THIS OPINION WAS INITIALLY ISSUED UNDER PROTECTIVE ORDER AND IS BEING RELEASED TO THE PUBLIC IN REDACTED FORM ON SEPTEMBER 14, 1993. _______________________________ DENIED: August 16, 1993 _______________________________ GSBCA 12454-P ELECTRONIC DATA SYSTEMS CORPORATION, Protester, v. DEPARTMENT OF ENERGY, Respondent, and UNISYS GOVERNMENT SYSTEMS, INC., Intervenor. Ronald K. Henry, Peter C. Condron and Laura E. Jehl of Kaye, Scholer, Fierman, Hays & Handler, Washington, DC, counsel for Protester. Paul L. Lewis and Patricia D. Graham, Office of Assistant General Counsel for Procurement and Finance, Department of Energy, Washington, DC, counsel for Respondent. C. Stanley Dees, Thomas C. Papson, Victoria McEneney and Mark J. Meagher of McKenna & Cuneo, Washington, DC, counsel for Intervenor. Before Board Judges HENDLEY, BORWICK, and DeGRAFF. BORWICK, Board Judge. Background On June 11, 1993, Electronic Data Systems Corporation (EDS) protested the award of a contract under Request for Proposals No. DE-RPO1-92EI21967 (RFP) by the Energy Information Administration of the Department of Energy (EIA) to UNISYS Government Systems, Inc. (Unisys). Protester filed a seven count complaint, but the allegations as refined revolve around five issues: (1) Alleged "wage busting" of compensation to be paid to professional employees exempt from the provisions of the Service Contract Act; (2) unequal treatment of escalation rates; (3) organizational conflict of interest; (4) uncompensated overtime hours and (5) evaluation of corporate references. EDS alleges that respondent's technical and cost evaluations did not recognize the alleged "wage busting," accorded different treatment to EDS' escalation rates, did not downscore Unisys' technical proposal for organizational conflict of interest, did not score corporate references and did not give EDS proper credit for uncompensated overtime. The first issue was the primary issue. We deny the protest. Unisys' evaluated price was lower than EDS' evaluated price. EDS has not proven that Unisys' lower evaluated price was due to "wage busting" of professional employees. In fact, the record shows that direct labor costs proposed by Unisys and EDS were EDS has not proven that it is entitled to prevail on the other issues. Findings of Fact The Terms of the RFP 1. The scope of work of the RFP required the successful offeror to provide support maintenance and operation for respondent's mainframe system, associated personal computers, a related data communications facility, and related local area networks. Protest File, Exhibit 3, Attachment B at 2-4.1 The successful offeror was also to provide software and equipment maintenance and inventory maintenance for respondent's facility. Id. Additionally, the successful offeror was to propose options and recommendations for evaluating, ordering, installing, repairing and maintaining information systems and automated support systems to satisfy respondent's informational requirements. Id. The RFP contemplated a cost plus award fee contract for a base year and four option years. Protest File, Exhibit 2 at 2. 2. Respondent estimated 199,020 (plus or minus ten percent) direct productive labor hours would be required to perform the services required. Protest File, Exhibit 2, B.007 at 3. The RFP specified 107 positions for the base year (growing to 125 positions at option year four), in 40 labor categories. Id., Section J, Attachment 1 at 000409-418. ____________________ 1 Page number citations are to exhibit page numbers. Where there are no exhibit page numbers, citations are to Bates Stamps numbers. 3. Section L of the RFP set forth the proposal format required of each offeror. Section L.47 (Preparation of Technical/Business Proposals) states in part that, "In order that your Technical/Business Management Proposal may be evaluated strictly on the merit of material submitted, no contractual cost information is to be included in your Technical/Business Management Proposal." Protest File, Exhibit 3, L.047 at 99. 4. Section L.049 (Preparation of Cost Proposals) stated in part that, "The Cost/Price Proposal . . . . Contractual cost information is not to be included in the Technical Proposal." Id., L.049 at 109. Labor rates for proposed individuals and categories were to be put in the cost proposal. Id. 5. The evaluation factors read in pertinent part: M.0001 GENERAL . . . . (b) Award will be made to that responsible offeror whose offer, conforming to this RFP is considered most advantageous to the Government, considering the evaluation criteria in this Section M. . . . . M.006 OVERALL RELATIVE IMPORTANCE OF EVALUATION CRITERIA (a) The Technical and Business Management proposal is of greater importance than the cost proposal. However, if, after evaluation of the Technical and Business Management and cost proposals, two or more competing proposals are within the competitive range, evaluated probable cost to the Government may be the deciding factor for selection, depending on whether the most acceptable proposal (excluding cost consideration) is determined to be worth the cost differential, if any. Protest File, Exhibit 2. 6. The evaluation criteria for the technical and business management proposals were, in descending order of importance: (1) Capability and Experience (2) Corporate Resources (3) Key Personnel (4) Project Management Protest File, Exhibit 3, M.006(b) at 125-26.2 7. Section M.009 described the basis for the application of the evaluation criteria. Capability and experience "will be evaluated on the basis of the demonstrated experience and performance on both past and current contracts similar in both size and scope as solicited by this RFP." The evaluation would place particular emphasis on experience in the areas of supporting Multiple Virtual Systems (MVS) and Virtual Machine (VM) operating systems. Id., M.009. 