TITLE:  Gracon Corporation, B-293009; B-293009.2; B-293009.3, January 14, 2004
BNUMBER:  B-293009; B-293009.2; B-293009.3
DATE:  January 14, 2004
**********************************************************************
Gracon Corporation, B-293009; B-293009.2; B-293009.3, January 14, 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:   Gracon Corporation
    
File:            B-293009; B-293009.2; B-293009.3
    
Date:           January 14, 2004
    
Daniel M. Gross, Esq., Oviatt, Clark & Gross, for the protester.
John E. Jensen, Esq., Devon E. Hewitt, Esq., and Daniel S. Herzfeld, Esq.,
Shaw Pittman, for All Cities Enterprises, an intervenor.
Lt. Col. Daniel Poling, Department of the Army, for the agency.
Mary G. Curcio, Esq., and John M. Melody, Esq., Office of the General
Counsel, GAO, participated in the preparation of the decision.
DIGEST
    
1.  Agency was not required to hold discussions regarding areas of
protester*s proposal that were weak, but acceptable, and that did not
prevent the protester from having a reasonable opportunity for award.
    
2.  Agency properly utilized adjectival rating system to provide guidance
to source selection authority (SSA) in evaluating proposals; since record
shows that SSA was aware of the relative merits of the proposals when
making his *best value* determination, there is no basis to question the
evaluation.
    
3.  Procuring agency reasonably determined, based on explanation of
pricing methodology in awardee*s proposal, that awardee*s low fixed price
did not indicate a failure to understand the requirements of the
solicitation.
DECISION
    

   Gracon Corporation protests the award of a contract to All Cities
Enterprises (ACE) under request for proposals (RFP) No. DAKF19-02-R-0003,
issued by the Department of the Army for a contractor to perform real
property maintenance/repair and minor construction projects at Fort Riley,
Kansas and nearby areas. Gracon challenges the award on several grounds.
    

   We deny the protest.
    
The solicitation, for a job order contract (JOC) for a 1-year base period,
with nine 1‑year option periods, provided for a *best value* award
based on an evaluation under three factors--quality (with subfactors for
management control plan, quality control plan, work execution, and
experience), past performance, and price.  Quality was more important than
past performance, and quality and past performance combined were
significantly more important than price.  Written proposals consisted of
slides that would be used in an oral presentation, and a packet containing
past performance information for the past 3 years.  With respect to price
(price proposals were submitted only by offerors included in the
competitive range), offerors were required to propose a coefficient (a
percentage factor required to cover all contractor costs) for each of 18
line items.  The coefficient was based on the Unit Price Book (UPB),
published by the U.S. Army Corps of Engineers, which contains prices for
various types of work that can be ordered under the contract.  Agency
Report (AR) at 3.[1]
    
Following submission of initial proposals (the oral presentations and past
performance packets), which were evaluated by a source selection
evaluation board (SSEB) and assigned adjectival ratings for the quality
and past performance factors,[2]  four offerors, including Gracon and ACE,
were included in the competitive range and invited to submit price
proposals.  The Army held price discussions and requested revised price
proposals.  ACE offered the lowest price coefficient (between 1.02 and
1.05) and its proposal was rated green under the quality and past
performance factors.  Gracon submitted the next lowest coefficient (1.144
to 1.411), and its proposal was rated green under the quality factor and
yellow under the past performance factor.  The source selection authority
(SSA) concluded from these results that ACE*s proposal represented the
best value, and thus made award to ACE. 
    
Gracon challenges the award decision on several grounds.  We have reviewed
all of Gracon*s arguments and find them to be without merit.  We discuss
Gracon*s principal arguments below.
    
DISCUSSIONS
    
Gracon asserts that the contracting officer identified seven significant
proposal weaknesses or deficiencies during Gracon*s debriefing that were
not raised with Gracon during the discussions process, and that this
evidences an improper failure by the agency to provide it with meaningful
discussions.
    
