B-309982.2, Master Lock Company, LLC, June 24, 2008
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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.
Matter of: Master Lock Company, LLC
William
M. Weisberg, Esq., Beth L. Jacobson, Esq., and Joyce L. Tong, Esq., Sullivan
& Worcester LLP, for the protester.
Matthew O. Geary, Esq., Defense Logistics Agency, for the agency.
Jonathan L. Kang, Esq., and Ralph O. White, Esq., Office of
the General Counsel, GAO, participated in the preparation of the decision.
DIGEST
1.
Protest is sustained where agency’s evaluation of awardee’s proposal as “neutral”
under two evaluation factors resulted in those factors not being considered in
the tradeoff determination, which was inconsistent with solicitation’s award
criteria.
2. Protest is
denied where agency reasonably relied on awardee’s representations regarding
compliance with the Trade Agreements Act.
DECISION
Master Lock Company, LLC
protests the award of a contract to Evergreen Specialty Services under request
for proposals (RFP) SPM5L5-07-R-0056, issued by the Defense Logistics Agency
(DLA) for low security padlocks. Master
Lock contends that the agency improperly evaluated the offerors’ technical
proposals and the awardee’s representations regarding compliance with the Trade
Agreements Act (TAA), and that the award determination was inconsistent with the
stated evaluation criteria.
BACKGROUND
The RFP was issued on
The RFP stated that proposals would be evaluated on the
basis of the following non-price factors, in descending order of importance: past performance, socio-economic
considerations, and Javits-Wagner-O’Day (JWOD) Act considerations.[1] RFP at 64-65.
The past performance evaluation factor had three equally-weighted
subfactors: delivery, business
relations/customer satisfaction, and quality.
Under the socio-economic and JWOD considerations
evaluation factors, offerors were instructed to describe the efforts they would
take to ensure that small, small disadvantaged, women-owned, veteran-owned and
service-disabled veteran-owned small business concerns and JWOD concerns “will
have an equitable opportunity to compete for subcontracts in this acquisition.” RFP at 59.
Under each of these factors, offerors were required to provide the
following information:
Describe any future plans your company has for developing additional subcontracting possibilities for [small business and JWOD concerns].
. . . Specify what proportion of your proposal, as a percentage of dollars, will be subcontracted to [small business and JWOD concerns].
With regard to both evaluation factors, the RFP stated
that “[a]n offeror who proposes a higher percentage, complexity level, and
variety of participation by” small business and JWOD concerns, “will receive a
higher rating.” RFP at 67-68.
The solicitation incorporated the clause at Defense
Federal Acquisition Regulation Supplement (DFARS) sect. 252.225-7021(a)(12), which
implements provisions of the Trade Agreements Act (TAA), 19 U.S.C. sect. 2501 et
seq. The TAA clause requires
offerors to provide only “U.S.-made, qualifying country, or designated country
end products,” absent circumstances not relevant here. DFARS sect. 252.225-7021(c). DLA received proposals from four offerors: Master Lock, Evergreen, Pacific Lock Co.
(PLC), and a fourth offeror. Agency
Report[2]
(AR) at 3. During the initial evaluation
of proposals by the technical evaluation team (TET), DLA determined that the
fourth offeror’s proposal was technically unacceptable, and eliminated it from
award consideration. AR at 3. The agency also determined PLC’s proposal indicated
that the offeror would not comply with the TAA requirements, and eliminated
that offeror’s proposal from award consideration.[3]
With respect to Evergreen’s TAA certification, DLA
concluded that an additional inquiry was required. AR at 8.
Evergreen left the TAA certificate blank in its proposal, thereby taking
no exception to the blanket statement that none of the products it would supply
would fail to meet the requirements of the TAA.
AR, Tab 6, Evergreen Proposal, at 79.
The agency was aware, however, that in July 2007 Evergreen declined to
accept an order from DLA for locks under a different
indefinite-delivery/indefinite-quantity (ID/IQ) contract, and did so under
circumstances which indicated that the company was doing business with a
supplier that had manufacturing facilities in
Because
After receiving the additional information from Evergreen,
the TET accepted as adequate both offerors’ representations that they would comply
with the TAA. Specifically, the agency
concluded that both proposed to supply locks manufactured in “designated
countries,” see DFARS sect. 252.225-7021(a)(3)(i), with Master Lock
proposing to manufacture its locks in Mexico, and Evergreen proposing to supply
locks manufactured by [deleted] in [deleted].
