Comptroller General

United States Government Accountability Office

Washington, DC 20548 

of the United States

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 

Matter of: Northeast Military Sales, Inc. 

File: B-404153 

Date: January 13, 2011 

Ira E. Hoffman, Esq., Shulman, Rogers, Gandal, Pordy & Ecker, PA, for the protester. 

Helen J. S. White, Esq., Department of Defense, for the agency. 

Pedro E. Briones, Esq., and Guy R. Pietrovito, Esq., Office of the General Counsel, 

GAO, participated in the preparation of the decision. 

DIGEST 

An agency’s assessment of awardee’s past performance as exceptional was not 

reasonable where the agency failed to consider adverse past performance 

information of which it was aware. 

DECISION 

Northeast Military Sales, Inc. (NEMS), of Sterling, Massachusetts, protests the award 

of a contract to Nayyarsons Corporation, of Williston Park, New York, under request 

for proposals (RFP) No. HDEC02-10-R-0005 issued by the Department of Defense, 

Defense Commissary Agency (DeCA), for deli and bakery resale operations. NEMS 

broadly challenges the agency’s technical, past performance, and price evaluations, 

as well as the adequacy of discussions. 

We sustain the protest. 

BACKGROUND 

The RFP, issued on June 22, 2010, provided for the award of a requirements-type, 

fixed-price-award-term contract for deli and bakery resale operations at six 

commissaries in DeCA’s Great Lakes Cluster/East Region for a 2-year base period 

with two 1-year option periods and four 1-year award term periods. See RFP 

at 1-3, 27, 37. The contractor is required to provide commissary customers with a 

core list of deli and bakery food items at costs below those of the same or similar 

items from comparable commercial supermarkets (excluding membership clubs, 

specialty stores, and convenience stores) within 10 miles of each commissary. See

id. at 3; Performance Work Statement at 46. The agency will provide the contractor 
with operating space, equipment, supplies, utilities, and storage. See Agency Hearing 

Comments at 1.1

Offerors were informed that award would be made on a best value basis considering 

the following evaluation factors: technical capability, past performance, and price. 

RFP at 14-15. The RFP stated that the technical capability factor was significantly 

more important than past performance and, when combined, the technical capability 

and past performance factors were significantly more important than price. The 

technical capability factor included the following five subfactors: customer 

satisfaction; increasing sales; continuing customer savings; quality assurance 

program; and transition approach (the first four subfactors were of equal weight and 

significantly more important than the transition approach subfactor). The past 

performance factor included the following two equally weighted subfactors: quality 

history/overall customer satisfaction, and business relations. 

With regard to the technical capability factor, offerors were required to describe 

their practices for increasing sales, including marketing strategies and adjusting to 

customer demographics, and propose a percentage of combined deli and bakery 

sales increases per commissary. See id. at 13. Offerors were informed that the 

increased sales percentage would be calculated using the previous year’s sales as a 

base and, in this regard, the RFP provided offerors with historical sales data, namely, 

monthly sales data from each commissary for the prior year. See RFP amend. 3, 

attach. 3, Deli/Bakery & Commissary Historical Sales Data. The RFP provided that 

the proposed percentages of increased sales would be incorporated into the contract 

and considered in making future award term decisions. Offerors were also 

instructed to describe their long-term approach to continuing customer savings, their 

quality assurance process, and their transition approach. 

With regard to past performance, offerors currently performing contracts for DeCA 

were permitted, but not required, to provide references from outside the agency. 

See RFP at 11. Non-DeCA contractors were required to provide past performance 

information on three to five contracts and/or subcontracts completed during the last 

3 years, or currently in progress, that are similar in nature to the requirements of the 

solicitation and that demonstrate the offerors’ ability to perform the services sought. 

With regard to the price factor, offerors were instructed to provide their proposed 

customer savings for core items. Id. at 3. The savings were to be proposed as a 

discount percentage. The RFP provided that the proposed discount percentage 

would be assessed for realism in relation to the total requirements of the solicitation 

and the offeror’s technical proposal. 

 

1

 Our Office conducted a telephone hearing to receive testimony from the contracting 

officer (CO), who was the source selection authority for this procurement, regarding 

the agency’s evaluation and source selection decision. 

