TITLE: B-400177; B-400177.2, ECI Defense Group, July 25, 2008
BNUMBER: B-400177; B-400177.2
DATE: July 25, 2008
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B-400177; B-400177.2, ECI Defense Group, July 25, 2008

   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: ECI Defense Group

   File: B-400177; B-400177.2

   Date: July 25, 2008

   Howell Roger Riggs, Esq., Timothy P. Pittman, Esq., and Kimberly A. Ford,
   Esq.,

   Dick Riggs Miller LLP, for the protester.

   Elan D. Taylor, Esq., and Benjamin G. Perkins, Esq., Defense Logistics
   Agency, for the agency.

   Louis A. Chiarella, Esq., and Christine S. Melody, Esq., Office of the
   General Counsel, GAO, participated in the preparation of the decision.

   DIGEST

   1. Offeror's failure to acknowledge a material amendment to a request for
   proposals which significantly altered the government's guaranteed minimum
   quantity renders the proposal unacceptable.

   2. Protester is not an interested party to maintain protest challenging
   proposal evaluation where it did not acknowledge material amendment;
   protester would be ineligible for award even if protest of evaluation were
   sustained.

   DECISION

   ECI Defense Group protests the award of a contract to Thomas Instrument
   under request for proposals (RFP) No. SPM4A7-07-R-1322, issued by the
   Defense Supply Center Richmond (DSCR), Defense Logistics Agency, for
   aircraft actuator screwshaft assemblies. ECI argues that the agency's
   evaluation of offerors' proposals was improper.

   We dismiss the protest on the basis that the protester is not an
   interested party to challenge the award to Thomas Instrument.

   The RFP, issued on August 30, 2007, contemplated the award of a
   fixed-price, indefinite-quantity contract for a base year and four 1-year
   options. The solicitation informed offerors of the agency's estimated
   quantity (252), guaranteed minimum quantity (63), minimum delivery order
   quantity (63), maximum delivery order quantity (252), and maximum quantity
   (504) for the base year, as well as similar estimated, minimum delivery
   order, maximum delivery order, and maximum quantities for the option
   periods. The RFP identified two evaluation factors of equal importance:
   price (to be based on the solicitation's estimated quantities) and past
   performance. Award was to be made to the responsible offeror whose
   proposal was determined to represent the "best value" to the government,
   all factors considered. RFP at 2, 20, 24-25. Also relevant to the protest
   here, the RFP established a delivery schedule of 150 days after receipt of
   order for the first article requirement, and 200 days after first article
   approval for production quantities.[1] Id. at 3.

   ECI submitted its proposal by the December 17 closing date. As part of its
   proposal, ECI both requested a waiver of the first article requirement
   (based upon prior approval), and stated that it would make deliveries 372
   days after receipt of order. Agency Report (AR), Tab 4, ECI Proposal, Nov.
   26, 2007, at 1, 5. DSCR subsequently granted ECI's first article waiver
   request. Id., Tab 15, DSCR Email to ECI, Jan. 17, 2008, at 1. On March 14,
   2008, ECI modified its proposal by clarifying its pricing and by changing
   its delivery schedule to 386 days after receipt of order.[2] Id., Tab 9,
   ECI Email to DSCR, Mar. 14, 2008, at 3.

   On April 22, by amendment No. 0005, the agency changed the base year's
   guaranteed minimum quantity from 63 to 250 assemblies (in comparison to
   the unchanged estimated quantity of 252 units) and established a revised
   closing date of April 29. The amendment also included a pricing table by
   which offerors could revise their prices. RFP amend. 5, at 1-2. ECI did
   not submit amendment No. 0005, and thereby either modify or confirm its
   pricing in light of the change to the base year's guaranteed minimum
   quantity, by the April 29 closing date. Instead, ECI signed and returned
   amendment No. 0005 on April 30 without modifying its pricing. AR, Tab 13,
   ECI amend. 5, Apr. 30, 2008.