8. The Corporate Resources criterion would be evaluated on the basis of: [A]vailability of personnel resources and staffing, including additional resources for special situations. The evaluation will consider the ability to provide and retain the required number of qualified resources by labor category; the offeror's commitment to and accomplishment of staff training and development; the offeror's labor relations and compensation plan; the offeror's overall management system organization. Id. 9. Key personnel: will be evaluated based on their qualifications as demonstrated by education, technical, and professional experience (to include demonstrated leadership capabilities and experience necessary to perform as a key person) relevant to the Statement of Work and generic position descriptions, and the timely availability and commitment of the key personnel proposed. Id. 10. Paragraph M.013 of the RFP concerns the evaluation of compensation plans for professional employees. Because of the importance of this section to the issues presented, we set it forth in full: (1) Recompetition of service contract may in some cases result in lowering the compensation (salaries and fringe benefits) paid or furnished professional ____________________ 2 By amendment 0001, respondent reduced the number of key personnel from 19 to 3, and restructured the evaluation criteria to reflect the reduction in key personnel. The corporate resources criterion became the second most important, where before it had been third. Compare Protest File, Exhibit 2 with _______ ____ Protest File, Exhibit 3. employees. This lowering can be detrimental in obtaining the quality of professional services needed for adequate contract performance. It is therefore in the Government's best interest that professional employees, . . . be properly and fairly compensated. As a part of their defined proposals, offerors will submit a total compensation plan setting forth salaries and fringe benefits proposed for the professional employees who will work under the contract. The Government will evaluate the plan to assure it reflects sound management approach and understanding of the contract requirements. This evaluation will include an assessment of the offeror's ability to provide uninterrupted high quality work. The 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. Supporting information will include data, such as recognized national and regional compensation surveys and studies of professional, public and private organizations, used in establishing the total compensation structure. (2) The compensation levels proposed should reflect a clear understanding of work to be performed and should indicate the capability of the proposed compensation structure to obtain and keep suitable qualified personnel to meet mission objectives. The salary rates or ranges must take into account differences in skills, the complexity of various disciplines, and professional job difficulty. Additionally, proposals envisioning compensation levels lower than those of predecessor contractors for the same work will be evaluated on the basis of maintaining program continuity, uninterrupted high-quality work, and availability of required competent professional service employees. Offerors are cautioned that lowered compensation for essentially the same professional work may indicate lack of sound management judgement and lack of understanding of the requirement. (3) The Government is concerned with the quality and stability of the work force to be employed on this contract. Professional compensation that is unrealistically low or not in reasonable relation to the various job categories, since it may impair the Contractor's ability to attract and retain competent professional service employees, may be viewed as evidence of failure to comprehend the complexity of the contract requirements. (4) The compensation plan may be utilized during the Government's evaluation of proposals under evaluation Criterion 2, Corporate Resources. Protest File Exhibit 3, at 128-29. EDS Proposal 11. In the corporate resources portion of its BAFO, EDS Unisys Proposal Acquiring the staff to fulfill the contract 12. In the corporate resources portion of its BAFO, Unisys outlined its strategy for acquiring the staff to fulfill the requirements of this contract. Retaining the staff to fulfill the contract 13. In the corporate resources portion of its BAFO, Unisys outlines its strategy for retaining the staff necessary to fulfill the requirements of this contract. 14. 15. 16. Prior to submission of its BAFO, Unisys received a list of questions/clarifications from the Department of Energy (DOE). 17. In response, Unisys stated: Id. Evaluation Methodology 18. Respondent used formal source selection procedures in conducting the procurement. The Source Evaluation Board (SEB) evaluated the technical and business portion of the offerors' proposals, determined a competitive range of three offerors, and based upon its evaluation, made recommendations to the Source Selection Official (SSO) for award. The SSO adopted the position of the SEB and determined that Unisys is "a responsible offer, whose offer is most advantageous to the Government." Protest File, Exhibit 45 at 4. Scoring Plan 19. The technical and business evaluation was based upon a point scoring system. A corresponding system of descriptive adjectives was matched with the numeric point score. The technical and business evaluation scoring system for rating the technical and business criteria is as follows: 10 = Excellent 8 = Above Average 5 = Average 2 = Below Average 0 = Unsatisfactory Protest File, Exhibit 43 at 23.1.3 20. The SEB weighted the technical criteria. Capability and experience was the highest rated criterion and worth 50% of the technical and business score. Id., Attachment 6 at 6-1. Corporate resources was the second highest rated criterion was worth 30% of the