BNUMBER: B-278407.2
DATE: February 13, 1998
TITLE: Sprint Communications Company, B-278407.2, February 13, 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:Sprint Communications Company
File: B-278407.2
Date:February 13, 1998
David S. Cohen, Esq., and Alex B. Kond�, Esq., Cohen Mohr LLP, and
George J. Affe, Esq., and Anthony L. Cogswell, Esq., Sprint
Communications Company, for the protester.
Richard P. Rector, Esq., Kevin P. Mullen, Esq., Chandra Emery, Esq.,
Piper & Marbury, and Robin L. Redfield, Esq., for MCI
Telecommunications Corporation, the intervenor.
H. Jack Shearer, Esq., McKenzie Whitaker, Esq., Defense Information
Systems Agency, for the agency.
John Van Schaik, Esq., and Michael R. Golden, Esq. Office of the
General Counsel, GAO, participated in the preparation of the decision.
DIGEST
Modification of contract for bandwidth management and switching
services for Department of Defense telecommunications network to
permit the contractor to become the primary supplier of transmission
services for agency customers using asynchronous transfer mode (ATM)
service (a high-speed, packet-like switching and multiplexing
technique which simultaneously transfers voice, data, and video at far
higher speeds than other existing technology) is beyond the scope of
the original contract; the transmission component of ATM must be
purchased in accordance with the statutory requirements for
competition.
DECISION
Sprint Communications Company protests the decision of the Defense
Information Systems Agency (DISA) to modify its contract with MCI
Telecommunications Corporation for bandwidth management and switching
services for the Defense Information System Network (DISN). Sprint
argues that the requirement of the modification that MCI provide
transmission services exceeds the scope of the original contract.
Thus, Sprint argues that DISA was required to hold a competition for
the transmission services.
We sustain the protest.
BACKGROUND
MCI's contract, No. DCA200-96-D-0096, is one of a series of component
contracts that make up the DISN, a telecommunications system providing
end-to-end common user, switched voice and video, and dedicated data
service in support of Department of Defense (DOD) command, control,
communication, and intelligence requirements. The MCI contract, which
is known as the DISN Switched/Bandwidth Manager Services continental
United States (CONUS) (DS/BMS-C) contract, was awarded under request
for proposals (RFP) No. DCA200-95-R-0129.
Three vendors submitted proposals in response to the DS/BMS-C RFP:
MCI, AT&T Corporation, and Electronic Data Systems, Inc., which
proposed Sprint as a subcontractor. The DS/BMS-C contract was awarded
to MCI on August 28, 1996, at an evaluated life-cycle cost of
approximately $84.9 million. Agency Report (Report) at 14. The
contract includes a not-to-exceed cost ceiling of $400 million.
The DS/BMS-C contract includes a statement of work (SOW) which
describes the services to be provided under the contract as "switched
and bandwidth management services in support of DISN CONUS." SOW sec.
1.2. Thus, the DS/BMS-C contract provides the capability to switch
network traffic[1] at service delivery points and provides bandwidth
managers at government specified service delivery points.[2] In
addition, the contractor provides network management services and
shares network coordinating functions with other network contractors.
SOW sec. 3.4.
Concerning the issue raised by this protest--whether the DS/BMS-C
contractor will provide transmission services--section 1.2 of the SOW
states:
This contract will not require the contractor to provide
either access to the network or backbone transmission
services. All access and backbone transmission services,
including those that are needed to connect with existing
services during transition of full services between end-user
[service delivery points], will be provided by the Government
under separate contract unless otherwise stipulated.
Also relevant to this protest, SOW section 1.4, "ROLE OF OTHER
CONTRACTORS," describes the various contracts that make up the DISN.