Although discussions must address at least deficiencies and significant
weaknesses identified in proposals, the scope and extent of discussions
are largely matters of the contracting officer*s judgment.  An agency is
not required to afford offerors all‑encompassing discussions, or to
discuss every aspect of a proposal that receives less than the maximum
score, and is not required to advise an offeror of a minor weakness that
is not considered significant, even where the weakness subsequently
becomes a determinative factor in choosing between two closely ranked
proposals.  We review the discussions provided only to determine whether
the agency pointed out weaknesses that, unless corrected, would prevent an
offeror from having a reasonable chance for award.  Northrop Grumman Info.
Tech., Inc., B-290080 et al., June 10, 2002, 2002 CPD P: 136 at 6.
    
Discussions here were adequate.  While the seven weaknesses in Gracon*s
proposal were identified--after award--as significant weaknesses or
deficiencies, the agency reports, and the record confirms, that, prior to
award, these weaknesses in fact were not significant, but were merely
areas where Gracon*s proposal could have been improved.  AR
at 22‑25.  In this regard, the Army explains that, after the
debriefing, Gracon submitted a list of questions to the agency, the first
of which asked that any *significant* proposal weaknesses or deficiencies
be identified.  In responding with a list of weaknesses, the contracting
officer restated the question--including the term *significant*--making it
appear that the weaknesses were considered significant. 
AR at 22.  The record supports the contracting officer*s explanation that
the weaknesses were not considered significant; the evaluation documents
show that,
of the seven weaknesses, three are noted as areas where the proposal met
the requirements, and four are listed only as weaknesses, not as
significant weaknesses.  AR at 23.  Moreover, Gracon*s proposal was not
rated deficient based on these weaknesses; rather, it was rated green
(high quality) under each quality subfactor and under the quality factor
overall.  Consensus Evaluation.  We conclude that the weaknesses were not
significant in the sense that they prevented Gracon from having a
reasonable chance for award, and that they therefore did not have to be
raised in discussions.  See Development Alternatives, Inc., B-279920, Aug.
6, 1998,
98-2 CPD P: 54 at 7.[3]
ADJECTIVAL RATING SCHEME
    
Gracon argues that the color-coded adjectival rating system used by the
Army--blue, green, yellow, pink or red--resulted in an unreasonable
evaluation because the rating categories were too broad to allow the
agency to meaningfully evaluate quality differences between its and ACE*s
proposals.  However, there is nothing improper in an agency*s using an
adjectival rating system in a best-value procurement to provide the SSA
with guidance in judging the relative merits of the proposals.  See
generally Harris Corp.; PRC Inc., B‑247440.5, B-247440.6, Aug. 13,
1992, 92-2 CPD P: 171 at 8.  The key consideration is whether the
evaluation record reflects knowledge of the proposals* relative merits,
and provides reasonable support for the agency*s conclusion as to which
proposal provides the best value.  See Astro Pak Corp., B‑256345,
June 6, 1994, 94-1 CPD P: 352 at 4.  Here, the SSA was aware of the
differences in the merits of the Gracon and ACE proposals under the
various factors and subfactors, as reflected in the price negotiation
memorandum.  Under these circumstances, the fact that he ultimately agreed
with the adjectival ratings developed by the SSEB for the two proposals
does not provide a basis for questioning the evaluation.
    
EVALUATORS* DISAGREEMENT
    
Gracon challenges the evaluation on the basis that certain of the
evaluators filed minority reports that did not agree with the consensus
evaluation.  However, disparate scoring among evaluators, by itself, does
not establish an improper evaluation, General Sec. Servs. Corp., B-280388,
B-280388.2, Sept. 25, 1998, 99‑1 CPD P: 49 at 6, as it is not
unusual for individual evaluators to have different judgments
that may lead to reasonable differences of opinion.  Unisys Corp.,
B‑232634, Jan. 25, 1989, 89-1 CPD P: 75 at 6.  This argument thus
does not provide a basis for questioning the award decision.
    
UNREALISTIC PRICE
    
The solicitation provided that an unrealistic coefficient would be equated
with a failure to understand the requirements of the solicitation.  RFP at
153.  Gracon maintains that ACE*s coefficient for line item AE (the Army
estimated that approximately 89 percent of the contract work would be
performed under this line item)--[DELETED], versus 1.144 for
Gracon--should have been found unrealistically low, and that the agency
therefore should have concluded that ACE did not understand the RFP
requirements.
    
