BNUMBER:  B-261883
DATE:  November 1, 1995
TITLE:  P.G. Electronics, Ltd.

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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.