___________________________________________________________ DENIED: October 9, 1992 ___________________________________________________________ GSBCA 11963-P MCI TELECOMMUNICATIONS CORPORATION, Protester, v. GENERAL SERVICES ADMINISTRATION, Respondent, and AT&T COMMUNICATIONS, INC., Intervenor. Robert H. Koehler, Mary Beth Bosco, Judith Bartnoff, Michael J. Schaengold, Curtis V. Gomez, and James L. Lester of Patton, Boggs & Blow, Washington, DC, and Robin L. Redfield and Linda P. Armstrong of MCI Telecommunications Corporation, Washington, DC, counsel for Protester. George N. Barclay, Michael J. Ettner, Seth P. Binstock, Pamela Reiner, and Kurt Summers, Office of General Counsel, General Services Administration, Washington, DC, counsel for Respondent. C. Stanley Dees, Thomas C. Papson, Daniel E. Johnson, and Paul E. Pompeo of McKenna & Cuneo, Washington, DC; Michael R. Greene, Jonathan S. Hoak and G. Ridgley Loux of AT&T Communications, Inc., Silver Spring, MD; and David S. Cohen of Cohen and White, Washington, DC, counsel for Intervenor. Before Board Judges HENDLEY, PARKER, and HYATT. PARKER, Board Judge. In this protest, MCI Telecommunications Corporation challenges the General Services Administration's (GSA's) decision to procure "dedicated multipoint service" by modifying a GSA ten- year comprehensive FTS2000 contract. AT&T Communications, Inc., the other party to the contract, has intervened in the protest in support of GSA. MCI, which is a prospective offeror of the multipoint service, maintains that the contract modification is improper because it is outside the scope of the FTS2000 contract. Thus, according to MCI, if GSA is to obtain the services, it must do so by conducting a competitive procurement. For the reasons discussed below, we hold that the contract modification was proper; GSA's contracting officer reasonably determined that the services in question were within the scope of the FTS2000 contract. Accordingly, we deny the protest. Findings of Fact Contract Provisions 1. In December 1988, GSA awarded two ten-year telecommunications contracts known as FTS2000. The "Network A" contract was awarded to AT&T as a fixed-price, indefinite quantity contract with an estimated value of $1.3 billion and a maximum dollar limitation of $15 billion. Intervenor's Exhibit 11. U.S. Sprint Communications Company was awarded the "Network B" contract, with a maximum dollar limitation of $10 billion. 2. The solicitation described the contract generally as follows: This contract is for telecommunications services for the FTS2000 program. The FTS2000 program will replace the existing intercity switched voice Federal Telecommunications System (FTS) and provide additional and enhanced telecommunications capabilities to the Federal Government. The FTS2000 program will be mandatory for all federal agency activities subject to P.L. 89-306, as implemented by the Federal Information Resources Management Regulations (FIRMR). Protest File, Exhibit 1 at C-15. The solicitation also stated that: The FTS2000 procurement is designed to meet the following government objectives: a. To obtain a comprehensive set of telecommunication services. b. To obtain telecommunications services through two prime service contractors responsible for providing all services and network management. . . . . e. To adopt an architecture that will provide a smooth transition to an Integrated Services Digital Network (ISDN) environment when it becomes economically attractive. f. To encourage competition between the two FTS2000 services contractors as a means of ensuring continued improvements in FTS2000 services and prices.[foot #] 1 Id. at C-15-1 through C-16. 3. Section C of the contract went on to describe the six telecommunication services intended to be procured: C.1.3.1 Telecommunications Services. T h e government intends to procure the following six telecommunications services: switched voice service, switched data service, switched digital integrated service, packet switched service, video transmission service, and dedicated transmission service. This solicitation describes these services, as well as specific features of these services that the government is likely to procure. It is the government's intent that these services conform as closely as possible with those offered commercially. Protest File, Exhibit 1 at C-16. 