BNUMBER: B-280261
DATE: September 9, 1998
TITLE: Morrison Knudsen Corporation, B-280261, September 9, 1998
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Matter of:Morrison Knudsen Corporation
File:B-280261
Date:September 9, 1998
Timothy Sullivan, Esq., Katherine S. Nucci, Esq., and Martin R.
Fischer, Esq., Adduci, Mastriani & Schaumberg, for the protester.
Donald A. Tobin, Esq., Bastianelli, Brown & Kelley, for CFS Logistics,
Inc., an intervenor.
Kenneth G. Wilson, Esq., Department of the Navy, for the agency.
C. Douglas McArthur, Esq., and Christine S. Melody, Esq., Office of
the General Counsel, GAO, participated in the preparation of the
decision.
DIGEST
1. Where solicitation provided that agency would evaluate past
performance based on information presented in the proposals, awardee
presented past performance information for an affiliate that had
performed similar contracts, and protester did not advise contracting
officer in writing of adverse information regarding performance by
another of awardee's affiliates under contract for a different agency,
evaluation of past performance, which considered only the contracts
identified in the awardee's proposal, was reasonable and consistent
with solicitation.
2. Where agency found both proposals technically acceptable and both
offerors low risk under the factor of past performance, selection of
lower-priced proposal was reasonable and consistent with solicitation,
which provided that, for technically acceptable proposals, price and
past performance would be of equal importance in selection decision.
DECISION
Morrison Knudsen Corporation (MKC) protests the award of a contract to
CFS Logistics, Inc. under request for proposals (RFP) No.
N00189-97-R-0085, issued by the Department of the Navy for operation
of the agency's Advanced Traceability and Control (ATAC) program. The
protester argues that the agency's evaluation and selection decision
were unreasonable or inconsistent with the solicitation.
We deny the protest.
On September 30, 1997, the agency issued the RFP, for a fixed-price,
indefinite-delivery requirements contract to operate the ATAC program
for a 1-year base period, with two 6-month option periods. RFP sec. B.
The ATAC program is the Navy's program for managing repairable assets,
those which the agency has determined more economical to repair than
discard, which have been returned for repair. RFP sec. C.1, attachment
1, Statement of Work (SOW) 1.1. The SOW involved staffing and
operating 12 sites in the United States and abroad, providing
accountability and control over items of high dollar value or critical
to operational requirements, ranging from small electronic circuit
cards to large steam-driven deck winches, from the point of failure to
intermediate storage points and to the point of repair and back to the
end user. RFP sec. C.1, attachment 1, SOW 1.0 and exhibit 3.
The RFP provided for award to the offeror whose offer was found
technically acceptable and was most advantageous to the government
based on price and past performance, which were equal in weight as
selection criteria. RFP sec. M.1(a). It directed offerors to submit
proposals in three parts, including a technical proposal, a price
proposal, and past performance information. RFP sec. L.1. It stated
that the agency would base its evaluation of proposals on the
information presented in the proposals. RFP sec. M.1 The RFP provided
for evaluation of technical proposals considering five factors, as
follows: overall technical approach to implementing ATAC; quality
assurance; management approach; personnel qualifications; and
corporate experience. RFP sec. M.1(e). With regard to corporate
experience, the RFP advised as follows:
Offerors shall provide a synopsis of their experience within the
past six years with contracts of a similar nature and magnitude
(e.g., freight forwarding, transportation, and warehousing).
Include the same type of information relative to any applicable
subcontractor that would be participating in this program.
As a minimum, the contractor must provide an example of a
contract or function performed or managed within the last six
years which involved operation of multiple facilities, including
Conus and EXCONUS, involving custody of third party material,
electronic data transmission and fluctuating workload
requirements.
RFP sec. L.1.I.5. The agency would review this material for technical
acceptability.
As noted above, the solicitation provided for a comparative evaluation
of past performance and instructed offerors to include past
performance information in sufficient detail to identify previous
experience as it related to the probability of successful
accomplishment of the statement of work. It directed offerors to
"submit a description of their previous government (federal, state and
local) or commercial contracts (all prime and major subcontracts
received, or in performance, during the past 5 years) which are in any
way relevant to the effort required by this solicitation." RFP sec.
L.1.III. It provided for assessment of risk in the areas of timely
delivery of services, technical quality, and businesslike concern for
the interests of the customer, considering the number and severity of
any problems, the effectiveness of any corrective action taken, and
overall work record. RFP sec. L.1.III, M.1.B.
The agency received two proposals--from the protester and from the
awardee--on January 9, 1998 and referred them to its source selection
evaluation board (SSEB). The SSEB found both proposals unacceptable
but susceptible to being made acceptable. The agency held discussions
on March 3; the two offerors submitted best and final offers (BAFO) on
March 11. On May 12, the agency requested another round of BAFOs,
which the offerors submitted on May 18. As a result of discussions,
the SSEB found both proposals technically acceptable and both offerors
low risk under the past performance factor. Since the proposals were
technically acceptable and had received identical ratings for past
performance, the contracting officer selected CFS for award, based on
its lower price. The agency provided a debriefing to MKC on June 2,
and this protest followed.
