TITLE: B-298761; B-298761.2, BST Systems, Inc., December 1, 2006
BNUMBER: B-298761; B-298761.2
DATE: December 1, 2006
*********************************************************
B-298761; B-298761.2, BST Systems, Inc., December 1, 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: BST Systems, Inc.
File: B-298761; B-298761.2
Date: December 1, 2006
Brian A. Darst, Esq., for the protester.
Jonathan D. Shaffer, Esq., Smith Pachter McWhorter, for Yardney Technical
Products, the intervenor.
Emilia Muche Thompson, Esq., Department of the Navy, for the agency.
David A. Ashen, Esq., and John M. Melody, Esq., Office of the General
Counsel, GAO, participated in the preparation of the decision.
DIGEST
Protest challenging evaluation of protester's past performance in
procurement for battery cells is denied where record establishes that
evaluation was reasonable and in accord with stated evaluation criteria;
reports of electrolyte leaking from protester's battery cells furnished
under prior contracts for the cells being procured warranted assigning
protester less favorable rating than awardee, for which there were no
reports of leakage.
DECISION
BST Systems, Inc. protests the award of a contract to Yardney Technical
Products under Naval Undersea Warfare Center, Division Newport, Request
for Proposals (RFP) No. N66604-06-R-0016, for silver-zinc battery cells
for the MK30 Mod 1 Anti-Submarine Warfare (ASW) target. BST challenges the
evaluation of past performance.
We deny the protest.
The solicitation contemplated the award of a fixed-price contract to
furnish a basic quantity of 4,600 to 4,800 silver-zinc battery cells to be
shipped dry and electrolyte fill kits to activate the batteries, with
12 options for various quantities (with a maximum of 8,000 production
cells and fill kits per year) over 4 years. The MK30 Mod 1 target is a
torpedo-shaped vehicle, 20 feet long and weighing 2,700 pounds, which
simulates a threat from a submarine in acoustic and magnetic
characteristics and dynamic manuevers. Energy for the propulsion and
payload systems of the target is furnished by 168 individual silver-zinc
battery cells arranged in eight trays and installed in the battery hull
section of the target. The standard wet-life of a cell/battery system is
15 months from the time the cell is activated with electrolyte.
Consequently, the MK30 Mod 1 Program needs to maintain and replenish a
replacement inventory of battery cells at each operational site. (The
battery cell used in the MK30 Mod 1 target is only used in that vehicle,
and not in the MK30 Mod 2 target, which is replacing the MK30 Mod 1 target
and uses a different battery cell built to a different specification.)
Historically, Yardney and BST have been the only two producers of MK30 Mod
1 battery cells. The current solicitation, issued January 24, 2006,
essentially is a follow-on to Yardney's contract for the same cells,
contract No. N66604-01-C-2305 (contract-2305).
The RFP provided for award to be made to the responsible offeror whose
proposal represented "the best overall value to the Government" based on
two equally weighted evaluation factors, total evaluated price and past
performance. RFP sect. M32X(a). Offerors were required to furnish
information regarding past performance, including "a list of the last ten
(most recent) contracts and subcontracts completed during the last three
years and all contracts and subcontracts currently in process." RFP sect.
L34X(a). The solicitation provided that past performance
will be evaluated as an indicator of the offeror's expected future
performance. The currency and relevance of the information, source of
the information, context of the data, and general trends in contractor's
performance are representative of the types of data that may be
considered. The Government may contact points of contact listed in the
offeror's proposal for the purpose of obtaining additional past
performance information. The number of contacts, if any, will be
determined by the Government at its discretion. Selection of contacts
may be random.
RFP sect. M32X(b). In addition, the RFP provided that the government "may
consider information concerning the offeror's past performance that is not
contained in the proposal." Id.
Yardney and BST submitted proposals. After conducting discussions with the
offerors--including discussions with BST regarding deficiencies in its
performance of its prior contract--contract No. N66604-95-C-B111
(contract-B111)--for MK30 Mod 1 cells--the agency requested final revised
proposals.
The agency's final evaluation of Yardney's past performance was based on
3 of the 10 contracts Yardney cited in its proposal: (1) contract-2305,
NUWC's prior contract for MK30 Mod 1 silver-zinc cells; (2) contract No.
