BNUMBER: B-265602; B-265602.2
DATE: December 15, 1995
TITLE: Corion Corporation
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Matter of:Corion Corporation
File: B-265602; B-265602.2
Date: December 15, 1995
Jed L. Babbin, Esq., and Walter G. Birkel, Esq., Tighe, Patton,
Tabackman & Babbin, L.L.P., Richard Linn, Esq., Marks & Murase, LLP,
and Lawrence J. Sklute, Esq., for the protester.
Harry C. J. Blair, Esq., for Fraser-Volpe Corporation, an interested
party.
Captain David Harney and William G. Bradley, Esq., Department of the
Army, 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 agency waived mandatory technical specification for
awardee is denied where awardee's proposal documents reasonably convey
intent to comply with specification.
2. Protest that awardee's prices were materially unbalanced is denied
where base price reasonably reflects price of engineering modification
to commercial specifications required for production of first 20
prototypes; awardee's price becomes low in the first option period of
the contract (which included four option periods); and the agency
reasonably expected to exercise all options.
3. Protest that agency improperly relied on unstated evaluation
criteria is denied where the record shows that the agency's judgments
were reasonable and consistent with the explicit terms of the
solicitation.
4. Protest that agency improperly ignored negative pre-award survey
in evaluating awardee's management experience and responsibility is
denied where in the course of making its responsibility determination,
the agency thoroughly considered the pre-award survey and reasonably
concluded that awardee's successful production and delivery experience
under eight recent contracts for identical items sufficiently rebutted
concerns set forth in the survey regarding awardee's delinquent
performance on another contract for a different type of item.
DECISION
Corion Corporation protests the award of a contract to Fraser-Volpe
Corporation (FVC) under request for proposals (RFP) No.
DAAE20-95-R-0019, issued by the Army for 20 XM25 Stabilized
Binoculars, and four follow-on production options, with a total option
quantity ceiling of 5,000 binoculars. Corion contends that the Army's
technical evaluation was improper because the agency waived a
mandatory technical requirement for the awardee and utilized
evaluation criteria which were not specified in the RFP. Corion also
contends that the agency improperly disregarded a negative pre-award
survey when it evaluated the manufacturing capability and experience
of the awardee.
We deny the protest.
The XM25 is a hand-held, lightweight, internally stabilized binocular
with laser protection and a rubber coating; it is classified as a
non-developmental item (NDI). The RFP was issued on March 3, 1995,
and set forth the XM25 purchase item description in the statement of
work (SOW). The RFP required offerors to submit three samples for
evaluation under four go/no-go criteria which required (1) that the
sample be a binocular, consisting of two parallel telescopes; (2) that
the binocular have an internally stabilized image; (3) that the
binocular weigh 2.5 kilograms or less; and (4) that the binocular's
size be equal to or less than 12 inches long, 9 inches wide, and 4
inches high. The RFP further provided that the Army would only
evaluate proposals from those offerors whose binocular samples met
each of the four go/no-go criteria.
Offerors were required to submit technical proposals demonstrating
full compliance with each criterion set forth in the SOW, as well as a
basic quantity pricing schedule and an "Evaluated Options" pricing
schedule, which set forth an evaluation quantity for each option
period. The RFP provided that technical proposals would be evaluated
on a "best value" basis under three evaluation factors--(1) technical;
(2) price and cost; and (3) manufacturing capability, experience, and
past performance--and that "[t]echnical [was] the single most
important element, and significantly more important than [p]rice and
[c]ost." The RFP further stated that the Army would evaluate the
degree to which the offeror's binocular samples met each of the SOW
requirements, and--of significance to this protest--provided that:
"Where the offeror's bid samples submitted do not meet a
specified requirement, the degree of risk associated with any
proposed modifications which are needed to enable it to meet the
requirements in time for delivery of test and production hardware
will be evaluated. Apparent inconsistencies between the claimed
current capabilities and the bid sample or other literature, if
unexplained, may result in a lower evaluation."
By the April 7 closing date, offers were received from FVC and
Corion.[1] After concluding that each offeror's three binocular
samples met the four go/no-go criteria, the agency conducted its
technical evaluation of the proposals and samples. On May 23, the
Army issued discussion letters which set forth each offer's technical
deficiencies and requested that the deficient technical areas be
"further addressed/clarified." Of significance to this protest, the
Army's letter to FVC advised the firm that while each of FVC's
submitted bid samples passed the go/no-go criteria, one of the samples
"slightly did not meet" the SOW's resolution requirement which
provided
"The day system resolution in the caged mode with the unit
powered down shall be 4.3 seconds of arc or better, when measured
at the center of the field of view."
