BNUMBER:  B-278584 
DATE:  February 17, 1998
TITLE: U.S. Technology Corporation, B-278584, February 17, 1998
**********************************************************************

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:U.S. Technology Corporation

File:     B-278584

Date:February 17, 1998

Richard L. Moorhouse, Esq., Dorn C. McGrath III, Esq., and Frank K. 
Peterson, Esq., Holland & Knight L.L.P., for the protester.
G. Alan Perkins, Esq., and Matthew H.P. Warner, Esq., Hill Gilstrap 
Perkins & Warner, for Composite Leasing Corporation, an intervenor.
Lori S. Chofnas, Esq., Department of the Navy, 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 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.  Award in best value procurement to firm whose lower-price proposal 
was rated lower than protester's proposal for past performance is 
unobjectionable, despite solicitation provision that past performance 
was to be considered more important than price, where solicitation did 
not provide for award on the basis of highest past performance rating, 
and agency reasonably concluded that paying the approximate 
[deleted]-percent price premium for the protester's higher-rated past 
performance was not warranted in light of the satisfactory past 
performance of the awardee and the awardee's substantially 
lower-proposed price.

DECISION

U.S. Technology Corporation (UST) protests the award of a contract to 
Composite Leasing Corporation (CLC) under request for proposals (RFP) 
No. N00140-97-R-1472, issued by the Department of the Navy, Fleet and 
Industrial Supply Center--Norfolk, Detachment Philadelphia, on behalf 
of the Naval Aviation Depot, Cherry Point, North Carolina, for the 
lease and recycling of plastic media blasting mesh, and the recycling 
of abrasive glass bead dust products, used in the removal of paint 
from Navy aircraft.  UST, the incumbent contractor, protests the 
propriety of the agency's evaluation of the awardee's past 
performance, and the source selection authority's determination that 
the protester's higher past performance rating was not worth the 
associated price premium.[1]

We deny the protest.

The RFP provided that plastic media and glass bead dust products 
(containing residue plastic media or glass bead dust, and paint chips 
containing heavy metals including chromium, lead, and cadmium) are 
considered hazardous material which must be recycled in accordance 
with stated regulatory requirements, pursuant to 40 C.F.R.  sec.  261.2(e) 
(1997).  RFP Amendment No. 6 at 3,  sec.  C.1.  The RFP stated that, in 
addition to the lease of plastic media meeting stated military 
specifications (id. at 4,  sec.  C.5.1), the government expected the 
contractor to eliminate hazardous waste from the paint removal site by 
recycling generated dust products.  Id.,  sec.  C.2.  The recycling of the 
dust products was to involve using those products as ingredients in an 
industrial process to make a new product (rendering inert the 
hazardous material)--which would exempt the dust products from 
characterization as hazardous waste.  Id. at 7,  sec.  C.6.3.1.  In order 
to be eligible for award, each offeror was required to submit with its 
proposal written approval from the cognizant environmental authority 
for the state of North Carolina (where the blasting media are to be 
used) and the state in which the recycling will be performed, 
demonstrating that the states had approved the offeror's recycling 
process as meeting requisite regulatory qualifications.  Id. at 7 
(definitive responsibility criteria).

The award of a firm, fixed-price, requirements-type contract, for a 
base year plus 2 option years, was contemplated.  RFP at 33; RFP 
Amendment No. 6 at 2-3,  sec.  B.  The RFP, as amended, provided that award 
would be made to the offeror determined to have submitted the most 
advantageous proposal, price and past performance considered, with 
past performance being "more important" than price.  RFP Amendment No. 
5 at 10,  sec.  M.  Each offeror was to "describe its past performance on 
similar contracts it has held within the last five (5) years which are 
of similar scope, magnitude and complexity to that which is detailed 
in the 
RFP . . . ."  Id. at 9,  sec.  L.  Offerors were also advised of the 
following:  that the agency would consider the quality of the past 
performance to assess the relative capability of the offeror to meet 
the requirements of the RFP; that the agency could obtain information 
about the offeror's prior contracts from any source; and that greater 
consideration was to be given to contracts which "the Government feels 
are most relevant to the RFP."  Id. at 10-11,  sec.  M.

The contracting officer's representative surveyed six of CLC's past 
performance references regarding some of the firm's other plastic 
media lease and recycling contracts.  Hearing Transcript (Tr.) at 24.  
Each reference contacted recommended CLC for award.  Although three of 
those references noted a minor performance concern, they also reported 
that the problem was promptly cured by CLC, and that the firm's 
performance was in accordance with contract requirements.  See 
Contract Review Board Presentation (Post-negotiation), Oct. 16, 1997 
at 13.  CLC's overall contract performance was rated as "satisfactory" 
or "acceptable" on five of the contracts, and "outstanding" on the 
sixth.  Id.

