BNUMBER: B-278343; B-278343.2
DATE: January 20, 1998
TITLE: COMARK Federal Systems, B-278343; B-278343.2, January 20,
1998
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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:COMARK Federal Systems
File: B-278343; B-278343.2
Date:January 20, 1998
Joseph P. Hornyak, Esq., Sonnenschein Nath & Rosenthal, for the
protester.
Keith L. Baker, Esq., and Jeffrey E. Weinstein, Esq., Eckert Seamans
Cherin & Mellott, LLC, for Sytel, Inc., an intervenor.
Kenneth E. Patton, Esq., and Ada E. Bosque, Esq., Department of Health
and Human Services, for the agency.
Andrew T. Pogany, Esq., and John M. Melody, Esq., Office of the
General Counsel, GAO, participated in the preparation of the decision.
DIGEST
Under request for quotations which asked vendors to identify a
configuration of computer systems and related hardware and services on
Federal Supply Schedule, where agency intended to conduct a technical
evaluation and cost/technical trade-off, agency improperly failed to
advise vendors of the basis for selection.
DECISION
COMARK Federal Systems protests the issuance of a delivery order to
Sytel, Inc. under request for quotations (RFQ) No. 0008, issued by the
Health Care Financing Administration, Department of Health and Human
Services, for computer desktop workstations. COMARK principally
argues that the agency improperly failed to advise vendors of the
agency's actual needs and evaluated quotations in a manner that was
inconsistent with the solicitation.
We sustain the protest.
BACKGROUND
In June 1997, the agency announced that it would issue multiple
blanket purchase agreements (BPAs) covering a variety of computer
hardware, software, associated equipment and services pursuant to the
General Services Administration (GSA) Federal Supply Schedule (FSS).
The agency tentatively identified six vendors to receive for review
BPA "packages," which included, among other things, a sample personal
computer specification, a document entitled "BPA Evaluation
Requirements Criteria," and the agency's terms and conditions for
future delivery orders to be issued under the BPA. The BPA package
required the submission of a demonstration workstation to undergo a
benchmark test and specified that the proposed unit have a hard drive
capable of storing 1 gigabyte (GB) of data. In July, question and
answer sessions were conducted and based on these sessions, as well as
past performance evaluations, the agency selected four vendors,
including COMARK and Sytel, to receive BPAs. On August 6, the agency
revised the BPA specifications to require a hard drive capable of
storing a minimum of 2 GB of data. Benchmark demonstrations were
performed by the agency from mid-August through mid-September. As
relevant here, COMARK's "Plus Data" unit, which it proposed to meet
the BPA specifications, successfully passed the benchmark
demonstration, as did two models from Sytel and two from another
vendor, BTG, Inc. These three firms signed and accepted the BPAs on
September 4.
On September 18, the agency issued RFQ No. 0008 to the three firms via
electronic mail. The RFQ called for a quantity of 1,950 desktop
workstations and specifically stated that it was being issued "under
[the agency's] BPA." The BPA, in turn, specified that it was issued
"[p]ursuant to GSA Federal Supply Contract[s]." The RFQ contained
numerous specifications, some of which were followed by the
parenthetical designation "(minimum)." Among the latter, the RFQ
included a requirement for a "2 GB Hard Disk (minimum)." The RFQ also
required a 3-year on-site warranty for all items. The RFQ did not
contain any evaluation criteria.
From September 23 through September 29, the agency received quotes,
which were rated on a 1,000-point system with eight categories,
including system design, features, performance, and price (which
accounted for [deleted] percent of the total score). COMARK submitted
two quotes; the chart below reflects its lower-priced quote. The
evaluation results contained a pricing error that significantly
reduced COMARK's rating; we show below the total scores and prices, as
the agency has corrected them in its post-protest calculations. The
total evaluated points includes both technical and price factors--that
is, the scores reflect a combination of technical merit and price in a
composite rating. The evaluation results, in relevant part, were as
follows:
Vendor Total Evaluated Score (Technical and Price)Price
Sytel Dell [deleted] [deleted]
Sytel Opal [deleted] [deleted]
COMARK Plus Data[deleted] [deleted]
BTG Model A [deleted] [deleted]
BTG Model B [deleted] [deleted]
Based on the mistaken evaluation results (that is, results which, as
noted above, assumed a significantly higher price and therefore a
lower total evaluated score for COMARK), the agency's Project Officer
made the following determination:
Based on the quotations and the evaluation criteria, I recommend
the purchase of the [Sytel] Dell system as a 'best value'
decision. The Dell ranked highest on the [agency's] evaluation
test in system design, system configuration and performance, as
well as in overall scoring. It has a newer chipset [deleted]
than the cheaper, and closest technically acceptable competitor,
[deleted]. In addition, the [Sytel] Dell system has a [deleted]
GB hard drive [versus] the 2 GB drive found on the less expensive
machines.
