BNUMBER: B-260953.4
DATE: October 4, 1995
TITLE: Krueger International, Inc.
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DOCUMENT FOR PUBLIC RELEASE
A protected decision was issued on the date below and was subject to a
GAO Protective Order. This version has been redacted or approved by
the parties involved for public release.
Matter of:Krueger International, Inc.
File: B-260953.4
Date:October 4, 1995
David T. Ralston, Jr., Esq., Leonard, Ralston, Stanton, Remington &
Danks, for the protester.
Thomas L. McGovern III, Esq., and S. Gregg Kunzi, Esq., Hogan &
Hartson, for Nightingale, Inc., an interested party.
Octavia Johnson, Esq., Department of Justice, for the agency.
David A. Ashen, Esq., and John M. Melody, Esq., Office of the General
Counsel, GAO, participated in the preparation of the decision.
DIGEST
Agency proposal to reopen discussions and request the submission of
samples and technical information, but not to permit revision of cost
proposals, is unobjectionable where discussions are necessary only to
correct technical proposals, and corrections are unlikely to have a
cost impact.
DECISION
Krueger International, Inc. protests the award of a contract to
Nightingale, Inc. under request for proposals (RFP) No. 1PI-C-2010-95,
issued by the Department of Justice, Federal Prison Industries (known
as UNICOR), for stacking chairs and occasional seating. Krueger
contends that the awardee's proposal fails to comply with mandatory
solicitation requirements and challenges the agency's proposed
corrective action as inadequate.
We deny the protest.
The RFP contemplated the award of a 5-year requirements contract. The
solicitation generally provided for award to be made "to the
responsible offeror whose proposal represents the best value to the
Government." The RFP listed two specific evaluation factors: (1)
total cost, which was "slightly more important than" (2) technical
quality. The technical quality factor included consideration of
compliance with the "performance standards" in RFP section C
("Description/Specifications/Statement of Work"), as well as four
specific subfactors: (1) the acceptability of the components offered;
(2) whether any assembly, component or data are protected by patent or
proprietary rights; (3) the offeror's approach to vertical
integration, that is, the process by which UNICOR would perform some
of the manufacturing of the chairs at one or more of UNICOR's 75
manufacturing facilities using inmate labor; and (4) the equipment
required to complete each type of chair.
With respect to vertical integration, the solicitation advised
offerors that:
"[UNICOR] is interested in vertically integrating its chair
assembly line to maximize [UNICOR] chair production capability
and inmate employment while reducing overall costs. Offerors
shall identify the level of vertical integration possible for
each type of chair, and the effect upon [UNICOR] production
capability, inmate employment, and overall production costs.
Offerors should propose a schedule of backward vertical
integration including a list of each logical progressive step.
"This schedule should take into account required training,
equipment, etc. for each progressive step."
The RFP further stated that "[t]he contractor shall provide a list of
required equipment including estimates of cost (installed), indicate
delivery lead time for each piece of equipment, and whether the
equipment is unique to the offeror's product line." The RFP provided
that the total cost (evaluation factor) "includes the price of the
proposed bases, and the cost of equipment, etc. necessary for [UNICOR]
to begin production using the alternative bases." Although the
references to "proposed bases" and "alternative bases" were unclear,
having been, according to the agency, mistakenly taken from a prior
procurement for chair bases, the agency advised potential offerors at
the pre-proposal conference, the transcript of which was incorporated
by amendment into the solicitation, that:
"[a]ward will be based on the combination of total cost and
technical quality. . . . Total cost is the cost of the
components themselves, of course[,] and any cost of equipment
that will be needed to produce it if we don't have that
already would be something that has to be identified in your
proposal and will be evaluated."
Finally, the RFP required offerors to provide a "detailed listing of
the components with all salient characteristics," and also stated
that "[f]irms in the competitive range will be required to send
production or prototype samples to a UNICOR location for evaluation
and testing. . . . Firms submitting a prototype sample will be
required to submit a production sample after award."
Six proposals were received by the closing time. Four--including
Krueger's and Nightingale's--were included in the competitive range.
UNICOR did not request the firms in the competitive range to submit
samples. Instead, following discussions with offerors, the agency
requested best and final offers (BAFO).
Based on its evaluation of BAFOs, UNICOR determined that Nightingale's
proposal offered the best value to the government. Although Krueger's
BAFO received a higher technical score (37 of 40 possible points) than
Nightingale's (35 points), the agency determined that the difference
in technical scores was "minimal," and made award on the basis that
Nightingale's proposal offered a price ($[DELETED]) approximately
[DELETED] percent ($[DELETED]) than Krueger's ($[DELETED]).
