THIS OPINION WAS INITIALLY ISSUED UNDER PROTECTIVE ORDER AND IS BEING RELEASED TO THE PUBLIC IN REDACTED FORM March 8, 1993 DENIED: February 11, 1993 GSBCA 12082-P TECHNOLOGY, MANAGEMENT & ANALYSIS CORPORATION, Protester, v. ENVIRONMENTAL PROTECTION AGENCY, Respondent, and ORACLE COMPLEX SYSTEMS CORPORATION, Intervenor. William W. Goodrich, Jr., and Thomas W.A. Barham of Arent Fox Kintner Plotkin & Kahn, Vienna, VA; and Jacob B. Pompan and Daniel A. Perkowski of Pompan, Ruffner & Bass, Alexandria, VA, counsel for Protester. Avital G. Zemel, Office of the General Counsel, Environmental Protection Agency, Washington, DC; and L. Carol Roberson, Office of General Counsel, Environmental Protection Agency, Research Triangle Park, NC, counsel for Respondent. Richard O. Duvall, Richard L. Moorhouse, and Michael H. Ditton of Dunnells, Duvall & Porter, Washington, DC, counsel for Intervenor. Before Board Judges NEILL, HYATT, and VERGILIO. NEILL, Board Judge. On October 8, 1992, this protest was filed by Technology, Management & Analysis Corporation (TMA). The procurement in question involves a contract for the supply and support of relational database management system (RDBMS) software and related services under request for proposals (RFP) number W002073-A3 issued by the U.S. Environmental Protection Agency (EPA). Respondent awarded the protested contract to Oracle Complex Systems Corporation (OCSC), which has intervened, as a matter of right, in this protest. Protester's initial complaint set forth four bases of protest. On November 3, on motion from protester, two of the four counts were dismissed with prejudice. Shortly thereafter, the Board granted protester's motion to amend its complaint to include two additional counts. The first alleged negotiations with OCSC after submission of best and final offers (BAFOs). The second count alleged that the offer of OCSC was unbalanced. Both respondent and intervenor moved for summary relief with regard to the allegation of negotiations with OCSC after BAFOs. Protester opposed the motions and brought its own cross-motion for summary relief on the same count. We denied the cross-motion and granted the two motions for summary relief. Technology, Management & Analysis Corp. v. Environmental Protection Agency, GSBCA 12082-P, 1992 BPD 406 (Dec. 9, 1992). EPA also filed a motion for summary relief regarding the second count of the amended complaint, namely, the allegation that the offer of OCSC was unbalanced. OCSC supported the motion. This motion was denied. Technology, Management & Analysis Corp. v. Environmental Protection Agency, GSBCA 12082-P, 1992 BPD 407 (Dec. 9, 1992). Shortly before the hearing, protester sought leave to add yet another allegation to its protest. In this final count, protester alleged that OCSC had made material misrepresentations of fact in its proposal and for this reason should be disqualified from the procurement. After hearing argument from the parties, the Board granted the motion to amend. Four counts remained in this protest, therefore, at the time this protest came to hearing. In the first remaining count, Count I, protester alleges that OCSC's proposal was non-compliant in that OCSC allegedly failed to offer installation support services for two multiuser platforms. The second remaining count is Count III. In this count, TMA argues that the contracting officer failed in two ways to follow provisions of the RFP regarding the evaluation of offers. The first error is said to be the failure of the contracting officer to perform a price realism analysis as called for in the RFP. Alternatively, protester argues that if she did do the analysis, it was unreasonable. The second error on the part of the contracting officer is said to be her failure to consider a technical subfactor, namely, corporate health and stability, in evaluating OCSC's technical proposal. The third remaining count in this protest is Count VI. In this count, protester alleges that certain contract line item numbers (CLINs) were unbalanced. In the fourth and final remaining count, Count VII, protester alleges that OCSC made material misrepresentations in its revised BAFO and that these misrepresentations led the contracting officer to conclude incorrectly that the This conclusion is said to have served as the basis for the contracting officer's further conclusion that, because these costs were equal, there was effective competition in the procurement. Because of the alleged misrepresentations, protester argues that OCSC should be disqualified from further participation in the procurement. Upon review of the record, we find that protester has failed to prove any of the four remaining counts. We, therefore, deny the protest. Findings of Fact The Solicitation 1. The RFP involved in this protest was issued by the EPA on June 10, 1991. The RFP envisioned award of an indefinite delivery/indefinite quantity, fixed price type contract, based on a systems life covering a base period and seven annual option periods. Protest File, Exhibit 5 at 125-26. The RFP was to procure a RDBMS that would satisfy "the data storage, data manipulation, and scientific application generation needs of the EPA's large scientific community." Id. at 129. Approximately sixty percent of the acquisition was for software licenses, ten to fifteen percent for software maintenance generated from the software manufacturer, and the remaining approximately thirty percent was for support services. Transcript at 152. 2. Section M of the RFP set forth a "best value" selection scheme, with technical factors more important than cost. Protest File, Exhibit 5 at 116, 261-62. 3. Section M also provided for a scored technical evaluation of the acceptability of the proposed products and services and the offeror's capabilities according to the following criteria: I. Additional Technical Features 254 points II. Corporate Mgmt. Plan, Experience & Commitment 146 points III. Vendor Support 200 points IV. Commitment to Technology Enhancement 100 points Protest File, Exhibit 5 at 263. 