TITLE: B-297660; B-297660.2, Novex Enterprises, March 6, 2006
BNUMBER: B-297660; B-297660.2
DATE: March 6, 2006
******************************************************
B-297660; B-297660.2, Novex Enterprises, March 6, 2006

   Decision

   Matter of: Novex Enterprises

   File: B-297660; B-297660.2

   Date: March 6, 2006

   Vahe Penbe for the protester.

   Michael L. Walters, Esq., and Edward C. Hintz, Esq., Defense Logistics
   Agency, for the agency.

   Charles W. Morrow, Esq., and James A. Spangenberg, Esq., Office of the
   General Counsel, GAO, participated in the preparation of the decision.

   DIGEST

   Agency unreasonably selected higher-priced proposal based on the fact that
   its initial delivery was somewhat earlier than the protester's, where the
   awardee's overall delivery schedule was noncompliant with the delivery
   schedule established in the solicitation and significantly less
   advantageous than the protester's compliant delivery schedule, and the
   agency apparently did not consider this in making the award selection.

   DECISION

   Novex Enterprises protests the award of a contract to Badger Truck Center,
   Inc. under request for proposals (RFP) No. SP0750-06-R-3979, issued by the
   Defense Logistics Agency (DLA), Defense Supply Center, Columbus, Ohio, for
   steel side rings. Novex objects to the award on the basis that Badger's
   proposal was at a higher price and offered a less favorable delivery
   schedule than Novex's.

   We sustain the protest.

   This RFP, issued on September 23, 2005, solicited fixed-price proposals to
   satisfy an "urgent" DLA requirement for 15,887 military, steel, side rings
   National Stock Number (NSN) 2530-00-738-9061. The RFP included the
   following note:

   This is an urgent requirement. Please quote your best possible price and
   delivery. Phased delivery is acceptable if delivery can be improved. There
   are backorders on this NSN and earlier shipments of smaller quantities,
   phased out longer may be accepted without discussions. The required
   delivery . . . is for the FAT [first article test] test part in 45 days,
   up to 3000 each in 165 days and 3000 every 30 days thereafter until
   complete with FAT required. If FAT is waived, the required delivery is up
   to 3000 each in 90 days and 3000 every 30 days thereafter until complete.
   An improved delivery will be appreciated even if it is for smaller
   shipments.

   RFP at 2. The RFP also stated that the 45 days for FAT as well as the
   initial delivery of 165 days were both measured from date of award. RFP at
   11.

   The RFP provided for award on a best-value basis based on a comparative
   assessment of the following evaluation factors, listed in descending order
   of importance: price, proposed delivery, past performance, socioeconomic
   support, and Javits-Wagner-O'Day Act (JWOD) Program. Regarding proposed
   delivery, the RFP explained that the "[o]fferors will be evaluated based
   on their offered delivery as compared to the government's required
   delivery" and that "[p]reference may be given for offered deliveries that
   are shorter than the required delivery." Regarding past performance, the
   evaluation included considering the offeror's "automated best value
   system" (ABVS) score,[1] and any other information related to the
   offeror's past performance. RFP at 20d.

   Six offerors, including Novex and Badger, responded to the RFP by the
   October 14 closing date. Novex proposed a unit price of $38.50, for a
   total price of $611,649.50, and alternative delivery schedules: one for
   the required delivery schedule identified in the RFP where there was no
   waiver of FAT, and the other, if there was waiver of FAT, for 3,000 units
   in 120 days and 3,000 units every 30 days until contract completion.
   Badger based its price solely on waiver of FAT with a unit price of $39.11
   for a total price of $621,340.57, with delivery of the initial 3,000 units
   in 150 days and delivery of the remainder at a rate of 1,800 units every
   30 days until contract completion.

   The agency's evaluation of the proposals is documented solely in a
   "Prenegotiation and Price Memorandum," which includes a comparative
   assessment of the proposals based on the price, delivery, and past
   performance evaluation factors. This document indicated that Badger's past
   performance was superior to the other offerors based on its higher ABVS
   score; no other past performance discriminators were identified.[2] The
   document focuses on the facts that "delivery time is critical" because
   there was very little stock on hand and that Badger was the only offeror
   for which FAT was waived, so that the initial delivery will be made in 150
   days (instead of the required 165 days). This document states that for
   those offerors, such as Novex, where FAT was not waived, "all required FAT
   approval . . . adds a minimum of 75 days (45 days for FAT submission plus
   30 days for government approval) before the production quantity would
   begin." The source selection official determined that "[b]ecause of the
   urgent need for this material, the waived FAT source was selected as
   awardee."[3] Agency Report, Tab 5, Prenegotiation and Price Memorandum.

   Award was made to Badger on November 18, 2005. This protest followed. On
   December 16, DLA determined that urgent and compelling circumstances
   required continuing with contract performance notwithstanding the protest,
   for a quantity of 7,353 units to cover current and anticipated
   backorders.[4] Agency Report, Tab 8, Authorization To Continue
   Performance, at 3.

   Novex challenges the award on the basis that Novex "submitted a bid of
   $38.50 each against 15,887 pieces of the solicited Ring . . . to be
   delivered at the required scheduled [delivery] dates" specified in the
   RFP, while award was made to Badger at "$39.11 per Ring, with a delivery
   schedule of 3,000 pieces due in 150 days and 1,800 pieces due every 30
   days until completion." Protest at 1.

