United States Government Accountability Office

Washington, DC 20548

Comptroller General

of the United States

 

Decision

Matter of: KinetX Aerospace, Inc.

File: B-406798; B-406798.2; B-406798.3

Date: August 21, 2012

Brett W. Johnson, Esq., Daniel P. Wierzba, Esq., Sara J. Agne, Esq., and Eric H. 

Spencer, Esq., Snell & Wilmer, LLP, for the protester.

Cynthia Malyszek, Esq., Malyszek & Malyszek, for Vector Planning & Services, Inc., 

the intervenor.

Cheryl R. Parker, Esq., Department of the Navy, for the agency.

Christina Sklarew, Esq., and Guy R. Pietrovito, Esq., Office of the General Counsel, 

GAO, participated in the preparation of the decision.

DIGEST

Protest challenging an agency’s evaluation of technical and cost proposals and 

selection decision is denied where the record shows that the agency’s evaluation 

and selection decision were reasonable and consistent with the terms of the 

solicitation.

DECISION

KinetX Aerospace, Inc., of Tempe, Arizona, protests the issuance of a task order to 

Vector Planning & Services, Inc. (VPSI), of San Diego, California, under request for 

proposals (RFP) No. N00024-11-R-3347, issued by the Space and Naval Warfare 

Systems Command (SPAWAR), Department of the Navy, for systems engineering 

support services.

We deny the protest. 

BACKGROUND

The Program Executive Office (PEO) for Space Systems, an office within SPAWAR, 

is responsible for the development, acquisition, integration, production, launch, test, 

and operational support of space systems supporting the Department of Defense 

and other agencies. RFP amend. 3, Performance Work Statement (PWS), at 1. 

The task order to be issued here follows an earlier order to a large business and is 

for a full range of engineering support services, including requirements development 

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-406798 et al. 

and tracking, system performance and other technical analysis, system interface 

verification and validation, and performance modeling and simulations.1

 PWS at 2. 

Among other things, these services will support the development of the Mobile User 

Objective System (MUOS) program, which is the intended next-generation 

narrowband satellite communication system that will replace the agency’s current 

constellation of satellites. Id. at 1.

The RFP, which the Navy issued to small business holders of SeaPort-Enhanced 

(SeaPort-e) multiple award contracts, provided for the issuance of a cost-plus-fixedfee task order for these services for PEO Space Systems and related offices for a 

base year and 4 option years. Offerors were informed that the task order would be 

issued on a best-value basis, considering cost and the following non-cost evaluation 

factors, which were stated to be in descending order of importance: organizational 

experience; management approach; personnel qualifications (key personnel); and 

past performance. The RFP provided that the non-cost factors, combined, were 

significantly more important than cost. RFP amend. 3, at 54. 

The solicitation provided a SeaPort-e Ratings Guide that described the adjectival 

ratings that would be used in the evaluation of the non-cost evaluation factors. See

RFP amend. 2, attach. 11, SeaPort-e Ratings Guide. For example, offerors were 

informed that the technical evaluation board (TEB) would evaluate the 

organizational experience, management approach, and personnel qualifications 

factors as outstanding, good, acceptable, marginal or unacceptable.2 Id. at 1. 

Offerors were informed that past performance would be evaluated as substantial 

confidence, satisfactory confidence, limited confidence, no confidence, or unknown 

confidence (neutral).3

 Id. at 3.

 1 Offerors were informed that the incumbent task order contractor was Accenture 

Federal Services, LLC. Agency Report (AR), Tab 2, Solicitation Question/Answer 

Nol. 1.

2 As relevant here, an outstanding rating reflects a proposal that demonstrated an 

exceptional approach and understanding of the requirements, had strengths that far 

outweighed any weaknesses, and where the risk of unsuccessful performance was 

very low. A good rating reflects a proposal that demonstrated a thorough approach 

and understanding of the requirements, contained strengths which outweighed any 

weaknesses, and where the risk of unsuccessful performance was low. RFP 

amend. 2, attach. 11, SeaPort-e Ratings Guide, at 1.

3 As relevant here, a substantial confidence rating reflected a high expectation that 

the offeror would successfully perform the required effort, based on its 

recent/relevant performance record. A satisfactory confidence rating reflected a 

reasonable expectation of successful performance. RFP amend. 2, attach. 11, 

SeaPort-e Ratings Guide, at 3.
Page 3 B-406798 et al. 

The RFP provided detailed proposal preparation instructions that, among other 

things, required offerors to provide separate technical and cost proposals and that 

described the information to be provided under each factor. RFP amend. 3, 

at 40-51. With respect to the organizational experience factor, offerors were 

instructed to describe the offeror’s relevant corporate experience with performing 

and managing the PWS tasks. The RFP defined relevant corporate experience as 

work performed within the last 3 years that was of a similar technical nature, scope, 

size and complexity as that required by the PWS. Id. at 49.