4. Criterion II dealt with the evaluation of an offeror's corporate management plan, experience, and commitment. Evaluation of the corporate management plans was to include: techniques for meeting management objectives and staffing requirements work flow control, administrative operations which include documentation and procurement management reliability, and quality assurance. The offeror's management of and approach to meeting project requirements and objectives, including organizational structure and planning for interfaces with Government, shall be evaluated. The offeror's procedures for problem review, escalation, and resolution shall be considered. The offeror's plans for delivering products, services, and support to EPA's multiple, geographically dispersed locations shall be evaluated. Evaluation of corporate experience was to be: based on experience with the installation and support of the RDBMS software in similar environments, and experience in providing quality technical support by accurately and quickly diagnosing and solving software problems. The provided corporate references will be evaluated as indicators of corporate experience. Evaluation of corporate capability[foot #] 1 and commitment was to be: in terms of the commitment and capability of the offeror to maintain quality personnel throughout the life of the contract, the offeror's established internal quality assurance programs and other programs which ensure the quality support service; evidence of corporate health and stability; and customer references. The offeror's corporate commitment shall also be evaluated by consideration of proposed plans for ensuring high quality services in all functional areas, responsiveness to fluctuating EPA workloads and ----------- FOOTNOTE BEGINS --------- [foot #] 1 The term "capability" is added to the description of this factor in the body of the clause M.3.1.2 but does not appear in the descriptions of the factors for criterion II set out at the start of that same clause. ----------- FOOTNOTE ENDS ----------- changing EPA requirements, and the proposed corporate involvement and support in the contracts. Protest File, Exhibit 5 at 263-64. 5. Section L of the solicitation contained instructions, conditions, and notices to offerors. Included in this section was guidance on the preparation of an offeror's technical proposal and business proposal (of which the offeror's price proposal was to be a part). Protest File, Exhibit 5 at 248-60. 6. The guidance in Section L dealing with criterion II of the technical proposal directed the offeror to describe in this section of its proposal its corporate management plan for and approach to the contract. Offerors were instructed to describe experience with similar contracts, to provide three corporate references for similar contracts, to discuss their management chain of command, corporate structure, and various other items relating to "corporate management plans, corporate experience and corporate commitment." No express reference was made in this guidance, however, to financial information. Protest File, Exhibit 5 at 250-51. 7. The guidance in Section L dealing with the preparation of the business proposal expressly states: The information submitted in the offeror's business proposal in response to the Sections 1 through 7 below will be used for determining whether prospective contractors are responsible in accordance with FAR Part 9 [Federal Acquisition Regulation, 48 CFR 9 (1992)]. This information will not be used in the technical evaluation of proposals, as only the information submitted in the offeror's technical proposal will be evaluated against the technical evaluation criteria specified in Section M. Protest File, Exhibit 5 at 255. Section 6 of the above-mentioned "Sections 1 through 7" provides: SECTION 6 - Financial Capability The offeror shall provide a copy of their most recent annual financial statements. Also, a copy of their most recent quarterly (or other partial year) financial statement should be included. Offerors should provide all information deemed relevant to their proposal and in demonstrating their ability to perform the requirement from a financial point of view if awarded the subject contract. Similar information is requested on all non- Offeror items included with your offer. Id. at 256. 8. Clause M.7 of the solicitation, entitled "Fixed Price Options," provided in pertinent part as follows: (a) This solicitation is being conducted on the basis that the known requirements extend beyond the initial contract period to be awarded, but due to the unavailability of funds, including statutory limitations on obligation of funds, the option(s) cannot be exercised at the time of award of the initial contract. There is a reasonable certainty that funds will be available thereafter to permit exercise of the options. Because realistic competition for the option periods is impracticable once the initial contract is awarded, it is in the best interest of the Government to evaluate options in order to eliminate the possibility of a "buy-in." . . . . (d) Selection of an offer shall be made on the basis of lowest overall cost, price and other factors considered, to the Government provided that the contract price reasonably represents the value of bonafide fiscal year requirements, rather than representing, to any extent, a portion of any other fiscal year requirements. This determination with respect to the contract price shall be made after consideration of such factors as commercial or catalog prices for short term leases, offeror system start up expenses, multiyear price protection, assured system- life availability of equipment, software and vendor support. If a determination is made that an offer does not meet these criteria, that offer cannot be accepted for award. Protest File, Exhibit 5 at 268-70. Evaluation of Technical Proposals 9. OCSC in its initial technical proposal addressed in detail all three of the principal factors under criterion II, namely, (i) Corporate Management Plans, (ii) Experience and Commitment, and (iii) Corporate Capability and Commitment. Protest File, Exhibit 8 at 817-94. With regard to the factor of Corporate Capability and Commitment (which includes among others the subfactor of Corporate Health and Stability) OCSC addresses such items as OCSC's commitment to maintain quality personnel, the firm's established quality assurance programs, the backing of the parent company, the parent's successful involvement in foreign markets, OCSC's satisfied customers, and the company's responsiveness to fluctuating workloads and environments. Id. at 881-82. 10. The chairman of the technical evaluation panel testified that the subfactor of corporate health and stability was evaluated for each technical proposal. Transcript at 167, 215, 226. Notations regarding this subfactor, however, may not exist if that subfactor is not perceived as a strength or weakness. Id. at 216. He also testified that the evaluation regarding the corporate health and stability subfactor, like the evaluation regarding all other factors and subfactors, was based exclusively upon the technical proposal. Id. at 183-84, 215. He also stated that the technical evaluation panel did not have information relating to OCSC's financial situation which was provided with OCSC's business proposal. Id. at 183-84. 