TITLE: B-299058; B-299058.2, OK Produce; Coast Citrus Distributors, February 2, 2007
BNUMBER: B-299058; B-299058.2
DATE: February 2, 2007
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B-299058; B-299058.2, OK Produce; Coast Citrus Distributors, February 2, 2007
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: OK Produce; Coast Citrus Distributors
File: B-299058; B-299058.2
Date: February 2, 2007
Mark A. McAndrew, Esq., and Philip J. Truax, Esq., Dinsmore & Shohl LLP,
for the protesters.
Christopher Kim, Esq., and Lorinda D. Franco, Esq., Lim, Ruger & Kim, LLP,
and Richard B. Oliver, Esq., McKenna, Long & Aldridge LLP, for Coast
Produce Company, an intervenor.
Jay P. Manning, Esq., and Elliot J. Clark, Jr., Esq., Defense Commissary
Agency, for the agency.
Susan K. McAuliffe, Esq., and Christine S. Melody, Esq., Office of the
General Counsel, GAO, participated in the preparation of the decision.
DIGEST
1. Protests of evaluation of proposals and source selection are denied
where record shows agency's evaluation and awards were reasonable and
consistent with the solicitation's terms; protesters' mere disagreement
with the agency's evaluation and selection does not show they are
unreasonable.
2. Protests that awardee obtained an unfair competitive advantage by
hiring as a consultant a former government employee who had served as a
technical evaluator for a previous procurement are denied where record
shows the individual did not assist in the preparation of the solicitation
and that there is no reason to believe inside information was shared with
the awardee.
DECISION
OK Produce and Coast Citrus Distributors protest the award of two (of
three) contracts to Coast Produce Company under request for proposals
(RFP) No. HDECO2-06-R-0009, issued by the Defense Commissary Agency (DeCA)
for fresh fruits and vegetables (produce) for resale at commissaries
located in DeCA's west region. (The Area 6, Group 1 award covers 8
commissaries in California and Nevada; the Group 2 award covers 22
commissaries in California, Arizona and Nevada; and the Group 3 award, not
challenged here, covers 5 commissaries in Hawaii.) OK Produce and Coast
Citrus contend that the agency's evaluation of the proposals and the award
decisions are unreasonable. The protesters also contend that the awardee
benefited from an improper competitive advantage by hiring a former DeCA
commissary produce manager as a consultant.
We deny the protests.
The RFP, issued as a small business set-aside on June 16, 2006,
contemplated the award of a requirements-type, indefinite-delivery
contract by regional group of commissaries; each group's contract was to
have a 2-year base period with two 12-month option periods. RFP at 28, 45.
Award was to be made to the firm that submitted the proposal deemed to
offer the best value to the agency considering technical capability, past
performance, and price. Technical capability (including subfactors for
experience, quality program, production capability/distribution plan, and
additional support/promotion plan) was significantly more important than
past performance (including subfactors for product delivery, quality
history/customer satisfaction, and business relations); technical
capability and past performance combined were significantly more important
than price. RFP amend. 2, at 13. The RFP provided technical specifications
and performance requirements, and emphasized that offerors' technical
proposals were to detail the firms' capabilities to perform in accordance
with the solicitation's terms.
For the evaluation of price, offerors were to propose a minimum percentage
of patron savings, defined in the RFP as:
the average amount the contractor will save the commissary patron on all
core items over the selling price of the same or similar items from
comparable commercial operations within the local commuting area and/or
geographical area within a 20-mile radius of the commissary location
(excluding membership clubs and convenience type stores), called Market
Basket Pricing.
RFP amend. 2, at 8.
Each offeror also was to propose unit prices for core and non-core produce
items reflecting application of its proposed minimum percentage of patron
savings. Unit prices were to be reviewed for reasonableness and realism,
and to assess the offeror's understanding of the use of the minimum
percentage of patron savings percentage. RFP amend. 2, at 14.
Nine offers were received; eight were included in the competitive range.
Discussions were conducted, and revised proposals were received and
evaluated. The Coast Produce proposal was rated highest technically,
receiving the highest evaluation ratings of all proposals under every
technical capability subfactor and two of the three past performance
subfactors.[1] For Group 1, OK Produce's proposal was rated next highest
technically, and Coast Citrus' proposal was ranked third highest
technically. For Group 2, Coast Citrus' proposal was rated second highest
technically behind Coast Produce's proposal. (OK Produce did not submit a
proposal for Group 2.)
