THIS OPINION WAS INITIALLY ISSUED UNDER PROTECTIVE ORDER AND IS BEING RELEASED TO THE PUBLIC IN ITS ENTIRETY ON SEPTEMBER 16, 1993 ______________________________ SUMMARY RELIEF GRANTED IN PART; MOTION TO DISMISS DENIED: September 13, 1993 ______________________________ GSBCA 12536-P SYSTEMS RESOURCES, INC., Protester, v. DEPARTMENT OF THE NAVY, Respondent, and DEFENSE PRIORITY EQUIPMENT RECONDITIONING CORPORATION, Intervenor. Gerard F. Doyle, Scott A. Ford, Ron R. Hutchinson, and Alexander T. Bakos of Doyle & Bachman, Washington, DC, counsel for Protester. Charles M. Stinger and Jill A. Eggleston, Defense Finance and Accounting Service, Kansas City, MO; and Robert T. Cali and George N. Brezna, Office of Counsel for the Commandant, U.S. Marine Corps, Department of the Navy, Arlington, VA, counsel for Respondent. Jeffrey L. Michelman and Timothy T. Sigmund of Blumenfeld, Kaplan & Sandweiss, St. Louis, MO, counsel for Intervenor. Before Board Judges LaBELLA, NEILL, and DeGRAFF. LaBELLA, Board Judge. Systems Resources, Inc. (protester) has protested the proposed award of a contract by the Department of the Navy, Marine Corps Support Activity (respondent), and has filed a motion for summary relief. The respondent has filed a cross- motion to dismiss the protest for untimeliness. As explained below, we grant protester's motion in part and deny respondent's motion. Background Terms of the Solicitation Respondent issued Solicitation No. M67443-92-R-0002 on June 15, 1992 for procurement by negotiation of maintenance support services for automated data processing equipment (ADPE). The procurement requires the furnishing of supplies and services required to maintain the equipment items listed in the solicitation. Protest File, Exhibit 7. The solicitation required offerors to submit separate technical and cost proposals. Protest File, Exhibit 7. Section M-5.2 of the solicitation stated that the technical and cost proposals would be evaluated separately. Protest File, Exhibit 7. The technical proposal would be reviewed in detail to determine if it met all mandatory requirements and would be assigned a technical rating of either "ACCEPTABLE" or "UNACCEPTABLE". Protest File, Exhibit 7. An acceptable proposal was defined as: . . . meets minimum RFP [request for proposal] requirements and is acceptable. The approach is generally comprehensive and complete in all details. There are no significant deficiencies. The methodology is presented in sufficient detail to assure the probability of meeting the requirement with little risk of disruption of operation, increase in costs or degradation of performance. Id. An unacceptable proposal was defined as: . . . not comprehensive and complete in all detail. It fails to achieve one or more of the requirements. It is highly likely to cause significant disruption of operations, increase in costs or degradation of performance. Id. Cost proposals were evaluated on the basis of a thirty-six month life cycle. Id. The total evaluated cost of each offer was the basis for determining the low offered price. Id. Section L.20 of the solicitation contained Alternate III of the standard Federal Acquisition Regulation (FAR) clause found at 48 CFR 52.215-16, which is required to be included in all requests for proposals when it is anticipated that award will be made without discussion on the basis of initial proposals. The clause provides that the Government intends to evaluate proposals without discussion and may accept other than the lowest offer. Protest File, Exhibit 7. The contract is to be awarded to the responsible offeror whose offer would be "the most advantageous to the Government, cost or price, and other factors, specified elsewhere in this solicitation, considered." Id. Section M-10 of the solicitation went on to state that the award would be made to "[t]he offeror whose proposal meets all mandatory requirements, is determined to be technically acceptable and represents the best value to the Government." Id. In Amendment No. 2 to the solicitation, the contracting officer provided written responses to the following questions regarding the solicitation: 1. Section M, Source Selection: How will the technical rating be used in the award decision? Response: Each proposal will receive a technical rating of "Acceptable" or "Unacceptable". Those offers which are determined to be technically acceptable will be included in the cost evaluation. Award will be made to an offeror whose proposal is most advantageous to the Government. 2. What is the relationship between technical and cost? Response: There is no explicit relationship between costs and technical considerations. Protest File, Exhibit 7. Award of the Contract Initial technical and cost proposals were submitted to the contracting officer on September 21, 1992. The Source Advisory Committee (SAC) found that both Defense Priority Equipment Reconditioning Corporation's (DPER's) and protester's proposals were technically acceptable and were equal in most respects. Protest File, Exhibit 4. SAC's report went on to note that DPER's proposal exceeded the Government's minimum needs in some areas. Id. SAC also conducted a cost comparison of the two proposals. Id. On the basis of the initial proposals, protester's life cycle cost was lower than DPER's. Id. However, SAC went on to assign a dollar value to the aspects of DPER's technical proposal which exceeded the Government's minimum needs and applied this cost savings adjustment to DPER's life cycle cost. Id. When the cost savings adjustment was subtracted from DPER's life cycle cost, DPER became the low offeror. SAC did not apply a cost savings adjustment to protester's life cycle cost. Id. In a letter dated August 11, 1993, protester was notified that DPER would be awarded the contract. Protest File, Exhibit 3. Protester was informed that its proposal was technically acceptable and met the Government's requirements. Id. However, the letter added that DPER's proposal "exceed[ed] the Government's requirements and offered the best overall value to the Government, price and other factors considered." Id. Discussion Protester's Motion for Summary Relief This protest involves alleged violations of the Competition in Contracting Act of 1984 (CICA), 10 U.S.C. 2301-2305, and regulations derived therefrom. In protests, summary relief is granted only if there is no genuine issue of material fact and the moving party is entitled to judgment as a matter of law. C3, Inc., GSBCA 10066-P, 89-3 BCA 22,053, at 110,949, 1989 BPD 189, at 11. The material facts relevant to protester's motion are not in dispute. Disclosing Factors to be Considered in Evaluating Proposals The CICA provides that agencies must obtain full and open competition when conducting a procurement for property or services. 