BNUMBER: B-270585
DATE: March 22, 1996
TITLE: Shelby's Gourmet Foods
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Matter of:Shelby's Gourmet Foods
File: B-270585
Date:March 22, 1996
Albert S. C. Millar, Jr., Esq., for the protester.
Michael Trovarelli, Esq., Susan L. Extein, Esq., Defense Logistics
Agency, for the agency.
Christine Davis, Esq., Office of the General Counsel, GAO,
participated in the preparation of the decision.
DIGEST
Agency reasonably eliminated the protester's seriously deficient
proposal from the competitive range in a prime vendor procurement to
obtain full line food supplies for five military bases, where the
proposal did not adequately describe how the protester would satisfy a
contract of this scope and complexity.
DECISION
Shelby's Gourmet Foods protests the rejection of its proposal from the
competitive range and the terms of request for proposals (RFP) No.
SPO300-95-R-4000, issued by the Department of Defense (DOD), Defense
Logistics Agency (DLA), to obtain a "prime vendor" to supply a full
line of food products to various military installations in North
Carolina.
We deny the protest.
In 1993, DOD introduced the Prime Vendor acquisition method of
procuring food products, which is designed to use commercial practices
and commercial items to the greatest extent possible. Traditionally,
DOD purchased a single food item or a limited number of items per
solicitation; used military specifications to define the item(s); and
provided for delivery to DOD depots where the government would store
and redistribute the food in response to customer requests. In
contrast, under the Prime Vendor acquisition method, a single
contractor supplies a full line of commercially available food
products; uses electronic catalogues and an electronic ordering
system; and employs a commercial distribution system. Under such a
distribution system, each military installation orders its immediate
food requirements from the contractor, who supplies the food directly
to the installation in routine, bulk shipments.
The instant prime vendor RFP, issued on an unrestricted basis,
contemplated an indefinite quantity, indefinite delivery contract to
supply food to five military bases in North Carolina.[1] There were
64 delivery points at the five military installations, and each
delivery point required three weekly deliveries composed of any of the
3,000 items on the RFP schedule. These 3,000 food items encompassed
the entire range of food products, e.g., fish, meat, poultry, fresh
fruits and vegetables, dairy products, chilled foods, frozen foods,
semi-perishable and canned foods, baked goods, and confections. The
estimated cost of supplying the food to the five specified bases was
$25.1 million per year for a base and 3 option years.
The RFP advised that, of the 3,000 solicited food items, 120 items
would probably account for 80 percent of the total amount spent under
the contract. The RFP provided quantity estimates for these 120
items, for which it requested unit and extended prices, which were
used to determine each offeror's total price.[2]
The RFP stated a "best value" evaluation scheme, in which technical
quality was more important than price. The technical evaluation was
based upon 6 factors and 14 subfactors as follows:
A. Distribution, Delivery System, and Location
1. Product Availability
2. Ordering System
3. Location
4. Surge/Mobilization Capability
5. Product Sourcing
B. Corporate Experience
1. Past Performance and Experience
2. Organizational Support
C. Quality Program
1. Quality Control Procedures
2. Inspection Procedures
3. Storage Procedures
4. Supplier Selection
5. Product Descriptions
D. Socioeconomic Considerations
E. Procurement Pricing Plan
1. Purchasing Procedures
2. Unit Pricing
F. Small Entrepreneurial Enhancement Development (SEED) Program
The technical factors were listed in descending order of importance.
The RFP thoroughly described what the government expected the offeror
to demonstrate under each technical factor and subfactor.
Furthermore, the RFP authorized the government to conduct site visits
to verify information in the offerors' proposals. Under the
evaluation plan for this procurement, an offeror could earn a rating
of "highly acceptable," "acceptable," "marginally acceptable," or
"unacceptable," under the various factors and subfactors.
The agency received three proposals by July 27, 1995. Shelby's, a
small business, submitted the low-priced proposal. Shelby's
represented, pursuant to Federal Acquisition Regulation (FAR) sec.
52.215-6, that it was submitting its offer as a corporation, as
opposed to a joint venture or a partnership, and Shelby's proposal
contained no information suggesting a joint venture or partnership
arrangement. In its 2-1/2-page technical proposal, Shelby's listed
its prior DOD food service contracts, which ranged in value from
$17,271.60 to $143,747.78. Under the Distribution, Delivery System
and Location factor, the protester stated that it owned a computer to
receive product orders; that it owned a delivery truck and could rent
other trucks; and that its warehouse was inspected by a military
veterinarian and the Georgia Department of Agriculture. The protester
addressed the Quality Program factor by stating that it "always
look[ed] for quality products backed by a replacement guarantee."
From August 15 to August 17, the technical evaluation panel (TEP)
visited the site or sites designated by each offeror as its place of
performance. The protester's proposal listed a single site as its
place of performance--Shelby's warehouse in St. Mary's, Georgia near
Jacksonville, Florida. The TEP judged from the site visit that the
protester's warehouse, inventory, computer resources, quality
assurance program, distribution system and organizational structure
were inadequate to support a contract of this size and complexity.
