Agile-Bot II, LLC v. United States

In the United States Court of Federal Claims

No. 21-1529C

Filed: September 4, 2021

Redacted Version Issued for Publication: September 30, 20211

* * * * * * * * * * * * * * * * ** *

AGILE-BOT II, LLC, *

*

Protestor, *

v. *

*

UNITED STATES,

*

Defendant,

*

v. *

SECURIGENCE, LLC, *

*

Defendant-Intervenor.

*

* * * * * * * * * * * * * * * * ** *

Paul A. Debolt, Venable, LLP, Washington, DC for protestor. With him were

Spencer Williams, Lindsay Reed, and Taylor Hillman, Venable, LLP, Washington, DC.

Bryan M. Byrd, Department of Justice, Washington, DC, Trial Attorney,

Commercial Litigation Branch, Civil Division, for defendant. With him were Douglas K.

Mickle, Assistant Director, Commercial Litigation Branch, Martin F. Hockey, Jr., Acting

Director, Commercial Litigation Branch, and Brian M. Boynton, Acting Assistant Attorney

General, Civil Division. Christinalynn E. McCoy and Geraldine Chanel, of counsel.

David S. Black, Holland & Knight LLP, Tysons, VA for intervenor. With him were

Greg Hallmark and Amy Fuentes, Holland & Knight LLP, Tysons, VA.

OPINION

HORN, J.

In the above-captioned post-award bid protest, protestor Agile Bot II, LLC (ABII)

challenges the decision of the Defense Advanced Research Projects Agency (DARPA)

1 This Opinion was issued under seal on September 4, 2021. The parties were asked to

propose redactions prior to public release of the Opinion. This Opinion is issued with the

redactions that the parties proposed in response to the court’s request. Words which are

redacted are reflected with the notation: “[redacted].”

to award a contract to intervenor, SecuriGence, LLC (SecuriGence), arguing that the

award was “arbitrary and capricious.” Given the urgency identified by the agency for

resolution of this protest, this Opinion memorializes the oral decision issued by the court

on August 30, 2021, which granted defendant’s and intervenor’s cross-motions for

judgment on the amended Administrative Record and denied protestor’s motion for

judgment on the amended Administrative Record, which was effective immediately at the

time of the oral decision.

FINDINGS OF FACT

On March 23, 2020, DARPA issued Request for Quotations No. HR001120Q0002

(the RFQ) as a total small business set-aside,2 seeking proposals for “entire range of IT

services, support, engineering, and infrastructure necessary to implement the DARPA IT

operational, mission, and research objectives.” The RFQ contemplated the issuance of a

task order on a hybrid fixed-price award fee, time-and-material, and labor-hour basis, with

a one-year base period and eight one-year options.

The RFQ explained: “The Government intends to award one (1) standalone task

order to the Quoter determined to be the best value to the Government. The best value

determination will be made using a trade-off analysis of all Phase I and II evaluation

factors in accordance with methodology specified in this solicitation.” For Phase I, the

RFQ stated:

Factor 1 – Essential Capabilities Experience

The Quoter will be evaluated on their past experience working in an

unclassified Gov-Cloud environment. The Quoter will be evaluated on their

past experience working in a classified multi-level security environment.

The Quoter will be evaluated on their DoD-approved multi-level security

vendor solution and its rationale for why it is relevant. Providing a solution

with which the Quoter has experience will be rated higher. Past experience

will only be considered as acceptable (recent and relevant) if it has been

performed since January 1, 2015, and includes minimums of 2000 users

and 300 remote sites across multiple systems. If a Quoter’s stated

experience is based all or in part on their subcontractor’s experience, the

Quoter will be evaluated on their description of the subcontractor’s intended

role performing this work under the resultant contract in the performance

confidence assessment rating.

(emphasis in original). The RFQ continued: “For Phase I, there is one evaluation factor,

and no subfactors, stated or unstated. The Government evaluators, however, may use

their professional judgment and experience in rating quotations for Phase I.” Factor 1 was

evaluated on the following ratings: Substantial Confidence, Satisfactory Confidence,

Neutral Confidence, Limited Confidence, and No Confidence. For the Phase II Evaluation

Criteria, the RFQ indicated:

2 The RFQ was amended three times, most recently on June 29, 2020.

2

The Government will use the following evaluation factors to evaluate

quotations:

Factor 1: Essential Capabilities Experience

Factor 2: Technical Approach

Factor 3: Management Approach

Factor 4: Key Personnel

Factor 5: Past Performance

Factor 6: Supply Chain Risk Mitigation Plan

Factor 7: Price/Cost (Reasonableness/Realism)

Factor 1 is the most important evaluation factor and is more important than

combined Factors 2-6. Factors 2-6 are listed in descending order of

importance. Non-price/cost Factors 1-6 combined are significantly more

important than price/cost Factor 7. The importance of price/cost Factor 7,

however, will increase as non-price/cost Factors 1-6 of quotations become

closer in merit. For Phase II, there are no subfactors, stated or unstated.

The Government evaluators, however, may use their professional

judgement and experience in rating quotations for Phase II. Quoters’ Phase

I Evaluation Factor 1 rating will be included in the overall Phase II trade-off

evaluation.

For “Factor 2: Technical Approach,” the RFQ explained that “[q]uoters will be evaluated

on how well their technical approaches will fulfill all of the requirements of all requirements

of the exemplar PWS sections/subsections demonstrating the ability to successfully

perform all contract requirements,” and for “Factor 3: Management Approach,” the RFQ

stated “[t]he Quoter will be evaluated on how well their management approach

demonstrates their ability to successfully manage all requirements of the task order.”

Regarding “Factor 4: Key Personnel,” the RFQ indicated that a quoter will be “evaluated

on how well the Key Personnel demonstrate appropriate qualifications, education, and

experience for the work they will be accomplishing. Relevant DARPA or related

Government IT experience will be rated higher. Current employment with the prime

contractor or quoted subcontractor or letter of intent will be rated higher.” For “Factor 6:

Supply Chain Risk Mitigation Plan,” the RFQ indicated: “The Quoter will be evaluated on

how well their plan mitigates supply chain risk for the Government,” and “Based on its

evaluation, the Government will assign each Quoter a rating of High Confidence, Medium

Confidence, or Low Confidence for each Factor 2, 3, 4, and 6 as outlined in the table

below:”

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CONFIDENCE RATING DESCRIPTION

High Confidence The Government has high confidence that the Quoter understands the

requirement, proposes a sound approach, and will be successful in

performing the task order.

Medium Confidence The Government has some confidence that the Quoter understands the

requirement, proposes a sound approach, and will be successful in

performing the task order.

Low Confidence The Government has low confidence that the Quoter understands the

requirement, proposes a sound approach, and will be successful in

performing the task order.

For Factor 5: Past Performance,” the RFQ stated, “[q]uoters will be evaluated on their

probability of meeting all of the solicitation requirements, including the PWS [Performance

Work Statement]. The past performance evaluation will consider each Quoter’s

demonstrated recent and relevant record of performance in supplying services that meet

the task order’s requirements.” Like Factor 1, past performance evaluations utilized the

confidence assessment ratings of Substantial Confidence, Satisfactory Confidence,

Neutral Confidence, Limited Confidence, and No Confidence.

For “Factor 7: Price/Cost,” the RFQ explained:

No adjectival ratings will be utilized for evaluating price. Price analysis will

include a determination of whether the quoted price is fair and reasonable

using the proposal analysis techniques at FAR 15.404-1 in accordance with

DoD Class Deviation 2014-O0011. Comparison of proposed prices is

expected to satisfy the requirement to perform a price analysis since

competition normally establishes price reasonableness (FAR 15.404-

1(a)(2)(i)). However, the Government may use various price analysis

techniques described in FAR 15.404-1 to evaluate whether the proposed

price is fair and reasonable. ODC/Travel CLIN prices provided by the

Government, Labor award fee pool totals required to be 3% of quoted Labor

fixed price totals, and Surge CLIN prices required to be 3% of quoted Labor

fixed price totals will only be evaluated as part of the total evaluated price.

Quoted maximum on-site and off-site Labor Hour (LH) rates for all

personnel descriptions will be evaluated for reasonableness.

Cost realism will be limited to the Fixed Price portion of the quotation and

analyzed to evaluate whether the 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 described in

the Quoter’s technical quotation. If a Quoter fails to provide adequate

information to support a cost realism analysis, their quotation may be found

unrealistic and unawardable. Negative consequences may result from a

Quoter proposing a cost that is too low, including a High Risk performance

risk rating or elimination of quotation. The results of the cost realism

analysis will be used to determine a performance risk of Low, Medium, or

High as outlined in the table below:

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PERFORMANCE DESCRIPTION

RISK RATING

Low Risk Negligible potential to cause degradation of performance or issues with retention

and recruitment of personnel.

Medium Risk Some potential to cause degradation of performance or issues with retention and

recruitment of personnel.

High Risk Likely to cause degradation of performance or issues with retention and

recruitment of personnel.

Regarding discussions, the RFQ specifically indicated that

[t]he Government reserves the right to make an award without

communications with Quoters. The Government reserves the right to

communicate with Quoters after receipt of quotes to clarify or resolve any

minor or clerical discrepancies (as deemed by the Contracting Officer).

Clarifications and/or resolution of minor discrepancies are not considered

alterations to quotes. The Government also reserves the right to hold

exchanges with one or all Quoters. Exchanges are anything that results in

an alteration to a quote.

After evaluations, DARPA initially made an award to SecuriGence on October 9,

2020, but on October 16, 2020, ABII filed a protest with the United States Government

Accountability Office (GAO). ABII subsequently filed a supplemental GAO protest on

October 19, 2020. After DARPA indicated to the GAO that the agency intended to take

corrective action, the GAO dismissed the protest on October 27, 2020. After the GAO

dismissed the protest, DARPA informed ABII, SecuriGence, and [redacted] of the

corrective action and explained that DARPA would engage in discussions with the

offerors via Exchange Notices on November 18, 2020. The Exchange Notices indicated:

The Defense Advanced Research Projects Agency (DARPA) recently took

corrective action following a protest filed with the Government

Accountability Office for the subject RFQ. After re-evaluating quotes, I have

decided to engage in exchanges with all Phase II Quoters as authorized by

RFQ Attachment 3, paragraph 1. The attached exchange notice notifies you

of exchanges for your quote. You may address the attached exchange

notice by providing a final quote revision. However, final quote revisions are

limited to changes that are within the scope of the attached exchange

notice. Any price/cost changes must fully explain how such changes have

a clear nexus to and are materially impacted by the attached exchange

notice. Any final quote revisions that change aspects of the quote outside

the scope of the attached exchange notice will be deemed non-compliant

and not evaluated by DARPA.

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On November 23, 2020, ABII, SecuriGence, and [redacted] all submitted questions to

DARPA, and on November 27, 2020, DARPA responded to the questions. Relevant to

the above captioned protest, one exchange between ABII and DARPA was as follows:

To assist us with mitigating any assumed operational risk or burden with

this proposed fluctuation in Fee/Profit, ABII respectfully requests the

Government confirm offerors are indeed allowed to make changes to their

proposed Base Fee.

- Yes the government confirms that an increase in proposed base fee has

a clear nexus to removing award fee from the commodity CLINs with

respect to overall operational risk and would therefore be a permitted

change to the quote.

On December 7, 2020, all three offerors submitted final, revised proposals. Included with

ABII’s was the following note:

ABII deviated from RFQ instructions by editing a formula contained within

the Government-provided spreadsheet. ABII added [redacted]% award fee

to the Commodity IT Support Services.

o Response:

Per the Government’s instructions, ABII has corrected our pricing model to

remove the [redacted]% award fee related to the Commodity IT Support

Services costs. This reduced our price/cost by a total of $[redacted]. The

affected cells are highlighted in yellow under the CLIN Totals tab (Row 7, 8

and 11; Columns E, G, I, K, M, O, Q, S, U and V) in DARPA MSO ITD

MNSS - Volume IV - Agile-Bot II.xlsx. In addition, the removal of the

[redacted]% award fee from the Commodity IT Support Services has

materially impacted our overall Price/Cost Proposal strategy. The following

paragraphs explain how the removal of the [redacted]% award fee has a

material impact on and clear nexus to the Exchange Notice.

Consequential Material Impact: Net Impact is a proposed savings of

$[redacted]).

ABII’s internal proposal pricing standard practices require us to provide

balanced pricing to our customers, such that all work requirements under

the same contract have the same fee/profit across CLINs, with the

exception of cost reimbursement CLINs (such as Travel and ODCs). ABII

has historically found that sound operational focus and exceptional

technical support is better realized through a balanced fee approach. This

way the Program Manager can focus his or her attention on the core mission

instead of on internal Profit & Loss (P&L) statements. In accordance with

our standard practices, we have reduced the Base Fee on the Multi-Network

Support costs from [redacted]% to [redacted]%. The combined total fee for

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the Multi-Network Support is now set at [redacted]% ([redacted]% Base Fee

and [redacted]% Award Fee). The Commodity IT Base Fee remains at

[redacted]% ([redacted]% Base Fee and [redacted]% Award Fee per the

Exchange Notice). In summary, both total/combined fee maximums

(Base Fee plus Award Fee) for Commodity IT and Multi-Network are

now at [redacted]%, which results in a balanced application of fee/profit

that is consistent with our standard practices. This change does not

create risk for DARPA, since there have been no adjustments to proposed

salaries, proposed staffing levels or man-year hours beyond the adjustment

to the Quality Manager salary discussed in the next Exchange. The changes

are highlighted in yellow in Column X in the following tabs: Base Period,

Option Period 1, Option Period 2, Option Period 3, Option Period 4, Option

Period 5, Option Period 6, Option Period 7, Option Period 8. In addition,

under the CLIN Totals tab (Row 3, 4, 5 and 10; Columns E, G, I, K, M, O,

Q, S, U and V). The reduction in Base Fee for the Multi-Network Support

costs reduced our price by $[redacted].

(all emphasis in original).

In response to protestor’s revised proposal, the contracting officer filed a February

10, 2021 Memorandum for Record with the subject line: “Rejection of Non-Compliant

Revised MNSS (Support Services) Base Fee in the Final Quote Revision of Agile-Bot II

(ABII).” The February 10, 2021 Memorandum for Record concluded:

After consulting with the price/cost team and reviewing ABII’s rationale

summarized in paragraph 5 above, I decided to reject ABII’s price/cost

revision that reduced the quoted fee for MNSS [Multi-Network Support

Services] base fee from [redacted]% to [redacted]%. My determination

included the following considerations:

a) ABII failed to establish that DARPA’s Exchange Notice permitting ABII to

revise (reduce) its Commodity IT Services award fee is expected to have a

material impact on its MNSS base fee, and that such impact materially

requires ABII to also reduce its MNSS base fee. ABII’s quoted reduction to

its Commodity IT Support Services award fee was not inextricably linked to

reducing its quoted reduced MNSS base fees, specifically, reducing the

former fee did not inextricably require ABII to also reduce the latter fees. As

summarized in paragraph 5 above, ABII stated that it reduced its MNSS

base to follow its standard business practices. ABII’s internal business

practices, however, are inadequate to explain how its decision to revise

(reduce) its quoted Commodity IT Support Services fee materially impacted,

and was inextricably linked to a causal necessity to lower the prices of its

MNSS base (support costs) fees. Rather, ABII’s decision to reduce its

MNSS base (support costs) fees was admittedly motivated by its business

practices, not by materiality, causation, or nexus of the fees to one another.

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b) ABII failed to explain how reducing the award fee on the Commodity IT

Support Services CLIN (i.e., reducing total amount of potential fee that it

could earn during performance of the task order) has a direct nexus with

respect to contract risk in reducing the MNSS (support services) base fee.

A reduction of [redacted]% award fee of the Commodity IT Support Services

CLIN increases ABII’s operational risk of earning profit on the task order. A

rational nexus to reducing the Commodity IT Support Services fee would

have been, for example, to increase the potential amount of base fee ABII

could earn elsewhere under the task order, for instance it could have

increased (not decreased) the MNSS (support services) base fee to help

ensure that reducing the Commodity IT Support Services fee did not

increase overall operational risk of not earning profit on the task order.