4. Section C.2.1 described the services in a little more detail: This section defines the telecommunications services and features that comprise FTS2000. Included in this section are the specifications of these services and their features, as well as descriptions of the interfaces to FTS2000 and equipment associated with these interfaces. ----------- FOOTNOTE BEGINS --------- [foot #] 1 Clause H-14 of the contract requires GSA to conduct a recompetition between the two winning vendors in the fourth and seventh years of the contract. Thus, although AT&T now holds the Network A contract (sixty percent of the total), it will compete with U.S. Sprint in those years for the lion's share. ----------- FOOTNOTE ENDS ----------- C.2.1.1 Services. The contractor shall provide the following services: a. Switched voice service for the transmission of voice or data for data speeds to 4.8 kilobits per second (kbps) b. Switched data service for the transmission of data in a digital format at 56 kbps and 64 kbps c. Switched digital integrated service for the digital transmission of voice, data, image, and video at transmission rates of up to 1.544 megabits per second (Mbps) c. Packet switched service for the transmission of data in packet form e. Video transmission service for the transmission of both compressed and wideband video f. Dedicated transmission service for the point-to-point private line transmission of voice and data Protest File, Exhibit 1 at C-19. 5. This protest concerns the dedicated transmission service portion of the contract which, again, is described in greater detail later on in the solicitation: C.2.7 Dedicated Transmission Service Dedicated transmission service includes analog, digital, and T1 transmission service, as described below. Dedicated transmission service between two FTS2000 service delivery points [SDPs] whether on the same or between two FTS2000 networks, shall be provided from SDP to SDP by the FTS2000 contractor from whom the service is ordered. The connection between the locations receiving this service shall be continuously established unless an authorized request for disconnect is received. C.2.7.1 Analog. The contractor shall provide dedicated analog transmission for (i) voice and analog data at rates up to 4.8 kbps, and (ii) voice and analog data at 9.6 kbps between two FTS2000 service delivery points. . . . . C.2.7.2 Digital. The contractor shall provide dedicated, synchronous, full duplex, totally digital, service delivery point-to-service delivery point data transmission service between FTS2000 locations. The data transfer rates shall be 9.6 kbps and 56 kbps/64 kbps (when clear channel capability is available). Protest File, Exhibit 1 at C-57. 6. The solicitation explained that "[s]ervice and feature requirements are provided in this solicitation to enable offerors to prepare price and technical proposals, and to provide a common framework for proposal evaluations." Protest File, Exhibit 1 at C-20. Offerors, however, were encouraged, in section L.37.4.4, to offer additional features and items not identified in the price schedules provided in the RFP [request for proposals], but which the offeror normally supplies to its other customers. Id. at L-62. The same section required that such additional features and items be, among other things, "items that can be included under the general scope of this solicitation." 7. Finally, the solicitation contained the standard "Changes" clause (section I.52), and a "Service Improvements" clause (section H.16), which provided mechanisms by which additional items could be added to the contract. Clause H-16 stated in pertinent part: H.16 Service Improvements a. After contract award, the Government may solicit, and the Contractor is encouraged to propose independently, improvements to the services, features, or other requirements of the contract. These improvements may be proposed to save money, to improve performance, or for any other purpose which presents a service advantage to the Government. As part of the proposed changes, the Contractor shall submit a price proposal to the Contracting Officer for evaluation. Those proposed service improvements that are acceptable to the government will be processed as modifications to the contract. . . . . e. If a proposal submitted pursuant to this clause is accepted and applied to this contract, the equitable adjustment increasing or decreasing the contract price shall be in accordance with the procedures of the "Changes" clause. The resulting contract modification will state that it is made pursuant to this clause. Protest File, Exhibit 1 at H-24 through H-24-1. Expectations of the Offerors as to Scope 8. The FTS2000 project was first described publicly by GSA at a "pre-bidders' conference," on February 13, 1985. GSA announced that FTS2000 would provide agencies with "one-stop shopping, includ[ing] every provision of intercity services," with "continuous upgrades." Intervenor's Exhibit 18; Transcript at 606-08. These concepts were reinforced by GSA throughout the three and one-half years leading up to contract award. Transcript at 504-05, 577-78, 608-09, 666. 9. Prior to award, AT&T, Sprint and Martin Marietta, the three prime contractor offerors for FTS2000, understood that the successful vendors would provide virtually all commercially available intercity telecommunications services to the user agencies, and that the losing vendor would be essentially shut out of that business. Transcript at 577-78, 581-82, 607-09, 637, 666. 