BNUMBER: B-281693
DATE: March 22, 1999
TITLE: Opti-Lite Optical, B-281693, March 22, 1999
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Matter of:Opti-Lite Optical
File: B-281693
Date:March 22, 1999
Jeffrey L. Sachs for the protester.
Phillipa L. Anderson, Esq., Merilee D. Rosenberg, Esq., and Philip
Kauffman, Esq., Department of Veterans Affairs, for the agency.
Linda C. Glass, Esq., and Paul I. Lieberman, Esq., Office of the
General Counsel, GAO, participated in the preparation of the decision.
DIGEST
Source selection decision is not reasonable where the record does not
provide any documentation or explanation which supports the
price/technical tradeoff, and the award determination was based
entirely on a comparison of total technical and price point scores
under a solicitation which does not provide for such a point-based
tradeoff.
DECISION
Opti-Lite Optical protests the award of a contract to Classic Optical
Laboratories, Inc. under request for quotations (RFQ) No. 663-56-98,
issued by the Department of Veterans Affairs (VA) for commercial item
prescription eyeglasses and services for VA beneficiaries.[1]
Opti-Lite principally contends that its offer was improperly evaluated
and that the agency's selection decision was unreasonable.
We sustain the protest.
The solicitation, issued September 9, 1998, contemplated the award of
an indefinite-delivery, indefinite-quantity requirements contract to
supply prescription eyeglasses on an as-needed basis to listed
participating VA facilities. The solicitation listed 85 specific
items or services for which offerors were required to provide a unit
price. RFQ Part 1, sec. A. The solicitation provided for award to the
responsible offeror whose conforming offer was most advantageous to
the government. The stated technical evaluation criteria consisted of
methodology of approach, personnel qualifications and past
performance. RFQ Part IV, at 103. Under past performance, the
solicitation required offerors to submit a minimum of four references
with evidence of their organization's qualification, experience and
achievements with relevant ongoing contracts, or contracts that have
been completed within the past 3 years. Id. at 104. The
solicitation further provided that technical and past performance
combined were approximately equal in weight to price. Id. at 105.
Additionally, offerors were encouraged to submit multiple offers
presenting alternative terms and conditions or commercial items for
satisfying the solicitation requirements, and were cautioned that the
agency reserved the right to award on the basis of initial offers
without holding discussions. RFQ Part III, at 99, 102.
Six offerors responded to the solicitation.[2] Opti-Lite submitted
two separate price proposals; in both of them for many items, it
entered "0." On October 20, the contracting officer contacted
Opti-Lite to clarify whether entries of "0" in Opti-Lite's price
proposal meant no bid or no additional charge. Agency Report (AR),
exh. 1, Contracting Officer's Statement, at 2. Opti-Lite faxed a
clarification letter stating that all items marked with a "0" would be
"supplied when ordered at no additional charge." AR, exh. 3, Letter
from Protester to Contracting Officer (Oct. 20, 1998). As a result of
the technical evaluation, Classic's offer received 92 out of 100
points for technical merit and was ranked first, and the protester's
offer received a technical score of 70 and was ranked third. AR, exh.
4, Award Memorandum, Nov. 18, 1998, at 1. Because the protester's
evaluated price of $624,380 was the lowest, it was awarded the top
score of 100 for price. Id. at 2. Classic's second low evaluated
price of $706,854.23 received a score of 88. The contracting officer
then added the technical and price scores to determine the
highest-ranking offer. Classic's offer received the highest total
point score of 180 and the protester's was second with a total score
of 170. Id.
Classic's pricing was compared to current contract prices and was
found to represent a savings of 8 percent. The protester's prices
were approximately
18 percent lower than current contract prices and were 12 percent
lower than Classic's. However, the contracting officer was concerned
that the protester's "unrealistic" price proposal might jeopardize
performance. Id. The contracting officer concluded that, based on
the protester's pricing scheme, it was possible to order complete sets
of glasses at no charge. The contracting officer's award memorandum
concludes that award to Classic was warranted based on Classic's
highest combined total score. Id. at 3. The protester was notified
of the award by letter dated November 20, and was provided a
debriefing by letter dated November 25. The debriefing letter advised
the protester of deficiencies pertaining to its methodology and
approach, its support for the professional qualifications of its
personnel, and its failure to identify the subcontractors it intended
to use in the course of performance. AR, exh. 6, Letter from
Contracting Officer to Protester (Nov. 25, 1998).
