BNUMBER:  B-275139
DATE:  January 24, 1997
TITLE:  Creative Apparel Associates

**********************************************************************

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:Creative Apparel Associates

File:     B-275139

Date:January 24, 1997

Ruth E. Ganister, Esq., and Glenn L. Blackwell, Esq., Rosenthal and 
Ganister, for the protester.
Marc Lamer, Esq., Kostos and Lamer, P.C., an intervenor.
Gale Furman, Esq., Defense Logistics Agency, for the agency.
Katherine I. Riback, Esq., and Paul Lieberman, Esq., Office of the 
General Counsel, GAO, participated in the preparation of the decision.

DIGEST

1.  Allegation that agency improperly evaluated awardee's proposal is 
denied where evaluation documentation clearly demonstrates that the 
ratings assigned to the proposal were reasonable and reflected the 
solicitation's stated evaluation criteria.  
  
2.  Protest against award to offeror with a lower-cost, lower-rated 
proposal is denied where agency reasonably determined that cost 
premium associated with award to higher-rated, higher-priced offeror 
was not justified by slightly higher technical rating.

DECISION

Creative Apparel Associates protests the Defense Logistics Agency's 
award of a contract to Carter Industries, Inc. to provide police 
security jackets under request for proposals (RFP) No. 
SPO100-95-R-0305.  

We deny the protest.

The RFP contemplated the award of a firm, fixed-price contract for a 
base quantity with two option quantities of jackets.[1]  The RFP 
stated that technical criteria would be more important than price in 
the source selection decision.  The RFP set forth a technical 
evaluation scheme which provided that proposals would be evaluated 
under the following technical criteria, listed in descending order of 
importance:  product demonstration model, past performance, 
manufacturing plan, and quality assurance plan.  The RFP called for 
offerors to submit a written summary of their past experience and 
quality history during the past 2 years which demonstrated their 
capability to manufacture the jacket in accordance with the 
specification and delivery requirements.[2]
  
Four proposals were received in response to the solicitation, and the 
agency, after considering both cost and technical factors, included 
the three highest technically ranked proposals in the competitive 
range.  Carter's proposal stated that the company was formed with the 
purpose of purchasing the assets of Isratex, Inc., which filed for 
protection from its creditors under Chapter 11 Bankruptcy proceedings 
in May 1994.  Pursuant to a reorganization plan, Carter began managing 
the daily operations of Isratex's business in June 1995, and, in this 
regard, began performance on contracts which had been awarded to 
Isratex.[3]  Carter is managed by its two owners, Mr. Wolf and Mr. 
Azrak, neither of whom had a prior association with Isratex.  On June 
21, 1996, the novation of five of Isratex's government contracts to 
Carter was finally approved.[4]  Carter took the position in its 
proposal  that it did not have any past performance history since it 
had not manufactured any end items for either the U.S. Government or 
commercial customers, and therefore deserved a "neutral" rating for 
past performance.[5]  

Written discussions were conducted with the competitive range 
offerors.   The contracting officer determined that specific past 
performance data did in fact exist for Carter because Carter had been 
performing Isratex's contracts since June 1995, even though the 
novation agreement was not approved until later.  Therefore, during 
discussions, Carter was asked, among other things, to provide 
information and explanations regarding delinquencies on certain 
contracts which were originally awarded to Isratex and were currently 
being performed by Carter pursuant to the novation agreement.  Based 
on this performance record, the contracting officer determined that a 
neutral rating was not justified, and gave Carter a "marginally 
acceptable" rating for past performance.     

All offerors submitted best and final offers (BAFO) by the closing 
date.  The BAFO's were evaluated as follows:

Offeror           Total Price (Base quantity plus two option 
                  quantities)       Technical Rating

Carter            $2,954,958.72     Marginally Acceptable

Creative          $3,247,249.60     Acceptable

Offeror C         $3,512,978.56     Acceptable
Creative's proposal was evaluated as acceptable under all four 
criteria, while the Carter proposal was evaluated as acceptable under 
three, but marginally acceptable under past performance resulting in 
an overall rating of marginally acceptable.  While Carter's proposal 
received a slightly lower overall technical rating than Creative's 
proposal because of its past performance assessment, the agency 
decided that Carter's proposal represented the best value to the 
government based on its significantly lower price.  This protest 
followed.

Creative raises numerous arguments to the effect that the technical 
evaluation was improper, and that the resulting source selection 
therefore was invalid.  We have reviewed the record and conclude that 
these arguments are without merit.  

