TITLE:   Parmatic Filter Corporation, B-285288; B-285288.2, August 14, 2000
BNUMBER:  B-285288; B-285288.2
DATE:  August 14, 2000
**********************************************************************
Parmatic Filter Corporation, B-285288; B-285288.2, August 14, 2000

Decision

Matter of: Parmatic Filter Corporation

File: B-285288; B-285288.2

Date: August 14, 2000

Claude P. Goddard, Jr., Esq., and Hal J. Perloff, Esq., Wickwire Gavin, for
the protester.

Kenneth A. Martin, Esq., and Jennifer C. Adams, Esq., Martin & Adams, for
Hunter Manufacturing, Inc., the intervenor.

Jeffrey I. Kessler, Esq., and Joseph M. Picchiotti, Esq., Department of the
Army, for the agency.

Henry J. Gorczycki, Esq., and James A. Spangenberg, Esq., Office of the
General Counsel, GAO, participated in the preparation of the decision.

DIGEST

1. Agency reasonably downgraded the protester's proposal under the technical
capability subfactor of the technical factor in a solicitation for the
acquisition of filters, where it reasonably concluded, based on the
protester's proposal, that there was some doubt that the offeror had the
capability or capacity to produce the filters at the required level.

2. Agency reasonably did not consider an offeror's experience and past
performance in evaluating the technical capability subfactor of the
technical factor where the solicitation did not contemplate that experience
and past performance would be so considered and provided for the evaluation
of past performance under a separate evaluation factor.

3. Agency reasonably rated the awardee's past performance superior to the
protester's, even though both offerors had problems in timely and
successfully performing prior relevant contracts, where the agency
reasonably concluded that the awardee had a significantly better record of
recovering from contract delays.

4. The protester was not prejudiced by the agency's consideration of the
awardee's initial proposal which exceeded the page limitations on proposals
stated in the solicitation, where the proposal contained only three pages
beyond the limitations, no page limits were placed on the discussions
conducted with the offerors, and there was no evidence that the awardee
gained an unfair competitive advantage by exceeding the page limits.

5. The limitation on subcontracting contained in Federal Acquisition
Regulation (FAR) sect. 52.219-14, which was incorporated into a small business
set-aside solicitation by reference, does not apply to individual line
items, but to the contract as a whole.

6. Protest is sustained where the agency unreasonably and unequally
evaluated the quality programs of the awardee and the protester and this was
a significant factor justifying the award selection.

DECISION

Parmatic Filter Corporation protests the award of a contract to Hunter
Manufacturing, Inc. under request for proposals (RFP) No. DAAE20-00-R-0015
issued by the Department of the Army, Tank-automotive and Armaments Command
(TACOM), Rock Island, Illinois, for gas and particulate filters and filter
canisters. Parmatic protests TACOM's evaluation of the proposals and source
selection decision.

We deny the protest in part and sustain it in part.

BACKGROUND

The RFP, issued as a total small business set-aside on January 6, 2000,
contemplated the award of one or more fixed-price, indefinite-delivery,
indefinite-quantity contracts for 1 year with 4 option years. RFP at 5. One
or more contracts would be awarded for a total of three items: contract line
item number (CLIN) 0001 for M48A1 gas particulate filters, CLIN 0002 for 200
cubic feet per minute (cfm) gas and particulate filters, and CLIN 0003 for
hermetically sealed filter canisters. Id. The RFP stated an estimated
quantity for each CLIN for the base year and each option year. [1] Id. at 6.

The RFP stated the following basis for award:

The award of a contract will be made to the offeror whose proposal offers
the best value to the government based on an integrated assessment of
technical, past performance, quality, small business participation and
price. Technical, past performance and quality are of equal importance and
individually are more important than price. Small business participation is
of least importance among all non-price factors and is of less importance
than the price. Because this a best value procurement, the government
reserves the right to make an award(s) to someone other than the low priced
offeror.

Id. at 46.

The technical factor had two subfactors: carbon-fill/manufacturing process
and manufacturing capability. The quality factor also had two subfactors:
quality program and process control system. For each non-price factor and
subfactor, the RFP generally stated a five-place adjectival rating scale
with ratings (ranging from best to worst) of excellent, good, adequate,
marginal, and unacceptable or poor, and specified the standards for
achieving each of these ratings with regard to each factor or subfactor. [2]
Id. at 46-48. The RFP stated that price would be evaluated to ensure that it
was fair and reasonable. Id. at 49. The RFP also provided under price that
CLIN 0001 would be evaluated separately, and CLIN 0002 and CLIN 0003 were to
be evaluated together. The RFP also reserved to the government the right to
make multiple awards. Id.

TACOM received initial proposals from Hunter and Parmatic by February 14.
Hunter proposed to manufacture the products under CLINs 0002 and 0003 at its
own facilities in Ohio, and to manufacture the M48A1 filters under CLIN 0001
at the facilities of Hunter Protective Systems (HPS), a subsidiary company,
in California. Agency Report, Tab 11, Source Selection Decision, at 8; Tab
4, Hunter's Proposal,
at 14.

