THIS OPINION, INITIALLY ISSUED UNDER PROTECTIVE ORDER, IS RELEASED WITHOUT REDACTION ON JUNE 13, 1995 _____________________ DENIED: July 26, 1994 _____________________ GSBCA 12855-P L.A. SYSTEMS, Protester, v. DEPARTMENT OF COMMERCE, Respondent. Shelton H. Skolnick, Wayne Finegar, Amy Hall, Amer Syed, and Bruce Trimble of Skolnick & Leishman, Derwood, MD, counsel for Protester. F. Jefferson Hughes, Mark Langstein, and Jerry A. Walz, Office of General Counsel, Contract Law Division, Department of Commerce, Washington, DC, counsel for Respondent. Before Board Judges DANIELS (Chairman), HENDLEY, and VERGILIO. VERGILIO, Board Judge. On June 6, 1994, L.A. Systems filed with the Board this pre- award protest challenging actions of the respondent, the Department of Commerce, National Oceanic and Atmospheric Administration (NOAA). In particular, the protester maintains that in "rejecting" its "alternate" proposals, the agency acted contrary to the terms of the solicitation, with the result that it failed to obtain full and open competition, and violated regulation by failing to evaluate in accordance with the stated evaluation criteria. The protester filed its protest in a timely manner, and has stated a claim upon which relief can be granted. Accordingly, the Board denies the agency's motion to dismiss. The protester has not demonstrated an agency violation. As is evident from the materials submitted to the protester in response to its agency protest, and reinforced in the record developed during this proceeding, the agency acted fully in accordance with the terms of the solicitation, statute and regulation in not pursuing the alternate proposals of the protester. The Board denies the protest. Findings of Fact The solicitation 1. The agency issued a request for proposals to obtain all services required to maintain the equipment/system specified in the solicitation--the National Weather Service Telecommunications Gateway (NWSTG). Protest File, Exhibit 2 at C-2 ( C.1, C.2). 2. For the six-month base period and each option period,[foot #] 1 the solicitation identifies fifty- eight items of hardware (by line item number, number of units, and total number of months of required maintenance) in three broad categories of maintenance.[foot #] 2 The offeror is required to supply a unit price and a total price for each line item of maintenance. Protest File, Exhibit 2 at B-1 to B-33 ( B.2). The solicitation specifies that award is to occur on a fixed-price basis. Id. at L-3 ( L.6), M-4 ( M.5). 3. The solicitation specifies that in performing that portion of the contract requiring total maintenance responsibility, the contractor shall "provide labor, parts, transportation and substitute equipment as necessary for ensuring performance within the parameters defined by the manufacturers' recommended performance specifications." The solicitation both recognizes that the agency may make alterations or install attachments, upgrades, or expansions on any systems or equipment covered by the resulting contract, and specifies that the parties "may renegotiate an adjustment under the Changes Clause should the alterations or attachments increase or decrease the maintenance costs to the Contractor." Also, the solicitation specifies: "Contractor-sponsored alterations or attachments to ----------- FOOTNOTE BEGINS --------- [foot #] 1 Although pricing is required only on the former, the solicitation describes the contract both as encompassing a base period running from April 1, 1994, through September 30, 1994, with four one-year option periods to run consecutively thereafter, and as encompassing a base period of eight months, with four twelve-month option periods to run consecutively thereafter. Protest File, Exhibit 2 at B-1, B-8, B-15, B-22, B-28 ( B.2), F-1 ( F.3). [foot #] 2 The varieties of hardware maintenance require either: (1) contractor maintenance 24 hours per day, 7 days per week (with either a 2 or 4 hour response time); (2) contractor maintenance 8 hours per day, 5 days per week; or (3) shared contractor/Government maintenance 24 hours per day, 7 days per week for parts support, telephonic technical support, and on-site support (with either a next-day or 5 day response time). Protest File, Exhibit 2 at B-1 to B-33 ( B.2), at A-1 to A-5 ( J, Attachment A). ----------- FOOTNOTE ENDS ----------- the system shall be made only with the consent of the Government." Protest File, Exhibit 2 at C-3 to C-4 ( C.4.1). 4. The solicitation's instructions for the preparation of technical and cost or pricing proposals expressly address the submission of alternate proposals: Offerors may, at their discretion, submit alternate proposals or proposals which deviate from the requirement; provided, that an offeror also submit a proposal for performance of the work as specified in the statement of work. Any "alternate" proposal may be considered if overall performance would be improved or not compromised, and if it is in the best interest of the Government. Alternate proposals, or deviations from any requirement of this RFP, must be clearly identified. Protest File, Exhibit 2 at L-3 ( L.7(3)). The scope of a permissible deviation from requirements is not articulated beyond references to performance and best interest. 