Generally, that section explains that the DS/BMS-C contract provides
switching and bandwidth management services and network management
functions for the DISN. Section 1.4 of the DS/BMS-C SOW also
describes the DTS-C contract, which was awarded to AT&T on January 28,
1997. According to section 1.4, the DTS-C contract provides access
transmission services defined as "access between DOD facilities and
the DISN CONUS network" and backbone transmission services defined as
"the wideband network level transport that will connect the [bandwidth
managers] provided under this [the DS/BMS-C contract] contract."[3]
The Modification
In May 1997, DOD's TRICARE[4] Information Management Program requested
that DISA provide a high bandwidth, reliable telecommunications
network for hospitals and medical facilities within the military's
health care system. Report at 16. The network is to integrate
information such as patient records, laboratory analysis results,
resource scheduling, billing, and medical consultations. In addition,
the network is to allow health care providers in critically short
specialty areas to serve a wider area of coverage through video
teleconferencing and telemedicine. DISA agreed to provide the
required telecommunications network and decided that an advanced
technology known as asynchronous transfer mode (ATM) service would
best support the type of high bandwidth service requested by
TRICARE.[5] DISA also determined that the TRICARE requirement should
be satisfied on the DISN rather than a separate stand-alone network.
Id.
As explained by the contracting officer, DISA expected that the DTS-C
contractor, AT&T, would be the primary source of transmission for the
DISN, including transmission for ATM service. Hearing transcript
(Tr.) at 82. However, AT&T was unable to install the SONET[6]
transmission backbone required for ATM service by the time required by
the contract and proposed a schedule for installation no later than
June 1998. Tr. at 84. As a result, DISA has had to look elsewhere
for transmission for ATM until AT&T can provide it.
In the summer of 1997, DISA considered several possible approaches to
satisfying the TRICARE ATM requirement. Among the approaches
considered were:
(1) modification of the DS/BMS-C contract to provide full ATM service,
including transmission; (2) providing ATM service indirectly through
Sprint via the Federal Systems Integration and Management Center
contract, a General Services Administration multiple-award schedule
contract;[7] (3) initiation of a new competitive procurement for ATM
service; and (4) delay providing ATM technology until the DISN reaches
full operational capability, probably in the summer of 1998. Report
at 17.
In September 1997, while DISA was considering its options, Sprint
first approached the agency and argued that use of the DS/BMS-C
contract to provide full ATM service would exceed the scope of that
contract. Report at 19. DISA and Sprint discussed whether Sprint
could provide ATM services, including switching and transmission under
either one of two existing contracts. DISA rejected those
possibilities.[8] Report at 19.
Subsequently, DISA decided to modify the DS/BMS-C contract to allow
MCI to provide ATM services, including bandwidth management and
switching and transmission under that contract. On November 4, the
modification, No. P00012, was signed. The modification states that it
was issued to add 54 TRICARE sites under subclin 0014AA of the
contract for ATM service. The modification lists 54 TRICARE sites and
adds to the contract a Statement of Work Addendum (SOW Addendum) and a
Functional Requirements Specification Appendix, both dated October 15,
1997. After the modification, some TRICARE sites were added and some
were deleted; DISA now plans to provide ATM services to 70 TRICARE
sites under the modification. Tr. at 29.
The SOW Addendum, at section 1.2 "CONTRACT SCOPE," states that the
"Addendum provides for DISN-CONUS ATM services under the DS/BMS-C
contract." It also states:
Initially, the government's ATM service will be provisioned using
commercial ATM services under the DS/BMS-C and other ATM contract
sources. . . . The interim ATM service will transition to an
objective DISN CONUS ATM service after the DISN CONUS achieves
Full Operational Capability. . . . After DISN CONUS [Full
Operational Capability], the government's ATM service will be
provisioned using both the DS/BMS-C and DTS-C contracts.
The SOW Addendum also states that transition from the interim ATM
service to the objective ATM service--with transmission to be provided
by the DTS-C contract--will start 180 days after Full Operational
Capability and the transition will be completed 180 days after it has
begun. SOW Addendum at sec. 1.2.
PROTEST ALLEGATIONS
Sprint acknowledges that the bandwidth management and switching
component of the ATM modification is within the scope of the DS/BMS-C
contract. Sprint Supplemental Comments, January 8, 1998, at 7.
