BNUMBER:  B-265751.2
DATE:  January 18, 1996
TITLE:  Better Service

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Matter of:Better Service

File:     B-265751.2

Date:     January 18, 1996

Daniel A. Weiss for the protester.
Turhan E. Robinson, Esq., General Services Administration, for the 
agency.
Scott H. Riback, Esq., and John M. Melody, Esq., Office of the General 
Counsel, GAO, participated in the preparation of the decision.

DIGEST

1.  Protest against agency's bundling of copier machine service for 
government-owned machines with sales of copiers under a federal supply 
schedule solicitation is sustained where the agency has not shown that 
the bundling is necessary for it to meet its minimum needs.

2.  Protest against agency's deletion of a clause requiring 
manufacturers awarded a federal supply schedule (FSS) contract to sell 
spare parts to service vendors under the FSS is denied; agency is not 
required to compel copier machine vendors to sell parts to service 
vendors.

DECISION

Better Service protests the terms of request for proposals (RFP) No. 
FCGR-92-0041-N, issued by the General Services Administration (GSA) to 
allow an open season for adding vendors to its multiple award federal 
supply schedule (FSS) for the purchase, rental, maintenance, repair 
and lease-to-purchase of photocopiers, supplies and accessories.  
Better Service argues that the solicitation improperly requires firms 
to offer photocopier sales in connection with an offer to provide 
maintenance and repair service for government-owned equipment.  Better 
Service also contends that GSA improperly deleted a solicitation 
provision requiring manufacturers of photocopier equipment receiving 
award of an FSS contract to make spare parts available at reasonable 
prices to FSS vendors providing maintenance and repair services.  

We sustain the protest in part and deny it in part.

BUNDLING OF SALES AND SERVICE

At issue in this case are two solicitation provisions that Better 
Service maintains are unduly restrictive of competition.  The first 
provision requires firms offering repair and maintenance services for 
government-owned equipment to also offer copier machines for sale; 
firms are essentially required to offer sales and service as a total 
package, and are thus precluded from offering only repair and 
maintenance service.

Because procurements conducted on a bundled or total package basis can 
unduly restrict competition, we will sustain a challenge to the use of 
such an approach where it is not necessary to satisfy the agency's 
minimum needs.  National Customer Eng'g, 72 Comp. Gen. 132 (1993), 
93-1 CPD  para.  225.

GSA does not dispute that its bundling approach reduces competition 
and, specifically, precludes the protester and similarly situated 
firms from competing.  It contends only that applicable regulations 
require multiple award schedule contracts to be national in scope and 
that such contracts are more efficient for user agencies and permit 
GSA to negotiate more favorable prices initially.   The record does 
not show, however, and it is not apparent to us, how separating the 
sales requirement from the service requirement would inhibit GSA's 
ability to negotiate favorable contracts for repair and maintenance on 
a national basis.  It would seem that the only direct result of 
separating the requirements would be to have two, instead of one, 
national scope acquisitions.  Better Service states that it is fully 
prepared to offer national coverage for repair and maintenance.

GSA contends that separating these two requirements will increase the 
number of offers to be evaluated and the number of contracts to be 
administered, thus resulting in a significant duplication of effort.  
GSA's contention in this regard, however, does not justify bundling 
the two requirements.  First, GSA has presented no evidence showing 
that any expected additional contracts would involve significant 
additional cost to the government.  See  Richard M. Milburn High Sch., 
B-244933, Nov. 27, 1991, 91-2 CPD  para.  496.  Further, the fact that 
bundling will be more administratively convenient is insufficient to 
support this inherently restrictive approach.  Id.  When concerns of 
administrative convenience are being weighed against ensuring full and 
open competition, the Competition in Contracting Act (CICA), 41 U.S.C.  sec.  
253 et seq. (1994), and its implementing regulations require that the 
scales be tipped in favor of ensuring full and open competition.  
National Customer Eng'g, supra.

GSA also contends that having repair and maintenance service as a 
"natural complement" to sales makes it easier for user agencies to 
purchase a total package of both sales and service and avoid having to 
obtain the two separately.  At the same time, GSA contends, because 
the repair and maintenance service line items of this FSS contract are 
nonmandatory, agencies can elect to purchase their service 
requirements separately; the protester thus is not precluded from 
competing for the service aspects of the requirement outside of the 
FSS program.

