Opinion

Koam Engineering Services, Inc. v. United States

Court: United States Court of Federal Claims
Filed: Feb 10, 2023
Status: Published
Cited by: 0 cases
Authority: More cited than 22.6%

“Bid protest actions are subject to the standard of review established under section 706 of title 5 of the Administrative Procedure Act (‘APA’

How later courts described this case

“Bid protest actions are subject to the standard of review established under section 706 of title 5 of the Administrative Procedure Act (‘APA’
“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
“[A] plaintiff’s burden ‘is elevated where the solicitation 40 contemplates award on a “best value” basis.’” (internal citations omitted)
“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.”

Written by the judges who cited it.

The opinion

In the United States Court of Federal Claims

No. 22-816C

Filed: November 30, 2022

Redacted Version Issued for Publication: February 10, 20231

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

KOAM ENGINEERING SYSTEMS,

INC., *

Protestor,

v. *

UNITED STATES, *

Defendant, *

MCKEAN DEFENSE GROUP, LLC, *

Defendant-Intervenor. *

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

Richard Rector, DLA Piper, LLP, Washington, DC for protestor. With him were

Tom Daley and Leslie Edelstein, DLA Piper, LLP, Washington, DC.

Kara M. Westercamp, Trial Attorney, Commercial Litigation Branch, Civil Division,

United States Department of Justice, Washington, DC, for defendant. With her were

William Grimaldi, Assistant Director, Commercial Litigation Branch; Patricia M.

McCarthy, Director, Commercial Litigation Branch, and Brian M. Boynton, Principal

Deputy Attorney General, Civil Division. Tracey Ferguson, Trial Attorney, Associate

Counsel Commercial Litigation Branch, Naval Information Warfare Center Pacific, of

counsel.

Rebecca Pearson, Venable LLP, Washington, DC; for intervenor. With her were

J. Scott Hommer, III, Lindsay M. Reed, and Allison M. Siegel, Venable LLP,

Washington, DC.

1This Opinion was issued under seal on November 30, 2022. The parties were asked to

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

some of the redactions that the parties proposed in response to the court’s request. Words

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

OPINION

HORN, J.

In the above-captioned, post-award bid protest, protestor KOAM Engineering

Systems, Inc. (KOAM) challenges the decision by the United States Department of the

Navy to award a contract to defendant-intervenor, McKean Defendant Group, LLC

(McKean).2 Protestor KOAM alleges that the Navy failed to “meet its obligation to strictly

avoid even the appearance of a conflict of interest,” and that the Navy’s cost realism

evaluation of McKean’s proposal was arbitrary and capricious. The parties have briefed

cross-motions for judgment on the Administrative Record.

FINDINGS OF FACT

On January 27, 2021, the Navy issued request for proposals No. N66001-21-R-

0041 (the RFP) for engineering support services for the Navy’s Network Integration

Engineering Facility (NIEF). KOAM was the incumbent contractor for the Navy on the prior

contracts. The RFP explained that “Naval Information Warfare Center – Pacific (NIWC

Pacific) is responsible for basic research, end-to-end system design, prototype

development, systems engineering, integration, production, software loading, Pre-

Installation Testing and Checkout (PITCO), deployment, and life cycle support of

Command, Control, Communications, Computer, Intelligence, Surveillance, and

Reconnaissance (C4ISR) systems.” The RFP contemplated an indefinite-delivery,

indefinite-quantity (IDIQ) single award contract with cost-plus-fixed-fee pricing

arrangement over a potential five year performance period, with one base year and four

one-year option periods. The RFP provided:

(a) The contract resulting from this solicitation will be awarded to the

responsible offeror whose offer conforming to the solicitation, is determined

to provide the “best value” to the Government. Such offer may not

necessarily be the proposal offering the lowest cost or receiving the highest

technical rating.

(b) Proposals will be rated using a four-step methodology. Step One is an

evaluation of Acceptability of the Offer. Step Two is an evaluation of

Capability (including Technical Approach, Past Performance, and Small

Business Participation). Step Three is an evaluation of the proposed cost.

Step Four is a cost/technical (non-cost evaluation factors) trade-off analysis

in order to determine the best value source selection decision.

2 As noted in intervenor’s motion for judgment on the Administrative Record: “McKean

was indirectly acquired by Noblis Inc. on April 30, 2021, through Noblis Parent’s

acquisition of the equity in McKean Defense Group, LLC’s parent company and

subsequently renamed Noblis MSD, LLC.” The parties refer to intervenor as McKean in

their submissions in the above captioned protest. The court refers to intervenor as

McKean in this Opinion, but leaves quotations unchanged.

Non-Cost Evaluation Factors

Factor I – Technical Approach

Factor II – Past Performance

Factor III – Small Business Participation

Relative Importance of the Evaluation Factors

(d) The non-cost evaluation factors, when combined, are significantly more

important than cost. However, the degree of importance of cost will increase

with the degree of the equality of proposals in terms of the non-cost

evaluation factors.

(e) Technical Approach is more important than Past Performance and Small

Business Participation. Past Performance is more important than Small

Business Participation.

(f) Evaluation of an offeror’s proposal shall be based on the information

presented in the proposal and information available to the contracting office

from sources deemed appropriate. Sources typically considered include

Defense Contract Audit Agency, Defense Contract Management

Administration offices, other contracts with same firms for similar items or

services, known commercial sources such as Data Resources, Inc.,

Standard and Poor, etc. If the proposed contract requires the delivery of

data, the quality of organization and writing reflected in the proposal will be

considered an indication of the quality of organization and writing which

would be prevalent in the proposed deliverable data. Subjective judgment

on the part of the Government evaluators is implicit in the entire process.

(capitalization and emphasis in original).

For Step One, the RFP explained, “[t]he Government will determine the

acceptability of each offer on a pass or fail basis,” and for Step Two, the RFP indicated

“the Government will evaluate the capability of each offeror on the basis of its: (I)

Technical Approach, (II) Past Performance, and (III) Small Business Participation.” For

“Factor I – Technical Approach,” the RFP explained that

Considering the identified strengths and weaknesses, the SSEB [Source

Selection Evaluation Board] will then assign an overall factor rating for

technical approach. The factor rating is based on the collective

effectiveness of the offeror’s technical approach in meeting the

Government’s requirements in the SOW [Statement of Work] across all

submitted responses. Risk will not be evaluated as a separate factor, but

will be evaluated as one aspect inherent in the evaluation of the Technical

Approach. Technical Approach will receive one of the following combined

technical/risk ratings: Outstanding, Good, Acceptable, Marginal, or

Unacceptable.

(alterations added). For “Factor II – Past Performance,” the RFP indicated:

The past performance evaluation is an assessment of the offeror’s

probability of meeting the solicitation requirements. The past performance

evaluation considers the offeror’s demonstrated recent and relevant record

of performance in supplying products and services that meet the contract’s

requirements. In accordance with FAR 15.305(a)(2), the currency and

relevance of the information, source of the information, context of the data,

and general trends in contractor’s performance shall be considered. These

are combined to establish one performance confidence assessment rating

for each offeror.

For “Factor III – Small Business Participation,” the RFP provided:

The Government will evaluate the total percentage of small business

participation. The inclusion of each subcontractor in the cost proposal shall

serve as evidence that the prime contractor and subcontractor have entered

into a business agreement; no further evidence of a business agreement is

required. Only the portion of small business participation that is both listed

in the matrix and substantiated by the cost proposal will be considered in

the evaluation.

