BNUMBER:  B-278881 
DATE:  March 24, 1998
TITLE: San Diego Beverage & Kup, Inc., B-278881, March 24, 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:San Diego Beverage & Kup, Inc.

File:     B-278881

Date:March 24, 1998

Nancy O. Dix, Esq., and Mary E. Shallman, Esq., Gray Cary Ware & 
Freidenrich, for the protester.
D. Michael Fitzhugh, Esq., Robert J. Sherry, Esq., and Francis E. 
Purcell, Jr., Esq., McKenna & Cuneo, for Dispenser Juice, Inc., the 
intervenor.
Michael Trovarelli, Esq., and Gweyn Colaberdino, Esq., Defense 
Logistics Agency, for the agency.
John L. Formica, Esq., and James A. Spangenberg, Esq., Office of the 
General Counsel, GAO, participated in the preparation of the decision.

DIGEST

Contracting agency reasonably evaluated the awardee's proposal as 
"excellent" under the solicitation's experience/past performance and 
management plan evaluation factors, and the protester's proposal as 
"good" under the same factors;  the protester's mere disagreement does 
not render the agency's judgment unreasonable.

DECISION

San Diego Beverage and Kup, Inc. protests the award of a contract to 
Dispenser Juice, Inc., under request for proposals (RFP) No. 
SPO300-97-R-M039, issued by the Defense Personnel Support Center 
(DPSC), Defense Logistics Agency (DLA), for juice, coffee, and tea 
products, as well as dispensing equipment, for Department of the Army 
troops at various sites in South Korea.  San Diego Beverage contends 
that the agency's evaluation of its and Dispenser Juice's proposals, 
and selection of Dispenser Juice's higher-priced proposal for award, 
were unreasonable.

We deny the protest.

The RFP, issued July 11, 1997, on an unrestricted basis, provided for 
the award of a fixed-price, indefinite-delivery, indefinite-quantity 
contract for a base period of 1 year with one 1-year option.  The 
successful contractor under the RFP will be required to provide the 
juice, coffee, and tea products ordered by the agency to either of two 
ports in California for shipping to South Korea.[1]  The contractor 
will also be required to furnish, install, maintain, repair and/or 
replace the juice, coffee, and tea dispensing equipment in the 
facilities in South Korea.  

The RFP stated that award would be made to the offeror submitting the 
proposal representing the best value to the government, price and 
other factors considered, and listed the following technical 
evaluation factors and subfactors in descending order of importance:

     (1)Experience and Past Performance
     (2)Management Plan
        a.Quality
          i. Shelf Life
          ii.Production Capacity
          iii.Product Identity
        b.Distribution to the Port of Embarkation
        c.Customer Service
          i. Installation and Maintenance of Equipment
     (3)Socioeconomic Considerations
     (4)DLA Mentoring Business Agreement 

The solicitation noted that the socioeconomic considerations and DLA 
mentoring business agreement evaluation factors would not be rated, 
but that the offerors' responses would be compared to each other and 
ranked, with the response indicating the most comprehensive plan for 
tutoring small businesses, small disadvantaged businesses, or 
women-owned small businesses receiving the highest ranking.  The RFP 
included a "Notice of Evaluation Preference for Small Disadvantaged 
Business Concerns," which provided that offers would be evaluated by 
adding a factor of 10 percent to the evaluated price of all offers, 
except those received from small, disadvantaged business (SDB) 
concerns.

The RFP provided detailed instructions for the preparation of 
proposals, and requested that offerors submit a technical proposal, 
organized to respond to the technical evaluation factors listed, and a 
business proposal.  Offerors were required to prepare their business 
proposals primarily by completing the price schedule set forth in the 
RFP. 

The agency received three proposals, including those of San Diego 
Beverage (an SDB concern) and Dispenser Juice (a small business), by 
the RFP's closing date.  The proposals were evaluated, written 
discussions were conducted, and best and final offers (BAFOs) were 
received and evaluated.  San Diego Beverage's BAFO was rated as "good" 
under the experience and past performance and management plan 
evaluation factors, and "good" overall.[2]  Dispenser Juice's BAFO was 
rated as "excellent" under the experience and past performance, and 
management plan evaluation factors, and "excellent" overall.  The 
source selection authority (SSA), while recognizing that Dispenser 
Juice's total proposed price for the base period and option year of 
$7,220,345 was 1.2 percent higher than San Diego Beverage's total 
proposed price, and 11.2 percent higher with the application of the 
SDB evaluation preference, directed that the contract be awarded to 
Dispenser Juice as the offeror submitting the proposal representing 
the best value to the government.

