BNUMBER: B-271495
DATE: April 26, 1996
TITLE: Sprint Communications Company, L.P.
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Matter of:Sprint Communications Company, L.P.
File: B-271495
Date:April 26, 1996
David S. Cohen, Esq., Carrie B. Mann, Esq., and G. Brent Connor, Esq.,
Cohen & White, for the protester.
Thomas C. Papson, Esq., and David Kasanow, Esq., McKenna & Cuneo, for
AT&T Communications, Inc., an intervenor.
George N. Barclay, Esq., and Michael J. Ettner, Esq., General Services
Administration, for the agency.
David A. Ashen, Esq., and John M. Melody, Esq., Office of the General
Counsel, GAO, participated in the preparation of the decision.
DIGEST
Protest against reallocation of telephone service requirements between
FTS 2000 contractors is dismissed where reallocation process was
provided for under the FTS 2000 contracts and is a matter of contract
administration; General Accounting Office generally does not exercise
jurisdiction to review matters of contract administration, which are
within the discretion of the contracting agency and for review by a
cognizant board of contract appeals or the Court of Federal Claims.
DECISION
Sprint Communications Company, L.P. protests the General Services
Administration's (GSA) determination to reallocate 40 percent of
Sprint's share of the FTS 2000 contract requirements to AT&T in the
Year 7 Price Redetermination/Service Reallocation (PR/SR). Sprint
challenges the conduct of the PR/SR process and the evaluation of
proposals.
We dismiss the protest.
In 1987, GSA issued solicitation No. KET-JW-87-02, requesting
proposals to furnish long-distance telecommunications services to
federal agencies. As amended, the solicitation contemplated the award
of two 10-year, indefinite delivery/indefinite quantity contracts--one
for Network A for 60 percent of the requirement (with a guaranteed
minimum of $270 million) and another for Network B for 40 percent
(with a guaranteed minimum of $180 million). The solicitation divided
the 10-year contract term into three periods--an initial 4-year
period, followed by two successive 3-year periods--and provided GSA
with the right to request revised prices and reallocate service
requirements between the contractors prior to commencement of the
second and third contract periods. The solicitation stated that
proposals for price redetermination--repricing--would be requested
during the fourth and seventh contract years; GSA would select service
requirements for potential reallocation using a target of 40 percent
of each network's estimated revenue over the remaining life of the
contract. The service requirements selected for reallocation were to
be awarded based on consideration of two factors of equal weight: (1)
cost and (2) quality of service during the preceding contract phase
and effectiveness of the most recent transition.
In December 1988, GSA awarded the Network A contract (for 60 percent
of the requirement) to AT&T and the Network B contract (for 40)
percent to Sprint. The Year 4 PR/SR (undertaken in 1992) resulted in
a determination to maintain the 60/40 percent split.
On April 4, 1995, GSA issued to AT&T and Sprint a set of
instructions--the "Year 7 Price Redetermination/Service Reallocation
Document"--for the conduct of the Year 7 PR/SR. Contractors were
required to submit technical and cost proposals. The instructions
listed two evaluation factors of equal weight--technical and cost
(including service/feature prices and transition costs). Based on the
results of the evaluation, GSA was to select one of three scenarios:
(1) the Network A contractor (AT&T) wins 40 percent of the Network B's
(Sprint) target revenue split, (2) the Network B contractor wins 40
percent of the Network A's target revenue split, or (3) no change in
the 60/40 percent target revenue split.
On June 30 and July 10, Sprint and AT&T, respectively, filed protests
with the General Services Board of Contract Appeals (GSBCA), arguing
that the conduct of the PR/SR was not in accordance with the
Competition in Contracting Act of 1984, the Federal Acquisition
Regulation and the PR/SR instructions. In particular, Sprint argued
that GSA had added disproportionate transition costs to Sprint's
evaluated cost, used understated traffic volumes for Sprint, used an
irrational "average pricing" approach to compute the evaluated cost,
and improperly deleted certain Department of Defense traffic from the
PR/SR process.
On July 30, GSBCA dismissed the protests on the basis that the PR/SR
process was a matter of contract administration, not contract
formation, and therefore was not protestable under GSBCA's bid protest
jurisdiction as set forth in 40 U.S.C. sec. 759(f) (1994). Sprint
Communications Co., L.P., GSBCA No. 13,323-P, 13,333-P, 95-2 BCA para.
27,811, 1995 BPD para. 144. In reaching its decision in this regard,
GSBCA rejected Sprint's and AT&T's argument that the PR/SR process was
analogous to limited competitions which are conducted between parallel
development/production contractors to determine which contractor's
option should be exercised and which our Office has found to be
subject to bid protest review. Mine Safety Appliances Co., 69 Comp.
Gen. 562 (1990), 90-2 CPD para. 11; Westinghouse Elec. Corp., 57 Comp.
