BNUMBER:  B-275935; B-275935.2 
DATE:  April 21, 1997
TITLE: Matter of:Sylvest Management Systems Corporation 

**********************************************************************

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:Sylvest Management Systems Corporation

File:     B-275935; B-275935.2

Date:April 21, 1997

William F. Savarino, Esq., Cohen & White, for the protester.
William M. Rosen, Esq., and Robert J. Moss, Esq., Dickstein Shapiro 
Morin & Oshinsky, for BTG, Inc., an intervenor.
Michael L. Wills, Esq., Tennessee Valley Authority, for the agency.
Scott H. Riback, Esq., and John M. Melody, Esq., Office of the General 
Counsel, GAO, participated in the preparation of the decision.

DIGEST

1.  Tennessee Valley Authority (TVA) Act, 16 U.S.C.  sec.   sec.  831-831dd 
(1994), and "procurement code" adopted by TVA Board require, at a 
minimum, that TVA consider total price in evaluating proposals and 
making award decisions.

2.  Protest is sustained where record shows that price evaluation 
improperly failed to include the cost of all required items in its 
evaluation of awardee's price for computer systems;  some required 
hardware items were listed in the proposal as optional equipment and 
were priced separately from the systems prices, and a certification 
executed by the awardee in its best and final offer was not sufficient 
to include those optional items in the systems at no additional cost.  
Award therefore improperly was based on less than the actual price of 
the awardee's systems.

DECISION

Sylvest Management Services Corporation protests the award of a 
contract to BTG, Inc. under request for proposals (RFP) No. YD-142201, 
issued by the Tennessee Valley Authority (TVA) for the purchase of 
computer hardware and maintenance support services.  Sylvest argues 
that the award to BTG is improper because its evaluated price did not, 
as TVA believed, include all required equipment.

We sustain the protest.

The RFP included three broad schedules of products and services.  
Schedule I was for the purchase of computer maintenance services, and 
Schedules II and III were for the purchase of various hardware and 
software upgrades to existing TVA computers, as well as for the 
purchase of new hardware.  The solicitation also permitted the award 
of multiple contracts, and the agency advised that it reserved the 
right to award one contract for Schedule I and another for Schedules 
II and III; this protest concerns only the new hardware requirements 
under Schedule III, and thus only the portion of BTG's contract 
covering that equipment.  Under schedule III, firms were required to 
offer nine servers--three different-sized servers (small, medium, and 
large) from three different manufacturers.  Offerors were required to 
run both industry standard and TVA needs-specific benchmark testing.  
The RFP required offerors to certify as follows:

     "Regarding the benchmark requirements, whatever configuration you 
     use to run the benchmark successfully shall be the same 
     configuration you use in your pricing proposal."

The acquisition was conducted on a best value basis, with the RFP 
specifying that TVA would make award to the offeror whose proposal 
received the highest cumulative score for both technical and price 
evaluation factors.  TVA received numerous offers in response to the 
RFP and, after evaluating the proposals, engaging in discussions and 
soliciting two rounds of best and final offers (BAFO), made award to 
BTG as the firm submitting the proposal deemed to offer the best 
overall value to the government.

SCOPE OF REVIEW

As an initial matter, TVA argues that this acquisition is not subject 
to generally applicable procurement statutes and regulations, 
including the Federal Property and Administrative Services Act of 1949 
(FPASA) as amended, 41 U.S.C.  sec.  253-266 (1994), and the Federal 
Acquisition Regulation (FAR), 48 C.F.R. chap. 1 (1996).  In this 
regard, TVA notes that Congress, through the enactment of the 
Information Technology Management Reform Act of 1996, Pub. L. No. 
104-106,  sec.  5101, 101 Stat. 679, 680 (1996), recently repealed the 
Brooks Act, 40 U.S.C.  sec.  759 (1994); the Brooks Act was the authority 
under which TVA previously conducted its automatic data processing 
(ADP) acquisitions (such as the one here), and which required it to 
abide by the various statutes and regulations noted above in 
conducting ADP procurements.  Telos Field Eng'g, B-257747, Nov. 3, 
1994, 94-2 CPD  para.  172, at 3, and authorities cited therein.  According 
to TVA, this repeal, along with solicitation language stating that TVA 
"will be the sole judge of the suitability of products offered in 
response to the solicitation," effectively excepts this acquisition 
from procurement statutes and regulations, and precludes review of 
this protest by our Office.  TVA maintains that it is bound solely by 
the requirements of the TVA Act, 16 U.S.C.  sec.  831-831dd (1994), and 
the procurement procudures and policies promulgated by the TVA Board.

