BNUMBER: B-281255
DATE: December 28, 1998
TITLE: Amdahl Corporation, B-281255, December 28, 1998
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Matter of:Amdahl Corporation
File: B-281255
Date:December 28, 1998
Karen Zucker, Esq., for the protester.
Todd Hutchen, Esq., for IBM, Global Government Industry, an
intervenor.
Kavita Kalsy, Esq., Bureau of the Public Debt; and Roger D. Waldron,
Esq., General Services Administration, for the agencies.
Paul E. Jordan, Esq., and Paul Lieberman, Esq., Office of the General
Counsel, GAO, participated in the preparation of the decision.
DIGEST
1. In evaluating system-life cost under Federal Supply Schedule
procurement for 36-month lease of computer equipment, agency properly
used vendors' catalog prices for maintenance for years beyond the
lease period, where solicitation advised vendors of this evaluation
scheme.
2. Agency's technical evaluation of vendor quotations on computer
systems was reasonable where performed in accordance with stated
evaluation criteria and based on valid assessments of proposed
systems.
DECISION
Amdahl Corporation protests the issuance of a delivery order to IBM
under request for quotations (RFQ) No. 99-007, issued by the Bureau of
the Public Debt, Department of the Treasury, for a complimentary metal
oxide semiconductor (CMOS) processor. Amdahl challenges the order
citing alleged flaws in the evaluation of quotations and in the
price/technical tradeoff.
We deny the protest.
On August 12, 1998, Treasury issued the RFQ for a CMOS through a
36-month lease-to-own-plan (LTOP). The RFQ also included related
requirements such as training, system manuals, publications, and a
minimum warranty period. The RFQ specifically limited quotations to
those under a General Services Administration (GSA) Nonmandatory
Federal Supply Schedule (FSS), FSC Group 70, Part I, in conformity
with the terms and conditions of the schedule. The RFQ set forth
mandatory functional requirements and listed a number of six specific
features which were desired, but not required. As a seventh "desired"
feature, the RFQ sought "[a]ny additional features, functionalities,
or capabilities offered which add value commensurate with the price
differential." RFQ at 4.
Vendors were required to submit quotations which specified all
components and prices to implement the system. For mandatory
requirements, vendors were required to describe how the proposed
system met the requirements with references to commercial technical
literature to substantiate satisfaction of the mandatory requirements.
Vendors were also advised to "highlight any additional features,
functionalities, or capabilities included with the offered system
which they [felt] would provide added value to the Government." RFQ
at 7.
Quotations were to be evaluated under objective and subjective
technical factors and price. The objective evaluation was to be
conducted on a "pass/fail" basis and was to determine whether a
quotation met all mandatory requirements. The subjective evaluation
was to review the number and relative value added by desired features
included in the quote and proposed maintenance for those offering it
(as explained above, "additional" features were included in the rubric
of "desired" features, even though they were separate from the six
specified desired features). Desired features were considered
"somewhat more important" than maintenance. RFQ at 8. The RFQ also
stated that the government would weigh the inclusion of one or more of
the desired features in its best value determination and that the
government was willing to pay more for quotations which included one
or more of the desired features.
Price was to be evaluated by totaling the prices of items and
services, plus other identifiable costs expected to be incurred by the
government in order to implement and operate the proposed system for a
5-year system-life. The implementation/operating costs included, but
were not limited to, maintenance which the government would have to
acquire separately as a follow-on to the warranty period and any
offered maintenance. Price was considered somewhat more important
than the technical factors.
Three vendors, including IBM and Amdahl, submitted quotations by the
August 26, 1998 closing date. After evaluating the quotations, the
technical evaluation team determined that both IBM and Amdahl's
quotations met all mandatory requirements. They also found that IBM's
proposed system provided all six specified desired features as well as
nine additional features, five of which were considered of significant
value, while the rest were considered of moderate value. Accordingly,
the evaluators found IBM's quotation to be superior and ranked first
overall. In evaluating Amdahl's quotation, the evaluators found that
it provided five of the six desired features as well as three
additional features, one of significant value and two of moderate
value. The evaluators ranked Amdahl's quotation as superior and
second overall. The agency evaluated the system-life cost of IBM's
system as $857,971.45 and Amdahl's system-life cost as $830,397.82.
Based upon IBM's superior technical evaluation and additional features
of significant value, the evaluators recommended selection of IBM,
notwithstanding its higher evaluated system-life cost. The
contracting officer concurred, finding the substantial technical
benefits of the IBM quotation far outweighed the slight evaluated cost
differential as compared to the Amdahl quotation. The contracting
officer issued the delivery order to IBM on September 10. After
learning of the delivery order and receiving a debriefing, Amdahl
filed a protest with the agency.
