Lockheed Martin Information Systems, B-292836; B-292836.2; B-292836.3; B-292836.4, December 18, 2003

Lockheed Martin Information Systems, B-292836; B-292836.2; B-292836.3; B-292836.4, December 18, 2003 TITLE: Lockheed Martin Information Systems, B-292836; B-292836.2; B-292836.3; B-292836.4, December 18, 2003 BNUMBER: B-292836; B-292836.2; B-292836.3; B-292836.4 DATE: December 18, 2003 ********************************************************************** Lockheed Martin Information Systems, B-292836; B-292836.2; B-292836.3; B-292836.4, December 18, 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: Lockheed Martin Information Systems File: B-292836; B-292836.2; B-292836.3; B-292836.4 Date: December 18, 2003 Thomas C. Papson, Esq., Richard B. Oliver, Esq., John A. Burkholder, Esq., Jason N. Workmaster, Esq., and Stephen M. Lastelic, Esq., McKenna Long & Aldridge, for the protester. Rand L. Allen, Esq., Philip J. Davis, Esq., Timothy W. Staley, Esq., Jonathan L. Kang, Esq., Jesse L. Rudy, Esq., and William J. Grimaldi, Esq., Wiley Rein & Fielding, for Electronic Data Systems Corporation, an intervenor. Peter F. Pontzer, Esq., and Angela T. Puri, Esq., Department of Housing and Urban Development; and Joseph C. Port, Jr., Esq., Mark P. Guerrera, Esq., Richard L. Larach, Esq., and Kevin M. Henry, Esq., Sidley, Austin, Brown & Wood, for the agency. Scott H. Riback, Esq., and John M. Melody, Esq., Office of the General Counsel, GAO, participated in the preparation of the decision. DIGEST 1. Protest that agency misevaluated proposals is sustained where record does not support agency's conclusion that the awardee's proposal was superior to the protester's with respect to a number of the discriminators used by the agency in arriving at its source selection decision. 2. Agency unreasonably determined that awardee met solicitation's requirement for small business subcontracting where record shows that it miscalculated the percentage of the awardee's subcontracting dollars relative to the overall value of the contract, and failed to account for the possibility that at least one of the awardee's small business contracts may have been improperly inflated in terms of its value. DECISION Lockheed Martin Information Systems (LMIS) protests the award of a contract to Electronic Data Systems Corporation (EDS) under request for proposals (RFP) No. R-OPC-21970, issued by the Department of Housing and Urban Development (HUD) to acquire information technology services.LMIS asserts that the agency misevaluated proposals and made an irrational source selection decision. We sustain the protest. BACKGROUND HUD issued the RFP to acquire a wide range of information technology (IT) services to support all of the agency's requirements for information processing, telecommunications and other related needs for a base period of up to 1 year, plus nine 1-year options. The RFP contemplated a single award for what is referred to as the HUD Information Technology Solution (HITS) contract, which is a follow-on contract for the HUD Integrated Information Processing Service (HIIPS) contract. (LMIS is the incumbent for the HIIPS contract.) The solicitation contemplated the award of a hybrid contract that included both fixed-price and cost-reimbursement contract line item numbers (CLINs). Specifically, CLIN 1 (transition in) is to be performed on a cost-plus-fixed-fee basis, CLINs 2 through 10 (performance of the requirement for up to 9 years) are to be performed on a fixed price basis, CLIN 11 (transition out) is to be performed on a cost-plus-award-fee basis, and CLIN 12 is an indefinite-delivery, indefinite-quantity (ID/IQ) CLIN to be performed on a cost-reimbursement, no-fee basis. The RFP also included CLIN 13, which did not contemplate any actual work but included dollar figures representing financial incentives that could be earned by the contractor through enhanced performance. The requirement--essentially all of HUD's information processing, telecommunications and related needs on a nationwide, agency-wide basis--was organized around 24 core functions reflecting the agency's various service needs. For example, the first core function was *hardware* and included the provision, management, storage, maintenance, upgrade, backup and operation of all computer hardware, including mainframe computers, servers, printers and peripheral devices. Another core function related to the provision of all of the agency's desktop computing requirements, another to notebook computing requirements, and so on. The RFP also included seven non-core functions that related primarily to providing advice and assistance, training and emergency supplies or services not otherwise contemplated under one or another of the core functions.