TITLE:  Crofton Diving Corporation, B-289271, January 30, 2002
BNUMBER:  B-289271
DATE:  January 30, 2002
**********************************************************************
Decision

Matter of: Crofton Diving Corporation

File: B-289271

Date: January 30, 2002

Robert E. Korroch, Esq., Michael J. Gardner, Esq., James S. Phillips, Esq.,
and Frances E. Purcell, Jr., Esq.,Williams Mullen Clark & Dobbins, for the
protester.

Buel White, Esq., for Seaward Marine Services, Inc., the intervenor.

Andrew C. Saunders, Esq., Kelly Calahan, Esq., and Trina Alexander, Esq.,
Naval Sea Systems Command, for the agency.

Paul I. Lieberman, Esq., and Michael R. Golden, Esq., Office of the General
Counsel, GAO, participated in the preparation of the decision.

DIGEST

Agency evaluation of proposals and resulting determination to make a
combined award are unobjectionable where they are reasonable and consistent
with the solicitation evaluation and award criteria; protest that agency was
required to conduct procurement in a manner that would afford preference to
a split award to different offerors for each of two zones being solicited is
denied where solicitation does not provide for such preference and states
that either a combined or a split award could be made, based on which is
most advantageous to the government.

DECISION

Crofton Diving Corporation protests the award of a combined contract to
Seaward Marine Services for waterborne hull cleaning and associated services
for both zones solicited under request for proposals (RFP) No.
N00024-00-R-4091 by the Department of the Navy, Naval Sea Systems Command.
Crofton contends that the Navy failed to conduct the procurement in a manner
that implemented the agency's goal of making a split award for the two zones
in order to develop multiple sources, and otherwise improperly implemented
the evaluation and award determination in various respects that adversely
affected Crofton.

We deny the protest.

BACKGROUND

The solicitation, issued on July 24, 2000, contemplated the award of either
one or two fixed-price, indefinite-delivery/indefinite-quantity contracts
for a base year with four 1-year options. The RFP divided the work into Zone
A, encompassing the East Coast and related areas, and Zone B, encompassing
the West Coast and related areas. Within the two zones, separate regions
were designated, for which the RFP specified 19 contract line item numbers
(CLINs) for the performance of specified services, of which CLIN 0001, for
full hull cleaning, and CLIN 0002, for interim cleaning (of propellers,
rudders, shafts and the like), constituted the largest portion of the work.
The solicitation contained estimated quantities or man-hours for each CLIN,
by region. The RFP explained that "[t]he purpose of this procurement is to
obtain one or two contracts for the performance of [specified underwater]
hull cleaning, hull inspections, and other related ship husbandry services,"
and stated that "[i]t is the Government's intention to award either two
separate contracts (one for Zone A and one for Zone B) . . . or one combined
contract (Zones A and B combined), whichever is most advantageous to the
Government." RFP sect. L-3.0, at 89. The RFP permitted the submission of
proposals for either zone or for a combined award, with offerors submitting
a combined proposal required to also submit separate individual zone
proposals. Id.

The RFP evaluation section contemplated a "best-value" award in which "[t]he
technical factors, taken together, are significantly more important than
Evaluated Price." RFP sect. M-4.0, at 114. The total evaluated price was the
grand sum of the total estimated extended CLIN prices for base and option
years calculated, as applicable, by single zone and by combined zones. The
solicitation did not call for a price realism analysis [1]; it did warn that
a proposal which was materially unbalanced with respect to CLIN base and
option prices could be rejected. RFP sect. M-3.0, at 114.

The RFP listed the following four technical evaluation factors:
experience/management/organization; equipment/facilities; comprehensive
execution plan (technical problem No. 1); and quiz (technical problem No.
2), in descending order of importance, with stated relative weights that
placed substantial emphasis (45 percent) on the
experience/management/organization factor. RFP sect. M-2.0, at 110-12. Within
the first two technical factors, subfactors and elements were also listed,
for which the RFP specified the relative weighting. Id. at 112. The RFP
further stated that risk would be evaluated within these factors. RFP sect.
M-1.0, at 110.

