TITLE:  	NAPA Supply of Grand Forks, Inc., B-280996.2, May 13, 1999
BNUMBER:  B-280996.2
DATE:  May 13, 1999
**********************************************************************
NAPA Supply of Grand Forks, Inc., B-280996.2, May 13, 1999

Decision

Matter of: NAPA Supply of Grand Forks, Inc.

File: B-280996.2

Date: May 13, 1999

Orlin W. Backes, Esq., and Jon W. Backes, Esq., McGee, Hankla, Backes &
Dobrovolny, for the protester.

Joel S. Rubinstein, Esq., and Andrew N. Cook, Esq., Bell, Boyd & Lloyd, for
Jay Automotive Specialties, Inc., an intervenor.

John E. Lariccia, Esq., Lt. Col. Gregory B. Porter, and Douglas P. Goetz,
Esq., Department of the Air Force, for the agency.

Linda S. Lebowitz, Esq., and Michael R. Golden, Esq., Office of the General
Counsel, GAO, participated in the preparation of the decision.

DIGEST

Where solicitation provided that past performance was significantly more
important than price, but that the award would not necessarily be made to
the offeror whose proposal received the highest past performance rating,
agency reasonably selected a lower priced, lower rated proposal for award
after determining that the price premium associated with the protester's
higher rated proposal was not justified in light of the awardee's minimal
risk of nonperformance.

DECISION

NAPA Supply of Grand Forks, Inc. protests the award of a contract to Jay
Automotive Specialties, Inc. under request for proposals (RFP) No.
F32604-98-R0004, issued by the Department of the Air Force for the
furnishing of commercial vehicle and equipment-related parts, automotive
chemicals, corrosion control materials, upholstery material, and accessories
for the vehicle fleet and miscellaneous equipment at Minot Air Force Base,
North Dakota. NAPA challenges the evaluation of Jay's past performance and
the agency's past performance/price tradeoff resulting in the award to an
offeror whose proposal was lower rated and lower priced.

We deny the protest.

An amended RFP was issued on an unrestricted basis on December 4, 1998. [1]

RFP amend. 2 (hereinafter "RFP"), at cover sheet. The RFP provided that the
award would be made to the responsible offeror whose proposal was most
advantageous to the government, past performance and price considered. RFP
at 56. The RFP included the following two past performance subfactors: (1)
current/similar previous jobs (quality of service, timeliness of
performance, cost control, and customer satisfaction) and (2) business
relations (source of supply references and financial references). Id. at
56-58. The basis for the agency's past performance evaluations would be
customer satisfaction, supplier, and financial reference surveys completed
for each offeror. Id. at 57-58. Color/adjectival ratings, which had
corresponding narrative descriptions, would be assigned to the past
performance subfactors ( e.g., blue/exceptional, green/acceptable,
yellow/marginal, and red/unacceptable), and an overall past performance
color/adjectival rating would be assigned to an offeror's proposal. Id. In
determining the most advantageous proposal, the RFP stated that past
performance would be considered significantly more important than price. Id.
at 60. Finally, the RFP advised that the offeror with the lowest priced
proposal or the offeror whose proposal received the highest past performance
rating would not necessarily be awarded the contract. Id. at 59.

Five offerors, including NAPA (the incumbent contractor) and Jay, submitted
proposals by the December 21 closing time. As relevant here, the past
performance ratings for the proposals of NAPA and Jay were as follows:

                    NAPA               Jay

 Current/Similar    Blue/Exceptional   Green/Acceptable

 Previous Jobs

 Business           Green/Acceptable   Blue/Exceptional
 Relations

 OVERALL            Blue/Exceptional   Green/Acceptable

NAPA's total price was approximately 2.4 percent higher than Jay's total
price. Agency Report, Tab 10, Final Proposal Analysis Report, at 3 rd-5th
unnumbered pages.

