BNUMBER:  B-272388.2 
DATE:  December 9, 1996
TITLE: Matrix International Logistics, Inc., B-272388.2, December 9,
1996
**********************************************************************

DOCUMENT FOR PUBLIC RELEASE
A protected decision was issued on the date below and was subject to a 
GAO Protective Order.  This version has been redacted or approved by 
the parties involved for public release.
Matter of:Matrix International Logistics, Inc.

File:     B-272388.2

Date:December 9, 1996

Timothy Sullivan, Esq., Katherine S. Nucci, Esq., and Martin R. 
Fischer, Esq., Adduci, Mastriani & Schaumberg, for the protester.
Raymond S.E. Pushkar, Esq., and Michael A. Hopkins, Esq., McKenna & 
Cuneo, for Sea-Land Logistics, Inc., the Intervenor.
Charna J. Swedarsky, Esq., and William R. Buonaccorsi, Esq., 
Department of the Navy, for the agency.
John L. Formica, Esq., and James A. Spangenberg, Esq., Office of the 
General Counsel, GAO, participated in the preparation of the decision.

DIGEST

1.  The agency's evaluation of the awardee's best and final offer and 
its source selection decision cannot be determined reasonable where 
they are unsupported by either the contemporaneous evaluation and 
source selection documentation or the arguments, explanations, and 
testimony in the record.

2.  Agency failed to conduct meaningful discussions with the protester 
where it determined during its evaluation of initial proposals that a 
material element of the protester's price proposal was either 
unreasonably priced or the result of a mistake, but did not raise the 
matter during discussions.  

3.  Correction of mistake in awardee's price after receipt of best and 
final offers where it is not clear from the proposal and solicitation 
what price was intended constitutes discussions requiring discussions 
with all offerors whose proposals are in the competitive range.

DECISION

Matrix International Logistics, Inc. protests the award of a contract 
to Sea-Land  Logistics, Inc. under request for proposals (RFP) No. 
N62387-96-R-9602, issued by the Military Sealift Command, Department 
of the Navy, for transportation services in support of the Cooperative 
Threat Reduction (CTR) program.  

We sustain the protest because the agency's determination that 
Sea-Land's proposal was "excellent" and "essentially equal" to 
Matrix's higher-priced "excellent" proposal is unsupported by the 
record, and because the agency failed to conduct meaningful 
discussions with Matrix and improperly conducted discussions with 
Sea-Land after the submission of best and final offers (BAFO).

BACKGROUND

The CTR program assists the former Soviet Union (FSU) countries of 
Russia, Belarus, Ukraine, and Kazahkstan in the elimination of their 
nuclear and chemical weapons of mass destruction and of other weapons.  
CTR program support includes, to the extent feasible, the use of 
United States technology and technicians, and has resulted in the 
provision of equipment and services to the FSU.  The successful 
contractor under the RFP will be required to provide multifaceted 
transportation and shipping support services to the CTR program 
including shipment planning, material handling, shipment, reporting, 
and security.  Essentially, the objective of the contract is to 
provide the CTR program with door-to-door intermodal services for the 
transportation of containerized and breakbulk cargoes from the United 
States and Europe to certain points within the FSU.

The RFP provided for the award of a fixed-price, indefinite delivery, 
indefinite quantity contract, for a base period of 1 year with one 
1-year option.  The RFP stated that award would be made to the offeror 
submitting the proposal representing the best overall value to the 
government, price and other factors considered, and listed the 
following technical evaluation factors and subfactors: 

     1.  Proposed Services for CTR Shipments
        A.  Procedures and Method for Shipment Planning
        B.  Shipment Execution
        C.  Reporting and In-Transit Visibility (ITV)
        D.  Security
        E.  Sample Problem Solution

     2.  Experience and Past Performance
        A.  Corporate Performance
          (i)  Resources
          (ii) Program Management
          (iii)ITV
          (iv) Security
        B.  Government Assessment of Performance

     3.  Corporate Capabilities
        A.  Personnel experience/resumes
        B.  Program management
        C.  Facilities, transportation assets
        D.  Computer systems, databases, etc.
        E.   Financial Capability

     4.  Material Handling
        A.  Container and less-than-trailerload shipments
        B.  Breakbulk and Rolling Stock
        C.  Oversize Breakbulk

The RFP informed offerors that the evaluation factors and subfactors 
were listed in descending order of importance, with certain 
exceptions; within evaluation factor one, subfactors A, B, and C were 
of equal importance, and subfactors D and E were of equal importance, 
but were less important than subfactors A, B, and C; the subfactors of 
evaluation factor four were of equal importance.
 