11. Analysis of Financial Information Submitted with OCSC's Business Proposal 12. OCSC's initial business proposal, dated August 9, 1991, provided only financial statements of its parent company, Oracle Corporation. OCSC was, therefore, requested to submit its own financial statements. The contracting officer wrote that she advised OCSC that its failure to provide the necessary financial statements could affect the determination of responsibility should OCSC otherwise be determined eligible for award. Protest File, Exhibit 89 at 4940. In its first BAFO submission of April 21, 1992, OCSC supplied its financial statements. Id. [foot #] 2 Installation Support Services 13. Clause C.8.5 of the RFP requires the contractor to provide "on-site installation support to assist users with the installation and initial use of the RDBMS." Protest File, Exhibit 5 at 169. When the RFP was issued, this installation support was to be for the VMS and UNIX systems, two of the operating systems upon which the RDBMS software was required to be able to operate. Id. at 134-35. Amendments 6, 7, and 8 to the RFP revised clause C.8.5 to add the IBM-MVS and Prime Computer PRIMOS hardware platforms within the class of multiuser systems requiring installation support. Id., Exhibits 41, 43, 66. OCSC signed each of these amendments without noting any exceptions to its requirements. Id., Exhibits 50 at 2778-79, 75 at 4191. 14. In OCSC's initial technical proposal, OCSC discussed the requirements of clause C.8.5. The proposal stated: OCSC will provide on-site support at sites implementing the ORACLE RDBMS and its tool in a multiuser environment (VMS or UNIX). Protest File, Exhibit 8 at 1036. This language -- specifically the parenthetical reference to "VMS or UNIX" -- remained unchanged in OCSC's first BAFO which was submitted after the issuance of amendments 6 and 7 which added the IBM-MVS to the multiusers systems covered by clause C.8.5. Id., Exhibit 49 at 2721. The parenthetical reference to "VMS or UNIX," likewise remained unchanged in OCSC's second BAFO which was submitted after the issuance of amendment 8 which added Prime computer platforms to the installation support called for under clause C.8.5. Id., Exhibit 74 at 4158. ----------- FOOTNOTE BEGINS --------- [foot #] 2 The problems presented by the financial information contained in OCSC's business proposal and the eventual resolution of these problems by the contracting officer are described in detail in our earlier decision, referenced above, in which we granted respondent's and intervenor's motion for summary judgment on Count V of this protest. Technology, ___________ Management & Analysis Corp., 1992 BPD 406 (Dec. 9, 1992). ___________________________ ----------- FOOTNOTE ENDS ----------- 15. Although OCSC's response to the installation support requirement of clause C.8.5 did not specifically mention IBM-MVS or PRIMOS hardware platforms, other statements within its final proposal show that OCSC was aware of and apparently intended to comply with the requirement for installation of the RDBMS on MVS and PRIMOS platforms as well as VMS and UNIX. E.g., Protest File, Exhibit 74 at 4143-44, 4151-54, 4159-60. 16. In its initial technical proposal, TMA stated: TMA will perform the installation and assist in the initial use of the ORACLE RDBMS software on multi-user systems, specifically on minicomputers or workstations running VMS or Unix. Protest File, Exhibit 104 at 6279. In its first and second BAFOs, however, TMA failed to provide a change page modifying this statement contained in its initial proposal. The statement, therefore, as contained in TMA's final proposal, makes no reference to the MVS or PRIMOS platforms added to the RFP by amendments 6, 7, and 8. Id., Exhibits 106 at changed pages, 108 at 7305. The Price Realism Analysis 17. In amendment 4, the contracting officer added the following provision to the RFP. Paragraph (a)(2) [of clause M.2] which states that "The Government will evaluate price in accordance with FAR Part 15.805-2" will also include price realism. Protest File, Exhibit 37 at 2389. The contracting officer testified at the hearing that the purpose of the inclusion of the term "price realism" was to elicit a pricing narrative from the offerors to explain the methodologies and assumptions each offeror used in arriving at its pricing. Transcript at 131. 18. The contracting officer acknowledged during the hearing that there is no definition of "price realism" in the FAR. She stated that she utilized the term "to complement price analysis and to have an understanding of the methodologies and how offerors arrive at their pricing." Transcript at 659. She believed that the pricing narratives would explain certain patterns or trends observed in the proposals but not readily understood. For example, the contracting officer expected a disparity in pricing between on-site and off-site training courses because of overhead and facilities costs and was puzzled when the price proposed by one offeror was the same for both. See id. at 42-44, 669-71. 19. The contracting officer alerted the offerors, both in oral discussions and by letter, that each offeror would be required to demonstrate the price realism of its proposal by providing written pricing narratives. Protest File, Exhibits 47 at 2478-83, 48 at 2487-91. The contracting officer has testified: [A]t no time did I ever envision doing a cost analysis. At no time did I ever want cost and pricing data. . . . Since I was performing a price analysis, I just wanted to keep it to a narrative just so I could have an understanding of essentially their methodologies and their assumptions. Transcript at 44-45. 20. In her testimony, the contracting officer has readily admitted that there is no document in the protest file entitled "Price Realism Analysis." However, she has stated that she did perform a price realism analysis and that the results of the analysis are embodied in various documents included in the protest file. Transcript at 45. Specifically, she referred to the Source Evaluation Board (SEB) Report, Protest File, Exhibit 92, particularly at pages 4964-66; to the supplemental Business Evaluation Proposal (BEP) Report, id., Exhibit 89; and to the pre-post negotiation document, id., Exhibit 97. Transcript at 675-76. 21. In her testimony, the contracting officer effectively distinguished between her price realism analysis and her price analysis. She stated: For this acquisition, I used the price realism analysis to complement my price analysis in terms of eliciting basically a pricing narrative to understand the methodologies and assumptions used in arriving at the pricing. I feel that I did perform that. I reviewed all the pricing narratives submitted by the offerors. . . . . . . . I think the SEB Report and pre/post negotiation memorandums, and all the other documents show that I gave some serious thoughtful consideration to the pricing narrative and to the pricing proposed, and I didn't just conduct a mere price analysis. A price analysis would have just merely been left comparing one CLIN to another CLIN, and showing the price differential. I did go beyond that. It is unfortunate, I guess, that I didn't term anything price realism analysis, but I was thinking that I was conducting what I intended to do when I wrote up my decisional documents. Transcript at 131-2. 