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Tuesday, May 5, 2015

Unusual confluence of 3 separate GAO protests, all involving one contractor

You can View Recent Bid Protest Decisions of the GAO on its website. My recent visit to the site came up with the unusual coincidence of three separate protests, each involving one contractor, SupplyCore Inc. 

As always in the blawg, do not rely on the rendition of the cited piece presented; read the full piece at the link provided, to keep me honest, first of all, and to learn more than what is presented, secondly, including internal citations. I cut, rearrange, paraphrase and generally conduct mayhem with the material to suit my own purpose in presenting a view point for a teachable moment; for right or wrong.

Matter of: SupplyCore Inc., File: B-409418.4; B-409418.5; B-409418.6, April 16, 2015
DIGEST: Protest challenging the agency’s decision to cancel a solicitation is denied where the agency reasonably concluded that continued in-house performance would result in cost savings and efficiencies.

DECISION: SupplyCore Inc., of Rockford, Illinois, protests the Defense Logistics Agency’s (DLA) cancellation of request for proposals (RFP) No. SPM7LX-14-R-0029, for supply chain integration and management of lead-acid batteries. SupplyCore contends that DLA’s decision to cancel the solicitation was unreasonable. We deny the protest.

DLA issued the RFP with the intent of eliminating and reducing its current inventory of lead-acid batteries through attrition, and transfer of the responsibility for supply chain management functions such as forecasting, acquisition, storage, distribution, and transportation to a supply chain integrator. The RFP solicited proposals for a supply chain integrator to manage and perform all responsibilities required under the supply chain for worldwide support of current and future Department of Defense lead-acid batteries customers.

Based upon the agency’s evaluation of the offerors’ final proposal revisions, the SSAC and the contracting officer unanimously recommended the award of a contract to an offeror other than SupplyCore. Thereafter, the agency sent the presumptive awardee’s price information to a DLA business analyst to conduct an acquisition business case analysis (BCA) in accordance with DLA procedures. The final analysis found that it would cost the agency $13.8 million more to award a contract as compared to keeping the requirement in house. DLA also requested a BCA be performed by a private firm, which used a proprietary methodology distinct from the VSRM model used by DLA. The private firm’s BCA found an approximately $7 million cost of awarding the contract, as compared to continuing in-house performance, after accounting for transportation and contract costs. Thereafter, the agency determined that it would cancel the solicitation.

SupplyCore challenges the agency’s decision to cancel the procurement. The protester contends that the agency’s rationale for cancelling the RFP is pretextual because DLA does not want to award it a contract. SupplyCore alleges that the cancellation is unreasonable because the final BCA was based on faulty information and improper assumptions. Based upon our review of the record, we find that the agency’s cancellation was reasonable.[5]

As a general rule, our Office does not review agency decisions to cancel procurements and instead perform the work in-house, since such decisions are a matter of executive branch policy. However, where, as here, a protester argues that the agency’s rationale for cancellation is but a pretext -- that the agency’s actual motivation is to avoid awarding a contract -- we will examine the reasonableness of the agency’s actions in cancelling the procurement.

The protester makes three primary assertions in support of its allegation: the BCA improperly relied upon the price of the presumptive awardee, instead of SupplyCore’s lower-priced proposal; the BCA unreasonably assumed a 10‑percent decrease in demand; and the BCA failed to consider that the contract would be awarded on a fixed-price basis without an economic price adjustment, while the agency’s costs of in-house performance are not fixed. SupplyCore contends that these flaws led the agency to skew its cost analysis in favor of in‑house performance.

With regard to SupplyCore’s first assertion -- that it was unreasonable for the BCA to use the presumptive awardee’s price, while there may have been other methodologies the agency could have chosen to calculate costs for its final BCA, had the final BCA recommendation used the lowest-priced offer instead of the best-value offeror as the protester argues, such analysis would have been of little value to the agency given the solicitation’s best‑value award criteria, which placed significantly more importance on the non‑price factors. We find nothing unreasonable about the agency’s decision.

With regard to SupplyCore’s challenge to the agency’s assumed decrease in demand, we likewise find the agency’s evaluation unobjectionable. In this regard, the agency states that offerors were provided with demand history and briefing charts from an industry day, which showed declining demands and divestiture schedules. The agency also explains that its BCA included a sensitivity analysis that covered a range of demand scenarios, including a 10-percent increase in demand, which demonstrates that a savings would not be realized even if the BCA assumption of a 10-percent reduction was removed.

