Martin Electronics, Inc.

B-290846.3,B-290846.4: Dec 23, 2002

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Martin Electronics, Inc. (MEI) protests the Department of the Army's award of a contract to Pyrotechnic Specialties, Inc. (PSI) under request for proposals (RFP) No. DAAA09-01-R-0162 to provide M49A1 surface trip flares. MEI protests, among other things, that the agency failed to properly evaluate the offerors' past performance information and failed to conduct meaningful discussions.

We sustain the protest.

B-290846.3; B-290846.4, Martin Electronics, Inc., December 23, 2002




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: Martin Electronics, Inc.

File: B-290846.3; B-290846.4

Date: December 23, 2002

James J. McCullough, Esq., Louis D. Victorino, Esq., and Steven A. Alerding, Esq., Fried, Frank, Harris, Shriver & Jacobson, for the protester.
Jeffrey I. Kessler, Esq., Vera Meza, Esq., and Bradley J. Crosson, Esq., Department of the Army, for the agency.
Glenn G. Wolcott, Esq., and Michael R. Golden, Esq., Office of the General Counsel, GAO, participated in the preparation of the decision.

DIGEST

Protest is sustained where agency conducted exchanges with offerors in a manner that favored one over the other and where, in evaluating awardee's past performance, agency failed to include consideration of negative past performance information that occurred within the period defined by the solicitation as recent contract performance.

DECISION

Martin Electronics, Inc. (MEI) protests the Department of the Army's award of a contract to Pyrotechnic Specialties, Inc. (PSI) under request for proposals (RFP) No. DAAA09-01-R-0162 to provide M49A1 surface trip flares.[1] MEI protests, among other things, that the agency failed to properly evaluate the offerors' past performance information and failed to conduct meaningful discussions.

We sustain the protest.

BACKGROUND

The agency issued the RFP on November 20, 2001, seeking fixed-price proposals for specified quantities of M49A1 surface trip flares.[2] The solicitation provided that proposals would be evaluated on the basis of the following three factors: manufacturing plan,[3] past performance,[4] and price. The solicitation further provided that manufacturing plan and past performance were of equal importance and that these factors, combined, were significantly more important than price, advising offerors that award would be made to the offeror whose price, recent/relevant past performance and manufacturing plan provides the best value to the Government. Agency Report, Tab A, RFP at 37, 40.

With regard to past performance, offerors were required to identify recent and relevant contracts they had performed.[5] The solicitation specifically defined recent past performance as occurring within the past three years to the date of the solicitation closing, and relevant past performance as having previously produced like or similar items. RFP at 37. The solicitation advised offerors that adjectival ratings of excellent, good, marginal and unacceptable would be used to evaluate offerors under the manufacturing plan and past performance evaluation factors.[6] Agency Report, Tab A, RFP at 40.

On or before the March 8, 2002 closing date, the agency received proposals from [deleted] offerors, including MEI and PSI. Thereafter, the agency conducted discussions, requested and received final proposal revisions, and evaluated the final revised proposals. Based on these submissions the ratings and evaluated prices for MEI's and PSI's proposals were as follows: [7]


Evaluation Factor

MEI

PSI

Manufacturing Plan



Delivery Schedule

[deleted]

[deleted]

Essential Processes

[deleted]

[deleted]

Quality

[deleted]

[deleted]

Past Performance



On-Time Delivery

[deleted]

[deleted]

Quality

[deleted]

[deleted]

Price

[deleted]

[deleted]






[8] [9]

Id.
[10] [11]

[12]

[13] [14] [15] Id.



Evaluation Factor

MEI

PSI

Manufacturing Plan



Delivery Schedule

[deleted]

[deleted]

Essential Processes

[deleted]

[deleted]

Quality

[deleted]

[deleted]

Past Performance



On-Time Delivery

[deleted]

[deleted]

Quality

[deleted]

[deleted]

Price

[deleted]

[deleted]




Id.







[16] scheduled to occur actually occurred









A. Yes, because they relate to the original delivery date, but they should have been delivered prior to the three-year [period]. So I wouldn't have counted those.
Tr. at 124-25.