22. A review of the documentation referred to by the contracting officer clearly shows that she did give "thoughtful consideration" to the narratives and pricing proposed by each offeror and that in several instances her analysis went beyond the standard price analysis techniques described in FAR 15.805-2. See Protest File, Exhibits 89 at 4934-45, 92 at 4963-71, 97 at 5381-403. Her analysis, as set out in those documents, amply confirms the answer given to counsel's question at hearing: Q What was your conclusion regarding whether or not OCSC's prices were realistic or unrealistic? A I felt that they could perform the contract. I felt that they were realistic in that regard. Transcript at 132. 23. An expert in cost and pricing in Federal Government procurement was called by intervenor to testify regarding the contracting officer's price realism analysis. He confirmed that there is no description of price realism in the FAR. He stated, however, that after a review of the procurement documentation, he was satisfied that a price realism analysis had been done. His conclusion was based on the fact that a price analysis had been done and there were two competitive offers involving "[off the] shelf kinds of items." Transcript at 491, 497-500. 24. Protester called its own expert in the area of Government cost or price analysis and cost or price realism. This expert also confirmed that there is no regulatory definition of price realism. Transcript at 439. He explained that a price realism analysis is not directed to whether the price is too high but rather to whether the price is unrealistically low -- so low that the company will not be able to perform or, once the contract is awarded, the Government will eventually pay more than it thought it bargained for. Id. at 438. This expert testified that after a review of the procurement documentation identified by the Government as containing the price realism analysis, he was of the opinion that no such analysis had been done. Id. at 405. 25. Protester also called an expert in the costs a prime contractor encounters assembling the resources and items necessary to deliver contract products and services. Transcript at 454. OCSC's Subcontract Costs 26. 27. 28. 29. 30. 31. In its August 31, 1993, BAFO, OCSC provided a detailed pricing narrative, including: the rationale for the change in pricing, explanation of the methodologies used in the price proposal, including the unit prices, unit prices over time, and historical pricing of the proposed items. Protest File, Exhibit 75 at 4388. In this narrative, OCSC frequently repeated that "OCSC's pricing to EPA merely reflects the declining cost Oracle has quoted" and utilized the word "quote" interchangeably with "cost quote" with regard to Oracle Corporation's pricing. OCSC explained that it had increased its prices for software maintenance, off-site training, technical support, and hotline support due to a reassessment of costs. Id. at 4388-97, 4412-14. 32. In its August 31 BAFO, OCSC also provided copies of agreements it had entered with its other two subcontractors, OCSC provided no pricing information regarding those subcontracts. OCSC, as a wholly-owned subsidiary of Oracle Corporation, did not provide a subcontract with its parent but rather a letter of commitment from Oracle Corporation showing the company's intention to work closely with OCSC on any contract to be awarded. The letter does not contain any actual prices for the items to be provided by Oracle Corporation to OCSC under any contract which might be awarded. Protest File, Exhibits 75 at 4417-33, 87 at 4930. 33. In its August 31 BAFO, TMA supplied a copy of its subcontract agreement with Oracle Corporation. With the agreement, TMA also provided the unit prices or quotes which Oracle Corporation offered TMA for the software licenses and software maintenance to be provided for the RDBMS procurement. Protest File, Exhibit 109 at 7735-91. 34. The contracting officer has testified that, in the course of reviewing the final BAFOs, she noticed that the prices offered by OCSC were identical to those shown in the Oracle Corporation quotes furnished by TMA with its subcontract agreement with Oracle. Transcript at 687-88. In the SEB Report she wrote: An extensive sampling revealed that OCSC's proposed unit prices for the RDBMS tool CLIN's and for most of the RDBMS kernel CLIN's were identical to the unit prices offered by Oracle Corporation to TMA. Upon reviewing the maintenance unit pricing, it was noted that OCSC's proposed unit prices for software maintenance in its April 21, 1992 BAFO were identical to the unit prices offered to TMA by Oracle Corporation in the subcontract agreement. Protest File, Exhibit 92 at 4962-63. 35. It is the testimony of the contracting officer that it was not because of any language in OCSC's BAFO that she arrived at the conclusion that Rather, this conclusion was prompted by her comparison of Oracle quotes, provided by TMA, to prices contained in OCSC's BAFO. See Transcript at 685-88. OCSC's Static Pricing 36. OCSC's August 31 BAFO also indicated that the prices for certain software license CLIN's remained static after a certain point in the evaluation model because there are no evaluated quantities at that point. Protest File, Exhibit 75 at 4390; Transcript at 350. The contracting officer noticed this pattern but did not consider OCSC's proposal to be materially unbalanced. Protest File, Exhibit 97 at 5396. Competition 37. The RDBMS software to be procured under this acquisition is a commercial, off-the-shelf product. Its specifications do not restrict the selection of the software product to a specific brand name. The chairman of the technical evaluation panel testified that at the time the solicitation was issued, there were at least four firms that could meet the specifications. Transcript at 634. In her preliminary Business Evaluation Proposal (BEP) Report, the contracting officer, relying on this fact, reaffirmed that full and open competition was achieved. Protest File, Exhibit 22 at 2078. 38. In her competitive range determination of December 20, 1991, the contracting officer concluded that adequate price competition was present in this procurement and that, therefore, certified cost and pricing data would not be required from offerors. She noted: The primary component of this procurement is a standard commercial software product available to the general public in substantial quantities. Two or more responsible and responsive offerors that can satisfy the Government requirement have submitted proposals and it is presumed that these offerors are competing independently for a contract to be awarded to the offeror whose proposal offers the greatest value to the Government, based on technical quality and price. Accordingly, the Contracting Officer has concluded that price competition is present and that the criteria of FAR 15.804-3 required for an exemption from submission of certified cost and pricing data exist on this procurement. Protest File, Exhibit 26 at 2291-92; See Transcript at 672-74. 