Opti-Lite protested to the agency by letter dated December 2,
alleging, among other things, that the agency's decision not to allow
alternate pricing proposals was a major change requiring the agency to
request best and final offers, that the agency erred in failing to
check its past performance references, made at least six mathematical
evaluation errors, improperly penalized Opti-Lite for failure to
include subcontractor information in the past performance section when
no subcontractors were used or requested, and failed to give any
weight to Opti-Lite's claim that it is over 1,000 miles and 2 shipping
days closer to the locations of contract performance than the awardee.
AR, exh. 7, Letter from Protester to Contracting Officer 2-3 (Dec. 2,
1998).
The contracting officer reviewed Opti-Lite's allegations and
discovered that some irregularities had occurred in the evaluation of
the protester's proposal. Errors had been made in evaluating
Opti-Lite's past performance in the technical evaluation and in
computing estimated quantities for the price evaluation. The
contracting officer prepared a revised award memorandum dated December
7, in which Opti-Lite's proposal was given the maximum score for past
performance, thus adding three points to its technical score, which
still placed Opti-Lite's offer in the third position for technical
merit, 19 points below that of the awardee. AR, exh. 8, Award
Memorandum--Revised, Dec. 7, 1998. Since Opti-Lite had received the
maximum number of points for its price proposal, that score remained
unchanged. In the final ranking, Opti-Lite's total point score
remained second, nine points below that of the awardee.
The contracting officer denied Opti-Lite's protest by letter dated
December 8 and advised Opti-Lite that he used option No. 2 in the
evaluation as directed by Opti-Lite in its letter dated October 20.
AR, exh. 9, Letter from Contracting Officer to Protester 1 (Dec. 8,
1998). Opti-Lite had previously been advised award to Classic was
appropriate based on Classic's high "total score for technical and
price." AR, exh. 6, Letter from Contracting Officer to Protester 2
(Nov. 25, 1998). This protest to our Office followed.
Opti-Lite challenges the agency's evaluation of its technical proposal
and maintains that it was wrongly denied an award because it was a
highly technically qualified offeror under a solicitation for which it
proposed the lowest price and contends that the agency's concerns
about its performance risk are due to a lack of understanding of
Opti-Lite's pricing methodology.[3]
While this is a commercial items purchase, it was conducted using
negotiation procedures. See FAR sec. 12.203. In a negotiated
procurement, the government is not required to make award to the firm
offering the lowest price unless the solicitation specifies that price
will be the determinative factor. Shirley Constr. Corp., B-240357,
Nov. 8, 1990, 90-2 CPD para. 380 at 6. Here, the solicitation provided
that award would be made to the offeror whose proposal was most
advantageous to the government considering price and other factors.
Consequently, the contracting officer had the discretion to determine
whether the technical advantage associated with Classic's proposal was
worth its higher price. This discretion exists notwithstanding the
fact that price and technical factors were of equal weight. However,
the propriety of such a price/technical tradeoff decision turns not on
the difference in the technical scores or ratings per se, but on
whether the selection official's judgment concerning the significance
of the difference was reasonable and adequately justified in light of
the solicitation evaluation scheme. Cygnus Corp., B-275181, Jan. 29,
1997, 97-1 CPD para. 63 at 11.
In order for our Office to perform a meaningful review of an agency's
selection determination, an agency is required to have adequate
documentation to support its evaluation of proposals and its selection
decision. Biospherics Inc., B-278508.4
et al., Oct. 6, 1998, 98-2 CPD para. 96 at 4; Arco Management of
Washington, D.C., Inc., B-248653, Sept. 11, 1992, 92-2 CPD para. 173 at 3.
While adjectival ratings and point scores are useful as guides to
decision-making, they generally are not controlling, but rather, must
be supported by documentation of the relative differences between
proposals, their strengths, weaknesses and risks, and the basis and
reasons for the selection decision. Century Envtl. Hygiene, Inc.,
B-279378, June 5, 1998, 98-1 CPD para. 164 at 4; Arco Management of
Washington, D.C., Inc., supra, at 3.
Here, it is clear from the record that the source selection decision
was based on a purely mechanical application of the numerical scores
for the technical factors and price. The contemporaneous
documentation of the agency's evaluation process in the report to our
Office consists of copies of the technical evaluation completed by the
evaluation team members, the price evaluation conducted by the
contracting officer and the original and revised award memorandum
completed by the contracting officer. The technical evaluation sheets
completed by the evaluators contain numerical scores for each factor
and subfactor, total point scores, and some narrative responses to
certain aspects of the vendors' proposed solution.
