BNUMBER:  B-261769
DATE:  September 5, 1995
TITLE:  Compugen, Ltd.

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Matter of:  Compugen, Ltd.

File:       B-261769

Date:       September 5, 1995
                                                            
David R. Johnson, Esq., and James C. Dougherty, Esq., Gibson, Dunn & 
Crutcher, for the protester.
Jeffrey H. Schneider, Esq., Epstein, Becker & Green, for MasPar 
Computer Corporation, an interested party.
Fred Kopatich, Esq., Department of Commerce, for the agency.
Guy R. Pietrovito, Esq., and James A. Spangenberg, Esq., Office of the 
General Counsel, GAO, participated in the preparation of the decision.
                                                            
DIGEST

In light of the decision in U.S. West Comms. Servs., Inc. v. United 
States, 940 F.2d 622 (Fed. Cir. 1991), the General Accounting Office 
(GAO) will no longer exercise jurisdiction over subcontract 
procurements "for" the government, in the absence of a request by the 
federal agency involved; nor will GAO consider a sole-source 
subcontract award to be "by a federal agency" so as to justify taking 
jurisdiction over a protest of the award, where the prime contractor, 
in evaluating the protester's proposal and determining to make a 
sole-source award to another firm, exercised substantial 
responsibility for the procurement such that the prime contractor 
could not be said to be a mere conduit for the agency.
                                                            
DECISION

Compugen, Ltd. protests the award of a sole-source subcontract to 
MasPar Computer Corporation by PRC, Inc. for a biotechnology sequence 
search computer system to be provided to the U.S. Patent and Trademark 
Office (PTO), Department of Commerce, under PRC's prime contract with 
PTO.

We dismiss the protest.

Since the early 1980s, PTO has sought to establish an automated patent 
system (APS), which would computerize all patent records and allow 
text retrieval.  To accomplish this, PTO has established a master 
plan, under which an outside contractor--the systems engineering 
integrator--would have the primary role of designing, testing, 
acquiring, and maintaining the APS.  In 1984, PTO awarded a 
cost-plus-award-fee, task order contract to PRC to be the APS systems 
engineering integrator.

The prime contract provided that the contractor would acquire 
automated data processing (ADP) resources in accordance with the 
policies and procedures of the Federal Information Resources 
Management Regulation, 41 C.F.R. Part 201-39.[1]  Under the prime 
contract, PTO would review and approve PRC's solicitation documents 
for APS system resources prior to release by PRC and, in this regard, 
PRC was required to prepare a source selection handbook and 
acquisition plan for each planned subcontract acquisition.  PTO 
reserved the right to have no more than two government observers 
attend meetings of PRC's evaluation or source selection evaluation 
boards; the contract provided that PTO's observers may ask questions 
but were not permitted to present their own evaluations or opinions.  
PTO also reserved the right to approve subcontract selections.

In 1994, PRC awarded a sole-source subcontract to MasPar for that 
firm's chemical sequencing similarity software system with associated 
hardware (the 1994 procurement).  Prior to the award of this 
sole-source subcontract, PTO prepared a sole-source justification for 
the issuance of a task order directing PRC to synopsize PTO's 
requirements for the computer system, inform potential sources of an 
intended sole-source subcontract award to MasPar, and acquire the 
MasPar system.  PTO's sole-source justification documented PTO's 
conclusion that "only MasPar Computer Corporation hardware and 
software provides the needed compatibility and most cost effective 
procurement alternative" and "that the MasPar . . . system, was the 
only available software and hardware currently available that can 
satisfy PTO's advanced sequence searching requirements."  On March 17, 
1994, PRC synopsized the sole-source subcontract award in the Commerce 
Business Daily (CBD).

In May 1994, Compugen contacted PTO regarding the agency's possible 
requirements for a biotechnology research computer system.  Compugen 
was informed that a MasPar computer system was being acquired by PRC 
for PTO under PRC's prime contract and pursuant to the March 1994 CBD 
announcement; Compugen was invited, however, to submit information on 
its system and was informed that "PTO's intent is simply to maintain 
an awareness of products that may be of use now or in the future."  
From May 1994 through March 1995, Compugen and PTO communicated 
regarding the capabilities of Compugen's system.

On April 5, PRC synopsized in the CBD its intent to award another 
sole-source subcontract to MasPar for a biotechnology sequence search 
computer system (the 1995 procurement).  The CBD announcement 
referenced Note 22, which invited interested persons to identify their 
interest and capability to respond to this requirement.  In this 
regard, the CBD notice provided that:

     "PRC requires that the vendor of any sequence similarity 
     searching software acquired must demonstrate that the products 
     have successfully operated as part of a sequence data base 
     searching service for public access.  Further, PRC requires that 
     any searching system acquired be fully compatible with existing 
     SPARC hardware, and SunOS 4.x/Solaris 2.x operating system 
     software at the USPTO.  This is required to ensure that the 
     existing hardware and software may continue to function as 
     components of the network used to access the sequence searching 
     software."

