BNUMBER: B-272414.7; B-272414.8; B-274628; B-274628.2
DATE: December 20, 1996
TITLE: Canon USA, Inc.; Minolta Corporation
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Matter of:Canon USA, Inc.; Minolta Corporation
File: B-272414.7; B-272414.8; B-274628; B-274628.2
Date:December 20, 1996
Andrew Mohr, Esq., Cohen & White, for Canon USA, Inc., and Robert
Brams, Esq., and Michael Schaengold, Esq., Patton Boggs LLP, for
Minolta Corporation, the protesters.
Trisa J. Thompson, Esq., and G. Matthew Koehl, Esq., Seyfarth, Shaw,
Fairweather & Geraldson, and Harry Orenstein, Esq., for Xerox
Corporation, an intervenor.
Turhan Robinson, Esq., and Marie Adamson Collins, Esq., General
Services Administration, for the agency.
Guy R. Pietrovito, Esq, and James A. Spangenberg, Esq., Office of the
General Counsel, GAO, participated in the preparation of the decision.
DIGEST
1. Dismissal of protests as academic is affirmed where the corrective
action provided by the contracting agency prior to the filing of the
agency's report on the protests is the maximum relief that the General
Accounting Office would have provided had a decision been issued
finding the protests have merit; protesters are not entitled to
reimbursement of the costs of filing and pursuing the protests where
the agency timely implemented its promised corrective action.
2. Protest that a modification to a firm's multiple award schedule
contract exceeds the scope of the contract and is an unjustified sole
source procurement is academic where the modification was rescinded
within two weeks of the date on which the protests were filed, and
prior to the modification's effective date, ordering agencies were
advised that equipment could not be ordered pursuant to that
modification.
DECISION
Canon USA, Inc. and Minolta Corporation request reconsideration of our
dismissal of their protests of the award of delivery orders to Xerox
Corporation by the United States Army Information Systems Command
(USAISC) and the General Services Administration (GSA) under contract
No. DAE32-94-D-0004 (0004), for the rental and maintenance of
photocopier equipment. Canon and Minolta also protest GSA's issuance
of modification No. 49 to Xerox under its Federal Supply Contract
Group 36, Part IV Schedule Contract No. GS-26F-1001B (1001B) for
photocopier equipment, maintenance, and services, to allow federal
agencies to convert equipment ordered under other government contracts
(including contract No. 0004) to the schedule contract. Canon and
Minolta request that we sustain the protest against the award of
delivery orders to Xerox under contract No. 0004 and against the
issuance of modification No. 49 to contract No. 1001B, and that we
recommend that the orders placed under those contracts be terminated,
the equipment ordered thereunder be removed, and the protesters be
reimbursed their costs of filing and pursuing the protests.
We affirm the dismissal of Canon's and Minolta's protests of the
delivery orders under contract No. 0004 as academic; dismiss as
academic Canon's and Minolta's protests of modification No. 49 to
contract No. 1001B; and deny Canon's and Minolta's requests for
entitlement to costs.
Contract No. 0004, as awarded to Xerox by the Army on August 10, 1994,
provided that the USAISC could order copier equipment and services for
USAISC headquarters, subordinate commands, and field operating
activities within the continental United States (CONUS) up to stated
estimated quantities; the contract also provided that other military
and civilian agencies within the CONUS could order copier equipment
and services "as long as their annual requirements do not exceed 30
percent of the estimated annual quantities established for USAISC."
The contract with option years extended through June 1999. Subsequent
to award, control and administrative responsibility for the contract
was transferred by the Army to GSA. Pursuant to the contract, a
number of delivery orders were issued to Xerox for the rental of
copiers for USAISC and other agency offices.
Minolta and Canon protested that many of the orders placed by other
agency offices under contract No. 0004 exceeded that contract's
maximum quantity limitation for non-USAISC offices and, pursuant to
Liebert Corp., 70 Comp. Gen. 448 (1991), 91-1 CPD para. 413, should have
been the subject of competition. The protesters requested that the
performance of all government delivery orders in excess of the
contract's maximum quantity be suspended and those requirements
competed.
