TITLE:  Saco Defense Corporation, B-283885, January 20, 2000
BNUMBER:  B-283885
DATE:  January 20, 2000
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Saco Defense Corporation, B-283885, January 20, 2000

Decision

Matter of: Saco Defense Corporation

File: B-283885

Date: January 20, 2000

Robert A. Mangrum, Esq., Eric J. Marcotte, Esq., and Scott A. Schipma, Esq.,
Winston & Strawn, for the protester.

Thomas C. Papson, Esq., and Richard P. Castiglia, Jr., Esq., McKenna &
Cuneo, for Ramo Manufacturing, Inc., an intervenor.

Vera Meza, Esq., and Maria B. Bribriesco, Esq., U.S. Army Materiel Command,
for the agency.

Mary G. Curcio, Esq., David A. Ashen, Esq., and John M. Melody, Esq., Office
of the General Counsel, GAO, participated in the preparation of the
decision.

DIGEST

Evaluation was inconsistent with solicitation's evaluation scheme where,
although solicitation provided that proposals would be evaluated for
quality, including effectiveness of the total quality system and how well
quality processes are controlled, agency evaluated awardee's proposal as
equal to protester's (which included adequate information) under quality
factor, notwithstanding that awardee's proposal provided little more
information than the quality standard used.

DECISION

Saco Defense Corporation protests the U. S. Army Tank-Automotive and
Armaments Command's (TACOM) award of a contract to Ramo Manufacturing, Inc.,
under request for proposals (RFP) No. DAAE20-98-R-0201, for M2 machine guns,
stellite-lined M2 barrel assemblies, and M2 bolt sub-assemblies. Saco
contests the evaluation of technical proposals and the resulting source
selection.

We sustain the protest.

The solicitation, issued June 23, 1999, provided for award to be made on the
basis of best value to the government, considering past performance,
quality, small business participation, and price. When combined, the
non-price evaluation factors were more important than price, while quality
and past performance were significantly more important than small business
participation. The solicitation further indicated that price was not the
most important consideration. RFP sect. M. The solicitation provided that
proposals were to be assigned adjectival ratings of excellent/very low risk,
good/low risk, adequate/moderate risk, marginal/high risk, or poor/very high
risk for each non-price factor. RFP sect.sect. M.1, M.2, M.3. [1]

Five offerors submitted proposals in response to the solicitation. After
conducting discussions with the offerors, TACOM requested and received
revised final offers (RFO). Contracting Officer's Statement (COS) at 2-3.
Both Saco's and Ramo's RFOs were rated good/low risk for quality and
excellent/very low risk for past performance. Although Saco's RFO was rated
as excellent for small business participation and Ramo's as only adequate in
that area, Ramo's price [DELETED] was [DELETED] lower than Saco's price
[DELETED]. Noting that small business participation was not heavily weighted
under the stated evaluation approach, the source selection authority (SSA)
concluded that Saco's advantage in this regard was not worth the price
premium associated with its proposal and that Ramo's proposal instead
offered the best value to the government. Source Selection Document (SSD)
at 7-8. This protest followed the ensuing award to Ramo.

Saco challenges the evaluation under the quality factor. The solicitation
provided for quality to be evaluated based on the "offeror's likelihood of
only offering conforming material for acceptance" under the contract. RFP
sect. M.1.1. According to the solicitation, "[t]he Quality element will be
evaluated by reviewing the information furnished concerning the offeror's
quality system. . . . Evaluation will consist of assessing the effectiveness
of the total quality system, including how well the accuracy/precision of
acceptance inspection equipment and all other processes are controlled." Id.
In this regard, the RFP provided that the contractor "shall implement and
maintain a quality system that ensures the functional and physical
conformity of all products or services you furnish under this contract. Your
quality system shall achieve (1) defect prevention and (2) process control,
providing adequate quality controls throughout all areas of contract
performance." RFP sect. E-7(a). Offerors were required to specify the quality
standard--"based on (1) international quality standards . . . , or (2)
military, or (3) commercial, or (4) national quality standards"--that their
system complies with and "represent that your performance under this
contract will be in conformance with your quality system." RFP sect.sect.
E-7(b), L.1.1(a). The RFP further required offerors to respond to the
following:

(b) How is your System applied to all processes, i.e., production,
contracting, fabrication, processing, inspection, testing, maintenance,
packaging, preservation, shipping, storage, buying, receiving, etc.?

(c) How do you monitor/audit your system to assure effectiveness and
continuous product improvement?

(d) What metrics do you use to track progress/status?

(e) How do you handle product deficiencies and implement corrective actions?

(f) Give examples/feedback on your customer satisfaction/market acceptance
of products.

