BNUMBER: B-280645
DATE: September 17, 1998
TITLE: Phillips Industries, Inc., B-280645, September 17, 1998
**********************************************************************
Matter of:Phillips Industries, Inc.
File: B-280645
Date:September 17, 1998
Marshall L. Phillips III for the protester.
Philip F. Eckert, Jr., Esq., Defense Logistics Agency, for the agency.
Michael Golden, Esq., Office of the General Counsel, GAO, participated
in the preparation of the decision.
DIGEST
Agency selection of slightly higher-priced offeror with excellent
performance history instead of lower-priced offeror with no
performance history is reasonable and consistent with solicitation's
evaluation scheme, which weighed past performance and price equally,
and where the item was in backlog status, anticipated demand was high,
and agency concluded that the awardee's established excellent record
for timely delivery was worth the slightly higher price.
DECISION
Phillips Industries, Inc. protests the Defense Supply Center
Richmond's (DSCR) award of a contract for "Combat Quick Kill"
insecticide, a commercial item manufactured by Clorox Company, to
Amjay Chemicals under request for proposals (RFP) No.
SP0450-98-R-0989. The item is a "bait station," commonly referred to
as a "roach motel." Contracting Officer (CO) Report, Aug. 12, 1998,
at 2. Phillips, the low-priced offeror, alleges that DSCR misapplied
the evaluation factor for past performance and made an improper
tradeoff decision to award the contract to Amjay, the third
lowest-priced offeror.
We deny the protest.
The RFP required delivery of 3,000 packages of this product within 45
days after award. RFP section B, at 2; RFP, DSCR clause 52.211-9G52,
at 8. The RFP provided:
The Government will award a contract . . . to the responsible
offeror whose offer conforming to the solicitation will be most
advantageous to the Government, price and other factors
considered. The following factors shall be used to evaluate
offers:
See Section M of the solicitation
Technical and past performance, when combined, are equal.
RFP, Federal Acquisition Regulation (FAR) clause 52.212-2, "Evaluation
- Commercial Items (Oct. 1997)," at 4.
Section M of the RFP contained a DSCR clause, 52.215-9G05,"Automated
Best Value Model (Nov 1996)," at 13, which provided that:
(a) Award. The award against this solicitation shall be made
based on a comparative assessment of offerors' prices and past
quality and delivery performance. Price and past performance are
the primary evaluation factors. The award may be made to other
than the low-priced, technically acceptable responsible offeror.
For this award, price and performance factors will be evaluated
equally unless a different order of precedence is indicated
below:
[ ] Performance is of greater importance than price.
[ ] Price is of greater importance than performance.
For this award, the performance factor considers quality
performance and delivery performance to be of equal value
unless otherwise indicated below:
[ ] Quality performance is of greater importance than delivery
performance.
[ ] Delivery performance is of greater importance than quality
performance.
(b) The Automated Best Value Model (ABVM) Score.
(1) To evaluate each offeror's past performance, each
offeror will be assigned an ABVM score based on the
offeror's past performance. . . . The ABVM score . . . is a
combination of an offeror's delivery and quality scores.
The quality score will be comprised of validated contractor
caused product and packaging nonconformances and negative
lab tests during the rating period . . . . The delivery
score will be comprised of all lines reflected delinquent
during the rating period . . . .[1]
Subsection (d) of this clause provided that:
The lack of performance history is not grounds for
disqualification for award but may cause the offeror to be
considered less favorably than an offeror with favorable
performance history. Conversely, new offerors may be
considered more favorably than scored offerors with poor
performance history. The contracting officer also may
consider the need to expand the supplier base and the
possibility of enhancing future competition when new
offerors are present.
Finally, subsection (f) stated the following:
General Basis for Award. Award will be made to the offeror whose
proposal conforms to the terms and conditions of the solicitation
and which represents the best value to the Government. In making
the best value determination, the Government will make a
comparative assessment of the proposals. Where the offeror with
the best performance history has not also offered the lowest
price, the Government will determine the appropriate trade-off of
price for past performance. The following considerations may
affect the trade-off determination:
--Weapons system application/item criticality.
--Delivery schedule/inventory status.
--Historical delivery/quality problems.
--Limitation of supply sources/industrial base concerns.
--Benefits from obtaining new sources.
Nine firms, including Phillips, Amjay, and Landscapers Supply,
submitted offers. The contracting officer initiated negotiations with
the firms. CO Memorandum for Record, July 21, 1998, at 1-2. The
contracting officer then prepared an ABVM evaluation sheet which
listed an offeror's unit and total price and ABVM rating. ABVM sheet,
July 15, 1998, and CO Report, at 4. Phillips and Landscapers Supply
had no performance histories for this product, and therefore no ABVM
ratings. Specifically, Phillips was denoted as "unscored." Amjay
received an ABVM score of 97.8. Amjay's total price was $5,820 higher
than the Phillips total price, and $5,760 higher than Landscapers
Supply's total price. CO Memorandum for Record, at 2-3. The
contracting officer also reviewed the inventory position for the item.
