BNUMBER:  B-280180.2; B-280180.3; B-280180.4 
DATE:  September 28, 1998
TITLE: The Xerxe Group, Inc., B-280180.2; B-280180.3; B-280180.4,
September 28, 1998
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Matter of:The Xerxe Group, Inc.

File:     B-280180.2; B-280180.3; B-280180.4

Date:September 28, 1998

Andrew Searcy, Jr. for the protester.
Louise E. Hansen, 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

Neither the Small Business Act nor any other statute precludes a 
contracting agency from comparatively evaluating the proposal of a 
small disadvantaged business concern where the solicitation's 
evaluation factors contemplate such an evaluation.

DECISION

The Xerxe Group, Inc. protests the award of contracts to any other 
offerors under requests for proposals (RFP) Nos. SP0600-97-R-0055-0109 
(-0109), SP0600-R-0055-0110 (-0110), and SP0600-97-R-0055-0111 
(-0111), issued by the Defense Energy Support Center, Defense 
Logistics Agency (DLA), for the direct supply of natural gas to 
various installations in the United States.  Xerxe, a small 
disadvantaged business (SDB) concern, protests the agency's evaluation 
of its proposals.

We deny the protests.

The protested natural gas requirements were originally to be procured 
under RFP No. SP0600-97-R-0055 (-0055), issued on June 4, 1997.  This 
RFP provided for the award of fixed-price with economic price 
adjustment, indefinite-delivery type contracts, or the issuance of 
basic ordering agreements (BOA), depending on the contract line item 
number (CLIN).  RFP -0055 stated that award would be made to the 
offeror submitting the offer determined to be the best value to the 
government, and listed the following evaluation factors in descending 
order of importance:

     (1)  Technical Experience
        (A)  Transportation
        (B)  Supply Management
        (C)  Quality of Previous Experience
     
     (2)  Past Performance
        (A)  Timeliness
        (B)  Reliability
        (C)  Customer Satisfaction[1]
     (3)  Price
     (4)  Socioeconomic Commitment

The RFP specified that technical experience was more important than 
past performance, and that technical experience and past performance 
combined were significantly more important than price.  RFP at 176.  
The RFP added that price was significantly more important than 
socioeconomic commitment.  In addition, the RFP provided for a 
10-percent evaluation preference for SDB concerns, whereby 10 percent 
would be added to the total prices (for evaluation purposes only) of 
all non-SDB concerns' offers prior to the source selection decision.  
RFP at 203.

The RFP set forth detailed instructions for the preparation of 
proposals.  Specifically, it required that offerors, among other 
things, complete the pricing sheets and technical experience form 
included in the RFP.  RFP at 175.  The technical experience form 
solicited detailed information regarding, among other things, the 
offeror's experience in transporting natural gas, in performing supply 
management, and in handling previous or current contracts with similar 
end users, and the experience of certain of the offeror's personnel.  
RFP Attachment II.  The RFP explained that the offerors' completed 
technical experience forms would be used in evaluating the offerors' 
proposals under the technical experience and past performance 
evaluation factors and their relevant subfactors.  RFP at 176-77.

Xerxe responded to RFP -0055 by completing certain of the 
solicitation's standard forms, indicating its intention to enter into 
BOAs and/or contracts, and providing a narrative technical proposal, 
which included a "Company Profile & Capability Statement," a 
"Financial Information" section, and a section purportedly describing 
its "Natural Gas Supply Sources."  Xerxe's submission did not, 
however, include a completed technical experience form or much of the 
information required for completion of the form.

The agency subsequently informed Xerxe that it could not evaluate 
Xerxe's proposal as submitted, and sent Xerxe a blank copy of the 
technical experience form that had been included in the RFP, and 
requested that Xerxe complete it.  Xerxe responded by completing a 
small portion of the form, identifying three transportation agreement 
numbers and the CLINs it expected to deliver via the applicable 
pipelines, and the names of three individuals and each individual's 
years of experience.  Xerxe's submission did not include any other 
information.

Based on its submission, Xerxe's proposal was rated as "poor" under 
the technical experience factor.  The proposal received a "neutral" 
rating under the past performance evaluation factor because it did not 
provide any information regarding Xerxe's experience in supplying 
natural gas.  Xerxe's proposal received a "good" rating under the 
socioeconomic commitment evaluation factor, even though it did not 
provide any information in response to this factor, because a rating 
of "good" was the lowest permitted by the relevant source selection 
plan.         

