TITLE: B-297077; B-297077.2, Haworth, Inc., November 23, 2005
BNUMBER: B-297077; B-297077.2
DATE: November 23, 2005
******************************************************
B-297077; B-297077.2, Haworth, Inc., November 23, 2005

   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: Haworth, Inc.

   File: B-297077; B-297077.2

   Date: November 23, 2005

   James J. McCullough, Esq., Deneen J. Melander, Esq., Steven A. Alerding,
   Esq., and Courtney J. Edmonds, Esq., Fried, Frank, Harris, Shriver &
   Jacobson LLP, for the protester.

   Michael A. Nemeroff, Esq., Patrick K. O'Keefe, Esq., Richard L. Larach,
   Esq., and Patrick F. Linehan, Esq., Sidley Austin Brown & Wood LLP, for
   Herman Miller, Inc., an intervenor.

   Kenneth A. Redden, Esq., Environmental Protection Agency, for the agency.

   Paul N. Wengert, Esq., and Michael R. Golden, Esq., Office of the General
   Counsel, GAO, participated in the preparation of the decision.

   DIGEST

   1. Protest is sustained where agency issued blanket purchase agreement for
   office furniture to vendor whose quotation did not comply with
   requirements of request for quotations.

   2. Protest is sustained where agency evaluation of protester's quotation
   for furniture was based on purported weakness under one evaluation
   criterion, where quotation showed that vendor actually met (or even
   exceeded) that criterion, and protester was competitively prejudiced
   because evaluation showed quotations were considered very close under the
   technical evaluation.

   DECISION

   Haworth, Inc. protests the issuance of a blanket purchase agreement (BPA)
   to Herman Miller, Inc. (HMI) by the United States Environmental Protection
   Agency (EPA) under a request for quotations (RFQ) for furniture, including
   design and installation, for the Potomac Yard Complex buildings in Crystal
   City, Virginia.[1] Protest at 1. Haworth objects that its quotation was
   misevaluated, and that the successful vendor's quotation was noncompliant
   with the terms of the RFQ.

   We sustain the protest.

   The EPA issued the RFQ on July 15, 2005 to six vendors holding contracts
   under General Services Administration (GSA) Federal Supply Service (FSS)
   schedule 71 I for office furniture. The RFQ contemplated that the EPA
   would obtain its furniture as a single "Project," consisting of "the
   design and installation of approximately one thousand five hundred twenty
   (1,520) workstations and approximately one hundred eighty (180) private
   offices, along with conference rooms and miscellaneous furniture as noted
   in the counts provided." RFQ at 1.[2] In explaining the basis for vendor
   selection the RFQ stated that "[i]n accordance with FAR [Federal
   Acquisition Regulation] 8.404(d), award will be made to the GSA Schedule
   Contractor that offers the best value to the Government." RFQ at 34.
   Haworth agrees that the RFQ contemplated selection of a single vendor.
   Supplemental Protest at 4.

   The RFQ provided that "[a]ll evaluation factors and significant
   sub-factors that will affect the contract award and their relative
   importance, other than cost and price, when combined are significantly
   more important than cost and price. All technical evaluation factors are
   essentially equal in importance." RFQ at 34. The RFQ listed four technical
   evaluation factors: product, environmental factors, past performance, and
   management approach. RFQ at 33-34. After receipt of quotations from three
   vendors, including Haworth and HMI, the agency selected HMI as the
   strongest technical submission and second lowest overall cost. Agency
   Report (AR), Tab L, Memorandum to File, at 3. Haworth was ranked second on
   the basis of its technical submission and its quotation was priced higher
   than HMI's.

   The EPA issued a BPA to HMI on August 11. AR, Tab N, BPA No. GS-28F-8049H,
   at 1. On August 16, the EPA issued a unilateral modification, appearing to
   state that the BPA was an indefinite-quantity contract.[3] AR, Tab R, Mod.
   No. GS-28F-8049H/0001, at 2.

   The EPA provided a debriefing to Haworth on August 16, after which Haworth
   filed this protest on August 19. The agency notified our Office that the
   agency had determined to proceed with performance based on the best
   interests of the government. Letter from EPA Protest Control Officer to
   GAO (Aug. 31, 2005).

