BNUMBER: B-280814
DATE: November 25, 1998
TITLE: Packaging Strategies, Inc., B-280814, November 25, 1998
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Matter of:Packaging Strategies, Inc.
File: B-280814
Date:November 25, 1998
James H. Roberts, III, Esq., Manatt, Phelps & Phillips, for the
protester.
Edward LeCouix for ECS Composites, an intervenor.
Robert C. Peterson, Esq., Department of the Navy, for the agency.
Henry J. Gorczycki, Esq., and James A. Spangenberg, Esq., Office of
the General Counsel, GAO, participated in the preparation of the
decision.
DIGEST
1. A proposal for transit cases is technically acceptable with regard
to a requirement that the cases not have sharp metal edges, where the
initial proposal did not take exception to the requirement and
subsequent proposal revisions stated that there would be no sharp
edges.
2. Agency selection of a higher-priced offeror with a reasonably
assessed low performance risk rating, instead of a lower-priced
offeror with a reasonably assessed high risk rating, based on prior
contract delinquencies and quality defects, is reasonable and
consistent with the stated evaluation scheme.
DECISION
Packaging Strategies, Inc. protests an award to ECS Composites under
request for proposals (RFP) No. N65236-98-R-0457, issued by the
Department of the Navy, Space and Naval Warfare Systems Center
Charleston, South Carolina, for five types of transit cases for
information technology equipment.
We deny the protest.
The RFP was issued on July 9, 1998, as a total small business
set-aside, pursuant to the streamlined procedures of Federal
Acquisition Regulation (FAR) Subpart 12.6 (June 1997) for the
evaluation and solicitation of commercial items. RFP at 1. The
procurement was handled as part of the test program using simplified
acquisition procedures for commercial items. See FAR Subpart 13.5.
The RFP contemplated a fixed-price, indefinite-delivery,
indefinite-quantity contract for 3 years with an estimated total
quantity of 2,900 cases and a minimum guaranteed value of $50,000.
RFP at 1-2.
The cases will be used to transport Intelligence/Operations
Workstation (IOW) equipment in combat and combat-simulated situations.
Agency Report, Sept. 15, 1998, Tab 30, RFP at 1. The agency has a
critical need for these cases, which are the cornerstone of the entire
IOW design; it found that expedited acquisition of the cases is
required and acquisition delays will cause a substantial delay in the
fielding of the IOW. Agency Report, Tab 30. The RFP stated that
meeting the stated delivery schedule was critical. RFP at 3.
The RFP stated that award would be made on a best value basis and
listed two evaluation factors of equal importance--past performance
and price. RFP at 3. The stated criteria for evaluating past
performance were quality of product or service and timeliness of
performance/delivery. Id. The RFP instructed offerors to submit data
on a maximum of five contracts performed in the past 3 years. Id.
The RFP stated that data submitted by offerors and independent data
may be used in the evaluation and, since the government may not
interview all of the sources provided by the offeror, it was the
offeror's responsibility to explain the relevance of the data it
provides and to submit thorough and complete past performance
information. Id.
Five offerors submitted proposals by the July 16 due date.
Ultimately, only the proposals of Packaging Strategies and ECS were
determined to be in the competitive range. Agency Report at 3. The
agency evaluated the proposals for compliance with the technical
requirements stated in the RFP, and for past performance and price
under the RFP's best value evaluation plan. Packaging Strategies'
proposed price was lower than ECS's. Id.
Packaging Strategies' proposal was evaluated as technically
acceptable. Under past performance, the proposal identified 10 prior
contracts for evaluation; however, it did not provide all of the
contract information requested in the RFP. Although the RFP stated
that information on a maximum of five contracts could be submitted,
the agency attempted to contact eight of Packaging Strategies'
references--all of the points of contacts for which adequate
information was given. Of these attempted contacts, the agency
successfully reached five references, four of which submitted past
performance questionnaires. Of the four responding references, one
reported quality deficiencies, a second reported slow delivery, and a
third reported deficiencies in both areas. The fourth questionnaire
was incomplete and did not provide information to permit evaluation
under quality, although it did indicate that Packaging Strategies
timely performed under the contract. The agency considered the
reported deficiencies in quality and delivery to be more than isolated
incidents and evaluated Packaging Strategies as high risk under past
performance. Agency Report at 3, Tab 8.
