TITLE:   Wellco Enterprises, Inc., B-282150, June 4, 1999
BNUMBER:  B-282150
DATE:  June 4, 1999
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Wellco Enterprises, Inc., B-282150, June 4, 1999

Decision

Matter of: Wellco Enterprises, Inc.

File: B-282150

Date: June 4, 1999

Joel R. Feidelman, Esq., Anne B. Perry, Esq., Jonathan S. Aronie, Esq., and
Shelby L. Katz, Esq., Fried, Frank, Harris, Shriver & Jacobson, for the
protester.

Michael Trovarelli, Esq., and Maria Ventresca, Esq., Defense Logistics
Agency, for the agency.

Aldo A. Benejam, Esq., and Christine S. Melody, Esq., Office of the General
Counsel, GAO, participated in the preparation of the decision.

DIGEST

1. Agency reasonably rejected the protester's proposal as technically
unacceptable where the protester took exception in its proposal to material
specification requirements in the solicitation.

2. There is no basis to object to agency decision not to communicate with
offeror regarding whether it intended to comply with material specification
requirements contained in solicitation's purchase description, since any
such communication would have constituted discussions, not clarifications,
and the solicitation clearly notified offerors of the agency's intention to
make award without discussions.

DECISION

Wellco Enterprises, Inc. protests the rejection of its proposal as
unacceptable and the award of a contract to Cove Shoe Co. under request for
proposals (RFP) No. SPO100-98-R-0021, issued by the Defense Supply Center
Philadelphia (DSCP), Defense Logistics Agency (DLA), for intermediate,
cold/wet boots with safety toe. Wellco argues that the agency unreasonably
rejected its proposal. Wellco also argues that Cove's participation in the
procurement presented an organizational conflict of interest which should
have disqualified the firm from receiving the award.

We deny the protest.

Background

The RFP, issued on March 9, 1998, contemplated the award of an
indefinite-delivery, indefinite-quantity, fixed-price contract for a minimum
of 21,348 and a maximum of 35,586 pairs of boots during the base period,
with up to two 1-year options. RFP sect. B, at 6-7, sect. I, at 49. Section M of the
RFP listed the following evaluation criteria in descending order of
importance: product demonstration models (PDM); experience/past performance;
DLA mentoring business agreements program; and socioeconomic considerations.
Id. sect. M, at 67. The RFP stated that PDMs were to be subjected to evaluation
for all characteristics of the purchase description (PD) [1] attached to the
RFP, including conformance to the visual, dimensional, and end item test
requirements of the PD. Id. sect. L, at 60, sect. M, at 68. End item tests would
consist of a leakage test and an impact resistance test. Id. sect. L, at 60. The
RFP emphasized that PDM was the most important evaluation factor and stated
that technical quality was more important than price. Id. sect. M, at 67. Award
was to be made to the responsible offeror whose proposal conformed to the
solicitation and was deemed most advantageous to the government. Id.

With their proposals, offerors were required to submit three pairs of boots
of any size for evaluation for conformance to the visual, dimensional, and
end item test requirements of the RFP's PD. Id. sect. L, at 60. The RFP
specifically warned that "[f]ailure of models to conform to the requirements
of the [PD] may result in an unfavorable evaluation of the offer." Id. The
RFP further stated that the government preferred that all materials to be
used in the PDMs be those listed in the PD. If an offeror proposed to use
alternate materials, however, the RFP required the offeror to provide a
letter with its PDM stating any departures from the PD. Offerors were
further required to include a statement certifying that if awarded the
contract, the item would comply with all the terms of the PD. Id.

By letter to DSCP dated March 12, Cove suggested several changes to the PD,
which DSCP forwarded to the Navy for review and approval. Pending the Navy's
review of Cove's suggestions, DSCP extended indefinitely the RFP's closing
date. RFP amend. 0001, Mar. 24, 1998. The agency subsequently amended the
RFP to incorporate the changes to the PD approved by the Navy and establish
a new closing date of August 24. RFP amend. 0002, July 16, 1998.

Wellco also requested changes to the PD, primarily addressing the
construction of the toe area of the boot. AR, Tab 9, Letter from Wellco to
DSCP (July 31, 1998). [2] Although DSCP forwarded Wellco's request to the
Navy for review and approval, the Navy responded that it would not be
possible to review and approve the requested changes to the PD prior to the
solicitation's August 24 closing date. The contracting officer (CO) explains
that on or about August 18, a Wellco representative telephoned her to
inquire as to the status of its requested changes to the PD. The CO states
that she explained to Wellco that the Navy had not yet responded to the
requested changes to the PD and that the closing date would not be extended.
AR, Tab 12, CO Affidavit. The CO states that she further advised Wellco that
the RFP contained the standard clause reserving to the government the right
to make award on initial proposals, and cautioned that Wellco should submit
an offer on the solicitation as written, with an alternate offer
incorporating Wellco's requested deviations. Id.