The protester contends that the agency unreasonably and improperly
evaluated the past performance of CFS, a new company that is the
successor to a concern, now bankrupt, that has been in "non-use"
status with the Military Traffic Management Command (MTMC) for the
past year. MKC points out that CFS has only been in existence for 3
years. The protester therefore concludes that the only past
performance information that CFS could have provided must relate to
predecessor corporations, one of which, Calore Express, MTMC has
placed in "non-use" status.[1] It was therefore unreasonable, MKC
argues, to rate CFS as "low risk" for past performance.
The evaluation of technical proposals is primarily the responsibility
of the contracting agency, since the agency is responsible for
defining its needs and the best method of accommodating them, and it
must bear the burden of any difficulties resulting from a defective
evaluation. Litton Sys., Inc., B-237596.3, Aug. 8, 1990, 90-2 CPD para.
115 at 8. In reviewing protests challenging an agency's evaluation of
proposals, we will not substitute our judgment for that of the agency
regarding the merits of proposals; rather, we will examine the
agency's evaluation to ensure that it was reasonable and consistent
with the stated evaluation criteria and applicable statutes and
regulations. Federal Envtl. Servs., Inc., B-250135.4, May 24, 1993,
93-1 CPD para. 398 at 9. A protester's mere disagreement with the
agency's evaluation does not render it unreasonable. Id. We find the
evaluation here to be both reasonable and consistent with the RFP's
stated evaluation criteria.
The record shows that CFS supplied past performance information
related to three contracts--its own warehousing contract and two
contracts performed by CFS Air Cargo, a firm that the awardee
considers the true predecessor of CFS Logistics. Beyond references,
in the corporate experience portion of its technical proposal, to
origins with "a regional trucking company" (Calore Express,
incorporated in 1954), the proposal made little mention of affiliates
and none of Calore Freight Systems. For the contracts listed, the
record shows that the agency did contact references, who reported no
problems. The Navy states that it did not consider contracts
involving Calore Express or Calore Freight Systems because, under the
technical factor of corporate experience, CFS had primarily relied
upon the experience of its management personnel with CFS Air Cargo,
and under past performance, CFS did not reference any contract
involving Calore Express or Calore Freight Systems.
As noted above, section L.1.III of the RFP required offerors to submit
past performance information on "relevant" contracts. In this regard,
the awardee argues that CFS Air Cargo, whose assets CFS Logistics
acquired and in whose name CFS Logistics does business, and not Calore
Freight Systems, is the awardee's predecessor organization. The
contracts performed by CFS Air Cargo, which required management at
multiple sites and which contained extensive computerized
record-keeping requirements, and not the trucking contracts awarded to
Calore Freight Systems, are, the awardee argues, the contracts
relevant to performance under the instant contract. Thus, CFS argues,
it did identify the relevant contracts and provided information on the
relevant predecessor corporation as required by the solicitation. It
did not provide information on Calore Freight Systems, CFS explains,
because the RFP did not require it to provide information on its
affiliated or "sister" companies. We do not find this interpretation
unreasonable.
As a general rule, in determining whether one company's performance
should be attributed to another, an agency must consider the nature
and extent of their relationship, and it is appropriate to consider an
affiliate's performance record where it will be involved in the
contract effort or where, as here, it shares management with the
offeror. NAHB Research Ctr., Inc., B-278876.2, May 4, 1998, 98-1 CPD para.
150 at 4. Thus, the agency reasonably considered past performance by
CFS Air Cargo, which shares management with CFS Logistics, in the
evaluation of the awardee's proposal.
The protester contends, however, that regardless of the information in
CFS's proposal, information on the problems with Calore Freight
Systems was so "close at hand" that it was unreasonable for the agency
to disregard the poor performance of that firm in the past performance
evaluation of CFS. See International Bus. Sys., Inc., B-275554, Mar.
3, 1997, 97-1 CPD para. 114 at 5 (evaluation of past performance
unreasonable where agency failed to consider information "close at
hand," specifically, the protester's performance of a contract for the
same services for the same agency, simply because no one in the agency
had completed and returned the past performance evaluation forms).