San Diego Beverage first challenges the agency's evaluation of its and 
Dispenser Juice's proposals as "good" and "excellent," respectively, 
under the experience and past performance evaluation factor.  The 
evaluation of technical proposals is a matter within the discretion of 
the contracting agency since the agency is responsible for defining 
its needs and the best method of accommodating them.  Marine Animal 
Prods. Int'l, Inc., B-247150.2, July 13, 1992, 92-2 CPD  para.  16 at 5.  In 
reviewing an agency's evaluation, we will not reevaluate technical 
proposals, but instead will examine the agency's evaluation to ensure 
that it was reasonable and consistent with the solicitation's 
evaluation criteria.  MAR, Inc., B-246889, Apr. 14, 1992, 92-1 CPD  para.  
367 at 4.  An offeror's mere 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.

The RFP informed offerors that the experience and past performance 
section of their proposals should, among other things, "describe the 
extent of their experience of their own corporate entity, any 
partners, joint ventures, subcontractors, etc. who will be performing 
the contract."  The RFP added here that offerors "shall provide a list 
of their Government contracts entered into within the last two years," 
and explained that the list would be used "to determine if the offeror 
has consistently demonstrated a commitment to customer service 
satisfaction and timely delivery of quality goods."  The RFP added 
that the proposals were to include "a point of contact and telephone 
number, dollar value, date of contract, contract quality, and period 
of performance for each listed contract." 

The agency found in reviewing Dispenser Juice's proposal that 
Dispenser Juice currently had contracts, similar to the contract to be 
awarded under this RFP, for various Department of the Air Force dining 
facilities in Hawaii, and with DPSC for the agency's requirements in 
Okinawa.  The agency was also aware of Dispenser Juice's current 
support of DPSC's juice, coffee, and tea requirements in South Korea.  
The agency found that the "fill rate" for the facilities in Okinawa 
and Korea was 99.7 percent.[3]  The evaluation record notes with 
regard to the Okinawa contract that "Dispenser Juice has been very 
responsive to delivery dates, delivering on-time to the port," and 
that "[t]o date no product has been returned and no non-conformances 
have been reported," and that when "problems with mix ratios" were 
reported by the Okinawa facility, Dispenser Juice "responded within 8 
hours to correct the problem," and that "[n]o problems have been 
reported since."  The agency also contacted the Department of the Air 
Force, which reported a fill rate of 100 percent for the facilities in 
Hawaii.  The agency concluded that Dispenser Juice's experience and 
record of past performance merited a rating of "excellent" under the 
experience and past performance evaluation factor.

San Diego Beverage's proposal demonstrated that it had no experience 
providing products to overseas facilities, and listed only one 
contract, which had been performed by Barrios Distributing, one of San 
Diego Beverage's proposed subcontractors, that indicated experience in 
providing items overseas.  This contract was for the supply of shake 
and yogurt mix and ice cream to South Korea, with a value of $252,000 
per year.  The agency concluded that the experience and record of past 
performance of San Diego Beverage and its proposed subcontractors were 
"respectable" and thus merited a "good" rating under the experience 
and past performance evaluation factor.         

The protester contests much of the agency's evaluation of its and 
Dispenser Juice's proposals under the experience and past performance 
evaluation factor.  For example, with regard to its own proposal, the 
protester argues that the agency, in rating San Diego Beverage's 
proposal as "good" under the experience and past performance 
evaluation factor, failed to adequately consider Barrios 
Distributing's "substantial overseas shipping experience."  The 
protester points out that according to the evaluation record, its 
initial proposal, which did not include Barrios Distributing as a 
subcontractor, received a "good" rating under the experience and past 
performance evaluation factor, and that its BAFO also received a 
"good" rating under this factor, even though the Barrios Distributing 
had been added to San Diego Beverage's proposal.  The protester claims 
that Barrios Distributing has performed numerous "overseas" contracts, 
and that even though these contracts were not listed or otherwise 
mentioned in its proposal, the agency could have learned of Barrios 
Distributing's "substantial overseas shipping experience" because, 
according to the protester, Barrios's experience is reflected in "over 
fifty DPSC purchase orders for beverages shipped overseas."  The 
protester adds that the agency considered "fill-rate information 
obtained 'in-house'" regarding Dispenser Juice's performance on its 
contracts with DPSC for the supply of products to facilities in 
Okinawa and South Korea, and argues that the agency was thus required 
to "consult[] its available 'in-house' information concerning 
Barrios."   The protester also argues that it did not receive adequate 
credit for its proposed use of a Korean firm to install and service 
the dispensing equipment. 
 
