Matter of: RJO Enterprises, Inc. File: B-247241.2 Date: June 4, 1992

Matter of: RJO Enterprises, Inc. File: B-247241.2 Date: June 4, 1992

PROCUREMENT Competitive Negotiation Offers Evaluation Technical acceptability Protest that agency improperly evaluated proposal which allegedly satisfied solicitation requirements as technically unacceptable is denied where record establishes that, in fact, proposal was given full consideration through the source selection process, and award was made on the basis of detailed cost/technical tradeoff analysis. PROCUREMENT Competitive Negotiation Offers Evaluation Downgrading Propriety Protest that agency improperly downgraded proposal for use of particular system architecture is denied where agency reasonably concluded that the architecture restricted the usefulness of the system for purposes encompassed by the solicitation requirements. PROCUREMENT Competitive Negotiation Discussion Adequacy Criteria Protest that discussions were not meaningful is denied where agency repeatedly conveyed its concern about the restrictions inherent in the offeror's proposed system architecture.

Attorneys

DECISION RJO Enterprises, Inc. protests the award to Paramax Systems Corporation of a contract for an integrated commercial intrusion detection system under request for proposals (RFP) No. DAAK01-91-R-0015, issued by the Department of the Army. RJO contends that the agency failed to conduct meaningful discussions and improperly excluded RJO's proposal from consideration for award.

We deny the protest.

The RFP, issued on January 24, 1991, by the U.S. Army Troop Support Command, stated that it was intended to lead to an indefinite delivery, indefinite quantity contract, with minimum and maximum quantities, for a base year and 4 option years. The RFP sought proposals for the supply and installation of commercially available security systems at Army facilities worldwide, of which 48 were named in the RFP, with a provision that the Department of the Air Force may also order systems under the contract. The RFP statement of work notified offerors that the system would have to be tailored to protect the unique combination of assets at each ordering facility and provided that the contractor would learn about the specific security needs of each facility through a site survey, which would be furnished after contract award when a specific facility initiated the ordering process. See also Video Transcript (VT) 14:51:00-40 (Gallagher). Accordingly, no information about the configuration required at any specific facility was provided to offerors prior to contract award.

Although the RFP left each offeror the flexibility to propose any system architecture that it deemed appropriate, all offerors were required to propose modular systems including a primary monitor console (PMC), a communications system linking remote areas with the monitoring location, remote area data collectors (RADCs), sensors (both interior and exterior), a closed circuit television system, and an entry control system.

Section M of the RFP stated that proposals would be evaluated "to judge the degree to which the offeror's product will serve the Army's intrusion detection mission and assess the quality of the offeror's proposed approach and ability to perform the . . . work described in the solicitation." As to the relative weight to be assigned technical and cost considerations in source selection, the RFP stated:

"Generally, award will be made to the offeror whose proposal is judged most superior in terms of the technical elements and factors set forth [elsewhere in Section M]. The offeror's cost/price proposal will be evaluated; but in this regard, the technical superiority of the offeror's proposal is significantly more important than its cost/price aspects. . . . Under certain circumstances, award may be made to an offeror with lesser technical superiority in order that the Government may obtain the best value for the funds to be expended."

The RFP provided that the most important technical evaluation element was technical performance and engineering; the other elements were integrated logistics support, fielding, and management, each of which was equally important. The total proposed price was to be calculated by multiplying the unit price for each of the system components by an estimated quantity figure set forth in the RFP.

Six proposals were received, including those of RJO and Paramax. RJO's proposal was based on a relay-type system in which information from sensors in the field is passed on to a sub-RADC (or slave), a number of which can pass on data to a "master" RADC that, in turn, sends information to the central control station (the PMC) through a modem operating over a telephone line connection. The proposed architecture would support a limited number of master RADCs to be connected directly to the PMC; additional RADCs could be connected to the PMC only through use of further equipment which, while included in the proposal as optional equipment, would raise the price of the system. Moreover, although each of the master RADCs could be located as much as 10 miles from the PMC, sub-RADCs had to be placed relatively near the master RADC to which they were connected: all subRADCs connected to a master RADC had to be located along a computer wiring line, or bus, whose total length could not exceed 2,000 feet.

