BNUMBER: B-277973
DATE: December 15, 1997
TITLE: Kahn Instruments, Inc., B-277973, December 15, 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:Kahn Instruments, Inc.
File: B-277973
Date:December 15, 1997
Mary Beth Bosco, Esq., and Lynn T. Burleson, Esq., Patton Boggs, for
the protester.
Russell P. Spindler, Esq., Naval Air Systems Command, for the agency.
John Van Schaik, Esq., and Michael R. Golden, Esq., Office of the
General Counsel, GAO, participated in the preparation of the decision.
DIGEST
Protest that agency improperly evaluated protester's alternate design
proposal for digital hygrometers as technically unacceptable and
impermissibly made award on the basis of initial proposals is denied,
where record shows agency reasonably concluded that the proposal was
unacceptable due to informational deficiencies, and award to remaining
technically acceptable offeror without discussions was consistent with
the solicitation.
DECISION
Kahn Instruments, Inc. protests the rejection of its proposal and the
award of a contract to Panametrics under request for proposals (RFP)
No. N68936-97-R-0157, issued by the Naval Air Warfare Center, Weapons
Division for 215 digital hygrometers.
We deny the protest.[1]
BACKGROUND
The hygrometers called for by the RFP are to be used to measure the
water content of various gases that cool the Sidewinder AIM-9M
missile. Although hygrometers are commercially available, due to the
Navy's special requirements, commercial, off-the-shelf hygrometers
were not considered to meet the agency's needs. The Navy developed a
prototype hygrometer and drawings based on a commercially-available
Panametrics hygrometer and purchased from Panametrics a quantity of
the instruments built to the Navy's drawings. As issued, the current
RFP included those Navy-developed drawings and essentially permitted
only offers meeting those drawings. In a protest and a series of
letters to the agency, Kahn complained that the RFP was unduly
restrictive of competition since it did not permit offers based on
other than the Panametrics instrument. The Navy amended the RFP to
permit alternative offers meeting certain listed operational
requirements.
The RFP and accompanying drawings required the hygrometer to be built
into a portable carrying case with two detachable halves. One half of
the case is to house the hygrometer instrument itself, either the
referenced Panametrics instrument or an acceptable alternative. The
other half of the case is to house a sampling system and other parts.
The RFP also called for the sensor--the part of the system that comes
into contact with the gas to be tested, Hearing Transcript (Tr.) at 8,
10--to be mounted in the sampling system, not in the hygrometer
itself.
Although commercially available hygrometers were not considered to
meet the agency's needs without modifications, the RFP was issued as a
commercial buy. The RFP required that offers show:
A technical description which shall include a comprehensive
statement of the offeror's understanding of the work required in
this solicitation and the offeror's method of approach to attain
contract objectives. The technical description shall also be
specific, detailed, and complete enough to demonstrate that the
offeror has a thorough understanding of the requirements needed
to achieve the specifications of the products described in the
solicitation. The technical description may include product
literature, or other documents, but shall not include
advertisements or unsubstantiated opinions.
The RFP stated that award would be made to the responsible offeror
whose proposal, conforming to the solicitation, was most advantageous
to the government, price and other factors considered. The RFP listed
as evaluation factors:
(1) technical capability of the item offered to meet the government's
requirement, (2) past performance, and (3) price, and stated that when
combined, the first two factors were significantly more important than
the third. The RFP also stated that the government intended to award
a contract without discussions with offerors so that initial proposals
should contain the offeror's best terms. The RFP, however, reserved
the right for the agency to conduct discussions.
