GAO sides with Raytheon in Volpe protest

Computer Sciences Corp. late last week asked the General Accounting Office to reconsider its decision to uphold a protest against a $171.4 million Transportation Department support services contract awarded to CSC.

In a Feb. 2 decision, GAO directed the Volpe National Transportation Systems Center to reopen discussions and solicit new best and final offers for the contract it awarded to CSC in September.

Hughes STX, now part of Raytheon, filed a protest against the contract in October, charging that Volpe failed to correctly analyze the salary rates Hughes had proposed against what it considered normal for certain positions. In addition, Hughes charged that Volpe was not specific enough when it told Hughes that its proposed rates were too low and should be adjusted. This led the company to raise rates across the board rather than in a specific labor category, which, in turn, made the Hughes bid more expensive than the CSC bid, according to the protest.

"Hughes brought the protest because we were told by the agency that the initial proposed [labor] cost was too low. Hughes increased those costs and then was told by Volpe that they were not cost-competitive with CSC," said Richard Webber, a lawyer with Arent, Fox, Kintner, Plotkin & Kahn, which is representing Hughes in the case. "We are very pleased with the decision."

GAO recommended Volpe re-evaluate the proposals, reopen discussions and request another round of BAFOs from, at least, CSC and Hughes. Incumbent contractor Unisys Corp. and Lockheed Martin Corp. also bid on the contract.

Industry sources said the Hughes bid was $18 million higher than the winning CSC bid of $171.4 million, after Hughes adjusted its rates at the request of Volpe. Hughes received a higher technical score than CSC.

GAO upheld the protest because "the cost-realism evaluation was unreasonable, and discussions conducted with the protester concerning its proposed labor rates were not meaningful," according to a redacted version of the protest decision released late last week. Volpe did not "meaningfully explain" why Hughes' initial proposed labor rates were not realistic but that CSC's were realistic, according to GAO.

GAO said Hughes "had no choice but to assume that its labor rates were too low across the board." Hughes' lower costs "could well have led to a different source selection."

A CSC spokesman said the company is disappointed with the decision. The company filed a motion for reconsideration with GAO late Feb. 13.