BNUMBER:  B-281800 
DATE:  April 9, 1999
TITLE: Korrect Optical, B-281800, April 9, 1999
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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:Korrect Optical

File:     B-281800

Date:April 9, 1999

Stephen E. Smith, Esq., Goldberg & Simpson, for the protester.
Phillipa L. Anderson, Esq., Merilee D. Rosenberg, Esq., and Philip S. 
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

1.  Protest of agency's evaluation of offeror's past performance is 
denied where the record shows that the evaluation was reasonable and 
consistent with the applicable evaluation factors.  

2.  Selection of technically superior, higher-priced proposal is 
unobjectionable where the solicitation made technical considerations 
and past performance more important than price and the agency 
reasonably concluded that the technical superiority and better past 
performance record of the awardee warranted payment of the associated 
price premium. 

DECISION

Korrect Optical protests the award of a contract to Classic Optical 
Laboratories, Inc. under request for proposals (RFP) No. 583-75-98, 
issued by the Department of Veterans Affairs (VA) for prescription 
eyeglasses and services for VA beneficiaries.  Korrect principally 
contends that the agency improperly evaluated its past performance 
because the agency relied on negative reference information to which 
the protester was not provided an adequate opportunity to respond.

We deny the protest.  

The solicitation, issued August 12, 1998 as a commercial-item 
procurement, contemplated the award of a fixed-price contract to 
provide the necessary resources, facilities, and establishments in 
each community where either a Veterans Integrated Services Network 
(VISN) 11 VA Medical Center or Outpatient Clinic is located, in order 
to furnish prescription eyeglasses to eligible beneficiaries.  RFP  sec.  
A.6.3.  The solicitation provided for award to the responsible offeror 
whose conforming offer was most advantageous to the government.  RFP  sec.  
C.4.  The RFP provided for evaluation of the proposals under the 
criteria of technical factors, past performance, and price.  Id.  The  
technical evaluation criteria consisted of the education of 
individuals providing supplies and services to VA beneficiaries and 
the offerors' management capabilities and approach.  Id.  Under 
management capabilities, offerors were to describe management methods 
to ensure the provision of prompt and quality service.  Id.  Under 
past performance, the solicitation required offerors to identify all 
federal, state and local government contracts and private contracts of 
similar type, size, scope, and complexity that were ongoing, or had 
been completed within the past 3 years.  RFP  sec.  C.4.B.  The RFP further 
provided that the information must evidence customer satisfaction with 
the offeror's products and services, and demonstrate the offeror's 
compliance with and fulfillment of the requirements under previous 
contracts.  Id. 

Three offerors, including Korrect and Classic, submitted proposals by 
the September 30, 1998 closing date.  One proposal was determined to 
be technically unacceptable and was not further considered.  After 
performing an initial evaluation, the agency determined that 
discussions should be held with each of the other two offerors.  Under 
the initial evaluation, Classic's management approach was determined 
to be better than that of Korrect, and Korrect was found not to have 
provided sufficient information about the education and experience of 
its employees.  The evaluators were also concerned about whether 
Korrect's management and capacity would be sufficient to permit 
Korrect to satisfactorily handle a large increase in workload.  
Additionally, the evaluators had concerns with Korrect's past 
performance on current/recent contracts with other VA medical centers.  
In the initial evaluation, Classic's proposal received a score of 34.5 
out of 40 for technical, 15.75 out of 20 for past performance, and 
25.23 out of 40 for price.  Korrect's proposal received a score of 20 
out of 40 for technical, 4.25 out of 20 for past performance, and 40 
out of 40 for price.  Agency Report, exh. 5.

The contracting officer and the chairman of the technical evaluation 
team held discussions with both offerors, seeking clarification of 
various issues, such as past performance, frame selection, and 
additional dispensing locations.  During these discussions, the 
contracting officer advised Korrect of the adverse past performance 
information identified by the evaluation team and requested Korrect to 
provide a written response to the adverse past performance matters and 
to the other issues as well.  Agency Report, exh. 1.  The protester 
responded to the agency's concerns by letter dated October 24, 1998.  
Specifically, Korrect explained that certain delivery delays at VA 
medical facilities in Illinois and Virginia were due to continuous 
frame backorders from certain manufacturers and other delays were due 
to the size of Korrect's former facility.  Protest, exh. 2.  Korrect's 
representative pointed out that it had recently moved into a larger 
facility which allowed both expandability and better production flow.  
Additionally, the protester stated that delays in a Washington, D.C. 
hospital were the result of the prosthetic service's inability to 
provide timely responses to its concerns regarding missing information 
on prescription forms.  Lastly, Korrect stated that it did not recall 
quality problems at the Topeka, Kansas hospital, but that if there had 
been problems, they must have related to Korrect's previous production 
flow problems.  Id.  

