TITLE:  Oregon Iron Works, Inc., B-284088.2, June 15, 2000
BNUMBER:  B-284088.2
DATE:  June 15, 2000
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Oregon Iron Works, Inc., B-284088.2, June 15, 2000

Decision

Matter of: Oregon Iron Works, Inc.

File: B-284088.2

Date: June 15, 2000

James F. Nagle, Esq., Oles Morrison Rinker & Baker, for the protester.

James J. McCullough, Esq., Deneen J. Melander, Esq., and Timothy W. Staley,
Esq., Fried, Frank, Harris, Shriver & Jacobson, for Appleton Marine, Inc.,
an intervenor.

Arthur Thibodeau, Esq., and Vicki E. O'Keefe, Esq., Department of the Navy,
for the agency.

Glenn G. Wolcott, Esq., and Paul I. Lieberman, Esq., Office of the General
Counsel, GAO, participated in the preparation of the decision.

DIGEST

1. Where agency advised protester of specific evaluated past performance
weaknesses, and solicitation amendment stated that subsequent discussions
would be limited to issues other than past performance, post-award protest
that agency improperly failed to provide protester an opportunity to address
agency's past performance concerns during those discussions is not timely
filed.

2. Protester's complaints that its proposal should have been evaluated more
favorably with regard to various non-price evaluation factors are without
merit where they merely reflect protester's disagreements with the agency's
evaluation.

3. Agency's consideration of past performance information regarding contract
performance completed more than 3 years prior to source selection does not
provide a basis to sustain the protest where the contracts were submitted by
the protester as part of its proposal, in response to a solicitation
requirement that offerors provide up-to-date past performance references and
information.

DECISION

Oregon Iron Works, Inc. (OIW) protests the Department of the Navy's award of
a fixed-price contract to Appleton Marine, Inc. under request for proposals
(RFP) No. N47408-99-R-3924, to provide ship-to-shore amphibious bulk liquid
transfer (ABLT) systems. OIW protests that the agency improperly failed to
discuss its concerns regarding OIW's past performance and otherwise
improperly evaluated proposals.

We deny the protest.

BACKGROUND

The solicitation for this procurement was issued on August 12, 1999, seeking
proposals for engineering, fabrication, testing, inspection and delivery of
eight ABLT systems, with four options for an additional four systems under
each option. The systems will be used to transfer fuels and potable water
between ships and shore stations. Each system includes flexible hoses, from
5,000 to 10,000 feet in length, along with hose reels on which the hoses are
stored.

Under a prior contract, OIW developed a prototype ABLT system along with
related product specifications. The agency provided the specifications to
potential offerors with the solicitation, but specifically stated that
"[t]his Statement of Work requirements takes precedence over the Product
Specifications," further explaining that "[t]he requirements established
within Section C.3 of this Statement of Work take precedence over the
requirements delineated in the attachments to the SOW." RFP sect. C.3.0.2.
Consistent with these provisions, RFP sect. C.3 made certain changes to the
specifications, among other things, stating: "Change the materials for the
hose reel assembly and the bow ramp assembly to stainless steel, and the
preferred Type is 316L for its marine atmosphere resistance
characteristics." RFP sect. C.3.2.1.

On August 30, the agency issued RFP amendment No. 2, again addressing the
structural material to be used, but now mandating use of the particular type
of steel it had previously identified as "preferred," stating: "316L
stainless steel shall be used for [various specified portions of the ABLT
systems.]" RFP amend. 2, at 3-4.

On September 15, the agency issued RFP amendment No. 4, in which it
responded to a question regarding the required structural material.
Specifically, a potential offeror asked: "Since the . . . Solicitation
requires the substitution of 316L stainless steel . . . will [there] be a
requirement to perform a reanalysis of the structure components, and
possibility of redesign of the structure to maintain the same structural
strength[?]" The agency responded: "No[,] as long as the sizes and
thicknesses as indicated on the drawings are kept or maintained." RFP amend.
4, at 2.

On September 29, the agency issued RFP amendment No. 8, again addressing the
required structural material and associated strength requirements,
reprinting the following question and response in the amendment:

[Question:] The question is to resolve the concern about the structural
integrity of the hose reel frame with the change from carbon steel to 316L
stainless steel. By example. The lifting eyes are specified as ï¿½" ASTM A572
Gr 50 steel plate with a min. yield of 50000 psi. A ï¿½" 316L stainless plate
will produce to ASTM A240 and has a min. yield of 25000 psi. This would be
typical of most structural components of the frame. Is the lower strength
acceptable?