In evaluating CLC's past performance, the contracting officer 
considered the six reference reports; the discussion of past 
performance in CLC's proposal; UST's earlier agency-level protest 
challenges to CLC's past performance; and CLC's attorney's detailed 
response to those allegations.  Tr. at 24-27.  With respect to UST's 
agency-level protest challenging the initial award to CLC, UST had 
provided letters from the U.S. Environmental Protection Agency (EPA) 
and a state of Utah environmental authority regarding the dust product 
processing portion of a blast media contract awarded in 1991 to CLC by 
Hill Air Force Base (AFB) based on a recycling process approved, at 
the time, by the state of Utah.  These letters (dated in 1994, after 
completion of CLC's base contract, but prior to the remaining option 
period under the contract) explained that the EPA, which had recently 
reviewed the "recycling" process utilized under the Hill contract 
(which involved exportation of dust products to India for processing), 
had notified the Utah authority that the EPA considered the processing 
performed by CLC under the Hill contract to be reclamation, and not 
approved recycling.[2]  The letter from the state of Utah to Hill AFB 
explained that due to this new interpretation of the process, Utah 
could no longer approve the process as recycling, as it had done 
several years earlier.  CLC had addressed this Hill contract 
information in its proposal, and in its response to UST's agency-level 
protest, by explaining that, contrary to UST's contention, the 
contract had not been terminated; rather, CLC explained that the 
remaining option on that contract was not exercised after 2 years of 
"excellent performance," due solely to the subsequent EPA/Utah 
interpretation.  See CLC proposal at 42; CLC's response to 
agency-level protest, Aug. 20, 1997 at 2-3. 

The contracting officer took note of the age and scope of the Hill 
contract and concluded that less relevance would be attributed to that 
contract compared to more recent CLC contracts for similar services.  
The Hill contract was considered by the contracting officer to be 
materially distinguishable in scope from the current requirement 
because CLC's current recycling process, approved by the states of New 
York and North Carolina, does not involve the process used in the Hill 
contract--export of dust products to India for media recovery 
processing.  Tr. at 27, 89, 99.[3]  In giving the contract less 
weight, the contracting officer, without contacting the Hill reference 
listed in the CLC proposal, chose to discount both the alleged 
strengths (as asserted by CLC in its proposal), and the alleged 
weaknesses (as asserted by UST) related to that contract in his 
evaluation of CLC's past performance.  Tr. at 27-28.

The contracting officer, noting the quality of CLC's performance on 
the six contracts surveyed, while recognizing the lower dollar amount 
of those contracts, rated the CLC proposal satisfactory under the past 
performance criterion.[4]  UST's proposal received a rating of 
exceptional for past performance.[5]  Of the four proposals received 
under the RFP, CLC's proposal offered the lowest total price:  
$1,110,550.  UST's proposal offered the [deleted] total price:  
[deleted].  Finding that the [deleted]-percent price differential 
between the two proposals was "so great," given CLC's satisfactory 
past performance ratings and the limited risk related to offeror 
capability and performance in light of the states' approvals of CLC's 
recycling efforts, the contracting officer (the source selection 
authority for the procurement) determined that the protester's higher 
past performance rating was not worth the substantial price premium 
associated with it.[6]  Contract Review Board Presentation 
(Post-negotiation) at 16.  CLC was determined to have submitted the 
most advantageous offer, and the agency awarded a contract to the firm 
on October 29, 1997.  After a post-award debriefing, UST filed this 
protest.

UST contends that the agency unreasonably rated CLC's past performance 
as satisfactory; UST contends that CLC's past performance should have 
been found unacceptable and that the award should have been made to 
UST.  UST specifically protests the agency's evaluation of CLC's past 
performance proposal regarding two prior CLC contracts:  one at North 
Island Naval Air Station; and the one at Hill AFB, discussed in detail 
above.

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.  Crown Clothing Corp., B-277505.2, Oct. 
31, 1997, 97-2 CPD  para.  127 at 3-4.  