She found that there was no current stock, that 52 packages were on
"back order," and that anticipated demand was 542 packages per
quarter. CO Memorandum for Record, at 2; CO Report, at 4.
The contracting officer awarded the contract on the following basis:
Based on a comparative assessment of all prices offered, Amjay
Chemicals [was] not the lowest offer received nor the highest
scored, but [had] a very good ABVM score . . . . The low offers
from Phillips Ind. & Landscapers Supply reveal that they have
never furnished items to DSCR and therefore would be a great risk
if an award were finalized with either of these firms considering
that this item is already in a backorder situation. It is in the
Government's best interest to pay $5820.00 or 4.5% (Phillips) and
$5760.00 or 3.1% (Landscapers Supply) more for the product to a
supplier, to be assured of timely delivery.
CO Memorandum for Record, at 3; Award Justification document, July 21,
1998.
In the agency report, the contracting officer elaborates further on
her decision stating:
Consistent with the ABVM Clause, [she] considered the presence of
backorders and high demand for the item represented a higher than
normal risk of non-performance. The lowest priced offerors,
Phillips and [Landscapers Supply], had neutral performance
ratings. The third lowest offeror, Amjay, had excellent
performance history, rating a 97.8 out [of] 100 ABVM score. Yet,
Amjay's price was only around 3% higher than Phillips and
[Landscapers Supply]. She concluded that Amjay's price was worth
the reduced risk of non-performance, in light of the high-demand
for items already in a back-ordered inventory position. Thus,
Amjay represented the best value to the Government.
CO Report, at 7.
Phillips argues that it should have been awarded the contract under
the evaluation scheme which provided that an "unscored" vendor--one
with no performance history--would be given a neutral rating for past
performance. Phillips argues that it was penalized for its lack of
past performance history based on the contracting officer's statements
in the Memorandum for Record (and the Award Justification document)
that there would be a "great risk" if an award was made to either of
the firms with no contract performance history with DSCR. Phillips
asserts that the solicited item is a dealer-supplied item shipped
directly from Clorox to the agency warehouse and that Phillips, Amjay
or any other dealer could essentially perform the contract by placing
an order and invoicing the government. Protester comments, Aug. 21,
1998, at 2-3.
We think the agency's decision to award to Amjay was reasonable and
consistent with the RFP. Here, the RFP established that price and
past performance would be the factors for award among the technically
acceptable firms. The ABVM clause stated how past performance would
be rated based on ABVM scores, that a lack of performance history
would not disqualify a firm, but that, among other things, the offeror
could be considered less favorably than an offeror with a favorable
performance history. The clause further provided for a comparative
assessment of offers and stated that "[w]here the offeror with the
best performance history has not also offered the lowest price, the
Government will determine the appropriate trade-off of price for past
performance." RFP, DSCR clause 52.215-9G05(f), at 13.
The RFP listed certain factors, including delivery schedule/inventory
status, which could affect the tradeoff determination. Here, the
contracting officer decided, given the high demand and the backlog
status for the item, that award to a slightly higher-priced firm which
had an excellent performance history was justified to ensure timely
delivery and represented the best value to the government. This was
entirely consistent with the RFP evaluation scheme and the discretion
afforded the contracting officer in making the tradeoff decision. See
Excalibur Sys., Inc.,
B-272017, July 12, 1996, 96-2 CPD para. 13 at 3.
As we stated in Excalibur, supra, at 3, the use of a neutral rating
approach, to avoid penalizing a vendor without prior experience and
thereby enhance competition, does not preclude, in a best value
procurement, a determination to award to a higher-priced offeror with
a good past performance record over a lower-cost vendor with a neutral
past performance rating. Indeed, such a determination is inherent in
the concept of best value.
We share the protester's concern with the language in the selection
decision documentation that Phillips and Landscapers Supply, vendors
with no performance histories, pose a "performance risk" or a "great
risk" for award. As the protester argues, a company like Phillips
which may be new to government contracting should not be disqualified
from award merely because it lacks a performance history. As the
agency recognizes, such an approach would be inconsistent with the FAR
and the RFP. FAR sec. 15.305(a)(2)(iv) provides that, for past
performance evaluations, in the case of an offeror without a record of
relevant past performance or for whom information on past performance
is not available, the offeror may not be evaluated favorably or
unfavorably on past performance. The RFP ABVM clause also states that
lack of performance history is not grounds for disqualification for
award. RFP, DSCR clause, 52.215-9G05(d), at 13; CO Report, at 6-7.
Nonetheless, as explained above, the contracting officer's decision to
award to the slightly higher-priced firm with an established excellent
performance history, rather than a lower-priced vendor with no
performance history with the agency, was permissible and reasonable.
We deny the protest.
Comptroller General
of the United States
1. Although not pertinent here, the clause also provides how vendors
can obtain their scores and challenge any negative data. RFP, DSCR
clause 52.215-9G05(b)(2) and (3), at 13.