TITLE:  Korrect Optical, Inc., B-288128; B-288128.2, September 21, 2001
BNUMBER:  B-288128; B-288128.2
DATE:  September 21, 2001
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Korrect Optical, Inc., B-288128; B-288128.2, September 21, 2001

Decision

Matter of: Korrect Optical, Inc.

File: B-288128; B-288128.2

Date: September 21, 2001

Sam Z. Gdanski, Esq., for the protester.

Merilee D. Rosenberg, Esq., Philip Kauffman, Esq., and Phillipa L. Anderson,
Esq. Department of Veterans Affairs, 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. Agency's calculation of the mathematical average of prices submitted by
five competitive range offerors, and disclosure of that average price to
protester and awardee, who were the only offerors included in the agency's
subsequent competitive range determination, did not constitute prohibited
communications.

2. Agency's evaluation of protester's technical proposal was reasonable
where protester failed to adequately respond to multiple technical
weaknesses and deficiencies which the agency had called to protester's
attention during discussions.

DECISION

Korrect Optical, Inc. protests the Department of Veterans Affairs' (VA)
award of a contract to Safe-Lite Optical Company under request for proposals
(RFP) No. 590-26-01 to provide prescription eyeglasses for eligible
veterans. Korrect protests that the agency engaged in an auction, improperly
evaluated technical proposals, and failed to conduct meaningful discussions.

We deny the protest.

BACKGROUND

The RFP was issued on February 12, 2001, seeking proposals to provide
prescription eyeglasses to eligible veterans at specified VA facilities, and
contemplated award of a fixed-price requirements contract for a base period
and four 1-year option periods. Section B of the solicitation contained line
items for various types of prescription lenses, advised offerors that the
agency estimated a total of 18,500 eyeglasses would be required annually,
and required offerors to propose fixed prices for the various individual
line items.

The solicitation required offerors to submit cost and technical proposals
and established the following technical evaluation factors: ability to make
lenses, quality of frame selection, staff experience and qualifications, and
quality assurance plan. Agency Report, exh. 3, RFP at 26; Agency Report,
exh. 10, Letters from Contracting Officer to Offerors (Apr. 2, 2001). [1]
Regarding the basis for award, the solicitation provided that the combined
technical factors would be slightly more important than price.

The agency received eight proposals by the March 15, 2001 due date,
including proposals submitted by Korrect and Safe-Lite. [2] After separating
pricing information from the technical proposals, the technical proposals
were evaluated by a technical evaluation panel (TEP). Consistent with the
solicitation statement that technical factors would be more important than
price, the agency assigned a total of 60 points to the technical factors and
40 points to price. [3] Although Korrect's proposed price was the lowest
submitted, its technical proposal was ranked sixth of the eight proposals
submitted due to various evaluated technical weaknesses and/or deficiencies.

In evaluating Korrect's technical proposal, the TEP was concerned that the
proposal failed to sufficiently demonstrate Korrect's ability to make the
required lenses--one of the two most important technical evaluation factors.
Specifically, Korrect's initial proposal stated that Korrect was currently
producing 500 pairs of glasses per day and had produced a total 91,480 in
the prior year, but indicated it did not intend to increase current staffing
or augment other manufacturing resources to accommodate production of the
additional 18,500 pairs of glasses--more than 20 percent of its prior annual
production--that would be required annually under this contract.
Accordingly, the TEP downgraded Korrect's proposal under the evaluation
factor covering the ability to make lenses. The TEP also downgraded
Korrect's proposal under the factor for quality of frame selection,
criticizing the durability of the frames Korrect had submitted. [4] Finally,
the TEP downgraded Korrect's proposal under the factor for the quality
assurance plan, on the basis that the proposal contained no evidence of a
quality assurance process and no training plan.

Despite Korrect's low technical ranking, its proposal received the maximum
score of 40 points for price based on its lowest offered price. Based on
Korrect's total point score, including the 40 points awarded for low price,
the agency included Korrect's proposal in the competitive range along with
the proposals of four other offerors including Safe-Lite.

By letters dated April 2, the agency opened discussions with each
competitive range offeror. In the letter to Korrect, the agency stated:

We . . . are providing a list of significant deficiencies in your
submittals. The intent is to give you the opportunity to revise your
technical, pricing and/or eyeglass frame submittals.

. . . . .

Technical Proposal: Ability to fabricate lenses: Ability to handle daily
volume of contract. Frames: overall poor frame selection, spring hinge
selection poor, only one large plastic frame and one half frame submitted,
no long temple, female frames unacceptable. QA Plan -- No evidence of QA
Plan process or customer satisfaction, no plan for training.

