THIS OPINION WAS INITIALLY ISSUED UNDER PROTECTIVE ORDER AND WAS RELEASED TO THE PUBLIC IN REDACTED FORM ON NOVEMBER 10, 1993 _________________________ GRANTED: November 3, 1993 _________________________ GSBCA 12552-P INTEGRATED SYSTEMS GROUP, INC., Protester, v. DEPARTMENT OF AGRICULTURE, Respondent. Shelton H. Skolnick, Judy Leishman, and Amy M. Hall of Skolnick & Leishman, Derwood, MD, counsel for Protester. Jane H. Talley, Office of the General Counsel, Department of Agriculture, Washington, DC, counsel for Respondent. Before Board Judges WILLIAMS, VERGILIO, and GOODMAN. VERGILIO, Board Judge. On August 25, 1993, Integrated Systems Group, Inc., filed with the Board this pre-award protest. Protester maintains that the respondent, the Department of Agriculture, "attempted to modify solicitation requirements without formal amendment." On September 1, the protester amended its protest to allege that the agency had improperly excluded it from the competitive range and had failed to provide the protester with timely and proper notice of its exclusion. The agency has moved to dismiss the initial protest, contending that these issues have been untimely protested to the Board because they had been untimely protested to the agency. The Board concludes that the issues raised in the agency protest initially, and subsequently raised in the initial protest at this Board, are matters which would normally be discussed or resolved through the discussion process. The agency had not yet requested best and final offers. The protest to this Board was timely filed. In light of fundamental, unresolved aspects of the solicitation, and the ambiguity of certain provisions, the agency's rigid approach to the discussion process was unreasonable, as was its exclusion of the protester from the second competitive range. The agency's actions impermissibly stifled competition and improvidently excluded a potential offeror from the competition. Findings of Fact Initial proposals and discussions 1. The agency obtained initial proposals for the delivery, installation, maintenance, and support of IBM-compatible, large scale, mainframe CPU (central processing unit) complexes on a lease or lease-to-ownership basis. Protest File, Exhibits 7, 9- 12, 14, 15, 19. The solicitation dictates, "To be considered for source selection, both the technical (pass/fail) and the cost proposal must be compliant without exception, qualification, and/or reservation." Id., Exhibit 14 at 369 ( M.3, proposal evaluation). Further, award would be made to the offeror proposing the lowest overall cost to the Government based upon a cost model described in the solicitation. Id., Exhibits 10 at 321, 14 at 373, 386-87, 15 at 397-99 ( M.4 through M.6). 2. Following its evaluation of initial proposals, one of which the protester had submitted, the agency concluded: The evaluations revealed that all offerors' proposals could be made acceptable with revisions and no complete rewrites would be needed. . . . It is felt that all [] offerors have a reasonable chance for award. Protest File, Exhibit 19 at 777. The agency included the protester and others in the initial competitive range, and proceeded to issue written discussion questions. Id. The agency did not exclude any offeror because of price disparity. Transcript at 125. 3. The protester received its written discussion questions on July 19. Protest File, Exhibit 30(a) ( 17). The cover letter to these questions noted: "These questions need to be addressed by submitting an addendum to your proposal." "Revised cost and price information and technical information shall be submitted in separate, sealed envelopes[.]" "Your signed addendum must be received by 11:00 a.m., Eastern Standard Time, on August 2nd, 1993 . . . . Late responses will be governed by the 'Late Submissions, Modifications, and Withdrawals of Proposal' clause in the solicitation document." Id., Exhibit 20 at 781-82.[foot #] 1 The response time and date were later extended through 11:00, August 3. Id., Exhibit 22 at 900. 4. The protester received forty-four numbered questions. The questions were pigeon-holed into three categories--those relating to general contract terms (five questions); technical requirements (ten questions); and cost requirements (twenty-nine questions). Protest File, Exhibit 20. Those in the first category asked if the protester "will": submit a copy of various solicitation sections, as amended; provide written acknowledgement of receipt of amendments; submit specific section K certifications fully completed; provide additional information o n [ R E D A C T E D ]; and provide a certificate of insurance as required under section H. Id. at 783-86. 5. The questions in the second category focused upon sections C, J, and L of the solicitation, asking if the protester "will": [ REDACTED ] Protest File, Exhibit 20 at 787-93. 6. Although arising from evaluation of the cost proposal, the questions in the cost category reached into cost and technical areas of the initial proposal. A sampling of the questions is indicative of the agency's concerns. [ ----------- FOOTNOTE BEGINS --------- [foot #] 1 The solicitation incorporates by reference Federal Acquisition Regulation (FAR) clauses 52.215-9 (Submission of Offers) (Dec. 1989) and 52.215-10 (Late Submissions, Modifications, and Withdrawals of Proposals) (Dec. 1989). Protest File, Exhibit 23 at 1000 ( L.1). ----------- FOOTNOTE ENDS ----------- REDACTED ] Protest File, Exhibit 20 at 794-880. 