OMB Circular No. A-76. Contracting Officer (CO) Statement at 1. The RFP contemplated the award of a fixed-price contract. RFP Sec. L.7. The services required under the RFP include logistics, operations and maintenance, risk management, organizational support, and community and family activities. Id. Sec. C-1.1. The RFP listed management, technical, past performance, and cost/price as evaluation areas. The RFP stated that selection of a private sector proposal would be based on a "best value" determination. Id. Sec. C-5.4, at 1. On December 17, the government submitted its MEO to the CO; on January 4, 1999, the agency received three proposals from private-sector firms in response to the RFP. CO Statement at 1. The Army evaluated the proposals, held discussions, and received final proposal revisions from the two offerors within the competitive range, including ATS. Based on the results of the final evaluation, ATS's proposal was selected as the "best value" offer for purposes of the cost comparison. Agency Report (AR), tab 5, Source Selection Authority, Cost/Technical Tradeoff Analysis, at 5. On May 27, the agency conducted a cost comparison between the government's MEO and ATS's proposal. The results of that cost comparison showed that ATS's proposal ($129,559,970) was less expensive than the government's estimate ($130,062,726) to perform the services in-house. AR, exh. 13A, Cost Comparison of In-House vs. Contract or ISSA Performance. On June 3, the CO received a memorandum from the Department of Labor (DOL), instructing all federal contracting agencies to increase prevailing health and welfare fringe benefits in accordance with the methodology described in the memorandum. AR, exh. 14A, Memorandum No. 192, from Deputy Administrator, Wage Determination No. 94-2247 (Rev. 15) (May 24, 1999). In addition, three employees and an employee association filed administrative appeals of the tentative selection of ATS as a result of the cost comparison. ATS itself also filed an appeal, stating that in light of challenges it anticipated would be filed by non-prevailing parties, it believed that correction of certain alleged errors in the government cost estimate would strengthen its position as the tentative awardee. AR, exh. 19, Letter from DynCorp Technical Services to the CO 1 (July 8, 1999). On July 12, the agency convened an administrative board to review the appeals. The Army also requested that the Defense Contract Audit Agency (DCAA) assist the board by reviewing the appeals and expressing an opinion with respect to the issues raised by the appellants. The board then temporarily suspended its review pending DCAA's assessment of the appeals. In response to the Army's request, DCAA performed an audit of the issues raised in the appeals and their impact on the in-house estimate and on ATS's price. On August 27, DCAA issued its report on the appeals. DCAA found that of all of the issues raised, four had merit, but only one of the four had a significant impact on the cost comparison.