Page 2 B-404153 
DeCA received five proposals, including those from Nayyarsons and NEMS. CO’s 

Statement at 2. The agency’s technical evaluation team rated proposals by assigning 

both points and adjectival ratings.2 AR, Tab 5, Decision Summary, at 3, 14. With 

respect to the past performance subfactors, proposals were rated as either 

exceptional (19-20); very good (15-18); satisfactory (8-14); marginal (1-7); or 

unsatisfactory (0). An exceptional rating reflected past performance “accomplished 

with few minor problems for which corrective actions taken by the contractor were 

highly effective.”3 Id. at 4. 

The agency established a competitive range of four proposals, including those of 

Nayyarsons and NEMS, and conducted discussions with those offerors. At the 

conclusion of discussions and after receipt of revised proposals, the evaluation 

results for protester and awardee were as follows: 

NEMS Nayyarsons 

Customer satisfaction 23 / VG 24 / E 

Increasing sales 23 / VG 23 / VG 

Continuing customer savings 23 / VG 23 / VG 

Quality assurance program 21 / VG 25 / E 

Transition approach 8 / VG 9 / E 

OVERALL TECHNICAL CAPABILITY 98 104 

Quality history / overall customer satisfaction 19 / E 19 / E 

Business relations 19 / E 19 / E 

OVERALL PAST PERFORMANCE 38 38 

AR, Tab 5, Decision Summary, at 14. 

 

2

 The evaluation team was to be comprised of two program managers and a quality 

assurance food specialist. See Agency Report (AR), Tab 14, Evaluation Plan. 

Ultimately, one of the program managers was unable to participate in the evaluation 

of proposals, and the quality assurance food specialist only participated in the 

evaluation of Nayyarsons’ proposal. See Hearing Transcript (Tr.) at 23-26. The 

agency proceeded with the evaluation of technical proposals to keep the 

procurement “on track” and because the agency did not have “back-up” evaluators 

with relevant expertise. See id. at 25. 

3

 With respect to the technical capability subfactors for customer satisfaction, 

increasing sales, continuing customer savings, and quality assurance program, 

proposals were rated as either exceptional (24-25), very good (20-23), satisfactory 

(11-19), marginal (1-10), or unsatisfactory (0). With respect to the technical 

capability subfactor for transition approach, proposals were rated as either 

exceptional (9-10), very good (7-8), satisfactory (4-6), marginal (1-3), or 

unsatisfactory (0). 

Page 3 B-404153 
NEMS proposed customer savings of [DELETED] percent and sales increases, 

ranging, by commissary, between [DELETED] percent in the first base year, to 

between [DELETED] percent in the fourth award term. See NEMS’ Proposal, vol. 1, 

at 4-7; vol. 2, at 54. Nayyarsons proposed customer savings of [DELETED] percent 

and sales increases of [DELETED] percent or more at five of the six commissaries 

through both option years and all award terms.4 See Nayyarsons’ Proposal, vol. 1, 

at 4-7; vol. 2, at 17. 

The CO evaluated the offerors’ prices, that is, their proposed customer savings 

discount percentages. See AR, Tab 5, Decision Summary, at 14-21; Tab 8, Price 

Evaluations. She found that Nayyarsons’ proposed customer savings were realistic, 

namely, that Nayyarsons’ proposed discount percentage was in line with its technical 

proposal. See Tr. at 8, 15. The CO also found that Nayyarsons’ exceptional technical 

and past performance ratings indicated the firm’s thorough understanding of the 

solicitation requirements. AR, Tab 5, Decision Summary, at 23. The CO determined 

that Nayyarsons’ proposal provided the best overall value. Award was made to 

Nayyarsons, and this protest followed. Performance of the contract has been 

suspended pending our decision in this matter. 

DISCUSSION 

NEMS contends, among other things, that the agency ignored adverse past 

performance information concerning the awardee’s performance at a number of 

DeCA commissaries. See Protest at 5; Comments at 9-12; Protester’s Hearing 

Comments at 6. 