AR, Tab 9, Pre-Negotiation Briefing Memorandum (PBM), at 5.
The TET also determined that Evergreen’s initial proposal
did not address the socio-economic or JWOD considerations evaluation factors,
and rated the proposal as “poor” under these factors, the lowest rating under
the agency’s source selection plan (SSP).[4] AR, Tab 9, PBM, at 2. The agency requested that Evergreen submit a
revised proposal that addressed these factors.
Although Evergreen submitted a proposal revision detailing its approach,
the TET concluded that the proposal still merited a rating of “poor” under
those evaluation factors. AR, Tab 11,
Price Negotiation Memorandum (PNM), at 2.
The contracting officer (CO) determined, however, that
Evergreen’s proposal should instead be rated “neutral” under the socio-economic
and JWOD evaluation factors because, as a small business, “Evergreen has fewer
opportunities to subcontract to meet the socio-economic and JWOD factors.”
The final ratings for the offerors were as follows:
MASTER LOCK |
EVERGREEN |
|
PAST PERFORMANCE |
OUTSTANDING |
GOOD |
Delivery |
Good |
Good |
Business relations/ customer
satisfaction |
Outstanding |
Outstanding |
Quality |
Outstanding |
Good |
SOCIO-ECONOMIC CONSIDERATIONS |
GOOD |
NEUTRAL |
JWOD CONSIDERATIONS |
GOOD |
NEUTRAL |
OVERALL RATING |
OUTSTANDING |
GOOD |
AR, Tab 11, PNM, at 2; Tab 12, SSD, at 1-2.
In the tradeoff determination, the SSA stated that the
“evaluation of offerors was completed using price and past performance as
evaluation factors, weighted equally.”
AR, Tab 12, SSD, at 1. The SSA
noted that Master Lock and Evergreen proposed prices that ranged in difference
from 1% to 17%, with “the majority of items averaging an 8% or less (+/-)
difference.”
DLA advised each offeror of the award decisions, and
provided Master Lock a debriefing regarding the portion of the requirements it
was not awarded. This protest
followed.
DISCUSSION
The protester challenges the award of 13 lock types to
Evergreen. The protester argues that the
agency unreasonably determined that Evergreen’s proposal met the requirements
of the TAA, that the agency’s evaluation of the offerors’ proposals under the
socio-economic and JWOD considerations evaluation factors was unreasonable, and
that the agency’s evaluation of Master Lock’s past performance was unreasonable. As discussed below, we find no merit to these
arguments. The protester also argues
that the agency failed to consider the socio-economic and JWOD considerations
evaluation factors in the selection decision.
We agree with the protester regarding this argument, and sustain the
protest on this basis.
TAA Compliance Evaluation
Master Lock contends that the agency unreasonably ignored
evidence that Evergreen would not perform the contract in compliance with the
TAA. Specifically, the protester argues
that the agency did not reasonably consider Evergreen’s inability to provide
locks under a different contract under circumstances that suggested
non-compliance with the TAA. We disagree.
When a bidder or offeror represents that it will
furnish end products of designated or qualifying countries (including domestic
end products) in accordance with the TAA, it is obligated under the contract to
comply with that representation. That
is, where a bidder or offeror leaves the certificate blank and does not exclude
any end product from the certificate, and does not otherwise indicate that it
is offering anything other than a TAA-compliant end product, acceptance of the offer
will result in an obligation on the offeror’s or bidder’s part to furnish a
TAA-compliant end product. Wyse Tech., Inc., B-297454,
In its proposal, Evergreen left the TAA certificate blank,
thereby indicating that it would provide locks that complied with the TAA. AR, Tab 6, Evergreen Proposal, at 79. As discussed above, however, DLA determined that
additional inquiry regarding Evergreen’s representation was required, based on
the company’s prior contracting history.