N00104-05-C-LA17 (contract-LA17), awarded by the Naval Inventory Control
Point (NICP), Mechanicsburg, Pennsylvania, for silver-zinc battery cells
for the Navy SEALs' Seal Delivery Vehicle (SDV); and (3) contract
No. N61331-05-P-1788 (contract-1788), awarded by the Naval Surface Warfare
Center (NSWC) for silver-zinc battery cells for the Navy's Autonomous
Underwater Vehicle (AUV). The agency assigned Yardney the following
detailed ratings for these contracts:
+------------------------------------------------------------------------+
| Yardney |Contract-2305|Contract-LA17|Contract-1788|Overall Rating|
| | | | | |
| |(MK30 Mod 1) | (SDV) | (AUV) | |
|---------------+-------------+-------------+-------------+--------------|
|Quality of | Exceptional | Very Good | Exceptional | Exceptional |
|Product | | | | |
|---------------+-------------+-------------+-------------+--------------|
|Timeliness | Exceptional | Very Good | Very Good | Very Good |
|---------------+-------------+-------------+-------------+--------------|
|Cost Control | Exceptional | Very Good | Very Good | Very Good |
|---------------+-------------+-------------+-------------+--------------|
|Business | Exceptional | Very Good | Very Good | Very Good |
|Relations | | | | |
|---------------+-------------+-------------+-------------+--------------|
|Customer | Exceptional | Very Good | Very Good | Very Good |
|Satisfaction | | | | |
+------------------------------------------------------------------------+
In particular, the agency noted that, under Yardney's most relevant
contract, its predecessor contract-2305 for 19,965 of the same MK30 Mod 1
silver-zinc battery cells being procured here, Yardney's performance had
been exceptional in all categories, with no spillages of electrolyte when
the cells were removed and charged. In addition, the agency noted that the
silver-zinc battery cells furnished by Yardney under contract-1788 for use
in the Navy AUV were superior in quality to those previously furnished by
BST for that program, with better wet-life and chargeability. Based on
these considerations, the agency rated Yardney as low risk for past
performance.
BST's final past performance evaluation was based on 3 of the 10 completed
and 7 in-process contracts cited by BST in its proposal: (1) purchase
order No. [DELETED] (contract-[DELETED]), issued by [DELETED] for
silver-zinc battery cells for the [DELETED]; (2) purchase order
No. [DELETED] (contract-[DELETED]), issued by [DELETED] for batteries for
the [DELETED]; and (3) contract No. N00164-02-C-6906 (contract-6906),
issued by the NSWC for silver-zinc battery cells for use in the Advanced
SEAL Delivery System Vehicle (ASDV). In addition, the agency evaluated
BST's performance under its prior contract for MK30 Mod 1 cells,
contract-B111, even though BST did not cite that contract in its proposal
for past performance purposes.[1] The agency assigned BST the following
detailed ratings for these contracts:
+----------------------------------------------------------------------------+
| BST |Contract-B111| [DELETED] |[DELETED]|Contract-6906| Overall |
| |(MK30 Mod 1) | | | (ASDV) | Rating |
|------------+-------------+------------+---------+-------------+------------|
|Quality of | Marginal |Satisfactory|Very Good| Very Good |Satisfactory|
|Product | | | | | |
|------------+-------------+------------+---------+-------------+------------|
|Timeliness | Marginal | Very Good |Very Good| Very Good | Very Good |
|------------+-------------+------------+---------+-------------+------------|
|Cost Control|Satisfactory | Very Good |Very Good| Very Good | Very Good |
|------------+-------------+------------+---------+-------------+------------|
|Business | Marginal | Very Good |Very Good| Very Good | Very Good |
|Relations | | | | | |
|------------+-------------+------------+---------+-------------+------------|
|Customer | Marginal | Very Good |Very Good| Very Good | Very Good |
|Satisfaction| | | | | |
+----------------------------------------------------------------------------+
In particular, the agency noted that BST's performance under
contract-B111, which the agency viewed as BST's most relevant contract,
had been marked by spillages of electrolyte and failures to meet
dimensional requirements of the specifications; according to the agency,
BST's performance problems included problems that were unrelated to the
government changes in the specifications or inspections to the wrong
standard which BST had cited in explaining the performance deficiencies
brought to its attention during discussions. Concluding that BST's
"overall work record is good or fair," with performance problems
encountered that "might have been substantial but were not severe," the
agency assigned BST a moderate risk rating for past performance. Final
Evaluation of BST Systems at 2.
