BNUMBER: B-276740; B-276740.2
DATE: July 23, 1997
TITLE: Precision Echo, Inc., B-276740; B-276740.2, July 23, 1997
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DOCUMENT FOR PUBLIC RELEASE
The decision issued on the date below was subject to a GAO Protective
Order. This redacted version has been approved for public release.
Matter of:Precision Echo, Inc.
File: B-276740; B-276740.2
Date:July 23, 1997
Donald G. Featherstun, Esq., and Mitchell H. Segal, Esq., Seyfarth,
Shaw, Fairweather & Geraldson, for the protester.
Ronald K. Henry, Esq., Kaye, Scholer, Fierman, Hays & Handler, for
TEAC America, Inc., an intervenor.
Daniel A. Laguaite, Esq., Department of the Navy, for the agency.
David A. Ashen, Esq., and John M. Melody, Esq., Office of the General
Counsel, GAO, participated in the preparation of the decision.
DIGEST
Protest challenging evaluation and source selection is denied where
agency reasonably determined that awardee's aircraft video fatigue
data recorder demonstrated more user-friendly interface and
consequently higher reliability; since awardee's proposal therefore
was superior to protester's under the most important evaluation
criteria, agency reasonably concluded that, despite its higher price,
it represented better value than protester's.
DECISION
Precision Echo, Inc. protests the award of a contract to TEAC America,
Inc. under request for proposals (RFP) No. N00163-96-R-0336, issued by
the Department of the Navy, Naval Air Warfare Center, Indianapolis,
Indiana, for HI-8mm video fatigue data recorders (VFDR) for the
Harrier AV-8B aircraft.[1] Precision Echo challenges the
acceptability of TEAC's offer and the evaluation generally.
We deny the protest.
The solicitation provided for award of a fixed-price contract for a
base quantity of 209 VFDRs (with an option for an additional 20 units)
to the responsible offeror whose offer "provides the best value to the
Government" under the following three criteria (listed in descending
order of importance): (1) statement of work (SOW), comprised of six
subcriteria, including performance requirements,
mean-time-between-failure (MTBF), mean-time-to-repair (MTTR),
environmental survivability, safety assessment, and supportability;
(2) past performance; and (3) price. Past performance was "slightly
less important" than SOW, while price was "the least important."
Four proposals from three offerors were received by the closing time
on October 1, 1996. TEAC submitted two proposals--one for entirely
new VFDRs, and a "buy-back" proposal which offered a price reduction
based upon the return and reuse of certain components from the
agency's current VFDRs. All proposals were included in the
competitive range. Following discussions with offerors, the Navy
requested best and final offers (BAFO). Based upon its evaluation of
BAFOs, the agency determined that TEAC's buy-back proposal provided
the best value to the government. The evaluation results were as
follows:
TEAC (New/Buy-back) Precision Echo
SOW
Performance Satisfactory Plus Satisfactory Plus
MTBF Highly Satisfactory Satisfactory
MTTR Highly Satisfactory Highly Satisfactory
Survivability Satisfactory Satisfactory
Safety Satisfactory Satisfactory
Supportability Highly Satisfactory Satisfactory
Past Performance Highly Satisfactory Satisfactory
Risk Low Moderate
OVERALL NON-PRICE Highly Satisfactory Satisfactory
PRICE $[DELETED](New)/
$1,143,855 (Buy-back)
$[DELETED]
On December 20, the Navy made award to TEAC.
REUSE OF MATERIAL
TEAC offered a credit or price reduction of $[DELETED] per new VFDR
when an existing VFDR was returned in working order within 60 days of
receipt of the new replacement unit. Precision Echo maintains that
this constituted the use of government-furnished material (GFM), and
that this arrangement resulted in an unfair competitive advantage for
TEAC because the solicitation did not advise offerors that GFM would
be available, as required by Federal Acquisition Regulation (FAR) sec.