10. Protester MCI, which teamed with Martin Marietta, also shared this view. Transcript at 630-32. On October 30, 1987, MCI's FTS2000 Team Leader wrote to another MCI executive following a GSA announcement regarding FTS2000: [H]ere's what GSA said: 1. Single procurement for ten years with two winners (60-40 split). Loser is out of (at least the civilian side of) the government business. . . . . 4. Each winning vendor will have the exclusive right to sell ALL telecommunications services to the agencies on its network (i.e. such agencies cannot go outside FTS2000 to procure any service). Intervenor's Exhibit 20. 11. GSA intended, and the offerors understood, that the solicitation did not list every service which the winning vendors would be expected to provide over the life of the contract. Transcript at 494, 503-05, 537, 539-40, 579, 583-85, 609, 624-25, 664, 667-68, 720-21. The executive summary of the Martin Marietta/MCI proposal proclaimed: We have organized these partners . . . so that long-term user needs . . . will dictate the introduction of new technologies and service offerings. Protest File, Exhibit 2a at 2. 12. All three offerors proposed additional features and items in response to section L.37.4.4. See Finding 6. Specifically, all three offerors expected that dedicated multipoint was the type of service that would be added to the FTS2000 contracts at some point. Transcript at 589-90, 629, 679- 80. AT&T and Sprint offered multipoint capability under section L.37. Id. at 592-93, 669-72; Protest File Supplement, Exhibit 81; Intervenor's Exhibit 3c. Martin Marietta/MCI did not offer multipoint because it did not have the capability at that time. Transcript at 184. 13. GSA did not accept, reject or even evaluate any of the additional features or items proposed by the offerors in response to section L.37.4.4. GSA concluded that it did not have time to evaluate the additional items, and informed the offerors that it would use the responses to L.37.4.4 only as a market survey. Transcript at 541-48, 675, 724-33. GSA made no decisions as to whether any of the L.37.4.4 items were within the scope of the FTS2000 procurement, and did not intend to foreclose the addition of those items at a later date. Id. at 544, 570-71, 675, 731-33. Modification No. PS100 14. In June 1991, AT&T proposed to add analog and digital dedicated multipoint transmission service to the FTS2000 contract. Protest File, Exhibit 11. This was the same item that AT&T had proposed in response to section L.37.4.4 of the original solicitation. Transcript at 672. GSA determined that "DTS [dedicated transmission service] Multipoint is a feature enhancement to the DTS service under the contract," and was, therefore, within the scope of the FTS2000 contract. Protest File, Exhibit 13. On July 6, 1992, AT&T and GSA executed the modification. Id., Exhibit 15. 15. The pricing of the dedicated multipoint uses, with one exception, the same pricing elements, and the same prices, used for the existing FTS2000 dedicated analog and digital point-to- point services.[foot #] 2 There is one additional charge -- a ten dollar monthly "bridging" charge for each analog multipoint circuit. There is no additional charge for digital multipoint. Transcript at 380. 16. GSA estimated the incremental cost of the multipoint capability over the cost of the existing FTS2000 services to be approximately $16.8 million for the remaining term of the contract. Protest File, Exhibit 15 at 5. An independent government estimate estimated the total cost of all multipoint circuits which may be added to the contract over its remaining term to be $349 million; at trial, however, that estimate was shown to contain several faulty assumptions and other errors. Transcript at 267-78. The current value of the contract is between $5 billion and $8 billion. What is Multipoint and How Does it Relate to the Contract? 17. Telecommunications services generally are categorized as broadcast, mobile, or fixed. Transcript at 27; Protester's Exhibit 41. Fixed telecommunications services denote a stationary transmission medium and are further categorized as "switched" or "dedicated." Dedicated transmission service (the type at issue in this protest), also called private line service, refers to the fact that the transmission capacity is reserved for the user and available at all times to the user. Transcript at 29. In other words, with switched service (i.e., regular telephone service), the connection is made when you make the call and changes, depending on whom you call. Dedicated circuits, however, are always connected to the same party at the other end. 18. Existing dedicated service under the FTS2000 contract is "point-to-point," which means that the dedicated circuit connects only two points. The multipoint capability added by Modification No. PS100 uses existing FTS2000 elements to connect three or more locations together on a single dedicated circuit. ----------- FOOTNOTE BEGINS --------- [foot #] 2 As explained in the following section of this opinion, because a multipoint circuit connects more than two points, a method for determining the shortest (least cost) network transport charge is necessary. The formula or algorithm used for