Engineering Services Unlimited, Inc., B-291275; B-291275.2, December 17, 2002

Engineering Services Unlimited, Inc., B-291275; B-291275.2, December 17, 2002 TITLE: Engineering Services Unlimited, Inc., B-291275; B-291275.2, December 17, 2002 BNUMBER: B-291275; B-291275.2 DATE: December 17, 2002 ********************************************************************** Engineering Services Unlimited, Inc., B-291275; B-291275.2, December 17, 2002 DOCUMENT FOR PUBLIC RELEASE The decision issued on the date below was subject to a GAO Protective Order. This redacted version has been approved for public release. Decision Matter of: Engineering Services Unlimited, Inc. File: B-291275; B-291275.2 Date: December 17, 2002 Howell Roger Riggs, Esq., for the protester. John J. Fausti, Esq., and Monica C. Parchment, Esq., John J. Fausti & Associates, for Mainthia Technologies, Inc., an intervenor. H. Gray Marsee, Esq., and Sumara M. Thompson-King, Esq., National Aeronautics and Space Administration, for the agency. Louis A. Chiarella, Esq., and Christine S. Melody, Esq., Office of the General Counsel, GAO, participated in the preparation of the decision. DIGEST 1. Contracting agency did not induce or coerce the protester into raising its proposed labor rates where the agency was reasonably concerned with protester's ability to attract and retain incumbent personnel, as the protester proposed, due to its low proposed labor rates and asked the protester during discussions to explain how it intended to attract and retain incumbent personnel at the rates proposed; the protester's decision to increase its proposed labor rates reflected the exercise of the firm's business judgment. 2. Protest that agency's negotiating techniques led to an impermissible auction is denied; agency's disclosure that an offeror's proposed labor rates were in certain instances materially lower than current wage rates did not constitute prohibited communications. DECISION Engineering Services Unlimited, Inc. (ESU) protests the award of a contract to Mainthia Technologies, Inc. under request for offers (RFO) No. 8-1-2-CD-D7142, issued by the National Aeronautics and Space Administration (NASA) for administrative support services at the Marshall Space Flight Center, Alabama. ESU alleges that the agency improperly induced ESU to raise its offered price and that the agency's negotiating techniques with ESU led to an improper auction. We deny the protest. The RFO, issued on December 19, 2001, as a section 8(a) set-aside, contemplated the award of a fixed-price, indefinite-quantity contract for 2 years, with three 1-year options for *center-wide* administrative services. The solicitation established three evaluation factors: understanding the performance work statement (PWS) (also referred to as the baseline requirement), value characteristics, and price.[1] The RFO stated that the first two factors together established the qualitative merit of the offer, which was approximately equal in importance to price. The solicitation also notified offerors that the basis for award was *best value,* based on the agency's determination of the *best combination of price and qualitative merit of the offers submitted.* RFO at 12. The agency received 26 offers by the January 15, 2002, closing date. Prior to the evaluation of proposals, NASA provided all offerors with a revised Department of Labor (DOL) area wage determination and the opportunity to revise previously submitted labor rates as necessary to comply with the revised wage determination. Agency Report, Tab BB, Agency Request for Additional Cost Information and Cost Forms, at 2. In its response ESU proposed wage rates for each labor classification that were equal to the revised wage determination. Agency Report, Tab W, ESU's Initial Proposal Cost Form Submission, at 4. The initial evaluation of proposals resulted in NASA establishing a competitive range consisting of five offers, including those from ESU and Mainthia. As part of its initial proposal ESU set forth its goal of hiring 90 percent of the incumbent personnel. Agency Report, Tab FF, ESU Original Proposal, Vol. B, at 27. Prior to holding discussions with ESU, the agency asked, *Given the revised [w]age [d]etermination . . . previously provided and the seniority level of the incumbent staff you anticipate retaining, are your proposed base labor rates sufficient to attract and retain those incumbent personnel?*[2] Agency Report, Tab T, Agency Determination of Finalists Letter to ESU, at 4. ESU submitted its final proposal revision on June 12 using the same labor rates as initially proposed. Agency Report, Tab N, ESU's First Final Proposal Revision, at 10. On July 16 the source selection authority (SSA) approved the reopening of discussions with offerors because of the evaluators' inability to reach consensus on the evaluation of certain proposals.