45.303-2. Precision Echo also argues that the agency improperly
failed to fully evaluate the buy-back proposal, for example, by not
considering the additional costs to the government in the event that
existing VFDRs were not returned on time and in working order.
While the Navy denies that it acted improperly or unreasonably in
accepting TEAC's alternate buy-back offer, the agency also asserts
that, in any case, Precision Echo was not prejudiced since TEAC's
other proposal--offering all new VFDRs--not Precision Echo's, was next
in line for award by virtue of its superior ratings under the SOW and
past performance evaluation factors. In this regard, a protest will
not be sustained unless the protester demonstrates a reasonable
possibility that it was prejudiced by the agency's actions, that is,
unless the protester demonstrates 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, 102 F.3d 1577 (Fed. Cir. 1996).
As discussed in detail below, we find that the Navy reasonably
determined that TEAC's proposal based on furnishing all new VFDRs was
next in line for award. As a result, Precision Echo was not
competitively prejudiced by any alleged impropriety regarding the use
of GFM in TEAC's buy-back proposal, and there is no basis for
sustaining the protest on this ground.[2]
PAST PERFORMANCE
Offerors were required to furnish "a summary of recent relevant
contracts which appropriately supports past and present positive
performance or correction of past or present performance problems."
For each relevant contract, offerors were to provide specified
contract administration data, a description of the relevance of the
contract, and a synopsis of contract performance, including
information with respect to (1) product quality, (2) product
performance, "with particular emphasis on reliability and
maintainability," (3) delivery schedule performance, and (4)
cost/price performance. The RFP advised that past and present
performance would be evaluated based on this information, as well as
data in existing government databases or from contracting offices and
on-site surveys. As noted above, TEAC's past performance was rated
highly satisfactory, and Precision Echo's only satisfactory.
Precision Echo essentially argues that the evaluation of TEAC's past
performance failed to account for schedule problems that led the
cognizant Defense Contract Management Center (DCMC) for the facility
at which TEAC proposed to complete the VFDRs to recommend against
award to TEAC. In this regard, the DCMC reported that TEAC America
had not previously manufactured VFDRs but, rather, had acted only as a
distributor of VFDRs manufactured by other TEAC entities. The DCMC
found that, while TEAC possessed satisfactory organization and
management, facilities, equipment, material and subcontracting
systems, and personnel, such that TEAC "appears able to produce" the
VFDRs, TEAC's current and past performance was unsatisfactory.
Specifically, according to the pre-award survey report, the
information available to the DCMC indicated that TEAC was responsible
for delays on approximately 89 percent of its current contracts. In
contrast, the pre-award survey on Precision Echo reported that, while
7 of its 29 current contracts (24 percent) were delinquent, Precision
Echo was responsible for the delays on only 4 of the 7 contracts, for
an effective delinquency rate of 14 percent. Precision Echo argues
that, given TEAC's record of unsatisfactory performance, the agency
could not reasonably assign its proposal a higher past performance
rating and a lower risk rating than Precision Echo's received.
In considering a protest against an agency's evaluation of proposals,
we will examine the record to determine whether the agency's judgment
was reasonable and consistent with stated evaluation criteria and
applicable statutes and regulations. ESCO, Inc., 66 Comp. Gen. 404,
410 (1987), 87-1 CPD para. 450 at 7. The information available to the
Navy at the time of the evaluation reasonably supported TEAC's
superior past performance rating.
Relevance
As noted, the RFP focused on "recent relevant contracts," specifically
calling for an explanation of the relevance of the contract to the
work contemplated here, that is, production of current generation
HI-8mm VFDRs. The record shows that the Navy discounted much of the
DCMC's report on the basis of lack of relevance; as acknowledged by
the DCMC itself, the performance information reviewed related only to
TEAC's performance as a distributor, not as a manufacturer. Further,
TEAC explained to the Navy that all of the discrepancies cited by the
DCMC related to spare parts and service/repair contracts for TEAC's
oldest model video recorders, with none related to its current line of
HI-8mm VFDRs. Moreover, TEAC advised the Navy that DCMC's information
(marginally relevant as it was) was inaccurate in significant
respects; TEAC furnished the Navy with information indicating that
significantly fewer of the cited contracts, on the order of 29 to 43
percent, could be considered delinquent.