With respect to the award determination, specifically as to whether a
combined zone contract or separate zone contracts would be awarded, the RFP
provided:

As stated in SECTION L-3, the Government intends to award either two
separate contracts (one for Zone A and one for Zone B), or one combined
contract covering both Zones, whichever is determined to be the best value
to the Government. The Government will apply a multi-step process to enable
comparison between single zone and combined zone offers. Each step of the
process uses the best value methodology discussed above.

The Government will determine which single zone offer represents the best
value to the Government for each of the two Zones, Zone A and Zone B.

Next, for the purposes of the evaluation, the best value offer for Zone A
will be paired with the best value offer for Zone B to result in a 'paired
best value' for the whole requirement. For purposes of evaluation, the
evaluated price of the 'paired best value' will be the sum of the evaluated
price for each component offer of the 'paired best value' as determined in
accordance with Section M. The technical score of the 'paired best value'
will be a simple average of the weighted technical scores assigned to the
two component offers.

If necessary, the Government will determine a 'combined best value,' i.e.,
the combined zone offer that represents the best value to the Government for
a single contract for the whole requirement.

Finally, the Government will compare the 'paired best value' and the
'combined best value' to determine which of the two is a better value, and
thereby, the best value overall.

RFP sect. M-5.0, at 114-15.

Four offerors submitted proposals by the August 9 closing date. Crofton's
proposal was for Zone A only. The other three offerors, including Seaward,
each submitted combined proposals and separate proposals for Zones A and B.
After oral presentations relating to offerors' proposed solutions to the
technical problems, as provided for under the RFP, the agency performed an
initial evaluation. The technical proposals were evaluated under a narrative
and point scheme in which all of the listed factors, subfactors and elements
were assessed as follows: unacceptable/0; marginal/1-2; acceptable/3-4;
good/5-6; excellent/7-8; outstanding/9-10. Agency Report (AR) at 8. As a
result of this evaluation, the proposals submitted by one of the offerors
were rejected as technically unacceptable and discussions were conducted
with the three offerors whose proposals were included in the competitive
range. After two rounds of discussions were conducted, final proposal
revisions (FPRs) were submitted on July 31. The agency contract selection
panel (CSP) performed an evaluation and submitted its recommendations to the
source selection authority (SSA) on September 25. The evaluation results
were as follows:

                    Zone A             Zone B             Combined Zones

                                                          A & B

 Seaward Marine     Outstanding (932)  Outstanding (924)  Outstanding (924)
 Services, Inc.     Low Risk
                                       Low Risk           Low Risk
                    Price:
                    $77,085,785        Price:             Price:
                                       $68,501,633        $114,892,193

 [DELETED]          Good (628)         Good (618)         Good (613)

                    Medium Risk        Medium Risk        Medium Risk

                    Price:             Price:             Price
                    $55,792,385        $55,807,618        $111,600,003

 Crofton Diving     Good (532)         No Proposal        No Proposal
 Corp.
                    Medium Risk

                    Price:
                    $53,321,682

AR at 10.

In making the final award determination, the agency went through the
comparison sequence set forth at RFP sect. M-5.0, quoted above. For Zone A,
Crofton's proposal was selected as the best value in a comparison with
Seaward's Zone A proposal, on the basis that Seaward's technical superiority
did not warrant payment of the associated substantial (approximately $24
million) price premium. AR , Tab 65, CSP Final Report, at 32. For Zone B,
the agency selected [DELETED] proposal as representing the best value, again
concluding that Seaward's evaluated technical superiority did not warrant
payment of the substantial ($13 million) associated price premium. Id. In
the combined proposal comparison, the agency concluded that Seaward's
proposal represented the best value in comparison to the [DELETED] proposal,
on the basis that Seaward's substantial technical superiority outweighed the
relatively small ($3 million) associated price premium. Id. at 38.

Finally, the SSA compared the paired best value proposals with the best
value combined proposal. All of the various possible combinations are
summarized as follows:

 SCENARIO         OFFEROR(S)           TECHNICAL      EVALUATED PRICE
                                       SCORE

 A                Seaward Combined     924            $115 Million

 B                Crofton (A),         575            $109 Million
                  [DELETED] (B)

 C                [DELETED] Combined   613            $112 Million

 D                Crofton (A),         728            $122 Million

                  Seaward (B)

 E                [DELETED] (A),       776            $124 Million
                  Seaward (B)

 F                [DELETED] (B),       775            $133 Million
                  Seaward (A)

AR at 11.

