BNUMBER:  B-274621
DATE:  December 20, 1996
TITLE:  Marion Composites

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Matter of:Marion Composites

File:     B-274621

Date:December 20, 1996

John B. Denniston, Esq., and Jason A. Levine, Esq., Covington & 
Burling, for the protester.
Robert S. Ryland, Esq., and Susan K. Fitch, Esq., Kirkland & Ellis, 
for Gichner Shelter Systems, an intervenor.
Joshua A. Kranzberg, Esq., and Robert A. Russo, Esq., Department of 
the Army, 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

Where the solicitation's evaluation scheme provided that the technical 
evaluation factors were more important than price in determining the 
proposal representing the best value to the government, agency 
properly selected the higher technically rated, higher-priced proposal 
for award after reasonably determining that the proposal was 
technically superior to the protester's and that the advantages of 
that proposal warranted the payment of a price premium.

DECISION

Marion Composites protests the award of a contract to Gichner Shelter 
Systems under request for proposals (RFP) No. DAAB07-96-R-E009, issued 
by the Department of the Army for a quantity of Standardized 
Integrated Command Post System-Rigid Wall Shelters, Version 4.  Marion 
challenges the evaluation of its proposal and the agency's 
price/technical tradeoff.

We deny the protest.

The basic shelter provides the structural framework for the integrated 
shelter which will house electronic command, control, and 
communications systems.  The basic shelter is a six-sided enclosure, 
each side of which is made up of aluminum facing panels bonded to a 
paper honeycomb core.  The integrated shelter must contain, at a 
minimum, workspace for two operators and must support a variety of 
electronic equipment.  The shelter can be set up on the ground or can 
be mounted on a high mobility multi-purpose wheeled vehicle, 
transforming the shelter into a mobile command post.  The RFP included 
a Functional Description Document (FUDD) which described the 
performance specifications for this version of the shelter.  Offerors 
were also furnished, for reference purposes, technical data drawings 
for the immediately preceding version of the shelter.  Offerors could 
base their shelter design on the data provided or could propose 
another technical approach for satisfying the FUDD's performance 
specifications.

The RFP contemplated the award of a firm, fixed-price contract for 125 
shelters, with an option for up to an additional 400 shelters, to the 
offeror whose proposal represented the best value to the government, 
technical evaluation factors, performance risk, price, and management 
evaluation factors considered.  Technical evaluation factors and 
performance risk were considered of equal importance, and individually 
were considered more important than price.  Price was considered 
significantly more important than management evaluation factors.[1]  
As relevant to this protest, the RFP stated that the adequacy of an 
offeror's technical approach would be evaluated to determine the 
extent to which the offeror addressed and understood the design and 
production requirements.  The RFP also stated that the feasibility of 
an offeror's technical approach would be evaluated to determine 
whether the offeror's methods and approach in meeting the design and 
production requirements would provide the government with a high level 
of confidence of successful completion within the required schedule.  
Finally, the RFP advised that the award would not necessarily be made 
to the low-priced offeror.

Three firms, including Marion and Gichner, submitted initial technical 
and price proposals which were included in the competitive range.  
Following discussions, the agency requested each competitive range 
offeror to submit a best and final offer (BAFO).  The final evaluation 
ratings for Marion and Gichner were as follows:
 
                             Marion               Gichner

   Technical Factors       Acceptable           Outstanding

   Performance Risk         Moderate                Low

  Management Factors       Acceptable              Good
Marion's price was approximately 34 percent less than Gichner's price.

Marion, whose predecessor corporate entity developed the current 
shelter design, proposed to use this design, but to modify several 
shelter components to reduce costs.  For example, Marion proposed an 
aluminum alloy for the shelter's facing panels which was not as strong 
as the aluminum alloy currently used.  Marion also proposed an 
unidentified commercial grade paper honeycomb core in lieu of the core 
material currently used.  Marion basically stated that if the proposed 
alternate materials proved to be unacceptable or unavailable, the firm 
would revert to using the currently tested and proven component 
materials at no additional cost to the government.  Following 
discussions with Marion which focused on the impact of these and other 
proposed component modifications on the firm's ability to satisfy the 
shelter's performance and production requirements, the evaluators 
concluded that by substituting untested materials for critical shelter 
components in an effort to reduce costs, Marion's proposed 
modifications could compromise the shelter's structural, 
environmental, and transportability requirements and could pose a risk 
of significant production delays.  Accordingly, the evaluators viewed 
these proposed modifications as major disadvantages in Marion's 
technical approach.  In contrast, Gichner, the incumbent contractor 
for a production quantity of a previous version of the shelter, 
proposed the aluminum alloy facing panels and core material used in 
the current shelter design.  Because Gichner, unlike Marion, proposed 
critical shelter components that were already tested and proven, and 
as a result, its technical approach did not pose a risk of production 
delays, the agency determined that Gichner's proposal was technically 
superior to Marion's proposal and that this technical superiority 
justified the payment of a price premium to Gichner.  The agency 
awarded a contract to Gichner as the offeror whose proposal 
represented the best value to the government.

