TITLE: B-297849, TVI Corporation, April 19, 2006
BNUMBER: B-297849
DATE: April 19, 2006
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B-297849, TVI Corporation, April 19, 2006
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: TVI Corporation
File: B-297849
Date: April 19, 2006
Paul F. Khoury, Esq., and Michael S. Caldwell, Esq., Wiley Rein & Fielding
LLP, for the protester.
Richard P. Rector, Esq., and Eric M. O'Neill, Esq., DLA Piper Rudnick Gray
Cary US LLP, for 3M Canada Company, an intervenor.
Jeffery I. Kessler, Esq., and Caridad Ramos, Esq., U.S. Army Materiel
Command, for the agency.
Scott H. Riback, Esq., and John M. Melody, Esq., Office of the General
Counsel, GAO, participated in the preparation of the decision.
DIGEST
1. Agency's evaluation of protester's proposal as moderate risk--rather
than as an unknown risk--under past performance factor was unreasonable,
where protester tendered a large amount of past performance information,
almost all of which the agency determined to be either not recent or not
relevant; solicitation required agency to assign an unknown risk rating
where offeror tendered "little or no" recent, relevant past performance
information.
2. Agency improperly rated awardee's proposal neutral--instead of
downgrading it--under small business participation factor, where record
shows that awardee did not meet criteria established in solicitation for
assignment of neutral rating, and did not offer meaningful small business
participation plan.
DECISION
TVI Corporation protests the award of a contract to 3M Canada Company
under request for proposals (RFP) No. W52H09-05-R-0142, issued by the
Department of the Army, Tank, Automotive and Armaments Command, to acquire
a quantity of C2A1 filtration canisters. TVI asserts that the agency
misevaluated the proposals.
We sustain the protest.
The C2A1 filtration canister is a critical life safety component used in
various models of nuclear, biological and chemical protective masks. The
RFP contemplated the award of a fixed-price,
indefinite-delivery/indefinite-quantity contract to provide the canisters
for a base period, with four 1-year options.
Award was to be made to the firm submitting the proposal deemed to offer
the "best value" to the government, considering several non-price
factors--technical, past performance and small business participation--and
price. The technical and past performance factors were equal in
importance, while the small business participation factor was less
important than the technical and past performance factors, but slightly
more important than price. Agency Report (AR), exh. 2a, at 1. The
technical factor was comprised of three subfactors: design, carbon fill,
and manufacturing capability. The design subfactor was to be rated on a
go/no-go basis, while the carbon fill and manufacturing capability
subfactors were to be rated adjectivally (excellent, good, marginal, or
unacceptable). Id. at 1-2. The past performance factor was to be rated as
very low risk, low risk, moderate risk, high risk, or unknown risk. Id. at
2. Finally, the small business participation factor was to be rated as
excellent, good, adequate, marginal, poor, or neutral. Id. at 3-4.
The agency received three proposals, including the protester's and 3M's.
The agency determined that all three were in the competitive range,
engaged in discussions, and obtained revised proposals, which it rated as
follows:
+------------------------------------------------------------------------+
| Evaluation Factor | 3M Canada | TVI | Offeror A |
|------------------------+---------------+---------------+---------------|
|Technical | | | |
|------------------------+---------------+---------------+---------------|
|Design | Go | Go | Go |
|------------------------+---------------+---------------+---------------|
|Technical (Overall) | Excellent | Excellent | Good |
|------------------------+---------------+---------------+---------------|
|Carbon Fill | Excellent | Excellent | Excellent |
|------------------------+---------------+---------------+---------------|
| Manufacturing Capacity | Excellent | Excellent | Adequate |
|------------------------+---------------+---------------+---------------|
|Past Performance | Low Risk | Moderate Risk | Moderate Risk |
|------------------------+---------------+---------------+---------------|
|Small Business | Neutral | Excellent | Excellent |
|Participation | | | |
|------------------------+---------------+---------------+---------------|
|Evaluated Price |$255,001,021.92|$258,716,465.95|$292,709,024.59|
+------------------------------------------------------------------------+
The competition for contract award therefore was extremely close between
3M and TVI in terms of both price and non-price factors. The agency made
award to 3M, finding that the firm's proposal offered the best overall
value to the government. Following the award announcement and debriefing,
TVI filed this protest.
PAST PERFORMANCE
TVI asserts that the agency improperly rated its proposal moderate risk,
rather than unknown risk, under the past performance factor, since the RFP
contained a strict definition of "recent and relevant" past performance,
and the overwhelming majority of the past performance information TVI
submitted did not meet the definition. TVI notes in this connection that
it is a newly-formed concern. TVI also points out that, prior to the final
evaluation, the agency had rated TVI's proposal as unknown risk.
