TITLE: B-299227; B-299227.2, L-3 Communications Corporation, BT Fuze Products Division, March 14, 2007
BNUMBER: B-299227; B-299227.2
DATE: March 14, 2007
***********************************************************************************************
B-299227; B-299227.2, L-3 Communications Corporation, BT Fuze Products Division, March 14, 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: L-3 Communications Corporation, BT Fuze Products Division
File: B-299227; B-299227.2
Date: March 14, 2007
Louis D. Victorino, Esq., Anne B. Perry, Esq., Marko W. Kipa, Esq., and
Jessie J. Williams, Esq., Sheppard Mullin Richter & Hampton LLP, for the
protester.
Alison L. Doyle, Esq., and Jennifer M. Morrison, Esq., McKenna Long &
Aldridge LLP, and Randall W. Sweeney for Canadian Commercial
Corporation/SNC Technologies, Inc., the intervenor.
Maj. Walter R. Dukes, and John D. Gates, Esq., Department of the Army, for
the agency.
Guy R. Pietrovito, Esq., and James A. Spangenberg, Esq., Office of the
General Counsel, GAO, participated in the preparation of the decision.
DIGEST
In a negotiated procurement which provides for award on the basis of a
cost/technical tradeoff, a protest challenging the agency's evaluation and
source selection decision is denied, where the record establishes the
reasonableness of the the agency's judgment that the awardee's superior
approach, understanding, and level of expertise outweighed the protester's
price advantage.
DECISION
L-3 Communications Corporation, BT Fuze Products Division, protests the
award of a contract to SNC Technologies, Inc., via Canadian Commerical
Corporation, under request for proposals (RFP) No. W52P1J-05-R-0137,
issued by the Department of the Army for M314A3 illuminating
cartridges.[1] L-3 challenges the agency's evaluation of proposals,
conduct of discussions, and source selection decision.
We deny the protests.
The M314A3 cartridge is a 105-millimeter (mm), visible light, battlefield
illumination cartridge intended for signaling or illuminating a designated
area.
The M314A3 projectile is [a] hollow steel forging with a streamlined
ogive,[2] a gilding metal rotating band, and a pinned base plug. The
unfuzed projectile (C541) is assembled with a closing plug screwed into
the nose for shipping and storage. The projectile cavity contains an
expelling charge, illuminating canister, and parachute assembly. The
complete projectile assembly is free fitted to a cartridge case. The
cartridge case contains a percussion primer assembly and seven
individually bagged and numbered propelling charge increments.
Agency Report (AR), Tab 3, Source Selection Evaluation Plan, at 1. The
solicitation was restricted to domestic and Canadian sources within the
national technology and industrial base.[3]
The RFP provided for the award of a fixed-price contract for M314A3
cartridges for a base and 4 option years. The base-year requirement was
for a two-phased, pre-production optimization effort; under phase one, the
contractor would address manufacturing process definition, procedures, and
control, and under phase two would provide 890 first article test (FAT)
cartridges. RFP sect. B, at 5; Statement of Work at 17. For each of the
option years, offerors were required to provide fixed-unit-prices for a
range of cartridges up to a maximum quantity of 31,216 cartridges per
option year. RFP amend. 3, at 3.
The RFP provided for award on the basis of a cost/technical tradeoff and
identified the following evaluation factors and subfactors:
1. Technical/management factor[4]
a. Process optimization/FAT
b. Essential processes, procedures, skills (EPPS)
c. Integrated master plan/delivery schedule
d. System integration/program management
e. Quality
2. Past performance factor
a. On-time delivery
b. Quality
3. Financial capability factor
4. Price factor
5. Small business utilization factor
The technical/management factor was stated to be more important than the
past performance factor or the financial capability factor, and the past
performance and financial capability factors were stated to be equally
important and to be each slightly more important than the price factor.
The price factor was stated to be significantly more important than the
small business utilization factor. Offerors were informed that all
non-price factors, when combined, were significantly more important than
the price factor. RFP sect. M, at 68-70.
The RFP provided for both written proposals and oral presentations, and
included detailed proposal preparation instructions. Offerors were
informed that they would address the technical/management factor only
through the oral presentation, for which offerors were allowed to provide
charts and slides.[5] As part of the oral presentation for the process
optimization/FAT subfactor, offerors were to describe, among other things,
their assessment of the processes that they considered high risk and to
describe a plan which optimizes these processes through mitigation, design
of experiments (DOE), and analysis. RFP sect. L, at 64. In this regard,
the RFP informed offerors that their understanding of how these critical
processes could affect ballistic performance would be evaluated under this
subfactor. RFP sect. M, at 68. For the EPPS subfactor, offerors were to
address in the oral presentation
the essential processes (including key manufacturing processes), skills,
knowledge, and availability of the offeror[']s, subcontractor[']s, or
partner[']s, if applicable, facilities and labor force to include, but
not limited to, management, quality engineering, and production.
RFP sect. L, at 64. Offerors were informed that under the EPPS subfactor
the agency would evaluate the offeror's "essential skills and knowledge."
RFP sect. M, at 69. With respect to the integrated master plan/delivery
schedule subfactor, the RFP required that offerors demonstrate their
ability to meet the required delivery schedule.
The Army received three proposals in response to the RFP, including those
of L-3 and SNC (the incumbent contractor). Following oral presentations,
the agency included the proposals of L-3 and SNC in the competitive range
and conducted written discussions with those two firms.[6] Revised
proposals were evaluated as follows:
+------------------------------------------------------------------------+
| | L-3 | SNC |
|--------------------------+----------------------+----------------------|
|Technical/management | Fair | Excellent |
|--------------------------+----------------------+----------------------|
|Past performance |Adequate/Moderate Risk|Adequate/Moderate Risk|
|--------------------------+----------------------+----------------------|
|Financial capability | Low Risk | Low Risk |
|--------------------------+----------------------+----------------------|
|Small business utilization| Excellent | Excellent |
|--------------------------+----------------------+----------------------|
|Price | $[Deleted] | $69,999,085 |
+------------------------------------------------------------------------+
Contracting Officer's Statement at 4.