Agency Report, exh. 10, Letter from Contracting Officer to Korrect, Apr. 2,
2001 at 1.

Each competitive range offeror submitted a response to the agency's
discussion questions by the April 10 due date. Korrect responded to the
agency's concern regarding its ability to handle the production requirements
by downplaying the significance of the additional production requirements
and reiterating that it did not intend to retain additional staff or
otherwise augment its production resources, stating:

We currently produce 550 pairs of glasses (jobs) per day[ [5]] with 2 shifts
working 5 days a week. With 24 employees, that comes to 1.4 jobs per person
per hour. This contract calls for approximately 18,500 of glasses per year.
This should be about 72 jobs per day (or 4.5 jobs per hour, or .19 jobs per
person per hour). Our current level of employees can produce an additional
.19 jobs per person per hour. Our equipment (blockers, generators, cylinder
machines) is capable of producing over 900 jobs per day. This is based on
the manufacturers specifications.

Agency Report, exh. 25, Letter from Korrect to VA Contracting Officer, Apr.
6, 2001, at 2.

Korrect also responded to the agency' s concerns regarding the poor quality
of its sample frames by submitting a different selection of frames.
Regarding the agency's stated concerns with its quality assurance plan,
Korrect provided an industry publication regarding quality control and
represented that it was Korrect's quality control manual.

The offerors' responses to the agency's April 2 discussion questions were
reviewed and evaluated by the TEP. The TEP continued to have concerns with
Korrect's proposal under the three evaluation factors previously
identified--ability to make lenses, quality of frame selection, and quality
assurance plan. In a memorandum to the contracting officer, dated April 20,
the TEP Chair summarized the concerns, stating:

Ability to make lenses - [Korrect] has the ability to make all lenses,
however, no supporting documentation to support ability to handle increase
workload. Error rate exceeds VA expectations. Frames - Poor selection of
plastic unisex frames, no extra long temples in men's plastic, metal frame
with screws at cheek bone area, lenses popped out easily, men's metal frame
broke easily, women's metal frames bent easily, women's plastic frame broke
easily, poor spring hinges (1 broke), overall lacked quality and diversity.
QA Plan -- Information provided showed a QA Plan; however no outcomes [were]
provide[d], no meeting minutes and no formal training plan for lab staff.

Agency Report, exh. 12, Memorandum from TEP Chair to Contracting Officer, at
2.

Thereafter, the agency made a second competitive range determination, this
time retaining in the competitive range only Korrect's proposal, which again
offered the lowest price, and Safe-Lite's proposal, which was the highest
technically rated proposal. By letters dated April 27, the agency conducted
a second round of discussions with these two offerors. In these letters, the
agency advised both offerors that the agency had calculated the mathematical
average of the prices submitted by the previous competitive range offerors,
disclosed that average price to both offerors, and also advised Korrect of
various continued concerns the TEP had with its technical proposal.

Korrect and Safe-Lite each subsequently submitted final proposal revisions.
In its final submission, Korrect provided a third set of sample frames and
increased its price, offering a final price of $3,921,000. In its final
submission, Safe-Lite lowered its price, offering a final price of
$4,463,600. The agency performed a final proposal evaluation with the
following results:

 Eval. Factors          Safe-Lite     Korrect

 (max. pts.)

 Ability to Make        [deleted]     [deleted]
 Lenses (15)

 Frame                  [deleted]     [deleted]

 Selection

 (15)

 Past Performance       [deleted]     [deleted]

 (10)

 Staff Experience       [deleted]     [deleted]

 (10)

 Quality Assurance      [deleted]     [deleted]
 Plan

 (10)

 Price                  [deleted]     [deleted]

 (40)

 Total                  93.39         80.75

Agency Report, exh. 18, at 3.

Based on this final evaluation, the contracting officer documented the
following best value determination:

Best Value Analysis: the Technical Evaluation Panel judged [S]afe Lite's
proposal technically superior to Korrect Optical's. Out of a possible 60
points Safe[L]ite was judged almost 17 points superior. Korrect Optical was
rated either as the wors[t] technically acceptable proposal or near the
wors[t] of the proposers throughout the negotiations. Use of our overall
scoring system including pricing left Korrect Optical behind the proposal of
Safe Lite by 12 points. Based on the fair and reasonableness of Safe Lite's
pricing offer and its technically superior offer, the SafeLite proposal is
determined to be worth the cost differential and therefore the most
acceptable offer to the government.

Agency Report, exh. 18, at 2.

A contract was awarded to Safe-Lite on June 6. This protest followed.

DISCUSSION

Auction

Korrect first protests that the agency violated the Federal Acquisition
Regulation (FAR) by conducting what Korrect characterizes as an "improper
auction" when it advised Safe-Lite of the average price submitted by the
five competitive range offerors. We find no merit in this portion of the
protest.

