BNUMBER:  B-275390.5 
DATE:  May 14, 1997
TITLE: Henschel, Inc., B-275390.5, May 14, 1997
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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:    Henschel, Inc.

File:     B-275390.5

Date:May 14, 1997

D. Whitney Thornton II, Esq., and Joel Freid, Esq., Seyfarth, Shaw, 
Fairweather & Geraldson, for the protester.
Sam Zalman Gdanski, Esq., for Dynalec Corporation, an intervenor.
Benjamin G. Perkins, Esq., and Amalia Evola, Esq., Defense Logistics 
Agency, for the agency.
Susan K. McAuliffe, Esq., and Michael R. Golden, Esq., Office of the 
General Counsel, GAO, participated in the preparation of the decision.

DIGEST

Where request for proposals (RFP) designates a specific brand name 
part, but permits consideration of an alternate product that is 
physically, mechanically, electrically, and functionally 
interchangeable with the product identified in the RFP, protest of 
award to offeror of alternate product is sustained where agency failed 
to reasonably confirm that alternate product met material 
characteristics of named part number. 

DECISION

Henschel, Inc. protests the award of a contract to Dynalec Corporation 
under request for proposals (RFP) No. SPO430-96-R-2173, issued by the 
Defense Logistics Agency (DLA) for digital airflow panels.  The panels 
are used in airflow monitoring systems in ships; the panel is an 
integral part of the system and interfaces with an airflow sensor (not 
procured under this RFP) located in the ventilation duct of the 
monitored compartment.  Henschel contends that the agency improperly 
determined that the panel offered by Dynalec was interchangeable with 
the named Henschel panel requested by the solicitation; the protester 
states that there are material differences between its named part and 
Dynalec's part.  The protester contends that the agency improperly 
relaxed material, more costly performance specifications of its named 
part.

We sustain the protest.

BACKGROUND

The RFP requested offers on digital airflow panels, Henschel Part No. 
(P/N) 20-300, but did not specify any functional or other 
characteristics of the named P/N item.  The RFP included DLA's 
"Conditions for Evaluation and Acceptance of Offers for Part Numbered 
Items" (similar to DLA's former "Products Offered" clause) which 
allows firms to offer alternate products which are physically, 
mechanically, electrically, and functionally interchangeable with the 
product identified in the solicitation.  The RFP informed offerors 
that a technical data package was not available from the agency for 
the specified Henschel P/N; offerors were required to submit 
sufficient technical data on any alternate product offered as well as 
the named P/N to enable the agency to evaluate the alternate product 
to determine whether it is interchangeable with the named P/N.  Award 
was to be made on the basis of the offer of an acceptable product 
determined to be most advantageous to the government considering price 
and offeror past performance information.  Two offerors responded to 
the RFP--Henschel offered its named product (at a unit price of 
$[deleted]) and Dynalec offered its panel (Dynalec P/N 62413-100, at a 
unit price of $[deleted]).  Dynalec did not submit any technical data 
with its offer but stated in its offer's cover letter that its offered 
panel is "form, fit and function interchangeable and is currently 
being accepted by the Navy as an equal."

After the closing time for the receipt of proposals, the contracting 
officer made a series of requests to Dynalec for additional technical 
data necessary for an evaluation of the Dynalec alternate product 
offer.  Dynalec submitted summary data and narrative information 
regarding its offered product in response to those requests.   DLA 
determined that Dynalec failed to provide adequate data, particularly 
pertaining to the Henschel P/N, to evaluate the firm's offer.  On 
October 22, 1996, the agency awarded a contract to Henschel.  On the 
same day, the contracting officer received additional data from 
Dynalec regarding the Henschel part.  After reviewing the data 
submitted by Dynalec and conferring with a Navy engineer who advised 
DLA that he was familiar with the two companies' panels, a DLA 
technician on November 5 approved the Dynalec part as interchangeable 
and acceptable.[1]

Following a protest filed by Dynalec with our Office on November 7, 
challenging the award to Henschel at a higher price than that offered 
by Dynalec for its panel, the agency reopened the competition and 
requested best and final offers (BAFO) from the two offerors.  We 
dismissed as academic Dynalec's protest on 
December 17 in light of the agency's corrective action.[2]  An award 
was subsequently made to Dynalec on January 27, 1997 (at the firm's 
BAFO unit price of $2,499, for a total contract price of $157,437); 
Henschel's BAFO unit price was $[deleted].  The initial award to 
Henschel has been terminated.