The agency conducted discussions with both offerors and requested final
proposal revisions. An evaluation team evaluated the proposals. The source
selection authority (SSA) reviewed the proposals and accepted the evaluation
team's ratings and conclusions. Contracting Officer's Statement at 2. The
SSA's source selection decision document presented the evaluation results as
follows:

 Evaluation                Hunter       Parmatic
 Factors/Subfactors

 Technical: Carbon         Excellent    Excellent
 Fill/Manufacturing
 Process

 Technical:                Excellent    Good (Excellent for
 Manufacturing                          award based on CLIN
 Capability                             0001 only)

 Past Performance          Good         Adequate

 Quality: Quality          Good         Adequate
 Program

 Quality: Process          Excellent    Good
 Control System

 Small Business            Excellent    Good
 Participation

 Price -- CLIN 0001        $ 7,235,779  $ [DELETED]

 Price -- CLINs 0002 &     $16,569,023  $[DELETED]
 0003

Agency Report, Tab 11, Source Selection Decision, at 12. After discussing
the basis for each of the ratings, the SSA stated the following
cost-technical tradeoff analysis:

I have reviewed the results of the evaluations and the discriminators
between proposals and find that Hunter's proposal for CLIN 0001 and for
CLIN's 0002 and 0003 offers the greatest value to the Government. Hunter
scored better in five of the six non-priced areas or factors considered by
the Government. Hunter's superior ratings under these areas or factors
indicates that there is essentially no doubt that Hunter can timely produce
these items in accordance with the technical requirements of the
solicitation. I believe that the level of risk mitigated through Hunter's
offer merits the payment of a [DELETED]% premium under CLIN 0001 and a
[DELETED]% premium under CLIN 0002 and CLIN 0003. The solicitation stated
that Technical, Past Performance, and Quality were of equal importance and
that, individually, they were more important than Price. Given the
importance of these non-price factors relative to price, I believe that
Hunter's superior non-price ratings more than outweigh the price premiums
associated with its offer. Parmatic essentially merited a rating of
Excellent in the Technical area when it was considered for CLIN 0001 only.
This brings the differences between its proposal and Hunter's closer
together and warrants additional consideration. However, Hunter's superior
ratings under Past Performance and Quality still outweigh Parmatic's
relatively lower price. Hunter received a higher rating under Small Business
Participation, but I see these differences as being relatively minor and
they did not impact my selection decision.

. . . . .

Based on the foregoing, I find that Hunter's prices are reasonable and
realistic. I further find that it is in the Government's best interest to
make one award, rather than two, since Hunter's proposal is clearly superior
relative to CLIN 0001 and CLIN's 0002 and 0003, which were evaluated as a
unit.

Id. at 13-14.

TACOM awarded the contract to Hunter on April 19. By letter of April 20,
Parmatic requested a debriefing. TACOM conducted a debriefing with Parmatic
on May 1.
On May 5, Parmatic protested to our Office.

PROTEST SUMMARY

Parmatic alleges that TACOM's evaluation was unreasonable under every one of
the non-price evaluation factors for either or both offerors' proposals.
Parmatic also alleges that an award to Hunter under CLIN 0001 violates the
limitation on subcontracting because the majority of work would be performed
by a subcontractor, HPS; that the agency treated offerors unequally by
allowing Hunter's initial proposal to exceed the page limitations stated in
the RFP without advising Parmatic that it could submit a proposal that
exceeded the stated page limitations; and that the first article test
requirements were improperly waived for Hunter under CLIN 0001.

We will examine an agency's evaluation and selection decision to ensure that
they are reasonable and consistent with the terms of the solicitation.
Sarasota Measurements & Controls, Inc., B-252406.3, July 15, 1994, 94-2 CPD
para. 32 at 4.
A protester's disagreement with the agency does not render the evaluation
unreasonable. Id. It is fundamental that the contracting agency must treat
all offerors equally, which includes providing a common basis for the
preparation and submission of proposals, and not disparately evaluating
offerors with respect to the same requirements. Sci-Tec Gauging, Inc.;
Sarasota Measurements & Controls, Inc., B-252406, B-252406.2, June 25, 1993,
93-1 CPD para. 494 at 8.

We have examined all of Parmatic's numerous, specific allegations falling
under the various protest issues, although not all contentions are
specifically discussed in this decision. We conclude that most of Parmatic's
allegations do not provide a basis for sustaining its protest. However, in
the case of TACOM's evaluation of both proposals under the quality factor,
the record shows that the evaluations were unreasonable and treated the two
offerors' proposals unequally, such that the selection decision as it
relates to CLIN 0001 is not supported by the record. We first address
Parmatic's unsuccessful protest allegations.

TECHNICAL FACTOR EVALUATION

The protester alleges that TACOM unreasonably rated its proposal good,
instead of excellent, under the manufacturing capability subfactor of the
technical factor. Protest at 5; Protester's Comments at 3-4. Parmatic also
alleges that TACOM unreasonably rated Hunter excellent under the two
technical subfactors, given that Hunter lacks significant experience in
manufacturing M48A1 filters and has encountered production problems on other
contracts. Protest at 5; Protester's Comments at 4.

The RFP states that a proposal warrants an excellent rating under
manufacturing capability where "no doubt exists that the offeror has the
capability and capacity to perform the required effort"; a good rating is
warranted where "little doubt exists." RFP at 47. The agency considered that
Parmatic [DELETED], which creates "a little doubt" concerning Parmatic's
capability or capacity to produce at the required level until [DELETED];
this translated into Parmatic's proposal receiving a good rating for this
subfactor. [3] Agency Report, Tab 11, Source Selection Decision, at 3-4. We
think this assessment of risk and the resultant good rating under this
subfactor are reasonable; although Parmatic may be able to meet the required
production schedule [DELETED], the agency could reasonably conclude that
Parmatic's capability and capacity to address production contingencies will
be weaker than if [DELETED].

With regard to the protester's contentions that the agency did not consider
the relative experience and past performance of either offeror in connection
with the manufacturing capability subfactor, the RFP did not provide for
consideration of experience or past performance under this subfactor;
instead, past performance was a separate evaluation factor. RFP at 43, 47;
Agency Report at 6. Thus, the agency reasonably did not consider such
experience or past performance in evaluating the proposals under the
technical subfactors. See Management Tech. Servs., B-251612.3, June 4, 1993,
93-1 CPD para. 432 at 4, 7.

PAST PERFORMANCE FACTOR EVALUATION

The protester alleges that, under past performance, TACOM should not have
rated Hunter higher than Parmatic because Parmatic allegedly had the more
relevant and better record of contract performance. Protest at 5-6;
Protester's Comments at 7-12; Supplemental Protest at 16-18; Protester's
Supplemental Comments at 13-20.