For example, the TEP stated that the protester had "no
[organizational] structure outside of owner. Owner is buyer, loader,
driver, [quality assurance] and whatever else is needed." Although
the protester stated at the site visit that it could obtain adequate
supplies and additional warehouse space from two Jacksonville-based
suppliers (Jacksonville Hotel Supply Co. (JHS) and Winn-Dixie Grocery
Co.), the protester did not describe the alternate warehouse
facilities and could not give a "viable answer" as to how it would
"receive orders, purchase varying quantities of up to 500 items,
receive them, breakdown [and] load orders, and deliver to 50 - 60
points across [North Carolina] in less than 48 [hours or] as little as
4 - 6 [hours]."
On August 29, the contracting officer requested additional information
from each offeror to complete the proposal evaluation. The
contracting officer advised Shelby's that it had not adequately
addressed any of the evaluation factors, and asked Shelby's to review
the solicitation requirements and to provide the required information.
In its response, Shelby's provided more proposal information and also
asserted that Winn-Dixie and JHS were Shelby's joint venturers in the
competition. Shelby's submission prompted the contracting officer to
request "a written joint venture agreement, or any other legal
documentation to support your claim of a joint venture." In response,
Shelby's produced letters from JHS' Vice President, who affirmed the
claimed joint venture arrangement,[3] and a letter from Winn-Dixie's
Jacksonville location director, who did not.
On November 1, 1995, the contracting officer completed his review of
the offerors' proposals and all evaluation documentation generated by
the business evaluation panel and the TEP. Based upon this review,
the contracting officer concluded that the protester's technical
proposal was unacceptable overall and eliminated it from the
competitive range. The agency found Shelby's proposal unacceptable in
9 of the 10 subfactors comprising the most important Distribution,
Delivery System and Location factor and the third-most important
Quality Program factor. With respect to the second-most important
Corporate Experience factor, Shelby's proposal received an
unacceptable rating under the Organizational Support subfactor and a
neutral rating under the Past Performance and Experience subfactor
(which was accorded because the protester was found to possess no
relevant experience, see FAR sec. 15.608(a)(2)(iii)).[4]
Among the major deficiencies attributed to Shelby's proposal was its
failure to include a plan for ensuring that orders could be filled and
delivered according to the contract requirements, particularly given
that Shelby's own inventory and warehouse were inadequate to meet the
demands imposed by the RFP. Although Shelby's stated that it could
obtain sufficient stock and adequate warehouse space from Winn-Dixie
and JHS, the agency found that Shelby's had not substantiated its
claim of a joint venture with these firms, and that neither firm
promised to reserve any inventory or warehouse space for Shelby's or
to play a specific role in meeting the contract requirements. Even
though Shelby's was evidently a high-volume customer of these firms,
Shelby's did not state which firm would be responsible for
coordinating individual orders and consolidating shipments, where
shipments would originate, which firm would make shipment
arrangements, or how long it would take to make deliveries.
Compounding this problem was the fact that Shelby's owned only one
small, non-refrigerated delivery truck and proposed to use rented
trucks from a Wilmington, North Carolina, firm to meet the contract
requirements. In the absence of any explanation from Shelby's, the
contracting officer presumed that the trucks would travel from North
Carolina to Jacksonville to retrieve the food, then from Jacksonville
to North Carolina to deliver it, which the contracting officer viewed
as highly inefficient.[5]
The contracting officer further found that Shelby's never addressed
the Organizational Support subfactor, which required offerors to
describe key personnel and their functions and to provide an
organizational chart showing the individuals involved in contract
performance. Similarly, the contracting officer found that Shelby's
submitted "so little information under all the [Quality Program]
subfactors . . . that the response must be considered nonexistent."
Specifically, the contracting officer found that Shelby's relied upon
general statements, such as "we select the best," or "I always look
for quality products," instead of describing the procedures and
furnishing the documentation required by the Quality Program
subfactors.
The contracting officer advised the protester of its proposal's
elimination from the competitive range on November 8. Shelby's
protests that DLA lacked a reasonable basis for excluding its proposal
from the competitive range.
The evaluation of proposals and the resulting determination of whether
a proposal is within the competitive range is a matter within the
discretion of the contracting agency, since the agency is responsible
for defining its needs and the best method of accommodating them.
OPSYS, Inc., B-248260, Aug. 6, 1992, 92-2 CPD para. 83. Our Office will
only question the agency's evaluation where it lacks a reasonable
basis or conflicts with the stated evaluation criteria for award. See
General Servs. Eng'g, Inc., B-245458, Jan. 9, 1992, 92-1 CPD para. 44. A
protester's mere disagreement with the agency's technical evaluation
does not establish that the evaluation was unreasonable. DAE Corp.,
Ltd., B-257185, Sept. 6, 1994, 94-2 CPD para. 95.
The record reasonably supports DLA's conclusion that Shelby's
submitted a seriously deficient technical proposal that did not
demonstrate the firm's ability to perform a contract of this scope and
complexity, and Shelby's proposal was therefore properly rejected.