this purpose is the same one used for the compressed video transmission portion of the FTS2000 contract, which has included multipoint capability from the beginning. Protest File, Exhibit 1 at C-53, C-56; Transcript at 300-05, 380-82. ----------- FOOTNOTE ENDS ----------- Indeed, a multipoint circuit is essentially built from "point-to- point" links bridged together to form a multipoint circuit. Transcript at 127, 404. The analog links are bridged together by a Digital Multipoint Bridge, and the digital links are bridged together by a Multipoint Junction Unit. Id. at 333. Both of these devices are small circuit packs which have been part of AT&T's network from the beginning, although they are not "turned on" for FTS2000's current point-to-point service. Id. at 333-35. 19. Multipoint service does not involve any new transmission rates. Transcript at 329. The testing, maintenance, digital clocking, performance objectives, service intervals and service interfaces for a multipoint circuit are the same as those for a point-to-point circuit. Id. at 357-61. The delivery schedule is the same. Id. From the contractor's perspective, the only difference between a multipoint circuit and a point-to-point circuit is that the former uses the existing bridging capability to connect more than two locations, while the latter connects only two points without use of the bridging capability. Id. at 118-20, 403-04. 20. Each "bridge" on a multipoint circuit is easily programmed to permit one of the three user applications of multipoint: broadcast, broadcast polling, or conferencing. Transcript at 345-47. A user could accomplish these same applications with a number of point-to-point circuits already available under FTS2000. Id. at 153-54, 408-09. 21. Although an agency customer could, as a cost saving measure, replace a number of point-to-point circuits with a smaller number of multipoint circuits, the Government has no plans to do so at this time. Instead, GSA intends to bring a number of existing multipoint circuits, which were separately competed outside of FTS2000, under the FTS2000 umbrella. Transcript at 352. GSA made a business decision to aggregate the multipoint services with other FTS2000 services to take advantage of volume discounts and to simplify maintenance, billing and related items. Id. at 264, 374-75, 386-87, 783. Any long- distance carrier is capable of providing the multipoint circuits to the Government in essentially the same manner as AT&T intends to provide them. The carrier would simply pick up the signal from the local carrier; the long distance multipoint service would still be transparent to the user and the AT&T point-to- point circuits would not be deleted or disrupted in any way. Transcript at 132, 138, 315, 362-63. GSA has not studied the comparative costs of competing the multipoint circuits and placing them under the FTS2000 contract. 22. The Board heard expert testimony to the effect that the addition of multipoint is a new FTS2000 service, as well as testimony that multipoint is a feature or enhancement of the existing dedicated transmission service. This "battle of the experts" has succeeded in convincing us only that there is no general agreement in the telecommunications industry as to what constitutes a "service," as opposed to a "feature" or "enhancement" to a service. It seems that a telecommunications service, like beauty itself, is in the eye of the beholder. We do point out, however, that when MCI first announced the availability of its digital multipoint "service" in 1990, it described the service as "an enhancement to MCI's existing point- to-point" dedicated service. Protest File Supplement, Exhibit 70. MCI's government tariff likewise presents multipoint as a subcategory of one of MCI's "point-to-point" dedicated services. Transcript at 213-14. AT&T and Sprint tariff their multipoint capabilities the same way. Id. at 249, 252. Discussion MCI maintains that GSA unlawfully added dedicated multipoint service to the FTS2000 contract because dedicated multipoint is "a separate and independent telecommunications service" that is beyond the scope of the contract. As discussed below, we disagree. Analytical Framework Under the Changes Clause The standard Changes clause incorporated in AT&T's FTS2000 contract authorizes the contracting officer to order additional work "within the general scope of [the] contract." In protests challenging a contract modification, this Board, and the Comptroller General, have monitored the integrity of the competitive procurement process by assessing the nature and scope of the original competition. The Comptroller General's often quoted Memorex test -- whether a modification "so substantially changes the purpose or nature of a contract that the contract for which the competition was held and the contract which is to be performed are essentially different" -- is a means to that end. Memorex, 61 Comp. Gen. 42 (1981), 81-2 CPD 334.