In reviewing an agency's evaluation of past performance, we will examine
the evaluation to ensure that it was reasonable and consistent with the
solicitation, applicable statutes and regulations. Acepex Mgmt. Corp.,
B-283080 et al., Oct. 4, 1999, 99-2 CPD para. 77 at 3.
The evaluation here was not reasonable. The solicitation provided that, in
evaluating past performance, the agency would consider "recent and
relevant" past performance information, which was defined as performance
of contracts within the last 3 years that were for the same or similar
items (that is, filtration items using carbon bed filling and comparable
gas life testing skills) and had a value of at least $1 million. AR, exh.
2b, at 2. The RFP further provided that, for newly-formed entities, the
agency would consider information relating to contracts performed by
predecessor concerns or contracts performed or supported by the offeror's
key personnel. Id. The RFP also included definitions for each of the past
performance risk ratings that could be assigned. For the moderate risk
rating, the solicitation provided: "Based on the offerors past
performance, some doubt exists that the offeror will successfully perform
the required effort." AR, exh. 2a, at 2. For the unknown risk rating, the
RFP provided: "The offeror had little or no recent/relevant past
performance upon which to base a meaningful performance prediction." Id.
In its initial evaluation of TVI's past performance, the agency assigned
the firm an unknown risk rating, finding that none of the five contract
references provided by TVI in its proposal fit the definition of relevant
contracts because none was for the manufacture of an item that included
filters. AR, exh. 8, at 12. The agency also appears to have determined at
that point in its evaluation that TVI's management team, engineering team,
and key personnel had experience directly related to military canisters,
but that this experience did not qualify as recent (the evaluators noted
that TVI's key personnel who had experience with the C2A1 canister
performed those activities from 1990 to 1996). Id.
Thereafter, the agency engaged in discussions with TVI, during which there
were several exchanges relating to the firm's past performance, with a
focus on recent and relevant contracts performed by TVI's key personnel
and subcontractors. AR, exhs. 6-6e. Following discussions, the agency
assigned the firm a past performance rating of moderate risk. The
narrative portion of the agency's evaluation materials analyzing the
information provided during discussions states as follows:
The offeror confirms that it has not manufactured or provided C2A1
canisters or similar items on contracts over $1,000,000. TVI Corporation
is considered to be a "newly formed entity" for the production of
canisters. Although TVI has not provided relevant contract references
that demonstrate they have successfully manufactured or provided the
C2A1 canister or similar items on contracts over $1,000,000, a review of
the information provided by TVI suggests that their key personnel have
extensive knowledge in the manufacture of carbon bed type canisters.
[Key employee No. 1] had contract experience on C2A1 awards made by the
U.S. Government under Rock Island contracts during 1990 to 1997.
Although they are relevant, they fall outside the definition of recent
past performance. [Key employee No. 2's] experience is relevant and
recent. He designed and advised on the production line for the C2A1
canisters produced by [deleted]. [Elsewhere in the agency's evaluation
report, key employee 2's work is further detailed; he worked with
[deleted] in connection with that firm's manufacture of the C2A1
canister under one contract for the Austrian military during 2004-05,
and a second contract worth just over $1 million with [deleted] for the
manufacture of the C2A1 canister. AR, exh.. 8, at 21.] [deleted] and
Calgon are suppliers to TVI and do not manufacture the C2A1 canister or
a similar item; however, as subcontractors they are providing their
expertise to TVI. (Note: All offerors will be utilizing Calgon as a
subcontractor.)key personnel and subcontractors.
The rating of Unknown Risk that was established on 18 August 2005 is
changed. Based on TVI being a "newly formed entity" and in the review of
the key personnel and subcontractor expertise, supporting rationale was
provided for a rating of "Moderate Risk" for TVI.
AR, exh. 8, at 22-23.
Similarly, the source selection official found that the experience of
TVI's key personnel working on contracts for the production of the C2A1
canister (except for Key Employee No. 2 noted above) did not qualify as
recent experience as defined in the RFP, and that TVI's subcontractors
(Calgon Carbon and [deleted]) had not performed contracts that met the
RFP's definition of relevant contracts. AR, exh. 10, at 16. He also found,
however, that TVI's lack of past performance in manufacturing the C2A1
canister was an element in his determination that the TVI proposal merited
a moderate risk rating. Specifically, the source selection official found
as follows:
TVI Corporation confirmed that it has not manufactured or provided C2A1
Canisters or similar items on contracts over $1,000,000. TVI has
recently produced approximately 500 C2A1 Canisters on its automated
production line. Based on TVI being a "newly formed entity" and its key
employee experience and subcontractors [the experience of which was
found elsewhere in the source selection decision not to be recent,
relevant experience], some doubt exists that the offeror will
successfully perform the required effort. I concur with the evaluator[s]
that TVI merits a rating of "Moderate Risk."