From our review, the reasons given by DLA for finding Shelby's
proposal unacceptable, as set forth above, were reasonably based. It
is apparent from the record that Shelby's, whose experience was
limited to much smaller food service contracts, did not appreciate the
significantly enhanced requirements imposed by this RFP and did not
structure its proposal to meet such requirements. In our view, DLA's
rejection of Shelby's proposal was reasonable.
The protester's specific objections to the technical evaluation in no
way cause us to question the reasonableness of the evaluation. For
example, the protester claims that DLA should have accepted its
representation that it could make timely deliveries, instead of
questioning Shelby's ostensible use of North Carolina rental trucks to
retrieve food from Florida and return to North Carolina. Shelby's
simply asserts that "rhetorical questions as to how the product would
get to the trucks would seem a little unnecessary." Similarly, the
protester argues that its proposal to obtain adequate supplies "from
the Winn-Dixie warehouse on 24 hour notice, day or night," was
"self-explanatory on its face," and that DLA had no basis to criticize
the adequacy of Shelby's ordering and distribution system. Contrary
to the protester's bald objections, we think that DLA reasonably
questioned these areas of Shelby's proposal and was entitled to probe
beyond Shelby's blanket assurances that it could perform the contract.
Shelby's argues that DLA should have made site visits to Winn-Dixie's
and JHS' facilities and credited Shelby's proposal with their
resources and experience, since Shelby's in fact substantiated its
joint venture with these firms. This allegation has no merit.
Joint ventures are recognized legal entities for contracting with the
government. See FAR subpart 9.6. A joint venture is an association
of persons or firms with an intent, by way of contract, to engage in
and carry out a single business venture for joint profit, for which
purpose they combine their efforts, property, money, skill and
knowledge. See T.V. Travel, Inc.; World Travel Advisors, Inc.;
General Servs. Admin.--Recon., 65 Comp. Gen. 109 (1985), 85-2 CPD para.
640. In this case, Shelby's was requested to produce "a written joint
venture agreement, or any other legal documentation to support [its]
claim of a joint venture." Shelby's did not produce such a joint
venture agreement or documentation, nor has Shelby's ever claimed
during the course of this protest that such documentation exists.
Absent such an agreement designating the responsibilities, profits,
liabilities and resources shared by the participating firms, the
contracting officer was not required to accept Shelby's and JHS'
blanket affirmation of a joint venture arrangement.[6] Moreover, it
is notable that Shelby's did not represent itself as a joint venture
pursuant to FAR sec. 52.215-6, did not designate any other firms'
facilities as performance sites, and did not develop a technical
approach integrating the responsibilities of its purported partners.
Finally, Shelby's protests that the Prime Vendor acquisition method
and the RFP evaluation scheme are biased in favor of large businesses.
Shelby's asserts that large businesses are more likely than small
businesses to submit higher-priced, technically superior proposals in
response to a Prime Vendor acquisition. Shelby's argues that the
agency should have neutralized this advantage by making price a more
important evaluation factor, using all items on the RFP pricing
schedule to calculate an offeror's total price, and making Corporate
Experience a less important evaluation factor.
These allegations concern solicitation defects, which Shelby's should
have protested before initial proposals were due in order to be
considered timely under our Bid Protest Regulations, section
21.2(a)(1), 60 Fed. Reg. 40,737, 40,740 (Aug. 10, 1995) (to be
codified at 4 C.F.R. sec. 21.2(a)(1)). Shelby's concedes that the
alleged defects were "apparent from the face" of the solicitation, but
maintains that "it was not until the evaluation process was observed
in action that it became crystal clear that the prime vendor concept
was not designed to effect cost savings." Our Bid Protest Regulations
do not entitle protesters to wait until their proposals are rejected
to protest such apparent solicitation defects. Shelby's could have
protested the acquisition strategy before initial proposals were due,
but chose instead to compete under this strategy. We will not now
hear Shelby's untimely objections to the RFP.
The protest is denied.
Comptroller General
of the United States
1. The bases were Seymour and Pope Air Force Bases, Fort Bragg, Camp
Lejeune, and Cherry Point Marine Corps Air Station.
2. As for the remaining items on the schedule, the RFP requested fixed
prices reflecting each item's indirect and distribution costs, but not
the item's invoice price. The prices for the remaining items were not
used to calculate each offeror's total price, although they were
comparatively evaluated.
3. In an earlier letter, JHS's Vice President described Shelby's as a
"customer."
4. As for the remaining evaluation factors and subfactors, the
protester's proposal received marginally acceptable ratings under both
Procurement Pricing Plan subfactors, a highly acceptable rating under
the Socioeconomic Considerations factor, and an acceptable rating
under the SEED Program factor. The favorable ratings were not deemed
sufficient to overcome the deficiencies under the more significant
evaluation factors.
5. Shelby's also failed to address whether the rented trucks would
meet the RFP's refrigeration and dry storage requirements.
6. As noted above, Winn-Dixie, although it did "not foresee any
difficulties in providing . . . support" to Shelby's, never affirmed a
joint venture arrangement as to this procurement, contrary to the
protester's apparent belief.