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.