Price realism is not ordinarily a consideration in fixed-price contracts,
since the risk of performing the contract at the proposed price is borne
by the contractor.  However, as was the case here, an agency may decide to
use price realism in the competition for a fixed‑price contract, not
to evaluate price, but to assess the risk of poor performance in an
offeror*s approach or to measure an offeror*s understanding of the
solicitation*s technical requirements.  PHP Healthcare Corp., B-251933,
May 13, 1993, 93-1 CPD P: 381 at 5.  The nature and extent of an agency*s
price realism analysis are matters within the agency*s discretion, and our
review of an agency*s price realism evaluation is limited to determining
whether it was reasonable and consistent with the solicitation*s
evaluation criteria.  Uniband, Inc., B-289305, Feb. 8, 2002, 2002 CPD P:
51 at 4. 

   The realism analysis was reasonable.  Gracon*s protest is primarily based
on the fact that the analyst who evaluated ACE*s price expressed concern
that a coefficient based on discounting the UPB by [DELETED] might be
unrealistic.  Protester*s Comments, Dec. 16, 2003, at 4-5.  However, the
contracting officer determined that this was not a concern, given the
pricing methodology ACE detailed in its proposal.  AR at 30; Supplemental
AR at 14-15.  In this regard, ACE*s proposal included a detailed
explanation of its pricing methodology, along with schedules and
spreadsheets showing various cost estimates and data concerning overhead
and other expenses.  In further support of its pricing, ACE (1) noted that
its 12 years of experience with JOC and similar contracts allowed it to
use comprehensive modeling projections to determine the required staffing
level; (2) explained that it compared the UPB to other JOC/Saber contracts
that it managed to determine the true value of the UPB; and (3) noted that
it had surveyed area subcontractors for actual prices to compare to the
line items in the UPB.  Based on this information, the contracting officer
discounted the price analyst*s concern, and determined that ACE*s low
coefficient did not indicate a lack of understanding of the requirement. 
Gracon has not established, and we therefore find no basis to conclude,
that this determination was unreasonable. 
ORAL PRESENTATION
    
The solicitation limited the presenters attending the oral presentation to
current employees of the offeror.  Gracon asserts that ACE should have
been found ineligible for the award because certain individuals who
presented for ACE allegedly were not ACE employees.  Gracon asserts that
this is not a minor informality because the obvious purpose of the
requirement was to ensure that it was the offeror*s own capabilities that
were being presented. 
    
This argument is without merit.  The Army states, and the record shows,
that all of the individuals who conducted the oral presentation for ACE
represented that they were ACE employees on the sign-in sheet. 
Specifically, they signed in as the president, director of
operations/teaming partner, head of business development, and corporate
project manager for ACE.  AR at 33-35; Supplemental AR at 18-19.  Although
Gracon disputes that any of the individuals (except the president) are ACE
employees--it claims that they own, operate, or work for other
companies--the agency had no reason to question the individuals*
representations.  The agency also notes that the fact that the individuals
were associated with other companies would not establish that they were
not also employed by ACE for purposes of this contract.  In this regard,
after the protest was filed, the agency obtained business cards from two
of the individuals, which indicated that they were ACE employees.  In any
case, notwithstanding Gracon*s assertion that a violation of this
requirement would not be a minor informality, Gracon has not shown, and
there is no reason to believe, that it was competitively prejudiced, that
is, that it would have had a greater chance of receiving the award had it
been aware that the agency would waive this requirement.  See West Coast
Unlimited, supra.[4]
    
Gracon also complains that, during the oral presentation, ACE referred to
the contract being performed by the ACE/Sanders team, but did not identify
or fully disclose its arrangement with Sanders in its proposal package or
during its oral presentation.  This basis of protest is without merit.  In
its oral presentation slides, ACE specifically noted that Sanders was the
prime subcontractor to ACE for this procurement.  While Gracon asserts
that the Army was required to investigate the nature of the relationship,
and determine if Sanders was in fact a subcontractor to ACE, Gracon has
pointed to no information that should have indicated to the agency that
such an investigation was necessary.  There thus was no requirement that
the agency further examine ACE*s arrangement with Sanders.[5]
    
ACE*S EXPERIENCE/PAST PERFORMANCE
    
With respect to experience and past performance, the solicitation required
offerors to list projects they had performed during the past 3 years, and
to submit past performance questionnaires to references for those
contracts.  Gracon asserts that ACE failed to list all contracts that it
performed during the past 3 years; Gracon specifically cites three Bureau
of Prisons (BOP) projects that it claims ACE omitted.
    