AR, exh. 10, at 17.
We find the agency's assignment of a moderate risk rating to be
problematic. As noted, the agency determined that only one of TVI's key
employees' work was both relevant and recent within the meaning of the
RFP's definition. To the extent that the agency found any of TVI's past
performance information recent and relevant, it was limited to this one
individual's performance in connection with two contracts, only one of
which was specifically identified as meeting the RFP's $1 million
threshold for relevance. In particular, the record shows that he worked to
design a production line for [deleted], and also advised in the design and
manufacture of C2A1 canisters by [deleted]. [deleted] manufactured C2A1
canisters under two prior contracts (only one of which is noted as meeting
the $1 million relevance threshold), which were completed without any
performance problems; at least one of the contracts was described as
resulting in deliveries ahead of schedule, with excellent quality. AR,
exh. 8, at 21. There does not appear to be anything negative in the
information reviewed by the agency with respect to this individual's work.
The RFP specifically provided for the assignment of an unknown risk rating
where the offeror was found to have "little or no" recent or relevant past
performance upon which to base a meaningful performance prediction. While
"no" past performance information is easily understood as a complete
absence of past performance information, the question of what constitutes
"little" past performance information is at issue here. As noted, the
agency considered the past performance of only one of TVI's key employees
(out of 11 individuals whose resumes were included in the firm's
proposal), while rejecting the remaining information relating to its other
key employees, all of its prior subcontractors, and its prime contracts as
either not relevant or not recent. To the extent that this individual's
past performance information was reviewed, there is nothing in the record
to show why the agency considered the information as predictive of a
moderate risk of unsuccessful performance of the requirement by TVI; the
agency simply did not articulate a nexus between the information reviewed
with regard to this individual's experience and its evaluation conclusion.
It certainly is not clear how the positive past performance information
found in connection with this individual could reasonably translate into
the negative past performance rating assigned; while a limited quantity of
positive information might not be sufficient to warrant assigning an
offeror a positive, rather than neutral, past performance rating, absent
some compelling justification, positive information should not result in a
negative rating. Under the circumstances, we conclude that the agency
should have assigned an unknown risk rating to TVI, since there was little
information to consider, and the information considered apparently did not
provide the basis upon which the agency made its performance prediction.
We therefore find the agency's assignment of a moderate risk rating
unreasonable given the terms of the RFP.
SMALL BUSINESS PARTICIPATION PLAN
TVI protests that the agency improperly assigned the 3M proposal a neutral
rating under the small business participation evaluation factor. In this
regard, the solicitation provided for a neutral rating where:
Foreign firm (offeror) has held no past government contract(s) subject
to FAR sect. 52.219-8 or 52.219-9. Foreign firm (offeror) indicates no
opportunity for using SBs [small businesses], VOSBs [veteran-owned small
businesses], SDVOSBs [service-disabled veteran-owned small businesses],
HUBZone SBs [historically underutilized business zone small businesses],
SDBs [small disadvantaged businesses], WOSBs [women-owned small
businesses], and HBCU/MIs [historically black colleges and
universities/minority institutions] as all contract work will be
performed completely outside the United States and no meaningful
subcontract opportunities exist.
AR, exh. 2a, at 4. TVI asserts that 3M does not meet any of the criteria
outlined in the RFP for the assignment of a neutral rating under the small
business participation factor. According to the protester, 3M has had
prior contracts that were subject to Federal Acquisition Regulation (FAR)
sections 52.219-8 (utilization of small business concerns) and 52.219-9
(small business subcontracting plan); 3M plans (indeed, is required) to
have at least a portion of the contract performed within the U.S. because
all offerors were required to use Calgon Carbon, a U.S. concern, as a
supplier of one of the canister's components; and 3M actually states in
its proposal that, if necessary, it has meaningful opportunities to
subcontract some of the work to small business concerns.
