B-247229, B-247794, May 19, 1992

B-247229,B-247794: May 19, 1992

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PROCUREMENT - Competitive Negotiation - Requests for proposals - Evaluation criteria - Prior contracts - Contract performance PROCUREMENT - Contractor Qualification - Responsibility criteria - Performance capabilities DIGEST: Protests challenging solicitation's evaluation criteria are denied where criteria reasonably provide for consideration of offeror's demonstrated commitment to customer satisfaction and timely delivery of quality goods at fair and reasonable prices. One of which is a total small business set-aside. Are identical in all other aspects relevant to these protests. Both state that technical evaluation factors are more important than price and list the following technical evaluation factors.

B-247229, B-247794, May 19, 1992

PROCUREMENT - Competitive Negotiation - Requests for proposals - Evaluation criteria - Prior contracts - Contract performance PROCUREMENT - Contractor Qualification - Responsibility criteria - Performance capabilities DIGEST: Protests challenging solicitation's evaluation criteria are denied where criteria reasonably provide for consideration of offeror's demonstrated commitment to customer satisfaction and timely delivery of quality goods at fair and reasonable prices, as well as offeror's reputation for reasonable and cooperative behavior and commitment to customer satisfaction, as part of the evaluation of offeror's past performance.

Attorneys

RMS Industries:

RMS Industries protests against certain evaluation criteria contained in request for proposals (RFP) Nos. DLA100-91-R-0552 and DLA100-92-R-0099, issued by the Defense Personnel Support Center of the Defense Logistics Agency respectively for the procurement of men's gloves and flyers' suitcases. RMS objects to evaluation language in the RFPs which provides that the agency intends to consider an offeror's consistent demonstration of a commitment to customer satisfaction and timely delivery of quality goods at fair and reasonable prices as well as an offeror's reputation for reasonable and cooperative behavior and commitment to customer satisfaction.

We deny the protests.

The RFPs, one of which is a total small business set-aside, are identical in all other aspects relevant to these protests. Specifically, both state that technical evaluation factors are more important than price and list the following technical evaluation factors, in descending order of importance:

"(1) The Product Demonstration Model;

(2) The offeror's commitment to customer satisfaction and product support as evidenced by the written response to the information requested elsewhere in the RFP; and

(3) Past performance (offeror's record of delivering quality products on time) (Step 4)."

Step four of the proposal preparation instructions requests offerors to:

"(a) Provide a point of contact ... of three current or recent Government or commercial customers who have purchased the same or similar commercial product as represented by your demonstration model.

(b) Describe any experience your firm has in the design, development or manufacture of a product that is the same or similar to the product description set forth in Section C of the draft contract.

(c) Any other information you wish to be considered that will reflect your commitment to the timely delivery of quality products."

In explaining the evaluation factors, the RFPs state that past performance:

"means the offeror's record of conforming to product descriptions and to standards of good workmanship; the offeror's adherence to contract schedules; the offeror's reputation for reasonable and cooperative behavior and commitment to customer satisfaction; and generally, the offeror's business-like concern for the interests of the customer."

The RFPs further explain that:

"evaluation of past performance will be a subjective assessment based on consideration of all relevant facts and circumstances. It will not be based on absolute standards of acceptable performance. The Government is seeking to determine whether the offeror has consistently demonstrated a commitment to customer satisfaction and timely delivery of quality goods at fair and reasonable prices. This is a matter of judgment."

RMS contends that three aspects of these provisions (which have been used by the agency in solicitations for some time, see CORVAC, Inc., B-244766, Nov. 13, 1991, 91-2 CPD Para. 454), violate Federal Acquisition Regulation (FAR) Sec. 15.605(b), which provides that:

"The evaluation factors that apply to an acquisition and the relative importance of those factors are within the broad discretion of agency acquisition officials. However, price or cost to the Government shall be included as an evaluation factor in every source selection. Quality also shall be addressed in every source selection. In evaluation factors, quality may be expressed in terms of technical excellence, management capability, personnel qualifications, prior experience, past performance, and schedule compliance. Any other relevant factors, such as cost realism, may also be included."

Specifically, RMS argues that: (1) because the fairness and reasonableness of prices are evaluated in the context of the price evaluation, they should not be considered a second time as part of past performance; (2) quality of products provided in the past should not be evaluated at all because the only relevant quality consideration is whether offerors will provide a product conforming to these RFP specifications, which set the standard for quality; and (3) considering an offeror's reputation is improper because it permits contracting officers to give weight to gossip and speculation.

