TITLE:  Engineering & Professional Services, Inc., B-289331, January 28, 2002
BNUMBER:  B-289331
DATE:  January 28, 2002
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Decision

Matter of: Engineering & Professional Services, Inc.

File: B-289331

Date: January 28, 2002

Francesco A. Musorrafiti for the protester.

Kevin C. Dwyer, Esq., David A. Churchill, Esq., and Nathan C. Guerrero,
Esq., Jenner & Block, for General Dynamics Communications Systems, an
intervenor.

Maj. Edward Beauchamp, and Gary Theodore, Esq., Department of the Army, for
the agency.

Aldo A. Benejam, Esq., and Christine S. Melody, Esq., Office of the General
Counsel, GAO, participated in the preparation of the decision.

DIGEST

Contract modification resulting from an engineering change proposal (ECP) to
provide technologically advanced ruggedized handheld computers is not beyond
the scope of the basic contract where the original request for proposals
(RFP) called for a wide array of hardware and software; the RFP contemplated
that the successful contractor would use the ECP process to incorporate
technological advances to the required products; and the modification does
not change the fundamental nature and purpose of the underlying contract.

DECISION

Engineering & Professional Services, Inc. (EPS) protests the issuance by the
Army's Communications-Engineering Command (CECOM) of modification No. P00204
to contract No. DAAB07-94-C-N853 (hereinafter referred to as contract No.
N853). The modification is to acquire a quantity of ruggedized handheld
computers (RHC).

We deny the protest.

BACKGROUND

In 1995, CECOM awarded a 10-year requirements contract to GTE Government
Systems Corporation to support the Army's Common Hardware Software-2 (CHS-2)
program. [1] The CHS-2 program provides command and control computer
workstations, server hardware, handheld terminal units (HTU), peripherals,
software, operating systems, and databases for the military. These systems
support Department of Defense customers worldwide in managing information
for intelligence, maneuver control, combat artillery, combat support, and
air defense, allowing critical instantaneous communications during times of
war and peace. Contracting Officer's (CO) Statement at 1; AR exh. C,
Contract No. N853, Statement of Work (SOW), Executive Summary. The contract
contemplated that during the first 5-year performance period, the Army would
acquire a full range of ruggedized and commercial off-the-shelf computer
equipment ranging from the HTUs to high capacity workstations; the
contractor was to provide maintenance and support for the last 5 years of
the contract.

In 2000, Litton Data Systems, the original equipment manufacturer (OEM) of
the HTUs acquired under GD-CS's contract, announced that it would not extend
its then-current pricing for the units beyond the contract's initial 5-year
ordering period. As a result, the Army determined that Litton was no longer
a viable source for the HTUs, and embarked on a joint market research effort
with GD-CS to find a vendor to replace Litton. CO Statement at 2; AR exh. H,
CO Determination, Sept. 15, 2000.

The market research identified six firms that manufacture the units. One of
those firms, Talla-Tech, was developing a handheld computer with improved
features. In July 2000, GD-CS submitted an engineering change proposal (ECP)
under contract No. N853 to the Army proposing Talla-Tech's improved handheld
computer, the Tacter-31. [2] The agency describes the Tacter-31 as a
compact, messaging terminal, designed to serve all combat echelons on the
digital battlefield. According to the Army, the Tacter-31 is equipped with
many technological advances not available in the CHS-2 HTU, at a comparable
overall cost. Some of those improved features include a 256-color display
versus 4 colors, with touch screen capability; embedded Global Positioning
System; enhanced computing performance (Pentium III 500 megahertz (MHz)
central processor unit (CPU) versus the 586 133 MHz CPU; increased RAM (128
MB RAM versus 64 MB RAM); a larger, removable hard-disk drive (10 gigabytes
versus 512 MB); and a more robust, fully functional, backlit, keyboard. The
Army states that the Tacter-31 will allow the military to perform its
mission faster, thereby reducing the soldiers' risk of exposure in a hostile
environment.

Based on its review, the Army deemed GD-CS's ECP technically acceptable, and
changed the acronym of the units to RHC to differentiate them from the HTUs
previously acquired under the basic contract. The Army also extended the
original ordering period under GD-CS's contract by 3 years, through April
2003. AR exh. F, amend. No. P00153, Apr. 5, 2000. In August 2001, the agency
issued modification P00204 to GD-CS's contract for the RHCs. This protest
followed an agency-level protest which the Army denied.