10 U.S.C. 2304(a)(1)(1988). A solicitation for competitive proposals must include at a minimum: (A) a statement of - (i) all significant factors which the head of the agency reasonably expects to consider in evaluating . . . competitive proposals (including cost or price); and (ii) the relative importance assigned to each of those factors[.]. 10 U.S.C. 2305(a)(2)(1988). The FAR provides: The solicitation shall clearly state the evaluation factors, including price or cost and any significant subfactors, that will be considered in making the source selection and their relative importance. . . . The solicitation shall inform offerors of minimum requirements that apply to particular evaluation factors and significant subfactors. 48 CFR 15.605(e) (1992). The agency must award the contract to the responsible source whose proposal is most advantageous to the Government, "considering only price and the other factors included in the solicitation." 10 U.S.C. 2305(b)(4)(D)(1988). In the instant case, the Marine Corps did not comply with the statutory and regulatory mandate that all significant factors to be considered when evaluating competitive proposals and the relative importance of these factors be disclosed to offerors. The solicitation provided that technical proposals would be evaluated on an acceptable/unacceptable basis only. There was no indication that SAC would look beyond the articulated rating system and examine whether, and by how much, an offeror's technical proposal exceeded the Government's needs as described in the solicitation. Moreover, not only did SAC examine whether the technical proposals exceeded the Government's needs, but it then assigned a dollar value to the aspects of the proposal which it determined exceeded the requirements of the solicitation and discounted the offered price by that amount. Again, the fact that SAC would be assessing a cost savings adjustment to the proposals was not disclosed to the offerors. In fact, respondent's responses to vendor's questions which were included in the amendment to the solicitation indicated that there would not be such a tradeoff, as there was to be no relationship between cost and technical considerations. The Board has held that any factor which significantly contributes to how a potential offeror structures its proposal or which affects the selection of an awardee should be disclosed in the solicitation. Systemhouse Federal Systems, Inc., GSBCA 9313- P, 88-2 BCA 20,603, at 104,122, 1988 BPD 33, at 13. The fact that SAC would be examining the technical proposals to determine whether they exceeded the requirements of the solicitation and would be assigning a dollar value to those elements is such a significant factor. Offerors may structure their proposals differently and may include additional features in their proposals based on this knowledge. The proposal an offeror submits based on the terms of this solicitation could be markedly different than the proposal which may have been submitted if the evaluation factors and cost savings adjustment had been disclosed. Thus, the fact that proposals would be examined to determine if they exceeded the requirements of the solicitation and the fact that a cost savings adjustment would be applied to those elements which exceeded the requirements should have been disclosed in the solicitation. Best Value Respondent argues that the solicitation specifically states that the award would be made to the offeror whose proposal represents the best value to the Government, and not to the offeror who had the lowest priced, technically acceptable offer. The respondent contends that various contract provisions demonstrate the Government's intent to evaluate terms of proposals which provided added value and to compare that added value against the terms offered in other proposals. Among the contract provisions cited by the respondent to support its argument is Amendment No. 2 of the solicitation. The contracting officer issued the amendment to respond to questions concerning how the technical aspects of the proposal would be rated and the nature of the relationship between cost and technical. As quoted above, respondent's replies indicated that technical proposals would be rated either acceptable or unacceptable and that there was "no explicit relationship between cost and technical considerations." Protest File, Exhibit 7. Rather than preserving the evaluating team's discretion in determining whether any added value in a proposal was worth an increase in cost as respondent argues, the amendment could only have led a prudent potential offeror to believe that there would not be a tradeoff between technical and cost factors. In these circumstances, more than a mere reference to the phrase "best value" was needed in order to alert potential offerors that there would be a tradeoff between cost and technical factors. In order to comply with CICA's mandate that all significant factors be disclosed, the agency needs to articulate, directly or indirectly, that it intends to consider enhancements in the technical proposals and thus conduct a technical/price tradeoff. Without any elaboration by the agency, potential offerors could not reasonably have understood best value to mean there is a tradeoff or how the relevant factors would be assessed in the tradeoff. An example of a solicitation which elaborated on these factors in a best value procurement is found in Lockheed Missiles & Space Co. v. Department of the Treasury, GSBCA 