Regarding the North Island contract, UST alleges that the contract had 
been "terminated for cause" for CLC's failure to provide plastic media 
conforming to certain size and attrition rate specifications 
(allegedly resulting in additional cost to the agency).  UST contends 
that, even though the contracting officer for the North Island 
contract reported that the contract had been terminated for the 
convenience of the government due to a change in specifications, the 
interview was incomplete and inadequate since that contracting 
officer, according to UST, should have been questioned about the 
actions being a no-cost termination.  UST contends that the 
contracting officer here should have concluded that a no-cost 
termination suggested that a basis for terminating that contract for 
default could have existed, and that such a default basis (if present) 
could have served as a basis to lower CLC's past performance rating.

Our review of the record shows that UST's speculation in this regard 
provides insufficient basis to question the reasonableness of the 
challenged survey of the past performance reference for the North 
Island contract.  The record shows that the North Island contracting 
officer reported that the termination for convenience was based upon a 
change in the agency's needs.  That reference was specifically asked 
about any performance problems under that contract, and absolutely no 
performance problem or concern was mentioned by the reference.  In 
fact, the contracting officer on that contract attested that CLC met 
all contractual requirements and recommended CLC for the current 
award.  Given the North Island contracting officer's clear explanation 
that the termination was a contract administration matter based on a 
change in requirements, without any suggestion that the contractor's 
performance of the contract had been in issue, as well as his 
unconditional positive recommendation of CLC, we do not find 
persuasive the protester's contention that the past performance survey 
of this reference was unreasonable or deficient for failure to ask 
about the no-cost terms of that termination.[7]

With regard to CLC's contract at Hill AFB, the protester contends that 
the evaluation of CLC's past performance was flawed because the 
contracting officer had a duty to contact the Hill contract reference 
listed in the CLC proposal to further investigate CLC's performance on 
that contract, since CLC emphasized that contract and its high dollar 
amount in its proposal.  UST principally contends that because the 
contracting officer did not contact the Hill reference, even though 
the contracting officer knew that UST had previously challenged CLC's 
performance on that contract, the past performance evaluation was 
improper and the award determination cannot stand.  

There is no legal requirement that all past performance references 
listed in an offeror's proposal be checked or included in a valid 
review of past performance.[8]  See Dragon Servs., Inc., B-255354, 
Feb. 25, 1994, 94-1 CPD  para.  151 at 8; Questech, Inc., B-236028, Nov. 1, 
1989, 89-2 CPD  para.  407 at 3.  Rather, what is critical is whether the 
evaluation is conducted fairly, reasonably, and in accordance with the 
stated evaluation criteria, and whether it is based upon relevant 
information sufficient to make a reasonable determination of the 
offeror's overall past performance rating, including relevant 
information close at hand or known by the contracting personnel 
awarding the contract.  See, e.g., International Bus. Sys., Inc., 
B-275554, Mar. 3, 1997, 97-1 CPD  para.  114 at 5.  Given the circumstances 
here, discussed further below, especially in light of the substantial 
information already known to the contracting officer about the 
challenged Hill contract, and his reasonable analysis of material 
differences between that contract and the current contract's dust 
product processing, we cannot find that the contracting officer acted 
unreasonably in not contacting the Hill reference.

First, the protester itself had provided to the contracting officer 
substantial substantive information (from the federal and state 
environmental authorities involved) regarding the facts surrounding 
the authorities' subsequent interpretation of the dust product 
processing method used under that contract.  As stated above, those 
letters, which UST had alleged in its agency-level protest should 
serve as a basis to find its competitor's past performance 
unacceptable, convey that the EPA had recently found the material 
processing in India conducted under the Hill contract to be 
reclamation rather than recycling.  Neither the letters nor UST's 
agency-level protest reasonably suggests (as UST now contends) that 
CLC had misrepresented the propriety of its proposed processing at the 
time it submitted its Hill proposal or performed that contract.  
Rather, in our view, the letters reasonably informed the contracting 
officer here that, although CLC had been approved to perform the Hill 
contract in a certain way, and had performed that contract as 
approved, the approving authority several years later changed its 
approval decision.  We cannot see how this alone should have advised 
the contracting officer, as UST contends, that additional 
investigation of the matter was required.

