BNUMBER:  B-272093.3
DATE:  March 11, 1997
TITLE:  CDA Investment Technologies, Inc.--Reconsideration

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Matter of:CDA Investment Technologies, Inc.--Reconsideration

File:     B-272093.3

Date:March 11, 1997

Kenneth B. Weckstein, Esq., and Raymond Fioravanti, Esq., Epstein, 
Becker & Green, P.C., for the protester.
Aldo A. Benejam, Esq., and Christine S. Melody, Esq., Office of the 
General Counsel, GAO, participated in the preparation of the decision.

DIGEST

Request for reconsideration is denied where protester does not show 
that prior decision denying its protest contained any errors of fact 
or law or present information not previously considered that warrants 
reversal or modification of the decision.

DECISION

CDA Investment Technologies, Inc. requests that we reconsider our 
decision in CDA Investment Technologies, Inc., B-272093; B-272093.2, 
Sept. 12, 1996, 97-1 CPD  para.     , in which we denied CDA's protest of 
the award of a contract to Disclosure, Inc. under request for 
proposals (RFP) No. SECHQ1-94-R-0013, issued by the Securities and 
Exchange Commission (SEC) for processing various forms required to be 
filed with the SEC.

We deny the request for reconsideration.

To obtain reconsideration, the requesting party must show that our 
prior decision may contain either errors of fact or law or present 
information not previously considered that warrants reversal or 
modification of our decision.   4 C.F.R.  sec.  21.14(a) (1996).  As 
explained in detail below, CDA's request for reconsideration does not 
meet this standard.

BACKGROUND

The RFP required the contractor to perform several tasks, including 
keying in and processing data filed with the SEC on Forms 13F, 3, 4, 
5, and 144.[1]  Section M of the RFP stated that technical proposals 
would be evaluated on the basis of the following four factors:  (1) 
technical qualifications; (2) experience and references of key 
individuals; (3) past performance; and (4) facilities.  The technical 
qualifications factor was more important than the other three, and had 
four subfactors (demonstrated ability including past performance on 
similar contracts; reliability and maintainability of the computer 
system; computer flexibility to respond to requests for special 
projects; and understanding of contract requirements).  Of the total 
number of points available in the evaluation, technical and price were 
worth 75 and 25 percent, respectively.  Award was to be made to the 
offeror whose proposal was deemed to be most advantageous to the 
government.

A technical evaluation panel (TEP) rated the six proposals the agency 
received by the time set on January 12, 1995, for receipt of initial 
proposals.  The TEP concluded that no discussions were necessary with 
any offeror, but directed the contracting specialist to ask the 
offerors to clarify their intent with respect to their proposed use of 
subcontractors.  Out of a maximum possible score of 75 weighted 
points, CDA's technical proposal received 69.3 points, while 
Disclosure's proposal received 70.3 points.  Of the six technical 
proposals, Disclosure's was ranked first and CDA's third, based on 
these scores.  Both proposals received the maximum number of points in 
the price area.[2]  Based on the combined technical and price scores, 
Disclosure's and CDA's proposals were ranked first and second, 
respectively (95.3 points for Disclosure's proposal, 94.3 points for 
CDA's).  The TEP recommended that award be made to Disclosure.

Based on the TEP's recommendation, the contracting officer offered the 
contract to Disclosure on May 1, 1996, expressly incorporating its 
January 1995 proposal.  Disclosure signed the contract on May 1 and 
returned it to the SEC with a cover letter dated May 2, the contents 
of which are discussed further below.  On May 2, the contracting 
officer signed the contract on behalf of the government.

In its protest, CDA maintained that the evaluation of Disclosure's 
proposal was unreasonable because it was based on inaccurate 
information regarding Disclosure's proposed use of subcontractors.  
CDA also argued that prior to award the SEC improperly permitted 
Disclosure to modify its proposal, without giving CDA a similar 
opportunity.[3]

Evaluation of Disclosure's Proposal

CDA contended that the SEC failed to identify and evaluate the 
subcontractors Disclosure intends to use to perform the data-entry 
services and instead improperly evaluated Disclosure's proposal under 
the assumption that the firm would perform all work in-house.  Since 
Disclosure indicated its intent to use a subcontractor for some data 
entry, and since the TEP failed to evaluate this aspect of the 
proposal, CDA believed that the evaluation was unreasonable.  CDA took 
the position that had the TEP been aware that Disclosure intended to 
use a subcontractor, Disclosure's proposal would have been downgraded 
because of the firm's failure to properly manage subcontractors under 
a previous contract.  We concluded that CDA was not prejudiced by any 
deficiencies that may have occurred in the evaluation.  