11776-P, et. al, 93-1 BCA 25,401, 1992 BPD 155, aff'd sub nom. Lockheed Missiles & Space Co. v. Bentsen, No. 92-1566 (Fed. Cir. Aug. 30, 1993) (TMAC II). In TMAC II, Lockheed Missiles and Space Co., Inc. (Lockheed) and International Business Machines Corp. (IBM) protested the award of the Treasury Multi-User Acquisition Contract (TMAC) by the Department of the Treasury, Internal Revenue Service (IRS) to AT&T Federal Systems (AT&T). TMAC was a procurement of office automation systems and software, as well as maintenance and support services. TMAC II, 93-1 BCA at 126,498, 1992 BPD 155, at 2. The TMAC solicitation included an evaluation scheme which provided, in part: Award will be made to that offeror whose proposal, containing the combination of technical, management and support, and cost features, offers the best overall value to the Government. The Government is more concerned with obtaining superior technical (technical and management and support) features than making award at the lowest price. Award will be determined by comparing differences in the value of technical features with difference in overall cost to the Government (overall cost to the Government includes the offeror's prices for equipment, software, maintenance, support and any other solicited[)]. However, the Government will not make an award at a significantly higher overall cost to the Government to achieve slightly superior technical features. TMAC II, 93-1 BCA at 126,498, 1992 BPD 155, at 2. The TMAC solicitation put all potential offerors on notice that a best value procurement was intended and that technical features were more important than cost considerations. In fact, the IRS awarded the contract to AT&T because of its technical features even though its evaluated cost was over one-half to three- quarters of a billion dollars more than that of Lockheed and IBM, respectively. TMAC II, 93-1 BCA at 126,508, 1992 BPD 155, at 4. Furthermore, respondent's oblique reference to best value does not put offerors on notice that a cost savings adjustment would be applied to elements of the technical proposals which exceeded the requirements of the solicitation. Potential offerors were not made aware that technical proposals would be evaluated to determine if they exceed the requirements of the solicitation, let alone that a cost savings adjustment would be applied to the factors that did exceed the requirements. Given this fact, it is difficult to believe use of the phrase "best value" adequately informed potential offerors as to the nature of the evaluation in which respondent engaged. While respondent argues that the Government's intent to conduct a best value procurement was evident from the provisions of the solicitation, this intent was ambiguously stated at best. Clearly, there was confusion about the meaning of best value in reference to this solicitation or there would not have been questions concerning how the technical evaluation would be used in the award decision and the relationship between technical and cost factors. Respondent may have tried to rectify the situation by issuing Amendment No. 2, but its efforts to shed light on the subject effectively rendered meaningless any previous passing reference in the solicitation to best value. Respondent is not precluded from conducting a best value procurement, but must put all potential offerors on notice that this is what is intended. Respondent's Motion to Dismiss due to Untimeliness of the Protest Respondent filed a motion to dismiss the protest for untimeliness. Based on its contention that the solicitation was clearly for a best value procurement and in accordance with Rule 5(b)(3)(i) of the Board's Rules of Procedure, the respondent argues that protests based on alleged improprieties in a solicitation which are apparent before the closing time for receipt of initial proposals must be filed prior to closing time of initial proposals. Thus, says respondent, protester should have filed its protest prior to September 21, 1992, in order to contest the language of the protest. As in Systemhouse Federal Systems, respondent's arguments misinterpret the nature of protester's complaint. The basis for [SRI's] protest is that 'hidden criteria' were applied to its offer. [Protester] could not have known, prior to closing time for receipt of initial proposals, that the [cost savings adjustments] would be applied in the manner that they were [or that they would even be applied in the first instance]. Thus, the impropriety that [protester] alleges were not apparent before initial proposals were due. Systemhouse Federal Systems, 88-2 BCA at 104,120, 1988 BPD 33, at 10-11. The appropriate rule to be applied is Rule 5(b)(3)(ii), which provides that "[a] protest, other than one covered in subparagraph (b)(3)(i) of this rule, shall be filed no later than 10 days after the basis for the protest is known or should have been known, whichever is earlier." Because protester could not have known that the technical proposals would be evaluated as they were, or that a cost savings adjustment would be applied, until after being notified that DPER would be awarded the contract, the protest is timely. Respondent's motion to dismiss is denied. Decision For the reasons stated above, protester's motion is GRANTED IN PART and respondent's motion is DENIED. Respondent must revise its solicitation to provide clear notice that it will be conducting a best value procurement in which technical enhancements over the Government's minimum requirements will permit a cost/technical tradeoff, if this is what respondent intends. Respondent shall then obtain revised proposals from all offerors. In its motion, protester essentially requested that a directed award be granted. However, a directed award is not the proper relief in this case. The proper relief is for respondent to revise its solicitation and for offerors to resubmit proposals on the basis of the revised solicitation. _____________________________ VINCENT A. LaBELLA Board Judge We concur: ____________________________ _____________________________ EDWIN B. NEILL MARTHA H. DeGRAFF Board Judge Board Judge