BNUMBER:  B-276040 
DATE:  May 2, 1997
TITLE: Matter of:Hughes Space and Communications Company

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Matter of:Hughes Space and Communications Company

File:     B-276040

Date:May 2, 1997

Michael A. Hordell, Esq., and Laura L. Hoffman, Esq., Gadsby & Hannah, 
for the protester.
Kenneth M. Bruntel, Esq., Paul Shnitzer, Esq., and John E. McCarthy, 
Jr., Esq., Crowell & Moring, for COMSAT RSI, Inc., the intervenor.
Douglas G. White, Esq., Defense Information Systems Agency, 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

Contract modification to a satellite communications services contract 
which added "system preemptible" satellite transponder leases to the 
contract, which previously only specified "non-preemptible" 
transponder leases, did not exceed the scope of the contract, as 
originally awarded, because the fundamental nature and purpose of the 
contract was not changed.

DECISION

Hughes Space and Communications Company protests the Defense 
Information Systems Agency's (DISA) modification of contract No. 
DCA200-95-D-0079 (called the Commercial Satellite Communication 
Initiative (CSCI) contract) with COMSAT RSI, Inc. for satellite 
communications services.  Hughes argues that the modification to 
provide satellite transponder services for the Armed Forces Radio and 
Television Service (AFRTS) exceeds the scope of the CSCI contract and 
is an improper sole-source award.

We deny the protest.

The CSCI contract, which DISA competitively awarded to COMSAT on July 
18, 1995, provides, among other things, for the lease of a minimum of 
2 and a maximum of 45 satellite transponders on an indefinite 
delivery, indefinite quantity (ID/IQ) basis.[1]  The satellite 
transponder leases could be for domestic or international service.  
The contract statement of work provides:

     "The DISA intends to use the satellite transponders provided 
     under this contract whenever the [Department of Defense] DOD 
     requires commercial satellite communications support to any 
     location in the footprint of the available satellite 
     transponders, subject to [Federal Communications Commission] FCC 
     or host national approval and the minimum and maximum limitations 
     specified under the ID/IQ contract."

Specific satellite transponder characteristics for domestic and 
international service regions were provided, describing, among other 
things, the required coverage, frequency bands, and bandwidth.  The 
contract also provided that COMSAT could "not preempt satellite 
transponders leased to the DISA" and that in the event of operational, 
performance, or satellite failure, COMSAT would repair or replace the 
affected satellite transponder within 6 hours of the failure.

On December 26, 1996, DISA announced in the Commerce Business Daily 
(CBD) its intention to award the AFRTS services to COMSAT, but invited 
interested vendors to submit proposals.  These satellite communication 
services are to provide AFRTS service and programming, which is now 
routinely provided for entertainment and morale purposes to other 
military personnel outside the continental United States, to U.S. Navy 
ships in the Atlantic, Pacific, and Indian Ocean Regions.  On January 
10, 1997, COMSAT and Hughes submitted proposals in response to the CBD 
request.  On January 17, DISA issued Modification No. 12 to COMSAT's 
CSCI contract to provide for the AFRTS services over three 
transponders under that contract; the maximum number of transponders 
that could be ordered under the contract and period of performance 
were not changed.  This protest followed, challenging the modification 
as being outside the scope of COMSAT's contract.[2]

