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.