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