TITLE: B-297552, Computers Universal, Inc., February 14, 2006
BNUMBER: B-297552
DATE: February 14, 2006
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B-297552, Computers Universal, Inc., February 14, 2006

   Decision

   Matter of: Computers Universal, Inc.

   File: B-297552

   Date: February 14, 2006

   Peter L. Cannon for the protester.

   Jonathan A. Beyer, Esq., Department of Defense, 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 unreasonably evaluated protester's quotation for repairing a
   vehicle tracking system when it added to protester's price, for evaluation
   purposes, the protester's proposed increase in telecommunications charges
   under another contract for maintaining the system, without first verifying
   with the protester whether costs for necessary telecommunications to
   accomplish the purchase order work were already included in the purchase
   order price.

   DECISION

   Computers Universal, Inc. (CUI) protests the issuance of a purchase order
   to WINTEK IT, CO., LTD., by the Department of Defense Dependents Schools
   (DoDDS), pursuant to an oral solicitation, to reestablish operability of
   the Korea Vehicle Tracking System (KVTS). CUI contends that award was
   improperly made at a higher price than quoted by CUI.

   We sustain the protest.

   DoDDS is the overseas educational division of the Department of Defense
   Education Activity (DoDEA) that operates schools worldwide for students in
   United States military communities. The agency asserts that the safe
   transportation of these students to and from their schools is integral to
   DoDEA's mission. In this regard, the KVTS was designed to track the buses
   and students being transported to and from DoDDS throughout South Korea
   using global positioning system and digital telecommunications
   technologies. In order for the KVTS to function properly the system must
   be connected to an active telecommunications server. Agency Supplemental
   Report, Declaration of Logistics Division Chief.

   CUI was awarded a contract to maintain the KVTS on August 26, 2005, for 1
   base year with 2 option years beginning September 1. Shortly after CUI
   initiated performance of the contract, it discovered that the new
   Korea-wide cell phone standard of 11 digits required a change in the
   existing system's database program, given that the tracking devices in
   KVTS were programmed with cell phone numbers that were 10 digits long and
   the vehicle tracking database program would accept only 10 digit
   numbers.[1] Protester's Response to Agency Supplemental Report at 1. CUI
   informed the agency in an e-mail that it could perform the required
   changes to make the system operable, plus required testing, for $20,000.
   Agency Report (AR), Tab D-2, E-mail from CUI to Contract Specialist (Sept.
   6, 2005).[2]

   In response, the agency instructed CUI to "not take any action as to the
   efforts you mentioned [which] would require the $20,000" because this work
   was considered to be outside the scope of the maintenance contract. AR,
   Tab D-2, E-mail from Contract Specialist to CUI (Sept. 7, 2005). On
   September 8, the contract specialist sent CUI an e-mail requesting a plan
   from CUI for making the KVTS fully operational, in which the agency again
   stated that these changes were outside the scope of CUI's current
   contract. CUI's Response to Agency Supplemental Report, Tab 3, E-mail from
   Contract Specialist to CUI (Sept. 8, 2005). On that same day, CUI provided
   the Contract Specialist, in an e-mail, the list of the steps that it
   proposed to make the KVTS operational:

   1. Deinstall of all MDT's [mobile data terminals] from the buses at each
   base.

   2. The purchase of the new cell phone lines.

   3. The programming of the MDT Cell phone modules with the new 010 numbers.

   4. Permanent programming of the alias between the new 010 and 019 numbers.

   5. Entry of the new 019 alias's in the DODDS Control Program.

   6. Reinstallation of the MDT's into the buses.

   7. Testing to insure all is working OK.

   We can have all work completed 10 working days after approval of the
   additional $20,000 required for the purchase of the new phone lines,
   [p]rogramming of the numbers into the MDT Cell Phone modules, and alias
   set up between the 010 and 019 numbers.

   CUI's Response to Agency Supplemental Report, Tab 3, E-mail from CUI to
   Contract Specialist (Sept. 8, 2005).

   On September 9, the contracting officer contacted CUI by telephone, and
   issued an oral request for quotations (RFQ) pursuant to the simplified
   acquisition procedures set forth in Federal Acquisition Regulation (FAR)
   sect. 13.106-1(c), in which he requested that CUI provide a detailed
   quotation of what work and costs would be required to reestablish the
   operability of the KVTS. This oral RFQ was followed up by an e-mail in
   which CUI was instructed to include the "[p]roposed cost of the overall
   effort (note that this must be complete and factor whatever costs you feel
   will be necessary to reestablish operability)." Agency Supplemental
   Report, Tab H, E-mail from Contracting Officer to CUI (Sept. 9, 2005).