With respect to the management approach factor, offerors were instructed to 

describe their proposed technical/management approach for performing and 

managing the PWS tasks, and to provide an overall technical/management plan that 

described the offeror’s approach to systems engineering support services, including 

engineering, information technology, and logistics. Id. 

With respect to the personnel qualifications factor, offerors were instructed to 

provide resumes for the following key personnel: senior systems engineer and 

senior information technology specialist. Id. at 50. Offerors were informed that key 

personnel must have experience supporting the work scope and organizations 

described in the PWS; that proposed key personnel could not be “key” on another 

contract; that they must hold an active “secret” clearance; and that they must be 

available at the time of award to travel up to 50 percent of each year. Minimum 

experience and education qualifications were also identified for the senior systems 

engineer and senior information technology specialist. Id. Offerors were also 

informed that key personnel that exceeded the minimum experience or education 

requirements may receive higher ratings. RFP amend. 2, attach. 11, SeaPort-e

Ratings Guide, at 4. 

With respect to the past performance factor, offerors were instructed to submit up to 

three completed Relevant Experience Forms (RFP amend. 2, attach. 7) for 

contracts performed within the last 3 years. The RFP advised offerors to choose 

experiences they deemed most relevant to the size and scope of the requirement. 

RFP amend. 3, at 51. The RFP also provided that the past performance evaluation 

would be based on both relevance (similarity of the work, in terms of scope and 

magnitude of effort and complexities) and quality (how well the offeror performed). 

RFP amend. 2, attach. 11, SeaPort-e Ratings Guide, at 3.

Detailed instructions were also provided for the preparation of offerors’ cost 

proposals. RFP amend. 3, at 44-49. The RFP identified eight labor categories with 

associated estimated hours for the base and option years, for which offerors were 

required to provide their direct labor rates.4

 4 The RFP stated that the offeror may also offer additional labor categories and 

corresponding hours not identified in the RFP. RFP amend. 3, at 44.

 For example, for the base year, the 
Page 4 B-406798 et al. 

solicitation identified the program manager category with 2,000 hours and the senior 

information technology specialist category with 14,400 hours. RFP amend. 3, at 45. 

Offerors were also instructed to provide indirect cost rates and other cost 

information. Id. at 47-48. 

Offerors were informed that the cost evaluation would be based on an analysis of 

the realism and completeness of the cost data, and that based on this analysis, the 

agency would determine the offeror’s most probable cost to perform the task order.5

Id. at 55. The RFP cautioned that to the extent proposed costs appeared 

unrealistic, the agency might infer either a lack of understanding of the 

requirements, increased risk of performance, or lack of credibility on the part of the 

offeror.6 Id. 

The Navy received proposals from three firms, including KinetX and VPSI. Both 

KinetX and VPSI based their proposals on teaming with a number of other 

companies with varying degrees of experience under the incumbent contract. 

KinetX emphasizes in its proposal, for example, that its team provides program 

office engineering support on the current contract, in addition to system design and 

development, providing exclusive insight into MUOS functionality. AR, Tab 8, 

KinetX’s Proposal, at 1. VPSI’s proposal states that its team, which includes 

Accenture (the incumbent systems engineering prime contractor), encompasses a 

majority of incumbent personnel, and asserts that it has been providing support to 

MUOS “since its inception.” VPSI’s Proposal, at 1-2.

The Navy decided to conduct discussions and established a competitive range that 

included only KinetX’s and VPSI’s proposals. With respect to KinetX, the Navy 

 5 Offerors were informed that the agency would, among other things:

Compare the proposed rates (direct, indirect, escalation) against 

DCAA [Defense Contract Audit Agency] recommended rates, or in 

the absence thereof, against other offerors’ or marketplace rates. 

In the absence of DCAA, verified/verifiable direct rates or a 

comparison of the proposed rates against current payroll data, the 

Government may use other methods such as market salary surveys 

to determine the realism of the proposed rates. In the absence of 

DCAA verified/verifiable indirect rates, the Government may use 

statistical analysis to determine a range of marketplace indirect 

multipliers. 

RFP amend. 3, at 55.

6 The RFP also provided for a price analysis to establish price reasonableness. Id.

at 56. 
Page 5 B-406798 et al. 

identified evaluated technical weaknesses and concerns the agency had with some 

aspects of the firm’s cost proposal. For example, the Navy informed KinetX that its 

proposed direct labor rates for its senior engineer and senior information technology 

specialists categories (with the exception of identified rates for certain individuals) 

were found to below the market rates for the particular category.7 See Protest, 

exhib. C, Navy Letter to KinetX of Feb. 29, 2012.

