TITLE:  Sales Resources Consultants, Inc., B-284943; B-284943.2, June 9, 2000
BNUMBER:  B-284943; B-284943.2
DATE:  June 9, 2000
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Sales Resources Consultants, Inc., B-284943; B-284943.2, June 9, 2000

Decision

Matter of: Sales Resources Consultants, Inc.

File: B-284943; B-284943.2

Date: June 9, 2000

Peter A. Cerick, Esq., for the protester.

Willliam M. Rosen, Esq., for Intellisys Technology Corporation, an
intervenor.

David A. Ingold, Esq., Internal Revenue Service, for the agency.

Guy R. Pietrovito, Esq., and James A. Spangenberg, Esq., Office of the
General Counsel, GAO, participated in the preparation of the decision.

DIGEST

  1. In deciding whether to place an order for brand name software under a
     Federal Supply Schedule (FSS) contract, agency is not required to first
     consider the unsolicited offer of an alternate software product from a
     vendor that does not have an FSS contract.

2. A protester that does not have a Federal Supply Schedule (FSS) contract
is not an interested party to challenge an agency's determination as to its
minimum needs and its decision to conduct a limited competition among FSS
vendors for a particular brand name software.

DECISION

Sales Resources Consultants, Inc. (SRC) protests the issuance of an order to
Beyond.com and Intellisys Technology Corporation (ITC) by the Internal
Revenue Service (IRS) under the Federal Supply Schedule (FSS) program for
electronic delivery of various Microsoft Corporation software. SRC, which
does not have an FSS contract, complains that the IRS refused to consider
SRC's unsolicited offer to provide Lotus SmartSuite software [1] to satisfy
the agency's needs for office applications software.

We dismiss the protest.

In 1998, the IRS decided to standardize its workstation software to provide
for service-wide compatibility, system management interfaces, and cost
savings. To this end, IRS's chief information officer (CIO) issued a
memorandum designating two levels (mandatory and controlled) of commercial
off-the-shelf software that may be purchased by the IRS. [2] See Agency
Report, Tab 6, CIO Memorandum 1 (Dec. 14, 1998). The CIO directed that only
the listed standard software, which included various Microsoft Corporation
software products, could be purchased by the agency. Id. at 2. In March
1999, consistent with the 1998 directive of the CIO, the IRS determined that
it would seek to competitively acquire Microsoft Windows NT operating system
and Microsoft Office application software under the FSS program. See Agency
Report, Tab 7, Brand Name or Equal Justification (Mar. 1, 1999) (justifying
restriction to Microsoft operating system and office application software on
the basis of compatibility and costs).

In March 1999, the IRS requested reductions in pricing for the Microsoft
Corporation software from four FSS vendors, including ITC, with which the
IRS had entered blanket purchase agreements (BPA). [3] Agency Report, Tab 8,
Request for price reduction. ITC entered into a teaming arrangement with
Beyond.com, another FSS software vendor, to respond to the IRS's price
reduction request, [4] and on April 26 ITC/Beyond.com provided a price
reduction quote to the IRS. Agency Report, Tab 9, ITC/Beyond.com quote. On
April 29, Beyond.com's FSS contract was modified to include the software
sought by the IRS. Supplemental Contracting Officer's Statement at 2;
Supplemental Agency Report, exh. 2, Mod. 1 to Beyond.com's FSS Contract. On
May 13, after evaluation of the vendors' responses to the agency's price
reduction request, the IRS decided to accept the ITC/Beyond.com teaming
arrangement and modified ITC's BPA accordingly. Agency Report, Tab 10,
Selection of Microsoft Enterprise Agreement Vendor; Supplemental Contracting
Officer's Statement at 2. Two delivery orders have been issued under the
ITC/Beyond.com FSS teaming arrangement. Agency Report, Tab 2, Jan. 4, 2000
Order, and Tab 11, June 3, 1999 Order.

SRC protests the issuance of the second order for electronic delivery of
Microsoft office applications software. SRC variously complains that the IRS
has no reasonable basis to restrict its acquisition of office applications
software to Microsoft products; that the IRS did not timely or adequately
justify its restriction of the acquisition to Microsoft software; that the
issuance of the order was "in reality" an unpublicized, sole-source award;
and that the IRS did not comply with FSS program "requirements" in selecting
the ITC/Beyond.com FSS teaming arrangement to receive delivery orders.