technical and business score. Id. Key personnel and project management were valued as the lowest rated criteria and were each worth 10% of the technical and business score. Id. 21. Section M.010 of the RFP states that, "cost proposals will be evaluated, but not point scored, to determine the probable cost to the Government. The determination will take into consideration allowability, allocability, reasonableness, realism, and the risks associated with the proposed costs." Protest File, Exhibit 3. Team Makeup 22. There were seven members of the SEB, of which four were voting members. The voting members consisted of two Computer Specialists, a Supervising Survey Statistician and the Contracting Officer. Protest File, Exhibit 43 at 11. The SEB also had a number of nonvoting procurement, cost, and legal advisors. Id. Evaluation Results SEB Report 23. The SEB evaluated the BAFO cost proposals against the cost criteria in section M (M.010) of the solicitation taking into account the written and oral discussions and the findings of the person who performed the initial cost analysis. Protest File, Exhibit 43 at 23.1, subpart n. 24. The SEB conducted its technical and business evaluation, applying the ten point scoring system to the four criteria stated in section M.009 of the solicitation. When the final scoring was completed, the SEB combined the technical scores and the cost proposals on a summary scoring form. The scoring form listed the offerors' technical and business scores and proposed and ____________________ 3 A detailed analysis of each rating level is at Protest File, Exhibit 43, Attachment 4 at 6-8. evaluated probable cost.4 Protest File, Exhibit 43, Attachment 6 at 6-1. The information contained in the scoring form was incorporated into a table of final rankings, which the SEB prepared. The SEB's summary comparison of the final rankings of the top two offerors is as follows: Offeror Technical Rating Proposed Costs Evaluated Initial Final Initial $ Final $ Cost $ Unisys EDS Protest File, Exhibit 43 at 5.1. 25. The SEB report states that Unisys and EDS both had the same final technical rating of . Id. However, the Evaluated Cost $ column demonstrates that EDS' evaluated cost to the Government was $ more than the Unisys evaluated cost ( ). Id. SEB Evaluation of Corporate Resources 26. The SEB Chairman testified that the SEB examined the quality and stability of the proposed workforce in its technical evaluation by examining an offeror's corporate resources. Transcript at 141. The SEB Chairman stated that no comparison between EDS' and Unisys' cost or salary proposals was conducted in evaluating the corporate resources criterion. 27. To consider the quality and stability of an offeror's corporate resources, the SEB considered ability to hire, retain and fill vacancies; training methods and development; fringe benefit plans; compensation plans summaries; management systems and organizational plans. Transcript at 141-42. All of those factors were taken into consideration for the corporate resources factor. Transcript at 141. Specifically, in order to examine the offerors' compensation without looking at their cost proposals, the SEB evaluated the offerors' compensation summaries. Transcript at 141-142. This analysis included the use of surveys that the offerors based their salaries upon. Transcript at 142. The analysis also included a consideration of the reported escalation rates for raises. Transcript at 144. 28. For example, the information in Unisys' corporate resources portion of its BAFO included ____________________ 4 Unisys' scoring form is at Protest File, Exhibit 43, Attachment 10 at 000235. EDS' scoring form is at Protest File, Exhibit 43, Attachment 10 at 000234. See generally Protest File, Exhibit 39 at II.A-2 through II.A-27. 29. Paragraph L.047(b)(I) of the RFP required vendors to provide contract references listing at least three but not more than five of the offerors' most recent computer facilities management contracts, similar in size and scope to the proposed contract. Protest File, Exhibit 2 at 100. All offerors in the competitive range received generally good references, with the personnel interviewed stating they would hire the contractors again. Protest File, Exhibit 44. The SEB did not use affirmative or negative remarks in scoring proposals, as those remarks were considered subjective. The corporate references were used to substantiate data in the offerors' proposals as to the offerors' capability and experience. Although the overall criteria (in this case capability and experience) were point scored, the individual elements were not. Protest File, Exhibit 44; Transcript at 166. Cost Proposals and Subsequent Analysis 30. The RFP specified that direct labor hours were to be proposed in accordance with labor categories and labor hour requirements set forth elsewhere in the RFP. Protest File, Exhibit 3, L.049 1.(c). The RFP indicated that a category or composite rate could be used for unnamed individuals, with named individuals being "separately identified." Id., Exhibit 2, L.049 at 111. 31. EDS proposed 32. After the issuance of Amendment 0001, reducing key personnel and increasing the importance of the corporate resources criterion, respondent directed EDS 33. 