The record shows that both offerors had problems with production failures
and late deliveries on prior contracts for the same or similar filters;
however, in the agency's view, Hunter has a better record of getting
production back in line with contract schedules than Parmatic. Agency
Report, Tab 11, Source Selection Decision, at 4-7. Although the SSA
considered both offerors to be acceptable under past performance, she found
that the difference in recovering from contract delays between the offerors
was significant, and warranted a good rating for Hunter's past performance
and only an adequate rating for Parmatic's past performance. Id. at 14.
Based on our review, since Parmatic has not shown that the past performance
evaluation was unreasonable, we find the agency's past performance ratings
of the offerors were reasonable. [4]

SMALL BUSINESS PARTICIPATION FACTOR EVALUATION

The protester challenges the evaluation under the small business
participation factor, where Hunter's proposal received an excellent rating
and Parmatic's proposal a good rating. Parmatic contends that TACOM rated
Parmatic's same small business participation approach higher under another
solicitation. Parmatic also claims that there are no substantive differences
between the proposed approaches of Parmatic and Hunter under this factor to
warrant different ratings. Protest at 6, Protester's Comments at 12;
Supplemental Protest at 18-21; Protester's Supplemental Comments at 20-21.

We first note that since each procurement stands on its own, evaluation
ratings under another solicitation are not probative of the alleged
unreasonableness of the evaluation ratings under the present RFP. Copy
Graphics, B-273028, Nov. 13, 1996, 96-2 CPD para. 185 at 4 n.3.

As for Parmatic's allegation that there was little difference between the
small business participation proposals of these two small business offerors
so that the proposals' relative ratings were unreasonable, the record shows
that the SSA made a similar determination, concluding that the higher rating
for Hunter reflected only minor differences between the two proposals and
stating that the ratings under this factor had no impact on the source
selection decision. Agency Report, Tab 11, Source Selection Decision, at 13.
In other words, the SSA's decision essentially considered the proposals
equivalent under this relatively low weighted factor, which the protester
asserts is the appropriate evaluation. Thus, there is no basis to challenge
the agency's consideration of this factor in the source selection.

PAGE LIMITATIONS

The protester alleges that the agency waived the proposal page limitations
stated in the RFP for Hunter, and not for Parmatic, by accepting Hunter's
initial proposal with pages in excess of the stated limitations, without
informing Parmatic of the waiver and giving it an opportunity to submit
additional pages. Supplemental Protest at 3-5; Protester's Supplemental
Comments at 10-12.

The RFP stated page limitations of 20 pages for the technical section, 10
pages for past performance, 10 pages for quality, and 3 pages for small
business participation. RFP at 43. It is clear that Hunter's initial
proposal exceeded the page limitations by a few pages overall. According to
the protester, Hunter's initial proposal exceeded the technical page limit
by 1 page, and the small business participation limit by 2 pages, for a
total of 3 pages over the limits. [5] Supplemental Protest at 3-4;
Protester's Supplemental Comments at 11.

The agency never stated that the page limit on initial proposals was waived,
but it
did conduct discussions with both offerors and did not place page
limitations on information provided during discussions, nor did the agency
restrict the content of information that an offeror could submit during
discussions. Although the protester alleges, without providing any
supporting evidence, that the agency prohibited submission of material
related to technical or small business participation, Protester's
Supplemental Comments at 11-12, there is no such prohibition evident from
the record. See, e.g., Agency Report, Tab 5, Discussions with Parmatic,
Letter from TACOM to Parmatic (Mar. 3, 2000) (unrestricted request for
proposal revisions). We note also that Parmatic provided a large number of
pages of information during discussions that clearly exceeded the initial
proposal page limitations.

We have held that the conduct of discussions, in and of itself, cannot
negate a competitive advantage that an offeror gains when it materially
exceeds initial proposal page limitations, and the agency considers such
excess material without announcing that those page limitation are waived and
giving the other offerors a reasonable opportunity submit proposals
accordingly. Electronic Design, Inc., B-279662.2 et al., Aug. 31, 1998, 98-2
CPD para. 69 at 10-11(consideration of 1,700 excess pages created an unequal
competition); ITT Electron Tech. Div., B-242289, Apr. 18, 1991, 91-1 CPD
para. 383 at 9-10 (consideration of 83 excess pages of one proposal, where page
limits applied throughout discussions for the other proposals, created an
unequal competition).

However, we do not think that the three extra pages in Hunter's initial
proposal, particularly in light of the unrestricted discussions with the
offerors, were material or prejudicial here. The two extra pages in the
small business participation section resulted in no prejudice, since, as
explained above, the SSA considered the evaluated advantage of Hunter under
that factor to be minor and essentially considered the two offerors equal in
that area. The remaining surplus page fell under the technical section.
However, there is nothing in the record to suggest that Parmatic could have
eliminated the distinguishing weakness found in its proposal, relating to
[DELETED], by submitting more proposal pages. Nor is there any evidence that
Hunter's technical ratings would have been lower without the extra page. The
record thus shows that the agency's failure to enforce the initial proposal
page limitations did not provide Hunter with an unfair competitive advantage
or otherwise prejudice the protester, and thus there is no basis to sustain
Parmatic's protest on this basis.

SUBCONTRACTING LIMITATION

Parmatic alleges that Hunter was ineligible for an award under CLIN 0001, or
should have been rated unacceptable under the manufacturing capability
subfactor relative to that portion of the award, because, by subcontracting
the manufacture of the filter to HPS, Hunter's proposal necessarily exceeds
the 50 percent subcontracting limitation for small business offerors stated
in Federal Acquisition Regulation (FAR) sect. 52.219-14 and incorporated into
the RFP by reference. Supplemental Protest at 7-8; Protester's Supplemental
Comments at 9-10.

