GAO: Agency “Mechanically” Applied Undisclosed Staffing Estimate

An agency improperly downgraded a proposal simply because the proposal’s full-time equivalents (FTEs) differed from the agency’s undisclosed internal estimate.

In a recent bid protest decision, the GAO concluded that an agency’s “mechanical” evaluation of the adequacy of an offeror’s proposed staffing by reference to an undisclosed government estimate was improper, because the estimate was not disclosed to the offeror and the agency failed to give the offeror an opportunity to address the differences between the offeror’s proposed staffing and the government estimate.

The decision, Native Resource Development Company, B-409617.3 (July 21, 2014), involved a request for proposals from the Department of Homeland Security, Federal Emergency Management Agency for facility operations and support services.  The solicitation called for the consideration of several technical factors, including offerors’ staffing plans.  The agency had an internally prepared staffing estimate that it used in the evaluation, but the agency did not provide offerors with a staffing estimate.

Native Resource Development Company (NRDC) was one of the eight offerors included in the competitive range.  After establishing a competitive range, the agency opened discussions.  In discussions with NRDC, the agency stated that NRDC’s proposed staffing appeared to be too low for certain positions.  In its final proposal, NRDC proposed to increase staffing for those positions.  Nevertheless, in the agency’s final evaluation of NRDC’s proposal, the agency determined that NRDC’s overall staffing remained a weakness.  Another offeror was assigned a staffing rating of outstanding, based on its proposal of overall staffing which was very close to the agency’s internal estimate.  The agency awarded the contract to that offeror.

NRDC filed a big protest with the GAO.  NRDC challenged the agency’s evaluation of NRDC’s staffing plan, arguing that the agency improperly evaluated the adequacy of proposed staffing based on a comparison of the overall number of full-time employees proposed to an undisclosed estimate.

The GAO agreed.  The GAO wrote “[w]hile an agency may rely on its own estimates of the staffing levels necessary for satisfactory performance in evaluating proposals for the award of a fixed price contract, it is improper for an agency to downgrade a proposal simply because the offeror’s overall proposed FTEs differed from the government’s estimate, where the government’s estimate was not disclosed to the offerors, the agency failed to conduct discussions with the offeror concerning the discrepancy, and the agency did not look beyond the bottom line numbers to determine whether there were specific areas in which the offeror’s proposed staffing was inadequate.”

The GAO continued, “[t]his is precisely what happened here–NRDC’s proposed staffing was found to present a performance risk solely because the protester’s overall number of FTEs was below an undisclosed agency estimate, without discussions providing adequate notice of the agency’s concern or an analysis of whether the protester’s proposed staffing in particular areas was sufficient.”  Rather than considering NRDC’s specific technical approach, “the agency mechanically compared NRDC’s total FTE count with the total FTE set forth in the government estimate . . . [s]uch a comparison, without any analysis or explanation, was fundamentally unreasonable.”

The GAO concluded that the agency acted unreasonably in determining that NRDC’s overall level of staffing to be a weakness without providing NRDC with reasonable notice of, and the opportunity to address, the discrepancy between the agency’s overall staffing estimate and its own number.  The GAO sustained NRDC’s protest.

The Native Resource Development Company GAO protest decision demonstrates that, although a procuring agency can develop an internal staffing estimate for use in evaluating proposals, it cannot mechanically apply that estimate without considering offerors’ unique technical approaches to the work.  The policy is a wise one–if it were otherwise, the government might unreasonably reject offerors’ uniquely efficient approaches to the work.

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