In responding to the agency-level protest, the contracting officer
acknowledged that Amdahl's system actually had five additional
features which were the same as those offered by IBM, two of which
were deemed significant. The contracting officer concluded that
consideration of these additional features would not have changed the
decision to select IBM.[1] After receiving notice of the contracting
officer's decision, Amdahl filed this protest with our Office.
Amdahl objects to the agency's evaluation of the quotations. In
Amdahl's view, had the agency conducted a proper technical and price
evaluation, its lower-priced quotation would have been selected.
Under the FSS program, agencies are not required to request proposals
or to conduct a competition before using their business judgment in
determining whether ordering supplies or services from an FSS vendor
represent the best value and meet the agency's needs at the lowest
overall cost. Federal Acquisition Regulation (FAR) sec. 8.401,
8.404(b)(2). Where, as here, an agency conducts a competition,
however, we will review the agency's actions to ensure that the
evaluation was reasonable and consistent with the terms of the
solicitation. Information Sys. Tech. Corp., B-280013.2, Aug. 6, 1998,
98-2 CPD para. 36 at 3; COMARK Fed. Sys., B-278343, B-278343.2, Jan. 20,
1998, 98-1 CPD para. 34 at 4-5. The fact that a protester does not agree
with the agency's evaluation does not render the evaluation
unreasonable. Tracor, Inc., B-250716.2, Feb. 23, 1993, 93-1 CPD para. 165
at 7.
Amdahl first argues that the price evaluation was flawed because the
agency failed to consider Amdahl's proposed pricing for maintenance.
Amdahl proposed a reduced maintenance rate for the last 2 years of the
5-year system-life. Instead of using those prices, the agency used
Amdahl's published FSS catalog prices. As a result, Amdahl's
evaluated price was increased by approximately $27,000. If this
amount were eliminated from Amdahl's evaluated price, IBM's evaluated
price would be approximately $53,000 higher than Amdahl's price.
Amdahl believes that the selection would have been different had the
contracting officer considered this slightly higher premium associated
with IBM's system.
Leaving aside the question of whether this relatively minor adjustment
would have affected the source selection, we view this protest ground
as an untimely challenge to the terms of the solicitation. The RFQ
made clear that the agency intended to order only a 36-month LTOP.
While the RFQ stated that the agency "encouraged" vendors to "offer"
maintenance, this was stated only for the "36-month term" of the LTOP;
there was no provision to order an additional 24 months of maintenance
under the RFQ. RFQ at 7. With regard to determining the overall
5-year system-life cost of systems, however, the RFQ provided that, in
addition to the price of "the items and services offered" in response
to the RFQ, the price evaluation would take into account "other
identifiable costs expected to be incurred by the Government in
implementing and operating the proposed system for a system life of
five (5) years." Id. at 8. By contrasting the price of the items and
services "offered" with the price of "other" items, the RFQ made clear
that those "other" items were not being purchased under the RFQ.
As one of those "other" items, the RFQ specifically identified
maintenance "which the Government would have to acquire separately as
a follow-on to the warranty period and any offered maintenance." Id.
Since this procurement was for a 36-month LTOP, any maintenance
"offered" in response to the RFQ would end (at the latest) at the
close of 36 months, so that the separately acquired maintenance
referred to would necessarily include maintenance for years 4 and 5
(and might include maintenance for the earlier period, as well, if not
"offered" by the vendor). As to the maintenance being separately
acquired, the RFQ went on:
For this purpose, we will use the current catalog or list price
for maintenance meeting the requirements specified in the
Statement of Work, as furnished by the Offeror, subject to
verification by the Government. For any offers which fail to
include this information, the Government will evaluate using the
current price of such maintenance from the [original equipment
manufacturer] or other readily available source.
Id. at 8-9. The RFQ thus clearly stated that the agency would use
catalog or list prices for maintenance in years 4 and 5. Accordingly,
Amdahl's argument that the agency should have considered discounted
prices for maintenance in those 2 years is now untimely. Protests of
alleged improprieties in a solicitation, apparent before the closing
time, must be filed prior to the closing time. Bid Protest
Regulations, 4 C.F.R. sec. 21.2(a)(1) (1998).
Further, since the RFQ did not cover maintenance for years 4 and 5,
reduced prices that a vendor identified for those years would not be
binding. As noted by GSA in its response to our request for its views
on this protest, use of catalog or list prices (rather than allowing
vendors to identify lower prices) was reasonable; it gave the agency
an approximate idea of maintenance prices for the competing systems,
while avoiding the risk that vendors would identify very low
maintenance prices for years 4 and 5, secure in the knowledge that
they would not be bound to honor those low prices. See GSA Nov. 16,
1998 Response at 2 n.1. Accordingly, for purposes of evaluation, the
agency reasonably used the vendors' published prices for those years.