The Navy considered the contracts for TEAC's HI-8mm VFDRs to be most
relevant for the past performance evaluation. In this regard, TEAC's
proposal discussed 12 contracts (in 8 contracting programs) for its
HI-8mm VFDRs, on all of which it reported successful performance. In
addition, in a letter to the DCMC, a copy of which was furnished to
the agency, TEAC cited an additional 15 contracts for its HI-8mm
VFDRs. (In contrast, while Precision Echo also referred in its
proposal to successful past performance on contracts for HI-8mm VFDRs,
it cited only three contracts, only one of which--albeit the
largest--was for installation in high performance jet aircraft, the
application in this contract.) This information led the agency to
conclude that TEAC's relevant past delivery schedule performance had
been "excellent." We find nothing unreasonable in the agency's
reaching this conclusion, based on the contracts most similar to the
effort under this RFP.
Quality and Reliability
In any case, the record shows that it was the quality and reliability
of the VFDRs that was the most significant discriminator in the past
performance area. Two of the four specific areas proposals were to
address in describing the quality of performance under the listed
contracts were product quality and product performance, "with
particular emphasis on reliability and maintainability." The
available data led the Navy to conclude that the overall product
quality of the TEAC VFDR was "much more desirable" than that of
Precision Echo's. Specifically, TEAC's VFDR was rated "extremely
reliable," and "much more reliable" than Precision Echo's, with a
demonstrated MTBF of at least 1,900 hours. In contrast, although
Precision Echo estimated the MTBF of its VFDRs as between 3,300 and
6,534 hours, the available past performance data showed a
significantly lower MTBF, with its latest line of VFDRs demonstrating
an MTBF of approximately 801 hours (earlier models showed an even
lower MTBF).[3]
Precision Echo challenges the evaluated MTBF numbers. According to
the protester, most of the failures attributed to its VFDR were caused
by user misuse, such as attempting to remove a tape when the aircraft
power had been turned off and before the tape had been completely
unthreaded. Precision Echo asserts that when MTBF is properly
calculated to exclude user-caused failures, the TEAC and Precision
Echo MTBFs are the same. In support of its position regarding user
misuse, Precision Echo cites an electronic mail message dated June 19,
1997 (after this protest was filed), from an officer apparently
serving on the aircraft carrier USS Nimitz, which states as follows:
Operator induced failures continue to be a big problem. The
recorder is not a milspec sailor-proof box. If an attempt is
made to remove a tape that is not completely unthreaded, the
recorder drive will be damaged and require replacement.
Different squadrons exhibit wide ranges of MTBFs which appear to
correlate to their understanding of the system. As an example,
one squadron deployed aboard the [aircraft carrier USS] Roosevelt
reported over an [1800-hour] MTBF while another squadron aboard
the same carrier was getting about [a] [100-hour] MTBF. The
demand from the squadron with the high failure rate effectively
dried up spares for lower priority (ashore and on workups)
squadrons.
The protester's argument is without merit. The technical evaluation
team (TET) was well aware that users played a role in Precision Echo's
lower MTBF. However, after conducting a "hands-on review," the TET
attributed significant responsibility for Precision Echo's VFDR's
higher failure rate to product design. According to the TET report,
"[i]t is clear that human interface problems exist with the [Precision
Echo] recorder" and "[h]uman interface problems are viewed as quality
problems." In this regard, the Navy reports that examination of the
actual VFDRs indicated that the TEAC unit was "more ruggedized" and
possessed "a more friendly user interface such that the unit was less
likely to be inadvertently damaged by Navy or Marine personnel." For
example, the agency reports that the TEAC VFDR has a mechanical
ejection system connected to the door, which raises the flight tape
out of the chassis, thereby reducing the likelihood of inadvertent
damage to the VFDR. In contrast, reports the agency, Precision Echo's
tape ejection requires an additional step--a lever located inside the
front panel must be manually released by the user, who usually is
wearing gloves. As another example, the Navy reports that vendor data
indicates that the tape transport mechanism for the TEAC VFDR has a
lower repair rate than Precision Echo's. Further, since TEAC's tape
transport mechanism, unlike Precision Echo's, is constructed of
separate subcomponents, it often can be repaired without replacing the
entire mechanism.