Marion argues that the agency unreasonably downgraded its technical 
proposal based on its proposed shelter component modifications.  
Marion, which does not challenge the agency's conduct of discussions, 
contends that it addressed the agency's concerns about these proposed 
modifications during discussions and maintains that these features 
should not have been considered disadvantages in its technical 
approach.

In reviewing protests against the propriety of an agency's evaluation 
of proposals, we will examine an agency's evaluation to ensure that it 
was fair and reasonable and consistent with the evaluation criteria 
stated in the RFP.  Research Analysis and Maintenance, Inc., B-239223, 
Aug. 10, 1990, 90-2 CPD  para.  129; Institute of Modern Procedures, Inc., 
B-236964, Jan. 23, 1990, 90-1 CPD  para.  93.  Based on our review of the 
record, we conclude that the agency reasonably downgraded Marion's 
technical approach based on its proposed modifications of critical 
shelter components.

Although it proposed to construct the shelter in accordance with the 
current shelter design, Marion proposed to modify several shelter 
components in order to reduce costs.  Two of these components--the 
aluminum alloy facing panels and the core material--are critical 
components of the basic shelter which provides the structural 
framework for the integrated shelter.  In its proposal, Marion pointed 
out that under the current shelter design, the facing sheets for the 
wall, roof, and floor panels were made of a particular aluminum alloy.  
Marion proposed to change the alloy for the facing panels, noting an 
"opportunity for a significant cost reduction" using an aluminum alloy 
with a "[7] percent lower tensile and lesser ductility," i.e., 
strength and ability to be bent.  Marion noted that "[s]hould further 
strength analyses during the contractual phase indicate that this 
reduction is unacceptable, the panel design will revert to the use of 
[the currently used aluminum alloy] facing sheets."  Marion also 
pointed out that the current shelter design uses a customized paper 
honeycomb core.  Marion proposed a commercial grade core material 
offered by "[a]t least one vendor" which would provide an opportunity 
for a cost reduction.  Marion "assume[d] a success-based outcome of 
the [in-house] tests.  Should this not be the case, the fall-back 
position is to continue to use the same core material as in the 
existing . . . [s]helter."

During discussions, Marion was asked to describe how its proposed 
shelter panel construction comprised of the alternate aluminum alloy 
facing sheets and commercial honeycomb core would affect the shelter's 
ability to meet various transportability and environmental 
requirements as described in the FUDD.  Marion provided a cursory, 
three sentence response that the shelter's ability to meet these 
requirements "will not be compromised by the use of the [alternate 
aluminum alloy] facings and commercial core[,]" explaining that "the 
shelter design will be modified to use these alternate materials only 
after detailed engineering evaluations . . . confirm their 
suitability.  Should the engineering evaluations show that either of 
the options is structurally or functionally inadequate, then the panel 
designs will revert to currently-used" aluminum alloy panels and core 
material.  Marion was also asked to describe how the "lower tensile 
and lesser ductility" of the alternate aluminum alloy would affect the 
shelter's ability to meet various structural, environmental, and 
transportability requirements.  Marion responded by conceding that 
while the alternate aluminum alloy offers a cost reduction, "the 
alternate alloy does not quite offer the strength or the ductility of 
the replaced material. . . .  The lower strength of the [alternate 
aluminum] alloy is a factor which will be resolved by structural 
analysis efforts during the early stages of the contract[,] . . . 
focus[ing] upon the floor panel as it is the most heavily loaded panel 
within the shelter."  Marion stated that with its proposed use of a 
less flexible metal, it "planned to perform" a bending operation on a 
test specimen prior to actual production.  Finally, Marion was asked 
to describe the criteria for determining the "success" of its in-house 
testing of the commercial grade core material, including how the test 
data would demonstrate the shelter's ability to meet the FUDD's 
performance requirements.  Marion responded that "[t]o date, the 
in-house engineering development testing for the candidate commercial 
core materials ha[s] not yet taken place.  However, the submitted 
costs . . . are based on the assumption that the engineering 
evaluations will successfully prove that the candidate commercial 
cores can replace the currently-used core."  Marion provided flow 
charts and diagrams of the selection process involving the use of a 
commercial core versus a customized core.