Moreover, the RFP specifically provided that the contracting officer 
had the discretion to determine the degree of relevance of past 
performance information and to assign less weight to those contracts 
less relevant to the current contract.  RFP Amendment No. 5 at 11,  sec.  
M.  Here, the contracting officer determined that the Hill contract 
warranted less weight in the CLC past performance evaluation because 
it was less relevant than other past performance information for CLC.  
The contracting officer's reasoning was based upon the time that had 
passed since that contract (where more recent contract information was 
available), as well as the fact that the Hill contract utilized a 
completely different process from that which has been used by CLC 
since 1995, and which was proposed and fully approved here.  The 
contracting officer, in our opinion, acted reasonably in considering 
the substantial information he already had regarding the Hill 
contract, from which, we believe, he reasonably determined that the 
Hill contract was less relevant and worth less weight in the overall 
past performance evaluation.  Given these circumstances, and in light 
of the unanimous recommendation of CLC by all six of the more recent 
contract references surveyed, we cannot find that the contracting 
officer acted unreasonably in determining not to contact the Hill 
reference for additional information.[9]  Tr. at 33.  Our review of 
the record supports the reasonableness of the contracting officer's 
evaluation of CLC's past performance; the protest provides no basis to 
question the reasonableness of the satisfactory rating assigned.[10] 

UST next protests the contracting officer's price/technical trade off 
that resulted in the selection of CLC for award.[11]  Source selection 
officials have broad discretion to determine the manner and extent to 
which they will make use of the technical and price evaluation results 
in negotiated procurements.  Grey Advertising, Inc., 55 Comp. Gen. 
1111, 1119 (1976), 76-1 CPD  para.  325 at 9.  Price/past performance trade 
offs are permitted provided they are rational and consistent with the 
stated evaluation criteria.  Dragon Servs. Inc., supra, at 12.  Here, 
the source selection decision documentation notes that the CLC 
proposal received a satisfactory past performance rating, that UST's 
proposal received an exceptional past performance rating, and that 
past performance was more important than price.  The source selection 
authority specifically determined that:

     it is most advantageous to the Government to award this contract 
     to [CLC].  [CLC] has performed satisfactorily on previous 
     contracts and has offered a lower price than [UST].  Further, 
     although [UST] has been rated higher on past performance, the 
     price differential is so great ([deleted] %) that it would not be 
     in the Government's best interest to displace the low offeror.

Contract Review Board Presentation (Post-negotiation) at 16.  UST 
contends that the source selection decision language (particularly the 
use of the term "displace," which UST believes shows a predilection to 
award on the basis of low price) indicates that the agency failed to 
follow the stated evaluation scheme, which gave more importance to 
past performance, and did not conduct a proper price/technical trade 
off.

We cannot agree with the protester that the use of the term "displace" 
shows an improper application of the stated evaluation scheme or an 
improper trade off analysis.  The contracting officer has explained 
that, despite his adoption of the contract negotiator's use of the 
"displace" language, the award was made on the basis of the 
contracting officer's determination of the proposal determined to 
offer the best overall value.[12]  Tr. at 7, 77.  Our review of the 
record supports the reasonableness of the contracting officer's 
position that, given the satisfactory past performance rating assigned 
to the CLC proposal, and a reasonable expectation of less performance 
risk in light of the RFP's requirements for state approval of the 
proposed recycling process, the agency could not justify spending 
approximately [deleted] percent more for UST's exceptional past 
performance rating.[13]  Tr. at 32-33, 62.  The protester's 
disagreement with the award determination does not show it to be 
unreasonable.  

The protest is denied.

Comptroller General
of the United States 

1. An earlier contract awarded to CLC under the RFP was canceled, and 
the procurement reopened, after the agency amended the terms of the 
solicitation to provide for the recycling of glass bead dust products.  
That cancellation followed an agency-level protest filed by UST 
challenging the initial award to CLC on the basis of the awardee's 
alleged unfavorable contract performance history.  Although CLC had 
responded in detail to UST's allegations, in light of the cancellation 
of the award on other grounds, the agency did not resolve UST's 
agency-level protest challenges to CLC's past performance.  CLC's 
current protest relates to the agency's subsequent award to CLC under 
the RFP.

2. Although "recycled" material is generally defined, at 40 C.F.R.  sec.  
261.1(c)(7), as including "reclaimed" material, the recycling here is 
to involve the use of the dust product hazardous materials as 
ingredients in an industrial process to make a product, so that the 
resulting materials are not solid waste, pursuant to 40 C.F.R.  sec.  
261.2(e)(1)(i).  The protester points out that reclamation (processing 
of the hazardous material to recover a usable product (40 C.F.R.  sec.  
261.1(c)(4)) may not eliminate all hazardous waste, since hazardous 
process residues may remain.

3. CLC's current recycling process, initiated in 1995, involves a 
teaming arrangement with a tabletop manufacturer in New York State; 
the dust products are used for pigmentation in the production of 
tabletops.  

