SRS Technologies, B-291618.2; B-291618.3, February 24, 2003

SRS Technologies, B-291618.2; B-291618.3, February 24, 2003 TITLE: SRS Technologies, B-291618.2; B-291618.3, February 24, 2003 BNUMBER: B-291618.2; B-291618.3 DATE: February 24, 2003 ********************************************************************** SRS Technologies, B-291618.2; B-291618.3, February 24, 2003 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: SRS Technologies File: B-291618.2; B-291618.3 Date: February 24, 2003 J. Patrick McMahon, Esq., William B. Barton IV, Esq., and William T. Welch, Esq., Barton, Baker, McMahon & Tolle, for the protester. Alan Dickson, Esq., Paul C. Burkholder, Esq., and Howard A. Wolf-Rodda, Esq., Epstein, Becker & Green, for Sparta, Inc., an intervenor. Raymond M. Saunders, Esq., and Capt. Richard L. Hatfield, Department of the Army, for the agency. Henry J. Gorczycki, Esq., and James A. Spangenberg, Esq., Office of the General Counsel, GAO, participated in the preparation of the decision. DIGEST Under a solicitation for a cost reimbursement contract for services that did not prohibit or limit the use of uncompensated overtime, the agency unreasonably raised the protester's evaluated costs in the cost realism analysis to remove the impact on the protester's proposed labor rates based on its use of uncompensated overtime from its labor costs. DECISION SRS Technologies protests an award to Sparta, Inc. under request for proposals (RFP) No. HQ0006-02-R-0011, issued by the Missile Defense Agency (MDA), for support services for the Deputy for Force Structure Integration and Deployment. SRS protests the agency's cost and technical evaluation and the source selection decision. We sustain the protest. The RFP, issued as a small business set-aside on July 31, 2002, contemplated the award of a cost-plus-fixed-fee, level-of-effort contract for 1 year with 4 option years. The resulting contract will consolidate support services previously covered by two separate contracts for which the incumbent contractors are SRS and Sparta. Award was to be made on a *best value* basis with non-cost factors collectively being significantly more important than cost. The RFP stated the non-cost factors in the following descending order of importance: (1) technical expertise, (2) corporate experience, (3) management plan, and (4) past performance. The RFP stated that the cost evaluation would consider whether an offeror's proposed costs were realistic, complete and reasonable. The vast majority of costs under the RFP were for labor. The RFP provided estimated total labor hours for each of the contract line item numbers (CLIN). The estimated total hours required were 56,400 hours per year (which represents 30 full‑time equivalents per year) plus 2,880 hours for surge effort per year. Offerors were to propose an appropriate mix of staff from various labor categories, along with the portion of the total estimated hours proposed for each position. Each offeror was also to identify its current labor rates, related cost rates, and annual escalation rates, consistent with its proposed staffing matrix and management plan. The RFP stated that, based on the agency's cost realism analysis, the agency might adjust an offeror's proposed costs to identify the most probable cost for evaluation purposes. The agency received proposals from SRS and Sparta, which were evaluated as follows:[1] +------------------------------------------------------------------------+ | |SRS |Sparta | |-----------------------------+--------------------+---------------------| |Technical Expertise |[DELETED] |[DELETED] | |-----------------------------+--------------------+---------------------| |Corporate Experience |[DELETED] |[DELETED] | |-----------------------------+--------------------+---------------------| |Management Plan |[DELETED] |[DELETED] | |-----------------------------+--------------------+---------------------| |Past Performance |[DELETED] |[DELETED] | |-----------------------------+--------------------+---------------------| |Most Probable Cost |$[DELETED] |$37,160,881 | +------------------------------------------------------------------------+ The evaluated cost figures for both proposals reflect adjustments made by the agency. Sparta's proposal incorrectly added its individual CLIN prices and stated in one place a total estimated cost of $[DELETED]. Agency Report, Tab C-2, Sparta Proposal, at I-10.