TITLE:  Hubbell Electric Heater Company, B-289098, December 27, 2001
BNUMBER:  B-289098
DATE:  December 27, 2001
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Decision

Matter of: Hubbell Electric Heater Company

File: B-289098

Date: December 27, 2001

Robert Allen Evers, Esq. , and George M. Coburn, Esq., Robert Allen Evers
Law Office, for the protester.

James J. Regan, Esq., Daniel R. Forman, Esq., and Amy E. Laderberg, Esq.,
Crowell & Moring, for SFA, Inc., Frederick Manufacturing Division, an
intervenor.

Joshua Kranzberg, Esq., and Peter G. Tuttle, Esq., U.S. Army Materiel
Command, for the agency.

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

DIGEST

Selection of other than the lowest-priced proposal was reasonable where
source selection authority determined that the offeror's failure to
adequately address how it would establish compliance with quality assurance
standards at the time of production represented a risk that outweighed the
one percent price advantage of its proposal.

DECISION

Hubbell Electric Heater Company protests the award of a contract to SFA,
Inc., Frederick Manufacturing Division under request for proposals (RFP) No.
DAAD16-01-R-0016, issued by the United States Army Natick Soldier Center for
the development and production of the Advanced Food Sanitation Center
(AFSC),
which essentially is a field dishwashing system. The protester contends that
the source selection decision lacked a reasonable basis.

We deny the protest.

The RFP, issued June 1, 2001, provided for award of a fixed-price
requirements contract for a 2-year base with three 2-year options. The RFP
specified that "[t]he contractor shall comply with the specification titled
either ISO 9000/9001/9002 Model quality assurance in production and
installation." [1] RFP sect. E1.e.

The RFP provided that the source selection decision would be based on the
conduct of a tradeoff among the areas and factors identified, and award to
be made to the offeror whose proposal offered the best overall value to the
government. The RFP identified the following evaluation areas and factors:

Area I Technical. Factor (a) is more important than Factor (b).

  a. Overall Design
  b. Integrated Water Heating System and Spray Washer Design

Area II Management and Experience. Factors (a) and (b) are equal in
importance and are more important than Factor (c) which is more important
than Factor (d).

  a. Facilities and Equipment
  b. Quality Assurance Program
  c. Experience
  d. Warranty

Area III Contract/Price Proposal

Area IV Past Performance

RFP sect. M3.

The RFP stated that the technical area was the most important, and that the
management and experience area was more important than the contract/price
proposal area, which was more important than the past performance area.
Technical, management, and past performance, when combined, were
significantly more important than cost. The RFP provided that proposals
would be assigned an adjectival rating and would be evaluated for proposal
and performance risk. Under the quality assurance evaluation factor, the RFP
stated that "status of compliance with ISO 9000/9001/9002" would be
examined. RFP sect. M4, Area II, Factor b.

Two offerors, Hubbell and SFA, submitted proposals. The source selection
evaluation board (SSEB) evaluated both proposals, and found that both
contained significant weaknesses and some deficiencies. Agency Report (AR),
Enclosure I, Initial Evaluation Report. However, the SSEB determined that
all weaknesses and deficiencies could be resolved through discussions and
included both offerors' proposals in the competitive range. Id. As relevant
here, the SSEB identified Hubbell's quality assurance program as a
deficiency. More specifically, the SSEB determined that:

Hubbell proposes to use a Quality Program that conforms to MIL-I-45208A.
There is no mention of their compliance with or transitioning to the ISO
9000/9001/9002 Quality Standards as required by . . . the RFP.

AR, Tab I, SSEB Initial Evaluation Report.

Written discussions were held with both offerors. Among other things,
Hubbell was requested to "[p]ropose how [it] would conform to the ISO
9000/9001/9002 Quality Standard as required by . . . [the] RFP." [2] AR,
Enclosure J, Hubbell Discussion Items. Hubbell responded as follows:

The U.S. Navy has always required that manufacturers of critical components
conform to the quality control requirements of MIL-I-45208A which is a
comprehensive and thorough quality control system. MIL-I-45208A incorporates
the same components as required in the more recent commercial ISO9000.
MIL-I-45208A is in no way an inferior quality control system to ISO9000, it
just happens to be the quality control system written for certain government
purchases. Both MIL-I-45208A and ISO9000 use essentially the same structure
to ensure the quality of the end product. Therefore, Hubbell's current
quality control system, which is in conformance to MIL-I-45208A, meets all
of the essential components of ISO9000. However, given the current use of
ISO9000 as a benchmark for QC operations across a wide range of business
types, it is Hubbell's intent to seek ISO9000 approval in the very near
future. It is estimated that the approval process will take six

months to complete. Hubbell will commit to having ISO9000 certification in
place by the time full production of the AFSC begins.

Id.