The RFP provided detailed instructions for the preparation of 
proposals and requested that offerors organize their technical 
proposals to respond to the evaluation factors and subfactors and 
provide separate technical and price proposals.  The RFP instructed 
offerors that they were to prepare their price proposals by completing 
pricing sheets contained in the RFP as an attachment, and that each 
line item must be completed with a unit and extended price as 
indicated, or marked "not separately priced" or "no service."

The agency received five proposals, including Matrix's and Sea-Land's, 
by the RFP's closing date.  An analysis of the price proposals was 
conducted, and the technical proposals were evaluated by the 
four-member source selection evaluation board (SSEB).  The technical 
proposals were evaluated under each of the subfactors and overall, as 
either excellent, good, acceptable, marginal, or unacceptable.  
Members of the SSEB each prepared narratives setting forth their views 
as to each proposal under each of the evaluation subfactors, and 
completed an evaluation matrix, on which the evaluator's individual 
ratings for each proposal under each of the evaluation subfactors was 
noted.  As there were a total of 15 evaluation subfactors and four 
evaluators, each proposal received a total of 60 evaluation ratings 
(15 subfactors x 4 evaluators = 60 ratings), and an overall rating.  

Matrix's initial proposal, which was evaluated as technically 
"excellent" overall at a total price of $8,512,268, received a total 
of 48 "excellent" ratings and 12 "good" ratings.  Sea-Land's initial 
proposal, which was evaluated as technically "good" overall at a price 
of $6,395,557, received a total of 23 "excellent" ratings, 29 "good" 
ratings, 1 "acceptable" rating, and 7 "marginal" ratings.  The 
proposals of Matrix, Sea-Land, and a third offeror, whose proposal was 
evaluated as "good" at a price of $6,193,090, were included in the 
competitive range.

Discussions were held, and BAFOs received and evaluated.[1]  Matrix's 
evaluated BAFO price was $7,086,280, and Sea-Land's BAFO price was 
$5,829,674.  Sea-Land's BAFO provided prices of "$0" for each of the 
eight contract line items set forth on the pricing sheets for the 
various ancillary services to be performed in the option year of the 
contract; the agency determined that this was an apparent mistake in 
Sea-Land's BAFO.  The agency contacted Sea-Land and permitted the firm 
to submit prices for each of these eight contract line items.  
Sea-Land's evaluated BAFO price became $6,016,179.

Members of the SSEB evaluated BAFOs individually, but did not prepare 
narratives supporting their views, even where ratings were revised.  
According to the BAFO evaluation matrices, Matrix's BAFO ratings were 
the same as its initial ratings, whereas Sea-Land's BAFO received 28 
"excellent" ratings and 32 "good" ratings, and was rated as 
"excellent" overall by three members of the SSEB, and "good" overall 
by the remaining member of the SSEB.  The SSEB drafted a summary of 
its evaluation results, which stated that although both Matrix's and 
Sea-Land's BAFOs were "excellent" overall, the SSEB believed that 
"Matrix's proposal is still clearly SUPERIOR to the remaining 
proposals."  The SSEB's evaluation summary was forwarded to the 
chairman of the SSEB and the contracting officer (CO).  

The chairman of the SSEB drafted a Recommendation for Award memorandum 
to the cognizant source selection authority (SSA) summarizing the 
evaluation results, and the recommendations of the CO and chairman of 
the SSEB.  Hearing Transcript (Tr.) at 481.  This memorandum provides 
in part that "[a]lthough the [SSEB] assigned a technical ranking of 1 
and 2 respectively to Matrix and Sea-Land Logistics (both rated as 
[e]xcellent), the SSEB determined after detailed review that the 
offers were essentially equal in overall technical merit."  The 
memorandum adds that "[a]fter careful review . . . the Chairman of the 
SSEB concluded that the BAFOs submitted by Matrix and Sea-Land were 
essentially equal."  The memorandum recommends that award be made to 
Sea-Land because it submitted the "lowest priced offer with a 
technical rating of '[e]xcellent.'"

