MMI-Federal Marketing Service Corp.
Highlights
MMI-Federal Marketing Service Corp. protests the award of a contract to Iguana, LLC under request for quotations (RFQ) SPO406-05-Q-T784, issued by the Defense Logistics Agency, Defense Supply Center Richmond (DSCR) for pop-up bednets impregnated with an insecticide. The protester contends that the agency unreasonably relied upon information provided by the awardee indicating that it would comply with the RFQ's domestic production restrictions.
B-297537, MMI-Federal Marketing Service Corp., February 8, 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.
Matter of: MMI-Federal Marketing Service Corp.
Ron R. Hutchison, Esq., Doyle & Bachman LLP, for the protester.
Jennifer A. Kerkhoff, Esq., Troutman Sanders LLP, for Iguana, LLC, an intervenor.
Marit D. Bank, Esq., Defense Logistics Agency, for the agency.
Jonathan L. Kang, Esq., and Michael R. Golden, Esq., Office of the General Counsel, GAO, participated in the preparation of the decision.
DIGEST
Protest is sustained where the agency unreasonably determined that awardee's quotation demonstrated compliance with the Berry Amendment's domestic production requirements, in light of countervailing pre-award information that the awardee would not comply.
DECISION
MMI-Federal Marketing Service Corp. protests the award of a contract to Iguana, LLC under request for quotations (RFQ) SPO406-05-Q-T784, issued by the Defense Logistics Agency, Defense Supply Center Richmond (DSCR) for pop-up bednets impregnated with an insecticide. The protester contends that the agency unreasonably relied upon information provided by the awardee indicating that it would comply with the RFQ's domestic production restrictions.
BACKGROUND
The agency sought quotations for the supply of 25,000 bednets, which are mesh screen fabric covers that surround a user's sleeping area. The required bednets are manufactured from synthetic fabrics and coated synthetic fabrics that have been impregnated with permethrin, an insecticide. The RFQ stated that the bednet manufacturing process must comply with the requirements of 10 U.S.C. sect. 2533a, commonly referred to as the Berry Amendment. RFQ at 2. The Berry Amendment generally restricts the Department of Defense's expenditure of funds for certain articles and items, including synthetic fabric and coated synthetic fabric, to domestically produced products. See 10 U.S.C. sect. 2533a(b). The RFQ also included the Preference for Certain Domestic Commodities clause, Defense Federal Acquisition Regulation Supplement (DFARS) sect. 252.225-7012, which implements the Berry Amendment. RFP at 11. The RFQ listed two approved sources for the bednets, MMI and Iguana.
Because the use of permethrin is regulated as a pesticide by the Federal Insecticide, Fungicide and Rodenticide Act (FIFRA), 7 U.S.C. sections 136a-y, the RFP required the bednets to carry a label listing valid Environmental Protection Agency (EPA) registration and establishment numbers. RFP at 2-3; see also 40 C.F.R. sect. 156.10 (EPA labeling requirements). An EPA registration number identifies the company that registered the pesticide product, and an establishment number identifies the location where the final product will be assembled. EPA FIFRA Label Review Manual 3d Ed., available at http://www.epa.gov/oppfead1/labeling/lrm. A supplemental distribution number must be identified on the product label, comprised of the registration number and a number identifying the distributor, if the distributor of the pesticide product is not the party to whom the pesticide product is registered.
The agency received quotations from both Iguana and MMI. The agency delayed award of the contract to review information indicating that Iguana would not comply with the Berry Amendment requirements. Contracting Officer's Statement at 2. In its quotation, Iguana provided a product label that identified EPA registration No. 81041-1-66306 and EPA establishment No. 81041-CHN-001. Agency Report (AR), Tab C, Iguana Quotation, at 27-28. The agency was aware, due to its exchanges with Iguana regarding another procurement for bednets, contract No. SP0406-05-D-4084, that establishment No. 81041-CHN-001 referred to Igauana's subcontractor in
AR, Tab G, Exh. B, Letter from Iguana to Agency,
Additionally, MMI filed a protest with the Small Business Administration (SBA) challenging the small business status of Iguana in connection with the award of contract No. SP0406-05-D-4084. SBA denied the protest, concluding that Iguana was a small business for purposes of the procurement. AR, Tab L, SBA Size Determination No. 3-2005-57,
Domestically produced rip-stop polyester fabric, which is the material used to make the bednets, will be procured in the
. [Iguana] will also purchase (in the United States ) Permetherin (pesticide), dye and waterproofing chemicals. These materials will then be shipped to U.S. where [Bickel Company of China ] will use the EXPELTM process to impregnate the rip-stop polyester fabric with the pesticide, and will dye and waterproof the fabric. This is because [Bickel's] facility in Seoul ,Korea is the only facility in the world where the EXPELTM process is performed. The treated fabric will then be shipped to the China , where it will be cut-and-sewn into the appropriate dimensions. U.S.