DARPA alluded to this rationality in the response reproduced in paragraph

3 above by stating, “[T]he government confirms that an increase [emphasis

added] in proposed (MNSS) base fee has a clear nexus to removing award

fee from the commodity CLINs with respect to overall operational risk and

would therefore be a permitted change to the quote”. But there was no

indication by DARPA that a decrease in the MNSS (support services) base

fee has a clear nexus to removing award fee from the commodity CLINs

with respect to overall operational risk and would therefore be a permitted

change to the quote. Furthermore, ABII did not provide any explanation as

to how a reduction in the MNSS (support services) base fee would mitigate

operational risk or burden due to the decrease in Commodity IT Support

Services award fee.

c) ABII’s final quote revision did not provide sufficient evidence that ABII’s

revision (decrease) of its MNSS base fees in response to the Exchange

Notice was inextricably linked to, caused by or had a clear nexus to its

revision to Commodity IT Support Services fee. For example, ABII’s Final

Quote Revision Volume IV-Price/Cost does not describe the rationale for,

or document, its asserted standard business practice of having same

profit/fee across CLINs, including not in the following sections of its final

price/cost quote: 1.4 Balanced Pricing, 1.5.1 Accounting System, 1.7.1

Proposed Base Fees, and 1.7.2 Award Fee. Moreover, within Section 1.7.2,

ABII admitted that award fee is not guaranteed: “Agile-Bot II understands

that award fee pools is [sic] not guaranteed and is an incentive to exceed

requirements and award fee criteria.” ABII Final Quote Revision Volume IV,

p. 14. However, ABII failed to explain how its program manager will not be

more focused on the MNSS (support service) effort, since [redacted]% of

the total [redacted]% available fee is not guaranteed and is only earned as

an incentive for exceeding requirements. In other words, I do not agree with

ABII’s assertion that a quoted [redacted]% award fee and [redacted]% base

fee is a balanced fee approach, particularly where the Commodity IT

Support Services CLIN includes a guaranteed [redacted]% base fee. In my

contracting officer experience, I have found that contractor program

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managers are significantly incentivized by award fees and that they put

additional effort into earning award fee for their company. In my business

judgment, I believe that such incentivization will be particularly significant

under this task order, where only [redacted]% fee is guaranteed for the

MNSS (support services) effort (i.e., CLIN 0001 in the base period) and

anticipate this arrangement would have the exact affect ABII is apparently

trying to avoid by incentivizing their program manager to focus on earning

the 3% non-guaranteed award fee.

d) It would require DARPA to engage in unequal treatment of the Quoters if

it allowed ABII to not follow the Exchange Notice instructions by making

non-compliant changes to its price quote whereas the other Quoters

followed the Exchange Notice instructions and did not make non-compliant

changes to their price quotes. I determined it would be unfair to other

Quoters, and detrimental to the integrity of the procurement system, if the

price/cost team determined ABII’s non-compliant revisions to its price quote

were compliant (e.g., within the scope of the Exchange Notice) and

evaluated it as part of determining ABII’s revised quoted price.

In view of the considerations above, I determine that ABII’s revision of its

MNSS (support services) fee in its final quote revision — impermissibly

reducing base fee from [redacted]% to [redacted]% — are non-compliant

with DARPA’s Exchange Notice instructions and, therefore, will not be

evaluated.

7. I have directed the price/cost team to conduct two evaluations. First, to

provide the Decision Authority with information to conduct his own

independent review of ABII’s final quote revision, I directed the price/cost

team to evaluate ABII’s price/cost quote as submitted, and to evaluate

ABII’s non-compliant revision to its MNSS (support services) fee. Second, I

directed the price/cost team to separately evaluate ABII’s price/cost quote

given my decision to reject the non-compliant portion of the final quote

revision. I further directed the price/cost team to disregard ABII’s non-

compliant reduction in the MNSS (support services) base fee from

[redacted]% to [redacted]% and to evaluate ABII’s final price MNSS

(support services) base fee at [redacted]% as originally quoted by ABII.

(emphasis in original) (first alteration added).

On February 25, 2021, the Technical Evaluation Board issued a Technical

Evaluation Board Consensus Report for all three offerors, and the same day, February

25, 2021, the Price/Cost Evaluation Board issued a Price/Cost Evaluation. Regarding the

Price Fair & Reasonableness Analysis, the February 25, 2021 Price/Cost Evaluation

stated:

9

The Price/Cost Evaluation Board (PCEB) used two price analysis

techniques from FAR 15.404-1 and in accordance with DoD Class Deviation

2014-O0011 to evaluate the price/cost quotations. Normally, adequate price

competition establishes a fair and reasonable price (FAR 15.403-1(c)(1)(i)).

Thus, first, because of the competitive nature of this acquisition, which

received three competitive responsive quotations, the PCEB found that all

Quoters’ prices were presumptively fair and reasonable. Second, to provide

additional assurance that the proposed prices were fair and reasonable, the

PCEB further analyzed the total evaluated price of each quotation by

comparing proposed prices to each other and to historical prices paid for

the same items as reflected in the Independent Government Cost Estimate

(IGCE).

The February 25, 2021 Price/Cost Evaluation determined:

The PCEB considers the Quoters’ total evaluated prices to be fair and

reasonable as they are each not higher than the IGCE. Additionally, the

IGCE is further confirmed to be an acceptable baseline as it is reasonably

close (i.e., less than 20% higher) than the average of the three Quoters’

total evaluated prices. FAR price analysis guidance was used to provide

additional analysis for reasonableness. FAR 15.403-1(c)(1)(i) allows the

following elements to establish a price is based on adequate price

competition, and thus the PCEB was able to corroborate the method used

with the following price reasonableness guidance from the cited FAR

regulations:

a) Two or more responsible offerors, competing independently, submit

priced offers that satisfy the Government’s expressed requirement.

* In response to this RFQ, three responsible Quoters, competing

independently, submitted priced offers that satisfy the Government’s

expressed requirement.

b) Award will be made to the offeror whose proposal represents the best

value where price is a substantial factor in source selection.

* Per the RFQ, award will be made to the Quoter whose quotation

represents the best value, and although price is listed as significantly less

important than the other six factors, it is still a substantial factor. In addition,

it is noted the importance of price will increase as the other six non-price

factors become closer in merit.

c) There is no finding that the price of the otherwise successful offeror is

unreasonable.

* There is no finding, as documented below, that the price is unreasonable

for any of the Quoters. Therefore, all technically acceptable proposals

received are considered fair and reasonable based on adequate price

competition.

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Below is the reasonableness evaluation of quoted maximum on-site and off-

site Labor Hour (LH) rates for all personnel descriptions:

ABII’s quoted maximum (surge) on-site LH rates are reasonable as they

were proposed in response to a competitive acquisition that the PCEB

determined met FAR 15.403-1(c)(1)(i) requirements for establishing

adequate price competition. Further, the proposed maximum (surge) on-site

LH rates are approximately [redacted]% higher than the highest acceptable

fully loaded labor rate for each labor category included in the fixed price

labor totals. Their maximum (surge) off-site LH rates are also reasonable

as they are [redacted]% higher than the highest acceptable fully loaded

maximum (surge) on-site labor rate for each labor category included in the

fixed price labor totals to also consider their [redacted]% contractor site

overhead rate.

SecuriGence’s quoted maximum (surge) on-site and off-site LH rates are

reasonable as they were proposed in response to a competitive acquisition

that the PCEB determined met FAR 15.403-1(c)(1)(i) requirements for

establishing adequate price competition and they are [redacted] the

acceptable fully loaded labor rates included in the fixed price labor totals.

[redacted] quoted maximum (surge) on-site and off-site LH rates are

reasonable as they were proposed in response to a competitive acquisition

that the PCEB determined met FAR 15.403-1(c)(1)(i) requirements for

establishing adequate price competition and they are [redacted] the

acceptable fully burdened labor rates included in the fixed price labor totals.

All Quoters complied with the RFQ and Government-provided spreadsheet

in proposing 3% award fee on the MNSS fixed price.

Regarding the cost realism analysis, the February 25, 2021 Price/Cost Evaluation

determined:

The cost realism analyses and performance risk ratings are documented for each

Quoter are as follows and discussed below:

Table 3. Performance Risk Ratings for Phase II Price Quotes

Quoter Performance Risk Rating

Agile-Bot II Low Risk

SecuriGence Low Risk

[redacted] Medium Risk

For ABII, the February 25, 2021 Price/Cost Evaluation summarized:

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ABII’s price/cost quotation is determined to [sic] realistic for the work to be

performed, reflects a clear understanding of the requirements, and is

consistent with the unique methods of performance described in the

Quoter’s technical quotation. ABII’s focus on supporting engineering and

operations capabilities, as described in the Technical Approach, is

demonstrated by the Engineering and Operations staff levels meeting and

exceeding the proposed levels in the IGCE. Based upon the PCEB’s

thorough review of documentation provided by ABII, considering their

proposed labor hours, direct labor rates, fringe, overhead, G&A, SM&H,

escalation, proposed base fee/profit, and other price/cost considerations,

there is negligible potential to cause degradation of performance or issues

with retention and recruitment of personnel, so ABII receives a “Low Risk”

Performance Risk Rating.

For SecuriGence, the February 25, 2021 Price/Cost Evaluation summarized,

based on the preceding analysis, the SecuriGence price/cost quotation is

determined to be realistic for the work to be performed, reflects a clear

understanding of the requirements, and is consistent with the unique

methods of performance described in the Quoter’s technical quotation.

SecuriGence’s strengths in [redacted] of the Technical Approach with

regard to the assessment of the [redacted] and correlation of events, is

demonstrated by the focus on [redacted] personnel. Based upon the

PCEB’s thorough review of documentation provided by SecuriGence,

considering their proposed labor hours, direct labor rates, fringe, overhead,

G&A, SM&H, escalation, proposed base fee/profit, and other price/cost

considerations, there is negligible potential to cause degradation of

performance or issues with retention and recruitment of personnel, so

SecuriGence receives a “Low Risk” Performance Risk Rating.

For [redacted], the February 25, 2021 Price/Cost Evaluation determined that

based on the preceding analysis, [redacted] price/cost quotation is

determined to have some realism for the work to be performed, reflects a

clear understanding of the requirements, and is consistent with the unique

methods of performance described in the Quoter’s technical quotation.

Based upon the PCEB’s thorough review of documentation provided by

[redacted], considering their proposed labor hours, direct labor rates, fringe,

overhead, G&A, SM&H, escalation, proposed base fee/profit, and other

price/cost considerations, there is some potential to cause degradation of

performance or issues with retention and recruitment of personnel, so

[redacted] receives a “Medium Risk” Performance Risk Rating.

On March 1, 2021, DARPA’s source selection authority issued a Best Value

Determination and Task Order Award Decision, and explained that

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[i]n determining the best value, in accordance with FAR 8.4, I utilized a

trade-off process between the evaluation factors in the order of relative

importance specified in the RFQ. My task order decision considers

recommendations from the Technical Evaluation Board (TEB) and

Price/Cost Evaluation Board (PCEB), but represents my own independent

judgment of each quote. I agree with the TEB and PCEB analysis and

ratings and will not re-state their findings; rather, in this memorandum I will

generally focus on the distinguishing features within each quote that

weighed most heavily on my best value determination and task award

decision.

The Best Value Determination and Task Order Award Decision also included the following

chart:

Table 1. Summary of Adjectival Ratings for Factors 1-6 and Price/Cost Findings for Factor 7.

Evaluation Factor Name SecuriGence ABII [redacted]

Factor

1 Essential Substantial Substantial Substantial

Capabilities Confidence Confidence Confidence

Experience

2 Technical High Confidence High Confidence High Confidence

Approach

3 Management High Confidence High Confidence Medium

Approach Confidence

4 Key Personnel High Confidence High Confidence Low Confidence

5 Past Substantial Substantial Substantial

Performance Confidence Confidence Confidence

6 Supply Chain High Confidence High Confidence High Confidence

Risk Mitigation

Plan

7 Price/Cost* $781,997,009 $819,569,555** $[redacted]

(Performance (Low Risk) (Low Risk) (Medium Risk)

Risk Rating)

* Prices rounded to the nearest dollar

** ABII’s total price with non-complaint quoted revisions to its MNSS base fees was $[redacted]

The source selection authority also explained:

As summarized in my discussion below, I did not merely rely on the

adjectival ratings and price/cost findings in Table 1 above; rather, I used the

ratings and findings as guides to help me make a rational and reasonable

independent decision of which Quoter offered the best value to DARPA. As

further summarized in my discussion below, I determined that the first and

13

second ranked Quoters-SecuriGence and ABII-were essentially tied in merit

for Evaluation Factors 1-6 and, therefore, in accordance with the RFQ, I

increased the relative importance of Factor 7 (Price/Cost) in my tradeoff

analysis and best value determination for these two Quoters. Further, I

determined that the first and third ranked Quoters (SecuriGence and

[redacted]), were not close in merit for Evaluation Factors 1-6 (I found

SecuriGence much higher than [redacted] in technical merit) and therefore,

in accordance with the RFQ, I considered Factor 7 as the least important

factor in my tradeoff analysis and best value determination for these two

Quoters.

I also carefully considered the price premium for ABII’s quote; specifically,

whether it offered additional technical value to DARPA that would justify its

price premium over SecuriGence’s quote. As discussed below, I did not find

that ABII’s quote offered DARPA additional technical value that justified its

price premium and selecting it for the task order award over SecuriGence.

Although I did not find [redacted] quote to be close in technical value to

SecuriGence’s quote, out of prudence, and to be mindful of my duty as a

steward of taxpayers’ dollars, I also carefully considered the price premium

of SecuriGence’s price quote over [redacted] quote. I wanted to make sure

that SecuriGence’s quote was worth its additional price to DARPA

notwithstanding that it was much higher rated than [redacted] on Evaluation

Factors 1-6. As discussed below, I found that SecuriGence’s quote offered

DARPA additional technical value that justified its price premium and

selecting it for the task order award over [redacted] quote.[3]

Regarding Factor 2, the source selection authority concluded:

For Factor 2 (Technical Approach), I determine ABII, SecuriGence, and

[redacted] each receive a High Confidence rating. For Factor 2, I have high

confidence that all three Quoters understand the requirement, propose a

sound approach, and will be successful in performing the task order.

For Factor 2, the distinguishing features of ABII’s approach were an

excellent process for the management of the DARPA Network Operations

Support Center (NOSC), their experience with implementing product teams,

and their focus on speeding up the deployment of classified sites with the

proposed Commercial Solutions for Classified for improved Multi-Level

System functionality shows a clear understanding of the DARPA

requirements and a focus on supporting the Tech Offices in conducting their

3As the source selection authority found SecuriGence’s proposal and ABII’s proposal to

be significantly higher rated for Factors 1-6 than [redacted] proposal, and as ABII does

not raise any challenges to DARPA’s evaluation of [redacted], this Opinion does not

address all of the observations the source selection authority made regarding [redacted]

proposal.

14

missions. Furthermore, ABII’s approach to problem management is robust,

using personnel and unique automated tools to drive efficiencies that will

minimize outages and increase network uptime. Within Cloud, ABII

distinguished itself by having a proven methodology and unique

understanding of building a virtual private cloud for DARPA's unclassified

network, which should allow for a seamless and quick transition for

DARPA’s classified network operations. These strengths, along with others

and no significant weaknesses or deficiencies noted, led me to assign ABII

a High Confidence rating for Factor 2.

For Factor 2, SecuriGence had numerous strengths with one minor

weakness. SecuriGence’s distinguishing features included an excellent

[redacted]. In particular, [redacted]. Furthermore, SecuriGence’s practice of

[redacted] and will allow [redacted]. Additionally, SecuriGence’s approach

to the NOSC had several strengths, most notably, their focus on security

[redacted] and their staffing approach that allows for a [redacted], exceeding

expectations, but very beneficial to DARPA that has [redacted]. For Factor

2, SecuriGence had one minor weakness, but it does not weigh heavily

against it my award decision. There is some risk to the schedule that

SecuriGence has proposed for off-site secure storage. SecuriGence

proposes renovations to their quoted contractor-provided facility for storage

requirements will be completed prior to the start of contract. However, there

are not many details to understand how SecuriGence will meet this timeline

or how other mentioned rental options completely mitigate the risk. I find

this risk is mitigated, for the following reasons. SecuriGence has [redacted]

sq. ft. available [redacted] and DARPA has the ability to cover the remainder

of requirement while any final renovations are made or other space is

rented. In addition, considerable time has passed since SecuriGence’s

initial quote submission, their final quote submission, and more time will

pass by before the period of performance starts reducing the risk their

required improvements and accreditation will not occur on-time as quoted.

Other potential local options were also mentioned by SecuriGence, and

although there were not detailed enough to completely eliminate the risk,

based on Government knowledge, and in my business judgement, it is likely

SecuriGence will be able to rent additional local space, as quoted, in time

to meet PWS requirements should their other proposed facility not be ready.

I also noted that SecuriGence is [redacted]. These strengths, along with

others, one minor weakness (which I believe is sufficiently mitigated), and

no deficiencies noted, led me to assign SecuriGence a High Confidence

rating for Factor 2.