5. The solicitation notes that standard form 33, Solicitation, Offer, and Award (SF 33), is being used in the procurement, and that the submission of the completed form is an offer which can be unilaterally accepted by the Contracting Officer and awarded on said SF 33. Therefore, the following points must be strictly adhered to by the Offeror in submitting the proposal. Protest File, Exhibit 2 at L-4 ( L.8.1). One the of points provides: "UNDER NO CIRCUMSTANCES MAKE ALTERATIONS OR CHANGES TO THE SF 33 OR THE RELATED PAGES WHICH ARE A PART OF THE ENCLOSED REQUEST FOR PROPOSAL AND PROPOSAL PACKET." Id. ( L.8.1(b)). 6. In section M, a paragraph captioned "evaluation of proposals" states: Proposals to be acceptable and eligible for evaluation must be prepared in accordance with and comply with the instructions given in this solicitation document and must meet the specifications set forth in Section C and Section J. Proposals meeting the requirements and complying with the provisions of the Standard Form of Contract will be evaluated in accordance with the procedures described herein and award made to that responsible offeror whose proposal is determined to be the most advantageous to the Government. Protest File, Exhibit 2 at M-2 ( M.2) (emphasis added). Protester's submission and agency actions 7. By December 20, 1993, the protester submitted a basic proposal, as well as two "alternate" (i.e., deviating) proposals. In these proposals, it proposes to replace specific existing equipment and provide maintenance on the resulting system. Under these proposals the protester is not offering to provide maintenance on every stated line item of hardware. Protest File, Exhibits 3, 4. These proposals do not offer maintenance on the entirety of equipment specified in sections C and J. 8. The agency reviewed the deviating proposals and concluded in a memorandum to the file (with a final signature date of April 19, 1994) regarding the competitive range determination: "While the government appreciates the offeror's efforts in this regard, such proposals are outside of the scope of this solicitation and were not considered in the technical evaluation process." Protest File, Exhibit 5 at 4.[foot #] 3 9. By letter dated April 21, the agency informed the protester of its determinations regarding the deviating proposals: The Government appreciates the two alternative proposals that entail the replacement of the existing . . . hardware with newer and more efficient systems. Unfortunately, such alternative proposals are outside the scope of this solicitation and these proposals were not considered in the technical evaluation process. Protest File, Exhibit 6. 10. By letter to the agency dated April 25, the protester protested the agency's position concerning the deviating proposals. Protest File, Exhibit 7. 11. In a memorandum dated May 18 to the contracting officer, the chairman of the technical evaluation panel articulated his rationale underlying the treatment of the deviating proposals. The chairman states that "the alternate proposals are outside the scope of this contract, which is for the maintenance of existing operational computer equipment. It is still my opinion that this is sufficient cause for rejecting the alternative proposals; this contract is not intended for the purchase of ADP hardware." The memorandum concludes: ----------- FOOTNOTE BEGINS --------- [foot #] 3 Despite testimony of the protester's president that as early as February a contract specialist informed the protester "that the alternate proposals were not something the government wanted to do," Transcript at 122, nothing in the record suggests the finality of a decision before mid-April, Finding 8, or a reason for the protester to have known how the agency would proceed. ----------- FOOTNOTE ENDS ----------- In summary, my position on this matter is that the alternate proposals should not be considered because they are ADP hardware procurement actions that should undergo the full competitive process. As further justification for my position, I maintain that an evaluation of the alternate proposals will cause significant delays in the contract award process that is already several months behind schedule. Furthermore, implementing either proposal may be impossible and would certainly be exceedingly difficult and resource intensive for what would prove to be an unnecessary interim measure. Protest File, Exhibit 9. 12. As explained in a letter to the protester dated May 24, the contracting officer denied the protest to the agency. The contracting officer stated that existing procurement regulations preclude acceptance of the deviating proposals. Further, The intent of provision L.10 [sic--L.7(3)] is to provide offerors an opportunity to propose alternate methods of satisfying the Government's requirement. In this case, the Government's requirement is for maintenance, not replacement of equipment. If replacement were our requirement, many competitors would be capable of satisfying this requirement; therefore, competition in this environment would have to be sought. Consideration of this alternate proposal would constitute a change of such magnitude that in accordance with FAR 16.606(a)(4) [sic--15.606(b)(4)] the solicitation would have to be canceled and reissued under the changed circumstances. . . . . . . . Implementing either of the alternate proposals would be significantly more difficult because the new equipment