Amdahl next contends that the agency's technical evaluation was flawed
because IBM received credit for listing technical features which are
standard features also available from Amdahl.[2] We disagree. As
noted above, in evaluating IBM's system, the evaluators noted that
IBM's system offered all six desired features and possessed nine
additional features, five of which were considered of significant
value (1. Support for asynchronous transfer mode (ATM); 2.
Crypto-graphic co-processor; 3. CP & SAP sparing and SAP reassignment;
4. Asynchronous data mover facility; and 5. Y2K utilities bundled with
the additional features). The other four features (6. TCP/IP check
sum assist; 7. Asynchronous pageout facility; 8. Movepage facility;
and 9. CMOS experienced engineers) were considered of moderate value.
Amdahl's system offered only five of the six desired features and
eight additional features. Amdahl points out that its system shares
five of IBM's additional features. However, only two of them (Nos. 3
and 4) are considered of significant value, and the other three (Nos.
6, 7, and 8) are considered of only moderate value. While Amdahl's
system possesses three other features which IBM's system does not,
only one (dynamic quickswitch) was considered significant and the
others (retaining the current serial number and a large cache memory)
were considered of only moderate value.[3] Accordingly, despite the
agency's initial failure to identify all of the additional features
identified by Amdahl, the agency's determination of IBM's system
superiority was reasonable in light of IBM's offer of nine additional
features, including five of significant value, versus Amdahl's offer
of eight additional features, only three of which were of significant
value.[4]
Finally, Amdahl contends that the agency improperly issued the
delivery order to IBM at a higher price based on its higher evaluation
rating. According to Amdahl, nothing in the RFQ allowed the agency to
perform a price/technical tradeoff. We disagree. The RFQ
specifically advised vendors that the agency would evaluate the number
and relative value added by desired features included in the offer.
It also advised that, with regard to desired features, the government
would "weigh the inclusion of one or more of these features in its
best value considerations [and was] willing to pay more for offers
which include one or more of these features." RFQ at 4. While the
RFQ stated that price was somewhat more important than technical
merit, the RFQ also made clear that the agency contemplated a best
value award determination and could properly determine that a superior
technical quotation was worth paying a higher price. See Coleman
Research Corp., B-278793, Mar. 16, 1998, 98-1 CPD para. 111 at 7
(government is not required to select the lowest-cost, technically
acceptable proposal unless the solicitation specifies that price will
be the determinative award factor).
In this case, the price of the higher-rated quotation, IBM's, was only
slightly higher than that of Amdahl's. While Amdahl asserts that the
technical advantages of the IBM system are "trivial," it does not
provide any persuasive support for its conclusion. Its disagreement
with the agency's evaluation does not make that evaluation, or the
resulting judgment that the technical superiority of the IBM system
was worth its slightly higher price, unreasonable.
The protest is denied.
Comptroller General
of the United States
1. Although the agency responded to all of Amdahl's protest grounds,
the agency concluded that the agency-level protest was untimely.
While that protest was untimely based on the September 10 notice of
award, at its September 21 debriefing, Amdahl learned additional
information forming the basis of that protest. Accordingly, its
protest to our Office is timely because it was filed within 10 days of
receiving the agency's response to the agency-level protest.
2. In a related argument, Amdahl contends that IBM's system cannot
meet one of the desired features: ability to upgrade beyond the
minimum number of ESCON channels. The agency report explains that
IBM's system is currently configured to meet this desired feature.
Since Amdahl has provided nothing to rebut the agency's explanation,
we consider the issue to have been abandoned and will not consider it
on the merits. Analex Space Sys., Inc.; PAI Corp., B-259024,
B-259024.2, Feb. 21, 1995, 95-1 CPD para. 106 at 9.
3. Amdahl also maintains that the IBM unique features are undeserving
of additional credit because Amdahl will offer them in the future
(e.g., ATM support and crytographic co-processor). We see nothing
unreasonable in the agency focusing its consideration on currently
available features.
4. Amdahl notes that its system offers a number of additional features
and questions how a vendor would know which to highlight. An offeror
is responsible for affirmatively demonstrating the merits of its
proposal. DBA Sys., Inc., B-241048, Jan. 15, 1991, 91-1 CPD para. 36 at
4, citing Vista Videocassette Servs., Inc., B-230699, July 15, 1988,
88-2 CPD para. 55 at 5. Here, the agency encouraged vendors to exercise
their business judgment by specifically inviting offerors to highlight
additional features, functionalities, or capabilities which they felt
would provide added value.