BNUMBER: B-261412.4
DATE: November 8, 1995
TITLE: Shilog Limited, Inc.
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REDACTED DECISION
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:Shilog Limited, Inc.
File: B-261412.4
Date: November 8, 1995
Michael E. Krasnow, Esq., for the protester.
James S. Phillips, Esq., for W. S. Darley & Company, an interested
party.
Sandra D. Baker Jumper, Esq., and Neil Hirsch, Esq., Department of the
Navy, for the agency.
Behn Miller, Esq., and Christine S. Melody, Esq., Office of the
General Counsel, GAO, participated in the preparation of the decision.
DIGEST
1. Protest that contracting agency improperly evaluated proposals
using unstated evaluation factor is denied where area
considered--benefits offered by smaller-sized pump unit--was part of
the specified design evaluation factor.
2. Protest that agency failed to hold meaningful discussions with
protester is denied where record shows that agency reasonably led
protester into the areas of its technical proposal that were
deficient.
3. Protest challenging agency's downgrading of proposed pump exhaust
system is denied where the record shows the protester's competitive
position was not prejudiced by this alleged error.
DECISION
Shilog Limited, Inc. protests the award of a contract to W. S. Darley
& Company under request for proposals (RFP) No. N00104-94-R-D014,
issued by the Department of the Navy for portable emergency
firefighting centrifugal pumps and associated special tool kits for
use in damage control, dewatering, and firefighting operations on Navy
ships. Shilog contends that the Navy improperly evaluated proposals
under an unstated design factor which resulted in an improper
upgrading of the awardee's technical proposal. Shilog also challenges
the agency's technical evaluation of its proposed corrosion protection
features and exhaust system as unreasonable and further alleges that
the Navy never gave the firm an adequate opportunity to remedy these
alleged deficiencies.
We deny the protest.
The RFP was issued on May 2, 1994, as a total small business set-aside
and contemplated the award of a fixed-price, indefinite quantity
contract for a base year and 4 option years to the offeror proposing
the "best value" offer, based on a combination of price and technical
factors specified in the RFP.[1]
In addition to a price proposal, offerors were required to submit a
detailed technical proposal which was to include acceptance test plan
reports demonstrating compliance with various technical requirements
set forth in the RFP's "Purchase Description," sample technical
manuals, quality assurance plans, milestone production schedules,
corrosion protection standards, and offered warranties. The RFP
provided that technical proposals would be evaluated under the
following five technical evaluation criteria, which were listed in
"relative order of importance" in the RFP: (1) Corrosion Protection;
(2) Performance; (3) Design; (4) Supportability; and (5) Quality
Management.
As specified in the RFP, the Navy required a fire pump composed of
commercial products or commercial-type products to replace the
existing P-250 fire pump model currently used in the fleet. The RFP
advised offerors that while the Navy's minimum technical needs were
enunciated in the statement of work set forth in the "Purchase
Description" at Section C of the RFP, in fact "[t]he government's
needs are greater than that defined in section C; and therefore,
offerors are encouraged to propose pump units which will yield
improved performance."
On the November 2 closing date, offers were received from three
offerors, Darley, Mechanical Equipment Company (MECO), and Shilog. On
November 21, the contracting officer requested a size determination
from the Small Business Administration (SBA) to ascertain Shilog's
eligibility for award. On December 16, the SBA determined that Shilog
did not qualify as a small business for this procurement;
consequently, the contracting officer advised Shilog that its offer
was unacceptable.
By separate letters dated December 21, the contracting officer advised
Darley and MECO that the agency would conduct discussions with each
offeror regarding various topics which were outlined in the letters.
After conducting discussions with Darley and MECO, both offerors were
asked to submit best and final offers (BAFO) by February 10, 1995.
On February 13, the SBA Office of Hearing and Appeals issued a
redetermination opinion which held that Shilog was in fact a small
business. That same day, the Navy reinstated Shilog in the
competition and proceeded to schedule discussions with Shilog. Of
significance to this protest, the Navy asked Shilog to
"provide verification in your [BAFO] submission that the pump unit
subjected to Acceptance Testing is the pump unit proposed. In
particular, [were] the proposed corrosion protection features
included in, or applied to, the pump unit tested?
