ELAINE D. KAPLAN, District Judge.
In this post-award bid protest, Plaintiff URS Federal Services, Inc. ("URS") challenges a decision by the National Aeronautics and Space Administration ("NASA") to award Defendant-Intervenor PAE-SGT Partners, LLC ("PSP") a contract for "baseport operations and spaceport services" at the John F. Kennedy Space Center in Cape Canaveral, Florida.
URS, the incumbent contractor on the predecessor contract at Kennedy Space Center, presents two grounds for its protest. First, it contends that NASA's evaluation of the technical approach outlined in PSP's proposal was arbitrary and capricious. Specifically, it argues that the agency overlooked a large discrepancy between the number of craft and non-craft labor hours needed to perform certain key contractual requirements that were set forth in PSP's "Basis of Estimates" ("BOE") and the number of craft and non-craft labor hours that were contained in NASA's own Independent Government Cost Estimate ("IGCE"). It also contends that to the extent that NASA used a comparator other than the IGCE when reviewing PSP's BOE—namely, NASA's "Internal Government Estimate" ("IGE")—the record contains inadequate documentation of the basis for the IGE.
Second, URS contends that NASA erred by allegedly failing to engage in a price reasonableness analysis before establishing the competitive range. As a result of this error, according to URS, the discussions NASA held with it were neither meaningful nor equal. Thus, URS observes, PSP was given an opportunity during discussions to eliminate all of the weaknesses in its technical proposal. On the other hand, NASA never alerted URS that, to make its proposal competitive with PSP's, it would need to reduce its price (which was ultimately the determinative factor in NASA's decision to award the contract to PSP).
The case is currently before the Court on the parties' cross-motions for judgment on the administrative record. For the reasons discussed below, the Court concludes that URS's arguments lack merit. The agency's award decision was not arbitrary, capricious, or contrary to law. URS's motion is therefore
NASA issued Solicitation NNK18619079R ("the Solicitation") on November 1, 2017. AR Tab 4 at 485. The Solicitation requested proposals for the Kennedy Space Center Base Operations and Spaceport Services Contract ("the BOSS Contract").
The BOSS contract was structured to provide a set amount of baseline work to fulfill certain known and defined baseline requirements, as well as an IDIQ component to meet fluctuating requirements. AR Tab 2 at 377-78. Two categories of baseline work—Baseline Repairs and Replacements ("BRRs") and Service Orders ("SOs")—are relevant to the resolution of one of URS's protest grounds. BRRs are "request[s] for work to existing infrastructure that is essential to protect, preserve, or restore Facilities, Systems, Equipment, and Utilities (FSEU)," AR Tab 4 at 740, while SOs are "request[s] for facilities-related work that is new in nature and not typically essential to protect, preserve, or restore FSEU,"
Under the Solicitation, the award would be made to the responsible offeror whose proposal represented the best value to the government.
The Solicitation advised prospective offerors that their "initial proposal[s] should contain [their] best terms from a cost or price and technical standpoint," and indicated that NASA did not intend to hold discussions.
NASA's Source Evaluation Board ("SEB") would conduct evaluations of the proposals pursuant to NFS 1815.370.
As set forth in the Solicitation and in accordance with NFS 1815.304-70, the SEB would evaluate proposals based on three factors: (1) Mission Suitability; (2) Past Performance; and (3) Price. AR Tab 4 at 603. The Price factor was more important than the Mission Suitability factor, which was more important than the Past Performance factor.
The Mission Suitability factor was comprised of three subfactors which would be individually evaluated, numerically scored, and weighted "using the adjectival rating, definitions, and percentile ranges at NFS 1815.305(a)(3)(A)."
