TITLE:  KELO, Inc., B-284601.2, June 7, 2000
BNUMBER:  B-284601.2
DATE:  June 7, 2000
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KELO, Inc., B-284601.2, June 7, 2000

Decision

Matter of: KELO, Inc.

File: B-284601.2

Date: June 7, 2000

James A. Calderwood, Esq., and Heather J. LoPresti, Esq., Zuckert Scoutt &
Rasenberger, for the protester.

Robert L. Duecaster, Esq., for Coville, Inc., an intervenor.

Christine S. Trafford, Esq., Federal Prison Industries, for the agency.

C. Douglas McArthur, Esq., and Michael R. Golden, Esq., Office of the
General Counsel, GAO, participated in the preparation of the decision.

DIGEST

Protest challenging the evaluation of the protester's past performance is
denied where the record establishes the reasonableness of the agency's
evaluation and the protester merely disagrees with the agency's
determination.

DECISION

KELO, Inc. protests the award of a contract to Coville, Inc., under request
for proposals (RFP) No. 1PI-R-1474-00/PFU, issued by Federal Prison
Industries for fabric to be used to manufacture T-shirts. The protester
contends that the agency's evaluation of KELO's past performance was
unreasonable.

We deny the protest.

Federal Prison Industries is a wholly-owned government corporation within
the Department of Justice that operates at various locations within the
federal prison system under the trade name UNICOR. RFP amend. 3, at 12.
UNICOR operates factories at 70 locations providing employment, education,
and training to inmates in federal custody. Id. In so doing, UNICOR ensures
the safety and security of operations at federal correctional facilities
while producing and selling market-priced, quality goods in a
self-sustaining manner. UNICOR states that it achieves this mission by
manufacturing the products it sells. Warvel Prods., Inc., B-281051.5,
July 7, 1999, 99-2 CPD para. 13 at 2.

On November 12, 1999, the agency issued the RFP for a fixed-price,
indefinite-delivery/indefinite-quantity (ID/IQ) contract to supply nine line
items of 100% polyester Jersey, heather gray fabric for a base year, with
four 1-year option periods to the Federal Correctional Institution (FCI) at
Jesup, Georgia. RFP amend. 3, at 3-11. UNICOR will use the fabric to
manufacture and deliver the shirts for use as part of a physical fitness
uniform for the military. RFP amend. 3, at 12.

The RFP basically stated that the contracting officer would make award to
the offeror whose proposal represented the best overall value and was
considered most advantageous to the government based on the criteria of past
performance, specification, and price, in that order of importance. [1] RFP
at 51-52. The RFP provided for scoring on a 100-point basis, with past
performance worth 60 points, specification worth 25 points, and price worth
15 points. RFP at 52. The RFP stated that factors other than price, when
combined, would be significantly more important than price. Id.

The RFP provided for past performance ratings of "poor," defined as
"unfavorable"; "marginal," defined as "more unfavorable than favorable";
"good," defined as "more favorable than unfavorable"; and "excellent,"
defined as "entirely favorable." RFP at 52. For the evaluation of past
performance, the RFP directed offerors to identify at least three and no
more than five completed contracts, similar to the one being evaluated. RFP
at 48. A questionnaire was included that requested specific information
concerning the contracts, including contract number, contractor name,
address and telephone number, the type of contract, contract amount and the
status of any uncompleted contracts. RFP at 48-49. The RFP asked offerors to
list UNICOR contracts first. RFP at 48. The RFP further stated that, in the
evaluation of past performance, the agency would be considering the
offeror's record of adherence to contract schedules, cooperative behavior,
and commitment to customer satisfaction. RFP at 51. The RFP stated that
offerors had the opportunity to submit information on problems with past
customers and to address the resolution of those problems, and that FPI
would examine recent contracts to ensure that the offeror had implemented
any corrective measures taken in response to such problems. Id.

The agency received six offers and determined one of them technically
unacceptable. Debriefing Memorandum 2 (Feb. 23, 2000). The protester
submitted the lowest price, for which it received a perfect score
(15 points); the agency awarded Coville a price score (KELO's price divided
by Coville's price, multiplied by 15) of 14.35 points. Undated Memorandum,
Subject: Best Value Evaluation/Consignment. Both offerors received a perfect
score, 25 points, for the specification factor. Debriefing Memorandum 1
(Feb. 23, 2000). Based on a review of each offeror's past performance,
Coville received a perfect past performance score, 60 points ("excellent" or
"entirely favorable"). Coville's Past Performance Evaluation at 1-2.