(g) How do you keep abreast of new technologies?

RFP sect. L.1.1. In addition, offerors were required to describe their:
(1) "Calibration/Metrology and Acceptance Equipment" and how it works; and
(2) control process, including the determination of what will be monitored,
qualification of the process, training, qualification and recertification of
personnel, determination of which requirements to flow-down to vendors, and
utilization of generated data/information. RFP sect.sect. L.1.2, .3.

TACOM rated Saco's proposal as good/low risk under the quality factor based
on Saco's statement of compliance with International Organization for
Standardization (ISO), International Quality System Standard 9001. TACOM
also rated Ramo's proposal as good/low risk under the quality factor based
on Ramo's statement of compliance with military quality standard
MIL-Q-9858A. SSD at 5; Agency Report, Tab K16, Evaluation of Contractor
Responses for Quality Element. Specifically, the SSA noted that:

[t]he team evaluated [Ramo's] . . . quality system as rated good, posing a
low performance risk. They have complied with a MIL-Q-9858A quality system,
however they are not [Contractor Performance Certification Program (CP)2]
certified by the Government, nor have they received the Malcolm Baldridge
[National Quality] Award. Little doubt exists that Ramo's quality system
will allow successful performance of the required effort.

Id.

Saco asserts that it was improper to base the quality ratings only on the
proposed quality standard and not to take into account the other aspects of
a firm's approach to quality that the RFP indicated would be evaluated.

In reviewing protests against allegedly improper evaluations, our Office
will examine the record to determine whether the agency's judgment was
reasonable and in accord with the RFP's stated evaluation criteria.
Engineering and Computation, Inc., B-261658, Oct. 16, 1995, 95-2 CPD para. 176
at 2-3.

The evaluation here does not meet this standard. As noted, the solicitation
provided for the quality rating to be based on "the information furnished
concerning the offeror's quality system," with the agency "assessing the
effectiveness of the total quality system, including how well the
accuracy/precision of acceptance inspection equipment and all other
processes are controlled." RFP sect. M.1.1. Obviously, in order for the agency
to evaluate the proposals in this manner, proposals had to include
information bearing on the identified evaluation considerations. Toward this
end, the RFP called for information describing numerous aspects of the
offeror's approach to quality, such as how their quality system was applied
to all processes and how they handled product deficiencies and implemented
corrective action. RFP sect.sect. L.1.1, .2, .3.

Saco's proposal included information addressing the various aspects of its
quality system. For example, Saco described in some detail such elements of
its proposed approach to quality as: [DELETED].

In contrast, Ramo's response was significantly less detailed, largely
consisting of general statements and references to undefined procedures and
prior successful performance. For example, apparently in response to the
requirement that it describe its approach to monitoring/auditing its system
to assure effectiveness and continuous product improvement, Ramo stated in
its proposal that [DELETED]. Similarly, apparently in response to the
requirement that it describe the metrics used to track progress/status, Ramo
stated that [DELETED]. Further, when advised by the agency that its response
"[DELETED]," Letter from TACOM to Ramo (Sept. 21, 1999), Ramo responded that
[DELETED].

We find that TACOM's evaluation was inconsistent with the quality evaluation
provisions in section M of the RFP. While the record indicates an intention
on the part of the agency to consider the additional aspects of an offeror's
quality approach beyond merely the specified quality standard, Agency
Report, Tab B, Sample Maturity Matrix, there is no evidence that the agency
actually did so. In this regard, TACOM was fully aware of Ramo's inadequate
response to the quality requirements, as evidenced by the agency's
September 21 letter to Ramo requesting more information, but nothing in the
source selection document indicates that this had any impact on the quality
evaluation. In explaining Ramo's good/low performance risk quality rating,
the decision simply indicates that "[t]hey have complied with a MIL-Q-9858A
quality system . . . Little doubt exists that Ramo's quality system will
allow successful performance of the required effort." SSD at 5. Likewise, in
explaining Saco's good/low performance risk quality rating, the decision
indicates only that "[t]hey have a certified ISO9001 quality system, and
have demonstrated a commitment to customer satisfaction." Id. The decision
does not reference the missing information or identify the basis--other than
the quality systems used--on which the evaluation conclusions were based.
Rather, it appears that the quality factor rating was based only on the
quality standards proposed; since the agency considered Saco's and Ramo's
quality standards essentially equivalent, it rated both proposals "good"
under the quality factor. [2]

Ramo's identifying its quality system, along with the other general
information provided, was not sufficient to permit the agency to evaluate
Ramo's proposal in accordance with section M which, again, provided that the
agency would assess "the effectiveness of the total quality system,
including how well the accuracy/precision of acceptance inspection equipment
and all other processes are controlled." The limited information furnished
would not appear to provide a basis for judging the "effectiveness" of the
system as implemented by Ramo, or to assess how well various quality
processes are "controlled" by Ramo. The agency's conclusion that Ramo's
proposal was "good," and that the two proposals were equal, under the
quality factor therefore is not supported by the record, and we sustain the
protest on this basis.