PROTESTER'S CONTENTIONS

EPS contends that the modification is beyond the scope of GD-CS's contract.
In this connection, EPS explains that soon after the Army awarded the basic
contract to GD-CS, during the initial 5-year ordering period, the agency
acquired HTUs that incorporated improved features over those specified in
the original solicitation. The protester does not take issue with that
acquisition. EPS maintains, however, that since the Army extended the
contract's initial 5-year ordering period, and since it had already acquired
advanced HTUs which met its needs during the initial ordering period, the
contract modification to acquire the RHCs at issue here--with even more
enhanced features--is beyond the scope of the original contract because the
RHCs respond to agency needs that arose subsequent to the term of the
original contract. Alternatively, EPS maintains that since the Marine Corps
is the requiring activity for the items being acquired under the
modification, and since EPS has a contract with the Marine Corps to provide
handheld computers, the Marine Corps should be required to meet its needs by
exercising production options under EPS's contract.

DISCUSSION

Once a contract is awarded, our Office will generally not consider protests
against modifications to that contract, because such matters are related to
contract administration and are beyond the scope of our bid protest
function. 4 C.F.R. sect. 21.5(a) (2001); Stoehner Sec. Servs., Inc., B-248077.3,
Oct. 27, 1992, 92-2 CPD para. 285 at 4. The exception to this general rule is
where, as here, a protester alleges that a contract modification is beyond
the scope of the original contract, because, absent a valid sole-source
determination, the work covered by the modification would otherwise be
subject to the statutory requirements for competition. Neil R. Gross & Co.,
Inc., B-237434, Feb. 23, 1990, 90-1 CPD para. 212 at 2, aff'd, Department of
Labor--Recon., B-237434.2, May 22, 1990, 90-1 CPD para. 491.

In determining whether a modification triggers the competition requirements
in the Competition in Contracting Act of 1984, 10 U.S.C. sect. 2304(a)(1)(A)
(Supp. IV 1998), we look to whether there is a material difference between
the modified contract and the contract that was originally awarded. Neil R.
Gross & Co., Inc., supra, at 2-3; see AT&T Communications, Inc. v. Wiltel,
Inc., 1 F.3d 1201, 1205 (Fed. Cir. 1993). Evidence of a material difference
between the modification and the original contract is found by examining any
changes in the type of work, performance period, and costs between the
contract as awarded and as modified. Access Research Corp., B-281807, Apr.
5, 1999, 99-1 CPD para. 64 at 3-4; MCI Telecomms. Corp., B-276659.2, Sept. 29,
1997, 97-2 CPD para. 90 at 7-8. The question for our review is whether the
original nature or purpose of the contract is so substantially changed by
the modification that the original and modified contract would be
essentially different, and the field of competition materially changed.
Everpure, Inc., B-226395.4, Oct. 10, 1990, 90-2 CPD para. 275 at 4. Here, as
explained in greater detail below, the record is clear that the purpose and
nature of the original contract were not substantially changed by the
modification.

As a preliminary matter, the request for proposals (RFP) that led to the
award of
GD-CS's basic contract informed all potential offerors of the broad scope
both of the CHS-2 program, and the wide range of supplies and services to be
obtained under the contract. In particular, the RFP explained that the Army
has a continuing requirement for a family of common hardware, peripherals,
and software to satisfy the CHS-2 requirements. AR exh. C, RFP, attach. 8,
SOW, at 7. The introduction to the SOW also listed a diverse array of
hardware, software, and support services that would be acquired under the
resulting contract. Id.

To further reinforce the broad scope of the contract, the SOW contained the
following description of the supplies and services required:

A CHS-2 item is defined as any of the hardware components, software cables,
manuals, services, and ancillary components needed to satisfy the
Government's requirements as expressed in this [RFP] which are not currently
in the Army inventory. These items constitute an interoperable family of
modular building blocks, both Non-Developmental Items (NDIs) and
developmental items (DIs) whose design and implementation is based upon the
open systems architecture concept.

Id. (emphasis in original).

The RFP's SOW also made it clear that the Army contemplated that the
technical requirements of the CHS-2 program would change over time as
technological advances and innovations became available during the
relatively long term of the contract. To that end, the SOW specifically
required the successful offeror to incorporate those new technologies into
the products required under the contract, setting forth the following
provision:

The Army desires to obtain a family of common computer items that have [the]
potential to take advantage of future advances in computer technology. Those
CHS-2 items must exhibit a high degree of flexibility, including
upgradeability and expandability to facilitate insertion of technology
improvements to the CHS-2 hardware and software.

Technology Insertion is defined as the modification, enhancement or addition
of CHS-2 products and services to incorporate technology advances which add
value to the CHS-2 program, products and services, as these advances become
available in the marketplace.

The contractor shall establish a technology insertion program to maintain
cognizance of applicable advances in technology, identify these advances to
the items, propose the necessary modifications, enhancements or additions to
the Government through the ECP process and if the proposed improvements are
acceptable to the Government, implement the changes [in accordance with]
approved ECPs. Incorporation of the changes proposed shall not preclude full
implementation of all hardware and software supported previously.