Sprint, nonetheless, argues that the transmission component of the
modification is materially different from the services solicited by
the RFP and is outside the scope of the DS/BMS-C contract. Protest at
4. According to Sprint, the original solicitation could not be
construed as advising potential offerors of the possibility that ATM
transmission services could be acquired under the contract.
Sprint states that, in reliance on the plain language of the DS/BMS-C
RFP, it elected not to submit a proposal in response to that RFP,
although it did submit a proposal in response to the transmission RFP.
Sprint also argues that it was prejudiced by the modification because
it is fully able to provide public or private transmission services to
meet DISA's ATM requirements.
ANALYSIS
Standard of Review
The Competition in Contracting Act (CICA) requires "full and open
competition" in government procurements as obtained through the use of
competitive procedures. 10 U.S.C. sec. 2304(a)(1)(A) (1994). Once a
contract is awarded, however, our Office will generally not review
modifications to that contract, because such matters are related to
contract administration and are beyond the scope of our bid protest
function. 4 C.F.R. sec. 21.5(a)(1997); Stoehner Sec. Servs., Inc.,
B-248077.3, Oct. 27, 1992, 92-2 CPD para. 285 at 4. The exception to this
rule is where it is alleged that a contract modification is beyond the
scope of the original contract, since the work covered by the
modification would otherwise be subject to the statutory requirements
for competition (absent a valid determination that the work is
appropriate for procurement on a sole-source basis). MCI Telecomms.
Corp., B-276659.2, Sept. 29, 1997, 97-2 CPD para. 90 at 7.
In determining whether a modification triggers the competition
requirements in CICA, we look to whether there is a material
difference between the modified contract and the contract that was
originally awarded. Id.; see AT&T Communications, Inc. v. Wiltel,
Inc., 1 F.3d 1201, 1205 (Fed. Cir. 1993). Evidence of a material
difference between the modification and the original contract is found
by examining any changes in the type of work, performance period, and
costs between the contract as awarded and as modified. MCI Telecomms.
Corp., supra, at 7-8. We also consider whether the solicitation for
the original contract adequately advised offerors of the potential for
the type of change found in the modification, CAD Language Sys., Inc.,
B-233709, Apr. 3, 1989, 89-1 CPD para. 342 at 4, or whether the
modification is of a nature which potential offerors would reasonably
have anticipated at the time of the original award. American Air
Filter Co.--DLA Request for Recon., 57 Comp. Gen. 567, 573 (1978),
78-1 CPD para. 443 at 9-10.
The Scope of the DS/BMS-C Contract
As an initial matter, there is no question that the DS/BMS-C contract
contemplated the possibility of some ATM services being ordered under
the contract. The pricing tables of the contract include line item
0014, "Technical Enhancements" and subline item 0014AA "Asynchronous
Transfer Mode" each with the reference that the price was "To Be
Negotiated." In another reference to ATM, the SOW, section 1.2,
SCOPE, states in part:
Service enhancements, such as ATM, may be required under the
provisions of technology enhancements. The specific
terminations, throughput capability, and network management suite
for system operation have not been finalized. It is envisioned
that dedicated point-to-point service will migrate to this
capability as soon as the performance for the ATM is proven and
the costs for ATM service becomes competitive.
These and other provisions in the DS/BMS-C contract indicate that ATM
service could be added to the contract; these provisions, however, do
not address the question presented by Sprint's protest: whether the
transmission component of the ATM modification is within the scope of
the contract.
The contract also includes, at section H12, an expansive technical
enhancements clause which provided that after award:
the Government may solicit, and the contractor is encouraged
to propose independently, improvements to the services,
features, or other requirements of the contract. These
improvements may be proposed to save money, to improve
performance, or for any other purpose which presents a service
advantage to the Government.
Despite the broad nature of the enhancements clause, however, and
despite the references to the DS/BMS-C contractor providing ATM
service, we conclude that the transmission component of ATM added to
the contract by the modification resulted in a material change in the
contract. Our reasons for this conclusion are set forth below.