   The procurement was conducted as a competition among selected FSS
   contractors, and the RFQ invoked FAR sect. 8.404(d). Under the FSS
   program, agencies are not required to conduct a competition before
   selecting a vendor that represents the best value and meets the agency's
   needs at the lowest overall cost. Federal Acquisition Regulation (FAR)
   sect. 8.404(a); Computer Prods., Inc., B-284702, May 24, 2000, 2000 CPD
   para. 95 at 4. However, where, as here, an agency handles the selection of
   a vendor for an FSS order like a competition in a negotiated procurement,
   and a protest is filed challenging the outcome of the competition, we will
   review the agency's actions to ensure that the evaluation was reasonable
   and consistent with the terms of the solicitation. Id. at 4-5. An order
   issued on the basis of a quotation that deviates from RFQ requirements is
   objectionable where other firms in the competition are prejudiced by the
   award, that is, where the other firms might have been able to meet the
   agency's needs if afforded an opportunity to compete based on the relaxed
   requirements. Armour of Am., B-237690, Mar. 19, 1990, 90-1 CPD para. 304
   at 4.

   Haworth alleges that HMI's quotation should have been evaluated as
   technically unacceptable because the quotation indicated that HMI could
   not provide furniture meeting the specifications in the RFQ. As explained
   below, we agree, because we conclude that the HMI quotation did not
   provide chairs that would stack as required by the RFQ, and did not
   provide Forest Stewardship Council (FSC)-certified wood conference
   tables.[4]

   The RFQ provided specific requirements for furniture, including the
   following for the stacking chairs to be used in break areas:

   Stacking Capability: Stacking capacity shall be eight (8) units high,
   forty-eight (48) inches nominal above finished floor, or twenty (20) units
   high, seventy-three (73) inches nominal above finished floor on dolly.

   RFQ at 53.

   In its quotation, HMI submitted a version of a multipurpose chair, which
   it calls the [deleted] chair. The commercial brochure indicated that the
   [deleted] chair was designed, among other things, for use in break areas,
   and that "[deleted]." HMI Quotation, Tab 2, HMI [deleted] Chairs Brochure.
   HMI also noted that "[deleted]." HMI Quotation, Tab 9, Specifications for
   Furniture To Be Priced, at 33.

   While the RFQ required the chairs to stack at least "eight (8) units high
   . . . above finished floor," HMI's chair could be stacked only
   "[deleted]." At the same time, while the RFQ required stacking "twenty
   (20) units high . . . on dolly," HMI's chairs could be stacked only
   "[deleted]." The information in HMI's quotation thus clearly indicated
   that that these stacking chairs did not have the required stacking
   capability required by the RFQ.

   The agency apparently concedes that HMI's chairs did not meet the
   specifications. However, the agency argues that the RFQ allowed it to find
   a quotation acceptable notwithstanding the discrepancy:

   If a discrepancy existed between Herman Miller's submission and the RFQ in
   this regard, the RFQ specifically states under Section 3.1.2i, Volume I --
   Technical Instructions that `A GSA Schedule Contractor shall be considered
   deficient if the products do not match the requirements and if the
   contractor fails to identify the discrepancies.' (Emphasis added).
   Therefore, in accordance with this language, the Agency was under no
   obligation to downgrade Herman Miller if it did in fact fail to meet the
   standard expressed in the RFQ for chair stacking capability in break areas
   since Herman Miller clearly identified this discrepancy in its submission.

   Supplemental Legal Memorandum at 8-9 (quoting RFQ at 27).

   The protester counters that it understood this provision was an invitation
   for vendors to offer "equal or better" alternatives, not that the agency
   would disregard unacceptable aspects of a quotation simply because they
   were clearly identified. Protester's Supplemental Comments at 17.

   As a threshold matter, we note that there is nothing in the
   contemporaneous record to show that the agency identified HMI's quotation
   as deviating from the RFQ requirement, or that the agency was aware that
   it was agreeing to HMI furnishing a nonconforming product. In any event,
   we do not believe the language of the quotation preparation instructions
   supports the agency's position that vendors could supply a noncompliant
   product. The language, by its terms, merely states that a schedule
   contractor's quotation is deficient if its product does not match the
   requirements and the vendor fails to identify the discrepancies. It does
   not authorize a vendor to supply a noncompliant product.