From our review of the record, we find the agency's evaluation of 
Dispenser Juice's and San Diego Beverage's proposals under the 
experience and past performance evaluation factor as "excellent" and 
"good," respectively, to be reasonable.  San Diego Beverage's 
assertion regarding its subcontractor's "substantial overseas 
experience" appeared for the first time in San Diego Beverage's 
protest.  As conceded by the protester, its BAFO referenced only one 
overseas contract that had been or was being performed by Barrios, and 
this contract was relatively small in dollar value, and was not for 
juice, tea or coffee products.  Similarly, San Diego Beverage's 
proposal provided very little information regarding the experience of 
the Korean contractor it proposed to have install the dispensing 
equipment, and failed to list any contracts that have been performed 
by that firm.  

In light of the fact that the contract performed by Barrios 
Distributing was the only contract listed in San Diego Beverage's 
proposal that reflected any overseas experience, we do not find the 
agency's rating of San Diego Beverage's BAFO as "good" under the 
experience and past performance evaluation factor unreasonable, nor do 
we find it objectionable that the addition of this listing in the BAFO 
did not prompt the agency to raise its rating of the protester's 
proposal to "excellent."  To the extent that Barrios Distributing does 
possess "substantial overseas experience," San Diego Beverage had the 
burden of submitting an adequately written proposal for the agency to 
evaluate, and in light of San Diego Beverage's failure to fulfill its 
obligation in this regard, we see no basis to criticize this aspect of 
the agency's evaluation.  GEC-Marconi Elec. Sys. Corp., B-276186; 
B-276186.2, May 21, 1997, 97-2 CPD  para.  23 at 7.

Nor does the record indicate, as the protester suggests, that the 
agency failed to treat the offerors equally in evaluating the 
proposals.  The RFP clearly contemplated that in evaluating the 
offerors' experience and past performance the agency would contact 
individuals or entities regarding the contracts listed by the offerors 
in their proposals to gather information regarding the offerors' past 
performance.  That the agency did this with regard to the contracts 
listed in the offerors' proposals (including Dispenser Juice's), but 
did not search its files for contracts that were not listed in the 
offerors' proposals (such as San Diego Beverage's), does not evidence 
unequal treatment, particularly given the obligation of the offeror to 
list its relevant experience.[4]

In sum, the record reflects that the major discriminator between the 
proposals of Dispenser Juice and San Diego Beverage with regard to the 
experience and past performance evaluation factor and the reason why 
Dispenser Juice's proposal was rated by the agency as "excellent" and 
San Diego Beverage's as "good" under this factor was Dispenser Juice's 
successful performance of a number of overseas contracts (as detailed 
previously) similar to that contemplated by the RFP.  San Diego 
Beverage's proposal simply does not reflect comparable experience, and 
while the protester clearly disagrees with the agency's evaluation of 
the proposals under this factor, its disagreement with the agency's 
evaluation does not render it unreasonable.[5]  

The protester also argues that the agency's evaluation of its proposal 
under the management plan evaluation factor as "good" was 
unreasonable.  The protester asserts that it did not receive adequate 
credit for its proposed use of new (rather than used) dispensing 
equipment or for its plan to warehouse its coffee products in Korea.  
The protester concludes that because of this its "technical evaluation 
was significantly lower than warranted."

The agency responds that it has no preference for new, rather than 
used, dispensing equipment, and that, accordingly, the RFP did not 
indicate any preference.  Specifically, under the customer service 
subfactor to the management plan evaluation factor, the solicitation 
provided only that the agency would "evaluate the offeror's plan to 
install and maintain equipment necessary for dispensing . . . juice," 
and stated that "[a]ll costs to install, repair and maintain equipment 
shall be the sole responsibility of the contractor."  With regard to 
San Diego Beverage's proposed plan to warehouse its coffee products in 
Korea, the agency responds (and the record reflects) that San Diego 
Beverage's proposal failed to provide any details with regard to this 
plan, stating only that a benefit of its proposed plan "is the coffee 
which is warehoused in Korea and can be delivered to the port 
directly."  The agency concludes here that because the protester's 
proposal lacked any explanation at all regarding the protester's plan 
to warehouse its coffee products in Korea, and it sees little, if any, 
benefit in the use of new, rather than used, dispensing equipment, a 
rating of "excellent" under the management plan evaluation factor of 
customer service subfactor simply was not warranted.

