Klinge Corporation
Highlights
Klinge Corporation protests the U.S. Marine Corps's (USMC) award of a contract to Sea Box, Ltd., under request for proposals (RFP) No. M67854-07-R-5060, for large field refrigeration systems (LFRS). Klinge asserts that Sea Box's proposal should have been rejected as unacceptable.
B-309930.2, Klinge Corporation, February 13, 2008
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.
Decision
Richard P. Rector, Esq., and Seamus Curley, Esq.,with the law firm of DLA Piper, for the protester.
Robert A. Farber, for Sea Box, Ltd., the intervenor.
David P. Ingold, Esq., and James McCloskey, Esq., U.S. Marine Corps, for the agency.
David A. Ashen, Esq., and John M. Melody, Esq., Office of the General Counsel, GAO, participated in the preparation of the decision.
DIGEST
Protest that awardee's proposed large field refrigeration system (LFRS) did not meet requirements of Trade Agreements Act is denied where agency, after requesting further information from awardee, reasonably determined that components of awardee's LFRS would be substantially transformed in U.S. and thus qualify as a U.S.-made end product.
DECISION
Klinge Corporation protests the U.S. Marine Corps's (USMC) award of a contract to Sea Box, Ltd., under request for proposals (RFP) No. M67854-07-R-5060, for large field refrigeration systems (LFRS). Klinge asserts that Sea Box's proposal should have been rejected as unacceptable.
The solicitation provided for award of an indefinite'delivery/indefinite-quantity contract for a base period of 1 year, with four 1-year options, to furnish up to 300 LFRSs, as well as spare parts and training. Each LFRS was to be comprised of two primary components: (1) a 20-x-8-x-8-foot insulated container, compliant with International Organization for Standardization (ISO) standards, with double doors at one 8'x'8'foot end, and (2) (to be installed at the opposite end of the container) an electrically-powered refrigeration/freezing/heater unit (RU).
The solicitation included a performance specification that divided the specified performance characteristics into Critical Performance Parameters that must be met for minimum acceptability, and other parameters that were only objectives and were subject to tradeoff in the best value analysis. RFP at 1; Performance Specification sections 1.0, 3.0, 3.1, 3.2. The solicitation also incorporated the standard Trade Agreements Act (19 U.S.C. sect. 2501 et seq.) clauses requiring (1) that offerors certify, [f]or all line items subject to the Trade Agreements clause of this solicitation, that each end product to be delivered under this contract, except those listed in paragraph (c)(2) of this provision, is a U.S.-made, qualifying country, or designated country end product, Defense Federal Acquisition Regulation Supplement (DFARS) sect. 252.225-7020, Trade Agreements Certificate; and (2) that the contractor deliver under this contract only U.S.-made, qualifying country, or designated country end products, absent exceptions not applicable here, DFARS sect. 252.225-7021(c), Trade Agreements. In this regard, DFARS standard clause 252.225-7021(a)(12), Trade Agreements, incorporated in the solicitation, provided that:
U.S.-made end product means an article that --
(1) Is mined, produced, or manufactured in the; or United States
(2) Is substantially transformed in theinto a new and different article of commerce with a name, character, or use distinct from that of the article or articles from which it was transformed. United States
Award was to be made to the offeror whose proposal represented the best value based on four evaluation criteria: operational effectiveness, past performance, supportability, and price. RFP, Federal Acquisition Regulation (FAR) sect. 52.212-2, Evaluation''Commercial Items. Sea Box, Klinge and three other offerors submitted proposals. Based on its evaluation of the initial proposals, the Corps determined that Sea Box's proposal represented the best value and made award to that firm on
Klinge filed a protest with our Office challenging the award, asserting that (1) the agency had improperly determined Klinge's proposal to be unacceptable for failure to satisfy a Critical Performance Parameter in the performance specification''the requirement that the RU start and operate in ambient temperatures from '25 Fahrenheit (F.) to +131 F, Performance Specification sect. 3.9.1, and (2) Sea Box's proposal did not comply with the Trade Agreements provisions included in the RFP. In response to Klinge's protest, the USMC determined to take corrective action; it suspended performance under Sea Box's contract, established a competitive range of three offerors (including Klinge and Sea Box), and conducted discussions. We dismissed the protest as academic (B-309930,
In its September 6 letters opening discussions, the agency requested that Klinge and Sea Box (1) [p]lease provide specific test data or analysis that supports your claim of meeting the 131 degrees F. operating temperature Critical Performance Parameter; and (2) specifically identify the country of origin for each line item number and . . . address your compliance with DFARS 252.225-7021, Trade Agreements. Discussion Letters to Klinge and Sea Box,
We have considered each of Klinge's arguments and find that they are without merit. We discuss Klinge's primary arguments below.