L-3's "fair" evaluation rating under the technical/management factor
primarily reflected the agency's judgment that, although L-3's proposal
presented a number of strengths, it included several significant
weaknesses that posed schedule and performance risks.[7] In particular,
the agency found that L-3's discussion of the likely causes of
illuminating cartridge or "candle" failure,[8] and plan to use push-out
testing to assess consolidation quality demonstrated a lack of knowledge
and understanding, and reflected significant dependence upon a major
subcontractor--Crane Army Ammunition Activity[9]--for expertise. In this
regard, the agency noted that x-ray testing, and not push-out testing, was
the appropriate testing methodology to inspect consolidation quality for
cracks and voids. The Army also found that, although the use of "crush
testing"[10] was incorporated in the SOW as a method of assuring
composition quality, this method was not addressed in L-3's proposal. In
addition, the agency found that L-3's proposed introduction of an o-ring
and discussion of the fiberboard-lined configuration for the candle also
indicated L-3's lack of knowledge and understanding, and the firm's
significant reliance upon its candle subcontractor. In short, the agency
was concerned that L-3 lacked its own core competency and understanding,
and was overly dependent upon Crane for expertise. AR, Tab 10, Source
Selection Decision Document (SSDD), at 7-10.
The agency was also concerned that L-3 had not demonstrated that it could
satisfy the contract's base year delivery schedule for FAT cartridges
because L-3 had indicated that the contract schedule could only be
satisfied by completing the optimization of candle illumination and
procurement of specialized equipment prior to contract award, and L-3 had
not provided sufficient details that indicated that these pre-award steps
would be completed prior to award. In addition, L-3 did not address the
schedule of the subcontractor that L-3 proposed for the forged projectile
bodies. Id. at 10-11.
L-3's "adequate/moderate risk" rating for the past performance factor
reflected the agency's conclusion that, although L-3 had not previously
produced any of the components of the M314A3 cartridge, it had experience
as a systems integrator overseeing the ordering, delivery and quality of
similar items. The agency found, however, that L-3 and some of its
proposed subcontractors "have some history of untimely deliveries due to
contractor fault" that caused some doubt that L-3 could timely perform the
contract. In addition, the agency noted that the Army had experienced
quality problems with L-3's proposed candle subcontractor (Crane) under
the prior contract. Id. at 15-17.
SNC's "excellent" evaluation rating under the technical/management factor
reflected the agency's judgment that SNC's proposal contained a number of
strengths and no deficiencies or weaknesses. In particular, the agency
found that SNC had demonstrated the firm's expertise and capability to
meet the government's requirements. In addition, the agency found that SNC
had presented a detailed and realistic schedule to satisfy the key program
milestones. Id. at 3-5.
SNC's "adequate/moderate risk" rating for the past performance factor
reflected the agency's judgment that, although SNC had generally
demonstrated a history of quality products delivered on-time or ahead of
schedule, SNC had quality and delivery issues on the prior contract for
the M314A3 cartridge. Id. at 14. These quality and delivery problems
concerned the candle produced by its subcontractor, Crane. The agency
disagreed with SNC's contention that the firm's problems with the candle
were the result of a defective government technical data package (TDP).
Id. at 17. In this regard, the agency states that, although the TDP was
not "perfect, it is adequate." Agency's Post-Hearing Comments at 7.
The source selection authority (SSA) concluded from his review that SNC's
higher-rated proposal offered the best value to the government despite
L-3's $[Deleted] price advantage. In this regard, the SSA stated that SNC
had demonstrated its capability to successfully perform the contract and
that L-3 had not. Specifically, the SSA noted that L-3 had failed to
demonstrate the technical competence and planning necessary to
successfully perform and to demonstrate that the firm would "have the
essential equipment, processes and procedures in place in such a time so
as to be able to perform in accordance with the contract requirements."
AR, Tab 10, SSDD, at 23. Award was made to SNC, and, after a debriefing,
these protests followed.
L-3 complains that the Army misevaluated L-3's proposal under all of the
evaluation factors. 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. A protester's
mere disagreement with the agency's judgment does not establish that an
evaluation was unreasonable. UNICCO Gov't Servs., Inc., B-277658, Nov. 7,
1997, 97-2 CPD para. 134 at 7.
L-3 argues that the agency improperly downgraded the firm's proposal under
the technical/management factor for failing to discuss x-ray testing of
the candle, even though such testing was not required by the RFP and SNC
also did not discuss the use of x-ray testing.
The Army agrees that the RFP did not require offerors to discuss x-ray
testing, and that, in fact, SNC did not discuss x-ray testing of the
candle and was not downgraded for failing to do so. See Tr. at 39-40. The
Army states, however, that it was not L-3's failure to discuss x-ray
testing that resulted in the assessment of a deficiency in L-3's proposal
under the process optimization/FAT subfactor. Rather, the agency's
evaluation concern was that during discussions L-3 stated that it would
evaluate the consolidation quality of the candle and search for cracks and
voids in the illuminant through the use of a push-out test, but the
push-out test was not the appropriate test for inspecting for cracks and
voids.[11] The agency notes in this regard that, to examine the interior
of the illuminant for cracks and voids, as suggested by L-3, x-ray testing
would be necessary, and that L-3's discussion of push-out testing for this
purpose demonstrated the firm's lack of understanding and expertise. See
Tr. at 38 ("[t]o my knowledge, [x-ray testing is] the only way that you
would be able to see a crack or void.")