AR exh. C, Contract No. N853, attach. No. 8, SOW, Task No. 11--TECHNOLOGY
INSERTION, at 188.

The intervenor points out, correctly we believe, that the quoted language is
not limited to the enhancement or modification of existing items offered
under the basic contract. Indeed, the provision itself defines "technology
insertion" as referring to "the modification, enhancement or addition of
CHS-2 products and services . . . which add value to the CHS-2 program,
products, and services, as these advances become available in the
marketplace." Id. (emphasis added). The RFP thus clearly described the CHS-2
program as dynamic, and contemplated that the contractor would incorporate
new technologies as they became available. The quoted provision also listed
several specific areas and items the agency considered candidates for
technology insertion, including "[a] lighter HTU . . . with functionality
equal to or better than the CHS-2 HTU." Id. para. 11.18 at 189. The record shows
that, consistent with this provision, the contractor had previously added
several new products to the CHS-2 contract. See, e.g., AR exh. H,
Modification No. P00070, Dec. 4, 1997, and No. P0061, Aug. 2, 2000.

In our view, the modification at issue in the protest does not alter the
fundamental nature and purpose of the contract. Rather, modification No.
P00204 merely serves to replace the HTUs acquired under the basic contract
with the updated, technologically advanced RHCs with the same basic
functionality, as was clearly contemplated by the RFP and the basic
contract. The fact that the RHCs acquired under the modified contract
incorporate advanced features not found in the original

HTUs does not render the RHCs entirely different or new items requiring
competition, as EPS maintains. Where, as here, a contractor provides more
technologically advanced equipment pursuant to a modification within the
scope of the basic contract--i.e., the fundamental nature and purpose of the
underlying contract remains unchanged--the modification is not improper. See
Hewlett Packard Co., B-245293, Dec. 23, 1991, 91-2 CPD para. 576 at 3-4.

The agency further points out that the basic contract contemplated acquiring
a maximum of 8,000 HTUs. Of that quantity, 4,576 had already been delivered
prior to the issuance of the modification; the remaining 3,424 units will be
the RHCs acquired under the modification. AR exh. H, CO Determination,
supra, at 2-3. Thus, the modification does not expand on the total number of
units contemplated by the basic contract. The agency further explains that,
while unit prices will vary depending on configurations and year ordered,
any differences in total costs will be negligible. EPS does not take issue
with the agency's position in this regard.

In view of the broad scope and nature of the underlying contract, and
especially in light of the contract's "Technology Insertion"
provision--which explicitly contemplated that the contractor would use the
ECP process to add new items and incorporate technological advancements to
the required CHS-2 products--we think that potential offerors under the RFP
reasonably could have anticipated the modification. See Paragon Sys., Inc.,
B-284694.2, July 5, 2000, 2000 CPD para. 114 at 3. In short, EPS has not
established that the fundamental nature and purpose of
GD-CS's contract was so materially changed by modification No. P00204 so as
to require a separate competition. [3] See Hughes Space and Communications
Co., B-276040, May 2, 1997, 97-1 CPD para. 158 at 4; Master Sec., Inc.,
B-274990, B-274990.2, Jan. 14, 1997, 97-1 CPD para. 21 at 6.

The protest is denied.

Anthony H. Gamboa

General Counsel

Notes

1. After award, the Army and GTE executed a novation reflecting that General
Dynamics Corporation had acquired GTE, and had changed its name to General
Dynamics Government Systems Corporation (GD-GSC). Agency Report (AR) exh. D,
modification No. ARZ999, Sept. 30, 1999. Pursuant to that document, the
parties agreed, among other things, that GD-GSC would assume all of GTE's
then-existing obligations to the government, including performance of
contract No. N853. For clarity, we refer to General Dynamics-Communications
Systems (GD-CS), an operating unit of GD-GSC, as the awardee of the basic
contract.

2. The parties do not dispute that the Tacter-31 was tested and selected by
the Marine Corps Systems Command as the preferred system to handle the
Corps's battlefield computing needs. Talla-Tech is also the OEM for handheld
computers EPS provides under a different contract (No. M67854-97-D-2086) the
Corps's awarded to EPS in 1997.

3. EPS also challenges the Army's decision to extend the ordering period of
the basic contract to acquire the remaining units. Since we conclude that
the modification does not change the fundamental nature, scope, or overall
term of the initial contract, and since the Army had identified its needs
for the units during the initial
5-year ordering period, there is no basis to object to the extension.
Similarly, we will not consider EPS's allegation that the Marine Corps
should exercise an option under EPS's existing contract, since the decision
whether to exercise the option is a matter of contract administration
outside the scope of our bid protest function. 4 C.F.R. sect. 21.5(a) (2001).
AVW Elec. Sys., Inc., B-252399, May 17, 1993, 93-1 CPD para. 386 at 3.