BNUMBER: B-278478.4
DATE: September 21, 1998
TITLE: CVB Company, B-278478.4, September 21, 1998
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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:CVB Company
File: B-278478.4
Date:September 21, 1998
Robert A. Brunette, Esq., for the protester.
Ralph L. Kissick, Esq., Ronald S. Perlman, Esq., and Jeffrey L.
Karlin, Esq., Zuckert, Scoutt & Rasenberger, for Pacific Consolidated
Industries, the intervenor.
John Lariccia, Esq., Marian E. Sullivan, Esq., and Mark Frazier, Esq.,
Department of the Air Force, for the agency.
Susan K. McAuliffe, Esq., and Christine S. Melody, Esq., Office of the
General Counsel, GAO, participated in the preparation of the decision.
DIGEST
1. Protest of agency's evaluation of proposals is denied where record
shows that evaluation was reasonable and consistent with the stated
evaluation factors.
2. Agency's proposed award to offeror that submitted lower-rated,
lower-priced proposal in a best value procurement (where solicitation
stated that technical merit was significantly more important than
price) is proper where the source selection authority performed a
rational integrated assessment of the proposals and reasonably
determined that the price premium involved in an award to the
protester on the basis of its higher-rated, higher-priced proposal was
not justified given the favorable level of technical competence
available at the lower price.
DECISION
CVB Company, a joint venture of CV International, Inc. and Bauer
Compressors, Inc., protests the proposed award of a contract to
Pacific Consolidated Industries (PCI) under request for proposals
(RFP) No. F41608-97-R-20209, issued by the Department of the Air Force
for self-generating nitrogen service carts (SGNSC). CVB principally
contends that the evaluation of proposals and source selection
decision were unreasonable and inconsistent with the stated evaluation
factors for award.
We deny the protest.
The RFP, set aside for small business concerns, contemplated the award
of a fixed-price requirements contract for a 2-year base period, with
a 3-year option period, for an estimated quantity of 1,420 SGNSCs.
RFP sec. B, sec. L-65C, and Amendment No. 8. The required SGNSC is a diesel
engine-powered, self-contained, towable unit capable of producing
high-purity nitrogen gas from ambient air using air separation
membrane technology; the carts are to be used in servicing military
aircraft (e.g., in the service of tires, struts, accumulators, and
external receivers) in all operating environments. The RFP, sec. M-902,
provided for award on the basis of the proposal that "provides the
best overall value to satisfy Air Force needs." In this regard,
section M-900.A.1 provided that the agency would award a contract
under the solicitation "to the responsible offeror whose offer,
conforming to the solicitation, has the highest degree of credibility
and whose performance can best meet the Government's requirements at
an affordable cost."[1]
The RFP, sec. M-900.A.1, stated that award would be based on an
integrated assessment of the results of the evaluations of the
technical and price proposals, proposal and performance risk, and
general considerations.[2] The technical proposals were to be
evaluated under the following factors (and subfactors), listed in
descending order of importance: design (including unit design,
reliability/maintainability, and first article test plan); and
production (including facilities, quality programs, and production
plan). RFP sec. M-900.B.1. Offerors were advised that "to allow
innovation and encourage superior design, evaluators may reward
proposals which improve upon the requirements of the purchase
description, with emphasis on mean time between failure, unit
dimensions, weight, and operating time before refueling." Id.
Proposed prices were to be evaluated for realism and reasonableness.
RFP sec. M-900.B.2.
Section M-900.A.3 of the RFP specified as follows regarding the
respective weights of the evaluation factors in the overall evaluation
scheme:
The Technical Area is significantly more important than cost or
price, with cost or price and general considerations receiving
equal consideration. The Technical Area will receive a color
rating and a performance risk rating, and the technical factors
will receive color ratings and proposal risk ratings.[[3]] Each
of the ratings shall be given equal consideration in making an
integrated source selection decision.[[4]]
Eight firms submitted proposals by the closing time for receipt of
initial proposals on June 30, 1997. Discussions were then conducted,
through the issuance of clarification and deficiency reports, with the
six offerors that submitted proposals determined to be within the
competitive range for award, including CVB and PCI. Initial best and
final offers (BAFO) were received on November 3, and second BAFOs,
submitted in response to certain amended solicitation terms, including
a reduction in the stated estimated quantity, were received on
February 18, 1998.