As a general rule, our Office will not consider protests against 
contract modifications because they involve matters of contract 
administration.  4 C.F.R.  sec.  21.5(a) (1997); American Air Filter Co., 
Inc., 57 Comp. Gen. 285, 286 (1978), 78-1 CPD  para.  136 at 2.  However, we 
recognize an exception to this rule where, as here, it is alleged that 
a contract modification is beyond the scope of the original contract, 
such that the work covered by the modification would be subject to the 
requirement for competition absent a valid sole source determination.  
Neil R. Gross & Co., Inc., 69 Comp. Gen. 292, 294 (1990), 90-1 CPD  para.  
212 at 2.  In determining whether a modification improperly exceeds 
the scope of the contract, we consider whether the contract as 
modified is materially different from the original contract for which 
the competition was held.  Id., 69 Comp. Gen. 294, 90-1 CPD  para.  212 at 
2-3.  The question of whether there is material difference is resolved 
by considering factors such as the extent of any changes in the type 
of work, performance period, the costs between the contract as awarded 
and as modified, and whether the agency itself had historically 
procured the services under a separate contract, as well as whether 
potential offerors reasonably would have anticipated the modification.  
Data Transformation Corp., B-274629, Dec. 19, 1996, 97-1 CPD  para.  10 at 
6; Stoehner Sec. Servs., Inc., B-248077.3, Oct. 27, 1992, 92-2 CPD  para.  
285 at 4.

Hughes complains that COMSAT's CSCI contract only provides for 
satellite transponder leases on a non-preemptible basis, but the AFRTS 
satellite communications services added to the contract are for 
services on a preemptible basis.  Hughes argues that preemptible 
satellite communication services are materially different from 
non-preemptible services, such that adding these services to the CSCI 
contract could not have been anticipated by the original competitors 
for the contract, and are beyond the scope of that contract.[3]

DISA and COMSAT respond that there is no technical difference between 
non-preemptible and preemptible transponder services leases.  Rather, 
the designation of transponder leases as non-preemptible or 
preemptible identifies the priority a specific lease has within a 
hierarchy that defines the "bumping" rights non-preemptible leases 
have vis-a-vis lower priority preemptible leases; in the event of 
operational or satellite transponder failure, non-preemptible leases 
receive the highest priority in being allocated to available 
equipment.  DISA and COMSAT point out that the CSCI contract, as 
modified, provided for "system preemptible" transponder leases, which 
the contract provided could not be preempted by the contractor, but 
which would only be preempted in the event of an operational or 
satellite equipment failure.  In the event of satellite failure, the 
contractor was required to use its best efforts to allocate other 
equipment to provide the service.

We find that COMSAT's CSCI contract, as modified to provide for AFRTS 
services over preemptible satellite transponder leases, is not 
materially different from that awarded.  The fundamental purpose of 
the CSCI contract is to provide domestic and international satellite 
communication services through satellite transponder leases.  To this 
end, offerors for the CSCI contract were informed that DISA would use 
the satellite transponders provided under the contract whenever it 
required commercial satellite communications support to any location 
in the footprint of the available satellite transponders and that the 
CSCI program to be supported by the contract would:

     "1) meet operational communications support requirements; 2) 
     reduce DOD telecommunications costs; 3) enhance diversity, 
     capability, and flexibility of DOD satellite communications 
     services; 4) take advantage of the newest commercial satellite 
     services and the relaxation of restrictions involving 
     international commercial satellite communications; and 5) provide 
     a preplanned surge capacity for crises, contingency and 
     humanitarian relief operations."

As this indicates, and as offerors for the original contract therefore 
should have been aware, the CSCI contract provided a flexible means of 
ordering satellite communication services within the specified minimum 
and maximum ordering limitations on the lease of satellite 
transponders.  Here, the modification of the contract to provide for 
AFRTS service did not affect the specified minimum or maximum order 
limitations or the stated period of performance.  Moreover, although 
the parties disagree as to the dollar value of the additional premium 
preemptible services, the record shows that any increase in the value 
of the contract due to the addition of these AFRTS services is minimal 
in relation to the overall value of the contract as originally 
awarded.[4]

It is true that the CSCI contract, as awarded, limited the satellite 
transponder leases to non-preemptible leases.  However, the record 
shows that there is no technical difference between the satellite 
communication services provided under non-preemptible or preemptible 
transponder leases; both services must satisfy the specific satellite 
transponder characteristics identified in the contract for the 
domestic and international service regions.  

