BNUMBER:  B-281030; B-281030.2           
DATE:  December 21, 1998
TITLE: Beckman Coulter, B-281030; B-281030.2, December 21, 1998
**********************************************************************

DOCUMENT FOR PUBLIC RELEASE
The decision issued on the date below was subject to a GAO Protective 
Order.  This redacted version has been approved for public release.
Matter of:Beckman Coulter

File:B-281030; B-281030.2          
        
Date:December 21, 1998

Alison L. Doyle, Esq., C. Stanley Dees, Esq., and Traci M. Vanek, 
Esq., McKenna & Cuneo, for the protester. 
Richard L. Moorhouse, Esq., Holland & Knight, for Spectrofuge 
Corporation of North Carolina, Inc., an intervenor.
Michael Colvin, Department of Health & Human Services, for the agency. 
Jacqueline Maeder, Esq., and Paul I. Lieberman, Esq., Office of the 
General Counsel, GAO, participated in the preparation of the decision.

DIGEST

Award is improper where awardee's proposal does not conform to 
material solicitation requirements regarding preventive maintenance 
services, contract termination, and submission of a fixed-price offer.

DECISION

Beckman Coulter, Inc. protests the award of a contract to Spectrofuge 
Corporation of North Carolina, Inc. under request for proposals (RFP) 
No. 273-98-P-0008, issued by the National Institute of Environmental 
Health Sciences (NIEHS), Department of Health and Human Services, for 
on-going preventive maintenance, rotor inspection and emergency repair 
of Beckman scientific instruments/equipment at NIEHS, Research 
Triangle Park, North Carolina.  Beckman challenges the agency's 
evaluation of technical proposals and asserts that Spectrofuge 
submitted a technically noncompliant best and final offer (BAFO) which 
the agency attempted to cure by engaging in improper discussions.    

We sustain the protest.

The RFP, issued as a commercial item solicitation on May 20, 1998, 
contemplated the award of a fixed-price contract for a 1-year base 
period with four 1-year options for the maintenance, repair and 
relocation[1] of certain scientific equipment manufactured by Beckman.  
RFP, Description and Specifications at 23.  Offerors were to "furnish 
all necessary personnel, labor, equipment, tools, parts, materials and 
supplies to prepare and execute complete maintenance, repairs, and 
relocations to Government-owned Beckman [i]nstruments."  RFP, 
Amendment 1, Supplies or Services and Prices, at 3.  The RFP listed 
the Beckman instruments that were to be covered (providing model 
numbers and quantities), and stated that the contractor was to provide 
"trained personnel with experience in the repair and maintenance of 
the equipment types listed herein."  RFP, Description and 
Specifications at 24.  Offerors were required to provide pricing for 
one and two preventive maintenances (PM) per year, with the agency 
determining which of the PM schedules to award.  RFP, Amendment 1, 
Supplies or Services and Prices at 3-22a.  In the specifications 
section, the RFP provided that "[e]quipment shall be maintained by the 
contractor to 100% of original Beckman specifications and technical 
updates."  RFP, Description and Specifications at 25.                 

The solicitation provided that award would be made "to the responsible 
offeror whose offer conforming to the solicitation will be most 
advantageous to the Government, price and other factors considered" 
and that technical proposals would be scored on the basis of plan of 
operation (40 points), experience of offeror (30 points), and 
experience of key senior service and field engineers (30 points), for 
a possible technical score of 100 points.  RFP at 42.  Under plan of 
operation, offerors were advised that the agency would evaluate: 

     the offeror's specific plans for insuring that preventive 
maintenance
     and remedial repairs are performed at the highest possible level 
of
     quality and responsiveness and to 100% of original Beckman 
     specifications and technical updates.  Plan should include 
details
     on availability of senior service engineering staff, quality 
control, and
     availability of manufacturer's approved spare parts.

Id.