During the initial evaluation, technical evaluators reviewing each proposal were told to assign ratings of "excellent," "acceptable," "marginally acceptable," and "unacceptable" for each technical subfactor. Those subfactor ratings were then "rolled up" to a factor rating for each of the four technical factors. In rolling up the subfactor assessments to an overall factor rating, the evaluators apparently did not treat an "unacceptable" rating to mean that the proposal had to be rejected because of that score. In at least one instance, an "unacceptable" subfactor was rolled up to a "marginally acceptable" score (for an offeror other than RJO and Paramax). VT 15:22:10-34 (Gallagher). RJO's proposal was evaluated as "marginally acceptable" technically overall, as well as for two of the four technical factors.

After the initial evaluation, two of the proposals were excluded from the competitive range. Written questions were sent to the remaining four offerors, including RJO and Paramax. One of the questions sent to RJO on August 19, 1991, was the following:

"Only forty (40) RADCs (Auditor Master) can have a ten (10) mile data line from the PMC. The total distance between the RADC (Auditor Master) and all twenty-seven (27) RADCs (Auditor Slaves) connected to it must not exceed 2,000 feet. This appears to be a significant restriction for the system coverage. Please discuss."

RJO's September 6, 1991, response to this question presented further detail concerning the company's proposed system and stated that the system would be "ideally suited to facilities of 1,000 to 2,000 feet in length or width and performs exceptionally well on multi-storied structures." The response went on to concede that RJO's system "does have its limitations in long perimeters." The cause for this limitation is precisely the issue identified by the agency in its letter: RJO's proposed system is limited by what RJO conceded is a "narrow 2,000 foot baseline." That is, RJO acknowledged that its sub-RADCs can be no more than 2,000 feet away from a master RADC and, if several sub-RADCs are connected to the same master RADC, the wiring connecting them to the master cannot exceed 2,000 feet in total length for all the slaves. As a result, the number of distinct, separated remote areas that can be protected by RJO's system is constrained by the number of master RADCs: the proposed system (without use of added-cost options) supported only a limited number of master RADCs, hence RJO's system could only protect that limited number of remote areas, where those areas are widely separated from one another.

RJO's response went on to suggest that the 2,000-foot limitation could be overcome, to a certain extent, by the possibility of locating the actual sensors a considerable distance from the sub-RADCs. Thus, while the sub- RADCs had to be placed within 2,000 feet of the masters, the sensors could be as far as an additional 8,000 feet from the subRADCs. To illustrate this flexibility in its system, RJO included, as part of its September 6 response, a hypothetical "racetrack" with two RADCs, a master and a slave, in the center. The master could be connected by telephone wire to a PMC located 10 miles away, while the slave could be up to 2,000 feet from the master. The racetrack diagram demonstrates that the two RADCs could cover an area of 8.36 square miles by distributing sensors around the perimeter of the racetrack.

Again, however, RJO was forthright in conceding the limitations of its system. While the two RADCs could "protect" 8.36 square miles by running wires 8,000 feet out from the RADCs to the perimeter of the racetrack, wires that long could only support one sensor on each loop. As RJO admitted, "the price paid for this increase in distance is that you may not have four sensors per loop. Thus, whenever doubling the distance traveled over 1,000 feet, you halve the number of usable alarm points." Consequently, if four sensors are to be placed on a loop, the maximum distance from the RADC (slave or master) drops to 1,000 feet, thus reducing the coverage from 8.36 square miles to 0.25 square miles. RJO summarized its response by stating that its "solution does provide coverage using off-the-shelf elements that are very cost-effective in high -density sensor situations."

On September 12, 1991, a few days after receipt of RJO's responses, based on a review of those responses, the contracting officer notified RJO on September 12, 1991, that its proposal had been determined to be technically unacceptable and that it would not be further considered for award--effectively, that it was being eliminated from the competitive range. Telephonic Hearing Transcript (T. Tr.) 9-10 (Schrader); VT 14:44:00 (Gallagher). The contracting officer specifically informed RJO that the decision was related to the 2,000-foot limitation associated with the sub- RADCs. VT 10:28:45-29:08 (Lipnick). The next day, RJO requested permission to make an oral presentation to the technical evaluation committee. The agency granted that request and the meeting was held on September 25, 1991.

