B-296861, EDO Corporation, September 28, 2005

B-296861 Sep 28, 2005 Jump To VIEW DECISION DOWNLOADS RELATED PAGES GAO CONTACTS Highlights EDO Corporation's EDO MTech, Inc. (EDO) protests the award of a contract to Raytheon Company under request for proposals (RFP) No. FA8626-04-R-2067, issued by the Department of the Air Force for development of the Smart Triple Ejector Rack (TER) bomb rack unit. EDO challenges the agency's cost realism evaluation of EDO's proposal and the resulting award to Raytheon. We deny the protest. View Decision B-296861, EDO Corporation, September 28, 2005 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: EDO Corporation File: B-296861 Date: September 28, 2005 Jeffrey P. Bialos, Esq., Christer L. Mossberg, Esq., John M. Wingate, Esq., and Bradley E. Prendergast, Esq., Sutherland, Asbill & Brennan LLP, for the protester. Maj. Lawrence Anderson, Maj. Christina M. Slicker, and Bridget E. Lyons, Esq. Department of the Air Force, for the agency. Mark D. Colley, Esq., and Kara L. Daniels, Esq., Holland & Knight LLP, for Raytheon Company, an intervenor. Paul E. Jordan, Esq., and John M. Melody, Esq., Office of the General Counsel, GAO, participated in the preparation of the decision. DIGEST 1. Cost realism evaluation of protester's proposal was unobjectionable where record shows that upward cost adjustments were based on evaluators' reasonable assessments that proposal significantly understated labor hours needed to perform. 2. Agency's identification of risk associated with protester's very low fixed production price is not relevant to award decision where selection authority did not cite the identified risk in making award decision. 3. Agency reasonably evaluated protester's proposal as high risk, despite protester's experience, due to proposal's failure to include sufficient support for low proposed labor hours. DECISION EDO Corporation's EDO MTech, Inc. (EDO) protests the award of a contract to Raytheon Company under request for proposals (RFP) No. FA8626-04-R-2067, issued by the Department of the Air Force for development of the Smart Triple Ejector Rack (TER) bomb rack unit. EDO challenges the agency's cost realism evaluation of EDO's proposal and the resulting award to Raytheon. We deny the protest. The RFP contemplated the award of a cost-plus-fixed-fee contract to develop modifications to the TER-9A, with two fixed-price options to produce up to 60 units each. This is a follow-on effort to modify a portion of the existing TER-9A, a bomb carriage and release mechanism to carry precision guided (smart) weapons as well as conventional weapons on F-16 aircraft. The basic contract effort was expected to be completed in 20 months. The RFP included a statement of objectives outlining the agency's expectations. Offerors were required to submit detailed technical proposals for development and production of the units, and detailed cost proposals including work breakdown structures (WBS) and basis of estimate (BOE) data as support. Proposals were to be evaluated on a –best value— basis considering four factors--mission capability, proposal risk, past performance (all of equal importance), and cost/price. The mission capability factor was divided into five subfactors, the first four of which--system performance; system engineering, system support, production readiness, and participation of small and small disadvantaged businesses, historically black colleges and universities, and minority institutions--were considered of equal importance. The technical factors combined were significantly more important than cost/price. Each mission capability subfactor was to be rated on a color/adjectival basis with individual risk ratings.[1] Proposed costs were to be evaluated for realism, including calculation of a most probable cost (MPC), and proposed prices were to be evaluated for reasonableness. Five proposals, including EDO's and Raytheon's, were received and were evaluated by the source selection evaluation team. Three proposals were included in the initial competitive range and the agency conducted written discussions with the three offerors. Based on evaluation of the offerors' responses, only EDO and Raytheon were included in the final competitive range. The agency conducted discussions with and obtained final proposal revisions (FPR) from both. The source selection authority (SSA) subsequently reopened negotiations and, following a third round of discussions, both offerors submitted revised FPRs. The agency concluded from its cost realism evaluation that EDO had failed to adequately support the adequacy of its proposed labor hours in various categories, and therefore added hours in those categories. EDO's MPC was adjusted upward based on the burdened cost of these additional hours and its risk rating under the system engineering subfactor was raised to high.