Focusing first on the type of work at issue, the DS/BMS-C SOW, in
section 1.4, "ROLE OF OTHER CONTRACTORS," states that "DISN CONUS end
user services will be provided through services and facilities that
are obtained from a number of separate contracts referred to
throughout this contract as DISN Service Contracts." According to
section 1.4(1), the DS/BMS-C contractor is to "provide the capability
to switch DISN CONUS traffic and . . . provide dedicated [bandwidth
managers] at Government-specified locations. In addition, the DS/BMSC
Contractor shall perform the active Network Management functions for
DISN and share network coordinating information with the other DISN
service contracts."
According to section 1.4(2) of the DS/BMS-C SOW, the DTS-C (AT&T)
contract, is to provide access transmission services, described as
"access between DOD facilities and the DISN CONUS network. Each DOD
facility will be connected to a [bandwidth manager] provided under the
DS/BMSC contract." Section 1.4(2) also states that the DTS-C contract
is to provide backbone transmission services, which are described as
"the wideband network level transport that will connect the [bandwidth
managers] provided under this contract."
Thus, as reflected in SOW section 1.4 of the DS/BMS-C contract, the
DISN generally was based upon a division of responsibilities, with the
DS/BMS-C contract providing bandwidth management, switching services,
and network management functions, and the DTS-C contract providing
transmission. Section 1.2 of the DS/BMS-C SOW specifically addresses
the provision of transmission under that contract. That provision
states:
This contract will not require the contractor to provide
either access to the network or backbone transmission
services. All access and backbone transmission services,
including those that are needed to connect with existing
services during transition of full services between end-user
[service delivery points], will be provided by the Government
under separate contract unless otherwise stipulated.
DISA maintains that this provision permits the delivery of
transmission for ATM service under the DS/BMS-C contract. According
to the agency, "although the RFP advised offerors that the DS/BMS-C
contractor would not be 'required' to provide transmission, it did not
prevent the contractor from agreeing to provide such services."
Report at 11. In addition, referring to the phrase "unless otherwise
stipulated" in the above-quoted provision, DISA argues that it
"explicitly reserved the right to stipulate that transmission would be
provided under the DS/BMS-C instead of a separate contract." Report
at 11-12.
The linchpin of DISA's position is the premise that the "otherwise
stipulated" clause permits DISA to modify the contract to add
transmission requirements beyond those in the contract when it was
awarded as long as DISA and MCI agree to do so. We reject this
premise. The "unless otherwise stipulated" paragraph must be read in
the context of other provisions of the contract, including the SOW
language that describes the duties of the DS/BMS-C contract and the
DTS-C contract, and the transmission requirements that were in the
contract when it was awarded. The only reasonable reading of the
"unless otherwise stipulated" paragraph in the context of the contract
as a whole is that access and backbone transmission services will not
be provided by the DS/BMS-C contractor except for purposes which the
contract as awarded stipulated. Section 1.4 of the SOW, as quoted
above, indicates that DISA generally contemplated a separation of
transmission and bandwidth management duties between the two
contracts. Any reading of the "unless otherwise stipulated" paragraph
that contradicts that fundamental separation must be based on specific
language in the contract when it was awarded. We are aware of no such
language.
As DISA notes, the division of responsibilities between the DS/BMS-C
contract and the DTS-C contract was not absolute; the DS/BMS-C
contract included some transmission requirements when it was awarded.
For example, the DS/BMS-C SOW indicates that MCI provides transmission
of network management data and service information, SOW sec. 3.4, sec.
3.4.2; transmission for certain calls which overflow onto MCI's public
switched telephone network because they cannot be completed over the
DISN, Functional Requirements Specification sec. 1.2.2(a); and
transmission for calling cards. SOW sec. 3.1.7, Functional Requirements
Specification sec. 1.2.2(b). Nonetheless, the only reasonable reading of
the contract is that those transmission requirements are the
"otherwise stipulated" transmission services referred to in the
paragraph of the SOW quoted above. Since the SOW specifically states
that transmission would be provided under other contracts and that
this contract will not require transmission "unless otherwise
stipulated," the only transmission requirements that are within the
scope of the DS/BMS-C contract are the transmission requirements
called for by the contract as awarded.
