TITLE: B-297454, Wyse Technology, Inc., January 24, 2006
BNUMBER: B-297454
DATE: January 24, 2006
*************************************************
B-297454, Wyse Technology, Inc., January 24, 2006

   Decision

   Matter of: Wyse Technology, Inc.

   File: B-297454

   Date: January 24, 2006

   Brian A. Darst, Esq., for the protester.

   David Erlewine, Esq., Department of Justice, for the agency.

   Katherine I. Riback, Esq., and James A. Spangenberg, Esq., Office of the
   General Counsel, GAO, participated in the preparation of the decision.

   DIGEST

   Agency improperly awarded contract based upon a proposal where the offeror
   expressly declined to certify that the product to be provided would comply
   with the Trade Agreements Act as was required by the terms of the
   solicitation.

   DECISION

   Wyse Technology, Inc. protests the award of a contract to CDW Government,
   Inc. (CDWG) under solicitation No. CG0270, issued by the Department of
   Justice, Federal Prison Industries (FPI) d/b/a UNICOR,[1] for Hewlett
   Packard HP Compaq t5520 Thin Client devices.[2] Specifically, Wyse
   contends that the awardee's brand name product was manufactured in Taiwan
   or China, and, thus, the award is in violation of the Trade Agreements Act
   (TAA), 19 U.S.C. sections 2501-81 (2000).[3]

   We sustain the protest.

   On September 13, 2005, the agency posted the solicitation for the Hewlett
   Packard HP Compaq t5520 Thin Client devices and "APC Essential Surge
   Arrest Outlets."[4] The solicitation was issued on a "brand-name-or-equal"
   basis and included the applicable salient characteristics of the brand
   name products. The solicitation stated that it contemplated the award of a
   requirements contract with a 2-year period of performance. Agency Report
   (AR), Tab E, Solicitation.

   The procurement was to be conducted under streamlined commercial item and
   simplified acquisition procedures, Federal Acquisition Regulation (FAR)
   Subpart 12.6 and Part 13, using an electronic reverse auction.[5]
   Participants in the auction were required to register in the Contractor
   Performance System (CPS) and to submit written proposals to the agency,
   exclusive of pricing, before September 16 at 11 a.m., EST. The auction was
   to commence at 1 p.m. and close by 1:20 p.m. EST on that same date. The
   solicitation stated that award would be made on a "best value" basis, and
   identified three evaluation factors: past performance, ability to conform
   to the specifications, and price. The solicitation also stated that
   although award could be made without discussions, the government "reserves
   the right to conduct verbal or written discussions with respect to factors
   other than price with offerors at anytime prior to award." Id. The terms
   of the solicitation were not protested.

   The information required to be included in the written proposal included
   three past performance references and a certification that the required
   representations and certifications were completed on the on-line
   representations and certifications application (ORCA).[6] The solicitation
   also incorporated FAR sect. 52.212-3, Offeror Representations and
   Certifications--Commercial Items, paragraph j(2) which provides that "the
   offeror verifies by submission of this offer that the representations and
   certifications currently posted electronically at FAR 52.212-3, Offeror
   Representations and Certifications--Commercial Items, have been entered or
   updated in the last 12 months, are current, accurate, complete, and
   applicable to this solicitation" and provides for offerors to update their
   representations and certifications for the particular acquisition. The
   solicitation further provided that "[a]ll proposals that fail to certify
   that the required representations and certifications have been completed
   at the ORCA website or fail to adhere to the terms and conditions of this
   solicitation shall no longer be considered for award." Id.

   Among the certifications incorporated and required by this solicitation
   was the Trade Agreements Certificate, FAR sect. 52.225-6 (Jan. 2005),
   which states: "The offeror certifies that each end product . . . is a
   U.S.-made or designated country end product, as defined in the clause of
   this solicitation entitled `Trade Agreements,'" and provides space where
   the offeror is required to list those end products that are not U.S.-made
   or designated country end products. The solicitation also incorporated the
   "Trade Agreements" clause, FAR sections 52.212-5, 52.225-5, which as
   pertinent here requires that only the end products of the United States
   and designated countries can be provided.

   There were six firms, including CDWG and Wyse, that registered in the CPS
   and submitted written proposals. All of these firms submitted prices in
   the reverse auction.

