TITLE: B-295126.5; B-295126.6, Engineered Electric Company d/b/a/ DRS Fermont, December 7, 2007
BNUMBER: B-295126.5; B-295126.6
DATE: December 7, 2007
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B-295126.5; B-295126.6, Engineered Electric Company d/b/a/ DRS Fermont, December 7, 2007
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: Engineered Electric Company d/b/a/ DRS Fermont
File: B-295126.5; B-295126.6
Date: December 7, 2007
David Z. Bodenheimer, Esq., and Richard W. Arnholt, Esq., Crowell & Moring
LLP, for the protester.
David T. Ralston, Esq., Philip A. Nacke, Esq., and Frank S. Murray, Esq.,
Foley & Lardner LLP, for Onan Corporation, an intervenor.
Brian E. Toland, Esq., Michael G. Skennion, Esq. and William J. Kampo,
Esq., U.S. Army Materiel Command, for the agency.
Scott H. Riback, Esq., and John M. Melody, Esq., Office of the General
Counsel, GAO, participated in the preparation of the decision.
DIGEST
1. Allegation that agency misevaluated proposals is denied where record
supports agency's evaluation regarding merits of firms' proposals and
performance of prototypes furnished during earlier phase of acquisition.
2. Allegation that agency engaged in unequal discussions is denied where
record shows that discussions were appropriately tailored to firms'
respective proposals.
3. Allegation that agency engaged in misleading discussions is untimely
where protester was aware during discussions that agency's questions were
inconsistent with solicitation requirements, but did not raise the
assertion until more than 10 days later.
DECISION
Engineered Electric Company d/b/a DRS Fermont protests the exclusion of
its proposal from the competitive range under request for proposals (RFP)
No. W15P7T-04-R-A001, issued by the Department of the Army for various
mobile electrical generators. DRS maintains that the agency misevaluated
proposals and engaged in improper discussions.
We deny the protest.
The solicitation originally contemplated the award of up to three
indefinite-delivery, indefinite-quantity contracts to design, build and
furnish to the Army a new set of generators (variously sized and
configured, and ranging from 5 to 60 kilowatts (kW)). Performance under
the resulting contracts was to occur in three phases. During phase I, the
contractors were to develop prototype generators, complete a maintenance
demonstration, perform limited testing, and provide limited logistics
data. At the conclusion of phase I, the solicitation and resulting
contracts provided that the agency would perform a "downselect" among the
phase I contractors and issue a delivery order to one of the contractors
for performance of phases II and III. The protester and Onan Corporation
received phase I contracts, and the phase II/III downselect is the subject
of this protest.
The firms' contracts, at clause H-13, set forth the procedures and
evaluation criteria to be applied in the phase II/III downselect
competition. That clause provides that the agency will award the phase II
and III work to the contractor submitting the proposal deemed to offer the
"best value" to the government, considering cost/price and the following
non-cost/price factors (in descending order of importance): technical
(with subfactors for key operational performance parameters--reliability,
schedule, other key operational performance parameters, specific design
characteristics, and design concept); integrated logistics support (ILS)
(with subfactors for number of parts per generator family, other
supportability analysis, logistics support, and maintenance planning); and
small business participation plan. In order to receive consideration for
award, a proposal had to be rated no less than acceptable for every factor
and subfactor.
When performance of phase I was sufficiently complete, the agency
solicited proposals from DRS and Onan. After evaluating those proposals,
the agency established a competitive range comprised of only Onan's
proposal, and DRS filed a protest with our Office complaining that its
proposal improperly had been excluded from the competitive range. In
response, the agency advised that it would include DRS's proposal in the
competitive range; we therefore dismissed DRS's protest. (B-295126.2,
B-295126.3, Aug. 26, 2006). Thereafter, the agency issued a solicitation
amendment that relaxed the specifications relating to the generators' fuel
efficiency standards. DRS filed a protest objecting to the revised
specifications. We denied that protest, finding that the relaxed
specifications were unobjectionable and enhanced competition. See
Engineered Elec. Co. d/b/a/ DRS Fermont, B-295126.4, June 14, 2007, 2007
CPD para. 111.