Subsequent to the filing of the protests and prior to the submission
of the agency's reports on the protests, GSA modified contract No.
0004 to accede to Minolta's and Canon's interpretation of the
contract's maximum quantity limitation provision and agreed not to
exercise the contract option for performance beginning October 1,
1996. According to GSA, this meant that after September 30, the
copiers delivered under the contract must be removed and the
government's requirements for copiers and copier services reprocured.
The Army stated that, in accordance with the transfer of contract
responsibility to GSA, the Army would not place any new delivery
orders against the contract. On August 21, GSA notified its customer
agencies of the expiration of contract No. 0004 and that the customer
agencies' copier needs could no longer be met through that contract.
GSA also notified customer agencies that GSA had in place alternative
contracts, such as the federal supply schedule contracts, to meet the
rental copier needs.
On August 30, we dismissed Canon's and Minolta's protests as academic
because GSA's promised corrective action provided the maximum relief
that our Office would have provided had we issued a decision finding
the protests to have merit. See East West Research, Inc.--Recon.,
B-233623.2, Apr. 14, 1989, 89-1 CPD para. 379.
On September 5, GSA issued modification No. 49 to Xerox's federal
supply schedule contract No. 1001B, which provided, effective October
1, 1996, for a temporary price reduction for the rental of certain
Xerox copier models and that "[f]ederal customers renting (currently
installed) any Xerox . . . copiers under any and all Federal contracts
as of September 30, 1996, may convert to the monthly fixed rate rental
prices shown below." [Emphasis in original.] Pursuant to this
modification, equipment ordered from Xerox under contract No. 0004
could have been converted to coverage under the Xerox schedule
contract.
Canon and Minolta now timely protest that the conversion of existing
rental equipment under other contracts to contract No. 1001B under
modification 49 exceeds the scope of Xerox's federal supply schedule
contract because that contract did not include the rental of used
equipment. Canon and Minolta also argue that the conversion of
equipment ordered under contract No. 0004 to Xerox's federal supply
contract would be an unjustified, sole source procurement. Canon and
Minolta also request that under the circumstances we reconsider our
August 30 dismissal of the protests of the award of delivery orders
under contract No. 0004 because GSA's issuance of modification 49
deprived the protesters of the promised corrective action that formed
the basis of our dismissal of the protests, that is, the removal of
the ordered equipment. Canon and Minolta finally argue that, in
accordance with our decision in Commercial Energies, Inc.--Recon. and
Declaration of Entitlement to Costs, 71 Comp. Gen. 97 (1991), 91-2 CPD para.
499, we should recommend that the protesters be reimbursed the costs
of filing and pursuing their protests because GSA not only failed to
perform its promised corrective action, but issued an illegal
modification to Xerox's federal supply contract to permit the
continued rental of the improperly ordered Xerox copiers.
In response to the protests, on September 26, prior to the effective
date of modification 49, GSA rescinded Modification 49 because the
agency agreed that contract No. 1001B did not include the rental of
used equipment. By letter of October 9, GSA notified its customer
agencies that contract No. 0004 had expired on September 30 and that
modification 49 to contract No. 1001B had been rescinded on September
26; GSA stated that:
"[a]ccordingly, there is no contract method in place available
through GSA to retain the machines procured [under contract No.
0004] beyond September 30. Therefore, the machines covered by
[contract No. 0004] should have been removed unless your agency
independently used another contract method permitted by the
Federal Acquisition Regulation [FAR] or other legal authority."
GSA contends that its corrective action has provided Canon and Minolta
with all the relief the protesters could reasonably expect in response
to their protests of contract No. 0004 and modification 49 to contract
1001B. In this regard, GSA disputes Canon's and Minolta's view that
by issuing modification 49 the agency reneged on its promised
corrective action in response to the protests of contract No. 0004.
GSA states that ordering agencies could always obtain copier rental
under the multiple award schedule in accordance with the FAR, and that
modification 49 was issued to notify current renters of Xerox machines
under federal contracts that these machines could be rented under the
Xerox multiple award schedule contract. GSA rescinded modification 49
because Xerox's multiple award schedule contract did not provide for
the rental of used copiers (although the multiple award solicitation
had allowed for rental of used copiers).