The RFP advised that under the experience factor offerors would be 
evaluated on their "experience in providing similar types of service 
in both the government and private sector," and under the experience 
of key senior service and field engineers factor, offerors would be 
evaluated on the "experience of [their] engineering staff in providing 
these types of services on this equipment in an operation of this size 
and type," and that "[p]roof of training must be provided."  Id.  For 
award purposes, the RFP stated that the agency would evaluate offers 
by adding the total price for all options to the total price for the 
basic requirement.  The RFP provided that price would be point-scored, 
with the lowest priced proposal receiving the maximum 25 points.  
Other acceptable proposals would be: 
     
     awarded a proportional share of points with the lowest priced 
     acceptable offeror being the base.  For example, points awarded 
     an offer 25% higher than the lowest price will be reduced by 25%.

Id.  Thus, there was a maximum possible 125 technical/price point 
score for each proposal.       

Beckman and Spectrofuge were the only offerors to submit proposals by 
the  amended June 10, 1998 closing date.  The proposals were evaluated 
by a four-member technical evaluation committee and both proposals 
were included in the competitive range.  

Written discussions were held with both offerors and the record shows 
that, among other things, the agency asked the awardee to address the 
supplemental terms and conditions that Spectrofuge had included in its 
proposal.  Specifically, at Attachment B, page 56 of its proposal, 
Spectrofuge included "Supplemental Terms and Conditions" and at 
Attachment B, page 57, the awardee included its "Annual Maintenance 
Service Agreement."  The awardee's "Supplemental Terms and Conditions" 
included, among other things, five "excluded services" listed as (a) 
through (e) and including at (b) "moving or re-installation of . . . 
instrument(s)."[2]  The "Supplemental Terms and Conditions" also 
allowed either party to "terminate this agreement within 30 days 
written notice to the other party."  Spectrofuge's Annual Maintenance 
Service Agreement specifically stated that its service "does not 
include rotors, chambers, consumable supply items, accessories, 
software, software related problems, and manufacturer-recommended 
modifications."  The Agreement also stated that "[a]ny component or 
part determined by Spectrofuge to be defective shall be replaced (upon 
authorization by the Buyer) at Spectrofuge's then current price."  The 
agency requested that Spectrofuge "[c]larify the supplemental terms 
that are inconsistent with stated contract requirements (i.e., 
relocation of instruments not covered by Spectrofuge - page 56 of your 
proposal).  This page 56 in its entirety is not acceptable to the 
NIEHS."  Opening of Discussions Letter, July 14, 1998, Question 2.  

BAFOs were received from both offerors on or before the July 20 
closing date.  Contracting Officer's Statement, Paragraph 2.  In its 
BAFO, Spectrofuge addressed the inconsistent supplemental terms on 
page 56 of its proposal, stating as follows:

     The inclusion of the Supplemental Terms and Conditions (page 56)
     of the Spectrofuge Corporation standard maintenance contract was
     submitted only to include Excluded Services as so entitled, in
     order to address misuse and abuse of instrumentation by a user.
     This page was not meant to be included in its entirety.  Since 
this
     RFP requires that reinstallation of instrumentation be included 
in
     this contract, (b) should be discarded.  Spectrofuge Corporation
     would provide reinstallation of instrumentation as part of this
     contract and at no extra cost to the government.

Spectrofuge's BAFO, July 17, 1998, Paragraph 2.  

Thus, in its BAFO, Spectrofuge stated that it would "discard" its 
reinstallation exception and provide relocation/reinstallation 
services as required by the solicitation.    

Beckman's technical BAFO was awarded [deleted] points (out of a 
possible 100) and Spectrofuge's BAFO was awarded [deleted].  In its 
evaluation of BAFOs, however, the agency noted that the awardee's 
response concerning the inconsistent terms at page 56 of its proposal 
"is inadequate.  The termination and other clauses still exist.  These 
supplemental terms cannot be included as part of the NIEHS contract."  
Technical Evaluation Committee Memorandum (Aug. 6, 1998) at second 
unnumbered page.

