TITLE:  HK Systems, Inc.--Protest and Reconsideration, B-291647.6; B-291647.7, August 29, 2003
BNUMBER:  B-291647.6; B-291647.7
DATE:  August 29, 2003
**********************************************************************
HK Systems, Inc.--Protest and Reconsideration, B-291647.6; B-291647.7, August
29, 2003

   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:   HK Systems, Inc.--Protest and Reconsideration
    
File:            B-291647.6; B-291647.7
    
Date:              August 29, 2003
    
William J. Spriggs, Esq., and Max V. Kidalov, Esq., Spriggs &
Hollingsworth, for the protester.
William H. Carroll, Esq., Dykema Gossett, for Siemens Dematic Corporation,
an intervenor.
Lt. Colonel Samuel T. Stevenson, Defense Logistics Agency, 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
    
Award to offeror that submitted low-priced proposal offering equipment
required by the solicitation is unobjectionable, especially where offeror
also was found technically more advantageous.
DECISION
    
HK Systems, Inc. protests the award of a contract to Siemens Dematic
Corporation under request for proposals (RFP) No. SP3100-02-R-0014, issued
by the Defense Logistics Agency (DLA), Defense Distribution Center (DDC),
for the upgrade and/or reconfiguration of storage and retrieval systems,
and for the installation of one automatic guided vehicle (AGV) system at
the Defense Distribution Depot in San Diego, California.  HK principally
asserts that the awardee*s proposal is technically unacceptable because
certain equipment proposed by Siemens does not comply with the RFP*s
commerciality requirements.  HK also requests reconsideration of our
decision dismissing as untimely HK*s previously filed protests against the
award to Siemens.
    

   We deny the protest and the request for reconsideration.
    
The solicitation, issued on April 23, 2002, as a commercial-item
procurement, provides for the award of a fixed-price contract on the basis
of a *best value* determination.  The RFP sets forth technical/business,
past performance, and price as evaluation factors, and provides that the
non-price evaluation factors when combined are significantly more
important than price.  Under the technical/business factor, the RFP
specifies the following sub-elements:  project management plan;
organization structure and qualifications; system layout and design;
integration of software; and reliability, maintainability and parts
availability.  The RFP states that alternate equipment and system
architecture and layout may be proposed by the contractor, provided that
all firm performance requirements specified in the RFP are satisfied by
the proposed design.  RFP S: 3.0.  As relevant here, the RFP also
specifically provides the following:
    
All equipment (each whole product with its integral software) shall be the
manufacturer*s current, commercially designed and available or a
commercial product that has been slightly modified to fit the proposed
system.  The commercial product must have proven, successful field
application for at least two years immediately preceding the issue date of
this solicitation.  The field experience of each specific equipment
product shall have been gained by an identical or previous model to the
one being offered.
Id.
    
Offerors were required to identify all areas of their proposal that
differed from or enhanced the requirements of the technical
specifications.  RFP at 16.  The solicitation defines an enhancement as
any proposed change which fulfills a *specified requirement in a [manner]
different from the Technical Specification or associated Drawings, but
which results in better performance, safer operation, or lower cost at no
sacrifice in performance.*  Id.  The solicitation provides that an
enhancement would be evaluated to determine if the change offered results
in lower cost and higher efficiency of the operation.  RFP at 17. 
    
