TITLE: Computer Associates International, Inc.--Reconsideration, B-292077.6, May 5, 2004
BNUMBER: B-292077.6
DATE: May 5, 2004
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Computer Associates International, Inc.--Reconsideration, B-292077.6, May 5,
2004
Computer Associates International, Inc.--Reconsideration, B-292077.6, May 5,
2004
DOCUMENT FOR PUBLIC RELEASE
The decision issued on the date below was subject to a GAO Protective
Order. This version has been approved for public release.
Decision
Matter of: Computer Associates International, Inc.--Reconsideration
File: B-292077.6
Date: May 5, 2004
Claude P. Goddard, Jr., Esq., J. Michael Littlejohn, Esq., J. William
Eshelman, Esq., and Elizabeth M. Gill, Esq., Wickwire Gavin, P.C., for the
protester.
Marion T. Cordova, Esq., Department of Agriculture, for the agency.
Edward Goldstein, Esq., and Jerold D. Cohen, Esq., Office of the General
Counsel, GAO, participated in the preparation of the decision.
DIGEST
Prior decision properly held that agency could lawfully issue purchase
order to vendor at price quoted in response to request for quotations,
notwithstanding language in quotation indicating that it was valid through
a specified date and order was issued after that date; quotations are not
offers, and vendors are not bound to honor them, so that the concept of an
acceptance period has no application to quotations.
DECISION
Computer Associates International, Inc. (CA) requests reconsideration of
our decision in Computer Assocs. Int*l, Inc., B-292077.3 et al., Jan. 22,
2004, 2004 CPD P: ____, denying CA*s protest of the issuance of a purchase
order to Serena Software, Inc. under request for quotations (RFQ) No.
RFQ-OPPM-3-1007VT, issued by the Office of Procurement and Property
Management, Department of Agriculture (USDA), for quotations from Federal
Supply Schedule (FSS) vendors for "change management" software.
We deny the request for reconsideration.
Under our Bid Protest Regulations, to obtain reconsideration, the
requesting party must show that our prior decision contains errors of
either fact or law, or must present information not previously considered
that warrants reversal or modification of our decision. 4 C.F.R. S:
21.14(a) (2004). Here, CA argues that our decision erred in several
respects. Principally, CA challenges our decision for upholding the
agency*s determination to make an offer to Serena at a price that had
expired by the terms of Serena*s quotation. According to CA, we also
improperly held that the agency did not violate any law or regulation when
it revised its point rating system after having received the vendors*
technical quotations. Last, CA disagrees with our conclusion that CA had
abandoned two of its protest grounds.
The solicitation as issued on December 12, 2002 explained that USDA was
seeking information; any quotations submitted in response were not offers;
the agency would conduct a price/technical tradeoff; and USDA would make
an offer to the firm whose quotation represented the *best value* to the
government.
On May 16, 2003, USDA amended the RFQ and sought revised price quotations
from the vendors. In response, Serena significantly reduced its price
and, as part of its revised price quotation, stated: *This offer is valid
through June 31 [sic], 2003.* Serena*s Revised Price Quotation, at 1.
Based on the reduced price in Serena*s revised price quotation, USDA
determined that Serena*s quotation represented the best value to the
government. The agency, however, did not make Serena an offer until after
our Office issued a September decision denying a protest filed by CA
challenging the terms of the solicitation and the May 16 amendment.
Computer Assocs. Int*l, Inc., B-292077.2, Sept. 4, 2003, 2003 CPD P: 157.
When the agency made the September 5 offer, it was at the reduced price
identified in Serena*s revised price quotation.
CA argued that USDA could not properly have made an offer to Serena at the
price identified in the firm*s revised price quotation because that price
had expired by its own terms. We rejected this argument, holding that the
agency*s decision neither violated a procurement statute or regulation nor
otherwise was unreasonable, since Serena*s quotation was not an actual
offer, and the vendor thus was under no obligation to accept the agency*s
September 5 offer, regardless of any *expiration* date set forth in
Serena*s revised price quotation.