must coexist with the current systems in an already constricted facility while operations are phased over. If possible, it would certainly consume most of SOC's [Systems Operation Center's] resources for several months at a time when it can ill afford to divert them from other high priority projects. These costs would have to be weighed against the claimed cost savings. Once implemented, it would only be an interim measure because there are plans in motion for a new upgrade over the course of the next few years as a part of the modernization of the National Weather Service. The upgrade path will entail the conversion from mainframe to client/server based systems. Neither of the alternate proposals conform to the upgrade path. NOAA continually reconsiders our hardware configuration to optimize performance and minimize cost; however, our current requirement remains a maintenance requirement. . . . In summary, the Government's position on this matter is that the alternate proposals were not [to] be considered because they are outside the scope of the current solicitation. Protest File, Exhibit 10. 13. The testimony of agency personnel elicited at the hearing is consistent with, buttresses, and expands upon, the above-quoted reasons and rationale of the agency for not pursuing the deviating proposals. For example, the contracting officer noted that were the agency to pursue equipment replacement or maintenance on a reconfigured system, the agency would have to seek competition to satisfy those needs. Transcript at 12-13, 23. A new solicitation would result in lost efforts and delays; the agency would have a continuing need for maintenance of the existing system, and would have to forego any benefits (technical and cost) achievable from awarding the pure maintenance contract envisioned in the solicitation. Id. at 14-15. The deviating proposals are not attractive to the agency from a technical, cost,[foot #] 4 and time/delay perspective. Id. at 28- 30; Protest File, Exhibit 11. The testimony of the chief of the network monitoring and analysis branch of the National Weather Service added additional insights. The existing system has reduced or eliminated potential sources of system failure; the deviating proposals introduce unacceptable single points of failure into the system. Transcript at 202-03, 223. Monthly maintenance cost savings are anticipated from the resulting contract for pure maintenance; to pursue the deviating proposals would not allow the agency to benefit from those savings and would require the agency to expend additional, perhaps unavailable, money for the protester-proposed hardware replacement. Id. at 212-14. The deviating proposals conflict with the planned upgrade and modernization of the system--in terms of the direction of technology and the yearly expenditure ----------- FOOTNOTE BEGINS --------- [foot #] 4 The protester faults the agency's technical and price analyses, in part, because the deviating proposals could have been improved (in both the technical and cost aspects) after discussions at the time of best and final offers; this argument downplays the solicitation's notice that award could be made without discussions, such that "each initial offer should contain the offeror's best terms from a cost and price and technical standpoint." Protest File, Exhibit 2 at L-2 ( L.1, 48 CFR 52.215-16 (JUL 1990)). On their face, the deviating proposals are not the lowest priced offers; moreover, the analysis does not associate any cost with resources which must be expended to implement hardware replacement. Transcript at 28-30; Protest File, Exhibit 11. ----------- FOOTNOTE ENDS ----------- of funds. Id. at 214-22. Further, the replacement of equipment, as proposed in the deviating proposals, is a major undertaking requiring numerous agency resources (now tasked elsewhere) to plan and accomplish; the proposed plans may not be accomplishable because of space limitations for the location of equipment. Id. at 230-33. The chief of the systems section in charge of all of the operational software running on the system noted deficiencies inherent in the deviating proposals. The proposed system has single points of failure. The proposed configurations do not exactly equate to the current system, such that more than a swap- out/swap-in is required. A migration to either proposed system is a major undertaking which would entail direct costs and resources of the agency, and would pull resources away from the agency's other projects. Agency concerns over the proposed systems exist as to processing power, memory, and input-output capabilities. Id. at 273-86. 14. The testimony of the protester's personnel revealed the protester's view that the agency could and should have pursued negotiations with the protester regarding the deviating proposals; the protester maintains that, under the existing solicitation, the agency could have made an award for hardware replacement and maintenance of the reconfigured system or for maintenance of hardware significantly different from that described in the solicitation (e.g., the agency could obtain through Government excess property the equipment proposed by the protester, and maintenance would be provided on that system). Transcript at 256-61. 