Meetings attended by the chairman of the SSEB, the CO, the contract 
negotiator, and the SSA were held, at which the Recommendation for 
Award memorandum and other aspects of the procurement were 
discussed.[2]  The SSA signed the Recommendation for Award memorandum 
as "concur[ring]" with the recommendation of award to Sea-Land, and 
award was made to that firm on the same day.  This protest followed.  
The agency has authorized performance of Sea-Land's contract, 
notwithstanding the protest.  

UNDOCUMENTED BAFO EVALUATION   

Matrix argues that the agency's selection of Sea-Land's proposal for 
award was unreasonable.  Specifically, the protester contends that the 
agency's evaluation record does not support the conclusion, set forth 
in the Recommendation for Award memorandum, that Sea-Land's technical 
proposal was "excellent" overall and "essentially equal" to Matrix's.  
The protester argues that because the SSA's concurrence with the 
recommendation that award be made to Sea-Land was based upon the 
unsupported conclusion that the proposals of Sea-Land and Matrix were 
"essentially equal," the SSA's concurrence with the recommendation, 
and effective selection of Sea-Land for award, were unreasonable.

In reviewing an agency's evaluation of  proposals and source selection 
decision, our review is confined to a determination of whether the 
agency acted reasonably and consistent with the stated evaluation 
factors.  Main Building Maintenance, Inc., B-260945.4, Sept. 29, 1995, 
95-2 CPD  para.  214.  An agency's evaluation of proposals and source 
selection decision should be documented in sufficient detail to allow 
for the review of the merits of a protest.  See Southwest Marine, 
Inc.; American Sys. Eng'g Corp., B-265865.3; B-265865.4, Jan. 23, 
1996, 96-1 CPD  para.  56.  An agency which fails to adequately document its 
evaluation of proposals or source selection decision bears the risk 
that its determinations will be considered unsupported, and absent 
such support, our Office may be unable to determine whether the agency 
had a reasonable basis for its determinations.  Engineering and 
Computation, Inc., B-261658, Oct. 16, 1995, 95-2 CPD  para.  176; U.S. 
Defense Sys., Inc., B-245563, Jan. 17, 1992, 92-1 CPD  para.  89; American 
President Lines, Ltd., B-236834.3, July 20, 1990, 90-2 CPD  para.  53.  That 
is not to say that our Office, in determining the reasonableness of an 
agency's evaluation and award decision, limits its review to the 
contemporaneous evaluation and source selection documentation.  
Rather, we will consider, in addition to the contemporaneous 
documentation, all information provided to our Office for 
consideration during the protest, including the parties' arguments and 
explanations, and testimony elicited at a hearing.  Southwest Marine, 
Inc.; American Sys. Eng'g Corp., supra.  In considering the entire 
record, we accord greater weight to contemporaneous evaluation and 
source selection material than to the parties' later explanations, 
arguments, and testimony.  DynCorp, 71 Comp. Gen. 129 (1991), 91-2 CPD  para.  
575; Southwest Marine, Inc.; American Sys. Eng'g Corp., supra.

As explained in detail below, we cannot conclude, based upon the 
entire record, including the agency's later-raised arguments and 
explanations as well as the testimony elicited at a hearing, that the 
agency acted reasonably in evaluating Sea-Land's proposal as 
"excellent" overall and "essentially equal" to Matrix's.  Accordingly, 
we cannot determine that the agency's selection of Sea-Land for award 
was reasonably based.

As noted above, Sea-Land's initial proposal was evaluated as "good" 
overall with regard to technical merit, while its BAFO was rated as 
"excellent."  While the record adequately supports the initial rating, 
there is little in the evaluation record that documents or explains 
why the agency rated Sea-Land's BAFO as "excellent."  Although the 
SSEB members prepared narratives explaining their respective views of 
the technical merits of the offerors' initial proposals, they did not 
prepare narratives explaining their evaluation of any of the BAFOs.  
Tr. at 361-362.  The SSEB members simply filled out the evaluation 
matrix with the BAFO ratings for each subfactor with no narratives 
explaining the changes.[3]  Three of the members of the SSEB wrote 
notations on the bottom of the evaluation matrices; however, these 
notations consist only of comments such as "deficiencies were 
adequately addressed" or "proposal identifies understanding of 
requested services." 