Spectrofuge's total price for the base and option years was $[deleted] 
for one PM per year and $716,950 for two PMs per year.  Beckman's 
total price for the base and option years was $[deleted] for one PM 
per year and $[deleted] for two PMs per year.[3]  As required by the 
solicitation, Spectrofuge received 25 points for the lowest acceptable 
price for both the one and the two PM per year requirements for a 
total technical/price point score of [deleted].  Agency Report at 1.  
Beckman received a portion of the 25 points based on the percentage of 
the price difference for each schedule, specifically [deleted] price 
points for the one PM schedule and [deleted] price points for the two 
PM schedule, resulting in total technical/price scores for the one and 
the two PM schedules of [deleted] and [deleted], respectively.  Id.  
The agency noted that "[t]here are no further questions to either 
offeror.  The award should be made based on price.  Incompletely 
resolved issues listed under technical [concern] #2 . . . for 
Spectrofuge should be addressed in negotiations, if necessary."  
Technical Evaluation Committee Memorandum (Aug. 6, 1998) at third 
unnumbered page.  

Subsequently, on August 13, a representative of Spectrofuge met with 
agency personnel to discuss "two questions that needed to be answered 
by Spectrofuge before award."  Summary of Negotiations, Attachment A 
at 3.  As relevant here, the agency again questioned Spectrofuge about 
the exclusions submitted in its proposal.  The Spectrofuge 
representative indicated that while it was standard practice for 
Spectrofuge to submit the exclusions, "they could be excluded from the 
contract."[4]  Id.  Based on this meeting, the contracting officer 
states that "[t]hese issues were resolved to the satisfaction of the 
Government."  Contracting Officer's Statement, Paragraph 2.  Because 
Spectrofuge received the higher score, it was awarded the contract for 
two PMs per year.[5]  An award notification, dated August 27, was sent 
to Beckman.  After a September 9 debriefing, Beckman protested to our 
Office.   

Beckman contends that Spectrofuge's BAFO was technically unacceptable 
and that the August 13 post-BAFO meeting between a Spectrofuge 
representative and agency personnel constituted improper discussions 
and unequal treatment because the agency was attempting to permit 
Spectrofuge to remedy its noncompliant BAFO.  Supplemental Protest, 
Oct, 26, 1998, at 4; Protester's Supplemental Comments, Nov. 16, 1998, 
at 1-9.  Beckman also argues that while the agency's memorandum 
concerning this meeting indicates that the awardee agreed to delete 
all exclusions from the contract, "Spectrofuge itself never put this 
response in writing."  Supplemental Protest, Oct. 26, 1998, at 4-5.  
Thus, Beckman argues that, despite these attempts, the contracting 
officer actually made award without correcting the deficiencies.  
Moreover, Beckman notes that the agency never addressed the exclusions 
contained on page 57 of the Spectrofuge proposal.  As noted above, 
this page excluded service of software-related problems and 
manufacturer-recommended modifications.  According to the protester, 
many Beckman instruments under the solicitation are software driven, 
and manufacturer-recommended modifications "are the type of 
information that is issued in Beckman's internal technical updates."  
Id. at 8.  Since the RFP specified that the contractor was to maintain 
equipment to manufacturer specifications, including technical updates, 
Beckman argues that Spectrofuge had taken exceptions to solicitation 
requirements, and that these exceptions indicate that Spectrofuge 
"cannot offer its commercial customers software support or technical 
updates."  Protester's Supplemental Comments, Nov. 24, 1998, at 9.  
The protester also argues that page 57 provided that replacement parts 
would be separately priced but, because the RFP called for a fixed 
price and specified that the contractor was to provide all necessary 
equipment, parts, materials and supplies, these services were required 
to be included in Spectrofuge's prices.  Supplemental Protest, Oct. 
26, 1998, at 7.