L-3 responds that it did not propose the use of push-out testing to assess
cracks and voids in the illuminant, but only proposed this test to assess
adherence of the fiberboard liner to the canister.[12] See Protester's
Post-Hearing Comments at 16. In addition, L-3 argues, citing its response
in discussions, that it discussed other methods for ensuring proper
consolidation that demonstrated its experience and understanding. Id. at
16-17, citing AR, Tab 7.1, L-3's Discussion Response, at 3-4.
We find from our review of the record that it was reasonable for the Army
to conclude that L-3 had proposed the use of push-out testing to assess
cracks and voids in the illuminant and that this indicated a lack of
expertise and understanding on L-3's part.[13] Specifically, in its
discussion questions, the Army informed L-3 that it had not addressed
critical parameters and process inspections; that L-3 had provided no
detail concerning how particle size distribution, mixing techniques,
material preparation and cure time would be evaluated; and that L-3 had
not described the difficulties involved in controlling the manufacturing
process for the candle.[14] In response, L-3 stated
[Crane] has found that particle size distribution (magnesium and NaO3
[sodium trioxide]) and mixing technique are critical for a consistent
illuminating candle. Consolidation (pressing) method and parameters are
also critical to candle performance. Repeatable consolidation forces of
hydraulic press, ram speed and dwell time (5 seconds) are . . .
controlled. Consolidation punch surface finishes, clearance with
canister and geometry of pressing services have been developed and are
controlled to ensure superior candle performance. Control of these
consolidation parameters ensures uniform density, free of crack and
voids and no surface discontinuities between pressed increments and
canister. Push out force testing is used to evaluate adherence to
canister, which is an indicator of candle consolidation quality.
AR, Tab 7.1, L-3's Discussion Response, at 3.
We think that the Army could reasonably conclude from the foregoing that
L-3 had proposed to use push-out testing in part to assess candle
consolidation quality, which, as L-3 indicated in its quote above, would
include assuring an illuminant "free of cracks and voids." At best,
viewing L-3's response in the light most favorable to the protester, L-3's
response was ambiguous with respect to whether L-3 believed that the
push-out test would assess whether the illuminant was free of cracks and
voids. It is an offeror's obligation to submit an adequately written
proposal, see United Defense LP, B-286925.3 et al., Apr. 9, 2001, 2001 CPD
para. 75 at 19, and where, as here, an offeror introduces an ambiguity in
its proposal after discussions, we will not object to the agency's
reasonable interpretation of the proposal. See Marylou's Transp. Serv.,
B-261695, Sept. 28, 1995, 95-2 CPD para. 154 at 3.
With respect to L-3's argument that other parts of its response during
discussions indicated the firm's understanding and expertise with respect
to ensuring consolidation quality, we agree that L-3 provided additional
information concerning controlling particle size, mixing technique, and
material preparation processes. This, however, does not demonstrate that
the Army was unreasonably concerned with L-3's apparent inappropriate use
of push-out testing to assess cracks and voids in the illuminant,
particularly where the agency found that other aspects of L-3's proposal
indicated a lack of understanding and expertise.[15] To the extent that
L-3 is arguing that this additional information overcomes the agency's
concerns with the firm's understanding and expertise, this is nothing more
than mere disagreement with the agency's judgment that does not establish
that the evaluation was unreasonable. See UNICCO Gov't Servs., Inc.,
supra.
We also do not find that the Army treated L-3 and SNC disparately,
although SNC's proposal was not downgraded where SNC also did not discuss
x-ray testing and had proposed push-out testing. As discussed above, the
record supports the agency's explanation that L-3 was not downgraded for
failing to propose the use of x-ray testing, see Tr. at 39, 42
(solicitation did not require the use or discussion of x-ray testing, and
the evaluators did not anticipate that offerors would discuss x-ray
testing), but for proposing the apparent use of an inappropriate test
(push-out testing) to inspect for cracks and voids where the appropriate
test to perform such an inspection was x-ray testing, which to the agency
evidenced a lack of expertise and understanding. SNC's proposal, on the
other hand, did not propose the use of push-out testing to inspect for
cracks and voids, but only for verifying "base plate crimping
resistance"--an apparently appropriate object of this test.[16] See SNC's
Technical/Management Slides at 89. In short, SNC's proposal did not
exhibit the same deficiency that was associated with L-3's discussion of
push-out testing, and therefore the agency's evaluation in this regard did
not reflect disparate treatment.
L-3 also objects to the Army's assessment of a deficiency in the firm's
proposal under the technical/management factor with respect to L-3's
"proposal" to introduce an o-ring at the base of the projectile body to
reduce candle break-up and malfunction. L-3 argues that it only "proposed
investigating the addition of an o-ring as a means of achieving better
performance." Protest at 5 (emphasis in original).
The Army explains that, in its initial proposal, L-3 discussed providing a
base plug seal (which the agency states is an o-ring) as a redundant
safety measure to assure that excess gasses would not get into the
projectile; this was viewed as neither a strength nor a weakness because
it addressed a "problem" that the agency had never experienced with this
cartridge. Agency's Post-Hearing Comments, Supplemental Legal Memorandum,
at 5, citing Tr. at 69-70. However, in response to discussions, wherein
L-3 was informed that "[p]otential failure modes such as candle drop out,
streamers, non-ignition were not addressed," AR, Tab 6, Discussion Letter
to L-3, at 1, L-3 stated that it would "consider o-ring seal at base
plug/body interface" to address "excessive pressurization of canister
exterior surface," which L-3 identified as a "speculative" cause of early
candle burnout. AR, Tab 7.1, L-3's Discussion Response, at 6. In this
regard, L-3 stated that it "believes a redundant gas seal . . . to
restrict inbore propellant gases from entering the projectile body is
beneficial in optimizing candle performance." Id. at 4. The agency's
technical evaluators did not believe inserting an o-ring into the
cartridge design would have any impact on candle burn time, but viewed
L-3's assertions regarding the o-ring as indicating a lack of
understanding and technical competency with respect to the functioning of
the cartridge. See Contracting Officer's Statement at 9-10; Tr. at 70-72.