Turning to the modification, the SOW Addendum of the modification
states at section 1.2 that, prior to full operational capability of
the DISN, "the government's ATM service will be provisioned using
commercial ATM services under the DS/BMS-C and other ATM contract
sources." The Functional Requirements Specification Appendix
describes the performance requirements for the DISN-ATM service as
"end-to-end," which is defined as "customer terminal to customer
terminal . . . includ[ing] the effects of all the intermediate systems
and subsystems such as the customer network, the access network, ATM
switch service and the backbone network." Functional Requirements
Specification Appendix, at sec. 3.1. Moreover, DISA and MCI acknowledge
that, as a result of the modification, in addition to its bandwidth
management duties, MCI will be the primary provider of access and
backbone transmission for ATM customers under the DISN until Full
Operational Capability.
The modification represents a material departure from the contract as
competed and awarded. Under the modification, MCI as the DS/BMS-C
contractor is to be the primary provider of transmission for ATM users
under the DISN until the DISN reaches Full Operational Capability.
Although transmission was required under the DS/BMS-C contract as
awarded, as explained above, prior to the modification, MCI's
transmission responsibilities were limited to those situations
stipulated in the contract--which did not stipulate that the DS/BMS-C
contractor was to be the primary provider of transmission for any DISN
users.
Moreover, in addition to becoming the primary provider of transmission
for ATM service under the modification (until Full Operational
Capability), MCI also will provide to ATM users bandwidth management
and switching services as well as network management services, in
addition to those types of transmission that were stipulated in the
contract as awarded. Having one firm provide such a largely complete
network solution for particular DISN customers was not contemplated by
the DISN. On the contrary, as explained above, section 1.4 of the SOW
indicates that DISA generally contemplated a separation of
transmission and bandwidth management duties between the two
contracts. For this reason also, the type of work to be performed
under the modification is materially different from the work performed
under the original contract.
DISA has argued, however, that Sprint must have known that some
transmission responsibilities would be included under the DS/BMS-C
contract. Report at 13-14; Supplemental Agency Report at 4-5, n.4.
In this connection, DISA notes that the Electronic Data Systems
proposal, which included Sprint as a subcontractor, discussed Sprint's
transmission capabilities.
Here again, the issue is not whether Sprint understood that the
delivery of transmission would be required under the DS/BMS-C
contract; the contract stipulated a number of specific situations in
which the DS/BMS-C contractor would provide transmission. The issue
rather is transmission for ATM, and DISA does not suggest that
anything in the Electronic Data Systems proposal demonstrates that
Sprint knew that the DS/BMS-C contractor would be the primary provider
of transmission for ATM for any DISN customers.[9] In addition, we
consider it significant that DISA solicited bandwidth management and
switching services in one RFP and transmission in another; it appears
that DISA itself views the services as separable. The separate
solicitations for these services further supports our view that a
modification to make the DS/BMS-C contractor the primary provider of
transmission for ATM service (until Full Operational Capability of the
DISN) was beyond the contemplation of offerors when the contract was
awarded.
The potential cost of the transmission component of the modification
also supports what is clear from the DS/BMS-C contract itself--that
ATM transmission is beyond the scope of the contract. Based on a
stipulation by the parties, Tr. at 291-292, 294-297, the cost of the
transmission component appears to be between [deleted] for the 70
TRICARE sites currently covered by the modification. MCI and DISA
argue that this cost range does not represent a significant increase
in the cost of the contract, which has a $400 million not-to-exceed
ceiling. For several reasons, however, the actual cost associated
with the modification may be considerably greater than [deleted]. For
example, the modification includes no firm date for Full Operational
Capability and it is possible that MCI will be the primary provider of
ATM transmission longer than expected. The contracting officer
insists that he will monitor the situation to ensure that there is no
extension of the scheduled June 30, 1998, Full Operational Capability
date (after which transmission for ATM is to be provided under the
DTS-C contract). Tr. at 43-44. However, the contracting officer
acknowledges that the original date for Full Operational Capability
was June 1, 1997, so the date by which the DTS-C contract will provide
ATM transmission has already been delayed more than a year. Tr. at
43. A further delay would obviously increase the cost associated with
the modification.