Regarding KELO's past performance, in its proposal, KELO provided specific
information on one contract--a current one for delivery of similar fabric to
FCI Jesup. Letter from KELO to Contracting Officer (Jan. 5, 2000). KELO also
referred to a contract with the State of Michigan, but provided no reference
for this contract. Id. The contracting officer subsequently obtained a
reference to contact from KELO, and KELO received an "excellent" rating
(60 points) for the Michigan contract. KELO's Past Performance Evaluation at
2. The contracting officer rated KELO as "marginal" (40 points) for the
ongoing contract with FCI Jesup. Id. As administrative contracting officer
on that contract, she had issued KELO a cure notice for delinquent
deliveries; in addition, the contracting officer's technical representative
(COTR) reported continued delinquencies. Letter from Contracting Officer to
KELO (Aug. 26, 1999); E-mail Message from COTR to Contracting Officer
(Jan. 18, 2000). As a result, FCI Jesup was responsible for "$545,057.28 in
delinquencies [in deliveries to its primarily military customer] directly
attributable to this vendor." Id. The contracting officer obtained
information from the agency's database on a third contract, which had been
terminated for default because KELO had failed to deliver heather gray
material timely under that contract. Contracting Officer's Statement at 1;
KELO's Past Performance Evaluation at 2. Although the termination had
subsequently been converted to a no-cost termination for convenience, she
rated KELO as "marginal" for that contract. KELO's Past Performance
Evaluation at 2. KELO thus received two "marginal" ratings (40 points each)
and an "excellent" rating (60 points). Id. The points for each of these
contracts were averaged and KELO received an overall rating of 46.66 points.
Id. at 1. Coville's total score was 99.35 and KELO's score was 86.66.
Undated Memorandum, Subject: Best Value Evaluation, at 1.

On January 28, the contracting officer awarded a contract to Coville because
she concluded that based on past performance, Coville's higher priced
proposal represented the "best value" to the agency. KELO's protest
challenging the marginal ratings it received for the two UNICOR contracts
followed.

In reviewing an agency's evaluation of proposals, our Office will question
the agency's evaluation only where it violates a procurement statute or
regulation, lacks a reasonable basis, or is inconsistent with the stated
evaluation criteria for award. See B. Diaz Sanitation, Inc., B-283827,
B-283828, Dec. 27, 1999, 2000 CPD para. 4 at 6. An agency may base its
evaluation of past performance upon its reasonable perception of inadequate
prior performance, regardless of whether the contractor disputes the
agency's interpretation of the facts. Quality Fabricators, Inc., B-271431,
B-271431.3, June 25, 1996, 96-2 CPD para. 22 at 7. A protester's mere
disagreement with the agency's judgment is not sufficient to establish that
the agency acted unreasonably.
Coffman Specialties, Inc., B-284546, B-284546.2, May 10, 2000, 2000 CPD
para. ___ at 5. We have no basis to conclude that the evaluation here was
unreasonable.

Initially, we note that KELO in its protest attempts to explain or excuse
its past performance record. For example, it now claims that the government
specifications under the terminated contract were "commercially
impracticable to meet." Protest at 5. However, as the agency points out, the
RFP clearly provided offerors an opportunity to submit information on
problems with past customers and to address the resolution of those
problems. RFP at 51. The RFP further advised that recent contracts would be
examined to ensure corrective measures had been taken in response to
problems. Id. KELO did not address its performance problems and failed to
even list the terminated contract. KELO appears to argue that it was not
obligated to provide information in its proposal because, at least with
respect to some of the orders, it was "unaware of any reports concerning
delivery problems until [this] contract was awarded." Protester Comments at
5. Based on the record, we simply do not find it credible that KELO did not
realize until after award of this contract that its performance was an issue
with the agency. We agree with the agency that, in light of these RFP
provisions, KELO's attempts in this protest to introduce information into
the record that should reasonably have been submitted with its proposal does
not invalidate the contracting officer's contemporaneous decision. As
discussed more fully below, in any event, we are not persuaded by the
protester's submissions that the marginal ratings under these contracts were
unreasonable. [2]

The record shows that the agency had awarded KELO contract No. 1PI-C-3670-98
for 50/50 poly/cotton, heather gray, flat material. On September 10, 1998,
the agency issued a cure notice for KELO's failure to make any delivery of
material due on July 27, 1998 under delivery order No.
232-PID-0427-98-CS-01, as well as deliveries under a number of other orders
under the contract. Letter from Agency to KELO (Sept. 10, 1998). The
contracting officer sent a "show cause" letter on September 18, rejecting
KELO's offer in response to the cure notice to provide a substitute, tubular
material because the KELO contract specified "flat fabric, no
substitutions." Letter from Agency to KELO (Sept. 18, 1998). The agency also
warned that it was considering terminating the contract for default. Id. The
protester's response, dated September 30, 1998, promised to "begin to
correct the delivery deficiencies." Letter from KELO to Agency (Sept. 30,
1998). KELO referred to problems with its fabric dyers but stated that it
had found a new dyer, and that this dyer "[was] confident that [its lots
would] pass shade evaluation and we [would] be on our way to getting the
KELO Inc. deliveries back on track." Id. KELO indicated that it would
"continue to catch-up on deliveries" as it received more yarn, that when it
received enough yarn it would take 8-10 weeks to get back on schedule, but
that once on schedule, it would be able to supply UNICOR's needs. Id.
Finding this response unsatisfactory, by notice of October 15, the agency
terminated the contract for default. Letter from Agency to KELO (Oct. 15,
1998). This termination for default subsequently was converted into a
no-cost convenience termination, because the FPI attorneys believed KELO
might have a good case because it was "a small business [who] tried to meet
the requirements." E-mail Message from Agency Official (Dec. 8, 1998). The
contracting officer here, who was the administrative contracting officer for
the terminated contract, rated KELO "marginal" for performance of this
contract. KELO Past Performance Evaluation at 2.

