TITLE:  IBP, Inc., B-289296, February 7, 2002
BNUMBER:  B-289296
DATE:  February 7, 2002
**********************************************************************
Decision

Matter of: IBP, Inc.

File: B-289296

Date: February 7, 2002

Ronald K. Henry, Esq., Kaye Scholer, for the protester.

James H. Roberts, Esq., Manatt, Phelps & Phillips, for Farmland National
Beef Packing Company, an intervenor.

Jay P. Manning, Esq., Defense Commissary Agency, 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. Where solicitation advised offerors that experience was an evaluation
factor, agency properly considered the particular benefit associated with an
offeror's experience as the incumbent.

2. Although solicitation provided that price and non-price factors were
"approximately equal" in importance, agency was not required to give equal
weight to the percentage differential between technical scores and the
percentage differential between proposed costs; rather, the source selection
official properly exercised her business judgment regarding the significance
of the differences.

DECISION

IBP, Inc. protests the Defense Commissary Agency's (DeCA) award of a
contract to Farmland National Beef Packing Company under request for
proposals (RFP) No. DECA-02-R-0010 for the sale and delivery of beef
products to various commissaries within DeCA's Eastern Region. IBP protests
that the agency failed to properly apply the solicitation's stated
evaluation factors.

We deny the protest.

BACKGROUND

Solicitation No. DECA-02-R-0010 was published on June 29, 2001 and sought
proposals to provide various beef products to nine geographical commissary
groups within DeCA's Eastern Region. [1] The solicitation contemplated a
contract, or contracts, covering each of the commissary groups for a 1-year
base period and two 1-year option periods. The solicitation provided that
proposals would be evaluated on the basis of price and non-price factors,
identified the non-price factors as technical capability and past
performance, [2] stated that these two non-price factors were "equally
important," and provided that "approximately equal" weight would be given to
price and to the combined non-price factors. RFP at 270-71. Regarding
evaluation of price, the solicitation contained a schedule of the beef
products to be sold and delivered for each commissary group, along with
estimated quantities for each item. Offerors were required to submit fixed
prices for each line item, and the solicitation provided that each offeror's
total prices would be calculated, for each commissary group, by multiplying
the offered price for each line item by the estimated quantity and totaling
the line item prices for the base year and option years.

Farmland and IBP each submitted initial proposals by the specified closing
date. [3] Those proposals were evaluated, discussions were conducted, and
final revised proposals were submitted and evaluated. Under each of the
evaluation factors and subfactors, the agency assigned a numerical point
score, which corresponded to an adjectival rating. The final ratings were as
follows:

                          IBP                       Farmland

 Technical Capability     Adjectival   Numerical    Adjectival   Numerical
                          Rating       Score        Rating       Score

 Experience               Excellent    [deleted]    Excellent    [deleted]

 Quality Control          Excellent    [deleted]    Excellent    [deleted]

 Distribution Plan        Excellent    [deleted]    Excellent    [deleted]

 Additional Support       Good         [deleted]    Good         [deleted]

 Past Performance

 Quality History          Excellent    [deleted]    Excellent    [deleted]

 Timeliness of            Excellent    [deleted]    Good         [deleted]
 Deliveries

 Customer Satisfaction    Excellent    [deleted]    Good         [deleted]

 Fill Rates               Excellent    [deleted]    Good         [deleted]

 Total Point Score                     93.50                     82.10

Agency Report, Tabs 9, 12.

With regard to price, IBP's evaluated prices were higher than Farmland's for
each commissary group. The evaluated prices, along with the amount that
IBP's price exceeded Farmland's in each group, were as follows:

                        Farmland     IBP's Price

            IBP                      Premium Percentage
                                     [4]

 Group 1    $[deleted]  $41,754,743  [deleted] [deleted]

 Group 2    [deleted]   33,313,943   [deleted] [deleted]

 Group 3    24,794,859  [deleted]    [deleted] [deleted]

 Group 4    22,840,896  [deleted]    [deleted] [deleted]

 Group 5    [deleted]   29,308,881   [deleted] [deleted]

 Group 6    [deleted]   29,526,398   [deleted] [deleted]

 Group 8    [deleted]   39,513,474   [deleted] [deleted]

 Group 9    [deleted]   45,180,379   [deleted] [deleted]

 Group 10   [deleted]   47,307,258   [deleted] [deleted]

Following the final evaluation of price and non-price factors, the
contracting officer compared the relative merits of IBP's and Farmland's
proposals with regard to the non-price factors, contemporaneously
documenting this analysis in narrative form in the source selection
document. Among other things, the source selection document stated:

In comparing IBP to Farmland in the [primary evaluation factor] Technical
Capability, both are excellent overall in the rated [subfactors] of
experience, quality control, distribution plan, and additional support, with
National being rated slightly lower than IBP, but still in the excellent
range for each of the rated areas. Both have an extensive amount of
experience in supplying resale subsistence for commissaries and commercial
supermarkets.