For Step Three, Cost, the RFP stated:

The Government will evaluate the estimated cost and proposed fee of each

offer for realism and reasonableness in accordance with FAR Subpart 15.4

and as described below. The purpose of this evaluation will be (a) to verify

the offeror's understanding of the requirements; (b) to assess the degree to

which the cost/price proposal reflects the approaches and/or risk

assessments made in the proposal as well as the risk that the offeror will

provide the supplies or services for the offered prices/cost; and (c) assess

the degree to which the cost reflected in the cost/price proposal accurately

represents the work effort included in the proposal. Proposed costs may be

adjusted, for purposes of evaluation, based upon the results of the cost

realism evaluation. In a competitive environment, an offeror is incentivized

to propose the lowest possible price; therefore, downward cost realist

adjustments generally will not be made. When a cost realism analysis is

performed, the resulting realistic cost estimate will be used in the evaluation.

Cost realism analysis may be limited to those offerors whose proposals

represent the most likely candidate(s) for award, based on the

Government’s technical evaluation and the offeror(s) proposed costs. In

addition to easily identifiable cost adjustments, unrealistic cost proposals

may result in a re-evaluation and concurrent rescoring of technical

proposals. Such re-evaluation based on cost or realistic cost analysis could

negatively impact the technical rating and ranking of the proposal.

Depending on the number of offerors and the number and dollar amount of

proposed subcontractors, the Government may choose to limit the extent of

the cost realism analysis of offerors’ proposed subcontractor costs. In such

instance, the Government will establish a threshold whereby individual

subcontractor cost proposals that do not meet the threshold will not undergo

a cost realism analysis. The threshold established by the Government may

consist of a percentage of the prime contractor’s proposed costs, or a dollar

amount, or a combination thereof. All offers with separately priced line items

will be analyzed to determine if the prices are unbalanced. Offers may be

rejected if the Contracting Officer determines the lack of balance poses an

unacceptable risk to the Government.

Finally, for Step Four, the “Trade-Off Process,” the RFP explained:

The contract resulting from this RFP will be awarded to the responsible

offeror whose offer, conforming to the RFP, is determined to provide the

best value to the Government, which may not necessarily be the proposal

offering the lowest cost, nor receiving the highest technical rating. In order

to select the winning offeror, the Government will compare all offerors under

consideration for award by trading off the differences in the non-cost factors

against the difference in most probable cost and proposed fee between the

offerors, as follows:

(a) If an offeror is better in terms of the non-cost factors and has the lower

evaluated cost and proposed fee, then the Government will consider that

offeror to be the better value.

(b) If an offeror is better in terms of the non-cost factors but has the higher

evaluated cost and proposed fee, then the Government will decide whether

the differences in the non-cost factors are worth the difference in cost and

fee. If the Government will consider the differences in the non-cost factors

to be worth the difference in evaluated cost and proposed fee, then the

Government will consider the offeror with the higher evaluated cost and

proposed fee to be the better value. If not, then the Government will

consider the offeror with the lower evaluated cost and proposed fee to be

the better value.

in this way until the Government has decided which offeror is the best value.

The RFP also indicated that

[t]he Contract Specialist will be the sole evaluator for Acceptability of the

Offer, Small Business Participation, and Cost. The Contract Specialist will

not evaluate any other factors. Input from the SSEB Chairperson and other

SSEB members may be solicited. Except for the Contract Specialist, the

SSEB will not have access to cost proposals; however, with approval of the

SSA, the Contract Specialist may disclose selected cost information as

required (e.g., when technical analysis is necessary to make a realism or

reasonableness determination).

(alteration added).

The RFP further explained:

The Contractor shall perform work at the contractor’s facilities and/or onsite

at government facilities and on travel in support of designated activities.

Because the NIWC Pacific Code 42150 leadership resides in San Diego,

the majority of the production and PITCO/GAT support will be required to

be supported within the NIWC Pacific (4301 Pacific Highway, San Diego,

CA) Area of Responsibility (10 Miles). The majority of engineering support

is expected to be off site at the contractor facility.

Included with the Technical Approach Worksheet in the Source Selection Plan

were questions and answers:

1.) What tools and techniques will you employ to manage Cost,

Schedule, and Performance of the multiple projects and associated

C4ISR [Command, Control, Communications, Computers,

Intelligence, Surveillance and Reconnaissance] Task Orders that will

be accomplished during the execution of this contract?

The written technical approach should address but is not limited to

discussion of applications and or existing company

policies/procedures that will enable you to track and report financials,

such as funds received, funds expended, and funds remaining at the

CLIN [Contract Line Item Number] level within Task Orders and for the

contract as a whole. Describe your approach for tracking and

reporting the status of deliverables and all milestones to achieve

timely distribution of deliverables? What system(s) will you employ to

track and report risks and issues that need to be addressed in order

to minimize delays to scheduled deliveries?

2.) What tools and techniques will you use to manage the inventory,

tracking, and reporting of C4ISR materials that will be moving between

the different functional areas and physical locations within the NIEF?

The written technical approach should address but is not limited to

the discussion of applications and or existing company

policies/procedures that will enable you, in real time, to track and

report receipt, storage and movement of all material in the

possession of the NIEF. This would include the receipt and storage

in the warehouse facility that is cataloged and auditable at any time

to ensure accountability. This also includes means of tracking

material as it is removed from the warehouse and delivered to a

different physical functional area such as the Quality Assurance area

or the Production floor.

3.) Question: What tools and techniques will you use for management

and completion of C4ISR engineering projects from Requirements to

Delivery, for the development of Engineering Development Model

(EDM) / First Article System (FAS), and execution of Environmental

Qualifications Testing (EQT)?

The written technical approach should address but is not limited to

the discussion of applications and or existing company

policies/procedures that allow you to organize, develop and document

the processes required to deliver an EDM or First Article. Identify and

describe the System Engineering Plan that you intend to implement to

manage the above and keep track of milestones throughout the

process. Identify the milestone achievements/reviews you plan to

monitor in the lifecycle of the Systems Engineering Technical Review

(SETR) process. Provide a detailed approach to how you will execute

Environmental Qualifications Testing.

4.) Question: What tools and techniques will you use to properly

execute Pre-Installation Check-out and Operational (PITCO) Testing

and Government Acceptance Testing (GAT) as well as Factory

Acceptance Testing (FAT) for C4ISR systems and components that are

received or developed by the NIEF?

The written technical approach should address but is not limited to

the discussion of applications and or existing company

policies/procedures that allow you to organize, execute, track and

document the successful completion of PITCO testing and GAT/FAT

requirements. Describe your approach and the sequence in which you

plan to perform these tests and report status and percentage of

completion. What is your approach for tracking discrepancies and the

ability to correct these discrepancies if required?

(capitalization and emphasis in original; alterations added).

In response to the RFP, only KOAM and McKean submitted proposals on February

26, 2021. During the evaluation process, the Navy contacted McKean to clarify its

proposal and asked:

In order to complete our cost realism analysis additional clarification is

required. The subject RFP states some of the work is required to be

performed in the San Diego, CA area. In order to complete our cost realism

analysis using the actual rates submitted in your cost proposal, we need

you to clarify for each of the named individuals, where the work was

performed for the rates submitted.

McKean subsequently submitted the requested information.