Four proposals were received by the June 7, 2002 closing date and, after
discussions, the agency determined to award to Siemens on the basis that
it offered the best value to the government.  After receiving a
debriefing, HK filed an agency-level protest on September 18.  After the
agency denied its protest, HK filed a protest with our Office on November
4, in which it argued that the agency improperly evaluated Siemens* past
performance and HK*s technical proposal.  HK also argued that the agency*s
discussions with the protester were inadequate.  Our Office conducted a
hearing on January 14, 2003, to clarify the record with respect to the
agency*s past performance evaluation and its conduct of discussions.  On
January 29, at the request of the agency, our Office conducted *outcome
prediction* alternative dispute resolution.  The GAO attorney advised the
agency that the record appeared to demonstrate that the agency*s
discussions with the protester were inadequate.  Specifically, several
weaknesses identified by the evaluators relating to HK*s failure to
identify *install and test* personnel, failure to offer a manual control
for the AGV, and failure to provide a software integration plan were
actually deficiencies because HK was not in compliance with specific
solicitation requirements.  The agency was advised that these items should
have been raised with the protester during discussions, but were not.  In
response, the agency decided to take corrective action and to re-open
negotiations and evaluate revised proposals.  Our Office dismissed the
protest on January 31, based on the agency*s determination to take
corrective action.
    
On February 5, the agency terminated for convenience the award to Siemens
and sent letters to the offerors detailing weaknesses/deficiencies in
their proposals and offering them the opportunity to submit revised
proposals.  Since the Siemens proposal contained no weaknesses or
deficiencies, Siemens was merely invited to submit a final proposal
revision. 
    
HK submitted a series of letters to the agency requesting oral discussions
concerning its proposal deficiencies.  All of these requests were denied
by the agency.  In the agency*s February 24 letter denying HK*s request
for oral discussions, the agency provided HK additional clarifications
concerning its proposal deficiencies.  Through another series of letters,
HK was provided more information further clarifying the deficiencies. 
Finally, amendment No. 0002 was issued on March 4 clarifying issues
concerning the AGV controller and requesting proposals and final pricing
by
March 12.
    
The agency received four final revised proposals, including those of
Siemens and HK.  The Siemens offer was priced at $2,724,606.  HK offered
alternative proposals. One HK proposal, priced at [DELETED], was rejected
as unacceptable because it did not provide the AGV control hardware to
provide vehicle redirection capability that was required by the
specifications.  HK*s other proposal, priced at [DELETED], included the
required AGV control hardware and was evaluated for award.  Siemens*
offered price was based on delivery of the system with the Allen Bradley
model 1336 drives specified by the solicitation.  However, Siemens also
stated in its final proposal that it would *(with DLA approval) replace
the Allen Bradley Drives 1336. . . in the below paragraphs with [DELETED]
[Drives].*  Agency Report (AR), Tab 18, Siemens* Final Price Offer.  (The
drives control the horsepower and torque ratios of the motors that power
the cranes for the system.)
    
The evaluation team conducted a reevaluation of the offers based on the
specified 1336 drives, as a result of which the technical proposals of
Siemens and HK were both rated as *excellent* overall.  AR, Tab 21,
Summary Input Form For Source Selection Evaluations.  The source selection
authority (SSA) determined that Siemens* offer was the most advantageous
and offered the best value to the government in terms of technical merit,
management merit, and price.  AR, Tab 22, Source Selection Decision
Document.  The SSA concluded that Siemens* lowest priced offer provided a
number of specific technical advantages.  The SSA noted that Siemens
proposed to upgrade all drive motors to [DELETED] drives, which the SSA
concluded were superior to the Allen Bradley 1336 drives and to the drives
being supplied by other vendors because they [DELETED].  Other advantages
noted by the SSA included Siemens* proposed [DELETED].  Award was made to
Siemens on March 27.  After receiving a debriefing, HK filed several
protests with our Office. 
On June 27, 2003, we dismissed as untimely HK*s protests asserting that
the agency unreasonably evaluated Siemens* past performance and misapplied
a definitive responsibility criterion. 
    
We first address the timely-filed supplemental protest issues.  In its
supplemental protest, HK argues that, prior to the submission of its
initial proposal, the DDC technical representative refused its request to
propose the Allen Bradley [DELETED] drives, which the agency subsequently
accepted from Siemens in its final revised proposal.  HK argues that it
was prejudiced by the technical representative*s actions because it could
have proposed the [DELETED] drives at a lower price.  Alternatively, HK
argues that the [DELETED] drives do not meet the solicitation*s 2-year
commerciality requirement.  On July 23, our Office conducted a hearing to
clarify the record with respect to whether an agency official denied HK
the opportunity to propose the [DELETED] drives and whether the [DELETED]
drives meet the solicitation*s 2-year commerciality requirement.
    
