BAE Systems Technical Services, Inc., B-293070, January 28, 2004

B-293070 Jan 28, 2004 Jump To VIEW DECISION RELATED PAGES GAO CONTACTS Highlights The additional costs required for the MEO to meet all PWS requirements are greater than the marginal difference between the protester's evaluated cost and the IHCE. The agency failed to consider all of the costs that will be required for in-house performance of the competed requirements. Seeking private-sector proposals for a base contract period and four 1-year option periods. /3/ The solicitation incorporated a Performance Work Statement (PWS) that identified all activities the service provider (SP) will be required to perform. Regardless of whether the SP is a private-sector contractor or the government's MEO. The PWS expressly cautioned that this functional workload data was provided only to assist in proposal preparation and "shall not be a limiting factor on the SP's obligation to perform all services described in this PWS to the required level of effort.". View Decision BAE Systems Technical Services, Inc., B-293070, January 28, 2004 * REDACTED DECISION DIGEST Attorneys DECISION BAE Systems Technical Services, Inc. protests the Department of the Navy's decision, pursuant to Office of Management and Budget (OMB) Circular A-76, that it would be more economical to perform retail supply operations for the Fleet Industrial Supply Center (FISC) at Jacksonville, Florida, in-house, rather than to contract for these services with BAE under request for proposals (RFP) No. N68836-03-R-0001. /1/ BAE challenges the agency's decision on the basis that, in its cost comparison determination, the agency failed to consider all of the costs that will be required for in-house performance of the competed requirements. Among other things, BAE protests that the cost estimate for in-house performance fails to reflect the costs associated with the solicitation's minimum staffing requirements for the FISC facilities at Mayport and Key West, Florida. We sustain the protest. BACKGROUND In July 2000, the agency announced that it would perform an A-76 commercial activities study regarding 192 positions associated with the FISC retail supply operations for the southeastern United States. /2/ Pursuant to the study, the agency issued the RFP in March 2003, seeking private-sector proposals for a base contract period and four 1-year option periods. /3/ The solicitation incorporated a Performance Work Statement (PWS) that identified all activities the service provider (SP) will be required to perform--regardless of whether the SP is a private-sector contractor or the government's MEO--and identified various locations where performance must take place, including: Mayport, Key West, and Jacksonville, Florida; Corpus Christi, Kingsville, and Ingleside, Texas; and Charleston, South Carolina. Functions to be performed include warehouse operations, material delivery, customer service, inventory management and program management. The PWS also provided technical exhibits containing historical workload data, by functional area, for each of the various locations; however, the PWS expressly cautioned that this functional workload data was provided only to assist in proposal preparation and "shall not be a limiting factor on the SP's obligation to perform all services described in this PWS to the required level of effort." Agency Report, Tab 3, PWS, at 6. The PWS listed the normal operating hours at the various facilities, including those at Mayport and Key West, and stated: The SP shall provide the full range of services during the hours indicated. [/4/] This requirement shall not be satisfied by the use of recording devices, pagers or other remote methods unless otherwise specified in C-5[/5/]. . . . Normal hours of operation represent the minimum standard for system and customer support. Agency Report, Tab 3, PWS Sec. C.1.10.1, at 10. In short, the PWS required that the SP provide on-site staff at the Mayport and Key West facilities for a minimum of 2,250 and 2,125 hours per year, respectively, /6/ and expressly precluded "remote methods" of performance. On or before the July 16 closing date, the agency received proposals from two private-sector offerors, including BAE; /7/ these proposals were subsequently evaluated and discussions were conducted with each offeror. With regard to staffing the Mayport facility, BAE's initial proposal provided a full time, on-site supply technician for the base contract period, but proposed to eliminate that position in the option periods. By letter dated August 8, 2003, the agency opened discussions with BAE, stating: The following deficiencies were identified . .