As indicated in the Source Selection Authority’s August 23, 2021 Business

Clearance Memorandum:

Recommend approval to award a single IDIQ contract to McKean under

solicitation N66001-21-R-0041 as a five (5) year contract valued at

$187,467,409.92. Based on the analysis herein, McKean’s proposal

represents the best value to the Government. Recommend award be made

based on initial offers. The solicitation included FAR provision 52.215-1,

which notified potential offerors, “the Government intends to evaluate

proposals and award a contract without discussions with offerors.”

A summary of Best Value Ranking and Most Probable Costs are as follows:

Best Offeror Acceptability Factor I Factor II Past Factor III Proposed Cost Probable Cost

Value Technical Performance Small

Rank Approach Business

Participation

1 McKean Acceptable Good Satisfactory Good $187,467,409.92 $195,045,486.39

Confidence

2 KES Acceptable Good Satisfactory Outstanding $204,870,045.22 $204,870,045.22

Confidence

Regarding McKean’s cost proposal, the Source Selection Authority noted:

McKean combined with their subcontractors proposed all hours and

overtime hours in accordance with the RFP. McKean proposed prime hours

on 69% of the overall level of effort in terms of hours. McKean proposed on

a CPFF [Cost Plus Fixed Fee] basis. According to DCAA Audit Report No.

6151-2015T17741001 dated 6 February 2015, McKean’s accounting

system was found adequate. Therefore, McKean’s accounting system is

considered suitable for a cost reimbursement contract. Based on the

analysis below, McKean’s proposed costs were found to be 3.89% or

$7,578,076.48 below the realistic cost; therefore, a cost realism adjustment

was made and McKean’s cost was realized up from $187,467,409.92 to

$195,045,486.39.

(i). Prime Direct Labor.

McKean proposed direct labor rates for 28 labor categories with a list of

rates for 128 employees. McKean’s direct labor rates were developed by

using the actual salaries for the proposed current McKean employees or the

contingent salaries (three employees) for the proposed contingent McKean

employees, in which signed Letters of Intent were provided. Although

McKean’s rates were substantiated with corresponding employee payroll

information, clarifications revealed not all of the payroll information provided

was for work within San Diego. Twenty of the 128 proposed rates were

based on actual labor rates for named individuals whose labor rate were

substantiated by payroll records and whose place of performance of work

was San Diego, CA, were deemed realistic and reasonable and are shown

in averages in the first table below. The rates for 108 of the 128 rates

proposed by McKean were based on work performed outside of San Diego.

24 of the 108 non-San Diego based rates were found to be equal or above

the average San Diego Rates identified in the San Diego Rates Utilized for

Cost Realism Analysis Table on page 24 and no cost realism adjustment

was made. However, 84 of the 108 non-San Diego based rates for

individuals in the remaining 21 labor categories were lower than the San

Diego Rates Utilized for Cost Realism Analysis Table on page 24. The direct

labor rates for these 84 employees were realized up accordingly to the San

Diego Rates identified in the San Diego Rates Utilized for Cost Realism

Analysis Table on page 24, as shown in the second table below. The tables

below includes direct labor rates proposed per labor category for the base

year, which were escalated by [redacted]% year over year for the option

years. Proposed overtime hours for exempt and non-exempt employees

were reviewed and found to be realistic. Overtime rates for non-exempt

employees working as Junior Configuration Management Specialist, Senior

Material Specialist, Material Specialist, Technical Typist,

Warehouse/Forklift Operator, and Assembler Electronic/Electrical were

proposed [redacted]. Overtime rates for the remaining labor categories

proposed were for exempt individuals that were proposed [redacted]. Based

on the rationale above, McKean’s direct labor rates were realized up

accordingly.

(alteration added). Regarding KOAM’s cost proposal, the Source Selection Authority

stated:

KES combined with their subcontractors proposed all hours and overtime

hours in accordance with the RFP. KES proposed prime hours on 84.5% of

the overall level of effort in terms of hours. KES proposed on a CPFF basis.

The DCMA administrative contracting officer (ACO) sent a final

determination letter, which formally approved KES’ accounting system

based on a post award review of KES accounting system documented in

DCAA Audit Report No. 4151-2020C17741003 on 12 August 2020.

Therefore, the KES’s accounting system is considered suitable for a cost

reimbursement contract. Based on the analysis below KES’s proposed

costs were found to be realistic; therefore, no cost realism adjustment was

made.

(i). Prime Direct Labor.

KES proposed direct labor rates for 30 labor categories with a list of rates

for 160 employees. KES’ direct labor rates were developed for most labor

categories and hours using named individuals currently supporting the

existing NIEF requirement. All of KES rates for named individuals were

substantiated with corresponding employee payroll information for work

performed in San Diego. According to KES’ proposal, “labor categories that

KES did not have enough named individuals to support the number of hours

in a labor category, KES utilized labor category averages based on named

individuals of in their proposal in those respective labor categories. KES

utilized an ERI rate for one labor category.” This method to use the average

rate of named individuals for work performed in San Diego or ERI was

determined reasonable.

The Source Selection Authority conducted a trade-off analysis explained that

McKean and KES[3] received the same rating for the most important non-

cost factor, Factor I – Technical Approach, as they each received Good

ratings for demonstrating a thorough approach and understanding of the

requirements. KES’ received twenty-eight (28) strengths, and thirteen (13)

weaknesses, and McKean received three (3) significant strengths, nineteen

(19) strengths and eight (8) weaknesses. Neither KES nor McKean received

any significant weaknesses.

(footnote added). The Source Selection Authority concluded, regarding Factor I “[o]verall,

the Government did not find any trade-off appropriate with regard to Technical Approach

based upon the various significant strengths, strengths and weakness assigned to KES

and McKean as described above,” and “[t]aken as a whole, both offerors demonstrated a

thorough technical approach, and there was no trade-off warranted.” The Source

Selection Authority continued:

Based on the past performance evaluation, the Government has a

reasonable expectation that either offeror will successfully perform the

3 The Navy’s evaluation documents, and other documents in the Administrative Record

refer to KOAM as “KES.” Most of the filings in the above captioned protest refer to

protestor as “KOAM.” The court refers to protestor as KOAM unless quoting directly from

the Administrative Record.

required effort. The Government did not find any trade-off appropriate with

regard to Past Performance. Although McKean’s past performance was

less relevant, it had higher quality ratings that were supported by comments

in the CPARS [Contractor Performance Assessment Reporting System].

The higher quality gave the Government reasonable confidence that

McKean will be able to perform even though the references were less

relevant. While KES’ Past Performance was very relevant, the

quality/success ratings were lower. While the Government has reasonable

confidence that KES can perform, the confidence is decreased by the

continuing issues with performance for the most relevant work. Overall,

while different in terms of the underlying relevance and quality ratings, the

Government’s confidence is similar with both, and did not find any trade-off

appropriate for past performance.

McKean and KES were very close in the least important non-cost factor,

Factor III - Small Business Participation, as McKean was rated Good for

indicating a thorough approach and understanding and KES was rated

Outstanding for indicating an exceptional approach and understanding of

the small business objectives. Although, McKean received a slightly lower

rating than KES in Small Business Participation, McKean was only half a

percent away from being assessed as Outstanding. Meanwhile KES, as a

small business, received an Outstanding rating, as they easily met the 20%

threshold needed to obtain an Outstanding rating in Small Business

Participation by proposing to perform about 82% of the work in house as

the prime contractor.

In terms of cost, McKean’s proposed cost were adjusted during the cost

realism analysis. KES’ proposed realistic direct and indirect cost that were

compared to company payrolls, and indirect rate information provided by

DCAA and DCMA, and were not adjusted during the cost realism analysis.