The agency determined that Yardney's superior past performance warranted
payment of its higher evaluated price--$[DELETED] versus $[DELETED] for
BST. In reaching this conclusion, the agency contrasted Yardney's
problem-free performance of contract-2305 for MK30 Mod 1 battery cells,
with the problems BST had encountered in performing contract-B111 for MK30
Mod 1 cells. The agency specifically noted in its best value analysis,
with reference to the spillages of electrolyte by BST's MK30 Mod 1 battery
cells, that the need to clean spilled electrolyte in the internal areas of
the Mod 1 target vehicles and retest vehicle electrical parameters would
delay return of targets to operational use and would add to the program's
expense; that electrolyte is a hazardous, very caustic material that poses
a risk to operational site personnel; and that spillage of electrolyte
during operational use can cause premature shutdown of the target vehicle
during fleet operations and previously caused the loss of one of the $2.5
million target vehicles. The agency also noted that, because it is in the
process of replacing the Mod 1 targets with the Mod 2 targets, inventories
of the Mod 1 cells will be kept to a minimum in order to avoid having
unused cells at the end of the MK30 Mod 1 program; thus, any slippage in
production would affect availability of the Mod 1 targets for fleet
training events. The agency therefore made award to Yardney. Following a
debriefing, BST filed this protest with our Office.
BST primarily challenges both the manner in which the agency selected
contracts for review in the past performance evaluation and the evaluation
of its performance under the selected contracts.
Determining the relative merits of offerors' past performance information
is primarily a matter within the contracting agency's discretion; we will
examine an agency's evaluation only to ensure that it was reasonable and
consistent with the solicitation's evaluation criteria and procurement
statutes and regulations. The MIL Corp., B-297508, B-297508.2, Jan. 26,
2006, 2006 CPD para. 34 at 10; Hanley Indus., Inc., B-295318, Feb. 2,
2005, 2005 CPD para. 20 at 4. In this regard, it is reasonable for an
agency to give different evaluation weights to prior contracts based on
their similarity or relevance to the required effort. See Chenega Tech.
Prods., LLC, B-295451.5, June 22, 2005, 2005 CPD para. 123 at 6; SWR,
Inc.--Protest and Costs, B-294266.2 et al., Apr. 22, 2005, 2005 CPD para.
94 at 6.
The evaluation of Yardney's and BST's past performance was both reasonable
and consistent with the RFP's evaluation terms. We discuss BST's principal
arguments below.
YARDNEY'S CONTRACTS
BST asserts that Yardney improperly failed to list a contract that it was
required to list under the solicitation instructions, thereby precluding
the agency from evaluating Yardney's performance shortfalls under that
contract. In this regard, in addition to the three contracts evaluated by
the agency--contracts-2305, -LA17, and -1788--Yardney listed 7 other
contracts in its past performance proposal, including a contract completed
in April 2004. Yardney did not list contract No. N00104-98-C-LA13
(contract-LA13), the 1998 predecessor contract to the 2005 contract
(contract-LA17) for low rate, 360 amp silver-zinc battery cells for the
SDV. BST asserts that, since contract-LA13 was not completed until 2005,
within the 3-year period for which offerors were to submit past
performance information, Yardney was required to list the contract in its
past performance proposal.
At the hearing our Office conducted in this matter, the Yardney manager
responsible for preparing its proposal testified that, in selecting the
contracts to be included in the past performance section, he selected the
most current contract for a particular relevant battery cell type, e.g., a
low rate 190 amp cell, for a particular application. For example, the
manager explained that he listed both contract-2305, the prior contract
for low rate, 190 amp MK30 Mod 1 silver-zinc cells, and contract-1788, a
contract for low rate, 190 amp silver-zinc battery cells used in the AUV,
because they were for different vehicles, and thus for different
applications. Hearing Transcript (Tr.) at II/41-II/48, II/80-II/81. The
manager further explained that he did not list contract-LA13, the
predecessor contract for low rate, 360 amp battery cells for the SDV,
because he had listed the more recent 2005 Contract-LA17 for SDV battery
cells. Tr. at II/59. In this regard, we note that Yarney's interpretation
of the solicitation past performance listing requirement appears similar
to that of the contracting officer (who was also the source selection
authority). Specifically, the contracting officer testified that, while he
was unaware of contract-LA13 at the time of the evaluation, he would not
have expected that contract to be listed, since the more current
contract-LA17, which was listed, was "the most relevant and current"
contract regarding Yardney's performance on the SDV program. Tr. at
I/73-I/76.