   In reviewing protests of an agency's evaluation and source selection
   decision, our Office will not reevaluate proposals; rather, we review the
   record to determine whether the evaluation and source selection decision
   are reasonable and consistent with the solicitation's evaluation criteria,
   and applicable procurement laws and regulations. Keeton Corrections, Inc.,
   B-293348, Mar. 4, 2004, 2005 CPD para. 44 at 6.

   Based on our review, the source selection official could not reasonably
   accept Badger's proposed delivery schedule as the basis for award. As
   indicated above, the "required" delivery schedule, as specified by the RFP
   if FAT was waived, was delivery of 3,000 units in 90 days (not the 150
   days proposed by Badger) with deliveries at 3,000 units per month until
   completion (not the 1,800 units per month proposed by Badger). While, as
   noted above, the RFP indicated that "earlier shipments of smaller
   quantities, phased out longer may be accepted," RFP at 2, this provision
   had no applicability to Badger's noncompliant delivery proposal, which did
   not offer "earlier shipments."

   Indeed, while Badger's proposed initial delivery of 3,000 units in 150
   days was somewhat better than the RFP-required delivery of 165 days if FAT
   was not waived--which was the delivery proposed by Novex--Badger's
   1,800-unit monthly rate of delivery for the rest of the contract was
   significantly less advantageous than the RFP-required 3,000-unit monthly
   rate, which was proposed by Novex. This means that, except for the initial
   quantity, Novex's proposed delivery schedule, which would be completed in
   315 days (initial delivery in 165 days and five deliveries at 3,000-unit
   rate every 30 days), was significantly better than Badger's, which would
   not be completed until 390 days (initial delivery in 150 days and eight
   deliveries at 1,800-unit rate every 30 days). There is no evidence in the
   award selection documentation that the agency recognized Novex's
   superiority with regard to delivery of the bulk of the units, and the
   source selection official did not reasonably explain why gaining earlier
   delivery of only 15 days for the initial delivery was worth the additional
   cost, considering that the rest of Badger's proposed delivery was
   significantly less advantageous than Novex's. Cf. American Material
   Handling, B-297536, Jan. 30, 2006, 2006 CPD para. __ at 4 (agency
   reasonably focused on early initial delivery as award discriminator where
   the delivery evaluation factor in the solicitation expressly stated that
   such credit would be given).

   While the award selection documentation indicates that up to 75 days would
   be needed to obtain and approve FAT before production could begin, Novex's
   proposal committed to supply the total initial quantity in 165 days from
   date of award, including FAT, which is only 15 days longer than the 150
   days proposed for delivery by Badger. The agency did not indicate that
   Novex's proposed delivery schedule was unrealistic. Instead, in a
   supplemental agency submission made after the attorney from our Office, in
   response to an agency request for alternate dispute resolution, advised
   the agency of the reasons (set forth in this decision) that our Office
   believed the award selection was unreasonable, the agency for the first
   time argued that the source selection official was actually considering
   the risk that Novex might fail its FAT in determining that Badger offered
   superior delivery because FAT had been waived for it and therefore its
   offer represented the best value. However, the contemporaneous
   documentation does not mention that any such risk was considered. We give
   little weight to this argument because it was made in the heat of
   litigation. See Boeing Sikorsky Aircraft Support, B-277263.2, B-277263.3,
   Sept. 29, 1997, 97-2 CPD para. 91 at 15.

   In view of the agency's urgent requirement, we do not recommend disturbing
   the initial quantity to be delivered by Badger. However, given Badger's
   slower delivery schedule, and the agency's determination that it no longer
   has an urgent requirement for the entire quantity of steel side rings, we
   recommend that DLA consider terminating the remainder of Badger's contract
   and resoliciting the requirement. We also recommend that the protester be
   reimbursed its costs of filing and pursuing the protest, including
   reasonable attorneys' fees. 4 C.F.R. sect. 21.8(d)(1) (2005). The
   protester should submit its certified claim for such costs, detailing the
   time expended and costs incurred, directly with the agency within 60 days
   of receiving this decision. 4 C.F.R. sect. 21.8(f)(1). In the event the
   agency elects not to terminate Badger's contract, we recommend that Novex
   be reimbursed its proposal preparation costs. If the agency does not
   terminate Badger's contract, then the protester should submit its
   certified claim for these costs directly with the agency within 60 days of
   receiving notice from the agency that it has elected not to terminate
   Badger's contract. Id.

   The protest is sustained.

   Anthony H. Gamboa

   General Counsel

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

   [1] The ABVS score is a function of the individual offeror's past
   performance history on prior procurements with DLA and is based on
   delivery delinquencies and quality complaints.

   [2] Notwithstanding the agency's post hoc arguments made in response to
   the protest that the awardee had a significant advantage over the
   protester under past performance, this is not stated in the
   contemporaneous evaluation documentation and in fact the protester's ABVS
   score is not significantly lower than the awardee's. In any case, the
   contemporaneous record does not evidence that this superiority was the
   primary reason for the award selection.

   [3] FAT was not waived for Novex.

   [4] DLA also concluded that it was "modifying this contract to reduce the
   urgent requirement from 15,887 units to a quantity of 7,353 units." Agency
   Report, Tab 8, Authorization To Continue Performance, at 3.