OK Produce offered the highest patron savings percentage of the offerors
for Group 1 (at [deleted] percent), Coast Produce offered the third
highest patron savings percentage (at [deleted] percent for the base
period and [deleted] percent for the option periods), and Coast Citrus
offered the lowest patron savings percentage of all offerors
(at [deleted] percent). For Group 2, Coast Produce offered the second
highest patron savings percentage of all offerors (at [deleted] percent
for the base period and [deleted] percent for the option periods), and
Coast Citrus proposed the lowest percentage of patron savings (at
[deleted] percent).
While the protesters' proposals were noted as having technical strengths,
they were not found to have as many strengths as the Coast Produce
proposal. Despite OK Produce's slightly higher proposed patron savings
percentage for Group 1, the contracting officer determined that, in light
of the RFP's evaluation terms, where technical and past performance
factors combined were significantly more important than price, and the
agency's finding that the strengths of the proposal warranted the price
premium associated with it, Coast Produce's higher technically rated,
slightly higher-priced proposal offered the best value. For Group 2, the
Coast Produce proposal, with a higher technical rating and higher proposed
patron savings than the Coast Citrus proposal, was determined to offer the
best value. Awards were made to Coast Produce for Group 1 and Group 2 (as
well as Group 3). Debriefings were held with the protesters and these
protests followed.
OK Produce and Coast Citrus contend that the agency's evaluation of their
proposals was unreasonable. The protesters mainly contend that, since the
agency's debriefings reported only strengths and no weaknesses in their
final revised proposals, their proposals should have received higher
evaluation point scores. OK Produce contends that, had its proposal
received a higher technical evaluation point score, it would have received
the Group 1 contract in light of its slightly higher proposed patron
savings percentage. Coast Citrus generally contends that if its proposal
had received a higher technical evaluation rating, the agency would have
determined that it presented the best value offer despite its
substantially lower proposed patron savings percentage.
In reviewing protests of alleged improper evaluations and source selection
decisions, it is not our role to reevaluate proposals. Rather, we will
examine the record to determine whether the agency's judgment was
reasonable and in accord with the stated evaluation criteria and
applicable procurement laws and regulations. See Abt Assocs., Inc.,
B-237060.2, Feb. 26, 1990, 90-1 CPD para. 223 at 4. It is an offeror's
obligation to submit an adequately written proposal for the agency to
evaluate, United Def. LP, B-286925.3 et al., Apr. 9, 2001, 2001 CPD para.
75 at 19, and a protester's mere disagreement with the evaluation is not
sufficient to render it unreasonable. Ben-Mar Enters., Inc., B-295781,
Apr. 7, 2005, 2005 CPD para. 68 at 7.
Our review of the record shows a lack of support for the protesters'
challenges, which, though numerous, provide no basis to question the
reasonableness of the agency's evaluation. For instance, while OK Produce
generally contends that the agency should have found a weakness in Coast
Produce's proposal of multiple subcontractors, the protester provides no
support for its assertion that the coordination of the firm's team of
highly experienced firms should have been of concern to the agency. On the
contrary, the agency evaluators found that the awardee's use of current
commissary vendors as subcontractors provided valuable strengths, not only
in terms of the particular subcontractors' directly relevant experience at
the commissaries to be served, but also in terms of their knowledge about
the commissary procedures, their relationships with staff and customers,
and the anticipation of reduced travel time by local vendors which may
better ensure delivery of a fresher product. The protester does not
provide, and our review of the record does not show, any basis to question
the reasonableness of the agency's favorable evaluation of the awardee's
team effort.[2]
OK Produce also contends that its ordering system and contingency plan
deserve more credit than the awardee's system under the experience
subfactor, since, according to OK Produce, its established automated
ordering system has more protections for continuous service during a power
outage. Our review of the record, however, supports the reasonableness of
the agency's evaluation of both firms' automated systems and contingency
plans as sufficient to meet the agency's needs and provide adequate
safeguards for outages, and that OK Produce's proposal was not superior to
Coast Produce's proposal. Specifically, while OK Produce argues that
operation of its ordering system is protected by a back-up generator at
its offices that provides for a longer period of back-up power than the
Coast Produce proposal provided, the record shows that the agency
reasonably considered both offerors' back-up plans sufficient, since, for
instance, although the Coast Produce system would switch to battery power
in the case of a shorter-term electrical outage, there is also longer-term
protection available through the use of back-up servers at other
facilities which would permit continuous service. Similarly, while the
protester believes its generator-based contingency plan is superior in
terms of ensuring product quality in the event of an outage, we see no
basis in the record to find unreasonable the agency's satisfaction with
the awardee's back-up plan providing for hours of battery support,
followed by, if necessary, movement of produce to refrigerated trucks for
storage or transport to the firms' additional facilities. In addition,
since Coast Produce's ordering system is already in use in numerous DeCA
commissaries, the agency cited as an added benefit--unchallenged by the
protester--that there would be a decreased need for work interruptions to
provide training and orientations for a new automated system at the
commissaries. In sum, the protester simply has not shown that the
evaluation in this area was flawed in any way; the firm's disagreement
with the evaluation does not make it unreasonable. See Ben-Mar Enters.,
Inc., supra.