AR at 11. As also explained
above, DLA inquired because, in response to an earlier order issued by the
agency, Evergreen advised DLA that its supplier, [deleted], could not provide a
sample that met the specifications of the order because “[t]heir factory in China
is new and is not yet 100% operational,” and “[t]herefore, they cannot provide
a sample at this time.” AR, Tab 13,
Email from Evergreen to DLA,
During DLA’s evaluation here, the agency contacted Evergreen
by telephone to confirm the site of manufacture for the locks. AR at 11.
Evergreen confirmed via email that its supplier was [deleted], and that
the “factory where the . . . locks are made is located in the city of [deleted].” AR, Tab 6, Email from Evergreen to DLA,
We think the record shows that the agency considered the
available information concerning Evergreen’s supplier, contacted Evergreen to
confirm details regarding the TAA representation for this solicitation, and
reasonably relied on Evergreen’s confirmation that the locks would manufactured
in [deleted], a TAA-designated country.
Further, the record shows that the locks to be provided under the
canceled order were not the same models as those to be provided under the award
challenged here. AR at 8. On this record, we conclude that DLA
reasonably addressed any concerns regarding Evergreen’s representation that it
would comply with the requirements of the TAA.[5]
Socio-Economic and JWOD Considerations Evaluation
Next, Master Lock contends that Evergreen’s proposal
should have been rejected as unacceptable for failing to address the socio-economic
and JWOD evaluation factors in its proposal.
We disagree because the record shows that the agency reasonably
concluded that Evergreen’s proposal merited a rating of “poor” under these
factors, but was not unacceptable.
The evaluation of an offeror’s proposal, including past
performance, is a matter within the agency’s discretion. IPlus, Inc., B-298020, B-298020.2,
As discussed above, Evergreen did not address either
factor in its initial proposal, and the agency rated Evergreen’s proposal as “poor”
under these factors. AR, Tab 9, PBM, at
5. The agency conducted discussions with
Evergreen and requested that the offeror revise its proposal to address these
factors. The TET evaluated Evergreen’s
revised proposal, but concluded that it still merited a “poor” rating under the
factors because “the information submitted did not justify a change in [the
company’s] initial rating.” AR, Tab 11, PNM,
at 2.
Master Lock argues that the revised proposal did not meet
the RFP requirement that offerors identify the “portion of your proposal, as a
percentage of dollars, [that] will be subcontracted” to small business and JWOD
concerns, and should therefore have been rejected as technically unacceptable. RFP at 59.
On this issue, Evergreen’s proposal stated that [deleted]% of the
company’s current subcontracted work is with small, woman-owned, or veteran-owned
businesses, and that the company’s goal for the future is to increase this
amount to [deleted]%. Supplemental
Agency Report (SAR), attach. 9, Evergreen Revised Proposal, at 1. Evergreen did not, however, address what
percentage of work or dollar value it proposed to subcontract to small
businesses for this contract. See
id. With respect to the JWOD
considerations evaluation factor, Evergreen stated that it has been in contact
with the JWOD program and states that the company and its supplier [deleted] “have
expressed interest” in partnering with JWOD concerns in the future.
We conclude that the agency’s evaluation was
reasonable. The RFP did not require
offerors to propose a minimum level of subcontract participation for small
business or JWOD concerns. See
RFP at 59. Rather, the RFP merely
required offerors to identify the efforts offerors would make to encourage
subcontracting opportunities. The record
here indicates that the agency considered Evergreen’s proposal to merit a “poor”
rating under both subfactors. The SSP
states that a “poor” rating indicates that the offeror “either does not address
[socio-economic or JWOD subcontracting] plans or states that it has no plans to
subcontract” with either small business or JWOD concerns. AR, Tab 8, SSP, at 6. The “poor” rating
appears to show that the agency concluded that Evergreen did not make a specific
commitment for subcontracting--a conclusion we think is consistent with
Evergreen’s proposal. In effect, we
think the record shows that the agency rated Evergreen as proposing $0 for small
business and JWOD concern subcontracts.
As discussed above, the RFP did not prohibit offerors from proposing a
$0 level of subcontracting participation.
On this record, we find no basis to sustain the
protest. As discussed below, however, we
conclude that the SSA’s subsequent consideration of Evergreen’s evaluation
under these factors in the selection decision was not reasonable.