   CDWG submitted a signed proposal on September 16 in which it proposed to
   provide the designated brand name HP Compaq t5520 Thin Client. CDWG's
   proposal incorporated its representations and certifications entered on
   the ORCA. In the ORCA, CDWG's response to the Trade Agreements Certificate
   stated, "[CDWG] has elected not to complete this provision. Information
   pertaining to this provision, must be submitted to the Government with
   individual offers/proposals." AR, Tab I, CDWG ORCA Public Certification,
   at 19. According to the ORCA instructions, the representations and
   certifications could "be supplemented by information submitted to the
   Government in response to a specific solicitation." Id. at 1. Here,
   however, CDWG did not supplement its Trade Agreements Act Certificate.
   Wyse's proposal offered the Wyse V30 as an equal product, indicated how it
   would comply with the salient characteristics, and certified compliance
   under the Trade Agreements Certificate. AR, Tab J, Wyse's Proposal, at 2.

   CDWG submitted the lowest overall price of $522,462 in the auction and
   received a strong past performance rating; Wyse submitted the second
   lowest overall price of $525,714.25 in the auction and also received a
   strong past performance rating. The contracting officer determined that
   both CDWG and Wyse "appeared to have the ability to deliver products
   conforming to the specifications." Contracting Officer's Statement at 5.
   The contracting officer then determined that CDWG, the lowest overall
   priced offeror, offered the best value to the government. On September 23,
   the contracting officer made award to CDWG.

   Wyse received a written "debriefing" letter on October 5, in which the
   agency disclosed that CDWG was providing the brand name product. On
   October 11, Wyse asked Hewlett Packard where the t5520 thin clients were
   manufactured, and received a response that they were manufactured in
   Taiwan and will not comply with the TAA, inasmuch as Taiwan is not a
   designated country whose products can be supplied under the TAA.
   Protester's Comments, attach. 1. Wyse reports that it provided FPI with
   this information at a follow-up meeting on October 12, and that the agency
   informed it that it should have protested this matter prior to
   September 16 if it believed that the brand name product was not compliant
   with the TAA.[7] Wyse then protested to our Office on October 17.
   Performance of the contract was not stayed and the agency states that the
   contract was fully performed when the last of the thin clients were
   delivered on November 8. AR, Tab P, E-mail (Nov. 9, 2005). According to
   the agency, the delivered products were marked "Made in China" (AR at 4
   n.8), which indicates that they were end products of the People's Republic
   of China, which is not a designated country under the TAA.[8]

   Wyse challenges the agency's award determination on the grounds that the
   awardee's brand name product was the end product of either Taiwan or the
   People's Republic of China, and thus the award was in violation of the
   TAA, inasmuch as these countries are not designated countries under the
   TAA. Wyse asserts that there were several discrepancies, in particular
   CDWG's failure to certify that it would provide an end product of the
   United States or a designated country, that should have caused the agency
   to make inquiries about the acceptability of the product before it made
   award to CDWG.

   FPI initially contends that Wyse's challenge of an apparent TAA violation
   concerning the brand name referenced in a brand name or equal solicitation
   is an untimely challenge to the terms of the solicitation, which must be
   filed prior to bid opening or the time set for receipt of initial
   proposals under our Bid Protest Regulations, 4 C.F.R. sect. 21.2(a)(1)
   (2005). The agency's argument here is that a protest contending that a
   brand name designated in the solicitation does not comply with the TAA
   concerns a solicitation impropriety, which must be filed prior to the
   closing date for receipt of proposals.

   We have been presented with this type of argument before with regard to
   protests of awards based on the brand name under brand-name-or-equal
   solicitations and found protests that the brand name would not otherwise
   satisfy solicitation requirements were timely, even though filed after
   award. See, e.g., Abbott GmbH Diagnostika, B-241513, B-241513.2, Feb. 7,
   1991, 91-1 CPD para. 139 at 2. This is so because bids or proposals
   offering the brand name product also have to satisfy the other stated
   solicitation requirements. Thus, protests contending that an offered brand
   name product in response to a brand-name-or-equal solicitation does not
   satisfy solicitation requirements is not considered a protest concerning a
   solicitation impropriety that must be protested prior to bid opening or
   the closing date for receipt of proposals, but such protests can be filed
   after award. Id. (protest that brand name did not satisfy salient
   characteristic required by solicitation); Innovative Refrigeration
   Concepts, B-258655, Feb. 10, 1995, 95-1 CPD para. 61 at 3-4 (protest that
   brand name does not satisfy solicitation requirement that small business
   product must be provided).

   In any event, although Wyse may have been suspicious some time prior to
   September 16 that the t5520 thin client was not TAA-compliant, the record
   does not establish that it had evidence of this until October 11, when
   Hewlett Packard advised that it was not. The agency has provided no
   evidence that indicates that Wyse should have earlier known that this
   product did not comply with the TAA.[9] Moreover, according to Wyse,
   CDWG's failure to certify TAA compliance for this particular acquisition
   did not come to Wyse's attention until the October 12 meeting. See
   Protester's Supplemental Comments at 2. Under the circumstances, we
   consider Wyse's protest filed on October 17 to be timely.