15. If one defines "technical evaluation" as scoring a proposal against the technical factors and subfactors found in section M of the solicitation, Protest File, Exhibit 2 at M-3 to M-4 ( M.4), the agency did not conduct a technical evaluation of the protester's deviating proposals. However, the agency did consider the deviating proposals. Not only did the agency recognize that the "alternate" proposals deviate from the solicitation requirements, but also it determined that, for significant and substantive reasons, to pursue the protester's approach would not be in the best interests of the Government. Discussion The protester states that its "alternate" proposals (which propose to substitute equipment and maintain the resulting system) complied with the terms of the solicitation, paragraphs C.4.1, L.7(3) and M.2 (Findings 3, 4, 6). The protester contends that in rejecting the deviating proposals, the agency failed to act in accordance with the cited solicitation provisions. The protester raises two grounds of protest. First, the protester alleges that the agency actions failed to seek full and open competition. Second, the protester contends that the agency violated regulation, 48 CFR 15.608(a) (1992) ("An agency shall evaluate competitive proposals solely on the factors specified in the solicitation."), by failing to evaluate the deviating proposals in accordance with paragraph M.2 of the solicitation. In performing its de novo review, the Board is not limited to the considerations and rationale put forward by the contracting officer at the time the agency decided to pursue neither deviating proposal. The Board must consider information developed in the record of the protest. See Grumman Data Systems Corp. v. Widnall, 15 F.3d 1044, 1046-47 (Fed. Cir. 1994) (In terms of a challenge to a source selection determination, under a de novo standard of review, "the reviewing board is not limited to the findings made by the agency or contained in the initial decision. Under de novo review, a board may consider the analysis developed by the agency, or produce and consider its own analysis.") (citations omitted). The protester bears the burden of proof; to prevail it must demonstrate a violation of statute, regulation or condition of procurement authority. Agency motion The agency requests the Board to dismiss the protest as untimely filed or for failing to state a claim upon which relief can be granted. The agency contends that it is obvious from the face of the solicitation that the agency could not make an award for the procurement of hardware and the maintenance of such a system, or for the maintenance of a system configured as protester proposes in its deviating proposals. The agency treats the protest as challenging the agency's formulation of its requirements, and maintains that, under Rule 5(b)(3)(i), the protester was required to protest the allegedly restrictive solicitation prior to the submission of initial proposals. Agency Motion at 6. The agency's motion fails to give weight to the language of the solicitation found in paragraph L.7(3), which invites "alternate" proposals which deviate from the requirements of the solicitation. With this language, the agency is actively permitting offerors to propose deviations from the requirements and indicating that it will consider such "alternates" in proceeding with satisfying its requirements and before making an award determination. A prerequisite to the consideration of such a deviating proposal is that it improve, or not compromise, overall performance, and that it be in the best interest of the Government. As the agency recognizes, this language does not entitle the agency to circumvent the requirements for obtaining full and open competition, or of other procurement statutes and regulations, in making an award. Implicitly, the language suggests that should the agency prefer a deviating offer, the agency will proceed in accordance with statute and regulation-- actions which may well entail amending or canceling the existing solicitation. 48 CFR 15.606(b)(4), (c) (1993). In light of the solicitation language which invites "alternate" offers deviating from stated requirements, this protest which challenges the agency's actions in relation to that language is timely. In support of its assertion that the Board should dismiss the protest for failing to state a claim upon which the Board can grant relief, the agency notes that the protester maintains that the agency improperly rejected the deviating proposals and requests that the agency be required to evaluate the deviating proposals. The agency states: "Because this procurement has been synopsized and solicited for maintenance services only and not for hardware supply, if the Board required the evaluation of these proposals, the fundamental nature of this procurement would have to be changed, which is not relief available from the Board." Agency Motion at 6. Under the Brooks Act, the Board "shall review any decision by a contracting officer alleged to violate statute or regulation." 