ECS's proposal contained five past performance references. The agency
contacted all of these references and received questionnaires from two
of them. Both references provided comments which rated ECS's
performance as excellent for quality and timely delivery. The agency
evaluated ECS as low risk under past performance. Agency Report at 3,
Tab 7.
The agency had questions concerning ECS's proposal regarding its
compliance with the technical requirements for color, placement of
connectors (applicable only to case A), and no metal knife-edges.
Agency Report at 3-4. On July 17, the agency contacted ECS and
advised it of some of its technical concerns. Agency Report at 3-4,
Tab 9. ECS responded that same day, by e-mail and fax, providing a
sample of the color of its proposed cases and a revised drawing
covering all five cases, which identified the proposed color as
"forest green" (the color specified in the RFP) and that the metal is
"free of knife sharp edges." Agency Report, Tab 9.
By letter of August 3, the agency amended the RFP, clarifying that the
evaluation was a two-step process with the first step being a
pass/fail technical evaluation and the second step being the best
value evaluation of past performance and price. Agency Report, Tabs
13, 14. The amendment also stated that all line-item pricing was to
be based on shipping costs for delivery to North Charleston, South
Carolina. Id. The agency's letter also advised each offeror of
additional information requested as a result of the agency's
evaluations. Packaging Strategies received notice of the agency's
receipt of adverse past performance information under three of its
past contracts. ECS received notice of the evaluated technical
concerns which were previously identified. Revised proposals were due
by August 5. Id.
Packaging Strategies responded by letter dated August 4. It
essentially confirmed that all of the instances of adverse past
performance occurred. Packaging Strategies suggested that the late
deliveries could have been due either to engineering changes made by
the customer's engineering department, which were not communicated to
the contracts department, or, in the case of Packaging Strategies'
performance as a subcontractor, its failure to inform its prime
contractor of replacement parts shipments which Packaging Strategies
had made directly to the government, which resulted in a decrease in
available parts and caused late delivery on all subsequent orders.
Regarding a quality problem which resulted in returned items,
Packaging Strategies stated that it promptly fixed the defects.
Packaging Strategies also submitted letters of reference from several
previous customers with general endorsements of the firm's record of
quality and timely performance. Agency Report, Tab 15. Packaging
Strategies' total price was $1,646,350.[1] Agency Report, Tab 24,
Attachment 1 at 2.
ECS's revised proposal stated that the connectors in question on case
A had been relocated and provided a revised drawing showing that
revision. The revised drawing for case A, and a corresponding
statement in its cover letter, stated that there would be no metal
knife-edges. Agency Report, Tab 20; Agency Supplemental Document
Submission, Oct. 8, 1998. ECS increased its original price to account
for the amended shipping requirement; its total price was $2,385,786.
Agency Report, Tab 24, Attachment 1 at 2.
The agency evaluated the additional information and proposal revisions
submitted by the offerors. The agency determined that the information
submitted by Packaging Strategies, which acknowledged and explained
instances of late delivery and quality deficiencies, did not negate
the occurrence of these events, nor address how Packaging Strategies
would prevent similar events from occurring in the future. Thus, the
high risk evaluation for Packaging Strategies did not change. Agency
Report at 4, Tab 16.
ECS's revised proposal addressed the identified areas of technical
concern and was evaluated as technically acceptable. Also,
notwithstanding the positive past performance ratings of ECS, the
agency, anticipating a possible award to ECS, requested a pre-award
responsibility determination review on August 7 by the Defense
Contract Management Command (DCMC). DCMC reported that of the five
transit case contracts ECS had with the Department of Defense in the
previous 12 months, late delivery occurred under two of the contracts.
The agency requested and received information on these late deliveries
from ECS that same day. One delay was attributable to the
government's adding an unnecessary requirement to the contract, and
subsequently delaying the correction of the contract requirements.
The other delay was due to ECS recording an incorrect delivery date in
its computer system, which ECS subsequently corrected, although an
8-day delay resulted. Agency Report at 5, Tabs 18, 19. The
contracting officer determined that this negative information was
offset by the explanations and did not warrant a change in ECS's past
performance evaluation. Agency Report, Tab 18.