The firms’ final proposal revisions (FPR) were evaluated as follows:

KinetX VPSI

Organizational experience Good Outstanding

Management approach Good Good

Personnel qualifications Good Outstanding

Past performance Satisfactory Confidence Substantial Confidence

Overall Technical Rating GOOD OUTSTANDING

Proposed Cost $57,902,447 $70,483,483

Probable Cost $65,421,254 $75,153,602

 

AR, Tab 7, Technical Evaluation Report (TEB) Report, at 5; Tab 9, Cost Evaluation 

Board (CEB) Report, at 12, 32.

KinetX’s overall good technical rating reflected the TEB’s judgment that KinetX had 

demonstrated a thorough approach and understanding of the solicitation 

requirements and that it and its subcontractors proposed qualified personnel in most 

areas. AR, Tab 7, TEB Report, at 5. The TEB noted a number of major and minor 

strengths, and a number of minor weaknesses in KinetX’s proposal. Id. at 6-13. 

For example, under the organizational experience factor, the TEB noted as a major 

strength the KinetX team’s direct experience with MUOS architecture. Id. at 6. 

Under the personnel qualifications factor, the TEB assessed whether KinetX’s 

proposed key personnel met or exceeded the various qualification requirements. 

The TEB found that KinetX’s key personnel generally met and sometimes exceeded 

the requirements. Id. at 10-12.

VPSI’s overall outstanding technical rating reflected the TEB’s judgment that VPSI 

had demonstrated an exceptional approach and understanding of the program 

goals, methods, resources, schedules, and other aspects essential to the 

performance of the program. The TEB also found that VPSI had documented 

 7 KinetX’s cost proposal provided a number of different labor rates for the senior 

engineer and senior information technology specialists labor categories, reflecting 

actual salary rates for employees, negotiated rates for contingent hires, and salary 

survey rates for anticipated hiring. See, e.g., KinetX Revised Cost Proposal, 

attach. 5.
Page 6 B-406798 et al. 

extensive organizational experience and proposed exceptionally qualified personnel 

in almost all areas. Id. at 5. The TEB noted many major strengths and minor 

strengths in VPSI’s proposal, and only one minor weakness.

The source selection authority (SSA) reviewed the reports prepared by the TEB and 

CEB and determined that VPSI’s higher-rated, higher-cost proposal offered the best 

value to the agency. In this regard, the SSA found that the additional benefits 

offered by VPSI outweighed the approximately $9.7 million difference in the firms’ 

evaluated probable costs. AR, Tab 7, Source Selection Decision, at 6. In 

particular, the SSA noted the difference in the two firms’ ratings under the most 

important organizational experience factor. The SSA stated that successful 

performance of the contract would require intimate familiarity with MUOS plans and 

operations. Although KinetX was assessed a major strength for its team’s highly 

relevant experience with MUOS architecture, the SSA noted that the TEB assessed 

a number of major strengths in VPSI’s proposal under the organizational experience 

factor, including extensive experience supporting the MUOS ground infrastructure 

development. Id. at 5. The SSA concluded that VPSI proposed an exceptionally 

qualified team and documented extensive, comprehensive experience with the 

MUOS program across a majority of the PWS requirements. Id. The SSA also 

noted that VPSI’s team was comprised of more than [deleted] percent of [deleted], 

with over 10 years of experience. Id. at 7.

The task order was issued to VPSI. This protest followed a debriefing. 

DISCUSSION

KinetX has numerous objections to the agency’s technical and cost evaluations and 

the source selection decision.8 Although we have addressed only the protester’s 

primary arguments in this decision, we have considered all of the protester’s 

complaints and find that they do not provide a basis to find unreasonable the 

issuance of the task order to VPSI.9

 8 KinetX abandoned a number of arguments, which the agency addressed in its 

report and to which KinetX provided no response. We do not address these 

arguments and issues that KinetX abandoned. See Cedar Elec., Inc., B-402284.2, 

Mar. 19, 2010, 2010 CPD ¶ 79 at 3 n.4.

 

9 Among its numerous arguments, KinetX complains that the agency’s deputy 

program manager for an office within PEO Space Systems was a former VPSI 

executive and speculated that this individual may have aided VPSI in this 

procurement. See, e.g., Protest at 28-29; Protester’s Comments at 24 n.10. The 

record shows, however, that before the RFP was issued, this individual recused 

himself from this procurement in an email to the agency’s program manager, 

contracting officer, legal advisor and contracting officer’s representative. See AR, 

Tab 12, Email, July 13, 2011. KinetX’s continued speculation does not demonstrate 

(continued...)
Page 7 B-406798 et al. 

