TITLE:  PharmChem, Inc., B-292408.2; B-292408.3, January 30, 2004
BNUMBER:  B-292408.2; B-292408.3
DATE:  January 30, 2004
**********************************************************************
PharmChem, Inc., B-292408.2; B-292408.3, January 30, 2004

   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:   PharmChem, Inc.
    
File:            B-292408.2; B-292408.3
    
Date:              January 30, 2004
    
Joseph P. Hornyak, Esq., Hector Garcia-Santana, Esq., and Renee C. Macri,
Esq., Sonnenschein Nath & Rosenthal, for the protester.
John Peterson for Kroll Laboratory Specialists, the intervenor.
Roberta M. Echard, Esq., Demetria T. Carter, Esq., and Dinah Stevens,
Esq., Administrative Office of the United States Courts, for the agency.
Guy R. Pietrovito, Esq., and James A. Spangenberg, Esq., Office of the
General Counsel, GAO, participated in the preparation of the decision.
DIGEST
    
In a negotiated procurement for urinalysis drug testing services that
provided for a cost/technical tradeoff basis for award under which
technical merit was significantly more important than price, agency
reasonably awarded a contract to the significantly higher-priced awardee
where the agency found, based upon the protester*s performance of its
incumbent contract and Department of Health and Human Services test
reports of the protester*s laboratory, that protester presented more
significant performance risks than the awardee.
DECISION
    
PharmChem, Inc. protests the award of contract to Kroll Laboratory
Specialists under request for proposals (RFP) No. USCA-03-R-0029, issued
by the Administrative Office of the United States Courts for urinalysis
drug testing services. PharmChem challenges the agency*s evaluation of
proposals and source selection decision.
    

   We deny the protest.
    
The RFP provided for the award of three
indefinite-delivery/indefinite-quantity, fixed‑price contracts to
conduct urinalysis drug testing services for United States Probation
Offices and Pretrial Services Offices in the East, Midwest, and West
regions of the United States.  Offerors were permitted to submit one
proposal for a single region, in which the offeror was located, and were
informed that *[t]his shall result in three separate contract awards based
upon the regions.*  RFP S: M.9.  This protest concerns the award for the
Midwest region.
    
A detailed statement of work described the services to be provided.  Among
other things, the contractors were required to perform drug testing,
provide supplies, comply with reporting and confidentiality requirements,
and provide testimony preparation and presentation.  The contractor was
also required to maintain a quality control program that ensured *accuracy
over every aspect of specimen handling and processing; analytical
procedures; reporting of results; turnaround time; equipment maintenance,
internal security; data management; and other measures taken to ensure the
integrity of the testing program.*  RFP S: C.28.  In addition to
describing their quality control measures, offerors were directed to do
the following:
    
Provide copies of all Federal, state, local and/or private proficiency
testing program results for the three years preceding the date of the
Request for Proposal.  Provide the names and addresses of each proficiency
review team, as well as the dates for which the proficiency rating(s) were
compiled.  Provide copies of the previous two HHS [Department of Health
and Human Services] Certification inspection critiques and ensuing
correspondence.[1]
RFP S: L.3.1.
    
The RFP provided for a cost/technical tradeoff basis for award. 
Specifically, offerors were informed that award would be made to the
responsible offeror whose technically acceptable proposal reflected the
best overall value to the government, and that this determination would be
made by *comparing differences in the value of quality of services,
methodology operations and experience with differences in cost to the
Government.*  RFP S: M.2.a.  The RFP provided that proposals would first
be evaluated for compliance with mandatory requirements, then judged for
technical excellence based upon the following technical evaluation
criteria, in descending order of importance:  (1) additional technical
capability; (2) past experience/past performance; and (3) personnel
qualifications/organization.  RFP S: M.4.  Offerors
were informed that technical excellence was more important than price. 
RFP S: M.9.  Offerors were also informed that the
    
Government reserves the right to determine the specific order and duration
of individual activities as the evaluation proceeds, or call for
discussions, proposal clarifications, or revisions at any time as may be
determined to be in the Government*s best interest, and in accordance with
[the] Federal Acquisition Regulation [FAR].
RFP S: M.2.a. 
    
The RFP also provided that the *otherwise successful offeror(s)* would be
required to perform an *Operational Capability Demonstration* (OCD) to
show that the offeror*s proposed approach would meet all of the mandatory
statement of work requirements.  RFP S: M.11.
    