Response: For the non-mild steel load bearing members, such as padeyes (ASTM
572 Grade 50), the thickness of the plate must compensate for the difference
in strength between the high-strength structural steel and stainless steel.

RFP amend. 8, at 1.

On September 30, the agency realized that RFP amendment No. 8, which
required that the proposed thickness of load bearing members compensate for
the difference in strength between the previously specified steel and the
now-required stainless steel, conflicted with RFP amendment No. 4, which
specifically stated that no redesign of the structure would be required. The
agency states that, "[because] there were only a few days before the closing
date . . . [i]t was considered too late to issue a written amendment[,] so
offerors were notified orally not to include any engineering and analysis
costs in their proposals." Agency Report at 3.

Three offerors, including OIW and Appleton, submitted proposals by the
October 6 closing date. Appleton submitted the lowest price of $37,286,748.
OIW's proposed price was [deleted]. The third offeror's price was
substantially higher than either Appleton's or OIW's price.

Section M of the RFP provided for contract award on the basis of four
primary evaluation factors: (1) proposal acceptability; [1] (2) capability
of the offeror; (3) risk associated with an offeror's capability; and (4)
proposed price. RFP sect. M.1. The RFP also stated that the non-price factors
combined were "significantly more important than price." RFP sect. M.6.

Under the "capability" factor, the RFP identified four subfactors:
experience; past performance; understanding of the requirements; and
compliance with instructions. RFP sect. M.4. Under the "risk" factor, the RFP
provided that the agency would use its findings regarding offerors'
capabilities to establish level of confidence assessment ratings (LOCAR)
which would reflect the agency's subjective assessments regarding the
likelihood that offerors would keep the promises made in their proposals.
RFP sect.sect. M.4, M.5.

In evaluating the proposals under the "capability" factor, the agency
created a "capabilities assessment report" for each offeror in which it
documented its assessments for each subfactor. With regard to three of the
subfactors--experience, understanding the requirements, and compliance with
instructions--the agency evaluated the Appleton and OIW proposals as being
virtually identical.

In order to evaluate the fourth "capabilties" subfactor, past performance,
the agency contacted the references each offeror had identified in its
proposal. [2] With regard to Appleton, the agency found that "[a]ll previous
customers contacted . . . indicated that Appleton Marine provided very good
administrative and engineering services and outstanding products." Agency
Report, Tab 12, attach. 4, Capabilities Assessment Report for Appleton, at
1. With regard to OIW, the agency found that, while OIW's past performance
was [deleted].

Consistent with the provisions of RFP sect. M, the agency used its findings
regarding the offerors' capabilities to develop a risk rating, or LOCAR,
which reflected the agency's assessment of the likelihood that each offeror
would keep the promises contained in its proposal. Based on the differences
in the agency's evaluation of Appleton's and OIW's past performance,
Appleton's proposal was assigned a LOCAR of [deleted], and OIW's proposal
was assigned a slightly lower LOCAR of [deleted]. [3]

No discussions were conducted (consistent with the RFP's notification in
this regard) and based on Appleton's more favorable past performance
evaluation and its resulting higher LOCAR, along with its lower price, the
agency selected Appleton for award on October 29. OIW was subsequently
advised of the award and, thereafter, requested a debriefing which the
agency conducted on November 4. During the debriefing, the agency advised
OIW of its various evaluated past performance [deleted].

On November 9, OIW filed a protest with our Office challenging the October
29 award. The agency responded to that protest on December 7, stating that,
in light of the conflicting provisions in the solicitation amendments, the
agency could not be certain as to what material it was to receive for the
prices offered and, therefore, that the contract would be cancelled, an RFP
amendment issued, and the procurement reopened for the offerors that had
submitted initial proposals. Letter from Department of Navy to GAO (Dec. 7,
1999). Based on this corrective action, we dismissed OIW's protest as
academic. Oregon Iron Works, Inc., B-284088, Dec. 15, 1999 (unpublished
decision). On January 19, 2000, Appleton executed a no-cost termination of
the contract with the agency. Agency Report, Tab 17.

On January 19, the agency issued RFP amendment No. 9, clarifying the agency
requirements regarding the type of steel to be used and applicable strength
requirements, and sought revised price proposals from offerors consistent
with those requirements. Additionally, RFP amendment No. 9 provided for
discussions which were explicitly limited in scope, stating:

The prices submitted will only include changes due to this amendment from
the prices previously submitted on October 6, 1999. All contractors will
include revised spreadsheets as required in the solicitation and a revised
Section B as modified above. If any other changes have occurred since the
last submission, please include those changes too (such as small business
status, debarment . . . etc). Contractors will also include vendor quotes
for steel from the original pricing submitted in October and vendor quotes
for the Best and finals submitted by 27 January at 2:00 PST. The final day
to submit questions is 24 January at 4:00 pm PST. Discussions will be held
with each contractor that submitted an original proposal. The discussions
will be limited to the items in this amendment, all other questions should
be submitted in writing to [the source selection board chair], Contracts
office.