   As requested, CUI again responded on September 9 with a quotation of
   $20,000 as the total price to reestablish the operability of the KVTS
   system and listed essentially the same seven steps that it included in its
   September 8 e-mail to the contract specialist and provided milestones for
   accomplishing this work. In this same e-mail, CUI also requested an
   increase of $7,000 per month in the telecommunications charges in its
   contract to maintain the KVTS because of incorrect historical information
   on which it based its maintenance contract price; this proposed
   incremental charge was labeled "Increase in Telecommunication Charges" on
   the price schedule. AR, Tab A-2, CUI's Quotation.

   On September 9, WINTEK was telephonically requested to provide a detailed
   quotation of what work and costs would be required to reestablish the
   operability of the KVTS.[3] This telephone call was also followed up by a
   confirming e-mail. In response, on September 14, WINTEK submitted a
   quotation of $16,500 to reestablish the operability of the KVTS, plus a
   1-month telecommunications charge of $7,400, which WINTEK stated was
   "[b]ecause, in order to reestablish service, we need one month contract
   with [the telecommunications contractor]," for a total price of $23,900.
   AR, Tab A-1, WINTEK's Quotation.

   In evaluating CUI's quotation, the agency added to CUI's $20,000 quotation
   an additional $7,000 based upon CUI's request for a $7,000 increase in
   monthly telecommunications charges under CUI's contract to maintain the
   KVTS (which, as noted above, was referenced in the same e-mail containing
   CUI's quotation to make the KVTS operable), to reach a total evaluated
   price of $27,000. This was higher than WINTEK's $23,900 quotation. WINTEK
   thus received the award as the vendor offering the lowest price.[4] This
   protest followed.[5]

   CUI contends that its $20,000 quotation to make the KVTS operable was
   all-inclusive and included all necessary telecommunications charges, as
   evidenced by the fact that the quotation included the acquisition of new
   cell phone lines and testing (which could only be accomplished if there
   was an active telecommunications service). CUI states that its quotation
   clearly indicated that the requested $7,000 increase in monthly
   telecommunications charges on its maintenance contract was completely
   separate from this work and that this charge would take effect after the
   system was made operable and the repair work was completed. CUI contends
   that it therefore provided the lowest-priced quotation and should have
   received the purchase order. We agree.

   When using simplified  acquisition procedures under FAR Part 13, an agency
   must conduct the procurement consistent with a concern for fair and
   equitable competition. In reviewing protests against an allegedly improper
   simplified award selection, we examine the record to determine whether the
   agency met this standard and exercised its discretion reasonably. Dew Drop
   Sprinklers & Landscaping, B-293963, July 15, 2004, 2004 CPD para. 171 at
   3.

   The agency claims that telecommunications services were necessary to test
   and demonstrate the operability of the KVTS, and that it added the $7,000,
   which was taken from the same price schedule containing CUI's $20,000
   quotation to make the system operable, to account for these costs because
   "[t]he government also had to identify the cost of telecommunications
   within the CUI quotation in order to ensure [that] CUI had presented a
   viable proposal of reestablishing operability and testing of the KVTS,"
   given that CUI's quotation did not specifically indicate that such costs
   were included. Contracting Officer's Supplemental Statement at 3.

   CUI's claim that the costs for necessary telecommunications were included
   in its $20,000 lump sum quotation is consistent with its e-mails and
   quotation, given that the quotation expressly included the acquisition of
   new cell phone lines and testing of the system, which could not be done
   without an active telecommunications service. In addition, CUI's quotation
   clearly indicated that the $7,000 figure used by the agency in the
   evaluation was not the total monthly telecommunications charges, but was a
   proposed increase to the monthly communications charges under CUI's
   maintenance contract, and that this proposed increase was not related to
   CUI's quotation to make the system operable. Our review reveals no
   reasonable basis for the agency to assume that the $7,000 increase
   referred to in CUI's quotation represented the cost of telecommunications
   that would be needed to make the system operable under the purchase
   order.[6]

   In any case, the record evidences that the contracting officer did not ask
   CUI whether the costs for necessary telecommunications were included in
   its quotation or request CUI to separately price the telecommunications
   charges.[7] Instead, when its quotation was solicited, CUI was asked to
   provide "a detailed proposal of what work and costs would be required to
   reestablish KVTS operability," and for a "[p]roposed cost for the overall
   effort," to reestablish the operability of the KVTS. Contracting Officer's
   Supplemental Statement at 2; Agency Supplemental Report, Tab H, E-mail
   from Contracting Officer to CUI (Sept. 9, 2006). Before adding this $7,000
   charge to CUI's quotation for evaluation purposes, the agency, at a
   minimum, should have requested CUI to verify whether or not the costs for
   necessary telecommunications to accomplish the purchase order work were
   included in its $20,000 quotation.