The agency received proposals from four firms, including PharmChem and
Kroll, for the Midwest region.[2]  Following the evaluation of initial
proposals, only Kroll*s proposal was included in the competitive range
(although PharmChem*s proposal was found technically acceptable). 
    
PharmChem protested the exclusion of its proposal from the competitive
range to our Office.  Prior to the submission of its report, the agency
took corrective action in response to the protest, agreeing to reevaluate
proposals, and we dismissed PharmChem*s protest as academic.
    
The agency reevaluated proposals and identified areas of the proposals
that needed to be addressed by the offerors during discussons.  Several
rounds of written *deficiency requests* and *clarification requests* were
sent to PharmChem and Kroll. 
    
Following discussions, the agency*s technical evaluation team (TET) found
that both PharmChem*s and Kroll*s proposals were acceptable.  With respect
to the technical excellence evaluation, Kroll*s and PharmChem*s proposals
were evaluated as follows:
    

   +------------------------------------------------------------------------+
|                                     |Kroll         |PharmChem          |
|-------------------------------------+--------------+-------------------|
|Additional Technical Capability[3]   |Superior      |Good/Marginal      |
|-------------------------------------+--------------+-------------------|
|Past Experience/Past Performance[4]  |Good          |Good/Marginal      |
|-------------------------------------+--------------+-------------------|
|Personnel Qualifications/Organization|Superior      |Superior           |
|-------------------------------------+--------------+-------------------|
|Overall                              |Superior      |Good               |
+------------------------------------------------------------------------+

    
Contracting Officer*s Statement at 8.
    
Kroll*s superior rating under the additional technical capability factor
reflected the evaluators* judgment that Kroll*s proposal exceeded the
solicitation requirements in a number of beneficial ways, including that
Kroll had a [Deleted] square foot secure facility at which it analyzed
[Deleted] specimens per day and could increase testing to [Deleted]
specimens per day without increasing its staff or equipment.  In addition,
Kroll offered an [Deleted].  Agency Report, exh. 24, Final Consensus
Technical Evaluation Report, at 2.
    
Kroll*s good rating under the past experience/past performance factor
reflected the evaluators* finding that all of Kroll*s reported experience
was of similar scope to the solicitation requirements, and that all of its
references rated the offeror as excellent and stated that Kroll offered
good customer service, was easy to reach, provided a high level of
security, and had a state-of-the-art facility.  The evaluators also noted,
however, that historically the volume of specimens tested by Kroll was
smaller than the number that will be tested under this contract.  Id. at
2-3.
    
PharmChem*s proposal*s good/marginal rating under the additional technical
capability factor reflected the TET*s finding that although PharmChem*s
proposal exhibited a number of strengths, including the offer of a
[Deleted] square foot secure facility at which PharmChem analyzed up to
[Deleted] specimens daily and [Deleted], its proposal also included a
number of weaknesses.  These weaknesses included that PharmChem*s
web-based system was [Deleted], that PharmChem*s HHS proficiency testing
reports exhibited results in the [Deleted] testing cycles that were
[Deleted],[5] and that PharmChem*s most recent HHS inspection report
showed *issues that had been previously cited in prior inspections.*[6] 
Id. at 4-5.
    
PharmChem*s good/marginal rating under past experience/past performance
reflected the evaluators* determination that PharmChem*s proposal
exhibited both strengths and weaknesses under this factor.  Specifically,
the TET found that all of PharmChem*s references were for contracts of
similar scope and that, as the incumbent contractor, the protester had
provided the identical services.  In addition, PharmChem received
excellent to high ratings from its references.  Id. at 4.  However, the
TET also noted that PharmChem had a number of performance problems under
its incumbent contract, including lost samples, false-positive test
reports, and delinquent test results, and also noted that one of
PharmChem*s identified references reported long *turnaround* times for
reporting drug testing results.  Id. at 5.
    
As the apparent successful offeror, Kroll was invited to perform an OCD,
as required by the RFP, to demonstrate that Kroll*s proposed approach
would satisfy the SOW requirements, which the firm successfully did.
    