40 U.S.C. 759(f)(1) (1988). The protester's claims relate to alleged violations of statute and regulation, each tied to the terms of the solicitation and the agency's actions with respect to those terms. A cognizable protest has been presented--if the protester prevails, the Board can fashion relief. A claim which is meritless when the facts are reviewed does not merit dismissal for the reasons articulated by the agency. The Board denies this aspect of the agency's motion. The merits Underlying the protest is the assertion that the agency failed to comply with the solicitation requirements. The protester brazenly insists upon an interpretation of the solicitation which is irrational and anti-competitive. The solicitation recognizes both that the contractor will be required to "substitute equipment as necessary for ensuring performance with the parameters defined by the manufacturers' recommended performance specifications" and that the equipment to be maintained may be altered over the life of the contract. Finding 3. The solicitation also enables offerors to "submit alternate proposals which deviate from the requirement." Finding 4. However, the competition achieved is for the maintenance of the existing system--that is, the equipment specified by line item number for which unit prices are required. Findings 1, 2, 5. Competition has not been achieved for an award based upon the maintenance of alternate equipment, let alone the replacement of equipment as the protester proposes. Contrary to the assumptions of the protester, the language of the solicitation does not guarantee that the agency will perform a technical evaluation on any proposal which deviates from the requirement. Findings 4, 6. The agency did consider the protester's deviating proposals. There exist well-supported reasons underlying the conclusion of the agency that to pursue the deviating proposals under this procurement is not in the best interests of the Government. Findings 12, 13, 15. The agency emphasizes in the letter denying the protest to the agency that: the requirement to be satisfied is maintenance of the existing system, not replacement of the existing system; to satisfy a replacement requirement under the maintenance language of the solicitation would be anti-competitive; to proceed toward award with either deviating proposal would require canceling the given solicitation and procuring under a changed circumstance; there exist difficulties (technically and in terms of resources) in implementing the replacements proposed in the deviating proposals; and the replacements are contrary to the scheduling of the maintenance and the planned up-grade of the equipment at issue. Finding 12. The record further developed for this protest fully supports and adds to these conclusions. Findings 13, 15. The agency conducted a review of the deviating proposals. The analysis supports the conclusion that further pursuit of the deviating proposals would not necessarily result in improved (or not compromised) performance, and would not be in the best interest of the Government. In its treatment of the deviating proposals, the agency has fully complied with the solicitation provisions. Contrary to the protester's assertions, for the agency to pursue, on a sole-source basis, an award to the protester based on either deviating proposal would violate provisions of statute and regulation calling for full and open competition; the agency would be satisfying requirements not apparent under the solicitation. Under the protester's interpretation, the language permitting proposals which "deviate from the requirement," Finding 4, becomes akin to the solicitation setting forth no requirements, standards, or specifications under which the agency may without altering the solicitation make an award for whatever it pleases. The protester has not suggested how such an approach achieves competition consistent with statute, 41 U.S.C. 253a (1988). The protester's analysis of the evaluation and selection criteria in the solicitation fails to give meaning to the language. The protester's alternate, deviating proposals do not offer maintenance on the entirety of equipment specified in sections C and J. Finding 7. Section M specifies that to be acceptable, any proposal "must meet the specifications set forth in Section C and Section J." Finding 6. The solicitation also instructs offerors to make no alterations to pages related to the award document; a change in the equipment to be maintained constitutes an alteration to section B and the line items. Finding 5. Given this language, the agency could not make an award to the protester based upon either of the deviating proposals. Such an award would be contrary to paragraphs L.8.1 and M.2. Decision The protester has failed to demonstrate the alleged violations of statute and regulation. Accordingly, the Board DENIES the protest. The previously entered Board-ordered suspension of the agency's applicable procurement authority lapses by its very terms. 40 U.S.C. 759(f)(2) (1988); Order (June 15, 1994). _________________________ JOSEPH A. VERGILIO Board Judge I concur: _________________________ STEPHEN M. DANIELS Board Judge HENDLEY, Board Judge, concurring. I concur with the result reached by the majority. Because alternate proposals were permitted, the sole rationale I use to justify the denial of the protest is this: The protester's alternate proposals are not the lowest-priced offers, Finding 13, n.4, coupled with the fact that there were no particular benefits associated with the proposals. The agency is not required to pursue alternate proposals which obviously are not in the best interest of the Government. _________________________ JAMES W. HENDLEY Board Judge