The SSEB's memorandum to the SSA and CO summarizing the BAFO 
evaluation results contains the following paragraph concerning the 
SSEB's evaluation of Sea-Land's BAFO:

     "The Sea[-L]and offer is rated second with an overall EXCELLENT 
     rating.  This rating is an improvement over the GOOD rating 
     received during initial technical evaluation.  The revised 
     technical proposal from Sea-Land corrected and clarified all 
     deficiencies found in the initial offer.  The revised proposal 
     convincingly addressed previous areas of concerns on program 
     management coordination, warehousing capabilities, customs 
     charges and FSU security requirements.  The Sea-Land proposal in 
     its revised form demonstrates an excellent understanding of the 
     contract requirements.  The capability to provide transportation 
     services to effectively manage the CTR program is confidently 
     demonstrated with minimal technical risk to the [g]overnment."

This explanation, however, is largely inconsistent with the initial 
and BAFO evaluation matrices prepared by the SSEB.  

For example, the paragraph states that Sea-Land's proposal's technical 
rating was raised to "excellent" because it "convincingly addressed 
previous areas of concern on program management coordination, 
warehousing capabilities, customs charges and FSU security 
requirements."  Yet, according to the initial and BAFO evaluation 
matrices prepared by the SSEB, Sea-Land's initial proposal had been 
rated as "excellent" under the evaluation subfactors addressing its 
program management coordination and warehousing capabilities, 
notwithstanding the evaluators' concerns in these areas; accordingly, 
its rating under these evaluation subfactors could not and did not 
increase because of Sea-Land's BAFO.  

Additionally, Sea-Land's initial proposal and BAFO were not rated very 
differently under the evaluation subfactor addressing its 
understanding of customs, with the initial proposal receiving four 
"good" ratings, and the BAFO receiving three "good" ratings and one 
"excellent" rating.  Only in the area of FSU security requirements, 
where under the evaluation subfactor "security" Sea-Land improved its 
initial proposal rating of one "marginal" and three "acceptable" 
ratings to one "excellent" and three "good" ratings for its BAFO, is 
the above explanation supported by the record; however, it is not 
evident why this one area of improvement in itself should result in an 
overall upgrade of Sea-Land's BAFO to "excellent."

Thus, although it appears from the record that the agency reasonably 
concluded
that Sea-Land's BAFO was an improvement over its initial proposal in 
certain areas (e.g., its approach to the RFP's security requirements), 
the contemporaneous documentation in the record does not adequately 
explain why the SSEB considered Sea-Land's two and one-half page BAFO 
to warrant the rating increase from "good" to "excellent" overall.[4]      

The agency, after being afforded the opportunity to clarify the record 
at a hearing, did not provide any further adequate support for 
Sea-Land's overall "excellent" rating.  For example, an SSEB member 
testified that Sea-Land's BAFO was considered technically "excellent" 
overall because many of the "good" ratings the BAFO received under the 
evaluation subfactors "were borderline excellent," and many of the 
excellent ratings "were extremely strong [excellents]."  Tr. at 
262-263.  This SSEB member conceded, however, that although it would 
have been possible for the SSEB to have documented its beliefs 
regarding certain of the "good" ratings under the evaluation 
subfactors as "borderline excellent," or certain of the "excellent" 
ratings as "strong [excellents]," Tr. at 348-349, this was not done 
and no documents exist to support this assertion.  Tr. at 339, 348, 
363, 365, 385.  Finally, although this individual testified generally 
as to his belief that Sea-Land's "good" ratings were "stronger good," 
he could only reference one specific example as to why this was the 
case, and, with regard to the evaluation subfactor he chose to 
discuss, he was unable to explain certain aspects of his evaluation of 
Sea-Land's initial proposal, including what a particular documented 
concern under this evaluation subfactor referred to and thus whether 
it was addressed in Sea-Land's BAFO.  Tr. at 373-379.

