MOTION FOR RECONSIDERATION DENIED: December 23, 1992 GSBCA 11998-P-R AMDAHL CORPORATION, Protester, v. DEPARTMENT OF HEALTH AND HUMAN SERVICES, Respondent. David S. Cohen, Lisa Hovelson, and Donn Milton of Cohen & White, Washington, DC, counsel for Protester. Ronald Guttman and Dalton F. Phillips, Office of General Counsel, Department of Health and Human Services, Washington, DC, counsel for Respondent. Before Board Judges DANIELS, WILLIAMS, and VERGILIO. DANIELS, Board Judge. The Department of Health and Human Services (HHS or the Department), respondent, moves us to reconsider a portion of our decision of October 30, 1992, granting a protest by Amdahl Corporation (Amdahl). We found that as Amdahl alleged, two specifications contained in a solicitation for proposals to supply mainframe computers to the Department's Social Security Administration (SSA) are unnecessarily restrictive of competition. Amdahl Corp. v. Department of Health & Human Services, GSBCA 11998-P, 1992 BPD 325 (Oct. 30, 1992). The specifications mandated that each of the computers offered in response to the solicitation be "field-proven" by an established date and have a capacity of at least a certain number of MIPS, or millions of instructions per second. Initially, HHS argued that Amdahl had to prevail as to the "field-proven" requirement in order to be an interested party to complain about the MIPS specification. Now, HHS asks that we retract what we said about the former provision; the agency maintains that our ruling as to this clause is unnecessary because in holding that the MIPS specification is contrary to statute and regulation, we have resolved the case against the Government. The solicitation contemplated award of a contract for the supply of one computer in December 1992, a second in January 1993, and as many as seven additional computers (at the Government's option) over the next forty-four months. Throughout the life of the contract, SSA could accept any computer which (a) has a cost "equal to or lower than [that of] the originally proposed equipment on a per MIPS basis," (b) is "field-proven," and (c) meets all other specifications. The "field-proven" requirement is an amalgam of written and unwritten rules that SSA intends to implement for the purpose of ensuring that computers have been demonstrated to be reliable. Insofar as this requirement applies to computers actually supplied, a machine must be "field-proven" at the time it is ordered. The solicitation restricts offerors, however, to proposing equipment that was "field-proven" as of August 28, 1992, which would satisfy capacity needs over the entire contract life. Thus, although the agency fully anticipates accepting, during a period of forty-six months, equipment that was not field-proven on August 28, the solicitation restricts competition using that cut- off date. We held that this limitation is inconsistent with the agency's stated need and unnecessarily restricts competition to fill that need. Amdahl is capable of satisfying SSA's stated requirements over the next several months with equipment that was field-proven as of August 28. Further, as SSA recognizes, the relevant technology is changing rapidly and Amdahl is highly likely to be able to meet the agency's future requirements with computers that will be field-proven at the time they are ordered. Yet the solicitation excludes Amdahl from the entire competition because the firm's machines that were field-proven on August 28 have insufficient capacity to meet those future requirements over the life of the contract. The agency has not demonstrated the reasonableness of such a restriction. It is not obtaining true competition for either its present or its future requirements. What SSA would actually award under this solicitation, we said, is in effect a contract for the supply of two known computers plus the privilege of negotiating the sale of now unspecified computers to the agency, on a sole-source basis, over the next almost four years. In asking for reconsideration, HHS does not cite any of the recognized grounds for such a motion. Rule 32(a) (referencing Rule 33(a)). The agency maintains instead that our decision was wrong. HHS calls our finding with regard to technology and price changes in the computer industry "speculation without basis." Motion for Reconsideration at 4. The Department's concern is that "this decision, as it stands, essentially bars Government agencies from pursuing long-term contracts with field-proven or similar requirements that extend over one year." Id. at 8. These reasons for asking us to review our decision are insufficient to support a motion for reconsideration, and the motion is consequently denied. HHS's arguments do prompt us, however, to explain the basis for the decision further, in the hope that our reasoning will thereby become clear to the department. HHS's contention that we were merely speculating when we considered the impact of product and price changes in the computer industry is not correct. Our finding was expressly based on