   Generally, where, as here, the solicitation contains a clause that permits
   a vendor to include in its quotation products that deviate from the
   specifications, the provision ordinarily allows a vendor to suggest
   changes that the agency could consider for possible revisions to its
   specifications, and is not a means by which an agency can freely disregard
   specifications. See, e.g., Simmonds Precision Prods., Inc., B-244559.3,
   June 23, 1993, 93-1 CPD para. 483 at 10-11 (deviations clause was means
   for agency to determine whether specific deviations met agency needs, and
   gave agency an opportunity to inform all offerors of revised
   specifications). In this case, if the agency concluded that HMI's
   deviations demonstrated that the RFQ standard exceeded the agency's
   minimum needs, the agency was required to notify all competitors.

   With respect to the use of FSC-certified wood for conference tables, the
   RFQ stated:

   Products: In Section 5, GSA Schedule Contractors will find a table listing
   the types of environmental features for each category of furniture being
   proposed for the Project. GSA Schedule Contractors shall provide the
   following submittals to document the environmental features for the
   furniture items proposed for the Project. For each product category
   described in Table 5.1, provide a table showing the following information:

   . . . .

   (b) Sustainable Harvested and Rapidly Renewable Materials: Active
   sustainable harvested wood certifications by an FSC-accredited
   certification agency and annually renewable materials used or available.

   RFQ at 26-27.

   Under the heading of "Wood Casegoods for Executive Offices and Conference
   Rooms," the RFQ also specified as follows:

   Contractors shall make available for Agency a selection of wood color
   stains and finishes in a full range of species, including ash, maple, oak,
   sycamore and walnut in plain, birdseye and burled veneers that conform
   with the requirements of Section 5.

   RFQ at 50.

   Table 5.1 of the RFQ stated, next to a red dot,[5] a requirement for
   "[w]ood components certified by an FSC-accredited certification agency"
   for the conference tables. RFQ at 38.

   HMI based its quotation and pricing on the use of non-FSC-certified wood.
   After noting the requirement, HMI's quotation stated:

   The requirement in Section 6 is for FSC certified wood and veneers. You
   have also requested that this furniture be available in a wide variety of
   wood species. FSC certified [deleted] is not available and all of the
   other species are subject to availability in the quantities required for
   this project. There is a price premium for any of these species FSC
   certified. Since the premium varies by specie[s], we have provided a
   spreadsheet, which reflects the price increase based on the specific
   specie[s] selected. Again, any selection is subject to availability at the
   time of award. There would be a [deleted] charge for using FSC certified
   veneers and their use is subject to availability in the quantities and
   within the timelines required by this RF[Q].

   HMI Quotation, Tech. Vol., Tab 9, sect. 6.4.1.i.

   In short, HMI's quotation indicated that the wood HMI planned to use was
   not FSC-certified, and HMI did not definitely commit itself to furnish
   FSC-certified wood. The pricing volume of HMI's quotation indicated that
   the prices listed were not for FSC-certified wood.[6]

   In its supplemental report responding to this protest allegation, instead
   of establishing from the evaluation record that HMI's quotation complied
   with this requirement, the agency argues that the pricing volume of
   Haworth's quotation did not contain prices for the FSC veneers, and that
   Haworth's quotation also did not meet this requirement. Supplemental Legal
   Memorandum at 3. However, the record shows that Haworth committed in its
   quotation to supplying FSC-certified wood for those types of furniture
   that the RFQ required. Haworth Quotation, Tech. Vol Tab 8, at 19-20, 32.
   Moreover, there is no indication in the contemporaneous record that the
   evaluators believed that Haworth's quotation failed to meet the
   requirement for FSC-certified wood, or was unacceptable on this (or any
   other) basis. AR, Tab K, Tech. Evaluation Report, at 2, 29.[7]

   Finally, Haworth objects that the agency improperly downgraded Haworth's
   quotation under the "environmental factors" evaluation factor because
   Haworth's quotation did not indicate that it had achieved at least one
   Leadership in Energy and Environmental Design (LEED)[8] certification. The
   RFQ stated that the agency had a preference for a vendor that "has had or
   is in the process of having at least one (1) facility LEED-certified." RFQ
   at 36. Haworth argues that, among a number of references in its quotation
   to LEED certifications received by projects, it clearly stated that one of
   its projects in 2004 had "earned LEED CI gold level certification," while
   another in 2005 had been submitted for gold certification. Haworth
   Quotation, Tech. Vol., Tab 8, at 4.[9]