ANALYSIS

Henschel contends that the agency had no reasonable basis for its 
decision that the Dynalec part is interchangeable with its part as 
defined in the RFP's alternate product evaluation clause.  In 
particular, the protester asserts that the Dynalec part is inferior to 
its part with respect to several material characteristics, including 
operating temperature range and drip-proof enclosure.  Henschel argues 
that its panel has been fully tested in accordance with more stringent 
military specifications contained in MIL-E-16400G to operate in a 
temperature range of -28ï¿½C to 65ï¿½C and to be drip-proof to an angle of 
45ï¿½.  The panel proposed by Dynalec, however,  is described in the 
technical data submitted by Dynalec as operational from 0ï¿½C to 60ï¿½C 
and drip-proof to an angle of 15ï¿½; Dynalec's data shows that the firm 
intends compliance with the less stringent requirements of 
MIL-STD-108, apparently based upon a draft specification for the 
product prepared by a different contractor and distributed by the Navy 
almost 10 years ago.[3]  Henschel further argues that its panel is 
superior to Dynalec's, among other things, in terms of vibration, 
visual alarm configuration, system expansion, battery protection, and 
fault clearing.[4]  Henschel contends that if Dynalec is permitted to 
propose on less stringent performance capability standards, it too 
should be allowed to propose a panel meeting similarly lower 
performance standards which would be substantially lower in cost to 
manufacture.[5]

In response, the agency argues that the more stringent temperature and 
drip-proof specifications of the Henschel unit were tested in response 
to testing requirements in that firm's prior contracts which are not 
contained in this RFP.  The agency, which does not address the 
relevancy to the current procurement of the more stringent military 
specification which the Henschel unit meets, states that no testing is 
required under this RFP and thus Dynalec need not be evaluated against 
Henschel's test results.  The agency argues that its technician 
reasonably decided that the Dynalec panel was physically, 
mechanically, electrically, and functionally interchangeable with the 
specified Henschel panel based upon the technical data submitted by 
Dynalec and the general verbal confirmation he received from a Navy 
engineer.

An agency may properly express its needs by specifying a particular 
product and affording other firms an opportunity to submit offers for 
alternate products where, as here, the agency has insufficient 
technical information to more adequately describe its requirements.  
Hilti, Inc., B-265662, Dec. 19, 1995, 95-2 CPD  para.  275 at 4.  When using 
this method of describing its needs, agencies may not relax a 
solicitation requirement that an alternate item be physically, 
mechanically, electrically, and functionally interchangeable with the 
named product.  Id.  This means that an agency does not have the 
discretion to accept an item that is not interchangeable with the 
named item based on a finding that it otherwise satisfies the agency's 
minimum needs.  Hobart Bros. Co., B-222579, July 28, 1986, 86-2 CPD  para.  
120, modified, B-222579.2, Sept. 19, 1986, 86-2 CPD  para.  323.  The 
obligation to demonstrate the acceptability of an alternate offer is 
on the offeror, and consequently an offeror must submit sufficient 
information to enable the agency to evaluate its alternate product.  
See Julie Research Labs., Inc., 70 Comp. Gen. 159, 161 (1990), 90-2 
CPD  para.  526 at 4.

We recognize that under a "Products Offered" type clause, the agency 
has broad discretion to accept offered equivalent products and that 
acceptance of lower-priced alternates is the preferred result since it 
promotes competition.  Id.  However, the agency must determine that no 
material differences exist between the alternate product and the 
referenced product with respect to those characteristics essential to 
the proper performance of the item.  Id. at 5.  The record does not 
establish that DLA met its obligation in this regard.

The record contains absolutely no documentation regarding any 
pre-approval technical evaluation or comparison by either the Navy or 
DLA regarding whether the Dynalec panel is interchangeable with the 
specified Henschel panel.  Rather, the record shows that a Navy 
engineer's statement that the Dynalec product is interchangeable 
(which the DLA technician relied on in approving the Dynalec panel) 
apparently was based mostly upon his knowledge that Dynalec was to 
supply digital panels under a subcontract awarded by another 
contractor.  There also is no technical evaluation or source selection 
documentation in the record, however, of the Navy's alleged 
"acceptance" of the same Dynalec panels as interchangeable with 
Henschel's panel under that contract.  This engineer's statement that 
the parts are interchangeable was also based on his opinion that 
Dynalec had the technical capability to supply acceptable digital 
panels since Dynalec has been producing various electronic parts for 
Navy vessels for 40 years and has supplied numerous older-type analog 
panels to the Navy in the past.  However, statements obtained from 
this individual after the protest was filed show that he had only 
limited involvement (prototype testing) in the Henschel panel 
performance tests and that he had no meaningful knowledge of the 
specific performance characteristics of the Dynalec panel.  
Consequently, the agency's reliance on this Navy engineer's statements 
without seeking supporting documentation was unreasonable.

With regard to the protester's assertion that the Dynalec part is 
inferior to the named Henschel part with respect to operating 
temperature, drip-proof enclosure, and other functional aspects, the 
agency simply did not meaningfully evaluate whether the Dynalec part 
was interchangeable with the Henschel part in these areas.  The record 
shows (based upon the technical data submitted to date for each firm's 
proposed panel) that, in fact, there are material differences between 
the products in these performance areas which were not recognized or 
considered at the time of the approval.[6]  Further, while DLA now 
asserts that certain Henschel panel characteristics may not be 
essential to the agency's needs, DLA's position was certainly not made 
clear to Henschel during the procurement.  As a result, Henschel could 
not meaningfully respond to the agency's precise relaxed needs.