In addition, the scope of the modification is broad. Although the
modification, when issued, specifically covered only 54 TRICARE sites,
the modification states that "[o]ther/future customers for ATM
services within the DISN CONUS service area may be added and/or
deleted to this contract service . . . ." Thus, although the
contracting officer has explained that he intends to limit the number
of sites for which ATM is provided under the modification, Tr. at
27-29, the modification itself places no limit on the number of
TRICARE sites for which ATM transmission can be provided. In fact,
the modification would permit the expansion of ATM service to any site
within the DISN--not just TRICARE sites. Under the circumstances, and
because there is no firm date for conversion to ATM transmission from
the DTS-C contract, we conclude that the modification could have a
significant impact on the cost of the DS/BMS-C contract. MCI
Telecomms. Corp., supra, at 10.
RECOMMENDATION
We conclude that the modification to the DS/BMS-C contract adding
transmission services for ATM is beyond the scope of the original
contract, and that DISA was required to procure these services in
accordance with the competition requirements of CICA, 10 U.S.C. sec.
2304(a)(1)(A). Accordingly, we recommend that DISA terminate the
transmission services added to the DS/BMS-C contract pursuant to
modification number P00012, and either hold a competition for these
services or prepare the appropriate justification required by CICA for
a sole-source procurement.[10]
We also recommend that the protester be reimbursed the reasonable
costs of filing and pursuing its protest including attorneys' fees. 4
C.F.R. sec. 21.8(d)(1). In accordance with 4 C.F.R. sec. 21.8(f)(1),
Sprint'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."Traffic" is the flow of information in a telecommunications
network, and a telecommunications "switch" is essentially a computer
system that routes or directs traffic to the desired location.
2. Bandwidth managers essentially link transmission facilities (or
transmission lines) within a telecommunications network.
3. In a previous decision, AT&T Corp., B-270841 et al., May 1, 1996,
96-1 CPD para. 237, we denied a protest by AT&T against DISA's refusal to
allow offerors to submit, and have evaluated, single proposals as an
alternative to individual proposals under three DISN RFPs, the
DS/BMS-C RFP, the DTS-C RFP and a third RFP, for video services.
4. TRICARE is a DOD managed health care program.
5. ATM is a high-speed, packet-like switching and multiplexing
technique which simultaneously transfers voice, data, and video over
the same circuits at far higher speeds than other existing technology.
Report at 3.
6. SONET stands for synchronous optical network and refers to a fiber
optic transmission system for high-speed digital traffic.
7. Sprint provides a transmission backbone as a subcontractor for
small disadvantaged business firms on some Federal Systems Integration
and Management Center contracts. DISA reports that it has used this
program to obtain ATM service for specific functions. Report at 17
n.9.
8. Sprint first protested the proposed modification of the DS/BMS-C
contract to this Office on October 17, 1997. That protest was
dismissed as premature on October 24 since DISA had not yet decided to
modify the contract.
9. For the record, we note that an MCI official testified and showed
references in the firm's proposal that appear to indicate MCI
anticipated ATM transmission could be ordered under the contract. Tr.
at 250-251, 256-257. We also note, however, that MCI has acknowledged
that [deleted]. MCI Post Hearing Comments, January 29, 1998, at 19.
10. During the course of this protest, DISA determined that it was in
the best interest of the government to continue performance
notwithstanding the protest and executed a "best interest" override of
the statutory stay of MCI's performance of this modification to the
contract. See 31 U.S.C. sec. 3553(d)(3)(C)(i)(I) (1994). In such cases,
CICA requires our Office to make our recommendation "without regard to
any cost or disruption from terminating, recompeting, or reawarding
the contract." 31 U.S.C. sec. 3554(b)(2).