TITLE:  Charleston Marine Containers, Inc., B-283393, November 8, 1999
BNUMBER:  B-283393
DATE:  November 8, 1999
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Charleston Marine Containers, Inc., B-283393, November 8, 1999

Decision

Matter of: Charleston Marine Containers, Inc.

File: B-283393

Date: November 8, 1999

David R. Wall for the protester.

Capt. Richard P. Donoghue, Department of the Army, for the agency.

Jennifer D. Westfall-McGrail, Esq., and Christine S. Melody, Esq., Office of
the General Counsel, GAO, participated in the preparation of the decision.

DIGEST

1. Buy American Act price differential should not be applied in evaluating
proposal offering containers manufactured in Turkey because the Department
of Defense has waived application of the Act to the acquisition of defense
equipment manufactured in certain "qualifying countries," one of which is
Turkey.

2. Bases of protest which fail to allege improper conduct by the agency are
dismissed. General Accounting Office will not conduct investigations for the
purpose of establishing whether a protester may have a valid basis for
protest.

3. General Accounting Office will not sustain protest objecting to agency's
failure to hold discussions where it is apparent from the record that
protester could not have improved its proposal enough through discussions to
be in contention for award.

DECISION

Charleston Marine Containers, Inc. (CMCI) protests the award of a contract
to Military Transport, Inc. (MTI) under request for proposals (RFP) No.
DAMT01-99-R-9007, issued by the Department of the Army's Military Traffic
Management Command for the production of TRICON intermodal containers. CMCI
contends that the agency failed to investigate adequately various aspects of
MTI's proposal and engaged in improper discussions with the awardee.

We deny the protest.

In accordance with Federal Acquisition Regulation (FAR) part 12.6
(Streamlined Procedures for Evaluation and Solicitation for Commercial
Items), the Army Military Traffic Management Office posted notice of a
combined synopsis/solicitation for the intermodal containers on the Commerce
Business Daily Online (CBDnet) on June 3, 1999. The solicitation sought
proposals for 681 new TRICON configured containers, to be constructed in
accordance with Commercial Item Description A-A-65422B, Mar. 22, 1999;
General Purpose Configuration Drawing Number 9-1-0533; and Shelf
Configuration Drawing Number 9-1-0534. The RFP provided for award to the
responsible offeror whose proposal represented the best overall value to the
government based on an integrated assessment of technical capability, [1]
past performance, and price, with technical capability of significantly
greater importance than past performance, and technical capability and past
performance, when combined, of greater importance than price. The RFP
incorporated by reference FAR sect. 52.212-1, which provides at subsection (g):

The Government intends to evaluate offerors and award a contract without
discussions with offerors. Therefore, the offeror's initial offer should
contain the offeror's best terms from a price and technical standpoint.
However, the Government reserves the right to conduct discussions if later
determined by the contracting officer to be

necessary . . . .

Of the three offers evaluated by the agency, MTI's was the most highly rated
technically and the lowest in price. [2] The evaluators concluded that
CMCI's offer contained a number of significant weaknesses, and that
discussions would be required to determine compliance with the government's
requirements. In particular, CMCI had failed to submit a complete package of
technical drawings; had referenced an outdated Commercial Item Description;
had described incorrect shelving and tie-down configurations; had failed to
identify the forklift pocket dimensions, restraint locations, and marking
requirements; and had failed to furnish detailed information regarding, and
to identify the type of, coupler. Technical Evaluation Report, June 30,
1999, at 3. In addition, the protester had not demonstrated experience in
the production of the same or similar items. Id. at 4. MTI's proposal, on
the other hand, "present[ed] the highest probability that the requirements
[would] be met or exceeded, in an effective and efficient manner with no
weaknesses noted." Id. at 2. Moreover, its past performance under contracts
for the same and similar items was excellent. Id. The contracting officer
determined that opening discussions to allow CMCI to resolve the weaknesses
in its proposal would not be in the government's best interest because it
would jeopardize the ability of any offeror to meet the required delivery
date. She further determined that MTI's proposal represented the best value
to the government. Notice of Award, July 22, 1999. On July 14, the agency
awarded a contract to MTI.

CMCI first contends that MTI intends to rely on a Turkish subcontractor for
manufacture of the containers and that the provisions of the Buy American
Act should therefore be applied in the evaluation of its offer.

The Buy American Act, 41 U.S.C. sect.sect. 10a-10d (Supp. III 1997), which was
enacted to establish a legal preference for domestic products over foreign
products in government procurement, authorizes the head of a department or
independent establishment to waive its application where he or she
determines such application to be inconsistent with the public interest. 41
U.S.C. sect. 10a; see SeaBeam Instruments, Inc., B-247853.2, July 20, 1992, 92-2
CPD para. 30 at 4. Pursuant to this authority, the Department of Defense has
determined it inconsistent with the public interest to apply restrictions of
the Act to the acquisition of defense equipment which is mined, produced, or
manufactured in certain "qualifying countries," one of which is Turkey.
Department of Defense FAR Supplement (DFARS) sect. 225.872-1(a). Thus, although
MTI did represent in its offer that it intended to furnish containers
manufactured in Turkey, application of a Buy American evaluation factor to
its offer would not have been appropriate. [3]

Next, the protester asks us to determine whether the TRICON containers
delivered by MTI under a previous contract and/or the containers to be
delivered under this contract "claim CSC [International Convention for Safe
Containers] certification." [4]

Protest at 3.