The SSA determined that the technical superiority of the combined Seaward
proposal warranted payment of the associated price premium in comparison
with the Crofton/[DELETED] paired proposals. In particular, the SSA
concluded that the approximately $6 million price differential was
"considered insignificant when compared to the vastly superior technical
quality gained by awarding scenario (A)." AR, Tab 65, CSP Final Report, at
33. In support of this determination, the SSA provided a detailed narrative
explaining the basis for determining that Scenario A was superior to
Scenario B under every RFP factor, subfactor and element except for
facilities, in which the two scenarios were evaluated as substantially
equal. Id. at 33-38. Accordingly, the SSA made the determination to make a
combined award to Seaward for Zones A and B. After receiving an agency
debriefing, Crofton timely filed this protest with our Office.

PROTEST

Crofton initially raised what it characterizes as nine separate protest
issues. The issues, which overlap and are interrelated, generally pertain to
and question the agency's application of the solicitation price and
technical evaluation and award criteria, the reasonableness of specific
areas of evaluation of Crofton's and Seaward's proposals, and the agency's
conduct of discussions. [2]

The gravamen of Crofton's protest arises from the protester's claim that
Seaward "has maintained a monopoly over NAVSEA's hulling cleaning
procurements for many years," which "three decade monopoly is chronicled in
a series of [GAO] decisions." Protester's Supplemental Comments at 1, 3 n.2.
In Crofton's view, this protracted "monopoly" incumbency has given Seaward
an unfair competitive advantage which Crofton believes the agency was
required to, and intended to, mitigate by conducting this procurement in a
manner which gives a preference to making a split award in order to foster
competition. This premise pervades Crofton's protest and is either
articulated as, or in some instances presumed to provide, the underlying
foundation for most of Crofton's protest allegations.

ADVANTAGE OF INCUMBENCY

A particular offeror may possess unique advantages and capabilities due to
its prior experience under a government contract or otherwise and the
government is not required to attempt to equalize competition to compensate
for it, unless there is evidence of preferential treatment or other improper
action. Crux Computer Corp., B-234143, May 3, 1989, 89-1 CPD para. 422 at 5. The
existence of this advantage, by itself does not constitute preferential
treatment by the agency, nor does it otherwise represent an unfair
competitive advantage. Government Bus. Servs. Group, B-287052 et al., Mar.
27, 2001, 2001 CPD para. 58 at 10.

Here, other than recapitulating the 21-year period during which the Navy has
consistently made awards to Seaward to perform the services in question, the
only purported evidence that Crofton presents to suggest that the agency
acted unfairly to favor that firm consists of a recitation that five bid
protest decisions have been issued by our Office relating to those contract
awards. [3] However, despite Crofton's assertion that this record shows that
"the Navy has abdicated its duty to foster competition" (Protester's
Supplemental Comments at 3 n.2), in fact, none of the cited cases was
sustained by our Office, because we did not find the agency's actions
legally objectionable in any instance. There is simply no basis to conclude
that the Navy has demonstrated an improper preference for the incumbent, or
otherwise acted unfairly so as to favor that firm, such that the Navy was
required to equalize any competitive advantage that Seaward may enjoy.
Whatever advantage Seaward may have derive from its performance under the
prior contracts, and its familiarity with agency requirements, not from any
improper or unfair agency action. Such an advantage is commonly enjoyed by
incumbents and is not unfair, since it does not result from preferential
treatment or other unfair action by the agency.

Based primarily on this premise that the agency was obligated to mitigate
Seaward's advantages of incumbency, Crofton assumes that the agency had, in
fact, planned the procurement and structured the solicitation in a manner
designed and intended to prevent a combined award to Seaward, and that the
agency failed to implement this preference in its conduct of the
competition. In Crofton's view, "NAVSEA consciously created a procurement
model that would allow for the establishment of viable second sources to
Seaward, which has maintained a monopoly over NAVSEA's hulling cleaning
procurements for many years. This procurement model was well conceived and
provided for split contact awards to an East Coast service provider and a
West Coast service provide[r] based on best value considerations."
Protester's Supplementary Comments at 1.