". . . . Request you provide in your [BAFO] submission information
on the maximum operating temperature for the Viton o-ring seals used
in the exhaust hose couplings."
On February 28, after completing discussions with Shilog, the Navy
received BAFOs from all three offerors. On March 10, the Navy amended
the RFP to "encourage" all offerors to submit a sample fire pump for
"visual inspection." Shilog advised the contracting officer that it
had removed the "guts" of the model it had prepared for testing so
that revisions could be made for an upcoming trade show, and therefore
the tested prototype model was no longer technically functional. The
contracting officer responded that the pump was only required for
visual inspection; Shilog then submitted a "gutted" model to the
agency.
Prior to the request for samples, the Navy had rated Shilog's proposal
as "satisfactory" under each technical evaluation factor. However,
after its visual inspection of the submitted sample, the Navy became
concerned about the corrosion protection features of Shilog's model,
even though Shilog had submitted independent tests demonstrating full
compliance with these requirements. In addition, the Navy decided
that the packaging requirements set forth in the RFP needed to be
revised.
As a result, on April 6, the contracting officer issued three separate
facsimiles which identified brief agendas and topics for a subsequent
round of discussions which were held with each offeror by telephone
that afternoon. Each discussion letter began with the following
introduction:
"All proposals indicate that corrosion has been considered,
however, for some offerors, there is insufficient description of
the materials, e.g., alloy, ASTM specifications, etc. All
offerors are afforded an opportunity with their [BAFO] to submit
any additional information they wish in the area of corrosion
protection materials used on the pump units offered."
With regard to technical deficiencies in Shilog's proposal, the Navy
set forth the following two specific concerns for Shilog to respond to
"Request you provide data to demonstrate the MIL-C-81751B coating
will resist disbonding when used to coat pump interior surfaces,
and to particularly provide evidence that the agent applying the
coating has proven experience with the coating, and if it fails,
to provide the particle size of the failed coating.
"Request you verify satisfactory compliance with the requirements
(Section C-4.5., para[graph], C-4.5.2.) for maximum allowable
exhaust hose outer surface temperature."
On April 13, each of the three firms submitted a second BAFO. At the
conclusion of the technical evaluation, the proposal evaluation panel
(PEP) rated the technical proposals as follows for each of the
technical evaluation factors:
Evaluation FactorDarley MECO Shilog
Corrosion ProtectionOutstanding Good Not Technically
Acceptable
Performance Good Good Not Technically
Acceptable
Design Outstanding Satisfactory Satisfactory
Supportability Satisfactory Satisfactory Satisfactory
Quality ManagementGood Satisfactory Satisfactory
Of significance to this protest, the record shows that after
evaluating Shilog's second BAFO, the PEP downgraded Shilog's ratings
of "satisfactory" for both the Corrosion Protection and Performance
factors to ratings of "not technically acceptable."
After the contract award review panel (CARP) reviewed both the PEP's
and cost evaluation panel's (CEP) findings, the CARP recommended
Darley for award, primarily as a result of the following three
findings. First, the CARP placed a very high value on Darley's
offered corrosion protection features--the most important technical
factor. Next, the CARP determined that Darley's proposed pump design
was extremely advantageous to the agency because its smaller size
enabled it to be stored in the existing shipboard stowage containers
which had been used to house the predecessor fire pump model, the
P-250; this feature allowed the Navy to save substantial stowage
container modification costs which otherwise would have been required
for a larger-sized model. Finally, the CARP determined that Darley's
quality plan and warranty plan provided a potential cost savings to
the Navy. As a result of these three strengths, the Navy determined
that Darley's offer warranted paying a $252,820 price premium.[2]
On May 4, the Navy advised all offerors that the contract would be
awarded to Darley. On May 15, Shilog filed this protest, which was
supplemented on July 5, after Shilog received the agency report
responding to its May 15 filing.[3]
PROTESTER'S CONTENTIONS
Shilog contends that the Navy evaluated technical proposals under an
evaluation factor that was not specified in the RFP. Shilog also
contends that the agency's evaluation of Shilog's offered corrosion
protection features was unreasonable since--according to the
protester--the Navy failed to apprise Shilog of technical deficiencies
in this aspect of its proposal. Finally, Shilog contends that the
Navy improperly evaluated the performance features of its proposed
pump.
