BNUMBER:  B-270816
DATE:  April 29, 1996
TITLE:  SMS Systems Maintenance Services, Inc.

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Matter of:SMS Systems Maintenance Services, Inc.

File:     B-270816

Date:April 29, 1996

Leonard Walsh for the protester.
Janis P. Rodriguez, Esq., Digital Equipment Corporation, an 
intervenor.
William L. Murphy, Esq., Department of the Treasury, for the agency.
Wm. David Hasfurther, Esq., Susan K. McAuliffe, Esq., and Michael R. 
Golden, Esq., Office of the General Counsel, GAO, participated in the 
preparation of the decision.

DIGEST

Where both quotations submitted by two firms under a request for 
quotations for computer equipment maintenance services reasonably 
required clarification regarding whether the required on-site engineer 
was being offered as a part of the quoted prices, and where the agency 
instead effectively rejected protester's quotation (by unreasonably 
adding a 20-percent cost increase for the on-site engineer to the 
protester's quotation) without requesting clarification of the matter, 
but asked the awardee for clarification on its quotation, and then 
relaxed the on-site engineer requirements for the awardee, the award 
selection was based on unequal and unfair treatment and the 
procurement should be reopened to permit clarifications by both firms.

DECISION

SMS Systems Maintenance Services, Inc. protests the issuance of a 
delivery order to Digital Equipment Corporation for the maintenance of 
Digital computer equipment under a request for quotations (RFQ) issued 
by the Department of the Treasury.  SMS principally argues that it 
submitted the low-priced quotation and that the issuance of the order 
to Digital was improper.

We sustain the protest.

By letter of September 26, 1995, the agency issued the RFQ to SMS and 
Digital.  The RFQ stated that only quotations under General Services 
Administration (GSA) schedule contracts would be considered and that 
the agency would consider 
one-time price reductions from schedule prices.[1]  Quotations were 
required by September 28 for services to be performed October 1, 1995, 
through September 30, 1996.  Quotations were to be submitted in the 
form of fixed monthly prices for each piece of listed equipment.  The 
RFQ provided that the principal period of maintenance (PPM) for 
on-call, basic maintenance "is expected" to be from 
8 a.m. to 12 a.m. (16 hours) Monday through Saturday.  The RFQ also 
provided that the following optional PPMs and maintenance coverage 
shall be available: for on-call maintenance coverage, from 9 a.m. to 6 
p.m. (9 hours) Monday through Friday and from 12 a.m. to 12 a.m. (24 
hours) Sunday through Saturday; and for on-site maintenance coverage, 
requiring the stationing of one engineer and all required tools, test 
equipment, and supplies at the Treasury site, from 9 a.m. to 6 p.m. 
(9 hours) Monday through Friday.  Offerors were required to have the 
capability to perform all required services on site as well as to have 
a technical support center that would be available for per-call 
maintenance 24 hours a day, 7 days a week.

Both SMS and Digital submitted quotations.  SMS submitted a total 
monthly price of $11,123 for a 12-hour PPM (8 a.m. to 8 p.m.) Monday 
through Friday.  It also provided a $117 hourly rate for maintenance 
performed outside of that time frame.  However, because the agency 
interpreted SMS' quotation as not offering an on-site engineer except 
at prices 20-percent higher than the prices quoted, SMS' prices were 
increased by 20 percent and then decreased by the 3-percent discount 
provided in the firm's quotation for orders exceeding $10,000 in 
monthly maintenance, resulting in an evaluated total monthly price of 
$12,947.17.  The decision to increase SMS' prices by 20 percent 
resulted from the agency's interpretation of the following language in 
the SMS quotation:

     "For GSA Schedule contracts, our standard Principal Period 
     Maintenance is 8 AM to 8 PM, Monday though Friday, see page 22 of 
     our GSA Schedule."

     "For service any time outside these hours our hourly rate is 
     $117."

