TITLE: B-298888, World Wide Technology, Inc., December 1, 2006
BNUMBER: B-298888
DATE: December 1, 2006
*******************************************************
B-298888, World Wide Technology, Inc., December 1, 2006
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: World Wide Technology, Inc.
File: B-298888
Date: December 1, 2006
Stephen S. Kaye, Esq., and William E. Olson, Esq., Bryan Cave LLP, for the
protester.
Janine S. Benton, Esq., and Kathy C. Potter, Esq., Benton & Potter, PC,
for Government Technology Services, Inc., an intervenor.
John R. Caterini, Esq., and Barry C. Hansen, Esq., Department of Justice,
for the agency.
Guy R. Pietrovito, Esq., and James A. Spangenberg, Esq., Office of the
General Counsel, GAO, participated in the preparation of the decision.
DIGEST
In a procurement conducted under Federal Supply Schedule procedures,
protest challenging agency's price analysis under a solicitation that
provided for a realism assessment of quoted fixed prices for the issuance
of a blanket purchase agreement is denied, where the protester asserts
that the agency failed to consider that quoted laptop computers would not
be available throughout the agreement's base term, but the record shows
that the source selection official in fact considered whether the laptop
computer models quoted would be available and reasonably concluded based
upon the information before him that the models would be available.
DECISION
World Wide Technology, Inc. protests the establishment of a blanket
purchase agreement (BPA) with Government Technology Services, Inc. (GTSI)
by the Department of Justice (DOJ) under request for quotations (RFQ) No.
DJJL-06-RFQ-0397 for desktop and laptop computers. World Wide complains
that the agency unreasonably evaluated the realism of GTSI's proposed
fixed prices.
We deny the protest.
The RFQ provided for the establishment of a BPA with a 3-year base period
and 1-year option period for desktop and laptop computers and optional
accessories, services, and peripheral equipment. The competition was
limited to vendors who hold contracts under schedule 70 of the General
Services Administration Federal Supply Schedule (FSS). Prospective vendors
were informed that the agency intended (but did not guarantee) to place an
initial order for approximately 15,000 computers and to purchase
approximately 60,000 computers over the base period of the BPA.
The solicitation informed vendors that quotations would be evaluated on
the basis of four factors: proposed workstation and laptop products,
technical/management proposal, past experience/past performance, and
"total evaluated price," and that award would be made on the basis of a
price/technical tradeoff. RFQ, Evaluation Factors, at 1-2. With respect to
the price evaluation factor, the solicitation provided a pricing table, on
which vendors were to provide their FSS contract unit prices, their prices
offered under this BPA, and their discounts from the FSS contract prices
for each of the required computers, accessories and peripheral equipment
for each of the 3 years of the BPA's base period. The pricing table evenly
spread the agency's identified estimated quantities of desktop and laptop
computers over the 3-year base period. See RFQ amend. 4, at 6-8. Vendors
were informed that the price evaluation factor would be evaluated as
follows:
Based on the proposed DOJ [BPA] unit prices times the DOJ estimated
quantities for each line item, a Grand Total All Workstations and
Options Amount will be calculated by the Pricing Table. In reviewing and
verifying an Offeror's Grand Total Evaluated Amount, the Government may
make adjustments to the pricing table for errors and omissions, or make
other corrections as deemed necessary by the Contracting Officer. In
addition to the aforementioned adjustments, the Government may make
Price Realism adjustments to the Gran[d] Total Evaluated Amount, if the
circumstances warrant.
RFQ, Evaluation Factors, at 1.
The RFQ also provided a "technology refreshment" provision, under which
the vendor or the agency could propose or request product substitutions
for a number of reasons, including that the vendor's BPA product had been
discontinued by the manufacturer. Vendors were informed that
discounts proposed for the initial products shall apply to all
subsequent additions or substitutions, which must be compliant with the
[statement of work] requirements. If DOJ agrees to a permanent
substitution, it shall receive at least the same percentage discount
from the GSA price of the new item that it received on the original
item.
RFQ, BPA, at 11.
DOJ received quotations from a number of vendors, including World Wide and
GTSI, whose quotations along with those of two other vendors were included
in the "competitive range." Discussions were conducted and revised
quotations obtained. Agency Report (AR) at 9-11.
The final revised quotations of World Wide and GTSI, which both offered
the same Hewlett Packard desktop and laptop computer models, received the
following technical scores:
+------------------------------------------------------------------------+
| |Maximum Points | GTSI | World Wide |
|----------------------------+---------------+------------+--------------|
|Proposed Desktop and Laptop | 40 | 40 | 40 |
|----------------------------+---------------+------------+--------------|
|Technical/Management | 40 | 36 | 40 |
|----------------------------+---------------+------------+--------------|
|Experience/Past Performance | 20 | 15 | 18 |
|----------------------------+---------------+------------+--------------|
|TOTAL | 100 | 91 | 98 |
+------------------------------------------------------------------------+
AR, Tab 13, Source Selection Recommendation Report, at 5. These numerical
ratings reflected the evaluators' judgment that both firms had submitted
"outstanding" quotations with a number of strengths and no weaknesses or
deficiencies. See AR, Tab 16, Technical Evaluation Report, at 13-15,
20-22.