RMS' contentions are without merit. FAR Sec. 15.605(b) does not preclude an agency from considering, as part of past performance, whether an offeror has consistently demonstrated a commitment to deliver goods at fair and reasonable prices. Certainly, if an offeror had a history of overcharging the government, such as through violations of the Truth in Negotiations Act, 10 U.S.C. Sec. 2306(a) (1988), or of failing to perform at the contracted price, nothing in FAR Sec. 15.605(b) would bar an agency from considering that fact in evaluating the offeror's past performance. Further, the RFPs distinguish between the reasonableness of the price proposed for each of these procurements, which is evaluated as part of the price evaluation, and the offeror's demonstrated commitment to providing quality products at fair and reasonable prices, which is separately evaluated in the context of the technical evaluation of past performance.

Moreover, while it is correct that performing to the specifications should ensure the requisite quality here, FAR Sec. 15.605(b) does not proscribe taking into account an offeror's past performance. Indeed, the governing statute expressly allows contracting activities to include prior experience as an evaluation criterion. 10 U.S.C. Sec. 2305(a)(3) (Supp. II 1990). Similarly, a procuring agency may properly consider the extent to which, under prior contracts, an offeror succeeded in producing a product that complied with the relevant specifications or instead consistently failed to deliver acceptable products. See Magneco Inc., B-235338, Sept. 1, 1989, 89-2 CPD Para. 207 (explaining the Blue Ribbon contractor list program's emphasis on offerors demonstrating the dependable quality of their products in prior procurements). In short, FAR Sec. 15.605(b) does not prohibit an agency from considering an offeror's record of consistent performance in accordance with contract specifications.

Finally, we find nothing unlawful in the agency's taking into account, as one element of past performance, an offeror's reputation for reasonable and cooperative behavior and commitment to customer satisfaction. In the context of this RFP, we understand the term "reputation" to refer to fact- based evaluations rather than mere hearsay. We note that RMS does not challenge the propriety of the agency's seeking references from prior contracts. Indeed, where, as here, the solicitation informs offerors that the references will be considered as part of the evaluation process, relying on such references is a common and proper part of proposal evaluation. See, e.g., Ferranti Int'l Defense Sys., Inc., B-237555, Feb. 27, 1990, 90-1 CPD Para. 239.

In that context, one of the appropriate reasons for seeking references is surely to learn whether the offeror has a history of reasonable and cooperative behavior demonstrating a commitment to customer satisfaction. See George A. and Peter A. Palivos, B-245878.2 et al., Mar. 16, 1992, 92-1 CPD Para. *** (references considered to evaluate offerors' past responsiveness to customer concerns). It is hard to see what purpose those references would serve if, as RMS contends, they may not be used as a source of information about the offeror's past performance in the areas of pricing, quality, cooperativeness, or commitment to customer satisfaction. Rather than introducing an element of uncertainty or unfairness into the evaluation process under these solicitations, DLA is informing offerors of the purposes for which the references, whose use in general RMS does not challenge, will be used here.

We note that, to the extent the past performance criteria are being used to evaluate the reliability of the offeror and its capability of performing the contract, the technical evaluation will encompass factors that are traditionally matters of responsibility. See FAR Sec. 9.104- 1(c); Sanford and Sons Co., 68 Comp.Gen. 266 (1988), 88-2 CPD Para. 266. The use of traditional responsibility factors as technical evaluation criteria is not improper so long as that use is not inconsistent with the Small Business Act. McLaughlin Research Corp., B-247118, May 5, 1992, 92-1 CPD Para. ***.

Application of the criteria on a pass/fail or go/no go basis that results in the elimination of a small business without a referral to the Small Business Administration (SBA) is inconsistent with the Act since such a technical evaluation is essentially a determination that the offeror is Federal Support Corp., B-245573, Jan. 16, 1992, 71 Comp.Gen. ***, 92-1 CPD Para. 81. Here, however, this problem does not arise because the RFP indicates that DLA will be using the responsibility-type factors as part of a comparative evaluation of proposals in the relevant areas, rather than on a pass/fail basis. In a negotiated procurement agencies properly may use traditional responsibility factors as comparative evaluation criteria, that is, to make relative assessments of competing proposals, so long as the factors provide an appropriate basis for a selection that will be in the government's best interest. Califone Int'l, Inc., B-246233, B-246233.2, Feb. 25, 1992, 92-1 CPD Para. 226.

The protests are denied.