DISCUSSION
Design Evaluation
As discussed above, the record shows that the Navy substantially
upgraded Darley's proposal under the Design evaluation criterion--and
in fact, considered the smaller size of Darley's proposed pump to be a
substantial strength--in part because the smaller dimensions of
Darley's proposed pump resulted in significant cost savings to the
agency with regard to stowage container modifications. Specifically,
because Darley's pump would fit into the stowage containers used by
the fleet to house the predecessor pump model, the Navy calculated
that it would save approximately $2.8 million in costs which otherwise
would be required to modify the stowage containers to house a
larger-sized pump model. The Navy also concluded that Darley's
smaller pump size rendered its model more readily transportable and
advantageous for use in the smaller passageways of a shipboard
environment.
In its protest, Shilog argues that the Navy applied an unstated
evaluation criterion--smaller pump size--in evaluating Darley's
proposed pump, and that had the Navy's preference for a smaller-sized
pump been disclosed to all offerors, Shilog would have proposed a
smaller-sized pump design.
It is a fundamental rule of federal procurement that an RFP adequately
inform all offerors of the basis for evaluation of proposals, and that
the subsequent evaluation be based on the evaluation scheme set forth
in the RFP. Global Plus, B-257431.9, Dec. 14, 1994, 95-1 CPD 77.
In this case, we conclude that the RFP adequately informed offerors of
the agency's preference for a smaller-sized pump model. First, as
noted above, the RFP encouraged offerors to propose pump models with
features that surpassed the minimum needs specified in the RFP. More
specifically, the "Design" factor provided the following evaluation
guidelines in the RFP:
"Design will be evaluated based on the extent the offeror provides
documentation that demonstrates superiority in areas such as, but not
limited to, those identified below:
"a. Weight - Consideration will be given to units that weigh
less than that specified in Section C . . . .
"b. Size - Consideration will be given to units that are smaller
in size than that specified in Section C . . . .
"c. Portability - Consideration will be given to units that are
more ergonomically suited for a shipboard environment."
(Emphasis added.)
Although it is true that the RFP did not specify the substantial cost
savings which would inure to the Navy as a result of a smaller-sized
pump model, given the above language which encouraged offerors to
propose a pump model that was "superior" to the minimum specifications
set forth at section C and "more ergonomically suited" for shipboard
use, as well as the express notation that "[c]onsideration" would be
given to smaller-sized units, we think the RFP design factor placed
offerors on notice that smaller-sized pump models would receive a more
favorable technical evaluation. As a result, we conclude that the
Navy properly considered the advantages associated with a
smaller-sized model in its evaluation of Darley's proposal.
Corrosion Protection
Section 3.7 of the RFP--Corrosion Protection--required that all
components of the proposed pump unit exposed to seawater or sea air be
constructed of corrosion resistant materials or treated in accordance
with commercial corrosion protection/control specifications. As noted
above, the record shows that the Navy downgraded Shilog's proposal
from a "satisfactory" to a "not technically acceptable" rating under
the Corrosion Protection factor, based on the Navy's evaluation of
Shilog's sample and subsequent BAFO submissions.
In its protest, Shilog contends that the agency improperly downgraded
its proposal under the Corrosion Protection evaluation factor. First,
Shilog argues that the Navy's downgrading was unreasonable since the
Navy's actions were based on its examination of a nonworking, gutted
prototype model of the pump unit. Next, Shilog contends that the
agency's downgrading of its proposal for alleged corrosion protection
deficiencies was improper since the Navy never alerted the protester
to these weaknesses.
To the extent Shilog argues that the agency's assessment of its sample
was unreasonable, we find this argument unpersuasive. Shilog
contends that because it advised the agency that its submitted model
was a modified, nonworking version of the pump unit which had been
tested, the agency was precluded from drawing negative inferences or
otherwise questioning the technical properties of its proposed pump.
