BNUMBER: B-261883
DATE: November 1, 1995
TITLE: P.G. Electronics, Ltd.
**********************************************************************
Matter of:P.G. Electronics, Ltd.
File: B-261883
Date: November 1, 1995
Gerry Graham for the protester.
Maureen Cummings-Spickler, Esq., Federal Aviation Administration, for
the agency.
Robert Arsenoff, Esq., and Paul I. Lieberman, Esq., Office of the
General Counsel, GAO, participated in the preparation of the decision.
DIGEST
1. Protest that agency should have used price evaluation formulas
other than those set forth in the solicitation is without merit;
evaluation must be based on scheme in solicitation.
2. Agency's decision to permit a second operational capability
demonstration on awardee's proposed equipment is unobjectionable where
it was not prohibited by the solicitation and resulted in increased
competition.
3. Protest that awardee's proposed equipment should have been
rejected because it was not "commercial-off-the-shelf" (COTS)
equipment is denied where both the protester and the awardee offered
tailored COTS equipment and the non-mandatory COTS requirement was not
strictly applied to either offer.
DECISION
P.G. Electronics, Ltd. protests the award of a contract to Mu-Del
Electronics, Inc. under request for proposals (RFP) No.
DTFA01-92-R-06593A, issued by the Federal Aviation Administration
(FAA) for multicoupler devices which receive and distribute radio
signals from a single antenna to no fewer than four receivers without
a significant loss of either signal level or signal intelligence.
P.G. objects to the evaluation of proposals.
We deny the protest.
BACKGROUND
The RFP, issued on September 1, 1994, contemplated the award of a
5-year fixed-price requirements contract for "base requirements" set
forth in section B.1 of the schedule of items including multicoupler
hardware and related support services, and "optional requirements" set
forth in section B.2 of the schedule including routine and emergency
repair services (contract line items (CLIN) Nos. 2201 and 2202,
respectively) and various other optional CLINs. No warranty beyond
the standard commercial warranty provided by the multicoupler
manufacturer was required. Award was to be made to the offeror whose
proposal provided the lowest overall price for a technically compliant
offer.
Section M.4 of the RFP provided that overall price would be calculated
by using the maximum estimated quantities set forth in the schedule of
items. Technical compliance with non-mandatory requirements and
mandatory requirements listed in the product description was to be
evaluated on a "pass/fail" basis. Failure to meet at least 75 percent
of the non-mandatory requirements could result in a determination of
technical unacceptability; however, the agency reserved the right to
waive non-mandatory requirements if determined to be in the
government's best interest.
Ten mandatory requirements were listed in the product description.
The solicitation provided that the agency could, at its option,
require an operational capabilities demonstration (OCD) to verify
proposed equipment against the listed mandatory requirements.
On November 22, P.G. and Mu-Del submitted initial proposals. P.G.
submitted an alternate proposal that provided extended warranty
coverage for all defects for a period of 10 years at a cost of 3
percent of the purchase price per year.
Written discussions were then held and the FAA elected to require an
OCD for Mu-Del.[1] As a result of the OCD which was witnessed and
certified by an FAA engineer, Mu-Del's equipment was found to have met
9 of the 10 mandatory requirements. Subsequently, a second OCD was
conducted and Mu-Del's equipment was found to be compliant with all 10
of the mandatory requirements.
P.G. and Mu-Del submitted best and final offers on May 10, 1995. Both
offers were found to have satisfied the technical requirements of the
RFP and overall prices were calculated as follows:
Mu-Del P.G. P.G. Alternate
Hardware $ 5,522,169 $ 7,060,980 $ 7,060,980
Tech. Support $ 476,376 $ 488,507 $ 488,507
Repairs $ 2,257,500 $ 1,453,830 N/A
Other Optional Items$ 1,439,380 $ 1,410,864 $1,410,864
Extended Warranty N/A N/A $ 1,059,147[2]
Total $ 9,695,525 $10,414,181 $10,019,498
Accordingly, award was made to Mu-Del on the basis of its low
evaluated price. This protest followed.
PROTEST OVERVIEW
P.G. raises four contentions with respect to the evaluation of
proposals:
(1) a proper evaluation of its alternate proposal would have resulted
in a determination that it provided the lowest overall price to the
government;
(2) the agency should have evaluated its proposal as affording the
lowest overall implementation price to the government;
(3) Mu-Del's offer was noncompliant with certain mandatory technical
requirements; and
(4) Mu-Del submitted a noncompliant offer because it did not propose
COTS equipment.
ISSUE-BY-ISSUE ANALYSIS
Evaluation of P.G.'s Alternate Proposal
P.G. asserts that the agency miscalculated its extended warranty
price. In the protester's view, the price of the warranty should have
been $459,058. Using this figure, P.G. submits that the overall price
of its alternate proposal should have been calculated as:
Hardware $7,060,980
Technical Support 470,507[3]
Repairs i.e., the warranty 459,058 (i.e. the warranty)
Other Options 1,410,864
Total $9,401,409
When calculating the price of the extended warranty offered by P.G. in
its alternate proposal, the FAA initially assumed that the warranty
would replace CLINs 2201 and 2202, which covered routine and emergency
repairs. Upon reevaluation of the proposal following the protest, the
FAA determined that the language of the alternate proposal was
inconsistent with the agency's initial assumption. The warranty terms
in the alternate proposal provided:
". . . warrant coverage of all defects for a period of 10 years at
a cost of 3% per year of the unit price . . . the quoted Routine
Repair price (CLIN 2201) would apply for all items returned without
defects."[4]
In its agency report, the FAA states that because the plain language
of the extended warranty covered only repairs necessitated by defects,
there was no reasonable way to calculate how many repairs, if any,
would be covered by CLINs 2201 and 2202 and how many by the proposed
warranty. Accordingly, in its reevaluation, the agency concluded that
it could not consider P.G.'s alternate proposal because the RFP
required a price evaluation using the estimated quantities set forth
in the schedule of items for the repair CLINs. This reevaluation left
only a comparison between Mu-Del's offer ($9,695,525) and P.G.'s basic
offer ($10,414,181) and, in the agency's view, confirmed the propriety
of the award.
