ABCD __________________________ DENIED: July 7, 1992 __________________________ GSBCA 11817-P CODAR TECHNOLOGY, INC., Protester, v. DEPARTMENT OF THE ARMY, Respondent. Thomas P. Humphrey and Gena E. Cadieux of Davis, Graham & Stubbs, Washington, DC, counsel for Protester. Ronald P. Cundick, Charles R. Marvin, Jr., and Sophia L. Rafatjah, Department of the Army, Arlington, VA, counsel for Respondent. Before Board Judges HYATT, WILLIAMS, and VERGILIO. VERGILIO, Board Judge. On May 1, 1992, Codar Technology, Inc., filed with the Board this protest, which it amended on May 22, contending that the respondent, the Department of the Army, is improperly satisfying its requirement for laptop computers, related equipment and services. Protester recognizes that the agency has a pre- existing cost-plus-award-fee contract with ARC Professional Services Group, Inc. and that ARC is procuring the items after ARC issued a request for quotations to which protester did not respond. However, protester contends that the agency's use of the ARC contract amounts to an unjustified sole-source procurement and modification beyond the scope of that contract, and that the agency lacks the procurement authority to obtain the items through ARC. Protester maintains that the agency must obtain competition to satisfy its true requirements for which protester would compete. The agency has moved to dismiss the protest for lack of jurisdiction. It maintains that the protested acquisition was conducted by ARC, an independent contractor, not the agency. It concludes that because the agency neither issued a solicitation nor purchased the items, the Board lacks jurisdiction under U.S. West Communications Services, Inc. v. United States, 940 F.2d 622 (Fed. Cir. 1991). The parties agreed to conduct discovery on matters affecting the motion and merits of the protest, and alleviate the need for multiple hearings and briefs. The allegations of protest address the actions and inactions of the agency, not the contractor. Protester contends that the acquisition of laptop computers is subject to the Brooks Act and competition requirements, as well as this Board's jurisdiction. The Board has jurisdiction to decide whether or not the procurement is outside the scope of the ARC contract. Accordingly, the Board denies the agency motion to dismiss. On the merits, protester has not established that the acquisition of laptop computers is outside the scope of the ARC contract. The specifications of that contract--in terms of technical requirements and line items for computer purchases-- encompass the actual acquisition of laptops. Thus, the Board denies the related issues of protest. The agency has lacked a valid delegation of procurement authority to obtain computers under the ARC contract. However, protester is not an interested party to pursue solely that issue. Findings of Fact ARC contract 1. With an award date of September 28, 1990, the agency entered into a cost-plus-award-fee contract with ARC based on a competitively negotiated procurement issued on December 15, 1989. In addition to a phase-in period and basic contract running through September 30, 1991, the contract has four one-year options. Protest File, Exhibit 1, Amendment Two, at B-1 to B-9. The contract contains a Buy American Act provision. Id., Exhibit 1, at I-5 ( I.51, 48 CFR 252.225-7006 (1991)). 2. Regarding the scope of the contract, the statement of work "defines the Government's requirement for non-personal services to operate the US Army's Electromagnetic Environmental Test Facility (EMETF) located at the US Army Electronic Proving Ground (USAEPG), Fort Huachuca, Arizona." Protest File, Exhibit 1 at C-1 ( C.1.1). A stated mission of EMETF is to: conduct scientific research and development (R&D) in all mission areas for the purpose of improving the quality, cost, and timeliness of adequate testing, as well as providing a capability to test state-of-the-art equipments and systems. The work required is of a highly technical nature and requires substantive and dynamic innovation and creativity on the part of the contractor. Id. 3. The contract divides the contractor's work into "four primary mission functions to be performed as tasked": (1) 3 command, control, communication, and intelligence (C3I) data base development and maintenance; (2) modeling and simulation; (3) laboratory and closed-loop hardware testing (empirical measurements); and (4) field testing of hardware (empirical measurements). Protest File, Exhibit 1 at C-2 to C-8 ( C.3). 4. Regarding modeling and simulation, the contract provides: The contractor shall perform analyses by developing or adapting models which he shall use in the simulation of C-E [Communications- Electronics] systems (including EO [Electro- Optical] systems) to evaluate expected performance of these systems in their intended electromagnetic environments. The contractor responsibilities shall include but are not limited to the modeling and simulation (M&S) of components, equipments, and systems. Protest File, Exhibit 1 at C-3 ( C.3.2). 