The final consensus technical evaluation report and the firms* proposals
were provided to the contracting officer, who was the source selection
official for this procurement.  The contracting officer accepted the
report*s findings, after examining the proposals to review those sections
that related to the TET*s assessed strengths and weaknesses.  Tr. at 357,
371.  The contracting officer also had some limited discussions with one
evaluation panel member, who was a forensic scientist, to understand the
evaluations with respect to the HHS proficiency test scores and inspection
critiques.[7]  Tr. at 357-58. The contracting officer also evaluated the
firms* proposed pricing:  Kroll*s final proposed price was $34.1 million,
and PharmChem*s final proposed price was $27.9 million.  Recognizing
PharmChem*s more than $6 million price advantage, the contracting officer
concluded that Kroll*s higher-rated proposal reflected the best value to
the government.  Specifically, the contracting officer stated that
    
[t]imely and accurate drug test results are critical to ensure that the
judicial system meets its responsibility to protect the community by
identifying offenders and defendants who are using illicit drugs, and to
protect the rights of the individual offenders and defendants by detaining
or imprisoning only those whose drug tests are accurately confirmed
positive.
Agency Report, exh. 28, Pre/Post-Negotiation Memorandum and Award
Determination, at 10.  The contracting officer identified, as the
important discriminators in his award determination, *PharmChem*s
performance problems on [its incumbent] contract, which had continued for
more than two years, and the integrity of its quality control program, as
reflected in the HHS reports.*  Contracting Officer*s Statement at 16; Tr.
at 374-75, 381.  Award was made to Kroll, and this protest followed.
    
PharmChem challenges nearly all of the evaluated weaknesses in its
proposal and complains that Kroll*s proposal was unequally evaluated.  In
deciding this case, we do not resolve all of PharmChem*s objections to
weaknesses evaluated in its proposal, because the record reflects that
PharmChem*s incumbent performance and quality control problems, as
reflected in the firm*s inspection critiques and proficiency tests, were
the discriminators in the contracting officer*s cost/technical tradeoff
decision.[8]  Accordingly, in resolving PharmChem*s protest, we focus on
the weaknesses evaluated in PharmChem*s proposal, which the contracting
officer identified as technical discriminators justifying award based on a
higher-priced proposal; on PharmChem*s challenge to the evaluation of
Kroll*s technical proposal; and on the alleged strengths in PharmChem*s
proposal that PharmChem asserts were not considered in the cost/technical
tradeoff analysis.
    
PharmChem argues that the agency unreasonably concluded that PharmChem*s
proposal evidenced quality control problems and that Kroll*s proposal did
not.  In reviewing protests against allegedly improper evaluations, it is
not our role to reevaluate proposals. Rather, our Office examines the
record to determine whether the agency*s judgment was reasonable and in
accord with the RFP criteria.  Abt Assocs. Inc., B-237060.2, Feb. 26,
1990, 90-1 CPD P: 223 at 4.
    
With respect to the firms* HHS inspection critiques, the agency noted that
there were no issues cited in Kroll*s earlier inspection critique that
were later cited in that firm*s most recent critique, and this was
assessed as a proposal strength.  On the other hand, the agency found that
PharmChem*s later inspection critique identified an issue that was
previously cited in prior inspections and that this was a proposal
weakness. 
    
PharmChem argues that the agency*s evaluation of the firms* HHS inspection
critiques was irrational because the agency did not consider the
materiality of the issues cited in the inspection critiques, but only
evaluated whether the most recent inspection critique contained issues
that were previously cited.  In this regard, PharmChem argues that Kroll*s
most recent inspection critique reflects a greater number of cited
concerns than were in PharmChem*s most recent critique and that Kroll was
assessed a [Deleted] in connection with this critique, and that the
foregoing evidenced that Kroll had more quality control problems than
PharmChem.
    
The agency contends that it was reasonable to focus on whether the firms*
most recent inspection critiques identified issues that were cited in
previous inspections.  This is so, the agency argues, because its purpose
in requiring offerors to submit two HHS inspection critiques was to
evaluate the firms* *responsiveness in addressing and/or correcting
deficiencies between inspections.*  Supplemental Agency Report at 5;
Affidavit of the TET Chairperson at 2; Tr. at 89.  The agency also states
that, although the TET initially attempted to evaluate the seriousness of
assessed inspection findings in the firms* critiques, this approach was
abandoned as unworkable because the TET could not reach a consensus
judgment as to whether one issue was more serious than another.  Tr. at
88-89, 138; Agency*s Post-Hearing Comments at 4.  In this regard, the
evaluator who had significant educational and work experience with respect
to drug testing, testified that in reviewing the assessed issues in the
firms* critiques and reviewing the ensuing correspondence, the evaluation
panel could not conclude that a particular issue or issues were
significant where the issues were ultimately resolved to HHS*s
satisfaction.  Tr. at 85-86.
    