39. OCSC witnesses testified that OCSC did not view itself as immune from competition. The reasons given for the presence of competitive pressure were: (1) the existence of requirements other than the software licenses and maintenance on which OCSC enjoyed a price advantage; (2) the understanding that there were other suppliers that could meet the requirements either individually or through multiple software vendors at a lower price; and (3) the heavy emphasis on technical quality in this procurement. Transcript at 288, 391-93, 549, 552-55; Protest File, Exhibit 218 at 2330. 40. Both OCSC's and TMA's proposed prices were found to be fair and reasonable, especially in comparison with the GSA schedule prices or commercial price lists. Protest File, Exhibit 92 at 4971. The contracting officer testified at the hearing that she considers OCSC's prices and TMA's prices to be reasonable and realistic. Transcript at 676-77. The final evaluated price of OCSC was $27,876,217 and the final evaluated price of TMA was $33,349,397. Protest File, Exhibit 92 at 4963. Because the technical proposals of both companies were deemed equal, award was made to OCSC as the offeror proposing the lower and more advantageous systems life evaluated price. Id. at 4970- 71. Discussion Count I - A Non-Compliant Proposal In this count, protester alleges that respondent erred by accepting for award a technically non-compliant proposal. In the opening statement at hearing, as well as in the posthearing brief, counsel for protester have limited this allegation to one instance only of technical non-compliance. That instance is described as follows: We believe that the record shows that OCSC did not propose to perform the required installation support services for the IBM mainframe, MVS-based platform, or for the Prime computer platform. Transcript at 19-20. Protester bases its argument for this count on the fact that OCSC in its initial proposal expressly addressed the requirements of clause C.8.5 in terms of a multiuser environment which was qualified and allegedly limited by a parenthetical reference to "VMS or UNIX." It is indeed true that the portion of OCSC's initial technical proposal which contained this parenthetical reference never was amended to include reference to the MVS and PRIMOS platforms added by amendments 6, 7, and 8. Finding 14. However, it is also true that TMA, in discussing the same requirement in its own initial technical proposal, also made specific reference to VMS and UNIX but never provided change pages in subsequent revisions of its own proposal which would have broadened that discussion to include a specific reference to the MVS and Prime platforms as well. Finding 16. Notwithstanding a similar oversight in its own proposal, protester contends that its proposal differs from that of OCSC with regard to the requirement for installation support. TMA points out that it expressly agreed to comply with all RFP amendments and further offered "a fully compliant . . . solution" for all platforms, expressly including IBM-MVS and PRIMOS. See Protester's Brief at 96. This is indeed correct. Nevertheless, while OCSC may not have been as explicit as TMA, OCSC's proposal, when read as a whole, gives no indication that OCSC intended to meet the installation requirement for only VMS and UNIX platforms. The amendments adding the MVS and PRIMOS platforms were all signed without any reservation and returned with OCSC's revised proposals. Finding 13. In addition, other segments of OCSC's revised proposals indicate that the company was aware of and apparently planned to comply with the requirement for installation of the RDBMS on MVS and PRIMOS platforms as well as VMS and UNIX. Finding 15. Given these considerations, we remain unconvinced that the unchanged parenthetical in the OCSC proposal constituted an exception to a technical requirement of the RFP. Consequently, we deny protester's first count. Count III - Incorrect Evaluation In the opening statement for TMA's case, counsel stated: [Count III] is still in the protest in two respects. Number one, we do not believe that the Government either did a price realism evaluation as was required by Amendment IV, and alternatively, to the extent that the Board might find one was attempted, we will put in expert testimony and other testimony which will prove, we believe, that it was not anything that remotely resembles a reasonable price realism evaluation. We'll also adduce evidence which shows that the sub-factor, Corporate Health and Stability, under the technical evaluation criterion number two, Corporate Commitment and Capability was not evaluated at all by the Technical Evaluation Panel. We will attempt to prove that had it been evaluated, the technical evaluation would have been much different. Transcript at 20-21. We turn first to the allegation that there was no price realism analysis or, alternatively, that if there was one, it was not a reasonable one. The contracting officer's explanation of what she intended by the term price realism appears clear enough and, in the absence of a regulatory definition of the term, obviously does not conflict with regulatory guidance. See Findings 23-24. The contracting officer has explained that she added the term "price realism analysis" to the RFP "to complement her price analysis and to have an understanding of the methodologies and how offerors arrive at their pricing." Findings 17-18, 21. To this end, she sought pricing narratives from all offerors for purposes of understanding their pricing methodologies and assumptions. Finding 19. The narratives were provided and carefully analyzed. Findings 20-21. She ultimately concluded that the prices offered were realistic and that the offerors could perform at the offered price levels. Findings 20-22. An expert called by protester, although acknowledging that there is no regulatory definition of "price realism," contended that a price realism analysis addresses only the issue of whether an offered price is too low. Finding 24. We do not find this definition to be in fundamental conflict with the contracting officer's approach. The expert would limit the scope of a price realism analysis to the lower part of the pricing spectrum. The contracting officer would not. This does not mean, however, that she would necessarily exclude low prices from a price realism analysis. As a complement to her pricing analysis, presumably she intended to use the pricing narratives provided by offerors to assess the realism of any price when, in the course of the pricing analysis, a price appeared to be unusually high or low. Protester's expert contends that, if the contracting officer truly believed then she should have questioned the realism of OCSC's low prices on these items. The contracting officer's failure to do so