BNUMBER: B-277862
DATE: December 3, 1997
TITLE: Motorola, Inc., B-277862, December 3, 1997
**********************************************************************
DOCUMENT FOR PUBLIC RELEASE
The decision issued on the date below was subject to a GAO Protective
Order. This redacted version has been approved for public release.
Matter of:Motorola, Inc.
File: B-277862
Date:December 3, 1997
David B. Apatoff, Esq., Hadrian R. Katz, Esq., and Rosemary Maxwell,
Esq., Arnold & Porter, for the protester.
Gerard F. Doyle, Esq., Ron R. Hutchinson, Esq., and Michael F. Mason,
Esq., Doyle & Bachman, for Savi Technology, the intervenor.
Craig E. Hodge, Esq., and Capt. Brian J. Godard, Department of the
Army, for the agency.
Ralph O. White, Esq., and Christine S. Melody, Esq., Office of the
General Counsel, GAO, participated in the preparation of the decision.
DIGEST
1. Protester's contention that the agency waived a material
solicitation requirement for the awardee is dismissed as untimely
where the contention is based on an ambiguous requirement in the
statement of work that was apparent on the face of the solicitation
documents and thus constituted a patent ambiguity that had to be
protested prior to the closing date for submission of initial
proposals.
2. Protester was not prejudiced by an agency decision to ignore a
requirement in the statement of work requiring compliance with a
transmission duty cycle imposed by Federal Communications Commission
regulations where the record shows that the awardee's offered
equipment operated with or without the duty cycle, and also shows that
even with the imposition of the duty cycle requirement the offered
equipment nonetheless transmitted data at a rate compliant with the
solicitation's requirements for transmission speed.
3. Contention that the agency conducted an unreasonable price
evaluation of one of the awardee's optional items is denied where the
record shows that the agency's approach was reasonable, and in
compliance with the instructions set forth in the solicitation.
DECISION
Motorola, Inc. protests the award of a contract to Savi Technology
pursuant to request for proposals (RFP) No. DAAB07-97-R-V002, issued
by the Department of the Army for Radio Frequency Identification
(RFID) equipment. Motorola disputes the Army's interpretation of the
solicitation in two areas, and in both, claims that the agency waived
a material RFP requirement for Savi. Motorola also argues that the
Army conducted an unreasonable evaluation of Savi's price proposal.
We dismiss the protest in part, and deny it in part.
BACKGROUND
The Army issued the RFP on April 15, 1997, to procure RFID equipment,
software, and support services for the Department of Defense and the
U.S. Coast Guard. The RFID equipment at issue here uses radio
frequency (RF) as the identification medium in shipping and receiving
material, including tracking and monitoring assets within large
military warehouse environments, open-air storage areas, office and
laboratory environments, combat areas, and military transportation
facilities. Specifically, the RFP sought to purchase an integrated
system of personal computers, transponders, interrogators and software
to permit electronic identification of assets.[1] The RFP contained a
36-month ordering period for hardware, software, and documentation,
and a 60-month ordering period for training and technical engineering
services.
The RFP anticipated award of a fixed-price, indefinite
delivery/indefinite quantity (ID/IQ) contract to the offeror whose
proposal presented the best value to the government based on
consideration of the evaluation factors of technical, cost,
management, and past performance. The RFP set forth the relative
weight of these factors as follows: the technical factor was
significantly more important than any other factor; the past
performance and cost factors were approximately equal, and each was
more important than the management factor; and the technical, past
performance, and management factors combined were significantly more
important than cost.[2] RFP, amend. No. 0002, part E-2, para. 3.1.
Under the evaluation scheme, each proposal was to receive an
adjectival and color rating under the technical, management, and past
performance evaluation factors; no score was to be assigned for the
cost factor.[3]
By the closing date set forth in the RFP, the Army received proposals
from two offerors, Motorola and Savi. The Army scheduled oral
presentations, conducted discussions, and permitted each offeror an
opportunity to demonstrate its proposed system. Although the results
of the demonstration were not separately scored, the RFP advised
offerors that information from the demonstration could be reflected in
the evaluations. RFP, amend. No. 0002, part E-1, para. 16.2.e.
