SelRico Services, Inc., B-286664.4; B-286664.5; B-287481.2; B-287481.3, June 22, 2001

B-286664.4,B-286664.5,B-287481.2,B-287481.3: Jun 22, 2001

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DIGEST Even where price is the least important evaluation factor for award under a best-value procurement. Lower-rated proposal if it determines that the price premium involved in awarding to an offeror with a higher-rated proposal is too great to justify. SelRico alleges that the "best value" tradeoff decision supporting the source selection was unreasonable and contrary to the RFP's evaluation criteria. Past performance was to be evaluated on similar contracts completed within the past 3 years or currently in progress. Three other offerors were given the past performance confidence assessment rating "exceptional/high confidence". Acorn's proposal was rated "very good/significant confidence.

SelRico Services, Inc., B-286664.4; B-286664.5; B-287481.2; B-287481.3, June 22, 2001




SelRico Services, Inc. protests the reevaluation of proposals and resulting contract award to Acorn Services, Inc. by the Department of the Air Force under request for proposals (RFP) No. F41652-00-R0025 for mess attendant services at Dyess Air Force Base, Texas. SelRico alleges that the "best value" tradeoff decision supporting the source selection was unreasonable and contrary to the RFP's evaluation criteria. SelRico also protests the Air Force's issuance of a purchase order to Acorn to provide these services during the pendency of SelRico's protest of the award to Acorn under the RFP.

We deny the protests.

The solicitation, incorporating the Federal Acquisition Regulation (FAR) clauses applicable to commercial items, provided that the award would be based on an assessment of each offeror's past performance and price, with past performance the more important factor. As relevant here, past performance was to be evaluated on similar contracts completed within the past 3 years or currently in progress, using a past performance survey to determine the quality of work previously performed and to assess the relative capability of the offeror to effectively accomplish the solicitation requirements. The RFP stated that award would be made to the offeror whose proposal represented the best value to the government.

Ten offerors, including SelRico (the incumbent contractor), Lewis Services/Southway Services, and Acorn, submitted proposals. The source selection team evaluated each offeror's past performance risk based on (1) the contractor's record of conforming to specifications and to standards of good workmanship; (2) the contractor's history of reasonable and cooperative behavior including the administrative aspects of performance and commitment to customer satisfaction; (3) the contractor's environmental record; and (4) the contractor's business-like concern for the interests of the customer, using questionnaires completed by references furnished by the offerors. The proposals submitted by SelRico, Lewis, and three other offerors were given the past performance confidence assessment rating "exceptional/high confidence"; Acorn's proposal was rated "very good/significant confidence," and the proposals of the remaining four offerors were rated "neutral/unknown confidence." Acorn's proposal offered the lowest price, while Lewis's price was third low and SelRico's price was fourth low.

The Air Force selected Lewis for the award. SelRico and Acorn each protested that award decision; the protests were resolved when the agency agreed to take corrective action by reevaluating the past performance of all offerors. The Air Force gave each offeror the opportunity to submit any additional, relevant past performance information to be considered during the reevaluation. The solicitation itself and previously-submitted proposals were not changed.

The source selection team re-evaluated the submissions and submitted its proposal evaluation report to the source selection authority. Acorn's proposal, offering the lowest price ($4,987,136), was again rated "very good/significant confidence" under the past performance factor. SelRico's proposal offered the fourth lowest price ($6,061,519.40) and was again rated "exceptional/high confidence" for past performance. Agency Report, Tab L, Proposal Evaluation Report, at 8-9. The source selection authority (SSA) determined that Acorn's proposal presented the best value to the government, based on a tradeoff between past performance and price, and selected Acorn for award. This protest followed, alleging that the agency's tradeoff was unreasonable and inconsistent with the terms of the RFP.

Since the incumbent contract, held by SelRico, had already been extended for 6 months because of the earlier protest and was about to expire, the Air Force needed to make arrangements to ensure continued food service. The agency requested a price quotation from Acorn for the services, and issued a purchase order to Acorn to provide these services for a 3-month period. SelRico protested the agency's failure to solicit a quotation from SelRico; the agency thereupon requested and received a price quote from SelRico on the interim purchase order. When the agency again determined to place the purchase order with Acorn, based on its lower price, SelRico protested that order.

SelRico protests that the award to Acorn under the RFP is improper because five other offerors received higher ratings for their past performance, and past performance was to be the most heavily-weighted factor in the award decision. Protest at 4. In support of its position, SelRico refers repeatedly to the agency's initial source selection and argues that the Air Force has failed to explain the "about face" that its later selection of Acorn represents. In this regard, SelRico argues that under the initial evaluation, Acorn's proposal was ranked sixth, and that the agency defended this ranking when it first responded to Acorn's protest of the initial award to Lewis.

First, we point out that the issue before us is whether the current evaluations and source selection decision are reasonable, and not whether they are consistent with the earlier source selection that the agency had conceded was improper. Indeed, it is precisely because the initial selection was improper that the agency agreed to take corrective action; therefore, we see no purpose in further examining that decision, or the agency's initial position with regard to that decision. /1/

Regarding the fact that Acorn's proposal did not receive the highest past performance rating, this does not render the award improper. Source selection officials in a negotiated procurement have broad discretion in determining the manner and extent to which they will make use of the technical and price evaluation results; price/technical tradeoffs may be made, and the extent to which one may be sacrificed for the other is governed only by the test of rationality and consistency with the established evaluation factors. Creative Apparel Assocs., B-275139, Jan. 24, 1997, 97-1 CPD Para. 65 at 6. Even where price is the least important factor, an agency may award to an offeror with a lower-priced, lower-scored proposal if it determines that the price premium involved in awarding to an offeror with a higher-rated, higher-priced proposal is not justified. Id.