Evaluation of KinetX’s Technical Proposal

KinetX generally complains that its proposal should have been rated higher under 

all of the non-cost evaluation factors. See Protester’s Comments at 3-11. In this 

regard, the protester argues that the minor strengths assessed by the TEB under 

the organizational experience, management approach, and personnel qualifications 

factors should have been viewed as major strengths. KinetX contends that its 

proposal should have received an outstanding, and not good, rating under these 

factors. The protester also contends that VPSI’s outstanding ratings under the 

organizational experience and personnel qualifications factors reflect disparate 

treatment where KinetX’s proposal only received good ratings.

The evaluation of an offeror’s proposal is a matter within the agency’s discretion. 

IPlus, Inc., B-298020, B-298020.2, June 5, 2006, 2006 CPD ¶ 90 at 7, 13. In 

reviewing a protest against an agency’s evaluation of proposals, our Office will not 

reevaluate proposals but instead will examine the record to determine whether the 

agency’s judgment was reasonable and consistent with the stated evaluation criteria 

and applicable procurement statutes and regulations. See Shumaker Trucking & 

Excavating Contractors, Inc., B-290732, Sept. 25, 2002, 2002 CPD ¶ 169 at 3. By 

itself, a protester’s disagreement with the agency’s judgment in its determination of 

the relative merit of competing proposals does not establish that the evaluation was 

unreasonable. VT Griffin Servs., Inc., B-299869.2, Nov. 10, 2008, 2008 CPD ¶ 219 

at 4. 

Here, the protester merely disagrees with the agency’s assessment of the overall 

merit of its proposal. In this regard, KinetX identifies no information in its proposal 

that the agency failed to consider or factual errors made by the agency in 

considering its proposal. Rather, the record shows that, as contemplated by the 

RFP, the agency exercised its judgment in assessing the overall merit of KinetX’s 

proposal, based upon the evaluated strengths and weaknesses.

 

(...continued)

any bad faith or bias on the part of the agency. In a similar vein, KinetX complains 

that on April 26, 2012, the Navy modified a task order that VPSI was performing, 

which allegedly provided VPSI with an opportunity for a “trial run” of this order. 

Protest at 30. The Navy explains that the modification of VPSI’s task order was 

within the scope of both VPSI’s contract and task order, and was issued to avoid 

interruption of critical operational support pending issuance of the task order here. 

AR at 44-45. Beyond KinetX’s speculation that this reflects favorable treatment of 

VPSI, there is no evidence in the record that this task order modification, which 

occurred after the evaluation of technical proposals, had any impact on the 

evaluation of proposals or the selection decision.
Page 8 B-406798 et al. 

For example, with respect to the evaluation of KinetX’s proposal under the 

organizational experience factor, the protester argues that it did not receive 

sufficient credit for its team’s “exclusive insight” into the MUOS system functionality, 

and other core competencies related to satellite control, operations, and space 

navigation. Protester’s Comments at 3. KinetX contends that the level of 

experience and expertise it offered on MUOS could not be offered by any other 

company, and that it should have received an outstanding rating on this basis alone. 

KinetX also complains that it received insufficient credit for the experience of 

SAVID, LLC, one of its team members, which KinetX states “provides exclusive 

incumbent core contractor support for MUOS spacecraft bus and payload 

engineering in Sunnyvale, CA.”10 Protest at 17 (emphasis in original).

The record shows, however, that the TEB recognized KinetX’s relevant 

organizational experience, assessing a major and eleven minor strengths in its 

proposal, as well as one minor weakness. See AR, Tab 7, TEB Report, at 6. In this 

regard, the TEB specifically noted the protester’s direct experience with MUOS 

architecture, which the evaluators found was a major strength. Id. The TEB also 

assigned a number of minor strengths with respect to KinetX’s MUOS experience. 

The TEB also recognized, as a minor strength, the experience offered by KinetX’s 

team member, SAVID, with respect to the spacecraft bus and payload engineering 

requirements of the PWS. Id. at 7.

Although KinetX believes that these evaluated strengths should have been more 

highly valued and should have resulted in a higher evaluation rating, this 

disagreement with the agency’s business judgment provides no basis to find the 

agency’s evaluation unreasonable.

KinetX also complains that VPSI’s outstanding rating under the organizational 

experience factor reflected disparate treatment. We disagree and find from our 

review of the record that the firms’ respective ratings under this factor reflected the 

TEB’s judgment as to the relative merits of the firms’ experience. For example, with 

respect to a systems engineering and security engineering PWS requirement, VPSI 

received a major strength, where its proposal documented the firm’s proactive 

approach to engineering analysis and spectrum management. In this regard, the 

TEB noted that:

VPSI provided engineering recommendations and proposed 

changes that added significant capacity to the existing constellation 

to reduce the current [ultra high frequency] satellite footprint of F11, 

 10 The Navy notes that KinetX’s protest presents arguments and information, such 

as for example numerous statements emphasizing SAVID’s capabilities, which were 

not presented in its proposal for the agency’s evaluation.
Page 9 B-406798 et al. 

maximizing the Government’s return on investment for potential 

future [ultra high frequency] commercial leases.11

Id. at 15. The TEB recognized as a minor strength in KinetX’s proposal under this 

same requirement that KinetX had highly relevant experience, where it had 

participated in the design of the MUOS key management architecture and the 

design of an encryption solution for the Navy’s unmanned aerial vehicles. Id. at 7. 

