BNUMBER:  B-277505.2 
DATE:  October 31, 1997
TITLE: Crown Clothing Corporation, B-277505.2, October 31, 1997
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Matter of:Crown Clothing Corporation

File:     B-277505.2

Date:October 31, 1997

Ruth E. Ganister, Esq., and Glenn L. Blackwell, Esq., Rosenthal and 
Ganister, for the protester.
Timothy A. Sullivan, Esq., Starfield & Payne, for DeRossi & Son, Co., 
an intervenor.
Maria Ventresca, Esq., Defense Logistics Agency, for the agency.
Christina Sklarew, Esq., and Paul Lieberman, Esq., Office of the 
General Counsel, GAO, participated in the preparation of the decision.

DIGEST

1.  Protest challenging agency's evaluation of awardee's past 
performance is denied where the record shows that the evaluation was 
reasonable and consistent with the evaluation criteria set forth in 
the solicitation.

2.  Protest challenging source selection decision in best value 
procurement is denied where agency reasonably concluded that the 
protester's higher-priced proposal offered no advantages that 
warranted paying the associated price premium.

DECISION

Crown Clothing Corporation protests the evaluation of proposals and 
the source selection decision under request for proposals (RFP) No. 
SPO100-96-R-0213, issued by the Defense Personnel Support Center 
(DPSC), a field activity of the Defense Logistics Agency, for the 
manufacture of Army dress coats for men.   

We deny the protest.

The RFP was issued in December 1996, as a total small business 
set-aside, to serve  in part as a formal market survey to permit the 
agency to decide whether the current market offered a better value 
than could be obtained by exercising an option available under an 
existing contract.  It contemplated the award of an indefinite 
quantity contract for the manufacture of Army dress coats, listing 
maximum and minimum quantities for a base year with 1 option year.  
The RFP, at section L, advised offerors that proposals would be 
evaluated for both technical merit and price reasonableness, following 
the evaluation procedures in section M of the RFP.  The solicitation 
stated that award would be made to the responsible offeror whose offer 
conformed with this solicitation and was most advantageous to the 
government.  In that regard, the RFP stated that technical quality was 
more important than cost or price, but that, the more proposals were 
equal in their technical merit, the more important evaluated cost or 
price would be.

The RFP stated that technical proposals would be used to assess the 
efficiency of the offeror's production methods and the effectiveness 
of their quality control procedures.  

Offerors were instructed to submit a sample coat, referred to as a 
"product demonstration model" (PDM), as part of their proposals.  The 
RFP identified the specification for the PDM as MIL-C-44211B and 
stated that the failure of a model to conform to all requirements of 
the specification could result in an unfavorable evaluation of the 
offer.

The RFP listed the following technical evaluation factors, in 
descending order of importance:

     1.  Product Demonstration Model
     2.  Past Performance
     3.  Electronic Data Interchange Capability
     4.  Manufacturing Plan [with four subfactors]
     5.  Quality Assurance Plan
     6.  Socio-Economic Program Support

The RFP provided some narrative guidance regarding the basis for 
evaluating each of these factors.  For example, it stated that the PDM 
would be evaluated for conformance to visual and dimensional 
requirements of the specification and standard.  Regarding past 
performance, it stated that the assessment of past performance would 
be used in two ways:  to evaluate the credibility of the offeror's 
proposal, and to evaluate the relative capability of the offeror and 
the other competitors to meet the performance requirements of the 
proposed contract.  Further, it stated that evaluation of past 
performance would be a subjective assessment based on a consideration 
of all relevant facts and circumstances and would not be based on 
absolute standards of acceptable performance.  Offerors were 
instructed to describe their experience with producing the same or a 
similar item within the last 2 years.  The RFP required offerors to 
describe both delivery and quality performance under government and 
commercial contracts and advised offerors to furnish an explanation of 
substandard quality and/or delinquent delivery, where applicable.  

The RFP provided that after technical evaluation, technical proposals 
would be given an adjectival rating of highly acceptable, acceptable, 
marginally acceptable, or unacceptable.  The RFP provided some 
description of the adjectives' application to each of the evaluation 
factors.  For example, it stated that a highly acceptable PDM would 
meet the stated requirements of the specification and have no 
deficiencies, whereas an acceptable PDM would meet the stated 
requirements of the specification but would exhibit deficiencies that 
would be easily correctable during production. 

Four firms, including Crown, submitted proposals with PDMs.  Technical 
proposals were evaluated and given adjectival ratings.  After 
reviewing the evaluations, the contracting officer assigned an overall 
rating to each proposal.  Crown's proposal and the proposal of one 
other offeror, DeRossi and Son Co., were rated acceptable overall, 
based on the following ratings:

                      Crown        DeRossi

         PDM          Acceptable   Highly Acceptable

         Past 
         Performance  
                      Acceptable   
                                   Acceptable 

         EDI          Acceptable + Acceptable +

         Mfg. Plan    Acceptable   Acceptable

         Q/A Plan     Acceptable   Acceptable

         Overall      Acceptable   Acceptable

The remaining two proposals received lower ratings.  DeRossi's price 
was the lowest submitted and was substantially lower than Crown's 
price, which was the highest for both the base year and the option 
year.  