In its comments on the hearing, the protester abandoned its argument that
an agency official denied its request to propose the [DELETED] drives,
while allowing Siemens to propose those drives.  We note that testimony at
the July 23 hearing made clear that HK was not deterred by the technical
representative from proposing the [DELETED] drives.  Hearing Transcript
(Tr.) at 106-08, 123-28, 135.  In fact, the record shows that at the time
HK submitted its initial proposal, there was not a currently available
[DELETED] drive version that would satisfy the solicitation requirements,
and one did not become available until the agency reopened negotiations. 
Thus, neither HK nor, for that matter, any other firm could have proposed
the [DELETED] at the time of initial proposals.  An HK official also
testified that the firm did not propose the [DELETED] drives during the
reevaluation as a result of the agency*s corrective action because he
believed these drives would not meet the 2-year  commerciality requirement
of the solicitation.  Tr. at 108. 
    
HK essentially is left with its contention that Siemens* proposal is
technically unacceptable because the [DELETED] drives do not meet the
2-year commerciality requirement of the solicitation.  HK*s Post-Hearing
Comments, Aug. 4, 2003, at 10.  DLA responds that Siemens* proposal
conformed to the RFP*s technical requirements and was rated excellent, the
same rating given to HK*s proposal, and that its decision to award to
Siemens on the basis of its lower price was reasonable.  Agency Report on
Supplemental Protest at 5.
    
Our Office will question an agency*s evaluation of proposals only if it
lacks a reasonable basis or is inconsistent with applicable statutes or
regulations or with the stated solicitation evaluation criteria.  Cobra
Techs., Inc., B-280475 et al., Oct. 6, 1998, 98-2 CPD P: 98 at 3; DAE
Corp., Ltd., B-257185, Sept. 6, 1994, 94-2 CPD P: 95 at 4.
    
Here, we conclude that the agency*s evaluation and selection decision were
reasonable and supported by the record.  The commerciality requirement at
issue here essentially requires that the system and components have
successful field application for at least 2 years immediately preceding
the solicitation issue date.  However, the requirement states that this
field experience can be based on a *previous model to the one being
offered.*  RFP S: 3.0.  The record supports the agency*s view that the
[DELETED] drives meet the 2-year requirement because these drives are an
upgrade of the Allen Bradley 1336 drives.  The agency*s technical
representative testified that, based on [DELETED] product literature and
Siemens* proposal, the [DELETED] drive is *a new and improved model* of
the 1336 drive.  He further testified that *whether it*s a 1336 or it*s a
[DELETED], they*re doing the same thing.*  He stated that *the [DELETED]
drives are [[DELETED]] next generation model,* that *[h]e didn*t see any
new science* with respect to the [DELETED] drives, and that *the basic
product is essentially the same.*  Tr. at 16-19, 28-35.  The technical
representative*s testimony, taken as a whole, reasonably supports the
agency*s position that the [DELETED] drives satisfy the RFP*s
commerciality requirement because the drives are commercially available
and are an upgrade to the previous model 1336 drive.  Thus, the 1336*s
successful field experience reasonably can be applied to the [DELETED]
drives.  
    