L-3 has not shown that the agency's conclusion that L-3's suggestion or
proposal to investigate the possibility of introducing the o-ring at the
base of the projectile to control pressure on the exterior of the surface
of the candle demonstrated a lack of understanding on L-3's part, was
unreasonable.[17] For purposes of assessing L-3's understanding, we do not
find any meaningful difference in whether L-3 proposed the addition of the
o-ring or only proposed investigating the addition of the o-ring.
L-3 also complains that the Army unreasonably downgraded the firm's
proposal to have its candle subcontractor, Crane, provide a
fiberboard-lined candle configuration, where SNC also proposed to use
Crane and to similarly provide a fiberboard-lined candle.
The Army responds that neither L-3's nor SNC's proposal was downgraded for
proposing a fiberboard-lined candle. Rather, the agency states that the
deficiency assessed in L-3's proposal with respect to the fiberboard liner
reflected the agency's concern that L-3's discussion response indicated
the firm's lack of understanding and an undue dependence upon Crane, its
candle subcontractor.[18] Agency's Supplemental Legal Memorandum at 4.
L-3 initially proposed to investigate both fiberboard-lined and
epoxy-lined candle configurations.[19] Because L-3's proposed candle
subcontractor did not have the equipment or facilities necessary to
provide epoxy-lined candles, the Army asked L-3 to address its proposed
liner configuration and identify required equipment and facilities.[20] In
response, L-3 informed the Army that
[Crane] strongly recommends the fiberboard liner design . . . over the
3-part epoxy liner design. This design has not only proven successful in
numerous other illuminating rounds (60, 81 & 120mm mortar rounds, 155mm
artillery round & Navy 5" round) but it also requires less equipment,
less ingredients, and is much less operator dependent.
AR, Tab 7.1, L-3's Discussion Response, at 33.
This response, the Army found, demonstrated that L-3 did not have any core
competency with respect to producing the fiberboard-lined candle, and that
L-3 completely relied upon its candle subcontractor's expertise. In this
regard, the Army noted that L-3's response failed to recognize that the
munitions identified in L-3's discussion response, with the exception of
the 155mm artillery round, were dissimilar to the M314A3 cartridge, having
"different operating parameters tha[n] the fiberboard liner [we'll] see in
gun launch and functioning of [the M314A3] cartridge"; nor did L-3
indicate that it was aware that, at the time of the firm's discussion
response, the fiberboard-lined configuration for the 155mm projectile had
not been qualified. Tr. at 34-35; see Tr. at 118 (As compared to the
cartridge being procured here, "the mortar rounds see a much different
ballistic environment, the velocity is not as extreme in the mortar
rounds, the spin is not as extreme in the mortar rounds. Thus, when the
parachute deploys, the yanking, whatever, it is not as violent.") In sum,
L-3's discussion responses simply failed to demonstrate to the Army that,
apart from the expertise provided by its candle subcontractor, L-3 had any
level of expertise or core competency that would allow it to manage its
candle subcontractor's performance.[21]
L-3 argues, however, that it was reasonable for the firm, as the prime
contractor, to rely upon the expertise of its candle subcontractor, and
that SNC similarly relied upon the expertise of Crane in providing the
fiberboard-lined candle. In this regard, L-3 cites SNC's response in
discussions, which attached a memorandum from Crane explaining that Crane
had tested the use of a epoxy liner in the 81mm and 120mm mortar munitions
and in the preliminary testing of the 155mm artillery munition, and found
that these munitions failed ballistic testing; based upon these tests,
Crane "offered and SNC accepted [the fiberboard-lined] design for the
105mm program." See AR, Tab 7.2, SNC Discussion Response, attach., Crane
Memorandum, Sept. 12, 2006, at 1.
Although we agree with L-3 that it is not unreasonable, per se, for a
prime contractor to rely upon the expertise of its subcontractor, we also
do not find that it was unreasonable for the Army to be concerned,
consistent with the RFP evaluation criteria, with whether a prospective
prime contractor had a sufficient core competency to allow that contractor
to manage its subcontractor's performance. In this regard, the RFP
provided that the agency would evaluate the offeror's "essential skills
and knowledge" under the EPPS subfactor. RFP sect. M, at 69. Moreover, we
agree that the hearing testimony supports the Army's view that each
offeror's "process controls would require [Crane] to tailor its use of
fiberboard liners to the specific prime contractor." See Agency's
Post-Hearing Comments, Supplemental Legal Memorandum, at 6. Specifically,
one of the agency's technical evaluators (a mechanical engineer from the
Army's Picatinny Arsenal in New Jersey, who was the agency's project
officer for the M314A3 cartridge) testified that the fiberboard liner is a
critical component of the cartridge, and that it was the prime
contractor's responsibility to inform the candle subcontractor of the
critical dimensions for the fiberboard liner and to decide on necessary
inspections and testing for the fiberboard liner. Tr. at 32-33. He also
testified that, because the TDP for this cartridge was "marginal" and had
a fairly large "tolerance band" for satisfying TDP requirements, it was
essential that the prime contractor have an understanding of the processes
involved in producing the candle, so that the prime contractor could
control proposed design changes and resolve any performance issues. Tr. at
72-73.
Unlike L-3's proposal, the Army found that SNC's proposal demonstrated the
firm's complete and comprehensive understanding of the M314A3 cartridge.