TECHNICAL EVALUATION OF PROPOSALS

The evaluation of technical proposals is a matter within the 
discretion of the contracting agency since the agency is responsible 
for defining its needs and the best methods of accommodating them.  
Marine Animal Prods. Int'l, Inc., B-247150.2, July 13, 1992, 92-2 CPD  para.  
16.  In reviewing an agency evaluation, we will not reevaluate 
technical proposals but instead will examine the agency's evaluation 
to ensure that it was reasonable and consistent with the 
solicitation's stated evaluation criteria.  MAR, Inc., B-246889, Apr. 
14, 1992, 92-1 CPD  para.  367.  

Past Performance

Creative first argues that the agency gave Carter "favored treatment" 
when it evaluated Carter's past performance.  Specifically, Creative 
argues that the agency treated Carter leniently even though it was 
behind schedule in a number of contracts that it had assumed from 
Isratex.

The record, as outlined above, is to the contrary.  The contracting 
officer explicitly considered the Isratex contracts that were taken 
over and performed by Carter as of  June 1995, declining to give 
Carter the requested "neutral" rating for past performance, and 
instead, after evaluating Carter's response concerning certain 
delinquencies, giving it a "marginally acceptable" rating for past 
performance.  During the final evaluation, the contracting officer 
noted that Carter had successfully completed and delivered quality end 
items on two contracts, and that after the bankruptcy was finalized 
that it had negotiated and was performing under a revised delivery 
schedule for three other contracts.  The contracting officer stated 
that:

     "The contracts novated by Carter are clearly their legal 
     responsibility.  In addition, Mr. Wolf and Mr. Azrak of Carter 
     Inds. have been managing the Isratex Corporation since June 1995.  
     Therefore, Carter cannot be given a neutral rating.  However, in 
     full consideration of all of the circumstances surrounding both 
     the bankruptcy proceedings and the asset transfer, a rating of 
     Unacceptable also appears unwarranted.  Therefore, based on 
     Carter's demonstrated attempts to perform on several of the 
     Isratex contracts (excluding 93-C-0393), the lack of evidence 
     regarding substantial quality problems in the proposed plant and 
     the recognition of the potential limitations of Carter to fully 
     address contractual responsibilities for these contracts prior to 
     the finalization of bankruptcy proceedings in December, the 
     Contracting Officer has determined that a rating of Marginally 
     Acceptable is appropriate."

We see nothing unreasonable about this assessment.  The contracting 
officer took into account the adverse effect the Isratex bankruptcy 
proceedings had on Carter's ability to perform the contracts assumed 
from Isratex, noting that there had been some delays in performance, 
but also that Carter was limited in what it could do because of the 
bankruptcy situation.  She therefore considered that Carter had 
successfully completed and delivered quality end items on two 
contracts and that it had negotiated and was performing under a 
revised delivery schedule for three other contracts.  On these facts, 
we fail to see how the agency's evaluation of Carter's performance as 
"marginally acceptable" is unreasonable.[6]  

AWARD

Contracting Officer's Independent Determination

Creative also protests that the contracting officer's determination to 
award a contract to Carter was flawed because it was not the product 
of her own independent judgment.  Rather, Creative alleges that the 
contracting officer was encouraged to favorably evaluate Carter's past 
performance by the agency's Office of Counsel.  

The contracting officer states that she had considered mitigating 
circumstances surrounding Creative's delinquencies on three contracts, 
and the agency's Office of Counsel recommended that she also afford 
Carter the same consideration.  The contracting officer further states 
that she discussed the bankruptcy process and its effect on management 
decisions with the Office of Counsel and then independently reviewed 
and favorably revised Carter's past performance assessment from an 
extremely negative rating to the upper end of the "marginally 
acceptable" range.[7]   

We find without merit Creative's suggestion that the contracting 
officer's willingness to accept advice from her legal experts 
regarding legal issues which affected her award decision rendered the 
final award decision improper.  The record establishes  that the 
contracting officer relied on and accepted legal advice with regard to 
the effects of the bankruptcy process, and that she then independently 
evaluated Carter's past performance.  The contracting officer's 
decision to accept the advice of her legal experts on legal issues 
reflects reasoned logic and sound judgment, and her decision to award 
a contract after considering and accepting the advice of those experts 
constituted an appropriate exercise of her own independent judgment.  