Coast Citrus questions the reasonableness of the agency's assignment of
the same evaluation ratings to the firm's Group 1 and Group 2 proposals,
arguing that the agency failed to evaluate the differences in its proposed
performance of the Group 1 work from its approach to perform the Group 2
work. In this respect, the firm states that it plans to use different
warehouses for each geographical group of commissaries, and proposed to
use a subcontractor for a small group of the Group 2 commissaries. In
response, the agency reports, and the record confirms, that the protester
submitted a single proposal for both groups of commissaries, and that the
proposal does not specify unique capabilities for each warehouse or vendor
for consideration. Rather, the qualifications of the offeror and its
subcontractor are instead generally presented as shared capabilities with
similar strengths and approaches. Under these circumstances, we do not
find unreasonable the agency's determination that the firm's proposal
reasonably warrants the same evaluation rating for each of the regional
groups to be awarded.[3]
Coast Citrus next contends that its proposal's point score for the quality
history/customer satisfaction subfactor of the past performance factor is
unreasonably low given the favorable reference surveys received for the
firm. In particular, the protester alleges that it received past
performance reference ratings similar to those received for the Coast
Produce team of contractors, yet the Coast Produce proposal received a
higher point score rating for the criterion. The record shows, however,
that even if the Coast Citrus proposal received the maximum points
available under this past performance subfactor (which would add an
additional 10 points to its rating under the past performance subfactor),
the Coast Citrus proposal still would not displace the Coast Produce
proposal for award. First, the Coast Citrus proposal is higher-priced than
the Coast Produce proposal. Second, since the Coast Produce proposal
received a higher overall technical score including a score 10 points
higher than Coast Citrus under the more important technical capability
factor, even adding 10 points for past performance simply would not make
the Coast Citrus proposal higher-rated in technical merit than the
awardee's. Under the RFP's evaluation terms, the awardee's lower-priced,
technically superior proposal would remain in line for the award. Since
competitive prejudice is a necessary element of any viable basis of
protest, we have no basis to review the allegation further. See
CRAssociates, Inc., B-282075.2, B-282075.3, Mar. 15, 2000, 2000 CPD para.
63 at 10.
The protesters next generally challenge the price evaluation, contending
that the agency failed to adequately assess the reasonableness and realism
of the proposed patron savings percentages and unit prices as required by
the RFP. We disagree. First, to the extent the protesters contend that the
agency's review of offerors' proposed patron savings was improperly based
on commissary prices rather than commercial supermarket prices, the
protesters are mistaken. The record demonstrates that the prices provided
by the commissaries for the market basket price analysis were obtained
from local commercial supermarkets, in accordance with the solicitation's
provisions.[4] See Agency Decision Summary, Oct. 4, 2006, at 4.
Second, to the extent the protesters allege that the agency failed to
perform the price analysis required by the RFP to assess the
reasonableness and realism of the proposed prices, our review of the
record supports the sufficiency of the agency's review. In accordance with
generally accepted price analysis procedures, the agency compared the
prices received to each other and to the government estimate. See FAR
sect. 15.404-1(b). The RFP did not specify any further price review,
except to generally assess the offerors' understanding of the application
of the patron savings percentage and to confirm that like items were
priced by the offerors.[5] For the latter review, the agency compared each
offeror's proposed patron savings percentage to the proposed prices to
confirm the use of a similar base of items, as well as the offeror's
understanding of the savings percentage. Variation among the offerors'
overall pricing was expected, since produce pricing can vary substantially
not only due to seasonal factors, but also the level of supply and demand
for the item in a region or at a store location, even on a daily basis.
Accordingly, while there were differences in the firms' prices, this was
considered simply to reflect a spread of reasonable prices among the
offerors. Similarly, while the protesters generally assert that the agency
failed to perform a price realism review, again, the solicitation required
only an assessment of realism in terms of the offeror's understanding of
the application of the patron savings percentage and that like items were
offered by the different firms. Neither protester provides any evidence to
suggest that the agency's review of the firms' application of the patron
savings percentage was flawed in any way, or that the variance in prices
indicates use of dissimilar items for pricing purposes.
