BNUMBER:  B-279793             
DATE:  July 23, 1998
TITLE: Pacific Ship Repair and Fabrication, Inc., B-279793, July 23,
1998
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Matter of:Pacific Ship Repair and Fabrication, Inc.

File:B-279793            
        
Date:July 23, 1998

Richard B. Oliver, Esq., and Linda S. Kayajanian, Esq., McKenna & 
Cuneo, for the protester. 
Samuel J. Galbo, Jr., Esq., Janice Passo, Esq., Valerie A. Williams, 
Esq., and James Beback, Esq., Department of the Navy, for the agency. 
Christine Davis, Esq., and James Spangenberg, Esq., Office of the 
General Counsel, GAO, participated in the preparation of the decision.

DIGEST

1.  An agency properly rated the protester's past performance on 
several contracts as satisfactory, where the agency relied on the 
ratings on the various elements of performance supplied by a cognizant 
contracting official, even though there was no supporting narrative on 
the questionnaire forms regarding the protester's performance of these 
contracts.

2.  An agency improperly assigned satisfactory ratings to reflect the 
protester's past performance on several contracts, where the agency 
failed to obtain any information regarding the protester's performance 
of these contracts; however, the protester has not established a 
reasonable possibility that it was prejudiced by the misevaluation, 
where the protester failed to submit any evidence that its performance 
of these contracts was better than satisfactory.

3.  An agency reasonably determined that the awardee possessed an 
exceptional past performance record and represented a minimal 
performance risk in performing the solicited ship repair contract, 
notwithstanding significant differences between the awardee's prior 
contracts and the solicited contract, where those differences  did not 
negate the applicability of the many performance strengths possessed 
by the awardee that were considered in the past performance 
evaluation.

4.  In a solicitation for a fixed-price contract that provided for a 
price realism evaluation, an agency reasonably questioned the realism 
of certain prices in the protester's proposal, where those prices were 
much lower than the independent government cost estimate and the 
prices proposed by other offerors.

DECISION

Pacific Ship Repair and Fabrication, Inc. protests the award of a 
contract to Todd Pacific Shipyards Corporation under request for 
proposals (RFP) No. N62799-98-R-0018, issued by the Department of the 
Navy, for repair work to be performed on the U.S.S. Constellation at 
the Puget Sound Naval Shipyard.

We deny the protest.

The RFP contemplated the award of a fixed-price contract based on a 
tradeoff between the offerors' evaluated prices and past performance 
ratings.  RFP  sec.  L-2-6, RFP Amendment 1  sec.  M-6(b)(1), (b)(2), (g).  The 
price factor, which provided for an evaluation of price realism, among 
other things, was significantly less important than the past 
performance factor.  RFP Amendment 1  sec.  M-6(b)(2), (c)(2).

The past performance factor contemplated a performance risk assessment 
under three subfactors, technical, schedule, and management.  RFP 
Amendment 1  sec.  M-6(b)(1)(A), (B), (C).  The offeror's performance 
ratings on relevant ship repair contracts were to be considered in 
this evaluation.  RFP Amendment 1  sec.  L-2-8(a).  Contracts involving 
work of comparable type and complexity to the instant requirements 
were to receive greater consideration in the evaluation.  RFP 
Amendment 1  sec.  M-6(b)(1).  In this regard, the "most relevant" 
contracts for evaluation purposes were fixed-price contracts performed 
within the Puget Sound Naval Shipyard for tank/void repair and 
preservation work, as required by this solicitation.  Id.  The 
solicitation asked offerors to list relevant ship repair contracts of 
more than $500,000 performed for the government within the past 3 
years and to discuss any aspect of their performance record that they 
desired the Navy to consider.  RFP Amendment 1  sec.  L-2-8(b), (c).  The 
results of the past performance evaluation were represented by 
adjectival ratings ("exceptional," "very good," "satisfactory," 
"neutral," "marginal," and "unsatisfactory"), risk assessment ratings 
("high," "moderate," "minimal," and "none"), and ratings to express 
the relevance of the evaluated contracts ("relevant," "some 
relevance," "barely relevant," and "not relevant").[1]  

Four firms submitted initial proposals, including Pacific Ship and 
Todd.  The agency conducted oral discussions relating to price only 
with all offerors and requested best and final offers.  Pacific Ship 
submitted the lowest-priced offer at $1,998,852, and Todd submitted 
the next lowest-priced offer at $2,659,035, which was close to the 
government estimate of $2,638,934.