Crofton's only support for this alleged model consists of references to
nonspecific conversations with unnamed agency officials who purportedly
advised Crofton that the agency "sought to develop two reliable sources for
the services sought in the RFP." Protest at 9. This unsubstantiated
allegation does not provide any meaningful support for Crofton's position
where, as here, the solicitation does not contain any requirement or
preference for a split award. [4] In the absence of any RFP provision
setting forth a preference for a split award, it would have been improper
for the agency to implement such a preference, since to do so would have
been inconsistent with the stated solicitation evaluation and award
criteria. Lear Siegler Servs., Inc., B-280834, B-280834.2, Nov. 25, 1998,
98-2 CPD para. 136 at 7. In short, the premise on which Crofton bases its
protest arguments lacks any legal and factual basis.

UNBALANCING

Crofton's explication of its allegation that Seaward's single zone and
combined proposals are unbalanced vis-ï¿½-vis each other provides a good
example of the protester's application of this underlying premise. Crofton
asserts that the Navy was required to reject Seaward's proposal as
materially unbalanced because of the substantial difference between the sum
of Seaward's single zone prices and its combined price. In particular,
Crofton points out that Seaward's combined price of approximately $115
million is $31 million lower than the sum of its individual zone proposal
prices of $69 million and $77 million. Crofton asserts that "the Navy has no
pricing evaluation data that would justify this significant pricing
discrepancy. Obviously, the strategic and practical effect of this pricing
scheme made it virtually impossible for the Government [to] make an award to
more than one contractor. The Awardee elevated its Zone B price so high [to
$77 million] [5] that any price combination with the Awardee in the 'paired
best value process' would be too expensive to merit consideration." Protest
at 6.

This argument provides no legal basis to consider whether Seaward's
proposals should have been rejected as unbalanced. Unbalanced pricing exists
when, despite an acceptable total evaluated price, the price of one or more
contract line items is significantly overstated or understated. Federal
Acquisition Regulation (FAR) sect. 15.404-1(g)(1). An agency's acceptance of a
proposal with unbalanced pricing is not, in and of itself, improper. An
agency may lawfully award a contract on the basis of a proposal with
unbalanced pricing, provided it has concluded that the pricing does not pose
an unacceptable level of risk, and the prices the agency is likely to pay
under the contract are not unreasonably high. FAR sect. 15.404-1(g)(2), (3).

These unbalancing considerations are not applicable to the relative pricing
under the three separate proposals submitted by Seaward. The FAR analysis
(and the solicitation language used here to caution against unbalancing) is
designed to address a possible award based on a proposal in which the CLIN
pricing within the proposal is unbalanced, which may raise a performance
risk or a risk that the eventual contract amount actually received by the
awardee will be higher than the evaluated price. Here, Seaward's combined
proposal price is unaffected by its prices for the individual zone
proposals. Seaward's proposals are separate, and the pricing under one has
no impact on the amount that may actually be paid under the others. That is
to say, each zone or combined award would be a complete contract. These
awards are not like CLINs within a contract awarded to one offeror, where
unbalanced CLIN prices coupled with possible inaccuracies in the respective
CLIN estimates can have possible total price consequences. Here, the
separate and combined zone offers are distinct, and do not pose potential
total price consequences arising from overstated or understated total
pricing. Stated differently, Crofton's objection is that Seaward's total
evaluated prices for its separate Zone A and Zone B proposals are relatively
high, unrelated to the CLIN pricing within each proposal. Accordingly, the
concept of unbalancing has no application.

Crofton's real objection, upon which its "unbalancing" argument is
predicated, seems to be that Seaward's individual zone pricing strategy
essentially precluded Crofton from obtaining the benefit of having its
proposal paired with Seaward's highest technically rated single Zone B
proposal. Thus Crofton contends that "under the scheme created by the Agency
Crofton's ability to compete for a single zone award was significantly
dependent on the Agency's willingness to . . . penalize the incumbent for
submitting unreasonable and/or unbalanced proposals." Protester's
Supplemental Comments at 10. This argument does not raise a legally adequate
claim of unbalancing, and does not provide any basis to object to Seaward's
pricing strategy; it merely reflects Crofton's erroneous underlying
presumption that the solicitation requires that the agency apply an
evaluation preference for split awards.