In its original protest, Krueger argued that UNICOR had acted
improperly in accepting a proposal which was not compliant with the
solicitation requirements. Krueger noted that Nightingale had failed
to comply with the solicitation requirement for a "detailed listing of
the components with all salient characteristics." Nightingale had
underlined some, but not all, of the specification requirements for
the stacking chairs as set forth in section C of the solicitation and
had stated that its proposed stacking chair "is completely compatible
with the UNICOR (existing) chair"; it had not underlined any of the
specification requirements or offered a similar guarantee of
compatibility for the occasional seating. Krueger further noted that
Nightingale had not complied with the requirement in section C that
"offerors' manufacturing facilities should be ISO 9001 certified and
all processes involved in the seating line's production should be
completely documented." In addition, Krueger pointed out that
Nightingale's proposed chair did not include the [DELETED] for the
occasional seating; according to the protester, had it not included a
[DELETED] in its proposal, its price would have been $[DELETED].
Krueger also argued that UNICOR had acted improperly in not requesting
samples from competitive range offerors and in not including in the
evaluated total cost to the government the cost of any additional
equipment necessary for UNICOR to begin production of the chairs as
set forth in offerors' vertical integration proposals.
In response to Krueger's protest, UNICOR has proposed to reopen
negotiations to request the submission of samples, a list of
components, and other additional technical information concerning the
acceptability of the proposed chairs and any ISO certification of the
offeror's manufacturing facilities. However, since Nightingale's
price had been exposed, UNICOR determined that reopening the price
competition could result in an unacceptable auction; accordingly, the
agency will not permit revisions to offerors' prices.
Krueger now argues that UNICOR's corrective action in response to its
original protest is inadequate. According to the protester, UNICOR
should permit offerors to revise their prices. In support of its
position, Krueger argues that it based its proposal on the belief that
the solicitation required the chairs to include a [DELETED] and
provided for the evaluated total cost to include the cost of equipment
not already possessed by UNICOR which was necessary for production of
the chair.
As a general rule, in response to discussions offerors may revise any
aspect of their proposals they see fit--including portions which were
not the subject of discussions. American Nucleonics Corp., B-193546,
Mar. 22, 1979, 79-1 CPD para. 197. In appropriate circumstances, however,
an agency may decide to limit the revisions offerors can make to their
proposals after discussions. See, e.g., Metron Corp., B-227014, June
29, 1987, 87-1 CPD para. 642 (agency may request BAFOs on the basis of
cost and price revisions alone where the agency has determined that
the initial technical proposals do not contain significant
uncertainties or deficiencies), aff'd on other grounds, Metron
Corp.--Recon., B-227014.2, Sept. 25, 1987, 87-2 CPD para. 299. Thus,
where the reopening of discussions is due, not to the addition of a
new solicitation requirement or a change in an existing requirement,
but to the need to correct an informational deficiency in a technical
proposal, the correction of which is unlikely to have a cost impact,
an agency may limit proposal revisions to revisions in technical
proposals. See Pacific Architects and Engineers, Inc.--Recon.,
B-232500.4, Mar. 3, 1989, 89-1 CPD para. 231; see generally Eldyne, Inc.,
B-250158 et al., Jan. 14, 1993, 93-1 CPD para. 430, recon. denied, Dept.
of the Navy--Recon., B-250158.4, May 28, 1993, 93-1 CPD para. 422; System
Planning Corp., B-244697.4, June 15, 1992, 92-1 CPD para. 516; URS Int'l,
Inc., and Fischer Eng'g & Maintenance Co., Inc.; Global-Knight, Inc.,
B-232500; B-232500.2, Jan. 10, 1989, 89-1 CPD para. 21. We find that the
reopening of discussions here is necessary only to correct
informational deficiencies in the technical proposals, the correction
of which is unlikely to have a significant cost impact, and that
therefore UNICOR was not required to permit revisions to offerors'
prices.
We agree with UNICOR that the solicitation did not require offerors to
furnish a [DELETED]; thus, the purpose of reopening discussions was
not to add or change a solicitation requirement in a manner that would
have a significant cost impact. [DELETED], and the agency repeatedly
advised potential offerors at the pre-proposal conference--the
transcript of which was incorporated by amendment into the
solicitation--that there were no minimum mandatory specifications.
For example, the agency stated that:
"The technical quality would among other things be the
compliance with the statement of work. The minimum
specifications in section C. It is an evaluation factor, but
not the evaluation factor. It is not something that would
automatically get you thrown out, but obviously, the less that
somebody's products meet at least the minimum specifications
will have some weight upon the final evaluation of their
product."
