TITLE: B-298196; B-298196.2, Capps Shoe Company, Inc., July 6, 2006
BNUMBER: B-298196; B-298196.2
DATE: July 6, 2006
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B-298196; B-298196.2, Capps Shoe Company, Inc., July 6, 2006

   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: Capps Shoe Company, Inc.

   File: B-298196; B-298196.2

   Date: July 6, 2006

   William S. Foster, Esq., John H. Williamson, Esq., and Anand V. Ramana,
   Esq., McGuire Woods LLP, for the protester.

   David T. Ralston, Jr., Esq., George W. Ash, Esq., Frank S. Murray, Esq.,
   and Philip A. Nacke, Esq., Foley & Lardner LLP, for Wolverine World Wide,
   Inc., an intervenor.

   Maria Ventresca, Esq., Defense Logistics Agency, for the agency.

   Katherine I. Riback, Esq., and James A. Spangenberg, Esq., Office of the
   General Counsel, GAO, participated in the preparation of the decision.

   DIGEST

   Protester's delivery performance, which evidenced significant
   delinquencies, was reasonably found marginal by the agency.

   DECISION

   Capps Shoe Company, Inc. protests the award of a contract to Wolverine
   World Wide, Inc., under request for proposals (RFP) No. SP0100-05-R-0036,
   issued by the Defense Logistics Agency (DLA) for men's and women's leather
   dress shoes. The protester argues that the agency improperly evaluated its
   past performance.

   We deny the protest.

   The RFP contemplated the award of an indefinite-delivery,
   indefinite-quantity contract with minimum and maximum quantities for a
   1-year base ordering period with four 1-year option periods to the offeror
   whose proposal was "most advantageous" to the government, price and other
   factors considered. The RFP specified the following evaluation factors,
   listed in descending order of importance: past performance, vendor managed
   program, bill and hold capability, socio-economic considerations, and
   Javits-Wagner-O'Day Act (JWOD) entity. The solicitation provided that
   "technical and past performance, when combined, are . . . significantly
   more important than cost or price." RFP at 74. The RFP provided that the
   first three non-price factors would be assigned an overall rating of
   exceptional, very good, satisfactory, marginal, and unsatisfactory,
   whereas the proposals would be rank-ordered under the two lowest weighted
   non-price factors.

   Past performance, the most important evaluation factor, was divided into
   the following subfactors: experience, quality of items/delivery
   performance, and compliance with contractual socioeconomic
   subcontracting/mentoring goals. With regard to delivery performance,
   offerors were to indicate in their proposals whether previously supplied
   items were delivered on time, ahead of or behind schedule. If the items
   were not delivered on time, the offeror was to provide the number of days
   delivered ahead of or behind schedule, whether revised delivery schedules
   were granted, and an explanation for any delivery extensions. For
   delinquent delivery, the description also was to include an explanation
   for its occurrence, a clear plan or evidence of measures taken to preclude
   a recurrence, and whether or not the problem was the offeror's fault,
   otherwise excusable or subject to mitigating circumstances. RFP at 47.

   Six offerors, including Capps and Wolverine, submitted proposals. After
   evaluating the proposals, the agency decided to make award to Wolverine on
   the basis of initial proposals without discussions. Capps received a
   satisfactory rating for the most important factor--past performance--and
   very good ratings for the vendor managed programs and bill & hold
   capability factors. Capps' proposal was ranked first for the JWOD entity
   factor, and second for the socio-economic considerations factor. Capps'
   proposal was rated satisfactory overall with a price of $34,902,086.
   Wolverine's proposal received a rating of very good under the past
   performance factor, and excellent ratings under the vendor managed
   programs and bill & hold capability factors. Its proposal was ranked first
   for the socio-economic considerations factor and second for the JWOD
   entity factor. Its proposal was the only one to receive an overall very
   good rating, and its price was $35,867,494. The agency considered
   Wolverine's proposal's superiority to Capps' on four of the five factors
   to be worth the 2.7-percent higher price. Agency Report, Tab 8, Price
   Negotiation Memorandum.

   Capps' overall satisfactory rating was primarily the result of its
   satisfactory past performance, given that factor's primary importance
   under the evaluation scheme. Capps' past performance was considered only
   satisfactory because even though it had experience in making similar items
   and an exceptional quality record, Capps' delivery performance was
   considered only marginal because of a number of delinquent orders under
   the two contracts that it held with the agency. Those two contracts
   included 18 delivery orders within the 2-year rating period, and of those
   orders, 12 delivery orders were behind schedule from 5 days to 5 months, 3
   delivery orders were on-time or ahead of schedule from 1 to 6 days, and
   3 delivery orders were not due as of yet. The agency also considered that
   Capps submitted two other references, both of which advised that Capps has
   always had timely deliveries. Id. at 9.

