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.