34. In its initial proposal, Unisys proposed 35. Defense Contract Audit Agency (DCAA) conducted an evaluation of the offerors' direct labor categories. The SEB referenced the DCAA report in its cost analysis. Protest File, Exhibit 42. The information included a "BAFO Rate Confirmation Worksheet." Id. The worksheet contained DCAA's evaluation of the offerors' labor categories. For the Unisys proposal, DCAA determined that Unisys' direct labor rates, Id., Attachment to Memorandum to the Record at 1. A comparison of the direct labor rates proposed by Unisys and the base rate that DCAA calculated was compiled into a table, which showed: Direct Labor: Base Rate Prop. Base Rate DCAA FPRA Labor Category Id. The same analysis was conducted for Unisys' subcontractor, . Id. DCAA stated that, "all direct labor rates sampled conform to recently audited and approved rates. . . ." Id. A table was compiled that compared the proposed base rate and the DCAA base rate. Id. The table stated: Direct Labor: Base Rate Prop. Base Rate DCAA FPRA Labor Category Id. 36. The contracting officer conducted his own cost evaluation, separate from DCAA. He established an average hourly labor rate per labor category by averaging the rates per category by the thirteen offerors. He then compared each offeror's labor rate per category against the average for that category. Transcript at 221. He concluded that one offeror (not Unisys) was significantly low within all labor categories it had proposed. One offeror was high. The remaining offerors were within a reasonable range of the averages that were calculated and their offers reflected fair and reasonable prices. Transcript at 524. He discerned that the difference between EDS' and Unisys' proposals amounted to $ per hour. The difference between EDS and Unisys' subcontractor was $ per hour. Transcript at 224. 37. Unisys' and EDS' evaluated cost data was as follows: Unisys' EDS' Evaluated Evaluated Cost Cost Direct Labor Cost Overhead Cost Subcontract Other Direct Costs Purchases Burden General & Admin. (G&A) Base Fee Award Fee Facilities Capital Cost of Money (FCCM) -Labor -G&A Total Estimated Cost Plus Award Fee Protest File, Exhibit 43 at 58 & 60. The contracting officer, based upon the DCAA audit and his own analysis, concluded that EDS and Unisys had offered fair and reasonable pricing. Transcript at 229, 233. Uncompensated Overtime 38. The RFP provided that uncompensated overtime would be evaluated as part of the cost proposal. The RFP stated that use of uncompensated overtime must be adequately supported to receive full consideration in the evaluation of the cost proposal. Protest File, Exhibit 2, L.051 at 119. There was no technical evaluation of uncompensated overtime and the contracting officer testified that there was no guarantee that a successful contractor would actually give respondent uncompensated overtime hours. Transcript at 283-84. Source Selection 39. The SSO had been an ex officio member of the SEB, but ceased to be a member of the SEB after his assumption of the duties and responsibilities of SSO. Protester's Exhibit 6 at 1. The SSO received and evaluated the SEB report and attended a formal presentation regarding the award of this contract. Id. at 2. The SSO selected the Unisys proposal for contract award. Id.; see also, Protest File, Exhibit 45 at 4. The Experts Intervenor's First Expert 40. Intervenor's first expert was qualified to testify in the areas of compensation, compensation as it applies to high-tech industries, and construction, development and analysis of surveys of compensation. See Intervenor's Exhibit 10, Resume of Michael Burniston. Unisys' Benefits 41. The expert compared and contrasted the benefit programs of Unisys and EDS based upon their benefits handbooks. Transcript at 608. This comparison included pension benefits, 401K benefits, stock purchase plans, medical plans, prescription drug plans, other additional medical plans, dental, vision, sick leave, short and long term disability, life and accident insurance, and retiree medical benefits. Intervenor's Exhibit 15. The expert found that both EDS' and Unisys' benefits package: "have the kind of benefits that an employee would view as almost a minimum condition of employment. . . ." Transcript at 615. Unisys Direct Compensation (Salaries) 42. The expert analyzed the labor rates for professional labor categories against market rates for similar work. To perform this analysis, the expert examined eleven compensation surveys. Intervenor's Exhibit 11 at 1-2. He matched the RFP's labor categories to the survey's labor categories based upon job descriptions (not job titles) as stated in the RFP. Intervenor's Exhibit 12. Column one of the exhibit lists the job code. Id. Column two represents the RFP labor category and specifically the title that was in the RFP job descriptions. Id. Column four lists the survey that matches the title of the position in the third column.5 Id. The expert then derived the average of the three median salary rates for the applicable labor category. Id. 43. The comparisons of Unisys' proposed labor category rates and their corresponding market rates are set forth in intervenor's exhibit 13. The expert took the Unisys rate bid for each labor category and compared it to the average of the three median market rates for that labor category. Id. From this comparison, the expert derived Unisys' overall average for exempt employees which was of the average median market rate. The expert also concluded that Unisys' overall average for non-exempt employees was of the average median market rate. Id.6 ____________________ 5 For example, the exhibit's analysis of job code 1 (the Access Control Clerk as stated as a labor category in the RFP), states that there are three surveys with a job that possesses the same or similar job description. Intervenor's Exhibit 12. Those surveys are the Washington Personnel Association Salary Survey, the TCF 1992 Benchmark Survey, and the Wyatt Technical & Skilled Trades 1992. Id. The exhibit lists the corresponding ___ survey job titles (Security Guard, Security Guard B and Security Guard Jr.) and lists the salary rate the position pays at the median 50th percentile ( ). 