Arc-second resolution is typically measured by arc-seconds of "line
pair"--or "LP." This measurement standard reflects the amount of
distance between the human eye and the object at which an optic's
focus--or resolution--between two lines (thus, the term "line pair")
can be distinguished. In this case, the specification set forth above
required a resolution of "4.3 seconds of arc or better"--but did not
include the term "line pair." Based on its 20 years of experience in
manufacturing the XM25, the degree of magnification required by the
RFP, and the resolution specification's omission of the term "LP," FVC
concluded that the 4.3 number listed above referred to the width of
one line in the resolution line pair measurement; consequently, FVC
determined that all binoculars produced for this contract had to meet
an 8.6 arc-second LP requirement (two lines with the width of 4.3
arc-seconds each) and prepared its binocular samples in accordance
with this interpretation. After receiving the Army's discussion
letter, FVC learned that the 4.3 number in the resolution
specification was intended to refer to a 4.3 arc-second LP--and that
the "line pair" reference had been inadvertently omitted.
By letter dated May 31, FVC provided the Army with a 25-page technical
briefing paper which responded to and discussed each of the technical
deficiencies outlined in the Army's discussion letter. With regard to
the resolution specification, FVC explained the basis for its initial
interpretation of the specification, and further requested that the
agency "modify the specification resolution allowance from 4.3
arc[-]seconds to 5.0 arc[-]seconds." FVC's reason for requesting the
modification was clear: the firm asserted that a 5.0 arc-second LP
specification would meet the Army's minimum needs since this
measurement represented state-of-the art resolution. Nevertheless,
FVC further advised the agency that "[s]hould the [Army] determine
that the 4.3 arc[-] second [LP] is essential FVC can meet this
requirement for a slight increase in price." FVC explained that the
price increase would reflect the cost of realigning its optic
production equipment to the 4.3 arc-second LP standard.
The Army carefully reviewed FVC's request for a 5.0 arc-second LP
measurement but ultimately determined that its minimum needs required
the more stringent 4.3 arc-second LP resolution standard. On June 6,
the contracting officer separately informed both FVC and Corion by
telephone that the 4.3 arc-second LP resolution specification was a
firm requirement and would not be modified. On June 21, the Army
ended technical discussions and requested best and final offers (BAFO)
from FVC and Corion; both offerors submitted BAFOs by June 28. On
July 26, the Army awarded the contract to FVC based on its technically
superior, lower-priced offer. On August 7, Corion filed this protest
at our Office; the protest was timely supplemented on September 21,
after Corion attended an agency debriefing.
PROTESTER'S CONTENTIONS
Corion contends that FVC's proposal does not commit it to provide
binoculars equipped with the 4.3 arc-second LP resolution and that,
consequently, the Army must have waived this requirement for the
awardee. Corion also argues that the awardee does not understand this
requirement because its pricing is materially unbalanced. Corion
further contends that the Army improperly downgraded its proposal
based on application of unstated evaluation criteria. Finally, Corion
contends that the agency ignored a negative pre-award survey of FVC,
resulting in an improper evaluation of the firm's manufacturing
capability and experience.
ANALYSIS
Compliance with the 4.3 Arc-Second LP Resolution Requirement
Corion argues that because FVC did not explicitly use the term "4.3
arc-seconds" in its BAFO, the awardee is not obligated to meet the 4.3
arc-second LP resolution requirement, and, consequently, the Army must
have improperly waived this mandatory specification for the awardee.
In this regard, the record shows that as its BAFO, FVC, like Corion,
submitted only a cover letter and new pricing schedules.
In a negotiated procurement, an offeror must demonstrate within the
four corners of its proposal that it will perform the required work in
accordance with the terms and conditions set forth in the
solicitation. See A&W Maintenance Servs., Inc., B-258293; B-258293.2,
Jan. 6, 1995, 95-1 CPD 8. In this case, we think that the Army
reasonably concluded that FVC was committed to comply with the 4.3
arc-second LP resolution specification.
In its May 31 technical response to the Army's discussion letter, FVC
clearly explained why it regarded the resolution specification as
ambiguous, and set forth a reasoned basis for its interpretation.
Next, although FVC asked that the Army modify the resolution standard,
it also stated
"Should the U. S. Government determine that the 4.3 arc[-]second
[LP] is essential FVC can meet this requirement for a slight
increase in cost."
Additionally, in the cover letter attached to the technical response,
FVC reiterated that if the day resolution "specification remains
unchanged" this option would impact FVC's costs. Thus, FVC clearly
communicated that if the Army insisted on the 4.3 arc-second LP
resolution requirement, it would comply with this requirement--though
at a higher price.
