TITLE: B-298720; B-298720.2, Midland Supply, Inc., November 29, 2006
BNUMBER: B-298720; B-298720.2
DATE: November 29, 2006
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B-298720; B-298720.2, Midland Supply, Inc., November 29, 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: Midland Supply, Inc.

   File: B-298720; B-298720.2

   Date: November 29, 2006

   Richard D. Lieberman, Esq., and Nicole S. Allen, Esq., McCarthy, Sweeney &
   Harkaway, P.C., for the protester.

   Adele Ross Vine, Esq., General Services Administration, for the agency.

   Linda S. Lebowitz, Esq., and Christine S. Melody, Esq., Office of the
   General Counsel, GAO, participated in the preparation of the decision.

   DIGEST

   Under solicitation providing for award to offeror whose proposal is found
   to be the most advantageous to the government based on past performance,
   delivery, and price, selection of lower technically rated, lower-priced
   proposal is improper where the record shows that selection decision was
   based on a mechanical comparison of offerors' total point scores and lacks
   any documentation indicating that a price/technical tradeoff was made.

   DECISION

   Midland Supply, Inc. protests the award of a contract to Danaher Tool
   Group under solicitation No. 6FLS-G3-050327-N, issued by the General
   Services Administration for quantities of 50 commercial line items in the
   5120 Federal Supply Class (handtools, non-edged, non-powered). Midland
   challenges the agency's award for line item No. 1 for socket wrench sets
   (an item Midland has provided to the government since 2001) to Danaher, a
   firm submitting a lower technically rated, lower-priced proposal for this
   line item.

   We sustain the protest.

   The solicitation, issued on February 24, 2006, contemplated awards of
   fixed-price requirements contracts for a 2-year base period with three
   1-year option periods. The solicitation included the clause at Federal
   Acquisition Regulation (FAR) sect. 52.212-2, captioned
   "Evaluation--Commercial Items," which provided that the agency would award
   contracts to the responsible offerors whose proposals, conforming to the
   solicitation, were determined to be most advantageous to the government,
   past performance, delivery, and price considered. (The past performance
   evaluation factor had three subfactors--on-time delivery, quality
   deficiency notices, and orders terminated.) The solicitation stated that
   past performance and delivery, when combined, would be considered
   significantly more important than price. The solicitation also stated that
   if proposals were determined to be essentially technically equal, awards
   would be made to the firms submitting the lowest prices.

   With respect to the time of delivery, the solicitation required that
   delivery be made "within 120 calendar days after receipt of order for all
   items." Solicitation at 99. The solicitation also permitted an offeror to
   propose for evaluation an alternate, more favorable delivery time by
   inserting in its proposal a specific number of calendar days for delivery
   after receipt of order for all items. Id.

   In evaluating proposals, the agency assigned the following raw points
   under the three evaluation factors: excellent (5 points); good (4 points);
   average (3 points); and poor (0 points). These raw scores were then
   multiplied by the following weights: 35 percent for both past performance
   and delivery (for a total combined weight of 70 percent) and 30 percent
   for price.[1] The agency then added the weighted scores together to arrive
   at a total point score for each proposal.

   In evaluating Midland's past performance, the agency assigned it a raw
   score of 3 points under the on-time delivery subfactor based on Midland's
   [deleted]-percent on-time delivery record. Because Midland had no quality
   deficiency notices and no terminated orders, the agency assigned it a raw
   score of 5 points under each of the other two past performance subfactors.
   The agency averaged these scores, for a final past performance raw score
   of 4.34 points. Because Midland proposed a [deleted]-day delivery
   schedule, the agency assigned it the highest raw score of 5 points under
   the delivery factor.[2] Midland's price for line item No. 1--$[deleted]
   per item--received a raw score of 3 points.[3] Contracting Officer's (CO)
   Statement, Sept. 26, 2006, at 4. (Midland's price was approximately
   [deleted] percent higher than Danaher's price.)

   In evaluating Danaher's past performance, the agency assigned it a raw
   score of 3 points under the on-time delivery subfactor based on Danaher's
   [deleted]-percent on-time delivery record. Because Danaher had no quality
   deficiency notices and no terminated orders, the agency assigned it a raw
   score of 5 points under each of the other two past performance subfactors.
   The agency averaged these scores, for a final past performance raw score
   of 4.34 points, the same as Midland's. Because Danaher proposed an
   [deleted]-day delivery schedule, the agency assigned it a raw score of
   4 points under the delivery factor. Danaher's price for line item No.
   1--$[deleted] per item--received a raw score of 5 points. Id. at 3.