As noted, Packaging Strategies offered the lowest price and ECS had
the better past performance evaluation. The contracting officer
sought the opinions of the evaluators on whether ECS's advantage under
the past performance factor offset the price advantage of Packaging
Strategies' proposal. In addition to a general description of the
added time and labor which deficiencies in quality performance and
late deliveries would cause for the agency, the contracting officer
was advised that this procurement was critical to the user activity
and the agency had been specifically instructed that it could not be
late on this project. Agency Report, Tab 24, Attachment 3 at 1. The
contracting officer determined that ECS's proposal represented the
best value to the government, stating:
Though their proposal was not the one offering the lowest overall
price, it was the one which received the highest past performance
rating and was determined worth the price premium because of
their excellent past performance evaluation in the areas of
quality and timeliness of delivery.
Agency Report, Tab 24, Attachment 1 at 2.
The agency awarded a contract to ECS on August 7. This protest
followed.[2] The agency has continued performance of the contract
based on urgent and compelling circumstances.
The protester first alleges that ECS's revised proposal is technically
unacceptable because it states only that it will comply with the
no-metal-knife-edge requirement for case A, and does not state that it
will comply with this requirement for the other four cases.[3]
Protester's Comments, Sept. 25, 1998, at 4-5.
A proposal in a negotiated procurement that does not conform to all
material terms and conditions should be considered unacceptable and
may not form the basis for an award. National Med. Staffing, Inc.;
PRS Consultants, Inc., B-238694, B-238694.2, June 4, 1990, 90-1 CPD para.
530 at 3.
The pertinent RFP requirement states:
All cases will be engineered and constructed in a manner that
will ensure there are no metal knife-edges joining case bases and
lids.
ECS's proposal did not take exception to this requirement, nor did it
state anything about metal knife-edges. Agency Report, Tab 5. Almost
immediately upon receiving the proposal, the Navy asked ECS to address
the requirement. Agency Report, Tab 9. ECS responded on July 17 with
a revised master drawing for all five case types which stated:
[Note] 4) Closure frame is made from . . . aluminum extrusion and
is free of knife sharp edges (in accordance with MIL-STD-454,
Requirement 9 which states to deburr and break all sharp edges).
Agency Report, Tab 9.
Although the agency's request for revised proposals on August 3 stated
two technical "deficiencies," one of which was the no-metal-knife-edge
requirement, and requested ECS to address this in a revised proposal,
Agency Report, Tab 14, the Navy acknowledges that this was unnecessary
because the revised drawing submitted on July 17 left no doubt that
ECS fully complied with the requirement for all five cases. Agency
Supplemental Submission, Oct. 19, 1998, at 2. ECS's final proposal
revisions addressed the other identified technical deficiency, which
concerned relocation of electrical connectors on case A, and, in
reference to the reconfigured case A, ECS stated that there would be
no metal knife-edges.
Given ECS's unambiguous July 17 revisions, which addressed this
requirement with regard to all five case types, ECS's reference in its
final proposal revision to case A only was merely redundant and cannot
reasonably be construed as taking exception to its earlier commitment
to this requirement with regard to all five cases. Thus, the absence
of a statement committing to this requirement for all five cases in
the final proposal submission, though requested by the agency, did not
create a technical deficiency under this requirement. See RGII
Techs., Inc.--Recon. and Protest, B-278352.2, B-278352.3, Apr. 14,
1998, 98-1 CPD para. 130 at 7 (failure to submit all information requested
is a waivable informality or irregularity where the information
comprising a proposal is otherwise sufficient).
The protester next alleges that the agency unreasonably failed to
consider explanations about adverse past performance to negate
evaluated risk for Packaging Strategies, but unfairly did so for ECS.
The record does not support this contention. To the contrary, the
record shows that the agency reevaluated Packaging Strategies under
this factor considering the additional information provided and
determined that the information did not mitigate the high risk
associated with Packaging Strategies' recurring and recent instances
of delivery delays or delivery of items with quality deficiencies.
Agency Report at 4-5, Tab 16.
For example, in the case of Packaging Strategies' record as a
subcontractor under a Navy contract, the prime contractor reported
both delay and quality problems attributable to Packaging Strategies.