In terms of past performance, Todd's proposal was highest-rated and 
Pacific Ship's proposal was next highest-rated.  Todd's past 
performance evaluation was based on seven contracts, four "somewhat 
relevant" and three "barely relevant"; the relevance ratings reflected 
the fact that Todd predominantly performed the contracts at its 
private shipyard, some on a cost-reimbursement basis.  The PPET 
identified 24 major strengths, 3 minor strengths, 4 minor weaknesses, 
and no major weaknesses stemming from Todd's performance of these 
contracts, and rated Todd's overall past performance 
"exceptional/minimal risk."  Pacific Ship's past performance 
evaluation was based on 20 contracts, 14 "relevant" and 6 "somewhat 
relevant"; its performance record was deemed more relevant than 
Todd's.  The PPET identified 27 major weaknesses, 3 minor weaknesses, 
2 major strengths, and 1 minor strength stemming from the protester's 
performance of the evaluated contracts, and rated Pacific Ship's 
overall past performance "satisfactory/moderate risk."

Based on the results of the price and past performance evaluations, 
the best value advisory committee (BVAC) identified several evaluated 
past performance weaknesses and certain unrealistic prices in the 
protester's proposal as risk factors.  Overall, the BVAC's conclusion 
was that the $660,183 price premium associated with Todd's offer was 
justified to avoid the greater performance risks posed by Pacific 
Ship.[2]  The contracting officer adopted the BVAC's selection 
recommendation.  This protest followed.

Pacific Ship protests that the PPET lacked sufficient information to 
rate 11 of the 20 contracts that formed the basis of its past 
performance evaluation.  The PPET assigned "satisfactory" ratings to 
these 11 contracts.  The protester claims that its performance of 
these contracts was very successful and that the Navy would have rated 
these contracts higher, if it had sought more information from 
cognizant Navy contracting personnel or from Pacific Ship during 
discussions.

It is not the function of our Office to evaluate past performance 
information de novo.  Rather, we will examine an agency's evaluation 
only to ensure that it was reasonable and consistent with the stated 
evaluation criteria and applicable statutes and regulations, since 
determining the relative merit of offerors' past performance 
information is primarily a matter within the contracting agency's 
discretion.  See Boeing Sikorsky Aircraft Support, B-277263.2, 
B-277263.3, Sept. 29, 1997, 97-2 CPD  para.  91 at 5.

The record shows that, of the 11 allegedly misevaluated contracts, 7 
were for ship repair work on the U.S.S. Constellation performed 
between 1995 and 1997.  The record shows that the PPET assigned 
"satisfactory" ratings to the protester's performance of these 
contracts based on information obtained from a contracting official at 
the cognizant Navy contracting activity.  This respondent completed a 
questionnaire asking him to rate the protester's performance as 
"excellent," "satisfactory," "marginal," or "unsatisfactory," with 
regard to four performance standards.  The respondent gave the 
protester "satisfactory" ratings under each performance standard for 
all seven U.S.S. Constellation contracts; these rating were adopted by 
the PPET.  In an affidavit submitted during the course of this 
protest, the respondent explained that he based his ratings on advice 
from the project officer assigned to these contracts, who 
characterized the protester's performance under each standard as 
satisfactory and who recalled no distinguishing good or bad features 
about any aspect of the protester's performance.[3]  The respondent 
did not believe that comments were necessary because there were no 
notable performance strengths or weaknesses to report in the 
protester's performance of the seven contracts.