The FAR provides:

(e) Limits on exchanges: Government personnel involved in the acquisition
shall not engage in conduct that-

. . . . .

(3) Reveals an offeror's price without that offeror's permission. However,
the contracting officer may inform an offeror that its price is considered
by the Government to be too high, or too low, and reveal the results of the
analysis supporting that conclusion. It is also permissible, at the
Government's discretion to indicate to all offerors the cost or price that
the Government's price analysis, market research, and other reviews have
identified as reasonable . . . .

FAR sect.15.306(e)(3).

Initially, we note that, while the FAR generally prohibited "auction
techniques" until 1997, due to revisions made in October 1997, the current
FAR provision which addresses limitations on the disclosure of offerors'
prices during discussions no longer includes language regarding the
prevention of auctions. FAR sect.15.306(e)(3); see also RS Info. Sys., Inc.,
B-287185.2, B- 287185.3, May 16, 2001, 2001 CPD para. 98. Further, it is clear
that, here, the agency's communications with Safe-Lite and Korrect regarding
the average price submitted by the five competitive range offerors did not
violate the FAR prohibition on revealing another offeror's price. We view
the disclosure of the average price submitted by multiple offerors as
reasonably within the scope of activities which the FAR expressly permits,
including the authority to "indicate to all offerors the cost or price that
the Government's price analysis, market research, and other reviews have
identified as reasonable." FAR sect.15.306(e)(3). On this record, we find no
merit in Korrect's protest that the agency engaged in what Korrect
characterizes as an "improper auction."

Technical Evaluation

Korrect next protests that the agency improperly downgraded Korrect's
technical proposal by awarding it only 9.25 points under the evaluation
factor regarding the ability to make lenses, complaining that its proposal
adequately addressed its ability in this regard. Specifically, Korrect
maintains that the statements it submitted in its initial proposal, along
with its response to the agency's April 2 discussion letter, quoted above,
wherein Korrect essentially characterized the additional requirements of
performing this contract as insignficant, should have precluded the agency
from downgrading its proposal under this evaluation factor. We disagree.

The evaluation of technical proposals is a matter within the discretion of
the contracting agency since the agency is responsible for defining its
needs and the best method of accommodating them. Marine Animal Prods. Int'l,
Inc., B-247150.2, July 13, 1992, 92-2 CPD para. 16 at 5. In reviewing an
agency's evaluation, we will not reevaluate technical proposals, but instead
will examine the agency's evaluation to ensure that it was reasonable and
consistent with the solicitation's stated evaluation criteria. MAR, Inc.,
B-246889, Apr. 14, 1992, 92-1 CPD para. 367 at 4. An offeror's mere disagreement
with the agency does not render the evaluation unreasonable. McDonnell
Douglas Corp., B-259694.2, B-259694.3, June 16, 1995, 95-2 CPD para. 51 at 18.

Here, as noted above, although this contract would require Korrect to
increase production by more than 20 percent over its total production in the
immediately preceding year, Korrect's response to the agency's April 2
discussion letter reiterated Korrect's view that no additional resources
would be required to perform this contract. Indeed, in pursuing this
protest, Korrect itself succinctly summarizes the multiple portions of its
proposal reflecting this view, stating:

In the paragraph [of our proposal] headed ‘Equipment' . . . we stated
that no new equipment would be needed based on the size of this contract. .
. . On page 9 [of our technical proposal] . . . we stated that we already
have all the support staff and material resources in place to meet the
statement of work on this contract. Also on page 9 . . . we stated that no
additional space would be required to service this contract.

Protest at 4.

Further, in responding to the agency's identification of Korrect's ability
to meet the production requirements as a matter of concern, Korrect
increased its factual representation regarding its current production rate
by 10 percent over the rate stated in its initial proposal--without
explaining in any way the basis for this stated increase. [6] In light of
the RFP's estimated requirements of 18,500 pair of glasses annually--more
than 20 percent of Korrect's most recent actual annual production--and in
the absence of any meaningful explanation by Korrect regarding how it
intended to meet these requirements, we find no basis to question the
reasonableness of the agency's downgrading of Korrect's proposal under the
evaluation factor covering the ability to make lenses.

Korrect also complains that the agency improperly downgraded its proposal
under the quality assurance plan factor. In this regard, the agency's final
evaluation assigned Korrect's proposal a score of 7 out of a possible 10
points. As discussed above, the agency was concerned that Korrect's proposal
contained inadequate discussion of Korrect's quality assurance process and
no plan for training. In responding to the agency's concerns with regard to
quality assurance, Korrect submitted an industry publication, but provided
virtually no information that specifically discussed Korrect's own quality
assurance process, and essentially confirmed that Korrect would provide only
on-the-job training for its personnel.