We disagree with SRC that the IRS's use of a limited competition under the
FSS program to satisfy its software needs violates the full and open
competition requirements of the Competition in Contracting Act of 1984, 41
U.S.C. sect. 253(a)(1) (1994), as implemented by FAR part 6. The FSS program,
directed and managed by GSA, provides federal agencies with a simplified
process for obtaining commonly used commercial supplies and services at
prices associated with volume buying. FAR sect. 8.401(a). Section 259(b)(3)
(1994) of title 41 of the United States Code provides that the procedures
established for the GSA's multiple award schedule program (that is, the FSS
program) satisfy the general requirement in 41 U.S.C. sect. 253(a)(1) for use of
competitive procedures:

if--(A) participation in the program has been open to all responsible
sources; and (B) orders and contracts under such procedures result in the
lowest overall cost alternative to meet the needs of the Government.

SRC argues that the IRS did not comply with 41 U.S.C. sect. 259(b)(3) because it
did not consider its unsolicited offer to provide Lotus SmartSuite software,
which SRC states would represent a lower cost alternative to the Microsoft
software acquired under the FSS program. We disagree.

Consistent with 41 U.S.C. sect. 259(b)(3), participation in the FSS program is
open to all responsible sources--a fact not disputed by SRC. With respect to
the second statutory element, referring to the lowest overall cost
alternative meeting the needs of the government, SRC apparently believes
that the IRS was required to consider its offer, outside the FSS program, to
determine whether purchasing software from the schedule would result in the
lowest overall cost alternative. In our view, imposing such a requirement on
agencies is inconsistent with the purpose of the FSS program, which, as
noted above, is meant to provide a simplified process for obtaining commonly
used commercial supplies and services. In this regard, we note that FAR
sect. 6.102(d)(3), which implements 41 U.S.C. sect. 259(b)(3), indicates that the
requirement for competitive procedures is satisfied through the use of the
FSS program, given that the program is open to all responsible sources. [5]
Accordingly, we find reasonable GSA's position that purchases from the
schedule using the procedures of FAR subpart 8.4 are considered to result in
the lowest overall cost alternative. See
 ("orders placed following the
procedures in FAR [subpart] 8.4 result in the lowest overall cost
alternative to meet the needs of the Government"). While one FSS vendor may
protest that it offers a lower cost alternative meeting the agency's needs
than the vendor selected by the agency, see, e.g., Delta Int'l, Inc.,
B-284364.2, May 11, 2000, 2000 CPD para. ___, we do not believe that 41 U.S.C.
sect. 259(b)(3) requires an agency to consider whether non-FSS alternatives
would meet the agency's needs at a cost lower than that offered by FSS
vendors, or that the failure to do so constitutes a basis of protest.
Because the FSS program meets the requirements of 41 U.S.C. sect. 259(b)(3), an
agency, when placing an order under the FSS, is not required to seek further
competition, synopsize the requirement, or determine fair and reasonable
pricing, since the planning, solicitation, and award phases of the FSS
satisfy these requirements. FAR sect. 8.404(a); Design Contempo, Inc., B-270483,
Mar. 12, 1996, 96-1 CPD para. 146 at 2.

SRC also cites numerous examples of what it asserts are failures to comply
with FSS program requirements, such that the acquisition was in effect not
under the FSS program. See DRS Precision Echo, Inc., B-284080, B-284080.2,
Feb. 14, 2000, 2000 CPD para. 26 at 2 (order issued against expired FSS contract
was outside FSS program).

For example, SRC notes that the software purchased under the second delivery
order to the ITC/Beyond.com team was added to Beyond.com's FSS contract
after the date on which ITC and Beyond.com entered into a teaming
arrangement and 4 days after the submission of the team's price reduction to
the IRS. See Protester's Supplemental Comments, May 15, 2000, at 2. SRC
acknowledges, however, that the software was on Beyond.com's schedule
contract prior to the placement of any delivery orders by the IRS.
Protester's Supplemental Comments at 2. We fail to see any violation of FSS
program requirements, given that, at the time of the orders, the software
was in fact on Beyond.com's schedule contract.