According to Packaging Strategies, the delays to the prime contractor
resulted because Packaging Strategies was responding directly to the
Navy and sending parts from its production inventory to replace lost
or missing parts reported by the Navy. This resulted in Packaging
Strategies being short of parts to supply its prime contractor.
Packaging Strategies' letter to the agency suggested that the Navy's
parts shortage was possibly the Navy's fault due to a recent
relocation of Navy operations. Agency Report, Tab 15 at 1-2. The
protester's comments re-assert this as the cause and provide other
explanations which it did not state in its August 4 response to the
adverse information. Protester's Comments, Sept. 25, 1998, Attachment
at 3-4.
However, the agency's record of the communications regarding this
contract/subcontract, both within the agency and between the agency
and Packaging Strategies, provides no support for the allegation that
the missing parts were caused by a relocation of Navy operations.
Rather, this documentation shows that replacement parts were needed to
correct deficiencies which were attributable entirely to Packaging
Strategies. Examples of this include a number of parts sets which
contained duplicate left keyboard tray brackets but no right brackets,
"TCIM brackets" with captive screws which were too short, and case
lids without handles. Agency Report, Tabs 28, 29. These are not
shortages due to lost parts which could have resulted in the agency's
move, but rather quality deficiencies which are solely attributable to
Packaging Strategies.
Thus, we find the agency's determination that Packaging Strategies'
additional information about this adverse performance information did
not mitigate the associated past performance risk is reasonable. The
additional information which the protester has provided in its
comments, even if of a nature that might mitigate the risk, cannot
render the agency's determination unreasonable since it was not
offered at the time of the evaluation. See Creative Sys. Elecs.,
Inc., B-235388.2, Aug. 24, 1989, 89-2 CPD para. 175 at 2-3.
With regard to the other two contracts where Packaging Strategies'
performance was considered deficient, the protester contends that its
delays in delivery and quality deficiencies were minor, and the
quality deficiencies were promptly corrected. Protester's Comments,
September 25, 1998, at 6, Attachment at 1-2. However, since timely
performance in this procurement is critical, we believe that it was
reasonable for the agency to conclude that any delay, whether due to
late deliveries or correction of quality deficiencies, could have
significant adverse impact on the implementation of the IOW project.
See Agency Report, Tab 30. Therefore, it was reasonable for the
agency to consider this adverse information as indicative of high risk
for Packaging Strategies.
In contrast, the past performance information upon which ECS was
evaluated indicated a marked superiority in past performance over that
of Packaging Strategies. The questionnaires returned from ECS's
references stated that ECS was an "excellent contractor all around,"
its products "were manufactured promptly and with obvious attention to
detail," they meet the agency's demands "even when [the agency is]
asking the impossible," and all items were delivered within the
original contract schedule, even where design changes occurred.
Agency Report, Tab 7.
The only negative information for ECS appeared during the
responsibility determination review, during which DCMC identified two
late deliveries. ECS responded to this information with documentation
to show that the one instance was entirely the fault of the
government. For that contract, ECS provided an agency letter from the
administrative contracting officer prior to the delivery date stating
that all of the items were ready for source inspection and acceptance
by the government. The administrative contracting officer recommended
that an unnecessary requirement not stated in the solicitation be
deleted. Additional documents evidence that the resulting delay in
acceptance was due to delay within the agency in deleting the
unnecessary requirement. Agency Report, Tab 19. Thus, unlike
Packaging Strategies, ECS provided substantiating evidence to support
its explanation that the late delivery was attributable to the
government. ECS accepted responsibility for the other instance of
late delivery, explaining that an 8-day delay resulted from ECS's
incorrect entry of the delivery date into its records. This was the
only reported ECS contract problem and was attributable to a clerical
mistake; there is no evidence of such mistakes recurring. Thus, even
with the information from the responsibility determination review,
ECS's record of past performance reasonably supports a low risk
evaluation rating.
As demonstrated by the above discussion, there is no evidence
suggesting that the agency treated the offerors unequally in
evaluating their records of past performance. Packaging Strategies
allegation that the agency "cherry picked" the contracts in a manner
unfairly prejudicial to Packaging Strategies is unsupported by the
record. The agency attempted to contact 8 and successfully contacted
5 of the 10 contract references stated in Packaging Strategies'
proposal. The agency considered all of the information received. For
ECS, the agency contacted all five of the references stated in ECS's
proposal and similarly considered all of the information received.
