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4 min read

LOGC2 v. Zantech Bid Protest: Analyzing the GAO's Decision

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On February 20, 2018, LOGC2, Inc. lodged a protest against the Department of the Army contesting the award of a task order to Zantech IT Services, Inc. In their protest, LOGC2, Inc. alleged that the agency failed to adequately evaluate various aspects of Zantech's proposal, such as costs, technical and risk factors, and potential organizational conflict of interest (OCI). However, the Government Accountability Office (GAO) dismissed LOGC2, Inc.'s protest, affirming that the agency's assessment was reasonable and in accordance with the criteria outlined in the solicitation. This decision was issued on June 5, 2018.

In the following case study, we will delve deeper into the key arguments put forth in the LOGC2 v. Zantech bid protest case and analyze the GAO's assessment of the matter. By understanding the intricacies of this protest and its subsequent denial, a clearer picture will emerge regarding the complexities and considerations involved in federal bid protests.

Background

The Army issued a solicitation to small business PMSS 3 IDIQ contract holders, outlining that the award would be based on a best-value tradeoff considering technical/risk and cost/price factors. Notably, the technical/risk factor held greater importance than the cost/price factor. Offerors were required to provide a comprehensive description of their approach to executing the performance requirements stated in the performance work statement (PWS). The evaluation process consisted of assessing the offerors' technical capabilities subfactor for meeting certain tasks, along with the management capabilities subfactor for personnel management, staffing, and key personnel.

To evaluate the technical/risk factor, the agency assessed the extent to which each proposal fulfilled the requirements outlined in the solicitation. Additionally, offerors were mandated to furnish detailed information on labor categories, position descriptions, personnel qualifications, and skill levels. They were also expected to submit a summary cost/price spreadsheet, a detailed cost spreadsheet, and a cost/price narrative. The Army evaluated the offerors' price/costs based on criteria such as price reasonableness, cost realism, and understanding of the effort required.

In response to the solicitation, LOGC2 and Zantech submitted proposals, leading the Army to initiate discussions and provide evaluation notices to address any weaknesses and uncertainties. Following this, both offerors submitted revised proposals; however, the Army re-opened discussions to address cost concerns. 

Ultimately, Zantech was awarded the task order based on being deemed the best value to the Army. Although Zantech and LOGC2 were considered technically comparable, Zantech had a slight advantage in the Technical Capabilities subfactor. The determining factor for the award was cost, as LOGC2's proposal proved to be 45% more expensive than Zantech's. 

On February 20, 2018, LOGC2 filed a bid protest with the U.S. Government Accountability Office (GAO) after undergoing a debriefing.

GAO Review of Zantech's Technical Approach and Cost Elements

The Government Accountability Office (GAO) reviewed Zantech's technical approach and individual cost elements, including labor rates, which were compared to data from salary.com. Zantech responded to evaluation notices and provided additional rationale to support its rates. Despite LOGC2's claim that the agency did not calculate the most probable costs of Zantech's proposal, the comptroller general found no grounds to question the agency's analysis.

In the evaluation of Zantech's proposed direct labor rates, the GAO thoroughly examined the explanations provided by Zantech. Zantech asserted that their rates were based on a competitive wage and salary structure. Zantech supported their proposed rates with screenshots from salary.com for each position, accompanied by justifications for the appropriateness of each salary percentile range.

Upon reviewing the additional information provided by Zantech, the GAO deemed the Army's analysis of Zantech's costs to be reasonable. The Army did not make upward adjustments to account for Zantech's low direct labor rates, and the GAO found no basis to question the Army's most probable cost calculation.

Furthermore, the GAO delved into the Army's cost analysis of Zantech's proposal and determined that the technical approach aligned harmoniously with the proposed costs. Notably, the Army did not express any concerns with Zantech's proposed direct labor rates or those of its subcontractors. The evaluators concluded that Zantech's costs were realistic and indicated a clear understanding of the requirements. Based on a thorough examination of the cost evaluators' conclusions, The Source Selection Authority (SSA) determined that accepting Zantech's proposal posed no risk to the government.

In its comprehensive review, the GAO found no grounds to sustain the protest since the Army's evaluation demonstrated reasonableness and adequate documentation. The GAO deemed the agency's evaluation of the technical and risk proposals from both offerors to be reasonable.

Reasonableness of Weakness Assignment

LOGC2 challenged the agency's decision to assign a weakness to LOGC2 under the management capabilities subfactor. The agency evaluated this subfactor based on LOGC2's proposed approach for meeting the requirements outlined in the Performance Work Statement (PWS).

In its proposal, LOGC2 deviated from the RFTOP's identification of four key personnel positions and instead proposed more. LOGC2 justified this deviation by arguing that designating more key personnel positions would reduce the government's risk. However, the evaluators determined that LOGC2's approach actually transferred the responsibility and risk from the contractor to the government, thus warranting the assignment of a weakness.

LOGC2 contested the reasonableness of this weakness assignment, asserting that it was inconsistent with the solicitation's requirement for offerors to provide resumes for key personnel replacements. LOGC2 also argued that the Source Selection Authority's concern about creating an improper personal services contract was misplaced.

The Government Accountability Office found that the agency's assessment of the weakness was reasonable, noting that it had legitimate concerns about the transfer of responsibility and risk to the government. The GAO determined that LOGC2's proposal lacked clarity regarding its process for replacing key personnel.

Even if the assignment of the weakness was deemed inappropriate, the GAO concluded that LOGC2 was not prejudiced by this decision. The Source Selection Authority found that the proposals from LOGC2 and Zantech were technically comparable, thus negating any potential harm caused by the weakness assessment. The comptroller general determines that the agency had no obligation to inform LOGC2 of the new weakness in its technical proposal, as the agency is not required to provide detailed guidance to offerors. 

Concerns Over Organizational Conflict of Interest

LOGC2 raised concerns regarding a potential organizational conflict of interest (OCI) related to Zantech's subcontractor, whose identity has not been publicly released. According to the GAO's findings, the contracting officer conducted a thorough investigation into the potential OCIs surrounding Zantech's subcontractor. This investigation included a review of the OCI mitigation plans of both Zantech and the subcontractor, as well as an examination of the TMSS 3 and ERP PWS. The contracting officer confirmed that the subcontractor is a prime contractor on the Army's ERP IDIQ contract and possesses an approved OCI mitigation plan.

Additionally, the GAO highlighted the Army's implementation of an internal "firewall" to segregate project support personnel from the proposal team. The contracting officer compared the requirements of the TMSS 3 task order with those of the GFEBS ERP contract and concluded that there was no OCI with Zantech's subcontractor. Accordingly, the contracting officer determined that any potential OCI resulting from the subcontractor's work on the ERP IDIQ could be adequately mitigated or avoided.

Ultimately, the GAO denied the bid protest, affirming the contracting officer's findings and judgment.

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