In its reconsideration request, CDA argues that in concluding that CDA 
was not prejudiced, we improperly substituted our judgment for that of 
the agency.  According to CDA, our Office is not in a position to know 
what the TEP would have done had it known that Disclosure was 
proposing to use a particular subcontractor.

As explained in our prior decision, competitive prejudice is an 
essential element of a viable protest.  Lithos Restoration, Ltd., 71 
Comp. Gen. 367 (1992), 92-1 CPD 379.  To demonstrate prejudice, the 
protester must show or it must otherwise be evident from the record 
before us that there is a reasonable possibility that but for the 
alleged agency error, the protester would have otherwise been selected 
for award.  Global Assocs. Ltd., B-271693; B-271693.2, Aug. 2, 1996, 
96-2 CPD  para.  100, at 6.  On the other hand, where no reasonable 
possibility of prejudice is shown or is otherwise evident from the 
record, our Office will not disturb an award, even if some technical 
deficiency in the procurement is apparent.  MetaMetrics, Inc., 
B-248603.2, Oct. 30, 1992, 92-2 CPD  para.  306 at 8; Merrick Eng'g, Inc., 
B-238706.3, Aug. 16, 1990, 90-2 CPD  para.  130 at 4, recon. denied, 
B-238706.4, Dec. 3, 1990, 90-2 CPD  para.  444.

Here, the record showed that the volume of Forms 3, 4, and 5 processed 
over the last year had been approximately 16,000 per month, while the 
volume of Form 144 is approximately 3,000 per month, for a total of 
approximately 19,000 forms processed per month or 57,000 forms per 
quarter (about 228,000 forms per year).  The record further showed 
that the volume of Form 13F--which is only filed on a quarterly 
basis--is approximately 1,100 per quarter (or about 4,400 forms per 
year).  In addition, the agency stated, and the protester did not 
dispute, that keying in paper Form 13F data will soon be obsolete.  In 
this regard, the SEC explained that it was moving towards requiring 
that all Form 13F filings be made electronically by the end of 1996, 
rendering manual data entry unnecessary.  Consistent with its 
transition toward electronic filings, the SEC stated that it 
anticipates that the volume of paper Form 13Fs filed will decrease 
over time as electronic filing of that form becomes mandatory.[4]

Based on these figures, and since the Form 13F filings will be made 
electronically by the end of the current year, we concluded that 
manual processing of Form 13F (i.e., keying in data from paper forms) 
would constitute less than 2 percent of the total work contemplated 
under the contract.  Given that the "technical qualifications" 
evaluation factor encompassed several elements unrelated to 
subcontractor use, and given that manual Form 13F processing is 
expected to account for less than 2 percent of the total effort and 
that this task will soon become obsolete, we found no reasonable basis 
to conclude that the TEP, had it known Disclosure intended to use a 
subcontractor to key in Form 13F data, would have downgraded 
Disclosure's proposal[5] by any meaningful amount.  Accordingly, we 
concluded that CDA was not prejudiced by any deficiencies that may 
have occurred in the evaluation of Disclosure's proposal with respect 
to the use of a subcontractor.

Contrary to CDA's argument on reconsideration, our analysis did not 
involve substituting our judgment for the TEP's.  Rather, our 
conclusion recognized that, based on the record before us, and in view 
of the evaluation scheme and the significance of the Form 13F work 
within the context of the contract as a whole, it would not be 
reasonable for the TEP to reduce Disclosure's rating materially based 
on any proposed use of a subcontractor for the Form 13F work.  Given 
that CDA does not dispute that the work contemplated to be performed 
by a subcontractor constitutes a relatively minor portion of the work 
under the contract, there is no basis to conclude that our prior 
decision was in error.

Alleged Revisions to Disclosure's Initial Proposal

Disclosure signed the contract on May 1, and returned the signed 
contract to the SEC with a cover letter dated May 2, stating in 
relevant part:

     "We note that Disclosure's offer dated January 12, 1995, has been 
     incorporated [into the contract] by reference. . . .  However, 
     given the period of time between the date of that offer, and now, 
     when the selection of the contract has been finalized, we would 
     like to inform the [SEC] that several changes have occurred with 
     regard to our operations.  In summary, these changes related to 
     certain personnel who are no longer with the company but for whom 
     equal or more capable staff have been employed, to the exact 
     technical solutions and methodologies to be used, and the use of 
     subcontractors, which have impacted our approach today versus the 
     1995 proposal.