Because of certain delays, the agency was unable to enter into BOAs or 
contracts in time to fulfill its monthly requirements for certain of 
the locations included in RFP -0055.  Instead of proceeding under RFP 
-0055 for these locations, the agency decided to issue to all offerors 
that had expressed an interest in entering into a BOA or contract for 
these locations new RFPs for the relevant locations' monthly 
requirements.  These RFPs incorporated by reference the terms of RFP 
-0055.  

Xerxe responded to RFP No. SP0600-97-R-0055-0106 (-0106), which 
represented the March requirements for certain locations.  Although 
Xerxe's prices under the relevant CLINs were low once the SDB 
evaluation preference was considered, Xerxe's proposal was determined 
not to represent the best value because of the awardee's ratings of 
"excellent" under the technical experience and past performance 
evaluation factors, and of "very good" under the socioeconomic 
commitment evaluation factor--in comparison to Xerxe's ratings of 
poor, neutral, and good under, respectively, the technical experience, 
past performance, and socioeconomic commitment evaluation factors--and 
the awardee's evaluated price, which was only slightly higher 
(considering the SDB evaluation preference) than that proposed by 
Xerxe.

After being informed that it was not the awardee under RFP -0106, 
Xerxe requested and received a debriefing.  In response to the 
debriefing, Xerxe submitted additional materials concerning its 
technical experience and past performance.  The additional material 
consisted primarily of a narrative technical proposal that was 
virtually identical to that initially submitted by Xerxe on RFP -0055.  
The agency reevaluated Xerxe's proposal considering this additional 
information, and again rated it under the technical experience, past 
performance, and socioeconomic commitment evaluation factors as poor, 
neutral, and good, respectively, and let the RFP -0106 award stand.

RFPs -0109, -0110, and -0111, which were released in May, June, and 
July, respectively, represent the agency's June, July, and August 
natural gas requirements for certain locations.  Xerxe submitted 
offers in response to each RFP.  Again, although after the application 
of the SDB evaluation preference Xerxe's proposed prices were lower 
than the prices of the respective awardees, its proposals were 
determined not to represent the best value because of Xerxe's 
relatively low ratings vis-ï¿½-vis the relatively high ratings of the 
awardees, which had only slightly higher evaluated prices (including 
the SDB evaluation preference) than those proposed by Xerxe.

Xerxe protests that DLA is without authority to evaluate Xerxe's 
proposal, which relies upon its suppliers' experience and technical 
capabilities, and rate it negatively under the various evaluation 
factors.  In Xerxe's view, only the Small Business Administration 
(SBA) has such authority because Xerxe qualifies as an SDB concern.

Congress has established for the Department of Defense (DOD) a goal of 
5 percent of the contract funds obligated each fiscal year for the 
award of contracts and subcontracts to small business concerns owned 
and controlled by socially and economically disadvantaged 
individuals.[2]  10 U.S.C.  sec.  2323(a) (1994 & Supp. II 1996).  Section 
2323 provides that section 8(d) of the Small Business Act, 15 U.S.C.  sec.  
637(d) (1994 & Supp. II 1996), and regulations under that section, 
govern the determination of whether a business is small and whether it 
is owned and controlled by socially and economically disadvantaged 
individuals.  Consistent with this, the Small Business Act explicitly 
vests SBA with the authority to determine whether a prospective 
federal government contractor can properly be considered an SDB 
concern.  15 U.S.C.  sec.  636(j)(11)(F)(vii) (1994);  Hatco Corp., 
B-270545, Mar. 21, 1996, 96-1 CPD  para.  161 at 3.  The SBA also has 
conclusive authority to determine the responsibility of an SDB 
concern.  See 15 U.S.C.  sec.  637(b)(7) (1994); Advanced Resources Int'l, 
Inc.--Recon., B-249679.2, Apr. 29, 1993, 93-1 CPD  para.  348 
at 2.