The past performance ratings were supported by narratives of an offeror's
strengths and weaknesses based on information reported in customer
satisfaction, supplier, and financial reference surveys. Regarding NAPA, the
survey results reflected no weaknesses for the past performance subfactor of
current/similar previous jobs. For this subfactor, the customer satisfaction
surveys noted specific strengths for NAPA, including that the firm was
knowledgeable, professional, and courteous, and that the quality of NAPA's
service exceeded expectations; that NAPA timely performed in an outstanding
manner, including delivery of ordered parts and maintenance of a backordered
parts log; that NAPA exceeded all expectations in the area of cost control;
and that NAPA performed in an overall outstanding manner. For the past
performance subfactor of business relations, the supplier and financial
references reported that NAPA pays within 30 days of required payment dates;
that NAPA has a history of longtime good standing relationships with its
suppliers; and that NAPA is an excellent, very professional bank customer.
The supplier references did not indicate that NAPA took advantage of early
payment discounts. Id. at 7th unnumbered page.

Regarding Jay, for the past performance subfactor of current/similar
previous jobs, the customer satisfaction surveys reflected that the firm
continually strove to improve its quality of service; that its performance,
with minor quality problems not affecting the achievement of contract
requirements, met or exceeded all cost control expectations; and that the
firm never failed to meet or exceed contract terms and conditions. For this
subfactor, one reference noted that Jay had a warranty documentation problem
and an overcharge/undercharge problem for parts under $100.00; however, the
reference reported that both problems were corrected. Another reference
reported that while Jay did not meet estimated delivery dates, the firm
continued to make improvements in this area. For the past performance
subfactor of business relations, the supplier and financial references
reported no weaknesses for Jay. The supplier references reported that Jay
takes advantage of discounts and pays within 30 days of required payments
dates, and the financial reference reported that the firm handles its bank
account in a professional manner. Id. at 6th unnumbered page.

The source selection authority (SSA) determined that the lower rated, lower
priced proposal submitted by Jay was most advantageous to the government,
considering past performance and price. The SSA noted that Jay's proposal
was acceptable in terms of past performance based on the firm's depth of
experience, its cost control measures, and its business relationships with
suppliers. The SSA pointed out that Jay had an acceptable performance record
on jobs of the same magnitude as contemplated by this RFP. The SSA noted
that Jay was rated acceptable (not exceptional) for quality of service and
timeliness of performance because of the firm's problems with warranty
documentation and with meeting estimated delivery dates; however, the SSA
viewed these problems as minor, pointing out that these items were corrected
by Jay and that Jay continues to make improvements in these areas. The SSA
believed Jay's management demonstrated its ability to identify and correct
problems, thereby lowering the performance risk to the government if Jay
were awarded the contract. Agency Report, Tab 12, Source Selection Decision
Document. In making his past performance/price tradeoff, the SSA recognized
the price differential between Jay's lower rated, lower priced proposal and
NAPA's higher rated, higher priced proposal. The SSA determined that the
approximate 2.4 percent price premium associated with NAPA's higher rated
proposal was not justified in light of Jay's minimal risk of nonperformance.
Id.

NAPA challenges the evaluation of Jay's past performance for the business
relations subfactor, for which Jay's proposal received a blue/exceptional
rating. NAPA contends that in order to have reasonably evaluated Jay's
proposal for this subfactor, the agency should have requested a Dun &
Bradstreet (D&B) report for Jay, which NAPA believes would have
independently reflected various credit and financial difficulties
experienced by Jay.

In reviewing protests against the propriety of an agency's evaluation of
proposals, we will examine an agency's evaluation to ensure that it was fair
and reasonable and

consistent with the evaluation criteria stated in the RFP. Dayron,
B-265875.2, Jan. 11, 1996, 96-1 CPD para. 10 at 3.

