Valkyrie Enterprises, LLC

B-415633.3 Jul 11, 2019 Jump To FULL REPORT VIEW DECISION RELATED PAGES GAO CONTACTS Highlights Valkyrie Enterprises, Inc., a small business of Virginia Beach, Virginia, protests the issuance of a task order to The McHenry Management Group, Inc. (McHenry), a small business of Chesapeake, Virginia, under request for proposals (RFP) No. N00024-16-R-3157, which was issued by the Department of the Navy to provide engineering, logistics and program support services for the Naval Surface Warfare Center, Philadelphia Division. The protester contends that the agency conducted a flawed cost realism evaluation, that the awardee does not intend to provide the key personnel proposed, and that there were errors in the agency's best-value tradeoff decision. We sustain the protest. View Decision 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: Valkyrie Enterprises, LLC File: B-415633.3 Date: July 11, 2019 J. Bradley Reaves, Esq., and Beth V. McMahon, Esq., ReavesColey, PLLC, for the protester. Gerald H. Werfel, Esq., and H. Todd Whay, Esq., Baker, Cronogue, Tolle & Werfel, LLP, for The McHenry Management Group, Inc., the intervenor. Paul Scheck, Esq., Department of the Navy, for the agency. Stephanie B. Magnell, Esq., and Amy B. Pereira, Esq., Office of the General Counsel, GAO, participated in the preparation of the decision. DIGEST 1. Protest challenging the agency's cost realism evaluation is sustained where the agency's evaluation failed to reasonably evaluate the protester's proposed direct labor rates. 2. Protest asserting that the awardee intended to perform an improper bait and switch is dismissed where the protester fails to allege "baiting," that is, replacing proposed personnel with less qualified employees. DECISION Valkyrie Enterprises, Inc.,1 a small business of Virginia Beach, Virginia, protests the issuance of a task order to The McHenry Management Group, Inc. (McHenry), a small business of Chesapeake, Virginia, under request for proposals (RFP) No. N00024-16-R-3157, which was issued by the Department of the Navy to provide engineering, logistics and program support services for the Naval Surface Warfare Center, Philadelphia Division. The protester contends that the agency conducted a flawed cost realism evaluation, that the awardee does not intend to provide the key personnel proposed, and that there were errors in the agency's best-value tradeoff decision. We sustain the protest. BACKGROUND On November 18, 2016, the Navy issued the RFP to holders of the Navy's SeaPort Enhanced multiple-award, indefinite-delivery, indefinite-quantity (IDIQ) contract pursuant to Federal Acquisition Regulation (FAR) part 16. RFP at 1, 56. The solicitation was set aside for small businesses in the contract's northeast zone.2 Id. at 2, 4; Agency Report (AR), Tab 9, Business Clearance Memorandum (BCM) at 1. The RFP anticipated the issuance of cost-plus-fixed-fee, level-of-effort task order with a 12-month base period and four 12-month option periods to the offeror whose proposal represented the best value to the agency, considering the following three factors in descending order of importance: technical, past performance, and cost/price. RFP at 2, 56, 59. The technical factor contained three equally-important subfactors: personnel, management approach, and corporate experience. Id. at 56. The solicitation permitted the agency to make upward adjustments to costs considered unrealistic in order to arrive at the agency's most probable cost. Id. at 59. The agency intended the most probable cost to be used in the best-value tradeoff decision. Id. As the evaluations of proposals' non-cost factors equalized, cost was to become "more of a deciding factor in selecting the best value." Id. The RFP here specified, by year, the level of effort for each of 15 labor categories. Id. at 4-5. It provided for an annual level of effort of 148,966 direct labor hours, or 744,830 direct labor hours over the life of the contract. Id. Six labor categories were characterized as key personnel positions. Id. For each of the proposed key personnel not currently employed by an offeror, offerors were required to submit a resume and letter of intent affirming the individual's intent to accept employment within 30 days of task order issuance. Id. at 16. The agency received proposals from five firms prior to the November 30 closing date, including those of Valkyrie and McHenry. Contracting Officer's Statement (COS) at 5. After an initial evaluation, discussions, and final proposal revisions, the Navy made award to McHenry on September 29, 2017. AR, Tab 9, BCM at 4. After Valkyrie received its debriefing, it filed a timely protest at GAO on October 30. The Navy took corrective action, and our Office dismissed the protest as academic. Valkyrie Enters., Inc., B-415633, Dec.