     "SMS provides any Principal Period of Maintenance up to and 
     including 7 X 24 [i.e., 7 days a week, 24 hours a day] but we 
     feel that using the GSA Schedule standard PPM with guaranteed 
     per-call service for all other hours at the above rate [$117 per 
     hour] gives you protection 7 days a week 24 hours a day at the 
     least expensive cost.  For your reference, the increase in cost 
     for a 7 X 24 PPM is 20 [percent] of the quoted prices."

     "An engineer on-site from 9 AM to 6 PM Monday through Friday, as 
     required by C.2.3.1 of your WORK STATEMENT, whose sole duty is 
     the maintenance of the machines covered under this contract, 
     would be occupied with that maintenance, in our estimate, less 
     than 20 [percent] of the time.  The cost of an on-site engineer 
     would therefore be largely wasted, particularly since our field 
     engineer will be at your site within 2 hours of your placing a 
     service call anyway, as required by C.2.5.2 of your WORK 
     STATEMENT."

The agency interpreted the above statement in the SMS quotation as an 
affirmation by the protester that the price for the required on-site 
engineer was not included in the quotation's stated monthly price, and 
that a 20-percent increase in price was instead quoted by SMS for the 
provision of the on-site engineer.  Consequently, the agency, as 
stated above, increased the SMS quotation's monthly price by 20 
percent, calculating the evaluated price to be $12,947.17.

Digital's quotation's total monthly price was $11,631.91.  The 
quotation, however, did not mention the required on-site engineer.  
Needing clarification of whether or not the Digital quotation provided 
for the on-site engineer, the agency requested confirmation from the 
awardee as to whether the prices quoted included the provision of an 
on-site engineer.  Digital, by letter of September 28, stated that:  
"a 'Dedicated' engineer will . . . be available . . . [during the PPM 
and] will start each work day . . . at the Department of Treasury . . 
. [but that if] no maintenance activity [at the Treasury site] is 
required, Digital's Dedicated engineer will be available for 
assignment to available service calls in the Greater Metropolitan 
area."  Accordingly, any service calls that the agency might make to 
Digital during the PPM--where the dedicated engineer was not at the 
Treasury site--would be dispatched to the engineer for his resolution 
if he was available.  Accepting this "clarification" from Digital as 
confirmation that the firm's quotation provided the requisite on-site 
engineer, and the fact that Digital's quoted price was considered low, 
the agency issued the delivery order to Digital.  This protest 
followed.[2]

The record indicates that the agency's selection of Digital to perform 
the required maintenance was based on an unequal and unfair evaluation 
of the quotations vis-a-vis the agency's stated requirements.  The 
agency determined that SMS' quoted monthly price expressly did not 
include the on-site engineer.  However, there is no reasonable basis 
in that quotation to support the agency's determination.  We cannot 
agree with the agency's interpretation that the SMS quotation, as 
stated above, took exception to the RFQ on-site engineer requirement 
or provided that the on-site engineer would only be provided at a 
20-percent increase in the quoted price.  The quotation simply did not 
state this; the quotation only pointed out the protester's opinion 
that an on-site engineer will only have on-site work for less than 20 
percent of his work day and that it would be more cost effective for 
the agency to delete the on-site engineer requirement.  Further, the 
"7x24 PPM," relating to the 20-percent premium quoted by SMS, responds 
to the RFQ requirement for per-call maintenance, not the independent 
requirement for an on-site engineer.  We therefore can find no 
reasonable basis in the record to explain or support the agency's 
20-percent increase to the SMS quotation price for the on-site 
engineer.  Additionally, while its GSA contract does not provide for 
such services (SMS states, and the agency does not rebut, that 
Digital's GSA contract also does not), SMS' quotation stated that "SMS 
meets or exceed all the specifications contained in your WORK 
STATEMENT."  While we think SMS' quotation could have been presented 
in a more straightforward manner, it did not take exception to the 
on-site requirement.