In its request for reconsideration, CA contends that our holding on this
issue was in error. CA maintains that it was unreasonable for the agency
to have concluded that Serena*s quotation represented the *best value* in
September because Serena*s reduced price was *unavailable* at that time,
and Serena*s undiscounted price was $6 million more than CA*s price. To
conclude otherwise, according to CA, *ignores the reality that Serena*s
discount explicitly expired by its own terms as of June 30th,* renders the
quotation process meaningless and undermines the integrity of that process
*because the Government can simply ignore the unequivocal words of the
vendor and make an award . . . on terms different than those the vendor
provided.* Request for Reconsideration at 3-4. CA further maintains that
the offer to Serena at an *expired* price provided Serena with an unfair
competitive advantage. Id. at 8.
It is true, as CA notes, that when an agency chooses to employ competitive
procedures similar to those used in a FAR Part 15 negotiated procurement,
in the context of an RFQ, and a protest is filed challenging the outcome
of the competition, we will review the record to ensure that the agency*s
evaluation of the vendor*s submissions was fair, reasonable and consistent
with the terms of the solicitation. KMR, LLC, B-292860, Dec. 22, 2003,
2003 CPD P: 233 at 4 (citing COMARK Fed. Sys., B‑278343,
B‑278343.2, Jan. 20, 1998, 98-1 CPD P: 34 at 4-5). Ignoring the
*June 31* language in Serena*s revised quotation, however, was not
inconsistent with the express terms of the solicitation, nor was it unfair
vis-`a-vis the other vendors; rather it was in accord with the fundamental
legal nature of a quotation.
We recognize that, in practice, agencies and vendors often treat
quotations just as they treat offers. Nonetheless, as a matter of law,
quotations are different from bids or offers. The submission of a bid or
proposal constitutes, by its very nature, an offer by a contractor that,
if accepted, creates a binding legal obligation on both parties. Because
of the binding nature of bids and offers, they are held open for
acceptance within a specified or reasonable period of time, and our case
law has necessarily developed rules regarding the government*s acceptance
of *expired* bids or proposals. See, e.g., Consultants Ltd., B-286688.2,
May 16, 2001, 2001 CPD P: 92 (holding that where a bidder agrees to hold
its bid open for the minimum acceptance period required and extends its
acceptance period with each agency request, the integrity of the bidding
system is not compromised if the bidder is subsequently permitted to
revive its expired bid); Esprit Int*l Corp., B-276294, Mar. 10, 1997, 97-1
CPD P: 106 at 2 (allowing bidder with shorter acceptance period to revive
its bid after it had expired would afford the bidder an unfair advantage
since its initial exposure to the risk of the marketplace was for a
shorter period of time); CDA Inv. Tech., Inc.‑‑Recon.,
B‑27209.3, Mar. 11, 1997, 97-1 CPD P: 103 at 8 (stating that *it is
not improper for an agency to accept an expired offer without opening
negotiations where . . . acceptance is not prejudicial to the competitive
system).
A quotation, on the other hand, is not a submission for acceptance by the
government to form a binding contract; rather, vendor quotations are
purely informational, Zarc Int*l, Inc., B‑292708, Oct. 3, 2003, 2003
CPD P: 172 at 2. In the RFQ context, it is the government that makes the
offer, albeit generally based on the information provided by the vendor in
its quotation, and no binding agreement is created until the vendor
accepts the offer. Federal Acquisition Regulation (FAR) S: 13.004(a). A
vendor submitting a price quotation therefore could, the next moment,
reject an offer from the government at its quoted price. Because vendors
in the RFQ context hold the power of acceptance and their submissions are
purely informational, there is nothing for vendors to hold open; thus, it
simply does not make sense to apply the acceptance period concept or the
attendant rules regarding expiration of bids or offers to RFQs. As a
consequence, notwithstanding the statement in Serena*s revised price
quotation that *[t]his offer is valid through June 31 [sic], 2003,*
Serena*s discounted price was *valid,* or not, at Serena*s option, both
before and after the date mentioned in the quotation--on whatever date the
agency might present an offer to the firm.
In arguing that USDA afforded Serena an unfair advantage, CA maintains
that by disregarding the *June 31* language, USDA afforded Serena a
*second bite at the apple* because it provided Serena with the opportunity
to *hold the Government up for better terms or other prices that might
benefit the vendor at the time.* Request for Reconsideration at 8. As
explained above, however, when any vendor--Serena, CA, or any
other--submits a quotation, it always has the option to accept or reject
the government*s subsequent offer--to take a *second bite at the apple,*
using CA*s phrase‑‑based on the vendor*s assessment of prices
and/or other information at the time the offer is made.[1]
In sum, since the language concerning the price*s expiration date in
Serena*s revised quotation had no operative effect, and thus did not
afford Serena an unfair competitive advantage, we properly found that it
provided no legal basis for our Office to object to USDA*s best-value
determination and September 5 offer to Serena at the firm*s discounted
price.