5. A particular element of the modeling and simulation mission involves an R&D effort: The contractor shall conduct research and development of any or all of the following efforts, or others that may later be identified to support EMETF modeling, simulation, and analysis: a. Acquisition of larger and/or faster computers and the development of new computer architectures and programs that better and more efficiently simulate C3I systems and model the dynamic electromagnetic and battlefield environments in which they are intended to operate. b. Acquisition and/or development of computer automated and networked test and facility management tools, computer aided software engineering (CASE) tools, scientific and engineering development and statistical analysis tools, and document control, report generation, and publishing tools. Included in this is the development of sensitivity analysis tools which will establish whether the SUTs [systems under test] have any concept weakness, design flaws, or possible 4 difficulty in performing in battlefield environments. . . . . d. Development of methods to systematically and comprehensively analyze and evaluate C-E system or equipments, and test their performance in simulated battlefield conditions. As a second feature of this development the contractor shall develop requirements to be provided to developers for inclusion in design specifications to improve the testability of the C3I systems by introducing, at the design stage, the "test points," "hooks," or test vectors which will allow proper testing after the equipment is fabricated. e. Development of testing methodologies through which it is possible to represent (in software and/or hardware) the workings of a given equipment or system. This simulation will be used to reveal problems with concepts, specifications, or design at any point in the acquisition cycle. This method of testing will surface incompatibilities, vulnerabilities, or interface problems as well as establish possible weaknesses in performance or deployment and force mix concepts. Protest File, Exhibit 1 at C-5 to C-6 ( C.3.2.5). 6. Regarding the field testing of hardware mission, the contract provides: C.3.4.1 Conduct of Field Testing. The contractor shall perform field testing. Field testing consists of actual positioning of communications and non-communications equipments or systems in representative deployments to conduct measurements to determine EMC [electromagnetic compatibility], EMV [electromagnetic vulnerability], or performance. These deployments may be on Fort Huachuca or adjacent land, Gila Bend Arizona Government Range, or anywhere within the continental United States (CONUS) or outside CONUS (OCONUS). This type of testing is done with the equipment operating in 5 simulated/realistic operating conditions, i.e., equipments performing their intended mission, radiating RF [radio frequency] energy, carrying traffic, determining geographical position, directing simulated fire, tracking simulated enemy movement, and being interfered with or jammed. Testing may be in conjunction with Army exercises and tests, under field operating conditions. C.3.4.2 R&D Effort. The contractor shall apply the R&D efforts described in paragraph C.3.3.4 to provide the instrumentation necessary to conduct efficient and effective field tests, under field operating conditions. Protest File, Exhibit 1 at C-7 to C-8. The referenced paragraph C.3.3.4 provides, in pertinent part: The contractor shall conduct research and development of any or all of the following efforts, or others that may later be identified to support laboratory and closed-loop testing: a. Identify requirements for and develop and/or acquire instrumentation hardware and software, required to conduct the simulation, stimulation, and test measurement data collection, reduction, and analysis of C-E systems-under-test by the EMETF. . . . . c. Identify requirements for and develop and/or acquire instrumentation, or test systems, assemblages, components, or interfaces (not available from vendors) which are required for control of hardware testing. The development work will focus on the design/adaptation/modification of the interfaces required for test systems instrumentation, test jigs, special test controllers (i.e., mini or microprocessors) or special simulators (i.e., RF generators, interferers, mixers, attenuators, waveform generators), signal acquisition equipments, data collection equipments, data recording, data analysis, and data displays. 6 Id. at C-7. 