In comparing IBP to Farmland National Beef in the [primary evaluation
factor] of Past Performance, IBP is stronger than Farmland National Beef.
IBP has slightly stronger quality history, being rated at the "low end" of
excellent with Farmland being rated at the "high end" of good. IBP is
stronger in the area of timeliness of deliveries, with IBP being at the "low
end" of Excellent and Farmland National Beef at the "low end" of good. In
the area of customer satisfaction, IBP [is] slightly stronger than Farmland
with IBP being rated at the low end of Excellent [and] Farmland rated at the
high end of Good. In the area of fill rate, IBP has a slight edge, with IBP
claiming between a 99 and 100% fill rate and Farmland claiming a "high 90s"
fill rate[,] with IBP being rated at the "low-end" of excellent and Farmland
being rated at the "high end" of good.

Agency Report, Tab 13, Source Selection Document, at 1-2.

Overall, the contracting officer concluded that the two proposals were
essentially equal with regard to technical capability and that IBP's
proposal was somewhat superior to Farmland's with regard to past
performance. Agency Report, Tab 1, Contracting Officer's Statement, at 2.

The contracting officer then performed a cost/technical tradeoff for each of
the commissary groups, taking into consideration the above analysis along
with her consideration of which offeror was currently performing the
contract in each of the commissary groups. The contracting officer balanced
those non-price considerations against IBP's higher cost in each group,
taking into consideration both the total cost differential for each
commissary group, as well as the average additional cost per commissary
within a given group. Based on this analysis, the contracting officer
selected Farmland's proposal as representing the best value to the
government for commissary groups 1, 2, 5, 6, 8, 9, and 10, and selected
IBP's proposal as representing the best value to the government for
commissary groups 3 and 4. This protest followed.

DISCUSSION

Among other things, IBP challenges the contracting officer's consideration
of which offeror was currently performing the contract, asserting that
"incumbency . . . was not an evaluation factor." IBP Post-Hearing Comments
at 6 (Jan. 16, 2002). As discussed below, the contracting officer's
consideration of an offeror's experience, and more specifically, whether
that experience included performance as the incumbent contractor, was both
reasonable and consistent with the solicitation's stated evaluation factors.

Where a solicitation advises offerors that experience is to be evaluated, an
agency may properly consider an offeror's specific experience in the area
that is the subject of the procurement. Gulf Group, Inc., B-287697,
B-287697.2, July 24, 2001, 2001 CPD para. 135 at 2-3. In this regard, experience
as an incumbent may offer genuine benefits to an agency and may reasonably
distinguish the incumbent's proposal. Dr. Carole J. Barry, B-271248,
June 28, 1996, 96-1 CPD para. 292 at 3. An agency may properly consider the
additional costs associated with a non-incumbent's "learning curve." Veda
Inc., B-278516.2, Mar. 19, 1998, 98-1 CPD para. 112 at 12.

Here, the solicitation specifically stated that an offeror's experience was
a subfactor that would be evaluated in the context of technical capability.
RFP at 270. In this regard, offerors were instructed: "Describe your
experience with . . . the same or similar items and quantities required in
this solicitation." RFP at 268. In considering the impact of incumbency, the
contracting officer's source selection document repeatedly noted that the
incumbent contractor's experience in accomplishing the required tasks in
each group was expected to eliminate "transition/startup" problems. Based on
the solicitation's identification of experience as an evaluation factor, we
find no basis to question the contracting officer's consideration of
incumbency in making her cost/technical trade-off decisions.

Next, IBP protests that the agency failed to follow the solicitation's
stated evaluation scheme which provided that "approximately equal" weight
would be given to price and to the combined non-price factors. Relying on
the numerical point scores awarded under the non-price evaluation factors,
IBP repeatedly refers to its "14% technical advantage," asserting that it
was unreasonable for the agency to rely on Farmland's price advantage, which
ranged from [deleted] to [deleted], to offset IBP's technical superiority.
We disagree.

In conducting cost/technical tradeoffs, selection officials retain
considerable discretion in determining the significance of technical point
score differentials. The determinative element is not the difference in
technical scores per se, but the considered judgment of the selection
officials concerning the significance of the difference. Hardman Joint
Venture, B-224551, Feb. 13, 1987, 87-1 CPD para. 162. Where, as here, a
negotiated procurement provides for award after a cost/technical tradeoff,
point scores are merely guides to assist contracting agencies in evaluating
proposals;

they do not mandate automatic selection of a particular proposal, and an
agency is not required to give equal weight to the percentage differential
between technical scores and the percentage differential between proposed
costs. Ecology and Env't, Inc., B-209516, Aug. 23, 1983, 83-2 CPD para. 229. The
business judgment of a source selection official in determining how much
additional cost an agency is willing to incur to obtain the benefit of a
higher rated proposal is governed only by the tests of rationality and
consistency with established evaluation criteria. Grey Adver., Inc.,
B-184825, 76-1 CPD para. 325 at 9-12.