From our review of the record, we have no basis to conclude that the
agency*s evaluation of the firms* inspection critiques was unreasonable or
not in accord in the RFP criteria.  Although it is true that the TET*s
evaluation report did not assess the significance of issues identified in
the firms* respective inspection critiques, our review of the hearing
testimony, the parties* arguments, and the inspection critiques and
correspondence supports the agency*s argument that the issues identified
in Kroll*s most recent inspection critique were resolved to HHS*s
satisfaction and that these issues did not negatively reflect on Kroll*s
quality control record.  In this regard, the hearing testimony established
that the number of cited concerns alone does not demonstrate the
materiality of the quality control problems, particularly where nearly
half of the cited concerns were ultimately found not to be valid.[9] 
Tr. at 86, 134-35, 144.  Rather, we find that the agency could reasonably
conclude that the concerns assessed in Kroll*s most recent inspection
critique were not significant where HHS in its final letter to Kroll
concluded that the *information submitted by the laboratory appears to
demonstrate that corrective actions are being taken to address the issues
raised.*[10]  Kroll Technical Proposal, RTI Letter to Kroll, Feb. 14,
2003, at 605.
    
With respect to the [Deleted] against Kroll in its most recent inspection
critique, the agency states that it noted that this [Deleted] but found
that this [Deleted] did not alone indicate quality control problems. 
Agency Report, exh. 24, Final Consensus Evaluation Report, at 2; Agency*s
Post‑Hearing Comments at 7-8.  As explained at the hearing, a
[Deleted] where, based upon the inspection report, the staff time required
to review laboratory responses to the critique is [Deleted].  See
Tr. at 143; see also [Deleted].  The agency also contends that, from its
review of the correspondence following Kroll*s inspection critique, it was
clear that Kroll explained or corrected the assessed concerns, and that
the [Deleted] is only indicative of quality control problems to the extent
that the assessed issues are ultimately found to be valid.  Tr. at 143-44,
264.  Inasmuch as the agency reasonably found that the issues assessed in
Kroll*s inspection critique were not significant, it could reasonably
conclude that the [Deleted] in Kroll*s inspection critique was not
significant.
    
We also find reasonable the agency*s judgment that issues that were
identified in PharmChem*s most recent inspection critique as *previously
cited* were indicative of quality control problems.  That is, the citation
of issues that were cited in previous inspections indicates the failure of
a laboratory to correct identified procedural issues in drug testing. 
Indeed, the protester raises no objection to the agency*s assessment of
weakness and risk for *previously cited* issues or to the agency*s
determination that PharmChem*s most recent inspection critique evidenced a
previously cited issue.  Rather, PharmChem complains that firms were
treated unequally because Kroll*s inspection critiques also evidence
previously cited issues for which the agency failed to account in its
evaluation.[11]
    
The agency disputes that the firms were treated unequally, stating that
there were no issues identified in Kroll*s most recent inspection critique
that were previously cited in its earlier critique.  In this regard, we
heard significant hearing testimony explaining that issues identified in
Kroll*s prior inspection report were not identified in Kroll*s most recent
inspection report.  Tr. at 288-307, 316-26, 335-36.  Moreover, Kroll*s
most recent inspection critique did not identify any issues as having been
previously cited, unlike PharmChem*s most recent critique.  Because the
protester does not show that the agency was incorrect or that issues
identified in Kroll*s earlier, baseline inspection critique were repeated
in the later inspection critique, we have no basis to question the
agency*s judgment in this regard.[12]
    
PharmChem also complains that the firms were treated unequally under the
additional technical capability factor with respect to the quality control
weakness assessed PharmChem*s proposal as a result of its HHS proficiency
testing reports, which exhibited results in [Deleted] that were
[Deleted].[13]  In contrast, Kroll*s proposal was assessed a strength
because its proficiency test reports had [Deleted] outside the [Deleted]. 
PharmChem complains that this represents unequal treatment because Kroll
did not timely submit 3 years of proficiency test reports, as required by
the RFP, but timely submitted only 11 HHS quarterly, proficiency test
reports and was allowed to submit the final, twelfth report after the TET
had already assigned this strength to Kroll*s proposal in its final
evaluation report.
    
The agency agrees that Kroll submitted its twelfth proficiency test report
after the date of the final TET evaluation report, but states that the
evaluators reviewed and discussed the twelfth report and concluded that it
did not affect its previous evaluation.  The agency also points out in
this regard that the twelfth report was received prior to the conduct of
Kroll*s OCD and to the contracting officer*s selection decision.
    