Again, it is not apparent to us why combining these requirements makes 
it easier in any significant way for user agencies to purchase their 
requirements from the schedule.  It would seem to be no more 
difficult, and involve no significant additional administrative effort 
or cost, to simply place an order for purchase or lease with one 
vendor and an order for service with another vendor.  The agency's 
position also ignores the fact that agencies will not be purchasing 
machines when they merely require maintenance or repair of equipment 
already owned by the government; bundling the requirement will not 
facilitate the purchase of such services.  GSA has offered no 
explanation of why it is necessary for agencies to obtain their 
service requirements from vendors that also happen to offer copier 
machines for sale.  In fact, allowing vendors to contract separately 
for services under the schedule would provide the user agency more 
choice as to how to meet its requirements--since it would not be bound 
to use the same vendor for sales and service--and the presence of 
additional vendors could result in a wider range of prices for these 
services.  In any case, administrative convenience is not a proper 
basis for restricting competition.  National Customer Eng'g, supra.

Additionally, the fact that the protester may be able to compete for 
some agency service requirements outside of the FSS does not eliminate 
the need to ensure full and open competition under the FSS contract.  
Even if the agency is correct that there will be competitions outside 
the FSS, the FSS contract represents a key source of government 
contracting business (GSA reports that in fiscal year 1995, repair and 
maintenance service requirements had a value of $122,341,886).   In 
this regard, FAR  sec.  8.001 encourages agencies to use nonmandatory FSS 
contracts, and it is easier for user agencies to contract with 
schedule vendors than to conduct a new competition since technical 
acceptability and vendor responsibility have already been determined 
by GSA.  Thus, only by being on the schedule can vendors benefit from 
the large numbers of federal agency requirements met under the FSS. 

Finally, GSA contends that combining sales with service is reasonable 
because it enables the agency to find that sales rather than service 
is the primary purpose of the contract.  This is important, according 
to GSA, because it means that the requirements of the Service Contract 
Act (SCA), 41 U.S.C.  sec.  451 et seq., are inapplicable to the 
requirements being purchased.  GSA maintains that if it separates 
sales from service, the terms of the SCA will clearly apply to the 
service portion of the requirement, and GSA will be required to obtain 
a prevailing wage rate determination from the Department of Labor 
(DOL).   

This essentially is an administrative convenience argument.  There is 
no legal authority permitting agencies to bundle their procurements in 
order to avoid the administrative burdens associated with complying 
with the SCA and, as already discussed, mere administrative 
convenience is not a basis for structuring a procurement in a manner 
which restricts competition.

In view of the foregoing, we sustain Better Service's protest on this 
basis.

AVAILABILITY OF SPARE PARTS CLAUSE

Better Service also protests the agency's deletion of another clause 
that essentially requires manufacturers of copier equipment to make 
spare parts available to FSS service vendors at a reasonable price.  
The record shows that the clause was originally included in the RFP by 
mistake, and was subsequently removed by GSA.  Better Service contends 
that the clause should be included in the RFP because it will enable 
it to obtain the spare parts it needs to effectively perform the 
repair and maintenance services called for under the solicitation.  
However, while Better Service may have a limited ability to obtain 
spare parts from certain manufacturers, GSA is not required by any 
applicable statute or regulation to compel manufacturers to furnish 
parts to a competing service vendor.   See Group Technologies Corp.; 
Electrospace Sys., Inc., B-250699 et al., Feb. 17, 1993,  93-1 CPD  para.  
150 (agencies are not required to eliminate competitive advantage 
certain firms may enjoy where the advantage has not resulted from 
government action).  We therefore deny this aspect of Better Service's 
protest.

In view of the foregoing, we are by separate letter of today to the 
Administrator of General Services recommending that the agency amend 
the solicitation to delete the requirement that a firm offer copier 
sales in order to offer maintenance and repair services.  We also find 
Better Service entitled to the costs of filing and pursuing its 
protest, including reasonable attorneys' fees.  4 C.F.R.  sec.  21.6(d) 
(1995).  In accordance with 4 C.F.R.  sec.  21.6(f), Better Service should 
submit its certified claim for these costs, detailing the time 
expended and the costs incurred, to the agency within 60 days of its 
receipt of our decision.

The protest is sustained in part and denied in part.

Comptroller General
of the United States