Decision
 
Matter of: DynCorpInternational LLC
 
File: B-289863;B-289863.2
 
Date: May 13, 2002
 
CarlJ. Peckinpaugh, Esq., and Charles S. McNeish, Esq., DynCorp, for the protester.
C.Stanley Dees, Esq., Alison L. Doyle, Esq., and David M. Glynn, Esq., McKenna& Cuneo, and Peter H. Johnson, Esq., ITT Defense, for ITT Federal ServicesInternational Corporation, an intervenor.
RichardC. Bennett, Esq., U.S. Army Corps of Engineers, for the agency.
ScottH. Riback, Esq., and John M. Melody, Esq., Office of the General Counsel, GAO,participated in the preparation of the decision.

DIGEST
 
1. Protest is sustained where source selection authority discountedweaknesses in awardee's proposal identified by technical and cost evaluators,and record does not establish that her disagreement had a rational basis.
 
2. Protest thatagency improperly assigned high performance risk rating to protester's proposalbased on potential cost growth, while not assigning a similar rating toawardee's proposal, is sustained where agency had concern about cost growth asto both proposals.

DECISION
 
DynCorp International LLCprotests the award of a contract to ITT Federal Services InternationalCorporation under request for proposals (RFP) No. DACA78-01-R-0016, issued bythe U.S. Army Corps of Engineers to obtain base operation services at Camp AsSayliyah, in Qatar. DynCorp maintainsthat the agency misevaluated cost and technical proposals in making its awarddecision.
 
We sustain the protest.
The RFP sought proposals to provide an array of supportservices on a cost reimbursable basis for a base year, with four 1-yearoptions. Offerors were advised that theagency would make award to the firm submitting the proposal deemed to offer thebest overall value to the government, in light of price and non-priceconsiderations. The RFP included fournon-price elements (equal in importance):management capability, technical capability, experience and past performance. (Each of the elements included subelementsthat are not relevant here.) The RFPadvised that adjectival ratings of outstanding, excellent, satisfactory,marginal, unsatisfactory or unacceptable would be assigned for each subelementand element, and that an overall adjectival rating would be assigned to eachproposal. As for cost, the RFP providedthat proposals would be evaluated to determine cost reasonableness, costrealism, and completeness of the proposed costs (that is, that every requiredelement of cost has been addressed in the proposal). With respect to the completeness element, the RFP included a costbreakdown sheet that specified cost elements for each of the various contractline items (for example, direct labor, indirect rates, materials, equipment andsupplies). Offerors were advised thatthey were not required to use the cost breakdown sheet included with the RFP,but were nonetheless required to provide the information called for. Finally, the RFP provided that the agencywould assign a risk rating to each proposal based on technical and costconsiderations.
 
In response to the solicitation, the agency received fiveproposals, including those submitted by DynCorp and ITT. DynCorp's proposal received excellentratings from the technical evaluation team (TET) under all four evaluationfactors. Initial Documents (ID), exh.2A at 5-8.[1] The TET identified a total of 18 strengthsin the DynCorp offer; it found no weaknesses or risks. ID, exh. 2A, DynCorp Consensus EvaluationWorksheet, at 1-2.
 
ITT's proposal received satisfactory ratings in themanagement capability and technical capability areas, an excellent rating inthe experience area, and an outstanding rating in the past performancearea. ID, exh. 2A, at 11-13. The TET identified a total of eightstrengths, six weaknesses and one risk consideration. ID, exh. 2A, ITT Consensus Evaluation Worksheet, at 1-2. The evaluators were concerned primarily withITT's proposed staffing levels, which they described as “minimally satisfactory.” Id.The TET further noted that ITT did not seem to understand the number ofpeople required to meet the contract's requirements, and apparentlymisunderstood the overall scope of work; that, while the firm's proposedstaffing approach might work, it would result in lower levels of response andservices; and that there was a particular concern with the adequacy of thestaffing in the security area of the requirement. Id. As for therisk consideration, the TET noted that ITT intended to expand its workforceafter contract award, and that there was a risk that this might not be possiblewithout compromising the firm's ability to perform quality work in a timelymanner within the compressed timeframe available for startup of thecontract. Id. at 2.
 