   The agency then multiplied the raw scores for the three evaluation factors
   by the weights assigned to each of these evaluation factors, which yielded
   the following results for the four top-scoring firms, including Midland
   and Danaher:

 +---------------------------------------------------------------------------+
 |                     |  Midland   |  Offeror A   |  Offeror B  |  Danaher  |
 |---------------------+------------+--------------+-------------+-----------|
 |  Past Performance   |    152     |  [deleted]   |  [deleted]  |    152    |
 |---------------------+------------+--------------+-------------+-----------|
 |      Delivery       |    175     |  [deleted]   |  [deleted]  |    140    |
 |---------------------+------------+--------------+-------------+-----------|
 |        Price        |     90     |  [deleted]   |  [deleted]  |    150    |
 |---------------------+------------+--------------+-------------+-----------|
 | Total Point Scores  |    417     |     418      |     430     |    442    |
 +---------------------------------------------------------------------------+

   Agency Report, Tab 10, Evaluation Chart.

   The agency awarded a contract for line item No. 1 to Danaher because its
   proposal received the highest total point score of the 15 proposals
   received.

   Midland challenges the agency's decision to award line item No. 1 to
   Danaher, contending that all the agency did was to mechanically consider
   the total point scores assigned to the Midland and Danaher proposals and
   then award to Danaher because its proposal had the highest total point
   score. Midland maintains that the agency made no meaningful
   price/technical tradeoff, pointing out, for example, that the agency
   failed to consider whether Midland's proposed [deleted]-day delivery
   schedule was worth the payment of an approximate [deleted] percent price
   premium in light of Danaher's significantly longer proposed delivery
   schedule of [deleted] days.[4]

   While this is a commercial-item procurement, it was conducted using
   negotiated procedures, at least in terms of the substance of the agency's
   actions.[5] Specifically, the solicitation provided that the combination
   of technical evaluation factors--past performance and delivery--would be
   considered significantly more important than price in determining the
   proposals that were most advantageous to the government. Under this type
   of evaluation scheme, an agency has the discretion to determine whether
   the technical advantage associated with an offeror's proposal is worth its
   higher price. The propriety of a price/technical tradeoff turns not on the
   difference in the technical scores or ratings per se, but on whether the
   agency's judgment concerning the significance of the difference is
   reasonable and adequately justified in light of the evaluation scheme.
   Opti-Lite Optical, B-281693, Mar. 22, 1999, 99-1 CPD para. 61 at 4.

   In order for our Office to perform a meaningful review of an agency's
   award determination, the agency is required to have adequate documentation
   to support its evaluation of proposals and its award decision. Century
   Envtl. Hygiene, Inc., B-279378, June 5, 1998, 98-1 CPD para. 164 at 4;
   Biospherics, Inc., B-278508.4 et al., Oct. 6, 1998, 98-2 CPD para. 96 at
   4; Arco Mgmt. of Wash., D.C., Inc., B-248653, Sept. 11, 1992, 92-2 CPD
   para. 173 at 3. An award decision is not reasonable where there is no
   documentation or explanation to support the price/technical tradeoff and
   where the agency makes its award decision based strictly on a mechanical
   comparison of the offerors' total point scores. Universal Bldg. Maint.,
   Inc., B-282456, July 15, 1999, 99-2 CPD para. 32 at 4; see also FAR
   sections 12.602(c), 15.308.

   The evaluation record here consists of one-paragraph summaries of the
   proposals, and charts showing for each evaluation factor the agency's
   assignment of raw scores, the calculation of weighted scores, and the
   total point score for each proposal. The record lacks any documentation
   reflecting a meaningful comparative analysis of proposals or any
   explanation of why Danaher's lower technically rated, lower-priced
   proposal was selected for award over Midland's higher technically rated,
   higher-priced proposal. The record shows that the agency relied on a
   mechanical comparison of the total point scores assigned to the Midland
   and Danaher proposals without any qualitative assessment of the technical
   differences between these proposals to determine whether Midland's
   technical superiority would justify the payment of a price premium. [6]

   We recommend that the agency perform and document a price/technical
   tradeoff analysis. If the agency determines that Danaher's proposal for
   line item No. 1 is not the most advantageous to the government, we
   recommend that the agency terminate for the convenience of the government
   Danaher's contract for this line item and award to the offeror whose
   proposal is determined to be the most advantageous. In addition, we
   recommend that the agency reimburse Midland for the reasonable costs of
   filing and pursuing its protest, including reasonable attorneys' fees. Bid
   Protest Regulations, 4 C.F.R. sect. 21.8(d)(1) (2006). Midland's certified
   claim for costs, detailing the time expended and costs incurred, must be
   submitted to the agency within 60 days of receiving this decision. 4
   C.F.R. sect. 21.8(f)(1).