We do not agree that TVA's actions here are beyond review.  First, it 
is well established that TVA falls under the definition of "federal 
agencies" subject to our bid protest jurisdiction pursuant to the 
Competition in Contracting Act (CICA).  31 U.S.C.  sec.  3551(3); see also 
40 U.S.C.  sec.  472 (1994).  Our original decision to this effect, Monarch 
Water Sys., Inc., 64 Comp. Gen. 756, 759-762 (1985), 85-2 CPD  para.  146 at 
5-9, which was issued shortly after the 1984 passage of CICA and 
followed in subsequent cases,[1] has not been repealed by statute, nor 
are we aware that legislation has ever been proposed to do so.

Second, the TVA Act and TVA's implementing resolutions provide a basis 
for review.  Section 9(b) of the TVA Act, 16 U.S.C.  sec.  831h(b) (1994), 
requires TVA to conduct its procurements in accordance with procedures 
which the TVA Board has determined to be adequate to ensure 
prospective offerors notice of, and an opportunity to compete for, the 
agency's requirements.  Pursuant to this authority, the TVA Board has 
passed a resolution, dated February 13, 1991, adopting a "revised 
procurement code" which outlines TVA's policies and procedures for 
conducting its acquisitions.  Among other things, the procurement code 
requires TVA to "purchase personal property and services in a manner 
that ensures the best value to TVA in quality, delivery, reliability, 
and price," and allows consideration of both price and non-price 
factors.  In addition, while the code permits TVA to accept an offer 
that does not comply with one or more solicitation terms, TVA may only 
do so where "acceptance of such an offer would not adversely affect 
competition for the requirement."

Thus, TVA, by virtue of its implementation of the TVA Act, is required 
to obtain the best value when conducting procurements unless doing 
otherwise would not adversely affect the competition.  The 
solicitation language purporting to make TVA the sole determiner of 
product suitability does not negate that requirement.  Accordingly, 
the issue to be resolved is whether TVA's actions in evaluating 
proposals resulted in a best value selection and, if they did not, 
whether the competition was adversely affected.

TIMELINESS

As another preliminary matter, TVA (and BTG) maintains that Sylvest's 
protest of the evaluation of BTG's pricing is untimely because it was 
not filed within 10 days after Sylvest obtained the information on 
which the allegation is based.  Bid Protest Regulations, 4 C.F.R.  sec.  
21.2(a)(2) (1997).  TVA asserts that Sylvest had all necessary 
information after receiving its debriefing, where it learned BTG's 
total price and the hardware vendors proposed by BTG.  This argument 
is without merit. Sylvest's protest is based on the contents of BTG's 
BAFO and TVA's price evaluation materials; without this information, 
Sylvest could not have raised its contention.  These documents were 
provided to Sylvest's counsel pursuant to a protective order issued by 
our Office during the pendency of the protest, and Sylvest raised its 
allegation within 10 days after receiving the information.  Therefore, 
the protest is timely.

TVA'S EVALUATION OF BTG'S PRICING

As indicated, Sylvest maintains that the agency erred in its 
evaluation of BTG's price proposal.  Firms were required to run 
benchmark testing on their proposed equipment, and to certify that the 
equipment being proposed and priced was the same configuration as that 
used to successfully pass the benchmark testing.  All parties agree 
that, in order to successfully run the TVA-specific benchmark tests, a 
significant amount of additional "hard disk memory" had to be added to 
the basic server configurations.  (For example, the basic large IBM 
server originally required  4 gigabytes of hard disk memory.  In order 
to pass the TVA-specific benchmark tests, an additional 64.3 gigabytes 
of hard disk memory were required.)  Sylvest maintains that BTG's 
systems prices included only the basic server configurations, and not 
the additional hard disk memory, which was priced in the offer as an 
option, and that the agency improperly failed to include the cost of 
all required items in BTG's low evaluated price.

TVA does not dispute that BTG's proposal included the additional 
required hard disk memory as optional, separately priced items, but 
essentially argues that the certification in BTG's BAFO was sufficient 
to indicate that BTG was offering the optional additional memory as 
part of the base configurations, at no additional cost.  TVA maintains 
that it reasonably relied on the certification in reaching this 
conclusion, since there was nothing in BTG's offer that brought the 
certification into question.