7. One special contract requirement, pertaining to the cost-plus-award fee contract, states: G&A, Profit, Base, and Award Fees on the EMETF Supplies and Equipment. (1) The acquisition of any equipment, facilities, computers, test equipment, software, EMETF supplies, including the efforts related to the acquisitions (i.e., planning, requirements analysis, writing of specifications, cost analysis, contracting with a subcontractor for supplies, transportation, installation, testing and acceptance, spare parts, follow-on maintenance, and development of operational plans), shall all be considered as part of the normal work/functions of the contractor personnel at the EMETF. Therefore, no profit, base fee, or award fee is to be charged to these acquisitions whether directly or through subcontracts. The quality of the acquisitions or subcontracting, and the efforts of the S/E and subcontracting specialist are a factor in any award fee consideration in the same way as any product delivered by the contractor. (2) Contractor acquisition of capital equipment shall be done only when specifically directed/authorized by the government. However, acquisition of day-to- day operational supplies will be controlled by the contractor. All Purchase Orders or subcontracts in excess of $2,500 shall be subject to the prior approval of the Contracting Officer. Protest File, Exhibit 1 at H-13 to H-14 ( H.22--52.200-4218). 8. For each of the base and option years, the solicitation and contract contained cost reimbursable line items which are non-fee bearing. Included in these line items are the following at the indicated yearly estimated amounts, as of the time of award: Item Base Year 1st Option Computer Hardware & Software $1,140,000 $1,818,000 ADPE Services $ 39,000 $ 101,000 7 Computer Maintenance $ 220,000 $ 268,000 Computer Supplies $ 50,000 $ 59,600 Total of four items $1,449,000 $2,246,600 Total of all cost- reimbursable items $3,225,000 $4,391,880 Protest File, Exhibit 1, Amendment Two at B-1 to B-9. A yearly comparison of the estimated costs for the total of the four items to all cost reimbursable items reveals the following: contract year four items all cost reimburs. Basic year $ 1,449,000 $ 3,225,000 first option $ 2,246,600 $ 4,391,880 second option $ 3,052,944 $ 6,265,875 third option $ 4,023,063 $ 7,361,070 fourth option $ 3,257,984 $ 6,182,554 TOTAL $14,029,591 $27,426,379 Id. The contract also encompasses other costs, for services and fees. Id. 9. Throughout the first year the agency issued contract modifications which provided incremental funding to the contract, and specified how the obligated funds were to be allocated among the line items. Protest File, Exhibit 2. Some modifications also altered the estimated costs for the various line items, including the four computer-related items noted above, Finding 8. Id., Modifications 18, 20, 22, 24. 10. On September 20, 1991, the agency and ARC modified the contract to restructure the line item elements for the option years. The modification became effective on October 1, 1991. Of the cost reimbursable line items, two (computer hardware and software, and special test items and instrumentation) were consolidated into one, while the remainder were consolidated into a separate line item. The restructuring did not alter the overall contract amount. Protest File, Exhibit 2, Modification 22. 11. On September 30, 1991, the agency exercised the first- year option on the ARC contract. Protest File, Exhibit 2, Modification 25. EPLRS and Test Control Concept 12. A mission at the Electronic Proving Ground EMETF involves the enhanced position locating and reporting system (EPLRS) which is utilized on a battlefield. Using EPLRS, individuals know their precise location and the locations of others. Additionally, EPLRS may have a data handling capability, which can link together key battlefield computers. Transcript at 8 138-39. This is accomplished by using EPLRS user units (EPUUs), e.g., radio sets, which receive and send data and position information across a battlefield. Transcript at 54. 13. Test item stimulators (TISs) are used to test various systems. A TIS is a collection of hardware, software and communication components that allows one to stimulate a system by injecting a message set into the system so that it responds as if it is in an actual operating environment. In testing EPLRS, TISs interact with EPUUs which are positioned in the field. The software will include three parts: a pre-test portion (scenario generation); a real time or system specific applique (inject traffic one expects to see); and a post-test portion (reduce and analyze data collected during real time phase). Transcript at 54, 95, 113-14. 14. TISs exist with a variety of computer hardware platforms. As technology has progressed, the size of the necessary hardware has been reduced while the speed and capabilities have been enhanced. The hardware has gone through a progression from that occupying a van (van-TIS), to utilizing a micro VAX, to lightweight computer units, to laptop computers. Transcript at 55-56, 100-01, 114-15. 15. The testing of systems has also been evolving. ARC was the principal contractor which developed the test control center (TCC) concept (first prototyped in the fall of 1991). Transcript at 59-60, 95. Under the TCC concept, central computers utilize radio or other transmission media to send commands to, and receive information from, TISs. A function of the TCC is to provide real-time test control capabilities, thereby allowing a test director continuously to view the status of a test, rapidly identify problems as they occur, halt the test, correct problems and restart the test, while reducing wasted efforts. Control is accomplished remotely, with synchronization and coordination not possible with human operation. The TCC permits tests to be run with greater accuracy, effectiveness, efficiency, and reliability, and with fewer human resources. Id. at 58, 85-86, 92-95, 163-64; Protest File, Exhibit 30 at 9-10 ( 9.e). 