6 For example, on page 3 of intervenor's exhibit 13, the first job code and labor category listed is the Access Control Clerk. Intervenor's Exhibit 13 at 3. The "FLSA" column states whether an employee's status is exempt or non-exempt. Id. The ___ "number of employees" column states the number of employees in this job category required by the RFP. Id. The "UGS (Unisys ___ Government Systems) Curr Rate" column shows the average salary Unisys' bid stated it would pay an employee in this labor category. Id. The "Mar '93 50th %ile Rt" column lists the ___ average median market rate for the job category as of March 1993. Id. The March 1993 rate is the rate that was calculated in ___ intervenor's exhibit 12. For the Control Access Clerk the market rate is . Id. The Unisys average rate of pay for an ___ employee in this labor category is . Id. The "UGS/50%" ___ column calculates the percentage difference that the Unisys average rate varies from the median market rate. Id. Since the ___ (continued...) 44. A similar process was conducted for Unisys' subcontractor Intervenor's Exhibit 14. The expert concluded from these figures that, "the compensation . . . portrayed and proposed by Unisys [is] within the line of prevailing market practices, and adequate to attract and retain qualified personnel to fill the labor categories." Transcript at 581. Expert's Conclusions 45. The expert found that, both compensation in the form of direct compensation and overall benefits that are being proposed and provided to employees of Unisys are in line with competitive practices. They are certainly consistent with prevailing market practices and in my view well position the organization to attract and retain qualified people to fill the job categories. Transcript at 616-17. Intervenor's Second Expert 46. Intervenor's second expert (a Certified Public Accountant) was qualified as an accountant and an expert in evaluation of cost proposals. Transcript at 731-32. The expert analyzed the cost data submitted in EDS' and Unisys' BAFOs, the DCAA report and the SEB report. Id. at 734-35. The SEB report listed the evaluated costs of the offerors. 47. 48. The expert compiled the evaluated cost data into a summary sheet to demonstrate that Unisys' and EDS' direct expenses were similar and that no wage-busting occurred. Intervenor's Exhibit 17. The summary, with all figures listed in millions of dollars, is as follows: EDS Price Unisys Price Unisys Price Advantage ____________________ 6(...continued) median market rate is for the Access Control Clerk and the Unisys average bid rate is , the "UGS/50%" difference is Id. On average, for that labor category, Unisys is paying ___ of the median market rate. Id. Using the same methodology, ___ the expert then compared market rates for each category and arrived at an average for exempt and non-exempt employees. Id. ___ Direct Costs Indirect Costs Facilities Capital Total Cost Fee Total Price Id. The "Direct Costs" row in the summary includes the direct labor cost7, the subcontractor cost and the other direct cost from the offerors' evaluated cost data. Transcript at 738. The "Indirect Costs" row includes the overhead, General and Administrative costs (G&A), the purchasers' burden and the G&A rate from the offerors' evaluated cost data. Id. at 738-39. The "Fee" row is the award fee from the offerors' evaluated cost data. Id. The first two columns of the summary list the corresponding figures for Unisys and EDS. Intervenor's Exhibit 17. The "Unisys Price Advantage" column represents the difference in price between EDS' and Unisys' cost figures as defined in the exhibit. 49. 8 ____________________ 7 Direct labor costs are "the costs that would specifically be used in the performance of the contract as opposed to direct labor which are the general management kinds of things." Transcript at 734. "[E]ach offeror proposed direct labor hours. . . . Under the rules, those are charged directly to the contract because they can get identified with the contract." Id. ___ This type of a charge does not include fringe benefits, which "is an overhead factor which is later added to the direct labor hours." Id. ___ 8 A comparison of the Unisys and EDS difference in Labor Overhead, G&A, Fee and Facilities Capital is placed in a percentile format as intervenor's exhibit 18. (continued...) 50. The expert also calculated the amount of indirect costs per dollar of direct labor for both EDS and Unisys and presented a comparison of the results. Intervenor's Exhibit 19. Protester's First Expert 51. Protester's first expert prepared a chart and a series of exhibits, comparing the average EDS BAFO wage rates and the average Unisys BAFO wage rates to the current compensation of the employees performing under the existing contract. Protester's Exhibit 4. The chart compares, "current compensation without raises to the two offers planned and budgeted compensation plans for the professionals that they are proposing." Transcript at 392. 52. The analysis determined that the average rates paid by Unisys were lower than the actual rate paid to incumbent personnel currently performing under the contract for every year of the contract. Transcript at 392. The analysis determined that the average rates paid by EDS begin lower, but, in later years of the contract, exceed the actual compensation paid to employees currently performing under this contract. Id. The expert concluded that the variance from current compensation between EDS' and Unisys' proposals "is a difference. . . . On the 53. Although the expert calculated this difference, he was not sure he included all incumbent personnel in his computation of current compensation, which is the basis for his comparison. Id. at 439-40. Further, the expert is comparing average rates to actual rates. Average rates, because they are merely an average assessment of the wage rates, do not necessarily compare or correlate directly to an actual rate, because some employees are ____________________ 8(...continued) paid above the average rates and some below the average rates. 