The firms' quoted prices were evaluated under three pricing scenarios: (A)
where the estimated requirements were spread evenly over the 3-year BPA
period (as provided in the solicitation's pricing table); (B) where 67
percent of the estimated requirements were obtained in the first year and
the remainder in the second year; and (C) where all of the estimated
requirements were obtained in the first year of the BPA.[1] World Wide's
and GTSI's evaluated prices under the three scenarios were found to be:
+------------------------------------------------------------------------+
| Scenario | GTSI | World Wide |
|-----------------+---------------------------+--------------------------|
| A | $42,331,130 | $47,394,500 |
|-----------------+---------------------------+--------------------------|
| B | $55,253,560 | $56,538,000 |
|-----------------+---------------------------+--------------------------|
| C | $63,110,670 | $62,179,500 |
+------------------------------------------------------------------------+
AR, Tab 13, Source Selection Recommendation Report, at 5.
The evaluators recommended to the source selection official (SSO) that the
BPA be awarded to GTSI because they concluded that World Wide's point
advantage did not reflect a significant technical advantage and that World
Wide's evaluated price was only low under the third scenario, which the
evaluators concluded was unlikely to occur. Id. at 7.
The SSO accepted the evaluators' judgment that World Wide and GTSI had
submitted outstanding quotations. With respect to the technical/management
factor, the SSO found that World Wide's point score advantage did not
reflect any "significant differences" between the firms' quotations. The
SSO viewed World Wide's point score advantage under the experience/past
performance factor as "slight." AR, Tab 6, Source Selection Decision, at
5.
With respect to the firms' evaluated prices, the SSO stated that, although
both firms quoted "deep discounts" to their schedule contract prices, GTSI
was more aggressive than World Wide with respect to that firm's pricing
for the second and third year of the BPA, and that was the reason that
GTSI's evaluated price was determined to be lower under scenarios A and B.
The SSO also determined that, although World Wide's evaluated price was
lower than GTSI's price under scenario C (which reflected the agency's
purchase of all its estimated quantities in the first year of the BPA),
this scenario was "most unlikely." This was so because the various DOJ
components that will place orders under the RFP have a range of buying
cycles that cover the 3-year contract period beyond the first year. Id. at
6.
Besides the above scenarios, the SSO considered the firms' proposed prices
under a number of additional scenarios, in which, under the BPA technology
refreshment provision, the desktops and/or laptops would be replaced by
newer equipment. The SSO stated that although "[i]t is a common accepted
fact that computer technology prices fall over time as new products are
introduced to the market," it is possible that substituted equipment could
be offered, accepted, and priced at the higher first year BPA prices, and
not at the lower prices quoted for the second and third years of the BPA.
Id. According to the SSO, this could happen because the BPA's technology
refreshment provision mandates that the original offered discounts must be
applied to substituted equipment. The SSO stated that he determined, from
his own research done on the internet, that Hewlett Packard had announced
a replacement for the desktop computer model offered by both World Wide
and GTSI, and that therefore there was a reasonable possibility that the
desktop model would be "tech refreshed out" before the third year of the
BPA. The SSO determined, however, that the laptop computer models quoted
by the two firms had only recently been put on the market and that there
was a reasonable possibility that these models would still be in
production and available in the third year of the BPA base period. Thus,
under the additional scenarios considered by the SSO to account for
possible substitution, the SSO first calculated the firms' evaluated
prices for the desktop computer models for the first year of the BPA as
applicable to the estimated quantities for total 3-year BPA contract,
based on the assumption that if desktops were substituted it would be at
prices equivalent to the BPA's first year prices.[2] Added to this figure
were the prices for laptops, calculated consistent with scenarios A and B,
based on the assumptions that either the estimated quantities of the
laptops would be purchased in even quantities over the 3-year BPA term, or
67 percent of the laptops would be purchased in the first year and
33 percent in the second year. Under each of these additional scenarios,
GTSI's evaluated price was determined to also be lower than World Wide's
evaluated price. Id. at 6-7.
The SSO selected GTSI's quotation for award, based upon his determination
that GTSI's quotation provided the lowest evaluated price in almost all
situations, with the exception of one scenario that the SSO believed was
unlikely to occur, and that GTSI's evaluated price advantage outweighed
World Wide's "slight" advantage under the experience/past performance
factor. Id. at 5-7. The BPA was awarded to GTSI, and, following a
debriefing, this protest was filed.