The source selection evaluation team (SSET) assigned a [deleted] color
rating to CVB's proposal for the "technical area" (reflecting the
[deleted] color rating received under the more important "design"
technical evaluation factor, and the [deleted] color rating received
under the less important "production" technical evaluation factor).
CVB's proposal also received a [deleted] performance risk rating under
the technical area, and [deleted] proposal risk ratings under the
design and production technical evaluation factors. The CVB proposal
was ranked highest technically of the offers received.
PCI's proposal was ranked third highest technically (slightly below
another offeror's higher-priced proposal), with an overall [deleted]
color rating for the "technical area" (reflecting the [deleted] color
ratings the proposal received under the "design" and "production"
technical evaluation factors). Like CVB's proposal, PCI's proposal
received a [deleted] performance risk rating under the technical area,
and [deleted] proposal risk ratings under both technical evaluation
factors.
CVB's evaluated price was $[deleted], which was the second highest
price among the six competitive range offerors; PCI's evaluated price,
at $[deleted], was the lowest received (at an amount only slightly
lower than proposed by two other offerors). All of the offerors'
proposed prices were determined to be realistic and reasonable in
terms of proposed approach; the difference between CVB's and PCI's
proposed prices [deleted] primarily was attributed to PCI's lower
overhead and material costs.
In his source selection decision document (SSDD), the source selection
authority (SSA) compared the strengths, weaknesses, evaluation
ratings, and proposed prices of the six competitive range offerors.
In making his best value determination for award, the SSA expressly
recognized that CVB's proposal received the highest technical rating,
and that technical merit was significantly more important than cost.
The SSA determined, however, that "the additional technical benefits"
offered by CVB compared to those offered by PCI did not merit paying
the associated [deleted] cost premium (slightly more than $[deleted]
million) over PCI's proposed price.[5] SSDD at 7. The offerors were
subsequently notified that the agency intended to award the contract
to PCI, since PCI submitted the proposal found to offer the best value
to the government. This protest, which includes supplemental protest
grounds filed by CVB in response to the agency's document productions,
followed.
CVB challenges the agency's evaluation of its and PCI's technical
proposals as unreasonable. The evaluation of technical proposals is a
matter within the discretion of the contracting agency because the
agency is responsible for defining its needs and the best method of
accommodating them. Metrica, Inc., B-270086, B-270086.2, Feb. 8,
1996, 96-1 CPD para. 135 at 3. In reviewing an agency's evaluation, we
will not reevaluate proposals, but instead will examine the agency's
evaluation to ensure that it was reasonable and consistent with the
solicitation's stated evaluation criteria. Decision Sys. Techs.,
Inc.; NCI Info. Sys., Inc., B-257186 et al., Sept. 7, 1994, 94-2 CPD para.
167 at 7. An offeror's disagreement with the agency does not render
the evaluation unreasonable. McDonnell Douglas Corp., B-259694.2,
B-259694.3, June 16, 1995, 95-2 CPD para. 51 at 18. Based on our review
of the record, and as discussed in the examples set forth below, we
believe that the agency's evaluation of CVB's and PCI's proposals was
reasonable and consistent with the RFP's stated evaluation criteria.
The final SSET technical evaluation ratings, as recorded in the
Proposal Analysis Report prepared by the SSET, and reviewed by the
SSA, were as follows:
PCI CVB
Technical Area/Risk [deleted] [deleted]
Design/Risk [deleted] [deleted]
--Unit Design [deleted] [deleted]
--Reliability [deleted] [deleted]
--First Article Test[deleted] [deleted]
Production/Risk [deleted] [deleted]
--Facilities [deleted] [deleted]
--Quality Programs [deleted] [deleted]
--Production Plan [deleted] [deleted]
CVB protests the favorable technical ratings given to the PCI
proposal, generally contending that its proposal should have been
rated significantly higher in technical merit than the PCI proposal
under each technical evaluation factor, as well as for overall merit.
Although we have reviewed every one of CVB's numerous challenges to
the agency's evaluation of proposals, we see no basis to question the
proposed award. We discuss below a sampling of CVB's allegations.
