TITLE:  Tenderfoot Sock Company, Inc., B-293088.2, July 30, 2004
BNUMBER:  B-293088.2
DATE:  July 30, 2004
**********************************************************************
   Decision

   A 

   A 

   Matter of:   Tenderfoot Sock Company, Inc.

   A 

   File:            B-293088.2

   A 

   Date:              July 30, 2004

   A 

   Bernadine M. Solwey for the protester.

   Maura C. Brown, Esq., Department of Veterans Affairs, and John W. Klein,
Esq., and Kenneth Dodds, Esq., Small Business Administration, for the
agencies.

   Paul E. Jordan, Esq., and John M. Melody, Esq., Office of the General
Counsel, GAO, participated in the preparation of the decision.

   DIGEST

   A 

   Protest that agency improperly failed to award contract to protester after
Small Business Administration (SBA) issued Certificate of Competency (COC)
for protester, is denied where agency prematurely--i.e., before selecting
protester*s proposal for award--referred protester*s responsibility to SBA
for COC review, and record shows that subsequent decision to make award to
another offeror was based on price/technical tradeoff that reasonably
concluded that protester*s higher-technically-rated proposal did not
justify award at its significantly higher price.

   DECISION

   A 

   Tenderfoot Sock Company, Inc. protests the award of a contract to Southern
Hosiery Mills, Inc. under request for proposals (RFP) No. 797-NC-03-0024,
issued by the Department of Veterans Affairs (VA) for diabetic socks.
Tenderfoot asserts that it should have received the award, since the Small
Business Administration (SBA) issued it a Certificate of Competency (COC).

   A 

   We deny the protest.

   A 

   The RFP, issued as a small business set-aside, contemplated the award of a
fixeda**price requirements contract for a base year, with four 1-year
options, for diabetic socks.  Offerors were required to submit product
samples that were to be evaluated by experts in treating VA*s elderly
diabetic population and other patients at risk of limb-threatening foot
problems.  The evaluation was to consist of an initial determination of
whether the offered items met the minimum requirements and, for those
found acceptable, an evaluation under three factors--technical, price and
quality/past performance (in descending order of importance).  Award was
to be made, without discussions, to the offeror whose proposal would be
most advantageous to the government, that is, on a *best value* basis. 

   A 

   The agency received proposals from 32 offerors, including Tenderfoot and
Southern.  The technical evaluation panel (TEP), which included two
doctors of podiatry and a chief of prosthetics trained as an orthotist,
evaluated each proposed sock.  Agency Report (AR) at 3.  The TEP rejected
a significant number of socks in the initial evaluation and then evaluated
those remaining.  The final evaluation for Tenderfoot and Southern was as
follows:

   A 

   +------------------------------------------------------------------------+
|A                         |Tenderfoot               |Southern           |
|--------------------------+-------------------------+-------------------|
|Technical                 |Very Good                |Acceptable         |
|--------------------------+-------------------------+-------------------|
|Price                     |$3,782,400               |$1,572,000         |
|--------------------------+-------------------------+-------------------|
|Past Performance          |Highly Acceptable        |Acceptable         |
+------------------------------------------------------------------------+

   A 

   The contracting specialist initially considered Tenderfoot and other
offerors for the award based on their technical ratings.  Prior to making
an award determination, however, since the contracting specialist was
unable to make a financial responsibility determination as to Tenderfoot,
she obtained additional information from Tenderfoot and then referred the
matter to SBA for a COC review.  At the same time she made the referral,
another offeror, Apex Foot Health Industries, filed a protest with our
Office challenging the rejection of its offered socks.  The procurement
was suspended until issuance of our decision denying Apex*s protest.  See
Apex Foot Health Indus., Ba**293088, Jan. 23, 2004, 2004 CPD PA 30. 

   A 

   During this delay, SBA completed its review and issued a COC to
Tenderfoot.  After Apex*s protest was denied and the procurement resumed,
the contracting specialist reviewed the TEP*s evaluations of Tenderfoot*s
and Southern*s socks and found no quality differences between them
sufficient to justify Tenderfoot*s significantly higher price.  She then
conducted a tradeoff analysis between Southern and each of the other
offerors, concluded that Southern represented the best value, and
recommended that it receive the award.  The contracting officer agreed
with the recommendation and awarded Southern the contract.  This protest
followed.  

   Tenderfoot asserts that VA had determined that Tenderfoot was in line for
the award, as evidenced by its referral of the firm*s responsibility to
SBA for a COC review, which occurs only where the agency has identified
the offeror otherwise in line for award, but has found the firm
nonresponsible.  In the protester*s view, once SBA issued it a COC, the
agency could not then change its award decision--it was required to award
Tenderfoot the contract. 

   A 

   Under the FAR, a contracting officer must make an affirmative
determination of an offeror*s responsibility before making award to it. 
FAR SA 9.103(b).  Where a small business concern*s offer would otherwise
be accepted for award, but the firm is determined to be nonresponsible,
the contracting officer must refer the matter to SBA, which will determine
whether the firm is responsible and, if so, issue a COC.  FAR
SA 9.104-3(d).  Where SBA issues a COC, agencies are to make award to the
concern, without requiring it to meet any other responsibility or
eligibility requirement.  15 U.S.C. SA 637(b)(7)(C) (2000); FAR
SA 19.602-4.

