B-311245.2; B-311245.4, MCT JV, May 16, 2008

B-311245.2; B-311245.4, MCT JV, May 16, 2008 TITLE: B-311245.2; B-311245.4, MCT JV, May 16, 2008 BNUMBER: B-311245.2; B-311245.4 DATE: May 16, 2008 ******************************************** B-311245.2; B-311245.4, MCT JV, May 16, 2008 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: MCT JV File: B-311245.2; B-311245.4 Date: May 16, 2008 Terence Murphy, Esq., Patrick H. O'Donnell, Esq., and J. Bradley Reaves, Esq., Kaufman & Canoles, P.C., for the protester. Michael Katchmark, Esq., Michael C. Laurence, Esq., Gary A. Bryant, Esq., and Brett A. Spain, Esq., Willcox & Savage, P.C., for Metro Machine Corp., the intervenor. Rhonda L. Russ, Esq., Naval Sea Systems Command, for the agency. Edward Goldstein, Esq., and Christine S. Melody, Esq., Office of the General Counsel, GAO, participated in the preparation of the decision. DIGEST 1. Where, due to concerns about their negative effect on contract performance, the solicitation instructed offerors not to propose unrealistically low costs, and the awardee capped its indirect rates at levels that the agency concluded were significantly below its costs, protest is sustained because the agency failed to consider performance risk associated with the awardee's decision to cap its indirect rates. 2. Discussions with protester regarding allocation of labor hours in its cost proposal were not meaningful where the discussions did not communicate that the agency was concerned about the protester's inconsistent allocation of labor hours between its technical proposal and cost proposal. DECISION MCT JV protests the award of a contract to Metro Machine Corp. under request for proposals No. N00024-07-R-4006, issued by the Department of the Navy, Naval Sea Systems Command (NAVSEA), for maintenance and modernization work on LSD 41/49 Class ships (Navy amphibious assault ships, commonly referred to as Dock Landing Ships) homeported in Norfolk, VA. MCT JV challenges NAVSEA's cost realism and technical evaluations of its own proposal and of the proposal submitted by Metro. We sustain the protest. Background On December 15, 2006, NAVSEA issued the RFP, providing for the award of a cost-plus-award-fee "multi-ship, multi-option (MSMO)" contract for planning and performance of extended drydocking work, referred to as "availabilities," in support of the "Midlife Sustainment Program" for LSD Class ships homeported in Norfolk, VA.[1] Agency Report (AR) at 1, 3. Generally, under an MSMO contract, each ship availability is a separate option under the contract. In this case, the RFP provided for the award of a base contract for the planning for the first scheduled availability, the USS Gunston Hall (LSD-44)--the actual maintenance and modernization work was an option under the base contract. In addition, the RFP provided for options for six additional availabilities and the associated execution planning for these availabilities over a 6-year period. RFP sect. B, Schedule of Supplies or Services and Prices. In addition, as it relates to the protest, the RFP included a 40 percent small business subcontracting requirement for each availability and further specified that a "small business offeror" is "not exempt" from the subcontracting requirement. RFP at 68. Offerors were informed that NAVSEA would make award to the offeror whose proposal represented the best value to the government based on its evaluation of offerors' proposals under two categories, technical and cost, with overall technical merit being more important than cost. Within the technical category, the RFP listed three factors in descending order of importance: (1) management capability, (2) resource capabilities, and (3) past performance. The past performance factor was further divided into four equally important subfactors: (1) technical, (2) schedule, (3) management, and (4) cost. In evaluating proposals under the management capability and resource capabilities factors, the agency assigned adjectival ratings of outstanding, very good, satisfactory, marginal, and unsatisfactory. The adjectival scheme used to rate offerors' past performance differed slightly, with the agency assigning ratings of outstanding, good, satisfactory, neutral, marginal, or unsatisfactory. Regarding its evaluation under the resource capabilities technical factor, as it relates to the protest, the RFP required offerors to describe the facility resources available to the offeror to accomplish the RFP requirements as well as "manpower" and workload estimates in support of the requirement established by the RFP. Specifically, the RFP provided as follows: 1.