We fail to see how PharmChem was prejudiced by the agency*s acceptance of
Kroll*s twelfth proficiency test report, which was received prior to the
contracting officer*s selection decision.  As stated by the agency, this
twelfth proficiency test report shows [Deleted], see Supplemental Agency
Report, exh. 35, Proficiency Test Report, Nov. 14, 2000, and it is thus
consistent with the evaluators* judgment; indeed, the protester does not
assert that any of the results of the proficiency testing reported in this
twelfth report demonstrates that the evaluators* final assessment was
unreasonable.  Although PharmChem complains that the agency noted in its
evaluation report that PharmChem*s had submitted only 11 HHS proficiency
test reports, the evaluation report was accurate; PharmChem had only 11
proficiency tests during the 3 year period for which proficiency tests
were requested.[14]  Contrary to PharmChem*s argument, we fail to see how
the firms were treated unequally, given that PharmChem had only 11
proficiency test reports to provide in response to the RFP.
    
PharmChem also complains that the agency failed to evaluate the 3 years of
state, local and/or private proficiency test reports that offerors
provided as required by the RFP.  See RFP S: L.3.1.  The agency responds
that, although the RFP requested that offerors submit these reports, they
were not evaluated because, unlike the HHS reports, the agency did not
know what standards were applied by the state, local, and/or private
testing entities.  The agency contends that without knowing what standards
were applicable, the agency could not fairly compare or assess the results
of these tests.  Affidavit of TET Chairperson at 2.
    
We find no basis in this record to object to the agency*s failure to
evaluate offerors* state, local, and/or private proficiency test reports. 
Although the protester argues that its state, local, and private
proficiency test reports are more favorable than those provided by Kroll
(an assertion with which the agency disagrees), PharmChem has not argued
or shown that the agency could fairly and reasonably evaluate these
reports without knowing the standards applied.  For example, in response
to the questions of the protester*s counsel at the hearing conducted by
our Office, the agency*s evaluator/forensic scientist could not identify
which proficiency test reports related to PharmChem, as opposed to other
unrelated laboratories, on the report that PharmChem provided in its
proposal for the Pennsylvania Department of Health.[15]  See Tr. at
341-43.  Given that the agency could not reasonably assess the import of
these test reports, we think it was appropriate for the agency not to
consider them in its evaluation.
    
PharmChem also challenges the contracting officer*s assessment that
PharmChem posed a greater performance risk than Kroll.  This assessment
was based upon his review of PharmChem*s performance of the incumbent
contract, as documented in a memorandum prepared by the contracting
officer for the incumbent contract to the contracting officer for this
procurement.  This memorandum reported that until March 2001 PharmChem had
been performing the contract successfully, but that, after that date (on
which PharmChem moved the location of its main testing laboratory) until
the date of the memorandum, PharmChem had serious performance problems,
including, among other things, lost specimens, delinquent test results,
and false‑positive test reports.[16]  The memorandum reported that
regularly scheduled conference calls had been and continue to be necessary
to ensure PharmChem*s timely performance.  In particular, the memorandum
noted that *[a]t this time, the outstanding performance issue remains to
be [PharmChem*s] failure to consistently meet the 3 working day
contractual requirement for reporting test specimens.*  See Agency Report,
exh. 19, PharmChem*s Incumbent Contract Performance Evaluation Memorandum,
July 24, 2003, at 4.
    
PharmChem argues that, contrary to FAR S: 15.306(d)(3), the agency
improperly failed to provide it with an opportunity to address the adverse
past performance information reported by the contracting officer for its
incumbent contract.[17]  PharmChem contends that it would have explained
its performance problems and that because its performance of the incumbent
contract had allegedly improved, it was prejudiced by the agency*s failure
to provide it with an opportunity to address this adverse performance
information.
    
The agency responds that it satisfied the requirements of FAR S:
15.306(d)(3) because it raised its concerns with PharmChem*s performance
of the incumbent contract in writing and in on-going conference calls with
PharmChem under that contract, and that PharmChem in its responses did not
alleviate the agency*s concerns.[18]  In this regard, the agency disputes
PharmChem*s protest allegations that it had improved its contract
performance.  For example, although PharmChem admits that it had a number
of false-positive test reports during the performance of the incumbent
contract, the protester alleges that it had identified and resolved the
cause of the false-positive reports.  The agency states that, in fact,
despite repeated opportunities to address this concern during contract
performance, PharmChem had not only not identified the cause of
false-positive reports, but admitted that *the actual cause [of the
false‑positive reports] has not been determined with any
certainty.*  See Supplemental Agency Report, exh. 36, Meeting Minutes,
Apr. 15, 2003, at 15.
    