CVB generally contends that, since it has produced similar SGNSC units
in the past, its proposal should have been ranked significantly higher
than PCI's proposal in the technical area (i.e., higher in technical
merit and lower in proposal and performance risk). As the agency's
evaluation record shows, CVB was credited for its prior experience in
connection with the evaluation of performance risk (for which the
protester's proposal received a [deleted] rating). However, contrary
to CVB's contention that its prior SGNSC experience should have
increased its proposal's rating under the [deleted], the agency
reasonably gave CVB's proposal a [deleted] rating, [deleted], compared
to the larger quantities and shorter time frames required under the
RFP. We also do not find that CVB's SGNSC experience provides any
basis to conclude that PCI's proposal should have been rated as
inferior regarding performance risk. PCI's proposal was credited, and
reasonably so, for the firm's substantial favorable prime contractor
experience, and credit reasonably was given for the documented air
membrane technology experience of its proposed subcontractor, since
the RFP did not preclude the consideration of subcontractor
experience. Premier Cleaning Sys., Inc., B-249179.2, Nov. 2, 1992,
92-2 CPD para. 298 at 4. There is nothing in the record, and the
protester does not provide any persuasive basis, to suggest that the
[deleted] performance risk rating assigned to the PCI proposal
(supported by favorable customer and preaward survey information
regarding the firm's compliance with delivery schedules) was other
than reasonable.
CVB also protests that, under the technical area's design factor,
PCI's proposal unreasonably received a [deleted] rating for the unit
design subfactor--CVB contends that only its proposal deserves this
high rating. The RFP, sec. M-900.B.1, informed offerors that innovative
proposals that exceeded technical requirements would receive
additional credit, with emphasis in the design areas of mean time
between failure, unit dimensions, weight, and operating time before
refueling (where, regarding size and weight of the unit, proposing
smaller measurements was desirable). Both CVB's and PCI's proposals
were found to exceed the RFP requirements in the following four
identified significant design areas and, as a result, received
[deleted] color ratings for the most important subfactor (unit design)
of the most important technical evaluation factor (design):
Purchase Description Requirement PCI CVB
Mean time between failure (250 hours)[deleted] [deleted]
Unit dimensions (90"l x 72"w x 62"h)[deleted] [deleted]
Unit weight (4,000 lbs.) [deleted] [deleted]
Oper. time between refueling (5 hours)[deleted] [deleted]
CVB contends that its proposal [deleted] should have been [deleted]
because CVB's unit is based on proven technology and exceeded RFP
requirements to a greater extent than PCI's unit.
Our review of the record shows that both offerors' proposals
reasonably earned their [deleted] ratings under this subfactor in
light of the design strengths noted for each. For example, PCI's
proposal was credited for proposing the use of [deleted] and [deleted]
CVB's proposal was credited for proposing [deleted]. Since our review
of the evaluation record confirms the reasonableness of the agency's
determination that both proposals exceeded critical RFP requirements,
and that each provided adequate support for the cited additional
strengths, we have no basis to question the [deleted] ratings received
by both proposals in this technical area.[6]
CVB also protests the evaluation of CVB's and PCI's proposals under
the second and less important technical evaluation factor, production.
In particular, CVB challenges the agency's acceptance of PCI's
substantially smaller proposed facilities, for which the PCI proposal
received a [deleted] rating under the facilities subfactor. (CVB's
proposal received a [deleted] rating for offering much larger
production facilities.) The record reasonably supports CVB's higher
rating given [deleted] CVB for this effort. However, contrary to
CVB's contentions, there is no basis in the record to conclude that
PCI's proposed facilities are inadequate to successfully perform the
contract. Although PCI's proposed production facilities are
substantially smaller than those proposed by CVB, the evaluators found
that the smaller facilities posed little, if any, risk to successful
performance in light of PCI's proposed production facility layout and
approach. Tr. at 103-04. Our review supports the reasonableness of
this determination in view of PCI's anticipated substantial
subcontracting of production line (metal fabrication subassembly) work
to be performed at additional facilities.[7] Overall, based on our
review of the record, CVB has not provided any persuasive basis to
question the propriety of the evaluation of CVB's and PCI's proposals.