7. By amendment eight to the solicitation issued with an effective date of July 29, prior to the due date for responses to the written discussion questions, the agency noted that questions pertaining to clauses involving the Buy American Act, Trade Agreements Act and Small Business Act "have been taken under advisement and no final decision has been made on whether or not to apply an evaluation preference for, or to restrict eligibility to, domestic products." Protest File, Exhibit 22 at 900. The parties were not informed of any resolution of these questions prior to the due date for responses to written questions. Id., Exhibit 3 at 23. Protest to agency 8. On August 3, prior to the time set for receipt of responses, the agency received by facsimile from the protester an agency protest. Protest File, Exhibit 2; Transcript at 128; Answer at 5 ( 3). The letter states that the protester: is interested in participating in the referenced solicitation. The Government's clarification questions recite "requirements" of the solicitation which have not been made solicitation requirements by formal amendment (see attached for specific examples). Please (1) remove these questions or (2) restate the clarification questions to [re]move the amendments or (3) make the changes as a formal amendment and provide sufficient time to respond to that amendment IAW FAR 15.410. We are confused by the most recent amendment which implies that the Government is changing its requirements for US Made products. This change would represent a significant change, requiring us to reevaluate the products which we have proposed. Should the Government make such a change, please provide sufficient time IAW FAR 15.410. When these issues are resolved, we will promptly respond to the remaining clarification questions. Please suspend immediately the conduct of this solicitation until these matters are resolved . . . . Protest File, Exhibit 2. 9. Only through the agency protest, as the protester's referenced attached specific examples, did the protester provide "responses" to eight of the forty-four written discussion questions. Two responses relate to the technical category of questions, six to the cost category of questions. See Findings 11-12. The protester did not submit a written response specific to any of the other thirty-six questions. Transcript at 136. 10. By letter dated August 13, to the protester, the contracting officer responded to the agency protest. Protest File, Exhibit 3. The letter provides specific determinations. Namely, the "protest based upon Amendment 7 is untimely"--any protest based upon changed requirements was known or should have been known on July 19 (the date protester picked up that amendment); ten working days hence was August 2. The response also addresses the merits of each item raised in the agency protest by the protester. 11. [ REDACTED ] 12. The second written discussion question in the technical category, protester's response (contained in its agency protest), and the agency response to that protest are as follows: [ REDACTED ] Protest File, Exhibit 3 at 24-25. 13. While the actual requirements of the agency may not have changed, the agency recognized that the existing solicitation could be (and was being) interpreted in a manner inconsistent with the agency's intent. In amendment nine, issued to those in the second competitive range (not the protester) with an effective date of August 13, the agency altered the very provision addressed by the protester. Protest File, Exhibit 27 at 1032 ( M.3.1.6). 14. In addition to responding to the cost category of questions, the agency concluded its August 13 response to the agency protest by stating, "The Government will not remove the questions issued under written discussions dated July 19, 1993 nor relax the due date of August 3, 1993 as the deadline for submission." Moreover, "The protest is denied." Protest File, Exhibit 3 at 29. Second competitive range determination 15. After the date and time had elapsed for receipt of responses to the written discussion questions, the agency reviewed the initial proposals, as supplemented or not by written response. The agency did not consider the "responses" in the protester's agency protest during this process because they had been submitted by facsimile, and the original was received after the closing date had elapsed. Transcript at 132-33, 135-36. The agency made a new competitive range determination. The contracting officer "had to look to see, did [each offeror] still stand a reasonable chance for award. The offerors that responded had improved theirs significantly, so that the [protester's] relative standing, you know, was a lot further down." Id. at 149. The determination of relative standing was made in terms of "how close were they to having a technically acceptable proposal." Id. The contracting officer concluded that the protester