   The agency concedes an error in the evaluation on this point. Legal
   Memorandum at 6. It argues, however, that Haworth was not prejudiced
   because the record shows that Haworth was also downgraded under another
   criterion, and thus was evaluated "somewhat weak in the [deleted] factor."
   AR, Tab K, Tech. Evaluation Report, at 3. The agency argues that under a
   reevaluation without the LEED certification error, the evaluators would
   have found Haworth's quotation "at best . . . essentially equal to [HMI]'s
   technical submission," and still would have selected HMI's lower-priced
   quotation. Legal Memorandum at 7.[10] The agency thus asserts that Haworth
   was not competitively prejudiced by the error.

   We note that this argument that the source selection official (SSO),
   notwithstanding the evaluation error, still would have selected HMI has no
   support in the contemporaneous record. In fact, the agency's position is
   limited to arguments from counsel, unsupported even by the SSO's very
   brief statement in this protest. In any event, our Office will accord
   little or no weight to such arguments, which have been made in the heat of
   litigation. KEI Pearson, Inc., B-294226.3, B-294226.4, Jan. 10, 2005, 2005
   CPD para. 12 at 8 n.13; Boeing Sikorsky Aircraft Support, B-277263.2,
   B-277263.3, Sept. 29, 1997, 97-2 CPD para. 91 at 15. Here, the record
   reflects that, while the technical evaluators considered HMI to be ranked
   highest, they stated that "Haworth's [quotation] was only slightly behind
   [HMI's quotation] in terms of its strengths." AR, Tab K, Tech. Evaluation
   Report, at 4. If, after correction of this evaluation error concerning the
   certification preference, Haworth's quotation were to be determined
   technically superior, this could have changed the outcome of the
   competition. RFQ at 34.[11] Particularly in light of the other errors in
   the evaluation, we conclude that Haworth was competitively prejudiced.

   We sustain the protest because the record shows that the agency
   erroneously concluded that HMI's quotation met the stated requirements and
   erroneously downgraded Haworth under the "environmental factors"
   evaluation factor.

   Based on the record, including the agency's position during this protest,
   it appears that the agency overstated its actual needs, and that either
   the agency did not consider certain requirements to be significant to its
   overall needs, or the agency would find some items that deviated from the
   requirements to be acceptable. For example, the agency now characterizes
   the stacking chair requirement as an "incidental RFQ requirement."
   Supplemental Legal Memorandum at 14.

   Where, as here, an agency determines that it is in the best interest of
   the government to proceed with performance in the face of a protest in our
   Office, and we sustain the protest, we are required by the Competition in
   Contracting Act of 1984, 31 U.S.C. sect. 3554(b)(2) (2000), to make our
   recommendation for corrective action without regard to any cost or
   disruption from terminating the contract, or recompeting or reissuing the
   solicitation. During the course of the protest, at our request, the agency
   informed our Office of the issuance of three orders, the total price of
   which is slightly less than 1 percent of [deleted].[12] The orders also
   confirm that the furniture itself has not been ordered yet. We, therefore,
   recommend that the agency place no further orders for these requirements.
   We also recommend that the agency review its needs, revise the RFQ, if
   necessary, to reflect them, and solicit new quotations to ensure that all
   firms are afforded an equal opportunity to compete based upon the same set
   of requirements. The agency should then evaluate new quotations in
   accordance with the terms of the revised solicitation, and make a new
   award decision. If the award is made to a contractor other than HMI, the
   agency should terminate HMI's contract for the convenience of the
   government. In addition, we recommend that the agency reimburse Haworth
   the reasonable costs of filing and pursuing the protest, including
   reasonable attorneys' fees. Haworth's certified claim for costs, detailing
   the time expended and the costs incurred, must be submitted to the agency
   within 60 days of receiving this decision. 4 C.F.R. sect. 21.8(f)(1)
   (2005).

   The protest is sustained.