Generally, an agency's judgment as to whether a small business offeror will
comply with this subcontracting limitation is a matter of responsibility,
and the contractor's actual compliance with the provision is a matter of
contract administration. Global Assocs. Ltd., B-271693, B-271693.2, Aug. 2,
1996, 96-2 CPD para. 100 at 5. However, we have considered, as a challenge to
the technical acceptability of an offer, protests that allege that the terms
of an awardee's proposal take exception to the subcontracting limitation.
Id. Nevertheless, we have recognized that the subcontracting limitation
stated at FAR sect. 52.219-14 only applies to a contract as a whole. See
Lockheed Martin Fairchild Sys., B-275034, Jan. 17, 1997, 97-1 CPD para. 28 at 5.

In the present case, although the RFP permitted a separate award for CLIN
0001, it did not require a separate contract award for that CLIN and the
agency did not award a separate contract for CLIN 0001. [6] The protester
does not allege, nor would the record support an allegation, that Hunter's
proposal for all the CLINS together, which was the contract awarded to
Hunter, takes exception to the subcontracting limitation. Thus, there is no
merit to this protest basis.

WAIVER OF FIRST ARTICLE TEST REQUIREMENT

Parmatic also alleges that TACOM improperly waived the first article test
requirement for Hunter under CLIN 0001. Supplemental Protest at 8 n.5;
Protester's Supplemental Comments at 12-13. The waiver of the first article
test requirement is only relevant here to the price evaluation, since it is
not covered by any of the non-price evaluation factors. The RFP required
offerors to propose base year prices with and without the first article test
requirement for each CLIN. RFP at 45. Hunter proposed the same price with or
without the first article test requirement. Agency Report, Tab 4, Hunter
Proposal, Cover Letter, attach. 1, at 1. The first article test waiver for
CLIN 0001 thus had no impact on the evaluation of Hunter's price and thus
did not prejudice Parmatic in this competition. Since there is no prejudice
to the protester, we will not consider the allegation further.

For the above reasons, we deny the majority of Parmatic's protest bases.

PROTEST OF EVALUATION UNDER THE QUALITY FACTOR

We now turn to the protest concerning the evaluation of the quality factor.
Under the quality factor, Parmatic alleges that TACOM's evaluation of the
quality programs and process control systems of the two proposals was
unreasonable and unequal. Protest at 5; Protester's Comments at 5-7;
Supplemental Protest at 9-16; Protester's Supplemental Comments at 4-8,
22-23; Protester's Post-Hearing Comments at 2-18. We agree and sustain the
protest on this basis.

Evaluation of Hunter's Proposal under Quality Program Subfactor

The RFP stated in pertinent part that proposals would be rated under the
quality program subfactor as follows:

1) Excellent: Contractor is CP2 certified.

2) Good: Contractor is certified to [International Standardization
Organization (ISO)] 9001 or ISO 9002 or meets those requirements.

3) Adequate: Contractor has a previously approved quality system with
milestones for upgrading to meet ISO 9001 or ISO 9002 prior to start of
production.

4) Marginal: Contractor has an inspection system but no plan for meeting ISO
9001 or ISO 9002.

5) Unacceptable: Contractor has an inadequate inspection system or does not
provide any information in his proposal.

RFP at 47.

TACOM's quality evaluator initially rated Hunter's program as good because
Hunter's proposal stated that it was certified as compliant with ISO 9002,
as evidenced by a certificate from the Defense Contract Management Command
(DCMC), Cleveland, Ohio. Agency Report, Tab 4, Hunter's Proposal, at 23,
attach. F; Tr. at 22-23, 380-81 (testimony of evaluator). However, Hunter
proposed HPS to manufacture the M48A1 filters under CLIN 0001, and since
HPS's facilities were to be the place of performance for this CLIN, the SSA
required the separate evaluation of HPS's quality program. Tr. at 194-97,
270-72, 282-84 (testimony of SSA); see Tr. at 129, 133-34 (testimony of
evaluator).

After gathering information on this matter during discussions, the evaluator
determined that HPS's quality program was equivalent to ISO 9002 and rated
HPS as good under the subfactor. Agency Report, Tab 8, Evaluation of
Hunter's Proposal, Quality Evaluator's Memorandum at 1 (Apr. 14, 2000). The
SSA relied on the evaluator's determination that HPS has a quality system
equivalent to ISO 9002, and did not obtain additional supporting information
from the evaluator or conduct her own evaluation of quality programs. Tr. at
210-11, 223-28, 248 (testimony of SSA). In fact, based solely upon the
evaluator's advice and to justify Hunter's good rating for the quality
program subfactor in making her source selection decision, the SSA adopted
the evaluator's conclusions as follows:

HPS is currently successfully manufacturing using a modified MIL-I-45208A
program, designed with requirements integrated from ISO 9001 and Mil-Q-9858
Quality Systems. The modified system meets the evaluation criteria defined
in the solicitation and [source selection plan] for a Good evaluation. HPS
has not yet completed its audit for ISO 9001 certification; however, its
current system is equivalent to ISO 9002.

Agency Report, Tab 11, Source Selection Decision, at 8.

The record, however, does not support the evaluator's conclusion that HPS's
quality system was compliant with, or equivalent to, ISO 9002. In fact, the
record shows that the evaluator initially determined that, based on the
agency's actual experience with HPS, HPS's facility "is not . . . compliant
with the quality system requirements of ISO 9002." Agency Report, Tab 6,
Discussions with Hunter, Letter from TACOM to Hunter attach, at 1 (Feb. 25,
2000). TACOM thus asked Hunter to provide information about HPS's quality
program. Id. Hunter provided a copy of a quality assurance manual depicting
an ISO 9001 quality program that HPS was in the process of implementing, and
stated:

[HPS's quality assurance] manual is 100 [percent] compliant with ISO 9001 .
. . A progress report indicating the status of implementation of this ISO
9001 [quality assurance] system is also included. . . .