The final evaluation was based on the original proposals, discussions 
with both offerors and the additional information received from both 
offerors regarding past performance, personnel background and 
experience of employees.  In the final analysis, the contracting 
officer determined that after consideration of all the past 
performance information for both offerors, Classic had the superior 
overall past performance record.  Agency Report, exh. 8.  The 
evaluation team concluded that Classic's education qualifications and 
experience were "superior/better" to those of Korrect.  Agency Report, 
exh. 8.  The evaluators found that Classic clearly outlined the number 
of years of experience and education of its staff and justified its 
capabilities to handle a contract of this magnitude.  Classic's 
management overview was found to articulate its capabilities and 
approach to the type and size of contract, and its approach was found 
to be more defined than Korrect's.  Classic was determined to offer a 
better defined understanding of quality management and its quality 
assurance plan was found to indicate a defined style of its 
management.  Lastly, Classic offered to provide at least 30 different 
frame styles for the original price, while Korrect agreed to provide 
only 22 at the same price.

In making the award determination, the contracting officer concluded 
that Classic demonstrated that it offered the better technical 
capabilities, skills, management, resources and performance potential 
to provide the best performance at a reasonable price.  Agency Report, 
exh. 8.  While the contracting officer recognized that Korrect's 
overall price was significantly lower than Classic's, he concluded 
that Classic's technical superiority, combined with Classic's overall 
superior past performance record, warranted award to Classic.  Id.  On 
November 27, 1998, award was made to Classic.  

By letter dated December 1, 1998, Korrect filed an agency-level 
protest objecting to the award and contending that its technical 
proposal and other factors as submitted, when coupled with the price 
offered, entitled Korrect to the award.  Agency Report, exh. 9.  The 
agency-level protest was denied by letter dated December 21 and 
Korrect filed this protest with our Office on December 31, 1998.  
Korrect primarily objects to the agency's evaluation of its past 
performance as improper because Korrect was not given an opportunity 
to rebut negative past performance information relied on by the agency 
and maintains that it did not have significant delivery problems in 
the performance of past or present contracts.

The evaluation of technical proposals, including the evaluation of 
past performance, is primarily the responsibility of the contracting 
agency since the agency is responsible for defining its needs and the 
best method of accommodating them, and it must bear the burden of any 
difficulties resulting from a defective evaluation.  Federal Envtl. 
Servs., Inc., B-260289, B-260490, May 24, 1995, 95-1 CPD  para.  261 at 3.  
In reviewing protests challenging an agency's evaluation of proposals, 
we will not substitute our judgment for that of the agency regarding 
the merits of proposals; rather, we will examine the agency's 
evaluation to ensure that it was reasonable and consistent with the 
solicitation's evaluation criteria.  Honolulu Marine, Inc., B-245329, 
Dec. 27, 1991, 91-2 CPD  para.  586 at 3.  A protester's mere disagreement 
with the agency's evaluation does not render it unreasonable.  CORVAC, 
Inc., B-244766, Nov. 13, 1991, 91-2 CPD  para.  454 at 5.

Korrect challenges its past performance evaluation and disputes that 
there were widespread significant delivery problems on its completed 
and existing contracts.   The contracting officer states that the new 
format for delivery of glasses being used in this procurement was 
developed specifically to enable veterans to receive prompt delivery 
of eyeglasses in order to improve service and customer satisfaction.  
The contracting officer explains that in order to evaluate the past 
performance of both offerors, he sent a past performance questionnaire 
to a number of the past performance references included in each 
offeror's technical proposal.  Agency Report, exh. 1.  The contracting 
officer also obtained data from other VA medical centers on both 
offerors.  Korrect's initial past performance evaluations included a 
number of instances of unsatisfactory performance which resulted in 
the contracting officer's further examination of Korrect's past 
performance.  Id. at 4.  The additional inquiries into Korrect's past 
performance history resulted in many satisfactory and 
above-satisfactory ratings and comments on the various aspects of 
performance, but also resulted in numerous unsatisfactory ratings and 
comments.  In several instances, Korrect was cited by several VA 
facilities for problems meeting delivery schedules.  Agency Report, 
exh. 6.  There were also several instances where, while Korrect 
received an overall above-satisfactory evaluation, comments indicated 
that Korrect had delivery problems in performing the contract.  
Moreover, Korrect's letter of explanation noted above concedes, rather 
than disputes, the existence of such problems and attempts to explain 
the measures it has taken which it believes will ameliorate the 
performance problems for future contracts.  Because the documentation 
supports the contracting officer's finding that Korrect had a record 
which included performance problems while Classic's past performance 
received uniformly favorable ratings, there is no basis to question 
the agency's lower evaluation of Korrect's proposal under past 
performance.[1]  