NASA's evaluation of PSP's proposal with respect to the Technical Approach subfactor is at issue in this protest. Under that subfactor, proposals would be evaluated to determine, among other things, an offeror's understanding of and ability to perform certain work set out in the Performance Work Statement ("PWS"). Of particular relevance to the current bid protest, the Solicitation required offerors to fill in a "BOE [Basis of Estimate] Template" which itemized both the labor and non-labor resources that the contractor would devote to five categories of work set forth in the PWS: 1) Maintenance; 2) Operations; 3) BRRs; 4) SOs; and 5) Systems Engineering and Engineering Services.
The Solicitation provided that, consistent with FAR 15.305(a)(2) and NFS 1815.305(a)(2), NASA would "evaluate [offerors'] and proposed major subcontractors' recent performance of work similar in size, content, and complexity to the requirements of th[e] solicitation."
Price—the most important factor—was to be evaluated for reasonableness in accordance with FAR Subpart 15.4. To that end, the Solicitation stated that NASA would perform a price analysis consistent with FAR 15.404-1(b). AR Tab 4 at 607. That provision, in turn, identifies a variety of techniques for assessing price reasonableness, including comparing the offerors' prices to each other and against an independent government cost estimate. NASA reserved the right to reject any proposal with unbalanced pricing.
Offerors were instructed to submit their pricing on a pricing template.
The Solicitation required that all proposals be fully submitted by December 29, 2017. AR Tab 4 at 479. URS, PSP, and three other offerors submitted timely proposals. AR Tab 16 at 29720.
On April 11, 2018, the SEB presented the results of its evaluation to the Source Selection Authority ("SSA").
In the "Final Summary" section of its presentation, the SEB provided the chart below, which detailed the offerors' Mission Suitability adjectival ratings and scores, their Past Performance ratings, and their total evaluated prices:
Because the contracting officer had decided during the evaluation process that discussions should be held, FAR 15.306(c) required the establishment of a competitive range composed of the most highly rated proposals.
On April 12, 2018, the contracting officer prepared a five-page memorandum summarizing the evaluation process and the rationale for her competitive range determination, which matched the SEB's recommendation.
The contracting officer opined that "[d]iscussions would likely enhance all three proposals, thereby increasing competition, which maximizes the Government's ability to obtain the best value."
On April 16, 2018, the contracting officer notified the three competitive-range offerors that they were advancing in the procurement and opened discussions. AR Tab 17 at 29727-29; AR Tab 18 at 30075-77; AR Tab 172 at 83781-83. Discussions took place in two to three rounds, as tailored to each proposal, and lasted until July 11, 2018. AR Tab 40 at 71007.
NASA sent URS three clarification questions and two "other" requests for proposal revisions along with its competitive range notification letter. AR Tab 18 at 30075-80. One of the clarification questions was related to the single weakness assigned to URS's proposal (under the Technical Approach subfactor) during the initial evaluation.
URS's April 23, 2018 response resolved its weakness, leaving unresolved a Management Approach clarification question as well as three additional clarification questions arising out of an intervening solicitation amendment.
On May 8, 2018, NASA held face-to-face discussions with URS regarding the outstanding clarification questions. AR Tab 18 at 30092, 30106. URS then submitted proposal changes to the agency on May 15, 2018. AR Tab 27 at 43477;
In PSP's competitive range notification letter, NASA listed four clarification questions under Management Approach (where PSP had been assigned no weaknesses), four clarification questions under Technical Approach (where it had two significant weaknesses and five weaknesses), and two "other" clarification questions. AR Tab 17 at 29730-35. PSP participated in face-to-face discussions with NASA on May 7, 2018, and submitted proposal changes on May 14, 2018.
Because the May 14 submission did not resolve all of PSP's weaknesses and clarification questions, NASA held another face-to-face meeting with PSP on June 6, 2018.
PSP then submitted another set of proposal changes on June 15, 2018. AR Tab 29 at 45385. Because those revisions left two weaknesses unresolved (including the weakness which had precipitated the categorization exercise) and also introduced two new weaknesses, NASA conducted a teleconference with PSP on July 10, 2018 to discuss all remaining issues. AR Tab 17 at 29916, 29918-20. PSP did not provide any further proposal changes until its final proposal revisions were submitted on July 16, along with those of the other two competitive-range offerors.