(capitalization in original).

15

For Factor 3, the source selection authority explained:

For Factor 3 (Management Approach), ABII and SecuriGence each

receive a High Confidence rating. For Factor 3, [redacted] receives a

Medium Confidence rating. For Factor 3, I have high confidence that ABII

and SecuriGence understand the requirement, propose a sound approach,

and will be successful in performing the task order. For Factor 3, I have

some confidence that [redacted] understands the requirement, proposes a

sound approach, and will be successful in performing the task order.

For Factor 3, ABII’s management approach strategies, taken in aggregate,

form a comprehensive portfolio of recruitment, training, incentives, and

compensation that should result in hiring and retaining a high-quality MNSS

staff. Likewise, for Factor 3, ABII has a robust plan for quality control to

include well-defined quality management and service level objective

responsibilities and the ability to reach-back for corporate support.

Additionally, for Factor 3, ABII has a sound product team structure that also

adds value by providing [redacted] that will help ensure DARPA is able to

rapidly evolve to emerging DoD mandates.

For Factor 3, SecuriGence’s proposed removal of [redacted] aligns the staff

to the mission and [redacted]. In addition, SecuriGence’s approach provides

value with [redacted] and an [redacted] to reduce the burden for the

[redacted] while also providing ideas [redacted]. Overall, for Factor 3, I

believe that SecuriGence’s approach to recruitment, training, incentives,

and compensation should result in hiring and retaining a high-quality MNSS

staff.

The source selection authority continued: “In summary, for Factor 3, my confidence is

significantly higher in ABII and SecuriGence than in [redacted]. I have equal confidence

in ABII and SecuriGence for Factor 3. Therefore, I assigned ABII and SecuriGence High

Confidence ratings for Factor 3, and I assigned [redacted] a Medium Confidence rating

for Factor 3.”

For Factor 7, the source selection authority concluded:

For Factor 7 (Price/Cost), ABII quoted a Total Evaluated Price of

$819,569,555 and receives a Low Risk rating; SecuriGence quoted a Total

Evaluated Price of $781,997,009 and receives a Low Risk rating; and

[redacted] quoted a Total Evaluated Price of $[redacted] and receives a

Medium Risk rating.

For ABII for Factor 7, I concur with the Contracting Officer’s Memorandum

for Record (MFR), dated February 10, 2021, that documented non-

compliant quote revisions that ABII made to their price quote during

16

Exchanges. Specifically, I concur with the Contracting Officer that ABII’s

reduction of its quoted MNSS base (support costs) fees from [redacted]%

to [redacted]% is non-compliant because reducing these fees did not have

a clear nexus to and was not materially impacted by the relevant Exchange

Notice to revise (reduce) its Commodity IT services fee. These non-

compliant revisions resulted in ABII’s quoted price being $[redacted] lower

than ABII’s total evaluated price cited above ($819,569,555), or $[redacted].

I carefully reviewed ABII’s rationale for making these non-compliant

revisions, specifically that they were required based on their internal

standard business practices to provide balanced pricing and fee

approaches. ABII’s business rationale offered for making the revisions does

not adequately explain and fails to establish how ABII’s revision to the

Commodity IT Services fee in response to the Exchange Notice materially

impacted and had a clear nexus to requiring ABII to also reduce its MNSS

base fees. I found ABII’s rationale failed to explain how revisions to the

Commodity IT services fee was inextricably linked to requiring ABII to

reduce the MNSS base fees. I believe that ABII’s business rationale for

making the non-compliant quote revisions was not sufficient to establish the

causal nexus (not business nexus, as ABII would apparently have it)

required by the Exchange Notice instructions. Consequently, I concur with

the Contracting Officer’s MFR, and I determined that ABII's revisions to its

MNSS base fees were non-compliant with the Exchange Notice

instructions. The instructions specifically notified all Quoters that any

price/cost changes must fully explain how such changes have a clear nexus

to and are materially impacted by the Exchange Notice. Further, the

instructions stated, that any final quote revisions that change aspects of the

quote outside of the scope of the Exchange Notice will be deemed non-

compliant and not evaluated by DARPA. Thus, I rejected ABI’'s revisions to

its MNSS base fees- totaling $[redacted]-and these revisions are not

included in ABII’s total evaluated price above. I also found, from an equal

treatment perspective, that SecuriGence and [redacted] followed the

Exchange Notice instructions and did not submit non-compliant quote

revisions as part of their final quote revisions. I believe it would be unfair to

SecuriGence and [redacted] if I accepted ABII’s non-compliant price quote

revisions discussed above. I would have to treat ABII unequally, and more

preferentially, than SecuriGence and [redacted] if l decided to accept ABII’s

non-compliant final quote revisions. I consider this matter further as part of

my trade-off summary and best value determination below.

For Factor 7, I find ABII’s quote, as evaluated and not considering the non-

compliant price revisions discussed above, to be reasonable and realistic. I

determine ABII’s quote to contain negligible potential to cause degradation

of performance or issues with retention and recruitment of personnel. ·

For Factor 7, I find SecuriGence’s quote to be reasonable and realistic. I

determine SecuriGence’s quote to contain negligible potential to cause

17

degradation of performance or issues with retention and recruitment of

personnel.

(capitalization and emphasis in original). The source selection authority continued:

“Therefore, for Factor 7, I assigned ABII’s and SecuriGence’s price/cost quote each a

Low Risk rating.”

The source selection authority then moved to the trade-off analysis and for Factor

7 explained: “For Factor 7 (Price/Cost), I concur with the Price/Cost Evaluation Board’s

assessment that all three Quoters’ quotes are fair and reasonable. Concerning realism, I

find little to no risk with ABII’s and SecuriGence’s quotes. I find that [redacted], however,

has some risk associated with realism.” (emphasis in original). The source selection

authority continued:

For Factor 7, from a trade-off perspective, I find ABII and SecuriGence to

be essentially equal in realism risk, and both are higher priced than

[redacted]. As between ABII and SecuriGence, however, my consideration

of Factor 7 additionally included an increased relative importance of Factor

7 due to the closeness in the merit of ABII’s and SecuriGence’s quotes for

Factors 1-6. I also considered the price premiums associated with ABII’s

quote compared to SecuriGence’s quote; and the price premium of

SecuriGence’s quote compared to [redacted] quote. These considerations

are further discussed below.

For Factors 1-6, overall, I found the technical quotes of ABII and

SecuriGence to be very close in merit and essentially tied for these Factors.

Therefore, in accordance with the RFQ, I increased the relative importance

of Factor 7 (Price/Cost) in my trade-off analysis and comparison of the

quotes of ABII and SecuriGence. On the other hand, for Factors 1-6, overall,

I found the technical quote of [redacted] to be significantly lower in value to

DARPA than the quote for SecuriGence (and ABII). I did not increase the

relative importance of Factor 7 (Price/Cost) in my trade-off analysis and

comparison of the quotes of SecuriGence (and ABII) and [redacted]. I did,

however, take note that [redacted] total evaluated price is lower than the

total evaluated price for ABII and for SecuriGence. The following table

restates the total evaluated prices for ABII, SecuriGence, and [redacted]:

Table 4. Summary of Total Evaluated Prices for Phase II Quoters.

Phase II Quoter Total Evaluated Price*

ABII $819,569,555**

SecuriGence $781 997,009

[redacted] $[redacted]

18

* Prices rounded to the nearest dollar.

** ABII’s total price with non-compliant quoted revisions to its MNSS

base fees was $[redacted].

The source selection authority explained:

As documented in Table 4, I found that ABII’s total evaluated price is higher

than either SecuriGence’s or [redacted] total evaluated price. Relevantly,

ABII’s total evaluated price is approximately $37.6M higher than

SecuriGence, which is approximately $4M per year higher over the potential

9.5-year period of performance (PoP) of the task order. Even if l accepted

ABII’s non-compliant quote revision, which I do not, ABII’s total quoted price

is still up to $[redacted] higher than SecuriGence’s total evaluated price, or

about $[redacted] over the potential 9.5-year PoP of the task order. Thus,

per the RFQ’s evaluation rating scheme, and as discussed below, in view

of my decision to increase the importance of price/cost in my award

decision, I carefully considered whether the $37.6M price premium of ABII’s

quote was within the price premium in terms of additional technical value to

DARPA compared to the equally technically rated but significantly lower-

priced quote of SecuriGence.

Also, as documented in Table 4, I found that SecuriGence’s total evaluated

price is approximately $[redacted] higher than the total evaluated price of

[redacted]. As discussed above, for Factors 1-6, I found SecuriGence’s

quote to be of significantly higher value to DARPA than [redacted] quote.

Therefore, per the RFQ, I did not increase the relative importance of Factor

7 (Price/Cost) in my trade-off analysis between these two Quoters, e.g., per

the RFQ, Factor 7 remained as the least important factor. Nevertheless, out

of prudence, and as a steward of taxpayers’ dollars, I considered whether

the $[redacted] cost premium of SecuriGence’s higher rated technical quote

offered DARPA additional technical value over [redacted] lower-rated

technical quote.

Considering SecuriGence’s and ABII’s price quotes from a trade-off

perspective, and considering my decision to increase the relative

importance of Factor 7 for these two quotes, and further considering that I

find the technical quotes of these two Quoters to be essentially tied, I

determined that ABII’s higher-priced quote is not worth its higher price to

DARPA compared to SecuriGence’s equally highly rated but significantly

lower-priced quote. As summarized by my adjectival ratings in Table 1 and

trade-off summary for Factors 1-6 above, I found ABII and SecuriGence to

be equally highly rated and essentially tied for these Evaluation Factors. I

carefully considered any potential technical differentiators between the two

quotes. For instance, for Factor 2 (Technical Approach) I considered

SecuriGence’s weakness for its off-site secure space approach. Although I

believe this weakness to be sufficiently mitigated, I nevertheless weighed it

from a price premium perspective ( e.g., Was it worth for DARPA to pay up

19

to $37.6M more and award ABII and avoid this weakness in SecuriGence’s

quote? My answer: No.). Under Factor 5 (Past Performance), I also

considered that SecuriGence had five (5) past performance submissions

versus the six (6) past performance submissions for ABII. Although I did not

find the fact that SecuriGence five past performance submissions to be a

weakness, I weighed it from a price premium perspective to ensure that I

considered any potentially distinguishing technical feature between ABII’s

and SecuriGence’s technical quotes (e.g., Was it worth it for DARPA to pay

up to $37.6M more and award to ABII because it provided one more past

performance submission than SecuriGence? My answer: No). Based on my

review, I did not identify any technical feature or a combination of technical

features of ABII’s quote that, in my business judgement, would justify

DARPA spending up to $37.6M, or about $4M per year more on ABII’s

quote compared to SecuriGence’s quote which I believe offers DARPA

essentially equal value at a significantly less price. Even if I would have

accepted ABII’s non-compliant quote revisions, which I do not, its price

premium compared to SecuriGence’s quote is still $[redacted], or about

$[redacted] per year. In comparing the quotes of ABII and SecuriGence

from the perspective of its non-compliant price quote, I still found little, if

anything, in ABII’s technical quote that would justify DARPA spending up to

$[redacted], or $[redacted] per year more than it would for SecuriGence’s’

[sic] quote which offers equal value at a significantly lower price. Therefore,

I concluded that ABII’s quote is not worth its $37.6M price premium, or even

a $[redacted] price premium, over SecuriGence’s equally highly rated but

significantly lower-priced quote. My conclusion is reinforced by my decision

to increase the relative importance of Factor 7 (Price/Cost) based on my

finding that the quotes for ABII and SecuriGence are essentially tied for

Evaluation Factors 1-6. In my judgment, from a price premium and

price/cost trade-off perspective. SecuriGence’s quote offers greater value

to DARPA than ABII’s quote.

Considering SecuriGence’s and [redacted] price quotes, and in view of my

decision not to increase the relative importance of Factor 7 for these two

quotes, and fu1ther considering that I find SecuriGence’s technical quote

under Factors 1-6 to be significantly higher rated than [redacted] technical

quote, I nevertheless still considered whether SecuriGence's quote offers

DARPA additional technical value that justifies its $25.4M price premium, or

about $[redacted] per year. I found that SecuriGence’s quote offers DARPA

additional technical value that justifies its price premium compared to

[redacted] quote.

The Best Value Determination and Task Order Award Decision concluded:

After independently considering the evaluation ratings and the particular

merits and risks associated with each final quote revision, I determine that

SecuriGence’s quote provides the best value to the Government. My best

20

value determination takes into consideration the RFQ’s evaluation factors

in descending order of importance, increasing the relative importance of

Factor 7 for ABII and SecuriGence’s quotes due to their closeness in

technical merit, and considering all of the aforementioned distinguishing

features of the Quotes.

ABII and SecuriGence had the same adjectival ratings for all factors and

included very similar distinguishing factors that did not significantly

influence my decision for either Quoter. As I have documented in my

discussion above, I found ABII and SecuriGence to be essentially tied for

Evaluation Factors 1-6. Therefore, the respective strengths and risks

resulted in ABII’s and SecuriGence’s quotes being extremely close in

technical merit in my trade-off analysis and, as discussed above, led me the

relative importance of price/cost Factor 7 in my award decision. As I also

discuss above, I did not find that the up to $37,572,546, or about $4M per

year, price premium of ABII’s quote was worth its premium over

SecuriGence’s quote given that SecuriGence’s quote offers DARPA

essentially the same technical value at a much lower price. I have equal

confidence that ABII and SecuriGence understand the requirement,

proposed a sound approach, and could be successful in performing the task

order. I selected SecuriGence over ABII because I found no persuasive

additional technical advantages in ABII’s quote that, in my judgment, were

worth its much higher price compared to SecuriGence’s quote. Thus, I find

that SecuriGence’s quote offers better value to DARPA than ABII’s quote.

I agree with the Contracting Officer's decision to reject the non-compliant

portion of ABII’s final quote that decreased the base fee on the Multi-

Network Support Services. As stated by the Contracting Officer, I agree that

it would be unfair to the other Quoters, and in my opinion, detrimental to the

integrity of the procurement system, if the price/cost team determined ABII’s

non-compliant revisions to its price quote were compliant (e.g., within the

scope of the Exchange Notice) and evaluated it as part of determining ABII’s

revised quoted price. However, even if the quote revision of reducing base

fee had been compliant with the Exchange Notice, which it was not, it still

would not have changed my best value decision. More specifically, even

with a price premium of up to $[redacted], or about $[redacted] per year,

ABII’s quote would still not be worth awarding over SecuriGence’s quote

which offers essentially equal technical value at a much lower price. Thus,

even if I would have accepted ABII’s non-compliant price revisions, which I

do not, I would still find that SecuriGence’s quote offers better value to

DARPA than ABII’s quote.

I found that SecuriGence’s quote to be much higher rated in technical merit

than [redacted] quote. So, per the RFQ, I did not increase the relative

importance of price/cost Factor 7 in my comparison of SecuriGence’s and

[redacted] quotes. For SecuriGence’s versus [redacted] quotes, Factor 7

21

remained as the least important Evaluation Factor. But out of prudence, and

mindful of my duty as a steward of taxpayer’s funding, I nevertheless

considered the price premium of SecuriGence’s quote to confirm that it was,

in my judgement, worth its extra price to DARPA. As documented above, I

found SecuriGence’s higher-rated quote to be worth its $[redacted], or

about $[redacted] per year, price premium compared to [redacted] lower

rated but lower priced quote. My finding was based on my consideration of

[redacted] lower overall ratings for several of the Evaluation Factors,

including for Factor 3 where there were significant weaknesses related to

[redacted] within its staffing plan; for Factor 4 where minimum requirements

for the [redacted] were not met, for Factor 5 where there was [redacted] for

a Very Relevant contract; and for Factor 7 whether there was some realism

risk. I am much more confident in SecuriGence than [redacted] that

SecuriGence understands the requirement, proposes a sound approach,

and will be successful in performing the task order. I determined that it is

more valuable to DARPA to pay the price premium for a Quoter

(SecuriGence) that I am fully confident is able to successfully perform all

MNSS requirements than to award to a Quoter ([redacted]) that I am not

confident can successfully perform all MNSS requirements, particularly

given how critical MNSS services are to carrying out DARPA's mission to

maintain technological superiority over our adversaries. I have identified

and documented technical features of SecuriGence’s quote that support my

price premium determination. Thus, I find that SecuriGence’s quote offers

better value to DARPA than [redacted] quote.

Therefore, for the three quotes evaluated under the Phase II of the RFQ:

1. I rank SecuriGence as first in line for the task order award.

2. I rank ABII as second in line for the task order award.

3. I rank [redacted] as third in line for the task order award.

Award Decision

I have directed the Contracting Officer to award the task order to

SecuriGence in the amount of $734,813,243. This dollar amount is lower

than the above total evaluated price ($781,997,009) because it does not

include the FAR 52.217-8 six-month extension in the amount of

$47,183,766.