Gen. 328 (1978), 78-1 CPD para. 181; Honeywell, Inc., B-244555, Oct. 29,
1991, 91-2 CPD para. 390. The GSBCA distinguished such limited
competitions as involving additional work beyond that expressly
awarded at the time the original contracts were entered into. In
contrast, according to the GSBCA, GSA was
"at most, reshuffling existing requirements already awarded
within the initial ten-year span of the FTS 2000 contracts. .
. . . [N]o new procurement action will occur. The PR/SR will
do nothing more than reallocate the Government's purchases of
the same requirements already subjected to full and open
competition under the original solicitation, as the FTS 2000
contracts fully entitle it to do. As such, the contemplated
action is more properly categorized as a matter of contract
administration, rather than formation and does not constitute
a protestable event. GSA's choice of procurement-like
procedures to determine reallocation of work between existing
contractors does not transform the reallocation into a
'procurement.' To the extent that GSA's PR/SR process is
mishandled, the remedy is provided under the Contract Disputes
Act."
Sprint Communications Co., L.P., supra. On August 22, Sprint's and
AT&T's motions for reconsideration were denied by the GSBCA. Sprint
Communications Co., L.P., GSBCA No. 13,323-P-R, 13,333-P-R, 95-2 BCA para.
27,898, 1995 BPD para. 170. On September 29, Sprint's and AT&T's motions
for full board consideration likewise were denied. Sprint
Communications Co., L.P., GSBCA No. 13323-P-R, 13333-P-R, 96-1 BCA para.
27,987, 1995 BPD para. 191. AT&T appealed the GSBCA's decisions to the
Court of Appeals for the Federal Circuit, but subsequently withdrew
the appeal.
In November, at the conclusion of discussions, Sprint and AT&T made
their final submissions to the agency under the PR/SR process. On
December 1, GSA announced that it would reallocate 40 percent of
Sprint's target revenue--specifically, all of the requirements of the
Department of the Treasury--to AT&T. On December 22, following a
December 12 debriefing, Sprint wrote to GSA to complain that the Year
7 PR/SR process was "flawed." According to Sprint, the agency had (1)
improperly publicly disclosed the relative standing of the contractors
after submission of the first revised price proposals and prior to
submission of the second (final) revised price proposals, (2)
unreasonably assumed in calculating costs that the Treasury
requirements would immediately transition--"flash cut"--to AT&T on the
December 7, 1995 effective date for the Year 7 PR/SR, (3) improperly
accepted AT&T's offer of a transition cost fund, and (4) improperly
accepted AT&T's unbalanced offer. When GSA, by letter of March 7,
1996, found Sprint's arguments to be without merit, Sprint filed this
protest with our Office raising the same arguments raised in its
December 22 letter to GSA.
GSA and AT&T argue that Sprint's protest should be dismissed on the
basis that it raises a matter of contract administration over which
our Office does not exercise jurisdiction.
Our Office considers bid protests challenging the award or proposed
award of contracts. 31 U.S.C. sec. 3551, 3552. Therefore, we generally
do not exercise jurisdiction to review matters of contract
administration, which are within the discretion of the contracting
agency and for review by a cognizant board of contract appeals or the
Court of Federal Claims. See Bid Protest Regulations, section
21.5(a), 60 Fed. Reg. 40,737, 40,742 (Aug. 10, 1995) (to be codified
at 4 C.F.R. sec. 21.5(a)); Specialty Plastics Prods., Inc., B-237545,
Feb. 26, 1990, 90-1 CPD para. 228. The few exceptions to this rule
include such situations as where it is alleged that a contract
modification improperly exceeds the scope of the contract and
therefore should have been the subject of a new procurement, CAD
Language Sys., Inc., 68 Comp. Gen. 376 (1989), 89-1 CPD para. 364; where a
protest alleges that the exercise of a contractor's option is contrary
to applicable regulations, Bristol Elecs., Inc., B-193591, June 7,
1979, 79-1 CPD para. 403; and where an agency's basis for contract
termination is that the contract was improperly awarded. Condotels,
Inc. et al., B-225791; B-225791.2, June 30, 1987, 87-1 CPD para. 644.
We conclude, as did the Board, that the FTS 2000 reallocation raises a
matter of contract administration that is not for consideration under
our bid protest jurisdiction. The limited competition conducted
between Sprint and AT&T is not only provided for under their contracts
with GSA, but also is not intended to result in the additional
procurement of anything. It is, as the Board held, simply a tool for
determining whether requirements previously awarded to the two
contractors should be reallocated between them. Thus, we are in
agreement with the Board's view that our prior decisions dealing with
limited competitions conducted between parallel development/production
contractors pursuant to provisions of their contracts to determine
which contractor should be selected for the next phase of the
development/production effort are distinguishable as they involved
additional, follow-up work--here no additional work is contemplated.
In short, since the PR/SR was conducted pursuant to the terms of the
FTS contracts and only reallocates the requirements already subjected
to full and open competition under the original solicitation, the
reallocation is properly categorized as a matter of contract
administration not reviewable under our bid protest jurisdiction.
The protest is dismissed.
Comptroller General
of the United States