Korrect also objects to this evaluation on the basis that it was not 
given a sufficient opportunity to respond to the adverse past 
performance evaluation.  As explained above, the agency held oral 
discussions with the offerors and communicated the adverse past 
performance matters to Korrect and requested Korrect to provide a 
written response.  The adverse past performance issues involved 
delivery problems in the performance of several contracts at VA 
medical facilities in Illinois, Virginia, Kansas, and Washington, D.C.  
Agency Report, exh. 6.  As noted above, in fact, by letter dated 
October 24, 1998, Korrect responded to the agency's concerns about its 
adverse past performance evaluation, and provided the agency specific 
explanation for delivery delays at the VA facilities.  Protest, exh. 
2. Further, the record shows that, contrary to the protester's 
assertions, at least one of the VA facilities provided Korrect with 
the opportunity to correct past performance problems.  Specifically, 
the VA Medical Center in Danville, Illinois provided Korrect with 
specific concerns the agency had with its performance, including 
delivery delays, and also made several suggestions to enable Korrect 
to improve its performance.  Id.  Thus, Korrect was provided with an 
opportunity to address adverse past performance information, and we 
therefore have no reason to object to the propriety of the past 
performance evaluation on this basis.  

Korrect also asserts that the agency in its award decision improperly 
relied too heavily on the past performance evaluation.  The agency 
position is that it properly awarded the contract to Classic on the 
basis of an appropriate technical/price tradeoff.  In a negotiated 
procurement, agency officials have broad discretion in determining the 
manner and extent to which they will make use of technical and price 
evaluation results.  Price/technical tradeoffs may be made; the extent 
to which one may be sacrificed for the other is governed by the test 
of rationality and consistency with the established evaluation 
factors.  General Servs. Eng'g Inc., B-245458, Jan. 9, 1992, 92-1 CPD  para.  
44 at 9.  Where, as here, the RFP indicates that technical 
considerations are more important than price considerations, selection 
of a technically superior, higher-priced proposal is proper where the 
record shows that the price premium was justified in light of the 
proposal's technical superiority.  Dynamics Research Corp., B-240809, 
Dec. 10, 1990, 90-2 CPD  para.  471 at 2.  Here, the record supports the 
contracting officer's decision to award the contract to Classic as the 
technically superior offeror, notwithstanding Classic's higher 
proposed price.

After reviewing the proposals submitted by the offerors, the 
information provided by the offerors' references, as well as the 
responses provided by the offerors in response to discussion 
questions, the VA determined that Classic's proposal demonstrated that 
it had the better technical capabilities, skills, management, 
resources and performance potential to provide the best performance 
under the contract.  Although Korrect's overall price was lower, the 
cost savings were outweighed by Classic's demonstrated superiority and 
by Korrect's weaker proposed management approach and its poorer past 
performance record.  Contrary to Korrect's argument that the agency 
placed undue emphasis on past performance, the record demonstrates 
that, in accordance with the solicitation, the agency's determination 
of the relative merits of the proposals involved consideration of the 
educational qualifications and experience of the offerors' proposed 
staff, management capability and approach, past performance, and scope 
of offered frame selection.  Consequently, this record provides no 
basis to question the reasonableness of the award determination.[2]

The protest is denied.

Comptroller General 
of the United States
    
1. The protester asserts that the agency's actions here constitute 
"blackballing" or a de facto debarment essentially because it is being 
penalized for its unproven past performance problems.  This allegation 
is entirely unfounded--it does not set forth any alleged pattern of 
conduct by the agency and instead appears to be based on Korrect's 
speculation about possible future actions by the agency.  As for the 
procurement at issue here, the record shows that the agency conducted 
a reasonable analysis of both offerors' past performance consistent 
with the stated evaluation criteria and Korrect reasonably was not 
selected for award because it did not present the best value in part 
because of the agency's valid assessment of its past performance as 
weaker than Classic's.  This does not constitute "blackballing" or 
debarment.  See JCI Envtl. Servs., B-250752.3, Apr. 7, 1993, 93-1 CPD  para.  
299 at 9.

2. The protester in its comments submitted in response to the agency 
report complained that the agency failed to provide any foundation or 
documentation to support the allegations of poor performance.  
However, after the agency then produced all of the evaluation 
documentation, the protester declined to submit any comments, i.e., it 
failed to dispute and rebut the agency's rationale, which is not 
otherwise called into question by the record.