TITLE:  TDS, Inc., B-292674, November 12, 2003
BNUMBER:  B-292674
DATE:  November 12, 2003
**********************************************************************
TDS, Inc., B-292674, November 12, 2003

   DOCUMENT FOR PUBLIC RELEASE                                                
The decision issued on the date below was subject to a GAO Protective      
Order.  This redacted version has been approved for public release.        

   Decision
    
Matter of:   TDS, Inc.
    
File:            B-292674
    
Date:              November 12, 2003
    
William A. Roberts, III, Esq., Philip J. Davis, Esq., Phillip H.
Harrington, Esq., Timothy W. Staley, Esq., and Jonathan L. Kang, Esq.,
Wiley Rein & Fielding, for the protester.
Rafael A. Madan, Esq., John L. Pensinger, Esq., Linda Fallowfield, Esq.,
and Alan Fisher, Esq., Office of Justice Programs, Department of Justice,
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
    
1.  Protest that awardee's proposed subcontractor has an impermissible
*impaired objectivity* organizational conflict of interest by virtue of
another contract with the agency, is denied where record fails to show
that firm will be in a position to evaluate the performance or activities
of the prime contractor as part of its responsibilities under that other
contract. 
    
2.  Where agency personnel comment on, or raise substantive questions or
concerns about, vendors' quotations or proposals in the course of an oral
presentation, and either simultaneously or subsequently afford the vendors
an opportunity to make revisions in light of the agency personnel's
comments, questions, and concerns, discussions have occurred.
    
3.  Protest that agency failed to engage in meaningful, equitable
discussions is sustained where agency personnel, during course of at least
one vendor's oral presentations, asked detailed, substantive questions
relating to the vendor's quotation, yet agency failed to alert protester
to any of the numerous weaknesses identified in its quotation. 
DECISION
    
TDS, Inc. protests the issuance of a task order to Northrop Grumman
Information Technology under request for quotations (RFQ) No.
OJP-2003-Q-014, issued by the Department of Justice, Office of Justice
Programs (OJP), to acquire help desk operation services.  TDS maintains
that one of Northrop's subcontractors has an impermissible organizational
conflict of interest and that the agency misevaluated quotations and
failed to engage in meaningful discussions.
    
We sustain the protest.
    
The RFQ contemplated the issuance of a task order under the successful
firm's federal supply schedule (FSS) contract, for a 1-year base period
with three 1-year options, to perform *help desk* operations services in
support of the agency's information technology (IT) requirements.  Two
primary tasks were contemplated:  help desk support services (essentially
help desk services for agency end-users of computing and
telecommunications resources), and system administration and network
engineering (the administration and management of all UNIX-based resources
at the agency, and hardware and software engineering necessary to
accomplish the agency's design goals for its computer network).  RFQ,
attachment No. 1, Statement of Objectives (SOO), at 2-4.[1]
    
Firms were advised that quotations would be evaluated under six
equally-weighted criteria:  past performance, corporate experience,
technical understanding, quality control, professional staff and team, and
management approach.  RFQ at 2-4.  The submissions would be assigned
adjectival ratings of either exceptional, acceptable, marginal or
unacceptable.  Firms were further advised that the agency would make award
on a *best value* basis, considering price and the non-price criteria,
with the non-price considerations deemed more important than price. 
    
The agency received three timely quotations.  After reviewing the
submissions, the agency invited the firms to make oral presentations.  In
the course of the oral presentations, the agency posed questions to the
vendors.  Agency Report (AR), exh. 23.  After concluding the oral
presentations, the agency invited firms to submit final quotation
revisions (FQR), advising them that they could submit technical revisions
to their quotations in the areas mentioned by the agency during oral
presentations, and also could submit revised pricing. 
    
The agency received FQRs from all three vendors.  After evaluating the
submissions, the agency assigned final adjectival ratings.  Northrop's
quotation received adjectival ratings of [deleted] under four of the six
evaluation areas, and an [deleted] rating under the technical
understanding and professional staff and team criteria; Northrop submitted
a final price of [deleted].  TDS received [deleted] ratings under five of
the evaluation criteria, and an [deleted] rating under the past
performance criterion; it submitted a final price of [deleted].[2]  On the
basis of these evaluation results, the agency made award to Northrop as
the firm submitting the quotation offering the best value to the
government.
    