In our view, the evaluators reasonably considered Marion's proposed 
modifications of critical shelter components, including its proposal 
to use a weaker and less flexible aluminum alloy for the shelter's 
facing panels and to use an unidentified commercial grade honeycomb 
core, to be major disadvantages in the firm's technical approach.  In 
its responses during discussions, Marion failed to furnish any 
supporting details addressing the use of the proposed alternate 
materials in satisfying the shelter's performance requirements.  In 
the absence of the requested information, the evaluators reasonably 
concluded that Marion's proposed use of these alternate materials in 
lieu of the already tested and proven materials could compromise the 
shelter's structural (roof load, floor load, impact resistance, 
integration), environmental (temperature, shock, solar load), and 
transportability (external air transport, ground mobility, rail 
transport, material handling, lift/tiedown) requirements.  The 
evaluators also were concerned that should these alternate materials 
prove unacceptable in post-award testing, and accordingly necessitate 
Marion's reverting to the already tested and proven materials, the 
firm's technical approach could pose a risk of significant delays in 
the shelter's production schedule.  Since Marion had not yet tested 
the proposed alternate component materials, the evaluators were 
reasonably concerned with Marion's ability to timely satisfy the 
required production schedule.[2]  We conclude that the evaluators, 
consistent with the RFP's evaluation scheme, reasonably downgraded 
Marion's technical approach for adequacy and feasibility based on the 
firm's proposed modifications of critical shelter components which 
posed risks to the government involving the firm's ability to satisfy 
the FUDD's performance and production requirements.[3]

Marion also challenges the agency's price/technical tradeoff decision 
which resulted in the award to Gichner at a significantly higher 
price.  Marion believes that the agency unreasonably factored into the 
tradeoff decision the previously discussed "disadvantages" in its 
technical approach.  Marion believes that the agency had no reasonable 
basis for concluding that Gichner's proposal was technically superior 
to Marion's proposal and therefore worth the payment of a price 
premium.

In a negotiated procurement, an agency has the discretion to make 
award to an offeror whose proposal is higher technically rated and 
higher priced where the agency reasonably determines that the price 
premium is justified considering the technical superiority of the 
offeror's proposal and the result is consistent with the RFP's 
evaluation scheme.  See Systems Integration & Dev., Inc., B-271050, 
June 7, 1996, 96-1 CPD  para.  273.

In the source selection decision document, the source selection 
authority (SSA)  included the final adjectival ratings for Marion and 
Gichner, along with their respective prices, and explained in the 
accompanying narrative why Gichner's proposal was viewed as 
technically superior to Marion's proposal.  Noting the 34 percent 
differential between Marion's and Gichner's prices, the SSA considered 
the differences in the technical approaches of these two offerors and 
ultimately concluded that the advantages in Gichner's technical 
approach warranted the payment of a price premium to that firm.

More specifically, the SSA noted that Gichner proposed to use a proven 
shelter design in accordance with the drawing package provided to the 
offerors and  proposed performance enhancements which provided the 
government with a very high level of confidence that the firm would 
meet or exceed the shelter's performance and production requirements.  
The SSA specified as advantages in Gichner's proposal the firm's 
recognition of critical payload requirements and its plan to monitor 
design modifications and the impact of these modifications on the 
weight of the shelter; the firm's complete design of a quick erect 
antenna mast mount, including a detailed transportability analysis; 
and the firm's detailed discussion of the validation testing process, 
including detailed first article testing milestone charts and road 
testing requirements.  In addition, the SSA noted that Gichner had 
facilities and equipment in place to begin the manufacturing process.  
Finally, the SSA believed that the implementation of Gichner's quality 
control program would provide the government with a high level of 
confidence that Gichner would produce a quality product.  The SSA did 
not describe any major disadvantages in Gichner's proposal (and none 
was described in the final evaluation report).  In short, the SSA 
found that Gichner's proposal was outstanding based on the firm's 
technical approach to meeting the shelter's performance and production 
requirements.

