TITLE:  Pitney Bowes Inc., B-294868; B-294868.2, January 4, 2005
BNUMBER:  B-294868; B-294868.2
DATE:  January 4, 2005

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   Decision

   Matter of:   Pitney Bowes Inc.

   File:            B-294868; B-294868.2

   Date:              January 4, 2005

   Grace Bateman, Esq., and Amanda B. Weiner, Esq., Seyfarth Shaw, for the
protester.

   Carmody A. Gaba, Esq., and Michael I. Goulding, Esq., Department of
Homeland Security, Customs and Border Protection, for the agency.

   Carl L. Vacketta, Esq., Richard P. Rector, Esq., William J. Crowley, Esq.,
and David E. Fletcher, Esq., Piper Rudnick, for Neopost, Inc., an
intervenor.

   Paul N. Wengert, Esq., Glenn G. Wolcott, Esq., and Michael R. Golden,
Esq., Office of the General Counsel, GAO, participated in the preparation
of the decision.

   DIGEST

   1.  Protest that agency improperly canceled delivery order initially
issued to protester is denied where protester's response to solicitation
did not contain prices for all required line items. 

   2.  Protest that agency improperly permitted successful vendor to submit
revised pricing following initial submissions is denied where agency
sought and received revised pricing from both protester and successful
vendor. 

   3.  Protest that successful vendor failed to acknowledge material
amendments to solicitation is denied where successful vendor's submission
indicated compliance with all material terms. 

   4.  Protest that successful vendor's equipment does not comply with the
solicitation requirements is denied where solicitation did not require
detailed technical submissions and agency reasonably relied on general
statements of compliance and descriptive literature submitted by
successful vendor to conclude that its equipment complies with
solicitation requirements. 

   DECISION

   Pitney Bowes Inc. protests the issuance of a delivery order to Neopost,
Inc. by the Department of Homeland Security, Customs and Border Protection
(CBP), under request for quotations (RFQ) No. 48269 for mailing system
equipment and installation, maintenance, and training services.  Pitney
Bowes also objects to the cancellation of an initial delivery order that
had been issued to Pitney Bowes. 

   We deny the protest.

   The RFQ was issued in August 2004 and, as amended,[1] sought quotations
from vendors holding Federal Supply Schedule (FSS) contracts for
commercial mailing equipment.[2]  The RFQ provided that the mailing
systems to be obtained under this solicitation must include the following
line items:  meter head, meter head base, scale, effective interface,
software, training, training guides, removal/return of existing equipment,
and equipment repair/replacement support.  The RFQ provided specific
quantities for each line item with regard to a base year and for each of
four 1-year option periods.  For each line item, the solicitation provided
a space, under the heading ``unit price,'' for the vendor to submit its
quotation and at the top of the pricing schedule vendors were directed to
``complete the following pricing.''  AR, Tab 3, at 1.  The RFQ also advised
offerors as follows:  ``The number of units to be provided in the option
years has not been determined[;] therefore the quantities identified in
the option years are included only for the purpose of evaluating bids.'' 
AR, Tab 3, at 1 (bold in original).  Finally, under the heading
``evaluation of offerors,'' the RFQ stated: ``The vendor who submits the Low
bid, and obtain[s] a satisfactory past performance evaluation will be
awarded subject contract.''[3]  RFQ at 3. 

   Only Pitney Bowes and Neopost submitted quotations.  After reviewing the
initial quotations, the contracting officer invited both vendors to submit
revised pricing.  Neopost submitted a set of revised pricing sheets on
August 26.  AR, Tab 5B, Neopost Pricing, at 6-7.  Pitney Bowes submitted
its revised pricing, which it referred to as pricing ``correction,'' on
August 29.  AR, Tab 4B, Pitney Bowes Pricing, at 1-2.  Thereafter,
CBPA determined that the quotation submitted by Pitney Bowes was
lower-priced, and issued a delivery order to Pitney Bowes on August 30. 
AR, Tab 8, Delivery Order, at 1. 

   On September 7, CBP canceled the August 30 delivery order on the basis
that Pitney Bowes had failed to submit pricing for several line items. 
Specifically, Pitney Bowes's submission did not reflect any pricing for
the purchase of meter head bases or scales for any of the four option
periods.  AR, Tab 9, Termination Notice, at 1.  CBP then issued an order
dated September 9 to Neopost, which incorporated by reference the RFQ, and
also ``Neopost Inc.'s proposal which responded to this RFQ with related
FAX; and the three amendments to the RFQ.''  AR, Tab 23, Delivery Order, at
2. 