The record here shows that the technical evaluation team received past performance 

information from DeCA commissaries and from two other federal agencies.5 See AR, 

Tab 9, Past Performance Information, at 92-185. Although this information included 

a number of favorable comments regarding Nayyarsons’ past performance, e-mails 

from several DeCA commissaries also indicated that Nayyarsons had a number of 

performance problems. Specifically, the evaluation team was provided with e-mails 

from various commissaries which reported staff and product shortages during 

transition periods; unsanitary conditions; employee tardiness and cleanliness; and 

problems with sushi, including use of expired products and pre-dating products. 

See, e.g., id. at 147-48 (June 25 e-mail reporting “serious problems” with sushi at 

 

4

 Nayyarsons’ proposal also states that, in the past 5 months, the firm “increased 

sales overall in [its DeCA commissary] accounts an average of 7.67 percent” and that 

“[i]n June 2010 we enjoyed an overall increase of 12.14 [percent]” by introducing new 

products and programs. See Nayyarsons’ Proposal, vol. 2, at 16. 

5

 Nayyarsons first began providing delivery/bakery services at DeCA commissaries in 

February 2010. See CO’s Statement at 10; Tr. at 12. 

Page 4 B-404153 
Memphis commissary which “nee[d] to be addressed immediately”); 145-46 (July 15 

e-mails reporting an “ongoing problem” and that “there are still significant issues” 

with sushi at Memphis commissary); 154 (July 18 e-mail reporting problems “once 

again” with sushi at Scott AFB). 

As a general matter, the evaluation of an offeror’s past performance is within the 

discretion of the contracting agency, and we will not substitute our judgment for 

reasonably based past performance ratings. See MFM Lamey Group, LLC, B-402377, 

Mar. 25, 2010, 2010 CPD ¶ 81 at 10. While we have recognized that such judgments 

are often subjective by nature, the exercise of these judgments in the evaluation of 

proposals must be documented in sufficient detail to show that they are not 

arbitrary. That is to say, in order for us to review an agency’s evaluation of 

proposals, an agency must have adequate documentation to support its judgment. 

Northeast MEP Servs., Inc., B-285963.5 et al., Jan. 5, 2001, 2001 CPD ¶ 28 at 7. See

American President Lines, Ltd., B-236834.3, July 20, 1990, 90-2 CPD ¶ 53 at 6. 

Where a protester challenges the past performance evaluation and source selection, 

we will review the evaluation and award decision to determine if they were 

reasonable and consistent with the solicitation’s evaluation scheme and 

procurement statutes and regulations, and to ensure that the agency adequately 

documented the basis for the selection. Wackenhut Servs., Inc., B-400240, 

B-400240.2, Sept. 10, 2008, 2008 CPD ¶ 184 at 6; S4, Inc., B-299817, B-299817.2, 

Aug. 23, 2007, 2007 CPD ¶ 164 at 9. When an agency fails to document or retain 

evaluation materials, it bears the risk that there may not be adequate supporting 

rationale in the record for us to conclude that the agency had a reasonable basis for 

its source selection decision. Southwest Marine, Inc.; American Sys. Eng’g Corp., 

B-265865.3, B-265865.4, Jan. 23, 1996, 96-1 CPD ¶ 56 at 10.6

The contemporaneous record here shows no consideration by the technical 

evaluation team or the CO of the awardee’s recent performance problems identified 

in these e-mails. Rather, the evaluation team rated Nayyarsons’ proposal 

“exceptional” for each of the two past performance subfactors, despite the team’s 

receipt of numerous e-mail reports of problems with Nayyarsons’ performance.7

 See

 

6

 Moreover, while we consider the entire record in a protest, including the parties’ 

later explanations and arguments, we accord greater weight to contemporaneous 

evaluation and source selection material than to arguments and documentation 

prepared in response to protest contentions. Southwest Marine, supra. 

7

 The evaluators’ notes also state that no problems or issues were presented to the 

technical evaluation team and that no negative comments were found in the offeror’s 

past performance file. AR, Tab 9, Evaluators’ Notes, at 89-91. (The evaluators also 

noted that Nayyarsons proposed expanding sushi products to other commissaries. 

Id. at 83, 85.) 

Page 5 B-404153 
AR, Tab 9, Past Performance Information, at 89-92. Moreover, the record shows that 

several of the e-mails identifying problems with Nayyarsons’ performance were 

originally addressed to the CO here, and, during the hearing, the CO testified that she 

reviewed all of the information that was provided to the evaluation team. See, e.g., 

id. at 132, 145, 148, 150-54 (e-mail reports of awardee’s adverse past performance 

addressed to CO); Tr. at 74. 