ORGANIZATIONAL CONFLICT OF INTEREST
    
TDS asserts that one of Northrop's subcontractors, [deleted], has an
impermissible organizational conflict of interest (OCI) that should have
precluded award to Northrop.  The record shows that [deleted] has another
contract with OJP to provide various IT services to the agency (referred
to in the record as the management system contract), and TDS maintains
that [deleted] role under that contract, coupled with its responsibilities
under the help desk contract, creates an *impaired objectivity* OCI.
    
An impaired objectivity OCI exists where a firm's work under one
government contract could entail its evaluating itself, either through an
assessment of performance under another contract or an evaluation of a
proposal submitted to obtain another contract.  Aetna Gov't. Health Plans,
Inc.; Foundation Health Fed. Servs., Inc., B-254397.15 et al., July 27,
1995, 95-2 CPD P: 129 at 13.  The concern in such situations is that the
firm's ability to render impartial advice to the government could appear
to be undermined by its relationship with the entity whose work product is
being evaluated.  Id.
    
[deleted] management system contract is for the provision of services
relating to the agency's effort to update its computer systems and develop
certain agency-wide enterprise systems.  The contract calls for [deleted]
to perform eight defined tasks.  The first three of these tasks relate to
the modification, build out, troubleshooting, integration and maintenance
of one of OJP's computer systems known as the grants management system
(GMS), as well as the migration of several other preexisting contemporary
and legacy grants management systems, to the GMS enterprise framework. 
AR, exh. 17, at 2-3.  The fourth and sixth tasks require [deleted] to
research, document and implement an enterprise architecture for all of
OJP's business activities and computer systems, and to implement an
enterprise portal that will provide a single point of access for all of
OJP's core computer systems (including, for example, the GMS).  Id. at
4-5.  The seventh task requires [deleted] to evaluate the existing
communications infrastructure between OJP and the office of the chief
information officer (OCIO), to identify any barriers to communications
between OJP and OCIO, and to develop and implement an *internal
communications campaign* to ensure effective two-way communication between
OJP and OCIO.  Id. at 5-7.  The eighth task requires [deleted] to develop
and execute a *change management process* to be used to essentially train
agency users in the use of newly-implemented IT systems so as to optimize
the use of the newly-implemented systems.  Id. at 7. 
    
The fifth task--the focus of much of TDS's OCI allegation--requires
[deleted] to provide comprehensive guidance to OCIO on infrastructure
refreshment, migration, security and other related projects.  AR, exh. 17,
at 4-5.  This task requires [deleted] to provide guidance on projects that
require constant monitoring and expert technical guidance, including the
agency's migration of its system from a Novell-based environment to a
Microsoft Windows-based environment, and the roll-out of new desktop
computers configured for Microsoft networking.  Id.
    
Under the help desk task order to be awarded under the current RFQ, the
contractor is essentially responsible for providing operational support
and system availability to the users of the OJP system enterprise
architecture by installing and upgrading system hardware and software and
by successfully migrating existing software, files and databases from the
Novell-based operating environment to the Microsoft Windows-based
operating environment; by providing administration and management of all
UNIX-based resources in OJP including moving, adding, changing and
maintaining system resources; by providing hardware and software
engineering services necessary to accomplish the design goals of the
agency's computer network; and by providing network and system
administration support for OJP's two major systems, GMS (discussed above)
and the integrated financial management information system (IFMIS).  SOO
at 3-7.  In effect, the help desk contractor is responsible for assisting
the agency in maintaining its existing system assets, providing support to
system users, implementing the agency's new enterprise architecture,
migrating system assets from a Novell-based environment to a Microsoft
Windows-based environment and providing support for the agency's two major
systems, GMS and IFMIS.
    
The thrust of TDS's allegation is that, because [deleted] is responsible
under its management system contract for monitoring the activities of the
help desk contractor in its implementation of the new system architecture
and the migration from one operating environment to another, and because
the firm provides advice and guidance to the agency in support of these
activities, the firm has an impaired objectivity OCI.  TDS maintains that
[deleted] management contract duties conflict with the duties it may be
called upon to perform as Northrop's subcontractor under the help desk
task order, for example, implementation of the agency's migration from a
Novell-based environment to a Microsoft Windows-based environment. 
    