During the demonstration, Motorola experienced numerous significant
problems with its equipment; Savi's equipment experienced few problems
during the demonstration.
Upon receipt of best and final offers (BAFO) on July 30, 1997, the
Army's source selection evaluation board (SSEB) concluded its review.
The ratings under each of the evaluation factors, and the total
evaluated prices, are shown below:
OFFEROR TECHNICAL PRICE/COST PAST
PERFORM. MGMT.
SAVI Blue $100 million Blue Blue
MOTOROLA Yellow [deleted] Blue Blue
On August 6, after reviewing the SSEB report and other evaluation
materials, the Source Selection Authority selected Savi for award,
which was made on August 8. After receiving a debriefing on August
14, Motorola filed its protest with our Office on August 25.
DISCUSSION
Motorola raises three challenges to this procurement. First, it
claims it was misled by the RFP into proposing a graphical user
interface (GUI) for the hand-held interrogators (HHI) required by this
solicitation. Because providing GUI capability for the HHI portion of
this system was technologically difficult, and because the Army did
not impose the same requirement for Savi's proposed HHI, Motorola
contends that its system was necessarily more expensive and
experienced more technical problems during its demonstration than the
less complex device offered by Savi. Second, Motorola claims that the
Army waived Savi's noncompliance with a material requirement of the
RFP regarding the radio frequency operating parameters of this system.
Third, Motorola contends that the Army improperly used an arbitrary
and unfair method of computing the evaluated price for one of the
optional items proposed by Savi.
The GUI Requirement
As explained above, the RFP here anticipated that offerors would
propose an integrated system of transponders and interrogators which,
together with a computer (the PC), would permit the user to locate (as
well as organize and inventory) various assets. The requirements for
the system were set forth in the Specification and Statement of Work.
RFP, amend. No. 0002, part D, sec. 4. Specifically, subsection 4.10
identified the hardware and software requirements for each of the
system's components.
As shown below, the general software requirements in the RFP mandated
contractor-provided software for a minimum of two components--the PC
and the HHI--and established two standards applicable to such
contractor-provided software. The RFP stated:
The Government requires software to operate from, at a minimum,
AT-compatible PCs and the Contractor-provided Hand-held
Interrogators. The Contractor shall provide as a minimum,
Operating Software for PC, Operating Software for HHI, and
Application Development Software. All Contractor-provided
software shall provide a Graphical User Interface and be, as a
minimum, compatible with MS-DOS, Windows 95, and Windows NT
operating systems.
RFP, amend. No. 0002, part D, para. 4.10.8. In the protester's view,
this provision contains a clear mandate that contractors must provide
software for the HHI, and that such contractor-provided software must
include a GUI. There is no dispute in the record that Motorola's HHI
included a GUI and Savi's HHI did not. Hearing Transcript (Tr.) at
119-121.
The Army disagrees with Motorola's interpretation of paragraph 4.10.8,
stating that it interpreted "no requirement for the HHI to have a
graphical display or to run Windows 95 or Windows NT as the native
operating system." Department of the Army Letter to Motorola, August
25, 1997, enclosure at second unnumbered page. Rather, in the Army's
view, the requirement for a GUI in paragraph 4.10.8 applied only to
the PC, and not to the HHI.
The Army also argued that Motorola's interpretation of paragraph
4.10.8 is inconsistent with the RFP's hardware requirements for the
"active" version of the HHI.[4] These requirements are as follows:
The Active Hand-held Interrogator (HHI) shall have an internal
memory capacity of at least 512 Kbytes; however, the Government
desires a larger memory capacity. . . . The Active HHI shall use
an operating system that is compatible with MS-DOS�, and shall
have a manual data input interface as well as user-programmable
functions. . . . The Active HHI shall have a user-selectable,
night-readable display, capable of displaying at least 80
characters without scrolling; however, the capability to display
more than 80 characters without scrolling is desired.