Based on the information indicating Iguana's plan to use bednet fabric that was impregnated in a facility in
In correspondence with the agency, Iguana confirmed that it intended to impregnate the bednet fabric with permethrin in
The agency then requested that both Iguana and MMI confirm that their quotations in response to the RFQ at issue in this protest would comply with the Berry Amendment. Contracting Officer's Statement at 3. Iguana replied that all items provided under the RFQ would comply with the Berry Amendment:
[Iguana] certifies all line items delivered on RFQ SP0406-06-Q-T784, if awarded to Iguana will be B[e]rry Amendment compliant as interpreted by DSCR. All materials will be domestically produced, treated, cut & sewn and assembled in the
. United States
Impregnation will be performed in theat a registered EPA establishment [by] either [deleted], Burlington Mills Services or another qualified EPA establishment within the United States . United States
AR, Tab H, E-mail from Iguana to Agency,
In response to the agency's request for additional information regarding Iguana's manufacturing process, Iguana provided a copy of its product label, indicating the EPA registration and establishment numbers for the bednet:
Please see the attached Iguana Bed Net Label. International Textile Group's number is 82689-VA-1; which is Burlington Industries. [Deleted] we will be receiving electronically on Tuesday 27 SEP and as soon as I get it back from our Graphics company I will forward theirs to you.
We have 2 labels one with International Textile Group and one with [deleted]. According to our EPA consultant with Technology Sciences Mr. Bob Stewart, Iguana does not need any additional submissions to the EPA to change the establishment number at any time.
AR, Tab H, E-mail from Iguana to Agency,
The agency requested that Iguana clarify its previous e-mail: Tech reply: Which establishment location will be supplying the product? That is the one we need. AR, Tab H, E-mail from Agency to Iguana,
Our label reflects International Textile Groups (
) located in Hurt Virginia; so therefore this will be our source for fabric impregnation. Should another establishment acquire the proper establishment registration and are capable of producing this product we may decide to use them at that time. If they acquire this ability we then will submit a label with their EPA registration number. Burlington
AR, Tab H, E-mail from Iguana to Agency,
The label submitted by Iguana on September 26 was approved by an agency technician on September 28. Contracting Officer's Statement at 4; AR, Tab J, Source Selection Decision (SSD), at 2. The agency determined that Iguana had submitted sufficient information to warrant lifting the stop-work order under SP0406-05-D-4084 contract: The contractor has provided documentation indicating all of the material is now domestically produced and therefore fully complies with the Berry Amendment. AR, Tab J, SSD at 1. The agency also concluded that Iguana's quotation complied with the Berry Amendment.
Iguana | MMI | |
ABVS Score | 90.5 | 76.6 |
Price | $1,999,250 | [deleted] |
Based on Iguana's lower price and higher ABVS score, the agency awarded the contract to Iguana on October 28.
DISCUSSION
MMI contends that the agency unreasonably relied upon information provided by Iguana certifying that it would comply with the Berry Amendment in the impregnation of the bednet fabrics with permethrin. As discussed in detail below, the agency requested that Iguana provide information to establish its quotation's compliance with the Berry Amendment, and the agency relied upon this information to determine that Iguana's quotation did comply. It is clear, however, based on our review of the record, that Iguana's submissions did not convey the information that the agency believed was required to establish compliance with the Berry Amendment.
In reviewing an agency's technical evaluation of vendor submissions under an RFQ, we will not reevaluate the quotations; we will only consider whether the agency's evaluation was reasonable and in accord with the evaluation criteria listed in the solicitation and applicable procurement statutes and regulations. American Recycling Sys., Inc., B-292500,
The agency acknowledges that it had reason to question Iguana's representation in its initial quotation that it would comply with the Berry Amendment requirements, in light of the facts that gave rise to the stop-work order and cure notice under the SP0406-05-D-4084 contract. Contracting Officer's Statement at 2. The agency contends, however, that it did not rely solely on Iguana's certification that its quotation met the Berry Amendment requirements; rather, the agency requested and received information regarding Iguana's EPA product label and the identity of Iguana's proposed manufacturers. Contracting Officer's Statement at 5. The agency then confirmed that the facility identified by Iguana for permethrin impregnation was in the
For the reasons discussed below, we disagree with the agency's view that the information it received was sufficient to determine that Iguana's quotation demonstrated compliance with the Berry Amendment.
Here, to comply with the Berry Amendment, as interpreted by the agency, the vendor had to establish that the impregnation of the bednet fabric would be performed at a domestic facility. It is clear from the Contracting Officer's Statement and the record that the agency believed, prior to award, that the establishment number listed on Iguana's label indicated the facility at which the impregnation would take place:
The EPA label Iguana provided was from International Textile Group, which Iguana explained was Burlington Industries, with EPA registration number 81041-1-66306 and indicates the place where pesticide-related work will be performed, and appears after the number identifying the company. See Tab I. Iguana's EPA establishment identified a facility in
. A DSCR technician approved the label Iguana provided on Virginia September 28, 2005 . TAB J.