We have no basis on the record before us to find that [deleted] has an
impaired objectivity OCI.  Contrary to TDS's position, there is nothing
inherently improper in a firm's monitoring the activities of a team member
such as Northrop here (or its own activities); monitoring, standing alone,
does not necessarily create the potential for impaired objectivity. 
Rather, as noted above, an impaired objectivity conflict typically arises
where a firm is evaluating its own activities because the objectivity
necessary to impartially evaluate performance may be impaired by the
firm's interest in the entity being evaluated.  See Johnson Controls World
Servs., B-286714.2, Feb. 13, 2001, 2001 CPD P: 20 at 11-12.  While we do
not exclude the possibility in a different context of monitoring
activities resulting in an impaired objectivity OCI, here there is no
evidence that [deleted] will be evaluating the performance of the help
desk contractor, and there is nothing otherwise objectionable in the
interrelationship of activities performed by [deleted] on the two
contracts.  Instead, the record shows that the help desk contractor's
performance must at least meet the minimum standards outlined in the RFQ
and that the contracting officer's technical representative will be
responsible for evaluating the adequacy of the firm's performance for
purposes of assessing the firm's overall performance, deciding whether or
not to award option year requirements, and determining the firm's
compensation under the SLA.  SOO at 8-9.  We find no indication in the
record--and TDS has not directed our attention to any information--showing
that [deleted] will have any input whatsoever into the evaluation of the
help desk contractor's performance.  Under these circumstances, we have no
basis to find that the awardee, or its subcontractor, has an impaired
objectivity OCI. 
    
DISCUSSIONS
    
TDS asserts that the agency improperly failed to conduct meaningful
discussions with it during the acquisition.  In support of its position,
TDS directs our attention to the relatively large number of weaknesses and
risks identified during the agency's evaluation of its quotation; TDS
maintains that the agency failed to meaningfully bring virtually any of
these matters to its attention.  TDS maintains that the agency was
required to conduct meaningful discussions, since it opened discussions by
eliciting information from the firms during the oral presentation and then
providing them an opportunity to revise their quotations.
    
The agency responds that it properly conducted the firms' oral
presentations and, in the course thereof, sought only clarifications.  OJP
maintains that it did not open discussions, and thus was under no legal
obligation to engage in meaningful discussions and thereby bring the
weaknesses and risks identified in the TDS quotation to the firm's
attention.
    
We find, despite the agency's characterization of the exchanges, that
discussions occurred here. [3]  The FAR anticipates *dialogue among the
parties* in the course of an oral presentation, FAR S: 15.102(a), and we
see nothing improper in agency personnel expressing their view about
vendors' quotations or proposals, in addition to listening to the vendors'
presentations, during those sessions.  Once the agency personnel begin
speaking, rather than merely listening, in those sessions, however, that
dialogue may constitute discussions.  As we have long held, the acid test
for deciding whether an agency has engaged in discussions is whether the
agency has provided an opportunity for quotations or proposals to be
revised or modified.  See, e.g., Priority One Servs., Inc.,
B‑288836, B-288836.2, Dec. 17, 2001, 2002 CPD P: 79 at 5. 
Accordingly, where agency personnel comment on, or raise substantive
questions or concerns about, vendors' quotations or proposals in the
course of an oral presentation, and either simultaneously or subsequently
afford the vendors an opportunity to make revisions in light of the agency
personnel's comments and concerns, discussions have occurred.  See FAR
S: 15.102(g).
    
That plainly is the case here.  Following the oral presentations, the
agency specifically advised the firms:
    
Technical revisions may only be made, at your selection where you feel
necessary, to the questions presented in Oral Presentations, along with
those specifically requested, such as the percent of discount offered from
the GSA Schedule rates, Performance Evaluation Questionnaire.
AR, exh. 24, at 7.  The record thus shows that the agency afforded the
firms an opportunity to revise their quotations, in particular in the
areas raised by agency personnel during the oral presentations, and the
record further shows that the firms in fact made revisions to their
submissions, both as to technical matters and as to price.  AR, exh. 8,
TDS Final Submission, June 19, 2003; AR, exh. 9, Northrop Final
Submission, June 19, 2003.  Based on these considerations, we conclude
that the agency engaged in discussions.
    
The FAR requires at a minimum that contracting officers discuss with each
firm being considered for award *deficiencies, significant weaknesses, and
adverse past performance information to which the offeror has not yet had
an opportunity to respond.*  FAR S: 15.306(d)(3).  The FAR also encourages
contracting officers to discuss other aspects of the firm's proposal that
could, in the opinion of the contracting officer, be altered or explained
to enhance materially the proposal's potential for award.  Id. 
Discussions must be meaningful, equitable, and not misleading.  ACS Gov't
Solutions Group, Inc., B-282098 et al., June 2, 1999, 99-1 CPD P: 106 at
13-14.  Discussions cannot be meaningful unless they lead a firm into
those weaknesses, excesses or deficiencies in its quote or proposal that
must be addressed in order for it to have a reasonable chance of being
selected for contract award.  Id.
    