Here, as noted above, the contracting officer first concluded that IBP's and
Farmland's proposals were essentially equal with regard to the technical
capability factor--which represented one-half of the weight to be accorded
to the non-price evaluation factors. [5] In reaching that determination, the
contracting officer recognized the slight differences in IBP's and
Farmland's point scores for each of the technical capability subfactors and
noted that both proposals were rated in the "excellent" range for all
subfactors, with the exception of the least important subfactor, additional
support, under which both proposals were rated "good." On this record, we
find nothing unreasonable regarding the determination that the two proposals
were essentially equal with regard to technical capability.

With regard to the past performance evaluation factor, the contracting
officer recognized that IBP's proposal was somewhat superior, noting that
IBP's proposal was rated "excellent" under each of the evaluation
subfactors, while Farmland's proposal was rated "excellent" in only one
subfactor (quality history) and "good" in the remaining three subfactors
(timeliness of deliveries, customer satisfaction, and fill rates). [6]

Accordingly, in performing the cost/technical tradeoffs for commissary
groups 2, 5, 6, 8, 9 , and 10, where Farmland was the incumbent contractor,
the contracting officer considered the significance of the difference
between IBP's "excellent" past performance and Farmland's "good" past
performance, along with Farmland's experience in performing as the incumbent
contractor. The contracting officer then balanced the value of these
non-price considerations against IBP's higher prices, (ranging from
[deleted] to [deleted] higher) considering not only the total differential
for each commissary group, but also the cost differential per commissary
within each group. Specifically, for these groups, the additional daily cost
associated with IBP's proposal ranged from approximately [deleted] to
[deleted] per commissary. For each of these groups, the contracting officer
concluded that Farmland's proposal offered the best value to the government.

In making her determinations, the contracting officer provided a narrative
analysis of the factors she took into consideration for each group, relying
generally on her comparison of the two proposals' ratings for non-price
factors, quoted above, and adding additional discussion regarding
considerations that were unique for each group. For example, with regard to
group 2, the source selection decision stated:

I determine that Farmland National Beef is the best value for Group 2
Mandatory category items. Farmlands evaluated price is over [deleted] lower
than IBP's evaluated price. Again, in my business judgment, it is not worth
paying [deleted], or an average of over [deleted] per day, per store, for
the difference between Excellent and Good past performance, particularly
when considering that Farmland National Beef in this case, is the incumbent
contractor for Group 2 and no transition/startup period would be required.

Agency Report, Tab 13, Source Selection Document, at 2-3.

In light of our earlier discussion regarding the contracting officer's
proper consideration of incumbency in situations where, as here, offerors
were advised that experience would be evaluated, along with the discretion
properly afforded source selection officials in making the tradeoff decision
in a given source selection, we find nothing unreasonable in the contracting
officer's source selection decisions regarding these groups. In short, the
contracting officer reasonably concluded that IBP's advantage with regard to
past performance-an evaluation factor which, under the stated evaluation
scheme, was approximately half as important as price-did not warrant payment
of price premiums ranging from [deleted] to [deleted] percent, or
approximately [deleted] to [deleted] per day per commissary, in situations
where IBP's relative non-price advantage was diminished by the benefit
associated with Farmland's incumbency.

In contrast to the decisions for groups 2, 5, 6, 8, 9, and 10, the
contracting officer selected IBP's proposal as offering the best value to
the government for groups 3 and 4. Although IBP's proposal carried a price
premium of [deleted] in those groups, IBP was also the incumbent contractor;
further, the price differential for groups 3 and 4 amounted to only
[deleted] and [deleted] per day per commissary, respectively---the lowest
per store differentials for all nine groups. Accordingly, when the
contracting officer considered IBP's somewhat superior past performance
along with its specific experience in selling and delivering products to the
commissaries in those groups, she concluded that the benefit for the
government from those factors was sufficient to warrant paying IBP's higher
prices. IBP complains that, in light of the agency's best value
determination in groups 3 and 4, where IBP's prices were [deleted] higher
than Farmland's, it was inconsistent for IBP not to be selected for award in
group 6, where IBP's price was only [deleted] higher than Farmland's. [7] We
disagree. As discussed above, the contracting officer properly considered
the offerors' specific experience as the incumbent. Thus, the determination
that Farmland's slightly lower priced proposal represented the best value to
the government in group 6 where Farmland was the incumbent was consistent
with the contracting officer's determination that IBP's proposal for groups
3 and 4, where IBP was the incumbent, represented the best value to the
government, notwithstanding the fact that the price differential in groups 3
and 4 was somewhat greater than the differential for group 6.

