TITLE:  Intermagnetics General Corporation, B-286596, January 19, 2001
BNUMBER:  B-286596
DATE:  January 19, 2001
**********************************************************************
Intermagnetics General Corporation, B-286596, January 19, 2001

Decision

Matter of: Intermagnetics General Corporation

File: B-286596

Date: January 19, 2001

Leo Blecher for the protester.

Michael Colvin, Department of Health and Human Services, for the agency.

Marie Penny Ahearn, Esq., and John M. Melody, Esq., Office of the General
Counsel, GAO, participated in the preparation of the decision.

DIGEST

1. Protest that agency improperly evaluated proposals on the basis of two
unannounced criteria is denied where, although the first criterion was not
specifically set forth in the solicitation, protester was on notice of it
from discussions, and the protester failed to rebut the agency's position
that the second criterion, a relaxed specification, was immaterial and not
prejudicial to the firm.

2. Protest that agency improperly selected higher-priced proposal for award
is denied where solicitation provided for award on a best value basis and
agency reasonably concluded that the technical superiority of awardee's
proposal warranted payment of its higher price.

DECISION

Intermagnetics General Corporation (IGC) protests the award of a contract to
Oxford Instruments America, Inc. under solicitation No. NHLBI-PS-2000-631,
issued by the National Institutes of Health (NIH), Department of Health and
Human Services, for a 1.5 tesla (T) magnet and/or a gradient coil and its
integrated shim coils, known as the gradient shim assembly, to be installed
in the magnet. These components are part of a Magnetic Resonance Imaging
(MRI) scanner for cardiac studies in large animal models. [1] The protester
challenges the evaluation of proposals and award to a higher-priced offeror.

We deny the protest.

BACKGROUND

The solicitation, as amended, requested fixed-price, commercial item
proposals for delivery and installation of either (1) both the MRI magnet
and the gradient/shim assembly, or (2) the MRI magnet or the gradient shim
assembly. The solicitation provided for award "to the responsible offeror
whose offer conforming to the solicitation will be most advantageous to the
Government, price and other factors considered." Solicitation at 7. It also
included technical performance specifications, identified as "minimum
qualification criteria," Solicitation at 7-10, and offerors were required to
"include all information which documents and/or supports the qualification
criteria" and were "reminded that award will be made to the offeror whose
proposal meets or exceeds the qualification criteria." Id. at 7, 10.

The minimum qualification criteria for the magnet included the requirements
that a "40 cm inner-diameter gradient coil and its integrated room
temperature shim coils will be installed in this magnet," and the "magnet
manufacturer should consult with the gradient manufacturer regarding the
exact dimension of the magnet bore space [i.e., the space where the gradient
shim assembly would be installed], and requirements on the
gradient/room-temperature shim assembly for proper mounting in the magnet."
Solicitation at 7. [2] The minimum qualification criteria for the
gradient/shim assembly included the requirements that the "gradient coil
should have a 40 cm diameter or larger inner clear bore," the "gradient coil
and its integrated room-temperature shim coils should be mounted permanently
in a commercial whole-body 1.5T magnet of 900mm or larger bore size and
approximately 1.7m length," and "[y]our company should contact the magnet
manufacturer for exact dimensions of the available magnet bore space, and
should mount the gradient/shim assembly into the magnet according to the
proper method recommended by the magnet manufacturer." Solicitation at 8.
[3]

The agency received four offers. IGC offered the magnet alone, while Oxford
offered both the magnet and the gradient/shim assembly. (The other offers
are not relevant here.) IGC's and Oxford's offered magnets were evaluated as
acceptable; all of the offered gradient shim assemblies, including Oxford's,
were evaluated as unacceptable. The agency conducted written and oral
discussions and requested revised and best and final offers (BAFO). IGC's
BAFO price of $240,000 for the magnet was low, and Oxford's price of
$289,278 for its magnet was second low.