In response to your specific questions:

1) HPS is currently qualified . . . to Mil-I-45208A. HPS is currently 76% in
compliance with ISO9001.

2) HPS currently operates under strict procedural control due to the nature
of the products they produce (carbon filters). Our technical response
submitted in accordance with the solicitation requirements indicates the
level of control required to successfully produce carbon filters.

3) Full implementation of ISO9001 is scheduled for completion by 1 May 00.
DCMC San Diego has requested that the Quality Assurance Operating Procedures
for all twenty ISO elements be finalized and the data for a full six months
of operation under the new ISO9001 system be generated before they complete
an audit. Hunter . . . will audit HPS for compliance no later than 15 May
00.

Agency Report, Tab 6, Discussions with Hunter, Letter from Hunter to TACOM
at 1 (Feb. 29, 2000). The progress report attached to this letter listed 20
items for compliance with ISO 9001, [7] and, for each item, provided a bar
graph covering various portions of a timeline from March 2000 through April
2000, followed by a percentage figure labeled "percent complete." Id.
attach. The bar graph did not state the date to which the percent-complete
figure applied and none of the figures indicated 100 percent completion. [8]
Thus, although Hunter asserted that HPS's quality assurance manual is
compliant with ISO 9001, Hunter did not assert that HPS had implemented a
quality program that is compliant with ISO 9001, and made no assertions
whatsoever about HPS's quality program and ISO 9002. [9] To the contrary,
Hunter only stated that HPS's program was currently qualified under
MIL-I-45208A.

Notwithstanding that Hunter's proposal did not claim that HPS's quality
system was equivalent to ISO 9002, see Tr. at 55, the evaluator determined
on his own that HPS's quality program was fully compliant with ISO 9002. Tr.
at 13. Essentially, the evaluator based his determination on a limited
review of 3 of the 19 ISO 9002 items that he believed to have been
implemented by HPS--item 9 (process controls), item 11 (inspection,
measuring, and test equipment), and item 18 (training).
Tr. at 29-48. Considering that the evaluator's determination is contrary to
Hunter's repeated representations during discussions that HPS had not
completed implementing any of the ISO items in question, the evaluator's
determination, based on this limited review, that HPS had a quality program
equivalent to ISO 9002, was not supported by the record and was therefore
unreasonable. [10]

The agency and intervenor now argue that, since the RFP rating scale refers
specifically to the quality program of the "contractor," RFP at 47, only
Hunter's quality program, and not HPS's, should be considered under the
evaluation. Agency's Post-Hearing Comments at 4, Agency's Post-Hearing Legal
Memorandum at 5; Intervenor's Post-Hearing Comments at 5-11. They also argue
that Hunter's ISO 9002 quality program flows down to HPS, and thus only
Hunter's program should be evaluated for purposes of the source selection.
Agency's Post-Hearing Comments at 4, Agency's Post-Hearing Legal Memorandum
at 6; Intervenor's Post-Hearing Comments at 5-11. The record supports
neither argument.

The SSA determined that evaluation of HPS under the quality factor was
necessary to evaluate Hunter's proposal because Hunter proposed HPS as the
place of manufacture of the M48A1 filters under CLIN 0001. Tr. at 194-97,
238-39, 271-72, 279-84, 333-34 (testimony of SSA). After instructing the
evaluator to perform such an evaluation, the SSA relied upon the evaluator's
determination that HPS's quality program was equivalent to ISO 9002 in
concluding that Hunter and HPS merited a good rating for the quality program
subfactor and to support her judgment that Hunter's proposal was superior to
Parmatic's under the quality factor, even when considering a separate award
of CLIN 0001.

We think that the SSA's contemporaneous judgment that HPS's quality program
should be considered apart from Hunter's quality program, was reasonable and
appropriate, notwithstanding that the rating scale for the quality program
stated in the RFP only mentioned the "contractor's" quality program, given
that HPS, not Hunter, was responsible for the actual manufacturing of the
M48A1 filters under CLIN 0001 and inasmuch as the RFP contemplated the
possibility of a separate award of CLIN 0001. [11] A key purpose of a
quality program, such as ISO 9002, is to ensure that adequate manufacturing
controls are in place. Tr. at 165-66, 367-76, 385-97 (testimony of
evaluator). Although Hunter's proposal indicated that its own quality
standards would flow down to its subcontractors and vendors through its
purchasing and inspection procedures, it did not similarly indicate that it
would put its quality program in place at HPS's manufacturing facility. See
Agency Report, Tab 4, Hunter's Proposal, at 14, 23-26; Tab 6, Discussions
with Hunter, Letter from Hunter to TACOM attach., at 1-2 (Mar. 17, 2000). In
fact, during discussions, the agency informed Hunter that it would evaluate
the quality program of HPS, and Hunter cooperated with such an evaluation
without objection by describing HPS's separate quality program without
asserting that Hunter ISO 9002 quality program would be imposed on HPS. See
Agency Report, Tab 6, Discussions with Hunter, Letter from TACOM to Hunter
(Feb. 25, 2000), Letter from Hunter to TACOM (Feb. 29, 2000).

To the extent the agency's and intervenor's responses to the protest seek to
amend the way the evaluation and source selection were actually conducted,
by discounting either the need for considering HPS's quality program in the
evaluation or the SSA's reliance on the unreasonable determination that HPS
had a quality program that was equivalent to ISO 9002, we give little weight
to these arguments. These arguments were first presented during the heat of
the adversarial process and may not represent the fair and considered
judgment of the agency, which is a prerequisite of a rational evaluation and
source selection process. [12] See Boeing Sikorsky Aircraft Support,
B-277263.2, B-277263.3, Sept. 29, 1997, 97-2 CPD para. 91 at 15.