At this meeting, the contracting officer told RJO that its proposed system had serious limitations from the government's point of view. RJO made an extensive presentation of the capabilities of its system and emphasized, in particular, the system's flexibility. In its presentation, RJO said that it knew that one of the agency's concerns was the "worst case scenario" of needing to position a substantial number of sensors to be distributed over a large area. As part of the explanation of RJO's system's flexibility, RJO presented diagrams showing the use of a powerful PMC which could support considerably more than 200 master RADCs, thus serving a very large number of remote areas without the use of sub-RADCs and, therefore, without the 2,000-foot limitation associated with sub- RADCs. That more powerful system needed a 96-port multiplexer (MUX), rather than the 12-port MUX used in RJO's proposed base system or the 24- port MUX which RJO offered as a higher price option. RJO confirmed that it was discussing the 96-port MUX in response to the written discussion question (quoted above) concerning the limitations of the proposed system.

RJO's representative understood that the government "liked" the 96-port MUX "scenario." VT 10:35:01-08 (Lipnick). The leader of the agency's Technical Performance and Engineering evaluation team specifically asked whether RJO was going to propose the 96-port MUX. He told RJO that he could only evaluate what was actually proposed, rather than the capabilities of the system in general. In response, the RJO representative said that RJO was not proposing the system that RJO had just explained. He then said that:

"it is harder for us to express ourselves on this ID/IQ bid where we do not know [the agency's requirements], that is why we went through this scenario bit where we said, OK, given that we have these requirements, how would we solve them, see. . . . But, that is why it is so difficult for us and I tried to make the point this morning that we did not price [the 96- port MUX configuration], that we priced something that corresponded to 512 [remote areas] in a master slave configuration."

To this, the Technical Performance and Engineering evaluation team leader replied: "I understand what you are saying and what I am saying is that if I go with what was proposed in [RJO's proposal] assuming that doesn't change [in] your Best and Final, OK, it seems like your system has serious limitations from the Government's point of view. . . ."

RJO's representative was concerned that his company could not know what to propose unless offerors were told the government's requirements in terms of the needed distribution of security coverage on government installations. VT 10:35:20-28; 13:40:40 (Lipnick). His view was that RJO needed to know the government's intended distribution in order to tailor a proposal to meet those requirements. VT 10:35:20-28; 10:37:10-30; 10:45:01; 13:30:02-15 (Lipnick). He therefore asked the agency to define its requirements, so that RJO could be sure that its proposal responded to those requirements. An agency official said that the Army recognized that there were some difficulties interpreting its requirements and that the agency would relay its exact requirements to all offerors during negotiations.

Shortly before the meeting adjourned, RJO's representative asked the contracting officer if the agency would ever want RJO to "completely upgrade the proposal to reflect what we offer at the end" and the contracting officer indicated that the difference between "your original quote versus the additional capability" that RJO presented at the meeting would have to be reflected in RJO's best and final offer (BAFO). In concluding the meeting, the contracting officer said that, "based on the additional capability information you presented today," the agency was rescinding its earlier determination to eliminate RJO's proposal from further consideration, and that it would be considered for award.

The only further relevant communication between the parties was a package of material dated November 4, 1991, in which the agency instructed offerors concerning preparation of BAFOs. Those instructions did not prohibit the use of sub-RADCs, but did include the following paragraph: "Your bid should include RADCs capable of interfacing with all remote area devices . . . without the use of sub-RADCs and capable of communicating with a PMC located at a distance of 10 miles or greater. An additional CLIN(s) [i.e., contract line item number] may be added for RADC's with lesser capabilities which may be used in specific installations. The use of these additional CLINs will be approved by the government on a case-by- case basis. These will be used by the government as a basis for negotiations/orders for individual installations."

The contracting officer's cover letter to the November 4 package stated that the additional CLINs discussed in this quoted paragraph "will not be considered as part of the evaluation for the total price for contract award--only the primary CLINs will be evaluated."

No further explanation of the agency's requirements was provided to any offeror, nor were further negotiations conducted. Instead, by a November 26, 1991, letter, the agency requested BAFOs from the remaining four offerors, including RJO.

