TITLE:  Scot, Inc., B-295569; B-295569.2, March 10, 2005
BNUMBER:  B-295569; B-295569.2
DATE:  March 10, 2005
**********************************************************************
   Decision

   Matter of:   Scot, Inc.

   File:            B-295569; B-295569.2

   Date:              March 10, 2005

   Brian W. Craver, Esq., Person & Craver, for the protester.

   Frederick W. Claybrook, Jr., Esq., and Amy E. Laderberg, Esq., Crowell &
Moring, for Gentex Corporation, an intervenor.

   Lenore K. Strakowsky, Esq., Department of the Navy, for the agency.

   Sharon L. Larkin, Esq., and James A. Spangenberg, Esq., Office of the
General Counsel, GAO, participated in the preparation of the decision.

   DIGEST

   1.  Protest that agency did not give sufficient weight to protester's
superior warranty in selecting low-priced proposal for award based on a
cost/technical tradeoff is denied, where agency reasonably determined in
accordance with the solicitation that the warranty was not worth a price
premium. 2.  Agency reasonably considered awardee's past performance to be
relevant, even though it was on lower-priced contracts than protester's
relevant contracts, where solicitation did not state that contract value
was a consideration in determining relevance. 3.  Protest that awardee's
price is unbalanced is denied, where the agency reasonably considered the
risk to the government associated with the offerors' different pricing
strategies, and properly determined that the government would pay less
under the awardee's pricing approach than with the protester's and that
the cost risk entailed in the awardee's approach was acceptable. 4. 
Agency did not err in accepting expired offer for award without reopening
negotiations where, despite the protester's assertion that it can now
offer a lower price, the acceptance of the expired offer did not prejudice
the competitive system or provide the awardee with an unfair competitive
advantage.

   DECISION

   Scot, Inc. protests the award of a contract to Gentex Corporation under
request for proposals (RFP) No. N68335-03-R-0141, issued by the Department
of the Navy for oxygen mask, regulator, helmet, and communications test
sets.  Scot challenges the evaluation of proposals and the acceptance of
Gentex's expired offer.

   We deny the protest.

   The RFP provided for award of an indefinite-delivery/indefinite-quantity
(ID/IQ) contract for a minimum quantity of 1 test set and a maximum
quantity of 251 test sets to be purchased over a 5-year period, with a
maximum quantity of 50 test sets to be purchased in any calendar year. 
Each test set consisted of a portable oxygen regulator, mask, helmet, and
communications test set that was to be capable of testing all
personnel-mounted aviator's breathing oxygen regulators, masks, helmets,
and communications in the Navy inventory.  The contractor selected for
award was to provide 1 first article test unit to the Navy for testing
within 120 days of award, with 10A production units to follow within
90A days of first article approval, and the remaining production units to
be delivered within 6 months of first article approval as specified in
delivery orders; training was also to be provided within 90 days of first
article approval. 

   The RFP contained a number of provisions relating to the acquisition of
commercial items.  For example, offerors were required to "provide a
narrative, discussing in detail the warranty service [to be provided] . .
. includ[ing] length of warranty service and any other relevant
information as specified in the solicitation," RFP attach. 3, Instructions
to Offerors, at 4, and submit any standard warranty normally offered in a
similar commercial sale.  RFP at 39.  Each offeror was also required to
"hold the prices in its offer firm for 30 calendar days from the date
specified for receipt of offers, unless another time period is specified
in an addendum to the solicitation."  RFP at 17.  The firms were further
instructed to provide the history of the proposed test unit (i.e., how
long the item had been designed, modified, or produced in the current
configuration, and the quantity produced) as part of its "commercial item
description."  RFP attach. 3, Instructions to Offerors, at 3.

   The RFP provided for award on a "best value" basis considering (in
descending order of importance) technical, past performance, and price. 
The technical factor consisted of the technical approach, logistics, and
management subfactors.  The technical approach and logistics subfactors
were equally weighted, and combined were more important than the
management subfactor.  Each of these technical subfactors had
sub-subfactors listed in descending order of importance.  The logistics
subfactor had five sub-subfactors; of relevance to this protest, the
fourth listed one was the warranty plan.  The past performance
subfactors--quality of product and processes, customer satisfaction, and
timeliness--were stated to be of equal importance.  RFP attach. 3,
Evaluation Factors for Award, at 7-8. 