     These updates in no way alter the material terms and conditions 
     of our offer, particularly as they relate to the services 
     contemplated, tasks, and prices.  We intend to fulfill the 
     requirements indicated in the contract completely, albeit in a 
     different, more capable manner than . . . initially proposed. . . 
     ."

Subsequent to the SEC's receipt of Disclosure's May 2 letter, and 
after CDA filed its protest, the contracting officer informed 
Disclosure that the SEC could not accept changes to its proposal.  The 
contracting officer explained that Disclosure's proposal had been 
evaluated and selected for award according to the terms of the RFP and 
Disclosure's initial proposal, and requested Disclosure to confirm in 
writing its willingness to accept and perform the contract under the 
terms of the RFP and in accordance with Disclosure's proposal as 
submitted.

In a May 29 letter, Disclosure's president responded to the 
contracting officer's request, assuring the SEC that the firm was 
committed to performing the contract consistent with the terms of its 
proposal.  Disclosure's president stated that the May 2 letter neither 
diminished the firm's commitment "nor modified any term or condition" 
of its proposal. 

Disclosure further explained that its statement with respect to the 
use of subcontractors is consistent with its technical approach as 
stated in its initial proposal.  In this regard, Disclosure's proposal 
stated that "Disclosure is considering the use of an outside vendor 
for keying the 13F filings . . . ."  Disclosure reaffirmed that 
statement in its response to the contracting officer, explaining that 
the firm was still considering that option.  Disclosure's letter 
further assured the SEC that it had "no other plans, intentions, or 
agreements to use subcontractors to produce the data required by the 
contract."

Subsequently, to further assure himself that Disclosure agreed to be 
bound by the terms of its proposal as it was evaluated and selected 
for award, the contracting officer held a telephone conference with 
Disclosure.  The record shows that the conference included a 
representative of Disclosure and SEC's Director of the Office of 
Filings and Information Services (OFIS) (the division within the SEC 
responsible for processing the forms covered by the contract).  The 
record contains a document dated June 3 memorializing that telephone 
conference in which the contracting officer affirms that both he and 
the OFIS Director were satisfied that Disclosure "had made no changes 
to its proposal and was contemplating performance in accordance with 
the terms of the contract and its proposal."

Contrary to the protester's contentions, the record does not show that 
Disclosure made any material changes to its initial proposal with 
respect to the use of subcontractors through the May 2 letter, or 
through subsequent communications with the SEC.  As noted above, 
Disclosure's proposal stated that the firm was considering the use of 
a subcontractor for keying in the Form 13F filings; the record 
indicates that it is not an uncommon practice for the contractor to 
supplement its work force during the peak periods corresponding to the 
regulatory quarterly filing deadlines.  The May 2 letter, with its 
general reference to the use of subcontractors, cannot reasonably be 
read as materially changing the approach set out in Disclosure's 
proposal.[6]  

In its reconsideration request, CDA argues that in concluding that the 
May 2 letter made no material changes to the proposal, we should not 
have considered "parol evidence"--i.e., the correspondence between the 
parties after CDA filed its protest.  Specifically, CDA maintains that 
we should have reached our conclusion based solely on the language of 
the May 2 letter, and not on Disclosure's statements made after CDA 
filed its protest.  CDA argues that our conclusion regarding the 
letter is clearly erroneous since the cover letter itself stated that 
certain "changes" impacted on Disclosure's proposal.