(emphasis in original).

The following day, March 2, 2021, ABII received notice that DARPA had again

awarded the task order to SecuriGence. Subsequently, on March 11, 2021, ABII filed

another protest at the GAO. ABII argued that “DARPA’s evaluation of both ABII and

SecuriGence’s proposals was riddled with numerous material flaws and conducted in a

manner contrary to the requirements of the RFQ and relevant procurement law principles.

These errors, taken individually and collectively, render DARPA ITD’s best value

22

determination and resultant award decision unreasonable.” On June 16, 2021, the GAO

denied the protest in full.

On June 30, 2021, protestor filed a bid protest complaint in this court.

Subsequently, protestor filed an amended complaint on July 7, 2021. Protestor’s

amended complaint had 7 counts.4 Count 1 claims that DARPA “arbitrarily and

capriciously failed to adhere to the terms of the RFQ in its price realism evaluation,” Count

2 alleges that DARPA “arbitrarily and capriciously utilized a flawed price realism

methodology that relied on an overly narrow sample.” Count 3 claims that DARPA

“arbitrarily and capriciously failed to reject SecuriGence’s quotation as unacceptable

under Factor 2 for its failure to comply with a material solicitation requirement.”

Specifically, the amended complaint alleges that “SecuriGence’s quotation did not adhere

to the RFQ’s material requirement to provide approximately 2,000 square feet of

equipment storage space at a Top Secret Sensitive Compartmented Information Facility

(‘SCIF’) with a current Top Secret Facility Security Clearance (‘FCL’) within the National

Capitol Region.” The amended complaint argues that “[b]y its own admission,

SecuriGence could not provide ~2,000 square feet of storage at an accredited SCIF

location at the time of quotation submission,” but “rather than disqualifying SecuriGence

from the competition because of its material noncompliance with the requirement for a

Top Secret SCIF, the Agency arbitrarily and capriciously assessed SecuriGence a ‘minor’

weakness, while acknowledging that SecuriGence’s proposed contractor furnished space

could not maintain its SCIF accreditation.” Count 4 alleges that “DARPA treated ABII and

SecuriGence disparately in its evaluation of Factor 3 (Management approach)

quotations.” Count 5 alleges that DARPA “arbitrarily and capriciously determined that

ABII’s price revisions were not compliant with en [exchange notice] instructions and

improperly ignored the revisions in its evaluation of ABII’s price.” Count 6 alleges that

“DARPA conducted an arbitrary and capricious evaluation of SecuriGence’s price under

Factor 7.” The amended complaint contends that DARPA conducted an “arbitrary and

capricious price/cost realism evaluation of SecuriGence’s price by failing to consider the

risk inherent in SecuriGence’s unrealistically low price. Because of this fundamental

evaluation flaw, the Agency assessed SecuriGence’s price a Low Risk rating rather than

the Medium, if not High Risk assessment that its quotation warranted.” Finally, Count 7

alleges “DARPA conducted an arbitrary and capricious best value tradeoff resulting in a

flawed best value determination.”

On July 2, 2021, the court held an initial hearing with the parties, and set an

aggressive schedule for briefing cross-motions for the judgment on the amended

Administrative Record, per the agency’s requirement a decision be issued by August 31,

2021. After all the submissions were reviewed, and cognizant of the request that a

decision be made by August 31, 2021, on August 30, 2021, as noted above, the court

4 Protestor’s June 30, 2021 complaint originally included two additional counts, a count

alleging that “DARPA treated ABII and SecuriGence disparately in its evaluation of Factor

2 (Technical approach) quotations,” and a count alleging that DARPA “arbitrarily and

capriciously evaluated SecuriGence’s past performance (Factor 5) quotation.” Neither

count was included in the amended complaint filed on July 7, 2021.

23

issued an oral decision, effectively immediately, to the parties and provided an

explanation of its decision which granted defendant’s and intervenor’s cross-motions for

judgment on the amended Administrative Record and denied protestor’s motions for

judgment on the amended Administrative Record. As noted above, this decision

incorporates and memorializes the oral decision.

DISCUSSION

As noted above, the parties have filed cross-motions for judgment on the amended

Administrative Record. Rule 52.1(c)(1) (2021) of the Rules of the United States Court of

Federal Claims (RCFC) governs motions for judgment on the administrative record. The

court’s inquiry is directed to “‘whether, given all the disputed and undisputed facts, a party

has met its burden of proof based on the evidence in the record.’” Mgmt. & Training Corp.

v. United States, 115 Fed. Cl. 26, 40 (2014) (quoting A & D Fire Prot., Inc. v. United

States, 72 Fed. Cl. 126, 131 (2006) see also Superior Optical Labs, Inc. v. United States,

150 Fed. Cl. 681, 691 (2020) (citing Bannum, Inc. v. United States, 404 F.3d 1346, 1356-

57 (Fed. Cir. 2005)); see also AAR Manufacturing, Inc. v. United States, 149 Fed. Cl. 514,

522 (2020); Glocoms, Inc. v. United States, 149 Fed. Cl. 725, 731 (2020); Centerra Grp.,

LLC v. United States, 138 Fed. Cl. 407, 412 (2018) (citing Bannum, Inc. v. United States,

404 F.3d at 1356-57); Informatics Applications Grp., Inc. v. United States, 132 Fed. Cl.

519, 524 (2017) (citation omitted); Strategic Bus. Sols., Inc. v. United States, 129 Fed. Cl.

621, 627 (2016), aff’d, 711 F. App’x 651 (Fed. Cir. 2018); Rotech Healthcare Inc. v. United

States, 118 Fed. Cl. 408, 413 (2014); Eco Tour Adventures, Inc. v. United States, 114

Fed. Cl. 6, 21 (2013); DMS All-Star Joint Venture v. United States, 90 Fed. Cl. 653, 661

(2010). Pursuant to RCFC 52.1, in a bid protest, the court reviews the agency’s

procurement decision to determine whether it is supported by the administrative record.

See CW Gov’t Travel, Inc. v. United States, 110 Fed. Cl. 462, 481 (2013); see also

CR/ZWS LLC v. United States, 138 Fed. Cl. 212, 223 (2018) (citing Bannum, Inc. v.

United States, 404 F.3d at 1353-54).

The Administrative Dispute Resolution Act of 1996 (ADRA), Pub. L. No. 104-320,

§§ 12(a), 12(b), 110 Stat. 3870, 3874 (1996) (codified at 28 U.S.C. § 1491(b)(1)–(4)),

amended the Tucker Act to establish a statutory basis for bid protests in the United States

Court of Federal Claims. See Impresa Construzioni Geom. Domenico Garufi v. United

States, 238 F.3d 1324, 1330-32 (Fed. Cir. 2001); see also Sys. Application & Techs., Inc.

v. United States, 691 F.3d 1374, 1380 (Fed. Cir. 2012) (explaining that the Tucker Act

expressly waives sovereign immunity for claims against the United States in bid protests).

The statute provides that protests of agency procurement decisions are to be reviewed

under APA standards, making applicable the standards outlined in Scanwell Labs., Inc.

v. Shaffer, 424 F.2d 859 (D.C. Cir. 1970), and the line of cases following that decision.

See, e.g., Per Aarsleff A/S v. United States, 829 F.3d 1303, 1309 (Fed. Cir. 2016)

(“Protests of agency procurement decisions are reviewed under the standards set forth

in the Administrative Procedure Act (‘APA’), see 28 U.S.C. § 1491(b)(4) (citing 5 U.S.C.

§ 706), ‘by which an agency’s decision is to be set aside only if it is arbitrary, capricious,

an abuse of discretion, or otherwise not in accordance with law[.]’” (quoting NVT Techs.,

Inc. v. United States, 370 F.3d 1153, 1159 (Fed. Cir. 2004)) (citing PAI Corp. v. United

24

States, 614 F.3d 1347, 1351 (Fed. Cir. 2010))); Dell Fed. Sys., L.P. v. United States, 906

F.3d 982, 990 (Fed. Cir. 2018); Impresa Construzioni Geom. Domenico Garufi v. United

States, 238 F.3d at 1332; Res. Conservation Grp., LLC v. United States, 597 F.3d 1238,

1242 (Fed. Cir. 2010) (“Following passage of the APA in 1946, the District of Columbia

Circuit in Scanwell Labs., Inc. v. Shaffer, 424 F.2d 859 (D.C. Cir. 1970), held that

challenges to awards of government contracts were reviewable in federal district courts

pursuant to the judicial review provisions of the APA.”); Galen Med. Assocs., Inc. v. United

States, 369 F.3d 1324, 1329 (Fed. Cir.) (citing Scanwell Labs., Inc. v. Shaffer, 424 F.2d

at 864, 868, for its “reasoning that suits challenging the award process are in the public

interest and disappointed bidders are the parties with an incentive to enforce the law”),

reh’g denied (Fed. Cir. 2004). In Banknote Corp. of Am., Inc. v. United States, 365 F.3d

1345 (Fed. Cir. 2004), the Federal Circuit explained that “[u]nder the APA standard as

applied in the Scanwell line of cases, and now in ADRA cases, ‘a bid award may be set

aside if either (1) the procurement official’s decision lacked a rational basis; or (2) the

procurement procedure involved a violation of regulation or procedure.’” Id. at 1351

(quoting Impresa Construzioni Geom. Domenico Garufi v. United States, 238 F.3d at

1332)); see also Harmonia Holdings Grp., LLC v. United States, 999 F.3d 1397, 1403

(Fed. Cir. 2021); Palantir USG, Inc. v. United States, 904 F.3d 980, 990 (Fed. Cir. 2018);

AgustaWestland North Am., Inc. v. United States, 880 F.3d 1326, 1332 (Fed. Cir. 2018);

Info. Tech. & Applications Corp. v. United States, 316 F.3d 1312, 1319 (Fed. Cir.), reh’g

and reh’g en banc denied (Fed. Cir. 2003).

When discussing the appropriate standard of review for bid protest cases, the

United States Court of Appeals for the Federal Circuit addressed subsections (2)(A) and

(2)(D) of 5 U.S.C. § 706, see Impresa Construzioni Geom. Domenico Garufi v. United

States, 238 F.3d at 1332 n.5, but focused its attention primarily on subsection (2)(A). See

Croman Corp. v. United States, 724 F.3d 1357, 1363 (Fed. Cir.) (“‘[T]he proper standard

to be applied [to the merits of] bid protest cases is provided by 5 U.S.C. § 706(2)(A)

[(2006)]: a reviewing court shall set aside the agency action if it is “arbitrary, capricious,

an abuse of discretion, or otherwise not in accordance with law.”’” (alterations in original)

(quoting Banknote Corp. of Am. v. United States, 365 F.3d at 1350-51 (citing Advanced

Data Concepts, Inc. v. United States, 216 F.3d 1054, 1057-58 (Fed. Cir.), reh’g denied

(Fed. Cir. 2000)))), reh’g and reh’g en banc denied (Fed. Cir. 2013). The statute says that

agency procurement actions should be set aside when they are “arbitrary, capricious, an

abuse of discretion, or otherwise not in accordance with law,” or “without observance of

procedure required by law.” 5 U.S.C. § 706(2)(A), (D) (2018);5 see also Veterans

5 The language of 5 U.S.C. § 706 provides in full:

To the extent necessary to decision and when presented, the reviewing

court shall decide all relevant questions of law, interpret constitutional and

statutory provisions, and determine the meaning or applicability of the terms

of an agency action. The reviewing court shall—

(1) compel agency action unlawfully withheld or unreasonably delayed;

and

25

Contracting Grp., Inc. v. United States, 920 F.3d 801, 806 (Fed. Cir. 2019) (“In a bid

protest, we follow Administrative Procedure Act § 706 and set aside agency action ‘if it is

arbitrary, capricious, an abuse of discretion, or otherwise not in accordance with law.’”

(quoting Palladian Partners, Inc. v. United States, 783 F.3d 1243, 1252 (Fed. Cir. 2015));

Tinton Falls Lodging Realty, LLC v. United States, 800 F.3d 1353, 1358 (Fed. Cir. 2015);

Orion Tech., Inc. v. United States, 704 F.3d 1344, 1347 (Fed. Cir. 2013); COMINT Sys.

Corp. v. United States, 700 F.3d 1377, 1381 (Fed. Cir. 2012) (“We evaluate agency

actions according to the standards set forth in the Administrative Procedure Act; namely,

for whether they are ‘arbitrary, capricious, an abuse of discretion, or otherwise not in

accordance with law.’” (quoting 5 U.S.C. § 706(2)(A); and Bannum, Inc. v. United States,

404 F.3d at 1351)); Savantage Fin. Servs. Inc., v. United States, 595 F.3d 1282, 1285-86

(Fed. Cir. 2010); Weeks Marine, Inc. v. United States, 575 F.3d 1352, 1358 (Fed. Cir.

2009); Axiom Res. Mgmt., Inc. v. United States, 564 F.3d at 1381 (noting arbitrary and

capricious standard set forth in 5 U.S.C. § 706(2)(A), and reaffirming the analysis of

Impresa Construzioni Geom. Domenico Garufi v. United States, 238 F.3d at 1332); Blue

& Gold Fleet, L.P. v. United States, 492 F.3d 1308, 1312 (Fed. Cir. 2007) (“‘[T]he inquiry

is whether the [government]’s procurement decision was “arbitrary, capricious, an abuse

of discretion, or otherwise not in accordance with law.”’” (quoting Bannum, Inc. v. United

States, 404 F.3d at 1351 (quoting 5 U.S.C. § 706(2)(A) (2000)))); NVT Techs., Inc. v.

United States, 370 F.3d at 1159 (“Bid protest actions are subject to the standard of review

established under section 706 of title 5 of the Administrative Procedure Act (‘APA’), 28

U.S.C. § 1491(b)(4) (2000), by which an agency’s decision is to be set aside only if it is

‘arbitrary, capricious, an abuse of discretion, or otherwise not in accordance with law,’ 5

U.S.C. § 706(2)(A) (2000).” (internal citations omitted)); Info. Tech. & Applications Corp.

v. United States, 316 F.3d at 1319 (“Consequently, our inquiry is whether the Air Force’s

procurement decision was ‘arbitrary, capricious, an abuse of discretion, or otherwise not

(2) hold unlawful and set aside agency action, findings, and conclusions

found to be—

(A) arbitrary, capricious, an abuse of discretion, or otherwise not in

accordance with law;

(B) contrary to constitutional right, power, privilege, or immunity;

(C) in excess of statutory jurisdiction, authority, or limitations, or short

of statutory right;

(D) without observance of procedure required by law;

(E) unsupported by substantial evidence in a case subject to sections

556 and 557 of this title or otherwise reviewed on the record of

an agency hearing provided by statute; or

(F) unwarranted by the facts to the extent that the facts are subject

to trial de novo by the reviewing court.

In making the foregoing determinations, the court shall review the whole

record or those parts of it cited by a party, and due account shall be taken

of the rule of prejudicial error.

5 U.S.C. § 706.

26

in accordance with law.’ 5 U.S.C. § 706(2)(A) (2000).”); Synergy Sols., Inc. v. United

States, 133 Fed. Cl. 716, 734 (2017) (citing Banknote Corp. of Am. v. United States, 365

F.3d at 1350); Eco Tour Adventures, Inc. v. United States, 114 Fed. Cl. at 22; Contracting,

Consulting, Eng’g LLC v. United States, 104 Fed. Cl. 334, 340 (2012). “In a bid protest

case, the agency’s award must be upheld unless it is ‘arbitrary, capricious, an abuse of

discretion, or otherwise not in accordance with law.’” Turner Constr. Co. v. United States,

645 F.3d 1377, 1383 (Fed. Cir.) (quoting PAI Corp. v. United States, 614 F.3d at 1351),

reh’g en banc denied (Fed. Cir. 2011); see also Tinton Falls Lodging Realty, LLC v. United

States, 800 F.3d at 1358 (“In applying this [arbitrary and capricious] standard to bid

protests, our task is to determine whether the procurement official’s decision lacked a

rational basis or the procurement procedure involved a violation of a regulation or

procedure.” (citing Savantage Fin. Servs., Inc. v. United States, 595 F.3d at 1285-86));

Glenn Def. Marine (ASIA), PTE Ltd. v. United States, 720 F.3d 901, 907 (Fed. Cir.), reh’g

en banc denied (Fed. Cir. 2013); McVey Co., Inc. v. United States, 111 Fed. Cl. 387, 402

(2013) (“The first step is to demonstrate error, that is, to show that the agency acted in an

arbitrary and capricious manner, without a rational basis or contrary to law.”);

PlanetSpace, Inc. v. United States, 92 Fed. Cl. 520, 531-32 (“Stated another way, a

plaintiff must show that the agency’s decision either lacked a rational basis or was

contrary to law.” (citing Weeks Marine, Inc. v. United States, 575 F.3d at 1358)),

subsequent determination, 96 Fed. Cl. 119 (2010).