In the cost reasonableness and completeness areas, the cost evaluation team (CET) foundthe DynCorp proposal complete from an informational standpoint. ID, exh. 2B, at 8. The CET found the DynCorp proposal low as tocost overall, and specifically identified the costs associated with severalfunctional areas as low, chiefly because the labor rates for some third countrynationals (TCN) were considered low. [2] Id. at 8-10. The CET also concluded that some of thelabor rates for United States nationals were low, and that DynCorp had proposedinadequate staffing in several functional areas. ID, exh. 2B, at 9-10.
 
As for ITT, the CET found that its cost proposal wasincomplete from an informational standpoint because it did not include theRFP's cost breakdown sheets,[3]and instead presented cost information in such a way that the CET could notadequately evaluate whether the proposal included costs for each element of therequirement. ID, exh. 2B, at 10. Additionally, the CET, like the TET, foundthat ITT's proposed staffing was inadequate to perform the requirement in 5 ofthe 10 functional areas, and that the staffing in 2 other functional areasindicated a misunderstanding of the scope of work. Id. at 11. In thethree remaining functional areas, the CET either could not determine theadequacy of ITT's proposed rates or staffing, or could not evaluate the ratesbecause necessary information was omitted from (or could not be identified in)the firm's proposal. Id.
 
For cost realism purposes, the CET adjusted both firms'proposals upward to account for shortfalls in staffing. In this connection, the record shows thatthe CET independently established composite labor rates for the various skillcategories required to perform the contract, and also developed minimumstaffing levels that the agency thought were necessary to perform therequirement. First AR, exh. 5; SAR,exh. 7. Where a firm proposed fewerthan a minimum acceptable number of staff (in the agency's view), the CET addedstaff to the offer to bring it up to the minimum, and derived the cost to beadded by multiplying the composite hourly rates by the number of additionalhours. As a result of theseadjustments, the CET added [deleted] staff positions to the DynCorp proposaland adjusted its cost upward by [deleted], to a total evaluated cost of[deleted]. ID, exh. 2B, at 18; SAR,exh. 7, at 1. For ITT, the CETadded [deleted] staff positions and adjusted its cost upward by [deleted], to atotal evaluated cost of [deleted]. ID,exh. 2B, at 18; SAR, exh. 7, at 2. TheCET made no adjustments to the proposals to account for labor rates deemed toolow; according to the agency it did not make this adjustment because of timelimitations.
 
The cost and technical evaluation results were provided tothe source selection authority (SSA), who reviewed the materials and the proposals. The SSA took exception to certain of theevaluators' conclusions in making her source selection decision. She concluded, for example, that the DynCorpproposal should have been assigned weaknesses in the area of subcontracting,and also assigned the proposal a performance risk based on her conclusion thatits low labor rates could result in cost growth over the course of thecontract. ID, exh. 7, at 3-4. As for ITT, the SSA discounted several ofthe weaknesses identified by the TET, primarily those relating to ITT'sproposed staffing, and also concluded that the performance risk identified bythe TET (relating to the need for ITT to expand its workforce shortly aftercontract award) was not a legitimate concern.Id. at 5. The SSA alsospecifically discounted the CET's concern relating to the completeness of ITT'scost proposal, finding instead that all necessary information was included inthe proposal, simply not in the form specified in the RFP's cost breakdownsheets. Id. On the basis of these considerations, theSSA made award to ITT without discussions, finding that the firm's proposalrepresented the best overall value to the government, notwithstanding itshigher cost.
 
THE SSA'S DISAGREEMENT WITH THE EVALUATORS' CONCLUSIONS
 
DynCorp contends that the agency's source selectiondecision was unreasonable. DynCorpchiefly maintains that the TET's and CET's evaluations of the proposalsaccurately reflected the relative strengths and weaknesses of the offers, andthat the SSA's disagreement with the evaluators' conclusions was unreasonable.
 
