TITLE:  Minolta Corporation--Costs, B-285010.2, September 26, 2000
BNUMBER:  B-285010.2
DATE:  September 26, 2000
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Minolta Corporation--Costs, B-285010.2, September 26, 2000

Decision

Matter of: Minolta Corporation--Costs

File: B-285010.2

Date: September 26, 2000

Robert S. Brams, Esq., and Rodney A. Grandon, Esq., Patton Boggs, for the
protester.

Marshall J. Doke, Jr., Esq., Gardere & Wynne, and Kavita Kalsy, Esq., Bureau
of the Public Debt, for the agency.

Paul E. Jordan, Esq., Glenn G. Wolcott, Esq., and Paul Lieberman, Esq.,
Office of the General Counsel, GAO, participated in the preparation of the
decision.

DIGEST

General Accounting Office recommends that protester be reimbursed the costs
of filing and pursuing its protest where the agency unduly delayed taking
corrective action in response to the protest, which was clearly meritorious.

DECISION

Minolta Corporation requests that we recommend that it be reimbursed the
costs of filing and pursuing its protest challenging the issuance of
delivery order No. FBA-00-0001 by the Department of the Treasury, Bureau of
Public Debt's Franchise Business Activity-West (FBA-West), to Ricoh
Corporation for certain copier services. [1] The delivery order was issued
pursuant to Ricoh's General Services Administration (GSA) federal supply
schedule (FSS) contract No. GS-26F-1015B.

We recommend that the Department of the Treasury reimburse Minolta its
protest costs.

The matter at issue is under a follow-on to a contract awarded by FBA-West
to Minolta in 1995, under which Minolta provided copier services to various
federal agencies in the southern California vicinity. Seeking to expand the
prior area of performance to cover the entire country, the agency decided
that, "[i]n the interest of time and effort," this procurement would be
negotiated using the GSA schedule instead of "a formal acquisition." Agency
Report, Tab 13, Narration of Acquisition, at 1. To this end, in June 1999,
the agency contacted several potential offerors who held GSA schedule
contracts for copier services, provided them with Minolta's prior contract
for use as a "model," and advised them that they must propose rates for
various identified services, propose both digital and color copiers, and
propose performance nationwide. Agency Report, Tab 13, Narration of
Acquisition, at 1-3; Tab 2, Memorandum for the Record, Sept. 21, 1999.

Four offerors, including Minolta, submitted initial proposals. The agency
conducted discussions with Minolta and obtained proposal revisions from it.
Based on its evaluation of the proposals, the agency concluded that "Ricoh
was the only contractor to comply with all of the Terms & Conditions,
technical and configuration requirements." Agency Report, Tab 13, Narration
of Acquisition, at 6. Accordingly, the agency issued delivery order
FBA-00-0001 to Ricoh on October 28.

Minolta was notified of the award on November 4 and, by letter dated
November 17, filed a Freedom of Information Act (FOIA) request, seeking
specified information related to the procurement. The agency provided the
requested information to Minolta on March 16, 2000, and Minolta filed its
initial protest with our Office on March 24.

In its protest Minolta asserted, among other things, that the delivery order
issued to Ricoh included services and supplies that were not on Ricoh's
supply schedule contract. Protest at 2, 10. Minolta specifically identified
Ricoh's proposal reference to "open market items," and further specifically
objected that, "where the offered services (e.g., the minimum copy volumes,
Monthly Effectiveness Level, new machine requirement) are less than that
permitted under the GSA schedule, the agency has effectively procured
services not included on the GSA schedule." Protest at 10.

In the April 26 agency report, the contracting officer generally denied
Minolta's allegations and requested that the protest be dismissed or denied.
The contracting officer specifically represented that "[a]ll of the items
procured under the delivery order are on the GSA Schedule." Contracting
Officer's Statement at 10. After submission of Minolta's May 5 comments on
the report, by letter dated May 31, the agency advised our Office that it
was taking corrective action in response to the protest. Specifically the
agency stated: "In light of information gained in conversations between the
Bureau of the Public Debt, FBA-West, and GSA, it was determined that
delivery order FBA-00-0001 against Ricoh Corporation's GSA Schedule
GS-26F-1015B is out of scope for cost-per-copy (CPC) and flat-rate-monthly
fee (FRMF) services." Letter from Department of Treasury to GAO 1 (May 31,
2000). In taking corrective action, the agency continued performance
throughout the remainder of the base period ending September 30, 2000, but
agreed not to exercise any options, and to recompete the requirements for
copier services beyond that date. Accordingly, by decision dated June 15,
2000 (B-285010), we dismissed Minolta's protest as academic.

Minolta requests that we recommend reimbursement of its protest costs on the
basis that the agency unduly delayed taking corrective action.

