Link: GAO Opinion
Agency: Department of the Navy
Disposition: Protest denied.
Keywords: Cost-Technical Trade-Off
General Counsel P.C. Highlight: Even where price is the least important evaluation factor, an agency properly may award a contract to even a lower technically rated firm where it reasonably concludes that the price premium involved in selecting the higher-rated quotation is not justified in light of the acceptable level of technical competence available at a lower price.
United Terex, Inc. protests the issuance of a purchase order under a request for quotations (RFQ), issued by the Department of the Navy for aircraft tow bars.
The RFQ, a set-aside procurement for small businesses, requested quotations for a fixed-price purchase order for 20 “ALBAR” aircraft tow bars. The RFQ, which provided for simplified acquisition procedures set out in Federal Acquisition Regulation (FAR) Part 13, did not require the submission of technical quotations or first article testing samples. The RFQ also provided that where the vendor had not previously manufactured the required tow bar, inspection and acceptance would be conducted by the Defense Contract Management Agency. As to the evaluation of quotations for selection, the RFQ anticipated the use of two evaluation factors, price and past performance (with past performance being significantly more important than price). For the purpose of evaluating past performance, vendors were instructed to submit references from a minimum of three government/state/local agencies where the vendor had provided “same/similar equipment.”
After consideration of the relative merits of the quotations, the source selection authority determined that, although United Terex had more directly relevant past performance experience, as it had previously manufactured the required ALBAR tow bars, given the level of the awardee’s technical competence shown by its favorable past performance evaluation, the approximate 50% price premium associated with the selection of United Terex for a purchase order under the RFQ was not warranted. The agency, having determined that GAI’s quotation presented the best value, selected GAI as the successful vendor and issued a purchase order for the current ALBAR tow bar requirement to the firm.
United Terex challenges the agency’s past performance evaluation, contending that, since the awardee has not yet manufactured the precise item required here, or other aircraft tow bars for use aboard aircraft carriers, it was unreasonable for the agency to determine that the awardee had “favorable” past performance.
As an initial matter, to the extent United Terex suggests that the RFQ required only ALBAR or other aircraft carrier tow bar experience, GAO disagrees. The solicitation merely provided that the agency would consider vendors’ prior contracts for the provision of the same or similar equipment. The RFQ did not state how similarity would be determined or measured nor did it state that a firm’s experience with the same equipment would be considered materially more important than a firm’s experience with similar equipment. Given the general wording of the RFQ’s past performance evaluation criterion, there is no basis for the type of stringent evaluation advanced by the protester.
The record reflects, as noted above, that the agency gave United Terex credit for the firm’s successful performance of recent orders for the same ALBAR tow bars required under the solicitation and, based on this review, assigned United Terex a favorable past performance rating. Unlike United Terex, the awardee had not manufactured the ALBAR tow bars; thus, the agency reviewed past performance information it obtained for the awardee regarding past and current contracts, which the agency deemed to be for similar equipment. In assessing the similarity of the awardee’s references, the record reflects that the agency reviewed the type of work performed to determine if the end items were manufactured in a manner similar to the solicited tow bars, including build-to-print projects and those using similar skills and materials. More specifically, GAO’s review of the record confirms that the agency obtained and considered performance information for the awardee concerning 14 prior projects, including projects providing various aircraft ground support equipment, including other large metal stress and load-bearing equipment which, in the agency’s judgment, involved the firm’s extensive machine shop experience with the same or similar manufacturing processes needed to perform the requirements of this solicitation.
The protester also challenges the reasonableness of the agency’s tradeoff determination in which the source selection authority concluded that, despite the protester’s more directly relevant experience manufacturing the precise item required here, given the level of the awardee’s technical competence to manufacture the item, as demonstrated by the information revealed and considered during the firm’s past performance evaluation, the payment of the substantial price premium associated with the selection of United Terex is not warranted. GAO states that it is well-settled that, even where price is the least important evaluation factor, an agency properly may award a contract to even a lower technically rated firm where it reasonably concludes that the price premium involved in selecting the higher-rated quotation is not justified in light of the acceptable level of technical competence available at a lower price.
Here, the record shows that the source selection authority reviewed the past performance evaluation record, recognized past performance was more important an evaluation factor than price, and that United Terex’s quotation demonstrated more directly relevant past performance experience (with the same equipment) as compared with the awardee’s quotation (which showed experience with similar equipment). The source selection authority, however, concluded that the payment of a 50% price premium for United Terex to do the work was not justified. GAO sees no basis to object to this determination.