The short answer to NAPA's complaint concerning the evaluation of Jay's past
performance under the business relations subfactor is that the RFP did not
require the agency to request a D&B report for purposes of evaluating any
aspect of an offeror's past performance.[2] While the agency was aware,
based on NAPA's original protest, that NAPA had alleged that Jay experienced
credit and financial difficulties in the past,For example, NAPA points to
two payroll-type liens against Jay. However, the amounts involved appear to
be de minimis and, in any event, were promptly paid when the firm became
aware of them. Intervenor Comments at 2. NAPA also alleges that Jay
previously miscertified its size status. The alleged miscertification
occurred 10 years ago, id. at 3, and has no effect on this unrestricted
procurement. in evaluating Jay's past performance, the agency reasonably
focused on the fact that Jay has been successfully performing contracts of
the type contemplated by this RFP. In accordance with the terms of the RFP,
the agency's past performance evaluations were based on customer
satisfaction, supplier, and financial reference surveys completed for each
offeror. Except for one customer satisfaction survey, in which a contracting
official declined, for reasons of fairness, to complete the survey because
of having had "serious problems" with Jay in the past, Agency Report, Tab 6,
Past Performance Survey, at 12 th unnumbered page, all of the other customer
satisfaction, supplier, and financial reference surveys, as described above,
reported favorably on Jay's past performance. NAPA neither acknowledges nor
challenges the information reported in these surveys. On this record, we
conclude that the agency reasonably evaluated Jay's proposal for past
performance. NAPA complains that its proposal received a green/acceptable
rating for the past performance subfactor of business relations because its
supplier references did not mention in their completed surveys that NAPA
took advantage of early payment discounts. However, even if its proposal
should have received a blue/exceptional rating for this subfactor, NAPA was
not prejudiced because its overall rating for past performance would have
remained blue/exceptional.

NAPA also challenges the SSA's past performance/price tradeoff which
resulted in an award to Jay, an offeror with a lower rated, lower priced
proposal. NAPA contends that the approximate 2.4 percent price premium
associated with its proposal is justified in light of the overall
blue/exceptional rating assigned to its proposal for past performance.

Source selection officials in a negotiated procurement have broad discretion
in determining the manner and extent to which they will make use of the
technical and price evaluation results; price/technical tradeoffs may be
made, and the extent to which one may be sacrificed for the other is
governed only by the test of rationality and consistency with the
established evaluation factors. Creative Apparel Assocs.,

B-275139, Jan. 24, 1997, 97-1 CPD para. 65 at 6. Even where price is the least
important evaluation factor, an agency may award to an offeror with a lower
priced, lower scored proposal if it determines that the price premium
involved in awarding to an offeror with a higher rated, higher priced
proposal is not justified. Id.

Here, in this acquisition for commercial vehicle and equipment-related parts
and other items, the RFP stated that in determining the proposal most
advantageous to the government, past performance would be considered
significantly more important than price. However, the RFP also advised that
the offeror whose proposal received the highest past performance rating
would not necessarily be awarded the contract. The SSA determined that the
lower rated, lower priced proposal submitted by Jay was most advantageous to
the government, considering both past performance and price. In making his
tradeoff decision, the SSA recognized the price differential between Jay's
proposal and NAPA's higher rated, higher priced proposal. The SSA determined
that the price premium associated with NAPA's higher rated proposal was not
justified in light of Jay's minimal risk of nonperformance. More
specifically, considering the results of the past performance evaluations,
which were based on customer satisfaction, supplier, and financial reference
surveys, the SSA concluded that Jay had acceptable past performance based on
the firm's experience and performance in jobs of the same magnitude as
contemplated by this RFP, its cost control measures, and its business
relationships with suppliers. The SSA viewed as minor Jay's prior problems
in the areas of warranty documentation and failure to meet estimated
delivery dates because Jay continues to make improvements in these areas,
thereby demonstrating the firm's ability to identify and correct problems.
For all of these reasons, the SSA believed the risk of nonperformance to the
government if the contract were awarded to Jay was minimal. Accordingly, on
this record, which NAPA does not meaningfully challenge, and consistent with
the terms of the RFP, we have no basis to question the reasonableness of the
SSA's selection of Jay's proposal as most advantageous to the government.

The protest is denied.

Comptroller General

of the United States

Notes

1. The amended solicitation package was issued as part of corrective action
taken by the agency in response to an earlier protest filed by NAPA. To the
extent NAPA believes that in taking corrective action the agency did not
adequately amend the RFP's evaluation scheme, this matter, constituting an
alleged solicitation impropriety raised after award, instead of prior to the
closing time for receipt of proposals under the amended RFP, is untimely.
Bid Protest Regulations, 4 C.F.R. sect. 21.2(a)(1) (1998).

2. Under the terms of the RFP, an offeror was required to provide a number
assigned to it by D&B, to be used by the agency to verify that the offeror
was registered in a Department of Defense contractor database; the failure
of the offeror to be registered would make the firm ineligible for award.
RFP at 46. There was no requirement that the agency obtain a D&B report for
purposes of evaluating an offeror's past performance.