16. The TCC concept has been and will be utilized to test other battlefield systems. Transcript at 61-64. In September 1991, the agency tasked ARC to prepare time and labor estimates for TCC support for EPLRS technical testing. Protest File, Exhibit 10. In December 1991, the agency determined that, under its contract, ARC would work out the design for implementing the TCC concept in the EPLRS testing. Id., Exhibit 14; Transcript at 96. Acquisition of laptops 17. As of December, the plans were for other than laptops to be utilized with TISs in the TCC support of EPLRS testing. 9 Protest File, Exhibit 49, Stipulated Facts ( 3); Transcript at 165-66 (plan to utilize GRID TISs). In the ensuing three months, alternatives in the hardware platform were explored to obtain the necessary computing power and other technical and physical requirements. The agency, with the input of ARC and others, determined that laptops would be utilized to interface with the EPLRS TCC. Id., Exhibits 14-17; Transcript at 92, 98-101, 119, 141. Utilizing the laptops and TCC concept, EPLRS would be tested to demonstrate its ability to handle representative levels of traffic under various scenarios. Transcript at 154-56; Protest File, Exhibit 30 at 3-4 ( 2), 7 ( 8). 18. A contracting officer representative (COR) letter of direction accompanied by a capability requirements work order, both dated March 20, 1992, directs ARC to purchase 150 laptop computers satisfying identified specifications. The letter of direction states that the laptops are to be deliverables under the ARC contract, and are to be used in conjunction with the EPLRS TCC that ARC is currently developing. Protest File, Exhibit 17. The work order states that "[r]equired delivery is the most important factor determining which of the four technically acceptable ruggedized laptop computers will meet our needs." Id. 19. Initially, ARC issued to five companies a request for quotations (RFQ) on laptops satisfying the given requirements. At the request of protester, ARC provided a copy of the RFQ to protester. Transcript at 198. After receiving responses to the RFQ, ARC selected a company to provide the KONTRON IP Lite laptop computer. Protest File, Exhibit 23a. 20. ARC prepared a purchase order, dated April 6, 1992, to obtain the laptops and related material. Protest File, Exhibit 23b. An agency COR approved the order on April 7, and the agency contracting officer on the ARC contract approved it on April 21. Id., Exhibit 23c; Transcript at 181. 21. Title to any laptop computers delivered to ARC will vest in the Government pursuant to the ARC contract. Protest File, Exhibit 49, Stipulated Facts ( 13). 22. The agency plans to utilize the laptop computers directly for testing of military electronic systems and equipment. In addition to ARC personnel, contractors other than ARC will utilize the laptop computers for EPLRS testing and for testing of other military electronic systems and equipment. Protest File, Exhibit 49, Stipulated Facts ( 14-15). 23. The acquisition of the laptop computers does not require a change in the ARC contract price or deviation from the initial estimates for acquisitions. Transcript at 178-79. 10 Delegation of procurement authority 24. The agency has not obtained a specific delegation of procurement authority (DPA) from the Administrator of General Services for its procurement with ARC, and has not obtained a DPA related to the purchase of the laptop computers. Protest File, Exhibit 49, Stipulated Facts ( 16); Transcript at 182-83. Protester 25. Protester did not submit a proposal or otherwise attempt to obtain the contract ARC was awarded. Transcript at 45. 26. In effect from prior to ARC obtaining its contract through the present, protester has been a contractor to the agency under a requirements contract to provide small enhanced terminals, that is, microcomputers meeting specified requirements. Protest File, Exhibits 3 and 49, Stipulated Facts ( 2); Transcript at 27-28. 27. By letter dated March 29, 1992, protester submitted to the agency a request to alter the equipment available under its requirements contract. It sought to provide the KONTRON IP Lite. Protest File, Exhibit 19. In its request, protester makes no mention of any implications regarding the Buy American Act provision in its contract; a provision which is identical to that in the ARC contract. Id., Exhibits 3 at I-4 ( I.42), 19; Finding 1. The agency did not modify protester's contract. Protest File, Exhibits 20-22. By letter dated May 1, the agency expressly informed protester: "Your contract, as written, does not satisfy the government's current requirements." Id., Exhibit 22. 