The contracting officer determined that DeRossi's proposal represented 
the best value to the government, based on its technical superiority 
and low price.  The contracting officer also determined that it would 
be more beneficial to award a contract under the solicitation at issue 
than to exercise the available option.  The contract was awarded to 
DeRossi without discussions (as permitted by the terms of the 
solicitation), and this protest followed.

Crown protests that it was unreasonable for DeRossi's proposal to 
receive an acceptable rating for past performance, that Crown's PDM 
should have been rated highly acceptable, and that the RFP award 
provision required that the source selection decision be based solely 
on technical factors without considering price.  

In reviewing whether a proposal was properly evaluated, our Office 
will not reevaluate the proposal, as the determination of whether a 
proposal meets the contracting agency's needs is a matter within the 
agency's discretion.  We will examine the record to determine whether 
the evaluators' judgments were reasonable and consistent with the 
stated evaluation criteria.  Triton Marine Constr. Corp., B-250856, 
Feb. 23, 1993, 93-1 CPD  para.  171 at 2.  Here, the record supports the 
agency's evaluation of DeRossi's and Crown's proposals.

At the core of the past performance evaluation issue is a dispute 
regarding the performance of a prior DPSC contract under which DeRossi 
was the prime contractor and Crown performed as subcontractor.  This 
contract, 
No. 95-C-0311 (-0311), was awarded to DeRossi in 1995 for the 
manufacture of approximately 177,000 Air Force dress coats.  DeRossi 
subcontracted for approximately 15,000 coats with Crown.  During the 
course of performance, slightly fewer than 4,000 coats that were 
produced by Crown were found to be defective and were ultimately 
repaired or replaced by DeRossi.  Crown essentially argues that 
responsibility for the deficiencies under that contract should be 
assessed against DeRossi as the prime contractor.  However, while 
Crown and DeRossi vigorously dispute many aspects of the performance 
of that contract, the record shows that Crown's President admitted 
responsibility for the problem at the time it occurred, stating that 
the defects were caused by a breakdown in Crown's sewing section.[1]  
Although a prime contractor is responsible for the performance of its 
subcontractor, Neal R. Gross & Co., Inc., B-275066, Jan. 17, 1997, 
97-1 CPD  para.  30 at 4, a protester will not be heard to challenge the 
past performance of a competing offeror as a prime contractor based on 
its deficient performance as that competing offeror's subcontractor.   
Particularly in light of Crown's concession, the agency reasonably 
viewed Crown as primarily responsible, since the defective articles 
were produced by Crown and shipped directly by Crown to the agency, 
whereas the coats that DeRossi produced were both acceptable and 
delivered within the established schedule.  Moreover, even if DeRossi 
is considered responsible based on its obligation as the prime 
contractor, the agency reasonably rated DeRossi's proposal acceptable 
overall for past performance based on other information in the record 
that is not disputed.  

The RFP instructed offerors to describe their experience with 
producing the same or a similar item within the last 2 years.  
DeRossi's proposal listed contracts under which it was currently 
performing and an additional 14 contracts for men's and women's coats 
that had been awarded to the firm since 1994; for each of these, 
delivery was made on or ahead of schedule.  The evaluation sheet noted 
that the standard for past performance is met when "[p]revious 
performance demonstrates ability to meet contract delivery schedules 
without significant quality problems."  Under the evaluation scheme 
established in the RFP, an acceptable rating for past performance is 
given when an "[o]fferor's record of past performance demonstrates an 
acceptable commitment to customer satisfaction and an overall record 
of timely delivery of quality products/services."  The evaluation 
sheet for DeRossi's proposal includes the following summary narrative 
justification of the rating given to DeRossi for this factor:

     Highly experienced.  Deliveries are always on time or ahead of 
     schedule.  One quality problem noted but only on the portion 
     subcontracted to Crown.  To DeRossi's credit, this portion they 
     quickly replaced/repaired.  No negative impact on supply 
     position.