As noted by BST, Yardney's approach to listing prior contracts was
inconsistent with the RFP, which instructed offerors to furnish "a list of
the last ten (most recent) contracts and subcontracts completed during the
last three years and all contracts and subcontracts currently in process."
RFP sect. L34X(a). Nothing in this provision permitted offerors to include
only one of several contracts for the same battery cell where the
contracts otherwise qualified as the most recent contracts that had been
completed during the last 3 years or were currently in process.
Nevertheless, BST's assertion does not furnish a basis for sustaining the
protest. In this regard, the record indicates that, as acknowledged in its
proposal, BST also furnished only a "partial listing" of contracts. BST
Past Performance Proposal at 5. BST's program manager for these batteries
testified that she selected the contracts to list not only for relevance,
but also with an eye toward avoiding listing similar contracts. Tr. at
II/242-43. Thus, BST also interpreted the RFP as permitting offerors to
select which of the contracts within the 3-year period to list, and to
omit contracts where it had already listed a similar contract. This being
the case, BST cannot now argue that Yardney's proposal should be rejected
for following the same approach as BST; the integrity of the protest
process does not permit a protester to espouse one interpretation of a
solicitation during the procurement, and then argue during a protest that
the interpretation is unreasonable. AAI Eng'g Support, Inc., B-257857,
Nov. 16, 1994, 95-1 CPD para. 2 at 3-4; see Sabreliner Corp., B-290515,
Aug. 21, 2002, 2003 CPD para. 4 at 6; Picker Int'l, Inc., B-249699.3, Mar.
30, 1993, 93-1 CPD para. 275 at 7.
In any case, there is no basis on this record for concluding that
consideration of Yardney's performance on Contract-LA13 would have altered
its low risk past performance rating. The record indicates that, while the
first article tests (FAT) and lot acceptance tests (LAT) for Lots 1 to 3
under contract-LA13 indicated a failure of some of the tested cells to
meet some specification requirements, resulting in a delay in contract
performance, Lots 1, 2 and 3 ultimately were accepted by the agency, and
the subsequent LATs for Lots 4 to 10 indicated no critical failures. Test
Reports for FAT and LAT Lots 1-10, contract-LA-13; Tr. at II/97.[2] In
this regard, the Navy Technical Lead for contracts -LA13 and -LA17
testified that Yardney's cells in Lots 4 to 10 of contracts -LA13 and
-LA17 satisfied all of the "performance requirements," and that there were
no reports of problems attributable to the cells. Tr. at I/116-18,
I/132-48. Furthermore, as discussed above, the agency had determined that
Yardney's contract-2305, the prior contract for the MK30 Mod 1 cells being
procured here, was the most relevant indicator of Yardney's expected
performance under the contemplated contract. In this regard, neither the
technical point of contact for contract-2305, who was also the chairman of
the technical evaluation panel (TEP) here, nor the MK30 program manager at
the Atlantic Undersea Test and Evaluation Center (AUTEC), the operational
site using the greatest number of MK30 Mod 1 target vehicles, was aware of
any problems (including any electrolyte leakage) with Yardney's MK30
cells. Tr. at I/253-54, II/332; Final Technical Evaluation Report,
July 14, 2006, at 3. We conclude that there is no basis for questioning
the agency's evaluation of Yardney's past performance as low risk.
BST'S Past Performance
BST challenges the agency's rating of its past performance as moderate
risk, asserting that its performance under contract-B111, its most recent
contract for battery cells for the MK30 Mod 1 target vehicles, awarded on
or about August 29, 1995, did not fall within the RFP's 3-year timeframe
for listing prior contracts. RFP sect. L34X(a). BST asserts that the
contract was completed no later than October 1, 2001, when the last
battery cells produced and shipped under the contract were inspected and
accepted by the government, and that the contract therefore should not
have been considered in the past performance evaluation. The agency
determined that contract-B111 fell within the 3-year period because the
government-furnished molds used by BST in performing the contract were not
shipped back to the agency until June 28, 2004, that is, within 3 years
before the February 28, 2006 closing date for receipt of proposals here.