Here, the record shows that the agency considered three of the past performance references submitted by Acorn to be relevant. /2/ Agency Report, Tab L, Proposal Evaluation Report, at 3-4. The past performance references who completed "past and present performance questionnaires" for these contracts rated Acorn's performance "satisfactory" for one of the contracts, "very good" for another, and "exceptional" for the third. /3/ Agency Report, Tab H, Acorn Past Performance Surveys. Overall, the Air Force assigned a rating of "very good/significant confidence" for Acorn's past performance references. SelRico offered a price that was more than one million dollars higher than Acorn's price. Agency Report, Tab K, Abstract of Offers, at 2. Based on these facts, the contracting officer, acting as the SSA, concluded that Acorn's proposal provided the best value to the government. In the source selection report, the contracting officer recognized that Acorn's proposal was not the most highly rated (in terms of past performance), but decided that payment of the price premium associated with SelRico's proposal--approximately 22 percent--was too great to be justified by SelRico's higher past performance rating, notwithstanding the RFP's emphasis on past performance. That analysis appears reasonable and consistent with the RFP, and we therefore have no basis to question the contracting officer's tradeoff determination.

SelRico also alleges that Acorn's pricing was impermissibly unbalanced, and that the award was improper on this basis. SelRico notes that the RFP solicited pricing for the operation of two separate dining facilities, "Longhorn" and "Flightline." Because the Longhorn facility is larger than Flightline (by a factor of 5) and the estimated number of meals to be served at Longhorn is greater (by a factor of about 10), SelRico argues essentially that pricing for the two facilities should reflect that ratio. Protester's Comments on Supplemental Agency Report at 6. Since Acorn's price for operating the Longhorn facility was only about three times its price for operating the Flightline facility, SelRico argues that its proposal is unbalanced and represents an unacceptable risk to the government.

Unbalanced pricing exists when, despite an acceptable total evaluated price, the price of one or more contract line items is significantly overstated (as indicated by the application of cost or price analysis techniques); the overstated prices are generally compensated for by understated ones. See FAR Sec. 15.404-1(g)(1). An agency's acceptance of a proposal with unbalanced pricing is not, in and of itself, improper. An agency may lawfully award a contract on the basis of a proposal with unbalanced pricing, provided it has concluded that the pricing does not pose an unacceptable level of risk, and the prices the agency is likely to pay under the contract are not unreasonably high. FAR Sec. 15.404-1(g)(2), (3); Citywide Managing Servs. of Port Washington, Inc., B-281287.12, B-281287.13, Nov. 15, 2000, 2001 CPD Para. 6 at 7.

Here, the protester does not provide a basis for us to find that any of Acorn's prices were significantly overstated, and our review does not indicate that any were (its Flightline prices were roughly in line with other offerors'). There is therefore no factual basis for the allegation of unbalanced pricing. While Acorn's prices were obviously much lower than the protester's, the risk of low prices (or even below-cost prices) is not the risk at issue in unbalanced pricing analysis under FAR Sec. 15.404-1(g).

SelRico also protests that the issuance of the interim purchase order was improper, alleging that the agency solicited quotations without disclosing the fact that the quotations would be compared on the basis of price alone. The protester asserts that "Acorn's quote was, predictably, lower because Acorn offers a lower level of service," and argues that SelRico was misled when the contracting officer advised it to base its quotation "on the existing solicitation." Protester's Comments at 2.

SelRico's argument is wholly without merit. First, since no new proposals, but only prices were solicited, we fail to see how the protester was "misled"; it submitted a price, and the price was compared to Acorn's price. Second, to the extent the oral request was based on the RFP, the RFP never provided for a comparative evaluation of the level of service being offered: the only factors to be evaluated under the solicitation were past performance and price. Since SelRico could not change its past performance, and had received an exceptional rating for its past performance, any failure on the agency's part to specifically alert the firm to the fact that only pricing would be compared for the interim award would have no competitive consequence. The only factor that the offerors could control when competing for the interim purchase order was price, and Selrico had the opportunity to change its price. In any event, our conclusion that the award made to Acorn under the RFP was unobjectionable, as discussed above, renders Selrico's protest of the evaluation and award of the interim purchase order academic. Even if, as SelRico argues, the Air Force was required to issue the purchase order under the same source selection terms as pertained to the contract award under the RFP (as opposed to basing the award on price), we would find the selection of Acorn unobjectionable, following our analysis as detailed above.

The protests are denied.

Anthony H. Gamboa General Counsel

1. In addition, SelRico's premise that Acorn's proposal was ever "ranked sixth" is factually unsupported. While the agency report in response to Acorn's protest listed the proposals in groups reflecting their past performance confidence assessments, this grouping did not reflect any qualitative ranking within the groups, nor did it represent the integrated assessment of past performance and price that the award decision ultimately would be based on. Contracting Officer's Statement at 3.

2. While SelRico challenges the relevance of the contracts that Acorn submitted, alleging that the volume of meals served under those contracts did not meet the RFP's threshold for relevance, we reject this allegation as merely speculative. Acorn bases its allegation on the contracts' dollar values, speculating that these prices either reflect a lower volume or a lower level of service. However, the record shows that Acorn furnished specific information regarding the number of meals served and that the agency reasonably evaluated Acorn's past performance based on the data submitted.

3. While SelRico alleges that Acorn received a "very good" rating from the Air Force for a past performance reference that "contained no score above a 'satisfactory,'" Protester's Comments, May 7, 2001, at 3, the record shows that SelRico's allegation in this regard is simply factually incorrect. See Agency Report, Tab H, Reference for Contract No. DTCG84-99-C-AA-1002.

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