In reviewing a protest of an agency's evaluation and source selection decision, we will not re-evaluate proposals, but will review the record to determine whether the evaluation and selection decision are reasonable and consistent with the stated evaluation criteria, and with applicable procurement laws and regulations. M&S Farms, Inc., B-290599, Sept. 5, 2002, 2002 CPD 174 at 6. A source selection decision based on inconsistent or inaccurate information concerning the relative merits of the offerors' technical proposals is not reasonable. OneSource Energy Servs., Inc., B'283445, Nov. 19, 1999, 2000 CPD 109 at 10; New Breed Leasing Corp., B-259328, Mar. 24, 1995, 96-2 CPD 84 at 4.

Here, the solicitation specifically contemplated evaluation of past contract performance within a specified 3-year period. It is clear that, when PSI made late deliveries within the 3-year period, the firm was still engaging in contract performance at the time the late deliveries were made. In our view, the fact that the originally scheduled delivery date was prior to the beginning of the 3-year period does not provide a reasonable basis for excluding that contract performance from consideration--particularly in the context of evaluating on-time delivery.

Further, where PSI's evaluated price was [deleted] than MEI's, and the only non-price discriminator between the two proposals was PSI's [deleted] rating for on-time delivery, we cannot find reasonable the agency's selection of PSI's [deleted] proposal when that decision incorporates the agency's unreasonable failure to consider delinquent deliveries by PSI. Accordingly, we sustain the protest on this basis.

PSI also protests that the exchanges between PSI and the agency regarding PSI's record for on-time delivery, and the agency's failure to engage in similar exchanges with MEI, constituted agency conduct that improperly favored PSI. We agree.

As discussed above, in reevaluating PSI's past performance information, the agency found the record was not complete, Agency Report, Tab F, at 7, requested that PSI submit additional documents relating to its past performance, sought PSI's explanation regarding late deliveries and, based in part on PSI's explanations, evaluated PSI's proposal as [deleted] for on-time delivery. Tr. at 121. In contrast, the agency's reevaluation of MEI's proposal resulted in the agency downgrading MEI's rating for on-time delivery from [deleted] to [deleted], yet the agency opted not to communicate with MEI in any way regarding this matter.

The FAR provides that, in conducting exchanges with offerors, agency personnel shall not engage in conduct that . . . favors one offeror over another. FAR 15.306(e)(1); see Chemonics Int'l, Inc., B-282555, July 23, 1999, 99-2 CPD 61 (agency conducted discussions in manner which unreasonably favored awardee over protester in violation of FAR 15.306(e)).

On the basis of the record here, we find that the agency's exchanges with PSI regarding its delivery record, when viewed together with the agency's failure to conduct similar exchanges regarding MEI's delivery record, constituted conduct which improperly favored PSI and violated the provisions of FAR 15.306(e)(1). The agency apparently recognizes that it should have communicated with MEI regarding its reevaluation of MEI's proposal.[17]

The agency argues, however, that we should not sustain the protest on this basis because MEI was not prejudiced by the agency's actions. Specifically, the agency relies on the contracting officer's statement in the SSDD that, even without considering the MJU7-AB and M206 flare contracts, MEI's rating for on-time delivery would still be [deleted] than PSI's rating [deleted] for on-time delivery . . . [and] the outcome of the award would not change. Agency Report, Tab F, at 18-19. The agency's arguments regarding prejudice appear to be based on the premise that there was no possibility that MEI's prior rating of [deleted] for on-time delivery could have been enhanced, had the agency engaged MEI in the same type of exchanges that were conducted with PSI. The basis for the agency's assumption in this regard is not clear, since its exchanges with PSI clearly addressed both information that had been initially submitted and previously evaluated, along with newly-submitted information. On the record here, we cannot conclude that, if the agency had conducted exchanges with MEI that were similar to those conducted with PSI, there would not have been a reasonable possibility of MEI's proposal being rated [deleted] for on-time delivery, which could well have led to selection of MEI's [deleted] proposal for award.

The protest is sustained.[18]

RECOMMENDATION

Since the agency's evaluation was flawed and the agency engaged in unequal exchanges that improperly favored PSI, we recommend that the agency reopen discussions with all offerors whose proposals are within the competitive range, seek revised proposal submissions, evaluate those revisions in a manner consistent with the solicitation requirements, and make a new source selection decision. If an offeror other than PSI is selected for award, the agency should terminate the contract previously awarded to that firm. We also recommend that the agency reimburse the protester its cost of pursuing this protest, including reasonable attorney's fees. 4 C.F.R. 21.8(d) (2002). The protester should submit its certified claim for costs, detailing the time expended and the costs incurred, directly to the contracting agency within 60 days of receipt of this decision. 4 C.F.R. 21.6(f)(1).