In any event, even if the [DELETED] drives do not satisfy the
solicitation*s commerciality requirement, the award to Siemens is not
objectionable.  Siemens* final revised proposal was based on providing the
1336 drives as required by the RFP and offering, at the same price and
subject to DLA approval, the substitution of the [DELETED] drives for the
1336 drives.  Siemens did not condition its price on acceptance of the
[DELETED] drives and left the decision to DLA on whether to allow the
substitution.  Notwithstanding HK*s argument to the contrary, the record
shows that Siemens* revised proposal met the drive requirements by
offering to furnish the technically acceptable 1336 drives.  Siemens*
offer to supply, subject to DLA approval, the upgraded [DELETED] drives at
the same price did not render Siemens* proposal nonconforming. 
Accordingly, the award to Siemens on the basis of its low priced,
technically acceptable proposal was reasonable.[1]
    
    
    
We also deny HK*s request for reconsideration of our decision in HK Sys.,
Inc., B‑291647.4, B-291647.5, June 27, 2003, dismissing as untimely
its previously filed protests against the award to Siemens.  We dismissed
HK*s protests as untimely because the allegation that the awardee failed
to meet an alleged definitive responsibility criterion in the RFP was
known or should have been known to the protester from the record developed
during the initial round of protests.  We also held that HK*s protest of
the agency*s failure to consider a contract at Anniston Army Depot in
DLA*s past performance evaluation was an untimely challenge to the
agency*s corrective action.
    
In requesting reconsideration, HK argues that this protest ground in fact
was premature because the definitive responsibility issue was predicated
upon Siemens* past performance record *developed after the award
adjudicated in the original protest.*  Protester*s Request for
Reconsideration at 2.  However, as we stated in our dismissal, the
information HK relies on to challenge the eligibility of Siemens for award
and the evaluation of Siemens* past performance history, specifically the
Anniston contract, was developed during the initial round of protests
prior to the agency*s corrective action.  HK is essentially repeating and
elaborating upon its earlier-raised arguments concerning the timeliness of
its protests and expressing disagreement with the conclusion in our
dismissal that its protests were untimely filed.  Under our Bid Protest
Regulations, to obtain reconsideration, the requesting party must show
that our prior decision contains either errors of fact or law or present
information not previously considered that warrants reversal or
modification of our decision.  4 C.F.R. S: 21.14(a) (2003); R.E. Sherrer
Inc.--Request for Recon., B‑231101.3, Sept. 21, 1988, 88-2 CPD P:
274 at 2.  HK*s repetition of its original arguments and its disagreement
with our decision do not satisfy the standard for reconsideration.
    
In any event, definitive responsibility criteria are specific and
objective standards established by an agency for use in a particular
procurement to measure a bidder*s ability to perform the contract. 
Federal Acquisition Regulation S: 9.104-2.  These special standards of
responsibility limit the class of bidders to those meeting specified
qualitative and quantitative qualifications necessary for adequate
contract performance.  The Mary Kathleen Collins Trust, B-261019.2, Sept.
29, 1995, 96-1 CPD P: 164 at 3.
    
Here, the record is clear that the requirement for offerors to submit
information on all contracts valued at over $500,000 was included to
assist the agency in its past performance evaluation.  In this regard, it
is instructive that the requirement was contained in the proposal
preparation instructions, which provided that the *instructions contained
herein are to serve as a guide in preparation of proposals.*  Under the
RFP*s evaluation section, the solicitation states that in investigating
past performance, the government would consider information in the
offeror*s proposal and information obtained from other sources, including
past and present customers
and government agencies.  The RFP is clear that this information was to be
used in connection with the past performance evaluation, and that the
proposal preparation language in the RFP does not constitute a definitive
responsibility criterion.
    
The protest and the request for reconsideration are denied.
    
Anthony H. Gamboa
General Counsel
      
    
    
    

   ------------------------

   [1] Moreover, the record shows that notwithstanding the same adjectival
rating for HK, the SSA reasonably considered Siemens* lower priced
proposal superior to HK*s proposal.  As identified above, the SSA found
numerous strengths in Siemens* proposal which merited a superior rating
beyond the advantages offered by the [DELETED] drives.  AR, Tab 22, Price
Negotiation Memorandum.  The record is clear that even without the
substitution of the [DELETED] drives, the agency reasonably concluded that
Siemens* lower priced proposal offered significantly more advantages than
HK*s.