We disagree.
Although amendment No. 0009 did provide that the agency's "inspection
is limited to visual only," the amendment also specified that the
purpose of obtaining the model was to examine the "Pump Unit
(including any fittings)" as well as the "Exhaust Hose (2 items)."
Although it was clear from the amendment that the submitted sample
would not be subjected to physical testing (and thus, the amendment
specifically directed offerors to "identify in writing any differences
between the unit being provided for visual inspection and that offered
in their proposal"), the stated purpose of the agency's request for a
sample was to allow a visual examination. Consequently, the fact that
this step in the technical evaluation caused the agency to question
certain corrosion protection features of Shilog's offered pump which
were evident from the visual examination provides no basis for
objection by the protester.
Moreover, we find the PEP's concerns to be reasonably based.
Initially, the PEP had rated Shilog's proposal as "satisfactory" under
the Corrosion Protection evaluation factor--primarily as a result of
offsetting major strengths against major weaknesses. Of significance
to this discussion, the PEP awarded Shilog a "major strength" rating
for the firm's selection of an aluminum pump; however, because Shilog
did not detail the materials and coatings which would be used in
conjunction with an aluminum based-pump model, and because Shilog's
proposal indicated that the pump contained cast iron and steel
fittings which require extensive corrosive protection, the PEP
classified this lack of detail as a "major weakness in the protester's
corrosion protection plan, resulting in a moderate risk." (Emphasis
in original.) In sum, the PEP determined that while the use of
aluminum as a base-line material appeared to be suitable for a marine
environment, Shilog's initial proposal nonetheless contained "a
limited and incomplete demonstration" as to the exact corrosion
protection features of its offered pump. However, the PEP also noted
that Shilog had submitted the required acceptance test results
demonstrating compliance with the testing corrosion protection
standards. Consequently, despite the vague corrosion protection
description, the PEP gave Shilog's initial proposal a "satisfactory"
rating for the Corrosion Protection factor.
However, after examining the model submitted by Shilog, the agency
became increasingly concerned about Shilog's lack of explanation
regarding its proposed pump's corrosion protection features. In
short, the agency began to question its initial rating of
"satisfactory" under the corrosion protection factor because its
examination of Shilog's submitted physical sample indicated other
troublesome pump features which were not evident from Shilog's
submitted initial proposal. For example, although not stated in the
initial proposal, the model submitted by Shilog revealed that the
protester intended to use malleable iron piping--which, even if
coated, rusts rapidly in a marine environment.
As a result of these technical concerns, the agency decided to conduct
a second round of discussions. Consequently, on April 6--as noted
above--the Navy issued a letter to Shilog that expressly stated "[t]he
first area to be discussed is corrosion protection." Further, the
letter expressly repeated the solicitation's directions that "[t]he
proposal should identify and address what corrosion protection
material is used on the pump units offered." In addition to the
letter, the agency has submitted an affidavit from the chief PEP
evaluator detailing how the Navy orally "informed Shilog that
corrosion protection was the primary evaluation critieri[on] in the
solicitation and of extreme importance . . . [and] invited Shilog to
present any additional information necessary to show" compliance with
the RFP's corrosion protection testing standards. Shilog does not
dispute the Navy's account of the April 6 oral discussion session;
instead, the protester asserts that merely advising it of the
corrosion protection requirements of the solicitation was not a
reasonable indication that there were any weakness or deficiencies in
Shilog's offer. In sum, Shilog contends that neither the April 6
correspondence nor that day's oral discussions were adequate to place
Shilog on notice of the corrosion protection deficiencies for which
its proposal was later downgraded. We disagree.
In order for discussions to be meaningful, agencies generally must
point out weaknesses, excesses, or deficiencies in proposals, unless
doing so would result in disclosure of one offeror's technical
approach to another offeror or in technical leveling. Marine Animal
Prods. Int'l, Inc., B-247150.2, July 13, 1992, 92-2 CPD 16.
