TITLE:  National Aerospace Group, Inc., B-281958; B-281959, May 10, 1999
BNUMBER:  B-281958; B-281959
DATE:  May 10, 1999
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National Aerospace Group, Inc., B-281958; B-281959, May 10, 1999

Decision

Matter of: National Aerospace Group, Inc.

File: B-281958; B-281959

Date: May 10, 1999

Karl Dix, Jr., Esq., Smith, Currie & Hancock, for the protester.

Mike Friedman for Airport Metals, an intervenor.

Lillian Weiss, Esq., Defense Logistics Agency, for the agency.

Wm. David Hasfurther, Esq., and Michael R. Golden, Esq., Office of the
General Counsel, GAO, participated in the preparation of the decision.

DIGEST

Placement of an order at a significant price premium for the sole reason
that the vendor quoting a lower price has no prior performance history in
supplying the item being procured was unreasonable, where determination was
not made in accordance with the stated evaluation scheme.

DECISION

National Aerospace Group, Inc. protests the issuance of purchase orders for
sheet metal to other firms under request for quotations (RFQ) Nos.
SPO500-99-T-A426 (RFQ-A426) and SPO540-99-Q-A152 (RFQ-A152) by the Defense
Logistics Agency (DLA), Defense Industrial Supply Center (DISC). National
argues that its quotations represented the best value under these two RFQs.

We sustain National's protest of the order under RFQ-A426, and deny
National's protest under RFQ-A152.

RFQ-A426 was a simplified acquisition using the agency's automated purchase
procedures. Under these procedures, RFQs are transmitted directly to an
electronic bulletin board (EBB) maintained by the agency. Firms desiring
access to the EBB to review the RFQs and to submit quotations are required
to first register with the agency by completing a small purchase agreement
(SPA). Once registered, vendors can then access the EBB either through a
service or using their own personal computers via the Internet. Contracting
Officer's Statement at 1; see Commonwealth Indus. Specialties, Inc.,
B-277833, Nov. 25, 1997, 97-2 CPD para. 151 at 2-3; Arcy Mfg. Co., Inc.; Beard
Servs., Inc.; Keys Wholesale, Inc.; Craftmaster Hardware Co., Inc., B-261538
et al., Aug. 14, 1995, 95-2 CPD para. 283 at 1-2. The SPA, which every

supplier must sign in order to obtain a password to submit quotations on the
EBB, and which was applicable to this RFQ, provides as follows:

DISC purchases at or below the SAT [simplified acquisition threshold] are
subject to Best Value Buying techniques. This includes, but is not limited
to, the Blue Chip Vendor Program, the Delivery Evaluation Factor Program,
and Contracting Officer's individual determinations based on a comparative
assessment of pertinent circumstances, including past performance, delivery
and product quality.

DISC Small Purchase Agreement, Modification, at 2nd unnumbered page.

RFQ-A426 sought prices for metal sheets with a specified dimension for
delivery within 120 days after the date of order. Contracting Officer's
Statement at 2. The agency received four acceptable quotations in response
to RFQ-A426. National submitted the low quotation at a price of $10,500,
with delivery within 45 days from the date of the order. Tara Metals
submitted a quotation of $13,083 with delivery within 70 days from the date
of order. Agency Report, Tab 4, EBB Quotation Abstract for RFQ-A426. The
agency evaluated vendors under the Automated Best Value Model (ABVM).
Contracting Officer's Statement at 2. ABVM is an automated system that
collects a vendor's past performance data for a specific period and
translates it into a numeric score. Tara had an ABVM score of 95.4.
National, which was a relatively new supplier, was given a rating of 999.9
because it lacked a performance history for this item. Id.; Agency Report,
Tab 6, ABVM Rating Printout. Under the ABVM procedures, a supplier with no
performance history is assigned a rating of 999.9, which is referred to in
the record as a neutral rating. Contracting Officer's Statement at 2.

The record also includes a facsimile sent at 9:15 a.m. on January 20, 1999
from National responding to an inquiry from the agency in which National
advised the agency that the "material quoted as called out . . . no
exceptions . . . . We have in stock." Protest, exh. 3. The award
justification document, signed and dated on January 20, 1999, was a
preprinted form, which permitted the contracting officer to select one of a
variety of reasons for the award. Here, in pertinent part, the contracting
officer completed the form as follows: "Lower priced offer(s) not selected
because: . . . Other score(s) not a true indicator of performance because
score(s) based on too few contract line items." Agency Report, Tab 7, Award
Justification.

There is no other contemporaneous award documentation. In her statement to
our Office in the agency report, the contracting officer states that,
"[e]ssentially, [she] determined that Tara, who had a composite ABVM score
of 95.4 represented a lesser risk of nonperformance than did [National] who
had a neutral rating of 999.9 because it is a relatively new supplier."
Contracting Officer's Statement at 2.

National argues that the award to Tara was unreasonable and not supported by
the record. National points out that its quotation was significantly less
expensive than Tara's; that it quoted a shorter delivery time than Tara; and
that in response to the agency's apparent concern about its capability to
supply the item, it confirmed that it could furnish the item. National
argues that it was improperly penalized without any justification for a lack
of previous performance history. National asserts that the agency's
selection decision violates the ABVM notice provision which provides, in
pertinent part, that "[a]n ABVM score does not determine an offeror's award
eligibility, or technical acceptability," and that "[n]ew offeror status
will not be grounds for disqualification for award." Protester's Comments,
attach., DISC clause 52.215-9112(e).