Finally, we also find unpersuasive SupplyCore’s argument that the final BCA did not consider differences between the fixed-price nature of the contract and in-house performance costs that would not be fixed. In fact, the BCA cost analysis summary clearly notes that the absence of an economic price adjustment in the fixed-price contract is “a further cost benefit” of contract award.

Matter of: Al Raha Group for Technical Services, Inc.; Logistics Management International, Inc., File: B-411015.2; B-411015.3, April 22, 2015
DIGEST: 1. Protests challenging the agency’s evaluation of the awardee’s past performance are sustained where the record shows that the evaluation was inconsistent with the terms of the solicitation and not adequately documented.

2. Protests challenging the agency’s evaluation of the protesters’ past performance are sustained in part, where the record shows that, for one protester, the agency unreasonably failed to consider information verifying the protester’s claimed past performance, and where the agency did not have a reasonable basis to discount positive past performance references.

DECISION: Al Raha Group for Technical Services, Inc. (RGTS), of Riyadh, Saudi Arabia, and Logistics Management International, Inc. (LMI), of Eastman, Georgia, protest the award of a Foreign Military Sales contract to SupplyCore, Inc., of Rockford, Illinois, by the United States Air Force under request for proposals (RFP) No. FA8505‑13‑R-31138, for F‑15 fighter jet transportation support services (TSS) for the Royal Saudi Air Force (RSAF). RGTS and LMI challenge the agency’s evaluation of the offerors’ past performance, and LMI challenges the agency’s tradeoff determination. We sustain the protests in part, and deny them in part.

The RFP sought proposals for comprehensive fleet management for various special-purpose vehicles and trailers to support base stand-ups and continued RSAF operation of F-15s. The contractor will provide all transportation and support services required to source, procure, track, warehouse, and deliver assets needed within the Kingdom of Saudi Arabia to support RSAF F-15 operations.

For purposes of award, the Air Force was to evaluate proposals under the following three factors: technical; past performance; and cost/price. With regard to past performance, the Air Force was to assess an offeror’s ability to successfully accomplish the proposed effort based on its demonstrated present and past work record. In addition to the present/past performance FACTS sheets prepared by offerors for four past performance references and the associated past performance questionnaires (PPQ) obtained by offerors, the agency also expressly reserved the right to obtain performance information from other sources. The RFP further provided that the agency was to evaluate the number and severity of performance problems, the appropriateness and effectiveness of corrective actions taken, and the overall work record; the solicitation warned that prompt corrective action in isolated instances might not outweigh overall negative performance trends.

The RFP advised offerors that the Air Force would evaluate the recency and relevance of each past performance reference. Recency was defined as active or completed efforts performed within the past 5 years from the issuance date of the RFP. For purposes of evaluating relevance, the RFP provided that the Air Force would evaluate the scope, magnitude of effort, and complexities for each reference. The RFP provided that the evaluation would include logistical and programmatic considerations, including but not limited to, the quantity procured, length of effort, complexity of the required delivery timeline, and dollar values of efforts submitted. The relevance rating was dependent on the degree to which the past performance references reflected similar scope, magnitude of effort, and complexities as compared to the solicitation’s requirements. For example, if the submitted contract met essentially the same technical complexities, but involved only some of the programmatic and logistical scope and magnitude of effort, a lesser relevancy rating was to be assigned.

the Air Force was also to evaluate whether an offeror’s past performance references demonstrated experience with the following: (1) foreign military sales or direct commercial sales material procurement; (2) procurement negotiations; (3) electronic asset visibility tracking and reporting; (4) subcontractor management; (5) international teaming agreements and/or international operations management; (6) packing, handling, shipping, and transportation management; and (7) quality assurance management. The RFP stated that the relevance rating for each reference would be based on the scope, magnitude, and complexity of the effort, and whether the reference demonstrated experience in the seven enumerated areas of experience.

Under the technical factor, the Air Force was to evaluate an offeror’s proposal for acceptability--essentially, a pass/fail evaluation. Among the technically acceptable proposals, the Air Force was then to make a best value tradeoff between past performance and cost/price, wherein past performance was to be significantly more important than cost/price.