   Under the past performance factor, the RFP stated that the government
would evaluate the offerors' past performance under existing or prior
government (federal, state, and local) and private contracts that were
"relevant (similar in nature)" to the effort here.  Customer satisfaction
(the second of the past performance subfactors) required consideration of
the "[s]atisfaction of end users with the Contractor's service/product." 
Id. at 10.

   With regard to price, the RFP specified that the offerors' total proposed
price for the first article test unit, training and data, and production
units would be considered.  InA this regard, the agency advised as
follows:

   The average price per unit for all five years will be calculated from the
proposed step-ladder pricing[1] and multiplied by a quantity of fifty
(50).  The calculated amount will then be added to the proposed prices for
all the other line items listed in Schedule B.

   Agency Report (AR), Tabs 17 and 18, Letters from Navy to Offerors (Aug. 5,
2004).  The RFP advised that the agency might reject unbalanced offers,
stating that an "offer is materially unbalanced when it is based on prices
significantly understated for some items and overstated in relation to the
price for other items."  RFP attach. 3, Evaluation Factors for Award, at
10-11. 

   Two offerors, Scot and Gentex, submitted proposals based on modified
designs of commercial items available in their current product lines.  The
technical evaluation team (TET) evaluated proposals and initially rated
Scot's proposal as marginal with medium risk and Gentex's proposal as
satisfactory with low risk under the technical factor.  Scot's lower
ratings were primarily due to a [redacted] weakness under the technical
approach subfactor and a [redacted] weakness in the logistics subfactor. 
Both weaknesses, the TET found, would cause inefficiencies within the Navy
context of operations.  Gentex's proposal, on the other hand, was
determined to be satisfactory and low risk because it met the requirements
of the solicitation and any weaknesses found were minor in nature.  AR,
Tab 23, TET Final Evaluation Summary, at 3, 8; TabA 24, Source Selection
Evaluation Board (SSEB) Memorandum, at 2.

   After holding discussions and evaluating final proposal revisions, the TET
upgraded Scot's proposal's technical ratings to satisfactory and low risk,
finding that the firm adequately addressed the agency's concerns and made
improvements to its proposal in the technical approach and logistics
areas.  In fact, Scot improved its proposal such that it received highly
satisfactory ratings under the two most heavily weighted sub-subfactors
under the technical approach subfactor--system performance and
test/evaluation--as well as under the fourth listed warranty plan
sub-subfactor under the logistics subfactor.  Gentex also improved its
proposal rating and was considered highly satisfactory under the third
most important sub-subfactor of the technical approach
subfactor--reliability/maintainability--but otherwise its proposal ratings
under the technical subfactors and its overall technical rating remained
the same.  The TET reported these findings to the SSEB, indicating that
Scot's proposal was technically superior to Gentex's, and the SSEB
concurred with the TET's evaluation ratings.  AR, Tab 23, TET Final
Evaluation Summary, at 4-5, 9; Tab 24, SSEB Memorandum, at 2-3.  The
detailed ratings of the firms' proposals under each of the evaluation
factors and subfactors as follows: 

   +------------------------------------------------------------------------+
|                    |             |A          ||Past Performance|Low|Low|
|--------------------+-------------+-----------+-------------------------|
|A |Quality of       |Low          |Low        |                         |
|  |Product &        |             |           |                         |
|  |Processes        |Low          |Low        |                         |
|  |                 |             |           |                         |
|  |Customer         |Low          |Low        |                         |
|  |Satisfaction     |             |           |                         |
|  |                 |             |           |                         |
|  |Timeliness       |             |           |                         |
|--------------------+-------------+-----------|                         |
|Price               |$1,023,404.52|$936,749.00|                         |
+------------------------------------------------------------------------+

   AR, Tab 24, SSEB Memorandum, at 1, 3.