CVB next protests the agency's selection of PCI for award as the
offeror submitting the proposal determined to offer the best value to
the government. CVB contends that the technical superiority offered
by its proposal more than accounts for the cost difference [deleted],
or slightly more than $[deleted] million) between the PCI and CVB
proposals.
Notwithstanding a solicitation's emphasis on technical merit, an
agency may properly select a lower-priced, lower technically scored
proposal if it decides that the price premium involved in selecting a
higher-rated, higher-priced offer is not justified given the
acceptable level of technical competence available at the lower cost.
Dayton T. Brown, Inc., B-229664, Mar. 30, 1988, 88-1 CPD para. 321 at 4.
The determining element is not the difference in technical merit, per
se, but the contracting agency's judgment concerning the significance
of that difference. Id. at 4-5. In this regard, evaluation scores
are merely guides for the source selection authority, who must use his
or her judgment to determine what the technical difference between
competing proposals might mean to contract performance, and who must
consider what it would cost to take advantage of it. Grey Adver.,
Inc., B-184825, May 14, 1976, 76-1 CPD para. 325 at 9-10. In making such
determinations, the source selection authority has broad discretion,
and the extent to which technical merit may be sacrificed for cost, or
vice versa, is limited only by the requirement that the tradeoff
decision be reasonable in light of the established evaluation and
source selection criteria. Id. at 12.
In making his source selection decision, the SSA reviewed the
solicitation requirements and factors for award, the SSET's Proposal
Analysis Report, the briefing charts prepared by the SSET, oral
presentations by the SSET, and the results of inquiries he posed to
the SSET. Tr. at 15-17. The SSA recognized that CVB's proposal was
highest rated technically, and that the proposal exceeded the four
emphasized design requirements (regarding weight, size, mean time
between failure, and refueling) "by a significant margin." Tr. at 19.
The SSA then considered those proposals which were rated next highest
technically, along with the SSET findings regarding those proposals.
Tr. at 20. The SSA then noted where proposals offered the same sort
of strengths offered in the CVB proposal; the SSA noted, for instance,
that the PCI proposal "far exceeded" the same critical design
requirements that were significantly exceeded by the CVB proposal.
Tr. at 21. The SSA (who specifically noted that PCI's projected mean
time between failure was based on [deleted] critical components, but
that the evaluators reasonably were not substantially concerned about
that sole weakness, Tr. at 22), considered the overall technical
evaluations for design and production. Tr. at 24.
CVB asserts that the SSA improperly found the two proposals to be
technically equal. Our review of the SSDD, however, does not support
the protester's allegation that the proposals were at any time
considered to be technically equivalent, since the SSA expressly
recognized that CVB's proposal was technically superior to PCI's.
Rather, the SSA noted that both PCI and CVB far exceeded the Air
Force's minimum requirements "in the same areas" and that they,
therefore, offered "many of the same strengths." Tr. at 25. The SSA
explains that it was not critical to him that CVB "significantly"
exceeded some RFP requirements that PCI's proposal "far exceeded" (but
to a lesser degree than the CVB proposal did in some instances), since
both firms submitted strong proposals greatly exceeding those
requirements. Tr. at 80. The SSA instead reviewed the SSET's
findings to determine if there were any meaningful differences between
the proposals that were worth paying another $[deleted] million, since
the agency could make award to PCI on the basis of its strong
technical proposal, that included several cited technical strengths,
at a significant cost savings. Tr. at 25-26, 36-37.
We have reviewed the integrated assessment performed by the SSA in
reaching his best value determination, and the SSDD memorializing that
determination. The SSA's review was, in our opinion, quite
comprehensive. The SSA first noted that CVB's proposal was highest
rated technically, and included a short, but detailed evaluation
summary of the proposal's technical ratings, as well as the strengths
of that proposal that were noted by the SSET; he recognized that no
weaknesses were found in the proposal and that it offered low risk.
He then summarized every other proposal's evaluation and
strengths/weaknesses, followed by a comparison of those technical
areas where offerors had similar (albeit, to a differing extent)
strengths. He eliminated from consideration those offers that did not
appear to have a reasonable chance for award in terms of technical
merit or price. Three proposals remained in the analysis: CVB's
higher-rated, higher-priced proposal; another offeror's slightly
higher-rated, slightly higher-priced proposal; and PCI's technically
acceptable proposal, with noted technical strengths (as well as a
noted weakness regarding the limited seven-component reliability
analysis to support proposed mean time between failure). Focusing on
the substantial cost difference, and the other two proposals'
technical strengths, the SSA removed the CVB proposal from further
consideration for award. Finding that the intervening proposal was
only slightly superior technically to PCI's lower-priced proposal, the
SSA determined that the additional cost was not warranted, and that
PCI's proposal offered the best value to the government.