Finally, although FVC's BAFO does not refer to any specific arc-second
LP resolution measurement, the cover letter to the BAFO states
"Our review consisted of evaluating the impact on cost and
schedule of [FVC's laser hardening] Technical Approach, the
clarified resolution specification and other clarifications
discussed in our letter of May 31, 1995."
The remainder of FVC's BAFO consisted of a revised pricing schedule
which reflected a $3.9 million increase over its initial proposal
price.
Based on FVC's offer to meet the standard if so required; the agency's
June 6 conversation with offerors making clear that the 4.3 arc-second
requirement was firm; FVC's statement after discussions on this issue
that its BAFO price increase reflected the "clarified resolution
specification"; and the BAFO price increase itself, we think the
agency reasonably concluded that FVC's final offer was based on the
required 4.3 arc-second LP resolution feature.[2] See E. W. Bliss
Co., B-255648.3, Apr. 26, 1994, 94-1 CPD 280.
FVC's Pricing
The RFP's basic pricing schedule solicited fixed prices for the base
contract quantity of 20 binoculars, and the "Evaluated Options"
pricing schedule solicited fixed prices for the four follow-on
production option quantities. The record shows that although FVC's
total contract price for the base and option quantities was $2.3
million lower than Corion's, FVC's price for the base 20-unit
production quantity was significantly higher than Corion's base
price.[3] As a result, Corion argues that FVC's pricing proposal is
materially unbalanced.
We find this contention without merit. First, both the Army and FVC
explain that the higher base quantity price reflects the cost of
engineering changes to commercial specifications. The RFP required
that 5 of the initial 20 base quantity binoculars be equipped with a
special "3rd generation" night vision capability--a technology which
the Army estimate indicates would cost at least $100,000.[4]
Additionally, as permitted by the RFP, FVC proposed a technical
modification to the existing commercial specifications which gives the
Army an internal electronic means for stabilizing the binoculars
during non-use; the cost of implementing this feature, as well as the
cost of realigning FVC's optic production equipment to obtain the 4.3
arc-second LP resolution for the entire production line, is reflected
in the base quantity unit price of $34,805 per binocular.[5]
Next, a comparison between the FVC and Corion pricing reveals that the
Army will realize a price savings as soon as the first option is
exercised:
Price No. of Units FVC Corion
Base
Quantity 20 $ 696,100 $ 419,220
Option 1 425 1,880,625 2,493,900
Option 2 1,725 7,357,125 8,330,025
Option 3 1,800 7,965,000 8,692,200
Option 4 1,050 4,882,500 5,070,450
The Army states that it intends to exercise all options.
Under these circumstances, since the higher base price has been
reasonably explained and related to FVC's technical superiority, and
since the Army will immediately obtain price savings upon exercising
the first contract option, we find FVC's pricing to be
unobjectionable. See A&W Maintenance Servs., Inc., B-255711, Mar. 25,
1994, 94-1 CPD 214; Integrated Protection Sys., Inc., B-254457.2;
B-254457.3, Jan. 19, 1994, 94-1 CPD 24.
Unstated Evaluation Criteria
The record shows that Corion's technical proposal was downgraded in
part because its binocular samples failed to meet the required 4.3
arc-second LP resolution requirement, and because the agency
determined that Corion's manufacturing method for complying with the
resolution requirement was high risk. Corion contends that these
portions of the agency's technical evaluation were improper because
the Army deviated from the solicitation's evaluation criteria.
Although the protester contends that the agency applied unstated
evaluation factors, the record simply does not support this
contention. First, the RFP specifically provided that "Bid Sample
Resolution" would be examined as part of the technical evaluation.
Thus, offerors were clearly on notice that their samples would be
evaluated to ascertain whether they met the 4.3 arc-second LP
resolution specification.
Next, although Corion maintains that the Army could not properly
consider whether a manufacturing method involved "risk," in fact the
RFP specifically provided that:
"Where the offeror's bid samples submitted do not meet a
specified requirement, the degree of risk associated with any
proposed modifications which are needed to enable it to meet the
requirements in time for delivery . . . will be evaluated."
(Emphasis added.)
Clearly, both the binocular samples' non-compliance with the required
resolution specification, as well as the risk inherent in an offeror's
technique for correcting such technical non-compliance, were
encompassed by the above-referenced solicitation provision.
Consequently, we deny this ground of protest.[6] See San Diego State
Univ. Found., B-250838.3, Apr. 21, 1993, 93-1 CPD 337.