Three firms, including Wellco and Cove, responded to the RFP by the August
24 closing date. With its proposal, Wellco submitted a letter regarding its
PDM, stating in part as follows:

On July 31 and August 4, 1998, we sent to DSCP information provided to us by
Rocky Shoes and Boots concerning procedures and materials in [the PD] which
are different than those used by Rocky and the industry as a whole . . . . A
copy of this communication is attached to this section. We suggested a
simple way to conform [the PD] to the procedures and materials stated in
Rocky's letter. To date, we have not received a response. Our PDMs
incorporate the ‘deviations' from [the PD] outlined in this
correspondence. It is impossible to produce this boot without certain of
these deviations. If you do not agree with all of these deviations, we
hereby certify that we will change to those procedures and materials in [the
PD] where ever such is possible.

AR, Tab 13, attachment to Wellco's Proposal, at 1-2.

Wellco also attached a letter from its supplier, Rocky Shoes and Boots,
taking exception to several of the PD's requirements for construction of the
boot's [DELETED].

The record shows that DSCP evaluated Wellco's proposal and the PDMs
notwithstanding Wellco's letters. Wellco's PDMs were examined to determine
whether they complied with visual and dimensional requirements and were
subjected to laboratory testing for leakage and impact resistance in
accordance with the RFP. Wellco's PDMs passed both laboratory tests and were
found to contain only minor visual and dimensional deficiencies. AR para. 11, at
4. The evaluator noted that Wellco's PDM had certain minor deficiencies (in
the visual and dimensional areas) that could be easily corrected during
production and rated Wellco's PDMs acceptable overall. The evaluator also
noted, however, that Wellco had not manufactured its PDMs in accordance with
the PD requirements, finding that Wellco had cited approximately six
deviations from the PD requirements. According to the evaluator, these
deviations could not be rated under the visual or dimensional criteria
because the boots would have to be cut apart in order to view the extent of
the deviations. AR, Tab 15, PDM Evaluation Form, at 2.

DPSC requested that the agency's Chief, Field Product Services (CFPS) review
the letters Wellco had included with its proposal listing the various
deviations from the PD requirements. The CFPS first disagreed with Wellco's
statement "that it is impossible to produce this boot without certain of
these deviations." In this regard, the CFPS specifically noted that a
careful review of competing offerors' PDMs found that they were produced in
accordance with the PD requirements without any of the deviations Wellco
claimed were required. AR, Tab 16, Memorandum from the CFPS to DSCP-FRFA at
1 (Oct. 16, 1998). The CFPS then identified several areas where Wellco's PDM
deviated significantly from the PD. One significant deviation was the
[DELETED]. The CFPS found this to be a significant change because [DELETED].
The CFPS also noted that Wellco proposed to use a [DELETED] instead of the
required felt strip for masking the underside breastline of the safety toe.
Id. Based on his evaluation, the CFPS concluded that Wellco's PDM departed
significantly from the PD. Id.

Based on the results of the evaluations, the CO found that Wellco's proposal
took exception to several aspects of the PD. The CO specifically noted that
Wellco took exception to the PD requirements regarding the [DELETED]
contained in the PD. AR, Tab 17, Pre-Negotiation Briefing Memorandum/Price
Analysis, Nov. 17, 1998, at 3. In addition, the CO noted that Wellco
specifically stated in its proposal that it is impossible to produce the
boot without certain of these deviations, and that if DSCP did not agree
with all of the deviations, Wellco would change to the procedures and
materials in the PD "where ever such is possible." Id. The CO further noted
that Wellco's proposed deviations had been forwarded to the Navy for
approval; that none of Wellco's deviations had been approved; and that the
CFPS had determined that Wellco's proposed deviations from the PD were
significant in several respects, as noted above. Accordingly, the CO
concluded that Wellco took exception to the PD requirements, and rejected
the protester's proposal as unacceptable. Id. at 9.