RJO's BAFO did not include any mention of the 96-port MUX. Instead, it was identical in the areas relevant here to the company's initial proposal. The agency's technical evaluators rated three of the proposals acceptable, but, on December 10, 1991, RJO's technical proposal was assessed "unacceptable," for reasons essentially identical to those discussed with RJO during the written and oral negotiations. Of particular importance to the evaluators was the concern that the 2,000-foot maximum distance between sub-RADCs and masters would place intolerable limits on the system's flexibility, especially in light of the perceived dependence in RJO's proposal on the use of sub-RADCs.

As with the initial technical evaluation, the agency did not treat the "unacceptable" rating as meaning that a proposal could not be considered for award. Accordingly, despite the "unacceptable" assessment given RJO's technical proposal, the Co-Chairmen of the Technical Evaluation Committee (TEC) proceeded to perform a detailed cost/technical tradeoff analysis which took that proposal into consideration. The analysis took into account the disparity among the BAFO prices: RJO's proposal was low, about 4 percent lower than Paramax's $52.62 million price; those two proposals were approximately $30-$40 million below the remaining two proposals. The result of the cost/technical tradeoff analysis was a recommendation to the source selection authority, who was also the contracting officer, that, once past performance and cost were taken into account, RJO's proposal be ranked third (out of four), ahead of one of the offerors whose technical proposal had received an "acceptable" rating. VT 17:04:49-55 (Petcu).

The source selection authority adopted the TEC recommendation. Thus, if the top two ranked proposals had not been accepted for any reason (e.g., the offerors had been found nonresponsible), award would have been made to RJO. T. Tr. 23-24 (Schrader). That was not the case, in fact, and award was made to Paramax on January 3, 1992. At a debriefing held on January 14, 1992, the agency informed RJO that its proposal had been found technically unacceptable.

RJO contends that the agency evaluated proposals as if the RFP prohibited use of sub-RADCs, even though neither the RFP nor any other information provided to offerors barred the use of sub-RADCs. Accordingly, the protester argues that the discussions conducted were not meaningful and that its proposal was improperly found technically unacceptable and denied full consideration for award. The Army contends that the evaluators used the term "unacceptable" to mean "weak" or "inferior" and that, although RJO's proposal could have been found technically unacceptable, the proposal was treated as acceptable in the sense that it was given full consideration throughout the source selection process. VT 14:29:30-40, 14:30:23-53 (Army counsel); 14:40:01-29 (Gallagher).

The agency's use of the term "unacceptable" is inappropriate, since generally that term means that a proposal cannot be considered for award. JEM Assocs., B-245060.2, Mar. 6, 1992, 92-1 CPD Para. 263. If, in fact, the Army had excluded RJO's proposal from consideration for award on the basis of technical noncompliance, we would have had to consider whether the RFP, as amended, prohibited the use of sub-RADCs. Here, however, the record establishes that the agency considered RJO's proposal for award throughout the evaluation and source selection process: RJO was involved in every stage of negotiations and was invited to submit a BAFO, and the contemporaneous cost/technical tradeoff documents demonstrate that the agency fully considered awarding the contract to RJO, and presumably would have done so, if Paramax and one other offeror had been eliminated. In our view, the fact that RJO's BAFO was ranked above a technically "acceptable" proposal conclusively establishes that, notwithstanding its ostensible "unacceptable" rating, the proposal was not eliminated from consideration.

Accordingly, we assume, for purposes of our analysis, that offerors were not prohibited from proposing systems using, and even dependent on, sub- RADCs. The relevant questions are whether the agency could properly downgrade RJO's technical proposal on the basis of the 2,000-foot limitation and other issues related to the use of sub-RADCs, and whether discussions in this area were meaningful.

Generally, the evaluation of technical proposals is a matter within the contracting agency's discretion, since the agency is responsible for defining its needs and the best method of accommodating them. Science Sys. and Applications, Inc., B-240311; B-240311.2, Nov. 9, 1990, 90-2 CPD Para. 381. In reviewing an agency's technical evaluation, we will not reevaluate the proposal, but will examine the record of the agency's evaluation to ensure that it was reasonable and in accord with stated evaluation criteria and not in violation of procurement laws and regulations. Information Sys. & Networks Corp., 69 Comp.Gen. 284 (1990), 90-1 CPD Para. 203. An offeror's mere disagreement with the agency's judgment is not sufficient to establish that the agency acted unreasonably. United HealthServ Inc., B-232640 et al., Jan. 18, 1989, 89-1 CPD Para. 43.