The agency, while conceding that the applicable FAR clauses have been
incorporated into two prior 3M contracts, states that it did not consider
3M to have been "subject to" those clauses, since the clauses were not
enforced due to 3M's status as a foreign concern. As for the subcontracts
with U.S. concerns, the agency states that 3M was directed by the terms of
the solicitation to use Calgon Carbon, a large U.S. business, and that a
second subcontract, with another large U.S. concern, Lydall Corporation,
is necessary because Lydall is the primary approved source for a component
that it manufactures (the particulate filter media); the agency notes in
this respect that TVI also proposed Lydall as a subcontractor for the
particulate filter media. Finally, as for opportunities to use small U.S.
concerns, the agency maintains that 3M's proposal states that, because it
has developed a supply chain of Canadian concerns, it does not have
meaningful opportunities to subcontract with small U.S. concerns. The
agency notes further that, because the offerors were directed to use
Calgon Carbon as a subcontractor, this cannot be viewed as presenting a
meaningful opportunity for subcontracting with a U.S. small business and,
as for Lydall, since its subcontract represents only 2.5 percent of the
total contract values, it also does not represent a meaningful
subcontracting opportunity.
We agree with the protester that 3M meets none of the criteria outlined in
the RFP for a neutral rating. First, as noted, the agency concedes that
the applicable FAR small business subcontracting clauses were included in
two prior 3M contracts. Thus, while the agency may have chosen not to
enforce the clauses, we do not think it was reasonable for the agency to
conclude that 3M has never held past government contracts that were
"subject to" the applicable FAR clauses. Second, the record shows that the
current contract will not be performed entirely outside of the U.S. At
least two U.S. concerns--Calgon Carbon and Lydall--are participating in
performance of the contract as 3M subcontractors, and even if those firms
are large businesses, it remains that a portion of the contract is being
performed within the U.S.
Finally, as TVI notes, 3M's proposal does indicate that the firm has the
ability to make meaningful small business subcontracting opportunities
available, should it elect to do so. In this regard, the 3M proposal
specifically states:
3M Canada does have access to 3M Company. 3M Company is our US parent
company and 3M Company has an established Small Business plan that could
be leveraged to access potential small business concerns. Within this
solicitation, 3M Canada is not committing to achieving any U.S. small
business participation but certainly, should opportunities arise where
3M Canada can take advantage of a small business concern(s), then that
opportunity will be investigated and evaluated against existing
suppliers.
AR, exh. 4a, at 1. It is therefore clear that meaningful subcontracting
opportunities existed for 3M through its parent company.
Since we find that 3M did not satisfy the RFP criteria for a neutral
rating under the small business participation plan factor, it was
unreasonable for the agency to assign 3M that rating.[1] Accordingly, we
also sustain this aspect of TVI's protest.
Given that TVI's proposed price was only approximately 1.45 percent higher
than 3M's (and price was the least important evaluation factor); that the
proposals were ranked equal under the technical evaluation factor; and
that TVI's proposal was rated excellent under the small business
participation factor, it is not possible to determine from the record
which proposal would be found to be the best value after the evaluation
errors are corrected. We therefore conclude that there is a reasonable
possibility that the evaluation errors resulted in competitive prejudice
to TVI; that is, but for the evaluation errors, TVI would have had a
substantial chance of receiving the award. See McDonald Bradley, B-270126,
Feb. 8, 1996, 96-1 CPD para. 54 at 3; Statistica, Inc. v. Christopher, 102
F.3d 1577, 1581 (Fed. Cir. 1996).
RECOMMENDATION
We recommend that the agency reevaluate the proposals in a manner
consistent with the discussion above and make a new source selection
decision based on the results of that reevaluation. Should the agency
conclude that an offeror other than 3M is in line for award, we recommend
that the agency terminate 3M's contract for the convenience of the
government and make award to that other offeror, if otherwise proper.
Finally, we recommend that TVI be reimbursed the costs of filing and
pursuing its protest, including reasonable attorneys' fees. 4 C.F.R. sect.
21.8(d)(1) (2005). TVI's certified claim for costs, detailing the time
spent and the costs incurred, must be submitted to the agency within 60
days of receiving our decision. 4 C.F.R. sect. 21.8(f)(1).
The protest is sustained.
Anthony H. Gamboa
General Counsel
------------------------
[1] Given 3M's failure to meet the criteria for a neutral rating and the
fact that it offered no small business subcontracting participation in its
proposal, it appears that it would have been appropriate to downgrade 3M
under this factor. In this regard, we note that the RFP provided for a
rating of poor where
[o]fferor demonstrates little or no commitment to using SBs, VOSBs,
SDVOSBs, HUBZone SBs, SDBs, WOSBs, and HBCU/MIs. There is no evidence
that the offeror met his prior goals and/or shows no serious commitment
and did not provide adequate justification for not doing so. Based on
the proposal and/or past performance history, there is negligible
likelihood that anything other than a token portion of the work will be
performed in this sector. . . .
AR, exh. 2a, at 4.