[foot #] 3 In Wiltel, Inc. v. General Services Administration, GSBCA 11857-P, 1992 BPD 201 (Aug. 4, 1992), appeal docketed, No. 92- 1474 (Fed. Cir. Aug. 18, 1992), a recent case in which the Board found a telecommunications service called "T-3" to be outside the scope of this same contract, we cited four basic factors (again, originally identified by the Comptroller General) that we will consider when evaluating whether the proposed modification was within the scope of the contract. All the parties to the instant case agree that the four factors are relevant to a scope determination here. The factors are: the degree of change in the (1) pricing of the service; (2) the schedule for delivery of the ----------- FOOTNOTE BEGINS --------- [foot #] 3 Although rulings by the Comptroller General are not binding on this Board, they nonetheless constitute "persuasive authority." Laser Digital, Inc., GSBCA 10810-P, 91-1 ___________________ BCA 23,499, 1990 BPD 373. ----------- FOOTNOTE ENDS ----------- service; (3) the type of service the contractor would need to perform; and (4) whether, during the competition, potential offerors reasonably would have expected the changed work to be within the scope of the contract, including its "Changes clause." Wiltel, slip op. at 14. We apply those same factors here. Change in the Pricing of the Service As explained in our findings of fact, existing dedicated service under the FTS2000 contract is "point-to-point," which means that the dedicated circuit connects only two points, or users. The multipoint capability added by Modification No. PS100 uses existing FTS2000 elements to connect three or more locations on a single dedicated circuit. This is accomplished by "bridging" several point-to-point circuits together to form a multipoint circuit. Finding 18. The pricing of the proposed dedicated multipoint capability uses, with one exception, the same pricing elements, and the same prices, used for the existing FTS2000 dedicated analog and digital point-to-point services. Finding 15. There is one additional charge -- a relatively insignificant ten dollar monthly "bridging" charge for each analog multipoint circuit. There is no additional charge for digital multipoint. Id. The above does not necessarily mean that adding multipoint capability to the FTS2000 contract will be inexpensive. The multipoint circuits intended to be purchased will not replace existing point-to-point circuits, although they could be used for that purpose. Finding 21. The new multipoint circuits will be additional circuits, albeit priced on substantially the same basis as the existing point-to-point service. The pricing is virtually identical because the multipoint circuits essentially are several point-to-point circuits bridged together. The cost of these new circuits is estimated to be somewhere between $16.8 million and $349 million, depending on which estimate one chooses to believe. There seems little doubt, however, that the latter estimate is substantially inflated. See Finding 16. The current value of the contract is between $5 billion and $8 billion. Id. Taken as a whole, we view the degree of change in the pricing as supporting GSA's in-scope determination. Unlike the situation in Wiltel, the prices, with the exception of the bridging charge, were obtained competitively through the original FTS2000 procurement; the tables are already in the contract. Although the Government will be purchasing additional circuits, we view the change in pricing to be of an incremental nature -- certainly more so than was the case in Wiltel. Finally, although significant, the dollar value added by the modification is modest, considering the size of the FTS2000 contract. See MCI Telecommunications Corp., GSBCA 10450-P, 90-2 BCA 22,735, 1990 BPD 55. "Pricing" goes in the "in-scope" column. Change in the Schedule for Delivery of the Service The delivery schedule for the multipoint service -- that is, the amount of time in which the contractor must initiate the service after an order is placed -- is the same as the schedule for the existing point-to-point service; it was already in the contract. Finding 19. On the other hand, as each new circuit is ordered, whether it be point-to-point or multipoint, one could say that a new delivery "schedule" is established. Again, on balance, we think that the change in the delivery schedule analysis supports the in-scope determination. Because FTS2000 is an indefinite quantity, indefinite delivery contract (i.e, the contract contains no fixed date for delivery of a particular circuit until it is ordered), we think that GSA was reasonable in looking at the change in delivery schedule as a negligible one. AT&T is obligated to provide ordered multipoint services in exactly the same timeframe as it is obligated to provide point- to-point services. Change in the Type of Service Which the Contractor Will Perform We view this factor as being key in the in-scope versus out- of-scope analysis. Once again, although there are two valid ways of looking at the multipoint capability, we hold that GSA was reasonable in determining