54. Intervenor's second expert examined the chart and accompanying data and concluded that, "it's a comparison of an awarded contract against an incumbent salary. It's not a comparison of salaries against the market and here the definition of market, which is where you would expect Unisys and other contractors to have to go to get these services, and the talent to recruit people, is the marketplace." Transcript at 765. 55. Intervenor's second expert also testified that the analysis conducted by protester's first expert, "[i]s not a comparison of compensation plans. It's a comparison of the costs of compensation, which are wholly different things and I think no place more than fringe benefits underscores that problem more dramatically." Lastly, the intervenor's second expert evaluated the chart and accompanying data as "a comparison with plant-wide bid rates, which are all employees against incumbent salaries which are basically singular employees. On average you will have in these proposals the incumbents have the higher salary level than the plant-wide rate, . . . I would not represent this analysis to be any kind of a comparison of compensation found in the marketplace." Id. Protester's Second Expert 56. Protester's second expert, called in rebuttal, was qualified as an expert in compensation levels and the computer services industry. Transcript at 808. The expert stated that the intervenor's first expert survey, "fell very short of what I would need in order to make a good determination" of whether an employer has the compensation package necessary to attract, retain and motivate employees. Id. The expert concluded that, "Unisys' compensation as proposed under the RFP would not be sufficient to attract, retain and motivate the quality of staff that appeared to be called for under all the exhibits that I looked at." Id. at 810. 57. The expert stated that intervenor's first expert's statistical analysis did not include a discussion with the client, did not include getting any other information about what was important on this program and only relied upon the RFP and its job descriptions to determine what was required to do the survey matches. Id. at 812. The expert stated that the reasonable starting-point for determining what is the market rate would be to examine the incumbent's (EDS') wage rates. However, the expert admitted that EDS' average bid rates were lower than its own current incumbent's salary rates. 58. The expert also challenged the strength of the intervenor's first expert's survey matches. However, the expert was only able to review two of the eleven surveys relied upon by intervenor's first expert. Id. at 821. The expert also challenged using the percentage variance from a median market rate as an indicator of a company's position in the marketplace. Id. at 826-27. However, the expert did not verify every survey and job category match that intervenor's first expert made. Id. at 835. The expert testified that out of twenty-five matches he recalled examining, only five concerned him. Id. at 836. 59. Intervenor's first expert, in surrebuttal, testified that many of the eleven surveys he premised his analysis upon are available to those who participated in the surveys and to non- participants. Transcript at 851. In addition, many of the surveys are for sale to the public by the intervenor's first expert's company. Id. Therefore, protester's assertion that only two surveys were readily available is inaccurate. In spite of his criticism of intervenor's expert's statistical analysis and methodology, protester's expert admits that intervenor's first expert's survey, "followed practices that are fairly common in the industry for compensation. . . ." Transcript at 809. Organizational Conflict of Interest 60. The RFP required offerors to disclose all relevant facts concerning any past, present, or currently planned interest . . . relating to the work to be performed . . . bearing on whether the offeror has a possible organizational conflict of interest. . . . Protest File, Exhibit 2, K.26 at 13. The RFP also required organization conflict of interest documents to be provided as part of the offer (Volume I), but separate from the technical and cost portions of the offer. Protest File, Exhibit 2, L.046 at 97. The offerors provided the information in Volume 1 of their proposals. Protest File, Exhibits 7 and 23. 61. The SEB concluded that "any possible conflict of interest which may develop during the performance of this contract by any of the offerors will be identified and appropriately avoided . . . ." Protest File, Exhibit 43. The Source Selection Decision noted avoidance of conflict of interest by inclusion of Clause H.020 Confidentiality of Information, Clause H.025 Energy Information Administration Data, and Clause H.040 Hardware and Software Exclusion Clause. Protest File, Exhibit 45.9 Discussion Wage Busting and Related Issues The central issue of "wage-busting" is found in Counts IV, V, VI and VII of the protest complaint. Protester's first ____________________ 9 The last clause prohibits the successful contractor from providing to the Government hardware or software which is manufactured, produced, licensed or distributed by the contractor. Protest File, Exhibit 2, H.040 at 44. argument is that respondent failed to evaluate the compensation plans as required under M.009 and M.013 of the RFP. Protester's Posthearing Brief at 59. This is a restatement of Count V (failure to follow evaluation criteria). We understand protester's argument to be that respondent's technical evaluators were required under the RFP as part of the scoring of technical proposals (as well as in the cost evaluation) to evaluate the compensation plans of the offerors. EDS is the incumbent contractor for the facility management contract. Finding 31. EDS argues that the SEB was required by paragraph M.013 to compare the offerors' compensation plans against the compensation of the incumbent contract. Such a comparison, says EDS, should have