TITLE:  LBM Inc., B-286271, December 1, 2000
BNUMBER:  B-286271
DATE:  December 1, 2000
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LBM Inc., B-286271, December 1, 2000

Decision

Matter of: LBM Inc.

File: B-286271

Date: December 1, 2000

Frank Moody for the protester.

Mitzi S. Phalen, Esq., Department of the Navy, for the agency.

Glenn G. Wolcott, Esq., and Michael R. Golden, Esq., Office of the General
Counsel, GAO, participated in the preparation of the decision.

DIGEST

1. Solicitation requirement that contractor must be registered pursuant to
ISO-9000 quality assurance standards reasonably reflects the agency's needs
where contract performance will include transportation of hazardous
materials, ordnance, aviation parts, components and aircraft, and where
failure to properly perform such activities could result in personal injury
and/or damage to equipment, vehicles and aircraft.

2. In solicitation issued in anticipation of cost comparison pursuant to
Office of Management and Budget Circular No. A-76, agency may not exclude
private-sector proposals solely on the basis that an offeror has not, at the
time proposals are submitted, obtained ISO-9000 registration.

DECISION

LBM Inc. protests the provisions of request for proposals (RFP) No.
N00421-00-R-0498 to provide transportation services at the Naval Aviation
Depot (NADEP) in Cherry Point, North Carolina. [1] This solicitation was
issued in anticipation of a cost comparison, pursuant to Office of
Management and Budget (OMB) Circular No. A-76, between the private-sector
proposal offering the best value to the government and the government's most
efficient organization (MEO). Among other things, the solicitation required
that an offeror be registered pursuant to ISO-9000 standards prior to
submitting a proposal. [2] LBM protests that the solicitation's ISO-9000
requirements are inappropriate in that they are overly restrictive of
competition and exceed the agency's actual needs.

Following the agency's corrective action which rendered moot certain
portions of LBM's protest, we deny the remaining protest issues.

The solicitation at issue was published on August 31, 2000 and contemplates
award of a fixed-price contract for a base period and four 1-year option
periods. In anticipation of an A-76 cost comparison, the solicitation seeks
private-sector proposals to perform various transportation related services,
including: movement of aircraft, aircraft parts, components and materials
within the NADEP and the surrounding area; refueling and defueling aircraft;
forklift and lowboy services; transportation of visiting dignitaries; and
equipment maintenance and administrative services. RFP, PWS, sect. C-5.

As initially issued, the solicitation also stated:

The offeror shall address its possession of ISO-9001 (1994), ISO-9002
(1994), or ISO-9001 (2000) registration from a Registrar accredited by the
American National Standards Institute Registration Accreditation Board
(ANSI-RAB) for services required under the PWS. A copy of the offeror's
"ISO-9000 Certificate of Compliance" and a letter signed by the offeror
certifying that it is currently ISO-9001 (1994), ISO-9002 (1994), or
ISO-9001 (2000) registered must be provided in this tab. Note: The ISO-9000
registration will not be subject to a qualitative rating evaluation or risk
assessment. The ISO-9000 registration shall be evaluated on a Pass/Fail
basis only. Failure to provide the required proof of ISO-9000 registration
by the time set for receipt of proposals will result in the offeror being
rated "Unsatisfactory" for the entire Technical Approach factor contained in
Section M. The offeror will thereby be ineligible for award and excluded
from the competitive range, should discussions be held and one established.

RFP at 76.

The closing date for submission of proposals was October 18, 2000. By
protest dated September 13, LBM challenged the above-quoted solicitation
requirements regarding ISO-9000 registration. [3] The agency subsequently
extended the closing date for submission of proposals to December 18, 2000.

LBM first protests that any provision requiring a private-sector offeror to
obtain ISO-9000 registration is overly restrictive and exceeds the agency's
actual needs. Among other things, LBM argues that the registration
requirement is excessive because LBM maintains it has previously performed
other, similar contracts, without meeting this requirement and the services
involved are "not of a highly technical nature." Protester Comments, Oct.
25, 2000, at 2-3.

The determination of a contracting agency's needs and the best method for
accommodating them are matters primarily within the agency's discretion.
Systems Application & Techs., Inc., B-270672, Apr. 8, 1996, 96-1 CPD para. 182
at 3. However, where a protester challenges a specification as unduly
restrictive of competition, we will review the record to determine whether
the restrictions imposed are reasonably related to the agency's needs. Id.
The adequacy of the agency's justification is ascertained through examining
whether the agency's explanation is reasonable, that is, whether the
explanation can withstand logical scrutiny. R.R. Mongeau Eng'rs, Inc.,
B-218356, B-218357, July 8, 1985, 85-2 CPD para. 29 at 2.

Here, in response to LBM's protest, the agency explains that the requirement
that a private-sector offeror obtain ISO-9000 registration ensures that the
entity performing the required activities will have certain minimum quality
assurance procedures in place during contract performance. [4] The agency
elaborates that such quality assurance requirements are necessitated by the
particular type of activities contemplated by this solicitation, including:
loading, offloading and transporting hazardous materials, ordnance, aviation
parts, components and aircraft, and notes that failure to properly perform
these activities could result in personal injury and/or damage to equipment,
vehicles and aircraft. Agency Report at 16-17. Finally, the agency explains
that requiring a contractor to comply with the ISO-9000 registration
requirements will decrease the level of resources the government must expend
to inspect and monitor contract performance. Id. at 12.