We find on the record before us that DOJ failed to engage in meaningful
discussions with TDS.  The agency's source selection decision document
summarizes the weaknesses identified by the agency's technical evaluators
relating to the TDS quote:
    
[deleted]
AR, exh. 11, at 3. 
    
Despite this rather considerable list of weaknesses identified by the
agency, TDS was given only two general questions during its oral
presentation, neither of which actually addressed the weaknesses noted. 
TDS was asked only:  *What performance based standards will your operation
use?* and *How do you propose to ensure that technical issues that come up
are properly reported to OJP and then handled by the correct people?*  AR,
exh. 23.  Based on the foregoing, we conclude that the agency failed to
afford TDS meaningful discussions giving the firm a reasonable opportunity
to address the weaknesses in its quote, and thereby giving it a reasonable
chance of being selected for award.
    
We also find that the agency's discussions were not equitable.  ACS Gov't
Solutions Group, Inc., supra.  Both of the other firms received questions
that were far more detailed, and related far more specifically to the
agency's concerns about their quotes.  Northrop received a list of seven
questions that were tailored to its proposed technical and management
approach:
    
[deleted]
[deleted]
[deleted]
[deleted]
[deleted]
[deleted]
[deleted]
AR, exh. 23.  The third firm also received a list of seven similarly
detailed questions relating to its proposed technical and management
approach.  Id.  The record contains no explanation from the agency
regarding why it provided TDS a substantially lower level of specificity
in its communications.
    
In view of the foregoing, we sustain TDS's protest.[4]  We recommend that
the agency reopen the acquisition, engage in meaningful discussions with
all of the firms, obtain and evaluate revised quotations and make a new
source selection decision.  We further recommend that if, at the
conclusion of these activities, the agency determines that a firm other
than Northrop is properly in line for award, it should terminate the task
order issued to Northrop for the convenience of the government, and make
award to the eligible firm if otherwise proper.  Finally, we recommend
that TDS be reimbursed the costs associated with filing and pursuing its
protest, including reasonable attorneys' fees, insofar as those costs were
incurred in pursuit of its protest allegation relating to the adequacy of
discussions.  4 C.F.R. S: 21.8(d)(1).  TDS's certified claim for costs,
detailing the time spent and the costs incurred must be submitted to the
agency within 60 days of receiving of our decision.  4 C.F.R.
S: 21.8(f)(1).
    
The protest is sustained.
    
Anthony H. Gamboa
General Counsel
    
    

   ------------------------

   [1] Because the agency is using a performance-based contracting method,
the RFQ does not include specifications.  Instead, the agency provided
prospective contractors with an SOO, and required them to submit
quotations describing how they intend to meet the agency's objectives
through their proposed technical and management approaches.  Firms also
were required to submit a service level agreement (SLA) describing the
level of service to be provided, performance measures to evaluate the
level of service provided, and a list of financial incentives and
disincentives associated with varying levels of performance.  RFQ at 5.
[2] The agency's technical evaluation report reflected an adjectival
rating of [deleted] for TDS under the past performance criterion.  AR,
exh. 10, at 2; Source Evaluation Board Award Recommendation Report, July
8, 2003, appendix No. 1, at 1.  By e-mail dated July 15, 2003, the
contracting officer specifically advised the chairman of the technical
evaluation board that TDS should have received an [deleted], rather than
an [deleted], rating for past performance.  AR, exh. 10, at 5.  The
agency's source selection document does not reflect the revised rating for
TDS in the past performance area.  AR, exh. 11 at 2. 
[3] Since the RFQ provided for the issuance of a task order against the
selected vendor's FSS contract, the provisions of Federal Acquisition
Regulation (FAR) subpart 8.4 (governing FSS acquisitions) apply.  However,
the record establishes that OJP treated the vendors' responses as if it
were conducting a negotiated procurement.  Under these circumstances,
while the provisions of FAR part 15 (governing contracting by negotiation,
including requirements concerning meaningful discussions) do not directly
apply, we will analyze TDS's contentions by the standards applicable to
negotiated procurements.  Uniband, Inc., B-289305, Feb. 8, 2002, 2002 CPD
P: 51 at 3-4.
[4] TDS's protest also raises additional arguments relating to the
agency's evaluation findings and source selection decision.  We dismiss
these aspects of its protest as academic because we recommend that the
agency reopen the acquisition, engage in meaningful discussions and
receive and evaluate revised quotations.  ACS Gov't Solutions Group, Inc.,
supra, at 14 n.7.