After discussions, both offerors were asked to submit final proposal
revisions. The final SSEB evaluation ratings were:

 Evaluation Area/Factor          Hubbell              SFA

 Area I: Technical               Acceptable/Low       Acceptable/Low
                                 Risk                 Risk

 Factor a: Overall Design        Acceptable/Low       Acceptable/Low
                                 Risk                 Risk

 Factor b: Integrated Water
 Heating                                              Acceptable/Low
                                 Excellent/Low Risk
                                                      Risk
 System Design

 Area II: Management and         Acceptable/          Acceptable/Low
 Experience                                           Risk
                                 Moderate Risk

 Factor a: Facilities and        Acceptable/Low       Acceptable/Low
 Equipment                       Risk                 Risk

 Factor b: Quality Assurance     Acceptable/
 Program                                              Excellent/Low Risk
                                 Moderate Risk

                                 Acceptable/
 Factor c: Experience                                 Excellent/Low Risk
                                 Moderate Risk

 Factor d: Warranty              Acceptable/Low       Acceptable/Low
                                 Risk                 Risk

 Area III: Contract Price        $84,051,320          $84,912,667

 Area IV: Past Performance       Low Risk             Low Risk

After the final proposal evaluation, the SSEB determined that, while both
offers were rated "Acceptable/Low Risk" in Area I (Technical), the most
important evaluation area, Hubbell's offer was considered slightly stronger
because of the excellent rating it received for its water heating system
design. Additionally, while both proposals were rated "Acceptable" in Area
II (Management and Experience), which was less important than the technical
area, SFA's offer was considered somewhat stronger due to its "Excellent"
ratings in factor (b) (Quality) and factor (c) (Experience). SFA was rated
as a low risk under the management and experience area, while Hubbell was
rated as a moderate risk due to its current weaknesses in compliance with
ISO quality standards. The SSEB recommended award to Hubbell because, in the
SSEB's view, Hubbell's proposal offered the better value to the government
based on Hubbell's lower-priced proposal, which was slightly stronger in the
most important evaluation area, technical. The SSEB noted that Hubbell
presented a moderate risk in the management and experience area due to ISO
quality issues, but that "the potential for additional Government monitoring
of the ISO Quality issue does not warrant paying the additional cost to
SFA." AR, Enclosure L, SSEB Final Evaluation Report.

The source selection authority (SSA) reviewed the SSEB's evaluation and
recommendation, but disagreed with it: he concluded that award should be
made to SFA. In his decision document, the SSA concluded that the cost
savings associated with an award to Hubbell did not outweigh its moderate
risk rating in the management and experience area due to the potential risk
involved with Hubbell "attaining ISO900/9001/9002 compliance prior to
production of deliverables." AR, Enclosure N, SSA Decision Document. The SSA
expressed concern that Hubbell's commitment to comply with ISO 9000 lacked
"any actual assurance of attainment." Moreover, the SSA was concerned that
Hubbell's response to the discussion item regarding its conformance to the
ISO standard indicated that Hubbell did not understand what was required for
it to become ISO compliant or the differences between Hubbell's current
quality system and the ISO standard. The SSA concluded that, since "the only
non-price related discriminator, at the Area level, was the moderate risk
rating given to Hubbell in the Area of Management and Experience," it was
his judgment that SFA, with its low risk rating under the management and
experience area, offered the better overall value. Accordingly, award was
made to SFA on September 18, 2001. After receiving a debriefing from the
agency, Hubbell filed this protest with our Office.

Hubbell primarily challenges the SSA's decision to reject the SSEB's
recommendation to award to Hubbell. [3] Since the SSA agreed with the SSEB's
underlying evaluation, the protester maintains that it should have received
the award based on its slightly stronger rating under the technical area and
its lower price without any need for a tradeoff, and that the SSA, in his
tradeoff decision, made the management and experience area equal to or more
important than the technical area, which is inconsistent with the
solicitation's evaluation criteria. [4] Hubbell contends that the SSA's
misplaced emphasis on compliance with the ISO standard effectively reversed
the importance of the technical area and the management and experience area.

Where consistent with a solicitation's terms, price/technical tradeoffs may
be made, and the extent to which one may be sacrificed for the other is
governed only by the tests of rationality and consistency with the
established evaluation criteria. TRW, Inc., B-234558, June 21, 1989, 89-1
CPD para. 584 at 4. In deciding between competing proposals, the propriety of
such a tradeoff turns not on the difference in technical scores or ratings
per se, but on whether the selection official's judgment concerning the
significance of that difference was reasonable and adequately justified in
light of the RFP evaluation scheme. DynCorp, B-245289, B-245289.2, Dec. 23,
1991, 91-2 CPD para. 575 at 6. Source selection officials in negotiated
procurements have broad discretion in determining the manner and extent to
which they will make use of the technical and price evaluation results, and
the selection officials are not bound by the recommendation of lower-level
evaluators.. See DynCorp, supra. Accordingly, in considering a protest of an
award decision, we are reviewing the ultimate decision of the source
selection authority. LTR Training Sys., Inc., B-274996, B-274996.2, Jan. 16,
1997, 97-1 CPD para. 71 at 4; Burnside-Ott Aviation Training Center, Inc.;
Reflectone Training Sys., Inc., B-233113, B-233113.2, Feb. 15, 1989, 89-1
CPD para. 158.