MKC believes the problems of Calore Freight Systems to be so
well-known in the industry that the agency could not be ignorant of
them. In any event, the protester argues, it has presented evidence
in the form of sworn statements that its representatives discussed the
Calore companies with the contracting officer's technical
representative (COTR) prior to the submission of proposals.[2]
The RFP stated that the agency would base its evaluation of proposals
on the information presented in the proposals; therefore, reliance
upon the contracts referenced by CFS Logistics was consistent with the
solicitation. Although the COTR acknowledges that MKC raised the
issue of past performance by CFS's affiliates at a lunch, after the
site visit, she states that she told MKC to put this information in
writing, which MKC did not do; MKC does not dispute this. The COTR
did not participate in either the evaluation of past performance or
the selection of CFS. She did not independently advise the SSEB or
the selection official of her conversations with MKC officials and
states that, as she has never administered one of CFS's contracts, she
has no independent knowledge of any performance difficulties. Where
we have charged an agency with responsibility for considering
information "close at hand" in its past performance evaluation, that
information has generally concerned contracts for the same services,
with the same procuring activity, or at least information personally
known to the evaluators. See, e.g., International Bus. Sys., Inc.,
supra, and cases cited therein, at 5, including G. Marine Diesel,
B-232619.3, Aug. 3, 1989, 89-2 CPD para. 101 at 5-6; G. Marine Diesel;
Phillyship, B-232619, B-232619.2, Jan. 27, 1989, 89-1 CPD para. 90 at 4-5;
Inlingua Schs. of Languages, B-229784, Apr. 5, 1988, 88-1 CPD para. 340 at
5; and New Hampshire-Vermont Health Serv., B-189603, Mar. 15, 1978,
78-1 CPD para. 202 at 12-13.
With regard to issues raised with the COTR at the site visit, only
Calore Freight Systems' "non-use" status with MTMC would appear
relevant to the past performance evaluation. MKC did not present the
allegation (which MKC apparently knew only from rumor) or raise it
during discussions with the contracting officer. The record indicates
that the COTR's participation in the instant procurement was limited;
she had no direct role in the evaluation or selection. We see no
basis for charging the SSEB or contracting officer with knowledge of
everything that may have been said to the COTR at the site visit.
MKC also contends that, by selecting the low-priced, technically
acceptable offeror for award, the Navy failed to follow the selection
criteria of the RFP, which provided that past performance was equal in
importance to price. The Navy concedes that, during the debriefing on
June 2, it advised the protester that it had selected CFS for award as
the low-priced, technically acceptable offeror. In addition, the
business clearance memorandum, which memorialized the selection
decision, incorrectly stated that the RFP had provided for award to
the technically acceptable, low-priced offeror.
The agency explains that, in preparing the business clearance
memorandum, it inadvertently copied the format from an earlier
document and incorrectly described the basis of award as low-priced,
technically acceptable. The error was carried over to the debriefing.
Regardless of the reference to the incorrect selection criteria on
page 6 of the memorandum, however, page 8 of the memorandum contains a
detailed discussion of the criteria for evaluating past performance
and the results of the evaluation, supporting the "low risk" rating
for the two offerors.[3] MKC has made no allegation that CFS's
proposal was technically unacceptable, and the record clearly supports
the agency's determination that both contractors were technically
acceptable, with low risk. Since the agency therefore found nothing
to distinguish the two proposals technically or in the past
performance area, it was consistent with the RFP to select the
lower-priced proposal. USA TODAY, B-278650, Feb. 20, 1998, 98-1 CPD para.
71 at 6.
The protest is denied.
Comptroller General
of the United States
1. MKC categorizes the firms at issue here, affiliated with CFS, as
"corporate vehicles" for the business of Michael Calore, sharing the
same addresses and all incorporated in Rhode Island. They include CFS
Air Cargo and Calore Freight Systems, Inc., which was merged into
Calore Express, a trucking company, in 1993. According to a MTMC
letter dated May 22, 1997, placed in the record by MKC as an enclosure
to its comments of July 16, 1998, responding to the agency report,
MTMC imposed the "non-use" status on Calore Freight Systems as a
result of problems with performance of a contract at the Defense Depot
Susquehanna. The letter was addressed to JSC Investments, a holding
company for the bankrupt Calore Freight Systems, and precludes JSC and
Calore Freight Systems from transporting freight traffic for MTMC for
a period of 1 year, beginning May 22, 1997.
2. MKC representatives also advised agency officials of the
bankruptcies of certain Calore firms; however, the record shows that
the agency properly addressed issues related to CFS's financial
responsibility in its affirmative determination of responsibility; our
Office will not review such determinations, absent an allegation of
bad faith or the failure to meet definitive responsibility criteria.
See 4 C.F.R. sec. 21.5(c) (1998). In any event, the record shows that
the agency became aware of the bankruptcies of CFS Air Cargo and
Calore Express during the preaward phase here and concluded that CFS
had a line of credit more than sufficient to finance the instant
effort, considering that it is primarily a service contract, with no
great need for capital outlay at the outset.
3. For example, the memorandum notes that the references contacted
regarding CFS's past performance rated the firm's overall technical
performance as "good" and quoted the references' conclusions.