United States Government Accountability Office

Washington, DC 20548

Comptroller General

of the United States

Decision

Matter of: NikSoft Systems Corporation

File: B-406179.2

Date: August 14, 2012

Ron R. Hutchinson, Esq., Doyle & Bachman LLP, for the protester.

Rafael A. Madan, Esq., John L. Pensinger, Esq., and Rhonda M. Craig, Esq., 

Department of Justice, for the agency.

Peter D. Verchinski, Esq., and Guy R. Pietrovito, Esq., Office of the General 

Counsel, GAO, participated in the preparation of the decision.

DIGEST

In a procurement conducted under Federal Supply Schedule procedures, where a 

statement of work is included, protest that an agency improperly made upward 

adjustments to the protester’s level of effort as part of its analysis to establish a 

blanket purchase agreement and to issue an order under it, is sustained where the 

record provides no basis for the agency’s determination that the protester’s level of 

effort was insufficient or that the protester’s level of effort should be increased to the 

same level of effort proposed by the successful vendor.

DECISION

NikSoft Systems Corp., of Reston, Virginia, protests the establishment of a blanket 

purchase agreement (BPA) and placement of an initial “call” or task order to LS3 

Incorporated, of Odenton, Maryland, under request for quotations (RFQ) 

No. 2011Q_049, issued by the Department of Justice (DOJ), Office of Justice 

Programs (OJP), for federal identity, credential and access management (FICAM) 

services to support the Office of the Chief Information Officer. NikSoft challenges 

the agency’s evaluation of quotations and source selection decision.

We sustain the protest.1

 1 This is NikSoft’s second protest of DOJ’s evaluation and selection decision. Many 

of the facts set forth here were also included in our earlier decision in this 

procurement. See NikSoft Sys. Corp., B-406179, Feb, 29, 2012, 2012 CPD ¶ 104. 

In fact, the record for this protest includes the agency’s report in response to 

(continued...)

DOCUMENT FOR PUBLIC RELEASE

The decision issued on the date below was subject to 

a GAO Protective Order. This redacted version has 

been approved for public release.
Page 2 B-406179.2 

BACKGROUND

The RFQ, issued under Federal Acquisition Regulation (FAR) subpart 8.4, Federal 

Supply Schedule (FSS) procedures, sought quotations from 10 vendors holding 

contracts under schedule 70, information technology equipment, software, and 

services. The RFQ provided for the establishment of a BPA for a base year and four 

option years, against which time-and-materials calls (that is, task orders) would be 

issued as needed, to acquire software and services to support OJP’s FICAM 

framework. The RFQ provided a statement of work (SOW) for the BPA’s general 

requirements, and for an initial call that would be awarded concurrently with the 

BPA. Vendors were informed that, under the initial call, the successful firm would 

select and purchase commercial software for the FICAM framework, provide detailed 

design for various interfaces, develop source code, and conduct system testing.

2

 

Agency Report (AR), Tab 13, BPA Call SOW, at 387-91.

Vendors were informed that the BPA would be issued on a best value basis, 

considering price and the following non-price evaluation factors (listed in descending 

order of importance): corporate experience, past performance, technical 

qualifications of proposed personnel, and technical understanding and approach. 

RFQ at 44. The RFQ stated that technical merit was more important than price. Id. 

Under the corporate experience evaluation factor, vendors were required to 

demonstrate a minimum of 3 years of experience providing FICAM support and 

implementation services. Id. at 46. Vendors were also to provide a narrative 

demonstrating relevant technical ability and experience related to the migration of 

data, implementation, maintenance, and training related to a FICAM system. 

Under the past performance evaluation factor, vendors were required to submit a 

minimum of three past performance questionnaires that reflected the firm’s 

experience in FICAM implementation, operability and support.3

 

(...continued)

NikSoft’s first protest, as well as its report in response to this second protest. The 

agency’s second report follows sequentially the tabs and BATES numbers used in 

the first report. Our citations are to the reports’ BATES numbers.

 The RFQ required 

vendors to submit completed and signed questionnaires with their quotations. 

2 The SOW for the first call described the services to be provided by the vendor in 

designing and implementing various FICAM tasks, and required that at a minimum 

the vendor would provide a technical project manager and one subject matter 

expert. AR, Tab 13, BPA Call SOW, at 387-91. Vendors were free to propose their 

own technical approaches, including labor hours and labor mixes.

3 The questionnaires were provided in an attachment to the solicitation. 
Page 3 B-406179.2 

Vendors were informed that “the burden of providing current, accurate and complete 

past performance information rests with the offeror.”4 RFQ at 47. Furthermore, 

vendors whose experience included performance as a subcontractor were permitted 

to submit past performance questionnaires that had been completed by 

representatives from a prime contractor. RFQ amend. 1, at 97.