the testimony of Amdahl and SSA witnesses -- and of course, it is consistent with common knowledge about the industry. The Department's concern about the legality of certain solicitations is well founded, however. Our decision does not say anything about a one-year period (as HHS imagines) or any other length of contract. Nor does it outright bar agencies from pursuing long-term contracts which contain field-proven or similar requirements (as HHS fears). The decision simply addresses a situation in which an agency's need is for computers which are field-proven at the date of order, and that date is so much later than the date of award that what the agency orders will not necessarily be what is field-proven shortly before award. In this situation, by imposing a different reliability standard for computers which may be offered today, the agency is precluding itself from obtaining full and open competition for the opportunity to fulfill its long-term needs. By limiting itself to negotiating with a single vendor as to both product and price whenever a new computer is to be ordered, SSA has put itself in a position where it cannot know whether it will be getting the most advantageous deal possible at that time. We note that SSA has never, during the course of this protest, maintained that it would derive any benefit -- such as economy in maintenance or ability to develop a complex, unified system -- from purchasing computers from a single vendor. To the contrary, an agency official testified at hearing that no such benefit is involved here. We comment additionally on two points made by HHS in its motion. The first is the assertion that limiting competition to computers that are reliable today, but permitting newer technology to be substituted for those machines each time a new computer is needed, "saves the Government many thousands of dollars in procurement expenses." Motion for Reconsideration at 7. Although this statement may be correct, it is beside the point. Savings in administrative expenses, standing alone, are not justification for violating statutory requirements for full and open competition. A principal objective of those requirements is to have agencies get the best value in acquiring the goods and services they need. In determining this value, an agency must be concerned with the lowest overall cost of what it is buying -- not simply one element of cost, administrative expenses. If a certain procurement strategy saves thousands of dollars in these expenses, but costs millions in higher prices, that strategy is counter-productive. HHS has not even alleged that by limiting competition here, it will achieve lower overall costs for the computers it needs. HHS also implicates the Federal Information Resources Management Regulation's (FIRMR's) policy regarding use of options (though that regulation is not cited specifically) in justifying the inclusion of its "field-proven" requirement in the solicitation. The FIRMR says that -- a contract for FIP [federal information processing] resources with options . . . to acquire additional quantities or optional FIP resources may be used when -- (a) The Government has requirements for the acquisition of FIP resources extending beyond the basic contract period; (b) Funds are not available for the entire system life, but a reasonable certainty exists that they will be available in the future; or (c) Competition for the additional periods, quantities or optional FIP resources is impracticable once the contract is awarded. 41 CFR 201-39.1701-3 (1991) (emphasis added). HHS says that the first two of these conditions are clearly present here. The FIRMR's options policy is somewhat separate from the corresponding policy enunciated in the Federal Acquisition Regulation (FAR). 41 CFR 201-39.1701-2, -3 (1991), 48 CFR 17.200 (1991). Under the FAR, which precludes the placement of options into solicitations in numerous circumstances, options would clearly be proscribed in the solicitation at issue. This is because delivery requirements are far enough into the future to permit competitive acquisition, production, and delivery; and market prices for the supplies involved are likely to change substantially before delivery occurs. 48 CFR 17.202(b)(2), (c)(4) (1991). To the extent that the FIRMR might be read to permit an agency to issue a solicitation which includes options, at the same time that these conditions occur, that regulation is inconsistent with the statutory mandate for full and open competition in Government procurements, which is implemented through the FAR. 41 U.S.C. 253(a)(1)(A), 253a(a)(1)(C), (2)(B) (1988); 48 CFR 6.101(a), 10.002(a)(1), (3), 10.004(a) (1991). The problem here is the use of the disjunctive "or," rather than the conjunctive "and," linking the three subclauses set out above. Decision HHS's motion for reconsideration is DENIED. _________________________ STEPHEN M. DANIELS Board Judge We concur: _________________________ _________________________ MARY ELLEN COSTER WILLIAMS JOSEPH A. VERGILIO Board Judge Board Judge