BNUMBER:  B-271686
DATE:  July 24, 1996
TITLE:  Smith of Galeton Gloves, Inc.

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Matter of:Smith of Galeton Gloves, Inc.

File:     B-271686

Date:July 24, 1996

Lola Dickerman, Esq., for the protester.
Maria C. Santucci, Esq., Defense Logistics Agency, for the agency.
Behn Miller, Esq., and Christine S. Melody, Esq., Office of the 
General Counsel, participated in the preparation of the decision.

DIGEST

1.  Agency's evaluation of protester's past performance as marginally 
acceptable was reasonable where the record shows that the protester 
was delinquent on two contracts, and did not--in response to direct 
discussion questions--submit any evidence to explain these 
delinquencies.

2.  Protester's deficient past performance rating was not required to 
be referred to the Small Business Administration for review as a 
responsibility matter under certificate of competency proceedings 
since past performance was a technical evaluation factor that was 
evaluated on a comparative basis, and therefore did not constitute a 
finding pertaining to the protester's responsibility.

3.  Where the solicitation stated that technical quality was more 
important than price, an award to a higher-priced offeror was 
reasonable where the source selection authority reasonably concluded 
that the awardee's proposal was technically superior to the 
protester's proposal and was worth its 10-percent higher price.

DECISION

Smith of Galeton Gloves, Inc. protests the award of a contract to 
Nationwide Glove Company under request for proposals (RFP) No. 
SPO100-95-R-0244, issued by the Defense Personnel Support Center 
(DPSC), Defense Logistics Agency (DLA), for the manufacture and 
delivery of chemical protective glove inserts.  Smith challenges the 
award on the ground that the agency improperly downgraded its proposal 
under the past performance evaluation factor; had this downgrading not 
occurred, Smith contends, it would have been equally ranked with 
Nationwide in technical merit, and would have received contract award 
as the lowest-priced offeror.

We deny the protest.

The RFP was issued as a total small business set-aside on August 11, 
1995, and contemplated the award of an indefinite quantity contract 
for a base year with 2 option years; the RFP set forth minimum/maximum 
estimates of 144,440/222,600 glove insert pairs per year.

Offerors were to provide a product demonstration model (PDM) which 
would be evaluated by the agency for compliance with each of the 
technical criteria set forth in the solicitation's "PURCHASE 
DESCRIPTION," as well as a past performance "descri[ption] of their 
experience with producing the same or items of similar complexity, 
within the past two (2) years."  The RFP further advised offerors that 
the past performance information "should demonstrate the ability to 
successfully produce the item identified in the solicitation without 
significant quality or schedule problems" and requested telephone 
numbers and contact personnel for all contracts referenced in the 
offerors' technical proposals.  With regard to technical evaluations, 
the RFP provided that an adjectival rating scheme of highly 
acceptable; acceptable; marginally acceptable; and unacceptable would 
be used to score each offeror's proposal under the solicitation's two 
technical evaluation factors--PDM and Past Performance--which were 
listed in descending order of importance.

For their price proposals, offerors were directed to complete and 
submit the solicitation's Section B "SUPPLIES/SERVICES" pricing 
schedule.  In this regard, the RFP provided that contract award would 
be made to the offeror submitting the most advantageous offer, and 
emphasized that "technical quality is more important than price."  

By the September 25 closing time, three proposals--including one 
submitted by Nationwide and one submitted by the protester--were 
received.  The results of the technical evaluation were as follows:

Offeror         PDM
                Factor          Past Performance
                                Factor          Overall Rating

Nationwide      Acceptable      Acceptable      Acceptable

Smith           Acceptable      Marginally AcceptableMarginally 
                                                Acceptable

Offeror C       Unacceptable    Marginally AcceptableMarginally 
                                                Acceptable
Both Nationwide and Smith submitted glove inserts that lacked an 
identification/size label; Smith's PDM also lacked a required bar-code 
label.  Because the agency viewed these deficiencies as easily 
correctable, it gave both Nationwide and Smith an "acceptable" rating 
under the PDM technical evaluation factor.  In this regard, the RFP 
specified that an "acceptable" rating for the PDM factor meant that:

     "The PDM meets the stated requirements of the 
     specification/commercial product description, but exhibits 
     deficiencies that are easily correctable during production."  
     (Emphasis added.)