Like the other two competitive-range offerors, Offeror A's April 16, 2018 competitive range notification letter enclosed its first set of discussion questions. AR Tab 172 at 83781-87. Offeror A had five Management Approach, four Technical Approach, and two "other" clarification questions.
On July 11, 2018, NASA closed discussions and requested final proposal revisions from URS, PSP, and Offeror A by July 16, 2018. AR Tab 17 at 29952-55; AR Tab 18 at 30175-77; AR Tab 240 at 92206-08. After receiving the final proposal revisions, the SEB completed its final evaluations and presented its findings to the SSA on August 2, 2018. AR Tab 40 at 70916. The following chart, taken from the August 2 presentation, summarizes the evaluations of the initial and the final revised proposals of each of the three offerors:
As the chart illustrates, PSP's Technical Approach rating increased significantly (from 218 to 338 points) between the evaluation of its initial and final proposals. This increase stemmed largely from PSP's resolution during discussions of the two significant weaknesses and five other weaknesses initially assigned to its proposal under the Technical Approach subfactor.
As the ratings stood after the evaluation of the final revised proposals, PSP and URS's prices had not changed significantly, but their Mission Suitability scores were closer. In fact, PSP had pulled ahead of URS by a relatively small number of points. Although URS resolved the single weakness initially assigned to its proposal, its revisions amounted to an increase of three points in its Mission Suitability score as compared to PSP's improvement of 120 points. Meanwhile, Offeror A also improved its score, but came in third on Mission Suitability and increased its price by approximately $[* * *] million.
During the August 2 SEB presentation, the SSA "carefully considered [the SEB's] findings and questioned the SEB on the material presented." AR Tab 40 at 71014. He also "solicited and considered the views of the individual members of the SEB and other [Kennedy Space Center] senior officials in attendance."
In documenting his source selection decision, the SSA summarized the SEB's findings and the merits of the remaining three proposals both independently and in relation to one another.
After a detailed comparative review of the qualitative features of each proposal, the SSA "found the offerors' proposals to be of similarly high quality."
As to Past Performance, the SSA reviewed in detail each offeror's relevant experience, which had led the SEB to assign a confidence level of "Very High" to all three offerors.
Turning finally to the Price factor, the SSA noted that, per the terms of the Solicitation, Price was the most important factor; specifically it was approximately equal to the non-price factors combined and was "more important than either non-price factor individually."
The SSA reported that he had "questioned the SEB" on the significant price differences among the proposals—ranging from URS's price of $672.1 million to PSP's price of $466.8 million, with Offeror A in the middle at $[* * *] million.
In light of the significant differences between the offerors' prices and the lack of "significant discriminators" on non-price factors, the SSA found that Price was "the only significant discriminator among the proposals, and [was] therefore the determinative factor."
URS requested post-award debriefing on August 6, 2018, the same day it was notified it had not been awarded the contract. AR Tab 41 at 71021. A face-to-face debriefing took place on August 10, 2018.
URS filed a post-award protest at GAO on August 15, 2018. AR Tab 48 at 71785. Before GAO could issue a decision on the merits, however, offeror KBA filed a pre-award protest in this Court on October 9, 2018. AR Tab 71 at 72580-81. As a result, on October 26, 2018, GAO dismissed URS's protest without reaching its merits.
URS then filed the instant protest in this court on November 5, 2018. ECF No. 1. On November 7, 2018, while the case was briefly consolidated with KBA's protest, the Court granted PSP's motion to intervene. Order, KSC Boss Alliance, LLC & URS Federal Servs., Inc. v. United States & PAE-SGT Partners, LLC, No. 1:18-cv-01559-EDK (Fed. Cl. Nov. 7, 2018), ECF No. 32. URS filed its motion for judgment on the administrative record on December 13, 2018 (ECF No. 46), and the government and PSP filed cross-motions for judgment on the administrative record ("the cross-motions") on February 13, 2019 (ECF Nos. 52, 53).