In reviewing source selection decisions, we examine thesupporting record to determine whether the decision was reasonable, consistentwith the evaluation scheme and adequately documented. AIU North America, Inc., B-283743.2, Feb. 16, 2000, 2000CPD ¶ 39 at 7-8. Although sourceselection officials may reasonably disagree with the ratings andrecommendations of evaluators, they are nonetheless bound by the fundamentalrequirement that their independent judgments be reasonable, consistent with thestated evaluation scheme and adequately documented. Id. For thereasons discussed below, we find the SSA's conclusions here unreasonable.
 
The ITT Proposal
 
As noted, both the TET and the CET had reservations relatingto the adequacy of ITT's proposed staffing; the TET described it as minimallysatisfactory, while the CET raised specific concerns about the adequacy ofITT's proposed staffing in each of the 10 functional areas of contractperformance, either because the data available in ITT's proposal showed thatthe staffing was inadequate, or because the data were inadequate to evaluatethe staffing. In making her sourceselection decision, however, the SSA disagreed with the evaluators'conclusions, stating as follows:
 
Some of the weaknesses noted by the technical team was theofferor did not have a very good understanding of the overall scope ofwork. The offeror appears to haveunderstaffed for the security responsibilities. Another weakness noted was the offeror does not fully understandthe full extent of what is asked in the statement of work. After carefully reviewing this offeror'stechnical proposal, I disagree with all of the weaknesses. The weaknesses noted by the technical teamare in direct conflict with the strengths noted by the same individuals. The strengths noted above [the SSA'sdecision document enumerated 5 strengths found by the TET] best describe thisfirm's technical proposal. The plan touse [deleted] on the base strengthens their proposal even more, since thisproject is a carry on of what is currently on going during normal time framesat this base. The performance risknoted on the technical proposal was the offeror intends to expand its workforceas soon as the contract is awarded. Ido not feel this is a performance risk.This offeror currently has the base support contract at this base foreverything except security and dining facility requirements. They have first hand knowledge of what workis required and the staffing required to perform in a satisfactory manner. This eliminates any performance risk forthis offeror.
ID, exh. 7, at 5.
 
As an initial matter, we point out that, while the TET'sconclusions were based to a great extent on a finding of inadequate staffing,none of the strengths noted by the SSA to explain her departure from theevaluators' conclusions relates to the adequacy of ITT's staffing. Given the importance of ITT's inadequatestaffing to the TET's conclusions, it is not apparent how the SSA could have questionedthe weaknesses identified by the TET without considering its staffingconcerns. There is nothing else in therecord that provides a basis for questioning the weaknesses identified by theTET (and the CET) relating to the adequacy of ITT's proposed staffing. In this connection, the CET, in performingits cost realism evaluation, added [deleted] full time equivalents (FTEs) tothe ITT proposal, thereby increasing the firm's proposed staffing—[deleted]full time equivalents (FTE)--by more than [deleted]. SAR, exh. 7, at 2. TheSSA does not explain why she did not consider such a large underestimation ofrequired staffing to be a significant weakness.
 
It also is not clear how--as the SSA found--ITT's use of[deleted] alleviated the staffing shortfall weakness noted by theevaluators. First, the record showsthat, overall, subcontract personnel comprised only [deleted] (or [deleted]percent) of the agency's projected [deleted] FTEs required to perform the contract. ITT Proposal at 1-5. Moreover, the evaluators actually found itnecessary to add [deleted] FTEs for cost realism purposes to those areas whereITT proposed to use subcontractors; this indicates that, rather thanalleviating ITT's staffing deficiency, the proposed subcontractors exacerbatedit. (The record also shows that[deleted]--ITT is the incumbent contractor for many of the installationsfunctional areas, excluding food service and security). ITT Proposal at 1-2, 1-3.
 