Tr. at I/29-41.
We need not resolve whether contract-B111 was completed within the last 3
years, because the solicitation did not limit the past performance
information that the agency could consider. In this regard, although RFP
sect. L34X(a) required offerors to list contracts within a 3-year
timeframe, section M stated that "[p]ast performance will be evaluated as
an indicator of the offeror's expected future performance," with
consideration to be given to the "currency and relevance of the
information, source of the information, context of the data, and general
trends in contractor's performance," and specifically provided that the
government may "consider information concerning the offeror's past
performance that is not contained in the proposal." RFP sect. M32X(b).
There is nothing in sections L or M, or elsewhere in the solicitation,
that precluded the agency from evaluating relevant past performance
information, whether or not it was listed in the proposal or concerned a
contract completed within the past 3 years.
BST also complains that contract B-111 was given too much weight in the
evaluation. This argument, too, is without merit. Although, as noted by
BST, it also had two other MK30 Mod 1 battery cell contracts besides
contract-B111, including contract No. N66604-95-C-A978 (contract-A978) and
contract No. N66604-97-C-3077 (contract-3077), the final deliveries of
cells under those contracts--September 27, 2001 and January 31, 2000,
respectively--were no more recent than those under contract-B111 (which
were accepted October 1, 2001). More importantly, the quantities of cells
delivered under contract-A978 (approximately 6,500) and contract-3077
(7,000-8,000) were significantly smaller than the quantity under
contract-B111 (approximately 13,429). BST Comments, Oct. 23, 2006, at 14,
citing exh. 2 (Material Inspection and Receiving Reports, Contract-B111,
Contract-A978, Contract-3077); BST Protest, Sept. 5, 2005, at 11, 15; see
also Tr. at II/165-67; BST Comments, Nov. 28, 2006, at 10. In any case, as
discussed below, the record indicates that the performance problems with
respect to BST's MK30 Mod 1 battery cells extended beyond
contract-B111.[3]
BST also questions the agency's view of its Mod 1 battery cell performance
problems as extensive. We find no basis to question the agency's judgement
in this regard.[4] The record indicates that there were spewages or
leakages of electrolyte from BST battery cells on 3 or 4 of the lots under
contract-B111 in 1997 and 1998. In addition, BST requested a waiver in
connection with leakage experienced under contract-3077. Although BST
attributes the leakages during that period to a government-directed change
in the concentration of electrolyte from 42 to 45 percent, the record
indicates that leakages continued even after BST had been authorized to
return to using a 42 percent concentration. Modifications (with associated
Requests for Deviations/Waivers) to contract-B111, Nos. P00004, P00005,
P00010, P00016; LAT Lot 7 Test Results, July 15, 1998; BST Letter to Navy,
July 22, 1998; BST Response to Discussions Question, June 27, 2006, at
2-3; Tr. II/177-81, II/186-92, II/205. Likewise, there was at least one
instance of leakage in 1999, under contract-3077, as a result of defective
workmanship. Modification (with associated Request for Deviation/Waiver)
to contract-3077, No. P00016; Tr. at II/219-29. The record also includes a
Product Quality Deficiency Report, dated June 22, 1999, and prepared by
AUTEC, which reports leakage during the third cycle of charging and
discharging the cells (as well as over 50 cells failing to retain the
proper voltage after 4 cycles). Further, 33 cells were returned by AUTEC
to BST in 2000 after cracks were discovered as a result of leaking
electrolyte. Letter from DCMA Hartford to BST, July 11, 2000; Tr.
at I/285-86, I/296, II/211-12. Finally, as noted in the agency's past
performance evaluation, the chairman of the TEP was advised by AUTEC in
connection with the procurement of 8 instances during 2004 and 2005,
involving from 1 to 18 BST Mod 1 cells in each instance, in which the
cells experienced leakages or spillages. Best Value Analysis, Table 1.