28. Protester obtained a copy of the request for quotation issued by ARC. Finding 19. Protester did not submit a quotation, but recommended that the purchase be implemented under its contract. Protest File, Exhibits 22, 23a. Discussion Agency motion to dismiss for lack of jurisdiction The agency contends that the protest must be dismissed for lack of jurisdiction because an independent contractor, ARC, not the agency, conducted the procurement. Citing U.S. West Communications Services, Inc. v. United States, 940 F.2d 622 (1991), the agency contends that the Board's jurisdiction is grounded on the existence of a solicitation or purchase of automatic data processing equipment by a federal agency and a decision by a contracting officer regarding that procurement. 11 A protest before the Board is defined as: a written objection by an interested party to a solicitation by a Federal agency for bids or proposals for a proposed contract for the procurement of property or services or a written objection to a proposed award or the award of such a contract. 40 U.S.C. 759(f)(9)(A) (1988) (emphasis added). A protester may challenge "any decision by a contracting officer alleged to violate a statute or regulation." Id. 759(f)(1). Protester here objects to the determination and related actions by the contracting officer not to issue a separate solicitation to obtain the laptop computers. Protester maintains that utilizing the ARC contract is improper, because such constitutes a modification beyond the scope of that contract and amounts to an unjustified sole-source procurement. Moreover, protester contends that the agency lacks the procurement authority to obtain the laptop computers. Unlike the situation underlying U.S. West, protester is not challenging any actions or inactions of ARC, the contractor. Protester's focus is on the actions (and inactions) of the agency contracting officer. The agency has not issued a solicitation separately to compete the requirement for laptop computers. Although statute defines a "protest" as a written objection to "a solicitation by a Federal agency," to construe the statute as restricting Board jurisdiction to agency actions in situations where the agency has issued a solicitation would run contrary to the present statutory language. Such a literal interpretation as espoused by the agency results in limiting the Board jurisdiction to situations more restrictive than procurements "conducted under" the Brooks Act, 40 U.S.C. 759(h)(1) (Supp. III 1985)--a construction superseded by the change resulting in the existing language.[foot #] 1 Protester raises issues of protest different from those addressed in U.S. West. The issues come within the jurisdiction of this Board. ----------- FOOTNOTE BEGINS --------- [foot #] 1 The agency's interpretation would permit an agency to award a contract on a sole-source basis without issuing a solicitation, and so preclude interested parties from seeking redress at this Board. The change in the statute envisioned the Board having jurisdiction over such situations. ----------- FOOTNOTE ENDS ----------- 12 Merits Protester raises four counts of protest: (1) The agency has engaged in a prohibited sole-source procurement by modifying beyond its scope the agency contract with ARC, thereby violating 10 U.S.C. 2304 (1988). (2) The agency has failed to obtain competition for the requirements here at issue, thereby violating statute, 10 U.S.C. 2304 and 40 U.S.C. 759(g) (1988), and has failed to follow regulatory requirements relating to procurements of a specific make and model. (3) The agency failed to furnish a notice for publication in the Commerce Business Daily revealing its intent to enter into a sole-source contract, and that it had amended the ARC contract to satisfy its requirements, thereby violating 41 U.S.C. 416. (4) The agency failed to obtain a delegation of procurement authority to acquire its requirements here at issue, thereby violating statute, 40 U.S.C. 759, and regulation 41 CFR Part 201-39. Scope of ARC contract Underlying the first three issues of protest is the allegation that the acquisition of the laptop computers is outside the scope of the ARC contract. For the following reasons, protester concludes that the purchase of computers for use in the creation of test item stimulators (TISs) is outside the scope of the ARC contract: (1) historically, the agency has procured production quantities of TISs and TIS components through direct federal procurements; (2) hardware purchases under the ARC contract are explicitly limited to equipment for the EMETF; and (3) ARC lacks authority under its contract concerning research and development and field testing to purchase commercial, off- the-shelf items for use as multi-purpose testing equipment by the agency and other contractors. Protester Post-hearing Brief at 2- 3. Protester fails to meet its burden of proof to justify its restrictive interpretation of the ARC contract. The contract expressly encompasses the modeling and simulation of components, equipment, and