BNUMBER:  B-274374
DATE:  December 6, 1996
TITLE:  HLC Industries, Inc.

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Matter of:HLC Industries, Inc.

File:     B-274374

Date:December 6, 1996

Ruth E. Ganister, Esq., and Glenn L. Blackwell, Esq., Rosenthal and 
Ganister, for the protester.
Jonathan C. Cramer, Esq., Federal Bureau of Prisons, for the agency.
C. Douglas McArthur, Esq., and Christine S. Melody, Esq., Office of 
the General Counsel, GAO, participated in the preparation of the 
decision.

DIGEST

1.  Contracting officer's consideration of protester's late deliveries 
under prior contracts; determination that protester's performance was 
poor under those contracts; and evaluation of protester's past 
performance as marginal were reasonable and consistent with 
solicitation criteria that stated that agency would consider 
timeliness of performance, in addition to other factors, in evaluation 
of past performance.

2.  Agency's evaluation of offerors' past performance was reasonable 
where the prior contracts selected for evaluation were performed in 
the last 2 years and, like the solicitation at issue, called for the 
manufacture of cloth meeting the standards of the using agency for 
physical, shade, and end item testing, and thus involved work similar 
to that required under the solicitation at issue.

DECISION

HLC Industries, Inc. protests the award of a contract to Coville, Inc. 
under request for proposals (RFP) No. IPI-R-0502-96, issued by the 
Bureau of Prisons for brown cotton cloth.  HLC contends that the 
agency did not properly evaluate its proposal.

We deny the protest.

On May 2, 1996, the agency issued the RFP for a firm, fixed-price 
requirements contract for cloth to supply to the Federal Correctional 
Institution in Jesup, Georgia.  The cloth will be used for the 
manufacture of clothing (tee shirts) by Federal Prison Industries, a 
wholly-owned government corporation within the Department of Justice 
that operates under the trade name "Unicor" at various federal 
correctional institutions in the federal prison system, and which 
provides employment, education, and training opportunities to inmates 
under federal custody.  Unicor operates approximately 100 factories at 
53 different locations that manufacture a variety of products for the 
government.  Under the contract here, the awardee would provide fabric 
to Unicor, which is contracting with the Defense Personnel Support 
Center (DPSC) for the delivery of finished items of clothing.

The RFP provided for award to the offeror whose proposal represented 
the best overall expected value and was considered most advantageous 
based on past performance, "specification,"[1] and price, with past 
performance being the most important factor.  With regard to past 
performance, the RFP instructed offerors to provide information on the 
last five contracts performed which were similar to the instant 
requirement, and advised offerors that the agency would consider this 
information, along with any other information received regarding past 
contracts and any additional data obtained in the evaluation.  The RFP 
stated that the contracting officer would consider the following 
factors:

     "The offeror's records of past performance, and to what extent 
     the performance has been satisfactory.  The offeror's cooperative 
     behavior and commitment to customer satisfaction with the 
     [g]overnment, public and private agencies.  The timeliness of 
     performance taking into account excusable delays. . . ."

The agency received seven offers on June 3, evaluated them, and 
requested submission of best and final offers.  The protester 
submitted the lowest price (thus receiving the maximum score available 
for price, 25 points), with Coville third low (23.71 points); both 
Coville and HLC received the maximum score (25 points) for the second 
evaluation factor, "specification."  Under the past performance 
factor, the contracting officer reviewed three contracts--in the case 
of HLC and Coville, two contracts that each had performed for Unicor 
and one other contract listed in each offeror's proposal.   Coville 
received three positive reports and a "good" rating (receiving 40 out 
of 50 points available), while HLC received two negative reports, 
which along with one positive report, earned the protester a 
"marginal" rating (30 points).  On August 15, the agency awarded a 
contract to Coville, whose proposal received the highest total point 
score of any offeror's (89 points), and this protest followed.