Two proposals were submitted. Kahn's proposal, priced at [deleted],
did not offer the Panametrics commercial hygrometer; rather it was
based on a commercially-available Kahn Cermax hygrometer. Kahn's
technical proposal consisted of the following sections:
I. Technical Presentation Summary
II. Technical Description
III. Statement of Compliance
IV. First Article Testing
The Navy's technical evaluator found Kahn's proposal to be technically
unacceptable. Generally the evaluator concluded that, while there
were some specifications in Kahn's proposal, the proposal did not
explain how the complete instrument would be assembled. Related to
this general consideration, the evaluator concluded that Kahn's
proposal was unacceptable due to the failure to establish compliance
with a number of specific requirements. Among these, the evaluator
concluded that the proposal indicated that the sensor was to be housed
in the hygrometer and not in the sample system, as required by the
RFP; the sample gas is connected to the hygrometer, not the sampling
system, as required; and the proposal did not meet a requirement that
the proposed system function using alternating current (AC) power.
In its proposal, Panametrics proposed to construct hygrometers in
accordance with the RFP specifications and drawing package. The
Panametrics proposal, priced at $2,311,250, was considered technically
acceptable as submitted. The Navy reports that it awarded the
contract to Panametrics based on its initial proposal, without
discussions.
Kahn first disputes the Navy's conclusion that the Kahn proposal did
not include the information required by the RFP to show that the
proposal met the specifications. According to Kahn, its proposal
carefully extracted each of the Navy's requirements from the RFP and
demonstrated Kahn's understanding and compliance with each. Kahn
also challenges each of the specific flaws attributed to its proposal
by the evaluator. In addition, Kahn argues that the Navy applied a
different standard to its evaluation of the Panametrics proposal.
According to Kahn, in some instances, the Panametrics proposal
contained the same information as that contained in the Kahn proposal,
yet in Kahn's case the Navy claims it could not understand what Kahn
was proposing, while in Panametrics' case, the Navy had no such
problem. Finally, Kahn argues that in spite of the Navy's
representation that award was made to Panametrics based on its initial
proposal, discussions occurred with Panametrics and therefore should
have been conducted with Kahn.
KAHN'S PROPOSAL
In reviewing a technical evaluation, we will not reevaluate proposals;
rather, we will examine the record to ensure that the evaluation was
reasonable and consistent with the RFP evaluation criteria and
applicable statutes and regulations. Advanced Am. Diving Serv., Inc.,
B-274766, Jan. 2, 1997, 97-1 CPD para. 1 at 3. Based on our review of the
record, we conclude that the Navy reasonably determined that Kahn's
alternate design proposal was technically unacceptable for lack of
adequate supporting information. We discuss some areas of the
evaluation below.
The Navy's basic problem with the Kahn proposal was its lack of
information concerning how the firm would modify the Cermax commercial
instrument and how that instrument would be mounted in the two-part
case required by the RFP. As explained, the RFP called for the
hygrometer instrument itself to be housed in one part of the carrying
case and the sampling system to be housed in the other, separable part
of the case. Concerning how the firm's commercial unit would be
modified to fit in the two-part case, Kahn's representative testified
that this would be done by abandoning the case for the commercial
unit, and fastening the display and the internal parts of the
commercial unit to a front panel, which would be mounted in a case
meeting the requirements of the RFP. Tr. at 29-30, 50-51.
Nonetheless, the Technical Description in Kahn's proposal appears to
indicate that the commercial instrument, including the commercial
case, would be provided. The specifications on the second page of the
Technical Description, including dimensions, weight, and other details
of construction, describe the commercial case. The specifications
also include commercially available options such as a carrying bag, a
shoulder strap and a spare battery pack, which were not required by
the Navy's drawings. To the Navy, regardless of other representations
in the proposal, these references raised a question as to what Kahn
was proposing and whether the firm understood the agency's
requirements. Tr. at 52-53.
In addition, beyond the problem of what the unit would look like and
how it would fit in the case, the Navy's evaluator was concerned that
Kahn's proposal did not meet the RFP requirement that the sensor be
mounted in the sampling system, not in the hygrometer itself. As
Kahn's representative acknowledged at the hearing, the Kahn Cermax
commercial hygrometer has an internal sensor. Tr. at 25. As Kahn
notes, its proposal stated that the firm was offering the Cermax
commercial instrument with "the optional sampling system," and that
the "[s]ensor, transducer are mounted in sample system." Nonetheless,
the proposal otherwise led the Navy's evaluator to question those
representations. As the Navy notes, the first page of the Technical
Description in Kahn's proposal described the firm's Cermax hygrometer.