McKean’s probable cost of $195,045,486.39 was 4.80% or $9,824,558.83

lower than KES’ probable cost of $204,870,045.22.

With regard to Small Business Participation, KES demonstrated an

outstanding use of small business with 82% small business utilization.

McKean also demonstrated a very high Small Business utilization of

19.47%, which is just below the outstanding level as well. There is a benefit

to KES’ higher small business utilization, but Small Business is the least

important non-cost factor. In terms of trade-off the Government finds that

KES’ better Small Business Utilization does not warrant a premium of 4.80%

or $9,824,558.83.

KES did receive a higher rating in small business participation; however,

McKean was a fraction of a percent from matching KES rating of

Outstanding for small business participation. Consistent with M-2 of the

solicitation, “If the Government will consider the differences in the non-cost

factors to be worth the difference in evaluated cost and proposed fee, then

the Government will consider the offeror with the higher evaluated cost and

proposed fee to be the better value. If not, then the Government will

consider the offeror with the lower evaluated cost and proposed fee to be

the better value.” The differences between KES’ and McKean’s non-cost

factors were not enough to overcome the difference between the evaluated

costs, where McKean’s evaluated cost was 4.80% or $9,824,558.83 lower

than KES.

Based on the rationale above, McKean was evaluated as the best value

contractor after consideration of both cost and non-cost factors.

Source Selection: I, Sharon Pritchard, the Source Selection Authority for

this procurement, have independently reviewed all SSEB evaluations

provided herein. As a result of such review, I have determined McKean’s

proposal represents the best value to the Government and, therefore,

McKean to be the awardee.

Therefore, on August 21, 2021, the Navy awarded a contract to McKean.

After the Navy provided an Unsuccessful Offeror Notice to KOAM, KOAM

requested a debriefing and provided the Navy with a list of 55 debriefing questions,

including: “Freddie Saucedo, a member of McKean’s senior management staff, is married

to a NIWC PAC contracting officer’s representative on KES’ existing contract, and the

contracting officer’s representative has access to KES’ proprietary cost data. What

actions did the Government take to address this issue and ensure the integrity of the

procurement?” On September 2, 2021, the Navy provided KOAM with a written debriefing.

After the debriefing, on September 14, 2021, KOAM filed a protest at the United

States Government Accountability Office (GAO) alleging, among other issues, that “the

Navy’s decision to award the contract to McKean (the only other offeror) is flawed and

deeply concerning because McKean has proposed labor costs so low that McKean will

be unable to provide contractor personnel at the Navy’s facilities in the San Diego area,

as required,” and alleging “the Navy’s apparent failure to address an appearance of

impropriety concerning a familial relationship between a McKean executive and one of

the Contracting Officer’s Representatives (‘CORs’) on the incumbent contract.” In

response to the protest, on September 27, 2021, the Navy informed the GAO that, “[a]fter

reviewing the subject protest, the Agency will undertake corrective action” and

represented to the GAO that “the Agency will conduct an investigation into a possible

organizational conflict of interest, and possible personal conflict of interest. After

completing both steps, the Agency will make a new source selection decision, as

appropriate.” On September 30, 2021, the GAO dismissed KOAM’s protest.

Upon the dismissal of the GAO protest, the Navy undertook an investigation into

the conflict of interest issue raised by KOAM. In defendant’s cross-motion for judgment

on the Administrative Record, defendant represents: “Upon being notified of the potential

personal conflict of interest, the Navy immediately began its investigation of the apparent

personal conflict of interest before GAO even dismissed KOAM’s first protest,” which is

reflected in an exchange of emails between the contract specialist, Johannes Cardenas,

and Ms. Saucedo, sent on September 20, 2021 and September 21, 2021. The email

below includes the questions asked by Contract Specialist Cardenas and the answers

provided by Ms. Saucedo and is presented in full:

Good afternoon,

Please note, due to the confidentiality of the contents within: This e-mail

message, including any attachments, is for the sole use of the intended

recipients and may contain confidential and privileged information. Any

unauthorized review, use, disclosure or distribution is prohibited.

PLEASE DO NOT FORWARD OR DISCUSS THE CONTENTS OF THIS

EMAIL WITH ANYONE BESIDES THE CONTRACTS AND LEGAL TEAM,

WHICH CONSIST OF NORMAN JULIEN, JOHANNES CARDENAS, AND

TRACEY FERGUSON[4] WITHOUT THE EXPRESS WRITTEN

PERMISSION OF SENDER. THIS EMAIL CONTAINS QUESTIONS THAT

REQUIRE A RESPONSE BY COB TOMORROW, 21 SEPTEMBER 2021.

IF FOR ANY REASON, YOU ARE UNABLE TO ANSWER THE

QUESTIONS BE THE DEADLINE, PLEASE LET ME KNOW

IMMEDIATELY AND PROVIDE A REASON WHY.

NIWC Pacific received a post award protest in response to the recent award

of the NIEF Engineering contract that resulted from solicitation N66001-21-

0041. The unsuccessful offeror presented the following argument:

The Navy Failed To Reasonably Consider A Conflict And Appearance of

Impropriety Concerning A COR On The Incumbent Contract….a COR for

the incumbent contract, Ms. Jaime Saucedo, is married to a McKean

executive (Mr. Freddie Saucedo). As a COR for the incumbent contract, Ms.

Saucedo may have participated personally and substantially in the subject

procurement and, even if she did not, still had access to KES’s cost

information and cost proposals under the incumbent contract. Because Ms.

Saucedo’s marriage to a McKean executive creates a conflict of interest and

an appearance of a potential impropriety.

4 Norman Julien was the contracting officer for the procurement at issue in the above

captioned bid protest and the author of the personal conflict of interest memorandum.

Johannes Cardenas was the contract specialist for the procurement at issue and was the

author of the email sent to Ms. Saucedo on September 20, 2021. Tracey Ferguson was

an attorney with the Naval Information Warfare Center Pacific and is of counsel in the in

the above captioned bid protest.

I’m reaching out to you to assist the contracting officer in the investigation

of whether an OCI was present during the preparation for or during the

evaluation of the NIEF Engineering requirement, solicitation N6001-21-R-

0041.

The question we are seeking to address is whether McKean had an

“unequal access to information OCI” via information that may have been

shared between a COR on the current NIEF Engineering contract N66001-

18-D-0075 held by KES, and whom the protest documents refer to as the

COR’s husband and also a McKean executive.

“An ‘unequal access to information’ OCI arises where ‘a firm has access to

nonpublic information as part of its performance of a government contract

and where that information may provide the firm a competitive advantage in

a later competition for a government contract.’ In such cases, the primary

concern is minimizing the risk that a firm will gain an unfair competitive

advantage over other offerors. The FAR contemplates that an OCI may

arise from access to proprietary information and source selection

information” (Conflict and Intrigue in Government Contracts: A Guide to

Identifying and Mitigating Organizational Conflicts of Interest; Public

Contract Law Journal; Volume 35, No. 4; Summer 2006).

In order to validate whether an “unequal access to information OCI” may

have existed, it’s important that the contracting officer receives answers to

several questions. Please review and provide your response to the following

questions, and return to the following members of the contracts and legal

team:

(norman.p.julien.civ@us.navy.mil), (johannes.t.cardenas.civ@us.navy.mil),

and (tracey.l.ferguson3.civ@us.navy.mil).

1) What is your job?