Under the past performance evaluation factor, the agency gave 
Nationwide's proposal an "acceptable" rating, which according to the 
RFP's definition meant that the "offeror's record of past performance 
demonstrates an . . . overall record of timely delivery."  Although 
Nationwide completed 1 of the referenced contracts 1 month late, the 
remaining 11 had been completed on time or ahead of schedule.  The 
agency's investigation also showed that the sole incident of 
delinquent contract performance occurred because, in compliance with 
the contract's warranty provision, Nationwide had been required to 
replace a small number of delivered gloves because of product defects.  
Because three other contracts for the same heavy duty glove had been 
successfully and timely performed without any quality or delinquency 
problem, the agency evaluators determined that, on balance, 
Nationwide's past performance record was acceptable.

In contrast, the agency rated Smith's proposal as "marginally 
acceptable" under the past performance factor.  In its proposal, Smith 
had listed two contracts--neither of which could be considered by the 
agency since they did not fall within the prior 2 contract years, as 
required by the RFP.  Nevertheless, the agency researched its own 
files and discovered two glove contracts Smith had performed for 
DPSC.[1]  Smith completed one of the contracts 2 years late.  The 
agency evaluators also noted that minor quality problems occurred 
throughout Smith's performance of this contract.  The second contract 
was completed 11 weeks late; although 5 of these weeks were deemed 
partially excusable as a result of a defective specification, the 
remaining 6 weeks were deemed inexcusable by DPSC since once the 
proper supplies to manufacture the gloves in accordance with the new 
specifications were delivered to Smith, it nonetheless delayed 
commencing production.  As a result of these two delinquencies, and 
because no other contract references were provided, the agency 
determined--in accordance with the "marginally acceptable" rating 
definition set forth in the RFP--that Smith's "record of past 
performance demonstrate[d] a less than acceptable commitment to 
customer satisfaction and timely delivery."

On February 5, 1996, the contracting officer issued discussion letters 
to each offeror.  Of significance to this protest, the contracting 
officer advised Smith that it had received a PDM rating of 
"acceptable" and that the missing identification and bar-code labels 
were deemed deficiencies in its offer.  In the letter, the contracting 
officer advised Smith that to correct the label deficiencies, Smith 
could either submit a new PDM or certify that the firm would correct 
the deficiencies; the letter further apprised Smith that

     "by submitting a new PDM, your rating . . . for this factor may 
     be upgraded or downgraded as necessary.  By certifying that the 
     above defects will be corrected, your present evaluation will not 
     change."

Smith also was informed that it had received a "marginally acceptable" 
rating under the past performance technical factor; to remedy this 
deficiency, Smith was asked to "address the delinquency and quality 
problems experienced" on the two DPSC contracts, and to provide "past 
performance information for your commercial customers."  Smith also 
was advised that the two contracts listed as references in its 
technical proposal could not be evaluated as they fell outside the 
RFP's 2-year  time frame.

Nationwide received a discussion letter similar to Smith's; as in the 
case of the protester, Nationwide was apprised of its PDM rating and 
advised that submitting a new PDM with corrected deficiencies could 
raise or lower its "acceptable" rating, while certifying correction of 
the label deficiency would not change the evaluation rating.

Both Nationwide and Smith submitted best and final offers (BAFO) by 
the February 8 BAFO due date.  For its BAFO, Nationwide submitted a 
new PDM--with all the required labels; since Nationwide's PDM complied 
with every technical requirement, its PDM score was raised to highly 
acceptable, in accordance with the terms of the RFP.  Nationwide's 
past performance rating remained unchanged--acceptable. Overall, 
Nationwide's proposal was rated acceptable.

Smith did not submit a new PDM; instead, as permitted by the agency's 
instructions, Smith provided a certification that the label 
deficiencies would be corrected during production.  Consequently, its 
PDM rating of acceptable was not changed.  Although the agency had 
invited Smith to address the identified contract delinquencies and/or 
submit additional reference information from commercial customers, 
Smith did not provide any additional information regarding the past 
performance factor in its BAFO.  Therefore, Smith's proposal's past 
performance rating remained unchanged as marginally acceptable.  
Overall, Smith's proposal was rated marginally acceptable.

On March 20, the contracting officer issued an amendment to the RFP 
which incorporated several new contract clauses; each offeror was 
advised to submit its acknowledgment of the amendment along with a 
BAFO by March 22.