   For past performance, Scot provided two references from the Air Force,
both of which were from the same individual, relating to Scot's "CAST
tester," which is a product that the agency determined to be similar to
the test set proposed here.  The value of these contracts was
approximately $2.4 and $2.5 million.  In its report to the SSEB, the TET
noted that Scot's Air Force reference was "pleased" with the quality of
the equipment delivered, and that customer satisfaction was "excellent." 
AR, TabA 12, TET Initial Evaluation Summary, at 10.  The Air Force
customer rated Scot's performance as outstanding or highly satisfactory in
each evaluated area. 

   Gentex identified five references, three of which provided past
performance evaluations for contracts valued at less than $300,000.  Two
of the responding references were retailers/distributors, and one was an
aerospace company that used the product.  These references provided
feedback concerning existing product lines that the agency found formed
the bases for Gentex's test set proposed here, such that the agency
considered this contract performance to be relevant and similar in nature
to the required effort.  The references rated Gentex's performance as
outstanding or highly satisfactory in almost all evaluated areas (the only
exception was that one reference rated Gentex's performance as only
satisfactory under the timeliness subfactor), and all were "highly
complimentary" about Gentex's performance.  AR, Tab 12, TET Initial
Evaluation Summary, at 16.

   Based on these references, both the TET and SSEB determined that both
offerors were deserving of a low risk rating for past performance.  

   With regard to price, the SSEB noted that Scot's proposal was 8 percent
higher than Gentex's.  As the SSEB found, Scot [redacted]; whereas Gentex
[redacted].  The total evaluated price for both offerors was as follows:

   +------------------------------------------------------------------------+
|                    |Training/Data     |$[redacted]     |$[redacted]    |
|--------------------+------------------+----------------+---------------|
|Production Units    |$[redacted]       |$[redacted]     |               |
|--------------------+------------------+----------------|               |
|Total               |$1,023,404.52     |$936,749.00     |               |
+------------------------------------------------------------------------+

   AR, Tab 24, SSEB Memorandum, at 3.  The SSEB recognized that the
government would experience [redacted].  Based on the agency's estimate
that a total of 50A production units would be ordered, it was determined
that Gentex's proposal was lower overall in price by $86,655.52.  Id.

   The SSEB then placed a value on the benefit to the agency from certain
items in Scot's proposal that led to its higher ratings to determine
whether Scot's proposal was worth the higher price.  For example, the
agency quantified the benefit associated with [redacted] and a [redacted]
warranty plan instead of Scot's standard commercial [redacted]-month
warranty.  Specifically with regard to the warranty, the agency determined
that this feature provided no added value because "although extended
warranties typically carry a monetary value in the commercial market, the
[program here] does not benefit from warranties because equipment is
normally stored in a staging facility beyond the warranty period."  Id. at
5.  However, the remaining items were found to be worth a total of
$17,833, which reduced the evaluated price differential from $86,655.52 to
$68,822.52.  Id. at 4-5. 

   The SSEB thus determined that the benefits of Scot's proposed additional
technical features were "not of a significant enough value to the
Government to be worth the higher price and therefore, would not justify
award to Scot, the higher priced offeror."  Id. at 5.  The SSEB
recommended to the source selection authority (SSA) that Gentex be
selected for award, and the SSA concurred.  After receiving notice of the
award to Gentex, Scot filed an agency level protest that was denied, and
then Scot timely protested the denial of its protest to our Office.     

   Scot challenges the agency's evaluation of proposals and selection of
Gentex for award, contending that the agency misevaluated Scot's warranty
plan, Gentex's past performance, and Gentex's price.[2]  InA reviewing an
agency's evaluation, our Office will not reevaluate proposals, but will
examine the record to ensure that the evaluation was reasonable and
consistent with the stated evaluation criteria and applicable statutes and
regulations.  U.S. Facilities, Inc., B-293029, B-293029.2, Jan.A 16, 2004,
2004 CPD P 17 at 6. 