resulted in a lower score for Unisys' technical proposal based upon alleged lower compensation proposed by Unisys for professional exempt employees. Protester is correct that the SEB did not evaluate the compensation plans in scoring technical proposals; the SEB evaluated offerors' compensation plan summaries, rather than the total compensation offered. Finding 27. This was fully in accord with the terms of the RFP. The RFP in paragraph L.047 advised offerors that, "In order that your Technical/Business Management Proposal may be evaluated strictly on the merit of material submitted, no contractual cost information is to be included in your Technical/Business Management Proposal." Paragraph L.049 of the RFP further advised offerors that contractual cost information was not to be included in the technical proposal. Findings 3, 4. The SEB reviewed the summaries in conducting the technical evaluation, including salary surveys the offerors based their compensation summaries upon and wage escalation rates. Findings 27, 28. Protester has not shown that the SEB failed to apply the required criteria in conducting its technical evaluation. Protester relies on the language of paragraph M.013 as requiring the technical scoring of compensation plans. In support of its interpretation, protester focuses on the references to "evaluation" or "evaluate" throughout that paragraph. Protester's Post-Hearing Brief at 60-61. Indeed, paragraph M.013 speaks of evaluation "to assure [the compensation plan] reflects sound management approach and understanding of the contract requirements." Finding 10. This is fully in accord with the Federal Acquisition Regulation, which provides that cost evaluation is to be used "to determine the offeror's understanding of the work and ability to perform the contract." 48 CFR 15.608(a)(1) (1992). Furthermore, the RFP's subparagraph four of paragraph M.013 states that, "the compensation plan may be utilized during the Government's evaluation of proposals under evaluation Criterion 2, Corporate Resources," Finding 10, i.e., the technical evaluation. Respondent reserved the discretion to use compensation plans during the technical evaluation, but nothing in the RFP required the SEB to evaluate and score the compensation plans. Protester also argues that respondent's cost evaluation was flawed in that it did not recognize Unisys' alleged "wage- busting." This is Count IV. The legal standard applicable to cost evaluations is settled. The Board will not disturb the Government's cost analysis unless clearly unreasonable. Program Resources, Inc., GSBCA 8879-P, 87-2 BCA 19,816, at 100,253, 1987 BPD 65, at 13. In this case the evidence does not establish that Unisys intended to "wage-bust," or that its compensation was unrealistically low. Unisys based its compensation on its established salary range derived from actual salaries. Finding 14. The contracting officer made a comprehensive cost-analysis, deriving an average wage rate for all labor categories as bid by the thirteen offerors in the procurement. He found Unisys' rates, as well as others, were within a reasonable range of averages of all offerors. He concluded that one offeror (not Unisys) was significantly low within all labor categories it had proposed. Finding 36. The DCAA has also verified Unisys' direct labor category bid rates, which the contracting officer relied upon. Findings 35, 37. The experts intervenor and respondent called at the hearing confirmed the reasonableness of the contracting officer's analysis. The expert compensation witness testified that Unisys' exempt direct labor rate was of the average median market rate for comparable or similar labor categories. Finding 43. The expert's testimony was convincing and credible, and not successfully rebutted by EDS' rebuttal expert. EDS' second expert only looked at a part of the data relied upon by the intervenor's first expert. EDS' second expert also relied upon the incumbent contractor's compensation as his starting point. Findings 57, 58. Paragraph M.013 of the RFP, however, did not make "current compensation" the lodestar for any determination of cost reasonableness; thus EDS' expert's methodology was flawed from the outset. The lodestar is broader, i.e., that professional employees be "properly and fairly" compensated. Finding 10. To make that determination, a variety of sources may be used, including "recognized national and regional compensation surveys," "studies of professional, public and private organizations." Id. The paragraph warns that proposals envisioning compensation levels "lower than those of predecessor contracts" will be evaluated for program continuity and uninterrupted high quality work. But that does not enshrine the wages paid by the immediately preceding contractor as the benchmark for cost reasonableness. The Government did not so constrain itself in the RFP. Unisys' evaluated direct labor costs totalled of direct labor plus per subcontract). Finding 37. EDS' direct labor costs totalled (direct labor costs of plus subcontract cost of . Finding 37. There is a (relative to the size of the contract) difference of in the evaluated direct labor costs as recorded by the contracting officer. Unisys' expert accountant established the difference in direct labor cost of taking into account direct labor, subcontract and other direct labor costs. Findings 48, 49. This expert testified that the cost difference lay in EDS' costs. Findings 49, 50. This testimony was persuasive and unrebutted. In the past, we have found "wage busting" (and an unreasonable cost determination) when (1) the awardee's direct labor costs for various skill levels ranged between 13 and 38 percent below the Government estimate for those levels, (2) when the labor costs fell substantially below General Schedule (GS) wages for comparable skills, and (3) when performance of task orders on