   Anthony H. Gamboa

   General Counsel

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

   [1] We note that the RFQ apparently had no serial number, and is simply
   identified by the parties as "Furniture Procurement for One & Two Potomac
   Yard," or similar phrasing.

   [2] The agency confirms that it anticipated "that a blanket purchase
   agreement (BPA) would be awarded to the GSA Schedule Contractor that
   offered the best value." Contracting Officer's Statement at 1.

   [3] The terminology used by the parties to refer to the contracting
   actions challenged here is not consistent. The RFQ contemplated orders,
   but also stated that "[t]he Agency will award a contract to a `GSA
   Contract Holder' only." Haworth styled its protest as an objection to the
   issuance of a "delivery order" or "task order" to HMI for the entire
   requirement. Protest at 1; Supplemental Protest at 1; Protester's
   Supplemental Comments at 1. However, the record shows that, rather than
   issuing a single task or delivery order, the EPA initially executed a BPA
   with HMI. The subsequent modification added a clause stating that "[t]his
   is an indefinite-quantity contract for the supplies or services specified,
   and effective for the period stated, in the Schedule," and providing that
   "[t]he Contractor shall furnish to the Government, when and if ordered,
   the supplies or services specified in the Schedule up to and including the
   quantity designated in the Schedule as the `maximum.' The Government shall
   order at least the quantity of supplies or services designated in the
   Schedule as the `minimum.'" AR, Tab R, Mod. No. GS-28F-8049H/0001, at 2-3.
   We do not address the propriety of the procedures by which the contract
   resulted from the RFQ, since they were not challenged in the protest.

   [4] Given our recommendation below, we find it unnecessary to address
   several additional issues concerning HMI's alleged noncompliance with
   other specifications. We expect that the agency will review those issues
   in the course of implementing our recommendation.

   [5] Table 5.1 was entitled "Environmental Criteria by Furniture Item," and
   each criterion was accompanied by either a red or blue dot. The key to the
   table indicated that a red dot indicated a "Required" feature, while a
   blue dot meant that the feature was merely "Preferred." RFQ at 38.

   [6] Confirming that HMI had not priced FSC-certified wood, on the "Product
   Price Sheet--Summary" page of its pricing volume, HMI stated that "FSC
   certified woods can be provided at an additional cost and are subject to
   availability. Please see our response in Section 6.3.2." HMI Quotation,
   Pricing Vol., Tab A.2 at 1. FSC-certified wood is not mentioned in sect.
   6.3.2 of the quotation, but is discussed in sect. 6.4.1.i.

   [7] It appears that the pricing volume in Haworth's quotation showed lower
   price increases than the agency expected because Haworth applied its
   discounts to the surcharges for FSC-certified wood. Haworth Quotation,
   Pricing Vol., Tab A.4, at A-4; Protester's Supplemental Comments at 17.

   [8] According to the U.S. Green Building Council, the LEED Green Building
   Rating System is a set of certification standards providing specialized
   criteria for particular types of projects, such as commercial interiors
   ("LEED-CI"), and new construction ("LEED-NC"). Current LEED certifications
   include a "rating level" ranging from the basic "certified" through
   "silver," and "gold," to the highest rating of "platinum." U.S. Green
   Building Council, An Introduction to the U.S. Green Building Council and
   the LEED Green Building Rating System, October 2005 (visited Nov. 9, 2005)
   at 3, 27
   .

   [9] It appears that the agency preferred a vendor with a previous LEED
   certification because, as the RFQ emphasized, the terms of the leases for
   the Potomac Yard One and Two buildings require the agency to achieve at
   least LEED silver level certification. RFQ at 1, 35.

   [10] The agency acknowledges that HMI's quotation was evaluated as having
   a "minor weakness" in its [deleted]. Supplemental Legal Memorandum at 12.

   [11] We note that under the price evaluation, Haworth's evaluated price
   was within [deleted] percent of HMI's, depending on the financing terms
   selected by the agency. AR, Tab L, Source Selection Decision, at 3.

   [12] Order No. 1, issued on August 12, before the protest was filed, was
   for $111,925.00; order No. 2, issued after the protest was filed, was for
   $5,109.60; and order No. 3 was for $16,168.20, for a total of $133,202.80.