In negotiated procurements, any proposal that fails to conform to 
material terms and conditions of the solicitation should be considered 
unacceptable and may not form the basis for an award.  Barents Group, 
L.L.C., B-276082, B-276082.2, May 9, 1997, 97-1 CPD  para.  164 at 10; 
Martin Marietta Corp., B-233742.4, Jan. 31, 1990, 90-1 CPD  para.  132 at 7.  
The agency argues in its response to Beckman's protest that the 
"clarifying language" from Spectrofuge's BAFO "eliminated any 
potential non-compliant language originally included on pages 56 and 
57," and states that it "merely desired to confirm its understanding 
of what Spectrofuge had already proposed, with respect to 
re-installation of equipment,"  Supplemental Report, Nov. 6, 1998, at 
1-2.  However, as discussed below, it is clear from the record that 
Spectrofuge's proposal did not comply with the RFP requirements for 
maintenance services and included an unacceptable termination clause; 
moreover, Spectrofuge's pricing scheme deviated from that called for 
in the RFP with the result that its evaluated price understated the 
actual cost to the government because Spectrofuge was proposing to 
charge the government unspecified prices for replacement parts, in 
addition to its offered "fixed price."     

The agency's representation in its response to the protest conflicts 
with the evaluators' contemporaneous assessment of the BAFOs.  
Specifically, the contemporaneous record reflects that after the 
evaluation of BAFOs, the evaluators recognized that there were 
remaining issues to be resolved regarding the Spectrofuge proposal.  
While Spectrofuge's position relating to relocation and reinstallation 
of equipment had been clarified in its BAFO, the evaluators believed 
that Spectrofuge's response to the discussion question concerning the 
exclusions was still "inadequate" because not all exclusions were 
deleted from the proposal.  Technical Evaluation Committee Memorandum 
(Aug. 6, 1998) at second unnumbered page.  The evaluators referred to 
the remaining exclusions as "incompletely resolved issues" which 
should "be addressed in negotiations if necessary."  Id. at third 
unnumbered page.  Moreover, as the protester correctly states, the 
exclusions on page 57 were never addressed in discussions.  Thus, 
these exclusions, including responsibility for software-related 
problems and manufacturer-recommended modifications, which were 
clearly material RFP requirements, and the addition of unspecified 
costs that the proposal allowed Spectrofuge to charge for replacement 
parts were never addressed or cured by Spectrofuge in its BAFO.  
Moreover, the unilateral termination clause, which the agency 
correctly noted was unacceptable, remained part of the proposal.  See 
Gelco Payment Sys., Inc., B-234957, July 10, 1989, 89-2 CPD  para.  27 at 
2-3 (bid which attempts to limit government's rights and supplement 
bidder's rights under standard termination for convenience clause is 
nonresponsive).

The agency's record of the August 13 meeting indicates that the agency 
recognized that the exclusions in the Spectrofuge proposal were 
material and that they had not been resolved by Spectrofuge's BAFO.  
The record specifically states that agency personnel met with the 
Spectrofuge representative after the submission of BAFOs to discuss 
questions "that needed to be answered by Spectrofuge before award."  
Summary of Negotiations, Attachment A at 3.  In spite of this, 
however, and as the agency, the protester, and the intervenor all 
point out, the Spectrofuge proposal was not modified during or after 
the August 13 meeting.  Indeed, the agency's record of the meeting 
suggests that while it was standard practice for Spectrofuge to submit 
the exclusions, its representative only agreed that "they could be 
excluded from the contract."  Id.  However, the proposal was never 
changed, nor was a written agreement otherwise reached as a result of 
the August 13 meeting.[6]    Because Spectrofuge included noncompliant 
terms and conditions in its proposal, the proposal was technically 
unacceptable and could not properly form the basis of award.  
Accordingly, we sustain the protest.   