SEAWARD PRICE DISCUSSIONS

Crofton's argument regarding the propriety of the agency's conduct of
discussions with Seaward is similarly based on the same unfounded
presumption. Citing as authority FAR sect. 15.306(d)(3), Crofton asserts that,
in light of Seaward's unreasonable single Zone B price, the contracting
officer was required during discussions to have "negotiated a bona fide zone
B price in his negotiations with Seaward." Protester's Comments at 16. This
argument misconstrues the discussion requirements. The FAR requires that
contracting officers discuss with each offeror being considered for award
"significant weaknesses, deficiencies, and other aspects of its proposal . .
. that could, in the opinion of the contracting officer, be altered or
explained to enhance materially the proposal's potential for award."
FAR sect. 15.306(d)(3). While the precise scope and extent of discussions are a
matter of contracting officer judgment, the agency should tailor its
discussions to each offeror's proposal. FAR sect. 15.306(d)(1); The Pragma
Corp., B-255236 et al., Feb. 18, 1994, 94-1 CPD para. 124 at 9.

Here, the protester would impose on the agency the requirement to conduct
discussions with Seaward for the purpose of negotiating a price change to
Seaward's competitive detriment; that is, to encourage Seaward to make a
change that would reduce Seaward's chances of receiving the largest possible
(combined) award, in order to enhance the possibility that Crofton's Zone A
proposal would become more competitive. Even as articulated by Crofton, this
constitutes an "allegation that the

Agency failed to negotiate price with Seaward, to Crofton's detriment."
Protester's Supplemental Comments at 17. This proposition is without merit
as it is based on the erroneous premise that the agency was required to take
all possible steps to ensure a split award, rather than a combined one.

SINGLE ZONE PROPOSAL EVALUATION

Crofton contends that "[t]he Government's evaluation of Crofton's [s]ingle
[z]one [o]ffer [f]ailed to [c]omply with the [t]erms of the RFP." Protest at
13. The only support that Crofton offers for this assertion consists of
reciting the RFP provisions permitting the award of one combined or two
separate contracts, whichever was most advantageous to the government, and
the provisions setting forth the best value evaluation methodology, which
are quoted above. After doing so, without providing any explanation of how
the agency failed to apply the award criteria, the protester pronounces that
"Crofton submitted a proposal for Zone A only. The Government's evaluation
of Crofton's proposal failed to comply with the terms of the solicitation
recited above. Specifically, the Government's application of the methodology
for the combined technical evaluation and combined price evaluation was
flawed. Additionally, the Government's best value comparisons were flawed."
Protest at 14. Other than to state the allegation, the protester's pleadings
provide no explanation or basis; again this reflects only Crofton's
assumption that the agency was required to apply a preference that would
ensure a split award, which presumably would entitle Crofton to an award
because its Zone A proposal was evaluated as offering the best value under
the preliminary separate zone evaluation.

TECHNICAL EVALUATION

Finally, Crofton raises a variety of objections to various specific aspects
of the agency's evaluation of the Seaward and Crofton technical proposals.
An agency's method for evaluating the relative merits of competing proposals
is a matter within the agency's discretion, since the agency is responsible
for defining its needs and the best method for accommodating them. Advanced
Tech. and Research Corp., B-257451.2, Dec. 9, 1994, 94-2 CPD para. 230 at 3.
Where an evaluation is challenged, our Office will not reevaluate proposals
but instead will examine the record to determine whether the agency's
judgment was reasonable and consistent with the stated evaluation criteria
and applicable statutes and regulations. Lear Siegler Servs., Inc., supra,
at 7. The fact that the protester disagrees with the agency's judgment does
not render the evaluation unreasonable.

