TITLE:  PeopleSoft USA, Inc., B-283497, November 30, 1999
BNUMBER:  B-283497
DATE:  November 30, 1999
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PeopleSoft USA, Inc., B-283497, November 30, 1999

Decision

Matter of: PeopleSoft USA, Inc.

File: B-283497

Date: November 30, 1999

Alan M. Grayson, Esq., Ira E. Hoffman, Esq., and Brian T. Scher, Esq.,
Grayson & Associates, for the protester.

David S. Cohen, Esq., and John J. O'Brien, Esq., Cohen Mohr, for SAP Public
Sector and Education, Inc., an intervenor.

Ruth L. Ramsey, Esq., Peace Corps, for the agency.

Scott H. Riback, Esq., and John M. Melody, Esq., Office of the General
Counsel, GAO, participated in the preparation of the decision.

DIGEST

Agency met its obligation to conduct meaningful discussions where record
shows that it put protester on notice of its principal concern with the
protester's proposal, namely, the fact that certain of the functionality
required by the solicitation was not yet available, since the protester's
offered software had not yet been released.

DECISION

PeopleSoft USA, Inc. protests the elimination of its proposal from the
competitive range under letter of interest (LOI) No. PCORPS-99-R-1023,
issued by the Peace Corps for financial management software. PeopleSoft
asserts that the agency improperly failed to conduct meaningful discussions
with it before eliminating its proposal from further consideration. [1]

We deny the protest.

The LOI sought information for purposes of issuing a master delivery order
under one of the eligible vendors' Financial Management Systems Software
multiple award schedule (FMSS MAS) contracts to provide financial management
software. The agency's requirements were spelled out in great detail in
section J of the LOI, which included extensive narrative descriptions of
some 580 functional and technical requirements. [2] The solicitation further
provided that the functional and technical considerations were significantly
more important than price. LOI sect. M.1. Each of the 580 functional and
technical requirements were designated as either "mandatory," "critical" or
"desirable," LOI sect. J, at v, and these requirements were specified as either
Peace Corps specific, or as arising from Joint Financial Management
Improvement Program (JFMIP) requirements. [3] LOI sect. J.

In response to the solicitation, the Peace Corps received several offers,
including the protester's. The evaluators rated all proposals except the
protester's as "more than satisfactory," and rated the protester's proposal
"satisfactory." Agency Report
at 187. [4] PeopleSoft offered an as yet unreleased version of its software
(version 7.5) and supported its proposal with literature relating to the
previous version (version 7.0) as well as "pre release notices" prepared for
version 7.5. Protest at 4 & n.3. PeopleSoft further represented that its
version 7.5 software was scheduled for release in the summer 1999 timeframe.
PeopleSoft Proposal, Pre-release Notes, at 2. The evaluators specifically
found that, to the extent that PeopleSoft was proposing to meet the federal
functionality called for under the solicitation, it had done so only by
offering the version 7.5 of its software that had not yet been released.
Agency Report at 195. The evaluators also were concerned that PeopleSoft's
proposed software used "non-federal" terminology (essentially because it had
been developed for non-federal users), and that this problem required
satisfactory resolution in order to meet the agency's needs. Id. at 157.
Finally, the evaluators were concerned about an exception in PeopleSoft's
proposal, id. at 125, which stated:

Future Functionality

Where PeopleSoft has described features or functionality that it anticipates
will be included in future releases of the applications, PeopleSoft is not
making a contractual offer to provide the features or functionality.
Descriptions of future features or functionality and estimates of their
availability represent PeopleSoft's good faith estimates. PeopleSoft does
not make contractual commitments regarding timing or delivery of features or
functionality that are not currently available. PeopleSoft ascribes no value
to such features or functionality, as it is not committing to delivering
them. The Peace Corps' evaluators should understand that their selection of
PeopleSoft as their software vendor should rely on the functionality
provided today in the software.

PeopleSoft Initial Proposal at 10-1.

The agency then engaged in discussions with PeopleSoft and the other
offerors. As for the protester, the agency's discussion questions focused on
the issues identified above, namely, the progress PeopleSoft was making in
terms of releasing version 7.5 of its software (as well as how the firm
would handle bugs in the new release) and the firm's proposed solution to
the lack of federal terminology. Agency Report
at 157. The firm also was asked about the exception quoted above, and
specifically requested to provide adequate assurances that the functionality
promised with the release of version 7.5 of its software would be available
by the time specified in the solicitation. [5] Id. at 125.

After receiving responses to the discussion questions, the evaluators
concluded that PeopleSoft did not have a reasonable chance of receiving
award, primarily because of the current lack of functionality noted
initially, coupled with the firm's reliance on its pre-release notices to
show that it met the solicitation's requirements in this respect. Agency
Report at 202-03. Accordingly, PeopleSoft's proposal was eliminated from the
competitive range. In this respect, the agency advised PeopleSoft that its
proposal had been eliminated from further consideration because it was
judged to be relatively weak in the functional areas, particularly the
general ledger, funds management, cash management and payment management
functions specified in the solicitation. [6]

PeopleSoft maintains that the agency improperly failed to engage in
meaningful discussions. PeopleSoft principally argues that the agency failed
to identify those areas where its functionality was considered weak,
specifically, the general ledger, funds management, cash management and
payment management functions. PeopleSoft asserts that, if given an
opportunity to respond to the agency's specific concerns, it could have
resolved the alleged weaknesses.