Although KinetX believes the two firms should have received the same type of 

strength with respect to this requirement, this disagreement with the agency’s 

judgment does not show it to be unreasonable.

Similarly, with respect to the evaluation of KinetX’s proposal under the personnel 

qualifications factor, the protester contends that it should have received an 

outstanding, and not good, rating. As noted above, the RFP identified minimum 

experience and education requirements for key personnel. The solicitation also 

required proposed key personnel to have experience supporting the work scope 

and organizations described in the PWS, to not be a “key” person on another 

contract, to hold an active “secret” clearance, and to be available at the time of 

award for travel up to 50 percent of each year. KinetX contends that the agency’s 

personnel qualifications evaluation focused upon only the specialized experience 

“subfactor,” and not “all subfactors together.” See 2nd Supp. Protest, at 7. In 

addition, KinetX contends that its and VPSI’s proposals were evaluated disparately. 

Protester’s Comments, at 12.

The record does not support KinetX’s contention that the Navy unreasonably rated 

its or VPSI’s proposals under the personnel qualifications factor. As an initial 

matter, we disagree with KintetX’s view that the RFP established equally-weighted 

subfactors under this factor. The “subfactors” to which KinetX’s points are actually 

various requirements that key personnel were to meet or exceed. In accordance 

with the Navy’s announced rating guide, a proposal would receive an outstanding 

rating under this factor where a proposed key person met or exceeded many of the 

requirements. A good rating reflected a key person that met or exceeded some of 

the requirements. RFP amend. 2, attach. 11, SeaPort-e Ratings Guide, at 4. 

Offerors were specifically informed key personnel with additional years of the 

specified experience and/or higher levels of education may receive higher ratings. 

Id. 

 11 The ultra high frequency follow-on (UFO) constellation is the present narrowband 

military satellite communication system, consisting of 8 satellites, including the UFO 

F11 satellite that was launched in 2003 “as a gapfiller” between UFO and the next 

generation MUOS. See www.public.navy.mil/spawar/PEOSpaceSystems/

ProductsServices/Pages/default.aspx.
Page 10 B-406798 et al. 

Here, the TEB reviewed the two firms’ proposed key personnel, qualitatively 

considering the merit of these individuals’ specific experience and qualifications. 

Thus, the TEB found that VPSI proposed key personnel with a greater degree of 

extensive and specific experience than KinetX. See AR, Tab 7, TEB Report, 

at 10-12, 18-20. Consistent with its rating guide, the Navy assigned a higher rating 

to VPSI’s proposal under this factor. Although KinetX contends that the agency 

should have merely counted the number of instances where a proposed key person 

exceeded the stated requirements, this ignores the terms of the RFP that provided 

for considering the qualitative differences in key personnel.12

Evaluation of VPSI’s Technical Proposal

In addition to complaining that the agency disparately evaluated the firms’ technical 

proposals, KintetX challenges a number of other aspects of the agency’s evaluation 

of VPSI’s technical proposal. That is, KinetX complains that under the management 

approach factor, the Navy assessed a number of major and minor strengths in 

VPSI’s proposal for the firm’s ability to transition to performance and maintain 

continuity of the program. See Protester’s Supp. Comments at 5-6. KinetX argues 

that this was unreasonable, where offerors were informed that they were not 

required to submit a transition plan as part of their proposal. See AR, Tab 2, 

Solicitation Questions/Answer No. 6.13

We do not agree with KinetX that the RFP did not allow for considering an offeror’s 

ability to begin work under the task order, where the solicitation did not require the 

 12 KinetX points to a key person it submitted that was found to have exceeded 

requirements for that person’s clearance level and education level, and was rated 

good, while VPSI’s proposed key person also exceeded two requirements, but 

received an outstanding rating. 2nd Supp. Protest at 8-9. The record shows that 

the agency found that VPSI’s proposed key person had more extensive specialized 

experience, which in addition to exceeding the education qualifications, justified an 

outstanding rating.

13 The question and answer were as follows:

Since the incumbent, a large business, is prohibited from submitting a 

prime bid, the resulting contract will be awarded to a different 

company than the incumbent, which will require a transition. Will the 

government require a Transition Plan and, if so, will additional page 

count be specified in the Factor 2: Management Approach to account 

for it?