Impact of the Negative Pre-Award Survey
The record shows that during the technical evaluation, the Army asked
the Defense Logistics Agency (DLA) to conduct pre-award surveys of
both Corion and FVC. On May 23, DLA completed its pre-award survey of
FVC and recommended no award on the ground that FVC had encountered
production problems in the past due to its "difficulty receiving
vendor materials in a timely manner." As a result, the DLA evaluator
noted that although FVC had "show[n] its ability to deliver on
schedule, the question of vendor control to receive material in a
timely manner must be addressed in detail." Despite the negative
pre-award survey, the record shows that FVC received a favorable
technical rating--slightly higher than the protester's--under the
manufacturing capability, experience and past performance evaluation
factor. Corion challenges this aspect of the technical evaluation on
the ground that the Army improperly disregarded the negative pre-award
survey.
The record shows that the pre-award survey was used in the agency's
assessment of FVC's responsibility, but was not considered in the
technical evaluation of FVC. Even assuming that the agency was
required to consider the pre-award survey in the course of the
technical evaluation, however, there is no basis in the record to
conclude that FVC's rating under the manufacturing capability,
experience, and past performance evaluation factor would have changed.
On the contrary, the record shows that in the course of making his
responsibility determination, the contracting officer conducted a
detailed review of the findings in the pre-award survey and reasonably
concluded that it revealed no major concerns related to this
procurement.
Although the DLA surveyor recommended "no award," he nonetheless
stated that "[FVC] could deliver the items on-time IF the vendor
control was actively in-place. " After receiving the survey, the
contracting officer further investigated the findings in the survey,
and questioned FVC about its current vendor control status. On July
18, as a result of his investigation, the contracting officer executed
a "Decision to Override Negative Pre-Award Survey."
The contracting officer concluded that FVC only encountered vendor
control problems on those contracts where the procured items were
non-NDI items--which typically involved a higher degree of difficulty
due to the use of unusual and limited numbers of supplies from limited
numbers of sources in remote locations. In contrast, this contract
does not present the same obstacles since the binoculars are NDI items
with numerous commercial sources of component supplies. Moreover, FVC
has successfully completed eight contracts for these items with other
agencies, and has had no delinquencies or problems in the last 24
months.
Next, the contracting officer determined that a contributing element
to FVC's delinquencies on non-NDI contracts in the past had been the
contractor's limited financial resources. However, as evidenced by
DLA's May 23 findings, FVC now has received a positive financial
recommendation.
Finally, because of DLA's negative pre-award survey, the contracting
officer asked FVC to provide evidence of its ability to control
vendors and obtain supplies for this contract; FVC responded with firm
quotes and commitments from its suppliers.
The record shows that the Army thoroughly and carefully considered
DLA's pre-award survey findings and nonetheless concluded that the
principle deficiencies were not significant with respect to the
current contract. Under these circumstances, we see no basis to
object to the selection decision based on the agency's failure to
consider the pre-award survey during the technical evaluation.
The protest is denied.
Comptroller General
of the United States
1. A third offer was also received but later eliminated from the
competitive range as technically unacceptable on May 30.
2. We note that the actual contract award document executed by the
parties reflects this compliance by stating that "[a]s a
clarification, the resolution shall be as stated in the purchase
description and shall be for a line pair not an individual line."
3. A comparison of the unit prices is as follows:
FVC Corion
Base Quantity $34,805 ea $20,916 ea
Option 1 4,425 5,868
Option 2 4,265 4,829
Option 3 4,425 4,829
Option 4 4,650 4,829
The total evaluated price for FVC was $22,855,130; the total evaluated
price for Corion was $25,214,189.
4. The record shows that a similar commercial binocular equipped with
similar night capability (but which would not meet the Army's more
stringent minimum needs here) is available on the General Services
Administration's Federal Supply Schedule for $20,000 more than the
price of a binocular without that feature. Since five night-vision
equipped binoculars are required here, the Army estimates that this
technology would add approximately $100,000 to the base price.
5. The Army acknowledges that it will pay a higher price in the
prototype phase of this contract to realize the benefits of FVC's
technically superior product.
6. Corion was notified in the Army's May 23 discussion letter that its
submitted binocular samples did not meet the resolution requirement.
Corion was also advised in the letter that its proposed manufacturing
method indicated that it would not produce a high yield of binoculars
meeting the resolution requirement, and that the method "could
potentially cause production problems" and "does not present a strong
understanding of the requirement." Consequently, to the extent Corion
suggests that it was not adequately apprised of these deficiencies,
this contention is without merit, especially since the record contains
a written response from Corion to the Army's discussion letter stating
that "[y]our letter correctly states the fact that mass production
techniques will yield only a percentage of precision prism needed for
this requirement."