In sum, the record evidences that Hunter's proposal was overrated under the
quality program subfactor at least insofar as CLIN 0001 was concerned.

Evaluation of Parmatic's Proposal under Quality Program Subfactor

As discussed below, the record evidences that the same evaluator, who rated
the quality factor for Hunter's proposal and unreasonably concluded that
HPS's quality program was equivalent to ISO 9002, unequally and unreasonably
evaluated Parmatic's proposal under the quality factor with regard to
Parmatic's quality program's equivalency to ISO 9002 and under the process
control system subfactor.

Although Parmatic's initial proposal did not state that its quality program
was compliant with, or the equivalent of, ISO 9002, it did state that it
maintains a program in accordance with MIL-I-45208A (i.e., the same standard
that Hunter stated HPS was currently satisfying) under the surveillance of
DCMC and listed a number of customers that had approved or certified
Parmatic's program. Agency Report, Tab 3, Parmatic's Proposal, Quality, at
1, 3. TACOM requested copies of letters from two of these customers "which
validate adherence or equivalency of Parmatic's in-house MIL-I-45208A
(Modified) to the ISO 9002 program." Agency Report, Tab 5, Discussions with
Parmatic, Letter from TACOM to Parmatic at 1 (Feb. 25, 2000). TACOM also
asked:

6) Is Parmatic contemplating upgrading to the ISO . . . standard or CP2
Government Program, if so, when will this be accomplished?

Id.

Parmatic provided the two letters requested, along with additional
information. Agency Report, Tab 5, Discussions with Parmatic, Letter from
Parmatic to TACOM at 1-4, and attachs. C, D, E, F (Feb. 29, 2000). Both of
the requested letters indicated that the respective customers had approved
Parmatic's quality program, although neither letter referenced ISO 9002. Id.
attachs. C, D. In response to the inquiry about upgrading its quality
program, Parmatic stated:

6) Parmatic is in the process of upgrading its quality assurance system into
the ISO international standard. Essentially [Parmatic's] quality assurance
system is in general compliance with ISO-9002, but lacks the formal
certification. [Parmatic] is evaluating which consultant and certifier to
use for this project. In addition, [Parmatic] [DELETED]. We expect
implementation of the upgraded systems within a year.

Id. at 4. Parmatic also attached to its response a letter from DCMC,
Picatinny,
New Jersey, that stated the following:

The system review of Parmatic Filters quality system was conducted to insure
compliance with MIL-STD 45208A. This also included a higher level of quality
to the requirements of ANSI/ISO/ASQC Q9002. [13]

Id. attach. F. DCMC's system review of Parmatic's quality program, as
described in this letter, did not identify any deficiencies.

The evaluator's assessment did not account for DCMC's system review or the
protester's statement that it was in general compliance with ISO 9002.
Rather, he stated that the offeror's program lacked ISO 9002 certification
and concluded that "[b]ased on the data available the Offeror's current
Quality Program is not equivalent to the ISO 9002 cited in the
solicitation." Agency Report, Tab 7, Evaluation of Parmatic, Quality
Evaluator's Memorandum, April 13, 2000, at 1. The evaluator thus rated
Parmatic's quality plan as adequate.

However, under the RFP evaluation scheme, a good rating does not require ISO
9002 certification; it only requires the quality program to be equivalent to
ISO 9002. [14] RFP at 47; Tr. at 295 (testimony of SSA). DCMC's review,
which was provided to TACOM during discussions, supports Parmatic's
statement that it is in general compliance with ISO 9002 but lacked
certification. On these facts, Parmatic's quality program appears to deserve
a rating of good, rather than the adequate rating it actually received.

To the extent the evaluator states that he relied on other information to
determine that Parmatic's quality program was not equivalent, his evaluation
documentation does not indicate any such deficiencies or weaknesses, and his
testimony on this undocumented evaluation and the record of discussions with
Parmatic does not support such a conclusion. For example, except for his
conclusory testimony that Parmatic's "manual did not follow the 9002
elements," Tr. at 83, neither the written record of evaluations nor the
evaluator's testimony demonstrated how the evaluator could reach such a
conclusion.

Unequal Evaluation of Proposals under the Process Control System Subfactor

Under the process control system subfactor of the quality factor, the agency
rated Parmatic's proposal only good (as compared to Hunter's proposal's
excellent rating) in part because the information on work instructions
provided by Parmatic during discussions was not sufficiently detailed
relative to what tasks are to be performed. Agency Report, Tab 7, Evaluation
of Parmatic, Quality Evaluator's Memorandum, Apr. 13, 2000, at 1; Tr.
at 84-86.

The record shows that during discussions Parmatic provided TACOM with a
description of how it generates work instructions, and how it references all
specific procedures to be used on the work order or "process routing sheet."
Agency Report, Tab 5, Discussions with Parmatic, Letter from Parmatic to
TACOM at 1-2 (Mar. 17, 2000). The work order and the applicable drawing
accompany the part as it proceeds through the fabrication and assembly
process. Id. at 2. Parmatic provided TACOM with three samples of such work
orders. One example, work order number 29489, stated, "Weld per [blueprint
No.] D5-19-7437. Use weld procedure [No.] 1826T . . ." Id., attach. 1.
Parmatic also provided TACOM with the referenced welding procedure (a
two-page document), which stated relevant welding instructions and
information, including such things as the joint design, base metal type and
grade, thickness range of the base metal groove, filler metal type and size,
position of groove, temperatures, gas composition and flow rate, and the
welding technique to be used. Id. attach 4.

In contrast to his evaluation of Parmatic's work instructions, the evaluator
determined that HPS's work instructions showed that its process controls
were equivalent to the requirements for ISO 9002. [15] Tr. at 29-35
(testimony of evaluator). However, this evaluation was entirely based on a
single one-page example of HPS's instructions submitted during discussions
that contained much more limited and nonspecific information than either
Parmatic's or Hunter's work instructions, Agency Report, Tab 6, Discussions
with Hunter, Letter from Hunter to TACOM exh. D (Mar. 17, 2000), and even
the evaluator stated that he could not tell from HPS's document what
detailed steps a person would have to take to complete the instructions.
[16] Tr. at 69 (testimony of evaluator).