   Scot first contends that the agency unreasonably placed a "zero" value on
Scot's proposed warranty during the best-value analysis, since this
negated the importance of the warranty plan technical sub-subfactor.  The
record shows that the agency favorably recognized Scot's extended warranty
and in fact rated the firm's proposal highly satisfactory under the
warranty plan sub-subfactor as a result.  The record also shows, however,
that while this feature was considered to be a technical strength, the
agency found that it provided a "negligible" monetary benefit to the
government because the equipment would be stored beyond the warranty
period so that the government would not be able to take advantage of the
extended warranty.[3]  Thus, in performing its best-value comparison, the
agency concluded that Scot's extended warranty did not provide sufficient
value to the government to justify paying a higher cost.  Although Scott
apparently believes that its warranty is worth a higher value to the
government, it has not shown that the agency's evaluation was unreasonable
or inconsistent with the RFP's evaluation scheme, given the agency's
explanation and the relatively little weight in the overall evaluation of
this fourth most important sub-subfactor of the logistics subfactor of the
technical factor. 

   Scot also challenges the agency's evaluation of past performance.  It
contends that Gentex's proposal should have received a higher risk past
performance rating than Scot's because Gentex's prior contracts were
smaller in dollar value and two of its references were from
retailers/distributors who were not "end users" of the Gentex product.

   The evaluation of past performance, including the agency's determination
of the relevance and scope of the offeror's performance history to be
considered, is a matter of agency discretion, which we will not find
improper unless unreasonable or inconsistent with the solicitation
criteria.  Acepex Mgmt. Corp., B-283080 et al., Oct.A 4, 1999, 99-2 CPD P
77 atA 3. 

   While it is true that the value of Gentex's referenced contracts was less
than $300,000A each and that Scot's were over $2 million each, the agency
found that the experience of both offerors was relevant because it related
to supplying commercial items that formed the bases of their product
designs here.  AR, Tab 12, TET Initial Evaluation Summary, at 10, 16. 
Based on our review of the record, we find the agency's evaluation was
reasonable and consistent with the evaluation criteria, which announced
that the agency would consider contracts that were "similar in nature" to
the effort here without indicating that the value of the contracts was a
consideration. 

   We also find that the agency properly considered the positive references
from the retailers/distributors that sold Gentex products.  Although the
customer satisfaction subfactor required consideration of the
"satisfaction of end users with the contractor's service/product," neither
this subfactor nor any other past performance criteria stated that only
end users could report on the experience.  Since the retailer/distributor
references had knowledge of "end user" satisfaction, the agency could
properly consider it here. 

   Thus, we find no basis to conclude that the agency's evaluation of
Gentex's past performance was unreasonable or inconsistent with the RFP. 

   Scot next challenges the price evaluation.  It contends that Gentex's
price is unbalanced because it [redacted].  It contends that the Navy
failed to consider the risks to the government associated with this
unbalanced pricing. 

   Unbalanced pricing exists when, despite an acceptable total evaluated
price, the price of one or more contract line items is significantly
overstated, while others are understated.  Federal Acquisition Regulation
(FAR) SA 15.404-1(g)(1); Citywide Managing Servs. of Port Washington,
Inc., B-281287.12, B-281287.13, Nov. 15, 2000, 2001 CPD P 6 at 7.  While
unbalanced pricing may increase risk to the government, contrary to the
protester's argument, agencies are not required to reject an offer solely
because it is unbalanced.  Rather, where an unbalanced offer is received,
the contracting agency is required to consider the risks to the government
associated with the unbalanced pricing in making the award decision,
including the risk that the unbalancing will result in unreasonably high
prices for contract performance.  FAR SA 15.404-1(g)(2); Semont Travel,
Inc., B-291179, Nov.A 20,A 2002, 2002 CPD P 200 at 3; Citywide Managing
Servs. of Port Washington, Inc., supra. 

   As noted above, the offerors employed significantly different pricing
approaches.  InA this regard, [redacted].  Although there is a wide
variance between the offerors' line-item pricing, the record does not
establish that either offeror's approach results in unreasonably high or
low line-item pricing, and the agency denies that either pricing approach
is unbalanced.

