PROCUREMENT Competitive Negotiation Technical transfusion/leveling Allegation substantiation Evidence sufficiency Contention that agency engaged in impermissible technical leveling by coaching a lower cost offeror to improve its proposal is denied where the offeror submitted a strong technical proposal ranked almost identical to the protester's proposal. Where nothing in the record indicates that the second round of discussion questions elicited answers from the offeror that it might have provided earlier but for a lack of diligence in preparing its proposal and answering the agency's first round of discussion questions. Are as follows: Technical approach and overall responsiveness of proposal 15 points Institutional capability and experience 61 points Personnel and management.
Matter of:Matrix International Logistics, Inc. File: B-249285.2 Date: December 30, 1992
PROCUREMENT Competitive Negotiation Technical transfusion/leveling Allegation substantiation Evidence sufficiency Contention that agency engaged in impermissible technical leveling by coaching a lower cost offeror to improve its proposal is denied where the offeror submitted a strong technical proposal ranked almost identical to the protester's proposal, and where nothing in the record indicates that the second round of discussion questions elicited answers from the offeror that it might have provided earlier but for a lack of diligence in preparing its proposal and answering the agency's first round of discussion questions.
DECISION Matrix International Logistics, Inc. protests the award of a contract to Panalpina, Inc. under request for proposals (RFP) No. OP/CC/P- 92-002, issued by the Agency for International Development (AID) for international freight forwarding, together with related warehousing services, of contraceptives. Matrix argues that AID engaged in technical leveling by using a second round of discussions to improperly help Panalpina improve its lower-priced proposal so that AID could justify award to Panalpina and take advantage of that company's lower price.
We deny the protest.
On February 26, 1992, AID issued RFP No. OP/CC/P-92-002 seeking proposals for a fixed unit-price contract for freight forwarding services for the shipment of contraceptives to various locations throughout the world. The freight services at issue include shipments by truck, ocean vessel, and air, as well as warehousing of contraceptives. The RFP sought these services for a base period of 2 years, with an option for 3 more years.
The evaluation section of the RFP advised that award would be made to the offeror whose proposal offered the best value to the government, which would not necessarily be the proposal with the lowest price or the highest technical score. In addition, the RFP included a formula for ranking offerors using their technical scores and prices. This formula, shown below, ranks offerors by giving technical merit twice the weight accorded price:
Offeror's Rank = .67(PTS/HTS) + .33(LPP/PP)
PTS = Proposer's technical score HTS = Highest technical score LPP = Lowest proposal price PP = Proposer's price
The evaluation scheme set forth three technical evaluation factors. These three factors, and their relative weights, are as follows:
Technical approach and overall responsiveness of proposal 15 points
Institutional capability and experience 61 points
Personnel and management, technical competence and experience of proposed personnel, and proposed management structure 24 points
TOTAL 100 points
In addition, each of the three technical factors was divided into subfactors. The points for each subfactor were listed in the evaluation section of the RFP, and the sum of the points available for each subfactor equaled the total points available for that factor. For example, the technical approach factor included five subfactors, totaling 15 points.
By April 17, the closing date for receipt of initial proposals, AID received offers from four companies. Upon review of the initial technical proposals by the Technical Evaluation Committee (TEC), together with a separate review of the cost proposals, AID evaluated the offers as follows:
Technical Score Total Price Rank
Matrix 98 $ 18,239,770 94 Panalpina 92 14,903,305 96 Company A 56 16,258,445 69 Company B 60 8,553,370 74
On the basis of initial technical scores, the TEC concluded that both Matrix and Panalpina were "highly qualified" to perform, while Companies A and B were considered "marginally acceptable." The contracting officer determined that all four proposals should be kept in the competitive range, and initiated written discussions. (To distinguish between these discussions and those held later, we will refer to this as "the first round" of discussions.)
After each of the offerors responded to the written discussion questions provided by the agency, the TEC reevaluated technical proposals. The TEC provided the results of the reevaluation to the contracting officer, who then ranked offerors according to the formula set forth in the RFP. Based on the revised technical scores, prices, and relative rankings, shown below, the contracting officer excluded companies A and B from further consideration for award.
