TITLE:   Si-Nor, Inc., B-282064; B-282064.2, May 25, 1999
BNUMBER:  B-282064; B-282064.2
DATE:  May 25, 1999
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Si-Nor, Inc., B-282064; B-282064.2, May 25, 1999

Decision

Matter of: Si-Nor, Inc.

File: B-282064; B-282064.2

Date: May 25, 1999

Sam Z. Gdanski, Esq., and Jeffrey I. Gdanski, Esq., for the protester.

John E. Lariccia, Esq., and C. Gordon Jones, Esq., Department of the Air
Force, for the agency.

Jeanne W. Isrin, Esq., David A. Ashen, Esq., and John M. Melody, Esq.,
Office of the General Counsel, GAO, participated in the preparation of the
decision.

DIGEST

Determination that higher-priced proposal rated higher under past
performance subfactor (compared to protester's) offered best value to
government cannot be determined reasonable where price was approximately
twice as important as past performance under solicitation's evaluation
scheme, and documentation of tradeoff decision does not explain why agency
considered awardee's evaluation advantage under past performance sufficient
to offset protester's lower offered price.

DECISION

  1. Si-Nor, Inc. protests the Department of the Air Force's award of a
     contract to U.S. Eagle, Inc. under request for proposals (RFP) No.
     F64605-98-R0032, for refuse collection and disposal services at Hickam
     Air Force Base, Hawaii.
  2. We sustain the protest.
  3. The RFP contemplated award of a fixed-price requirements contract for
     an 8-month base period, with four 1-year options. No technical
     proposals were required, but each offeror was required to submit
     financial references and at least three past performance references for
     service contracts exceeding $100,000 in revenues annually on which it
     had performed as prime contractor during the period November 1, 1995
     through October  31, 1998. Addendum to RFP para. 1(b), at 1; RFP, amend.
     0003, Preproposal Conference Minutes sect. 7a and d; RFP, Performance
     Reference Information Sheet. Offers were to be evaluated based on (1)
     past performance/experience and (2) price/cost, which were to be
     approximately equal in weight. Past performance and experience also
     were to be approximately equal in weight. Agency Report, Tab 7,
     Decision Document, Feb. 24, 1999, at 1st unnumbered page, and Decision
     Document (original), at 1st unnumbered page. Award was to be made on a
     best value basis. RFP sect. I(a), at 1. Past performance was to be assessed
     to determine offerors' relative capability and trustworthiness, and
     thus their relative reliability to perform the contract requirements,
     and experience was to be evaluated to assess offerors' experience in
     performing work on similar refuse collection and disposal services
     contracts. RFP sect. I(a)(1), at 1.
  4. Five offers were received. Based on the evaluation, the source
     selection official determined that Eagle's proposal represented the
     best value to the government. Although Si-Nor's evaluated price
     ($7,974,020) was slightly lower than Eagle's ($8,029,688), and both
     proposals were rated low risk for experience, Si-Nor's proposal was
     rated only satisfactory for past performance, while Eagle's was rated
     outstanding. In comparing Eagle's proposal to Si-Nor's, the selection
     official stated as follows:
  5. I have determined [Eagle]'s proposal to be of better value than
     [Si-Nor]'s proposal. [Eagle] received an outstanding past performance
     rating compared to the satisfactory rating given [Si-Nor]. [Eagle]'s
     quality control and business relations, in particular, received
     laudatory comments from customers. I believe that [Eagle]'s outstanding
     past performance outweighs the lower price offered by [Si-Nor], a
     difference of $7,944 (Basic Period).
  6. Agency Report, Tab 7, Decision Document (Original), at 2nd unnumbered
     page.
  7. Upon learning of the resulting award to Eagle, Si-Nor first filed an
     agency-level protest, and then later filed a protest with our Office,
     arguing in part that the agency improperly had failed to apply a small
     disadvantaged business (SDB) evaluation adjustment to prices. The
     agency agreed, concluding that Federal Acquisition Regulation clause
     52.219-23, which provides for addition of an evaluation factor to all
     non-SDB offers for evaluation purposes, erroneously had been omitted
     from the RFP. The agency then reevaluated prices, applying a 10-percent
     factor to the prices of offers from non-SDBs (that is, all offers other
     than Si-Nor's, since Si-Nor was the only SDB offeror). This increased
     Eagle's evaluated price to $8,832,656.80, and increased the difference
     between its and Si-Nor's total price from $55,668 to $858,636.80.
     However, a new selection official determined that Eagle's proposal
     still represented the best value to the agency in light of its
     outstanding performance.
  8. Si-Nor challenges the source selection decision on the basis that the
     agency failed to document why any advantage reflected in Eagle's higher
     past performance rating warranted payment of an $858,636.80 premium.
     Si-Nor believes its lower evaluated price warranted a determination
     that its proposal represented the best value to the government. [1]
  9. Source selection officials in negotiated procurements have broad
     discretion in determining the manner and extent to which they will make