RFP, amend. No. 0002, part D, para. 4.10.3.4.1. In the Army's view,
two of the requirements in this provision--internal memory of at least
512 kbytes, and a display of at least 80 characters without
scrolling--foreclose the possibility that an HHI was required to have
a GUI, because GUI capability for the HHI would require significantly
more memory and display capability than the minimums imposed by the
hardware requirements.
When faced with a dispute over the terms of a solicitation, we first
attempt to read the solicitation as a whole and in a manner that gives
effect to all provisions of the solicitation. Dr. Carole J. Barry,
B-271248, June 28, 1996, 96-1 CPD para. 292 at 4. Applying this rule, we
find unpersuasive the Army's view that the requirement for a GUI in
paragraph 4.10.8 applied only to the PC.
The GUI requirement in the RFP is located within a paragraph (4.10.8)
describing the general software requirements for the solicitation.
This general provision requires software for, at a minimum, the PCs
and the HHIs, and requires that "[a]ll [c]ontractor-provided software
shall provide a [GUI] and be, as a minimum, compatible with MS-DOS,
Windows 95, and Windows NT operating systems." RFP, amend. No. 0002,
part D, para. 4.10.8. In our view, the Army's interpretation of this
clause--that the GUI requirement applies to the PC and not the HHI--is
not supported by the plain language of the clause, and renders
meaningless the statement that software must be provided for the PC
and the HHI.
On the other hand, Motorola's interpretation of paragraphs 4.10.8 and
4.10.3.4.1 requires the addition of words and terms not found in the
clauses, and ultimately highlights a patent ambiguity in the
solicitation. As an initial matter, all of Motorola's arguments
regarding the GUI requirement in paragraph 4.10.8, relate to the RFP's
requirement for active HHIs. However, the 4.10.8 requirement is
driven by the mandate to provide software. While the RFP did not
require either memory or software for the passive HHI (RFP, amend.
0002, part D, paras. 4.10.8, 4.10.4.4.1; Tr. at 112), the record shows
that Motorola offered software with its passive HHI. Tr. at 80-81.
Given that paragraph 4.10.8 required all contractor-provided software
to have GUI capability, and given that the software provided with
Motorola's passive HHI did not offer GUI capability, Tr. at 81,
Motorola's own actions appear inconsistent with its urged
interpretation of the RFP. Alternatively, Motorola's interpretation
requires that the application of the clause be limited to the active
HHI--a limitation clearly not found in paragraph 4.10.8--to preserve
the meaning Motorola now urges.
As discussed below, Motorola's contention that paragraph 4.10.8
requires GUI capability for the HHI ultimately highlights an ambiguity
in the solicitation that was discernable on its face, and should have
been challenged prior to the submission of proposals.
Motorola's response to the Army's contention that the requirement for
a GUI on the HHI is inconsistent with paragraph 4.10.3.4.1 is that the
restricted memory and display capabilities stated for the active HHI
in paragraph 4.10.3.4.1 are only bare minimums; Motorola points out
that the RFP sought more capability than the minimum amount stated in
both areas.[5] Since the RFP expressed a preference for greater
capabilities than the stated minimums, Motorola argues that the
provisions can be read together and are not inconsistent.
While Motorola is correct about the RFP's stated desire for products
that exceed minimum capabilities, we conclude that equipment meeting
the minimum hardware requirements of paragraph 4.10.3.4.1 will not
have the capability to operate software that includes a GUI. In this
regard, our Office convened a hearing to learn, in part, if it is
possible to meet the software requirements for a GUI with hardware
that is minimally compliant with the requirements in paragraph
4.10.3.4.1. On at least two occasions, the protester's witness
admitted that an active HHI offering minimum compliance with the
hardware requirements of this solicitation would not operate a GUI.
