BNUMBER:  B-271492
DATE:  June 26, 1996
TITLE:  S.D.M. Supply, Inc.

**********************************************************************

Matter of:S.D.M. Supply, Inc.

File:     B-271492

Date:June 26, 1996

Donald E. Goodroe for the protester.
Major Michael J. O'Farrell, Jr., Department of the Army, for the 
agency.
Adam Vodraska, Esq., and James A. Spangenberg, Esq., Office of the 
General Counsel, GAO, participated in the preparation of the decision.

DIGEST

Agency failed to promote competition to the maximum extent practicable 
under a request for quotations issued on the Federal Acquisition 
Computer Network (FACNET) using simplified acquisition procedures 
where the agency failed to maintain adequate procedures for receiving 
quotations through FACNET, as evidenced by its loss of all of the 
quotations submitted through FACNET because of a previously identified 
systemic problem with its computer. 

DECISION

S.D.M. Supply, Inc. protests the issuance of purchase order No. 
DABT01-96-V-0248 to New Pig Corporation under request for quotations 
(RFQ) No. DABT01-96-T-0112 issued by the U.S. Army Aviation Center, 
Fort Rucker, Alabama, as a small business, small purchase set-aside, 
for seven aerosol can puncturing systems.[1]  S.D.M. contends that the 
agency failed to consider S.D.M.'s lower-priced quotation which was 
timely submitted through the Federal Acquisition Computer Network 
(FACNET). 

We sustain the protest.

FACNET refers to a government-wide electronic commerce/electronic data 
interchange systems architecture that provides for electronic data 
interchange of acquisition information between the government and the 
private sector, employs nationally and internationally recognized data 
formats, and provides universal user access.  Federal Acquisition 
Streamlining Act of 1994, 41 U.S.C  sec.  426(a), (b)(3) (1994); Federal 
Acquisition Regulation (FAR)  sec.  4.501 (90-29).  FACNET creates an 
electronic marketplace for the acquisition of supplies and services.  
That is, through FACNET, contracting agencies can post notices of and 
receive responses to solicitations, post notices of contract awards, 
and issue orders where practicable; and private sector users can 
access notice of solicitations, receive orders, and access information 
on contract awards.  41 U.S.C.  sec.  426(b)(1), (2).  

A contracting agency enters solicitation data into FACNET through a 
business application program on its computer.  The data is then 
electronically transmitted to a government gateway, which is a 
computer/communications system performing a variety of data management 
functions, such as converting business application program data into 
the proper data format for subsequent transmission.  After processing 
by the gateway, the information is transmitted to a network entry 
point, which is also government operated, and relayed to Value-Added 
Networks (VAN).[2]  VANs, which are private sector entities, then 
provide information obtained from the FACNET to their customers, who 
have registered to do business with the government and are known as 
trading partners.  Trading partners submit quotations through FACNET 
to the contracting agency in reverse order to that described above.  
All transactions conducted over FACNET, except the issuance of RFQs, 
are acknowledged automatically by the end of the business day 
following the arrival of the transmission at its destination to notify 
the sender as to whether a transaction has been received, e.g., to 
notify a trading partner that its quotation has been received by the 
contracting agency.

Here, the RFQ was issued through FACNET on February 7, 1996.  The RFQ 
was also mailed to New Pig and one other vendor.  The RFQ instructed 
vendors that quotations were due by close of business February 20, and 
that quotations could also be submitted to the contracting office via 
facsimile transmission.  Only one quotation--from New Pig--was 
received at the contracting office by the time and date set for 
receipt of quotations, and this quotation was submitted via facsimile 
transmission.  Because no quotations had been received through FACNET, 
the purchasing agent asked the office's computer systems administrator 
to verify that no quotations had been received on the office's 
computer.  Following the computer administrator's confirmation, the 
purchasing agent determined that New Pig's quotation of $4,473 was 
fair and reasonable, and issued the purchase order to New Pig on 
February 21.

The contracting office then posted a notice on FACNET that the 
purchase order had been issued to New Pig.  As a result of this 
notice, the purchasing agent subsequently received telephone calls 
from three other vendors, including the protester, complaining that 
they had submitted quotations through FACNET for this RFQ and that 
their quoted prices were lower than New Pig's.  When the agency 
declined to cancel the purchase order, S.D.M. filed an agency-level 
protest, contending that it should have been issued the purchase order 
based on its lower quotation of $3,080.  This protest was accompanied 
by printed records from S.D.M.'s computer showing transactions with 
its VAN, including the quotation it claimed to have submitted on 
February 8 to Ft. Rucker, as well as an acknowledgment of the receipt 
of its quotation dated February 9.  

The contracting officer denied S.D.M.'s protest because the protester 
assertedly had not shown that the agency's failure to receive S.D.M.'s 
quotation was caused by government computer error or malfunction or by 
government mishandling.  In this regard, the contracting officer 
asserted that the acknowledgment received by S.D.M. was generated by 
S.D.M.'s VAN and not by the government, and was not evidence of 
receipt of S.D.M.'s quote by the government.   

S.D.M. then filed its protest with our Office, contending that the 
acknowledgment it received was in fact generated by the government, 
and because the government actually received S.D.M.'s quotation, the 
agency's failure to consider the quotation was the result of 
mishandling.[3]  

In response, the Army admits that on the date that quotations were 
due, the FACNET system malfunctioned.  During a telephonic hearing 
conducted by our Office, agency personnel stated that, after S.D.M.'s 
protest had been filed, they had discovered computer records showing 
that three vendors, including S.D.M., had in fact submitted quotations 
through FACNET for this RFQ, which were received by the Standard Army 
Automated Contracting System (SAACONS) government computer gateway 
located at Fort Lee, Virginia, and relayed to Ft. Rucker.  Correcting 
the agency's earlier assertion, the agency personnel stated that the 
acknowledgment received by S.D.M. was in fact generated by the 
government upon receipt of its quotation rather than by the 
protester's VAN.  During this telephonic hearing, the SAACONS software 
technician explained that S.D.M.'s quotation was "lost" because of a 
transmission "bottleneck" located at the Ft. Rucker computer system, 
which had to be cleared before the quotations could continue to the 
contracting office destination, and that this problem was not 
discovered until after the contracting office had issued the purchase 
order.