Compugen subsequently contacted PRC and submitted a proposal in 
response to the CBD announcement.  After PRC conducted discussions 
with Compugen concerning the capabilities of its offered computer 
system, PRC, by letter of May 31, informed Compugen that the firm's 
offered sequence search hardware and software did not meet PRC's and 
PTO's present needs.  Specifically, PRC stated that it and the 
government had already invested substantial resources in the MasPar 
system, and that introduction of Compugen's system would cause delays 
and require additional training.  In addition, PRC concluded that 
Compugen's system did not provide some of the features of the MasPar 
system that PTO required.  Compugen then filed this protest.

Commerce requests dismissal of Compugen's protest of the subcontract 
award because the procurement is not by a federal agency but by PRC 
under its prime contract with PTO.  Compugen responds that PRC's 
subcontract award was "by or for" the government and therefore we have 
jurisdiction to review this subcontract procurement.  

Under the Competition in Contracting Act of 1984 (CICA), our Office 
has jurisdiction to resolve bid protests concerning solicitations and 
contract awards that are issued "by a [f]ederal agency."  31 U.S.C.  
3551(l) (1988).  In the context of subcontractor procurements, we 
interpreted CICA as authorizing our Office to review protests where, 
as a result of the government's involvement in the award process or 
the contractual relationship between the prime contractor and the 
government, the subcontract in effect is awarded on behalf of the 
government, that is, where the subcontract is awarded "by or for the 
government."  See  4 C.F.R.  21.3(m)(10) (1995); see also Ocean 
Enters., Ltd., 65 Comp. Gen. 585 (1986), 86-1 CPD  479, aff'd, 65 
Comp. Gen. 683 (1986), 86-2 CPD  10.  Pursuant to this 
interpretation, we traditionally reviewed subcontractor selections 
that were "for" the government, where the subcontract awards concerned 
(1) subcontracts awarded by prime contractors operating and managing 
certain Department of Energy, or other agency, facilities; (2) 
purchases of equipment for government-owned, contractor-operated 
plants; and (3) procurements by certain construction management prime 
contractors.  Ocean Enters., Ltd., supra. 

Our review role of the award of subcontracts was called into question 
by U.S. West Comms. Servs., Inc. v. United States, 940 F.2d 622 (Fed. 
Cir. 1991), which held that under CICA the General Services 
Administration Board of Contract Appeals (GSBCA) did not have 
jurisdiction over protests of subcontract awards; the court of appeals 
held, construing statutory language basically identical to that 
applicable to our Office, that the GSBCA does not have jurisdiction 
over subcontract procurements that were conducted "for" a federal 
agency, in the absence of a showing that the prime contractor was a 
procurement agent, as defined by the Supreme Court in United States v. 
New Mexico, 455 U.S. 720 (1982), and the court of appeals in United 
States v. Johnson Controls, Inc., 713 F.2d 1541 (Fed. Cir. 1983).[2]

In response to this decision, we declined to review subcontract 
procurements conducted by Department of Energy management and 
operating prime contractors in the absence of a request by the agency 
that we do so.[3]  Geo-Centers, Inc., B-261716, June 29, 1995, 95-2 
CPD     .  Also in response to the U.S West decision and in the 
absence of any authorizing language in the recently enacted Federal 
Acquisition Streamlining Act of 1994, Pub. Law No. 103-355, Oct. 13, 
1994, we issued final revisions to our Bid Protest Regulations 
confirming that we review of protests of subcontract awards only upon 
the written request of the federal agency that awarded the prime 
contract.  See 60 Fed. Reg. 40,742-743 (1995) (to be codified at 4 
C.F.R.  21.5(h), 21.13(a)).[4]  The protester here has not persuaded 
us that our view of the applicable law is erroneous.  Accordingly, in 
the absence of a request by the federal agency concerned, we decline 
to take jurisdiction of this subcontract procurement "for" the 
government.

Compugen also asserts that we should take jurisdiction in any event 
because the agency's involvement is so pervasive that PRC is in effect 
merely a conduit for PTO and therefore this procurement is "by" the 
government.[5]  We have reviewed subcontract procurements where the 
government's involvement in the award process is so pervasive that the 
subcontract is in effect awarded "by" the government.  We have 
considered a subcontract procurement to be "by" the government where 
the agency handles substantially all the substantive aspects of the 
procurement, leaving to the prime contractor only the procedural or 
ministerial aspects of the procurement, i.e., issuing the subcontract 
solicitation and receiving proposals.  See St. Mary's Hosp. and 
Medical Center of San Francisco, California, 70 Comp. Gen. 579 (1991), 
91-1 CPD  597; University of Michigan; Indus. Training Sys. Corp., 66 
Comp. Gen. 538 (1987), 87-1 CPD  643.  On the other hand, we have 
found subcontractor procurements were not "by" the government, even 
where the agency effectively directed the subcontractor selections, 
where the prime contractor handled other meaningful aspects of the 
procurement.  See ToxCo, Inc., 68 Comp. Gen. 635 (1989), 89-2 CPD  
170; Kerr-McGee Chemical Corp., B-252979, May 3, 1993, 93-1 CPD  358, 
aff'd, B-252979.2, Aug. 25, 1993, 93-2 CPD  120.