Compare AR, Tab 9, Initial Technical/Management Evaluation of SNC's
Initial Proposal, at 1 ("SNC has identified all necessary resources along
with a detailed approach to performing the effort" and "SNC's approach is
realistic, achievable and supportable."), with Tab 8.11,
Technical/Management Evaluation of L-3's Initial Proposal, at 1 ("L-3's
approach[,] although minimally adequate, does not provide a comprehensive
technical understanding of the issues involved" and L-3 did not
"demonstrate a level of understanding of the candle's critical
processes/parameters and how they must be controlled to assure optimum
performance.") Thus, while both firms proposed to use Crane to provide
fiberboard-lined candles, the record shows that the Army reasonably found
that SNC provided a more detailed discussion of the candle in its
technical proposal that demonstrated the firm's own expertise and
competency, and ability to manage its candle subcontractor's performance.
See SNC's Technical/Management Oral Presentation Slides at 18-32. L-3's
discussion of the candle and Crane was more general. See L-3's
Technical/Management Oral Presentation Slides at 61-65.
In sum, we find no basis in this record to conclude that the Army
unreasonably concluded that L-3 had failed to demonstrate its own
expertise and core competency for this RFP work, but that SNC had
demonstrated its own capabilities to manage the work.
L-3 also complains that the agency treated L-3 and SNC disparately under
the integrated master plan/delivery schedule subfactor of the
technical/management factor where the agency evaluated L-3's proposal as
"fair" because L-3 had not updated its proposed schedule to reflect a
later award date, whereas SNC's proposal was evaluated as excellent under
this subfactor, even though it did not update its proposed schedule. See
Protester's Supplemental Comments at 11.
We do not agree with L-3 that the difference in the firms' ratings under
the integrated master plan/delivery schedule subfactor was based upon the
agency's assessment that L-3 had not updated its proposed schedule to
reflect a later award date. Rather, the evaluation record and source
selection decision show that L-3's "fair" rating for this subfactor
reflected the evaluators' and SSA's judgment that L-3 had failed to
provide quotes or other information from its propellants or cartridge case
subcontractors or address the schedule of its forged projectile body
subcontractor to demonstrate that these subcontractor could meet L-3's
proposed schedule. In addition, L-3's rating reflected the evaluators' and
SSA's concern that L-3's master schedule was premised upon completing
optimization of the candle and procurement of specialized load, assembly
and packing (LAP) equipment prior to award, and that L-3 had provided no
information "as to the progress of the illuminating candle optimization or
what steps in the LAP equipment procurement effort were completed." AR,
Tab 10, SSDD, at 10-11. Based on this record, we find that the agency
reasonably concluded that L-3 presented a "high" risk that it could not
accomplish the process optimization effort within 12 months. See id.;
Tab 8, Final L-3 Technical/Management Evaluation, at 3-4; Tr. at 89-91,
119-20.
On the other hand, SNC's "excellent" rating under the integrated master
plan/delivery schedule subfactor reflected the evaluators' and SSA's
judgment that SNC had provided a complete and comprehensive proposal that
demonstrated a realistic and detailed schedule, supported by all necessary
subcontractors, facilities and equipment. In addition, the agency found
that SNC had [Deleted] with ballistic test facilities, test laboratories,
and key suppliers and that this provided schedule risk mitigation. See AR,
Tab 9.4, SNC's Integrated Master Plan/Delivery Schedule Evaluation; Tab
10, SSDD, at 4-5. In this regard, the SSA testified that, unlike L-3's
proposed schedule, SNC's schedule was based upon tasks and milestones that
began at the time of award and appeared technically reasonable. Tr. at
120.
In short, we find reasonable the agency's evaluation of L-3's and SNC's
proposals under the integrated master plan/delivery schedule subfactor.
L-3 also contends that the agency unreasonably did not consider under the
technical/management evaluation factor that SNC had an approximately
[Deleted] percent failure rate under the prior contract and that SNC
attributed its performance problems to the government-provided TDP, a
contention which the agency rejected in its evaluation.[22] The Army
responds that SNC's performance problems under the prior contract and the
contention that these problems were due to the TDP were addressed in the
agency's past performance evaluation and ultimately considered by the SSA
in his selection decision, and did not have to be considered in the
technical/management proposal evaluation.
We agree with the Army that SNC's past performance problems and contention
that these problems were due to the TDP were properly considered by the
agency in the evaluation and source selection decision. Specifically,
SNC's performance problems under the prior contract were considered under
both past performance subfactors--on-time delivery and quality--and
resulted in SNC's proposal being evaluated as "adequate" with "moderate
risk." See AR, Tab 9.7, SNC's Past Performance Evaluation. In this regard,
the agency noted under the quality subfactor that
SNC thoroughly detailed the extensive investigations taken during the
previous contract. A number of variables were addressed and many
reasonable actions were taken by SNC, additionally extensive efforts by
the Government Technical Community were extended to resolve these
issues. Not relieving SNC of any of the end item accountability as a
System's Contractor, but this evaluation indicates during this previous
contract a large amount [of] resources were expended by SNC to implement
corrective actions. There does seem to be increased risk associated with
the production of M314A3 Illumination Candle. The knowledge SNC and the
Government has gained during the last contract should be seen as a
mitigating factor, but SNC's previous failures have indicated an
uncomfortable level of risk.
AR, Tab 9.10, SNC's Past Performance Quality Subfactor Evaluation, at 1.
In making his selection decision, the SSA was specifically aware of both
SNC's prior performance problems and contention that these problems were
due to the TDP, and decided that SNC presented some delivery and
performance risk. See AR, Tab 10, Source Selection Decision, at 13-14, 17.