is, in the opinion of this expert, proof that there was, in fact, no price realism analysis. We agree with the expert that one would have expected the contracting officer to address the realism of OCSC's prices given her mistaken assumption regarding subcontract prices. We disagree, however, that her failure to do so demonstrates that no price realism analysis was done. We find the expert's observation goes rather to the quality than to the existence of the contracting officer's price realism analysis. Contemporaneous documentation in the record consistently confirms the contracting officer's avowed purpose in adding the price realism analysis to the RFP and her subsequent efforts to carry out such an analysis. Intervenor's expert in cost and pricing in Federal Government procurement reviewed the contracting officer's action and declared himself satisfied that a price realism analysis had been made. Finding 23. Given these facts and, in particular, the contracting officer's own clear explanation and record of what she intended by and what she actually did in her price realism analysis, we have no hesitancy in concluding that a price realism analysis was, in fact, made. In the alternative, protester challenges the reasonableness of the contracting officer's analysis, if indeed it is determined that one was done. Protester writes: The issue of price realism should be viewed from the Contracting Officer's perspective -- based upon her belief (her "conclusion") that the subcontract costs to both offerors were the same. This was an erroneous conclusion, but nevertheless reflects the actual state of mind of the Contracting Officer at the time she decided to award the Contract to OCSC. Protester's Posthearing Brief at 91. Protester would have us conclude that the contracting officer's price realism analysis was unreasonable given her false assumption regarding OCSC's subcontract costs. At this point in the procurement, we do not view this as still being a critical issue. Given our task to undertake a de novo review and the fact that the record for this case has now been fully developed, the more critical question is whether the contracting officer's conclusion regarding price realism was reasonable given the real facts regarding the subcontract costs of OCSC. We find it was. Consequently, one can conclude that the prices offered by OCSC were even more realistic than the contracting officer believed them to be when, notwithstanding her incorrect assumption regarding subcontract costs, she concluded they were adequate for purposes of price realism. In other words, had her information regarding OCSC's subcontracting costs been more accurate, there is no doubt that her conclusion regarding the realism of OCSC's prices would have been essentially the same. There is, therefore, no real benefit in protester's continuing to critique the reasonableness of the contracting officer's price realism analysis if correction of the error which allegedly flawed the analysis and rendered it unreasonable only leads to the same conclusion as before. We have in the past stated that we will not investigate the allegation that a price realism analysis is inadequate when the allegation, if proven, would have no material effect on the outcome of the protest. See Andersen Consulting, GSBCA 10833-P, 91-1 BCA 23,474, at 117,755, 1990 BPD 396, at 16, aff'd, 959 F.2d 929 (Fed. Cir. 1992). Such is the situation in this case. At most, protester's allegations, if proven, would demonstrate that the contracting officer was right about price realism but for the wrong reason. Such an error, if made, does not prejudice protester and certainly does not constitute a reasonable ground for directing respondent to cancel award. We, therefore, conclude that there was a price realism analysis done, as called for in the RFP, and that any deficiencies regarding the reasonableness of that analysis did not in any way prejudice the interests of the Government or the protester. We turn now to the allegation that the subfactor of corporate health and stability under the technical evaluation criterion II was not evaluated at all by the Technical Evaluation Panel (TEP).[foot #] 3 Protester argues: The evidence is undisputed that the TEP never evaluated OCSC's financial status during the Technical evaluation. Protester's Posthearing Brief at 89. What protester appears to be saying is that the negative information regarding the financial condition of OCSC which was provided in OCSC's business proposal (see Findings 7, 12), should have been made available to the technical evaluation panel. Had this occurred, it is protester's belief that the technical score of OCSC [R]escoring OCSC in corporate health and stability could very well have made for a different evaluation decision. However, a technical/cost tradeoff analysis was never done because EPA supposed that the offerors were Protester's Posthearing Brief at 90. The principal difficulty with protester's argument is that, under the terms of the solicitation, information regarding the financial condition of an offeror, such as that submitted by OCSC in its business proposal, was not to be used in the evaluation of technical proposals. Finding 7. Use of it in the evaluation of technical proposals would have been in direct conflict with provisions of section L. Nothing in the record suggests that this information was passed on to the technical evaluation panel for use in evaluating OCSC's proposal. The chairman of the technical evaluation panel assures us that the panel did not have the information. Finding 10. More importantly, protester's own ----------- FOOTNOTE BEGINS --------- [foot #] 3 We note for the record that in protester's opening statement, criterion II was incorrectly identified as "Corporate Commitment and Capability." Its proper title is "Corporate Management Plans, Corporate Experience and Corporate Commitment." See Findings 3-4. ___ ----------- FOOTNOTE ENDS ----------- allegation is based on the fact that the information was not passed on -- but should have been. Protester would have us believe that because the technical evaluation panel lacked the information contained in OCSC's business proposal regarding its financial condition, no consideration was given to the company's corporate health and stability. We simply cannot reach this conclusion based on the record before us. OCSC did include in its technical proposal information which presumably does bear on the subfactor of corporate health and stability. See Finding 9. The chairman of the technical evaluation committee has testified that this subfactor was considered but has also explained that the absence of any express reference to the subfactor of corporate health and stability merely suggests that the panel did not see either a strength or weakness in OCSC's technical proposal so far as this subfactor was concerned. Finding 10. We find this explanation highly credible