that multipoint is, in essence, a form of the existing FTS2000 dedicated transmission service. The FTS2000 contract, like the telecommunications industry, uses the term "service" rather loosely. See Finding 22. The contract, in section C.1.3.1, lists six "services": switched voice, switched data, switched digital, packet switched, video transmission, and dedicated transmission. Finding 3. All of the parties agree that multipoint is one type of dedicated transmission service. MCI relies primarily on sections C.2.1 and C.2.7 to argue that multipoint is a "separate and independent telecommunications service," outside the scope of the FTS2000 contract. Section C.2.1 provides that "the contractor shall provide the following services: . . . [d]edicated transmission service for the point- to-point private line transmission of voice and data." Finding 4. Section C.2.7 states that "[d]edicated transmission service includes analog, digital, and T1 transmission service, as described below." The section then goes on to state that "[d]edicated transmission service between two FTS2000 service delivery points . . . shall be provided from SDP to SDP . . . ." Finding 5. MCI reads these sections as defining the scope of the dedicated transmission service and, thus, the contract, as "point-to-point." We think MCI reads the contract too narrowly. Certainly, multipoint capability is not required under the current contract; if it were, there would be no need for a contract modification. The "general scope" of a contract, however, is a horse of a somewhat different color. Reading the contract as a whole, we believe that multipoint capability, whether or not one wishes to call it a "service," is an enhancement or improvement to the dedicated transmission service called for in the contract.[foot #] 4 A multipoint circuit uses existing FTS2000 elements to connect three or more locations together on a single dedicated circuit. It is essentially built from point-to- point links bridged together. Finding 18. Multipoint does not, as Wiltel's T-3 did, involve new transmission rates. Finding 19. From the contractor's perspective, the only difference between a multipoint circuit and a point-to-point circuit is that the former uses the existing bridging capability to connect more than two locations, while the latter connects only two points without use of the bridging capability. Id. GSA has established that the change in the type of service that the contractor will need to perform is minimal. Multipoint service, by everyone's definition, is an improvement to (1) the dedicated transmission service called for in the contract, and (2) the analog and digital dedicated transmission services called for in the contract. Finally, consistent with MCI's own Government tariff and its own descriptions of multipoint, it can reasonably be viewed as an improvement to "dedicated point-to- point transmission service." See Finding 22. Expectations of the Offerors The record in this case establishes beyond doubt that all of the offerors for the FTS2000 contract, and the Government, believed that the successful vendors would provide virtually all commercially available intercity telecommunications services to the user agencies, and that the losing vendor would be essentially shut out of that business for a ten-year period. Finding 9. The offerors structured their proposals accordingly. Findings 11-12. MCI, which elected to team with Martin Marietta for the competition, shared that view. Finding 10. We need not decide for purposes of this protest whether all of those grand expectations were reasonable. Significantly, though, all three offerors have conceded that dedicated multipoint was the type of service that would be added to the contract at some point. Finding 12. For reasons discussed previously, we hold that this belief clearly was reasonable. Conclusion Throughout these proceedings, MCI has asked this Board to weigh the many benefits of competition against GSA's decision to add multipoint services to the existing FTS2000 contract. But ----------- FOOTNOTE BEGINS --------- [foot #] 4 In Wiltel, we held that the "services already ______ bargained for" in the FTS2000 contract were "analog, digital, and T-1 in the Dedicated Transmission Services' group." Wiltel at ___ ______ 17. ----------- FOOTNOTE ENDS ----------- our role is not to "second guess" the business decisions of the Government; this Board is charged with determining whether a challenged agency action violated a statute, regulation, or the conditions of any delegation of procurement authority. 40 U.S.C. 759(f) (1988). After reviewing the relevant factors, we hold that dedicated multipoint service was reasonably determined to be within the general scope of the FTS2000 contract. Accordingly, GSA's decision to modify the contract was permissible. Decision The protest is DENIED. ______________________ ROBERT W. PARKER Board Judge We concur: _______________________ JAMES W. HENDLEY Board Judge ________________________ CATHERINE B. HYATT Board Judge