CDA's contention that we should have ignored the correspondence 
between Disclosure and the SEC regarding the May 2 letter is without 
merit.  In appropriate circumstances, contracting officials should 
consider extrinsic evidence when evaluating proposals.  E.g., Magnavox 
Advanced Prods. and Sys. Co., 69 Comp. Gen. 89 (1989), 89-2 CPD  para.  458.  
This is clearly such a case.  As Disclosure correctly points out, at a 
minimum, Disclosure's May 2 letter raised some doubt in the 
contracting officer's mind regarding Disclosure's proposal.  As a 
result, the contracting officer inquired further as to Disclosure's 
intent and the meaning of the May 2 letter.  In this connection, we 
have held that where there is any doubt as to an offeror's intent, an 
agency could not properly reject an offer that was otherwise in line 
for award without inquiring further as to the offeror's intent.  AAA 
Eng'g & Drafting, Inc., B-250323, Jan. 26, 1993, 93-1 CPD  para.  287.  To 
require an agency to ignore information which it reasonably believes 
relevant to an offeror's proposal, or which suggests that an offeror 
may not perform or intends to perform in a manner different from that 
reflected in a technically acceptable offer, would be unfair to both 
the agency and other competitors, and thus inconsistent with the 
competitive procurement system.  Department of the Navy--Recon., 
B-244918.3, July 6, 1992, 92-2 CPD  para.  199 at 4.  Thus, to the extent 
that Disclosure's letter raised any questions or introduced 
ambiguities regarding Disclosure's proposal, those questions were 
eliminated by the SEC's subsequent inquiry.  Since the agency acted 
reasonably in relying in part on the results of that subsequent 
inquiry to determine that the award to Disclosure was properly made, 
we see no reason to exclude that information from the record in 
reviewing CDA's allegations.

Finally, CDA argues that we erred in concluding that the SEC properly 
allowed Disclosure to waive the expiration of its proposal acceptance 
period.  According to CDA, that conclusion is erroneous because 
Disclosure made acceptance of its initial proposal contingent on the 
agency's acceptance of the alleged changes.  As we explained, it is 
not improper for an agency to accept an expired offer without opening 
negotiations where, as here, acceptance is not prejudicial to the 
competitive system.  See The Fletcher Constr. Co., Ltd., B-248977, 
Oct. 15, 1992, 92-2 CPD  para.  246.  Since we concluded that Disclosure 
made no material changes to its proposal, and all offers had expired 
by the May 1996 award date, the SEC properly allowed Disclosure to 
waive the expiration of its proposal acceptance period since a waiver 
under such circumstances is not prejudicial to the competitive system.  
See Sublette Elec., Inc., B-232586, Nov. 30, 1988, 88-2 CPD  para.  540.  
CDA has not shown that our decision contained any errors in this 
regard.

The request for reconsideration is denied.

Comptroller General
of the United States

1. SEC rules require securities holdings by certain "insiders," such 
as officers and directors, to be reported to the SEC on Form 3; 
subsequent transactions are reported on Form 4; and an annual report 
is submitted on Form 5.  Form 144 is a notice of intent to sell 
restricted securities.  Form 13F is a report of securities holdings 
filed quarterly by institutional investment managers.  See 17 C.F.R.  sec.  
240.13f-1, 240.16a-3 (1996).

2. Both CDA and Disclosure offered proposals at no cost to the 
government, and thus each proposal earned 25 points for price, the 
maximum number of points available.

3. In its protest, CDA also argued that the TEP's evaluation of its 
past performance was unreasonable because the TEP downgraded its 
proposal for performance problems for which, according to CDA, it was 
not responsible.  We found no basis to object to the evaluation of 
CDA's proposal in this area.  In its reconsideration request, CDA does 
not take issue with this aspect of our decision.

4. Recognizing that electronic filing of Form 13 is the wave of the 
future, CDA stated in its proposal that "[t]oday, approximately 13 or 
one [percent] of Form 13F filings are received on tape and process[ed] 
via the [Electronic Data Gathering Analysis and Retrieval] system.  
This number is expected to grow materially over the period of the 
contract."  

5. With respect to Form 13F, since CDA proposed to use "external 
keyers predominantly to meet the four peak [quarterly filing 
periods]," any rescoring involving subcontractors could also affect 
CDA's score.

6. In its reconsideration request, CDA maintains that our decision 
overlooked other alleged "changes" allegedly reflected in Disclosure's 
letter regarding personnel and technical solutions.  CDA focused its 
protest on Disclosure's statement regarding its use of a subcontractor 
and did not present any arguments or evidence showing that Disclosure 
also made material changes to its proposal regarding personnel or 
technical methods.  CDA also complains in its reconsideration request 
that it was denied the opportunity to obtain relevant documents to 
prove its case.  Contrary to CDA's assertions, the SEC produced all 
documents relevant to CDA's protest.  Moreover, during a telephone 
conference held between the parties to address CDA's supplemental 
document request, the SEC confirmed that it had produced all documents 
responsive to CDA's document request.  The fact that the record did 
not contain any documents supporting CDA's protest allegations does 
not mean that the firm was in any way denied an opportunity to request 
relevant documents, or to inquire further, as it in fact did here, as 
to the existence of any specific document that it believed may have 
been inadvertently omitted from the record.