The protester characterizes the questionnaires as superficial and 
incomplete because the respondent did not justify the ratings in the 
"comments" block of the questionnaires, which allegedly should have 
caused the PPET to solicit more information about the protester's 
performance.[4]  Although the respondent did not justify the 
"satisfactory" ratings with supporting narrative, we do not agree that 
the agency under these circumstances was required to conduct further 
investigation to validate or supplement the ratings, given that the 
record shows that the "satisfactory" ratings reflected the judgment of 
a cognizant contracting official with specific knowledge of the 
contracts in question.  See Black & Veatch Special Projects Corp., 
B-279492.2, June 26, 1998, 98-1 CPD  para.  173 at 7; SDA Inc., B-256075, 
B-256206, May 2, 1994, 94-2 CPD  para.  71 at 7 n.9.   In any event, even 
assuming that the questionnaires lacked sufficient support for the 
ratings assigned, the protester has submitted no evidence that its 
performance of the U.S.S. Constellation contracts was better than 
satisfactory, as discussed further below.

With regard to the other four allegedly misevaluated contracts, we 
find that the PPET lacked sufficient information to support the 
"satisfactory" ratings assigned.  The respondents who completed the 
questionnaires for these four contracts declined to rate the 
protester's performance because they were unable to locate 
knowledgeable contracting personnel or past performance records 
documenting the protester's performance.  Nevertheless, the PPET 
assigned "satisfactory" ratings to the protester's performance of 
these four contracts.

The Navy has not identified, nor can we find, any precedent that would 
permit the agency to assign a qualitative rating--"satisfactory" or 
otherwise--in the absence of any information to support that rating.  
In our view, once the agency decided to include these contracts within 
the scope of its past performance evaluation, it had a duty to acquire 
information adequate to support an evaluation.  See Northwest 
EnviroService, Inc., B-247380.2, July 22, 1992, 92-2 CPD  para.  38 at 5-11.  
The Navy's failure to do so renders the "satisfactory" ratings 
assigned to the four contracts unreasonable.[5]

Although we find that the Navy misevaluated these contracts, the 
protester has not established the possibility of competitive prejudice 
arising from the misevaluation. Our Office will not sustain a protest 
unless the protester demonstrates a reasonable possibility that it was 
prejudiced by the agency's actions, that is, unless the protester 
demonstrates that, but for the agency's actions, it would have had a 
substantial chance of receiving the award.  McDonald-Bradley, 
B-270126, Feb. 8, 1996, 96-1 CPD  para.  54 at 3; see Statistica, Inc. v. 
Christopher, 102 F.3d 1577 (Fed.  Cir. 1996).  Based on our review of 
the record, we conclude that the protester would not have had a 
reasonable possibility of receiving the award, even if the agency had 
solicited more information regarding these contracts.

The protester characterizes its performance under the four contracts 
(as well as the seven U.S.S. Constellation contracts) as very 
successful, and states that the Navy could have acquired information 
to this effect had it discussed the matter with Pacific Ship or 
queried other Navy contracting personnel familiar with the contracts.  
During a telephone conference, our Office advised protester's counsel 
that the protester had not submitted any evidence to substantiate its 
claim that its performance of the 11 contracts was better than 
satisfactory, and offered the protester an opportunity to submit 
evidence on this point, which it declined.[6]  In the absence of such 
evidence, we think it unlikely that Pacific Ship or Navy contracting 
personnel would have produced, even if requested, information that the 
performance of these contracts was better than satisfactory.[7]  See 
Black & Veatch Special Projects Corp., supra, at 8-9.  We therefore 
find that no reasonable possibility of prejudice resulted from the 
protested "satisfactory" ratings or the lack of discussions as to 
those ratings.[8]

Pacific Ship also protests that Todd's past performance did not 
warrant an "exceptional/minimal risk" rating.  Pacific Ship does not 
protest that the PPET misevaluated any of the seven contracts that 
formed the basis for Todd's past performance evaluation.  Rather, the 
protester argues that the PPET did not take the limited relevance of 
these contracts into account in assigning Todd an overall 
"exceptional/minimal risk" rating.  We disagree.  