A paragraph on that page which begins with a description of Kahn's
commercial Cermax instrument states that "[m]easurements are made by
connecting the sample gas to the inlet port compression fitting and
turning the instrument on . . . ." In the context of that paragraph,
the Navy's evaluator understood the reference to "the instrument" as a
reference to the hygrometer--raising a question of whether the
proposal complied with the RFP requirement that the sensor be located
in the sample system.
Kahn's response to these concerns is essentially twofold. First, Kahn
maintains that other sections of its proposal, in particular the
Statement of Compliance, included information concerning how the
instrument was to be assembled and what it would look like. As to the
overall configuration of the hygrometer and the sample system in the
carrying case, Kahn points to the following language in the Statement
of Compliance in its proposal:
Attachment 2 Enclosure 1, Para. 1.0
Also Enclosure 2, Para. 3.0
Kahn maintains that by means of this language, which is a reference to
provisions in the RFP, the firm agreed to provide a configuration for
the hygrometer and the sample system in an acceptable carrying case in
accordance with the Navy's drawings. That provision, Kahn argues,
essentially incorporated into the proposal various requirements
concerning dimensions, workmanship, assembly and construction.
Second, Kahn argues that the RFP did not require offerors to describe
what the assembled instrument would look like or how it would fit
together. Noting that the solicitation called for a technical
description, which could include product literature that exhibited an
understanding of the requirements needed to achieve compliance, Kahn
argues there was no requirement that offerors provide drawings or
sketches of the products offered. Kahn maintains that it met the RFP
requirements by including in its proposal a narrative description of
its proposed product's operational capabilities--the Technical
Presentation Summary, a narrative technical description of the product
which included a one-page sheet outlining the salient characteristics
of the product being offered to the Navy--the Technical Description,
and the Statement of Compliance, which parsed out each individual
requirement of the RFP and demonstrated how Kahn would comply.
Notwithstanding Kahn's attempts to refute the Navy's concerns, we
conclude that those concerns were reasonable. Concerning the
Statement of Compliance, while that section of Kahn's proposal appears
to cover many of the specific requirements which are in dispute, due
to information in other sections of the proposal, in particular the
section labeled Technical Description, the Navy's evaluator reasonably
questioned whether the proposal met the requirements. In this
respect, although Kahn asserts that its Statement of Compliance shows
the firm's commitment to the requirements of the RFP for dimensions,
workmanship, construction and assembly of the complete instrument,
various provisions of the Technical Description also covered these
matters, in some cases in a contradictory fashion. For example, a
page of the Technical Description labeled Specifications included the
dimensions for the case for Kahn's commercial Cermax hygrometer, which
Kahn concedes would not fit in the case required by the RFP. Tr. at
30. Although Kahn now explains that it planned to discard the
commercial case, this was not clear from the proposal.[2]
Moreover, although Kahn argues that those specific provisions of the
Technical Description did not apply because those provisions dealt
with the firm's commercial item, this was far from clear from the
proposal. Essentially, the problem is that the Technical Description
section of Kahn's proposal included two pages which, although they
appear to have been prepared specifically for this solicitation, also
included information which related only to the Cermax commercial
instrument and which was not intended to apply to this proposal. To
add to the confusion, although Kahn now discounts some of the
information on those two pages of the Technical Description as simply
related to its commercial instrument, Tr. at 52-54, 83-85, those pages
also include information which Kahn has repeatedly asserted was
prepared specifically for this proposal in order to show the actual
product which the firm would supply.[3]
We think it is significant that the section of the proposal labeled
"Technical Description" included these ambiguities. As explained, the
RFP called for a "technical description" to demonstrate the offeror's
"understanding of the work required in this solicitation and the
offeror's method of approach to attain contract objectives." The
technical description was to "be specific, detailed, and complete
enough to demonstrate that the offeror has a thorough understanding of
the requirements needed to achieve the specifications of the products
described in the solicitation." Thus, although Kahn is correct that
there was no specific requirement of the RFP that its proposal
describe what the assembled instrument would look like, or how it
would fit together, the very section of the proposal which the RFP
stated was to demonstrate an offeror's understanding of the work
required in the RFP, in fact, caused the most confusion about Kahn's
understanding and intentions. Under the circumstances, the Navy's
technical evaluator reasonably determined that Kahn's proposal was
unacceptable as submitted.
