TITLE:  U.S. Textiles, Inc., B-289685.3, December 19, 2002
BNUMBER:  B-289685.3
DATE:  December 19, 2002
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U.S. Textiles, Inc., B-289685.3, December 19, 2002

   DOCUMENT FOR PUBLIC RELEASE                                                
The decision issued on the date below was subject to a GAO Protective      
Order.  This redacted version has been approved for public release.        

   Decision
    
Matter of:    U.S. Textiles, Inc.
    
File:             B-289685.3
    
Date:              December 19, 2002
    
E.R. Hembree for the protester.
Michael W. Clancy, Esq., Holland & Knight, for Dorothea Knitting Mills
U.S., Ltd., an intervenor.
James J. McCullough, Esq., and Abram J. Pafford, Esq., Fried, Frank,
Harris, Shriver & Jacobson, for Bancroft Cap Company, Inc., an intervenor.
Sean P. Bamford, Esq., and Marlene Surrena, Esq., Defense Logistics
Agency, for the agency.
David A. Ashen, Esq., and John M. Melody, Esq., Office of the General
Counsel, GAO, participated in the preparation of the decision.
DIGEST
    
Agency reasonably attributed experience/past performance of an affiliated,
foreign company to a domestic offeror where the offeror proposed to
relocate required specialized equipment from the foreign affiliate's
facilities to new domestic production facility, train senior supervisory
personnel at the foreign affiliate's facilities (where item being procured
currently is being produced), and have the foreign affiliate's management
and senior technical personnel be involved in training and be *hands on*
at the new domestic facility.
DECISION
    
U.S. Textiles, Inc. (UST) protests the Defense Logistics Agency's (DLA)
award of a contract to Dorothea Knitting Mills U.S., Ltd. (DKMUS), under
request for proposals No. SP0100-01-R-0045, for military berets.  UST
challenges the evaluation of proposals and price/technical tradeoff.
    
We deny the protest.
    
The solicitation provided for award of two contracts to different
offerors, for a 24‑month base period with 3 option years, for
military wool berets for the U.S. Army and Air Force, including 1 (line
item No. 0001) for 3,643,488 berets of various colors, and a second (line
item No. 0002) for 3,643,440 black berets.  Award was to be made to the
responsible, small business offerors whose conforming proposals were most
advantageous to the government.  The solicitation provided for proposals
to be evaluated with respect to price and several technical factors,
including (in descending order of importance) experience/past performance,
manufacturing plan, quality control plan, and participation in the DLA
Mentoring Business Agreements Program.  Under the experience/past
performance factor, offerors were required to *describe their experience
with producing the same or items of similar complexity within the past two
(2) years.*  RFP S: L at 129.  Technical factors were more important than
price.
    
Sixteen offerors submitted proposals; six proposals for item No. 0001 and
five for item No. 0002 were included in the competitive range.  Price
Negotiation Memorandum, May 28, 2002, at 1-10.  After discussions with the
offerors in the competitive range, DLA requested submission of final
proposal revisions (FPR).  Based upon its evaluation of FPRs, DLA
determined that DKMUS's proposal for item No. 0001 was most advantageous
because, while DKMUS's price ($31,465,877) was somewhat higher
(approximately 14.5 percent) than UST's ($27,470,470), the price premium
was offset by the technical superiority of DKMUS's proposal; DLA found
that DKMUS's technical proposal was *far superior* to UST's and, in
particular, that it was clearly superior in the area of experience/past
performance, the most important technical factor.  Source Selection
Decision Document, Item No. 0001, at 1-3.  DLA therefore awarded item
No. 0001 to DKMUS. 
    
UST challenges the agency's determination that DKMUS was superior with
respect to experience/past performance on the basis that UST has *vast
experience in related textile manufacturing,* and that the experience
cited for DKMUS was outside of the United States.  UST Comments, Nov. 15,
2002, at 3.
    
The evaluation of technical proposals is a matter within the contracting
agency's discretion, since the agency is responsible for defining its
needs and the best method of accommodating them.  Hago-Cantu Joint
Venture, B-279637.2, July 20, 1998, 98-2 CPD P: 99 at 11.  In reviewing an
agency's technical evaluation, we will not reevaluate the proposal, but
will examine the record of the evaluation to ensure that it was reasonable
and in accordance with stated evaluation criteria and not in violation of
procurement laws and regulations.  Id.  The evaluation here was
unobjectionable.
    
DKMUS's higher rating under the experience/past performance factor was
based on DLA's finding that, whereas Dorothea Knitting Mills (Canada) (DKM
Canada), a company associated with DKMUS through common ownership, had
successfully produced more than 950,000 berets for the U.S. government
since November 2000, and 200,000 berets for the Canadian military during
the prior 2 years, UST had never produced berets.  Further, UST furnished
no information concerning production more recent than July 2000 (at the
beginning of the 2-year period being evaluated), and the information it
did furnish covered only contracts for throw rugs and various sportswear. 
DLA viewed the woven throw rugs and the cut-and-sew sportswear produced by
UST as significantly less complex than berets, which require knitting,
felting, dyeing, drying, shearing, binding, and blocking using specialized
equipment.  In addition, DLA contracting officials reported that DKM
Canada had been an outstanding contractor with respect to its contract to
furnish berets to the U.S. Army; DKM Canada had a perfect quality record
on that contract, had accommodated customer preferences for altered sizing
and, except for an initial excusable delay related to a change, had
exceeded every monthly incremental delivery requirement.  While UST
furnished customer references indicating that it had always met delivery
demands and provided the highest quality on its referenced contracts, the
agency noted, again, that the referenced contracts were for significantly
less complex, dissimilar items, and had been performed nearly 2 years
ago.  Source Selection Decision Document, Item No. 0001, at 1-3. 
    