PharmChem argues that having the opportunity to address the agency*s
concerns as part of its contract performance does not satisfy FAR S:
15.306(d)(3), because it was not provided with an opportunity to address
this adverse past performance information to the contracting officer for
this procurement.  At least in the context of the facts presented here, we
do not agree that FAR S: 15.306(d)(3) requires that PharmChem be provided
with another opportunity to address the agency*s concerns with its past
performance, where the record establishes that PharmChem already had an
opportunity to address this adverse past performance information with the
contracting officer who would be most knowledgeable of the contract
requirements and PharmChem*s performance under those requirements.
    
We also find that the protester has not shown that the agency*s assessment
of its past performance of the incumbent contract was unreasonable.  The
evaluation of past performance is a matter within the agency*s discretion,
which we will not find improper unless unreasonable, inconsistent with the
solicitation criteria, or undocumented.  Sonetronics, Inc.,
B‑289459.2, Mar. 18, 2002, 2002 CPD P: 48 at 3; IGIT, Inc.,
B‑275299.2, June 23, 1997, 97-2 CPD P: 7 at 5.  An agency*s past
performance evaluation may be based on a reasonable perception of
inadequate prior performance, regardless of whether the contractor
disputes the agency*s interpretation of the underlying facts, Ready
Transp., Inc., B-285283.3, B-285283.4, May 8, 2001, 2001 CPD P: 90 at 5,
and the protester*s mere disagreement with the agency*s judgment is not
sufficient to establish that the agency acted unreasonably.  Birdwell
Bros. Painting & Refinishing, B-285035, July 5, 2000, 2000 CPD P: 129 at
5.
    
Here, PharmChem admits that it had performance problems under its
incumbent contract, but contends that it improved its performance.  The
agency disagrees that PharmChem*s performance improved and notes that the
information, provided by PharmChem during the protest to demonstrate that
its performance had improved or could be explained, is not different from
what was presented to the contracting officer for the incumbent contract
and with which that contracting officer did not agree.  Based on our
review of the record and the protester*s arguments, we conclude that
PharmChem*s arguments are nothing more than mere disagreement with the
agency*s evaluation judgment, which provides us with no basis to find
unreasonable the agency*s perception of PharmChem*s incumbent contract
performance.
    
PharmChem also argues that, in performing his cost/technical tradeoff
analysis, the contracting officer for this procurement did not consider a
number of areas in PharmChem*s proposal where PharmChem allegedly offered
greater technical capability than Kroll.  Specifically, PharmChem states
that it proposed a facility with more [Deleted] than Kroll proposed, that
PharmChem*s facility [Deleted] than does Kroll*s, and that PharmChem
proposed an [Deleted] web-based tracking and reporting system and detailed
*database mirroring.*[19]
    
Based on our review, we find that PharmChem*s arguments do not provide us
with any basis to challenge the contracting officer*s cost/technical
tradeoff judgment.  With respect to PharmChem*s proposal of a facility
that [Deleted] than does Kroll*s and an [Deleted] web-based tracking and
reporting system, each of these parts of its proposal was specifically
identified as a strength in the evaluation report that was provided to the
contracting officer.  In this regard, the evaluation report specifically
reported PharmChem*s and Kroll*s current volume and capacity for specimen
testing.  Although PharmChem apparently believes that these features of
its proposal should have received greater weight in the source selection
decision, it has not shown that the contracting officer abused his
discretion in determining that PharmChem*s past performance and quality
control problems were the discriminators in comparing PharmChem*s and
Kroll*s technical merit.
    
With respect to database mirroring, the record supports the agency*s
position that both PharmChem and Kroll offered fully compliant redundant,
back-up database systems, as required by the RFP.  Although PharmChem
argues that its back-up system was [Deleted] and Kroll*s back-up system
was not, the protester does not explain why (even if that is so) its
system is superior to Kroll*s.  In this regard, the agency states that the
RFP did not provide for evaluating whether an offeror [Deleted] its
database mirroring system [Deleted] and that the agency did not ask either
offeror whether its back-up system was [Deleted].
    