systems. It envisions field testing of hardware and various systems. Findings 3-6. An element of performance is the acquisition of instrumentation and test systems, with express references to computers. Findings 6-7. Particular contract line items also estimate costs for the acquisition of computer hardware and software. Finding 8. Protester has not demonstrated that the agency has altered any estimated amounts under the ARC contract in order to effectuate the laptop acquisition; that is, the ARC contract has not been modified to permit the laptop acquisition. The indicia of the contrary interpretation proffered by protester are insufficient to overcome the language of the contract. Protester maintains that the agency had been procuring 13 the computer hardware platforms to run the TISs through requirement contracts such as the one it had with the agency. However, the record does not indicate an identity of requirements; it suggests the contrary with respect to protester's contract, as protester unsuccessfully attempted to modify its contract to include the particular laptops actually chosen. Finding 27. The language in the ARC contract, which references the acquisition of computer hardware, and the particular line items for such purchases, establish a vehicle for the acquisition of the laptop computers. Protester construes the ARC contract as being restricted to actions at a particular EMETF facility. That interpretation runs contrary to the language in the ARC contract which describes a broad range in the mission of EMETF, Finding 2, and depicts ARC's activities as transcending matters at Fort Huachuca, Finding 6. Protester contends that the ARC contract does not envision the purchase of commercial off-the-shelf equipment for use as multi-purpose testing equipment. Protester has not demonstrated how the acquisition of the laptops for use in EPLRS testing and other testing is at odds with the requirements of the ARC contract, which encompass systems under test at EMETF, and are not restricted to EPLRS testing. Findings 4-6. Protester also urges that because the laptops selected, KONTRON IP Lites, are not manufactured in the United States, and were not identified by ARC in its contract under the Buy American Act provision, the acquisition is not encompassed in the ARC contract. Given the nature of the ARC contract, with its inherent uncertainties as to the equipment to be obtained over the life of the contract on a cost-reimbursable basis, protester has not demonstrated the reasonableness of the Board drawing an inference from ARC's failure to identify these items. Additionally, protester's own actions belie such an interpretation--protester attempted to alter its requirements contract without regard to the identical Buy American Act provision. In summary, protester has failed to establish that the acquisition of the laptops is outside the scope of the ARC contract. The predicate to it prevailing on its first three issues of protest is lacking. Delegation of procurement authority Protester asserts that the agency lacked a delegation of procurement authority to enter into the ARC contract and to authorize the acquisition of the laptop computers. The agency maintains that a blanket delegation applied at the time it entered into the ARC contract, and that no further authority was required for the acquisition of the laptops. 14 Given the estimated dollar value of the hardware and software line items (without regard to support services and other computer-related line items), Finding 8, the agency should not have proceeded with the ARC procurement without a specific delegation of procurement authority. 41 CFR 201-23.104-1 (1988). However, protester has not established its status as an "interested party" to challenge the lack of a DPA. Protester has failed to demonstrate that the acquisition of the laptops constitutes a modification outside the scope of the ARC contract. Given this conclusion, protester has no remaining direct economic interest in the procurement subject to the protest. Electronic Systems & Associates, Inc., GSBCA 11291-P, 91-3 BCA 24,254, 1991 BPD 175. This does not mean that the agency should shun seeking the appropriate and necessary procurement authority to legitimately proceed with the acquisition of laptop computers. Decision The Board DENIES the agency motion to dismiss the protest for lack of jurisdiction. The Board DENIES the issues of protest premised on the assertion that the acquisition of laptops was outside the scope of the ARC contract. Given this conclusion, protester no longer is an interested party simply to pursue the issue regarding the agency's lack of a delegation of procurement authority; the Board DISMISSES FOR LACK OF JURISDICTION that issue. The previously entered suspension of the agency's procurement authority lapses by its terms. Order (May 8, 1992). __________________________ JOSEPH A. VERGILIO Board Judge We concur: __________________________ __________________________ CATHERINE B. HYATT MARY ELLEN COSTER WILLIAMS Board Judge Board Judge