The record establishes that, as HLC asserts, the different ratings for 
past performance, and the resulting 10-point difference in score, were 
decisive in the selection of Coville over HLC.  HLC argues that it 
should have received at least the same "good" rating that Coville 
received.  To the extent that Unicor viewed HLC as delinquent under 
other contracts, the protester asserts that it has previously 
addressed the circumstances involved and that the delays incurred were 
without the fault or negligence of HLC.  HLC contends that, if its 
proposal had received the "good" (40-point) rating it deserved, it 
would have been entitled to award.

Evaluation of an offeror's past performance is a matter within the 
discretion of the contracting agency, and we will not substitute our 
judgment for the agency's, so long as the rating is reasonably based 
and documented.  PMT Servs., Inc., B-270538.2, Apr. 1, 1996, 96-2 CPD  para.  
98.  Mere disagreement with the agency's evaluation does not itself 
render the evaluation unreasonable.  Macon Apparel Corp., B-272162, 
Sept. 4, 1996, 96-2 CPD  para.  95.  The contracting officer here was the 
contracting officer under the prior Unicor contracts at issue; she 
also performed the evaluation under this RFP.  Therefore, the 
reasonableness of the rating here depends here upon the reasonableness 
of the contracting officer's determination to rate HLC's performance 
as unfavorable, as supported by the underlying documentation.  We 
conclude that the contracting officer's determination regarding HLC's 
past performance and her rating of HLC's past performance as 
"marginal" were both reasonable and consistent with the evaluation 
criteria that the RFP established.

As noted above, the RFP advised offerors that the agency would 
consider the timeliness of the offeror's performance in evaluating 
past performance, taking into account excusable delays.  Further, the 
RFP advised offerors that each proposal would receive one of five 
ratings--"poor," "marginal," "neutral," "good," or "excellent"--and 
that more unfavorable than favorable reports would result in a rating 
of "marginal," while more favorable than unfavorable reports would 
result in a rating of "good."  As explained in the contracting 
officer's evaluation memorandum, "marginal" ratings meant that "many 
sources . . . make unfavorable reports" while "good" ratings meant 
that "most sources . . . state that the offeror's performance was 
good, better than average, etc."  For example, HLC's "marginal" rating 
resulted from two unfavorable reports on the Unicor contracts, versus 
one favorable one from the Postal Service.

Of the three contracts considered by the agency, HLC's performance 
under its contract with the Postal Service is not at issue because 
that agency rated HLC's performance as "excellent."  Under the two 
Unicor contracts, Nos. IPI-C-2357-96 (contract No. -2357) and 
IPI-C-2130-96 (contract No. -2130), HLC was, as the awardee will be 
here, providing fabric for manufacture of clothing for delivery to 
DPSC.  DPSC therefore makes the final inspection of cloth when it 
receives the finished items.  DPSC also provides Unicor's contractors, 
such as HLC, with standard samples of the cloth to be used in 
manufacturing clothing, for shade evaluation purposes.  (As noted 
below, HLC attributes some of its problems under contract No. -2357 to 
its failure to receive a standard sample of a flat heather gray 
material from DPSC for shade evaluation purposes.)

In its initial protest, HLC contended that the delays under contract 
No. -2130 were caused by DPSC's lack of historical data to create a 
shade range for a woodland camouflage print, one of three line items 
under the contract and the only one not delivered in a timely manner.  
Evaluation material submitted with the agency report indicated, 
however, that the factory manager at Unicor's Bastrop, Texas facility 
stated that HLC had provided cloth of the wrong width.  In its 
comments on the agency report, HLC contends that the factory manager 
was confusing HLC's performance problems under contract No. -2130 with 
its performance problems under a different contract for the same 
woodland camouflage print fabric. As explained below, we see no basis 
for finding the evaluation unreasonable.

Documents submitted by the agency show that HLC had two problems under 
contract No. -2130, which caused samples to fail inspection, and which 
resulted in late deliveries.  First, some of HLC's responses to cure 
notices acknowledge delivering cloth of the wrong width; if this 
problem related to a separate contract, as HLC contends, it appears 
that Unicor was using both contracts to supply DPSC under the same 
prime contract.  Moreover, inspection records show another problem 
under contract No. -2130:  HLC apparently provided cloth that was the 
wrong weight--32 ends of yarn per inch, where the contract required 33 
ends per inch.  HLC furnished the agency a letter from its supplier, 
admitting the problem with the yarn ends and attributing it to a 
change in the manufacturer's production facility.  Second, there is 
also evidence that some fabric failed shade testing.