The Court of Federal Claims has jurisdiction over bid protests in accordance with the Tucker Act, 28 U.S.C. § 1491, as amended by the Administrative Dispute Resolution Act of 1996 § 12, 28 U.S.C. § 1491(b). Specifically, the Court has the authority "to render judgment on an action by an interested party objecting to a solicitation by a Federal agency for bids or proposals for a proposed contract or to a proposed award or the award of a contract or any alleged violation of statute or regulation in connection with a procurement or a proposed procurement." 28 U.S.C. § 1491(b)(1);
To possess standing to bring a bid protest, a plaintiff must be an "interested party"—
In post-award protests, like this one, a plaintiff may demonstrate competitive injury or prejudice by showing that it would have had a "substantial chance" of winning the award "but for the alleged error in the procurement process."
URS has standing to pursue the present bid protest. Taking its allegations of error to be true, URS would have had a "substantial chance" at award but for the alleged errors. Specifically, if NASA erred in its evaluation of PSP's technical approach and/or if the agency was required to discuss URS's price, URS could have won the contract award because price was "the determinative factor," AR Tab 40 at 71019, and the SSA found URS's proposal overall to be of similarly high quality to PSP's proposal,
Parties may move for judgment on the administrative record pursuant to Rule 52.1 of the Rules of the Court of Federal Claims ("RCFC"). Under RCFC 52.1, the Court reviews an agency's procurement decision based on the administrative record.
The Court reviews challenges to procurement decisions under the same standards used to evaluate agency actions under the Administrative Procedure Act, 5 U.S.C. § 706.
This "highly deferential" standard of review "requires a reviewing court to sustain an agency action evincing rational reasoning and consideration of relevant factors."
A disappointed offeror "bears a heavy burden" in attempting to show that a procuring agency's decision lacked a rational basis.
URS contends that NASA's evaluation of PSP's proposal under the Technical Approach subfactor was arbitrary and capricious, arguing that NASA "failed to analyze a key question about PSP's proposal: does PSP understand the level of resources that will be needed to perform two key requirements, Baseline Repairs and Replacements [or BRRs] and Service Orders [or SOs]?" Pl.'s Mem. in Supp. of Mot. for J. on the Admin. R. ("Pl.'s Mem.") at 9, ECF No. 46-1. URS asserts that PSP "proposed significantly fewer resources than the Agency's internal estimates showed it needed" for BRRs and SOs in the first year of performance.
URS's argument fails for several reasons, foremost among them because NASA did not employ the data reflected in the IGCE to evaluate the offerors' technical approaches. Instead, it used a separate internal government estimate (or IGE) for that purpose. As the government explains, the IGE was tailored to NASA's goal of assessing the soundness of the offerors' proposals based on the information they supplied in their BOEs. It "identifie[d] the direct craft labor hours needed to perform the [BRRs] and the [SOs]" on the basis of "historical data." Def.'s Mot. at 16 (citing AR Tab 36 at 53546-4331);
In this case, the Solicitation did not prescribe a particular method for analyzing the BOEs to assess the offerors' understanding of the technical requirements or the reasonableness of their approaches. And determining what standards to use to evaluate proposals for their technical quality requires the special expertise of procurement officials. Reviewing courts therefore give the greatest deference possible to these determinations.
The agency clearly acted within its broad discretion when it chose to use historical data regarding craft labor hours as the yardstick against which to evaluate offerors' understanding of the level of resources needed to perform the BRRs and SOs. Indeed, it is unclear to the Court that URS argues otherwise. Instead, URS's argument appears to be that it would have been more appropriate for the agency to use the IGCE as a point of comparison, and for it to also consider the non-craft labor hours reflected in the offerors' BOEs when considering their understanding of the technical requirements.