Accordingly, the delivery order was issued to Sytel on September 30,
1997. This protest followed.
The protester argues that the RFQ was silent as to what evaluation
criteria the agency would follow, and that the agency nevertheless
improperly engaged in a "best value" procurement instead of selecting
the low, technically acceptable quote.[1] The agency responds that
best value determinations are permitted under the FSS.
The RFQ specifically referred to the BPA, which, in turn, stated that
it was issued pursuant to the GSA FSS. Accordingly, the provisions of
Federal Acquisition Regulation (FAR) Subpart 8.4 apply. Those
provisions anticipate agencies reviewing vendors' federal supply
schedules--in effect, their catalogs--and then placing an order
directly with the schedule contractor that can provide the supply (or
service) that represents the best value and meets the agency's needs
at the lowest overall cost. FAR sec. 8.404(b)(2) (June 1997).[2] When
agencies review competing vendors' schedule offerings, they are
permitted to make a best-value determination that takes into account
"[s]pecial features of one item not provided by comparable items which
are required in effective program performance." FAR sec.
8.404(b)(2)(ii)(A).[3] When agencies take this approach, there is no
requirement that vendors receive any advance notice, regarding either
the agency's needs or the selection criteria.
Agencies, however, may shift the responsibility for selecting items
from schedule offerings to the vendors, by issuing solicitations
(typically in the form of RFQs) that call on the vendors to select,
from among the hundreds (or thousands) of possible configurations of
the items on their schedules, a particular configuration on which to
submit a quotation. It is certainly understandable that an agency
would prefer for the vendors to construct these configurations;
particularly in the area of information technology, the large number
of possible combinations might make it difficult for agency personnel
unfamiliar with the particular equipment or related technical issues
to select one configuration by reviewing vendors' schedule
offerings.[4]
Yet once an agency decides, by issuing an RFQ (a procedure not
mentioned in FAR Subpart 8.4), to shift to the vendors the burden of
selecting items on which to quote, the agency must provide some
guidance about the selection criteria, in order to allow vendors to
compete intelligently.[5] Haworth, Inc.; Knoll N. Am., Inc., 73 Comp.
Gen. 283, 286 (1994), 94-2 CPD para. 98 at 5. Where the agency intends to
use the vendors' responses as the basis of a detailed technical
evaluation and cost/technical trade-off, the agency has elected to use
an approach that is more like a competition in a negotiated
procurement than a simple FSS buy, and the RFQ is therefore required
to provide for a fair and equitable competition. See EMC Corp.,
B-277133, Sept. 4, 1997, 97-2 CPD para. 64 at 3; L.A. Sys., Inc.,
B-276349, June 9, 1997, 97-1 CPD para. 206 at 3-4. While an agency need
not identify detailed evaluation criteria in an RFQ, even where it is
asking vendors to select items from their schedules and where the
agency intends to conduct a technical evaluation, it must indicate, at
a minimum, the basis on which the selection is to be made, including
whether the agency intends to select the low-cost technically
acceptable quotation, or whether the agency is willing to consider
paying a higher price for superior technical features (that is,
whether it contemplates performing a cost/technical trade-off).
In the field of information technology, where schedule contractors
typically have a wide spectrum of items--from cut-rate to
cutting-edge--on their schedules, an FSS vendor needs guidance from
the agency in order to rationally decide which products to select in
responding to an RFQ. To use an example drawing on the facts of this
protest, when the agency is asking a computer vendor to decide whether
to submit a quotation for a hard drive with a 2 GB storage capacity
for a lower price, or one with a [deleted] GB capacity at a higher
price--where both possibilities are covered by the schedule
contract--the vendor cannot intelligently make that choice without
guidance about the basis on which the agency intends to make its
selection.
In the multi-million dollar acquisition at issue in this protest, the
agency intended to conduct a detailed technical evaluation and
cost/technical trade-off, yet it asked vendors to submit quotations
with less guidance than is required to be given in a solicitation for
a far smaller purchase under the simplified acquisition procedures of
Part 13 of the FAR. See FAR sec. 13.106-2(a)(1) ("Solicitations shall
notify suppliers of the basis upon which award is to be made.").
Specifically, the agency apparently viewed the specifications set out
in the RFQ only as a statement of the minimum it was willing to
purchase, and it was willing to pay a higher price for greater
technical capabilities. It failed, however, to advise vendors of that
critical fact.