Past Performance Evaluation
The protester argues that the agency unreasonably
evaluated its past performance under the delivery subfactor as “good,” rather
than applying the higher rating of “outstanding.” We disagree.
The agency received seven past performance references for Master
Lock. AR, Tab 8, Master Lock Past
Performance References. Four references
rated Master Lock’s delivery as “outstanding,” two as “good,” and one did not
provide a rating.
Master Lock argues that the survey forms all state that
the company had no delays in delivery, and that the agency’s evaluation of the
company’s performance as having problems with delivery was unreasonable. We agree that the survey forms all state “yes”
in response to the question “Was/were deliveries on time?” AR, Tab 8, Master Lock Past Performance
Evaluations. However, for four of those
references, the surveys stated the delivery was on time, but also that delays
were adequately addressed. Furthermore,
those four references each described some degree of delay or error with
delivery, but stated that Master Lock had always adequately addressed the
problems.
To the extent there is a contradiction between the
references stating on the survey form that Master Lock’s deliveries were on
time, but also that delays were adequately addressed, we think that the agency
reasonably interpreted these responses as indicating less than perfect delivery
at all times. Additionally, the agency’s
assessment of Master Lock’s delivery record is consistent with the ABVS rating,
which does not show 100% on-time delivery.
On this record, we conclude that the agency’s evaluation of Master Lock’s
past performance was reasonable and consistent with the evaluation criteria.
Tradeoff and Selection Decision
Master Lock argues that the selection decision was flawed
for two reasons: (1) the selection
decision relied on a mechanical comparison of offerors’ proposed prices, and
(2) the selection decision excluded consideration of Evergreen’s evaluation
under the socio-economic and JWOD considerations evaluation factors. We disagree with the first argument, but
agree with the second one.
First, the protester argues that the selection decision
was based solely on a mechanical comparison of the offerors’ proposed price,
rather than a tradeoff between price and non-price factors, as required by the
solicitation. Specifically, the
protester contends that the selection decision was made based on an arbitrary
price evaluation that “split the difference” between the offerors’ prices.
Where a price/technical tradeoff is made, the selection
decision must be documented, and the documentation must include the rationale
for any tradeoffs made, including the benefits associated with additional
costs. Federal
Acquisition Regulation (FAR) sect. 15.308.
It is improper for an agency to rely on a purely mathematical
price/technical tradeoff methodology. Opti-Lite
Optical, B-281693,
Here, the record shows that the SSA used the average of
the offerors’ prices as a starting point for the tradeoff determination, but also
considered the non-price factors. The
SSA noted that offerors prices ranged in difference from 1% to 17% from each
other, with the average difference being approximately 8%. AR, Tab 12, SSD, at 1. The SSA determined that, based on Master Lock’s
superior past performance, award would be made to Master Lock for all lock types
where that offeror’s price was either lower, or was no more than 8% higher than
Evergreen’s price.
We think this evaluation was reasonable because the
non-price evaluation for each offeror was to be based on factors that did not
depend on which lock was being offered--i.e., past performance,
socio-economic considerations, and JWOD considerations. Consequently, price was the only difference
between the offerors regarding each of the distinct lock types offered. The SSA’s determination was for each lock
type, in essence, that an 8% difference represented a reasonable price premium
for Master Lock’s advantage on the non-price evaluation. In sum, we conclude that this tradeoff decision
was not merely a mechanical comparison of price, but instead represented a
reasonable exercise of business judgment by the SSA.
Finally, Master Lock argues that the SSA’s decision to
rate Evergreen’s proposal “neutral” under the socio-economic and JWOD evaluation factors was inconsistent with the solicitation. DLA contends that its selection decision did
take these factors into consideration, and that the “neutral” ratings were consistent
with the solicitation. We agree with the
protester that the agency’s assignment of “neutral” evaluation ratings was
unreasonable, and further conclude that the evaluation was inconsistent with
the solicitation’s stated award scheme because it resulted in a selection
decision that ignored the socio-economic and JWOD evaluation factors.
The record here shows that the tradeoff decision
considered only one of the
non-price evaluation factors, past performance.