THE PANAMETRICS PROPOSAL
As explained above, Kahn also argues that the Navy applied a different
standard in its evaluation of the Panametrics proposal. Kahn argues
that, in some instances, the Panametrics proposal contained
inconsistencies between the commercial literature in the proposal and
other parts of the proposal--as did the Kahn proposal-- yet in Kahn's
case, the Navy claims it could not understand what Kahn was proposing,
while the Navy had no such problem with the Panametrics proposal. For
example, Kahn notes that the Panametrics proposal included commercial
literature for the firm's commercially-available hygrometer, the
Panametrics System 280, and that literature included the notation that
"AC operation of the unit is not possible in this configuration."
Thus, according to Kahn, the Navy ignored a statement of noncompliance
in the commercial literature in the Panametrics proposal.
We reject this contention. While permitting alternative offers, the
RFP called for offers to "manufacture, test and validate the design of
the TTU-546/E, Digital Hygrometer in accordance with Government
Baseline Drawing Number 639AS9334." That drawing depicts the entire
unit as designed by the Navy, based on the Panametrics commercial
instrument. The cover letter to the Panametrics proposal states that
the firm was proposing "Digital Hygrometers, NAWC P/N: TTU-546/E," and
that the proposal includes standard product literature for the firm's
"commercial equivalent to the TTU-546/E," the System 280 Moisture
Analyzer.[4] In addition, the next page of the Panametrics proposal
states that the firm is offering a quantity of "280-NAWC" units. One
of the drawings in the Navy's drawing package indicates that
Panametrics is an approved source of supply for the instrument
depicted in the drawings under its vendor part number "280-NAWC."
Under the circumstances, it was clear that Panametrics was offering to
supply the precise instrument identified in the Navy's drawing
package.
DISCUSSIONS
Kahn argues that the agency should have held discussions to permit it
to correct any deficiencies in its proposal. However, there generally
is no requirement that an agency hold discussions when the
solicitation advises offerors that the agency intends to make award
without discussions. Federal Acquisition Regulation (FAR) sec.
15.610(a)(3) (June 1997); Advanced Am. Diving Serv., Inc., supra, at
7-8. Since the solicitation advised offerors that the agency intended
to make award without discussions, Kahn could not presume that it
would have a chance to improve its proposal through discussions. The
burden was on Kahn to submit an initial proposal containing sufficient
information to demonstrate its merits, and the protester ran the risk
of having its proposal rejected by failing to do so. Id. Given that
the solicitation advised offerors of the possibility of award without
discussions, and our conclusion that the Navy reasonably determined
that Kahn's proposal was unacceptable as written, there was no
requirement for the agency to hold discussions with Kahn.[5]
Kahn nonetheless argues that, in spite of the Navy's representation
that it awarded the contract to Panametrics without discussions, the
record shows that discussions were conducted with Panametrics.
Specifically, Kahn notes that, although there is no record of any
discussions, the contract awarded to Panametrics differs from the
Panametrics proposal in three instances. According to Kahn, the only
explanation for these differences is that the Navy must have conducted
discussions with Panametrics.
Concerning the first of these three instances, Kahn notes that the RFP
required the delivery and testing of a first article unit. The RFP
permitted waiver of the first article requirement when supplies
identical to those called for by the RFP had previously been furnished
and accepted by the government. Kahn notes that the Panametrics
proposal requested waiver of first article testing, although the
proposal admitted that testing had not been completed on the firm's
previously delivered units. Kahn also notes that, in spite of the
fact that, at the time of proposal submission, the Panametrics unit
had not completed testing, the contract awarded to Panametrics waived
the first article requirement. According to Kahn, some discussions
must have occurred between the Navy and Panametrics in order to
approve the waiver of first article testing.