Simplified acquisition procedures are designed to, among other things,
reduce administrative expenses, promote efficiency and economy in
contracting, and avoid unnecessary burdens for agencies and contractors.
Federal Acquisition Regulation (FAR) sect. 13.002. Although the procedures for
simplified acquisitions do not require detailed justifications supporting a
best value determination, the FAR requires that the contracting officer
evaluate quotations "on the basis established in the solicitation" and
support "the award decision if other than price-related factors were
considered in selecting the supplier." FAR sect.sect. 13.106-2(a)(2),
13.106-3(b)(3)(ii). Thus, even when using such procedures, an agency must
conduct the procurement consistent with a concern for fair and equitable
competition and must evaluate quotations in accordance with the terms of the
solicitation. See Sawtooth Enters., Inc., B-281218, Dec. 7, 1998, 98-2 CPD
para. 139 at 3; Nunez & Assocs., B-258666, Feb. 10, 1995, 95-1 CPD para. 62 at 2. In
reviewing protests against an allegedly improper simplified acquisition
evaluation and selection decision, we examine the record to determine
whether the agency met this standard and exercised its discretion
reasonably. Id. Here, we conclude that the selection decision was flawed
because it is inadequately supported and was not based on the criteria
announced in the SPA.

The SPA, which established the terms and conditions for this EBB
acquisition, stated that the contracting officer would use best value
techniques and make an individual determination based on a comparative
assessment of pertinent circumstances, including past performance, delivery
and product quality. The contracting officer states that she used the ABVM
to perform this comparative assessment. Contracting Officer's Statement at
1, 4. As quoted above, the sole reason for paying a significant price
premium for Tara was that National's ABVM score was not a true indicator of
past performance because it was based on too few contract lines. Agency
Report, Tab 7, Award Justification.

In a recent case involving DLA's use of ABVM scoring, we concluded that the
use of a neutral rating approach to avoid penalizing a vendor without prior
experience does not preclude a determination to award to a higher-priced
firm with a good past performance record over a lower priced vendor with a
neutral past performance rating. Indeed, such a determination is inherent in
the concept of best value. Phillips Indus., Inc., B-280645, Sept. 17, 1998,
98-2 CPD para. 74 at 5. In Phillips, the contracting officer's determination to
select a higher priced vendor with an excellent ABVM score, rather than a
new supplier with a neutral rating, was reasonable where the record in that
case showed that the agency had backorders for the item and timely delivery
was critical. Nonetheless, we expressed concern that the vendor without a
performance history not be disqualified from award merely because it lacked
a performance history; we pointed out that such an approach would be
inconsistent with the FAR and the DLA ABVM clause. Id. As DLA recognized in
that case, FAR sect. 15.305(a)(2) provides that in the case of an offeror
without a record of relevant past performance or for whom information on
past performance is not available, the offeror may not be evaluated
favorably or unfavorably on past performance. See 41 U.S.C. sect. 405(j)(2)
(1994). The ABVM clause states that lack of performance history is not
grounds for disqualification for award. Protester's Comments, attach., DISC
clause 52.215-9112(e).

There is nothing in the record to show that the contracting officer
performed a comparative assessment of the vendors. The contracting officer
merely checked a box on a form indicating that National was not selected
because its 999.9 ABVM score was based on insufficient information and,
therefore, was not a true indicator of its capabilities. Nor is there any
indication that the contracting officer performed a tradeoff that considered
the significant price premium in ordering from Tara, or that the contracting
officer considered in her decision that National quoted a significantly
shorter delivery time and confirmed that the metal sheets were in stock.
Unlike in Phillips, there is no indication here that the item was in backlog
or high demand status or that timely delivery was critical and worth the
price premium to avoid the risk of using a vendor with no performance
history. We conclude that the contracting officer failed to make a
meaningful best value determination consistent with the SPA to justify
paying a significant premium to Tara. As a result, DLA's decision was
tantamount to rejecting National's quotation based on its lack of past
performance history, which is inconsistent with 41 U.S.C. sect. 405(j)(2), FAR sect.
15.305(a)(2), and the clauses which implement the ABVM program, as discussed
in the Phillips decision. We therefore sustain National's protest of the
order to Tara under RFQ-A426.

We deny National's protest of the order to Airport Metals under RFQ-A152.
Airport Metals was the low priced vendor, had a ABVM score of 98.4, and
quoted a significantly shorter delivery time than National. Agency Report,
Tab 9, RFQ-A152 Abstract. We think the contracting officer's selection of
Airport Metals in these circumstances was amply justified. Although National
challenges Airport Metals' ABVM score, we have no basis to question the
score on this record.

For RFQ-A426, we recommend that the contracting officer perform a proper
best value determination consistent with this decision, and issue an order
appropriate with that best value determination. In any event, National
should be reimbursed the costs of filing and pursuing its protest of
RFQ-A426, including attorneys' fees. Bid Protest Regulations, 4 C.F.R. sect.
21.8(d)(1) (1998). National 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. sect. 21.8(f)(1).

The protest regarding RFQ-A426 is sustained; the protest regarding RFQ-A152
is denied.

Comptroller General

of the United States