BNUMBER:  B-270632.2
DATE:  June 12, 1996
TITLE:  International Business Systems, Inc.

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Matter of:International Business Systems, Inc.

File:     B-270632.2

Date:June 12, 1996

Michael A. Hordell, Esq., Gadsby & Hannah, for the protester.
Jane Converse, Esq., and Dennis Foley, Esq., Department of Veterans 
Affairs, for the agency.
Behn Miller, Esq., and Christine S. Melody, Esq., Office of the 
General Counsel, GAO, participated in the preparation of the decision.

DIGEST

Correction of offeror's insertion of an improper quantity figure in 
request for proposal line items does not warrant reopening of 
discussions since matter is properly correctable through the 
clarification process. 

DECISION

International Business Systems, Inc. (IBSI) protests the agency's 
proposed action under request for proposals (RFP) No. 101-21-95, 
issued by the Department of Veterans Affairs (VA) for the installation 
of a replacement telecommunications system at the VA Medical Center in 
Washington, D.C.

The RFP was issued as a competitive set-aside for small disadvantaged 
businesses under section 8(a) of the Small Business Act, 15 U.S.C.  sec.  
637(a) (1994), and contemplated the award of a firm, fixed-price 
requirements contract to the lowest-priced, technically acceptable 
offeror for a base year with nine 1-year option periods.  On November 
22, 1995, the VA awarded a contract under the RFP to IBSI; however, in 
response to a protest filed at this Office by the second lowest-priced 
offeror--Dulles Networking Associates (DNA)--the VA determined that it 
had failed to conduct meaningful discussions with DNA, and as a 
result, proposes to reopen the competition with a new round of 
discussions and a second request for best and final offers (BAFO).

In its protest, IBSI contends that the agency's corrective action is 
unwarranted (and therefore improper) because the agency's discussions 
with DNA were adequate.  Alternatively, IBSI challenges the proposed 
corrective action on the ground that its prices have been disclosed to 
the other offerors in the agency's award letter, placing IBSI at a 
competitive disadvantage in any subsequent negotiations.

We deny the protest.

BACKGROUND

The RFP, issued on May 8, 1995, required offerors to submit both 
technical and price proposals.  For their price proposals, offerors 
were directed to complete and submit five pricing tables set forth in 
section B of the solicitation; in particular, "Table B-1 Equipment and 
Software Unit Price Schedule" required a unit price, a basic monthly 
maintenance (BMM) price, an installation price, and quantity estimates 
for the telephone system hardware (contract line item number (CLIN) 
1001); the public address system hardware (CLIN 2001); the fiber optic 
cables necessary for the replacement telecommunications and public 
address system installation (CLIN 3001); and the copper cables 
necessary to perform the replacement system installation (CLIN 4001).  
Of significance to this protest, the RFP also required offerors to 
propose unit prices for an "Optional Cable Plant," which was 
identified as encompassing any additional distributional cable (fiber 
optic and/or copper) which might be required to connect newly 
constructed or renovated VAMC building areas to the base replacement 
installation performed under CLINs 1001 through 4001.  Unlike the 
other replacement installation CLIN series, for CLIN 5001, the 
solicitation instructions advised that "[o]fferors shall provide 
pricing for all cabling on a per foot basis with a quantity of '0'."  
(Emphasis added.)  The solicitation also required offerors to submit 
their pricing proposals in both hard copy and electronic media 
(computer disk) format.

By the June 13 closing date, nine proposals were received.  Shortly 
thereafter, the contracting officer began conducting a "validation" 
process of each offeror's pricing proposal; to accomplish this, the 
contracting officer ran each offeror's computer disk through a price 
evaluation program; for Table B-1, the program multiplied each CLIN 
item's total price (unit price + BMM price + installation price) by 
the estimated quantity figure to arrive at an evaluated price 
computation, which could be compared with each offeror's proposed 
price.  However, when the contracting officer attempted to process 
DNA's computer disk, the VA program was unable to access the DNA 
software.  Consequently, the contracting officer did not perform any 
"validation" analysis of DNA's initial price proposal.[1]  Had she 
done so, the contracting officer would have discovered that DNA had 
improperly completed the CLIN 5001 series portion of its B-1 pricing 
table by inserting actual cable quantities, instead of a "0" quantity, 
as directed by the RFP instructions. 

On September 15, after receiving the technical evaluation team's (TET) 
evaluation results, the contracting officer issued discussion letters 
to each offeror.  In DNA's discussion letter, the contracting officer 
advised the firm that because its "electronic media files could not be 
opened due to the version of software [DNA] used," a validation--that 
is a comparison of the agency's evaluated pricing with DNA's proposed 
total prices--could not be performed.  The letter also advised DNA 
that with regard to Table B-1, the firm had improperly included 
telephone system hardware (CLIN 1001) in the CLIN 5001 series (which, 
as noted above, was only to include optional distributional cable 
items).  Finally, the letter contained a general warning that 
"[d]efective pricing submissions, tables, pricing questionnaires or 
documentation will make an offer ineligible for award."  Each 
discussion letter directed offerors to submit a BAFO by September 28.