   A 

   The award to Southern was unobjectionable.  The FAR requirement that
agencies make award to a concern where SBA issues a COC presumes that the
COC referral will occur after the concern has been determined to be
otherwise in line for the award.  FAR SA 9.104-3(d).  The record in this
case shows that, at the time of the referral, the contracting specialist
had not yet determined that Tenderfoot was in line for the award; she had
determined only that Tenderfoot was one of several firms that could
receive the award.  Contracting Officer*s Statement atA 1.  Nevertheless,
apparently not fully understanding the COC process, and having questions
about Tenderfoot*s financial capability, the contracting specialist
(prematurely) submitted the matter to SBA for a COC review.  AR at 3. 
Although SBA acted on the referral and issued a COC to Tenderfoot, VA was
not required to make award to Tenderfoot at that juncture, since it had
not yet determined that Tenderfoot was otherwise in line for the award. 
The agency could not deny Tenderfoot the award based on matters of
responsibility, but nothing prohibited it from selecting another offeror
for award based on a price/technical tradeoff in accordance with the RFP*s
evaluation scheme.  See The Gerard Co., Ba**274051, Nov. 8, 1996, 96a**2
CPD PA 177 at 3 (agency properly obtained best and final offers--due to
issuance of amendment--after COC was issued to protester). [3]

   A 

   Tenderfoot asserts that the award determination was flawed because
Southern*s offered sock is of a lower quality than Tenderfoot*s. 

   A 

   Agency officials have broad discretion in determining the manner and
extent to which they will make use of technical and price evaluation
results.  Price/technical tradeoffs may be made; the extent to which one
may be sacrificed for the other is governed by the test of rationality and
consistency with the established evaluation factors.  Randolph Eng*g
Sunglasses, Ba**280270, Aug. 10, 1998, 98-2 CPD PA 39 at 5. 

   A 

   The award determination was reasonable.  Upon reviewing the technical
ratings and prices of the proposals, the contracting specialist noted that
Tenderfoot*s proposed sock was rated as very good and that the firm*s past
performance was rated as highly acceptable, while Southern*s proposal was
rated as acceptable under both technical factors.  However, she also noted
that Tenderfoot*s price was some 141 percent higher than Southern*s. 
Seeing no apparent quality differences sufficient to justify this price
difference, she consulted with the diabetic sock working group to obtain
its input.  Their consensus was that there were no strengths associated
with the protester*s sock that would justify paying its substantially
higher price.  Contracting Officer*s Statement at 2.  Finding that
Tenderfoot*s price was excessive for a slightly better product, the
contract specialist concluded that Southern*s proposal represented the
best value to the government.  While Tenderfoot disagrees with the award
determination, the tradeoff was reasonable and was in no way inconsistent
with the terms of the RFP. [4]

   A 

   Tenderfoot asserts that the agency should have provided it with
discussions regarding its sock and its high price.  However, a contracting
agency generally is not obligated to conduct discussions where, as here,
the RFP specifically instructs offerors of the agency*s intent to award a
contract on the basis of initial proposals.  ACC Constr. Co., Inc.
B-288934, Nov. 21, 2001, 2001 CPD P 190 at 3.  Based on this notice,
Tenderfoot knew that it might not have an opportunity to revise its
proposal prior to award, and it therefore was incumbent upon Tenderfoot to
submit an initial proposal containing its best terms and pricing. 
Tenderfoot made a business judgment in choosing to propose as it did, and
the agency was not obligated to open discussions to permit the firm to
change its approach. 

   A 

   The protest is denied.

   A 

   Anthony H. Gamboa

   General Counsel

   A 

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

   [1] The solicitation defined a diabetic sock as *hosiery specifically
designed to reduce pressure or friction to the foot.  They should be
devoid of large seams or creases that could impart clinically significant
pressure to an insensitive foot and should be loose fitting proximally, as
not to restrict circulation.*  RFP at 4.

   [2] A COC is a written instrument issued by SBA to a contracting officer
certifying that a small business concern possesses the responsibility to
perform a particular contract.  Federal Acquisition Regulation (FAR)
SA 19.601; 13 C.F.R. SA 125.5(a). 

   [3] SBA*s view--furnished at our request--is consistent with our
conclusion.  SBA Report, June 16, 2004, at 3-4.

   [4] Tenderfoot asserts that, in finding its price unreasonably high, the
agency *in effect determined that [the firm] was not sufficiently
financially responsible to sell its product at a reasonable price.* 
Comments at 5.  This argument is without merit.  While the agency termed
Tenderfoot*s price excessive, its award decision turned on the
price/technical tradeoff contemplated by the best-value evaluation
scheme--the agency determined that the quality of Tenderfoot*s sock was
insufficient to justify paying its higher proposed price.  This
determination had nothing to do with Tenderfoot*s capability to perform,
that is, its responsibility.