Since none of the offered gradient shim assemblies met the specifications,
the agency became concerned with the installation compatibility of a third
party's gradient shim assembly into the offered magnets, as well as
performance and cost risks in matching the gradient shim assembly to the
magnet. Recommendation for Award at 2; see also Postaward Debriefing of IGC,
Oct. 5, 2000, at 1. Thus, during discussions the agency asked IGC "whether
there exists a Gradient System that readily goes into the IGC Magnet and
meets the Gradient System specifications of the solicitation." Contracting
Officer's (CO's) Statement at 11, 14, and 16. IGC did not identify a
gradient shim assembly that was compatible with its offered magnet. Rather,
IGC responded that "they [could] install a Gradient System for the cost of
$40,000 to $50,000, but the Gradient System [would] not meet the NIH
specifications due to the bore size and gradient strength." CO's Statement
at 16; Recommendation for Award, Sept. 27, 2000, at 2. The agency also posed
the following written questions to IGC: (1) "The proposal did not answer
Criterion five (5) of the Solicitation with regard to facilitating the
installation of third party gradient/shim assembly into the magnet" and (2)
"Is offeror willing to work with the gradient coil manufacturer to
facilitate the installation of the gradient/shim system into the magnet?"
Request for IGC Revised Proposal, Sept. 20, 2000, at 2. In response, in its
revised proposal, IGC stated, "We are willing to work with gradient
manufacturers to facilitate installation of the gradient shim system into
the magnet on a cost plus basis[;] [a]s you know, depending on the gradient
selected, it may be necessary to develop and weld on gradient interfaces[;]
[t]his can be done at IGC for an additional cost to be determined at a later
date." IGC Revised Proposal, Sept. 22, 2000, at 2. Thereafter, in its BAFO,
IGC stated that it "will work with the gradient supplier regarding the
requirements of the gradient/room temperature shim assembly for proper
mounting in the magnet[;] [a]ny minor modifications (brackets, etc.) to the
magnet required to mount the gradient will be supplied within the price
quoted . . .  ; [o]nly in the event that major modifications are required
would [IGC] request a change in scope with associated cost reimbursement."
IGC BAFO, Sept. 25, 2000, at 2.

In contrast, during discussions Oxford did identify a third party gradient
shim assembly previously installed in its magnet in a commercially available
MRI scanner, that was compatible in "all aspects of installation" with its
offered magnet (including "physical dimensions, weight distribution,
mounting points and rigidity"), and that met most of the solicitation
specifications for the gradient shim assembly. Recommendation for Award,
Sept. 27, 2000, at 2. In this regard, when the agency asked Oxford if it
would "be willing to propose a gradient system that meets the gradient
strength and slew rate specifications" (which Oxford's own proposed gradient
shim assembly did not meet), Oxford responded in its revised proposal that
"[a]n alternative to the proposed Gradient Set would be to employ Siemens
[Corporation] Sonata gradients, which if purchased directly from Siemens
could be integrated with the Oxford Instruments Magnet System." Request for
Oxford Revised Proposal, Sept. 20, 2000, at 2; Oxford Revised Proposal,
Sept. 22, 2000, at 2. Oxford further explained that the magnet it proposed
"was supplied to Siemens as part of the Sonata MRI system, and therefore
[was] fully compatible with the Sonata Gradient System," but that Oxford
could not supply the Siemens Sonata--it would have to be purchased directly
from Siemens. CO's Statement at 14.

In evaluating the proposals, NIH determined that IGC's failure to identify a
gradient shim assembly compatible with its offered magnet presented a
significant risk of incompatible installation and resulting increased costs
in matching the two items. IGC Postaward Debriefing, Oct. 5, 2000, at 1;
Final Technical Evaluation Report, Sept. 26, 2000, at 7. According to the
agency, "if major parameters of the Gradient System such as length, weight
and diameter need to be changed to fit into the Magnet, then the Gradient
System will need to be redesigned and restructured." CO's Statement at 21.
The agency considered IGC's revised proposal statement that it was willing
to facilitate the installation of other vendors' gradient systems, and the
fact that the magnet was fixed-priced, insufficient to outweigh its concern
that "significant technical risks [exist] in installing a large bore high
performance gradient system into a superconducting large bore magnet without
prior design considerations," due to the "heavy weight of such gradient
coils and the high vibrational forces associated with higher performance
large gradients, and inductive [i.e., electrical] couplings between the
gradient coils and the magnet [as here]." IGC Postaward Debriefing Oct. 5,
2000, at 1-2; Final Technical Evaluation Report at 7. In this regard, the
agency believed that, without prior design considerations for matching the
magnet with the gradient coils, "technical problems may degrade the
performance of both the magnet and the gradient system" and "major changes
to the
magnet or the gradient coils to integrate the two" may be required. Final
Technical Evaluation Report at 7; Postaward Debriefing Letter to IGC at 1-2.
[4] Further, the agency considered IGC's BAFO to present a price contingency
that heightened the cost risk to the agency, since there was no estimated
cost cap for the referenced modifications that might be required to match
the magnet with the gradient shim assembly. AR at 2-3; CO's Statement at 24.
The agency determined that these risks presented by the protester's proposal
outweighed its lower offered price.