4. The following adjectival ratings were used in the evaluation of 
past performance:  exceptional (little or no potential exists for 
disruption of schedule, increases in cost, or degradation of 
performance based on the offeror's past performance), satisfactory 
(some potential exists for disruption of schedule, increases in cost, 
or degradation of performance based on the offeror's past performance; 
marginal (significant potential exists for disruption of schedule, 
increases in cost, or degradation of performance based on the 
offeror's past performance); and neutral (no relevant past performance 
available for evaluation--proposal receives no merit or demerit for 
this factor).  Contract Review Board Presentation (Post-negotiation) 
at 11-12.

5. The contracting officer states that the difference in adjectival 
ratings between the two offers relates to the breadth and depth of 
experience shown by UST's proposal on larger dollar amount contracts, 
rather than any overall comparative quality of the performance by the 
contractors.  Tr. at 33, 68.

6. While the contracting officer used the [deleted]-percent figure, 
which converts the approximately [deleted] difference as a percentage 
of UST's price, it is true, as CLC notes, that UST's price is 
approximately [deleted] percent higher than CLC's.

7. The contracting officer points out that the fact that the 
termination was at no cost to the government does not necessarily 
indicate that there was any performance problem, since the North 
Island contract was an indefinite quantity contract, and it is 
reasonable that, under such a contract, there would be no costs to be 
paid upon termination, since the agency would have already paid for 
the work performed to date.  Tr. at 93-94, 101-102.

8. As the agency points out, there is nothing in the current RFP that 
required the contracting officer to contact all references identified 
by the offerors in their past performance proposals.  Tr. at 37.

9. We are not persuaded by UST's argument that the past performance 
surveys fail to support the contracting officer's evaluation because 
no reference specifically mentioned the recycling portion of each of 
the contracts.  Each reference was specifically asked about the 
contractor's performance on each lease/recycling contract--the fact 
that no recycling problems were reported during the surveys, we 
believe, was reasonably interpreted by the contracting officer as 
indicative of satisfactory performance of the recycling portion of the 
contract, as well as the product lease portion of the contract.

10. UST also protests that the contracting officer improperly failed 
to lower CLC's past performance rating based upon the [deleted].  UST, 
however, does not rebut the following reasonable bases put forth by 
the agency supporting the contracting officer's decision not to 
downgrade the CLC proposal in this area:  two positive pre-award 
surveys had been conducted for CLC and its subcontractor since that 
time; and the [deleted] should not have an adverse effect on the award 
of other contracts to the firm.

11. In its protest, UST also challenges the adequacy of the agency's 
price analysis of the CLC proposal.  Specifically, UST contends that, 
since the contracting officer knew that CLC is currently [deleted], 
the agency was required to adjust CLC's evaluated price to reflect a 
more realistic cost to the agency.  CLC, however, did not take 
exception to the RFP specifications (including required product size 
and attrition rate), and the RFP did not require the type of cost 
realism analysis sought by UST.  Rather, as appropriate for award of 
the fixed-price contract here, CLC's proposed price was determined to 
be reasonable after a comparison with the other offers received; two 
other offerors' prices were closer to CLC's low price than to UST's 
[deleted] price.  See PHP Healthcare Corp.; Sisters of Charity of the 
Incarnate Word, B-251799 et al., May 4, 1993, 93-1 CPD  para.  366 at 6.  
[deleted] Tr. at 70-71, 81.

12. The contracting officer correctly points out that the RFP only 
provided that past performance was "more important" (rather than 
substantially or significantly more important).  Tr. at 40.  Here, 
given the large price difference and the contracting officer's 
determination of CLC's satisfactory past performance and demonstrated 
capability, the contracting officer chose not to award on the basis of 
the protester's higher past performance rating.  For purposes of 
comparison, the contracting officer testified that on a recent 
procurement for similar services, where past performance was more 
important than price, the agency in fact awarded the contract to UST 
on the basis of its higher past performance rating, since in that 
case, the price differential between UST and CLC was only 
approximately [deleted] percent, much less than the significant price 
premium involved here.  Tr. at 14-15.

13. We recognize, as the protester points out, that CLC's prior 
"recycling" process under the Hill contract was also "state-approved," 
and that the state approval was withdrawn several years after it was 
granted.  We agree that this indicates that state approval at the time 
of award may not eliminate all performance risk.  However, as with 
licensing requirements, in general, we believe it is reasonable to 
conclude, as the contracting officer has done here, that the state 
approval requirements of the RFP are directly related to lessening the 
performance risk associated with an award to the state-approved 
contractor.