While the amendment incorporating the transcript of the pre-proposal
conference noted that the minutes were "for informational purposes
only," and were "provided as a clarification only and do not modify
any solicitation requirements," the clear import of this language was
that the pre-proposal conference was not intended to change the
meaning of the solicitation. Thus, the transcript did not alter the
solicitation requirements, but instead only clarified the agency's
intention not to treat the section C specifications, or the attached
drawings, as mandatory, minimum requirements. Since the solicitation
did not require offerors to furnish a [DELETED], UNICOR did not
improperly relax the specifications in this regard in making award to
Nightingale on the basis of a proposal that did not offer a [DELETED].
The Federal Acquisition Regulation sec. 15.610(e)(2), generally prohibits
the use of auction techniques, that is, indicating one offeror's price
to another during negotiations, thereby promoting direct price bidding
between offerors. See Youth Dev. Assocs., B-216801, Feb. 1, 1985,
85-1 CPD para. 126. Although reopening discussions after prices have been
disclosed is not precluded and does not constitute an improper auction
where it corrects a material, prejudicial impropriety in the
procurement process or a violation of procurement laws, see The Faxon
Co., 67 Comp. Gen. 39 (1987), 87-2 CPD para. 425, reopening competition
after price disclosure is improper where it is not warranted by any
material, prejudicial defect in procurement process or violation of
procurement laws. See Hawaii Int'l Movers, Inc., B-248131, Aug. 3,
1992, 92-2 CPD para. 67, recon. denied, Gunn Van Lines; Dept. of the
Navy--Recon., B-248131.2; B-248131.4, Nov. 10, 1992, 92-2 CPD para. 336.
Here, in view of the fact that the awardee's price has been disclosed,
permitting price revisions would create the risk of an auction. Since
the record establishes that there was no actual impropriety with
respect to the [DELETED], and given the risk of creating an auction,
we agree with the agency that in these circumstances there would be no
benefit to the procurement system that would justify reopening the
price competition. See generally BDM Int'l, Inc., 71 Comp. Gen. 363
(1992), 92-1 CPD para. 377; Hawaii Int'l Movers, Inc., supra.
Nor do we find any basis for recommending cost discussions on account
of UNICOR's decision not to include the cost of equipment in the
evaluated total cost. Competitive prejudice is an essential element
of a viable protest, and where no competitive prejudice is shown or is
otherwise evident, our Office will not sustain a protest even if a
deficiency in the procurement is evident. See Latins Am., Inc., 71
Comp. Gen. 436 (1992), 92-1 CPD para. 519; Anament Labs., Inc., B-241002,
Jan. 14, 1991, 91-1 CPD para. 31. Here, it is clear from the record that
Krueger was not prejudiced by UNICOR's failure to include in the
evaluated total cost the cost of equipment associated with the
proposed vertical integration approaches. UNICOR reports that even
when the cost of equipment is included in the evaluated total cost,
Nightingale's offer [DELETED] after taking into consideration the
proposed price reductions offered to account for the additional work
to be performed by inmates; according to the agency, Nightingale's
offer [DELETED] whether considering all levels of the proposed
vertical integration, or only the elements common to both Krueger's
and Nightingale's offers--[DELETED]. In these circumstances, where
Krueger was not prejudiced by UNICOR's failure to include the cost of
equipment associated with any selected vertical integration approach
in the evaluated total cost, and given the risk of creating an
auction, we agree with the agency that there would be no benefit to
the procurement system that would justify reopening the price
competition after offerors' competitive positions had been compromised
by disclosure of the awardee's price. See generally, BDM Int'l, Inc.,
supra; Hawaii Int'l Movers, Inc., supra.
Krueger also argues that Nightingale is ineligible for award because
it allegedly proposed Krueger components, thereby misrepresenting that
it could obtain the component parts from Krueger. This argument is
not persuasive. Although it appears that Nightingale's post-award
prototype sample used some Krueger parts, nowhere did Nightingale's
proposal state that it was offering Krueger components.[1] Rather,
Nightingale merely stated that its proposed stacking chair "is
completely compatible with the UNICOR (existing) chair," that is, with
the current Krueger-supplied chair. While UNICOR read this language
as indicating that the proposed chair "would be identical in all
respects to the current stacking chair supplied by Krueger," the
statement in no way represented that the parts would be identical to
the Krueger components, much less that they would be produced by
Krueger.
The protest is denied.
Comptroller General
of the United States
1. Nightingale has informed our Office that it has acquired tooling to
manufacture the parts in question.