Tr. at 148, 150. Later the protester attempted to counter that
evidence by explaining that it could conceive of a very elementary
GUI--Windows 1.0, for example--that might operate within the hardware
constraints of paragraph 4.10.3.4.1. Tr. at 217-222. Upon reviewing
the testimony as a whole, however, we find that no reasonable offeror
could have concluded that an active HHI with the minimally required
memory and display capability stated within paragraph 4.10.3.4.1 would
be able to operate a GUI sufficient for this requirement.[6]
Since equipment that complies, however minimally, with the hardware
requirement for the HHI could not reasonably be viewed as capable of
operating a GUI sufficient for this system, the solicitation documents
contained a patent ambiguity. In such situations an offeror may not
simply make unilateral assumptions regarding the meaning of patently
ambiguous terms in the RFP and then expect relief when the agency does
not act in the manner assumed. Rather, the offeror must challenge the
alleged ambiguity prior to the time set for receipt of initial
proposals. 4 C.F.R. sec. 21.2(a)(1) (1997); American Connecting Source
d/b/a Connections, B-276889, July 1, 1997, 97-2 CPD para. 1 at 3; Christie
Constructors, Inc., B-271759, B-271759.2, July 23, 1996, 96-2 CPD para. 87
at 6. The purpose of our timeliness rule with respect to solicitation
improprieties is to afford parties a fair opportunity to bring such
matters to the attention of the agency prior to the submission of
offers, so that the matter can be remedied before offerors have relied
on the terms of the solicitation in formulating their proposals.
Gordon R. A. Fishman, B-257634, Oct. 11, 1994, 94-2 CPD para. 133 at 3.
Since we conclude that this ambiguity could have been raised in
advance, this basis of Motorola's challenge is untimely and must be
dismissed.
The Requirement for Non-Licensed Communication
Motorola argues that the Army waived Savi's noncompliance with the
requirements in paragraph 4.5 of the statement of work regarding
non-licensed radio frequency (RF) communication. For the reasons set
forth below, we agree with Motorola that the provisions of paragraph
4.5 were effectively waived by the Army, but we conclude that Motorola
was not prejudiced by the Army's actions because Savi's offered
equipment could also be operated in accordance with the requirement.
Paragraph 4.5 of the statement of work required the following:
The RFID configuration shall support non-licensed communication
in compliance with . . . Federal Communications Commission Code
of Federal Regulations, Title 47, Part 15, Radio Frequency
Devices, or equivalent regulations. RFID devices shall be
capable of operating at a frequency and radiated output power
that does not require special operational licensing by the
Government or host nation.
RFP, amend. 0002, part D, para. 4.5.
The Federal Communications Commission (FCC) regulations set forth in
47 C.F.R. Part 15, describe the operational characteristics of RF
equipment permitted to operate without an FCC license. 47 C.F.R. sec.
15.1 (1996). Of particular interest here is the "duty cycle"
requirement applicable to certain frequencies that limits the duration
and frequency of non-licensed transmissions. Specifically, the duty
cycle applicable to the 433 MHz frequency selected by Savi requires
that devices have a means of automatically limiting their operation
"so that the duration of each transmission shall not be greater than
one second and the silent period between transmissions shall be at
least 30 times the duration of the transmission but in no case less
than 10 seconds." 47 C.F.R. sec. 15.231(e). This duty cycle
requirement--for example, 1 second "on" followed by 30 seconds
"off"--was a technological barrier to the offerors in designing a
system that would transmit information at the speed required by the
RFP. Tr. at 239-241, 243-247.
During the course of the procurement, Savi, through its attorney,
approached the FCC about its compliance with the requirements of 47
C.F.R. Part 15, and was advised, in writing, that the requirements are
inapplicable to devices intended for use by the government, pursuant
to guidance set forth at 47 C.F.R. sec. 2.807(d). FCC Letter to Wiley,
Rein & Fielding, May 19, 1997. When Savi provided this letter to the
Army, the Army evaluated Savi's proposed RF solution without regard to
the duty cycle requirement. Motorola, on the other hand, proposed
equipment that operated at a different frequency, in part at least, to
avoid the duty cycle requirement applicable to 433 MHz. Motorola
explains that the 433 MHz frequency might have permitted a more
straightforward technical solution than the one it used, and states
that it might have selected this frequency had it known that there
would be no duty cycle requirement.