Specifically, the SSA stated in his SSDD, at 7, that "CvB's proposal
was the most highly rated and ranked Technical Proposal, and the
Technical Area was significantly more important than Cost, however, in
my final integrated assessment I did not consider the additional
technical benefits CvB offered compared to PCI . . . merited paying an
additional [deleted] (over PCI) . . . ."
CVB contends that if a dollar value were assigned to each noted
technical benefit in its proposal, the cumulative dollar value would
outweigh the savings expected by the agency in making award to PCI at
its lower price. Specifically, CVB contends that the SSA wrongfully
failed to consider [deleted] from the protester's SGNSC's [deleted].
First, the record shows that, as noted by the SSA, the RFP did not
provide for evaluation of any claimed [deleted]. (In fact, our review
of the PCI proposal shows that that firm also claimed [deleted] its
proposed technology, which likewise were not evaluated in terms of
dollar value.) Second, these alleged [deleted] are only potential
savings, at best, given that they would not be realized until the bulk
of the estimated units were purchased (which further assumes no
possibility of early termination of the contract or failure to
exercise the option). Moreover, the claimed [deleted] are dependent
on a 20-year use of the SGNSCs (when, of course, advances in related
technology or changed agency needs could as reasonably be expected to
result in much earlier retirement of some of the units). The SSA's
failure to consider these, at best, [deleted], in our view, cannot be
said to be unreasonable.
In our opinion, the SSA properly compared CVB's proposal's technical
superiority, available at a substantially higher price, to the
technical strengths of the PCI proposal (which exceeded critical RFP
requirements), available at a substantially lower cost, and reasonably
determined in accordance with the best value terms of the procurement
that the noted technical superiority was not worth the cost premium
involved.
The protest is denied.[8]
Comptroller General
of the United States
1. The term "highest degree of credibility" refers to the extent to
which offerors provide sufficient support in their proposals to verify
claims to meet solicitation requirements; the term "affordable cost"
refers to the source selection authority's tradeoff analysis between
technical merit and price. Hearing Transcript (Tr.) at 12, 59-60, 97.
2. The RFP defines "general considerations" as elements typically
relating to proposed contract terms and conditions, and results of
preaward surveys. While proposals were not to receive color, proposal
risk, or performance risk ratings under this factor, it would be
considered in the integrated assessment forming the basis for award.
RFP sec. M-900.A.4.
3. The "color rating" depicts how well the offeror's proposal meets
the evaluation standards and solicitation requirements (e.g., a "blue"
rating indicates "exceptional"--that the specified performance or
capability has been exceeded in a way beneficial to the government,
and there are no significant weaknesses--and a "green" rating
indicates "acceptable"--that the evaluation standards have been met
and any weaknesses are readily corrected). "Proposal risk" assesses
the risk associated with the offeror's proposed approach as it relates
to accomplishing the requirements of the solicitation (e.g., a low
proposal risk rating reflects little potential to cause disruption of
schedule, increase in cost, or degradation of performance, and normal
contractor effort and normal government monitoring will probably be
able to overcome difficulties). The "performance risk" rating
assesses the probability of the offeror successfully accomplishing the
proposed effort based on the offeror's demonstrated present and past
performance (e.g., a low performance risk rating indicates that little
doubt exists that the offeror will successfully perform as proposed).
RFP sec. M-900.A.3.