In our view, Nayyarsons’ past performance rating is inconsistent with the agency’s 

stated rating scheme, which provided that an “exceptional” rating would only be 

assigned for past performance reflecting few minor problems for which corrective 

actions taken by the contractor were highly effective. As discussed above, nothing 

in contemporaneous record shows that the agency considered whether the firm in 

fact took effective steps to correct the performance problems reported by DeCA 

commissaries.8 See AR, Tab 9, Evaluators’ Notes, at 75-91; Tab 5, Decision Summary, 

at 1-23. For example, the record shows that the Memphis commissary reported 

serious problems with Nayyarsons’ sushi products on June 25, but that significant 

problems with sushi were ongoing as of July 15. The record also shows that on 

July 18, the commissary at Scott AFB reported renewed problems with Nayyarsons’ 

sushi products. 

Based on this record, we conclude that the agency ignored adverse past performance 

information and--in assigning a past performance rating of exceptional to the 

awardee--deviated from the agency’s evaluation scheme. See G. Marine Diesel, 

B-232619.3, Aug. 3, 1989, 89-2 CPD ¶ 101 at 6-7 (protest sustained where agency 

ignored awardee’s performance problems); Apptis, Inc., B-299457, et al., May 23, 

2007, 2008 CPD ¶ 49 at 11 (evaluation cannot be determined to be reasonable where 

record lacks documentation that agency considered deficiencies in awardee’s 

proposal); Midland Supply, Inc., B-298720.3, May 14, 2007, 2007 CPD ¶ 104 at 5-6 

(past performance evaluation unreasonable and inconsistent with awardee’s record 

and agency’s rating scheme); International Bus. Sys., Inc., B-275554, Mar. 3, 1997, 

97-1 CPD ¶ 114 at 5 (past performance information too close at hand for agency to 

fail to consider the information). Accordingly, we sustain the protest on this basis. 

NEMS raises a number of other protest grounds, which we considered, but find no 

basis to sustain.9

 For example, NEMS complains that the agency did not analyze 

 

8

 To the extent that the CO testified that the awardee took timely and appropriate 

actions to address sushi problems at one commissary, her testimony did not show 

that she considered all of Nayyarsons’ past performance problems or whether 

Nayyarsons’ proposed improvements were effective. See Tr. at 65-66. 

9

 In addition, the protester challenges the agency’s evaluation of NEMS’ proposal 

under the quality assurance and transition approach subfactors, as well as the 

adequacy of discussions. See, e.g., Protest at 5; Comments at 6, 8-9. The protester 

also complains that the agency did not verify the awardee’s business size status; that 

(continued...) 

Page 6 B-404153 
whether Nayyarsons’ proposed percentages of increased sales were viable, or verify 

the claims of recent increases in sales. See Comments at 7; Protester’s Hearing 

Comments at 9. 

The agency disputes NEMS’ complaint. The CO states that she evaluated the 

awardee’s proposed percentages of increased sales, including for the latter years, by 

comparing the percentages to other contractors’ performance over the last 3 years. 

See Agency Hearing Comments at 3-4; Tr. at 50-56. In this regard, the CO stated that 

she found that some contractors far exceeded Nayyarsons’ proposed [DELETED] 

percent increases, for example, by changing product lines, using innovative 

marketing strategies and subject matter experts, and improving processes. See CO’s 

Supp. Statement at 2; Tr. at 50. The CO also testified that the technical factors 

overlap and contribute to sales increases. See Tr. at 62-64. In this respect, the CO 

stated that she considered customer service and quality assurance factors in 

evaluating Nayyarsons’ proposed increased sales. With regard to Nayyarsons’ claims 

of recent increased sales, the CO stated that these claims were not given a lot of 

weight because the agency does not average sales growth across stores to evaluate 

sales projections.10 See id. at 48-52; CO’s Supp. Statement at 2. In this respect, the 

agency points out that the awardee averaged its supposed sales increase at all 37 

commissaries under its two DeCA contracts. See Supp. AR at 4. 