We do not agree with L-3 that the agency was also required to downgrade
SNC's proposal under the technical/management factor for these prior
failures and its contentions regarding the TDP, particularly where the
agency itself was of the view that the TDP was in fact "marginal" and
provided contractors with a certain amount of discretion with respect to
producing the candle. See Tr. at 49-51. Thus, given SNC's otherwise
excellent technical/management proposal and the SSA's knowledge and
consideration of SNC's position regarding the TDP, the agency's decision
to not specifically consider SNC's TDP position in the evaluation of the
firm's technical/management proposal was unobjectionable.
L-3 also complains that while the agency downplayed SNC's past performance
problems under the prior contract, it unduly and incorrectly emphasized
L-3's past performance issues. With respect to L-3's past performance
evaluation, the agency noted, among other things, late delivery
performance problems with L-3's proposed parachute assembly subcontractor
and projectile metal parts subcontractor and quality concerns with its
candle subcontractor and parachute assembly subcontractor. L-3 does not
contend that its subcontractors did not have these evaluated performance
problems, but only argues that the Army did not provide enough credit for
the fact that its proposed parachute assembly subcontractor and projectile
metal parts subcontractor had corrected their late delivery problems.
However, the record shows that the Army did credit L-3's proposed
parachute assembly subcontractor with correcting its delivery problems;
there is no evidence in the record, however, that L-3's proposed
projectile metal parts subcontractor had corrected its delivery problems.
See AR, Tab 8.8, L-3's Past Performance Evaluation, at 1-2; see also Tab
10, SSDD, at 15-17.
With respect to L-3's argument that SNC's past performance should have
been more severely downgraded than L-3's due to SNC's and Crane's
performance problems under the prior contract, the SSA ultimately
concluded with respect to SNC's and L-3's past performance that, although
each firm had "encountered problems in the past, whether it is
attributable to their performance or that of a subcontractor, there is no
evidence that they did not take adequate action to quickly correct the
problem."[23] AR, Tab 10, SSDD, at 22. L-3's arguments disputing this
conclusion represent nothing more than mere disagreement with the agency's
evaluation judgment.
L-3 also complains that the Army, as part of its technical/management
evaluation of SNC's proposal, failed to assess any risk associated with
SNC's proposal to provide a [Deleted], given the issues that arose
concerning the [Deleted] under the prior contract.[24] The Army assessed
SNC's proposed [Deleted] as a strength in the agency's
technical/management evaluation of SNC's proposal. AR, Tab 9, SNC
Technical/Management Evaluation, at 2. L-3 objects, however, on the basis
that one of the agency's past performance evaluators found that SNC was
contending that the [Deleted] was the root cause of candle short burn time
failure on the cartridges under the prior contract.[25] According to this
evaluator:
[Short burn time], [SNC] now claim[s], was due to [Deleted]. This was
caused by the [Deleted]. SNC Mitigation now to eliminate [short burn
time] is to [Deleted]. . [.] Amazing!!!
Bottom line: My [past performance] evaluation [of adequate/moderate
risk] remains the same as before. SNC's late deliveries were attributed
exclusively to LAT [lot acceptance testing] failures. It is obvious to
me that SNC is dedicated to resolving the [short burn time] failure
mode. But, it is also obvious that passed FMEA [failure mode and effects
analysis], DOE's, and RCA [root cause analysis] in correcting the LAT
failure were not successful. The jury remains out if the [Deleted] [now
proposed by SNC] will be any more successful than their prior
revelations.
AR, Tab 9.14, Past Performance Evaluator's Memorandum to the SSA.
We find no basis from our review of the record to conclude that the Army's
evaluation of SNC's proposed [Deleted] was unreasonable. As is documented
by the past performance evaluator's memorandum to the SSA, the agency
appropriately considered SNC's performance problems associated with the
[Deleted] that the firm redesigned in the prior contract. The strength
that was assessed in SNC's technical/management proposal was not for the
[Deleted] used in the prior contract, but was for a proposed "unique"
[Deleted] to resolve the primary issue of short burn times:
[Deleted].
AR, Tab 9, SNC Technical/Management Evaluation, at 2. At best, the past
performance evaluator's memorandum could be read as questioning the
likelihood that SNC's [Deleted] will perform better than the one that the
firm had previously provided;[26] this, however, does not demonstrate that
the technical evaluators unreasonably determined that SNC's proposal of a
"unique" process optimization approach, which included a [Deleted], was a
strength.
L-3 raises a number of other challenges to the agency's evaluation of
L-3's and SNC's proposals, arguing that the Army treated the firms
disparately under the technical/management, financial capability, and
small business utilization factors, and "double counted" strengths in
SNC's proposal and weaknesses in L-3's proposal. Although not all of L-3's
numerous arguments are discussed in this decision, we have considered all
of the parties' arguments and find from our review of the record that
L-3's additional arguments provide no basis to object to the agency's
evaluation and source selection.
For example, L-3 complains that the Army assessed as a strength in SNC's
proposal, under the process optimization/FAT subfactor, the firm's
brainstorming with its candle subcontractor, where L-3 also reported in
its proposal that it brainstormed with a subcontractor but this was not
assessed as a proposal strength. See Protester's Supplemental Comments at
12. However, the agency reasonably explains that SNC's brainstorming was
done with its candle subcontractor[27] and was part of an elaborate DOE
with a "comprehensive analysis of the different variables," while L-3's
brainstorming was not done with its candle subcontractor and was part of a
"limited and elementary" DOE.[28] See Tr. at 88-89.