After the TET completed its evaluation of each offeror's BAFO, the 
contracting officer performed a second validation analysis of each 
offeror's pricing proposal.  Based on her validation analysis, the 
contracting officer concluded that IBSI had submitted the 
lowest-priced, technically acceptable offer at $3,397,675, and that 
DNA had submitted the next lowest-priced, technically acceptable offer 
at $3,509,770.  By letter dated November 21, the contracting officer 
notified all offerors that IBSI had been selected for award at a price 
of $3,397,675.  After attending a November 29 debriefing provided by 
the agency, DNA filed a protest at this Office on November 30, 
challenging the IBSI award as improper.

In its protest, DNA contended that the agency had improperly evaluated 
its pricing proposal.  First, DNA maintained that the contracting 
officer failed to hold meaningful discussions with it because it was 
never apprised that it had improperly used actual quantities--instead 
of the required "0"--for its CLIN 5001 estimates; alternatively, DNA 
contended that the contracting officer should have waived its CLIN 
5001 error since this portion of the B-1 pricing table was for 
explanatory purposes only, and was not intended to be part of the 
agency's price evaluation.

On January 29, 1996, VA advised this Office that in response to DNA's 
protest, it had decided to take corrective action comprised of 
terminating the IBSI award and reopening discussions with all 
offerors.  On January 30, DNA withdrew its protest.  On February 8, 
IBSI filed this protest at our Office challenging the agency's 
proposed corrective action; VA has withheld proceeding with the 
corrective action pending our decision on this protest.  

PARTIES' POSITIONS

IBSI contends that the solicitation's clear pricing 
instructions--which expressly directed offerors to use a quantity 
figure of "0" for all Table B-1 CLIN 5001 items--and the language in 
the September 15 discussion letter warning offerors that defective 
pricing tables would render proposals unacceptable were adequate to 
place DNA on notice of its Table B-1 pricing error.  IBSI also 
contends that providing DNA with an additional discussion opportunity 
essentially gives DNA an improper second chance at the competition, 
and also creates an improper auction atmosphere--since any successive 
negotiations will essentially constitute a bidding war by IBSI's 
competitors to beat IBSI's price, which was disclosed by the agency to 
all offerors in the November 21, 1995, award letter.

The agency responds that although it believes the solicitation 
instructions regarding the Table B-1 CLIN 5001 series were clear, 
neither these instructions nor the September 15 discussion letter were 
sufficient to apprise DNA of its pricing error.  The contracting 
officer reports that because she could not use the initial price 
proposal computer disk submitted by DNA, she never realized that the 
firm had improperly inserted actual estimates in the quantity column 
of Table B-1 for the CLIN 5001 series, in contravention of the 
solicitation's instructions.  The contracting officer also reports 
that when VA's computer program was unable to analyze the DNA disk, 
she should have conducted a manual validation process--which would 
have required her to input the numbers from the firm's hard copy 
pricing submission into the pricing analysis program.  The contracting 
officer maintains that because she never performed this validation 
analysis using DNA's submitted hard copy pricing proposal, DNA was not 
alerted to its B-1 Table CLIN 5001 quantity error during discussions.  
In reaching this conclusion, the contracting officer reports that like 
DNA, IBSI also had included quantities for the CLIN 5001 series in its 
initial B-1 table submission; however, after receiving the contracting 
officer's validation results--which consisted of a table comparing the 
firm's proposed B-1 prices with the contracting officer's evaluated 
pricing figures--IBSI apparently discovered and corrected the quantity 
error in its BAFO Table B-1 CLIN 5001 series by inserting a "0" in 
each CLIN 5001 series quantity column.

As explained below, the error in DNA's pricing table is a clerical one 
and is correctable without discussions; any communication with DNA 
regarding this correction would simply be clarification pursuant to 
Federal Acquisition Regulation (FAR)  sec.  15.607 (FAC 90-31).  
Consequently, while we agree that the agency should not reopen 
discussions, correction of the mistake results in award to DNA.

DISCUSSION

The VA apparently is driven to reopen discussions by its Price 
Evaluation Plan, which was established by the agency for all VA 
telephone system procurements.  This plan directs the contracting 
officer to review each offeror's hard copy price proposal for 
compliance with the solicitation criteria, and to disclose any 
deviations in the hard copy as "identified deficiencies" to each 
offeror.  Had the contracting officer followed the Price Evaluation 
Plan, she would have discovered the Table B-1 CLIN 5001 quantity error 
in DNA's hard copy price proposal, and so advised DNA.  
However, while raising the error during discussions with DNA was 
contemplated by the agency's evaluation plan, the agency's failure to 
do so does not warrant reopening the competition at this point.  
First, contracting officers are encouraged by the FAR not to reopen 
discussions after submission of BAFOs.  FAR  sec.  15.611(c) (FAC 90-31); 
second, DNA's error can be corrected without resort to discussions.  

