BNUMBER:  B-272162
DATE:  September 4, 1996
TITLE:  Macon Apparel Corporation

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Matter of:Macon Apparel Corporation

File:     B-272162

Date:September 4, 1996

Ruth E. Ganister, Esq., and Glenn L. Blackwell, Esq., Rosenthal & 
Ganister, for the protester.
John M. Logue, Esq., and Michael Trovarelli, Esq., Defense Logistics 
Agency, for the agency.
Paul E. Jordan, Esq., and Paul Lieberman, Esq., Office of the General 
Counsel, GAO, participated in the preparation of the decision.

DIGEST

Agency evaluation of protester's past performance as "marginally 
acceptable" is unobjectionable where agency considered protester's 
improvements in deliveries and contractual adjustments to delivery 
schedules, but found protester's deliveries under five of six most 
recent contracts were inexcusably delinquent.  

DECISION

Macon Apparel Corporation protests the award of a contract to Martin 
Manufacturing Company under request for proposals (RFP) No. 
SPO100-95-R-0095, issued by the Defense Personnel Support Center, 
Defense Logistics Agency for the manufacture of certain shirts.  The 
protester contends that the agency's evaluation of Macon's past 
performance was flawed.

The RFP sought proposals to manufacture long-sleeve shirts for wear by 
Navy personnel.  The RFP contemplated a basic award for the 
manufacture of 123,360 shirts, with two mandatory options of 123,360 
shirts each.  Offerors were required to submit a product demonstration 
model (PDM) using the materials specified in the RFP.  Offerors also 
were required to describe their experience with production of the same 
or similar garments within the last 2 years, including delivery and 
quality performance information and explanations of any substandard 
quality or delinquent delivery.

Proposals were evaluated on price and four technical factors, listed 
in descending order of importance:  PDMs; experience/past performance; 
manufacturing plan; and quality assurance plan.  Technical quality was 
more important than price.  Proposals were rated on an adjectival 
basis with categories of highly acceptable, acceptable, marginally 
acceptable, and unacceptable.  Award was to be made to the offeror 
whose proposal was evaluated as most advantageous to the government.

Three offerors including Macon and Martin submitted proposals by the 
May 4, 1996, closing date.  In its initial evaluation, the agency 
rated all three proposals marginally acceptable under the 
experience/past performance factor and thus, marginally acceptable 
overall.  In October 1995, the agency conducted discussions with all 
three.  Among other things, the agency identified five of Macon's six 
recent contracts which were delinquent and invited Macon to describe 
the reasons for the delinquency and future actions to be taken to 
preclude further delinquencies.  The agency invited Martin and the 
other offeror to explain negative aspects of some, but not all, of 
their delinquent contracts.  In reviewing the offerors' responses, the 
agency found that the delivery delays for all offerors were 
inexcusable and determined not to change the marginally acceptable 
rating for any of the offerors.  

After conducting more rounds of negotiations, the agency requested 
best and final offers (BAFO) from all three.  At that point, all three 
proposals were rated marginally acceptable overall due to marginally 
acceptable experience/past performance ratings.  In April 1996, during 
its final review, the agency discovered that Martin and the third 
offeror had not been provided an opportunity to address instances of 
negative past performance on certain contracts.[1]  Since these 
offerors' marginal ratings were based on these unresolved negative 
aspects, the agency reopened negotiations with all offerors.  The 
agency identified the contracts in question for Martin and the third 
offeror and provided Macon the opportunity to furnish any additional 
or revised information.

As a result of Martin's responses, the agency evaluated Martin's 
proposal as acceptable in all factors including experience/past 
performance.  The agency did not change the marginally acceptable 
ratings for Macon and the third offer.  While the contracting officer 
considered Macon's competitive prices and the firm's recent 
improvements in performance, he determined that Martin's proposal, 
specifically in the area of past performance, was clearly technically 
superior to the others and warranted paying a premium of $409,548.08 
(16 percent) over Macon's price.  The source selection authority 
approved the contracting officer's determination to award the contract 
to Martin. 

Macon contends that the agency unreasonably evaluated its past 
performance as marginally acceptable.  Macon argues that its proposal 
should have been rated as acceptable since it has successfully been 
performing under other government and commercial contracts and has a 
significant history of successful production of this and other 
military shirts.  Macon maintains that its delays were not the result 
of its fault or negligence.   

