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-DOSï¿½, 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.