   In sum, the agency unreasonably added CUI's proposed $7,000 increase in
   its telecommunications monthly charge in the KVTS maintenance contract to
   CUI's $20,000 quotation without first requesting that CUI verify whether
   the necessary telecommunications costs were already included in its
   quotation. On this record, CUI's $20,000 quotation was the lowest-priced
   one, and CUI should have been issued the purchase order, if otherwise
   appropriate.

   Because we are advised by the agency that the performance under this
   purchase order has been completed, we recommend that CUI be reimbursed its
   quotation preparation costs as well as the reasonable costs of filing and
   pursuing the protest. 4 C.F.R. sect. 21.8(d)(1), (2). CUI 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 KVTS system had apparently not been operable for some time prior
   to CUI's commencement of performance of the maintenance contract. See
   Protester's Comments on Agency Supplemental Report at 1.

   [2] While the contracting officer states that the president of CUI stated
   in a telephone conversation with the contract specialist and the
   contracting officer that the total work to make the KVTS system
   operational was $40,000 to $50,000, this is denied by CUI, whose written
   quotations consistently indicate that it would perform the work for
   $20,000.

   [3] Only CUI and WINTEK were solicited for this RFQ due to the complex and
   expedited nature of the system repairs. Supplemental Contracting Officer's
   Statement at 2.

   [4] This purchase order work has been completed. The agency now advises
   that it will no longer operate the KVTS and that the options in CUI's
   maintenance contract will not be exercised. See Agency Summary Dismissal
   Request for B-297693, Tab B, Declaration of Logistics Division Chief.

   [5] The agency argues that CUI's protest, filed on November 7, is untimely
   because it was filed more than 10 days after CUI was notified of the
   issuance of the purchase order to WINTEK. See 4 C.F.R. sect. 21.2(a)(2)
   (2005). In this regard, CUI was notified on September 15 that it was not
   the low vendor, although it was not advised of the award price. On
   multiple occasions, beginning September 22, CUI requested under the
   Freedom of Information Act (FOIA) that the agency provide certain
   information about the award, including the WINTEK purchase order. In
   response to its repeated FOIA requests, the agency informed CUI that "no
   contract exists for this requirement." Protester's Response to Agency
   Summary Dismissal Request (Nov. 16, 2005). After CUI appealed the denial
   of its FOIA request, on November 7, CUI was provided a copy of the
   purchase order to WINTEK, which for the first time indicated to CUI the
   purchase order price, and filed a protest that the award was not made to
   the low-priced vendor with our Office on that same day. Under the
   circumstances, we consider CUI's protest to be timely filed.

   [6] The agency alternatively claims in its supplemental report that even
   if telecommunications were already being furnished under CUI's KVTS
   maintenance contract, CUI's quotation stated that the monthly charge for
   telecommunications should be $7,000 more than provided under the
   maintenance contract and that it was therefore appropriate to account for
   these additional costs in the evaluation. We find no basis for the agency
   to apply this request to this evaluation, inasmuch as we do not believe
   the agency could reasonably assume that CUI's proposed change in the
   monthly telecommunications charge under the maintenance contract would (or
   could) be unilaterally imposed by CUI before this change was accepted by
   the agency and made applicable while the system was being repaired under
   the purchase order.

   [7] In its initial report, the agency claimed that it expressly requested
   that CUI provide a separate price for 1 month of telecommunications,
   although it provided no documentation supporting this claim, and the
   record indicates that telecommunications costs were unilaterally offered
   by WINTEK and were not solicited by the agency. CUI denies that any such
   request for separate pricing for telecommunications was made. Moreover, in
   response to CUI's comments denying that any such request was made, the
   contracting officer, in the agency's supplemental report, does not claim
   that CUI was specifically requested to provide a separate price for
   telecommunications.