HLC has submitted no contemporaneous documentation in support of its 
contention that any delays under contract No. -2130 were due to DPSC's 
lack of historical data.  In fact, the record indicates that, at the 
time, the protester made no such argument; it simply argued chiefly 
that the nonconformities were not material and that Unicor should 
waive the defects and use the cloth.[2]  Given the documented problems 
with the deliveries under contract No. -2130, which the protester has 
not effectively rebutted, we see no basis for concluding that the 
contracting officer unreasonably determined that HLC's performance 
under contract No. -2130 was poor.

The protester attributes its problems with contract No. -2357 to 
Unicor's failure to obtain a shade sample from DPSC.  With regard to 
that contract, the record shows that Unicor issued two delivery orders 
for the heather gray fabric, one on January 24, 1996 for 5,000 yards, 
and another on February 6, for 25,000 yards.  The protester states 
that it did not know of the second order until May, when it received a 
delivery extension under the first order.  At that time, Unicor 
extended the delivery date for the first order from May 1 to June 3, 
and the delivery date for the second order to July 1.  HLC met neither 
extended delivery date.

According to the protester's July 8, 1996 letter responding to a cure 
notice of July 1 from the agency, HLC had received notice of award at 
the beginning of November 1995, and requested a shade sample of the 
heather gray material on November 6.  The agency advised HLC that it 
should obtain the sample from DPSC, and the protester requested a 
sample from DPSC by letter of November 15.  After a month, HLC 
followed up with a second request to DPSC.   HLC apparently took no 
further action to secure a sample, and ultimately received the sample 
on January 30, 1996.  Thus, HLC's own version of events indicates that 
it made only limited efforts to obtain the sample during the first 
2-1/2 months of the contract.

On March 15, HLC submitted a sample of its cloth to DPSC.  DPSC 
provided the test results a week later.[3]  Apparently the protester 
was confused by a reference to roll number 3285 on the inspection 
form; the sample received from DPSC had been marked "3565."  As a 
result, HLC deferred further action until April 24, when DPSC advised 
HLC that the form was incorrect and that the protester should use the 
sample provided in January.  On that date, HLC asked for a delivery 
extension from May 1 to June 3.  On June 27, 3 weeks after the 
extended due date, HLC delivered the cloth for inspection; it failed.  
According to HLC, it was then that it realized that, in view of the 
nature of the cloth, the sample obtained in January was too small, 
which caused the shade to vary when the dye was applied to larger 
pieces.

It was in response to the agency's July 1 cure notice, 8 months after 
award (more than 5 months after receiving the first sample and more 
than a month after the delivery extension requested by HLC), that HLC 
advised Unicor that DPSC was not cooperating with a request for a 
larger shade sample and blaming its delinquencies on Unicor's failure 
to fulfill its obligation as a prime contractor to obtain a shade 
sample from DPSC.  Insofar as Unicor had an obligation to obtain the 
shade sample, the record shows that it was provided on July 31, 3 
weeks after HLC requested Unicor's assistance and, again, 9 months 
after HLC accepted a contract for production of the cloth.

As a preliminary matter, we know of no contractual provision or 
regulation that places the burden of obtaining proper samples on 
Unicor.  We have requested that the protester direct our attention to 
any such provision or regulation, and the protester has not done so.   
In any event, we do not see a failure of cooperation between Unicor 
and DPSC as a significant factor in HLC's lateness.  Rather, as the 
chronology of events set out above shows, HLC's actions--and inaction, 
such as its failure to recognize its need for a larger sample until 
late June, 6 months after receiving the sample and after failing 
inspection--at a minimum contributed significantly to the delay in 
delivery.  Accordingly, based on this record, we find reasonable the 
contracting officer's determination that HLC's performance under 
contract No. -2357 was poor. 