The SSEB member also testified that the SSEB had concluded that 
Sea-Land's BAFO was technically "excellent" overall because Sea-Land's 
BAFO received more "excellent" than "good" ratings under the most 
important evaluation subfactors.  Tr. at 257, 384.  This individual 
pointed out that under the most important evaluation factor, "Proposed 
Services for CTR Shipment," Sea-Land's proposal received, under the 
five subfactors rated by the four evaluators, a total of 11 
"excellent" and 9 "good" ratings.  Tr. at 257.

Again, while the testimony of the SSEB member indicates that the 
agency reasonably concluded that Sea-Land's BAFO was an improvement 
over its initial proposal, the testimony fails to adequately explain 
why the SSEB raised Sea-Land's BAFO rating from "good" to "excellent."  
There is no documentation nor specific testimony in the record 
explaining which or why any of Sea-Land's 28 "excellent" and 32 "good" 
ratings under the evaluation subfactors were considered "strong 
excellent," "borderline excellent," or "strong good."  Despite being 
provided the opportunity to clarify the record at the hearing, the 
agency was unable to reasonably explain any example supporting its 
position in this regard.  Thus, the fact that Sea-Land received 
slightly more "excellent" than "good" ratings under the most important 
evaluation factor does not here justify a rating of "excellent" 
overall, given this record and the fact that overall the "good" 
ratings exceeded the number of "excellent" ratings.

Notwithstanding the above discussion, even if we assume that 
Sea-Land's proposal could reasonably be considered technically 
"excellent" overall, the record does not support the agency's 
conclusion that Sea-Land's BAFO is "essentially equal" in technical 
merit to Matrix's BAFO.  While the Recommendation for Award memorandum 
states that "[a]lthough the [SSEB] assigned a technical ranking of 1 
and 2 respectively to Matrix and Sea-Land Logistics (both rated as 
Excellent), the SSEB determined after detailed review that the offers 
were essentially equal in overall technical merit," there is no 
documentation in the record regarding a "detailed review," or any 
other review, performed by the SSEB after it prepared its memorandum 
to the chairman of the SSEB, and no other support in the 
contemporaneous evaluation documentation for the assertion that the 
proposals of Matrix and Sea-Land were considered "essentially equal" 
in technical merit by the SSEB.

In fact, the SSEB plainly states in its memorandum to the chairman of 
the SSEB that "Matrix's proposal is still clearly SUPERIOR to the 
remaining proposals."  Further, the BAFO evaluation matrix, which was 
forwarded to the chairman of the SSEB with the memorandum, supports 
the SSEB's statement that Matrix's proposal was clearly superior to 
Sea-Land's.  For example, under the five subfactors of the most 
important evaluation factor "Proposed Services for CTR Shipments," 
Matrix's proposal received one "good" and 19 "excellent" ratings, 
whereas Sea-Land's proposal received 9 "good" and 11 "excellent" 
ratings.  Additionally, as mentioned above, Matrix's proposal received 
50 "excellent" and 10 "good" ratings overall, whereas Sea-Land's 
proposal received 29 "excellent" and 31 "good" ratings.

There is also nothing in the contemporaneous record showing that 
either the chairman of the SSEB or the SSA performed an independent 
evaluation of the proposals in support of the Recommendation for Award 
memorandum's assertion that Sea-Land's proposal was technically 
"excellent" and "essentially equal" to Matrix's.  In this regard, the 
memorandum provides as follows with regard to Sea-Land's proposal:

     "As a result of discussions, Sea-Land's technical rating at BAFO 
     was upgraded from '[g]ood' to '[e]xcellent.'  The SSEB identified 
     no weaknesses with Sea-Land's revised proposal.  In their BAFO 
     offer Sea-Land corrected and clarified all deficiencies found in 
     initial offer and convincingly addressed all previous areas of 
     concern.  The proposal demonstrates an excellent understanding of 
     the contract requirements, including a thorough methodology for 
     conducting shipment planning, which is reflected in their problem 
     solution.  In summary the offer projects the carrier's capability 
     to provide required transportation services, and to effectively 
     manage the CTR program, with minimal technical risk to the 
     [g]overnment."