I [Ms. Saucedo] am a project manager and COR [Contracting Officer

Representative] for several programs at the NIEF.

2) What are your duties?

Develop task orders based on sponsor requirements, oversee task orders,

and other COR duties.

3) What role do you have in relation to the NIEF Engineering contract?

N6001-18-D-0075, my role is project manager and COR of multiple projects.

4) How long, how much of your job/work is as a COR and how much as a

COR for NIEF?

I have been at NWIC PAC since 2012 and have worked at the NIEF since

5 April 2018. I have been a COR my entire time at the NIEF.

5) Who is your Supervisor, Branch head, and Division Head?

[redacted] was my branch head up through July 2021 – [redacted] and

[redacted] are currently acting branch heads.

6) Which contracting officers do you work with?

Marianito "Nito" Rosal is the KO and Bennett McDonald is the CS.

7) What KES[5] non-public information did you have access to in the past

year? (Examples would include access to proposals containing labor rates,

indirect rates, etc.)

As a COR on this contract I have had access to task order proposals which

include all financial data (labor rates, indirect rate, ect) [sic]

8) Did you have ANY input into drafting the requirements, IGCE, CDRLS,

solicitation, etc. for the NIEF engineering requirement that became RFP

N6001-21-R-0041?

I did not have any input in drafting the requirements for RFP N6001-21-R-

0041, nor have I had any access to the solicitation package.

9) Did you have any other role/discussion/access to anything related to the

requirements, development of the RFP/solicitation, evaluation, IGCE, etc.

No, I did not have any role in anything related to RFP N6001-21-R-0041.

10) Did you participate at all in the evaluation process?

No, I was not involved in the evaluation process of RFP N6001-21-R-0041.

11) Are you married or in a close personal relationship? To whom? For how

long?

I am married to Alfredo Saucedo and have been for 8 years.

12) How long have you known Mr. Freddie Saucedo? Do you live together?

5Ms. Saucedo and Contract Specialist Cardenas both refer to KOAM as KES in the email

exchange.

I have known Alfredo Saucedo for 13 years, we have lived together for 10

years.

13) Was Mr. Saucedo ever a government employee?

Mr. Saucedo served in the Navy, but has never been a federal employee.

14) Do you work with Mr. Saucedo? On what types of things?

No, I do not currently work with Mr. Saucedo on any projects.

15) Did you ever discuss your work as a COR on the KES contract with Mr.

Saucedo? How often? What types of things concerning the contract were

discussed?

The only thing I have discussed with Mr. Saucedo regarding my work at the

NIEF is high level project details, never have discussed my role as COR or

the details of that work.

16) What non-public information, if any, did you share with Mr. Saucedo and

when? For example, did you ever discuss labor rates such as pay between

KES and McKean?

I have never discussed any labor rates or any other financial contract

information with Mr. Saucedo.

17) Have you worked from home? If so, for how long, how often, etc.?

I have been working full time from home due to the COVID 19 Pandemic.

18) Are you in the same household? If the answer to question is yes, To

your knowledge, did he ever have access to any information provided by

KES to the Government? Is it possible that he may have had access to

information provided by KES without your knowledge via access to

documents, emails, or your government computer?

Yes, we are married and live in the same household. My government

computer requires a CAC [Common Access Card] to log in and Mr. Saucedo

does not have access to my computer. We have to separate offices in our

home and I always close the door when I have any discussions on the

phone regarding anything related to my COR duties.

19) Did you ever discuss Mr. Saucedo’s job with your co-workers? Who,

when and how often?

I haven’t discussed his job with co-workers, however, co-workers know he

works for Cabrillo. In his current role, he does work with the NIEF on

projects, not any projects I am responsible for.

20) Do you know any of Mr. Saucedo’s co-workers? If so who, how well,

how much contact?

I know several of Mr. Saucedo’s co-workers, many of them I have worked

with before on previous projects. I do have a close personal relationship

with [redacted], however, have not had any real contact with her over the

past year and a half, just some texting, but nothing about work.

21) Did you ever discuss your work with Mr. Saucedo’s co-workers as a

COR, or anything about KES?

I do not discuss anything that is contract sensitive with anyone, I understand

it is unethical for me to divulged any financial data – IGCE’s, Labor Rates,

Cost Proposals – none of this is ever discussed expect with other CORs of

the contract. I also do not discuss KES with anyone, but other CORs on the

contract.

22) Were you aware that Mr. Saucedo’s company was competing for the

NEIF Engineering contract? If so, when did you find out? How or from whom

did you find out?

I did know the company was developing a proposal for this contract, Mr.

Saucedo told me. I am not sure when the contract actually went out for

bidding but I knew before the proposal was submitted. Other than knowing

they were developing a proposal, we did not have any other discussion

about the contract.

23) If known, when did Mr. Saucedo find out that his company had proposed

on the NIEF Engineering contract? Did Mr. Saucedo know he was named

in the proposal for the NIEF Engineering contract?

I am not exactly sure when Mr. Saucedo new [sic] his company was bidding

on the NIEF engineering contract. It is my understanding he knew he was

named in the proposal.

24) Did you ever share concerns about your role as a COR in conjunction

with Mr. Saucedo’s job at McKean with anyone at work? With the KO? Your

supervisor? A Coworker?

My supervisor and IPT [Integrated Product Team] lead both know that Mr.

Saucedo works for Cabrillo. When McKean won the contract, we did discuss

that my role as COR would have to end and I would need to have another

role within the NIEF.

25) If there were concerns, did you tell anyone within NIWC PAC about a

potential OCI [Organizational Conflict of Interest]?

I really didn’t have huge concerns as I was completely excluded from the

entire contract development and selection process. I did not read the PWS

or have any input into the package at all. I am not even aware of how many

companies submitted proposals.

(capitalization and first alteration in original; footnote added).

On October 21, 2021, counsel for KOAM, and protestor’s counsel of record in the

above captioned protest, sent the Navy a letter, which stated in part:

Following the dismissal of the [GAO] protest as academic, KES learned that

Ms. Saucedo has communicated with her husband in the past about

ongoing Navy programs in which McKean was involved. Specifically, KES

has been advised that, in multiple meetings in the past, NIEF government

project leads have discussed problems and concerns regarding the Military

Sealift Command (“MSC”) program office, on which McKean and Mr.

Saucedo provide contract support to PMW 160. When the NIEF MSC

government project lead expressed frustration with the MSC program and

its effects on the NIEF during weekly meetings of government project leads,

Ms. Saucedo has spoken up to defend the MSC program based on

information she has learned from her husband. In other words, Ms. Saucedo

clearly has information about McKean and her husband’s work on the MSC

program that is unrelated to her role at the NIEF, and she has shared that

information with NIEF officials in the past in a way that has been helpful to

McKean. Although this may not, in and of itself, constitute improper

behavior, it does demonstrate that Mr. and Ms. Saucedo discuss details of

their work for the Navy and share certain program-related information. Thus,

it supports the concern about an appearance of impropriety, so we felt

compelled to relay the information to you.

Both Ms. Saucedo and Mr. Saucedo subsequently provided sworn declarations.

Mr. Saucedo’s declaration, executed on February 12, 2022, stated in full:

I, Alfredo “Freddy” Saucedo, Senior Systems Engineer for Noblis MSD, LLC

declare:

1. I am over the age of twenty-one and have personal knowledge of all

representations contained herein.