This example evidences that the evaluator conducted unreasonable evaluations
and, in particular, treated Parmatic and HPS unequally in evaluating the
proposals under the quality factor. Since this unequal evaluation concerned
both subfactors under the quality factor, we conclude that the quality
evaluation was unreasonable and unequal overall.

Unreasonable Cost/Technical Tradeoff

In making her source selection, the SSA relied on the unsupported
conclusions that HPS had a quality program that was equivalent to ISO 9002
and Parmatic did not, and that HPS's quality program and process control
system were superior to Parmatic's. Agency Report, Tab 11, Source Selection
Decision, at 8; Tr. at 210-11, 248 (testimony of SSA). Her cost-technical
tradeoff analysis, as stated in the source selection decision, considered
the two offerors closely competitive under CLIN 0001, where HPS was
manufacturing the filters, and she based her selection in significant part
on the Hunter/HPS evaluated superiority under the quality factor. Agency
Report, Tab 11, Source Selection Decision, at 13; Tr. at 194-95 (testimony
of SSA). Moreover, she recognized that Parmatic had a significant price
advantage for CLIN 0001. Agency Report, Tab 11, Source Selection Decision,
at 13. Since the quality evaluation upon which the SSA relied was
unreasonable and unequal pertaining to HPS and Parmatic, the source
selection for CLIN 0001 lacks a reasonable basis. [17] See CRAssociates,
Inc., B-282075.2, B-282075.3, Mar. 15, 2000, 2000 CPD para. 63 at 4.

RECOMMENDATION

We recommend that the agency reevaluate proposals, conduct discussions if
appropriate, and make a new source selection decision with respect to CLIN
0001. If Parmatic is selected for award of this line item, the agency should
terminate the CLIN 0001 portion of Hunter's contract and award a separate
contract for CLIN 0001 to Parmatic. We also recommend that the agency
reimburse the protester its reasonable costs of filing and pursuing the
protest bases that were sustained,

including attorneys' fees. 4 C.F.R. sect. 21.8(d)(1) (2000). The protester
should file its claims for costs, detailing the time expended and costs
incurred, with the contracting agency within 60 days of receiving this
decision. 4 C.F.R. sect. 21.8(f)(1).

The protest is denied in part and sustained in part.

Anthony H. Gamboa

Acting General Counsel

Notes

1. The estimated base-year quantities were 1,925 for CLIN 0001, 6,252 for
CLIN 0002, and 412 for CLIN 0003. RFP at 6.

2. One subfactor, carbon-fill/manufacturing process, had a four-place rating
scale, with the middle rating of adequate omitted. RFP at 46-47.

3. However, the SSA recognized that Parmatic's [DELETED] production issue
does not apply if Parmatic only received an award for the production of
M48A1 filters alone, and thus rated Parmatic excellent under this subfactor
in considering a separate contract award for CLIN 0001.

4. Much of Parmatic's protest of its past performance evaluation concerns
ongoing disagreements with the agency regarding current contracts. For
example, Parmatic states that it has shown that one production problem was
caused by an agency design flaw which Parmatic has identified through the
process of elimination. Protester's Comments at 8-9; Protester's
Supplemental Comments at 13-15. The agency states that, although production
has successfully resumed under that contract, it remains concerned that
Parmatic cannot demonstrate that the design is flawed and, absent some
evidence of an actual flaw, there remains a risk that the same production
problem will resurface. Supplemental Contracting Officer's Statement at 6;
Agency Report, Tab 11, Source Selection Decision, at 7. Absent resolution of
this dispute, or perhaps more concrete identification of the alleged design
flaw, we cannot adopt the protester's view that the agency's position is
unreasonable. See Quality Fabricators, Inc., B-271431, B-271431.3, June 25,
1996, 96-2 CPD para. 22 at 7 (agency's past performance evaluation may be based
on reasonable perception of inadequate prior performance, even though
agency's interpretation of underlying facts is disputed). Additionally, the
protester submitted TACOM's response to a Parmatic settlement proposal,
which was prepared by TACOM several months after the date of evaluations and
the source selection decision under this RFP. Protester's Document
Production, July 25, 2000, attach. 1, Letter from TACOM to Protester (July
17, 2000). The protester offers this settlement correspondence as evidence
that the agency assumes responsibility for contract delays in dispute.
Hearing Transcript (Tr.) at 349-50. The letter does not evidence any such
assumption of responsibility by the agency; in fact, the letter states that
the government does not "necessarily agree" with Parmatic's position and, in
fact, expressed total disagreement with Parmatic on one issue.

5. Initially, the protester also alleged that Hunter's proposal exceeded the
page limit for the past performance section by 16 pages, and for the quality
section by 28 pages. Supplemental Protest at 3. However, the record shows
that 20 pages of Hunter's past performance information were test
results--information that was explicitly excluded from the page limitation
for the past performance section. RFP amend. 0002 at 2. Also, the agency
report erroneously included HPS's 34-page quality assurance manual behind
Hunter's initial proposal, when in fact Hunter did not submit this manual
until discussions had started. Contracting Officer's Supplemental Statement
at 1; Agency Report, Tab 6, Letter from HPS to TACOM (Feb. 28, 2000). Thus,
it is now undisputed that the past performance and quality sections in
Hunter's initial proposal were well under the applicable page limits.

