BNUMBER: B-274626; B-274626.2
DATE: December 23, 1996
TITLE: Intelligent Decisions, Inc.
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DOCUMENT FOR PUBLIC RELEASE
A protected decision was issued on the date below and was subject to a
GAO Protective Order. This version has been redacted or approved by
the parties involved for public release.
Matter of:Intelligent Decisions, Inc.
File: B-274626; B-274626.2
Date:December 23, 1996
Daniel B. Abrahams, Esq., and Raymond Fioravanti, Esq., Epstein Becker
& Green, P.C. for the protester.
Stephen T. Yelverton, Esq., for Win Laboratories, Ltd., an intervenor.
James J. Roby, Esq., and John R. Caterini, Esq., Department of Justice
and Roger D. Waldron, Esq., General Services Administration, for
the agency.
Paula A. Williams, Esq., and Michael R. Golden, Esq., Office of
General Counsel, GAO, participated in the preparation of the decision.
DIGEST
1. Under request for quotations which sought prices for computer
systems and related software listed on Federal Supply Schedule, agency
properly selected the vendor that offered the best system
configuration that meets the agency's needs at the lowest overall
cost.
2. Where record shows that challenged agency discussions with vendor
ultimately selected to provide the agency's computer needs were in the
context of a Federal Supply Schedule buy, protest contending that such
communications were improper is denied since the agency may properly
obtain additional information in order to determine that it was
selecting the vendor that meets the agency's needs at the lowest
overall cost.
DECISION
Intelligent Decisions, Inc. (IDI) protests the actions of the
Department of Justice (DOJ) in connection with request for quotations
(RFQ) No. DOJ-SAS-Q-C089 for personal computers, related software and
hardware. IDI contends that DOJ improperly awarded a contract to WIN
Laboratories, Ltd. (WIN) under the simplified acquisition procedures
in Part 13 of the FAR. IDI also argues that DOJ improperly accepted a
revised quotation from WIN after the time set for receipt of
quotations, failed to evaluate quotations on an equal basis because
WIN was allowed to substitute a non-compliant motherboard, and held
improper discussions with WIN to the detriment of other vendors.
We deny the protests.
In June 1996, DOJ identified a need for an estimated 2,000 to 4,000
personal computers to be used in its consolidated office network
system, and the contracting officer concluded that she could fulfill
the agency's computer needs through a Federal Supply Schedule (FSS)
buy. As a result, the contracting officer and other DOJ officials met
with officials from the General Services Administration's (GSA) FSS
office to seek guidance on making large purchases under the FSS. At
that June 18 meeting, GSA officials indicated that since a large buy
was anticipated, DOJ could request price reductions from the vendors'
schedule prices and enter into a blanket purchase agreement (BPA) with
the FSS contractor that was selected to fulfill its needs.[1]
Thereafter, DOJ's technical representative contacted 10 vendors
(including WIN and IDI) holding Federal Supply Classification (FSC)
group 70 schedule contracts encompassing various microcomputers and
associated software. The technical representative states that he
discussed the agency's need for an estimated quantity of 2,000 to
4,000 systems in several telephone conversations and face-to-face
meetings with the vendors and requested that each vendor submit
descriptive literature and price lists for various configurations of
computer systems available from their schedule.[2]
On August 8, the agency issued the RFQ to six vendors, including WIN
and IDI. The RFQ stated that only quotations under GSA schedule
contracts would be considered for 2,000 computer systems containing
either Intel Pentium 133 processors or Intel Pentium 166 processors.