The agency then engaged in discussions with both firms, and evaluated the
revised proposals as follows:
+------------------------------------------------------------------------------+
| Factor | Subfactor | Onan | DRS |
|------------------+----------------------------------+-----------+------------|
| Technical | | Good |Unacceptable|
|------------------+----------------------------------+-----------+------------|
| | Key Operational Performance |Outstanding| Acceptable |
| | Paramaters--Reliability | | |
|------------------+----------------------------------+-----------+------------|
| | Schedule |Outstanding|Unacceptable|
|------------------+----------------------------------+-----------+------------|
| | Other Key Performance Parameters |Acceptable | Acceptable |
|------------------+----------------------------------+-----------+------------|
| | Specific Design Characteristics | Good | Acceptable |
|------------------+----------------------------------+-----------+------------|
| | Design Concept | Good | Acceptable |
|------------------+----------------------------------+-----------+------------|
| ILS | | Good | Good |
|------------------+----------------------------------+-----------+------------|
| | Number of Parts Per Generator | Good | Good |
| | Family | | |
|------------------+----------------------------------+-----------+------------|
| | Other Supportability Analysis | Good | Good |
|------------------+----------------------------------+-----------+------------|
| | Logistics Support |Outstanding| Good |
|------------------+----------------------------------+-----------+------------|
| | Maintenance Planning | Good | Acceptable |
|------------------+----------------------------------+-----------+------------|
| Cost/Price | |$88,146,211|$88,487,822 |
|------------------+----------------------------------+-----------+------------|
| Small Business | |Acceptable | Acceptable |
|Participation Plan| | | |
+------------------------------------------------------------------------------+
Agency Report (AR), exhs. 63, 64, at 2. On the basis of these evaluation
results, the agency established a revised competitive range comprised of
only Onan's proposal, and advised the protester that its proposal would
not be further considered. After receiving a debriefing, DRS filed the
current protest.
DRS has raised numerous assertions, principally relating to the agency's
technical evaluation and the adequacy of discussions. We have reviewed all
of DRS's assertions and find them to be either without merit or not
properly for our consideration. We discuss DRS's more significant
arguments below.
TECHNICAL EVALUATION
DRS challenges the agency's technical evaluation and, in particular, the
agency's conclusion that its proposal was technically unacceptable under
the schedule subfactor of the technical factor. The central focus of DRS's
numerous evaluation arguments is that the agency essentially applied a
more stringent standard in evaluating DRS's proposal than it applied in
evaluating Onan's. DRS maintains, for example, that its proposal was
downgraded for offering a schedule that had overlapping testing and design
activities, but that Onan's was not downgraded, even though Onan will have
to conduct testing and design activities as well, and even though it did
not propose a definitized schedule for those activities.
In reviewing protests concerning the propriety of an agency's evaluation,
it is not our role to reevaluate proposals; rather, we will examine the
record to determine whether the agency's evaluation conclusions were
reasonable and consistent with the terms of the solicitation, as well as
applicable procurement laws and regulations. L-3 Commc'n. Corp., BT Fuze
Prods. Div., B-299227, B-299227.2, Mar. 14, 2007, 2007 CPD para.83 at 6.
There is no basis for objecting to the evaluation here. The record shows
that there was a significant difference in the firms' success during phase
I, and that this had a direct impact on both the proposal submission
process and the firms' respective strategies for meeting the requirements
of phase II.