The Navy's conclusions were reasonable. The Navy was aware of the
possibility that many of the failures of Precision Echo's VFDRs were
due to user error, but specifically determined that these errors
likely were attributable, at least in significant part, to design
features. It appears that the features cited by the agency, including
those discussed above, reasonably could account for failures, and a
resultant lower MTBF, and Precision Echo has not shown otherwise.
Although one squadron on the Roosevelt reportedly attained an MTBF of
more than 1,800 hours using the Precision Echo VFDR (a fact not known
to the evaluators at the time of source selection), this fact alone,
even if it had been available at the time of the evaluation, would not
preclude the agency from considering the countervailing fact that
another squadron on the same ship attained a significantly lower MTBF
(no more than 100 hours, which corresponds to the experience of the
squadrons aboard the Nimitz), and the reports of Precision Echo's
significantly lower overall MTBF on F/A-18 aircraft relative to the
TEAC VFDRs similarly deployed; the agency reasonably concluded that,
on average, the Precision Echo VFDR was more difficult to use or learn
to use properly than the TEAC unit. We conclude that the Navy
reasonably viewed the past performance data as indicating that TEAC's
VFDR was more ruggedized and had a more user-friendly interface such
that it was likely to be more reliable in future use. It follows that
the Navy reasonably rated TEAC's overall past performance superior to
Precision Echo's.
PRICE/TECHNICAL TRADEOFF
TEAC's proposal was evaluated as superior to Precision Echo's under
both the most important SOW criterion and the next most important past
performance criterion. Although TEAC's proposal for all new VFDRs was
somewhat higher priced ([DELETED] percent) than Precision Echo's,
price was the least important criterion. In these circumstances, the
Navy reasonably concluded that the technical advantages of TEAC's
proposal were worth the associated price premium and that TEAC's
proposal represented the best value.
The protest is denied.
Comptroller General
of the United States
1. The VFDRs record the pilot's view of the heads-up display
information (or instrument readings) projected onto the inside of the
cockpit windshield for subsequent use in mission evaluation.
2. Precision Echo also argues that TEAC's proposal was ineligible for
award because TEAC did not complete a certification included in the
solicitation and set forth at the then-current FAR sec. 52.222-48,
entitled "Exemption from Application of Service Contract Act
Provisions for Contracts for Maintenance, Calibration, and/or Repair
of Certain ADP, Scientific and Medical, and/or Office Business
Equipment--Contractor Certification (OCT 1995)." However, the Navy
reports that this clause was included in the solicitation
inadvertently and was not applicable, since the purpose of the
procurement was not to obtain the maintenance, calibration, or repair
of the types of equipment covered by the certification. Indeed, the
solicitation indicated that the procurement was not subject to the
Service Contract Act. In these circumstances, TEAC's failure to
complete the clause did not preclude award to it.
3. This data was consistent with a May 1996 report (from the aircraft
carrier USS Nimitz) TEAC submitted with its proposal concerning the
performance of Precision Echo's HI-8mm VFDRs on the carrier's F/A-18
squadrons during a 6-month deployment beginning in December 1995. The
report termed Precision Echo's VFDRs a "high failure item" requiring
an "unsatisfactory" level of manpower to maintain. TEAC's analysis of
the performance data indicated an MTBF of less than 100 hours.