Although the Digital quotation similarly made no mention of providing 
an on-site engineer, the agency asked only that firm to clarify 
whether its price provided for such an engineer.  Further, when 
Digital responded to the clarification request by stating that it 
would provide a "dedicated" engineer, rather than an on-site engineer 
that would be stationed at the Treasury site during the hours required 
by the RFQ, the agency improperly relaxed the on-site engineer 
requirement for Digital without affording the protester an opportunity 
to quote on that basis.  We believe fairness requires that SMS also be 
given the opportunity to resolve any concerns that the agency had 
concerning SMS' intention to meet requirements including the 
opportunity to quote on the agency's "on-site" engineer requirements 
in terms similar to those provided by Digital through its "dedicated" 
engineer.[3]  The failure to permit SMS to clarify its quotation as 
Digital was permitted to do constituted unequal treatment under the 
circumstances, and was improper.  See BWC Technologies, Inc., 65 Comp. 
Gen. 500 (1986), 86-1 CPD  para.  366; see Mercer Prods. & Mfg. Co., 
B-205316, Feb. 22, 1982, 82-1 CPD  para.  155.[4]

Accordingly, we initially recommend that the agency review its 
requirements (e.g., regarding the agency's actual basic maintenance 
PPM to be used for evaluation and contract purposes and regarding its 
actual on-site engineer requirements).  Assuming that the agency 
wishes to maintain the stated requirements, we recommend that the 
agency request clarifications from both SMS and Digital of their 
quotations so as to determine whether these firms' quotations provide 
the required 16-hour basic maintenance PPM and on-site engineer (to be 
located at the Treasury site for the 9-hour period), and, if so, at 
what prices.[5]  If the agency determines that a "dedicated" engineer 
is sufficient to meet its minimum needs and that this engineer need 
not be on site for the 9-hour period stated in the RFQ, we 
alternatively recommend that the agency amend the RFQ to reflect the 
changed requirement and request revised quotations from both firms on 
that basis.

If SMS' quotation is found to meet the agency's requirements at a 
lower price, Digital's delivery order should be terminated and award 
should be made for the balance of the contract period to SMS.  
Additionally, we recommend that the protester be reimbursed its costs 
of filing and pursuing the protest.  Bid Protest Regulations, section 
21.8(d), 60 Fed. Reg. 40,737, 40,743 (Aug. 10, 1995) (to be codified 
at 4 C.F.R.  sec.  21.8(d)).  The protester should submit its detailed and 
certified claim for costs directly to the agency within 90 days after 
receipt of this decision.  Bid Protest Regulations, section 
21.8(f)(1).

The protest is sustained.

Comptroller General
of the United States.

1. The RFQ's statement of work varied from the terms of the SMS and 
Digital GSA schedule contracts in several regards.  SMS' post-award 
protest of the differences in terms is untimely and will not be 
considered.  See Herman Miller, Inc., B-230627, June 9, 1988, 88-1 CPD  para.  
549.

2. While the agency argues that the protest against the issuance of 
the delivery order is untimely since it was not filed within 14 days 
after SMS learned of its issuance, the record shows that SMS' requests 
for information, made shortly after the delivery order was issued, 
were not answered until December 11, and that SMS submitted a timely 
protest upon receipt of the information.

3. We note that the formal procedures of negotiated contracting are 
not applicable to this procurement.  See Federal Acquisition 
Regulation  sec.  15.602.

4. SMS also raised numerous other protest contentions (for example, 
concerning the terms of the RFQ, the date of award, and an alleged 
violation of appropriation laws) that are untimely and otherwise 
rendered academic by our decision above sustaining the protest of the 
evaluation of the SMS quotation.

5. Digital contends that regardless of whether SMS' quotation provided 
the on-site engineer, the protester's quotation cannot be considered 
low-priced because SMS' GSA schedule contract provides for substantial 
price increases for the RFQ's stated 16-hour, 6-day PPM.  The record 
shows, however, that both Digital and SMS quoted prices on and off 
their GSA schedule contracts and that SMS' quotation provided 
sufficient information (if calculated proportionately) that can 
reasonably be interpreted as providing for the 16-hour PPM at 
substantially lower prices than its GSA schedule prices.  This should 
thus also be a subject of clarification with the protester.  In any 
event, since the on-site requirement was relaxed, we have no way of 
knowing how SMS would quote on the relaxed requirement.