We also find no reasonable basis for the SSA's discountingof the performance risk identified by the evaluators. As noted, the evaluators assigned a proposal risk to the ITToffer because it showed that the firm intended to expand its workforce aftercontract award, and there was a concern that this might not be possible withinthe time available for contract start-up.ID, exh. 2A, ITT Consensus Evaluation Worksheet, at 2. The SSA discounted this risk, finding thatITT, the incumbent contractor for all of the functional areas except securityand full food service, had first-hand knowledge of the work involved and thestaffing required. The SSA's positionis untenable. First, her finding doesnot directly address the evaluators' concern--that the expansion of ITT'sworkforce might not be possible in the start-up time allowed. This concern would seem to go beyond thequestion of ITT's knowledge of the work and staffing requirements themselves,the only factor cited by the SSA. Inany case, the record shows that the security functional area alone comprisesapproximately [deleted] percent of the overall staffing requirement for ITT (ascalculated by the agency),[4][deleted] is the incumbent for this functional area (rather, DynCorp is theincumbent). We conclude that the SSAhas provided no rational basis for discounting the risk found by the technicalevaluators in arriving at her conclusions.
 
Finally, we find that the SSA unreasonably discounted theCET's finding that the ITT proposal was incomplete. As noted, the evaluators found that, because of the manner in whichITT presented its cost information (it did not include the cost breakdownsheets provided with the RFP), it was not possible to determine whether ITT hadproposed costs for each element of the requirement. ID, exh. 2B, at 10-11.The SSA disagreed with this conclusion, finding that, although the datawere not presented in the format provided in the RFP, the firm's proposal wasnonetheless complete. ID, exh. 7 at5. However, the SSA made no attempt,either in her source selection decision document, or elsewhere in the record,to explain the basis for her disagreement with the CET (she has not, forexample, pointed to the areas of ITT's proposal containing this information orshown that the information included in the ITT proposal could be used to derivethe cost elements missing from the CET's analysis.[5]) Under the circumstances, we cannot find thatthe SSA was reasonable in her rejection of the CET's concern.
 
In sum, we find that the SSA's disagreement with the TETand CET evaluation conclusions relating to ITT is not explained in or supportedby the record; it therefore was not reasonable.
 
The DynCorp Proposal
 
The record shows that the SSA found a weakness with theDynCorp proposal for failing to provide information relating to proposedsubcontractors. In this respect, shefound:
 
The only weakness noted in the technical proposal was theidentification of any subcontractors.The solicitation evaluation criteria states “Subcontractor's Experience(an element): In accordance with therequest for information pertaining to the offeror's experience (see the elementdescribed immediately above), the offeror should provide similar experienceinformation for identified subcontractors anticipated to perform more than fivepercent of the work on-site.” Theofferor states their corporate policy for managing, and selectingsubcontractors and how they are planning on using subcontractors for thisproject. They do not provide anyinformation on the experience of these proposed subcontractors nor state ifthey will perform more than five percent of the work on-site. The technical evaluators rated this elementas satisfactory with a met in each of the items being rated. Two of the items which were rated met, Ifeel should have been failed. Theseitems are “(b) the precise services and functions to be performed by eachproposed subcontractor: and (c) identification of subcontractors by name to themaximum extent possible:” In some areasof this project the offeror indicates he will be using subcontractors; however,he fails to provide the information requested.The third element rated was “Key Management and PersonnelPositions”. The first sub-element asksfor qualifications of subcontractor clearly identified as such. The technical evaluators stated this was notapplicable for the reason that this offeror did not identify the subcontractorsthat it intends to use. This itemshould have been rated failed. Again,the offeror indicates he will be using subcontractors; however, he fails toprovide the information requested.
ID, exh. 7 at 3.
 