With respect to PharmChem*s statement that it proposed a facility with
[Deleted] while Kroll proposed a facility with [Deleted], the agency
states that even if it is true that PharmChem offered more [Deleted] than
Kroll, this is irrelevant to the agency*s determination of technical
merit.  The agency evaluated the firms* capacity to test specimens under
the additional technical capability factor, and both were assessed
proposal strengths for their ability to process specimens.  See Agency
Report, exh. 24, Final Consensus Technical Evaluation Report, at 8, 16. 
Moreover, the agency specifically noted PharmChem*s higher capacity to
process specimens, which presumably reflects at least in part PharmChem*s
[Deleted].  Although the evaluation report and contracting officer
selection decision do not specifically mention the [Deleted] each offeror
will use in performance, the protester has not shown that its proposal to
use [Deleted] was material or that the agency*s evaluation that both
offerors* proposals warranted a strength for test capacity was
unreasonable.
    
In sum, we find the agency had a reasonable basis to select Kroll*s
higher-priced, technically superior proposal.
    
The protest is denied.
    
Anthony H. Gamboa
General Counsel
    
    

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

   [1] To ensure the validity of drug testing results, the Substance Abuse
and Mental Health Services Administration (SAMHSA), HHS, developed
mandatory scientific and technical guidelines and strict certification
standards for laboratories performing federal workplace drug testing.  See
59 Fed. Reg. 29,908 (June 9, 1994); see also
.  The
guidelines provide for periodic inspections (usually twice a year) and
proficiency (that is, quality control) testing (quarterly).
[2] PharmChem was the incumbent contractor for the performance of these
services on a nationwide basis.
[3] A superior rating under the additional technical capability factor
reflected a proposal that exceeds the mandatory requirements and *provides
significant performance improvements/capabilities in several areas that
are of enhanced value and benefit to the judiciary.*  A good rating
reflected a proposal that satisfies the mandatory requirements and
provides some additional capabilities that represented additional value
and enhancement.  A marginal rating reflected a proposal that satisfies
the mandatory requirements but provides little quantifiable additional
performance improvement/capabilities.  Agency Report, exh. 3, Evaluation
Scorebook, at 12-13.
[4] Under the past experience/past performance factor, a superior rating
reflected that all experience clearly showed that the offeror had provided
similar services in size, scope, and complexity to the required work, and
that all or nearly all of the offeror*s references provided positive
responses and rated the offeror*s quality of work as high.  A good rating
reflected that most of the offeror*s reported experience was for services
similar in size, scope, and complexity, and that the offeror received
positive responses from references, most of which rated the offeror*s
quality of work as high or all of which rated the offeror*s work as above
average.  A marginal rating reflected that the offeror*s past experience
was marginally similar to the required work, and that the offeror received
few positive comments from its references, which rated the quality of the
offeror*s work as minimally acceptable.  Agency Report, exh. 3, Evaluation
Scorebook, at 13.
[5] Laboratories are both inspected and tested to maintain their HHS
certifications.  Laboratories are sent control samples to test on a
quarterly basis, and the laboratories are judged on their proficiency and
accuracy in identifying drugs.  Hearing Transcript (Tr.) at 28, 46-47. 
PharmChem*s results for these particular proficiency tests were in
[Deleted].  Tr. at 36.  In addition to the proficiency tests, laboratories
are inspected twice a year to judge whether the laboratories* procedures
are in compliance with HHS*s mandatory guidelines.  Tr. at 28, 44-47.
[6] PharmChem*s two most recent inspection critiques consisted of a
*[Deleted] report* and a *typical maintenance inspection report.*  Tr.
at 94.  [Deleted] are conducted whenever there is reason to believe that a
laboratory*s practices [Deleted].  Affidavit of Evaluator/Forensic
Scientist P: 9.  PharmChem*s [Deleted] report was formatted differently
than its regular inspection report, which made it difficult for the TET to
use the earlier report as a baseline to determine whether issues in the
most recent inspection report had been previously cited.  However,
PharmChem*s most recent inspection critique identified an
issue--*[Deleted]*--that the critique stated *was cited in the
laboratory*s previous inspections.*  PharmChem*s Technical Proposal,
National Laboratory Certification Program Inspection Critique, at 81; see
Tr. at 94-95.
[7] This evaluator has significant educational and work experience with
respect to drug testing and, in fact, was involved in drafting the HHS
mandatory guidelines for laboratories performing workplace drug testing. 
Tr. at 25‑26.
[8] For example, PharmChem challenged the reasonableness of the
evaluators* assessed weakness that the firm*s web‑based system was