Although Todd predominantly performed the evaluated contracts at its 
private shipyard, some on a cost-reimbursement basis, the protester 
has not established that the relevance of these contracts was too 
limited to support the awardee's "exceptional/minimal risk" past 
performance rating.  Pacific Ship has not, for example, shown that 
Todd's contracts involved work of a different type or complexity than 
that required by the instant solicitation.  Nor has Pacific Ship 
protested any of the 24 major strengths and 3 minor strengths 
attributed to Todd's performance of its contracts, or shown these 
strengths to be inapplicable to the performance of a fixed-price 
contract at a public shipyard.  

Moreover, contrary to the protester's apparent belief, nothing in the 
solicitation precluded the PPET from judging an offeror's past 
performance "exceptional" or "minimal risk" merely because the 
offeror's performance history did not include fixed-price contracts 
performed at a public shipyard.  The RFP simply provided that the 
agency would give greater weight to contracts involving work of 
comparable type and complexity to the instant requirements, RFP 
Amendment 1  sec.  M-6(b)(1), and the record does not support that the PPET 
disregarded this requirement in its evaluation of Todd's past 
performance.  

Specifically, Todd earned nine "exceptional" ratings for its 
performance of the three "barely relevant" contracts; five 
"exceptional" and seven "satisfactory" ratings for its performance of 
the four "somewhat relevant" contracts; and a combination of minimal- 
and no-risk ratings for all contracts.  Although the protester argues 
that the impact of the "satisfactory" ratings scored on the "somewhat 
relevant" contracts should have been greater, so as to reduce Todd's 
past performance rating to "very good," this amounts to mere 
disagreement with the agency's judgment, which does not establish that 
the evaluation was unreasonable.  See Medland Controls, Inc., 
B-255204, B-255204.3, Feb. 17, 1994, 94-1 CPD  para.  260 at 3.  
Accordingly, we find no error with respect to the evaluation of Todd's 
past performance.

Pacific Ship finally protests that the BVAC's price/past performance 
tradeoff was compromised by an allegedly improper price analysis of 
the protester's proposal.

"Realism" ordinarily is not considered in the evaluation of proposals 
for the award of a fixed-price contract because the government's 
liability is fixed and the risk of loss is borne by the contractor.  
Human Resources Sys., Inc.; Health Staffers, Inc., B-262254.3 et al., 
Dec. 21, 1995, 96-1 CPD  para.  35 at 5.  However, because the risk of poor 
performance when a contractor is forced to provide products or 
services at little or no profit is a legitimate concern in evaluating 
proposals, an agency at its discretion may, as here, provide for a 
price realism analysis in the solicitation of fixed-price proposals.  
Cardinal Scientific, Inc., B-270309, Feb. 12, 1996, 96-1 CPD  para.  70 at 
4; PHP Healthcare Corp.; Sisters of Charity of the Incarnate Word, 
B-251799 et al., May 4, 1993, 93-1 CPD  para.  366 at 5.  The Federal 
Acquisition Regulation (FAR) provides a number of price analysis 
techniques that may be used, including a comparison of the prices 
received with each other, FAR  sec.  15.404-1(b)(2)(i) (FAC 97-02), and 
with an independent government cost estimate, FAR  sec.  15.404-1(b)(2)(v).  
The nature and extent of an agency's price realism analysis are 
matters within the sound exercise of the agency's discretion.  
Cardinal Scientific, Inc., supra, at 4.

The BVAC criticized three areas of the protester's price proposal as 
unrealistic based on a comparison with the other prices received and 
with an independent government estimate, techniques recommended by the 
FAR.  We find no error with respect to the adequacy of the price 
analysis or the reasonableness of the findings based upon it.

First, the BVAC found that Pacific Ship's offer was significantly 
lower than the government estimate and the other offers received.  The 
protester does not question this finding, but argues that its price 
was low because it proposed lower wages for its workforce, not because 
it underestimated the labor hours required to perform the contract, 
which are generally in line with the labor hours proposed by other 
offerors and used in the government estimate.  We are not persuaded by 
the distinction advanced by the protester.  In our view, the fact that 
the protester's labor rates were much lower than the rates proposed by 
the other offerors and estimated by the government, as was the case 
here, could be considered by the agency as increasing the risk of poor 
performance.  See JWK Int'l, B-256609.4, Sept. 1, 1994, 95-1 CPD  para.  166 
at 6-7.