DKMUS's proposal also was found to be more advantageous under other
evaluation factors.  DKMUS's proposal had an advantage with respect to
demonstrated ability to commence production and successfully produce the
required berets.  While DLA considered DKMUS (as well as UST) to be a
first‑time producer of berets--since DKMUS intended to produce the
berets at a new plant in the U.S. rather than at DKM Canada's facilities
where U.S. Army berets are being produced--the agency found DKMUS's plans
for commencing production to be superior to UST's.  DKMUS proposed to
relocate required specialized equipment from DKM Canada's facilities to
its new U.S. production facility; train senior supervisory personnel at
DKM Canada's facilities; and have DKM Canada management and senior
technical personnel be involved in training and be *hands on* at the new
facility.  DKMUS Technical Proposal, Experience and Past Performance, at
1-2, Manufacturing Plan, at 8-12.  In contrast, UST, in commencing beret
production for the first time, could not rely on a similar transfer of
equipment and expertise from a plant currently producing berets.  DKMUS's
proposal also was found superior with respect to its manufacturing plan
(in part for the reasons discussed above with respect to plans for
commencing production), and slightly superior with respect to its quality
plan.  (Neither offeror proposed participation in the DLA Mentoring
Business Agreements Program.)    
    
We find no basis to question the determination that DKMUS's proposal
indicated superior experience/past performance.  Although UST questions
the agency's consideration of experience/past performance in Canada, it
has cited no provision of the solicitation, nor are we aware of any such
provision, precluding consideration of that experience/past performance. 
Rather, the relevant question is whether the agency reasonably attributed
the experience of an affiliated company to DKMUS in the evaluation.  In
this regard, where, as here, no provision in the solicitation precludes
offerors from relying on the resources of affiliated companies in
performing the contract, an agency properly may attribute the experience
or past performance of an affiliated company to an offeror whose proposal
demonstrates that the affiliate's resources will affect the performance of
the contract.  Universal Bldg. Maint., Inc., B‑282456, July 15,
1999, 99-2 CPD P: 32 at 6.  The relevant consideration is whether the
resources of the affiliate--its workforce, management, facilities or other
resources--will be provided or relied upon, such that it will have
meaningful involvement in contract performance.  Perini/Jones, Joint
Venture, B‑285906, Nov. 1, 2000, 2002 CPD P: 68 at 4-5; NAHB
Research Ctr., Inc., B-278876.2, May 4, 1998, 98-1 CPD P: 150 at 4-5;
Physician Corp. of Am., B‑270698 et al., Apr. 10, 1996, 96-1 CPD P:
198 at 13.
    
Here, DKMUS proposed substantial involvement by DKM Canada:  specialized
equipment would be relocated to the new facility from DKM Canada's
facilities; senior supervisory personnel would be trained in a beret
production environment at DKM Canada's facilities; and DKM Canada
management and senior technical personnel would be involved in training at
the new U.S. facility.  Given this commitment of DKM Canada's equipment
and expertise to the contract, the agency reasonably could conclude that
DKM Canada will have a meaningful involvement in DKMUS's contract
performance.  It follows that DLA reasonably attributed DKM Canada's
experience/past performance to DKMUS in the evaluation. 
    
Further, DLA reasonably determined that DKMUS's experience/past
performance was superior to UST's, since only DKMUS (through DKM Canada)
possessed experience with the specialized processes and equipment
necessary for the production of berets.  DLA specifically determined that
UST's experience manufacturing woven throw rugs and cut-and-sew sportswear
was not comparable work from a complexity standpoint, and UST has not
shown this determination to be unreasonable.  Accordingly, we have no
basis to question the evaluation.
    
UST asserts that award to UST, a Historically Underutilized Business Zone
(HUBZone) company, would best serve to ensure a domestic small business
industrial base for the production of berets.  However, the solicitation's
evaluation criteria did not include HUBZone or industrial mobilization
base evaluation factors. 
    
UST argues that the agency did not adequately factor UST's lower price
into the award decision.  This argument is without merit.  Source
selection officials in negotiated procurements have broad discretion in
determining the manner and extent to which they will make use of technical
and cost evaluation results.  Mevatec Corp., B-260419, May 26, 1995, 95-2
CPD P: 33 at 3.  In exercising that discretion, they are subject only to
the tests of rationality and consistency with the established evaluation
criteria.  Id.  Here, DKMUS's proposal was determined to be clearly
superior under the experience/past performance factor, the most important
technical evaluation factor, and to be more advantageous with respect to
manufacturing and quality control plans, two of the other technical
factors, resulting in a technical proposal which was *far superior* to
UST's.  Given the extent of DKMUS's technical superiority, and the fact
that the technical factors were more important than price,
there is no basis to question DLA's determination that DKMUS's technical
superiority warranted payment of an approximately 14.5 price premium.
    
The protest is denied.
    
Anthony H. Gamboa
General Counsel