6. The protester contends that Lockheed Martin Fairchild Sys., supra, which
was a protest of a single delivery order under a contract that the protester
asserted should be subject to the subcontracting limitation, should not
apply here because, unlike with delivery orders, the solicitation here
contemplates a separate evaluation and award under CLIN 0001. Protester's
Supplemental Comments at 9. However, since the limitation in FAR sect.
52.219-14, by its language, only applies to contracts, we think the
protester's distinction would have merit only if the agency awarded a
separate contract for that CLIN.

7. These 20 items are: (1) management responsibility, (2) quality system,
(3) contract review, (4) design control, (5) document and data control, (6)
purchasing, (7) control of purchaser-supplied product, (8) product
identification and traceability, (9) process control, (10) inspection and
testing, (11) inspection, measuring and test equipment, (12) inspection and
test status, (13) control of nonconforming product, (14)
corrective/preventive action, (15) handling, storage, packaging,
preservation, and delivery, (16) control of quality records, (17) internal
quality audits, (18) training, (19) servicing, and (20) statistical
techniques. Agency Report, Tab 6, Discussions with Hunter, Letter from
Hunter to TACOM attach (Feb. 29, 2000).

8. The figures ranged from 10 to 95 percent complete. Agency Report, Tab 6,
Discussions with Hunter, Letter from Hunter to TACOM attach (Feb. 29, 2000).
On March 17, Hunter submitted the same information to TACOM; the
percent-complete numbers did not change for either the overall figure (i.e.,
76 percent compliant) or the figures for the individual items. Agency
Report, Tab 6, Discussions with Hunter, Letter from Hunter to TACOM attach.,
at 2, exh. T (Mar. 17, 2000).

9. ISO 9001 is comprised of the 20 items identified on Hunter's progress
report for HPS's quality program. Tr. at 12; Protester's Submission of
Documents, July 25, 2000, attach. 3, ISO 9001:1994(E). ISO 9002 is comprised
of 19 of these item--i.e., all of the items except design control. Tr. at
12, 27; Protester's Submission of Documents, July 25, 2000, attach. 4, ISO
9002:1994(E), at 3.

10. We also note that the quality of evidence in Hunter's submissions from
which the evaluator concluded that HPS's quality system was compliant with
even the three items that he reviewed is questionable at best. For example,
to determine compliance with ISO 9002 for the training item, he testified
that he reviewed two reports of quality assurance tests of welds. Tr. at
39-40; see Agency Report, Tab 6, Discussions with Hunter, Letter from Hunter
to TACOM exh. K, Weld Tests--HPS (Mar. 17, 2000). These do not appear to be
certificates of training. The evaluator states that, although the reports
appear to be a little different than the training certificates submitted for
Hunter's employees, the reports are certificates of training for
"[DELETED]." Closer examination of the test reports show that this
individual is an inspector employed by a quality assurance testing and
inspection firm; he is not employed by HPS. Moreover, while the evaluator
also stated that he based his judgment that HPS's quality program was
compliant with ISO 9002 on his review of HPS's quality assurance manual, he
also admitted that the HPS represented that it was only 76 percent complete
in implementing the manual. Tr. at 44-45. In addition, as discussed below,
the evaluator's reliance upon the one-page HPS work instructions to find
HPS's process control is equivalent to ISO 9002 was highly questionable.

11. We note that the SSA also reasonably conducted a similar, CLIN-specific
technical analysis for Parmatic's proposal under the manufacturing
capability subfactor of the technical factor, and rated Parmatic's proposal
higher under this subfactor if it received the award of only CLIN 0001.
Agency Report, Tab 11, Source Selection Decision, at 3, 13.

12. In addition to the agency's written submissions, the SSA testified that,
if the evaluation of HPS's quality program proved unreasonable, she would
consider the evaluation of Hunter's quality program controlling. Tr. at
206-11. On the other hand, she testified that HPS's quality program, and the
extent to which it may be equivalent to ISO standards, would be relevant to
her selection decision, and that such consideration was difficult and
required time for thought. Tr. at 209-10, 218-23. Rather than providing
support for the intervenor's and agency's newly asserted alternative
evaluation, we think the SSA's reluctance to opine on this matter shows that
such matters should be referred back to the agency for reasoned
consideration outside of the adversarial protest process.

13. The protester states that ISO 9002 is published in the United States as
ANSI/ASQC Q9002. Protester's Comments at 5. The RFP accepts identification
of compliance with either ISO 9002 or ANSI/ASQC Q9002 as an adequate
description of an offeror's quality program without need for the offeror to
describe its program. RFP at 43.

14. As discussed above, the evaluator did not require an ISO 9002
certification to determine that HPS's quality program should be rated as
good under the RFP evaluation plan, but determined (albeit unreasonably)
that HPS's quality program was equivalent to ISO 9002.

15. Since process control is one of the 19 elements of ISO 9002, Protester's
Document Production, July 25, 2000, attach. 4, ISO 9002:1994(E), at 5, it
may also be relevant to the evaluation of the quality plan subfactor.

16. The intervenor has sought to classify this HPS document as a "router"
and thus an incomplete work instruction. Tr. at 73-74. Incomplete or not,
the agency's evaluation of HPS's work instructions rests entirely on that
one-page document. Tr. at 29-35. (testimony of evaluator).

17. Although we conclude that the evaluation of Parmatic's proposal was
unreasonable and unequal under the quality factor, the protester has not
demonstrated, and it is not otherwise apparent, that a reasonable evaluation
would raise Parmatic's quality rating above Hunter's as it pertains to the
selection decision with regard to CLINs 0002 and 0003 where HPS is not
involved. Considering that Hunter was reasonably rated higher than Parmatic
under the other two most important evaluation factors, that the difference
in price was relatively small for these CLINs, and that the SSA's tradeoff
decision in favor of Hunter was much more conclusive for these two CLINs,
the record evidences that Parmatic was not prejudiced by the quality factor
evaluation with regard to the source selection for CLINs 0002 and 0003.
Thus, we see no basis to sustain Parmatic's challenge to the award of CLINs
0002 and 0003.