     use of the technical and price evaluation results. DynCorp, B-245289,
     B-245289.2, Dec. 23, 1991, 91-2 CPD para. 575 at 6. Price/technical
     tradeoffs may be made, and the extent to which one may be sacrificed
     for the other is governed only by the tests of rationality and
     consistency with the established evaluation criteria. TRW, Inc.,
     B-234558, June 21, 1989, 89-1 CPD para. 584 at 4. In deciding between
     competing proposals, the propriety of such a tradeoff turns not on the
     difference in technical scores or ratings per se, but on whether the
     selection official's judgment concerning the significance of that
     difference was reasonable and adequately justified in light of the RFP
     evaluation scheme. DynCorp, supra. In this regard, where a
     price/technical tradeoff is made, the source selection decision must be
     documented, and the documentation must include the rationale for any
     business judgments and tradeoffs made, including the benefits
     associated with additional costs. Federal Acquisition Regulation sect.
     15.308; Opti-Lite Optical, B-281693, Mar. 22, 1999, 99-1 CPD para. 61 at 5.
 10. Based on our review of the record, we conclude that the determination
     to award to Eagle was not adequately justified. The tradeoff rationale
     set forth in the new selection official's revised source selection
     decision stated as follows:
 11. I have determined [Eagle]'s proposal to be of better value than
     [Si-Nor]'s proposal. Both offerors received a low risk rating for
     experience. However, [Eagle] received an outstanding past performance
     rating based on their past performance record, meeting all contract
     requirements and exceeding some of the contract requirements, compared
     to the satisfactory rating given [Si-Nor]. . . . I believe that
     [Eagle]'s outstanding past performance outweighs the lower price
     offered by [Si-Nor], a difference of $858,636.80 for the total cost.
 12. Agency Report, Tab 7, Decision Document, Feb. 24, 1999, at 3rd
     unnumbered page.
 13. This determination--as well as the record as a whole-includes no
     explanation for the agency's conclusion as required by FAR sect. 15.308.
     While the record clearly sets forth the agency's conclusion that
     Eagle's past performance rating was worth an $858,636.80 price premium,
     it includes no documentation, evidence or explanation of the benefits
     that the agency associated with Eagle's superior past performance
     rating which would outweigh the additional price. This lack of
     documentation is significant in light of the fact that price was to be
     essentially twice as important as past performance under the stated
     evaluation scheme. [2] Absent a more detailed rationale, there simply
     is no way to determine whether the agency in fact accorded price this
     substantially greater weight. Further, such a rationale would provide
     evidence that the second tradeoff was conducted using the price premium
     reflecting the SDB preference ($858,636.80), rather than (as the
     protester alleges) continuing to use the premium without the SDB
     preference ($55,668), which the agency used in the erroneous initial
     tradeoff.
 14. We conclude that the record does not establish that the Air Force's
     tradeoff decision was reasonable, and sustain the protest on this
     basis. By letter of today to the Secretary, we are recommending that
     the agency perform and document a proper tradeoff analysis. If the Air
     Force determines that Eagle's proposal does not represent the best
     value to the government under the stated evaluation factors, the agency
     should terminate Eagle's contract for the convenience of the government
     and make award to Si-Nor. In addition, we recommend that the protester
     be reimbursed its costs of filing and pursuing the protest. 4 C.F.R. sect.
     21.8(d)(1) (1998). The protester
 15. 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).
 16. The protest is sustained.
 17. Comptroller General
     of the United States

Notes

1. Si-Nor also argues that Eagle's proposal should have been rated moderate
(rather than low) risk under the experience subfactor because Eagle has not
had prior contracts in the waste disposal field of a scope similar to that
under the contract here. The risk ratings are unobjectionable. The RFP
requested information on contracts over $100,000, thus indicating that such
contracts could be considered relevant, and Eagle's proposal cited its
performance of refuse disposal contracts at military and naval installations
with approximate annual values of $600,000, $304,000, and $185,072. (For the
contract at issue in this protest, Eagle's proposed price was $1,397,384 for
the 8-month base period and $1,658,076 for the first option year.) Although
Si-Nor's proposal referenced a number of contracts with higher annual values
($900,000, 850,000, $800,000, and $625,000), as well as some smaller
contracts ($488,172, $300,000, $259,620, $209,676, $86,808, and $80,000),
these values also were well below the value of the contract here. Si-Nor's
argument thus provides no basis for questioning the risk ratings.

2. Since past performance/experience and price/cost were to be given
approximately equal weight, each was worth approximately 50 percent of the
overall rating; since, within past performance/experience, each of the two
components was approximately equal, past performance was worth approximately
25 percent of the overall rating.