The United States Supreme Court has identified sample grounds which can

constitute arbitrary or capricious agency action:

[W]e will not vacate an agency’s decision unless it “has relied on factors

which Congress has not intended it to consider, entirely failed to consider

an important aspect of the problem, offered an explanation for its decision

that runs counter to the evidence before the agency, or is so implausible

that it could not be ascribed to a difference in view or the product of agency

expertise.”

Nat’l Ass’n of Home Builders v. Defenders of Wildlife, 551 U.S. 644, 658 (2007) (quoting

Motor Vehicle Mfrs. Ass’n v. State Farm Mut. Auto. Ins. Co., 463 U.S. 29, 43 (1983)); see

also F.C.C. v. Fox Television Stations, Inc., 556 U.S. 502, 552 (2009); Tinton Falls

Lodging Realty, LLC v. United States, 800 F.3d at 1358; Ala. Aircraft Indus., Inc.-

Birmingham v. United States, 586 F.3d 1372, 1375 (Fed. Cir. 2009), reh’g and reh’g en

banc denied (Fed. Cir. 2010); In re Sang Su Lee, 277 F.3d 1338, 1342 (Fed. Cir. 2002)

(“[T]he agency tribunal must present a full and reasoned explanation of its decision. . . .

The reviewing court is thus enabled to perform meaningful review . . . .”); Textron, Inc. v.

United States, 74 Fed. Cl. 277, 285-86 (2006), appeal dismissed sub nom. Textron, Inc.

v. Ocean Technical Servs., Inc., 223 F. App’x 974 (Fed. Cir. 2007). The United States

Supreme Court also has cautioned, however, that “courts are not free to impose upon

agencies specific procedural requirements that have no basis in the APA.” Pension

Benefit Guar. Corp. v. LTV Corp., 496 U.S. 633, 654 (1990).

Under an arbitrary or capricious standard, the reviewing court should not substitute

its judgment for that of the agency, but should review the basis for the agency decision to

determine if it was legally permissible, reasonable, and supported by the facts. See Motor

27

Vehicle Mfrs. Ass’n v. State Farm Mut. Auto. Ins. Co., 463 U.S. at 43 (“The scope of

review under the ‘arbitrary and capricious’ standard is narrow and a court is not to

substitute its judgment for that of the agency.”); see also Dell Fed. Sys., L.P. v. United

States, 906 F.3d 982, 990 (Fed. Cir. 2018); Turner Constr. Co., Inc. v. United States, 645

F.3d at 1383; R & W Flammann GmbH v. United States, 339 F.3d 1320, 1322 (Fed. Cir.

2003) (citing Ray v. Lehman, 55 F.3d 606, 608 (Fed. Cir.), cert. denied, 516 U.S. 916

(1995)); Synergy Sols., Inc. v. United States, 133 Fed. Cl. at 735 (citing Impresa

Construzioni Geom. Domenico Garufi v. United States, 238 F.3d at 1332-33). “‘“If the

court finds a reasonable basis for the agency’s action, the court should stay its hand even

though it might, as an original proposition, have reached a different conclusion as to the

proper administration and application of the procurement regulations.”’” Weeks Marine,

Inc. v. United States, 575 F.3d at 1371 (quoting Honeywell, Inc. v. United States, 870

F.2d 644, 648 (Fed. Cir. 1989) (quoting M. Steinthal & Co. v. Seamans, 455 F.2d 1289,

1301 (D.C. Cir. 1971))); Limco Airepair, Inc. v. United States, 130 Fed. Cl. 544, 550 (2017)

(citation omitted); Jordan Pond Co., LLC v. United States, 115 Fed. Cl. 623, 631 (2014);

Davis Boat Works, Inc. v. United States, 111 Fed. Cl. 342, 349 (2013); Norsat Int’l

[America], Inc. v. United States, 111 Fed. Cl. 483, 493 (2013); HP Enter. Servs., LLC v.

United States, 104 Fed. Cl. 230, 238 (2012); Vanguard Recovery Assistance v. United

States, 101 Fed. Cl. 765, 780 (2011).

Stated otherwise by the United States Supreme Court:

Section 706(2)(A) requires a finding that the actual choice made was not

“arbitrary, capricious, an abuse of discretion, or otherwise not in accordance

with law.” To make this finding the court must consider whether the decision

was based on a consideration of the relevant factors and whether there has

been a clear error of judgment. Although this inquiry into the facts is to be

searching and careful, the ultimate standard of review is a narrow one. The

court is not empowered to substitute its judgment for that of the agency.

Citizens to Pres. Overton Park, Inc. v. Volpe, 401 U.S. 402, 416 (1971) (internal citations

omitted), abrogated on other grounds by Califano v. Sanders, 430 U.S. 99 (1977); see

also U.S. Postal Serv. v. Gregory, 534 U.S. 1, 6-7 (2001); Bowman Transp., Inc. v.

Arkansas-Best Freight Sys., Inc., 419 U.S. 281, 285 (1974), reh’g denied, 420 U.S. 956

(1975); Co-Steel Raritan, Inc. v. Int’l Trade Comm’n, 357 F.3d 1294, 1309 (Fed. Cir. 2004)

(In discussing the “arbitrary, capricious, and abuse of discretion, or otherwise not in

accordance with the law” standard, the Federal Circuit stated: “the ultimate standard of

review is a narrow one. The court is not empowered to substitute its judgment for that of

the agency.”); In re Sang Su Lee, 277 F.3d at 1342; Advanced Data Concepts, Inc. v.

United States, 216 F.3d at 1058 (“The arbitrary and capricious standard applicable here

is highly deferential. This standard requires a reviewing court to sustain an agency action

evincing rational reasoning and consideration of relevant factors.” (citing Bowman

Transp., Inc. v. Arkansas-Best Freight Sys., Inc., 419 U.S. at 285)); Lockheed Missiles &

Space Co. v. Bentsen, 4 F.3d 955, 959 (Fed. Cir. 1993); Sys. Studies & Simulation, Inc.

v. United States, 146 Fed. Cl. 186, 199 (2019); By Light Prof’l IT Servs., Inc. v. United

States, 131 Fed. Cl. 358, 366 (2017); BCPeabody Constr. Servs., Inc. v. United States,

112 Fed. Cl. 502, 508 (2013) (“The court ‘is not empowered to substitute its judgment for

that of the agency,’ and it must uphold an agency’s decision against a challenge if the

28

‘contracting agency provided a coherent and reasonable explanation of its exercise of

discretion.’” (internal citations omitted) (quoting Keeton Corrs., Inc. v. United States, 59

Fed. Cl. 753, 755, recons. denied, 60 Fed. Cl. 251 (2004); and Axiom Res. Mgmt., Inc. v.

United States, 564 F.3d at 1381)), appeal dismissed, 559 F. App’x 1033 (Fed. Cir. 2014);

Supreme Foodservice GmbH v. United States, 109 Fed. Cl. at 382; Alamo Travel Grp.,

LP v. United States, 108 Fed. Cl. 224, 231 (2012); ManTech Telecomms. & Info. Sys.

Corp. v. United States, 49 Fed. Cl. 57, 63 (2001), aff’d, 30 F. App’x 995 (Fed. Cir. 2002).

According to the United States Court of Appeals for the Federal Circuit:

Effective contracting demands broad discretion. Burroughs Corp. v. United

States, 223 Ct. Cl. 53, 617 F.2d 590, 598 (1980); Sperry Flight Sys. Div. v.

United States, 548 F.2d 915, 921, 212 Ct. Cl. 329 (1977); see NKF Eng’g,

Inc. v. United States, 805 F.2d 372, 377 (Fed. Cir. 1986); Tidewater

Management Servs., Inc. v. United States, 573 F.2d 65, 73, 216 Ct. Cl. 69

(1978); RADVA Corp. v. United States, 17 Cl. Ct. 812, 819 (1989), aff’d, 914

F.2d 271 (Fed. Cir. 1990). Accordingly, agencies “are entrusted with a good

deal of discretion in determining which bid is the most advantageous to the

Government.” Tidewater Management Servs., 573 F.2d at 73, 216 Ct. Cl.

69.

Lockheed Missiles & Space Co. v. Bentsen, 4 F.3d at 958-59; see also Res-Care, Inc. v.

United States, 735 F.3d 1384, 1390 (Fed. Cir.) (“DOL [Department of Labor], as a federal

procurement entity, has ‘broad discretion to determine what particular method of

procurement will be in the best interests of the United States in a particular situation.’”

(quoting Tyler Constr. Grp. v. United States, 570 F.3d 1329, 1334 (Fed. Cir. 2009))), reh’g

en banc denied (Fed. Cir. 2014); Grumman Data Sys. Corp. v. Dalton, 88 F.3d 990, 995

(Fed. Cir. 1996); Geo-Med, LLC v. United States, 126 Fed. Cl. 440, 449 (2016); Cybertech

Grp., Inc. v. United States, 48 Fed. Cl. 638, 646 (2001) (“The court recognizes that the

agency possesses wide discretion in the application of procurement regulations.”);

Furthermore, according to the United States Court of Appeals for the Federal Circuit:

Contracting officers “are entitled to exercise discretion upon a broad range

of issues confronting them in the procurement process.” Impresa

Construzioni Geom. Domenico Garufi v. United States, 238 F.3d 1324,

1332 (Fed. Cir. 2001) (internal quotation marks omitted). Accordingly,

procurement decisions are subject to a “highly deferential rational basis

review.” CHE Consulting, Inc. v. United States, 552 F.3d 1351, 1354 (Fed.

Cir. 2008) (internal quotation marks omitted).

PAI Corp. v. United States, 614 F.3d at 1351; see also AgustaWestland N. Am., Inc. v.

United States, 880 F.3d at 1332 (“Where, as here, a bid protester challenges the

procurement official’s decision as lacking a rational basis, we must determine whether

‘the contracting agency provided a coherent and reasonable explanation of its exercise

of discretion,’ recognizing that ‘contracting officers are entitled to exercise discretion upon

a broad range of issues confronting them in the procurement process.’” (quoting Impresa

Construzioni Geom. Domenico Garufi v. United States, 238 F.3d at 1332-33 (internal

quotation marks and citation omitted))); Weeks Marine, Inc. v. United States, 575 F.3d at

1368-69 (“We have stated that procurement decisions ‘invoke [ ] “highly deferential”

29

rational basis review.’ Under that standard, we sustain an agency action ‘evincing rational

reasoning and consideration of relevant factors.’” (alteration in original) (quoting CHE

Consulting, Inc. v. United States, 552 F.3d at 1354 (quoting Advanced Data Concepts,

Inc. v. United States, 216 F.3d at 1058))).

“Contracting officers ‘are entitled to exercise discretion upon a broad range of

issues confronting them in the procurement process,’” PAI Corp. v. United States, 614

F.3d at 1351 (quoting Impresa Construzioni Geom. Domenico Garufi v. United States,

238 F.3d at 1332), and “[a]ccordingly, procurement decisions are subject to a ‘highly

deferential rational basis review.’” Id. (quoting CHE Consulting, Inc. v. United States, 552

F.3d at 1354 (Fed. Cir. 2008) (internal quotation marks omitted).

When the contracting officer’s discretion grows, so does the burden on the

protestor. As noted in D & S Consultants, Inc. v. United States:

The protestor’s burden becomes more difficult the greater the degree of

discretion vested in the contracting officer. DynCorp Int’l v. United States,

76 Fed. Cl. 528, 537 (2007). Negotiated procurements afford the contracting

officer a “breadth of discretion;” “best-value” awards afford the contracting

officer additional discretion. Id. Therefore, in a negotiated, best-value

procurement, the “protestor’s burden is especially heavy.” Id.

D & S Consultants, Inc. v. United States, 101 Fed. Cl. 23, 33 (2011), aff’d, 484 F. App’x

558 (Fed. Cir. 2012); see also Galen Med. Assocs., Inc. v. United States, 369 F.3d at

1330 (noting that contracting officers have great discretion in negotiated procurements

but even greater discretion in best-value determinations than in procurements based on

cost alone); PHT Supply Corp. v. United States, 71 Fed. Cl. 1, 11 (2006) (“It is critical to

note that ‘a protestor’s burden is particularly great in negotiated procurements because

the contracting officer is entrusted with a relatively high degree of discretion, and greater

still, where, as here, the procurement is a “best-value” procurement.’” (citations omitted)).

“It is well-established that contracting officers have a great deal of discretion in making

contract award decisions, particularly when, as here, the contract is to be awarded to the

bidder or bidders that will provide the agency with the best value.” Banknote Corp. of Am.

Inc. v. United States, 365 F.3d at 1355 (citing TRW, Inc. v. Unisys Corp., 98 F.3d 1325,

1327-28 (Fed. Cir. 1996); E.W. Bliss Co. v. United States, 77 F.3d 445, 449 (Fed. Cir.

1996); Lockheed Missiles & Space Co. v. Bentsen, 4 F.3d at 958–59); see also Am. Tel.

& Tel. Co. v. United States, 307 F.3d 1374, 1379 (Fed. Cir. 2002); Lockheed Missiles &

Space Co. v. Bentsen, 4 F.3d at 958; Brooks Range Contract Servs., Inc. v. United States,

101 Fed. Cl. 699, 707 (2011) (“[A] plaintiff’s burden ‘is elevated where the solicitation

contemplates award on a “best value” basis.’” (internal citations omitted)); Matt Martin

Real Estate Mgmt. LLC v. United States, 96 Fed. Cl. 106, 113 (2010); Serco v. United

States, 81 Fed. Cl. 463, 496 (2008) (“To be sure, as noted at the outset, plaintiffs have a

significant burden of showing error in that regard because a court must accord

considerable deference to an agency’s best-value decision in trading off price with other

factors.”).

A disappointed bidder has the burden of demonstrating the arbitrary and capricious

nature of the agency decision by a preponderance of the evidence. See Tinton Fall

30

Lodging Realty, LLC v. United Sates, 800 F.3d at 1364; see also Grumman Data Sys.

Corp. v. Dalton, 88 F.3d at 995-96; Enhanced Veterans Sols., Inc. v. United States, 131

Fed. Cl. 565, 578 (2017); Davis Boat Works, Inc. v. United States, 111 Fed. Cl. at 349;

Contracting, Consulting, Eng’g LLC v. United States, 104 Fed. Cl. at 340. The Federal

Circuit has indicated that “[t]his court will not overturn a contracting officer’s determination

unless it is arbitrary, capricious, or otherwise contrary to law. To demonstrate that such a

determination is arbitrary or capricious, a protester must identify ‘hard facts’; a mere

inference or suspicion . . . is not enough.” PAI Corp. v. United States, 614 F.3d at 1352

(citing John C. Grimberg Co. v. United States, 185 F.3d 1297, 1300 (Fed. Cir. 1999)); see

also Turner Constr. Co., Inc. v. United States, 645 F.3d at 1387; Sierra Nevada Corp. v.

United States, 107 Fed. Cl. 735, 759 (2012); Filtration Dev. Co., LLC v. United States, 60

Fed. Cl. 371, 380 (2004).

A bid protest proceeds in two steps. First . . . the trial court determines

whether the government acted without rational basis or contrary to law when

evaluating the bids and awarding the contract. Second . . . if the trial court

finds that the government’s conduct fails the APA review under 5 U.S.C.

§ 706(2)(A), then it proceeds to determine, as a factual matter, if the bid

protester was prejudiced by that conduct.

Bannum, Inc. v. United States, 404 F.3d at 1351; T Square Logistics Servs. Corp. v.

United States, 134 Fed. Cl. 550, 555 (2017); FirstLine Transp. Sec., Inc. v. United States,

119 Fed. Cl. 116, 126 (2014), appeal dismissed (Fed. Cir. 2015); Eco Tour Adventures,

Inc. v. United States, 114 Fed. Cl. at 22; Archura LLC v. United States, 112 Fed. Cl. at

496. To prevail in a bid protest case, the protestor not only must show that the

government’s actions were arbitrary, capricious, or otherwise not in accordance with the

law, but the protestor also must show that it was prejudiced by the government’s actions.