Agencies, however, are not required to describe deficiencies in such
detail that there could be no doubt as to their identity and nature;
rather, agencies are only required to reasonably lead offerors into
the areas of their proposals which require amplification or
correction. Son's Quality Food Co., B-244528.2, Nov. 4, 1991, 91-2
CPD 424. Accordingly, agencies are not obligated to "spoon-feed"
offerors as to what factors must be addressed in an acceptable
proposal or to conduct all-encompassing discussions. Institute for
Human Resources, B-246893, Apr. 13, 1992, 92-1 CPD 360.
Here, although Shilog repeatedly argues that the testing results
submitted with its initial proposal should have precluded the need for
any further elaboration about how its proposed model complied with the
RFP's corrosion protection requirements, we think both the plain
language of the April 6 letter and the oral discussions were
sufficient to apprise Shilog that the Navy was unwilling to accept
Shilog's submitted test results at face value. Clearly, the Navy
sought further corroboration that the proffered corrosion protection
testing results accurately reflected features of Shilog's proposed
pump. Under these circumstances, we conclude that the Navy imparted
sufficient information which should have led Shilog into the corrosion
protection area of its proposal, and conveyed to Shilog that this area
of its proposal required amplification. See Lucas Aerospace
Communications & Elecs. Inc., B-255186, Feb. 10, 1994, 94-1 CPD 106.
Our Office will not question an agency's evaluation of proposals
unless the agency deviated from the solicitation evaluation criteria
or the evaluation was otherwise unreasonable. Avacelle, Inc.,
B-258651, Jan. 24, 1995, 95-1 CPD 41. In this case, although the
protester contends that the agency improperly downgraded its proposal
under the corrosion protection factor, we find no basis to challenge
this aspect of the agency's technical evaluation. As discussed above,
we think the lack of proposal detail coupled with the agency's
examination of Shilog's sample reasonably caused the Navy to question
the corrosion protection properties which Shilog intended to offer.
Shilog chose to ignore the agency's April 6 discussion attempts to
alert the protester to these deficiencies. Under these circumstances,
we conclude that the Navy reasonably downgraded this aspect of the
Shilog proposal. Id.
Exhaust System
Shilog also contends that the Navy improperly downgraded its proposal
under the Performance evaluation factor. We have carefully reviewed
this protest ground, and conclude that the protester has made a
compelling argument that this particular aspect of the agency's
technical evaluation was flawed. In short, the record contains
several numerical calculation errors made by the agency which
apparently--and we think, inadvertently--misled the Navy evaluators
into concluding that the exhaust components of Shilog's proposed pump
unit could not comply with the RFP's outer surface temperature
thresholds. As a result, the Navy downgraded Shilog's proposal to a
rating of "not technically acceptable" for the Performance technical
evaluation factor.
Despite this alleged evaluation error, however, we will not consider
this protest ground further. Prejudice is an essential element of a
viable protest; consequently, we will not sustain a protest against an
alleged evaluation error unless the protester was somehow prejudiced.
See Square 537 Assocs. Ltd. Partnership, B-249403.2, Apr. 21, 1994,
94-1 CPD 272. In this case, the record shows that even if the Navy
corrected its alleged evaluation error, and restored Shilog's initial
performance factor rating of "satisfactory," Shilog would not be in
line for award because it was properly found technically unacceptable
under the Corrosion Protection factor. Under these circumstances, we
see no basis to conclude that Shilog was prejudiced by this alleged
evaluation error, and therefore deny this protest ground. AEC-ABLE
Eng'g Co., Inc., B-257798.2, Jan. 24, 1995, 95-1 CPD 37.
The protest is denied.
Comptroller General
of the United States
1. The RFP set forth an estimated yearly quantity of 800 pumps and 360
special tool kits. The maximum quantity which the Navy could order
was 4,000 pump units and 1,800 special tool kits; the minimum quantity
was established at 500 pump units.
2. Darley's offered price was $20,773,540; MECO's offered price was
$20,520,720. Shilog's offered price was $17,998,215.
3. On May 18, MECO--the second ranked offeror--filed a protest against
the Darley award and technical evaluation which we denied by decision
dated September 29. Mechanical Equip. Co., B-261412.3, Sept. 29,
1995, 95-2 CPD ___.