BNUMBER: B-272685
DATE: October 23, 1996
TITLE: General Atronics Corporation
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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:General Atronics Corporation
File: B-272685
Date: October 23, 1996
Alfred J. Verdi, Esq., for the protester.
William H. Carroll, Esq., Dykema Gossett, for Mikros Systems
Corporation, an intervenor.
Debra Buck Haworth, Esq., John C. Hughes, Esq., and Andrei Kushnir,
Esq., Department of the Navy, for the agency.
Linda S. Lebowitz, Esq., and Michael R. Golden, Esq., Office of the
General Counsel, GAO, participated in the preparation of the decision.
DIGEST
Proposed awardee's proposal is not mathematically unbalanced and
therefore, could not properly be rejected as materially unbalanced,
where there has been no showing of nominal prices for some items and
enhanced prices for other items, and where the awardee's price
basically remains level over the base and option years of the
contract.
DECISION
General Atronics Corporation (GAC) protests the proposed award of a
contract to Mikros Systems Corporation under request for proposals
(RFP) No. N00039-96-R-0030(S), issued by the Department of the Navy,
Space and Naval Warfare Systems Command, for common shipboard data
terminal set hardware, training, and ancillary support services. GAC
generally contends that Mikros's proposal is unbalanced and should not
be considered eligible for award.
We deny the protest.
The RFP was issued as a total small business set-aside and
contemplated an award on the basis of initial proposals to the
low-priced, technically acceptable offeror for firm line item
quantities for the base period and for option quantities for fiscal
year 1996 through fiscal year 2000. The RFP described a complex
scheme for the evaluation of price proposals.
The RFP basically provided that an offeror's evaluated price for each
fiscal year would be determined by adding together the following price
elements: (a) prices for firm hardware line items;[1] (b) the average
of the unit prices of the government's preselected hardware option
order quantities;[2] (c) prices for optional training line items; (d)
prices for on-call engineering services; and (e) prices for interim
support items. An offeror's evaluated price for each fiscal year
would be added together to arrive at the offeror's total evaluated
price.
The RFP also provided that the individual price elements within a
fiscal year, as listed above, and an offeror's evaluated price for the
sequential fiscal years would each, respectively, be weighted in
descending order of importance. Percentage weights were not disclosed
in the RFP.[3] The RFP generally described the weights for the
individual price elements and fiscal years in terms of an element or
fiscal year being either "relatively" or "significantly" more
important than the next single and/or combination of elements or
fiscal years.
Finally, the RFP advised that a materially unbalanced proposal could
be rejected as unacceptable. The RFP defined an unbalanced proposal
as one based on prices for basic and option quantities which were
significantly less than cost for some items and on prices which were
significantly overstated for other items.
GAC and Mikros, both small business concerns, submitted timely
proposals. The following is a summary of GAC's and Mikros' raw unit
prices for price elements (a) and (b):
MIKROS GAC
Base--$[deleted]------ Base--$[deleted]------
Small IncrementalLarge IncrementalSmall IncrementalLarge Incremental
FY 96--$[deleted]$[deleted] FY 96--$[deleted]$[deleted]
FY 97--$[deleted]$[deleted] FY 97--$[deleted]$[deleted]
FY 98--$[deleted]$[deleted] FY 98--$[deleted]$[deleted]
FY 99--$[deleted]$[deleted] FY 99--$[deleted]$[deleted]
FY 00--$[deleted]$[deleted] FY 00--$[deleted]$[deleted]
The contracting officer concluded, based on the price evaluation
scheme described in the RFP, that Mikros' total weighted evaluated
price was approximately 15-percent lower than GAC's total weighted
evaluated price. In accordance with the terms of the RFP, the agency
proposes to award a contract to Mikros, the low-priced, technically
acceptable offeror.
GAC challenges the agency's evaluation of price proposals, principally
contending that Mikros' proposal was unbalanced, making the proposal
ineligible for award.[4]
Our review of the record does not support GAC's contention that Mikros
submitted a materially unbalanced proposal. There are two aspects to
unbalancing: mathematical unbalancing--where an offer is based on
nominal prices for some of the work and overstated prices for other
work, and material unbalancing--where the offer is mathematically
unbalanced and there is a reasonable doubt that award based on the
mathematically unbalanced offer will result in the lowest overall cost
to the government. GTE Customer Networks, Inc., B-254692.2, Feb. 24,
1994, 94-1 CPD para. 143.
Here, the highest unit price in Mikros' proposal is for the firm
hardware line items in the base period. Considering the incremental
hardware option quantities,
Mikros' pricing scheme is relatively level. For the first three
fiscal years, there is a slight increase in unit prices over time,
with the differential remaining constant as incremental quantities
increase, and with these unit prices remaining less than Mikros' unit
price for the base period. The last two fiscal years show decreased
unit prices, with the unit prices for the final fiscal year being a
few hundred dollars more than the unit prices for the prior fiscal
year. Mikros' unit prices decrease from the earlier fiscal years to
the later fiscal years by approximately 10 percent. [Deleted].