We find TVA's position untenable.  First, it is clear from the face of 
BTG's BAFO (that is, before considering the certification) that the 
extended or aggregate pricing--the pricing relied on by the agency for 
evaluation purposes--does not include the required additional hard 
disk memory.  Both of BTG's BAFOs are comprised of "updates" that 
specify pricing information relating to the nine server 
configurations.  Each of these nine configurations is listed as a 
single contract line item (for example, the small server offered from 
manufacturer no. 1 is listed as line item 01AA, and the small server 
offered from manufacturer no. 2 is listed as line item 01AB).  Each of 
the base line items includes a listing of salient features for each 
configuration.  Underneath each base line item is a list of options 
designated as sub-line items (for small server manufacturer No. 1, for 
example, there are 17 sub-line items designated as line item No 
01AA-opt. 1, line item No 01AA-opt. 2, etc.).  These optional items 
include various hardware enhancements that can be added to the basic 
server configuration.  The additional hard disk memory units are 
listed as separate, optional sub-line items that are priced separately 
from the basic server units.  A careful examination of BTG's aggregate 
or extended pricing shows that it is based on the prices for the basic 
servers only and does not include the cost of the additional hard disk 
memory units.

The remaining question, then, is whether the certification operated to 
incorporate the required additional memory in the offered systems 
without additional cost.  We find that it did not.  As indicated 
above, offerors were required to certify that the configurations 
necessary to pass the benchmarks were the configurations used in the 
pricing proposal.  BTG certified as follows:

     "BTG, Inc. has updated its proposal to reflect the configuration 
     used to run its benchmark successfully.  Proposal change pages 
     are provided in tab 5 and hardcopies and/or computer tapes of the 
     required benchmarks have been provided as tab 4 of this best and 
     final offer."

While this certification states that the proposal has been updated to 
reflect the benchmarked configurations, it does not state that all 
items included in the required configurations are included in the 
systems prices.  This is problematic due to BTG's listing of hard disk 
memory (and other items) as separately priced options.  In light of 
this separate pricing, and because the certification did not state 
that the required optional memory was included in the systems prices, 
BTG's proposal cannot reasonably be read as offering the optional 
memory at no additional cost.  Rather, the total price for the 
configurations that passed the benchmarks consists of the systems 
prices plus the prices listed for the optional hard disk memory.  
Since TVA calculated BTG's evaluated total price by totaling only 
BTG's systems prices, without also adding the separate prices for the 
required additional hard disk memory, the evaluation did not provide 
TVA a basis for determining best value, and therefore was improper.[2]  

The record contains insufficient information for our Office to 
determine precisely what hard disk memory--and the resultant added 
cost--will be necessary for each of the nine server configurations to 
run the benchmark tests properly.  The record only contains detailed 
information with respect to the amount of additional hard disk memory 
required to configure the servers from one of the three manufacturers 
proposed by BTG.  It is clear from the record, however, that the 
additional hard disk memory cost would be substantial; Sylvest has 
submitted detailed, unrebutted calculations showing that, without its 
additional cost for the hard disk memory (a net present value of 
[deleted]), its proposal for the servers would have been the 
lowest-priced.  This, in our view, demonstrates that there is a 
reasonable likelihood that, but for the agency's price evaluation 
error, Sylvest would have been in line for the Schedule III 
requirements.  We therefore sustain Sylvest's protest.

By separate letter of today to the Chairman of TVA, we are 
recommending that TVA either reevaluate the BAFOs submitted in 
response to Schedule III of the contract or, if necessary to resolve 
concerns about BTG's offer, obtain revised BAFOs and evaluate the 
revised submissions.  If TVA determines that a firm other than BTG is 
entitled to award of this portion of the contract, TVA should 
terminate this portion of BTG's contract for the convenience of the 
government and make award to the eligible firm if otherwise proper.  
We also are recommending that TVA reimburse Sylvest's costs of filing 
and pursuing this aspect of its protest, including reasonable 
attorneys' fees.  Sylvest should submit its certified claim, detailing 
the time expended and the costs incurred, directly to TVA within 60 
days of its receipt of this decision.  4 C.F.R.  sec.  21.8(f)(1).

The protest is sustained.

Comptroller General
of the United States

1. Telos Field Eng'g, supra, at 3 n.1; Vertiflite, Inc., B-256366, May 
12, 1994, 94-1 CPD  para.  304, at 1 n.1.

2. In contrast, Sylvest certified as follows:

            "Sylvest is proposing the exact configuration from each 
            vendor that was used to successfully complete the 
            benchmarks.  These configurations match with the RAM 
            [random access memory], CPU [central processing units], 
            and disk space to run . . . the . . . benchmarks with no 
            reallocation of resources." (Emphasis supplied.)

Although this certification, like BTG's, did not specifically state 
that the offered systems prices included the additional memory 
necessary to pass the benchmarks, since Sylvest's offer included no 
optional, separately-priced items (for each server configuration, a 
single price is listed, and the server configuration, including the 
additional hard disk memory units, is specified under the single price 
given), there was no question that Sylvest's total systems prices 
included all required memory and other items.