still had much to address in many areas, while others had only minor areas to address. The protester "didn't seem to understand what we were looking for in terms of satisfying the requirements." Id. at 150. The contracting officer testified: "I don't know that anything would have been difficult for [the protester] to have corrected. They did not choose to submit a response. So I'm not in a position to say what they could have corrected or not." Id. at 151. The contracting officer noted: "I'm just saying that the other offerors had made a good faith effort of responding to the Government's questions and had satisfied a lot of those questions that had -- so that their proposal was nearer to being technical[ly] acceptable at that point in time and [protester]'s had remained stagnant." Id. at 152. 16. Although the contracting officer testified that, at the time of second competitive range determination, the protester's proposal was capable of being made acceptable, "in comparison to the other offerors, I did not feel they had a reasonable chance [of receiving the award]. Their initial submission, with everyone else's initial submission, they had approximately the same reasonable chance." Transcript at 153. Price was not a discriminating factor in the second competitive range determination. Id. at 158. 17. The agency placed multiple offerors, but not the protester, in the second competitive range. The contemporaneous rationale notes that the protester did not respond to the agency's written discussion questions, states that the initial proposal is not acceptable, and concludes, "Therefore, [protester] can no longer be considered." Protest File, Exhibit 26 at 1020-21. This conclusion rests, in part, on the conclusions of technical evaluation team's (TET's) revised technical evaluations (conducted taking into consideration the initial proposals and written responses, if any). The TET found the protester's proposal to be technically unacceptable, because, as originally submitted, it did not meet all mandatory requirements." Id. at 1022. 18. The contracting officer went through the summaries of the panels and "concluded that the offerors that had responded had improved their proposals sufficiently, that the gap had widened enough that I did not feel that [protester] had a reasonable chance for award, particularly considering the time that we had left prior to making award." Transcript at 344. 19. On August 18, the protester received from the agency a letter dated August 16. Appeal File, Exhibit 30(a) ( 24). After stating that the protester did not provide a response to the written discussion questions, and that the protester's initial proposal did not satisfactorily meet all of the mandatory requirements, the letter concludes, "Therefore, a determination has been made that FCC is no longer within the competitive range and cannot be considered further." Protest File, Exhibit 28. 20. Amendment nine to the solicitation, with an effective date of August 13, states that the agency has concluded its original determination that the [Trade Agreements Act] does not apply to this procurement was correct. Further, [the agency] has determined that offered end products must comport with the requirement that they be manufactured domestically. . . . Accordingly, [the agency] will not be applying the Buy American Act differential to end products determined to be foreign made. Protest File, Exhibit 27 at 1027. Finding 13 describes another provision of amendment nine. The Board protest 21. On August 25, the protester filed its initial protest with the Board. The stated ground of protest reads: The agency "attempted to modify solicitation requirements without formal amendment." Protest at 2. 22. On September 1, the protester amended its protest to include additional alleged agency violations: (1) Failure to give protester timely and proper notice of its exclusion from the competitive range. (2) Improper exclusion from the competitive range because the agency had "admitted the validity of some of the Protester's [agency] protest issues. Those protest issues could affect ma[n]y of the Protester's responses to the [agency's] written discussions." (3) Improper exclusion from the competitive range because the agency "expected to amend the protested solicitation (thus resulting in changes to prior respons[e]s to written discussion) at the time" the [agency] excluded the protester. (4) Improper exclusion from the competitive range because the agency had failed to make a finding the protester's proposal was not capable of being made acceptable. Discussion In its protest filed with the Board, the protester initially raised a single ground: the agency attempted to modify the solicitation without formal amendment. Thereafter, by amendment, the protester raised additional grounds, contending that the agency had failed to provide the protester properly and timely with notice of its removal from the competitive range, and had improperly excluded the protester from the competition. The agency maintains that the protest should be dismissed. On the merits, the agency contends that all bases of protest must be denied. Agency motion to dismiss The