2. I am a Senior Systems Engineer for Noblis MSD, LLC, formerly McKean

Defense Group, LLC (“McKean”) (collectively "Noblis") on mechanical

engineering and system development and networks. I have served in this

role since 2014. I am responsible for providing direct technical support to

the Other Costumer Funds (“OCF”) Assistant Program Manager (“APM”),

and the Technical Design Agents (“TDA”) on all matters related to

production engineering, systems engineering, design, and shipboard

installation. My tasking requires me to collaborate with Program off ice

government leads, Network Integration and Engineering Facility (“NIEF”)

Government project lead(s), NIEF production integrators, Shipboard

installers, project leads and engineers (U.S. Government and contractors).

My current support role is limited to projects under the OCFs umbrella.

3. I, Inc. ( “KES” or “Protester”), at the U.S. Government Accountability

Office, docketed as File No. B-42157, challenging the evaluation and award

of a contract by the United States Department of the Navy, Naval

Information Warfare Systems Center Pacific (the “Navy” or “Agency”) to

Noblis under Solicitation No. N6600121R0041 (“RFP” or “Solicitation”). I

have reviewed the redacted version of the Protest filed by KES.

4. As KES described in its protest, the Solicitation at issue provides:

the Navy with program management, basic research, end-to-

end system design, prototype development, systems

engineering, integration, environmental qualification testing

(“EQT”) , production, software loading, pre-installation testing

and checkout ( “PITCO”), deployment, and life cycle support

of Command, Control, Communications, Computer,

Intelligence, Surveillance, and Reconnaissance (C4ISR)

systems for the NIWC Pacific Network Integration

Engineering Facility (“NIEF”) .

Redacted Protest at 4.

5. In its protest, KES alleged that I was an “executive” of McKean Defense

Group, LLC and that my relationship with my wife, who is a Contracting

Officer's Representative (“COR”) on KES's incumbent contract, creates an

"appearance of potential impropriety." Redacted Protest at 28.

6. I have never served as an executive of McKean Defense Group, LLC or

Noblis. Instead, I am a Senior Systems Engineer. In its proposal in response

to the Solicitation, Noblis proposed me in a key personnel role as Senior

Systems Engineer.

7. My wife, Jaime Saucedo, serves as the COR administering the incumbent

contract for this effort, which is currently being performed by KES at the

Naval Information Warfare Systems Center Pacific, NIEF. My wife also

serves as a Project Lead at NIEF. She and I do not work on the same

projects.

8. My wife and I do not discuss her management of contracts. Accordingly,

I am not aware of my wife's specific duties as a COR regarding

administration of KES's incumbent contract. I do know that she has never

shared with me any proprietary or sensitive information of a contractor that

she oversees, including KES.

Access to or Knowledge of KES’s Proposal

9. KES’s protest alleges that “[a]s a COR for the incumbent contract,

[redacted], [she] may have participated personally and substantially in the

subject procurement . . .” That allegation is incorrect. Redacted Protest at

28. My wife and I do not discuss her role, if any, in the evaluation of

proposals or award decision resulting in a contract being awarded to Noblis

under the current Solicitation.

10. I have never had access to, viewed, nor possessed any portion of or

information regarding KES’s proposal for the NIEF contract at any time,

either under the incumbent effort or the proposal KES submitted under

current Solicitation for this effort.

11. My wife and I have not discussed KES’s proposal under the current

Solicitation. To the best of my knowledge, my wife is not involved in the

protested procurement and I am not aware that she has access to KES's

proposal or the evaluation thereof. Nor have I ever received or been told

any information regarding KES’s price or costs under KES’s incumbent

contract by my wife.

Access to Jaime Saucedo’s Work Files

12. I have never accessed my wife's Navy computer or work files at any

time.

13. While we both work from home, especially since the pandemic, we both

maintain separate offices. My wife has her own office where she keeps her

work computer. She accesses her files electronically from her work

computer through the Navy/Marine Corps Intranet (“NMCI”) system which

requires multi-factor authentication to confirm her identity. To my

knowledge, her Navy computer remains locked when she is not using it.

14. I cannot and have not ever accessed any of her work files, including any

files related in any way to KES’s incumbent contract or proposal submitted

in response to the Solicitation.

15. I do not possess any of her passwords or credentials for her Navy

computer, databases, files, etc.

Involvement in Noblis' Proposal Submission

16. In the Summer of 2021, I provided input on discrete technical matters

during the drafting of McKean Defense’s (now Noblis) technical proposal

submitted in response to the Solicitation. Specifically, I provided early input

regarding rack configuration and installation technical drawings, system

development, and installation processes given my expertise as a production

engineer. While the inputs I provided on such technical matters were used

to draft portions of Noblis’ technical proposal, I did not myself draft the final

technical section of the proposal, nor did I review the technical proposal

before submission.

17. I was never contacted or asked to provide any input whatsoever on

Noblis’ cost/price proposal submitted in response to the Solicitation, nor did

I ever provide any input on the cost/price proposal whatsoever. I neither

viewed nor had access to Noblis’ cost/price proposal or any cost details

used as inputs for that cost/price proposal prior to submission. In fact, to

this day I have never seen the details of this cost/price proposal.

18. I was not involved in any way in Noblis’ decision to compete under the

Solicitation.

Pursuant to 28 U.S.C. § 1746, I declare under penalty of perjury that the

foregoing is true and correct.

(capitalization, emphasis and alterations in original; footnote omitted).

Ms. Saucedo’s declaration, executed on February 23, 2022, stated in full:

I, JAIME SAUCEDO, declare:

1. I am currently the Project Manager and Contracting Officer

Representative (COR) for several programs at the Network Integration

Engineering Facility (NIEF) at the Naval Information Warfare Center Pacific

(NIWC PAC). I began this position in April of 2018. Prior to this position, I

worked as a COR for one year for another project. I have worked for the

federal government since December 2012.

2. In my position as the NIEF Engineering COR for Contract N66001-18-D-

0075, I am responsible for developing task orders based on sponsor

requirements, overseeing task orders, and other COR assigned duties. I am

and have been a COR on other contracts at the NIEF, Production MAC

N66001-16-D-032033, SAIC (Science Applications International

Corporation) and SERCO INC are the primes.

3. Until July 2021, my first-line supervisor was Branch Head [redacted].

Currently, I am supervised by [redacted].

4. During my tenure as the COR on N66001-18-D-0075, I only worked on

one PMW-160 project which was short term. I do not recall attending a

government or government/contractor meeting wherein I discussed Military

Sealift Command NIEF related efforts.

5. As a COR on contract N66001-18-D-0075, I have access to task order

proposals, which include financial data, such as, labor rates, indirect rates,

etc….

6. I did not have any involvement in drafting the requirements for Request

for Proposal (RFP) N66001-21-R-0041, nor did I have access to the

solicitation package. I did not have any role/involvement or have any

discussion/access to information related to the requirements, development

of the RFP/solicitation, Independent Government Cost Estimate (IGCE),

acquisition strategy, development of source selection criteria, evaluation of

proposals or the award decision.

7. I have been married to Alfredo Saucedo for 8 years. Alfredo Saucedo is

employed by Noblis as an engineer. Mr. Saucedo served in the Navy, but

has never been a federal employee. I do not currently work with Mr.

Saucedo on any projects.

8. I have never discussed my role as COR or the details of that work with

my husband. I have never disclosed any third party proprietary information,

like KES or its subcontractors’ labor rates, or any other financial or contract

information with Mr. Saucedo. The only thing I have discussed with Mr.