No transition plan is required.

AR, Tab 2, Solicitation Questions/Answer No. 6.
Page 11 B-406798 et al. 

submission of transition plans. Offerors were required to describe their 

technical/management approaches for performing and managing the PWS tasks. 

As part of this, the RFP required offerors to show “how proposed staffing will ensure 

the most effective and economical performance, including an approach for 

selecting, retaining, supporting, and replacing personnel to ensure that personnel 

assigned are well-trained in order to minimize learning curve and ramp-up time.” 

RFP amend. 3, at 49. The TEB noted as strengths under this factor VPSI’s 

proposal of incumbent personnel that would allow the firm to seamlessly transition 

to performance, minimize learning curve and ramp-up time, and maintain subject 

matter knowledge. AR, Tab 7, TEB Report, at 17. We think that these 

considerations are reasonably related to or encompassed by the management 

approach factor, such that KinetX should reasonably have been on notice that their 

approach to commencing work would be evaluated.14 See Raytheon Co., Space 

and Airborne Sys., B-298626.2, B-298626.3, Sept. 27, 2007, 2007 CPD ¶ 185 at 11.

KinetX also complains that VPSI improperly received credit under the management 

approach and past performance factors for a contract “performed by a separate 

entity,” Space and C4I Associates (SC4I). According to the protester, although 

VPSI identified this contract in its own past performance, the contract “is not related 

to VPSI at all.” 2nd Supp. Protest at 15. 

This allegation is belied by the record, however. The record shows that SC4I was 

formed as a joint venture between VPSI and two other companies. The other two 

companies withdrew from the venture, and VPSI was the only remaining entity. See 

Supp. AR at 11; AR, Tab 17, VPSI Joint Venture Documentation. Here, VPSI in its 

proposal identified SC4I as a “wholly owned entity of VPSI” and stated that the SC4I 

contract consisted of services performed by VPSI employees who are the same 

employees that will perform the efforts described in the organizational experience 

section in VPSI’s proposal, and would be available to perform the task order. See

VPSI Technical Proposal at 27-28. We find no reason to question the agency’s 

evaluation in this circumstance.

Cost Realism Evaluation

KinetX also challenges the Navy’s cost realism evaluation of its and VPSI’s cost 

proposals. We find, as explained below, that the agency’s cost evaluation was 

reasonable. 

When an agency evaluates proposals for the issuance of a cost-reimbursement 

order, an offeror’s proposed estimated cost of contract performance is not 

considered controlling since, regardless of the costs proposed by an offeror, the 

 14 KinetX in fact submitted a transition plan, which the TEB reviewed. AR at 23, 

Supp. AR at 4-5.
Page 12 B-406798 et al. 

government is bound to pay the contractor its actual and allowable costs. See The 

Boeing Co., B-311344 et al., June 18, 2008, 2008 CPD ¶ 114 at 63. As a result, a 

cost realism analysis is required to determine the extent to which an offeror’s 

proposed costs represent the offeror’s likely costs in performing the order under the 

offeror's technical approach, assuming reasonable economy and efficiency. See

FAR §§ 15.305(a)(1), 15.404-1(d)(1). A cost realism analysis involves 

independently reviewing and evaluating specific elements of each offeror’s cost 

estimate to determine whether the estimated proposed cost elements are realistic 

for the work to be performed, reflect a clear understanding of the requirements, and 

are consistent with the unique methods of performance and materials described in 

the offeror’s proposal. FAR § 15.404-1(d)(1); Advanced Commc'n Sys., Inc., 

B-283650 et al., Dec. 16, 1999, 2000 CPD ¶ 3 at 5. Based on the results of the cost 

realism analysis, an offeror’s proposed costs should be adjusted "to realistic levels 

based on the results of the cost realism analysis." FAR § 15.404-1(d) (2) (ii).

The evaluation of competing cost proposals requires the exercise of informed 

judgment by the contracting agency. We review an agency’s judgment in this area 

only to see that the agency’s cost realism evaluation was reasonably based and not 

arbitrary. Earl Indus., LLC, B-309996, B-309996.4, Nov. 5, 2007, 2007 CPD ¶ 203 

at 8. An agency’s cost realism analysis need not achieve scientific certainty; rather, 

the methodology employed must be reasonably adequate and provide some 

measure of confidence that the agency's conclusions about the most probable costs 

under an offeror’s proposal are reasonable and realistic in view of other cost 

information reasonably available to the agency as of the time of its evaluation. See

Metro Mach. Corp., B-295744, B-295744.2, Apr. 21, 2005, 2005 CPD ¶ 112 

at 10-11.