By contrast, the CO found that Cove did not take exception to any of the RFP
requirements, and its PDMs were rated acceptable. The CO also conducted a
detailed price analysis and found that Cove's prices were fair and
reasonable. Based on these evaluations, on February 18, 1999, the CO awarded
the contract to Cove based on initial proposals. This protest to our office
followed a debriefing by the agency.

Protester's Contentions

Wellco argues that DLA misinterpreted its proposal by ignoring Wellco's
explicit offer to abide by the government's original approach if DLA did not
approve of Wellco's proposed deviations. The protester also contends that
Cove's involvement in the procurement presented an organizational conflict
of interest that should have disqualified the firm from receiving the award.

Discussion

In a negotiated procurement, a proposal that fails to conform to material
solicitation requirements is technically unacceptable and cannot form the
basis for award. See International Sales Ltd., B-253646, Sept. 7, 1993, 93-2
CPD para. 146 at 2. Here, the record shows that the protester clearly took
exception to material solicitation requirements, thus rendering its proposal
technically unacceptable.

Section L of the RFP specifically stated that:

  a. Products delivered under any resultant contract shall conform to the
     [PD]. Approval of the [PDM] as part of the technical proposal does not
     relieve the potential awardee from the requirements of the [PD] of the
     RFP.

. . . . .

  a. The offeror is not permitted to utilize alternate manufacturing
     operations or change the construction/design of the PDM. PDM must be
     manufactured in accordance with applicable specifications.

RFP sect. L.52.215-9P14, at 60.

Wellco's proposal identified several areas where its PDM deviated from the
PD requirements and clearly stated that it would be impossible to
manufacture the boots without "certain" of the deviations. For example,
below we list some of the PD's requirements and Wellco's stated deviations
(as set out in its supplier's June 5, 1998 letter):

PD sect. 3.2.8.2 Box toe cushion. The material used to cushion the box toe and
mask the breastline shall be of ï¿½ inch opencell polyurethane. The cushion
shall be cut large enough to extend approximately ï¿½ inch rearward of the box
toe breast line.

Wellco response: [DELETED].

PD sect. 3.2.8.3 Felt Strips. The felt strips for masking the safety toe breast
line shall be a minimum of ï¿½ inch in width.

Wellco response: [DELETED].

PD sect. 3.2.8.4 Masking tape. The tape for holding the felt strips against the
breast line of the steel box toe shall be coated with a pressure sensitive
adhesive and be a minimum width of 1-1/2 inches.

Wellco response: [DELETED].

PD sect. 3.2.8.5 Vamp lining. The vamp lining shall be cut from 100 [percent]
short staple heterofil polyamide fiber, thermally bonded non woven fabric.
The fabric shall then be laminated to a cotton twill cloth conforming to
A-A-55296, Class II. (RFP amend. 0002, July 16, 1998, at 2).

Wellco response: [DELETED].

The record shows that the CFPS reviewed Wellco's proposed deviations and
concluded that Wellco's PDM departed significantly from the PD in three
respects--[DELETED]. The CFPS further concluded that, contrary to Wellco's
assertions, competing PDMs were constructed in accordance with the PD
requirements, without any of the deviations Wellco claimed were required to
produce the boots. The CO explains that the boot's steel toe design requires
specific lasting procedures and materials to assure protection and comfort
from the steel toe cap, and insulation from cold or wet conditions.
According to the agency, Wellco's proposed deviations, which involve
eliminating the [DELETED] as required by the PD and changing the [DELETED],
are material deviations from the PD requirements because they could affect
the boot's degree of comfort and protection. AR para. 18, at 6. In addition,
while Wellco stated in its proposal that if the agency did not agree with
all of its deviations, it would use the procedures and materials required by
the PD "where ever such is possible," that statement is simply inconsistent
with the terms of the letter from Wellco's supplier which Wellco included as
part of its proposal, and with Wellco's own statements that it is impossible
to produce the boots without the deviations and that its PDMs incorporated
these deviations. Since Wellco's proposal explicitly took exception to
material requirements of the RFP as contained in the PD, we conclude that
the agency reasonably rejected Wellco's proposal as technically
unacceptable. [3]

Wellco argues that to the extent that its proposal was "minimally unclear"
with respect to whether the firm intended to comply with material PD
requirements, the agency should have sought "clarification" from Wellco. In
this regard, Wellco suggests that the agency should have asked a
"straight-forward question, such as ‘Is Wellco agreeing to comply with
the specifications as written?" Comments, Apr. 12, 1999, at 13. We do not
agree that such a communication with Wellco could have been construed as
merely seeking clarification, rather than discussions. "Clarifications" are
limited exchanges between the government and offerors that may occur when
award without discussions is contemplated. Federal Acquisition Regulation
(FAR) sect.15.306(a). Such communications with offerors before establishing a
competitive range are not to be used to cure proposal deficiencies or
material omissions, materially alter the technical or cost elements of the
proposal, or otherwise revise the proposal. FAR sect. 15.306(b)(2). Discussions,
on the other hand, occur when a CO indicates or discusses with each offeror
still being considered for award, significant weaknesses, deficiencies, and
other aspects of its proposal that could be altered or explained to enhance
materially the proposal's potential for award. FAR sect.15.306(d)(3).