There is nothing in this statement which supports the conclusion that 
Sea-Land's proposal was "essentially equal" to Matrix's proposal.  It 
specifically addresses only one evaluation area, that involving 
problem solution.  There is no comparison of the relative merits of 
the competing proposals, and no explanation as to why the Sea-Land 
proposal was technically equivalent to the Matrix proposal with its 
greater number of "excellent" ratings.

Furthermore, the testimony of the SSEB chairman was provided in the 
most general terms.  For example, in explaining the SSEB's conclusion 
that Sea-Land's BAFO was technically "excellent" overall and 
"essentially equal" to Matrix's, the chairman testified that "we felt 
like we had addressed the program management coordination issues, the 
warehouse issues, the security as we've talked about and the customs 
fee issues, so from our standpoint, now Sea-Land and Matrix . . . were 
essentially equal."  Tr. at 411.  The chairman did not provide any 
further explanation, such as how the issues were addressed (presumably 
by Sea-Land), or why this led the chairman and the SSEB to conclude 
that Sea-Land's BAFO was essentially equal to Matrix's.

The SSA, who signed the Recommendation of Award memorandum as 
"concur[ring]" with the recommendation that the contract be awarded to 
Sea-Land, testified that he was unaware of the details of the 
proposals, Tr. at 157, had not read any of the initial proposals in 
total, Tr. at 57, 109, and cannot recall whether he read any of the 
BAFOs, including Sea-Land's, at all.  Tr. at 47, 112.  The SSA 
testified that in making his award selection, he relied on the 
determinations of the SSEB and the chairman of the SSEB that the 
proposals submitted by Sea-Land and Matrix were "essentially equal," 
and had not gone into any significant detail as to the relative merits 
of the competing proposals.  Tr. at 14, 45, 49.

Thus, it is clear from the record that the SSEB viewed the Matrix 
proposal as superior to Sea-Land's, that the SSEB chairman has not 
documented or explained an adequate basis for any subsequent 
conclusion that the two proposals were essentially equal, and that the 
SSA made no meaningful independent assessment of the relative merits 
of the proposals.  Accordingly, on this record, we find that there is 
no reasonable basis for the conclusion that Sea-Land's proposal was 
essentially equal in technical merit to the Matrix proposal. 

FAILURE TO CONDUCT MEANINGFUL DISCUSSIONS

Matrix contends that the agency failed to conduct meaningful 
discussions with regard to its proposed prices submitted for the 
contract line items set forth in the RFP's pricing sheets for cargo 
repackaging and consolidation services.  The protester points out here 
that its initial proposal's unit and extended prices for the base and 
option years of [DELETED] and [DELETED], respectively, far exceeded 
Sea-Land's initial proposal's unit and extended prices of [DELETED] 
and [DELETED], respectively, for the base year, and [DELETED] and 
[DELETED], respectively, for the option year. 

The protester noted, after receiving the agency report on the protest, 
that the difference in pricing was apparently caused by Matrix's 
failure to interpret the RFP's requirements concerning cargo 
repackaging and consolidation services as did the agency and 
presumably Sea-Land.  In this regard, the section of the RFP's 
statement of work corresponding to the cargo repackaging and 
consolidation contract line items provides, in pertinent part, as 
follows:

     "Cargo Re-Packaging and Consolidating.  If required, the 
     Contractor shall re-package and consolidate cargo into more 
     appropriate units.  This service shall include vapor barrier 
     packaging, as required."

The protester explains that based upon its reading of this 
solicitation provision and experience as an incumbent contractor, it 
believed, apparently mistakenly, that the solicitation required that 
offerors price the cargo repackaging contract line items on the basis 
that vapor barrier packaging would be required for any repackaging 
services ordered under the repackaging contract line items.  The 
protester states that it interpreted the RFP in this manner because 
the predecessor contract for these services had not originally 
included a contract line item under which the agency could order that 
cargo be shipped with vapor barrier packaging, and had required 
modification to include such a contract line item.  The protester adds 
that because this was the only contract line item in the RFP that 
referenced vapor barrier packaging, it believed that all cargo 
repackaging ordered under the cargo repackaging line items in this 
contract would require vapor barrier packaging, and that other 
repackaging and consolidating services would be ordered under certain 
other contract line items.  