Kahn argues that discussions also must have been occurred with
Panametrics concerning the delivery schedule, since the schedule in
the contract differs from that proposed by Kahn. The RFP included a
desired delivery schedule, but also allowed offerors to propose an
alternative delivery schedule so long as such an alternative schedule
required delivery of the first article no later than 90 days after the
date of the contract, and the production quantity no later than 820
days after the date of the contract. Panametrics proposed waiver of
the first article requirement and a phased delivery schedule of "First
10 units delivered in 12-14 weeks ARO [after receipt of order] -
Remainder of units will be delivered at a rate of 10/month."
In contrast, Kahn notes, the contract awarded to Panametrics stated a
delivery schedule of 98 days after the date of the contract for the
first 10 units and 737 days after the date of the contract for the
remaining units. Kahn maintains that the 737 days permitted by the
contract for delivery of all units is different than the schedule in
the Panametrics proposal. In this regard, Kahn argues that, under the
schedule in the Panametrics proposal, after delivery of the first ten
units in 84 to 98 days (12 to 14 weeks), delivery of the remaining
units at the proposed rate of 10 per month, would take 21 months, or
644 days (using seven 30-day months and fourteen 31-day months).
According to Kahn, since the first 10 units were to be delivered in 84
to 98 days, and the remainder were to be delivered in an additional
644 days, the Panametrics proposal permitted delivery of all required
units in 728 to 742 days. Kahn argues that discussions must have
occurred between the Navy and Panametrics in order for the contract to
be different than the proposal.
In response to these contentions, the Navy explains that after
Panametrics submitted its proposal, the contract specialist
responsible for this solicitation was informed by an agency technical
representative that first article approval had been granted to
Panametrics. Based on that approval, the contract document was
drafted to reflect waiver of the first article requirement.
Concerning the delivery schedule, the Navy explains that, once he was
informed of the waiver of the first article, the contract specialist
calculated the delivery schedule for the contract based on
Panametrics' proposal. The Navy also reports that there was no
contact with Panametrics concerning the delivery schedule.
We have no basis to conclude that the Navy conducted discussions with
Panametrics. The Navy denies there were any communications with
Panametrics. In addition, there was no need for discussions with
Panametrics; any information which the Navy needed concerning either
the first article waiver or the delivery schedule was either in the
proposal submitted by Panametrics, or was available from agency
sources. In this respect, since the decision as to whether to waive
the first article requirement was the Navy's to make, there would have
been no reason to communicate with Panametrics concerning a waiver.
Concerning the inconsistency between the delivery schedule in the
Panametrics proposal and the delivery schedule in the contract, the
proposed schedule was acceptable as submitted, and Kahn does not argue
otherwise. Under the circumstances, there was no reason to
communicate with Panametrics. Moreover, the only difference between
the schedule in the Panametrics proposal and the contract schedule was
that the contract included a conversion of weeks and months set forth
in the proposal to days; even with that conversion, the contract was
consistent with the proposal. Under these circumstances, even if the
Navy had communicated with Panametrics concerning the delivery
schedule, such communication would have constituted clarifications,
not discussions. See FAR sec. 15.601 (June 1997); Deployable Hosp. Sys.,
Inc., B-260778.2, B-260778.3, Feb. 12, 1996, 96-1 CPD para. 113 at 6, n.
4.[6]
Kahn also argues that discussions must have occurred with Panametrics
concerning the requirement of the RFP for a small business
subcontracting plan. Kahn notes that the RFP incorporated by
reference the clause located at FAR sec. 52.219-9 (Alt. II), which states
"Proposals submitted in response to this solicitation shall include a
subcontracting plan . . . ." Kahn notes that, although the
Panametrics proposal included no such plan, the Navy's business
clearance memorandum refers to the submission of such a plan by
Panametrics. According to Kahn, the submission of such a plan by
Panametrics after proposals were due must have involved some
discussions between the Navy and Panametrics.
