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bob7947

Emergint Technologies, Inc. & Infoshred LLC

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The first decision, Emergint Technologies, Inc., B-407006, Oct. 18, 2012, describes a classic IT support services acquisition. (T&M for five years and $78 million! Wow! That makes a joke out of FAR 16.601(d)(2). I would love to see the D&F.)

Three comments:

First, the acquisition is for nothing more than to hire a company to be a personnel office for the agency. The T&M pricing arrangement is the main giveaway. But also consider the quoted statement on page 3:

These categories total [deleted] of the level of effort which would translate to [deleted] of our staff being at risk for not taking positions with incumbents if the rate proposed be [sic] too low to maintain current staff.

"Our staff." "OUR staff!" Not the contractor's staff. That's a typical government proprietary attitude toward the contractor's employees under such contracts. The typical response of the government to poor quality work is to get after the contractor to replace certain employees or to hire more. I'll wager that government employees have had and will have the final say in contractor hiring and firing decisions.

Second, although I'm sure the CO would deny it, this is a classic example of "We really want the incumbent back, but we have to go through the motions, so... ."

Third, as for the bases for the protest itself, this is a typical case of a source selection being done by people who don't know how to do them.

Concerning the price realism protest, if the CO had known what he was doing the agency might have gotten away with what it did. They were nailed for relying on an unstated evaluation factor -- price realism. What bothered them was that the proposed labor rates would cause their favorite contractor employees to look for other work -- a valid concern. If they had called it a technical risk and downgraded the protester's score for management plan or staffing plan on the basis of that risk they could have relied on decisions like Hi-Shear Technology Corp. B-261206, 98-2 CPD para. 132:

With respect to Hi–Shear's contention that the agency improperly considered risk in the evaluation, even though risk was not a named evaluation factor, we point out that the contracting officer's statement that risk of late delivery outweighed any added value from making an award to Hi–Shear is consistent with the solicitation language that requires a best value determination before paying a higher price to a BRC. Consideration of risk is inherent in the evaluation of proposals. Information Spectrum, Inc., B–256609.3; B–256609.5, Sept. 1, 1994, 95–2 CPD ¶ 97.

See Feldman, Government Contract Awards: Negotiation and Sealed Bidding Sec. 6:18:

Even where risk is not a stated evaluation factor, it is “inherent” in the evaluation of proposals with an RFP containing evaluation criteria focusing on performance capabilities and permitting cost/technical tradeoffs. Hi-Shear Technology Corp., Comp Gen Dec B-261206, 95-2 CPD 97.

See also, "Evaluation of Risk in Competitive Negotiated Procurements: A Key Element in the Process," The Nash & Cibinic Report, April 1991:

One of the key issues in the evaluation of competitive proposals is the question of whether the offeror can actually satisfy the Government's requirements. Of course, all offerors promise to fulfill the Government's needs--so the question really is whether those promises are credible. One way to address this question is to evaluate the risks associated with each proposal.

The Comptroller General has held that evaluation of such risks is inherent in the evaluation process, Honeywell, Inc., Comp. Gen. Dec. B-238184, 90-1 CPD ¶435; AT&T Technologies, Inc., Comp. Gen. Dec. B-237069, 90-1 CPD ¶114. In these cases, risk was not stated as an evaluation factor but was a major issue in the scoring of one of the stated factors. In Honeywell the offeror's intention to meet the agency's requirements by reverse engineering critical software led to an evaluation of high risk that the offeror could meet the contract schedule or estimated cost. In AT&T the offeror's intention to demonstrate the acceptability of its product by “at-sea testing” rather than computer simulation led to an evaluation of high risk that the offeror could meet the schedule or technical performance requirements of the contract. In both cases it appears that risk was not identified as an element of the evaluation process. Hence, the Comptroller's description of risk as an “inherent” part of all evaluations.

Had the CO made no mention of the offeror's price, but had merely said that the low labor rates prompted the agency to downgrade the score(s) for management plan and/or staffing plan based on the risk to staffing and thus to the quality of performance, the GAO might have denied that part of the protest.

Unfortunately, the CO did not adequately scrub the technical evaluation, so the agency would have lost that part of the protest anyway based on the unsupported findings of weakness.