As another example, L-3 complains that the Army failed to evaluate the
sale of SNC to a third-party in its evaluation of the firm's proposal
under the technical/management and financial capability factors. With
respect to the technical/management factor, L-3 speculates that the sale
of SNC may impact the retention of SNC management and key personnel. With
respect to the financial capability factor, both L-3's and SNC's proposals
were evaluated as being "low risk," but L-3 argues that the proposed sale
of SNC should have resulted in a higher risk rating. As reported by SNC's
proposal, the sale of SNC stock to a third-party, although approved by
SNC's parent corporation at the time of proposal submission, was not final
at the time of the agency's evaluation and source selection. SNC Financial
Capability Proposal, annex A, SNC-Lavalin Annual Report, at 25. Under the
circumstances, we do not think the agency was required to assess the
technical impact of a proposed sale of the SNC corporate entity where the
sale had not yet been approved and completed. Further, with respect to the
financial capability factor, we note that the Canadian government
guarantees all commitments, obligations and covenants of the Canadian
Commercial Corporation. See DFARS sect. 225.870-1(a).
L-3 finally protests that the Army failed to conduct meaningful
discussions with it concerning the firm's failure to discuss x-ray testing
or crush-testing, the proposal of an o-ring, and the firm's schedule.[29]
In negotiated procurements, whenever discussions are conducted by an
agency, the discussions are required to be meaningful, equitable, and not
misleading. The Communities Group, B-283147, Oct. 12, 1999, 99-2 CPD para.
101 at 4. To satisfy the requirement for meaningful discussions, the
agency need only lead an offeror into the areas of its proposal requiring
amplification or revision; all-encompassing discussions are not required,
nor is the agency obligated to "spoon-feed" an offeror as to each and
every item that could be revised to improve its proposal. See Arctic Slope
World Servs., Inc., B-284481, B-284481.2, Apr. 27, 2000, 2000 CPD para. 75
at 8-9; The Communities Group, supra. This is particularly true where, as
here, one aspect of the evaluation is to test the offeror's technical
understanding. See TRI-COR Indus., B-259034.2, Mar. 14, 1995, 95-1 CPD
para. 143 at 5-6.
We find that the Army conducted meaningful discussions with L-3 concerning
its proposal. With respect to the agency's concerns that L-3 did not
discuss crush-testing and that L-3 had not proposed a realistic schedule
that would satisfy the contract requirements, the Army's discussion
questions should have reasonably led L-3 into those areas of its proposal.
Specifically, the Army informed L-3 that its "DOE was limited in scope"
and that "[c]ritical parameters and critical process inspections were not
addressed." With respect to its proposed schedule, L-3 was informed that
its "[p]roposed schedule for Phase I Optimization exceeds the required 12
months." See AR, Tab 6, Army Discussion Questions to L-3, at 1-2.
With respect to the Army's evaluated concerns with L-3's offer to
investigate providing an o-ring and its failure to identify x-ray testing
as the appropriate test to assess cracks and voids in the illuminant,
these were deficiencies that arose from L-3's response to the agency's
discussion questions. An agency is not obligated to re-open discussions
where an offeror introduces something in response to discussions that the
agency views as a deficiency or weakness. See Cube-All Star Servs. Joint
Venture, B-291903, Apr. 30, 2003, 2003 CPD para. 145 at 10-11.
In conclusion, we find reasonable the Army's documented judgment that
SNC's proposal offered a superior approach and demonstrated the firm's
technical understanding and expertise, while L-3's proposal had not
demonstrated a similar level of expertise and understanding, which posed
schedule and performance issues, and that the selection of SNC's
higher-priced, higher-rated proposal was reasonable and consistent with
the solicitation's evaluation scheme.
We deny the protests.
Gary L. Kepplinger
General Counsel
------------------------
[1] SNC is a Canadian firm. Awards to Canadian firms are generally made
through the Canadian Commercial Corporation. See Department of Defense
Federal Acquisition Regulation Supplement (DFARS) sect. 225.870-1(c).
[2] In this context, an "ogive" refers to the tapered top of the
projectile, to which the fuze is fitted. Hearing Transcript (Tr.) at
15-16.
[3] The components of the M314A3 are not commercially available because of
the unique technology and specialized skills required for manufacturing,
inspecting and testing the items. AR, Tab 3, Source Selection Evaluation
Plan, at 1.
[4] The first two subfactors of the technical/management factor were of
equal importance and each were said to be more important than the third
factor, which in turn was slightly more important than the fourth
subfactor, which was slightly more important than the fifth subfactor.
[5] The RFP also informed offerors that the oral presentation would not
constitute discussions and that therefore the agency would not inform
offerors of strengths, deficiencies or weaknesses in their proposals
during the oral presentation. RFP sect. L, at 63.
[6] The proposal of the third firm was rejected as technically
unacceptable.
[7] A "fair" rating under the technical/management factor was defined by
the RFP as meeting "the minimal expectations for manufacture of a complex
ballistic munition, such as the M314A3" and that the offeror's approach
"does not provide a comprehensive understanding," such that "[s]ome doubt
exists that the offeror will be successful on this contract." RFP sect. M,
at 71.
[8] The illuminating cartridge is a pyrotechnic device, which is also
referred to as the "candle." Tr. at 17-19. With respect to production of
the candle, "consolidation" refers to the process of mixing the illuminant
and pressing and binding the illuminant together. Tr. at 36-37.
[9] Both SNC and L-3 proposed Crane as their candle subcontractor.
[10] "Crush testing" is used to evaluate the strength of the illuminant
composition. Tr. at 41.
[11] The RFP does not require offerors to address cracks and voids in the
illuminant. Tr. at 66.
[12] The Army apparently agrees that push-out testing is appropriate to
assess fiberboard adherence to the canister.
[13] L-3 has not rebutted, and apparently agrees with, the Army's view
that the push-out test is not an appropriate test to inspect for cracks
and voids in the illuminant.