in view of the numerous factors and subfactors listed under criterion II. See Finding 4. The high number of factors and subfactors for criterion II also suggests to us that even if, in fact, the subfactor of corporate health and stability was ignored (and we are in no way convinced that it was), the oversight would have had a negligible effect on the overall technical score of OCSC. In short, we remain unconvinced that the subfactor of corporate health and stability was not considered in the evaluation of the OCSC technical proposal. The allegation of protester that it was ignored is, therefore, rejected as unproven. Count VI - An Unbalanced Offer Protester's contention that the offer of OCSC is unbalanced has undergone substantial modification during the course of this protest. In its opposition to a motion for summary relief on this count, protester assured the Board that it was prepared to show that the OCSC offer was unbalanced in two respects. First, TMA alleged that there was an imbalance between or among CLINs or products. Second, TMA claimed it would show an imbalance among base year price and option year prices for individual CLINs where OCSC offered zero mark-up for unevaluated option periods. Protester's Reply to Respondent's Motion for Summary Relief on Count VI at 3-4. In protester's opening statement at hearing, counsel advised the parties and the Board that there no longer was a contention of material imbalance in the sense that some contract line items are below costs for some software products and others are above cost for other software items. Transcript at 21. Instead, counsel explained during the course of the hearing that the only remaining contention in reference to Count VI is unbalancing within a CLIN and noncompliance with the requirements of clause M.7 within a CLIN. Id. at 432. In its posthearing brief, protester further clarified its contention by explaining that this refined allegation applies only to forty-one software CLINs on which OCSC offered static or unchanging prices for the base and option years. See Finding 36. According to protester, the prices offered for those items constitute mathematically unbalanced prices which the contracting officer should have recognized as precluded by provisions of clause M.7(a) and (d), See Finding 8. Protester's Posthearing Brief at 92-95. Protester bases its argument primarily on language appearing in an opinion of the United States Court of Appeals for the Federal Circuit which considered language similar to that found in clause M.7. In its decision, the Court noted: [N]o bid meeting the definition of mathematically imbalanced [i.e., a bid including items that fail to carry their share of the cost of the work plus profit or a bid based upon a nominal/enhances pricing structure] can be accepted if it includes bid prices representing anything other than the value of a bona fide fiscal year's requirements, either in the form of explicit "separate charges" or implicit charges. Implicit charges occur if the price of an item is not proportional to its value, but instead includes part of another fiscal year's requirements. SMS Data Products Group, Inc. v. United States, 900 F.2d 1553, 1556 (Fed. Cir. 1990). Protester is convinced that for purposes of its remaining allegation in Count VI, the Board should look at the facts as they existed in the mind of the contracting officer. See Protester's Posthearing Brief at 93. Counsel for protester points out that because the contracting officer believed she should have realized that the base period and early option prices for the static items were obviously below OCSC's fully loaded cost. At the same time, given this same mistaken assumption, the contracting officer also should have concluded that the prices on these items for the latter option periods were above the apparent raw subcontract costs in view of the known decline in subcontract prices in the latter years. This, according to protester, would have constituted the classic "buy- in" situation which section (a) of clause M.7 is designed to exclude. Hence, argues protester, the contracting officer, in accepting the static prices offered for the forty-one software items, violated clause M.7(a). Id. at 93-95. A similar argument is made by protester with regard to section (d) of clause M.7, which prohibits pricing embodying a shift of one fiscal year's price or value to later fiscal years. Given the nature of the static software prices and the mistaken assumption of the contracting officer protester argues that the contracting officer should have concluded that OCSC's static prices were likewise not in compliance with M.7(d). Id. We reject protester's arguments for the simple fact that they are based on contrary-to-fact conditions. The allegation in Count VI is that there was, in fact, unbalanced pricing. That allegation has been narrowed down to include only the static prices offered for forty-one software items. These prices are said to be the type of mathematically unbalanced prices found to be unacceptable by the Federal Circuit in its SMS decision. The record simply does not confirm the existence of any mathematical imbalance as the term is understood in the SMS decision. The ultimate question here is not whether the contracting officer, given her mistaken assumption, should have concluded that such an imbalance was present. Rather, the question now is whether, on de novo review, we find that there was or was not any imbalance. The simple answer is that, given the facts as now known in this case, the static prices were not mathematically unbalanced. Finding 26. This fact readily renders credible the contention of OCSC's proposal preparation manager that each CLIN was priced to make a profit for every year. Finding 27. Protester's argument as to what the contracting officer should have concluded based on her mistaken assumption does nothing to convince us that the static pricing for the forty-one software items was, in fact, unbalanced. The record indicates otherwise. Accordingly, we find no violation of clause M.7(a) and (d). Count VII - Misrepresentations In the seventh count of its protest, TMA claims that OCSC should be disqualified from participating in the protested procurement because of material misrepresentations made in OCSC's August 31 BAFO. Specifically, TMA alleges that OCSC in the pricing narrative requested by the contracting officer deliberately led the contracting officer to believe The argument advanced by protester in Count VII goes on to state that these alleged representations led the contracting officer to conclude See Second Amended Complaint at 3-4. This, in turn, alleges protester, served as the basis for the contracting officer's misinformed conclusion that effective competition existed. Id. at 7. In deciding whether OCSC made the alleged misrepresentations, we look, first of all, at the purpose of the pricing narrative in which the