Saucedo regarding my work at the NIEF is very high-level project details.

9. I have been working full time from home due to the COVID 19 Pandemic.

Mr. Saucedo and I are married and share the same household. We have

two separate offices in our home and I always close the door when I have

any discussions on the phone regarding anything related to my COR duties.

My government computer requires a CAC to log in and Mr. Saucedo does

not have access to my computer. I do not have a government cell phone. I

do not scan or print any documentation in my home office. I do not have a

hard copy material in home office other than hand written notes for my own

tasking that did not include third party proprietary or source selection

sensitive information. When I am not in front of my computer, the CAC is in

a secure location.

10. I know several of Mr. Saucedo’s co-workers, many of them I have

worked with before on previous projects. I have a close personal

relationship with [redacted]; however, I have not had real contact with her

over the past year and a half, just some texting, but nothing work related.

11. I only disclose nonpublic information to include proprietary or source

selection sensitive information to government employees with a need to

know. I fully understand my ethical and legal obligations regarding use,

disclosure and safeguarding nonpublic information I have access to at work

to include the requirements to not disclosure any financial data, such as

IGCEs, Labor Rates, Cost Proposals, etc. I maintain an annual OGE 450

on file wherein I disclose my husband’s employment.

12. I was aware that Mr. Saucedo’s company was developing a proposal

for the NIEF Engineering contract because Mr. Saucedo told me. I am not

sure when the contract actually went out for bidding but I knew before the

proposal was submitted. Other than knowing they were developing a

proposal, we did not have any other discussion about the RFP or contract.

I did not know that Mr. Saucedo was listed as key personnel on the contract.

Pursuant to 28 U.S.C. § 1746, I declare under penalty of perjury that the

foregoing is true and correct.

(capitalization and alteration in original).

After completing the investigation, on February 24, 2022, the contracting officer

issued a “Personal Conflict of Interest Memorandum,” which include the correspondence

and declarations quoted above. The contracting officer determined that “[t]here is no

evidence that Ms. Saucedo participated personally and substantially in the Procurement.”

(alteration added). The contracting officer noted:

The PCI [Personal Conflict of Interest] investigation confirmed from multiple

sources including the written interviews of [redacted] (NIEF Branch Head

and SSEB Chair), [redacted] (NIEF IPT Lead/Program Manager and initial

SSEB Chair), the other SSEB members, and Ms. Saucedo (one of several

CORs on KES’ NIEF contract, N66001-18-D-0075) that Ms. Saucedo did

not participate personally or substantially, or really in any capacity, with the

follow-on NIEF Engineering source selection, including with the

development of the statement of work, drafting of the source selection

strategy, drafting the RFP, participating in the evaluation of proposals or

selecting the awardee resulting in the NIEF Contract awarded to McKean.

(capitalization in original; internal reference omitted; alteration added). The contracting

officer also noted that “[a]ll members of the SSEB (Mr. [redacted], Mr. [redacted], Mr.

[redacted], and Ms. [redacted], and Mr. [redacted]) confirmed that Ms. Saucedo had no

role in the evaluation of the proposals,” and the contracting officer added, “[a]s

Contracting Officer for this procurement, to my knowledge and from my review of the

contract file, Ms. Saucedo had no role in any part of this procurement.” (alterations

added). Therefore, the contracting officer wrote:

The PCI investigation revealed the absence of any PCI concern prior to

award, since Ms. Saucedo was completely excluded from the acquisition

planning and throughout the source selection process for the follow-on NIEF

contract. The concern of impropriety was not a pre-award concern, since

Ms. Saucedo did not have any role in the source selection process for the

follow-on NIEF and the evaluation of proposals. Furthermore, the SSEB

members were not given access to the cost proposals, and therefore, would

not have known that Mr. Saucedo was listed as a proposed employee for

McKean. The SSEB did not have any available information in the non-cost

proposal documents provided for their review to know that Mr. Saucedo was

either proposed or if he had any involvement with McKean’s proposal. When

McKean received the follow-on NIEF contract award Ms. Saucedo had a

discussion with her supervisor that her role would need to change in order

to avoid any PCI that could arise in administration of the follow-on contract,

which her husband would be employed under.

The contracting officer further determined that “although Ms. Saucedo had access

to KES’ Cost Proposals under KES’ Prior Contracts, the evidence supports that she did

not provide that information to her husband,” and elaborated:

The PCI investigation revealed that Ms. Saucedo is one of several CORs

(8-10 at any given time) under KES’ existing contract, N66001-18-D-0075,

and also a project manager for several programs under the NIEF. According

to Ms. Saucedo, her duties include the development of task orders based

on sponsor requirements, overseeing task orders, and other standard COR

duties. As one of the CORs, Ms. Saucedo had access to some of KES’ non-

public labor and indirect rate information under KES’ existing NIEF contract

in order to review KES’ task order proposals. The contract file documents

her review of one such task order proposal in October 2020.

Although Ms. Saucedo had access to some of KES’ cost information under

the incumbent contract, Ms. Saucedo specifically denied, under penalty of

perjury, providing any of KES’ cost information to her husband. She also

described how she protected the proprietary information she had in

connection with her COR duties. While Ms. Saucedo stated she lives in the

same household with Mr. Saucedo, she stated she followed proper

protocols as a COR to safeguard non-public/sensitive information as

required on all contracts. Ms. Saucedo’s government computer requires a

CAC and pin to log in, and Ms. Saucedo stated that Mr. Saucedo does not

have access to her computer. Ms. Saucedo and Mr. Saucedo have separate

offices in their home. Ms. Saucedo stated, “I always close the door when I

have any discussions on the phone regarding anything related to my COR

duties.” Ms. Saucedo stated that she has “never discussed any labor rates

or any other financial contract information with Mr. Saucedo.” Ms. Saucedo

also said, “I do not discuss anything that is contract sensitive with anyone,

I understand it is unethical for me to divulge any financial data – IGCE’s,

Labor Rates, Cost Proposals – none of this is ever discussed except with

other CORs of the contract. I also do not discuss KES with anyone, but

other CORs on the contract.”

The PCI investigation revealed that although Ms. Saucedo has not

discussed Mr. Saucedo’s job with her co-workers, Ms. Saucedo along with

some fellow co-workers knew he worked for Cabrillo, which is a unit within

McKean and now owned by Noblis-MSD. Mr. Saucedo does not work on

any projects or programs that Ms. Saucedo is involved in with the NIEF.

The PCI investigation revealed Ms. Saucedo was aware of Mr. Saucedo’s

company competing on the requirement. Ms. Saucedo stated, “I did know

the company was developing a proposal for this contract, Mr. Saucedo told

me. I am not sure when the contract actually went out for bidding but I knew

before the proposal was submitted. Other than knowing they were

developing a proposal, we did not have any other discussion about the

contract.” Ms. Saucedo also mentioned, “I am not exactly sure when Mr.

Saucedo knew his company was bidding on the NIEF engineering contract.

It is my understanding he knew he was named in the proposal.” The above

does not present a competitive source selection advantage to McKean, but

it does present a potential postaward contract administration conflict in

which Ms. Saucedo will not be appointed as the COR for the new NIEF

Engineering contract award to avoid such a conflict during contract

administration.

The PCI investigation revealed no reluctance on Ms. Saucedo’s behalf

when she was requested to provide a written response to a list of 25

questions. She provided complete, and timely cooperation (i.e., within less

than 24 hours).