Here, the RFP required offerors to submit technical proposals and PDMs in
accordance with section L of the solicitation, and warned that technically
unacceptable proposals would be rejected without discussions. RFP
sect. M.52.215-9P20(b)(1), at 72. Further, section L of the RFP required that
PDMs be constructed in accordance with the specifications contained in the
PD attached to the RFP. RFP sect. L.52.215-9P14, at 60. As explained above,
Wellco took exception to several material requirements of the RFP as
contained in the PD, and made it clear in its proposal that it believed that
it was "impossible to produce this boot without certain of the deviations."
Thus, the agency having found the proposal unacceptable, the purpose of any
communication with Wellco with respect to whether it intended to comply with
the PD requirements would have been to provide Wellco the opportunity to
cure material defects in its proposal, and therefore would have constituted
discussions. See BE, Inc.; PAI Corp., B-277978, B-277978.2, Dec. 16, 1997,
98-1 CPD para. 80 at 5 (the acid test of whether discussions have been held is
whether it can be said that an offeror was provided the opportunity to
revise or modify its proposal). Since we conclude that the agency reasonably
determined that Wellco's proposal took exception to material requirements of
the solicitation rendering the proposal technically unacceptable, and since
the solicitation clearly notified offerors that technically unacceptable
proposals would be rejected without discussions, the agency was under no
obligation to hold discussions with Wellco. See Working Alternatives, Inc.,
B-276911, July 2, 1997, 97-2 CPD para. 2 at 4.

Finally, Wellco is not an interested party eligible to challenge the
contract award on the basis that Cove had an organizational conflict of
interest. Pursuant to statute and our Bid Protest Regulations, only an
interested party may protest a federal procurement; that is, a protester
must be an actual or prospective bidder or offeror whose direct economic
interest would be affected by the award of a contract or the failure to
award a contract. 31 U.S.C. sect. 3551(1),(2) (1994 & Supp. II 1996); 4 C.F.R.
sect.sect. 21.0(a), 21.1(a) (1999). A protester is not an interested party where it
would not be in line for award were its protest to be sustained. ECS
Composites, Inc., B-235849.2, Jan. 3, 1990, 90-1 CPD para. 7. In this case, the
agency evaluated three proposals and properly rejected Wellco's as
technically unacceptable. Since there was another technically acceptable,
reasonably-priced proposal besides the awardee's eligible for award, Wellco
is not an interested party to challenge the award. See Marine Pollution
Control Corp., B-270172, Feb. 13, 1996, 96-1 CPD para. 73 at 4.

The protest is denied.

Comptroller General

of the United States

Notes

1. Section C of the RFP required offerors to manufacture the boots in
accordance with the specifications contained in PD 96-07, July 30, 1997. RFP
sect. C, at 9. The agency states that the PD was developed based on research
conducted by the Naval Air Warfare Center, with the purpose of developing a
boot that would provide Naval and Marine aircrew adequate protection when
exposed to a variety of climate extremes, including impact protection,
particularly when forced to evacuate their aircraft. Agency Report (AR) at
2. As a result of that extensive research and testing, the PD specifies the
materials, components, and manner of manufacturing the boot. In particular,
to achieve impact resistance in the toe area, the PD requires a steel toe
cap, with specific types of lining under the steel toe cover and above it to
provide comfort. PD para. 3.2.8-3.2.8.5.

2. Wellco inadvertently omitted an attachment to its July 31 submission
which consisted of a letter from its supplier listing several deviations
from the PD, and submitted that letter on August 4.

3. The record shows that the technical evaluator assigned Wellco's PDM an
overall rating of acceptable. That rating is irrelevant, however, since the
RFP warned that approval of the PDM as part of the technical proposal did
not relieve offerors from complying with the PD requirements. RFP sect.
L.52.215-9P14 (c), at 60.