   With regard to the merits of Wyse's protest, we find that CDWG did not
   offer to comply with the TAA in its proposal or otherwise, that the agency
   was required to ensure CDWG's compliance with the TAA prior to making
   award to that firm, and that this failure resulted in the delivery of
   products that apparently do not comply with the TAA. Consequently, we
   sustain Wyse's protest on this basis.

   Where a bidder or offeror represents that it will furnish end products of
   the United States or designated countries, it is obligated to comply with
   that representation. Leisure-Lift, Inc., B-291878.3, B-292448.2, Sept. 25,
   2003, 2003 CPD para. 189 at 8. That is, where a bidder or offeror leaves
   the certificate blank and does not exclude any end product from the
   certificate, and does not otherwise indicate that it is offering anything
   other than a TAA-compliant end product, acceptance of the offer will
   result in an obligation on the offeror's or bidder's part to furnish a
   TAA-compliant end product. See Aesculap Instruments Corp., B-208202, Aug.
   23, 1983, 83-2 CPD para. 228 at 3 (involving similarly worded Buy American
   certificate). Under such circumstances, the agency can rely upon an
   offeror's representation/certification of compliance with the TAA unless
   the agency has reason to believe, prior to award, that the offeror will
   not provide a compliant product. See Leisure-Lift, Inc., supra.

   In this case, CDWG expressly declined to provide the required
   certification and thus did not expressly bind itself to provide a
   TAA-compliant end product as required by the solicitation. That is, as
   noted above, CDWG stated on the ORCA, which it incorporated by reference
   in its proposal, that it had "elected not to complete" the Trade
   Agreements Certification and that it was required to provide information
   regarding this provision with its proposal. AR, Tab I, CDWG ORCA Public
   Certification, at 19. However, CDWG did not supplement this certification
   in its proposal, or otherwise, with regard to this acquisition. Moreover,
   FPI did not ask CDWG to supplement this uncompleted certification at any
   time prior to award, even though it affected CDWG's obligation to provide
   a TAA-compliant end product; nor did the agency ask whether CDWG's offered
   product would comply with the TAA.[10] Award may not be based upon a
   proposal, where, as here, the offeror declines to certify compliance, as
   required, with a material term of the solicitation, in this case the TAA,
   such that the proposal consequently fails to establish a legal obligation
   to comply with that material term. See Automatics Ltd., B-214997, Nov. 15,
   1984, 84-2 CPD para. 535 at 2. The prejudice in this case of not requiring
   this certification prior to award is obvious, given that CDWG delivered
   thin clients marked "Made in China" that apparently do not comply with the
   TAA.

   Because we are advised by the agency that the performance under this
   contract has been completed,[11] we recommend that Wyse be reimbursed its
   proposal preparation costs as well as the reasonable costs of filing and
   pursuing the protest, including reasonable attorney's fees. 4 C.F.R.
   sect.21.8(d)(1), (2). Wyse should submit its certified claim for costs,
   detailing the time expended and costs incurred, directly to the agency
   within 60 days of receiving this decision.

   The protest is sustained.

   Anthony H. Gamboa

   General Counsel

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

   [1] The agency contends that our Office lacks jurisdiction to review
   protests of FPI procurements, arguing that FPI is a nonappropriated fund
   activity. Our Office has previously held that, since FPI is defined by
   statute as a federal agency, the agency is subject to our jurisdiction
   under the Competition in Contracting Act, 31 U.S.C. sections 3551-3556
   (2000), amended by the Ronald W. Reagan National Defense Authorization Act
   for Fiscal Year 2005, Pub. L. No. 108-375, sect. 326, 118 Stat. 1811
   (2004). USA Fabrics, Inc., B-295737, B-295737.2, Apr. 19, 2005, 2005 CPD
   para. 82 at 2-3.

   [2] The thin client devices are needed by FPI to replace all existing FPI
   employees' personal computers. The thin client devices have no hard
   drives, a security feature for the Bureau of Prisons institutions, so all
   information is retrieved and inputted via a main server.

   [3] The TAA authorizes the President to waive all buy-national laws,
   regulations, or procedures for the acquisition of eligible "end products"
   from any country designated as a reciprocating, signatory nation to a
   recognized agreement or as a least-developed country. In order to
   encourage trade agreements with additional countries for reciprocal
   procurement opportunities, the TAA also requires the President to prohibit
   the procurement of eligible end products from foreign countries not
   designated pursuant to the Act. 19 U.S.C. sect. 2511; Hung Myung (USA)
   Ltd., Inc.; Containertechnik Hamburg GmbH & Co., B-244686 et al., Nov. 7,
   1991, 91-2 CPD para. 434 at 2-3.