World Wide challenges the SSO's price analysis, complaining that his
analysis did not consider that the laptop computers would likely also be
"technically refreshed" during the BPA's term. In this regard, World Wide
contends that information available from the manufacturer would have
established the laptop computer models (offered by both GTSI and World
Wide) would also become unavailable after the first year of the BPA.
Because both the desktop and laptop computers will assertedly likely be
technically refreshed during the BPA's base period, the protester argues
that, in calculating the vendors' evaluated prices, the SSO should have
considered the firms' first year prices as reflecting the "realistic"
prices quoted by the firms. See Protester's Comments at 5. Such a
calculation is equivalent to scenario C, under which World Wide's
evaluated price would be lower than that of GTSI's.
Where, as here, a solicitation provides for the establishment of a BPA on
a fixed--price basis, "realism" of vendors' proposed pricing is not
ordinarily considered. See Systems, Studies, and Simulation, Inc.,
B-295579, Mar. 28, 2005, 2005 CPD para. 78 at 6. However, an agency may
provide for a price realism analysis in a solicitation that contemplates
the issuance of a BPA against the vendors' FSS contracts for the limited
purpose of measuring vendors' understanding of the requirements or to
assess the risk inherent in a vendor's quotation. See OMNIPLEX World Serv.
Corp., B-291105, Nov. 6, 2002, 2002 CPD para. 199 at 9; PHP Healthcare
Corp., B-251933, May 13, 1993, 93-1 CPD para. 381 at 5. The nature and
extent of such a price realism analysis ultimately are matters within the
sound exercise of the agency's discretion, and our review of such an
evaluation is limited to determining whether it was reasonable and
consistent with the solicitation's evaluation criteria. Citywide Managing
Servs. of Port Washington, Inc., B-281287.12, B-281287.13, Nov. 15, 2000,
2001 CPD para. 6 at 4-5. A price realism analysis, if conducted, may
affect the technical evaluation, but cannot properly lead to adjustment of
the firms' fixed prices. See Verestar Gov't Servs. Group, B-291854,
B-291854.2, Apr. 3, 2003, 2003 CPD para. 68 at 6 n.3.
The agency's analysis of the firms' quoted pricing here was apparently to
assess quotation risk focusing on the possible impact of technical
refreshment during the BPA base period on the vendors' prices. The
protester does not contend that this basic methodology was insufficient,
but for the reasons stated above contends that the agency improperly
analyzed the results of the scenarios.
As explained below, the protester's arguments provide us with no basis to
object to the agency's analysis of the vendors' quoted pricing. The SSO
analyzed the vendors' quoted prices under a number of scenarios, including
the agency's consideration of the "technology refreshment" of the firms'
proposed desktop computers. Under all but one of these scenarios, a
scenario not likely to occur, GTSI's evaluated prices were lower than that
quoted by World Wide.
Contrary to the protester's arguments that the agency did not reasonably
consider that the laptop computer models might not be available throughout
the BPA base term, we find that the SSO did in fact do so. That is, the
SSO considered whether the laptop computers would be subject to
"technology refreshment" and concluded from the information that was
before him that the laptops would likely be available through the third
year of the BPA. In this regard, SSO performed his own research on the
internet, which indicated to him that the laptop computer models were
relatively new and not likely to soon be replaced by new models. AR, Tab
6, Source Selection Decision, at 6. The protester has provided life-cycle
charts for the laptop computer models offered by the two firms, which its
states it obtained from Hewlett Packard, that purportedly shows that the
laptop computers could not be ordered after October 2007. See Protest exh.
4; Protester's Comments, exh. 5. World Wide argues that this information
was readily available from Hewlett Packard. However, the protester has
failed to show how the agency would have been aware of this information or
would know to inquire of the manufacturer as to when the laptop computers
would be discontinued. In this regard, the protester has also not provided
any statements or other evidence from the manufacturer to support its
arguments. Moreover, we note that the protester's quotation included no
information indicating to DOJ that the laptop computer models offered by
World Wide (the same models offered by GTSI) would become unavailable or
would be subject to "technology refreshment" before the end of the BPA's
term.
We deny the protest.
Gary L. Kepplinger
General Counsel
------------------------
[1] The agency's evaluation plan provided that, as part of the source
selection recommendation report, a number of different pricing scenarios
would be calculated "to test the unit prices proposed across a range of
possibilities." AR, Tab 33, Evaluation Plan, at 7.
[2] We are unsure of the basis for the assumption that first year prices
are the proper way to evaluate the "realistic" prices for computers that
will likely be refreshed during the BPA's 3-year base period. However, the
protester has raised no concerns in this regard and has adopted this
methodology in its protest asserting that its quotation should have been
considered as having a lower "realistic" price.