In addition, the BVAC found that Pacific Ship significantly underbid 
two contract line items (CLIN), a CLIN for management costs and a CLIN 
for material costs.  The record reflects that Pacific Ship's price for 
the management CLIN was considered too low in relation to the 
government estimate, while its price for the material CLIN was 
considered too low in relation to the prices proposed by other 
offerors.  According to the protester, "[t]he Navy's inconsistent cost 
evaluation standard demonstrates the results oriented nature of [its] 
analysis."  Protester's June 2, 1998 comments at 20.  Contrary to the 
protester's arguments, the FAR does not limit the agency to a single 
price analysis technique, but provides that the government "may use 
various price analysis techniques and procedures" in its price 
evaluation, as was done here.  FAR  sec.  15.404-1(b)(2).  Because the 
protester does not dispute that its prices for these CLINs were very 
low based upon the FAR-prescribed price analysis techniques used, we 
cannot say that the agency erred in questioning the protester's 
prices.

The protest is denied.

Comptroller General
of the United States

1. The RFP prescribed the adjectival ratings, RFP  sec.  M-6(b)(1), while 
the past performance evaluation team (PPET) developed the risk 
assessment ratings and contract relevance ratings.

2. In its report to the contracting officer, the BVAC incorrectly 
stated that Todd's offer was 25 percent higher than Pacific Ship's 
offer, instead of stating that Pacific Ship's offer was 25 percent 
lower than Todd's offer (or that Todd's offer was 33 percent higher 
than Pacific Ship's offer).  However, because the BVAC accurately 
reported both offerors' prices and the $660,183 price differential to 
the contracting officer, any error in reporting the percentage 
relationship between the firms' prices was inconsequential, as the 
contracting officer confirmed in an affidavit submitted in response to 
this protest.

3. In its agency report, the Navy initially misstated how these 
contracts were evaluated, but later corrected its misstatement.  The 
contemporaneous record supports the Navy's corrected version of this 
evaluation.

4. The protester similarly notes that the PPET lacked the second page 
of the questionnaires, which included additional space for the 
respondent's comments.

5. The Navy also argues that the assignment of "satisfactory" ratings 
benefitted the protester because the Navy could have assigned 
"neutral" ratings to the contracts for which it lacked past 
performance information.  There is no merit to this argument.  The RFP 
allowed the Navy to assign a "neutral" rating under the past 
performance factor to "an offeror without a record of relevant past 
performance or for whom information on past performance is not 
available."  RFP Amendment 1  sec.  M-6(b)(1).  "Neutral" ratings under the 
RFP were thus for offerors, not for individual contracts.

6. Pacific Ship argues that it did not have documents supporting the 
absence of problems in past contracts.  Protester's June 19, 1998 
Response at 19 n.31.  Elsewhere, it argues that it would be "very 
difficult" to produce documents to prove the strength of its past 
performance.  Id. at 11 n.20.  We view this position as inconsistent 
with the protester's view that "it is ludicrous to suggest that 
Pacific Ship could not have presented information regarding its 
performance of these eleven contracts during discussions, if it had 
been given the opportunity."  Protester's June 2, 1998 Response at 
7-8.  Our Office provided Pacific Ship such an opportunity, and it 
declined to present any evidence that its performance was better than 
satisfactory.

7. The protester's proposal also included no information regarding the 
alleged successful performance of the contracts, even though the RFP 
invited offerors to discuss any aspect of their performance records 
that they desired the Navy to consider.  RFP Amendment 1  sec.  L-2-8(b).

8. We also question whether better ratings on the protested contracts 
could have reasonably been found to offset the effect of the 27 major 
weaknesses and 3 minor weaknesses arising from the protester's more 
recent contract history, none of which were protested by Pacific Ship.