BNUMBER:  B-275017
DATE:  January 17, 1997
TITLE:  H.F. Henderson Industries

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Matter of:H.F. Henderson Industries

File:     B-275017

Date:January 17, 1997

Henry F. Henderson, H.F. Henderson Industries, for the protester.
Capt. Sheila D. Isbell and Col. William P. Bowen, Department of the 
Air Force, for the agency.
Charles W, Morrow, Esq., and James A. Spangenberg, Esq., Office of the 
General Counsel, GAO, participated in the preparation of the decision.

DIGEST

Agency selection of higher priced offeror with a low performance risk 
rating instead of the lower priced offeror with a reasonably based 
moderate performance risk rating based on prior contract delinquencies 
was reasonable and consistent with the solicitation's evaluation 
scheme, which weighted past performance and price equally, where 
timely delivery was imperative.  

DECISION

H.F. Henderson Industries protests the award of a contract to Datacom, 
Inc. under request for proposal (RFP) No. F09603-96-R-81605, a total 
small business set-aside issued by the Department of the Air Force, 
Warner Robins Air Logistics Center, for up to 2900 modification kits 
for the high/low frequency AN/ARC-190(v)8 radio transmitter/receiver.  

We deny the protest.

The RFP advised that the best value award decision would be based on a 
trade-off between performance risk and price, with performance risk 
and price being equally weighted.  Proposals were to be assigned a 
performance risk rating of either low, moderate, high, or not 
applicable.[1]  Award was to be made to the lowest-priced offeror if 
it received a low performance risk rating, but award could be made to 
other than the lowest priced offeror if that offeror received other 
than a low performance risk rating.  

The RFP required offerors to submit present and past performance 
information with their proposals and advised that the government would 
use data provided by the offeror, as well as information obtained from 
other sources, to determine a performance risk rating.[2]  In 
evaluating performance risk, the Air Force reviewed each offeror's 
submissions as well as contractor information summaries from the 
Mechanization of Contract Administration System (MOCAS), Contractor 
Performance Assessment Records System (CPARS), and the administrative 
contracting officer.  

Eleven proposals were submitted.  Henderson submitted the 
lowest-priced offer of $7.8 million, but received a moderate 
performance risk rating due to reported late (delinquent) deliveries 
under some current and prior contracts.  Datacom submitted the next 
lowest-priced offer of $9.2 million with a low performance risk rating 
based upon consistent early or timely performance under its contracts.  
Based on its detailed review of each offeror's past performance 
record, the Air Force determined that Datacom's higher-priced offer 
represented the best value because its past performance indicated that 
it was more likely that the government would receive timely delivery, 
as compared to Henderson's past performance which indicated a moderate 
risk that timely deliveries may not be made.  Award was made to 
Datacom on September 24, 1996, and this protest followed.

Henderson protests that the Air Force unreasonably assigned it a 
moderate performance risk rating and improperly selected a 
significantly higher-priced proposal.  

In a best value procurement, price is not necessarily controlling in 
determining the offer that represents the best value to the 
government.  Rather, that determination is made on the basis of 
whatever evaluation factors are set forth in the RFP, with the source 
selection official often required to make a cost/technical tradeoff to 
determine if one proposal's technical superiority is worth the higher 
cost that may be associated with that proposal.  In this regard, 
price/past performance tradeoffs are permitted when such tradeoffs are 
consistent with the RFP evaluation scheme.  Excalibur Systems, Inc., 
B-272017, July 12, 1996, 96-2 CPD  para. 13; Dragon Servs., Inc., B-255354, 
Feb. 25, 1994, 94-1 CPD  para.  151.  Thus, where, as here, an RFP 
identifies past performance and price as the evaluation criteria and 
indicates that an offeror with good past performance can expect a 
higher rating than an offeror without such a record of performance, 
proposals must be evaluated on that basis, and ultimately the 
selection official must decide whether or not a higher-priced offeror 
with the better past performance rating represents the best value to 
the government.  Excalibur Systems, Inc., supra.  Further, in 
reviewing an agency's evaluation of an offeror's performance risk, we 
will examine it to ensure that it was reasonable and consistent with 
the solicitation's stated evaluation criteria.  Dragon Servs., Inc., 
supra.

Henderson argues that its moderate performance risk rating was 
unreasonable because some of the information that the Air Force relied 
upon was misleading.  One contract, identified from MOCAS documents, 
is assertedly being held in a delinquent status until the government 
recoups an overpayment of progress payments; another, identified from 
CPARS documents, had late deliveries which Henderson attributes to 
defective government technical drawings as evidenced by the equitable 
adjustment it obtained under that contract; and a third, also 
identified from CPARS documents as delinquent, is assertedly so 
dissimilar from this RFP work that it should not have been considered. 

Even conceding that Henderson has legitimate excuses for the 
delinquencies under the three foregoing contracts and discounting them 
from the past performance evaluation, the Air Force reports, and the 
record confirms, that Henderson is delinquent on 4 of 13 other open 
contracts.  In contrast, Datacom's performance record indicated that 
it met or exceeded all contract requirements and had no delinquencies 
or delays, which supported its low performance risk rating.  The Air 
Force judged that Henderson's demonstrably spotty present and past 
performance record, particularly its delinquent deliveries, evidenced 
that there was a risk that Henderson may not make timely deliveries if 
it was awarded this contract.  While Henderson disagrees with its past 
performance assessment, it has not demonstrated that its moderate 
performance risk rating was unwarranted. 

In making the performance/price trade-off, the Air Force found that 
the price premium associated with making award to Datacom, instead of 
Henderson, was justified, given Datacom's low performance risk, based 
on its consistent timely and early contract deliveries, as compared to 
Henderson's moderate performance risk, which evidenced a greater 
potential for untimely deliveries under this contract.  The Air Force 
explained that it was imperative that the kits be delivered on 
schedule, and that award to an higher-priced offeror with a low 
performance risk was warranted in these circumstances because of the 
potential for additional costs to the government due to slips in 
delivery of these kits and the detrimental impact that delays would 
have on the mission-essential fleet upgrade.  While Henderson 
disagrees, we find nothing unreasonable in this determination, which 
is consistent with the RFP evaluation scheme.  Id.

The protest is denied.

Comptroller General
of the United States

1. The definitions of the performance risk ratings were contained in 
Air Force Supplement BB-305.  A high risk rating is defined as 
"significant doubt exists, based on the offeror's performance record, 
that the offeror can perform the proposed effort"; a moderate risk 
rating is defined as "some doubt exist, based on the offerors 
performance record, that the offeror can perform the proposed effort"; 
and a low risk rating is defined as "little doubt exists, based on the 
offeror's performance record, that the offeror can perform the 
proposed effort."

2. No technical proposals were requested.