With respect to Marion, the SSA noted as advantages in its proposal 
its elimination of environmental control unit electromagnetic 
interference filters and the fact that the firm had facilities and 
equipment in place to begin the manufacturing process.  However, the 
SSA also stated that there were numerous disadvantages in Marion's 
proposal, "[t]he most significant [being] the use of [an alternate 
aluminum alloy] for [the] shelter panels and the use of commercial 
honeycomb core material in the shelter panel."  The SSA explained that 
"[t]hese changes introduce significant risk in the proposed shelter's 
ability to meet the following FUDD performance requirements:  roof 
load, floor load, impact resistance, integration, temperature shock, 
solar load, external air transport, ground mobility, material 
handling, lift and tiedown.  If during verification the shelter 
material cannot pass the performance requirements a significant 
schedule impact would occur."  We point out that these concerns are 
supported by the underlying evaluation record and were properly 
considered by the SSA.[4]

Under the RFP's evaluation scheme, technical evaluation factors were 
considered more important than price.  The RFP also advised that the 
award would not necessarily be made to the low-priced offeror.  
Although Gichner's price was significantly higher than Marion's price, 
the SSA determined that Gichner's proposal was technically superior to 
Marion's proposal based on Gichner's use of a proven shelter design, 
its proposed use of tested and proven critical component materials, 
its approach to monitoring the impact of design modifications on 
payload and weight requirements, its detailed antenna design, its 
approach to testing, and its quality control program.  Based on these 
features of Gichner's technical approach, we conclude that the SSA 
could reasonably determine that Gichner's technically superior 
proposal was worth the payment of the price premium.[5]

The protest is denied.

Comptroller General
of the United States

1. The evaluators were to assign adjectival ratings to the technical 
and management evaluation factors (e.g., outstanding--proposal meets 
or exceeds the requirements of the RFP and offers numerous advantages; 
good--proposal meets or exceeds the requirements of the RFP and offers 
some major advantages; and acceptable--proposal meets the minimum 
requirements of the RFP).  In assessing an offeror's performance risk, 
the evaluators also were to assign adjectival ratings (e.g., high 
risk--significant doubt exists based on the offeror's past 
performance; moderate risk--some doubt exists; and low risk--little 
doubt exists).  Adjectival ratings were to be supported by narratives 
of the strengths, weaknesses, and risks in each offeror's proposal.

2. In its comments to the agency report, referencing specific portions 
of its proposal and a response to a discussion question, Marion 
contends that if it were required to revert to standard shelter 
components as a result of post-award testing, it would not encounter 
production delays because it maintains, due to its production of other 
types of shelters, inventories of standard aluminum alloy facing 
panels and core material.  We have read the referenced materials and 
conclude that they do not support Marion's position.  In this regard, 
the referenced proposal sections address Marion's manufacturing 
facilities and equipment, its shelter assembly and integration 
process, and its program risk assessment, including general statements 
about reverting to standard core material if commercial core is 
unacceptable or unavailable and the lead time for the proposed 
alternate aluminum alloy.  Marion does not address inventories of 
standard components.  Marion responded to the discussion question by 
stating that it planned to maintain "a sufficient safety stock [of raw 
materials]" to cover program requirements.  Marion, however, did not 
specify that these inventories would include the currently tested and 
proven aluminum alloy facing panels and core material.  We do not 
believe that Marion offered assurances in its proposal or in its 
response to the discussion question that would allay the agency's 
concerns with the firm's ability to timely perform the contract if it 
were required to revert to standard components.

3. Since the proposed shelter modifications discussed above represent 
the major disadvantages in Marion's technical approach, we are not 
addressing the other technical areas with which the evaluators also 
had concerns.

4. The evaluators and the SSA also had concerns with Marion's ability 
to perform this contract based on performance and schedule delays 
experienced by the firm on a recent, relevant shelter contract.  
Marion challenged the moderate risk rating assigned by the evaluators 
in assessing its performance risk and the SSA's consideration of this 
performance risk rating in making his tradeoff decision.  Assuming 
Marion is correct that it should have received a low risk performance 
rating, it is clear from the record that a favorable performance 
rating (equal to Gichner's low risk performance rating) would not have 
offset the major disadvantages in its technical approach.  In other 
words, independent of the performance risk assessment, as discussed 
above the evaluators and the SSA had a reasonable basis to be 
concerned with Marion's ability to meet the shelter's performance and 
production requirements because of the firm's proposed technical 
approach.

5. Marion complains that the SSA did not quantify the technical 
advantages in Gichner's proposal in justifying the payment of a price 
premium.  However, in a best value procurement, an SSA has the 
discretion to determine how to balance price and technical advantages 
in making the award decision.  An SSA need not base a price/technical 
tradeoff on a mathematical calculation whereby an additional dollar 
will be paid only if there is a corresponding discrete technical 
advantage.  See, e.g., EG&G Team--Recon., B-259917.3, Oct. 16, 1995, 
95-2 CPD  para.  175.