As an additional matter, Saco argues in its comments on the agency report
that TACOM improperly evaluated Ramo's proposal as offering to comply with
MIL-Q-9858A. Although Saco did not raise this argument in a timely manner,
and it thus does not a furnish a basis for sustaining the protest, we find
that the argument has merit and thus bring it to TACOM's attention. [3]
Specifically, section E-7 of the solicitation ("Higher Level Contract
Requirement, TACOM Quality System Requirement") required that offerors
specify the quality standard with which they would comply. Ramo's proposal
specified [DELETED]. Since the record indicates that the agency viewed
compliance with [DELETED] as warranting only an adequate/moderate risk
quality rating, Agency Report, Tab B, Sample Maturity Matrix, assigning a
good/low risk rating based on compliance with MIL-Q-9858A appears to be
unreasonable given the ambiguity in Ramo's proposal as to its commitment to
comply with [DELETED].

As noted above, the source selection decision was based on the determination
that Saco's and Ramo's proposals were equal with respect to quality and past
performance, and that Saco's advantage with respect to small business
participation, a factor which was "not heavily weighted," was offset by
Ramo's advantage with respect to price. In view of our conclusion that the
record does not support the rating of the proposals as equal under the
quality factor, we cannot conclude that the price/technical tradeoff and
resulting source selection decision were reasonably based. In these
circumstances, we find that there was a reasonable possibility that Saco was
prejudiced by the agency's actions. McDonald-Bradley, B-270126, Feb. 8,
1996, 96-1 CPD para. 54 at 3; see Statistica, Inc. v. Christopher, 102 F. 3d
1577, 1581

(Fed. Cir. 1996).

We recommend that TACOM reevaluate proposals consistent with the RFP and our
decision. If Ramo's proposal is no longer most advantageous, we recommend
that the agency terminate Ramo's contract for convenience. We also recommend
that Saco be reimbursed the reasonable costs of filing and pursuing its
protest, including attorneys' fees. Bid Protest Regulations, 4 C.F.R.
sect. 21.8(d)(1).

The protest is sustained.

Comptroller General
of the United States

Notes

1. Under past performance, offerors could also be rated neutral/unknown risk
in cases where they had no meaningful relevant record of past performance.
RFP sect. M.2.1.

2. TACOM found that the quality standard with which Ramo agreed to
comply--MIL-Q-9858A--warranted a good rating because, as the agency
explains, although MIL-Q-9858A has been canceled by the Department of
Defense (apparently as part of its move towards use of commercial
standards), MIL-Q-9858A remains a valid quality standard, recognized by the
American Society for Quality (ASQ) and the Registration Authority Board,
which is still being employed by many contractors. Indeed, according to the
agency, MIL-Q-9858A in fact was a guide ("polestar") for the creation of ISO
9001. The agency disagrees with Saco's position that ISO 9001 is superior to
MIL-Q-9858A as a quality standard. Declaration of TACOM Quality Manager at
2; COS at 3-4. Although Saco in its initial protest furnished a chart in
which the two quality standards are compared and which generally indicates
that there are a number of ISO 9001 provisions that are not present in
MIL-Q-9858A, the agency has responded with two charts (one prepared by the
agency and another reportedly prepared by the ASQ) which indicate that
MIL-Q-9858A addresses most of the areas covered by ISO 9001. Declaration of
TACOM Quality Manager, attachs. 4, 5. Based on this evidence, we do not
conclude that in this case a contractor conforming to ISO 9001 is
inherently, significantly more likely to offer conforming material for
acceptance under the contract than a contractor conforming to MIL-Q-9858A.

3. Under our Bid Protest Regulations, 4 C.F.R. sect. 21.2(a)(2) (1999), a
protest that is not based on a solicitation impropriety, must be filed no
later than 10 days after the basis of protest is known or should have been
known or 10 days after a required debriefing. Where a protester files a
timely protest, and later supplements it with new protest grounds, those new
grounds must independently satisfy our timeliness requirements. Speedy Food
Serv., Inc., B-258537.3, B-258537.5, May 2, 1995, 95-2 CPD para. 111 at 7-8.
Saco received the document which first furnished the basis for this
argument--a copy of the relevant portion of section E-7 of Ramo's
proposal--in an early document production on November 12, but did not raise
the argument until it filed its comments on the agency report on November
29, more than 10 days later. This argument therefore is untimely.