Frontier Technology, Inc., B-294061, August 12, 2004

B-294061 Aug 12, 2004 Jump To VIEW DECISION DOWNLOADS RELATED PAGES GAO CONTACTS Highlights Frontier Technology, Inc. protests the decision of the Department of the Army's appeal authority, pursuant to Office of Management and Budget (OMB) Circular A76, that it would be more economical to perform in-house the requirements of the Directorate of Information Management at the United States Military Academy (USMA) at West Point, New York, rather than to contract for these services under request for proposals (RFP) No. DABJ45-03-R-0003. Frontier challenges the appeal authority's cost comparison decision, essentially arguing that if various errors in the government's in-house cost estimate were corrected, the evaluated cost of performance under a contract with Frontier would be lower than the cost of in-house performance. We deny the protest. View Decision B-294061, Frontier Technology, Inc., August 12, 2004 Decision Matter of: Frontier Technology, Inc. File: B-294061 Date: August 12, 2004 Johnathan M. Bailey, Esq., Bailey & Bailey, for the protester. Capt. Charles K. Bucknor, Jr., and Maj. Gregory R. Bockin, Department of the Army, forthe agency. Linda S. Lebowitz, Esq., and Michael R. Golden, Esq., Office of the General Counsel, GAO, participated in the preparation of the decision. DIGEST Protest of agency appeal authority's cost comparison decision made pursuant to Office of Management and Budget Circular A-76 is denied where the appeal authority reasonably determined that the cost of in-house performance would be lower than the evaluated cost of contractor performance. DECISION Frontier Technology, Inc. protests the decision of the Department of the Army's appeal authority, pursuant to Office of Management and Budget (OMB) Circular A76, that it would be more economical to perform in-house the requirements of the Directorate of Information Management at the United States Military Academy (USMA) at West Point, New York, rather than to contract for these services under request for proposals (RFP) No. DABJ45-03-R-0003. Frontier challenges the appeal authority's cost comparison decision, essentially arguing that if various errors in the government's in-house cost estimate were corrected, the evaluated cost of performance under a contract with Frontier would be lower than the cost of inhouse performance. We deny the protest. BACKGROUND On December 20, 2002, the Army issued the RFP as a competitive small business setaside for the provision of information management support services at the USMA. The RFP contemplated the award of a fixed-price contract for a base period and four 1-year option periods. Offerors were advised that the procurement would be conducted in accordance with OMB Circular A-76, under which a cost comparison would be made to determine whether accomplishing the work with a commercial offeror or inhouse by the government's most efficient organization" (MEO) would be more economical. [1] Offerors were advised that if in-house performance was determined to be more economical, then the RFP would be canceled and no contract would be awarded. The RFP contained a detailed performance work statement (PWS) that described each of the services and tasks that would be required to be performed by the service provider," defined as the offeror selected to perform th[e] [PWS], whether federal government or commercial contractor." PWS C-1.1, at C-1-1. The PWS also included output tables" that reflected the workload estimated to be performed during each of the five performance periods. According to the PWS, the workload estimates were to be used by the private-sector offerors and the MEO in developing their respective approaches and costs. PWS C-2, at C-2-50. In December 2003, the Army selected Frontier's low-priced, technically acceptable proposal for purposes of the cost comparison with the government's in-house cost estimate. On January 21, 2004, the Army announced its tentative cost comparison decision that the cost of in-house performance by the MEO would be lower than the evaluated cost associated with contracting with Frontier. More specifically, the cost comparison form showed that the adjusted total cost of inhouse performance was896,167 lower than the adjusted total cost for Frontier to perform the contract. Cost Comparison Form at Line 17. Frontier's proposed cost was adjusted upward to an evaluated cost of $37,549,941, taking into account contract administration costs, one-time conversion costs, and a minimum 10-percent conversion differential (based on 10 percent of the government's personnel costs) to ensure that the government would not be converting for marginal estimated savings; Frontier's proposed cost was also reduced to reflect estimated future tax payments to the government. Id. atLines 7-14, 16. The adjusted total cost for inhouse performance was36,653,774.