In contrast, NIH evaluated Oxford's offered magnet as technically superior
based on the "proven compatibility" of the magnet with Siemens's Sonata
gradient shim assembly, which the agency considered "the highest performance
gradient/shim system . . . commercially available, [that] meets most of the
requirements in [the] solicitation." Recommendation for Award at 1-2.
Specifically, the agency determined that Oxford's offered magnet "removed
all technical risks and the potential costs associated with gradient/magnet
integration, including the mechanical issues and electrical coupling issues"
that IGC's proposal did not resolve. CO's Statement at 15; see also Final
Technical Evaluation Report at 5. The agency recognized that the Sonata's
gradient strength did not meet the solicitation's specification to produce
6 Gauss(G)/centimeter in all three orthogonal directions simultaneously, but
considered this a "minor change" in "the gradient system performance [that]
can be ‘worked around' [by] (re-orienting the MRI subject so that the
strongest gradient axis is aligned as desired)." Agency Supplemental
Statement, Dec. 12, 2000, at 1, attach.; see also Solicitation at 9. [5]
Based on these considerations, the agency determined that the technical
superiority of Oxford's offered magnet was "advantageous to the government
when balanced with the risk of ill-matched Magnet and Gradient/Shim
Systems," justified the firm's price premium, and presented the best value
to the government. CO's Statement at 24-25; Contract Recommendation. The
agency made award to the firm and this protest ensued.

UNDISCLOSED AWARD CRITERION

IGC primarily argues that the agency improperly made award on the basis of
an undisclosed criterion--proven installation compatibility of a third
party's gradient shim assembly with the offered magnet, including
consideration of the areas of mechanical vibrations and inductive coupling.
IGC complains that the specific issues of mechanical vibrations and
inductive coupling were never raised with the firm, and that if they had
been they could "have been quickly put to rest." Protest at 3. In any event,
the protester maintains that it "explicitly stated [in its BAFO] that its
price of $240,000 included working with the gradient manufacturer to insure
proper installation in the magnet," that it "clearly understood its
obligation to quote on a magnet that would work with a gradient assembly of
the performance specified in the solicitation including the related issues
of mechanical vibrations and inductive coupling," and that its
"consideration of these issues had already been included in [its] price."
Protest at 2, 3.

The determination of the relative merits of proposals is primarily a matter
of agency discretion, which we will not disturb unless it is shown to be
without a reasonable basis or inconsistent with the stated evaluation
criteria and applicable statutes and regulations. Madico, Inc., B-280003,
Aug. 12, 1998, 98-2 CPD para. 42 at 3. Agencies properly may evaluate proposals
on the basis of considerations brought to offerors' attention during
discussions. See TESCO, B-271756, June 26, 1996, 96-1 CPD para. 284 at 3.

The evaluation here was unobjectionable. While installation compatibility of
the magnet with a third party's gradient shim assembly was not specifically
required in the solicitation, the need for such compatibility should have
been clear from the discussion questions. In particular, the question
"whether there exists a Gradient System that readily goes into IGC's Magnet
and meets the Gradient System specifications of the solicitation" clearly
put the protester on notice that the agency was assessing its proposal in
light of this consideration, and IGC's response to the agency's questions
shows that the firm was fully aware of the issue. In addition, the
solicitation's best value award clause made it clear that a comparative
evaluation would be conducted; there thus was nothing improper in the
agency's rating of Oxford's proven installation compatibility superior to
IGC's unproven installation compatibility.