Technical Score Total Price Rank
Matrix 99 $ 18,239,770 91 Panalpina 91 15,275,607 90 Company A 52 16,258,445 61 Company B 62 13,026,890 75
After establishing the competitive range, the contracting officer, by letter, reopened discussions with Matrix and Panalpina--the "second round" of discussions. Upon receiving the replies from both offerors to the second round of discussion questions, the contracting officer requested best and final offers (BAFO). Based on each offeror's response to the second round of discussions, as well as each offeror's BAFO response, the agency assigned the following technical score and Panalpina:
Technical Score Total Price Rank
Matrix 99.75 $ 18,239,770 95 Panalpina95.5 15,430,950 97
Based on this ranking, AID awarded the contract to Panalpina on June 26. AID, 3 days later, provided a debriefing for Matrix, and on July 1, Matrix filed this protest with our Office.
In its protest, Matrix argues that during discussions AID violated the Federal Acquisition Regulation (FAR) admonition against technical leveling by improperly coaching Panalpina into improving its technical proposal so that the agency could take advantage of Panalpina's lower price. According to Matrix, AID's discussion questions for Panalpina pointed out weaknesses in that company's proposal resulting from a lack of diligence in responding to the RFP, and thus were improper.
Specifically, Matrix focuses on AID's questions related to four evaluation subfactors within the three technical evaluation factors. According to Matrix, there are four components to its allegation that the agency engaged in technical leveling: (1) the clarity of the information provided in the RFP under each of these four subfactors; (2) the fact that AID pointed out Panalpina's weaknesses in these four areas during the first round of discussions; (3) Panalpina's allegedly incomplete and not fully responsive replies to the first round of discussion questions; and (4) the fact that AID gave Panalpina a second chance to address the agency's concerns about these four areas in the second round of discussions.
A protester's complaint that an agency has engaged in technical leveling highlights a tension in the conduct of competitive negotiated procurements. On one hand, agencies are required by the Competition in Contracting Act of 1984, 41 U.S.C. Sec. 253b(d) (1988), and by FAR Sec. 15.610(b), to hold written or oral discussions with all responsible sources whose proposals are within the competitive range. For such discussions to be meaningful, they must at a minimum, point out deficiencies and resolve any uncertainties in the offeror's proposal. FAR 15.610(c); Aydin Vector Div., B-243430, July 22, 1991, 91-2 CPD Para. 79. On the other hand, agencies are admonished by the FAR to protect the integrity of the procurement process by balancing the need for mean- ingful discussions against actions that result in technical leveling (FAR Sec. 15.610(d)), technical transfusion (FAR Sec. 15.610(e)(1)), or auctions (FAR Sec. 15.610(e)(2)). See generally Mine Safety Appliances Co., B-242379.5, Aug. 6, 1992, 92-2 CPD Para. 76. The FAR defines technical leveling as helping an offeror "bring its proposal up to the level of other proposals through successive rounds of discussion, such as by pointing out weaknesses resulting from the offeror's lack of diligence, competence, or inventiveness in preparing the proposal." FAR Sec. 15.610(d).
In our view, striking the appropriate balance between meaningful discussions and technical leveling is an area where contracting officers necessarily must have considerable discretion, since the number and type of proposal deficiencies will vary among proposals. See CBIS Fed. Inc., B-245844.2, 71 Comp.Gen. 319 (1992), 92-1 CPD Para. 308; E-Systems, Inc., B-191346, Mar. 20, 1979, 79-1 CPD Para. 192. For example, in a case where it might have been preferable for an agency to have informed an offeror in the request for BAFOs of continuing concerns about a weakness identified during discussions, we found that there was nothing improper about not doing so, given the agency's reasonable concerns about technical leveling. E-Systems, Inc., supra. Our Office will sustain a protest, however, if an agency, attempting to strike the balance between holding meaningful discussions and avoiding technical leveling, acts unreasonably. See Price Waterhouse, B-222562, Aug. 18, 1986, 86-2 CPD Para. 190 (protest sustained where agency provided offerors with identical discussion questions because of concerns that questions tailored to the individual proposals would violate the FAR's restrictions against technical leveling and technical transfusion).
As a preliminary matter, we note that this is not a procurement where the result of discussions was to raise a marginal offeror to the level of an offeror who submitted a far superior proposal. In fact, as explained above, after the very first evaluatio overall than Matrix given the closeness of the technical scores and Panalpina's significantly lower price. Even after the first round of discussions when the technical scores diverged slightly, the two offerors were ranked as follows: Matrix, 91; Panalpina, 90. Therefore, in our view, any danger of significant technical leveling was minimal.