Seaward's combined technical proposal was evaluated as outstanding/low risk
overall, and outstanding under every subfactor and element other than
personnel experience and facilities, under which the proposal was evaluated
as excellent. Crofton's proposal was evaluated as good/medium risk overall,
with subfactor and evaluation ratings of acceptable, good, or excellent,
except for one outstanding rating under a corporate experience/past
performance element, and one marginal rating under the quiz factor.
Crofton's real objection is its contention in performing the evaluation
"[the agency had] a preconceived notion that the successful contractor must
look like the 21-year incumbent." Protester's Comments at 7. Crofton expands
this assertion to complain that "[t]he Government improperly concluded that
the successful offeror must present a mirror image of Seaward, the 21-year
incumbent . . . [which] results in a situation in which the procurement is
essentially sole sourced or any company which wants to compete must hire
away Seaward's employees." Protester's Comments at 14. Thus, Crofton
complains that the government simply favored a high volume of repetitive
ship cleaning experience (Seaward's proposal evidenced high quality
performance on more than 1,000 ships) and did not sufficiently credit
Crofton's "diverse experience" for which Crofton's proposal "provided
evidence of perfect performance on 54 ships over a 4 year time period."
Protester's Supplemental Comments at 5. Crofton views this as inconsistent
with the evaluation criteria.

Contrary to Crofton's assumptions, the RFP evaluation criteria expressly
called for credit for such extensive, relevant experience. Under the
corporate experience factor, the RFP provided for evaluation of "the amount
of experience the offeror has . . . as well as the type of experience (i.e.,
the size and type of vessels worked on, the type of equipment used, and how
it relates to the services to be performed under this procurement)." RFP sect.
M-2.0, at 112. Similarly, the facilities factor provided for evaluation
related to "adequacy to support the [performance of] operations to be
performed under the resultant contract as described in SECTION C-WORK
STATEMENT." Id. at 113-14. The other evaluation criteria were similarly
directed, in large measure, to the particular work to be performed under the
contract, as well.

In short, notwithstanding Crofton's contention that the evaluation criteria
are general and could be equally satisfied by any sort of hull cleaning
work, the criteria focused on the specific work to be performed under the
contract. Accordingly, the agency evaluation properly took into
consideration Seaward's extensive experience and favorably rated performance
history. Similar considerations also obtained with respect to the relative
evaluations under the other criteria. Again, Crofton's real objection is to
the incumbent's inherent advantage. The agency reasonably evaluated the
respective proposals consistent with the evaluation criteria, under which
Seaward's performance as incumbent and its knowledge of appropriate
procedures helped it to achieve an outstanding evaluation, while Crofton's
lesser experience and familiarity with the specific work at issue resulted
in a lower technical score. Accordingly, the agency's evaluation and
resulting award determination are consistent with the RFP criteria, and are
unobjectionable.

The protest is denied.

Anthony H. Gamboa

General Counsel

Notes

1. The RFP reserved the government's right to perform a cost realism
analysis solely with respect to CLIN 0018, a support reimbursement item for
services such as travel, for which the agency provided set pricing and the
offeror inserted a burden factor, which was inapplicable where the
contractor stipulated that its burden factor was a ceiling rate. RFP sect.
M-3.0, at 114. [DELETED]

2. We have carefully reviewed all of Crofton's protest allegations, many of
which, such as the assertion that its proposal was excluded from award
consideration as technically noncompliant (Protest at 8), or for posing an
unacceptable risk (Protest at 7), are simply factually wrong, as is clear
from the agency evaluation record. While we find each of Crofton's protest
allegations without merit, this decision will discuss only the more material
allegations.

3. The five decisions cited by Crofton actually concern three solicitations
or award determinations; two of the referenced decisions are associated
reconsideration requests.

4. To the extent that Crofton's real basis for protest is a contention that
the solicitation should have required split awards or otherwise penalized
Seaward, this constitutes an alleged solicitation impropriety which is
untimely under our bid protest regulations, since the protest was not filed
prior to the time set for receipt of initial proposals. 4 C.F.R.
sect. 21.2(a)(1) (2001). Moreover, as explained above, there is no legal basis
to require the agency to take steps to eliminate an incumbent's advantage in
the circumstances presented here.

5. This argument is based in part on Crofton's erroneous transposition of
Seaward's proposed single zone prices; Seaward's $69 million Zone B price
(the Zone with which Crofton's single zone proposal was combined for
purposes of the agency award determination) is actually significantly lower
than its $77 million Zone A price. This substantially undermines the
protester's argument, separate and apart from the otherwise flawed legal
analysis.