The Army responds that it did not "waive" the requirement in paragraph
4.5 of the statement of work because the requirement did not apply in
any event. Alternatively, the Army argues that Motorola was not
prejudiced in this area because Savi's equipment can also operate in
compliance with the FCC requirements.
As an initial matter, we disagree with the Army's contention that
since the requirements of part 15 of the FCC's regulations are
inapplicable to government equipment, the Army was not required to
advise Motorola that compliance with the regulations was unnecessary.
Although there appears to be no independent FCC requirement for
compliance with these regulations, the Army expressly required
compliance with their terms in paragraph 4.5 of the RFP. Unless or
until the Army indicated otherwise, an offeror failed to meet this
requirement at its own risk. Accordingly, to the extent that the Army
evaluated Savi's equipment without regard to the duty cycle
requirement, it effectively waived the requirement.
Despite our conclusion that the Army waived the requirement in
paragraph 4.5, our Office will not sustain a protest unless the
protester demonstrates a reasonable possibility that it was prejudiced
by the agency's actions, that is, unless the protester demonstrates
that, but for the agency's actions, it would have a substantial chance
of receiving the award. McDonald-Bradley, B-270126, Feb. 8, 1996,
96-1 CPD para. 54 at 3; see Statistica, Inc. v. Christopher, 102 F.3d
1577, 1581 (Fed. Cir. 1996). Here, the record shows that Savi's
equipment met the requirements of the RFP regardless of whether it
operated with or without compliance with the duty cycle. Tr. at
264-265, 271-272, 276-277.
The Army admits that Savi's equipment would operate at a substantially
slower speed if forced to meet the duty cycle requirement, but
explains that the equipment operates either way and would nonetheless
meet the minimum transmission requirements set forth elsewhere in the
RFP. Tr. at 278-279. In fact, during the hearing, the Army explained
that with the imposition of the duty cycle--and the resulting slower
transmission of data--Savi's hardware rating [deleted].[7] Tr. at
279.
While Motorola does not challenge the Army's reassessment of Savi, it
argues that it was prejudiced because it was unfairly induced to
compete. Specifically, Motorola explains that it
was familiar with the duty cycle restrictions that applied to
Savi's existing equipment and the slow data transfer rates
resulting from the duty cycle restriction; [deleted].
Motorola's Post-Hearing Comments, Nov. 4, 1997, at 16-17. We fail to
see how Motorola is in any different position now than it claims it
was in prior to submitting its bid. By reassessing Savi's technical
score to impose the duty cycle requirement, Savi is in precisely the
position that Motorola anticipated. Motorola could have chosen to
compete by offering the same solution--which would have met the
minimal requirements of the RFP, but would not have involved much
technical innovation--or it could have opted to outshine Savi with a
more complex solution--which the record shows it tried to do. Given
that Savi would still have a higher-rated, lower-priced proposal using
an RF that Motorola could have chosen as well, Motorola was not
prejudiced by this chain of events.
Evaluation of Savi's Docking Station Prices
Motorola's third argument involves the Army's treatment of Savi's
proposed prices for its optional transponder docking stations. In
essence, a docking station is a device into which a transponder can be
loaded to permit the ability to transmit data via a hardwired
connection. This device provides a faster interface than the RF
transmission. Tr. at 321-322. Although the item was offered as an
option by Savi, Motorola complains that the unit price for the item
should have been multiplied by the RFP's stated evaluation quantity
for interrogators--i.e., 12,945--because the docking station operates
as a hard-wired interrogator. Instead, the Army contacted Savi for
information regarding its previous sales of transponder docking
stations [deleted] and used those figures to evaluate Savi's price.
