BNUMBER:  B-261412.4
DATE:  November 8, 1995
TITLE:  Shilog Limited, Inc.

**********************************************************************

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  ___.