This contention must be rejected, given the substantial deference afforded to the agency in such matters. The bottom line is that the agency developed the IGCE to evaluate price, not technical approach. And, as the government explains, there are a number of problems with using the IGCE data to evaluate the offerors' BOEs. Among other things, the data that was used as the basis for the IGCE overstates the number of labor hours needed to perform the BRRs and SOs because it includes labor that is allocated to that work solely for pricing purposes. Def.'s Mot. at 15-16. Further, the IGCE employed generous assumptions about the labor that would be required because its purpose was to serve as a vehicle to secure funding from Kennedy Space Center's customers.
URS also complains that NASA's IGE "is nothing more than `[a] page with numbers' that—if not altogether wrong—are at least `completely lacking in any notes or back-up cumentation.'" Pl.'s Reply in Supp. of Mot. for J. on the Admin. R. & Resp. to Def.'s & Intervenor's Cross Mots. ("Pl.'s Reply") at 4, ECF No. 58 (quoting
In that regard it is telling that—while complaining about the absence of back-up notes or documentation to support the IGE—URS (the incumbent on the predecessor contract) never actually contends that the IGE does not accurately reflect historical data about craft labor hours devoted to performance of the BRRs and SOs. Nor could it credibly do so, for URS's proposal itself explicitly stated that the labor hours included in its BOE were "evaluated/developed from historical averages,"
Because URS does not provide any basis for the Court to question the validity of the historical data reflected in the IGE, the Court finds unpersuasive URS's contention that a remand is required to allow NASA to review the IGE and supply back-up notes and other documentation to support it. In that regard, URS's reliance on
Here, unlike in
URS further asserts that the record contains "no specific conclusion" that PSP understood the contract requirements and no "explanation of why the Agency might have" so concluded, given that PSP estimated craft labor hours for BRRs and SOs that were [* * *]% of the historical averages set forth in the IGE. Pl.'s Reply at 9. But contrary to URS's argument, it is clear from the record that NASA did conduct a comparison of PSP's BOE with the IGE's labor hours for BRRs and SOs.
Thus, NASA did not assign a weakness to PSP's proposal with respect to the craft labor hours listed in the BOE for the BRRs and SOs, but did find that PSP's initial BOE reflected a weakness based on the shortfall in the number of hours proposed for Maintenance and Systems Engineering.
Further, the record includes documentation supporting NASA's satisfaction with PSP's technical approach, notwithstanding that PSP's BOE specified fewer craft labor hours for BRRs and SOs than had historically been employed. NASA thus identified various strengths in PSP's technical approach that could lead to greater efficiencies in the performance of these tasks.
In short, NASA acted well within its discretion when it used the IGE to evaluate PSP's BOE (as it did for all offerors, including URS). The record further establishes that the agency was aware that PSP proposed craft labor hours for BRRs and SOs that were lower than the estimates in the IGE but that it did not consider those differences problematic. Accordingly, URS's challenge to NASA's evaluation of PSP's technical approach lacks merit.
URS's second protest ground concerns the adequacy and fairness of the discussions NASA held with the offerors. According to URS, NASA did not perform a price reasonableness analysis before it established the competitive range. Had NASA done so, URS argues, it would have found URS's price unreasonable and accordingly would have been required to raise price with URS during discussions. Instead, URS contends, NASA worked diligently with PSP to resolve the weaknesses in its proposal, but failed to give URS an opportunity to lower its price, which was ultimately the discriminating factor in the agency's decision to award the contract to PSP rather than URS.
Under the FAR, where an agency establishes a competitive range and holds discussions with offerors, those discussions must cover "deficiencies, significant weaknesses, and adverse past performance information." FAR 15.306(d)(3).