Vendors were instructed to submit separate technical and price volumes. The 

vendors’ costs were to be based on the firm’s current GSA contract labor rates, 

including any discounts. Vendors were also requested to submit pricing for the first 

call. RFQ at 50. The RFQ stated that the agency’s price evaluation would consist of 

evaluating the vendor’s “budget submission.”5 RFQ at 52. Further, although the 

SOW for the task order stated that vendors were to select and purchase software, 

the RFQ did not require firms to include this price in their quotation. 

The agency received three quotations, including NikSoft’s and LS3’s. Both NikSoft’s

and LS3’s quotations included various labor categories and labor rates to perform 

the work under the BPA. With regard to the call, NikSoft identified [DELETED] labor 

categories and total of [DELETED] hours (at a price of $374,423) to accomplish the 

work. AR, Tab 4, NikSoft Quotation, at 138. LS3 identified [DELETED] labor 

categories and a total of [DELETED] hours (at a price of $494,122) to accomplish 

the call work. AR, Tab 5, LS3 Quotation, at 204-205. 

After evaluating the quotations,6 the agency’s source evaluation board (SEB) initially 

rated NikSoft’s and LS3’s quotations as follows:

7

 4 Vendors without relevant past performance would not be evaluated favorably or 

unfavorably; rather, they would receive a “neutral” rating. RFQ at 47.

5 The RFQ did not explain this phrase.

6 The RFQ provided for rating quotations as exceptional, acceptable, marginal, or 

unacceptable. RFQ at 44, 45. The RFQ’s standard for an exceptional rating was a 

quotation that contains significant strengths and no weaknesses; exceeds the 

SOW’s performance and technical capability requirements; offers value-added 

methodologies; provides no doubt that the vendor can achieve the SOW

requirements, and identifies and mitigates risks. The standard for an acceptable 

rating was a quotation that contains strengths that outweigh any weaknesses; meets 

the SOW’s performance and technical capability requirements, and provides 

confidence that the vendor can achieve the SOW requirements. RFQ at 44.

7 The third vendor was found to be technically unacceptable. AR, Tab 9, Consensus 

Evaluation Report, at 251.
Page 4 B-406179.2 

NikSoft LS3

Corporate Experience Acceptable Exceptional

Past Performance Acceptable Acceptable

Technical Qualifications of Proposed 

Personnel

Acceptable Exceptional

Technical Understanding and Approach Exceptional Exceptional

Overall Rating Acceptable Exceptional

AR, Tab 9, SEB Consensus Report, at 251. 

Based on LS3’s overall exceptional rating, the SEB recommended award to that 

firm. The agency then evaluated LS3’s pricing, and found LS3’s hourly rates were 

“below or above and well within 10% of the Independent Government Estimate 

(IGE).” AR, Tab 7, CO’s Recommendation Memorandum, at 247. The CO noted 

that technical merit was more important than price and recommended establishment 

of the BPA and issuance of the call to LS3 in an amount not to exceed $844,122 

(that is $494,122 for LS3’s labor plus $350,000 for software).8 The source selection 

authority agreed with the recommendation.

NikSoft protested this initial selection decision to our Office in late 2011. Among 

other things, NikSoft argued that the agency’s source selection decision failed to 

meaningfully consider whether LS3’s higher-priced quotation merited the associated 

cost premium. NikSoft also argued that the agency’s evaluation of the firms’ past 

performance was unreasonable. In this regard, NikSoft complained that DOJ rated 

its past performance as acceptable, even though NikSoft had received only 

exceptional ratings from its prime contractor evaluators. NikSoft also complained 

that LS3 received an acceptable rating, even though LS3 failed to provide three past 

performance questionnaires, as required by the RFQ.

We sustained NikSoft’s protest because the record did not show that the agency 

meaningfully considered NikSoft’s lower price in its selection decision, and because 

the agency’s evaluation of NikSoft’s past performance was unreasonable and 

inconsistent with the solicitation. With regard to past performance, we found that the 

agency’s rationale for assigning a lower rating to NikSoft’s past perfomance (that is, 

that NikSoft had provided evaluations only from prime contractors for work it had 

performed as a subcontractor) was inconsistent with the terms of the RFQ, which 

specifically allowed firms to provide references for which the vendor was a 

subcontractor on a prime contract. In sustaining the earlier protest, we 

 8 The solicitation failed to include a not-to-exceed amount of $350,000 for purchase 

of the software, and thus the agency asked LS3 to revise its quotation to include the 

cost of the software prior to award.
Page 5 B-406179.2 

recommended that DOJ perform and document a new best value selection 

decision.9 NikSoft Sys. Corp., B-406179, Feb, 29, 2012, 2012 CPD ¶ 104 at 9.