   In its protest to our Office, Pitney Bowes presents the following
assertions:  the initial delivery order to Pitney Bowes was unjustifiably
canceled; Neopost was improperly allowed to amend its quotation after
initial submissions; Neopost failed to acknowledge material solicitation
amendments; and Neopost's equipment will not comply with the solicitation
requirements.[4] 

   Pitney Bowes first protests that the agency lacked a proper basis to
cancel the initial delivery order.  Pitney Bowes does not dispute that its
submission failed to reflect any prices for meter head bases[5] or scales
in the option years.  Nonetheless, Pitney Bowes maintains that the RFQ
only sought vendors' quotations to purchase meter head bases and scales
during the base year, and that no such purchases were contemplated during
the option years.  The record is to the contrary.

   As noted above, the solicitation expressly advised the vendors that they
were to ``complete the following pricing,'' that ``[t]he number of units to
be provided in the option years has not been determined,'' and that the
vendors' quotations for the option-year quantities would be used ``for the
purpose of evaluating bids.''  RFQ at 1.  Accordingly, it is clear that
quotations for all line items, including option-period line items was
required.  To the extent Pitney Bowes viewed this clear solicitation
requirement as either unrealistic or otherwise contrary to other aspects
of the RFQ, any protest on that basis had to be filed prior to the time
set for submission of quotations, in order to be timely under our Bid
Protest Regulations.[6]  4A C.F.R. SA 21.2(a)(1).  On this record, we find
nothing improper in the agency's cancellation of the initial delivery
order issued to Pitney Bowes.   

   Pitney Bowes next protests that the agency improperly sought and evaluated
the revised pricing submitted by Neopost on August 26, following
submission of initial quotations.  As noted above, the record is clear
that both Pitney Bowes and Neopost were provided an opportunity to revise
their respective quotations, and that both did so.[7]  Thus, we conclude
that CBP properly considered the revised pricing from both vendors. 

   Next, Pitney Bowes protests that Neopost failed to acknowledge amendments
2 andA 3 to the RFQ, and maintains that this alleged failure renders
Neopost's quotation defective.  We disagree because the Neopost quotation
complied with all material aspects of the revised RFQ.  Specifically, the
Neopost quotation specified the correct quantity of 311 systems, and the
descriptive literature showed that the Neopost machine would process
letters at the specified rate.  Further, the Neopost quotation indicated
that Neopost would comply with the general requirement to provide
sufficient supplies to meet the specified rate of performance. 

   Finally, Pitney Bowes protests that Neopost's equipment will not comply
with certain RFQ requirements.  In this regard, Pitney Bowes references a
provision in the RFQ's statement of work regarding system software that
states:

   CBP requires the ability to account for postal expenditures.  It is
necessary to track how the USPS and other carriers send mail.  The
software should provide ad hoc reporting, monitor postage usage, establish
business rules, create mail accounts and manage mail accountability.

   RFQ at 1.

   Pitney Bowes complains that Neopost's equipment will not comply with the
requirement that the software ``establish business rules.''  The phrase
``establish business rules'' was not defined in the RFQ.  CBP explains that
by ``business rules'' it meant the ability to ``create passwords, short-cut
keys, and custom rates,'' and notes that the descriptive literature
submitted by Neopost demonstrated that its equipment had the ability to
``perform custom rates and accommodate shortcut keys . . . . [and] perform
functions including tracking costs for up to 50 departments.'' 
Supplemental Report at 24.  Accordingly, the agency concluded that
Neopost's equipment complies with the RFQ requirements, including the
requirement regarding business rules.

   To the extent Pitney Bowes disagrees with the agency's interpretation of
the term ``business rules,'' we view the solicitation as patently
ambiguous.[8]  As noted above, an offeror has an affirmative obligation to
seek clarification prior to the first due date for submissions responding
to the solicitation following introduction of the ambiguity into the
solicitation.  4 C.F.R. S 21.2(a)(1).  Where a patent ambiguity is not
challenged prior to such submissions, we will dismiss as untimely any
subsequent protest assertion that is based on an alternative
interpretation.  Kellogg Brown & Root, Inc., supra; Bank of Am.,
B-287608, B-287608.2, July 26, 2001, 2001 CPD P 137 at 10.  Our rule
that protests of patent ambiguities must be filed prior to responsive
submissions is intended to facilitate clarification of legitimate
questions prior to preparation of submissions.  Since Pitney Bowes sought
no clarification of this matter prior to responding to the solicitation,
it may not now assert that the only permissible interpretation of this
term is its own. 

