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.