It is also true that the government assumed greater risk of loss of 
service by accepting preemptible service rather than non-preemptible 
service.  That is, in the event of operational or satellite failure 
there is a greater risk of some loss of service due to the greater 
bumping rights and higher priority for restoration of service 
non-preemptible leases enjoy vis-a-vis preemptible leases.  This risk 
is significantly mitigated by the terms of the CSCI contract, which 
only allow preemption in the event of operational or satellite failure 
and which require the contractor to repair or replace the affected 
satellite transponder within 6 hours of the failure.  Additionally, 
the contractor is required to prepare a Satellite Transponder Backup 
Plan, which is "updated after the lease of each additional satellite 
transponder" to address satellite failure.  Furthermore, COMSAT and 
DISA point out that the risk of satellite or transponder failure is 
extremely low in any case.  While we find that the government assumed 
some greater risk of loss of service by accepting preemptible service, 
we do not find that this assumption of what the record shows to be 
extremely minimal risk to be so significant as to conclude that the 
contract, as modified, is materially different from that as awarded.

In conclusion, we find that the CSCI contract, as modified, is not 
materially different from that awarded.  The type of service and 
quantity of transponders to be leased are within that contemplated by 
the original contract.  In addition, the costs associated with the 
modification of the contract are minimal vis-a-vis the original 
estimated contract value.  In sum, the modification to provide the 
AFRTS service is within the scope of the original contract.

The protest is denied.

Comptroller General
of the United States

1. A transponder is an electronic device based upon a satellite in 
geosynchronous orbit above the earth that receives electronic signals 
from a point on the ground and relays those signals back to earth.  
Typically, satellite transponders receive very "narrow" signals and 
relay back to earth "large footprint" signals covering a large 
geographic area.

2. Hughes also protested DISA's cancellation of the procurement 
announced in the CBD, the evaluation of its proposal, and allegedly 
unequal treatment of Hughes and COMSAT.  We dismissed these other 
protest allegations, given the fact that the agency had decided to 
fulfill its requirements through an existing contract.

3. On April 11, more than a month after the filing of its comments on 
the agency's report, Hughes also argued for the first time that 
Modification No. 12 did not amend the CSCI contract to provide for the 
power requirements identified in the CBD announcement and that this 
demonstrates that the addition of AFRTS services was outside the scope 
of the CSCI contract.  Hughes should have known the basis of this 
protest allegation from its review of the CSCI contract, which the 
record shows Hughes reviewed prior to the filing of the January 24 
protest.  The timeliness requirements of our Bid Protest Regulations 
do not provide for the piecemeal presentation of protest allegations 
but require that protests of other than alleged apparent solicitation 
improprieties must be filed not later than 10 working days after the 
basis of protest is known.  4 C.F.R.  sec.  21.2(a)(2); Pacific Architects 
& Eng'rs, Inc., B-262243; B-262243.2, Dec. 12, 1995, 95-2 CPD  para.  253 at 
12.  This new factual assertion as to why the modification is outside 
the scope of the CSCI contract is untimely and is dismissed.

4. While, as noted by the protester, non-preemptible services are 
generally more costly than preemptible services because 
non-preemptible leases have the highest priority in terms of bumping 
rights and restoration of service in the event of satellite failure, 
the monthly lease charge for the preemptible service under the CSCI 
contract is higher than the lease charge for non-preemptible service 
in the same region.  COMSAT explains that the non-preemptible service 
is being provided, in accordance with the contract requirements, over 
standard transponders while the preemptible service is being provided 
over premium transponders, which are more costly than standard 
transponders.  Premium transponders are necessary for these services 
because standard transponders are not powerful enough to transmit to 
small terminals on ships.  Hughes argues that the cost to DISA of 
preemptible services over premium transponders could have been lower 
as the result of competition; however, this argument that DISA 
received a "bad deal" does not demonstrate that the addition of the 
AFRTS services is outside the scope of the CSCI contract.