With respect to Onan, the record shows that their generator sets are based
on a relatively mature design concept, that the firm submitted detailed
information relating to the predicted reliability of their generator sets,
and that their generator sets performed successfully during the
overwhelming majority of the required testing, with results that were
consistent with the firm's reliability predictions. In this regard, the
firms were required to calculate reliability predictions for their
generator sets on the basis of the components included in the generators,
and those estimates had to be greater than 750 hours mean time between
effective function failure (MTBEFF). Onan's calculations showed estimates
that exceeded the 750 hour MTBEFF requirement for all generator sets. AR,
exh. 58, at 2. Onan's generator sets then performed during actual testing
in a manner consistent with the reliability predictions; each of Onan's
generator sets completed 800 hours of reliability maturation testing
without major system or component failures; any failures were related to
peripheral subsystems or components, such as muffler brackets and fuel
level sensors. Id. Onan's generator sets also exhibited no degradation in
performance when subjected to an array of electrical performance tests
before and after the reliability maturation testing.
Further, Onan's generator sets met the overwhelming majority of other
performance criteria outlined in the specifications, including overall
generator set dimensions, environmental operation at extremes, noise
suppression, transportability, maintainability, and winterization, with
only minor deficiencies (for example, one generator set did not meet the
specifications for noise suppression and two did not meet the weight
requirements). AR, exh. 58, at 8-9, 11-14. Where the generator sets did
not meet the specifications, Onan presented the agency with a detailed
corrective action plan to address those matters. Id. Finally, Onan
presented a workable, linear schedule that included phase I retesting to
the limited extent that that would be required, a period devoted to
resolving any deficiencies through redesign efforts, and a feasible
interval for fabrication of the phase II pre-production models, without
any overlap in activities that might jeopardize the overall schedule. AR,
exh. 58, at 5-7.
In contrast, the record shows that the generator set prototypes built by
DRS during phase I were beset with difficulties, apparently due to DRS's
design concept, which would have required significant design modifications
to address significant phase I test failures. AR, exh. 53, at 25-26. In
particular, the record shows that, like Onan, DRS presented the agency
with calculations showing predicted reliability estimates that exceeded
the 750 hour MTBEFF requirement for all generator sets. However, during
testing, three of DRS's five generator sets failed to meet the
specification's reliability maturation testing requirements and
experienced six catastrophic failures of major system components or
subsystems. Id. at 2-3. Notably, DRS's 15, 30 and 60 kW generator sets
experienced alternator failures, and its 30 and 60 kW generator sets also
experienced inverter failures prior to completing 400 hours of the 800
hour reliability maturation test. Id. As a consequence, while DRS was able
to demonstrate the electrical performance of its smaller generator sets
(the 5 and 10 kW sets), before and after performance of the reliability
maturation testing, it was unable to demonstrate the electrical
performance of the three larger generator sets that had experienced
catastrophic failure. Id. Because of these failures, the agency concluded
that DRS's design was not as mature after completion of phase I as it
should be and, accordingly, that this would require the government to
assume the risk that the DRS generator sets would not be able to meet the
reliability maturation test requirement during phase II. Id.
The record also shows that the DRS generator sets failed a host of other
testing requirements. For example, DRS did not provide complete data on
the power quality at full set load rating for two of DRS's generator sets
(the 5 and 10 kW sets), and all of DRS's generator sets failed to comply
with the specifications for power quality requirements relating to voltage
and frequency performance in the areas of voltage waveform, deviation,
harmonics and voltage transients at rated load and at low power factor
load. AR, exh. 53, at 10-17. DRS proposed a corrective action plan to
address these failures, but the plan involved reliance on a simulation of
actual generator set performance for each generator set size, followed by
validation through retesting. The agency therefore found that:
The [o]fferor's approach is based entirely on a simulation process that
the [o]fferor is still developing; none of the [p]hase I testing was
acceptable and must be re-conducted in [p]hase II. This requires that
the [g]overnment assume the very high performance risk based on the
[o]fferor's results of post-[p]hase I simulation rather than on [p]hase
I test data.