underpriced contracts revealed performance problems in retaining and recruiting employees. Planning Research Corp., GSBCA 10697-P, 91-2 BCA 23,881, at 119,622-24 and 119,628, 1991 BPD 82, at 10-12, 15. Here, protester's case did not present the plethora of evidence presented in Planning Research. Protester's case rests on unconvincing expert testimony comparing Unisys' rates for exempt professional employees against current compensation charged by EDS on its incumbent contract. Findings 51, 52. That testimony did not demonstrate that the cost evaluation was unreasonable. Therefore, the allegations of "wage busting" are insupportable. Uncompensated Overtime Hours Count I alleges defective technical evaluation of EDS' proposal. EDS faults the SEB for failing to give credit in the technical evaluation for the uncompensated overtime it proposed. Uncompensated overtime, however, was to be evaluated in the cost proposal. Finding 38. Furthermore, the contracting officer was properly skeptical of credit for uncompensated proposals given EDS has not made a showing that it should have been given credit in the technical evaluation for uncompensated overtime. In Count VI, EDS alleges among other things failure to conduct meaningful discussions based on the wage busting issue. Protester alleges in this count that respondent determined Unisys' proposal was technically superior to EDS', giving more weight to price factors than to technical factors. This allegation is baseless. The SEB determined the two proposals to be technically equal. Finding 24. The allegation also assumes the truth of the remaining wage-busting allegations, i.e., that Unisys' proposal should have been scored lower for "wage- busting." But, we conclude that there was no wage busting. Unequal Treatment of Escalation Rates In Count III of the complaint, EDS complains that the SEB erroneously imposed different burdens on EDS and Unisys by causing EDS to offer a higher escalation rate than Unisys. This was not the case. The Government requested escalation of labor rates from EDS, but did not dictate the rate EDS should use. EDS chose its own rate of Finding 32. The SEB was thus able to evaluate both proposals on a common basis as both offerors proposed escalation. Finding 34. Organizational Conflict of Interest In Count II (iii), EDS alleges that respondent did not downgrade Unisys in the technical evaluation for alleged conflict of interest. EDS alleges that organizational conflict of interest is a matter for the technical evaluation. The provisions of the RFP provide, however, the organizational conflict of interest was a matter to be separately considered. Finding 60. EDS does not allege that Unisys has a conflict of interest. Rather, it argues that the SEB should have considered the "disabling [e]ffect" that conflicts of interest would have on the ability of Unisys to perform "one of the major functions named in the RFP's scope of work." Protester's Post-Hearing Brief at 72. That function is a recommendatory function; the successful contractor is to propose options and recommendations for evaluating, ordering, installing, repairing and maintaining information systems and automated support systems to satisfy respondent's informational requirements. Finding 1. The presence of the conflict of interest clauses, Finding 61, assures the respondent of the contractor's objective opinion in any recommendation it may make. Protester has not identified any disabling effect that the SEB should have taken into account in evaluating proposals. Evaluation of Corporate References In Count I, EDS alleges respondent conducted an improper technical evaluation of EDS' proposal. EDS alleges that the respondent erred in not point scoring corporate references. The SEB evaluated each criterion through use of point scores but did not score each element comprising a criterion. This was true of the corporate references as well. Finding 29. The RFP did not require point scoring of individual elements comprising each criterion. Under paragraph M.009 of the RFP, capability and experience "will be evaluated on the basis of the demonstrated experience and performance on both past and current contracts similar in both size and scope as solicited by this RFP." Finding 7. The RFP did not limit the SEB's discretion on the precise use of the substantiating data. The SEB did not act improperly in its treatment of corporate references. The SEB acted reasonably in its analysis of the corporate references portion applicable to the capability and experience criterion. Miscellaneous Counts In Count I of its protest complaint, EDS alleged that respondent under-evaluated EDS' proposal by failing to give adequate consideration to EDS' superior performance on past contracts. In Count II (i) protester alleges that respondent over-evaluated Unisys' proposal by failing to downgrade the proposal for alleged lack of personnel qualified and personnel experienced in the unique requirements of the contract. In Count II (ii), EDS alleged that Unisys was not downgraded for alleged lack of experience and familiarity with various hardware and software features unique to the contract. In Count II (iv), EDS alleges that Unisys was not downgraded for inferior past performance on similar contracts. These issues were not addressed at the hearing or in protester's post-hearing submissions. These counts are denied for lack of proof. In Count III, EDS alleges that respondent failed to give appropriate credit to EDS' proposal for an indirect rate ceiling. This issue was withdrawn at the prehearing conference of July 20. Decision The protest is DENIED. The suspension of respondent's delegation of procurement authority lapses by its terms. _________________________ ANTHONY S. BORWICK Board Judge We concur: _________________________ _________________________ JAMES W. HENDLEY MARTHA H. DeGRAFF Board Judge Board Judge