   The protest is sustained.

   Gary L. Kepplinger

   General Counsel

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

   [1] To the extent that Midland complains that the past performance and
   delivery evaluation factors were each weighted only 5 percent more than
   price even though the solicitation provided that a premium would be placed
   on these technical evaluation factors in relation to price, we point out
   that, in accordance with the terms of the solicitation, the combination of
   the two technical evaluation factors, each weighted at 35 percent--for a
   total combined weight of 70 percent--was significantly more important than
   price, which had a total weight of 30 percent.

   [2] With respect to the delivery evaluation factor, the agency conducted a
   market survey in October 2005, in which nine firms, including Midland and
   Danaher, participated. Eight of the firms, including Midland, responded
   that delivery could be accomplished in 60 days. Based on the results of
   the market survey, the agency used 60 days as the lowest projected
   delivery timeframe. As a result, the agency determined that proposed
   delivery schedules of 60 days or less would be evaluated as excellent and
   assigned a raw score of 5 points, while proposed delivery schedules of 61
   to 90 days would be evaluated as good and assigned a raw score of 4
   points.

   [3] With regard to price, points were assigned based on comparison to the
   lowest price received. Thus, for example, a raw score of 5 points was
   assigned to prices within 5 percent of the lowest proposed price, and a
   raw score of 4 points was assigned to prices within 6-10 percent of the
   lowest proposed price.

   [4] Midland, which received the maximum raw score of 5 points for its
   proposed delivery schedule of [deleted] days, objects to the agency's
   reliance on the results of the market survey as the basis for the scoring
   methodology under the delivery evaluation factor. Midland, which, as the
   incumbent contractor, has delivered the items called for under line item
   No. 1 within [deleted] days, suggests a scoring methodology for this
   evaluation factor that would give it a higher total point score (by 10
   points) relative to Danaher. Using its proposed methodology, Midland
   maintains that it would have been selected for the award of line item No.
   1. Midland's Supp. Protest, Oct. 6, 2006, at 8. Contrary to Midland's
   position, we believe that the agency reasonably used the results of the
   market survey, in which Midland participated, as a benchmark in
   determining how it would evaluate each offeror's proposal for the delivery
   evaluation factor. Midland's objection amounts to no more than mere
   disagreement with the agency's evaluation approach and fails to establish
   that the agency's evaluation in this regard was unreasonable. See
   Bevilacqua Research Corp., B-293051, Jan. 12, 2004, 2004 CPD para. 15 at 8
   n.8. Moreover, as will be discussed in this decision, even if the agency
   had used Midland's proposed scoring methodology for the delivery
   evaluation factor, the agency still would have been required to document a
   meaningful tradeoff in accordance with the terms of the solicitation, as
   opposed to awarding a contract to Midland for line item No. 1 based solely
   on a higher total point score.

   [5] It is not entirely clear from the record that the agency intended to
   conduct this commercial item acquisition using FAR Part 15 negotiated
   procedures, although, for example, the RFP does reference in its
   instructions to offerors FAR sect. 15.306(a), a provision that addresses
   clarifications and award without discussions.

   [6] In response to the protest, the contracting officer states that
   Danaher had the highest technical score and the lowest price. Supp. CO
   Statement, Oct. 26, 2006, at 4. The contracting officer's statement is not
   supported by the record, which clearly shows that for the two technical
   evaluation factors--past performance and delivery--Midland received 327
   total technical points, while Danaher received 292 total technical points.
   Clearly, Midland, not Danaher, had the highest technical score. In
   addition, to the extent the contracting officer suggests that the Midland
   and Danaher proposals were essentially technically equal, such that the
   award to Danaher, the low-priced offeror, was consistent with the terms of
   the solicitation, we point out that there is no support in the record for
   a finding of technical equality between these two proposals.