The agency suggests that the protester's challenge to the RFQ's
failure to set out evaluation criteria should be dismissed as
untimely, pursuant to 4 C.F.R. sec. 21.2(a)(1) (1997). We believe that
the defect in the RFQ only became apparent when the protester learned
that the agency's needs were not for selection of the low-priced,
technically acceptable quotation (as the protester reasonably
expected, as explained below). Similarly, we reject the agency's
contention that the RFQ made clear, through the use of the word
"minimum" next to certain specifications, that a best-value
determination might be the basis of the source selection here. In our
view, the parentheticals in the list of specifications did not by
themselves indicate the intended basis of selection, since they would
have been consistent with either a lowest-price, technically
acceptable approach or a best-value one.
The protester contends that, on one of the two technical factors on
which the selection decision rested, the capacity of the hard drive,
it could have quoted an item equal in capacity to that quoted by
Sytel. The agency does not deny that the protester's FSS contract
includes such an item.[6] The protester contends that the reason that
it did not quote a configuration with greater capabilities was that it
understood the RFQ to mean that the agency's needs were for the
low-priced, technically acceptable configuration. Such a reading of a
solicitation that does not otherwise explain the agency's evaluation
criteria was reasonable.[7] See Vistron, Inc., B-277497, Oct. 17,
1997, 97-2 CPD para. 107 at 4 (where a solicitation does not contain
evaluation factors other than price, general rule is that price is the
sole evaluation criterion). We conclude that the RFQ did not
accurately state the agency's requirements and that the protester was
prejudiced by the agency's action in this regard.
Because the agency requested quotations from vendors without advising
them that the agency did not require the low-priced, technically
acceptable configuration, we sustain the protest. We recommend that
the agency amend the RFQ to advise the firms holding BPAs of the
agency's needs, including whether the agency is willing to conduct a
cost/technical trade-off, if configurations are quoted that exceed the
minimum specifications stated in the RFQ. If, upon reviewing
quotations received in response to the amended RFQ, the agency selects
other than Sytel, we recommend that the agency cancel that firm's
purchase order and issue a purchase order to the vendor selected. We
also recommend that the protester be reimbursed the reasonable costs
of filing and pursuing the protest, including attorneys' fees. 4
C.F.R. sec. 21.8(d)(1). The protester should submit its certified claim
for such costs, detailing the time expended and the costs incurred,
directly to the contracting agency within 60 days after receipt of
this decision.
The protest is sustained.
Comptroller General
of the United States
1. COMARK also alleges that it was orally advised by a contract
specialist after the benchmark demonstrations that "price [would] now
determine" the winner of this competition. The agency denies that
such advice was given. In light of our resolution of the protest, we
need not resolve this factual dispute or the other protest grounds
raised by COMARK.
2. The modification to this provision introduced by Federal
Acquisition Circular (FAC) 97-01 deleted the reference in this
paragraph to "lowest overall cost." This modification (which, in any
event, was not yet in effect when the RFQ at issue in this protest was
issued) would not change our analysis. We note, however, that the
requirement that FSS purchases, in order to be exempt from the mandate
for full and open competition, be made at the "lowest overall cost"
has a statutory basis, and thus cannot be removed by a modification to
the regulation. 41 U.S.C. sec. 259(b)(3)(B) (1994).
3. FAC 97-01 slightly reworded the provision, but without changing its
meaning in a way relevant here, and shifted its location to FAR sec.
8.404(b)(2)(i).
4. The same may apply for furniture, another area where schedules are
widely used. See, e.g., Design Contempo, Inc., B-270483, Mar. 12,
1996, 96-1 CPD para. 146.
5. Where an agency uses the RFQ simply to request price quotations for
items identified by the agency (for example, where the agency is
seeking a price reduction), the concern discussed here does not arise,
since the agency is asking the vendors only to quote prices, not to
choose the items on which to quote. See FAR sec. 8.404(b)(3) (FAC 97-01)
(agency shall generally seek price reductions where the value of the
purchase exceeds the maximum order threshold).
6. While the hard drive benchmark tested by the protester did not have
a [deleted] GB capacity, there was apparently no requirement that
vendors quote configurations that had been benchmark tested.
Similarly, the protester contends that it could offer, apparently
through its FSS contract, the chipset that the agency preferred.
7. The agency argues that, since the protester did not submit the
lowest technically acceptable quotation, it is not an interested party
for purposes of pursuing this protest. (The protester contends that
the only quote which was lower than its own was ineligible for
selection.) Since the agency's needs were apparently not for the
low-priced, technically acceptable solution and we are recommending
that the agency amend the solicitation accordingly, we conclude that
the protester is an interested party. See 4 C.F.R. sec. 21.0(a).