When discussions are conducted with offerors, the discussions must be
meaningful; that is, agencies are required to lead offerors generally into
those areas of their proposals requiring amplification or revision. Du &
Assocs., Inc., B-280283.3,

Dec. 22, 1998, 98-2 CPD para. 156 at 7-8.

We find that the Peace Corps met this standard. While PeopleSoft frames its
argument in terms of the specific functional areas identified in the
agency's notice of elimination, as discussed, the agency's overriding
concern relating to the PeopleSoft proposal was the lack of existing
functionality generally, and the firm's express refusal to obligate itself
contractually to provide software that met all of the solicitation's
specifications. In this regard, the record shows that the reasons for the
evaluators' concerns in the specific areas cited by PeopleSoft were directly
related to the fact that those functions were incorporated in as yet
unreleased software. For example, in the general ledger evaluation, the
concern was stated as follows:

PeopleSoft's CURRENT documentation shows little Federal Government general
ledger management capabilities. This functionality is in a new release and
will be ready for Peace Corps at the time of implementation.

Agency Report at 213. Similarly, the initial evaluation materials state that
"[f]unctionality not there yet for federal financial operations," and note
further that "much depends on software promised but not yet released." Id.
at 195. In addition, as noted above, the evaluators had a related concern
about the functionality of PeopleSoft's proposed software in that it did not
employ federal terminology as required by the solicitation.

Although the agency did not specifically identify all of the functional
areas affected by the prerelease status of PeopleSoft's software, it clearly
expressed its principal concern by means of questions presented on two
different occasions. First, the agency provided PeopleSoft a list of
clarification questions. Among other matters, the Peace Corps raised the
following concern: "You have responded to numerous requirements . . . that
certain functionality will be available in [PeopleSoft's] next release due
out in the ‘summer of 1999.' Is this new version on schedule and what
is the current date of release." Agency Report at 125. The Peace Corps
followed up its initial discussion questions with a list of discussion
topics to be addressed during PeopleSoft's oral discussions meeting.
Included in that list were three relevant questions: (1) "We would like to
know more about how your federal release is progressing"; (2) "What is your
procedure for handling bugs in new releases?"; and (3) "There is concern
that the terminology used is not federal. A crosswalk will not suffice." Id.
at 157. Related to these concerns was the Peace Corps's reservation about
the "exception" taken by PeopleSoft in its initial proposal quoted above; in
essence, PeopleSoft had declined to assume any contractual liability for its
proposed--but as yet unavailable--functionality. The agency specifically
queried PeopleSoft about this exception, stating:

[I]n regard to this new release, in the Exceptions section of your proposal,
you have stated in 10.2 that the functionality that is anticipated may or
may not be available and that the Peace Corps evaluations should rely on the
functionality provided today and not in the future release. An equitable
Peace Corps evaluation is dependent upon the functionality proposed. Can you
provide us further assurance that the functionality [your] proposal promises
with this new version will be provided by initial production? [7]

Id. at 125. [8]

Since these questions all related directly to the agency's concern that
certain of the required functionality was not yet available, they clearly
were sufficient to put the protester on notice of the agency's reservations
about its proposal. It follows that discussions with the firm were adequate.

The protest is denied.

Comptroller General
of the United States

Notes

1. PeopleSoft's initial protest also alleged that the agency had improperly
evaluated proposals using an unstated evaluation criterion, and that one of
the other competitors in the acquisition had an improper organizational
conflict of interest; the protester expressly withdrew these bases for
protest in its comments responding to the agency report.

2. When acquiring financial management software, executive agencies must
generally meet their requirements through the FMSS MAS program. Federal
Acquisition Regulation (FAR) subpart 8.9; see also OMB Circular No. A-127,
revised July 23, 1993.

3. The JFMIP is a program designed to establish uniformity in financial
management software among federal agencies.

4. The agency uses a numbering system to index its report; all of the pages
in the report documents except the LOI and the protester's proposal are
numbered sequentially using this system, which we use in this decision.

5. PeopleSoft was also asked numerous other questions that are not germane
to the issues in this protest. For example, it was asked to explain its
proposed solution for integrating various third-party software into its
proposed "suite" of programs, and was also asked several questions relating
to its proposed staffing.

6. The agency's initial letter also represented that PeopleSoft had been
found technically unacceptable, a representation the agency states--and the
record shows--was incorrect.

7. We note that the wording of this question, which asks PeopleSoft to
assure the Peace Corps that its new release will be ‘provided by
initial production' essentially disproves an assertion by PeopleSoft that
the agency required the revised functionality as of the time of discussions
rather than at the time for award. We point out as well that there is no
evidence in the evaluation record to show that PeopleSoft's proposal was
downgraded because of the timing of its new release.

8. In its response to the discussion question, PeopleSoft continued to
decline to assure the agency that its proposed software would meet all
functionality identified in the solicitation. PeopleSoft revised the
exception language in its initial proposal, but still offered to assure the
functionality of its software only as it related to the "mandatory" and
"critical" requirements outlined in the solicitation; PeopleSoft declined to
assure the functionality of its software as it related to the numerous
"desirable" requirements stated in the solicitation, whereas the other firms
took no such exception. PeopleSoft Revised Proposal at 10-1.