RFP amend. 9, at 17.

OIW did not protest or otherwise object to the provisions of RFP amendment
No. 9; it did not submit any questions to the agency as specifically
authorized by that amendment; and it submitted its final revised proposal by
the January 27 due date. In its final revised proposal, OIW slightly
decreased its price from [deleted] to [deleted]; Appleton slightly increased
its price from $37,286,748 to $37,720,601. [4] Because the offerors had not
revised anything in their proposals other than price, the agency relied on
the same evaluation documentation of non-price factors that it created
during the first evaluation. However, because OIW had decreased its price to
be slightly lower than Appleton's, the agency performed a cost/technical
tradeoff, comparing the advantages reflected by Appleton's higher non-price
factor rating with OIW's lower price. The agency concluded that the higher
level of confidence that Appleton would perform as promised was worth the
slightly higher price ([deleted]) the agency would pay. In performing this
tradeoff, the agency referred to precisely the same past performance
concerns that it had identified to OIW during the November 4
debriefing--specifically, concerns regarding OIW's [deleted]. On February
28, 2000, the agency again selected Appleton for award. This protest
followed.

DISCUSSION

OIW first protests that the agency failed to conduct discussions regarding
OIW's evaluated past performance weaknesses. OIW's protest regarding this
issue is not timely filed and is not for consideration on the merits.

In procurements where proposals are requested, alleged improprieties which
do not exist in the initial solicitation, but which are subsequently
incorporated into the solicitation, must be protested not later than the
next closing time for receipt of proposals following the incorporation. 4
C.F.R. sect. 21.2(a)(1) (2000).

Here, as set forth above, the agency specifically advised OIW during the
November 4 debriefing of its evaluated past performance weaknesses. Further,
the source selection documents show that the weaknesses discussed with OIW
at that time were the precise concerns on which the agency relied in
performing the relevant cost/technical tradeoff. Amendment No. 9 to the RFP
specifically advised offerors that the agency intended to limit discussions
to items in the amendment, which did not include past performance--a
solicitation provision to which OIW did not object prior to submitting its
revised proposal by the established closing date. Accordingly, OIW's
post-award protest that the agency failed to conduct discussions regarding
its evaluated past performance weaknesses constitutes a protest of an
alleged apparent solicitation impropriety which was not timely filed. Id.

OIW also challenges the agency's evaluation and source selection on various
other bases, first complaining that the agency's best value determination
was improper in that, "[i]n the first evaluation, the government had decided
that all three offerors were technically equivalent," and suggesting that
the later technical evaluation was revised after receipt of OIW's lower
price. Protest at 8. OIW is factually mistaken.

As discussed above, the record contains clear, contemporaneous documentation
of the agency's October 1999 evaluation--documentation on which the agency
relied for the subsequent best value determination--which indicates that
Appleton's proposal was rated higher in the initial evaluation and was not
subsequently altered in any way. Accordingly, this portion of OIW's protest
fails to state a factually valid basis.

OIW also complains that award to Appleton may have been motivated by the
government's desire not to "waste" termination costs, noting that "[u]nder
the termination for convenience rules . . . Appleton Marine is entitled to
reimbursement for [the] costs that it incurred in preparing to perform the
original contract plus any settlement expenses and reasonable profit," and
suggesting that the agency was motivated to select Appleton "so that those
original [settlement] costs would not be wasted." Protest at 9. In fact, as
noted above, Appleton executed a no-cost termination with the agency prior
to the issuance of RFP amendment No. 9. Agency Report, Tab 17. Accordingly,
OIW's assertions regarding the agency's consideration of termination costs
is also without factual basis.

Next, OIW complains that its proposal should have been rated higher than
Appleton's with regard to experience and past performance. OIW argues that
its experience in developing the prototype ABLT system "could not be matched
by anyone--specifically including [Appleton]," and concludes that "any
evaluation that rendered Appleton Marine on a level comparable to OIW in
experience and past performance is fatally flawed." Protest at 9.