Cost/Technical Tradeoff

Finally, Creative argues that the award decision was flawed since the 
agency did not fully take into account Creative's evaluated 
superiority under the technical factors and cost became the deciding 
factor, contrary to the announced criteria in the RFP.  Source 
selection officials in a negotiated procurement have broad discretion 
in determining the manner and extent to which they will make use of 
the technical and cost evaluation results; cost/technical tradeoffs 
may be made, and the extent to which one may be sacrificed for the 
other is governed by the test of rationality and consistency with the 
established evaluation factors.  Family Realty, B-247772, July 6, 
1992, 92-2 CPD  para.  6.  Even where cost or price is the least important 
evaluation factor, an agency may award to an offeror with a 
lower-cost, lower-scored proposal if it determines that the cost 
premium involved in awarding to a higher-rated, higher-priced offeror 
is not justified.  Id.; Dayton T. Brown, Inc., B-229664, Mar. 30, 
1988, 88-1 CPD  para.  321.  

The tradeoff here was reasonable.  The agency recognized that 
Creative's proposal was slightly more advantageous under the non-price 
factors.  The source selection authority determined, however, that 
since Carter had received fully acceptable ratings for all of the 
evaluation factors except the past performance factor where the 
constraints of the bankruptcy situation had adversely affected 
Carter's ability to perform, Creative's advantage under the non-price 
factors simply was not great enough to warrant award at Creative's 
higher price.  The record provides no basis for questioning the 
agency's conclusion that Creative's technical advantage was less 
significant than Carter's price advantage.  While price was the least 
important evaluation factor, the agency was not precluded (as 
Creative's argument suggests) from ultimately basing the award on the 
lowest price merely because the price factor was least important.  See 
Dayton T. Brown, Inc., supra.[8] 

The protest is denied.

Comptroller General 
of the United States

1. The solicitation required prices for the option quantities and 
stated that for price evaluation purposes the agency would use the 
total of the proposed prices for the base and option quantities.  

2. The RFP stated that the evaluation of each offeror's past 
performance is a subjective assessment that would be based on both the 
proposal and input from outside sources.

3. The reorganization plan and asset transfer were eventually approved 
and finalized in December 1995.

4. A novation agreement is a "legal instrument executed by (a) the 
contractor (transferor), (b) the successor in interest (transferee), 
and (c) the government by which, among other things, the transferor 
guarantees performance of the contract, the transferee assumes all 
obligations under the contract, and the government recognizes the 
transfer of the contract and related assets."  Federal Acquisition 
Regulation (FAR)  sec.  42.1201. 

5. FAR  sec.  15.608(a)(2)(iii) provides that firms without relevant past 
performance history will receive a neutral evaluation for past 
performance.  

6. The protester also objects to the contracting officer's statement, 
made in the agency report submitted in response to this protest, that 
Carter's owners, Mr. Wolf and Mr. Azrak, had "held high level 
management positions and had experience in the garment business."  The 
RFP asked offerors to describe past experience which demonstrates the 
capability to manufacture the items under this solicitation.  Both Mr. 
Wolf and Mr. Azrak have managed the daily operations of Carter from 
June 1995 and during that time have successfully produced and 
delivered quality garments.  Mr. Wolf was the CEO of Mark Solutions, 
Inc., which produced modular jail cells, and Mr. Azrak was the 
President and principal shareholder in Latique, Inc., which engaged in 
the import and export of handbags, backpacks, and accessories.  Based 
on this information, the contracting officer reasonably determined 
that Carter's owners had experience in the garment business and had 
high level management experience.

7. We are not persuaded by the protester's argument that the 
contracting officer improperly failed to alter Carter's past 
performance rating after revising her evaluation of this factor.  This 
assertion is contrary to the well established principle that 
adjectival ratings and point scores are only a guide to assist 
contracting agencies in evaluating proposals.  Grey Advertising, Inc., 
55 Comp. Gen. 1111 (1976), 76-1 CPD  para.  325.  Broad adjectival ratings, 
as used here, do allow agencies to reasonably conduct adequate 
evaluations of proposals.  

8. Creative's references to other DLA procurements where award was 
made to the higher technically rated proposal regardless of price are 
irrelevant since each procurement is a separate transaction, and 
action taken on any one procurement does not govern the conduct of 
other similar procurement.  Rack Eng'g, Co., 
B-208554, Mar. 7, 1983, 83-1 CPD  para.  224.