BST speculates that the reported leakages were caused by government
mishandling of the cells (e.g., overcharging or dropping the cells, or not
restraining the cells properly after a charged cell had been removed from
the battery). However, the president of BST conceded (when testifying
concerning the reported leakages in 2004 and 2005) that the only way to
determine whether a leakage was the result of a BST-caused problem or a
government-caused problem would be to perform a detailed, thorough failure
analysis on the cell, which was not done for most of the reported
instances of leakage. Tr. at II/319, II/324. In other instances, the
record indicates that BST likely was at fault, e.g., the continued
leakages even after authorization to return to using a 42 percent
concentration of electrolyte or the leakage in 1999 as a result of
defective workmanship. In any case, while it is possible that government
mishandling or use of a cell beyond its expected life may have contributed
to leakages by some cells, BST has not furnished convincing evidence of a
pattern of government mishandling of its cells causing leakages of
electrolyte. Meanwhile, neither the chairman of the TEP, who was the
technical point of contact for contracts-B111, -A978 and -3077, nor the
MK30 program manager at AUTEC, was aware of any government mishandling of
BST's cells that caused leakage of electrolyte. Tr. at I/183-84, I/201-05,
I/284-85, II/326-30. Further, any pattern of mishandling would be expected
to extend to all cells, including Yardney's; however, as discussed above,
no leakages of Yardney MK30 Mod 1 battery cells have been reported. We
conclude that the agency reasonably found that the repeated instances of
BST's MK30 Mod 1 cells leaking electrolyte, contrasted with the absence of
leakages from Yardney's MK30 Mod 1 cells, warranted assigning BST a less
favorable performance risk rating (moderate) than Yardney (low).[5]
The protest is denied.
Gary L. Kepplinger
General Counsel
------------------------
[1] BST did cite its performance of contract-B111 in requesting a waiver
of the First Article Test requirements.
[2] While it appears that the agency revised the testing procedures,
apparently in response, in part, to Yardney's claim that the testing
procedures initially used were improper, the Navy Technical Lead for
contract-LA13 and contract-LA17 testified that the revisions in testing
procedures did not diminish the value of the cells to the Fleet. Tr. at
I/110, I/123-24, I/148, I/156.
[3] BST asserts that the agency also should have considered its
performance under contract Nos. N66604-03-C-0240 (contract-0240) and
N666604-06-C-1381 (contract-1381), for battery cells for the MK30 Mod 2
target, which were listed in its past performance proposal. However, since
the Mod 1 and Mod 2 cells are not interchangeable, we find nothing
unreasonable in the agency's focusing on contract-B111, for the same Mod 1
cells under the RFP, as the best indication of expected future
performance. BST itself recognized this principle in basing its request
for a waiver of FAT on its performance of contracts -B111, -A978 and
-3077, all for Mod 1 cells. In any case, not only was the quantity under
contract-0240 fewer than 1,500 cells (as compared to approximately 13,429
under contract-B111), but because there are only a few MK30 Mod 2
vehicles, which are still under development, BST's Mod 2 cells have not
been tested in the vehicles. As for contract-1381, which was listed as "in
process" in BST's proposal, the record indicates that BST has only
furnished a part of the cell, not the entire cell, under that contract.
Tr. at I/225-30, I/325.
[4] We note that, in addition to the electrolyte spewages or leakages on
which the agency's past performance evaluation focused, the record
indicates that there were other problems with BST cells. For example, a
1999 modification to contract-B111 waived dimensional requirements for one
lot in order to permit acceptance of the lot. Modification No. P00022
(with associated Request for Deviation/Waiver) to contract-B111.
[5] BST asserts that, because the agency's discussion question to
BST--citing "problems with batteries including delivery, voltage,
spillage, weight and dimensional problems," Discussion Question for BST,
June 21, 2006--did not refer to reports from AUTEC citing cracked cases as
the apparent cause for some leakages, the agency failed to satisfy the
requirement under FAR sect. 15.306(b)(1)(i) to raise in discussions
"adverse past performance information to which an offeror has not had a
prior opportunity to respond." However, as discussed above, and as
confirmed by both the contemporaneous evaluation documentation and the
testimony of contracting officials, the agency's concern with BST's past
performance focused on the fact that leakages had been reported, not on
the particular cause of any leakage. Best Value Analysis, Table 1; Tr. at
I/85, I/174, I/193. The agency's discussion questions clearly put the
protester on notice of the leakages.