Where an evaluation is challenged, we will examine the evaluation to 
ensure that it was reasonable and consistent with the evaluation 
criteria and applicable statutes and regulations, since the relative 
merit of competing proposals is primarily a matter of administrative 
discretion.  Information Sys. & Networks Corp., 69 Comp. Gen. 284 
(1990), 90-1 CPD  para.  203.  Mere disagreement with the agency's 
evaluation does not itself render the evaluation unreasonable.  Litton 
Sys., Inc., B-237596.3, Aug. 8, 1990, 90-2 CPD  para.  115.  Our review of 
the record here provides no basis to object to the agency's 
evaluation.

In evaluating Macon's past performance as marginally acceptable, the 
agency considered that the protester's delinquencies occurred on 
critical contracts causing the agency to restructure the firm's 
contracts to minimize supply failures.[2]  While noting Macon's recent 
"marked improvement," the agency concluded that it was not sufficient 
to overcome the firm's poor showing on a number of contracts, nor did 
it convince the agency that the firm was truly capable of performing 
according to contract requirements.  Macon's disagreement with this 
assessment by the agency provides no basis for finding that assessment 
unreasonable.  Litton Sys., Inc., supra.

In explaining its delinquent deliveries, Macon simply stated that it 
had planned to build production through the award of one of the five 
recent contracts and had anticipated increasing production by 
increasing efficiency and hiring additional workers.  Macon was 
unsuccessful on both fronts and the only solutions to future problems 
it offered were delivery date extensions and plans not to accept 
additional work beyond a certain level of production.  None of these 
explanations indicates any fault by the government or reflects 
circumstances beyond Macon's control.  In essence, Macon's explanation 
concedes that it had misjudged its ability to handle the workload of 
its multiple contracts.  

Macon argues that the agency improperly relied on the state of Macon's 
performance as of October 1995.  According to Macon, its performance 
record had significantly improved by April 1996, when the agency 
provided Martin an additional opportunity to explain its past 
performance deficiencies.  Macon contends that the agency should have 
given it the same opportunity as Martin and should have considered 
Macon's improvements of which the agency was already aware.  In this 
regard, Macon observes that it was ahead of schedule against the 
revised schedule on two contracts and contends that the agency failed 
to consider all of its excusable delay.  Macon also contends that the 
agency failed to consider its improved production volume which 
increased from less than 42,000 units per month in October to more 
than 53,000 per month in April.[3]  Macon's arguments are without 
merit.

First, Macon was provided the opportunity in April to provide any 
additional or revised information, as well as to revise its price.  
Macon declined to do either.  While the agency did not advise Macon 
that it still considered the protester's past performance to be 
marginally acceptable, nothing prevented Macon from pointing out its 
performance improvements.  In this regard, while it now relies on 
delays attributable to the July 1994 flooding, it did not mention this 
to the agency in October 1995 or in April 1996.  

Second, it is clear from the record that the agency did consider 
Macon's performance from October to April and acknowledged its 
improvements; the agency simply did not agree that the improvements 
were sufficient to warrant an acceptable rating for this evaluation 
factor.  For example, one of the five contracts was originally 
evaluated as 2 months behind schedule.  By April, the contract was 
evaluated as completed only 52 days late.  The agency also found that 
Macon was ahead of schedule on the other four contracts.  However, the 
agency noted that Macon was ahead of schedule based on revised 
schedules and that each contract still had 1 to 2 months of 
inexcusable delay.[4]  The agency also considered Macon's improved 
productivity, but found it inconsistent.  For example, while in April, 
Macon was shipping 52,000 units on a requirement for 49,000 units, in 
October, Macon was shipping only 25,000 units when 47,000 units were 
required.  From this, the agency reasonably concluded that Macon had 
not shown a consistent ability to meet required delivery schedules.  
While Macon's delivery projections showed that it would complete all 
its contracts on time or ahead of the revised schedules, the agency 
also found it unlikely that Macon could meet all of its April 
projections which included shipment of 59,000 units on two of its 
contracts.[5]   In sum, the agency reasonably concluded that Macon's 
recent improved performance did not warrant upgrading Macon's 
performance evaluation of marginally acceptable.

Macon next contends that the agency improperly viewed Martin's past 
performance as acceptable despite a lengthy delay on one contract and 
quality deficiencies on others.  Macon argues that its delays were 
shorter and that it had no quality deficiencies.  