DOJ reevaluated the vendors’ quotations in response to our recommendation as 

follows:

NikSoft LS3

Corporate Experience Acceptable Exceptional

Past Performance Acceptable Neutral 

Technical Qualifications of Proposed 

Personnel

Acceptable Exceptional

Technical Understanding and Approach Exceptional Exceptional

Overall Rating Acceptable Exceptional

AR, Tab 24, SEB Consensus Report, at 787. The SEB’s reevaluation was 

documented in a new consensus report that provided a narrative discussion of the 

vendor’s respective strengths, weaknesses, and deficiencies under the non-price 

evaluation factors. 

During the reevaluation, DOJ changed LS3’s rating under the past performance 

factor from acceptable to neutral. The SEB acknowledged that LS3 had not 

provided three past performance questionnaires, as required by the RFQ. The 

agency also determined, however, that LS3’s quotation should not be considered 

unacceptable, because, in addition to the two questionnaires that LS3 submitted, 

DOJ was able to obtain other past performance information for LS3 from the Past 

Performance Information Retrieval System (PPIRS). The agency concluded that, 

under these circumstances, LS3’s quotation warranted a “neutral” rating under this 

factor. AR, Tab 24, Consensus Report, at 793. 

DOJ also reconsidered its rating of NikSoft’s quotation under the past performance 

factor. The agency found that, although the firm had submitted three past 

performance questionnaires showing excellent performance by NikSoft as a 

subcontractor, NikSoft had not provided past performance information where it was 

the prime contractor. Id. at 800. As a result, the agency concluded that its earlier 

rating of acceptable, rather than a higher rating, was appropriate. 

DOJ also evaluated the firms’ price quotations. In this regard, the agency examined 

each firm’s labor rates for the BPA’s base year and escalation rates for each option 

year. The agency noted that, although LS3 had not identified a discount from its 

FSS rates and NikSoft provided a [DELETED] discount, LS3’s labor rates were 

 9 We also recommended that the agency reconsider its rationale for the awardee’s 

past performance rating.
Page 6 B-406179.2 

“significantly lower than the discounted rates proposed by Nik[S]oft (on average, 

approximately [DELETED] less).” AR, Tab 26, Price Analysis, at 808-09. The 

agency also noted that LS3’s rates were in line with the IGE’s estimated rates, and 

that NikSoft’s rates were “significantly higher” than the IGE’s rates. Id. The agency 

recognized that LS3 had only submitted labor rates for the base year, and had failed 

to identify an escalation rate for the option years.10 Id. In its price evaluation, DOJ 

escalated LS3’s labor rates in the option years using the firm’s yearly escalation rate 

from its current FSS contract. Id.

The agency also examined the vendors’ labor hours and total labor cost to perform 

the first call. After noting that LS3’s total labor hours were 12 percent lower than the 

hours estimated by the IGE,11 the agency nonetheless concluded that, given LS3’s 

technical approach, LS3’s [DELETED] labor hours were sufficient to perform the first 

call. AR, Tab 26, Price Analysis, at 813-14. In contrast, the DOJ concluded that

NikSoft’s total labor hours [DELETED] were not sufficient to perform this 

requirement. As a result, the agency’s price evaluation increased NikSoft’s labor 

hours for performing the first call to the same level as LS3 (from [DELETED] to 

[DELETED]), which resulted in NikSoft’s evaluated price increasing from $374,423 to 

approximately $550,202.12 2nd

 

CO’s Statement at 904. 

At the conclusion of the agency’s review, the CO again recommended that the BPA 

be established, and that the call be issued to LS3, noting that, after adjusting 

NikSoft’s quotation to include additional hours to perform the call, NikSoft’s price 

was approximately $56,000 higher than LS3’s. AR, Tab 28, Award 

Recommendation, at 826-29. In this regard, the CO further noted that the labor mix 

proposed by LS3 presented the greatest probability of success. Id. at 827. The 

SSA concurred, and this protest followed.

DISCUSSION

The protester raises a number of objections to the agency’s reevaluation of 

proposals and selection decision. Among other things, the protester objects to the 

agency’s decision to upwardly adjust its proposed labor hours to perform the first

call, which resulted in NikSoft’s evaluated price being higher than LS3’s. In this 

regard, NikSoft complains that DOJ ignored NikSoft’s individual technical approach 

and improperly assumed that NikSoft would perform the first call in the same manner 

 10 LS3’s FSS contract expires in March of 2013. The agency concluded that it would 

renegotiate the contract at that time. 