It is clear from the record that RJO's proposed system placed constraints on the government's flexibility. We assume, for purposes of this analysis, that RJO is correct in claiming that its system is well suited to facilities of 1,000 to 2,000 feet in length or width and performs exceptionally well on multi-storied structures. RJO conceded during discussions, however, that due to what RJO termed the "narrow" 2,000-foot limitation, its system has limitations in long perimeters. Accordingly, the agency had good cause to conclude that RJO's system would present technical problems or higher cost, or both, in installations where widely separated remote areas need to be protected. Whether there will actually be such areas is not certain. However, taking into account the large number of Army and Air Force installations which may order under the contract, it does not appear that the Army could know with confidence how significant the limitations inherent in RJO's proposed system would be. RJO's representative testified at the hearing before our Office that he understood the systems would only have to protect the Army installations named in the RFP as priority sites. VT 13:33:30-40; 13:34-35-52 (Lipnick). Nothing in the RFP supports such an approach, which would, in any event, not establish that RJO's proposal was technically satisfactory, since RJO does not have access to site surveys and does not know the security needs even of that limited universe of Army installations. RJO's position is apparently that, since the Army did not disclose the required distribution of RADCs and sensors, RJO was free to propose the minimum configuration which could support the stated number of RADCs (256), even if that minimum configuration assumed a relatively clustered distribution. See VT 13:30:28 -37 (Lipnick). Consequently, RJO proposed a solution that would cover what its representative describes as "normal" distribution. VT 10:33:55-34:20 (Lipnick).

It is true that the RFP did not commit the government to any particular installations or to any particular configuration at any installation. Instead, it left the government the discretion to order from the contractor for any Army installation, and possibly any Air Force installation, in the world. If RJO believed that the RFP was deficient in not providing adequate guidance to offerors concerning the location of government installations where the system might be needed and the required distribution of RADCs and sensors at those installations, it was required to protest that perceived defect in the solicitation prior to the time set for receipt of proposals. 4 C.F.R. Sec. 21.2(a)(1) (1992). RJO cannot now object to the open-ended nature of the RFP, which left the universe of potential installations undefined and gave no guidance as to the required configuration of RADCs and sensors on any particular installation.

To summarize this issue: RJO, and apparently the agency as well, did not know whether any installation, even among those named in the RFP, might have security needs requiring widely dispersed distribution of sensors.

Even if it is assumed that RJO's proposed system would offer a "very cost effective [solution] in high-density sensor situations," as RJO contends, the agency could properly find (and indeed RJO apparently concedes) that the system has disadvantages in installations where security needs dictate a more dispersed distribution of sensors. The agency's taking those disadvantages into account in evaluating RJO's proposal was both reasonable and fully consistent with the RFP.

Finally, we see no deficiency in the agency's conduct of discussions regarding this issue. During discussions, an agency is only required to lead an offeror into areas of its proposal which require correction. Hill's Capitol Sec., Inc., B-233411, Mar. 15, 1989, 89-1 CPD Para. 274.

In so doing, an agency is required to do no more than express its concerns in a manner that would reasonably be viewed as communicating the nature and gravity of the concerns. Mark Dunning Indus., Inc., B-230058, Apr. 13, 1988, 88-1 CPD Para. 364.

The agency's August 19, 1991, written question directly and explicitly raised the issue of the 2,000-foot limitation and informed RJO that the government viewed that limitation as a "significant restriction for the system coverage." RJO's September 6 response to that question demonstrates that the protester understood the agency's concern. RJO's recognition of the nature and gravity of the government's concerns is further evidenced by RJO's discussion of the 96-port MUX at the September 25 meeting. The agency personnel reasonably left that meeting confident that RJO understood the agency's concern and expecting that RJO would submit a BAFO that would cure the 2,000-foot limitation, either through use of a 96-port MUX or through some other means. VT 14:54:35-57 (Gallagher). Why RJO declined to do so, despite the agency's having explicitly communicated its serious concern, is unclear. What is clear is that the discussions put RJO on notice that the agency would evaluate the subsequent BAFO just as RJO had been told repeatedly the agency had rated the initial proposal: the government viewed the 2,000-foot limitation as a significant restriction. In short, discussions on this critical point went beyond the minimum required to be adequate.

The protest is denied.