HLC asserts that the agency evaluated past performance differently for 
the protester and Coville.  HLC argues that in evaluating Coville's 
proposal, the contracting officer considered only the contracts listed 
in Coville's proposal, with no indication that the contracts were of 
similar dollar value or for similar items.  By contrast, HLC asserts, 
the contracting officer did not restrict her evaluation of HLC's past 
performance to the contracts listed in the proposal, did not 
"acknowledge" that she was in fact the contracting officer for the two 
Unicor contracts considered, and failed to consider HLC's responses to 
the cure notices where it had made late deliveries.

The agency states that in evaluating past performance, it tried to 
consider similar contracts.  "Similar," in this instance, meant that 
the contract was for cloth; required the contractor to meet DPSC's 
strict physical, shade, and end item testing; had been performed 
within the prior 2 years; and were close in dollar amount to the 
instant solicitation.  Of the four Unicor contracts listed by the 
protester, the agency states that none was recent (performed within 
the past 2 years).  The one contract within the 2-year period was the 
Postal Service contract, for which HLC got a favorable evaluation.  
Coville similarly listed five contracts, four of which were Unicor 
contracts.  While not similar in dollar amount, the contracts reviewed 
were not small purchases, and all met the other three criteria, one 
being with DPSC and the other two being for cloth delivered to the 
Jesup facility, both within the past 2 years.  Beyond noting that the 
contracts were for lower dollar amounts, HLC makes no showing that the 
cloth manufactured was not comparable to the cloth required under the 
instant solicitation.  Under these circumstances, we cannot conclude 
that the agency's selection of prior contracts as "similar" contracts 
for purposes of evaluating the offerors' past performance was 
unreasonable or inconsistent with the RFP. 

Similarly, we see nothing improper in the contracting officer's 
reliance on her own knowledge of HLC's performance on the two prior 
Unicor contracts.  The record indicates that she had, based on her own 
experience, sufficient information and background to evaluate HLC's 
performance.  Agencies evaluating proposals may properly consider 
their own experience with an offeror's performance where the 
solicitation contains past performance as an evaluation factor.  
George A. and Peter A. Palivos, B-245878.2; B-245878.3, Mar. 16, 1992, 
92-1 CPD  para.  286.  Particularly where, as here, the solicitation states 
that the agency may rely upon contracts not referenced, we see nothing 
improper in the agency's taking such direct knowledge of an offeror's 
performance problems into account in the evaluation.  See Quality 
Elevator Co., Inc., B-271899, Aug. 28, 1996, 96-2 CPD  para.  89.  Nor do we 
consider the evaluation of its past performance improper simply 
because the agency contacted only one of HLC's references.  There is 
no legal requirement that all references listed in a proposal be 
checked.  Questech, Inc., B-236028, Nov. 1, 1989, 89-2 CPD  para.  407.

Finally, to the extent that HLC challenges the evaluation of Coville's 
proposal under the past performance factor, HLC is not an interested 
party to raise this issue.   The record shows that there are two 
proposals with total scores higher than HLC's.  Under our Bid Protest 
Regulations, section 21.0(a), 61 Fed. Reg. 39039, 39042 (1996) (to be 
codified at 4 C.F.R.  sec.   21.0(a)), a party must be interested to raise 
a protest issue, that is, it must be in line for award if its protest 
were sustained on the issue raised.  Since there are other offerors 
with higher-rated proposals in line for award even if we sustained 
HLC's challenge to the evaluation of Coville's proposal, HLC is not an 
interested party to challenge that evaluation.  ASI Personnel Servs., 
Inc.--Recon., B-258537.8, Oct. 31, 1995, 95-2 CPD  para.  198.

The protest is denied.

Comptroller General
of the United States

1. The RFP defined this factor as relating to the "offeror's 
reputation for compliance or non-compliance with" specifications, the 
quality of supplies and services furnished, and the offeror's 
financial capability.

2. The record shows that Unicor did prevail upon DPSC to grant a 
waiver, but only after agreeing to a price reduction under its prime 
contract with DPSC.  

3. The protester's initial submissions, including its response to the 
cure notice, imply that the sample passed inspection.  Both parties 
indicate in their final submissions, however, that one of two samples 
failed shade testing.