Again, while San Diego Beverage clearly disagrees with the agency's 
evaluation of its proposal as "good" under the management plan 
evaluation factor, its disagreement with the agency's evaluation does 
not render the agency's rating of the protester's management plan 
unreasonable.  That is, there is nothing in the record to suggest that 
the proposed use of new dispensing equipment and plan to warehouse 
coffee in Korea, without any explanation as to how this would be 
accomplished, mandated a rating of "excellent."

The protester argues that there were other inconsistencies in the 
evaluation that render it unreasonable.  The protester points out that 
"[f]or example, one evaluator complained that it was difficult to 
determine the shelf-life of the products offered by [San Diego 
Beverage]," and contends that although Dispenser Juice's proposal was 
similar with regard to its description of the shelf-life of the 
products offered, its proposal was not similarly criticized.

The RFP's proposal preparation instructions requested that proposals 
"state the shelf life at time of production . . . [and] at Point of 
Embarkation (POE)."  The RFP added here that the "[s]helf life 
remaining at the POE shall be a minimum of 71%."  

San Diego Beverage's proposal stated with regard to 11 different 
flavored products (i.e., grape, orange, etc.) that the products' shelf 
life at time of production was 180 days, and at POE was "135-170 days 
75-94%."  Dispenser Juice's proposal specified with regard to the same 
11 flavors that its products' shelf life at time of production was 6 
months at 40ï¿½ fahrenheit (F) and 3 months at 70ï¿½ F, with a shelf life 
at POE of 5 1/2 months at 40ï¿½ F.  Given that San Diego Beverage's 
proposal indicated a range of 135 to 170 days as the shelf life for 
the products, whereas Dispenser Juice's proposal stated the shelf life 
with specificity, we cannot find that the evaluator's criticism that 
it was difficult to determine the shelf life of the products offered 
by San Diego Beverage either unreasonable or, as suggested by the 
protester, indicative of unequal treatment of the proposals during the 
evaluation process.         

San Diego Beverage initially also protested that the agency's price 
evaluation was flawed because the analysis was performed "without 
taking into consideration that the actual price for gallon of 
reconstituted juice would depend on the mix ratio of the concentrate 
provided."  In its report in response to the protest, the agency 
concedes that it "did make an improper calculation," and provides a 
revised price analysis, which calculates the proposed prices based 
upon the mix ratio of the concentrate provided.  Under this analysis, 
Dispenser Juice's proposed price per year of $3,772,628 is .2 percent 
lower than San Diego Beverage's total proposed price and 9.9 percent 
higher with the application of the SDB evaluation preference.[6]  As 
mentioned previously, the SSA had found that Dispenser Juice's 
proposal represented the best value to the government when its prices 
were believed to be 1.2 percent higher than San Diego Beverage's total 
proposed price, and 11.2 percent higher with the application of the 
SDB evaluation preference.  Because under the revised price analysis, 
the price differential between the offers is less than was thought at 
the time the initial source selection was made, there is no 
possibility that the protester was prejudiced by the agency's initial 
flawed price analysis.  Continental Airlines, Inc., B-258271.4, July 
31, 1995, 97-1 CPD  para.  81 at 8.

San Diego Beverage nevertheless contends that the agency's price and 
best value analyses are flawed because the agency did not credit it 
with the cost savings associated with its plan to warehouse its coffee 
products in Korea and proposal of "more concentrated products," which 
would result in lower freight costs.  

The RFP did not list freight or warehousing costs as an evaluation 
factor, or otherwise indicate that such costs would be considered 
during either the evaluation of proposals or the best value 
determination.  The agency thus acted properly in not considering such 
costs in either its price or best value analysis; once offerors are 
informed of the criteria against which their proposals will be 
evaluated, the agency must adhere to those criteria or inform all 
offerors of any change made in the evaluation or source selection 
scheme.  Cherokee Elecs. Corp., B-240659, Dec. 10, 1990, 90-2 CPD  para.  
467 at 4-5; Olympic Container Corp., B-219424, July 24, 1985, 85-2 CPD  para.  
83 at 3.

San Diego Beverage contends that price analysis is also flawed because 
the "standard marketing information received from [Dispenser Juice's] 
coffee supplier indicated that the coffee reconstitution ratio was 25 
to 1," whereas Dispenser Juice's proposal provides for a 30 to 1 
reconstitution ratio for coffee products.  The protester asserts that 
"the Government will either ultimately pay more for the [Dispenser 
Juice] coffee if the manufacturer's suggestions are followed when 
diluting the concentrate, or the troops will be drinking significantly 
weakened coffee."  The protester thus contends that "using the 
constitution ratio suggested by the supplier" of 25 to 1--rather than 
the ratio of 30 to 1 provided by Dispenser Juice in its proposal and 
used by the agency in its price analysis--San Diego Beverage's "prices 
would be significantly lower than [Dispenser Juice's]," which would 
increase its price advantage. 