KELO argues that, in agreeing to a no-cost termination for convenience, it
understood that the agency would not hold its failure to deliver against the
protester. Statement dated April 28, 2000, at 1. The protester provides no
written documentation in support of this understanding and we will not infer
a condition to a settlement that is not clearly set out in the language of
the settlement agreement. Wilderness Mountain Catering, B-280767.2, Dec. 28,
1998, 99-1 CPD para. 4 at 3-4. The fact that KELO appealed the termination does
not mean that it was unreasonable for the agency to rely upon the underlying
basis for the termination as evidence of past performance. Here, the record
shows that KELO simply did not meet its delivery obligation--as acknowledged
by KELO in response to the agency's "show cause" letter. Thus, we think the
contracting officer had a reasonable basis for her "marginal" rating.

With regard to the "marginal" rating assigned for KELO's performance of its
current contract with FCI Jesup, the record shows that the contracting
officer had issued KELO a cure notice on August 26, 1999. Letter from Agency
to KELO (Aug. 26, 1999). To check the current status of the contract, she
contacted the COTR on January 18, 2000. E-mail Message from COTR to
Contracting Officer (Jan. 18, 2000). The COTR described KELO's performance
as "marginal" and advised the contracting officer that KELO was delinquent
more than 30 days for nearly 40,000 yards of material, creating
delinquencies in the amount of $545,057.28 because FCI could not deliver the
finished product to the military customer. Id. On February 9, he provided a
list of purchase orders issued to KELO in the past year, none of which the
protester had delivered on time. COTR Memorandum to the Contracting Officer
(Feb. 9, 2000). He noted that deliveries under one order,
No. 232-PIC-0171-00-CS-00, were due the next day, February 10. Id. He also
reported that KELO had not provided test results, as required by the
contract, which prevented the agency from using the material that had been
delivered previously. Id. On the basis of this information, the contracting
officer rated KELO as "marginal" for this ongoing contract. KELO Past
Performance Evaluation at 2.

KELO correctly points out that the agency had accepted its response to the
cure notice. Contract Administration Report, Sept. 17, 1999, at 2. KELO
generally contends that many of the delivery orders issued under the
contract, which were identified as delinquent, were in excess of the maximum
order limitation and that it was therefore not obligated to meet the
delivery terms of the contract. Protester Comments at 4-5. Further, KELO
contends that, in many cases, it agreed upon alternate schedules, not
reflected in the written orders, with the COTR and the factory manager at
FCI Jesup. Id. at 3-4. In addition, KELO objects to the agency's
speculation, on February 9, that KELO's delivery scheduled for February 10
would
be late. Id. at 3.

KELO's contention that it was not bound by the contract delivery schedule is
clearly specious. Paragraph I.56, Order Limitations, specifically provides
that, where a contractor receives an order in excess of the maximum order
limitation, it has 5 days to accept or reject the order. This allows the
agency to locate another source if the contractor is unable or unwilling to
perform orders in excess of the limitation. Contract No. 1PI-C-3779-98,
at 22-23. Here, KELO accepted the orders under the terms of the contract.
Regarding KELO's assertion that FCI Jesup agreed to alternate delivery
schedules, there is no indication in the record of the agency's acceptance
of any alternate schedules. KELO has provided no evidence that the COTR or
factory manager agreed to a modified delivery schedule under these purchase
orders listed as delinquent. The contract itself provides that only the
contracting officer--and specifically not the COTR--can modify the contract
delivery terms, and that even the contracting officer must execute the
modification in writing and sign it. Contract No. 1PI-C-3779-98, at 15. We
further note that for order No. 232-PIC-0171-00-CS, due on February 10,
which was included in the February 9 list, the agency advises us that, in
fact, KELO did not deliver until April 26, more than 10 weeks late. The
agency's February 9 judgment regarding that order, speculative or not, was
not unreasonable. We find no basis for concluding that the "marginal" rating
for KELO's performance under this contract was unreasonable.

In short, we have no basis to object to the contracting officer's evaluation
of KELO's past performance and therefore no basis to question the selection
decision. [3]

The protest is denied.

Comptroller General
of the United States

Notes

1. The specification factor called for evaluation of the "offeror's
reputation for compliance or non-compliance with [specifications,] . . .
[the] quality of supplies delivered," and financial capability. RFP at 52.

2. For example, the protester contends, in its protest, that the
specifications were commercially impracticable to meet, although in its
September 30 response to the show cause order, KELO was representing that it
had found a dye supplier capable of meeting the specification. Letter from
KELO to Agency (Sept. 30, 1998). Further, the agency advises our Office that
Coville has successfully produced material meeting the specifications at
issue. Letter from Agency to GAO 3 (May 17, 2000).

3. KELO also asserts that the agency incorrectly calculated prices and that
Coville's price score should be .9 point lower. However, given our finding
that the agency reasonably evaluated past performance, worth a 14-point
advantage to Coville in the selection tradeoff, this miscalculation would
not have prejudiced KELO.