main memory available to FEA, the agency objections seem to be reasonable and appropriate.

5. FEA-OLS only proposed two channels to random access storage for Phase I, even though the RFP required at least three channels (RFP section II-C-4).

OLS response-OLS contends that FEA's claim of deficiency is in error, since it proposed for Phase I one subsystem for High Speed Random Access Storage (HSRAS) and two subsystems, each with its own channel, for High Capacity Random Access Storage (HCRAS). OLS claims that this was in accordance with FEA's letter dated September 19, 1974, prior to the closing date for receipt of proposals, to all potential offerors, as follows:

DEC has asked if each CPU may have two channels rather than three to HCRAS.

The answer is yes. The requirement is for three channels to all random access storage (HCRAS and HSRAS). This is illustrated in Attachment D of the technical specification, which shows one channel to HSRAS and two channels to HCRAS. Furthermore, the requirement is for functionally equivalent speed and backup of channel failure. If functional equivalency could be established for this requirement, that would be sufficient.

We note that OLS's schematic for the Phase I central hardware clearly indicated that only two channels were proposed (one to HSRAS and one to the two subsystems of HCRAS). This is the only reference in OLS's proposal to the number of channels it offered. Also, OLS has not demonstrated that its proposed configuration is functionally equivalent to the RFP requirements. We find that OLS's proposal as written does not meet the RFP requirements as clarified by the September 19 letter.

6. FEA-OLS proposed only one high-speed line printer instead of the two required by the RFP (RFP section II-C-6).

OLS response-This is an admitted oversight.

7. FEA-OLS responded to the RFP requirements that the offeror provide software packages for simulation, linear programming and non-linear programming with a general assertion that it has capabilities and technical assistance in these areas (RFP section II-D-5). The OLS proposal was considered technically inferior since it nowhere identified the software packages which would be provided.

OLS response-OLS states that the RFP only stated in the barest

terms:

Software packages for simulation, linear programming and non-linear programming must be provided.

Consequently, OLS contends that it would be unreasonable to penalize an offeror for responding in similarly general terms, and if FEA wanted more information it should have asked OLS.

We do believe it was reasonable for FEA to find OLS's proposal

deficient for failing to even identify the software packages it would use for simulation and linear and non-linear programming. The general terms of the RFP requirement do not make mere "parroting" back an adequate response. General requirements often are intended to elicit specific responses, as we believe was the case here.

The SEB also found the OLS proposal deficient because it did not: (1) specify where in the Washington, D.C. area its proposed service facility was located; (2) address the RFP requirement that each offeror must agree not to divert key management and supervisory personnel from the FEA contract without the contracting officer's consent; (3) address the RFP requirement for courier service between the service facility and FEA and there was no guarantee that the courier service supplied by OLS would have the essential security clearances; (4) specifically assert that the proposed equipment and telecommunications network were in conformance with the applicable Federal Information Processing Standards Publication; (5) assert that it would or could supply the maximum total of 500 terminals required in Phase II; (6) provide sufficiently detailed resumes of the key management personnel to adequately evaluate the capabilities of the proposed staff; (7) provide specific details as to the implementation and beginning dates of the service facility; (8) directly state that it could meet the required dates for either Phase I or Phase II; (9) contain adequate information about the implementation of the FEA physical security requirements; and (10) discuss how the contract's 10-percent increased quantity option might be accomplished.

While any one of the many aforementioned deficiencies may not itself be sufficient reason to exclude OLS from the competitive range, as a totality they justify the FEA conclusion that OLS's proposal was so materially deficient that it could not be made acceptable, except by major revisions and additions. Consequently, we conclude that FEA acted reasonably in excluding OLS's proposal from the competitive range.

Moreover, we believe that any offer-whether or not from an incumbent must demonstrate compliance with essential RFP requirements. There is no basis for favoring incumbents in competitive range determinations with presumptions merely on the basis of prior satisfactory performance. We have held it is proper to eliminate an incumbent from the competitive range for failure to translate whatever advantages or capabilities which might have accrued from its incumbency into an initial proposal. See 52 Comp. Gen. 718; Potomac Research Incorporated, supra; EG&G, Inc., supra.

Of particular significance, the elimination of OLS did not have the effect of leaving only one offeror in the competitive range, as in B-167291, supra; 45 Comp. Gen. 417; 47 id. 29; and B-173716, supra.

In this case, three proposals submitted by two offerors were placed in the competitive range.

OLS contends that, notwithstanding its alleged "informational" deficiencies, its significantly low offered costs mandated its inclusion in the competitive range pursuant to Federal Procurement Regulations (FPR) § 1-3.805-1 (1964 ed.). However, where, as here, a technical proposal has been found to be totally unacceptable, it may be eliminated from the competitive range without regard to its low estimated costs. 52 Comp. Gen. 382, 388; Potomac Research Incorporated, supra. FPR § 1-3.805-2 (1964 ed.) recognizes that costs should not be considered controlling in cost reimbursement type contracts since they are merely estimates, and award on such a basis may encourage the submission of unrealistically low estimates and increase the likelihood of cost overruns.