Here, KinetX challenges the Navy’s upward adjustment of its proposed costs, 

complaining that the Navy did not accept a number of its proposed labor rates for 

personnel that it proposed to hire. See Protester’s Comments at 17-18. In its cost 

proposal for the required labor categories, KintetX identified both actual employees 

(and contingent hires) and unidentified (to be determined) personnel that it would 

hire. See KinetX Revised Cost Proposal, attach. 5, Cost Summary. For its 

employees and contingent hires, KinetX identified the individual’s actual labor rate 

or agreed labor rate. The Navy accepted as realistic the labor rates identified for 

KinetX’s employees and contingent hires. See AR, Tab 9, CEB Report, at 14-15. 

With respect to the unidentified personnel that it would hire, KinetX proposed either 

representative rates or market survey rates. For example, as part of its senior 

systems engineer labor category, KinetX identified two current employees and their 

associated actual labor rates, which the agency accepted as realistic for these two 

individuals. KintetX identified another approximately [deleted] hours in these labor 

categories that it would provide with unidentified personnel it would hire; KinetX 

based its proposed labor rates for these unidentified personnel upon rates 

(representative rates) of its two employees. For the senior information technology 
Page 13 B-406798 et al. 

specialist labor category, KinetX identified a proposed labor rate that was based 

upon salary survey data. See KinetX Revised Cost Proposal at 97. KinetX stated 

in its revised cost proposal that its proposed labor rates for these categories was 

based upon the labor rate for these categories in the [deleted] percentile on the 

Western Management Group compensation survey.15 See id., attach. 5. The Navy 

did not find KinetX’s representative and survey rates for these labor categories to be 

realistic.16

With respect to the senior systems engineer and senior information technology 

specialist labor categories, the Navy reviewed two other salary survey websites 

(payscale.com and glassdoor.com). AR, Tab 9, CEB Report, at 7-8. The Navy 

considered the labor rates in the 90th percentile of these salary surveys to be 

realistic, when compared to its historic cost information and considering the 

complexity of the requirement. The Navy found that KinetX’s proposed rates for the 

unidentified personnel in these two categories were more than [deleted] percent 

below the 90th percentile rates of the payscale and glassdoor surveys. Id. at 9. The 

Navy also compared KinetX’s proposed rates to those of VPSI, the only other 

offeror in the competitive range, and found that KinetX’s proposed salary survey 

rates for these categories were significantly lower than VPSI’s average actual labor 

rates. The Navy concluded that KinetX’s proposed rates for personnel it would hire 

in these categories were not realistic, and upwardly adjusted its rate to the level of 

the average 90th percentile rate of the payscale and glassdoor surveys. Id. at 14-

15; AR at 34. 

We find the Navy’s adjustment of KinetX’s labor rates for future hires in the senior 

systems engineer and senior information technology specialist labor categories to 

be supported by the record and reasonable.17

 15 The Western Management Group website identifies salary on a range from 

lowest to highest and from the 10th to 90th percentile.

 As documented in the 

contemporaneous record and as explained by the Navy in response to the protest, 

the requirements here present highly complex, specialized engineering challenges 

16 The Navy did accept as realistic KinetX proposed salary survey rates for other 

labor categories, such as the engineer, information technology specialist, senior 

logistics/configuration specialist, senior program specialist, and program specialist 

categories. See AR, Tab 9, CEB Report, at 13-14.

17 KinetX also complains that the Navy was required to raise its technical rating to 

correspond with the higher labor rates applied to KinetX’s planned hiring in the

senior systems engineer and senior information technology specialist labor 

categories. There is no merit to this argument. In its technical evaluation, the Navy 

credited KinetX with providing qualified personnel in these labor categories. The 

cost realism adjustment applied by the Navy was to reflect the probable rates the 

agency would be required to pay for these individuals.
Page 14 B-406798 et al. 

for which there is only a small community of engineering expertise available. See

AR, Tab 9, CEB Report, at 8-9; AR at 35-38. Although KinetX disagrees with the 

Navy’s judgment as to the realistic labor rate that would be required to hire suitable 

personnel in these labor categories, it has not shown that the agency’s 

determination in this regard was unreasonable. Moreover in this regard, KinetX did 

not explain in its proposal or in response to the agency’s identified concerns in 

discussions how it will be able to provide personnel in these labor categories at its 

proposed rates.18

KinetX also challenges the agency’s evaluation of VPSI’s cost proposal. 

Specifically, KinetX complains that the agency in its cost realism assessment of 

VPSI’s labor rates reduced VPSI’s proposed actual labor rates for nine employees. 

Protester’s Comments at 17-18. Thus, for example, KinetX claims that VPSI 

proposes an actual labor rate of [deleted] for a current employee in the senior 

engineer labor category, but that the agency in its cost realism evaluation reduced 

this labor rate to [deleted]. See id. at 18.