agency raises alternative grounds to dismiss the protest: the protest to the agency and ensuing protest to the Board were untimely; the protest and clarification fail to conform to the requirements of Rule 7(b)(2); and the amendment of the protest was filed without leave of the Board and impermissibly enlarges the grounds of protest. Timeliness Contrary to the assumptions of the agency, the timeliness of the agency protest is not relevant, and Rule 5(b)(3)(i), not 5(b)(3)(ii), is here applicable. The allegation in the initial protest that the agency was improperly altering its requirements without a written amendment to the solicitation focuses on language in amendment eight which explicitly left unresolved the applicability of Buy American Act, Trade Agreement Act, and Small Business Act provisions and on eight written discussion questions. Amendment eight was issued fewer than ten days before the protester submitted its agency protest and before the agency requested a second round of proposals. The protester filed its protest with the Board within ten days of the agency denial. Thus, even under the agency's theory, that aspect of the initial protest was timely filed. Rule 5(b)(3). The other aspect of the initial protest focuses upon the written discussion questions. Rule 5(b)(3)(i) provides that alleged improprieties which do not exist in the initial solicitation but which are subsequently incorporated therein must be protested no later than the next closing time for receipt of proposals following the incorporation. The questions were part of the discussion process; under regulation, this process did not request a modification to the initial proposals. FAR, Part 15, defines the term "modification" to mean a "modification of a proposal, including a final modification in response to the contracting officer's request for 'best and final' offers. The term does not include normal revisions of offers made during the conduct of negotiations by offerors selected for discussions." 48 CFR 15.412 (1992) (emphasis added). At the time the protest was filed with the Board, the closing time for receipt of proposals had not yet passed--best and final offers were still to be submitted and ten days had not elapsed from the agency denial. Hence, the protest was filed timely with the Board, regardless of the timeliness of the underlying protest to the agency. Alternatively, the concerns of the protester revealed in the eight questions could all have been raised (whether or not ultimately resolved) during the discussion process. To start the protest clock with the receipt of written discussion questions, as urged by the agency, would encourage protests while greatly limiting the scope and benefits of, and the possibility of resolving matters through, the discussion process. Such a position is inconsistent with the regulatory preference that matters be raised with an agency before being protested at this Board. 48 CFR 33.102(c) (1992) ("An interested party wishing to protest--(1) Is encouraged to seek resolution within the agency (see 33.103) before filing a protest with the GAO or the GSBCA."). Rule 7(b)(2)(v) The agency maintains that the initial protest must be dismissed for failure to comply with Rule 7(b)(2)(v) which requires a "simple, concise, and direct statement of the grounds for protest, including citations to provisions of statute, regulation, or the delegation of procurement authority that the protester alleges were violated." The protest incorporates by reference the underlying agency protest which notes that the agency had yet to determine applicable provisions of the solicitation and expressly references FAR 15.410 in urging the contracting officer to provide sufficient time to respond to solicitation amendments. Even if the protest could have provided more detail as to the underlying legal violations, the specific factual problems and general legal violations were sufficiently explained so that the contracting officer could respond to the agency protest. The protester complied with Rule 7(b)(2)(v). Amended protest The protester filed with the Board the amended protest within ten days of learning of its exclusion from the competitive range. The grounds of protest raised serve as timely filed, independent bases of protest which could have been docketed as a separate protest. No party suggested that consolidating the matters with the initial protest would be inappropriate. There exists no basis to dismiss the timely raised new issues. Failure to issue written amendment The protester maintains that the agency improperly attempted to modify the solicitation without a formal amendment. That is, the protester alleges that the agency sought responses to written discussion questions before it had finalized terms of the solicitation relating to product eligibility and evaluation preferences, and before it had eliminated an ambiguity in the stated requirements. The protester contends that the agency acted improperly by proceeding with the discussion process without amending the solicitation so as to accurately set forth true requirements. The contracting officer, not an offeror or protester, is charged with controlling discussions. 