The differing evaluations are based on the agency's finding that 
Martin's explanations of its deficiencies were more compelling than 
Macon's.  While Macon explained its delinquencies as essentially due 
to misjudgment of its production capacity, Martin detailed the reasons 
for its 7-month delay and its efforts to cure the problems responsible 
for the delay.  In this regard, Martin explained that the delay was 
due to changes in the 13-year-old shade specification.  While Martin 
had used the original fabric manufacturer as its subcontractor to 
ensure it met the specification, the subcontractor was initially 
unsuccessful.  Martin sought the reasons for the problems and found 
them due to changes in the dye formulation including deletion of a 
soil release additive which affected the shade.  Once the problem was 
solved, Martin shipped the complete order within 90 days.  The agency 
concluded that any end item manufacturer would have encountered the 
same problems as Martin for this contract.  Thus, while the delay was 
"inexcusable," the agency determined that the delay should not be held 
against Martin.

Further, of the 15 Martin contracts reviewed, the agency found only 
three minor deficiencies in addition to the shade matching 
delinquency.  On one, Martin finished on time though it experienced a 
delay in the middle of performance and a second contract was only 1 
week behind schedule.  A third involved a quality problem so minor 
that it did not warrant repair or replacement; the garments were 
accepted in exchange for a small price reduction.  Comparing these 
circumstances with those surrounding Macon's past performance, we find 
nothing inequitable in the agency's conclusion that Martin's past 
performance was acceptable, while Macon's was marginal. 

Macon also notes that the agency is paying some $400,000 more for 
Martin's shirts than it would pay for Macon's.  In a negotiated 
procurement, the government is not required to make award to the 
lowest cost, technically acceptable offeror unless the RFP specifies 
that cost will be the determinative factor for award.  General Servs. 
Eng'g, Inc., B-245458, Jan. 9, 1992, 92-1 CPD  para.  44.  Award to offerors 
with higher technically scored proposals and higher prices are 
unobjectionable, so long as the result is consistent with the 
evaluation criteria, and the agency has determined that the technical 
difference is sufficiently significant to outweigh the cost 
difference.  Kelsey-Seybold Clinic, P.A., B-217246, July 26, 1985, 
85-2 CPD  para.  90.  Consistent with that standard, the agency concluded 
that Martin, with its superior past delivery history, represented the 
best value despite its higher price.  We see nothing unreasonable with 
that conclusion. 

The protest is denied.

Comptroller General 
of the United States 

1. The agency also failed to specify one of Macon's delinquent past 
contracts in its discussions with Macon.  However, the record is clear 
that the agency specifically did not consider that delinquent 
performance in its evaluation.  Rather, Macon's marginally acceptable 
past performance rating was based on five more recent delinquent 
contracts.  Thus, Macon was not affected by the agency's action in 
this regard.  

2. Macon also contends that it was unfair for the agency to have 
considered delivery delays where it had negotiated extended delivery 
dates.  However, since these extensions did not excuse all of Macon's 
delay on its contracts, we find nothing objectionable in the agency's 
evaluation. 

3. Macon also contends that the agency should have considered more 
excusable delay based on flooding at its Macon, Georgia plant in July 
1995.  According to Macon, the credit it did receive was inadequate.  
We note that Macon received excusable credit on two contracts as a 
result of the flooding and contractually waived any claim to 
additional credit.  With regard to the remaining contracts on which 
Macon was behind schedule, we also note that (as Macon subsequently 
conceded in its supplemental comments) the flooding was in July 1994, 
not 1995, months before the remaining contracts were awarded.  We fail 
to see how the flooding could have resulted in unexpected or 
unavoidable delays on these contracts. 

4. The agency has acknowledged that the evaluation of one contract 
showed 
4 months' delinquency when in fact it was a 3-month delinquency and 
that final delivery was projected to be only 1 month inexcusably late.  
The agency explains that the reference to 4 months was a typographical 
error and states that it considered the actual delinquency to be a 
negative aspect which, in conjunction with the other late contracts, 
supported the rating of marginally acceptable past performance.  

5. The agency also considered explanations of Macon's delinquencies 
which it submitted to other contracting officers.  In one of Macon's 
explanatory letters, after discussing the effects of the flood and how 
its production had recently increased greatly, Macon stated:  "We do 
however take some responsibility of overloading the plant beyond its 
capacity."  The agency reasonably viewed this as a concession by Macon 
that it bore some responsibility for its delinquent performance.