The contracting officer's original and revised award memorandum and
his statement submitted in response to this protest provide only the
total technical and price scores for the proposals evaluated and in
each instance state that the total score for technical and price would
determine the final ranking of vendors and award. The contracting
officer's award memorandum contains no hint as to the basis for the
scoring of the proposals and provides no assessment of the strengths
and weaknesses in the various proposals. While, in response to the
protest, the contracting officer makes references to certain
identified deficiencies in the protester's proposal, the contracting
officer does not provide any explanation of how, based on these
deficiencies in the protester's low priced proposal, or based on
strengths in Classic's proposal, Classic's proposal was determined to
be the more advantageous; rather he maintains his position that the
total point scores per se justified the award to Classic.
Where a price/technical tradeoff is made, the source selection
decision must be documented, and the documentation must include the
rationale for any tradeoffs made, including the benefits associated
with additional costs. Federal Acquisition Regulation sec. 15.308 (FAC
97-02). It is improper to rely, as the agency did here, on a purely
mathematical price/technical tradeoff methodology. See Teltara, Inc.,
B-280922, Dec. 4, 1998, 98-2 CPD para. at 4; General Offshore Corp.-Riedel
Co., a Joint Venture, B-271144.2, B-271144.3, July 2, 1996, 96-2 CPD para.
42 at 8.[4] In this case the tradeoff is inadequate because, beyond
the mechanical comparison of the total point scores, the contracting
officer made no qualitative assessment of the technical differences
between the offers from Classic and Opti-Lite to determine whether
Classic's technical superiority justified the cost premium involved.
In its submissions in response to the protest, the VA now maintains
that Opti-Lite's below-cost proposal for various line items creates a
risk of poor performance, and, in this manner, attempts to create a
tradeoff rationale. However, the contemporaneous analysis of the
contracting officer was in terms of financial capability to perform
the contract at Opti-Lite's low price:
Opti-Lite price proposal is unrealistic. Opti-Lite proposed that
71 out of 85 line items are offered at no cost to the government.
It is very unlikely that a contractor could perform this service
without compensation for all the line items offered at no cost.
AR, exh. 4, Award Memorandum, Nov. 18, 1998, at 2. The
contemporaneous concern about Opti-Lite's price reasonableness,
therefore, was in reality a concern about its responsibility. See
Envirosol, Inc., B-254223, Dec. 2, 1993, 93-2 CPD para. 295 at 5-6. To
the extent that the agency found Opti-Lite nonresponsible, it should
have referred the matter to the Small Business Administration (SBA)
for review under its certificate of competency (COC) procedures,
because Opti-Lite is a small business. 15 U.S.C. sec. 637(b)(7) (1994);
FAR sec. 19.602-1(a).[5]
Since we find that the agency failed to document the reasonableness of
its tradeoff decision, we recommend that the agency perform and
document a proper tradeoff analysis. If the agency believes that
Opti-Lite is nonresponsible, the matter should be referred to the SBA
for COC consideration. If a different award determination results,
the agency should terminate Classic's contract for the convenience of
the government. In addition, we recommend that the protester be
reimbursed its costs of filing and pursuing the protest. 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. While the solicitation is denominated as an RFQ, the agency treated
it as a negotiated procurement and the entire record, including the
RFQ provisions, speaks in terms of the submission and evaluation of
proposals/offers and the resulting award of a contract. In order to
avoid confusion, this decision will use the latter negotiated
procurement terminology throughout.
2. A seventh offeror did not include a technical proposal and was not
considered.
3. In its protest to our Office, Opti-Lite repeated the allegations
from its agency-level protest that the agency failed to verify its
past performance references, made several mathematical evaluation
errors, improperly penalized it for failure to include subcontractor
information, failed to give weight to the fact that it is over 1,000
miles and 2 shipping days closer to the locations of contract
performance than the awardee, and improperly refused to release
technical evaluations and scores. In its comments to the agency
report submitted in response to this protest, Opti-Lite acknowledges
that the agency took corrective action with respect to many of the
evaluation errors. Since the protester's did not respond to the
agency's position in its comments with respect to the other
allegations, we deem these allegations abandoned. TMI Servs., Inc.,
B-276624.2, July 9, 1997, 97-2 CPD para. 24 at 4 n.3.
4. We recognize that an agency properly may use a mathematical
tradeoff formula where the formula is explicitly set forth in the
solicitation and is structured in a manner which encompasses a
reasoned cost/technical tradeoff.
5. Opti-Lite also objects to the agency's decision not to consider
both of its price proposals. However, on October 20, the contracting
officer requested Opti-Lite to elect which of the two price proposals
should be used for evaluation purposes. Opti-Lite instructed the
contracting officer to disregard its price proposal option No. 1 and
to use its price proposal option No. 2. In our view, since Opti-Lite
consented to have only its option No. 2 price proposal evaluated, and
did not object at the time, Opti-Lite does not have a valid basis to
protest that only one of its price proposals was evaluated.