In sum, Mikros structured its price proposal in a relatively level
manner, spreading its costs over the term of the contract. Generally,
where there are price differences, these differences reflect higher
unit prices for smaller quantities and lower unit prices for larger
quantities. There has been no showing of nominal prices for some
items and enhanced prices for other items, or that Mikros' price does
not remain basically level over sequential fiscal years. Therefore,
we have no basis to conclude that Mikros' proposal is mathematically
unbalanced,[5] and for this reason, we need not consider whether
Mikros' proposal is materially unbalanced. Id. Accordingly, we
conclude that the contracting officer reasonably determined that
Mikros submitted the low-priced, technically acceptable proposal.[6]
In its post-award protest, GAC raises a number of other arguments
concerning the evaluation of price proposals, e.g., that the RFP did
not include the appropriate regulatory clause addressing the
evaluation of options; that the percentage weights for price elements
and fiscal years were not disclosed in the RFP and that there was no
indication that these weights would total 100 percent; and that the
RFP did not clearly state whether unit or extended prices would be
used to evaluate price element (a). These arguments constitute
challenges of apparent solicitation improprieties which were not
timely protested prior to the closing date for receipt of proposals.
4 C.F.R. sec. 21.2(a)(1); Engelhard Corp., B-237824, Mar. 23, 1990, 90-1
CPD para. 324.
In addition, we affirm our prior dismissal of GAC's post-award
argument that the agency failed to answer its pre-proposal questions
concerning the bases for the evaluation of price proposals prior to
the firm's proposal submission. Contrary to GAC's position, it is not
relevant to our determination of timeliness that the agency was under
the mistaken belief that it had provided answers to GAC's questions
prior to GAC's proposal submission. Rather, GAC knew prior to the
closing time that its questions had not been answered. Again, this
matter involves an apparent solicitation impropriety not timely
protested prior to the closing date. Id.
The protest is denied.
Comptroller General
of the United States
1. Although not clearly stated in the RFP, the agency intended that
the total price for the firm line items would be calculated by
multiplying the unit price times the quantity for line item No. 0001,
and then by adding this extended price to the extended prices for the
other firm line item quantities.
2. For price element (b), offerors were required to complete a pricing
matrix for incremental option quantities of five items (lot sizes of 1
to 5/small incremental quantities through 71 to 75/large incremental
quantities, if applicable). The preselected option quantities were
not disclosed in the RFP. Prior to opening and evaluating proposals,
the agency selected a low, medium, and high data point for a
particular item in order to identify over the range of incremental
option quantities for the item three possible option exercise
scenarios. Prices for the preselected option quantities were
averaged; the average unit price was used for evaluation purposes.
3. Percentage weights totaled 100 percent.
4. GAC also complains that the agency did not strictly follow the
price evaluation scheme described in the RFP, but rather, followed the
terms of the amended source selection plan (SSP) in determining that
Mikros was the low-priced, technically acceptable offeror. It is the
evaluation scheme in an RFP, not internal agency documents, such as an
SSP, to which an agency is required to adhere in evaluating proposals
and in making the source selection. Eccles Assocs., Inc.; Deloitte
Touche Tohmatsu ILA Group Ltd., B-260486.6; B-260486.7, Oct. 17, 1995,
95-2 CPD para. 179. Here, the record shows that the agency did follow the
RFP in evaluating price proposals. The agency also did a second
evaluation using the amended SSP. Under this evaluation, Mikros was
also the low-priced offeror by approximately 15 percent.
5. Using the same analysis, it appears that GAC's proposal may be
mathematically unbalanced. GAC's highest unit price is for the firm
hardware line items in the base period. Regarding the incremental
hardware option quantities, GAC did not propose a level pricing
structure. Rather, GAC's unit prices appear understated for smaller
quantities and overstated for larger quantities. Over the 5 fiscal
years, GAC's prices generally increase by approximately 30 percent.
[Deleted].
6. There is no support in the record for GAC's speculation that Mikros
gained a price advantage because it allegedly had knowledge of an
engineering change proposal (ECP). The record shows, in fact, that
there is no ECP from which Mikros, or any other offeror, could have
obtained any competitive advantage.
GAC also maintains that Mikros plans to use government-owned
facilities and equipment to perform the contract, contrary to the
terms of the RFP. The RFP provided that any government-owned
facilities, including production and test equipment, which were in the
possession of an offeror, were not to be used to support the offeror's
price proposal. Offerors were required to certify in their price
proposals that they prepared their proposals consistent with the terms
and conditions in the RFP, including those involving the referenced
prohibition. Mikros and GAC each provided the required certification,
and we have no basis to believe that Mikros, in performing the
contract, will not act in accordance with its certification. In the
event, however, that Mikros does use government-owned facilities and
equipment in performing the contract, an allegation in this regard
would involve a matter of contract administration which is within the
jurisdiction of the agency and for review by a cognizant board of
contract appeals or a court of competent jurisdiction, not our Office.
Bid Protest Regulations, 4 C.F.R. sec. 21.5(a) (1996); Specialty Plastics
Prods., Inc., B-237545, Feb. 26, 1990, 90-1 CPD para. 228.