The protester asserts that had the agency informed Matrix that its 
prices for the cargo repackaging and consolidation contract line items 
seemed to be unreasonably high or the product of a mistake, its 
confusion concerning these contract line items would have come to 
light and Matrix would have then priced these items in accordance with 
the agency's view that only a certain amount of the repackaging 
ordered under these contract line items need be accomplished with 
vapor barrier packaging.  (The matter was not brought up in 
discussions, and in Matrix's BAFO the base year prices for these 
services remained as initially proposed and the option year unit price 
for these services rose to [DELETED], with a corresponding rise in 
Matrix's extended price.  The price difference between the initial 
proposals of Matrix and Sea-Land for the cargo repackaging and 
consolidation line items total [DELETED], and their BAFO prices for 
these line items differed by a total of [DELETED]). 

In negotiated procurements, agencies are required to conduct 
meaningful discussions with competitive range offerors.  Arthur 
Andersen & Co., 71 Comp. Gen. 233 (1992), 92-1 CPD  para.  168.  In order 
for discussions to be meaningful, an agency must point out 
deficiencies, uncertainties, or suspected mistakes in a proposal, 
unless doing so would result in either disclosure of one offeror's 
approach to another or in technical leveling.  Mikalix & Co., 70 Comp. 
Gen. 545 (1991), 91-1 CPD  para.  527.  During discussions, agencies are 
prohibited from advising an offeror of its cost or price standing 
relative to other offerors.  Federal Acquisition Regulation  sec.  
15.610(e)(2)(ii) (FAC 90-31).  On the other hand, discussions cannot 
be meaningful if an offeror is not apprised that its cost or price 
exceeds what the agency believes to be reasonable, Mikalix & Co., 
supra; Price Waterhouse, 65 Comp. Gen. 205 (1986), 86-1 CPD  para.  54, 
aff'd, B-220049.2, Apr. 7, 1986, 86-1 CPD  para.  333, or if an agency fails 
to resolve a proposal error that it should have reasonably detected 
and which materially prejudices the offeror.  Centel Business Sys., 67 
Comp. Gen. 156 (1987), 87-2 CPD  para.  629.

The fact that Matrix's prices for the cargo repackaging contract line 
items either should have been or were considered by the agency to be 
unreasonably high or the result of a mistake, is readily apparent from 
the agency's own contemporaneous price analysis documentation.  In 
this regard, the agency performed its price analysis in part by 
comparing the prices proposed by the offerors submitting initial 
proposals, and highlighting the prices under each of the base and 
option year contract line items that were "high relative to others."  
The documentation of this aspect of the price analysis shows that 
Matrix's prices for the cargo repackaging contract line items were 
specifically highlighted during this process as being "high relative 
to others."  Additionally, the agency's Pre-Negotiation Business 
Clearance memorandum identified six areas of Matrix's price proposal 
for discussion, with one of these being "Ancillary Services - Cargo 
Re-packaging rates in the FIRM and OPTION periods."[5]  The agency 
offers no explanation as to why, after identifying this aspect of 
Matrix's price proposal for discussions, it failed to mention the 
matter.  

Instead, the agency argues that by informing Matrix during discussions 
"that its offer was too high and exceeded the government estimate," it 
conducted meaningful discussions regarding Matrix's proposed 
prices.[6]  We disagree.  While an agency generally need only lead an 
offeror into the general areas of concern about its proposal, the 
agency must impart during discussions sufficient information to afford 
the offeror with a fair and reasonable opportunity to identify and 
correct deficiencies, excesses or mistakes in its proposal.  Advanced 
Sciences, Inc., B-259569.3, July 3, 1995, 95-2 CPD  para.  52; Aydin 
Computer and Monitor Div., Aydin Corp., B-249539, Dec. 2, 1992, 93-1 
CPD  para.  135.  Where, as here, the agency identifies a particular 
material line item whose price is either grossly excessive or 
mistaken, a general statement to the offeror that its overall price is 
too high is insufficient to apprise the offeror of the agency's 
particular concern; under such circumstances, the agency must identify 
the specific area of concern to satisfy its obligation to conduct 
meaningful discussions.  FAR  sec.  15.610(c); Price Waterhouse, supra; 
Centel Business Sys., supra; Advanced Sciences, Inc., supra.  
Accordingly, the agency did not conduct meaningful discussions 
regarding Matrix's apparent excessive or mistaken pricing on the 
repackaging contract line item, which accounted for more than half of 
the difference between Matrix's and Sea-Land's prices.