LBM's comments responding to the agency report, while continuing to express
disagreement with the agency's judgments, do not challenge the agency's
description of the type of activities to be performed, nor the agency's
representation that failure to properly perform the contract requirements
could result in personal injury and/or damage to equipment, vehicles and
aircraft. On this record, we find no basis to question the reasonableness of
requiring that the contractor meet the ISO-9000 registration requirement by
the time performance of the activities--on which the agency specifically
relies to justify this requirement--actually begins. Thus, to the extent LBM
asserts that any requirement that a private-sector contractor possess
ISO-9000 registration exceeds the agency's actual needs, the protest is
denied.

LBM's protest also challenged the point in time at which the solicitation
required that ISO-9000 registration be obtained--that is, prior to
submission of proposals. Noting that LBM "[is] presently in the process of
obtaining the ISO registration," Protester Comments, Oct. 25, 2000, at 3,
LBM argued that there was no reasonable basis for refusing to consider the
proposal of an offeror simply because it had not actually completed that
effort by the solicitation closing date, and questions the reasonableness of
requiring offerors to obtain the certification well before contract
performance will actually begin.

An agency's otherwise legitimate requirements regarding an offeror's
demonstrated ability to meet contract requirements may not generally be
applied at a point in time prior to when such qualifications become
relevant--in this case, prior to actual contract performance. See Container
Prods. Corp., B-280603.2, Nov. 4, 1998, 98-2 CPD para. 106 at 3-4. Here, the
agency's conclusive determination that an offeror would not be capable of
meeting the contract requirements, based solely on the fact that it had not
obtained the necessary certification prior to submitting a proposal, would
unreasonably exclude potential offerors. Id. This is particularly true in
the context of an A-76 cost comparison, where the time between submission of
private-sector proposals and actual commencement of the contract activities
may be substantial. [5]

In light of the exclusionary effect of the solicitation requirement that
ISO-9000 registration be obtained prior to proposal submission--and
consistent with our Office's commitment to undertake alternative dispute
resolution (ADR) in cases where candid discussions, with all protest parties
participating, may facilitate early dispute resolution--our Office conducted
a telephone conference call with LBM and agency counsel during which various
matters, including the timing of the ISO-9000 requirement, were discussed.

Following this ADR conference, the agency advised our Office and LBM that it
was amending the solicitation to eliminate the requirement that an offeror
must obtain ISO-9000 registration as a prerequisite to submitting an
acceptable proposal. Instead, the amendment provides that the agency will
perform a risk analysis and comparative evaluation of offerors' proposals in
this area. Agency Supp. Report, Nov. 13, 2000, at 4-7; RFP amend. 3. [6]

Although LBM continues to assert that the agency's corrective action is
inadequate, complaining that the agency may still eliminate LBM's proposal
from the competition, we view this objection as premature. In the event LBM
submits a proposal which is rejected by the agency, and LBM believes that
such rejection is inappropriate, LBM may, consistent with applicable statute
and regulations, challenge the agency's actions at that time.

The protest is denied.

Anthony H. Gamboa

Acting General Counsel

Notes

1. The NADEP is an industrial facility that reworks, repairs, and overhauls
aircraft, engines, and components for customers, both U.S. and foreign
military. RFP, Performance Work Statement (PWS), sect. C-1.1.

2. ISO-9000 standards are a series of internationally recognized quality
assurance standards established by the International Standards Organization
(ISO). To become registered, a company's procedures are reviewed for
compliance with the standards by an independently accredited registrar.

3. LBM also protested that the solicitation did not include the clause
contained in FAR sect. 52.222.42, "Statement of Equivalent Rates for Federal
Hires." LBM inquired about the agency's failure to include this clause
during a site visit LBM attended on September 9; in response, the agency
directed LBM to submit its concerns in writing. In its report responding to
the protest, the agency acknowledged that this clause should have been
included in the solicitation and amended the solicitation accordingly. RFP
amend. 2.

4. The agency states that the entire NADEP at Cherry Point obtained ISO-9002
registration in November 1999.

5. We note that the OMB Circular A-76 Revised Supplemental Handbook
specifically contemplates a situation in which the entity selected to
perform the competed activities is unable to perform. The Handbook states:

If, after contract start, the cost comparison "winner" is found to be
unresponsive or otherwise unable to perform, the Government should seek a
reaffirmation of bids received from the in-house, private sector and ISSA,
as appropriate, to the cost comparison solicitation. Adjustments, limited to
time delays or inflation, should be accommodated for all offerors. The [Cost
Comparison Form] is then recalculated and award made to the next lowest
bidder.

OMB Circular A-76 Revised Supplemental Handbook, Part 1, Ch. 3 sect. J.4.

6. We understand this solicitation amendment to provide that, although the
agency will still require that offerors obtain ISO-9000 registration prior
to actually beginning contract performance, and will require offerors'
proposals to address this requirement, the agency will perform a risk
analysis regarding an offeror's likelihood of meeting that requirement, see
Canadian Commercial Corp./Polaris Inflatable Boats (Canada), Ltd., B-276945,
July 31, 1997, 97-2 CPD para. 48 at 6-7 (agency reasonably evaluated risk
associated with offeror's ability to comply with contract performance
requirements), and, in addition, will comparatively evaluate proposals in
this regard. See Davies Rail & Mechanical Works Inc., B-283911.2, Mar. 6,
2000, 2000 CPD para. 48 at 8 (in evaluating technical proposals, agency
reasonably distinguished between proposal of offeror who had demonstrated
prior successful use of ISO-9000 quality control program and proposal of
offeror who had just obtained ISO-9000 certification).