AR, exh. 53, at 15. Ultimately, in assessing the feasibility of DRS's
proposed phase II approach, the agency concluded:
The SOW [statement of work] requires that the [o]fferor confirm the
design approach and supply the [g]overnment with test data at the end of
[p]hase I, allowing the [g]overnment to assess [the] maturity of the
design prior to initiating [p]hase II of the program. Essentially, the
[o]fferor is in the process of confirming design approaches, then
assembling the hardware to conduct [p]hase I testing. This requires that
the [g]overnment assume the risk of [p]hase II performance based upon
limited electrical testing of the 60 kW prototype, leveraged onto the
remaining sets . . . that have not been modified or tested. This
approach represents initiation of a [p]hase I design, not a mature
design that is capable of a [p]hase II pre-production effort
AR, exh. 53, at 16.[1] In short, the agency concluded that, because of the
numerous failures of the DRS generator sets during phase I, the firm would
have to significantly reengineer its generator sets to make them compliant
with the specifications, and then essentially perform the phase I testing
regimen for a second time.
In its protest, DRS has largely ignored the agency's findings; DRS has not
argued or otherwise demonstrated that the agency's evaluation conclusions
with respect to the performance of its phase I prototype generator sets
were incorrect or unreasonable, and the record clearly supports these
conclusions.
The agency evaluated DRS's proposed phase II schedule in light of these
phase I failures. The agency assigned DRS's proposed schedule an
unacceptable rating because it appeared unrealistic in light of the
significant redesign and retesting requirements (essentially phase I
activities), as well as all phase II activities, that would need to be
performed within the time constraint of the phase II performance period.
For example, the agency found:
The [o]fferor's proposed [p]hase II schedule calls for completing four
distinct activities in parallel in order to deliver the required 130
pre-production generator sets 11 months after contract award. These
activities include: modification of inverter and governor control
software; retest of [p]hase I testing at the [o]fferor's facility and at
Aberdeen Test Center (ATC); completion of technical drawing packages;
and design, fabrication and burn-in testing of 130 pre-production
generator sets. The [o]fferor's approach shows that the design and
component purchases of [p]hase II generator sets is approximately 50
[percent] complete prior to completing [p]hase I retest activities. For
example, exhaust system components for [p]hase II generator sets are
ordered and received prior to completing [p]hase I retest of noise
performance. This approach presents the possibility that [p]hase II
generator sets will not capture performance modifications necessary to
comply with [p]hase I testing, or at a minimum, disrupt the [p]hase II
schedule. The proposed schedule shows the development of drawings being
completed prior to completion of [p]hase I retesting and after the start
of the [p]hase II design and test phase of the program. The [o]fferor
also proposes conducting environmental and rail impact tests at ATC on
[p]hase I generator sets before they are upgraded with [p]hase II
modifications.
AR, exh. 53 at 5. Given the agency's unrefuted findings relating to the
major failures of DRS's prototype generators during phase I, as well as
the necessity for repeating many phase I activities, the agency's
reservations about DRS's proposed phase II schedule--in particular, the
resulting risk to the agency--were reasonable. In the final analysis,
rather than demonstrating (as DRS contends) that the agency applied
different standards in its evaluation of the two proposals, the record, in
fact, shows that there was a wide disparity in the success of the firms'
designs during phase I, and that the agency reasonably took this into
account in its evaluation. We conclude that the agency reasonably assigned
DRS's proposal an unacceptable rating under this subfactor.[2]
DISCUSSIONS
DRS maintains that the agency engaged in unequal discussions,
specifically, that it was given more exacting questions and was required
to provide far more detail in its responses than Onan. In effect, DRS is
arguing that it was given a greater level of detail in its discussions
than was given to Onan. We fail to see how providing more detailed
discussions to DRS was improper or prejudicial to DRS. Discussions need
not be identical; rather, discussions are to be tailored to each offeror's
proposal. Federal Acquisition Regulation sect. 15.306(d)(1), (e)(1);
PharmChem, Inc., B-291725.3 et al., July 22, 2003, 2003 CPD para. 148 at
6. We find no impropriety here.
DRS also asserts that its discussions were misleading. As noted, the
agency relaxed the solicitation's requirements relating to the fuel
efficiency standards for the generator sets. The agency advised both
offerors of its intention to relax the specifications, and requested
comments relating to the revisions, by e-mail dated October 18, 2006. AR,
exh. 30. DRS commented by letter dated October 23, stating that, in its
view, the changes were unnecessary because it could meet the original,
more stringent, standards. AR, exh. 31. Notwithstanding DRS's position,
the agency revised the specifications on November 1. AR, exh. 32.