The agency points out that the RFP only requested prices for 
"bag-in-the-box" liquid concentrate coffee products, and "did not 
specify what reconstitution ratio was required for coffee products."  
The agency adds that Dispenser Juice "is currently supplying coffee 
product under the Okinawa contract . . . at a 30 to 1 ratio, and there 
have been no complaints to date."

The literature provided with San Diego Beverage's proposal regarding 
its proposed coffee products provides for reconstitution ratios 
ranging from 30 to 1, to 45 to 1.[7]  Yet San Diego Beverage's 
business proposal, rather than providing the range of reconstitution 
ratios stated in its literature or some average reconstitution ratio, 
references a 45 to 1 reconstitution ratio for price evaluation 
purposes (which has the effect of making its evaluated price lower).  
Because any upward adjustment to Dispenser Juice's proposed price to 
account for its alleged deviation from its supplier's suggested coffee 
reconstitution ratio would necessitate a similar upward adjustment to 
San Diego Beverage's proposed price to reflect the range of 
reconstitution ratios suggested by its supplier, the protester was not 
prejudiced by the asserted defect in the agency's price evaluation.  
MAR, Inc., B-255309.4, B-255309.5, June 8, 1994, 94-2 CPD  para.  19 at 8-9; 
Picker Int'l, Inc., B-249699.3, Mar. 30, 1993, 93-1 CPD  para.  275 at 7.

Finally, San Diego Beverage challenges the agency's price/technical 
tradeoff determination based upon its contentions that the agency's 
evaluation of its and Dispenser Juice's technical and business 
proposals was unreasonable.  As explained in the analysis above, we 
cannot find the agency's evaluation of San Diego Beverage's and 
Dispenser Juice's proposals to be unreasonable.[8]  Because the agency 
in its award selection document reasonably explained why Dispenser 
Juice's higher-rated proposal was worth its evaluated price premium, 
the protester's contentions here provide no basis for overturning the 
award.  Matrix Int'l Logistics, Inc., B-277208, B-277208.2, Sept. 15, 
1997, 97-2 CPD  para.  94 at 14; Hughes Georgia, Inc., B-272526, Oct. 21, 
1996, 96-2 CPD  para.  151 at 8.

The protest is denied.

Comptroller General 
of the United States 

1. The products will be transported to the individual dining 
facilities in South Korea by the government. 

2. The adjectival ratings used by the agency in evaluating proposals 
were excellent, good, fair, and poor. 

3."Fill-rate" is defined by the agency "as the percentage of items 
delivered as compared to the total number ordered, in the time 
specified in the contract."  That is, a 99.7-percent fill rate means 
that the contractor has delivered 99.7 percent of the products ordered 
by the agency in the time required by the contract.

4. The agency states that in light of the protester's contentions 
regarding Barrios's experience, it researched its files and found that 
although Barrios has filled a substantial number of delivery orders 
for the agency since 1992, these "small purchases were not required to 
be shipped overseas, as the protester alleges."  The protester 
contends that the agency is incorrect, stating that "Barrios has 
filled hundreds of DPSC orders for juice, many for export . . . and 
for shipboard use."  We need not resolve this dispute, since as 
discussed above, the agency was not required during the evaluation 
process to search its files for contacts that were not listed by the 
offerors in their proposals.

5. The protester also asserts, based "[u]pon information and belief," 
that Dispenser Juice does not hold contracts for the facilities in 
Hawaii that were listed in its proposal, but that it "rather provides 
juice through individual purchase orders awarded by a Hawaiian 
distributor."  As indicated, the protester has not provided any 
support for this assertion, and the record reflects that Dispenser 
Juice is performing these contracts.  For example, the agency 
contacted the facilities, requesting "a brief summary of how Dispenser 
Juice, Inc. has performed," with the facility replying that "we have 
had no problems with Dispenser Juice, Inc.  Their fill rate has been 
100 [percent]."            

6. San Diego Beverage does not challenge these calculations.  

7. Dispenser Juice's proposal also contains literature from its 
supplier suggesting that the reconstitution ratios for coffee vary.

8. San Diego Beverage has made a number of other related contentions 
during the course of the protest having to do with the agency's 
evaluation of its and Dispenser Juice's proposals.  Although not all 
of San Diego Beverage's contentions are specifically addressed in this 
decision, each was considered by our Office and found to be either 
insignificant in view of our other findings, or invalid based upon the 
record as a whole.