We do not agree. The requested subcontracting plan relates to an
offeror's responsibility, even where the solicitation requests the
offeror submit the plan with its proposal. A.B. Dick Co., B-233142,
Jan. 31, 1989, 89-1 CPD para. 106 at 3. Thus, we have found that an
agency's request for a subcontracting plan does not constitute
discussions or require that revised proposals be solicited from all
offerors. Id.[7]
The protest is denied.
Comptroller General
of the United States
1. We conducted a hearing on this protest to receive the testimony of
the Navy's technical evaluator and a representative of Kahn.
2. The specific reference in the Statement of Compliance upon which
Kahn relies also was a source of confusion and ambiguity in the
proposal. As noted above, the reference in the proposal was to:
Attachment 2 Enclosure 1, Para. 1.0
Also Enclosure 2, Para. 3.0,
Those provisions of the RFP essentially required that assembled
hygrometers under the contract would be examined in accordance with
the RFP specifications and drawings for compliance with requirements
for dimensions, surface finish, workmanship, assembly, construction,
identification plates, and stowage of loose parts. Both provisions
also stated that hygrometers not meeting those requirements could be
rejected. Although Kahn argues that its reference to those provisions
was a commitment to meet all of the RFP requirements for dimensions,
surface finish, workmanship, assembly, construction, identification
plates, and storage of loose parts, we think it was reasonable for the
Navy's evaluator to question whether Kahn had merely committed to
examine the units for compliance with various underlying requirements,
as a method of quality control, as opposed to committing to meet those
underlying requirements.
3. For example, in its October 20 comments, Kahn--arguing that its
proposal contained sufficient information to show compliance--stated
that, in addition to its Technical Presentation Summary, its proposal
included "a technical description of the item itself, including a
one-page specification sheet that set forth each of the salient
characteristics of the product." These references are to the two
pages of the Technical Description in question.
4. As contrasted with Kahn's proposal, there is no confusion in the
Panametrics proposal concerning the commercial literature. The
commercial literature in the Panametrics proposal is clearly
identifiable as such, so there is no ambiguity, as there was with the
Kahn proposal, concerning whether the commercial literature took
exception to RFP requirements.
5. Alternatively, Kahn argues that the Navy could have communicated
with Kahn, without conducting discussions, in order to address any
concerns the evaluator had with the firm's proposal. According to
Kahn, such communications would not have constituted discussions, but
would have been simply clarifications. This is incorrect. Kahn's
proposal was unacceptable. Since discussions occur when information
provided by an offeror is essential for determining the acceptability
of a proposal, FAR sec. 15.601 (June 1997), any communications with Kahn
in order to give the firm an opportunity to make its proposal
acceptable would have constituted discussions.
6. Kahn also argues that the Navy improperly waived the first article
requirement. While the contract indicates that the first article
requirement was waived, the Navy informs us that the waiver may have
been premature at the time the contract was awarded since, although
Panametrics had passed first article testing under the earlier
contract, it had not been given first article approval. We do not
see, and Kahn does not explain, how the first article waiver, even if
it was granted in error, would affect the propriety of the award to
Panametrics.
7. Kahn also argues that its proposal should have been included in the
competitive range and that the Navy improperly created a competitive
range of one. The premise of this allegation is incorrect; the Navy
did not create a competitive range. Rather, as explained above,
Kahn's proposal was rejected as technically unacceptable and award was
made to Panametrics based on its technically acceptable, initial
proposal. In addition, Kahn argues that the award was flawed because
the Navy failed to evaluate past performance and failed to determine,
as required by the RFP, that the Panametrics proposal was the most
advantageous to the government. We disagree; since Kahn's proposal
was unacceptable as submitted and Kahn was not eligible for award,
only the Panametrics proposal was eligible for award. Under the
circumstances, the past performance evaluation and the determination
of which proposal was the most advantageous to the government could
have had no impact on Kahn's competitive position.