IMPROPER POST-BAFO DISCUSSIONS

Matrix also protests that the agency conducted improper post-BAFO 
discussions with Sea-Land.  As indicated above, Sea-Land's BAFO, as 
initially submitted, provided prices of "$0" for each of the eight 
contract line items set forth on the pricing sheets for the various 
ancillary services to be performed in the option year of the contract.  
The agency determined that this was an apparent mistake in Sea-Land's 
BAFO, and permitted Sea-Land to submit prices for each of these eight 
contract line items.  

The correction of such a mistake without conducting discussions is 
appropriate only where the existence of the mistake and the proposal 
actually intended can be clearly and convincingly established from the 
RFP and the proposal itself.  Stacor Corp., B-231095, July 5, 1988, 
88-2 CPD  para.  9.  Although it may have been apparent from Sea-Land's 
proposal and the RFP that the price of $0 for each of these contract 
line items was a mistake, it was not clear from Sea-Land's BAFO or the 
RFP what prices Sea-Land had intended to insert for each of these 
contract line items.  Specifically, there was no pattern of pricing or 
other evidence from which Sea-Land's intended BAFO prices could be 
determined.  As such, Sea-Land's BAFO could only properly be corrected 
through discussions.  Contact Int'l Corp., B-237122.2, May 17, 1990, 
90-1 CPD  para.  481.  Once an agency conducts discussions with one offeror, 
as here, it is required to hold discussions with, and request BAFOs 
from, all offerors with proposals in the competitive range.  Id.  The 
agency therefore erred in not reopening discussions with all 
competitive range offerors.
 
RECOMMENDATION

We recommend that the agency reopen discussions and request new BAFOs.  
The agency should document its evaluation and its new selection 
decision.  If the agency concludes that Sea-Land is no longer in line 
for award, the agency should terminate the contract awarded to 
Sea-Land and award a contract to the appropriate offeror.  We also 
recommend that the protester recover the costs of filing and pursuing 
its protest, including reasonable attorneys' fees.  4 C.F.R.  sec.  
21.8(d)(1) (1996).  The protester should submit its certified claim 
for costs directly to the agency within 90 days of receipt of this 
decision.  4 C.F.R.  sec.  21.8(f)(1).     

The protest is sustained.

Comptroller General
of the United States 

1. Because Matrix's initial technical proposal was evaluated as 
technically "excellent," discussions with that firm were limited to 
certain aspects of Matrix's price proposal and to certain of its 
representations and certifications.

2. It is unclear from the record how many meetings were held and how 
long they lasted.  For example, the SSA testified that two meetings 
were held, with the first being a relatively short "informal" or "ad 
hoc" meeting and the second being a "formal meeting" lasting 
"[s]omething on the order of a half hour."  Tr. at 26-29, 39, 118, 
130, 150.  On the other hand, the chairman of the SSEB testified that 
three meetings were held, Tr. at 434, with the first being "an 
informal meeting" that lasted "for probably 10 or 15 minutes," the 
second being an informal meeting lasting for approximately 1 or 1-1/2 
hours, Tr. at 436, and the third "formal meeting" lasting "about two 
hours." Tr. at 435, 445. 

3. The record also contains evaluators notes regarding offeror 
responses to specific questions asked during discussions.  These notes 
contain no substantive support for the subfactor or overall ratings.

4. The SSEB's memorandum also designates "key strengths" of Sea-Land's 
(and Matrix's) proposal.  However, these strengths mirror those stated 
in the SSEB memorandum that reported the results of the initial 
evaluation and concluded that Sea-Land's proposal was "good," and thus 
do not support upgrading Sea-Land's proposal rating to "excellent."

5. The agency also identified six areas in Sea-Land's price proposal 
for discussion.

6. The agency prepared an estimate only as to the total price for the 
services, which the agency estimated at $7,500,000.