TRADE AGREEMENTS REQUIREMENTS
LFRS
Klinge asserts that Sea Box's proposal should have been rejected for failure to demonstrate compliance with the Trade Agreements requirement in the solicitation requiring that the offeror provide only U.S.'made, qualifying country, or designated country end products. DFARS sect. 252.225'7021(c).[1] We find Klinge's protest in this regard to be without merit.
Both Sea Box and Klinge proposed to utilize insulated containers manufactured (by the same company) in
Klinge proposed to ship the Chinese containers to the
As discussed above, the solicitation required an offeror either to (1) produce an item in the
The record indicates that the USMC determined that, under Sea Box's proposed approach, a substantial transformation would occur in the
When a bidder or offeror represents that it will furnish end products of designated or qualifying countries (including domestic end products) in accordance with the Trade Agreements Act, it is obligated under the contract to comply with that representation. If prior to award an agency has reason to believe that a firm will not provide compliant products, the agency should go beyond the firm's representation of compliance with the Act; however, where the contracting officer has no information prior to award that would lead to such a conclusion, the contracting officer may properly rely upon an offeror's representation without further investigation. Leisure-Lift, Inc., B-291878.3; B-292448.2,
The agency's evaluation and resulting determination of compliance was reasonable. As we noted in a recent decision, Pacific Lock Co., supra, at 3, neither the FAR nor DFARS provides guidance or examples to illustrate the circumstances under which an article is substantially transformed into a new and different item. Here, the contracting agency, in determining whether under Sea Box's proposal there would be a substantial transformation in the U.S., looked to whether significant work or processes necessary to the functioning as a refrigerated container system would occur in the U.S. Agency Supplemental Report,
In this regard, our review of the record supports the agency's determination that the information available to contracting officials concerning Sea Box's production process indicated that significant production activity would take place in the
Finally, the record indicates that the agency verified with Sea Box prior to award that significant, essential production activity remained to take place in the
Thus, it appears from the record that the information available to the contracting agency prior to award concerning Sea Box's contemplated production process indicated that the Singapore refrigeration units would be simply bolted to the Chinese containers in China, and that the work and processes necessary to combine the two components into a functioning refrigerated container systems, which would be substantial in terms of effort (whether measured by time required or cost), instead would first occur in the United States. Based on this information, the USMC determined that the components of Sea Box's LFRS would be substantially transformed in the
Spare Parts
Klinge asserts that language in Sea Box's proposal also called into question Sea Box's commitment to provide only U.S.'made, qualifying country, or designated country end products under Contract Line Item Number (CLIN) 0003, under which offerors were to propose and price a parts support package sufficient to support the LFRSs for a period of up to 2 years operation at a rate of 600 hours per year. DFARS sect. 252.225-7021(c). Klinge notes that Sea Box stated in its discussion response that its package is comprised of 32 discrete parts or items, substantially every one of which is manufactured in the
We have no reason to question the agency's determination that the reference in Sea Box's FPR, when discussing the parts support package, to substantially every one of which is manufactured in the United States, did not call into question Sea Box's commitment to furnish a compliant parts support package as reflected in Sea Box's overall certification that each end product to be delivered under this contract . . . is a U.S.-made, qualifying country, or designated country end product. Defense Federal Acquisition Regulation Supplement (DFARS) sect. 252.225-7020, Trade Agreements Certificate. Not only did the substantially every one of which language not clearly evidence an intention to take exception to Sea Box's overall certification of compliance, but, in addition, Sea Box specifically stated in its discussion response that one hundred percent (100%) of the CLIN 0003 2-Year Parts Support Package cost represents manufacturing efforts performed in the U.S. Sea Box Discussions Response,
AMBIENT TEMPERATURE REQUIREMENT
Klinge asserts that the agency unreasonably determined that Sea Box's proposed LFRS satisfied a Critical Performance Parameter in section 3.9.1 of the performance specification''the requirement that the RU start and operate in ambient external temperatures from -25 F. to +131 F. Specifically, Klinge questions whether the agency had a basis for determining that Sea Box's LFRS could start and operate in ambient temperatures up to 131 F.