That being said, there is nothing in the Small Business Act, or any 
other statute or regulation, that precludes an agency in its conduct 
of a procurement from comparatively evaluating the proposal of an SDB 
concern under the evaluation factors or criteria set forth in the 
relevant solicitation, as was done here.  Advanced Resources Int'l, 
Inc.--Recon., supra., at 3.   Where an offer receives less than the 
highest possible rating in the context of a comparative evaluation 
conducted under the criteria specified in an RFP, the matter is one of 
technical merit (or lack thereof), and not one of responsibility or 
small business or SDB concern status, which could be the subject of 
SBA review.  D. M. Potts Corp., B-247403.2, Aug. 3, 1992, 92-2 CPD  para.  
65 at 7.  Accordingly, Xerxe's protests that the contracting agency is 
without authority to comparatively evaluate its proposal under the 
various evaluation criteria are without merit.

Xerxe protests the agency's evaluation of its proposal under the 
supply management subfactor of the technical experience evaluation 
factor.  Specifically, while Xerxe's proposal did not address supply 
management, it argues that it should not have been found deficient 
with regard to the "pipeline supply management requirement" because 
that requirement "simply does not apply to the purchase and resell of 
Citygate supplies."[3]  Protest, June 19, 1998, at 3.  

There is no indication in the RFP that the supply management 
evaluation subfactor is not applicable to natural gas supplies 
procured through the citygate.  According to the agency, this is so 
because an offeror is still responsible for supply management by 
balancing the particular installation's account with the local 
distribution company.  Agency Report at 18.  The agency reports that, 
even when citygate supplies are procured, the contractor must still 
monitor the installation's consumption to make sure sufficient natural 
gas is available and purchased at the citygate to satisfy the 
installation's needs, thus keeping the installation's account with the 
local distribution company within balance.  Id.  Because the protester 
has not substantively responded to the agency's explanation, we have 
no basis to find it unreasonable.

Xerxe also protests its evaluation under the socioeconomic commitment 
factor.  The record shows that, even if this aspect of its protest 
were meritorious, Xerxe would not be prejudiced since it could not 
reasonably affect the award selection, given the very little weight 
accorded this factor in the RFP evaluation scheme, and the significant 
superiority of the awardees under the other, more heavily weighted 
technical factors that offset the awardees' only slightly higher 
evaluated prices.  See McDonnell Douglas Corp., B-259694.2, 
B-259694.3, June 16, 1995, 95-2 CPD  para.  51 at 17, 27-28.  

Xerxe finally complains that the agency "is without authority . . . to 
render an adverse determination as to [Xerxe's] . . . eligibility for 
SDB assistance programs."  Protester's Comments at 2.  The record 
reflects that the agency considered Xerxe an SDB concern, and thus 
entitled to the SDB evaluation preference set forth in the RFPs, in 
making its award determinations under RFPs -0109, -0110, and -0111.  
The agency has not, as implied by the protester's assertion, 
determined Xerxe to be other than an SDB concern.  Although the record 
reflects that the agency does have some concern as to whether Xerxe 
can properly be considered an SDB for future procurements, and has 
requested that Xerxe provide information regarding Xerxe's source of 
supply of the natural gas, any protest that the agency may not 
consider Xerxe eligible for the SDB evaluation preference essentially 
anticipates action in the future that might never arise.  Protests 
that merely anticipate improper agency action are speculative and 
premature, and will not be considered by our Office.  Safety-Kleen 
Corp., B-274176, B-274176.2, Nov. 25, 1996, 96-2 CPD  para.  200 at 6. 

The protests are denied.

Comptroller General 
of the United States

1. The RFP provided that the technical experience subfactors were 
listed in descending order of importance, while the past performance 
subfactors were equal in importance.  RFP at 177.

2. The DOD implementation of this legislation appears in part 219 of 
the Defense Federal Acquisition Regulation Supplement (DFARS).  This 
regulation lists the inclusion in solicitations of an evaluation 
preference for SDBs, as was done here, as one means of meeting this 
goal.  See DFARS  sec.  219.7000-7003, 252.219-7006.  

3. The natural gas industry is comprised of three major segments:  (1) 
the wellhead or production segment, in which natural gas is extracted 
from the ground; (2) the pipeline or transmission segment, in which 
the gas is transported by pipeline to the citygate; and (3) the local 
distribution segment in which utility companies and/or local 
distribution companies distribute the gas locally to commercial and 
residential customers.  The "citygate" is the connection between the 
pipeline and the local distribution segment.  Commercial Energies, 
Inc., B-240148, Oct. 19, 1990, 90-2 CPD  para.  319 at 2-3 nn.2, 4.