Nomura Enterprise, Inc., B-277768, November 19, 1997

B-277768 Nov 19, 1997 Jump To VIEW DECISION DOWNLOADS RELATED PAGES GAO CONTACTS Highlights A firm protested an Army contract award for missile warhead metal parts, contending that the: (1) Army's decision was based on the firm's low past performance evaluation rating, and the Army should have referred the matter to the Small Business Administration (SBA) under certificate-of-competency (COC) procedures; and (2) Army made an unreasonable best value determination by awarding the contract to a significantly higher bidder. GAO held that the: (1) protester's bid did not involve a matter of responsibility subject to SBA's COC procedures; and (2) Army made an appropriate cost/technical tradeoff in selecting the awardee's higher-priced, technically superior bid. Accordingly, the protest was denied. View Decision Matter of: Nomura Enterprise, Inc. File: B-277768 Date: November 19, 1997 DIGEST Attorneys DECISION Nomura Enterprise, Inc. protests the award of a firm, fixed-price contract to Defense Research Incorporated under request for proposals (RFP) No. DAAA09-97-R-0126, issued by the Department of the Army for a quantity of missile warhead metal parts. Nomura challenges as unreasonable the Army's decision to award to Defense at a significantly higher price than Nomura offered. Nomura contends that the agency's selection decision was based on the firm's low past performance evaluation rating, which Nomura maintains essentially constituted a nonresponsibility determination that the agency should have referred to the Small Business Administration (SBA) for the possible issuance of a certificate of competency (COC). We deny the protest. The RFP was issued for warhead metal parts which the record shows are critical components of the Hawk missile. The RFP provided that the award would be made to the offeror whose proposal was determined to represent the "best value" to the government based on an integrated assessment of two evaluation factors--price and recent, relevant past performance. The past performance evaluation factor consisted of two equally important subfactors--on-time delivery and quality. The RFP stated that in determining the best value, price was more important than past performance. The agency received three offers, including proposals from Nomura and Defense. The third firm, the prior producer of the item, failed to acknowledge a material solicitation amendment and the agency did not evaluate its offer. Defense's price for the basic contract award was $2,418,536, and if all options were exercised, $9,086,519. Nomura's price for the basic contract award was $1,639,449, and if all options were exercised, $5,616,198. [1] The agency conducted a pre-award survey of Nomura. The survey's program manager reported that "Nomura's product quality indicates a downward trend based on an increase in the number of product quality deficiency reports," and "Nomura [had] not provide[d] a plan for corrective action." The surveying official concluded that Nomura was "technically capable of being awarded this contract but due to [the firm's] delinquency rate," she recommended no award to Nomura. The pre-award survey was reviewed by the contract specialist who also reviewed the past performance information Nomura submitted in its proposal. The contract specialist assigned Nomura a rating of "fair" under past performance. [2] Under the on-time delivery subfactor, the contract specialist found that Nomura's recent, relevant contracts for similar items showed a consistent pattern of delinquency for various reasons, subcontractor and equipment problems, and relocation of the place of performance. Under the quality subfactor, the contract specialist concluded that Nomura's workmanship on recent contracts had not been good. She noted "multiple instances of late First Article Test Reports and failed First Article Tests." She also noted numerous quality deficiency reports issued under recent contracts, including four quality deficiency reports on a single contract. Further, when the agency surveyed Nomura's customers, only one stated it would do business again with Nomura without reservation, several stated they would not do business again with the firm, and several others stated they would need a convincing pre-award survey and also would have to closely monitor Nomura's performance. The contract specialist rated Defense's past performance as excellent overall. [3] Under recent contracts, Defense's delivery was always on time or early. Also, concerning quality, the performance records showed that Defense's workmanship on recent contracts was excellent with no quality deficiency reports on the contracts reviewed.