B-298694; B-298694.2; B-298694.3, Kellogg Brown & Root Services, Inc., November 16, 2006

B-298694; B-298694.2; B-298694.3, Kellogg Brown & Root Services, Inc., November 16, 2006 TITLE: B-298694; B-298694.2; B-298694.3, Kellogg Brown & Root Services, Inc., November 16, 2006 BNUMBER: B-298694; B-298694.2; B-298694.3 DATE: November 16, 2006 **************************************************************************************** B-298694; B-298694.2; B-298694.3, Kellogg Brown & Root Services, Inc., November 16, 2006 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: Kellogg Brown & Root Services, Inc. File: B-298694; B-298694.2; B-298694.3 Date: November 16, 2006 James J. McCullough, Esq., Steven A. Alerding, Esq., and Deneen J. Melander, Esq., Fried, Frank, Harris, Shriver & Jacobson LLP, for the protester. Richard L. Moorhouse, Esq., David T. Hickey, Esq., and Dorn C. McGrath III, Esq., Greenberg Traurig LLP, for Atlantic Contingency Constructors, LLC; William A. Roberts III, Esq., and Richard B. O'Keeffe Jr., Esq., Wiley Rein & Fielding LLP, for Fluor International, Inc.; and J. Alex Ward, Esq., Edward Jackson, Esq., and Kristen G. Schulz, Esq., Jenner & Block LLP, for URS-IAP, LLC, the intervenors. Richard Welsh, Esq., Naval Facilities Engineering Command, for the agency. Sharon L. Larkin, Esq., and James A. Spangenberg, Esq., Office of the General Counsel, GAO, participated in the preparation of the decision. DIGEST 1. Agency did not perform a reasonable cost realism evaluation when it deleted a certain element of cost from awardee's proposed indirect costs because other offerors accounted for this element as a direct cost; this evaluation did not result in a reasonable assessment of the probable cost of performing the contract associated with the awardee's proposal, given that the adjustment was inconsistent with Cost Accounting Standards 401 and 402 and the firm's cost accounting practices, to which the firm was obligated to adhere in performing the contract. 2. Protest of evaluation of protester's proposed contingency plan is sustained where the protester provided detailed arguments why the evaluation was unreasonable, which were consistent with the record, and the agency did not explain why the evaluation was reasonable in light of those arguments. DECISION Kellogg Brown & Root Services, Inc. (KBR) protests the award by the Department of the Navy of three global contingency construction contracts under request for proposals (RFP) No. N62470-06-R-6002 to Atlantic Contingency Constructors, LLC (ACC), Fluor International, Inc. (Fluor), and URS-IAP, LLC (URS). KBR contends that the agency misevaluated proposals under technical and cost factors. We sustain the protest. BACKGROUND This acquisition is for construction and related engineering services in response to global natural disasters, humanitarian assistance, conflict, or projects with similar characteristics. Agency Report (AR), Tab 23, Source Selection Board (SSB) Report, at 3. The RFP contemplated award of up to three cost-plus-award-fee, indefinite-delivery/indefinite-quantity (ID/IQ) contracts for a base year with four 1-year options. Award was to be made without discussions unless discussions were otherwise determined to be necessary. Id. at 68. The solicitation provided for award on a "best value" basis, considering corporate experience, past performance, contingency plan, management approach, small business utilization, and cost. The non-cost factors were of equal importance and together were more important than the cost factor. The past performance factor consisted of two subfactors listed in descending order of importance--past performance and safety. The management approach factor consisted of two equally rated subfactors--organization, home office support, and key personnel; and accounting and management systems and procedures. The small business utilization factor consisted of two equally rated subfactors--past performance in small business utilization, and participation of small business concerns for this program. Id. For the cost factor, offerors were required to submit a completed "cost model." This cost model, which was provided with the RFP, consisted of a spreadsheet for each year of the contract. In the cost model, offerors did not propose estimated direct costs, but instead the agency used fixed "plug" numbers for all of the direct costs (including "other direct costs") to be incurred under the contract. The total direct costs in the cost model were $186 million per year and $930 million for the 5-year contract period.