DynCorp takes issue with the SSA's conclusion, maintainingthat it did not propose any subcontractors, and therefore was not required toprovide any information. DynCorp addsthat, to the extent it may use subcontractors in the course of performance, itwould be for minor, contingency-type requirements (such as architectural andengineering requirements that may arise, minor construction and surge capacityrequirements) which cannot be anticipated in advance, and which would be belowthe 5 percent threshold in the RFP; DynCorp interpreted that threshold to meanthat subcontractor information would be required only where an individualsubcontractor would exceed the 5 percent threshold. DynCorp's proposal provides:”No DynCorp subcontractor will meet or exceed the 5 % threshold forsubmission of contract data.” DynCorpProposal at 164. In preparing itsproposal, DynCorp thus interpreted the requirement as it now states that itdid.
 
The agency, on the other hand, takes the position that theRFP required submission of subcontractor experience information where a firm'ssubcontractors, either individually or collectively, were to perform more than5 percent of the requirement. The agencyconcludes that the SSA reasonably downgraded DynCorp for failing to providesubcontractor information.
 
We think that DynCorp's interpretation is reasonable. The information to be provided was for eachsubcontractor and, accordingly, we think it was reasonable for offerors toassume that the provision was intended to apply for each subcontractor (asopposed to all combined). If we assumethat the agency's view is also reasonable, this indicates a latent ambiguity inthe RFP with respect to the 5 percent threshold. An ambiguity exists where two or more reasonable interpretationsof the terms or specifications of the solicitation are possible. Moreover, a party's particularinterpretation need not be the most reasonable to support a finding of ambiguity;rather, a party need only show that its reading of the solicitation provisionsis reasonable and susceptible of the understanding that it reached. Aerospace Design & Fabrication, Inc.,B-278896.2, et al., May 4, 1998, 98-1 CPD ¶ 139 at 13.
 
Given this conclusion, we need not decide whether the SSAreasonably downgraded DynCorp on this basis; where there is a latent ambiguity,both parties' interpretation of the provision may be reasonable. Under these circumstances, the appropriatecourse of action is to clarify the requirement and afford offerors anopportunity to submit proposals based on the clarified requirement. Allied Signal, Inc; Elec. Sys., B‑275032,B-275032.2, Jan. 17, 1997, 97-1 CPD ¶ 136 at 11.
 
As for whether the SSA reasonably downgraded DynCorp'sproposal under the other evaluation subelements, we find that DynCorp'sproposal is unclear regarding the role of subcontractors. On the one hand, DynCorp's proposal seems toprovide that the firm will perform the entire requirement by itself. DynCorp Proposal at 15. At the same time, however, DynCorp'sproposal also states that it will use subcontractors whenever cost savings willresult, DynCorp Proposal at 55, and goes on to enumerate various functionalareas where the firm states it is considering subcontracting. DynCorp Proposal at 56. Although, strictly speaking, DynCorp thusdid not “propose” any subcontractors, nonetheless the firm appears to havereserved the right to subcontract where it will be advantageous to do so. Accordingly, the SSA may have had alegitimate concern over the apparent possibility that DynCorp would employsubcontractors at a later time.[6]
 
RISK RATING
 
DynCorp also asserts that the SSA improperly assigned ahigh risk rating to its proposal based on low proposed hourly rates for some ofits employees. In this regard, thesource selection decision document states:
 
The overall estimated price is reasonable; however, thestaffing appears to[o] low in some functional areas which do not make thisproposal realistic. Also, the low laborrates indicate the estimated price as unrealistic. The cost growth due to actual rates for qualified staffing andcompliance with local labor laws could be extremely high and presents a highperformance risk with the pricing proposal.
ID, exh. 7, at 3-4.While DynCorp disputes that its rates were low, it maintains that thecost associated with raising the allegedly low labor rates to rates deemedreasonable by the agency would, in any event, be smaller than the differencebetween its and ITT's costs. DynCorpconcludes that its evaluated cost would have been lower than ITT's, and sinceits technical proposal would be at least equal to ITT's, it would be entitledto award. Alternatively, DynCorpasserts that it was unreasonable for the agency to assign a high performancerisk to its proposal because of potential cost growth while not assigning asimilar rating to the ITT proposal, which the agency also found wasunderstated. According to DynCorp, ifthe agency had properly accounted for its allegedly low hourly rates in itscost realism evaluation, as well as its allegedly low staffing, it would havefound that the DynCorp and ITT proposals were understated by similar amounts.
 