Anthony H. Gamboa
General Counsel


[1]

The agency describes the M49A1 flare as a booby-trap type of surface flare used to illuminate infiltrating enemy troops. Agency Report, Contracting Officer's Statement at 1.
[2] As amended, the solicitation sought proposals for a base quantity of 199,168 flares and option quantities of 398,336 flares. Agency Report, Tab L, at 2.
[3] Under manufacturing plan, the solicitation established the following subfactors, listed in descending order of importance: critical delivery schedule; essential processes, procedures and skills; and quality. Agency Report, Tab A, RFP at 41.
[4] Under past performance, the solicitation established two subfactors: on-time delivery and quality.
[5] Offerors were directed to identify the contract number and a point of contact (that is, name and telephone number) for each contract. Agency Report, Tab A, RFP at 38.
[6] Additionally, the solicitation provided for the possibility of a rating of unknown under the past performance factor. Agency Report, Tab A, RFP at 40.
[7] The other [deleted] offerors' proposals are not directly relevant to the protest issues and, accordingly, are not discussed.
[8] Although the agency rated PSI's proposal as [deleted] and [deleted] under the past performance subfactors, the agency's source selection document, dated June 14, stated: PSI has not produced a pyrotechnic device with an assembly or ignition system as found in the M49A1 [that is, the flare to be manufactured under this solicitation]. The M49A1 is not similar to products previously produced by PSI. Agency Report, Tab M, at 7.
[9] The agency had failed to accurately extend PSI's proposed unit prices for the option quantities.
[10] The contracting officer states that all offerors' proposals were completely reevaluated, Contracting Officer's Statement, Oct. 9, 2002, at 3; however, no changes were made to any proposal ratings other than PSI's and MEI's.
[11] In MEI's proposal, dated May17, MEI referenced various prior contracts, including contracts to provide MJU-7A/B flares and M206 flares. Agency Report, Tab P, MEI Past Performance Volume, at 8.
[12] As noted above, the solicitation stated that the agency would evaluate an offeror's recent and relevant past performance, stating that [r]elevant is defined as having previously produced like or similar items. The solicitation further added, Like or similar items are defined as items that have been produced utilizing the same manufacturing processes, essential skills and unique techniques need to produce the M49A1. A like item shall also have been produced under similar performance parameters and environmental conditions as the M49A1. Agency Report, Tab A, RFP at 37.
[13] The agency sought and received copies of Department of Defense (DD) Form 250, Material Inspection and Receiving Report, for PSI's various deliveries under the Navy contracts, as well as the contracts and amendments, the contracting officer's delivery schedule, and a summary worksheet. Agency Report, Tab N, at 9.
[14] In resolving this protest, GAO conducted a hearing on the record, during which testimony was provided by the contracting officer and two agency evaluators.
[15] For example, the documents showed that, with regard to Navy contract No. N00164-98-D-0049, deliveries were scheduled for March 24, 1999 and April 23, 1999, but were not made until June 2, 1999. Additionally, deliveries were scheduled for October 2, 2000, but were not made until October 17, 2000; similarly, deliveries were scheduled for January 1, 2001, but were not made until March 28, 2001. Agency Report, Tab N, at 21. Regarding an unidentified contract (or contracts), PSI's proposal shows that deliveries were scheduled for December 17, 1999, but not made until December 28, 1999; deliveries were scheduled for January 3, 2000, but not made until January 13, 2000; deliveries were scheduled for April 9, 2001, but not made until April 18, 2001; and that deliveries were scheduled for September 26, 2001, but not made until September 27, 2001. Agency Report, Tab K, PSI Past Performance Proposal, at 8-9.
[16] As noted above, the solicitation defined recent past performance as occurring within the past three years to the date of the solicitation closing.
[17] The contracting officer, after noting that the agency did not conduct discussions with MEI, states [w]ith the advice of counsel, I determined that I could not consider [MEI's performance of contracts that were not discussed]. Supplemental Contracting Officer's Statement, Nov. 15, 2002, at 13-14.
[18] MEO also protests that the agency misevaluated PSI's proposal with regard to each of the subfactors under management plan. We have reviewed all of its arguments in this regard and find no merit in them.