Similarly, Mr. Saucedo specifically declared, under penalty of perjury, that

Ms. Saucedo has never shared any proprietary or sensitive information of a

contractor that she oversees, including KES. Mr. Saucedo also explained

he did not have access to any portion of or information regarding the

proposal KES submitted, and that he cannot and has not ever accessed

any of her work files. Additionally, Mr. Saucedo stated he is not a McKean

executive, was not involved in any way with preparation of McKean’s cost

proposal submitted for the RFP, and he only had a limited role in preparing

the technical proposal response.

The PCI investigation revealed that [redacted] and [redacted] are the only

members of the SSEB who know Mr. Saucedo, but do not have a personal

relationship with him, and their interactions with Mr. Saucedo did not

otherwise raise any issues for concern.

I did not uncover any further information related to KES counsel’s 18

October 2021 email stating the KES learned that Ms. Saucedo spoke up to

defend the MSC program, and thereby McKean. The information provided

was vague, and offered no information as to any dates or timeframes it was

alleged to have occurred. Ms. Saucedo stated in her declaration that she

did not recall attending a government or government/contractor meeting

wherein she discussed Military Sealift Command NIEF related efforts. Given

the declarations by both Ms. Saucedo and Mr. Saucedo regarding Ms.

Saucedo not revealing any proprietary information regarding KES to Mr.

Saucedo, other information detailed above, and KES’ admission that its

allegation would not constitute improper behavior, I do not find this

allegation affects my findings. Furthermore, the allegation is more about Mr.

Saucedo discussing his work with Ms. Saucedo (not the reverse) which is

not improper. Finally, the discussion of problems or concerns with regards

to the MSC program office would not provide new or competitively useful

information that would have given McKean an advantage over KES, who

has overseen the full scope of work for the NIEF Engineering contract under

its incumbent contracts.

(capitalization in original; internal reference omitted). The contracting officer also

determined that “the evidence does not support a violation of FAR 3.104-3(a) or (b),” and

explained:

Although KES did not specifically mention the Procurement Integrity Act

(PIA) in its protest, or otherwise, to the extent that KES’ allegation that Ms.

Saucedo had access to KES’ cost information and cost proposals may be

construed as a possible violation of the PIA, my investigation showed no

evidence that Ms. Saucedo provided cost proposals or cost information to

her husband or anyone at McKean. Ms. Saucedo specifically denied, under

penalty of perjury, providing any of KES’ cost information to her husband.

She also described how she protected the proprietary information she had

in connection with her COR duties. In accordance with the COR

appointment letter, Ms. Saucedo complied with her COR duties, including

paragraph 5.(e) in which it states “You shall NOT…Discuss acquisition

plans, strategies or provide any advance information that might give one

contractor an advantage over another contractor in forthcoming

procurements.” Ms. Saucedo took steps to safeguard any cost information

she had access to by keeping it stored on her secure CAC enabled

machine.

Similarly, Mr. Saucedo specifically declared, under penalty of perjury, that

Ms. Saucedo has never shared any proprietary or sensitive information of a

contractor that she oversees, including KES. Mr. Saucedo also explained

he did not have access to any portion of or information regarding the

proposal KES submitted, and that he cannot and has not ever accessed

any of her work files. Additionally, Mr. Saucedo declared he was not

involved in any way with preparation of McKean’s cost proposal submitted

for the RFP, and he only had a limited role in preparing the technical

proposal response.

Additionally, the circumstances of this procurement would limit the

competitive usefulness of any cost proposal information under KES’

incumbent contract. While cost proposal information might be competitively

useful in some situations, the structure of the RFP evaluation factors and

type of contract (i.e., Cost type contract) limited the competitive usefulness

of the cost information Ms. Saucedo had access to. The reason the

information is not competitively useful is in a cost type contract, cost realism

analysis is utilized to realize up any unrealistic direct labor rates (e.g. rates

not based on local payrolls, which fall below the average rates for the

specific locality), as well as, any indirect labor rates that fell below the

contractor’s approved rates from DCAA or DCMA in the form of Provisional

Billing Rates (PBR), Forward Pricing Rate Agreement (FPRA), or Forward

Pricing Rate Recommendation (FPRR). The labor categories and level of

effort or hours to be proposed were provided in the RFP to all offerors.

McKean proposed in accordance with the level of effort identified within the

RFP.

(capitalization and alteration in original). Therefore, the contracting officer reasoned,

“[c]onsequently, the application of cost realism analysis would have limited the

competitive usefulness of any cost information Ms. Saucedo had access to.” (alteration

added).

The contracting officer concluded:

Based upon the above analysis, I find no conflict of interest affecting the

award to McKean. I found no evidence that: (1) Ms. Saucedo participated

personally and substantially in the NIEF Engineering source selection,

including development of the statement of work, drafting of the source

selection strategy, request for proposals, or participated in the evaluation of

proposals resulting in the NIEF Contract awarded to McKean; and (2) Ms.

Saucedo disclosed any competitively useful nonpublic information. I also

found no evidence that Ms. Saucedo provided contractor bid or proposal

information or source selection information to McKean before the award or

that McKean obtained contractor bid or proposal information or source

selection information before the award. Therefore, I find “no impact” on the

award of the contract to McKean in accordance with FAR 3.104-7(a).

Additionally, as discussed above, even if there were disclosure of cost

information as alleged by KES, I do not believe that such cost information

would have provided a competitive advantage due to the nature of the cost

evaluation. Although some may believe there is an appearance of

impropriety based upon Ms. Saucedo’s position as COR and her

relationship with a McKean employee, the above information, findings and

conclusions, do not support any actual impropriety. I do not believe the

appearance of impropriety by itself sufficient to impact the award of the

contract to McKean given all of the above.

The contracting officer’s Personal Conflict of Interest Memorandum was included

as an attachment to the Source Selection Authority’s February 24, 2022 Business

Clearance Memorandum, which again recommended McKean for award. In the February

24, 2022 Business Clearance Memorandum, the Source Selection Authority first noted

that “[n]o PCI Found During Investigation,” and elaborated

the Contracting Officer found no evidence that: (1) Ms. Saucedo

participated personally and substantially in any capacity in the NIEF

Engineering source selection, including development of the statement of

work, drafting of the source selection strategy and request for proposal, or

participated in the evaluation of proposals resulting in the NIEF Contract

awarded to McKean; and (2) Ms. Saucedo disclosed any competitively

useful nonpublic information, and what information she did possess would

not have provided a competitive advantage due to the nature of the

evaluation factors including cost.

(alteration added; internal reference omitted).

As reflected, the Navy’s evaluations of protestor and intervenor in the February 24,

2022 Business Clearance Memorandum were identical to the evaluations in the Source

Selection Authority’s August 23, 2021 Business Clearance Memorandum as reflected in

the table below:

Offeror Acceptability Factor I Factor II Past Factor III Proposed Cost Probable Cost

Technical Performance Small

Approach Business

Participation

McKean Acceptable Good Satisfactory Good $187,467,409.92 $195,045,486.39

Confidence

KES Acceptable Good Satisfactory Outstanding $204,870,045.22 $204,870,045.22

Confidence

Regarding McKean’s cost proposal, in the February 24, 2022 Business Clearance

Memorandum, the Source Selection Authority stated:

McKean combined with their subcontractors proposed all hours and

overtime hours in accordance with the RFP. McKean proposed prime hours

on 69% of the overall level of effort in terms of hours. McKean proposed on

a CPFF [Cost Price Fixed Fee] basis. According to DCAA Audit Report No.