See 5 U.S.C. § 706 (“[D]ue account shall be taken of the rule of prejudicial error.”); see

also Glenn Def. Marine (ASIA), PTE Ltd. v. United States, 720 F.3d at 907 (“In a bid

protest case, the inquiry is whether the agency’s action was arbitrary, capricious, an

abuse of discretion, or otherwise not in accordance with law and, if so, whether the error

is prejudicial.”); IT Enter. Sols. JV, LLC v. United States, 132 Fed. Cl. 158, 173 (2017)

(citing Bannum v. United States, 404 F.3d at 1357-58). In describing the prejudice

requirement, the Federal Circuit also has held that:

To prevail in a bid protest, a protester must show a significant, prejudicial

error in the procurement process. See Statistica, Inc. v. Christopher, 102

F.3d 1577, 1581 (Fed. Cir. 1996); Data Gen. Corp. v. Johnson, 78 F.3d

1556, 1562 (Fed. Cir. 1996). “To establish prejudice, a protester is not

required to show that but for the alleged error, the protester would have

been awarded the contract.” Data General, 78 F.3d at 1562 (citation

omitted). Rather, the protester must show “that there was a substantial

chance it would have received the contract award but for that error.”

Statistica, 102 F.3d at 1582; see CACI, Inc.-Fed. v. United States, 719 F.2d

1567, 1574-75 (Fed. Cir. 1983) (to establish competitive prejudice, protester

must demonstrate that but for the alleged error, “‘there was a substantial

chance that [it] would receive an award--that it was within the zone of active

consideration.’” (citation omitted)).

31

Alfa Laval Separation, Inc. v. United States, 175 F.3d 1365, 1367 (Fed. Cir.), reh’g denied

(Fed. Cir. 1999); see also Glenn Def. Marine (ASIA), PTE Ltd. v. United States, 720 F.3d

at 912; Allied Tech. Grp., Inc. v. United States, 649 F.3d 1320, 1326 (Fed. Cir.), reh’g en

banc denied (Fed. Cir. 2011); Info. Tech. & Applications Corp. v. United States, 316 F.3d

at 1319; Impresa Construzioni Geom. Domenico Garufi v. United States, 238 F.3d at

1332-33; OMV Med., Inc. v. United States, 219 F.3d 1337, 1342 (Fed. Cir. 2000);

Advanced Data Concepts, Inc. v. United States, 216 F.3d at 1057; Stratos Mobile

Networks USA, LLC v. United States, 213 F.3d 1375, 1380 (Fed. Cir. 2000).

Price Realism

Counts 1, 2, 5, and 6 in protestor’s amended complaint allege flaws of DARPA’s

price evaluations including the price realism analysis. A price realism analysis considers

whether an offeror’s price is too low, such that it indicates a risk of poor performance and

a lack of understanding of the solicitation requirements. See KWR Constr., Inc. v. United

States, 124 Fed. Cl. 345, 356 (2015) (“Generally, a price realism analysis examines the

performance risk of proposals in a fixed-price contract procurement, with particular

attention to the risk of low-priced proposals. . . .”) (internal citations removed). A price

realism analysis differs from a price reasonableness analysis because a price

reasonableness analysis considers whether an offeror’s price is too high.6 See Munilla

Constr. Mgmt., LLC v. United States, 130 Fed. Cl. 635, 649 (2017) (explaining that an

agency’s concern in making a price reasonableness determination is whether the prices

are too high, and a “determination of whether an offeror’s prices are too low is made when

an agency conducts a cost or price realism analysis”); see also EMTA Isaat, A.S. v. United

States, 123 Fed. Cl. 330, 338 n.9 (2015) (“In general, a price reasonableness analysis

has the goal of preventing the government from paying too much for contract work. A

price realism analysis, on the other hand, investigates whether the contractor is proposing

a price so low that performance of the contract will be threatened.”). Price realism is not

defined in the Federal Acquisition Regulation (FAR). See Mil-Mar Century Corp. v. United

States, 111 Fed. Cl. 508, 541 n.36 (2013); DMS All-Star Joint Venture v. United States,

90 Fed. Cl. at 663 n.11 (quoting Ralph C. Nash & John Cibinic, Price Realism Analysis:

A Tricky Issue, 12 No. 7 Nash & Cibinic Rep. ¶ 40 (July 1988) (citing 48 C.F.R. § 15.404–

1(d)(1), (3)) (“A price realism analysis ‘is analysis to determine if the offeror’s proposed

prices are unrealistically low.’”).7 “As recently explained by a Judge of the United States

Court of Federal Claims:

6 FAR 15.404-1(a) requires a price reasonableness evaluation and provides that the

“contracting officer is responsible for evaluating the reasonableness of the offered prices”

in a negotiated procurement. 48 C.F.R. § 15.404-1(a)(1) (2019). The parties do not

dispute that the agency considered price reasonableness.

7 Unlike price realism, FAR 15.404-1(d) defines a cost realism analysis as “the process

of independently reviewing and evaluating specific elements of each offeror's proposed

cost estimate to determine whether the estimated proposed cost elements are realistic

32

While “analyzing whether an offeror’s fixed price is so low that it reflects a

lack of understanding of solicitation requirements is the crux of a price

realism evaluation,” summary conclusions regarding price realism have

been held to be insufficient, as have instances in which an agency did not

meaningfully conduct the price realism analysis to which it had committed.

CW Gov’t Travel, Inc. v. United States, No. 21-1354C, 2021 WL 3085500, at *13 (Fed.

Cl. June 28, 2021) (quoting Flight Safety Servs. Corp., B–403831, 2010 CPD ¶ 294, 2010

WL 5241433, at *4 (Comp. Gen. Dec. 9, 2010)); see also Afghan Am. Army Servs. Corp.

v. United States, 90 Fed. Cl. 341, 358 (2009).

The Federal Circuit has explained that Judges of this court should determine

“whether the agency’s price-realism analysis was consistent with the evaluation criteria

set forth in the RFP, see Galen Med. Assocs., Inc. v. United States, 369 F.3d 1324, 1330

(Fed. Cir. 2004), not to introduce new requirements outside the scope of the RFP.” See

Alabama Aircraft Indus., Inc.-Birmingham v. United States, 586 F.3d at 1375–76

(emphasis in original); see also CW Gov’t Travel, Inc. v. United States, 2021 WL 3085500,

at *12. The Federal Circuit in Agile Defense, Inc. v. United States, also indicated, albeit

with regard to cost realism:

The regular view of the Court of Federal Claims, which we approve, is that

contracting agencies enjoy wide latitude in conducting the cost realism

analysis. See, e.g., Mission1st Grp., Inc. v. United States, 144 Fed. Cl. 200,

211 (2019) (“It is well established that contracting agencies have broad

discretion regarding the nature and extent of a cost realism analysis, unless

the agency commits itself to a particular methodology in a solicitation.”

(citation and internal quotation marks omitted)); Dellew Corp. v. United

States, 128 Fed. Cl. 187, 194 (2016) (“The Agency has demonstrated that

it considered the information available and did not make irrational

assumptions or critical miscalculations. To require more would be infringing

on the Agency’s discretion in analyzing proposals for cost realism.” (citation

and internal quotation marks omitted)); United Payors & United Providers

Health Servs., Inc. v. United States, 55 Fed. Cl. 323, 329 (2003)

(emphasizing that the procuring “agency is in the best position to make [the]

cost realism determination” (citation and internal quotation marks omitted)).

Agile Def., Inc. v. United States, 959 F.3d 1379, 1385–86 (Fed. Cir. 2020); see also

Afghan Am. Army Servs. Corp. v. United States, 90 Fed. Cl. at 358 (“The nature and

extent of a price realism analysis is ultimately within the sound exercise of the agency's

discretion, unless the agency commits itself to a particular methodology in a solicitation.”).

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 technical proposal.” 48 C.F.R. § 15.404-1(d)(1).

33

Judges of this court have found that, in a fixed-price procurement, an agency is

required to perform a price realism analysis when the solicitation expressly provides that

the agency will evaluate price realism or states that “[t]he Government may reject any

proposal that is . . . unreasonably high or low in price when compared to Government

estimates, such that the proposal is deemed to reflect an inherent lack of competence of

[sic] failure to comprehend the complexity and risks of the program.” ViON Corp. v. United

States, 122 Fed. Cl. 559, 573 (2015) (emphasis removed) (finding that such language

commits the agency to conducting a price realism analysis); see also EMTA Isaat, A.S.

v. United States, 123 Fed. Cl. at 338 (explaining that there “is no dispute that the plain

language of the RFP required the government to conduct a price realism analysis” when

the solicitation provided that “[a]ll offerors[’] proposed prices will be evaluated to ensure

they are realistic, reasonable, and complete”); D & S Consultants, Inc. v. United States,

101 Fed. Cl. at 33 (explaining that the parties agreed that the solicitation required a price

realism analysis because it stated “[t]he Government may evaluate the offeror's proposed

labor rates to determine if the proposed rates are unrealistically low in order to assess the

ability of the offeror to meet the PWS requirements and whether the proposal provides

the Government with a high level of confidence of successful performance”). In Afghan

American Army Services Corp. v. United States, another Judge on this court determined

that an agency was required to conduct a price realism evaluation because the solicitation

stated that the agency would “evaluate price proposals to determine whether the offered

price reflects a sufficient understanding of the contract requirements and the risk inherent

in the offeror's approach” and that proposals with “an unreasonable (high or low) price

may be deemed to be unacceptable and may not receive further consideration.” Afghan

Am. Army Servs. Corp. v. United States, 90 Fed. Cl. at 357 Similarly, in Rotech

Healthcare, Inc. v. United States, the court concluded that a price realism analysis was

required because the solicitation stated that an “unrealistically low price may be grounds

for eliminating a proposal.” Rotech Healthcare, Inc. v. United States, 121 Fed. Cl. 387,

404 (2015) (explaining that “the only reason any consideration of realism is necessary is

the language in the RFP stating that unrealistically low offers may be eliminated”).

Regarding price, the RFQ provides:

No adjectival ratings will be utilized for evaluating price. Price analysis will

include a determination of whether the quoted price is fair and reasonable

using the proposal analysis techniques at FAR 15.404-1 in accordance with

DoD Class Deviation 2014-O0011. Comparison of proposed prices is

expected to satisfy the requirement to perform a price analysis since

competition normally establishes price reasonableness (FAR 15.404-

1(a)(2)(i)). However, the Government may use various price analysis

techniques described in FAR 15.404-1 to evaluate whether the proposed

price is fair and reasonable. ODC/Travel CLIN prices provided by the

Government, Labor award fee pool totals required to be 3% of quoted Labor

fixed price totals, and Surge CLIN prices required to be 3% of quoted Labor

fixed price totals will only be evaluated as part of the total evaluated price.

Quoted maximum on-site and off-site Labor Hour (LH) rates for all

personnel descriptions will be evaluated for reasonableness.

34

Cost realism will be limited to the Fixed Price portion of the quotation and

analyzed to evaluate whether the 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 described in

the Quoter’s technical quotation.

In evaluating the offeror’s price proposals, the February 25, 2021 Price/Cost Evaluation

stated:

The Price/Cost Evaluation Board (PCEB) used two price analysis

techniques from FAR 15.404-1 and in accordance with DoD Class Deviation

2014-O0011 to evaluate the price/cost quotations. Normally, adequate price

competition establishes a fair and reasonable price (FAR 15.403-1(c)(1)(i)).

Thus, first, because of the competitive nature of this acquisition, which

received three competitive responsive quotations, the PCEB found that all

Quoters’ prices were presumptively fair and reasonable. Second, to provide

additional assurance that the proposed prices were fair and reasonable, the

PCEB further analyzed the total evaluated price of each quotation by

comparing proposed prices to each other and to historical prices.

The February 25, 2021 Price/Cost Evaluation determined:

The PCEB considers the Quoters’ total evaluated prices to be fair and

reasonable as they are each not higher than the IGCE. Additionally, the

IGCE is further confirmed to be an acceptable baseline as it is reasonably

close (i.e., less than 20% higher) than the average of the three Quoters’

total evaluated prices. FAR price analysis guidance was used to provide

additional analysis for reasonableness. FAR 15.403-1(c)(1)(i) allows the

following elements to establish a price is based on adequate price

competition, and thus the PCEB was able to corroborate the method used

with the following price reasonableness guidance from the cited FAR

regulations:

a) Two or more responsible offerors, competing independently, submit

priced offers that satisfy the Government’s expressed requirement.

* In response to this RFQ, three responsible Quoters, competing

independently, submitted priced offers that satisfy the Government’s

expressed requirement.

b) Award will be made to the offeror whose proposal represents the best

value where price is a substantial factor in source selection.

* Per the RFQ, award will be made to the Quoter whose quotation

represents the best value, and although price is listed as significantly less

important than the other six factors, it is still a substantial factor. In addition,

it is noted the importance of price will increase as the other six non-price

factors become closer in merit.

35

c) There is no finding that the price of the otherwise successful offeror is

unreasonable.

* There is no finding, as documented below, that the price is unreasonable

for any of the Quoters. Therefore, all technically acceptable proposals

received are considered fair and reasonable based on adequate price

competition.

Below is the reasonableness evaluation of quoted maximum on-site and off-

site Labor Hour (LH) rates for all personnel descriptions:

ABII’s quoted maximum (surge) on-site LH rates are reasonable as they

were proposed in response to a competitive acquisition that the PCEB

determined met FAR 15.403-1(c)(1)(i) requirements for establishing

adequate price competition. Further, the proposed maximum (surge) on-site

LH rates are approximately [redacted]% higher than the highest acceptable

fully loaded labor rate for each labor category included in the fixed price

labor totals. Their maximum (surge) off-site LH rates are also reasonable

as they are [redacted]% higher than the highest acceptable fully loaded

maximum (surge) on-site labor rate for each labor category included in the

fixed price labor totals to also consider their [redacted]% contractor site

overhead rate.

SecuriGence’s quoted maximum (surge) on-site and off-site LH rates are

reasonable as they were proposed in response to a competitive acquisition

that the PCEB determined met FAR 15.403-1(c)(1)(i) requirements for

establishing adequate price competition and they are [redacted] the

acceptable fully loaded labor rates included in the fixed price labor totals.

[redacted] quoted maximum (surge) on-site and off-site LH rates are

reasonable as they were proposed in response to a competitive acquisition

that the PCEB determined met FAR 15.403-1(c)(1)(i) requirements for

establishing adequate price competition and they are [redacted] the

acceptable fully burdened labor rates included in the fixed price labor totals.

All Quoters complied with the RFQ and Government-provided spreadsheet

in proposing 3% award fee on the MNSS fixed price.

The February 25, 2021 Price/Cost Evaluation continues:

Further, the PCEB compared the base year unburdened direct labor rates

and fully burdened labor rates for the key personnel positions identified in

the RFQ among the three Quoters and the IGCE. Only the key personnel

positions are analyzed as a sample because they are the only guaranteed

direct comparisons among all Quoters as the rest of the labor mix could be

defined and quoted as desired by the Quoter. Based on this rate analysis,

36

the PCEB found all labor rates to be in-line with the other Quoters’ proposed

direct labor rates.

The Price/Cost Evaluation also included a comparison of the labor rates for the key

personnel:

Table 5. Comparison of Labor Rates of Key Personnel of the Phase II Quotes.

Agile-Bot II Agile-Bot II ([redacted]%

([redacted]% Base Base Profit) SecuriGence [redacted] IGCE

Profit)

Position Title Labor Labor Rate Labor Fully Labor Fully Fully

Fully Fully

Rate Rate Burdened Rate Burdened Burdened

Burdened Burdened

Rate Rate Rate

Rate Rate

([redacted]% ([redacted]

base profit % base

rate) profit

rate)

Program [redacted] [redacted] [redacted] [redacted] [redacted] [redacted] [redacted] [redacted]

Manager $209.62

Deputy [redacted] [redacted] [redacted] [redacted] [redacted] [redacted] [redacted] [redacted]

Program $209.62

Manager

[redacted] [redacted] [redacted] [redacted] [redacted] [redacted] [redacted] [redacted]

Operations $156.08

Manager

Security Manager [redacted] [redacted] [redacted] [redacted] [redacted] [redacted] [redacted] [redacted]

- Information $171.69

System Security

Manager

(ISSM)

[redacted] [redacted] [redacted] [redacted] [redacted] [redacted] [redacted] [redacted]

124.09

Customer

Relations Manager

[redacted] [redacted] [redacted] [redacted] [redacted] [redacted] [redacted] [redacted]

Authorizations

168.73

and Compliance

Manager

[redacted] [redacted] [redacted] [redacted] [redacted] [redacted] [redacted] [redacted]

Engineering and

206.46

Development

Manager

Configuration [redacted] [redacted] [redacted] [redacted] [redacted] [redacted] [redacted] [redacted]

and Assets 128.82

Manager

Quality [redacted] [redacted] [redacted] [redacted] [redacted] [redacted] [redacted] [redacted]

Manager 183.12

Security [redacted] [redacted] [redacted] [redacted] [redacted] [redacted] [redacted] [redacted]

Control $161.58

Assessors

Site [redacted] [redacted] [redacted] [redacted] [redacted] [redacted] [redacted] [redacted]

Connections 137.56

Manager

37

Defendant argues that “Counts I, II, and VI fail because the agency’s price realism

evaluation comported with the RFQ’s evaluation scheme and was reasonable.” Although

disagreeing with the defendant’s conclusions, at oral argument protestor agreed with

defendant that “Counts 1, 2, and 6 are all interrelated in that they relate to the -- to

DARPA’s price realism analysis of the labor portion of the fixed price part of the contract.”