Tr. at 325-326. Specifically, based on the [deleted] experience, the
Army used an estimate of 33 transponder docking stations in
calculating Savi's proposed price.
At this juncture, the short answer to Motorola's contention is that
even if the Army was required to make the adjustment Motorola claims,
Savi's total costs would have risen by [deleted] between Motorola's
and Savi's price.[8] Thus, Savi would still have the higher-rated,
lower-priced proposal--even considering the adjustment to Savi's
technical rating for operation of its equipment within the duty cycle
confines of the FCC regulations. In any event, our review of the
record on this issue leads us to conclude that the Army acted
reasonably. Although the price evaluation scheme here anticipated the
use of fixed evaluation quantities for the line items required in the
RFP, the Army explained that its evaluation of prices for optional
items would "be determined on the basis of the solution proposed."
Question and Answer No. 52, appended to RFP. In fact, when Motorola's
representative was asked during the hearing if the company was
suggesting that the Army might actually purchase 12,900 docking
stations, he replied "[a]bsolutely not." Tr. at 331. We think the
Army reasonably evaluated this item using Savi's previous sales under
an earlier contract.
The protest is dismissed in part and denied in part.
Comptroller General
of the United States
1. A transponder is attached to an asset and stores information about
that asset. It operates as an electronic tag. An interrogator sends
out a radio signal that reads or communicates with the transponder.
Once the interrogator receives information from a transponder, it
transfers the information to a computer.
2. Although the RFP here includes an evaluation factor for cost, the
solicitation anticipated award of a fixed-price ID/IQ contract.
Hence, any estimated costs discussed in this decision are actually
estimated prices.
3. The Army used separate color schemes for each of the three rated
evaluation factors; however, since the technical evaluation is the
only issue in dispute in this protest, we will set forth only that
scheme. The technical proposals were rated as: blue/outstanding;
green/good; yellow/acceptable; pink/susceptible to being made
acceptable; or red/unacceptable.
4. The RFP set forth requirements for both active and passive HHI
devices. Generally, devices described as active were required to have
an omnidirectional read and write capability for each active
transponder at a minimum unobstructed distance of up to 300 feet.
RFP, amend. No. 0002, part D, para. 4.10.3.1. Passive devices were
required to have a read and write capability of a minimum of 1.5 feet
for writing, and 5 feet for reading. Id. at para. 4.10.4.1. In
addition, the RFP provisions cited above identified faster
transmission rates for active equipment than for their passive
counterparts.
5. Specifically, paragraph 4.10.3.4.1. stated that the active HHI
should have a memory "of at least 512 Kbytes; however, the Government
desires a larger memory capacity" and that the active HHI must be
"capable of displaying at least 80 characters without scrolling;
however, the capability to display more than 80 characters without
scrolling is desired." (Emphasis added.)
6. The record shows that Motorola's error was that it ignored the
RFP's minimum requirements and focused instead on the RFP's stated
desire to procure equipment that exceeded these minimums, if possible.
During the hearing, Motorola's explanations suggested that the company
viewed the RFP's minimum requirements as anachronistic remnants of
earlier specifications that had been overlooked in the desire to
upgrade the Army's system. See Tr. at 135.
7. While we are generally skeptical of reevaluations prepared in the
heat of the adversarial process, Boeing Sikorsky Aircraft Support,
B-277263.2, B-277263.3, Sept. 29, 1997, 97-2 CPD para. 91 at 15, the
Army's explanation of the impact on the evaluation of imposing the
duty cycle requirement on Savi's equipment--i.e., that Savi's rating
[deleted]--seems reasonable in light of the fact that the equipment
would continue to meet the transmission speed requirements in the RFP.
In addition, Motorola has not argued that the Army's assessment of
this impact was unreasonable.
8. Motorola acknowledges that Savi's evaluated price "would have been
approximately [deleted] with this adjustment. Motorola's Post-Hearing
Comments, November 4, 1997, at 20.