Where a procuring agency takes corrective action in response to a protest,
our Office may recommend that the agency reimburse the protester its protest
costs where, based on the circumstances of the case, we determine that the
agency unduly delayed taking corrective action in the face of a clearly
meritorious protest, thereby causing the protester to expend unnecessary
time and resources to make further use of the protest process in order to
obtain relief. Pemco Aeroplex, Inc.--Recon. and Costs, B-275587.5,
B-275587.6, Oct. 14, 1997, 97-2 CPD para. 102 at 5. A protest is clearly
meritorious when a reasonable agency inquiry into the protest allegations
would show facts disclosing the absence of a defensible legal position. The
Real Estate Ctr.--Costs, B-274081.7, Mar. 30, 1998, 98-1 CPD para. 105 at 3.

In its response to Minolta's request for costs, the agency asserts that the
initial protest was not clearly meritorious because the original protest
allegation was connected to an argument that the Ricoh items were not
compliant with the Buy American Act (BAA). Since the products were BAA
compliant, FBA-West argues that it was not on notice of any potentially
meritorious issue until Minolta's May 5 comments on the agency report which
specifically identified the non-schedule compliant copiers and services. We
disagree.

With respect to the merits of the protest, the agency conceded in its May 31
letter that the delivery order was out-of-scope in two significant areas.
While the agency claimed "confusion" as to whether the proposed copiers were
on the applicable FSS price list, the record demonstrates otherwise. A
simple comparison of the delivery order with Ricoh's GSA schedule contract
makes plain that only one of nine delivery order copiers was on Ricoh's
contract for CPC or FRMF services. GSA Comments, June 13, 2000, at 2-3.
Thus, the merit of the specific protest allegation that Minolta raised in
its initial protest submission was clearly discernible at a point early in
the protest process.

However, we will sustain a protest only where the protester demonstrates a
reasonable possibility that it was prejudiced by the agency's improper
actions, that is, but for the agency's actions, the protester would have had
a substantial chance of receiving the award. See McDonald-Bradley, B-270126,
Feb. 8, 1996, 96-1 CPD para. 54 at 3; Statistica, Inc. v. Christopher, 102 F.3d
1577, 1581 (Fed. Cir. 1996). The relevant question here is whether the
protester was prejudiced by the agency's admitted errors.

FBA-West asserts that Minolta was not prejudiced by "any procedural
irregularities . . . alleged" because the agency "satisfied the CICA's
mandate for full and open

competition" and Minolta was not deprived of that competition. Agency
Response to Request for Costs at 4. On the contrary, while Minolta
participated in the "competition" and its proposal was found unacceptable,
all of the other proposals--including Ricoh's--were also, in fact,
unacceptable, thus Minolta could participate in a recompetition under the
appropriate corrective action. See Wilcox Indus. Corp., B-281437.2 et al.,
June 30, 1999, 99-2 CPD para. 3 at 5. Accordingly, Minolta was prejudiced by the
agency's issuance to Ricoh of an improper delivery order.

Regarding the other prong of our analysis, the question of the promptness of
the agency's corrective action, we generally do not consider corrective
action to be prompt where it is taken after the due date for the agency
report. See CDIC, Inc.--Costs, B-277526.2, Aug. 18, 1997, 97-2 CPD para. 52 at
2. Here, as explained above, the agency was plainly on notice of the
relevant issue as a result of Minolta's March 24 protest, which included
quotations of Ricoh's own proposal references offering "open market" items,
and a simple comparison of the delivery order and applicable Ricoh schedule
contract would have established the merits of the protest. Yet FBA-West did
not propose corrective action until May 31, well after the agency had
submitted its report defending the propriety of its action, and after the
protester had incurred the time and expense necessary to respond to that
report. Under these circumstances, we do not consider the corrective action
to have been prompt. Tri-Ark Indus., Inc.--Costs, B-274450.2, Oct. 14, 1997,
97-2 CPD para. 101 at 4-5. Accordingly, we recommend that Minolta be reimbursed
its protest costs. [2] Minolta should submit its claim for such costs,
detailing and certifying the time expended and costs incurred, directly to
the agency within 60 days of receipt of this decision. Bid Protest
Regulations, 4 C.F.R. sect. 21.8(f)(1) (2000).

Anthony H. Gamboa

Acting General Counsel

Notes

1. FBA-West provides contracting services for other government agencies,
charging the user agencies a 1-percent administrative fee.

2. The agency also asserts that Minolta's recovery of costs should be
limited to those incurred after the date of Minolta's comments to the agency
report because, in the agency's view, the "out of scope" delivery order
issue was not raised until that time. In general, we consider a prevailing
protester entitled to costs incurred with respect to all issues pursued, not
merely those upon which it prevails. The Real Estate Ctr.--Costs, supra, at
5 n.2. Where a protester prevails on one of a number of related grounds of
protest, the allocation of cost between winning and losing issues is
generally unwarranted, and costs are not limited to the effort spent on the
issue upon which the protester prevails. Id. We will limit a successful
protester's recovery of protest costs when a part of the costs is allocable
to a losing protest issue that is so clearly severable as to constitute a
separate protest. Price Waterhouse--Costs, B-254492.3, July 20, 1995, 95-2
CPD para. 38 at 3. Here, the "out of scope" issue was raised in the initial
protest and was intertwined with related issues throughout Minolta's
submissions. Under these circumstances, there is no basis to limit Minolta's
recovery of costs.