Regardless of whether DeRossi or Crown was ultimately responsible for 
the defective coats under contract -0311, it is clear from the record 
that these coats represent a small fraction of the coats delivered 
under that contract, and an even smaller fraction of the total 
deliveries made by DeRossi during the 2-year period being evaluated.  
Further, the agency explicitly took into account the performance 
problem that Crown insists should be attributed to DeRossi but also 
recognized that DeRossi had repaired or replaced the defective coats 
quickly enough to still meet its deadline under that contract.  In 
view of the fact that DeRossi had performed all of the other numerous 
contracts listed in its proposal without any deficiencies and in a 
timely manner, the agency had a reasonable basis for its determination 
that DeRossi's overall past performance "demonstrates ability to meet 
contract delivery schedules without significant quality problems."  In 
short, we conclude that the acceptable rating given to DeRossi's past 
performance gives appropriate consideration to DeRossi's performance 
under contract -0311 and was reasonable and consistent with the terms 
of the RFP.  

Crown also objects to its own evaluation under the past performance 
factor, arguing that it should have been rated highly acceptable.  The 
record shows that Crown listed six contracts that it had performed, 
including the subcontract with DeRossi.  Although four of the five 
contracts that Crown performed as the prime contractor were delivered 
on or ahead of schedule, under one of its larger-volume contracts, the 
firm's delivery was late by nearly 3 weeks and the delinquency was 
considered inexcusable.  In order to satisfy the standard established 
in the RFP for a highly acceptable rating for this factor, an 
offeror's record of past performance must demonstrate "an exceptional 
commitment to customer satisfaction and a superior overall record of 
timely delivery of quality products."  Crown's inexcusable delinquency 
under one of its large volume contracts by itself provides a 
reasonable basis for the agency's conclusion that Crown's performance 
record fell short of the highly acceptable standard, and instead fell 
under the standard of demonstrating "an acceptable commitment to 
customer satisfaction and an overall record of timely delivery of 
quality products."  In sum, the record simply does not support Crown's 
contention that its past performance record should have been rated 
higher than DeRossi's.

Crown also argues that the agency improperly considered price in its 
source selection decision.  Crown alleges that the agency's deletion 
of a requirement in the RFP evaluation section for a "business 
evaluation," which calls for pricing information and a cost realism 
evaluation, "tells offerors distinctly that technical qualifications 
will be the determining factors regardless of prices offered."

This argument is frivolous.  The RFP stated that the award would be 
made to the offer that was most advantageous to the government and it 
clearly indicated that price was part of this assessment.  Further, 
the evaluation provision specifically stated that price would become 
more important as technical proposals became more equal in technical 
merit.  Crown's reading of the solicitation is inconsistent with the 
terms of the selection clause and would call for the legally 
impermissible selection of the highest technically rated proposal 
without consideration of cost.  Such a result is inconsistent not only 
with the RFP but with the requirement in the Competition in 
Contracting Act of 1994 (CICA) that the government consider cost or 
price as a significant factor in all its selection decisions.  See 10 
U.S.C.  sec.  2305(a)(2)(A) (1994); Federal Acquisition Regulation  sec.  
15.605(b)(1)(i).  An evaluation and source selection which fails to 
give significant consideration to cost is inconsistent with CICA and 
cannot serve as the basis for a reasonable source selection.  See 
Coastal Science and Eng'g, Inc., 69 Comp. Gen. 66, 67-68 (1989), 89-2 
CPD  para.  436 at 3.  

DeRossi proposed the lowest price, and the total price difference 
between DeRossi's proposal and Crown's proposal was more than a 
million dollars in a procurement with a total value of approximately 
$16 million.  Even if Crown's overall technical rating were equal to 
DeRossi's, which would be the case if the rating for its PDM were 
changed to highly acceptable,[2] the price difference would justify 
the selection of DeRossi as the best value offeror.  As noted above, 
RFP clause 52.215-9P19, "Evaluation Factors for Award," expressly 
stated that "[a]s proposals become more equal in their technical 
merit, the evaluated cost or price becomes more important."  Thus, 
even if we were to conclude that the two proposals should have been 
considered technically equal, the price advantage offered by DeRossi 
provides a reasonable basis for DPSC's selection of DeRossi's proposal 
as representing the best value to the government.  

The protest is denied.

Comptroller General 
of the United States

1. Crown raises a number of allegations concerning that contract's 
performance, such as whether additional defects were present in coats 
manufactured by DeRossi that should have caused the rejection of 
additional lots (but did not) and whether the agency held Crown 
responsible for the deficient coats under the evaluation of Crown's 
proposal under other solicitations, which are simply not relevant to 
the issue of whether DPSC's evaluation of past performance under this 
procurement was reasonable.

2. Crown also protests that its PDM was improperly evaluated.  DPSC 
gave the protester's PDM an acceptable rating, noting as the only 
minor deficiency that "the second and third front buttonholes are 
slightly crooked."  Crown disputes this finding as incorrect and 
argues that its PDM should have been rated highly acceptable.  We will 
not resolve this matter since Crown would not be entitled to the award 
even if we agreed that the buttonholes on its PDM were not crooked and 
that its PDM therefore should have been rated highly acceptable.