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

   [1] CBP issued three amendments to the RFQ.

   [2] Specifically, CBP distributed the RFQ using ``e-Buy'' to firms holding
contracts under FSS Schedule 36, titled ``office imaging and document
solution.''  AR, Tab 3, e-Buy Posting Confirmation, at 5. 

   [3] Although the solicitation anticipated issuance of a delivery order
under an FSS contract and was posted on e-Buy as an RFQ, the document
described itself as an ``IFB'' (invitation for bids) and referred to vendor
responses as ``bids.''   

   [4] Pitney Bowes also protests that the procurement violated requirements
in Federal Acquisition Regulation (FAR) PartA 8.4 because the evaluation
criteria did not include a ``comparative evaluation of the technical
merits'' of the products.  Supplemental Protest at 9.  As mentioned above,
the RFQ stated that the selection would be based on low price and
satisfactory past performance.  The challenge that the evaluation criteria
were inconsistent with FAR SA 8.4 is untimely because it was not protested
prior to the time set for submission of quotations, as required under our
Bid Protest Regulations.  4 C.F.R. SA 21.2(a)(1) (2004). 

   [5] Although meter manufacturers are permitted to sell the ``meter head
base'' portion of a postal meter, under regulations of the United States
Postal Service (USPS), the meter mechanism itself (the ``meter head'')
cannot be sold, but may only be rented from one of the USPS-authorized
postal meter manufacturers.  Therefore in both the ScheduleA 36 contract
and the RFQ, vendors provided purchase prices for meter head bases, and
monthly rental rates for the meter heads. 

   [6] Pitney Bowes argues that because the RFQ listed the same quantity
(311) of meter head bases and scales for each of the 4 option years as it
listed for the base year and the agency had indicated an intent to
purchase 311 bases and scales in the base-year period, Pitney Bowes
reasonably concluded that there would be no purchases of meter head bases
and scales during any of the 4 option years.  This interpretation is
unreasonable because it is directly contrary to the solicitation
provision, quoted above, indicating that vendors must submit quotations
for all line items for each of the option years, and that such quotations
would form the basis for the agency's evaluation of price.  At best, the
solicitation contained a patent ambiguity that Pitney Bowes was obligated
to protest prior to submitting its quotation.  Kellogg Brown & Root, Inc.,
B-291769, B-291769.2, Mar. 24, 2003, 2003A CPD PA 96 at 8.

   [7] On September 29, apparently after issuance of the delivery order,
Neopost submitted a third set of pricing sheets, which only added an
extended price for purchase of meter head bases in option years (where the
prior version had listed only a quantity and unit price).  AR, Tab 5Bii. 
Since this final submission was simply the mathematical product of the
previously-submitted prices for the stated quantities, the agency's
acceptance of this submission does not provide a basis for sustaining the
protest. 

   [8] Our conclusion in this regard is supported by Pitney Bowes' own
submissions in pursuing this protest.  Specifically, Pitney Bowes has
provided two different definitions of the term ``business rules.''  In its
comments on the initial agency report Pitney Bowes argued that business
rules meant ``software that enables the agency to restrict the user of the
mailing system from incurring certain types of postage costs, or that caps
the amount of postage that a particular user may incur.''  Protester's
Comments at 11.  In its comments on the supplemental agency report, Pitney
Bowes attached a declaration from an employee and argued that in the
mailing and freight-handling industries, `` `Business rules' is a
specially-defined term that means a routing guide that specifies shipping
methods, carriers, and/or services based on customer preferences,
negotiated contracts, or other specific criteria.''  Protester's
Supplemental Comments at 7.  Since Pitney Bowes itself has provided two
divergent definitions of the term, we decline to conclude that the
agency's definition of the term is unreasonable.   

   [9] Pitney Bowes also protests that Neopost's submission did not
explicitly address the RFQ requirement that equipment be capable of
calculating correct charges for various carriers.  Specifically, Pitney
Bowes complains that, while Neopost's submission certified that it
``acknowledge[d] and will comply'' with this requirement, its descriptive
literature ``is silent on the capability'' of correctly calculating various
rates.  Supplemental Protest at 4.  Since the RFQ did not require a
detailed technical submission, in our view, CBP reasonably accepted
Neopost's general assurance that its equipment was capable of calculating
the appropriate rates. 
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