It provided for award on a best value basis, system costs and other
factors considered, and listed the following minimum specifications:
(a) Intel motherboard w/plug & play (PnP) BIOS, Energy*Star
(b) 256k or larger pipeline burst cache
(c) 32 meg 60 ns EDO memory
(d) EIDE hard disk controller, Mode 4 capable
(e) 1.2 gigabyte or larger hard drive, EIDE Mode 4
(f) 3.5" floppy
(g) 2 megabyte video, PnP
(h) 17" monitor, at least 1280 x 1024, Energy*Star, Low
Radiation MPR-II, 0.28mm dot pitch/stripe or smaller
(i) Internal CD-ROM w/6X (900bps) or faster transfer rate, and
145ms or faster access time
(j) Sound card (Sound Blaster 16 compatible)
(k) Dual speakers
(l) Microsoft mouse
(m) Windows 95 (104-key keyboard)
(n) 3COM 3C905-TX network interface card
(o) Windows 95 w/CD-ROM and manual.[3]
The agency received six quotes by the August 12 receipt date. WIN's
initial quotation (dated August 11 but received on August 12) for the
Pentium 133 processor was $1,679 each and $1,868 each for the Pentium
166. Upon reviewing WIN's quotes, the technical representative
discovered that the quotations did not include pricing for the Windows
3.1 software license. Because the agency had identified this as a
requirement during the technical representative's communications with
vendors prior to issuance of the RFQ, he contacted WIN and allowed the
vendor to revise its quotations to include this requirement. That
same day, WIN submitted revised quotations of $1,832 each for the
Pentium 133 and $1,993 each for the Pentium 166. In its quotations,
WIN offered to provide, after delivery of an initial 700 systems,
Pentium processors with a 2.0 gigabyte hard drive (an upgrade from the
requirement for 1.2 GB) and a video display of 2.5 megabyte VideoRAM
with a 128-bit PCI adapter (an upgrade from the 2.0 MB VideoRAM,
64-bit PCI adapter). IDI's response to the RFQ contained quotes for
different configurations for the Pentium 133 and Pentium 166
processors and included open market prices for certain items (which
the agency did not evaluate because the RFQ called for FSS pricing
only). For the Pentium 133 system, IDI's quote was $2,000 each; for
two different configurations of Pentium 166 systems, IDI quoted $2,195
and $2,334, respectively.
In reviewing the quotes received, DOJ compared the relatively small
price differential between the Pentium 133 and Pentium 166 and the
difference in performance of each system and decided to eliminate the
Pentium 133 system from further consideration. Of the quotes received
for the Pentium 166, WIN's was the lowest priced at $1,993, with
certain upgrades after delivery of the first 700 systems. The next
lowest quotes were from International Data Products at $2,047 each
(offering a newer model Intel motherboard than either WIN or IDI
quoted), followed by NYMA, Inc. at $2,102 each, and IDI at $2,195 and
$2,334, respectively.[4] In its best value analysis, DOJ weighed
WIN's offered upgrades for the Pentium 166 against the systems offered
by the other five vendors and determined that WIN's system was
equivalent to, or better than, the systems offered by the others and
was the lowest priced. The contracting officer therefore concluded
that WIN's quotation offered the best value to the government and
selected WIN to fulfill its computer needs.[5] On September 5, DOJ
issued a "Confirming Order," No. 6FCJMD-0792, for an estimated
quantity of 3,000 Pentium 166 systems to WIN under its GSA schedule
contract for $5,979,000. These protests followed.[6]
THE PROCUREMENT
DOJ maintains that it conducted an FSS buy, ultimately entering into a
BPA with WIN pursuant to which it could place orders from time to
time. IDI, on the other hand, argues that this acquisition was not an
FSS acquisition, but was either a simplified acquisition under Part 13
of the FAR or a competitive negotiated procurement under Part 15. The
protester alleges that regardless of which of these two FAR parts is
applicable, the procurement was defective because DOJ treated vendors
unequally and unfairly in that the agency held discussions only with
WIN and improperly waived the requirement for an Intel-manufactured
motherboard by allegedly accepting a WIN-modified motherboard.
We conclude that this procurement was an FSS buy. Non-mandatory,
multiple award FSS contracts are indefinite delivery contracts for
commercial firms to provide government agencies with a variety of
commonly used supplies and services at stated prices for given periods
of time. Government ordering activities can order supplies or
services under simplified procedures from the FSS contractors to meet
their requirements.[7] FAR sec. 8.401(a). Here, the record indicates
that DOJ determined that its requirements could be satisfied through
the use of the FSS,[8] then reviewed price lists and descriptive
literature of competing systems, obtained quotes from FSS vendors,
compared the features of WIN's offered Pentium 166 processor with
those of other FSS vendors, and selected WIN after determining that
its Pentium 166 processor represents the best value and meets the
agency's needs at the lowest overall cost.