Finally, IBP focuses on the source selection decision for group 1, where IBP
was the incumbent contractor, but the agency concluded that payment of IBP's
[deleted] price premium was not warranted. As shown in the price table
above, IBP's price premium for group 1 was the highest of any group in which
IBP was also the incumbent. Further, IBP's price differential for group 1
represented a daily price premium of approximately [deleted] per
commissary--the highest per commissary differential for all nine groups. The
contracting officer's source selection document incorporated the
above-quoted comparative analysis of the non-price factor ratings of the two
proposals, and further stated:

IBP's evaluated price is over [deleted] higher than Farmland National Beef's
evaluated price. IBP's score for Technical Capability and Past Performance
combined is [deleted] percent higher than Farmland's combined score.

The solicitation and the evaluation plan stated that price is approximately
equal to Technical Capability and Past Performance combined. Farmland
National Beef received a lower combined evaluation score than IBP but, as
stated above, offered a significantly lower price. Although not the most
highly rated offeror overall, Farmland has excellent technical capability
and is rated overall good for past performance. I determine that Farmland's
substantially lower [deleted] price, excellent technical capability, [and]
good past performance is the best value for the Group 1, Mandatory category
items. Even though experience has shown that a change in contractors could
result in some initial startup difficulties, in my business judgment, it is
not worth trading over [deleted], or an average of approximately [deleted]
per day, per store, for excellent past performance over good past
performance.[ [8]]

Agency Report, Tab 13, at 2.

Based on our review of the record, it is clear that, in conducting this
procurement, the contracting officer made multiple best value
determinations, consistently applying the same evaluation factors and
balancing those factors against IBP's price differentials, which ranged from
[deleted] to [deleted] and reflected additional daily costs between
[deleted] and [deleted per commissary. In situations such as this, some
incremental price differential must, of necessity, become the determining
factor for source selection.

Here, in responding to IBP's specific complaint that the contracting
officer's decision to award to Farmland in group 1 was inconsistent with her
decision to award to IBP in groups 3 and 4, it is clear that, in the
contracting officer's business judgment, payment of IBP's [deleted] price
premium, which amounted to additional daily costs of approximately [deleted]
per commissary, were warranted in groups 3 and 4, while, in her judgment,
IBP's higher [deleted] premium, which amounted to additional daily costs of
approximately [deleted] per commissary in group 1, were not. In light of her
consistent consideration of all the factors discussed above, we find no
basis to question that determination.

The protest is denied.

Anthony H. Gamboa

General Counsel

Notes

1. The solicitation called for proposals for a total of ten groups; however,
for reasons not at issue in this protest, a contract for the tenth group
(identified in the procurement documents as "group 7") was not awarded. The
solicitation also provided an opportunity to offer certain "optional" items.
Neither IBP nor Farmland submitted proposals for these items, and they are
not at issue in this protest.

2. The solicitation established four subfactors under each primary
evaluation factor. Under technical capability, the solicitation listed:
experience, quality control, distribution plan, and additional support.
Under past performance, the solicitation listed: quality of history,
timeliness of deliveries, customer satisfaction, and fill rates. RFP at 270.

3. Proposals were also submitted by several other offerors. Ultimately, the
other offerors competing for the contracts at issue here either withdrew or
were eliminated from the competition.

4. We independently calculated the percentage of IBP's price premium by
dividing the premium for each group by Farmland's evaluated price for that
group and rounding to the nearest tenth of a percentage point.

5. As noted above, the solicitation provided that the two non-price factors,
technical capability and past performance, were "equally important." RFP at
270.

6. The solicitation established that quality history and timeliness of
delivers were more important than customer satisfaction and fill rates.

7. IBP makes a similar argument with regard to group 10, based on the
assertion that IBP's price advantage for that group was also only
[deleted]--and, thus, lower than the [deleted] advantage for groups 3 and 4.
As shown in the price table earlier in this decision, our review of the
record establishes that, in fact, IBP's evaluated price for group 10 was
[deleted] higher than Farmland's evaluated price.

8. In documenting her decision for group 1, the contracting officer refers
to a [deleted] price differential, while the record indicates that IBP's
price premium for group 1 was actually [deleted]. Since the record indicates
that IBP's actual premium was even higher than reflected in the source
selection document, we do not view the apparent error as prejudicing IBP.