BNUMBER:  B-277385 
DATE:  October 8, 1997
TITLE: International Data Systems, Inc., B-277385, October 8, 1997
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Matter of:International Data Systems, Inc.

File:     B-277385

Date:October 8, 1997

Al Barlas for the protester.
Sherry Kaswell, Esq., Department of the Interior, for the agency.
Katherine Riback, Esq., and Paul Lieberman, Esq., Office of the 
General Counsel, GAO, participated in the preparation of the decision.

DIGEST

1.  Where agency permitted competitive range offerors to submit 
information to clarify ambiguities in their proposals and requested 
responses in the form of best and final offers (BAFO), the agency 
conducted discussions; these discussions were not meaningful where the 
agency failed to advise the protester of its concern regarding the 
protester's proposed noncompliant delivery schedule which, while it 
was readily correctable, provided the basis to reject the protester's 
BAFO as technically unacceptable. 

2.  Where the agency's needs regarding the type of processor that it 
required changed after receipt of proposals, the agency improperly 
failed to issue an amendment alerting offerors of the revised 
requirement and providing all offerors an opportunity to submit 
proposals based on the agency's actual requirement.  

DECISION

International Data Systems, Inc. (IDS) protests the award of a 
contract to Applied Computer Technology (ACT) by the Department of the 
Interior under request for proposals (RFP) No. 143868-RFP97-12097.  
IDS primarily objects that the agency failed to conduct meaningful 
discussions.  

We sustain the protest.  

BACKGROUND

The agency issued a combined Commerce Business Daily synopsis and 
solicitation for personal computers which was published on March 21, 
1997.  The solicitation contemplated the award of a fixed-price, 
indefinite delivery/indefinite quantity contract for 6 months.  The 
RFP provided that award would be made to the responsible offeror whose 
proposal represented the best value to the government, taking into 
consideration price, conformance with technical specifications, and 
past performance, with technical considerations being more important 
than price.  The solicitation stated that the agency reserved the 
right to award the contract to other than the lowest-price offeror and 
provided that the agency "intends to evaluate proposals and award a 
contract without discussions with offerors (except communications 
conducted for the purpose of minor clarification)."  The agency issued 
one amendment on March 28.

The agency received 42 offers by the April 17 due date.  A technical 
evaluation panel (TEP) evaluated the advantages and disadvantages of 
each proposal, as a result of which seven proposals were "determined 
to meet or exceed [the agency's] minimum specifications in all 
critical elements, but each had not addressed some minor issues," and 
were included in the competitive range.  The agency sent each of the 
seven competitive range offerors a written request for clarifications, 
requiring each offeror to submit the additional requested information 
in the form of a best and final offer (BAFO).  The TEP then ranked the 
seven BAFOs, weighing technical merit and past performance each at 40 
percent, and price at 20 percent.  This evaluation resulted in the IDS 
proposal being ranked first, with ACT's proposal ranked second.  ACT 
proposed as an alternate a Pentium II processor, in addition to the 
Pentium Pro specified in the solicitation.[1]        

The contracting officer then reviewed the IDS proposal in greater 
detail and noticed that IDS offered a 30- to 45-day delivery schedule, 
rather than the 15-day delivery period required by the solicitation.  
The contracting officer stated that she had earlier rejected other 
proposals that failed to meet the 15-day delivery requirement; she 
therefore felt compelled to similarly find the IDS proposal ineligible 
for award based on noncompliance with the required delivery schedule.  
Moreover, believing that she had up to that point merely obtained 
clarifications and had not conducted discussions, she decided not to 
advise IDS about the problem with its proposed delivery schedule, in 
order to avoid holding discussions, which she feared would delay the 
procurement. 

The agency found that ACT's proposal represented the best value to the 
government and awarded the contract to that firm on June 19.  In ACT's 
contract, the agency added a line item that did not appear in the 
original solicitation for the Pentium II systems that ACT offered in 
its proposal.  While ACT failed to acknowledge the one amendment that 
was issued in connection with this solicitation, the agency waived 
this omission as a minor informality.  IDS protested to our Office, 
whereupon the agency determined that it was in the best interests of 
the government to continue with performance, notwithstanding the 
pendency of the protest.  See 31 U.S.C.  sec.  3553(d)(3)(C)(i)(I) (1994).