In this regard, FAR  sec.  15.607(a) provides for correction of minor 
informalities or irregularities and clerical mistakes in a proposal; 
in fact, the regulation places an affirmative obligation on 
contracting officers to examine proposals for such waivable errors--a 
duty which the contracting officer failed to comply with in this case.  
Correction of a mistake, without holding discussions with all 
offerors, is appropriate where the existence of the mistake, and the 
price actually intended, can be clearly and convincingly established 
from the RFP and the proposal itself.  See Action Serv. Corp., 
B-246413; B-246413.2, Mar. 9, 1992, 92-1 CPD  para.  267.

Here, the RFP in effect contemplated that offerors' Table B-1 CLIN 
5001 series pricing was not to be considered in the agency's price 
evaluation.  Instead, as noted above, the RFP instructions 
specifically directed offerors to insert a "0" in the quantity column 
for this CLIN; in the pricing evaluation formula, which required each 
CLIN unit price to be multiplied by the quantity figure, this had the 
effect of rendering all CLIN 5001 series pricing calculations "0," 
making the 5001 CLIN series essentially advisory in nature.  For the 
Table B-1 CLIN 5001 series, the only pricing evaluation that was to 
occur under the terms of the RFP was for realism.  This pricing scheme 
is consistent with the intent of the CLIN 5001 series; orders were to 
be placed under this "OPTIONAL" CLIN series only in the event that the 
agency needed to connect the installed replacement telecommunications 
and public address system to a renovated or newly constructed building 
area.

Further, the clerical nature of DNA's mistake is obvious from the face 
of its proposal.  The cable parts and unit prices for DNA's Optional 
Cable Plant CLIN 5001 series are identical to those proposed in its 
CLIN 3001 and CLIN 4001 series; it is apparent that like the other 
offerors, DNA simply copied its CLIN 3001 and CLIN 4001 series pricing 
and estimated quantities into the CLIN 5001 series portion of its B-1 
pricing table.  While it is true that this mistake should have been 
discovered by the contracting officer and corrected before award, 
correction at this point is appropriate in view of the obvious nature 
and correctability of the mistake, as well as the solicitation's 
evaluation scheme which clearly contemplated that the CLIN 5001 series 
would play no role in the agency's pricing evaluation.[2]  See id.

Since the solicitation clearly contemplated that all Table B-1 CLIN 
5001 pricing was to be multiplied by a quantity of "0," we think the 
agency should simply reperform its evaluation of DNA's price proposal 
using the correct quantity figure--"0"--for the CLIN 5001 series.  If 
a "0" is inserted for each quantity in DNA' s Table B-1 CLIN 5001 
series, the record shows that DNA's proposal is the lowest-priced, 
technically acceptable offer, with a price of $2,915,925.96.  Thus, 
had the agency simply performed its pricing evaluation in accordance 
with the RFP's pricing instructions, DNA would have been selected as 
the lowest priced, responsible offeror.

Under these circumstances, although we agree with IBSI that the VA 
should not reopen discussions, because the record shows that DNA--and 
not the protester--should receive the contract under a proper pricing 
evaluation, the award to IBSI should not stand. See Tek Contracting, 
Inc., B-245590, Jan. 17, 1992, 92-1 CPD  para.  90. 

The protest is denied.[3] 

Comptroller General
of the United States

1. Of the nine proposals received, software problems prevented the 
contracting officer from validating three offerors' prices, including 
DNA's.

2. Correction of a mistake through clarification is not permitted 
where "the resulting communication prejudices the interests of other 
offerors."  FAR  sec.  15.607(a) (FAC 90-31).  Such prejudice arises where 
a clarification would permit an offeror to change its offered price.  
See  ALM, Inc., 65 Comp. Gen. 405 (1986), 86-1 CPD  para.  240; Pulau Elecs. 
Corp., B-254443, Dec. 17, 1993, 93-2 CPD  para.  326.  However, there is no 
change to DNA's offered price--the change in essence simply permits 
evaluation of DNA's offer on the basis advertised and consistent with 
how all proposals were to be evaluated.

3. The record shows that at one point, the TET determined that DNA had 
proposed a technically noncompliant piece of telecommunications 
equipment--a determination which the contracting officer overrode, 
based on this part's success at other VAMC replacement 
telecommunications system installations.  The TET later reversed its 
conclusions and found the part technically compliant.  Although IBSI 
argues in its comments on the agency report that the initial technical 
determination of non-compliance should have kept DNA out of the 
competitive range, in light of the TET's evaluation reversal, and the 
supporting rationale in the record for this conclusion, we see no 
merit to IBSI's argument. Further, to the extent IBSI also  challenges 
DNA's experience, this is a responsibility matter which we will not 
consider as IBSI does not allege either bad faith or that definitive 
responsibility criteria were not met.  4 C.F.R.  sec.  21.5(c) (1996); 
Carter Chevrolet Agency, Inc., B-270962; B-270962.2, May 1, 1996, 96-1 
CPD  para.  210.