Further, while IGC claims that the specific installation issues of
mechanical vibrations and inductive coupling were not brought to its
attention, it does not dispute the agency's position that these are
technical considerations encompassed by the requirement for a "proper
mounting" of the gradient shim assembly into the magnet. Indeed, as noted
above, IGC asserts that it was aware of these issues, and that it included
consideration of them in its price (although there is no indication of this
in the firm's offer). Protest at 2-4. While IGC asserts that, if these
installation issues had been specifically raised it could have "put the
matter to rest," it gives no indication of how it would have done so. This
is problematic in light of the uncertainty raised in its offer concerning
referenced modifications necessary to install the gradient shim assembly
into the magnet. IGC BAFO at 2. The evaluation thus was not rendered
unreasonable by the agency's reliance on its vibration and inductive
coupling concerns in downgrading IGC's offer.

COST RISK

IGC contends that the agency's concerns over increased costs for installing
a third party's gradient shim assembly into its offered magnet were
unfounded, since its BAFO merely stated its right under the standard changes
clause in the resulting contract for a price adjustment "for changes in
scope, such as the concerns identified by IGC." Comments, attach. 1. We
disagree. IGC's offer was for a fixed price, and its BAFO both clearly
stated that only minor installation modifications were included in its
price, and raised the possibility that major modifications could be
necessary at an additional price. IGC's BAFO provided no certainty as to
what installation modifications would be necessary and no assurance that
major modifications, with their resulting increased cost, would not be
necessary. Given this uncertainty as to the type of modifications that would
be required, or some limit on the potential increased cost to the
government, the agency reasonably determined that the protester's offer
presented a risk of increased cost. [6]

RELAXED REQUIREMENT

IGC objects that accepting Oxford's offered third party gradient shim
assembly with a gradient strength lower than that specified in the
solicitation was improper. IGC argues that, because the "NIH specifications
[for gradient strength] obviously cannot currently be met by the commercial
market," the reduced requirement for the gradient should have been
communicated to all offerors, and that it was prejudiced by not being
allowed the opportunity to offer on the "changed specification
requirements." Comments at 3, attach., at 1-2. NIH responds that the
relaxation of the requirement was not material, since it would not affect
the "size requirement or . . . the absolute power of the system," and would
not compromise "the ability of the system to perform the required research."
Agency Supplemental Statement at 1. The agency asserts, moreover, that IGC
was not prejudiced by the relaxation of the requirement, because there is no
showing that it could have revised its proposal had it been informed of the
relaxation. Id. at 2.

IGC does not dispute the agency's position regarding the materiality of the
relaxed requirement, and we find nothing in the record that brings that
position into question. In any event, we agree with the agency that there is
no evidence that IGC was prejudiced by the agency's failure to inform IGC of
the relaxation. In this regard, prejudice is an essential element of every
viable protest, and our Office will not sustain a protest unless the
protester demonstrates a reasonable possibility that it was prejudiced by
the agency's actions, that is, unless the protester demonstrates that, but
for the agency's actions, it would have had a substantial chance of
receiving the award. McDonald-Bradley, B-270126, Feb. 8, 1996, 96-1 CPD para. 54
at 3; see Statistica, Inc. v. Christopher, 102 F.3d 1577, 1581 (Fed. Cir.
1996).

Although IGC contends, in supplemental comments requested by our Office on
this issue, that "the revised gradient specification changes the evaluation
of compatibility," gradient strength was not an issue in the downgrading of
its offer, and IGC does not identify a reduced strength gradient shim
assembly without installation compatibility problems that it would have
identified had it known of the relaxed requirement. Protester's Supplemental
Comments at 1. IGC cites Philips Medical Systems' Explorer model as being
"similar" to the Sonata, and notes that it has "tested with Intermagnetics'
. . . MRI magnets of the type offered to NIH," but does not address the
question of whether the Explorer has proven commercial installation
compatibility with its offered magnet; again, this installation
compatibility issue was the principal basis for the agency's finding
Oxford's offer superior to IGC's. Id. Under these circumstances, we find
that IGC was not competitively prejudiced by the relaxation of the gradient
strength requirement.