Thereafter, by letter of November 2, DRS requested that the Army engage in
discussions relating to the deficiencies identified in its original phase
II and III proposal. In response, the agency provided DRS with two rounds
of discussion questions, first by letter dated November 3, and
subsequently by letter dated January 16, 2007. In both letters, the agency
provided DRS with detailed questions that had been developed by the
evaluators after their review of DRS's initial proposal, including
questions relating to DRS's ability to meet the original, more stringent,
fuel efficiency standards.
DRS maintains that these discussions were misleading because they required
it to address the original, more stringent, fuel efficiency standards. DRS
claims that it was prejudiced by the agency's actions because addressing
the original standards required it to divert resources it could have used
to address the relaxed standards. [3]
Under our Bid Protest Regulations, protesters are required to file within
10 days of when they know or should know of their basis for protest. 4
C.F.R. sect. 21.2(a)(2) (2007). Here, as noted, the agency advised DRS of
its intention to relax the specifications in October, and amended the
specification in early November. On November 3, the agency provided DRS
with the first round of discussion questions, which specifically required
DRS to demonstrate its compliance with the original fuel efficiency
standards. Upon receipt of these questions, DRS had all of the information
necessary to assert that the discussions were misleading; DRS was fully
aware that the questions related to the original standards rather than to
the relaxed standards in the amended specifications. This being the case,
this allegation of misleading discussions had to be raised within 10 days
after November 3. Since DRS did not file its protest until well after that
time, this aspect of the protest is untimely and will not be
considered.[4]
The protest is denied.
Gary L. Kepplinger
General Counsel
------------------------
[1] The record shows that four of DRS's generator sets (the 5, 10, 30 and
60 kW sets) also did not meet the specification requirements for noise.
AR, exh. 53, at 17-23.
[2] DRS also asserts that the agency improperly made a cost realism
adjustment in its evaluated cost. Since we conclude that the agency
reasonably found the firm's proposal technically unacceptable, and firms
were required to achieve a technical rating of at least acceptable under
all of the evaluation factors and subfactors in order to be considered for
award under phase II, DRS's proposal was unacceptable regardless of cost.
We thus need not consider this argument.
[3] We note that the record appears to show that the agency discussed the
earlier, more stringent fuel efficiency standards because of DRS's
insistence, in its November 2 letter, that the agency afford it an
opportunity to respond to the deficiencies identified in its initial phase
II and III proposal and provide it an opportunity, essentially, to
demonstrate its ability to meet the earlier, more stringent fuel
efficiency standard. DRS wrote to the agency:
DRS Fermont is also concerned that the Purchase Description was revised
following discussions with its competitor. DRS Fermont believes that had
the government conducted discussions with DRS so that DRS Fermont would
have had an opportunity to clarify and explain certain aspects of its
proposal, it is possible that different decisions could have been made
regarding the Purchase Description. However, as the government has now
changed the Purchase Description based only on discussions with DRS'
competitor, DRS Fermont is concerned that the changes to the PD may
result in advantage to its competitor.
AR, exh. 33, at 2.
[4] One aspect of DRS's misleading discussions argument is timely. DRS
alleges that the agency misled it regarding its proposed sequence of
testing during discussions. The record shows, however, that this aspect of
DRS's proposed testing sequence was not central to the agency's criticism
of DRS's schedule. Rather, as discussed, the agency's central concern was
that DRS was proposing to progress to phase II with generator set
configurations that had not passed major phase I testing requirements. AR,
exh. 53, at 6. Thus, even if we agreed with DRS that discussions were
misleading in this regard, it would have no effect on the decision to
exclude DRS from further consideration because its schedule was
unacceptable.