Since we find that the agency improperly accepted for award a 
materially nonconforming proposal, we recommend that NIEHS reopen 
discussions with both offerors, call for another round of BAFOs and 
proceed with the source selection process.[7]  After reevaluating 
BAFOs, if Spectrofuge's proposal is no longer considered the most 
advantageous for the government, the agency should terminate 
Spectrofuge's contract for the convenience of the government and award 
the contract to Beckman.  In addition, we recommend that the protester 
be reimbursed its costs of filing and pursuing the protest, including 
reasonable attorney fees.  4 C.F.R.  sec.  21.8(d)(1) (1998).  The 
protester should submit its certified claim, detailing the time 
expended and costs incurred, directly to the contracting agency within 
60 days of receiving this decision.  4 C.F.R.  sec.  21.8(f)(1).

The protest is sustained.

Comptroller General
of the United States

1."Relocation" is described as the movement of an instrument from one 
location to another at the request of a user and returning the 
instrument to operational condition.  RFP, Description and 
Specifications at 23-24. 

2. Spectrofuge also excluded services for damage from, among other 
things, fire, explosion, riot, lightning, windstorms, hail, flood or 
earthquake; decontamination due to spillage; interpretation of data; 
and installation of unauthorized Spectrofuge field modifications.  

3. The record shows that Beckman actually reduced its prices in its 
BAFO to $[deleted] for one PM per year and $1,241,534 for two PMs per 
year.  The agency improperly failed to consider these price reductions 
in both its computation of final technical/price point scores and its 
award determination.   

4. The summary of negotiations goes on to say, in the next sentence, 
"They will be excluded."  It is not clear from the document whether 
this is meant to be a statement of the government's intent or a 
paraphrase of a commitment by the Spectrofuge representative.  In any 
event, the exclusions were not removed from the proposal (or from the 
contract).

5. It is improper to rely, as the agency apparently did here, on a 
purely mathematical cost/technical tradeoff because, unless a 
solicitation specifically provides for award on the basis of highest 
total point scores, these scores are merely intended to be aids for 
source selection officials.  See Teltara Inc., B-280922, Dec. 4, 1998, 
98-2 CPD  para.  __; SEC, Inc., B-226978, July 13, 1987, 87-2 CPD  para.  38 at 3.  
Here, while the solicitation explained the scoring of proposals, 
including price, it did not state that award would be based on the 
mere calculation of the highest combined technical and price scores.  
If the agency wants to use such a mechanical approach as the basis for 
its award, it should so provide in the RFP.  

6. Contrary to the agency's position, it also appears that the 
communications which occurred at the August 13 meeting did constitute 
improper post-BAFO discussions.  Specifically, these communications 
were directed at material terms of Spectrofuge's proposal and 
materially affected the proposal's potential for award.  Federal 
Acquisition Regulation (FAR)  sec.  15.306(d)(3) (FAC 97-02).    

7. Beckman raised additional protest issues, arguing, for example, 
that Spectrofuge's proposal was too highly rated because Spectrofuge 
cannot meet the requirement to maintain the instruments "to 100% of 
original Beckman specifications and technical updates" since Beckman 
does not make its technical updates publicly available and, thus, 
Spectrofuge has no access to the updates.  RFP, Description and 
Specifications at 25.  In its BAFO, Spectrofuge explained that the 
company keeps "abreast of new [original equipment manufacturer] 
models" through, among other things, national instrumentation shows, 
vendor conferences, and its membership in a service organization whose 
members exchange information on new developments in the field.  
Spectrofuge's BAFO, July 17, 1998, at Paragraph 3.  While Beckman 
argues that this response is inadequate, we find reasonable the 
agency's conclusion that Spectrofuge could meet the solicitation 
requirements.  Moreover, it is clear from the record that the agency 
was aware Spectrofuge had limited access to Beckman technical updates 
and that this weakness was one reason Spectrofuge's proposal was 
downgraded.  While the protester believes Spectrofuge's scores are too 
high, mere disagreement with the agency evaluation does not render the 
evaluation unreasonable.  Global Assocs., Ltd., B-275534, Mar. 3, 
1997, 97-1 CPD  para.  129 at 3.  We have reviewed the other evaluation 
issues raised by Beckman and, based on the protest record, we conclude 
that they are without merit.