We agree with GSA that Canon and Minolta have received all the relief
they could reasonably have expected from our Office had we issued a
decision finding their protests have merit. Regarding Canon's and
Minolta's challenge to the legitimate scope of contract No. 0004, GSA
allowed the contract to expire and informed customer agencies that
their rental copier could not be retained under this contract. While
Canon and Minolta argue that GSA should have policed this promised
corrective action by ordering other agencies and Xerox to remove the
equipment obtained under that contract, this is not relief that Canon
and Minolta could reasonably have expected from our Office. Rather,
had we decided Canon's and Minolta's protests and found them to have
merit, we would have recommended that GSA inform its customer agencies
that the rental of these copiers exceeded the scope of contract No.
0004 and should be removed--this is exactly the corrective action
provided by GSA.
Nor do we agree with Canon and Minolta that the issuance of
Modification 49 to contract No. 1001B deprived the protesters of the
promised corrective action in response to the protests of the orders
placed under contract No. 0004. As promised in response to Canon's
and Minolta's protests of contract No. 0004, GSA allowed contract No.
0004 to expire and informed customer agencies that rental copiers
could not be retained under that contract. While modification 49
ostensibly informed customer agencies that currently rented Xerox
copiers under any contract, including contract No. 0004, could be
rented under Xerox's multiple award schedule, this was consistent with
GSA's August 21 notice that multiple award schedule contracts were
available to satisfy customer agencies' rental copier needs. GSA
immediately rescinded modification 49, before its effective date, when
the agency was informed that Xerox's multiple award schedule contract
did not provide for the rental of used copiers. Thus, Canon's and
Minolta's protests against contract No. 0004 were properly dismissed
as academic.
Moreover, because Canon and Minolta have received the corrective
action promised by GSA in response to their protest under contract No.
0004--the expiration of that contract--we do not agree that Canon and
Minolta are entitled to reimbursement of the costs of filing and
pursuing the protests. Unlike Commercial Energies, Inc., supra, in
which we found that a protester was entitled to reimbursement of its
costs of filing and pursuing the protest where an agency did not
timely implement its promised corrective action which allowed the
awardee to continue performance of an improperly awarded contract, GSA
here did not delay implementing its promised relief.
Finally, we find that Canon's and Minolta's protests of the issuance
of modification 49 to Xerox's multiple award schedule contract are
academic. As noted above, on September 26, within 2 weeks of Canon
and Minolta's protests and prior to the effective date of the
modification, GSA rescinded modification 49. This resolves Canon's
and Minolta's complaints that this modification exceeds the scope of
Xerox's multiple award schedule contract and is an unjustified
sole-source action. Rescission of modification 49 and advising
customer agencies that Xerox equipment could not be ordered pursuant
to that modification is all the relief that our Office would recommend
had we issued a decision finding the protests against the issuance of
modification 49 to have merit.[1] The issues therefore are
academic.[2]
The prior dismissals of contract No. 0004 are affirmed, the requests
for entitlement to protest costs are denied, and the protests of
modification 49 to contract No. 1001B are dismissed as academic.
Comptroller General
of the United States
1. GSA advises that it does not have the authority to order the
physical removal of Xerox equipment order modification 49, but could
only, as it did, advise customer agencies that equipment could not be
ordered pursuant to this modification. While the protesters assert
that GSA does have such authority, this involves GSA's administration
of its contract and is thus not appropriate for review under our bid
protest function. Bid Protest Regulations, sec. 21.5(a), 61 Fed. Reg.
39039, 39045 (1996) (to be codified at 4 C.F.R. sec. 21.5(a)).
2. While Canon and Minolta complain that a number of ordering agencies
have improperly converted rented Xerox copiers to Xerox's multiple
award schedule under the authority of modification 49 and continue to
rent these machines, despite GSA's notice that the modification has
been rescinded, these ordering agencies' procurement actions have not
been protested to our Office and are thus not for our review.