[14] L-3 also complains that the agency assessed a weakness in its
proposal for failing to discuss particle size, distribution, mixing
techniques, material preparation, and cure time, where L-3 had addressed
this in response to discussions. The record shows, however, that this was
only assessed as a weakness in the agency's evaluation of L-3's initial
technical proposal. The Army found that L-3 adequately addressed this
particular concern during discussions, and this was not identified as a
weakness or deficiency in the agency's final evaluation or source
selection. See Agency's Supplemental Legal Memorandum at 10; Tr. at 29.
[15] L-3 does not address the Army's concern that the use of crush testing
was incorporated in the statement of work as a method of ensuring
consistent strength of the illuminating and first fire compositions, but
that L-3 did not discuss crush testing in its discussion response. See AR,
Tab 8, Final L-3 Technical/Management Evaluation, at 1; Tab 10, SSDD, at
8. SNC, on the other hand, provided significant information in its
proposal concerning the crush test. See SNC's Technical/Management Slides
at 29-32.
[16] L-3 also objects that SNC did not discuss inspecting for cracks and
voids in the candle. However, as noted above, the solicitation did not
require offerors to address inspecting for cracks and voids in the
illuminant. The agency does not view cracks and voids in the illuminant as
a problem because the required minimum burn time for the candle could be
achieved even where there were cracks and voids. See Tr. at 66-67 (there
is "no evidence that [cracks and voids] affected any performance in the
past.")
[17] In its post-hearing comments, L-3, for the first time, questioned the
agency's determination that L-3 had proposed the o-ring as a solution to
addressing short burn times. This late argument not only appears to be
inconsistent with L-3's proposal, see AR, Tab 7.1, L-3 Discussion
Response, at 6, but was untimely raised under our Bid Protest Regulations,
4 C.F.R. sect. 21.2(a)(2) (2006), given that L-3 was informed of the
agency's determination in this regard in its debriefing, but did not raise
this argument in its initial protest. See Protest, exh. 1, L-3 Debriefing,
at 10^th unmarked page.
[18] L-3 disputes the Army's statement that the firm's proposal was not
downgraded for offering a fiberboard-lined candle configuration, and
contends that the Army's arguments and the hearing testimony are
inconsistent with the contemporaneous record. Contrary to L-3's arguments,
however, we find that the contemporaneous record supports the Army's
contention that L-3's proposal was downgraded because the firm's
discussion demonstrated a lack of understanding and undue reliance upon
its candle subcontractor, and was not downgraded merely because the firm
proposed a fiberboard-lined candle. In this regard, the SSA found:
As the System Contractor, [L-3 is] allowing their subcontractor [Crane]
to make a decision on the design configuration without any contribution
from or recommendations of their own. Their apparent significant level
of dependence on [Crane] coupled with the fact that there was no
indication that they contributed any technical input to their response
demonstrates a lack of core competency in the manufacturing of
illuminating candles and raises concern whether L-3 can provide the
proper oversight of their subcontractor.
AR, Tab 10, SSDD, at 10.
L-3 also asserts that at least one evaluator accepted L-3's discussion
response concerning the proposal of epoxy-lined and fiberboard-lined
configurations, and assessed no weakness or deficiency in his final
evaluation of L-3's proposal in this respect. Protester's Supplemental
Comments at 18-19. We find no merit to this argument, given that the final
evaluation reflected the consensus judgment of the evaluators and was
accepted by the SSA. See Tr. at 25, 106-08.
[19] The fiberboard or epoxy liner discussed here sits inside the steel
canister housing the candle, and is between the wall of the candle
canister and the illuminant composition. Tr. at 21.
[20] L-3's initial proposal to investigate both fiberboard-lined and
epoxy-lined configurations for the candle was assessed by the agency as a
proposal strength under the process optimization/FAT subfactor. See AR,
Tab 10, SSDD, at 7. The agency noted, however, that L-3 apparently did not
understand that its proposed candle subcontractor currently lacked the
equipment and facilities necessary to produce the epoxy-lined candle
configuration; this was assessed as weakness/deficiency under the EPPS
subfactor. See AR, Tab 8.13, Initial Evaluation of L-3 Proposal under EPPS
Subfactor; Tab 10, SSDD, at 9.
[21] L-3 also argues that it proposed the use of a third firm to conduct
DOEs with respect to understanding "candle cause and effect," and that
this indicates that L-3 was not unduly relying upon Crane's expertise.
Protester's Comments at 19, citing L-3 Technical/Management Slides, pt.1,
at 9. This, however, does not demonstrate that the Army was unreasonably
concerned that L-3 lacked its own expertise and knowledge to manage its
candle subcontractor.
[22] SNC's oral presentation slides indicate that SNC produced 82,743
cartridges in 17 lots under the prior contracts, but that [Deleted] lots
failed ballistic lot acceptance testing, but were accepted by the agency
after granting waivers. Most of the deficiencies were associated with
short candle burn times. SNC's Technical/Management Oral Presentation
Slides at 15; see also AR, Tab 9.10, SNC's Past Performance Quality
Subfactor Evaluation, at 1.
[23] As noted above, both L-3 and SNC proposed Crane as their candle
subcontractor.
[24] [Deleted].
[25] The cartridge was required to provide "effective illumination for 55
seconds." RFP sect. E, at 25.
[26] The agency's states, without rebuttal, that the past performance
evaluator's area of expertise was not technical. See Agency's Post-Hearing
Comments at 2.
[27] The candle is the source of most of the performance problems with the
M314A3 cartridge. Tr. at 89.
[28] The agency also states that L-3 failed to share the brainstorming
information it obtained regarding candle performance with its candle
subcontractor.
[29] In its comments on the agency report, L-3 argued that the agency
failed to provide the firm with meaningful discussions with respect to
agency's negative past performance evaluation of some of L-3's
subcontractors. This protest allegation is untimely, given that L-3
learned the basis of this allegation in its debriefing and did not raise
this ground of protest in its initial protest. 4 C.F.R. sect. 21.2(a)(2).