In requesting only parts physically, mechanically, electrically, and 
functionally interchangeable with the specified Henschel part, but 
accepting an alternate product on the basis of only general technical 
data which specifically shows noncompliance with material functional 
aspects of the named P/N, the agency may have overstated  its minimum 
needs.[7]  Hilti, supra.  This resulted in prejudice to Henschel which 
claims that had it realized that the agency did not require the full 
performance capabilities of its P/N 20-300, it would have offered a 
lower performance, lower-priced panel.  Id. at 4-5.  Given the RFP's 
"most advantageous" offer criterion for award, Henschel's higher past 
performance rating, and the higher cost incurred by that firm in 
meeting the RFP's stated requirements, the protester has adequately 
demonstrated that but for the agency's actions, it would have had a 
substantial chance of receiving the award.  McDonald-Bradley, 
B-270126, Feb. 8, 1996, 96-1 CPD  para.  54 at 3; see Statistica, Inc. v. 
Christopher, No. 96-1148, slip op. ___ (Fed. Cir. 
Dec. 19, 1996).

Accordingly, we sustain Henschel's protest.  We recommend the agency 
identify its material requirements and if the higher performance 
characteristics of the named Henschel panel are in fact required, 
perform an evaluation of the alternate product offered by Dynalec for 
compliance with all material characteristics of the named P/N prior to 
approval.  If Dynalec is not approved, we recommend that the agency 
terminate the award to Dynalec.  If the agency's needs are less than 
those stated in the RFP, the agency should resolicit the requirement 
on a basis which reflects its actual needs.  We also recommend that 
Henschel recover its costs of pursuing its protest including 
reasonable attorneys' fees.  Bid Protest Regulations, 4 C.F.R.  sec.  
21.8(d)(1) (1997).  The protester should submit its claim for such 
costs directly to the agency.  4 C.F.R.  sec.  21.8(f). 

The protest is sustained.

Comptroller General
of the United States

1. The technical data submitted by Dynalec prior to award includes 
summary data sheets on both firms' panels, drawings of the Dynalec 
part, a copy of Henschel's technical manual, and a copy of what 
Dynalec states is its technical manual (which is a verbatim copy of 
chapter two (operating manual) of Henschel's manual with all 
references to company name, P/N, and drawings changed to substitute 
references to the Dynalec product).

2. On December 17, we dismissed as premature Henschel's protests of 
the agency's corrective action in reopening the competition and 
canceling the award to Henschel since the contract had not yet been 
terminated.  Henschel has requested reconsideration of that decision, 
however, we find no reason to change our position and deny the 
reconsideration request.  Henschel also has urged that corrective 
action was improper because the corrective action was taken in 
response to an allegedly untimely protest filed by Dynalec.  However, 
an untimely protest does not bar an agency from taking corrective 
action upon a finding of an improper procurement action.  See HDL 
Research Lab, Inc., B-254863.3, May 9, 1994, 94-1 CPD  para.  298 at 7 n.5.

3. Given the fact that product performance failure would affect the 
health and safety of personnel, and in light of the environmental 
conditions which could arise on the ship, we agree with the protester 
that certain of the identified characteristics, such as temperature 
range and drip-proof angle, are material both in terms of product 
performance and in evaluating whether the products are 
interchangeable.

4. For many of these characteristics, Dynalec to date has only 
submitted blanket statements of compliance which does not meet the RFP 
clause requirement for data.  Centroid, Inc., B-265951, Jan. 22, 1996, 
96-1 CPD 15  para.  at 3.

5. Henschel also contends that the Dynalec digital airflow panel is 
not interchangeable with the Henschel panel because the Dynalec part 
will not operate properly with the Henschel sensor (which has been 
purchased separately by the Navy).  The agency reports that although 
the Navy considers such mutual operation desirable, it is not a 
requirement of the RFP.  Nonetheless, the agency reports that since 
Dynalec was given reverse engineering information by the Navy 
regarding the interface operation between the Henschel panel and 
sensor units, which Dynalec proposes to adopt along with its own 
embedded software, the claimed proprietary Henschel software 
reasonably should not be an impediment to communication between the 
system units.  

6. The agency argues that the Henschel part's characteristics at issue 
were established through prior contract required testing of the 
Henschel panel and the Dynalec part has not yet been tested under 
similar environmental conditions.  The agency reports that the Dynalec 
panels will be tested under that firm's subcontract with a Navy prime 
contractor, but emphasizes that, in any event, no testing was required 
under the current RFP.  Nonetheless, regardless of the lack of testing 
requirements in the current RFP, the superior temperature, drip-proof, 
and other characteristics of the named Henschel P/N remain material 
characteristics of the named product that relate to the proper 
performance of the part.  Dynalec's technical data, however, shows 
that its panel does not meet these material characteristics.

7. The record shows that after Henschel filed its current protest, the 
agency specifically requested information from the Navy, the user 
agency, as to the agency's actual requirements.  However, no response 
from the Navy is included in the record.