With respect to the protester's claims regarding technical leveling, there is nothing in the record to suggest that AID erred in its attempt to hold meaningful discussions with Matrix and Panalpina. For each of the four evaluation subfactors where Matrix argues that AID engaged in technical leveling, we have reviewed Panalpina's initial proposal; the agency's initial evaluation materials; the first round of discussion questions; Panalpina's response; the agency's evaluation of the response; the second round of discussion questions; Panalpina's supplemental response; and the agency's evaluation of the supplemental response. These materials simply do not support Matrix's claim that AID acted improperly. To illustrate our conclusion, we will discuss in detail the exchanges between Panalpina and AID related to one of the four evaluation subfactors challenged by Matrix.
As explained above, the evaluation scheme in the RFP contained 3 evaluation factors, under which appeared a total of 17 subfactors. One of these subfactors, set forth at paragraph M.7b.6 ("subfactor b.6"), states that offerors shall possess:
"Demonstrated capacity to trouble-shoot shipments with changing requirements and successfully win claims for reimbursement."
This evaluation subfactor is worth a total of 8 points towards the 61 points available under the Institutional Capability and Experience factor.
Panalpina's initial technical proposal responded to subfactor b.6 with claims of extensive experience with trouble-shooting shipments and similar claims with respect to the company's track record in getting reimbursed for shipping losses. In addition, the technical proposal included a bar graph showing the absence of shipping claims for hundreds of shipments to Asia, Africa, Latin America, and the Caribbean.
In the first round of discussions, AID provided a written request to Panalpina asking for additional information in 17 different areas. Included in AID's letter to Panalpina was a request for more detail about Panalpina's initial response to subfactor b.6. Specifically, AID asked Panalpina to:
"Indicate the quantity of claims received, the bidder's response to them and the resolution status of the claims indicated in the Shipment Integrity graph."
In its written response to the agency's questions, Panalpina answered each of AID's requests regarding subfactor b.6--i.e., Panalpina furnished AID with the precise number of claims covered by the Shipment Integrity Chart; explained which of those claims involved losses by commercial carriers and which involved losses due to pilferage or theft; and set forth in general terms Panalpina's usual procedure for handling such claims. In addition, Panalpina explained that all of the claims had been settled.
After reviewing Panalpina's response, and after deciding to seek more information from both offerors, AID provided a second letter posing questions to Panalpina. In this letter, AID asked additional questions related to subfactor b.6, as well as three other evaluation subfactors. With respect to subfactor b.6, the letter states:
"Clarify what you will do for claims of loss and/or damage to product. Be specific on how you will handle claims through to resolution (item B.6)."
In response to this question Panalpina provided excerpts from an insurance manual used by its offices. The excerpts describe in detail the company's guidelines on how to handle claims. After reviewing the answers to the second round of discussion questions, AID requested BAFOs and subsequently awarded to Panalpina.
To Matrix, the exchanges above--together with the simplicity of the evaluation requirement--add up to prohibited action by AID. According to Matrix, AID coached Panalpina to provide information that it could have provided sooner but for its lack of diligence in responding to the solicitation and to the first discussion question on this subject.
AID's concerns about subfactor b.6 were apparently allayed by Panalpina's decision to provide excerpts from its insurance handbook describing its claims procedure in response to the second round of discussion questions. We simply do not agree with Matrix's claim that if Panalpina had acted diligently it would have provided this information sooner. The RFP advised offerors that they would be evaluated by their "[d]emonstrated capacity to trouble-shoot shipments with changing requirements and successfully win claims for reimbursement." In response to this requirement, Panalpina reasonably described its experience with handling the logistics of changing requirements, and chose to provide information contrasting the large number of shipments it had handled with the relatively small numbers of claims it had experienced.
Once AID reviewed the Panalpina response, it did not suggest in its first round of discussions that the company had misunderstood the requirement, or had misaddressed the issue. Rather, the question to Panalpina in the first round of discussions sought additional details about the response provided in Panalpina's proposal--i.e., indicate the quantity of claims received, the response to them and the resolution of the claims. The question in the second round of discussions does not repeat the first round question or even elaborate on the questions asked in the first round. Instead, in the second round AID asks for specific information on how Panalpina will handle AID's claims from the time they are received until they are resolved. In response, Panalpina provided a detailed answer, and AID was satisfied that the procedures provided would meet the agency's needs.
In conclusion, our review of the record does not support the protester's claim that AID engaged in technical leveling through improper coaching of Panalpina during discussions. In fact, the two rounds of discussions here demonstrate the kind of thorough review required for adequate competitive negotiation.
The protest is denied.