CO Statement at 4. Although the record does not disclose the method followed by the agency technician in approving Iguana's label, post-protest exchanges between agency counsel and the technician indicate that the approval process involved checking the establishment and registration numbers in EPA databases to ensure that they were valid. Supplemental AR, Tab 2B, E-mail from Agency Counsel to Agency Technician,
However, in response to questions posed by our Office, the agency acknowledged that information from a vendor's product label, particularly the EPA establishment number, would not be sufficient to verify whether that vendor would perform the permethrin impregnation at a domestic facility. The agency's technician explained that [t]he EPA establishment number of Iguana's label does not reflect that the treatment facility will engage in any kind of pesticide usage and, therefore, the registration label that Iguana provided identifying [deleted] taken alone would not be sufficient to establish that permethrin treatment would occur at the establishment facility. Agency Technician's Responses to GAO Questions,
As relevant here, therefore, when a vendor identifies a facility for a particular manufacturing process, such as permethrin impregnation, the fact that the vendor lists an establishment number for the same facility on a product label does not mean that the facility is necessarily capable of performing that process or that the vendor has a valid relationship with a pesticide registrant that authorizes the facility to perform the process with the registrant's pesticide. See id.; see also, 40 C.F.R. sect. 167.20 (issuance of EPA establishment number is not made in connection with and does not indicate EPA's approval for any particular pesticide use or process).
As Iguana explained to SBA in July 2005 and to the agency in September 2005, Bickel was the registrant for the EXPEL permethrin impregnation process that would be used to produce Iguana's bednet fabric, and the only location where Bickel authorized that process to occur was in
With regard to the relationship between Bickel and a domestic manufacturer, Iguana now states, in response to questions posed by our Office, that Iguana will subcontract with [deleted], and not Burlington, to perform the permethrin impregnation. Iguana Response to GAO Questions,
The Bickel-[deleted] documentation, however, was signed on
November 29, and therefore could not, at the time of award, have made any determination regarding the relationship between Bickel, [deleted] and Iguana. In addition, Iguana provided in its December 22 response to our Office a new EPA product label, which lists Iguana's own facility as the establishment number, indicating that final assembly of the bednets will take place there. Iguana Response to GAO Questions,
During the agency's attempts to verify that both vendors would comply with the Berry Amendment requirements, Iguana stated that the impregnation would take place at the Burlington facility identified by the establishment number on its label: Our label reflects International Textile Groups (Burlington) located in Hurt Virginia; so therefore this will be our source for fabric impregnation. AR, Tab H, E-mail from Iguana to Agency,
In sum, we believe that the agency's evaluation of Iguana's quotation was unreasonable. Because Iguana's quotation as originally submitted disclosed a manufacturing process in China that violated the Berry Amendment requirements, and because Iguana advised the agency that domestic facilities capable of performing the EXPEL impregnation processes were not then available, the agency was required to verify, prior to award, that Iguana's intended manufacturing process would comply with the Berry Amendment. The agency's pre-award determination regarding Iguana's compliance was flawed because the agency relied on inadequate information to satisfy its concerns. Although Iguana identified
RECOMMENDATION
From the record, it is clear that the agency did not have a reasonable basis at the time of award to conclude that Iguana would perform the contract in accordance with the Berry Amendment. We recommend that the agency reassess, in light of the facts discussed above, the compliance of Iguana's quotation with the agency's interpretation of the Berry Amendment requirements.
We additionally recommend that the agency reimburse the protester the reasonable costs of pursuing its protest, including reasonable attorneys' fees. The protester's certified claim for costs, detailing the time expended and the costs incurred on this issue, must be submitted to the agency within 60 days of receiving this decision. 4 C.F.R. sect. 21.8(f)(1) (2005).
The protest is sustained.
Anthony H. Gamboa
General Counsel
[1] Because Iguana agreed to comply with the agency's interpretation of the Berry Amendment, our decision addresses only whether the agency reasonably determined whether Iguana would supply bednets that complied with that interpretation; references to compliance with the Berry Amendment in this decision refer to compliance with the agency's interpretation. We need not, therefore, address the substance of the agency's interpretation of the Berry Amendment.
[2] During exchanges between Iguana and the agency concerning the cure notice issued for performance of contract No. SP0406-05-D-4084, Iguana indicated that the shift from impregnating the fabric with permethrin in
[3] Iguana provided the agency a Notice of Supplemental Distribution of a Registered Pesticide Product, which indicated that Bickel had authorized Iguana to distribute fabrics treated with Bickel's EXPEL permethrin, under EPA registration No. 81041-1. AR, Tab H, Notice of Supplemental Distribution of a Registered Pesticide Product,