CA also argues that we wrongly held that USDA did not violate any law or
regulation in first obtaining and reviewing vendors* technical submissions
and only then developing a point scoring system for the purposes of
evaluation. According to CA, the agency*s actions in this regard violated
longstanding precedent of our Office holding that agencies may not
evaluate vendors* submissions based on criteria different from those
contemplated by the solicitation. However, in our decision, we expressly
found that the points assigned by the agency to each evaluation factor
were consistent with the relative weights for those factors as
contemplated by the solicitation, and that the agency applied the point
scoring system in a consistent manner. CA*s repetition of and elaboration
on the arguments it raised in its protest concerning the agency*s point
scoring, and the firm*s expression of disagreement with our conclusion
that the agency*s actions were not improper, do not provide a basis for
granting reconsideration. HK Sys., Inc.--Protest and Recon.,
B‑291647.6, B‑291647.7, Aug. 29, 2003, 2003 CPD P: 159 at 6.
Last, CA maintains that we erred in concluding that it had abandoned two
of its grounds for protest: that USDA*s best-value determination was
fundamentally flawed because the agency chose a higher-priced and lower
technically rated vendor, and that USDA unfairly allowed Serena to make
technical revisions to its quotation while denying CA the opportunity to
do the same. We did not consider those grounds because the agency had
addressed them in its reports, but CA failed to respond in its comments.
According to CA, it addressed the arguments, respectively, in its November
17 comments on the agency report and in its December 17 reply to the
agency*s December 9 response to CA*s comments.
CA*s challenge of USDA*s best-value determination was based on the
assumption that CA*s price was lower than Serena*s price and that CA*s
technical score was higher than Serena*s score. Upon receipt of the
agency report, however, CA learned that Serena had substantially reduced
its price so that it was in fact below CA*s price, and that the agency had
revised its technical evaluation resulting in Serena*s technical score
exceeding CA*s. Presumably because CA*s assumptions underpinning its
challenge to the agency*s best-value determination were no longer valid,
CA shifted the focus of its protest to principally challenge the agency*s
consideration of Serena*s reduced price and the revised technical scoring;
to the extent CA*s November 17 comments argued that the agency*s
best-value determination was unreasonable, they were proffered in that
context, and were considered in our resolution of the protest and, as
indicated above, properly rejected.
As to CA*s complaint that USDA improperly allowed Serena to make technical
revisions to its quotation, CA first raised this issue in its November 17
comments, arguing that Serena improperly revised its technical proposal to
add information about its favorable ranking from an independent industry
analysis organization, the Gartner Group, and information advising the
agency that the U.S. Postal Service had awarded a contract to Serena to
replace CA products. In its response to these allegations USDA maintained
that the information about which CA complained was *mere puffery* and was
not even new, since it was set forth in Serena*s initial quotation and
because the agency had discussions with the Gartner Group during a
conference call regarding the selection process; USDA advised that it did
not change Serena*s technical rating based on the information. CA replied
and shifted the tenor of its argument, maintaining that it was improper
for USDA to consider information it received from the Gartner Group in the
conference call. We addressed that matter in resolving the protest,
Decision at 14--because CA fundamentally changed the
nature of its challenge as a result of the agency*s response, we properly
viewed CA as having otherwise abandoned its argument in this regard.
The request for reconsideration is denied.
Anthony H. Gamboa
General Counsel
------------------------
* This decision is being released in advance of a public version of the
underlying protest decision because of a dispute regarding release of
certain information in the public version of that decision.
[1] In contrast, and as CA recognizes in its submission, we have held, in
the sealed bid context, that it is improper to allow a firm to extend or
revive a bid that proposed a shorter acceptance period than did the other
bidders. See, e.g., ADAK Comm. Sys., Inc., B-222546, July 24, 1986, 86-2
CPD P: 103. Because bidders are subject to the risks associated with
changing market conditions during the period that their bids are open,
accepting such a bid after it has expired would be fundamentally unfair
because the bidder with the shorter acceptance period takes less risk of
market fluctuation than those providing a longer acceptance period.