   Even if we were to find that Gentex's prices were unbalanced, however, the
record here confirms that the agency considered the risks to the
government from the offerors' different pricing strategies.  The agency
found that under the Gentex approach, the costs would be [redacted], but
that the government would likely pay less overall for contract performance
because [redacted].  Based on the agency's estimate that 50 production
units would be procured,[4] the agency calculated that Gentex's overall
price was lower than Scot's and closer to the government estimate.[5]  AR,
Tab 26, Post-Negotiation Business Clearance Memorandum, at 8-12.  As more
[redacted] are purchased, the cost savings to the government from
selecting Gentex over Scot becomes even greater.  Under these
circumstances, we find that the agency considered the risks to the
government and reasonably concluded that Gentex's proposal reflected the
lowest cost to the government, that its acceptance would not result in
payment of unreasonably high prices for contract performance, and that the
cost risk of this award was acceptable.  FAR SA 15.404-1(g)(2).

   Scot also argues that the award to Gentex was improper because Gentex's
offer, which according to the RFP was to remain open for 30 days, had
expired 10 days prior to award.  Scot contends that since its offer had
also expired, the agency must resolicit proposals.  It asserts that due to
ongoing "manufacturing process redesign efforts," it would have been able
to submit a lower price had it known that the award, and thus the
performance period, would be delayed.  Declaration of Scot's Director of
Life Support Programs, Feb. 2, 2005, PP 3-4.

   It is not improper for an agency to accept an expired offer without
reopening negotiations where acceptance is not prejudicial to the
competitive system.  Krug Life Scis., Inc., B-258669.2, Feb. 22, 1995,
95-1 CPD P 111 at 4; The Fletcher Constr. Co., Ltd., B-248977, Oct. 15,
1992, 92-2 CPD P 246 at 6.  Even where, as here, the acceptance period has
expired on all offers, an agency may allow the successful offeror to waive
the expiration of its proposal acceptance period without reopening
negotiations and make award on the basis of the offer as submitted.  The
Fletcher Constr. Co., Ltd., supra.  Here, although the acceptance of
Gentex's expired offer permitted Gentex to waive the expiration of the
offer, because no changes were made to Gentex's proposal, this waiver did
not prejudice the competitive system or provide Gentex with an unfair
competitive advantage.  Although Scot asserts that it can now provide a
lower price to the agency, the agency was not required to reopen the
competition when proposals expired to allow the offerors to revise their

   proposals.  See BioGenesis Pac., Inc., B-283738, Dec. 14, 1999, 99-2 CPD P
109 at 6 (agency not required to consider protester's revised proposal
submitted after proposals expired but could make award based on unchanged
expired proposals).

   The protest is denied.

   Anthony H. Gamboa

   General Counsel

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

   [1] The "step-ladder" pricing pertained to production units.  Each offeror
was to provide unit pricing for quantity ranges of 1-10, 11-20, 21-30,
31-40, and 41-50.  RFP, Schedule B. 

   [2] In addition, Scot generally contends that the agency failed to follow
the stated evaluation criteria in performing its best-value determination
and in evaluating the technical subfactors of technical manual and supply
support plan, but provides no arguments on these issues in its comments
after the agency addressed the protest allegations in its agency report. 
Instead, Scot asserts in its comments that it "cannot demonstrate an abuse
of discretion solely from the written agency record."  Protester's
Comments at 12.  Given this concession, we need not address these issues
further, but note from our review of the record that the agency's
evaluation in these areas appears reasonable. 

   [3] To the extent that Scot argues that the agency should have disclosed
that the units would be stored, we do not find that Scot was misled in
this regard.

   [4] Scot contends for the first time in its comments that the agency's
estimate that 50A production units would be ordered is inaccurate. 
However, this protest ground is untimely.  Scot was informed during
discussions that the agency's price calculations under the price
evaluation would be based on its estimate that 50 production units would
be procured, and thus should have protested this, if viewed as a
solicitation defect, by the time set for receipt of final proposals.  See
4 C.F.R. SA 21.2(a)(1) (2004).  In any event, the record establishes the
reasonableness of the agency's estimate.  For example, internal Navy
e-mails estimate that a "total of [redacted]" units would be ordered by
the Navy, and this number could be even higher since, as acknowledged by
the protester, other agencies may order from this ID/IQ contract as well. 
Supp. AR, TabA 1, Internal Navy E-mails, at 1; Protest at 5.

   [5] Scot's price was found to be, on average, 42 percent above the
government estimate, while Gentex's price was, on average, 28 percent
below the government estimate.  AR, Tab 26, Post-Negotiation Business
Clearance Memorandum, at 12.