Protestor’s counsel continued:

I think when you distill our argument down to its nub, our position is that the

sampling methodology that was done by DARPA was unreasonable

because it did not account for anything other than the key personnel for the

base year and it ignored the personnel that would be performing the

contract in the out years.

Protestor’s motion for judgment on the amended Administrative Record argues “[t]he RFQ

required DARPA’s price realism evaluation to encompass the entire fixed price portion of

offerors’ price/cost quotations, including evaluating whether all cost elements were

realistic,” but “[r]ather than considering the entire fixed-price portion of offerors’ quotations

and accounting for the entirety of each quoter’s proposed labor rates (one of the cost

elements required to be evaluated), however, DARPA strayed from the RFQ’s evaluation

scheme by implementing an overly narrow sampling methodology. Utilizing this method,

DARPA only compared ABII and SecuriGence’s base year key personnel labor rates in

its labor rate analysis.” Protestor further argues that “DARPA’s chosen sampling method

was also arbitrary and capricious,” DARPA unreasonably based its price realism analysis

on an overly limited sample of labor rates that amounted to only about one-tenth of the

rates proposed by ABII or SecuriGence for the base year, and only about 1 percent of

their respective labor rates proposed over the life of the contract.”

In response, defendant notes that DARPA had “explained that it chose this sample

because key personnel ‘are the only guaranteed direct comparisons among all Quoters

as the rest of the labor mix could be defined and quoted as desired by the Quoter.’”

Defendant also argues that

Agile-Bot makes it seem like the agency’s comparison among quoters of

proposed direct labor rates for key personnel in the base year was the full

extent of the agency’s realism analysis for direct labor rates. It was not. For

instance, the agency also: (1) noted that SecuriGence’s direct labor rates

were based on historical labor data and salary surveys; (2) documented that

SecuriGence proposed to provide incumbent staff [redacted] and, for

others, salaries using [redacted] of industry-wide salary data; and (3)

confirmed the mapping of SecuriGence’s labor rates across all labor

categories to similar categories in SecuriGence’s FSS contract rates,

including the proposed discount rates.

Moreover, defendant argues that “the agency did not assess the realism of the direct labor

rates for approximately [redacted]% of the FTEs during the base year or [redacted]% of

the FTEs over the life of the contract. Rather, the agency evaluated the realism of all of

38

the proposed direct labor rates,” and “[a]lthough Agile-Bot would require the agency to

compare each of the direct labor rates among the quoters to assess their realism, the

RFQ did not require the agency to do so. Rather, the RFQ permitted the agency to assess

the realism of proposed cost elements based on the supporting document that quoters

provided, which DARPA did.”

In its cross-motion for judgment on the amended Administrative Record, intervenor

argues:

The RFQ was not nearly as prescriptive with respect to the method of price

realism evaluation as ABII contends. The Solicitation did not specify a

particular method that DARPA would use to conduct the price realism

evaluation. It did not require the price realism evaluation to “encompass the

entire fixed-price portion” or to evaluate “all cost elements.” Nor did it require

a comparison of any particular number of labor rates between quoters. It

did not even require that the price realism involve a comparison of labor

rates between quoters at all. The Agency did not contravene the terms of

the RFQ by declining to conduct a comparison between quoters of every

labor rate across all years.

Intervenor also argues “[w]ith respect to the portion of DARPA’s price realism evaluation

that involved a comparison of key personnel labor rates, DARPA’s decision to compare

only key personnel labor rates was perfectly consistent with the RFQ. The RFQ did not

specify a particular staffing mix, beyond requiring quoters to propose the key personnel

positions.” Intervenor also claims that ABII makes a “false premise that the Agency’s price

realism evaluation was limited to its comparison of key personnel labor rates between

ABII and SecuriGence,” and argues that DARPA “actually conducted a more thorough

price realism analysis than just comparing the quoters’ key personnel labor rates. ABII

simply ignores the majority of the price realism evaluation. This failing is also fatal to its

allegation that the price realism evaluation methodology was arbitrary and capricious.”

Despite protestor’s argument that DARPA used an overly narrow sampling

methodology and argues that the RFQ required DARPA’s price realism evaluation to

encompass the entire fixed-price portion of offerors’ price/cost quotations” to account “for

the entirety of each quoter’s proposed labor rates,” the RFQ does not require any specific

evaluation for the entire fixed-price portion of offerors’ price/cost quotations. The RFQ

states:

Cost realism will be limited to the Fixed Price portion of the quotation and

analyzed to evaluate whether the 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 described in

the Quoter’s technical quotation.

Although protestor cites to KWR Construction, Inc. v. United States, 124 Fed. Cl. 345

(2015), which found that the Air Force’s price realism analysis was not consistent with the

39

requirements of the RFP at issue, that decision does not resolve the issues in the above

captioned protest. See generally id. In KWR Construction,

[t]he RFP provided that the government would determine price realism

based on an evaluation of “the individual line items of the demonstration

project proposal.” In contrast, the RFP stated that the government would

assess price reasonableness based on a comparison of each offeror's total

proposed price to historical prices for similar efforts and to the IGE, and a

consideration of price competition obtained by other offers.

The agency's comparisons of KWR's total proposed price and total direct

costs to the IGE and the average for technically acceptable offers apply the

RFP's price reasonableness criteria to the evaluation of price realism. This

distinction is important in this case because a substantial portion of the gap

between KWR's total proposed price and the IGE's total price is due to

acknowledged errors in the IGE. For example, as the government

acknowledges, the IGE was not revised to reflect amendments to the

solicitation. In particular, the total price in the IGE includes at least [...] in

design work that was removed from the demonstration project. In addition,

the total demonstration project price listed in the IGE includes [...] that is not

explained in the record. Finally, the elimination of unnecessary direct costs

in the IGE would also reduce the percentage-based indirect costs for profit,

overhead, tax, and bonding. KWR's total evaluated price includes [...] less

than the IGE for indirect costs of overhead, profit, tax, and bonding. In

Afghan American Army Services Corp. v. United States, the court found that

an agency failed to conduct a sufficient price realism analysis by relying on

an IGE that included “irrational assumptions or critical miscalculations.” 90

Fed. Cl. at 359. In that case, the agency erred by making awards to low

priced offerors based on a comparison of proposed prices to an IGE that

incorrectly excluded a category of work covered in the proposals. Id. In this

case, the government rejected KWR's low priced offer based, in part, on a

comparison to an IGE that includes costs which should have been removed.

The June 26, 2015 proposal analysis report also claims that the agency was

most concerned with the “vast departure from comparison points” with

regard to electrical work and that while the other differences might not be

significant, KWR's pricing for electrical work reflects a lack of understanding

of the demonstration project requirements. This conclusion appears to be

based on a comparison of KWR's subtotal for electrical work to the subtotal

for electrical work in the IGE. While the June 26, 2015 proposal analysis

report shows which line items in KWR's price proposal the agency counted

as electrical work, there is no discussion of whether any of the electrical line

items are priced realistically in comparison to line items in the IGE. At oral

argument, counsel for the government also acknowledged that the only

SSEB evaluator who commented on KWR’s understanding of the

40

demonstration project requirements discussed subtotals for mechanical

work and electrical work but did not evaluate costs for individual line items.

Id. at 357-58 (emphasis and alterations in original; internal citations and footnotes

omitted). The Judge in KWR Construction, therefore, determined “that the agency

committed to a methodology for conducting a price realism analysis in the solicitation and

that the agency did not follow that methodology in evaluating and rejecting KWR's

proposal,” id. at 357, and concluded:

[T]he agency did not comply with the RFP and that this error was prejudicial

to KWR. The RFP did not give the agency discretion to ignore its obligation

to look at individual line items in making its decision and, had the agency

conducted a line item analysis, as KWR argues and as discussed below,

the agency would have seen that its concerns about KWR's understanding

of the demonstration project requirements were not supported.

Id. at 358-59. This court agrees with the Judge in KWR Construction that “‘the nature and

extent of a price realism analysis is ultimately within the sound exercise of the agency’s

discretion, unless the agency commits itself to a particular methodology in a solicitation,’”

id. at 357 (quoting Afghan Am. Army Servs. Corp. v. United States, 90 Fed. Cl. at 358).

In the protest currently before this court, DARPA did not commit itself to a “particular

methodology” for its price realism analysis.

In addition The February 25, 2021 Price/Cost Evaluation explained:

Further, the PCEB compared the base year unburdened direct labor rates

and fully burdened labor rates for the key personnel positions identified in

the RFQ among the three Quoters and the IGCE. Only the key personnel

positions are analyzed as a sample because they are the only guaranteed

direct comparisons among all Quoters as the rest of the labor mix could be

defined and quoted as desired by the Quoter. Based on this rate analysis,

the PCEB found all labor rates to be in-line with the other Quoters’ proposed

direct labor rates.

Therefore, a comparison between the offerors of the direct labor rates “found all labor

rates to be in-line with the other Quoters’ proposed direct labor rates.” Notably, the

comparison between the proposed escalation rates for the direct labor rates between ABII

and SecuriGence demonstrated [redacted] escalation rates and both ABII’s and

SecuriGence’s escalation rates were found to be realistic. For ABII, the February 25, 2021

Price/Cost Evaluation explained:

Escalation: ABII’s proposed escalation rate is [redacted]% for employee

compensation, which is [redacted] than the actual rate reported on March

2020 by the Department of Labor Bureau of Labor Statistics (BLS) that was

cited in ABII’s quotation (Vol IV, Appendix C – Bureau of Labor Statistics

Employment Index March 2020). ABII stated that since the rate fluctuates

41

every quarter, they utilized the most frequently reported rate within the

report ([redacted]%). (Vol IV, Eval Factor 7, page 14). This justification is

acceptable to the Government. In assessing the realism of the proposed

escalation rate of [redacted]%, the PCEB relied on IHS Markit Forecast

labor rate data provided by DCAA. The IHS data shows projected annual

labor rate escalation for average hourly rates for Professional, Scientific and

Technical Services employees. The data shows an average year over year

escalation rate of [redacted]% from 2021 through 2027. Based on this data

and supporting documentation provided by ABII, the PCEB considers the

proposed escalation of [redacted]% to be realistic.

(emphasis in original). For SecuriGence, the February 25, 2021 Price/Cost Evaluation

explained

Escalation: SecuriGence stated in its quotation that direct labor costs for all

staff for this contract will be escalated at the beginning of each [redacted],

rather than at the beginning of the [redacted] (Phase II – Volume IV

Price/Cost, pages 9 and 10). SecuriGence is proposing an escalation rate

of [redacted]% each year to the direct labor rates for all option periods.

SecuriGence stated that they took into consideration the Bureau of Labor

Statistics and U.S. Department of Labor data included in its proposal in

considering an appropriate escalation factor to apply. As stated in its

quotation, they have selected an annual escalation factor of [redacted]%,

which is [redacted] the Employment Cost Index and US Inflation calculator,

because they stated [redacted]. In assessing the realism of the proposed

escalation rate of [redacted]%, the PCEB relied on IHS Markit Forecast

labor rate data provided by DCAA. The IHS data shows projected rate

escalation for average hourly rates for Professional, Scientific and

Technical Services employees. The data shows an average year over year

escalation rate of [redacted]% from 2021 through 2027. Based on this data,

the PCEB considers the proposed escalation of [redacted]% to be realistic.

(emphasis in original).

Furthermore, the February 25, 2021 Price/Cost Evaluation emphasized that both

ABII and SecuriGence offered “unique methods of performance.” For ABII, the February

25, 2021 Price/Cost Evaluation summarized:

ABII’s price/cost quotation is determined to [sic] realistic for the work to be

performed, reflects a clear understanding of the requirements, and is

consistent with the unique methods of performance described in the

Quoter’s technical quotation. ABII’s focus on supporting engineering and

operations capabilities, as described in the Technical Approach, is

demonstrated by the Engineering and Operations staff levels meeting and

exceeding the proposed levels in the IGCE. Based upon the PCEB’s

thorough review of documentation provided by ABII, considering their

proposed labor hours, direct labor rates, fringe, overhead, G&A, SM&H,

escalation, proposed base fee/profit, and other price/cost considerations,

42

there is negligible potential to cause degradation of performance or issues

with retention and recruitment of personnel, so ABII receives a “Low Risk”

Performance Risk Rating.

Similarly for SecuriGence, the February 25, 2021 Price/Cost Evaluation summarized,

based on the preceding analysis, the SecuriGence price/cost quotation is

determined to be realistic for the work to be performed, reflects a clear

understanding of the requirements, and is consistent with the unique

methods of performance described in the Quoter’s technical quotation.

SecuriGence’s strengths in [redacted] realm of the Technical Approach with

regard to the assessment of the [redacted] and [redacted], is demonstrated

by the focus on [redacted] personnel. Based upon the PCEB’s thorough

review of documentation provided by SecuriGence, considering their

proposed labor hours, direct labor rates, fringe, overhead, G&A, SM&H,

escalation, proposed base fee/profit, and other price/cost considerations,

there is negligible potential to cause degradation of performance or issues

with retention and recruitment of personnel, so SecuriGence receives a

“Low Risk” Performance Risk Rating.

Therefore, it did not make sense for DARPA to conduct a side by side comparison of the

offerors’ proposals to determine if they were realistic and DARPA offered a reasonable

explanation for why only the key personnel positions were compared for each offeror.

Additionally, the court notes that key personnel and direct labor rates were not the

only criteria that DARPA used to evaluate SecuriGence’s proposal for realism. The

February 25, 2021 Price/Cost Evaluation explained, in part:

Cost Realism:

SecuriGence’s supporting price quotation documentation included all of the

example individual cost element information requested in the RFQ in order

for the Government to determine the realism of the proposed quotation.

Direct labor rates: As stated in its quotation (page 6, Phase II – Volume IV

Price/Cost), SecuriGence’s labor rates are based on historical labor data

from successful staffing of similar personnel as well as salary surveys.

SecuriGence has stated they will bid incumbent staff [redacted]. For non-

incumbent staff, SecuriGence proposed salaries using [redacted].

SecuriGence noted in its quotation that its salary research is [redacted],

which they then [redacted]. As stated in its quotation, by [redacted], they

believe they achieve more accurate and balanced results. They stated they

then [redacted]. The results of their salary survey and related calculations

are detailed in the Salary Survey tab of their submitted spreadsheet:

SecuriGence_DARPA ITD MNSS Phase II Volume IV Details.xlsx.

SecuriGence also noted in its quote that salaries [redacted].

43

SecuriGence stated in their quotation that direct labor rates are based on a

[redacted] total hour manyear, [redacted] to calculate the direct hourly rate

(Phase II – Vol IV, page 8). As required, SecuriGence mapped its labor

categories to the most similar GSA contract labor categories, and they

provided a discount off each labor rate. The average discount to its GSA

contract labor rates across all labor categories is [redacted]. The PCEB

confirmed that the proposed direct labor rates do match and reflect a

discount to SecuriGence listed GSA rates under its current GSA contract

GS-35F-626GA. As presented in Table 5 above, the PCEB compared the

base year unburdened direct labor rates and fully burdened labor rates for

the key personnel positions identified in the RFQ among the three Quoters

and the IGCE; and based on this rate analysis, the PCEB found

SecuriGence labor rates to be in-line with the other Quoters’ proposed direct

labor rates. Based on the preceding analysis and documentation provided

by SecuriGence, the PCEB finds the proposed direct labor rates to be

realistic for use in the development of the price quotation for the MNSS

contract.

Fringe: SecuriGence proposed [redacted] fringe rate of [redacted] and

applied this rate to [redacted] in calculating total fringe costs and burdened

labor rates. SecuriGence provided a description in its quotation of the cost

elements that make up the cost pool and base for its proposed fringe rate

(Phase II – Volume IV, Price/Cost, page 7). Based on the PCEB’s review of

the elements that make up the fringe cost pool and base, the PCEB did not

object to the method used by SecuriGence to develop its fringe rate.