   Wolverine's very good past performance was based on its very successful
   experience providing the identical items under government contracts. With
   regard to its delivery performance, Wolverine had four completed contracts
   and five current contracts with the agency, and within the rating period
   Wolverine performed on and ahead of the required delivery schedules on 41
   out of the 60 delivery orders with these orders being completed anywhere
   from 2 days to 5 months ahead of schedule. Wolverine was behind schedule
   on 6 delivery orders from 3 to 24 days, and 13 delivery orders were not
   due as of yet. The agency noted that, to the extent that Wolverine
   experienced problems with timely deliveries, effective corrective actions
   had been taken. Id. at 13; Past Performance Evaluation Form for Wolverine
   at 2.

   Capps argues that the agency improperly evaluated its delivery performance
   under the past performance factor as marginal. 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 or with procurement
   statutes or regulations. National Beef Packing Co., B-296534, Sept. 1,
   2005, 2005 CPD para. 168 at 4. An agency's past performance evaluation may
   be based on a reasonable perception of inadequate prior performance,
   regardless of whether the contractor disputes the agency's interpretation
   of the underlying facts, and the protester's mere disagreement with the
   agency's judgment is not sufficient to establish that the agency acted
   unreasonably. General Dynamics-Ordnance & Tactical Sys., B-295987,
   B-295987.2, May 20, 2005, 2005 CPD para. 114 at 7.

   Capps contends that the agency's evaluation of its on-time delivery
   performance was not accurate. According to Capps, "DLA would count an
   entire order late if a single pair of shoes was not delivered by the
   scheduled delivery date." Capps' Comments at 1. However, the agency notes,
   and the record confirms, that in determining whether a delivery order was
   delinquent it applied a 2-percent variance provision, which is contained
   in DLA's shoe and boot contracts, whereby an order was considered
   complete, once the contractor delivered 98 percent of the ordered
   quantity. Agency Supplemental Report, Declaration of Contract Specialist
   at 1. In its protest, Capps asserts that the timeliness of deliveries
   should be measured in a different way and posits a relative high timely
   delivery rate if its deliveries were measured on a monthly basis.
   Notwithstanding Capps' disagreement as to how delivery performance should
   be measured, we find that the agency reasonably concluded that Capps was
   delinquent on two-thirds of its delivery orders on the two DLA contracts
   during this rating period.

   Capps also argues that the agency did not properly account for Capps'
   improved on-time performance to overcome the problems caused by the
   acceleration of the manufacture of certain shoe sizes at DLA's request as
   well as the initial start-up problems as it gained experience in producing
   military footwear. In this regard, Capps references that its proposal
   explained that its first delivery order was adversely affected because of
   the need to purchase various items and manufacturing machinery and to
   train workers, as well as its "unwavering commitment to quality," and its
   refusal to ship shoes that did not meet its quality standards. While Capps
   reported its on-time delivery during this start-up period was only 7
   percent, it states that current delivery orders are being timely delivered
   between 95 and 100 percent of the time. Capps' proposal also stated that
   it "makes every effort to accommodate [DLA's] size needs. We are able to
   make changes for them at their request, such as acceleration of needed
   sizes versus sizes that are scheduled, but not as critical. This
   flexibility, done solely at the request of [DLA], however, can have a
   negative effect on our on-time delivery rate and should be taken into
   consideration." Capps also noted that "[i]n the past" it had scheduled
   production within its factory to maintain a smooth work flow, and "[i]f a
   new delivery order was delayed in being awarded, we in turn had to adjust
   production to keep the factory operating until a new order was issued.
   This adjustment resulted in lower production per day which resulted in
   slower or later shipments." Capps noted that, as a result of a significant
   increase in its civilian uniform business, it did not anticipate this
   problem recurring. Agency Report, Tab 4, Capps' Technical Proposal,
   at 2-3.