SRC also asserts that the IRS did not adequately conduct acquisition
planning and market research, as required by FAR parts 7 and 10, in deciding
to satisfy its needs under the FSS program. Protester's Comments at
17–20. The crux of SRC's argument is that adequate acquisition
planning and market research would have compelled the IRS to conduct its
procurement outside the FSS program and to consider SRC's offer. Acquisition
planning and market research are required to ensure that agencies, among
other things, develop a plan to suitably satisfy their needs in a timely
manner and at a reasonable cost. See FAR sect.sect. 7.101, 10.000. The FSS program
specifically satisfies these goals by allowing the government to acquire a
wide range of commercial products and services in a timely fashion and at
fair and reasonable prices. Thus, we think that, as a general rule,
obtaining information from the FSS program and FSS vendors satisfies the
agency's obligations to conduct procurement planning and market research.
See Canon U.S.A., Inc., B-232262,
Nov. 30, 1988, 88-2 CPD para. 538 at 2-3.

SRC also argues that ITC's schedule contract provided for at least annual
reviews of ITC's BPA with the IRS and that the record does not demonstrate
that such reviews were conducted to determine if the BPA still represents
the best value to the government. Protester's Comments at 4. This argument
is without merit. Because the IRS conducted a competition among its BPA
holders, including the ITC/Beyond.com team, to obtain price reductions from
the FSS contracts, the agency adequately determined that ordering from the
ITC/Beyond.com team represented the lowest overall cost alternative
satisfying the government's needs.

SRC also complains that the IRS did not reasonably justify its determination
to purchase only Microsoft Corporation software. We find that SRC is not an
interested party to challenge this determination. Under the bid protest
provisions of the Competition in Contracting Act of 1984, 31 U.S.C. sect.sect.
3551-56 (Supp. III 1997), only an "interested party" may protest a federal
procurement. That is, a protester must be an actual or prospective supplier
whose direct economic interest would be affected by the award of a contract
or the failure to award a contract. 31 U.S.C. sect. 3551(2). Bid Protest
Regulations, 4 C.F.R. sect. 21.0(a) (2000). Determining whether a party is
interested involves consideration of a variety of factors, including the
nature of issues raised, the benefit or relief sought by the protester, and
the party's status in relation to the procurement. Four Winds Servs., Inc.,
B-280714, Aug. 28, 1998, 98-2 CPD para. 57 at 2. Here, SRC is not an FSS vendor
and is thus ineligible to compete for orders under the FSS program, which
the IRS has chosen to use to satisfy its needs. We note in this regard that
the Lotus SmartSuite software, which SRC would offer, is available through
the FSS program from other vendors. Accordingly, even if SRC could
successfully challenge the IRS's determination to limit its FSS competition
to Microsoft software, such that the IRS would also seek information from
FSS vendors offering the Lotus software, SRC would still not be in line for
receipt of an order. In sum, SRC does not have an adequate economic interest
to qualify as an interested party for purposes of filing a protest
challenging the agency's determination to limit its FSS competition to a
Microsoft product.

The protest is dismissed.

Comptroller General
of the United States

Notes

1. Lotus SmartSuite bundles word processing, spreadsheet, database, time
management, and other office applications. See .

2. There were no exceptions permissible for software in the mandatory
category, but office heads could request exceptions for software in the
controlled category. Agency Report, Tab 6, CIO Memorandum, at 1.

3. All FSS contracts contain BPA provisions, and ordering agencies are
permitted to establish BPAs with FSS contractors for recurring requirements.
Federal Acquisition Regulation (FAR) sect. 8.404(b)(4). FAR sect. 8.404(b)(3)
provides that where, as here, the FSS order would exceed the maximum order
threshold of the schedule contract, the ordering office should seek price
reductions.

4. FAR subpart 9.6 specifically recognizes the validity of contractor
teaming arrangements. The General Services Administration (GSA) also
recognizes that FSS vendors may team to provide products and services from
their combined schedule contracts. See
.

5. The regulations governing use of the FSS program address the situation
that SRC asserts exists here, by stating that, "when the ordering office
finds a schedule supply or service elsewhere at a lower price . . .,
requesting a price reduction [from FSS contractors] could be advantageous."
FAR sect. 8.404(b)(5).