OK Produce also generally challenges the agency's determination that the
technical superiority of the Coast Produce proposal was worth the price
premium associated with it.[6] The agency's source selection decision
includes a list of technical advantages in the awardee's proposal that
were found to warrant the slight price premium associated with the
proposal in terms of its slightly lower patron savings percentage. The
protesters have not persuasively challenged the reasonableness of the
agency's findings in this regard. For example, the Coast Produce team
currently provides produce to 32 of the 35 commissaries listed in the RFP,
and the agency reasonably regarded this as an advantage in the firm's
proposal, in terms of the commissaries' familiarity with the firm's
automated ordering system and the firm's familiarity with commissary
security and delivery procedures, staff, and the needs of its customers.
Given the reasonableness of the agency's conclusion that the awardee's
proposal offered additional value, we see no basis to question the
trade-off determination, especially since the awardee's technically
superior proposal offers only a slightly lower patron savings percentage.
Lastly, the protesters contend that the awardee obtained an unfair
competitive advantage by hiring a consultant who is a former DeCA
employee. Prior to his December 2005 retirement, the consultant served as
the produce category manager responsible for store support and
merchandising produce, he was a spokesperson for the agency at two
industry roundtables held to solicit industry suggestions on the use of
commercial business practices at the commissaries, and he served as an
evaluator reviewing two technical proposals (but not price proposals)
submitted for a follow-on contract to a short-term test contract awarded
for the provision of produce to the Area 1 commissaries.[7]
OK Produce and Coast Citrus contend that the consultant had a conflict of
interest, that he may have violated post-employment rules for former
government employees, and that he may have shared inside information with
the awardee, giving the firm an unfair competitive advantage in the
procurement.
We reviewed essentially the same allegations involving the same consultant
in our recent decision in Philadelphia Produce Mkt. Wholesalers, LLC,
B-298751, Dec. 8, 2006, 2006 CPD para. 193, concerning the agency's
procurement of produce for commissaries in the eastern region in Areas 3
and 5. In that decision, as applicable here, we noted that the
interpretation and enforcement of post-employment conflict of interest
restrictions are primarily matters for the procuring agency and the
Department of Justice, not our Office. See Medical Dev. Int'l, B-281484.2,
Mar. 29, 1999, 99-1 CPD para. 68 at 7-8; Physician Corp. of Am., B-270698
et al., Apr. 10, 1996, 96-1 CPD para. 198 at 5 n.1. Our role, within the
confines of a bid protest, is to determine whether any action of the
former government employee may have resulted in prejudice for, or on
behalf of, the awardee during the award selection process. See Creative
Mgmt. Tech., Inc., B-266299, Feb. 9, 1996, 96-1 CPD para. 61 at 7.
Specifically, we review whether an offeror may have prepared its proposal
with knowledge of inside information sufficient to establish a strong
likelihood that the offeror gained an unfair competitive advantage in the
procurement. PRC, Inc., B-274698.2, B-274698.3, Jan. 23, 1997, 97-1 CPD
para. 115 at 19-20. Our review includes consideration of whether the
former government employee had access to competitively useful information,
as well as whether the individual's activities with the firm likely
resulted in disclosure of such information. Id. An individual's
familiarity with the type of work required under a solicitation from prior
government employment is not, by itself, evidence of an unfair competitive
advantage. Id.
Consistent with our finding in the Philadelphia case, we conclude here
that, even if this individual's prior employment with DeCA had given him
access to inside information regarding the agency's initial produce
procurements, it appears much, if not all, of the alleged inside
information has in fact been shared with the produce industry through the
agency's informational roundtables, and thus cannot be characterized as
inside information. The agency reports that the current solicitation was
issued without this individual's assistance and that material differences
exist in each of its Area produce procurements; here, for instance, the
contractor faces additional challenges in terms of warm climate conditions
and, in some locations, harsh terrain, as well as ensuring produce
delivery to the commissaries in Hawaii. As we noted in the Philadelphia
decision, the consultant signed a non-disclosure agreement certifying that
he would not disclose contractor or source-selection information that he
may have learned as an evaluator. Moreover, as in that case, there is no
indication in this record that the awardee's proposal was prepared based
on any inside information.
Both the consultant and the awardee deny that any communication involving
inside information took place. The awardee is an experienced federal
government contractor that prepared its own proposal for additional work
at numerous commissaries that it already successfully serves. The awardee
reports that the consultant did not write the proposal, but was asked to
review it prior to its submission. The awardee and the consultant affirm
that the consultant's suggestions were editorial in nature, including
general suggestions to provide additional detail, to identify the proposal
as containing proprietary information, to describe workforce and
activities, and to make assorted style/format changes for consistency.