Since the acknowledgment received by S.D.M. was generated by the 
SAACONS government gateway, which then transmitted S.D.M.'s quotation 
to Ft. Rucker, the protester received the acknowledgment, even though 
the "bottleneck" at the Ft. Rucker computer prevented S.D.M.'s and the 
other vendors' quotations from actually being received by the 
contracting office.  The contracting personnel, who were inexperienced 
with the computer system, failed to check available computer system 
status reports, which would have indicated the existence of the 
problem, and were thus unaware of the problem preventing the receipt 
of FACNET quotations prior to the issuance of the purchase order.  
Finally, during the telephonic hearing the contracting personnel 
reported several other instances of quotations transmitted over FACNET 
being "lost" in the computer system at Ft. Rucker, including other 
situations where, as here, the contracting office failed to receive 
any of the quotations submitted through FACNET in response to an RFQ.  

Agencies, when using simplified acquisition procedures, must promote 
competition "to the maximum extent practicable."  Competition in 
Contracting Act of 1984 (CICA), 10 U.S.C.  sec.  2304(g)(3) (1994).  In 
meeting this requirement, agencies must make reasonable efforts, 
consistent with efficiency and economy, to afford all eligible and 
interested vendors an opportunity to compete.  RMS Indus., B-247074, 
Mar. 18, 1992, 92-1 CPD  para.  290.  Agencies have a fundamental obligation 
to have procedures in place not only to receive quotations, but also 
to reasonably safeguard quotations actually received and to give them 
fair consideration.  East West Research Inc., B-239565; B-239566, Aug. 
21, 1990, 90-2 CPD  para.  147, aff'd, Defense Logistics Agency--Recon., 
B-239565.2; B-239566.2, Mar. 19, 1991, 91-1 CPD  para.  298.  On the other 
hand, we recognize, as a practical matter, that even with appropriate 
procedures in place, an agency occasionally will lose or misplace a 
bid or quotation, especially when the procuring activity is 
responsible for a high volume of small purchase buys, and have taken 
the position that the occasional negligent loss of a quotation by an 
agency does not entitle the supplier to any relief.  Id.; Interstate 
Diesel Serv., Inc., B-229622, Mar. 9, 1988, 88-1 CPD  para.  244.

This case involves more than mere occasional negligent loss of a 
quotation.  Instead, the agency's loss of the protester's quotation 
was due to a systemic failure that resulted in the loss of all other 
quotations submitted for this RFQ through FACNET.  The agency reports 
that similar systemic failures have occurred for other RFQs issued by 
Ft. Rucker.  As indicated, an agency, in order to satisfy its 
obligation under CICA to promote competition to the maximum extent 
practicable, must have adequate procedures to receive and safeguard 
quotes actually received, as well as to give them fair consideration.  
East West Research Inc., supra.  The record here evidences that the 
agency did not have adequate procedures in place to ensure that 
quotations received through FACNET would be considered, and we sustain 
the protest on this basis.[4]  

The agency states that in light of the problems it has experienced 
with FACNET, it allows quotations to be submitted via facsimile 
transmission in order to give vendors as much opportunity as possible 
to participate, and asserts that the protester should have availed 
himself of this opportunity.  However, we think the protester here was 
under no obligation to additionally transmit its quotation via 
facsimile to the agency because the RFQ did not caution potential 
quoters of the problems it was having receiving quotes over FACNET and 
the protester reasonably relied on the acknowledgment that its 
quotation had been received by the government through FACNET.  Indeed, 
the FAR contemplates that responses to solicitations and requests for 
information issued through FACNET will be submitted through FACNET in 
furtherance of the goal of converting the acquisition process from 
paper-based to an electronic one.  FAR  sec.  4.505-1(b); see H.R. Conf. 
Rep. No. 712, 103d Cong., 2d Sess. 238 (1994), reprinted in 1994 
U.S.C.C.A.N. 2607, 2668; see generally Arcy Mfg. Co., Inc., et al., 
B-261538, et al., Aug. 14, 1995, 95-2 CPD  para.  283 (note 10).  

No corrective action is feasible because the agency has taken delivery 
of the aerosol can puncturing systems.  We recommend that the 
protester recover its quotation preparation costs, as well as the 
costs of filing and pursuing its protest.
4 C.F.R.  sec.  21.8(d) (1996).  S.D.M.'s certified claim for such costs, 
detailing the time expended and costs incurred, should be submitted 
directly to the agency within 90 days after receipt of this decision.  
4 C.F.R.  sec.  21.8(f)(1).

The protest is sustained.

Comptroller General
of the United States  

1. These devices are used to render discarded aerosol cans safe for 
incineration.

2. A VAN, typically a commercial information service, provides access 
to FACNET as well as communications services, electronic mailboxes and 
other services for electronic data interchange transmissions.  See FAR  sec.  
4.501.

3. S.D.M. also complains that the aerosol can disposal system was 
available on a General Services Administration Federal Supply Schedule 
contract at a lower price than New Pig's.  The agency contracting 
personnel state that they were unaware until after award that the 
disposal system was listed on the schedule.

4. The SAACONS software technician reports that a procedure is being 
implemented for the future, which will allow the Ft. Rucker 
contracting personnel to automatically print status reports to alert 
them to such computer system problems.