The results of the final BAFO evaluation were as follows:

Offeror              Overall Technical RatingPrice

Nationwide           Acceptable           $794,896.20

Smith                Marginally Acceptable$721,418.40
After reviewing the technical evaluation results, by memorandum dated 
March 28, the source selection authority determined that Nationwide's 
technical superiority warranted paying the approximately 10-percent 
price premium.  Consequently, on March 29, DLA awarded the contract to 
Nationwide as the offeror proposing the most advantageous offer.

PROTESTER'S CONTENTIONS

Smith contends that its proposal was improperly downgraded under the 
past performance evaluation factor, and that but for this downgrading, 
it would have been equally ranked with Nationwide in technical merit, 
and would have received contract award because of its lower price.  
Smith concedes that it was 2 years delinquent on one of the identified 
DPSC contracts; however, with regard to the second DPSC contract, 
Smith contends that its delinquent performance should have been 
classified by the agency as excusable since all production delays 
resulted from the agency's use of a defective specification.  Smith 
also maintains that the agency's evaluation of its past performance is 
unreasonable since DLA recently awarded Smith a small purchase 
contract to provide the same glove item required here.  Additionally, 
Smith contends that it cannot be downgraded under the past performance 
factor without referral of the matter to the Small Business 
Administration (SBA) for review under certificate of competency (COC) 
proceedings as a responsibility matter.  Finally, Smith maintains that 
its submission of a certification that all label deficiencies would be 
corrected should have caused the agency to raise its proposal's rating 
from acceptable to highly acceptable under the PDM factor.  

DISCUSSION

The evaluation of technical proposals is primarily the responsibility 
of the contracting agency since the agency is responsible for defining 
its needs and the best method of accommodating them, and it must bear 
the burden of any difficulties resulting from a defective evaluation.  
Litton Sys., Inc., B-237596.3, Aug. 8, 1990, 90-2 CPD  para.  115.  It is 
not a function of our Office to reevaluate proposals; rather, we 
review the agency's evaluation of proposals only to ensure that it was 
fair, reasonable, and consistent with the evaluation criteria stated 
in the solicitation.  VSE Corp., B-247610.2, Aug. 6, 1992, 92-2 CPD  para.  
81.  Where a solicitation requires the evaluation of offerors' past 
performance, an agency has discretion to determine the scope of the 
offerors' performance histories to be considered, provided all 
proposals are evaluated on the same basis and consistent with the 
solicitation requirements.  Wind Gap Knitwear, Inc., B-261045, June 
20, 1995, 95-2 CPD  para.  124.  From our review of the record, there is no 
basis to object to the agency's evaluation of Smith's past 
performance.

First, while the RFP limited offerors to submitting past performance 
references for the preceding 2 years, the record shows that Smith 
disregarded these instructions and submitted two references for 
contracts performed prior to the 2-year time limit set forth in the 
RFP.  Next, although the agency identified and asked Smith to address 
its delinquent contract performance on the two DPSC contracts, Smith 
failed to provide any additional discussion or alternate contract 
references to alleviate the agency's concerns.  In this regard, 
although Smith now maintains that its delinquent performance under one 
of the DPSC contracts should be classified as excusable, and that the 
agency should have realized this by virtue of the fact that an 
equitable adjustment claim was pending regarding that contract during 
the agency's evaluation on this contract, Smith never apprised the 
agency of this fact in its BAFO.  Further, while Smith contends that 
its receipt of a DPSC contract for the same glove item 10 days prior 
to the award of this contract demonstrates its ability to successfully 
perform this requirement, the agency reports that the contract award 
to which Smith refers was made as an urgent small purchase in response 
to a request for quotations which did not require a past performance 
evaluation, and which solicited a much smaller number of glove 
inserts--30,000 pairs--than the number required here.

Given the agency's discussion letter, which clearly placed Smith on 
notice that the firm needed to furnish additional evidence to improve 
its past performance rating, and Smith's failure to respond--in any 
fashion--to the agency's past performance concerns, we think the 
agency reasonably found Smith's proposal marginally acceptable under 
the past performance factor.