This advice does not suggest the use of inside information, or, for that
matter, any information that could reasonably be found to have provided an
unfair competitive advantage to this experienced firm.[8] Rather, the
record here shows that the awardee's favorable evaluation was based on the
strength of the firm's established business operations and experience,
described in its comprehensive technical proposal. Accordingly, we have no
reason to question the propriety of the awards.[9]
The protest is denied.
Gary L. Kepplinger
General Counsel
------------------------
[1] Coast Produce submitted two proposals, one for separate group awards,
and an alternate proposal of higher patron savings percentages for the
award of all three contracts in Area 6. It is the alternate proposal that
was selected for award and is discussed in this decision. The protesters'
and the awardee's proposals were all highly rated; out of a total of 190
available evaluation points (for the technical capability and past
performance factors combined), the Coast Produce proposal received 176
points, OK Produce's proposal received 173 points, and Coast Citrus'
proposal received 159 points.
[2] The protesters' allegation that the awardee failed to identify which
subcontractors would service which commissaries is factually incorrect.
Attachment D of the alternate proposal, for instance, identifies with
specificity which firm will service its neighboring commissaries. Further,
to the extent the protesters contend the awardee was given credit in its
Group 1 evaluation for a subcontractor the awardee plans to use only in
the performance of the Group 3 award, the record shows that although an
evaluation summary lists all of the firms' subcontractors, the final
source selection documentation shows, contrary to the protesters'
contention, that the Group 3 subcontractor was considered only for the
evaluation of that geographical area.
[3] The protesters also generally contend that the agency failed to
conduct meaningful discussions with them. The protesters essentially
contend that the agency should have had further discussions with them in
any areas where their proposals received fewer than the maximum evaluation
points available. As the agency points out, however, unlike an offeror
that has remaining weaknesses warranting further discussions with that
firm, all of the initial weaknesses cited in the protesters' proposals
were cured during the initial round of discussions. Contrary to the
protester's argument, there simply is no requirement that the contracting
officer, either initially or through successive rounds of discussions,
discuss every area where a proposal could be improved. See Federal
Acquisition Regulation (FAR) sect. 15.306(d).
[4] The protesters allege that it is unreasonable that although the agency
initially questioned the awardee's calculation of its proposed patron
savings percentage (having initially evaluated the firm's offered savings
as less favorable than proposed), it then accepted the offeror's savings
percentage without question. The protesters are mistaken. As the agency
explained in its supplemental reports, its initial review of the awardee's
proposed patron savings percentage was flawed because the price evaluator
mistakenly averaged the comparative market basket prices received as if
obtained from four stores instead of the three actually used, which made
the average price much lower than the corrected average reflecting only
three stores. The protester provides no reason to question the validity of
the agency's explanation.
[5] The RFP provided as follows:
The Government will evaluate each offeror's proposed minimum percentage
of patron savings, in addition to evaluating the proposed unit prices
for price reasonableness in relation to the total requirements of the
solicitation. The proposed unit prices should reflect the application of
the proposed minimum percentage of patron savings for the specified week
and will indicate an understanding of the percentage of patron savings
application, in addition to providing the government with the
opportunity to perform a price realism assessment. . . . The contracting
officer will conduct price analysis to determine price reasonableness.
RFP amend. 2, at 14.
[6] The protesters also generally allege that the agency's trade-off
analysis for the source selection was improper because, according to the
protesters, the underlying evaluation of proposals was improper. This
allegation warrants no further consideration, since, as discussed above,
the record squarely supports the reasonableness of the evaluation of the
proposals.
[7] In December 2004, a joint test program was held with DSC-P and DeCA
personnel to validate the use of a new business model at 20 commissaries
(Area 1) and to confirm the produce industry's capability to meet the
commissaries' produce service needs. In May 2005, DeCA announced its
satisfaction with the test program and subsequently issued the follow-on
procurement for Area 1.
[8] The awardee reports that many of these suggestions were not adopted by
the firm due to time constraints. Intervenor's Supplemental Comments, Dec.
27, 2006, at 7.
[9] The protester also infers that the consultant acted improperly by
serving as a messenger, delivering the awardee's proposal to the agency
when the awardee's personnel were delayed in travel. We cannot agree with
the protester's speculation that performance of this administrative task
may have conveyed an unfair competitive advantage to the firm. See PRC,
Inc., supra.