While agencies are not required to conduct in-depth costanalyses to verify each and every proposed cost element in conducting a costrealism evaluation, ManTech Envtl. Tech., Inc., B-271002 et al.,June 3, 1996, 96-1 CPD ¶ 272 at 8, agencies may not engage in disparatetreatment when evaluating proposals for the award of a cost reimbursement typecontract. United Int'l Eng'g, Inc.et al., B-245448.3 et al., Jan 29, 1992, 92-1 CPD ¶122 at 13.
 
Here, the record shows that, on the one hand, the agencyquantified its concerns relating to the offerors' low staffing by making upwardadjustments in their cost proposals, but did not assign risk ratings based onthis potential cost growth. In the areaof DynCorp's low proposed labor rates, on the other hand, the agency did notquantify its concern relating to potential cost growth by increasing DynCorp's evaluatedcost, but instead assigned a risk rating based on the potential for costgrowth--precisely the concern associated with the offerors' low proposedstaffing. Indeed, unduly low laborrates would appear to be a particularly appropriate circumstance for aquantified cost realism adjustment (especially where, as here, the agency hasalready prepared composite labor rates that it considers realistic); it appearsthe only reason one was not performed on DynCorp's labor rates was a lack oftime. First AR, Legal Memorandum at15-16. The result, however, wasunreasonable. The agency comparedDynCorp's performance risk (due to potential cost growth) to ITT's quantifiedpotential cost growth (with no associated performance risk). As a result of this disparate treatment, theagency could not reasonably determine which offeror's cost-driven performancerisk was higher, or alternatively, which offeror's potential cost growth wasgreater.
 
Prejudice to the protester is an essential element of aviable protest, since our Office will not sustain a protest unless theprotester demonstrates a reasonable possibility of prejudice, that is, unlessthe protester demonstrates that, but for the agency's actions, it would havehad a substantial chance of receiving the award. McDonald Bradley, B-270126, Feb. 8, 1996, 96-1 CPD ¶ 54 at3; see Stastistica, Inc. v. Christopher, 102 F.3d. 1577, 1581(Fed. Cir 1996). Here, the dollarimpact of the cost growth associated with DynCorp's low labor rates is notclear from the record, since the agency never performed the analysis because ofalleged time constraints. However,there is nothing in the record that establishes that DynCorp's cost growthbased on an adjustment to its allegedly low labor rates would be substantiallygreater than the cost growth associated with the ITT proposal (based onDynCorp's own calculations, its cost growth would be lower than ITT's—[deleted]million for DynCorp and [deleted] million for ITT[7]). With these cost adjustments, DynCorp'sevaluated cost would remain lower than ITT's, which suggests that DynCorp couldhave been selected for award. Weconclude that the agency's disparate treatment of the offerors was prejudicial.
 
RECOMMENDATION
 
In light of the foregoing, we sustain DynCorp'sprotest. We recommend that the agencyamend the RFP to clarify its subcontractor data requirements and obtain revisedproposals. The agency should evaluatethose proposals consistent with the above discussion and make a new sourceselection decision. (Should the agencyengage in discussions during this resolicitation, we recommend that it addressat least the subcontracting issue (for DynCorp) and the cost data issue (forITT).) If the agency concludes that afirm other than ITT is properly in line for award, we recommend that the agencymake award to that other firm and terminate ITT's contract for the convenienceof the government. We also recommendthat DynCorp be reimbursed the costs associated with filing and pursuing itsbid protest, including reasonable attorneys' fees. 4 C.F.R. § 21.8 (d)(1) (2002).DynCorp should submit its certified claim, detailing the time spent andthe costs incurred directly to the agency within 60 days of receiving ourdecision.
4 C.F.R.§ 21.8 (f)(1).
 
The protest is sustained.
 
Anthony H. Gamboa
General Counsel