While recognizing that there is a distinction between overall repair
work and the repair of defective items, P.G. seems to argue that the
FAA's reevaluation was illogical because "[w]e see no justification
for the FAA ever to return units for 'repair' unless they are
'defective.'" This argument is plainly without merit as it conflicts
with the plain terms of the protester's own proposed extended
warranty. The warranty expressly limited its coverage to "defects"
and recognized the existence of repairs for items "returned without
defects," for which the agency also required service under the RFP.
Thus, the FAA correctly determined that P.G.'s alternate proposal
could not be evaluated in accordance with the RFP's scheme based on
the estimated quantities. See Labat-Anderson Inc., 71 Comp. Gen. 252
(1992), 92-1 CPD 193 (Competition in Contracting Act of 1984
requires that solicitations include a statement of evaluation factors,
including price, and that agencies evaluate proposals solely on those
factors). Thus, the FAA properly evaluated the proposals by
evaluating CLINs 2201 and 2202 using the stated estimated maximum
quantities set forth for each CLIN. Since the protester in essence is
arguing that the agency should have used an evaluation formula not
stated in the RFP, this aspect of the protest is denied.
Lowest Overall Implementation Price
P.G. sets forth a number of arguments based on its assertion that the
equipment it offered featured enhancements which would have reduced
the agency's overall implementation price when operating the
multicoupler devices to be ordered under the contract. For example,
P.G. notes that it is offering 8-port devices whereas Mu-Del's
multicouplers only have 4 ports. P.G. argues that, by necessity, the
FAA would have to order fewer of its devices, thereby reducing the
overall cost to the government.
The simple answer is that the RFP did not provide that award would be
made on the basis of the lowest overall implementation price; rather,
it specified that low price was to be determined based on extending
the CLIN unit prices offered by the estimated quantities set forth in
the RFP. The second issue is therefore denied for the same reason as
the first, that is, the agency properly evaluated P.G.'s proposal
based on the scheme set forth in the RFP. Id.
Noncompliance With Mandatory Requirements
As noted above, at the first OCD the awardee's equipment failed to
meet one of the mandatory requirements--involving a specific tolerance
for intermodulation. P.G. asserts that this rendered the proposal
technically unacceptable, and that it was improper to conduct a second
OCD.
The application of strict pass/fail standards in the evaluation of
OCDs that lead to the automatic exclusion of potentially acceptable
proposals is to be avoided, especially in circumstances where, as
here, eliminating a proposal would leave only one firm in the
competition. Data Sys. Mktg., Corp., B-228888, Dec. 18, 1987, 87-2
CPD 609. Accordingly, as multiple OCDs were not prohibited by the
RFP, the agency's decision to conduct a second OCD--made in the
interest of enhancing competition--is legally unobjectionable.
Failure To Propose COTS Equipment
The specification contained in the RFP stated that:
"The receiver multicoupler equipment shall be commercial equipment
constructed and fabricated to ensure compliance with all
requirements contained herein."
P.G. alleges that, because the MDP-model multicouplers offered by
Mu-Del required tailoring to meet the RFP's technical requirements
they were not acceptable because they did not constitute COTS
equipment.
First, whether this RFP language--which does not use the term
COTS--prohibited any degree of tailoring to meet the agency's needs is
a matter committed to the broad discretion of the contracting
officer. American Seating Co., B-229915,
Apr. 26, 1988, 88-1 CPD 408. There is no basis on this record for
concluding that the agency intended to define commerciality in a
manner that precluded modified commercial equipment. Further, while
Mu-Del did in fact propose to tailor its commercial equipment to meet
the agency's requirements, the agency points out--and P.G. does not
dispute--that P.G. also proposed to modify its equipment to meet the
solicitation's requirement for multicouplers which operated on both
direct and alternating current; notwithstanding P.G.'s need to tailor
its equipment, the FAA found that the firm also had met the
commerciality requirement.
The RFP specifically provided that non-mandatory requirements could be
waived in the discretion of the agency. The commerciality requirement
was not listed as a mandatory requirement and, even if the protester's
reading of the requirement were correct, the FAA effectively "waived"
the requirement for both offerors. Where, as here, a specification
standard is waived for all offerors, there is no prejudice and,
therefore, no basis to sustain a protest. Automated Power Sys., Inc.,
B-251019, Mar. 2, 1993, 93-1 CPD 193.
The protest is denied.
Comptroller General
of the United States
1. An OCD was waived for P.G. because it had successfully demonstrated
the capability of its multicouplers in 1994.
2. This evaluation of P.G.'s extended warranty price was accomplished
by multiplying the
protester's hardware
price of $7,060,980 by
3 percent over the
duration of the
contract. The
evaluation assumed
that the extended
warranty would
completely replace any
need to consider the
prices offered for
CLINs 2201-02.
3. While this figure differs from the agency's calculation of $488,507
for these items, the difference is insignificant
to the resolution of the protest.
4. The schedule of items listed an estimate of 3,000 repairs on a
routine basis (CLIN 2201) and 10 repairs on an emergency basis (CLIN
2202). P.G. priced each CLIN at $483 per repair for a total of
$1,453,830; the protester does not dispute the accuracy of this
calculation.