The RFP required an offeror to receive a score of 60 points on a 100-point scale to be in the competitive range. The establishment of such a predetermined cut-off score is not in accord with sound procurement practice. See 50 Comp. Gen. 59 (1970); Moxon, supra. Nevertheless, the inclusion of a predetermined cut-off score in this evaluation plan was not prejudicial to OLS in view of its low score (44.8) in relation to others received (96.3, 92.1, 88.2). See 52 Comp. Gen. 382, 387; 53 id. 240 (1973).

From the foregoing, we find that OLS was properly excluded from the competitive range, the SEB members did not go outside the parameters of the evaluation criteria to derogate OLS's proposal, and there is no indication of bias against OLS. In view of this, it is not necessary to discuss the FEA position taken during the course of the protest that OLS's low estimated costs were unrealistic.

OLS also contends that (1) acceptance of its proposal would have saved the cost of conversion to the new system and (2) OSI is not complying with the contract requirements since FEA has had to contract directly for the performance of such conversion tasks. Since the RFP did not require this conversion to be performed by the contractor, these contentions have no merit.

COST REALISM OF OSI's PROPOSAL

A cost evaluation was made of the proposed estimated costs of those offerors found to be in the competitive range. The cost evaluation considered the total proposed estimated costs for both Phase I (contract period ending June 1975) and Phase II (option period ending June 1976) of the project.

The total evaluated estimated costs (including base fee) proposed by the three firms in the competitive range were as follows:

native A

88.2

1,815, 850

6, 258, 741

8, 074, 591 The cost figures set out above reflect adjustments made for minor clerical errors in each of the cost proposals and the total estimated costs of the 500 terminals offered by OSI. This computation was not included in OSI's cost proposal due to OSI's uncertainty as to the schedule for the phasing in of the terminals (although OSI clearly indicated its unit prices for the terminals in its cost proposal and identified the terminals in its technical proposal). PRC has indicated that it had the same uncertainty as to the timing for the phasing in of the terminals.

The estimated costs set out above, on which basis the cost proposals were evaluated, include the base fee (3-percent of the total estimated costs) to which a contractor would be entitled under the CPAF contract to be awarded (unless it had defective cost or pricing data (discussed below)). These figures do not reflect the award fee pool of 7-percent of the total estimated costs, to which a contractor has no vested right until the FEA Director of Procurement awards the contractor that part of the pool which he finds the contractor to be entitled. The award fee pool under OSI's CPAF contract is $100,383 for Phase I and $399,992 for Phase II for a total pool of $500,375. This makes OSI's total contract value $7,691,597.

PRC has protested that OSI's proposed costs are not realistic and that FEA has made an insufficient cost analysis. In contending that OSI's proposed costs are not realistic, PRC refers to its Alternative B proposal, which it states offered equipment similar to the IBM 370/168 CPU configuration offered by OSI (PRC's Alternative A proposal offered equipment manufactured by the Burroughs Corporation (Burroughs)), but which proposed in excess of $3 million more in estimated costs than OSI's cost proposal. PRC claims that part of the difference may be explained by OSI's allegedly deficient proposed manning of the ADP facility (discussed below) and by OSI's proposed sharing of the communications network and front-end processors (discussed below). PRC claims that the substantial remaining difference in estimated costs between the two proposals demonstrates the insufficiency of FEA's cost analysis, and that OSI has made a

"buy-in" at an unreasonably low cost, and that cost overruns are certain to occur. PRC claims that FEA should have made an item-by-item comparison of all cost components in the proposals, which would have revealed the unreasonableness of OSI's proposed costs.

In support of its contentions, PRC has submitted the results of its own cost analysis of OSI's proposal and concluded that OSI's estimated costs should have been approximately $8,775,000 (excluding fees), giving OSI the benefit of the doubt. PRC's cost analysis is in part based on FEA's cost estimate for dedicated services, set out in Attachment 14 of FEA's report on these protests, which was prepared in order to compute and compare FEA's various alternatives for consolidating FEA's computer resources. By making substantial alterations and various assumptions concerning this Government estimate, PRC has "normalized" and adjusted the estimate (which included costs which would not be incurred by the contractor, e.g., conversion costs) to a cost figure which it regards as what FEA should have known to be a reasonable estimate for the contract at the time the contract was awarded. PRC's "normalized" version of the Government estimate is $9,784,000 (excluding fees). PRC concludes its cost analysis shows that OSI's proposal was either not cost realistic or was based upon furnishing shared facilities in violation of the RFP requirements, since it is more than $2 million below the Government estimate and more than $3 million below PRC's cost estimate (excluding fees).

The cost analysis performed by FEA consisted of a comparison of the OSI and the PRC Alternative A and Alternative B proposals to one another based on the following general factors:

Materials

Direct Labor

Labor Overhead

Travel/Per Diem

Other Direct Costs

General and Administrative Expenses

Fee

Total Estimated Costs

(At the request of OSI and FEA, we will not disclose the precise numbers in this comparison.) Contrary to PRC's assertion, the cost of the terminals was "normalized" for this comparison and all cost proposals in the competitive range were evaluated based on the same terminal "phase in" time. In addition, although all components of the direct labor costs were compared on an item-by-item basis, no corresponding comparison was made with respect to the components of the other general cost categories.