After evaluating the recency, relevance, and quality of an offeror’s past performance, the Air Force was to assign an overall past performance confidence assessment using the following ratings: Substantial Confidence, Satisfactory Confidence, Limited Confidence, No Confidence, and Unknown Confidence (Neutral). The following matrix was established:


The Source Selection Authority (SSA) determined that SupplyCore’s proposal, based on its “Substantial” confidence past performance assessment, warranted paying a price premium of 4.18 percent over LMI’s proposal and 2.15 percent over RGTS’s proposal, both of which received “Limited” confidence assessments. Based on the tradeoff, the SSA determined that SupplyCore’s proposal offered the best value to the government, and selected the proposal for award.

 RGTS and LMI both challenge the Air Force’s evaluation of SupplyCore’s past performance as warranting a “substantial confidence” assessment, and each separately challenges the agency’s evaluation of its past performance as warranting a “limited confidence” assessment.

As a general matter, the evaluation of an offeror’s past performance is within the discretion of the contracting agency, and we will not substitute our judgment for reasonably based past performance ratings.   However, we will question an agency’s evaluation conclusions where they are unreasonable or undocumented.  The critical question is whether the evaluation was conducted fairly, reasonably, and in accordance with the solicitation’s evaluation scheme.  Here, we find that the agency’s evaluation with respect to SupplyCore’s and LMI’s past performance was unreasonable, inconsistent with the terms of the RFP, and not adequately documented and sustain these protest arguments.  We find that the agency’s evaluation with respect to RGTS’s past performance was reasonable and in accordance with the terms of the RFP and deny these protest arguments.

As discussed above, our Office will question an agency’s past performance evaluation where the record indicates that the agency either failed to evaluate, or otherwise unreasonably considered, the relevance of past performance references in accordance with the solicitation’s stated evaluation criteria. As relevant here, an agency’s evaluation of an offeror’s past performance is unreasonable where the solicitation requires the agency to consider the value of the offerors’ references as compared to the value of the solicited requirement, and the agency fails to reasonably explain why comparatively small-value references provide a basis to justify a high past performance rating, or in this case the highest possible rating.

Additionally, where an agency fails to document or retain evaluation materials, it bears the risk that there may not be an adequate supporting rationale in the record for us to conclude that the agency had a reasonable basis for its source selection decision.

 In sum, based on the fact that SupplyCore’s past performance submitted for evaluation was with respect to references that were small fractions of the size of the effort required by the RFP and the Air Force’s reliance on other past performance information did not adequately evaluate relevance pursuant to the RFP’s applicable criteria, the agency’s decision to assign SupplyCore the highest past performance confidence assessment of “substantial confidence” is not supported by the record.

Notwithstanding that the past performance information claimed for LMI’s CEO was verified by knowledgeable agency officials in the written PPQs,  the Air Force effectively elected to “verify” the verification set forth in the PPQs by seeking further information from the subsequent program manager.  That individual, who was not the program manager for two of the three cited references, could not verify certain aspects of the LMI CEO’s performance. The agency, however, has failed to advance any reasonable explanation for how the subsequent program manager’s inability to verify the LMI CEO’s performance negates the verification provided by knowledgeable agency officials in the PPQs.   We have held that an agency is required to consider PPQs in its possession.  The agency’s wholesale discounting of the verification provided by the PPQs, on the basis that it could not confirm LMI’s past performance information through yet an additional source, was unreasonable.  As a consequence, the Air Force failed to meaningfully consider available agency information regarding LMI’s past performance of similar requirements for the Air Force, and therefore we sustain the protest on this basis.

 In summary, we find that the Air Force’s evaluation of SupplyCore’s past performance was inconsistent with the relevancy requirements of the RFP and not adequately documented. Because the reevaluation of SupplyCore’s past performance could result in a new rating for that offeror, which could in turn require a new source selection decision, we conclude that RGTS and LMI, both of whom submitted lower-priced offers, were prejudiced by this error.  We also find that the agency unreasonably failed to consider information regarding LMI’s past performance on similar efforts for the agency, and that the protester was also prejudiced by this error.

We recommend that the Air Force, consistent with our decision, reevaluate offerors’ past performance information. Based on that reevaluation, we recommend that the agency make a new source selection determination. We also recommend that the agency reimburse the protesters their respective costs associated with filing and pursuing their protests, including reasonable attorneys’ fees.

[Note:  there is a considerable amount of fact and application of particular elements of the RFP requirements that is analyzed to reach the decision made.  You have to look to the source cited above to read it.]