As explained above, the SSA disagreed here with the SSEB's assessment of the
importance of the ISO issue in choosing between two proposals with similar
ratings and prices. The SSA concluded that the one-percent savings
associated with award to Hubbell did not outweigh its moderate risk for
management and experience, based on the potential risk involved with Hubbell
transitioning to ISO 9000 quality standards prior to production of
deliverables. [5] The SSA determined that Hubbell's blanket promise to
conform to ISO 9000 standards prior to production did not substitute for
evidence that Hubbell "fully [understood] what is required for them to be
ISO compliant." In our view, the SSA's decision that the ISO issue justified
award to SFA in this very close competition was a reasonable exercise of his
discretion, and was consistent with the evaluation criteria in the RFP.

In this connection, the record contains an agency quality assurance
specialist's assessment of Hubbell's discussion response that was submitted
to the SSEB chairman during the SSEB final evaluation process. (The SSA is
the immediate supervisor of the quality assurance specialist.) The
specialist points out, among other things, that the military specification
identified by Hubbell in its proposal does not meet the intent of the ISO
standards in a number of areas, such as management review, quality planning,
contract review and preventive action. The specialist further notes that the
military specification reflects an obsolete inspection system that is
reactive, compared to the ISO standards, which call for a "proactive"
management program. He also points out that the transition from the military
specification to an ISO quality program would require a "major revision" to
Hubbell's existing quality manual. AR, Tab M, E-Mail from Quality Assurance
Specialist to SSEB Chair; Contracting Officer's Statement at 8-9. Based on
this analysis, which is not meaningfully rebutted by the protester, we think
that Hubbell's response to the discussion item raised legitimate concerns
about Hubbell's ability to timely transition to the ISO quality assurance
standards, and that the SSA reasonably
could consider these concerns in his selection decision.

In sum, based on our review of the record, we find the selection of SFA to
be consistent with the stated evaluation criteria and reasonable. [6]

The protest is denied.

Anthony H. Gamboa

General Counsel

Notes

1. ISO-9000 standards are a series of internationally recognized quality
assurance standards established by the International Standards Organization
(ISO). LBM Inc., B-286271, Dec. 1, 2000, 2000 CPD para. 194 at 2 n.2. The RFP
here required conformance with the ISO standards, as opposed to registration
with, or certification by, an independently accredited registrar.

2. During discussions, Hubbell was also requested to submit information,
required by Section L of the RFP, regarding any past experience of Hubbell
and its subcontractors with regard to development of technical manuals and
training curricula. Hubbell was also requested to provide information
regarding any experience in integrating components other than water heating
systems. AR, Enclosure J, Hubbell Discussion Items. In response, Hubbell
identified a number of contracts for which it and its subcontractor had
prepared technical manuals but did not specifically address its experience
in the development of training curricula and also did not respond to the
discussion item relating to system integration experience.

3. In its initial protest, Hubbell also objected to the cost evaluation. By
letter dated November 16, 2001, the protester withdrew this protest basis.

4. The protester also maintains that the SSA's tradeoff decision was a clear
violation of the explicit parameters of permissible tradeoffs set forth in
the agency's acquisition plan. As far as alleged deviations from the
agency's acquisition plan are concerned, they do not themselves provide a
basis for questioning the validity of the award selection. Acquisition plans
are internal agency instructions and as such do not give outside parties any
rights. See Motorola, Inc., B-247937.2, Sept. 9, 1992, 92-2 CPD para. 334 at 5.

5. Hubbell argues that in reaching his decision, the SSA failed to consider
its excellent rating for its water heating system design under factor (b),
and improperly made management and experience more important than technical
in contradiction of the solicitation. We do not agree. The record shows that
the SSA specifically recognized Hubbell's "excellent" rating for factor (b),
but he also recognized that for the technical area overall, Hubbell, like
SFA,was rated acceptable/low risk. AR, Enclosure D, SSA Decision Document at
1. (Hubbell does not challenge its overall technical rating of acceptable.)

6. Throughout its comments to the agency report, the protester contends that
the SSA was a member of the SSEB, which unanimously recommended award to
Hubbell and that it was improper for him to later reject that
recommendation. The protester reached this conclusion because the SSA signed
the SSEB reports. The agency has provided an affidavit from the SSA, which
states that, in accordance with agency policy, he (together with the
contracting officer and legal advisor) signed the SSEB reports to indicate
that the reports were prepared in accordance with the source selection plan
and could be used by the SSA to assist in the final evaluation. The SSA
states that he did not participate in the SSEB deliberations. Moreover,
notwithstanding any alleged participation in the SSEB deliberations, the SSA
provided a detailed explanation for not following the SSEB's recommendation.