   The agency evaluated the proposals of ECI, Thomas Instrument, and a third
   offeror. DSCR determined that ECI was ineligible for award because the
   firm had failed to respond to amendment 0005 in a timely manner. AR, Tab
   16, DSCR Evaluation Report, at 2. The agency also found ECI's proposal to
   be "non-responsive"[3] for failing to comply with the RFP's delivery
   schedule: ECI had proposed deliveries 386 days after receipt of an order
   while, in light of the waiver of the first article requirement, the RFP in
   effect required ECI to make deliveries 200 days after receipt of an order.
   Id. DSCR concluded that Thomas Instrument's proposal represented the best
   value to the government. Id. at 5. This protest followed.

   ECI protests the agency's determination that its proposal was
   unacceptable. Specifically, the protester argues that its proposal did in
   fact comply with the solicitation's delivery schedule and represented the
   best value to the government based on its more favorable pricing.[4]
   Protest, May 20, 2008, at 2-4. Additionally, ECI protests that DSCR
   employed unstated evaluation criteria in its evaluation of offerors'
   proposals.[5] Protest, June 30, 2008, at 2-4.

   The agency argues that ECI's protest should be dismissed because ECI is
   not an interested party. The agency contends that ECI failed to timely
   acknowledge amendment No. 0005, a material amendment to the solicitation.
   Because ECI did not have a valid (i.e., timely submitted) proposal before
   the agency for consideration and thus is ineligible for award even if it
   prevails in its protest, DSCR argues, ECI is not an interested party to
   pursue its protest.[6] Agency Dismissal Request, June 11, 2008, at 1-4.

   ECI argues that its protest should not be dismissed on these grounds. The
   protester does not dispute that it failed to acknowledge and return
   amendment No. 0005 by the specified date. Rather, ECI argues that its late
   submission of amendment No. 0005 did not automatically mandate rejection
   of its proposal but instead made such action only discretionary on the
   agency's part (and DSCR apparently elected to further consider ECI's
   proposal). In support thereof, ECI points to the language of Standard Form
   (SF) 30, Amendment of Solicitation/Modification of Contract, which states
   in relevant part that "[f]ailure of your acknowledgement to be received at
   the place designated for the receipt of offers prior to the hour and date
   specified may result in rejection of your offer."

   We find that ECI failed to timely acknowledge a material amendment and, as
   a result, is not an interested party to challenge the agency's evaluation
   of proposals. As a general rule, an offeror's failure to acknowledge a
   material amendment renders the proposal unacceptable and such proposal may
   not form the basis for award. Sterling Servs., Inc., B-291625, B-291626,
   Jan. 14, 2003, 2003 CPD para. 26 at 3; International Filter Mfg. Corp.,
   B-235049, June 21, 1989, 89-1 CPD para. 586 at 3. In determining whether
   an amendment is material, we look at the facts of each case. While no
   precise rule exists as to whether a change required by an amendment is
   more than negligible, such that failure to acknowledge the amendment
   renders the proposal unacceptable, an amendment is material where it
   imposes legal obligations on a party that are different from those
   contained in the original solicitation, or if it would have more than a
   negligible impact on price, quantity, quality, or delivery. See Skyline
   ULTD, Inc., B-297800.3, Aug. 22, 2006 CPD para. 128 at 3; Navistar Marine
   Instrument Corp., B-277143.2, Feb. 13, 1998, 98-1 CPD para. 53 at 2.

   Here, amendment No. 0005 significantly altered the guaranteed minimum
   quantity for the base year. Instead of a guaranteed minimum quantity of 63
   assemblies as contained in the original RFP, the amendment changed the
   minimum quantity that DSCR was required to purchase to 250 assemblies, in
   comparison to the unchanged estimated quantity of 252 units. As expressed
   in percentage terms, amendment No. 0005 changed the RFP's guaranteed
   minimum quantity for the base year from 25 percent (63 / 252 = .25) to
   99 percent (250 / 252 = .99) of the estimated quantity. While the
   evaluation of proposals remained based on offerors' prices for the
   estimated quantities, offerors were able to, and did, propose different
   (i.e., tiered) pricing based on the number of units that the agency
   actually purchased. For example, ECI's base year price for the guaranteed
   minimum quantity of 63 assemblies was $[DELETED] each, while its base year
   price for the estimated quantity of 252 assemblies was $[DELETED] each, a
   $[DELETED] difference per unit. AR, Tab 9, ECI Email to DSCR, Mar. 14,
   2008, at 3. That ECI did not actually modify its proposed pricing as a
   result of amendment No. 0005 does not alter the fact that DSCR's legal
   obligation as a result of such amendment was significantly greater than
   that contained in the original solicitation, and had the potential for
   more than a negligible impact on offerors' prices. See Christolow Fire
   Prot. Sys., B-286585, Jan. 12, 2001, 2001 CPD para. 13 at 3-4.
   Accordingly, the amendment was material in nature.[7]