   [4] The acquisition of the outlets was not protested.

   [5] The solicitation did not state whether it was a request for proposals
   (RFP) or a request for quotations (RFQ) as required by FAR sect.
   12.603(c)(2)(ii). While the solicitation in places did state that "offers"
   were contemplated and the agency when implementing the award to CDWG
   indicated that the solicitation was an RFP, the responding vendors
   referred to this solicitation as an RFQ. This inconsistency does not
   affect our analysis in this decision. For purposes of consistency, we will
   refer to the vendors' responses to the solicitation as proposals.

   [6] ORCA is "the primary Government repository for contractor submitted
   representations and certifications required for the conduct of business
   with the Government." FAR sect. 2.101.

   [7] The agency confirms that Wyse asserted at the October 12 meeting that
   the t5520 thin client was not compliant with the TAA and that it advised
   that this should have been protested prior to September 16. However, the
   agency denies receiving the correspondence that Hewlett Packard provided
   to Wyse indicating that this product was not TAA-compliant.

   [8] Notwithstanding the reasonable inference that can be made by virtue of
   the "Made in China" inscription that these were end products of China, the
   agency states that it is still not convinced that the delivered thin
   clients were the end products of China, and speculates that they may have
   been substantially transformed in the United States or a designated
   country. In addition, the agency states that it has as yet been unable to
   obtain any information from Hewlett Packard regarding where this product
   was manufactured. While the agency references various Hewlett Packard web
   pages that it contends show that t5520 thin clients may have been
   manufactured in the United States or in Hong Kong (a designated country
   pursuant to the TAA), our review of these web pages contain no evidence
   that the t5520 thin client is an end product of either country. (The
   portions of the web pages referenced by FPI in making this contention
   appear to merely indicate that these products are available in those
   countries.)

   [9] The agency references a Wyse protest of a predecessor FPI procurement
   of another Hewlett Packard thin client model, which we dismissed as
   untimely. In that procurement, FPI proposed to buy on a brand-name-only
   basis, and Wyse protested, among other things, the brand name nature of
   the acquisition and the TAA-compliance of that brand name. FPI contends
   that this prior protest shows that Wyse was cognizant at that time of the
   basis for its belief that the Hewlett Packard's thin clients were not
   TAA-compliant end products. However, the acquisition that is the subject
   of this protest was conducted on a brand-name-or-equal basis, for a
   different thin client model, and, for the reasons explained above, Wyse
   could assume that the agency would ensure compliance with the TAA in
   making award.

   [10] The agency states, with regard to CDWG's failure to certify
   compliance with the TAA, that in the future it will resolve TAA-compliance
   issues before award is made. AR at 4 n.9.

   The agency nevertheless states that it took reasonable steps to ensure
   compliance with the TAA in issuing the solicitation when it noted that the
   HP t5520 thin client was being offered by a variety of vendors on the
   General Services Administration GSA Advantage website (listed products are
   included in vendor's Federal Supply Schedule (FSS) contracts). AR at 5;
   Tab N, GSA Advantage Printout for Thin Client, see
   http://www.gsaadvantage.gov/advgsa/advantage/main/start_page.do. As
   correctly noted by FPI, products and services offered under FSS contracts
   for information technology items are required to be compliant with the
   TAA. AR at 5; see
   http://www.fbo.gov/spg/GSA/FSS/FCI/FCIS%2DJB%2D980001%2DB/Attachments.html 
   (contract provisions for Multiple Award Schedule 70
   General Purpose Commercial Information Technology Equipment, Software FSS
   Contracts, which include the Trade Agreements Clause (FAR sect. 52.225-5)
   that requires compliance with the TAA). After this protest was filed, the
   agency states it contacted the GSA Advantage customer service staff via
   telephone and was assured that the thin client was TAA-compliant, but that
   GSA later declined to provide this opinion in writing. AR at 5 n.13. Given
   the evidence in this record suggesting that this end product is not
   TAA-compliant, we are bringing this matter to GSA's attention to take
   appropriate action.

   [11] We note, however, that the solicitation otherwise describes this as a
   "requirements" contract for 2005 and 2006. In view of our conclusion
   above, the agency should not place any further orders for t5520 thin
   clients under this contract. How FPI will deal with the thin clients
   already delivered is a matter of contract administration not subject to
   our Office's review under our Bid Protest Regulations, 4 C.F.R.
   sect. 21.5(a).