Smith contends that it cannot be downgraded under the past performance 
factor without referral of the matter to the SBA for consideration 
under that agency's COC proceedings.  Referral to the SBA is not 
required here.  It is true that where an agency finds that a small 
business is nonresponsible, the agency is required to refer the matter 
to the SBA for consideration under the COC procedures.  Flight Int'l 
Group, Inc., 69 Comp. Gen. 741 (1990), 90-2 CPD  para.  257.  In a 
negotiated procurement, SBA referral is mandatory where the 
solicitation includes, as a matter to be evaluated on a pass/fail 
basis, a criterion that is traditionally a responsibility-type factor, 
and the contracting agency has determined that a small business's 
proposal should be rejected for failure to "pass" that criterion; this 
is so because the agency is viewed as having made a nonresponsibility 
determination notwithstanding its use of and reliance on a technical 
evaluation criterion.  Docusort, Inc., B-254852, Jan. 25, 1994, 94-1 
CPD  para.  38.

The requirement for referral does not apply here.  While the past 
performance criterion is a responsibility-type factor, it was not 
applied on a pass/fail basis.  Rather, each proposal--including 
Smith's--was comparatively evaluated under this factor, and assigned a 
comparative adjectival rating.  That means that the agency did not in 
essence make a responsibility determination, but simply integrated its 
relative assessment of past performance into its overall determination 
of which proposal was most advantageous to the government.  In such 
circumstances, there was no need for referral to the SBA.  Tri-Servs., 
Inc., B-256196.4, Sept. 30, 1994, 94-2 CPD  para.  121.

As a final matter, to the extent Smith argues that the agency should 
have raised its PDM rating to highly acceptable as a result of its 
certification (promising that all label deficiencies would be 
corrected during production), its protest is untimely.  As noted 
above, the contracting officer's February 5 discussion letter advised 
Smith that certifying correction of the label defects would not change 
its initial PDM evaluation rating.  If Smith objected to this 
evaluation scheme, it was required to challenge this factor prior to 
the next solicitation closing time.  Since it did not raise this issue 
until after award, this aspect of its protest is untimely.  See 4 
C.F.R.  sec.  21.2(a)(1) (1996); NASCO Aircraft Brake, Inc., B-237860, Mar. 
26, 1990, 90-1 CPD  para.  330.

In sum, we conclude that the agency's evaluation of Smith's proposal 
as marginally acceptable under the past performance factor, and 
acceptable under the PDM factor, is unobjectionable.  Further, we see 
no basis to question the agency's evaluation of Nationwide's proposal.  
Both Nationwide and Smith were given the same choice for remedying 
virtually identical PDM label defects.  Nationwide--as a result of its 
decision to submit a new, fully compliant PDM--reasonably earned a 
highly acceptable rating, and fully demonstrated its commitment to 
providing a quality glove insert.  In contrast, Smith, instead of 
producing a new PDM, chose to certify that the label deficiencies 
would be remedied in the production stage--resulting in no change to 
its acceptable rating.  With regard to past performance, Nationwide 
also demonstrated its technical superiority; a detailed list of 12 
contracts was provided, demonstrating timely--and even 
expedited--compliance with all quality and delivery terms for 11 of 
the references. [2]  Smith, on the other hand, made no attempt to 
alleviate the agency's reasonable concerns about its performance under 
its two prior contracts .

Where, as here, a solicitation emphasizes that technical quality is 
more important than price, an agency may reasonably decide to award to 
a technically superior awardee for a slightly higher price premium.  
See Macon Apparel Corp., B-253008, Aug. 11, 1993, 93-2 CPD  para.  93.  
Given that the record supports the agency's conclusion that 
Nationwide's offer represented a superior demonstration of product 
quality and commitment to timely delivery, we see no basis to object 
to the agency's decision that Nationwide's offer represented the best 
value to the government and warranted payment of a 10-percent price 
premium.

The protest is denied.

Comptroller General
of the United States

1. The RFP provided that in evaluating each offeror's past 
performance, the agency would consider--in addition to what was stated 
in the offeror's technical proposal--"information available at DPSC."

2. Smith objects to the agency's decision not to rate Nationwide's 
performance marginally acceptable based on the twelfth contract 
reference--which, as noted above, was completed 1 month late.  We 
think the agency reasonably concluded that Nationwide's proposal 
warranted a rating of acceptable rather than marginally acceptable 
given that the sole instance of delinquency occurred on the earliest 
contract for the production of the glove item, and since that one 
delinquency, three additional contracts for the same item were 
successfully and timely performed without incident.  Smith's mere 
disagreement with the agency's evaluation rating does not render the 
evaluation unreasonable.  Wind Gap Knitwear, Inc., supra.