Thus, the agency did not select reference contracts in a manner which
was either unfairly favorable to ECS or unfairly prejudicial to
Packaging Strategies. There is no legal requirement that all
contracts identified in a proposal must be evaluated in a past
performance evaluation. Braswell Servs. Group, Inc., B-278921.2, June
17, 1998, 98-2 CPD para. 10 at 6.
The protester next alleges that the difference in evaluated past
performance risk cannot reasonably have a value to the agency of
$739,436, the difference in price between the two proposals. We
disagree.
In a best value procurement, price is not necessarily controlling in
determining the offer that represents the best value to the
government. Rather, that determination is made on the basis of
whatever evaluation factors are set forth in the RFP, with the source
selection official often required to make a tradeoff to determine if
one proposal's superiority under the non-price factors is worth a
higher price. Such tradeoffs are permitted where they are consistent
with the RFP evaluation scheme. Where, as here, the RFP identifies
past performance and price as the evaluation criteria, proposals must
be evaluated on that basis and ultimately the selection official must
decide whether or not a higher-priced proposal submitted by an offeror
with a better past performance rating represents the best value to the
government. We will review an evaluation and selection decision to
ensure that it was reasonable and consistent with the stated
evaluation criteria. H.F. Henderson Indus., B-275017, Jan. 17, 1997,
97-1 CPD para. 27 at 2-3.
Here, in making the past performance/price tradeoff, the Navy found
that the price premium associated with making award to ECS, instead of
to Packaging Strategies, was reasonable, given ECS's lower performance
risk. This was based on ECS's consistent record of timely delivery of
transit cases without quality problems, compared to Packaging
Strategies recurring history of late deliveries and/or quality
deficiencies. As indicated, the RFP stated that past performance
would be evaluated on the basis of timeliness of delivery or
performance and quality of product or service, and that the best value
decision would be based only on past performance and price, both of
equal importance. Since the record shows that timeliness of
performance is critical to successful implementation of this project,
and any delay could jeopardize the project, even if Packaging
Strategies' record of delivery and performance problems resulted in
only minor delays under the referenced contracts, such minor delays
would be significant here. Therefore, we find the tradeoff reasonable
and consistent with the stated evaluation scheme.
The protester alleges that the selection decision was also based on an
unstated evaluation factor of technical quality. This is also not
supported by the record. It is true that in response to the
contracting officer's request for input from the evaluators regarding
whether an award to ECS at a higher price was justified or not, an
evaluator did state that, based on her experience with both offerors'
transit cases, she considered ECS's cases to be of higher quality than
Packaging Strategies' cases. However, the majority of the input given
otherwise supported an award to ECS based on past performance
differences between the two offerors. The contracting officer was not
bound by the isolated statement of the evaluator, and indeed she based
her selection decision entirely on the stated factors of price and
past performance. See Loral Aeronutronic, B-259857.2, B-259858.2,
July 5, 1995, 95-2 CPD para. 213 at 8-9 (source selection official not
bound by recommendations or judgments of lower-level evaluators).
In sum, we find that the award, based on ECS's technically acceptable,
higher-rated, higher-priced proposal, was reasonable and in accordance
with the solicitation's evaluation scheme.
The protest is denied.
Comptroller General
of the United States
1. Packaging Strategies' response to the request for revised proposals
had not provided revised prices to address the shipping charges added
by the amendment. The agency contacted Packaging Strategies for
clarification. Packaging Strategies stated that it would provide the
shipping under its original price.
2. Packaging Strategies initially protested that the evaluation
factors and best value evaluation plan stated in the RFP were
ambiguous and that the RFP and/or amended RFP did not allow adequate
time for submitting proposals and revisions. The agency report
addressed these allegations, including a detailed explanation that
these allegations are untimely protests. The protester did not
respond to the agency's report or otherwise request a decision on
these issues. We thus consider that the protester has abandoned these
issues. Akal Sec., Inc., B-261996, Nov. 16, 1995, 96-1 CPD para. 33 at 5
n.5.
3. The protester withdrew an allegation that ECS's revised proposal
was submitted late after receiving documentation evidencing a timely
submission. Audio Tape of Conference Call, Oct. 14, 1998.