We find that the agency’s evaluation of Nayyarsons’ proposed increased sales was 

reasonable and consistent with the RFP’s stated evaluation criteria. As discussed 

above, the RFP required offerors to describe their practices for increasing sales, 

including marketing strategies and adjusting to customer demographics. The RFP 

 

(...continued) 

the awardee did not submit a small business subcontracting plan; and that the 

awardee’s North American Industry Classification Code and non-DeCA past 

performance are not relevant to the solicitation requirements. We reviewed these 

protest grounds and find them to have no merit. 

10 During the hearing, the CO testified that she evaluated NEMS’ proposed increased 

sales by, among other things, comparing DeCA-generated monthly sales reports, but 

that such reports were not reliable for Nayyarsons’ commissaries because of 

computer software problems. See Tr. at 53-58. However, the agency states that the 

monthly sales reports are generally used for purposes of award term packages to 

determine whether incumbent contractors met or exceeded their projected 

increased sales. See id. at 52-62 Supp. AR at 5. In this respect, the agency points out 

that Nayyarsons began performing as a DeCA contractor in February 2010, and did 

not have any award term packages as of this solicitation. See id. Moreover, the 

agency points out that, because NEMS is the incumbent contractor for the cluster of 

stores under this solicitation, the agency has sales data and award term evaluations 

since the beginning of NEMS contracts. 

Page 7 B-404153 
also informed offerors that the increased sales percentage would be calculated using 

historical sales data provided in the RFP. In this respect, Nayyarsons proposed a 

number of methods to increase sales, including take-out services; daily specials; new 

products; discounts for frequent purchases; internet and print advertising; nutritional 

labeling and analysis by a dietitian; hot soups; baked goods; rotisserie, smoked and 

barbequed meats; and prepared holiday meals for families. See Nayyarsons’ 

Proposal, vol. 2, at 17-18. Here, the contemporaneous evaluation record shows that 

the agency considered such factors in evaluating the awardee’s proposed increases 

in sales. See, e.g., AR, Tab 5, Decision Summary, at 18 (Nayyarsons’ proposal for 

internet and faxing for placing orders; internet advertising; customer taste panels; 

cooking classes; and regular as well as seasonal promotions); Tab 9, Evaluators’ 

Notes, at 83-84 (Nayyarsons’ proposed take-out concept; dietician; soups; and 

holiday meals). 

With regard to the protester’s challenge of the agency’s price realism analysis, we 

find that the analysis was reasonable and consistent with the RFP’s evaluation 

criteria. The CO testified that she conducted price realism analyses by considering 

each offeror’s technical proposal and whether the offeror could accomplish what 

“they said they were going to do.” See Tr. at 8-11; see, e.g., AR, Tab 5, Decision 

Summary, at 17-18. In this regard, her decision was based on her institutional 

knowledge of deli/bakery operations and what other contractors had done. See RFP 

at 3; see, e.g., Mark G. Anderson Consultants, B-403250, B-403250.2, Oct. 7, 2010, 2010 

CPD ¶ 241 at 6 (nature and extent of agency’s price realism analysis a matter of 

agency discretion and GAO’s review limited to determining whether analysis was 

reasonable and consistent with solicitation’s evaluation criteria). 

Although NEMS disagrees with the agency’s technical and price evaluations, the 

protester’s disagreement does not demonstrate that the agency’s judgments with 

regard to those factors were unreasonable. 

RECOMMENDATION 

We recommend that the agency reevaluate Nayyarsons’ past performance consistent 

with our decision and make a new source selection determination. If, upon 

reevaluation of proposals, another offeror’s proposal is found to offer the best value 

to the government, DeCA should terminate Nayyarsons’ contract for convenience of 

the government and make award to that other firm. We also recommend that NEMS 

be reimbursed the costs of filing and pursuing the protest, including reasonable 

Page 8 B-404153 
Page 9 B-404153 

attorneys’ fees. Bid Protest Regulations, 4 C.F.R. § 21.8(d)(1) (2010). NEMS should 

submit its certified claims for costs directly to the contracting agency within 60 days 

after receipt of this decision. Id., § 21.8(f)(1). 

The protest is sustained. 

Lynn H. Gibson 

General Counsel