4. Referring to this sentence, CVB asserts that the technical factors
comprising the overall "technical area" were to be given equal weight
to the technical area itself. This arguments reflects a strained
reading of the sentence and is inconsistent with the overall
evaluation scheme in the RFP. Specifically, section M-900.B.1 sets
out the two technical factors and their subfactors as elements of the
overall technical area, not as independent factors; that provision
also specifies that the factors are listed in descending order of
importance, meaning that the first factor, design, is more important
than--not equal to--the second, production. Section M-900.A.3 then
specifies that it is the overall "technical area" that is
significantly more important than price in the evaluation. In sum,
the RFP clearly contemplates that the proposals would be evaluated
under the two technical factors, resulting in an overall rating in the
technical area which would then be significantly more important than
price. It simply is not reasonable to read the phrase "each of the
ratings" in section M-900.A.3 as establishing that the individual
factors under the overall technical area--which themselves comprise
the technical area--were to be given weights equal to the technical
area itself.
5. As noted above, section M-900.A.4 of the RFP also provided for an
evaluation of "general considerations" for each proposal. The SSA
concluded that the general considerations factor was not a
discriminator between CVB's and PCI's proposals in view of the fact
that both firms had received unconditional award recommendations under
this factor. SSDD at 7.
6. CVB also alleges that it was unreasonable for the agency to accept
PCI's projections regarding mean time between failure, because those
projections were based on PCI's analysis of the performance of only
[deleted] of approximately [deleted] SGNSC components. We find CVB's
challenge unpersuasive, since the RFP did not require the level of
proof sought by CVB to be applied to the PCI proposal, and the record
shows that those components that were analyzed are the PCI unit's key
components which are critical to successful performance and reasonably
serve as a representative model of anticipated unit operation. Tr. at
101-02, 153-54; Proposal Analysis Report at 23.
7. CVB's proposal received a [deleted] rating for the quality programs
subfactor of the production technical evaluation factor for certifying
compliance to an acceptable, yet less stringent quality assurance
program than that proposed by PCI; PCI's proposal was rated [deleted]
under this subfactor of the production factor. CVB challenges the
ratings assigned to the proposals under this subfactor. Although CVB
contends that its "certification" of performance to the less stringent
quality standards offers some sort of strength over PCI's promise to
"conform" to the more stringent standards, the agency reports that it
does not recognize "certification" as offering any benefit over a
firm's conformance to higher standards. Tr. at 23, 84. In short,
since performance must be in compliance with the level of quality
assurance standards proposed, we agree that PCI's proposal of a more
stringent plan justifiably received the higher rating.
8. CVB has also raised numerous protest issues which are not for our
consideration and thus, are addressed here only in a summary manner.
For example, the protest ground asserting that this should have been a
commercial item procurement is an untimely challenge to the terms of
the solicitation. 4 C.F.R. sec. 21.1(a)(1) (1998). In this regard, CVB
also has failed to provide sufficient grounds to support a waiver of
our timeliness rules, since its contention that it did not know of the
alleged requirement for a commercial item procurement prior to
competing under the RFP is insufficient to excuse a late filing, and
CVB has not persuasively shown that the matter warrants consideration
as a significant issue of widespread interest. Air Inc.--Recon.,
B-238220.2, Jan. 29, 1990, 90-1 CPD para. 129 at 2. We also note, as
follows, that several of CVB's other challenges simply do not
constitute valid bases of protest, since, contrary to CVB's general
allegations: it is not unlawful for an offeror to "buy in" (or offer
a price below its costs), T.J. O'Brien Co., Inc., B-223680, Aug. 11,
1986, 86-2 CPD para. 177 at 1-2; CVB is not an interested party to protest
the proposal evaluations of those offerors not in line for award
before CVB, ECS Composites, Inc., B-235849.2, Jan. 3, 1990, 90-1 CPD para.
7 at 1; and, where an offeror's price is found to be reasonable,
discussions are not required to inform the offeror that its price is
higher than some of the other offerors'. Blue Cross Blue Shield of
Texas, Inc., B-261316.4, Nov. 9, 1995, 95-2 CPD para. 248 at 6-7.
Additionally, CVB has failed to provide any persuasive support for its
general allegations of improper agency action related to the possible
relaxation of purchase description requirements for PCI, or an alleged
release by agency personnel of sensitive target pricing information to
PCI (information which, we note, the record shows is available from
other public sources and, in any event, could reasonably be estimated
from available commercial pricing information). Robert Wall
Edge--Recon., B-234469.2, Mar. 30, 1989, 89-1 CPD para. 335 at 2. The
remaining protest issue, regarding the propriety of the agency's
denial of an earlier requested preaward debriefing, was withdrawn by
CVB.