While the record supports Gracon*s claim that ACE failed to list all
contracts under the experience portion of its proposal, we find that this
discrepancy was immaterial.  The Army states that, with respect to
experience, during the oral presentation ACE listed five JOC/Saber
contracts that it had performed with the Army and the Air Force, and
discussed a composite of the task orders it performed under those
contracts.  With respect to past performance, ACE submitted questionnaires
for the five contracts it discussed during the oral presentation, and for
seven additional JOC/Saber contracts.  Thus, while ACE did not list all of
the JOC/Saber contracts in the experience portion of its proposal, the
Army was aware of them from the past performance submissions.  Further,
while ACE did not list the BOP contracts, the Army has obtained (in the
course of the protest) ACE*s performance evaluations for those contracts,
and notes that ACE was rated satisfactory for one of the contracts and
outstanding for the other two.  This being the case, there is no basis to
conclude that ACE*s omission of those contracts had any effect on the
award decision.
    
The protest is denied.
    
Anthony H. Gamboa
General Counsel
    
    
    

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

   [1] The prices in the UPB are based on direct costs (labor, material and
equipment), but do not include indirect costs or profit.  If an offeror
proposed a coefficient of 1, it would be proposing to perform for the same
price as the UPB.  A coefficient less than or greater than 1 reflected an
offer to perform for a corresponding percentage less than or greater than
the price in the UPB. 
[2] The ratings for the quality and past performance factors were as
follows:  blue (excellent, no doubt of success); green (high quality,
little doubt of success); yellow (adequate quality, some doubt of
success); pink (overall quality cannot be determined, substantial doubt of
success); red (unacceptable, extreme doubt of success); and white (neutral
for no past performance).
[3] Gracon also argues that the agency improperly failed to provide it
with an opportunity to address negative past performance information in
the form of marginal ratings assigned by references to its performance
under prior contracts.  Gracon was rated yellow for past performance based
on these marginal ratings, and suggests that it was entitled to a green
rating instead.  We will not sustain a protest unless the protester
demonstrates that it was prejudiced by the agency*s improper actions;
that, but for the agency*s actions, it would have had a substantial chance
of receiving the award.  West Coast Unlimited, B-281070.2, Aug. 18, 1999,
99-2 CPD P: 40 at 4.  Here, because two evaluators believed that Gracon
should have received a consensus rating of green for past performance, the
contracting officer specifically considered (in her best value
determination) the effect of assigning Gracon a green rating.  She
concluded that the higher rating would not change the outcome because ACE
then would have the same green rating as Gracon for the past performance
and quality factors, but a lower price.  PNM at 18.  Accordingly, even
assuming, arguendo, that discussions in this area were required, Gracon
was not prejudiced by the agency*s failure to provide them.
    
[4] In comments submitted on November 24 in response to the agency report,
Gracon raised a number of new protest grounds, including challenges to the
agency*s evaluation of its and ACE*s proposals under the past performance
and quality factors, and the best value determination.  These arguments
are based on documents contained in the agency report that Gracon received
on November 11 and thus, to be timely, had to be raised no later than 10
days later, that is, by November 21.  Since Gracon did not raise these
arguments until November 24, they are untimely and will not be
considered.  4 C.F.R. S: 21.2(a)(2) (2003).
[5] In a supplemental protest (B-293009.2), Gracon argued that ACE
misrepresented who would perform the contract, as well as its
capabilities.  The agency responded to these issues in its report, and
Gracon did not reply to the agency*s response in its comments.  Instead,
Gracon filed a second supplemental protest (B-293009.3), in which it
raised its arguments regarding ACE*s arrangement with Sanders, addressed
above.  As Gracon did not rebut the Army*s response to its first
supplemental protest, we consider those issues abandoned.  O. Ames Co.,
B-283943, Jan. 27, 2000, 2000 CPD P: 20 at 7.