This request does not constitute a valid basis for protest because it
contains no allegation of improper conduct by the agency. Swager
Communications, Inc.,

B-220000.2, Nov. 21, 1985, 85-2 CPD para. 585 at 2, aff'd, B-220000.4, Dec. 23,
1985, 85-2 CPD para. 702. In this regard, our Bid Protest Regulations require
that a protest include a detailed statement of the legal and factual grounds
for protest, and that the grounds be legally sufficient. 4 C.F.R.
sect.sect. 21.1(c)(4), (f) (1999). In other words, the protester must allege that
the agency took particular actions and that these actions were contrary to
law or regulation. Here, the protester has alleged neither. To the extent
that the protester is under the impression that our Office will conduct
investigations for the purpose of establishing whether a protester may have
a valid basis for protest, it is mistaken. Our Office does not conduct
investigations as part of our bid protest function. [5] Stabro Labs., Inc.,
B-256921, Aug. 8, 1994, 94-2 CPD para. 66 at 5; TSI Microelectronics
Corp.--Recon., B-243889.2, Nov. 4, 1991, 91-2 CPD para. 423 at 2.

CMCI also asks us to investigate whether MTI has complied with the
requirements of 38 U.S.C.A. sect. 4212 (West Supp. 1999) and FAR sect. 52.222-37,
which require federal contractors to file annual reports with the Secretary
of Labor summarizing (1) the number of disabled veterans and the number of
veterans of the Vietnam era in the work force of the contractor by job
category and hiring location, and (2) the total number of new employees
hired during the period covered by the report, and of that total, the number
of disabled veterans, and the number of veterans of the Vietnam era. The
protester points out that both recent Department of Defense appropriations
acts [6] and the DFARS [7] prohibit the obligation or expenditure of funds
to enter into or renew a contract with a contractor that is subject to the
above reporting requirement, but has not submitted the most recent required
report. The protester argues that if MTI had not filed its most recent
report at the time of the July 14 award, the award was illegal.

Again, CMCI has failed to state a legally sufficient basis for protest. The
protester maintains that if MTI failed to comply with the above reporting
requirements, an award to it would be illegal; CMCI does not allege,
however, that MTI in fact failed to file the required report. In other
words, the protester has failed to allege improper conduct on the part of
agency officials. Instead, it asks us to conduct an investigation to
determine whether it has factual grounds for protest. As noted above,
however, we will not conduct an investigation for the purpose of determining
whether a protester may have a valid basis for protest. [8]

CMCI further argues that the agency treated offerors unequally by allowing
MTI, but not other offerors, to provide additional information after receipt
of proposals.

The agency concedes that it requested and received information from MTI, but
not other offerors, after the closing date for receipt of proposals. Agency
Report at 5. Specifically, the agency notes that it asked MTI to identify
the type of coupler it would use to link the TRICON containers and to
specify where the data plate would be placed on the door and where the
vertical shelf supports would be located. The agency also asked MTI to
provide a timeline for the prototype and a statement that deliveries would
not be made after 3:30 p.m., and to identify the estimated sailing dates for
the shipments from Turkey and the port of debarkation. The agency argues
that its requests for information and MTI's responses to them were mere
clarifications, not rising to the level of discussions, and, as such, were
permissible pursuant to FAR sect. 15.306.

"Clarifications" are limited exchanges between the government and offerors
that may occur when award without discussions is contemplated. 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 contracting officer 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); Wellco Enters., Inc., B-282150, June 4, 1999, 99-1 CPD
para. 107. If a procuring agency holds discussions with one offeror, it must
hold discussions with all offerors whose proposals are in the competitive
range. FAR sect. 15.306(d)(1); Strategic Analysis, Inc., B-270075, B-270075.4,
Feb. 5, 1996, 96-1 CPD para. 41 at 4.

Here, we need not determine whether the exchanges with MTI constituted
discussions--and thus whether the agency should have established a
competitive range and conducted discussions with other offerors in
it--because it is clear from the record that CMCI was not prejudiced by the
agency's failure to hold discussions with it. In this regard, competitive
prejudice is an essential element of every viable protest, Lithos
Restoration, Ltd., B-247003.2, Apr. 22, 1992, 92-1 CPD para. 379 at 5, and we
will not sustain a protest for failure to hold discussions where it is
apparent from the record that the protester could not have improved its
proposal enough through discussions to be in contention for award.
Schleicher Community Corrections Center, Inc., B-270499.3 et al., Apr. 18,
1996, 96-1 CPD para. 192 at 6, recon. denied,
B-270499.6, Aug. 15, 1996, 96-2 CPD para. 68; Strategic Analysis, Inc., supra,
at 5; Northrop Worldwide Aircraft Servs., Inc., B-262181, Oct. 27, 1995,
95-2 CPD para. 196 at 8-9, recon. denied, B-262181.3, June 4, 1996, 96-1 CPD
para. 263. Such is the case here. The solicitation provided for award based on
an integrated assessment of technical capability, past performance, and
price; MTI received ratings of blue for both technical capability and past
performance, and its price was lower than CMCI's. It appears that CMCI would
not have been able to improve its past performance rating of neutral, which
was based on its lack of experience in manufacturing the same or similar
items, through discussions (presumably if the protester had such experience,
it would have mentioned it in its initial proposal), nor has the protester
alleged that it would have lowered its price if given the opportunity. Thus,
even assuming that the protester could have resolved all of the technical
deficiencies in its proposal through discussions and improved its technical
capability rating to blue, it would still not have been in line for award
based on an integrated assessment of technical capability, past performance,
and price. Accordingly, we find that CMCI was not prejudiced by the agency's
failure to hold discussions with it. [9]