   In light of this, ECI is not an interested party to challenge the agency's
   evaluation of proposals. In order for a protest to be considered by our
   Office, a protester must be an interested party, that is, an actual or
   prospective offeror whose direct economic interest would be affected by
   the award or failure to award a contract. 4 C.F.R. sections 21.0(a)(1),
   21.1(a) (2008); Cattlemen's Meat Co., B-296616, Aug. 30, 2005, 2005 CPD
   para. 167 at 2 n.1. A protester is an interested party to challenge the
   agency's evaluation of proposals where there is a reasonable possibility
   that the protester's proposal would be in line for award if its protest
   were sustained. Ridoc Enter., Inc., B-292962.4, July 6, 2004, 2004 CPD
   para. 169 at 9. By contrast, a firm is not an interested party where it
   would be ineligible to receive award under the protested solicitation if
   its protest were sustained. Sterling Servs., Inc., supra, at 2; Acquest
   Dev., LLC, B-287439, June 6, 2001, 2001 CPD para. 101 at 6. Since ECI is
   ineligible for award for failing to timely acknowledge amendment No. 0005,
   the firm is not an interested party to challenge the propriety of the
   agency's evaluation of proposals.

   The protest is dismissed.

   Gary L. Kepplinger
   General Counsel

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

   [1] The solicitation also included a schedule for the agency test and
   evaluation of the contractor's first article submission. Id. at 3.

   [2] ECI proposed tiered pricing based on the number of assemblies actually
   purchased by the agency.

   [3] While DSCR rejected ECI's proposal as "non-responsive," the record is
   clear that the solicitation here employed negotiated procedures pursuant
   to FAR Part 15. Accordingly, references to "nonresponsiveness" are
   inappropriate, since this concept is not applicable to negotiated
   procurements. See Lifecare Mgmt. Partners, B-297078, B-297078.2, Nov. 21,
   2005, 2006 CPD para. 8 at 6 n.12; Marshall-Putnam Soil & Water
   Conservation Dist., B-289949, B-289949.2, May 29, 2002, 2002 CPD para. 90
   at 4-5. We instead interpret the agency's evaluation as concluding that
   ECI's proposal was technically unacceptable for failing to comply with the
   RFP's delivery schedule.

   [4] Alternatively, ECI contends that the agency should have held
   discussions with it regarding any perceived discrepancies in its delivery
   schedule. Protest, May 20, 2008, at 4-5.

   [5] ECI also claimed that DSCR had failed to treat offerors equally and
   that the agency was biased in favor of Thomas Instrument, Protest, June
   30, 2008, at 2-4, but later withdrew these grounds for protest. ECI Email
   to GAO, July 7, 2008.

   [6] While the award notice stated that ECI's proposal had been found
   unacceptable for failing to comply with the required delivery schedule,
   AR, Tab 18, DSCR Letter to ECI, May 12, 2008, it was not until the
   dismissal request was filed with our Office that the agency informed ECI
   that its proposal was also considered untimely for failing to acknowledge
   amendment No. 0005 by the specified date.

   [7] We also find ECI's reliance on the alleged discretionary language
   contained within amendment No. 0005 ("[f]ailure of your acknowledgement to
   be received . . . prior to the hour and date specified may result in
   rejection of your offer") to be misplaced. The use of the word "may" on SF
   30 provides offerors with notice that a failure to timely acknowledge the
   amendment could result in rejection of their proposals, depending on the
   materiality of the amendment. When the amendment which an offeror fails to
   timely acknowledge is, as here, material in nature, however, the offeror's
   proposal must be rejected. Moreover, even while DSCR also found ECI's
   proposal to be noncompliant with the RFP's delivery schedule, the agency's
   contemporaneous evaluation determined ECI ineligible for award because of
   the offeror's failure to timely acknowledge the material amendment here.