In this regard, market research conducted by the agency prior to issuance of the solicitation led the agency to conclude that it was uncertain whether Klinge and Sea Box could meet the ambient temperature requirement with a commercial product. Market Research, LFRS, at 12. However, Sea Box included in its initial proposal a specification matrix indicating [f]ull compliance with respect to the ambient temperature requirement. Sea Box Initial Proposal, Specification Matrix. In its discussion letter to Sea Box (after the agency undertook discussions as part of its corrective action in response to Klinge's initial protest), the USMC referred to a Carrier specification for the Carrier refrigeration unit proposed by Sea Box that had not been included in Sea Box's proposal. Agency Report,
Klinge asserts that the Carrier letter did not furnish a reasonable basis for finding Sea Box's proposal compliant with the ambient temperature requirement. We disagree. Although Klinge maintains that Sea Box was required to support its stated compliance with test data (similar to the data Klinge supplied in its own proposal), the language in the discussion letter on which Klinge relies did not establish a solicitation requirement for an offeror to furnish test data in support of its proposal such that failure to furnish such data required rejection of the proposal as unacceptable. Instead, as noted above, the agency's discussion letter simply requested that Sea Box (and Klinge) [p]lease provide specific test data or analysis. Discussion Letters,
The protest is denied.
Gary L. Kepplinger
General Counsel
[1] Designated countries are listed at DFARS sect. 252.225-7021(a)(3); qualifying countries are listed in DFARS sect. 225-872-1.
[2] Klinge also asserts that because Sea Box indicated in its FPR that testing would occur in China, the LFRS must have been essentially complete by that time. Sea Box's FPR, however, also provided for substantial testing to occur in the U.S., including 6 days of Contractor Testing, after the 10 days allotted to Install[ing] Interior components. Sea Box FPR, Work Breakdown Structure, at 1-2. In any case, Klinge's additional, testing argument was raised for the first time in Klinge's December 20, 2007 submission, which was filed more than 1 month after counsel for Klinge had received a copy of Sea Box's FPR on November 16 (and after Klinge had made a filing responsive to the November 16 document distribution and the agency had filed its report). As a general matter, under our Bid Protest Regulations, protests based on other than solicitation improprieties must be filed within 10 calendar days of when the protester knew or should have known their bases. 4 C.F.R. sect. 21.2(a)(2) (2007). Moreover, where a protester initially files a timely protest, and later supplements it with independent grounds of protest, the later-raised allegations must independently satisfy the timeliness requirements. FR Countermeasures, Inc., B'295375, Feb. 10, 2005, 2005 CPD para. 52 at 9. Likewise, where a protester raises a broad ground of protest in its initial submission but fails to provide details within its knowledge until later, so that a further response from the agency would be needed for us to adequately review the matter, these later, more specific arguments and issues cannot be considered unless they independently satisfy the timeliness requirements under our Regulations. Planning and Development Collaborative Int'l, B-299041, Jan. 24, 2007, 2007 CPD para. 28 at 11; Biospherics, Inc., B-285065,
[3] As further explained by Sea Box in response to the protest, the Chinese container is manufactured with one end open; the refrigeration unit is seated in a metal panel and the panel is simply bolted to the end of the container so as to close off the container and thereby facilitate shipment to the U.S. According to Sea Box, no work is performed in China other than bolting the panel to the container for shipment purposes; all other required work, including the addition of all other necessary parts and all mechanical and electrical labor operations and integration, is performed at Sea Box's facility in the U.S. Sea Box Comments,
[4] Klinge asserts that the communications between agency counsel and Sea Box's director of contracts, which occurred after the closing time for receipt of FPRs, amounted to discussions such that the agency was required to reopen discussions with Klinge as well. Klinge states that, had it been provided further discussions, this would have included another opportunity to potentially revise its pricing and, perhaps more importantly, to address past performance, which was an area where the agency raised a concern and essentially discredited all explanatory information supplied in Klinge's written discussion responses. Klinge Comments,
[5] In contrast, as noted by the agency, Klinge's proposed list of 23 spare parts (appendix F to its proposal), included two parts that were described in a separate list in its proposal (appendix B) as being Non-Designated Country parts and non'U.S. parts, which would appear to render its proposal not compliant with the Trade Agreements Act. Klinge Comments,