Matter of: Dalma Tech2 Company, B-411015, April 22, 2015
DIGEST: 1. Protest challenging the agency’s evaluation of the awardee’s proposal as technically acceptable is denied where the agency’s evaluation was reasonable and consistent with the terms of the solicitation.

2. Protest challenging the agency’s evaluation of the awardee’s past performance is denied where the evaluation was reasonable and consistent with the terms of the solicitation.

DECISION: Dalma Tech2 Company (DTC), of Riyadh, Saudi Arabia, protests the award under request for proposals for F‑15 fighter jet transportation support services (TSS) for the Royal Saudi Air Force (RSAF). DTC challenges the agency’s determination that SupplyCore’s proposal was technically acceptable, and the agency’s evaluation of DTC’s past performance. We deny the protest.

DTC challenges the Air Force’s determination that SupplyCore’s proposal was technically acceptable, arguing that SupplyCore failed to meet In-Kingdom licensing and facility requirements. The protester also challenges the agency’s evaluation of its past performance as warranting only a “satisfactory confidence” assessment. For the reasons that follow, we find that none of DTC’s challenges provides a basis to sustain the protest.

DTC alleges that SupplyCore cannot satisfy the RFP’s requirement to present a valid Saudi Arabian business license because SupplyCore is not a registered company or legally affiliated with an agent, distributor, joint venture partner, or teaming partner under Saudi Arabian law. See Protest at 2; Comments at 2.

Ordinarily, a solicitation requirement for a contractor to warrant that it possesses, or will otherwise obtain prior to performance, licenses required to conduct business in a foreign country is a matter concerning a contractor’s responsibility. In most cases, responsibility is determined based on standards set forth in Federal Acquisition Regulation (FAR) § 9.104-1, and involves subjective business judgments that are within the broad discretion of the contracting activities. Our Office generally will not consider a protest challenging an agency’s affirmative determination of an offeror’s responsibility.

Here, however, the Performance Work Statement in the RFP (PWS) explicitly required that offerors “include [a] copy of [an] actual Saudi business license” with their In-Kingdom Execution Plans, effectively imposing what amounted to a “definitive responsibility” criterion. Definitive responsibility criteria are specific and objective standards designed to measure a prospective contractor’s ability to perform the contract. Such criteria, which must be met as a precondition to award, limit the class of contractors to those meeting specified qualitative and quantitative qualifications necessary for adequate performance, e.g., unusual expertise or specialized facilities. Where an agency includes a definitive responsibility criterion in a solicitation, we will review the record to ascertain whether evidence of compliance has been submitted from which the contracting officer reasonably could conclude that the criterion has been met; generally, a contracting agency has broad discretion in determining whether offerors meet definitive responsibility criteria since the agency must bear the burden of any difficulties experienced in obtaining the required performance.

Based on our review of the record, we find nothing objectionable about the Air Force’s determination that SupplyCore met the RFP’s licensing requirement. The RFP did not require that the offeror itself have a Saudi Arabian business license. Rather, the RFP specifically contemplated that an offeror could satisfy the licensing requirement by maintaining a sponsorship or teaming effort with a Saudi Arabian company. SupplyCore’s proposal states that the awardee’s proposed subcontractor, Arwadh Establishment, is a Saudi Arabian company licensed in accordance with applicable Saudi law. SupplyCore’s proposal included copies of Arwadh’s business licenses. Id. The Air Force found that Arwadh will conduct the In-Kingdom TSS requirements, and the SupplyCore team will utilize Arwadh’s stand-alone In-Kingdom Operations department to ensure that the company maintains and adheres to the local laws and customs for Saudi Arabia and to ensure that foreign personnel maintain a legal work status. Thus, the agency reasonably concluded that SupplyCore demonstrated compliance with the RFP’s licensing requirement through its teaming arrangement with a licensed, Saudi Arabian company.

To the extent DTC argues that the teaming agreement between the awardee and its subcontractor is inconsistent with Saudi Arabian law, the protester’s argument is misplaced. Our focus is limited to whether SupplyCore met the eligibility requirements under the terms of the RFP. In this regard, the RFP did not require offerors to demonstrate that their proposed teaming approaches were approved under Saudi Arabian law; rather, the RFP required evidence of an “actual Saudi business license,” which, as noted above, SupplyCore provided through its subcontractor, Arwadh. Under these circumstances, we find that the Air Force reasonably found that SupplyCore satisfied the RFP’s licensing requirement.
















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