Day & Zimmermann/IMR L.L.C., B-280568; B-280569, October 19,

Day & Zimmermann/IMR L.L.C., B-280568; B-280569, October 19, BNUMBER: B-280568; B-280569 DATE: October 19, 1998 TITLE: Day & Zimmermann/IMR L.L.C., B-280568; B-280569, October 19, 1998 ********************************************************************** 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:Day & Zimmermann/IMR L.L.C. File:B-280568; B-280569 Date:October 19, 1998 Stephen G. Anderson, Esq., Baker, Donelson, Bearman & Caldwell, for the protester. Brian A. Mizoguchi, Esq., Verner Liipfert Bernhard McPherson and Hand, for Royal Ordnance North America, Inc., an intervenor. Bradley J. Crosson, Esq., and Vera Meza, Esq., U.S. Army Materiel Command, for the agency. Andrew T. Pogany, Esq., and John M. Melody, Esq., Office of the General Counsel, GAO, participated in the preparation of the decision. DIGEST Award to offeror submitting higher-priced, technically superior proposal under a solicitation which stated that proposed price was more important than technical evaluation factors was unobjectionable where agency reasonably determined that the awardee's substantial technical advantage warranted payment of the price premium associated with its proposal. DECISION Day & Zimmermann/IMR L.L.C. (D&Z) protests the award of contracts to Royal Ordnance North America, Inc. (RONA) under request for proposals (RFP) Nos. DAAA09-97-R-0044 (RFP-0044) and DAAA09-98-0214 (RFP-0214), issued by the Department of the Army for explosives and a facility use contract for Holston Army Ammunition Plant (HSAAP), respectively. D&Z principally argues that the agency misevaluated the proposals, and made improper awards based on a defective price/technical tradeoff. We deny the protest. BACKGROUND Both solicitations were issued as two-step negotiated procurements. RFP-0044 sought proposals to award a fixed-price contract for RDX/HMX explosives and other products for 5 years. RFP-0214 sought proposals to award a fixed-price facility use contract for HSAAP for a 25-year period. The solicitations were issued together, contained, as amended, identical section M evaluation provisions, and provided that both contracts would be awarded to the same offeror. (For the sake of simplicity, we therefore will refer to the solicitations as a single RFP.)[1] The RDX/HMX products are used by all Department of Defense (DOD) services. Because of the unique nature of RDX/HMX, such as requiring large amounts of acid production and recycling, and the commonality of the RDX/HMX in numerous end item applications, RDX/HMX has been procured as a bulk item. AR, Tab E, at 3. Due to the large quantity of RDX/HMX necessary in wartime, HSAAP was constructed in the 1940's for the sole purpose of manufacturing large quantities of explosives. HSAAP has been operated as a government-owned, contractor-operated (GOCO) facility since its completion. Due to declining peacetime requirements for the RDX/HMX products, the agency found that the cost of maintaining HSAAP with only these requirements in production had become cost prohibitive to the Army and its customers. The agency therefore decided to solicit industry's expertise in finding a solution to its problem, that is, to "compete the problem." AR, Tab 1, at 3. On May 5, 1997, a pre-solicitation conference was held at which industry was provided with the definition of the "problem," a description of the proposed acquisition, a discussion of the requirements, both peacetime and replenishment,[2] a presentation on the availability of Armament Retooling and Manufacturing Support (ARMS) funding, and a description of the facility at HSAAP, among other things. The problem as defined at this conference remained the same throughout the final selection of the successful contractor. The problem had four parts: (1) peacetime requirements for RDX/HMX; (2) replenishment requirements for these items; (3) need for development of new formulations of explosives, defined as research and development (R&D); and (4) a plan for the HSAAP facility itself, comprised of approximately 6,000 acres of acid manufacturing and explosives finishing equipment and buildings. AR, Tab C. In response, contractors then furnished "concept papers," which were unique to each contractor. AR, Tab 1, at 3. Because of the uniqueness of the contractor approaches, the agency decided to "'cut' a competitive range," so the agency could logically handle unique performance-based contracts and still maintain a competitive basis. AR, Tab 1, at 4. Consequently, on August 1, 1997, the agency issued the first-step solicitation for the purpose of establishing a competitive range of the "technically acceptable offerors that will move on to the second and final step." AR, Tab F, at 2.