For the 22 lock types awarded to Master Lock, the SSA concluded that the
protester’s “outstanding rating for past performance demonstrated the best
overall value to the government, with price and past performance weighted
equally.” AR, Tab 12, SSD, at 1. For the 13 lock types awarded to Evergreen and
challenged by the protester, the record also shows that the agency did not
consider the socio-economic or JWOD considerations evaluation factors. The SSA concluded that “[f]or the remaining
13 items . . . award is recommended to Evergreen,” because “Evergreen is the
lowest priced offeror, and their past performance is rated overall as good.”
Thus, the record shows, the tradeoff decision did not
consider the socio-economic or JWOD considerations evaluation factors. The solicitation stated, however, that price would
be considered along with three non-price factors: past performance, socio-economic considerations,
and JWOD considerations. RFP at 66. Furthermore, the RFP specifically advised
offerors that “[a]n offeror who proposes a higher percentage, complexity level,
and variety of participation by” small business and JWOD concerns, “will
receive a higher rating.” RFP at
67-68. On this record, we conclude that
the selection decision was inconsistent with the solicitation’s award scheme.
DLA contends that, notwithstanding the solicitation’s
identification of three non-price factors, the agency had a reasonable basis
for rating Evergreen’s proposal as “neutral” under these factors, and thus not
factoring them into the award determination.[7] The agency contends that the “neutral”
ratings were reasonable because Evergreen was itself a small business offeror,
and thus “has fewer opportunities to subcontract to meet the socio-economic and
JWOD factors.” AR, Tab 11, PNM, at 4;
Tab 12, SSD, at 1. The agency also argues
that a “neutral” rating for a small business was reasonable because it
furthered the agency’s goal of promoting opportunities for small businesses. SAR at 13.[8]
The clear effect of these neutral ratings, as discussed
above, was that the agency only considered one non-price factor: past performance. Nothing in the RFP stated that small business
offerors were exempt from evaluation under these factors, or that an offeror’s
status as a small business could offset an otherwise negative rating under
these factors. For the same reason, we
think the agency unreasonably concluded that Evergreen’s status as a small
business and its “poor” ratings made that offeror equal to Master Lock’s “good”
ratings for these evaluation factors. Furthermore,
DLA’s rationale for rating Evergreen as “neutral” under the socio-economic
considerations factor because the offeror was itself a small business has no rational
relevance to the evaluation of the offeror under the JWOD considerations
factor.
In sum, we conclude that DLA’s tradeoff decision for the
13 lock types awarded to Evergreen relied on a tradeoff that only considered past
performance and price, based on the agency’s unreasonable determination that
Evergreen’s proposal should be rated “neutral” under the socio-economic and
JWOD considerations evaluation factors.
We further conclude that because Master Lock had a higher rating than
Evergreen for these factors, the protester was prejudiced by this error, and
sustain the protest because of the flawed tradeoff decision. See McDonald Bradley,
B-270126,
Additional Past Performance Evaluation Concern
During the course of this protest, Master Lock also argued
that the agency’s evaluation of Evergreen’s past performance was
unreasonable. As discussed above,
Evergreen declined to accept order No. 2745, which was issued under a different
contract. DLA acknowledges that it did
not consider these events in its evaluation of Evergreen’s past
performance. AR at 8. The agency contends, however, that it was not
required to do so because the submission of a quote by a vendor under an ID/IQ
contract does not result in a binding obligation.[9] Thus, the agency argues, because Evergreen
did not accept the order, there was no contract performance for the agency to
evaluate.
The agency is correct that neither the submission of a
quote by a vendor nor the issuance of an order by an agency results in a
binding contractual obligation. Rather,
the government’s order represents an offer that the vendor may accept either
through performance or by a formal acceptance document. M. Braun, Inc., B-298935.2,
We disagree, however, with DLA’s view as to the relevance
of a vendor’s rejection of an order to a past performance evaluation. A vendor who has been awarded an ID/IQ
contract has a contractual relationship with the agency that awarded the
underlying contract. Although the work
required under any task or delivery order will only become a binding obligation
on the parties if the vendor accepts the order, the underlying ID/IQ contract
may itself have obligations. For
example, a contract may require a vendor to accept orders placed by the agency
within certain parameters. If a vendor
were required to accept certain orders placed against the contract, but was
unable to do so, this could be a matter relevant to the evaluation of that
vendor’s past performance.