   The agency did not find the general assurances and explanations in Capps'
   proposal were sufficient to rate Capps' delivery performance higher than
   marginal, given the significant delinquencies in its DLA contracts. As
   noted by the contracting officer, Capps' proposal did not explain which
   orders were affected by acceleration or provide information showing
   delinquencies that were considered excusable or that delivery schedules
   were extended. Contracting Officer's Statement at 10. As noted above, the
   solicitation requested the offeror to "provide the number of days
   delivered ahead of or behind schedule, whether revised delivery schedules
   were granted and an explanation for any delivery extensions." While Capps
   did address its late deliveries generally, it failed to follow the
   solicitation instructions and provide information regarding causation and
   remediation for each late delivery. While the protester also contends that
   the agency's evaluation of its delivery record gave disproportionate
   weight to what Capps characterizes as "initial start-up problems," in the
   context of the firm's record of a large volume of on-time deliveries, see
   Protest at 5, in our view the agency reasonably focused on patterns of
   negative performance in Capps' record of timely delivery that had not been
   adequately addressed, as well as the fact that Capps had not manufactured
   the exact dress shoes requested by this RFP.[1] In sum, the contracting
   officer concluded that "[i]n reviewing Capps' overall delivery record,
   clearly Capps has failed to take effective corrective actions to deal with
   its continuing trend of delinquencies on its delivery orders," including
   its first delivery on its most recent contract with DLA.[2] Contracting
   Officer Statement at 23. Based on our review, we find the agency's
   evaluation of Capps delivery performance to be reasonable and consistent
   with the solicitation.

   The protester contends that Wolverine's contracts demonstrated a similar
   on-time delivery record that did not justify an award over Capps at a
   significant higher price, asserting that 40 percent of Wolverine's
   delivery orders were late. As noted above, in evaluating proposals the
   agency considered delivery orders to be timely if 98 percent of the items
   were timely delivered. When this variance is applied to the delivery
   orders that Wolverine had listed as late in its proposal, the agency found
   that only 10 percent of Wolverine's delivery orders were late. Agency
   Supplemental Report at 2, n.1; Declaration of Contract Specialist at 1.
   Thus, we have no basis to find the agency's evaluation of Wolverine's
   delivery performance was unreasonable, inconsistent with the solicitation
   or evidenced unequal or unfair evaluation.

   Finally, the protester notes, in a supplemental protest, that the
   solicitation included the standard "Preference for Certain Domestic
   Commodities" clause, Defense Federal Acquisition Regulation Supplement
   (DFARS) sect. 252.225-7012, which implements the Berry Amendment, 10
   U.S.C. sect. 2533(a) (2000), which generally restricts the Department of
   Defense's expenditure of funds for certain articles and items, to
   domestically produced products. Because Wolverine operates one factory in
   the Dominican Republic in addition to its factories in the United States
   and because Wolverine has both foreign and domestic suppliers, the
   protester speculates that Wolverine will obtain some of its materials, or
   manufacturing services, from foreign sources in violation of the Berry
   Amendment.

   In response, the agency noted that Wolverine, in its proposal, identified
   the location for each stage of production of the shoes, and provided a
   list of its clothing and textile suppliers, in addition to other
   suppliers, that it was using in the performance of this contract. Based on
   the information Wolverine provided in its offer, the agency concluded that
   there was no basis for stating that Wolverine was not in compliance with
   the requirements of DFARS sect. 252.225-7012, or that it was taking an
   exception to that provision. Also, the agency stated that it obtained an
   additional certification from Wolverine regarding its compliance with the
   new revisions of the Berry Amendment regarding this solicitation. Agency
   Supplemental Report at 5. While Capps contends that the agency should have
   investigated Wolverine's compliance with the Berry Amendment more
   thoroughly, our review of the record, including Wolverine's proposal, does
   not indicate that the agency could not reasonably accept Wolverine's
   proposal and subsequent assurances that it would comply with the RFP
   requirements, including those deriving from the Berry Amendment.

   The protest is denied.

   Gary L. Kepplinger

   General Counsel

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

   [1] Capps also contends that the agency focused solely on the two DLA
   contracts that it performed, and that the agency, in conducting its
   evaluation, failed to give sufficient consideration to contracts that it
   performed in the private sector. As noted above, the agency in fact did
   consider Capps' delivery performance outside of its contracts with DLA. To
   the extent that Capps argues that its delivery performance on these
   contracts should have been given greater weight in the evaluation, this
   amounts to a simple disagreement with the agency's evaluation, which is
   not sufficient to establish that the agency acted unreasonably.
   Nicholson/Soletanche Joint Venture, B-297011.3, B-297011.4, Apr. 20, 2006,
   2006 CPD para. 71 at 8.

   [2] To the extent that Capps argues that its on-time delivery was more
   favorably evaluated in procurements with other agencies, we note that each
   federal procurement stands on its own, so that evaluation ratings under
   another solicitation are not probative of the alleged unreasonableness of
   the evaluation ratings under the present RFP. Parmatic Filter Corp.,
   B-285288, B-285288.2, Aug. 14, 2000, 2000 CPD para. 185 at 7.