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.