TITLE: B-299044; B-299044.2, Global Communications Solutions, Inc., January 29, 2007
BNUMBER: B-299044; B-299044.2
DATE: January 29, 2007
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B-299044; B-299044.2, Global Communications Solutions, Inc., January 29, 2007

   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: Global Communications Solutions, Inc.

   File: B-299044; B-299044.2

   Date: January 29, 2007

   Ronald K. Henry, Esq., Kevin S. Donohue, Esq., and John L. Bowles, Esq.,
   Kaye Scholer LLP, for the protester.

   Gerald H. Werfel, Esq., Pompan, Murray & Werfel, PLC, for Globecomm
   Systems, Inc., an intervenor.

   Robin Ray Coll, Esq., Department of the Navy, Naval Air Systems Command,
   for the agency.

   Linda C. Glass, Esq., and Glenn G. Wolcott, Esq., Office of the General
   Counsel, GAO, participated in the preparation of the decision.

   DIGEST

   Protest is sustained where agency had no authority to use small purchase
   procedures to acquire a commercial item because the anticipated contract
   value was in excess of $5 million, contrary to applicable regulation
   limiting use of these procedures to purchases at or below $5 million.

   DECISION

   Global Communications Solutions, Inc. (GCS) protests the issuance of a
   delivery order to Globecomm Systems, Inc. (GSI) under request for
   quotations (RFQ) No. 0010181342, issued by the Department of the Navy,
   Naval Air Systems Command for a quantity of satellite communications
   systems capable of time division multiple access operation. GCS protests,
   among other things, that issuance of the delivery order was inconsistent
   with the solicitation provisions and contrary to statute and regulation.

   We sustain the protest.

   BACKGROUND

   The RFQ, issued on August 24, 2006 under a combined synopsis/solicitation
   for a commercial item, was issued as a total small business set-aside
   using simplified acquisition procedures pursuant to the authority of
   Federal Acquisition Regulation (FAR) Subpart 13.5, captioned "Test Program
   for Certain Commercial Items." In this regard, the solicitation stated
   that the applicable provisions and clauses of the FAR were "those in
   effect through [FAR] Federal Acquisition Circular (FAC) 2005-12." RFQ at
   2.[1] Thus, the then-applicable provisions of FAR Subpart 13.5 stated:
   "This subpart authorizes, as a test program, use of simplified procedures
   for the acquisition of supplies and services in amounts greater than the
   simplified acquisition threshold but not exceeding $5 million."
   FAR sect. 13.500 (FAC 2005-06). Similarly, the then-applicable provisions
   of FAR Subpart 13.0 stated: "The contracting officer shall not use
   simplified acquisition procedures to acquire supplies and services if the
   anticipated award will exceed . . . $5 million . . . including options,
   for acquisitions of commercial items using Subpart 13.5." FAR sect. 13.000
   (FAC 2005-06).

   In preparing for this acquisition, the agency acknowledges that it
   initially intended to acquire the solicited items on a sole-source basis
   from GSI and that, in connection with that planned sole-source
   acquisition, the agency estimated the acquisition value to be [DELETED] an
   amount based on "quotes previously obtained from GSI." Agency Report (AR),
   Tab 6, Price Reasonableness Memorandum, at 3. Nevertheless, the agency
   asserts that, in light of its determination to compete the requirements,
   "it was reasonable to expect the eventual cost to drop below $5 million
   due to the introduction of competition." Id.

   On September 8, the agency received quotations from seven vendors. Five of
   the seven vendors, including GCS, submitted quotations that were less than
   the applicable $5 million threshold;[2] the agency evaluated each of these
   five quotations as technically unacceptable.[3] Two of the seven vendors,
   including GSI, submitted quotations that were higher than the $5 million
   threshold;[4] the agency evaluated GSI's technical submission as "highly
   satisfactory"[5] and the other vendor's quotation that exceeded the $5
   million threshold as "satisfactory."

   On September 28, FAR Subpart 13.5 was revised, authorizing an increase in
   the applicable threshold to $5.5 million. FAR Subpart 13.5 (FAC 2005-13).
   However, the agency did not amend this solicitation's provision that
   applicable FAR provisions "are those in effect through . . . FAC 2005-12,"
   that is, the solicitation was not amended to include any reference to FAC
   2005-13, nor did the agency permit the subsequent submission of revised
   quotations.

   Thereafter, the agency issued a delivery order to GSI in the amount of
   [DELETED]. The agency asserts that, "As this award was made on October 19,
   2006, it did not violate the statutory or regulatory threshold." AR at 14.