Finally, CMCI alleges that the Department of Defense has a policy of
"forwarding TRICON container manufacturing contracts to Turkey." The
protester concedes that

it has no hard evidence that this is the case, but argues that the following
circumstances raise suspicion:

  1. issuance of this and a previous solicitation for the containers near
     the end of the fiscal year (which, according to the protester, suggests
     that the agency had "assurances that a factory was standing by to fill
     the bill," Protest at 4); and
  2. selection of other than the lowest-priced offeror last year, but the
     lowest-priced this year.

We see nothing suspicious in either of the circumstances cited by the
protester. With regard to the first, neither solicitation was in fact issued
particularly late in the fiscal year (both were issued in early June,
approximately 4 months prior to the end of the fiscal year), and even had
they been, we do not see how issuance of a solicitation late in the fiscal
year implies that the agency already has a particular contractor lined up.
With regard to the second, where award is to be made on a best value basis,
and price is one of several factors to be considered in determining best
value, it is to be expected that the lowest-priced proposal will sometimes,
but not always, be selected.

The protest is denied.

Comptroller General
of the United States

Notes

1. Subfactors to be considered under technical capability were ability to
meet the specifications and delivery schedule.

2. MTI's proposal received color scores of blue (highest probability that
requirements will be met or exceeded/no weaknesses) for both technical
capability and past performance, and its price was $1,559,236. CMCI's
proposal received a score of red (no probability that requirements will be
met as reflected in major omissions and/or deficiencies) and was rated
neutral for past performance; its price was $1,741,310.

3. Moreover, it does not appear that application of an evaluation
differential would have had any impact on the award decision in any event,
because MTI's proposal was the only technically acceptable one. See ASOMA
Instruments, Inc., B-251674, Apr. 13, 1993, 93-1 CPD para. 317 at 4.

4. Paragraph (ix) of the RFP required offerors to demonstrate their ability
to comply with CSC certificate requirements. Those requirements derive from
the International Convention for Safe Containers, done at Geneva, Dec. 2,
1972, and ratified by the United States on Jan. 3, 1978. See 49 C.F.R.
sect. 450.3 (1999). In this regard, in its proposal, MTI stated that it would
comply with the CSC certificate requirements, and the agency found that MTI
satisfied the RFP in this regard. Technical Evaluation Report, supra, at 1.

5. In its comments on the agency report regarding this issue, CMCI states
that "upon full investigation," our Office would discover that MTI did not
furnish CSC certificates under its prior contract for the containers, and
that it will not do so under the challenged contract. Protester's Comments,
Sept. 16, 1999, at 2. To the extent that CMCI attempts to recast its initial
request for an investigation by our Office into a valid basis for protest,
the issue is untimely raised. 4 C.F.R. sect. 21.2(a)(2). In any event, at best
CMCI's statement constitutes a challenge to the agency's determination that
MTI is responsible (i.e., that MTI is capable of furnishing compliant
containers), or raises an issue of contract administration (i.e., whether
MTI in fact furnishes compliant containers under the contract). We do not
review protests raising either of these issues. 4 C.F.R. sect. 21.5(a), (c).
Moreover, we note that CMCI appears to take contradictory positions in its
comments, arguing both that MTI will not furnish compliant containers, and
that the containers to be furnished are exempt from the CSC certificate
requirements. See Protester's Comments, supra.

6. Section 8096 of the Department of Defense (DOD) Appropriations Act for
Fiscal Year 1999, provided that:

None of the funds made available in this Act may be obligated or expended to
enter into or renew a contract with a contractor that is subject to the
reporting requirement set forth in subsection (d) of section 4212 of title
38, United States Code, but has not submitted the most recent report
required by such subsection for 1998 or a subsequent year.

DOD Appropriations Act, 1999, Pub. L. No. 105-262, 112 Stat. 2279, 2319
(1998).

7. The relevant DFARS clause is sect. 222.1304.

8. Similarly, we will not conduct an investigation to determine whether MTI
can be expected to comply with the required delivery date, as requested by
the protester.

9. Similarly, to the extent that the protester objects to the contracting
officer's decision to award on the basis of initial proposals rather than
conducting discussions, we will not consider the argument because, as noted
above, the protester suffered no prejudice as a result of the agency's
decision not to conduct discussions with the protester.