Again, we will not reevaluate technical proposals, but rather will examine
the agency's evaluation to ensure that it was reasonable and consistent with
the solicitation's stated evaluation criteria, and mere disagreement with
the agency does not render the evaluation unreasonable.

Here, in light of the agency's explicitly expressed concern regarding the
quality assurance process that Korrect would employ, as well as its concern
with regard to training its personnel, and Korrect's response providing
virtually no information regarding its own, unique quality assurance process
or training program, we find nothing unreasonable in the agency assigning a
score of 7 out of 10 possible points to Korrect's proposal under this
evaluation factor.

Finally, Korrect challenges the agency's evaluation of its proposal with
regard to the quality of frames factor, under which its proposal received
only 7 of 15 possible points. As noted above, offerors were required to
submit 36 frames (12 male, 12 female, and 12 unisex) for evaluation. In its
initial proposal, Korrect submitted frames which Korrect, itself,
characterizes as "budget frames with limited features," elaborating that, in
the past, "[w]e [Korrect] have been awarded VA contracts using these types
of frames." Protester's Comments at 2. In response to the agency's stated
concerns regarding the quality of its frames, Korrect twice submitted
different frame selections, including a number of "NYI" frames with its
final submission which the agency evaluated as being of inferior quality.
Specifically, the TEP Chair concluded that "NYI frames did not appear
durable, bending easily." Agency Report, exh. 17, Memorandum from TEP Chair
to Contracting Officer (May 18, 2001).

In resolving this protest, GAO conducted a recorded telephone hearing during
which testimony was obtained from the TEP Chair concerning, among other
things, the basis for and process used to evaluate the frames. During this
hearing both Korrect personnel and their counsel were given opportunities to
cross-examine the TEP Chair regarding the evaluation. Based on the record as
a whole, including the TEP Chair's testimony, Korrect has not demonstrated
that the agency's evaluation of its frame selection was unreasonable. [7]

Meaningful Discussions

Finally, Korrect maintains that the agency failed to conduct meaningful
discussions in that it did not adequately advise Korrect of the areas of its
proposal that required correction and/or amplification. We disagree.

As discussed above, in its discussions with Korrect, the agency specifically
advised Korrect of its concern with Korrect's "ability to fabricate lenses"
and its "[a]bility to handle daily volume of contract"; its concern with the
quality of Korrect's multiple frame submissions, referring to the "overall
poor frame selection" and advising Korrect that its selection "overall
lacked quality"; and its concern with Korrect's quality assurance plan,
advising Korrect that its proposal contained "[n]o evidence of QA plan
process." Agency Report, exh. 10, Letter from Contracting Officer to
Korrect, at 1 (Apr. 2, 2001); Agency Report, exh. 14, Letter from
Contracting Officer to Korrect at 1 (Apr. 27, 2001). On this record, Korrect
was reasonably led into the areas of its proposal requiring amplification.
See Aydin Computer and Monitor Div., Aydin Corp., B-249539, Dec. 2, 1992,
93-1 CPD para. 135 at 11.

The protest is denied.

Anthony H. Gamboa

General Counsel

Notes

1. Offerors were advised by letters dated April 2, 2001 of a final revision
in the relative importance of the evaluation factors. The order listed above
reflects the April 2 revision.

2. A ninth offeror failed to submit any technical information and,
therefore, its proposal was not considered.

3. The agency used a point system for rating proposals in which the points
associated with the individual technical factors were as follows: ability to
make lenses (15), quality of frame selection (15), past performance (10),
staff experience (10), and quality assurance plan (10). Regarding assignment
of points for price, the agency employed a formula in which the maximum of
40 points was assigned to the lowest-priced proposal and lesser points were
assigned to higher-priced proposals based on their ratio to the low price.

4. Offerors were required to submit 36 sample frames as part of their
proposals--12 male frames, 12 female frames, and 12 unisex frames.

5. Korrect offered no explanation for increasing its representation
regarding current daily production by 10 percent.

6. In passing, we note that, while Korrect alternatively represented that it
was producing 500 and 550 pairs of glasses per day, its actual production of
91,480 glasses during the year 2000 reflects an average production rate of
366 pair of glasses per day (assuming a 5-day work week and 50 work weeks
per year).

7. In any event, in light of our conclusion above that the agency reasonably
evaluated Korrect's proposal under the other evaluation factors, even if
Korrect's proposal had received the maximum possible score of 15 points
under the quality of frames factor, its total rating, including price, would
have remained lower than that of Safe-Lite's proposal.