The Navy responds that, although a summary table in the CEB’s report purports to 

show that the agency reduced VPSI’s actual labor rates in its cost realism 

evaluation, see AR, Tab 9, CEB Report, at 37-38, the agency used VPSI’s actual 

labor rates in calculating the awardee’s probable cost of performance. That is, the 

Navy found VPSI’s actual labor rates to be realistic. See Agency’s Response of 

July 24, 2012 to Protester’s Supp. Comments, at 8-9. The Navy states that the 

summary table contained a transcription (or “cut & paste”) error in this respect.

There is no merit to KinetX’s arguments in this regard.19

 18 KinetX raised a number of other challenges to the agency’s upward adjustment of 

its labor rates in the senior systems engineer and senior information technology 

specialist labor categories, none of which we find have any merit. KinetX complains 

that the upward adjustment of its labor rates reflected an improper normalizing of its 

rates with those proposed by VPSI. Protester’s Comments at 19-20. KinetX also 

contends that the agency’s analysis was “focused on a specific percentage labor 

rate not identified in the solicitation.” 2nd Supp. Protest at 11. These arguments 

are unsupported by the record, which, as explained above, shows that the agency’s 

adjustments were based upon the agency’s reasoned judgment as the labor rates it 

could be expected to pay during performance of the order.

 The record shows that, in 

fact, the summary table, to which KinetX alludes, was in error. The table, which 

19 KinteX also suggests that the Navy helped VPSI reduce its costs during 

discussions, given that VPSI reduced its overall proposed costs and where KinetX 

increased its overall proposed costs. See Protester’s Comments at 23. There is no 

evidence in the record supporting the protester’s suggestion that the Navy 

unreasonably aided VPSI in discussions.
Page 15 B-406798 et al. 

provides the labor rates for [deleted], one of VPSI’s subcontractors, includes 

explanatory notes showing that the Navy accepted as realistic these individuals’ 

actual labor rates. See AR, Tab 9, CEB Report, at 38-39. The detailed supporting 

documentation for the CEB’s cost realism evaluation also shows that the CEB did 

not reduce VPSI’s proposed labor rates for this subcontractor but that the CEB 

accepted [deleted]’s actual labor rates as realistic.20 See id., attach. 33, VPSI’s 

Subcontractor’s Cost Realism Spreadsheet.

Best Value Decision

KinetX also challenges the agency’s best value decision, largely based upon its 

view that the SSA assigned too much weight to VPSI’s proposal of an incumbent 

workforce and ability to seamlessly transition to performance. See Protester’s 

Comments at 15-16.

Where, as here, a solicitation provides for a cost/technical tradeoff basis for 

selection decisions, source selection officials are permitted to make tradeoffs 

between the relative merits of proposals and price. The extent of such tradoffs is 

governed only by the test of rationality and consistency with the solicitation criteria. 

See Wyle Labs., Inc., B-311123, Apr. 29, 2008, 2009 CPD ¶ 96 at 9. A protester’s 

disagreement with the agency’s determinations as to the relative merit of competing 

proposals and its judgment as to which proposal offers the best value to the agency, 

does not establish that the evaluation or source selection was unreasonable. 

Weber Cafeteria Servs., Inc., B-290085.2, June 17, 2002, 2002 CPD ¶ 99 at 4.

Here, the record contains substantial documentation regarding the evaluated merit 

of the firms’ proposals and the agency’s view that VPSI’s proposal was technically 

superior to KinetX’s. In this regard, as discussed above, we disagree with KintetX’s 

view that the agency could not properly consider VPSI’s offer of incumbent 

personnel and ability to seamlessly transition to performance as being more 

favorable than KinetX’s approach.21

 20 The Navy did make some minor upward adjustment to the subcontractor’s labor 

rates to reflect the agency’s judgment that a higher escalation rate was required. 

See AR, Tab 9, CEB Report, at 38-39.

 The SSA considered this advantage, along 

with other more favorable aspects, of VPSI’s technically superior proposal in his 

cost/technical tradeoff analysis, and explained why VPSI’s technical superiority was 

worth the premium associated with VPSI’s approximately $9.7 million higher 

21 In its initial protest, KinetX essentially recognized the value of offering an 

incumbent workforce, where the protester argued that its own proposal should have 

been rated more highly based on the experience of some of its team members 

under the prior order. See Protest at 17.
Page 16 B-406798 et al. 

probable costs. See AR, Tab 6, Source Selection Decision, at 6-8. Although 

KinetX disagrees with the SSA’s judgment, this does not show that the SSA’s 

cost/technical tradeoff analysis was unreasonable.

The protest is denied.

Lynn H. Gibson

General Counsel