11 The IGE was 4,525 hours to complete the first call order.

12 To calculate NikSoft’s overall evaluated price, the agency added 1,500 hours to 

NikSoft’s least expensive hourly labor rate.
Page 7 B-406179.2 

as LS3, which had a different technical approach to providing these services. See

Comments at 15-16.

Where, as here, an agency issues an RFQ to FSS contractors under Federal 

Acquisition Regulation (FAR) subpart 8.4 and conducts a competition, we will review 

the record to ensure that the agency's evaluation is reasonable and consistent with 

the terms of the solicitation. See Digital Solutions, Inc., B-402067, Jan. 12, 2010, 

2010 CPD ¶ 26 at 3-4; GC Servs. Ltd. P'ship, B-298102, B-298102.3, June 14, 

2006, 2006 CPD ¶ 96 at 6. With regard to the establishment of BPAs under FSS 

procedures, the FAR requires that the agency establish the BPA with the contractor 

that provides the best value, considering price and other identified factors. FAR 

§ 8.405-3(a)(1), (2). In this regard, FAR § 8.405-2(d) requires the agency to 

evaluate all responses received using the evaluation criteria provided in the 

solicitation, and to consider the level of effort and the mix of labor in evaluating the 

offered prices. See Advanced Tech. Sys., Inc., B-296493.6, Oct. 6, 2006, 2006 CPD 

¶ 151 at 9-10. 

While we are mindful that, when an agency places an order under a BPA, limited 

documentation of the source selection is permissible, the agency must at least 

provide a sufficient record to show that the source selection was reasonable. FAR 

§ 13.303-5(e); see also FAR § 8.405-2(e) (minimum documentation requirements 

include documenting the rationale for any tradeoffs when establishing a BPA or 

placing an order); e-LYNXX Corp., B-292761, Dec. 3, 2003, 2003 CPD ¶ 219 at 8 

(even for procurements conducted under simplified acquisition procedures, an 

agency must have a sufficient record to allow for a meaningful review). 

The record here provides no basis to support the agency’s determination that 

NikSoft’s level of effort or labor mix was insufficient to perform the first call, or to 

support its determination that NikSoft’s level of effort should be increased to the 

same level of effort proposed by LS3. Specifically, apart from the agency’s 

conclusion that NikSoft’s level of effort is insufficient and that LS3’s level of effort is 

sufficient, there is no analysis or explanation in the agency’s price evaluation and 

source selection decision to support these determinations. Nor has the agency 

provided any explanation or support for these conclusions in response to NikSoft’s 

protest. This is particularly problematic given DOJ’s recognition that the two vendors 

had differing approaches to performing the call.13

 13 As noted by DOJ, the level of effort and labor mix in NikSoft’s and LS3’s 

quotations to perform the call are dramatically different. For example, LS3 identified 

[DELETED] of its total [DELETED] labor hours for two administrative labor 

categories that needed no FICAM experience, while NikSoft’s quotation identified no 

administrative labor categories. DOJ has not addressed whether these labor 

categories are necessary to perform the call. 
Page 8 B-406179.2 

FAR § 8.405-2(d) does not elaborate on the precise method of analysis, or the 

extent of consideration an agency must give to a vendor’s proposed level of effort 

and labor mix. In our view, agencies are not required to conduct a formal evaluation 

of the kind typically performed in a negotiated procurement under FAR Part 15. 

However, in light of the significant differences between NikSoft’s and LS3’s levels of 

effort and labor mixes, the conclusory statements in the record simply are not 

adequate to demonstrate that DOJ reasonably considered whether NikSoft’s level of 

effort and labor mix were sufficient to perform the call, or to explain the agency’s 

decision to upwardly adjust NikSoft’s level of effort to that of LS3’s. We, therefore, 

sustain the protest on this basis.

RECOMMENDATION

We recommend that DOJ evaluate the vendors’ level of effort and labor mix and 

make a new best value selection decision. If LS3’s quotation is not found to reflect 

the best value, the agency should cancel LS3’s BPA and establish a BPA with 

NikSoft. We further recommend that the protester be reimbursed its reasonable 

costs of filing and pursuing the protest, including attorneys’ fees. Bid Protest 

Regulations, 4 C.F.R. § 21.8(d)(1). The protesters’ certified claims for such costs, 

detailing the time expended and costs incurred, must be submitted directly to the 

agency within 60 days after receipt of this decision. 4 C.F.R. § 21.8(f)(1).

The protest is sustained.14

Lynn H. Gibson

General Counsel

 14 NikSoft also challenges the agency’s technical evaluation of its and LS3’s 

quotations, as well as the agency’s evaluation of the past performance of both 

vendors. We have considered all of NikSoft’s arguments, and find that they provide 

no basis to challenge the agency evaluation.