The determination of the relative merits of proposals is primarily a matter
of agency discretion. Saco Defense, Inc., B-252066, May 20, 1993, 93-1 CPD para.
395 at 5. In reviewing a challenge to an agency's technical evaluation, we
examine the record to ensure that the evaluation is reasonable and
consistent with the stated evaluation criteria. Id. A protester's mere
disagreement with the agency's judgment does not render that judgment
unreasonable. Id.

We have reviewed the agency evaluation record regarding the aspects of the
evaluation about which OIW complains and conclude that OIW's assertions
represent mere disagreements with the agency regarding the agency's
evaluation of proposals. Accordingly, we find this portion of OIW's protest
without merit.

Finally, OIW complains that the agency's evaluation of OIW's past
performance violated the provisions of Federal Acquisition Regulation (FAR)
Subpart 42.15--which establishes policies and procedures for recording and
maintaining contractor performance information--because of a provision
directing that past performance information subject to the regulation not be
retained for longer than 3 years following contract completion. FAR sect.
42.1503(e). Specifically, OIW complains that two of the contracts which the
agency considered in evaluating OIW's past performance were completed more
than 3 years prior to the agency's source selection decision.

To the extent OIW is asserting that FAR sect. 42.1503(e) establishes a blanket
prohibition precluding source selection officials from considering any past
performance information for contracts completed more than 3 years prior to
the source selection, we decline to reach this conclusion. In this regard,
FAR Part 15--the portion of the FAR which establishes source selection
policies and procedures applicable to negotiated procurements--does not
establish any such requirement. Rather, in the portion of the regulation
specifically addressing an agency's evaluation of past performance
information, FAR Part 15 provides that "[t]he currency and relevance of
[past performance] information, source of the information, context of the
data, and general trends in contractor's performance shall be considered."
FAR sect. 15.305(a)(2)(i). More specifically, FAR Part 15 states:

The solicitation shall describe the approach for evaluating past performance
. . . and shall provide offerors an opportunity to identify past or current
contracts (including Federal, State, and local government and private) for
efforts similar to the Government requirement. . . . The Government shall
consider this information . . . .

FAR sect.15.305(a)(2)(ii). See also Advanced Data Concepts, Inc. v. United
States,

43 Fed. Cl. 410, 421 (1999) (recognition of distinction between past
performance data generated pursuant to FAR Subpart 42.15 and past
performance data submitted by an offeror pursuant to FAR Part 15).

Here, as noted above, the solicitation required offerors to submit
references "who will provide information about the quality of your past
performance." RFP sect. L.2. The RFP also advised offerors to "[m]ake sure that
your reference information is up to date." Id. Relying on the information
OIW submitted, the agency contacted the listed references regarding the
identified contracts. OIW now complains because one of the contracts it
identified in its proposal had been completed approximately 3ï¿½ years earlier
and another had been completed approximately 4ï¿½ years earlier.

We find no merit in this portion of OIW's protest. Consistent with the
provisions of FAR sect. 15.305(a)(2)(ii), the agency sought past performance
information from OIW--then complied with the FAR requirement that "[t]he
Government shall consider this information." On this record, we do not
question the agency's consideration of OIW's performance on contracts
completed approximately 3ï¿½ and 4ï¿½ years prior to the source selection.

The protest is denied.

Comptroller General
of the United States

Notes

1. The acceptability determination was performed on a pass/fail basis and
was based on an assessment of whether the proposal manifested the offeror's
assent, without exception, to the terms and conditions of the RFP. RFP sect.
M.2. All of the offerors' proposals were determined to be acceptable and the
agency's evaluation of proposals under this factor is of no further
relevance.

2. The RFP required that each offeror "[p]repare and submit [an] Offeror
Qualifications Statement . . . which includes relevant experience and the
names of references . . . who will provide information about the quality of
your past performance." RFP sect. L.2. The RFP further required that offerors
"[m]ake sure that your reference information is up to date." Id.

3. In assigning LOCAR scores, the agency used an evaluation scheme under
which 1.0 represented certain success; a .8 or .9 was assigned if the agency
believed the offeror was "[m]ore likely to succeed and closer to certain
success"; a .6 or .7 was assigned if the offeror was considered "[m]ore
likely to succeed, but closer to 50-50"; a .5 was assigned if the offeror
was considered "equally likely to fail or succeed"; a .3 or .4 was assigned
if the offeror was considered "[m]ore likely to fail, but closer to 50-50";
and a .1 or .2 assigned if the offeror was considered "[m]ore likely to fail
and closer to certain failure." Agency Report, Tab 12, Source Selection
Plan, at 10.

4. Again, the third offeror's price was substantially higher than either
OIW's or Appleton's price.