Notwithstanding these facts, the protester contends, on the basis of
language included in the September 5 document--the indefinite quantity
contract language and other standard contract clauses--that DOJ
changed the nature of the procurement from that of an FSS buy to the
award of an indefinite quantity contract under either simplified
acquisition procedures or full and open competitive procedures.
However, it is clear from the record that the agency intended to
satisfy its needs through FSS purchases and that what DOJ did here was
consistent with the regulations governing FSS transactions. While the
September 5 document is not a fixed quantity order that is typically
placed against an FSS contract and contains certain language typically
found in an indefinite quantity contract, it also does not obligate
the government to order any minimum quantity, a requirement of
indefinite quantity contract. See FAR sec. 16.504(a)(1). Thus, under
circumstances here, we think that DOJ, through this September 5
document, in effect entered into a BPA. A BPA, of course, is a
mechanism for placing charge account orders for an agency's repetitive
needs. FAR sec. 13.201. The FSS program envisions agencies entering
into BPAs with FSS contractors. FAR sec. 13.202(c)(3).
IDI argues that DOJ has no authority to enter into a BPA within the
context of an FSS buy. IDI points out that the authority to enter
into a BPA under FSS procedures, once authorized by FAR sec. 8.406, was
removed by Federal Acquisition Circular (FAC) No. 90-21 (October 25,
1994). GSA, commenting on this matter at our request, acknowledges
that FAC No. 90-21 deleted FAR sec. 8.406 from the FAR; however, it takes
the position that ordering agencies may enter into BPAs with FSS
contractors pursuant to FAR sec. 13.202(c)(3) and clause H.5 of their FSS
contracts. FAR sec. 13.202(c)(3) provides that "BPAs may be established
with Federal Supply Schedule contractors, if not inconsistent with the
terms of the applicable schedule contract" and, as previously
indicated, section H.5 of WIN's and IDI's schedule contracts expressly
authorizes the contractor to enter into a BPA with an ordering
agency.[9] Purchases under BPAs with FSS contractors are not limited
to $100,000. FAR sec. 13.204(b). These provisions clearly support GSA's
position. Under the circumstances, we conclude that DOJ's actions
were fundamentally consistent with an FSS buy.
DISCUSSIONS
Since we have concluded that this acquisition was an FSS buy, IDI's
allegations that the agency held improper discussions with WIN and
impermissibly allowed WIN to "revise its price and technical solution"
are without merit.
Quotations in response to an RFQ that reflect FSS contract prices are
not offers that can be accepted by the government. Rather, they are
informational responses that indicate the products on the FSS that
vendors would propose to meet the agency's requirements and the prices
of those products and related services that the government may use as
the basis for issuing a delivery order to an FSS contractor. Crown
Furniture Mfg. Inc., B-225575, May 1, 1987, 87-1 CPD para. 456. Thus,
vendors responding to an agency's request for quotations for products
on an FSS do not submit offers that define exactly what the vendor
would supply at what price; that already is defined by their FSS
contracts. Since such requests are merely intended to identify
suitable products available on the FSS, the agency can seek additional
information from vendors after the submission of quotations. Monroe
Sys. for Business, Inc., B-271136, May 17, 1996, 96-1 CPD para. 242; Hugo
Heyn Co., B-255329, Feb. 15, 1994, 94-1 CPD para. 113. Therefore, to the
extent the agency needed clarification of whether WIN's quotation
included, for example, the cost to provide the Windows 3.1 license,
the agency properly could contact WIN and obtain the information it
required. We think DOJ's requests for additional information were
proper in the context of an FSS buy and we have no basis to object to
the agency's actions.
EVALUATION
IDI also argues that WIN's Pentium 166 processor does not comply with
the stated RFQ specifications because WIN does not list an Intel
motherboard on its GSA schedule; therefore, it asserts, WIN unfairly
was allowed to offer a non-conforming motherboard in contravention of
the RFQ requirements.