[Deleted].  The contracting officer testified, however, that, although he
noted this assessed weakness (and accepted the evaluators* judgment
regarding it), he did not view this to be an important concern and it did
not have any impact in his award selection decision.  Tr. at 373.
[9] Each inspection critique is accompanied by a cover letter, prepared by
Research Triangle Institute (RTI), the contractor who operates the
National Laboratory Certification Program for HHS.  RTI does not have to
accept all of the inspectors* identified concerns, and RTI*s cover letter
will identify the concerns that a laboratory must address within a
specified period of time.  Here, RTI*s cover letter on Kroll*s most recent
inspection critique identified only [Deleted] issues to which Kroll was
required to respond.  Kroll Technical Proposal, RTI Cover Letter to
Kroll*s 23rd Maintenance Inspection Report, Jan. 7, 2003, at 416.  In
addition to addressing the concerns identified in the cover letter, Kroll
responded to all of the concerns identified in the inspection critique. 
See Kroll Technical Proposal, Kroll Letter to RTI, Feb. 5, 2003, at
454-68.  Reviewing all of the correspondence, the evaluator/forensic
scientist testified that nearly half of the identified concerns in the
critique were not valid.  See Tr. at 86, 134-35, 144.  The remaining
concerns were not viewed as material, particularly because HHS was
satisfied with Kroll*s responses.  See Tr. at 264.  The protester has
provided no evidence that shows that the concerns found by RTI were
material.
[10] In addition, this letter identified [Deleted] issues requiring
clarification and/or correction, but stated that Kroll*s actions would be
reviewed at the next scheduled inspection.  Kroll Technical Proposal, RTI
Letter to Kroll, Feb. 14, 2003, at 606.  This also suggests that the
issues did not present pressing concerns.
[11] PharmChem also suggests that the agency adopted this evaluation
methodology of considering *previously cited* issues only after the
evaluation of initial proposals when the agency knew that PharmChem*s
inspection critique evidenced previously cited issues but Kroll*s did
not.  The record does not support PharmChem*s suggestion that this
evaluation methodology was adopted to favor Kroll.  Rather, the previously
cited issue in PharmChem*s inspection critique was identified in the
initial evaluation as a weakness.  See Agency Report, exh. 42, Evaluator*s
Initial Evaluation Scoresheets, at 46.  In addition, as noted by the
agency, Kroll*s initial proposal did not include two inspection critiques,
as required by the RFP, to allow the TET to assess whether there were
previously cited issues.
[12] PharmChem also complains that Kroll*s earlier inspection critique
identified an issue as having been previously cited and that the agency
did not assess a weakness in Kroll*s proposal.  The agency contends that
it properly did not assess a weakness for this issue because it appeared
in the earlier inspection critique, which the agency used as a *baseline*
for its evaluation, and not the most recent inspection critique.   We do
not decide this protest allegation because it was untimely raised. 
Although PharmChem knew or should have known the basis of this protest
allegation from the agency*s report, which PharmChem received on November
24, the protester first raised this complaint in its Supplemental
Comments, which were filed on December 26, more than 10 days from the date
it should have learned the basis of its complaint.  See 4 C.F.R. S:
21.2(a)(2) (2003).
[13] PharmChem does not challenge the agency*s assessment of this
weakness.
[14] PharmChem did not participate in proficiency testing in February 2002
(which presumably would have led to a twelfth report) *[Deleted].*  Agency
Report, exh. 24, Final Consensus Evaluation Report, at 4.
[15] In the Pennsylvania Department of Health report, the laboratories are
identified only by a series of numbers, and there is no identification in
the report (or in PharmChem*s proposal) as to what number or numbers
correspond to PharmChem.  PharmChem Proposal at 368-85.
[16] A false-positive test report is one where a specimen is incorrectly
identified as containing a particular drug or substance.
[17] PharmChem also complains that it was not provided with an opportunity
to address the negative comment made by one of its references regarding
long *turnaround* times for reporting drug-testing results.  Because the
contracting officer only identified PharmChem*s performance of its
incumbent contract as the reason for his determination that PharmChem
posed a significant performance risk, we do not consider this allegation.
[18] The Administrative Office of United States Courts, as an office
within the judicial branch, is not generally subject to the FAR.  See
Court Copies & Images, Inc., B‑277268, B-277268.2, Sept. 24, 1997,
97-2 CPD P: 85 at 2 n.2.  However, here the RFP provided that the agency
would conduct discussions and clarifications in accordance with the FAR. 
See RFP S: M.2.a.
[19] Database mirroring refers to the RFP requirement that the
contractor*s database, which was stated to include all testing, tracking
information, specimen information, and reports, be protected by a
separate, redundant, real-time system.  See RFP S: C.6.5.