   DISCUSSION

   GCS protests, among other things, that the agency improperly issued the
   delivery order to GSI in an amount exceeding the applicable $5 million
   limitation, as reflected in the terms of the solicitation against which
   GCS submitted its quotation.

   Under the terms of FAR Part 13 applicable to this solicitation, the
   contracting officer was not authorized to use simplified acquisition
   procedures to acquire supplies and services when the anticipated award
   exceeded $5 million. We are unpersuaded that the agency had a reasonable
   expectation that, "due to the introduction of competition," the value of
   this acquisition would decrease below $5 million. Nothing in the record
   indicates that the agency conducted any market survey or Internet product
   search to support its view that the required items could be purchased at a
   price below the $5 million threshold. To the contrary, the only documented
   research performed by the agency, conducted in connection with the planned
   sole-source award to GSI, indicated that the procurement value was
   [DELETED].[6] AR, Tab 6, Price Reasonableness Memo, at 3. In short, the
   record shows that the agency's estimated value of this acquisition was in
   excess of $5 million, yet the agency proceeded with this procurement on
   the basis of authority that had application only to acquisitions below $5
   million.

   Further, the record indicates that the agency's violation of the
   applicable FAR Part 13 provisions prejudiced GCS. GCS maintains that, had
   the agency amended the solicitation to place vendors on notice of its
   intent to proceed pursuant to the $5.5 million threshold, GCS would have
   added additional enhanced features to its product, just as GSI did in its
   quotation that exceeded the $5 million threshold, and that GCS's
   enhancements would have led the agency to conclude that GCS's quotation
   reflected the best value to the government. Protester Comments, Dec. 11,
   2006, at 19-21. In this context, GCS states that it considered the $5
   million threshold in FAR Part 13 to constitute a ceiling on its quotation.
   Id. We view GCS's understanding in this regard to be reasonable.

   The protest is sustained.

   RECOMMENDATION

   The record indicates that the agency's needs are inconsistent with a $5
   million threshold and, if simplified acquisition procedures continue to be
   used, that the agency's needs can only be met pursuant to the higher
   threshold established in FAC 2005-13. Assuming that the agency intends to
   continue using simplified acquisition procedures, we recommend that the
   agency amend the solicitation to incorporate the revised FAR provision,
   and allow all previously competing vendors to submit revised quotations.
   [7] Upon receipt of the revised quotations, the agency should select the
   vendor's quotation representing the best value to the government,
   consistent with the amended solicitation. If a quotation submitted by a
   vendor other than GSI is selected as representing the best value to the
   government, the agency should terminate GSI's delivery order and issue an
   order to that other vendor. We also recommend that the agency reimburse
   the protester for its costs of filing and pursuing the protest, including
   reasonable attorneys' fees. Bid Protest Regulations, 4 C.F.R. sect.
   21.8(d)(1) (2006). The protester should submit its certified claim,
   detailing the time expended and costs incurred, directly to the
   contracting agency within 60 days of receiving this decision. 4 C.F.R.
   sect. 21.8(f)(1).

   Gary L. Kepplinger
   General Counsel

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

   [1] FAC 2005-12 was issued on August 4, 2006, and represented the most
   current FAR revisions at the time the solicitation was issued.

   [2] These five quotations ranged from [DELETED]. GCS submitted a quotation
   of [DELETED]. AR, Tab 5, Source Selection Authority Approval, at 1.

   [3] The solicitation listed several specific technical requirements,
   provided for a "best value" determination on the basis of the agency's
   evaluation of technical approach, past performance, and price, and stated
   that technical approach and past performance, when combined, were
   significantly more important than price.

   [4] GSI submitted a quotation of [DELETED]; another vendor submitted a
   quotation of [DELETED]

   [5] The documentation supporting the agency's technical evaluation of
   GSI's quotation stated: "The vendor meets all of the requirements and has
   provided several enhancement[s] that provide for a more efficient and
   reliable design." AR, Tab 3, Source Selection Evaluation, at 1.

   [6] The reasonableness of the agency's estimate that the value of the
   procurement would exceed $5 million is buttressed, after the fact, by the
   agency's own evaluation record in which it assessed every one of the five
   quotations that were priced below $5 million as technically unacceptable.

   [7] In light of the indications in the record regarding the agency's
   needs, along with our recommendation that the agency amend the
   solicitation to reflect the higher threshold, our decision here does not
   address whether the agency properly evaluated GCS's quotation, submitted
   pursuant to the lower threshold, as technically unacceptable.