Our Office requested that the agency address “whether
under the terms of the contract against which orders could be placed with
Evergreen, vendors were required to fill orders, or whether [Evergreen] was
free to decline to accept the order based on an inability to fill the order.” GAO Request for SAR,
RECOMMENDATION
We recommend that the agency conduct a new selection
decision for the 13 lock types awarded to Evergreen that follows the award
scheme identified in the solicitation, consistent with this decision. As part of this new selection decision, the
agency should reevaluate Evergreen’s past performance, consistent with this
decision. If Evergreen’s proposal is not
found to offer the best value to the government for any of these lock types,
the agency should terminate or modify Evergreen’s contract for the convenience
of the government consistent with the new selection decision.
We also recommend that Master Lock be reimbursed the costs
of filing and pursuing this protest, including reasonable attorney fees. Bid Protest Regulations, 4 C.F.R.
sect. 21.8(d)(1) (2008). Master Lock should
submit its certified claim for costs, detailing the time expended and cost incurred, directly to the
contracting agency within
60 days after receipt of this decision.
4 C.F.R. sect. 21.8(f)(1).
The protest is sustained.
Gary L. Kepplinger
General Counsel
[1]
The JWOD Act establishes the Committee for Purchase From People Who Are Blind
or Severely Disabled, and authorizes it to establish and maintain a list of
commodities and services provided by qualified nonprofit agencies for the blind
or severely handicapped that it has determined are suitable for procurement by
the government. 41 U.S.C. sections 46(a),
47(a) (2000).
[2]
DLA submitted a document titled “Report of the Contracting Officer” which was
signed by the source selection authority (SSA), instead of the contracting
officer (CO). This document comprised
the initial agency’s report on the protest and is referred to herein as the
Agency Report. The agency also submitted
a document titled “Supplemental Report of the Contracting Officer” which was
signed by both the SSA and CO. This
document comprised the agency’s response to supplemental protest grounds filed
by Master Lock and additional questions from our Office, and is referred to
herein as the Supplemental Agency Report.
[3]
PLC filed a bid protest with our Office, arguing that the agency had not
applied the correct standards in evaluating its proposal’s compliance with the
TAA. We denied the protest, concluding
that the agency had reasonably determined that PLC’s proposal, which called for
the assembly in the
[4]
For the past performance evaluation, the agency used an evaluation scheme of
outstanding, good, no record, fair and poor.
AR, Tab 8, SSP at 4. For the
socio-economic and JWOD considerations evaluations, the agency used an
evaluation scheme of outstanding, good, fair and poor.
[5]
Master Lock also argues that the agency should have questioned Evergreen’s
compliance with the TAA because its proposal indicated a 15-20 day gap between
the date that an order is sent to its supplier, [deleted], and the date the
lock enters production. The protester
contends that the delay suggests that [deleted] might be obtaining parts from a
non-TAA compliant source. This argument
is merely speculative, and does not provide a basis to sustain the protest.
[6]
The ABVS is an automated system which collects and analyzes vendors’ past
performance history for a specific period and translates it into a numeric
score; it is based on considerations of delivery and quality.
[7]
In the supplemental AR, DLA states that the SSA rated Evergreen’s proposal as
“neutral” under the socio-economic evaluation factor, but did not change the
“poor” rating for the JWOD evaluation factor.
SAR at 11. We do not think the
record supports this view. The selection
decision states “Evergreen was rated as poor in two factors--socio-economic
and JWOD. . . . The contracting officer
considers these factors to be neutral, since they are a small business
themselves.” AR, Tab 12, SSD, at 1
(emphasis added). Thus, the selection
decision was based on an evaluation of Evergreen’s proposal as “neutral” under
both evaluation factors.
[8]
The FAR states that small business offerors without a record of relevant past
performance “may not be evaluated favorably or unfavorably on past performance.” FAR sect. 15.305(a)(2)(iv). The socio-economic and JWOD consideration
evaluation factors did not, however, address past performance; rather they
addressed offerors’ proposals to subcontract to small business and JWOD
concerns during contract performance.
[9] “Vendor” is the common term for a contractor who has received an ID/IQ contract, and to whom task and delivery orders are “issued” under such a contract.