[redacted]. However, the PCEB did receive from DCAA SecuriGence’s

2019 Incurred Cost Submission, which showed that SecuriGence claimed

a fringe of [redacted]% for 2019. [redacted], this 2019 fringe rate of

[redacted]% is in-line with the proposed fringe rate of [redacted]% for the

[redacted]. Additionally, as evident in Table 4 above, the PCEB compared

the proposed fringe rate against the proposed fringe rates submitted by the

other small businesses that submitted a price/cost quotation to this RFQ

and found the fringe rates to be in line with each other. Based on the

preceding analysis, the PCEB finds that the proposed fringe rate is applied

to proper bases within SecuriGence’s cost element buildup, and the fringe

rate is realistic for use in the development of the price quotation for the

MNSS contract.

Overhead: SecuriGence proposed an Overhead (OH) rate of [redacted]

periods and [redacted] in calculating total OH costs and burdened labor

rates. SecuriGence provided a description in its quotation of the cost

elements that make up the cost pool and base for its proposed OH rate

(Phase II – Volume IV Price/Cost, page 7). As described in its quotation,

SecuriGence captures costs in its OH pool associated [redacted]. For this

reason, SecuriGence has a [redacted]. Notwithstanding, SecuriGence

noted in its quotation that it [redacted] (Phase II – Volume IV Price/Cost,

44

page 7). Based on the PCEB’s review of the elements that make up the OH

cost pool and base, the PCEB did not object to the method used by

SecuriGence to develop its OH rate. [redacted]. However, as noted above,

the PCEB did receive from DCAA SecuriGence’s 2019 Incurred Cost

Submission, which showed that SecuriGence claimed an OH of

[redacted]% for 2019. [redacted], this 2019 OH rate of [redacted]% is of

[redacted]% for the [redacted]. As stated in its quotation, SecuriGence

developed its provisional indirect rates based on [redacted]. For this reason,

the proposed OH rate is [redacted] because SecuriGence [redacted]. The

PCEB considered this assumption by SecuriGence reasonable in its

development its indirect rates. Additionally, as evident in Table 4 above, the

PCEB compared the proposed OH rate against the proposed OH rates

submitted by the other small businesses that submitted a price/cost

quotation to this RFQ and found the OH rates to be in line with each other.

Based on the preceding analysis, the PCEB finds that the OH rate is applied

to proper bases within SecuriGence’s cost element buildup, and the

proposed OH rate is realistic for use in the development of the price

quotation for the MNSS contract.

...

Labor Hours: SecuriGence stated on page 3 of its Phase II – Volume IV,

Price/Cost submission the following on the rationale for their proposed level

of effort to further acceptably support a realistic cost:

[redacted]. We applied the following judgmental factors in our

basis of estimate: [redacted]. Level Of Effort (LOE) amounts

were determined [redacted]. We also [redacted]. We then

applied [redacted]. Finally, we compiled the results of our

[redacted], creating a [redacted]approach that is the most

probable and lowest-risk total LOE.

In addition, when comparing quoted labor hours against IGCE in Table 6,

SecuriGence [redacted] showing a realistic approach. Finally, when

compared to IGCE for broad Team categories in Table 7 SecuriGence has

allocated their resources appropriately and in accordance with their unique

approach outlined in Factors 2 and 3. SecuriGence’s approach supports the

Government’s confidence that the cost is realistic as it accounts [redacted].

Overall, in consultation with the TEB, the cost elements are realistic for the

work to be performed. The Quoter’s labor rates and number of labor hours

reflect a clear understanding of the requirements and are consistent with

the unique methods of performance described in the contractor’s technical

quote.

(all emphasis in original).

45

Protestor additionally. alleges that “the Agency conducted an unreasonable

evaluation of SecuriGence’s Price under Factor 7,” and argues “DARPA failed to adhere

to the RFQ’s evaluation scheme by ignoring the significant risk posed by SecuriGence’s

low price, resulting in the erroneous assessment of a Low Risk rating to SecuriGence’s

price quotation,” specifically because “DARPA failed to consider risk posed by

SecuriGence’s price given its low labor rates and salaries.” In response, defendant argues

“Agile-Bot simply disagrees with the agency’s considered assessment that SecuriGence’s

total labor hours and total FTEs are realistic. The agency documented its analysis of the

realism of the proposed labor hours and FTEs, as cost elements of the fixed priced portion

of the quotes, in accordance with the RFQ.” As noted above, DAPRA determined “in

consultation with the TEB, the cost elements are realistic for the work to be performed.

The Quoter’s labor rates and number of labor hours reflect a clear understanding of the

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

the contractor’s technical quote.”

Protestor also alleges

Given SecuriGence’s promise to [redacted], the Agency should have been

concerned given that SecuriGence’s price is lower than ABII’s (whose

mentor member is performing under the incumbent effort) even though it

proposed many more FTEs and labor hours than ABII. This simply does not

add up. SecuriGence is either going to pay its employees rock bottom

salaries, hire inexperienced individuals, or perform at a loss—all of these

scenarios pose a risk to performance that DARPA should have considered

in its evaluation. It did not do so.

The court notes that February 25, 2021 Price/Cost Evaluation indicated

the PCEB compared the total labor hours and full-time equivalents (FTEs)

quoted to each other, the average, and the IGCE and found each Quoters’

hours to be within an acceptable range, with exceptions noted below for

[redacted], to be considered realistic:

Table 6. Comparison of Total and Total Average Annual Labor Hours/FTEs

by period to the IGCE for the Phase II Quotes.

Agile-Bot II SecuriGence [redacted] Average IGCE

Total Labor

Hours [redacted] [redacted] [redacted] [redacted] 360,960

Total FTEs* 188

[redacted] [redacted] [redacted] [redacted]

*For the purposes of comparing proposed FTEs to the IGCE on a level basis, the PCEB used 1,920

labor hours as one FTE

46

(emphasis in original). Defendant notes that “SecuriGence proposed [redacted] annual

FTEs (and their attendant labor hours), which is only [redacted] more FTEs than Agile-

Bot’s proposed [redacted] FTEs.” Similarly, intervenor argues

ABII does not explain why SecuriGence’s slightly higher total hours (about

[redacted] FTEs) and a slightly lower total price (4.6%) than ABII proves

“mathematically” that SecuriGence’s labor rates are below-market or

[redacted], as ABII originally argued, or “rock bottom.” ABII makes no

attempt to prove that SecuriGence’s specific labor rates were too low,

instead speculating about what SecuriGence “must have proposed” even

though its quotation is in the Administrative Record.

(footnote omitted).

Defendant argues that “Agile-Bot can identify nothing in the RFQ that required the

agency to assign SecuriGence a higher risk rating for its total evaluated price,” argues

that ABII is “[m]erely disagreeing with the agency’s considered assessment of

SecuriGence’s price.” As noted above in both KWR Construction, Inc. v. United States

and Afghan American Army Services Corp. v. United States, “the nature and extent of a

price realism analysis is ultimately within the sound exercise of the agency’s discretion,

unless the agency commits itself to a particular methodology in a solicitation.” KWR

Constr., Inc. v. United States, 124 Fed. Cl. at 357; Afghan Am. Army Servs. Corp. v.

United States, 90 Fed. Cl. at 358. As determined above, the requirements of the realism

analysis was “limited to the Fixed Price portion of the quotation and analyzed to evaluate

whether the 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 described in the Quoter’s technical quotation.” DARPA’s realism analysis

was within the “sound exercise of the agency’s discretion,” and protestor has not

demonstrated that the analysis was arbitrary or capricious.

Separate from the methodology, protestor alleges that “DARPA Unreasonably

Determined that ABII’s price revisions were noncompliant with EN Instructions,” claiming

“DARPA arbitrarily and capriciously found ABII’s revision to its MNSS base fee to be

noncompliant with the instructions set forth in ABII’s Exchange Notice (‘EN’) and ignored

information contained in ABII’s quotation revisions based solely on its overly narrow

reading of the EN’s instruction.” Protestor claims that

ABII responded to the EN by removing its originally proposed [redacted]

percent Commodity IT Support Services award fee, which reduced its TEP

by a total of $[redacted]. ABII also reduced its MNSS base fee from

[redacted] percent to [redacted] percent due to its removal of the

Commodity IT Support Services award fee. ABII’s justification for the

reduction to its MNSS base fee explained how the removal of the

Commodity IT Support Services award fee also required it to reduce its

MNSS base fee to maintain balanced pricing, i.e., removal of the

Commodity IT Support Services award fee materially impacted the MNSS

47

base fee, as well as other portions of ABII’s price quotation, such that it

could have become unbalanced if the MNSS base fee was not removed.

Protestor argues that

DARPA, however, did not consider this information because of the

restrictive reading of the EN’s instructions it employed during the quotation

revision evaluation. Based on this flawed reading of ABII’s price revisions

and its justification supporting the same, DARPA improperly determined

that ABII’s price revisions did not comply with the EN instructions because

ABII had purportedly failed to provide either (1) a clear nexus between, or

(2) describe the material impact of, removing its Commodity IT Services

award fee on its MNSS base fee.

Defendant responds that this argument “fails because DARPA rejected Agile-Bot’s

final quote revision MNSS base fee reduction in accordance with the Exchange Notice

instructions” and “Agile-Bot’s challenge to the agency’s rejection of its proposed MNSS

base fee reduction is mere disagreement with the agency’s sound judgment that Agile-

Bot failed to establish that such a reduction had a clear nexus to or was materially

impacted by the reduced Commodity IT Services award fee.” Similar to defendant,

intervenor argues that “ABII’s protest is mere disagreement with the Agency’s reasonable,

considered judgment. It should therefore be denied.” Additionally, intervenor claims: “ABII

argues that rejecting its price reduction improperly ‘decreased’ or ‘prejudiced’ its chances

of award because it allegedly made ABII’s pricing unbalanced within the meaning of FAR

15.404-1(g). But this is false, because the Agency did not, in fact, reject ABII for

unbalanced pricing after rejecting its price reduction. “(emphasis in original). Intervenor

continues, “[a]nd the award to SecuriGence was not based in any way on concerns about

ABII’s pricing balance—no such concerns existed to reduce ABII’s likelihood of winning

the award.”

As indicated above, DARPA initially made an award to SecuriGence on October

9, 2020, and in response, ABII filed a protest with the GAO, which was dismissed on

October 27, 2020, after DARPA indicated it would take corrective action. After GAO

dismissed the protest, DARPA informed ABII, SecuriGence, and [redacted] of the

corrective action and explained that DARPA would engage in discussions with the

offerors via Exchange Notices on November 18, 2020. The Exchange Notices indicated:

The Defense Advanced Research Projects Agency (DARPA) recently took

corrective action following a protest filed with the Government

Accountability Office for the subject RFQ. After re-evaluating quotes, I have

decided to engage in exchanges with all Phase II Quoters as authorized by

RFQ Attachment 3, paragraph 1. The attached exchange notice notifies you

of exchanges for your quote. You may address the attached exchange

notice by providing a final quote revision. However, final quote revisions are

limited to changes that are within the scope of the attached exchange

notice. Any price/cost changes must fully explain how such changes have

48

a clear nexus to and are materially impacted by the attached exchange

notice. Any final quote revisions that change aspects of the quote outside

the scope of the attached exchange notice will be deemed non-compliant

and not evaluated by DARPA.

On November 23, 2020, ABII, SecuriGence, and [redacted] all submitted questions to

DARPA, and on November 27, 2020, DARPA responded to the questions. Relevant to

the above captioned protest, one exchange between ABII and DARPA was as follows:

To assist us with mitigating any assumed operational risk or burden with

this proposed fluctuation in Fee/Profit, ABII respectfully requests the

Government confirm offerors are indeed allowed to make changes to their

proposed Base Fee.

- Yes the government confirms that an increase in proposed base fee has

a clear nexus to removing award fee from the commodity CLINs with

respect to overall operational risk and would therefore be a permitted

change to the quote.

On December 7, 2020, all three offerors submitted final, revised proposals. Included with

ABII’s was the following note:

ABII deviated from RFQ instructions by editing a formula contained within

the Government-provided spreadsheet. ABII added [redacted]% award fee

to the Commodity IT Support Services.

o Response:

Per the Government’s instructions, ABII has corrected our pricing model to

remove the [redacted]% award fee related to the Commodity IT Support

Services costs. This reduced our price/cost by a total of $[redacted]. The

affected cells are highlighted in yellow under the CLIN Totals tab (Row 7, 8

and 11; Columns E, G, I, K, M, O, Q, S, U and V) in DARPA MSO ITD

MNSS - Volume IV - Agile-Bot II.xlsx. In addition, the removal of the

[redacted]% award fee from the Commodity IT Support Services has

materially impacted our overall Price/Cost Proposal strategy. The following

paragraphs explain how the removal of the [redacted]% award fee has a

material impact on and clear nexus to the Exchange Notice.

Consequential Material Impact: Net Impact is a proposed savings of

$[redacted]).

ABII’s internal proposal pricing standard practices require us to provide

balanced pricing to our customers, such that all work requirements under

the same contract have the same fee/profit across CLINs, with the

exception of cost reimbursement CLINs (such as Travel and ODCs). ABII

has historically found that sound operational focus and exceptional

49

technical support is better realized through a balanced fee approach. This

way the Program Manager can focus his or her attention on the core mission

instead of on internal Profit & Loss (P&L) statements. In accordance with

our standard practices, we have reduced the Base Fee on the Multi-Network

Support costs from [redacted]% to [redacted]%. The combined total fee for

the Multi-Network Support is now set at [redacted]% ([redacted]% Base Fee

and [redacted]% Award Fee). The Commodity IT Base Fee remains at

[redacted]% ([redacted]% Base Fee and [redacted]% Award Fee per the

Exchange Notice). In summary, both total/combined fee maximums

(Base Fee plus Award Fee) for Commodity IT and Multi-Network are

now at [redacted]%, which results in a balanced application of fee/profit

that is consistent with our standard practices. This change does not

create risk for DARPA, since there have been no adjustments to proposed

salaries, proposed staffing levels or man-year hours beyond the adjustment

to the Quality Manager salary discussed in the next Exchange. The changes

are highlighted in yellow in Column X in the following tabs: Base Period,

Option Period 1, Option Period 2, Option Period 3, Option Period 4, Option

Period 5, Option Period 6, Option Period 7, Option Period 8. In addition,

under the CLIN Totals tab (Row 3, 4, 5 and 10; Columns E, G, I, K, M, O,

Q, S, U and V). The reduction in Base Fee for the Multi-Network Support

costs reduced our price by $[redacted].

(all emphasis in original). During the agency’s evaluation of the revised proposals, the

contracting officer filed a February 10, 2021 Memorandum for Record with the subject

line: “Rejection of Non-Compliant Revised MNSS (Support Services) Base Fee in the

Final Quote Revision of Agile-Bot II (ABII).” The February 10, 2021 Memorandum for

Record determined the reduction from [redacted]% to [redacted]% was non-compliant,

explaining:

After consulting with the price/cost team and reviewing ABII’s rationale

summarized in paragraph 5 above, I decided to reject ABII’s price/cost

revision that reduced the quoted fee for MNSS base fee from [redacted]%

to [redacted]%. My determination included the following considerations:

a) ABII failed to establish that DARPA’s Exchange Notice permitting ABII to

revise (reduce) its Commodity IT Services award fee is expected to have a

material impact on its MNSS base fee, and that such impact materially

requires ABII to also reduce its MNSS base fee. ABII’s quoted reduction to

its Commodity IT Support Services award fee was not inextricably linked to

reducing its quoted reduced MNSS base fees, specifically, reducing the

former fee did not inextricably require ABII to also reduce the latter fees. As

summarized in paragraph 5 above, ABII stated that it reduced its MNSS

base to follow its standard business practices. ABII’s internal business

practices, however, are inadequate to explain how its decision to revise

(reduce) its quoted Commodity IT Support Services fee materially impacted,

and was inextricably linked to a causal necessity to lower the prices of its

50

MNSS base (support costs) fees. Rather, ABII’s decision to reduce its

MNSS base (support costs) fees was admittedly motivated by its business

practices, not by materiality, causation, or nexus of the fees to one another.

b) ABII failed to explain how reducing the award fee on the Commodity IT

Support Services CLIN (i.e., reducing total amount of potential fee that it

could earn during performance of the task order) has a direct nexus with

respect to contract risk in reducing the MNSS (support services) base fee.

A reduction of [redacted]% award fee of the Commodity IT Support Services

CLIN increases ABII’s operational risk of earning profit on the task order. A

rational nexus to reducing the Commodity IT Support Services fee would

have been, for example, to increase the potentia

This text is long and has been trimmed here. Open the source document for the complete record.