In this case, there is nothing in the record to suggest that NASA found URS's initial price proposal unacceptable or unreasonable. The Solicitation required the SEB to "perform a price analysis in accordance with FAR 15.404-1(b)." AR Tab 4 at 607 (Solicitation); AR Tab 40 at 70963 (SEB presentation to SSA). Under the FAR, a "[c]omparison of proposed prices received in response to [a] solicitation" is typically a satisfactory price analysis technique because "[n]ormally, adequate price competition establishes a fair and reasonable price." FAR 15.404-1(b)(2)(i) (citing FAR 15.403-1(c)(1)(i)). Similarly, a comparison of proposed prices with the IGCE is a valid price analysis technique.
The record reflects that the SEB undertook this analysis. It includes charts prepared by the SEB which compared the offerors' proposed prices to one another and to the IGCE on a CLIN-by-CLIN basis, as well as on the basis of total evaluated price. AR Tab 40 at 70963-64. Further, the record reveals that as part of the price analysis, the agency recalculated and revised the IGCE to address a number of assumptions contained in the estimate which turned out to be inconsistent with the offerors' proposals (such as, for example, an assumed higher rate of profit than the average rate of the offerors). AR Tab 16 at 29680.
As the SSA confirmed in his source selection decision, the SEB conducted an initial price evaluation and it "found each of the offeror's price[s] to be fair and reasonable" at the time the competitive range was established. AR Tab 40 at 71006. The SEB also evaluated the price proposals for unbalanced pricing and found none.
Thus, the contracting officer discussed the offerors' prices in the context of comparing the highest scored proposals to one another. She noted that while URS had the highest Mission Suitability Score, it also had the highest price. AR Tab 16 at 29720-21. She did not suggest, however, that URS's price was so high as to be unreasonable. Indeed, the agency would have been hard-pressed to have found URS's price proposal unreasonable. For while URS's total evaluated price was significantly higher than that of PSP and Offeror A, it was still approximately 25% below the original IGCE and only about 2.5% higher than a revised IGCE that NASA prepared as part of its competitive range determination process to adjust for assumptions contained in the offerors' proposals.
There is similarly no merit to URS's contention that—even if the agency did determine that its price was reasonable—NASA was required to discuss price with URS because it "had zero chance for award unless it substantially lowered its price" and because the award decision "makes clear that [NASA] would not award to URS at its proposed price." Pl.'s Reply at 15. To be sure, it is undisputed that, because the final three proposals were found essentially equal from a technical and past performance standpoint, price ultimately became "the determinative factor."
Contracting agencies are not required to discuss proposal features that "eventually prove[] determinative of the contract award" where, as here, those features do not constitute significant weaknesses or deficiencies.
Finally, URS argues that the discussions that NASA held were unequal because, while never raising price as a concern with URS, NASA spent significant time and effort attempting to resolve PSP's weaknesses and allowing it to enhance its proposal. Indeed, URS observes, NASA went beyond the FAR's requirements when it discussed areas of weakness with PSP that were not "significant weaknesses" and therefore not a mandatory topic for discussions.
This contention also lacks merit. FAR 15.306(e)(1) provides that when conducting discussions, the government may not "engage in conduct that . . . favors one offeror over another." But while "[a]ll contractors and prospective contractors" must "be treated fairly and impartially," they "need not be treated the same." FAR 1.102-2(c)(3). Discussions thus must be "tailored to each offeror's proposal." FAR 15.306(d)(1).
In this case, URS does not contend that NASA raised issues with PSP that were "identical" or even similar to issues implicated by URS's proposal but not discussed.
Further, the initial evaluation resulted in the assignment of more weaknesses (both "significant" and otherwise) to PSP's proposal than were assigned to the proposal URS submitted. It is therefore neither surprising nor unfair that NASA spent more time in discussions with PSP, and that those discussions covered a larger number of topics than did the discussions NASA held with URS. Because NASA was merely fulfilling its obligation under FAR 15.306(d)(1) to tailor discussions to each offeror's proposal, the Court rejects URS's allegation of error based on unequal discussions.
For the reasons discussed above, URS's motion for judgment on the administrative record is