The record, including the hearing testimony of WIN's representatives,
establishes that the Intel Endevor II system motherboard described in
WIN's response to the RFQ, is the same motherboard listed on WIN's GSA
schedule as part number
DTS-01-002. The descriptive literature furnished by WIN prior to the
issuance of the RFQ, which DOJ's technical representative reviewed,
shows that the motherboard WIN would provide was an Intel
motherboard. Nothing in the record indicates that WIN's nomenclature
denotes that the Intel-manufactured motherboard was modified. As to
the nomenclature used by WIN, the hearing testimony of WIN's
representatives indicate that WIN routinely assigns its own internal
identification numbers to parts made by other manufacturers, a common
practice in the computer industry. Thus, contrary to the protester's
allegation, the record shows that WIN quoted an Intel-manufactured
motherboard,[10] and we find that the agency reasonably determined
that WIN's Pentium 166 processor meets the stated specification
requirements.
The protests are denied.
Comptroller General
of the United States
1. WIN's GSA schedule contract No. GS-35F-4312D and IDI's GSA schedule
contract No. GS-35F-4153D authorize each contractor to enter into BPAs
with procuring agencies. The BPA provision in clause H.5 of their FSS
contracts states as follows:
"The contractor agrees to enter into blanket purchase
agreements in accordance with FAR 13.2 with ordering
activities, provided that:
a. Only items covered by the contract are ordered under
such agreements;
b. The period of time covered by such agreements shall not
exceed the period of the contracts; and
c. Orders placed under such agreements shall be issued in
accordance with all applicable regulations and the terms
and conditions of the contract. (NOTE: THE MAXIMUM ORDER
OF THE CONTRACT APPLIES SOLELY TO INDIVIDUAL ORDERS PLACED
AGAINST THE BLANKET PURCHASE AGREEMENTS AND HAS NO BEARING
ON THE CUMULATIVE OR TOTAL VALUE OF THESE ORDERS)."
[Emphasis in original.]
2. The record indicates that IDI was aware of DOJ's estimated needs,
as evidenced by its June 26 submission to the agency in which the
protester provided pricing for various system configurations "based
upon the purchase of 2,000-4,000 units."
3. A hearing was conducted for the purpose of receiving testimony from
DOJ's technical representative and two WIN representatives. See Bid
Protest Regulations, sec. 21.7, 61 Fed. Reg. 39039, 39042 (1996) (to be
codified at 4 C.F.R. sec. 21.7). DOJ's technical representative
testified that while the specifications should have listed Windows 3.1
software and the Windows 3.1 license, they did not. Video Recording
(VR) at 10:18:27. He further testified that in his communications
with each vendor--prior to the issuance of the RFQ--he had identified
the Windows 3.1 software and the Windows 3.1 license as requirements
that should be provided from their schedules. VR at 10:20:08.
4. While six quotations were received and evaluated, we only discuss
the quotations received from WIN and IDI.
5. The DOJ representative testified that the agency wanted all the
systems to have the offered upgrades so he asked WIN for a price quote
if all the systems (not just those delivered after the first 700)
contained these upgrades. WIN subsequently offered an upgraded 1.6
gigabyte hard drive (not a 2.0 gigabyte) for the same price of $1,993
each.
6. Performance of WIN's contract has not been suspended based on the
agency's determination that continued contract performance is in the
best interest of the government.
7. The terms "Federal Supply Schedules" and "Multiple Award Schedules"
are used interchangeably throughout Subpart 8.4 of the FAR.
8. Under the FAR, an agency is required to satisfy its requirements
for supplies and services from or through a list of sources set forth
in descending order of priority at FAR sec. 8.001(a). Purchasing from
the FSS has a higher priority than purchasing through non-FSS
commercial sources. FAR sec. 8.001(a)(1).
9. This BPA provision was added to WIN's and IDI's schedule contracts
in October 1995 through bilateral modifications.
10. At the hearing, WIN representatives brought a demonstrator Intel
motherboard and a demonstrator WIN motherboard for inspection by the
parties. It appears that Intel assigns its own serial numbers on
motherboards it manufactures and the configuration of the
Intel-manufactured motherboard appears unique to Intel.