48 CFR 15.610 (1992). Filing a protest with the agency is not to be equated with the suspension of the procurement process. 48 CFR 33.103 (1992). By not formally participating in the discussion process, and by filing an agency protest instead, the protester limited the benefits it (and the agency) could gain through discussions. However, as explained below, the agency had yet to finalize solicitation provisions which substantively could affect what would be offered and the ultimate responses to many of the questions. In light of the recognized need to amend the solicitation, the agency has not demonstrated the reasonableness of rigidly proceeding with discussions and requiring the protester to finalize technical and cost aspects of a proposal when the underlying items to be offered could change with future amendments to the solicitation. Notice of the exclusion from the competitive range The protester's allegation that the agency failed to provide the protester with timely and proper notice that it had been excluded from the competitive range rests on a sentence in the letter addressed to the protester: "Therefore, a determination has been made that FCC is no longer within the competitive range and cannot be considered further." Finding 19. Indeed, protester is not FCC. However, the protester learned of its exclusion from the competitive range and amended its protest within ten days of receiving the letter referencing FCC. The protester suffered no prejudice. To pursue the allegation regarding notification under these circumstances is frivolous. Exclusion from the competitive range The protester asserts that it was improperly excluded from the second competitive range. Having concluded that the protester's initial proposal could be made acceptable without a complete rewrite, the agency included the protester in the initial competitive range. Finding 2. At the time of the second competitive range determination, the agency concluded that the unamended initial proposal was unacceptable, and therefore, excluded the protester from the competitive range. This determination was made, despite the protester's agency protest and the agency's determinations and conclusions revealed in amendments eight and nine to the solicitation and its response to the agency protest. Amendment eight explicitly recognized that the terms of the solicitation and, hence, the underlying competition, remained incomplete. Finding 7. The agency had yet to make determinations regarding evaluation preferences and restrictions on the eligibility of products. Contending that the resolution of these matters could affect its determination of the products to be offered, the protester raised this as a basis in support of delaying responses to the written discussion questions in its agency protest. Finding 8. In its agency protest, the protester expressed concern regarding the agency's interpretation of paragraph M.3.1.6 and contended that the related written discussion question revealed changed agency requirements. Finding 12. While the actual requirement of the agency may well have remained unchanged, both the agency's response to the protest question, Finding 12, and the subsequent amendment to the solicitation, Finding 13, reflect the agency's belief that the protester's interpretation of the provision was reasonable. In short, the solicitation language at the time responses to written discussion questions were due did not accurately reflect the requirements of the agency. The agency's actions, particularly as reflected in amendments eight and nine, demonstrate that the agency was proceeding with discussions, evaluations, and competitive range determinations while the solicitation failed to reflect its true requirements. Moreover, while so proceeding, the agency was aware that the protester was contending that its ultimate response to the solicitation would be dependent on the agency's answers to unresolved and ambiguous matters. To preclude an offeror from submitting a best and final offer, without giving that offeror the opportunity to be responsive to finalized terms of a solicitation, is inconsistent with requirements that the agency obtain competition. With the information in the agency protest and the knowledge that the solicitation was not finalized in fundamental aspects (relating to evaluation preferences and eligibility of products, and to a provision acknowledged by the agency to be ambiguous), the contracting officer's determination that the protester lacked a reasonable chance of being selected for contract award is unwarranted. 48 CFR 15.609(b) (1992). Decision The Board GRANTS the protest. The previously entered order suspending the agency's applicable procurement authority lapses by its terms. The Board revises the procurement authority of the agency to require the agency to place the protester in the competitive range and to conduct discussions and proceed as permitted by statute and regulation. 40 U.S.C. 759(f)(5)(B) (1988). ____________________________ JOSEPH A. VERGILIO Board Judge We concur: ____________________________ ____________________________ MARY ELLEN COSTER WILLIAMS ALLAN H. GOODMAN Board Judge Board Judge