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FAR
22.11: Professional Employee Compensation |
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Comptroller
General - Key Excerpts |
New
SEC argues that the agency’s price evaluation was flawed because
the Air Force failed to evaluate ERC’s proposed professional
employee compensation plan in accordance with FAR provision
52.222-46, which was incorporated into the solicitation and
formed part of the section M evaluation. SEC Comments at 14; RFP
at 178. In this regard, SEC contends that the agency did not
evaluate ERC’s complete plan or compare the proposed salaries to
incumbent salaries, and that this failure allowed the agency to
find ERC’s proposal to be acceptable under this analysis despite
low salary rates. Id.
The purpose of a review of compensation for professional
employees is to evaluate each offeror’s ability to provide
uninterrupted, high-quality work, considering the realism of the
proposed professional compensation and its impact upon
recruiting and retention. FAR § 52.222-46(a); MicroTechnologies,
LLC, B-413091, B-413091.2, Aug. 11, 2016, 2016 CPD ¶ 219 at 6.
In the context of a fixed-price labor hour contract, our Office
has explained that this FAR provision anticipates an evaluation
of whether an awardee understands the contract requirements and
has proposed a compensation plan appropriate for those
requirements, in effect, a price realism evaluation regarding an
offeror’s proposed compensation. L-3 Nat’l Sec. Sols., Inc.,
B-411045, B-411045.2, Apr. 30, 2016, 2016 CPD ¶ 233 at 7-8. Our
review of a price realism analysis is limited to determining
whether it was reasonable and consistent with the terms of the
solicitation. Smiths Detection, Inc.; Am. Sci. & Eng’g, Inc.,
B-402168.4 et al., Feb. 9, 2011, 2011 CPD ¶ 39 at 17. Where a
solicitation requires an agency to conduct a price realism
analysis, and the evaluation record does not demonstrate whether
the agency reasonably conducted such an analysis, we will
sustain the protest. L-3 Nat’l Sec. Sols., Inc., supra, at 9;
Logistics 2020, Inc., B-408543, B‑408543.3, Nov. 6, 2013, 2013
CPD ¶ 258 at 7-8.
As relevant here, the RFP required proposals to include a
professional employee compensation plan, as prescribed in FAR
provision 52.222-46. RFP at 126. This FAR provision calls for an
evaluation of each offeror’s compensation plan, defined as
“salaries and fringe benefits,” to ensure that the plan reflects
a sound management approach and understanding of the contract
requirements. FAR § 52.222-46(a). Offerors are advised that
“[t]he professional compensation proposed will be considered in
terms of its impact upon recruiting and retention, its realism,
and its consistency with a total plan for compensation.” Id.
Additionally, proposals envisioning professional compensation
levels lower than those of predecessor contractors for the same
work were to be evaluated on the basis of maintaining program
continuity, uninterrupted high-quality work, and availability of
required, competent professional service personnel. FAR §
52.222-46(b). The provision cautions offerors that “lowered
compensation for essentially the same professional work may
indicate lack of sound management judgment and lack of
understanding of the requirement.” Id.
ERC submitted a professional compensation plan showing salary
ranges by labor category and fringe benefits. AR, Tab 12, ERC
Proposal at 64-72. The agency noted ERC’s stated “intent to pay
incumbent SEMATS 1 employees to whom we make offers the same
salaries they earn at the end of SEMATS 1 on Day 1 of SEMATS 2,”
and ERC’s “intent to offer a benefits package that is
substantially equivalent in value to the benefits package
provided to SEMATS 1 employees.” AR, Tab 23, ERC Initial
Technical Worksheet, at 24; Tab 12, ERC Proposal, at 9.
The agency found ERC’s fringe benefits to be “standard” for the
“market and region.” AR, Tab 23, ERC Initial Technical
Worksheet, at 24. However, ERC’s initial proposed compensation
was so far below “Government estimates” that the agency
concluded it represented a “material failure in the Offeror’s
proposal.” Id. During discussions, the agency advised ERC that
its below-market compensation represented a “deficiency” in its
proposal. AR, Tab 43, ERC Evaluation Notice with Response, at 9.
In response, ERC defended its rates, but advised that it was
raising its journeyman salaries to a minimum of the [DELETED]
percentile, and that it was raising other salaries to a minimum
of the [DELETED] percentile. Id. at 10. The agency concluded
that the positions with minimum salaries in the [DELETED]
percentile were “within the incumbent and Government salary
range estimates for these positions.” Id. at 11. The agency
noted ERC’s commitment to “materially preserve the incumbent
salaries and benefits of the SEMATS 2 workforce” and concluded
that ERC’s revised salary ranges were satisfactory. Id. at 10.
Under FAR provision 52.222-46(b), offerors are advised that, in
recompetitions, “proposals envisioning compensation levels lower
than those of predecessor contractors for the same work” require
additional evaluation. Thus, in order for an agency to determine
whether to perform this additional evaluation in a recompetition,
it must first conclude whether a proposal “envision[s]
compensation levels lower than those of predecessor contractor”
by comparing the incumbent rates and the proposed rates. FAR §
52.222-46(b). Here, the record does not reflect that the agency
compared ERC’s labor rates to those paid to incumbent
personnel.[5] Although the record contains a list of the
agency’s estimated labor rates by labor category, there is
nothing in the record documenting how these rates were compared
to ERC’s rates. AR, Tab 15, Estimated Direct Labor Rates; COSF
at 45 (“The Government evaluation team determined the risk of
each proposed Professional Compensation Plan by comparing the
labor rates proposed to that of the Government established
rate.”). The evaluation notice discussions show that the agency
concluded that some of ERC’s initial proposed rates were so low
as to rate a deficiency. However; the record is silent as to
whether, in the end, any of ERC’s rates were lower than
incumbent rates but nevertheless acceptable to the Air Force.
In sum, the record does not demonstrate that the agency
considered ERC’s proposed compensation plan under FAR provision
52.222-46(b). Specifically, the Air Force did not reasonably
compare ERC’s salaries to incumbent salaries, a necessary step
to determine whether the proposed salaries are lower than
incumbent salaries. Id. Accordingly, we find that the agency
failed to reasonably evaluate whether ERC offered “lowered
compensation for essentially the same professional work,” as
envisioned by FAR provision 52.222-46. We therefore sustain this
aspect of SEC’s protest. L-3 Nat’l Sec. Sols., Inc., supra, at
9; see also Wackenhut Int’l, Inc., B-286193, Dec. 11, 2000, 2001
CPD ¶ 8 at 7 (sustaining protest where RFP language contemplated
reviewing compensation plans in comparison to current wages and
the agency failed to perform such a review). (SURVICE
Engineering Company, LLC B-414519: Jul 5, 2017) |
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Comptroller
General - Listing of Decisions |
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For
the Government |
For
the Protester |
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New
SURVICE Engineering Company, LLC
B-414519: Jul 5, 2017 |
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