January 11, 1999
RAF Technologies, Inc.
Solicitation No. 102590-98-A-0140
Protest against award of optical character reader contract is denied. Contentions about awardee’s principal are unsupported; terms of protester’s licenses of software to Postal Service do not provide basis to challenge award; determination of awardee’s capability is not for review; and fact that awardee was not incorporated when offer was submitted does not preclude award.
RAF Technologies, Inc. (RAF) protests the award of a contract for Small Facility Optical Character Readers (SFOCRs). Solicitation 102590-98-A-0140 was issued by Automation Purchasing at Postal Service Headquarters on June 24, 1998, seeking five prototype SFOCR units, with an unpriced option for a Gray Scale Image Binarization Module.1
According to section M of the solicitation, award was to be made on the basis of best value, taking into account technical factors2 and price "of approximately equal importance." Two firms were solicited, RAF and Pacific Northwest Software, Inc. (PNS). Each submitted a proposal, and written and oral discussions were conducted with each offeror. Best and final offers were received and evaluated. As evaluated, each offer was "eminently satisfactory," but PNS had a slightly higher technical score. PNS’s price, $122,725, was substantially lower than RAF’s price, $745,564.
Award was made to PNS on September 3. RAF’s protest was dated and received September 14. The protest raises the following issues:
The award to PNS was improper because its price reflects only "the amount of the hardware cost associated with the contract, and does not include software or service costs," and is therefore unbalanced.
Washington state corporate records do not list a corporation named Pacific Northwest Software, Inc. Award cannot be made to the corporation, to the corporation’s principal, or to that principal’s other corporation.
Neither PNS nor its principal "have ever performed a contract, . . . they have no track record" and they cannot be found responsible.
PNS’s principal was terminated from RAF. He has made misrepresentations about it, and, as a substantial shareholder in RAF, has created a conflict of interest. He "has shown a pattern of violating [RAF’s] confidential information rights and intellectual property rights." (Elsewhere, the protest asserts that the "winning offer is believed to contain [RAF’s] proprietary and confidential information.")
Under previous contracts, RAF has provided software to the Postal Service with "limited rights" which the Postal Service can furnish to its contractors. RAF has a "reasonable fear" that PNS will damage RAF’s business through misuse of the software so provided.
RAF believes that PNS’s proposal may have misstated its principal’s work, background, and software development experience, inflating his experience and accomplishment.
The contracting officer’s statement includes the following points:3
The protester submitted comments on the contracting officer’s statement, including the following:
The contracting officer submitted a rebuttal to the protester’s submission which included the following:
Basic to the protest process is the principle that the protester has the burden of establishing its case affirmatively, and that in doing so it must overcome the "presumption of correctness" which accompanies the statements of the contracting officer.
International Business Machines Corporation, P.S. Protest No. 98-22, January 5, 1998. Here, the protester’s statements about PNS’s principal’s previous relationship with RAF, his violations of RAF’s rights, and the possibility that the proposal may have overstated his qualifications are mere allegations, unsupported by evidence of any kind. "Unsupported allegations . . . cannot amount to evidence necessary to sustain a protest." Frederick Manufacturing Co., Inc., P.S. Protest No. 88-03, March 25, 1988.
The protester’s fear that the award will result in a breach of its software license agreements with the Postal Service provides no basis for relief, since those agreements do not require RAF’s approval when the Postal Service provides its software to contractors pursuant to the agreements’ terms. If the information furnished is subsequently disclosed, the license agreements provide RAF’s remedy.
With the exception discussed below, the challenge to the contracting officer’s determination of responsibility4 is not for review. The well-established rule regarding determinations of responsibility (or, as here, capability), is that "[a]n affirmative determination of responsibility is a matter within the broad discretion of the contracting officer and is not subject to being overturned by this office in the course of a protest absent fraud, abuse of discretion, or failure to apply definitive responsibility criteria." See, e.g., Grand Rapids Label Company, Inc. P.S. Protest No. 96-22, January 31, 1997. Accordingly, the contention that PNS is not a capable offeror because of its corporate inexperience or because of its pricing is not for our review.
The protester’s contentions concerning the corporate identity of the offeror warrant somewhat more extended discussion. PNS’s proposal was submitted in the name of Pacific Northwest Software, Inc., and signed by its principal as President. In Section L of the solicitation, provision A-20, Type of Business Organization, was completed to reflect that the offeror "[o]perates as: a corporation incorporated under the laws of the state of Washington . . . [and as] a limited liability company."5 Elsewhere, the proposal reflected that "[PNS] has not done any business . . . . It was founded by [its principal] in order to provide contract software development such as required by this project."
The "firm bid rule" applicable to formally advertised (sealed bid) procurements requires that contracts only be awarded to an entity which has been bound by its bid to perform the work. However, as we have noted, "negotiated procurements [such as the one at issue here] involve a different issue; whether there has been an attempted transfer or assignment of a proposal other than as allowed by law" since the "firm bid rule" does not apply, and an offeror can withdraw its offer at any time Sheffield Press P&L, Inc., P.S. Protest No. 94-11, May 13, 1994.
In this case, award was made to the same entity which submitted its offer, so there is no question of attempted transfer or assignment. Nor, despite protester’s urgings, is there a question of misrepresentation in PNS’s submission of its offer in its corporate name prior to its incorporation. That submission reflected PNS’s principal’s intention of proceeding as a corporation, and the accomplishment of the incorporation coincident to the contract award accomplished that intention.
The protest is denied.
William J. Jones
Contract Protests and Policies
1 According to the Statement of Work, the contract work involves repackaging of a prototype coprocessor for installation in existing Carrier Sequence Bar Code Sorters, and the enhancement and modification of the coprocessor.
4 Although both the protester and the contracting officer have framed the issue in terms of "responsibility," under the Postal Service’s current purchasing regulation, the correct term is "capability." Supplier capability is a supplier-specific evaluation factor which is "evaluated in order to determine a supplier’s ability to perform upon award." Purchasing Manual (PM) 2.1.7.c.3.(a) While the key elements of supplier capability, set out at PM 2.1.7.c.3.(b), are similar to the key elements of responsibility as defined in the Postal Service’s previous purchasing regulations (see, e.g., Procurement Manual (Pub. 41) 3.3.1.b., the two terms differ in that capability is considered and established in the supplier-selection process (PM 2.1.5), while responsibility was considered and determined separately from the evaluation of offers prior to contract award (Pub. 41 3.3.1).
5 The identification of PNS as both a corporation and a limited liability company is, of course, internally inconsistent, since the terms describe different legal entities. Given that the offeror included in its name the term, "Inc." (an abbreviation for "incorporated") which Washington state law reserves for corporations, (RCW § 23B.04.010 (1)(a)) and that its principal indicated his title as President, a position appropriate to corporate status and not to status as an L.L.C., the inconsistency is immaterial. Cf. Zinger Construction Co., Inc., P.S. Protest No. 85-67, November 7, 1985.