PRICE/TECHNICAL TRADEOFF

IGC maintains that the award to Oxford at a higher price is not supported by
"any value of ‘technical advantage' on a product that is essentially a
commercial type item or on the basis of some perceived risk of cost."
Protest at 4. However, as discussed above, the agency's evaluation of
Oxford's proposal as superior to IGC's based on Oxford's proven installation
compatibility and lower cost risk was reasonable. Given that technical
considerations carried the same weight as price under the terms of the
solicitation, and that the agency's cost risk concern reasonably could be
viewed as mitigating IGC's cost advantage, there simply is no basis to
question the agency's conclusion that Oxford's technical superiority
outweighed IGC's lower price. [7] See J&J Maintenance, Inc., B-284708.2,
B-284708.3, June 5, 2000 CPD para. 106 at 3 (in making price/technical
tradeoffs, an agency has the discretion to make an award to a higher-rated
offeror at a higher price where it reasonably determines that the cost
premium involved is justified considering the superiority of the selected
proposal).

The protest is denied.

Anthony H. Gamboa

Acting General Counsel

Notes

1. The magnet is a large, thick-walled cylinder approximately two meters
long and two meters in diameter, with an opening of approximately 60
centimeters through which the research subject is passed. The gradient and
shim coils are assembled in the shape of a smaller cylinder that fits
closely inside the magnet and provides a means of controlling the electrical
field and dissipating the large amounts of heat that build up. Agency Report
(AR) at 1.

2. Correspondingly, the statement of work (SOW) provided that the contractor
for the magnet "shall . . . coordinate with the contractor responsible for
the gradient and shim coils to accomplish proper installation of the
gradient/shim assembly in the magnet." SOW para. II.B. at 22.

3. Correspondingly, the SOW required that the contractor for the gradient
and shim coils "shall . . . [i]n consultation with the magnet manufacturer,
rigidly mount the gradient/shim assembly into the magnet." SOW para. II.B.
at 22.

4. The agency explains that, in order to prevent mechanical vibration and
resulting degraded performance, "it is crucial to mount the Gradient Coil
Assembly securely on the weight bearing points of the Magnet," which "means
that the size and shape of the Gradient Coil Assembly and the weight bearing
points of the Magnet should be designed to match," since "[s]uch a match
prevents damage to the Magnet and is therefore part of the ‘proper
installation' described in the solicitation." CO's Statement at 10.

5. The agency noted that the Sonata's gradient system is specified at 7
G/cm, but "the fact that it cannot produce the highest gradient field in
three orthogonal axes simultaneously is not a major problem for the research
protocols, as the scans usually require a high gradient field along a single
axis, and this axis can be chosen to approximately align with one of the
directions where the gradient system produces its maximum field." CO's
Statement, attach. Further, according to the agency, "[i]n rare cases when
this cannot be accomplished, the price is a slightly longer scan time." Id.
Based on these considerations, the agency judged the gradient strength
specification "flexible" and considered the Sonata gradient system to
"overall . . . meet the need of the research protocols." Id.

6. While the cost uncertainty of IGC's proposal was heightened by its BAFO
response, we note that this uncertainty already was present based on the
discussions with the firm and in the firm's revised offer, as described and
quoted above.

7. Since the solicitation did not indicate the relative weights of technical
and price factors, it must be presumed that they were of equal weight. Ideal
Elec. Sec. Co., Inc., B-283398, Nov. 10, 1999, 99-2 CPD para. 87 at 2 n.1. While
the contracting officer states in response to the protest that "[b]ased on
the order of importance of the evaluation factors for award[,] technical
factors are of paramount consideration," there is no indication in the
contemporaneous record that technical factors were accorded greater weight
in the award decision. CO's Statement at 25; see Summary of Negotiations,
Sept. 27, 2000, and Recommendation for Award, Sept. 27, 2000.