DISCUSSION

IDS asserts that the agency's failure to advise it of the agency's 
concerns regarding the IDS delivery schedule constituted a failure to 
conduct meaningful discussions and that, had the matter been brought 
to its attention, the firm could have easily corrected what it 
describes as a typographical error regarding the delivery schedule.  
The agency takes the position that the communications between it and 
the seven competitive range offerors were clarifications and not 
discussions.  In addition, the agency contends that, due to the 
unacceptable delivery schedule in its proposal, that proposal should 
not have been included in the competitive range, and IDS therefore was 
not entitled to discussions at all, so that any deficiency in the 
communications with IDS would be immaterial.

Federal Acquisition Regulation (FAR)  sec.  15.610(a) (1997) permits 
contracting agencies to make award on the basis of initial proposals 
without discussions, where the solicitation, as here, announces this 
possibility.  As set forth in FAR  sec.  15.601; the difference between 
clarifications and discussions is as follows:

     'Clarification' . . . means communication with an offeror for the 
     sole purpose of eliminating minor irregularities, informalities, 
     or apparent clerical mistakes in the proposal. . . .  Unlike 
     discussion . . ., clarification does not give the offeror an 
     opportunity to revise or modify its proposal, except to the 
     extent that correction of apparent clerical mistakes results in a 
     revision.

     'Discussion' . . . means any oral or written communication 
     between the Government and an offeror (other than communications 
     conducted for the purpose of minor clarification) whether or not 
     initiated by the Government, that- (a) [i]nvolves information 
     essential for determining the acceptability of a proposal; or (b) 
     [p]rovides the offeror an opportunity to revise or modify its 
     proposal.     

It is the actions of the parties that determine whether discussions 
have been held, and not merely the characterization of the 
communications by the agency.  Raytheon Co., B-261959.3, Jan. 23, 
1996, 96-1 CPD  para.  37 at 11; ABT Assocs., Inc.,
B-196365, May 27, 1980, 80-1 CPD  para.  362 at 5.  The acid test of whether 
discussions have been held is whether it can be said that an offeror 
was provided the opportunity to revise or modify its proposal.  51 
Comp. Gen. 479, 481 (1972); New Hampshire-Vermont Health Serv., 57 
Comp. Gen. 347, 353 (1978), 78-1 CPD  para.  202 at 9.  

Here, the communication with the seven competitive range offerors 
clearly constituted discussions, both because the communications 
concerned information essential for determining the acceptability of 
their proposals and because the offerors were given an opportunity to 
submit BAFOs modifying their proposals.   The communications would 
constitute discussions even if the information provided by the 
competitive range offerors served only to resolve ambiguities.  See 
Integrated Sys. Group, B-272336, B-272336.2, Sept. 27, 1996, 96-2 CPD  para.  
144 at 6.  

We next consider whether the agency was obligated to raise its concern 
regarding the delivery schedule in the IDS proposal during 
discussions.  When discussions are held, they are required to be 
meaningful.  See Fidelity Techs. Corp., B-276425, May 30, 1997, 97-1 
CPD  para.  197 at 6; Ashland Sales & Serv., Inc., B-255159, Feb. 14, 1994, 
94-1 CPD  para.  108 at 3.  Discussions cannot be meaningful unless they 
lead an offeror into those aspects of its proposal that must be 
addressed in order for it to have a reasonable chance of being 
selected for award.  Voith Hydro, Inc., B-277051, Aug. 22, 1997, 97-2 
CPD  para.  ___; Global Indus., Inc., B-270592.2 et al., Mar. 29, 1996, 96-2 
CPD  para.  85 at 4-5; Eldyne, Inc., B-250158 et al., Jan. 14, 1993, 93-1 
CPD  para.  430 at 7, recon. denied, Department of the Navy--Recon., 72 
Comp. Gen. 221 (1993), 93-1 CPD  para.  422.  Under this standard, Interior 
was required to advise IDS of the agency's concerns with its delivery 
schedule so that IDS would have an opportunity to revise it and 
resolve this readily correctable matter.  We therefore conclude that 
the agency failed to afford IDS meaningful discussions.