Just another example of a job badly done.

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I posted 4 protests on the home page last night. What do you think of the first 3? They are easy to read and the excerpts are linked with their decision.

Bob, you deserve recognition and credit for your efforts to keep your readers informed on the GAO and COFC decisions that interpret the procurement regulations in light of specific sets of facts. Contracts “professionals” must read these decisions if they are to understand what the regulations mean and to apply them correctly.

With regard to the Emergint and Infoshred decisions, they emphasize the point that one cannot understand the meaning of the procurement regulations without reading the GAO and COFC decisions. The FAR does not address price realism directly [see FAR 15.404-1(d)(3)], yet it is commonly seen in source selections. The Emergint decision provides insight the way the government may inform the competing contractors of the government’s intent to use price realism in its source selection decision.

Nor does the FAR describe the “materiality” of amendments or the circumstances when a contractor must acknowledge receipt of an amendment. The Infoshred decision sets out valuable information on the definition of the “materiality” of solicitation amendments and how the definition will be applied.

I like the link to the Key Excerpts page with a further link to the entire decision. The excerpt allows the reader to see the key issue(s) under review and to decide whether or not to read the entire decision.

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Napolik:

Thanks.

Vern & Napolik:

Thanks for always contributing your knowledge.

Anyone:

I checked the attorney's office (web site) and the individual attorney who represented Infoshred. You can do it yourself. The office appears to be a local law office in Connecticut. The specific attorney does not represent himself as having a background in federal contracts--and he won the decision. I think he used a non-technical practice--if you want to call it that--to win. Hint--2 words.

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The Infoshed decision is just sad on so many levels. This is a case of pure dumbness. What is especially distressing is that the agency's lawyer didn't see that corrective action was the way to go. The taxpayers' money was wasted fighting the protest. Pure incompetence.

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Second, although I'm sure the CO would deny it, this is a classic example of "We really want the incumbent back, but we have to go through the motions, so... ."

I had the same impression. If what the agency really valued was experience, why did it choose this evaluation scheme?:

management plan (35 points); staffing plan (30); similar experience (15); technical approach (10); and transition/start up plan (10)

Did the agency want the incumbent because they were adept at creating management plans, staffing plans, transition/start up plans, and describing their technical approach in proposals? Is this what the agency would be requiring the contractor to do under the task order? Why not just evaluate experience?

Too often agencies are thoughtless when choosing evaluation factors. The selection of evaluation factors is a mechanical, rather than deliberative, process. Some agencies also try to mitigate the inherent advantage of the incumbent by evaluating things that they don't really value out of a misguided notion of fairness. They don't seem to realize that these practices create a bigger target for protesters to shoot at.

Had the CO made no mention of the offeror's price, but had merely said that the low labor rates prompted the agency to downgrade the score(s) for management plan and/or staffing plan based on the risk to staffing and thus to the quality of performance, the GAO might have denied that part of the protest.

I would hope that the GAO would be consistent in that regard. However, there are a couple of statements in the decision that are troubling:

While it is within an agency’s discretion to provide for a price realism analysis in awarding a fixed-price contract to assess understanding or risk, see FAR § 15.404-1(d)(3), offerors competing for such an award must be given reasonable notice that a business decision to submit low pricing will be considered as reflecting on their understanding or the risk associated with their proposals. Analytic Strategies, B-404840, May 5, 2011, 2011 CPD ¶ 99 at 2-3.

Because below cost prices are not inherently improper, when offerors are competing for award of a fixed-price contract, as explained above, they must be given reasonable notice that their business decision to submit a low-priced proposal can be considered in assessing their understanding or the risk associated with their proposal. See Milani Constr. LLC, supra, at 5.

Is this another case of the GAO attorney being unfamiliar with their own case law, or do we an exception to the "risk assessment is inherent in proposal evaluation" rule when it comes to price realism? I hope it's the former.

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I think the GAO was focusing on the price realism issue, not risk evaluation. I think that's because the agency did not state its evaluation in terms of risk assessment. It focused on low price, instead of the risk impact of low rates. At least, that's how it seems from the text of the decision. Also, I think the GAO may have been turned off by the sloppy evaluation.

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