BNUMBER:  B-271197
DATE:  June 3, 1996
TITLE:  Cartridge Technology Network, Inc.

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Matter of:Cartridge Technology Network, Inc.

File:     B-271197

Date:June 3, 1996

David S. Cohen, Esq., and Victor G. Klingelhofer, Esq., Cohen & White, 
for the protester.
Christopher G. Lill, for American Laser, Inc., an intervenor.
Benjamin G. Perkins, Esq., Defense Logistics Agency, for the agency.
Sylvia Schatz, Esq., and John M. Melody, Esq., Office of the General 
Counsel, GAO, participated in the preparation of the decision.

DIGEST

Awardee's offer is not unbalanced where awardee's last 2 option year 
prices were lower than protester's and lower than awardee's prices for 
the base year and first two option years, but there is no evidence of 
overstated prices in awardee's offer in the earlier contract years.

DECISION

Cartridge Technology Network, Inc. (CTN) protests the award of a 
contract to American Laser, Inc. (ALI) under Defense General Supply 
Center (DGSC) request for proposals (RFP) No. SPO450-95-R-3056, for 
laser printer toner cartridges to be used by the Defense Supply Center 
in Richmond, Virginia (DSCR).  CTN argues that ALI's proposal 
contained unbalanced prices and should have been rejected.

We deny the protest.

The RFP contemplated the award of a fixed-price requirements contract 
on a best value basis, for a base year with four 1-year options, for 
an annual estimated 25,000 cartridges.  The solicitation set forth two 
equally weighted factors, price and past performance.  Past 
performance was evaluated using an Automated Best Value Model (ABVM) 
score (ranging from 0 points for poor performance to 100 points for 
excellent performance), which indicated the offeror's performance on 
DSCR contracts for the type of supplies required here, performed over 
a 12-month period beginning 14 months prior to generation of the 
offeror's ABVM score.  Price (for the base and option years) was to be 
evaluated for reasonableness.

DSCR received 13 offers.  Following discussions, the agency requested 
and received best and final offers (BAFO).  ALI's BAFO was assigned an 
ABVM score of        99.3 points, while CTN's was 89.7 points.  The 
offerors' prices were as follows:

                              ALI                 CTN

Base price       $57.90               $53.90                  

Option period 1   48.90                48.90                  

Option period 2   40.90                43.00                  

Option period 3   29.30                43.00                  

Option period 4   26.20                43.50                  

TOTAL            $5,080,000          $5,795,000               
The contracting officer made award to ALI based on its highest past 
performance score and lowest price.

CTN argues that ALI's BAFO was unbalanced, and could not be accepted 
for award, because its base year and first 2 option year prices were 
substantially higher than the prices for the last 2 option years.  CTN 
maintains that ALI's BAFO will not result in the lowest price to the 
government, "since demand for the toner cartridge models procured 
under [this] RFP is likely to diminish over a five year period," as 
Hewlett-Packard introduced a new "next generation" series of laser 
printers which utilize different toner cartridges from those required 
here. 

Before an offer can be rejected as unbalanced, it must be found to be 
both mathematically and materially unbalanced.  An offer is 
impermissibly mathematically unbalanced where it contains nominal 
prices for some items and overstated prices for others.  SIMSHIP 
Corp., B-253655.2, Dec. 2, 1993, 93-2 CPD  para.  293.  A mathematically 
unbalanced offer is considered materially unbalanced, and cannot be 
accepted, where there is a reasonable doubt that acceptance of the 
offer will result in the lowest overall cost to the government, or 
where it is so grossly unbalanced that its acceptance would be 
tantamount to allowing an advance payment, even if the offer 
represents the lowest cost to the government.  Star Brite Constr. Co., 
Inc., B-244122, Aug. 20, 1991, 91-2 CPD  para.  173.

It does not appear that ALI's BAFO was mathematically unbalanced.  A 
mathematically unbalanced offer must contain both nominal prices and 
overstated prices.  Although ALI's last 2 option year prices were 
lower than CTN's and lower than ALI's own prices for the base year and 
first 2 option years, there is no evidence of overstated prices in the 
earlier contract years--ALI's base and first 2 option year prices 
($57.90, $48.90, and $40.90, respectively) were very similar to CTN's 
($53.90, $48.90, and $43.00, respectively).  Accordingly, we cannot 
say that ALI's offer is mathematically unbalanced, and therefore there 
is no basis to find it materially unbalanced.[1]

The protest is denied.

Comptroller General
of the United States 

1. Moreover, the agency reports that CTN's assumption that more 
cartridges will be ordered in the early contract years is based on a 
faulty premise, i.e., that the printers which use these cartridges 
likely will be replaced with new generation printers during the life 
of the contract.  The agency states that, in fact, it currently has no 
plans to do so; indeed, the agency reports that, given the cutbacks in 
government spending, it is unlikely DSCR will switch to this new 
printer during the next 5 years.