misrepresentations were said to have been made. The purpose of the narrative -- as pointed out by the contracting officer to offerors and at hearing -- was to provide an explanation regarding the methodologies and assumptions each offeror used in arriving at its pricing. Findings 17-21. The contracting officer's request for a pricing narrative was not a request for cost or pricing data. Finding 19. One could, in fact, be completely responsive to the request for a narrative without providing subcontract costs or pricing. We are not faced here, therefore, with a situation similar to those in the cases cited by protester[foot #] 4 where an offeror attempted to circumvent an informational requirement by answering with an untruth, a half truth, or an omission. In this case, OCSC was not asked to or expected to provide its subcontract costs or prices for software licenses and software maintenance. The references made by OCSC in its pricing narrative regarding "quotes," "quotations," "cost quotes," and "declining costs" of Oracle products are made for purposes of explaining the rationale for the change in pricing and the methodologies used in the price proposal. See Finding 31. It is difficult to imagine how these issues could have been adequately addressed without making reference to the Oracle Corporation quotes. Those quotes do serve as a critical point of reference in OCSC's pricing methodologies. Indeed, the quotes even serve as a point of reference We, therefore, do not view these statements by OCSC as half truths intended to convey misleading information regarding OCSC's actual subcontract costs or prices. Rather, we see this terminology as appropriate and perhaps even essential to the presentation of a meaningful pricing narrative. ----------- FOOTNOTE BEGINS --------- [foot #] 4 Namely Sterling Federal Systems, Inc., GSBCA ________________________________ 10381-P, 90-2 BCA 22,802 , 1990 BPD 70, aff'd on _________ reconsideration, 90-3 BCA 22,962, 1990 BPD 123; Informatics, _______________ ____________ Inc., 57 Comp. Gen. 217 (1978), 78-1 CPD 53. ____ ----------- FOOTNOTE ENDS ----------- Nevertheless, we do not consider that either company was required under the terms of this procurement to reveal such information. Accordingly, we do not view the omission of any reference to such materials, either by OCSC or TMA, in the pricing narratives as tantamount to a material misrepresentation. As noted, protester further argues under Count VII that the alleged misrepresentations of OCSC led the contracting officer to conclude We find the argument without foundation. Protester has offered no evidence that OCSC provided respondent with its Oracle quotes. See Finding 32. In addition, the submission of alternate proposals demonstrated that Oracle Corporation's pricing terms could vary. Id. In short, we remain convinced that the contracting officer's ultimate conclusion was simply the result of her comparison of the Oracle quotes supplied by TMA to the prices offered by OCSC. See Findings 34-35. We can find no basis for the assertion that this somewhat speculative[foot #] 5 conclusion stemmed from statements made or not made in OCSC's pricing narrative and from the contracting officer's reliance on the same. ----------- FOOTNOTE BEGINS --------- [foot #] 5 Upon review of the entire record for this case, we are not convinced that much, if any, credence should be given to this conclusion of the contracting officer. It was apparently made very late in the evaluation process and seized upon as a convenient confirmation of competition. The observation was not, however, thought through since it clearly conflicts with a working assumption the contracting officer had throughout this procurement regarding a competitive advantage OCSC probably enjoyed as a wholly owned subsidiary of Oracle Corporation. This assumption is even mentioned in the SEB report -- See ___ Finding 29. ----------- FOOTNOTE ENDS ----------- Having concluded that the material misrepresentation alleged by protester did not occur and that the contracting officer did not, in fact, rely on any statements in OCSC's pricing narrative to arrive at her erroneous conclusion regarding the subcontract costs to TMA and OCSC, we see no need to proceed further in our discussion of Count VII. A Competitive Procurement Notwithstanding our conclusion that Count VII necessarily fails for want of a valid premise, a word regarding the alleged consequences of the contracting officer's mistaken assumption regarding subcontract costs seems appropriate. Protester would have us believe that the contracting officer's erroneous assumption regarding subcontract costs virtually vitiated any assumption on her part that the procurement was a competitive one. We consider the argument to be greatly overstated. It is indeed true that the contracting officer incorrectly concluded and that she considered this to be evidence of effective competition. Finding 34. Fortunately, however, this was not the sole basis for her considering the procurement to be a competitive one. The receipt of competitive offers to supply commercial software available to the general public in substantial quantities convinced her early on in this procurement that she did have full and open competition as well as adequate price competition. Findings 37-38. Admittedly OCSC as a wholly-owned subsidiary of Oracle Corporation had a competitive advantage over vendors offering Oracle products on this procurement. It is well established, however, that the existence of a price advantage by one offeror over others by virtue of special status or relationship with a common supplier is not an unfair advantage. See Rodenberg's Floor Coatings, Inc., B-211908, 83-2 CPD 5 (June 20, 1983); Braswell Shipyards, Inc., B-191451, 78-1 CPD 233 (Mar. 24, 1978). Similarly, we have held that the Government is not obligated to equalize the competitive position of all potential offerors and the fact that a firm may enjoy a competitive advantage by virtue of its own particular circumstances is not a valid basis for protest. GTE Telecom Inc., GSBCA 10986-P, et. al., 91-2 BCA 23,691, 1991 BPD 18. Furthermore, intervenor has elicited persuasive testimony from employees of OCSC which indicates that their company was, in fact, sensitive to a certain competitive pressure on this procurement. See Finding 39. We do not, therefore, share protester's apparent conviction that, once the contracting officer's conclusion regarding equal subcontract costs was shown to be fallacious, the procurement is thus exposed as bereft of any competitive character. Decision This protest is DENIED. The Board's order of October 13, 1992, suspending respondent's delegation of procurement authority expires in accordance with its terms. ____________________ EDWIN B. NEILL Board Judge We concur: _______________________ CATHERINE B. HYATT Board Judge _______________________ JOSEPH A. VERGILIO Board Judge