Here, the record establishes that PRC retained substantial 
responsibility for the conduct of the 1995 subcontract procurement, 
such that it did not act as a mere conduit for the government.  
Although Compugen argues that PRC does not have the expertise to 
evaluate the sophisticated system that is to be acquired;[6] that PRC 
did not comply with the documentation requirements of its prime 
contract for conducting APS resource procurements; and that the agency 
directed PRC to award a sole-source contract to MasPar in 1994,[7] we 
find none of these factors establishes that PRC acted as only a 
conduit for the agency.  The evidence in the record, including the 
affidavits provided for PRC and agency personnel, establishes that it 
was PRC, and not the agency, which received and evaluated Compugen's 
proposal in response to the April 1995 CBD announcement and which 
determined that award should be made to MasPar.  Specifically, PRC 
conducted all the discussions with Compugen regarding the 
acceptability of its proposal in response to the 1995 CBD 
announcement,[8] and the only contemporaneous evaluation documentation 
in the record is PRC's letter to Compugen detailing PRC's reasons for 
rejecting Compugen's proposal.  In addition, the affidavits of PRC's 
and the agency's personnel evidence that PRC acted in more than a 
ministerial way in making this subcontract award and that, consistent 
with the PRC contract, the agency was not actively involved in the 
evaluation and source selection.  In sum, the record indicates that 
PRC's involvement in the procurement is more than that of a mere 
conduit for the government, and we therefore find that this 
procurement is not, in effect, by the government.  See ToxCo, Inc., 
supra.

The protest is dismissed.

      /s/ Ronald Berger
      for Robert P. Murphy
          General Counsel 

1."ADP resources" are defined by the contract as ADP equipment, 
commercially available software, maintenance services, and related 
supplies.

2. Compugen argues that PRC under this contract satisfies the tests 
set out in New Mexico and Johnson Controls, so as to be considered a 
procurement agent for the purposes of this procurement.  Those 
decisions held that, to be considered a procurement agent, the prime 
contractor must be (1) acting as a purchasing agent for the 
government; (2) the agency relationship between the government and the 
prime contractor must be established by clear contractual consent; and 
(3) the contract must state that the government would be directly 
liable to vendors for the purchase price.  See 455 U.S. at 742; 713 
F.2d at 1551-52.  Here, there is no evidence that the prime contract 
established an agency relationship between PRC and the agency or 
provided that the government was directly liable to 
vendors/subcontractors for the purchase price.

3. The Department of Energy revised its regulations, effective June 2, 
1995, to eliminate language providing for our bid protest review of 
its management and operating contractor procurements.  See 60 Fed. 
Reg. 28,737 (1995).

4. These revisions will become effective October 1, 1995.

5. Compugen also argues, citing our decision in Premiere Vending, 
B-256560, July 5, 1994, 94-2 CPD  8, that we will take jurisdiction 
over a subcontract procurement where a protester merely alleges that 
the government is using a prime contractor as a conduit to evade the 
competition requirements of CICA.  Compugen misreads this decision.  
In Premiere Vending, we considered whether a non-appropriated fund 
instrumentality--an employees club of the Federal Bureau of 
Prisons--in conducting a procurement was acting as a conduit for the 
agency in order to circumvent the requirements of CICA; we found that 
the employees club was not acting as a conduit for the agency and did 
not review the merits of the protest.

6. We do not find that PRC lacks the expertise to evaluate the 
biotechnology sequence search system that is being acquired by PRC.

7. The relationship and conduct of the agency and PRC in 1994 with 
respect to the acquisition of the MasPar equipment does not ipso facto 
establish, as Compugen asserts, that PRC is acting as a conduit for 
the agency in 1995, even assuming the agency directed PRC to acquire 
MasPar equipment in 1994.  Compugen did not timely protest the 1994 
acquisition of the MasPar equipment.

8. The affidavit of Compugen's director of marketing confirms that 
after the April 5, 1995 CBD announcement, PTO's only communications 
with Compugen regarding that firm's offered system were to inform 
Compugen that PRC was conducting the procurement, that PRC was acting 
in its own capacity as a private company, and that Compugen should 
have received notice from PRC that PRC was making award to MasPar.