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.