We also note that the contract that was awarded to ACT by Interior 
contained a line item for the Pentium II processor that was not in the 
original solicitation.  ACT's proposal offered two configurations, one 
was the Pentium Pro processor required by the solicitation, and the 
second configuration proposed the Pentium II.  ACT's proposal "urged" 
the agency to "strongly consider" the Pentium II technology because 
the RFP's specifications state that the replacement parts and support 
must be available for the lifetime of the system and Intel had 
indicated that the required Pentium Pro would be phased out at the end 
of 1997.  ACT further advised the agency that Intel had announced that 
the Pentium II was the scheduled replacement for the Pentium Pro.  The 
agency was receptive to ACT's "urging," and cites as its reason for 
including the Pentium II line item in ACT's contract that the Pentium 
II is the newest technology available, and that it was not available 
when the solicitation was issued.  The agency also stated that many 
users that were scheduled to receive the Pentium Pro in the computer 
upgrade have expressed a preference for receiving the Pentium II 
instead.  

Generally, where an agency's requirements change after a solicitation 
has been issued, it must issue an amendment to notify offerors of the 
changed requirements and afford them an opportunity to respond.  FAR  sec.  
15.606(a); Symetrics Indus., Inc., B-274246.3 et al., Aug. 20, 1997, 
97-2 CPD  para.  59 at 6.  The purpose of the rule is to avoid award 
decisions not based on the agency's most current view of its minimum 
needs.  See N.V. Philips Gloellampenfabriken, B-207485.3, May 3, 1983, 
83-1 CPD  para.  467 at 12.  Agencies must amend solicitations to reflect a 
significant change in the government's requirements even after the 
submission of BAFOs, up until the time of award.  See United Tel. Co. 
of the Northwest, B-246977, Apr. 20, 1992, 92-1 CPD  para.  374 at 7-9, 
aff'd, Department of Energy et al., B-246977.2 et al., July 14, 1992, 
92-2 CPD  para.  20.  Amending the solicitation provides offerors an 
opportunity to submit revised proposals on a common basis reflecting 
the agency's actual requirements.  Dairy Maid Dairy, Inc., B-251758.3 
et al., May 24, 1993, 93-1 CPD  para.  404 at 7-9.    
    
Here, while the RFP specified a Pentium Pro processor, it appears that 
the agency determined during the course of the procurement that the 
Pentium II represented its needs and should be incorporated into the 
contract.  To the extent that the agency's needs changed to include 
the Pentium II, the agency was required to issue an amendment 
permitting all offerors an opportunity to submit revised proposals on 
a common basis reflecting the agency's actual needs.

RECOMMENDATION

Where an agency determines that it is in the best interest of the 
government to proceed with contract performance in the face of a 
protest in our Office, and we sustain the protest, the Competition in 
Contracting Act of 1984, 31 U.S.C.  sec.  3554(b)(2), calls for us to make 
our recommendations for corrective action without regard to any cost 
or disruption from termination, recompeting, or reawarding the 
contract.  In this case, the agency reports that all of the required 
equipment has been delivered and the contract fully performed.  Under 
these circumstances, corrective action is not available.  See Bosco 
Contracting, Inc., B-270366, Mar. 4, 1996, 96-1 CPD  para.  140 at 4.  We 
therefore recommend that IDS be reimbursed for its proposal 
preparation costs as well as the reasonable costs of filing and 
pursing this protest.  4 C.F.R.  sec.  21.8(d)(1), (2) (1997).  In 
accordance with 4 C.F.R.  sec.  21.8(f)(1), The protester's certified claim 
for such costs, detailing the time expended and the costs incurred, 
must be submitted directly to the agency within 60 days after receipt 
of this decision.        

The protest is sustained.

Comptroller General
of the United States 

1. The contracting officer stated that the Pentium II offered by ACT 
was considered "state of the art."